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Mr. Chavez
serves as President, Neuromodulation Division, as a result of our acquisition
of Advanced Neuromodulation Systems (ANS) in November 2005. From April 1998 to
2005, he served as President, Chief Executive Officer and Director of ANS, when
it was a separate company, and has since served as President, Neuromodulation
Division.
Dr. Fain
joined St. Jude Medical in 1997 as a part of our acquisition of Ventritex,
Inc., where he had served since 1987. In 1998, he was named Senior Vice
President, Clinical Engineering and Regulatory Affairs, Cardiac Rhythm
Management. In 2002 he was appointed Senior Vice President for Development and
Clinical/Regulatory Affairs for Cardiac Rhythm Management and was promoted to
Executive Vice President over those functions in 2005. In July 2007, Dr. Fain
became President, Cardiac Rhythm Management Division.
Mr. Gestin
joined St. Jude Medical in 1997 as manager of cardiac rhythm management and
catheter product sales in France. He was named Managing Director of St. Jude
Medical France in 1999 and was promoted to Vice President, Northern Europe
& Africa in 2002. He was named President of SJM Europe, Middle East, Africa
and Canada in August 2004, and in January 2008, Mr. Gestin was promoted to
President, International Division.
Ms. Song
joined St. Jude Medical in 1998 as Senior Vice President, Cardiac Rhythm
Management Operations. In May 2002, she was appointed President, Cardiac
Surgery Division, and in August 2004, was appointed President, Atrial
Fibrillation Division.
Ms. Craig
joined St. Jude Medical in May 2005 as Vice President of Communications and
served in that position until being named Vice President, Corporate Relations,
in January 2006. Ms. Craig was also named Vice President, Human Resources in
August 2010. Prior to joining St. Jude Medical, Ms. Craig spent 12 years with
Smith & Nephew plc, a medical device company headquartered in London,
England, where she last served as Vice President of U.S. Public Relations and
Investor Relations from 2003 to 2005.
Mr. Khosravi
joined St. Jude Medical in 1998 as Vice President, Quality, Cardiac Rhythm
Management. He held various positions within
the Cardiac Rhythm Management division.
In 2005, he was promoted to Senior Vice President Quality and Leads
Development and Operations, Cardiac Rhythm Management. In 2006, he served as
Executive Vice President Quality and Leads Development and Operations, Cardiac
Rhythm Management. Prior to being appointed Vice President, Global Quality in
2009, Mr. Khosravi was Executive Vice President, Product Development and Leads
Operations, Cardiac Rhythm Management from 2007 to 2009.
Ms. Krop
joined St. Jude Medical in July 2006 as Vice President, General Counsel and
Corporate Secretary. She previously spent 15 years at General Electric (GE)
Company, a diversified industrial corporation, and served as General Counsel of
GE Healthcare Bio-Sciences from June 2004 to June 2006.
Mr.
Northenscold joined St. Jude Medical in 2001 as Vice President, Finance and
Administration of Daig Corporation, a wholly-owned subsidiary of St. Jude
Medical. In March 2003, he was named Vice President, Administration and in
November 2007 was promoted to Vice President, Information Technology and Chief
Information Officer.
Mr. Zurbay
joined St. Jude Medical in 2003 as Director of Corporate Finance. In 2004, Mr.
Zurbay was named Corporate Controller, and in January 2006 he was named Vice
President and Corporate Controller.
Availability of SEC Reports
We make available, free of charge, our annual reports on Form 10-K, quarterly
reports on Form 10-Q, current reports on Form 8-K and any amendments filed or
furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of
1934 (the Exchange Act) as soon as reasonably practical after they are filed or
furnished to the U.S. Securities and Exchange Commission (SEC). Such reports
are available on our website (http://www.sjm.com) under
Our
Company Investor Relations SEC Filings
. Information included
on our website is not deemed to be incorporated into this Form 10-K.
Our business
faces many risks. Any of the risks discussed below, or elsewhere in this Form
10-K or our other SEC filings, could have a material impact on our business,
financial condition or results of operations.
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We face intense
competition and may not be able to keep pace with the rapid technological
changes in the medical devices industry.
The medical
device market is intensely competitive and is characterized by extensive
research and development and rapid technological change. Our customers consider
many factors when choosing suppliers, including product reliability, clinical outcomes,
product availability, inventory consignment, price and product services
provided by the manufacturer, and market share can shift as a result of
technological innovation and other business factors. Major shifts in industry
market share have occurred in connection with product problems, physician
advisories and safety alerts, reflecting the importance of product quality in
the medical device industry. Our competitors range from small start-up
companies to larger companies which have significantly greater resources and
broader product offerings than us, and we anticipate that in the coming years,
other large companies will enter certain markets in which we currently hold a
strong position. For example, Boston Scientific acquired one of our principal
competitors, Guidant Corporation, in 2006. In addition, we expect that
competition will continue to intensify with the increased use of strategies
such as consigned inventory, and we have seen increasing price competition as a
result of managed care, consolidation among healthcare providers, increased
competition and declining reimbursement rates. Product introductions or
enhancements by competitors which have advanced technology, better features or
lower pricing may make our products or proposed products obsolete or less
competitive. As a result, we will be required to devote continued efforts
and financial resources to bring our products under development to market,
enhance our existing products and develop new products for the medical
marketplace. If we fail to develop new products, enhance existing products
or compete effectively, our business, financial condition and results of
operations will be adversely affected.
We are subject to
stringent domestic and foreign medical device regulation and any adverse regulatory
action may materially adversely affect our financial condition and business
operations.
Our products,
development activities and manufacturing processes are subject to extensive and
rigorous regulation by numerous government agencies, including the FDA and
comparable foreign agencies. To varying
degrees, each of these agencies monitors and enforces our compliance with laws
and regulations governing the development, testing, manufacturing, labeling,
marketing and distribution of our medical devices. The process of obtaining marketing approval or clearance from the
FDA and comparable foreign bodies for new products, or for enhancements or
modifications to existing products, could:
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take a
significant amount of time,
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require the
expenditure of substantial resources,
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involve
rigorous pre-clinical and clinical testing, as well as increased post-market
surveillance,
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involve
modifications, repairs or replacements of our products, and
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result in
limitations on the indicated uses of our products.
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We cannot be
certain that we will receive required approval or clearance from the FDA and
foreign regulatory agencies for new products or modifications to existing
products on a timely basis. The failure to receive approval or clearance for significant
new products or modifications to existing products on a timely basis could have
a material adverse effect on our financial condition and results of operations.
Both before
and after a product is commercially released, we have ongoing responsibilities
under FDA regulations. For example, we
are required to comply with the FDAs Quality System Regulation (QSR), which
mandates that manufacturers of medical devices adhere to certain quality
assurance requirements pertaining to, among other things, validation of
manufacturing processes, controls for purchasing product components, and
documentation practices. As another
example, the Federal Medical Device Reporting regulation requires us to provide
information to the FDA whenever there is evidence that reasonably suggests that
a device may have caused or contributed to a death or serious injury or, that a
malfunction occurred which would be likely to cause or contribute to a death or
serious injury upon recurrence.
Compliance with applicable regulatory requirements is subject to
continual review and is monitored rigorously through periodic inspections by
the FDA, which may result in observations on Form 483, and in some cases
warning letters, that require corrective action. If the FDA were to conclude that we are not in compliance with
applicable laws or regulations, or that any of our medical devices are
ineffective or pose an unreasonable health risk, the FDA could ban such medical
devices, detain or seize such medical devices, order a recall, repair,
replacement, or refund of such devices, or require us to notify health
professionals and others that the devices present unreasonable risks of
substantial harm to the public health. The FDA has recently been increasing its
scrutiny of the medical device industry and the government should be expected
to continue to scrutinize the industry closely with inspections, and possibly
enforcement actions, by the FDA or other agencies. Additionally, the FDA may
restrict manufacturing and impose other operating restrictions, enjoin and
restrain certain violations of applicable law pertaining to medical devices,
and assess civil or criminal penalties against our officers, employees, or
us. The FDA may also recommend
prosecution to the Department of Justice.
Any adverse regulatory action, depending on its magnitude, may restrict
us from effectively manufacturing, marketing and selling our products. In
addition, negative publicity and product liability claims resulting from any
adverse regulatory action could have a material adverse effect on our financial
condition and results of operations.
Foreign
governmental regulations have become increasingly stringent and more common,
and we may become subject to even more rigorous regulation by foreign
governmental authorities in the future.
Penalties for a companys noncompliance with foreign governmental
regulation could be severe, including revocation or suspension of a companys
business license and criminal sanctions.
Any domestic or foreign governmental medical device law or regulation
imposed in the future may have a material adverse effect on our financial
condition and business operations.
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Our products are
continually the subject of clinical trials conducted by us, our competitors or
other third parties, the results of which may be unfavorable, or perceived as
unfavorable by the market, and could have a material adverse effect on our
business, financial condition and results of operations.
As a part of
the regulatory process of obtaining marketing clearance for new products and
new indications for existing products, we conduct and participate in numerous
clinical trials with a variety of study designs, patient populations and trial
endpoints. Unfavorable or inconsistent clinical data from existing or future
clinical trials conducted by us, by our competitors or by third parties, or the
markets or FDAs perception of this clinical data, may adversely impact our
ability to obtain product approvals, our position in, and share of, the markets
in which we participate and our business, financial condition and results of
operations.
If we are unable to
protect our intellectual property effectively, our financial condition and
results of operations could be adversely affected.
Patents and
other proprietary rights are essential to our business and our ability to
compete effectively with other companies is dependent upon the proprietary
nature of our technologies. We also rely upon trade secrets, know-how,
continuing technological innovations and licensing opportunities to develop,
maintain and strengthen our competitive position. We seek to protect these, in
part, through confidentiality agreements with certain employees, consultants
and other parties. We pursue a policy of generally obtaining patent protection
in both the United States and in key foreign countries for patentable subject
matter in our proprietary devices and also attempt to review third-party
patents and patent applications to the extent publicly available to develop an
effective patent strategy, avoid infringement of third-party patents, identify
licensing opportunities and monitor the patent claims of others. We currently
own numerous United States and foreign patents and have numerous patent
applications pending. We are also a party to various license agreements
pursuant to which patent rights have been obtained or granted in consideration
for cash, cross-licensing rights or royalty payments. We cannot be certain that
any pending or future patent applications will result in issued patents, that
any current or future patents issued to or licensed by us will not be
challenged, invalidated or circumvented or that the rights granted thereunder
will provide a competitive advantage to us or prevent competitors from entering
markets which we currently serve. Any required license may not be available to
us on acceptable terms, if at all. In addition, some licenses may be
non-exclusive, and therefore our competitors may have access to the same
technologies as us. In addition, we may have to take legal action in the future
to protect our trade secrets or know-how or to defend them against claimed
infringement of the rights of others. Any legal action of that type could be
costly and time consuming to us and we cannot be certain of the outcome. The
invalidation of key patents or proprietary rights which we own or an
unsuccessful outcome in lawsuits to protect our intellectual property could
have a material adverse effect on our financial condition and results
of operations.
Pending and future
patent litigation could be costly and disruptive to us and may have an adverse
effect on our financial condition and results of operations.
We operate in
an industry that is susceptible to significant patent litigation and, in recent
years, it has been common for companies in the medical device field to
aggressively challenge the rights of other companies to prevent the marketing
of new devices. Companies that obtain patents for products or processes that
are necessary for or useful to the development of our products may bring legal
actions against us claiming infringement and at any given time, we generally
are involved as both a plaintiff and a defendant in a number of patent
infringement and other intellectual property-related actions. Defending
intellectual property litigation is expensive and complex and outcomes are
difficult to predict. Any pending or future patent litigation may result in
significant royalty or other payments or injunctions that can prevent the sale
of products and may cause a significant diversion of the efforts of our
technical and management personnel. While we intend to defend any such lawsuits
vigorously, we cannot be certain that we will be successful. In the event that
our right to market any of our products is successfully challenged or if we
fail to obtain a required license or are unable to design around a patent, our
financial condition and results of operations could be materially adversely
affected.
Pending and future
product liability claims and litigation may adversely affect our financial
condition and results of operations.
The design,
manufacture and marketing of the medical devices we produce entail an inherent
risk of product liability claims. Our products are often used in intensive care
settings with seriously ill patients, and many of the medical devices we
manufacture and sell are designed to be implanted in the human body for long
periods of time or indefinitely. There are a number of factors that could
result in an unsafe condition or injury to, or death of, a patient with respect
to these or other products which we manufacture or sell, including component
failures, manufacturing flaws, design defects or inadequate disclosure of
product-related risks or product-related information. Product liability claims
may be brought by individuals or by groups seeking to represent a class.
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We are
currently the subject of various product liability claims, including several
lawsuits in the United States and a lawsuit being allowed to proceed as a class
action in Canada relating to products incorporating Silzone® coating. The
outcome of litigation, particularly class action lawsuits, is difficult to
assess or quantify. Plaintiffs in these types of lawsuits often seek recovery of
very large or indeterminate amounts, and the magnitude of the potential loss
relating to such lawsuits may remain unknown for substantial periods of time.
We believe that the final resolution of the Silzone litigation matters may take
a number of years and cannot reasonably estimate the time frame in which any
potential settlements or judgments would be paid out or the amounts of any such
settlements or judgments. In addition, the cost to defend any future
litigation, whether Silzone-related or not, may be significant. We believe that
many settlements and judgments relating to the Silzone litigation and our other
litigation may be covered in whole or in part under our previously-issued
product liability insurance policies and existing reserves. Any costs (the
material components of which are settlements, judgments, legal fees and other
related defense costs) not covered under our previously-issued product
liability insurance policies and existing reserves could have a material
adverse effect on our consolidated earnings, financial position and cash flows.
Our product
liability insurers may refuse to cover certain losses on the grounds that such
losses are outside the scope of our product liability insurance policies.
Our legacy
product liability insurers may seek to deny coverage of Silzone-related claims
and other past and/or future losses relating to our products on the grounds
that such losses are outside the scope of coverage of those previously-issued
insurance policies. To the extent that we suffer losses that are outside of the
scope or range of coverage of those previously-issued product liability
insurance policies, those losses may have a material adverse effect on our
consolidated earnings, financial position and cash flows.
Our self-insurance
program may not be adequate to cover future losses.
Consistent
with the predominant practice in our industry, we do not currently maintain or
intend to maintain any insurance policies with respect to product liability in
the future. This decision was made based on current conditions in the insurance
marketplace that have led to increasingly higher levels of self-insured
retentions, increasing number of coverage limitations and high insurance
premium rates. We will continue to monitor the insurance marketplace to
evaluate the value to us of obtaining insurance coverage in the future. We believe
that our self-insurance program, which is based on historical loss trends, will
be adequate to cover future losses, although we can provide no assurances that
this will remain true as historical trends may not be indicative of future
losses. These losses could have a material adverse impact on our consolidated
earnings, financial condition and cash flows.
The loss of any of
our sole-source suppliers or an increase in the price of inventory supplied to
us could have an adverse effect on our business, financial condition and
results of operations.
We purchase
certain supplies used in our manufacturing processes from single sources due to
quality considerations, costs or constraints resulting from regulatory
requirements. Agreements with certain suppliers are terminable by either party
upon short notice and we have been advised periodically by some suppliers that
in an effort to reduce their potential product liability exposure, they may
terminate sales of products to customers that manufacture implantable medical
devices. While some of these suppliers
have modified their positions and have indicated a willingness to continue to
provide a product temporarily until an alternative vendor or product can be
qualified (or even to reconsider the supply relationship), where a particular
single-source supply relationship is terminated, we may not be able to
establish additional or replacement suppliers for certain components or
materials quickly. This is largely due to the FDA approval system, which
mandates validation of materials prior to use in our products, and the complex
nature of manufacturing processes employed by many suppliers. In addition, we
may lose a sole-source supplier due to, among other things, the acquisition of
such a supplier by a competitor (which may cause the supplier to stop selling
its products to us) or the bankruptcy of such a supplier, which may cause the
supplier to cease operations. A reduction or interruption by a sole-source
supplier of the supply of materials or key components used in the manufacturing
of our products or an increase in the price of those materials or components
could adversely affect our business, financial condition and results of
operations.
Cost containment
pressures and domestic and foreign legislative or administrative reforms
resulting in restrictive reimbursement practices of third-party payors or
preferences for alternate therapies could decrease the demand for products
purchased by our customers, the prices which they are willing to pay for those
products and the number of procedures using our devices.
Our products
are purchased principally by healthcare providers that typically bill various
third-party payors, such as governmental programs (e.g., Medicare and
Medicaid), private insurance plans and managed care plans, for the healthcare
services provided to their patients. The ability of customers to obtain
appropriate reimbursement for their services and the products they provide from
government and third-party payors is critical to the success of medical technology
companies. The availability of reimbursement affects which products customers
purchase and the prices they are willing to pay. Reimbursement varies from
country to country and can significantly impact the acceptance of new
technology. After we develop a promising new product, we may find limited
demand for the product unless reimbursement approval is obtained from private
and governmental third-party payors.
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Major
third-party payors for healthcare provider services in the United States and
abroad continue to work to contain healthcare costs. The introduction of cost
containment incentives, combined with closer scrutiny of healthcare
expenditures by both
private health insurers and employers, has resulted in increased discounts and
contractual adjustments to healthcare provider charges for services performed
and in the shifting of services between inpatient and outpatient settings.
Initiatives to limit the growth of healthcare costs, including price
regulation, are also underway in several countries in which we do business.
Implementation of healthcare reforms in the United States and in significant
overseas markets such as Germany, Japan and other countries may limit the price
of, or the level at which, reimbursement is provided for our products and
adversely affect both our pricing flexibility and the demand for our products.
Healthcare providers may respond to such cost-containment pressures by
substituting lower cost products or other therapies for our products.
In March 2010,
the Patient Protection and Affordable Care Act and Health Care and Education
Reconciliation Act were enacted into law in the United States, which included a
number of provisions aimed at improving quality and decreasing costs. It is
uncertain what consequences these provisions will have on patient access to new
technologies and what impacts these provisions will have on Medicare
reimbursement rates. Legislative or administrative reforms to the U.S. or
international reimbursement systems that significantly reduce reimbursement for
procedures using our medical devices or deny coverage for such procedures, or
adverse decisions relating to our products by administrators of such systems in
coverage or reimbursement issues, would have an adverse impact on the products,
including clinical products, purchased by our customers and the prices our
customers are willing to pay for them. This in turn would have an adverse
effect on our financial condition and results of operations.
Our failure to
comply with restrictions relating to reimbursement and regulation of healthcare
goods and services may subject us to penalties and adversely affect our
financial condition and results of operations.
Our devices
are subject to regulation regarding quality and cost by the United States
Department of Health and Human Services, including the Centers for Medicare and
Medicaid Services (CMS), as well as comparable state and foreign agencies
responsible for reimbursement and regulation of healthcare goods and services.
Foreign governments also impose regulations in connection with their healthcare
reimbursement programs and the delivery of healthcare goods and services. U.S.
federal government healthcare laws apply when we submit a claim on behalf of a
U.S. federal healthcare program beneficiary, or when a customer submits a claim
for an item or service that is reimbursed under a U.S. federal government
funded healthcare program, such as Medicare or Medicaid. The principal U.S.
federal laws implicated include those that prohibit the filing of false or
improper claims for federal payment, those that prohibit unlawful inducements
for the referral of business reimbursable under federally-funded healthcare
programs, known as the anti-kickback laws, and those that prohibit healthcare
service providers seeking reimbursement for providing certain services to a
patient who was referred by a physician that has certain types of direct or
indirect financial relationships with the service provider, known as the Stark
law.
The laws
applicable to us are subject to evolving interpretations. If a governmental
authority were to conclude that we are not in compliance with applicable laws
and regulations, we and our officers and employees could be subject to severe
criminal and civil penalties, including, for example, exclusion from
participation as a supplier of product to beneficiaries covered by CMS. If we
are excluded from participation based on such an interpretation, it could
adversely affect our financial condition and results of operations.
Consolidation in the
healthcare industry could lead to demands for price concessions or limit or
eliminate our ability to sell to certain of our significant market segments.
The cost of
healthcare has risen significantly over the past decade and numerous
initiatives and reforms initiated by legislators, regulators and third-party
payors to curb these costs have resulted in a consolidation trend in the
medical device industry as well as among our customers, including healthcare
providers. This in turn has resulted in greater pricing pressures and
limitations on our ability to sell to important market segments, as group
purchasing organizations, independent delivery networks and large single
accounts, such as the Veterans Administration in the United States, continue to
consolidate purchasing decisions for some of our healthcare provider customers.
We expect that market demand, government regulation, third-party reimbursement
policies and societal pressures will continue to change the worldwide
healthcare industry, resulting in further business consolidations and alliances
which may exert further downward pressure on the prices of our products and
adversely impact our business, financial condition and results of operations.
Failure to integrate
acquired businesses into our operations successfully could adversely affect our
business.
As part of our
strategy to develop and identify new products and technologies, we have made
several acquisitions in recent years and may make additional acquisitions in
the future. Our integration of the operations of acquired businesses requires
significant efforts, including the coordination of information technologies,
research and development, sales and marketing, operations, manufacturing and
finance. These efforts result in additional expenses and involve significant
amounts of managements time that cannot then be dedicated to other projects.
Our failure to manage successfully and coordinate the growth of the combined
company could also have an adverse impact on our business. In addition, we
cannot be certain that the businesses we acquire will become profitable or
remain so. If our acquisitions are not successful, we may record unexpected
impairment charges. Factors that will affect the success of our acquisitions
include:
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the presence
or absence of adequate internal controls and/or significant fraud in the
financial systems of acquired
companies;
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adverse
developments arising out of investigations by governmental entities of the
business practices of acquired companies;
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any decrease
in customer loyalty and product orders caused by dissatisfaction with the
combined companies product lines and sales and marketing practices,
including price increases;
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our ability
to retain key employees; and
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the ability
of the combined company to achieve synergies among its constituent companies,
such as increasing sales of the combined companys products, achieving cost
savings and effectively combining technologies to develop new products.
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The success of many
of our products depends upon strong relationships with physicians.
If we fail to
maintain our working relationships with physicians, many of our products may
not be developed and marketed in line with the needs and expectations of the
professionals who use and support our products. The research, development,
marketing and sales of many of our new and improved products is dependent upon
our maintaining working relationships with physicians. We rely on these
professionals to provide us with considerable knowledge and experience regarding
our products and the marketing of our products. Physicians assist us as
researchers, marketing consultants, product consultants, inventors and as
public speakers. If we are unable to maintain our strong relationships with
these professionals and continue to receive their advice and input, the
development and marketing of our products could suffer, which could have a
material adverse effect on our financial condition and results of operations.
Instability in
international markets or foreign currency fluctuations could adversely affect
our results of operations.
Our products
are currently marketed in more than 100 countries around the world, with our
largest geographic markets outside of the United States being Europe, Japan and
Asia Pacific. As a result, we face currency and other risks associated with our
international sales. We are exposed to foreign currency exchange rate
fluctuations due to transactions denominated primarily in Euros, Japanese Yen,
Canadian Dollars, Australian Dollars, Brazilian Reals, British Pounds and
Swedish Kronor, which may potentially reduce the U.S. Dollars we receive for
sales denominated in any of these foreign currencies and/or increase the U.S.
Dollars we report as expenses in these currencies, thereby affecting our reported
consolidated revenues and net earnings. Fluctuations between the currencies in
which we do business have caused and will continue to cause foreign currency
transaction gains and losses. We cannot predict the effects of currency
exchange rate fluctuations upon our future operating results because of the
number of currencies involved, the variability of currency exposures and the
volatility of currency exchange rates.
In addition to
foreign currency exchange rate fluctuations, there are a number of additional
risks associated with our international operations, including those related to:
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the
imposition of or increase in import or export duties, surtaxes, tariffs or
customs duties;
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the
imposition of import or export quotas or other trade restrictions;
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foreign tax
laws and potential increased costs associated with overlapping tax
structures;
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compliance
with import/export laws;
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longer
accounts receivable cycles in certain foreign countries, whether due to
cultural, exchange rate or other factors;
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changes in
regulatory requirements in international markets in which we operate; and
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economic and
political instability in foreign countries, including concerns over excessive
levels of national debt and budget deficits in countries where we market our
products that could result in an inability to pay or timely pay outstanding
payables.
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The medical device
industry is the subject of numerous governmental investigations into marketing
and other business practices. These investigations could result in the
commencement of civil and/or criminal proceedings, substantial fines, penalties
and/or administrative remedies, divert the attention of our management and have
an adverse effect on our financial condition and results of operations.
We are subject
to rigorous regulation by the FDA and numerous other federal, state and foreign
governmental authorities. These authorities have been increasing their scrutiny
of our industry. We have received subpoenas and other requests for information from
state and federal governmental agencies, including, among others, the U.S.
Department of Justice and the Office of Inspector General of the Department of
Health and Human Services. These investigations have related primarily to
financial arrangements with health care providers, regulatory compliance and
product promotional practices. In December 2008, the U.S. Attorneys Office in
Boston delivered a subpoena issued by the U.S. Department of Health and Human
Services, Office of the Inspector General (OIG) requesting the production of
documents relating to implantable cardiac rhythm device and pacemaker warranty
claims. The Company has cooperated with the investigation and has produced
documents as requested. In March 2010, we received a Civil Investigative
Demand (CID) from the Civil Division of the U.S. Department of Justice. The CID
requests documents and sets forth interrogatories related to communications by
and within our company on
various indications for ICDs and a National Coverage Decision issued by Centers
for Medicare and Medicaid Services. Similar requests were made of our major
competitors.
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We are fully
cooperating with these investigations and are responding to these requests.
However, we cannot predict when these investigations will be resolved, the
outcome of these investigations or their impact on the company. An adverse
outcome in one or more of these investigations could include the commencement
of civil and/or criminal proceedings, substantial fines, penalties and/or
administrative remedies, including exclusion from government reimbursement
programs. In addition, resolution of any of these matters could involve the
imposition of additional and costly compliance obligations. Finally, if these
investigations continue over a long period of time, they could divert the
attention of management from the day-to-day operations of our business and
impose significant administrative burdens on us. These potential consequences,
as well as any adverse outcome from these investigations or other investigations
initiated by the government at any time, could have a material adverse effect
on our financial condition and results of operations.
Regulatory actions
arising from the concern over Bovine Spongiform Encephalopathy may limit our
ability to market products containing bovine material.
Our
Angio-Seal vascular closure device, as well as our vascular graft products,
contain bovine collagen. In addition, some of the tissue heart valves we
market, such as our Biocor®, Epic and Trifecta tissue heart valves,
incorporate bovine pericardial material. Certain medical device regulatory
agencies may prohibit the sale of medical devices that incorporate any bovine
material because of concerns over BSE, sometimes referred to as mad cow
disease, a disease which may be transmitted to humans through the consumption
of beef. While we are not aware of any reported cases of transmission of BSE
through medical products and are cooperating with regulatory agencies
considering these issues, the suspension or revocation of authority to
manufacture, market or distribute products containing bovine material, or the
imposition of a regulatory requirement that we procure material for these
products from alternate sources, could result in lost market opportunities,
harm the continued commercialization and distribution of such products and
impose additional costs on us. Any of these consequences could in turn have a
material adverse effect on our financial condition and results of operations.
We are not insured
against all potential losses. Natural disasters or other catastrophes could
adversely affect our business, financial condition and results of operations.
Our facilities
could be materially damaged by earthquakes, hurricanes and other natural
disasters or catastrophic circumstances, including acts of war. For example, we
have significant CRM facilities located in Sylmar and Sunnyvale, California.
Earthquake insurance in California is currently difficult to obtain, extremely
costly and restrictive with respect to scope of coverage. Our earthquake
insurance for these California facilities provides $10 million of insurance
coverage in the aggregate, with a deductible equal to 5% of the total value of
the facility and contents involved in the claim. Consequently, despite this insurance
coverage, we could incur uninsured losses and liabilities arising from an
earthquake near one or both of our California facilities as a result of various
factors, including the severity and location of the earthquake, the extent of
any damage to our facilities, the impact of an earthquake on our California
workforce and on the infrastructure of the surrounding communities and the
extent of damage to our inventory and work in process. While we believe that
our exposure to significant losses from a California earthquake could be
partially mitigated by our ability to manufacture some of our CRM products at
our manufacturing facilities in Sweden and Puerto Rico, the losses could have a
material adverse effect on our business for an indeterminate period of time
before this manufacturing transition is complete and operates without
significant problems. Furthermore, our manufacturing facilities in Puerto Rico
may suffer damage as a result of hurricanes which are frequent in the Caribbean
and which could result in lost production and additional expenses to us to the
extent any such damage is not fully covered by our hurricane and business
interruption insurance.
Even with
insurance coverage, natural disasters or other catastrophic events, including
acts of war, could cause us to suffer substantial losses in our operational
capacity and could also lead to a loss of opportunity and to a potential
adverse impact on our relationships with our existing customers resulting from
our inability to produce products for them, for which we would not be
compensated by existing insurance. This in turn could have a material adverse
effect on our financial condition and results of operations.
Our operations are
subject to environmental, health and safety laws and regulations that could
require us to incur material costs.
Our operations
are subject to environmental, health and safety laws and regulations
concerning, among other things, the generation, handling, transportation and
disposal of hazardous substances or wastes, particularly ethylene oxide, the
cleanup of hazardous substance releases, and emissions or discharges into the
air or water. We have incurred and expect to incur expenditures in the future
in connection with compliance with environmental, health and safety laws and
regulations. New laws and regulations, violations of these laws or regulations,
stricter enforcement of existing requirements, or the discovery of previously
unknown contamination could require us to incur costs or become the basis for
new or increased liabilities that could be material.
21
Table of Contents
Failure to
successfully implement a new enterprise resource planning (ERP) system could
adversely affect our business.
We are in the
process of converting to a new ERP system. Failure to smoothly execute the
implementation of the ERP system could adversely affect the Companys business,
financial condition and results of operations.
Current economic
conditions could adversely affect our results of operations.
The global
financial crisis has caused extreme disruption in the financial markets,
including severely diminished liquidity and credit availability. There can be
no assurance that there will not be further deterioration in the global
economy, and these and other factors beyond our control may adversely affect our
ability to borrow money in the credit markets and to obtain financing for
acquisitions or other general corporate and commercial purposes. Our customers may experience financial
difficulties or be unable to borrow money to fund their operations which may
adversely impact their ability or decision to purchase our products or to pay
for products they do purchase on a timely basis, if at all. The strength and
timing of any economic recovery remains uncertain, and we cannot predict to
what extent the global economic slowdown may negatively impact our average
selling prices, net sales, profit margins, procedural volumes and reimbursement
rates from third party payors. In addition, the current economic conditions may
adversely affect our suppliers, leading them to experience financial
difficulties or to be unable to borrow money to fund their operations, which
could cause disruptions in our ability to produce our products.
Our business,
financial condition, results of operations and cash flows could be significantly
and adversely affected by recent healthcare reform legislation and other
administration and legislative proposals.
The Patient
Protection and Affordable Care Act and Health Care and Educational
Reconciliation Act (the Acts) were enacted into law in March 2010. As a U.S.
headquartered company with significant sales in the United States, this health
care reform legislation will materially impact us as well as the U.S. economy.
Certain provisions of the Acts will not be effective for a number of years and
there are many programs and requirements for which the details have not yet
been fully established or consequences not fully understood, and it is unclear
what the full impacts will be from the legislation.. The legislation does levy
a 2.3% excise tax on all U.S. medical device sales beginning in 2013. This is a
significant new tax that will materially and adversely affect our business and
results of operations. The legislation also focuses on a number of Medicare
provisions aimed at improving quality and decreasing costs. It is uncertain at
this point what negative unintended consequences these provisions will have on
patient access to new technologies. The Medicare provisions include
value‐based payment programs, increased funding of comparative effectiveness
research, reduced hospital payments for avoidable readmissions and hospital
acquired conditions, and pilot programs to evaluate alternative payment
methodologies that promote care coordination (such as bundled physician and
hospital payments). Additionally, the
provisions include a reduction in the annual rate of inflation for hospitals
starting in 2011 and the establishment of an independent payment advisory board
to recommend ways of reducing the rate of growth in Medicare spending. We
cannot predict what healthcare programs and regulations will be ultimately
implemented at the federal or state level, or the effect of any future
legislation or regulation. However, any changes that lower reimbursements for
our products or reduce medical procedure volumes could adversely affect our
business and results of operations.
Changes in tax laws
or exposure to additional income tax liabilities could have a material impact
on our financial condition and results of operations.
We are subject to income taxes as well as
non-income based taxes, in both the United States and various foreign
jurisdictions. We are subject to ongoing tax audits in various jurisdictions.
Tax authorities may disagree with certain positions we have taken and assess
additional taxes. We regularly assess the likely outcomes of these audits in
order to determine the appropriateness of our tax provision. However, there can
be no assurance that we will accurately predict the outcomes of these audits,
and the actual outcomes of these audits could have a material impact on our net
income or financial condition. Additionally, changes in tax laws or tax rulings
could materially impact our effective tax rate. For example, proposals for
fundamental U.S. international tax reform, such as the recent proposal by the
Obama administration, if enacted, could have a significant adverse impact on
our future results of operations. In addition, recent health care legislation
levies a 2.3% excise tax on all U.S. medical device sales beginning in 2013.
|
|
I
tem 1B.
|
UNRESOLVED STAFF COMMENTS
|
None.
22
Table of Contents
We own our
principal executive offices, which are located in St. Paul, Minnesota. Our
manufacturing facilities currently operating are located in California,
Minnesota, Arizona, South Carolina, Texas, New Jersey, Oregon, Massachusetts,
Brazil, Puerto Rico, Sweden, Costa Rica, Malaysia and Thailand. We own
approximately 60%, or 630,000 square feet, of our total manufacturing
space. We also maintain sales and
administrative offices in the United States at 48 locations in 20 states and
outside the United States at 104 locations in 39 countries. With the exception of 16 locations, all of
these locations are leased.
We believe
that all buildings, machinery and equipment are in good condition, suitable for
their purposes and are maintained on a basis consistent with sound operations.
During 2010, we completed the first phase of construction (approximately
125,000 square feet) on our 250,000 square foot facility located in Costa Rica.
Currently our CV division is utilizing the finished portion of the facility for
manufacturing, warehouse and general
office space. We expect our Brazil facility located in Pampula to be complete
in the first quarter of 2011, which will primarily be utilized by our CV division
to support manufacturing efforts as well as include warehouse and office space.
Our Malaysia facility recently began operating and manufacturing CRM product in
January 2011. The 342,000 square foot facility houses manufacturing, warehouse
and general office space. We also plan to expand our CRM facility in Sunnyvale,
California during 2011. We believe that we have sufficient space for our
current operations and for foreseeable expansion in the next few years.
|
|
I
tem 3.
|
LEGAL PROCEEDINGS
|
We are the
subject of various pending or threatened legal actions and proceedings,
including those that arise in the ordinary course of our business. Such matters
are subject to many uncertainties and to outcomes that are not predictable with
assurance and that may not be known for extended periods of time. We record a
liability in our consolidated financial statements for costs related to claims,
including future legal costs, settlements and judgments, where we have assessed
that a loss is probable and an amount can be reasonably estimated. Our
significant legal proceedings are discussed in Note 5 of the Consolidated
Financial Statements in the Financial Report included in St. Jude Medicals
2010 Annual Report to Shareholders and filed as Exhibit 13 to this Form 10-K
and incorporated herein by reference. While it is not possible to predict the
outcome for most of the legal proceedings discussed in Note 5, the costs
associated with such proceedings could have a material adverse effect on our
consolidated results of operations, financial position and cash flows of a
future period.
|
|
I
tem 4.
|
[REMOVED AND RESERVED]
|
This item was
removed and reserved pursuant to SEC Release No. 33-9089A issued on February
23, 2010.
P
ART II
|
|
Ite
m 5.
|
MARKET FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS
AND ISSUER PURCHASES OF EQUITY SECURITIES
|
There were no
sales of unregistered securities during the 2010 fiscal year. The information
set forth under the
Stock Exchange Listings
caption in the
Financial Report included in St. Jude Medicals 2010 Annual Report to
Shareholders and filed as Exhibit 13 to this Form 10-K is incorporated herein
by reference. We have not
declared or paid any cash dividends during the past two years.
Issuer Purchases of
Equity Securities
On October 18, 2010, our Board
of Directors announced a share repurchase program of up to $600.0 million of
our outstanding common stock with no expiration date. On October 22, 2010, our
Board of Directors announced an additional $300.0 million of authorized share
repurchases as part of this share repurchase program. On November 18, 2010, we
began making share repurchases through transactions in the open market in
accordance with applicable securities laws. Through January 1, 2011, we had
repurchased 15.4 million shares under the program for $625.3 million at an
average repurchase price of $40.63 per share.
23
Table of Contents
The following
table provides information about the shares repurchased during the fourth
quarter of 2010:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Period
|
|
Total Number
of Shares
Purchased
|
|
Average Price
Paid per Share
|
|
Total Number of
Shares Purchased
as Part of Publicly
Announced Plans
or Programs
|
|
Approximate
Dollar Value of
Shares that May
Yet Be Purchased
Under the Plans
or Programs
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10/02/10 10/29/10
|
|
|
|
|
$
|
|
|
|
|
|
$
|
900,000,000
|
|
10/30/10 12/03/10
|
|
|
6,963,100
|
|
|
39.35
|
|
|
6,963,100
|
|
|
625,975,304
|
|
12/04/10 01/01/11
|
|
|
8,425,400
|
|
|
41.69
|
|
|
8,425,400
|
|
|
274,748,912
|
|
Total
|
|
|
15,388,500
|
|
|
40.63
|
|
|
15,388,500
|
|
$
|
274,748,912
|
|
|
|
I
tem
6.
|
SELECTED FINANCIAL DATA
|
The
information set forth under the caption
Five-Year
Summary Financial Data
in the Financial Report included in St. Jude
Medicals 2010 Annual Report to Shareholders and filed as Exhibit 13 to this
Form 10-K is incorporated herein by reference.
|
|
I
tem
7.
|
MANAGEMENTS DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
The
information set forth under
Managements
Discussion and Analysis of Financial Condition and Results of Operations
in the Financial Report included in St. Jude Medicals 2010 Annual Report to
Shareholders and filed as Exhibit 13 to this Form 10-K is incorporated herein
by reference.
|
|
I
tem
7A.
|
QUANTITATIVE AND QUALITATIVE
DISCLOSURES ABOUT MARKET RISK
|
The
information set forth under the
Market Risk
section of
Managements Discussion and
Analysis of Financial Condition and Results of Operations
in the
Financial Report included in St. Jude Medicals 2010 Annual Report to
Shareholders and filed as Exhibit 13 to this Form 10-K is incorporated herein
by reference.
|
|
I
tem
8.
|
FINANCIAL STATEMENTS AND
SUPPLEMENTARY DATA
|
The
Consolidated Financial Statements and Notes thereto and the Reports of
Independent Registered Public Accounting Firm set forth in the Financial Report
included in St. Jude Medicals 2010 Annual Report to Shareholders and filed as
Exhibit 13 to this Form 10-K are incorporated herein by reference.
|
|
I
tem
9.
|
CHANGES IN AND DISAGREEMENTS WITH
ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
|
None.
|
|
I
tem
9A.
|
CONTROLS AND PROCEDURES
|
Under the
supervision and with the participation of our management, including our Chief
Executive Officer (CEO) and Chief Financial Officer (CFO), we evaluated the
effectiveness of the design and operation of our disclosure controls and
procedures (as defined in Rule 13a-15(e) under the Exchange Act of 1934). Based
on that evaluation, our CEO and CFO concluded that our disclosure controls and
procedures were effective as of January 1, 2011.
Managements
annual report on our internal control over financial reporting is provided in
the Financial Report included in St. Jude Medicals 2010 Annual Report to
Shareholders and filed as Exhibit 13 to this Form 10-K and incorporated herein
by reference. The effectiveness of our internal control over financial
reporting as of January 1, 2011 has been audited by Ernst & Young LLP, an
independent registered public accounting firm, as stated in their report which
is provided in the Financial Report included in St. Jude Medicals 2010 Annual
Report to Shareholders and filed as Exhibit 13 to this Form 10-K and incorporated
herein by reference.
24
Table of Contents
During the
fiscal quarter ended January 1, 2011, there were no changes in our internal
control over financial reporting (as defined in Rule 13a-15(f) under the
Exchange Act) that have materially affected, or are reasonably likely to
materially affect, our internal control over financial reporting.
|
|
I
tem
9B.
|
OTHER INFORMATION
|
None.
P
ART III
|
|
I
tem
10.
|
DIRECTORS, EXECUTIVE OFFICERS AND
CORPORATE GOVERNANCE
|
The
information set forth under the captions
Proposal
to Elect Directors, Director Qualifications, Director Nomination Process,
Director Independence and Audit Committee Financial Literacy and Expertise,
Committees of the Board of Directors
and
Section 16(a) Beneficial Ownership Reporting Compliance
in
St. Jude Medicals Proxy Statement for the 2011 Annual Meeting of Shareholders
is incorporated herein by reference. The information set forth under the
caption
Executive Officers of the Registrant
in Part I, Item 1 of this Form 10-K is incorporated herein by reference.
We have
adopted a Code of Business Conduct for our principal executive officer,
principal financial officer, principal accounting officer, corporate controller
and all other employees. We have made our Code of Business Conduct available on
our website (http://www.sjm.com) under the
Our
Company About Us Business Integrity
section. We
intend to satisfy the disclosure requirement under Item 5.05 of Form 8-K
regarding an amendment to, or waiver from, a provision of our Code of Business
Conduct by posting such information on our website at the web address and
location specified above. Information included on our website is not deemed to
be incorporated into this Form 10-K.
|
|
I
tem
11.
|
EXECUTIVE COMPENSATION
|
The
information set forth under the captions
Compensation
of Directors, Executive Compensation
and
Compensation Committee Interlocks and Insider Participation
in St. Jude Medicals Proxy Statement for the 2011 Annual Meeting of
Shareholders is incorporated herein by reference.
|
|
I
tem
12.
|
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
|
The
information set forth under the captions
Share
Ownership of Management and Directors and Certain Beneficial Owners
and
Equity
Compensation Plan Information
in St. Jude Medicals Proxy Statement
for the 2011 Annual Meeting of Shareholders is incorporated herein by
reference.
|
|
It
em
13.
|
CERTAIN RELATIONSHIPS AND RELATED
TRANSACTIONS, AND DIRECTOR INDEPENDENCE
|
The
information set forth under the captions
Related
Person Transactions
and
Director
Independence and Audit Committee Financial Literacy and Expertise
in
St. Jude Medicals Proxy Statement for the 2011 Annual Meeting of Shareholders
is incorporated herein by reference.
|
|
I
tem
14.
|
PRINCIPAL ACCOUNTANT FEES AND
SERVICES
|
The
information set forth under the caption
Proposal
to
Ratify the Appointment of
Independent Registered Public Accounting Firm
in St. Jude Medicals
Proxy Statement for the 2011 Annual Meeting of Shareholders is incorporated
herein by reference.
25
Table of Contents
P
ART IV
|
|
I
tem
15.
|
EXHIBITS AND FINANCIAL STATEMENT
SCHEDULES
|
|
|
|
|
(a)
|
List of documents filed as part of this Report
|
|
|
|
|
|
(1)
|
Financial Statements
|
|
|
|
|
|
|
The
following Consolidated Financial Statements of St. Jude Medical and Reports
of Independent Registered Public Accounting Firm as set forth in the
Financial Report included in St. Jude Medicals 2010 Annual Report to
Shareholders are incorporated herein by reference from Exhibit 13 attached
hereto:
|
|
|
|
|
|
|
|
Reports of
Independent Registered Public Accounting Firm
|
|
|
|
|
|
|
|
Consolidated
Statements of Earnings Fiscal Years ended January 1, 2011, January 2, 2010
and January 3, 2009
|
|
|
|
|
|
|
|
Consolidated
Balance Sheets January 1, 2011 and January 2, 2010
|
|
|
|
|
|
|
|
Consolidated
Statements of Shareholders Equity Fiscal Years ended January 1, 2011,
January 2, 2010 and January 3, 2009
|
|
|
|
|
|
|
|
Consolidated
Statements of Cash Flows Fiscal Years ended January 1, 2011, January 2,
2010 and January 3, 2009
|
|
|
|
|
|
|
|
Notes to the
Consolidated Financial Statements
|
|
|
|
|
|
(2)
|
Financial Statement Schedules
|
|
|
|
|
|
|
Schedule II
Valuation and Qualifying Accounts, is filed as part of this Form 10-K (see
Item 15(c)).
|
|
|
|
|
|
|
All other
financial statement schedules not listed above have been omitted because the
required information is included in the Consolidated Financial Statements or
Notes thereto, or is not applicable.
|
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|
(3)
|
Exhibits
|
|
|
|
|
|
|
Pursuant to
Item 601(b)(4)(iii) of Regulation S-K, copies of certain instruments defining
the rights of holders of certain long-term debt of St. Jude Medical are not
filed, and in lieu thereof, we agree to furnish copies thereof to the SEC
upon request.
|
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|
Exhibit
|
|
Exhibit Index
|
|
|
|
2.1
|
|
Agreement
and Plan of Merger and Reorganization, dated as of October 15, 2010, among
St. Jude Medical, Inc, Asteroid Subsidiary Corporation and AGA Medical
Holdings, Inc., is incorporated by reference to Exhibit 2.1 to St. Jude
Medicals Registration Statement on Form S-4 filed on October 20, 2010 (Commission File No. 333-170045).
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|
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|
3.1
|
|
Articles of
Incorporation, as amended on May 9, 2008, are incorporated by reference to
Exhibit 3.1 of St. Jude Medicals Quarterly Report on Form 10-Q for the
quarter ended June 28, 2008.
|
|
|
|
3.2
|
|
Bylaws, as
amended and restated as of February 25, 2005, are incorporated by reference
to Exhibit 3.1 of St. Jude Medicals Current Report on Form 8-K filed on
March 2, 2005.
|
|
|
|
4.1
|
|
Specimen Common Stock Certificate is incorporated by reference to Exhibit 4.1 to St. Jude Medicals
Registration Statement on Form S-4 filed October 20, 2010 (Commission File No. 333-170045).
|
26
Table of Contents
|
|
|
Exhibit
|
|
Exhibit Index
|
|
|
|
4.2
|
|
Indenture,
dated as of July 28, 2009, between St. Jude Medical, Inc. and U.S. Bank
National Association,
as Trustee, is incorporated by reference to Exhibit 4.1 to St. Jude Medicals
Current Report on Form 8-K filed on July 28, 2009.
|
|
|
|
4.3
|
|
First
Supplemental Indenture, dated as of July 28, 2009, between St. Jude Medical,
Inc. and U.S. Bank National Association, as Trustee, is incorporated by
reference to Exhibit 4.2 to St. Jude Medicals Current Report on Form 8-K
filed on July 28, 2009.
|
|
|
|
4.4
|
|
Second
Supplemental Indenture, dated as of March 17, 2010, between the Company and
U.S. Bank National Association, as Trustee, is incorporated by reference to
Exhibit 4.1 to St. Jude Medicals Current Report on Form 8-K filed on March
19, 2010.
|
|
|
|
4.5
|
|
Third
Supplemental Indenture, dated as of December 6, 2010, between the Company and
U.S. Bank National Association, as Trustee, is incorporated by reference to
Exhibit 4.1 to St. Jude Medicals Current Report on Form 8-K filed on
December 6, 2010.
|
|
|
|
10.1
|
|
Form of
Indemnification Agreement that St. Jude Medical, Inc. has entered into with
executive officers. *#
|
|
|
|
10.2
|
|
Form of
Indemnification Agreement that St. Jude Medical, Inc. has entered into with
directors. *#
|
|
|
|
10.3
|
|
St. Jude
Medical, Inc. Management Incentive Compensation Plan is incorporated by
reference to Exhibit 10.1 to St. Jude Medicals Current Report on Form 8-K
filed on May 11, 2009. *
|
|
|
|
10.4
|
|
St. Jude
Medical, Inc. Management Savings Plan, restated effective January 1, 2008, is
incorporated by reference to Exhibit 10.1 of St. Jude Medicals Current
Report on Form 8-K filed on October 29, 2008. *
|
|
|
|
10.5
|
|
Retirement
Plan for members of the Board of Directors, as amended on March 15, 1995, is
incorporated by reference to Exhibit 10.6 of St. Jude Medicals Annual Report
on Form 10-K for the year ended December 31, 1994. *
|
|
|
|
10.6
|
|
St. Jude
Medical, Inc. 2007 Employee Stock Purchase Plan is incorporated by reference
to Exhibit 10.4 to St. Jude Medicals Current Report on Form 8-K filed on May
18, 2007. *
|
|
|
|
10.7
|
|
St. Jude
Medical, Inc. 1994 Stock Option Plan is incorporated by reference to Exhibit
4(a) of St. Jude Medicals Registration Statement on Form S-8 filed July 1,
1994 (Commission File No. 33-54435). *
|
|
|
|
10.8
|
|
Amendment,
dated as of October 23, 2008, to the St. Jude Medical, Inc. 1994 Stock Option
Plan is incorporated by reference to Exhibit 10.1 of St. Jude Medicals
Quarterly Report on Form 10-Q for the quarter ended September 27, 2008. *
|
|
|
|
10.9
|
|
St. Jude
Medical, Inc. 1997 Stock Option Plan is incorporated by reference to Exhibit
4.1 of St. Jude Medicals Registration Statement on Form S-8 filed December
22, 1997 (Commission File No. 333-42945). *
|
|
|
|
10.10
|
|
Amendment,
dated as of October 23, 2008, to the St. Jude Medical, Inc. 1997 Stock Option
Plan is incorporated by reference to Exhibit 10.2 of St. Jude Medicals
Quarterly Report on Form 10-Q for the quarter ended September 27, 2008. *
|
|
|
|
10.11
|
|
St. Jude
Medical, Inc. 2000 Stock Plan, as amended, is incorporated by reference to
Exhibit 10.4 of St. Jude Medicals Quarterly Report on Form 10-Q for the
quarter ended June 30, 2006. *
|
|
|
|
10.12
|
|
Amendment,
dated as of October 23, 2008, to the St. Jude Medical, Inc. 2000 Stock Plan
is incorporated by reference to Exhibit 10.3 of St. Jude Medicals Quarterly
Report on Form 10-Q for the quarter ended September 27, 2008. *
|
|
|
|
10.13
|
|
St. Jude
Medical, Inc. 2002 Stock Plan, as amended, is incorporated by reference to
Exhibit 10.5 of St. Jude Medicals Quarterly Report on Form 10-Q for the
quarter ended June 30, 2006. *
|
|
|
|
27
Table of Contents
|
|
|
Exhibit
|
|
Exhibit Index
|
|
|
|
10.14
|
|
Amendment,
dated as of October 23, 2008, to the St. Jude Medical, Inc. 2002 Stock Plan
is incorporated by reference to Exhibit 10.4 of St. Jude Medicals Quarterly
Report on Form 10-Q for the quarter ended September 27, 2008. *
|
|
|
|
10.15
|
|
Form of
Non-Qualified Stock Option Agreement under the St. Jude Medical, Inc. 2002
Stock Plan, as amended, is incorporated by reference to Exhibit 10.14 of St.
Jude Medicals Annual Report on Form 10-K for the year ended December 31,
2004. *
|
|
|
|
10.16
|
|
St. Jude
Medical, Inc. 2006 Stock Plan is incorporated by reference to Exhibit 10.1 to
St. Jude Medicals Current Report on Form 8-K filed on May 16, 2006. *
|
|
|
|
10.17
|
|
Amendment,
dated as of October 23, 2008, to the St. Jude Medical, Inc. 2006 Stock Plan
is incorporated by reference to Exhibit 10.5 of St. Jude Medicals Quarterly
Report on Form 10-Q for the quarter ended September 27, 2008. *
|
|
|
|
10.18
|
|
Form of
Non-Qualified Stock Option Agreement for Non-Employee Directors under the St.
Jude Medical, Inc. 2006 Stock Plan is incorporated by reference to Exhibit
10.2 to St. Jude Medicals Current Report on Form 8-K filed on May 16, 2006.
*
|
|
|
|
10.19
|
|
Form of
Non-Qualified Stock Option Agreement for Employees under the St. Jude
Medical, Inc. 2006 Stock Plan is incorporated by reference to Exhibit 10.4 of
St. Jude Medicals Quarterly Report on Form 10-Q for the quarter ended
September 30, 2006. *
|
|
|
|
10.20
|
|
St. Jude
Medical, Inc. 2007 Stock Incentive Plan, as amended (2008), is incorporated
by reference to Exhibit 10.1 to St. Jude Medicals Current Report on Form 8-K
filed on May 12, 2008. *
|
|
|
|
10.21
|
|
Amendment,
dated as of October 23, 2008, to the St. Jude Medical, Inc. 2007 Stock
Incentive Plan is incorporated by reference to Exhibit 10.6 of St. Jude
Medicals Quarterly Report on Form 10-Q for the quarter ended September 27,
2008. *
|
|
|
|
10.22
|
|
Form of
Non-Qualified Stock Option Agreement and related Notice of Non-Qualified
Stock Option Grant under the St. Jude Medical, Inc. 2007 Stock Incentive
Plan, is incorporated by reference to Exhibit 10.2 to St. Jude Medicals
Current Report on Form 8-K filed on May 18, 2007. *
|
|
|
|
10.23
|
|
Form of
Non-Qualified Stock Option Agreement for Non-Employee Directors under the St.
Jude Medical, Inc. 2007 Stock Incentive Plan, is incorporated by reference to
Exhibit 10.1 of St. Jude Medicals Quarterly Report on Form 10-Q for the
quarter ended July 3, 2010. *
|
|
|
|
10.24
|
|
Form of
Restricted Stock Award Agreement and related Restricted Stock Award
Certificate under the St. Jude Medical, Inc. 2007 Stock Incentive Plan, is
incorporated by reference to Exhibit 10.3 to St. Jude Medicals Current
Report on Form 8-K filed on May 18, 2007. *
|
|
|
|
10.25
|
|
Form of Restricted Stock
Units Award Agreement and related Restricted Stock Units Award Certificate under
the St. Jude Medical, Inc. 2007 Stock Incentive Plan. *#
|
|
|
|
10.26
|
|
St. Jude
Medical, Inc. Amended and Restated 1995 Stock Option Plan (formerly the Quest
Medical, Inc. 1995 Stock Option Plan) is incorporated by reference to Exhibit
10.12 of St. Jude Medicals Annual Report on Form 10-K for the year ended
December 31, 2005. *
|
|
|
|
10.27
|
|
St. Jude
Medical, Inc. Amended and Restated 1998 Stock Option Plan (formerly the Quest
Medical, Inc. 1998 Stock Option Plan) is incorporated by reference to Exhibit
10.13 of St. Jude Medicals Annual Report on Form 10-K for the year ended
December 31, 2005. *
|
|
|
|
10.28
|
|
St. Jude
Medical, Inc. Amended and Restated 2000 Stock Option Plan (formerly the
Advanced Neuromodulation Systems, Inc. 2000 Stock Option Plan) is
incorporated by reference to Exhibit 10.14 of St. Jude Medicals Annual
Report on Form 10-K for the year ended December 31, 2005. *
|
28
Table of Contents
Exhibit
|
|
Exhibit Index
|
|
|
|
10.29
|
|
St. Jude
Medical, Inc. Amended and Restated 2001 Employee Stock Option Plan (formerly
the Advanced Neuromodulation Systems, Inc. 2001 Employee Stock Option Plan)
is incorporated by reference to Exhibit 10.15 of St. Jude Medicals Annual
Report on Form 10-K for the year ended December 31, 2005. *
|
|
|
|
10.30
|
|
St. Jude
Medical, Inc. Amended and Restated 2002 Stock Option Plan (formerly the
Advanced Neuromodulation Systems, Inc. 2002 Stock Option Plan) is
incorporated by reference to Exhibit 10.16 of St. Jude Medicals Annual
Report on Form 10-K for the year ended December 31, 2005. *
|
|
|
|
10.31
|
|
St. Jude
Medical, Inc. Amended and Restated 2004 Stock Incentive Plan (formerly the
Advanced Neuromodulation Systems, Inc. 2004 Stock Incentive Plan) is
incorporated by reference to Exhibit 10.17 of St. Jude Medicals Annual
Report on Form 10-K for the year ended December 31, 2005. *
|
|
|
|
10.32
|
|
Form of
Severance Agreement between St. Jude Medical, Inc. and executive officers is
incorporated by reference to Exhibit 10.1 to St. Jude Medicals Current
Report on Form 8-K filed on January 7, 2009. *
|
|
|
|
10.33
|
|
Employment
Agreement, dated as of January 13, 2010, between St. Jude Medical, Inc. and
Joseph H. McCullough is incorporated by reference to Exhibit 10.32 to St.
Jude Medicals Annual Report on Form 10-K for the year ended January 2, 2010.
*
|
|
|
|
10.34
|
|
Employment
Agreement, dated as of April 1, 2002, between Advanced Neuromodulation
Systems, Inc. and Christopher G. Chavez is incorporated by reference to
Exhibit 10.16 of Advanced Neuromodulation Systems Quarterly Report on Form
10-Q for the quarter ended March 31, 2002. *
|
|
|
|
10.35
|
|
Amendment,
dated as of July 27, 2006, between Advanced Neuromodulation Systems, Inc. and
Christopher G. Chavez, to Employment Agreement, effective as of April 1,
2002, between Advanced Neuromodulation Systems, Inc. and Christopher G.
Chavez is incorporated by reference to Exhibit 10.2 to St. Jude Medicals
Current Report on Form 8-K filed on August 2, 2006. *
|
|
|
|
10.36
|
|
Multi-Year
$1,500,000,000 Credit Agreement dated as of December 22, 2010 among St. Jude
Medical, Inc., as the Borrower, Bank of America, N.A., as Administrative
Agent, L/C Issuer and Lender, and the other Lenders party thereto, is
incorporated by reference to Exhibit 10.1 to St. Jude Medicals Current
Report on Form 8-K filed on December 29, 2010.
|
|
|
|
|
|
|
12
|
|
Computation
of Ratio of Earnings to Fixed Charges. #
|
|
|
|
13
|
|
Portions of
St. Jude Medicals 2010 Annual Report to Shareholders. #
|
|
|
|
21
|
|
Subsidiaries
of the Registrant. #
|
|
|
|
23
|
|
Consent of
Independent Registered Public Accounting Firm. #
|
|
|
|
24
|
|
Power of
Attorney. #
|
|
|
|
31.1
|
|
Certification
of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act
of 2002. #
|
|
|
|
31.2
|
|
Certification
of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act
of 2002. #
|
|
|
|
32.1
|
|
Certification of Chief Executive Officer Pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002. #
|
|
|
|
32.2
|
|
Certification
of Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002. #
|
|
|
|
101
|
|
Financial
statements from the Annual Report on Form 10-K of St. Jude Medical, Inc. for
the year ended January 1, 2011, formatted in XBRL: (i) the Consolidated
Statements of Earnings, (ii) the Consolidated Balance Sheets, (iii) the
Consolidated Statements of Shareholders Equity, (iv) the Consolidated
Statements of Cash Flows and (v) the Notes to the Consolidated Financial
Statements. ##
|
* Management contract or compensatory
plan or arrangement.
# Filed as an exhibit to this Annual Report
on Form 10-K.
## Furnished herewith.
|
|
(b)
|
Exhibits
: Reference is made to Item
15(a)(3).
|
|
|
(c)
|
Schedules
:
|
29
Table of Contents
SCHEDULE II VALUATION AND QUALIFYING
ACCOUNTS
(In thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance
|
|
Additions
|
|
Deductions
|
|
|
|
|
|
|
at Beginning
|
|
Charged to
|
|
|
|
|
|
|
|
Balance at
|
|
Description
|
|
of Year
|
|
Expense
|
|
Other (2)
|
|
Write-offs (1)
|
|
Other (2)
|
|
End of Year
|
|
Allowance for doubtful accounts:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal year ended
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
January 1, 2011
|
|
$
|
34,947
|
|
$
|
4,053
|
|
$
|
2,276
|
|
$
|
(5,922
|
)
|
$
|
|
|
$
|
35,354
|
|
January 2, 2010
|
|
$
|
28,971
|
|
$
|
10,867
|
|
$
|
640
|
|
$
|
(5,531
|
)
|
$
|
|
|
$
|
34,947
|
|
January 3, 2009
|
|
$
|
26,652
|
|
$
|
9,569
|
|
$
|
|
|
$
|
(6,275
|
)
|
$
|
(975
|
)
|
$
|
28,971
|
|
|
|
(1)
|
Uncollectible accounts written off, net of recoveries.
|
(2)
|
In 2010,
2009 and 2008 $2,276, $640, and $(975), respectively, of other represents
the effects of changes in foreign currency translation.
|
30
Table of Contents
S
IGNATURES
Pursuant to
the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
|
|
|
|
ST. JUDE
MEDICAL, INC.
|
|
|
|
Date: March 2, 2011
|
By
|
/s/ DANIEL
J. STARKS
|
|
|
Daniel J.
Starks
|
|
|
Chairman, President and Chief Executive Officer
|
|
|
(Principal Executive Officer)
|
|
|
|
|
By
|
/s/ JOHN C.
HEINMILLER
|
|
|
John C.
Heinmiller
|
|
|
Executive Vice President and Chief Financial Officer
|
|
|
(Principal Financial and Accounting Officer)
|
Pursuant to
the requirements of the Securities Exchange Act of 1934, this report has been
signed below by the following persons on behalf of the registrant and in the
capacities indicated, on the 2
nd
day of March, 2011.
|
|
|
|
/s/ DANIEL
J. STARKS
|
|
Chairman of
the Board
|
Daniel J.
Starks
|
|
|
|
|
|
*
|
|
Director
|
John W.
Brown
|
|
|
|
|
|
*
|
|
Director
|
Richard R.
Devenuti
|
|
|
|
|
|
*
|
|
Director
|
Stuart M.
Essig
|
|
|
|
|
|
*
|
|
Director
|
Thomas H.
Garrett III
|
|
|
|
|
|
*
|
|
Director
|
Barbara B.
Hill
|
|
|
|
|
|
*
|
|
Director
|
Michael A.
Rocca
|
|
|
|
|
|
*
|
|
Director
|
Wendy L.
Yarno
|
|
|
|
|
|
|
* By:
|
/s/ PAMELA S. KROP
|
|
|
|
Pamela S.
Krop
|
|
|
|
Attorney-in-Fact
|
|
|
31
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