Exhibit 99.1
| St. Paul, Minnesota 55117 |
| (651) 483.2000
www.sjm.com |
Contacts: | Angie Craig | Kathleen Janasz |
| Investor Relations | Media Relations |
St. Jude Medical Reports Third Quarter Sales and Earnings
ST PAUL, Minn.– October 18, 2006 – St. Jude Medical, Inc., (NYSE: STJ) today reported results for the third quarter ended September 30, 2006. The Company reported net sales of $821 million, an increase of 11% compared to the $738 million reported in the third quarter of 2005. Favorable foreign currency translation comparisons increased third quarter sales by about $7 million.
Reported net earnings for the third quarter of 2006 were $116 million, or $0.32 per diluted share. Reported net earnings for the third quarter of 2006 include a pre-tax charge of approximately $35 million, or $0.06 per share, related to the previously announced combination of St. Jude Medical’s Cardiac Surgery and Cardiology divisions and changes to enhance the efficiency and effectiveness of the Company’s sales and customer service operations in certain international geographies. Reported net earnings for the third quarter of 2006 also include a pre-tax charge of approximately $18 million, or $0.03 per share, related to stock based compensation. This compares to reported net earnings of $168 million, or $0.44 per diluted share, in the third quarter of 2005.
Commenting on third quarter 2006 results, St. Jude Medical Chairman, President and Chief Executive Officer Daniel J. Starks said, “Our third quarter results reinforce our optimism that we are well positioned to return to stronger growth in 2007 and beyond. We believe that we continued to gain market share in ICDs, pacemakers and atrial fibrillation products, all of which are key to our long-term success.”
Sales results for each of the business segments are detailed below.
Cardiac Rhythm Management
Third quarter ICD product sales were $271 million, a 2% decrease compared to the third quarter of 2005.
Third quarter pacemaker sales were $248 million, an increase of 7% from the comparable quarter of 2005.
Atrial Fibrillation
Atrial fibrillation product sales for the third quarter totaled $81 million, a 29% increase over the third quarter of 2005.
Cardiology
Total sales of cardiology products for the third quarter were $109 million, a 4% increase over the comparable period in 2005. Within this category of products, vascular sealing device sales for the third quarter of 2006 totaled $84 million, a 6% increase over the third quarter of last year.
Cardiac Surgery
Total cardiac surgery sales for the third quarter of 2006 were $68 million, a 10% increase over the third quarter of last year. Sales of heart valve products this quarter were approximately $64 million, up 10% when compared with the third quarter of last year.
Neuromodulation
St. Jude Medical sales of neuromodulation products were approximately $44 million in the third quarter of 2006, up 13% from Advanced Neuromodulation Systems’ stand-alone sales in the third quarter of 2005. St. Jude Medical did not have neuromodulation sales during the third quarter of 2005.
Fourth Quarter and Full-Year Earnings Guidance
During a conference call today, St. Jude Medical will provide sales and earnings guidance for the fourth quarter and for the full-year 2006. The Company expects its consolidated earnings for the fourth quarter of 2006 to be in the range of $0.38 to $0.40 per diluted share.
Non-GAAP Financial Measures
The Company provides adjusted net earnings and adjusted 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, restructuring charges, litigation reserve adjustments and income tax adjustments). These adjustments result from facts and circumstances (such as business development activities, restructuring activities, 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. The Company’s non-GAAP adjusted net earnings also exclude stock-based compensation expense which the Company started recording under FAS 123R in the first quarter of 2006. St. Jude Medical management uses adjusted net earnings and adjusted 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. The Company’s non-GAAP adjusted earnings per share include the effects of FAS 123R on the number of diluted shares used in calculating non-GAAP adjusted earnings per share.
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 third quarter earnings conference call can be heard live today at 7:30 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=1370509.
(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 is dedicated to making life better for cardiac, neurological and chronic pain patients worldwide through excellence in medical device technology and services. The Company has five major focus areas that include: cardiac rhythm management, atrial fibrillation, cardiac surgery, cardiology and neuromodulation. Headquartered in St. Paul, Minn., St. Jude Medical employs approximately 11,000 people worldwide. 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, regulatory approvals, anticipated future product launches, 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 Company’s Annual Report on Form 10-K filed on March 16, 2006 (see Item 1A on pages 15-21) and in the Company’s Quarterly Report on Form 10-Q filed on August 7, 2006 (see page 31 and Item 1A on page 32). 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 September 30 | | Nine Months Ended September 30 | |
| | 2006 | | 2005 | | 2006 | | 2005 | |
Net sales | | $ | 821,278 | | $ | 737,780 | | $ | 2,438,616 | | $ | 2,125,344 | |
Cost of sales: | | | | | | | | | | | | | |
Cost of sales before special charges | | | 225,179 | | | 200,735 | | | 660,590 | | | 589,636 | |
Special charges | | | 15,108 | | | | | | 15,108 | | | | |
Total cost of sales | | | 240,287 | | | 200,735 | | | 675,698 | | | 589,636 | |
Gross profit | | | 580,991 | | | 537,045 | | | 1,762,918 | | | 1,535,708 | |
| | | | | | | | | | | | | |
Selling, general & administrative | | | 290,424 | | | 243,551 | | | 875,654 | | | 700,184 | |
Research & development | | | 108,674 | | | 97,493 | | | 322,772 | | | 264,285 | |
Purchased R&D | | | | | | | | | | | | 26,100 | |
Special charges (credits) | | | 19,719 | | | (11,500 | ) | | 19,719 | | | (11,500 | ) |
| | | | | | | | | | | | | |
Operating profit | | | 162,174 | | | 207,501 | | | 544,773 | | | 556,639 | |
Other income (expense) | | | (9,159 | ) | | 3,917 | | | (15,082 | ) | | 7,038 | |
Earnings before taxes | | | 153,015 | | | 211,418 | | | 529,691 | | | 563,677 | |
Income tax expense | | | 37,475 | | | 43,631 | | | 136,050 | | | 175,058 | |
Net earnings | | $ | 115,540 | | $ | 167,787 | | $ | 393,641 | | $ | 388,619 | |
| | | | | | | | | | | | | |
Adjusted net earnings (Non-GAAP) | | $ | 149,902 | (1) | $ | 153,157 | (2) | $ | 452,729 | (3) | $ | 427,089 | (4) |
| | | | | | | | | | | | | |
Diluted earnings per share | | $ | 0.32 | | $ | 0.44 | | $ | 1.05 | | $ | 1.03 | |
Adjusted diluted earnings per share (Non-GAAP) | | $ | 0.41 | (1) | $ | 0.40 | (2) | $ | 1.21 | (3) | $ | 1.13 | (4) |
| | | | | | | | | | | | | |
Weighted average shares outstanding-diluted | | | 365,171 | | | 380,957 | | | 375,110 | | | 377,817 | |
(1) | Adjusted third quarter 2006 net earnings and adjusted diluted net earnings per share exclude after tax charges of: |
| – | $12,348, or $0.03 per share, related to stock based compensation |
| – | $22,014 or $0.06 per share, related to restructuring plans |
(2) | Adjusted third quarter 2005 net earnings and adjusted diluted net earnings per share exclude after tax charges and credits of: |
| – | $6,200 contribution, or $0.02 per share, to the St. Jude Medical Foundation, recorded as a charge to SG&A expense |
| – | $7,130 credit, or $0.02 per share, for the reversal of accrued Symmetry™ Bypass System legal costs, net of settlement costs |
| – | $13,700 reversal, or $0.04 per share, of previously recorded income tax expense due to the finalization of certain tax examinations |
(3) | Adjusted first nine months of 2006 net earnings and adjusted diluted net earnings per share exclude after tax charges of: |
| – | $37,074, or $0.10 per share, related to stock based compensation |
| – | $22,014, or $0.06 per share, related to restructuring plans |
(4) | Adjusted first nine months of 2005 net earnings and adjusted diluted net earnings per share exclude after tax charges and credits of: |
| – | $6,200 contribution, or $0.02 per share, to the St. Jude Medical Foundation, recorded as a charge to SG&A expense |
| – | $26,100 purchased R&D charges, or $0.07 per share, related to the acquisitions of Endocardial Solutions, Inc. and Velocimed, LLC |
| – | $7,130 credit, or $0.02 per share, for the reversal of accrued Symmetry™ Bypass System legal costs, net of settlement costs |
| – | $27,000 income tax expense, or $0.07 per share, on the repatriation of $500 million under the American Jobs Creation Act of 2004 |
| – | $13,700 reversal, or $0.04 per share, of previously recorded income tax expense due to the finalization of certain tax examinations |
Condensed Consolidated Balance Sheets
(in thousands)
(Unaudited)
| | September 30, 2006 | | December 31, 2005 | |
Cash & cash equivalents | | $ | 70,289 | | $ | 534,568 | |
Accounts receivable, net | | | 868,327 | | | 793,929 | |
Inventories | | | 438,401 | | | 378,456 | |
Other current assets | | | 258,681 | | | 234,188 | |
Property, plant & equipment, net | | | 572,203 | | | 438,416 | |
Goodwill | | | 1,639,023 | | | 1,634,973 | |
Other intangible assets, net | | | 560,308 | | | 572,246 | |
Other assets | | | 267,832 | | | 258,064 | |
Total assets | | $ | 4,675,064 | | $ | 4,844,840 | |
| | | | | | | |
Current portion of long-term debt | | $ | 660,000 | | $ | 876,000 | |
Other current liabilities | | | 607,030 | | | 658,382 | |
Long-term debt | | | 358,197 | | | 176,970 | |
Deferred income taxes | | | 178,817 | | | 157,443 | |
Long-term other liabilities | | | 109,469 | | | 93,000 | |
Total equity | | | 2,761,551 | | | 2,883,045 | |
Total liabilities & equity | | $ | 4,675,064 | | $ | 4,844,840 | |
