St. Jude Medical Inc. (NYSE:STJ) Q4 2014 Earnings Conference Call - Final Transcript

Jan 28, 2015 • 08:00 am ET

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St. Jude Medical Inc. (NYSE:STJ) Q4 2014 Earnings Conference Call - Final Transcript

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Presentation
Operator
operator

Welcome to the St. Jude Medical Fourth Quarter and Full Year 2014 Earnings Conference Call. Hosting the call today is Dan Starks, Chairman, President and Chief Executive Officer of St. Jude Medical. (Forward-Looking Cautionary Statements). The 10-K and 10-Q, as well as the company's other SEC filings, are available through the company or online.

During the call, non-GAAP financial measures may be used to provide information pertinent to ongoing business performance. Tables reconciling these measures to most comparable GAAP measures are available on the company's press release issued earlier this morning, or on the St Jude Medical website at www.sjm.com. At this time, all participants have been placed in listen-only mode and the floor will be opened for your questions following management's prepared remarks.

It is now my pleasure to turn the floor over to Dan Starks.

Executive
Dan Starks

Thank you, Ryan. Welcome to The St. Jude Medical fourth quarter and full year 2014 Earnings Conference Call. With me on the call today are Mike Rousseau, Chief Operating Officer; Eric Fain, Group President; Don Zurbay, Chief Financial Officer and Rachel Ellingson, Vice President of Global Communications.

Our plan this morning is for Don Zurbay to provide a review of our financial results for the fourth quarter and full year 2014. And to give sales and earnings guidance both for the first quarter and full year 2015. I will then address several topics and open it up for your questions. Go ahead, Don.

Executive
Don Zurbay

Sales for the quarter totaled $1.439 billion, up approximately 1% from the $1.422 billion reported in the fourth quarter of last year. Unfavorable foreign currency translations decreased this quarter sales by approximately $54 million. On a constant currency basis fourth quarter sales increased approximately 5% versus last year.

For the full year 2014, net sales were $5.622 million, up 2% from last year. Unfavorable foreign currency translations decreased 2014's net sales by approximately $74 million resulting at constant currency sales growth for the year approximately 4%. During the fourth quarter, we recognized $65 million or $0.22 per share in after-tax special charges.

For further information regarding these charges, please refer to details provided in our press release. Comments during this call referencing fourth quarter and full year 2014 results including EPS amounts will be exclusive of these items. During the fourth quarter of 2014 the federal research and development tax credit was extended for 2014, retroactive to the beginning of the year.

As a result. During the fourth quarter, we recorded a $12 million benefit to income tax expense, which increased earnings per share by $0.04, representing the cumulative catch-up adjustment of this credit for the first nine months of 2014. Comments during this call, referencing fourth quarter 2014 EPS will be exclusive of this item.

Additionally, we would note that the federal research and development tax credit has not yet been extended for 2015. This circumstance GAAP requires us to estimate and record our effective income tax rate for 2015, assuming that the R&D tax credit is not extended. For