Breaking News

Tweet TWEET

St. Jude Medical Reports Fourth Quarter and Full-Year 2012 Results

  St. Jude Medical Reports Fourth Quarter and Full-Year 2012 Results

Business Wire

ST. PAUL, Minn. -- January 23, 2013

St. Jude Medical, Inc. (NYSE: STJ) today reported sales and net earnings for
the fourth quarter and year ended December 29, 2012.

Fourth Quarter and Full-Year Sales

The Company reported net sales of $1.372 billion in the fourth quarter of
2012, a decline of approximately 2 percent compared with the $1.407 billion in
the fourth quarter of 2011. Unfavorable foreign currency translation
comparisons decreased fourth quarter sales by approximately $23 million. On a
currency neutral basis, net sales decreased by 1 percent from the fourth
quarter of 2011.

Net sales in 2012 were $5.503 billion compared to $5.612 billion in 2011, a
decrease of about 2 percent. Unfavorable foreign currency translation
comparisons decreased full-year 2012 sales by about $137 million. On a
currency neutral basis, net sales grew 1 percent over the prior year.

Commenting on the Company’s results and growth program, St. Jude Medical
Chairman, President and Chief Executive Officer Daniel J. Starks said, “We are
particularly pleased with the strong growth of our atrial fibrillation
business, our ability to maintain share in the global ICD market and exceeding
prior earnings per share guidance for the quarter. We remain firmly committed
to delivering strong EPS growth in 2013 without sacrificing investment in our
broad portfolio of pipeline products.”

Cardiac Rhythm Management (CRM)

Total CRM sales, which include implantable cardioverter defibrillator (ICD)
and pacemaker products, were $682 million for the fourth quarter of 2012, a 6
percent decrease compared to the fourth quarter of 2011. After adjusting for
the impact of foreign currency, total CRM sales decreased 5 percent. Total CRM
product sales for the full-year 2012 were $2.854 billion, down approximately 6
percent from 2011. On a currency neutral basis, total CRM sales declined 3.5
percent from the prior year.

Of that total, ICD product sales were $422 million in the fourth quarter, a 3
percent decrease compared to the fourth quarter of 2011. ICD revenue decreased
2 percent after adjusting for the impact of foreign currency. ICD product
sales for the full-year 2012 were $1.743 billion, a decrease of 4 percent when
compared to 2011. On a constant currency basis, total ICD sales declined 2
percent from the prior year.

Fourth quarter pacemaker sales were $260 million, an 11 percent decrease
compared to the fourth quarter of 2011. Total pacemaker sales for 2012 were
$1.111 billion, down 8 percent compared to pacemaker sales in 2011. On a
constant currency basis, total pacemaker sales declined 6 percent from the
prior year.

Atrial Fibrillation (AF)

AF product sales for the fourth quarter totaled $239 million, a 10 percent
increase over the fourth quarter of 2011. On a constant currency basis, AF
product sales increased 11 percent in the fourth quarter of 2012. For the
full-year 2012, AF product sales were $898 million, an increase of 9 percent
over the prior year. On a constant currency basis, AF product sales increased
12 percent in 2012.

Cardiovascular

Total cardiovascular sales, which primarily include vascular and structural
heart products, were $338 million for the fourth quarter of 2012,
approximately equal to the fourth quarter of 2011. Total cardiovascular
product sales for 2012 were $1.328 billion, down 1 percent from 2011,
including a $36 million decrease due to unfavorable foreign currency
translations. On a constant currency basis, cardiovascular product sales
increased 2 percent in 2012.

Total structural heart product sales for the fourth quarter of 2012 were $152
million, approximately equal compared with the fourth quarter of 2011. Total
structural heart product sales for 2012 were $612 million, an increase of 3
percent compared to 2011 or 6 percent on a currency neutral basis.

Sales of vascular products in the fourth quarter of 2012 were $186 million, a
2 percent decrease from the fourth quarter of 2011. Total vascular product
sales for 2012 were $716 million, down about 3 percent from 2011 or down 1
percent on a constant currency basis.

Neuromodulation

St. Jude Medical sales of neuromodulation products were $113 million in the
fourth quarter of 2012, down 7 percent from the prior year. Total
neuromodulation product sales for 2012 were $423 million, up 1 percent over
the prior year including a $7 million decrease due to unfavorable currency
translations.

Fourth Quarter and Full-Year Earnings Results

In the fourth quarter, the Company recognized after-tax special charges of
$113 million, or $0.36 per share, primarily related to our previously
announced restructuring activities. Also, during the fourth quarter, the
Company recognized a $46 million income tax charge, or $0.15 per share,
related to adjustments to uncertain tax positions associated with the
effective settlement of domestic income tax audits.

Including these items, reported net earnings for the fourth quarter of 2012
were $0.39 per share. This compares to reported net earnings for the fourth
quarter of 2011 of $0.39 per share. For the full-year 2012, reported net
earnings were $752 million, or $2.39 per share.

In accordance with GAAP, reported net earnings for the fourth quarter 2012 do
not include any benefit from the research and development tax credit, even
though this tax credit was extended for 2012 and 2013 earlier this month
retroactive to the beginning of 2012. Including the $0.02 per share benefit of
this adjustment and excluding the fourth quarter charges, adjusted net
earnings for the fourth quarter of 2012 were $285 million, or $0.92 per share.
This compares to adjusted net earnings for the fourth quarter of 2011 of $0.86
per share. A reconciliation of the Company's non-GAAP adjusted net earnings
per share to the Company's GAAP net earnings per share is provided in the
schedule at the end of the press release.

First Quarter and Full-Year 2013 Sales and Earnings Guidance

During a conference call today, St. Jude Medical will provide its range for
revenue expectations for the first quarter and full-year 2013 by product
category.

The Company expects its consolidated net earnings for the first quarter of
2013 to be in the range of $0.91 to $0.93 per share and for full-year 2013
consolidated net earnings to be in the range of $3.68 to $3.73. A further
reconciliation of the Company’s quarterly and annual guidance is provided in
the schedule below.

Non-GAAP Financial Measures

The Company provides adjusted net earnings and adjusted net earnings per share
because St. Jude Medical management believes that in order to properly
understand the Company’s short-term and long-term financial trends, investors
may wish to consider the impact of certain adjustments (such as in-process
research and development charges, impairment charges, restructuring charges,
litigation charges or litigation reserve adjustments and income tax
adjustments). These adjustments result from facts and circumstances (such as
business development activities, restructuring activities, asset impairment
events or developments, settlements and other developments relating to
litigation and resolution of audits by tax authorities) that vary in frequency
and impact on the Company’s results of operations. St. Jude Medical management
uses adjusted net earnings and adjusted net earnings per share to forecast and
evaluate the operational performance of the Company as well as to compare
results of current periods to prior periods on a consolidated basis.

The Company provides constant currency sales growth because St. Jude Medical
management believes that in order to properly understand the Company’s
short-term and long-term financial trends, investors may wish to consider the
impact of foreign currency translation on net sales. St. Jude Medical
management uses constant currency sales growth to forecast and evaluate the
operational performance of the Company as well as to compare sales of current
periods to prior periods.

Non-GAAP financial measures used by the Company may be calculated differently
from, and therefore may not be comparable to, similarly titled measures used
by other companies. Investors should consider non-GAAP measures in addition
to, and not as a substitute for, or superior to, financial performance
measures prepared in accordance with GAAP.

Conference Call/Webcast

St. Jude Medical’s fourth quarter and full-year 2012 earnings call can be
heard live today beginning at 7 a.m. CST (also archived for 90 days) on the
Investor Relations section of our website sjm.com.

Annual Investor Meeting

The company has scheduled an annual investor meeting for Friday, Feb. 1, 2013,
in New York City. Investors must be registered in advance in order to gain
entry into the meeting and can email Abbey Nelson, Investor Relations
Specialist, at ANelson02@sjm.com for more information. The meeting will take
place from approximately 8 a.m. to 12:30 p.m. EST, and the general public can
listen to the meeting live on the Investor Relations section of our website
sjm.com.

About St. Jude Medical

St. Jude Medical develops medical technology and services that focus on
putting more control into the hands of those who treat cardiac, neurological
and chronic pain patients worldwide. The company is dedicated to advancing the
practice of medicine by reducing risk wherever possible and contributing to
successful outcomes for every patient. St. Jude Medical is headquartered in
St. Paul, Minn. and has four major focus areas that include: cardiac rhythm
management, atrial fibrillation, cardiovascular and neuromodulation. For more
information, please visit sjm.com.

Forward-Looking Statements

This news release contains forward-looking statements within the meaning of
the Private Securities Litigation Reform Act of 1995 that involve risks and
uncertainties. Such forward-looking statements include the expectations, plans
and prospects for the Company, including potential clinical successes,
anticipated regulatory approvals and future product launches, and projected
revenues, margins, earnings and market shares. The statements made by the
Company are based upon management’s current expectations and are subject to
certain risks and uncertainties that could cause actual results to differ
materially from those described in the forward-looking statements. These risks
and uncertainties include market conditions and other factors beyond the
Company’s control and the risk factors and other cautionary statements
described in the Company’s filings with the SEC, including those described in
the Risk Factors and Cautionary Statements sections of the Company’s Annual
Report on Form 10-K for the fiscal year ended December 31, 2011 and Quarterly
Report on Form 10-Q for the fiscal quarter ended September 29, 2012. The
Company does not intend to update these statements and undertakes no duty to
any person to provide any such update under any circumstance.


Summary of Fourth Quarter 2012 Sales and Reconciliation to Constant Currency
Sales Growth
(in millions)
                                     Reported   Constant              Constant
                                     %          Currency   Reported   Currency
(unaudited)       4Q12    4Q11    Change    %         $ Change  $
                   Sales    Sales    vs.        Change     vs. 4Q11   Change
                                     4Q11       vs.                   vs. 4Q11
                                                4Q11
Total Sales       $1,372  $1,407  -2%       -1%       -$35      -$12
Total
International     $746    $771                                  
Sales
Total U.S. Sales  $626    $636                               
Worldwide
Cardiac Rhythm    $682    $728    -6%       -5%       -$46      -$35
Management
International
Cardiac Rhythm    $343    $377
Management
U.S. Cardiac
Rhythm            $339    $351                               
Management
Worldwide ICD     $422    $436    -3%       -2%       -$14      -$8
International     $186    $199
ICD
U.S. ICD          $236    $237                               
Worldwide         $260    $292    -11%      -9%       -$32      -$27
Pacemakers
International     $157    $178
Pacemakers
U.S. Pacemakers   $103    $114                               
Worldwide Atrial  $239    $218    10%       11%       $21       $25
Fibrillation
International
Atrial            $148    $134
Fibrillation
U.S. Atrial       $91     $84                                
Fibrillation
Worldwide         $338    $340    0%        1%        -$2       $5
Cardiovascular
International     $229    $234
Cardiovascular
U.S.              $109    $106                               
Cardiovascular
Worldwide         $113    $121    -7%       -6%       -$8       -$7
Neuromodulation
International     $26     $26
Neuromodulation
U.S.              $87     $95
Neuromodulation
                                                                      

                                 
St. Jude Medical, Inc.
Condensed Consolidated Balance Sheets
(in millions)
(Unaudited)
                                                      
                                   December 29, 2012     December 31, 2011
Cash and cash equivalents          $1,194                $986
Accounts receivable, net           1,349                 1,367
Inventories                        610                   624
Other current assets               408                   414
Property, plant & equipment, net   1,425                 1,388
Goodwill                           2,961                 2,953
Other intangible assets, net       804                   856
Other assets                       400                   417
Total assets                       $9,151                $9,005
                                                         
Current debt obligations           $530                  $83
Other current liabilities          1,245                 978
Long-term debt                     2,550                 2,713
Deferred income taxes, net         203                   279
Long-term other liabilities        529                   477
Total equity                       4,094                 4,475
Total liabilities & equity         $9,151                $9,005
                                                         

               
St. Jude Medical, Inc.
Condensed Consolidated Statements of Earnings
(in millions, except per share amounts)
(Unaudited)
                                                                    
                                                                           
                 Three Months Ended              Year Ended
                                                                           
                                                                           
                 December         December       December       December
                 29, 2012         31, 2011       29, 2012       31, 2011
Net sales        $1,372           $1,407         $5,503         $5,612
Cost of sales:
Cost of sales
before special   372              374            1,445          1,486
charges
Special          47               29             93             47
charges
Total cost of    419              403            1,538          1,533
sales
Gross profit     953              1,004          3,965          4,079
                                                                           
Selling,
general &        451              552            1,891          2,084
administrative
expense
Research &
development      158              177            676            705
expense
Purchased
in-process R &   0                0              0              4
D charges
Special          119              118            298            171
charges
                                                                           
Operating        225              157            1,100          1,115
profit
Other income     (28)             (24)           (95)           (96)
(expense), net
                                                                           
Earnings
before income    197              133            1,005          1,019
taxes
Income tax       77               8              253            193
expense
Net earnings     $120             $125           $752           $826
                                                                           
Adjusted net
earnings         $285       (1)   $274       (2) $1,095     (3) $1,074     (4)
(Non-GAAP)
                                                                           
Diluted net
earnings per     $0.39            $0.39          $2.39          $2.52
share
Adjusted
diluted net
earnings per     $0.92      (1)   $0.86      (2) $3.48      (3) $3.28      (4)
share
(Non-GAAP)
                                                                           
Cash dividends
declared per     $0.23            $0.21          $0.92          $0.84
share
                                                                           
Weighted
average shares   310.0            320.0          314.8          327.1
outstanding-
diluted
                                                                           
                                                                           
(1) Fourth quarter 2012 adjusted net earnings and adjusted diluted net
earnings per share exclude the following after-tax items totaling $159 or
$0.51 per share:
- $75 charges, or $0.24 per share, primarily related to ongoing restructuring
actions originally announced in August 2012 to realign our product divisions
and to centralize certain support functions. The associated pre-tax amount of
$106 was recorded as a Special Charge to Cost of sales ($8) and Special
charges ($98).
- $11 charges, or $0.03 per share, related to intangible asset impairment
charges and inventory write-offs for discontinued CATD product lines. The
associated pre-tax amount of $17 was recorded as a Special Charge to Cost of
sales ($14) and Special charges ($3).
- $27 charges, or $0.09 per share, related to litigation and other costs
associated with field actions in our IESD business. The associated pre-tax
amount of $43 was recorded as a Special Charge to Cost of sales ($25) and
Special charges ($18).
- $46 income tax expense, or $0.15 per share, related to adjustments to
uncertain tax positions associated with the effective settlement of certain
income tax audits.
Fourth quarter 2012 adjusted net earnings and adjusted diluted net earnings
per share include $6 of income tax benefit, or $0.02 per share, for the fourth
quarter 2012 benefit relating to the federal research and development tax
credit that was extended in 2013 retroactive to the beginning of the 2012
fiscal year.

(2) Fourth quarter 2011 adjusted net earnings and adjusted diluted net
earnings per share exclude the following after-tax charges totaling $149 or
$0.47 per share:
- $71 charges, or $0.22 per share, primarily related to ongoing restructuring
actions that began in the second quarter to realign certain activities in our
CRM business as well as employee termination and other costs primarily
associated with continuing efforts to improve our sales & sales support
organization. The associated pre-tax amount of $98 was recorded as a Special
Charge to Cost of sales ($29) and Special charges ($69).
- $31 charges, or $0.10 per share, related to the write-down of certain
intangible assets which were determined to be impaired. The associated pre-tax
amount of $49 was recorded to Special charges.
- $38 charges, or $0.12 per share, related to increased collection risk for
accounts receivable related to one customer in Europe. The associated pre-tax
amount of $56 was recorded to SG&A expense.
- $9 charges, or $0.03 per share, related to contributions to the St. Jude
Medical Foundation. The associated pre-tax amount of $15 was recorded to SG&A
expense.
                                                                           
(3) Year ended 2012 adjusted net earnings and adjusted diluted net earnings
per share exclude the following after-tax items totaling $321 or $1.02 per
share:
- $123 charges, or $0.39 per share, primarily related to ongoing restructuring
actions originally announced in August 2012 to realign our product divisions
and to centralize certain support functions. The associated pre-tax amount of
$173 was recorded as a Special Charge to Cost of sales ($10) and Special
charges ($163).
- $11 charges, or $0.03 per share, related to intangible asset impairment
charges and inventory write-offs for discontinued CATD product lines. The
associated pre-tax amount of $17 was recorded as a Special Charge to Cost of
sales ($14) and Special charges ($3).
- $75 charges, or $0.24 per share, primarily related to ongoing restructuring
actions that began in 2011 to realign certain activities in our legacy CRM
business as well as costs primarily associated with continuing efforts to
improve our sales and sales support organizations. The associated pre-tax
amount of $107 was recorded as a Special Charge to Cost of sales ($44) and
Special charges ($63).
- $27 charges, or $0.09 per share, related to litigation and other costs
associated with field actions in our IESD business. The associated pre-tax
amount of $43 was recorded as a Special Charge to Cost of sales ($25) and
Special charges ($18).
- $14 impairment charges, or $0.04 per share, related to writing down acquired
neuromodulation intangible assets to fair value. The associated pre-tax amount
of $23 was recorded to Special charges.
- $25 charges, or $0.08 per share, related to a license dispute settlement
charge. The associated pre-tax amount of $28 was recorded to Special charges.
- $46 income tax expense, or $0.15 per share, related to adjustments to
uncertain tax positions associated with the effective settlement of certain
income tax audits.
Year ended 2012 adjusted net earnings and adjusted diluted net earnings per
share include $22 of income tax benefit, or $0.07 per share, for the 2012
benefit relating to the federal research and development tax credit that was
extended in 2013 retroactive to the beginning of the 2012 fiscal year.

(4) Year ended 2011 adjusted net earnings and adjusted diluted net earnings
per share exclude the following after-tax charges totaling $248 or $0.76 per
share:
- $19 charges, or $0.06 per share, related to AGA Medical Holdings, Inc.
acquired inventory step up amortization expense. The associated pre-tax amount
of $30 was recorded to Cost of sales.
- $121 charges, or $0.37 per share, primarily related to ongoing restructuring
actions that began in the second quarter to realign certain activities in our
CRM business as well as employee termination and other costs primarily
associated with continuing efforts to improve our sales & sales support
organization. The associated pre-tax amount of $169 was recorded as a Special
Charge to Cost of sales ($47) and Special charges ($122).
- $31 charges, or $0.09 per share, related to the write-down of certain
intangible assets which were determined to be impaired. The associated pre-tax
amount of $49 was recorded to Special charges.
- $19 charges, or $0.06 per share, primarily related to post acquisition
expenses for AGA Medical Holdings, Inc. which principally include contract
termination costs and other integration costs in international locations. The
associated pre-tax amount of $25 was recorded to SG&A expense.
- $9 charges, or $0.03 per share, related to contributions to the St. Jude
Medical Foundation. The associated pre-tax amount of $15 was recorded to SG&A
expense.
- $46 charges, or $0.14 per share, related to increased collection risk for
accounts receivable related to customers in Europe. The associated pre-tax
amount of $66 was recorded to SG&A expense.
- $3 Purchased in-process R&D charges, or $0.01 per share, associated with the
Company's acquisition of certain pre-development technology assets.



2013 Earnings Guidance Reconciliation
                                                                  
                            First                        Full Year
                            Quarter                      2013
                            2013
                                                                         
Estimated 2013 diluted      $0.95 - $                    $3.61 - $
net earnings per share      0.97                         3.66
Restructuring actions       0.04             (5)         0.15            (5)
Federal R&D tax credit      (0.08)           (6)         (0.08)          (6)
extension
Estimated 2013
adjusted diluted net        $0.91 - $                    $3.68 - $
earnings per share          0.93                         3.73
(Non-GAAP)
                                                                         
(5) The Company's above estimated 2013 adjusted diluted net earnings per share
(Non-GAAP) excludes the impact of after-tax charges expected to be recognized
related to ongoing business restructuring actions.

(6) The federal research and development tax credit was extended in 2013
retroactive to the beginning of the 2012 fiscal year. The Company's above
estimated 2013 adjusted diluted net earnings per share (Non-GAAP) excludes the
tax benefit related to fiscal year 2012 expected to be recognized in the first
quarter of 2013.


Contact:

St. Jude Medical, Inc.
Media and Investor Contact:
Rachel Ellingson, 651-756-2295
rellingson02@sjm.com
or
Investor Contact:
J.C. Weigelt, 651-756-4347
jweigelt@sjm.com