NATICK, Mass., April 20 /PRNewswire-FirstCall/ -- Boston Scientific Corporation (NYSE: BSX) today announced financial results for the first quarter ended March 31, 2009, as well as guidance for net sales and earnings per share (EPS) for the second quarter and full year of 2009.
First Quarter Highlights (Sales growth rates are constant currency):
"We're off to a good start on the year with four percent sales growth, excluding divestitures, on a constant currency basis and adjusted EPS at the high end of our guidance range," said Jim Tobin, President and Chief Executive Officer of Boston Scientific. "Our CRM and DES results were particularly impressive, with double-digit U.S. growth in both businesses. We also saw continued solid performances by our Endoscopy, Urology/Gynecology and Neuromodulation businesses. We further reduced risk by settling additional litigation, pre-paying debt, amending our credit facility, and maintaining financial discipline and strong cash flow."
Net sales for the first quarter of 2009 were $2.010 billion, which included sales from divested businesses of $4 million, as compared to net sales of $2.046 billion for the first quarter of 2008, which included sales from divested businesses of $32 million. Excluding the impact of foreign currency and sales from divested businesses, net sales increased four percent over the prior year.
Worldwide sales of the Company's CRM products for the first quarter were as follows: (in millions) U.S. International Worldwide Q1 2009 Q1 2008 Q1 2009 Q1 2008 Q1 2009 Q1 2008 ICD systems $312 $274 $132 $137 $444 $411 Pacemaker systems 84 82 61 72 145 154 Total CRM products $396 $356 $193 $209 $589 $565 Worldwide sales of the Company's coronary stent systems for the first quarter were as follows: (in millions) U.S. International Worldwide Q1 2009 Q1 2008 Q1 2009 Q1 2008 Q1 2009 Q1 2008 Drug-eluting $246 $218 $199 $210 $445 $428 Bare-metal 16 26 28 36 44 62 Total coronary stent systems $262 $244 $227 $246 $489 $490
Reported net loss for the first quarter of 2009 was $13 million, or $0.01 per share. Reported results included acquisition-, divestiture-, litigation-, and restructuring-related net charges; discrete tax items and amortization expense (after-tax) of $302 million, or $0.20 per share, which consisted primarily of:
Adjusted net income for the first quarter of 2009, excluding these charges, was $289 million, or $0.19 per share. Included in the reported and adjusted net income was $11 million, or $0.01 per share, of favorable discrete income tax items.
Reported net income for the first quarter of 2008 was $322 million, or $0.21 per share. Reported results included acquisition-, divestiture-, litigation-, and restructuring-related charges; and amortization expense (after-tax) of $35 million, or $0.03 per share. Adjusted net income for the first quarter of 2008, excluding these charges, was $357 million, or $0.24 per share. Included in the reported and adjusted net income was $43 million, or $0.03 per share, of favorable discrete income tax items and $8 million, or $0.01 per share, associated with divested businesses.
Guidance for Second Quarter and Full Year 2009
The Company estimates net sales for the second quarter of 2009 of between $1.960 billion and $2.080 billion, which includes an estimated $100 million negative impact from foreign currency exchange as compared to the second quarter of 2008. Excluding the impact of foreign currency and sales from divested businesses, the Company estimates net sales growth rates of three percent to nine percent during the second quarter of 2009. Adjusted earnings, excluding acquisition-, divestiture-, litigation- and restructuring-related charges; and amortization expense, are estimated to range between $0.16 and $0.21 per share. The Company estimates net income on a GAAP basis of between $0.07 and $0.13 per share.
The Company reaffirms its net sales estimate for the full year of 2009 of between $8.0 billion and $8.5 billion. The Company also continues to expect adjusted earnings, excluding acquisition-, divestiture-, litigation- and restructuring-related charges; discrete tax items, and amortization expense, for the full year of between $0.80 and $0.90 per share. The Company now expects net income on a GAAP basis of between $0.46 and $0.57 per share, as a result of first quarter litigation-related charges and discrete tax items.
"This guidance reflects our optimism about the growth potential of all our businesses, which are benefiting from our renewed focus on product development and increasing sales profitably," said Tobin. "Our momentum is building, and we are particularly enthusiastic about our prospects for the second half of the year, which we believe will contribute to a very strong 2009."
Boston Scientific officials will be discussing these results with analysts on a conference call at 8:00 a.m. (ET) Tuesday, April 21, 2009. 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.
Cautionary Statement Regarding Forward-Looking Statements
This press release contains forward-looking statements within the meaning of 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 financial performance, our growth strategy, new product approvals, our market position, acquisitions and divestitures, restructuring activities and litigation matters. 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 factors, in some cases, have affected and in the future (together with other factors) 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.
Factors that may cause such differences include, among other things: future economic, competitive, reimbursement and regulatory conditions; new product introductions; demographic trends; intellectual property; litigation; financial market conditions; and future business decisions made by us and our competitors. 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 thereafter. We disclaim any intention or obligation to publicly update or revise any forward-looking statements 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 document.
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 measures, is included in the exhibits attached to this press release.
CONTACT: Paul Donovan 508-650-8541 (office) 508-667-5165 (mobile) Media Relations Boston Scientific Corporation Larry Neumann 508-650-8696 (office) Investor Relations Boston Scientific Corporation
BOSTON SCIENTIFIC CORPORATION CONDENSED CONSOLIDATED GAAP RESULTS OF OPERATIONS (Unaudited) Three Months Ended March 31, In millions, except per share data 2009 2008 Net sales $2,010 $2,046 Cost of products sold 607 580 Gross profit 1,403 1,466 Operating expenses: Selling, general and administrative expenses 651 661 Research and development expenses 257 244 Royalty expense 46 46 Amortization expense 128 143 Purchased research and development 13 Gain on divestitures (250) Restructuring charges 23 29 Litigation-related charges 287 1,392 886 Operating income 11 580 Other income (expense): Interest expense (102) (131) Other, net (6) 13 (Loss) income before income taxes (97) 462 Income tax (benefit) expense (84) 140 Net (loss) income $(13) $322 Net (loss) income per common share - basic $(0.01) $0.22 Net (loss) income per common share - assuming dilution $(0.01) $0.21 Weighted average shares outstanding - basic 1,504.8 1,494.1 Weighted average shares outstanding - assuming dilution 1,504.8 1,500.1 BOSTON SCIENTIFIC CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS March 31, December 31, In millions 2009 2008 (Unaudited) ASSETS Current assets: Cash and cash equivalents $897 $1,641 Trade accounts receivable, net 1,369 1,402 Inventories 852 853 Deferred income taxes 941 911 Assets held for sale 13 13 Prepaid expenses and other current assets 579 632 Total current assets 4,651 5,452 Property, plant and equipment, net 1,708 1,728 Investments 109 113 Other assets 175 181 Intangible assets, net 19,539 19,665 $26,182 $27,139 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Current debt obligations $5 $2 Accounts payable 254 239 Accrued expenses 2,014 2,612 Income taxes payable 8 161 Other current liabilities 150 219 Total current liabilities 2,431 3,233 Long-term debt 6,242 6,743 Deferred income taxes 2,322 2,262 Other long-term liabilities 1,911 1,727 Stockholders' equity 13,276 13,174 $26,182 $27,139 BOSTON SCIENTIFIC CORPORATION NON-GAAP NET INCOME AND NET INCOME PER COMMON SHARE RECONCILIATIONS (Unaudited) Three Months Ended March 31, 2009 2008 In millions, except Net Impact per Impact per per share data (loss) diluted Net diluted income share income share GAAP results $(13) $(0.01) $322 $0.21 Non-GAAP adjustments: Acquisition-related charges 8 0.01 Divestiture-related gains (2) (0.00) (114) (0.08) Restructuring-related charges 26 0.02* 32 0.02 Litigation-related charges 240 0.15* Discrete tax items (63) (0.04)* Amortization expense 101 0.07* 109 0.08 Adjusted results $289 $0.19 $357 $0.24 * Assumes dilution of 3.9 million shares for all or a portion of these non-GAAP adjustments. An explanation of the Company's use of these non-GAAP measures is provided at the end of this document.
BOSTON SCIENTIFIC CORPORATION NON-GAAP NET INCOME AND NET INCOME PER COMMON SHARE RECONCILIATIONS (CONT.) (Unaudited) Three Months Ended March 31, 2009 2008 Acquisition-related charges: Purchased research and development $13 Less: Income tax benefit (a) 5 Acquisition-related charges, net of tax $8 Divestiture-related gains: Gain on sale of investments (b) $(3) Gain on divestitures $(250) Less: Income tax expense (a) 1 136 Divestiture-related gains, net of tax $(2) $(114) Restructuring-related charges: Restructuring charges $23 $29 Restructuring-related charges (c) 14 15 37 44 Less: Income tax benefit (a) 11 12 Restructuring-related charges, net of tax $26 $32 Litigation-related charges: Litigation-related charges $287 Less: Income tax benefit (a) 47 Litigation-related charges, net of tax $240 Discrete tax items: Income tax benefit (a) $(63) Amortization expense: Amortization expense $128 $143 Less: Income tax benefit (a) 27 34 Amortization expense, net of tax $101 $109 (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 Interpretation No. 18, "Accounting for Income Taxes in Interim Periods." (b) Recorded in other, net. (c) In 2009, recorded $10 million to cost of products sold; $3 million to selling, general and administrative expenses; and $1 million to research development expenses. In 2008, recorded $4 million to cost of products sold; $9 million to selling, general and administrative expenses; and $2 million to research and development expenses. An explanation of the Company's use of these non-GAAP measures is provided at the end of this document. BOSTON SCIENTIFIC CORPORATION WORLDWIDE SALES (Unaudited) Change As Three Months Ended Reported Constant March 31, Currency Currency In millions 2009 2008 Basis Basis United States $1,170 $1,117 5% 5% EMEA 446 507 (12)% 3% Japan 243 222 9% (2)% Inter-Continental 147 168 (13)% 6% International 836 897 (7)% 2% Subtotal 2,006 2,014 -% 4% Divested Businesses 4 32 N/A N/A Worldwide $2,010 $2,046 (2)% 2% Change As Three Months Ended Reported Constant March 31, Currency Currency In millions 2009 2008 Basis Basis Interventional Cardiology $738 $756 (3)% 1% Peripheral Interventions 158 177 (12)% (7)% Cardiovascular 896 933 (4)% -% Neurovascular 87 92 (5)% -% Cardiac Rhythm Management 589 565 4% 9% Electrophysiology 37 38 (3)% (1)% Cardiac Rhythm Management 626 603 4% 8% Endoscopy 232 229 1% 6% Urology 104 100 5% 7% Endosurgery 336 329 2% 7% Neuromodulation 61 57 8% 9% Subtotal 2,006 2,014 -% 4% Divested Businesses 4 32 N/A N/A Worldwide $2,010 $2,046 (2)% 2% An explanation of the Company's use of these non-GAAP measures is provided at the end of this document.
BOSTON SCIENTIFIC CORPORATION NON-GAAP CONSTANT CURRENCY NET SALES RECONCILIATIONS (Unaudited) Q1 2009 Net Sales as compared to Q1 2008 Change Estimated As Reported Constant Impact of Currency Currency Foreign In millions Basis Basis Currency United States $53 $53 $- EMEA (61) 16 (77) Japan 21 (4) 25 Inter-Continental (21) 12 (33) International (61) 24 (85) Subtotal (8) 77 (85) Divested Businesses (28) (28) - Worldwide $(36) $49 $(85) Q1 2009 Net Sales as compared to Q1 2008 Change Estimated As Reported Constant Impact of Currency Currency Foreign In millions Basis Basis Currency Interventional Cardiology $(18) $11 $(29) Peripheral Interventions (19) (12) (7) Cardiovascular (37) (1) (36) Neurovascular (5) - (5) Cardiac Rhythm Management 24 51 (27) Electrophysiology (1) - (1) Cardiac Rhythm Management 23 51 (28) Endoscopy 3 15 (12) Urology 4 7 (3) Endosurgery 7 22 (15) Neuromodulation 4 5 (1) Subtotal (8) 77 (85) Divested Businesses (28) (28) - Worldwide $(36) $49 $(85) An explanation of the Company's use of these non-GAAP measures is provided at the end of this document. BOSTON SCIENTIFIC CORPORATION WORLDWIDE NET SALES GUIDANCE (Unaudited) Change Three Months As Ended Reported Constant June 30, Currency Currency In millions 2009 2008 Basis Basis Estimated worldwide net sales - high $2,080 $2,024 3% Less: Net sales from divested businesses 19 Adjusted estimated worldwide net sales - high $2,080 $2,005 4% 9% Estimated worldwide net sales - low $1,960 $2,024 (3%) Less: Net sales from divested businesses 19 Adjusted estimated worldwide net sales - low $1,960 $2,005 (2%) 3% BOSTON SCIENTIFIC CORPORATION NON-GAAP CONSTANT CURRENCY NET SALES RECONCILIATION (Unaudited) Q2 2009 Net Sales as compared to Q2 2008 Change As Estimated Reported Constant Impact of Currency Currency Foreign In millions Basis Basis Currency Adjusted estimated worldwide net sales - high $75 $175 $(100) Adjusted estimated worldwide net sales - low $(45) $55 $(100) An explanation of the Company's use of these non-GAAP measures is provided at the end of this document. BOSTON SCIENTIFIC CORPORATION ESTIMATED NON-GAAP NET INCOME PER COMMON SHARE RECONCILIATIONS (Unaudited) Q2 2009 Estimate Q2 2009 Estimate (Low) (High) GAAP results $0.07 $0.13 Estimated restructuring-related charges 0.02 0.01 Estimated amortization expense 0.07 0.07 Adjusted results $0.16 $0.21 2009 Estimate 2009 Estimate (Low) (High) GAAP results $ 0.46 $ 0.57 Estimated acquisition-related credits (0.12) (0.12) Estimated restructuring-related charges 0.08 0.07 Estimated litigation-related charges 0.15 0.15 Estimated discrete tax items (0.04) (0.04) Estimated amortization expense 0.27 0.27 Adjusted results $ 0.80 $ 0.90 An explanation of the Company's use of these non-GAAP measures is provided at the end of this document.
Use of Non-GAAP Financial Measures
To supplement Boston Scientific's condensed consolidated financial statements presented on a GAAP basis; the Company discloses certain non-GAAP measures that exclude certain amounts, including non-GAAP net income, non-GAAP net income per share, and regional and divisional revenue growth rates that exclude the impact of foreign exchange. These non-GAAP measures are not in accordance with, or an alternative for, generally accepted accounting principles in the United States.
The GAAP measure most comparable to non-GAAP net income is GAAP net income and the GAAP measure most comparable to non-GAAP net income per share is GAAP net income per share. Reconciliations of each of these non-GAAP financial measures to the corresponding GAAP measure are included in the accompanying schedules.
To calculate regional and divisional revenue growth rates that exclude the impact of foreign exchange, the Company converts actual current-period net sales from local currency to U.S. dollars using constant foreign exchange rates. The GAAP measure most comparable to this non-GAAP measure is growth rate percentages based on GAAP revenue. A reconciliation of this non-GAAP financial measure to the corresponding GAAP measure is included in the accompanying schedules.
Use and Economic Substance of Non-GAAP Financial Measures Used by Boston Scientific
Management uses these supplemental non-GAAP measures to evaluate performance period over period, to analyze the underlying trends in the Company's business, to assess its performance relative to its competitors, and to establish operational goals and forecasts that are used in allocating resources. In addition, management uses these non-GAAP measures to further its understanding of the performance of the Company's operating segments. The adjustments excluded from the Company's non-GAAP measures are consistent with those excluded from its reportable segments' measure of profit or loss. These adjustments are excluded from the segment measures that are reported to the Company's chief operating decision maker and are used to make operating decisions and assess performance.
The following is an explanation of each of the adjustments that management excluded as part of its non-GAAP measures for the three months ended March 31, 2009 and 2008 and for the forecasted three month period ending June 30, 2009, as well as reasons for excluding each of these individual items:
Material Limitations Associated with the Use of Non-GAAP Financial Measures
Non-GAAP net income, non-GAAP net income per diluted share, and regional and divisional revenue growth rates that exclude the impact of foreign exchange may have limitations as analytical tools, and these non-GAAP measures should not be considered in isolation from or as a replacement for GAAP financial measures. Some of the limitations associated with the use of these non-GAAP financial measures are:
Compensation for Limitations Associated with Use of Non-GAAP Financial Measures
Boston Scientific compensates for the limitations on its non-GAAP financial measures by relying upon its GAAP results to gain a complete picture of the Company's performance. 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.
The Company provides detailed reconciliations of each non-GAAP financial measure to its most directly comparable GAAP measure in the accompanying schedules, and Boston Scientific encourages investors to review these reconciliations.
Usefulness of Non-GAAP Financial Measures to Investors
The Company believes that presenting non-GAAP net income, non-GAAP net income per share, and regional and divisional revenue growth rates that exclude the impact of foreign exchange in addition to the related GAAP measures provides investors greater transparency to the information used by Boston Scientific management for its financial and operational decision-making and allows investors to see Boston Scientific's results "through the eyes" of management. The Company further believes that providing this information better enables Boston Scientific's investors to understand the Company's operating performance and to evaluate the methodology used by management to evaluate and measure such performance.
|SOURCE Boston Scientific Corporation|
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