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St. Jude Medical's CEO Discusses Q1 2012 Results - Earnings Call Transcript

Daniel J. Starks

Thank you, Brooke. Welcome to the St. Jude Medical First Quarter 2012 Earnings Conference Call. With me on the call today are John Heinmiller, Executive Vice President and Chief Financial Officer; Eric Fain, President of our Cardiac Rhythm Management division; Mike Rousseau, Group President; and Angie Craig, Vice President of Corporate Relations and Human Resources.

Our plan this morning is for John Heinmiller to provide his normal review of our financial results for the first quarter 2012 and to give sales and earnings guidance both for the second quarter and full year 2012. I will then address several topics and open it up for your questions.

Go ahead, John.

John C. Heinmiller

Thank you, Dan. Sales for the quarter totaled $1,395,000,000, up approximately 1% over the $1,376,000,000 reported in the first quarter of last year and above the upper end of our total sales guidance range of $1,305,000,000 to $1,390,000,000. Unfavorable foreign currency translations versus last year's first quarter reduced this quarter's sales by approximately $7 million. We will update our currency assumptions in a moment, but the actual average exchange rates during the first quarter were within our previous guidance range.

On a constant currency basis, first quarter sales increased approximately 2% versus last year. And excluding the impact of terminating a contract in Japan, under which St. Jude Medical distributed cardiovascular products manufactured by a third party, first quarter sales increased 3% on a constant currency basis.

During the first quarter, we recognized $29 million or $0.09 per share in after-tax charges, primarily in connection with our previously announced restructuring action initiated during the second quarter of 2011 to streamline manufacturing within our CRM business, which consists primarily of closing down operations at our location in Sweden as well as costs associated with our continuing efforts to leverage our sales and sales support organizations. In addition, we recognized $25 million or $0.08 per share in after-tax charges related to a settlement involving a dispute over the final payments due under a license agreement involving the vascular closure product line. Comments during this call referencing first quarter results and guidance for full year 2012 results, including EPS amounts, will be exclusive of these items.

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