SECURITIES AND EXCHANGE
COMMISSION
Washington,
D.C.
FORM 10-K
ANNUAL REPORT PURSUANT TO
SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended
December 31, 1999
Commission File Number
1-13388
GUIDANT
CORPORATION
(Exact name of registrant
as specified in its charter)
| INDIANA
(State or other
jurisdiction of
incorporation or
organization)
|
|
35-1931722
(IRS
Employer
Identification
No.)
|
|
| 111 MONUMENT
CIRCLE
29TH
FLOOR
INDIANAPOLIS,
INDIANA
(Address of
principal
executive
offices)
|
|
46204
(Zip
Code)
|
|
Registrant’s
telephone number, including area code: 317-971-2000
Securities registered
pursuant to Section 12(b) of the Act:
Title of each
class
|
|
Name of each
exchange on which registered
|
| Common Stock |
|
New York Stock
Exchange |
| |
|
Pacific Exchange,
Inc. |
|
| Preferred Stock Purchase
Rights |
|
New York Stock
Exchange |
| |
|
Pacific Exchange,
Inc. |
Securities registered
pursuant to Section 12(g) of the Act:
None.
Indicate by check mark whether the registrant (1) has
filed all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months, and (2) has
been subject to such filing requirements for the past 90 days. Yes
X No
Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained herein, and will not
be contained, to the best of registrant’s knowledge, in the definitive
proxy or information statement incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K. ¨
The aggregate market value of voting stock of the
registrant held by non-affiliates as of March 6, 2000 (Common Stock) was
approximately $21.9 billion.
The number of shares of Common Stock outstanding as of
March 6, 2000:
| Class
Common
|
|
Number of shares
outstanding
306,864,687
|
|
Portions of the following documents have been incorporated
by reference into this report:
| Document |
|
Parts into which
incorporated |
|
Registrant’s Annual
Report to Shareholders for
fiscal year ended December 31, 1999 |
|
Parts I, II and
IV |
| |
|
Registrant’s Proxy
Statement for the Annual
Meeting of Shareholders to be held May 15, 2000 |
|
Part III |
|
Part I
Item 1.
BUSINESS
Overview
Guidant Corporation (the “Company”)* was
incorporated in Indiana on September 9, 1994, as the parent of five of the
nine businesses in the Medical Devices and Diagnostics (“MDD”)
Division of Eli Lilly and Company (“Lilly”). Before the initial
public offering of the Company’s common stock in December 1994 (the
“Offering”), the Company was a wholly owned subsidiary of Lilly.
Pursuant to the Offering, 19.8% of the Company’s common stock was
issued to the public. Lilly continued to own 80.2% of the Company’s
common stock after the Offering. On September 25, 1995, Lilly disposed of
its remaining ownership interest in the Company by means of a tax-free
split-off, an exchange offer pursuant to which Lilly shareholders were given
the opportunity to exchange some, all or none of their Lilly common stock
for the Company’s common stock owned by Lilly (the “Exchange Offer
”). The consummation of the Exchange Offer resulted in Lilly
distributing all of its Company common stock to Lilly shareholders. As a
result, Lilly no longer owns any Company common stock.
Guidant is a global company that designs, develops,
manufactures, and markets a broad range of innovative, high quality,
therapeutic medical devices for the treatment of cardiovascular and vascular
diseases. Guidant is a leader in the medical device industry and offers: (i)
coronary stents, coronary balloon dilatation catheters, and related products
and accessories used to treat blockages in the vascular system; (ii)
automatic implantable cardioverter defibrillator (“AICD”) systems,
which are used to detect and treat abnormally fast heart rhythms, known as
tachycardia; (iii) a full line of implantable pacemaker systems used to
manage slow or irregular heart rhythms, known as bradycardia; (iv) products
for use in minimally invasive vascular surgeries, including the treatment of
abdominal aortic aneurysms; and (v) products for use in minimally invasive
cardiac surgeries, including products to perform cardiac artery bypass
grafting on a beating heart. Guidant is a global company with principal
operations in the United States, Western Europe, and Japan. Guidant markets
its products in nearly 100 countries by use of a direct sales force in the
United States and a combination of direct sales representatives and
independent distributors in international markets.
Cardiovascular disease continues to be the leading cause
of death in the United States. Guidant’s business strategy is to design
therapeutic products, principally for use in treating cardiovascular and
vascular diseases, which improve the quality of patient care and reduce
treatment costs. In implementing this strategy, Guidant focuses on the
following three areas, which it believes are critical to its future success:
(1) global product innovation, (2) economic partnerships with customers
worldwide, and (3) organizational excellence.
Guidant will continue to pursue a strategy that includes
the potential acquisition of businesses in the medical device industry.
Guidant’s strategy is, where appropriate, to acquire technologies that
are complementary to its existing technology base, products that serve the
Company’s existing customer base and businesses that expand its
geographical presence. However, Guidant cannot provide assurance that it
will complete any acquisition or, if completed, what the terms of the
acquisition will be.
*
|
The terms, “Company,
” “Guidant,” and “Registrant” are used
interchangeably herein to refer to Guidant Corporation or to Guidant
Corporation and its consolidated subsidiaries, as the context
requires.
|
Product
Description
The Company offers implantable device systems used to
detect and treat abnormally fast, abnormally slow or irregular heart rhythms
or arrhythmias. These devices are organized into two major product
categories: tachycardia (“Tachy”) and bradycardia (“Brady
”). Sales of these products, as a percentage of the Company’s
total consolidated net sales for the years ended December 31, 1999, 1998,
and 1997, were 45%, 43% and 50%, respectively.
AICD systems, or Tachy products, include AICDs,
endocardial defibrillation leads, programmers and accessories used primarily
in the treatment of abnormally fast arrhythmias. Tachy products are used to
detect and treat potentially fatal, abnormally fast heart rhythms by
delivering electrical energy to the heart and, in so doing, restoring the
heart’s normal rhythm. Tachyarrhythmias often result from the presence
of abnormal cardiac tissue which interferes with the natural electrical
activity of the heart. The primary physician users for Tachy products are
electrophysiologists.
The Company’s Tachy products offer multiple
therapeutic options (tiered-therapy). Tiered-therapy devices use a staged
process for treating certain arrhythmias by first providing lower intensity
pacing pulses, or antitachycardia pacing, to the patient in an attempt to
correct the abnormal rhythm. If antitachycardia pacing is unsuccessful or if
the arrhythmia requires more aggressive therapy, then the device can
progress to low or high energy shocks. In January 2000, the Company received
FDA approval to market the VENTAK PRIZM AICD system in the U.S. The VENTAK
PRIZM DR is the world’s smallest dual-chamber defibrillator. The VENTAK
PRIZM is the fifth in a series of sophisticated, full-featured, dual-chamber
pacing and defibrillation devices developed and manufactured by the Company
since September 1996.
Cardiac pacemaker systems, or Brady products, include
pacemaker pulse generators, endocardial pacing leads, programmers and
accessories used primarily in the treatment of slow or irregular
arrhythmias. These products, are generally used to manage a slow or
irregular heartbeat caused by disorders that disrupt the heart’s normal
electrical conduction system. This often results in a heart rate
insufficient to provide adequate blood flow through the body, creating
symptoms including fatigue, dizziness and fainting. Brady products range
from conventional single chamber devices to more sophisticated adaptive-rate
dual chamber devices. Primary physician users for Brady products include
electrophysiologists, implanting cardiologists and cardiovascular
surgeons.
Brady products are used to treat patients whose natural
pacemaker, the sinus node, is malfunctioning, or patients suffering from a
disruption in the electrical conduction system. Normally, the sinus node,
located in the upper atrial portion of the heart, sends electrical signals
through the atrium to the atrioventricular (“AV”) node, which in
turn sends signals down to the lower (ventricular) chambers of the heart.
The patient population needing pacemakers can be divided roughly in half:
those with malfunctioning sinus nodes, or Sick Sinus Syndrome, and those
suffering from malfunctioning AV nodes, or AV Block.
On February 1, 1999, the Company purchased the
electrophysiology business of Sulzer Medica, Ltd., including Intermedics,
Inc., for an aggregate cost of approximately $772 million in cash, net of
postclosing adjustments. This includes $200 million for a settlement of the
Company’s intellectual property litigation with Intermedics.
Intermedics was a global leader in the design, development, manufacture and
distribution of pacemakers and pacemaker leads.
Guidant commercially released its family of products
designed specifically for the treatment of patients with heart failure, the
CONTAK CD and CONTAK TR devices and the EASYTRAC lead system, in Europe in
November 1999. Heart failure is a medical condition in which the heart is
unable to pump enough blood to meet the metabolic needs of the body. It
affects well over 5 million people in the United States and an estimated 6.5
million people in Europe. Research in this area has shown that
device systems like the CONTAK offer the potential to relieve symptoms and
positively impact the lives of heart failure patients who at this time have
few therapeutic alternatives. The Company anticipates applying for United
States Food and Drug Administration (“FDA”) approval of this
product in 2001. However, the Company cannot provide assurance that it will
obtain FDA and other regulatory approval to market any resulting
product.
The Company acquired InControl, Inc., a company developing
the use of devices to treat atrial fibrillation, in September 1998. As of
December 31, 1999, a project is in the design phase to use InControl
technology, in combination with existing Guidant technology, to develop more
advanced implantable devices for the treatment of atrial fibrillation. The
Company expects to begin clinical testing in late 2000 or early 2001 on the
resulting new product and expects to file for FDA approval for this product
in 2001. However, the Company cannot provide assurance that it will obtain
FDA and other regulatory approval to market any resulting
product.
Guidant also offers its customers a wide range of products
for the treatment of coronary artery and peripheral vascular disease,
including stent systems, dilatation catheters, guide wires, guiding
catheters, atherectomy catheters and related accessories. Customers for
these products are primarily interventional cardiologists. Sales of these
products, as a percentage of the Company’s total consolidated net sales
for the years ended December 31, 1999, 1998 and 1997, were 52%, 52% and 44%,
respectively.
More than six million Americans have been diagnosed with
coronary artery disease (“CAD”), which is the formation of blood
flow restrictions (atherosclerotic lesions) within the coronary arteries. If
untreated, CAD can lead to a heart attack, or cause chest pain that may
interfere with normal activities. Worldwide, over one million patients
annually undergo minimally invasive CAD interventions (angioplasty,
stenting, atherectomy or mechanical ablation), which are less invasive, more
patient friendly and less expensive alternatives to coronary artery bypass
graft surgery.
In a percutaneous transluminal coronary angioplasty (
“PTCA”) procedure, a local anesthetic is administered and a small
incision is made in the patient’s groin area to gain access to the
femoral artery. The physician inserts a guiding catheter through the femoral
artery, up through the aorta and into the entrance of the coronary blood
vessel and then advances a small guide wire through the inside of the
guiding catheter, into the blood vessel and across the site of the blockage.
Then a dilatation catheter is delivered over the guide wire through the
inside of the guiding catheter into the blood vessel and across the site of
the blockage. The dilatation catheter is then inflated to compress the
atherosclerotic plaque against the artery wall, thereby enlarging the
opening of the vessel and increasing blood flow to the heart. At the end of
the PTCA procedure, all of the devices are withdrawn.
Coronary stents are metal tubes or coils that are mounted
on coronary dilatation catheters. Coronary stents are permanently deployed
at the blockage by inflating the coronary dilatation catheter to expand the
stent in the artery. When the coronary dilatation catheter is removed from
the artery, the stent stays in place, which provides a “mechanical
” way of keeping the artery open. In December 1999, the Company
received approval to market the ACS MULTI-LINK RX TRISTAR and ACS MULTI-LINK
OTW TRISTAR Coronary Stent Systems in the United States. The ACS MULTI-LINK
TRISTAR features delivery system improvements designed to increase accuracy
of stent placement and reduce the potential for vessel injury, which is
believed to contribute to acute complications.
The major clinical challenge to PTCA is clinical
restenosis, the renarrowing of the blood vessel at the site of the initial
treatment, generally requiring another intervention within six months of the
initial procedure. A number of other technologies have evolved to reduce the
occurrence of this condition, often in combination with a coronary
dilatation catheter, including stenting, atherectomy and ablation. Like
coronary dilatation catheters, coronary stents, atherectomy catheters and
ablation catheters are delivered through a guiding catheter and over a guide
wire.
The Company acquired NeoCardia, a company developing
intravascular radiotherapy devices for the treatment of restenosis, in 1997.
The Company has applied for CE Mark approval on these products in Europe.
Clinical trials, which are utilizing the acquired technology, are underway
in the United States. However, the Company does not have a product
commercially available using this technology. The Company expects to file a
pre-market approval, or PMA, application with the FDA for this product in
late 2000. The Company cannot provide assurance that it will obtain the
regulatory approvals necessary for commercial marketing.
Further, the Company has made significant investments
targeted at the growing peripheral disease market. Millions of patients
worldwide suffer from peripheral arterial occlusive disease, which can
affect several anatomical locations such as the carotids, kidneys and lower
extremities. The Company believes that its core competency in cardiology
technology could greatly benefit those patients. The Company also plans to
begin clinical trials in 2000 to determine the efficacy of these therapies
including using stents in the carotids, with the aim of having the use of
stents be as effective as surgery in reducing the incidence of stroke. In
1999, the Company commercially released several non-coronary products
including stents, guide wires, guiding catheters and dilation catheters.
These products include the OTW MEGALINK Stent Delivery System, the RX
HERCULINK 14 and the OTW VIATRAC 18 Peripheral Dilatation Catheters. It also
established a sales force to focus on this emerging market.
The Company is also a provider of innovative solutions for
minimally invasive cardiac and vascular surgery. The Company develops and
markets innovative surgical devices and systems which alter the surgeon
’s approach to surgical procedures and may provide improved clinical
benefit, reduced procedure time and better patient outcomes. The Company
believes that these product systems may significantly decrease the patient
’s postoperative pain, hospital stay and recovery period by reducing
the resulting trauma caused by more invasive surgical techniques. The
Company sold its general surgery business to United States Surgical
Corporation, a subsidiary of Tyco, Ltd., in July 1999. However, the sale did
not include any of the products for cardiac surgery applications. The
primary customers for these products currently are cardiac and vascular
surgeons. Sales of these products, as a percentage of the Company’s
total consolidated net sales for the years ended December 31, 1999, 1998 and
1997, were 3%, 5% and 6%, respectively. These percentages include the sales
of minimally invasive general surgery products sold by Guidant prior to the
sale of the Company’s general surgery business to Tyco,
Ltd.
The Company developed a product, the ANCURE system, to
provide catheter-based delivery and implantation of a specialized vascular
prosthesis to repair abdominal aortic aneurysms which provides a less
invasive alternative to the open surgical procedure. The ANCURE system was
approved for marketing in the United States on September 28,
1999.
In November 1999, the Company acquired CardioThoracic
Systems, Inc. (“CTS”) in a tax-free stock for stock merger in
which approximately 5.3 million shares of Guidant common stock were issued.
CTS designs, develops and manufactures proprietary, disposable instruments
and systems for performing minimally invasive cardiac surgery. CTS’
current products are designed to enable cardiothoracic surgeons, using their
existing skills, coupled with CTS technology and its physician training, to
perform minimally invasive cardiac surgery on a beating heart to eliminate
the requirement of using a heart-lung machine during a coronary artery
bypass grafting procedure.
Products
The Company offers a broad array of Tachy products,
including complex devices and systems offering multiple therapeutic options
as set forth in the following chart:
Category
|
|
Description
|
|
Product
Name
|
|
Date of Commercial
Release
|
|
|
|
U.S.
Release
|
|
First
International Release
|
| Tiered-Therapy |
|
AICDs that
provide |
|
VENTAK PRIZM |
|
January 2000 |
|
January 2000 |
| |
|
low and high |
|
VENTAK VR |
|
May 1999 |
|
January 1999 |
| |
|
energy shock |
|
VENTAK MINI IV |
|
December 1998 |
|
December 1998 |
| |
|
therapy, Brady |
|
VENTAK MINI III
HE |
|
December 1998 |
|
December 1998 |
| |
|
pacing and |
|
VENTAK AV III DR |
|
September 1998 |
|
October 1998 |
| |
|
antitachycardia |
|
VENTAK AV II DR |
|
March 1998 |
|
September 1997 |
| |
|
pacing. |
|
VENTAK MINI III |
|
January 1998 |
|
October 1997 |
| |
|
|
|
VENTAK AV II DDD |
|
December 1997 |
|
September 1997 |
| |
|
|
|
VENTAK AV DDD |
|
July 1997 |
|
November 1996 |
| |
|
|
|
VENTAK MINI II+ |
|
July 1996 |
|
June 1996 |
| |
|
|
|
VENTAK MINI II |
|
July 1996 |
|
June 1996 |
| |
|
|
|
VENTAK MINI +HC |
|
May 1996 |
|
December 1995 |
| |
|
|
|
VENTAK MINI HC |
|
May 1996 |
|
December 1995 |
| |
|
|
|
VENTAK MINI + |
|
January 1996 |
|
December 1995 |
| |
|
|
|
VENTAK MINI |
|
January 1996 |
|
December 1995 |
|
| Endocardial |
|
Insulated wires |
|
ENDURANCE EZ |
|
June 1999 |
|
November 1998 |
| Defibrillation
Leads |
|
inserted through
a |
|
ENDURANCE RX |
|
March 1999 |
|
April 1998 |
| |
|
vein into the
heart, |
|
ENDURANCE |
|
September 1998 |
|
February 1998 |
| |
|
which allow
energy |
|
ENDOTAK DSP |
|
January 1996 |
|
October 1994 |
| |
|
to be
transmitted |
|
ENDOTAK 70
Series |
|
August 1994 |
|
November 1992 |
| |
|
to and from the |
|
|
|
|
|
|
| |
|
implanted AICD, |
|
|
|
|
|
|
| |
|
allowing |
|
|
|
|
|
|
| |
|
arrhythmias to
be |
|
|
|
|
|
|
| |
|
detected and |
|
|
|
|
|
|
| |
|
treated. |
|
|
|
|
|
|
(1)
|
This product is not
currently available in the United States. There can be no assurance that
the Company will obtain the regulatory approval necessary for commercial
marketing of this product in the United States.
|
The Company offers a broad array of Brady products
ranging from conventional single chamber devices to more sophisticated
adaptive-rate, dual chamber devices as set forth in the following
chart:
Category
|
|
Description
|
|
Product
Name
|
|
Date of Commercial
Release
|
|
|
|
U.S.
Release
|
|
First
International Release
|
| Single Chamber |
|
Pacemakers that |
|
DISCOVERY II SSI |
|
(1) |
|
January 2000 |
| (SSI) |
|
pace one chamber |
|
PULSAR SSI |
|
June 1999 |
|
March 1998 |
| |
|
of the heart,
typically |
|
MERIDIAN SSI |
|
May 1998 |
|
March 1998 |
| |
|
the ventricle, at
a |
|
VIGOR SSI |
|
March 1995 |
|
May 1993 |
| |
|
programmed rate. |
|
|
|
|
|
|
|
| Single Chamber |
|
Pacemakers that |
|
PULSAR MAX II SR |
|
(1) |
|
January 2000 |
| Adaptive-Rate |
|
pace one chamber |
|
DISCOVERY II SR |
|
(1) |
|
January 2000 |
| (SSIR) |
|
of the heart,
and |
|
PULSAR MAX SR |
|
June 1999 |
|
October 1998 |
| |
|
incorporate a
sensor |
|
PULSAR SR |
|
June 1999 |
|
March 1998 |
| |
|
that modifies
the |
|
DISCOVERY SR |
|
May 1998 |
|
March 1998 |
| |
|
pacing rate in |
|
MERIDIAN SR |
|
May 1998 |
|
March 1998 |
| |
|
response to
physical |
|
VIGOR SR |
|
June 1995 |
|
May 1993 |
| |
|
activity. |
|
|
|
|
|
|
|
| Dual Chamber |
|
Pacemakers that |
|
DISCOVERY II DDD |
|
(1) |
|
January 2000 |
| (DDD) |
|
pace both
chambers |
|
PULSAR DDD |
|
June 1999 |
|
March 1998 |
| |
|
of the heart,
thereby |
|
MERIDIAN DDD |
|
May 1998 |
|
March 1998 |
| |
|
improving heart |
|
VIGOR DDD |
|
October 1994 |
|
May 1993 |
| |
|
synchronization
and |
|
VISTA DDD |
|
June 1990 |
|
October 1989 |
| |
|
cardiac output. |
|
|
|
|
|
|
|
| Dual Chamber |
|
Pacemakers that |
|
PULSAR MAX II DR |
|
(1) |
|
January 2000 |
| Adaptive-Rate |
|
pace both
chambers |
|
DISCOVERY II DR |
|
(1) |
|
January 2000 |
| (DDDR) |
|
of the heart,
and |
|
PULSAR MAX DR |
|
June 1999 |
|
October 1998 |
| |
|
incorporate a
sensor |
|
PULSAR DR |
|
June 1999 |
|
March 1998 |
| |
|
that modifies
the |
|
DISCOVERY DR |
|
May 1998 |
|
March 1998 |
| |
|
pacing rate in |
|
MERIDIAN DR |
|
May 1998 |
|
March 1998 |
| |
|
response to
physical |
|
VIGOR DR |
|
June 1995 |
|
May 1993 |
| |
|
activity. |
|
|
|
|
|
|
|
| Endocardial |
|
Insulated wires, |
|
FINELINE |
|
August 1999 |
|
January 2000 |
| Pacemaker Leads |
|
inserted through
a |
|
FINELINE II
STEROX |
|
(1) |
|
September 1999 |
| |
|
vein into the
heart, |
|
SELUTE PICOTIP |
|
(1) |
|
October 1998 |
| |
|
which allow
energy |
|
ATRIAL J |
|
|
|
|
| |
|
to be transmitted
to |
|
SWEET PICOTIP RX |
|
June 1999 |
|
May 1998 |
| |
|
and from the |
|
SELUTE PICOTIP |
|
April 1998 |
|
September 1997 |
| |
|
implanted |
|
SWEET TIP RX |
|
October 1998 |
|
June 1997 |
| |
|
pacemaker. |
|
SELUTE ATRIAL J |
|
(1)
|
|
October 1996 |
| |
|
|
|
SELUTE |
|
May 1996 |
|
December 1994 |
(1)
|
This product is not
currently available in the United States. There can be no assurance that
the Company will obtain the regulatory approval necessary for commercial
marketing of this product in the United States.
|
On February 1, 1999, the Company completed the acquisition
of Intermedics. Intermedics manufactured and distributed bradycardia
pacemakers worldwide. Intermedics also manufactured AICD systems, leads, and
other electrophysiology products. Intermedics offers its products to
electrophysiologists, cardiovascular surgeons, cardiologists and
institutional buyers, including community hospitals. Intermedics products
include dual-chamber pacemakers such as the Cosmos 3, dual-chamber,
rate-responsive pacemakers such as the Relay, Marathon DR and Momentum DR,
single-chamber rate-responsive pacemakers such as Dash and Marathon SR, and
single-chamber rate-responsive pacemakers such as the Unity-C and the Unity,
and leads such as the Thinline family.
The Company offers a family of products designed
specifically for the treatment of patients with heart failure as set forth
in the following chart:
Category
|
|
Description
|
|
Product
Name
|
|
Date of Commercial
Release
|
|
|
|
U.S.
Release
|
|
First
International Release
|
Heart Failure
Therapy Devices |
|
Devices that provide
ventricular
synchronization
therapy and brady
therapy. |
|
CONTAK TR |
|
(1) |
|
November 1999 |
| |
|
| |
|
Devices that provide
ventricular
synchronization
therapy and brady
and ICD therapy. |
|
CONTAK CD |
|
(1) |
|
November 1999 |
| |
|
| Heart Failure
Leads |
|
Insulated wires
inserted into the
heart to deliver
therapy. |
|
EASYTRAK |
|
(1) |
|
November 1999 |
(1)
|
This product is not
currently available in the United States. There can be no assurance that
the Company will obtain the regulatory approval necessary for commercial
marketing of this product in the United States.
|
The Company offers its customers a wide range of
products for the treatment of coronary artery and peripheral vascular
disease, including coronary dilatation catheters, coronary stents,
atherectomy catheters, guide wires and accessories as well as products for
peripheral vascular application as set forth in the following
chart:
Category
|
|
Description
|
|
Product
Name
|
|
Date of U.S.
Commercial Release
|
| CORONARY: |
|
Stents are implantable
|
|
ACS MULTI-LINK RX
TRISTAR |
|
December 1999 |
| Stents |
|
metal devices that
are |
|
ACS MULTI-LINK OTW
TRISTAR |
|
December 1999 |
| |
|
permanently deployed
|
|
ACS MULTI-LINK OTW
DUET |
|
November 1998 |
| |
|
to provide |
|
ACS MULTI-LINK RX
DUET |
|
November 1998 |
| |
|
“mechanical
” |
|
ACS OTW MULTI-LINK
HP |
|
April 1998 |
| |
|
scaffolding to hold an
|
|
ACS OTW
MULTI-LINK |
|
April 1998 |
| |
|
artery open. |
|
ACS RX MULTI-LINK
HP |
|
February 1998 |
| |
|
|
|
ACS RX
MULTI-LINK |
|
October 1997 |
|
| Rapid Exchange |
|
RX coronary
dilatation |
|
ACS RX GEMINI |
|
January 1999 |
| (“RX”)
Coronary |
|
catheters allow
for |
|
ACS RX SOLARIS |
|
November 1998 |
| Dilatation
Catheter |
|
easy exchange of
the |
|
ACS RX ROCKET |
|
November 1997 |
| |
|
catheter without |
|
ACS RX COMET VP |
|
February 1997 |
| |
|
removing the
original |
|
|
|
|
| |
|
guide wire. |
|
|
|
|
|
| Perfusion
Coronary |
|
Perfusion
coronary |
|
ACS RX ESPRIT |
|
April 1998 |
| Dilatation
Catheter |
|
dilatation
catheters |
|
|
|
|
| |
|
allow continuous
blood |
|
|
|
|
| |
|
flow during the
PTCA |
|
|
|
|
| |
|
procedure,
offering |
|
|
|
|
| |
|
flexibility in
inflation |
|
|
|
|
| |
|
times. Perfusion |
|
|
|
|
| |
|
catheters are
available |
|
|
|
|
| |
|
in RX and OTW |
|
|
|
|
| |
|
configurations. |
|
|
|
|
|
| Over-the-wire (“OTW
”) |
|
OTW coronary |
|
ACS OTW PHOTON |
|
July 1999 |
| Coronary
Dilatation |
|
dilatation catheters
are |
|
ACS OTW SOLARIS |
|
July 1999 |
| Catheter |
|
delivered over a
guide |
|
ACS AVENGER |
|
April 1998 |
| |
|
wire which may
require |
|
ACS Tx2000 VP |
|
April 1997 |
| |
|
either a longer
or |
|
|
|
|
| |
|
exchange guide
wire |
|
|
|
|
| |
|
to complete the |
|
|
|
|
| |
|
procedure. |
|
|
|
|
|
| Atherectomy
Products |
|
Catheters which
allow |
|
ATHEROCATH-BANTAM |
|
December 1996 |
| |
|
for the excision
and |
|
ATHEROCATH-GTO |
|
September 1994 |
| |
|
removal of |
|
ATHEROCATH
SCA-EX |
|
September 1992 |
| |
|
atherosclerotic
plaque. |
|
|
|
|
Category
|
|
Description
|
|
Product
Name
|
|
Date of U.S.
Commercial Release
|
|
| Guide wires |
|
Individual guide
wires |
|
HI-TORQUE CROSS-IT
100XT |
|
March 1999 |
| |
|
are inserted
through |
|
HI-TORQUE CROSS-IT
200XT |
|
March 1999 |
| |
|
coronary and
peripheral |
|
HI-TORQUE CROSS-IT
300XT |
|
March 1999 |
| |
|
vessels facilitating
the |
|
ACS HI-TORQUE
BALANCE |
|
November 1998 |
| |
|
subsequent
placement |
|
HEAVYWEIGHT |
|
|
| |
|
of the catheter or
stent |
|
ACS HI-TORQUE
CROSS-IT |
|
September 1998 |
| |
|
delivery system. |
|
ACS HI-TORQUE ALL
STAR |
|
September 1997 |
| |
|
|
|
ACS HI-TORQUE
BALANCE |
|
August 1997 |
| |
|
|
|
MIDDLEWEIGHT |
|
|
| |
|
|
|
ACS HI-TORQUE IRON
MAN |
|
February 1997 |
| |
|
|
|
HI-TORQUE
BALANCE |
|
October 1994 |
| |
|
|
|
ACS HI-TORQUE EXTRA S
’PORT |
|
September 1994 |
| |
|
|
|
HI-TORQUE EXTRA
SUPPORT |
|
February 1992 |
| |
|
|
|
HI-TORQUE
TRAVERSE |
|
November 1991 |
| |
|
|
|
DOC |
|
February 1988 |
| |
|
|
|
HI-TORQUE
INTERMEDIATE |
|
August 1988 |
| |
|
|
|
HI-TORQUE
STANDARD |
|
August 1988 |
| |
|
|
|
HI-TORQUE FLOPPY
II |
|
June 1986 |
| Accessories |
|
Accessories are |
|
COPILOT |
|
September 1999 |
| |
|
products that
facilitate |
|
ACS VIKING |
|
November 1997 |
| |
|
the delivery or
operation |
|
INDEFLATOR 20/30 |
|
September 1996 |
| |
|
of a device. |
|
TOURGUIDE |
|
December 1995 |
| |
|
|
|
INDEFLATOR 20/20 |
|
March 1990 |
| PERIPHERAL: |
|
|
|
OTW MEGALINK
Stent |
|
December 1999 |
| Stents |
|
See above. |
|
Delivery System |
|
|
| |
|
|
|
RX HERCULINK 14 |
|
September 1999 |
| |
|
|
|
MEGALINK |
|
March 1999 |
| Guide Wires |
|
See above. |
|
HI-TORQUE SPARTACORE
14 |
|
May 1999 |
| |
|
|
|
HI-TORQUE STEELCORE
18 |
|
November 1998 |
| |
|
|
|
HI-TORQUE
MEMCORE |
|
September 1998 |
| |
|
|
|
FIRM 14 |
|
|
| |
|
|
|
HI-TORQUE SUPRACORE
35 |
|
March 1998 |
| Dilatation
Catheters |
|
Peripheral
dilatation |
|
OTW VIATRAC 18
Peripheral |
|
February 2000 |
| |
|
catheters are
delivered |
|
Dilatation
Catheter |
|
|
| |
|
over a separate
guide |
|
VIATRAC 14
Peripheral |
|
September 1999 |
| |
|
wire to position
the |
|
Dilatation
Catheter |
|
|
| |
|
balloon across
the |
|
|
|
|
| |
|
peripheral
vasculature. |
|
|
|
|
| Accessories |
|
See above. |
|
EZPATH GUIDING
CATHETER |
|
May 1998 |
Additionally, the Company offers products for minimally
invasive cardiac and vascular surgery. The Company markets the VASOVIEW
endoscopic vessel harvesting system for minimally invasive access to, and
removal of, the saphenous vein. The saphenous vein is used in coronary
artery bypass graft surgery (“CABG”). As a result of the
acquisition of CTS, the Company also markets the CTS ULTIMA OPCAB mechanical
stabilization system and the VORTEX vacuum assist stabilization system which
offer the surgeon two modalities to enable immobilization of the anastamotic
site on a beating heart during CABG procedures. The VOYAGER Aortic
IntraClusion Device is used for stopped-heart procedures that include
coronary artery bypass, mitral valve replacement and valve repair. This
device offers a potentially less traumatic method of eliminating blood flow
to the heart, which is a necessary
step in any stopped heart procedure. In September 1999, the Company received
FDA approval for and began marketing in the United States, the ANCURE
system, a catheter-based product that delivers and implants a specialized
vascular prosthesis to repair abdominal aortic aneurysms.
Sales and
Marketing
The Company has a broad product line which requires a
sales and marketing strategy that is tailored to its customers in order to
deliver high quality, cost-effective products and services to all of its
customers worldwide. Because of the diverse needs of the global market that
the Company serves, the Company’s distribution system includes a direct
sales force and independent distributors. Sales personnel work closely with
the primary decision makers who purchase the Company’s products,
whether physicians, material managers, biomedical staff, hospital
administrators or purchasing managers. The Company is not dependent on any
single customer and no single customer accounted for more than 5% of the
Company’s net sales in 1999.
United
States
In the United States, the Company sells substantially all
of its products through its direct sales force. In 1999, 70% of the Company
’s consolidated net sales were derived from sales to customers in the
United States.
Guidant actively pursues preferred vendor status with
hospital group purchasing organizations that negotiate contracts with
suppliers of medical products. There are a growing number of regional buying
groups that are emerging in response to cost containment pressures and
health care reform. As a result of Guidant’s product line breadth,
industry expertise, as well as technical support offered by its sales force,
Guidant has been able to develop a number of contracts with these national
buying groups as well as long-term contracts with other
hospitals.
International
In 1999, 30% of the Company’s consolidated net sales
were derived from its international operations through its direct sales
force and independent distributors. The Company sells its products in nearly
100 countries. Major international markets for the Company’s products
include: Japan, Germany, France, Spain, Italy, the United Kingdom,
Australia, Belgium, The Netherlands, and Canada. The sales and marketing
approach in international markets varies depending on market size and stage
of development. The Company believes that its geographic-based sales
organization gives the Company greater flexibility in responding to each of
these markets.
Manufacturing
The Company’s manufacturing operations currently are
carried out in facilities in Cupertino, Menlo Park, Santa Clara and
Temecula, California; St. Paul, Minnesota; Houston and Pearland, Texas;
Dorado, Puerto Rico; and Clonmel, Ireland. The Company began manufacturing
at the Clonmel, Ireland location in June, 1999. During 1999, the Company
also had manufacturing operations at Angleton, Texas and LeLocle,
Switzerland, which were manufacturing facilities acquired through the
Intermedics acquisition. The Company has discontinued manufacturing
operations at these two locations.
In general, the Company’s production activities occur
in a controlled environment setting or “cleanroom.” Such a
manufacturing environment helps ensure that products meet all cleanliness
standards and requirements. In addition, manufacturing employees are trained
in the necessary production operations, the Quality System Regulation (
“QSR”) requirements and ISO 9001/9002, ISO 13485/88 and
EN46001/46002 international quality system standards applicable to the
production process. The Company uses various production and quality
performance measures to provide high manufacturing quality and
efficiency.
The Company vertically integrates its operations
where it believes such integration provides significant cost, supply or
quality benefits. In some areas, the Company is highly vertically
integrated. In other cases, the Company purchases components. In all cases,
the Company attempts to work closely with its suppliers to ensure the
cost-effective delivery of high quality materials and components. The Company
’s major considerations used in the selection and retention of
suppliers are supplier technology, quality, reliability, consistent on-time
deliveries, value-added services and cost. The Company tries to select, and
build long-term relationships with, suppliers who have demonstrated a
commitment to these factors. To date, the Company has been able to obtain
all required components and materials for all market released products and
for all products under development.
Raw
Materials
The Company purchases certain of the materials and
components used in manufacturing its products, some of which are custom-made
for the Company. In addition, the Company purchases certain supplies from
single sources due to quality considerations, costs or constraints resulting
from regulatory requirements. In the past, some suppliers have announced
that, in an effort to reduce potential product liability exposure, they
intend to limit or terminate sales to the medical device industry. In
addition, agreements with certain suppliers can be terminated by either
party upon short notice. The Company has agreed to indemnify certain
suppliers against certain potential product liability exposure. The Company
cannot quickly establish additional or replacement suppliers for certain
components or materials, largely due to the FDA approval system and the
complex nature of the manufacturing processes employed by many suppliers.
The Biomaterials Access Assurance Act of 1998, by addressing the inequities
in United States tort law, is expected to help ensure a continued supply of
raw materials and component parts essential to the manufacture of Company
products. It is not possible to assess the impact this law will have on the
continued availability of raw materials. The inability to develop
satisfactory alternatives, if required, or a reduction or interruption in
supply or a significant increase in the price of materials or components,
could have a material adverse effect on the Company.
Patents, Trademarks,
Proprietary Rights and Licenses
The Company believes that patents and other proprietary
rights are important to its business. The Company also relies upon trade
secrets, know-how, continuing technological innovations and licensing
opportunities to develop and maintain its competitive position. The Company
reviews third-party patents and patent applications, as available, in an
effort to develop an effective patent strategy, avoid infringement of
third-party patents, identify licensing opportunities and monitor the patent
claims of others.
There has been substantial litigation regarding patent and
other intellectual property rights in the medical device industry. From time
to time, the Company is subject to claims of, and legal actions alleging,
infringement by the Company of the patent rights of others. The Company
believes that it has been vigilant in reviewing the patents of others with
regard to the Company’s products. However, an adverse outcome with
respect to any one or more of these claims or actions could have a material
adverse effect on the Company.
The Company owns numerous patents and has numerous patent
applications pending in the United States and in certain foreign countries
which relate to aspects of the technology used in many of the Company’s
products. The Company’s policy is generally to file patent applications
in the United States and foreign countries where rights are available and
the Company believes it is commercially advantageous to do so. In addition,
the Company is a party to several license agreements with unrelated third
parties pursuant to which it has obtained, for varying terms, the exclusive
or non-exclusive rights to certain patents held by such third parties in
consideration for cross-licensing rights or royalty payments. The Company
has also granted various rights in its own patents to others under
license agreements. The Company cannot assure that pending patent applications
will result in issued patents, that patents issued to or licensed by the
Company will not be challenged or circumvented by competitors, that such
patents will not be found to be invalid or that such patents will be found
to be sufficiently broad to protect the Company’s technology or provide
the Company with a competitive advantage.
The Company actively monitors the products of its
competitors for possible infringement of the Company’s owned and/or
licensed patents. Historically, litigation has been necessary to enforce
certain patent rights held by the Company and the Company plans to continue
to defend and prosecute its rights with respect to such patents. However,
the Company cannot assure that its efforts in this regard will be
successful. In addition, patent litigation could result in substantial cost
to, and diversion of effort by, the Company. The Company also relies upon
trade secrets for protection of its confidential and proprietary
information. There can be no assurance that others will not independently
develop substantially equivalent proprietary information or techniques or
that third parties will not otherwise gain access to the Company’s
trade secrets.
It is the Company’s policy to require certain of its
employees, consultants and other parties to execute confidentiality and
invention assignment agreements at the beginning of employment or consulting
relationships with the Company. However, the Company cannot assure that
these agreements will provide meaningful protection against, or adequate
remedies for, the unauthorized use or disclosure of the Company’s trade
secrets.
The Company has the following registered trademarks that
are referred to in this document: ACS, ACS HI-TORQUE EXTRA S’PORT, ACS
MULTI-LINK, ACS RX COMET, ANCURE, ATHEROCATH-BANTAM, ATHEROCATH-GTO, CPI,
DOC, ENDOGRAFT, ENDOTAK, ENDOTAK DSP, EXCEL,
HI-TORQUE BALANCE, HI-TORQUE FLOPPY II, HI-TORQUE TRAVERSE, TOURGUIDE,
INDEFLATOR, ORIGIN, SELUTE, SWEET TIP VENTAK, VENTAK MINI and VIGOR. The
following are trademarks of the Company: ACS ANCHOR, ACS AVENGER, ACS
CRITICOIL, ACS HI-TORQUE ALL STAR, ACS HI-TORQUE BALANCE MIDDLEWEIGHT, ACS
HI-TORQUE EXTRA S’PORT, ACS HI-TORQUE IRON MAN, ACS MULTI-LINK RX
TRISTAR, ACS MULTI-LINK OTW TRISTAR, ACS MULTI-LINK DUET, ACS MULTI-LINK RX
DUET, ACS OTW LIFESTREAM, ACS OTW MULTI-LINK, ACS RX MULTI-LINK, ACS RX
MULTI-LINK HP, ACS RX ROCKET, ACS TX 2000, ACS TX 2000 VP, ACS VIKING,
ACTIVATOR, ARIES, CONTAK, CONTAK TR, DISCOVERY, ENDURANCE, ENDURANCE EZ,
ENDURANCE Rx, FLOCOK, INDEFLATOR PLUS 20, 20/30 INDEFLATOR, SCA-EX,
S.T.E.P., TOURGUIDE, VASOVIEW, VENTAK PRIZM, GRIP, PULSAR, PULSAR MAX,
ULTIMA, VORTEX, VOYAGER, VASOVIEW UNIPORT, VASOVIEW UNIPORT PLUS, VERSACUT
and XCELON.
Competition
The medical devices industry is highly competitive. The
Company competes with many companies, some of which may have access to
greater financial and other resources than the Company. Furthermore, the
medical devices industry is characterized by rapid product development and
technological change. The present or future products of the Company could be
rendered obsolete or uneconomical by technological advances by one or more
of the Company’s present or future competitors or by other therapies
such as drugs. The Company must continue to develop and acquire new products
and technologies to remain competitive with other developers of medical
devices and therapies.
The Company faces substantial competition from a number of
companies in the markets for its products. The Company’s primary
competitors for implantable device system products are Medtronic, Inc. (
“Medtronic”) and St. Jude Medical, Inc. (“St. Jude”).
The Company’s primary competitors for coronary artery and peripheral
vascular disease products are Boston Scientific Corporation (“BSC
”), Johnson & Johnson (“J&J”), and Medtronic. With
respect to minimally invasive cardiac and vascular
surgery devices, the principal competitors of the Company are United States
Surgical Corporation, J&J, Medtronic, Heartport, Genzyme and BSC. The
Company believes that it competes primarily on the basis of product
features, product quality, customer support, field services and
cost-effectiveness.
Government
Regulation
As a manufacturer of medical devices, the Company is
subject to extensive regulation by the FDA and, in some jurisdictions, by
state and foreign governmental authorities. These regulations govern the
introduction of new medical devices, the observance of certain standards
with respect to the design, manufacture, testing, labeling and promotion of
such devices, the maintenance of certain records, the ability to track
devices, the reporting of potential product defects, the export of devices
and other matters. The Company believes that it is in substantial compliance
with these governmental regulations.
From time to time, the Company has received notifications
from the FDA or other authorities of alleged deficiencies in the Company
’s compliance with applicable regulatory requirements. These include
FDA warning letters and adverse inspection reports. To date, the Company has
been able to address or correct such deficiencies to the satisfaction of the
FDA or other authorities and, to the extent deficiencies arise in the
future, the Company expects to be able to correct them, but the Company
cannot assure that this will be the case. In addition, from time to time,
the Company has recalled, or issued safety alerts or advisory notices on,
certain of its products. To date, no such recall or safety alert has had a
material adverse effect on the Company, but the Company cannot assure that a
future recall or safety alert would not have such an effect.
The Company’s medical devices introduced in the
United States market are required by the FDA, as a condition of marketing,
to secure a premarket notification clearance pursuant to Section 510(k) of
the federal Food, Drug and Cosmetic Act, an approved pre-market approval (
“PMA”) application or a supplemental PMA. Alternatively, the
Company may seek United States market clearance through a Product
Development Protocol approved by the FDA. Establishing and completing a
Product Development Protocol, or obtaining a PMA or supplemental PMA, can
take up to several years and can involve preclinical studies and clinical
testing. In order to perform clinical testing in the United States on an
unapproved product, the Company is also required to obtain an
investigational device exemption from the FDA. In addition to requiring
clearance for new products, FDA rules may require a filing and FDA approval,
usually through a PMA supplement or a 510(k) pre-market notification
clearance, prior to marketing products that are modifications of existing
products or new indications for existing products. While the FDA
Modernization Act of 1997, when fully implemented, is expected to inject
more predictability into the product review process, streamline post-market
surveillance, and promote the global harmonization of regulatory procedures,
the process of obtaining such clearances can be onerous and
costly.
The Company cannot assure that all the necessary
approvals, including approval for product improvements and new products,
will be granted on a timely basis, if at all. Delays in receipt of, or
failure to receive, such approvals could have a material adverse effect on
the Company’s business. Moreover, after clearance is given, if the
product is shown to be hazardous or defective, the FDA and foreign
regulatory agencies have the power to withdraw the clearance or require the
Company to change the device, its manufacturing process or its labeling, to
supply additional proof of its safety and effectiveness or to recall,
repair, replace or refund the cost of the medical device. In addition,
federal, state and foreign regulations regarding the manufacture and sale of
medical devices are subject to future changes. The Company cannot predict
what impact, if any, these changes might have on its business. However, the
changes could have a material impact on the Company’s
business.
The Company is also required to register with the FDA as a
device manufacturer. As such, the Company is subject to periodic inspection
by the FDA for compliance with the FDA’s QSR requirements and other
regulations. These regulations require that the Company manufacture its
products and maintain its documents in a prescribed manner with respect to
design, manufacturing, testing and control activities. Further, the Company
is required to comply with various FDA requirements for labeling and
promotion. The Medical Device Reporting regulations require that the Company
provide information to the FDA whenever there is evidence to reasonably
suggest that one of its devices may have caused or contributed to a death or
serious injury or, if a malfunction were to recur, could cause or contribute
to a death or serious injury. In addition, the FDA prohibits the Company
from promoting a medical device before marketing clearance has been received
or promoting an approved device for unapproved indications. If the FDA
believes that a company is not in compliance with applicable regulations, it
can institute proceedings to detain or seize products, issue a warning
letter, issue a recall order, impose operating restrictions, enjoin future
violations and assess civil penalties against the company, its officers or
its employees and can recommend criminal prosecution to the Department of
Justice. Such actions could have a material impact on the Company’s
business. Other regulatory agencies may have similar powers.
Medical device laws are also in effect in many of the
countries outside the United States in which the Company does business.
These laws range from comprehensive device approval and quality system
requirements for some or all of the Company’s medical device products
to simpler requests for product data or certifications. The number and scope
of these requirements are increasing. In addition, the Company is required
to notify the FDA if it exports to certain countries medical devices
manufactured in the United States that have not been approved by the FDA for
distribution in the United States. The Company is also required to maintain
certain records relating to exports and make the records available to the
FDA for inspection, if required.
Health Care Cost
Containment and Third-Party Reimbursement
During the past several years, the major third-party
payers of hospital services in the United States (Medicare, Medicaid,
private health care insurance and managed care plans) have substantially
revised their policies, methodologies and formulae in an attempt to contain
health care costs. The introduction of various Medicare cost containment
incentives, combined with closer scrutiny of health care expenditures by
both private health insurers and employers, has resulted in increased
contractual adjustments and discounts in hospital charges for services
performed and in the shifting of services from inpatient to outpatient
settings. If hospitals respond to such pressures by substituting lower cost
products or therapies for the Company’s products, the Company could be
adversely affected. Moreover, third-party payers may deny reimbursement if
they determine that a device was not used in accordance with cost-effective
treatment methods as determined by the payer, was experimental, or for other
reasons. Certain states have already made significant changes to their
Medicaid programs and have also adopted health care reform. Similar
initiatives to limit the growth of health care costs, including price
regulation, are also underway in several other countries in which the
Company does business. Implementation of health care reforms now under
consideration in Japan, Germany, France and other countries may limit the
price of, or the level at which, reimbursement is provided for the Company
’s products.
The ability of customers to obtain appropriate
reimbursement for their products and services from government and
third-party payers is critical to the success of all medical device
companies around the world. Several foreign governments have attempted to
dramatically reshape reimbursement policies affecting medical devices.
Further restrictions on reimbursement of the Company’s customers will
likely have an impact on the products purchased by customers and the prices
they are willing to pay.
Product Liability and
Insurance
The design, manufacture and marketing of medical devices
of the types produced by the Company entail an inherent risk of product
liability claims. The Company’s products are often used in
intensive care settings with seriously ill patients. In addition, many of the
medical devices manufactured and sold by the Company are designed to be
implanted in the human body for long periods of time or indefinitely. The
occurrence of a problem with one of the Company’s products could result
in product liability claims and/or a recall of, or safety alert or advisory
notice relating to, the product. While the amount of product liability
insurance maintained by the Company has been adequate in relation to claims
made against the Company in the past, the Company cannot assure that the
amount of this insurance will be adequate to satisfy claims made against the
Company in the future or that the Company will be able to obtain insurance
in the future at satisfactory rates or in adequate amounts. Product
liability claims or product recalls in the future, regardless of their
ultimate outcome, could have a material adverse effect on the Company’s
business, financial condition and reputation, and on the Company’s
ability to attract and retain customers for its products.
Environmental
Compliance
The Company is subject to various international, federal,
state and local laws and regulations relating to the protection of the
environment. In the course of its business, the Company is involved in the
handling, storage and disposal of certain chemicals. While the Company
continues to make capital and operational expenditures relating to
compliance with existing environmental laws and regulations, it does not
anticipate that those expenditures will have a material adverse effect on
its business.
Research and
Development
The Company is engaged in ongoing research and development
to introduce clinically advanced new products, to enhance the effectiveness,
ease of use, safety and reliability of its existing products and to expand
the applications for which the uses of its products are appropriate. The
Company is dedicated to developing novel technologies that will furnish
health care providers with a more complete line of products to treat medical
conditions through minimally invasive procedures.
The Company’s research and development activities are
carried out primarily in facilities located in Cupertino, Santa Clara, Menlo
Park, and Temecula, California; St. Paul, Minnesota; Redmond, Washington;
Houston, Texas; and Brussels, Belgium. The Company’s research and
development staff is focused on product design and development, quality,
clinical research and regulatory compliance. To pursue primary research
efforts, the Company has developed alliances with several leading research
institutions and universities. The Company also works with leading
clinicians around the world in conducting scientific studies on the Company
’s products. These studies include clinical trials which provide data
for use in regulatory submissions and post market approval studies involving
applications of the Company’s products.
The Company evaluates developing technologies in areas
where it may have technological or marketing expertise for possible
investment or acquisition. The Company has invested in several start-up
ventures. In return for funding and technology, the Company has received
equity interests, extended loans and has received other rights in these
ventures.
Quality Assurance
Systems
The Company is committed to providing high quality
products to its customers. To meet this commitment, the Company has
implemented modern quality systems and concepts throughout the organization.
The Company’s quality system starts with the initial product
specification and continues through the design of the product, component
specification process and the manufacturing, sales and servicing of the
product. The quality system is designed to build in quality and to utilize
continuous improvement concepts throughout the product life.
Certain of the Company’s operations are
certified under ISO 9001, ISO 9002, ISO 13485, ISO 13488, EN46001 and
EN46002 international quality system standards. ISO 9002 requires, among
other items, an implemented quality system that applies to component
quality, supplier control and manufacturing operations. In addition, ISO
9001 and EN46001 require an implemented quality system that applies to
product design. These certifications can be obtained only after a complete
audit of a company’s quality system by an independent outside auditor.
These certifications require that these facilities undergo periodic
reexamination.
Executive Officers of the
Company
Name
|
|
Position
|
|
Age
|
| James M.
Cornelius |
|
Chairman of the Board of
Directors and Director |
|
56 |
| |
|
| Ronald W.
Dollens |
|
President, Chief Executive
Officer and Director |
|
53 |
| |
|
| J.B. King(1) |
|
Vice President, General
Counsel, Secretary and Director |
|
70 |
| |
|
| Bruce J
Barclay(2) |
|
Deputy General Counsel and
Secretary |
|
43 |
| |
|
| Mark C.
Bartell(3) |
|
President, Guidant Sales
Corporation |
|
40 |
| |
|
| James R.
Baumgardt(4) |
|
President, Guidant Sales
Corporation |
|
52 |
| |
|
| Keith E. Brauer |
|
Vice President, Finance and
Chief Financial Officer |
|
51 |
| |
|
| John M. Capek(3) |
|
President, Vascular
Intervention Group |
|
38 |
| |
|
| A. Jay Graf(3) |
|
Group Chairman |
|
52 |
| |
|
| Ginger L.
Graham(3) |
|
Group Chairman |
|
44 |
| |
|
| Cynthia L.
Lucchese(5) |
|
Corporate Controller and
Chief Accounting Officer |
|
39 |
| |
|
| Fred McCoy(3) |
|
President, Cardiac Rhythm
Management Group |
|
43 |
| |
|
| Dana G. Mead,
Jr.(3) |
|
President, Guidant Japan,
Asia Pacific Operations |
|
40 |
| |
|
| Rodney R. Nash |
|
Vice President Corporate
Resources and Policy |
|
58 |
| |
|
| Guido J.
Neels(6) |
|
President, Guidant Europe,
Middle East and Africa |
|
51 |
| |
|
| Michael A.
Sherman(7) |
|
Corporate Controller and
Chief Accounting Officer |
|
33 |
| |
|
| Richard M. van
Oostrom(8) |
|
President of Operations,
Europe, Middle East and Africa |
|
55 |
| |
|
F. Thomas (Jay)
Watkins, III |
|
President, Cardiac &
Vascular Surgery |
|
47 |
(1)
|
Mr. King began serving as
Secretary on February 21, 2000.
|
(2)
|
Mr. Barclay resigned from
his position as Deputy General Counsel as of February 29, 2000, and
Secretary as of February 21, 2000.
|
(3)
|
These individuals began
serving in their respective positions as of March 1, 2000.
|
(4)
|
As of March 1, 2000, Mr.
Baumgardt is serving as President of Guidant Foundation.
|
(5)
|
Ms. Lucchese resigned from
her position as Corporate Controller and Chief Accounting Officer of the
Company as of March 20, 2000.
|
(6)
|
Mr. Neels began serving in
such position as of January 1, 2000.
|
(7)
|
Mr. Sherman began serving
as Corporate Controller and Chief Accounting Officer of the Company as of
March 20, 2000.
|
(8)
|
As of January 1, 2000, Mr.
Van Oostrom is serving as Chairman, Guidant European Policy
Board.
|
A brief summary of the recent business and professional
experience of each executive officer is set forth below.
James M. Cornelius Mr.
Cornelius is Chairman of the Board of Directors and a Director of the
Company. Previously, he was Vice President, Finance and Chief Financial
Officer of Lilly from 1983 until his retirement in October 1995 and was a
Director for Lilly. Mr. Cornelius has served as Treasurer of Lilly and as
President of IVAC Corporation, a former Lilly medical device subsidiary. He
joined Lilly in 1967. Mr. Cornelius is a director of American United Life
Insurance Company, Chubb Corporation, Lilly Industries, Inc., and the
National Bank of Indianapolis. Mr. Cornelius also serves as a Trustee of the
University of Indianapolis and the Indianapolis Museum of Art.
Ronald W. Dollens Mr.
Dollens is President, Chief Executive Officer and a Director of the Company.
Previously, he served as President of Lilly’s MDD Division from 1991
until 1995. Mr. Dollens served as Vice President of Lilly’s MDD
Division and Chairman of the Company’s subsidiary, Advanced
Cardiovascular Systems, Inc. (“ACS”), from 1990 to 1991. He also
held the position of President and Chief Executive Officer of ACS. Mr.
Dollens joined Lilly in 1972. Mr. Dollens currently serves on the boards of
Beckman Coulter, Inc., the Health Industry Manufacturers Association
(Chairman), the Eiteljorg Museum, St. Vincent Hospital Foundation, and the
Indiana State Symphony Society Board. He is also the President of the
Indiana Health Industry Forum.
J. B. King Mr. King is
Vice President, General Counsel, Secretary and a Director of the Company.
Mr. King also acts as counsel to the law firm of Baker & Daniels, which
provides legal services to the Company. He previously was Vice President and
General Counsel for Lilly, a position he held from 1987 until he retired in
1995. Before joining Lilly, Mr. King was a partner and chairman of the
management committee of Baker & Daniels. Mr. King is a director of the
Indiana Legal Foundation, IWC Resources, Inc., and the James Whitcomb Riley
Memorial Association.
Bruce J Barclay Mr.
Barclay served as Deputy General Counsel and Secretary of the Company
through February 2000. Previously, Mr. Barclay served as Vice President,
Secretary and General Counsel of Vascular Intervention and Cardiac and
Vascular Surgery. He was named Vice President and General Counsel of ACS in
1992. Prior to that he served as Patent Counsel for ACS. Mr. Barclay also
had responsibility for Business Development at Vascular Intervention. Prior
to working at ACS, Mr. Barclay worked for Lilly first in pharmaceutical
research and later as a patent attorney. Mr. Barclay joined Lilly in 1978
and is a registered patent attorney.
Mark C. Bartell As of
March 1, 2000, Mr. Bartell is a Vice President of the Company and President,
Guidant Sales Corporation. Prior to this assignment, he served as Vice
President of Marketing for the Company’s Cardiac Rhythm Management
Group from 1997 to February 2000. He served as Vice President and General
Manager of Guidewires for the Company’s Vascular Intervention Group
from 1995 to 1997. Mr. Bartell joined the Company’s subsidiary, Cardiac
Pacemakers, Inc. (“CPI”) in 1985 as a financial analyst. He held
positions in new product planning, research and development, product
management and as a sales representative.
James R. Baumgardt Mr.
Baumgardt served as a Vice President of the Company and President, Guidant
Sales Corporation through February 2000. Previously he held the position of
President, Western Hemisphere Sales. Prior to that he held the position of
Vice President, Corporate Resources from 1994 to 1995. Mr. Baumgardt has
also served as Executive Director of Human Resources and Business
Development for the MDD Division of Lilly from 1992 to 1994. Mr. Baumgardt
was Director of Personnel for Lilly from 1990 to 1992 and Director of Sales
for Lilly’s Select Product Division from 1988 to 1990. He joined Lilly
in 1970. Mr. Baumgardt is a director of the Rose-Hulman Institute of
Technology.
Keith E. Brauer Mr.
Brauer is Vice President, Finance and Chief Financial Officer for the
Company. Previously, he served as Executive Director of Finance and Chief
Accounting Officer of Lilly from 1992 to 1994. Mr. Brauer was Executive
Director of International Finance of Lilly from 1988 to 1992 and Director of
Corporate Affairs of Lilly from 1986 to 1988. Additionally, he held the
positions of
Vice President of Finance and Treasurer for Physio-Control Corporation, and
Controller for Elizabeth Arden, both former Lilly subsidiaries. Mr. Brauer
joined Lilly in 1974. Mr. Brauer is a trustee of the Indianapolis Museum of
Art and is a member of the Finance and Audit Committee Board of Community
Hospitals of Indiana, Inc. Mr. Brauer also serves on the University of
Michigan Business School Corporate Advisory Board.
John M. Capek As of March
1, 2000, Mr. Capek is a Vice President of the Company and President of the
Company’s Vascular Intervention Group. Previously, Mr. Capek was the
Vice President and General Manager of the Company’s German Operations.
He served in this position from 1997 to February 2000. Mr. Capek served as
Vice President, Marketing for the Company’s Cardiac Rhythm Management
Group from 1991 to 1997. Mr. Capek joined Lilly’s MDD division in 1987
and in 1990 served as Director of New Product Planning.
A. Jay Graf As of March
1, 2000, Mr. Graf is Group Chairman and is responsible for the Company
’s three operating groups, Cardiac Rhythm Management, Cardiac &
Vascular Surgery, and Vascular Intervention. Prior to this assignment, Mr.
Graf served as a Vice President of the Company and President of Cardiac
Rhythm Management since 1994. He has been President and Chief Executive
Officer of CPI since 1992. He joined CPI as Executive Vice President and
Chief Operating Officer in 1990. Mr. Graf has also held the position of
Senior Vice President of Operations at Physio-Control Corporation.
Additionally, Mr. Graf held the positions of Vice President of Sales and
Technical Services, and Vice President of Marketing and Communications at
Physio-Control Corporation. Mr. Graf joined Lilly in 1976. Mr. Graf is a
director of ATS Medical, Inc.
Ginger L. Graham As of
March 1, 2000, Ms. Graham is Group Chairman and is responsible for the
activities of the Company’s geographic operations in the United States,
Europe, Japan and Emerging Markets. Previously, Ms. Graham served as a Vice
President of the Company and President of Vascular Intervention, a position
she held since the Company was formed in 1994. She has been President and
Chief Executive Officer of ACS since 1993. She served as a Director of
Pharmaceutical Sales for Lilly in 1992 and was Director of Corporate
Pharmaceutical Strategic Planning from 1989 to 1991. Ms. Graham joined Lilly
in 1979. Ms. Graham is a director of Amylin Pharmaceuticals, Inc. and is a
director and Chairman of the California Healthcare Institute. She also
serves on the board for the Silicon Valley Chapter of the American Heart
Association and is a member of the Committee of 200.
Cynthia L. Lucchese Ms.
Lucchese was Corporate Controller and Chief Accounting Officer of the
Company from October 1999 through March 20, 2000. She served as Treasurer of
the Company from 1994 to October 1999. She served as Worldwide Treasury
Planning Manager for Lilly from 1992 to 1994. She served as Audit Manager
for Lilly from 1990 to 1992. Ms. Lucchese joined Lilly in 1987. Prior to
joining Lilly, she was on the audit staff of Ernst & Young LLP from 1982
to 1986. Ms. Lucchese is a Certified Public Accountant. She is a director
for Ballet Internationale and Park Tudor School.
Fred McCoy As of March 1,
2000, Mr. McCoy is a Vice President of the Company and President of the
Company’s Cardiac Rhythm Management Group. Prior to this assignment, he
served as President of Asia Pacific Operations from 1997 to February 2000.
Previously, he served as Vice President, U.S. Operations West from 1995 to
1997. Mr. McCoy was General Manager, Northwest Operations for the MDD
division of Lilly from 1993 to 1995. Additionally, he held the position of
Chief Financial Officer of CPI from 1991 to 1993. Mr. McCoy joined Lilly in
1981. He recently served as Vice Chairman of the American Chamber of
Commerce in Japan SubCommittee on Medical Equipment and Supplies. Mr. McCoy
serves on the Alumni Advisory Board of the Kellogg Graduate School of
Management at Northwestern University and on the Board of Trustees of St.
Andrews Presbyterian College.
Dana G. Mead, Jr. As of
March 1, 2000, Mr. Mead is a Vice President of the Company and President of
Guidant Japan, Asia Pacific Operations. Previously, he held the position of
Vice President
and General Manager, Stents, Vascular Intervention Group, from 1998 to
February 2000. Since joining the Company in 1992, Mr. Mead has held various
sales and marketing roles, including Director of Marketing and Director of
Sales, Cardiac & Vascular Surgery Group, from 1994 to 1996. In 1996, he
was promoted to Vice President, Global Marketing, Cardiac & Vascular
Surgery Group. Mr. Mead served in this position through 1997. From 1997 to
1998, Mr. Mead served as Vice President and General Manager of the Cardiac
& Vascular Surgery Group.
Rodney R. Nash Mr. Nash
is Vice President of Corporate Resources & Policy for the Company, which
includes management committee responsibility for Human Resources and
Corporate Affairs. Prior to this assignment, Mr. Nash served as the
president of Guidant Japan and Asia Pacific Operations from 1992 to 1996. He
joined Lilly in 1972 and has held various assignments in sales, marketing
and general management, including director of marketing, Eli Lilly
(Philippines); district sales manager, Long Island, New York; general
manager, Eli Lilly (Taiwan); executive director of international sales and
marketing, IVAC Corporation; and president of the MDD Division, Eli Lilly
Japan. While in Tokyo, he served as chairman of the American Chamber of
Commerce in Japan’s Medical Equipment and Supply SubCommittee, dealing
with U.S./Japan medical equipment trade issues. Currently, Mr. Nash serves
on the board of the Indianapolis Convention and Visitors Association and the
Kelly School of Business Board of Visitors at Indiana
University.
Guido J. Neels As of
January 1, 2000, Mr. Neels serves as President, Guidant Europe, Middle East
and Africa. He served as Vice President, Global Marketing for Vascular
Intervention from 1996 to December 1999. Prior to serving in that position,
he was Managing Director, Guidant Germany and Central Europe from 1993 to
1996. Mr. Neels joined Lilly in 1982 and held various sales and marketing
positions in the United Kingdom, The Netherlands and the United States. He
joined the MDD division of Lilly in 1989 and held general management
positions in the U.K. and Germany.
Michael A. Sherman As of
March 20, 2000, Mr. Sherman is the Corporate Controller and Chief Accounting
Officer for the Company. He served as Director of Finance for Guidant Sales
Corporation from March 1997 to March 2000. Prior to that he served as
Director of Corporate Financial Planning of the Company from 1994 to March
1997. Mr. Sherman joined Lilly in 1988. He has held positions in audit,
domestic and international financial planning and reporting, business
development and treasury while with Lilly and the Company.
Richard M. van Oostrom
Mr. van Oostrom was Vice President of the Company and President of
Operations, Europe, Middle East and Africa through December 31, 1999. He
served as Vice President of European Operations for Lilly’s MDD
Division from 1984 to 1994. Mr. van Oostrom was an Executive Director of
Marketing for Lilly from 1981 to 1984 and President and General Manager of
Eli Lilly Canada Inc. from 1980 to 1981. He joined Lilly in 1971. Mr. van
Oostrom is a board member of Isotis B.V., Impella and Eucomed, the European
Trade Association for medical devices.
F. Thomas (Jay) Watkins, III
Mr. Watkins has served as a Vice President of the Company and
President of Cardiac and Vascular Surgery and Compass since 1995.
Previously, he has served in management positions in several start-up
companies, including Microgenics Corporation, and was a consultant with the
international consulting firm of McKinsey & Company, Inc.
Employees
As of December 31, 1999, the Company had approximately
8,360 full-time employees, including approximately 1,730 employees outside
the United States. The Company maintains compensation, benefits, equity
participation and work environment policies intended to assist in attracting
and retaining qualified personnel. The Company believes that the success of
its business will depend, in significant part, on its ability to attract and
retain such personnel. In addition, the Company contracts
for services where appropriate. The contract labor provides management with
flexibility in dealing with fluctuations in volume during periods of high
sales growth and through new product transfers to manufacturing.
None of the Company’s employees are represented by a
labor union. The Company has never experienced an organized work stoppage or
strike and considers its relations with its employees to be
excellent.
Financial Information
Relating to Classes of Products
Financial information relating to classes of products, set
forth in the Company’s 1999 Annual Report to Shareholders at page 41
under “Notes to Consolidated Financial Statements, Note 12
—Segment Information,” is incorporated herein by
reference.
Due to several factors, including the introduction of new
products by the Company and other manufacturers, the relative contribution
of any particular Company product to consolidated net sales is not
necessarily constant from year to year, and its contribution to consolidated
net income is not necessarily the same as its contribution to consolidated
net sales.
Financial Information
Relating to Foreign and Domestic Operations
Financial information relating to foreign and domestic
operations, set forth in the Company’s 1999Annual Report to
Shareholders at page 41 under “Notes to Consolidated Financial
Statements, Note 12—Segment Information,” is incorporated herein
by reference.
Local restrictions on the transfer of funds from branches
and subsidiaries located abroad (including the availability of dollar
exchange) have not to date been a significant deterrent in the Company
’s overall operations abroad. The Company cannot predict what effect
these restrictions or the other risks inherent in foreign operations,
including possible nationalization, might have on its future operations or
what other restrictions may be imposed in the future.
Item 2.
PROPERTIES
As of December 31, 1999, the Company owned or leased the
following principal facilities:
Location
|
|
Type of
Facility
|
|
Approximate
Square Feet
|
|
Leased
or
Owned
|
| Basingstoke, UK |
|
Administration |
|
24,000 |
|
Leased |
| |
|
| Brussels,
Belgium |
|
Administration and CRM
research |
|
17,000 |
|
Leased |
| |
|
| Clonmel, Ireland |
|
Manufacturing |
|
155,000 |
|
Owned |
| |
|
| Cupertino, CA |
|
C&VS manufacturing,
research and development,
administrative, sales and marketing, and warehouse |
|
23,500 |
|
Leased |
| |
|
| Cupertino, CA |
|
C&VS administrative,
warehouse and quality
assurance |
|
11,000 |
|
Leased |
| |
|
| Dorado, PR |
|
CRM manufacturing and
administration |
|
124,000 |
|
Owned |
| |
|
| Houston, TX |
|
VI research and
development, manufacturing and
administration |
|
22,500 |
|
Leased |
| |
|
| Indianapolis, IN |
|
Administration |
|
18,000 |
|
Leased |
| |
|
| Menlo Park, CA |
|
C&VS manufacturing,
research and development,
administration, sales and marketing and warehouse |
|
200,000 |
|
Leased |
| |
|
| Redmond, WA |
|
CRM research and
development |
|
35,000 |
|
Leased |
| |
|
| Santa Clara, CA |
|
VI manufacturing, research
and development,
administration, and sales and marketing |
|
370,000 |
|
Owned |
| |
|
| St. Paul, MN |
|
CRM manufacturing, research
and development,
administration and sales and marketing |
|
456,000 |
|
Owned |
| |
|
| St. Paul, MN |
|
CRM lead development and
administration |
|
133,000 |
|
Leased |
| |
|
| St. Paul, MN |
|
CRM packaging, shipping and
warehouse |
|
25,000 |
|
Leased |
| |
|
| Temecula, CA |
|
VI manufacturing and
research and development;
CRM research and development |
|
500,000 |
|
Owned |
| |
|
| Tokyo, Japan |
|
Regulatory affairs, quality
assurance, administration
and sales and marketing |
|
21,000 |
|
Leased |
| |
|
| Tokyo, Japan |
|
Warehouse |
|
14,000 |
|
Leased |
The Company currently maintains its executive offices at
111 Monument Circle, 29th Floor, Indianapolis, Indiana. Subject to normal
expansion, the Company believes that its facilities are adequate to meet its
present and reasonably foreseeable needs.
The Company believes that none of its properties is
subject to any encumbrance, easement or other restriction that would detract
materially from its value or materially impair its use in the operation of
the business of the Company. The buildings owned by the Company are of
varying ages and are in good condition.
Item 3.
LEGAL AND REGULATORY PROCEEDINGS
The Company is currently a party to various legal actions
which have occurred in the normal course of its business. The litigation
includes disputes over intellectual property, product liability, employment
litigation and general commercial matters.
The Company currently has a number of disputes with Boston
Scientific Corporation (“BSC”) and its subsidiary, SciMed Life
Systems, Inc. (“SciMed”). These include the following:
|
A. In a lawsuit originally
filed against Advanced Cardiovascular Systems Inc. (“ACS”), a
wholly-owned subsidiary of the Company, on May 31, 1994, in the Northern
District of California, SciMed alleged that the ACS RX ELIPSE Coronary
Dilatation Catheter infringes certain patents owned by SciMed.
Subsequently, SciMed amended the complaint to allege infringement by the
ACS RX MULTI-LINK Coronary Stent System. On June 15, 1999, the court
entered an order granting a motion for summary judgment of
non-infringement in favor of ACS. As a result, the court entered judgment
in favor of ACS and closed the case. SciMed has appealed.
|
|
B. On October 10, 1995, ACS
filed suit against SciMed alleging that the SciMed Express Plus and
Express Plus II coronary dilatation catheters infringe certain patents of
ACS. In addition, on March 12, 1996, ACS filed a separate lawsuit alleging
that these products infringe another patent of ACS. These lawsuits were
filed in the Northern District of California and have now been
consolidated. In the lawsuit, ACS is seeking injunctive relief and
monetary damages. Trial is scheduled to begin in August 2000.
|
|
C. On March 12, 1996, ACS
filed suit against SciMed in the Northern District of California alleging
that SciMed’s Trio/Bandit line of coronary dilatation catheters
infringes a patent of ACS. On June 22, 1999, the court granted ACS’
motions for summary judgment of validity and infringement of its patent.
In the lawsuit, ACS is seeking injunctive relief and monetary damages.
Trial of the remaining issues is currently scheduled to commence in May,
2000.
|
|
D. On September 17, 1997,
ACS filed suit against SciMed and BSC in the Northern District of
California alleging that the SciMed Rebel rapid exchange coronary
dilatation catheter infringes certain patents of ACS. In the lawsuit, ACS
is seeking injunctive relief and monetary damages.
|
|
E. On August 12, 1998, ACS
and Guidant Sales Corporation (“GSC”) filed suit against BSC and
SciMed in the Southern District of Indiana alleging that SciMed’s NIR
stent infringes certain patents of ACS. In the lawsuit ACS is seeking
injunctive relief and monetary damages. The trial, which was originally
scheduled to begin in February 2000, has been postponed while the Court
considers the outstanding motions filed by the parties.
|
|
F. On December 29, 1998,
SciMed filed suit against the Company in The Hague, The Netherlands
alleging infringement of a European Patent owned by SciMed by the ACS RX
ELIPSE Coronary Dilatation Catheter and the ACS RX MULTI-LINK, ACS RX
MULTI-LINK HP, and ACS RX DUET Coronary Stent Systems. SciMed is seeking
injunctive relief and monetary damages. A hearing was held on November 5,
1999. On February 16, 2000, the Court asked the Dutch Patent Office for an
advisory opinion on the validity of the patent.
|
|
G. On January 13, 1999,
SciMed filed suit against the Company, ACS and GSC in the Northern
District of California alleging that ACS’ RX MULTI-LINK, RX
MULTI-LINK HP, and MULTI-LINK RX DUET Coronary Stent Systems infringe
certain SciMed patents. On September 17, 1999, the court dismissed SciMed
’s claims against the ACS RX MULTI-LINK, without prejudice. In the
lawsuit, SciMed is seeking injunctive relief and monetary damages. A
hearing to construe the patent currently is scheduled for June
2000.
|
The Company currently has a number of disputes with
Medtronic, Inc. (“Medtronic”), and its subsidiary Medtronic AVE,
including the following:
|
A. On October 10, 1995, ACS
filed suit against Medtronic in the Northern District of California
alleging that the Medtronic FALCON coronary dilatation catheter infringes
a patent of ACS. In addition, on March 12, 1996, ACS filed a separate
lawsuit alleging that the product infringes another patent of ACS. Both
lawsuits have been consolidated. On August 25, 1999, the court granted ACS
’ motions for summary judgment of infringement, validity and
enforceability of the patent. A jury trial was held from October 25, 1999
to November 3, 1999 on ACS’ claim of willful infringement and
damages. On November 3, 1999, the jury returned its verdict finding that
Medtronic had willfully infringed the patent and awarded ACS $5.4 million
in damages. The court held a hearing on December 15, 1999 on ACS’
requests for injunctive relief, enhanced damages, pre-judgment interest,
costs, and to declare the case exceptional and on Medtronic’s motion
for a new trial.
|
|
B. On November 6, 1997,
Medtronic filed a lawsuit against ACS in the United States District Court
for Minnesota alleging that the ACS RX MULTI-LINK Coronary Stent infringed
a patent owned by Medtronic. Medtronic amended its complaint on August 27,
1998 to add Guidant as a defendant. Trial by jury commenced on October 18,
1999, and in late November 1999, the court granted ACS’ and Guidant
’s motions for a directed verdict of non-infringement. A Final
Judgment of non-infringement was then entered on January 12, 2000.
Medtronic has appealed. Medtronic filed a second lawsuit on May 17, 1999
to add allegations that the ACS MULTI-LINK RX DUET Coronary Stent System,
the ACS MULTI-LINK OTW DUET Coronary Stent System, the ACS MULTI-LINK SOLO
Coronary Stent and the ACS MEGALINK Stent infringe the same patent. In
this new complaint, as well as the complaint in the earlier action,
Medtronic seeks injunctive relief and monetary damages. In view of the
appeal of the Final Judgment of non-infringement in the first lawsuit, the
parties have agreed to a stay of all actions in the second lawsuit pending
the outcome of the appeal.
|
|
C. On December 24, 1997,
ACS filed suit against Medtronic AVE in the United States District Court
for the Northern District of California alleging infringement of three
patents of ACS by certain Medtronic AVE stents. This case was subsequently
transferred to the District Court of Delaware. On April 10, 1998, ACS
filed another suit against Medtronic AVE alleging infringement of an
additional ACS patent. The lawsuits have now been consolidated. In the
lawsuits, ACS is seeking injunctive relief and monetary
damages.
|
|
D. On February 18, 1998,
Medtronic AVE filed suit against ACS in the District Court of Delaware
alleging that the sale of the ACS MULTI-LINK Coronary Stent infringes
certain patents licensed to Medtronic AVE. The lawsuit also alleges
misappropriation of trade secrets and breach of a confidentiality
agreement by ACS. In the lawsuit, Medtronic AVE is seeking injunctive
relief, monetary damages, and to invalidate certain ACS stent
patents.
|
|
E. On December 23, 1999,
ACS brought suit against Medtronic, Inc. and Medtronic AVE, Inc.
(collectively, “Medtronic”) in the Northern District of
California alleging that the S670 with Discrete TechnologyTM Rapid
Exchange Coronary Stent System (the “S670”) infringes a patent
of ACS. Additionally, on December 28, 1999, ACS filed a Notice of
Arbitration with the American Arbitration Association.
|
|
F. On February 7, 2000,
Medtronic filed suit against the Company and CTS in the Northern District
of California. The lawsuit alleges false advertising, unfair competition
and patent infringement by Guidant and CTS for making, using and selling
the VORTEX Stabilization System. In the lawsuit, Medtronic is seeking
injunctive relief, damages, attorneys’ fees and costs.
|
The Company currently has a number of disputes with J
&J and its subsidiary, Cordis Corporation (“Cordis”),
including the following:
|
A. On August 26, 1997, J
&J and Expandable Grafts Partnership (“EGP”) filed suit
against the Company’s subsidiary Guidant Canada Corporation in the
Federal Court of Canada alleging that the sale of the ACS MULTI-LINK
coronary stent in Canada infringes patents licensed to J&J by EGP. In
the lawsuit, J&J and EGP seek injunctive relief and monetary
damages.
|
|
B. On October 3, 1997,
Cordis filed suit against the Company and ACS, in the District Court for
the District of Delaware alleging that the sale of the ACS MULTI-LINK
Coronary Stent by ACS infringes certain patents licensed to Cordis. In
addition, on October 8, 1997, Cordis filed a motion for a preliminary
injunction in this lawsuit seeking to prevent ACS from selling the ACS
MULTI-LINK coronary stent. On October 22, 1997, Cordis amended the
complaint to include BSC and AVE as co-defendants. The complaint was
re-filed on February 6, 1998 to include EGP as a plaintiff. The court held
a hearing on the motion for a preliminary injunction in February 1998, and
in July, 1998 the court denied Cordis’ motion for a preliminary
injunction. On October 27, 1998 one of the patents asserted against the
Company and ACS emerged from a reexamination filed by Cordis. On April 1,
1999, Cordis filed a motion to again amend its complaint to add
allegations of infringement of the reexamined patent and a new patent of
Cordis that was issued on May 11, 1999 and to add the ACS MULTI-LINK DUET
Coronary and MEGALINK Biliary Stents as well. The court granted the motion
on May 13, 1999. In the lawsuit, Cordis is seeking injunctive relief and
monetary damages. Trial currently is scheduled to begin in November
2000.
|
|
C. On December 2, 1997,
Cordis filed suit against Guidant and ACS in the United States District
Court for the District of Delaware alleging that the ACS RX ROCKET
Coronary Dilatation Catheter infringes patents owned by Cordis. Cordis
also filed a motion for a preliminary injunction, which the court denied
on September 10, 1999. On September 17, 1999, the court dismissed Guidant
for lack of personal jurisdiction, leaving ACS as the sole defendant in
the case. In the lawsuit, Cordis is seeking injunctive relief, monetary
damages and attorney’s fees. Cordis also filed a separate lawsuit
against the Company in December 1997 in The Netherlands alleging
infringement of the European equivalents of these patents. In this
separate lawsuit, Cordis is seeking injunctive relief and monetary
damages.
|
|
D. On February 22, 1999,
ACS filed suit against Cordis in the United States District Court for the
Northern District of California alleging infringement of several ACS
patents by the Cordis CROWN stent. In the lawsuit, ACS is seeking
injunctive relief and monetary damages.
|
The Company currently has a number of disputes with
General Surgical Innovations, Inc. (“GSI”), including the
following:
|
A. On May 28, 1996, Origin
Medsystems, Inc. (“Origin”), a wholly-owned subsidiary of the
Company, filed suit against GSI in the Northern District of California
alleging that GSI’s Spacemaker balloon products infringe a patent of
Origin. In the lawsuit, Origin is seeking injunctive relief and monetary
damages. On April 20, 1998 the court granted GSI’s motion that the
Origin patent was obtained by inequitable conduct. On November 2, 1998 the
Court awarded GSI its attorney’s fees. Origin appealed both
decisions. On July 16, 1999, the Court of Appeals for the Federal Circuit
vacated the summary judgment of inequitable conduct and remanded the case
to the district court for further proceedings. On August 31, 1999, the
Federal Circuit vacated the award of attorneys’ fees.
|
|
B. On June 4, 1996, GSI
filed suit against Origin in the Northern District of California alleging
that Origin’s VASOVIEW Balloon Dissection System, Preperitoneal
Distention Balloon Systems, and Extraview Balloon Systems infringe a
patent owned by GSI. GSI’s motion for summary judgment of
infringement was granted on October 29, 1998, and a trial was held on the
validity of the GSI patent, willful infringement and damages. On February
8, 1999, the jury held the patent
valid and awarded GSI approximately $12.9 million in damages, which the
Company has accrued. GSI filed post-trial motions seeking injunctive
relief, enhancement of damages and a declaration that the case was
exceptional so as to provide a basis for an award of attorney’s fees.
By an order and judgment entered on April 16, 1999, the court declined GSI
’s requests to enhance damages and to declare the case exceptional.
The court issued an injunction, enjoining sales of the accused Origin
products for use in the United States. Origin has appealed the issues of
infringement and willfulness, and GSI has appealed the issues of
infringement, enhanced damages and attorney’s fees.
|
|
C. On September 24, 1997,
GSI filed a second suit against Origin in the Northern District of
California alleging that Origin’s VASOVIEW Balloon Dissection System
infringes another patent owned by GSI. GSI is seeking injunctive relief
and monetary damages. On July 6, 1999, GSI amended its complaint to add an
additional patent and Origin’s PDB and Extraview Systems to the suit.
On July 19, 1999, the district court entered an order staying all
proceedings pending the outcome of the appeal in the first case GSI
brought against Origin.
|
The Company currently has a number of disputes with St.
Jude Medical, Inc. (“St. Jude”), including the
following:
|
A. On May 3, 1996,
Pacesetter, Inc. (“Pacesetter”), a subsidiary of St. Jude, filed
a lawsuit against Cardiac Pacemakers, Inc. (“CPI”), a
wholly-owned subsidiary of the Company, which is currently pending in the
United States District Court for Minnesota. The complaint, as subsequently
amended, alleged infringement of certain Pacesetter patents by certain CPI
pacemaker models and programmers for pacemakers and defibrillators. The
lawsuit sought injunctive relief, unspecified monetary damages, and an
award of attorney’s fees. On December 16, 1998, following a trial on
the merits, the jury returned a verdict finding no liability by CPI on two
of the three patents asserted by Pacesetter, and infringement by software
in CPI programmers for certain pacemakers and defibrillators of the third
patent. The jury awarded Pacesetter damages in the amount of $9.675
million, which the Company has accrued, plus royalties and interest. The
court currently is considering (1) Pacesetter’s request for an
injunction, (2) Pacesetter’s request to overturn the jury’s
verdict of no liability on one patent, and (3) the Company’s request
that the court overturn the jury’s verdict of liability and declare
Pacesetter’s patent not infringed and invalid.
|
|
B. On November 26, 1996,
the Company and its subsidiaries, CPI and GSC, and Lilly filed suit (the
“State Court Case”) against St. Jude, Pacesetter, Ventritex,
Inc. (“Ventritex”) and the Telectronics Parties (as defined
below) in the Marion Superior Court, State of Indiana, alleging (among
other things) that the Telectronics Agreement (as defined below)did not
transfer to Pacesetter when Pacesetter purchased certain assets of the
Telectronics Parties in 1996. The lawsuit seeks declaratory and injunctive
relief to prevent and invalidate the purported transfer of the
Telectronics Agreement to Pacesetter. On June 12, 1998, the Company, CPI,
GSC, and Lilly requested a voluntary stay of the State Court Case pending
completion of the arbitration, which was granted on June 19,
1998.
|
|
C. On November 26, 1996,
CPI, GSC and Lilly filed suit against St. Jude, Pacesetter and Ventritex
in the United States District Court for the Southern District of Indiana
alleging that upon consummation of the merger of Ventritex and Pacesetter,
the continued manufacture, use or sale of certain Ventritex products would
infringe certain patents of CPI and Lilly. The lawsuit seeks declaratory
and injunctive relief and monetary damages. On June 8, 1998, the United
States District Court for the Southern District of Indiana entered an
Order staying proceedings pending the outcome of the arbitration between
the Company and the Telectronics Parties (as defined below).
|
|
D. On December 24, 1996,
certain entities affiliated with Telectronics Holdings Ltd. (“the
Telectronics Parties”) and Pacesetter filed suit against the Company,
CPI, GSC and Lilly in the
United States District Court for the District of Minnesota alleging that the
claims made in the State Court Case are subject to an arbitration
provision in the license agreement entered into in 1994 among CPI, Lilly
and the Telectronics Parties (“Telectronics Agreement”). In the
lawsuit, the Telectronics Parties and Pacesetter are seeking declaratory
and injunctive relief and an award of costs. On May 4, 1998, the United
States Court of Appeals for the Eighth Circuit (the “Eighth Circuit
”) held that an arbitrator (rather than a court) should decide
whether the disputes set forth in the State Court Case are subject to
arbitration. On July 9, 1998, the Minnesota District Court entered an
Order referring the matter to arbitration, subject to the qualification
that “the arbitrator shall determine what role, if any, Pacesetter
should have in the arbitration proceeding.” The arbitrator
subsequently ruled that Pacesetter was not a party to the arbitration. The
Telectronics Parties and the Company have completed the procedures for
selecting an arbitrator and have commenced the arbitration process. The
arbitration is scheduled to begin on April 17, 2000.
|
|
E. On March 31, 1999,
Pacesetter filed suit against GSC and CPI in the Central District of
California alleging that rate responsive pacemakers or defibrillators
having rate responsive pacing (including, by name, the VIGOR SR and VIGOR
DR pacemakers) infringe two patents owned by Pacesetter. In the lawsuit,
Pacesetter is seeking injunctive relief and unspecified monetary
damages.
|
On February 1, 1999 Deborah Charms filed suit against
Medtronic, the Company and CPI in the United States District Court for the
Western District of Texas alleging that unspecified defibrillation products
of Medtronic and CPI infringe a patent owned by Charms. On February 3, 2000,
the court entered an order that all claims alleged by Charms to have been
infringed by the Company and CPI were invalid and granted the defendants
’ motion for summary judgment. Charms has filed a Notice of Appeal. In
the lawsuit, Charms is seeking injunctive relief and unspecified monetary
damages.
In addition, the Company is currently involved in a number
of other patent related actions, including U.S. patent interferences,
European, Australian and Japanese patent oppositions and U.S. patent
reexamination proceedings.
While it is not possible to predict or determine the
outcome of the legal actions brought against it, or to provide an estimate
of the losses, if any, that may arise, the Company believes the costs
associated with all of these actions will not have a material adverse effect
on the Company’s consolidated financial position or liquidity, but
could possibly be material to the consolidated results of operations of any
one period.
Item 4.
SUBMISSIONS OF MATTERS TO A VOTE OF SECURITY HOLDERS
During the fourth quarter of 1999, no matters were
submitted to a vote of security holders.
PART II
Item 5.
MARKET FOR THE COMPANY’S COMMON STOCK AND RELATED STOCKHOLDER
MATTERS
The Company’s common stock is traded on the New York
Stock Exchange (“NYSE”) and the Pacific Exchange, Inc. (“PCX
”). Information relating to the high and low sales prices per share of
the Company’s common stock, as reported in the consolidated
transactions reporting system on the NYSE set forth in the Company’s
1999 Annual Report to Shareholders under “Notes to Consolidated
Financial Statements, Note 15—Selected Quarterly Information
(Unaudited),” at page 44 is incorporated herein by
reference.
During each quarter of 1998 and 1997, the Company paid a
quarterly cash dividend of $0.00625 per share of the Company’s common
stock, as adjusted for the Company’s two-for-one stock splits which
were effective in September 1997 and January 1999. In December 1998, the
Company’s Board of Directors voted to discontinue future dividend
payments on the Company’s common stock.
As of March 6, 2000, the approximate number of record
holders of the Company’s common stock was 5,933.
Item 6.
SELECTED FINANCIAL DATA
Selected financial data for each of the Company’s
five most recent fiscal years, set forth in the Company’s 1999 Annual
Report to Shareholders under “Selected Consolidated Financial Data,
” at page 19, are incorporated herein by reference.
Item 7.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION
Management’s Discussion and Analysis of Results of
Operations and Financial Condition, set forth in the Company’s 1999
Annual Report to Shareholders under “Operating Results” (pages 20
–26), “Liquidity and Financial Condition” (page 26), and
“Regulatory and Other Matters” (pages 27–28), is incorporated
herein by reference.
Item 7A.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK
Information related to quantitative and qualitative
disclosures about market risk, set forth in the Company’s 1999 Annual
Report to Shareholders under “Management’s Discussion and Analysis
of Results of Operations and Financial Condition — Market Risk
Disclosure” (page 27), is incorporated herein by reference.
Item 8.
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The consolidated financial statements of the Company and
its subsidiaries, listed in Item 14(a)1 and included in the Company’s
1999 Annual Report to Shareholders at pages 29–32 (Consolidated
Statements of Income, Consolidated Balance Sheets, Consolidated Statements
of Shareholders’ Equity and Consolidated Statements of Cash Flows), and
pages 33–44 (Notes to Consolidated Financial Statements) and the Report
of Independent Auditors set forth in the Company’s 1999 Annual Report
to Shareholders at page 45, are incorporated herein by
reference.
Information on quarterly results of operations, set forth
in the Company’s 1999 Annual Report to Shareholders under “Notes
to Consolidated Financial Statements, Note 15—Selected Quarterly
Information (Unaudited),” at page 44, is incorporated herein by
reference.
Item 9.
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
Part III
Item 10.
DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Information relating to the Company’s directors, set
forth in the Company’s Proxy Statement for the Annual Meeting of
Shareholders to be held on May 15, 2000, under “Election of Directors
—Nominees for Election,” is incorporated herein by reference.
Information relating to the Company’s executive officers is set forth
at pages 17–20 of this Form 10-K under “Executive Officers of the
Company.”
Item 11.
EXECUTIVE COMPENSATION
Information relating to executive compensation, set forth
in the Company’s Proxy Statement for the Annual Meeting of Shareholders
to be held May 15, 2000, under “Election of Directors—Executive
Compensation,” is incorporated herein by reference, except that the
Compensation Committee Report and Performance Graph are not so
incorporated.
Item 12.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
Information relating to ownership of the Company’s
common stock by persons known by the Company to be the beneficial owners of
more than 5% of the outstanding shares of common stock and by management,
set forth in the Company’s Proxy Statement for the Annual Meeting of
Shareholders to be held May 15, 2000, under “Election of Directors
—Ownership of Company Common Stock by Directors and Executive Officers,
” and “Election of Directors—Principal Holders of Company
Common Stock,” is incorporated herein by reference.
Item 13.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
None.
PART IV
Item 14.
EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM
8-K
(a)1. Financial
Statements
The following consolidated financial statements of the
Company and its subsidiaries, included in the Company’s 1999 Annual
Report to Shareholders at the pages indicated in parentheses, are
incorporated by reference in Item 8:
|
Consolidated Statements of
Income—Years Ended December 31, 1999, 1998 and 1997 (page
29)
|
|
Consolidated Balance Sheets
—December 31, 1999 and 1998 (page 30)
|
|
Consolidated Statements of
Shareholders’ Equity—Years Ended December 31, 1999, 1998 and
1997 (page 31)
|
|
Consolidated Statements of
Cash Flows—Years Ended December 31, 1999, 1998 and 1997 (page
32)
|
|
Notes to Consolidated
Financial Statements (pages 33–44)
|
(a)2. Financial
Statement Schedules
The following consolidated financial statement schedule of
the Company and its subsidiaries is included in this Form 10-K:
Valuation and Qualifying
Accounts (page F-1)
All other schedules for which provision is made in the
applicable accounting regulation of the Securities and Exchange Commission
are not required under the related instructions, are inapplicable or are
adequately explained in the financial statements and, therefore, have been
omitted.
The report of the Company’s independent auditors with
respect to the schedule listed above is contained herein as part of Exhibit
23.1, Consent of Independent Auditors.
(a)3.
Exhibits
| 3.1 |
|
Amended and Restated
Articles of Incorporation of the Registrant.(1) |
| |
|
| 3.2 |
|
By-Laws of the
Registrant.(2) |
| |
|
| 4.1 |
|
Specimen of Certificate for
Common Stock.(2) |
| |
|
| 10.1 |
|
Rights Agreement dated as
of October 17, 1994 between the Company and Bank One,
Indianapolis, N.A.(2) |
| |
|
| 10.2 |
|
Transfer Agreement dated as
of November 30, 1994 between Eli Lilly and Company and the
Company.(2) |
| |
|
| 10.3 |
|
Tax Sharing Agreement dated
as of November 30, 1994 between Eli Lilly and Company and
the Company.(2) |
| |
|
| 10.4 |
|
Form of International Asset
Purchase Agreement between international subsidiary of Eli Lilly
and Company and international subsidiary of the Company.(2) |
| |
|
| 10.5 |
|
Sublicense Agreement dated
as of October 18, 1994 between Eli Lilly and Company and
Cardiac Pacemakers, Inc.(2) |
| |
|
| 10.6 |
|
Purchase and Sale Agreement
and Escrow Instructions dated as of October 18, 1994 between
Eli Lilly and Company and Advanced Cardiovascular Systems,
Inc.(2) |
| 10.7 |
|
Assignment of Leases dated
as of October 25, 1985 between Seaport Centre Venture Phase
II and Metropolitan Life Insurance Company.(2) |
| |
|
| 10.8 |
|
Settlement Agreement dated
as of December 1, 1991 among Advanced Cardiovascular
Systems, Inc., Eli Lilly and Company and SciMed Life Systems,
Inc.(2) |
| |
|
| 10.9 |
|
Distribution Agreement
dated as of December 31, 1992 among Advanced Cardiovascular
Systems, Inc., Peripheral Systems Group and Mallinckrodt Medical,
Inc.(2) |
| |
|
| 10.10 |
|
Settlement Agreement dated
as of January 13, 1992 between Advanced Cardiovascular
Systems, Inc. and C. R. Bard, Inc.(2) |
| |
|
| 10.11 |
|
Settlement Agreement dated
as of April 4, 1998 between Advanced Cardiovascular Systems,
Inc. and C. R. Bard, Inc.(3) |
| |
|
| 10.12 |
|
Settlement and License
Agreement dated as of December 17, 1991 among Schneider
(Europe) A.G., Schneider (USA) Inc. and Advanced Cardiovascular Systems,
Inc.(2) |
| |
|
| 10.13 |
|
Amendment to Settlement and
License Agreement dated as of April 9, 1992 among
Schneider (Europe) A.G., Schneider (USA) Inc. and Advanced Cardiovascular
Systems,
Inc.(2) |
| |
|
| 10.14 |
|
Amended License Agreement
dated as of September 26, 1988 between Paul Yock, M.D. and
Advanced Cardiovascular Systems, Inc.(2) |
| |
|
| 10.15 |
|
First Amendment to Amended
License Agreement dated as of January 1, 1992 between Paul
Yock, M.D. and Advanced Cardiovascular Systems, Inc.(2) |
| |
|
| 10.16 |
|
Second Amendment to Amended
License Agreement dated as of January 13, 1992 between
Paul Yock, M.D. and Advanced Cardiovascular Systems, Inc.(2) |
| |
|
| 10.17 |
|
Agreement dated as of
January 31, 1994 between E. I. DuPont de Nemours and Company,
Cardiac Pacemakers, Inc. and Eli Lilly and Company.(2) |
| |
|
| 10.18 |
|
Agreement dated as of July
1, 1994 between E. I. DuPont de Nemours and Company, Minco
Products, Inc., Cardiac Pacemakers, Inc. and Eli Lilly and
Company.(2) |
| |
|
| 10.19 |
|
Override Agreement between
Motorola, Inc., Cardiac Pacemakers, Inc. and Eli Lilly and
Company. (2)10.20 Material Supply Agreement dated as of January 1, 1995
between Dow
Corning Corporation and Cardiac Pacemakers, Inc.(4) |
| |
|
| 10.20 |
|
Material Supply Agreement
dated as of January 1, 1995 between Dow Corning Corporation
and Cardiac Pacemakers, Inc.(4) |
| |
|
| 10.21 |
|
Purchase Contract dated as
of January 1, 1991 between Wilson Greatbatch Ltd. and Cardiac
Pacemakers, Inc.(2) |
| |
|
| 10.22 |
|
Purchase Contract Extension
between Wilson Greatbatch Ltd. and Cardiac Pacemakers, Inc.,
effective as of January 1, 1996.(4) |
| |
|
| 10.23 |
|
Exclusive License Agreement
dated as of January 30, 1973 between Medrad, Inc. and
Mieczyslaw Mirowski.(2) |
| |
|
| 10.24 |
|
Amendment to Exclusive
License Agreement dated as of January 10, 1975 between Medrad,
Inc. and Mieczyslaw Mirowski.(2) |
| |
|
| 10.25 |
|
First Addendum to the
Exclusive License Agreement dated as of June 17, 1974 between
Medrad, Inc. and Mieczyslaw Mirowski.(2) |
| |
|
| 10.26 |
|
Second Addendum to the
Exclusive License Agreement dated as of April 11, 1975 between
Medrad, Inc. and Mieczyslaw Mirowski.(2) |
| |
|
| 10.27 |
|
Third Addendum to the
Exclusive License Agreement dated as of December 22, 1976
between Medrad, Inc. and Mieczyslaw Mirowski.(2) |
| 10.28 |
|
Fourth Addendum to the
Exclusive License Agreement dated as of January 1, 1979 between
Medrad, Inc. and Mieczyslaw Mirowski.(2) |
| |
|
| 10.29 |
|
Fifth Addendum to the
Exclusive License Agreement dated as of June 24, 1981 between
Medrad, Inc. and Mieczyslaw Mirowski.(2) |
| |
|
| 10.30 |
|
Sixth Addendum to the
Exclusive License Agreement dated as of September 16, 1983
between Medrad, Inc., Mieczyslaw Mirowski, Medrad/Intec., Inc. and Intec
Systems, Inc.(2) |
| |
|
| 10.31 |
|
Guidant Corporation 1994
Stock Plan, as amended.(5)# |
| |
|
| 10.32 |
|
Guidant Corporation 1998
Stock Plan.(6)# |
| |
|
| 10.33 |
|
Guidant Corporation
Economic Value Added (EVA) Bonus Plan dated January 1,
1995.(4)# |
| |
|
| 10.34 |
|
Stock Purchase Agreement
dated as of October 31, 1994 between Eli Lilly and Company and
Advanced Cardiovascular Systems, Inc.(2) |
| |
|
| 10.35 |
|
Standard Form Office Lease
dated December 27, 1994 between Zell/Merrill Lynch Real
Estate Opportunity Partners Limited Partnership II and the
Company.(7) |
| |
|
| 10.36 |
|
Guidant Corporation Change
in Control Plan for Select Employees.(8) |
| |
|
| 10.37 |
|
Agreement and Plan of
Merger, dated as of August 30, 1999, among the Company,
Clydesdale Acquisition Corp. and CardioThoracic Systems, Inc.(9) |
| |
|
| 10.38 |
|
Five-Year Credit Agreement
dated as of August 26, 1998 among the Company, certain
banks, and Morgan Guaranty Trust Company of New York as Administrative
Agent.(3) |
| |
|
| 10.39 |
|
364-Day Credit Agreement
dated as of August 25, 1999, among the Company, certain banks,
and Morgan Guaranty Trust Company of New York as Administrative
Agent.(1) |
| |
|
| 10.40 |
|
Agreement and Plan of
Merger, dated August 10, 1998 by and among Guidant, Pegasus
Acquisition Corporation and InControl.(10) |
| |
|
| 10.41 |
|
Stock and Asset Purchase
Agreement, dated September 20, 1998, as amended February 1,
1999, between Guidant and Sulzer.(11) |
| |
|
| 10.42 |
|
Underwriting Agreement,
dated February 11, 1999 among the Company and certain
Underwriters relating to the issuance and sale by the Company of
$350,000,000 aggregate
principal amount of its 6.15% notes due 2006.(12) |
| |
|
| 11.1 |
|
Statement regarding
computation of per share earnings set forth in the Company’s 1999
Annual Report to Shareholders under “Notes to Consolidated Financial
Statements, Note 7
—Earnings (Loss) Per Share” at page 39, is incorporated herein by
reference. |
| |
|
| 12.1 |
|
Statement of Computation of
Ratio of Earnings to Fixed Charges.* |
| |
|
| 13.1 |
|
Annual Report to
Shareholders for the year ended December 31, 1999 (portions incorporated
by reference into this Form 10-K).* |
| |
|
| 21.1 |
|
Subsidiaries of the
Registrant.* |
| |
|
| 23.1 |
|
Consent of Independent
Auditors.* |
| |
|
| 27.1 |
|
Financial Data
Schedule.* |
| |
|
| 27.2 |
|
Restated Financial Data
Schedule* |
| |
|
| 27.3 |
|
Restated Financial Data
Schedule* |
| |
|
| 27.4 |
|
Restated Financial Data
Schedule* |
| |
|
| 27.5 |
|
Restated Financial Data
Schedule* |
| |
|
| 27.6 |
|
Restated Financial Data
Schedule* |
| |
|
| 27.7 |
|
Restated Financial Data
Schedule* |
| |
|
| 27.8 |
|
Restated Financial Data
Schedule* |
| 27.9 |
|
Restated Financial Data
Schedule* |
| |
|
| 99.1 |
|
Factors Affecting Future
Operating Results.* |
(1)
|
Incorporated herein by
reference to the identical exhibit filed as part of the Company’s
Quarterly Report on Form 10-Q for the quarterly period ended September 30,
1999.
|
(2)
|
Incorporated herein by
reference to the identical exhibit filed as part of the Company’s
Registration Statement on Form S-1, File No. 33-83934.
|
(3)
|
Incorporated by reference
to the identical exhibit filed as part of the Company’s Annual Report
on Form 10-K for the fiscal year ended December 31, 1998.
|
(4)
|
Incorporated herein by
reference to the identical exhibit filed as part of the Company’s
Annual Report on Form 10-K for the fiscal year ended December 31,
1995.
|
(5)
|
Incorporated herein by
reference to the identical exhibit filed as part of the Company’s
Annual Report on Form 10-K for the fiscal year ended December 31,
1996.
|
(6)
|
Incorporated herein by
reference to the identical exhibit filed as part of the Company’s
1998 Proxy Statement.
|
(7)
|
Incorporated herein by
reference to the identical exhibit filed as part of the Company’s
Annual Report on Form 10-K for the fiscal year ended December 31,
1994.
|
(8)
|
Incorporated herein by
reference to the identical exhibit filed as part of the Company’s
Quarterly Report on Form 10-Q for the quarterly period ended March 31,
1995.
|
(9)
|
Incorporated herein by
reference to the identical exhibit filed as part of the Company’s
Registration Statement on Form S-4, File No. 333-89085.
|
(10)
|
Incorporated herein by
reference to the identical exhibit filed as part of the Company’s
Form 8-K dated September 28, 1998.
|
(11)
|
Incorporated herein by
reference to the identical exhibit filed as part of the Company’s
Form 8-K dated February 4, 1999.
|
(12)
|
Incorporated herein by
reference to the identical exhibit filed as part of the Company’s
Form 8-K dated February 17, 1999.
|
# Management compensation
plan.
(b) Reports on
Form 8-K
On November 30, 1999, the Company filed a Report on Form
8-K reporting the completion of the Company’s acquisition of
CardioThoracic Systems, Inc. (“CTS”). The Report included the
Company’s quarterly Consolidated Statement of Income restated for the
acquisition of CTS for the three months ended September 30, 1999 and 1998,
June 30, 1999 and 1998, March 31, 1999 and 1998, for the nine months ended
September 30, 1999, for the three months ended December 31, 1998 and for the
year ended December 31, 1998 and Consolidated Balance Sheets as of September
30, 1999 and December 31, 1998.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d)
of the Securities Exchange Act of 1934, the Registrant has duly caused this
report to be signed on its behalf by the undersigned, thereunto duly
authorized.
March 20, 2000
Pursuant to the requirements of the Securities
Exchange Act of 1934, this report has been signed below by the following
persons on behalf of the Registrant and in the capacities and on the dates
indicated.
Signature
|
|
Title
|
|
Date
|
|
|
/s/
JAMES
M. CORNELIUS
James M.
Cornelius
|
|
Chairman of the Board and
Director (principal
executive officer) |
|
March 20, 2000 |
|
|
/s/
RONALD
W. DOLLENS
Ronald W.
Dollens
|
|
President, Chief Executive
Officer and Director
(principal executive officer) |
|
March 20, 2000 |
|
|
/s/
KEITH
E. BRAUER
Keith E.
Brauer
|
|
Vice President, Finance
and
Chief Financial Officer
(principal financial officer) |
|
March 20,
2000 |
|
|
/s/
MICHAEL
A. SHERMAN
Michael A.
Sherman
|
|
Corporate Controller and
Chief Accounting Officer
(principal accounting
officer) |
|
March 20,
2000 |
|
|
/s/
KIM
B. CLARK
, PH
.D.
Kim B. Clark,
Ph.D.
|
|
Director |
|
March 20,
2000 |
|
|
Maurice A.
Cox, Jr.
|
|
Director |
|
March 20,
2000 |
|
|
/s/
ENRIQUE
C. FALLA
Enrique C.
Falla
|
|
Director |
|
March 20,
2000 |
|
|
/s/
MICHAEL
GROBSTEIN
Michael
Grobstein
|
|
Director |
|
March 20,
2000 |
Signature
|
|
Title
|
|
Date
|
|
|
/s/
J.B. KING
J.B.
King
|
|
Director
|
|
March 20,
2000 |
|
|
/s/
SUSAN
B. KING
Susan B.
King
|
|
Director
|
|
March 20,
2000 |
|
|
/s/
J. KEVIN
MOORE
J. Kevin
Moore
|
|
Director
|
|
March 20,
2000 |
|
|
/s/
MARK
NOVITCH
, M.D.
Mark
Novitch, M.D.
|
|
Director
|
|
March 20,
2000 |
|
|
/s/
EUGENE
L. STEP
Eugene
L. Step
|
|
Director
|
|
March 20,
2000 |
|
|
/s/
RUEDI
E. WÄGER
Ruedi
E. Wäger, Ph.D.
|
|
Director
|
|
March 20,
2000 |
Guidant
Corporation and Subsidiaries
Schedule II.
Valuation and Qualifying Accounts
(in
millions)
Col.
A
|
|
Col.
B
|
|
Col.
C
|
|
Col.
D
|
|
Col.
E
|
Description
|
|
Balance
at
Beginning
of Period
|
|
Charges
and
Expenses
|
|
Deductions(1)
|
|
Balance
at
End of
Period
|
| Year Ended
December 31, 1997 |
|
|
|
Allowance for
inventory obsolescence |
|
$
23.0 |
|
$
14.7 |
|
$
(11.9 |
) |
|
$
25.8 |
|
Allowance for
doubtful accounts |
|
7.4 |
|
5.6 |
|
(3.6 |
) |
|
9.4 |
| |
|
|
|
|
|
|
|
|
|
|
Totals |
|
$
30.4 |
|
$
20.3 |
|
$
(15.5 |
) |
|
$
35.2 |
| |
|
|
|
|
|
|
|
|
|
| Year Ended
December 31, 1998 |
|
|
|
Allowance for
inventory obsolescence |
|
$
25.8 |
|
$
16.3 |
|
$
(19.1 |
) |
|
$
23.0 |
|
Allowance for
doubtful accounts |
|
9.4 |
|
15.6 |
|
(5.1 |
) |
|
19.9 |
| |
|
|
|
|
|
|
|
|
|
|
Totals |
|
$
35.2 |
|
$
31.9 |
|
$
(24.2 |
) |
|
$
42.9 |
| |
|
|
|
|
|
|
|
|
|
| Year Ended
December 31, 1999 |
|
|
|
Allowance for
inventory obsolescence |
|
$
23.0 |
|
$
31.9 |
|
$
(21.3 |
) |
|
$
33.6 |
|
Allowance for
doubtful accounts |
|
19.9 |
|
4.1 |
|
(8.5 |
) |
|
15.5 |
| |
|
|
|
|
|
|
|
|
|
|
Totals |
|
$
42.9 |
|
$
36.0 |
|
$
(29.8 |
) |
|
$
49.1 |
| |
|
|
|
|
|
|
|
|
|
(1)
|
Write-offs of
obsolete units or uncollectible accounts.
|
Exhibit
List
| 12.1 |
|
Statement of
Computation of Ratio of Earnings to Fixed Charges |
|
| 13.1 |
|
Annual Report
to Shareholders for the Year Ended December 31, 1998 (portions
incorporated
by reference) |
|
| 21.1 |
|
List of
Subsidiaries |
|
| 23.1 |
|
Consent of
Independent Auditors |
|
| 27.1 |
|
Financial Data
Schedule |
|
| 27.2 |
|
Restated
Financial Data Schedule |
|
| 27.3 |
|
Restated
Financial Data Schedule |
|
| 27.4 |
|
Restated
Financial Data Schedule |
|
| 27.5 |
|
Restated
Financial Data Schedule |
|
| 27.6 |
|
Restated
Financial Data Schedule |
|
| 27.7 |
|
Restated
Financial Data Schedule |
|
| 27.8 |
|
Restated
Financial Data Schedule |
|
| 27.9 |
|
Restated
Financial Data Schedule |
|
| 99.1 |
|
Factors
Possibly Affecting Future Operating Results |
