DELAWARE | 1-11083 | 04-2695240 |
(State or other | (Commission | (IRS employer |
jurisdiction of | file number) | identification no.) |
incorporation) |
One Boston Scientific Place, Natick, Massachusetts | 01760-1537 |
(Address of principal executive offices) | (Zip code) |
o | Written communication pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
o | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
o | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
o | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Date: April 19, 2012 | BOSTON SCIENTIFIC CORPORATION | ||
By: | /s/ Vance R. Brown | ||
Vance R. Brown | |||
Vice President and Chief Corporate Counsel | |||
Exhibit No. | Description |
99.1 | Press Release issued by Boston Scientific Corporation dated April 19, 2012 |
• | Generated sales of $1.866 billion and achieved GAAP earnings of $0.08 per share and adjusted EPS of $0.15, both above the company's EPS guidance range. |
• | Increased first quarter worldwide Peripheral Interventions sales 8 percent, Neuromodulation sales 8 percent, and Endoscopy sales 5 percent, all on a constant currency basis. |
• | Maintained leadership position in the drug-eluting stent market with a worldwide share of 34 percent and U.S. share of 46 percent. |
• | Achieved positive outcomes in the PLATINUM trial comparing the PROMUS Element™ Coronary Stent System to PROMUS (XIENCE V®)1 out to two years and demonstrated superior efficacy of PROMUS Element in a landmark analysis of outcomes from year one to year two in the trial. |
• | Demonstrated continued commitment to innovation and growth in the company's Cardiac Rhythm Management (CRM) business by initiating the launch of the INGENIO™ family of pacemaker systems in Europe and exercising an option to acquire Cameron Health, Inc. and its novel subcutaneous implantable cardioverter defibrillator (S-ICD) system. |
• | Strengthened the company's financial flexibility by putting in place a new five-year $2 billion revolving credit facility, replacing the previous credit facility, and returned to investment grade ratings with all three major credit-rating agencies. |
• | Repurchased 23 million shares, bringing total repurchases under the 2011 share repurchase program to more than 100 million shares. |
Change | ||||||||||||||
Three Months Ended | As Reported | Constant | ||||||||||||
March 31, | Currency | Currency | ||||||||||||
in millions | 2012 | 2011 | Basis | Basis | ||||||||||
Interventional Cardiology | $ | 603 | $ | 635 | (5 | ) | % | (5 | ) | % | ||||
Cardiac Rhythm Management | 501 | 559 | (10 | ) | % | (10 | ) | % | ||||||
Endoscopy | 302 | 287 | 5 | % | 5 | % | ||||||||
Peripheral Interventions | 190 | 176 | 8 | % | 8 | % | ||||||||
Urology/Women's Health | 120 | 120 | 0 | % | 0 | % | ||||||||
Neuromodulation | 84 | 77 | 8 | % | 8 | % | ||||||||
Electrophysiology | 37 | 37 | 1 | % | 1 | % | ||||||||
Subtotal Core Businesses | 1,837 | 1,891 | (3 | ) | % | (3 | ) | % | ||||||
Divested Businesses | 29 | 34 | N/A | N/A | ||||||||||
Worldwide | $ | 1,866 | $ | 1,925 | (3 | ) | % | (3 | ) | % | ||||
CONTACT: | Steven Campanini |
508-652-5740 (office) | |
Media Relations | |
Boston Scientific Corporation | |
steven.campanini@bsci.com |
Denise Kaigler | |
508-650-8330 (office) | |
Media Relations | |
Boston Scientific Corporation | |
denise.kaigler@bsci.com |
Sean Wirtjes | |
508-652-5305 (office) | |
Investor Relations | |
Boston Scientific Corporation | |
investor_relations@bsci.com |
Three Months Ended | |||||||
March 31, | |||||||
in millions, except per share data | 2012 | 2011 | |||||
Net sales | $ | 1,866 | $ | 1,925 | |||
Cost of products sold | 631 | 631 | |||||
Gross profit | 1,235 | 1,294 | |||||
Operating expenses: | |||||||
Selling, general and administrative expenses | 659 | 596 | |||||
Research and development expenses | 215 | 212 | |||||
Royalty expense | 48 | 51 | |||||
Amortization expense | 97 | 132 | |||||
Goodwill impairment charge | 697 | ||||||
Contingent consideration expense | 10 | 6 | |||||
Restructuring charges | 10 | 38 | |||||
Gain on divestiture | (760 | ) | |||||
1,039 | 972 | ||||||
Operating income | 196 | 322 | |||||
Other income (expense): | |||||||
Interest expense | (69 | ) | (75 | ) | |||
Other, net | (4 | ) | 26 | ||||
Income before income taxes | 123 | 273 | |||||
Income tax expense | 10 | 227 | |||||
Net income | $ | 113 | $ | 46 | |||
Net income per common share - basic | $ | 0.08 | $ | 0.03 | |||
Net income per common share - assuming dilution | $ | 0.08 | $ | 0.03 | |||
Weighted-average shares outstanding | |||||||
Basic | 1,445.2 | 1,526.5 | |||||
Assuming dilution | 1,454.1 | 1,536.3 | |||||
As of | |||||||||
in millions, except share and per share data | March 31, 2012 | December 31, 2011 | |||||||
(Unaudited) | |||||||||
ASSETS | |||||||||
Current assets: | |||||||||
Cash and cash equivalents | $ | 284 | $ | 267 | |||||
Trade accounts receivable, net | 1,316 | 1,246 | |||||||
Inventories | 889 | 931 | |||||||
Deferred income taxes | 404 | 458 | |||||||
Prepaid expenses and other current assets | 198 | 203 | |||||||
Total current assets | 3,091 | 3,105 | |||||||
Property, plant and equipment, net | 1,669 | 1,670 | |||||||
Goodwill | 9,762 | 9,761 | |||||||
Other intangible assets, net | 6,382 | 6,473 | |||||||
Other long-term assets | 281 | 281 | |||||||
$ | 21,185 | $ | 21,290 | ||||||
LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||||
Current liabilities: | |||||||||
Current debt obligations | $ | 4 | $ | 4 | |||||
Accounts payable | 288 | 203 | |||||||
Accrued expenses | 1,180 | 1,327 | |||||||
Other current liabilities | 197 | 273 | |||||||
Total current liabilities | 1,669 | 1,807 | |||||||
Long-term debt | 4,255 | 4,257 | |||||||
Deferred income taxes | 1,877 | 1,865 | |||||||
Other long-term liabilities | 1,988 | 2,008 | |||||||
Commitments and contingencies | |||||||||
Stockholders' equity | |||||||||
Preferred stock, $.01 par value - authorized 50,000,000 | |||||||||
shares, none issued and outstanding | |||||||||
Common stock, $.01 par value - authorized 2,000,000,000 | |||||||||
shares and issued 1,538,683,478 shares as of March 31, 2012 | 15 | 15 | |||||||
and 1,531,006,390 shares as of December 31, 2011 | |||||||||
Treasury stock, at cost - 104,450,758 shares as of March 31, 2012 | (630 | ) | (492 | ) | |||||
and 81,950,716 shares as of December 31, 2011 | |||||||||
Additional paid-in capital | 16,358 | 16,349 | |||||||
Accumulated deficit | (4,268 | ) | (4,381 | ) | |||||
Accumulated other comprehensive loss, net of tax | (79 | ) | (138 | ) | |||||
Total stockholders' equity | 11,396 | 11,353 | |||||||
$ | 21,185 | $ | 21,290 | ||||||
Three Months Ended March 31, | ||||||||||||||
2012 | 2011 | |||||||||||||
Impact | Impact | |||||||||||||
Net | per diluted | Net | per diluted | |||||||||||
in millions, except per share data | income | share | income | share | ||||||||||
GAAP net income | $ | 113 | $ | 0.08 | $ | 46 | $ | 0.03 | ||||||
Non-GAAP adjustments: | ||||||||||||||
Goodwill impairment charge | 697 | 0.45 | ||||||||||||
Acquisition-related net charges (credits) | 11 | (29 | ) | (0.01 | ) | |||||||||
Divestiture-related net charges (credits) | 1 | (530 | ) | (0.34 | ) | |||||||||
Restructuring-related charges | 13 | 0.01 | 34 | 0.02 | ||||||||||
Discrete tax items | 4 | |||||||||||||
Amortization expense | 82 | 0.06 | 114 | 0.07 | ||||||||||
Adjusted net income | $ | 220 | $ | 0.15 | $ | 336 | $ | 0.22 | ||||||
Three Months Ended | |||||||
in millions | March 31, | ||||||
2012 | 2011 | ||||||
Goodwill impairment charge: | |||||||
Goodwill impairment charge | $ | 697 | |||||
Income tax benefit (a) | |||||||
Goodwill impairment charge, net of tax | $ | 697 | |||||
Acquisition-related net charges (credits): | |||||||
Contingent consideration expense | $ | 10 | $ | 6 | |||
Acquisition-related costs (b) | 2 | 2 | |||||
Inventory step-up adjustment (c) | 1 | ||||||
Gain on previously held equity interests (d) | (38 | ) | |||||
12 | (29 | ) | |||||
Income tax benefit (a) | (1 | ) | |||||
Acquisition-related net charges (credits), net of tax | $ | 11 | $ | (29 | ) | ||
Divestiture-related net charges (credits): | |||||||
Gain on divestiture | $ | (760 | ) | ||||
Divestiture-related costs (c) | $ | 1 | 1 | ||||
1 | (759 | ) | |||||
Income tax expense (a) | 229 | ||||||
Divestiture-related net charges (credits), net of tax | $ | 1 | $ | (530 | ) | ||
Restructuring-related charges: | |||||||
Restructuring charges | $ | 10 | $ | 38 | |||
Restructuring-related charges (e) | 7 | 12 | |||||
17 | 50 | ||||||
Income tax benefit (a) | (4 | ) | (16 | ) | |||
Restructuring-related charges, net of tax | $ | 13 | $ | 34 | |||
Discrete tax items: | |||||||
Income tax expense (a) | $ | 4 | |||||
Amortization expense: | |||||||
Amortization expense | $ | 97 | $ | 132 | |||
Income tax benefit (a) | (15 | ) | (18 | ) | |||
Amortization expense, net of tax | $ | 82 | $ | 114 |
(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) | Recorded to selling, general and administrative expenses. |
(c) | Recorded to cost of products sold. |
(d) | Recorded to other, net. |
(e) | In the first quarter of 2012, recorded $4 million to cost of products sold and $3 million to selling, general and administrative expenses. In the first quarter of 2011, recorded $10 million to cost of products sold and $2 million to selling, general and administrative expenses. |
Change | ||||||||||||||
Three Months Ended | As Reported | Constant | ||||||||||||
March 31, | Currency | Currency | ||||||||||||
in millions | 2012 | 2011 | Basis | Basis | ||||||||||
(restated) | ||||||||||||||
United States | $ | 978 | $ | 1,023 | (4 | ) | % | (4 | ) | % | ||||
EMEA | 416 | 448 | (7 | ) | % | (3 | ) | % | ||||||
Japan | 238 | 234 | 2 | % | (2 | ) | % | |||||||
Inter-Continental | 205 | 186 | 10 | % | 9 | % | ||||||||
International | 859 | 868 | (1 | ) | % | 0 | % | |||||||
Subtotal Core Businesses | 1,837 | 1,891 | (3 | ) | % | (3 | ) | % | ||||||
Divested Businesses | 29 | 34 | N/A | N/A | ||||||||||
Worldwide | $ | 1,866 | $ | 1,925 | (3 | ) | % | (3 | ) | % | ||||
Change | ||||||||||||||
Three Months Ended | As Reported | Constant | ||||||||||||
March 31, | Currency | Currency | ||||||||||||
in millions | 2012 | 2011 | Basis | Basis | ||||||||||
Interventional Cardiology | $ | 603 | $ | 635 | (5 | ) | % | (5 | ) | % | ||||
Cardiac Rhythm Management | 501 | 559 | (10 | ) | % | (10 | ) | % | ||||||
Endoscopy | 302 | 287 | 5 | % | 5 | % | ||||||||
Peripheral Interventions | 190 | 176 | 8 | % | 8 | % | ||||||||
Urology/Women's Health | 120 | 120 | 0 | % | 0 | % | ||||||||
Neuromodulation | 84 | 77 | 8 | % | 8 | % | ||||||||
Electrophysiology | 37 | 37 | 1 | % | 1 | % | ||||||||
Subtotal Core Businesses | 1,837 | 1,891 | (3 | ) | % | (3 | ) | % | ||||||
Divested Businesses | 29 | 34 | N/A | N/A | ||||||||||
Worldwide | $ | 1,866 | $ | 1,925 | (3 | ) | % | (3 | ) | % | ||||
Q1 2012 Net Sales as compared to Q1 2011 | ||||||||||
Change | Estimated | |||||||||
As Reported | Constant | Impact of | ||||||||
Currency | Currency | Foreign | ||||||||
in millions | Basis | Basis | Currency | |||||||
United States | $ | (45 | ) | $ | (45 | ) | ||||
EMEA | (32 | ) | (16 | ) | $ | (16 | ) | |||
Japan | 4 | (4 | ) | 8 | ||||||
Inter-Continental | 19 | 16 | 3 | |||||||
International | (9 | ) | (4 | ) | (5 | ) | ||||
Subtotal Core Businesses | (54 | ) | (49 | ) | (5 | ) | ||||
Divested Businesses | (5 | ) | (5 | ) | 0 | |||||
Worldwide | $ | (59 | ) | $ | (54 | ) | $ | (5 | ) | |
Q1 2012 Net Sales as compared to Q1 2011 | ||||||||||
Change | Estimated | |||||||||
As Reported | Constant | Impact of | ||||||||
Currency | Currency | Foreign | ||||||||
in millions | Basis | Basis | Currency | |||||||
Interventional Cardiology | $ | (32 | ) | $ | (29 | ) | $ | (3 | ) | |
Cardiac Rhythm Management | (58 | ) | (56 | ) | (2 | ) | ||||
Endoscopy | 15 | 15 | 0 | |||||||
Peripheral Interventions | 14 | 14 | 0 | |||||||
Urology/Women's Health | 0 | 0 | 0 | |||||||
Neuromodulation | 7 | 7 | 0 | |||||||
Electrophysiology | 0 | 0 | 0 | |||||||
Subtotal Core Businesses | (54 | ) | (49 | ) | (5 | ) | ||||
Divested Businesses | (5 | ) | (5 | ) | 0 | |||||
Worldwide | $ | (59 | ) | $ | (54 | ) | $ | (5 | ) | |
in millions | U.S. | International | Worldwide | ||||||||||||||||||
Q1 2012 | Q1 2011 | Q1 2012 | Q1 2011 | Q1 2012 | Q1 2011 | ||||||||||||||||
Defibrillator systems | $ | 229 | $ | 266 | $ | 139 | $ | 151 | $ | 368 | $ | 417 | |||||||||
Pacemaker systems | 63 | 73 | 70 | 69 | 133 | 142 | |||||||||||||||
Total CRM products | $ | 292 | $ | 339 | $ | 209 | $ | 220 | $ | 501 | $ | 559 |
in millions | U.S. | International | Worldwide | ||||||||||||||||||
Q1 2012 | Q1 2011 | Q1 2012 | Q1 2011 | Q1 2012 | Q1 2011 | ||||||||||||||||
Drug-eluting stent systems | $ | 176 | $ | 184 | $ | 187 | $ | 195 | $ | 363 | $ | 379 | |||||||||
Bare-metal stent systems | 7 | 9 | 17 | 21 | 24 | 30 | |||||||||||||||
Total coronary stent systems | $ | 183 | $ | 193 | $ | 204 | $ | 216 | $ | 387 | $ | 409 |
Q2 2012 Estimate | Full Year 2012 Estimate | ||||||||||||
(Low) | (High) | (Low) | (High) | ||||||||||
GAAP results | $ | 0.06 | $ | 0.09 | $ | 0.25 | $ | 0.38 | |||||
Estimated acquisition-related charges | 0.01 | 0.01 | 0.04 | 0.03 | |||||||||
Estimated restructuring-related charges | 0.01 | 0.01 | 0.07 | 0.05 | |||||||||
Estimated amortization expense | 0.06 | 0.06 | 0.24 | 0.24 | |||||||||
Adjusted results | $ | 0.14 | $ | 0.17 | $ | 0.60 | $ | 0.70 | |||||
Goodwill impairment charge - This amount represents a non-cash write-down of the Company's goodwill balance attributable to its U.S. Cardiac Rhythm Management business. Management removes the impact of non-cash impairment charges from the Company's operating performance to assist in assessing the Company's cash generated from operations. Management believes this is a critical metric for the Company in measuring the Company's ability to generate cash and invest in the Company's growth. Therefore, this charge 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 this amount for purposes of calculating these non-GAAP financial measures to facilitate an evaluation of the Company's current operating performance and a comparison to the Company's past operating performance, particularly in terms of liquidity. |
Acquisition-related charges (credits) - These adjustments consist of (a) acquisition-related gains on previously held equity interests, (b) contingent consideration fair value adjustments, (c) due diligence, other fees and exit costs, and (d) an inventory step-up adjustment. The acquisition-related gains on previously held equity interests is a non-recurring benefit associated with acquisitions completed in the first quarter of 2011. The contingent consideration adjustments are non-cash charges representing 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. The inventory step-up adjustment is a non-cash charge related to acquired inventory directly attributable to prior acquisitions and is not indicative of the Company's on-going operations, or on-going cost of products sold. Accordingly, management excluded these amounts for purposes of calculating these non-GAAP financial measures to facilitate an evaluation of the Company's current operating performance and a comparison to the Company's past operating performance. |
Divestiture-related charges (credits) - These amounts represent (a) gains resulting from business divestitures and (b) fees and separation costs associated with business divestitures. The Company completed the sale of its Neurovascular business in January 2011 and the resulting gain is not indicative of future operating performance and is not used by management to assess operating performance. Fees and separation costs represent those associated with the Company's divestiture of its Neurovascular business 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 the Company's current operating performance and a comparison to the Company's past operating performance. |
Restructuring and restructuring-related costs - These adjustments represent primarily severance, costs to transfer production lines from one facility to another, and other direct costs associated with the Company's 2011 Restructuring plan, 2010 Restructuring plan and Plant Network Optimization program. These expenses are excluded by management in assessing the Company's operating performance, as well as from the Company's operating segments' measures of profit and loss used for making operating decisions and assessing performance. Accordingly, management excluded these charges for purposes of calculating these non-GAAP financial measures to facilitate an evaluation of the Company's current operating performance and a comparison to the Company's 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 (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 the Company's current operating performance and a comparison to the Company's past operating performance. |
Amortization expense - Amortization expense is a non-cash charge and does not impact the Company's liquidity or compliance with the covenants included in its credit facility agreement. Management removes the impact of amortization from the Company's operating performance to assist in assessing the Company's cash generated from operations. Management believes this is a critical metric for the Company in measuring the Company's ability to generate cash and invest in the Company's 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 the Company's current operating performance, particularly in terms of liquidity. |
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 regional and divisional revenue growth rates to facilitate an evaluation of the Company's current operating performance and a comparison to the Company's past operating performance. |
&%P+S$N,"\`/#]X<&%C:V5T(&)E9VEN/2?ON[\G
M(&ED/2=7-4TP37!#96AI2'IR95-Z3E1C>FMC.60G/SX*/'@Z>&UP;65T82!X
M;6QN K*+FK84,(I=J-2<*@^:U^=/]CHMOK(
M;C;E*D8J#\QP_P!GH\WR`Q0PV^4[-QRK@-K;JIDRF!F;PRT]7]Y$A5(H45?,
M\R2\Z1S;@6)]A39)3-:';Y.^>,T;U%/\'7MO8&V6V9PTT>#T8'XZ[_K-RL,3
MDJ2F7#Y3!3[9RLF0$T=-782:3Q"1Z4(YAEPDTQ>-V(M&Q`M>ZDF^V2V_ZB.?
M%5]:@<0PS^>KS^?1=NEN(U\5:^*&U"GKZ?F.FRJVMN+I+MM\MBZ(IMRFJ(L+
MN7.5L93!U.'R*1-CJ@4K.KY&+0X\@6\:H&1F`8^[BX@WC;/!D>LY&I5'Q!AQ
M%?+Y?D:=/1S17]H$<][+4`'((X_9\O/SZJI_F!?'3%=9;JGWGAZ6IDI:A!N+
M;GFJ%G\^WJV5H/X>DK!;2[5JXWHI`H4^***3G66]R+R1OS[C:K;3D>*G:U,=
MP''['%&^VH\NC2QF^K@5BWZJG2WVCS_VPH?S^75(/9&X H,F]NI;7F.QV[F/E
MUOK)V,46X6J!J`C/B_T*#.HX\O3I(9[='7/1FT\'B:JCR,6W\AD,KC:'%4-%
M_%ZZO?(&KRFX*RKI83`9*>=JR0R)"+MK*QJ2I]E*0WF[W5Q/&%$I-?05]!U)
MFY[GRI[3\NV7*US;SWMO=>)X@0`N0]3(Y6N`?(#.*])7K$X/8%'13=4YZ/-]
M-;IKPZX=,A)#D]DY.L<(7I8:G[>J^U)`1X)0"RJ+:9!ZS23;Y+]%26$Q;@BX
MK\+J/0^O47\K0M9WE-!Q7T/D?S_P`/0?YQY:W#VQYIM=PV^5DV
M:>;5:S>4,A-3`YX:6K1:X\O/HSS;7V;OK(8?.[PV7B:K>&Q,G%"D&2,]35[4
MSM(GFA6*6GJHJ7+XN6*05.-J)DFBFIG5EY!`+;D7VWE[-IF\#B/0@^8ZGGES
M:N2/<<6?,M_LT9Y@MG4RK4BDJ\&*@T<'B"1T#7S-W+O?$[4ZREVYN;.XG`YO
M?[[8FLW)EC_`*7A>*OV#HG6XMF?)?XI=Y9S
M=6YNBL[UYB=_Q-D
SC=[B4B:.SW>W=9T5J3.-,=15?#CD6I%1B20Z?X4(&KH17-S%8U7;]
MWCDNYE#'QV<11*PX1QNM'!XAW[?1//HHV[-Z87I>EWOOZ27I'O'-;^R,0S>V
M*O%=1=I]A[CAFDCFDEVFC8REWG@\;BZ>G)6!)J*C@5?$L\-[>[;)#O=Z+?;M
MT6!MA%5:=)77PG85#,T