Exhibit 1
- ---------
ST. JUDE MEDICAL REPORTS RECORD SECOND QUARTER RESULTS
------------------------------------------------------
SALES INCREASE 23% LED BY ICD AND ANGIO-SEAL PRODUCT LINES
----------------------------------------------------------
St. Paul, MN, July 16, 2003 -- St. Jude Medical, Inc. (NYSE: STJ) today reported
record second quarter 2003 sales and earnings. Second quarter 2003 net sales of
$495 million represent a $91 million or 23% increase compared to the $404
million reported by the Company in the second quarter of 2002. Favorable foreign
currency translation comparisons increased second quarter sales by $19 million.
First half 2003 net sales were $936 million, an increase of $160 million or 21%
over the $776 million reported in the first half of 2002. Favorable foreign
currency translation comparisons increased first half 2003 sales by about $35
million.
Net earnings for the second quarter of 2003 were $82 million, a $12 million or
17% increase over the $70 million reported in the second quarter of 2002.
Earnings per diluted share were $.43 in the second quarter of 2003, a 13%
increase over the $.38 per diluted share reported in the second quarter of 2002.
Net earnings for the first half of 2003 were $162 million, a $30 million or 23%
increase over the $132 million reported in the first half of 2002. Earnings per
diluted share were $.86 for the first half of 2003, a 19% increase over the $.72
per share reported in the first half of 2002.
Commenting on these financial results, St. Jude Medical President and Chief
Operating Officer Daniel J. Starks, said, "Second quarter results were
consistent with our overall expectations. Sales of $495 million represent a 23%
increase over last year's second quarter and were a result of strong performance
across multiple product lines. Earnings of $.43 per diluted share were
consistent with our expectations and 13% higher than last year's second quarter,
while year-to-date earnings of $.86 per diluted share were 19% greater than the
first half of 2002. Another strong cash flow quarter allowed us to increase our
cash reserves while internally funding a portion of the acquisition of Getz
Japan and the Epicor Medical investment."
On April 1, St. Jude Medical announced the completion of the acquisition of Getz
Bros. Co., Ltd., the largest distributor of St. Jude Medical products in Japan,
the world's second largest medical technology market. The Company now has a
significant direct presence in Japan, complemented by other longstanding
Japanese distributor relationships. Second quarter results reflect the sales
contributions of Getz to St. Jude Medical. On June 30, the Company announced
regulatory and reimbursement approvals by the Ministry of Health, Labor and
Welfare (MHLW) in Japan of the St. Jude Medical Integrity(R) Micro pacemaker
family, offering Japanese physicians the smallest physical dimensions and most
advanced features of any pacemaker available in that market. In the coming year,
St. Jude Medical plans to introduce several other key products in Japan.
Starks added, "Our high-voltage cardiac rhythm management business continued the
strong momentum we have seen since early 2001. ICD sales for the quarter of $106
million represented an increase of more than 42% over the second quarter of
2002. The St. Jude Medical Epic(TM) Plus, the first ICD to incorporate our
clinically proven AF Suppression(TM) technology, was introduced during the
quarter and has been well received by the clinical community. We expect to
follow that product in the months ahead with the launch of the Atlas(R) Plus
ICD, the industry's most powerful ICD that also incorporates AF Suppression(TM).
We believe that our share of the conventional ICD market continued its steady
increase in the second quarter.
"Our second quarter view of the ICD market saw good growth in the conventional
ICD segment. We also saw expanded use of ICDs with cardiac resynchronization
(CRT) capability, a new high-voltage segment which we expect to enter with
several advanced products in 2004. We are very excited that the new CRT ICD
market is developing strongly in the U.S., as we anticipate a very attractive
St. Jude Medical product offering next year. Our progress in the RHYTHM ICD
study of the Epic(TM) HF ICD with CRT capability remains on track in every
respect. On March 28, we announced that minimum patient enrollment had been
achieved in this study. Those patients are being followed for six months as
required in the study design. We expect to submit a pre-market approval
application for the Epic(TM) HF device in the fourth quarter, as previously
communicated," Starks said.
On June 10, St. Jude Medical announced that the first patients had been enrolled
in the V-V (left ventricular, right ventricular) optimization phase of the
RHYTHM study, with the expectation to provide clinical evidence that optimizing
the interventricular timing of biventricular pacing therapy improves exercise
capacity and left ventricular performance. The Company has also enrolled
patients in the Quicksite(TM) over-the-wire (OTW) lead portion of the clinical
trial. The St. Jude Medical Epic(TM) HF ICD and the Quicksite(TM) OTW lead heart
lead are already approved and commercially available in Europe.
Starks continued, "In our low-voltage product line, sales for the second quarter
totaled $212 million, an increase of 10% over last year's second quarter.
International pacing sales continued to be strong, up 32%. A global launch is
underway of the first models in our new pacemaker product family, the
Identity(R) ADx DR, part of the Company's Team ADx product family, incorporating
unique AT/AF discrimination and diagnostic features to complement our AF
Suppression(TM) technology, and significant enhancements in programmer
capabilities."
At the North American Society of Pacing and Electrophysiology (NASPE) meeting in
May, the results of the OASES clinical trial demonstrated that St. Jude
Medical's unique AF Suppression(TM) algorithm significantly reduced atrial
fibrillation (AF) in patients with a history of AF and that even better results
can be obtained with placement of the atrial lead in the low atrial septum. Also
during the second quarter, the Company received FDA approval of the IsoFlex(R) S
pacing lead and the first implant of the IsoFlex(R) P pacing lead.
In the electrophysiology (EP) catheter component of the cardiac rhythm
management business, sales of EP catheters were $32 million, up about 40% over
last year.
Second quarter sales in the Company's vascular closure business increased 36% to
$52 million, compared to the second quarter of 2002 with the continued strong
customer acceptance of the St. Jude Medical Angio-Seal(TM) product line. Initial
launch of the Angio-Seal(TM) STS Plus is underway. The STS Plus builds on the
very successful STS platform directed toward more efficient device positioning,
smoother arterial access and simplified deployment. Sales of other Cardiology
and Vascular access products for the quarter were $22 million.
Cardiac Surgery sales for the quarter were approximately $71 million, an
increase of approximately 6% over the second quarter of 2002. Heart valve sales
for the quarter were approximately $65 million, an increase of approximately 6%
compared to the second quarter of 2002.
Starks concluded, "An important event during the second quarter was our
announcement on May 2 of a minority investment in Epicor Medical, Inc., a
developer of new devices for the treatment of atrial fibrillation (AF) which is
the most common heart arrhythmia and a significant worldwide health challenge.
The agreement with Epicor Medical also provides that St. Jude Medical will
acquire Epicor
Medical in 2004 if specific clinical and regulatory milestones are achieved.
Epicor Medical is pursuing the clinical evaluation of its High Intensity Focused
Ultrasound (HIFU) ablation system for surgical treatment of AF. Epicor Medical's
technology is unique and has the potential to deal definitely and simply with
patients suffering from even the most difficult forms of AF. In addition, Epicor
Medical's surgical ablation system would represent a new growth opportunity for
our cardiac surgery business, leverage St. Jude Medical's long-standing
relationship with cardiac surgeons and expand St. Jude Medical's "Surround AF"
strategy."
The Company expects consolidated EPS for the third quarter to be in the range of
$0.43 - $0.45 and continues to expect EPS for the full year 2003 to be in the
range of $1.75 to $1.80.
St. Jude Medical's conference call will be webcast live and archived on July 16,
2003, at 8 AM CDT on the following website (www.sjm.com):
http://phx.corporate-ir.net/phoenix.zhtml?c=73836&p=irol-EventDetails&EventId=750613.
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 Three Months Six Months Six Months
Ended Ended Ended Ended
June 30, 2003 June 30, 2002 June 30, 2003 June 30, 2002
Net sales $ 495,093 $ 404,348 $ 936,477 $ 775,541
Cost of sales 161,300 128,962 300,764 247,750
Gross profit 333,793 275,386 635,713 527,791
Selling, general & administrative 163,916 131,210 303,000 253,897
Research & development 60,203 49,291 116,145 95,756
Operating profit 109,674 94,885 216,568 178,138
Other income (expense) 1,045 227 2,242 (258)
Earnings before taxes 110,719 95,112 218,810 177,880
Income tax provision 28,787 25,557 56,891 46,249
Net earnings $ 81,932 $ 69,555 $ 161,919 $ 131,631
Earnings per share
Basic $ 0.45 $ 0.39 $ 0.90 $ 0.75
Diluted $ 0.43 $ 0.38 $ 0.86 $ 0.72
Basic shares outstanding 180,289 176,396 179,588 175,810
Diluted shares outstanding 189,119 183,472 187,723 182,929
CONDENSED CONSOLIDATED BALANCE SHEETS
(DATA IN THOUSANDS)
(UNAUDITED)
June 30, 2003 Dec. 31, 2002
Cash & equivalents $ 589,142 $ 401,860
Accounts receivable, net 493,282 381,246
Inventories 290,732 227,024
Other current assets 141,218 104,187
Property, plant & equipment, net 302,364 300,481
Other assets 721,963 536,581
Total assets $2,538,701 $1,951,379
Short-term debt $ 31,647 $ 0
Other current liabilities 409,428 374,652
Long-term debt 176,757 0
Deferred income taxes 48,238 0
Total equity 1,872,631 1,576,727
Total liabilities & equity $2,538,701 $1,951,379