8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 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):     October 18, 2006

BOSTON SCIENTIFIC CORPORATION

(Exact name of registrant as specified in charter)

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)

Registrant’s telephone number, including area code:(508) 650-8000

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

¨ Written communication pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

ITEM 2.02. RESULTS OF OPERATIONS AND FINANCIAL CONDITION.

On October 18, 2006, Boston Scientific Corporation (the “Company”) issued a press release announcing financial results for the third quarter ended September 30, 2006. A copy of the release is furnished with this report as Exhibit 99.1.

The information in this Current Report on Form 8-K and the Exhibit attached hereto shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 (the “Exchange Act”) or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Exchange Act, regardless of any general incorporation language in such filing.

ITEM 9.01. FINANCIAL STATEMENTS AND EXHIBITS.

99.1 Press Release issued by Boston Scientific Corporation dated October 18, 2006.

SIGNATURE

Pursuant to the requirements of the Securities and Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	BOSTON SCIENTIFIC CORPORATION
Date:       October 18, 2006	By:	/s/ Lawrence J. Knopf
		Lawrence J. Knopf
		Vice President and Assistant General Counsel

INDEX TO EXHIBITS

Exhibit Number Description

99.1 Press release issued by Boston Scientific Corporation dated October 18, 2006

EX-99.1

EXHIBIT 99.1

BOSTON SCIENTIFIC ANNOUNCES RESULTS FOR

THIRD QUARTER ENDED SEPTEMBER 30, 2006

Natick, MA (October 18, 2006) -- Boston Scientific Corporation (NYSE: BSX) today announced financial results for the third quarter ended September 30, 2006.

Net sales for the third quarter of 2006 were $2.026 billion as compared to $1.511 billion for the third quarter of 2005, an increase of 34 percent. The increase was primarily attributable to the inclusion of $491 million of net sales from the Company’s cardiac rhythm management (CRM) and cardiac surgery businesses.

Reported net income for the third quarter of 2006 was $76 million, or $0.05 per share, on approximately 1.5 billion weighted average shares outstanding. Reported results for the third quarter of 2006 included charges (after-tax) of $77 million, or approximately $0.05 per share, which consisted primarily of expenses resulting from purchase accounting and other charges related to the Guidant acquisition.

Reported net loss for the third quarter of 2005 was $269 million, or $0.33 per share, on approximately 820 million weighted average shares outstanding. Reported results for the third quarter of 2005 included charges (after-tax) of $616 million, or approximately $0.75 per share, which consisted primarily of a settlement agreement with Medinol Ltd.

Operating cash flow for the third quarter of 2006 approximated $480 million. Adjusted net income for the quarter, excluding net charges and amortization and stock compensation expense, was $291 million, or $0.20 per share. Adjusted net income for the third quarter of 2005, excluding net charges and amortization and stock compensation expense, was $379 million, or $0.46 per share.

Worldwide sales of TAXUS^® paclitaxel-eluting coronary stent systems were $572 million for the third quarter of 2006 as compared to $601 million for the third quarter of 2005. U.S. sales of TAXUS coronary stent systems were $384 million for the third quarter of 2006 as compared to $404 million for the third quarter of 2005.

Worldwide CRM sales were $446 million, which included $315 million of worldwide implantable cardioverter defibrillator (ICD) sales and $131 million of worldwide pacemaker sales. U.S. CRM sales were $296 million, which included $221 million of U.S. ICD sales and $75 million of U.S. pacemaker sales.

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Boston Scientific Corporation/Page 2

October 18, 2006 

“Despite the challenges in Q3, we were able to achieve results near the high end of our previously announced preliminary sales and earnings ranges,” said Jim Tobin, President and Chief Executive Officer of Boston Scientific. “We look forward to providing an update on our business and our growth opportunities at our November 6 analyst meeting.”

Boston Scientific officials will be discussing these and other issues with analysts on a conference call at 4:30 p.m. (ET) Wednesday, October 18, 2006. The Company will webcast the call to all 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 one year on the Boston Scientific website.

Boston Scientific is a worldwide developer, manufacturer and marketer of medical devices whose products are used in a broad range of interventional medical specialties. For more information, please visit: www.bostonscientific.com.

This press release contains forward-looking statements. The Company wishes to caution the reader of this press release that actual results may differ from those discussed in the forward-looking statements and may be adversely affected by, among other things, risks associated with new product development and introduction, clinical trials, regulatory approvals, competitive offerings, intellectual property, litigation, integration of acquired companies, the Company’s overall business strategy, and other factors described in the Company’s filings with the Securities and Exchange Commission.

Non-GAAP Measures

The Company discloses non-GAAP measures that exclude certain charges. These supplemental measures exclude the impact of certain charges such as purchase accounting adjustments, costs associated with acquisitions and investment portfolio activity that are highly variable and difficult to predict. The Company’s non-GAAP adjusted net income also excludes stock-based compensation expense that the Company started recording under FAS 123(R) in the first quarter of 2006. Management uses these supplemental measures to evaluate performance period over period, to analyze the underlying trends in the Company’s business and to establish operational goals and forecasts that are used in allocating resources. Since management finds these measures to be useful, the Company believes that its investors benefit from seeing the Company’s results through the eyes of management in addition to seeing its GAAP results.

The Company recognizes that these charges can have a material impact on the Company’s cash flows and net income. Although the Company believes it is useful for investors to see its core performance free of certain charges, investors should understand that the excluded items are actual expenses that impact the cash available to the Company for other uses. To gain a complete picture of the Company’s performance, management does (and investors should) rely upon the GAAP income statement. The non-GAAP numbers focus instead upon the core business of the Company, which is only a subset, albeit a critical one, of the Company’s performance.

Readers are therefore reminded that non-GAAP numbers are merely a supplement to, and not a replacement for, GAAP financial measures. It should be noted as well that the Company’s non-GAAP information may be different from the non-GAAP information provided by other companies.

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Boston Scientific Corporation/Page 3

October 18, 2006 

CONTACT:   Milan Kofol 508-650-8569 (Office) 617-834-8595 (Mobile) Investor Relations Boston Scientific Corporation
Paul Donovan 508-650-8541 (Office) 508-667-5165 (Mobile) Media Relations Boston Scientific Corporation 

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BOSTON SCIENTIFIC CORPORATION

WORLDWIDE SALES

REGIONAL SUMMARY

(Unaudited)

	Three Months Ended
	September 30,				Change
					As Reported			Constant
In millions	2006		2005		Currency Basis			Currency Basis
DOMESTIC	$	1,273	$	926		37	%		37	%
Europe		402		274		47	%		41	%
Japan		148		140		6	%		9	%
Inter-Continental		203		171		19	%		18	%
INTERNATIONAL		753		585		29	%		26	%
WORLDWIDE	$	2,026	$	1,511		34	%		33	%
		Nine Months Ended
		September 30,				Change
						As Reported			Constant
In millions		2006		2005		Currency Basis			Currency Basis
DOMESTIC	$	3,579	$	2,924		22	%		22	%
Europe		1,147		871		32	%		33	%
Japan		431		440		(2	%)		5	%
Inter-Continental		599		508		18	%		17	%
INTERNATIONAL		2,177		1,819		20	%		21	%
WORLDWIDE	$	5,756	$	4,743		21	%		22	%

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BOSTON SCIENTIFIC CORPORATION

WORLDWIDE SALES

DIVISIONAL SUMMARY

(Unaudited)

	Three Months Ended
	September 30,				Change
					As Reported			Constant
In millions	2006		2005		Currency Basis			Currency Basis
Interventional Cardiology	$	868	$	892		(3	%)		(4	%)
Peripheral Interventions/Vascular Surgery		154		176		(13	%)		(13	%)
Electrophysiology		32		32		0	%		2	%
Neurovascular		81		67		21	%		19	%
Cardiac Surgery		45		NA		NA			NA
Cardiac Rhythm Management		446		NA		NA			NA
CARDIOVASCULAR		1,626		1,167		39	%		37	%
Oncology		60		52		15	%		14	%
Endoscopy		187		172		9	%		9	%
Urology		93		85		9	%		9	%
ENDOSURGERY		340		309		10	%		10	%
NEUROMODULATION		60		35		71	%		68	%
WORLDWIDE	$	2,026	$	1,511		34	%		33	%
		Nine Months Ended
		September 30,				Change
						As Reported			Constant
In millions		2006		2005		Currency Basis			Currency Basis
Interventional Cardiology	$	2,781	$	2,891		(4	%)		(3	%)
Peripheral Interventions/Vascular Surgery		506		537		(6	%)		(5	%)
Electrophysiology		99		97		2	%		4	%
Neurovascular		243		206		18	%		19	%
Cardiac Surgery		83		NA		NA			NA
Cardiac Rhythm Management		882		NA		NA			NA
CARDIOVASCULAR		4,594		3,731		23	%		24	%
Oncology		166		154		8	%		9	%
Endoscopy		556		519		7	%		8	%
Urology		273		238		15	%		15	%
ENDOSURGERY		995		911		9	%		10	%
NEUROMODULATION		167		101		65	%		65	%
WORLDWIDE	$	5,756	$	4,743		21	%		22	%

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BOSTON SCIENTIFIC CORPORATION

GAAP RESULTS OF OPERATIONS

(Unaudited)

	Three Months Ended
	September 30,
In millions, except per share data	2006			2005
Net sales	$	2,026		$	1,511
Cost of products sold		630			343
Gross profit		1,396			1,168
Selling, general and administrative expenses		719			444
Research and development expenses		272			181
Royalty expense		57			52
Amortization expense		153			47
Litigation-related charges					780
		1,201			1,504
Operating income/(loss)		195			(336	)
Other income/(expense):
Interest expense		(143	)		(21	)
Other, net		(1	)		5
Income/(loss) before income taxes		51			(352	)
Income tax benefit		(25	)		(83	)
Net income/(loss)	$	76		$	(269	)
Net income/(loss) per common share - assuming dilution	$	0.05		$	(0.33	)
Weighted average shares outstanding - assuming dilution		1,486.7			819.9

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BOSTON SCIENTIFIC CORPORATION

NON-GAAP NET INCOME AND NET INCOME PER COMMON SHARE RECONCILIATION

(Unaudited)

The Company discloses non-GAAP measures that exclude certain charges. These supplemental measures exclude the impact of certain charges such as purchase accounting adjustments, costs associated with acquisitions and investment portfolio activity that are highly variable and difficult to predict. The Company’s non-GAAP adjusted net income also excludes stock-based compensation expense that the Company started recording under FAS 123(R) in the first quarter of 2006. Management uses these supplemental measures to evaluate performance period over period, to analyze the underlying trends in the Company’s business and to establish operational goals and forecasts that are used in allocating resources. Since management finds these measures to be useful, the Company believes that its investors benefit from seeing the Company’s results through the eyes of management in addition to seeing its GAAP results.

The Company recognizes that these charges can have a material impact on the Company’s cash flows and net income. Although the Company believes it is useful for investors to see its core performance free of certain charges, investors should understand that the excluded items are actual expenses that impact the cash available to the Company for other uses. To gain a complete picture of the Company’s performance, management does (and investors should) rely upon the GAAP income statement. The non-GAAP numbers focus instead upon the core business of the Company, which is only a subset, albeit a critical one, of the Company’s performance.

Readers are therefore reminded that non-GAAP numbers are merely a supplement to, and not a replacement for, GAAP financial measures. It should be noted as well that the Company’s non-GAAP information may be different from the non-GAAP information provided by other companies.

	Three Months Ended						Three Months Ended
	September 30, 2006						September 30, 2005
In millions, except per share data	Net income			Impact per diluted share			Net (loss)/ income			Impact per diluted share
GAAP results	$	76		$	0.05		$	(269	)	$	(0.33	)
Non-GAAP adjustments:
Purchase accounting adjustments		59			0.04
Merger-related and other costs		18			0.01			18			0.02	*
Litigation-related charges								598			0.73
Amortization and stock compensation expense		138			0.10			32			0.04	*
Adjusted results	$	291		$	0.20		$	379		$	0.46	*
* Calculated by assuming dilution from stock equivalents of 10.9 million shares
		Three Months Ended
		September 30,
		2006			2005
Purchase accounting adjustments:
Step-up value of inventory sold (a)	$	94
Income tax benefit		(35	)
Purchase accounting adjustments, net of tax	$	59
Merger-related and other costs:
Integration costs (b)	$	9
Fair-value adjustment for the sharing of proceeds feature of the Abbott stock purchase (c)		13
CRM technology offering charge (a)		31
Business optimization charges (d)				$	28
		53			28
Income tax benefit		(35	)		(10	)
Merger-related and other costs, net of tax	$	18		$	18
Litigation-related charges:
Litigation-related charges				$	780
Income tax benefit					(182	)
Litigation-related charges, net of tax				$	598
Amortization and stock compensation expense:
Amortization expense	$	153		$	37
Stock compensation expense (e)		26			5
		179			42
Income tax benefit		(41	)		(10	)
Amortization and stock compensation expense, net of tax	$	138		$	32

(a) Recorded to cost of products sold

(b) Recorded $7 million to selling, general and administrative expenses and $2 million to research and development expenses

(c) Recorded to other, net

(d) Recorded $11 million to selling, general and administrative expenses, $7 million to research and development expenses and $10 million to amortization expense

(e) Recorded $16 million in 2006 to selling, general and administrative expenses, $6 million to research and development expenses and $4 million to cost of products sold; recorded $5 million in 2005 to selling, general and administrative expenses

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BOSTON SCIENTIFIC CORPORATION 

GAAP RESULTS OF OPERATIONS

(Unaudited)

	Nine Months Ended
	September 30,
In millions, except per share data	2006			2005
Net sales	$	5,756		$	4,743
Cost of products sold		1,681			1,044
Gross profit		4,075			3,699
Selling, general and administrative expenses		1,917			1,346
Research and development expenses		741			506
Royalty expense		177			174
Amortization expense		356			114
Purchased research and development		4,117			276
Litigation-related charges					780
		7,308			3,196
Operating (loss)/income		(3,233	)		503
Other income/(expense):
Interest expense		(291	)		(58	)
Other, net		(180	)		8
(Loss)/income before income taxes		(3,704	)		453
Income tax expense		150			159
Net (loss)/income	$	(3,854	)	$	294
Net (loss)/income per common share - assuming dilution	$	(3.19	)	$	0.35
Weighted average shares outstanding - assuming dilution		1,207.0			840.3

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BOSTON SCIENTIFIC CORPORATION

NON-GAAP NET INCOME AND NET INCOME PER COMMON SHARE RECONCILIATION

(Unaudited)

 

	Nine Months Ended						Nine Months Ended
	September 30, 2006						September 30, 2005
In millions, except per share data	Net (loss)/ income			Impact per diluted share			Net income		Impact per diluted share
GAAP results	$	(3,854	)	$	(3.19	)	$	294	$	0.35
Non-GAAP adjustments:
Purchase accounting adjustments		4,483			3.71			267		0.32
Merger-related and other costs		114			0.09	*		23		0.03
AAA program cancellation charges		(31	)		(0.03	)*
Investment portfolio activity		81			0.07	*
Litigation-related charges								598		0.71
Amortization and stock compensation expense		325			0.27	*		89		0.10
Adjusted results	$	1,118		$	0.92	*	$	1,271	$	1.51
* Calculated by assuming dilution from stock equivalents of 14.2 million shares
		Nine Months Ended
		September 30,
		2006			2005
Purchase accounting adjustments:
Purchased research and development	$	4,184		$	276
Step-up value of inventory sold (a)		279
		4,463			276
Income tax expense/(benefit)		20			(9	)
Purchase accounting adjustments, net of tax	$	4,483		$	267
Merger-related and other costs:
Integration costs (b)	$	42
Fair-value adjustment for the sharing of proceeds feature of the Abbott stock purchase (c)		100
Charitable donation (c)		5
CRM technology offering charge (a)		31
Certain retirement benefits (d)				$	17
Business optimization charges (f)					28
		178			45
Income tax benefit		(64	)		(22	)
Merger-related and other costs, net of tax	$	114		$	23
AAA program cancellation charges:
Purchased research and development	$	(67	)
Facility costs and severance (e)		31
Amortization expense		23
		(13	)
Income tax benefit		(18	)
AAA program cancellation charges, net of tax	$	(31	)
Investment portfolio activity:
Investment portfolio activity(c)	$	105
Income tax benefit		(24	)
Investment portfolio activity, net of tax	$	81
Litigation-related charges:
Litigation-related charges				$	780
Income tax benefit					(182	)
Litigation-related charges, net of tax				$	598
Amortization and stock compensation expense:
Amortization expense	$	333		$	104
Stock compensation expense (g)		89			13
		422			117
Income tax benefit		(97	)		(28	)
Amortization and stock compensation expense, net of tax	$	325		$	89

(a) Recorded to cost of products sold

(b) Recorded $39 million to selling, general and administrative expenses and $3 million to research and development expenses

(c) Recorded to other, net

(d) Recorded to selling, general and administrative expenses

(e) Recorded to research and development expenses

(f) Recorded $11 million to selling, general and administrative expenses, $7 million to research and development expenses and $10 million to amortization expense

(g) Recorded $59 million in 2006 to selling, general and administrative expenses, $18 million to research and development expenses and $12 million to cost of products sold; recorded $13 million in 2005 to selling, general and administrative expenses

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BOSTON SCIENTIFIC CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

	September 30,		December 31,
In millions	2006		2005
Assets
Current assets:
Cash, cash equivalents and short-term investments	$	1,541	$	848
Trade accounts receivable, net		1,460		932
Inventories		759		418
Other current assets		989		433
Total current assets		4,749		2,631
Property, plant and equipment, net		1,672		1,011
Intangible assets, net		23,743		3,735
Investments		568		594
Other assets		220		225
	$	30,952	$	8,196
Liabilities and Stockholders’ Equity
Current liabilities:
Borrowings due within one year	$	5	$	156
Accounts payable and accrued expenses		1,815		1,229
Other current liabilities		830		94
Total current liabilities		2,650		1,479
Long-term debt		8,893		1,864
Other long-term liabilities		4,393		571
Stockholders’ equity		15,016		4,282
	$	30,952	$	8,196

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