St. Jude Medical second-quarter net sales increase 11% to $1.313 billion

St. Jude Medical, Inc. (NYSE: STJ), a global medical device company, today reported sales and net earnings for the second quarter ended July 3, 2010.

Second Quarter Sales

The Company reported net sales of $1.313 billion in the second quarter of 2010, an increase of 11 percent compared with the $1.184 billion in the second quarter of 2009. Foreign currency translation comparisons increased second quarter sales by approximately $5 million.

Commenting on the second quarter and the Company's growth program, St. Jude Medical Chairman, President and Chief Executive Officer Daniel J. Starks said, "Our second quarter was highly successful by every major measure. Sales exceeded the high end of our guidance for the second quarter in a row. Adjusted earnings per share grew 25%. Operating margin improved by 210 basis points on a year over year basis at the same time we launched more than 10 new products, increased investment in R&D, and entered a new $500 million market through our acquisition of LightLab. Second quarter results and trends support raising our adjusted earnings per share guidance for the second quarter in a row."

Cardiac Rhythm Management (CRM)

Total CRM sales, which include ICD and pacemaker products, were $788 million for the second quarter of 2010, a 12 percent increase compared with the second quarter of 2009. Based on estimates, the Company believes that approximately $15 million of U.S. ICD sales in the second quarter are attributable to a competitor's suspension of sales of their ICD products in the U.S. for a period of time during the quarter.

ICD product sales were $471 million in the second quarter, an 18 percent increase compared with the second quarter of 2009.

Second quarter pacemaker sales were $317 million, an increase of 4 percent from the comparable quarter of 2009.

Atrial Fibrillation (AF)

AF product sales for the second quarter totaled $176 million, a 13 percent increase over the second quarter of 2009.

Neuromodulation

St. Jude Medical sales of neuromodulation products were $95 million in the second quarter of 2010, up 17 percent from the comparable quarter of 2009.

Cardiovascular

Total cardiovascular sales, which primarily include vascular closure and heart valve products, were $254 million for the second quarter of 2010, a 5 percent increase over the second quarter of 2009.

Sales of vascular closure products in the second quarter of 2010 were $98 million, approximately the same as the second quarter of 2009.

Heart valve product sales for the second quarter of 2010 were $87 million, a 4 percent increase over the second quarter of 2009.

Second Quarter Earnings Results

Reported net earnings for the second quarter of 2010 were $254 million, or $0.77 per diluted share. This compares to reported net earnings for the second quarter of 2009 of $219 million, or $0.63 per diluted share. In accordance with GAAP, reported net earnings for the second quarter of 2010 do not include any benefit from the federal research and development tax credit, which has yet to be extended for 2010. Including the benefit of this adjustment, which we continue to expect will be approved later this year, adjusted net earnings for the second quarter 2010 were $261 million, or $0.79 per diluted share. A further reconciliation of the Company's non-GAAP adjusted diluted earnings per share to the Company's GAAP diluted earnings per share is provided in the schedule below.

Second Quarter and Full Year 2010 Sales and Earnings Guidance

During a conference call today, St. Jude Medical will provide its range for revenue expectations for the third quarter and full year by product category.

The Company expects its consolidated earnings for the third quarter of 2010 to be in the range of $0.67 to $0.69 per diluted share and is raising its guidance for the full-year 2010 to be in the range of $2.86 to $2.91. The guidance for the third quarter reflects the normal seasonal impact of the summer selling period, updated currency assumptions and a return to normal competitive dynamics. The guidance also assumes that the federal research and development tax credit is approved and the benefit is recognized during 2010. A further reconciliation of the Company's quarterly and annual guidance is provided in the schedule below.