Edwards Lifesciences Reports Strong Fourth Quarter Results
Growth in Europe Drove Robust Global THV Sales; Important
Product Launches in 2014 to Strengthen Technology Leadership
IRVINE, CA--(Marketwired - Feb 3, 2014) - 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, 2013, of $75.8 million, or $0.68 per
diluted share, and non-GAAP net income of $101.5 million, or $0.91
per diluted share.
Fourth quarter net sales increased 5.0 percent to $536.0 million
compared to the same period last year. Underlying1 sales
growth was 10.3 percent.
"I'm proud to say that our strong fourth quarter results helped
us finish a year that places Edwards Lifesciences in a stronger
position today than at any time in our history," said Michael A.
Mussallem, chairman and CEO. "During 2013 we launched
important new products, reported strong clinical data and made
significant progress on several key development milestones that
position us very well for sustainable future growth. Most
importantly, even more patients are benefitting from our life
saving technologies than ever before."
Sales Results
For the fourth quarter, the company reported Surgical Heart Valve
Therapy product group sales of $207.0 million. Sales increased 4.7
percent over the fourth quarter last year, or 7.6 percent on an
underlying basis. Surgical heart valve sales growth was driven
primarily by unit growth in the U.S. and Europe. Sales of the
EDWARDS INTUITY valve in Europe also lifted growth.
Sales of transcatheter heart valves (THV) were $183.9 million
for the quarter, a 14.2 percent growth rate over the fourth quarter
last year. THV sales grew 21.6 percent on an underlying basis
to $198.0 million. These results were driven by especially strong
growth in Europe and the expected contribution from the Edwards
SAPIEN valve in the U.S. Outside the U.S., sales grew by 22.3
percent, or 27.6 percent on an underlying basis.
"Double digit industry growth of transcatheter valve procedures
in Europe, even after six years of commercial availability,
validates our belief in the existence of a large group of untreated
patients just now seeking treatment," said Mussallem. "We are
also pleased with how our THV rollout is progressing in Japan and
continue to believe the opportunity there is attractive. In the
U.S., clinical sales were strong once again, driven primarily by
the rapid enrollment of the SAPIEN 3 high-risk arm of The PARTNER
II Trial. And, by year end, 290 sites in the U.S. were offering
SAPIEN to their patients and maintaining high procedural success
rates."
As discussed during its Investor Conference in December, as the
company launches the Edwards SAPIEN 3 valve in Europe and Edwards
SAPIEN XT valve in the U.S., it will exchange previously sold
products with the more advanced technologies. These planned
product upgrades required the recording of two reserves in the
fourth quarter: a $14.1 million sales return reserve that reflects
the value of the valves already sold, which will reverse during
2014 as the company ships the upgraded valves, and a small
inventory reserve for returned product not expected to be
resold.
Critical Care product group sales were $145.1 million for the
quarter, representing a decrease of 4.4 percent, or an increase of
1.8 percent on an underlying basis. Growth was solid across most
regions and product lines this quarter, but was impacted by China
distributor inventory reductions and the ongoing exit of the Access
product line.
Domestic and international sales for the fourth quarter were
$239.1 million and $296.9 million, respectively.
Additional Operating
Results For the quarter, Edwards' gross profit margin was
72.9 percent, compared to 75.4 percent in the same period last
year. The reduction was driven primarily by a reduced benefit
from foreign exchange hedges, the impact from the sales return
reserve and higher manufacturing costs as the company prepares for
new THV product launches in the U.S. and Europe. These items were
partially offset by a more profitable product mix.
Selling, general and administrative expenses were $190.5 million
for the quarter, or 35.5 percent of sales, compared to $177.9
million in the same period last year. This 7.1 percent
increase was driven primarily by the U.S. Medical Device Excise Tax
and Japan transcatheter valve launch-related expenses, partially
offset by foreign exchange.
Research and development for the quarter grew 4.9 percent to
$78.6 million, or 14.7 percent of sales. This increase was
primarily the result of continued investments in heart valve
clinical studies.
Free cash flow for the quarter was $91.2 million, defined as
cash flow from operating activities of $111.3 million, less capital
spending of $20.1 million.
Cash, cash equivalents and short-term investments totaled $936.9
million at December 31, 2013. Total debt was $593.1 million.
Special Items
During the quarter, the company recorded a pre-tax $16.3 million
special charge comprised of two items: a global realignment charge
of $10.4 million, primarily related to severance expenses to
improve Critical Care's operational efficiency, and a $5.9 million
intangible asset write-off related to a prior acquisition.
Mitral Program
In providing an update on the company's mitral valve program,
Mussallem said, "We continue to be excited about this significant
opportunity that will be meaningful for patients, and believe that
Edwards is well positioned, even as the path to commercialization
may be long. We are disappointed that our first-in-human
experience has not yet begun, as we are just now receiving the
necessary regulatory approval to proceed. This has been the sole
cause for delay and we expect to begin shortly."
Twelve-Month
Results For the twelve months ended December 31, 2013, net
income was $391.7 million, or $3.44 per diluted share, a 38.7
percent increase over last year. On a non-GAAP basis, earnings
per diluted share were $3.13, a 16.4 percent increase over last
year.
Net sales for the twelve months of 2013 increased 7.7 percent to
$2.05 billion. Sales growth was 10.8 percent on an underlying
basis.
Domestic and international sales for the twelve months were $0.9
billion and $1.1 billion, respectively.
During 2013, the company repurchased 6.8 million shares of
common stock for $496.9 million.
Outlook "We
continue to expect full year 2014 total sales of $2.05 billion to
$2.25 billion. And, excluding special items, we continue to expect
diluted earnings per share to be a wide range around $3.00," said
Mussallem. "For the first quarter of 2014, we project total
sales, excluding the impact of the THV reserve, of $500 million to
$550 million, and diluted earnings per share, excluding the renewal
of the research and development tax credit and other special items,
to be between $0.61 and $0.71.
"We have a number of exciting products poised to contribute in
2014, and as we look beyond 2014, we like how we're positioned,"
Mussallem said. "Edwards is fortunate to have strong leadership in
attractive markets with sustainable growth potential, and a robust
pipeline that should enable us to strengthen our position even
further and impact the care of more patients around the
world. Combined with upside opportunities such as successful
mitral therapies, glucose monitoring and patent enforcement, we
believe Edwards' future is very bright."
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 13574369. The call will
also be available via live or archived webcast on the "Investor
Relations" section of the Edwards web site at www.edwards.com or
ir.edwards.com. A
live stream and archived 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, expectations for
sustainable future growth, potential upside opportunities, plans to
upgrade to new technologies, the expectation that product launches
will strengthen the company's leadership position, developments in
the mitral program and pipeline of new products, and expected
future business potential. 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 timing and extent of regulatory approvals, expanded
indications and reimbursement levels for our products, particularly
our transcatheter heart valves; the ability of the company to lead
and maintain our position in the THV field; the company's success
in developing new products, creating opportunities for its products
and avoiding manufacturing and quality issues; the impact of
competitive products and currency exchange rates; the timing or
results of pending or future clinical trials and pre-clinical
milestones; actions by the U.S. Food and Drug Administration and
other regulatory agencies; economic developments in key markets;
unexpected litigation results or expense; 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, 2012, which are available at
edwards.com.
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
reserves associated with THV product upgrades, and "excluding
special items" or "adjusted for 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. R&D tax
credit, which is required to be recorded in 2013. Those
results that exclude the impact of foreign exchange and reflect
"constant currency" are also non-GAAP financial measures. Guidance
for sales and sales growth rates is provided on an "underlying"
basis, and projections for diluted earnings per share, are also
provided on the same non-GAAP (or "excluding special items") basis
due to the inherent difficulty in forecasting such items.
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. By disclosing non-GAAP financial measures,
management intends to provide investors with a more meaningful,
consistent comparison of the company's core operating results and
trends for the periods presented. 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 operations that, when viewed with
its GAAP results, provide a more complete understanding of factors
and trends affecting the company's business. These non-GAAP
measures should be considered as a supplement to, and not as a
substitute for, or superior to, the corresponding measures
calculated in accordance with generally accepted accounting
principles. Non-GAAP financial measures are not prepared in
accordance with GAAP; therefore, the information is not necessarily
comparable to other companies. A reconciliation of non-GAAP
historical financial measures to the most comparable GAAP measure
is provided in the tables below. The company is not able to
provide a reconciliation of projected net income and growth, free
cash flow, and projected earnings per share guidance, excluding
special 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.
Edwards, Edwards Lifesciences, the stylized E logo, EDWARDS
INTUITY, Edwards SAPIEN, SAPIEN, SAPIEN XT, SAPIEN 3, PARTNER and
PARTNER II are trademarks of Edwards Lifesciences Corporation.
1 "Underlying" amounts are non-GAAP items and in this press
release exclude foreign exchange fluctuations and the THV sales
return reserve. See the reconciliation tables below.
|
|
EDWARDS LIFESCIENCES CORPORATION |
|
Unaudited Consolidated Statements of Operations |
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
Year Ended |
|
|
|
December 31, |
|
|
December 31, |
|
(in millions, except per share data) |
|
2013 |
|
|
2012 |
|
|
2013 |
|
|
2012 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales |
|
$ |
536.0 |
|
|
$ |
510.5 |
|
|
$ |
2,045.5 |
|
|
$ |
1,899.6 |
|
Cost of goods sold |
|
|
145.5 |
|
|
|
125.8 |
|
|
|
522.4 |
|
|
|
494.6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit |
|
|
390.5 |
|
|
|
384.7 |
|
|
|
1,523.1 |
|
|
|
1,405.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and administrative expenses |
|
|
190.5 |
|
|
|
177.9 |
|
|
|
745.6 |
|
|
|
705.3 |
|
Research and development expenses |
|
|
78.6 |
|
|
|
74.9 |
|
|
|
323.0 |
|
|
|
291.3 |
|
Special charges (gains), net |
|
|
16.3 |
|
|
|
9.0 |
|
|
|
(67.3 |
) |
|
|
16.0 |
|
Interest expense (income), net |
|
|
4.0 |
|
|
|
- |
|
|
|
5.2 |
|
|
|
(0.4 |
) |
Other (income) expense, net |
|
|
(0.4 |
) |
|
|
0.7 |
|
|
|
1.3 |
|
|
|
1.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before provision for income taxes |
|
|
101.5 |
|
|
|
122.2 |
|
|
|
515.3 |
|
|
|
391.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for income taxes |
|
|
25.7 |
|
|
|
31.1 |
|
|
|
123.6 |
|
|
|
97.9 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
$ |
75.8 |
|
|
$ |
91.1 |
|
|
$ |
391.7 |
|
|
$ |
293.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
0.69 |
|
|
$ |
0.79 |
|
|
$ |
3.51 |
|
|
$ |
2.55 |
|
|
Diluted |
|
$ |
0.68 |
|
|
$ |
0.77 |
|
|
$ |
3.44 |
|
|
$ |
2.48 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average common shares outstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
109.2 |
|
|
|
115.0 |
|
|
|
111.7 |
|
|
|
114.9 |
|
|
Diluted |
|
|
111.0 |
|
|
|
117.8 |
|
|
|
113.8 |
|
|
|
118.3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Statistics |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As a percentage of net sales: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross
profit |
|
|
72.9 |
% |
|
|
75.4 |
% |
|
|
74.5 |
% |
|
|
74.0 |
% |
|
Selling, general and administrative expenses |
|
|
35.5 |
% |
|
|
34.8 |
% |
|
|
36.5 |
% |
|
|
37.1 |
% |
|
Research and development expenses |
|
|
14.7 |
% |
|
|
14.7 |
% |
|
|
15.8 |
% |
|
|
15.3 |
% |
|
Income before provision for income taxes |
|
|
18.9 |
% |
|
|
23.9 |
% |
|
|
25.2 |
% |
|
|
20.6 |
% |
|
Net
income |
|
|
14.1 |
% |
|
|
17.8 |
% |
|
|
19.1 |
% |
|
|
15.4 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effective tax rate |
|
|
25.3 |
% |
|
|
25.5 |
% |
|
|
24.0 |
% |
|
|
25.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Note: Numbers may not calculate due to rounding. |
|
|
|
|
EDWARDS LIFESCIENCES CORPORATION |
|
Unaudited Balance Sheets |
|
(in millions) |
|
|
|
December 31, |
|
|
December 31, |
|
|
|
2013 |
|
|
2012 |
|
ASSETS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current assets |
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
420.4 |
|
|
$ |
310.9 |
|
Short-term investments |
|
|
516.5 |
|
|
|
210.5 |
|
Accounts and other receivables, net |
|
|
328.0 |
|
|
|
347.5 |
|
Inventories, net |
|
|
308.9 |
|
|
|
281.0 |
|
Deferred income taxes |
|
|
33.4 |
|
|
|
43.4 |
|
Prepaid expenses |
|
|
46.8 |
|
|
|
41.6 |
|
Other current assets |
|
|
71.8 |
|
|
|
57.0 |
|
|
Total
current assets |
|
|
1,725.8 |
|
|
|
1,291.9 |
|
|
|
|
|
|
|
|
|
|
Long-term accounts receivable, net |
|
|
7.3 |
|
|
|
9.9 |
|
Property, plant and equipment, net |
|
|
421.6 |
|
|
|
373.3 |
|
Goodwill |
|
|
385.4 |
|
|
|
384.7 |
|
Other intangible assets, net |
|
|
57.2 |
|
|
|
67.0 |
|
Investments in unconsolidated affiliates |
|
|
21.9 |
|
|
|
21.1 |
|
Deferred income taxes |
|
|
70.1 |
|
|
|
47.3 |
|
Other assets |
|
|
35.4 |
|
|
|
26.3 |
|
|
|
|
|
|
|
|
|
|
|
Total
assets |
|
$ |
2,724.7 |
|
|
$ |
2,221.5 |
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities |
|
|
|
|
|
|
|
|
Accounts payable and accrued liabilities |
|
$ |
345.6 |
|
|
$ |
347.4 |
|
|
|
|
|
|
|
|
|
|
Long-term debt |
|
|
593.1 |
|
|
|
189.3 |
|
Other long-term liabilities |
|
|
226.8 |
|
|
|
205.5 |
|
|
|
|
|
|
|
|
|
|
Stockholders' equity |
|
|
|
|
|
|
|
|
Common stock |
|
|
126.0 |
|
|
|
124.2 |
|
Additional paid-in capital |
|
|
671.2 |
|
|
|
489.0 |
|
Retained earnings |
|
|
2,045.6 |
|
|
|
1,653.9 |
|
Accumulated other comprehensive loss |
|
|
(27.6 |
) |
|
|
(37.9 |
) |
Treasury stock, at cost |
|
|
(1,256.0 |
) |
|
|
(749.9 |
) |
|
Total
stockholders' equity |
|
|
1,559.2 |
|
|
|
1,479.3 |
|
|
|
|
|
|
|
|
|
|
Total liabilities and stockholders' equity |
|
$ |
2,724.7 |
|
|
$ |
2,221.5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 discontinued and acquired products and
foreign exchange fluctuations, and "excluding special items" or
"adjusted for 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 is required to be recorded in 2013. Those results
that exclude the impact of foreign exchange and reflect "constant
currency" are also non-GAAP financial measures. 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. 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. By disclosing non-GAAP financial
measures, management intends to provide investors with a more
meaningful, consistent comparison of the Company's core operating
results and trends for the periods presented. 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 operations that, when
viewed with its GAAP results, provide a more complete understanding
of factors and trends affecting the Company's business. These
non-GAAP measures should be considered as a supplement to, and not
as a substitute for, or superior to, the corresponding measures
calculated in accordance with GAAP.
Non-GAAP financial measures are not prepared in accordance with
GAAP; therefore, the information is not necessarily comparable to
other companies. A reconciliation of non-GAAP historical financial
measures to the most comparable GAAP measure is provided in the
tables below. The Company is not able to provide a reconciliation
of projected net income and growth, free cash flow, and projected
earnings per share guidance, excluding special 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.
The items described
below are adjustments to the GAAP financial results in the
reconciliations that follow:
Transcatheter Heart Valve ("THV") Sales Returns Reserve and
Related Costs - In the fourth quarter of 2013, the Company recorded
a sales returns reserve and related costs of $15.2 million related
to estimated THV product returns expected upon introduction of next
generation THV products. Given the magnitude and unusual nature of
this adjustment relative to the operating results for the period
presented, the financial impact has been excluded from non-GAAP net
income and from the Company's sales growth in the "Unaudited
Reconciliation of Sales by Product Group and Region".
Recall of Heart Valves and Catheters - In the second quarter of
2012, the Company increased its non-GAAP gross profit by $8.1
million to exclude the impact of its voluntary recall of certain
heart valves and Critical Care catheters. Given the magnitude and
unusual nature of this adjustment relative to the operating results
for the period presented, the financial impact of the recall has
been excluded from non-GAAP net income.
Special Charges (Gains), net - The Company recorded certain
special gains and charges in 2013 and 2012 related to the
following:
|
1) Worldwide realignment:
$10.4 million charge in the fourth quarter of 2013 and $9.0 million
charge in the fourth quarter of 2012 related primarily to severance
expenses associated with a global workforce realignment; |
|
|
|
2) In-process Research and
Development ("IPR&D") Impairment: $5.9 million charge in
the fourth quarter of 2013 related to the impairment of
IPR&D; |
|
|
|
3) Litigation award: $83.6
million gain in the first quarter of 2013 related to the April 2010
jury award from Medtronic of damages for infringement of the U.S.
Andersen transcatheter heart valve patent. |
|
|
|
4) Licensing of Intellectual
Property: $7.0 million charge in the second quarter of 2012
for the upfront licensing and royalty fees related to the licensing
of intellectual property; |
Given the magnitude and unusual nature of these special items
relative to the operating results for the periods presented, this
item has been excluded from non-GAAP net income and earnings per
share.
Provision For Income Taxes - 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. During the first quarter of
2012, the Company recorded a $2.3 million tax benefit due to the
remeasurement of its uncertain tax positions. Given the magnitude
and unusual nature of the tax events relative to the periods
presented, non-GAAP net income and earnings per share has been
adjusted for these tax events.
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."
|
|
EDWARDS LIFESCIENCES CORPORATION |
|
Unaudited Reconciliation of GAAP to Non-GAAP Financial
Information |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP TO
NON-GAAP NET INCOME TABLE |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
Year Ended |
|
|
|
December 31, |
|
|
December 31, |
|
(in millions, except per share data) |
|
2013 |
|
|
2012 |
|
|
2013 |
|
|
2012 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP Net Income |
|
$ |
75.8 |
|
|
$ |
91.1 |
|
|
$ |
391.7 |
|
|
$ |
293.2 |
|
|
|
Growth Rate % |
|
|
(16.8 |
%) |
|
|
|
|
|
|
33.6 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciling items: (A) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
THV sales returns reserve and related costs |
|
|
15.2 |
|
|
|
- |
|
|
|
15.2 |
|
|
|
- |
|
|
Recall of heart valves and catheters |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
8.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Special charges (gains), net |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1) |
Worldwide realignment |
|
|
10.4 |
|
|
|
9.0 |
|
|
|
10.4 |
|
|
|
9.0 |
|
|
2) |
IPR&D impairment |
|
|
5.9 |
|
|
|
- |
|
|
|
5.9 |
|
|
|
- |
|
|
3) |
Litigation award |
|
|
- |
|
|
|
- |
|
|
|
(83.6 |
) |
|
|
- |
|
|
4) |
Licensing of intellectual property |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
7.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for income taxes |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tax
effect on reconciling items (B) |
|
|
(5.8 |
) |
|
|
(2.0 |
) |
|
|
25.5 |
|
|
|
(5.4 |
) |
|
|
Federal research and development tax credit |
|
|
- |
|
|
|
8.4 |
|
|
|
(8.4 |
) |
|
|
8.4 |
|
|
|
Remeasurement of uncertain tax position reserves |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(2.3 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP Net Income |
|
$ |
101.5 |
|
|
$ |
106.5 |
|
|
$ |
356.7 |
|
|
$ |
318.0 |
|
|
|
Growth Rate % |
|
|
(4.7 |
%) |
|
|
|
|
|
|
12.2 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP TO
NON-GAAP DILUTED EARNINGS PER SHARE TABLE |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP Diluted Earnings Per Share |
|
$ |
0.68 |
|
|
$ |
0.77 |
|
|
$ |
3.44 |
|
|
$ |
2.48 |
|
|
|
Growth Rate % |
|
|
(11.7 |
%) |
|
|
|
|
|
|
38.7 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciling items: (A)(C) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
THV sales returns reserve and related costs |
|
$ |
0.10 |
|
|
|
- |
|
|
$ |
0.10 |
|
|
|
- |
|
|
Recall of heart valves and catheters |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
0.06 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Special charges (gains), net |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1) |
Worldwide realignment |
|
|
0.08 |
|
|
|
0.06 |
|
|
|
0.08 |
|
|
|
0.06 |
|
|
2) |
IPR&D impairment |
|
|
0.05 |
|
|
|
- |
|
|
|
0.04 |
|
|
|
- |
|
|
3) |
Litigation award |
|
|
- |
|
|
|
- |
|
|
|
(0.46 |
) |
|
|
- |
|
|
4) |
Licensing of intellectual property |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
0.04 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for income taxes |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Federal research and development tax credit |
|
|
- |
|
|
|
0.07 |
|
|
|
(0.07 |
) |
|
|
0.07 |
|
|
|
Remeasurement of uncertain tax position reserves |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(0.02 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP Diluted Earnings Per Share |
|
$ |
0.91 |
|
|
$ |
0.90 |
|
|
$ |
3.13 |
|
|
$ |
2.69 |
|
|
|
Growth Rate % |
|
|
1.1 |
% |
|
|
|
|
|
|
16.4 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Note: Numbers may not calculate due to rounding. |
(A) |
See
description of "Gross Profit," "Special Charges (Gains), net" and
"Provision For Income Taxes" on the Non-GAAP Financial Information
page. |
(B) |
The
tax effect on non-GAAP adjustments is calculated using the relevant
tax jurisdictions' statutory tax rates. |
(C) |
All
amounts are tax effected, calculated using the relevant tax
jurisdictions' statutory tax rates. |
|
|
|
|
|
|
EDWARDS LIFESCIENCES CORPORATION |
|
Unaudited Reconciliation of GAAP to Non-GAAP Tax
Rate |
|
|
|
|
|
|
|
|
GAAP TO
NON-GAAP TAX RATE TABLE |
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
Year Ended |
|
|
|
December 31, 2013 |
|
|
December 31, 2013 |
|
|
|
|
|
|
|
|
GAAP Tax Rate |
|
25.3 |
% |
|
24.0 |
% |
|
|
|
|
|
|
|
Reconciling items: (A) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
THV sales returns reserve and related costs |
|
0.2 pts |
|
|
0.1 pts |
|
|
|
|
|
|
|
|
|
|
Special charges (gains), net |
|
|
|
|
|
|
|
|
Worldwide realignment |
|
(1.1) pts |
|
|
(0.2) pts |
|
|
|
IPR&D impairment |
|
(0.7) pts |
|
|
(0.1) pts |
|
|
|
Litigation award |
|
- |
|
|
(2.0) pts |
|
|
|
|
|
|
|
|
|
|
Provision for income taxes |
|
|
|
|
|
|
|
|
Federal research and development tax credit |
|
- |
|
|
1.2 pts |
|
|
|
|
|
|
|
|
Non-GAAP Tax Rate |
|
23.7 |
% |
|
23.0 |
% |
|
|
|
|
|
|
|
|
|
(A) |
See
description of "Special Charges (Gains), net" and "Provision For
Income Taxes" on the Non-GAAP Financial Information page. |
|
|
|
|
|
EDWARDS LIFESCIENCES CORPORATION |
Unaudited Reconciliation of Sales by Product Group and
Region |
($ in millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2013 Adjusted |
|
2012 Adjusted |
|
|
Sales by Product Group (QTD) |
|
4Q 2013 |
|
4Q 2012 |
|
Change |
|
GAAP Growth Rate* |
|
Sales Returns Reserve |
|
4Q 2013 Underlying Sales |
|
FX Impact |
|
4Q 2012 Underlying Sales |
|
Underlying Growth Rate* |
Surgical Heart Valve Therapy |
|
$ |
207.0 |
|
$ |
197.7 |
|
$ |
9.3 |
|
|
4.7 |
% |
|
$ |
- |
|
$ |
207.0 |
|
$ |
(5.4 |
) |
|
$ |
192.3 |
|
7.6 |
% |
Transcatheter Heart Valves |
|
|
183.9 |
|
|
161.0 |
|
|
22.9 |
|
|
14.2 |
% |
|
|
14.1 |
|
|
198.0 |
|
|
1.8 |
|
|
|
162.8 |
|
21.6 |
% |
Critical Care |
|
|
145.1 |
|
|
151.8 |
|
|
(6.7 |
) |
|
(4.4 |
%) |
|
|
- |
|
|
145.1 |
|
|
(9.3 |
) |
|
|
142.5 |
|
1.8 |
% |
Total Sales |
|
$ |
536.0 |
|
$ |
510.5 |
|
$ |
25.5 |
|
|
5.0 |
% |
|
$ |
14.1 |
|
$ |
550.1 |
|
$ |
(12.9 |
) |
|
$ |
497.6 |
|
10.3 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2013 Adjusted |
|
2012 Adjusted |
|
|
Sales by Product Group (YTD) |
|
YTD 4Q 2013 |
|
YTD 4Q 2012 |
|
Change |
|
GAAP Growth Rate* |
|
Sales Returns Reserve |
|
YTD 4Q 2013 Underlying Sales |
|
FX Impact |
|
YTD 4Q 2012 Underlying Sales |
|
Underlying Growth Rate* |
Surgical Heart Valve Therapy |
|
$ |
801.2 |
|
$ |
787.5 |
|
$ |
13.7 |
|
|
1.7 |
% |
|
$ |
- |
|
$ |
801.2 |
|
$ |
(20.2 |
) |
|
$ |
767.3 |
|
4.4 |
% |
Transcatheter Heart Valves |
|
|
707.7 |
|
|
552.1 |
|
|
155.6 |
|
|
28.2 |
% |
|
|
14.1 |
|
|
721.8 |
|
|
5.2 |
|
|
|
557.3 |
|
29.5 |
% |
Critical Care |
|
|
536.6 |
|
|
560.0 |
|
|
(23.4 |
) |
|
(4.2 |
%) |
|
|
- |
|
|
536.6 |
|
|
(28.9 |
) |
|
|
531.1 |
|
1.0 |
% |
Total Sales |
|
$ |
2,045.5 |
|
$ |
1,899.6 |
|
$ |
145.9 |
|
|
7.7 |
% |
|
$ |
14.1 |
|
$ |
2,059.6 |
|
$ |
(43.9 |
) |
|
$ |
1,855.7 |
|
10.8 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2013 Adjusted |
|
2012 Adjusted |
|
|
Sales by Region (QTD) |
|
4Q 2013 |
|
4Q 2012 |
|
Change |
|
GAAP Growth Rate* |
|
Sales Returns Reserve |
|
4Q 2013 Underlying Sales |
|
FX Impact |
|
4Q 2012 Underlying Sales |
|
Underlying Growth Rate* |
United States |
|
$ |
239.1 |
|
$ |
224.9 |
|
$ |
14.2 |
|
|
6.3 |
% |
|
$ |
7.5 |
|
$ |
246.6 |
|
$ |
- |
|
|
$ |
224.9 |
|
9.6 |
% |
|
Europe |
|
|
162.3 |
|
|
142.6 |
|
|
19.7 |
|
|
13.8 |
% |
|
|
6.6 |
|
|
168.9 |
|
|
5.9 |
|
|
|
148.5 |
|
13.9 |
% |
|
Japan |
|
|
67.6 |
|
|
79.2 |
|
|
(11.6 |
) |
|
(14.6 |
%) |
|
|
- |
|
|
67.6 |
|
|
(15.6 |
) |
|
|
63.6 |
|
6.1 |
% |
|
Rest of World |
|
|
67.0 |
|
|
63.8 |
|
|
3.2 |
|
|
5.1 |
% |
|
|
- |
|
|
67.0 |
|
|
(3.2 |
) |
|
|
60.6 |
|
10.6 |
% |
International |
|
|
296.9 |
|
|
285.6 |
|
|
11.3 |
|
|
4.0 |
% |
|
|
6.6 |
|
|
303.5 |
|
|
(12.9 |
) |
|
|
272.7 |
|
10.9 |
% |
Total |
|
$ |
536.0 |
|
$ |
510.5 |
|
$ |
25.5 |
|
|
5.0 |
% |
|
$ |
14.1 |
|
$ |
550.1 |
|
$ |
(12.9 |
) |
|
$ |
497.6 |
|
10.3 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2013 Adjusted |
|
2012 Adjusted |
|
|
Sales by Region (YTD) |
|
YTD 4Q 2013 |
|
YTD 4Q 2012 |
|
Change |
|
GAAP Growth Rate* |
|
Sales Returns Reserve |
|
YTD 4Q 2013 Underlying Sales |
|
FX Impact |
|
YTD 4Q 2012 Underlying Sales |
|
Underlying Growth Rate* |
United States |
|
$ |
939.6 |
|
$ |
812.1 |
|
$ |
127.5 |
|
|
15.7 |
% |
|
$ |
7.5 |
|
$ |
947.1 |
|
$ |
- |
|
|
$ |
812.1 |
|
16.6 |
% |
|
Europe |
|
|
616.5 |
|
|
559.7 |
|
|
56.8 |
|
|
10.2 |
% |
|
|
6.6 |
|
|
623.1 |
|
|
12.0 |
|
|
|
571.7 |
|
9.0 |
% |
|
Japan |
|
|
243.6 |
|
|
294.1 |
|
|
(50.5 |
) |
|
(17.2 |
%) |
|
|
- |
|
|
243.6 |
|
|
(50.7 |
) |
|
|
243.4 |
|
0.1 |
% |
|
Rest of World |
|
|
245.8 |
|
|
233.7 |
|
|
12.1 |
|
|
5.1 |
% |
|
|
- |
|
|
245.8 |
|
|
(5.2 |
) |
|
|
228.5 |
|
7.6 |
% |
International |
|
|
1,105.9 |
|
|
1,087.5 |
|
|
18.4 |
|
|
1.7 |
% |
|
|
6.6 |
|
|
1,112.5 |
|
|
(43.9 |
) |
|
|
1,043.6 |
|
6.5 |
% |
Total |
|
$ |
2,045.5 |
|
$ |
1,899.6 |
|
$ |
145.9 |
|
|
7.7 |
% |
|
$ |
14.1 |
|
$ |
2,059.6 |
|
$ |
(43.9 |
) |
|
$ |
1,855.7 |
|
10.8 |
% |
* Numbers may not calculate due to
rounding.
Media Contact: Sarah Huoh 949-250-5070 Investor Contact: David
K. Erickson 949-250-6826 Edwards Lifesciences Corporation One
Edwards Way Irvine, CA USA 92614 Phone: 949.250.2500 Fax:
949.250.2525 www.edwards.com
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