Jul 21, 2005
Guidant Reports All-Time Record Sales of $974 Million
Indianapolis, Ind. - Guidant Corporation (NYSE: GDT), a world leader in the treatment of cardiac and vascular disease, today reported second quarter sales of $974 million, representing sales growth of $35 million or 4 percent versus the prior year. Foreign currency translations favorably impacted revenue by $9 million compared to the prior year, and negatively impacted revenue by $12 million compared to the first quarter of 2005. Net income and earnings per share from continuing operations for the quarter were $116 million and $0.35 versus $136 million and $0.42 in the second quarter of 2004, down 14 and 17 percent. Please see the attached schedules and the Guidant website at www.guidant.com/investorseconciliations/ for additional information, including reconciliations of U.S. GAAP to as adjusted income and earnings per share, net cash reconciliations and product sales summaries reclassified for discontinued operations. Ronald W. Dollens, president and CEO of Guidant Corporation, commented, "Guidant''s second quarter revenue growth was supported by the reversal of the sales trend in the vascular intervention product lines and impressive strength in our emerging businesses. Our CRM product revenue was up only slightly due to the unavailability of the CONTAK RENEWAL 3 and 4 family of heart failure devices." Dollens continued, "Guidant is preparing to ship the CONTAK RENEWAL 3 and 4 family of heart failure devices in the current quarter contingent upon FDA approval. Future performance will be affected by the projected availability of these products in the current quarter. Longer term, the recent initiation of our SPIRIT II and SPIRIT III clinical trials will support the future launch of a new generation of drug eluting coronary stents." Regarding the company''s planned merger, Dollens noted, "We continue working with Johnson & Johnson management and are making timely progress toward the closing of the merger in the current quarter, including the previously completed shareholder approval, ongoing integration planning, and education around the product field actions." Second quarter net income and earnings per share also include the following items: Beginning in May, Guidant initiated physician communications related to some of its implantable defibrillators and pacemakers. The actions taken by the company over the last several weeks reflect our commitment to provide timely information to physicians and patients about our devices. Our products continue to demonstrate extremely high performance and reliability while saving and improving the lives of millions of patients. Guidant is working closely with FDA and will continue to work to meet and exceed the expectations of physicians, patients and the FDA. After further testing and evaluation during the past few weeks of one of these families of products, CONTAK RENEWAL 3 and 4 cardiac resynchronization therapy defibrillators, the company has identified a solution that resolves the device performance and quality concern of the magnetic switch component failures. Guidant has submitted a pre-market approval (PMA) supplement, for the FDA''s review. Guidant is preparing to ship product in the current quarter contingent on FDA approval. During the quarter, Guidant Corporation began enrollment in its SPIRIT III drug eluting stent clinical trial. SPIRIT III is a large-scale pivotal clinical trial evaluating XIENCE(tm) V, an everolimus eluting coronary stent system utilizing Guidant''s cobalt chromium MULTI-LINK VISION® Coronary Stent System platform. Guidant plans to use the results of the SPIRIT III trial to obtain FDA approval for XIENCE V for the treatment of coronary artery disease. Earlier this month, Guidant Corporation began enrollment in its SPIRIT II drug eluting stent clinical study. Results of the SPIRIT II study will provide additional clinical data to support the launch of XIENCE V in Europe and several countries outside the United States. In a special meeting held on April 27, 2005, Guidant shareholders overwhelmingly approved the agreement whereby Johnson & Johnson will acquire Guidant for $76 per share or $25.4 billion in fully diluted equity. The agreement, which was announced on December 15, 2004, remains subject to regulatory review as well as other customary closing conditions. Guidant Corporation pioneers lifesaving technology, giving an opportunity for a better life today to millions of cardiac and vascular patients worldwide. The company, driven by a strong entrepreneurial culture of more than 12,000 employees, develops, manufactures and markets a broad array of products and services that enable less invasive care for some of life's most threatening medical conditions. For more information, visit www.guidant.com. This release includes forward-looking statements that are based on assumptions about many important factors, including market trends and competition, particularly in connection with expanded indications and reimbursement for cardiac rhythm management products; satisfactory clinical and regulatory progress; progress with respect to the merger, including satisfaction of conditions to closing, including antitrust approvals; economic conditions, including exchange rates; litigation developments; and the factors listed on exhibit 99 to Guidant''s most recent 10-Q. As such, they involve risks that could cause actual results to differ materially. The company does not undertake to update its forward-looking statements. Guidant provides earnings per share on an adjusted basis from continuing operations because Guidant's management believes that the presentation provides useful information to investors. Among other things, it may assist investors in evaluating the company's operations period over period. In various periods, this measure may exclude such items as business development activities (including IPRD at acquisition or upon attainment of milestones and any extraordinary expenses), strategic developments (including restructuring and product line changes), significant litigation, and changes in applicable laws and regulations (including significant accounting or tax matters). Special items may be highly variable, difficult to predict, and of a size that sometimes has substantial impact on the company's reported operations for a period. Management uses this measure internally for planning, forecasting and evaluating the performance of the business, including allocating resources and evaluating results relative to employee performance compensation targets. Investors should consider non-GAAP measures in addition to, not as a substitute for, or as superior to, measures of financial performance prepared in accordance with GAAP.
Management Observations
Second Quarter Financial Highlights:
CRM Product Field Actions
Drug Eluting Stent Progress
Merger Update
Guidant Corporation