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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
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FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 2001
COMMISSION FILE NO. 0-8672
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ST. JUDE MEDICAL, INC.
(Exact name of Registrant as specified in its charter)
MINNESOTA 41-1276891
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
ONE LILLEHEI PLAZA
ST. PAUL, MINNESOTA 55117
(Address of principal executive offices)
(651) 483-2000
(Registrant's telephone number, including area code)
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SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
COMMON STOCK ($.10 PAR VALUE) PREFERRED STOCK PURCHASE RIGHTS
(Title of class) (Title of class)
NEW YORK STOCK EXCHANGE AND CHICAGO BOARD OPTIONS EXCHANGE
(Name of exchange on which registered)
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: NONE
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Indicate by check mark whether the Registrant: (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months; and (2) has been subject to such
filing requirements for the past 90 days.
Yes _X_ No ___
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of the Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. ___
The aggregate market value of the voting stock held by non-affiliates
of the Registrant was approximately $7.1 billion at February 22, 2002, when the
closing sale price of such stock, as reported on the New York Stock Exchange,
was $81.13 per share.
The Registrant had 87,754,141 shares of its $0.10 par value Common
Stock outstanding as of February 22, 2002.
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TABLE OF CONTENTS
ITEM DESCRIPTION PAGE
- ---- ----------- ----
PART I
1. Business.......................................................... 1
2. Properties........................................................ 9
3. Legal Proceedings................................................. 9
4. Submission of Matters to a Vote of Security Holders............... 11
4A. Executive Officers of the Registrant.............................. 11
PART II
5. Market for Registrant's Common Equity and Related
Shareholder Matters........................................... 13
6. Selected Financial Data........................................... 13
7. Management's Discussion and Analysis of Results of Operations
and Financial Condition....................................... 13
7A. Quantitative and Qualitative Disclosures About Market Risk........ 14
8. Financial Statements and Supplementary Data....................... 14
9. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure...................................... 14
PART III
10. Directors and Executive Officers of the Registrant................ 14
11. Executive Compensation............................................ 14
12. Security Ownership of Certain Beneficial Owners and Management.... 14
13. Certain Relationships and Related Transactions.................... 15
PART IV
14. Exhibits, Financial Statement Schedules and Reports on Form 8-K... 15
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Company's Annual Report to Shareholders for the fiscal
year ended December 31, 2001, are incorporated by reference in Parts I and II.
Portions of the Company's definitive Proxy Statement dated March 28, 2002, are
incorporated by reference in Part III.
PART I
ITEM 1. BUSINESS
GENERAL
St. Jude Medical, Inc., together with its subsidiaries (collectively
"St. Jude" or the "Company") is a leader in the development, manufacturing and
distribution of cardiovascular medical devices for the global cardiac rhythm
management (CRM), cardiology and vascular access (C/VA), and cardiac surgery
(CS) markets. The Company's principal products in each of these markets are:
bradycardia pacemaker systems, tachycardia implantable cardioverter
defibrillator (ICD) systems, and electrophysiology (EP) catheters in CRM;
vascular closure devices, catheters, guidewires and introducers in C/VA; and
mechanical and tissue heart valves, valve repair products, and suture-free
devices to facilitate coronary artery bypass graft anastomoses in CS.
The Company markets its products primarily in the United States,
Western Europe and Japan through both a direct employee-based sales organization
and independent distributors. St. Jude also sells its products in Eastern
Europe, Africa, the Middle East, Canada, Latin America and the Asia-Pacific
region through employee-based sales organizations and independent distributors.
On September 27, 1999, St. Jude acquired Vascular Science, Inc.
("VSI"), a development-stage company focused on the development of suture-free
devices to facilitate coronary artery bypass graft anastomoses.
On March 16, 1999, St. Jude purchased the Angio-Seal(TM) business of
Tyco International Ltd. Angio-Seal(TM) manufactured and marketed vascular
closure devices.
During 2001, 2000 and 1999, the Company acquired various businesses
involved in distribution of the Company's products.
The Company historically reported under two segments. During 2001, the
Company completed a reorganization of its global sales activities, which
resulted in changes to its internal management and financial reporting
structure. The Company now manages its business on the basis of one reportable
segment: the development, manufacture and distribution of cardiovascular medical
devices. In 2001, approximately 72% of net sales were derived from products sold
in the cardiac rhythm management market, 10% in the cardiology and vascular
access market, and 18% in the cardiac surgery market. In 2000, approximately 69%
of net sales were derived from products sold in the cardiac rhythm management
market, 9% in the cardiology and vascular access market, and 22% in the cardiac
surgery market. Approximately 65% of the Company's 2001 net sales were in the
U.S. market, as compared with 63% in 2000. Additional geographical information
is set forth in the Company's 2001 Annual Report to Shareholders on page 22 of
the Financial Report and is incorporated herein by reference.
St. Jude was incorporated in Minnesota in 1976.
1
PRINCIPAL PRODUCTS
CARDIAC RHYTHM MANAGEMENT: The Company's pacemakers and related systems
treat patients with hearts that beat inappropriately slow, a condition known as
bradycardia. Typically implanted pectorally, just below the collarbone,
pacemakers monitor the heart's rate and, when necessary, deliver low-level
electrical impulses that stimulate an appropriate heartbeat. The pacemaker is
connected to the heart by one or two leads that carry the electrical impulses to
the heart and information from the heart back to the pacemaker. An external
programmer enables the physician to retrieve diagnostic information from the
pacemaker and reprogram the pacemaker in accordance with the patient's changing
needs. Single-chamber pacemakers stimulate only one chamber of the heart (atrium
or ventricle), while dual-chamber devices can sense and pace in both the upper
and lower chambers.
St. Jude's current pacing products include the advanced featured
Identity(TM) family of pacemakers, approved by the U.S. Food and Drug
Administration (FDA) in November 2001. The Identity(TM) pacemaker models
maintain all of the therapeutic advancements of previous St. Jude Medical
pacemakers, including the AF Suppression(TM) Pacing Algorithm and the
BEAT-BY-BEAT(TM) AutoCapture(TM) Pacing System. The Identity(TM) models expand
the Company's AFx(TM) feature set to include a suite of arrhythmia diagnostics,
including dual-channel stored electrograms. AFx(TM) features are designed to
help physicians better manage pacemaker patients suffering from atrial
fibrillation (AF) - the world's most common cardiac arrhythmia. Also available
are Integrity(R) u (Micro) and the Integrity AFx(R) pacemaker models. The
Integrity(R) models build on the platform of the Affinity(R) product line with
the Beat-by-Beat(TM) AutoCapture(TM) Pacing System. Other available products
include the Affinity(R) pacemakers, the Entity(R) family of pacemakers,
containing the Omnisense(TM) activity-based sensor, and the Tempo(R) pacemaker
family, which uses fifth-generation Minute Ventilation sensor technology. These
pacemaker families are highly automatic and contain many advanced features and
diagnostic capabilities to optimize cardiac therapy. All are small and
physiologic in shape to enhance patient comfort. The Microny(R) II SR+ and
Microny(R) K SR are single chamber pacemakers available in the United States.
Other single-chamber pacemakers, the Microny(R) SR+ and the Regency(R) pacemaker
families, are also available outside the United States.
The Identity(TM), Integrity(R), Affinity(R), Entity(TM) and Regency(R)
families of pacemakers, as well as the Microny(R) SR+ pacemaker, all offer the
unique feature of the BEAT-BY-BEAT(TM) AutoCapture(TM) pacing system. The
AutoCapture(TM) pacing system enables the pacemaker to monitor every paced beat
to verify that the heart has been stimulated ("capture"), deliver a back-up
pulse in the event of noncapture, continuously measure threshold, and make
adjustments in energy output to match changing patient needs. In addition, the
Identity(TM) and Integrity(R) pacemakers include St. Jude Medical's AF
Suppression(TM) Pacing Algorithm, a therapy designed to suppress atrial
fibrillation.
St. Jude's current pacing leads include the active-fixation Tendril(R)
DX and SDX lead families and the passive-fixation Passive Plus(R) DX family
which are available worldwide, and the passive-fixation Membrane(TM) EX(TM)
family which is currently available outside the United States. All three lead
families feature steroid elution, which helps suppress the body's inflammatory
response to a foreign object.
Outside the United States, St. Jude also markets the Genesis(TM)
System, a device-based ventricular resynchronization system designed for the
treatment of heart failure (HF) and suppression of atrial fibrillation. HF
impairs the heart's ability to pump blood efficiently, causing shortness of
breath, fatigue, swelling and other debilitating symptoms. The Genesis(TM)
System includes three components: the Frontier(TM) 3 x 2 biventricular
stimulation device, designed to enhance cardiac function by resynchronizing the
contractions of the heart's two ventricles, the Aescula(TM) LV lead, and the
Alliance(TM) Catheter Delivery System.
2
ICDs and related systems treat patients with hearts that beat
inappropriately fast, a condition known as tachycardia. ICDs monitor the
heartbeat and deliver higher energy electrical impulses, or "shocks," to
terminate ventricular tachycardia (VT) and ventricular fibrillation (VF). In
ventricular tachycardia, the lower chambers of the heart contract at an
abnormally rapid rate and typically deliver less blood to the body's tissues and
organs. VT can progress to VF, in which the heart beats so rapidly and
erratically that it can no longer pump blood. Like pacemakers, ICDs are
typically implanted pectorally, connected to the heart by leads, and programmed
non-invasively.
The full St. Jude ICD product offering includes the Atlas(TM) ICD,
Photon(R) u ICD, Photon(R) ICD, and Contour(R) MD ICD. St. Jude received FDA
approval on the Atlas(TM) ICD family, powerful rate-adaptive ICDs, in December
2001. Representing an improvement from conventional high-energy ICDs, Atlas(TM)
ICDs offer high energy and small size without compromising charge times,
longevity, or feature set flexibility. Other available ICDs include the
Photon(R) u (Micro) DR/VR ICD family, the second-generation ICD products in a
series of downsized dual- and single-chamber St. Jude Medical ICDs with advanced
technology. Like the clinically proven Photon(R) DR ICD, FDA-approved in October
2000, the Photon(R) Micro DR/VR ICD family maintains a comprehensive feature set
underscored by precise SVT discrimination and AV Rate Branch designed to enhance
the precision of ventricular-based arrhythmia detection in a compact,
physiologic-shaped package. In addition, the Profile(TM) MD ICD is available
outside the United States.
The Company's ICDs are used with the dual electrode SPL and single
electrode TVL and TVL-ADX (active-fix) transvenous leads. The Atlas(TM) ICD,
Photon(R) u ICD, Photon(R) ICD, Profile(TM) MD ICD, and Contour(R) MD ICD are
programmable with the Model 3510 universal programmer.
The Model 3510 universal pacemaker and ICD programmer is an easy-to-use
programmer that supports St. Jude's ICDs and pacemakers, including the AtlasTM
ICD family and the Identity(TM) pacemaker family. The Model 3510 universal
programmer allows the physician to utilize the diagnostic and therapeutic
capabilities of St. Jude's pacemakers and ICDs.
Electrophysiology is the study of the electrical activity of the heart,
which controls the heart rhythm. EP catheters are placed into the human body
percutaneously (through the skin) to aid in the diagnosis and treatment of
cardiac arrhythmias (abnormal heart rhythms). Between two and five EP catheters
are generally used in each electrophysiology procedure. St. Jude's EP catheters
are available in multiple configurations. St. Jude's Supreme(TM) product line
consists of mapping catheters for the diagnosis of various cardiac arrhythmias,
including the 4 French Supreme(TM) diagnostic catheter for standard mapping
applications, and the Supreme Spiral SC(TM) catheter to assist clinicians in the
diagnosis of paroxysmal atrial fibrillation. St. Jude also offers the Livewire
TC Compass(TM) ablation catheter, which aids in clinical management of focal
arrhythmias, and the Livewire TC(TM) Bi-Directional ablation catheter, launched
in January 2002 following FDA and European market approval.
CARDIOLOGY AND VASCULAR ACCESS: The Company produces specialized
disposable cardiovascular devices, including angiography catheters, bipolar
temporary pacing catheters, percutaneous catheter introducers, diagnostic
guidewires, and vascular closure devices. Angiography catheters, such as St.
Jude's Spyglass(TM) angiography catheters, are used in coronary angiography
procedures to obtain images of coronary arteries to identify structural cardiac
diseases. St. Jude bipolar temporary pacing catheters are inserted
percutaneously for temporary use (ranging from less than one hour to a maximum
of one week) with external pacemakers to provide patient stabilization prior to
implantation of a permanent pacemaker, following a heart attack, or during
surgical procedures. The Company produces and markets several designs of bipolar
temporary pacing catheters, including its Pacel(TM) biopolar pacing catheters,
3
which are available in both torque control and flow-directed models with a broad
range of curve choices and electrode spacing options. Percutaneous catheter
introducers are used to create passageways for cardiovascular catheters from
outside the human body through the skin into a vein, artery or other location
inside the body. St. Jude's percutaneous catheter introducer products consist
primarily of peel-away and non peel-away sheaths, sheaths with and without
hemostasis valves, dilators, guidewires, repositioning sleeves and needles.
These products are offered in a variety of sizes and packaging configurations,
including St. Jude's newest introducer platform, the Ultimum(TM) hemostasis
introducer. Diagnostic guidewires, such as St. Jude's GuideRight(TM) and
HydroSteer(TM) guidewires, are used in conjunction with percutaneous catheter
introducers to aid in the introduction of intravascular catheters. St. Jude's
diagnostic guidewires are available in multiple lengths and incorporate a
surface finish for lasting lubricity.
The Company's vascular closure devices are used to close femoral artery
puncture wounds following angioplasty, stenting and diagnostic procedures. In
September 2001, St. Jude received FDA approval and European CE Marking for its
newest vascular closure product, the St. Jude Medical Angio-Seal(TM) STS
PLATFORM. The STS PLATFORM incorporates a self-tightening suture, which
eliminates the need for a post-placement spring, allowing for completion of the
entire procedure in the catheterization lab. It also integrates a
Secure-Cap(TM), which facilitates proper deployment through audible, tactile and
visual confirmations during the closure process.
CARDIAC SURGERY: Heart valve replacement or repair may be necessary
because the natural heart valve has deteriorated due to congenital defects or
disease. Heart valves facilitate the one-way flow of blood in the heart and
prevent significant backflow of blood into the heart and between the heart's
chambers. St. Jude offers both mechanical and tissue replacement heart valves
and valve repair products. The St. Jude Medical(R) mechanical heart valve has
been implanted in over 1.2 million patients to date. The SJM Regent(TM)
mechanical heart valve was approved for sale in Europe in December 1999 and
received FDA approval for U.S. market release in March 2002. In the United
States, the Company markets the Toronto SPV(R) stentless tissue valve, which
received FDA approval in November 1997. Outside the United States, the Company
markets the SJM Epic(TM) tissue heart valve, the SJM(R) Biocor(TM) stented
tissue valve, the Toronto SPV(R) stentless tissue valve and the Toronto Root(TM)
tissue valve. In August 2001, European regulatory approval was received to
market the next-generation Toronto Root(TM) tissue valve, a stentless aortic
root bioprosthesis used when aortic root disease accompanies valve disease.
Clinical trials for the Toronto Root(TM) valve began in the U.S. and Canada in
2001.
Annuloplasty rings are prosthetic devices used to repair diseased or
damaged mitral heart valves. The Company offers a line of valve repair products
including the semi-rigid SJM(R) Seguin annuloplasty ring and the fully flexible
SJM Tailor(TM) ring.
The Company has also entered into an agreement with LifeNet Transplant
Services, which enables it to assist in the marketing of human donated allograft
heart valves in the U.S.
In addition to prosthetic heart valves, St. Jude markets the
Symmetry(TM) Bypass System Aortic Connector (the "Aortic Connector"), a
suture-free device to facilitate coronary artery bypass graft aortic
anastomoses. St. Jude commenced marketing of this product in Western Europe in
2000 and in the U.S. during May 2001. Also in 2001, St. Jude received European
CE Marking for the first distal connector product, which mechanically connects
saphenous vein grafts to coronary arteries. The Company, however, intends to
make additional enhancements to this product in 2002 prior to filing for U.S.
regulatory approval and prior to releasing the product to either the European or
U.S. markets.
4
SUPPLIERS
The Company purchases raw materials and other items from numerous
suppliers for use in its products. For certain materials that the Company
believes are critical and may be difficult to obtain from an alternative
supplier, the Company maintains sizable inventories of up to three years of its
projected requirements. The Company has been advised from time to time that
certain of these suppliers may terminate sales of products to customers that
manufacture implantable medical devices in an effort to reduce their potential
product liability exposure. Some of these suppliers have modified their
positions and have indicated a willingness to either temporarily continue to
provide product until such time as an alternative vendor or product can be
qualified or to reconsider the supply relationship. While the Company believes
that alternative sources of raw materials are available and that there is
sufficient lead time in which to qualify such other sources, any supply
interruption could have a material adverse effect on the Company's ability to
manufacture its products.
COMPETITION
The medical technology market is a dynamic market currently undergoing
significant change due to cost of care considerations, regulatory reform,
industry consolidation and customer consolidation. The ability to provide cost
effective clinical outcomes is becoming increasingly more important for medical
technology manufacturers.
Within the medical technology industry, competitors range from small
start-up companies to companies with significant resources. The Company's
customers consider many factors when choosing supplier partners including
product reliability, clinical outcomes, product availability, inventory
consignment, price and product services provided by the manufacturer. St. Jude
believes that it competes on the basis of all these factors. Market share can
shift as a result of technological innovation, product recalls and product
safety alerts, as well as other business factors. This emphasizes the need to
provide the highest quality products and services. St. Jude expects the
competition to continue to increase with the use of tactics such as consigned
inventory, bundled product sales and reduced pricing.
The Company has traditionally been a technological leader in the global
bradycardia pacemaker market. The Company has strong bradycardia market share
positions in all major developed markets. There are three principal
manufacturers and suppliers of ICDs worldwide, one of which is the Company. ICD
therapy is a highly competitive market. The Company's other two competitors,
Medtronic, Inc. and Guidant Corporation, account for more than 80% of the
worldwide ICD sales. These two competitors are larger than the Company and have
invested substantial amounts in ICD research and development.
The global cardiology and vascular access market is also a growing
market with numerous competitors.
The Company is the world's leading manufacturer and supplier of
mechanical heart valves. There are two other principal and several other smaller
mechanical heart valve manufacturers. The Company also competes against two
principal and a large number of other smaller tissue heart valve manufacturers.
The Company is the technological leader in mechanical anastomotic
connector devices. The Company is aware of several other companies who are
investing significant dollars into developing these technologies.
5
MARKETING
The Company's products are sold in over 100 countries throughout the
world. No distributor organization or single customer accounted for more than
10% of 2001, 2000 or 1999 consolidated net sales.
In the United States, St. Jude sells directly to hospitals through a
combination of independent distributors and an employee-based sales
organization. In Western Europe, the Company has employee- based sales
organizations selling in 14 countries. In Japan, the Company primarily utilizes
independent distributors. Throughout the rest of the world the Company uses a
combination of independent distributor and direct sales organizations.
Group purchasing organizations (GPOs) in the United States continue to
consolidate the purchasing for some of the Company's customers. Several such
GPOs have executed contracts with the Company's CRM market competitors, which
exclude the Company. These contracts, if enforced, may adversely affect the
Company's sales of these products to members of these GPOs.
Payment terms worldwide are consistent with local country practices.
Orders are shipped as they are received and, therefore, no material backlog
exists.
SEASONALITY
Typically, the Company's net sales are somewhat higher in the first and
second quarters and lower in the third and fourth quarters. Lower net sales in
the third quarter result from patient tendency to defer, if possible, cardiac
procedures during the summer months and from the seasonality of the U.S. and
European markets where summer vacation schedules normally result in fewer
surgical procedures. Lower net sales in the fourth quarter result from fewer
selling days in the quarter because of holidays in the United States and other
markets, and patient tendency to defer, if possible, cardiac procedures during
these holiday seasons. Independent distributors may randomly place large orders
that can distort the net sales pattern just described. In addition, new product
introductions, acquisitions, and regulatory approvals can impact the typical net
sales patterns.
RESEARCH AND DEVELOPMENT
The Company is focused on the development of new products and
improvements to existing products. In addition, research and development expense
reflects the Company's efforts to obtain FDA approval of certain new products
and processes, and to maintain the highest quality standards with respect to
existing products. The Company's research and development expenses, exclusive of
purchased in-process research and development, were $164.1 million (12.2% of net
sales), $137.8 million (11.7% of net sales) and $125.1 million (11.2% of net
sales) in 2001, 2000 and 1999, respectively.
GOVERNMENT REGULATION
The medical devices manufactured and marketed by the Company are
subject to regulation by the FDA and, in most instances, by state and foreign
governmental authorities or their designated representatives. Under the U.S.
Federal Food, Drug and Cosmetic Act (the Act), and regulations thereunder,
manufacturers of medical devices must comply with certain policies and
procedures that regulate the composition, labeling, testing, manufacturing,
packaging and distribution of medical devices. Medical devices are subject to
different levels of government approval requirements, the most comprehensive of
which requires the completion of an FDA approved clinical evaluation program and
submission and approval of a pre-market approval (PMA) application before a
device may be commercially marketed. The Company's mechanical and tissue heart
valves, ICDs, certain pacemakers and leads and certain electrophysiology
catheter applications are subject to this level of approval or as a supplement
to a PMA approval. Other pacemakers and leads, annuloplasty ring products and
other
6
electrophysiology and cardiology products are currently marketed under the less
rigorous 510(k) pre-market notification procedure of the Act.
In addition, the FDA may require testing and surveillance programs to
monitor the effects of approved products that have been commercialized, and it
has the power to prevent or limit further marketing of a product based on the
results of these post-marketing programs. The FDA also conducts inspections
prior to approval of a PMA to determine compliance with the quality system
regulations which covers manufacturing and design and may, at any time after
approval of a PMA or granting of a 510(k), conduct periodic inspections to
determine compliance with both good manufacturing practice regulations and/or
current medical device reporting regulations. If the FDA were to conclude that
St. Jude is not in compliance with applicable laws or regulations, it could
institute proceedings to detain or seize products, issue a recall, impose
operating restrictions, assess civil penalties and recommend criminal
prosecution to the U.S. Department of Justice. Furthermore, the FDA could
proceed to ban, or request recall, repair, replacement or refund of the cost of,
any device previously manufactured or distributed.
The FDA also regulates recordkeeping for medical devices and reviews
hospital and manufacturers' required reports of adverse experiences to identify
potential problems with FDA- authorized devices. Aggressive regulatory action
may be taken by the FDA due to adverse experience reports.
Diagnostic-related groups (DRG) reimbursement schedules regulate the
amount the United States government, through the Centers for Medicare and
Medicaid Services (CMS), will reimburse hospitals and doctors for the inpatient
care of persons covered by Medicare. In response to rising Medicare and Medicaid
costs, several legislative proposals are under consideration, which would
restrict future funding increases for these programs. Changes in current DRG
reimbursement levels could have an adverse effect on the Company's domestic
pricing flexibility.
St. Jude's business internationally is subject to medical device laws
in individual countries outside the United States. These laws range from
extensive device approval requirements in some countries for all or some of the
Company's products, to requests for data or certifications in other countries.
Generally, regulatory requirements are increasing in these countries. In the
European Union, the regulatory systems have been harmonized, and approval to
market in all European Union countries (represented by the CE Mark) can be
obtained through one agency. In addition, government funding of medical
procedures is limited and in certain instances is being reduced.
A number of medical device regulatory agencies have begun considering
whether to continue to permit the sale of medical devices that incorporate any
bovine material because of concerns about Bovine Spongiform Encephalopathy
(BSE), sometimes referred to as "mad cow disease." It is believed that in some
instances this disease has been transmitted to humans through the consumption of
beef. There have been no reported cases of transmission of BSE through medical
products and no reported cases of BSE in the United States. Some of the
Company's products use bovine collagen (Angio-Seal(TM) and vascular grafts),
which is derived from the bovine component scientifically rated as least likely
to transmit the disease. Some of the Company's tissue heart valves incorporate
bovine pericardial material. The Company is cooperating with the regulatory
agencies considering these issues.
7
In May 1995, prior to the acquisition by St. Jude, Telectronics Pacing
Systems, Inc. (Telectronics), which is now part of St. Jude Medical Cardiac
Rhythm Management Division, and its president entered into a consent decree with
the FDA. The consent decree, which remains in effect indefinitely, requires that
Telectronics comply with the FDA's good manufacturing practice regulations and
identifies several specific provisions of those regulations. The consent decree
provides for FDA inspections and that Telectronics is obligated to pay certain
costs of the inspections.
PATENTS AND LICENSES
The Company's policy is to protect its intellectual property rights
related to its medical devices. Where appropriate, St. Jude applies for U.S. and
foreign patents. In those instances where the Company has acquired technology
from third parties, it has sought to obtain rights of ownership to the
technology through the acquisition of underlying patents or licenses.
While the Company believes design, development, regulatory and
marketing aspects of the medical device business represent the principal
barriers to entry into such business, it also recognizes that it's the Company's
patents and license rights may make it more difficult for its competitors to
market products similar to those produced by the Company. St. Jude can give no
assurance that any of its patent rights, whether issued, subject to license, or
in process, will not be circumvented or invalidated. Furthermore, there are
numerous existing and pending patents on medical products and biomaterials.
There can be no assurance that the Company's existing or planned products do not
or will not infringe such rights or that others will not claim such
infringement. No assurance can be given that the Company will be able to prevent
competitors from challenging the Company's patents or entering markets currently
served by the Company.
INSURANCE
The Company operates in an industry that is susceptible to significant
product liability claims. These claims may be brought by individuals seeking
relief for themselves or, increasingly, by groups seeking to represent a class.
In addition, product liability claims may be asserted against the Company in the
future relative to events that are not known to management at the present time.
While it is not possible to predict the outcome of every claim, the Company
believes that it has adequate product liability insurance to cover the costs
associated with them.
Subsequent to the tragic events of September 2001, the product
liability insurance market has dramatically changed. The Company has secured
product liability coverage for 2002, however the self-insured retention and
insurance premiums are significantly higher than in prior years. There can be no
assurance that this trend will reverse in the future. As a result of the
increased self-insured retention for 2002, the Company has increased financial
exposure in the event of significant product liability matters.
California earthquake insurance is currently difficult to procure,
extremely costly, and restrictive in terms of coverage. The Company's earthquake
and related business interruption insurance for its CRM operations located in
Sylmar and Sunnyvale, California provides for limited coverage above a
significant self-insured retention. There are several factors that preclude the
Company from determining the effect an earthquake may have on its business.
These factors include, but are not limited to, the severity and location of the
earthquake, the extent of any damage to the Company's manufacturing facilities,
the impact of an earthquake on the Company's California workforce and the
infrastructure of the surrounding communities, and the extent, if any, of damage
to the Company's inventory and work in process. While the Company's exposure to
significant losses occasioned by a California earthquake would be partially
mitigated by its ability to manufacture some of its CRM products at its Swedish
manufacturing facility, the losses could have a material adverse effect on the
Company, the duration of which cannot be reasonably predicted. The Company has
expanded the manufacturing capabilities at its Swedish facility
8
and has constructed a pacemaker component manufacturing facility in Arizona. In
addition, the Company has moved significant finished goods inventory to
locations outside California. These facilities and inventory transfers would
further mitigate the adverse impact of a California earthquake.
EMPLOYEES
As of December 31, 2001, the Company had 5,568 full-time employees. It
has never experienced a work stoppage as a result of labor disputes and none of
its employees are represented by a labor organization, with the exception of the
Company's employees in Sweden and certain employees in France. The Company
believes that its relationship with its employees is generally good.
INTERNATIONAL OPERATIONS
The Company's international business is subject to such special risks
as currency exchange controls, the imposition or increase of import or export
duties and surtaxes, and international credit, financial or political problems.
Currency exchange rate fluctuations relative to the U.S. dollar can affect
reported consolidated revenues and net earnings. The Company may hedge a portion
of this exposure from time to time to reduce the effect of foreign currency rate
fluctuations on net earnings. See the "Market Risk" section on page 5 of
"Management's Discussion and Analysis of Results of Operations and Financial
Condition", incorporated herein by reference from the Financial Report included
in the Company's 2001 Annual Report to Shareholders. Operations outside the
United States also present complex tax and cash management issues that
necessitate sophisticated analysis and diligent monitoring to meet the Company's
financial objectives.
ITEM 2. PROPERTIES
St. Jude's principal executive offices are owned and are located in St.
Paul, Minnesota. Manufacturing facilities are located in California, Minnesota,
Arizona, South Carolina, Canada, Brazil, Puerto Rico and Sweden. The Company
owns approximately 59%, or 338,000 square feet, of its total manufacturing
space, and the balance is leased.
The Company also maintains sales and administrative offices in the
United States at 16 locations in six states and outside the United States at 33
locations in 24 countries. With the exception of one location, all of these
locations are leased.
In management's opinion, all buildings, machinery and equipment are in
good condition, suitable for their purposes and are maintained on a basis
consistent with sound operations. The Company believes that it has sufficient
space for its current operations and for foreseeable expansion in the next few
years.
ITEM 3. LEGAL PROCEEDINGS
SILZONE(R) LITIGATION: The Company has been sued by patients alleging
defects in the Company's mechanical heart valves and valve repair products with
Silzone(R) coating. The Company voluntarily recalled products with Silzone(R)
coating on January 21, 2000, and sent a Recall Notice and Advisory concerning
the recall to physicians and others. Some of these cases are seeking monitoring
of patients implanted with Silzone(R)-coated valves and repair products who
allege no injury to date. Some of these cases are seeking class action status.
On April 18, 2001, the U.S. Judicial Panel on Multi-Litigation ruled
that certain lawsuits filed in U.S. federal district court involving products
with Silzone(R) coating should be part of Multi District Litigation proceedings,
which will take place under the supervision of U.S. District court Judge John
9
Tunheim in Minnesota. As a result, a number of actions involving products with
Silzone(R) coating are being transferred to Judge Tunheim's court in Minnesota
for coordinated or consolidated pretrial proceedings.
While it is not possible to predict the outcome of these cases, the
Company believes that it has adequate product liability insurance to cover the
costs associated with them. The Company further believes that any costs not
covered by product liability insurance will not have a material adverse impact
on the Company's financial position or liquidity, but may be material to the
consolidated results of operations of a future period.
GUIDANT LITIGATION: In November 1996 Guidant Corporation ("Guidant")
sued St. Jude Medical alleging that St. Jude Medical did not have a license to
certain patents controlled by Guidant covering ICD products and alleging that
St. Jude Medical was infringing those patents.
St. Jude Medical's contention that it had obtained its patent license
from Guidant to the patents in issue when it acquired certain assets of
Telectronics in November 1996 was rejected by an arbitrator in July 2000. In May
2001, a federal district court judge also ruled that the Guidant patent license
with Telectronics had not transferred to St. Jude Medical.
Guidant's suit in the United States District Court for the Southern
District of Indiana originally alleged infringement by St. Jude Medical of four
patents. Guidant later dismissed its claim on one patent (the `678 patent). In
addition, in response to a stipulation by the parties, the court ruled that a
second patent (the `191 patent) was invalid. Guidant has appealed the ruling of
invalidity concerning the `191 patent and the Court of Appeals for the Federal
Circuit held oral arguments on the `191 appeal on February 5, 2002.
A jury trial involving the two remaining patents asserted by Guidant
(the `288 and `472 patents) commenced in June 2001. The jury issued its verdict
on July 3, 2001, finding that both the `472 and `288 patents were valid and that
St. Jude Medical did not infringe the `288 patent. The jury also found that St.
Jude did infringe the `472 patent, which expired on March 4, 2001, but that the
infringement was not willful. The jury awarded damages of $140 million to
Guidant.
On February 13, 2002, the judge overseeing the jury trial issued his
rulings on the various post-trial motions. In particular, the judge ruled that
the `472 patent was invalid on two grounds: lack of proper written description
and double patenting. The judge also ruled that claim 18 was not infringed and
that claim 1 was infringed in only a limited manner.
The judge further ruled that the `288 patent was invalid for both
obviousness and failure to disclose the best mode.
The judge also found that St. Jude Medical was entitled to a new trial
on the issue of damages in the event the court's rulings on the other matters
were reversed on appeal. Finally, the judge held that in the event his other
rulings were reversed, St. Jude Medical would be entitled to a new trial because
of misconduct by Guidant and its attorneys during the first trial and that, in
such an event, Guidant would have to pay certain attorney's fees of St. Jude
Medical. The court ruled on several other motions, not summarized here.
The effect of the court's post-trial rulings was to eliminate the $140
million verdict against St. Jude Medical. The Company expects that Guidant will
appeal the judge's decision.
10
OTHER LITIGATION MATTERS: The Company is involved in various product
liability lawsuits, claims and proceedings of a nature considered normal to its
business. Subject to self-insured retentions, the Company believes it has
product liability insurance sufficient to cover such claims and suits.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There were no matters submitted to a vote of security holders during
the fourth quarter of 2001.
ITEM 4A. EXECUTIVE OFFICERS OF THE REGISTRANT
Name Age Position*
- ----------------------- --- ----------------------------------------------------------------------------
Terry L. Shepherd 49 Chief Executive Officer (1999)
Daniel J. Starks 47 President and Chief Operating Officer (2001)
David W. Adinolfi 46 President, Daig (2001)
Robert Cohen 44 Vice President, Business and Technology Development (1998)
Michael J. Coyle 39 President, Cardiac Rhythm Management (2001)
Peter L. Gove 54 Vice President, Corporate Relations (1994)
Steven J. Healy 44 President, Cardiac Surgery (1999)
John C. Heinmiller 47 Vice President, Finance, Chief Financial Officer and Treasurer (1998)
Jeri L. Lose 44 Vice President, Information Technology and Chief Information Officer (2000)
Joseph H. McCullough 52 President, International (2001)
Kevin T. O'Malley 50 Vice President, General Counsel and Secretary (1994)
Michael T. Rousseau 46 President, U.S. Sales (2001)
Frieda J. Valk 48 Vice President, Administration (1999)
- -----------------------
*Dates in brackets indicate year during which the named executive officers began
serving in such capacity.
Executive officers serve at the pleasure of the Board of Directors.
Mr. Shepherd joined the Company in 1994 as President of Cardiac
Surgery. In 1999, he was appointed President and Chief Executive Officer of St.
Jude, and since February 2001, has been the Company's Chief Executive Officer.
Mr. Shepherd has also served on St. Jude's Board of Directors since 1999.
11
Mr. Starks joined St. Jude in 1996 as a result of the Company's
acquisition of Daig Corporation, where he continued as Chief Executive Officer.
In 1997, he was also appointed CEO of Cardiac Rhythm Management, and in April
1998, became President and CEO of Cardiac Rhythm Management. He was appointed
President and Chief Operating Officer of St. Jude in February 2001. Mr. Starks
has also served on the Company's Board of Directors since 1996.
Mr. Adinolfi joined St. Jude in 1994 as a result of the Company's
acquisition of Pacesetter, Inc. He served as Vice President, CRM Global Product
Planning and Identification from June 1996 to March 1998, and in March 1998
became Vice President of CRM Business Development, Planning and Research. He
also served as Senior Vice President, CRM Global Marketing beginning in April
1998, and in March 1999 became Senior Vice President of CRM Product Portfolio
Management. In February 2001, Mr. Adinolfi was appointed President of Daig.
Prior to joining Pacesetter in 1989 as Director of Marketing, Mr. Adinolfi spent
five years at Cordis and Telectronics in a variety of marketing, sales and
management positions.
Mr. Cohen joined the Company in 1998 as Vice President, Business and
Technology Development. Prior to joining the Company, he was employed by Sulzer
Medica, a medical device company. During his 19-year career in the medical
device industry, Mr. Cohen has been associated with Pfizer Inc. and GCI Medical,
an investment firm focused on the medical technology industry.
Mr. Coyle joined St. Jude in 1994 as Director, Business Development. He
was appointed President of Cardiac Rhythm Management in February 2001. Prior to
that appointment, Mr. Coyle previously served as the Chief Operating Officer of
Daig since 1997. Prior to joining St. Jude, he spent nine years with Eli Lilly &
Company, a pharmaceutical products company, in a variety of technical and
business management roles in both its Pharmaceutical and Medical Device
Divisions.
Mr. Gove joined the Company in 1994 as Vice President, Corporate
Relations. Prior to joining the Company, Mr. Gove was Vice President, Marketing
and Communications of Control Data Systems, Inc., a computer services company,
from 1991 to 1994. From 1981 to 1990, Mr. Gove held various executive positions
with Control Data Corporation. From 1970 to 1981, Mr. Gove held various
management positions with the State of Minnesota and the U.S. Government.
Mr. Healy first joined the Company in 1983 as a heart valve sales
representative. In 1999 he was appointed President, Cardiac Surgery. From 1996
to 1999, Mr. Healy was Vice President of Heart Valve Sales and Marketing. He
served as Heart Valve Vice President of Marketing from 1993 to 1996.
Mr. Heinmiller joined the Company in May 1998 as Vice President of
Corporate Business Development. In September 1998, he was appointed Vice
President, Finance and Chief Financial Officer. Prior to joining the Company,
Mr. Heinmiller was president of F3 Corporation from 1997 to 1998, a privately
held asset management company, and was Vice President of Finance and
Administration for Daig Corporation from 1995 to 1997. Mr. Heinmiller is also a
former audit partner in the Minneapolis office of Grant Thornton LLP, a national
public accounting firm. Mr. Heinmiller is a director of Lifecore Biomedical,
Inc. and Arctic Cat, Inc.
Ms. Lose (formerly Ms. Jones) joined St. Jude in 1999 as Vice
President, Information Technology, and was appointed Vice President, Information
Technology and Chief Information Officer in 2000. Prior to joining the Company,
Ms. Lose was Vice President of Systems Development at U.S. Bancorp, a
multi-state financial services holding company, from 1993 to 1999. From 1990 to
1993, Ms. Lose was a Senior Manager in Information Technology Consulting with
Ernst & Young LLP, an
12
international public accounting firm. From 1979 to 1990, she held several
positions in Accounting and then Information Technology with General Mills, Inc,
a consumer food products company.
Mr. McCullough joined St. Jude in 1994 as a CRM Regional Sales
Director. He became Vice President, CRM Marketing in 1996 and in 1997 was named
Senior Vice President, CRM Europe, where his responsibilities included sales,
marketing and managing the Company's manufacturing facility in Veddesta, Sweden.
He was named President, International in July 2001. Prior to joining the
Company, Mr. McCullough worked for several medical technology companies for more
than 20 years.
Mr. O'Malley joined the Company in 1994 as Vice President and General
Counsel. Prior to joining St. Jude, Mr. O'Malley was employed by Eli Lilly &
Company for 15 years in various positions, including General Counsel of the
Medical Device and Diagnostics Division.
Mr. Rousseau joined the Company in 1999 as Senior Vice President, CRM
Global Marketing, and in August 1999, CRM Marketing and Sales were combined
under his leadership. In January 2001, he was named President, U.S. CRM Sales,
and in July 2001, he was named President, U.S. Sales. Prior to joining St. Jude,
Mr. Rousseau worked for Sulzer Intermedics, Inc., a medical device company, for
11 years. At Sulzer, he served as Vice President, Tachycardia, in 1997 and was
appointed Vice President, U.S. Sales and Marketing in 1998.
Ms. Valk joined the Company in 1996 as Human Resources Director of St.
Jude Medical Europe. She was appointed Vice President, Administration in 1999.
Prior to joining the Company, Mrs. Valk was employed by Eli Lilly & Company for
sixteen years in various positions, including pharmaceutical sales, sales
management, sales training and human resources.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED SHAREHOLDER MATTERS
The information set forth under the captions "Dividends" and "Stock
Exchange Listings" on pages 6 and 24 of the Financial Report included in the
Company's 2001 Annual Report to Shareholders is incorporated herein by
reference.
ITEM 6. SELECTED FINANCIAL DATA
The information set forth under the caption "Five-Year Summary
Financial Data" on page 23 of the Financial Report included in the Company's
2001 Annual Report to Shareholders is incorporated herein by reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION
The information set forth under the caption "Management's Discussion
and Analysis of Results of Operations and Financial Condition" on pages 1
through 6 of the Financial Report included in the Company's 2001 Annual Report
to Shareholders is incorporated herein by reference.
13
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The information appearing under the caption "Market Risk" on page 5 of
the Financial Report included in the Company's 2001 Annual Report to
Shareholders is incorporated herein by reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The following Consolidated Financial Statements of the Company and
Report of Independent Auditors set forth on pages 7 through 22 of the Financial
Report included in the Company's 2001 Annual Report to Shareholders are
incorporated herein by reference:
Consolidated Statements of Earnings - Fiscal Years ended December 31,
2001, 2000 and 1999
Consolidated Balance Sheets - December 31, 2001 and 2000
Consolidated Statements of Shareholders' Equity - Fiscal Years ended
December 31, 2001, 2000, and 1999
Consolidated Statements of Cash Flows - Fiscal Years ended December 31,
2001, 2000 and 1999
Notes to Consolidated Financial Statements
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information set forth under the caption "Board of Directors" in the
Company's definitive Proxy Statement dated March 28, 2002, is incorporated
herein by reference. Information on executive officers is incorporated herein by
reference to Item 4A of this Form 10-K.
ITEM 11. EXECUTIVE COMPENSATION
The information set forth under the caption "Executive Compensation" in
the Company's definitive Proxy Statement dated March 28, 2002, is incorporated
herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information set forth under the caption "Share Ownership of
Management and Directors and Certain Beneficial Owners" in the Company's
definitive Proxy Statement dated March 28, 2002, is incorporated herein by
reference.
14
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information set forth under the captions "Governance of the
Company" and "Executive Compensation" in the Company's definitive Proxy
Statement dated March 28, 2002, is incorporated herein by reference.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) LIST OF DOCUMENTS FILED AS PART OF THIS REPORT
(1) FINANCIAL STATEMENTS
The following Consolidated Financial Statements of the Company and
Report of Independent Auditors as set forth on pages 7 through 22
of the Financial Report included in the Company's 2001 Annual
Report to Shareholders (see Exhibit 13) are incorporated herein by
reference:
Consolidated Statements of Earnings - Fiscal Years ended December
31, 2001, 2000 and 1999
Consolidated Balance Sheets - December 31, 2001 and 2000
Consolidated Statements of Shareholders' Equity - Fiscal Years
ended December 31, 2001, 2000, and 1999
Consolidated Statements of Cash Flows - Fiscal Years ended
December 31, 2001, 2000 and 1999
Notes to Consolidated Financial Statements
(2) FINANCIAL STATEMENT SCHEDULE
Schedule II, Valuation and Qualifying Accounts, is filed as part
of this Form 10-K Annual Report (see Item 14(d)).
The report of the Company's Independent Auditors with respect to
the financial statement schedule is incorporated herein by
reference from Exhibit 23 attached hereto.
All other financial statements and schedules not listed above have been
omitted because the required information is included in the consolidated
financial statements or the notes thereto, or is not applicable.
(3) EXHIBITS
Pursuant to Item 601(b)(4)(iiii) of Regulation S-K, copies of
certain instruments defining the rights of holders of certain
long-term debt of the Company are not filed, and in lieu thereof,
15
the Company agrees to furnish copies thereof to the Securities and
Exchange Commission upon request.
EXHIBIT EXHIBIT INDEX
- ----------- ------------------------------------------------------------------
3.1 Articles of Incorporation as amended on September 5, 1996, are
incorporated by reference from Exhibit 3.2 of the Company's Annual
Report on Form 10-K for the year ended December 31, 1996.
3.2 Bylaws are incorporated by reference from Exhibit 3(ii) of the
Company's Quarterly Report on Form 10-Q for the quarter ended
September 30, 1997.
4.1 Rights Agreement dated as of June 16, 1997, between the Company
and American Stock Transfer and Trust Company, as Rights Agent,
including the Certificate of Designation, Preferences and Rights
of Series B Junior Preferred Stock is incorporated by reference
from Exhibit 4 of the Company's Quarterly Report on Form 10-Q for
the quarter ended June 30, 1997.
10.1 Form of Indemnification Agreement that the Company has entered
into with officers and directors is incorporated by reference from
Exhibit 10(d) of the Company's Annual Report on Form 10-K for the
year ended December 31, 1986.*
10.2 St. Jude Medical, Inc. Management Incentive Compensation Plan.*#
10.3 Management Savings Plan dated February 1, 1995, is incorporated by
reference from Exhibit 10.7 of the Company's Annual Report on Form
10-K for the year ended December 31, 1994.*
10.4 Retirement Plan for members of the Board of Directors as amended
on March 15, 1995, is incorporated by reference from Exhibit 10.6
of the Company's Annual Report on Form 10-K for the year ended
December 31, 1994.*
10.5 St. Jude Medical, Inc. 1991 Stock Plan is incorporated by
reference from the Company's Registration Statement on Form S-8
filed June 28, 1991 (Commission File No. 33-41459).*
16
EXHIBIT EXHIBIT INDEX
- ----------- ------------------------------------------------------------------
10.6 St. Jude Medical, Inc. 1994 Stock Option Plan is incorporated by
reference from Exhibit 4(a) of the Company's Registration
Statement on Form S-8 filed July 1, 1994 (Commission File No.
33-54435).*
10.7 St. Jude Medical, Inc. 1997 Stock Option Plan is incorporated by
reference from Exhibit 4.1 of the Company's Registration Statement
on Form S-8 filed December 22, 1997 (Commission File No.
333-42945).*
10.8 Split Dollar Insurance Agreement as amended April 29, 1999 between
St. Jude Medical, Inc. and Ronald A. and Lucille E. Matricaria is
incorporated by reference from Exhibit 10.14 of the Company's
Annual Report on Form 10-K for the year ended December 31, 1999.*
10.9 St. Jude Medical, Inc. 2000 Stock Plan.*#
10.10 St. Jude Medical, Inc. 2000 Employee Stock Purchase Savings
Plan.*#
10.11 Amended and Restated Employment Agreement dated as of March 25,
2001, between the Company and Daniel J. Starks is incorporated by
reference from Exhibit 10.17 of the Company's Annual Report on
Form 10-K for the year ended December 31, 2000.*
10.12 Form of Severance Agreement that the Company has entered into with
officers relating to severance matters in connection with a change
in control is incorporated by reference from Exhibit 10.18 of the
Company's Annual Report on Form 10-K for the year ended December
31, 2000.*
10.13 Amended and Restated Employment Agreement dated as of March 25,
2001, between the Company and Terry L. Shepherd is incorporated by
reference from Exhibit 10.19 of the Company's Annual Report on
Form 10-K for the year ended December 31, 2000.*
13 Portions of the Company's 2001 Annual Report to Shareholders.#
21 Subsidiaries of the Registrant.#
17
EXHIBIT EXHIBIT INDEX
- ----------- ------------------------------------------------------------------
23 Consent of Independent Auditors.#
24 Power of Attorney.#
- -------------------
* Management contract or compensatory plan or arrangement.
# Filed as an exhibit to this Annual Report on Form 10-K.
(b) REPORTS ON FORM 8-K FILED DURING THE QUARTER ENDED DECEMBER 31, 2001:
No reports on Form 8-K were filed by the Company during the fourth
quarter of 2001.
(c) EXHIBITS: Reference is made to Item 14(a)(3).
(d) SCHEDULES:
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
(DOLLARS IN THOUSANDS)
COL. A COL. B COL. C COL. D COL. E
- ------------------------------ ---------- ---------- ---------- ----------
BALANCE AT ADDITIONS BALANCE AT
BEGINNING CHARGED TO END OF
DESCRIPTION OF YEAR EXPENSE DEDUCTIONS(1) YEAR
- ------------------------------- ---------- ---------- ---------- ----------
Allowance for doubtful accounts
Fiscal Year Ended:
December 31, 2001 $ 13,831 $ 6,468 $ 3,089 $ 17,210
December 31, 2000 13,529 6,913 6,611 13,831
December 31, 1999 12,352 5,421 4,244 13,529
- -------------------------------
(1) Uncollectible accounts written off, net of recoveries.
18
SIGNATURES
Pursuant to the requirements of Sections 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 22, 2002 By /s/ TERRY L. SHEPHERD
-----------------------------
Terry L. Shepherd
CHIEF EXECUTIVE OFFICER
(PRINCIPAL EXECUTIVE OFFICER)
By /s/ JOHN C. HEINMILLER
-----------------------------
John C. Heinmiller
VICE PRESIDENT, FINANCE 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 and on the date indicated.
/s/ RONALD A. MATRICARIA Director March 22, 2002 /s/ TERRY L. SHEPHERD Director March 22, 2002
- ------------------------- -------------------------
Ronald A. Matricaria Terry L. Shepherd
/s/ RICHARD R. DEVENUTI Director March 22, 2002 /s/ DAVID A. THOMPSON Director March 22, 2002
- ------------------------- -------------------------
Richard R. Devenuti David A. Thompson
/s/ STUART M. ESSIG Director March 22, 2002 /s/ STEFAN K. WIDENSOHLER Director March 22, 2002
- ------------------------- -------------------------
Stuart M. Essig Stefan K. Widensohler
/s/ THOMAS H. GARRETT III Director March 22, 2002 /s/ WENDY L. YARNO Director March 22, 2002
- ------------------------- -------------------------
Thomas H. Garrett III Wendy L. Yarno
/s/ WALTER L. SEMBROWICH Director March 22, 2002 /s/ FRANK C-P YIN Director March 22, 2002
- ------------------------- -------------------------
Walter L. Sembrowich Frank C-P Yin
/s/ DANIEL J. STARKS Director March 22, 2002
- -------------------------
Daniel J. Starks
19