Full Press Release Details
MARLBOROUGH, Mass. , Feb. 4, 2015 /PRNewswire/ -- Boston Scientific Corporation (NYSE: BSX ) generated sales of $1.887 billion during the fourth quarter ended December 31, 2014 , compared to the company's guidance range for the quarter of $1.875 to $1.925 billion . This represents 7 percent operational revenue growth (constant currency basis, excluding divested businesses) and 3 percent revenue growth 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, which represents 5 percent growth, and GAAP earnings declined 19 percent to $0.06 per share, compared to $0.08 a year ago.*
For the year ended December 31, 2014 , the company achieved full year sales of $7.380 billion , representing 6 percent operational revenue growth and 3 percent revenue growth on a reported basis. The company delivered full year adjusted EPS of $0.84 , compared to $0.73 in 2013, which represents 15 percent growth, and reported a GAAP earnings of $0.20 per share, compared to a GAAP loss of ($0.09) in the prior year period.*
"2014 was another year of significant achievement for Boston Scientific," said Mike Mahoney , president and chief executive officer, Boston Scientific Corporation. "We strengthened our core businesses and invested in new technologies and global markets, which contributed to excellent results across our businesses and regions. Additionally, we expanded our operating margins and delivered double digit adjusted EPS growth. We look forward to the year ahead and bringing more innovative medical technologies and solutions to patients, physicians and hospitals."
Fourth quarter financial results and recent developments * :
* Growth rates are based on actual, non-rounded amounts and may not recalculate precisely. ** Limited by Federal (or US) law to investigational use only. Not available for sale. + DYNAGEN EL ICD/INOGEN EL ICD Physician's Technical Manual - VR models, 0% pacing, 60 ppm, 2.5 V RA/RV amplitude, 0.4 ms pulse width; RA/RV Impedance 500 Ω; sensors On.
| Worldwide sales for the fourth quarter: | |||||||||||||||
| Three Months Ended | |||||||||||||||
| December 31, | % Change | ||||||||||||||
| in millions | 2014 | 2013 | As Reported Basis | Less: Impact of Foreign Currency | Constant Currency Basis | ||||||||||
| (restated) | |||||||||||||||
| Interventional Cardiology | $ | 523 | $ | 500 | 4% | $ | (25) | (6)% | 10% | ||||||
| Peripheral Interventions | 222 | 209 | 6% | (9) | (4)% | 10% | |||||||||
| Cardiovascular | 745 | 709 | 5% | (34) | (5)% | 10% | |||||||||
| Cardiac Rhythm Management | 468 | 468 | 0% | (15) | (3)% | 3% | |||||||||
| Electrophysiology | 59 | 50 | 19% | (2) | (4)% | 23% | |||||||||
| Rhythm Management | 527 | 518 | 2% | (17) | (3)% | 5% | |||||||||
| Endoscopy | 340 | 339 | 0% | (15) | (5)% | 5% | |||||||||
| Urology and Women's Health | 140 | 132 | 6% | (4) | (3)% | 9% | |||||||||
| Neuromodulation | 134 | 138 | (3)% | (1) | (1)% | (2)% | |||||||||
| MedSurg | 614 | 609 | 1% | (20) | (3)% | 4% | |||||||||
| Subtotal Core Businesses | 1,886 | 1,836 | 3% | (71) | (4)% | 7% | |||||||||
| Divested Businesses | 1 | 2 | (38)% | — | 18% | (56)% | |||||||||
| Worldwide Net Sales | $ | 1,887 | $ | 1,838 | 3% | $ | (71) | 4% | 7% |
| Growth rates are based on actual, non-rounded amounts and may not recalculate precisely. |
| The company restated worldwide sales for the three months ended December 31, 2013 to reflect the realignment of certain product lines from Endoscopy to Peripheral Interventions as of January 1, 2014. |
| 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 fourth quarter of 2014 was $87 million , or $0.06 per share. These results included intangible asset impairment charges, acquisition- and divestiture-, litigation-, and restructuring-related net charges, discrete tax items and amortization expense, of $216 million (after-tax) or $0.16 per share. Adjusted net income for the fourth quarter of 2014, excluding these net charges, was $303 million , or $0.22 per share.
On a consolidated GAAP basis, net income for the fourth quarter of 2013 was $108 million , or $0.08 per share. These results included acquisition- and divestiture-, litigation- and restructuring-related charges, discrete tax items, and amortization expense, of $182 million (after-tax) or $0.13 per share. Adjusted net income for the fourth quarter of 2013, excluding these net charges, was $290 million , or $0.21 per share.
| Worldwide sales for the full year: | |||||||||||||||
| Twelve Months Ended | |||||||||||||||
| December 31, | % Change | ||||||||||||||
| in millions | 2014 | 2013 | As Reported Basis | Less: Impact of Foreign Currency | Constant Currency Basis | ||||||||||
| (restated) | |||||||||||||||
| Interventional Cardiology | $ | 2,057 | $ | 1,997 | 3% | $ | (37) | (2)% | 5% | ||||||
| Peripheral Interventions | 850 | 809 | 5% | (15) | (2)% | 7% | |||||||||
| Cardiovascular | 2,907 | 2,806 | 4% | (52) | (1)% | 5% | |||||||||
| Cardiac Rhythm Management | 1,912 | 1,886 | 1% | (14) | (1)% | 2% | |||||||||
| Electrophysiology | 227 | 155 | 47% | (2) | (1)% | 48% | |||||||||
| Rhythm Management | 2,139 | 2,041 | 5% | (16) | (1)% | 6% | |||||||||
| Endoscopy | 1,323 | 1,280 | 3% | (23) | (2)% | 5% | |||||||||
| Urology and Women's Health | 535 | 505 | 6% | (7) | (1)% | 7% | |||||||||
| Neuromodulation | 472 | 453 | 4% | (1) | (1)% | 5% | |||||||||
| MedSurg | 2,330 | 2,238 | 4% | (31) | (1)% | 5% | |||||||||
| Subtotal Core Businesses | 7,376 | 7,085 | 4% | (99) | (2)% | 6% | |||||||||
| Divested Businesses | 4 | 58 | (91)% | — | 0% | (91)% | |||||||||
| Worldwide Net Sales | $ | 7,380 | $ | 7,143 | 3% | $ | (99) | (2)% | 5% |
| Growth rates are based on actual, non-rounded amounts and may not recalculate precisely. |
| The company restated worldwide sales for the year ended December 31, 2013 to reflect the realignment of certain product lines from Endoscopy to Peripheral Interventions as of January 1, 2014. |
| 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 full year 2014 was $267 million , or $0.20 per share. These results included intangible asset impairment charges, restructuring- and litigation-related charges, acquisition- and divestiture-related net credits, discrete tax items and amortization expense, of $862 million (after-tax) or $0.64 per share. Adjusted net income for the full year 2014, excluding these net charges, was $1.129 billion , or $0.84 per share.
On a consolidated GAAP basis, net loss for the full year 2013 was $121 million , or ($0.09) per share. These results included goodwill and other intangible asset impairment charges, acquisition- and divestiture-, restructuring- and litigation-related charges, discrete tax items and amortization and debt extinguishment expenses, of $1.112 billion (after-tax) or $0.82 per share. Adjusted net income for the full year 2013, excluding these net charges, was $991 million , or $0.73 per share.
Guidance for Full Year and First Quarter 2015
The company estimates revenue for the full year 2015 to be in a range of $7.300 to $7.500 billion , which versus the prior year period, represents change in a range of negative 1 to positive 2 percent on a reported basis and a growth range of approximately 3 to 6 percent on an operational basis. The company estimates income on a GAAP basis in a range of $0.42 to $0.48 per share, and adjusted earnings, excluding acquisition- and divestiture- and restructuring-related charges, pension termination charges, and amortization expense, in a range of $0.88 to $0.92 per share.
The company estimates sales for the first quarter of 2015 in a range of $1.740 to $1.800 billion . The company estimates earnings on a GAAP basis in a range of $0.07 to $0.11 per share. Adjusted earnings, excluding acquisition- and divestiture- and restructuring-related charges, pension termination charges and amortization expense, are estimated in a range of $0.19 to $0.21 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 first quarter and full year 2015; our financial performance; our business plans; and our positioning for revenue and earnings growth. 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 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 | |
| [email protected] | |
| Investors: | Susan Lisa, CFA |
| 508-652-5345 (office) | |
| Investor Relations | |
| Boston Scientific Corporation | |
| [email protected] |
| BOSTON SCIENTIFIC CORPORATION CONDENSED CONSOLIDATED GAAP RESULTS OF OPERATIONS (Unaudited) | |||||||||||||
| Three Months Ended | Year Ended | ||||||||||||
| December 31, | December 31, | ||||||||||||
| in millions, except per share data | 2014 | 2013 | 2014 | 2013 | |||||||||
| Net sales | $ | 1,887 | $ | 1,838 | $ | 7,380 | $ | 7,143 | |||||
| Cost of products sold | 559 | 555 | 2,210 | 2,174 | |||||||||
| Gross profit | 1,328 | 1,283 | 5,170 | 4,969 | |||||||||
| Operating expenses: | |||||||||||||
| Selling, general and administrative expenses | 753 | 724 | 2,902 | 2,674 | |||||||||
| Research and development expenses | 208 | 216 | 817 | 861 | |||||||||
| Royalty expense | 25 | 24 | 111 | 140 | |||||||||
| Amortization expense | 111 | 106 | 438 | 410 | |||||||||
| Goodwill impairment charge | — | — | — | 423 | |||||||||
| Intangible asset impairment charges | 18 | — | 195 | 53 | |||||||||
| Contingent consideration expense (benefit) | 37 | 22 | (85) | 4 | |||||||||
| Restructuring charges | 32 | 46 | 69 | 101 | |||||||||
| Divestiture-related charges (gains) | — | 3 | (12) | (38) | |||||||||
| Litigation-related charges | 37 | 15 | 436 | 221 | |||||||||
| 1,221 | 1,156 | 4,871 | 4,849 | ||||||||||
| Operating income (loss) | 107 | 127 | 299 | 120 | |||||||||
| Other income (expense): | |||||||||||||
| Interest expense | (54) | (58) | (216) | (324) | |||||||||
| Other, net | (7) | (10) | 8 | (19) | |||||||||
| Income (loss) before income taxes | 46 | 59 | 91 | (223) | |||||||||
| Income tax expense (benefit) | (41) | (49) | (176) | (102) | |||||||||
| Net income (loss) | $ | 87 | $ | 108 | $ | 267 | $ | (121) | |||||
| Net income (loss) per common share - basic | $ | 0.07 | $ | 0.08 | $ | 0.20 | $ | (0.09) | |||||
| Net income (loss) per common share - assuming dilution | $ | 0.06 | $ | 0.08 | $ | 0.20 | $ | (0.09) | |||||
| Weighted-average shares outstanding | |||||||||||||
| Basic | 1,326.8 | 1,329.2 | 1,324.3 | 1,341.2 | |||||||||
| Assuming dilution | 1,350.1 | 1,355.6 | 1,348.0 | 1,341.2 |
| BOSTON SCIENTIFIC CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS | |||||||||
| As of | |||||||||
| December 31, | December 31, | ||||||||
| in millions, except share data | 2014 | 2013 | |||||||
| (Unaudited) | |||||||||
| ASSETS | |||||||||
| Current assets: | |||||||||
| Cash and cash equivalents | $ | 587 | $ | 217 | |||||
| Trade accounts receivable, net | 1,183 | 1,307 | |||||||
| Inventories | 946 | 897 | |||||||
| Deferred and prepaid income taxes | 235 | 288 | |||||||
| Other current assets | 443 | 302 | |||||||
| Total current assets | 3,394 | 3,011 | |||||||
| Property, plant and equipment, net | 1,507 | 1,546 | |||||||
| Goodwill | 5,898 | 5,693 | |||||||
| Other intangible assets, net | 5,606 | 5,950 | |||||||
| Other long-term assets | 425 | 371 | |||||||
| $ | 16,830 | $ | 16,571 | ||||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||||
| Current liabilities: | |||||||||
| Current debt obligations | $ | 403 | $ | 3 | |||||
| Accounts payable | 262 | 246 | |||||||
| Accrued expenses | 1,350 | 1,348 | |||||||
| Other current liabilities | 231 | 227 | |||||||
| Total current liabilities | 2,246 | 1,824 | |||||||
| Long-term debt | 3,859 | 4,237 | |||||||
| Deferred income taxes | 1,216 | 1,402 | |||||||
| Other long-term liabilities | 2,666 | 2,569 | |||||||
| 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 - issued 1,575,018,236 shares as of December 31, | |||||||||
| 2014 and 1,560,302,634 shares as of December 31, 2013 | 16 | 16 | |||||||
| Treasury stock, at cost - 247,566,270 shares as of December 31, | |||||||||
| 2014 and 238,006,570 shares as of December 31, 2013 | (1,717) | (1,592) | |||||||
| Additional paid-in capital | 16,703 | 16,579 | |||||||
| Accumulated deficit | (8,303) | (8,570) | |||||||
| Accumulated other comprehensive income (loss), net of tax | 144 | 106 | |||||||
| Total stockholders' equity | 6,843 | 6,539 | |||||||
| $ | 16,830 | $ | 16,571 |
| BOSTON SCIENTIFIC CORPORATION NON-GAAP NET INCOME AND NET INCOME PER COMMON SHARE RECONCILIATIONS (Unaudited) | |||||||||||||
| Three Months Ended December 31, 2014 | |||||||||||||
| in millions, except per share data | Pre-Tax | Tax Impact (a) | After-Tax | Impact per diluted share | |||||||||
| GAAP net income (loss) | $ | 46 | $ | 41 | $ | 87 | $ | 0.06 | |||||
| Non-GAAP adjustments: | |||||||||||||
| Intangible asset impairment charges | 18 | (3) | 15 | 0.01 | |||||||||
| Acquisition and divestiture- related net charges (b) | 69 | (8) | 61 | 0.04 | |||||||||
| Restructuring and restructuring-related net charges (c) | 48 | (11) | 37 | 0.03 | |||||||||
| Litigation-related net charges | 37 | (14) | 23 | 0.02 | |||||||||
| Amortization expense | 111 | (14) | 97 | 0.07 | |||||||||
| Discrete tax items | — | (17) | (17) | (0.01) | |||||||||
| Adjusted net income | $ | 329 | $ | (26) | $ | 303 | $ | 0.22 | |||||
| Three Months Ended December 31, 2013 | |||||||||||||
| in millions, except per share data | Pre-Tax | Tax Impact (a) | After-Tax | Impact per diluted share | |||||||||
| GAAP net income (loss) | $ | 59 | $ | 49 | $ | 108 | $ | 0.08 | |||||
| Non-GAAP adjustments: | |||||||||||||
| Acquisition and divestiture- related net charges (d) | 42 | (5) | 37 | 0.01 | |||||||||
| Restructuring and restructuring-related net charges (e) | 53 | (16) | 37 | 0.03 | |||||||||
| Litigation-related net charges | 15 | (5) | 10 | 0.01 | |||||||||
| Amortization expense | 106 | (2) | 104 | 0.08 | |||||||||
| Discrete tax items | — | (6) | (6) | 0.00 | |||||||||
| Adjusted net income | $ | 275 | $ | 15 | $ | 290 | $ | 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 three months ended December 31, 2014, pre-tax acquisition- and divestiture-related net charges were $69 million, of which $10 million was recorded in cost of products sold, $22 million was recorded in selling, general and administrative expenses and $37 million was recorded as contingent consideration expense. |
| (c) In the three months ended December 31, 2014, pre-tax restructuring charges were $32 million and pre-tax restructuring-related charges were $16 million, of which $9 million recorded in cost of products sold and $7 million recorded in selling, general and administrative expenses. |
| (d) In the three months ended December 31, 2013, pre-tax acquisition- and divestiture-related net charges were $42 million, of which $2 million was recorded in cost of products sold, $14 million was recorded in selling, general and administrative expenses, $1 million was recorded in research and development, $22 million was recorded as contingent consideration expense and $3 million was recorded a loss on divestiture. |
| (e) In the three months ended December 31, 2013, pre-tax restructuring charges were $46 million and pre-tax restructuring-related charges were $7 million, of which $1 million was recorded in cost of products sold and $6 million was recorded in selling, general and administrative expenses. |
| An explanation of our 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) | |||||||||||||
| Year Ended December 31, 2014 | |||||||||||||
| in millions, except per share data | Pre-Tax | Tax Impact (a) | After-Tax | Impact per diluted share | |||||||||
| GAAP net income (loss) | $ | 91 | $ | 176 | $ | 267 | $ | 0.20 | |||||
| Non-GAAP adjustments: | |||||||||||||
| Intangible asset impairment charges | 195 | (30) | 165 | 0.12 | |||||||||
| Acquisition and divestiture- related net credits (b) | (10) | (24) | (34) | (0.03) | |||||||||
| Restructuring and restructuring-related net charges (c) | 117 | (27) | 90 | 0.07 | |||||||||
| Litigation-related charges | 436 | (163) | 273 | 0.20 | |||||||||
| Amortization expense | 438 | (53) | 385 | 0.29 | |||||||||
| Discrete tax items | — | (17) | (17) | (0.01) | |||||||||
| Adjusted net income | $ | 1,267 | $ | (138) | $ | 1,129 | 0.84 | ||||||
| Year Ended December 31, 2013 | |||||||||||||
| in millions, except per share data | Pre-Tax | Tax Impact (a) | After-Tax | Impact per diluted share | |||||||||
| GAAP net income (loss) | $ | (223) | $ | 102 | $ | (121) | $ | (0.09) | |||||
| Non-GAAP adjustments: | |||||||||||||
| Goodwill and other intangible asset impairment charges | 476 | (8) | 468 | 0.35 | * | ||||||||
| Acquisition and divestiture- related net charges (d) | 1 | 3 | 4 | 0.00 | * | ||||||||
| Restructuring and restructuring-related net charges (e) | 124 | (36) | 88 | 0.07 | * | ||||||||
| Litigation-related charges | 221 | (72) | 149 | 0.11 | * | ||||||||
| Debt extinguishment charges (recorded in interest expense) | 70 | (26) | 44 | 0.03 | * | ||||||||
| Amortization expense | 410 | (44) | 366 | 0.27 | * | ||||||||
| Discrete tax items | — | (7) | (7) | (0.01) | * | ||||||||
| Adjusted net income | $ | 1,079 | $ | (88) | $ | 991 | $ | 0.73 |
| * Assumes dilution of 19.5 million shares for the twelve months ended December 31, 2013 for all or a portion of these non-GAAP adjustments. |
| (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 twelve months ended December 31, 2014, pre-tax acquisitions- and divestiture-related net credits were $10 million, of which $23 million was recorded in cost of products sold, $83 million was recorded in selling, general and administrative expenses, $85 million was recorded as a contingent consideration benefit, $12 million was recorded as a gain on divestiture and $19 million was recorded as gains on previously held equity interests (Other, net). |
| (c) In the twelve months ended December 31, 2014, pre-tax restructuring charges were $69 million and pre-tax restructuring-related charges were $48 million, of which $24 million recorded in cost of products sold and $24 million recorded in selling, general and administrative expenses. |
| (d) In the twelve months ended December 31, 2013, pre-tax acquisitions- and divestiture-related net charges were $1 million, of which $8 million was recorded in cost of products sold, $25 million was recorded in selling, general and administrative expenses, $2 million was recorded in research and development expenses, $4 million was recorded as a contingent consideration expense and $38 million was recorded as a gain on divestiture. |
| (e) In the twelve months ended December 31, 2013, pre-tax restructuring charges were $101 million and pre-tax restructuring-related charges were $23 million recorded in selling, general and administrative expenses. |
| An explanation of our use of these non-GAAP financial measures is provided at the end of this document. |
| BOSTON SCIENTIFIC CORPORATION SEGMENT INFORMATION (Unaudited) | ||||||||||||||||
| Three Months Ended | Year Ended | |||||||||||||||
| SEGMENT NET SALES* | December 31, | December 31, | ||||||||||||||
| in millions | 2014 | 2013 | Change | 2014 | 2013 | Change | ||||||||||
| (restated) | (restated) | |||||||||||||||
| Interventional Cardiology | $ | 549 | $ | 501 | 10% | $ | 2,092 | $ | 1,995 | 5% | ||||||
| Peripheral Interventions | 230 | 208 | 10% | 861 | 805 | 7% | ||||||||||
| Cardiovascular | 779 | 709 | 10% | 2,953 | 2,800 | 5% | ||||||||||
| Cardiac Rhythm Management | 481 | 466 | 3% | 1,922 | 1,882 | 2% | ||||||||||
| Electrophysiology | 61 | 50 | 23% | 228 | 154 | 48% | ||||||||||
| Rhythm Management | 542 | 516 | 5% | 2,150 | 2,036 | 6% | ||||||||||
| Endoscopy | 354 | 338 | 5% | 1,343 | 1,277 | 5% | ||||||||||
| Urology and Women's Health | 145 | 133 | 9% | 542 | 505 | 7% | ||||||||||
| Neuromodulation | 135 | 138 | (2)% | 474 | 454 | 5% | ||||||||||
| MedSurg | 634 | 609 | 4% | 2,359 | 2,236 | 5% | ||||||||||
| Subtotal Core Businesses | 1,955 | 1,834 | 7% | 7,462 | 7,072 | 6% | ||||||||||
| Divested Businesses | 1 | 2 | (56)% | 4 | 58 | (91)% | ||||||||||
| Foreign Currency | (69) | 2 | N/A | (86) | 13 | N/A | ||||||||||
| Worldwide Net Sales | $ | 1,887 | $ | 1,838 | 3% | $ | 7,380 | $ | 7,143 | 3% |
| SEGMENT OPERATING INCOME* | Three Months Ended | Year Ended | |||||||||||||||
| December 31, | December 31, | ||||||||||||||||
| in millions | 2014 | 2013 | 2014 | 2013 | |||||||||||||
| (restated) | (restated) | ||||||||||||||||
| Segment operating income | |||||||||||||||||
| Cardiovascular | $ | 202 | $ | 150 | $ | 767 | $ | 665 | |||||||||
| Rhythm Management | 80 | 35 | 289 | 211 | |||||||||||||
| MedSurg | 210 | 192 | 746 | 679 | |||||||||||||
| Operating income allocated to reportable segments | 492 | 377 | 1,802 | 1,555 | |||||||||||||
| Corporate expenses and currency exchange | (102) | (34) | (308) | (203) | |||||||||||||
| Goodwill and other intangible asset impairment charges; and acquisition-, divestiture-, restructuring-, and litigation-related charges and credits | (172) | (110) | (757) | (822) | |||||||||||||
| Amortization expense | (111) | (106) | (438) | (410) | |||||||||||||
| Operating income (loss) | $ | 107 | $ | 127 | $ | 299 | $ | 120 |
| *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 goodwill and other intangible asset impairment charges; acquisition and divestiture-, restructuring- and litigation-related charges and credits; 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. The company restated segment information for the prior period based on standard currency exchange rates used for the current period in order to remove the impact of foreign currency exchange fluctuation, and for the realignment of certain product lines from Endoscopy to Peripheral Intervention as of January 1, 2014. |
| 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) AND CORONARY STENT SYSTEM SALES (Unaudited) | |||||||||||||||||||||
| Three Months Ended December 31 | |||||||||||||||||||||
| in millions | U.S. | International | Worldwide | ||||||||||||||||||
| Q4 2014 | Q4 2013 | Q4 2014 | Q4 2013 | Q4 2014 | Q4 2013 | ||||||||||||||||
| Defibrillator systems | $ | 215 | $ | 204 | $ | 124 | $ | 129 | $ | 339 | $ | 333 | |||||||||
| Pacemaker systems | 60 | 65 | 69 | 70 | 129 | 135 | |||||||||||||||
| Total CRM products | $ | 275 | $ | 269 | $ | 193 | $ | 199 | $ | 468 | $ | 468 | |||||||||
| in millions | U.S. | International | Worldwide | ||||||||||||||||||
| Q4 2014 | Q4 2013 | Q4 2014 | Q4 2013 | Q4 2014 | Q4 2013 | ||||||||||||||||
| Drug-eluting stent systems | $ | 120 | $ | 108 | $ | 171 | $ | 164 | $ | 291 | $ | 272 | |||||||||
| Bare-metal stent systems | 5 | 4 | 7 | 11 | 12 | 15 | |||||||||||||||
| Total Coronary Stent Systems | $ | 125 | $ | 112 | $ | 178 | $ | 175 | $ | 303 | $ | 287 |
| Year Ended December 31 | |||||||||||||||||||||
| in millions | U.S. | International | Worldwide | ||||||||||||||||||
| YTD 2014 | YTD 2013 | YTD 2014 | YTD 2013 | YTD 2014 | YTD 2013 | ||||||||||||||||
| Defibrillator systems | $ | 867 | $ | 850 | $ | 513 | $ | 505 | $ | 1,380 | $ | 1,355 | |||||||||
| Pacemaker systems | 255 | 267 | 277 | 264 | 532 | 531 | |||||||||||||||
| Total CRM products | $ | 1,122 | $ | 1,117 | $ | 790 | $ | 769 | $ | 1,912 | $ | 1,886 | |||||||||
| in millions | U.S. | International | Worldwide | ||||||||||||||||||
| YTD 2014 | YTD 2013 | YTD 2014 | YTD 2013 | YTD 2014 | YTD 2013 | ||||||||||||||||
| Drug-eluting stent systems | $ | 486 | $ | 448 | $ | 665 | $ | 665 | $ | 1,151 | $ | 1,113 | |||||||||
| Bare-metal stent systems | 17 | 19 | 32 | 45 | 49 | 64 | |||||||||||||||
| Total Coronary Stent Systems | $ | 503 | $ | 467 | $ | 697 | $ | 710 | $ | 1,200 | $ | 1,177 |
| BOSTON SCIENTIFIC CORPORATION INTERNATIONAL AND EMERGING MARKETS* NET SALES (Unaudited) | |||
| Q4 2014 International Net Sales as compared to Q4 2013 | |||
| Estimated | |||
| As Reported | Constant | Impact of | |
| Currency | Currency | Foreign | |
| Basis | Basis | Currency | |
| Percentage change in net sales | 0% | 8% | (8)% |
| Q4 2014 Europe Net Sales as compared to Q4 2013 | |||
| Estimated | |||
| As Reported | Constant | Impact of | |
| Currency | Currency | Foreign | |
| Basis | Basis | Currency | |
| Percentage change in net sales | 2% | 10% | (8)% |
| E merging Markets Net Sales | |||
| Estimated | |||
| As Reported | Constant | Impact of | |
| Currency | Currency | Foreign | |
| Basis | Basis | Currency | |
| Percentage change in net sales - QTD Q4 2014 to Q4 2013 | 10% | 17% | (7)% |
| Percentage of total company sales - FY2014 | 10% | 10% | 0% |
| Percentage of total company sales - FY2013 | 9% | 9% | 0% |
| *We define Emerging Markets as including certain developing 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 our 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) | |||||||||||||
| Q1 and Full Year 2015 EPS Guidance | |||||||||||||
| Q1 2015 Estimate | Full Year 2015 Estimate | ||||||||||||
| (Low) | (High) | (Low) | (High) | ||||||||||
| GAAP results | $ | 0.07 | $ | 0.11 | $ | 0.42 | $ | 0.48 | |||||
| Estimated acquisition and divestiture-related net charges | 0.02 | 0.02 | 0.06 | 0.06 | |||||||||
| Estimated restructuring-related charges | 0.02 | 0.01 | 0.09 | 0.08 | |||||||||
| Estimated amortization expense | 0.07 | 0.07 | 0.28 | 0.28 | |||||||||
| Pension termination charges | 0.01 | 0.00 | 0.03 | 0.02 | |||||||||
| Adjusted results | $ | 0.19 | $ | 0.21 | $ | 0.88 | $ | 0.92 |
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.
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 twelve months ended December 31, 2014 and 2013, and for the forecasted three month period ending March 31, 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:
Goodwill and other intangible asset impairment charges - This amount represents non-cash write-downs of certain intangible asset balances during 2014 and 2013 and a non-cash write-down of our goodwill balance attributable to our global Cardiac Rhythm Management reporting unit in the first quarter of 2013. 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 charges (credits) - These adjustments consist of (a) contingent consideration fair value adjustments; (b) gains on previously held equity interests; (c) due diligence, other fees and exit costs; and (d) 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.
Discrete tax items - These items represent adjustments of certain tax positions, which were initially established in prior periods 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 $1.450 billion of debt during the third quarter of 2013. We believe these are infrequently occurring charges and do not reflect expected on-going 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 and do not reflect expected on-going operating results. Accordingly, management plans to exclude 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.
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, adjusted net income per share and revenue growth rates that exclude certain amounts, such as the sales from divested businesses and/or the impact of 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.
SOURCE Boston Scientific Corporation