IRVINE, Calif., Oct. 23, 2014 /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 September
30, 2014 of $94.6 million, or
$0.87 per diluted share, and non-GAAP
net income of $87.0 million, or
$0.80 per diluted share. Net
income for the same period a year earlier was $76.8 million, or $0.68 per diluted share, and non-GAAP net income
was $79.5 million, or $0.70 per diluted share.
Net sales for the quarter ended September
30, 2014 increased 22.6 percent to $607.4 million compared to the same period last
year. Underlying1 sales grew 18.9 percent.
U.S. and international segment sales for the third quarter
were $296.3 million and $311.1 million, respectively.
"We are pleased with the results in all product groups and
regions this quarter, highlighted by transcatheter heart valves
that exceeded our expectations and drove very strong sales
performance," said Michael A.
Mussallem, chairman and CEO. "The strong year-to-date
results reinforce our conviction in our focused innovation strategy
and its impact on unmet patient needs."
Sales Results
For the third quarter, the company reported sales of
transcatheter heart valves (THV) of
$267.2 million, a 55.3 percent growth
rate over the third quarter last year. On an underlying
basis, THV sales grew 43.8 percent. These results were driven by
strong growth in all regions, with the U.S. accounting for
approximately half of total THV sales.
In the U.S., THV sales were $143.3
million for the quarter, including $10.4 million from royalties. Included in this
quarter's results were lower clinical sales compared to the second
quarter and an approximate $16
million negative impact from net stocking. Underlying U.S.
THV sales were $125.9 million, which
excludes the benefit of a net $17.4
million sales return reserve reversal. This represented an
underlying growth rate of 46.2 percent compared to the $86.1 million reported last year.
"In Europe and the U.S., transcatheter valve procedure growth
was strong this quarter and exceeded our expectations," said
Mussallem. "Our new product launches have strengthened our
leadership position, and we are pleased that greater numbers of
patients are benefiting from transcatheter heart valve
therapy. The launches of SAPIEN 3 in Europe and SAPIEN XT in the U.S. are largely
complete, and feedback from clinicians on these new valves
continues to be very positive. We believe current market growth
rates are not sustainable and expect competitive activity will
increase."
Surgical Heart Valve Therapy product group sales for the quarter
were $203.4 million. Sales increased
6.0 percent over the third quarter last year, or 6.2 percent on an
underlying basis. Solid unit growth was seen across all regions,
and product mix drove a slightly higher overall average selling
price.
Critical Care product group sales were $136.8 million for the quarter, representing an
increase of 3.9 percent versus last year, or 4.5 percent on an
underlying basis. Growth was driven by a double digit
increase in Enhanced Surgical Recovery (ESR) product sales across
most regions. Additionally, the company is redirecting the
resources from its Glucose monitoring program to its ESR
initiative.
Additional Operating Results
For the quarter, the company's gross profit margin was 72.3
percent, compared to 74.1 percent in the same period last year.
This reduction was driven primarily by a 160 basis point negative
impact of foreign exchange, as well as higher costs associated with
operations in Utah. This reduction
was partially offset by a more profitable product mix.
Selling, general and administrative expenses were $222.2 million for the quarter compared to
$177.8 million in the prior
year. The largest components of the increase were driven by
transcatheter valve sales performance, including larger accruals
for sales commissions and incentive compensation.
Research and development investments for the quarter were
$87.6 million compared to
$84.1 million in the prior year
period. This increase was primarily the result of additional
investments in aortic and mitral valve programs.
Free cash flow for the quarter was a negative $5.9 million, which included a $158.5 million tax payment related to the prior
quarter's Medtronic litigation settlement. Free cash flow is
defined as cash flow from operating activities of $12.2 million, less capital spending of
$18.1 million. Excluding the tax
impacts of the second quarter's special items, free cash flow was
$139.0 million.
Cash, cash equivalents and short-term investments totaled
$1.52 billion at September 30, 2014. Total debt was
$596.4 million.
Adjustments to GAAP Results
During the quarter, the company's non-GAAP results reflected an
$18.4 million reduction to sales and
a $7.6 million reduction to net
income, primarily driven by the THV Sales Return Reserve reversal
and the write-down of assets related to its Glucose monitoring
program. See the attached schedule for additional details.
Nine-Month Results
For the nine months ended September 30,
2014, the company recorded net income of $701.9 million, or $6.49 per diluted share, compared to $314.0 million, or $2.74 per diluted share, for the same period in
2013. Net income growth for the nine months was 123.5 percent
and diluted earnings per share increased 136.9 percent over last
year, or 6.1 percent excluding special items in both periods.
Net sales for the first nine months of 2014 increased 12.9
percent to $1.7 billion. Sales
growth was 12.4 percent on an underlying basis.
U.S. and international segment sales for the first nine months
of 2014 were $760.7 million and
$944.2 million, respectively.
During the first nine months of 2014, the company repurchased
approximately 4.4 million shares of common stock for $300.7 million, substantially all of which was
completed in the first quarter.
Outlook
The company now expects full year 2014 total sales to exceed the
high end of its previous $2.05 billion to
$2.25 billion range. The company also raised its
guidance for full year 2014 diluted earnings per share, excluding
special items, to a range of $3.33 to
$3.39. For the fourth quarter of 2014, the company
projects total sales to be between $575
million and $615 million, and diluted earnings per share,
excluding special items, to be between $0.89
and $0.95.
"Although competition is intensifying, we believe our new
products position us well to drive solid organic sales growth and
help clinicians address critical unmet patient needs," said
Mussallem. "We are encouraged that new therapies supported by
compelling evidence are being adopted even in this challenging
healthcare climate."
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 third
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 13592286. The call will also be available via live or
archived webcast on the "Investor Relations" section of the Edwards
web site at ir.edwards.com or www.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, and expectations
for new product launches and procedural adoption rates.
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
effectiveness of new product launches; unexpected changes in
adoption rates and economic drivers for TAVR; competitive dynamics;
the timing and extent of regulatory approvals and reimbursement
levels for our products; the company's success in developing new
products, creating opportunities for its 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.
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" 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 was 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 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, SAPIEN,
SAPIEN XT, and SAPIEN 3 are trademarks of Edwards Lifesciences
Corporation. All other trademarks are the property of their
respective owners.
[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
|
|
|
|
|
|
(in millions, except
per share data)
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
September
30,
|
|
September
30,
|
|
2014
|
2013
|
|
2014
|
2013
|
|
|
|
|
|
|
Net sales
|
$ 607.4
|
$ 495.6
|
|
$ 1,704.9
|
$ 1,509.5
|
Cost of
sales
|
168.1
|
128.2
|
|
465.2
|
372.8
|
|
|
|
|
|
|
Gross
profit
|
439.3
|
367.4
|
|
1,239.7
|
1,136.7
|
|
|
|
|
|
|
Selling, general and
administrative expenses
|
222.2
|
177.8
|
|
634.9
|
546.8
|
Research and
development expenses
|
87.6
|
84.1
|
|
262.5
|
244.4
|
Intellectual property
litigation expense (income), net
|
0.9
|
4.3
|
|
(741.0)
|
(68.3)
|
Special
charges
|
3.0
|
-
|
|
60.5
|
-
|
Interest expense,
net
|
2.5
|
1.0
|
|
9.1
|
1.2
|
Other expense,
net
|
2.5
|
0.4
|
|
2.6
|
1.7
|
|
|
|
|
|
|
Income before
provision for income taxes
|
120.6
|
99.8
|
|
1,011.1
|
410.9
|
|
|
|
|
|
|
Provision for income
taxes
|
26.0
|
23.0
|
|
309.2
|
96.9
|
|
|
|
|
|
|
Net income
|
$ 94.6
|
$ 76.8
|
|
$ 701.9
|
$ 314.0
|
|
|
|
|
|
|
Earnings per
share:
|
|
|
|
|
|
Basic
|
$ 0.89
|
$ 0.69
|
|
$ 6.61
|
$ 2.79
|
Diluted
|
$ 0.87
|
$ 0.68
|
|
$ 6.49
|
$ 2.74
|
|
|
|
|
|
|
Weighted-average
common shares outstanding:
|
|
|
|
|
|
Basic
|
106.4
|
111.0
|
|
106.2
|
112.5
|
Diluted
|
108.4
|
112.9
|
|
108.1
|
114.7
|
|
|
|
|
|
|
Operating
Statistics
|
|
|
|
|
|
As a percentage of
net sales:
|
|
|
|
|
|
Gross profit
|
72.3%
|
74.1%
|
|
72.7%
|
75.3%
|
Selling, general and
administrative expenses
|
36.6%
|
35.9%
|
|
37.2%
|
36.2%
|
Research and development
expenses
|
14.4%
|
17.0%
|
|
15.4%
|
16.2%
|
Income before provision for
income taxes
|
19.9%
|
20.1%
|
|
59.3%
|
27.2%
|
Net income
|
15.6%
|
15.5%
|
|
41.2%
|
20.8%
|
|
|
|
|
|
|
Effective tax
rate
|
21.6%
|
23.0%
|
|
30.6%
|
23.6%
|
|
|
|
|
|
|
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)
|
|
|
|
|
September
30,
|
|
December
31,
|
|
2014
|
|
2013
|
ASSETS
|
|
|
|
|
|
|
|
Current
assets
|
|
|
|
Cash and cash
equivalents
|
$ 404.1
|
|
$ 420.4
|
Short-term
investments
|
1,111.0
|
|
516.5
|
Accounts and other
receivables, net
|
322.9
|
|
328.0
|
Inventories,
net
|
303.6
|
|
308.9
|
Deferred income
taxes
|
29.5
|
|
33.4
|
Prepaid
expenses
|
48.5
|
|
46.8
|
Other current
assets
|
89.6
|
|
71.8
|
Total current
assets
|
2,309.2
|
|
1,725.8
|
|
|
|
|
Long-term accounts
receivable, net
|
8.1
|
|
7.3
|
Long-term
investments
|
92.0
|
|
21.9
|
Property, plant and
equipment, net
|
429.3
|
|
421.6
|
Goodwill
|
379.0
|
|
385.4
|
Other intangible
assets, net
|
25.8
|
|
33.5
|
Deferred income
taxes
|
68.7
|
|
79.0
|
Other
assets
|
37.9
|
|
35.4
|
|
|
|
|
Total assets
|
$ 3,350.0
|
|
$ 2,709.9
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
|
|
|
|
Current
liabilities
|
|
|
|
Accounts payable and
accrued liabilities
|
$ 427.8
|
|
$ 345.6
|
|
|
|
|
Long-term
debt
|
596.4
|
|
593.1
|
Other long-term
liabilities
|
282.4
|
|
226.8
|
|
|
|
|
Stockholders'
equity
|
|
|
|
Common
stock
|
128.0
|
|
126.0
|
Additional paid-in
capital
|
810.0
|
|
671.2
|
Retained
earnings
|
2,732.7
|
|
2,030.8
|
Accumulated other
comprehensive loss
|
(70.6)
|
|
(27.6)
|
Treasury stock, at
cost
|
(1,556.7)
|
|
(1,256.0)
|
Total stockholders'
equity
|
2,043.4
|
|
1,544.4
|
|
|
|
|
Total liabilities and
stockholders' equity
|
$ 3,350.0
|
|
$ 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 ("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. 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:
|
|
|
Given the magnitude
and unusual nature of these special items relative to the operating
results for the periods presented, these items below have been
excluded in non-GAAP net income and diluted earnings per
share.
|
|
|
THV Sales Return
Reserve and Related Costs - In the first and second quarters of
2014, the Company recorded a net sales return reserve and related
costs, primarily related to inventory reserves, of $15.6 million
and $6.1 million, respectively, related to estimated THV product
returns expected upon introduction of next-generation THV
products. In the third quarter of 2014, the Company recorded
a net $16.0 million reversal of the reserve 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, and $0.9 million and $4.3 million
in the third 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.
|
|
|
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.
|
|
|
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.
|
|
|
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. Management believes
that excluding the impact of these items from its calculation of
free cash flow provides investors a more meaningful comparison to
historical financial results.
|
EDWARDS
LIFESCIENCES CORPORATION
|
|
|
|
|
|
Unaudited
Reconciliation of GAAP to Non-GAAP Financial
Information
|
|
|
|
|
|
|
|
|
|
|
RECONCILIATION OF
GAAP TO NON-GAAP NET INCOME
|
|
|
|
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
|
September
30,
|
|
September
30,
|
(in millions, except
per share data)
|
2014
|
2013
|
|
2014
|
2013
|
|
|
|
|
|
|
|
GAAP Net
Income
|
$ 94.6
|
$ 76.8
|
|
$ 701.9
|
$ 314.0
|
|
Growth Rate
%
|
23.2%
|
|
|
123.5%
|
|
|
|
|
|
|
|
|
Non-GAAP
adjustments: (A)
|
|
|
|
|
|
|
|
|
|
|
|
|
THV sales return
reserve and related costs
|
(16.0)
|
-
|
|
5.7
|
-
|
Intellectual property
litigation expense (income), net
|
0.9
|
4.3
|
|
(741.0)
|
(68.3)
|
Asset
write-down
|
5.0
|
-
|
|
5.0
|
-
|
Charitable foundation
contribution
|
-
|
-
|
|
50.0
|
-
|
Settlement
|
-
|
-
|
|
7.5
|
-
|
|
|
|
|
|
|
|
Provision for income
taxes
|
|
|
|
|
|
|
Tax effect on
reconciling items(B)
|
2.5
|
(1.6)
|
|
240.2
|
25.6
|
|
Remeasurement
of uncertain tax position reserve(A)
|
-
|
-
|
|
(6.2)
|
-
|
|
Federal
research and development tax credit(A)
|
-
|
-
|
|
-
|
(8.4)
|
|
|
|
|
|
|
|
Non-GAAP Net
Income
|
$ 87.0
|
$ 79.5
|
|
$ 263.1
|
$ 262.9
|
|
Growth Rate
%
|
9.4%
|
|
|
0.1%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RECONCILIATION OF
GAAP TO NON-GAAP DILUTED EARNINGS PER SHARE
|
|
|
|
|
|
|
|
GAAP Diluted
Earnings Per Share
|
$ 0.87
|
$ 0.68
|
|
$ 6.49
|
$ 2.74
|
|
Growth Rate
%
|
27.9%
|
|
|
136.9%
|
|
|
|
|
|
|
|
|
Non-GAAP
adjustments:(A), (C)
|
|
|
|
|
|
|
|
|
|
|
|
|
THV sales return
reserve and related costs
|
(0.10)
|
-
|
|
0.03
|
-
|
Intellectual property
litigation expense (income), net
|
-
|
0.02
|
|
(4.45)
|
(0.37)
|
Asset
write-down
|
0.03
|
-
|
|
0.03
|
-
|
Charitable foundation
contribution
|
-
|
-
|
|
0.33
|
-
|
Settlement
|
-
|
-
|
|
0.06
|
-
|
|
|
|
|
|
|
|
Provision for income
taxes
|
|
|
|
|
|
|
Remeasurement
of uncertain tax position reserve
|
-
|
-
|
|
(0.06)
|
-
|
|
Federal
research and development tax credit
|
-
|
-
|
|
-
|
(0.08)
|
|
|
|
|
|
|
|
Non-GAAP Diluted
Earnings Per Share
|
$ 0.80
|
$ 0.70
|
|
$ 2.43
|
$ 2.29
|
|
Growth Rate
%
|
14.3%
|
|
|
6.1%
|
|
|
|
|
|
|
|
|
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," "Asset
Write-down," "Charitable Foundation Contribution," "Settlement,"
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
|
|
|
|
September
30,
|
|
(in
millions)
|
2014
|
2013
|
|
|
|
|
|
|
GAAP THV United
States Sales
|
$ 143.3
|
$ 86.1
|
|
Adjustment for THV
sales returns reserve
|
(17.4)
|
-
|
|
|
|
|
|
|
THV United States
Underlying Sales
|
$ 125.9
|
$ 86.1
|
|
|
Underlying Growth
Rate %
|
46.2%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
THV OUTSIDE THE
UNITED STATES UNDERLYING SALES GROWTH
|
|
|
Three Months
Ended
|
|
|
|
September
30,
|
|
(in
millions)
|
2014
|
2013
|
|
|
|
|
|
|
GAAP THV Outside
the United States Sales
|
$ 123.9
|
$ 85.9
|
|
Adjustment for THV
sales returns reserve
|
(1.0)
|
-
|
|
Foreign exchange
impact
|
-
|
0.8
|
|
|
|
|
|
|
THV Outside the
United States Underlying Sales
|
$ 122.9
|
$ 86.7
|
|
|
Underlying Growth
Rate %
|
41.8%
|
|
|
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
|
|
Nine Months
Ended
|
|
|
|
September
30,
|
|
September
30,
|
|
(in millions, except
per share data)
|
2014
|
2013
|
|
2014
|
2013
|
|
|
|
|
|
|
|
|
|
Net cash provided
by operating activities
|
$ 12.2
|
$ 132.2
|
|
$ 929.1
|
$ 361.4
|
|
|
|
|
|
|
|
|
|
Capital
expenditures
|
(18.1)
|
(22.6)
|
|
(48.4)
|
(88.9)
|
|
Medtronic litigation
settlement
|
-
|
-
|
|
(750.0)
|
-
|
|
Charitable foundation
contribution
|
-
|
-
|
|
50.0
|
-
|
|
Medtronic litigation
award
|
-
|
-
|
|
-
|
(83.6)
|
|
Net tax payments on
Medtronic litigation and charitable contribution
|
144.9
|
-
|
|
156.3
|
26.3
|
|
|
|
|
|
|
|
|
|
Non-GAAP Free Cash
Flow
|
$ 139.0
|
$ 109.6
|
|
$ 337.0
|
$ 215.2
|
|
|
|
|
|
|
|
|
|
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)
|
3Q
2014
|
3Q
2013
|
Change
|
GAAP Growth
Rate*
|
|
Sales Return
Reserve
|
3Q 2014 Underlying
Sales
|
FX
Impact
|
3Q 2013 Underlying
Sales
|
Underlying Growth
Rate *
|
Transcatheter
Heart Valves
|
$ 267.2
|
$ 172.0
|
$ 95.2
|
55.3%
|
|
$
(18.4)
|
$ 248.8
|
$ 0.8
|
$ 172.8
|
43.8%
|
Surgical Heart
Valve Therapy
|
203.4
|
191.8
|
11.6
|
6.0%
|
|
-
|
203.4
|
(0.4)
|
191.4
|
6.2%
|
Critical
Care
|
136.8
|
131.8
|
5.0
|
3.9%
|
|
-
|
136.8
|
(0.9)
|
130.9
|
4.5%
|
Total
Sales
|
$ 607.4
|
$ 495.6
|
$ 111.8
|
22.6%
|
|
$
(18.4)
|
$
589.0
|
$ (0.5)
|
$
495.1
|
18.9%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2014
Adjusted
|
2013
Adjusted
|
|
Sales by Product
Group (YTD)
|
YTD 3Q
2014
|
YTD 3Q
2013
|
Change
|
GAAP Growth
Rate*
|
|
Sales Return
Reserve
|
YTD 3Q 2014
Underlying Sales
|
FX
Impact
|
YTD 3Q 2013
Underlying Sales
|
Underlying Growth
Rate *
|
Transcatheter
Heart Valves
|
$ 676.1
|
$ 523.8
|
$ 152.3
|
29.1%
|
|
$
(10.3)
|
$ 665.8
|
$ 6.8
|
$ 530.6
|
25.5%
|
Surgical Heart
Valve Therapy
|
620.0
|
594.2
|
25.8
|
4.3%
|
|
-
|
620.0
|
(3.3)
|
590.9
|
4.9%
|
Critical
Care
|
408.8
|
391.5
|
17.3
|
4.4%
|
|
-
|
408.8
|
(5.4)
|
386.1
|
5.9%
|
Total
Sales
|
$1,704.9
|
$1,509.5
|
$ 195.4
|
12.9%
|
|
$
(10.3)
|
$ 1,694.6
|
$ (1.9)
|
$ 1,507.6
|
12.4%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2014
Adjusted
|
2013
Adjusted
|
|
Sales by Region
(QTD)
|
3Q
2014
|
3Q
2013
|
Change
|
GAAP Growth
Rate*
|
|
Sales Return
Reserve
|
3Q 2014 Underlying
Sales
|
FX
Impact
|
3Q 2013 Underlying
Sales
|
Underlying Growth
Rate *
|
United
States
|
$ 296.3
|
$ 232.1
|
$ 64.2
|
27.7%
|
|
$
(17.4)
|
$
278.9
|
$
-
|
$
232.1
|
20.2%
|
Europe
|
176.9
|
144.4
|
32.5
|
22.4%
|
|
(1.0)
|
175.9
|
2.6
|
147.0
|
19.6%
|
Japan
|
66.8
|
56.7
|
10.1
|
17.9%
|
|
-
|
66.8
|
(2.9)
|
53.8
|
24.1%
|
Rest of World
|
67.4
|
62.4
|
5.0
|
8.1%
|
|
-
|
67.4
|
(0.2)
|
62.2
|
8.4%
|
International
|
311.1
|
263.5
|
47.6
|
18.1%
|
|
(1.0)
|
310.1
|
(0.5)
|
263.0
|
17.7%
|
Total
|
$ 607.4
|
$ 495.6
|
$ 111.8
|
22.6%
|
|
$
(18.4)
|
$
589.0
|
$ (0.5)
|
$
495.1
|
18.9%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2014
Adjusted
|
2013
Adjusted
|
|
Sales by Region
(YTD)
|
YTD 3Q
2014
|
YTD 3Q
2013
|
Change
|
GAAP Growth
Rate*
|
|
Sales Return
Reserve
|
YTD 3Q 2014
Underlying Sales
|
FX
Impact
|
YTD 3Q 2013
Underlying Sales
|
Underlying Growth
Rate *
|
United
States
|
$ 760.7
|
$ 700.5
|
$ 60.2
|
8.6%
|
|
$
(4.4)
|
$
756.3
|
$
-
|
$
700.5
|
8.0%
|
Europe
|
551.0
|
454.2
|
96.8
|
21.3%
|
|
(5.9)
|
545.1
|
17.6
|
471.8
|
15.5%
|
Japan
|
192.2
|
176.0
|
16.2
|
9.2%
|
|
-
|
192.2
|
(12.5)
|
163.5
|
17.6%
|
Rest of World
|
201.0
|
178.8
|
22.2
|
12.5%
|
|
-
|
201.0
|
(7.0)
|
171.8
|
17.0%
|
International
|
944.2
|
809.0
|
135.2
|
16.7%
|
|
(5.9)
|
938.3
|
(1.9)
|
807.1
|
16.2%
|
Total
|
$1,704.9
|
$1,509.5
|
$ 195.4
|
12.9%
|
|
$
(10.3)
|
$ 1,694.6
|
$ (1.9)
|
$ 1,507.6
|
12.4%
|
|
|
|
|
|
|
|
|
|
|
|
* Numbers may not
calculate due to rounding.
|
|
|
|
|
|
|
|
|
|
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SOURCE Edwards Lifesciences Corporation