St. Jude Medical Inc. (STJ, Financial) filed Quarterly Report for the period ended 2010-07-03.
St. Jude Medical Inc. has a market cap of $12.57 billion; its shares were traded at around $38.46 with a P/E ratio of 13.9 and P/S ratio of 2.7. St. Jude Medical Inc. had an annual average earning growth of 17.6% over the past 10 years. GuruFocus rated St. Jude Medical Inc. the business predictability rank of 5-star.STJ is in the portfolios of Bill Frels of Mairs & Power Inc. , Edward Owens of Vanguard Health Care Fund, RS Investment Management, Chris Shumway of Shumway Capital Partners LLC, John Rogers of ARIEL CAPITAL MANAGEMENT LLC, Pioneer Investments, Bruce Kovner of Caxton Associates, Jeremy Grantham of GMO LLC, Steven Cohen of SAC Capital Advisors, George Soros of Soros Fund Management LLC.
Net earnings and diluted net earnings per share for the second quarter of 2010 were $254.0 million and $0.77 per diluted share, increases of 16% and 22%, respectively, compared to the same prior year period. Net earnings and diluted net earnings per share for the first six months of 2010 were $492.6 million and $1.50 per diluted share, increases of 17% and 25%, respectively, over the first six months of 2009. These increases for both the second quarter and first six months of 2010 compared to the same prior year periods were due to incremental profits resulting from higher sales as well as lower outstanding shares resulting from repurchases of our common stock. From July 2009 through December 2009, we returned $1.0 billion to shareholders in the form of share repurchases.
We generated $495.4 million of operating cash flows during the first six months of 2010, compared to $358.5 million of operating cash flows during the first six months of 2009. We ended the second quarter with $667.1 million of cash and cash equivalents and $1,961.8 million of total debt. In March 2010, we issued $450.0 million principal amount of 2.2% Senior Notes due 2013 (2013 Senior Notes) and retired our 3-year, unsecured term loan due 2011 (2011 Term Loan) using the majority of the net proceeds. In April 2010, we issued 10-year, 2.04% unsecured senior notes in Japan (2.04% Yen Notes) totaling 12.8 billion Yen (the equivalent of $143.9 million at July 3, 2010) and we issued 7-year, 1.58% unsecured notes in Japan (1.58% Yen Notes) totaling 8.1 billion Yen (the equivalent of $91.9 million at July 3, 2010). The net proceeds from the issuance of these notes were used to repay the 1.02% Yen-denominated notes due in May 2010 (1.02% Yen Notes) totaling 20.9 billion Yen. During 2009, we issued $1,200.0 million principal amount of debt, consisting of $700.0 million of 3.75% Senior Notes due 2014 (2014 Senior Notes) and $500.0 million of 4.875% Senior Notes due 2019 (2019 Senior Notes). We have strong short-term credit ratings of A1 from Standard & Poors, P2 from Moodys and F1 from Fitch; and long-term credit ratings of A from Standard & Poors, Baa1 from Moodys and A from Fitch.
ICD net sales increased 18% and 16% in the second quarter and first six months of 2010, respectively, compared to the same prior year periods, due to operational sales growth of 18% and 15%, respectively. The improved operational sales growth in ICD net sales during the second quarter and first six months of 2010 was broad-based across both U.S. and international markets, reflecting our continued market penetration into new customer accounts and market demand for our cardiac resynchronization therapy ICD devices. During the second quarter of 2010, we launched a number of new ICD products, including the UnifyTM cardiac resynchronization therapy defibrillator (CRT-D) and FortifyTM ICD, which were both launched in the United States and European markets. The Unify CRT-D and Fortify ICD are smaller, deliver more energy, and have a longer battery life than comparable conventional devices. In the United States, second quarter 2010 ICD net sales of $299.5 million increased 18% over the prior years second quarter. This included an incremental benefit of approximately $15 million resulting from the suspension of U.S. ICD sales by a principal competitor in the CRM market. The first six months of 2010 U.S. ICD net sales of $580.0 million increased 13% over the same period last year. The incremental benefit resulting from the suspension of U.S. ICD sales by a principal competitor in the CRM market during the six-month period was approximately $35 million to $40 million. Internationally, second quarter 2010 ICD net sales of $171.7 million increased 18% compared to the second quarter of 2009, driven by operational sales growth of 19%. Foreign currency translation had a $0.9 million unfavorable impact on international ICD net sales during the second quarter of 2010 compared to the second quarter of 2009. Internationally, the first six months of 2010 ICD net sales of $342.7 million increased 22% compared to the first six months of 2009, driven by operational sales growth of 18%. Foreign currency translation had an $11.5 million favorable impact on international ICD net sales during the first six months of 2010 compared to the same period in 2009.
Pacemaker net sales increased 4% and 5% in the second quarter and first six months of 2010, respectively, compared to the same prior year periods, due to operational sales growth of 4% and 3%, respectively. In the United States, our second quarter 2010 pacemaker net sales of $139.5 million increased 6%. In the United States, the first six months of 2010 pacemaker net sales of $267.5 million increased 3% over the same period last year. Internationally, our pacemaker net sales of $177.2 million increased 3% compared to the second quarter of 2009 as a result of operational sales growth of 2% and $1.6 million of favorable foreign currency translation. Internationally, the first six months of 2010 pacemaker net sales of $349.4 million increased 8% compared to the first six months of 2009. Operational sales growth of 3% and $13.6 million of favorable foreign currency translation increased international pacemaker net sales during the first six months of 2010 compared to the same period in 2009.
Vascular closure net sales remained relatively flat during both the second quarter and first six months of 2010. While foreign currency translation did not significantly impact second quarter 2010 vascular closure sales, it did favorably impact sales for the first six months of 2010 by $3.4 million. Heart valve net sales increased 3% and 5% during the second quarter and first six months of 2010 due to operational sales growth of 2% in both periods over the prior year. Favorable foreign currency translation increased heart valve net sales by $1.2 million and $4.9 million for the second quarter and first six months of 2010, respectively. Net sales of other cardiovascular products increased $9.1 million and $19.3 million during the second quarter and first six months of 2010, respectively, compared to the same periods last year, primarily driven by sales growth of our PressureWireTM FFR (fractional flow reserve) measurement systems. Favorable foreign currency translation increased other cardiovascular net sales by $1.6 million and $4.5 million for the second quarter and first six months of 2010, respectively.
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St. Jude Medical Inc. has a market cap of $12.57 billion; its shares were traded at around $38.46 with a P/E ratio of 13.9 and P/S ratio of 2.7. St. Jude Medical Inc. had an annual average earning growth of 17.6% over the past 10 years. GuruFocus rated St. Jude Medical Inc. the business predictability rank of 5-star.STJ is in the portfolios of Bill Frels of Mairs & Power Inc. , Edward Owens of Vanguard Health Care Fund, RS Investment Management, Chris Shumway of Shumway Capital Partners LLC, John Rogers of ARIEL CAPITAL MANAGEMENT LLC, Pioneer Investments, Bruce Kovner of Caxton Associates, Jeremy Grantham of GMO LLC, Steven Cohen of SAC Capital Advisors, George Soros of Soros Fund Management LLC.
Highlight of Business Operations:
Net sales in the second quarter and first six months of 2010 were $1,312.8 million and $2,574.5 million, respectively, increases of 11% over both the second quarter and first six months of 2009, respectively. Our net sales increases were led by sales growth of our ICDs and pacemakers as well as products to treat atrial fibrillation. During the second quarter and first six months of 2010, our ICD net sales grew approximately 18% and 16%, respectively, while our pacemaker net sales grew approximately 4% and 5%, respectively. Our AF net sales increased 12% and 15% during the second quarter and first six months of 2010, respectively, to $175.8 million and $345.9 million, respectively. Favorable foreign currency translation comparisons increased our second quarter and first six month 2010 net sales by $4.7 million and $47.7 million, respectively. Total St. Jude Medical operational sales growth (sales changes excluding the impacts of foreign currency translation) was 10% and 9% for the second quarter and first six months of 2010, respectively. Refer to the Segment Performance section for a more detailed discussion of the results for the respective segments.Net earnings and diluted net earnings per share for the second quarter of 2010 were $254.0 million and $0.77 per diluted share, increases of 16% and 22%, respectively, compared to the same prior year period. Net earnings and diluted net earnings per share for the first six months of 2010 were $492.6 million and $1.50 per diluted share, increases of 17% and 25%, respectively, over the first six months of 2009. These increases for both the second quarter and first six months of 2010 compared to the same prior year periods were due to incremental profits resulting from higher sales as well as lower outstanding shares resulting from repurchases of our common stock. From July 2009 through December 2009, we returned $1.0 billion to shareholders in the form of share repurchases.
We generated $495.4 million of operating cash flows during the first six months of 2010, compared to $358.5 million of operating cash flows during the first six months of 2009. We ended the second quarter with $667.1 million of cash and cash equivalents and $1,961.8 million of total debt. In March 2010, we issued $450.0 million principal amount of 2.2% Senior Notes due 2013 (2013 Senior Notes) and retired our 3-year, unsecured term loan due 2011 (2011 Term Loan) using the majority of the net proceeds. In April 2010, we issued 10-year, 2.04% unsecured senior notes in Japan (2.04% Yen Notes) totaling 12.8 billion Yen (the equivalent of $143.9 million at July 3, 2010) and we issued 7-year, 1.58% unsecured notes in Japan (1.58% Yen Notes) totaling 8.1 billion Yen (the equivalent of $91.9 million at July 3, 2010). The net proceeds from the issuance of these notes were used to repay the 1.02% Yen-denominated notes due in May 2010 (1.02% Yen Notes) totaling 20.9 billion Yen. During 2009, we issued $1,200.0 million principal amount of debt, consisting of $700.0 million of 3.75% Senior Notes due 2014 (2014 Senior Notes) and $500.0 million of 4.875% Senior Notes due 2019 (2019 Senior Notes). We have strong short-term credit ratings of A1 from Standard & Poors, P2 from Moodys and F1 from Fitch; and long-term credit ratings of A from Standard & Poors, Baa1 from Moodys and A from Fitch.
ICD net sales increased 18% and 16% in the second quarter and first six months of 2010, respectively, compared to the same prior year periods, due to operational sales growth of 18% and 15%, respectively. The improved operational sales growth in ICD net sales during the second quarter and first six months of 2010 was broad-based across both U.S. and international markets, reflecting our continued market penetration into new customer accounts and market demand for our cardiac resynchronization therapy ICD devices. During the second quarter of 2010, we launched a number of new ICD products, including the UnifyTM cardiac resynchronization therapy defibrillator (CRT-D) and FortifyTM ICD, which were both launched in the United States and European markets. The Unify CRT-D and Fortify ICD are smaller, deliver more energy, and have a longer battery life than comparable conventional devices. In the United States, second quarter 2010 ICD net sales of $299.5 million increased 18% over the prior years second quarter. This included an incremental benefit of approximately $15 million resulting from the suspension of U.S. ICD sales by a principal competitor in the CRM market. The first six months of 2010 U.S. ICD net sales of $580.0 million increased 13% over the same period last year. The incremental benefit resulting from the suspension of U.S. ICD sales by a principal competitor in the CRM market during the six-month period was approximately $35 million to $40 million. Internationally, second quarter 2010 ICD net sales of $171.7 million increased 18% compared to the second quarter of 2009, driven by operational sales growth of 19%. Foreign currency translation had a $0.9 million unfavorable impact on international ICD net sales during the second quarter of 2010 compared to the second quarter of 2009. Internationally, the first six months of 2010 ICD net sales of $342.7 million increased 22% compared to the first six months of 2009, driven by operational sales growth of 18%. Foreign currency translation had an $11.5 million favorable impact on international ICD net sales during the first six months of 2010 compared to the same period in 2009.
Pacemaker net sales increased 4% and 5% in the second quarter and first six months of 2010, respectively, compared to the same prior year periods, due to operational sales growth of 4% and 3%, respectively. In the United States, our second quarter 2010 pacemaker net sales of $139.5 million increased 6%. In the United States, the first six months of 2010 pacemaker net sales of $267.5 million increased 3% over the same period last year. Internationally, our pacemaker net sales of $177.2 million increased 3% compared to the second quarter of 2009 as a result of operational sales growth of 2% and $1.6 million of favorable foreign currency translation. Internationally, the first six months of 2010 pacemaker net sales of $349.4 million increased 8% compared to the first six months of 2009. Operational sales growth of 3% and $13.6 million of favorable foreign currency translation increased international pacemaker net sales during the first six months of 2010 compared to the same period in 2009.
Vascular closure net sales remained relatively flat during both the second quarter and first six months of 2010. While foreign currency translation did not significantly impact second quarter 2010 vascular closure sales, it did favorably impact sales for the first six months of 2010 by $3.4 million. Heart valve net sales increased 3% and 5% during the second quarter and first six months of 2010 due to operational sales growth of 2% in both periods over the prior year. Favorable foreign currency translation increased heart valve net sales by $1.2 million and $4.9 million for the second quarter and first six months of 2010, respectively. Net sales of other cardiovascular products increased $9.1 million and $19.3 million during the second quarter and first six months of 2010, respectively, compared to the same periods last year, primarily driven by sales growth of our PressureWireTM FFR (fractional flow reserve) measurement systems. Favorable foreign currency translation increased other cardiovascular net sales by $1.6 million and $4.5 million for the second quarter and first six months of 2010, respectively.
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