St. Jude Medical, Inc. (NYSE: STJ) today reported sales and net
earnings for the second quarter ended June 28, 2008. Second Quarter
Results The Company reported net sales of $1.136 billion in the
second quarter of 2008, an increase of 20% compared to the $947
million in the second quarter of 2007. Favorable foreign currency
translation comparisons increased second quarter sales by
approximately $64 million, within the range of the Company�s
previous guidance related to the impact of foreign currency.
Reported net earnings for the second quarter of 2008 were $201
million, or $0.58 per diluted share. This compares to reported net
earnings for the second quarter of 2007 of $135 million, or $0.39
per diluted share. In accordance with GAAP, reported net earnings
for the second quarter of 2008 do not include any benefit from the
federal research and development tax credit, which has yet to be
extended for 2008. Including the benefit of this adjustment, which
the Company continues to expect will be approved later this year,
adjusted net earnings for the second quarter of 2008 were $209
million, or $0.60 per diluted share. This compares to $0.45 per
diluted share of adjusted net earnings in the second quarter of
2007. A further reconciliation of the Company�s non-GAAP adjusted
diluted net earnings per share to the Company�s GAAP diluted
earnings per share is provided in the schedule below. Commenting on
the second quarter results and the Company�s growth program, St.
Jude Medical Chairman, President and Chief Executive Officer Daniel
J. Starks said, �These are outstanding results across the board,
with revenue exceeding our guidance in every business category, and
especially strong ICD sales both in the U.S. and internationally.
These results confirm the strength of the total St. Jude Medical
program, driven by our people, products and multiple growth
platforms. We therefore are increasing both our revenue and
earnings guidance for 2008.� Cardiac Rhythm Management (CRM) Total
Cardiac Rhythm Management sales, which include implantable
cardioverter defibrillator (ICD) and pacemaker products, were $712
million for the second quarter of 2008, a 20% increase compared to
the second quarter of 2007. Of that total, ICD product sales were
$406 million in the second quarter, a 24% increase compared to the
second quarter of 2007. Second quarter pacemaker sales were $306
million, an increase of 14% from the comparable quarter of 2007.
Atrial Fibrillation (AF) AF product sales for the second quarter
totaled $135 million, a 35% increase over the second quarter of
2007. Neuromodulation St. Jude Medical sales of neuromodulation
products were $61 million in the second quarter of 2008, up 17%
from the comparable quarter of 2007. Cardiovascular Total
cardiovascular sales, which include primarily vascular closure and
heart valve products, were $228 million for the second quarter of
2008, a 14% increase over the second quarter of 2007. Sales of
vascular closure products in the second quarter of 2008 were $97
million, a 9% increase over the second quarter of 2007. Total heart
valve product sales for the second quarter of 2008 were $87
million, a 14% increase over the second quarter of 2007. Third
Quarter and Full Year 2008 Sales and Earnings Guidance During a
conference call today, St. Jude Medical will provide its range for
revenue expectations for the third quarter and raise its guidance
for full-year revenue and earnings per share as a result of the
strength of the business. The Company expects its consolidated
earnings for the third quarter of 2008 to be in the range of $0.56
to $0.58 per diluted share and is raising its guidance for the
full-year 2008 to the range of $2.28 to $2.33. In addition to
reflecting the strength in the business, this increased guidance
assumes that the federal research and development tax credit is
approved and the benefit is recognized during 2008. A further
reconciliation of the Company�s quarterly and annual guidance is
provided in the schedule below. Non-GAAP Financial Measures The
Company provides adjusted net earnings and adjusted net earnings
per share because St. Jude Medical management believes that in
order to properly understand the Company�s short-term and long-term
financial trends, investors may wish to consider the impact of
certain adjustments (such as in-process research and development
charges, impairment charges, restructuring charges, litigation
charges or litigation reserve adjustments and income tax
adjustments). These adjustments result from facts and circumstances
(such as business development activities, restructuring activities,
asset impairment events or developments, settlements and other
developments relating to litigation and resolution of audits by tax
authorities) that vary in frequency and impact on the Company�s
results of operations. St. Jude Medical management uses adjusted
net earnings and adjusted net earnings per share to forecast and
evaluate the operational performance of the Company as well as to
compare results of current periods to prior periods on a
consolidated basis. Non-GAAP financial measures used by the Company
may be calculated differently from, and therefore may not be
comparable to, similarly titled measures used by other companies.
Investors should consider non-GAAP measures in addition to, and not
as a substitute for, or superior to, financial performance measures
prepared in accordance with GAAP. Conference Call/Webcast St. Jude
Medical�s second quarter earnings call can be heard live today
beginning at 7:00 a.m. CT (also archived for 90 days) on the
following website: http://phx.corporate-ir.net/
phoenix.zhtml?p=irol-eventDetails&c=73836&eventID=1882479
(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.) About St. Jude Medical St. Jude Medical develops medical
technology and services that focus on putting more control into the
hands of those who treat cardiac, neurological and chronic pain
patients worldwide. The company is dedicated to advancing the
practice of medicine by reducing risk wherever possible and
contributing to successful outcomes for every patient.
Headquartered in St. Paul, Minn., St. Jude Medical employs more
than 12,500 people worldwide and has five major focus areas that
include: cardiac rhythm management, atrial fibrillation, cardiac
surgery, cardiology and neuromodulation. For more information,
please visit www.sjm.com. Forward-Looking Statements This news
release contains forward-looking statements within the meaning of
the Private Securities Litigation Reform Act of 1995 that involve
risks and uncertainties. Such forward-looking statements include
the expectations, plans and prospects for the Company, including
potential clinical successes, anticipated regulatory approvals and
future product launches, and projected revenues, margins, earnings,
and market shares. The statements made by the Company are based
upon management�s current expectations and are subject to certain
risks and uncertainties that could cause actual results to differ
materially from those described in the forward-looking statements.
These risks and uncertainties include market conditions and other
factors beyond the Company�s control and the risk factors and other
cautionary statements described in the Company�s filings with the
SEC, including those described in the Risk Factors and Cautionary
Statements sections of the Company�s Annual Report on Form 10-K
filed on February 27, 2008. The Company does not intend to update
these statements and undertakes no duty to any person to provide
any such update under any circumstance. St. Jude Medical, Inc.
Condensed Consolidated Statements of Earnings (in thousands, except
per share amounts) (Unaudited) � � � � � � � � � � Three Months
Ended Six Months Ended � � June 28, 2008 June 30, 2007 June 28,
2008 June 30, 2007 Net sales $1,135,760 $947,336 $2,146,498
$1,834,314 Cost of sales 287,691 253,023 548,178 492,000 Gross
profit 848,069 694,313 1,598,320 1,342,314 � Selling, general &
administrative expense 416,261 348,694 783,377 677,034 Research
& development expense 138,455 119,458 262,090 235,416 Special
charges 0 35,000 0 35,000 Operating profit 293,353 191,161 552,853
394,864 Other income (expense), net (5,040 ) (10,450 ) (2,439 )
(15,618 ) Earnings before income taxes 288,313 180,711 550,414
379,246 Income tax expense 87,254 45,911 164,574 98,721 Net
earnings $201,059 $134,800 $385,840 $280,525 � Adjusted net
earnings (Non-GAAP) $208,503 (1) $156,675 (2) $399,050 (3) $302,400
(2) � Diluted net earnings per share $0.58 $0.39 $1.10 $0.79
Adjusted diluted net earnings per share (Non-GAAP) $0.60 (1) $0.45
(2) $1.14 (3) $0.85 (2) � Weighted average shares outstanding-
diluted 348,269 349,567 350,112 354,422 � (1) Second quarter 2008
adjusted net earnings and adjusted diluted net earnings per share
include $7,444 of income tax benefit, or $0.02 per share, related
to the expected benefit from the federal research and development
tax credit not yet extended for 2008. � � (2) Second quarter and
first six months 2007 adjusted net earnings and adjusted diluted
net earnings per share exclude an after tax charge of $21,875, or
$0.06 per share, related to the settlement of a patent litigation
matter. � � (3) First six months 2008 adjusted net earnings and
adjusted diluted net earnings per share include $13,210 of income
tax benefit, or $0.04 per share, related to the expected benefit
from the federal research and development tax credit not yet
extended for 2008. � Condensed Consolidated Balance Sheets (in
thousands) (Unaudited) � � � � � � � � June 28, 2008 December 29,
2007 Cash and cash equivalents $ 397,481 $ 389,094 Accounts
receivable, net 1,169,772 1,023,952 Inventories 475,471 457,734
Other current assets 298,407 257,403 Property, plant &
equipment, net 859,511 776,795 Goodwill 1,666,485 1,657,313 Other
intangible assets, net 484,478 498,700 Other assets 287,079 268,413
Total assets $ 5,638,684 $ 5,329,404 � Current portion of long-term
debt $ 1,205,498 $ 1,205,498 Other current liabilities 662,239
643,731 Long-term debt 193,529 182,493 Deferred income taxes, net
129,753 107,011 Long-term other liabilities 273,705 262,661 Total
equity 3,173,960 2,928,010 Total liabilities & equity $
5,638,684 $ 5,329,404 2008 Earnings Guidance Reconciliation � � � �
Third Quarter 2008 Full Year 2008 � Estimated 2008 diluted net
earnings per share $ 0.54 - $ 0.56 $ 2.21 - $ 2.25 Estimated 2008
adjusted diluted net earnings per share (Non-GAAP) $ 0.56 - $ 0.58
(4) $ 2.28 - $ 2.33 (4) � (4) The federal research and development
tax credit has not yet been extended for 2008. The Company's above
estimated 2008 adjusted diluted net earnings per share (Non-GAAP)
assumes that the tax credit will be approved during 2008
retroactive to the beginning of the year. �
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