Mail Stop 6010
December 8, 2005
Mr. John C. Heinmiller
Chief Financial Officer
St. Jude Medical, Inc.
One Lillehei Plaza
St. Paul, MN 55117
Re: St. Jude Medical, Inc.
Form 10-K for the Year Ended December 31, 2004
Forms 10-Q for the Quarters Ended March 31, 2005, June 30, 2005
and
September 30, 2005
File No. 001-12441
Dear Mr. Heinmiller:
We have reviewed your filing and have the following
comments.
We have limited our review to matters related to the issues raised
in
our comments. Where indicated, we think you should revise your
future filings in response to these comments. If you disagree, we
will consider your explanation as to why our comment is
inapplicable
or a revision is unnecessary. Please be as detailed as necessary
in
your explanation. In some of our comments, we may ask you to
provide
us with information so we may better understand your disclosure.
After reviewing this information, we may raise additional
comments.
Please understand that the purpose of our review process is
to
assist you in your compliance with the applicable disclosure
requirements and to enhance the overall disclosure in your filing.
We look forward to working with you in these respects. We welcome
any questions you may have about our comments or any other aspect
of
our review. Feel free to call us at the telephone numbers listed
at
the end of this letter.
Form 10-K for the Year Ended December 31, 2004
Exhibit 13 - Portions of the Company`s 2004 Annual Report to
Shareholders
Consolidated Financial Statements
Note 7. Purchased In-Process Research and Development and Special
Charges, page 54
1. We note that in 2004 and thus far in 2005, you have recorded
significant amounts of in-process research and development expense
(IPR&D) as a result of acquisitions. Please revise the notes to
your
financial statements in future filings to address the following
related to IPR&D:
* Disclose the appraisal method used to value IPR&D costs
acquired;
* Discuss all significant assumptions made and estimates used in
determining the assigned values to each significant IPR&D project
such as the risk adjusted discount rate applied to the project`s
cash
flows and period in which material net cash inflows from
significant
projects are expected to commence;
* Describe each significant IPR&D project acquired; and
* Present in tabular format the fair value assigned to each
project
acquired and projected costs to complete by project;
For each project, disclose in MD&A the status of the development,
stage of completion at acquisition date, the nature and timing of
the
remaining efforts for completion, anticipated completion date and
the
date you will begin benefiting from the projects, the risks and
uncertainties associated with completing development within a
reasonable period of time, and the risks involved if the IPR&D
projects are not completed on a timely basis.
Additionally, in your MD&A in subsequent filings, provide a detail
discussion of the status of your efforts for completion of the R&D
projects and the impact from any delays. Also, provide an
explanation
of material variations between projected results and actual
results
and how failure to achieve projected results impacted (or will
impact) expected return on investment, future results, and
financial
condition.
Form 10-Q for the Quarter Ended September 30, 2005
Notes to Condensed Consolidated Financial Statements
Note 8. Purchased In-Process Research and Development and Special
Charges, page 14
2. We note that you reversed $14.8 million of the $21.0 million
charge for estimated Symmetry legal fees taken in 2004 due to the
fact that a majority of the cases have been resolved. Please tell
us
and revise future filings to disclose in greater detail the
specific
factors that caused you to conclude that the loss contingency
previously recorded was no longer needed. Enhance your disclosure
in
MD&A to indicate what percentage of claims remains open and the
status of those remaining claims.
Forms 8-K Filed January 26, 2005, April 20, 2005, July 20, 2005
and
October 17, 2005
3. We do not believe that the presentation of a non-GAAP statement
of
operations is appropriate unless all reconciliations and
substantive
disclosures required by Item 10(e)(1)(i) of Regulation S-K are
included for each separate non-GAAP measure. Your current
presentation has the effect of creating multiple non-GAAP
financial
measures for which you have not included the required substantive
disclosures. Please delete this presentation from all future
Forms
8-K or tell us why you believe your current presentation is
appropriate.
4. If you elect to present non-GAAP financial measures, Item 2.02
of
Form 8-K requires that disclosures "furnished" include information
that complies with the disclosure requirements of Item 10(e)(1)(i)
of
Regulation S-K. Accordingly, you must present a reconciliation
for
each non-GAAP measure presented. You must also provide statements
disclosing the reasons why management believes presentation of
each
of the individual non-GAAP measures provides useful information to
investors regarding your financial condition and results of
operations. Those disclosures should be specific and substantive
to
each individual measure. Refer to SEC Release 33-8176 and also
Question 8 of the FAQ Regarding the Use of Non-GAAP Financial
Measures, dated June 13, 2003. Please confirm that you will revise
your Forms 8-K in future periods to provide all of the disclosures
required by Item 10(e)(1)(i) for each non-GAAP measure presented.
Provide us with a full sample of your proposed disclosure. Please
note that this comment also applies to forward-looking information
that includes non-GAAP financial measures.
5. If you elect to report non-GAAP financial measures in your
future
filings on Form 8-K, please refrain from using the term "non-
recurring" to describe expenses that you have incurred in more
than
one period discussed or have a history of recording. We note that
you recorded $9.1 million, $12.4 million and $13.7 million of in-
process research and development expenses in 2004, the quarter
ended
March 31, 2005 and the quarter ended June 30, 2005, respectively,
and
have reported financial measures which exclude these charges.
As appropriate, please respond to these comments within 10
business days or tell us when you will provide us with a response.
Please furnish a cover letter with your response that keys your
responses to our comments and provides any requested information.
Detailed cover letters greatly facilitate our review. Please
understand that we may have additional comments after reviewing
your
responses to our comments.
We urge all persons who are responsible for the accuracy and
adequacy of the disclosure in the filing to be certain that the
filing includes all information required under the Securities
Exchange Act of 1934 and that they have provided all information
investors require for an informed decision. Since the company and
its management are in possession of all facts relating to a
company`s
disclosure, they are responsible for the accuracy and adequacy of
the
disclosures they have made.
In connection with responding to our comments, please
provide,
in writing, a statement from the company acknowledging that:
* the company is responsible for the adequacy and accuracy of the
disclosure in the filing;
* staff comments or changes to disclosure in response to staff
comments do not foreclose the Commission from taking any action
with
respect to the filing; and
* the company may not assert staff comments as a defense in any
proceeding initiated by the Commission or any person under the
federal securities laws of the United States.
In addition, please be advised that the Division of
Enforcement
has access to all information you provide to the staff of the
Division of Corporation Finance in our review of your filing or in
response to our comments on your filing.
You may contact Tom Dyer, Staff Accountant, at (202) 551-3641 or
me
at (202) 551-3643 if you have questions. In this regard, do not
hesitate to call Michele Gohlke, Branch Chief, at (202) 551-3327.
Sincerely,
Kevin Vaughn
Reviewing Accountant
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Mr. John C. Heinmiller
St. Jude Medical, Inc.
December 8, 2005
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