Guidant Posts All-Time Record Sales of $668.4 Million in Second Quarter; Record Net Income and Earnings Per Share of $0.40 Grow 22 Percent

Business Wire,  July 18, 2000  

Tags: earnings per share, Guidant Corp., net income

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Due to field sales force expansion and expenditures in research and development at an industry peer-leading rate of 13.9 percent of sales, total operating expense for the second quarter grew by 12 percent over the same period of 1999.

Other expenses decreased $4.3 million to $39.7 million due to higher than average other expenses in the second quarter of 1999. Income before taxes of $181.5 million grew by 11 percent over second quarter 1999 levels. The company's effective tax rate for the quarter of 31.5 percent reflects tax benefits involving its strategic investments in overseas manufacturing. The 1999 as adjusted tax rate of 37.4% had been re-stated for the acquisition of CardioThoracic Systems in November 1999.

Overall in the quarter, net income and earnings per share grew 22 percent to a record $124.3 million and $0.40, respectively, versus adjusted second quarter 1999 levels.

Six Months Ended June 30, 2000

First Half of Year Shows Solid Top and Bottom Line Growth

For the first half of 2000, Guidant reported net sales of $1,299.1 million, or 8 percent higher than the same period last year. Adjusted gross profit(b) increased 9 percent to $996.0 million and represented 76.7 percent of sales. Total operating expenses, excluding special items, grew 8%--in line with sales growth. Income before taxes of $360.2 million grew by 12 percent versus the previous year due to higher operating income and lower other expenses. The effective tax rate for the first six months of 2000 is 32.5 percent versus 37.6 percent in 1999. Excluding special items in 1999, net income grew by 21 percent to 243.1 million, while adjusted earnings per share grew 22 percent to $0.78.

A global leader in the medical technology industry, Guidant provides innovative, minimally invasive and cost-effective products and services for the treatment of cardiovascular and vascular disease. For more information on Guidant's products and services, visit the company's web site at www.guidant.com.

This release contains forward-looking statements about the company's future financial results, the company's prospects and products in research and development. This information is based upon management's current expectations, but actual results may differ materially from those discussed in the forward-looking statements. Factors affecting future results include those outlined in Exhibit 99.1 to the company's Form 10-K filed March 2000.

(a) Adjustments to the company's second quarter 1999 results

included stay pay for manufacturing and non-manufacturing

personnel and the impact of purchase accounting adjustments

required to write-up inventory acquired from Sulzer Medica,

which totaled $10.6 million, after tax.

(b) Adjustments to the company's first half results in 1999

included $21.3 million related to stay pay for manufacturing

and non-manufacturing Intermedics personnel and the impact of

purchase accounting adjustments required to write-up inventory

acquired from Sulzer Medica, $49.0 million related to the