MARLBOROUGH, Mass.,
July 23, 2015 /PRNewswire/
-- Boston Scientific Corporation (NYSE: BSX) generated sales
of $1.843 billion during the second
quarter ended June 30, 2015, compared
to the company's guidance range for the quarter of $1.800 to $1.850 billion. This represents 6
percent operational revenue growth (constant currency basis,
excluding divested businesses) and a decrease of 2 percent on a
reported basis, all compared to the prior year period. The
company achieved adjusted earnings per share of $0.22 for the period, compared to $0.21 a year ago, and GAAP earnings of
$102 million, or approximately
$0.08 per share, compared to
$0.00 a year ago.*
"Our strong performance in the second quarter reflects the
consistent execution of our global teams," said Mike Mahoney, president and chief executive
officer, Boston Scientific. "We are particularly pleased with the
improved growth in MedSurg and continued strength in
Cardiovascular. We look forward to continued momentum with
several ongoing product launches and the planned closing of the
American Medical Systems (AMS) urology portfolio acquisition in the
third quarter of 2015."
Second quarter financial results and recent
developments*:
- Achieved second quarter sales of $1.843
billion, representing 6 percent operational revenue growth
and a decrease of 2 percent on a reported basis, all compared to
the prior year period.
- Delivered adjusted earnings per share of $0.22 compared to the company's guidance range of
$0.20 to $0.22, and GAAP income of
$0.08 per share compared to the
company's guidance range of $0.09 to
$0.11 per share.
- Reported second quarter revenue growth of 10 percent in
Cardiovascular, 7 percent in MedSurg, and remained flat in Rhythm
Management, all on a constant currency basis over the prior year
period.
- Delivered strong operational revenue growth of 6 percent across
all three major regions (U.S., Europe, and Asia, Middle
East and Africa) and 12
percent operational revenue growth in the Emerging Markets.
- Added to a growing body of evidence supporting the performance,
safety and extremely low paravalvular aortic regurgitation
(leakage) rates of the Lotus™ Valve System** with
early results from the RESPOND Post-Market Study highlighted at
EuroPCR 2015.
- Began the U.S. commercial rollout of the WATCHMAN™
Left Atrial Appendage Closure Device.
- Launched the Precision Novi™ Spinal Cord Stimulator
(SCS) System*** in Europe. The Precision Novi System offers
patients and physicians the smallest 16-contact high capacity
primary cell device for the treatment of chronic pain.
- Initiated the UNTOUCHED post-market study evaluating the
EMBLEM™ Subcutaneous Implantable Defibrillator (S-ICD)
for primary prevention of sudden cardiac death in the setting of
severely reduced cardiac function. The EMBLEM System was launched
in Europe in May and began a limited introduction in the
U.S. in June.
- Reported positive, long-term data at EuroPCR 2015 from the
EVOLVE Trial of the SYNERGY™ Everolimus-Eluting
Bioabsorbable Polymer Platinum Chromium Coronary Stent
System** with no new major adverse cardiac events
reported between years three and four.
- Completed a $1.85 billion senior
notes offering with an average interest rate of 3.4%; a portion of
the net proceeds is expected to fund part of the AMS male urology
portfolio purchase price.
* Growth rates are based on actual, non-rounded amounts and
may not recalculate precisely.
** Investigational device and not available for sale in the
U.S. CE-marked device, available for sale in CE-mark
countries.
*** Not available for sale in the U.S. Available for
sale in CE-mark countries.
Worldwide sales for the second quarter:
|
|
Three Months
Ended
|
|
|
|
|
|
|
|
|
June
30,
|
|
%
Change
|
|
|
in
millions
|
2015
|
2014
|
|
As Reported
Basis
|
Less: Impact of
Foreign Currency
|
Constant Currency
Basis
|
|
|
|
|
|
|
|
|
|
|
|
|
Interventional Cardiology
|
$
|
515
|
|
$
|
528
|
|
|
(3)%
|
$
|
(52)
|
|
(10)%
|
7%
|
|
|
Peripheral Interventions
|
228
|
|
211
|
|
|
8%
|
(18)
|
|
(8)%
|
16%
|
|
|
Cardiovascular
|
743
|
|
739
|
|
|
0%
|
(70)
|
|
(10)%
|
10%
|
|
|
Cardiac
Rhythm Management
|
460
|
|
497
|
|
|
(7)%
|
(32)
|
|
(6)%
|
(1)%
|
|
|
Electrophysiology
|
57
|
|
56
|
|
|
2%
|
(4)
|
|
(7)%
|
9%
|
|
|
Rhythm
Management
|
517
|
|
553
|
|
|
(6)%
|
(36)
|
|
(6)%
|
0%
|
|
|
Endoscopy
|
326
|
|
333
|
|
|
(2)%
|
(25)
|
|
(8)%
|
6%
|
|
|
Urology
and Women's Health
|
135
|
|
133
|
|
|
2%
|
(7)
|
|
(5)%
|
7%
|
|
|
Neuromodulation
|
122
|
|
114
|
|
|
7%
|
(3)
|
|
(2)%
|
9%
|
|
|
MedSurg
|
583
|
|
580
|
|
|
1%
|
(35)
|
|
(6)%
|
7%
|
|
|
|
|
|
|
|
|
|
|
|
|
Subtotal Core
Businesses
|
1,843
|
|
1,872
|
|
|
(2)%
|
(141)
|
|
(8)%
|
6%
|
|
|
|
|
|
|
|
|
|
|
|
|
Divested
Businesses
|
—
|
|
1
|
|
|
N/A
|
—
|
|
N/A
|
N/A
|
|
|
|
|
|
|
|
|
|
|
|
|
Worldwide Net
Sales
|
$
|
1,843
|
|
$
|
1,873
|
|
|
(2)%
|
$
|
(141)
|
|
(8)%
|
6%
|
|
|
|
|
|
|
|
|
|
|
|
|
Growth rates are
based on actual, non-rounded amounts and may not recalculate
precisely.
|
|
|
|
Sales growth rates
that exclude the impact of sales from divested businesses and/or
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 2015 was $102 million, or
$0.08 per share. These results
included intangible asset impairment charges, acquisition- and
divestiture-related net charges, litigation-related net credits,
restructuring-related net charges, debt extinguishment charges, and
amortization expense, of $192 million
(after-tax) or $0.14 per share.
Adjusted net income for the second quarter of 2015, excluding these
net charges, was $294 million, or
$0.22 per share.
On a consolidated GAAP basis, net income for the second quarter
of 2014 was $4 million, or
$0.00 per share. These results
included intangible asset impairment charges, acquisition- and
divestiture-related net credits, litigation-, and
restructuring-related net charges, discrete tax items, and
amortization expense, of $281 million
(after-tax) or $0.21 per share.
Adjusted net income for the second quarter of 2014, excluding these
net charges, was $285 million, or
$0.21 per share.
Guidance for Full Year and Third Quarter 2015
The company now estimates revenue for the full year 2015 to be
in a range of $7.275 to $7.375
billion (compared to prior guidance of $7.225 to $7.375 billion), which versus the prior
year period represents change in a range of negative 1 to 0 percent
on a reported basis and a growth range of approximately 4 to 6
percent on an operational basis. The company now estimates
income on a GAAP basis in a range of $0.28
to $0.34 per share (compared to prior guidance of
$0.32 to $0.38), and continues to
estimate adjusted earnings, excluding intangible asset impairment
charges, debt extinguishment charges, acquisition- and
divestiture-, litigation-, and restructuring-related net charges,
pension termination charges, and amortization expense, in a range
of $0.88 to $0.92 per share.
The company estimates sales for the third quarter of 2015 in a
range of $1.790 to $1.840
billion. The company estimates earnings on a GAAP
basis in a range of $0.10 to $0.13
per share. Adjusted earnings, excluding acquisition- and
divestiture- and restructuring-related net charges and amortization
expense, are estimated in a range of $0.21
to $0.23 per share.
Conference Call Information
Boston 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 Scientific
Boston 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 35
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 and operational revenue growth rates, GAAP earnings and
adjusted earnings for the third quarter and full year 2015; our
financial performance; our business plans; our positioning for
revenue and earnings growth, and the acquisition of the American
Medical Systems male urology portfolio. 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; the closing and integration of acquisitions; 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 Information
A
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:
|
|
|
Media:
|
Kelly
Leadem
|
|
508-683-5543
(office)
|
|
Media
Relations
|
|
Boston Scientific
Corporation
|
|
kelly.leadem@bsci.com
|
|
Investors:
|
Susan Lisa,
CFA
|
|
508-683-5565
(office)
|
|
Investor
Relations
|
|
Boston Scientific
Corporation
|
|
investor_relations@bsci.com
|
|
BOSTON SCIENTIFIC
CORPORATION
|
|
CONDENSED
CONSOLIDATED GAAP RESULTS OF OPERATIONS
|
|
(Unaudited)
|
|
|
|
Three Months
Ended
|
|
Six Months
Ended
|
|
|
June
30,
|
|
June
30,
|
|
in millions,
except per share data
|
2015
|
2014
|
|
2015
|
2014
|
|
|
|
|
|
|
|
|
Net sales
|
$
|
1,843
|
|
$
|
1,873
|
|
|
$
|
3,611
|
|
$
|
3,647
|
|
|
Cost of products
sold
|
540
|
|
563
|
|
|
1,060
|
|
1,100
|
|
|
Gross
profit
|
1,303
|
|
1,310
|
|
|
2,551
|
|
2,547
|
|
|
|
|
|
|
|
|
|
Operating
expenses:
|
|
|
|
|
|
|
Selling, general and
administrative expenses
|
700
|
|
743
|
|
|
1,367
|
|
1,409
|
|
|
Research and
development expenses
|
220
|
|
206
|
|
|
412
|
|
397
|
|
|
Royalty
expense
|
18
|
|
25
|
|
|
36
|
|
65
|
|
|
Amortization
expense
|
116
|
|
109
|
|
|
229
|
|
218
|
|
|
Intangible asset
impairment charges
|
9
|
|
110
|
|
|
9
|
|
165
|
|
|
Contingent
consideration expense (benefit)
|
19
|
|
(96)
|
|
|
46
|
|
(118)
|
|
|
Restructuring
charges
|
3
|
|
15
|
|
|
9
|
|
35
|
|
|
Gain on
divestiture
|
—
|
|
—
|
|
|
—
|
|
(12)
|
|
|
Pension termination
charges
|
—
|
|
—
|
|
|
8
|
|
—
|
|
|
Litigation-related
charges (credits)
|
(1)
|
|
267
|
|
|
192
|
|
260
|
|
|
|
1,084
|
|
1,379
|
|
|
2,308
|
|
2,419
|
|
|
Operating income
(loss)
|
219
|
|
(69)
|
|
|
243
|
|
128
|
|
|
|
|
|
|
|
|
|
Other income
(expense):
|
|
|
|
|
|
|
Interest
expense
|
(106)
|
|
(53)
|
|
|
(167)
|
|
(108)
|
|
|
Other, net
|
(8)
|
|
18
|
|
|
(22)
|
|
22
|
|
|
Income (loss) before
income taxes
|
105
|
|
(104)
|
|
|
54
|
|
42
|
|
|
Income tax expense
(benefit)
|
3
|
|
(108)
|
|
|
(47)
|
|
(95)
|
|
|
Net income
(loss)
|
$
|
102
|
|
$
|
4
|
|
|
$
|
101
|
|
$
|
137
|
|
|
|
|
|
|
|
|
|
Net income (loss)
per common share - basic
|
$
|
0.08
|
|
$
|
0.00
|
|
|
$
|
0.08
|
|
$
|
0.10
|
|
|
Net income (loss)
per common share - assuming dilution
|
$
|
0.08
|
|
$
|
0.00
|
|
|
$
|
0.07
|
|
$
|
0.10
|
|
|
|
|
|
|
|
|
|
Weighted-average
shares outstanding
|
|
|
|
|
|
|
Basic
|
1,341.3
|
|
1,323.2
|
|
|
1,337.5
|
|
1,322.4
|
|
|
Assuming
dilution
|
1,361.8
|
|
1,345.0
|
|
|
1,359.7
|
|
1,347.1
|
|
|
BOSTON SCIENTIFIC
CORPORATION
|
|
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
|
|
|
|
As
of
|
|
|
|
June
30,
|
|
December
31,
|
|
in millions,
except share data
|
2015
|
|
2014
|
|
|
|
(Unaudited)
|
|
|
|
ASSETS
|
|
|
|
|
Current
assets:
|
|
|
|
|
Cash and cash
equivalents
|
$
|
903
|
|
|
$
|
587
|
|
|
Trade accounts
receivable, net
|
1,195
|
|
|
1,183
|
|
|
Inventories
|
968
|
|
|
946
|
|
|
Deferred and prepaid
income taxes
|
316
|
|
|
447
|
|
|
Other current
assets
|
391
|
|
|
443
|
|
|
Total current
assets
|
3,773
|
|
|
3,606
|
|
|
|
|
|
|
|
|
Property, plant and
equipment, net
|
1,451
|
|
|
1,507
|
|
|
Goodwill
|
5,930
|
|
|
5,898
|
|
|
Other intangible
assets, net
|
5,442
|
|
|
5,606
|
|
|
Other long-term
assets
|
527
|
|
|
425
|
|
|
|
|
$
|
17,123
|
|
|
$
|
17,042
|
|
|
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
Current debt
obligations
|
$
|
43
|
|
|
$
|
403
|
|
|
Accounts
payable
|
191
|
|
|
262
|
|
|
Accrued
expenses
|
1,401
|
|
|
1,950
|
|
|
Other current
liabilities
|
302
|
|
|
231
|
|
|
Total current
liabilities
|
1,937
|
|
|
2,846
|
|
|
|
|
|
|
|
|
Long-term
debt
|
5,069
|
|
|
3,859
|
|
|
Deferred income
taxes
|
899
|
|
|
1,214
|
|
|
Other long-term
liabilities
|
2,638
|
|
|
2,666
|
|
|
|
|
|
|
|
|
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 -
|
16
|
|
|
16
|
|
|
|
issued
1,589,772,340 shares as of June 30, 2015 and
|
|
|
|
|
|
1,575,018,236 shares
as of December 31, 2014
|
|
|
|
|
Treasury stock, at
cost - 247,566,270 shares as of June 30, 2015 and
|
(1,717)
|
|
|
(1,717)
|
|
|
|
247,566,270
shares as of December 31, 2014
|
|
|
|
|
Additional paid-in
capital
|
16,764
|
|
|
16,703
|
|
|
Accumulated
deficit
|
(8,587)
|
|
|
(8,689)
|
|
|
Accumulated other
comprehensive income (loss), net of tax
|
104
|
|
|
144
|
|
|
Total stockholders'
equity
|
6,580
|
|
|
6,457
|
|
|
|
|
$
|
17,123
|
|
|
$
|
17,042
|
|
|
|
|
|
|
|
|
BOSTON SCIENTIFIC
CORPORATION
|
|
NON-GAAP NET INCOME
AND NET INCOME PER COMMON SHARE RECONCILIATIONS
|
|
(Unaudited)
|
|
|
|
Three Months Ended
June 30, 2015
|
|
|
in millions,
except per share data
|
Pre-Tax
|
Tax
Impact
(a)
|
After-Tax
|
Impact per diluted
share
|
|
|
GAAP net income
(loss)
|
$
|
105
|
|
$
|
(3)
|
|
$
|
102
|
|
$
|
0.08
|
|
|
|
Non-GAAP
adjustments:
|
|
|
|
|
|
|
Intangible asset
impairment charges
|
9
|
|
(2)
|
|
7
|
|
0.01
|
|
|
|
Acquisition- and
divestiture-related net charges (b)
|
49
|
|
(7)
|
|
42
|
|
0.03
|
|
|
|
Restructuring and
restructuring-related net charges (c)
|
16
|
|
(2)
|
|
14
|
|
0.01
|
|
|
|
Litigation-related
net credit
|
(1)
|
|
—
|
|
(1)
|
|
0.00
|
|
|
|
Debt extinguishment
charges (d)
|
45
|
|
(16)
|
|
29
|
|
0.02
|
|
|
|
Amortization
expense
|
116
|
|
(15)
|
|
101
|
|
0.07
|
|
|
|
Adjusted net
income
|
$
|
339
|
|
$
|
(45)
|
|
$
|
294
|
|
$
|
0.22
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
June 30, 2014
|
|
|
in millions,
except per share data
|
Pre-Tax
|
Tax
Impact
(a)
|
After-Tax
|
Impact per diluted
share
|
|
|
GAAP net income
(loss)
|
$
|
(104)
|
|
$
|
108
|
|
$
|
4
|
|
$
|
0.00
|
|
|
|
Non-GAAP
adjustments:
|
|
|
|
|
|
|
Intangible asset
impairment charges
|
110
|
|
(19)
|
|
91
|
|
0.07
|
|
|
|
Acquisition- and
divestiture-related net credits (e)
|
(91)
|
|
(1)
|
|
(92)
|
|
(0.07)
|
|
|
|
Restructuring and
restructuring-related net charges (f)
|
25
|
|
(6)
|
|
19
|
|
0.01
|
|
|
|
Discrete tax
items
|
—
|
|
(2)
|
|
(2)
|
|
0.00
|
|
|
|
Litigation-related
net charges
|
267
|
|
(100)
|
|
167
|
|
0.13
|
|
|
|
Amortization
expense
|
109
|
|
(11)
|
|
98
|
|
0.07
|
|
|
|
Adjusted net
income
|
$
|
316
|
|
$
|
(31)
|
|
$
|
285
|
|
$
|
0.21
|
|
|
|
|
|
|
|
|
|
|
(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 second
quarter of 2015, pre-tax acquisition- and divestiture-related net
charges were $49 million, of which $3 million was recorded in cost
of products sold, $7 million was recorded in selling, general and
administrative expenses, $20 million was recorded in research and
development, and $19 million was recorded as a contingent
consideration expense.
|
|
(c) In the second
quarter of 2015, pre-tax restructuring charges were $3 million and
pre-tax restructuring- related charges were $13 million, of which
$8 million was recorded in cost of products sold and $5 million was
recorded in selling, general and administrative
expenses.
|
|
(d) Debt
extinguishment charges are recorded in interest expense.
|
|
(e) In the second
quarter of 2014, pre-tax acquisition- and divestiture-related net
credits were $91 million, of which charges of $3 million were
recorded in cost of products sold, charges of $22 million were
recorded in selling, general and administrative expenses, $96
million was recorded as a contingent consideration benefit, and
credits of $20 million were recorded within Other, net.
|
|
(f) In the second
quarter of 2014, pre-tax restructuring charges were $15 million and
pre-tax restructuring- related charges were $10 million, of which
$4 million was recorded in cost of products sold and $6 million was
recorded in selling, general and administrative
expenses.
|
|
An explanation of the
company's use of these non-GAAP financial measures is provided at
the end of this document.
|
|
BOSTON SCIENTIFIC
CORPORATION
|
|
NON-GAAP NET INCOME
AND NET INCOME PER COMMON SHARE RECONCILIATIONS
|
|
(Unaudited)
|
|
|
|
Six Months Ended
June 30, 2015
|
|
|
in millions,
except per share data
|
Pre-Tax
|
Tax
Impact
(a)
|
After-Tax
|
Impact per diluted
share
|
|
|
GAAP net income
(loss)
|
$
|
54
|
|
$
|
47
|
|
$
|
101
|
|
$
|
0.07
|
|
|
|
Non-GAAP
adjustments:
|
|
|
|
|
|
|
Intangible asset
impairment charges
|
9
|
|
(2)
|
|
7
|
|
0.01
|
|
|
|
Acquisition- and
divestiture-related net charges (b)
|
91
|
|
(5)
|
|
86
|
|
0.07
|
|
|
|
Restructuring and
restructuring-related net charges (c)
|
37
|
|
(6)
|
|
31
|
|
0.02
|
|
|
|
Pension termination
charges
|
8
|
|
(3)
|
|
5
|
|
0.00
|
|
|
|
Litigation-related
net charges
|
192
|
|
(70)
|
|
122
|
|
0.09
|
|
|
|
Debt extinguishment
charges (d)
|
45
|
|
(16)
|
|
29
|
|
0.02
|
|
|
|
Amortization
expense
|
229
|
|
(30)
|
|
199
|
|
0.15
|
|
|
|
Adjusted net
income
|
$
|
665
|
|
$
|
(85)
|
|
$
|
580
|
|
$
|
0.43
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended
June 30, 2014
|
|
|
in millions,
except per share data
|
Pre-Tax
|
Tax
Impact
(a)
|
After-Tax
|
Impact per diluted
share
|
|
|
GAAP net income
(loss)
|
$
|
42
|
|
$
|
95
|
|
$
|
137
|
|
$
|
0.10
|
|
|
|
Non-GAAP
adjustments:
|
|
|
|
|
|
|
Intangible asset
impairment charges
|
165
|
|
(25)
|
|
140
|
|
0.10
|
|
|
|
Acquisition- and
divestiture-related net credits (e)
|
(118)
|
|
(2)
|
|
(120)
|
|
(0.09)
|
|
|
|
Restructuring and
restructuring-related net charges (f)
|
53
|
|
(13)
|
|
40
|
|
0.03
|
|
|
|
Discrete tax
items
|
—
|
|
—
|
|
—
|
|
0.00
|
|
|
|
Litigation-related
net charges
|
260
|
|
(99)
|
|
161
|
|
0.12
|
|
|
|
Amortization
expense
|
218
|
|
(23)
|
|
195
|
|
0.15
|
|
|
|
Adjusted net
income
|
$
|
620
|
|
$
|
(67)
|
|
$
|
553
|
|
$
|
0.41
|
|
|
|
|
|
|
|
|
|
|
(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 first half
of 2015, pre-tax acquisition- and divestiture-related net charges
were $91 million, of which $8 million was recorded in cost of
products sold, $13 million was recorded in selling, general and
administrative expenses, $20 million was recorded in research and
development, $46 million was recorded as contingent consideration
expense, and $4 million was recorded as interest
expense.
|
|
(c) In the first half
of 2015, pre-tax restructuring charges were $9 million and pre-tax
restructuring- related charges were $28 million, of which $15
million was recorded in cost of products sold and $13 million was
recorded in selling, general and administrative
expenses.
|
|
(d) Debt
extinguishment charges are recorded in interest expense.
|
|
(e) In the first half
of 2014, pre-tax acquisition- and divestiture-related net credits
were $118 million, of which charges of $4 million were recorded in
cost of products sold, charges of $27 million were recorded in
selling, general and administrative expenses, $118 million was
recorded as a contingent consideration benefit, $12 million was
recorded as a gain on divestiture and credits of $19 million were
recorded within Other, net.
|
|
(f) In the first half
of 2014, pre-tax restructuring charges were $35 million and pre-tax
restructuring- related charges were $18 million, of which $6
million was recorded in cost of products sold and $12 million was
recorded in selling, general and administrative
expenses.
|
|
An explanation of the
company's use of these non-GAAP financial measures is provided at
the end of this document.
|
|
BOSTON SCIENTIFIC
CORPORATION
|
|
SEGMENT
INFORMATION
|
|
(Unaudited)
|
|
|
|
Three Months
Ended
|
|
Six Months
Ended
|
|
SEGMENT NET
SALES*
|
June
30,
|
|
June
30,
|
|
in
millions
|
2015
|
2014
|
Change
|
|
2015
|
2014
|
Change
|
|
|
|
|
|
|
|
|
|
|
Interventional Cardiology
|
$
|
567
|
|
$
|
528
|
|
7%
|
|
$
|
1,108
|
|
$
|
1,029
|
|
7%
|
|
Peripheral
Interventions
|
245
|
|
210
|
|
16%
|
|
477
|
|
414
|
|
15%
|
|
Cardiovascular
|
812
|
|
738
|
|
10%
|
|
1,585
|
|
1,443
|
|
10%
|
|
|
|
|
|
|
|
|
|
|
Cardiac
Rhythm Management
|
490
|
|
495
|
|
(1)%
|
|
973
|
|
959
|
|
2%
|
|
Electrophysiology
|
60
|
|
55
|
|
9%
|
|
121
|
|
113
|
|
7%
|
|
Rhythm
Management
|
550
|
|
550
|
|
0%
|
|
1,094
|
|
1,072
|
|
2%
|
|
|
|
|
|
|
|
|
|
|
Endoscopy
|
352
|
|
334
|
|
6%
|
|
680
|
|
650
|
|
5%
|
|
Urology
and Women's Health
|
142
|
|
133
|
|
7%
|
|
272
|
|
259
|
|
5%
|
|
Neuromodulation
|
125
|
|
114
|
|
9%
|
|
241
|
|
223
|
|
7%
|
|
MedSurg
|
619
|
|
581
|
|
7%
|
|
1,193
|
|
1,132
|
|
5%
|
|
|
|
|
|
|
|
|
|
|
Subtotal Core
Businesses
|
1,981
|
|
1,869
|
|
6%
|
|
3,872
|
|
3,647
|
|
6%
|
|
|
|
|
|
|
|
|
|
|
Divested
Businesses
|
—
|
|
1
|
|
N/A
|
|
—
|
|
3
|
|
N/A
|
|
Foreign
Currency
|
(138)
|
|
3
|
|
N/A
|
|
(261)
|
|
(3)
|
|
N/A
|
|
|
|
|
|
|
|
|
|
|
Worldwide Net
Sales
|
$
|
1,843
|
|
$
|
1,873
|
|
(2)%
|
|
$
|
3,611
|
|
$
|
3,647
|
|
(1)%
|
|
|
|
|
|
|
|
|
|
|
Growth rates are
based on actual, non-rounded amounts and may not recalculate
precisely.
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Six Months
Ended
|
|
|
SEGMENT OPERATING
INCOME*
|
|
June
30,
|
|
June
30,
|
|
|
in
millions
|
|
2015
|
2014
|
|
2015
|
2014
|
|
|
|
|
|
|
|
|
|
|
|
Segment operating
income
|
|
|
|
|
|
|
|
|
Cardiovascular
|
|
$
|
247
|
|
$
|
193
|
|
|
$
|
483
|
|
$
|
364
|
|
|
|
Rhythm
Management
|
|
78
|
|
67
|
|
|
155
|
|
133
|
|
|
|
MedSurg
|
|
188
|
|
175
|
|
|
355
|
|
343
|
|
|
|
Operating income
allocated to reportable segments
|
513
|
|
435
|
|
|
993
|
|
840
|
|
|
|
Corporate expenses
and currency exchange
|
(105)
|
|
(64)
|
|
|
(188)
|
|
(115)
|
|
|
|
Intangible asset
impairment charges; pension termination charges; acquisition-,
divestiture-, restructuring-, and litigation-related net charges
and credits
|
(73)
|
|
(331)
|
|
|
(333)
|
|
(379)
|
|
|
|
Amortization
expense
|
|
(116)
|
|
(109)
|
|
|
(229)
|
|
(218)
|
|
|
|
Operating income
(loss)
|
|
$
|
219
|
|
$
|
(69)
|
|
|
$
|
243
|
|
$
|
128
|
|
|
|
|
|
|
|
|
|
|
|
|
*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 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 intangible asset
impairment charges; acquisition and divestiture-, restructuring-
and litigation-related net charges and credits; pension termination
charges; 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.
|
|
An explanation of the
company's use of these non-GAAP financial measures is provided at
the end of this document.
|
|
BOSTON SCIENTIFIC
CORPORATION
|
|
WORLDWIDE CARDIAC
RHYTHM MANAGEMENT (CRM) SALES
|
|
(Unaudited)
|
|
|
Three Months Ended
June 30
|
|
|
in
millions
|
|
U.S.
|
|
International
|
|
Worldwide
|
|
|
Q2
2015
|
Q2
2014
|
|
Q2
2015
|
Q2
2014
|
|
Q2
2015
|
Q2
2014
|
|
Defibrillator
systems
|
|
$
|
218
|
|
$
|
223
|
|
|
$
|
117
|
|
$
|
132
|
|
|
$
|
335
|
|
$
|
355
|
|
|
Pacemaker
systems
|
|
61
|
|
67
|
|
|
64
|
|
75
|
|
|
125
|
|
142
|
|
|
Total CRM
products
|
|
$
|
279
|
|
$
|
290
|
|
|
$
|
181
|
|
$
|
207
|
|
|
$
|
460
|
|
$
|
497
|
|
|
Six Months Ended
June 30
|
|
|
in
millions
|
|
U.S.
|
|
International
|
|
Worldwide
|
|
|
YTD
2015
|
YTD
2014
|
|
YTD
2015
|
YTD
2014
|
|
YTD
2015
|
YTD
2014
|
|
Defibrillator
systems
|
|
$
|
438
|
|
$
|
431
|
|
|
$
|
232
|
|
$
|
263
|
|
|
$
|
670
|
|
$
|
694
|
|
|
Pacemaker
systems
|
|
119
|
|
130
|
|
|
127
|
|
139
|
|
|
246
|
|
269
|
|
|
Total CRM
products
|
|
$
|
557
|
|
$
|
561
|
|
|
$
|
359
|
|
$
|
402
|
|
|
$
|
916
|
|
$
|
963
|
|
|
BOSTON SCIENTIFIC
CORPORATION
|
|
INTERNATIONAL AND
EMERGING MARKETS* NET SALES
|
|
(Unaudited)
|
|
|
Q2 2015 Europe Net
Sales as compared to Q2 2014
|
|
|
Estimated
|
|
As
Reported
|
Constant
|
Impact
of
|
|
Currency
|
Currency
|
Foreign
|
|
Basis
|
Basis
|
Currency
|
|
|
|
|
|
Percentage change
in net sales
|
(13)%
|
6%
|
(19)%
|
|
|
|
|
|
Q2 2015 Asia,
Middle East and Africa (AMEA) Net Sales as compared to Q2
2014
|
|
|
Estimated
|
|
As
Reported
|
Constant
|
Impact
of
|
|
Currency
|
Currency
|
Foreign
|
|
Basis
|
Basis
|
Currency
|
|
|
|
|
|
Percentage change
in net sales
|
(6)%
|
6%
|
(12)%
|
|
|
|
|
|
Emerging Markets*
Net Sales as compared to Q2 2014
|
|
|
Estimated
|
|
As
Reported
|
Constant
|
Impact
of
|
|
Currency
|
Currency
|
Foreign
|
|
Basis
|
Basis
|
Currency
|
|
|
|
|
|
Percentage change
in net sales
|
3%
|
12%
|
(9)%
|
|
|
|
|
*We define Emerging Markets as including certain countries
that we believe have strong growth potential based on their
economic conditions, healthcare sectors, and our global
capabilities. Currently, we include 20 countries in our definition
of Emerging Markets.
An explanation of the company's use of these non-GAAP financial
measures is provided at the end of this document.
|
BOSTON SCIENTIFIC
CORPORATION
|
|
ESTIMATED NON-GAAP
NET INCOME PER COMMON SHARE RECONCILIATIONS
|
|
(Unaudited)
|
|
|
|
Q3 and Full Year
2015 EPS Guidance
|
|
|
Q3 2015
Estimate
|
|
Full Year 2015
Estimate
|
|
Prior Full Year
2015 Estimate
|
|
(Low)
|
(High)
|
|
(Low)
|
(High)
|
|
(Low)
|
(High)
|
|
GAAP
results
|
$
|
0.10
|
|
$
|
0.13
|
|
|
$
|
0.28
|
|
$
|
0.34
|
|
|
$
|
0.32
|
|
$
|
0.38
|
|
|
|
|
|
|
|
|
|
|
|
Intangible asset
impairment charges
|
—
|
|
—
|
|
|
0.01
|
|
0.01
|
|
|
—
|
|
—
|
|
|
Debt extinguishment
charges
|
—
|
|
—
|
|
|
0.02
|
|
0.02
|
|
|
—
|
|
—
|
|
|
Estimated acquisition
and divestiture-related net charges
|
0.02
|
|
0.01
|
|
|
0.10
|
|
0.09
|
|
|
0.07
|
|
0.06
|
|
|
Estimated
restructuring-related charges
|
0.02
|
|
0.02
|
|
|
0.06
|
|
0.06
|
|
|
0.08
|
|
0.08
|
|
|
Estimated
amortization expense
|
0.07
|
|
0.07
|
|
|
0.29
|
|
0.29
|
|
|
0.28
|
|
0.28
|
|
|
Estimated pension
termination charges
|
—
|
|
—
|
|
|
0.03
|
|
0.02
|
|
|
0.03
|
|
0.02
|
|
|
Litigation-related
charges
|
—
|
|
—
|
|
|
0.09
|
|
0.09
|
|
|
0.10
|
|
0.10
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
results
|
$
|
0.21
|
|
$
|
0.23
|
|
|
$
|
0.88
|
|
$
|
0.92
|
|
|
$
|
0.88
|
|
$
|
0.92
|
|
|
|
|
|
|
|
|
|
|
An explanation of the company's use of these non-GAAP financial
measures is provided at the end of this document.
Use of Non-GAAP Financial Measures
To supplement our 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 sales from divested businesses and/or 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 and the non-GAAP financial measure that
excludes sales from divested businesses 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 and adjusted net
income per share that exclude certain amounts, and revenue growth
rates that exclude the impact of sales from divested businesses
and/or 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,
2015 and 2014, and for the forecasted three month period
ending September 30, 2015 and full
year ending December 31, 2015, as
well as reasons for excluding each of these individual items:
Adjusted Net Income and Adjusted Net Income per
Share:
|
Intangible asset
impairment charges - This amount represents non-cash
write-downs of certain intangible asset balances in the first half
of 2014 and the second quarter of 2015. 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, these
charges are excluded from management's assessment of operating
performance and are 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- and
divestiture-related net charges (credits) - These adjustments
consist of (a) contingent consideration fair value adjustments; (b)
gains on previously held investments; (c) purchased and/or funded
in-process research and development expenses incurred outside of a
business combination; (d) due diligence, other fees and exit costs;
and (e) separation costs and gains primarily associated with the
sale of our Neurovascular business in January 2011. 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 and potential
future acquisitions and divestitures that can be highly variable
and not representative of on-going operations. Separation costs and
gains on the sale of a business unit primarily represent those
associated with the Neurovascular 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 net charges (credits) - These
adjustments represent primarily severance and other direct costs
associated with our 2014 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 (credits) - 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 in
conjunction with the purchase accounting for an acquisition or 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.
|
|
Debt extinguishment
charges - This item represents premiums, accelerated
amortization of debt issuance costs and investor discount costs net
of interest rate hedge gains related to the early extinguishment of
$1.0 billion of public senior notes during the second quarter of
2015. 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.
|
|
Pension termination
charges - This item represents charges associated with the
termination of the Guidant Retirement Plan, a frozen defined
benefit plan. These charges are not expected to recur after
2015 and do not reflect expected on-going operating results.
Accordingly, management has 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 financial covenants
included in our credit facility or our term loan facility
agreements. 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 our
operating segments' measures of profit and loss used for making
operating decisions and assessing performance. 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 Sales from
Divested Businesses and/or Changes in Foreign Currency Exchange
Rates
|
Sales from divested
businesses and/or changes in foreign currency exchange rates -
Sales from divested businesses are primarily associated with the
Neurovascular divestiture and are not representative of on-going
operations. The impact of changes in foreign currency
exchange rates is highly variable and difficult to predict.
Accordingly, management excludes the impact of sales from divested
businesses and/or 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 and adjusted net income per share that
exclude certain amounts, and revenue growth rates that exclude the
impact of sales from divested businesses and/or 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.
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/boston-scientific-announces-results-for-second-quarter-2015-300117476.html
SOURCE Boston Scientific Corporation