Apr 23, 2001
Guidant Notifies Physicians of Defibrillators Switching into Built-in Safety Mode

Field Action Results in One-Time Charge to First Quarter Earnings

Indianapolis, IN, and St. Paul, MN - Guidant Corporation (NYSE and PCX: GDT), a global leader in cardiac and vascular technology, has informed physicians of an issue that can cause some first-generation VENTAK® PRIZM(tm) and VENTAK PRIZM HE implantable cardioverter defibrillators (ICDs) to switch to a built-in safe mode.

A subset of the first-generation PRIZM and PRIZM HE ICDs can switch to Safety Mode because of a rare interaction between the device and a specific memory component. All of these devices continue to deliver lifesaving therapy - full-output shock delivery to treat dangerous tachyarrhythmias, as well as single-chamber pacing to treat slow heart rhythms.

"Patient safety is always our highest priority. We incorporated this important safety feature into all our PRIZM ICDs to provide lifesaving therapy following internal and external factors that could affect device function," said Fred McCoy, president, cardiac rhythm management, Guidant Corporation. "Because lifesaving therapy remains available, physicians can feel confident following their patients in the normal fashion."

Forty-four ICDs (0.3 percent) have switched to Safety Mode because of the component interaction. To prevent the inconvenience of future occurrences, Guidant has taken steps to ensure that all field inventory of devices that contain this memory component are returned to the company. The company will take a special charge to first quarter earnings of $14 million to cover expenses associated with this action.

Guidant's PRIZM 2 ICDs, introduced in late 2000, are unaffected by this action.

The company is working on a software solution designed to non-invasively return full functionality to any implanted device affected by the component interaction. This software will be available upon approval by regulatory agencies.

"We are fortunate to be in a strong supply position with PRIZM 2 while we rebuild our overall ICD inventory levels," McCoy said. "The PRIZM family of ICDs has earned a high level of satisfaction from physicians and patients alike. We at Guidant continue to earn physician and patient confidence through forthright communication in pursuit of the highest level of product quality and patient safety."

Conference Call and Webcast

Guidant will conduct a conference call regarding this matter today, Monday, April 23, at 3 p.m. Eastern Time. A live webcast of Guidant's conference call will be accessible to all investors through Guidant's website or at StreetFusion.com. The webcast will be archived on both websites for future on-demand replay.

In addition, as previously announced, Guidant will issue a press release today after the market closes detailing its first quarter 2001 earnings. The company will conduct, as also announced, a live webcast of its first quarter 2001 earnings conference call at 5 p.m. (EST) today.

System requirements for both webcasts include Internet Explorer 5.0 (or higher) or Netscape Navigator 4.0 (or higher). Users also should have the most recent version of Windows Media Player, which can be downloaded for free. Users may experience varying levels of performance based on their connection speed, system capabilities and presence of a corporate firewall. To ensure a connection, users should go to the program five to 15 minutes before its start.

A global leader in the medical technology industry, Guidant Corporation provides innovative, minimally invasive and cost-effective products and services for the treatment of cardiovascular and vascular disease.