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St. Jude Medical Conference Call Highlights

Shazir Mucklai

Shares of St. Jude Medical (NYSE: ABT) are down 0.09 percent following its second-quarter earnings release.

Below are some highlights and key takeaways from the company's conference call.

Results and Growth:

• Sales for the quarter totaled $1.448 billion, up three percent from the $1.403 billion reported in the second quarter of last year.
• Favorable foreign currency translations increased this quarter's sales by approximately $4 million.
• For purposes of this conference call and our calculation of adjusted net earnings, however, we are assuming that the R&D tax credit will be extended for 2014 as in past years
• Earnings per share were $1.02 for the second quarter of 2014, a six percent increase over adjusted EPS of $0.96 in the second quarter of 2013.
• During the second quarter, we announced FDA approval of the CardioMEMS heart failure system.
• Our sales guidance for 2014 continues to include sales of approximately $15 million to $20 million related to the CardioMEMS product line.
• For the second quarter, ICD sales were $462 million, up two percent from last year's second quarter.
• If you add up the sales guidance across all product platforms, we now expect total sales for 2014 to be approximately $5.640 billion to $5.760 billion.
• For the full year 2014, we remain on track to remain gross profit margin in the range of 71.5 percent to 72 percent.
• Our second quarter SG&A expenses were 34 percent of net sales, representing a 60 basis point improvement over the second quarter of 2013.
• For the full year 2014, we continue to expect SG&A as a percent of net sales to be in the range of 33.5% to 34.0%.
• Research and development expenses in the second quarter of 2014 were 12.3 percent of net sales.
• For the second quarter, our effective income tax rate was 18 percent.
• For 2014, we now expect the effective tax rate to be in the range of 18 percent to 18.5 percent.
• For the full year, we now expect this line to total approximately $25 million to $35 million.
• At the end of the second quarter, we had approximately $1.6 billion in cash and cash equivalence and $4.2 billion in total debt.
• There were no borrowings outstanding under our $1.5 billion revolving credit facility available with the group of banks.
• The company expects adjusted EPS for the third quarter of 2014 to be in the range of $0.95 to $0.97.
• For the full year 2014, we now expect adjusted EPS to be in the range of $3.96 to $4.01.
• On a constant currency basis, our adjusted earnings per share guidance represents EPS growth of approximately six percent to eight percent.

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