BOSTON
SCIENTIFIC ANNOUNCES THIRD QUARTER ADJUSTMENTS
Natick,
MA (October 8, 2008) – Boston Scientific (NYSE: BSX) announced today it expects
to record the following adjustments to its third quarter results, which it plans
to report on October 23rd.
As
previously disclosed, the Company received a $250 million milestone payment from
Abbott Laboratories (NYSE: ABT) in July, related to Abbott’s 2006 acquisition of
Guidant’s vascular intervention and endovascular solutions
businesses. As a result, the Company expects to record a pre-tax
operating gain of $250 million ($184 million after tax or approximately $0.12
per share) in the third quarter. The Company has used the proceeds of
the milestone payment and cash flow to retire $500 million of debt in the third
quarter.
The
Company expects to record an additional pre-tax charge of $334 million ($266
million after tax or approximately $0.18 per share) in the third quarter as a
result of a ruling last week by a federal judge in a patent infringement case
brought against the Company by Johnson & Johnson (NYSE: JNJ). As
the Company announced on October 1, the judge awarded Johnson & Johnson
approximately $703 million in damages and pre-judgment
interest. Earlier this week the U.S. Supreme Court declined to hear
the Company’s appeal on the infringement verdict in the Johnson & Johnson
case. The Supreme Court decision is unrelated to the damages ruling,
and the Company today reiterated its commitment to appeal the damages ruling to
the U.S. Court of Appeals for the Federal Circuit. This case is
separate from the two cases currently on appeal, in which Johnson &
Johnson’s CYPHER®
drug-eluting stent was found to have infringed two of Boston Scientific’s
patents.
The
Company intends to post a surety bond at a cost of approximately $7 million in
fees – backed by a letter of credit – to secure the damages
award. There should be no additional cash outflow related to this
award during the appeal process, which should take approximately 12 to 15
months.
The
Company also announced it expects to record a pre-tax, non-cash operating charge
of $140 million to $180 million ($115 million to $145 million after tax or
approximately $0.08 to $0.10 per share) in the third quarter in relation to
impairment charges on intangible assets. As previously announced, the
Company expects to record a net pre-tax gain of $15 million ($9 million after
tax or approximately $0.01 per share) in the third quarter on the liquidation of
its public and private investment portfolio.
Consistent
with previous practice, the Company expects to exclude the net gains and losses
associated with the items above from its adjusted earnings per share for the
third quarter. There should be no material effect on the Company’s
compliance with bank debt covenants as a result of the third quarter
adjustments. The surety bond will not be treated as debt for purposes
of calculating bank covenants, but it will reduce the Company’s $2 billion
undrawn revolving bank credit facility to approximately $1.3
billion. At the end of the second quarter, the Company had cash on
hand of $1.6 billion, which has remained largely unchanged. The
Company continues to have substantial liquidity and has been essentially
unaffected by the broader credit market issues of recent weeks.
The
Company plans to discuss these and other issues on its third quarter earnings
call on October 23 at 8:00 a.m. ET. A press release will be issued
after the close of the market on October 22. (The call had been
previously scheduled for October 30.) A live webcast and archived
replay of this call will be available at www.bostonscientific.com
in the Investor Relations section. The webcast is also being
distributed over Thomson’s Financial Investor Distribution Network via two
locations: www.earnings.com,
which is accessible to the public, and www.streetevents.com,
a password-protected event management site. To ensure a timely
connection to the live webcast it is recommended that users register at least 15
minutes before the webcast begins. A replay of the webcast will begin
at approximately 11:00 a.m. ET on October 23 and will be available for one
year.
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 earnings, cash
position, financial position and results of operations. 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 1A – 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.
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
