Medtronic First Quarter Revenue up 19 Percent to $3.706 Billion.* Non-GAAP diluted EPS (Encapsulated PostScript) A PostScript file format used to transfer a graphic image between applications and platforms. EPS files contain PostScript code as well as an optional preview image in TIFF, WMF, PICT or EPSI, the latter being an ASCII-only format. of $0.72 up 16%; GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). diluted EPS of $0.66 up 12% * Double-Digit Revenue Growth in 6 of 7 Businesses * Revenue Growth Outside the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. up 24% * Operating Income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. up 25% MINNEAPOLIS -- Medtronic, Inc. (NYSE NYSE See: New York Stock Exchange :MDT MDT abbr. Mountain Daylight Time MDT (in the US and Canada) Mountain Daylight Time MDT n abbr (US) (= mountain daylight time) → ) today announced financial results for its first quarter of fiscal year 2009, which ended July 25, 2008. Medtronic recorded first quarter revenue of $3.706 billion, a 19 percent increase over the $3.127 billion reported in the first quarter of fiscal year 2008. As detailed in the attached table, adjusting for restructuring charges restructuring charge The expense of reorganizing a company's operations. A restructuring charge is an infrequent expense that generally results from asset writedowns or facility closings. , non-GAAP net earnings and diluted earnings per share diluted earnings per share An earnings measure calculated by dividing net income less preferred stock dividends for a period by the average number of shares of common stock that would be outstanding if all convertible securities were converted into shares of were $813 million and $0.72 per share, an increase of 14 percent and 16 percent, respectively. As reported, net earnings for the first quarter were $747 million, or $0.66 per diluted share, an increase of 11 percent and 12 percent, respectively, over the same period in the prior year. Currency translation had a positive impact of $157 million to revenue in the first quarter. "We were pleased to see our momentum continue from fourth quarter to this quarter, which positions us well for the remainder of the fiscal year," said Bill Hawkins, Medtronic chief executive officer. "In addition to the strong revenue growth driven by our diversified product portfolio, we were pleased to see continued progress in our efforts to deliver operating leverage Operating Leverage A measurement of the degree to which a firm or project relies on fixed rather than variable costs. Notes: The higher the degree of operating leverage, the greater the potential danger from forecasting risk. as demonstrated by a 25 percent increase in operating income." Revenue in the CardioVascular, Neuromodulation, and Surgical Technologies product lines each grew more than 15 percent in the quarter. Revenue outside the United States of $1.457 billion grew 24 percent led by the Diabetes, Spinal and Surgical Technologies businesses. Revenue outside the U.S. accounted for 39 percent of Medtronic's revenue this quarter. Cardiac Rhythm Noun 1. cardiac rhythm - the rhythm of a beating heart heart rhythm regular recurrence, rhythm - recurring at regular intervals atrioventricular nodal rhythm, nodal rhythm - the normal cardiac rhythm when the heart is controlled by the Disease Management Cardiac Rhythm Disease Management (CRDM CRDM Control Rod Drive Mechanism CRDM Centre for Rapid Design and Manufacture (Buckinghamshire Chilterns University) CRDM Cumann Rince Dea Mheasa (Irish dancing organisation) ) revenue of $1.303 billion grew 6 percent. Revenue from implantable cardioverter defibrillators (ICDs) was $764 million, up more than 5 percent. Pacing revenue of $526 million in the quarter increased 7 percent. Outside the United States, CRDM revenue grew 19 percent, driven by 23 percent growth of the ICD ICD International Classification of Diseases (of the World Health Organization); intrauterine contraceptive device. ICD abbr. product lines. Spinal Spinal revenue of $859 million grew 33 percent, including Kyphon, which contributed $161 million in revenue. Excluding Kyphon, revenue increased 8 percent, driven by 16 percent growth in Biologics. The impact of Kyphon and continued growth in Biologics offset continued competitive pressure on Core Spinal products. CardioVascular CardioVascular revenue of $631 million grew 30 percent, driven by strong global performance across the drug-eluting stent In cardiology, a drug-eluting stent is a stent (a scaffold) placed into narrowed, diseased coronary arteries that slowly releases a drug to block cell proliferation. This prevents scar-tissue–like growth that, together with clots (thrombus), could otherwise block the stented and Endovascular product lines. Coronary vascular revenue of $349 million grew 41 percent globally with 173 percent growth in the United States, driven by the continued success of the Endeavor[R] drug-eluting stent in the U.S. Revenue from Endovascular products increased 26 percent on the strength of thoracic thoracic /tho·rac·ic/ (thah-ras´ik) pectoral; pertaining to the thorax (chest). tho·rac·ic adj. Of, relating to, or situated in or near the thorax. products in markets outside the U.S. and two new product launches in the U.S. Neuromodulation Neuromodulation revenue grew 20 percent to $348 million, fueled by sales of pain management products including the RestoreULTRA[R] neurostimulation system for the treatment of chronic back and leg pain. Revenue from Gastroenterology/Urological products grew 23 percent, driven by the ongoing success of InterStim[R] Therapy, used to treat the symptoms of overactive bladder Overactive Bladder Definition Overactive bladder is the leakage of large amounts of urine at unexpected times, including during sleep. Description and incontinence. InterStim has now achieved nine consecutive quarters of more than 25 percent growth. Diabetes Diabetes revenue of $269 million grew 12 percent driven by sales of consumables, the accessories required by insulin pump insulin pump n. A portable device for people with diabetes that injects insulin at programmed intervals in order to regulate blood sugar levels. users, and continuous glucose monitoring glucose monitoring Lab medicine The periodic evaluation of any analyte abnormal in Pts with DM, to assess short and long-term control with antiglycemic agents. See Glucose, Glycated hemoglobin. products. Revenue from international sales grew 31 percent over the same quarter last year. Surgical Technologies Revenue from Surgical Technologies of $202 million grew 17 percent, driven by monitoring, image-guided surgery Image-guided surgery is the general term used for any surgical procedure where the surgeon uses indirect visualization to operate, i.e., by employing imaging instruments in real time, such as fiber optic guides, internal video cameras, flexible or rigid endoscopes, ultrasonography, systems and navigation equipment, specifically the O-Arm[R] technology used in operating room operating room n. Abbr. OR A room equipped for performing surgical operations. procedures to guide neurological neurological, neurologic pertaining to or emanating from the nervous system or from neurology. neurological assessment evaluation of the health status of a patient with a nervous system disorder or dysfunction. and spinal procedures. The business also acquired Restore Medical, Inc. during the quarter. Physio-Control Physio-Control reported $94 million in revenue, based on the sale of external defibrillators and accessories. Physio-Control continues to work with the FDA FDA abbr. Food and Drug Administration FDA, n.pr See Food and Drug Administration. FDA, n.pr the abbreviation for the Food and Drug Administration. to resolve outstanding quality issues in an effort to resume unrestricted product distribution. "Broad-based sustainable growth and operating margin Operating Margin A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: improvement are in line with our recently announced initiatives that we believe will drive consistent, superior value creation," said Hawkins. "We delivered on our commitments again this quarter, and we expect progress will continue through the balance of this fiscal year." Webcast Information Medtronic will host a webcast today, Aug. 19, at 8 a.m. EDT EDT abbr. Eastern Daylight Time EDT Eastern Daylight Time EDT n abbr (US) (= Eastern Daylight Time) → hora de verano de Nueva York EDT (7 a.m. CDT CDT abbr. Central Daylight Time CDT Central Daylight Time CDT n abbr (US) (= Central Daylight Time) → hora de verano del centro; (BRIT ), to provide information about its businesses for the public, analysts and news media. This quarterly webcast can be accessed by clicking on the Investor Relations Investor relations The process by which the corporation communicates with its investors. link on the Medtronic home page at www.medtronic.com and this earnings release will be archived at www.medtronic.com/newsroom. Within 24 hours, a replay of the webcast and a transcript of the company's prepared remarks will be available in the "Presentations & Transcripts" section of the Investor Relations homepage. About Medtronic Medtronic, Inc., headquartered in Minneapolis, is the world's leading medical technology company, alleviating pain, restoring health and extending life for people with chronic disease. Its Internet address There are two kinds of addresses that are widely used on the Internet. One is a person's e-mail address, and the other is the address of a Web site, which is known as a URL. Following is an explanation of Internet e-mail addresses only. For more on URLs, see URL and Internet domain name. is www.medtronic.com. This press release contains forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. regarding our operating momentum, new products and other developments, which are subject to risks and uncertainties, such as competitive factors, difficulties and delays inherent in the development, manufacturing, marketing and sale of medical products, government regulation, general economic conditions and other risk and uncertainties described in Medtronic's Annual Report on Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. for the year ended April 25, 2008. Actual results may differ materially from anticipated results. Medtronic does not undertake to update its forward-looking statements. Unless otherwise noted, all comparisons made in this news release are on an "as reported basis," not on a constant currency basis, and references to quarterly figures increasing or decreasing are in comparison to the first quarter of fiscal year 2008. [TABLE OMITTED] (1) Medtronic management believes that in order to properly understand Medtronic's short-term and long-term financial trends, investors may wish to consider the impact of foreign currency translation on revenue. In addition, Medtronic management uses results of operations before currency translation to evaluate the operational performance of the Company and as a basis for strategic planning Strategic planning is an organization's process of defining its strategy, or direction, and making decisions on allocating its resources to pursue this strategy, including its capital and people. . Investors should consider these non-GAAP measures in addition to, and not as a substitute for, financial performance measures prepared in accordance with GAAP. Note: The data in this schedule has been intentionally rounded to the nearest million and therefore the quarterly revenue may not sum to the fiscal year to date revenue. [TABLE OMITTED] Note: The data in this schedule has been intentionally rounded to the nearest million and therefore the quarterly revenues may not sum to the fiscal year to date revenue. [TABLE OMITTED] (1) Medtronic management believes that in order to properly understand Medtronic's short-term and long-term financial trends, investors may wish to consider the impact of foreign currency translation on revenue. In addition, Medtronic management uses results of operations before currency translation to evaluate the operational performance of the Company and as a basis for strategic planning. Investors should consider these non-GAAP measures in addition to, and not as a substitute for, financial performance measures prepared in accordance with GAAP. Note: The data in this schedule has been intentionally rounded to the nearest million and therefore the quarterly revenue may not sum to the fiscal year to date revenue. [TABLE OMITTED] [TABLE OMITTED] (a) The $66 million ($0.06 per share) after-tax restructuring charge is related to a global realignment re·a·lign tr.v. re·a·ligned, re·a·lign·ing, re·a·ligns 1. To put back into proper order or alignment. 2. To make new groupings of or working arrangements between. initiative that the Company began in the fourth quarter of fiscal year 2008. This initiative focuses on shifting resources to those areas where the Company has the greatest opportunities for growth and attempts to streamline operations to drive operating leverage. The global realignment initiative impacts most businesses and certain corporate functions. The majority of the expense recognized in the first quarter of fiscal year 2009 is related to the execution of our global realignment initiative outside the United States. This includes the realignment of personnel throughout Europe and the Emerging Markets and the closure of an existing facility in the Netherlands that will be integrated into the U.S. operations. The remainder of the expense is associated with compensation provided to employees identified in the fourth quarter of fiscal year 2008 whose employment terminated with the Company in the first quarter of fiscal year 2009. These incremental costs Costs which are additional costs to the Service appropriations that would not have been incurred absent support of the contingency operation. See also financial management. were not accrued in the fourth quarter of fiscal year 2008 because these benefits had not yet been communicated to the impacted employees. In addition to disclosing restructuring charges that are determined in accordance with U.S. generally accepted accounting principles The standard accounting rules, regulations, and procedures used by companies in maintaining their financial records. Generally accepted accounting principles (GAAP) provide companies and accountants with a consistent set of guidelines that cover both broad accounting (GAAP), Medtronic management believes that in order to properly understand its short-term and long-term financial trends, investors may find it useful to consider the impact of excluding these restructuring charges. Management believes that the resulting non-GAAP financial measure provides useful information to investors regarding the underlying business trends and performance of the Company's ongoing operations and is useful for period over period comparisons of such operations. Medtronic management eliminates these restructuring charges when evaluating the operating performance of the Company. Investors should consider this non-GAAP measure in addition to, and not as a substitute for, financial performance measures prepared in accordance with U.S. GAAP. In addition, this non-GAAP financial measure may not be the same as similar measures presented by other companies. (b) The $11 million ($0.01 per share) after-tax restructuring charge is related to restructuring initiatives that the Company began in the fourth quarter of fiscal year 2007. These initiatives were designed to drive manufacturing efficiencies in our CardioVascular business, downsize Downsize Reducing the size of a company by eliminating workers and/or divisions within the company. Notes: When a company downsizes, it is attempting to find ways to improve efficiency and increase profitability. It is sometimes referred to as trimming the fat. our Physio-Control business due to our voluntary suspension of U.S. shipments, and rebalance resources within our Cardiac Rhythm Disease Management (CRDM) business to reflect the market dynamics. In the first quarter of fiscal year 2008, the Company recognized expense associated with compensation and early retirement benefits provided to employees whose employment terminated with the Company in the first quarter of fiscal year 2008 which could not be accrued in the fourth quarter of fiscal year 2007. In addition to disclosing restructuring charges that are determined in accordance with U.S. GAAP, Medtronic management believes that in order to properly understand its short-term and long-term financial trends, investors may find it useful to consider the impact of excluding these restructuring charges. Management believes that the resulting non-GAAP financial measure provides useful information to investors regarding the underlying business trends and performance of the Company's ongoing operations and is useful for period over period comparisons of such operations. Medtronic management eliminates these restructuring charges when evaluating the operating performance of the Company. Investors should consider this non-GAAP measure in addition to, and not as a substitute for, financial performance measures prepared in accordance with U.S. GAAP. In addition, this non-GAAP financial measure may not be the same as similar measures presented by other companies. (c) The $25 million ($0.02 per share) after-tax IPR&D charge is related to a $25 million ($18 million after-tax) milestone payment under a royalty bearing, non-exclusive patent cross-licensing agreement with NeuroPace, Inc. that the Company entered into in the first quarter of fiscal year 2006. The additional $8 million ($7 million after-tax) charge is related to purchases of certain intellectual property. These payments were expensed as IPR&D since technological feasibility of the underlying projects have not yet been reached and such technology has no future alternative use. In addition to disclosing IPR&D charges that are determined in accordance with U.S. GAAP, Medtronic management believes that in order to properly understand its short-term and long-term financial trends, investors may find it useful to consider the impact of excluding these IPR&D charges. Management believes that the resulting non-GAAP financial measure provides useful information to investors regarding the underlying business trends and performance of the Company's ongoing operations and is useful for period over period comparisons of such operations. Medtronic management eliminates these IPR&D charges when evaluating the operating performance of the Company. Investors should consider this non-GAAP measure in addition to, and not as a substitute for, financial performance measures prepared in accordance with U.S. GAAP. In addition, this non-GAAP financial measure may not be the same as similar measures presented by other companies. [TABLE OMITTED] (a) In the third quarter of fiscal year 2008, we acquired Kyphon Inc. The $161 million represents the revenue earned by Kyphon in the first quarter of fiscal year 2009. In addition to disclosing revenue and growth rates Growth Rates The compounded annualized rate of growth of a company's revenues, earnings, dividends, or other figures. Notes: Remember, historically high growth rates don't always mean a high rate of growth looking into the future. that are determined in accordance with U.S. generally accepted accounting principles (GAAP), Medtronic management believes that in order to properly understand its short-term and long-term financial trends, investors may find it useful to consider the impact of excluding the Kyphon revenue from these metrics. Management believes that the resulting non-GAAP financial measures provide useful information to investors regarding the underlying business trends and performance of the Company's ongoing operations and is useful for period over period comparisons of such operations. Medtronic management eliminates this revenue when evaluating the operating performance of the Company. Investors should consider these non-GAAP measures in addition to, and not as a substitute for, financial performance measures prepared in accordance with U.S. GAAP. In addition, these non-GAAP financial measures may not be the same as similar measures presented by other companies. (b) Medtronic calculates operating income by adding back other expense, net and interest to expense/(income), net to earnings before income taxes. [TABLE OMITTED] [TABLE OMITTED] |
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