SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) August 19, 2002
NOVOSTE CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
Florida 0-20727 59-2787476
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification)
3890 Steve Reynolds Blvd., Norcross, GA 30093
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (770) 717-0904
(Former name or former address, if changed since last report)
ITEM 5. OTHER EVENTS
On August 19, 2002, the registrant issued a press release announcing that it had
initiated a voluntary product recall of its Beta-Cath(TM) 3.5F delivery
catheters. The recall was related to the Company's belief that handling issues
specific to the distal rail design of the Beta-Cath(TM) 3.5F delivery catheters
may have the potential to compromise patient safety. The Beta-Rail 3.5F delivery
catheter will be returned to the Company and, pending FDA approval of a new
training program, the product will be relaunched. The FDA has been informed of
the Company's decision to recall the product and discussions relating to
improvements of the Beta-Rail 3.5F system training program and planned product
relaunch are ongoing. A copy of the press release is attached as Exhibit 99.2
and incorporated by reference herein. The Company conducted a telephone
conference call at 2 P.M. on August 19, 2002 to discuss the product recall and
other issues raised in the release. The following are excerpts from the
teleconference call:
o The recall was the result of isolated incidents in which the Beta-Cath(TM)
3.5F catheter tip separated. These incidents occurred in less than 1/10 of
one percent of patients on whom procedures utilizing 3.5F catheters were
performed. There have been no deaths as a result of these incidents and at
no time has there been a radiation safety issue, as the radiation source
train is safely contained within its own dedicated lumen.
o In Europe, which represents only about 5% of the Company's business, the
Company is planning to implement the same modified training program that it
will utilize in the U.S.
o The Company believes that the recall will impact approximately 200 of its
U.S. customers, most of whom currently utilize its 5F catheters as well as
the 3.5F. Because of the challenges that have been involved in meeting the
demand for the 3.5F catheters, the Company believes that there is not a
large number of them in stock at customer hospitals. Prior to the recall,
3.5F catheter sales growth had been in line with previously announced
guidance.
o The Company offered a preliminary outlook for the third and fourth quarters
of 2002. Third quarter revenues are expected at between $12 million and $16
million. The previous fourth quarter revenue guidance of between $18
million and $21 million was not changed. No guidance was offered with
respect to anticipated earnings or earnings per share for the remainder of
2002. The Company expects to offer sales incentives to customers during the
recall period.
o Pending the FDA's response to the Company's proposed training program and
planned product relaunch, the Company expressed its belief that the
majority of the financial impact of the recall would occur in the third
quarter.
o The company expects to use cash from operations during the remainder of the
third quarter of $1 to $2 million per month based on reduced revenue and
higher costs associated with the recall.
2
o One-time recall expenses expected to be incurred in the third quarter,
irrespective of lost revenues, may be as much as $750,000, with $300,000
expected to relate to recalled inventory and $450,000 expected to be
allocated to selling and general expenses.
Statements made in this press release that look forward in time or that express
management's beliefs, expectations or estimates regarding future occurrences are
forward-looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995. Actual results may differ materially from those
projected in these forward-looking statements based upon known and unknown risks
and uncertainties, including the risk that the FDA will not approve the
re-release of the 3.5F catheter, in conjunction with a revised training program,
on a timely basis or at all, that the Company will be unable to convert a number
of its 3.5F customers to 5F catheters, that pricing competition with respect to
5F catheters will reduce the Company's expected revenues, continued market
acceptance of the Beta-Cath(TM) System, continued demonstration of safety,
efficacy, and device performance in post-market surveillance studies,
competition and technological changes. These and other risks are detailed in
documents filed by Novoste with the SEC including its Form 10-K for the year
ended December 31, 2001 and its Form 10-Q for the quarter ended June 30, 2002.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial Statements.
Not applicable.
(b) Pro Forma Financial Information.
Not applicable.
(c) Exhibits.
Exhibit Number Description
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ITEM 99.1 PRESS RELEASE DATED AUGUST 19, 2002
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Dated: August 20, 2002
NOVOSTE CORPORATION
(Registrant)
By: /S/ EDWIN B. CORDELL, JR.
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Edwin B. Cordell, Jr.
Vice President, CFO, Finance and Treasurer
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