St Jude Medical (STU:JUD) Operating Income : €827 Mil (TTM As of Sep. 2016)

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What is St Jude Medical Operating Income?

St Jude Medical's Operating Income for the three months ended in Sep. 2016 was €255 Mil. Its Operating Income for the trailing twelve months (TTM) ended in Sep. 2016 was €827 Mil.

Operating Margin % is calculated as Operating Income divided by its Revenue. St Jude Medical's Operating Income for the three months ended in Sep. 2016 was €255 Mil. St Jude Medical's Revenue for the three months ended in Sep. 2016 was €1,336 Mil. Therefore, St Jude Medical's Operating Margin % for the quarter that ended in Sep. 2016 was 19.08%.

St Jude Medical's 5-Year average Growth Rate for Operating Margin % was 0.00% per year.

Operating Income or EBIT is linked to Return on Capital for both regular definition and Joel Greenblatt's definition. St Jude Medical's annualized ROC % for the quarter that ended in Sep. 2016 was 8.29%. St Jude Medical's annualized ROC (Joel Greenblatt) % for the quarter that ended in Sep. 2016 was 41.53%.

St Jude Medical Operating Income Historical Data

The historical data trend for St Jude Medical's Operating Income can be seen below:

* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD.
* For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.

* Premium members only.

St Jude Medical Operating Income Chart

St Jude Medical Annual Data

Trend

Dec06

Dec07

Dec08

Dec09

Dec10

Dec11

Dec12

Dec13

Dec14

Dec15

Operating Income

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847.40

838.20

767.23

933.46

945.54

St Jude Medical Quarterly Data
	Dec11	Mar12	Jun12	Sep12	Dec12	Mar13	Jun13	Sep13	Dec13	Mar14	Jun14	Sep14	Dec14	Mar15	Jun15	Sep15	Dec15	Mar16	Jun16	Sep16
Operating Income	Get a 7-Day Free Trial															261.95	89.05	204.74	278.57	254.83

St Jude Medical Operating Income Calculation

Operating Income, is the profit a company earned through operations. All expenses, including cash expenses such as cost of goods sold (COGS), research & development, wages, and non-cash expenses, such as depreciation, depletion and amortization, have been deducted from the sales.

Operating Income for the trailing twelve months (TTM) ended in Sep. 2016 adds up the quarterly data reported by the company within the most recent 12 months, which was €827 Mil.

St Jude Medical (STU:JUD) Operating Income Explanation

1. Operating Income or EBIT is linked to Return on Capital for both regular definition and Joel Greenblatt's definition.

St Jude Medical's annualized ROC % for the quarter that ended in Sep. 2016 is calculated as:

	ROC % (Q: Sep. 2016 )
=	NOPAT	/	Average Invested Capital
=	Operating Income * ( 1 - Tax Rate % )	/	( (Invested Capital (Q: Jun. 2016 )	+	Invested Capital (Q: Sep. 2016 ))	/ count )
=	1019.304 * ( 1 - 13.47% )	/	( (10696.02	+	10573.497)	/ 2 )
=	882.0037512	/	10634.7585
=	8.29 %

where

	Invested Capital		(Q: Jun. 2016 )
=	Total Assets	-	Accounts Payable & Accrued Expense	-	Excess Cash
=	Total Assets	-	Accounts Payable & Accrued Expense	-	( Cash, Cash Equivalents, Marketable Securities	-	max(0, Total Current Liabilities	-	Total Current Assets	+	Cash, Cash Equivalents, Marketable Securities	))
=	11265.62	-	215.38	-	( 354.22	-	max(0, 1524.57	-	2605.03	+	354.22	))
=	10696.02

	Invested Capital		(Q: Sep. 2016 )
=	Total Assets	-	Accounts Payable & Accrued Expense	-	Excess Cash
=	Total Assets	-	Accounts Payable & Accrued Expense	-	( Cash, Cash Equivalents, Marketable Securities	-	max(0, Total Current Liabilities	-	Total Current Assets	+	Cash, Cash Equivalents, Marketable Securities	))
=	11174.031	-	249.48	-	( 351.054	-	max(0, 1298.187	-	2509.056	+	351.054	))
=	10573.497

Note: The Operating Income data used here is four times the quarterly (Sep. 2016) data.

2. Joel Greenblatt's definition of Return on Capital:

St Jude Medical's annualized ROC (Joel Greenblatt) % for the quarter that ended in Sep. 2016 is calculated as:

	ROC (Joel Greenblatt) %		(Q: Sep. 2016 )
=	EBIT	/	Average of (Net fixed Assets	+	Net Working Capital)
=	EBIT	/	Average of (Property, Plant and Equipment	+	Net Working Capital)
			Q: Jun. 2016		Q: Sep. 2016
=	EBIT	/	( ( (Property, Plant and Equipment + Net Working Capital)	+	(Property, Plant and Equipment + Net Working Capital) )	/	count )
=	1012.176	/	( ( (1180.14 + max(1313.64, 0))	+	(1190.376 + max(1190.376, 0)) )	/	2 )
=	1012.176	/	( ( 2493.78	+	2380.752 )	/	2 )
=	1012.176	/	2437.266
=	41.53 %

where Working Capital is:

	Working Capital		(Q: Jun. 2016 )
=	(Accounts Receivable	+	Total Inventories	+	Other Current Assets)	-	(Accounts Payable & Accrued Expense	+	Defer. Rev.	+	Other Current Liabilities)
=	(1183.7	+	804.56	+	262.55)	-	(215.38	+	0	+	721.79)
=	1313.64

	Working Capital		(Q: Sep. 2016 )
=	(Accounts Receivable	+	Total Inventories	+	Other Current Assets)	-	(Accounts Payable & Accrued Expense	+	Defer. Rev.	+	Other Current Liabilities)
=	(1149.39	+	810.81	+	197.802)	-	(249.48	+	0	+	718.146)
=	1190.376

When net working capital is negative, 0 is used.

Note: The EBIT data used here is four times the quarterly (Sep. 2016) EBIT data.

3. Operating Income is also linked to Operating Margin %:

St Jude Medical's Operating Margin % for the quarter that ended in Sep. 2016 is calculated as:

Operating Margin %	=	Operating Income (Q: Sep. 2016 )	/	Revenue (Q: Sep. 2016 )
	=	254.826	/	1335.609
	=	19.08 %

4. Please click Growth Rate Calculation Example (GuruFocus) to see how GuruFocus calculates Wal-Mart Stores Inc (WMT)'s revenue growth rate. You can apply the same method to get the Operating Income growth rate using Operating Income per share data.

Be Aware

Compared with a company's EBITDA margin, Operating Margin can be manipulated by adjusting the rate of depreciation, depletion and amortization (DDA).

If a company is facing competition, its Operating Margin may decline. Often the Operating Margin declines well before the company's revenue or even profit decline. Therefore, Operating Margin is a very important indicator of whether the company is facing problems.

For instance, by 2012, Nokia (NOK)'s problems were well known and its stock had lost more than 90% of its market value since 2007. But Nokia's Operating Margin had already been in decline since 2002, although its earnings per share were still rising. Investors who paid attention to Operating Margin would have avoided this huge loss. The same can be said for Research-in-Motion (RIMM).

Therefore, Operating Margin is a very important screening filter for GuruFocus. GuruFocus's Buffett-Munger screener requires that the profit margin is either consistent or expanding. The Model Portfolio of the Buffett-Munger screener has outperformed the market every year since inception in 2009.

St Jude Medical Operating Income Related Terms

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St Jude Medical (STU:JUD) Business Description

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http://www.sjm.com

St Jude Medical Inc was incorporated in Minnesota in 1976. It develops, manufactures and distributes cardiovascular medical devices for the cardiac rhythm management, cardiovascular and atrial fibrillation therapy areas and neurostimulation medical devices for the management of chronic pain. The Company's two segments are the Implantable Electronic Systems Division and the Cardiovascular and Ablation Technologies Division. The Company's principal products in each business unit are as follows: Implantable Electronic Systems Division (IESD) - tachycardia implantable cardioverter defibrillator systems (ICDs), bradycardia pacemaker systems (pacemakers) and neurostimulation products (spinal cord and deep brain stimulation devices); and Cardiovascular and Ablation Technologies Division (CATD) - vascular products (vascular closure products, pressure measurement guidewires, optical coherence tomography (OCT) imaging products, vascular plugs and other vascular accessories), structural heart products (heart valve replacement and repair products and structural heart defect devices) and atrial fibrillation (AF) products (electrophysiology (EP) introducers and catheters, cardiac mapping, navigation and recording systems and ablation systems). Implantable Electronic Systems Division (IESD): IESD is focused on the cardiac rhythm management and neuromodulation therapy areas. Cardiac rhythm management devices include ICDs that provide life-saving therapy to patients suffering from lethal heart conditions, such as sudden cardiac arrest; cardiac resynchronization therapy (CRT) devices to save and improve the lives of patients suffering from heart failure (HF); pacemakers to help patients whose hearts beat too slowly or who suffer from other debilitating cardiac arrhythmias; leads (wires that connect devices to the heart) to carry electrical impulses to the heart and provide information from the heart to the device; and programmers and remote monitoring equipment which are used by physicians and healthcare professionals to program is cardiac rhythm management devices and analyze device data to improve patient management. Neuromodulation product offerings provide neurostimulation treatment in which an implantable device delivers electrical current directly to targeted nerve sites. The Company's commercialized neurostimulation therapies include spinal cord stimulation (SCS) for the treatment of chronic pain, deep brain stimulation (DBS) for treating the symptoms of Parkinson's disease and peripheral nerve stimulation (PNS) for the treatment of chronic migraine headache. A neurostimulation system typically consists of four components: a pulse generator that produces the electrical current and is implanted under the patient's skin; implanted leads that carry the electrical impulses to the targeted nerve sites; an external patient remote control that enables the patient to control his or her therapy within prescribed ranges; and an external clinician pro

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