NATICK, Mass., April 20, 2011 /PRNewswire/ -- Boston Scientific Corporation (NYSE: BSX) today announced financial results for the first quarter ended March 31, 2011, as well as net sales and earnings per share (EPS) guidance for the second quarter and updated guidance for the full year 2011. The Company exceeded its adjusted EPS guidance range for the quarter and raised adjusted EPS guidance for the full year 2011. First quarter GAAP results included a previously anticipated gain recognized on the sale of the Neurovascular business of $759 million pre-tax ($530 million after-tax), net of separation costs. In addition, primarily due to a reduction in the estimated size of the U.S. Cardiac Rhythm Management (CRM) market, which led to lower projected U.S. CRM results compared to prior forecasts, the Company also recorded a $723 million (pre- and after-tax) estimated goodwill impairment charge associated with its U.S. CRM business unit during the quarter. As a result, GAAP EPS for the first quarter of 2011 was below previous guidance, and the Company's updated full year GAAP EPS guidance reflects this charge. The amount of the goodwill impairment charge is subject to finalization and is estimated to range between $650 million and $800 million.
First quarter highlights:
“Despite an increasingly challenging U.S. CRM market and the resulting goodwill implications, we had several notable accomplishments during the quarter that illustrate progress toward the achievement of strategic milestones,” said Ray Elliott, President and Chief Executive Officer of Boston Scientific. “Our sales were at the high end of our projected range, we benefited from our cost-reduction initiatives, and we continue to aspire to double-digit EPS growth in the near term. Our increased financial flexibility has enabled us to reduce debt, expand our Emerging Markets footprint and complete six acquisitions in the past six months.”
Net sales for the first quarter of 2011 were $1.925 billion, as compared to net sales of $1.960 billion for the first quarter of 2010, a decrease of 2 percent. Excluding the impact of foreign currency and sales from divested businesses, net sales decreased 1 percent as compared to the prior period.
Worldwide CRM net sales for the first quarter - on a reported basis - were as follows:(in millions)U.S.InternationalWorldwideQ1 2011Q1 2010Q1 2011Q1 2010Q1 2011Q1 2010Defibrillator systems$
148Total CRM products$
538* Q1 2010 sales of the Company's implantable cardioverter defibrillator systems in the U.S. included an estimated $72 million negative impact associated with being off the market for a portion of Q1 2010 due to the ship hold and product removal actions related to these products.Worldwide coronary stent system net sales for the first quarter - on a reported basis - were as follows: (in millions)U.S.InternationalWorldwideQ1 2011Q1 2010Q1 2011Q1 2010Q1 2011Q1 2010Drug-eluting stent systems$
407Bare-metal stent systems9
37Total coronary stent systems$
444On a GAAP basis, net income for the first quarter of 2011 was $20 million, or $0.01 per share. These results included a goodwill impairment charge, acquisition- and divestiture-related net credits, restructuring-related charges, discrete tax items and amortization expense, for total net charges of $316 million, or $0.21 per share, which consisted of:
Adjusted net income for the first quarter of 2011, excluding these net charges, was $336 million, or $0.22 per share.
On a GAAP basis, net loss for the first quarter of 2010 was $1.589 billion, or $1.05 per share, and was driven primarily by a goodwill impairment charge related to the Company's U.S. CRM business unit. Reported results included goodwill and intangible asset impairment charges; acquisition-, divestiture-, and restructuring-related net charges and amortization expense (after-tax) of $1.840 billion, or $1.21 per share. Adjusted net income for the first quarter of 2010, excluding these net charges, was $251 million, or $0.16 per share.
Guidance for Second Quarter and Full Year 2011The Company estimates net sales for the second quarter of 2011 in a range of $1.92 to $2.0 billion. Compared to net sales for the second quarter of 2010, this range assumes a $46 million negative impact from the divestiture of the Neurovascular business. The Company estimates earnings on a GAAP basis in a range of $0.05 to $0.08 per share. Adjusted earnings, excluding acquisition-, divestiture- and restructuring-related net charges and amortization expense, are estimated in a range of $0.12 to $0.15 per share. Recent acquisitions are expected to dilute second quarter 2011 adjusted earnings by approximately $0.01 per share as compared to the prior year, and the divestiture of the Neurovascular business is expected to dilute second quarter 2011 adjusted earnings by $0.01 per share.
The Company now estimates net sales for the full year 2011 in a range of $7.6 to $7.9 billion. Compared to full year 2010 net sales, this range now assumes a $212 million negative impact from the divestiture of the Neurovascular business. Recent acquisitions are not expected to contribute to 2011 sales. The Company now estimates earnings on a GAAP basis in a range of $0.15 to $0.27 per share. Adjusted earnings, excluding goodwill impairment charges; acquisition-, divestiture-, and restructuring-related net credits; discrete tax items; and amortization expense, are being raised by $0.08 from previous guidance of $0.50 to $0.60 per share to an estimated range of $0.58 to $0.68 per share. Recent acquisitions are now expected to dilute 2011 adjusted earnings by approximately $0.03 to $0.04 per share as compared to the prior year, and the divestiture of the Neurovascular business is expected to dilute 2011 adjusted earnings by approximately $0.05 per share.
Conference Call InformationBoston Scientific management will be discussing these results with analysts on a conference call at 8:00 a.m. (ET) Thursday, April 21. 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.
About Boston ScientificBoston 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 StatementsThis 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 earnings and adjusted earnings for the second quarter and full year 2011, including expected impacts of acquisitions and the Neurovascular divestiture; our financial performance; the market for our products, including the U.S. CRM market; regulatory compliance; clinical trial results; new product introductions and the market acceptance of those products; our market position; our presence in emerging markets; the strength of our balance sheet; write-down of goodwill and other asset impairments; our capacity to generate sufficient cash flow to fund acquisitions and other investments, and our ability to successfully integrate them into our business; our ability to successfully separate our Neurovascular business; our ability to reduce our debt obligations; our ability to achieve aspirational goals, including near-term EPS growth; our ability to execute our POWER strategy; and our restructuring activities. 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, competitive, reimbursement and regulatory conditions; new product introductions and the market acceptance of those products; the market for our products, including the U.S. CRM market; pricing environment; procedural volumes; clinical trial results; demographic trends; intellectual property rights and related and other litigation; financial market conditions; the effect of our goodwill impairment charges and our restructuring initiatives; integration of acquired companies; 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 InformationA 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 press release. CONTACT:
Erik Kopp508-650-8660 (office)Media RelationsBoston Scientific Corporationerik.email@example.comSean Wirtjes508-652-5305 (office)Investor RelationsBoston Scientific Corporationinvestor_relations@bsci.comBOSTON SCIENTIFIC CORPORATIONCONDENSED CONSOLIDATED GAAP RESULTS OF OPERATIONS
(Unaudited)Three Months EndedMarch 31,in millions, except per share data
$ 1,960Cost of products sold
1,297Operating expenses:Selling, general and administrative expenses
628Research and development expenses
128Goodwill impairment charge
1,848Intangible asset impairment charges60Contingent consideration expense
6Acquisition-related milestone(250)Restructuring charges
65Gain on divestiture
2,783Operating income (loss)
(1,486)Other income (expense):Interest expense
4Income (loss) before income taxes
(1,575)Income tax expense
14Net income (loss)$
20$ (1,589)Net income (loss) per common share - basic$
.01$ (1.05)Net income (loss) per common share - assuming dilution$
.01$ (1.05)Weighted-average shares outstandingBasic
1,514.5 Assuming dilution
1,514.5 BOSTON SCIENTIFIC CORPORATIONCONDENSED CONSOLIDATED BALANCE SHEETSAs ofMarch 31,December 31,in millions, except share data
20112010(Unaudited)ASSETSCurrent assets:Cash and cash equivalents
213Trade accounts receivable, net
894Deferred income taxes
429Assets held for sale
576Prepaid expenses and other current assets
183Total current assets
3,615Property, plant and equipment, net
10,186Other intangible assets, net
6,343Other long-term assets
22,128LIABILITIES AND STOCKHOLDERS' EQUITYCurrent liabilities:Current debt obligations
1,626Other current liabilities
295Total current liabilities
4,934Deferred income taxes
1,644Other long-term liabilities
1,645Commitments and contingenciesStockholders' equityPreferred stock, $.01 par value - authorized 50,000,000shares, none issued and outstandingCommon stock, $.01 par value - authorized 2,000,000,000shares, issued 1,528,206,257 shares as of March 31, 2011 and
151,520,780,112 shares as of December 31, 2010Additional paid-in capital
(4,822)Other stockholders' deficit
(129)Total stockholders' equity
22,128BOSTON SCIENTIFIC CORPORATIONNON-GAAP NET INCOME AND NET INCOME PER COMMON SHARE RECONCILIATIONS
(Unaudited)Three Months Ended March 31,20112010ImpactNetImpactNetper diluted(loss)per dilutedin millions, except per share data
incomeshareincomeshareGAAP net income (loss)$
(1.05)Non-GAAP adjustments:Goodwill impairment charge
*Intangible asset impairment charges51
*Acquisition-related net credits
*Divestiture-related net credits
*Discrete tax items
*Adjusted net income$
.16* Assumes dilution of 9.7 million shares for the three months ended March 31, 2010 for all or a portion of these non-GAAP adjustments.An explanation of the Company's use of these non-GAAP financial measures is provided at the end of this document.
BOSTON SCIENTIFIC CORPORATIONNON-GAAP NET INCOME AND NET INCOME PER COMMON SHARE RECONCILIATIONS (CONT.)
(Unaudited)Three Months Endedin millions
March 31,20112010Goodwill impairment charge:Goodwill impairment charge
$ 1,848Income tax benefit (a)Goodwill impairment charge, net of tax
$ 723$ 1,848Intangible asset impairment charges:Intangible asset impairment charges$Income tax benefit (a)(9)Intangible asset impairment charges, net of tax$
51Acquisition-related net credits:Contingent consideration expense
$Acquisition-related milestone$ (250)Acquisition-related costs (b)2Inventory step-up adjustment (c)1Gain on previously held equity interests (d)(38)(29)
(250)Income tax expense (a)34Acquisition-related net credits, net of tax
$ (29)$ (216)Divestiture-related net credits:Gain on divestiture
$ (760)Divestiture-related costs (c)1(759)Income tax expense (a)229Divestiture-related net credits, net of tax
$ (530)Restructuring-related charges:Restructuring charges
5Restructuring-related charges (e)12
80Income tax benefit (a)(16)
(24)Restructuring-related charges, net of tax
56Discrete tax items:Income tax expense (a)$
4Amortization expense:Amortization expense
28Income tax benefit (a)(18)
(27)Amortization expense, net of tax
$ 114$(a) Amounts are tax effected at the Company's effective tax rate, unless the amount is a significant unusual or infrequently occurring item in accordance with FASB Accounting Standards Codification section 740-270-30, "General Methodology and Use of Estimated Annual Effective Tax Rate."
(b) Recorded to selling, general and administrative expenses.
(c) Recorded to cost of products sold.
(d) Recorded to other, net.
(e) In the first quarter of 2011, recorded $10 million to cost of products sold and $2 million to selling, general and administrative expenses. In the first quarter of 2010, recorded $14 million to cost of products sold and $1 million to selling, general and administrative expenses.An explanation of the Company's use of these non-GAAP financial measures is provided at the end of this document.
BOSTON SCIENTIFIC CORPORATIONWORLDWIDE SALES
(Unaudited)ChangeThree Months Ended As ReportedConstantMarch 31,CurrencyCurrencyin millions
2011 2010BasisBasis(restated)United States$ 1,023$ 1,036(1)%(1)%EMEA
89N/AN/AWorldwide$ 1,925$ 1,960(2)%(3)%ChangeThree Months Ended As ReportedConstantMarch 31,CurrencyCurrencyin millions
2010BasisBasis(restated)Cardiac Rhythm Management$
1657%4%Cardiovascular Group811855(5)%(7)%Electrophysiology3738(3)%(4)%Endoscopy28726010%8%Urology/Women's Health1201126%5%Neuromodulation776814%14%Subtotal1,8911,8711%(1)%Divested Businesses
89N/AN/AWorldwide$ 1,925$ 1,960(2)%(3)%Growth rates are based on actual, non-rounded amounts and may not recalculate precisely.
An explanation of the Company's use of these non-GAAP financial measures is provided at the end of this document.
BOSTON SCIENTIFIC CORPORATIONNON-GAAP CONSTANT CURRENCY NET SALES RECONCILIATIONS
(Unaudited)Q1 2011 Net Sales as compared to Q1 2010ChangeEstimatedAs ReportedConstantImpact ofCurrencyCurrencyForeignin millions
33Q1 2011 Net Sales as compared to Q1 2010ChangeEstimatedAs ReportedConstantImpact ofCurrencyCurrencyForeignin millions
BasisBasisCurrencyCardiac Rhythm Management$
4Cardiovascular Group(44)(62)18Electrophysiology(1)(2)1Endoscopy27216Urology/Women's Health862Neuromodulation990Subtotal20(13)33Divested Businesses
33An explanation of the Company's use of these non-GAAP financial measures is provided at the end of this document.
BOSTON SCIENTIFIC CORPORATIONESTIMATED NON-GAAP NET INCOME PER COMMON SHARE RECONCILIATIONS
(Unaudited)Q2 2011 EstimateFull Year 2011 Estimate(Low)(High)(Low)(High)GAAP results$ 0.05$ 0.08$ 0.15$ 0.27Goodwill impairment charge0.47
0.47Estimated acquisition-related net charges
0.00Estimated divestiture-related net charges (credits)
(0.35)Estimated restructuring-related charges
0.05Discrete tax items0.00
0.00Estimated amortization expense
0.24Adjusted results$ 0.12$ 0.15$ 0.58$ 0.68An explanation of the Company's use of these non-GAAP measures is provided at the end of this document.
Use of Non-GAAP Financial MeasuresTo supplement Boston Scientific's consolidated financial statements presented on a GAAP basis, the Company discloses certain non-GAAP financial measures, including adjusted net income and adjusted net income per share that exclude certain amounts, and regional and divisional revenue growth rates that exclude the impact of foreign exchange. These non-GAAP financial measures are not in accordance with generally accepted accounting principles in the United States.
The GAAP measure most directly comparable to adjusted net income is GAAP net income and the GAAP measure most directly comparable to adjusted net income per share is GAAP net income per share. 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 directly comparable to this non-GAAP measure is growth rate percentages using net sales on a GAAP basis. Reconciliations of each of these non-GAAP financial measures to the corresponding GAAP 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 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 financial measures to further its understanding of the performance of the Company's operating segments. The adjustments excluded from the Company's non-GAAP financial 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 Company believes that presenting adjusted net income, adjusted net income per share, and regional and divisional revenue growth rates that exclude the impact of foreign exchange in addition to the corresponding 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.
The following is an explanation of each of the adjustments that management excluded as part of these non-GAAP financial measures for the three months ended March 31, 2011 and 2010 and for the forecasted three month period ending June 30, 2011 and full year ending December 31, 2011, as well as reasons for excluding each of these individual items:
Adjusted Net Income and Adjusted Net Income per Share
Regional and Divisional Revenue Growth Rates Excluding the Impact of Foreign Exchange
Adjusted net income, adjusted net income per share and regional and divisional revenue growth rates that exclude the impact of foreign exchange are not in accordance with generally accepted accounting principles in the United States and should not be considered in isolation from or as a replacement for the most directly comparable GAAP measures. Further, other companies may calculate these non-GAAP financial measures differently than Boston Scientific does, which may limit the usefulness of those measures for comparative purposes.
|SOURCE Boston Scientific Corporation|
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