Boston Scientific Announces Results for Fourth Quarter and Full Year Ended December 31, 2010 Boston Scientific Corporation (NYSE: BSX) today announced financial results for the fourth quarter and full year ended December 31, 2010, as well as...

NATICK, Mass. , Feb. 1, 2011 /PRNewswire/ -- Boston Scientific Corporation (NYSE: BSX ) today announced financial results for the fourth quarter and full year ended December 31, 2010 , as well as net sales and earnings per share (EPS) guidance for the full year and first quarter 2011.

Fourth quarter highlights:

"We've made significant progress in our strategy to realign our portfolio through the execution of our Priority Growth Initiatives, with four targeted acquisitions and a divestiture," said Ray Elliott , President and Chief Executive Officer of Boston Scientific. "These acquisitions add promising new technologies to our portfolio and bolster our internal pipeline, which we expect will deliver more than 150 new products through 2015. Proceeds from the divestiture of our Neurovascular business provide us with increased flexibility to fund acquisitions and pay down debt. Nevertheless, we expect 2011 to be a difficult but necessary transition year in part driven by a worsening pricing environment and uncertainty in procedural volumes."

Fourth Quarter 2010

Net sales for the fourth quarter of 2010 were $2.002 billion , as compared to net sales of $2.079 billion for the fourth quarter of 2009, a decrease of 4 percent on both a reported and constant currency basis.

Worldwide cardiac rhythm management (CRM) net sales for the fourth quarter - on a reported basis - were as follows:

Worldwide coronary stent system net sales for the fourth quarter - on a reported basis - were as follows:

On a GAAP basis, net income for the fourth quarter of 2010 was $236 million , or $0.15 per diluted share. These results included acquisition-, divestiture-, litigation- and restructuring-related net charges; discrete tax items; and amortization expense (after-tax) of $77 million , or $0.05 per diluted share, which consisted primarily of:

Adjusted net income for the fourth quarter of 2010, excluding these net charges, was $313 million , or $0.20 per diluted share.

On a GAAP basis, net loss for the fourth quarter of 2009 was $1.075 billion , or $0.71 per share, and was driven primarily by charges related to the Company's settlement of patent disputes with Johnson & Johnson. Reported results included intangible asset impairment charges; acquisition-, divestiture-, litigation- and restructuring-related net charges; discrete tax items and amortization expense (after-tax) of $1.379 billion , or $0.91 per share. Adjusted net income for the fourth quarter of 2009, excluding these net charges, was $304 million , or $0.20 per share.

Net sales for the full year 2010 were $7.806 billion , as compared to net sales of $8.188 billion for the full year 2009, a decrease of 5 percent on both a reported and constant currency basis.

Worldwide CRM net sales for the full year - on a reported basis - were as follows:

Worldwide coronary stent system net sales for the full year - on a reported basis - were as follows:

On a GAAP basis, net loss for the full year 2010 was $1.065 billion , or $0.70 per share, and was driven primarily by a goodwill impairment charge recorded in the first quarter of 2010. Reported results included goodwill and intangible asset impairment charges; acquisition-, divestiture-, litigation- and restructuring-related net charges; discrete tax items and amortization expense (after-tax) of $2.116 billion , or $1.39 per share, which consisted primarily of:

Adjusted net income for the full year 2010, excluding these net charges, was $1.051 billion , or $0.69 per share.

On a GAAP basis, net loss for the full year 2009 was $1.025 billion , or $0.68 per share. Reported results included intangible asset impairment charges; acquisition-, divestiture-, litigation- and restructuring-related net charges; discrete tax items and amortization expense (after-tax) of $2.207 billion , or $1.46 per share. Adjusted net income for the full year 2009, excluding these net charges, was $1.182 billion , or $0.78 per share.

Guidance for Full Year and First Quarter of 2011

The Company estimates net sales for the full year 2011 in a range of $7.5 to $7.9 billion . Compared to full year 2010 net sales, this range assumes a $258 million negative impact from the divestiture of the Neurovascular business. Recently announced acquisitions are not expected to contribute to 2011 sales. The Company estimates earnings on a GAAP basis in a range of $0.53 to $0.68 per share. Adjusted earnings, excluding divestiture-related net credits, acquisition- and restructuring-related charges; and amortization expense, are estimated in a range of $0.50 to $0.60 per share. As previously disclosed, recently announced acquisitions are 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 $0.06 per share.

The Company estimates net sales for the first quarter of 2011 in a range of $1.825 to $1.925 billion . Compared to net sales for the first quarter of 2010, this range assumes a $62 million negative impact from the divestiture of the Neurovascular business. The Company estimates earnings on a GAAP basis in a range of $0.30 to $0.38 per share. Adjusted earnings, excluding acquisition- and divestiture-related net credits, restructuring-related charges, and amortization expense, are estimated in a range of $0.07 to $0.10 per share. Recently announced acquisitions are expected to dilute first 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 first quarter 2011 adjusted earnings by $0.01 per share.

Conference Call Information

Boston Scientific management will be discussing these results with analysts on a conference call at 8:00 a.m. (ET) Wednesday, February 2. 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 Scientific

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 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 first quarter and full year 2011, including expected impacts of acquisitions and the Neurovascular divestiture; our financial performance; expected pricing environment; expected procedural volumes; new product approvals, launches and sales; regulatory compliance; our market position; cash flow; write-down of goodwill and other asset impairments; our capacity to fund acquisitions and other investments and to successfully complete acquisitions and integrate them into our business; our ability to successfully separate our Neurovascular business; our ability to reduce our debt obligations; 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.

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.

An explanation of the Company's use of these non-GAAP measures is provided at the end of this document.

An explanation of the Company's use of these non-GAAP measures is provided at the end of this document.

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 measures is provided at the end of this document.

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 measures is provided at the end of this document.

An explanation of the Company's use of these non-GAAP measures is provided at the end of this document.

An explanation of the Company's use of these non-GAAP measures is provided at the end of this document.

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 consolidated financial statements presented on a GAAP basis, the Company discloses certain non-GAAP measures that exclude certain amounts, including adjusted net income, adjusted 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 adjusted net income is GAAP net income and the GAAP measure most comparable to adjusted 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 using net sales on a GAAP basis. 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

The following is an explanation of each of the adjustments that management excluded as part of its non-GAAP measures for the three months and full years ended December 31, 2010 and 2009 and for the forecasted three month period ending March 31, 2011 and full year ending December 31, 2011 , 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

SOURCE Boston Scientific Corporation