Medtronic Reports 19.9 Percent Rise in Constant-Currency Quarterly Revenues and 16.1 Percent Increase in Quarterly Pre-Charge Net Earnings.Business Editors MINNEAPOLIS--(BUSINESS WIRE)--May 22, 2002 Record Annual Revenues Exceed $6.4 Billion; Momentum in All Businesses and Industry-Leading Product Pipeline Spurred By Significant Gains in 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. and Heart Failure Markets Driven by broad-based strength across major product lines, 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 fourth-quarter pre-charge net earnings of $422.0 million, or $0.34 per diluted share, an increase in pre-charge net earnings of 16.1 percent over the $363.6 million and 13.3 percent above the $0.30 per diluted share recorded in last year's fourth quarter. After-tax non-recurring charges of $121.1 million that reflect previously announced litigation An action brought in court to enforce a particular right. The act or process of bringing a lawsuit in and of itself; a judicial contest; any dispute. When a person begins a civil lawsuit, the person enters into a process called litigation. settlements reduced quarterly net earnings to $300.9 million or $0.25 per diluted share. Quarterly revenues of $1.792 billion were up 19.9 percent on a constant-currency basis over the $1.518 billion recorded in the final quarter of fiscal 2001. Foreign currency translation negatively impacted revenues by $26.5 million in the quarter and reduced the growth percentage to 18.0 percent. "Medtronic experienced a record year of technological and financial progress that saw the commercialization of an unprecedented number of breakthrough therapies across our businesses," said Art Collins, Medtronic Chairman and Chief Executive Officer. "These innovations further broadened and strengthened our industry-leading product line." Collins went on to highlight the particularly strong fourth quarter performances of Medtronic's implantable defibrillators, insulin infusion pumps and devices to treat heart failure, spinal disorders and neurological diseases. He noted that these performances were capped by implantable 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 revenues, which increased 33 percent in the quarter and exceeded $1 billion for the year. Also, he pointed out that revenues generated from recently introduced heart failure devices are annualizing Annualizing See: Annual basis. at about $300 million and became a major contributor at a rate never before achieved by any new Medtronic product line. The fourth-quarter results capped Medtronic's year of growth to record levels of revenues, pre-charge net earnings, and pre-charge net earnings per diluted share. Annual pre-charge net earnings grew for the 17th consecutive year to $1.477 billion, up 15.2 percent from the $1.282 billion recorded in fiscal 2001. Pre-charge 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 $1.21 for the fiscal year, compared with the $1.05 per share earned last year. Non-recurring, after-tax charges of $493.2 million taken during fiscal 2002 reduced net earnings to $984.0 million or $0.80 per diluted share. The company also reported record annual revenues that increased 17.3 percent on a constant currency basis, to $6.411 billion. Foreign exchange translation reduced annual revenue by $90.5 million and the growth rate to 15.5 percent. "Looking ahead, Medtronic is exceptionally well-positioned to maintain its growth momentum," added Collins. "Significant investment in research and development promises to usher in a new era of medical technology, with continued advances in multi-chamber cardiac pacing, the increased use of device-biologic combinations, and the increasing role of information technology in transforming physician practice and patient care." (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 Marked by its first billion-dollar year in implantable defibrillator revenues and the introduction of devices to treat heart failure, Cardiac Rhythm Management posted a record $2.944 billion in worldwide revenues for the year and $831.6 million for the quarter, an increase of 13 percent and 18 percent, respectively. Fueled by the worldwide introduction of therapies in every established category, the business grew market share and further solidified its leadership position across all major product lines. Driven by the market's increasing preference for multi-chamber cardiac therapies, worldwide implantable defibrillator revenues rose 33 percent, primarily due to the introduction and rapid market acceptance of the Marquis(TM) DR. This performance was complemented by 12 percent revenue growth and market share gains in cardiac pacing, due to physician preference for the full-featured Kappa(R) 900 pacemaker, the InSync(R) device for heart failure, and the new CareLink(TM) programmer with Remote View(TM). Medtronic further solidified its market-leading heart failure franchise in the fourth quarter, with strong revenue gains and a number of milestones that firmly established Medtronic's tri-chamber therapies as the products of choice. Worldwide revenues for the full suite of Medtronic heart failure products continued to accelerate through the fourth quarter - after two-and-a-half quarters of U.S. market release, sales led by the InSync are currently annualizing at about $300 million. Momentum in Medtronic's heart failure business continued throughout the quarter, including a favorable U.S. Food and Drug Administration (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. ) panel meeting for the InSync(R) ICD ICD International Classification of Diseases (of the World Health Organization); intrauterine contraceptive device. ICD abbr. , the peer-presentation of MIRACLE ICD data at the annual American College of Cardiology The American College of Cardiology (ACC) is a nonprofit medical association established in 1949 to educate, research and influence health care public policy. The president for the 2006–2007 year is Steven E. Nissen. [1] The organization has 39 chapters in the U.S. (ACC See adaptive cruise control. ) meeting, the first implant of Medtronic's fourth-generation heart failure device, the InSync Marquis(TM), and the FDA approval of the Attain(TM) Over-The-Wire (OTW OTW Otherwise OTW Off The Wall OTW On the Way OTW On the Whole OTW Of The World (online TV network) OTW On The Web OTW Out the Window (display/graphics) OTW On The Water ) left-heart lead. Anticipated highlights for the first quarter include FDA approval of the InSync ICD and the publication of MIRACLE results in the peer-reviewed New England Journal of Medicine The New England Journal of Medicine (New Engl J Med or NEJM) is an English-language peer-reviewed medical journal published by the Massachusetts Medical Society. It is one of the most popular and widely-read peer-reviewed general medical journals in the world. . Medtronic Physio-Control posted revenue growth of 16 percent for the year and 8 percent for the quarter. The business recently introduced its next-generation automated external defibrillator automated external defibrillator Emergency medicine A portable device designed for use by first-response personnel for out-of-hospital emergency treatment of Pts suffering from cardiac arrest. See First-response personnel. (AED AED - Automated Engineering Design ), the LIFEPAK(R)20, for use by both first responders and professionals in hospitals or clinics. Medtronic expects to launch its next-generation AED for the commercial market, the LIFEPAK(R) CR Plus, during the first quarter. Vascular Business Vascular posted annual revenues of $902.3 million and quarterly revenues of $206.3 million. While growth versus last year's fourth quarter was down 16 percent, growth was up 10 percent sequentially from the third quarter, with solid contributions from the worldwide sale of stent grafts for the treatment of abdominal aortic aneurysms abdominal aortic aneurysm A focal aortic dilation of ≥ 50% ↑ in diameter, accompanied by distension and weakened aortic wall Epidemiology Incidence is rising 12/105–1951; 36/105 (AAA AAA: see American Automobile Association. (Triple A) A common single-cell battery used in a myriad of electronic devices of all variety. Like its double A (AA) cousin, it provides 1.5 volts of DC power. When used in series, the voltage is multiplied. ). Earlier this month, the business announced a series of strategic decisions that will further streamline and strengthen the business going forward, including the global consolidation of its operations and the signing of agreements with Abbott Laboratories that will fuel the company's entry into the drug-eluting stent market. The business continues to build momentum and further expand its product lines, most recently with the U.S. introductions of the Stormer Stormer may refer to:
n. A catheter with an inflatable balloon at its tip, used especially to expand a partially obstructed blood vessel or bodily passage and to measure blood pressure in a blood vessel. Also called balloon-tip catheter. and the Bridge(TM) Assurant(TM) peripheral stent. To further expand its offering of distal protection devices in a range of vascular interventions, Medtronic also recently announced the start of the EMERALD clinical trial, which will examine the use of distal protection during percutaneous intervention percutaneous intervention Cardiology An intravascular procedure performed without a large operative field Types Diagnostic catheterization, cardiac revascularization, angioplasty, stent placement in patients who have experienced acute myocardial infarctions acute myocardial infarction (  ·kyōōtˑ mī·ō·karˑ·dē· (AMIs).Clinical trials are already underway to evaluate its next-generation coronary stent coronary stent Intracoronary stent Cardiology An expandable tubular device which can be inserted percutaneously, and left within a coronary artery lumen to maintain its patency Pros Clinical and angiographic outcomes are better with intracoronary artery stent system, the Driver(TM). Medtronic also expects to begin clinical trials of its novel, single-operator balloon catheter and stent delivery system this summer. Also, clinical trials using Abbott's proprietary immunosuppression immunosuppression Suppression of immunity with drugs, usually to prevent rejection of an organ transplant. Its aim is to allow the recipient to accept the organ permanently with no unpleasant side effects. drug ABT-578 (a rapamycin analogue) with Medtronic stents are slated to begin by the end of this calendar year. Cardiac Surgery Business Reflecting continued growth in the practice of 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). and continued preference for tissue heart valves Heart valves Valves that regulate blood flow into and out of the heart chambers. Mentioned in: Heart Failure , Cardiac Surgery posted record worldwide revenues of $519.0 million for the year and $143.9 million for the fourth quarter, representing 9 and 10 percent growth respectively, over the same periods last year. Strong market acceptance of Medtronic products fueled robust growth in the Cardiac Surgery Technologies (CST CST abbr. 1. Central Standard Time 2. convulsive shock treatment CST Central Standard Time Noun 1. ) segment. U.S. physicians embraced the Cardioblate(TM) Ablation System, which was launched at the end of January and marketed throughout the fourth quarter. In addition, the business recently introduced its next-generation heart positioner, the Starfish(TM)2, which uses suction technology to gently lift and position the beating heart to expose coronary arteries Coronary arteries The two main arteries that provide blood to the heart. The coronary arteries surround the heart like a crown, coming out of the aorta, arching down over the top of the heart, and dividing into two branches. on any of its surfaces. Furthering its investment in the beating-heart surgery arena, Medtronic also announced an exclusive distribution agreement with Ventrica for its MVP (Multimedia Video Processor) A high-speed DSP chip from Texas Instruments, introduced in 1994. Officially introduced as the TMS320C80, it combines RISC technology with the functionality of four DSPs on one chip. (TM) (Magnetic Vascular Positioner), a proprietary method for creating a suture-less vessel anastomosis anastomosis /anas·to·mo·sis/ (ah-nas?tah-mo´sis) pl. anastomo´ses [Gr.] 1. communication between vessels by collateral channels. 2. . Worldwide revenues for the heart valves product line were up 19 percent for both the quarter and the year. Growth reflected continued surgeon and patient preference for tissue heart valve replacement Heart Valve Replacement Definition Heart valve replacement is a surgical procedure during which surgeons remove a damaged valve from the heart and substitute a healthy one. , as well as increased adoption of heart valve repair Heart Valve Repair Definition Heart valve repair is a surgical procedure used to correct a malfunctioning heart valve. Repair usually involves separating the valve leaflets (the one-way "doors" of the heart valve which open and close to . During the quarter, Medtronic also continued to enroll patients worldwide for clinical trials in support of its ADVANTAGE(TM) mechanical heart valve. Neurological and Diabetes Business Driven by accelerating sales of therapies for 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 , urological disorders and diabetes, the Neurological and Diabetes business reported annual revenues of $1.025 billion and quarterly revenues of $320.0 million, an increase of 60 percent and 79 percent, respectively. Excluding Diabetes, annual revenues in the sector increased 16 percent to $744.4 million and quarterly revenues increased 19 percent to $211.9 million. Core Neurological growth was driven by the full-scale U.S. launch of Activa(R) Parkinson's Control Therapy and continued market growth for implantable infusion systems to treat spasticity spasticity /spas·tic·i·ty/ (spas-tis´i-te) the state of being spastic; see spastic (2). spas·tic·i·ty n. 1. A spastic state or condition. 2. Spastic paralysis. . Neurologic Technologies growth was supported by the commercial launch of the Strata(TM) valve, a new medical device used in the treatment of hydrocephalus hydrocephalus (hī'drəsĕf`ələs), also known as water on the brain, developmental (congenital) or acquired condition in which there is an abnormal accumulation of body fluids within the skull. . The quarter also saw the completion of the VidaMed acquisition and the firm establishment of Medtronic's growing Gastroenterology and Urology urology Medical specialty dealing with the urinary system and male reproductive organs. It traces its origin to medieval lithologists, itinerant healers who specialized in surgical removal of bladder stones. franchise. Continued strong demand for InterStim(R) Therapy for incontinence contributed to the quarter's performance. Yesterday, Medtronic introduced the Bravo(TM) pH monitoring system, a "catheter-free" diagnostic system that allows for the measurement of esophageal pH levels in patients experiencing or suspected of having gastroesophageal reflux disease gastroesophageal reflux disease (GERD) Disorder characterized by frequent passage of gastric contents from the stomach back into the esophagus. Symptoms of GERD may include heartburn, coughing, frequent clearing of the throat, and difficulty in swallowing. (GERD GERD gastroesophageal reflux disease. GERD abbr. gastroesophageal reflux disease GERD ). Revenues for Diabetes were up about 24 percent, compared to the same period a year ago when MiniMed, Inc. was a stand-alone company stand-alone company An independent operating firm. For example, a large diversified firm may consider spinning off a subsidiary because, as a stand-alone company, the subsidiary would command a higher price-earnings ratio than the parent. . Quarterly results reflected the full U.S. launch of the Paradigm(TM) insulin infusion pump, which is the smallest full-featured pump available and offers many features that make it easier for people to use. Because pump therapy is more predictable than injections of longer-acting insulin, it helps diabetes patients to better control their glucose levels within a near-normal range, offering both short- and long-term health benefits. Spinal and ENT ENT ears, nose, and throat (otorhinolaryngology). ENT abbr. ear, nose, and throat ENT ear, nose and throat. ENT Ears, nose & throat; formally, otorhinolaryngology The Spinal and ENT business posted $1.021 billion in worldwide revenues for the year and $289.7 million for the quarter, an increase of 24 percent and 25 percent, respectively. Growth for the business has exceeded 20 percent each quarter since the company acquired Sofamor Danek (13 quarters). Reflecting the continued move towards minimally invasive therapies for a range of spinal disorders, the Spinal business posted growth in excess of 25 percent in the quarter. This reflected the strength of the thoracolumbar thoracolumbar /tho·ra·co·lum·bar/ (-lum´bar) pertaining to thoracic and lumbar vertebrae. tho·ra·co·lum·bar adj. 1. Of or relating to the thoracic and lumbar parts of the spinal column. segment, Medtronic's largest spine product line, and the popularity of the TSRH-3D system and the CD HORIZON(R) SEXTANT sextant, instrument for measuring the altitude of the sun or another celestial body; such measurements can then be used to determine the observer's geographical position or for other navigational, surveying, or astronomical applications. (TM) Spinal System, which was introduced during the quarter. Looking forward, Medtronic expects to receive FDA approval for its InFUSE(TM) Bone Graft bone graft Orthopedic surgery Sterilized bony tissue, often of cadaveric origin, used to fill and/or 'sculpt' bone defects Indications Spinal fusion, revision of failed articular prostheses, filling traumatic or malignant bone defects, or periodontal defects. for spinal fusion spinal fusion n. A surgical procedure in which vertebrae are joined. Also called spondylosyndesis. Spinal fusion within the next several months. The ENT portion of the business continued its steady growth with revenues for the quarter up 15 percent, while revenues for the image-guided surgery business were up 11 percent. Webcast Information Medtronic will host a webcast today, May 22, 2002, 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 information about its businesses for the public, analysts and the media. This quarterly presentation will be webcast through the company's website at www.medtronic.com/corporate/invest.html. Replay will be available until midnight CST on May 29, 2002. 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 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 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
April 26, 2002
---------------------------------
Before Non- Non-
Recurring Recurring
Charges Charges Reported
----------- ---------- ----------
Net sales $1,791.5 $ - $1,791.5
Costs and expenses:
Cost of products sold 456.8 - 456.8
Research and development expense 169.5 - 169.5
Selling, general, and administrative
expense 545.3 - 545.3
Special charges - 189.2 189.2
Purchased in-process research and
development - - -
Other (income)/expense 3.4 - 3.4
Interest (income)/expense 4.9 - 4.9
----------- ---------- ----------
Total costs and expenses 1,179.9 189.2 1,369.1
----------- ---------- ----------
Earnings before income taxes 611.6 (189.2) 422.4
Provision for income taxes 189.6 (68.1) 121.5
----------- ---------- ----------
Net earnings (loss) $ 422.0 $(121.1) $ 300.9
=========== ========== ==========
Earnings per share
Basic $ 0.35 $ (0.10) $ 0.25
=========== ========== ==========
Diluted $ 0.34 $ (0.10) $ 0.25
=========== ========== ==========
Weighted average shares outstanding
Basic 1,214.4 1,214.4
Diluted 1,226.7 1,226.7
Three months ended
April 27, 2001
---------------------------------
Before Non- Non-
Recurring Recurring
Charges Charges Reported
----------- ---------- ----------
Net sales $1,517.9 $ - $1,517.9
Costs and expenses:
Cost of products sold 389.0 8.4 397.4
Research and development expense 149.6 - 149.6
Selling, general, and administrative
expense 455.4 - 455.4
Special charges - 307.5 307.5
Purchased in-process research and
development - - -
Other (income)/expense 15.7 - 15.7
Interest (income)/expense (29.9) - (29.9)
----------- ---------- ----------
Total costs and expenses 979.8 315.9 1,295.7
----------- ---------- ----------
Earnings before income taxes 538.1 (315.9) 222.2
Provision for income taxes 174.5 (102.3) 72.2
----------- ---------- ----------
Net earnings (loss) $ 363.6 $(213.6) $ 150.0
=========== ========== ==========
Earnings per share
Basic $ 0.30 $ (0.18) $ 0.12
=========== ========== ==========
Diluted $ 0.30 $ (0.17) $ 0.12
=========== ========== ==========
Weighted average shares outstanding
Basic 1,208.9 1,208.9
Diluted 1,223.3 1,223.3
MEDTRONIC, INC.
CONSOLIDATED STATEMENT OF EARNINGS
(Unaudited)
(in millions, except per share data)
Twelve months ended
April 26, 2002
---------------------------------
Before Non- Non-
Recurring Recurring
Charges Charges Reported
----------- ---------- ----------
Net sales $6,410.8 $ - $6,410.8
Costs and expenses:
Cost of products sold 1,652.7 - 1,652.7
Research and development expense 646.3 - 646.3
Selling, general, and administrative
expense 1,962.8 - 1,962.8
Special charges - 290.8 290.8
Purchased in-process research and
development - 293.0 293.0
Other (income)/expense 34.4 - 34.4
Interest (income)/expense (25.4) 32.0 6.6
----------- ---------- ----------
Total costs and expenses 4,270.8 615.8 4,886.6
----------- ---------- ----------
Earnings before income taxes 2,140.0 (615.8) 1,524.2
Provision for income taxes 662.8 (122.6) 540.2
----------- ---------- ----------
Net earnings (loss) $1,477.2 $(493.2) $ 984.0
=========== ========== ==========
Earnings per share
Basic $ 1.22 $ (0.41) $ 0.81
=========== ========== ==========
Diluted $ 1.21 $ (0.40) $ 0.80
=========== ========== ==========
Weighted average shares outstanding
Basic 1,211.6 1,211.6
Diluted 1,224.4 1,224.4
Twelve months ended
April 27, 2001
---------------------------------
Before Non- Non-
Recurring Recurring
Charges Charges Reported
----------- ---------- ----------
Net sales $5,551.8 $ - $5,551.8
Costs and expenses:
Cost of products sold 1,402.2 8.4 1,410.6
Research and development expense 577.6 - 577.6
Selling, general, and administrative
expense 1,685.2 - 1,685.2
Special charges - 338.8 338.8
Purchased in-process research and
development - - -
Other (income)/expense 64.4 - 64.4
Interest (income)/expense (74.2) - (74.2)
----------- ---------- ----------
Total costs and expenses 3,655.2 347.2 4,002.4
----------- ---------- ----------
Earnings before income taxes 1,896.6 (347.2) 1,549.4
Provision for income taxes 614.5 (111.1) 503.4
----------- ---------- ----------
Net earnings (loss) $1,282.1 $(236.1) $1,046.0
=========== ========== ==========
Earnings per share
Basic $ 1.07 $ (0.20) $ 0.87
=========== ========== ==========
Diluted $ 1.05 $ (0.19) $ 0.85
=========== ========== ==========
Weighted average shares outstanding
Basic 1,203.0 1,203.0
Diluted 1,226.0 1,226.0
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