Sunday, December 21, 2014 Last update: 8:33 AM
FreshNews.com - Covering Large & Obscure Tech Companies Since 1996

Edwards Lifesciences Reports Strong Second Quarter Results

Companies mentioned in this article: Edwards Lifesciences Corporation

IRVINE, Calif., July 29, 2014 /PRNewswire/ -- Edwards Lifesciences Corporation (NYSE: EW), the global leader in the science of heart valves and hemodynamic monitoring, today reported net income for the quarter ended June 30, 2014 of $547.0 million, or $5.09 per diluted share, and non-GAAP net income of $94.0 million, or $0.88 per diluted share. Net income for the same period a year earlier was $93.3 million, or $0.81 per diluted share, and non-GAAP net income was $96.7 million, or $0.84 per diluted share.

http://photos.prnewswire.com/prnvar/20140714/126903

Net sales for the quarter ended June 30, 2014 increased 11.2 percent to $575.1 million compared to the same period last year. Underlying(1) sales grew 10.5 percent. U.S. and international segment sales for the second quarter were $242.0 million and $333.1 million, respectively.

"While our litigation settlement provided a large financial gain this quarter, we are particularly pleased that our sales were better than expected across all product lines, which drove strong bottom line results," said Michael A. Mussallem, chairman and CEO. "Even as TAVR competition intensifies, with the increasing adoption of this therapy around the globe, we believe we are poised for continued strong sales growth in the second half of 2014."

Sales Results

For the second quarter, the company reported sales of transcatheter heart valves (THV) of $219.7 million, a 20.6 percent growth rate over the second quarter last year. On an underlying basis, THV sales grew 18.8 percent. These results were driven once again by strong sales outside the U.S., which grew by 45.1 percent, or 34.7 percent on an underlying basis due to strong growth in Europe and the SAPIEN XT launch in Japan.

"In Europe, adoption of transcatheter valve therapy continues to be quite strong and we believe we gained share with SAPIEN 3," said Mussallem. "Representing more than half of our European THV sales, SAPIEN 3 is being very well received by clinicians who appreciate its best-in-class low profile and paravalvular leak solution.

"The launch of SAPIEN XT in the U.S., which just got underway in June, enables treatment of an even broader group of patients, while helping to reinforce our leadership position in that growing region," continued Mussallem. "Procedures with Edwards' transcatheter valves in the U.S. increased sequentially, as well as compared to a year ago."

Surgical Heart Valve Therapy product group sales for the quarter were $214.0 million. Sales increased 4.8 percent over the second quarter last year, or 4.3 percent on an underlying basis. Surgical heart valve sales growth was driven by growth across all regions and was partially offset by a small price decline due primarily to regional mix. Premium valves drove stronger growth in both mitral and aortic units.

Critical Care product group sales were $141.4 million for the quarter, representing an increase of 8.1 percent, or 8.5 percent on an underlying basis. Growth was driven by a double digit increase in enhanced surgical recovery product sales, aided by the recent introduction of the ClearSight noninvasive monitoring system.

Additional Operating Results

For the quarter, Edwards' gross profit margin was 73.7 percent, compared to 76.1 percent in the same period last year. This reduction was driven principally by a negative impact from foreign exchange, as well as the smaller impact of the write-off of SAPIEN valves in the U.S. in connection with the company's SAPIEN XT launch.

Selling, general and administrative expenses were $215.5 million for the quarter, or 37.5 percent of sales, compared to $186.6 million in the same period last year. The largest component of the increase was transcatheter valve launch-related expenses.

Research and development investments for the quarter were $89.1 million, or 15.5 percent of sales, compared to $80.5 million in the prior year period. Heart valve clinical studies continue to be one of the largest drivers of the 10.7 percent increase.

Free cash flow for the quarter was $762.0 million, which included proceeds from the recent litigation settlement. Free cash flow is defined as cash flow from operating activities of $778.0 million, less capital spending of $16.0 million.

Cash, cash equivalents and short-term investments totaled $1.48 billion at June 30, 2014. Total debt was $598.0 million.

Six-Month Results

For the six months ended June 30, 2014, the company recorded net income of $607.3 million, or $5.63 per diluted share, compared to $237.2 million, or $2.05 per diluted share, for the same period in 2013. Net income growth for the six months was 156.0 percent and diluted earnings per share increased 174.6 percent over last year, or 2.5 percent excluding special items in both periods.

Net sales for the first six months of 2014 increased 8.2 percent to $1.1 billion. Sales growth was 9.2 percent on an underlying basis.

U.S. and international segment sales for the first six months of 2014 were $464.4 million and $633.1 million, respectively.

During the first six months of 2014, the company repurchased approximately 4.4 million shares of common stock for $300.6 million.

Adjustments to GAAP Results

During the quarter, the company recorded four adjustments that provided a $4.21 net benefit to its GAAP EPS, but which are excluded from its non-GAAP EPS:

    --  a special net pre-tax gain of $747.4 million related to the previously
        announced global litigation settlement,
    --  a special charge of $50.0 million for a contribution to the Edwards
        Lifesciences Foundation,
    --  a benefit of $6.2 million resulting from the release of tax reserves,
        and
    --  a $6.1 million reduction to pretax earnings related to the THV sales
        return reserve.

Share Repurchase Authorization

In July, the company's board of directors authorized a new share repurchase program to acquire up to an additional $750 million of the company's outstanding common shares. This supplements the approximately $200 million remaining of its current share repurchase program, as of June 30, 2014.

Clinical Leader to Join Edwards

Edwards also announced today that it has appointed Dr. Martyn Thomas to the newly created position of vice president of medical affairs for transcatheter heart valves. He is currently the clinical director of cardiovascular services at St. Thomas' Hospital in London and a global leader in transcatheter heart valve research.

Outlook

The company now expects full year 2014 total sales at the high end of its previous $2.05 billion to $2.25 billion range. The company also raised its guidance for full year 2014 diluted earnings per share, excluding special items, to a range of $3.24 to $3.34. For the third quarter of 2014, the company projects total sales to be between $530 million and $570 million, and diluted earnings per share, excluding special items, to be between $0.66 and $0.72.

"As we reflect on our first half results, we are very pleased with the performance we have achieved across all of our product lines and believe our future remains bright," said Mussallem. "Overall, we are confident in our outlook for continued strong organic sales growth, reflecting our focused innovation strategy, and our commitment to helping patients."

About Edwards Lifesciences

Edwards Lifesciences is the global leader in the science of heart valves and hemodynamic monitoring. Driven by a passion to help patients, the company partners with clinicians to develop innovative technologies in the areas of structural heart disease and critical care monitoring enabling them to save and enhance lives. Additional company information can be found at www.edwards.com.

Conference Call and Webcast Information

Edwards Lifesciences will be hosting a conference call today at 2:00 p.m. PT to discuss its second quarter results. To participate in the conference call, dial (877) 407-8037 or (201) 689-8037. For 72 hours following the call, an audio replay can be accessed by dialing (877) 660-6853 or (201) 612-7415 and using conference number 13585946. The call will also be available via live or archived webcast on the "Investor Relations" section of the Edwards web site at ir.edwards.com or www.edwards.com. A live stream and archived replay can also be accessed via mobile devices by downloading Edwards' IR App for iPhone and iPad or Android.

This news release includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These forward-looking statements can sometimes be identified by the use of words such as "may," "will," "should," "anticipate," "believe," "plan," "project," "estimate," "expect," "intend," "guidance," "outlook," "optimistic," "aspire," "confident" or other forms of these words or similar expressions and include, but are not limited to, statements made by Mr. Mussallem, information in the Outlook section, the company's financial goals, and expectations for new product launches. Forward-looking statements are based on estimates and assumptions made by management of the company and are believed to be reasonable, though they are inherently uncertain and difficult to predict. Our forward-looking statements speak only as of the date on which they are made and we do not undertake any obligation to update any forward-looking statement to reflect events or circumstances after the date of the statement. If the company does update or correct one or more of these statements, investors and others should not conclude that the company will make additional updates or corrections.

Forward-looking statements involve risks and uncertainties that could cause actual results or experience to differ materially from that expressed or implied by the forward-looking statements. Factors that could cause actual results or experience to differ materially from that expressed or implied by the forward-looking statements include uncertainties associated with the launches of new products, competitive dynamics, the timing and extent of regulatory approvals, expanded indications and reimbursement levels for our products; the company's success in developing new products, creating opportunities for its products and avoiding manufacturing and quality issues; the impact of currency exchange rates; the timing or results of pending or future clinical trials; actions by the U.S. Food and Drug Administration and other regulatory agencies; economic developments in key markets; unexpected litigation results or expenses; and other risks detailed in the company's filings with the Securities and Exchange Commission, including its Annual Report on Form 10-K for the year ended December 31, 2013, which are available at edwards.com.

To supplement the consolidated financial results prepared in accordance with Generally Accepted Accounting Principles ("GAAP"), the company uses non-GAAP historical financial measures. The company uses the term "underlying" when referring to non-GAAP sales information, which excludes foreign exchange fluctuations, as well as adjustments for discontinued and acquired products and sales reserves associated with THV product upgrades, and "excluding special items" to also exclude gains and losses from special items such as significant investments, litigation, and business development transactions, and for 2012 to include the tax benefit for the U.S. R&D tax credit, which was required to be recorded in 2013. Those results that exclude the impact of foreign exchange and reflect "constant currency" are also non-GAAP financial measures. Guidance for sales and sales growth rates is provided on an "underlying" basis, and projections for diluted earnings per share are also provided on the same non-GAAP (or "excluding special items") basis due to the inherent difficulty in forecasting such items. Management does not consider the excluded items or adjustments as part of day-to-day business or reflective of the core operational activities of the company as they result from transactions outside the ordinary course of business. Management uses non-GAAP financial measures internally for strategic decision making, forecasting future results and evaluating current performance. By disclosing non-GAAP financial measures, management intends to provide investors with a more meaningful, consistent comparison of the company's core operating results and trends for the periods presented. These non-GAAP financial measures are used in addition to and in conjunction with results presented in accordance with GAAP and reflect an additional way of viewing aspects of the company's operations that, when viewed with its GAAP results, provide a more complete understanding of factors and trends affecting the company's business. These non-GAAP measures should be considered as a supplement to, and not as a substitute for, or superior to, the corresponding measures calculated in accordance with generally accepted accounting principles. Non-GAAP financial measures are not prepared in accordance with GAAP; therefore, the information is not necessarily comparable to other companies. A reconciliation of non-GAAP historical financial measures to the most comparable GAAP measure is provided in the tables below. The company is not able to provide a reconciliation of projected net income and projected earnings per share guidance, excluding special items, to expected reported results due to the unknown effect, timing and potential significance of special charges or gains, and management's inability to forecast charges associated with future transactions and initiatives.

Edwards, Edwards Lifesciences, the stylized E logo, SAPIEN, SAPIEN XT, and SAPIEN 3 are trademarks of Edwards Lifesciences Corporation. All other trademarks are the property of their respective owners.

[1] "Underlying" amounts are non-GAAP items and in this press release exclude foreign exchange fluctuations and the THV sales return reserve. See the reconciliation tables below.



    EDWARDS LIFESCIENCES
     CORPORATION

    Unaudited Consolidated
     Statements of
     Operations

    (in millions, except per
     share data)                  Three Months Ended           Six Months Ended

                                       June 30,                    June 30,
                                       --------                    --------

                                                   2014   2013                      2014     2013
                                                   ----   ----                      ----     ----


    Net sales                                    $575.1 $517.2                  $1,097.5 $1,013.9

    Cost of sales                                 151.2  123.6                     297.1    244.6
    -------------                                 -----  -----                     -----    -----


    Gross profit                                  423.9  393.6                     800.4    769.3


    Selling, general and
     administrative expenses                      215.5  186.6                     412.7    369.0

    Research and development
     expenses                                      89.1   80.5                     174.9    160.3

    Intellectual property
     litigation (income)
     expense, net                               (747.4)   5.5                   (741.9)  (72.6)

    Special charges                                50.0      -                     57.5        -

    Interest expense, net                           3.1    0.4                       6.6      0.2

    Other expense, net                              0.4    0.1                       0.1      1.3
    ------------------                              ---    ---                       ---      ---


    Income before provision
     for income taxes                             813.2  120.5                     890.5    311.1


    Provision for income
     taxes                                        266.2   27.2                     283.2     73.9
    --------------------                          -----   ----                     -----     ----


    Net income                                   $547.0  $93.3                    $607.3   $237.2
    ==========                                   ======  =====                    ======   ======


    Earnings per share:
    -------------------

         Basic                                    $5.18  $0.83                     $5.72    $2.09

         Diluted                                  $5.09  $0.81                     $5.63    $2.05


    Weighted-average common
     shares outstanding:
    -----------------------

         Basic                                    105.6  112.6                     106.1    113.3

         Diluted                                  107.4  114.7                     107.9    115.6


    Operating Statistics
    --------------------

    As a percentage of net
     sales:

         Gross profit                             73.7% 76.1%                    72.9%   75.9%

         Selling, general and
          administrative expenses                 37.5% 36.1%                    37.6%   36.4%

         Research and development
          expenses                                15.5% 15.6%                    15.9%   15.8%

         Income before provision
          for income taxes                       141.4% 23.3%                    81.1%   30.7%

         Net income                               95.1% 18.0%                    55.3%   23.4%


    Effective tax rate                            32.7% 22.6%                    31.8%   23.8%
    ------------------                             ----   ----                      ----     ----


    Note:  Effective January 1, 2014, the Company changed its method
     of accounting for certain intellectual property litigation
     expenses.  The Company has retrospectively adjusted the
     comparative financial statements of prior periods to apply this
     new method of accounting.  To make historical comparisons
     clearer, the Company has included a schedule on its website (see
     ir.edwards.com/results.cfm) detailing the impact of this change
     on its 2009-2013 Consolidated Balance Sheets and Statements of
     Operations.


    Note: Numbers may not calculate due to rounding.



    EDWARDS LIFESCIENCES
     CORPORATION

    Unaudited Balance Sheets

    (in millions)

                                    June 30,          December 31,

                                                 2014                  2013
                                                 ----                  ----

    ASSETS


    Current assets

    Cash and cash equivalents                  $498.6                $420.4

    Short-term investments                      985.5                 516.5

    Accounts and other receivables,
     net                                        327.5                 328.0

    Inventories, net                            317.1                 308.9

    Deferred income taxes                        42.8                  33.4

    Prepaid expenses                             46.3                  46.8

    Other current assets                         60.3                  71.8
                                                 ----                  ----

         Total current assets                 2,278.1               1,725.8


    Long-term accounts receivable,
     net                                          7.6                   7.3

    Long-term investments                        99.0                  21.9

    Property, plant and equipment,
     net                                        422.5                 421.6

    Goodwill                                    384.3                 385.4

    Other intangible assets, net                 29.5                  33.5

    Deferred income taxes                        69.9                  79.0

    Other assets                                 35.7                  35.4
                                                 ----                  ----


         Total assets                        $3,326.6              $2,709.9
                                             ========              ========


    LIABILITIES AND STOCKHOLDERS'
     EQUITY


    Current liabilities

    Accounts payable and accrued
     liabilities                               $540.5                $345.6
                                               ------                ------


    Long-term debt                              598.0                 593.1
                                                -----                 -----

    Other long-term liabilities                 273.2                 226.8
                                                -----                 -----


    Stockholders' equity

    Common stock                                127.1                 126.0

    Additional paid-in capital                  747.4                 671.2

    Retained earnings                         2,638.1               2,030.8

    Accumulated other comprehensive
     loss                                      (41.1)               (27.6)

    Treasury stock, at cost                 (1,556.6)            (1,256.0)
                                             --------              --------

         Total stockholders' equity           1,914.9               1,544.4
                                              -------               -------


    Total liabilities and
     stockholders' equity                    $3,326.6              $2,709.9
                                             ========              ========


    Note:  Effective January 1, 2014, the Company changed its method
     of accounting for certain intellectual property litigation
     expenses.  The Company has retrospectively adjusted the
     comparative financial statements of prior periods to apply this
     new method of accounting.  To make historical comparisons
     clearer, the Company has included a schedule on its website (see
     ir.edwards.com/results.cfm) detailing the impact of this change
     on its 2009-2013 Consolidated Balance Sheets and Statements of
     Operations.


    EDWARDS LIFESCIENCES CORPORATION

    Non-GAAP Financial Information


    To supplement the consolidated financial
     results prepared in accordance with
     Generally Accepted Accounting
     Principles ("GAAP"), the Company uses
     non-GAAP historical financial
     measures.   The Company uses the term
     "underlying" when referring to non-
     GAAP sales information, which excludes
     foreign exchange fluctuations, as well
     as adjustments for discontinued and
     acquired products and sales reserves
     associated with transcatheter heart
     valve ("THV") product upgrades, and
     "excluding special items" to also
     exclude gains and losses from special
     items such as significant investments,
     litigation, and business development
     transactions, and for 2012 to include
     the tax benefit for the U.S. Research
     and Development ("R&D") tax credit,
     which was required to be included in
     2013.  Those results that exclude the
     impact of foreign exchange and reflect
     "constant currency" are also non-GAAP
     financial measures.  Guidance for sales
     and sales growth rates is provided on
     an "underlying basis," and projections
     for diluted earnings per share, net
     income and growth, gross profit margin,
     taxes and free cash flow are also
     provided on the same non-GAAP (or
     "excluding special items") basis due to
     the inherent difficulty in forecasting
     such items.  Management does not
     consider the excluded items or
     adjustments as part of day-to-day
     business or reflective of the core
     operational activities of the Company
     as they result from transactions
     outside the ordinary course of
     business.


    Management uses non-GAAP financial
     measures internally for strategic
     decision making, forecasting future
     results and evaluating current
     performance.  By disclosing non-GAAP
     financial measures, management intends
     to provide investors with a more
     meaningful, consistent comparison of
     the Company's core operating results
     and trends for the periods presented.
     These non-GAAP financial measures are
     used in addition to and in conjunction
     with results presented in accordance
     with GAAP and reflect an additional way
     of viewing aspects of the Company's
     operations that, when viewed with its
     GAAP results, provide a more complete
     understanding of factors and trends
     affecting the Company's business. These
     non-GAAP measures should be considered
     as a supplement to, and not as a
     substitute for, or superior to, the
     corresponding measures calculated in
     accordance with GAAP.


    Non-GAAP financial measures are not
     prepared in accordance with GAAP;
     therefore, the information is not
     necessarily comparable to other
     companies. A reconciliation of non-
     GAAP historical financial measures to
     the most comparable GAAP measure is
     provided in the tables below.  The
     Company is not able to provide a
     reconciliation of projected net income
     and growth, free cash flow, and
     projected earnings per share guidance,
     excluding special items, to expected
     reported results due to the unknown
     effect, timing and potential
     significance of special charges or
     gains, and management's inability to
     forecast charges associated with future
     transactions and initiatives.




    The items described below are
     adjustments to the GAAP financial
     results in the reconciliations that
     follow:
    ------------------------------------


    Given the magnitude and unusual nature
     of these special items relative to the
     operating results for the periods
     presented, these items below have been
     excluded in non-GAAP net income and
     earnings per share.


    THV Sales Return Reserve and Related
     Costs -In the first and second
     quarters of 2014, the Company recorded
     a sales return reserve and related
     costs, primarily related to inventory
     reserves, of $15.6 million and $6.1
     million, respectively, related to
     estimated THV product returns expected
     upon introduction of next generation
     THV products.


    Intellectual Property Litigation
     (Income) Expense, net -The Company
     incurred intellectual property
     litigation expenses of $5.5 million and
     $5.5 million in the first quarter of
     2014 and 2013, respectively, and $2.6
     million and $5.5 million in the second
     quarter of 2014 and 2013, respectively.
      In addition, in the second quarter of
      2014, the Company recorded a $750.0
     million gain related to an agreement
     with Medtronic to settle all
     outstanding patent litigation.  In the
     first quarter of 2013, the Company
     recorded an $83.6 million gain related
     to the April 2010 jury award from
     Medtronic of damages for infringement
     of the U.S. Andersen transcatheter
     heart valve patent.


    Special Charges -The Company recorded a
     $7.5 million special charge in the
     first quarter of 2014 to settle past
     and future obligations related to one
     of its intellectual property
     agreements.  The Company recorded a
     $50.0 million charge in the second
     quarter of 2014 for a charitable
     contribution to the Edwards
     Lifesciences Foundation.


    Provision for Income Taxes - During the
     second quarter of 2014, the Company
     recorded a $6.2 million tax benefit due
     to the remeasurement of its uncertain
     tax positions.  During the first
     quarter of 2013, the Company recorded
     an $8.4 million income tax benefit
     relating to the federal R&D tax credit
     that was extended in 2013 retroactive
     to the beginning of 2012.


    Foreign Exchange -Fluctuation in
     exchange rates impacts the comparative
     results and sales growth rates of the
     Company's underlying business.
     Management believes that excluding the
     impact of foreign exchange rate
     fluctuations from its sales growth
     provides investors a more meaningful
     comparison to historical financial
     results. The impact of foreign exchange
     rate fluctuations has been detailed in
     the "Unaudited Reconciliation of Sales
     by Segments and Product Group."


    Free Cash Flow -The Company defines
     free cash flow as cash flows from
     operating activites less capital
     expenditures.  During 2014, the Company
     also excluded the impacts of the
     payment from Medtronic for the
     litigation settlement and its
     contribution to the Edwards
     Lifesciences Foundation from its
     calculation of free cash flow.  During
     2013, the Company excluded the impact
     of another payment from Medtronic
     related to litigation.  Management
     believes that excluding the impact of
     these items from its calculation of
     free cash flow provides investors a
     more meaningful comparison to
     historical financial results.


    EDWARDS LIFESCIENCES CORPORATION

    Unaudited Reconciliation of GAAP to Non-GAAP Financial Information


    RECONCILIATION OF GAAP TO NON-GAAP NET INCOME
    ---------------------------------------------

                                                                                                                   Three Months Ended           Six Months Ended

                                                                                                                        June 30,                  June 30,
                                                                                                                        --------                  --------

    (in millions, except per share data)                                                                                         2014    2013                   2014      2013
    -----------------------------------                                                                                          ----    ----                   ----      ----


    GAAP Net Income                                                                                                            $547.0   $93.3                 $607.3    $237.2

                                                                                                     Growth Rate %              486.3%                       156.0%


    Non-GAAP adjustments:  (A)
    -------------------------


    THV sales return reserve and related
     costs                                                                                                                        6.1       -                  21.7         -

    Intellectual property litigation
     (income) expense, net                                                                                                    (747.4)    5.5                (741.9)   (72.6)

    Special charges                                                                                                              50.0       -                  57.5         -


    Provision for income taxes

                                                                       Tax effect on reconciling items(B)                         244.5   (2.1)                 237.7      27.2

                                                                       Remeasurement of uncertain tax position
                                                                        reserve(A)                                                (6.2)      -                 (6.2)        -

                                                                       Federal research and development tax
                                                                        credit(A)                                                     -      -                     -    (8.4)


    Non-GAAP Net Income                                                                                                         $94.0   $96.7                 $176.1    $183.4
    ===================                                                                                                         =====   =====                 ======    ======

                                                                                                     Growth Rate %              (2.8%)                       (4.0%)




    RECONCILIATION OF GAAP TO NON-GAAP DILUTED EARNINGS PER SHARE
    -------------------------------------------------------------


    GAAP Diluted Earnings Per Share                                                                                             $5.09   $0.81                  $5.63     $2.05

                                                                                                     Growth Rate %              528.4%                       174.6%


    Non-GAAP adjustments: (A), (C)
    -----------------------------


    THV sales return reserve and related
     costs                                                                                                                       0.03       -                  0.14         -

    Intellectual property litigation
     (income) expense, net                                                                                                     (4.51)   0.03                 (4.47)   (0.39)

    Special charges                                                                                                              0.33       -                  0.39         -


    Provision for income taxes

                                                                       Remeasurement of uncertain tax position
                                                                        reserve                                                  (0.06)      -                (0.06)        -

                                                                       Federal research and development tax credit                    -      -                     -   (0.07)


    Non-GAAP Diluted Earnings Per Share                                                                                         $0.88   $0.84                  $1.63     $1.59
    ===================================                                                                                         =====   =====                  =====     =====

                                                                                                     Growth Rate %                4.8%                         2.5%


    Note: Numbers may not calculate due
     to rounding.


    (A)  See description of
     "Transcatheter Heart Valve ("THV")
     Sales Return Reserve and Related
     Costs," "Intellectual Property
     Litigation (Income) Expense, net,"
     "Special Charges," and "Provision
     for Income Taxes" on the Non-GAAP
     Financial Information page.

    (B)  The tax effect on non-GAAP
     adjustments is calculated based upon
     the impact of the relevant tax
     jurisdictions' statutory tax rates
     on the Company's estimated annual
     effective tax rate, or discrete rate
     in the quarter, as applicable.

    (C)  All amounts are tax effected,
     calculated based upon the impact of
     the relevant tax jurisdictions'
     statutory tax rates on the Company's
     estimated annual effective tax rate,
     or discrete rate in the quarter, as
     applicable.



    EDWARDS LIFESCIENCES CORPORATION

    Unaudited Reconciliation of GAAP to Non-GAAP Financial Information


    RECONCILIATION OF GAAP OPERATING CASH FLOW TO NON-GAAP FREE CASH FLOW
    ---------------------------------------------------------------------



                                                 Three Months Ended               Six Months Ended

                                                      June 30,                        June 30,
                                                      --------                        --------

    (in millions, except per
     share data)                                                 2014        2013                       2014      2013
    ------------------------                                     ----        ----                       ----      ----


    Net cash provided by
     operating activities                                      $778.0      $128.1                     $916.9    $229.2


    Medtronic litigation
     settlement, net of
     taxes paid                                               (738.6)          -                   (738.6)        -

    Capital expenditures                                       (16.0)     (29.5)                    (30.3)   (66.3)

    Charitable foundation
     contribution                                                50.0           -                      50.0         -

    Medtronic litigation
     award                                                          -          -                         -   (57.3)


    Non-GAAP Free Cash Flow                                     $73.4       $98.6                     $198.0    $105.6
    =======================                                     =====       =====                     ======    ======


    Note: Numbers may not
     calculate due to rounding.


    (A)  See description of "Free
     Cash Flow" on the Non-GAAP
     Financial Information page.



    EDWARDS LIFESCIENCES CORPORATION

    Unaudited Reconciliation of GAAP to Non-GAAP
     Tax Rate


    RECONCILIATION OF GAAP TO NON-GAAP TAX RATE
    -------------------------------------------


                                                 Three Months Ended   Six Months Ended

                                                    June 30, 2014       June 30, 2014
                                                    -------------       -------------


    GAAP Tax Rate                                               32.7%               31.8%


    Non-GAAP adjustments:  (A)
    -------------------------


    Intellectual property
     litigation (income)
     expense, net                                    (10.0) pts           (9.3) pts

    Special charges                                   (0.1) pts           (0.2) pts

    Remeasurement of
     uncertain tax
     position reserve                                  0.3 pts             0.4 pts


    Non-GAAP Tax Rate                                           22.9%               22.7%
    =================                                            ====                 ====


    (A)   See description of
     "Intellectual Property
     Litigation (Income) Expense,
     net," "Special Charges," and
     "Provision for Income Taxes"
     on the Non-GAAP Financial
     Information page.


    EDWARDS LIFESCIENCES CORPORATION

    Unaudited Reconciliation of Sales by Segments and Product Group

    ($ in millions)

                                                                                                                                 2014 Adjusted         2013 Adjusted
                                                                                                                                 -------------         -------------

    Sales by Product Group
     (QTD)                                               2Q 2014             2Q 2013          Change            GAAP              Sales Return            2Q 2014               FX Impact                 2Q 2013                 Underlying
                                                                                                            Growth Rate*            Reserve              Underlying                                      Underlying              Growth Rate *
                                                                                                                                                           Sales                                           Sales
    ---                                                                                                                                                    -----                                           -----

    Transcatheter Heart
     Valves                                                           $219.7           $182.1         $37.6                20.6%                 $2.0                   $221.7                    $4.4                   $186.5                    18.8%

    Surgical Heart Valve
     Therapy                                                           214.0            204.3           9.7                 4.8%                    -                   214.0                     0.9                    205.2                     4.3%

    Critical Care                                                      141.4            130.8          10.6                 8.1%                    -                   141.4                   (0.5)                   130.3                     8.5%
    -------------                                                      -----            -----          ----                  ---                   ---                   -----                    ----                    -----                      ---

    Total Sales                                                       $575.1           $517.2         $57.9                11.2%                 $2.0                   $577.1                    $4.8                   $522.0                    10.5%
    -----------                                                       ------           ------         -----                 ----                  ----                   ------                    ----                   ------                     ----


                                                                                                                                 2014 Adjusted         2013 Adjusted
                                                                                                                                 -------------         -------------

    Sales by Product Group
     (YTD)                                                YTD 2Q             YTD 2Q           Change            GAAP              Sales Return          YTD 2Q 2014             FX Impact               YTD 2Q 2013               Underlying
                                                                        2014             2013                 Growth Rate*            Reserve              Underlying                                      Underlying              Growth Rate *
                                                                                                                                                           Sales                                           Sales
    ---                                                                                                                                                    -----                                           -----

    Transcatheter Heart
     Valves                                                           $408.9           $351.8         $57.1                16.2%                 $8.1                   $417.0                    $6.0                   $357.8                    16.5%

    Surgical Heart Valve
     Therapy                                                           416.6            402.4          14.2                 3.6%                    -                   416.6                   (2.9)                   399.5                     4.3%

    Critical Care                                                      272.0            259.7          12.3                 4.7%                    -                   272.0                   (4.5)                   255.2                     6.6%
    -------------                                                      -----            -----          ----                  ---                   ---                   -----                    ----                    -----                      ---

    Total Sales                                                     $1,097.5         $1,013.9         $83.6                 8.2%                 $8.1                 $1,105.6                  $(1.4)                $1,012.5                     9.2%
    -----------                                                     --------         --------         -----                  ---                  ----                 --------                   -----                 --------                      ---


                                                                                                                                 2014 Adjusted         2013 Adjusted
                                                                                                                                 -------------         -------------

    Sales by Segments
     (QTD)                                               2Q 2014             2Q 2013          Change            GAAP              Sales Return            2Q 2014               FX Impact                 2Q 2013                 Underlying
                                                                                                            Growth Rate*            Reserve              Underlying                                      Underlying              Growth Rate *
                                                                                                                                                           Sales                                           Sales
    ---                                                                                                                                                    -----                                           -----

    United States                                                     $242.0           $240.5          $1.5                 0.6%                 $5.9                   $247.9             $         -                  $240.5                     3.0%
    -------------                                                     ------           ------          ----                  ---                  ----                   ------             -----------                  ------                      ---

         Europe                                                        193.8            155.3          38.5                24.8%                (3.9)                   189.9                    10.0                    165.3                    14.9%

         Japan                                                          66.7             59.3           7.4                12.4%                    -                    66.7                   (2.2)                    57.1                    16.8%

         Rest of World                                                  72.6             62.1          10.5                17.0%                    -                    72.6                   (3.0)                    59.1                    22.8%
                                                                        ----             ----                                                    ---                    ----                    ----                     ----

    International                                                      333.1            276.7          56.4                20.4%                (3.9)                   329.2                     4.8                    281.5                    16.9%
    -------------                                                      -----            -----          ----                 ----                  ----                    -----                     ---                    -----                     ----

    Total                                                             $575.1           $517.2         $57.9                11.2%                 $2.0                   $577.1                    $4.8                   $522.0                    10.5%
    -----                                                             ------           ------         -----                 ----                  ----                   ------                    ----                   ------                     ----


                                                                                                                                 2014 Adjusted         2013 Adjusted
                                                                                                                                 -------------         -------------

    Sales by Segments
     (YTD)                                                YTD 2Q             YTD 2Q           Change            GAAP              Sales Return          YTD 2Q 2014             FX Impact               YTD 2Q 2013               Underlying
                                                                        2014             2013                 Growth Rate*            Reserve              Underlying                                      Underlying              Growth Rate *
                                                                                                                                                           Sales                                           Sales
    ---                                                                                                                                                    -----                                           -----

    United States                                                     $464.4           $468.4        $(4.0)              (0.9%)                $13.0                   $477.4             $         -                  $468.4                     1.9%
    -------------                                                     ------           ------         -----                -----                 -----                   ------             -----------                  ------                      ---

         Europe                                                        374.1            309.8          64.3                20.8%                (4.9)                   369.2                    15.0                    324.8                    13.7%

         Japan                                                         125.4            119.3           6.1                 5.1%                    -                   125.4                   (9.6)                   109.7                    14.3%

         Rest of World                                                 133.6            116.4          17.2                14.8%                    -                   133.6                   (6.8)                   109.6                    21.9%
                                                                       -----            -----                                                    ---                   -----                    ----                    -----

    International                                                      633.1            545.5          87.6                16.1%                (4.9)                   628.2                   (1.4)                   544.1                    15.4%
    -------------                                                      -----            -----          ----                 ----                  ----                    -----                    ----                    -----                     ----

    Total                                                           $1,097.5         $1,013.9         $83.6                 8.2%                 $8.1                 $1,105.6                  $(1.4)                $1,012.5                     9.2%
    -----                                                           --------         --------         -----                  ---                  ----                 --------                   -----                 --------                      ---


    * Numbers may not
     calculate due to
     rounding.

Logo - http://photos.prnewswire.com/prnh/20140714/126903

SOURCE Edwards Lifesciences Corporation