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Boston Scientific Announces Results For Second Quarter Ended June 30, 2013
Date:7/25/2013

NATICK, Mass., July 25, 2013 /PRNewswire/ -- Boston Scientific Corporation (NYSE: BSX) generated sales of $1.809 billion and adjusted earnings per share of $0.18 for the second quarter ended June 30, 2013.  The company reported GAAP earnings of $0.10 per share.

Second quarter results and recent developments:

  • Exceeded high end of the guidance range with sales of $1.809 billion -- a year-over-year decline of 1 percent on a reported basis and operational growth of 2 percent (constant currency basis, excluding divested businesses). 
  • Delivered adjusted EPS of $0.18, exceeding the company's adjusted EPS guidance range of $0.14 to $0.17.
  • Achieved global year-over-year revenue growth of 21 percent in Neuromodulation on the strength of the Precision Spectra™ Spinal Cord Stimulator (SCS) System launch, 8 percent in Endoscopy and 5 percent in Peripheral Interventions, all on a constant currency basis.
  • Continued global expansion with combined year-over-year growth of 29 percent in Brazil, Russia, India and China, all on a constant currency basis.
  • Reported positive clinical data related to the Vessix Renal Denervation System, WATCHMAN® Left Atrial Appendage Closure Device, Lotus Aortic Valve System and Vercise Deep Brain Stimulation System - technologies the company believes will help drive growth.
  • Entered into a definitive agreement to acquire the electrophysiology (EP) business of C.R. Bard, Inc., for $275 million in cash. 
  • Generated operating cash flow of $396 million and used $100 million to repurchase approximately 12.5 million shares under the company's existing share repurchase authorizations.
  • "We are pleased with our improved performance during the quarter," said Mike Mahoney, president and chief executive officer, Boston Scientific.  "As we continue to expand our portfolio, our team is inspired to deliver meaningful innovation to more patients globally."Worldwide sales for the second quarter: Three Months EndedJune 30,% Changein millions20132012As Reported BasisLess: Impact of Foreign CurrencyConstant Currency BasisInterventional Cardiology

    $

    520$

    549(5)%

    $

    (15)(2)%

    (3)%Peripheral Interventions

    1991962%

    (6)(3)%

    5%Cardiovascular719745(4)%(21)(3)%(1)%Cardiac Rhythm Management

    475488(3)%

    (4)(1)%

    (2)%Electrophysiology

    3637(3)%

    (1)(1)%

    (2)%Rhythm Management511525(3)%(5)(1)%(2)%Endoscopy

    3253115%

    (11)(3)%

    8%Urology/Women's Health

    124126(1)%

    (3)(2)%

    1%Neuromodulation

    1119121%

    10%

    21%MedSurg5605286%(13)(3)%9%Subtotal Core Businesses1,7901,7980%(39)(2)%2%Divested Businesses

    1930(36)%

    12%

    (38)%Worldwide Net Sales$1,809$1,828(1)%$(38)(2)%1%Growth rates are based on actual, non-rounded amounts and may not recalculate precisely.

     Sales growth rates that exclude the impact of changes in foreign currency exchange rates are not prepared in accordance with U.S. GAAP.  An explanation of the company's use of these non-GAAP financial measures is included in the exhibits attached to this news release.

      

    On a consolidated GAAP basis, net income for the second quarter of 2013 was $130 million, or earnings of $0.10 per share.  These results included an intangible asset impairment charge, acquisition- and divestiture-related net credits, restructuring-related charges, and amortization expense, of $117 million (after-tax) or $0.08 per share.  Adjusted net income for the second quarter of 2013, excluding these net charges, was $247 million, or $0.18 per share.

    On a consolidated GAAP basis, net loss for the second quarter of 2012 was $3.578 billion, or $2.51 per share.  These results included goodwill and other intangible asset impairment charges, acquisition-related net credits, divestiture-, restructuring- and litigation-related charges and amortization expense, of $3.817 billion or $2.68 per share.  Adjusted net income for the second quarter of 2012, excluding these net charges, was $239 million, or $0.17 per share.

    Guidance for Third Quarter and Full Year 2013The company estimates sales for the third quarter of 2013 in a range of $1.700 to $1.760 billion.  The company estimates earnings on a GAAP basis in a range of $0.03 to $0.05 per share.  Adjusted earnings, excluding acquisition- and restructuring-related charges, divestiture-related net credits and amortization expense; are estimated in a range of $0.14 to $0.16 per share. 

    The company estimates sales for the full year 2013 in a range of $7.050 to $7.170 billion.  The company estimates losses on a GAAP basis in a range of ($0.07) to ($0.01) per share.  Adjusted earnings, excluding goodwill and intangible asset impairment charges, acquisition-, restructuring-, and litigation-related charges, divestiture-related net credits and amortization expense; are estimated in a range of $0.67 to $0.71 per share. 

    Conference Call InformationBoston Scientific management will be discussing these results with analysts on a conference call today at 8:00 a.m. (ET).  The company will webcast the call to interested parties through its website: www.bostonscientific.com.  Please see the website for details on how to access the webcast.  The webcast will be available for approximately one year on the Boston Scientific website.

    About Boston ScientificBoston Scientific transforms lives through innovative medical solutions that improve the health of patients around the world.  As a global medical technology leader for more than 30 years, we advance science for life by providing a broad range of high performance solutions that address unmet patient needs and reduce the cost of healthcare.  For more information, visit www.bostonscientific.com and connect on Twitter and Facebook.

    Cautionary Statement Regarding Forward-Looking Statements This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934.
    Forward-looking statements may be identified by words like "anticipate," "expect," "project," "believe," "plan," "estimate," "intend" and similar words.
    These forward-looking statements are based on our beliefs, assumptions and estimates using information available to us at the time and are not intended to be guarantees of future events or performance.
    These forward-looking statements include, among other things, statements regarding our expected net sales, GAAP earnings and adjusted earnings for the third quarter and full year 2013; our financial performance; our business plans; our growth initiatives and expected impact; our positioning for revenue and earnings per share growth; and our product pipeline and its importance.
    If our underlying assumptions turn out to be incorrect, or if certain risks or uncertainties materialize, actual results could vary materially from the expectations and projections expressed or implied by our forward-looking statements.
    These risks and uncertainties, in some cases, have affected and in the future could affect our ability to implement our business strategy and may cause actual results to differ materially from those contemplated by the statements expressed in this press release.
    As a result, readers are cautioned not to place undue reliance on any of our forward-looking statements.

    Risks and uncertainties that may cause such differences include, among other things: future economic, political, competitive, reimbursement and regulatory conditions; new product introductions and the market acceptance of those products; markets for our products; expected pricing environment; expected procedural volumes; clinical trial results; demographic trends; intellectual property rights; litigation; financial market conditions; the execution and effect of our restructuring program; the execution and effect of our business strategy, including our cost-savings and growth initiatives; and future business decisions made by us and our competitors. New risks and uncertainties may arise from time to time and are difficult to predict. All of these factors are difficult or impossible to predict accurately and many of them are beyond our control.
    For a further list and description of these and other important risks and uncertainties that may affect our future operations, see Part I, Item IA - Risk Factors in our most recent Annual Report on Form 10-K filed with the Securities and Exchange Commission, which we may update in Part II, Item 1A - Risk Factors in Quarterly Reports on Form 10-Q we have filed or will file hereafter.
    We disclaim any intention or obligation to publicly update or revise any forward-looking statement to reflect any change in our expectations or in events, conditions, or circumstances on which those expectations may be based, or that may affect the likelihood that actual results will differ from those contained in the forward-looking statements.
    This cautionary statement is applicable to all forward-looking statements contained in this press release.

    Use of Non-GAAP Financial InformationA reconciliation of the company's non-GAAP financial measures to the corresponding GAAP measures, and an explanation of the company's use of these non-GAAP financial measures, is included in the exhibits attached to this news release.

    CONTACT:

    Denise Kaigler508-650-8330 (office)Corporate Affairs & CommunicationsBoston Scientific Corporationmedia@bsci.com Peter Lucht508-650-8796 (office)Global Media RelationsBoston Scientific Corporationmedia@bsci.com Michael Campbell508-650-8023 (office)Investor RelationsBoston Scientific Corporationinvestor_relations@bsci.com

      

     

    BOSTON SCIENTIFIC CORPORATIONCONDENSED CONSOLIDATED GAAP RESULTS OF OPERATIONS

    (Unaudited)

     Three Months EndedSix Months EndedJune 30,June 30,in millions, except per share data2013201220132012Net sales

    $

    1,809$

    1,828$

    3,570$

    3,694Cost of products sold

    5305781,1081,209Gross profit

    1,2791,2502,4622,485Operating expenses:Selling, general and administrative expenses

    6616481,2921,306Research and development expenses

    223213427428Royalty expense

    47488796Amortization expense

    10199204195Goodwill impairment charge

    —3,6024233,602Intangible asset impairment charges

    5312953129Contingent consideration expense (benefit)

    (18)1(41)11Restructuring charges

    26283639Gain on divestiture

    (34)—(40)—Litigation-related charges

    —69130691,0594,8372,5715,875Operating income (loss)

    220(3,587)(109)(3,390)Other income (expense):Interest expense

    (65)(64)(130)(132)Other, net

    (3)33(3)27Income (loss) before income taxes

    152(3,618)(242)(3,495)Income tax expense (benefit)

    22(40)(18)(30)Net income (loss)$130$(3,578)$(224)$(3,465)Net income (loss) per common share - basic$0.10$(2.51)$(0.17)$(2.42)Net income (loss) per common share - assuming dilution$0.10$(2.51)$(0.17)$(2.42)Weighted-average shares outstandingBasic

    1,343.51,423.21,347.71,434.2Assuming dilution

    1,358.61,423.21,347.71,434.2 

     

     

     

    BOSTON SCIENTIFIC CORPORATIONCONDENSED CONSOLIDATED BALANCE SHEETS

     As ofJune 30, December 31,in millions, except share data20132012(Unaudited)ASSETSCurrent assets:Cash and cash equivalents

    $

    530$

    207Trade accounts receivable, net

    1,2781,217Inventories

    842884Deferred income taxes

    496433Prepaid expenses and other current assets

    352281Total current assets

    3,4983,022Property, plant and equipment, net

    1,5241,564Goodwill

    5,5535,973Other intangible assets, net

    6,0266,289Other long-term assets

    395306$16,996$17,154LIABILITIES AND STOCKHOLDERS' EQUITYCurrent liabilities:Current debt obligations

    $

    605$

    4Accounts payable

    251232Accrued expenses

    1,3651,284Other current liabilities

    256252Total current liabilities

    2,4771,772Long-term debt

    3,6474,252Deferred income taxes

    1,7111,713Other long-term liabilities

    2,5582,547Commitments and contingenciesStockholders' equityPreferred stock, $.01 par value - authorized 50,000,000shares, none issued and outstandingCommon stock, $.01 par value - authorized 2,000,000,000shares and issued 1,551,642,655 shares as of June 30,2013 and 1,542,347,188 shares as of December 31, 2012

    1615Treasury stock, at cost 212,293,891 shares as of June 30, 2013and 186,635,532 shares as of December 31, 2012

    (1,292)(1,092)Additional paid-in capital

    16,47016,429Accumulated deficit

    (8,673)(8,449)Accumulated other comprehensive income (loss), net of tax

    82(33)Total stockholders' equity

    6,6036,870$16,996$17,154 

     

     

     

    BOSTON SCIENTIFIC CORPORATIONNON-GAAP NET INCOME AND NET INCOME PER COMMON SHARE RECONCILIATIONS

    (Unaudited)

     Three Months Ended June 30, 2013in millions, except per share dataPre-TaxTax Impact (a)After-TaxImpact per diluted shareGAAP net income (loss)$152$(22)$130$0.10Non-GAAP adjustments:Intangible asset impairment charge

    53(8)450.03Acquisition-related net charges (credits)

    (12)(2)(14)(0.01)Divestiture-related charges (credits)

    (32)9(23)(0.02)Restructuring and restructuring-related net charges (b)

    31(8)230.02Amortization expense

    101(15)860.06Adjusted net income$293$(46)$247$0.18Three Months Ended June 30, 2012in millions, except per share dataPre-TaxTax Impact (a)After-TaxImpact per diluted shareGAAP net income (loss)$(3,618)$40$(3,578)$(2.51)Non-GAAP adjustments:Goodwill impairment charge

    3,602(23)3,5792.50*Intangible asset impairment charge

    129(19)1100.08*Acquisition-related net charges (credits)

    (34)13(21)(0.01)*Divestiture-related charges (credits)

    1—10.00*Restructuring and restructuring-related charges (c )

    33(9)240.02*Litigation-related net charges

    69(29)400.03*Amortization expense

    99(15)840.06*Adjusted net income$281$(42)$239$0.17* Assumes dilution of 5.8 million shares for the three months ended June 30, 2012 for all or a portion of these non-GAAP adjustments.(a) - Amounts are tax effected at the Company's effective tax rate, unless the amount is a significant unusual or infrequently occurring item in accordance with FASB Accounting Standards Codification section 740-270-30, "General Methodology and Use of Estimated Annual Effective Tax Rate."(b) In the three months ended June 30, 2013, pre-tax restructuring charges were $26 million and pre-tax restructuring-related charges were $5 million recorded in selling, general and administrative expenses.  (c) In the three months ended June 30, 2012, pre-tax restructuring charges were $28 million and pre-tax restructuring-related charges were $5 million, of which $2 million was recorded in cost of products sold and $3 million was recorded in selling, general and administrative expenses.  An explanation of our use of these non-GAAP financial measures is provided at the end of this document. 

     

     

     

    BOSTON SCIENTIFIC CORPORATIONNON-GAAP NET INCOME AND NET INCOME PER COMMON SHARE RECONCILIATIONS

    (Unaudited)

     Six Months Ended June 30, 2013in millions, except per share dataPre-TaxTax Impact (a)After-TaxImpact per diluted shareGAAP net income (loss)$(242)$18$(224)$(0.17)Non-GAAP adjustments:Goodwill impairment charge

    423(2)4210.31*Intangible asset impairment charges

    53(8)450.03*Acquisition-related net charges (credits)

    (35)(1)(36)(0.03)*Divestiture-related charges (credits)

    (37)11(26)(0.02)*Restructuring and restructuring-related net charges (b)

    46(12)340.03*Litigation-related charges

    130(48)820.06*Amortization expense

    204(29)1750.14*Adjusted net income$542$(71)$471$0.35Six Months Ended June 30, 2012in millions, except per share dataPre-TaxTax Impact (a)After-TaxImpact per diluted shareGAAP net income (loss)$(3,495)$30$(3,465)$(2.42)Non-GAAP adjustments:Goodwill impairment charge

    3,602(23)3,5792.49**Intangible asset impairment charge

    129(19)1100.08**Acquisition-related net charges (credits)

    (21)11(10)(0.01)**Divestiture-related charges (credits)

    22—**Restructuring and restructuring-related charges (c )

    50(13)370.03**Litigation-related net charges

    69(29)400.03**Amortization expense

    195(29)1660.12**Adjusted net income$531$(72)$459$0.32* Assumes dilution of 14.0 million shares for the six months ended June 30, 2013 for all or a portion of these non-GAAP adjustments.  ** Assumes dilution of 7.3 million shares for the six months ended June 30, 2012 for all or a portion of these non-GAAP adjustments.(a) - Amounts are tax effected at the Company's effective tax rate, unless the amount is a significant unusual or infrequently occurring item in accordance with FASB Accounting Standards Codification section 740-270-30, "General Methodology and Use of Estimated Annual Effective Tax Rate."(b) In the six months ended June 30, 2013, pre-tax restructuring charges were $36 million and pre-tax restructuring-related charges were $10 million recorded in selling, general and administrative expenses. (c) In the six months ended June 30, 2012, pre-tax restructuring charges were $39 million and pre-tax restructuring-related charges were $11 million, of which $6 million was recorded in cost of products sold and $5 million was recorded in selling, general and administrative expenses.  An explanation of our use of these non-GAAP financial measures is provided at the end of this document. 

     

     

     

    BOSTON SCIENTIFIC CORPORATIONSEGMENT INFORMATION

    (Unaudited)

     Three Months EndedSix Months EndedSEGMENT NET SALES*June 30,June 30,in millions20132012**Change20132012**ChangeInterventional Cardiology

    $

    537$

    551(3)%$

    1,050$

    1,149(9)%Peripheral Interventions

    2051965%4003844%Cardiovascular742747(1)%1,4501,533(5)%Cardiac Rhythm Management

    485494(2)%970998(3)%Electrophysiology

    3737(2)%7274(4)%Rhythm Management522531(2)%1,0421,072(3)%Endoscopy

    3343098%6476076%Urology/Women's Health

    1261251%2452430%Neuromodulation

    1119221%20017514%MedSurg5715269%1,0921,0256%Subtotal Core Businesses1,8351,8042%3,5843,630(1)%Divested Businesses

    1931(38)%5560(7)%Foreign Currency

    (45)(7)N/A(69)4N/AWorldwide Net Sales$1,809$1,828(1)%$3,570$3,694(3)%Growth rates are based on actual, non-rounded amounts and may not recalculate precisely.SEGMENT OPERATING INCOME*Three Months EndedSix Months EndedJune 30, June 30, in millions20132012**20132012**Segment operating incomeCardiovascular$

    194$

    195$

    364$

    386Rhythm Management6177124160MedSurg183150333283Operating income allocated to reportable segments438422821829Corporate expenses and currency exchange

    (77)(71)(146)(155)Goodwill and other intangible asset impairment

    charges; and acquisition-, divestiture-, restructuring-,

    and litigation-related net charges and credits

    (40)(3,839)(580)(3,869)Amortization expense(101)(99)(204)(195)Operating income (loss)$220$(3,587)$(109)$(3,390)*We measure and evaluate our reportable segments based on segment net sales and operating income, excluding the impact of changes in foreign currency and sales from divested businesses.  Sales generated from reportable segments and divested businesses, as well as operating results of reportable segments and corporate expenses, are based on internally-derived standard currency exchange rates, which may differ from year to year, and do not include intersegment profits.  We restated segment information for the prior period based on standard currency exchange rates used for the current period in order to remove the impact of foreign currency exchange fluctuations.  We exclude from segment operating income certain corporate-related expenses and certain transactions or adjustments that our chief operating decision maker considers to be non-recurring and/or non-operational, such as amounts related to goodwill and other intangible asset impairment charges; acquisition-, divestiture-, restructuring- and litigation-related charges and credits; and amortization expense.  Although we exclude these amounts from segment operating income, they are included in reported consolidated operating income (loss) and are included in the reconciliation above.** We have restated prior year information to conform to current year presentation.An explanation of the company's use of these non-GAAP financial measures is provided at the end of this document. 

     

     

     

    BOSTON SCIENTIFIC CORPORATIONWORLDWIDE CARDIAC RHYTHM MANAGEMENT (CRM) AND CORONARY STENT SYSTEM SALES

    (Unaudited)

     Three Months Ended June 30in millionsU.S.InternationalWorldwideQ2 2013Q2 2012Q2 2013Q2 2012Q2 2013Q2 2012Defibrillator systems$

    213$

    220$

    129$

    135$

    342$

    355Pacemaker systems69646469133133Total CRM products$282$284$193$204$475$488in millionsU.S.InternationalWorldwideQ2 2013Q2 2012Q2 2013Q2 2012Q2 2013Q2 2012Drug-eluting stent systems$

    117$

    140$

    170$

    178$

    287$

    318Bare-metal stent systems5612161722Total Coronary Stent Systems$122$146$182$194$304$340Six Months Ended June 30in millionsU.S.InternationalWorldwideYTD 2013YTD 2012YTD 2013YTD 2012YTD 2013YTD 2012Defibrillator systems$

    434$

    449$

    258$

    274$

    692$

    723Pacemaker systems132127130139262266Total CRM products$566$576$388$413$954$989in millionsU.S.InternationalWorldwideYTD 2013YTD 2012YTD 2013YTD 2012YTD 2013YTD 2012Drug-eluting stent systems$

    234$

    315$

    345$

    366$

    579$

    681Bare-metal stent systems101325333546Total Coronary Stent Systems$244$328$370$399$614$727 

     

     

    BOSTON SCIENTIFIC CORPORATIONBRIC* NET SALES

    (Unaudited)

     Q2 2013  Percentage change in BRIC Net Sales as compared to Q2 2012ChangeEstimatedAs ReportedConstantImpact ofCurrencyCurrencyForeignBasisBasisCurrency29%29%0%*BRIC - Countries comprised of Brazil, Russia, India and China 

     

     

    BOSTON SCIENTIFIC CORPORATIONESTIMATED NON-GAAP NET INCOME PER COMMON SHARE RECONCILIATIONS

    (Unaudited)

     Q3 and Full Year 2013 EPS GuidanceQ3 2013 EstimateFull Year 2013 Estimate(Low)(High)(Low)(High)GAAP results$0.03$0.05$(0.07)$(0.01)Goodwill impairment charge

    ——0.310.31Intangible asset impairment charges

    ——0.030.03Estimated acquisition-related net charges (credits)

    0.020.020.010.00Estimated divestiture-related net credits

    (0.01)(0.01)(0.02)(0.02)Estimated restructuring-related charges

    0.040.040.090.08Litigation-related charges

    ——0.060.06Estimated amortization expense

    0.060.060.260.26Adjusted results$0.14$0.16$0.67$0.71 

    An explanation of our use of these non-GAAP financial measures is provided at the end of this document.

    Use of Non-GAAP Financial MeasuresTo supplement our unaudited condensed consolidated financial statements presented on a GAAP basis, we disclose certain non-GAAP financial measures, including adjusted net income and adjusted net income per share that exclude certain amounts, and revenue growth rates that exclude the impact of changes in foreign currency exchange rates. These non-GAAP financial measures are not in accordance with generally accepted accounting principles in the United States.

    The GAAP financial measure most directly comparable to adjusted net income is GAAP net income and the GAAP financial measure most directly comparable to adjusted net income per share is GAAP net income per share. To calculate revenue growth rates that exclude the impact of changes in foreign currency exchange rates, we convert actual net sales from local currency to U.S. dollars using constant foreign currency exchange rates in the current and prior period. The GAAP financial measure most directly comparable to this non-GAAP financial measure is growth rate percentages using net sales on a GAAP basis. Reconciliations of each of these non-GAAP financial measures to the corresponding GAAP financial measure are included in the accompanying schedules.

    Management uses these supplemental non-GAAP financial measures to evaluate performance period over period, to analyze the underlying trends in our business, to assess our performance relative to our competitors, and to establish operational goals and forecasts that are used in allocating resources. In addition, management uses these non-GAAP financial measures to further its understanding of the performance of our operating segments. The adjustments excluded from our non-GAAP financial measures are consistent with those excluded from our operating segments' measures of net sales and profit or loss. These adjustments are excluded from the segment measures that are reported to our chief operating decision maker that are used to make operating decisions and assess performance.

    We believe that presenting adjusted net income, adjusted net income per share, and revenue growth rates that exclude certain amounts and/or the impact of changes in foreign currency exchange rates, in addition to the corresponding GAAP financial measures, provides investors greater transparency to the information used by management for its financial and operational decision-making and allows investors to see our results "through the eyes" of management. We further believe that providing this information assists our investors in understanding our operating performance and the methodology used by management to evaluate and measure such performance.

    The following is an explanation of each of the adjustments that management excluded as part of these non-GAAP financial measures for the three and six months ended June 30, 2013 and 2012, and for the forecasted three month period ending September 30, 2013 and full year ending December 31, 2013, as well as reasons for excluding each of these individual items:

    Adjusted Net Income and Adjusted Net Income per Share:

    Goodwill and other intangible asset impairment charges - These amounts represent a) a non-cash write-down of our goodwill balance attributable to our global Cardiac Rhythm Management reporting unit in the first quarter of 2013; b) non-cash write-downs of certain intangible asset balances in the second quarter of 2013; c) a non-cash write-down of our goodwill balance attributable to our Europe, Middle East and Africa (EMEA) reporting unit in the second quarter of 2012; and d) a non-cash write-down of certain intangible asset balances in the second quarter of 2012.  We remove the impact of non-cash impairment charges from our operating performance to assist in assessing our cash generated from operations.  We believe this is a critical metric for us in measuring our ability to generate cash and invest in our growth.  Therefore, this charge is excluded from management's assessment of operating performance and is also excluded for purposes of calculating these non-GAAP financial measures to facilitate an evaluation of our current operating performance and a comparison to our past operating performance, particularly in terms of liquidity.

    Acquisition-related charges (credits) - These adjustments consist of (a) contingent consideration fair value adjustments, and (b) due diligence, other fees and exit costs. The contingent consideration adjustments represent accounting adjustments to state contingent consideration liabilities at their estimated fair value. These adjustments can be highly variable depending on the assessed likelihood and amount of future contingent consideration payments. Due diligence, other fees and exit costs include legal, tax, severance and other expenses associated with prior acquisitions that are not representative of on-going operations. Accordingly, management excluded these amounts for purposes of calculating these non-GAAP financial measures to facilitate an evaluation of our current operating performance and a comparison to our past operating performance.

    Divestiture-related expenses (gains) - These amounts represent separation costs or recognized gains associated with the sale of our Neurovascular business in January 2011.  Separation costs and gains on the sale represent those associated with the divestiture and are not representative of on-going operations. Accordingly, management excluded these amounts for purposes of calculating these non-GAAP financial measures to facilitate an evaluation of our current operating performance and a comparison to our past operating performance.

    Restructuring and restructuring-related costs (credits) - These adjustments represent primarily severance and other direct costs associated with our 2011 Restructuring program. These costs are excluded by management in assessing our operating performance, as well as from our operating segments' measures of profit and loss used for making operating decisions and assessing performance. Accordingly, management excluded these costs for purposes of calculating these non-GAAP financial measures to facilitate an evaluation of our current operating performance and a comparison to our past operating performance.

    Litigation-related net charges - These adjustments include certain significant product liability and other litigation-related charges and credits. These amounts are excluded by management in assessing our operating performance, as well as from our operating segments' measures of profit and loss used for making operating decisions and assessing performance.  Accordingly, management excluded these amounts for purposes of calculating these non-GAAP financial measures to facilitate an evaluation of our current operating performance and a comparison to our past operating performance.

    Discrete tax items - These items represent adjustments of certain tax positions, which were initially established in prior periods as a result of intangible asset impairment charges; acquisition-, divestiture-, restructuring- or litigation-related charges or credits. These adjustments do not reflect expected on-going operating results. Accordingly, management excluded these amounts for purposes of calculating these non-GAAP financial measures to facilitate an evaluation of our current operating performance and a comparison to our past operating performance.

    Amortization expense - Amortization expense is a non-cash expense and does not impact our liquidity or compliance with the covenants included in our credit facility agreement. Management removes the impact of amortization from our operating performance to assist in assessing our cash generated from operations.  We believe this is a critical metric for measuring our ability to generate cash and invest in our growth. Therefore, amortization expense is excluded from management's assessment of operating performance and is also excluded from the measures management uses to set employee compensation. Accordingly, management has excluded amortization expense for purposes of calculating these non-GAAP financial measures to facilitate an evaluation of our current operating performance, particularly in terms of liquidity.

    Revenue Growth Rates Excluding the Impact of Changes in Foreign Currency Exchange Rates

    Changes in foreign currency exchange rates - The impact of changes in foreign currency exchange rates is highly variable and difficult to predict. Accordingly, management excludes the impact of changes in foreign currency exchange rates for purposes of reviewing revenue growth rates to facilitate an evaluation of our current operating performance and a comparison to our past operating performance.

    Adjusted net income, adjusted net income per share and revenue growth rates that exclude certain amounts and/or the impact of changes in foreign currency exchange rates are not in accordance with U.S. GAAP and should not be considered in isolation from or as a replacement for the most directly comparable GAAP financial measures. Further, other companies may calculate these non-GAAP financial measures differently than we do, which may limit the usefulness of those measures for comparative purposes.


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    SOURCE Boston Scientific Corporation
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    4. The 2013 Bioprocessing Summit to Bring Together International Leaders to Discuss Today's Bioprocess Issues From Cell Line Selection to Manufacturing in Boston, MA
    5. Verified Clinical Trials (VCT) Will Co-Present With SAFE-BioPharma At Bio-IT World April 10th In Boston, MA Exploring Identity Management In eClinical Trials
    6. Boston Heart Diagnostics Awarded $450,000 in Tax Incentives from the Massachusetts Life Sciences Center
    7. Local Leaders Convene in Boston to Share Industry Best Practices in Second “Business of Big Data” Summit
    8. R&D, Innovation Key to Success - Research Report on Varian Medical Systems, Inc., Boston Scientific Corporation, Stryker Corporation, St. Jude Medical, Inc., and Thermo Fischer Scientific Inc.
    9. Boston College researchers unique nanostructure produces novel plasmonic halos
    10. Boston Scientific to Webcast Conference Call Discussing Fourth Quarter and Full Year 2012 Financial Results on January 29th
    11. Shire and Boston Childrens Hospital Enter Into Broad Research Collaboration
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