SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): November 17, 1998
Medtronic, Inc.
(Exact name of Registrant as Specified in its Charter)
Minnesota
(State or Other Jurisdiction of Incorporation)
1-7707 41-0793183
(Commission File Number) (IRS Employer
Identification No.)
7000 Central Avenue N.E.
Minneapolis, Minnesota 55432-3576
(Address of Principal Executive Offices and Zip Code)
(612) 514-4000
(Registrant's telephone number, including area code)
Not Applicable
(Former Name or Former Address, if Changed Since Last Report)
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Item 5. Other Events
On November 17, 1998, the Registrant issued a press release relating to
second-quarter earnings. The full text of the press release is set forth in
Exhibit 99 which is attached hereto and incorporated in this Report as if fully
set forth herein.
Item 7. Financial Statements and Exhibits
Exhibit 99 Press release dated November 17, 1998.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
MEDTRONIC, INC.
By /s/ Robert L. Ryan
Date: November 19, 1998 Robert L. Ryan
Senior Vice President and Chief
Financial officer
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EXHIBIT INDEX
Medtronic, Inc.
Form 8-K Current Report
Dated November 19, 1998
Exhibit Number Description
99 Press release dated November 17, 1998
Exhibit 99
Contacts:
Chris O'Connell
Investor Relations
612/514-4971
Jessica Stoltenberg
Public Relations
612/514-3333
F O R I M M E D I A T E R E L E A S E
ACCELERATING DEFIBRILLATOR, NEUROLOGICAL SALES
DRIVE QUARTERLY EARNINGS GAIN FOR MEDTRONIC
MINNEAPOLIS, MN, November 17, 1998 -- Citing particularly strong sales
performance in implantable cardiac defibrillators and neurological devices,
Medtronic, Inc. (NYSE: MDT) announced today that quarterly earnings for the
period ended October 30, 1998, increased 9.8 percent to $159.1 million and
diluted earnings per share increased 10.0 percent to $0.33 before one-time
transaction charges related to the merger with Physio-Control International
Corporation. Quarterly revenues of $728.4 million increased 6.8 percent over the
year earlier on a constant currency basis. Foreign exchange negatively affected
revenues by $4.3 million, bringing the reported revenue gain to 6.2 percent.
Prior year financial results are restated to reflect the results from
Physio-Control, accounted for as a pooling of interests.
William W. George, chairman and chief executive officer, credited
accelerating sales in two of the company's fastest-growing product lines,
Cardiac Rhythm Management and Neurological and noted that products and platforms
are now in place to build exceptionally strong growth momentum over the next
several quarters. "We are rapidly gaining market share on a worldwide basis with
the introduction of the GEM DR and GEM implantable defibrillators, and have
established market leadership internationally with about 50 percent of the
market."
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George also noted that the launch of the GEM DR in the U.S. in early
October signaled a major inflection point for Medtronic's tachyarrhythmia
product line. "Although selling for only three weeks this quarter, the GEM DR
sparked a significant surge, propelling U.S. tachyarrhythmia revenues to a
sequential increase of more than 10 percent."
Worldwide sales of tachyarrhythmia management products increased 17
percent, led by international growth of 45 percent. Worldwide revenue and unit
sales of bradycardia pacemakers rose five percent, with the Medtronic.Kappa 700
pacemakers making solid gains in the European market. "The U.S. Bradycardia
business is poised for accelerated growth with the pending FDA clearance of the
Kappa 700," George said. Medtronic Physio-Control, the world's leading provider
of external defibrillators, made a meaningful contribution to the quarter,
growing in excess of 20 percent.
"Medtronic Neurological again headlined revenue growth with greater
than 30 percent growth in its core neurostimulation and drug delivery product
lines," George said. Neurological's 28 percent growth was led by sales of
neurostimulation devices for pain, tremor and incontinence, which were up nearly
35 percent, and a 30 percent increase for implantable drug delivery systems.
Going forward, Medtronic Neurological expects to benefit from two new
acquisitions -- Medtronic Midas Rex, which closed late October, and Sofamor
Danek Group, Inc., when that transaction is closed. "Combined with Sofamor
Danek, Medtronic Neurological will be a $1 billion enterprise next year and will
continue to build on its franchise position in advanced technologies and
therapies for the treatment of neurological and spinal disorders," George said.
Medtronic Cardiac Surgery recorded an increase in sales of more than 5
percent, primarily on the strength of prosthetic heart valves. Total valve sales
increased more than 10 percent over the prior year, with better-than-20 percent
growth in tissue valves. In addition, the acquisition of AVECOR Cardiovascular
Inc., is proceeding and is expected to enhance the Perfusion Systems product
line once closed.
Medtronic Vascular revenues declined significantly in the quarter due
to strong competitive pressures in the worldwide coronary balloon angioplasty
and stent markets.
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Including the effects of a $21.1 million pre-tax one-time
transaction-related charge associated with the closing of Physio-Control,
Medtronic reported net earnings of $145.0 million or $0.30 a share.
Earnings for the first half of Fiscal 1999 were $313.5 million ($0.64
per share), an increase of 6.5 percent, before the one-time transaction related
charges. Revenues were $1,434.1 million, compared with sales of $1,377.5 million
in the comparable prior period.
Medtronic, Inc., headquartered in Minneapolis, is the world's leading
medical technology company specializing in implantable and interventional
therapies. Its Internet address is www.medtronic.com.
- 0 -
Any statements made regarding the company's anticipated financial results and
regulatory approvals are forward-looking statements subject to risks and
uncertainties, such as those described in the company's Annual Report on Form
10K for the year ended April 30, 1998. Actual results may differ materially from
anticipated results.
(tabulation follows)
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<TABLE>
<CAPTION>
MEDTRONIC, INC.
CONSOLIDATED STATEMENT OF EARNINGS
(Unaudited)
(in thousands, except per share data)
Three Three Six Six
months ended months ended months ended months ended
Oct. 30, 1998 Oct.31, 1997 Oct. 30, 1998 Oct.31, 1997
-------------------------------- ------------ --------------------------------- ------------
Before One-Time Before One-Time
One-Time Transaction Related One-Time Transaction Related
Charges Charges Reported Charges Charges Reported
-------------------------------- ---------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net sales $ 728,405 $ 728,405 $ 686,218 $ 1,434,060 $ 1,434,060 $1,377,508
Costs and expenses:
Cost of products sold 206,137 206,137 182,007 402,085 402,085 364,127
Research and development expense 80,750 80,750 76,239 160,048 160,048 151,820
Selling, general, and
administrative expense 210,228 210,228 209,707 413,196 413,196 417,777
Non-recurring charges 0 21,101 21,101 0 0 21,101 21,101 0
Interest expense 2,960 2,960 2,310 5,222 5,222 4,661
Interest income (10,167) (10,167) (5,263) (17,163) (17,163) (10,331)
--------- ---------- --------- --------- ----------- ---------- ----------- ---------
Total costs and expenses 489,908 21,101 511,009 465,000 963,388 21,101 984,489 928,054
--------- ---------- --------- --------- ----------- ---------- ----------- ----------
Earnings before income taxes 238,497 (21,101) 217,396 221,218 470,672 (21,101) 449,571 449,454
Provision for income taxes 79,426 (7,069) 72,357 76,330 157,205 (7,069) 150,136 155,095
--------- ---------- --------- --------- ----------- ---------- ----------- ----------
Net earnings $ 159,071 $ (14,032) $145,039 $144,888 $ 313,467 $ (14,032) $ 299,435 $ 294,359
========= ========== ========= ========= =========== ========== =========== ==========
Weighted average shares outstanding 480,937 480,937 480,937 477,099 479,553 479,553 479,553 476,872
Basic earnings per share $ 0.33 $ (0.03) $ 0.30 $ 0.30 $ 0.65 $ (0.03) $ 0.62 $ 0.62
========= ========== ========= ========= =========== ========== =========== ==========
Earnings per share assuming dilution $ 0.33 $ (0.03) $ 0.30 $ 0.30 $ 0.64 $ (0.03) $ 0.61 $ 0.61
========= ========== ========= ========= =========== ========== =========== ==========
Weighted average shares outstanding
assuming dilution 488,222 488,222 488,222 485,499 486,909 486,909 486,909 484,847
</TABLE>
Note: The first quarter of FY99 and the prior year FY98 amounts have been
restated to reflect the September 1998 acquisition of Physio-Control
International Corporation which was accounted for as a pooling-of-interests.
