UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) April 16, 2003
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ST. JUDE MEDICAL, INC.
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(Exact name of registrant as specified in its chapter)
Minnesota 0-8672 41-1276891
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
One Lillehei Plaza, St. Paul, MN 55117
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (651) 483-2000
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Not applicable
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(Former name or former address, if changed since last report)
Item 9. Regulation FD Disclosure
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ST. JUDE MEDICAL REPORTS RECORD FIRST QUARTER SALES AND EARNINGS
St. Paul, MN, April 16, 2003 -- St. Jude Medical, Inc. (NYSE:STJ) today reported
results for the first quarter ended March 31, 2003. The Company reported record
net sales of $441.4 million, an increase of 18.9% compared to the $371.2 million
reported in the first quarter of 2002. Sales increased 14.7% on a constant
currency basis as favorable currency comparisons increased first quarter sales
by about $15.7 million. Earnings for the first quarter of 2003 were $80.0
million, also a record, a $17.9 million or 28.8% increase over net earnings of
$62.1 million in the first quarter of 2002. Earnings per diluted share were $.43
in the first quarter of 2003, a 26.5% increase over the $.34 reported in the
first quarter of 2002.
Commenting on first quarter 2003 results, St. Jude Medical Chairman and Chief
Executive Officer Terry L. Shepherd said, "We are pleased with this strong first
quarter performance. The markets we participate in continue to be robust and our
first quarter results reflect strong sales in several product categories led by
implantable cardioverter defibrillator (ICD) and vascular closure devices. Total
sales increased approximately 19% over a strong first quarter of 2002. Gross
margin and SG&A productivity gains were right on track reflecting our commitment
to continuous improvement and operating discipline. EPS of $.43 increased more
than 26% compared to the first quarter of 2002. Another strong cash flow quarter
allowed us to increase our cash reserves prior to financing the Getz
transaction."
Shepherd added, "Our high-voltage cardiac rhythm management product line
continued the strong momentum we saw throughout last year with first quarter ICD
sales of $102 million, an increase of 55% over the first quarter of 2002. Our
down-sized Epic(TM) ICD family, launched in October, is now our best selling ICD
product family in the United States and contributed to our continued excellent
growth and share gain in the ICD market. Epic(TM) ICDs are the smallest,
lightest ICDs to deliver 30 joules of energy. The European launch of the single
coil version of the Riata(R) ICD lead contributed to first quarter results as
well. The Epic(TM) Plus, our next generation ICD family incorporating our
clinically proven AF Suppression(TM) technology, remains on track for worldwide
launch during the second quarter."
Shepherd continued, "We passed another important milestone in our CRM business
on March 28 when we announced that the number of implants in our RHYTHM study
had reached the minimum number required by the protocol. The RHYTHM study is
designed to test the safety and efficacy of the Model V-338 Epic(TM) HF ICD
system which is used to treat heart failure patients who are also at risk of
dangerously fast ventricular tachyarrhythmias. We believe the complex nature of
heart failure and ventricular tachyarrhythmias can benefit from an advanced
product such as the Epic(TM) HF ICD, which combines many of St. Jude Medical's
most sophisticated cardiac rhythm management technologies - pacemaker therapy,
defibrillation therapy, and left-heart stimulation - in one device. We remain on
track for U.S. approval of the Epic(TM) HF in the first half of 2004. We also
received an Investigational Device Exemption (IDE) from the U.S. Food and Drug
Administration (FDA) authorizing the addition of the QuickSite(TM)
Left Heart Pacing Lead to the system of devices being studied in its RHYTHM
study. The QuickSite(TM) 1056K lead is St. Jude Medical's latest pacing lead
designed specifically for placement in the coronary sinus to enable left
ventricular pacing in cardiac resynchronization applications. The lead
incorporates a number of unique and important new features.
"In our low-voltage cardiac rhythm management product line, first quarter
worldwide pacing sales of $192 million represented an increase of 6%, consistent
with our expectations and guidance," Shepherd stated. "U.S. pacemaker sales
decreased 3%, reflecting an emerging trend in this market that some patients may
now be indicated for ICD therapy who previously might have received a pacemaker.
We expect this trend to continue in the U.S. for the balance of 2003.
International pacing sales were strong, up about 21%. We recently announced FDA
approval for market release of the Identity(R) ADx DR and Identity(R) ADx XL DR
pacemakers. U.S. launch of these Identity(R) ADx DR models, the world's most
advanced pacemakers, is planned next month. The St. Jude Medical Identity(R) ADx
pacemakers are the first models in the Company's Team ADx product family,
incorporating unique AT/AF discrimination and diagnostic features. This product
family builds upon innovations in previous St. Jude Medical pacemakers including
the AF Suppression(TM) algorithm and the BEAT-BY-BEAT(TM) AutoCapture(TM) Pacing
System. Other Team ADx models and the Integrity(R) ADx and Verity(TM) ADx
pacemakers will follow the Identity(R) ADx later this year, offering physicians
more choices in feature sets and header configurations. Earlier this week, we
announced FDA approval of the IsoFlex(R) S pacing lead and the first implant of
the IsoFlex(R) P pacing lead.
"Completing our array of product technologies for managing cardiac rhythm
disorders, sales of our electrophysiology (EP) catheter line increased about 17%
over last year in line with our expectations. The Livewire Cannulator(TM), a
unique steerable catheter designed to access the coronary sinus in conjunction
with a guiding introducer, like the Seal-Away(TM) CS, during permanent lead
placement for cardiac resynchronization therapy is the latest addition to our
full line of electrophysiology (EP) catheter products," Shepherd continued.
"First quarter sales in our Cardiology and Vascular Access business increased
$16 million to $56.5 million, a 40% increase compared to last year, driven by
continuing strong growth in our Angio-Seal product line," Shepherd stated.
"During the quarter, we announced FDA approval of the Angio-Seal(TM) STS Plus,
the Company's latest-generation vascular closure device. A mid-year global
launch of this product is planned. The STS Plus builds on the STS Platform which
features a self-tightening suture allowing the arterial closure procedure to be
completed in the catheterization lab as well as further enhancements directed
toward more efficient device positioning, smoother arterial access and
simplified deployment."
Shepherd added, "We also announced approval of new labeling for the
Angio-Seal(TM) STS 6F vascular closure devices following completion of an IDE
study which demonstrated how the Angio-Seal(TM) STS device significantly reduces
the time to patient ambulation and discharge following diagnostic procedures.
This new labeling is supported by clinical data demonstrating that many patients
can be safely ambulated in less than 20 minutes and discharged one hour
post-ambulation following diagnostic procedures using our Angio-Seal technology.
"In our Cardiac Surgery business, sales were $66 million, up about 5% compared
to the first quarter of 2002 with sales particularly strong in international
markets," Shepherd stated.
Shepherd continued, "Finally, on April 1, we announced the completion of the
acquisition of Getz Bros. Co., Ltd., the largest distributor of St. Jude
Medical's products in Japan. This is an important milestone for our business in
Japan. The Getz Bros. acquisition strengthens our presence in Japan, the world's
second largest medical technology market, at a critical time in the growth of
our international business. For more than 20 years, we have enjoyed a strong
partnership with Getz Bros., a well managed and effective organization. In the
past few months, integration teams from both companies worked to integrate our
operations and systems which will facilitate a smooth transition. With the close
of this transaction, we now have a significant direct presence in Japan, which
will be complemented by our other long-standing Japanese distributor
relationships. In the coming year, we plan to introduce key products into the
Japanese market, accelerating growth across all of our business segments.
"It's been a very productive start to the year, and our outlook for the
remainder of 2003 remains positive. All of our businesses are well positioned to
support the Company's financial expectations for the second quarter and 2003. We
look forward to a complete review of our technology and product portfolios at
our upcoming analyst meeting on April 24 in New York City which will be web-cast
for interested investors," Shepherd concluded.
The previously disclosed acquisition of St. Jude Medical's largest distributor
in Japan, Getz Bros., closed on April 1, 2003. The Company anticipates absorbing
the higher cost of goods sold associated with the Getz acquisition accounting in
the second quarter of 2003. Including the absorption of this higher cost of
goods sold, the Company expects consolidated EPS for the second quarter to be in
the range of $0.41 - $0.43. For the second half of 2003, the higher cost of
goods sold arising from the acquisition of Getz will moderate. For the full year
2003, the Company expects this acquisition will be neutral to EPS. The Company
expects consolidated EPS for the full year 2003 to be in the range of $1.75 to
$1.80.
During a teleconference scheduled today and available on
http://phx.corporate-ir.net/phoenix.zhtml?c=73836&p=irol-calendardetails&
Eventld=717421, the Company will review first quarter results and its earnings
and revenue forecasts for the second quarter and remainder of 2003.
Any statements made regarding the Company's anticipated product approvals,
sales, expenses and earnings are forward-looking statements which are subject to
risks and uncertainties, such as those described in the Financial Report section
of the Company's Annual Report to Shareholders for the fiscal year ended
December 31, 2002 (see pages 6-8). Actual results may differ materially from
anticipated results.
St. Jude Medical, Inc. (www.sjm.com) is dedicated to the design, manufacture and
distribution of innovative medical devices of the highest quality, offering
physicians, patients and payers unmatched clinical performance and demonstrated
economic value.
ST. JUDE MEDICAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(DATA IN THOUSANDS, EXCEPT EPS)
(UNAUDITED)
Three Months Ended Three Months Ended
March 31, 2003 March 31, 2002
Net sales $ 441,384 $ 371,193
Cost of sales 139,464 118,788
Gross profit 301,920 252,405
Selling, general & administrative 139,084 122,687
Research & development 55,942 46,465
Operating profit 106,894 82,253
Other income (expense) 1,197 (485)
Earnings before taxes 108,091 82,768
Income tax provision 28,104 20,692
Net earnings $ 79,987 $ 62,076
Earnings per share
Basic $ 0.45 $ 0.35
Diluted $ 0.43 $ 0.34
Basic shares outstanding 178,888 175,223
Diluted shares outstanding 186,326 182,385
CONDENSED CONSOLIDATED BALANCE SHEETS
(DATA IN THOUSANDS)
(UNAUDITED)
March 31, 2003 Dec. 31, 2002
Cash & equivalents $ 497,103 $ 401,860
Accounts receivable, net 405,287 381,246
Inventories 231,794 227,024
Other current assets 103,479 104,187
Property, plant & equipment, net 295,340 300,481
Other assets 543,515 536,581
Total assets $ 2,076,518 $ 1,951,379
Current liabilities $ 362,401 $ 374,652
Debt
0 0
Total equity 1,714,117 1,576,727
Total liabilities & equity $ 2,076,518 $ 1,951,379
SIGNATURE
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
ST. JUDE MEDICAL, INC.
Date: April 29, 2003 By: /s/ Kevin T. O'Malley
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Kevin T. O'Malley
Vice President and
General Counsel