IRVINE, Calif., Feb. 3, 2015 /PRNewswire/ -- Edwards Lifesciences
Corporation (NYSE: EW), the global leader in the science of heart
valves and hemodynamic monitoring, today reported net income for
the quarter ended December 31, 2014
of $109.2 million, or $1.00 per diluted share, and non-GAAP1
net income of $116.5 million, or
$1.06 per diluted share. Net
income for the same period a year earlier was $75.1 million, or $0.68 per diluted share, and non-GAAP net income
was $105.0 million, or $0.95 per diluted share.
Net sales for the quarter ended December
31, 2014 increased 15 percent to $618.0 million compared to the same period last
year. Underlying2 sales grew 16 percent to
$614.2 million. U.S. and
international segment sales for the fourth quarter were
$286.6 million and $331.4 million, respectively.
"In 2014, we were pleased to introduce several innovative
products that helped us maintain our strong global leadership
position. We are particularly gratified to see the meaningful
impact that our dedicated employees have in helping so many
patients around the world," said Michael A.
Mussallem, chairman and CEO. "For the quarter, we
experienced robust growth across all regions, which was again led
by transcatheter heart valves sales that exceeded our expectations,
most notably in Europe."
Sales Results
For the fourth quarter, the company
reported Transcatheter Heart Valve Therapy sales (THV) of
$267.5 million, a 46 percent growth
rate over the fourth quarter last year. On an underlying
basis, THV sales grew 38 percent. These results were driven by
strong sales of the company's innovative SAPIEN 3 valve in
Europe and SAPIEN XT valve in the
U.S. Globally, average selling prices remained stable.
In the U.S., THV sales for the quarter, including royalties,
were $129.5 million. On an underlying
basis sales grew 36 percent to $126.4
million.
"Outside the U.S., THV sales grew 41 percent on an underlying
basis during the quarter, once again driven by strong procedure
growth across most countries in Europe," said Mussallem. "While we expect this
procedure growth rate to slow and competition to build, we continue
to believe there are large numbers of untreated patients who can
benefit from transcatheter aortic valve replacement therapy."
Surgical Heart Valve Therapy product group sales for the quarter
were $206.1 million. Reported sales
were comparable to the fourth quarter last year, and on an
underlying basis increased 3.2 percent. Heart valve unit gains
across most geographies drove the majority of this quarter's
growth, partially offset by the expected reduction of Cardiac
Surgery Systems product sales.
Critical Care product group sales were $144.4 million for the quarter, which were
comparable to the fourth quarter last year, and on an underlying
basis grew 4.3 percent. Growth was solid in the U.S., and
sales outside the U.S. were aided by a favorable comparison as
inventory levels stabilized in China. Enhanced Surgical
Recovery product sales, including FloTrac and ClearSight, grew
double-digits.
Additional Operating Results
For the quarter, the
company's gross profit margin was 74.0 percent, compared to 73.2
percent in the same period last year. This increase was driven
primarily by a more profitable product mix and a positive impact
from foreign exchange.
Selling, general and administrative expenses were $223.1 million for the quarter compared to
$186.6 million in the prior
year. The largest drivers of the increase were related to the
company's global expansion of transcatheter heart valves, and a
larger accrual for incentive compensation.
Research and development investments for the quarter were
$84.0 million compared to
$78.6 million in the prior year
period. This increase was primarily the result of continued
investments in the company's aortic and mitral valve programs,
partially offset by lower spending on clinical trials this
quarter.
Cash flow from operating activities for the fourth quarter was
$93.2 million. After capital spending
of $34.5 million and excluding the
tax impacts of previously reported special items, free cash flow
was $107.5 million.
Cash, cash equivalents and short-term investments totaled
$1.4 billion at December 31, 2014. Total debt was
$598.1 million.
Twelve-Month Results
For the twelve months ended
December 31, 2014, the company
recorded net income of $811.1
million, or $7.48 per diluted
share. Excluding special items, net income was $379.6 million, or $3.50 per diluted share, representing 8.4 percent
growth over the prior year.
Net sales for the twelve months of 2014 increased 13.6 percent
to $2.3 billion. Sales growth
was 13.3 percent on an underlying basis.
U.S. and international segment sales for the twelve months of
2014 were $1.0 billion and
$1.3 billion, respectively.
Cash flow from operating activities for the year was
approximately $1.0 billion. After
capital spending of $82.9 million and
excluding the impacts of special items, free cash flow was
$444.5 million.
During 2014, the company repurchased approximately 4.4 million
shares of common stock for $300.9
million.
Outlook
Based on current foreign exchange rates, the
company expects an approximate $160
million negative impact to full year 2015 reported sales
compared to the prior year. The corresponding profit impact is
mitigated by the company's foreign exchange hedging program. As a
result, Edwards expects full year reported sales to be at the lower
end of its previously provided $2.3 to $2.5
billion range. Given the momentum in transcatheter heart
valve sales, the company is raising its full year 2015 diluted EPS
guidance to $4.00 to $4.30, excluding
special items.
For the first quarter of 2015, at current foreign exchange rates
the company projects total sales to be between $570 million and $610 million, and diluted
earnings per share, excluding special items, to be between
$1.02 and $1.10.
"Our foundation of leadership and our commitment to transform
patient care with innovative therapies remain the source of our
strength," said Mussallem. "Edwards is poised for solid growth in
2015, and our exciting product pipeline positions us well for
continued longer-term success and greater shareholder value."
About Edwards Lifesciences
Edwards Lifesciences is
the global leader in the science of heart valves and hemodynamic
monitoring. Driven by a passion to help patients, the company
partners with clinicians to develop innovative technologies in the
areas of structural heart disease and critical care monitoring,
enabling them to save and enhance lives. Additional company
information can be found at www.edwards.com.
Conference Call and Webcast Information
Edwards
Lifesciences will be hosting a conference call today at
2:00 p.m. PT to discuss its fourth
quarter results. To participate in the conference call, dial
(877) 407-8037 or (201) 689-8037. For 72 hours following the
call, an audio replay can be accessed by dialing (877) 660-6853 or
(201) 612-7415 and using conference number 13598642. The call
will also be available via live or webcast replay on the "Investor
Relations" section of the Edwards web site at ir.edwards.com or
www.edwards.com. A live stream and replay can also be accessed via
mobile devices by downloading Edwards' IR App for iPhone and iPad
or Android.
This news release includes forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933 and Section
21E of the Securities Exchange Act of 1934. These
forward-looking statements can sometimes be identified by the use
of words such as "may," "will," "should," "anticipate," "believe,"
"plan," "project," "estimate," "expect," "intend," "guidance,"
"outlook," "optimistic," "aspire," "confident" or other forms
of these words or similar expressions and include, but are not
limited to, statements made by Mr. Mussallem, information in the
Outlook section, the company's financial goals, and expectations
for procedural adoption rates and competitive activity.
Forward-looking statements are based on estimates and assumptions
made by management of the company and are believed to be
reasonable, though they are inherently uncertain and difficult to
predict. Our forward-looking statements speak only as of the
date on which they are made and we do not undertake any obligation
to update any forward-looking statement to reflect events or
circumstances after the date of the statement. If the company
does update or correct one or more of these statements, investors
and others should not conclude that the company will make
additional updates or corrections.
Forward-looking statements involve risks and uncertainties that
could cause actual results or experience to differ materially from
that expressed or implied by the forward-looking statements.
Factors that could cause actual results or experience to differ
materially from that expressed or implied by the forward-looking
statements include uncertainties associated with the rate of
adoption of TAVR therapy; timing and effectiveness of new product
launches; competitive dynamics; the timing and extent of regulatory
approvals and reimbursement levels for our products; the company's
success in developing new products, and avoiding manufacturing and
quality issues; the impact of currency exchange rates; the timing
or results of pending or future clinical trials; actions by the
U.S. Food and Drug Administration and other regulatory agencies;
unexpected litigation results or expenses; and other risks detailed
in the company's filings with the Securities and Exchange
Commission, including its Annual Report on Form 10-K for the year
ended December 31, 2013, which are
available at edwards.com.
Edwards, Edwards Lifesciences, the stylized E logo, ClearSight,
FloTrac, SAPIEN XT, and SAPIEN 3 are trademarks of Edwards
Lifesciences Corporation. All other trademarks are the property of
their respective owners.
[1] To supplement the consolidated financial results prepared in
accordance with Generally Accepted Accounting Principles ("GAAP"),
the company uses non-GAAP financial measures. Non-GAAP
amounts in this press release exclude selected items. See the
Non-GAAP Financial Information page and reconciliation tables
below.
[2] "Underlying" amounts are non-GAAP items and in this press
release exclude foreign exchange fluctuations and the THV sales
return reserve. See the Non-GAAP Financial Information page and
reconciliation tables below.
EDWARDS
LIFESCIENCES CORPORATION
|
|
|
|
|
|
Unaudited
Consolidated Statements of Operations
|
|
|
|
|
|
(in millions, except
per share data)
|
Three Months
Ended
|
|
Year
Ended
|
|
December
31,
|
|
December
31,
|
|
2014
|
2013
|
|
2014
|
2013
|
|
|
|
|
|
|
Net sales
|
$ 618.0
|
$ 536.0
|
|
$ 2,322.9
|
$ 2,045.5
|
Cost of
sales
|
160.4
|
143.8
|
|
625.6
|
516.6
|
|
|
|
|
|
|
Gross
profit
|
457.6
|
392.2
|
|
1,697.3
|
1,528.9
|
|
|
|
|
|
|
Selling, general and
administrative expenses
|
223.1
|
186.6
|
|
858.0
|
733.4
|
Research and
development expenses
|
84.0
|
78.6
|
|
346.5
|
323.0
|
Intellectual property
litigation expense (income), net
|
0.6
|
6.8
|
|
(740.4)
|
(61.5)
|
Special
charges
|
10.2
|
16.3
|
|
70.7
|
16.3
|
Interest expense,
net
|
1.7
|
4.0
|
|
10.8
|
5.2
|
Other expense
(income), net
|
5.1
|
(0.4)
|
|
7.7
|
1.3
|
|
|
|
|
|
|
Income before
provision for income taxes
|
132.9
|
100.3
|
|
1,144.0
|
511.2
|
|
|
|
|
|
|
Provision for income
taxes
|
23.7
|
25.2
|
|
332.9
|
122.1
|
|
|
|
|
|
|
Net income
|
$ 109.2
|
$ 75.1
|
|
$ 811.1
|
$ 389.1
|
|
|
|
|
|
|
Earnings per
share:
|
|
|
|
|
|
Basic
|
$ 1.02
|
$ 0.69
|
|
$ 7.62
|
$ 3.48
|
Diluted
|
$ 1.00
|
$ 0.68
|
|
$ 7.48
|
$ 3.42
|
|
|
|
|
|
|
Weighted-average
common shares outstanding:
|
|
|
|
|
|
Basic
|
107.4
|
109.2
|
|
106.5
|
111.7
|
Diluted
|
109.7
|
111.0
|
|
108.5
|
113.8
|
|
|
|
|
|
|
Operating
Statistics
|
|
|
|
|
|
As a percentage of
net sales:
|
|
|
|
|
|
Gross profit
|
74.0%
|
73.2%
|
|
73.1%
|
74.7%
|
Selling, general and
administrative expenses
|
36.1%
|
34.8%
|
|
36.9%
|
35.9%
|
Research and development
expenses
|
13.6%
|
14.7%
|
|
14.9%
|
15.8%
|
Income before provision for
income taxes
|
21.5%
|
18.7%
|
|
49.2%
|
25.0%
|
Net income
|
17.7%
|
14.0%
|
|
34.9%
|
19.0%
|
|
|
|
|
|
|
Effective tax
rate
|
17.8%
|
25.1%
|
|
29.1%
|
23.9%
|
Note: Effective
January 1, 2014, the Company changed its method of accounting for
certain intellectual property litigation expenses. The
Company has retrospectively adjusted the comparative financial
statements of prior periods to apply this new method of
accounting. To make historical comparisons clearer, the
Company has included a schedule on its website (see
ir.edwards.com/results.cfm) detailing the impact of this change on
its 2009-2013 Consolidated Balance Sheets and Statements of
Operations.
|
|
|
|
|
|
|
Note: Numbers may not
calculate due to rounding.
|
|
|
|
|
|
EDWARDS
LIFESCIENCES CORPORATION
|
|
|
|
Unaudited Balance
Sheets
|
|
|
|
(in
millions)
|
|
|
|
|
December
31,
|
|
December
31,
|
|
2014
|
|
2013
|
ASSETS
|
|
|
|
|
|
|
|
Current
assets
|
|
|
|
Cash and cash
equivalents
|
$
653.8
|
|
$
420.4
|
Short-term
investments
|
785.0
|
|
516.5
|
Accounts and other
receivables, net
|
325.0
|
|
328.0
|
Inventories,
net
|
296.8
|
|
308.9
|
Deferred income
taxes
|
63.5
|
|
33.4
|
Prepaid
expenses
|
48.8
|
|
46.8
|
Other current
assets
|
121.7
|
|
71.8
|
Total current
assets
|
2,294.6
|
|
1,725.8
|
|
|
|
|
Long-term accounts
receivable, net
|
5.8
|
|
7.3
|
Long-term
investments
|
240.9
|
|
21.9
|
Property, plant and
equipment, net
|
442.9
|
|
421.6
|
Goodwill
|
376.0
|
|
385.4
|
Other intangible
assets, net
|
23.4
|
|
33.5
|
Deferred income
taxes
|
91.5
|
|
79.0
|
Other
assets
|
49.2
|
|
35.4
|
|
|
|
|
Total assets
|
$
3,524.3
|
|
$
2,709.9
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
|
|
|
|
Current
liabilities
|
|
|
|
Accounts payable and
accrued liabilities
|
$
434.4
|
|
$
345.6
|
|
|
|
|
Long-term
debt
|
598.1
|
|
593.1
|
Other long-term
liabilities
|
300.4
|
|
226.8
|
|
|
|
|
Stockholders'
equity
|
|
|
|
Common
stock
|
128.9
|
|
126.0
|
Additional paid-in
capital
|
878.4
|
|
671.2
|
Retained
earnings
|
2,841.9
|
|
2,030.8
|
Accumulated other
comprehensive loss
|
(100.9)
|
|
(27.6)
|
Treasury stock, at
cost
|
(1,556.9)
|
|
(1,256.0)
|
Total stockholders'
equity
|
2,191.4
|
|
1,544.4
|
|
|
|
|
Total liabilities and
stockholders' equity
|
$
3,524.3
|
|
$
2,709.9
|
Note: Effective
January 1, 2014, the Company changed its method of accounting for
certain intellectual property litigation expenses. The
Company has retrospectively adjusted the comparative financial
statements of prior periods to apply this new method of
accounting. To make historical comparisons clearer, the
Company has included a schedule on its website (see
ir.edwards.com/results.cfm) detailing the impact of this change on
its 2009-2013 Consolidated Balance Sheets and Statements of
Operations.
|
EDWARDS
LIFESCIENCES CORPORATION
|
Non-GAAP Financial
Information
|
|
|
To supplement the
consolidated financial results prepared in accordance with
Generally Accepted Accounting Principles ("GAAP"), the Company uses
non-GAAP historical financial measures. The Company
uses the term "underlying" when referring to non-GAAP sales
information, which excludes foreign exchange fluctuations, as well
as adjustments for discontinued and acquired products and sales
return reserves associated with transcatheter heart valve therapy
("THV") product upgrades, and "excluding special items" to also
exclude gains and losses from special items such as significant
investments, litigation, and business development transactions, and
for 2012 to include the tax benefit for the U.S. Research and
Development ("R&D") tax credit, which was required to be
included in 2013. Guidance for sales and sales growth rates
is provided on an "underlying basis," and projections for diluted
earnings per share, net income and growth, gross profit margin,
taxes and free cash flow are also provided on the same non-GAAP (or
"excluding special items") basis due to the inherent difficulty in
forecasting such items. The Company is not able to provide a
reconciliation of these non-GAAP items, to expected reported
results due to the unknown effect, timing and potential
significance of special charges or gains, and management's
inability to forecast charges associated with future transactions
and initiatives. Management does not consider the excluded items or
adjustments as part of day-to-day business or reflective of the
core operational activities of the Company as they result from
transactions outside the ordinary course of
business.
|
Management uses
non-GAAP financial measures internally for strategic decision
making, forecasting future results and evaluating current
performance. These non-GAAP financial measures are used in
addition to and in conjunction with results presented in accordance
with GAAP and reflect an additional way of viewing aspects of the
Company's core operations that, when viewed with its GAAP results,
provide a more complete understanding of factors and trends
affecting the Company's business. Non-GAAP financial measures
are not prepared in accordance with GAAP; therefore, the
information is not necessarily comparable to other companies and
should be considered as a supplement to, and not as a substitute
for, or superior to, the corresponding measures calculated in
accordance with GAAP. A reconciliation of non-GAAP historical
financial measures to the most comparable GAAP measure is provided
in the tables below.
|
|
|
The items
described below are adjustments to the GAAP financial results in
the reconciliations that follow:
|
|
|
THV Sales Return
Reserve and Related Costs - In the fourth quarter of 2013 and
the first and second quarters of 2014, the Company recorded a net
sales return reserve and related costs, primarily related to
inventory reserves, of $15.2 million, $15.6 million, and $6.1
million, respectively, related to estimated THV product returns
expected upon introduction of next-generation THV products.
In the third and fourth quarters of 2014, the Company recorded a
net reversal of the reserve of $16.0 million and $3.5 million,
respectively, upon delivery of the next-generation THV
products.
|
|
|
Intellectual
Property Litigation Expense (Income), net - The Company
incurred intellectual property litigation expenses of $5.5 million
and $5.5 million in the first quarter of 2014 and 2013,
respectively, $2.6 million and $5.5 million in the second quarter
of 2014 and 2013, respectively, $0.9 million and $4.3 million in
the third quarter of 2014 and 2013, respectively, and $0.6 million
and $6.8 million in the fourth quarter of 2014 and 2013,
respectively. In addition, in the second quarter of 2014, the
Company recorded a $750.0 million gain related to an agreement with
Medtronic to settle all outstanding patent litigation. In the
first quarter of 2013, the Company recorded an $83.6 million gain
related to the April 2010 jury award from Medtronic of damages for
infringement of the U.S. Andersen transcatheter heart valve
patent.
|
|
|
Acquisition of
in-process research and development -The Company recorded a
$10.2 million charge related to the acquisition of transcatheter
mitral valve intellectual property in the fourth quarter of
2014.
|
|
|
Asset Write-down
- The Company recorded a $5.0 million charge in the third
quarter of 2014 to write-down assets related to its automated
glucose monitoring program. The charge related primarily to
intellectual property, fixed assets, inventory and severance
expenses. The Company recorded a $5.9 million charge in the
fourth quarter of 2013 related to the impairment of in-process
research and development assets.
|
|
|
Charitable
Foundation Contribution - The Company recorded a $50.0 million
charge in the second quarter of 2014 for a charitable contribution
to the Edwards Lifesciences Foundation.
|
|
|
Settlement -
The Company recorded a $7.5 million charge in the first quarter of
2014 to settle past and future obligations related to one of its
intellectual property agreements.
|
|
|
Worldwide
Realignment - The Company recorded a $10.4 million charge in
the fourth quarter of 2013 related primarily to severance expenses
associated with a global workforce realignment.
|
|
|
Provision for
Income Taxes - During the second quarter of 2014, the
Company recorded a $6.2 million tax benefit due to the
remeasurement of its uncertain tax positions. During the
first quarter of 2013, the Company recorded an $8.4 million income
tax benefit relating to the federal R&D tax credit that was
extended in 2013 retroactive to the beginning of
2012.
|
|
|
Foreign Exchange
- Fluctuation in exchange rates impacts the comparative results
and sales growth rates of the Company's underlying business.
Management believes that excluding the impact of foreign exchange
rate fluctuations from its sales growth provides investors a more
meaningful comparison to historical financial results. The impact
of foreign exchange rate fluctuations has been detailed in the
"Unaudited Reconciliation of Sales by Product Group and
Region."
|
|
|
Free Cash Flow
- The Company defines free cash flow as cash flows from
operating activities less capital expenditures. During 2014,
the Company excluded from its calculation of free cash flow the
impacts of the payment from Medtronic for the litigation settlement
and its contribution to the Edwards Lifesciences Foundation.
During 2013, the Company excluded the impact of another payment
from Medtronic related to litigation.
|
EDWARDS
LIFESCIENCES CORPORATION
|
|
|
|
|
|
Unaudited
Reconciliation of GAAP to Non-GAAP Financial
Information
|
|
|
|
|
|
|
|
|
|
|
|
RECONCILIATION OF
GAAP TO NON-GAAP NET INCOME
|
|
|
|
|
|
|
Three Months
Ended
|
|
Year
Ended
|
|
|
December
31,
|
|
December
31,
|
(in millions, except
per share data)
|
2014
|
2013
|
|
2014
|
2013
|
|
|
|
|
|
|
|
GAAP Net
Income
|
$ 109.2
|
$ 75.1
|
|
$ 811.1
|
$ 389.1
|
|
Growth Rate
%
|
45.4%
|
|
|
108.5%
|
|
|
|
|
|
|
|
|
Non-GAAP
adjustments: (A)
|
|
|
|
|
|
|
|
|
|
|
|
|
THV sales return
reserve and related costs
|
(3.5)
|
15.2
|
|
2.2
|
15.2
|
Intellectual property
litigation expense (income), net
|
0.6
|
6.8
|
|
(740.4)
|
(61.5)
|
Acquisition of
in-process research and development
|
10.2
|
-
|
|
10.2
|
-
|
Charitable foundation
contribution
|
-
|
-
|
|
50.0
|
-
|
Settlement
|
-
|
-
|
|
7.5
|
-
|
Asset
write-down
|
-
|
5.9
|
|
5.0
|
5.9
|
Worldwide
realignment
|
-
|
10.4
|
|
-
|
10.4
|
|
|
|
|
|
|
|
Provision for income
taxes
|
|
|
|
|
|
|
Tax effect on
reconciling items(B)
|
-
|
(8.4)
|
|
240.2
|
17.2
|
|
Remeasurement
of uncertain tax position reserve(A)
|
-
|
-
|
|
(6.2)
|
-
|
|
Federal
research and development tax credit(A)
|
-
|
-
|
|
-
|
(8.4)
|
|
|
|
|
|
|
|
Non-GAAP Net
Income
|
$ 116.5
|
$ 105.0
|
|
$ 379.6
|
$ 367.9
|
|
Growth Rate
%
|
11.0%
|
|
|
3.2%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RECONCILIATION OF
GAAP TO NON-GAAP DILUTED EARNINGS PER SHARE
|
|
|
|
|
|
|
|
|
GAAP Diluted
Earnings Per Share
|
$ 1.00
|
$ 0.68
|
|
$ 7.48
|
$ 3.42
|
|
Growth Rate
%
|
47.1%
|
|
|
118.7%
|
|
|
|
|
|
|
|
|
Non-GAAP
adjustments:(A), (C)
|
|
|
|
|
|
|
|
|
|
|
|
|
THV sales return
reserve and related costs
|
(0.02)
|
0.10
|
|
0.01
|
0.10
|
Intellectual property
litigation expense (income), net
|
-
|
0.04
|
|
(4.44)
|
(0.34)
|
Acquisition of
in-process research and development
|
0.08
|
-
|
|
0.09
|
-
|
Charitable foundation
contribution
|
-
|
-
|
|
0.33
|
-
|
Settlement
|
-
|
-
|
|
0.06
|
-
|
Asset
write-down
|
-
|
0.05
|
|
0.03
|
0.04
|
Worldwide
realignment
|
-
|
0.08
|
|
-
|
0.08
|
|
|
|
|
|
|
|
Provision for income
taxes
|
|
|
|
|
|
|
Remeasurement
of uncertain tax position reserve
|
-
|
-
|
|
(0.06)
|
|
|
Federal
research and development tax credit
|
-
|
-
|
|
-
|
(0.07)
|
|
|
|
|
|
|
|
Non-GAAP Diluted
Earnings Per Share
|
$ 1.06
|
$ 0.95
|
|
$ 3.50
|
$ 3.23
|
|
Growth Rate
%
|
11.6%
|
|
|
8.4%
|
|
Note: Numbers may not
calculate due to rounding.
|
|
|
|
|
|
(A) See
description of "THV Sales Return Reserve and Related Costs,"
"Intellectual Property Litigation Expense (Income), net,"
"Acquisition of In-Process Research and Development," "Asset
Write-down," "Charitable Foundation Contribution," "Settlement,"
"Worldwide Realignment," and "Provision for Income Taxes" on the
Non-GAAP Financial Information page.
|
(B) The tax
effect on non-GAAP adjustments is calculated based upon the impact
of the relevant tax jurisdictions' statutory tax rates on the
Company's estimated annual effective tax rate, or discrete rate in
the quarter, as applicable.
|
(C) All amounts
are tax effected, calculated based upon the impact of the relevant
tax jurisdictions' statutory tax rates on the Company's estimated
annual effective tax rate, or discrete rate in the quarter, as
applicable.
|
EDWARDS
LIFESCIENCES CORPORATION
|
|
|
Unaudited
Reconciliation of GAAP to Non-GAAP Financial
Information
|
|
|
|
|
|
THV UNITED STATES
UNDERLYING SALES GROWTH
|
|
|
|
Three Months
Ended
|
|
|
December
31,
|
(in
millions)
|
2014
|
2013
|
|
|
|
|
GAAP THV United
States Sales
|
$
129.5
|
$
85.7
|
Adjustment for THV
sales returns reserve
|
(3.1)
|
7.5
|
|
|
|
|
Underlying THV
United States Sales
|
$
126.4
|
$
93.2
|
|
Underlying Growth
Rate %
|
35.6%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
THV OUTSIDE THE
UNITED STATES UNDERLYING SALES GROWTH
|
|
|
Three Months
Ended
|
|
|
December
31,
|
(in
millions)
|
2014
|
2013
|
|
|
|
|
GAAP THV Outside
the United States Sales
|
$
138.0
|
$
98.2
|
Adjustment for THV
sales returns reserve
|
(0.7)
|
6.6
|
Foreign exchange
impact
|
-
|
(7.3)
|
|
|
|
|
Underlying THV
Outside the United States Sales
|
$
137.3
|
$
97.5
|
|
Underlying Growth
Rate %
|
40.8%
|
|
|
|
|
|
|
|
EDWARDS
LIFESCIENCES CORPORATION
|
|
|
Unaudited
Reconciliation of GAAP to Non-GAAP Tax Rate
|
|
|
|
|
|
RECONCILIATION OF
GAAP TO NON-GAAP TAX RATE
|
|
|
|
|
|
|
|
Three Months
Ended
|
Year
Ended
|
|
|
December 31,
2014
|
December 31,
2014
|
|
|
|
|
GAAP Tax
Rate
|
17.8%
|
29.1%
|
|
|
|
|
Non-GAAP
adjustments: (A)
|
|
|
|
|
|
|
THV sales return
reserve and related costs
|
(0.3) pts
|
0.1 pts
|
Intellectual property
litigation (income) expense, net
|
0.1 pts
|
(8.6) pts
|
Acquisition of
in-process research and development
|
(0.7) pts
|
(0.2) pts
|
Settlement
|
|
(0.1) pts
|
Remeasurement
of uncertain tax position reserve
|
|
0.4 pts
|
|
|
|
|
Non-GAAP Tax
Rate
|
16.9%
|
20.7%
|
(A) See
description of "THV Sales Return Reserve and Related Costs,"
"Intellectual Property Litigation (Income) Expense, net,"
"Acquisition of in-process research and development," "Settlement"
" and "Provision for Income Taxes" on the Non-GAAP Financial
Information page.
|
EDWARDS
LIFESCIENCES CORPORATION
|
|
|
|
|
|
Unaudited
Reconciliation of GAAP to Non-GAAP Financial
Information
|
|
|
|
|
|
|
|
|
|
|
|
RECONCILIATION OF
GAAP OPERATING CASH FLOW TO NON-GAAP FREE CASH FLOW
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Year
Ended
|
|
|
December
31,
|
|
December
31,
|
(in millions, except
per share data)
|
2014
|
2013
|
|
2014
|
2013
|
|
|
|
|
|
|
|
Net cash provided
by operating activities
|
$ 93.2
|
$ 111.3
|
|
$ 1,022.3
|
$ 472.7
|
|
|
|
|
|
|
|
Capital
expenditures
|
(34.5)
|
(20.1)
|
|
(82.9)
|
(109.0)
|
Medtronic litigation
settlement
|
-
|
-
|
|
(750.0)
|
-
|
Charitable foundation
contribution
|
-
|
-
|
|
50.0
|
-
|
Medtronic litigation
award
|
-
|
-
|
|
-
|
(83.6)
|
Net tax payments on
Medtronic litigation and charitable contribution
|
48.8
|
-
|
|
205.1
|
26.3
|
|
|
|
|
|
|
|
Non-GAAP Free Cash
Flow
|
$ 107.5
|
$ 91.2
|
|
$ 444.5
|
$ 306.4
|
Note: Numbers may not
calculate due to rounding.
|
|
|
|
|
|
|
|
|
|
|
|
(A) See
description of "Free Cash Flow" on the Non-GAAP Financial
Information page.
|
EDWARDS
LIFESCIENCES CORPORATION
|
|
|
|
|
|
|
|
|
|
Unaudited
Reconciliation of Sales by Product Group and Region
|
|
|
|
|
|
|
|
($ in
millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2014
Adjusted
|
2013
Adjusted
|
|
Sales by Product
Group (QTD)
|
4Q
2014
|
4Q
2013
|
Change
|
GAAP Growth
Rate*
|
|
Sales Return
Reserve
|
4Q 2014 Underlying
Sales
|
Sales Return
Reserve
|
FX
Impact
|
4Q 2013 Underlying
Sales
|
Underlying Growth
Rate *
|
Transcatheter
Heart Valve Therapy
|
$ 267.5
|
$ 183.9
|
$ 83.6
|
45.5%
|
|
$
(3.8)
|
$
263.7
|
$
14.1
|
$
(7.3)
|
$
190.7
|
37.9%
|
Surgical Heart
Valve Therapy
|
206.1
|
207.0
|
(0.9)
|
(0.5%)
|
|
-
|
206.1
|
-
|
(7.2)
|
199.8
|
3.2%
|
Critical
Care
|
144.4
|
145.1
|
(0.7)
|
(0.5%)
|
|
-
|
144.4
|
-
|
(6.6)
|
138.5
|
4.3%
|
Total
Sales
|
$ 618.0
|
$ 536.0
|
$
82.0
|
15.3%
|
|
$
(3.8)
|
$
614.2
|
$
14.1
|
$
(21.1)
|
$
529.0
|
16.0%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2014
Adjusted
|
2013
Adjusted
|
|
Sales by Product
Group (YTD)
|
YTD 4Q
2014
|
YTD 4Q
2013
|
Change
|
GAAP Growth
Rate*
|
|
Sales Return
Reserve
|
YTD 4Q 2014
Underlying Sales
|
Sales Return
Reserve
|
FX
Impact
|
YTD 4Q 2013
Underlying Sales
|
Underlying Growth
Rate *
|
Transcatheter
Heart Valve Therapy
|
$ 943.6
|
$ 707.7
|
$ 235.9
|
33.3%
|
|
$
(14.1)
|
$
929.5
|
$
14.1
|
$
(0.5)
|
$
721.3
|
28.9%
|
Surgical Heart
Valve Therapy
|
826.1
|
801.2
|
24.9
|
3.1%
|
|
-
|
826.1
|
-
|
(10.5)
|
790.7
|
4.5%
|
Critical
Care
|
553.2
|
536.6
|
16.6
|
3.1%
|
|
-
|
553.2
|
-
|
(12.0)
|
524.6
|
5.5%
|
Total
Sales
|
$ 2,322.9
|
$ 2,045.5
|
$
277.4
|
13.6%
|
|
$
(14.1)
|
$
2,308.8
|
$
14.1
|
$
(23.0)
|
$
2,036.6
|
13.3%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2014
Adjusted
|
2013
Adjusted
|
|
Sales by Region
(QTD)
|
4Q
2014
|
4Q
2013
|
Change
|
GAAP Growth
Rate*
|
|
Sales Return
Reserve
|
4Q 2014 Underlying
Sales
|
Sales Return
Reserve
|
FX
Impact
|
4Q 2013 Underlying
Sales
|
Underlying Growth
Rate *
|
United
States
|
$ 286.6
|
$ 239.1
|
$
47.5
|
19.9%
|
|
$
(3.1)
|
$
283.5
|
$
7.5
|
$
-
|
$
246.6
|
15.0%
|
Europe
|
193.5
|
162.3
|
31.2
|
19.2%
|
|
(0.7)
|
192.8
|
6.6
|
(10.1)
|
158.8
|
21.1%
|
Japan
|
65.7
|
67.6
|
(1.9)
|
(2.9%)
|
|
-
|
65.7
|
-
|
(7.3)
|
60.3
|
9.4%
|
Rest of World
|
72.2
|
67.0
|
5.2
|
7.6%
|
|
-
|
72.2
|
-
|
(3.7)
|
63.3
|
14.1%
|
International
|
331.4
|
296.9
|
34.5
|
11.6%
|
|
(0.7)
|
330.7
|
6.6
|
(21.1)
|
282.4
|
16.8%
|
Total
|
$ 618.0
|
$ 536.0
|
$
82.0
|
15.3%
|
|
$
(3.8)
|
$
614.2
|
$
14.1
|
$
(21.1)
|
$
529.0
|
16.0%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2014
Adjusted
|
2013
Adjusted
|
|
Sales by Region
(YTD)
|
YTD 4Q
2014
|
YTD 4Q
2013
|
Change
|
GAAP Growth
Rate*
|
|
Sales Return
Reserve
|
YTD 4Q 2014
Underlying Sales
|
Sales Return
Reserve
|
FX
Impact
|
YTD 4Q 2013
Underlying Sales
|
Underlying Growth
Rate *
|
United
States
|
$ 1,047.3
|
$ 939.6
|
$
107.7
|
11.5%
|
|
$
(7.5)
|
$
1,039.8
|
$
7.5
|
$
-
|
$
947.1
|
9.8%
|
Europe
|
744.5
|
616.5
|
128.0
|
20.8%
|
|
(6.6)
|
737.9
|
6.6
|
7.5
|
630.6
|
17.0%
|
Japan
|
257.9
|
243.6
|
14.3
|
5.9%
|
|
-
|
257.9
|
-
|
(19.8)
|
223.8
|
15.2%
|
Rest of World
|
273.2
|
245.8
|
27.4
|
11.2%
|
|
-
|
273.2
|
-
|
(10.7)
|
235.1
|
16.2%
|
International
|
1,275.6
|
1,105.9
|
169.7
|
15.3%
|
|
(6.6)
|
1,269.0
|
6.6
|
(23.0)
|
1,089.5
|
16.3%
|
Total
|
$ 2,322.9
|
$ 2,045.5
|
$
277.4
|
13.6%
|
|
$
(14.1)
|
$
2,308.8
|
$
14.1
|
$
(23.0)
|
$
2,036.6
|
13.3%
|
* Numbers may not
calculate due to rounding.
|
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SOURCE Edwards Lifesciences Corporation