St. Jude Medical, Inc. (NYSE: STJ) today reported sales and net
earnings for the fourth quarter and full-year ended Jan. 2,
2016.
Fourth quarter 2015 highlights:
- Neuromodulation sales increased 9
percent on a constant-currency basis over the fourth quarter of
2014
- Thoratec product sales grew 15% on a
comparable constant currency basis for the full fourth quarter
2015
- Adjusted net earnings per share of
$1.02 increased 11 percent on a constant currency basis, compared
to the fourth quarter of 2014
Fourth Quarter and Full-Year 2015 Sales
The company reported net sales of $1.447 billion in the fourth
quarter of 2015, a 1 percent increase over net sales of $1.439
billion in the fourth quarter of 2014. On a constant-currency
basis, net sales increased by 7 percent over the fourth quarter of
2014.
Fourth quarter sales of Thoratec products were $136 million
driven by continued strength in the U.S. and the launch of
Heartmate 3™ Left Ventricular Assist System in Europe. Full fourth
quarter 2015 Thoratec sales of $143 million represent comparable
constant currency quarterly sales growth of 15% over fourth quarter
2014 sales of $128 million.
When comparing net sales for the full fourth quarter of 2015 to
the combined net sales of both St. Jude Medical and Thoratec for
the fourth quarter of 2014 and adjusting for foreign currency,
comparable constant currency sales decreased 1 percent.
For the full-year 2015, net sales were $5.541 billion, compared
with $5.622 billion in 2014. On a constant-currency basis, net
sales increased 6 percent over the prior year. When comparing net
sales for the full year 2015 to the combined net sales of both St.
Jude Medical and Thoratec for the full-year 2014 and adjusting for
foreign currency, comparable constant currency sales increased 4
percent.
Commenting on the company’s financial results, St. Jude Medical
President and Chief Executive Officer Michael T. Rousseau said, “We
are pleased with the momentum we achieved in 2015 in our atrial
fibrillation, heart failure and neuromodulation businesses and with
the significant progress we have made integrating Thoratec, which
had a strong fourth quarter. In 2016, we expect to continue our
focus on these key areas which will drive our growth and allow us
to deliver a comprehensive portfolio of innovative technologies to
patients around the world.”
St. Jude Medical operates on a 52/53 week fiscal year convention
with an extra 53rd week occurring approximately every six years.
The company’s fiscal fourth quarter 2014 had one extra week of
sales compared to fiscal fourth quarter 2015. The company’s fiscal
year 2014 had three extra selling days compared to fiscal year
2015. In order to provide similar sales comparisons for quarterly
and annual results, the company recommends adjusting for the impact
of this convention. While the calculation is not precise, the
company estimates that these fewer selling days in 2015 negatively
impacted fourth quarter 2015 results by approximately 5 to 6
percentage points and full-year 2015 results by approximately 1
percentage point.
Cardiac Rhythm Management (CRM)
Total CRM sales, which include implantable cardioverter
defibrillator (ICD) and pacemaker products, were $580 million for
the fourth quarter of 2015, a 15 percent decline compared with the
fourth quarter of 2014. After adjusting for the impact of foreign
currency, CRM sales decreased 10 percent. Global results were
impacted by lower sales in the U.S. as the company is facing
increased pressure in the MRI conditional category of products.
This decline was partially offset by solid results in countries
where MRI conditional products are offered and continued adoption
of our MultiPoint Pacing™ technology in Europe.
CRM sales for the full-year 2015 were $2.523 billion, a 10
percent decrease when compared with 2014. On a constant-currency
basis, total CRM sales decreased 3 percent from the prior year.
Of that total, ICD product sales were $358 million in the fourth
quarter, a 16 percent decline on a reported basis and an 11 percent
decrease on a constant-currency basis compared with the fourth
quarter of 2014. ICD product sales for the full-year 2015 were
$1.582 billion, down 9 percent when compared with 2014. On a
constant-currency basis, ICD sales decreased 4 percent from the
prior year.
Fourth quarter pacemaker sales were $222 million, a 14 percent
decline compared with the fourth quarter of 2014. On a
constant-currency basis, pacemaker product sales decreased 7
percent in the fourth quarter. Pacemaker sales for 2015 were $941
million, down 10 percent when compared with pacemaker sales in
2014. On a constant-currency basis, pacemaker sales decreased 2
percent from the prior year.
Atrial Fibrillation (AF)
AF product sales for the fourth quarter totaled $276 million, a
2 percent decrease from the fourth quarter of 2014. On a
constant-currency basis, AF product sales increased 4 percent over
the fourth quarter of 2014 driven by continued adoption of the
FlexAbility™ and TactiCath™ ablation catheters.
For the full-year 2015, AF product sales were $1.096 billion, an
increase of 5 percent over the prior year. On a constant-currency
basis, AF product sales increased 13 percent in 2015.
Cardiovascular
Total cardiovascular sales, which primarily include structural
heart and vascular products, were $327 million for the fourth
quarter of 2015, a 6 percent decline from the fourth quarter of
2014. On a constant-currency basis, cardiovascular sales increased
2 percent in the fourth quarter. Cardiovascular growth was
primarily due to a successful initial launch of all sizes of the
Portico™ Transcatheter Aortic Valve Implantation System in Europe
as well as strong contributions from the AMPLATZER™ Amulet™ Left
Atrial Appendage Occluder in Europe and the Optical Coherence
Tomography product portfolio.
Total cardiovascular product sales for 2015 were $1.311 billion,
a decrease of 3 percent from the prior year. On a constant-currency
basis, cardiovascular product sales increased 6 percent in
2015.
Neuromodulation
St. Jude Medical sales of neuromodulation products were $128
million in the fourth quarter of 2015, a 3 percent increase on a
reported basis and a 9 percent increase on a constant-currency
basis over the prior year. Neuromodulation growth was driven by the
St. Jude Medical Burst technology offering in Europe as well as the
Protégé™ Spinal Cord Stimulation System with upgradeable features
in the U.S.
For the full-year 2015, Neuromodulation product sales were $475
million, an increase of 9 percent over the prior year. On a
constant-currency basis, Neuromodulation product sales increased 14
percent in 2015.
Fourth Quarter and Full-Year Earnings Results
In the fourth quarter the Company recorded after-tax charges of
$179 million, or $0.63 per diluted share, related primarily to
acquisition-related costs, ongoing restructuring actions and
amortization of intangible assets.
Including these items, reported net earnings for the fourth
quarter of 2015 were $113 million, or $0.39 per share. This
compares to reported net earnings for the fourth quarter of 2014 of
$245 million, or $0.84 per share. Excluding these items, adjusted
net earnings for the fourth quarter of 2015 were $292 million or
$1.02 per share.
For the full-year 2015, reported net earnings were $880 million,
or $3.07 per share, compared with reported EPS of $3.46 for the
full-year 2014. Adjusted net earnings for the full year 2015 were
$1.128 billion or $3.94 per share. A reconciliation of the
Company’s non-GAAP adjusted results to the Company’s GAAP reported
results is provided in the schedules at the end of the press
release.
First Quarter and Full-Year 2016 Sales and Earnings
Guidance
For the full-year 2016, the Company expects total sales to grow
in the range of 2 percent to 4 percent on a comparable constant
currency basis with currency negatively impacting full-year 2016
sales by approximately $120 million to $140 million. The company
expects comparable constant currency sales growth in the first
quarter of 2016 to be flat to slightly up.
The company expects its consolidated adjusted net earnings for
the first quarter of 2016 to be in the range of $0.87 to $0.89 per
share and full-year 2016 consolidated adjusted net earnings to be
in the range of $3.95 to $4.05. A further reconciliation of the
company’s quarterly and annual guidance is provided in the
schedules at the end of the press release.
Conference Call / Webcast
St. Jude Medical’s fourth quarter and full-year 2015 earnings
call can be heard live via webcast today beginning at 7 a.m. CST
via the St. Jude Medical Investor Relations website
(investors.sjm.com). Approximately one hour following the call
(and archived for 90 days), a replay will be available on the
Investor Events and Presentations webpage in the Investor Relations
section of the St. Jude Medical website.
St. Jude Medical will also be tweeting live during the call on
our Investor Relations Twitter account, @StJudeMedicalIR.
Annual Analyst and Investor Meeting
The company has scheduled its annual investor and analyst
meeting for Friday, Feb. 5, 2016, in New York City. Investors and
analysts must be registered in advance in order to gain entry into
the meeting and can email St. Jude Medical Investor Relations for
more information. The meeting will take place from approximately 8
a.m. to 12:30 p.m. EST, and the general public can listen to the
meeting live on the Investor Relations section of our website
investors.sjm.com.
About St. Jude Medical
St. Jude Medical is a leading global medical device manufacturer
and is dedicated to transforming the treatment of some of the
world’s most expensive epidemic diseases. The company does this by
developing cost-effective medical technologies that save and
improve lives of patients around the world. Headquartered in St.
Paul, Minn., St. Jude Medical has five major areas of focus that
include heart failure, atrial fibrillation, neuromodulation,
traditional cardiac rhythm management, and cardiovascular diseases.
For more information, please visit sjm.com or follow us on Twitter
@StJudeMedicalIR.
Forward-Looking Statements
This news release contains forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995
that involve risks and uncertainties. Such forward-looking
statements include the expectations, plans and prospects for the
Company, including potential clinical successes, anticipated
regulatory approvals and future product launches, and projected
revenues, margins, earnings and market shares. The statements made
by the Company are based upon management’s current expectations and
are subject to certain risks and uncertainties that could cause
actual results to differ materially from those described in the
forward-looking statements. These risks and uncertainties include
market conditions and other factors beyond the Company’s control
and the risk factors and other cautionary statements described in
the Company’s filings with the SEC, including those described in
the Risk Factors and Cautionary Statements sections of the
Company’s Annual Report on Form 10-K for the fiscal year ended
January 3, 2015 and Quarterly Report on Form 10-Q for the fiscal
quarter ended October 3, 2015. The Company does not intend to
update these statements and undertakes no duty to any person to
provide any such update under any circumstance.
Summary of 4Q15 Sales and Reconciliation to Constant
Currency Sales Growth (in millions) (unaudited)
4Q15
Sales 4Q14 Sales
Reported %Change
vs.4Q14
ConstantCurrency %Change
vs.4Q14
Reported$ Changevs.
4Q14
ConstantCurrency$ Changevs.
4Q14
ForeignCurrencyImpact
Total Sales $1,447 $1,439 1% 7%
$8 $99 -$91 Total International Sales
$708 $761 -7% 5% Total
U.S. Sales $739 $678 9%
Worldwide Cardiac Rhythm
Management $580 $685 -15% -10%
-$105 -$65 -$40 International Cardiac Rhythm
Management $286 $336 -15% -3% U.S.
Cardiac Rhythm Management $294 $349 -16%
Worldwide ICD $358 $426 -16%
-11% -$68 -$46 -$22 International ICD
$149 $179 -17% -5% U.S. ICD $209
$247 -16%
Worldwide Pacemakers $222 $259
-14% -7% -$37 -$19 -$18 International
Pacemakers $137 $157 -13% -1% U.S.
Pacemakers $85 $102 -17%
Worldwide Atrial
Fibrillation $276 $283 -2% 4%
-$7 $11 -$18 International Atrial Fibrillation
$154 $171 -10% 1% U.S. Atrial
Fibrillation $122 $112 10%
Worldwide
Cardiovascular $327 $347 -6% 2%
-$20 $7 -$27 International Cardiovascular
$199 $214 -7% 6% U.S. Cardiovascular
$128 $133 -4%
Worldwide Structural Heart
$148 $159 -7% 1% -$11 $2
-$13 International Structural Heart $97 $103
-6% 7% U.S. Structural Heart $51 $56
-9%
Worldwide Vascular $179 $188 -5%
2% -$9 $5 -$14 International Vascular
$102 $111 -8% 4% U.S. Vascular $77
$77 -1%
Worldwide Neuromodulation $128
$124 3% 9% $4 $10 -$6
International Neuromodulation $38 $40 -6%
9% U.S. Neuromodulation $90 $84 8%
Worldwide Thoratec $136 $0
$136 $136 $0 International
Thoratec $31 $0 U.S.
Thoratec $105 $0
Note: Percentage changes are based on actual, non-rounded amounts
and may not recalculate precisely.
Summary of 2015
Sales and Reconciliation to Constant Currency Sales Growth (in
millions) (unaudited)
2015 Sales 2014
Sales
Reported %Change
vs.2014
ConstantCurrency %Change
vs.2014
Reported$ Changevs.
2014
ConstantCurrency$
Changevs. 2014
ForeignCurrencyImpact
Total Sales $5,541 $5,622 -1% 6%
-$81 $332 -$413 Total International Sales
$2,703 $2,965 -9% 5%
Total U.S. Sales $2,838 $2,657 7%
Worldwide Cardiac Rhythm Management $2,523
$2,793 -10% -3% -$270 -$85 -$185
International Cardiac Rhythm Management $1,152 $1,322
-13% 1% U.S. Cardiac Rhythm Management $1,371
$1,471 -7%
Worldwide ICD $1,582 $1,746
-9% -4% -$164 -$61 -$103
International ICD $598 $695 -14% 1%
U.S. ICD $984 $1,051 -7%
Worldwide Pacemakers
$941 $1,047 -10% -2% -$106
-$24 -$82 International Pacemakers $554
$627 -12% 1% U.S. Pacemakers $387 $420
-8%
Worldwide Atrial Fibrillation $1,096 $1,044
5% 13% $52 $139 -$87
International Atrial Fibrillation $615 $640
-4% 10% U.S. Atrial Fibrillation $481 $404
19%
Worldwide Cardiovascular $1,311 $1,348
-3% 6% -$37 $79 -$116 International
Cardiovascular $767 $863 -11% 2% U.S.
Cardiovascular $544 $485 12%
Worldwide Structural
Heart $595 $639 -7% 2% -$44
$11 -$55 International Structural Heart $379
$422 -10% 3% U.S. Structural Heart $216
$217 0%
Worldwide Vascular $716 $709
1% 9% $7 $68 -$61 International
Vascular $388 $441 -12% 2% U.S.
Vascular $328 $268 22%
Worldwide Neuromodulation
$475 $437 9% 14% $38 $63
-$25 International Neuromodulation $138 $140
-1% 17% U.S. Neuromodulation $337 $297
13%
Worldwide Thoratec $136 $0
$136 $136 $0 International
Thoratec $31 $0 U.S.
Thoratec $105 $0
Note: The data in this schedule has been intentionally rounded to
the nearest million. Therefore, the quarterly revenue may not sum
to the total year revenue. Additionally, percentage changes are
based on actual, non-rounded amounts and may not recalculate
precisely.
St. Jude Medical, Inc. Condensed
Consolidated Balance Sheets (in millions)
(Unaudited) January 2, 2016 January
3, 2015 Cash and cash equivalents $667 $1,442 Accounts
receivable, net 1,237 1,215 Inventories 909 784 Other current
assets 452 459 Property, plant & equipment, net 1,320 1,343
Goodwill 5,651 3,532 Other intangible assets, net 2,226 851 Other
assets 602 567 Total assets $13,064 $10,193 Current debt
obligations $1,163 $1,593 Other current liabilities 1,310 1,073
Long-term debt 5,229 2,259 Long-term other liabilities 1,320 1,024
Total equity 4,042 4,244 Total liabilities & equity $13,064
$10,193 Effective January 2, 2016, the Company changed the
method of classification of debt issuance costs in accordance with
Accounting Standards Update No. 2015-03, Interest—Imputation of
Interest (Subtopic 835-30): Simplifying the Presentation of Debt
Issuance Costs. Prior period balances have been retrospectively
adjusted to conform to the current period’s presentation.
St. Jude Medical, Inc. Condensed Consolidated
Statements of Earnings (in millions, except per share
amounts) (Unaudited)
Three Months Ended Year Ended
January 2, 2016
January 3, 2015 January 2, 2016 January 3,
2015 Net sales $1,447 $1,439 $5,541 $5,622 Cost of sales: Cost
of sales before special charges 486 420 1,706 1,597 Special charges
15 5 39 56 Total cost of sales 501
425 1,745 1,653 Gross profit 946 1,014
3,796 3,969 Selling, general & administrative expense
588 457 1,878 1,856 Research & development expense 177 175 676
692 Amortization of intangible assets 45 24 116 89 Special charges
39 78 96 181 Operating profit 97 280
1,030 1,151 Other expense, net 32 22 102 83
Earnings before noncontrolling interest and income taxes 65
258 928 1,068 Income taxes (48 ) 20 62 113 Net
earnings before noncontrolling interest 113 238 866 955 Net loss
attributable to noncontrolling interest - (7 ) (14 ) (47 )
Net earnings attributable to St. Jude Medical, Inc. $113
$245 $880 $1,002
Diluted net earnings per share attributable to St. Jude Medical,
Inc. $0.39 $0.84 $3.07 $3.46 Adjusted diluted net earnings per
share attributable to St. Jude Medical, Inc. (Non-GAAP) (1) $1.02
$1.08 $3.94 $4.17 Cash dividends declared per share $0.29
$0.27 $1.16 $1.08 Weighted average shares outstanding-
diluted 286.5 290.6 286.3 289.7 (1) See accompanying
reconciliation tables.
Non-GAAP Financial Measures
Reconciliations (Unaudited)
Three Months Ended January 2, 2016
(in millions, except per share amounts)
Earnings beforenoncontrollinginterest and
incometaxes
Incometaxes
Effective taxrate
Net
earningsbeforenoncontrollinginterest
Net loss attributableto
noncontrollinginterest
Net earningsattributable to St.Jude
Medical,Inc.
Diluted net earningsper share
attributableto St. Jude Medical,Inc.
Diluted EPSgrowth rate
As reported (GAAP)
$ 65 $ (48
) -73.8 % $ 113 $
- $ 113 $ 0.39 -54
% Restructuring activities 47 17 30 - 30 0.10
Acquisition-related costs 187 46 141 141 0.49 Product field action
costs and litigation costs 4 1 3 - 3 0.01 Legal settlements 3 1 2 -
2 0.01 Amortization of intangible assets 45 16 29 - 29 0.10 Income
tax adjustments - 10 (10 ) - (10 ) (0.03 ) R&D credit - 16 (16
) - (16 ) (0.06 )
As adjusted (Non-GAAP)
$ 351
$ 59 16.8 %
$ 292 $ -
$ 292 $ 1.02
-6 % Unfavorable foreign currency
impact vs. 2014 0.18
Constant currency as
adjusted (non-GAAP)
$ 1.20 11
%
Restructuringactivities
Acquisition-relatedcosts
Product fieldaction costsand
litigationcosts
Legal settlements Total Cost of sales before
special charges
$ - $ 36 $ - $ - $ 36 Special charges
(cost of sales) 15 - - - 15 Selling, general & administrative
expense - 150 - - 150 Research & development expense - 1 - - 1
Special charges (operating expenses) 32 -
4 3
39
$ 47 $ 187
$ 4 $ 3
$ 241 Three Months Ended
January 3, 2015 (in millions, except per share amounts)
Earnings beforenoncontrollinginterest and
incometaxes
Incometaxes
Effective taxrate
Net
earningsbeforenoncontrollinginterest
Net loss attributableto
noncontrollinginterest
Net earningsattributable to St.Jude
Medical,Inc.
Diluted net earningsper share
attributableto St. Jude Medical,Inc.
As reported (GAAP)
$ 258 $ 20
7.8 % $ 238 $ (7 )
$ 245
$
0.84
Restructuring activities 30 8 22 - 22
0.08
Acquisition-related costs 14 4 10 - 10
0.03
Product field action costs and litigation costs 6 2 4 - 4
0.01
Legal settlements 14 6 8 - 8
0.03
Intangible asset impairment charges 33 12 21 - 21
0.07
Amortization of intangible assets 24 8 16 - 16
0.06
R&D credit - 12 (12 ) - (12 )
(0.04
)
As adjusted (Non-GAAP)
$ 379 $ 72
19.0 % $ 307
$ (7 ) $ 314
$
1.08
Restructuringactivities
Acquisition-relatedcosts
Product fieldaction costsand
litigationcosts
Legal Settlements
Intangible assetimpairment charges
Total Cost of sales before special charges
$
- $ 4
$ - $ - $ -
$ 4 Special charges (cost of sales) 9 - (4 ) - - 5 Selling, general
& administrative expense - 10 - - - 10 Special charges
(operating expenses) 21 -
10 14 33
78
$ 30 $ 14
$ 6 $ 14
$ 33 $ 97
Year Ended January 2, 2016 (in millions, except per share
amounts)
Earnings beforenoncontrollinginterest and
incometaxes
Incometaxes
Effective taxrate
Net
earningsbeforenoncontrollinginterest
Net loss attributableto
noncontrollinginterest
Net earningsattributable to St.Jude
Medical,Inc.
Diluted net earningsper share
attributableto St. Jude Medical,Inc.
Diluted EPSgrowth rate
As reported (GAAP)
$ 928 $ 62
6.7 % $ 866 $ (14
) $ 880 $ 3.07 -11
% Restructuring activities 128 41 87 - 87 0.30
Acquisition-related costs 161 56 105 4 101 0.35 Product field
action costs and litigation costs 11 4 7 - 7 0.02 Legal settlements
(6 ) (3 ) (3 ) - (3 ) (0.01 ) Intangible asset impairment charges 2
1 1 - 1 0.00 Amortization of intangible assets 116 38 78 - 78 0.27
Income tax adjustments - 21 (21 ) - (21 ) (0.07 ) R&D credit -
2 (2 ) - (2 ) (0.01 )
As
adjusted (Non-GAAP)
$ 1,340 $
222 16.6 %
$ 1,118 $ (10 )
$ 1,128 $ 3.94
-6 % Unfavorable foreign
currency impact vs. 2014 0.68 Constant
currency as adjusted (non-GAAP)
$ 4.62
11 %
Restructuringactivities
Acquisition-relatedcosts
Product fieldaction costsand
litigationcosts
Legal settlements
Intangible assetimpairment charges
Total Cost of sales before special charges $ - $ 36 $
- $ - $ - $ 36 Special charges (cost of sales) 46 - (7 ) - - 39
Selling, general & administrative expense - 109 - - - 109
Research & development expense - 2 - - - 2 Special charges
(operating expenses) 82 - 18 (6 ) 2 96 Other expense, net -
14 -
- - 14
$
128 $ 161 $
11 $ (6 ) $
2 $ 296
Year Ended January 3, 2015 (in millions, except per share amounts)
Earnings beforenoncontrollinginterest and
incometaxes
Incometaxes
Effective taxrate
Net
earningsbeforenoncontrollinginterest
Net loss attributableto
noncontrollinginterest
Net earningsattributable to St.Jude
Medical,Inc.
Diluted net earningsper share
attributableto St. Jude Medical,Inc.
As reported (GAAP)
$ 1,068 $ 113
10.6 % $ 955 $ (47
) $ 1,002 $ 3.46
Restructuring activities 140 41 99 - 99 0.34 Acquisition-related
costs 62 12 50 16 34 0.12 Product field action costs and litigation
costs 52 15 37 - 37 0.13 Legal settlements (13 ) (4 ) (9 ) - (9 )
(0.03 ) Intangible asset impairment charges 58 21 37 - 37 0.13
Amortization of intangible assets 89 32 57 - 57 0.20 Income tax
adjustments - 48 (48 ) - (48 ) (0.17 ) R&D credit - - - - - -
As adjusted (Non-GAAP)
$
1,456 $ 278
19.1 % $ 1,178
$ (31 ) $ 1,209
$ 4.17
Restructuringactivities
Acquisition-relatedcosts
Product fieldaction costsand
litigationcosts
Legal settlements
Intangible assetimpairment charges
Total Cost of sales before special charges $ - $ 6 $
- $ - $ - $ 6 Special charges (cost of sales) 37 - 19 - - 56
Selling, general & administrative expense - 56 - - - 56 Special
charges (operating expenses) 103 -
33 (13 ) 58
181
$ 140
$ 62 $ 52
$ (13 ) $ 58
$ 299 The sum of the
components may not equal the total due to rounding and quantities
of shares outstanding in different periods. Tax rates vary and are
applied based on the item's nature and tax jurisdiction where it is
incurred.
2016 Earnings Guidance
Reconciliation (Unaudited) First Quarter
Full Year Estimated 2016 diluted net earnings per share
attributable to St. Jude Medical,Inc. $0.68 - $0.70 $3.33 - $3.43
Estimated restructuring activities 0.02 0.08 Estimated
acquisition-related costs 0.11 0.17
Estimated legal settlements
(0.04 ) (0.04 ) Estimated amortization of intangible assets 0.10
0.41 Estimated 2016 adjusted diluted net earnings per
share attributable to St. Jude Medical, Inc. (Non-GAAP) $0.87 -
$0.89 $3.95 - $4.05 The sum of the components may not equal
the total due to rounding and quantities of shares outstanding in
different periods.
2016 Sales Guidance
Reconciliation (in millions) (Unaudited)
Full Year 2015 St. Jude Medical total sales $5,541
2015 Thoratec pre-acquisition total
sales
381 2015 comparable total sales $5,922 Estimated 2016 sales $5,900
- $6,040 Estimated unfavorable foreign currency impact vs 2015 $120
- $140 Estimated constant currency 2016 total sales (Non-GAAP)
$6,040 - $6,160 Estimated 2016 comparable constant currency %
change vs 2015 (Non-GAAP) 2% - 4%
Non-GAAP Financial Measures
The company provides the following non-GAAP financial measures
because St. Jude Medical management believes that in order to
understand the company’s short-term and long-term financial trends,
investors may wish to consider the impact of certain adjustments
discussed below. St. Jude Medical management uses these non-GAAP
financial measures to forecast and evaluate the operational
performance of the company as well as to compare results of current
periods to prior periods on a consolidated basis.
- Adjusted earnings before noncontrolling
interest and income taxes
- Adjusted income taxes and adjusted
effective tax rate
- Adjusted net earnings before
noncontrolling interest
- Adjusted net loss attributable to
noncontrolling interest
- Adjusted net earnings attributable to
St. Jude Medical, Inc.
- Adjusted diluted net earnings per share
attributable to St. Jude Medical, Inc. and adjusted diluted EPS
growth rate
- Adjusted constant currency diluted net
earnings per share attributable to St. Jude Medical, Inc. and
adjusted constant currency diluted EPS growth rate
The adjustments made to GAAP financial measures result from
facts and circumstances that vary in frequency and impact on the
company’s results of operations. The following is an explanation of
each of the adjustments that management excludes in calculating its
non-GAAP measures.
Restructuring activities – These amounts represent severance
costs and other termination benefits, inventory write-offs
primarily associated with discontinued product lines, fixed asset
write-offs related to assets no longer expected to be utilized,
other restructuring costs and restructuring-related costs.
Acquisition-related costs – These amounts consist of contingent
consideration fair value adjustments, acquired inventory step-up
amortization, other transaction costs, integration costs, financing
commitment fees and stock-based compensation expense for
accelerated and replacement equity awards.
Product field action costs and litigation costs – These amounts
primarily relate to inventory write-off and disposal costs,
additional warranty and patient monitoring costs, and estimated
legal costs for outstanding legal matters associated with product
field actions.
Legal settlements – These amounts consist of losses that are
probable and reasonably estimable, gains related to favorable
resolutions of litigation matters and probable insurance
recoveries.
Intangible asset impairment charges – These amounts represent
non-cash impairments of certain definite and indefinite-lived
intangible assets.
Amortization of intangible assets – These amounts represent the
non-cash amortization expenses we recognized for definite-lived
intangible assets.
Income tax adjustments – These amounts represent tax effects
related to significant unusual or infrequent items not attributable
to current-year ordinary income, such as settlement of tax
positions and discrete tax adjustments to uncertain tax positions,
and certain other tax adjustments.
R&D credit – These amounts represent the impact of the
federal research and development tax credit to present comparative
periods assuming that the tax credit had been enacted in all
periods presented.
The company provides comparable constant currency sales growth
because St. Jude Medical management believes that in order to
understand the company’s short-term and long-term financial trends,
investors may wish to consider the impact of the Thoratec
acquisition and foreign currency translation on net sales. St. Jude
Medical management uses comparable constant currency sales growth
to forecast and evaluate the operational performance of the company
as well as to compare sales of current periods to prior
periods.
In calculating comparable constant currency sales growth in its
non-GAAP measures, the company a) excludes the impact to net sales
after translating net sales at prior period foreign currency
exchange rates and b) includes Thoratec sales amounts for periods
prior to St. Jude Medical’s acquisition of Thoratec. Comparable
constant currency sales amounts have not been adjusted to eliminate
historical product sales between St. Jude Medical and Thoratec
because management believes that such adjustments are not
material.
The company also provides constant currency sales growth and
constant currency adjusted EPS growth because St. Jude Medical
management believes that in order to understand the company’s
short-term and long-term financial trends, investors may wish to
consider the impact of foreign currency translation on net sales
and adjusted EPS. St. Jude Medical management uses constant
currency sales growth and constant currency adjusted EPS growth to
forecast and evaluate the operational performance of the company as
well as to compare sales and adjusted EPS of current periods to
prior periods.
Non-GAAP financial measures used by the company may be
calculated differently from, and therefore may not be comparable
to, similarly titled measures used by other companies. Investors
should consider non-GAAP measures in addition to, and not as a
substitute for, or superior to, financial performance measures
prepared in accordance with GAAP.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20160127005254/en/
St. Jude Medical, Inc.Media Contact:Candace Steele Flippin,
651-756-3029csflippin@sjm.comorInvestor Contact:J.C. Weigelt,
651-756-4347jweigelt@sjm.com
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