Medtronic Reports 17 Percent Growth in Earnings Per Share; Revenue Growth Accelerates and Market Share Gains Continue.Business Editors & Health/Medical Writers MINNEAPOLIS--(BUSINESS WIRE)--Aug. 20, 2001 With positive performances from each of its major businesses and accelerated quarterly revenue growth, 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 first-quarter pre-charge diluted earnings-per-share of $0.28 on net earnings of $342.0 million. This represents an increase of 17 percent over pre-charge diluted earnings-per-share of $0.24 on pre-charge net earnings of $295.5 million in the same period a year ago. The company finalized its plans to further streamline its operations as announced in the fourth quarter of 2001. A $35.1 million pre-tax charge related to these restructuring activities was recorded in the first quarter, which was in line with its previous guidance. The company also recorded a $27.0 million pre-tax charge related to a previously announced arbitration award. First-quarter charges reduced reported quarterly earnings to $301.5 million and $0.25 per diluted share. Revenues of $1.456 billion - a 14 percent increase over the $1.310 billion recorded in the comparable quarter last year on a constant-currency basis - were achieved with solid gains in market share despite continuing world economic and competitive pressures. Foreign exchange translation reduced reported revenue growth over the prior year by $33.7 million to 11 percent. "Medtronic continues to deliver industry-leading growth across all major business segments," said Art Collins, president and chief executive officer. "The new product pipeline has never been stronger as we plan to introduce significant new therapies to treat major medical problems such as heart failure, diabetes, atrial fibrillation atrial fibrillation Irregular rhythm (arrhythmia) of contraction of the atria (upper heart chambers). The most common major arrhythmia, it may result as a consequence of increased fibrous tissue in the aging heart, of heart disease, or in association with severe infection. , excruciating back pain, and Parkinson's disease Parkinson's disease or Parkinsonism, degenerative brain disorder first described by the English surgeon James Parkinson in 1817. When there is no known cause, the disease usually appears after age 40 and is referred to as Parkinson's disease. . In addition, new products in each of Medtronic's core businesses will be launched throughout the remainder of this fiscal year." (Unless otherwise noted, all revenue 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 follow are reported on a constant-currency basis.) Cardiac Rhythm Management Cardiac rhythm management is a field of treatment in cardiology. The purpose is managing cardiac rhythm disorders. Usually it involves artificial pacemakers and/or implantable cardioverter-defibrillator therapy as well as antiarrhythmia drugs. Business Competitive market-share gains by the Tachyarrhythmia tachyarrhythmia /tachy·ar·rhyth·mia/ (tak?e-ah-rith´me-ah) any disturbance of the heart rhythm in which the heart rate is abnormally increased. tach·y·ar·rhyth·mi·a n. business (defibrillators) were credited for an overall 10 percent increase to $668.9 million in Cardiac Rhythm Management revenues during the quarter. Worldwide medical acceptance of the advanced Medtronic GEM(R) III VR/DR and GEM(R) III AT devices resulted in accelerating sales momentum for implantable defibrillators and 12 percent revenue growth year-over-year. Revenues for the bradycardia bradycardia: see arrhythmia. pacing business grew 7 percent, in line with the overall market's growth rate. New indications for implantable cardiac rhythm therapies spurred European sales, with the InSync(R) III device commercialized in Europe during the quarter. Additional milestones for the quarter included a favorable panel recommendation for 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. approval of its InSync(R) Cardiac Resynchronization Therapy, as well as the completion of enrollment for the SCD/HFT trial, which is evaluating the use of defibrillator defibrillator, device that delivers an electrical shock to the heart in order to stop certain forms of rapid heart rhythm disturbances (arrhythmias). The shock changes a fibrillation to an organized rhythm or changes a very rapid and ineffective cardiac rhythm to a backup in heart failure patients. Medtronic Physio-Control showed sales gains of more than 20 percent. Physio-Control soon expects clearance from the U.S. Food and Drug Administration of two new uses for its hospital-based LIFEPAK 12 defibrillators. The agency is considering clinical data supporting use for cardioversion Cardioversion Definition Cardioversion refers to the process of restoring the heart's normal rhythm by applying a controlled electric shock to the exterior of the chest. of atrial atrial /atri·al/ (a´tre-al) pertaining to an atrium. a·tri·al adj. Of or relating to an atrium. Atrial Having to do with the upper chambers of the heart. defibrillation Defibrillation Definition Defibrillation is a process in which an electronic device sends an electric shock to the heart to stop an extremely rapid, irregular heartbeat, and restore the normal heart rhythm. - the most prevalent cause of hospital defibrillation procedures - and for internal defibrillation during surgery. Vascular Business The Vascular business posted record revenues of $264.4 million, up 21 percent for the quarter. Coronary stents, balloon and guide catheters gained market share with sales increasing 14 percent, largely fueled by a full quarter of sales with the S7 coronary stent, plus the continued success of the S670. Sales of the AneuRx(TM) Stent Graft System for the minimally invasive treatment of abdominal aortic aneurysms more than doubled, compared to the same period a year ago. During the quarter, Medtronic launched the industry's first distal protection system, the GuardWire(TM) Plus Temporary Occlusion and Aspiration System, for use during interventions in diseased saphenous vein saphenous vein n. Either of two main superficial veins of the leg, one larger than the other, that begin at the foot. Saphenous vein A long vein in the thigh or calf commonly used for bypass grafts. grafts. The GuardWire Plus continues to be used and evaluated in conjunction with a number of clinical trials, including the U.S.-based MAVErIC trial, which is evaluating the safety and efficacy of Medtronic's carotid carotid /ca·rot·id/ (kah-rot´id) pertaining to the carotid artery, the principal artery of the neck. ca·rot·id n. stent. Also in the first quarter, Medtronic and AVI BioPharma announced the initiation of an exclusive worldwide agreement to license a family of antisense antisense, DNA or RNA manipulated in a laboratory so that its components (nucleotides) form a complementary copy of normal, or "sense," messenger RNA (mRNA; see nucleic acid). compounds currently under evaluation - including Resten-NG(TM), for use on medical devices, including stents. Cardiac Surgery Businesses Cardiac Surgery Technologies and the Heart Valve businesses shared credit for a solid six percent increase in revenues to $123.0 million for Cardiac Surgery. Revenues for Cardiac Surgery Technologies were again up more than 50 percent, boosted by the U.S. launch of its Starfish(TM) Heart Positioner for use during beating heart bypass surgery Bypass surgery A surgical procedure that grafts blood vessels onto arteries to reroute the blood flow around blockages in the arteries (arteriosclerosis). . Medtronic anticipates introducing the Starfish worldwide throughout the second quarter, fueling further growth in the acceptance and practice of beating heart bypass surgery. Medtronic's broad line of heart valve products and continued surgeon preference for tissue valves drove significant growth, with the Heart Valves Heart valves Valves that regulate blood flow into and out of the heart chambers. Mentioned in: Heart Failure business up close to 20 percent. Anticipated developments for the second quarter include further progress in clinical trials for the Medtronic ADVANTAGE(TM) bileaflet mechanical heart valve, as well as the worldwide introduction of the semi-rigid Colvin-Galloway Future(TM) annuloplasty band for the repair of natural heart valves. Neurological/Spinal/ENT Businesses Neurological, Spinal and Ear, Nose and Throat (ENT ENT ears, nose, and throat (otorhinolaryngology). ENT abbr. ear, nose, and throat ENT ear, nose and throat. ENT Ears, nose & throat; formally, otorhinolaryngology ) revenues grew 20 percent to $399.4 million, with balanced performance across all major product areas. Neurological revenues were up over 15 percent, due to strong sales of drug infusion systems for intrathecal intrathecal /in·tra·the·cal/ (-the´k'l) within a sheath; through the theca of the spinal cord into the subarachnoid space. Intrathecal baclofen therapy in the treatment of movement disorders Movement Disorders Definition Movement disorders are a group of diseases and syndromes affecting the ability to produce and control movement. Description ; Activa(R) Tremor Control Therapy Tremor control therapy A method for controlling tremor by self-administered shocks to the part of the brain that controls intentional movement (thalamus). for the treatment of essential tremor and the tremor associated with Parkinson's Disease, and InterStim(R) Therapy for Urinary Control for the treatment of bladder control problems. Revenues for the Spinal Surgery business were up almost 25 percent, driven by rapid growth in the interbody spinal segment and a full quarter of sales for its LT-Cage(TM). Medtronic is anticipating an FDA advisory panel review of its InFUSE(TM) Bone Graft bone morphogenetic protein Bone Morphogenetic Proteins (BMPs) are a group of growth factors and cytokines known for their ability to induce the formation of bone and cartilage. Types Originally, seven such proteins were discovered. (BMP (1) (BitMaP) Also known as a "bump" file, it is the native, bitmapped graphics format in Windows. A BMP can be saved in several color options: 1-, 4-, 8- and 24-bit color provide 2, 16, 256 and 16,000,000 colors respectively. BMP files use the .BMP or . ) sometime during the next two quarters. The ENT business also posted a solid quarter, with mid-teen growth in revenues. New ENT products anticipated for launch later this year include the pH Response Monitor, the XPS (1) See XML Paper Specification. (2) A brand name for certain models of Inspiron laptops from Dell. 3000 Drill and Shaver System, and the TREON-ENT Navigation System. Acquisition Update Medtronic continues to move forward in finalizing the acquisition of MiniMed Inc., a leader in the design, development, manufacture and marketing of advanced medical systems for the treatment of diabetes, and Medical Research Group, Inc. (MRG MRG Merge MRG Minority Rights Group International MRG Mad River Glen (Vermont) MRG Mouvement des Radicaux de Gauche (French: Left Radical Movement) MRG Manyetik Rezonans Görüntüleme ), which designs and develops implantable technologies related to pumps and sensors also used primarily for the treatment of diabetes. Both transactions, which were announced during the first quarter, are anticipated to close later this month. Webcast Information Medtronic will host a webcast today, Monday, August 20, 2001, at 4:30 p.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 ) (3:30 p.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 more detailed information about its businesses - the webcast is open to the public, analysts and the media. This quarterly announcement will be webcast through the company's website at www.medtronic.com/corporate/invest.html. Replay of the webcast will be available until midnight CDT on August 27, 2001. Medtronic, Inc., headquartered in Minneapolis, is the world's leading medical technology company, providing lifelong solutions for people with chronic disease. Its Internet address is www.medtronic.com. Any statements made about the company's anticipated financial results and regulatory approvals are forward-looking statements subject to risks and uncertainties such as those described in Medtronic's Annual Report on Form 10-K for the year ended April 27, 2001. Actual results may differ materially from anticipated results.
MEDTRONIC, INC.
CONSOLIDATED STATEMENT OF EARNINGS
(Unaudited)
(in millions, except per share data)
Three months ended
July 27, 2001
-------------------------------
Before Non- Non-
Recurring Recurring
Charges Charges Reported
----------- --------- ---------
$1,455.7 $ - $1,455.7
Net sales
Costs and expenses:
Cost of products sold 378.1 - 378.1
Research and development expense 151.0 - 151.0
Selling, general, and administrative
expense 444.8 - 444.8
Non-recurring charges - 62.1 62.1
Other (income)/expense 0.7 - 0.7
Interest (income)/expense (21.3) - (21.3)
--------- --------- ---------
Total costs and expenses 953.3 62.1 1,015.4
--------- --------- ---------
Earnings before income taxes 502.4 (62.1) 440.3
Provision for income taxes 160.4 (21.6) 138.8
--------- --------- ---------
Net earnings (loss) $ 342.0 $ (40.5) $ 301.5
========= ========= =========
Earnings per share
Basic $ 0.28 $ (0.03) $ 0.25
========= ========= =========
Diluted $ 0.28 $ (0.03) $ 0.25
========= ========= =========
Weighted average shares outstanding
Basic 1,209.9 1,209.9
Diluted 1,223.3 1,223.3
Three months ended
July 28, 2000
-------------------------------
Before Non- Non-
Recurring Recurring
Charges Charges Reported
----------- --------- ---------
Net sales $1,310.4 $ - $1,310.4
Costs and expenses:
Cost of products sold 316.6 - 316.6
Research and development expense 138.7 - 138.7
Selling, general, and administrative
expense 400.7 - 400.7
Non-recurring charges - 16.9 16.9
Other (income)/expense 26.1 - 26.1
Interest (income)/expense (11.3) - (11.3)
--------- --------- ---------
Total costs and expenses 870.8 16.9 887.7
--------- --------- ---------
Earnings before income taxes 439.6 (16.9) 422.7
Provision for income taxes 144.1 (5.5) 138.6
--------- --------- ---------
Net earnings (loss) $ 295.5 $ (11.4) $ 284.1
========= ========= =========
Earnings per share
Basic $ 0.25 $ (0.01) $ 0.24
========= ========= =========
Diluted $ 0.24 $ (0.01) $ 0.23
========= ========= =========
Weighted average shares outstanding
Basic 1,198.9 1,198.9
Diluted 1,228.8 1,228.8
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