Daniel J. StarksThank 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.
At the end of 2011, the federal research and development tax credit expired, and it has not yet been extended for 2012. In this circumstance, GAAP requires us to estimate and record our effective income tax rate, assuming that the R&D credit is not extended. For purposes of this conference call and our calculation of adjusted net earnings, however, we are assuming that the tax credit will be extended for 2012 as in past years. As a result, comments referencing first quarter results and our guidance for 2012, including EPS amounts, are presented based on an effective income tax rate that contemplates the extension of the tax credit retroactive to January 1, 2012. To the extent the federal research development tax credit is not renewed, our effective income tax rate for 2012 would be higher than what is being presented during this call.Earnings per share were $0.86 for the first quarter of 2012, an 8% increase over adjusted earnings per share of $0.80 in the first quarter of 2011 and above our guidance range of $0.82 to $0.84. Before we discuss our first quarter 2012 sales results by product category with guidance for the second quarter and the remainder of 2012, let me comment on foreign currency. As discussed on prior calls, the 2 main currencies influencing St. Jude Medical's operations are the euro and the yen. In preparing our sales and earnings guidance for the first quarter and the full year 2012, we used exchange rates which assumed that each euro would translate into about $1.26 to $1.31, and for the yen, each JPY 76 to JPY 81 would translate into USD $1. For the first quarter, the actual average exchange rates for the euro and the yen were consistent with these assumptions. In preparing our sales and earnings guidance for the second quarter and remainder of 2012, we are now assuming that each euro will translate into about $1.28 to $1.33, and we now expect each JPY 80 to JPY 85 to translate into USD $1. These changes in assumptions regarding currency exchange rates do not materially change our total forecasted sales for the remainder of 2012. Read the rest of this transcript for free on seekingalpha.com