Unaudited Consolidated Statements of Operations Three Months Ended March 31, (in millions, except per share data) 2003 2002 Net sales $212.5 $162.3 Cost of goods sold 89.1 69.1 Gross profit 123.4 93.2 Selling, general and administrative expenses 71.4 50.7 Research and development expenses 19.0 15.4 Purchased in-process research and development expenses 11.8 0.0 Other operating income 0.0 (3.8) Operating income 21.2 30.9 Interest expense, net 2.7 2.8 Other income, net (3.6) 0.0 Income before provision for income taxes 22.1 28.1 Provision for income taxes 7.6 7.3 Net income $14.5 $20.8 used to calculate basic earnings per share 58.8 59.3 Basic earnings per share $0.25 $0.35 used to calculate diluted earnings per share 60.9 61.8 Diluted earnings per share $0.24 $0.34 Gross profit 58.1% 57.4% Selling, general and administrative expenses 33.6% 31.2% Research and development expenses 8.9% 9.5% Operating income 10.0% 19.0% Income before provision for income taxes 10.4% 17.3% Net income 6.8% 12.8% Effective tax rate 34.4% 26.0%
Unaudited Balance Sheets ASSETS March 31, December 31, 2003 2002 Current assets Cash and cash equivalents $29.8 $34.2 Accounts and other receivables 124.9 108.4 Inventories 116.3 111.8 Short-term deferred income taxes 29.2 27.6 Other current assets 50.9 44.4 Total current assets 351.1 326.4 Property, plant and equipment 205.1 209.4 Goodwill 333.8 333.8 Other intangible assets 69.5 61.9 Investments in unconsolidated affiliates 23.2 23.5 Other assets 53.2 53.2 $1,035.9 $1,008.2 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities Accounts payable and accrued liabilities $189.6 $197.9 Long term debt 276.9 245.5 Other liabilities 26.4 25.4 Stockholders' equity Common stock 60.4 60.2 Additional contributed capital 416.0 412.0 Retained earnings 157.9 143.4 Accumulated other comprehensive (51.6) (44.7) Common stock in treasury, at cost (39.7) (31.5) Total stockholders' equity 543.0 539.4 $1,035.9 $1,008.2
The following tables reconcile GAAP results to the results stated in this press release that are not prepared in conformity with GAAP. These non-gaap results reflect the impact of the Japan Consolidation, FX and/or the in-process R&D charge. Management has determined that inclusion of these non-gaap results provides a more meaningful comparison of the Company's operating results for the periods presented and of ongoing operations. 1Q 2003 Unaudited Reconciliation of Consolidated Statement of Operations Non-Recurring Item GAAP Non-GAAP (in millions, except per share data) 1Q 2003 Jomed Charge 1Q 2003 Net sales $212.5 $212.5 Cost of goods sold 89.1 89.1 Gross profit 123.4 123.4 Selling, general and administrative expenses 71.4 71.4 Research and development expenses 19.0 19.0 Purchased in-process research and development expenses 11.8 $(11.8) 0.0 Operating income 21.2 11.8 33.0 Interest expense, net 2.7 2.7 Other income, net (3.6) (3.6) Income before provision for income taxes 22.1 11.8 33.9 Provision for income taxes 7.6 1.2 8.8 Net income $14.5 $10.6 $25.1 used to calculate basic earnings per share 58.8 58.8 Basic earnings per share $0.25 $0.18 $0.43 used to calculate diluted earnings per share 60.9 60.9 Diluted earnings per share $0.24 $0.17 $0.41 Gross profit 58.1% 58.1% Selling, general and administrative expenses 33.6% 33.6% Research and development expenses 8.9% 8.9% Operating income 10.0% 15.5% Income before provision for income taxes 10.4% 16.0% Net income 6.8% 11.8% Effective tax rate 34.4% 26.0%
1Q 2002 Unaudited Reconciliation of Consolidated Statement of Operations Pro Forma Adjustments GAAP Japan on a Non-GAAP (in millions, except per share data) 1Q 2002 Consolidated Basis 1Q 2002 Net sales $162.3 $22.7 $185.0 Cost of goods sold 69.1 8.5 77.6 Gross profit 93.2 14.2 107.4 Selling, general and administrative expenses 50.7 9.9 60.6 Research and development expenses 15.4 0.7 16.1 Other operating income (3.8) 3.8 0.0 Operating income 30.9 (0.2) 30.7 Interest expense, net 2.8 0.3 3.1 Other income, net 0.0 (0.3) (0.3) Income before provision for income taxes 28.1 (0.1) 28.0 Provision for income taxes 7.3 0.0 7.3 Net income $20.8 $(0.1) $20.7 used to calculate basic earnings per share 59.3 59.3 Basic earnings per share $0.35 $0.00 $0.35 used to calculate diluted earnings per share 61.8 61.8 Diluted earnings per share $0.34 $0.00 $0.34 Gross profit 57.4% 58.0% Selling, general and administrative expenses 31.2% 32.7% Research and development expenses 9.5% 8.7% Operating income 19.0% 16.6% Income before provision for income taxes 17.3% 15.1% Net income 12.8% 11.2% Effective tax rate 26.0% 26.0%
Unaudited Reconciliation of Sales by Product Line and Region (in millions) Growth Rate Adjustments Sales by Product Line 1Q 2002 1Q 2003 GAAP Growth Rate Japan Consolidation Foreign Exchange Underlying Growth Rate Cardiac Surgery $87.7 $107.4 22.4% 2.9% 5.3% 14.2% Critical Care 52.6 66.4 26.2% 11.6% 7.3% 7.4% Vascular 11.8 13.8 17.2% 6.1% 6.9% 4.2% Perfusion 9.5 13.7 44.4% 46.9% 4.1% (6.6%) Other Distributed Products 0.7 11.2 NM NM 9.7% (5.4%) Total Sales $162.3 $212.5 31.0% 16.1% 6.4% 8.5% Sales by Region 1Q 2003 United States $ 97.0 Europe 47.2 Japan 49.1 Rest of World 19.2 International 115.5 Total $ 212.5 Note: Percentages are based on actuals before rounding.