EX-99.1 2 a05-18915_1ex99d1.htm EXHIBIT 99

 

Exhibit 99.1

 

 

Edwards Lifesciences Corporation
One Edwards Way   Irvine, CA USA  92614
Phone: 949.250.2500   Fax: 949.250.2525
www.edwards.com

 

NEWS RELEASE

 

Media Contact:

 

Barry R. Liden, 949-250-5070

Investor Contact:

 

David K. Erickson, 949-250-6826

 

DOUBLE-DIGIT HEART VALVE SALES DRIVE THIRD QUARTER
OPERATING RESULTS FOR EDWARDS LIFESCIENCES

 

•                    Gross Profit Margin and Cash Flow Continue to Strengthen

•                    Special Items Include Charitable Fund Contribution and
Repatriation Tax Expense

 

 

IRVINE, Calif., October 25, 2005 — Edwards Lifesciences Corporation (NYSE: EW), the world leader in products and technologies to treat advanced cardiovascular disease, today reported a net loss for the quarter ended September 30, 2005 of $4.4 million, or $0.07 per diluted share, compared to net income of $12.4 million, or $0.20 per diluted share, for the same period in 2004.  Adjusted net income, which excludes the special items detailed in the reconciliation tables below, was $29.0 million compared to $23.5 million in the comparable period of the previous year.  Adjusted earnings per diluted share grew 21.1 percent to $0.46 per share, compared to $0.38 per share for the same period last year.

 

Third quarter net sales increased 7.2 percent to $240.9 million, compared to $224.8 million in the same quarter last year.  Foreign exchange (FX) contributed $1.5 million and was more than offset by discontinued businesses, resulting in underlying sales growth of 8.2 percent.

 

“We are pleased to report another solid quarter for Edwards Lifesciences, led by strong sales growth in our leading Heart Valve Therapy and Critical Care franchises,” said Michael A. Mussallem, chairman and CEO.  “Consistent performance around the globe, with particular strength in the U.S., continues to drive increased sales growth.”

 

 


 

Sales Results

 

For the third quarter, the company reported Heart Valve Therapy sales of $112.9 million, an 11.8 percent increase compared to the same quarter last year.  “Our innovative tissue heart valve and repair products continued to drive market share gains this quarter,” said Mussallem.  “In the U.S., Heart Valve Therapy sales grew 15 percent due to the continuing penetration of PERIMOUNT Magna and ThermaFix.  Additionally this quarter, we introduced the Magna mitral heart valve in Europe and look forward to its U.S. market launch in the first half of 2006, pending regulatory approval.”

 

Critical Care sales of $78.1 million grew 8.5 percent compared to last year’s quarter.  Growth was due primarily to strong pressure monitoring sales resulting from market share gains and sales of advanced technology catheters.

 

Cardiac Surgery Systems sales for the third quarter were $27.4 million compared to $27.5 million for the same period last year, as the expected difficult year-over-year comparison of TMR sales and the impact of discontinued businesses more than offset cannula sales growth and FX gains.

 

Vascular sales increased to $15.6 million and grew 9.1 percent compared to the same period in 2004.  Third quarter sales of LifeStent products were slightly more than $2 million, and fourth quarter sales are expected to be $3 million.

 

Sales of Other Distributed Products declined to $6.9 million in the quarter compared to $10.0 million in the year ago period, due primarily to the discontinued pacemaker business in Japan.

 

Domestic and international sales for the third quarter were $113.0 million and $127.9 million, respectively.

 

 

2


 

Additional Operating Results

 

For the quarter, Edwards’ gross profit margin increased to 62.3 percent from 60.9 percent in the same period last year, primarily due to the increase in sales of higher margin heart valve products.

 

Selling, general and administrative expenses were 35.7 percent of sales for the quarter, or $85.9 million, compared to 35.5 percent of sales in the year ago period.  Research and development (R&D) expenses of $24.0 million increased 9.6 percent compared to the prior year’s quarter, primarily attributable to increased investments in percutaneous valve programs.

 

During the quarter, the company recorded a $21.4 million net pretax special charge, primarily related to a previously announced $15.0 million contribution to the Edwards Lifesciences charitable fund, and a write-down of an investment in an unconsolidated affiliate.  In addition to these special charges, the company also recorded a $15.8 million tax expense related to a distribution of approximately $260 million from its foreign affiliates, and a $1.2 million pretax charge for an in-process R&D expense associated with a technology acquisition.

 

Long-term debt at September 30 was $251.5 million, resulting in a debt-to-cap ratio of 27.6 percent.  Free cash flow generated during the quarter was $43.2 million, which is defined as cash flow from operating activities of $39.0 million minus capital expenditures of $10.8 million, plus $15.0 million related to the charitable fund contribution.

 

In the quarter, the company repurchased approximately 460,000 shares of common stock for $20.4 million.

 

 

3


 

Nine-Month Results

 

For the nine months ended September 30, 2005, the company recorded net income of $40.7 million compared to a net loss of $24.2 million for the same period in 2004.  Excluding special items detailed in the reconciliation tables below, net income was $91.4 million compared to $75.2 million for the same period last year.  Adjusted earnings per diluted share grew 19.8 percent to $1.45 per share, compared to $1.21 per diluted share for the same period last year.

 

Net sales for the first nine months of 2005 totaled $748.2 million, an increase of 7.7 percent over the same period last year.  Foreign exchange contributed $12.0 million to the growth and was more than offset by discontinued businesses, resulting in an underlying year-to-date sales growth rate of 8.7 percent.

 

Domestic and international sales for the nine months were $343.2 million and $405.0 million, respectively.

 

Free cash flow generated in the first nine months was $103.7 million, calculated as cash flow from operating activities of $92.5 million minus capital expenditures of $26.6 million, plus special items totaling $37.8 million.

 

2005 Outlook

 

 “Based on our strong year-to-date performance, we expect to meet or exceed all of our financial goals this year,” said Mussallem.  “For 2005, we now expect total sales of approximately $1 billion, gross profit margin to be slightly above 62 percent of sales, net income growth of more than 18 percent excluding the impact of special items, and free cash flow of substantially more than $125 million.  And, at current FX levels and excluding special items, we are comfortable with the First Call mean EPS estimates for both the fourth quarter and full year 2005.

 

“The sales growth in our leading franchises demonstrates the underlying strength of Edwards’ base businesses, and together with our near-term initiatives, moves us closer to achieving consistent double-digit sales growth,” concluded Mussallem.  “Additionally, the potential of our innovative percutaneous valve technologies to address the needs of a large, untreated patient population suffering from heart valve disease represents a truly transformational growth opportunity for Edwards Lifesciences.  We look forward to providing additional details about our growth strategy and 2006 outlook at our upcoming Investor Conference next month.”

 

 

 

4


 

2005 Investor Conference

 

Edwards Lifesciences will be hosting its 2005 Investor Conference on November 29 and 30, 2005 at its corporate headquarters in Irvine, California.  Additional information about this event is available at http://www.edwards.com/investorconference.

 

About Edwards Lifesciences

 

Edwards Lifesciences, a leader in advanced cardiovascular disease treatments, is the number-one heart valve company in the world and the global leader in acute hemodynamic monitoring.  Headquartered in Irvine, Calif., Edwards focuses on specific cardiovascular opportunities including heart valve disease, peripheral vascular disease and critical care technologies.  The company’s global brands, which are sold in approximately 100 countries, include Carpentier-Edwards, Cosgrove-Edwards, Fogarty, LifeStent, PERIMOUNT and Swan-Ganz.  Additional company information can be found at www.edwards.com.

 

Conference Call and Webcast Information

 

Edwards Lifesciences will be hosting a conference call today at 5:00 p.m. EDT to discuss its third quarter results.  To participate in the conference call, dial (877) 407-8037 or (201) 689-8037.  For 72 hours following the call, an audio replay can be accessed by dialing (877) 660-6853 or (201) 612-7415 and using account number 2995 and conference number 172895.  The call will also be available via live or archived webcast on the “Investor Relations” section of the Edwards’ web site at www.edwards.com or www.edwards.com/InvestorRelations.

 

This news release includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934.  These forward-looking statements are subject to substantial risks and uncertainties including, but not limited to, the ability to sustain strong sales growth and/or drive market share gains in the Heart Valve Therapy and Critical Care franchises; the continuing penetration of Magna and ThermaFix; the introduction of the Magna mitral heart valve in Europe and the U.S.; the expectation of fourth quarter LifeStent sales of $3 million; the ability to meet or exceed 2005 financial goals including $1 billion in sales, a gross profit margin above 62 percent of sales, net income growth of more than 18 percent excluding the impact of special items, and free cash flow of substantially more than $125 million; the ability to achieve the First Call mean EPS estimates for both the fourth quarter and full year 2005; the ability to achieve consistent double-digit sales growth; the potential of the company’s innovative percutaneous valve technologies to address a large, untreated patient population and the transformational growth opportunity these technologies represent; and more generally, the ability to obtain regulatory approvals for and market new products; the ability to generate and maintain sufficient cash resources to increase investments in the company’s business and repay debt; the success and timing of new product launches; the impact of currency exchange rates; the timing or results of pending or future clinical trials; actions by the U.S. Food and Drug Administration and other regulatory agencies; technological advances in the medical field; product demand and market acceptance; changing conditions in the economy in general and in the healthcare industry; and other risks detailed in the company’s filings with the Securities and Exchange Commission including its Annual Report on Form 10-K for the year ended December 31, 2004.  These forward-looking statements are based on estimates and assumptions made by management of the company and are believed to be reasonable, though they are inherently uncertain and difficult to predict.  Actual results or experience could differ materially from that expressed or implied by forward-looking statements.

 

Edwards, PERIMOUNT Magna, Magna and ThermaFix are trademarks of Edwards Lifesciences Corporation.  Edwards Lifesciences, Carpentier-Edwards, Cosgrove-Edwards, Fogarty and Swan-Ganz are trademarks of Edwards Lifesciences Corporation and are registered in the U.S. Patent and Trademark Office.  LifeStent is a trademark of Edwards Lifesciences AG and is registered in the United States Patent and Trademark Office.

 

 

5


 

 

EDWARDS LIFESCIENCES CORPORATION

Unaudited Consolidated Statements of Operations

 

 

 

Three Months Ended
Sept. 30,

 

Nine Months Ended
Sept. 30,

 

(in millions, except per share data)

 

2005

 

2004

 

2005

 

2004

 

 

 

 

 

 

 

 

 

 

 

Net sales

 

$

240.9

 

$

224.8

 

$

748.2

 

$

694.4

 

Cost of goods sold

 

90.9

 

87.9

 

285.0

 

279.0

 

 

 

 

 

 

 

 

 

 

 

Gross profit

 

150.0

 

136.9

 

463.2

 

415.4

 

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative expenses

 

85.9

 

79.7

 

261.6

 

237.2

 

Research and development expenses

 

24.0

 

21.9

 

73.2

 

63.6

 

Purchased in-process research and development expenses

 

1.2

 

12.3

 

1.2

 

93.3

 

Special charges, net

 

21.4

 

—

 

47.0

 

12.3

 

Interest expense, net

 

2.2

 

3.4

 

8.3

 

10.7

 

Other expenses (income), net

 

—

 

0.1

 

(1.3

)

2.3

 

 

 

 

 

 

 

 

 

 

 

Income (loss) before provision for income taxes

 

15.3

 

19.5

 

73.2

 

(4.0

)

 

 

 

 

 

 

 

 

 

 

Provision for income taxes

 

19.7

 

7.1

 

32.5

 

20.2

 

 

 

 

 

 

 

 

 

 

 

Net income (loss)

 

$

(4.4

)

$

12.4

 

$

40.7

 

$

(24.2

)

 

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding used to calculate basic earnings per share

 

59.8

 

59.7

 

59.6

 

59.6

 

 

 

 

 

 

 

 

 

 

 

Basic earnings (loss) per share

 

$

(0.07

)

$

0.21

 

$

0.68

 

$

(0.41

)

 

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding used to calculate diluted earnings per share

 

59.8

 

62.1

 

62.4

 

59.6

 

 

 

 

 

 

 

 

 

 

 

Diluted earnings (loss) per share

 

$

(0.07

)

$

0.20

 

$

0.65

 

$

(0.41

)

 

 

 

 

 

 

 

 

 

 

Operating Statistics

 

 

 

 

 

 

 

 

 

As a percentage of net sales:

 

 

 

 

 

 

 

 

 

Gross profit

 

62.3

%

60.9

%

61.9

%

59.8

%

Selling, general and administrative expenses

 

35.7

%

35.5

%

35.0

%

34.2

%

Research and development expenses

 

10.0

%

9.7

%

9.8

%

9.2

%

Income (loss) before provision for income taxes

 

6.4

%

8.7

%

9.8

%

(0.6

)%

Net income (loss)

 

(1.8

)%

5.5

%

5.4

%

(3.5

)%

 

 

 

 

 

 

 

 

 

 

Effective tax rate

 

128.8

%

36.4

%

44.4

%

(505.0

)%

 

 

 

 

 

 

 

 

 

 

Reconciliation of Diluted Earnings per Share

 

 

 

 

 

 

 

 

 

Net income (loss) from above

 

$

(4.4

)

$

12.4

 

$

40.7

 

$

(24.2

)

Adjustment for items included in net income related to the contingent convertible debt

 

—

 

—

 

—

 

—

 

Adjusted net income (loss)

 

$

(4.4

)

$

12.4

 

$

40.7

 

$

(24.2

)

 

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding used to calculate diluted earnings per share excluding contingent convertible debt

 

59.8

 

62.1

 

62.4

 

59.6

 

Weighted average common shares outstanding for the contingent convertible debt

 

—

 

—

 

—

 

—

 

Weighted average common shares outstanding used to calculate diluted earnings per share including the contingent convertible debt

 

59.8

 

62.1

 

62.4

 

59.6

 

 

 

 

 

 

 

 

 

 

 

Diluted earnings (loss) per share including the contingent convertible debt

 

$

(0.07

)

$

0.20

 

$

0.65

 

$

(0.41

)

 

Note: Numbers may not foot due to rounding

 


 

Edwards Lifesciences Corporation

Unaudited Balance Sheets

(in millions)

 

 

 

September 30,

 

December 31,

 

 

 

2005

 

2004

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

Current assets

 

 

 

 

 

Cash and cash equivalents

 

$

88.0

 

$

48.9

 

Accounts and other receivables, net

 

125.9

 

119.4

 

Inventories, net

 

135.5

 

127.7

 

Deferred income taxes

 

13.9

 

21.1

 

Prepaid expenses and other current assets

 

67.1

 

50.4

 

 

 

 

 

 

 

Total current assets

 

430.4

 

367.5

 

 

 

 

 

 

 

Property, plant and equipment, net

 

192.1

 

201.7

 

Goodwill

 

337.7

 

337.7

 

Other intangible assets, net

 

141.8

 

152.6

 

Investments in unconsolidated affiliates

 

14.5

 

20.6

 

Deferred income taxes

 

18.9

 

22.3

 

Other assets

 

9.6

 

10.3

 

 

 

 

 

 

 

Total assets

 

$

1,145.0

 

$

1,112.7

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

 

 

 

Accounts payable and accrued liabilities

 

$

204.6

 

$

195.4

 

 

 

 

 

 

 

Long term debt

 

251.5

 

267.1

 

Other non current liabilities

 

29.7

 

22.1

 

 

 

 

 

 

 

Stockholders’ equity

 

 

 

 

 

Common stock

 

65.4

 

64.2

 

Additional contributed capital

 

528.0

 

500.6

 

Retained earnings

 

264.7

 

224.1

 

Accumulated other comprehensive income

 

(22.5

)

(20.8

)

Common stock in treasury, at cost

 

(176.4

)

(140.0

)

Total stockholders’ equity

 

659.2

 

628.1

 

 

 

 

 

 

 

Total liabilities and equity

 

$

1,145.0

 

$

1,112.7

 

 


 

Notes to the Unaudited Reconciliation Schedules

 

Certain disclosures prepared in accordance with Generally Accepted Accounting Principles (“GAAP”) contained in this discussion are accompanied by disclosures that are not prepared in conformity with GAAP.  These non-GAAP disclosures exclude certain items from the GAAP presentations.  Management has determined that these non-GAAP disclosures provide (1) a more meaningful, consistent comparison of the Company’s operating results for the periods presented, on a basis consistent with management’s means of evaluating operating performance, and (2) additional information for investors to assess changes between periods that better reflect the Company’s ongoing operations. The items included in these non-GAAP disclosures, and the basis for excluding them, are set forth below:

 

In-Process Research and Development - The Company incurred purchased in-process research and development expenses related to a technology acquisition for $1.2 million in the third quarter of 2005. In the first and third quarters of 2004, the Company incurred purchased in-process research and development expenses of $81.0 million for the acquisition of PVT and $12.3 million for the purchase of ev3, Inc. mitral valve repair program, respectively.  Given the materiality and unusual nature of these expenses relative to the operating results for the periods presented, these expenses have been excluded in the Adjusted Unaudited Consolidated Statements of Operations and the Unaudited Reconciliation of Consolidated Statements of Operations.

 

Other Items - The Company incurred certain special charges and credits in 2005 and 2004, related to the following:

1)              a $22.8 million charge for restructuring the 3F agreements in the second quarter of 2005

2)              a $15.8 million tax expense in the third quarter of 2005 related to repatriation

3)              a $15.0 million contribution to Edwards Lifesciences charitable fund in the third quarter of 2005

4)              the impairment of certain investments for $4.8 million and $8.9 million in the second and third quarters of 2005, respectively, and $1.7 million in the second quarter of 2004

5)              the 2004 termination of its Lifepath AAA program for $8.4 million and its Interventional Cardiology products for $2.2 million in the first quarter of 2004

6)              a $7.7 million gain on the sale of the Japan Perfusion Products business in the first quarter of 2005

7)              the Japan realignment for $5.7 million in the first quarter of 2005

8)              an intellectual property litigation gain for $2.5 million in the third quarter of 2005

 

Given the materiality and unusual nature of these items relative to the operating results for the periods presented, these items have been excluded in the Adjusted Unaudited Consolidated Statements of Operations and the Unaudited Reconciliation of Consolidated Statements of Operations.

 

Results of Discontinued Businesses – The Company has exited certain businesses during the periods presented.  In light of the significance of the impact these businesses had on the profitability of the Company, the results of these businesses have been detailed in the Reconciliation of Sales by Product Line and Region.

 

Foreign Exchange - Fluctuation in exchange rates impacts the comparative results and growth rates of the Company’s underlying business.  The impact of foreign exchange rate fluctuations have been detailed in the Reconciliation of Sales by Product Line and Region. Management believes that excluding these impacts helps explain changes in the fundamental business operations.

 


 

EDWARDS LIFESCIENCES CORPORATION

Adjusted Unaudited Consolidated Statements of Operations

Excluding Special Items, Net

 

 

 

Three Months Ended
Sept. 30,

 

Nine Months Ended
Sept. 30,

 

(in millions, except per share data)

 

2005

 

2004

 

2005

 

2004

 

 

 

 

 

 

 

 

 

 

 

Net sales

 

$

240.9

 

$

224.8

 

$

748.2

 

$

694.4

 

Cost of goods sold

 

90.9

 

87.9

 

285.0

 

279.0

 

 

 

 

 

 

 

 

 

 

 

Gross profit

 

150.0

 

136.9

 

463.2

 

415.4

 

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative expenses

 

85.9

 

79.7

 

261.6

 

237.2

 

Research and development expenses

 

24.0

 

21.9

 

73.2

 

63.6

 

Interest expense, net

 

2.2

 

3.4

 

8.3

 

10.7

 

Other expense (income), net

 

—

 

0.1

 

(1.3

)

2.3

 

 

 

 

 

 

 

 

 

 

 

Income before provision for income taxes

 

37.9

 

31.8

 

121.4

 

101.6

 

 

 

 

 

 

 

 

 

 

 

Provision for income taxes

 

8.9

 

8.3

 

30.0

 

26.4

 

 

 

 

 

 

 

 

 

 

 

Adjusted net income

 

$

29.0

 

$

23.5

 

$

91.4

 

$

75.2

 

 

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding used to calculate basic earnings per share

 

59.8

 

59.7

 

59.6

 

59.6

 

 

 

 

 

 

 

 

 

 

 

Adjusted basic earnings per share

 

$

0.48

 

$

0.39

 

$

1.53

 

$

1.26

 

 

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding used to calculate diluted earnings per share

 

65.2

 

64.8

 

65.1

 

64.7

 

 

 

 

 

 

 

 

 

 

 

Adjusted diluted earnings per share

 

$

0.46

 

$

0.38

 

$

1.45

 

$

1.21

 

 

 

 

 

 

 

 

 

 

 

Operating Statistics

 

 

 

 

 

 

 

 

 

As a percentage of net sales:

 

 

 

 

 

 

 

 

 

Gross profit

 

62.3

%

60.9

%

61.9

%

59.8

%

Selling, general and administrative expenses

 

35.7

%

35.5

%

35.0

%

34.2

%

Research and development expenses

 

10.0

%

9.7

%

9.8

%

9.2

%

Income before provision for income taxes

 

15.7

%

14.1

%

16.2

%

14.6

%

Adjusted net income

 

12.0

%

10.5

%

12.2

%

10.8

%

 

 

 

 

 

 

 

 

 

 

Effective tax rate

 

23.5

%

26.1

%

24.7

%

26.0

%

 

 

 

 

 

 

 

 

 

 

Reconciliation of Diluted Earnings per Share

 

 

 

 

 

 

 

 

 

Adjusted net income from above

 

$

29.0

 

$

23.5

 

$

91.4

 

$

75.2

 

Adjustment for items included in net income related to the contingent convertible debt

 

1.0

 

1.0

 

3.0

 

3.0

 

Adjusted net income

 

$

30.0

 

$

24.5

 

$

94.4

 

$

78.2

 

 

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding used to calculate diluted earnings per share excluding contingent convertible debt

 

62.5

 

62.1

 

62.4

 

62.0

 

Weighted average common shares outstanding for the contingent convertible debt

 

2.7

 

2.7

 

2.7

 

2.7

 

Weighted average common shares outstanding used to calculate diluted earnings per share including the contingent convertible debt

 

65.2

 

64.8

 

65.1

 

64.7

 

 

 

 

 

 

 

 

 

 

 

Adjusted diluted earnings per share including the contingent convertible debt

 

$

0.46

 

$

0.38

 

$

1.45

 

$

1.21

 

 

Note: Numbers may not foot due to rounding

 


 

EDWARDS LIFESCIENCES CORPORATION

Unaudited Reconciliation of Consolidated Statements of Operations

Q3 2005 and YTD 2005

(in millions, except per share data)

 

 

 

 

 

Special Items

 

 

 

 

 

Q3 2005

 

Charitable

 

 

 

Intellectual

 

 

 

 

 

Q3 2005

 

 

 

GAAP

 

Fund

 

Investment

 

Property

 

Purchased

 

Repatriation

 

Proforma

 

QUARTER TO DATE

 

As Reported

 

Contribution

 

Impairments

 

Litigation

 

In-Process R&D

 

Taxes

 

As Adjusted

 

Net sales

 

$

240.9

 

 

 

 

 

 

 

 

 

 

 

$

240.9

 

Cost of goods sold

 

90.9

 

 

 

 

 

 

 

 

 

 

 

90.9

 

Gross profit

 

150.0

 

 

 

 

 

 

 

 

 

 

 

150.0

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative expenses

 

85.9

 

 

 

 

 

 

 

 

 

 

 

85.9

 

Research and development expenses

 

24.0

 

 

 

 

 

 

 

 

 

 

 

24.0

 

Purchased in-process R&D expenses

 

1.2

 

 

 

 

 

 

 

(1.2

)

 

 

—

 

Special charges, net

 

21.4

 

(15.0

)

(8.9

)

2.5

 

 

 

 

 

—

 

Interest expense, net

 

2.2

 

 

 

 

 

 

 

 

 

 

 

2.2

 

Other expenses (income), net

 

—

 

 

 

 

 

 

 

 

 

 

 

—

 

Income before provision for income taxes

 

15.3

 

15.0

 

8.9

 

(2.5

)

1.2

 

—

 

37.9

 

Provision for income taxes

 

19.7

 

6.0

 

—

 

(1.0

)

—

 

(15.8

)

8.9

 

Net income (loss)

 

$

(4.4

)

$

9.0

 

$

8.9

 

$

(1.5

)

$

1.2

 

$

15.8

 

$

29.0

 

 

 

 

 

 

Special Items

 

 

 

 

 

YTD Q3’05

 

 

 

 

 

Charitable

 

Gain on sale of

 

 

 

Intellectual

 

 

 

 

 

YTD Q3’05

 

 

 

GAAP

 

Restructure 3F

 

Investment

 

Fund

 

Japan Perfusion

 

Japan

 

Property

 

Purchased

 

Repatriation

 

Proforma

 

YEAR TO DATE

 

As Reported

 

Agreements

 

Impairments

 

Contribution

 

Products Business

 

Realignment

 

Litigation

 

In-Process R&D

 

Taxes

 

As Adjusted

 

Net sales

 

$

748.2

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

748.2

 

Cost of goods sold

 

285.0

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

285.0

 

Gross profit

 

463.2

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

463.2

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative expenses

 

261.6

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

261.6

 

Research and development expenses

 

73.2

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

73.2

 

Purchased in-process R&D expenses

 

1.2

 

 

 

 

 

 

 

 

 

 

 

 

 

(1.2

)

 

 

—

 

Special charges, net

 

47.0

 

(22.8

)

(13.7

)

(15.0

)

7.7

 

(5.7

)

2.5

 

 

 

 

 

—

 

Interest expense, net

 

8.3

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

8.3

 

Other expenses (income), net

 

(1.3

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1.3

)

Income before taxes

 

73.2

 

22.8

 

13.7

 

15.0

 

(7.7

)

5.7

 

(2.5

)

1.2

 

—

 

121.4

 

Provision for income taxes

 

32.5

 

9.2

 

—

 

6.0

 

(3.2

)

2.3

 

(1.0

)

—

 

(15.8

)

30.0

 

Net income (loss)

 

$

40.7

 

$

13.6

 

$

13.7

 

$

9.0

 

$

(4.5

)

$

3.4

 

$

(1.5

)

$

1.2

 

$

15.8

 

$

91.4

 

 


 

EDWARDS LIFESCIENCES CORPORATION

Unaudited Reconciliation of Consolidated Statements of Operations

Q3 2004 and YTD 2004

(in millions, except per share data)

 

 

 

 

 

Special Items

 

 

 

 

 

Q3 2004

 

ev3, Inc.

 

Q3 2004

 

 

 

GAAP

 

Mitral Valve

 

Proforma

 

QUARTER TO DATE

 

As Reported

 

Impairments

 

As Adjusted

 

Net sales

 

$

224.8

 

 

 

$

224.8

 

Cost of goods sold

 

87.9

 

 

 

87.9

 

Gross profit

 

136.9

 

 

 

136.9

 

 

 

 

 

 

 

 

 

Selling, general and administrative expenses

 

79.7

 

 

 

79.7

 

Research and development expenses

 

21.9

 

 

 

21.9

 

Purchased in-process R&D expenses

 

12.3

 

(12.3

)

—

 

Special charges, net

 

—

 

—

 

—

 

Interest expense, net

 

3.4

 

 

 

3.4

 

Other expenses (income), net

 

0.1

 

 

 

0.1

 

Income before provision for income taxes

 

19.5

 

12.3

 

31.8

 

Provision for income taxes

 

7.1

 

1.2

 

8.3

 

Net income (loss)

 

$

12.4

 

$

11.1

 

$

23.5

 

 

 

 

 

 

Special Items

 

 

 

 

 

YTD Q3’04

 

 

 

ev3, Inc.

 

Lifepath AAA

 

Interventional

 

 

 

YTD Q3’04

 

 

 

GAAP

 

PVT

 

Mitral Valve

 

Program

 

Cardiology Product

 

Investment

 

Proforma

 

YEAR TO DATE

 

As Reported

 

IPR&D

 

Impairments

 

Termination

 

Termination

 

Impairments

 

As Adjusted

 

Net sales

 

$

694.4

 

 

 

 

 

 

 

 

 

 

 

$

694.4

 

Cost of goods sold

 

279.0

 

 

 

 

 

 

 

 

 

 

 

279.0

 

Gross profit

 

415.4

 

 

 

 

 

 

 

 

 

 

 

415.4

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative expenses

 

237.2

 

 

 

 

 

 

 

 

 

 

 

237.2

 

Research and development expenses

 

63.6

 

 

 

 

 

 

 

 

 

 

 

63.6

 

Purchased in-process R&D expenses

 

93.3

 

(81.0

)

(12.3

)

 

 

 

 

 

 

—

 

Special charges, net

 

12.3

 

 

 

 

 

(8.4

)

(2.2

)

(1.7

)

—

 

Interest expense, net

 

10.7

 

 

 

 

 

 

 

 

 

 

 

10.7

 

Other expenses (income), net

 

2.3

 

 

 

 

 

 

 

 

 

 

 

2.3

 

Income before taxes

 

(4.0

)

81.0

 

12.3

 

8.4

 

2.2

 

1.7

 

101.6

 

Provision for income taxes

 

20.2

 

0.6

 

1.2

 

2.8

 

0.9

 

0.7

 

26.4

 

Net income (loss)

 

$

(24.2

)

$

80.4

 

$

11.1

 

$

5.6

 

$

1.3

 

$

1.0

 

$

75.2

 

 


 

Edwards Lifesciences Corporation

Unaudited Reconciliation of Sales by Product Line and Region

(in millions)

 

 

 

 

 

 

 

 

 

2004

 

2005

 

 

 

 

 

 

 

 

 

Sales by Product Line (Qtr)

 

Q3 2005

 

Q3 2004

 

GAAP
Growth
Rate

 

Discontinued
Business
Impact

 

Discontinued
Business
Impact

 

FX Impact

 

Q3 2004
FX Adjusted

 

Underlying
Impact

 

Underlying

 

Heart Valve Therapy

 

$

112.9

 

$

101.0

 

11.8

%

—

 

—

 

$

0.2

 

$

101.2

 

$

11.7

 

11.6

%

Cardiac Surgery Systems

 

27.4

 

27.5

 

(0.4

)%

(6.8

)

(6.6

)

0.6

 

21.3

 

(0.5

)

(2.3

)%

Critical Care

 

78.1

 

72.0

 

8.5

%

—

 

—

 

0.6

 

72.6

 

5.5

 

7.6

%

Vascular

 

15.6

 

14.3

 

9.1

%

—

 

—

 

0.2

 

14.5

 

1.1

 

7.6

%

Other Distributed Products

 

6.9

 

10.0

 

(31.0

)%

(2.9

)

—

 

(0.1

)

7.0

 

(0.1

)

(1.6

)%

Total Sales

 

$

240.9

 

$

224.8

 

7.2

%

($9.7

)

($6.6

)

$

1.5

 

$

216.6

 

$

17.7

 

8.2

%

 

 

 

 

 

 

 

 

 

2004

 

2005

 

 

 

 

 

 

 

 

 

Sales by Product Line (YTD)

 

YTD
Q3 2005

 

YTD
Q3 2004

 

GAAP Growth
Rate

 

Discontinued Business Impact

 

Discontinued Business Impact

 

FX Impact

 

YTD Q3 2004
FX Adjusted

 

Underlying Impact

 

Underlying

 

Heart Valve Therapy

 

$

355.3

 

$

314.2

 

13.1

%

—

 

—

 

$

4.3

 

$

318.5

 

$

36.8

 

11.6

%

Cardiac Surgery Systems

 

78.8

 

80.5

 

(2.1

)%

(20.7

)

(13.8

)

1.8

 

61.6

 

3.4

 

5.5

%

Critical Care

 

239.6

 

222.7

 

7.6

%

—

 

—

 

4.5

 

227.2

 

12.4

 

5.5

%

Vascular

 

48.8

 

44.6

 

9.4

%

(1.7

)

—

 

1.1

 

44.0

 

4.8

 

10.8

%

Other Distributed Products

 

25.7

 

32.4

 

(20.7

)%

(8.5

)

—

 

0.3

 

24.2

 

1.5

 

6.1

%

Total Sales

 

$

748.2

 

$

694.4

 

7.7

%

($30.9

)

($13.8

)

$

12.0

 

$

675.5

 

$

58.9

 

8.7

%

 

Sales by Region (Qtr)

 

Q3 2005

 

Q3 2004

 

Change

 

United States

 

$

113.0

 

$

102.6

 

$

10.4

 

Europe

 

54.1

 

50.6

 

3.5

 

Japan

 

45.4

 

47.3

 

(1.9

)

Rest of World

 

28.4

 

24.3

 

4.1

 

International

 

127.9

 

122.2

 

5.7

 

Total

 

$

240.9

 

$

224.8

 

$

16.1

 

 

Sales by Region (YTD)

 

YTD
Q3 2005

 

YTD
Q3 2004

 

Change

 

United States

 

$

343.2

 

$

311.5

 

$

31.7

 

Europe

 

180.8

 

164.0

 

16.8

 

Japan

 

141.2

 

147.7

 

(6.5

)

Rest of World

 

83.0

 

71.2

 

11.8

 

International

 

405.0

 

382.9

 

22.1

 

Total

 

$

748.2

 

$

694.4

 

$

53.8