Medtronic Reports Pre-charge Diluted EPS Up 16 Percent to $0.29 in Second Quarter, With Constant Currency Revenue Growth of 17 Percent.Business Editors MINNEAPOLIS--(BUSINESS WIRE)--Nov. 27, 2001 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 second-quarter 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 of $0.29 on net earnings of $349.2 million. This represents an increase of 16.0 percent over diluted earnings per share of $0.25 on net earnings of $309.1 million in the comparable period a year ago. Pre-tax, non-recurring charges of $294.9 million primarily reflect a required in-process research and development charge and debt issuance costs related to the acquisitions of MiniMed, Inc. 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 ). Second-quarter diluted earnings per share after these charges were $0.05 on net earnings of $66.7 million. Quarterly revenues of $1.571 billion were up 16.8 percent on a constant-currency basis over the $1.362 billion recorded in the comparable quarter last year. Negative impact of foreign currency translation reduced the growth percentage to 15.4 percent. "Medtronic experienced a very solid quarter, reflecting the first contributions from two new significant growth markets - heart failure and diabetes," said Art Collins, president and chief executive officer. "Looking ahead, we expect accelerating growth as an unprecedented number of new products are introduced during the first half of the next calendar year." Collins also noted highlights for the second quarter - including 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. approval of the company's InSync(R) Cardiac Resynchronization Therapy System to treat heart failure, the financing and closure of the MiniMed/MRG acquisitions to address diabetes, and the initial presentation of positive clinical results seen with InFUSE in·fuse v. 1. To steep or soak without boiling in order to extract soluble elements or active principles. 2. To introduce a solution into the body through a vein for therapeutic purposes. (TM) 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 . ), used during spine fusions. (Unless otherwise noted, quarterly 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 Record sales of its 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. products, plus FDA approval of the InSync Cardiac Resynchronization System, pushed Cardiac Rhythm Management's quarterly revenues to $711.2 million, up more than 7 percent. Strong worldwide acceptance of the Medtronic GEM(R) III AT 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 contributed to a record quarter and market-share gains for the Tachyarrhythmia business - with revenues up approximately 6 percent worldwide, year-over-year. First European implants of the next-generation Marquis(R) implantable defibrillator also took place during the quarter. The Bradycardia bradycardia: see arrhythmia. business saw revenues rise approximately 9 percent worldwide, while maintaining worldwide pacing market share of more than 50 percent. Clinical pacing guidelines, set forth by the American Heart Association American Heart Association (AHA), n.pr a national voluntary health agency that has the goal of increasing public and medical awareness of cardiovascular diseases and stroke, and thereby reducing the number of associated deaths and disabilities. (AHA), the 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. and the European College of Cardiology, were reinforced during the quarter with the publication of the U.K.-based SAFE-PACE study in the Journal of the American College of Cardiology. The study recommended pacemaker therapy for persons with carotid sinus syndrome carotid sinus syndrome Carotid sinus syncope, see there who suffer repeated fainting spells. Pacemaker sales were positively impacted as more than 1,200 U.S. patients received InSync Cardiac Resynchronization Therapy, the only FDA-approved device for the treatment of heart failure. More than 1,000 physicians were trained during the quarter, providing for a strong implant base going forward. Efficacy of cardiac resynchronization therapy was further validated at this month's AHA meeting, where Dr. William Abraham presented additional positive results from the MIRACLE trial. These results suggest that InSync therapy contributes to improved patient quality of life and lower hospitalization rates, with the possibility for increased survival. During the third quarter, Medtronic anticipates the worldwide launch of its Medtronic Kappa(R) 900 pacemaker, CareLink(TM) Programmer and the Medtronic Marquis implantable cardioverter defibrillator. The business is also anticipating the launch of the innovative Medtronic CareLink Patient Management System, which links patients and their clinicians via the Internet. Medtronic Physio-Control reported revenue gains of more than 15 percent year over year, with strong growth momentum for its external defibrillators in commercial, emergency management systems and hospital markets. Hospitals showed strong interest in the new LIFEPAK(R) 12 defibrillator, the industry's only defibrillator with the biphasic bi·pha·sic adj. Having two distinct phases: a biphasic waveform; a biphasic response to a stimulus. waveform and escalating energy to treat arrhythmia arrhythmia (ārĭth`mēə), disturbance in the rate or rhythm of the heartbeat. Various arrhythmias can be symptoms of serious heart disorders; however, they are usually of no medical significance except in the presence of victims with higher impedance levels. Vascular Business The Vascular business posted revenues of $241.8 million during the second quarter, a 14 percent increase over the prior year. Coronary vascular revenues were level with prior year, as strong sales of over-the-wire 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 systems continued. Added top-line contributions came from the sale of minimally invasive stent-graft solutions 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 and the Medtronic GuardWire Plus(TM) Distal Protection System. The GuardWire Plus, approved last summer, is the only such protective system approved in the U.S. market. Maintaining its franchise as a broad-based supplier of solutions for the entire vascular system, the Vascular business introduced the Bridge(TM) SE self-expanding biliary stent biliary stent Biliary endoprosthesis Surgery A tube inserted into a stenosed or obstructed narrowed or blocked bile duct to improve bile flow in the United States during the quarter. The worldwide introduction of the Bridge(TM) Assurant(TM) balloon-expandable peripheral stent is anticipated for the third quarter. Evaluation of the Resten-NG coronary stent coating continued during the quarter, and the start of human trials is anticipated during the third quarter. Work is also progressing on an anti-proliferative stent coating compound, as well as the development of an alternative rapid-exchange delivery system. Cardiac Surgery Business The Cardiac Surgery business saw revenues increase almost 9 percent to $124.2 million for the quarter. Products associated with beating heart surgery beating heart surgery Cardiology Any cardiovascular procedure, often performed endoscopically, in which the heart is not stopped. See CABG. saw growth in excess of 50 percent for the quarter. This growth was fueled by continued sales of Medtronic Octopus(R) tissue stabilizers and the worldwide introduction of the Medtronic Starfish(TM) Heart Positioner, which provides increased access for bypass grafting on all surfaces of the heart while it continues to beat. Clinical equivalency between beating heart and stopped 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). was demonstrated in a Circulation study published during the quarter. The study also demonstrated added patient benefits of the beating heart approach, including preservation of healthy heart muscle tissue and less dependence on blood transfusions. The Heart Valves Heart valves Valves that regulate blood flow into and out of the heart chambers. Mentioned in: Heart Failure business continued to capitalize on the market shift from mechanical to tissue valves, with solid share gains and revenue up 17 percent. Gains were fueled by one of the broadest product portfolios in the industry, which includes the Mosaic(R) and Hancock(R)II tissue valves, plus the recently introduced Colvin-Galloway Future(TM) Band and Annuloplasty System. Neurological/Spinal/Diabetes/ENT Businesses Neurological, Spinal, Diabetes 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 revenues collectively rose to $494.0 million, which includes contributions from Medtronic MiniMed for the first time. Excluding Diabetes, growth in the sector increased almost 19 percent. Core Neurological grew 14 percent with strong contributions from 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). , 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(TM) for 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. , and InterStim(R) Therapy for Urinary Control. The clinical data supporting Medtronic's application for FDA approval of Activa(R) Parkinson's Control Therapy was also published in The 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. during the quarter. Spinal revenue growth of more than 25 percent was broad-based, with the LT-CAGE(TM) and the Antares anterior dual-rod systems contributing to the quarter's performance. Clinical data submitted to the FDA in support of InFUSE was presented at the North American North American named after North America. North American blastomycosis see North American blastomycosis. North American cattle tick see boophilusannulatus. Spine Society (NASS Nass (năs), river, 236 mi (380 km) long, rising in the Coast Mts., W British Columbia, Canada, and flowing SW to Portland Inlet of the Pacific Ocean. It is navigable for 25 mi (40 km) and has valuable salmon fisheries. ) meeting earlier this month - the data demonstrated the efficacy of the protein in spinal fusion spinal fusion n. A surgical procedure in which vertebrae are joined. Also called spondylosyndesis. Spinal fusion surgery while eliminating the painful second surgery to harvest bone from the hip. Looking ahead to the next quarter, the business expects to expand the launch of the Vertex Reconstruction System, as demand from the initial launch has exceeded expectations. Diabetes revenue for two months in the second quarter represents a growth rate of more than 30 percent versus the comparable period a year ago. The acquisitions of MiniMed and MRG were completed in August, and assimilation activities progressed ahead of schedule. Physicians continue to turn to MiniMed 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. therapies, as diabetes ranks as the fastest growing chronic disease. Looking ahead, the next-generation Paradigm(TM) insulin pump is scheduled for U.S. launch before the end of the fiscal year. Ear, nose and throat (ENT) revenues increased 14 percent on the strength of sales of surgical image-guidance systems for sinus surgery, powered endoscopy endoscopy Examination of the body's interior through an instrument inserted into a natural opening or an incision, usually as an outpatient procedure. Endoscopes include the upper gastrointestinal endoscope (for the esophagus, stomach, and duodenum), the colonoscope (for the shavers and nerve monitoring devices. During the quarter, Medtronic Xomed also acquired a product line from Pascal Medical AB for the treatment of Meniere's disease Mé·nière's disease n. A pathological condition of the inner ear that is characterized by dizziness, ringing in the ears, and progressive loss of hearing. Also called auditory vertigo, endolymphatic hydrops, labyrinthine vertigo. . First-Half Financial Performance Medtronic's pre-charge diluted earnings per share for the first half of Fiscal 2002 was $0.57, on net earnings of $691.2 million, an increase of 16.3 percent over the $0.49 pre-charge per diluted share in the same period a year ago. Year to date revenues were $3.027 billion, showing a 15.4 percent increase on a constant-currency basis over the $2.672 billion of the comparable period in Fiscal 2001. Foreign exchange translation reduced this year's revenues to date by $49.5 million and the growth rate to 13.3 percent. Webcast Information Medtronic will host a webcast today, November 27, 2001, at 4:30 p.m. (EST EST electroshock therapy. EST abbr. electroshock therapy ) (3:30 p.m. CST CST abbr. 1. Central Standard Time 2. convulsive shock treatment CST Central Standard Time Noun 1. ), 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 December 3, 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 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
Three months ended Oct. 27,
October 26, 2001 2000
------------------------------ ---------
Before
Non- Non-
Recurring Recurring
Charges Charges Reported
--------- --------- ---------
Net sales $1,571.2 $ - $1,571.2 $1,361.9
Costs and expenses:
Cost of products sold 405.0 - 405.0 351.2
Research and development
expense 162.4 - 162.4 145.4
Selling, general, and
administrative expense 479.2 - 479.2 422.3
Non-recurring charges - 269.4 269.4 -
Other (income)/expense 26.8 - 26.8 (2.6)
Interest (income)/expense (15.5) 25.5 10.0 (14.2)
-------- --------- -------- --------
Total costs and expenses 1,057.9 294.9 1,352.8 902.1
-------- --------- -------- --------
Earnings before income taxes 513.3 (294.9) 218.4 459.8
Provision for income taxes 164.1 (12.4) 151.7 150.7
-------- --------- -------- --------
Net earnings (loss) $349.2 $(282.5) $66.7 $309.1
======== ========= ======== ========
Earnings per share
Basic $0.29 $(0.23) $0.06 $0.26
======== ========= ======== ========
Diluted $0.29 $(0.23) $0.05 $0.25
======== ========= ======== ========
Weighted average shares
outstanding
Basic 1,210.1 1,210.1 1,200.4
Diluted 1,222.6 1,222.6 1,229.4
MEDTRONIC, INC.
CONSOLIDATED STATEMENT OF EARNINGS
(Unaudited)
(in millions, except per share data)
Six months ended
October 26, 2001
-----------------------------
Before
Non- Non-
Recurring Recurring
Charges Charges Reported
--------- --------- --------
Net sales $3,026.9 $ - $3,026.9
Costs and expenses:
Cost of products sold 783.1 - 783.1
Research and development expense 313.4 - 313.4
Selling, general, and administrative
expense 924.0 - 924.0
Non-recurring charges - 331.5 331.5
Other (income)/expense 27.5 - 27.5
Interest (income)/expense (36.8) 25.5 (11.3)
-------- ------- --------
Total costs and expenses 2,011.2 357.0 2,368.2
-------- ------- --------
Earnings before income taxes 1,015.7 (357.0) 658.7
Provision for income taxes 324.5 (34.0) 290.5
-------- ------- --------
Net earnings $691.2 $(323.0) $368.2
======== ======= ========
Earnings per share
Basic $0.57 $(0.27) $0.30
======== ======= ========
Diluted $0.57 $(0.27) $0.30
======== ======= ========
Weighted average shares outstanding
Basic 1,209.9 1,209.9
Diluted 1,222.9 1,222.9
Six months ended
October 27, 2000
-----------------------------
Before
Non- Non-
Recurring Recurring
Charges Charges Reported
--------- --------- --------
Net sales $2,672.3 $ - $2,672.3
Costs and expenses:
Cost of products sold 667.8 - 667.8
Research and development expense 284.1 - 284.1
Selling, general, and administrative
expense 823.0 - 823.0
Non-recurring charges - 16.9 16.9
Other (income)/expense 23.5 - 23.5
Interest (income)/expense (25.5) - (25.5)
-------- ------ --------
Total costs and expenses 1,772.9 16.9 1,789.8
-------- ------ --------
Earnings before income taxes 899.4 (16.9) 882.5
Provision for income taxes 294.8 (5.5) 289.3
-------- ------ --------
Net earnings $604.6 $(11.4) $593.2
======== ====== ========
Earnings per share
Basic $0.50 $(0.01) $0.49
======== ====== ========
Diluted $0.49 $(0.01) $0.48
======== ====== ========
Weighted average shares outstanding
Basic 1,198.6 1,198.6
Diluted 1,228.1 1,228.1
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