Jan 27, 2005
Guidant Reports Record Full-Year 2004 Sales of $3.8 billion; Fourth Quarter Sales of $968 Million

Company to repatriate $1.5 billion and record $104 million additional tax expense related to American Jobs Creation Act of 2004

• Sales of products other than worldwide coronary stents grew $426 million, an increase of 15 percent compared to 2003
• Worldwide implantable defibrillator revenue of $1.8 billion, up 18 percent
• Worldwide coronary stent revenue of $538 million, down 36 percent
• Earnings per share from continuing operations of $1.78, up 33 percent
• Adjusted earnings per share from continuing operations of $2.47, up 2 percent
• Definitive agreement announced whereby Johnson & Johnson will acquire Guidant for $25.4 billion in fully diluted equity value

Indianapolis, Ind. -

Guidant Corporation (NYSE: GDT), a world leader in the treatment of cardiac and vascular disease, today reported full-year 2004 sales of $3.8 billion, representing sales growth of $121 million or 3 percent versus the prior year. Foreign currency translations favorably impacted revenue by $88 million. Net income for the full-year 2004 was $524 million versus $330 million in 2003.

For the fourth quarter of 2004, the company reported sales of $968 million, representing sales growth of $28 million or 3 percent versus the fourth quarter of the prior year. Foreign currency translations favorably impacted revenue by $22 million. Net income for the fourth quarter was $105 million versus $205 million in the fourth quarter of 2003. Fourth quarter net income reflects $104 million of additional tax expense due to the planned repatriation of cash under the American Jobs Creation Act of 2004.

Please see the attached schedules and the Guidant website at http://www.guidant.com/investorseconciliations/ for additional information, including a reconciliation of special items, income statements and product sales summaries reclassified for discontinued operations.

Management Observations

Ronald W. Dollens, president and CEO, Guidant Corporation, stated, "Guidant''s financial performance in 2004 was in line with expectations set early in the year and reflected a strong implantable defibrillator market, contributions from emerging businesses, and the company''s resiliency in the face of a challenging stent environment." Dollens continued, "As we enter 2005, we look forward to continued strong growth in the implantable defibrillator market, a moderation in our coronary stent revenue erosion, continued acceleration of our emerging businesses and the closing of the company's merger with Johnson & Johnson."

2004 Financial Highlights:

• Worldwide implantable defibrillator sales increased 18 percent to $1.8 billion; U.S. implantable defibrillator sales grew 15 percent to $1.4 billion.
• Worldwide pacemaker sales grew 5 percent to $720 million; U.S. pacemaker sales were $426 million.
• Worldwide coronary stent sales of $538 million declined 36 percent versus the prior year. Coronary stents comprised 14 percent of company sales.
• U.S. stent sales totaled $260 million, declining 44 percent, with $162 million from end-user sales, reflecting a 60 percent decline.
• Worldwide angioplasty system sales increased 7 percent to $453 million.
• Worldwide sales of cardiac surgery, biliary, peripheral and carotid systems (emerging businesses) grew 42 percent to $292 million.
• Gross margin was 75.5 percent compared to 75.9 percent in 2003.

The company reported full-year 2004 income and earnings per share from continuing operations of $573 million and $1.78 compared to $419 million and $1.34 in 2003. Adjusted income and earnings per share from continuing operations were $793 million and $2.47 compared to $758 million and $2.42 in 2003. Please see the attached schedules for a reconciliation of these items.

Fourth Quarter Financial Highlights:

• Sales of products other than worldwide coronary stents represented 87 percent of total revenues and increased 14 percent versus the fourth quarter of 2003.
• Worldwide implantable defibrillator sales increased 16 percent to $458 million, representing 3 percent sequential growth; U.S. implantable defibrillator sales grew 12 percent to $351 million.
• Worldwide pacemaker sales grew 3 percent to $176 million; U.S. pacemaker sales were $99 million.
• Worldwide coronary stent sales of $124 million declined 38 percent versus the prior year, but stabilized sequentially. Coronary stents comprised 13 percent of company sales.
• U.S. stent sales totaled $62 million, declining 38 percent, with $31 million from end-user sales, reflecting a 64 percent decline.
• Worldwide angioplasty system sales increased 4 percent to $120 million.
• Worldwide sales of cardiac surgery, biliary, peripheral and carotid systems (emerging businesses) grew 60 percent to $90 million.
• Gross margin of 76.0 percent compared to 75.3 percent in the prior quarter and 75.4 percent in the fourth quarter of 2003.

The company reported fourth quarter income and earnings per share from continuing operations of $124 million and $0.38 compared to $200 million and $0.63 in the fourth quarter of 2003. Adjusted income and earnings per share from continuing operations were $228 million and $0.70 compared to $200 million and $0.63 in the fourth quarter of 2003. A fourth quarter adjustment of $104 million, or $0.32 per share, was made for additional income tax expense related to future repatriation of $1.5 billion of foreign subsidiary earnings in accordance with the American Jobs Creation Act of 2004.

Merger Update

As previously announced on December 15, 2004, Guidant and Johnson & Johnson entered into a definitive agreement whereby Johnson & Johnson will acquire Guidant for $76 per share or $25.4 billion in fully diluted equity value. The company has recently submitted its U.S. Hart-Scott-Rodino filing. Next steps in the merger include an antitrust filing in Europe, responding to requests for additional information from government authorities, the filing of a preliminary proxy statement/prospectus with the Securities and Exchange Commission and a meeting of Company shareholders anticipated in the spring.

Financial Guidance

Given the pending merger with Johnson & Johnson, Guidant has elected not to provide forward-looking financial guidance.

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 '" which is also the basis on which it generally is most reasonable to forecast results. 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 all of these measures 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.

Guidant Corporation

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.

Forward Looking Statements

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, particularly with respect to clinical trials relating to DES; progress with respect to the merger, including satisfaction of conditions to closing, including shareholder and 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.