November 19, 2008 Exchange Rate Hurts Profit at Medtronic By THE ASSOCIATED PRESS Medtronic, the medical device maker, said Tuesday that legal expenses and declining foreign exchange rates weighed down its quarterly profit. The company was also hurt by lower-than-expected sales of pacemakers, spinal implants and other devices. Shares of Medtronic, which is based in Minneapolis, fell $4.82, or 13 percent, to $31.60. Earnings for the period, which ended Oct. 24 and was the second quarter of Medtronic.s fiscal year, fell 14 percent, to $571 million, or 51 cents a share, from $666 million, or 58 cents a share, in the period a year earlier. Sales rose 14 percent, to $3.57 billion from $3.12 billion. Eliminating $187 million in charges that resulted mainly from a patent dispute over stents with a rival, Johnson & Johnson, the company said it earned 67 cents a share. .Clearly, this was a tough quarter, and the environment is changed a bit,. the chief executive, Bill Hawkins, told analysts. .We have seen some things that we didn.t anticipate coming about in the last three months or six months.. Sales outside the United States rose 18 percent, to $1.37 billion, helped by a $65 million gain from the weaker dollar. But that gain from currency exchange rates fell by more than half compared with $150 million in the prior quarter. Medtronic now projects fiscal 2009 revenue of $14.6 billion to $15 billion, down from a previous forecast of $15 billion to $15.5 billion. Sales from the company.s largest unit, cardiac rhythm management, rose 8 percent, to $1.24 billion, mainly on increased sales of implantable defibrillators. But analysts focused on lower-than-expected pacemaker sales, which rose 2 percent, to $506 million. Sales at the company.s cardiovascular business grew by 22 percent, to $596 million. -- ------------------------------ * Dr. James Ellingson, jellings(a)me.umn.edu * * University of Minnesota, mobile : 651/645-0753 * * Great Lakes Brewing News, 1569 Laurel Ave., St. Paul, MN 55104 *