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Guidant Reports Record First Quarter Sales of $953 Million
Company Completes Several Merger-Related Milestones During Quarter INDIANAPOLIS, April 21, 2005 -- Guidant Corporation (NYSE:GDT - News) Sales of products other than worldwide coronary stents were $838 million, up 10 percent.
Ronald W. Dollens, president and CEO of Guidant Corporation, commented, "Guidant's results this quarter reflect solid operating performance through continued financial discipline and strong revenue growth in implantable defibrillators and our emerging businesses. As planned, we are making timely progress toward the closing of the company's merger with Johnson & Johnson." Dollens continued, "As we look to the future, we expect strong growth in the implantable defibrillator market supported by expanded Medicare reimbursement, limited erosion in our coronary stent revenue, and increased contributions from our emerging businesses." First Quarter Financial Highlights:
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. Merger related milestones in the quarter included U.S. and European regulatory filings as well as providing proxy materials to company shareholders in connection with the special meeting to approve the merger on April 27, 2005. If approved by Guidant shareholders, the transaction will remain subject to receipt of regulatory approvals as well as other customary closing conditions. As expected, the company anticipates entering the second phase of European Commission review of the transaction this week. As previously announced, Johnson & Johnson and the company received a request for additional information (second request) from the Federal Trade Commission on February 18, 2005 and are in the process of responding. The announced acquisition price of $76 per share reflects $30.40 in cash and $45.60 in Johnson & Johnson common stock per share, provided the volume weighted average trading price of Johnson & Johnson common stock price is between $55.45 and $67.09 during the 15-day trading period ending three days prior to the transaction closing. Outside this range, each Guidant share exchanged will be converted into a fixed number of shares of Johnson & Johnson common stock equal to .8224 shares (at $55.45 or below) or .6797 shares (at $67.09 or above), plus $30.40 in cash. On April 20, the closing price for common shares of Johnson & Johnson was $68.10. 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. 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 shareholder and antitrust approvals; economic conditions, including exchange rates; litigation developments; and the factors listed on exhibit 99 to Guidant's most recent 10-K. 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.
Guidant Corporation
Consolidated Statements of Income
(In millions, except per-share data)
(Unaudited)
Three Months Ended Three Months Ended
March 31, 2005 March 31, 2004
US GAAP US GAAP
As Special As As Special As
Reported Item(1) Adjusted Reported Item(2) Adjusted
-------- ------- -------- -------- ------- --------
Net sales $953.3 $953.3 $934.1 $934.1
Cost of products
sold 225.3 225.3 226.3 226.3
------------------------- -------------------------
Gross profit 728.0 728.0 707.8 707.8
Research and
development 129.6 129.6 137.6 137.6
Purchased
in-process
research and
development -- -- 26.8 ($26.8) --
Sales, marketing
and administrative 310.3 310.3 314.7 314.7
Interest, net (7.6) (7.6) (1.0) (1.0)
Royalties, net 12.7 12.7 12.1 12.1
Amortization 7.8 7.8 7.3 7.3
Other, net (7.1) (7.1) 2.5 2.5
Impairment charge 60.0 ($60.0) -- -- --
------------------------- -------------------------
Income from
continuing
operations before
income taxes 222.3 60.0 282.3 207.8 26.8 234.6
Income taxes 45.6 22.2 67.8 54.8 1.5 56.3
-------- ------- -------- -------- ------- --------
Tax rate 20.5% 24.0% 26.4% 24.0%
Income from
continuing
operations 176.7 $37.8 $214.5 153.0 $25.3 $178.3
================ ================
% of sales 18.5% 22.5% 16.4% 19.1%
Loss from
discontinued
operations, net
of income taxes (14.4) (13.6)
-------- --------
Net Income $162.3 $139.4
======== ========
Earnings per
share -- basic
Income from
continuing
operations $0.55 $0.67 $0.50 $0.58
======== ========
Loss from
discontinued
operations, net
of income taxes (0.04) (0.05)
-------- --------
Net income $0.51 $0.45
======== ========
Earnings per
share -- diluted
Income from
continuing
operations $0.54 $0.65 $0.48 $0.56
======== ========
Loss from
discontinued
operations, net
of income taxes (0.05) (0.04)
-------- --------
Net income $0.49 $0.44
======== ========
Weighted average
shares outstanding
Basic 319.85 319.85 308.48 308.48
Diluted 329.47 329.47 318.56 318.56
(1) $60.0 million impairment charge related to the write-down of
assets associated with the FX miniRAIL Dilation Catheter
(2) $26.8 million in-process research and development primarily
related to the acquisition of AFx, inc., a manufacturer of
microwave surgical cardiac ablation medical devices
Guidant Corporation
Condensed Consolidated Balance Sheets
(In millions)
March 31, 2005 December 31, 2004
(Unaudited)
Cash and short-term investments $2,323.0 $2,214.3
Accounts receivable, net 842.2 845.9
Inventories 362.6 353.9
Other current assets 265.4 293.8
-------- --------
Total current assets 3,793.2 3,707.9
Other assets 806.9 855.4
Property and equipment, net 822.3 808.9
-------- --------
Total assets $5,422.4 $5,372.2
======== ========
Current liabilities,
excluding short-term debt $ 652.5 $ 726.7
Short-term debt 484.5 302.0
-------- --------
Total current liabilities 1,137.0 1,028.7
Long-term debt 7.6 357.2
Other noncurrent liabilities 234.9 244.2
Shareholders' equity 4,042.9 3,742.1
-------- --------
Total liabilities and equity $5,422.4 $5,372.2
======== ========
Source: Guidant CorporationContact: |
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