Contractual Obligations and Commitments

3 Months Ended

Mar. 31, 2022

Debt Disclosure [Abstract]

CONTRACTUAL OBLIGATIONS AND COMMITMENTS

NOTE E – CONTRACTUAL OBLIGATIONS AND COMMITMENTS

Borrowings and Credit Arrangements

We had total debt outstanding of $9.005 billion as of March 31, 2023 and $8.935 billion as of December 31, 2022, with current obligations of $510 million as of March 31, 2023 and $20 million as of December 31, 2022. The debt maturity schedule for our long-term debt obligations is presented below:

(in millions, except interest rates)	Issuance Date	Maturity Date	As of				Coupon Rate(1)
			March 31, 2023		December 31, 2022
March 2024 Senior Notes(4)	February 2019	March 2024	—		504		3.450%
March 2025 Senior Notes(3)	March 2022	March 2025	1,088		1,067		0.750%
June 2025 Senior Notes	May 2020	June 2025	500		500		1.900%
March 2026 Senior Notes(4)	February 2019	March 2026	255		255		3.750%
December 2027 Senior Notes(3)	November 2019	December 2027	979		960		0.625%
March 2028 Senior Notes(3)	March 2022	March 2028	816		800		1.375%
March 2028 Senior Notes(4)	February 2018	March 2028	344		344		4.000%
March 2029 Senior Notes(4)	February 2019	March 2029	272		272		4.000%
June 2030 Senior Notes	May 2020	June 2030	1,200		1,200		2.650%
March 2031 Senior Notes(3)	March 2022	March 2031	816		800		1.625%
March 2034 Senior Notes(3)	March 2022	March 2034	544		534		1.875%
November 2035 Senior Notes(2)	November 2005	November 2035	350		350		6.750%
March 2039 Senior Notes(4)	February 2019	March 2039	450		450		4.550%
January 2040 Senior Notes	December 2009	January 2040	300		300		7.375%
March 2049 Senior Notes(4)	February 2019	March 2049	650		650		4.700%
Unamortized Debt Issuance Discount and Deferred Financing Costs		2023 - 2049	(73)		(76)
Finance Lease Obligation		Various	5		5
Long-term debt			$	8,495	$	8,915

Note: The table above does not include unamortized amounts related to interest rate contracts designated as cash flow hedges.

(1)    Coupon rates are semi-annual, except for the euro-denominated senior notes, which bear an annual coupon.

(2)    Corporate credit rating improvements may result in a decrease in the adjusted interest rate on our November 2035 Notes to the extent that our lowest credit rating is above BBB- or Baa3. The interest rates on our November 2035 Notes will be permanently reinstated to the issuance rate if the lowest credit ratings assigned to these senior notes is either A- or A3 or higher. Effective May 2023, the interest rate payable will decrease by 0.25 percent and begin accruing at a rate of 6.50 percent following recent upgrades to our credit ratings.

(3)    These notes are euro-denominated and presented in U.S. dollars based on the exchange rate in effect as of March 31, 2023 and December 31, 2022, respectively.

(4)    Amounts repaid, or partially repaid as the case may be, in connection with the March 2022 tender offer and early redemption of certain of our outstanding senior notes are described below.

Revolving Credit Facility

On May 10, 2021, we entered into a new $2.750 billion revolving credit facility (2021 Revolving Credit Facility) with a global syndicate of commercial banks scheduled to mature on May 10, 2026, with one-year extension options, subject to certain conditions. On March 1, 2023, we entered into an amendment of the 2021 Revolving Credit Facility credit agreement, which provided for an extension of the scheduled maturity date to May 10, 2027 and replaced the London Interbank Offered Rate (LIBOR) with the Secured Overnight Financing Rate (SOFR) as the Eurocurrency Rate for Dollars, including applicable credit spread adjustments and relevant SOFR benchmark provisions, among other things described under Financial Covenant below. This facility provides backing for our commercial paper program, and outstanding commercial paper directly reduces borrowing capacity under the 2021 Revolving Credit Facility. There were no amounts outstanding under the 2021 Revolving Credit Facility as of March 31, 2023 or December 31, 2022.

Financial Covenant

As of March 31, 2023, we were in compliance with the financial covenant required by the 2021 Revolving Credit Facility, as amended.

	Covenant Requirement	Actual
	as of March 31, 2023	as of March 31, 2023
Maximum permitted leverage ratio(1)	3.75 times	2.52 times

(1)Ratio of total debt to consolidated EBITDA, as defined by the credit agreements, as amended.

The 2021 Revolving Credit Facility includes the financial covenant requirement for all of our credit arrangements that we maintain the maximum permitted leverage ratio of 3.75 times through the remaining term. The agreement provides for higher leverage ratios, at our election, for the period following a qualified acquisition for which consideration exceeds $1.000 billion. In the event of such an acquisition, for the four succeeding quarters immediately following, including the quarter in which the acquisition occurs, the maximum permitted leverage ratio is 4.75 times. The maximum permitted ratio steps down for the fifth, sixth and seventh succeeding quarters to 4.50 times, 4.25 times and 4.00 times, respectively. Thereafter, a maximum leverage ratio of 3.75 times is required through the remaining term of the 2021 Revolving Credit Facility. We have not elected to increase the maximum permitted leverage ratio for any qualified acquisitions due to our funding of these acquisitions using cash on hand.

The financial covenant requirement, as amended on March 1, 2023, provides for an exclusion from the calculation of consolidated EBITDA, as defined by the credit agreement, through maturity, of certain charges and expenses. The credit agreement amendment reset the starting date for purposes of calculating such permitted exclusions in each case from March 31, 2021 to December 31, 2022. Permitted exclusions include any non-cash charges and up to $500 million in restructuring charges and restructuring-related expenses associated with our current or future restructuring plans. As of March 31, 2023, we had $457 million of the restructuring charge exclusion remaining. In addition, any cash litigation payments (net of any cash litigation receipts), as defined by the agreement, are excluded from the calculation of consolidated EBITDA, as defined by the agreement, provided that the sum of any excluded net cash litigation payments do not exceed $1.000 billion plus all accrued legal liabilities as of December 31, 2022 for a total of $1.443 billion. As of March 31, 2023, we had $1.424 billion of the litigation exclusion remaining.

Any inability to maintain compliance with this covenant could require us to seek to renegotiate the terms of our credit arrangements or seek waivers from compliance with this covenant, both of which could result in additional borrowing costs. Further, there can be no assurance that our lenders would agree to such new terms or grant such waivers on terms acceptable to us. In this case, all 2021 Revolving Credit Facility commitments would terminate, and any amounts borrowed under the facility would become immediately due and payable. Furthermore, any termination of our 2021 Revolving Credit Facility may negatively impact the credit ratings assigned to our commercial paper program, which may impact our ability to refinance any then outstanding commercial paper as it becomes due and payable.

Commercial Paper

Our commercial paper program is backed by the 2021 Revolving Credit Facility. We had no commercial paper outstanding as of March 31, 2023 or December 31, 2022. In April 2023, we issued commercial paper to partially fund our acquisition of Apollo. As of the date of this Quarterly Report on Form 10-Q, we had approximately $400 million of commercial paper outstanding, which directly reduces our borrowing capacity under the 2021 Revolving Credit Facility.

Senior Notes

We had senior notes outstanding of $9.067 billion as of March 31, 2023 and $8.986 billion as of December 31, 2022. Our senior notes were issued in public offerings, are redeemable prior to maturity and are not subject to sinking fund requirements. Our senior notes are unsecured, unsubordinated obligations and rank on parity with each other. These notes are effectively junior to liabilities of our subsidiaries (refer to Other Arrangements below).

In March 2022, American Medical Systems Europe B.V. (AMS Europe), an indirect, wholly owned subsidiary of Boston Scientific, completed a registered public offering (the Offering) of €3.000 billion in aggregate principal amount of euro-dominated senior notes comprised of €1.000 billion of 0.750% Senior Notes due 2025, €750 million of 1.375% Senior Notes due 2028, €750 million of 1.625% Senior Notes due 2031 and €500 million of 1.875% Senior Notes due 2034 (collectively, the Eurobonds). Boston Scientific has fully and unconditionally guaranteed all of AMS Europe's obligations under the Eurobonds,

and no other subsidiary of Boston Scientific will guarantee these obligations. AMS Europe is a “finance subsidiary” as defined in Rule 13-01(a)(4)(vi) of Regulation S-X. The financial condition, results of operations and cash flows of AMS Europe are consolidated in the financial statements of Boston Scientific. The Offering resulted in cash proceeds of $3.270 billion, net of investor discounts and issuance costs.

We used the net proceeds from the Offering to fund the tender offer and early redemption of combined aggregate principal amount of $3.275 billion of certain of our outstanding senior notes, as well as to pay accrued interest, tender premiums, fees and expenses. We recorded associated debt extinguishment charges of $194 million during the first quarter of 2022 presented in Interest expense within our accompanying unaudited consolidated statements of operations.

Other Arrangements

We have accounts receivable factoring programs in certain European countries and with commercial banks in China and Japan which include promissory notes discounting programs. We account for our factoring programs as sales under FASB ASC Topic 860, Transfers and Servicing. We have no retained interest in the transferred receivables, other than collection and administration, and once sold, the accounts receivable are no longer available to satisfy creditors in the event of bankruptcy. Amounts de-recognized for accounts and notes receivable, which are excluded from Trade accounts receivable, net within our accompanying unaudited consolidated balance sheets, are aggregated by contract denominated currency below (in millions):

Factoring Arrangements	As of March 31, 2023				As of December 31, 2022
	Amount De-recognized		Weighted Average Interest Rate		Amount De-recognized		Weighted Average Interest Rate
Euro denominated	$	188	5.5	%	$	161	2.4	%
Yen denominated	188		0.5	%	194		0.6	%
Renminbi denominated	14		3.0	%	13		3.1	%

Other Contractual Obligations and Commitments

We had outstanding letters of credit of $143 million as of March 31, 2023 and $135 million as of December 31, 2022, which consisted primarily of bank guarantees and collateral for workers' compensation insurance arrangements. As of March 31, 2023 and December 31, 2022 we had not recognized a related liability for any outstanding letters of credit within our accompanying unaudited consolidated balance sheets.

We have a supplier financing program offered primarily in the U.S. where our suppliers can opt to receive early payment at a nominal discount, while allowing us to lengthen our payment terms and optimize working capital. Our standard payment term in the U.S. is 90 days. All outstanding payables related to the supplier finance program are classified within Accounts Payable within our unaudited consolidated balance sheets and were $128 million as of March 31, 2023 and $129 million as of December 31, 2022.

Refer to Note E – Contractual Obligations and Commitments to our audited financial statements contained in Item 8 of our most recent Annual Report on Form 10-K for additional information on our borrowings and credit agreements.