STJ ST. Jude Medical, Inc.

St. Jude Medical, Inc. (NYSE:STJ) today reported results for the second quarter ended June 30, 2005. The Company reported net sales of $724 million, an increase of 30% compared to the $557 million reported in the second quarter of 2004. Favorable foreign currency translation comparisons increased second quarter sales by about $12 million. Reported net earnings for the second quarter of 2005 were $101 million or $.27 per diluted share, compared to $99 million, or $.27 per diluted share in the second quarter of 2004. Earnings per diluted share were $.59 for the first half of 2005, a 13% increase over the $.52 per share reported in the first half of 2004. During the second quarter of 2005, St. Jude Medical recorded a special charge for the purchase of in-process research and development of approximately $14 million in conjunction with the completion of the acquisition of Velocimed, LLC. The company also recognized $27 million of additional income tax expense related to the repatriation of $500 million during the quarter under the provisions of the American Jobs Creation Act of 2004. Net earnings for the second quarter, excluding these non-recurring items, were $142 million or $.38 per diluted share, an increase of 41% over the $.27 per diluted share reported in the comparable quarter of 2004. Second quarter ICD product sales were $244 million, a 92% increase over the comparable quarter of 2004, continuing to underscore the competitiveness of St. Jude Medical's ICD products and reflecting additional market share gains. Second quarter pacemaker sales were $237 million, an increase of 4% from the comparable quarter of 2004. Atrial fibrillation product sales for the second quarter totaled $61 million, a 65% increase over the second quarter of 2004. Sales of atrial fibrillation products in 2005 include sales from businesses acquired since the second quarter of 2004. Total sales of cardiology products for the second quarter were $112 million, a 19% increase over 2004. Within this category of products, vascular sealing device sales for the second quarter of 2005 totaled $85 million, a 21% increase over the second quarter of last year. Total cardiac surgery sales for the second quarter of 2005 were $70 million, a decrease of 3% compared to the second quarter of last year. Sales of heart valve products this quarter were approximately $65 million, down 3% when compared with the second quarter of last year. Commenting on second quarter 2005 results, St. Jude Medical Chairman, President and Chief Executive Officer Daniel J. Starks said, "Our second quarter results reflect our progress on several major initiatives. Ninety-two percent growth in ICD revenues demonstrates clear and encouraging gains of ICD market share. We simultaneously strengthened our gross margin and expanded our investment in research and development. We completed our acquisition of Velocimed and continued to focus on expanding growth drivers to sustain our success." During a conference call today at 9 a.m. Eastern (8 a.m. Central), St. Jude Medical will further discuss these results and provide sales and earnings guidance for the third quarter and full year 2005. The Company expects its consolidated EPS for the third quarter of 2005 to be in the range of $.38 to $.39 per diluted share and is raising EPS guidance for the full year 2005 to be in the range of $1.49 to $1.51. The Company's guidance excludes the impact of non-recurring items. St. Jude Medical's 2nd quarter earnings conference call will be live (also archived for 90 days) on the following website: http://phx.corporate-ir.net/phoenix.zhtml?c=73836&p=irol- EventDetails&EventId=985469. (Due to its length, this URL may need to be copied/pasted into your Internet browser's address field. Remove the extra space if one exists.) St. Jude Medical, Inc. (www.sjm.com) is dedicated to the design, manufacture and distribution of innovative medical devices of the highest quality, offering physicians, patients and payers outstanding clinical performance and demonstrated economic value. Any statements made regarding the Company's anticipated future product launches, regulatory approvals, revenues, earnings, market shares, and potential clinical success are forward-looking statements which are subject to risks and uncertainties, such as those described in the Financial Section of the Company's Annual Report to Shareholders for the fiscal year ended December 31, 2004 (see page 16). Actual results may differ materially from anticipated results. -0- *T Condensed Consolidated Statements of Earnings (Data in Thousands, Except EPS) (Unaudited) Three Months Ended Three Months Ended June 30, 2005 June 30, 2004 ------------------------------------ ------------- Reported Adjustments Adjusted Reported ----------- ----------- ------------ ------------- Net sales $723,655 $723,655 $556,602 Cost of sales 201,018 201,018 161,451 Gross profit 522,637 522,637 395,151 Selling, general & administrative 237,586 237,586 191,755 Research & development 89,807 89,807 68,870 Purchased R&D 13,700 (13,700) Operating profit 181,544 13,700 195,244 134,526 Other income (expense) 1,389 1,389 121 Earnings before taxes 182,933 13,700 196,633 134,647 Income tax expense 81,452 (27,000) 54,452 35,804 Net earnings $101,481 $40,700 $142,181 $98,843 Earnings per share Basic $0.28 $0.11 $0.39 $0.28 Diluted $0.27 $0.11 $0.38 $0.27 Basic shares outstanding 362,419 362,419 362,419 352,605 Diluted shares outstanding 376,964 362,419 376,964 370,823 Six Months Ended Six Months Ended June 30, 2005 June 30, 2004 ------------------------------------ ------------- Reported Adjustments Adjusted Reported ----------- ----------- ------------ ------------- Net sales $1,387,564 $1,387,564 $1,105,178 Cost of sales 388,901 388,901 325,696 Gross profit 998,663 998,663 779,482 Selling, general & administrative 456,633 456,633 379,304 Research & development 166,792 166,792 134,450 Purchased R&D 26,100 (26,100) Operating profit 349,138 26,100 375,238 265,728 Other income (expense) 3,121 3,121 (1,444) Earnings before taxes 352,259 26,100 378,359 264,284 Income tax expense 131,427 (27,000) 104,427 70,287 Net earnings $220,832 $53,100 $273,932 $193,997 Earnings per share Basic $0.61 $0.15 $0.76 $0.55 Diluted $0.59 $0.15 $0.73 $0.52 Basic shares outstanding 361,361 361,361 361,361 350,889 Diluted shares outstanding 376,247 361,361 376,247 369,533 Condensed Consolidated Balance Sheets (Data in Thousands) (Unaudited) June 30, 2005 Dec. 31, 2004 Cash & equivalents $517,450 $688,040 Accounts receivable, net 699,589 630,983 Inventories 334,663 330,873 Other current assets 228,013 213,321 Property, plant & equipment, net 355,624 326,981 Goodwill 794,594 593,799 Other tangible assets, net 313,251 207,096 Other assets 242,223 239,654 Total assets $3,485,407 $3,230,747 Other current liabilities $635,653 $605,393 Long-term debt 188,986 234,865 Deferred income taxes 57,296 56,561 Total equity 2,603,472 2,333,928 Total liabilities & equity $3,485,407 $3,230,747 *T