BOSTON SCIENTIFIC CORP (Form: 10-Q, Received: 08/07/2013 08:23:30)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q



þ	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2013



o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File No. 1-11083

BOSTON SCIENTIFIC CORPORATION

(Exact name of registrant as specified in its charter)



DELAWARE	04-2695240
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

ONE BOSTON SCIENTIFIC PLACE, NATICK, MASSACHUSETTS 01760-1537

(Address of principal executive offices) (zip code)

(508) 650-8000

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).Yes þ No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.



Large accelerated filer þ	Accelerated filer o	Non-Accelerated filer o	Smaller reporting company o
		(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No þ

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.



		Shares outstanding
Class		as of July 31, 2013
Common Stock, $.01 par value		1,342,873,847

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TABLE OF CONTENTS



		Page No.

PART I	FINANCIAL INFORMATION	3

ITEM 1.	Condensed Consolidated Financial Statements	3

	Condensed Consolidated Statements of Operations	3

	Condensed Consolidated Statements of Comprehensive Income	4

	Condensed Consolidated Balance Sheets	5

	Condensed Consolidated Statements of Cash Flows	6

	Notes to the Condensed Consolidated Financial Statements	7

ITEM 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	38

ITEM 3.	Quantitative and Qualitative Disclosures About Market Risk	66

ITEM 4.	Controls and Procedures	66

PART II	OTHER INFORMATION	67

ITEM 1.	Legal Proceedings	67

ITEM 1A.	Risk Factors	67

ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	67

ITEM 6.	Exhibits	69

SIGNATURE		70

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PART I

FINANCIAL INFORMATION

ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

BOSTON SCIENTIFIC CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)



	Three Months Ended June 30,						Six Months Ended June 30,
in millions, except per share data	2013			2012			2013			2012

Net sales	$	1,809		$	1,828		$	3,570		$	3,694
Cost of products sold	530			578			1,108			1,209
Gross profit	1,279			1,250			2,462			2,485

Operating expenses:
Selling, general and administrative expenses	661			648			1,292			1,306
Research and development expenses	223			213			427			428
Royalty expense	47			48			87			96
Amortization expense	101			99			204			195
Goodwill impairment charges	—			3,602			423			3,602
Intangible asset impairment charges	53			129			53			129
Contingent consideration (benefit) expense	(18		)	1			(41		)	11
Restructuring charges	26			28			36			39
Litigation-related charges	—			69			130			69
Gain on divestiture	(34		)	—			(40		)	—
	1,059			4,837			2,571			5,875
Operating income (loss)	220			(3,587		)	(109		)	(3,390		)

Other income (expense):
Interest expense	(65		)	(64		)	(130		)	(132		)
Other, net	(3		)	33			(3		)	27
Income (loss) before income taxes	152			(3,618		)	(242		)	(3,495		)
Income tax expense (benefit)	22			(40		)	(18		)	(30		)
Net income (loss)	$	130		$	(3,578	)	$	(224	)	$	(3,465	)

Net income (loss) per common share — basic	$	0.10		$	(2.51	)	$	(0.17	)	$	(2.42	)
Net income (loss) per common share — assuming dilution	$	0.10		$	(2.51	)	$	(0.17	)	$	(2.42	)

Weighted-average shares outstanding
Basic	1,343.5			1,423.2			1,347.7			1,434.2
Assuming dilution	1,358.6			1,423.2			1,347.7			1,434.2

See notes to the unaudited condensed consolidated financial statements.

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BOSTON SCIENTIFIC CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (UNAUDITED)



	Three Months Ended June 30,						Six Months Ended June 30,
(in millions)	2013			2012			2013			2012
Net income (loss)	$	130		$	(3,578	)	$	(224	)	$	(3,465	)
Other comprehensive income:
Foreign currency translation adjustment	(6		)	(19		)	(3		)	7
Net change in unrealized gains and losses on derivative financial instruments, net of tax	43			11			118			44
Total other comprehensive income (loss)	37			(8		)	115			51
Total comprehensive income (loss)	$	167		$	(3,586	)	$	(109	)	$	(3,414	)

See notes to the unaudited condensed consolidated financial statements.

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BOSTON SCIENTIFIC CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS



	As of
	June 30,			December 31,
in millions, except share and per share data	2013			2012
	(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	530		$	207
Trade accounts receivable, net	1,278			1,217
Inventories	842			884
Deferred income taxes	496			433
Prepaid expenses and other current assets	352			281
Total current assets	3,498			3,022
Property, plant and equipment, net	1,524			1,564
Goodwill	5,553			5,973
Other intangible assets, net	6,026			6,289
Other long-term assets	395			306
	$	16,996		$	17,154

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Current debt obligations	$	605		$	4
Accounts payable	251			232
Accrued expenses	1,365			1,284
Other current liabilities	256			252
Total current liabilities	2,477			1,772
Long-term debt	3,647			4,252
Deferred income taxes	1,711			1,713
Other long-term liabilities	2,558			2,547

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 and issued 1,551,642,655 shares as of June 30, 2013 and 1,542,347,188 shares as of December 31, 2012	16			15
Treasury stock, at cost - 212,293,891 shares as of June 30, 2013 and 186,635,532 shares as of December 31, 2012	(1,292		)	(1,092		)
Additional paid-in capital	16,470			16,429
Accumulated deficit	(8,673		)	(8,449		)
Accumulated other comprehensive income (loss), net of tax	82			(33		)
Total stockholders’ equity	6,603			6,870
	$	16,996		$	17,154

See notes to the unaudited condensed consolidated financial statements.

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BOSTON SCIENTIFIC CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)



	Six Months Ended June 30,
in millions	2013			2012

Cash provided by operating activities	$	559		$	619

Investing activities:
Purchases of property, plant and equipment	(104		)	(118		)
Proceeds from sale of property, plant and equipment	53			—
Purchases of privately held securities	(8		)	—
Purchase of notes receivable	(3		)	—
Payments for acquisitions of businesses, net of cash acquired	—			(134		)
Payments for investments in companies and acquisitions of certain technologies	(7		)	(1		)
Proceeds from business divestitures, net of costs	30			—

Cash used for investing activities	(39		)	(253		)

Financing activities:
Payments on long-term borrowings	—			(9		)
Payment of contingent consideration	(15		)	(4		)
Proceeds from borrowings on credit facilities	240			251
Payments on borrowings from credit facilities	(240		)	(260		)
Payments for acquisitions of treasury stock	(200		)	(250		)
Proceeds from issuances of shares of common stock	19			9

Cash used for financing activities	(196		)	(263		)

Effect of foreign exchange rates on cash	(1		)	1

Net increase in cash and cash equivalents	323			104
Cash and cash equivalents at beginning of period	207			267
Cash and cash equivalents at end of period	$	530		$	371

Supplemental Information

Non-cash operating activities:
Stock-based compensation expense	$	50		$	57

See notes to the unaudited condensed consolidated financial statements.

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NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE A – BASIS OF PRESENTATION

The accompanying unaudited condensed consolidated financial statements of Boston Scientific Corporation have been prepared in accordance with accounting principles generally accepted in the United States (U.S. GAAP) and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments (consisting only of normal recurring adjustments) considered necessary for fair presentation have been included. Operating results for the three and six months ended June 30, 2013 are not necessarily indicative of the results that may be expected for the year ending December 31, 2013 . For further information, refer to the consolidated financial statements and footnotes thereto included in Item 8 of our 2012 Annual Report filed on Form 10-K.

Effective as of January 1, 2013, we reorganized our business from geographic regions to fully operationalized global business units. Our reorganization changed our reporting structure and changed the composition of our reporting units. As a result, we have reclassified certain prior year amounts to conform to the current year’s presentation. See Note D - Goodwill and Other Intangible Assets and Note L – Segment Reporting for further details.

Subsequent Events

We evaluate events occurring after the date of our most recent accompanying unaudited condensed consolidated balance sheets for potential recognition or disclosure in our financial statements. We did not identify any material subsequent events requiring adjustment to our accompanying unaudited condensed consolidated financial statements (recognized subsequent events) for the three and six month periods ended June 30, 2013 . Those items requiring disclosure (unrecognized subsequent events) in the financial statements have been disclosed accordingly. Refer to Note J - Commitments and Contingencies and Note F - Borrowings and Credit Arrangements for more information.

NOTE B – ACQUISITIONS

We did not close any material acquisitions during the first half of 2013. In June 2013, we entered into a definitive agreement to acquire Bard EP, the electrophysiology business of C.R. Bard Inc., for $275 million in cash at closing. We expect to close this transaction in the second half of 2013, subject to customary closing conditions.

2012 Acquisition

Cameron Health, Inc.

On June 8, 2012, we completed the acquisition of the remaining equity of Cameron Health, Inc. (Cameron). Cameron has developed the world's first and only commercially available subcutaneous implantable cardioverter defibrillator - the S-ICD® system.

Our unaudited condensed consolidated financial statements include the operating results for the acquired entity from its respective date of acquisition. We do not present pro forma financial information for this acquisition given the results are not material to our consolidated financial statements. Transaction costs associated with this acquisition were expensed as incurred and were not material for the three and six months ended June 30, 2013 and 2012.

Purchase Price Allocation

The components of the Cameron purchase price as of the acquisition date were as follows (in millions):



Cash, net of cash acquired	$	134
Fair value of contingent consideration	259
Fair value of prior interests	79
Fair value of debt assumed	9
	$	481

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Prior to the acquisition, we had an equity interest in Cameron and held $40 million of notes receivable. We re-measured our previously held investments to their estimated acquisition-date fair value of $79 million and recorded a gain of $39 million in other, net in the accompanying condensed consolidated statements of operations during the second quarter of 2012. We measured the fair values of the previously held investments based on the liquidation preferences and priority of the equity interests and debt, including accrued interest. In addition, we prepaid the assumed debt obligation of Cameron for approximately $9 million during the second quarter of 2012.

Total consideration included an initial $150 million cash payment at closing of the transaction, a payment of $150 million upon FDA approval of the S-ICD® system and up to an additional $1.050 billion of potential payments upon achievement of specified revenue-based milestones over a six-year period following FDA approval. Due to our receipt of FDA approval of Cameron's S-ICD® system, we paid the related $150 million milestone payment to the former shareholders of Cameron during the fourth quarter of 2012.

The following summarizes the Cameron purchase price allocation (in millions):



Goodwill	$	314
Amortizable intangible assets	42
Indefinite-lived intangible assets	48
Other net assets	1
Deferred income taxes	76
	$	481

We allocated a portion of the Cameron purchase price to specific intangible asset categories as follows:



	Amount Assigned (in millions)	Weighted Average Amortization Period (in years)	Risk-Adjusted Discount Rates used in Purchase Price Allocation
Amortizable intangible assets:
Technology-related	40	11	14.0	%
Customer relationships	2	5	14.0	%
Indefinite-lived intangible assets:
Purchased research and development	48		14.0	%
	90

The technology-related intangible assets consist of technical processes, intellectual property, and institutional understanding with respect to products and processes that we expect to leverage in future products or processes and carry forward from one product generation to the next. The technology-related intangible assets are being amortized on a straight-line basis over their assigned estimated useful lives.

Purchased research and development represents the estimated fair value of acquired in-process research and development projects which have not yet reached technological feasibility. These indefinite-lived intangible assets are tested for impairment on an annual basis, or more frequently if impairment indicators are present, in accordance with U.S. GAAP and our accounting policies described in our 2012 Annual Report filed on Form 10-K. Upon completion of the associated research and development efforts, we determine the useful life of the technology and begin amortizing the assets to reflect their use over their remaining lives. Upon receiving FDA approval for Cameron's S-ICD® system in September 2012, we reclassified approximately $47 million of in-process research and development (IPR&D) to technology-related amortizable intangible assets. The total estimated costs to complete the remaining IPR&D program associated with Cameron are immaterial.

We believe that the estimated intangible asset values represent the fair value at the date of acquisition and do not exceed the amount a third party would pay for the assets. We used the income approach, specifically the discounted cash flow method and excess earnings method, to derive the fair value of the amortizable intangible assets and purchased research and development. These fair value measurements are based on significant unobservable inputs, including management estimates and assumptions and, accordingly, are classified as Level 3 within the fair value hierarchy prescribed by ASC Topic 820, Fair Value Measurements and Disclosures .

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We recorded the excess of the aggregate purchase price over the estimated fair values of the identifiable assets acquired as goodwill, which is non-deductible for tax purposes. Goodwill was established due primarily to revenue and cash flow projections associated with future technologies, as well as synergies expected to be gained from the integration of this business into our Cardiac Rhythm Management (CRM) business and was allocated to our former geographic reportable segments based on the relative expected benefit from the business combination. Effective as of January 1, 2013, we reorganized our business from geographic regions to fully operationalized global business units. Our reorganization changed our reporting structure and changed the composition of our reporting units for goodwill impairment testing purposes. Following the reorganization, based on information regularly reviewed by our chief operating decision maker, we have three new global reportable segments consisting of: Cardiovascular, Rhythm Management, and MedSurg. See Note D - Goodwill and Other Intangible Assets for further details.

Contingent Consideration

We recorded a net benefit related to the change in fair value of our contingent consideration liabilities of $18 million and $41 million in the second quarter and first half of 2013, respectively, and an expense of $1 million and $11 million during the second quarter and first half of 2012, respectively. We paid $15 million in the second quarter and first half of 2013, and $1 million and $4 million during the second quarter and first half of 2012, respectively. As of June 30, 2013, the maximum amount of future contingent consideration (undiscounted) that we could be required to pay is approximately $2.328 billion .

Changes in the fair value of our contingent consideration liability were as follows (in millions):



Balance as of December 31, 2012	$	(663	)
Amounts recorded to acquisition purchase accounting	(3		)
Net fair value adjustments	41
Payments made	15
Balance as of June 30, 2013	$	(610	)

Contingent consideration liabilities are remeasured to fair value each reporting period using projected revenues, discount rates, probabilities of payment and projected payment dates. The recurring Level 3 fair value measurements of our contingent consideration liability include the following significant unobservable inputs:



Contingent Consideration Liability	Fair Value as of June 30, 2013	Valuation Technique	Unobservable Input	Range
Research and Development, Regulatory and Commercialization-based Milestones	$209 million	Probability Weighted Discounted Cash Flow	Discount Rate	0.9% - 1.8%
			Probability of Payment	70% - 98%
			Projected Year of Payment	2013 - 2017
Revenue-based Payments	$148 million	Discounted Cash Flow	Discount Rate	12% - 18%
			Probability of Payment	15% - 100%
			Projected Year of Payment	2013 - 2018
	$253 million	Monte Carlo	Revenue Volatility	13% - 28%
			Risk Free Rate	LIBOR Term Structure
			Projected Year of Payment	2013 - 2018

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Increases or decreases in the fair value of our contingent consideration liability can result from changes in discount periods and rates, as well as changes in the timing and amount of revenue estimates or in the timing or likelihood of achieving regulatory-, revenue- or commercialization-based milestones. Projected contingent payment amounts related to research and development, regulatory- and commercialization-based milestones and certain revenue-based milestones are discounted back to the current period using a discounted cash flow (DCF) model. Other revenue-based payments are valued using a Monte Carlo valuation model, which simulates future revenues during the earn out-period using management's best estimates. Projected revenues are based on our most recent internal operational budgets and long-range strategic plans. Increases in projected revenues and probabilities of payment may result in higher fair value measurements. Increases in discount rates and the time to payment may result in lower fair value measurements. Increases or decreases in any of those inputs in isolation may result in a significantly lower or higher fair value measurement.

NOTE C – DIVESTITURES

In January 2011, we closed the sale of our Neurovascular business to Stryker Corporation for a purchase price of $1.500 billion , $1.450 billion of which we received at closing. We received an additional $10 million during 2012, $30 million during the second quarter of 2013, and we will receive the final $10 million of consideration contingent upon the FDA approval of the transfer of certain manufacturing facilities, which we expect will occur during the third quarter of 2013.

Due to our continuing involvement in the operations of the Neurovascular business, the divestiture does not meet the criteria for presentation as a discontinued operation. Revenue generated by the Neurovascular business was $19 million in the second quarter of 2013, $55 million in the first half of 2013, $30 million in the second quarter of 2012, and $59 million in the first half of 2012.

NOTE D – GOODWILL AND OTHER INTANGIBLE ASSETS

The gross carrying amount of goodwill and other intangible assets and the related accumulated amortization for intangible assets subject to amortization and accumulated write-offs of goodwill as of June 30, 2013 and December 31, 2012 is as follows:



	As of
	June 30, 2013					December 31, 2012
	Gross Carrying		Accumulated Amortization/			Gross Carrying		Accumulated Amortization/
(in millions)	Amount		Write-offs			Amount		Write-offs
Amortizable intangible assets
Technology-related	$	8,045	$	(3,171	)	$	8,020	$	(3,005	)
Patents	500		(319		)	559		(352		)
Other intangible assets	810		(452		)	810		(428		)
	$	9,355	$	(3,942	)	$	9,389	$	(3,785	)
Unamortizable intangible assets
Goodwill	$	15,453	$	(9,900	)	$	15,450	$	(9,477	)
Technology-related	242		—			242		—
	$	15,695	$	(9,900	)	$	15,692	$	(9,477	)

In addition, we had $371 million and $443 million of purchased research and development intangible assets as of June 30, 2013 and December 31, 2012, respectively.

2013 Reorganization

We assess goodwill for impairment at the reporting unit level, which is defined as an operating segment or one level below an operating segment, referred to as a component. Effective as of January 1, 2013, we reorganized our business from geographic regions to fully operationalized global business units. Our reorganization changed our reporting structure and changed the composition of our reporting units for goodwill impairment testing purposes. Following the reorganization, based on information regularly reviewed by our chief operating decision maker, we have three new global reportable segments consisting of: Cardiovascular, Rhythm Management, and MedSurg. We determined our new global reporting units by identifying our operating segments and assessing whether any components of these segments constituted a business for which discrete financial information is available and whether segment management regularly reviews the operating results of any components. Through this process, we identified the following new global reporting units effective as of January 1, 2013: Interventional Cardiology, Peripheral Interventions, Cardiac Rhythm Management (CRM), Electrophysiology, Endoscopy, Urology/Women's Health, and Neuromodulation.

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The following represents our goodwill balance by new global reportable segment. We restated the prior period information to conform to the current presentation:



(in millions)	Cardiovascular		Rhythm Management			MedSurg		Total
Balance as of December 31, 2012 (restated)	$	3,249	$	577		$	2,147	$	5,973
Purchase price adjustments	3		—			—		3
Goodwill acquired	—		—			—		—
Goodwill written off	—		(423		)	—		(423		)
Balance as of June 30, 2013	$	3,252	$	154		$	2,147	$	5,553

2013 Goodwill Impairment Testing and Charge

We test our goodwill balances during the second quarter of each year for impairment, or more frequently if indicators are present or changes in circumstances suggest that impairment may exist. Following our reorganization from regions to global business units and our reallocation of goodwill on a relative fair value basis, we conducted the first step of the goodwill impairment test for all new global reporting units as of January 1, 2013. The first step requires a comparison of the carrying value of the reporting units to the fair value of these units. The fair value of each new global reporting unit exceeded its carrying value, with the exception of the global CRM reporting unit. The global CRM reporting unit carrying value exceeded its fair value primarily due to the carrying value of its amortizable intangible assets. The carrying value of amortizable intangible assets allocated to the global CRM reporting unit was $4.636 billion as of January 1, 2013. In accordance with ASC Topic 350, Intangibles—Goodwill and Other (Topic 350) , we tested the global CRM amortizable intangible assets for impairment in conjunction with the interim goodwill impairment test of our global CRM reporting unit. We performed the impairment analysis of the amortizable intangible assets on an undiscounted cash flow basis, and concluded that these assets were not impaired.

The second step of the goodwill impairment test compares the estimated fair value of a reporting unit’s goodwill to its carrying value. We performed the second step of the goodwill impairment test on the global CRM reporting unit and recorded a non-cash goodwill impairment charge of $423 million to write-down the goodwill to its implied fair value as of January 1, 2013. The primary driver of this impairment charge was our reorganization from geographic regions to global business units as of January 1, 2013, which changed the composition of our reporting units. As a result of the reorganization, any goodwill allocated to the global CRM reporting unit was no longer supported by the cash flows of other businesses. Under our former reporting unit structure, the goodwill allocated to our regional reporting units was supported by the cash flows from all businesses in each international region. The hypothetical tax structure of the global CRM business and the global CRM business discount rate applied were also contributing factors to the goodwill impairment charge. We finalized the second step of the global CRM goodwill impairment test during the second quarter of 2013, in accordance with ASC Topic 350, Intangibles - Goodwill and Other , and determined that no adjustments to the charge were required. After recording the impairment charge in the first quarter of 2013, there was no remaining goodwill allocated to the global CRM reporting unit as of March 31, 2013.

The goodwill impairment charge taken during the first quarter of 2013 was determined on a global CRM basis pursuant to our new organizational structure. We used the income approach, specifically the DCF method, to derive the fair value of the global CRM reporting unit. We completed a DCF model associated with our new global CRM business, including the amount and timing of future expected cash flows, tax attributes, the terminal value growth rate of approximately two percent and the appropriate market-participant risk-adjusted weighted average cost of capital (WACC) of approximately 12 percent .

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In the second quarter of 2013, we performed our annual goodwill impairment test for all of our reporting units. In conjunction with our annual test, the fair value of each reporting unit exceeded its carrying value except CRM, for which no goodwill remains. Therefore, it was deemed not necessary to proceed to the second step of the impairment test. We continue to identify our global Neuromodulation reporting unit as being at higher risk of potential failure of the first step of the goodwill impairment test in future reporting periods. Our global Neuromodulation reporting unit had excess fair value over carrying value of approximately 16 percent and held $1.356 billion of allocated goodwill as of June 30, 2013. In addition, changes in our reporting units or in the structure of our business as a result of future reorganizations, acquisitions or divestitures of assets or businesses could result in future impairments of goodwill within our reporting units including global CRM. Further, the recoverability of our CRM-related amortizable intangibles ( $4.510 billion globally as of June 30, 2013) is sensitive to future cash flow assumptions and our global CRM business performance. The $4.510 billion of CRM-related amortizable intangibles are at higher risk of potential failure of the first step of the amortizable intangible recoverability test in future reporting periods. An impairment of a material portion of our CRM-related amortizable intangibles carrying value would occur if the second step of the amortizable intangible test is required in a future reporting period. Refer to Critical Accounting Policies and Estimates within our Management's Discussion and Analysis of Financial Condition and Results of Operations contained in Item 2 of this Quarterly Report on Form 10-Q for a discussion of key assumptions used in our testing.

On a quarterly basis, we monitor the key drivers of fair value to detect events or other changes that would warrant an interim impairment test of our goodwill and intangible assets. The key variables that drive the cash flows of our reporting units and amortizable intangibles are estimated revenue growth rates and levels of profitability. Terminal value growth rate assumptions, as well as the WACC rate applied are additional key variables for reporting unit cash flows. These assumptions are subject to uncertainty, including our ability to grow revenue and improve profitability levels. Relatively small declines in the future performance and cash flows of a reporting unit or asset group or small changes in other key assumptions may result in the recognition of significant asset impairment charges. For example, keeping all other variables constant, an increase in the WACC applied of 80 basis points or a 200 basis point decrease in the terminal value growth rate would require that we perform the second step of the goodwill impairment test for the global Neuromodulation reporting unit. The estimates used for our future cash flows and discount rates represent management's best estimates, which we believe to be reasonable, but future declines in business performance may impair the recoverability of our goodwill and intangible asset balances.

Future events that could have a negative impact on the levels of excess fair value over carrying value of our reporting units and/or amortizable intangible assets include, but are not limited to:


•	decreases in estimated market sizes or market growth rates due to greater-than-expected declines in procedural volumes, pricing pressures, product actions, and/or competitive technology developments;


•	declines in our market share and penetration assumptions due to increased competition, an inability to develop or launch new and next-generation products and technology features in line with our commercialization strategies, and market and/or regulatory conditions that may cause significant launch delays or product recalls;


•	decreases in our forecasted profitability due to an inability to successfully implement and achieve timely and sustainable cost improvement measures consistent with our expectations, increases in our market-participant tax rate, and/or changes in tax laws;


•	negative developments in intellectual property litigation that may impact our ability to market certain products or increase our costs to sell certain products;


•	the level of success of on-going and future research and development efforts, including those related to recent acquisitions, and increases in the research and development costs necessary to obtain regulatory approvals and launch new products;


•	the level of success in managing the growth of acquired companies, achieving sustained profitability consistent with our expectations, establishing government and third-party payer reimbursement, supplying the market, and increases in the costs and time necessary to integrate acquired businesses into our operations successfully;


•	changes in our reporting units or in the structure of our business as a result of future reorganizations, acquisitions or divestitures of assets or businesses;


•	increases in our market-participant risk-adjusted WACC; and


•	declines in revenue as a result of loss of key members of our sales force or other key personnel.

Negative changes in one or more of these factors, among others, could result in additional impairment charges.

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2012 Charge

In the second quarter of 2012, we performed our annual goodwill impairment test for all of our reporting units and concluded that the goodwill within our former EMEA reporting unit was impaired and recorded a $3.602 billion ( $3.579 billion after-tax) charge in the second quarter of 2012. As a result of revised estimates developed during our annual strategic planning process and analysis performed in conjunction with our annual goodwill impairment test, we concluded that the revenue growth rates projected for the EMEA reporting unit were slightly lower than our previous estimates primarily driven by macro-economic factors and our performance in the European market. We updated short-term operating projections based on our most recent strategic plan for EMEA prepared by management. We reduced the EMEA long-term growth rates and terminal value growth rate projections and increased the discount rate within our 15-year DCF model for EMEA by approximately 100 basis points due to increased risk associated with our projections in this market primarily as a result of on-going economic uncertainty in Europe. While we do expect revenue growth in our EMEA business, our expectations for future growth and profitability were lower than our previous estimates and reflect declines in average selling prices and volume pressures due to austerity measures. The declines expected in the EMEA market did not impact our assumptions related to other reporting units.

The following is a rollforward of accumulated goodwill write-offs by global reportable segment. We restated the prior period information to conform to the current period presentation:



(in millions)	Cardiovascular			Rhythm Management			MedSurg			Total
Accumulated write-offs as of December 31, 2012 (restated)	$	(1,479	)	$	(6,537	)	$	(1,461	)	$	(9,477	)
Goodwill written off	—			(423		)	—			(423		)
Accumulated write-offs as of June 30, 2013	$	(1,479	)	$	(6,960	)	$	(1,461	)	$	(9,900	)

Intangible Asset Impairment Testing

During the second quarters of 2013 and 2012, as a result of revised estimates developed in conjunction with our annual strategic planning process and annual goodwill impairment test, we performed an interim impairment test of our in-process research and development projects associated with certain of our acquisitions. Based on the results of our impairment analyses, we revised our expectations of the market size related to Sadra Medical, Inc. (Sadra), and the resulting timing and amount of future revenue and cash flows associated with the technology acquired from Sadra Medical, Inc. As a result of these changes, we recorded pre-tax impairment charges of $51 million in the second quarter of 2013 and $129 million in the second quarter of 2012 to write-down the balance of these intangible assets to their fair value in each respective period. During the second quarter of 2013, we also recorded an additional $2 million intangible asset impairment charge associated with changes in the amount of the expected cash flows related to certain other acquired in-process research and development projects. We recorded these amounts in the intangible assets impairment charges caption in our accompanying unaudited condensed consolidated statements of operations.

In-process research and development fair value is measured using projected revenues, projected expenses, discount rates, and

probability of expected launch. The nonrecurring Level 3 fair value measurements of our intangible asset impairment

analysis included the following significant unobservable inputs:



Intangible Asset	Valuation Date	Fair Value	Valuation Technique	Unobservable Input	Rate
In-Process R&D	June 30, 2013	$178 million	Income Approach - Excess Earnings Method	Discount Rate	16.5%
In-Process R&D	June 30, 2012	$184 million	Income Approach - Excess Earnings Method	Discount Rate	20.0%

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NOTE E – FAIR VALUE MEASUREMENTS

Derivative Instruments and Hedging Activities

We develop, manufacture and sell medical devices globally and our earnings and cash flows are exposed to market risk from changes in foreign currency exchange rates and interest rates. We address these risks through a risk management program that includes the use of derivative financial instruments, and operate the program pursuant to documented corporate risk management policies. We recognize all derivative financial instruments in our consolidated financial statements at fair value in accordance with ASC Topic 815, Derivatives and Hedging (Topic 815). In accordance with Topic 815, for those derivative instruments that are designated and qualify as hedging instruments, the hedging instrument must be designated, based upon the exposure being hedged, as a fair value hedge, cash flow hedge, or a hedge of a net investment in a foreign operation. The accounting for changes in the fair value (i.e. gains or losses) of a derivative instrument depends on whether it has been designated and qualifies as part of a hedging relationship and, further, on the type of hedging relationship. Our derivative instruments do not subject our earnings or cash flows to material risk, as gains and losses on these derivatives generally offset losses and gains on the item being hedged. We do not enter into derivative transactions for speculative purposes and we do not have any non-derivative instruments that are designated as hedging instruments pursuant to Topic 815.

Currency Hedging

We are exposed to currency risk consisting primarily of foreign currency denominated monetary assets and liabilities, forecasted foreign currency denominated intercompany and third-party transactions and net investments in certain subsidiaries. We manage our exposure to changes in foreign currency exchange rates on a consolidated basis to take advantage of offsetting transactions. We use both derivative instruments (currency forward contracts), and non-derivative transactions (primarily European manufacturing and distribution operations) to reduce the risk that our earnings and cash flows associated with these foreign currency denominated balances and transactions will be adversely affected by foreign currency exchange rate changes.

Designated Foreign Currency Hedges

All of our designated currency hedge contracts outstanding as of June 30, 2013 and December 31, 2012 were cash flow hedges under Topic 815 intended to protect the U.S. dollar value of our forecasted foreign currency denominated transactions. We record the effective portion of any change in the fair value of foreign currency cash flow hedges in other comprehensive income (OCI) until the related third-party transaction occurs. Once the related third-party transaction occurs, we reclassify the effective portion of any related gain or loss on the foreign currency cash flow hedge to earnings. In the event the hedged forecasted transaction does not occur, or it becomes no longer probable that it will occur, we reclassify the amount of any gain or loss on the related cash flow hedge to earnings at that time. We had currency derivative instruments designated as cash flow hedges outstanding in the contract amount of $2.750 billion as of June 30, 2013 and $2.469 billion as of December 31, 2012.

We recognized net gains of $6 million in earnings on our cash flow hedges during the second quarter of 2013 and $1 million for the first half of 2013, as compared to net losses of $10 million during the second quarter of 2012 and $26 million for the first half of 2012. All currency cash flow hedges outstanding as of June 30, 2013 mature within 36 months. As of June 30, 2013, $150 million of net gains, net of tax, were recorded in accumulated other comprehensive income (AOCI) to recognize the effective portion of the fair value of any currency derivative instruments that are, or previously were, designated as foreign currency cash flow hedges, as compared to net gains of $31 million as of December 31, 2012. As of June 30, 2013, $64 million of net gains, net of tax, may be reclassified to earnings within the next twelve months.

The success of our hedging program depends, in part, on forecasts of transaction activity in various currencies (primarily Japanese yen, Euro, British pound sterling, Australian dollar and Canadian dollar). We may experience unanticipated currency exchange gains or losses to the extent that there are differences between forecasted and actual activity during periods of currency volatility. In addition, changes in foreign currency exchange rates related to any unhedged transactions may impact our earnings and cash flows.

Non-designated Foreign Currency Contracts

We use currency forward contracts as a part of our strategy to manage exposure related to foreign currency denominated monetary assets and liabilities. These currency forward contracts are not designated as cash flow, fair value or net investment hedges under Topic 815; are marked-to-market with changes in fair value recorded to earnings; and are entered into for periods consistent with currency transaction exposures, generally less than one year. We had currency derivative instruments not designated as hedges under Topic 815 outstanding in the contract amount of $2.271 billion as of June 30, 2013 and $1.942 billion as of December 31, 2012.

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Interest Rate Hedging

Our interest rate risk relates primarily to U.S. dollar borrowings, partially offset by U.S. dollar cash investments. We have historically used interest rate derivative instruments to manage our earnings and cash flow exposure to changes in interest rates by converting floating-rate debt into fixed-rate debt or fixed-rate debt into floating-rate debt.

We designate these derivative instruments either as fair value or cash flow hedges under Topic 815. We record changes in the value of fair value hedges in interest expense, which is generally offset by changes in the fair value of the hedged debt obligation. Interest payments made or received related to our interest rate derivative instruments are included in interest expense. We record the effective portion of any change in the fair value of derivative instruments designated as cash flow hedges as unrealized gains or losses in OCI, net of tax, until the hedged cash flow occurs, at which point the effective portion of any gain or loss is reclassified to earnings. We record the ineffective portion of our cash flow hedges in interest expense. In the event the hedged cash flow does not occur, or it becomes no longer probable that it will occur, we reclassify the amount of any gain or loss on the related cash flow hedge to interest expense at that time. We had no interest rate derivative contracts outstanding as of June 30, 2013 or December 31, 2012.

In prior years, we terminated certain interest rate derivative contracts, including fixed-to-floating interest rate contracts, designated as fair value hedges, and floating-to-fixed treasury locks, designated as cash flow hedges. We are amortizing the gains and losses on these derivative instruments upon termination into earnings as a reduction of interest expense over the remaining term of the hedged debt, in accordance with Topic 815. The carrying amount of certain of our senior notes included unamortized gains of $59 million as of June 30, 2013 and $64 million as of December 31, 2012, and unamortized losses of $3 million as of June 30, 2013 and $3 million as of December 31, 2012, related to the fixed-to-floating interest rate contracts. In addition, we had pre-tax net gains within AOCI related to terminated floating-to-fixed treasury locks of $4 million as of June 30, 2013 and $4 million as of December 31, 2012. We recorded $2 million during the second quarter of 2013 and $5 million during the first half of 2013 as a reduction to interest expense, resulting from the amortization of previously terminated interest rate derivative contracts. As of June 30, 2013, $10 million of pre-tax net gains may be reclassified to earnings within the next twelve months as a reduction to interest expense from amortization of our previously terminated interest rate derivative contracts.

Counterparty Credit Risk

We do not have significant concentrations of credit risk arising from our derivative financial instruments, whether from an individual counterparty or a related group of counterparties. We manage our concentration of counterparty credit risk on our derivative instruments by limiting acceptable counterparties to a diversified group of major financial institutions with investment grade credit ratings, limiting the amount of credit exposure to each counterparty, and by actively monitoring their credit ratings and outstanding fair values on an on-going basis. Furthermore, none of our derivative transactions are subject to collateral or other security arrangements and none contain provisions that are dependent on our credit ratings from any credit rating agency.

We also employ master netting arrangements that reduce our counterparty payment settlement risk on any given maturity date to the net amount of any receipts or payments due between us and the counterparty financial institution. Thus, the maximum loss due to counterparty credit risk is limited to the unrealized gains in such contracts net of any unrealized losses should any of these counterparties fail to perform as contracted. Although these protections do not eliminate concentrations of credit risk, as a result of the above considerations, we do not consider the risk of counterparty default to be significant.

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Fair Value of Derivative Instruments

The following presents the effect of our derivative instruments designated as cash flow hedges under Topic 815 on our accompanying unaudited condensed consolidated statements of operations during the second quarter and first half of 2013 and 2012 (in millions):



	Amount of Pre-tax Gain (Loss) Recognized in OCI (Effective Portion)		Amount of Pre-tax Gain (Loss) Reclassified from AOCI into Earnings (Effective Portion)			Location in Statement of Operations
Three Months Ended June 30, 2013
Currency hedge contracts	$	76	$	6		Cost of products sold
	$	76	$	6
Three Months Ended June 30, 2012
Currency hedge contracts	$	10	$	(10	)	Cost of products sold
	$	10	$	(10	)
Six Months Ended June 30, 2013
Currency hedge contracts	$	190	$	1		Cost of products sold
	$	190	$	1
Six Months Ended June 30, 2012
Currency hedge contracts	$	46	$	(26	)	Cost of products sold
	$	46	$	(26	)

The amount of gain (loss) recognized in earnings related to the ineffective portion of hedging relationships was de minimis for all periods presented.

Net gains and losses on currency hedge contracts not designated as hedging instruments were offset by net losses and gains from foreign currency transaction exposures, as shown in the following table:



(in millions)	Location in Statement of Operations	Three Months Ended June 30,						Six Months Ended June 30,
(in millions)	Location in Statement of Operations	2013			2012			2013			2012
Gain (loss) on currency hedge contracts	Other, net	$	29		$	12		$	54		$	15
Gain (loss) on foreign currency transaction exposures	Other, net	(29		)	(19		)	(56		)	(25		)
Net foreign currency gain (loss)	Other, net	$	—		$	(7	)	$	(2	)	$	(10	)

Topic 815 requires all derivative instruments to be recognized at their fair values as either assets or liabilities on the balance sheet. We determine the fair value of our derivative instruments using the framework prescribed by ASC Topic 820, Fair Value Measurements and Disclosures (Topic 820), by considering the estimated amount we would receive or pay to transfer these instruments at the reporting date and by taking into account current interest rates, foreign currency exchange rates, the creditworthiness of the counterparty for assets, and our creditworthiness for liabilities. In certain instances, we may utilize financial models to measure fair value. Generally, we use inputs that include quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; other observable inputs for the asset or liability; and inputs derived principally from, or corroborated by, observable market data by correlation or other means. As of June 30, 2013, we have classified all of our derivative assets and liabilities within Level 2 of the fair value hierarchy prescribed by Topic 820, as discussed below, because these observable inputs are available for substantially the full term of our derivative instruments.

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The following are the balances of our derivative assets and liabilities as of June 30, 2013 and December 31, 2012:



		As of
(in millions)	Location in Balance Sheet (1)	June 30, 2013		December 31, 2012
Derivative Assets:
Designated Hedging Instruments
Currency hedge contracts	Prepaid and other current assets	$	98	$	25
Currency hedge contracts	Other long-term assets	137		63
		235		88
Non-Designated Hedging Instruments
Currency hedge contracts	Prepaid and other current assets	32		33
Total Derivative Assets		$	267	$	121

Derivative Liabilities:
Designated Hedging Instruments
Currency hedge contracts	Other current liabilities	$	3	$	20
Currency hedge contracts	Other long-term liabilities	—		10
		3		30
Non-Designated Hedging Instruments
Currency hedge contracts	Other current liabilities	21		27
Total Derivative Liabilities		$	24	$	57


(1)	We classify derivative assets and liabilities as current when the remaining term of the derivative contract is one year or less.

Other Fair Value Measurements

Recurring Fair Value Measurements

On a recurring basis, we measure certain financial assets and financial liabilities at fair value based upon quoted market prices, where available. Where quoted market prices or other observable inputs are not available, we apply valuation techniques to estimate fair value. Topic 820 establishes a three-level valuation hierarchy for disclosure of fair value measurements. The categorization of financial assets and financial liabilities within the valuation hierarchy is based upon the lowest level of input that is significant to the measurement of fair value. The three levels of the hierarchy are defined as follows:


•	Level 1 – Inputs to the valuation methodology are quoted market prices for identical assets or liabilities.


•	Level 2 – Inputs to the valuation methodology are other observable inputs, including quoted market prices for similar assets or liabilities and market-corroborated inputs.


•	Level 3 – Inputs to the valuation methodology are unobservable inputs based on management’s best estimate of inputs market participants would use in pricing the asset or liability at the measurement date, including assumptions about risk.

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Assets and liabilities measured at fair value on a recurring basis consist of the following as of June 30, 2013 and December 31, 2012:



	As of June 30, 2013								As of December 31, 2012
(in millions)	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Assets
Money market and government funds	$	102	—		—		$	102	$	39	—		—		$	39
Currency hedge contracts	—		$	267	—		267		—		$	121	—		121
	$	102	$	267	—		$	369	$	39	$	121	—		$	160
Liabilities
Currency hedge contracts	—		$	24	—		$	24	—		$	57	—		$	57
Accrued contingent consideration	—		—		$	610	610		—		—		$	663	663
	—		$	24	$	610	$	634	—		$	57	$	663	$	720

Our investments in money market and government funds are generally classified within Level 1 of the fair value hierarchy because they are valued using quoted market prices. These investments are classified as cash and cash equivalents within our accompanying unaudited condensed consolidated balance sheets, in accordance with U.S. GAAP and our accounting policies.

In addition to $102 million invested in money market and government funds as of June 30, 2013, we had $272 million in short-term time deposits and $156 million in interest bearing and non-interest bearing bank accounts. In addition to $39 million invested in money market and government funds as of December 31, 2012, we had $168 million in interest bearing and non-interest bearing bank accounts.

Changes in the fair value of assets and liabilities measured on a recurring basis using significant unobservable inputs (Level 3) during the first three months of 2013 related solely to our contingent consideration liabilities. Refer to Note B - Acquisitions for a discussion of the fair value measurements related to our contingent consideration liabilities.

Non-Recurring Fair Value Measurements

We have certain assets and liabilities that are measured at fair value on a non-recurring basis in periods subsequent to initial recognition. The fair value of a cost method investment is not estimated if there are no identified events or changes in circumstances that may have a significant adverse effect on the fair value of the investment. The aggregate carrying amount of our cost method investments was $21 million as of June 30, 2013 and $13 million as of December 31, 2012.

During the second quarter of 2013, we recorded $53 million of intangible asset impairment charges, representing a decrease in the estimated fair value of the related intangible asset balances. During the first quarter of 2013, we recorded a $423 million charge to adjust our goodwill balances to their fair value. As a result, during the first half of 2013, we recorded $476 million of losses, to adjust our goodwill and certain other intangible asset balances to their fair value. Refer to Note D - Goodwill and Other Intangible Assets, for further detailed information related to these charges and significant unobservable inputs (Level 3).

The fair value of our outstanding debt obligations was $4.684 billion as of June 30, 2013 and $4.793 billion as of December 31, 2012, which was determined by using primarily quoted market prices for our publicly registered senior notes, classified as Level 1 within the fair value hierarchy. Refer to Note F – Borrowings and Credit Arrangements for a discussion of our debt obligations.

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NOTE F – BORROWINGS AND CREDIT ARRANGEMENTS

We had total debt of $4.252 billion as of June 30, 2013 and $4.256 billion as of December 31, 2012. The debt maturity schedule for the significant components of our debt obligations as of June 30, 2013 is as follows:




(in millions)	2013	2014		2015		2016		2017		Thereafter		Total
Senior notes	—	$	600	$	1,250	$	600	$	250	$	1,500	$	4,200
	—	$	600	$	1,250	$	600	$	250	$	1,500	$	4,200



	Note:	The table above does not include unamortized discounts associated with our senior notes, or amounts related to interest rate contracts used to hedge the fair value of certain of our senior notes.

Revolving Credit Facility

We maintain a $2.0 billion revolving credit facility, maturing in April 2017, with a global syndicate of commercial banks. Eurodollar and multicurrency loans under this revolving credit facility bear interest at LIBOR plus an interest margin of between 0.875 percent and 1.475 percent , based on our corporate credit ratings and consolidated leverage ratio ( 1.275 percent as of June 30, 2013). In addition, we are required to pay a facility fee based on our credit ratings, consolidated leverage ratio, and the total amount of revolving credit commitments, regardless of usage, under the agreement ( 0.225 percent as of June 30, 2013). There were no amounts borrowed under our revolving credit facility as of June 30, 2013 or December 31, 2012.

Our revolving credit facility agreement in place as of June 30, 2013 requires that we maintain certain financial covenants, as follows:



	Covenant Requirement	Actual as of June 30, 2013
Maximum leverage ratio (1)	3.5 times	2.4 times
Minimum interest coverage ratio (2)	3.0 times	6.9 times


(1)	Ratio of total debt to consolidated EBITDA, as defined by the credit agreement, for the preceding four consecutive fiscal quarters.


(2)	Ratio of consolidated EBITDA, as defined by the credit agreement, to interest expense for the preceding four consecutive fiscal quarters.

The credit agreement provides for an exclusion from the calculation of consolidated EBITDA, as defined by the agreement, through the credit agreement maturity, of any non-cash charges up to $500 million in restructuring charges and restructuring-related expenses related to our current or future restructuring plans. As of June 30, 2013, we had $312 million of the restructuring charge exclusion remaining. In addition, any cash litigation payments (net of any cash litigation receipts), as defined by the agreement, are excluded from the calculation of consolidated EBITDA and any new debt issued to fund any tax deficiency payments is excluded from consolidated total debt, as defined in the agreement, provided that the sum of any excluded net cash litigation payments and any new debt issued to fund any tax deficiency payments shall not exceed $2.3 billion in the aggregate. As of June 30, 2013, we had approximately $2.290 billion of the combined legal and debt exclusion remaining. As of and through June 30, 2013, we were in compliance with the required covenants.

Any inability to maintain compliance with these covenants could require us to seek to renegotiate the terms of our credit facilities or seek waivers from compliance with these covenants, both of which could result in additional borrowing costs. Further, there can be no assurance that our lenders would agree to such new terms or grant such waivers.

Term Loan

In August 2013, we entered into a new $400 million , unsecured term loan facility. Term loan borrowings under this facility bear interest at LIBOR plus an interest margin of between 1.0 percent and 1.75 percent (currently 1.5 percent ), based on our corporate credit ratings and consolidated leverage ratio. The term loan borrowings are payable over a 5-year period, with quarterly principal payments of $20 million commencing in the first quarter of 2016 and the remaining principal amount due at the final maturity date in August 2018, and are repayable at any time without premium or penalty. Our term loan facility requires that we comply with certain covenants, including financial covenants with respect to maximum leverage and minimum interest coverage, which are consistent with the corresponding covenants in our existing revolving credit facility.

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We intend to use the net proceeds from this facility to redeem a portion of our 5.45% notes due June 15, 2014, of which $600 million aggregate principal amount is outstanding, and to pay related fees, expenses and premiums.

Senior Notes

We had senior notes outstanding of $4.200 billion as of June 30, 2013 and December 31, 2012. These notes are publicly registered securities, are redeemable prior to maturity and are not subject to any sinking fund requirements. Our senior notes are unsecured, unsubordinated obligations and rank on parity with each other. These notes are effectively junior to borrowings under our credit and security facility and liabilities of our subsidiaries (see Other Arrangements below).

Other Arrangements

We also maintain a credit and security facility secured by our U.S. trade receivables. In June 2013, we extended the maturity of this facility through June 2015, subject to further extension, reduced the size of the facility from $350 million to $300 million and added a maximum leverage covenant consistent with our revolving credit facility. The maximum leverage ratio requirement is 3.5 times , our actual leverage ratio as of June 30, 2013 is 2.4 times . We had no borrowings outstanding under this facility as of June 30, 2013 and December 31, 2012.

We have accounts receivable factoring programs in certain European countries that we account for as sales under ASC Topic 860, Transfers and Servicing . These agreements provide for the sale of accounts receivable to third parties, without recourse, of up to approximately $296 million as of June 30, 2013. We have no retained interests in the transferred receivables, other than collection and administrative responsibilities and, once sold, the accounts receivable are no longer available to satisfy creditors in the event of bankruptcy. We de-recognized $189 million of receivables as of June 30, 2013 at an average interest rate of 3.5 percent , and $191 million as of December 31, 2012 at an average interest rate of 1.6 percent . Within Italy, Spain, Portugal and Greece the number of days our receivables are outstanding has increased above historical levels. We believe we have adequate allowances for doubtful accounts related to our Italy, Spain, Portugal and Greece accounts receivable; however, we continue to monitor the European economic environment for any collectibility issues related to our outstanding receivables. As of June 30, 2013, our net receivables in these countries greater than 180 days past due totaled $66 million , of which $18 million were past due greater than 365 days.

In addition, we have uncommitted credit facilities with a commercial Japanese bank that provide for borrowings, promissory notes discounting, and receivables factoring of up to 21.0 billion Japanese yen (approximately $212 million as of June 30, 2013). We de-recognized $158 million of notes receivable as of June 30, 2013 at an average interest rate of 1.8 percent and $182 million of notes receivable as of December 31, 2012 at an average interest rate of 1.6 percent . De-recognized accounts and notes receivable are excluded from trade accounts receivable, net in the accompanying unaudited condensed consolidated balance sheets.

As of June 30, 2013, we had outstanding letters of credit of $93 million , as compared to $94 million as of December 31, 2012, which consisted primarily of bank guarantees and collateral for workers' compensation insurance arrangements. As of June 30, 2013 and December 31, 2012, none of the beneficiaries had drawn upon the letters of credit or guarantees; accordingly, we did not recognize a related liability for our outstanding letters of credit in our consolidated balance sheets as of June 30, 2013 or December 31, 2012. We believe we will generate sufficient cash from operations to fund these payments and intend to fund these payments without drawing on the letters of credit.

NOTE G – RESTRUCTURING-RELATED ACTIVITIES

On an on-going basis, we monitor the dynamics of the economy, the healthcare industry, and the markets in which we compete. We continue to assess opportunities for improved operational effectiveness and efficiency, and better alignment of expenses with revenues, while preserving our ability to make the investments in research and development projects, capital and our people that we believe are essential to our long-term success. As a result of these assessments, we have undertaken various restructuring initiatives in order to enhance our growth potential and position us for long-term success. These initiatives are described below.

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2011 Restructuring plan

On July 26, 2011, our Board of Directors approved, and we committed to, a restructuring initiative (the 2011 Restructuring plan) designed to strengthen operational effectiveness and efficiencies, increase competitiveness and support new investments, thereby increasing stockholder value. Key activities under the 2011 Restructuring plan include standardizing and automating certain processes and activities; relocating select administrative and functional activities; rationalizing organizational reporting structures; leveraging preferred vendors; and other efforts to eliminate inefficiency. Among these efforts, we are expanding our ability to deliver best-in-class global shared services for certain functions and divisions at several locations in emerging markets. This action is intended to enable us to grow our global commercial presence in key geographies and take advantage of many cost-reducing and productivity-enhancing opportunities. In addition, we are undertaking efforts to streamline various corporate functions, eliminate bureaucracy, increase productivity and better align corporate resources to our key business strategies. On January 25, 2013, our Board of Directors approved, and we committed to, an expansion of the 2011 Restructuring plan (the Expansion). The Expansion is intended to further strengthen our operational effectiveness and efficiencies and support new investments. Activities under the 2011 Restructuring plan were initiated in the third quarter of 2011 and all activities, including those related to the Expansion, are expected to be substantially complete by the end of 2013.

We estimate that the 2011 Restructuring plan, including the Expansion, will result in total pre-tax charges of approximately $300 million to $355 million , and that approximately $270 million to $300 million of these charges will result in future cash outlays, of which we have made payments of $198 million , which were partially offset by proceeds of $53 million on facility and fixed asset sales, as of June 30, 2013. As of June 30, 2013, we recorded costs of $234 million since the inception of the 2011 Restructuring plan, including the Expansion, and recorded a portion of these expenses as restructuring charges and the remaining portion through other lines within our unaudited condensed consolidated statements of operations.

The following provides a summary of our expected total costs associated with the 2011 Restructuring plan, including the Expansion, by major type of cost:



Type of cost	Total estimated amount expected to be incurred
Restructuring charges:
Termination benefits	$185 million to $210 million
Other (1)	$70 million to $90 million
Restructuring-related expenses:
Other (2)	$45 million to $55 million
	$300 million to $355 million


(1)	Includes primarily consulting fees, gains and losses on disposals of fixed assets and costs associated with contractual cancellations.


(2)	Comprised of other costs directly related to the 2011 Restructuring plan, including the Expansion, such as program management, accelerated depreciation, retention and infrastructure-related costs.

2010 Restructuring plan

On February 6, 2010, our Board of Directors approved, and we committed to, a series of management changes and restructuring initiatives (the 2010 Restructuring plan) designed to focus our business, drive innovation, accelerate profitable revenue growth and increase both accountability and stockholder value. Key activities under the 2010 Restructuring plan included the restructuring of certain of our businesses and corporate functions; the re-alignment of our international structure to reduce our administrative costs and invest in expansion opportunities including significant investments in emerging markets; and the re-prioritization and diversification of our product portfolio. Activities under the 2010 Restructuring plan were initiated in the first quarter of 2010 and were complete by the end of 2012.

The execution of the 2010 Restructuring plan resulted in total pre-tax charges of $160 million , and required cash outlays of $145 million .

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The following provides a summary of our costs associated with the 2010 Restructuring plan by major type of cost:



Type of cost	Total amount incurred
Restructuring charges:
Termination benefits	$90 million
Fixed asset write-offs	$11 million
Other (1)	$51 million
Restructuring-related expenses:
Other (2)	$8 million
	$160 million


(1)	Includes primarily consulting fees and costs associated with contractual cancellations.


(2)	Comprised of other costs directly related to the 2010 Restructuring plan, including accelerated depreciation and infrastructure-related costs.

Plant Network Optimization program

In January 2009, our Board of Directors approved, and we committed to, a plant network optimization initiative (the Plant Network Optimization program), intended to simplify our manufacturing plant structure by transferring certain production lines among facilities and by closing certain other facilities. The program was a complement to the restructuring initiatives approved by our Board of Directors in 2007, and was intended to improve overall gross profit margins. Activities under the Plant Network Optimization program were initiated in the first quarter of 2009 and were substantially completed during 2012.

We estimate that the execution of the Plant Network Optimization program will result in total pre-tax charges of approximately $130 million , and that approximately $105 million to $110 million of these charges will result in cash outlays, of which we made payments of $103 million as of June 30, 2013. As of June 30, 2013, we recorded costs of $127 million since the inception of the plan, and recorded a portion of these expenses as restructuring charges and the remaining portion through cost of products sold within our unaudited condensed consolidated statements of operations.

The following provides a summary of our estimates of costs associated with the Plant Network Optimization program by major type of cost:



Type of cost	Total estimated amount expected to be incurred
Restructuring charges:
Termination benefits	$33 million
Restructuring-related expenses:
Accelerated depreciation	$22 million
Transfer costs (1)	$75 million
	$130 million


(1)	Consists primarily of costs to transfer product lines among facilities, including costs of transfer teams, freight, idle facility and product line validations.

In the aggregate, we recorded net restructuring charges pursuant to our restructuring plans of $26 million in the second quarter of 2013, $28 million in the second quarter of 2012, $36 million in the first half of 2013, and $39 million in the first half of 2012. During the first half of 2013, our restructuring charges were partially offset by a $19 million gain recognized on the sale of our Natick, Massachusetts headquarters. We are currently in the process of consolidating our Natick, Massachusetts headquarters into our Marlborough, Massachusetts location, where we are establishing a new global headquarters campus. In addition, we recorded expenses within other lines of our accompanying unaudited condensed consolidated statements of operations related to our restructuring initiatives of $5 million in the second quarter of 2013 and $5 million in the second quarter of 2012, and $10 million in the first half of 2013 and $11 million in the first half of 2012.

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The following presents these costs (credits) by major type and line item within our accompanying unaudited condensed consolidated statements of operations, as well as by program:



Three Months Ended June 30, 2013
(in millions)	Termination Benefits			Accelerated Depreciation		Transfer Costs		Fixed Asset Write-offs		Other		Total
Restructuring charges	$	13		$	—	$	—	$	—	$	13	$	26
Restructuring-related expenses:
Cost of products sold	—			—		—		—		—		—
Selling, general and administrative expenses	—			1		—		—		4		5
	—			1		—		—		4		5
	$	13		$	1	$	—	$	—	$	17	$	31


(in millions)	Termination Benefits			Accelerated Depreciation		Transfer Costs		Fixed Asset Write-offs		Other		Total
2011 Restructuring plan	$	15		$	1	$	—	$	—	$	17	$	33
2010 Restructuring plan	—			—		—		—		—		—
Plant Network Optimization program	(2		)	—		—		—		—		(2		)
	$	13		$	1	$	—	$	—	$	17	$	31

Three Months Ended June 30, 2012
(in millions)	Termination Benefits			Accelerated Depreciation		Transfer Costs		Fixed Asset Write-offs		Other		Total
Restructuring charges	$	22		$	—	$	—	$	—	$	6	$	28
Restructuring-related expenses:
Cost of products sold	—			—		2		—		—		2
Selling, general and administrative expenses	—			—		—		—		3		3
	—			—		2		—		3		5
	$	22		$	—	$	2	$	—	$	9	$	33

(in millions)	Termination Benefits			Accelerated Depreciation		Transfer Costs		Fixed Asset Write-offs		Other		Total
2011 Restructuring plan	$	20		$	—	$	—	$	—	$	8	$	28
2010 Restructuring plan	—			—		—		—		1		1
Plant Network Optimization program	2			—		2		—		—		4
	$	22		$	—	$	2	$	—	$	9	$	33

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Six Months Ended June 30, 2013
(in millions)	Termination Benefits			Accelerated Depreciation		Transfer Costs		Fixed Asset Write-offs			Other		Total
Restructuring charges	$	21		$	—	$	—	$	(16	)	$	31	$	36
Restructuring-related expenses:
Cost of products sold	—			—		—		—			—		—
Selling, general and administrative expenses	—			1		—		—			9		10
	—			1		—		—			9		10
	$	21		$	1	$	—	$	(16	)	$	40	$	46


(in millions)	Termination Benefits			Accelerated Depreciation		Transfer Costs		Fixed Asset Write-offs			Other		Total
2011 Restructuring plan	$	25		$	1	$	—	$	(16	)	$	40	$	50
2010 Restructuring plan	—			—		—		—			—		—
Plant Network Optimization program	(4		)	—		—		—			—		(4		)
	$	21		$	1	$	—	$	(16	)	$	40	$	46

Six Months Ended June 30, 2012
(in millions)	Termination Benefits			Accelerated Depreciation		Transfer Costs		Fixed Asset Write-offs			Other		Total
Restructuring charges	$	20		$	—	$	—	$	—		$	19	$	39
Restructuring-related expenses:
Cost of products sold	—			—		6		—			—		6
Selling, general and administrative expenses	—			—		—		—			5		5
	—			—		6		—			5		11
	$	20		$	—	$	6	$	—		$	24	$	50

(in millions)	Termination Benefits			Accelerated Depreciation		Transfer Costs		Fixed Asset Write-offs			Other		Total
2011 Restructuring plan	$	22		$	—	$	—	$	—		$	21	$	43
2010 Restructuring plan	(2		)	—		—		—			3		1
Plant Network Optimization program	—			—		6		—			—		6
	$	20		$	—	$	6	$	—		$	24	$	50

Termination benefits represent amounts incurred pursuant to our on-going benefit arrangements and amounts for “one-time” involuntary termination benefits, and have been recorded in accordance with ASC Topic 712, Compensation – Non-retirement Postemployment Benefits and ASC Topic 420, Exit or Disposal Cost Obligations (Topic 420) . We expect to record additional termination benefits related to our restructuring initiatives in 2013 when we identify with more specificity the job classifications, functions and locations of the remaining head count to be eliminated. Other restructuring costs, which represent primarily consulting fees, are being recorded as incurred in accordance with Topic 420. Accelerated depreciation is being recorded over the adjusted remaining useful life of the related assets, and production line transfer costs are being recorded as incurred.

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As of June 30, 2013, we have incurred cumulative restructuring charges related to our 2011 Restructuring plan (including the Expansion), 2010 Restructuring plan and Plant Network Optimization program of $391 million and restructuring-related costs of $130 million since we committed to each plan. The following presents these costs by major type and by plan:



(in millions)	2011 Restructuring plan (including the Expansion)		2010 Restructuring plan		Plant Network Optimization Program		Total
Termination benefits	$	125	$	90	$	31	$	246
Fixed asset write-offs	—		11		—		11
Other	83		51		—		134
Total restructuring charges	208		152		31		391
Accelerated depreciation	—		—		22		22
Transfer costs	—		—		74		74
Other	26		8		—		34
Restructuring-related expenses	26		8		96		130
	$	234	$	160	$	127	$	521

We made cash payments of $24 million in the second quarter of 2013 and $71 million in the first half of 2013 associated with restructuring initiatives pursuant to these plans, and as of June 30, 2013, we had made total cash payments of $446 million related to our 2011 Restructuring plan (including the Expansion), 2010 Restructuring plan and Plant Network Optimization program since committing to each plan, partially offset by $53 million of proceeds received on facility and fixed asset sales in the first half of 2013. Payments were made using cash generated from operations, and are comprised of the following:



(in millions)	2011 Restructuring plan (including the Expansion)		2010 Restructuring plan		Plant Network Optimization Program		Total
Three Months Ended June 30, 2013
Termination benefits	$	11	$	—	$	—	$	11
Transfer costs	—		—		—		—
Other	13		—		—		13
	$	24	$	—	$	—	$	24

Six Months Ended June 30, 2013
Termination benefits	$	33	$	—	$	1	$	34
Transfer costs	—		—		—		—
Other	37		—		—		37
	$	70	$	—	$	1	$	71

Program to Date
Termination benefits	$	96	$	90	$	30	$	216
Transfer costs	—		—		73		73
Other	102		55		—		157
	$	198	$	145	$	103	$	446

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Our restructuring liability is primarily comprised of accruals for termination benefits. The following is a rollforward of the termination benefit liability associated with our 2011 Restructuring plan (including the Expansion), 2010 Restructuring plan and Plant Network Optimization program, since the inception of the respective plans, which is reported as a component of accrued expenses included in our accompanying unaudited condensed balance sheets:



	Restructuring Plan Termination Benefits
(in millions)	2011			2010			Plant Network Optimization			Total
Accrued as of December 31, 2012	$	36		$	3		$	9		$	48
Charges (credits)	25			—			(4		)	21
Cash payments	(33		)	—			(1		)	(34		)
Other adjustments	—			(3		)	—			(3		)
Accrued as of June 30, 2013	$	28		$	—		$	4		$	32

In addition to our accrual for termination benefits, we had an $11 million liability as of June 30, 2013 and a $5 million liability as of December 31, 2012 for other restructuring-related items.

NOTE H – SUPPLEMENTAL BALANCE SHEET INFORMATION

Components of selected captions in our accompanying unaudited condensed consolidated balance sheets are as follows:

Trade accounts receivable, net



	As of
(in millions)	June 30, 2013			December 31, 2012
Accounts receivable	$	1,397		$	1,336
Less: allowance for doubtful accounts	(84		)	(88		)
Less: allowance for sales returns	(35		)	(31		)
	$	1,278		$	1,217

The following is a rollforward of our allowance for doubtful accounts for the second quarter and first half of 2013 and 2012:



	Three Months Ended June 30,						Six Months Ended June 30,
(in millions)	2013			2012			2013			2012
Beginning balance	$	86		$	90		$	88		$	81
Net (credits) charges to expenses	3			(3		)	6			6
Utilization of allowances	(5		)	(4		)	(10		)	(4		)
Ending balance	$	84		$	83		$	84		$	83

Inventories



	As of
(in millions)	June 30, 2013		December 31, 2012
Finished goods	$	555	$	598
Work-in-process	83		70
Raw materials	204		216
	$	842	$	884

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Property, plant and equipment, net



	As of
(in millions)	June 30, 2013		December 31, 2012
Land	$	81	$	81
Buildings and improvements	903		873
Equipment, furniture and fixtures	2,377		2,348
Capital in progress	190		218
	3,551		3,520
Less: accumulated depreciation	2,027		1,956
	$	1,524	$	1,564

Depreciation expense was $66 million for the second quarter of 2013 and $68 million for the second quarter of 2012, $127 million for the first half of 2013, and $135 million for the first half of 2012.

Accrued expenses



	As of
(in millions)	June 30, 2013		December 31, 2012
Payroll and related liabilities	$	405	$	452
Accrued contingent consideration	233		120
Legal reserves	104		100
Other	623		612
	$	1,365	$	1,284

Other long-term liabilities



	As of
(in millions)	June 30, 2013		December 31, 2012
Accrued income taxes	$	1,270	$	1,215
Accrued contingent consideration	377		543
Legal reserves	521		391
Other long-term liabilities	390		398
	$	2,558	$	2,547

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Accrued warranties

We offer warranties on certain of our product offerings. The majority of our warranty liability as of June 30, 2013 related to implantable devices offered by our CRM business, which include defibrillator and pacemaker systems. Our CRM products come with a standard limited warranty covering the replacement of these devices. We offer a full warranty for a portion of the period post-implant, and a partial warranty over the substantial remainder of the useful life of the product. We estimate the costs that we may incur under our warranty programs based on the number of units sold, historical and anticipated rates of warranty claims and cost per claim, and record a liability equal to these estimated costs as cost of products sold at the time the product sale occurs. We reassess the adequacy of our recorded warranty liabilities on a quarterly basis and adjust these amounts as necessary. The current portion of our warranty accrual is included in other accrued expenses in the table above and the non-current portion of our warranty accrual is included in other long-term liabilities in the table above. Changes in our product warranty accrual during the first half of 2013 and 2012 consisted of the following (in millions):



	Six Months Ended June 30,
	2013			2012
Beginning Balance	$	26		$	30
Provision	5			2
Settlements/reversals	(6		)	(7		)
Ending Balance	$	25		$	25

NOTE I – INCOME TAXES

Tax Rate

The following tables provide a summary of our reported tax rate:



	Three Months Ended June 30,
	2013		2012
Reported tax rate	14.3	%	1.1	%
Impact of certain receipts/charges*	0.4	%	13.4	%
	14.7	%	14.5	%




	Six Months Ended June 30,
	2013		2012
Reported tax rate	7.6	%	0.9	%
Impact of certain receipts/charges*	6.5	%	13.8	%
	14.1	%	14.7	%

*These receipts/charges are taxed at different rates than our effective tax rate.

The change in our reported tax rate for the second quarter and first half of 2013, as compared to the same periods in 2012, relates primarily to the impact of certain receipts and charges that are taxed at different rates than our effective tax rate and the impact of certain discrete tax items. In the first half of 2013, the receipts and charges included goodwill and intangible asset impairment charges, acquisition- and divestiture-related net credits, and litigation- and restructuring-related charges. The reported tax rate in the second quarter of 2013 was also impacted due to uncertain tax positions related to audit findings, while the first half of 2013 was favorably affected by discrete tax items that primarily related to the reinstatement of tax legislation that has been retroactively applied, offset in part by the resolution of uncertain tax positions related to audit settlements and findings. In the first half of 2012, the receipts and charges included goodwill and intangible asset impairment charges; divestiture-, litigation and restructuring-related net charges; and acquisition-related credits. Our reported tax rate in the first half of 2012 was also affected by discrete tax items related primarily to the resolution of an uncertain tax position resulting from a favorable court ruling.

As of June 30, 2013, we had $1.060 billion of gross unrecognized tax benefits, of which a net $924 million , if recognized, would affect our effective tax rate. As of December 31, 2012, we had $1.052 billion of gross unrecognized tax benefits, of which a net $902 million , if recognized, would affect our effective tax rate.

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We are subject to U.S. federal income tax as well as income tax of multiple state and foreign jurisdictions. We have concluded all U.S. federal income tax matters through 2000 and substantially all material state, local, and foreign income tax matters through 2001.

We have received Notices of Deficiency from the Internal Revenue Service (IRS) reflecting proposed audit adjustments for Guidant Corporation (Guidant) for its 2001 through 2006 tax years and Boston Scientific Corporation for its 2006 and 2007 tax years (Notices). Subsequent to issuing these Notices, the IRS conceded a portion of its original assessment. The total incremental tax liability now asserted by the IRS for the applicable periods is $1.162 billion plus interest. The primary issue in dispute for all years is the transfer pricing in connection with the technology license agreements between domestic and foreign subsidiaries of Guidant. In addition, the IRS has proposed adjustments in connection with the financial terms of our Transaction Agreement with Abbott Laboratories (Abbott) pertaining to the sale of Guidant's vascular intervention business to Abbott in April 2006. We do not agree with the transfer pricing methodologies applied by the IRS or its resulting assessment and we believe that the IRS has exceeded its authority by attempting to adjust the terms of our negotiated third-party agreement with Abbott. In addition, we believe that the IRS positions with regard to these matters are inconsistent with the applicable tax laws and the existing Treasury regulations.

We believe we have meritorious defenses for our tax filings and we have filed petitions with the U.S. Tax Court contesting the Notices for the tax years in challenge. No payments on the net assessment would be required until the dispute is definitively resolved, which, based on experiences of other companies, could take several years. We believe that our income tax reserves associated with these matters are adequate and the final resolution will not have a material impact on our financial condition or results of operations. However, final resolution is uncertain and could have a material impact on our financial condition, results of operations, or cash flows.

We recognize interest and penalties related to income taxes as a component of income tax expense. We had $394 million accrued for gross interest and penalties as of June 30, 2013 and $364 million as of December 31, 2012. The increase in gross interest and penalties was $30 million , which was recognized in our unaudited condensed consolidated statements of operations. We recognized net tax expense related to interest and penalties of $11 million during the second quarter of 2013, $9 million during the second quarter of 2012, $20 million in the first half of 2013, and $11 million in the first half of 2012.

It is reasonably possible that within the next 12 months we will resolve multiple issues including transfer pricing and transactional-related issues with foreign, federal and state taxing authorities, in which case we could record a reduction in our balance of unrecognized tax benefits of up to approximately $34 million .

NOTE J – COMMITMENTS AND CONTINGENCIES

The medical device market in which we primarily participate is largely technology driven. As a result, intellectual property rights, particularly patents and trade secrets, play a significant role in product development and differentiation. Over the years, there has been litigation initiated against us by others, including our competitors, claiming that our current or former product offerings infringe patents owned or licensed by them. Intellectual property litigation is inherently complex and unpredictable. In addition, competing parties frequently file multiple suits to leverage patent portfolios across product lines, technologies and geographies and to balance risk and exposure between the parties. In some cases, several competitors are parties in the same proceeding, or in a series of related proceedings, or litigate multiple features of a single class of devices. These forces frequently drive settlement not only for individual cases, but also for a series of pending and potentially related and unrelated cases. Although monetary and injunctive relief is typically sought, remedies and restitution are generally not determined until the conclusion of the trial court proceedings and can be modified on appeal. Accordingly, the outcomes of individual cases are difficult to time, predict or quantify and are often dependent upon the outcomes of other cases in other geographies.

During recent years, we successfully negotiated closure of several long-standing legal matters and recently received favorable legal rulings in several other matters; however, there continues to be outstanding intellectual property litigation particularly in the coronary stent market. Adverse outcomes in one or more of these matters could have a material adverse effect on our ability to sell certain products and on our operating margins, financial position, results of operations and/or liquidity.

In the normal course of business, product liability, securities and commercial claims are asserted against us. Similar claims may be asserted against us in the future related to events not known to management at the present time. We maintain an insurance policy providing limited coverage against securities claims, and we are substantially self-insured with respect to product liability claims and fully self-insured with respect to intellectual property infringement claims. The absence of significant third-party insurance coverage increases our potential exposure to unanticipated claims or adverse decisions. Product liability claims, securities and commercial litigation, and other legal proceedings in the future, regardless of their outcome, could have a material adverse effect on our financial position, results of operations and/or liquidity.

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In addition, like other companies in the medical device industry, we are subject to extensive regulation by national, state and local government agencies in the United States and other countries in which we operate. From time to time we are the subject of qui tam actions and governmental investigations often involving regulatory, marketing and other business practices. These qui tam actions and governmental investigations could result in the commencement of civil and criminal proceedings, substantial fines, penalties and administrative remedies and have a material adverse effect on our financial position, results of operations and/or liquidity.

We record losses for claims in excess of the limits of purchased insurance in earnings at the time and to the extent they are probable and estimable. In accordance with ASC Topic 450, Contingencies, we accrue anticipated costs of settlement, damages, losses for general product liability claims and, under certain conditions, costs of defense, based on historical experience or to the extent specific losses are probable and estimable. Otherwise, we expense these costs as incurred. If the estimate of a probable loss is a range and no amount within the range is more likely, we accrue the minimum amount of the range.

Our accrual for legal matters that are probable and estimable was $625 million as of June 30, 2013 and $491 million as of December 31, 2012, and includes estimated costs of settlement, damages and defense. The increase in our legal accrual was primarily due to $130 million in litigation-related charges recorded during the first half of 2013. During the first half of 2012, we recorded $69 million of litigation related charges, which consisted of a charge of $85 million , partially offset by credits of $16 million . We continue to assess certain litigation and claims to determine the amounts, if any, that management believes will be paid as a result of such claims and litigation and, therefore, additional losses may be accrued and paid in the future, which could materially adversely impact our operating results, cash flows and/or our ability to comply with our debt covenants.

In management's opinion, we are not currently involved in any legal proceedings other than those disclosed in our 2012 Annual Report filed on Form 10-K and our Quarterly Report filed on Form 10-Q for the quarter ended March 31, 2013, and those specifically identified below, which, individually or in the aggregate, could have a material adverse effect on our financial condition, operations and/or cash flows. Unless included in our legal accrual or otherwise indicated below, a range of loss associated with any individual material legal proceeding cannot be estimated.

Patent Litigation

On February 1, 2008, Wyeth Corporation and Cordis Corporation filed an amended complaint for patent infringement against Abbott Laboratories, adding us and Boston Scientific Scimed, Inc. as additional defendants to the complaint. The suit alleged that the PROMUS® coronary stent system, supplied to us by Abbott, infringes three U.S. patents (the Morris patents) owned by Wyeth and licensed to Cordis. The suit was filed in the U.S. District Court for the District of New Jersey seeking monetary and injunctive relief. Wyeth and Cordis subsequently withdrew their infringement claim as to one of the patents, and the District Court found the remaining two patents invalid. Wyeth and Cordis filed an appeal and on June 26, 2013, the Court of Appeals for the Federal Circuit affirmed the District Court's judgment in favor of Boston Scientific.

On January 15, 2010, Cordis Corporation filed a complaint against us and Boston Scientific Scimed, Inc. alleging that the PROMUS® coronary stent system, supplied to us by Abbott Laboratories, infringes three patents (the Fischell patents) owned by Cordis. The suit was filed in the U.S. District Court for the District of Delaware and sought monetary and injunctive relief. We filed counterclaims of invalidity and non-infringement. The District Court found that the PROMUS stent system did not infringe the Fischell patents and that our sales of this product were authorized. On May 13, 2013, the Court of Appeals for the Federal Circuit affirmed the District Court's judgment in favor of Boston Scientific.

In February 2013, Orbus International B.V. filed suits against the Company and two of its Dutch subsidiaries in the Hague District Court in the Netherlands and Orbus Medical GmbH filed suits against the Company and one of its German subsidiaries in the Duesseldorf District Court in Germany. In March 2013, Orbus Medical Inc. and Orbus International B.V. filed suit against the Company and two of its Irish subsidiaries in the Irish Commercial Court in Dublin, Ireland. Each of these matters alleges that the Company's sale of stent systems using the Element design infringes European patents owned by Orbus Medical Inc. and licensed to other Orbus entities. In one Dutch matter, Orbus sought cross-border, preliminary injunctive relief, which the court denied on July 9, 2013. In the other Dutch matter, Orbus is seeking damages and injunctive relief, and a hearing is scheduled for December 20, 2013. In one German matter, Orbus sought preliminary injunctive relief, which the Duesseldorf District Court granted on April 30, 2013. On that same date, we appealed the injunction to the Court of Appeals of Duesseldorf. In the other German matter, Orbus is seeking damages and injunctive relief, and a hearing is scheduled for May 14, 2014. In the Irish matter, Orbus is seeking damages and injunctive relief. In March 2013, two of the Company's subsidiaries filed suit against Orbus Medical Inc. in the English High Court seeking a declaration that the sale of the stent systems with the Element design does not infringe two Orbus patents and seeking to have the two patents found invalid. On June 5, 2013, Orbus cancelled one of the two UK patents.

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On May 16, 2013, Vascular Solutions, Inc. filed suit against the Company, alleging that its Guidezilla™ guide extension catheter infringes three U.S. patents owned by Vascular Solutions. The suit was filed in the U.S. District Court for the District of Minnesota seeking monetary and injunctive relief. On May 28, 2013 Vascular Solutions filed an amended complaint adding an allegation of copyright infringement. On June 10, 2013, Vascular Solutions filed a motion requesting a preliminary injunction. On July 11, 2013 the Company answered the amended complaint and filed a counterclaim against Vascular Solutions, alleging that its Guideliner™ guide extension catheter infringes a U.S. patent owned by the Company.

Product Liability Litigation

As of August 5, 2013, there were over 12,000 product liability cases or claims asserted against us in various federal and state courts across the country alleging personal injury associated with use of our transvaginal surgical mesh products designed to treat stress urinary incontinence and pelvic organ prolapse. Generally, the plaintiffs allege design and manufacturing claims, failure to warn, breach of warranty, fraud, violations of state consumer protection laws and loss of consortium claims. Many of the cases have been specially assigned to one judge in state court in Massachusetts. On February 7, 2012, the Judicial Panel on Multi-District Litigation (MDL) established MDL-2326 in the U.S. District Court for the Southern District of West Virginia and transferred the federal court transvaginal surgical mesh cases to MDL-2326 for coordinated pretrial proceedings. In addition, in October 2012 we were contacted by the Attorney General for the State of California informing us that their office and certain other state attorneys general offices intend to initiate a civil investigation into our sale of transvaginal surgical mesh products.

Governmental Investigations and Qui Tam Matters

On June 27, 2008, the Republic of Iraq filed a complaint against our wholly-owned subsidiary, BSSA France, and 92 other defendants in the U.S. District Court of the Southern District of New York. The complaint alleges that the defendants acted improperly in connection with the sale of products under the United Nations Oil for Food Program. The complaint also alleges Racketeer Influenced and Corrupt Organizations Act (RICO) violations, conspiracy to commit fraud and the making of false statements and improper payments, and it seeks monetary and punitive damages. A hearing on the pending motion to dismiss was held on October 26, 2012, and on February 6, 2013, the District Court dismissed the complaint with prejudice on standing and jurisdictional grounds. On February 20, 2013, the plaintiff filed an appeal, and it filed its appellate brief on June 4, 2013.

On October 17, 2008, we received a subpoena from the U.S. Department of Health and Human Services, Office of the Inspector General requesting information related to the alleged use of a skin adhesive in certain of our CRM products. In early 2010, we learned that this subpoena was related to a qui tam action filed in the U.S. District Court for the Western District of New York. After the federal government declined to intervene in the original complaint, the relator in the qui tam action filed an amended complaint alleging that Guidant violated the False Claims Act by selling certain PRIZM 2 devices and seeking monetary damages. In July 2010, we were served with the amended unsealed qui tam complaint filed by James Allen, an alleged device recipient. The civil division of the Department of Justice (DOJ) was later allowed to intervene in the Allen qui tam action and to transfer the litigation to the U.S. District Court for the District of Minnesota. In January 2011, the DOJ filed a civil False Claims Act complaint against us and Guidant (and other related entities) in the Allen qui tam action. On May 7, 2013, the Chief Magistrate Judge stayed the previously set deadlines in the case and the parties are in settlement discussions.

On March 22, 2010, we received a subpoena from the U.S. Attorney's Office for the District of Massachusetts seeking documents relating to the former Market Development Sales Organization that operated within our CRM business. We are cooperating with the request. On October 21, 2011, the U.S. District Court for the District of Massachusetts unsealed a qui tam complaint that relates to the subject matter of the U.S. Attorney's investigation, after the federal government declined to intervene in the matter. Subsequently, on January 30, 2012, the relator filed an amended complaint. On July 5, 2012, the District Court issued an opinion and order dismissing the amended complaint for lack of subject matter jurisdiction. On July 12, 2012, the relator appealed the judgment of dismissal to the U.S. Court of Appeals for the First Circuit, and oral argument was held on February 7, 2013. On May 31, 2013, the Court of Appeals rejected the relator's appeal and affirmed the dismissal of the amended complaint.

On August 3, 2012, we were served with a qui tam complaint that had previously been filed under seal against Boston Scientific Neuromodulation Corp. in the U.S. District Court for the District of New Jersey on March 2, 2011. On August 8, 2012, we learned that the federal government had previously declined to intervene in this matter. The relators' complaint, now unsealed, alleges that Boston Scientific Neuromodulation Corp. violated the federal and various states' false claims acts through submission of fraudulent bills for implanted devices, under-reporting of certain adverse events and promotion of off-label uses. On September 10, 2012, the relators filed an amended complaint revising and restating certain of the claims in the original complaint. Our motion to dismiss, filed subsequently, was denied on May 31, 2013, and on June 28, 2013, we answered the amended complaint and brought certain counterclaims arising from relators' unauthorized removal of documents from the business during their employments, which the relators moved to dismiss on July 22, 2013.

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Other Proceedings

On October 5, 2007, Dr. Tassilo Bonzel filed a complaint against Pfizer, Inc. and our Schneider subsidiaries and us in the District Court in Kassel, Germany alleging that a 1995 license agreement related to a catheter patent is invalid under German law and seeking monetary damages. In June 2009, the District Court dismissed all but one of Dr. Bonzel's claims and in October 2009, he added new claims. We opposed the addition of the new claims. The District Court ordered Dr. Bonzel to select the claims he would pursue and in January 2011, he made that selection. A hearing is scheduled for August 23, 2013.

On September 28, 2011, we served a complaint against Mirowski Family Ventures LLC in the U.S. District Court for the Southern District of Indiana for a declaratory judgment that we have paid all royalties owed and did not breach any contractual or fiduciary obligations arising out of a license agreement. Mirowski answered and filed counterclaims requesting damages. On May 13, 2013, Mirowski Family Ventures served the Company with a complaint alleging breach of contract in Montgomery County Circuit Court, Maryland, and they amended this complaint on August 1, 2013. On July 29, 2013, the Indiana case was dismissed.

Refer to Note I - Income Taxes for information regarding our tax litigation.

Matters Concluded Since December 31, 2012

On December 4, 2009, we, along with Boston Scientific Scimed, Inc., filed a complaint for patent infringement against Cordis Corporation alleging that its Cypher Mini™ stent product infringes a U.S. patent (the Jang patent) owned by us. In April 2011, the U.S. District Court for the District of Delaware granted summary judgment that Cordis willfully infringed the Jang patent. After a trial on damages in May 2011, the jury found in favor of Boston Scientific for lost profits of approximately $18.5 million and royalties of approximately $1 million . On March 13, 2012, the District Court granted our motion for enhanced damages, resulting in a total damages award of approximately $41 million . On February 12, 2013, the Court of Appeals affirmed the District Court's judgment in favor of Boston Scientific.

On November 17, 2009, Boston Scientific Scimed, Inc. filed suit against OrbusNeich Medical, Inc. and certain of its subsidiaries in the Hague District Court in the Netherlands alleging that OrbusNeich's sale of the Genous stent infringes a patent owned by us (the Keith patent) and seeking monetary damages and injunctive relief. On March 13, 2012, the Hague Court of Appeals denied our request for preliminary relief. On April 2, 2013, the Hague Court of Appeals found the Keith patent invalid.

In December 2007, we were informed by the U.S. Attorney's Office for the Northern District of Texas that it was conducting an investigation of allegations related to improper promotion of biliary stents for off-label uses. The allegations were set forth in a qui tam complaint, which named us and certain of our competitors. Following the federal government's decision not to intervene in the case, the U.S. District Court for the Northern District of Texas unsealed the complaint. In March 2011, the District Court issued an order granting our motion to dismiss and, in March 2012, issued its opinion ordering that all claims against us be dismissed, some of which were dismissed with prejudice and some of which were dismissed without prejudice to the relator's right to amend those claims. On September 14, 2012, the relator filed and served an amended complaint restating the claims that the District Court dismissed without prejudice. On January 17, 2013, the District Court granted our motion to dismiss with prejudice all of the relator's remaining claims against us, and on April 12, 2013, the District Court amended its order of dismissal to specify that it was final and appealable. On May 3, 2013, the relator voluntarily moved to dismiss his appeal of the January 17, 2013 order of dismissal, which he had filed with the U.S. Court of Appeals for the Fifth Circuit on February 15, 2013. The deadline for further appeals lapsed on May 13, 2013.

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NOTE K – WEIGHTED AVERAGE SHARES OUTSTANDING



	Three Months Ended June 30,			Six Months Ended June 30,
(in millions)	2013	2012		2013		2012
Weighted average shares outstanding - basic	1,343.5	1,423.2		1,347.7		1,434.2
Net effect of common stock equivalents	15.1	—	**	—	*	—	**
Weighted average shares outstanding - assuming dilution	1,358.6	1,423.2		1,347.7		1,434.2

* We generated net losses in the first half of 2013. Our weighted-average shares outstanding for earnings per share calculations exclude common stock equivalents of 14.0 million for the first half of 2013 due to our net loss position in this period.

** We generated net losses in the second quarter and first half of 2012. Our weighted-average shares outstanding for earnings per share calculations exclude common stock equivalents of 5.8 million for the second quarter of 2012 and 7.3 million for the first half of 2012 due to our net loss position in these periods.

Weighted average shares outstanding, assuming dilution, excludes the impact of 16 million stock options for the second quarter of 2013, 63 million stock options for the second quarter of 2012, 25 million stock options for the first half of 2013, and 61 million stock options for the first half of 2012, due to the exercise prices of these stock options being greater than the average fair market value of our common stock during the period.

We issued approximately one million shares of our common stock in the second quarter of 2013 and approximately nine million shares in the first half of 2013, following the exercise or vesting of underlying stock options or deferred stock units, or purchases under our employee stock purchase plans. We repurchased approximately 13 million shares of our common stock during the second quarter of 2013 for approximately $100 million , and approximately 26 million shares during the first half of 2013 for approximately $200 million , pursuant to our authorized repurchase programs as discussed in Note L – Stockholders' Equity to our audited financial statements contained in Item 8 of our 2012 Annual Report on Form 10-K.

NOTE L – SEGMENT REPORTING

Effective as of January 1, 2013, we reorganized our business from geographic regions to fully operationalized global business units. Following the reorganization, based on information regularly reviewed by our chief operating decision maker, we have three new reportable segments comprised of: Cardiovascular, Rhythm Management, and MedSurg. Our reportable segments represent an aggregate of operating segments. We have restated the prior period to conform to the current year presentation of our reportable segments.

Each of our reportable segments generates revenues from the sale of medical devices. We measure and evaluate our reportable segments based on segment net sales and operating income, excluding the impact of changes in foreign currency exchange rates 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 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 fluctuations. Based on information regularly reviewed by our chief operating decision maker following our reorganization, we also restated certain expenses associated with our manufacturing and corporate operations. 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-, 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 below.

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A reconciliation of the totals reported for the reportable segments to the applicable line items in our accompanying unaudited condensed consolidated statements of operations is as follows:



	Three Months Ended June 30,						Six Months Ended June 30,
(in millions)	2013			2012*			2013			2012*
Net sales
Interventional Cardiology	$	537		$	551		$	1,050		$	1,149
Peripheral Interventions	205			196			400			384
Cardiovascular	742			747			1,450			1,533

Cardiac Rhythm Management	485			494			970			998
Electrophysiology	37			37			72			74
Rhythm Management	522			531			1,042			1,072

Endoscopy	334			309			647			607
Urology/Women's Health	126			125			245			243
Neuromodulation	111			92			200			175
MedSurg	571			526			1,092			1,025
Net sales allocated to reportable segments	1,835			1,804			3,584			3,630
Sales generated from divested businesses	19			31			55			60
Impact of foreign currency fluctuations	(45		)	(7		)	(69		)	4
	$	1,809		$	1,828		$	3,570		$	3,694

Income (loss) before income taxes
Cardiovascular	$	194		$	195		$	364		$	386
Rhythm Management	61			77			124			160
MedSurg	183			150			333			283
Operating income allocated to reportable segments	438			422			821			829
Corporate expenses and currency exchange	(77		)	(71		)	(146		)	(155		)
Goodwill and other intangible asset impairment charges; and acquisition-, divestiture-, restructuring-, and litigation related charges and credits	(40		)	(3,839		)	(580		)	(3,869		)
Amortization expense	(101		)	(99		)	(204		)	(195		)
Operating (loss) income	220			(3,587		)	(109		)	(3,390		)
Other expense, net	(68		)	(31		)	(133		)	(105		)
Income (loss) before income taxes	$	152		$	(3,618	)	$	(242	)	$	(3,495	)

* We have restated prior year detail to conform to current year presentation.

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NOTE M – CHANGES IN OTHER COMPREHENSIVE INCOME

The following table provides the reclassifications out of other comprehensive income for the three and six months ended June 30, 2013 and June 30, 2012. Amounts in the chart below are presented net of tax.



Three Months Ended June 30, 2013
(in millions)	Foreign currency translation adjustments	Unrealized gains/losses on derivative financial instruments	Defined benefit pension items / Other	Total
Beginning Balance	$(23)	$109	$(41)	$45
Other comprehensive income (loss) before reclassifications	(6)	47	—	41
Amounts reclassified from accumulated other comprehensive income	—	(4)	—	(4)
Net current-period other comprehensive income	(6)	43	—	37
Ending Balance	$(29)	$152	$(41)	$82

Three Months Ended June 30, 2012
(in millions)	Foreign currency translation adjustments	Unrealized gains/losses on derivative financial instruments	Defined benefit pension items / Other	Total
Beginning Balance	$(32)	$(15)	$(32)	$(79)
Other comprehensive income (loss) before reclassifications	(19)	6	—	(13)
Amounts reclassified from accumulated other comprehensive income	—	5	—	5
Net current-period other comprehensive income	(19)	11	—	(8)
Ending Balance	$(51)	$(4)	$(32)	$(87)

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Six Months Ended June 30, 2013
(in millions)	Foreign currency translation adjustments	Unrealized gains/losses on derivative financial instruments	Defined benefit pension items / Other	Total
Beginning Balance	$(26)	$34	$(41)	$(33)
Other comprehensive income (loss) before reclassifications	(3)	118	—	115
Amounts reclassified from accumulated other comprehensive income	—	—	—	—
Net current-period other comprehensive income	(3)	118	—	115
Ending Balance	$(29)	$152	$(41)	$82

Six Months Ended June 30, 2012
(in millions)	Foreign currency translation adjustments	Unrealized gains/losses on derivative financial instruments	Defined benefit pension items / Other	Total
Beginning Balance	$(58)	$(48)	$(32)	$(138)
Other comprehensive income (loss) before reclassifications	7	28	—	35
Amounts reclassified from accumulated other comprehensive income	—	16	—	16
Net current-period other comprehensive income	7	44	—	51
Ending Balance	$(51)	$(4)	$(32)	$(87)

The income tax impact of the amounts in other comprehensive income for unrealized gains/losses on derivative financial instruments was an expense of $26 million in the second quarter of 2013, $71 million in the first half of 2013, $7 million in the second quarter of 2012, and $26 million in the first half of 2012. The income tax impact of the amounts reclassified from unrealized gains/losses on derivative financial instruments was a loss of $2 million in the second quarter of 2013, no impact in the first half of 2013, a benefit of $4 million in the second quarter of 2012, and a benefit of $10 million in the first half of 2012. Refer to Note E – Fair Value Measurements for further detail on the reclassifications related to derivatives.

NOTE N – NEW ACCOUNTING PRONOUNCEMENTS

Standards Implemented

ASC Update No. 2013-02

In February 2013, the FASB issued ASC Update No. 2013-02, Comprehensive Income (Topic 220): Reporting of Amounts Reclassified out of Accumulated Other Comprehensive Income . Update No. 2013-02 requires that entities provide information about amounts reclassified out of accumulated other comprehensive income by component. The amendment also requires entities to present significant amounts by the respective line items of net income, either on the face of the income statement or in the notes to the financial statements for amounts required to be reclassified out of accumulated other comprehensive income in their entirety in the same reporting period. For other amounts that are not required to be reclassified to net income in their entirety, a cross-reference is required to other disclosures that provide additional details about those amounts. We adopted Update No. 2013-02 beginning in our first quarter ended March 31, 2013. Update No. 2013-02 is related to presentation only and its adoption did not impact our results of operations or financial position.

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ASC Update No. 2013-01

In January 2013, the FASB issued ASC Update No. 2013-01, Balance Sheet (Topic 210): Clarifying the Scope of Disclosures about Offsetting Assets and Liabilities . Update No. 2013-01 clarifies the FASB's intent about requiring enhanced disclosures about certain financial instruments and derivative instruments that are offset in the statement of financial position or that are subject to enforceable master netting arrangements or similar agreements, previously issued ASC Update No. 2011-11, Disclosures about Offsetting Assets and Liabilities (Topic 210) . We adopted Update No. 2013-01 beginning in our first quarter ended March 31, 2013. The adoption of Update No. 2013-01 did not impact our results of operations or financial position.

Standards to be Implemented

ASC Update No. 2013-11

In July 2013, the FASB issued ASC Update No. 2013-11, Income Taxes (Topic 740): Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists . Update No. 2013-11 requires that entities present an unrecognized tax benefit, or portion of an unrecognized tax benefit, as a reduction to a deferred tax asset in the financial statements for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward, with certain exceptions. We are required to adopt Update No. 2013-11 for our first quarter ending March 31, 2014, and early adoption is permitted. Update No. 2013-11 is related to presentation only and its adoption will not impact our results of operations or financial position.

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ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Introduction

Boston Scientific Corporation is a worldwide developer, manufacturer and marketer of medical devices that are used in a broad range of interventional medical specialties. Our mission is to transform lives through innovative medical solutions that improve the health of patients around the world. Our products and technologies are used to diagnose or treat a wide range of medical conditions, including heart, digestive, pulmonary, vascular, urological, women's health, and chronic pain conditions. We continue to innovate in these areas and are intent on extending our innovations into new geographies and high-growth adjacency markets.

Effective as of January 1, 2013, we reorganized our business into fully operationalized global business units. We have three new global reportable segments comprised of Cardiovascular, Rhythm Management, and MedSurg. We have restated prior period information for 2012 to conform to the current year presentation of our segments.

Financial Summary

Three Months Ended June 30, 2013

Our net sales for the second quarter of 2013 were $1.809 billion , as compared to net sales of $1.828 billion for the second quarter of 2012, a decrease of $19 million, or one percent. Excluding the impact of changes in foreign currency exchange rates, which had a $38 million negative impact on our second quarter 2013 net sales as compared to the same period in the prior year, and the decrease in net sales from divested businesses of $12 million, our net sales increased $31 million, or two percent. ¹ Refer to Quarterly Results and Business Overview for a discussion of our net sales by global business.

Our reported net income for the second quarter of 2013 was $130 million , or $0.10 per share . Our reported results for the second quarter of 2013 included an intangible asset impairment charge, acquisition- and divestiture-related net credits, restructuring-related charges, and amortization expense totaling $117 million (after-tax), or $0.08 per share. Excluding these items, net income for the second quarter of 2013 was $247 million, or $0.18 per share. ¹ Our reported net loss for the second quarter of 2012 was $3.578 billion , or $2.51 per share . Our reported results for the second quarter of 2012 included goodwill and other intangible asset impairment charges, acquisition-related credits, divestiture-, restructuring-, and litigation-related charges and amortization expense totaling $3.817 billion, or $2.68 per share. Excluding these items, net income for the second quarter of 2012 was $239 million, or $0.17 per share. ¹

¹ Sales growth rates that exclude the impact of changes in foreign currency exchange rates and net income and net income per share excluding certain items required by GAAP are not prepared in accordance with generally accepted accounting principles in the United States (U.S. GAAP). Refer to Additional Information for a discussion of management’s use of these non-GAAP financial measures.

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The following is a reconciliation of results of operations prepared in accordance with U.S. GAAP to those adjusted results considered by management. Refer to Quarterly Results and Business Overview for a discussion of each reconciling item:



	Three Months Ended June 30, 2013
				Tax						Impact per
in millions, except per share data	Pre-Tax			Impact			After-Tax			share
GAAP net income (loss)	$	152		$	(22	)	$	130		$	0.10
Non-GAAP adjustments:
Intangible asset impairment charges	53			(8		)	45			0.03
Acquisition-related charges (credits)	(12		)	(2		)	(14		)	(0.01		)
Divestiture-related charges (credits)	(32		)	9			(23		)	(0.02		)
Restructuring and restructuring-related net charges	31			(8		)	23			0.02
Amortization expense	101			(15		)	86			0.06
Adjusted net income	$	293		$	(46	)	$	247		$	0.18



	Three Months Ended June 30, 2012
				Tax						Impact per
in millions, except per share data	Pre-Tax			Impact			After-Tax			share
GAAP net income (loss)	$	(3,618	)	$	40		$	(3,578	)	$	(2.51	)
Non-GAAP adjustments:
Goodwill impairment charge	3,602			(23		)	3,579			2.50			*
Intangible asset impairment charge	129			(19		)	110			0.08			*
Acquisition-related charges (credits)	(34		)	13			(21		)	(0.01		)	*
Divestiture-related charges (credits)	1			—			1			0.00			*
Restructuring and restructuring-related net charges	33			(9		)	24			0.02			*
Litigation-related charges	69			(29		)	40			0.03			*
Amortization expense	99			(15		)	84			0.06			*
Adjusted net income	$	281		$	(42	)	$	239		$	0.17
* Assumes dilution of 5.8 million shares for the three months ended June 30, 2012 for all or a portion of these non-GAAP adjustments.

Cash provided by operating activities was $396 million in the second quarter of 2013, as compared to $407 million in the second quarter of 2012. Our cash generated from operations continued to be a significant source of available funds for investing in our growth and buying back shares of our common stock pursuant to our share repurchase programs. During the second quarter of 2013, we used approximately $100 million of cash generated from operations to repurchase approximately 13 million shares of our common stock. As of June 30, 2013, we had total debt of $4.252 billion , cash and cash equivalents of $530 million and working capital of $1.021 billion. Refer to Liquidity and Capital Resources for further discussion.

Six Months Ended June 30, 2013

Our net sales for the first half of 2013 were $3.570 billion , as compared to net sales of $3.694 billion for the first half of 2012, a decrease of $124 million, or three percent. Excluding the impact of changes in foreign currency exchange rates, which had a $73 million negative impact on our net sales for the six months ended June 30, 2013 as compared to the same period in the prior year, and the decrease in net sales from divested businesses of $5 million, our net sales decreased $46 million, or one percent. ¹ Refer to Quarterly Results and Business Overview for a discussion of our net sales by business.

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Our reported net loss for the first half of 2013 was $224 million , or $0.17 per share, driven primarily by a goodwill impairment charge related to our global Cardiac Rhythm Management (CRM) business unit recorded in conjunction with interim goodwill impairment testing required following the change in composition of our segments and reporting units in the first quarter of 2013. Refer to Quarterly Results and Critical Accounting Policies and Estimates for a discussion of our goodwill valuation and this impairment charge. Our reported net loss for the first half of 2013 included goodwill and other intangible asset impairment charges, acquisition-, and divestiture-related credits, restructuring-, and litigation-related charges and amortization expense totaling $695 million (after-tax), or $0.52 per share. Excluding these items, net income for the first half of 2013 was $471 million, or $0.35 per share. ¹ Our reported net loss for the first half of 2012 was $3.465 billion , or $2.42 per share. Our reported results for the first half of 2012 included goodwill and other intangible asset impairment charges, acquisition-related credits, divestiture-, restructuring-, and litigation-related charges and amortization expense totaling $3.924 billion, or $2.74 per share. Excluding these items, net income for the first half of 2012 was $459 million, or $0.32 per share. ¹ The following is a reconciliation of results of operations prepared in accordance with U.S. GAAP to those adjusted results considered by management. Refer to Quarterly Results and Business Overview for a discussion of each reconciling item:



	Six Months Ended June 30, 2013
				Tax						Impact per
in millions, except per share data	Pre-Tax			Impact			After-Tax			share
GAAP net income (loss)	$	(242	)	$	18		$	(224	)	$	(0.17	)
Non-GAAP adjustments:
Goodwill impairment charge	423			(2		)	421			0.31			*
Intangible asset impairment charges	53			(8		)	45			0.03			*
Acquisition-related charges (credits)	(35		)	(1		)	(36		)	(0.03		)	*
Divestiture-related charges (credits)	(37		)	11			(26		)	(0.02		)	*
Restructuring and restructuring-related net charges	46			(12		)	34			0.03			*
Litigation-related charges	130			(48		)	82			0.06			*
Amortization expense	204			(29		)	175			0.14			*
Adjusted net income	$	542		$	(71	)	$	471		$	0.35
* Assumes dilution of 14.0 million shares for the six months ended June 30, 2013 for all or a portion of these non-GAAP adjustments.



	Six Months Ended June 30, 2012
				Tax						Impact per
in millions, except per share data	Pre-Tax			Impact			After-Tax			share
GAAP net income (loss)	$	(3,495	)	$	30		$	(3,465	)	$	(2.42	)
Non-GAAP adjustments:
Goodwill impairment charge	3,602			(23		)	3,579			2.49			**
Intangible asset impairment charge	129			(19		)	110			0.08			**
Acquisition-related charges (credits)	(21		)	11			(10		)	(0.01		)	**
Divestiture-related charges (credits)	2			—			2			0.00			**
Restructuring and restructuring-related net charges	50			(13		)	37			0.03			**
Litigation-related charges	69			(29		)	40			0.03			**
Amortization expense	195			(29		)	166			0.12			**
Adjusted net income	$	531		$	(72	)	$	459		$	0.32
** Assumes dilution of 7.3 million shares for the six months ended June 30, 2012 for all or a portion of these non-GAAP adjustments.

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Cash provided by operating activities was $559 million in the first half of 2013, as compared to $619 million in the first half of 2012. During the first half of 2013, we used approximately $200 million of cash generated from operations to repurchase approximately 26 million shares of our common stock.

Quarterly Results and Business Overview

Net Sales

We manage our global businesses on a constant currency basis, and we manage market risk from currency exchange rate changes at the corporate level. Management excludes the impact of changes in foreign currency exchange rates for purposes of reviewing global revenue growth rates to facilitate an evaluation of current operating performance and comparison to past operating performance. 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 constant currency growth rates in the tables below can be recalculated from our net sales presented in Note L – Segment Reporting to our unaudited condensed consolidated financial statements contained in Item 1 of this Quarterly Report on Form 10-Q.

The following table provides our worldwide net sales by business and the relative change on an as reported and constant currency basis, both excluding and including divested businesses. Net sales that exclude the impact of changes in foreign currency exchange rates are not financial measures prepared 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 measure. Refer to Additional Information for a further discussion of management’s use of this non-GAAP financial measure.



					Change
	Three Months Ended June 30,				As Reported Currency Basis			Constant Currency Basis
(in millions)	2013		2012		As Reported Currency Basis			Constant Currency Basis
Interventional Cardiology	$	520	$	549	(5	)	%	(3	)	%
Peripheral Interventions	199		196		2		%	5		%
Cardiovascular	719		745		(4	)	%	(1	)	%

Cardiac Rhythm Management	475		488		(3	)	%	(2	)	%
Electrophysiology	36		37		(3	)	%	(2	)	%
Rhythm Management	511		525		(3	)	%	(2	)	%

Endoscopy	325		311		5		%	8		%
Urology/Women’s Health	124		126		(1	)	%	1		%
Neuromodulation	111		91		21		%	21		%
MedSurg	560		528		6		%	9		%

Subtotal Core Businesses	1,790		1,798		0		%	2		%
Divested Businesses	19		30		(36	)	%	(38	)	%
Worldwide	$	1,809	$	1,828	(1	)	%	1		%

Growth rates are based on actual, non-rounded amounts and may not recalculate precisely

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					Change
	Six Months Ended June 30,				As Reported Currency Basis			Constant Currency Basis
(in millions)	2013		2012		As Reported Currency Basis			Constant Currency Basis
Interventional Cardiology	$	1,025	$	1,153	(11	)	%	(9	)	%
Peripheral Interventions	390		386		1		%	4		%
Cardiovascular	1,415		1,539		(8	)	%	(5	)	%

Cardiac Rhythm Management	953		989		(4	)	%	(3	)	%
Electrophysiology	71		74		(5	)	%	(4	)	%
Rhythm Management	1,024		1,063		(4	)	%	(3	)	%

Endoscopy	634		612		4		%	6		%
Urology/Women’s Health	242		246		(2	)	%	0		%
Neuromodulation	200		175		14		%	14		%
MedSurg	1,076		1,033		4		%	6		%

Subtotal Core Businesses	3,515		3,635		(3	)	%	(1	)	%
Divested Businesses	55		59		(7	)	%	(7	)	%
Worldwide	$	3,570	$	3,694	(3	)	%	(3	)	%

Growth rates are based on actual, non-rounded amounts and may not recalculate precisely

Cardiovascular

Interventional Cardiology

Our Interventional Cardiology division develops, manufactures and markets technologies for diagnosing and treating coronary artery disease and other cardiovascular disorders. Product offerings include coronary stents, including drug-eluting and bare metal stent systems, balloon catheters, rotational atherectomy systems, guide wires, guide catheters, embolic protection devices, and diagnostic catheters used in percutaneous transluminal coronary angioplasty (PTCA) procedures, as well as intravascular ultrasound (IVUS) imaging systems.

During the fourth quarter of 2012, we received CE Mark approval for our next generation SYNERGY™ Everolimus-Eluting Platinum Chromium Coronary Stent System featuring an ultra-thin abluminal (outer) bioabsorbable polymer coating and commenced a limited commercial launch. The SYNERGY Stent System is unique in that its polymer is gone shortly after drug elution is complete at three months. This innovation has the potential to improve post-implant vessel healing and eliminate long-term polymer exposure, a possible cause of late adverse events. We are currently enrolling patients in the EVOLVE II clinical trial, which is designed to further assess the safety and effectiveness of the SYNERGY Stent System and support U.S. Food and Drug Administration (FDA) and Japanese regulatory approvals for this technology. In the first quarter of 2013, we received CE Mark approval and launched our Promus PREMIER™ Everolimus-Eluting Platinum Chromium Coronary Stent System in Europe and other select geographies. The Promus PREMIER Stent System is designed to provide physicians improved drug-eluting stent (DES) performance in treating patients with coronary artery disease. We expect to launch the Promus PREMIER Stent System in the U.S. in the fourth quarter of 2013 following FDA approval.

Our worldwide net sales of Interventional Cardiology products were $520 million in the second quarter of 2013, or approximately 29 percent of our consolidated net sales in the second quarter of 2013. Our worldwide net sales of Interventional Cardiology products decreased $29 million, or five percent, in the second quarter of 2013, as compared to 2012. Excluding the impact of changes in foreign currency exchange rates, which had a $15 million negative impact on our Interventional Cardiology net sales in the second quarter of 2013, as compared to the same period in the prior year, net sales of these products decreased $14 million, or three percent. This decrease was primarily due to lower coronary stent system sales, as a result of lower DES market share following competitive product launches during 2012 and average selling price declines, partially offset by higher sales of our non-stent Interventional Cardiology products.

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Our coronary stent system sales represent a significant portion of our Interventional Cardiology net sales. The following are the components of our worldwide coronary stent system sales:



	Three Months Ended						Three Months Ended
(in millions)	June 30, 2013						June 30, 2012
	U.S.		International		Total		U.S.		International		Total
Drug-eluting	$	117	$	170	$	287	$	140	$	178	$	318
Bare-metal	5		12		17		6		16		22
	$	122	$	182	$	304	$	146	$	194	$	340

Our worldwide net sales of coronary stent systems decreased $36 million, or 11 percent, in the second quarter of 2013, as compared to 2012. Excluding the impact of changes in foreign currency exchange rates, which had a $9 million negative impact on our coronary stent system net sales in the second quarter of 2013, as compared to the same period in the prior year, net sales of these products decreased $27 million, or eight percent. This decrease was primarily related to lower market share due to competitive launches in 2012, average selling price declines following competitive product launches during 2012, partially offset by higher sales of our non-stent Interventional Cardiology products. We believe that our U.S. DES share was stable during the second quarter of 2013 as compared to the first quarter of 2013.

Historically, the worldwide coronary stent market has been dynamic and highly competitive with significant market share volatility. We believe that we will continue to maintain a strong position within the worldwide DES market for a variety of reasons, including:


•	the performance benefits of our current and future technology;


•	the strength of our pipeline of DES products, which has shown favorable results in clinical trials to date;


•	the breadth and depth of our interventional cardiology product portfolio;


•	the broad and consistent long-term results of our clinical trials;


•	our overall position in the interventional medical device market and our experienced interventional cardiology sales force;


•	the strength of our clinical, selling, marketing and manufacturing capabilities; and


•	our increased presence and investment in rapidly growing emerging markets, including Brazil, Russia, India and China.

However, a decline in net sales from our DES systems could have a significant adverse impact on our operating results. Significant variables that may impact the size of the DES market and our position within this market include, but are not limited to:


•	the impact of competitive pricing pressure on average selling prices of DES systems available in the market;


•	the impact and outcomes of on-going and future clinical trials involving our or our competitors’ products, including those trials sponsored by our competitors or other third parties, or perceived product performance of our or our competitors’ products;


•	new product launches by our competitors;


•	our ability to timely and successfully launch new or next-generation products and technologies, in line with our commercialization strategies;


•	physician and patient confidence in our current and next-generation technology;


•	changes in the overall number of percutaneous coronary intervention procedures performed, drug-eluting stent penetration rates and the average number of stents used per procedure;


•	delayed or limited regulatory approvals and unfavorable reimbursement policies; and


•	the outcome of intellectual property litigation.

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In January 2011, we completed the acquisition of Sadra Medical, Inc. (Sadra). Through our acquisition of Sadra, we are developing a fully repositionable and retrievable device for transcatheter aortic valve replacement (TAVR) to treat patients with severe aortic stenosis. The Lotus™ Valve System consists of a stent-mounted tissue valve prosthesis and catheter delivery system for guidance and placement of the valve. The low-profile delivery system and introducer sheath are designed to enable accurate positioning, repositioning and retrieval at any time prior to release of the aortic valve implant. In April 2013, we completed enrollment in the REPRISE II clinical trial to evaluate the safety and performance of the Lotus™ Valve System. We expect to receive CE Mark approval for the Lotus ™ Valve System and commence our launch in Europe and certain other international markets during the fourth quarter of 2013.

In March 2011, we completed the acquisition of Atritech, Inc. (Atritech). Atritech developed a novel device designed to close the left atrial appendage in patients with atrial fibrillation who are at risk for ischemic stroke. The WATCHMAN ^® Left Atrial Appendage Closure Technology is the first device proven in a randomized clinical trial to offer an alternative to anticoagulant drugs, and is marketed in CE Mark countries. In the U.S., we completed the PREVAIL trial to evaluate the safety and efficacy of the WATCHMAN® device in patients with nonvalvular atrial fibrillation versus long-term warfarin therapy, and during the second quarter of 2013, we submitted the final clinical module to the FDA and expect FDA approval and launch in the first half of 2014. We are leveraging expertise from both our Electrophysiology and Interventional Cardiology businesses in the commercialization of the WATCHMAN ^® device.

Peripheral Interventions (PI)

Our PI product offerings include stents, balloon catheters, wires, peripheral embolization devices and other devices used to diagnose and treat peripheral vascular disease. Our worldwide net sales of these products were $199 million in the second quarter of 2013, as compared to $196 million in the second quarter of 2012, an increase of $3 million. Excluding the impact of changes in foreign currency exchange rates, our worldwide PI net sales increased $9 million, or five percent, in the second quarter of 2013, as compared to the second quarter of 2012. The year-over-year increase in worldwide PI net sales was primarily driven by growth in our core PI franchise as the result of new product launches in stents and balloons, as well as the launch of the Vessix renal denervation system in Europe.

During the fourth quarter of 2012, we completed the acquisition of Vessix Vascular, Inc. (Vessix), a developer of catheter-based renal denervation systems for the treatment of uncontrolled hypertension. Through the acquisition of Vessix, we added a second generation, highly differentiated technology to our hypertension strategy. During the second quarter of 2013, we launched this technology in Europe, and we expect to commence our U.S. IDE clinical trial in early 2014.

Rhythm Management

Cardiac Rhythm Management (CRM)

Our CRM division develops, manufactures and markets a variety of implantable devices including implantable cardioverter defibrillator (ICD) systems and pacemaker systems that monitor the heart and deliver electricity to treat cardiac abnormalities. Worldwide net sales of our CRM products of $475 million in the second quarter of 2013, represented approximately 26 percent of our consolidated net sales for the second quarter of 2013. Our worldwide CRM net sales decreased $13 million, or three percent, in the second quarter of 2013, as compared to the same period in the prior year. Excluding the impact of changes in foreign currency exchange rates, which had a $4 million negative impact on our second quarter 2013 CRM net sales as compared to the same period in the prior year, our CRM net sales decreased $9 million, or two percent.

The following are the components of our worldwide CRM net sales:



	Three Months Ended						Three Months Ended
(in millions)	June 30, 2013						June 30, 2012
	U.S.		International		Total		U.S.		International		Total
ICD systems	$	213	$	129	$	342	$	220	$	135	$	355
Pacemaker systems	69		64		133		64		69		133
CRM products	$	282	$	193	$	475	$	284	$	204	$	488

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The reduction in our worldwide CRM net sales during the second quarter of 2013 as compared to the second quarter of 2012 was principally the result of declines in our ICD system sales primarily due to the impact of average selling price pressures driven by governmental, competitive and other pricing pressures. Our pacemaker system net sales were flat during the second quarter of 2013, as compared to the second quarter of 2012, but increased slightly excluding the impact of changes in foreign currency exchange rates, due to the continued strong performance of our INGENIO family of pacemaker systems.

During the second quarter of 2012, we completed the acquisition of Cameron Health, Inc. (Cameron). Cameron developed the world's first and only commercially available subcutaneous implantable cardioverter defibrillator, the S-ICD® System, which we believe is a differentiated technology that will provide us the opportunity to both increase our market share in the existing ICD market and expand that market over time. The S-ICD® system has received CE Mark and FDA approval. We continued to make progress in our efforts to enhance the S-ICD supply chain following early FDA approval in the third quarter of 2012. Despite these efforts, we have been supply constrained since early March 2013 and are only able to provide a very limited supply of S-ICD systems. We are managing this supply shortage with our customers and we continue to work diligently to expand our production capacity. We expect that these efforts will allow us to resume our controlled launch of the S-ICD system in the third quarter of 2013.

Net sales from our CRM products represent a significant source of our overall net sales. Therefore, increases or decreases in our CRM net sales could have a significant impact on our consolidated results of operations. Variables that may impact the size of the CRM market and/or our share of that market include, but are not limited to:


•	the on-going impact of physician alignment to hospitals, government investigations and audits of hospitals, and other market and economic conditions on the overall number of procedures performed and average selling prices;


•	our ability to retain and attract key members of our CRM sales force and other key CRM personnel;


•	the ability of CRM manufacturers to maintain the trust and confidence of the implanting physician community, the referring physician community and prospective patients in CRM technologies;


•	future product field actions or new physician advisories issued by us or our competitors;


•	our ability to timely and successfully acquire or develop, launch and supply new or next-generation competitive products and technologies worldwide, in line with our commercialization strategies, including the S-ICD® system;


•	new product launches by our competitors;


•	variations in clinical results, reliability or product performance of our and our competitors’ products; and


•	delayed or limited regulatory approvals and unfavorable reimbursement policies.

Electrophysiology

Our Electrophysiology business develops less-invasive medical technologies used in the diagnosis and treatment of rate and rhythm disorders of the heart. Our products include the Blazer™ line of ablation catheters, designed to deliver enhanced performance, responsiveness and durability. Worldwide net sales of our Electrophysiology products were $36 million in the second quarter of 2013 as compared to $37 million in the second quarter of 2012, a decline of $1 million. Changes in foreign currency exchange rates did not materially affect our Electrophysiology net sales in the second quarter of 2013, as compared to the same period in the prior year.

During the fourth quarter of 2012, we completed the acquisition of Rhythmia Medical, Inc. (Rhythmia), a developer of next-generation mapping and navigation solutions for use in cardiac catheter ablations and other electrophysiology procedures, including atrial fibrillation and atrial flutter. We received CE Mark approval for the Rhythmia technology during the second quarter of 2013 and received FDA approval during July of 2013. We believe that this acquisition, as well as our other expected product launches, will help to position us to competitively participate in the fast-growing Electrophysiology market.

In June 2013, we entered into a definitive agreement to acquire Bard EP, the electrophysiology business of C.R. Bard Inc., which generated $111 million of sales in 2012. We believe that this transaction brings a strong Bard commercial team and complementary portfolio of ablation catheters, diagnostic tools, and electrophysiology recording systems. We expect this transaction will allow us to better serve the global Electrophysiology market through a more comprehensive portfolio offering and sales infrastructure. See Note B - Acquisitions to our unaudited condensed consolidated financial statements contained in Item 1 of this Quarterly Report on Form 10-Q for additional details related to the acquisition.

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MedSurg

Endoscopy

Our Endoscopy division develops and manufactures devices to treat a variety of medical conditions including diseases of the digestive and pulmonary systems. Our worldwide net sales of these products were $325 million for the second quarter in 2013, as compared to $311 million in the second quarter of 2012, an increase of $14 million, or five percent. Our Endoscopy net sales increased $25 million, or eight percent, in the second quarter of 2013, as compared to the second quarter of 2012 excluding the impact of changes in foreign currency exchange rates, which had a $11 million negative impact on our Endoscopy net sales in the second quarter of 2013, as compared to the same period in the prior year. Our Endoscopy sales performance was primarily the result of growth across several of our key product franchises, including our hemostasis franchise on the continued adoption and utilization of our Resolution Clip for gastrointestinal bleeding; our biliary device franchise driven by our TrueTome biliary access device and our Expect™ Endoscopic Ultrasound Aspiration Needle; our metal stent franchise driven by our WallFlex® product family; and improved adoption of the Alair® Bronchial Thermoplasty system.

During the fourth quarter of 2010, we completed our acquisition of Asthmatx, Inc. (Asthmatx) and currently design, manufacture and market a less-invasive, catheter-based bronchial thermoplasty procedure for the treatment of severe persistent asthma. The Alair System, developed by Asthmatx, has both CE Mark and FDA approval and is the first device-based asthma treatment approved by the FDA. Beginning January 1, 2013, the American Medical Association (AMA) Current Procedural Terminology (CPT) editorial panel assigned category I CPT codes specifically for bronchial thermoplasty. The Category I CPT procedure codes are recognized by all public and private health insurance payers in the United States, which will allow physicians and hospitals to seek reimbursement for bronchial thermoplasty procedures. We believe these codes will provide greater access to treatment for patients with poorly controlled severe asthma, help facilitate claims processing and help private payers' approve coverage for this form of treatment. We expect five-year safety and efficacy data to be published in the third quarter of 2013 and continue to focus on driving commercialization and increased awareness of the Alair® System. We expect this technology to strengthen our existing offering of pulmonary devices and contribute to future sales growth and diversification of the Endoscopy business.

Urology/Women’s Health

Our Urology/Women’s Health division develops and manufactures devices to treat various urological and gynecological disorders. Our worldwide net sales of these products were $124 million in the second quarter of 2013, as compared to $126 million in the second quarter of 2012, a decrease of approximately $2 million, or one percent. Excluding the impact of changes in foreign currency exchange rates, our worldwide Urology/Women's Health net sales increased $1 million in the second quarter of 2013, as compared to the second quarter of 2012.

During the second quarter of 2013, net sales growth in our Urology business was flat compared to declines in our Women's Health revenues of approximately six percent. The sales decline in our Women's Health business was primarily due to continued pressures on elective procedures in the U.S. and lower U.S. sales levels following the FDA release of a Public Health Notice update in July 2011 regarding complications related to the use of urogynecologic surgical mesh for pelvic organ prolapse. We believe that our Urology/Women's Health business has the opportunity for growth as a result of our recent product launches in the U.S. and our continued expansion of the global footprint of this business.

Neuromodulation

Our Neuromodulation business offers the Precision® and Precision Spectra™ Spinal Cord Stimulation (SCS) systems, used for the management of chronic pain. Our worldwide net sales of Neuromodulation products were $111 million in the second quarter of 2013, as compared to $91 million in the second quarter of 2012, an increase of $20 million, or 21 percent. Foreign currency fluctuations did not significantly impact our Neuromodulation net sales in the second quarter of 2013, as compared to the same period in the prior year. The sales growth was primarily driven by net sales of our Precision Spectra System. We received CE Mark approval for the Precision Spectra System during the fourth quarter of 2012 and we received FDA approval and commenced our U.S. commercial launch of the device during the first quarter of 2013. The Precision Spectra System is the world's first and only SCS system with 32 contacts and 32 dedicated power sources and is designed to provide improved pain relief to a wide range of patients who suffer from chronic pain.

During the third quarter of 2012, we received CE Mark approval for use of our Vercise™ Deep Brain Stimulation (DBS) System for the treatment of Parkinson's disease in Europe, and we began our U.S. pivotal trial for the treatment of Parkinson's disease during the second quarter of 2013. We believe we have an exciting opportunity in DBS with our ability to customize the field designed to precisely stimulate the target without extraneous stimulation of adjacent areas that may cause unwanted side effects.

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Emerging Markets

As part of our strategic imperatives to drive global expansion, described in our 2012 Annual Report filed on Form 10-K, we are seeking to grow net sales and market share by expanding our global presence. In particular, we are focusing our efforts and increasing our investment in certain countries whose economies and healthcare sectors are growing rapidly, as well as others, in order to maximize opportunities in those countries. As a result of these efforts, in the second quarter of 2013, we increased net sales in Brazil, Russia, India and China by approximately 29% over the same period in the prior year on an as reported basis and continued investments in infrastructure in those countries.

Gross Profit

Our gross profit was $1.279 billion for the second quarter of 2013, $1.250 billion for the second quarter of 2012, $2.462 billion for the first half of 2013, and $2.485 billion for the first half of 2012. As a percentage of net sales, our gross profit increased to 70.7 percent in the second quarter of 2013, as compared to 68.4 percent in the second quarter of 2012 and was 69.0 percent for the first half of 2013, as compared to 67.3 percent for the first half of 2012. The following is a reconciliation of our gross profit margins and a description of the drivers of the change from period to period:



	Three Months		Six Months
Gross profit margin - period ended June 30, 2012	68.4	%	67.3	%
Manufacturing cost reductions	1.5		1.9
PROMUS® supply true-up	0.9		0.4
Sales from divested businesses	0.5		0.1
All other	0.2		0.3
Sales pricing	(0.8	)	(1.0	)
Gross profit margin - period ended June 30, 2013	70.7	%	69.0	%

The primary factors contributing to the increase in our gross profit margin during the second quarter of 2013, as compared to the same period in 2012, were the positive impact of cost reductions as a result of our restructuring and other process improvement programs. In addition, during the second quarter of 2013, we recorded a credit to cost of products sold related to the final retroactive pricing adjustment pursuant to our PROMUS® supply arrangement with Abbott for historical purchases of PROMUS® stent systems. We do not anticipate future adjustments related to this supply arrangement. Our gross profit margin was also positively impacted due to lower sales related to our divested businesses, as these sales are at significantly lower gross profit margins. Partially offsetting these factors was the negative impact of pricing related primarily to sales of our drug-eluting stent and CRM products.

The increase in our gross profit margin for the first half of 2013, as compared to the first half of 2012, primarily resulted from cost reductions from our restructuring and other process improvement programs, and the positive impact of the retroactive pricing adjustment related to the PROMUS® supply true-up. Partially offsetting these factors was the impact of pricing related primarily to sales of our drug-eluting stent and CRM products.

Operating Expenses

The following table provides a summary of certain of our operating expenses:



	Three Months Ended June 30,						Six Months Ended June 30,
	2013			2012			2013			2012
		% of Net			% of Net			% of Net			% of Net
(in millions)	$	Sales		$	Sales		$	Sales		$	Sales
Selling, general and administrative expenses	661	36.5	%	648	35.4	%	1,292	36.2	%	1,306	35.4	%
Research and development expenses	223	12.3	%	213	11.7	%	427	12.0	%	428	11.6	%
Royalty expense	47	2.6	%	48	2.6	%	87	2.4	%	96	2.6	%

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Selling, General and Administrative (SG&A) Expenses

In the second quarter of 2013, our SG&A expenses increased $13 million, or two percent, as compared to the second quarter of 2012, and were approximately 110 basis points higher as a percentage of net sales. This increase was driven primarily by our increased investment related to acquisitions and our expansion efforts in emerging markets, as well as $18 million of expense associated with the new excise tax on U.S. sales of Class I, II and III medical devices that went into effect January 1, 2013. Partially offsetting these increases were declines in spending as a result of our restructuring and other cost reduction initiatives and the impact of changes in foreign currency exchange rates.

In the first half of 2013, our SG&A expenses decreased $14 million, or one percent, as compared to the first half of 2012 and were 80 basis points higher as a percentage of net sales. The decrease in SG&A expenses was driven primarily by declines in spending as a result of our restructuring and other cost reduction initiatives, and the impact of changes in foreign currency exchange rates. These decreases in SG&A were partially offset by increased investment related to acquisitions and our expansion efforts in emerging markets, as well as $35 million of expense associated with the new excise tax on U.S. sales of Class I, II and III medical devices that went into effect January 1, 2013.

Research and Development (R&D) Expenses

In the second quarter of 2013, our R&D expenses increased $10 million, or five percent, as compared to the second quarter of 2012, and were 60 basis points higher as a percentage of net sales. The increase was due primarily to R&D funding for our acquisitions. Partially offsetting these increases was our continued focus on cost reduction initiatives associated with our restructuring programs and the benefits from our strategy to transform our research and development efforts to be more effective and cost efficient. In the first half of 2013, our R&D expenses remained consistent with the first half of 2012. We remain committed to advancing medical technologies and investing in meaningful research and development projects across our businesses in order to maintain a healthy pipeline of new products that we believe will contribute to profitable sales growth.

Royalty Expense

In the second quarter of 2013, our royalty expense remained consistent with the second quarter of 2012. In the first half of 2013, our royalty expense decreased $9 million, or nine percent, as compared to the first half of 2012, and was slightly lower as a percentage of net sales. This decrease relates primarily to lower sales of our royalty-bearing products within our Interventional Cardiology business.

Amortization Expense

Our amortization expense was $ 101 million in the second quarter of 2013, as compared to $ 99 million in the second quarter of 2012 and $ 204 million in the first half of 2013, as compared to $ 195 million in the first half of 2012. This increase was due primarily to amortizable intangible assets acquired during 2012. This non-cash charge is excluded by management for purposes of evaluating operating performance and assessing liquidity.

Goodwill Impairment Charge

2013 Charge

We test our goodwill balances during the second quarter of each year for impairment, or more frequently if indicators are present or changes in circumstances suggest that impairment may exist. Following our reorganization from regions to global business units and our reallocation of goodwill on a relative fair value basis, we conducted the first step of the goodwill impairment test for all new global reporting units as of January 1, 2013. The first step requires a comparison of the carrying value of the reporting units to the fair value of these units. The fair value of each new global reporting unit exceeded its carrying value, with the exception of the global CRM reporting unit. The global CRM reporting unit carrying value exceeded its fair value primarily due to the carrying value of its amortizable intangible assets. The carrying value of amortizable intangible assets allocated to the global CRM reporting unit was $4.636 billion as of January 1, 2013. In accordance with ASC Topic 350, Intangibles—Goodwill and Other (Topic 350) , we tested the global CRM amortizable intangible assets for impairment in conjunction with the interim goodwill impairment test of our global CRM reporting unit. We performed the impairment analysis of the amortizable intangible assets on an undiscounted cash flow basis, and concluded that these assets were not impaired.

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The second step of the goodwill impairment test compares the estimated fair value of a reporting unit’s goodwill to its carrying value. We performed the second step of the goodwill impairment test on the global CRM reporting unit and recorded a non-cash goodwill impairment charge of $423 million to write-down the goodwill to its implied fair value as of January 1, 2013. The primary driver of this impairment charge was our reorganization from geographic regions to global business units as of January 1, 2013, which changed the composition of our reporting units. As a result of the reorganization, any goodwill allocated to the global CRM reporting unit was no longer supported by the cash flows of other businesses. Under our former reporting unit structure, the goodwill allocated to our regional reporting units was supported by the cash flows from all businesses in each international region. The hypothetical tax structure of the global CRM business and the global CRM business discount rate applied were also contributing factors to the goodwill impairment charge. We finalized the second step of the global CRM goodwill impairment test during the second quarter of 2013 and determined that no adjustments to the charge were required. After recording the impairment charge in the first quarter of 2013, there was no remaining goodwill allocated to the global CRM reporting unit as of March 31, 2013.

The goodwill impairment charge taken during the first quarter of 2013 was determined on a global CRM basis pursuant to our new organizational structure. We used the income approach, specifically the discounted cash flow (DCF) method, to derive the fair value of the global CRM reporting unit. We completed a DCF model associated with our new global CRM business, including the amount and timing of future expected cash flows, tax attributes, the terminal value growth rate of approximately two percent and the appropriate market-participant risk-adjusted weighted average cost of capital (WACC) of approximately 12 percent .

In the second quarter of 2013, we performed our annual goodwill impairment test for all of our reporting units. In conjunction with our annual test, the fair value of each reporting unit exceeded its carrying value except CRM, for which no goodwill remains. Therefore, it was deemed not necessary to proceed to the second step of the impairment test. We continue to identify our global Neuromodulation reporting unit as being at higher risk of potential failure of the first step of the goodwill impairment test in future reporting periods. Our global Neuromodulation reporting unit had excess fair value over carrying value of approximately 16 percent and held $1.356 billion of allocated goodwill as of June 30, 2013. In addition, future changes in our reporting units or in the structure of our business as a result of future reorganizations, acquisitions or divestitures of assets or businesses could result in future impairments of goodwill within our reporting units including global CRM. Further, the recoverability of our CRM-related amortizable intangibles ( $4.510 billion globally as of June 30, 2013) is sensitive to future cash flow assumptions and our global CRM business performance. The $4.510 billion of CRM-related amortizable intangibles are at higher risk of potential failure of the first step of the amortizable intangible recoverability test in future reporting periods. An impairment of a material portion of our CRM-related amortizable intangibles carrying value would occur if the second step of the amortizable intangible test is required in a future reporting period.

2012 Charge

During the second quarter of 2012, we performed our annual goodwill impairment test for all of our reporting units and concluded that the goodwill within our former EMEA reporting unit was impaired and recorded a charge of $3.602 billion ($3.579 billion after-tax). As a result of revised estimates developed during our annual strategic planning process and analysis performed in conjunction with our annual goodwill impairment test, we concluded that the revenue growth rates projected for the EMEA reporting unit were slightly lower than our previous estimates primarily driven by macro-economic factors and our performance in the European market. We updated short-term operating projections based on our most recent strategic plan for EMEA prepared by management. We reduced the EMEA long-term growth rates and terminal value growth rate projections and increased the discount rate within our 15-year DCF model for EMEA by approximately 100 basis points due to increased risk associated with our projections in this market primarily as a result of on-going economic uncertainty in Europe. While we do expect revenue growth in our EMEA business, our expectations for future growth and profitability were lower than our previous estimates and reflect declines in average selling prices and volume pressures due to austerity measures. The declines expected in the EMEA market did not impact our assumptions related to other reporting units. For further information, refer to Note D - Goodwill and Other Intangible Assets to our consolidated financial statements included in Item 8 of our 2012 Annual Report filed on Form 10-K.

Refer to Critical Accounting Policies and Estimates for a discussion of key assumptions used in our testing and future events that could have a negative impact on the recoverability of our goodwill and amortizable intangible assets. Goodwill impairment charges are excluded by management for purposes of evaluating operating performance and assessing liquidity.

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Intangible Asset Impairment Charges

During the second quarters of 2013 and 2012, as a result of revised estimates developed in conjunction with our annual strategic planning process and annual goodwill impairment test, we performed an interim impairment test of our in-process research and development projects associated with certain of our acquisitions. Based on the results of our impairment analyses, we revised our expectations of the market size related to Sadra Medical, Inc. (Sadra), and the resulting timing and amount of future revenue and cash flows associated with the technology acquired from Sadra. As a result of these changes, we recorded pre-tax impairment charges of $51 million in the second quarter of 2013 and $129 million in the second quarter of 2012 to write-down the balance of these intangible assets to their fair value in each respective period. We continue to believe that the technology associated with our acquisition of Sadra represents a significant future opportunity for us in the structural heart market. During the second quarter of 2013, we also recorded an additional $2 million intangible asset impairment charge associated with changes in the amount of the expected cash flows related to certain other acquired in-process research and development projects. Intangible impairment charges are excluded by management for purposes of evaluating operating performance and assessing liquidity.

Contingent Consideration Expense

Certain of our acquisitions involve contingent consideration arrangements. Payment of additional consideration is generally contingent on the acquired company reaching certain performance milestones, including attaining specified revenue levels, achieving product development targets or obtaining regulatory approvals. In accordance with U.S. GAAP, we recognize a liability equal to the fair value of the contingent payments we expect to make as of the acquisition date. We re-measure this liability each reporting period and record changes in the fair value through a separate line item within our consolidated statements of operations. Increases or decreases in the fair value of the contingent consideration liability can result from changes in discount periods and rates, as well as changes in the timing and amount of revenue estimates or in the timing or likelihood of achieving regulatory, revenue or commercialization-based milestones.

We recorded net benefits related to the change in fair value of our contingent consideration liabilities of $18 million and $41 million in the second quarter and first half of 2013, respectively, and net expense of $1 million and $11 million during the second quarter and first half of 2012. Contingent consideration expense is excluded by management for purposes of evaluating performance.

Restructuring Charges and Restructuring-related Activities

2011 Restructuring plan

We estimate that the 2011 Restructuring plan, including the Expansion, will result in total pre-tax charges of approximately $300 million to $355 million , and that approximately $270 million to $300 million of these charges will result in future cash outlays, of which we have made payments of $198 million , which were partially offset by proceeds of $53 million on facility and fixed asset sales, as of June 30, 2013. As of June 30, 2013, we have recorded costs of $234 million since the inception of the 2011 Restructuring plan, including the Expansion, and recorded a portion of these expenses as restructuring charges and the remaining portion through other lines within our unaudited condensed consolidated statements of operations.

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In the aggregate, we recorded net restructuring charges pursuant to our restructuring plans of $26 million and $36 million in the second quarter and first half of 2013, respectively, and $28 million and $39 million during the second quarter and first half of 2012. During the first half of 2013, our restructuring charges were partially offset by a $19 million gain recognized on the sale of our Natick, Massachusetts headquarters. We are currently in the process of consolidating our Natick, Massachusetts headquarters into our Marlborough, Massachusetts location, where we are establishing a new global headquarters campus. In addition, we recorded expenses within other lines of our accompanying unaudited condensed consolidated statements of operations related to our restructuring initiatives of $5 million in the second quarter of 2013 and $10 million during the first half of 2013, and $5 million in the second quarter of 2012 and $11 million during the first half of 2012. Restructuring and restructuring-related costs are excluded by management for purposes of evaluating operating performance.

We made cash payments of $71 million , associated with our restructuring initiatives during the first half of 2013, which were partially offset by $53 million of cash proceeds on facility and fixed asset sales.

See Note G - Restructuring Related Activities to our unaudited condensed consolidated financial statements contained in Item 1 of this Quarterly Report on Form 10-Q for additional details related to our restructuring plans.

Litigation-related net charges

We recorded no net litigation-related charges in the second quarter of 2013 and $130 million in the first half of 2013, and $69 million for the second quarter and first half of 2012, which consisted of a charge of $85 million, partially offset by credits of $16 million, recorded in the second quarter of 2012. Significant litigation-related charges and credits are excluded by management for purposes of evaluating operating performance. Refer to Note J – Commitments and Contingencies to our unaudited condensed consolidated financial statements contained in Item 1 of this Quarterly Report on Form 10-Q for discussion of our material legal proceedings.

Gain on divestiture

In January 2011, we closed the sale of our Neurovascular business to Stryker Corporation for a purchase price of $1.500 billion , $1.450 billion of which we received at closing. During the second quarter of 2013, we recorded total gains related to this divestiture of $34 million , and we recorded gains of $40 million during the first half of 2013. During the second quarter of 2013, we received an additional $30 million of consideration related to this divestiture, and we expect to receive an additional $10 million , contingent upon the transfer or separation of certain manufacturing facilities, during the third quarter of 2013. Divestiture-related gains or charges are excluded by management for purposes of evaluating operating performance.

Interest Expense

Our interest expense was $65 million in the second quarter of 2013 and $130 million in the first half of 2013, as compared to $64 million in the second quarter of 2012 and $132 million in the first half of 2012. Our average borrowing rate was 5.7 percent in the second quarter of 2013 and 5.7 percent in the first half of 2013, as compared to 5.4 percent in the second quarter of 2012 and 5.6 percent in the first half of 2012. Refer to Liquidity and Capital Resources and Note F – Borrowings and Credit Arrangements to our unaudited condensed consolidated financial statements contained in Item 1 of this Quarterly Report on Form 10-Q for information regarding our debt obligations.

Other, net

Our other, net reflects expense of $3 million in the second quarter of 2013, income of $33 million in the second quarter of 2012, expense of $3 million in the first half of 2013, and income of $27 million in the first half of 2012. The following are the components of other, net:



	Three Months Ended June 30,						Six Months Ended June 30,
	Three Months Ended June 30,						Six Months Ended June 30,
(in millions)	2013			2012			2013			2012
Interest income	$	3		$	1		$	5		$	2
Foreign currency losses	—			(7		)	(2		)	(10		)
Net gains (losses) on investments	(3		)	39			(3		)	36
Other income (expense), net	(3		)	—			(3		)	(1		)
	$	(3	)	$	33		$	(3	)	$	27

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During the second quarter of 2012, we recognized gains of $39 million associated with the acquisition of Cameron in June 2012, related to previously-held investments.

Tax Rate

The following tables provide a summary of our reported tax rate:



	Three Months Ended June 30,
	2013		2012
Reported tax rate	14.3	%	1.1	%
Impact of certain receipts/charges*	0.4	%	13.4	%
	14.7	%	14.5	%

	Six Months Ended June 30,
	2013		2012
Reported tax rate	7.6	%	0.9	%
Impact of certain receipts/charges*	6.5	%	13.8	%
	14.1	%	14.7	%

*These receipts/charges are taxed at different rates than our effective tax rate.

The change in our reported tax rate for the second quarter and first half of 2013, as compared to the same periods in 2012, relates primarily to the impact of certain receipts and charges that are taxed at different rates than our effective tax rate and the impact of certain discrete tax items. In the first half of 2013, the receipts and charges included goodwill and intangible asset impairment charges; acquisition- and divestiture-related net credits, and litigation- and restructuring-related charges. The reported tax rate in the second quarter of 2013 was also impacted due to uncertain tax positions related to audit findings, while the first half of 2013 was favorably affected by discrete tax items that primarily related to the reinstatement of tax legislation that has been retroactively applied, offset in part by the resolution of uncertain tax positions related to audit settlements and findings. In the first half of 2012, the receipts and charges included goodwill and intangible asset impairment charges; divestiture-, litigation and restructuring-related net charges; and acquisition-related credits. Our reported tax rate in the first half of 2012 was also affected by discrete tax items related primarily to the resolution of an uncertain tax position resulting from a favorable court ruling.

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Critical Accounting Policies and Estimates

Our financial results are affected by the selection and application of accounting policies and methods. With the exception of our reorganization from regions to global business units effective January 1, 2013 and its impact to our goodwill and intangible asset valuation, there were no material changes in the six months ended June 30, 2013 to the application of critical accounting policies and estimates as described in our 2012 Annual Report filed on Form 10-K for the year ended December 31, 2012.

Valuation of Intangible Assets

Certain of our amortizable intangible assets that relate to our CRM business ($4.510 billion globally of June 30, 2013) are at higher risk of potential failure of the first step of the amortizable intangible recoverability test in future reporting periods. Key assumptions we have made in determining the recoverability of these assets include how we grouped our assets for purposes of measuring cash flows, the estimated life of those cash flows and our expectations for the amount of cash flows generated by these assets over their remaining useful life.

For purposes of testing the CRM-related amortizable intangible assets, we grouped the intangible assets with the other assets and liabilities of the global CRM reporting unit, as a result of having identified the CRM reporting unit as the lowest level of identifiable cash flows because our CRM core technology, which is the primary asset within the CRM asset group, is utilized by all CRM revenue-generating products. As a result, we include cash flows generated by our CRM products in our recoverability analysis through the core technology useful life, which is estimated to end in 2031. We determined the useful life of the core technology based on our expectation of the period during which the technology is expected to contribute to the cash flows of our business. Our core technology represents know-how, patented and unpatented technology, testing methodologies and hardware that is integral to our current and future CRM product generations. This core technology includes battery and capacitor technology, lead technology, software algorithms and interfacing for shocking and pacing used in each therapy franchise.

The recoverability of our CRM-related amortizable intangible assets is sensitive to future cash flow assumptions and our global CRM business performance. The amount of future cash flows within our recoverability analysis include our future projections of revenue, expenses and capital expenditures, which are based on our most recent operational budgets, long range strategic plans and other estimates. These future cash flow assumptions consider the significant investments we have made to renew the CRM reporting unit's product portfolio within its existing core franchises and to develop what we believe to be unique innovative solutions that utilize our core technology; the increased impact to the CRM reporting unit of our emerging markets; and demographic trends toward an aging population. Further, while our CRM revenue has declined over the last three years as a result of factors specific to our CRM business and contraction in the overall CRM market, we believe our CRM revenue will return to low growth over the remaining useful life of our CRM amortizing intangible assets. Events specific to our CRM business included the 2010 product ship hold actions and resulting market share losses, and lower replacement volumes due to historical product recalls. We believe that the contraction in the CRM market was primarily due to lower procedural volumes principally due to a focus on appropriate device usage and increased pressure on selling prices; however, we believe that there has been a recent trend toward stabilization in procedural volumes across the market.

We continue to perform thorough reviews of the CRM market and our recent business results within the market, and consider the impacts on future expectations of performance to determine if any adverse conditions exist or a change in circumstances has occurred that would indicate impairment or a change in the remaining useful life.

Goodwill Valuation

We allocate any excess purchase price over the fair value of the net tangible and identifiable intangible assets acquired in a business combination to goodwill. When allocating goodwill from business combinations to our reporting units, we assign goodwill to the reporting units that we expect to benefit from the respective business combination at the time of acquisition. We assess goodwill for impairment at the reporting unit level, which is defined as an operating segment or one level below an operating segment, referred to as a component. We test our goodwill balances during the second quarter of each year for impairment, or more frequently if indicators are present or changes in circumstances suggest that impairment may exist. In performing the assessment, we utilize the two-step approach prescribed under ASC Topic 350, Intangibles-Goodwill and Other.

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Effective as of January 1, 2013, we reorganized our business from geographic regions to fully operationalized global business units. Our reorganization changed our reporting structure and changed the composition of our reporting units for goodwill impairment testing purposes. Following the reorganization, we have three new global reportable segments consisting of: Cardiovascular, Rhythm Management, and MedSurg. We determined our new global reporting units by identifying our operating segments and assessing whether any components of these segments constituted a business for which discrete financial information is available and whether segment management regularly reviews the operating results of any components. Through this process, we identified the following new global reporting units as of January 1, 2013: Interventional Cardiology, Peripheral Interventions, Cardiac Rhythm Management (CRM), Electrophysiology, Endoscopy, Urology/Women's Health, and Neuromodulation.

To determine the amount of goodwill within our new global reporting units, on a relative fair value basis we reallocated $1.764 billion of goodwill previously allocated to our former Europe, Middle East and Africa (EMEA), Asia Pacific, Japan, and Americas international reporting units to our new global reporting units. In addition, we reallocated the goodwill previously allocated to the former U.S. divisional reporting units to each respective new global reporting unit, with the exception of the goodwill allocated to the former U.S. Cardiovascular reporting unit. The $2.380 billion of goodwill previously allocated to the former U.S. Cardiovascular reporting unit was reallocated between the global Interventional Cardiology and global Peripheral Interventions reporting units on a relative fair value basis. Following this reallocation, we tested the goodwill remaining in the new reporting units by conducting the first step of the goodwill impairment test for all global reporting units as of January 1, 2013. The first step requires a comparison of the carrying value of the reporting units to the fair value of these units. Refer to Quarterly Results for discussion of the results of our interim goodwill testing during the first quarter of 2013.

For our 2013 and our 2012 goodwill impairment testing, we used only the income approach, specifically the discounted cash flow (DCF) method, to derive the fair value of each of our reporting units in preparing our goodwill impairment assessments. This approach calculates fair value by estimating the after-tax cash flows attributable to a reporting unit and then discounting these after-tax cash flows to a present value using a risk-adjusted discount rate. We selected this method as being the most meaningful in preparing our goodwill assessments because we believe the income approach most appropriately measures our income producing assets. We have considered using the market approach and cost approach but concluded they are not appropriate in valuing our reporting units given differences in our reporting units' mix of currently marketed products, market shares, future product launch cadence, and expected profitability levels that render the market comparisons less relevant for application of the market approach and the inability to replicate the value of the specific technology-based assets within our reporting units for application of the cost approach. Therefore, we believe that the income approach represents the most appropriate valuation technique for which sufficient data is available to determine the fair value of our reporting units.

In applying the income approach to our accounting for goodwill, we make assumptions about the amount and timing of future expected cash flows, terminal value growth rates and appropriate discount rates. The amount and timing of future cash flows within our DCF analysis is based on our most recent operational budgets, long range strategic plans and other estimates. The terminal value growth rate is used to calculate the value of cash flows beyond the last projected period in our DCF analysis and reflects our best estimates for stable, perpetual growth of our reporting units. We use estimates of market-participant risk-adjusted WACC as a basis for determining the discount rates to apply to our reporting units’ future expected cash flows. In addition, for purposes of performing our goodwill impairment tests, assets and liabilities, including corporate assets, which relate to a reporting unit’s operations, and would be considered in determining its fair value, are allocated to the individual reporting units. We allocate assets and liabilities not directly related to a specific reporting unit, but from which the reporting unit benefits, based primarily on the respective revenue contribution of each reporting unit.

If the carrying value of a reporting unit exceeds its fair value, we then perform the second step of the goodwill impairment test to measure the amount of impairment loss, if any. The second step of the goodwill impairment test compares the estimated fair value of a reporting unit’s goodwill to its carrying value. If we were unable to complete the second step of the test prior to the issuance of our financial statements and an impairment loss was probable and could be reasonably estimated, we would recognize our best estimate of the loss in our current period financial statements and disclose that the amount is an estimate. We would then recognize any adjustment to that estimate in subsequent reporting periods, once we have finalized the second step of the impairment test.

Although we use consistent methodologies in developing the assumptions and estimates underlying the fair value calculations used in our impairment tests, these estimates are uncertain by nature and can vary from actual results. The use of alternative valuation assumptions, including estimated revenue projections, growth rates, cash flows and discount rates could result in different fair value estimates.

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As of June 30, 2013, we continue to identify our global Neuromodulation reporting unit as being at higher risk of potential failure of the first step of the goodwill impairment test in future reporting periods. Our global Neuromodulation reporting unit had excess fair value over carrying value of approximately 16 percent and held $1.356 billion of allocated goodwill. In addition, future changes in our reporting units or in the structure of our business as a result of future reorganizations, acquisitions or divestitures of assets or businesses could result in future impairments of goodwill within the global CRM reporting unit or other reporting units.

Future events that could have a negative impact on the levels of excess fair value over carrying value of our reporting units and/or amortizable intangible assets include, but are not limited to:


•	decreases in estimated market sizes or market growth rates due to greater-than-expected declines in procedural volumes, pricing pressures, product actions, and/or competitive technology developments;


•	declines in our market share and penetration assumptions due to increased competition, an inability to develop or launch new and next-generation products and technology features in line with our commercialization strategies, and market and/or regulatory conditions that may cause significant launch delays or product recalls;


•	decreases in our forecasted profitability due to an inability to successfully implement and achieve timely and sustainable cost improvement measures consistent with our expectations, increases in our market-participant tax rate, and/or changes in tax laws;


•	negative developments in intellectual property litigation that may impact our ability to market certain products or increase our costs to sell certain products;


•	the level of success of on-going and future research and development efforts, including those related to recent acquisitions, and increases in the research and development costs necessary to obtain regulatory approvals and launch new products;


•	the level of success in managing the growth of acquired companies, achieving sustained profitability consistent with our expectations, establishing government and third-party payer reimbursement, supplying the market, and increases in the costs and time necessary to integrate acquired businesses into our operations successfully;


•	changes in our reporting units or in the structure of our business as a result of future reorganizations, acquisitions or divestitures of assets or businesses;


•	increases in our market-participant risk-adjusted WACC; and


•	declines in revenue as a result of loss of key members of our sales force or other key personnel.

Negative changes in one or more of these factors, among others, could result in additional impairment charges.

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Liquidity and Capital Resources

As of June 30, 2013, we had $530 million of cash and cash equivalents on hand, comprised of $102 million invested in money market and government funds, $272 million invested in short-term time deposits, and $156 million in interest bearing and non-interest bearing bank accounts. We invest excess cash on hand in short-term financial instruments that earn market interest rates while mitigating principal risk through instrument and counterparty diversification, as well as what we believe to be prudent instrument selection. We limit our direct exposure to securities in any one industry or issuer. We also have full access to our $2.000 billion revolving credit facility and $300 million of available borrowings under our credit and security facility secured by our U.S. trade receivables, both described below.

The following provides a summary and description of our net cash inflows (outflows) for the six months ended June 30, 2013 and 2012:



	Six Months Ended June 30,
(in millions)	2013			2012
Cash provided by operating activities	$	559		$	619
Cash used for investing activities	(39		)	(253		)
Cash used for financing activities	(196		)	(263		)

Operating Activities

During the first half of 2013, we generated $559 million from operating activities, as compared to $619 million generated during the first half of 2012, a decrease of $60 million. This decrease was primarily driven by increases in our working capital, partially offset by a litigation-related cash receipt.

Investing Activities

During the first half of 2013, cash used for investing activities included $15 million of payments to acquire certain technologies and privately-held securities. Cash used for investing activities also included purchases of property, plant and equipment of $104 million that were partially offset by $53 million of proceeds received from the sale of our Natick, Massachusetts headquarters in March 2013. We are currently in the process of consolidating our Natick, Massachusetts headquarters into our Marlborough, Massachusetts location, where we are establishing a new global headquarters campus. In addition, our cash flow from investing activities included $30 million of proceeds related to the 2011 sale of our Neurovascular business to Stryker Corporation. During the first half of 2012, cash used for investing activities was comprised primarily of the acquisition of Cameron and purchases of property, plants and equipment.

Financing Activities

Our cash flows from financing activities reflect issuances and repayments of debt, proceeds from stock issuances related to our equity incentive programs and repurchases of common stock pursuant to our authorized repurchase programs, discussed in Note L - Stockholders' Equity to our consolidated financial statements included in Item 8 of our 2012 Annual Report filed on Form 10-K. During the first half of 2013, we repurchased 26 million shares of our common stock for approximately $200 million , pursuant to our authorized repurchase programs. During the first half of 2012, we repurchased 41 million shares of our common stock for approximately $250 million.

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Debt

We hold investment-grade ratings with all three major credit-rating agencies. We believe our investment grade credit profile reflects the size and diversity of our product portfolio, our share position in several of our served markets, our strong cash flow, our solid financial fundamentals and our financial strategy. We had total debt of $4.252 billion as of June 30, 2013 and $4.256 billion as of December 31, 2012. The debt maturity schedule for the significant components of our debt obligations as of June 30, 2013 is as follows:




(in millions)	2013		2014		2015		2016		2017		Thereafter		Total
Senior notes	$	—	$	600	$	1,250	$	600	$	250	$	1,500	$	4,200
	$	—	$	600	$	1,250	$	600	$	250	$	1,500	$	4,200



Note:	The table above does not include unamortized discounts associated with our senior notes, or amounts related to terminated interest rate contracts used to hedge the fair value of certain of our senior notes.

Revolving Credit Facility

Our revolving credit facility agreement requires that we maintain certain financial covenants, as follows:



	Covenant Requirement	Actual as of June 30, 2013
Maximum leverage ratio (1)	3.5 times	2.4 times
Minimum interest coverage ratio (2)	3.0 times	6.9 times


(1)	Ratio of total debt to consolidated EBITDA, as defined by the credit agreement, for the preceding four consecutive fiscal quarters.


(2)	Ratio of consolidated EBITDA, as defined by the credit agreement, to interest expense for the preceding four consecutive fiscal quarters.

The credit agreement provides for an exclusion from the calculation of consolidated EBITDA, as defined by the agreement, through the credit agreement maturity, of any non-cash charges and up to $500 million in restructuring charges and restructuring-related expenses related to our current or future restructuring plans. As of June 30, 2013, we had $312 million of the restructuring exclusion remaining. In addition, any cash litigation payments (net of any cash litigation receipts), as defined by the agreement, are excluded from the calculation of consolidated EBITDA and any new debt issued to fund any tax deficiency payments is excluded from consolidated total debt, as defined in the agreement, provided that the sum of any net excluded cash litigation payments and any new debt issued to fund any tax deficiency payments shall not exceed $2.300 billion in the aggregate. As of June 30, 2013, we had approximately $2.290 billion of the combined legal and debt exclusion remaining. As of and through June 30, 2013, we were in compliance with the required covenants.

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Term Loan

In August 2013, we entered into a new $400 million, unsecured term loan facility. Term loan borrowings under this facility bear interest at LIBOR plus an interest margin of between 1.0 percent and 1.75 percent (currently 1.5 percent), based on our corporate credit ratings and consolidated leverage ratio. The term loan borrowings are payable over a 5-year period, with quarterly principal payments of $20 million commencing in the first quarter of 2016 and the remaining principal amount due at the final maturity date in August 2018, and are repayable at any time without premium or penalty. Our term loan facility requires that we comply with certain covenants, including financial covenants with respect to maximum leverage and minimum interest coverage, which are consistent with the corresponding covenants in our existing revolving credit facility.

Senior Notes

We had senior notes outstanding in the amount of $4.200 billion as of June 30, 2013 and December 31, 2012.

Other Arrangements

We have accounts receivable factoring programs in certain European countries that we account for as sales under ASC Topic 860, Transfers and Servicing . These agreements provide for the sale of accounts receivable to third parties, without recourse, of up to approximately $ 296 million as of June 30, 2013. We have no retained interests in the transferred receivables, other than collection and administrative responsibilities and, once sold, the accounts receivable are no longer available to satisfy creditors in the event of bankruptcy. We de-recognized $189 million of receivables as of June 30, 2013 at an average interest rate of 3.5 percent , and $191 million as of December 31, 2012 at an average interest rate of 1.6 percent . Within Italy, Spain, Portugal and Greece the number of days our receivables are outstanding has increased above historical levels. We believe we have adequate allowances for doubtful accounts related to our Italy, Spain, Portugal and Greece accounts receivable; however, we will continue to monitor the European economic environment for any collectibility issues related to our outstanding receivables. As of June 30, 2013, our net receivables in these countries greater than 180 days past due totaled $66 million , of which $18 million were past due greater than 365 days. In addition, we are currently pursuing alternative factoring providers and financing arrangements to mitigate our credit exposure to receivables in this region.

In addition, we have uncommitted credit facilities with a Japanese bank that provide for borrowings, promissory notes discounting, and receivables factoring of up to 21.0 billion Japanese yen (converted to approximately $212 million as of June 30, 2013). We de-recognized $158 million of notes receivables as of June 30, 2013 at an average interest rate of 1.8 percent and $182 million of notes receivables as of December 31, 2012 at an average interest rate of 1.6 percent . De-recognized accounts and notes receivable are excluded from trade accounts receivable, net in the accompanying unaudited condensed consolidated balance sheets.

Equity

During the first half of 2013 and 2012, we received $19 million and $9 million , respectively, in proceeds from stock issuances related to our stock option and employee stock purchase plans. Proceeds from the exercise of employee stock options and employee stock purchases vary from period to period based upon, among other factors, fluctuations in the trading price of our common stock and in the exercise and stock purchase patterns of employees. We repurchased 26 million shares of our common stock during the first half of 2013 for approximately $200 million , pursuant to our authorized repurchase programs discussed in Note L - Stockholders' Equity to our consolidated financial statements included in Item 8 of our 2012 Annual Report filed on Form 10-K. As of June 30, 2013, we had $960 million remaining authorization under our 2013 share repurchase program and no remaining shares authorized under our previous share repurchase program.

Stock-based compensation expense related to our stock ownership plans was approximately $50 million for the first half of 2013 and $57 million for the first half of 2012.

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Contractual Obligations and Commitments

Certain of our acquisitions involve the payment of contingent consideration. See Note B - Acquisitions to our unaudited condensed consolidated financial statements contained in Item 1 of this Quarterly Report on Form 10-Q for further details regarding the estimated potential amount of future contingent consideration we could be required to pay associated with our acquisitions. There have been no other material changes to our contractual obligations and commitments as reported in our 2012 Annual Report filed on Form 10-K.

Legal Matters

Our accrual for legal matters that are probable and estimable was $625 million as of June 30, 2013 and $491 million as of December 31, 2012, and includes estimated costs of settlement, damages and defense. We continue to assess certain litigation and claims to determine the amounts, if any, that management believes will be paid as a result of such claims and litigation and, therefore, additional losses may be accrued and paid in the future, which could materially adversely impact our operating results, cash flows and/or our ability to comply with our debt covenants.

See further discussion of our material legal proceedings in Note J – Commitments and Contingencies to our unaudited condensed consolidated financial statements contained in Item 1 of this Quarterly Report on Form 10-Q and in Note K – Commitments and Contingencies to our audited financial statements contained in Item 8 of our 2012 Annual Report filed on Form 10-K.

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Recent Accounting Pronouncements

ASC Update No. 2013-02

ASC Update No. 2013-01

In January 2013, the FASB issued ASC Update No. 2013-01, Balance Sheet (Topic 210): Clarifying the Scope of Disclosures about Offsetting Assets and Liabilities . Update No. 2013-01 clarifies the FASB's intent about requiring enhanced disclosures about certain financial instruments and derivative instruments that are offset in the statement of financial position or that are subject to enforceable master netting arrangements or similar agreements. We adopted Update No. 2013-01 beginning in our first quarter ended March 31, 2013. See related disclosures in Note E - Fair Value Measurements to our unaudited condensed consolidated financial statements contained in Item 1 of this Quarterly Report on Form 10-Q.

Standards to be Implemented

ASC Update No. 2013-11

Additional Information

Use of Non-GAAP Financial Measures

To supplement our unaudited condensed consolidated 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 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 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 this Quarterly Report on Form 10-Q.

Management uses these supplemental non-GAAP financial measures to evaluate performance period over period, to analyze the underlying trends in our business, to assess our performance relative to our 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 our operating segments. The adjustments excluded from our non-GAAP financial measures are consistent with those excluded from our operating segments’ measures of net sales and profit or loss. These adjustments are

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excluded from the segment measures that are reported to our chief operating decision maker that are used to make operating decisions and assess performance.

We believe that presenting adjusted net income, adjusted net income per share, and revenue growth rates that exclude certain amounts and/or the impact of changes in foreign currency exchange rates, in addition to the corresponding GAAP financial measures, provides investors greater transparency to the information used by management for its financial and operational decision-making and allows investors to see our results “through the eyes” of management. We further believe that providing this information assists our investors in understanding our operating performance and 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 and six months ended June 30, 2013 and 2012, 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 represent (a) a non-cash write-down of our goodwill balance attributable to our global Cardiac Rhythm Management reporting unit in the first quarter of 2013; (b) non-cash write-downs of certain intangible asset balances in the second quarter of 2013; (c) a non-cash write-down of our goodwill balance attributable to our Europe, Middle East and Africa (EMEA) reporting unit in the second quarter of 2012; and (d) a non-cash write-down of certain intangible asset balances in the second quarter of 2012. 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, this charge is excluded from management's assessment of operating performance and is 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-related charges (credits) - These adjustments consist of (a) contingent consideration fair value adjustments, and (b) due diligence, other fees and exit costs. 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 acquisitions that 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.

•

Divestiture-related expenses (gains) - These amounts represent separation costs or recognized gains associated with the sale of our Neurovascular business in January 2011. Separation costs and gains represent those associated with the 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.

•

Restructuring and restructuring-related costs (credits) - These adjustments represent primarily severance and other direct costs associated with our 2011 Restructuring plan. These costs are excluded by management in assessing our operating performance, as well as from our operating segments' measures of profit and loss used for making operating decisions and assessing performance. Accordingly, management excluded these charges 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.

•

Litigation-related charges and credits - These adjustments include certain significant product liability and other litigation-related charges and credits. These amounts are excluded by management in assessing our operating performance, as well as from our operating segments' measures of profit and loss used for making operating decisions and assessing performance. 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.

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•

Amortization expense - Amortization expense is a non-cash expense and does not impact our liquidity or compliance with the covenants included in our credit facility agreement. Management removes the impact of amortization from our operating performance to assist in assessing our cash generated from operations. We believe this is a critical metric for measuring our ability to generate cash and invest in our growth. Therefore, amortization expense is excluded from management's assessment of operating performance and is also excluded from the measures management uses to set employee compensation. Accordingly, management has excluded amortization expense for purposes of calculating these non-GAAP financial measures to facilitate an evaluation of our current operating performance, particularly in terms of liquidity.

Revenue Growth Rates Excluding the Impact of Changes in Foreign Currency Exchange Rates

•

Changes in foreign currency exchange rates - The impact of changes in foreign currency exchange rates is highly variable and difficult to predict. Accordingly, management excludes the impact of 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 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.

Safe Harbor for Forward-Looking Statements

Certain statements that we may make from time to time, including statements contained in this Quarterly Report on Form 10-Q and information incorporated by reference herein, constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements may be identified by words like “anticipate,” “expect,” “project,” “believe,” “plan,” “may,” “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 business and results of operations; our business strategy and related financial returns; our growth initiatives, including our emerging markets strategy and investments; acquisitions and related payments, and the integration and impact of acquired businesses and technologies; finalizing the separation of our Neurovascular business; the timing and impact of our restructuring and plant network optimization initiatives, including expected costs and cost savings; our cash flow and use thereof; our outstanding accounts receivable in Europe; changes in the market and our market share for our businesses; procedural volumes and pricing pressures; competitive pressures facing our businesses; clinical trials, including timing and results; our product portfolio; product development and iterations; new and existing product launches, including their timing and acceptance, and their impact on the market, our market share and our business; competitive product launches; product performance and our ability to gain a competitive advantage; the strength of our technologies and pipeline; regulatory approvals, including their timing; our regulatory and quality compliance; expected research and development efforts and the allocation of research and development expenditures; our sales and marketing strategy; reimbursement practices; our ability to meet customer demand; goodwill and other intangible asset impairment analysis and charges; the effect of new accounting pronouncements on our financial results; the impact of healthcare reform legislation and new and proposed tax laws; the outcome and timing of transfer pricing and transactional-related matters pending before taxing authorities; our tax position and income tax reserves; the outcome and impact of intellectual property, qui tam actions, governmental investigations and proceedings and litigation matters; adequacy of our reserves; the drivers and impact of our investment ratings; anticipated expenses and capital expenditures and our ability to finance them; and our ability to meet the financial covenants contained in our credit facilities. 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. As a result, readers are cautioned not to place undue reliance on any of our forward-looking statements. Except as required by law, we do not intend to update any forward-looking statements even if new information becomes available or other events occur in the future.

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The forward-looking statements in this Quarterly Report on Form 10-Q are based on certain risks and uncertainties, including the risk factors described in “Item 1A. Risk Factors” of this Quarterly Report on Form 10-Q, “Part I, Item 1A. Risk Factors” in our 2012 Annual Report on Form 10-K and the specific risk factors discussed below and in connection with forward-looking statements throughout this Quarterly Report on Form 10-Q, which could cause actual results to 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 could affect our ability to implement our business strategy and may cause actual results to differ materially from those contemplated by the forward-looking statements. These additional factors include, among other things, future political, economic, competitive, reimbursement and regulatory conditions; new product introductions; demographic trends; intellectual property; litigation and governmental investigations; financial market conditions; and future business decisions made by us and our competitors, all of which are difficult or impossible to predict accurately and many of which are beyond our control. We caution each reader of this Quarterly Report on Form 10-Q to consider carefully these factors.

The following are some of the important risk factors that could cause our actual results to differ materially from our expectations in any forward-looking statements. For further discussion of these and other risk factors, see “Item 1A. Risk Factors” of this Quarterly Report on Form 10-Q and “Part I, Item 1A. Risk Factors” in our 2012 Annual Report on Form 10-K.

Our Businesses


•	Our ability to increase CRM net sales, including for both new and replacement units, expand the market and capture market share;


•	The volatility of the coronary stent market and our ability to increase our drug-eluting stent systems net sales, including with respect to our SYNERGY™, PROMUS® Element™ and Promus PREMIER™ stent systems, and capture market share;

•

The on-going impact on our business, including CRM and coronary stent businesses, of physician alignment to hospitals, governmental investigations and audits of hospitals, and other market and economic conditions on the overall number of procedures performed, including with respect to the drug-eluting coronary stent market the average number of stents used per procedure, and average selling prices;


•	Competitive offerings and related declines in average selling prices for our products, particularly our drug-eluting coronary stent systems and our CRM products;


•	The performance of, and physician and patient confidence in, our products and technologies, including our coronary drug-eluting stent systems and CRM products, or those of our competitors;


•	The impact and outcome of ongoing and future clinical trials, including coronary stent and CRM clinical trials, and market studies undertaken by us, our competitors or other third parties, or perceived product performance of our or our competitors' products;


•	Variations in clinical results, reliability or product performance of our and our competitor's products;


•	Our ability to timely and successfully acquire or develop, launch and supply new or next-generation products and technologies worldwide and across our businesses in line with our commercialization strategies, including our S-ICD® system;


•	The effect of consolidation and competition in the markets in which we do business, or plan to do business;


•	Disruption in the manufacture or supply of certain components, materials or products, or the failure to timely secure alternative manufacturing or additional or replacement components, materials or products;


•	Our ability to retain and attract key personnel, including in our cardiology and CRM sales force and other key cardiology and CRM personnel;


•	The impact of enhanced requirements to obtain regulatory approval in the United States and around the world, including the associated timing and cost of product approval; and

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•	The impact of increased pressure on the availability and rate of third-party reimbursement for our products and procedures in the United States and around the world, including with respect to the timing and costs of creating and expanding markets for new products and technologies.

Regulatory Compliance and Litigation


•	The impact of healthcare policy changes and legislative or regulatory efforts in the United States and around the world to modify product approval or reimbursement processes, including a trend toward demonstrating clinical outcomes, comparative effectiveness and cost efficiency, as well as the impact of other healthcare reform legislation;


•	Risks associated with our regulatory compliance and quality systems and activities in the United States and around the world, including meeting regulatory standards applicable to manufacturing and quality processes;


•	Our ability to minimize or avoid future field actions or FDA warning letters relating to our products and processes and the on-going inherent risk of potential physician advisories related to medical devices;

•

The impact of increased scrutiny of and heightened global regulatory enforcement facing global businesses, including in the medical device industry, arising from political and regulatory changes, economic pressures or otherwise, including U.S. Anti-Kickback Statute, U.S. False Claims Act (FCA) and similar laws in other jurisdictions; U.S. Foreign Corrupt Practices Act (FCPA) and similar laws in other jurisdictions; and U.S. and foreign export control, trade embargo and custom laws;


•	The effect of our litigation and risk management practices, including self-insurance, and compliance activities on our loss contingencies, legal provision and cash flows;


•	The impact of, diversion of management attention as a result of, and costs to cooperate with, litigate and/or resolve, governmental investigations and our class action, product liability, contract and other legal proceedings; and


•	Risks associated with a failure to protect our intellectual property rights and the outcome of patent litigation.

Innovation and Certain Growth Initiatives


•	The timing, size and nature of our strategic growth initiatives and market opportunities, including with respect to our internal research and development platforms and externally available research and development platforms and technologies, and the ultimate cost and success of those initiatives and opportunities;


•	Our ability to complete planned clinical trials successfully, obtain regulatory approvals and launch new and next generation products in a timely manner consistent with cost estimates, including the successful completion of in-process projects from purchased research and development;


•	Our ability to identify and prioritize our internal research and development project portfolio and our external investment portfolio on profitable revenue growth opportunities as well as to keep them in line with the estimated timing and costs of such projects and expected revenue levels for the resulting products and technologies;


•	Our ability to successfully develop, manufacture and market new products and technologies in a timely manner and the ability of our competitors and other third parties to develop products or technologies that render our products or technologies noncompetitive or obsolete;


•	The impact of our failure to succeed at or our decision to discontinue, write-down or reduce the funding of any of our research and development projects, including in-process projects from purchased research and development, in our growth adjacencies or otherwise;


•	Dependence on acquisitions, alliances or investments to introduce new products or technologies and to enter new or adjacent growth markets, and our ability to fund them or to fund contingent payments with respect to those acquisitions, alliances and investments; and


•	The failure to successfully integrate and realize the expected benefits from the strategic acquisitions, alliances and investments we have consummated or may consummate in the future.

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International Markets


•	Our dependency on international net sales to achieve growth, including in emerging markets;


•	The impact of changes in our international structure and leadership;

•

Risks associated with international operations and investments, including political and economic conditions, protection of our intellectual property, compliance with established and developing U.S. and foreign legal and regulatory requirements, including FCPA and similar laws in other jurisdictions and U.S. and foreign export control, trade embargo and custom laws, as well as changes in reimbursement practices and policies;


•	Our ability to maintain or expand our worldwide market positions in the various markets in which we compete or seek to compete, including through investments in product diversification and emerging markets such as Brazil, Russia, India and China;


•	Our ability to execute and realize anticipated benefits from our investments in emerging markets; and


•	The potential effect of foreign currency fluctuations and interest rate fluctuations on our net sales, expenses and resulting margins.

Liquidity


•	Our ability to generate sufficient cash flow to fund operations, capital expenditures, global expansion initiatives, litigation settlements, share repurchases and strategic investments and acquisitions as well as maintaining our investment grade ratings and managing our debt levels and covenant compliance;


•	Our ability to access the public and private capital markets when desired and to issue debt or equity securities on terms reasonably acceptable to us;


•	The unfavorable resolution of open tax matters, exposure to additional tax liabilities and the impact of changes in U.S. and international tax laws;


•	The impact of examinations and assessments by domestic and international taxing authorities on our tax provision, financial condition or results of operations;


•	The impact of goodwill and other intangible asset impairment charges, including on our results of operations; and


•	Our ability to collect outstanding and future receivables and/or sell receivables under our factoring programs.

Cost Reduction and Optimization Initiatives

•

Risks associated with significant changes made or expected to be made to our organizational and operational structure, pursuant to our 2011 Restructuring plan as expanded and as a result of our 2010 Restructuring plan and Plant Network Optimization program, as well as any further restructuring or optimization plans we may undertake in the future, and our ability to recognize benefits and cost reductions from such programs; and


•	Business disruption and employee distraction as we execute our global compliance program, restructuring and optimization plans and divestitures of assets or businesses and implement our other strategic and cost reduction initiatives.

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ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We develop, manufacture and sell medical devices globally and our earnings and cash flows are exposed to market risk from changes in currency exchange rates and interest rates. We address these risks through a risk management program that includes the use of derivative financial instruments. We operate the program pursuant to documented corporate risk management policies. We do not enter derivative transactions for speculative purposes. Gains and losses on derivative financial instruments substantially offset losses and gains on underlying hedged exposures. Furthermore, we manage our exposure to counterparty risk on derivative instruments by entering into contracts with a diversified group of major financial institutions and by actively monitoring outstanding positions.

Our currency risk consists primarily of foreign currency denominated firm commitments, forecasted foreign currency denominated intercompany and third-party transactions and net investments in certain subsidiaries. We use both nonderivative (primarily European manufacturing and distribution operations) and derivative instruments to manage our earnings and cash flow exposure to changes in currency exchange rates. We had currency derivative instruments outstanding in the contract amount of $5.021 billion as of June 30, 2013 and $4.411 billion as of December 31, 2012. We recorded $267 million of other assets and $24 million of other liabilities to recognize the fair value of these derivative instruments as of June 30, 2013, as compared to $121 million of other assets and $57 million of other liabilities as of December 31, 2012. A ten percent appreciation in the U.S. dollar’s value relative to the hedged currencies would increase the derivative instruments’ fair value by $252 million as of June 30, 2013 and $270 million as of December 31, 2012. A ten percent depreciation in the U.S. dollar’s value relative to the hedged currencies would decrease the derivative instruments’ fair value by $309 million as of June 30, 2013 and by $319 million as of December 31, 2012. Any increase or decrease in the fair value of our currency exchange rate sensitive derivative instruments would be substantially offset by a corresponding decrease or increase in the fair value of the hedged underlying asset, liability or forecasted transaction, resulting in minimal impact on our consolidated statements of operations.

Our interest rate risk relates primarily to U.S. dollar borrowings partially offset by U.S. dollar cash investments. We have historically used interest rate derivative instruments to manage our earnings and cash flow exposure to changes in interest rates. We had no interest rate derivative contracts outstanding as of June 30, 2013 and December 31, 2012. As of June 30, 2013, we had $4.252 billion of outstanding debt obligations, of which approximately 100% was at fixed interest rates.

See Note E – Fair Value Measurements to our unaudited condensed consolidated financial statements contained in Item 1 of this Quarterly Report on Form 10-Q for further information regarding our derivative financial instruments.


ITEM 4.	CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our Chief Executive Officer (CEO), and our Executive Vice President and Chief Financial Officer (CFO), evaluated the effectiveness of our disclosure controls and procedures as of June 30, 2013 pursuant to Rule 13a-15(b) of the Exchange Act. Disclosure controls and procedures are designed to ensure that material information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and that such material information is accumulated and communicated to our management, including our CEO and CFO, as appropriate, to allow timely decisions regarding required disclosure. Based on their evaluation, our CEO and CFO concluded that, as of June 30, 2013, our disclosure controls and procedures were effective.

Changes in Internal Control Over Financial Reporting

During the quarter ended June 30, 2013, there were no changes in our internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II

OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

See Note I – Income Taxes and Note J – Commitments and Contingencies to our unaudited condensed consolidated financial statements contained in Item 1 of this Quarterly Report on Form 10-Q, which is incorporated herein by reference.

ITEM 1A. RISK FACTORS

In addition to the information set forth below and other information contained elsewhere in this report, you should carefully consider the factors discussed in “Part I, Item 1A. Risk Factors” in our 2012 Annual Report filed on Form 10-K, which could materially affect our business, financial condition or future results.

We may record future goodwill impairment charges or other asset impairment charges related to one or more of our global reporting units, which could materially adversely impact our results of operations.

We test our goodwill balances during the second quarter of each year for impairment, or more frequently if indicators are present or changes in circumstances suggest that impairment may exist. We assess goodwill for impairment at the reporting unit level and, in evaluating the potential for impairment of goodwill, we make assumptions regarding estimated revenue projections, growth rates, cash flows and discount rates. Effective as of January 1, 2013, we reorganized our business from geographic regions to fully operationalized global business units. Our reorganization changed our reporting structure and changed the composition of our reporting units for goodwill impairment testing purposes. Following our reorganization from geographic regions to global business units and our reallocation of goodwill on a relative fair value basis, we conducted the first step of the goodwill impairment test for all new global reporting units as of January 1, 2013, and compared the carrying value of the reporting units to the fair value of these units. The fair value of each new global reporting unit exceeded its carrying value, with the exception of the global Cardiac Rhythm Management (CRM) reporting unit. We performed the second step of the goodwill impairment test on the global CRM reporting unit and recorded a non-cash goodwill impairment charge of $423 million to write-down the goodwill to its implied fair value as of January 1, 2013. After recording the impairment charge in the first quarter of 2013, there was no remaining goodwill allocated to the global CRM reporting unit as of March 31, 2013. We finalized the second step of the global CRM goodwill impairment test during the second quarter of 2013, in accordance with ASC Topic 350, Intangibles - Goodwill and Other , and there were no adjustments to the charge upon finalization. In the second quarter of 2013, we performed our annual goodwill impairment test for all of our reporting units. In conjunction with our annual test, the fair value of each reporting unit exceeded its carrying value except CRM, for which no goodwill remains. Therefore, it was deemed not necessary to proceed to the second step of the impairment test. In the second quarter of 2012, as a result of revised estimates developed during our annual strategic planning process and analysis performed in conjunction with our 2012 annual goodwill impairment test we recorded a non-cash $3.602 billion ($3.579 billion after tax) impairment charge of the goodwill within our former Europe, Middle East and Africa (EMEA) reporting unit. Further, in the third quarter of 2012, we performed an interim goodwill impairment test and recorded a non-cash $748 million (pre- and after-tax) charge associated with our former U.S. CRM reporting unit.

We continue to identify our global Neuromodulation reporting unit as being at higher risk of potential failure of the first step of the goodwill impairment test in future reporting periods. Our global Neuromodulation reporting unit had excess fair value over carrying value of approximately 16 percent and held $1.356 billion of allocated goodwill as of June 30, 2013. Additionally, the recoverability of our CRM-related amortizable intangibles is sensitive to future cash flow assumptions and our global CRM business performance. The carrying value of amortizable intangible assets allocated to our global CRM reporting unit was $4.510 billion as of June 30, 2013. Therefore, our CRM-related amortizable intangibles are at higher risk of potential failure of the first step of the amortizable intangible recoverability test in future reporting periods. Refer to Critical Accounting Policies and Estimates for a discussion of key assumptions used in our testing and future events that could have a negative impact on the recoverability of our goodwill and amortizable intangible assets.

On a quarterly basis, we monitor the key drivers of fair value to detect events or other changes that would warrant an interim impairment test of our goodwill and intangible assets. Relatively small declines in the future performance and cash flows of a reporting unit or asset group, changes in our reporting units or in the structure of our business as a result of future reorganizations, acquisitions or divestitures of assets or businesses, or small changes in other key assumptions, may result in the recognition of significant asset impairment charges, which could have a material adverse impact on our results of operations.

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ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

The following table provides information with respect to purchases by Boston Scientific Corporation of equity securities that are registered by us pursuant to Section 12 of the Exchange Act during the three months ended June 30, 2013:



Period	Total Number of Shares Purchased	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs *	Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs *
04/01/13 - 04/30/13	1,510,256	$	7.48	1,510,256	$	1,046,745,292
05/01/13 - 05/31/13	11,035,303	$	8.02	11,035,303	$	959,535,690
06/01/13 - 06/30/13
Total	12,545,559	$	7.95	12,545,559	$	959,535,690

*On July 28, 2011, we announced that our Board of Directors had re-approved approximately 37 million shares for repurchase which remained available under a previous share repurchase program at such time. On January 29, 2013, we announced that our Board of Directors had approved a new program authorizing the repurchase of up to $1.0 billion of our common stock. As of June 30, 2013, we had $960 million remaining authorization under our 2013 share repurchase program and no remaining shares authorized under our previous share repurchase program.

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ITEM 6. EXHIBITS (* documents filed with this report, ** documents furnished with this report, # compensatory plans or arrangements)




4.1		Indenture dated as of May 29, 2013 between the Company and U.S. Bank National Association, as Trustee (incorporated herein by reference to Exhibit 4.1, Registration Statement on Form S-3 filed May 29, 2013, File No.333-188918)

10.1		Amendment #7 to Amended and Restated Credit and Security Agreement, dated as of June 28, 2013, by and among Boston Scientific Funding LLC; Boston Scientific Corporation; Old Line Funding, LLC; Royal Bank of Canada; Liberty Street Funding LLC; and The Bank of Nova Scotia (incorporated herein by reference to Exhibit 10.1, Current Report on Form 8-K filed July 1, 2013, File No. 001-11083)

10.2*		Boston Scientific Corporation 2013 Annual Bonus Plan, Amended and Restated as of July 23, 2013#

10.3*		Form of Deferred Stock Unit Award Agreement effective July 23, 2013#

10.4*		Form of Non-Qualified Stock Option Award Agreement effective July 23, 2013#

10.5*		Boston Scientific Corporation Severance Pay and Layoff Notification Plan As Amended and Restated (Bridge Plan) Effective as of August 1, 2013#

10.6*		Boston Scientific Corporation U.S. Severance Plan For Exempt Employees As Amended and Restated Effective August 1, 2013#

31.1*		Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2*		Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1**		Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, Chief Executive Officer

32.2**		Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, Executive Vice President and Chief Financial Officer

101*		Interactive Data Files Pursuant to Rule 405 of Regulation S-T: (i) the Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2013 and 2012, (ii) the Condensed Consolidated Statements of Comprehensive Income for the three and six months ended June 30, 2013 and 2012, (iii) the Condensed Consolidated Balance Sheets as of June 30, 2013 and December 31, 2012, (iv) the Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2013 and 2012 and (v) the notes to the Condensed Consolidated Financial Statements.

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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized on August 7, 2013.



BOSTON SCIENTIFIC CORPORATION
By:	/s/ Jeffrey D. Capello

	Name:	Jeffrey D. Capello
	Title:	Executive Vice President and Chief Financial Officer

2013 Boston Scientific Annual Bonus Plan

Performance Period January 1 - December 31

July 2013

EXHIBIT 10.2


I.	Establishment and Purpose of the Plan

Boston Scientific Corporation has established the Boston Scientific Corporation Annual Bonus Plan ("Plan"). As explained in detail below, the Plan basically works as follows. For each Performance Year, there is an Aggregate Bonus Pool, which is the sum of the bonus targets of all eligible participants. After the end of the Performance Year, the Committee determines the percentage of the pool that will be paid out as bonus for the year, based on the Company's performance as to Sales and Adjusted Earnings Per Share and its attainment of quality goals. The percentage will be between 50% and 150%. The payable portion of the pool is then separated into an Assigned Bonus Pool for each Business Group, Region and Unit, based on their performance as to their respective Scorecards. The Compensation Management System then allocates the Assigned Bonus Pools among the managers, who evaluate the performance of the participants under their management and determine, for each participant, the percentage (between 0% and 200%) of the participant's Target Annual Bonus that will be the participant's Bonus Award for the Performance Year.

The Plan's purpose is to align the Company's interests and your interests as a Plan participant by providing incentive compensation for the achievement of Company and individual performance objectives. For covered employees, the Plan is established under section 4.a.(8) of the Boston Scientific Corporation 2011 Long-Term Incentive Plan and is intended to qualify for the performance-based compensation exception under Code section 162(m).

The capitalized words and terms that are used throughout the Plan are defined in the Glossary in Article IX.


II.	Eligibility and Participation

You are eligible to participate in the Plan for a Performance Year if you satisfy all of the following eligibility criteria:


•	You are either a Regular Exempt Employee or an Eligible International Employee;


•	You are not eligible for commissions under any sales compensation plan of the Company;


•	You are not eligible to participate in any other incentive plan or program of the Company (unless the written terms of that plan or program expressly permit participation in both that plan or program and the Plan); and


•	You complete at least two full months of Eligible Service during the Performance Year.

If you are eligible to participate in the Plan for only part of the Performance Year (for example, because you change positions or business units during the Performance Year), then you may participate in the Plan on a prorated basis for the Performance Year, provided that you complete at least two full months of Eligible Service during the Performance Year (and, if you are an executive officer covered by Code section 162(m), your participation in the Plan for the Performance Year would not be inconsistent with Code section 162(m)). If you are eligible for prorated participation, the Bonus Award, if any, otherwise payable to you for the Performance Year will be prorated based on your percentage of time in an eligible position during the Performance Year.


III.	Target Annual Bonus

For each Performance Year in which you are eligible to participate, you will be assigned a Target Annual Bonus, which will be a specified percentage of your annual base salary, determined based on your position. The Bonus Award, if any, that you ultimately receive for the Performance Year will be a

2013 Boston Scientific Annual Bonus Plan

Performance Period January 1 - December 31

July 2013

percentage of your Target Annual Bonus, determined pursuant to Article IV. The Aggregate Bonus Pool for a Performance Year will be the sum of the Target Annual Bonuses of all employees who are eligible to participate in the Plan for the Performance Year.


IV.	Steps For Determining Bonus Awards

Bonus Awards for a Performance Year will be determined pursuant to the following steps:

Step One: Establish performance goals, quality goals and the Corporate Performance Scale

On or before March 31 of a Performance Year, the Committee will establish performance goals for each of the Plan's Performance Metrics and quality goals for the Performance Year. The Performance Metrics are Sales and Adjusted Earnings Per Share. The Committee will also establish the Corporate Performance Scale for the Performance Year, which will be set forth in a separate schedule.

Step Two: Measure achievement and determine Total Annual Bonus

After the end of the Performance Year, the Committee will evaluate the Company's financial performance results for the Performance Year and determine the extent to which the performance goals were attained. The Committee will adopt a written resolution as to the extent of the attainment of the performance goals with respect to each of the Performance Metrics. Based on the extent to which the performance goals were attained, the Chief Executive Officer will make a recommendation to the Committee, consistent with the Corporate Performance Scale, as to the Applicable Percentage of the Aggregate Bonus Pool to be paid by the Company as the Total Annual Bonus for the Performance Year. Taking into account the Chief Executive Officer's recommendation and any other factors that the Committee, in its discretion, deems appropriate, the Committee will approve an Applicable Percentage for the Performance Year, which must be consistent with the Corporate Performance Scale. The Committee retains the right to reduce the Total Annual Bonus for the Performance Year based on the Committee's Quality Assessment. In no event, however, will the Total Annual Bonus be less than 50% of the Annual Bonus Pool for the Performance Year.

Step Three: Allocate the Total Annual Bonus

The Chief Executive Officer will make a recommendation to the Committee as to how the Total Annual Bonus for the Performance Year should be allocated among the Business Groups and Regions, based on their overall and relative performance against their respective applicable Scorecards for the Performance Year. Taking into account the Chief Executive Officer's recommendation and any other factors that the Committee, in its discretion, deems appropriate, the Committee will approve an allocation of the Total Annual Bonus among the Business Groups and Regions for the Performance Year. The portion of the Total Annual Bonus allocated to a Business Group or Region (its Assigned Bonus Pool) will be a percentage of the total Target Annual Bonuses of all its employees who participate in the Plan for the Performance Year. If a Business Group or Region has Units, the leader of the Business Group or Region will divide the Assigned Bonus Pool among the Units, based on their overall and relative performance against each Unit's applicable Scorecard for the Performance Year, so that each Unit will then have its own Assigned Bonus Pool. A Business Group or Region that does not have Units (for example, Corporate) will have a single Assigned Bonus Pool.

2013 Boston Scientific Annual Bonus Plan

Performance Period January 1 - December 31

July 2013

Step Four: Determine participants' individual Bonus Awards

Once the Assigned Bonus Pool is determined for each Business Group, Region, or Unit, the amount of the Assigned Bonus Pool will be entered into the Compensation Management System, which allocates a portion of the Assigned Bonus Pool to each manager of Plan participants. Each manager will evaluate the performance of each participant under his or her management and enter into the Compensation Management System a rating percentage, from 0% to 200%, for each evaluated participant. The rating percentage that your manager assigns to you will, in turn, determine the percentage of your Target Annual Bonus that will be your Bonus Award for the Performance Year.

If participants leave the Company before the Payment Date and, as a result, do not earn their Bonus Awards for the Performance Year, their Bonus Awards will be reallocated by the Chief Executive Officer, in his or her discretion, to other participants who are employed on the Payment Date and will become part of the Bonus Awards paid to those other participants. As provided in Article V, all Bonus Awards for a Performance Year (including those reallocated pursuant to the previous sentence) will be paid to eligible participants no later than March 15 of the following year.

Special Rules with Respect to Executive Officers

Notwithstanding any other provision of the Plan, the Committee retains sole and complete discretion to determine the eligibility of, and any Bonus Award payable to, each executive officer covered by Code section 162(m). The maximum Bonus Award payable with respect to a Performance Year to an executive officer covered by Code section 162(m) is $3,250,000.


V.	Payment Conditions

Payment Date and Form of Payment . Bonus Awards in the United States will be made by March 15 of the year following the Performance Year for which the Bonus Awards are made. Bonus Awards outside the United States will be processed as soon as administratively possible in each region following the end of the Performance Year and after the Committee has adopted its written resolution as to the attainment of performance goals pursuant to Article IV. Your Bonus Award, if any, will be paid in a single lump sum payment.

Required Employment on the Payment Date . Except as otherwise expressly provided in this Article V, to be eligible to receive payment of any Bonus Award, you must be employed by the Company on the Payment Date for that Bonus Award. In other words, except as expressly provided in this Article V, if you cease employment with Boston Scientific Corporation and all of its Affiliates before the Payment Date, you will not be eligible to receive any Bonus Award that would otherwise have been payable to you if you had been a Company employee on that date. Conversely, if you are an employee of the Company on the Payment Date, you will be entitled to your Bonus Award, if any, even if you are not actively performing duties on that date. For example, if you are not required to report to work during a notification period applicable under a Company severance or separation plan, but you are still a Company employee during that period, and the Payment Date occurs during your notification period, you will remain eligible to receive your Bonus Award.

Exception Under Written Company Plan or Agreement . If you are specifically exempted, under a written Company plan or agreement, from the requirement to be employed on the Payment Date, you may remain eligible for payment of your Bonus Award, depending on the terms of the applicable written plan or agreement. In such cases, the terms of such written plan or agreement will govern in all respects.

Layoff . Also notwithstanding any other provision of the Plan, if you are a participant and your employment ceases prior to the Payment Date by reason of Layoff, you may be eligible for payment of part or all of your Bonus Award, depending on the terms and conditions of the applicable severance pay plan, if any, for the country in which you are employed at the time of layoff. In the event that there is no country-specific severance plan for the country in which you are employed at the time of your Layoff, applicable law will apply.

2013 Boston Scientific Annual Bonus Plan

Performance Period January 1 - December 31

July 2013

Retirement . Also notwithstanding any other provision of the Plan, if you are a participant and your employment ceases prior to the Payment Date for a Bonus Award but after September 30 of the Performance Year to which the Bonus Award pertains, and you had at least nine months of Eligible Service in the Performance Year, you will be entitled to a prorated portion of the Bonus Award, if any, that would otherwise be paid you if, as of the date of your cessation of employment, (1) you had attained age 55, (2) you had accrued at least five years of service with the Company and (3) the sum of your age and years of service as of your date of cessation of employment equals or exceeds 65. In such a case, proration will be based on the percentage of time in the Performance Year during which you were employed and eligible to participate in the Plan. The prorated Bonus Award, if any, will be paid on the Payment Date.

Death . If your employment ceases prior to the Payment Date by reason of your death, but you otherwise met all eligibility criteria specified in Article II, your estate may receive a prorated portion of the Bonus Award, if any, that would have been paid had you lived to the Payment Date. In such a case, proration will be based on the percentage of time in the Performance Year during which you were employed and eligible to participate in the Plan. The prorated Bonus Award, if any, will be paid on the Payment Date.

Adjustment for Changes in Standard Hours . Also notwithstanding any other provision of the Plan, if you are a participant and have a change in standard hours (part-time to full-time, full-time to part-time) during a Performance Year, your Bonus Award, if any, for the Performance Year will be based on the full-time equivalent Target Annual Bonus and your average annualized base salary for the Performance Year. Except as provided in the preceding sentence, all Bonus Awards will be based on your salary and incentive target as of December 31 of the Performance Year.

No Guarantee of a Bonus Award . Nothing in this Plan guarantees that any Bonus Award will be made to any individual. Receipt of a Bonus Award in one year does not guarantee eligibility in any future year.


VI.	Incentive Compensation Recoupment Policy

General Recoupment Policy . To the extent permitted by governing law, the Board, in its discretion, may seek reimbursement of a Bonus Award paid to you if you are a Current Executive Officer or Former Executive Officer and you, in the judgment of the Board, commit misconduct or a gross dereliction of duty that results in a material violation of Company policy and causes significant harm to the Company while serving in your capacity as Executive Officer. Further, in such case:


•	if you are a Current Executive Officer, the Board may seek reimbursement of all or a portion of the Bonus Award paid to you during the one-year period preceding the date on which such misconduct or dereliction of duty was discovered by the Company, or


•	if you are a Former Executive Officer, the Board may seek reimbursement of all or a portion of the Bonus Award paid to you during the one-year period preceding the last date on which you were a Current Executive Officer.

Restatement of Financial Results . To the extent permitted by governing law, if you are an Executive Officer, the Board will seek reimbursement of a Bonus Award paid to you in the event of a restatement of the Company's financial results that reduced a previously granted Bonus Award's size or payment. In that event, the Board will seek to recover the amount of the Bonus Award paid to you that exceeded the amount that would have been paid based on the restated financial results.

Provisions Required by Law . If the Company subsequently determines that it is required by law to apply a "clawback" or alternate recoupment provision to a Bonus Award, under the Dodd-Frank Wall Street Reform and Consumer Protection Act or otherwise, then such clawback or recoupment provision also shall apply to the Bonus Award, as applicable, as if it had been included on the date the Plan was established and the Company shall notify you of such additional provision.

2013 Boston Scientific Annual Bonus Plan

Performance Period January 1 - December 31

July 2013


VII.	Termination, Suspension or Modification and Interpretation of the Plan

The Board may terminate, suspend or modify (and if suspended, may reinstate with or without modification) all or part of the Plan at any time, with or without notice to participants. The Committee has sole authority over administration and interpretation of the Plan, and the Committee retains its right to exercise discretion as it sees fit.

The Committee reserves the exclusive right to determine eligibility to participate in this Plan and to interpret all applicable terms and conditions, including eligibility criteria, performance objectives and payment conditions, for the Company's executive officers. The Committee delegates to the Company's highest human resources officer the authority to administer, and determine eligibility to participate in, the Plan and interpret all applicable terms and conditions for employees who are not executive officers of the Company. The determinations and interpretations of the Committee and its delegates will be conclusive.

All Bonus Awards are paid from the Company's general assets. No trust, account or other separate collection of amounts will be established for the payment of Bonus Awards under the Plan. Bonus Awards are unfunded obligations of the Company, so if and when a Bonus Award becomes due, a participant's rights to payment are no greater than the rights of a general unsecured creditor.


VIII.	Other

This document sets forth the terms of the Plan and is not intended to be a contract or employment agreement between you or any other participant and the Company. As applicable, it is understood that both you and the Company have the right to terminate your employment with the Company at any time, with or without cause and with or without notice, in acknowledgement of the fact that your employment relationship with the Company is “at will.”


IX.	Glossary

As used in the Plan, the following words and terms, when capitalized, have the following meanings:

Adjusted Earnings Per Share means, with respect to a Performance Year, Adjusted Net Income divided by weighted average shares outstanding for the Performance Year (determined in accordance with generally accepted accounting principles).

Adjusted Net Income means the Company's GAAP Net Income (as defined for purposes of the Boston Scientific Corporation 2011 Long-Term Incentive Plan) excluding goodwill and intangible asset impairments, acquisition, divestiture, and purchased research and development charges, restructuring expenses, certain tax-related items, and certain litigation and amortization expenses.

Affiliate means any corporation, trust, partnership, or any other entity that is considered to be a single employer with Boston Scientific Corporation under Code sections 414(b), (c), (m), or (o), such as a wholly-owned (or at least 80%-owned) subsidiary of Boston Scientific Corporation.

Aggregate Bonus Pool means, with respect to a Performance Year, the sum of the Target Annual Bonuses of all employees who are eligible to participate in the Plan for the Performance Year.

Applicable Percentage means, with respect to a Performance Year, a percentage, determined by the Committee in accordance with the Corporate Performance Scale, which cannot be less than 50% or more than 150%. The Applicable Percentage is used to determine the portion of the Aggregate Bonus Pool that the Company will pay out as the Total Annual Bonus for the Performance Year.

Assigned Bonus Pool means, with respect to a Business Group, Region, or Unit for a Performance Year, the portion of the Total Annual Bonus assigned to the Business Group, Region, or Unit to be paid as Bonus Awards for the Performance Year to eligible participants who worked for the Business Group, Region, or Unit during the Performance Year.

Board means the Board of Directors of Boston Scientific Corporation.

2013 Boston Scientific Annual Bonus Plan

Performance Period January 1 - December 31

July 2013

Bonus Award means, with respect to a participant for a Performance Year, the annual incentive bonus, if any, payable to the participant for the Performance Year, subject to the terms and conditions of the Plan.

Business Group means a functional or product-based area of the Company's business, as designated by the Chief Executive Officer from time to time.

Chief Executive Officer means the Chief Executive Officer of Boston Scientific Corporation.

Code means the Internal Revenue Code of 1986, as amended, and its interpretive rules and regulations.

Committee means the Executive Compensation and Human Resources Committee of the Board.

Company means Boston Scientific Corporation and its Affiliates.

Compensation Management System means the software tool used by the Company for various compensation management purposes.

Corporate Performance Scale means, with respect to a Performance Year, the schedule used to determine, based on the extent of attainment of the performance goals for the Performance Year, the Applicable Percentage of the Aggregate Bonus Pool to be paid as the Total Annual Bonus for the Performance Year. The Corporate Performance Scale must provide that the Applicable Percentage for a Performance Year cannot be less than 50%.

Current Executive Officer means any individual currently designated as an “officer” by the Board for purposes of Section 16 of the Securities Exchange Act of 1934, as amended.

Eligible International Employee means an international, international operations, or expatriate employee of the Company working in a position designated by the Company as eligible to participate in the Plan.

Eligible Service means periods in which you are considered, under the rules and procedures of the Company, to be in active service as a Regular Exempt Employee or Eligible International Employee (including, but not limited to, time away from work for approved vacation, recognized holidays, and FMLA leave).

Executive Officer means any Current Executive Officer or Former Executive Officer.

Former Executive Officer means any individual previously (but not currently) designated as an “officer” by the Board for purposes of Section 16 of the Securities Exchange Act of 1934, as amended.

Layoff means a layoff or similar involuntary termination from employment that renders you eligible for severance pay under a Company severance plan or applicable law.

Payment Date means, with respect to a Performance Year, the date on which Bonus Awards for the Performance Year are paid to participants, which will be no later than March 15 of the following year.

Performance Metrics means Sales and Adjusted Earnings Per Share.

Performance Year means the 12-month period beginning on January 1 and ending on the following December 31.

Plan means the Boston Scientific Annual Bonus Plan, which is set forth in this document, as it may be amended from time to time.

Quality Assessment means the process undertaken by the Committee following the end of each Performance Year, to evaluate the Company's progress made toward achievement of its quality objectives and the performance of the Company-wide quality system.

Region means a geographic region, as designated by the Chief Executive Officer from time to time, comprising a portion of the Company's international business.

2013 Boston Scientific Annual Bonus Plan

Performance Period January 1 - December 31

July 2013

Regular Exempt Employee means an employee of the Company who is on the Company's United States payroll and (1) classified by the Company as a regular full-time or regular part-time Employee; (2) performs a job that the Company has determined to be exempt from the minimum wage and overtime requirements of the Fair Labor Standards Act of 1938, as amended (FLSA); and (3) is not any of the following:


•	classified by the Company as an intern, summer student, co-op employee, or similar short-term employee; or


•	classified by the Company as a consultant, temporary or defined-term employee (such as temporary fellowship program employees), or similar category of limited-term employment, regardless of their work schedule or number of hours worked.

Sales means "BSC Global Sales" as that term is defined for purposes of the Boston Scientific Corporation 2011 Long-Term Incentive Plan, which measures sales using constant currency rates.

Scorecard means, with respect to a Performance Year, the tool used to establish performance measures and objectives with respect to a Business Group, Region, or Unit for the Performance Year.

Target Annual Bonus has the meaning given to that term in Article III.

Total Annual Bonus represents, with respect to a Performance Year, the total dollars to be paid out by the Company to all participating employees as Bonus Awards for the Performance Year.

Unit means a business unit of Business Group or Region, such as a plant or division (for a Business Group) or a country or group of countries (for a Region); the Units of a Business Group or Region may change from time to time.

Exhibit 10.3

Boston Scientific Corporation 2011 Long-Term Incentive Plan

Global Deferred Stock Unit Award Agreement

Month dd, yyyy

[Employee's Name]

(“Participant”)

EMPLOYEE COPY

PLEASE RETAIN FOR YOUR RECORDS

Boston Scientific Corporation 2011 Long-Term Incentive Plan

Global Deferred Stock Unit Award Agreement

This Global Deferred Stock Unit Award Agreement (the “Agreement”), dated dd ^th day of Month, yyyy (the “Grant Date”), is between you and Boston Scientific Corporation, a Delaware corporation, (the "Company") in connection with the Award of Deferred Stock Units by the Committee under the Boston Scientific Corporation 2011 Long-Term Incentive Plan (the “Plan”). Capitalized terms used but not defined in this Agreement shall have the same meaning as assigned to them in the Plan. The applicable terms and conditions of the Plan are incorporated into and made a part of this Agreement.

1. Grant of Units . The Committee hereby grants you that number of Deferred Stock Units as set forth in this Agreement (the “Units”). Each Unit represents the Company's commitment to issue to you one share of Stock subject to the conditions set forth in this Agreement. This Award is granted pursuant to and is subject to the provisions of the Plan and the terms and conditions of this Agreement and any applicable Addendum.

2. Vesting . The Units shall vest and shares of Stock will be issued to you according to the vesting schedule set forth in this Agreement. Except as otherwise provided in Sections 4, 5, 6, 7 and 8 below, the Units will vest, subject to the conditions described in Section 7 below, in approximately equal annual installments on each of the five (5) consecutive anniversaries of the Grant Date, beginning on the first anniversary of the Grant Date. No shares of Stock shall otherwise be issued to you prior to the date on which the Units vest. Notwithstanding anything in the Agreement to the contrary, the Company may, in its sole discretion, settle the Units in the form of a cash payment to the extent that settlement in shares of Stock is prohibited under local law or would require the Company and/or any of its Affiliates to obtain the approval of any governmental and/or regulatory body in your country of residence (or country of employment, if different). Alternatively, the Company may, in its sole discretion, settle the Units in the form of shares of Stock but require you to immediately sell such Stock (in which case, this Agreement shall give the Company the authority to issue sales instructions on your behalf).

3. Participant's Rights in Stock . The shares of Stock, if and when issued to you pursuant to this Agreement, shall be registered in your name and evidenced in a manner as determined by the Company, in its sole discretion. Under no circumstance will you be deemed, by virtue of the granting of the Units, to be a holder of any shares of Stock underlying the Units or be entitled to the rights or privileges of a holder of such shares of Stock (including the right to receive dividends or vote the shares of Stock), unless and until the Units have vested with respect to such shares of Stock and the shares of Stock have been issued to you.

Rev. 6.2013 2

4. Death . In the event you terminate employment by reason of death, any Units that have not vested prior to the date of your death shall immediately vest and shares of Stock shall be issued in accordance with your will or the laws of descent and distribution; provided that you have remained in continuous service with the Company or an Affiliate through the first anniversary of the Grant Date. In the event that your death occurs prior to the first anniversary of the Grant Date, a number of the Units equal to the percentage of the year completed (based on the number of full and partial months of employment completed in such vesting year, rounded up to the nearest whole month) prior to death shall immediately vest and shares of Stock shall be issued in accordance with your will or the laws of descent and distribution and all remaining unvested Units shall immediately terminate and be forfeited.

5. Retirement . Notwithstanding Section 4.a.(4)(B) of the Plan, if you terminate employment by reason of your Retirement (as the term is defined in the Plan or determined under local law), any Units that have not vested prior to the date of your Retirement shall immediately terminate and be forfeited in their entirety.

6. Disability . If you terminate employment by reason of your Disability (as the term is defined in the Plan or determined under local law), any Units that have not vested prior to the date of your Disability shall immediately vest and shares of Stock shall be issued to you; provided you have remained in continuous service with the Company or an Affiliate through the first anniversary of the Grant Date. In the event that your Disability occurs prior to the first anniversary of the Grant Date, all unvested Units shall immediately terminate and be forfeited in their entirety.

7. Other Termination of Employment; Certain Vesting Conditions . If your employment terminates for any reason other than death or Disability, any Units that have not vested prior to the date of your termination shall terminate and be forfeited on the effective date of such termination, except if your employment terminates for Cause, in which case, all unvested Units shall be forfeited upon notice of your termination for Cause. The issuance of shares of Stock is conditioned on your continuous employment with the Company or an Affiliate through and on the applicable anniversary of the Grant Date as set forth in Section 2 above. For purposes of the vesting conditions set forth in this Agreement, the effective date of your termination shall be deemed to be the last day of your active service with the Company or an Affiliate (if applicable). Notwithstanding anything to the contrary in the Plan or this Agreement, and for purposes of clarity, the date of your termination of employment shall not be extended by any statutory or common law notice of termination period.

8. Change in Control of the Company . In the event of a Change in Control of the Company, any Units that have not vested prior to the Change in Control shall immediately vest and shares of Stock will be issued to you; provided, however, that if you have entered into a Change in Control agreement with the Company, the Units will vest according to the provisions of the Change in Control agreement.

9. Recoupment Policy .

Rev. 6.2013 3

(a) Current Recoupment Policy . Pursuant to the Company's recoupment policy and to the extent permitted by governing law, the Board, in its discretion, may seek Recovery of the Award granted to you if you are a Current Executive Officer or Former Executive Officer and you, in the judgment of the Board, commit misconduct or a gross dereliction of duty that results in a material violation of Company policy and causes significant harm to the Company while serving in your capacity as Executive Officer.

(i) Definitions . The following terms, when used in this Section 9, shall have the meaning set forth below:

(1) "Current Executive Officer" means any individual currently designated as an “officer” by the Board for purposes of Section 16 of the Securities Exchange Act of 1934, as amended.

(2) "Executive Officer" means any Current Executive Officer or Former Executive Officer.

(3) "Former Executive Officer" means any individual previously (but not currently) designated as an “officer” by the Board for purposes of Section 16 of the Securities Exchange Act of 1934, as amended.

(4) "Recovery" means the forfeiture or cancellation of unvested Units.

(b) Provisions Required by Law . If the Company subequently determines that it is required by law to apply a "clawback" or alternate recoupment provision to outstanding Awards, under the Dodd-Frank Wall Street Reform and Consumer Protection Act or otherwise, then such clawback or recoupment provision also shall apply to this Award, as applicable, as if it had been included on the Grant Date and the Company shall notify you of such additional provision.

10. Consideration for Stock . The shares of Stock subject to the Units are intended to be issued for no cash consideration.

11. Issuance of Stock . The Company shall not be obligated to issue any shares of Stock until (a) all federal, state and local laws and regulations, as the Company may deem applicable, have been complied with; (b) the shares have been listed or authorized for listing upon official notice to the New York Stock Exchange, Inc. or have otherwise been accorded trading privileges; and (c) all other legal matters in connection with the issuance and delivery of the shares have been approved by the Company's legal department.

12. Transferability; Restrictions on Shares; Legend on Certificate . Until the vesting conditions of this Award have been satisfied and shares of Stock have been issued in accordance with the terms of this Agreement and any applicable Addendum or by action of the Committee, the Units awarded under this Agreement are not transferable and you

Rev. 6.2013 4

shall not sell, transfer, assign, pledge, gift, hypothecate or otherwise dispose of or encumber the Units awarded under this Agreement. Transfers of shares of Stock by you are subject to the Company's Stock Trading Policy and applicable securities laws. Shares of Stock issued to you in certificate form or to your book entry account upon satisfaction of the vesting and other conditions of this Award may be restricted from transfer or sale by the Company and evidenced by stop-transfer instructions upon your book entry account or restricted legend(s) affixed to certificates in the form as the Company or its counsel may require with respect to any applicable restrictions on sale or transfer.

13. Satisfaction of Tax Obligations . Regardless of any action the Company or the Affiliate that employs you (the “Employer”) (if applicable) takes with respect to any or all income tax (including U.S. federal, state and local taxes and/or non-U.S. taxes), social insurance, payroll tax, payment on account or other tax-related withholding (“Tax-Related Items”), you acknowledge and agree that the ultimate liability for all Tax-Related Items legally due by you is and remains your responsibility and that the Company and/or the Employer (a) make no representations or undertakings regarding the treatment of any Tax-Related Items in connection with any aspect of the Units or the shares of Stock issued upon vesting of the Units, and (b) do not commit to structure the terms of the Award (or any aspect of the Units) to reduce or eliminate your liability for Tax-Related Items.

Upon the issuance of shares of Stock or the satisfaction of any vesting condition with respect to the shares of Stock to be issued hereunder, if your country of residence (and/or the country of employment, if different) requires withholding of Tax-Related Items, the Company may hold back from the total number of shares of Stock to be delivered to you, and shall cause to be transferred to the Company, whole shares of Stock that have an aggregate Fair Market Value sufficient to pay the minimum Tax-Related Items required to be withheld with respect to the shares of Stock. The cash equivalent of the shares of Stock withheld will be used to settle the obligation to withhold the Tax-Related Items. By accepting the grant of Units, you expressly consent to the withholding of shares of Stock and/or cash as provided for hereunder.

Alternatively, you hereby authorize the Company (on your behalf and at your direction pursuant to this authorization) to immediately sell a sufficient whole number of shares of Stock acquired upon vesting resulting in sale proceeds sufficient to pay the minimum Tax-Related Items required to be withheld. You agree to sign any agreements, forms and/or consents that reasonably may be requested by the Company (or the Company's designated brokerage firm) to effectuate the sale of the shares of Stock (including, without limitation, as to the transfer of the sale proceeds to the Company to satisfy the Tax-Related Items required to be withheld). Further, the Company or the Employer may, in its discretion, withhold any amount necessary to pay the Tax-Related Items from your salary or any other amounts payable to you, with no withholding of shares of Stock or sale of shares of Stock, or may require you to submit a cash payment equivalent to the minimum Tax-Related Items required to be withheld with respect to the Units.

All other Tax-Related Items related to the grant of Units and any shares of Stock delivered in settlement thereof are your sole responsibility. In no event shall whole shares

Rev. 6.2013 5

be withheld by or delivered to the Company in satisfaction of any Tax-Related Items in excess of the maximum statutory tax withholding required by law. You agree to indemnify the Company and its Affiliates against any and all liabilities, damages, costs and expenses that the Company and its Affiliates may hereafter incur, suffer or be required to pay with respect to the payment or withholding of any Tax-Related Items.

The Units are intended to be exempt from the requirements of Section 409A of the U.S. Internal Revenue Code of 1986, as amended (the “Code”). The Plan and this Agreement shall be administered and interpreted in a manner consistent with this intent. If the Company determines that the Agreement is subject to Code Section 409A and that it has failed to comply with the requirements of that Section, the Company may, in its sole discretion, and without your consent, amend this Agreement to cause it to comply with Code Section 409A or be exempt from Code Section 409A.

14. Repatriation and Legal/Tax Compliance Requirements . If you are resident or employed outside of the United States, you agree, as a condition of the grant of Units, to repatriate all payments attributable to the shares of Stock and/or cash acquired under the Plan (including, but not limited to, dividends and any proceeds derived from the sale of the shares of Stock acquired pursuant to the Units) in accordance with local foreign exchange rules and regulations in your country of residence (and country of employment, if different). In addition, you agree to take any and all actions, and consent to any and all actions taken by the Company and the Employer, as may be required to allow the Company and the Employer to comply with local laws, rules and regulations in your country of residence (and country of employment, if different). Finally, you agree to take any and all actions as may be required to comply with your personal legal and tax obligations under local laws, rules and regulations in your country of residence (and country of employment, if different).

15. Data Privacy . The collection, processing and transfer of your personal data as it relates to the Units is necessary for the Company's administration of the Plan and your participation in the Plan, and your denial and/or objection to the collection, processing and transfer of personal data may affect your ability to participate in the Plan. As such, you voluntarily acknowledge, consent and agree (where required under applicable law) to the collection, use, processing and transfer of personal data as described in this Section 15.

You understand that the Company or the Employer (if applicable) holds certain personal information about you, including (but not limited to) your name, home address and telephone number, date of birth, social security number or other employee identification number, salary, nationality, job title, any shares of Stock held in the Company, and details of all Units awarded to you (vested, unvested and expired) for the purpose of managing and administering the Plan (“Data”). The Data may be provided by you or collected, where lawful, from the Company, its Affiliates or third parties, and the Company or the Employer will process the Data for the exclusive purpose of implementing, administering and managing your participation in the Plan. The data processing will take place through electronic and non-electronic means according to logics and procedures strictly correlated to the purposes for which the Data is collected and with confidentiality and security provisions as set forth by applicable laws and regulations in your country of residence.

Rev. 6.2013 6

You hereby explicitly consent to the transfer of Data by the Company or the Employer (if applicable) as necessary for the purpose of implementation, administration and management of your participation in the Plan, and the Company or the Employer (if applicable) may each further transfer Data to any third parties assisting the Company in the implementation, administration and management of the Plan, including but not limited to E*Trade Corporate Services (“E*Trade”) or any successor or any other third party that the Company or E*Trade (or its successor) may engage to assist with the administration of the Plan from time to time. You also consent to the transfer of Data outside your country of residence or employment (if applicable), including to the United States. You hereby authorize (where required under applicable law) the recipients to receive, possess, use, retain and transfer the Data, in electronic or other form, for purposes of implementing, administering and managing your participation in the Plan, including any requisite transfer of such Data as may be required for the administration of the Plan and/or the subsequent holding of shares of Stock on your behalf to a broker or other third party with whom you may elect to deposit any shares of Stock acquired pursuant to the Plan.

You may, at any time, exercise your rights provided under applicable personal data protection laws, which may include the right to (a) obtain confirmation as to the existence of the Data, (b) verify the content, origin and accuracy of the Data, (c) request the integration, update, amendment, deletion or blockage (for breach of applicable laws) of the Data, and (d) to oppose, for legal reasons, the collection, processing or transfer of the Data which is not necessary or required for the implementation, administration and/or operation of the Plan and your participation in the Plan. You may seek to exercise these rights by contacting your local Human Resources manager.

16. No Rights to Continued Employment . The Units granted under the Plan and this Agreement (and any applicable Addendum to this Agreement) shall not confer upon you any right to continue in the employ of the Company or the Employer, and this Agreement (and any applicable Addendum to this Agreement) shall not be construed in any way to limit the Company's (or the Employer's, as the case may be) right to terminate or change the terms of your employment (as otherwise may be permitted under local law).

17. Discretionary Nature of Plan . You acknowledge and agree that the Plan is discretionary in nature and may be amended, cancelled or terminated by the Administrator, in its sole discretion, at any time. The grant of the Units under the Plan is a one-time benefit and does not create any contractual or other right to receive Units or benefits in lieu of Units in the future. Future Awards under the Plan, if any, will be at the sole discretion of the Administrator, including, but not limited to, the form and timing of any Award, the number of shares of Stock subject to such Units and the vesting provisions. Any amendment, modification or termination of the Plan shall not constitute a change or impairment of the terms and conditions of your employment with the Company or the Employer.

18. Voluntary Participation in the Plan . You acknowledge that your participation in the Plan is voluntary.

Rev. 6.2013 7

19. Extraordinary Item of Compensation . The grant of Units under the Plan is an extraordinary item of compensation outside the scope of your employment (and your employment contract, if any). Any grant of Units under the Plan is not part of normal or expected compensation or salary for any purpose, including, but not limited to, the calculation of any severance, resignation, termination, redundancy, end of service payments, bonuses, long-service awards, pension or retirement benefits or similar payments, and, in no event, should be considered as compensation for, or relating in any way to, past services for the Company or the Employer.

20. Waiver of Entitlement to Compensation or Damages . In consideration of the grant of the Units under this Agreement, no claim or entitlement to compensation or damages shall arise from termination of the Units or diminution in value of the Units or shares of Stock acquired upon vesting of the Units resulting from termination of your employment by the Company or the Employer (for any reason whatsoever and whether or not in breach of local labor laws) and you irrevocably release the Company and the Employer from any such claim that may arise. Notwithstanding the foregoing, if any such claim is found by a court of competent jurisdiction to have arisen, then, by accepting this Agreement, you will be deemed to have irrevocably waived your entitlement to pursue such claim.

21. Not a Public Offering . The grant of the Units under the Plan is not intended to be a public offering of securities in your country of residence (and country of employment, if different). The Company has not submitted any registration statement, prospectus or other filings to the local securities authorities unless otherwise required under local law, and the grant of the Units is not subject to the supervision of the local securities authorities.

22. No Advice Regarding Grant . No Employee of the Company is permitted to advise you regarding your participation in the Plan or your acquisition or sale of the shares of Stock subject to the Units. Investment in shares of Stock involves a degree of risk. Before deciding whether to participate in the Plan, you should carefully consider all risk factors relevant to the acquisition of shares of Stock under the Plan, and you should carefully review all of the materials related to the Units and the Plan. You are hereby advised to consult with your own personal tax, legal and financial advisors before taking any action related to the Plan.

23. Investment Intent . You acknowledge that the acquisition of the shares of Stock to be issued hereunder is for investment purposes without a view to distribution thereof.

24. Award Subject to the Plan . The Award to be made pursuant to this Agreement is made subject to the Plan. The terms and provisions of the Plan, as it may be amended from time to time, are hereby incorporated herein by reference. In the event of a conflict between any term or provision contained in this Agreement and a term or provision of the Plan, the applicable terms and conditions of the Plan will govern and prevail. However, no amendment of the Plan after the date hereof may adversely alter or impair the issuance of the shares of Stock to be made pursuant to this Agreement. You hereby accept the Units subject to all the terms and provisions of the Plan and this Agreement and agree that all decisions under, and interpretations of, the Plan and this Agreement by the Administrator,

Rev. 6.2013 8

Committee or the Board shall be final, binding and conclusive upon you and your heirs and legal representatives.

25. Electronic Delivery of Documents . The Company may, in its sole discretion, deliver any documents related to the Units and participation in the Plan or future grants of Units that may be granted under the Plan, by electronic means unless otherwise prohibited by local law. You hereby consent to receive such documents by electronic delivery and agree to participate in the Plan through an on-line or electronic system established and maintained by the Company or a third party-designated by the Company.

26. Language . If you are resident outside of the United States, you hereby acknowledge and agree that it is your express intent that this Agreement and any applicable Addendum, the Plan and all other documents, notices and legal proceedings entered into, given or instituted pursuant to the Units, be drawn up in English. If you have received this Agreement and any applicable Addendum, the Plan or any other documents related to the Units translated into a language other than English, and if the meaning of the translated version is different than the English version, the English version will control.

27. Addendum . Notwithstanding any provision of this Agreement to the contrary, the Units shall be subject to any special terms and conditions for your country of residence (and country of employment, if different) as are forth in the applicable addendum to the Agreement (the “Addendum”). Further, if you transfer your residence and/or employment to another country reflected in the Addenda to these Agreements, the special terms and conditions for such country will apply to you to the extent the Company determines, in its sole discretion, that the application of such terms and conditions is necessary or advisable in order to comply with local laws, rules, and regulations, or to facilitate the operation and administration of the Units and the Plan (or the Company may establish alternative terms and conditions as may be necessary or advisable to accommodate your transfer). Any applicable Addendum shall constitute part of this Agreement.

28. Additional Requirements . The Administrator reserves the right to impose other requirements on the Units, any shares of Stock acquired pursuant to the Units and your participation in the Plan to the extent the Administrator determines, in its sole discretion, that such other requirements are necessary or advisable in order to comply with local laws, rules, and regulations or to facilitate the operation and administration of the Units and the Plan. Such requirements may include (but are not limited to) requiring you to sign any agreements or undertakings that may be necessary to accomplish the foregoing.

29. Legal Notices . Any legal notice necessary under this Agreement shall be addressed to the Company in care of its General Counsel at the principle executive offices of the Company and to you at the address appearing in the personnel records of the Company for you or to either party at such other address as either party may designate in writing to the other. Any such notice shall be deemed effective upon receipt thereof by the addressee.

30. Conflicts . The Units granted pursuant to this Agreement and any applicable Addendum is subject to the Plan. The terms and provisions of the Plan as it may be amended

Rev. 6.2013 9

from time to time are hereby incorporated herein by reference. This Agreement contains terms and provisions established by the Committee specifically for the grant described herein. Unless the Committee has exercised its authority under the Plan to establish specific terms of an Award, the terms of the Plan shall govern. Subject to the limitations set forth in the Plan, the Committee retains the right to alter or modify the Stock Units granted pursuant to this Agreement as the Committee may determine are in the best interests of the Company.

31. Governing Law . The interpretation, performance and enforcement of this Agreement shall be governed by the laws of The Commonwealth of Massachusetts (without regard to the conflict of laws principles thereof) and applicable federal laws. For purposes of litigating any dispute that arises directly or indirectly from the relationship of the parties evidenced by this Agreement, the parties hereby submit and consent to the exclusive jurisdiction of the Commonwealth of Massachusetts and agree that such litigation shall be conducted only in the Commonwealth of Massachusetts, or the federal courts for the United States for the District of Massachusetts, and no other courts, where this Award is made and/or to be performed.

32. Headings . The headings contained in this Agreement are for convenience only and shall not affect the meaning or interpretation of this Agreement.

33. Counterparts . This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original and all of which together shall be deemed to be the one and the same instrument.

SIGNATURE PAGE

IN WITNESS WHEREOF, the Company, by its duly authorized officer, and the Participant have executed and delivered this Agreement as a sealed instrument as of the date and year first above written.

Number of Deferred Stock Units: ####

Vesting Schedule

20% Month dd, yyyy

PARTICIPANT:

Signature _____________________________

<<Employee Name>>

Rev. 6.2013 10

BOSTON SCIENTIFIC CORPORATION

Michael F. Mahoney

President and Chief Executive Officer

BOSTON SCIENTIFIC CORPORATION

ADDENDUM TO THE AWARD AGREEMENT

RELATING TO DEFERRED STOCK UNITS GRANTED

PURSUANT TO THE 2011 LONG-TERM INCENTIVE PLAN

In addition to the terms of the Plan and the Agreement, the Units are subject to the following additional terms and conditions. All defined terms contained in this Addendum shall have the same meaning as set forth in the Plan and the Agreement. Pursuant to Section 27 of the Agreement, if you transfer your residence and/or employment to another country reflected in an Addenda, the additional terms and conditions for such country (if any) will apply to you to the extent the Company determines, in its sole discretion, that the application of such terms and conditions is necessary or advisable in order to comply with local laws, rules, and regulations or to facilitate the operation and administration of the Units and the Plan (or the Company may establish alternative terms and conditions as may be necessary or advisable to accommodate your transfer).

AUSTRALIA

1. Shareholder Approval Requirement . To the extent you are an individual whose termination benefits are subject to Sections 200 to 200J of the Corporations Act 2001, the Award is contingent upon the Company's satisfaction of the shareholder approval requirements thereunder. To the extent the Company does not or is unable to satisfy such requirements, your Award will be null and void, and you will not have any claims against the Company to receive any payment or other benefits in lieu of the Award.

2. Securities Law Notice . The Award is granted pursuant to the Australian Offer Document. Participation in the Plan and the Award granted under the Plan are subject to the terms and conditions stated in the Australian Offer Document, in addition to the Plan, the Agreement and this Addendum.

CANADA

1. Settlement in Shares . Notwithstanding anything to the contrary in the Agreement or the Plan, all Units shall be settled only in shares of Stock (and shall not be settled in cash).

2. Securities Law Notice . You are permitted to sell shares of Stock acquired under the Plan through the designated broker appointed under the Plan, if any, provided the resale

Rev. 6.2013 11

of shares of Stock acquired under the Plan takes place outside of Canada through the facilities of a stock exchange on which the shares of Stock are listed. The shares of Stock are currently listed on the New York Stock Exchange.

3. Data Privacy . You hereby authorize the Company and the Company's representatives to discuss with and obtain all relevant information from all personnel, professional or not, involved in the administration and operation of the Plan. You further authorize the Company and its Affiliates, and any stock plan service provider that may be selected by the Company, to assist with the Plan to disclose and discuss the Plan with their respective advisors. You further authorize the Company and its Affiliates to record such information and to keep such information in your employee file.

4. Use of English Language . You acknowledge and agree that it is your express wish that this Agreement, as well as all documents, notices and legal proceedings entered into, given or instituted pursuant hereto or relating directly or indirectly hereto, be drawn up in English. Vous reconnaissez et consentez que c'est votre souhait exprès qui cet accord, de meme que tous documents, toutes notifications et tous procédés légaux est entré dans, donné ou instituté conformément ci-annexé ou relatant directement ou indirectement ci-annexé, est formulé dans l'anglais.

CHILE

Private Placement . In accordance with Circular 99 of 2001, from Chile's Superintendence of Securities, the grant of Units hereunder is not intended to be a public offering of securities in Chile but instead is intended to be a private placement. As a private placement, the Company has not submitted any registration statement, prospectus or other filings with the local securities authorities, and the Plan is not subject to the supervision of the local securities authorities.

CHINA

1. Immediate Sale of Shares . If you are a PRC national, you will be required to immediately sell all shares of Stock acquired upon vesting of the Units (in which case, this Addendum shall give the Company the authority to issue sales instructions on your behalf). You agree to sign any additional agreements, forms and/or consents that reasonably may be requested by the Company (or the Company's designated brokerage firm) to effectuate the sale of the shares of Stock (including, without limitation, as to the transfer of the sale proceeds and other exchange control matters noted below) and shall otherwise cooperate with the Company with respect to such matters. You acknowledge that neither the Company nor the designated brokerage firm is under any obligation to arrange for such sale of shares of Stock at any particular price (it being understood that the sale will occur in the market) and that broker's fees and similar expenses may be incurred in any such sale. In any event, when the shares of Stock are sold, the sale proceeds, less any tax withholding, any broker's fees or commissions, and any similar expenses of the sale will be remitted to you in accordance with applicable exchange control laws and regulations.

2. Exchange Control Restrictions . You understand and agree that, if you are subject

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to exchange control laws in China, you will be required to repatriate to China immediately the proceeds from the sale of any shares of Stock acquired under the Plan. You further understand that such repatriation of proceeds may need to be effected through a special bank account established by the Company, and you hereby consent and agree that proceeds from the sale of shares of Stock acquired under the Plan may be transferred to such account by the Company on your behalf prior to being delivered to you and that no interest shall be paid with respect to funds held in such account. The proceeds may be paid to you in U.S. dollars or local currency at the Company's discretion. If the proceeds are paid to you in U.S. dollars, you understand that a U.S. dollar bank account in China must be established and maintained so that the proceeds may be deposited into such account. If the proceeds are paid to you in local currency, you acknowledge that the Company is under no obligation to secure any particular exchange conversion rate and that the Company may face delays in converting the proceeds to local currency due to exchange control restrictions. You agree to bear any currency fluctuation risk between the time the shares of Stock are sold and the net proceeds are converted into local currency and distributed to you. You further agree to comply with any other requirements that may be imposed by the Company in the future in order to facilitate compliance with exchange control requirements in China.

3. Administration . The Company shall not be liable for any costs, fees, lost interest or dividends or other losses you may incur or suffer resulting from the enforcement of the terms of this Addendum or otherwise from the Company's operation and enforcement of the Plan, the Agreement and the Award in accordance with Chinese law including, without limitation, any applicable rules, regulations and requirements imposed by the State Administration of Foreign Exchange.

BY SIGNING BELOW, YOU ACKNOWLEDGE, UNDERSTAND AND AGREE TO THE TERMS AND CONDITIONS OF THE PLAN, YOUR AWARD AGREEMENT AND THIS ADDENDUM.

By no later than [INSERT DATE] , please sign and return this addendum to: [INSERT CONTACT NAME AND ADDRESS].

___________________________________ ______________________________

Employee Signature Employee Name (Printed)

Employee ID: _______________________________

_____________________

Date

DENMARK

Treatment of Units upon Termination of Service . Notwithstanding any provisions in the Agreement to the contrary, the treatment of the Units upon your termination of employment shall be governed by the Act on Stock Options in Employment Relations.

Rev. 6.2013 13

FRANCE

Use of English Language . You acknowledge and agree that it is your express wish that this Agreement, as well as all documents, notices and legal proceedings entered into, given or instituted pursuant hereto or relating directly or indirectly hereto, be drawn up in English. Vous reconnaissez et consentez que c'est votre souhait exprès qui cet accord, de meme que tous documents, toutes notifications et tous procédés légaux est entré dans, donné ou instituté conformément ci-annexé ou relatant directement ou indirectement ci-annexé, est formulé dans l'anglais.

HONG KONG

1. IMPORTANT NOTICE/WARNING . The Agreement, the Addendum thereto for Hong Kong, and all other materials pertaining to the Award have not been reviewed by any regulatory authority in Hong Kong. You are hereby advised to exercise caution in relation to the offer. If you have any doubts about any of the contents of the materials pertaining to the Award, you should obtain independent professional advice.

2. Lapse of Restrictions . If, for any reason, shares of Stock are issued to you within six months of the Grant Date, you agree that you will not sell or otherwise dispose of any such shares of Stock prior to the six-month anniversary of the Grant Date.

INDIA

Repatriation Requirements . As a condition of this Award, you agree to repatriate any funds received pursuant to the Plan (e.g., proceeds from the sale of shares, cash dividends) to India within 90 days of receipt. In addition, you agree to obtain evidence of the repatriation of funds in the form of a foreign inward remittance certificate (“FIRC”) from the bank where you deposit the foreign currency and to maintain the FIRC as evidence of the repatriation of funds in the event the Reserve Bank of India or your Employer requests proof of repatriation.

MEXICO

1. Acknowledgement of the Agreement . By accepting the Units, you acknowledge that you have received a copy of the Plan and the Agreement, including this Addendum, which you have reviewed. You acknowledge further that you accept all the provisions of the Plan and the Agreement, including this Addendum. You also acknowledge that you have read and specifically and expressly approve the terms and conditions set forth in the Agreement, which clearly provide as follows:


(1)	Your participation in the Plan does not constitute an acquired right;


(2)	The Plan and your participation in it are offered by the Company on a wholly discretionary basis;


(3)	Your participation in the Plan is voluntary; and

Rev. 6.2013 14


(4)	The Company and its Affiliates are not responsible for any decrease in the value of any shares of Stock acquired at vesting of the Units.

2. Labor Law Acknowledgement and Policy Statement . By accepting the Award, you acknowledge that the Company, with registered offices at One Boston Scientifc Place, Natick, Masachusetts 01760, United States of America, is solely responsible for the administration of the Plan. You further acknowledge that your participation in the Plan, the grant of Award and any acquisition of shares of Stock under the Plan do not constitute an employment relationship between you and the Company because you are participating in the Plan on a wholly commercial basis and your sole employer is [INSERT NAME OF LOCAL ENTITY]. Based on the foregoing, you expressly acknowledge that the Plan and the benefits that you may derive from participation in the Plan do not establish any rights between you and your employer, and do not form part of the employment conditions and/or benefits provided by your employer, and any modification of the Plan or its termination shall not constitute a change or impairment of the terms and conditions of your employment.

You further understand that your participation in the Plan is the result of a unilateral and discretionary decision of the Company; therefore, the Company reserves the absolute right to amend and/or discontinue your participation in the Plan at any time, without any liability to you.

Finally, you hereby declare that you do not reserve to yourself any action or right to bring any claim against the Company for any compensation or damages regarding any provision of the Plan or the benefits derived under the Plan, and you therefore grant a full and broad release to the Company and its Affiliates, branches, representation offices, shareholders, officers, agents or legal representatives, with respect to any claim that may arise.

Spanish Translation

1. Reconocimiento del Acuerdo . Al aceptar los Units, usted reconoce que ha recibido una copia del Plan, y el Acuerdo, con inclusión de este apéndice, que le han examinado. Usted reconoce, además, que usted acepta todas las disposiciones del Plan, y en el Acuerdo. Usted también reconoce que ha leído y, concretamente, y aprobar de forma expresa los términos y condiciones establecidos en el Acuerdo, que claramente dispone lo siguiente:


(1)	Su participación en el Plan no constituye un derecho adquirido;


(2)	El Plan y su participación en el Plan se ofrecen por la Compañía en su totalidad sobre una base discrecional;

(3) Su participación en el Plan es voluntaria; y


(4)	La Compañía y sus Afiliadas no son responsables de ninguna disminución en el valor de las acciones adquiridas en la adquisición de los « Units ».

2. Reconocimiento de Ausencia de Relación Laboral y Declaración de la Política . Al aceptar los Units, usted reconoce que la Compañía, con domicilio social en, One Boston Scientifc Place, Natick, Masachusetts 01760, Estados Unidos de América, es el único

Rev. 6.2013 15

responsable de la administración del Plan. Además, usted acepta que su participación en el Plan, la concesión de Units y cualquier adquisición de acciones en el marco del Plan no constituyen una relación laboral entre usted y la Compañía porque usted está participando en el Plan en su totalidad sobre una base comercial y su único empleador es [INSERT NAME OF LOCAL ENTITY]. Derivado de lo anterior, usted expresamente reconoce que el Plan y los beneficios que pueden derivarse de la participación en el Plan no establece ningún derecho entre usted y su empleador y que no forman parte de las condiciones de empleo y / o prestaciones previstas por su empleador, y cualquier modificación del Plan o la terminación de su contrato no constituirá un cambio o deterioro de los términos y condiciones de su empleo.

Además, usted comprender que su participación en el Plan es causada por una decisión discrecional y unilateral de la Compañía, por lo que la Compañía se reserva el derecho absoluto a modificar y / o suspender su participación en el Plan en cualquier momento, sin responsabilidad alguna para con usted.

Finalmente, usted manifiesta que no se reserva ninguna acción o derecho que origine una demanda en contra de la Compañía, por cualquier compensación o daño en relación con cualquier disposición del Plan o de los beneficios derivados del mismo, y en consecuencia usted otorga un amplio y total finiquito a la Compañía, sus Afiliadas, sucursales, oficinas de representación, sus accionistas, directores, agentes y representantes legales con respecto a cualquier demanda que pudiera surgir.

BY SIGNING BELOW, YOU ACKNOWLEDGE, UNDERSTAND AND AGREE TO THE TERMS AND CONDITIONS OF THE PLAN, YOUR AWARD AGREEMENT AND THIS ADDENDUM.

By no later than [INSERT DATE] , please sign and return this addendum to: [INSERT CONTACT NAME AND ADDRESS].

___________________________________ ______________________________

Employee Signature Employee Name (Printed)

Employee ID: _______________________________

_____________________

Date

NETHERLANDS

Waiver of Termination Rights . As a condition to the grant of the Units, you hereby waive any and all rights to compensation or damages as a result of the termination of employment with the Company and the Employer for any reason whatsoever, insofar as those rights result or may result from (a) the loss or diminution in value of such rights or entitlements under the Plan, or (b) your ceasing to have rights under, or ceasing to be entitled to any awards under the Plan as a result of such termination.

Rev. 6.2013 16

PHILIPPINES

Settlement in Cash . Pursuant Section 2 of the Agreement, the Company shall settle your Units in the form of a cash payment unless, at the time of vesting, share settlement does not trigger the need for any approval from and/or filing with the Philippines Securities and Exchange Commission.

SINGAPORE

1. Director Notification Requirement . Directors of a Singaporean Subsidiary and/or Affiliate are subject to certain notification requirements under the Singapore Companies Act. Directors must notify the Singapore Subsidiary and/or Affiliate in writing of an interest ( e.g. , unvested Units, shares of Stock, etc.) in the Company or any Subsidiary and/or Affiliate within two (2) days of (i) its acquisition or disposal, (ii) any change in previously disclosed interest ( e.g. , when shares of Stock acquired at vesting are sold), or (iii) becoming a director.

2. Private Placement . The grant of Units is being made pursuant to the “Qualifying Person” exemption” under section 273(1)(f) of the Securities and Futures Act (Chapter 289, 2006 Ed.) (“SFA”). The Plan has not been and will not be lodged or registered as a prospectus with the Monetary Authority of Singapore and is not regulated by any financial supervisory authority pursuant to any legislation in Singapore. Accordingly, statutory liability under the SFA in relation to the content of prospectuses would not apply. You should note that the Units are subject to section 257 of the SFA and you will not be able to make (i) any subsequent sale of the shares of Stock in Singapore or (ii) any offer of such subsequent sale of the shares of Stock subject to the Units in Singapore, unless such sale or offer is made pursuant to the exemptions under Part XIII Division (1) Subdivision (4) (other than section 280) of the SFA (Chapter 289, 2006 Ed.).

SOUTH AFRICA

1. Withholding Taxes . The following provision supplements Section 13 of the Agreement:

By accepting the Units, you agree to notify the Employer of the amount of any gain realized upon vesting of the Units. If you fail to advise the Employer of the gain realized upon vesting of the Units, you may be liable for a fine. You will be responsible for paying any difference between the actual tax liability and the amount withheld.

2. Exchange Control Obligations . You are solely responsible for complying with applicable exchange control regulations and rulings (the “Exchange Control Regulations”) in South Africa. As the Exchange Control Regulations change frequently and without notice, you should consult your legal advisor prior to the acquisition or sale of shares of Stock under the Plan to ensure compliance with current Exchange Control Regulations. Neither the Company nor any of its Affiliates will be liable for any fines or penalties resulting from your failure to comply with applicable laws.

Rev. 6.2013 17

SPAIN

Acknowledgement of Discretionary Nature of the Plan; No Vested Rights . This provision supplements the terms of the Agreement.

In accepting the grant of Units, you acknowledge that you consent to participation in the Plan and have received a copy of the Plan.

You understand that the Company has unilaterally, gratuitously and in its sole discretion granted Units under the Plan to individuals who may be employees of the Company or its Affiliates throughout the world. The decision is a limited decision that is entered into upon the express assumption and condition that any grant will not economically or otherwise bind the Company or any of its Affiliates on an ongoing basis. Consequently, you understand that the Units are granted on the assumption and condition that the Units and the shares of Stock acquired upon vesting of the Units shall not become a part of any employment contract (either with the Company or any of its Affiliates) and shall not be considered a mandatory benefit, salary for any purposes (including severance compensation) or any other right whatsoever. In addition, you understand that this grant would not be made to you but for the assumptions and conditions referenced above; thus, you acknowledge and freely accept that should any or all of the assumptions be mistaken or should any of the conditions not be met for any reason, the grant of Units shall be null and void.

You understand and agree that, as a condition of the grant of Units, your termination of employment for any reason (including the reasons listed below) will automatically result in the loss of the Units to the extent the Units have not vested as of date the you cease active employment. In particular, you understand and agree that any unvested Units as of the date you cease active employment will be forfeited without entitlement to the underlying shares of Stock or to any amount of indemnification in the event of the termination of employment by reason of, but not limited to, resignation, retirement, disability prior to the first anniversary of the Grant Date, disciplinary dismissal adjudged to be with cause, disciplinary dismissal adjudged or recognized to be without cause, individual or collective dismissal on objective grounds, whether adjudged or recognized to be with or without cause, material modification of the terms of employment under Article 41 of the Workers' Statute, relocation under Article 40 of the Workers' Statute, Article 50 of the Workers' Statute, unilateral withdrawal by the Employer and under Article 10.3 of the Royal Decree 1382/1985. You acknowledge that you have read and specifically accept the conditions referred to in the Agreement regarding the impact of a termination of employment on your Award.

BY SIGNING BELOW, YOU ACKNOWLEDGE, UNDERSTAND AND AGREE TO THE TERMS AND CONDITIONS OF THE PLAN, YOUR AWARD AGREEMENT AND THIS ADDENDUM.

Rev. 6.2013 18

By no later than [INSERT DATE] , please sign and return this addendum to: [INSERT CONTACT NAME AND ADDRESS].

___________________________________ ______________________________

Employee Signature Employee Name (Printed)

Employee ID: _______________________________

_____________________

Date

UNITED KINGDOM

1. Income Tax and Social Insurance Contribution Withholding . The following provision shall replace Section 13 of the Agreement:

Regardless of any action the Company or the Affiliate that employs you (the “Employer”) (if applicable) takes with respect to any or all income tax, primary and secondary Class 1 National Insurance contributions, payroll tax or other tax-related withholding attributable to or payable in connection with or pursuant to the grant or vesting of the Award and the acquisition of Stock, or the release or assignment of the Award for consideration, or the receipt of any other benefit in connection with the Award (“Tax-Related Items”), you acknowledge and agree that the ultimate liability for all Tax-Related Items legally due by you is and remains your responsibility. Furthermore, the Company and/or the Employer (a) make no representations or undertakings regarding the treatment of any Tax-Related Items in connection with any aspect of the Award, including the grant of the Award, the vesting of the Award, and the issuance of Stock in settlement, the subsequent sale of any Stock acquired and the receipt of any dividends; and (b) do not commit to structure the terms of the grant or any aspect of the Award to reduce or eliminate your liability for Tax-Related Items.

As a condition of the issuance of Stock upon vesting of the Award, the Company and/or the Employer shall be entitled to withhold and you agree to pay, or make adequate arrangements satisfactory to the Company and/or the Employer to satisfy, all obligations of the Company and/or the Employer to account to HM Revenue & Customs (“HMRC”) for any Tax-Related Items. In this regard, you authorize the Company and/or the Employer to withhold all applicable Tax-Related Items legally payable by you by withholding a sufficient number of whole shares of Stock having a fair market value (determined in the Company's reasonable discretion) on the applicable withholding date equal to the minimum amount of Tax-Related Items required to be withheld. Alternatively, or in addition, if permissible under local law, you authorize the Company and/or the Employer, at its discretion and pursuant to such procedures as it may specify from time to time, to satisfy the obligations with regard to all Tax-Related Items legally payable by you by one or a combination of the following: (a) withholding from any wages or other cash compensation paid to you by the Company and/or the Employer; (b) arranging for the sale of a sufficient number of whole shares of Stock otherwise deliverable to you (on your behalf and at your direction pursuant to this

Rev. 6.2013 19

authorization); or (c) withholding from the proceeds of the sale of a sufficient number of whole shares of Stock acquired upon vesting of the Award. If the obligation for Tax-Related Items is satisfied by withholding a whole number of shares of Stock as described herein, you will be deemed to have been issued the full number of shares subject to the Award, notwithstanding that a number of the shares of stock are held back solely for the purpose of paying the Tax-Related Items due as a result of any aspect of the Award.

If, by the date on which the event giving rise to the Tax-Related Items occurs (the "Chargeable Event"), you have relocated to another country, you acknowledge that the Company and/or the Employer may be required to withhold or account for Tax-Related Items in more than one country.

You also agree that the Company and the Employer may determine the amount of Tax-Related Items to be withheld and accounted for by reference to the maximum applicable rates, without prejudice to any right which you may have to recover any overpayment from the relevant tax authorities. You shall pay to the Company or the Employer any amount of Tax-Related Items that the Company or the Employer may be required to account to HMRC with respect to the Chargeable Event that cannot be satisfied by the means previously described. If any of the foregoing methods of collection are not allowed under applicable laws or if you fail to comply with your obligations in connection with the Tax-Related Items as described in this section, the Company may refuse to deliver the shares of Stock acquired under the Plan.

If payment or withholding is not made within 90 days of the Chargeable Event or such other period as required under U.K. law (the "Due Date"), you agree that the amount of any uncollected Tax-Related Items shall (assuming you are not a director or executive officer of the Company (within the meaning of Section 13(k) of the U.S. Securities and Exchange Act of 1934, as amended), constitute a loan owed by you to the Employer, effective on the Due Date. You agree that the loan will bear interest at the then-current HMRC Official Rate and it will be immediately due and repayable, and the Company and/or the Employer may recover it at any time thereafter by any of the means referred to above. Notwithstanding the foregoing, if you are a director or executive officer of the Company (within the meaning of Section 13(k) of the U.S. Securities and Exchange Act of 1934, as amended), you shall not be eligible for a loan from the Company to cover the income tax liability. In the event that you are a director or executive officer and the income tax is not collected from or paid by you by the Due Date, the amount of any uncollected income tax may constitute a benefit to you on which additional income tax and national insurance contributions (“NICs”) will be payable. You will be responsible for paying and reporting any income tax due on this additional benefit directly to HMRC under the self-assessment regime, and the Company or the Employer (as applicable) will hold you liable for the cost of any employee NICs due on this additional benefit. The Company or the Employer (as applicable) may recover the cost of any such employee NICs from you at any time by any of the means referred to in this Section 13.

2. Exclusion of Claim . You acknowledge and agree that you will have no entitlement to compensation or damages insofar as such entitlement arises or may arise from your

Rev. 6.2013 20

ceasing to have rights under or to be entitled to the Award, whether or not as a result of the termination of your employment with the Company or its Affiliates for any reason whatsoever (whether the termination is in breach of contract or otherwise), or from the loss or diminution in value of the Award. Upon the grant of the Award, you shall be deemed irrevocably to have waived any such entitlement.

Rev. 6.2013 21

EXHIBIT 10.4

Boston Scientific Corporation 2011 Long-Term Incentive Plan

Global Non-Qualified Stock Option Agreement

Month dd, yyyy

[Employee's Name]

(“Optionee”)

EMPLOYEE COPY

PLEASE RETAIN FOR YOUR RECORDS

Rev. 6.2013 1

Boston Scientific Corporation 2011 Long-Term Incentive Plan

Global Non-Qualified Stock Option Agreement

This Global Non-Qualified Stock Option Agreement (the “Agreement”), dated [dd ^th ] day of [Month], [yyyy] (the “Grant Date”), is between you and Boston Scientific Corporation, a Delaware corporation, (the “Company”) in connection with the Non-Qualified Stock Option Award granted to you by the Company. This Agreement sets forth the terms and conditions relating to your Stock Option pursuant to the Boston Scientific Corporation 2011 Long-Term Incentive Plan (the “Plan”). Capitalized terms used but not defined in this Agreement shall have the same meaning as assigned to them in the Plan. The applicable terms and conditions of the Plan are incorporated into and made a part of this Agreement.

1. Grant of Stock Option . The Committee hereby grants you a Stock Option to purchase that number of shares of Stock set forth on herein (the "Option Shares") at the price set forth herein (the "Grant Price"). The Grant Price is equal to the Fair Market Value of the Company's Stock on the Grant Date.

2. Term and Vesting of Stock Option . Except as otherwise provided in Section 4 below, your Stock Option shall have a term of ten (10) years from [Month] [dd], [yyyy] until [Month] [dd], [yyyy] (the “Expiration Date”) and shall vest in accordance with the vesting schedule. If the Expiration Date falls on a date on which the New York Stock Exchange is closed for trading, the Expiration Date shall be the trading day immediately prior to the Expiration Date.

3. Exercise of Stock Option . While this Stock Option remains exercisable, you may exercise any vested portion of the Option Shares by delivering to the Company or its designee, in the form and at the location specified by the Company, notice stating your intent to exercise a specified number of Option Shares and payment of the full Grant Price for the specified number of Option Shares. Payment in full for the Option Shares being exercised may be paid in such manner as the Committee may specify from time to time, in its sole discretion, including, but not limited to the following: (a) in cash, (b) by certified check or bank draft payable in U.S. dollars ($US) to the order of the Company, (c) in whole or in part in shares of Stock owned by you, valued at Fair Market Value, or (d) if available to you, via cashless exercise, by which you deliver to your securities broker instructions to sell a sufficient number of shares of Stock to cover the Grant Price for the Option Shares, any applicable tax obligations and the brokerage fees and expenses associated therewith. Notwithstanding the foregoing, if you reside in a country where the local foreign exchange rules and regulations either preclude the remittance of currency out of the country for purposes of paying the Grant Price for the Option Shares being exercised, or require the Company and/or you to secure any legal or regulatory approvals, complete any legal or regulatory filings, or undertake any additional steps for remitting currency out of the country, the Company may restrict the method of exercise to a form of cashless exercise (either a cashless “sell all” exercise and/or a cashless “sell to cover” exercise) as it shall determine in its sole discretion.

The exercise date applicable to your exercise of the specified number of Option Shares pursuant to this Section 3 will be deemed to be the date on which the Company receives your irrevocable commitment to exercise the Option Shares in writing, subject to your payment in full of the Option Shares to be exercised within 10 (ten) days of the notice of exercise of the Option Shares to be exercised. The notice and payment in full of the Option Shares being exercised, must be received by the Company or its designee on or prior to the last day of the Stock Option term, as set forth in Section 2 above, except as provided in Section 4 below.

Upon the Company's determination that there has been a valid exercise of the Option Shares, the Company shall issue certificates in accordance with the terms of this Agreement or cause the Company's transfer agent to make the necessary book entries for the shares of Stock subject to the exercised Option

Rev. 6.2013 2

Shares. However, the Company shall not be liable to you, your personal representative or your successor(s)-in-interest for damages relating to any delays in issuing the certificates or in making book entries, any loss of the certificates, or any mistakes or errors in the issuance of the certificates or in making book entries, or in the certificates themselves.

4. Termination of Employment .

a. Provided that you have remained in continuous service with the Company or an Affiliate through the first anniversary of the Grant Date, upon termination of your employment due to death or Disability (as such terms are defined in the Plan or determined under local law, as applicable), all remaining unexercised portion(s) of your Stock Option shall immediately vest and become exercisable by you or your appointed representative, as the case may be, until the expiration of the term of the Stock Option or such other term as the Committee may determine at or after grant, provided that such exercise period does not extend beyond the original term of the Stock Option.

b. In the event that your employment terminates due to death prior to the first anniversary of the Grant Date, a number of the Option Shares equal to that percentage of year completed (based on the number of full and partial months of employment completed in such vesting year rounded up to the nearest whole month) prior to death shall immediately vest and become exercisable until the expiration of the term of the Stock Option or such other term as the Committee may determine at or after grant, provided that such exercise period does not extend beyond the original term of the Stock Option. All remaining unvested Option Shares shall immediately be forfeited.

c. In the event that your employment terminates due to Disability prior to the first anniversary of the Grant Date, the Option Shares shall immediately be forfeited in their entirety.

d. Upon termination of your employment for reasons other than for Cause, death or Disability, you shall have the shorter of (i) one (1) year from the date of termination and (ii) the remaining term of the Stock Option to exercise all vested Option Shares. Immediately upon termination of your employment for reasons other than for Cause, death or Disability (including your termination by reason of Retirement (as such term is defined in the Plan or determined under local law), notwithstanding Section 4.a.(4)(B) of the Plan), all unvested Option Shares shall be forfeited; provided, however, that the Committee, in its sole discretion, may extend the exercise period and/or accelerate vesting of any unvested Option Shares (provided that such exercise period does not extend beyond the original term of the Stock Option). Your termination date shall be the last day of your active service with the Company or an Affiliate (if applicable).

e. Immediately upon notice of termination of your employment for Cause, all unexercised Option Shares, whether vested or unvested, shall be forfeited.

f. The Option Shares, to the extent unexercised on the date following the end of any period described above or the term of the Stock Option set forth above in Section 2, shall thereupon be forfeited.

g. Notwithstanding anything to the contrary in the Plan or the Agreement, and for purposes of clarity, any termination of employment shall be effective as of the date your active employment ceases and shall not be extended by any statutory or common law notice of termination period.

h. Any one of your permitted transferee(s) (pursuant to Section 8 below) shall receive the rights herein granted subject to the terms and conditions of this Agreement and any applicable Addendum.

Rev. 6.2013 3

No transfer of this Stock Option shall be approved and effected by the Administrator unless (i) the Administrator shall have been timely furnished with written notice of such transfer and any copies of such notice as the Committee may deem, in its sole discretion, necessary to establish the validity of the transfer; (ii) the transferee or transferees shall have agreed in writing to be bound by the terms and conditions of this Agreement and any applicable Addendum; and (iii) such transfer complies with applicable laws and regulations.

i. If you reside or work in a country where the local foreign exchange rules and regulations require the repatriation of sale proceeds, the Company may require you to sell any Option Shares you acquire under the Plan within a specified period following your termination of employment (in which case, this Agreement shall give the Company the authority to issue sales instructions on your behalf).

5. Change in Control . To the extent that you have not entered into a Change in Control Agreement with the Company and except as the Administrator (as defined in the Plan) may otherwise determine, immediately prior to a Change in Control (as defined in the Plan), any unvested portion of the Stock Option shall vest and become exercisable. In addition, the Stock Option shall terminate immediately prior to the Change in Control unless the Stock Option is exercised coincident therewith or assumed in accordance with the immediately following sentence. If there is a surviving or acquiring entity, the Administrator may provide for a substitution or assumption of the Stock Option by the acquiring or surviving entity or an affiliate thereof, on such terms as the Administrator determines. If there is no surviving or acquiring entity, or if the Administrator does not provide for a substitution or assumption of the Stock Option, any unvested portion of the Stock Option shall vest and become exercisable on a basis that gives you a reasonable opportunity to participate as a stockholder in the Change in Control. If you have entered into a Change in Control agreement with the Company, the Stock Option will vest according to the provisions of the Change in Control agreement.

6. Recoupment Policy .

(i) Definitions . The following terms, when used in this Section 6, shall have the meaning set forth below:

(1) "Current Executive Officer" means any individual currently designated as an “officer” by the Board for purposes of Section 16 of the Securities Exchange Act of 1934, as amended.

(2) "Executive Officer" means any Current Executive Officer or Former Executive Officer.

(4) "Recovery" means the forfeiture or cancellation of unexercised Stock Options, whether vested or unvested.

Rev. 6.2013 4

(b) Provisions Required by Law . If the Company subsequently determines that it is required by law to apply a "clawback" or alternate recoupment provision to outstanding Awards, under the Dodd-Frank Wall Street Reform and Consumer Protection Act or otherwise, then such clawback or recoupment provision also shall apply to this Award, as applicable, as if it had been included on the Grant Date and the Company shall notify you of such additional provision.

7. Restrictions on Shares; Legend on Certificate . Shares of Stock issued to you in certificate form or to your book entry account upon exercise of the Stock Option may be restricted from transfer or sale by the Company and evidenced by stop-transfer instructions upon your book entry account or restricted legend(s) affixed to certificates in the form as the Company or its counsel may require with respect to any applicable restrictions on sale or transfer.

8. Transferability . Except as required by law, you shall not sell, transfer, assign, pledge, gift, hypothecate or otherwise dispose of the Stock Option granted under this Agreement other than by will or the laws of descent and distribution or without payment of consideration to your Family Members or to trusts or other entities for the benefit of your Family Members. During your lifetime, the Stock Option is exercisable only by you, subject to Section 4 above.

9. Satisfaction of Tax Obligations . Regardless of any action the Company or the Affiliate that employs you (the “Employer”) (if applicable) takes with respect to any or all income tax (including U.S. federal, state and local taxes and/or non-U.S. taxes), social insurance, payroll tax, payment on account or other tax-related withholding (“Tax-Related Items”), you acknowledge and agree that the ultimate liability for all Tax-Related Items legally due by you is and remains your responsibility and that the Company and/or the Employer (a) make no representations or undertakings regarding the treatment of any Tax-Related Items in connection with any aspect of the Stock Option, including the grant of the Stock Option, the vesting of the Stock Option, the exercise of the Stock Option, the subsequent sale of any shares of Stock acquired upon exercise of the Stock Option and the receipt of any dividends, and (b) do not commit to structure the terms of the grant or any aspect of the Stock Option to reduce or eliminate your liability for Tax-Related Items.

Prior to the delivery of shares of Stock upon exercise of the Stock Option, if your country of residence (and/or the country of employment, if different) requires withholding of Tax-Related Items, the Company may withhold a sufficient whole number of shares of Stock otherwise issuable upon exercise of the Stock Option that has an aggregate Fair Market Value sufficient to pay the minimum Tax-Related Items required to be withheld with respect to the shares of Stock. The cash equivalent of the shares of Stock withheld will be used to settle the obligation to withhold the Tax-Related Items. By accepting the Stock Option, you expressly consent to the withholding of shares of Stock as provided for hereunder.

Alternatively, you hereby authorize the Company (on your behalf and at your direction pursuant to this authorization) to immediately sell a sufficient whole number of shares of Stock acquired upon exercise resulting in sale proceeds sufficient to pay the minimum Tax-Related Items required to be withheld. You agree to sign any agreements, forms and/or consents that reasonably may be requested by the Company (or the Company's designated brokerage firm) to effectuate the sale of the shares of Stock (including, without limitation, as to the transfer of the sale proceeds to the Company to satisfy the Tax-Related Items required to be withheld). Further, the Company or the Employer may, in its discretion, withhold any amount necessary to pay the Tax-Related Items from your salary or any other amounts payable to you, with no withholding of shares of Stock or sale of shares of Stock, or may require you to submit a cash payment equivalent to the minimum Tax-Related Items required to be withheld with respect to the exercised Stock Option.

Rev. 6.2013 5

All other Tax-Related Items related to the Stock Option and any shares of Stock delivered in payment thereof are your sole responsibility. In no event, shall whole shares be withheld by or delivered to the Company in satisfaction of any Tax-Related Items in excess of the maximum statutory tax withholding required by law. You agree to indemnify the Company and its Affiliates against any and all liabilities, damages, costs and expenses that the Company and its Affiliates may hereafter incur, suffer or be required to pay with respect to the payment or withholding of any Tax-Related Items.

The Stock Option is intended to be exempt from the requirements of Section 409A of the U.S. Internal Revenue Code of 1986, as amended (the “Code”). The Plan and this Agreement shall be administered and interpreted in a manner consistent with this intent. If the Company determines that the Agreement is subject to Code Section 409A and that it has failed to comply with the requirements of that Section, the Company may, in its sole discretion, and without your consent, amend this Agreement to cause it to comply with Code Section 409A or be exempt from Code Section 409A.

10. Repatriation and Legal/Tax Compliance Requirements . If you are a resident or employed outside of the United States, you agree, as a condition of the Stock Option grant, to repatriate all payments attributable to the shares of Stock and/or cash acquired under the Plan (including, but not limited to, dividends and any proceeds derived from the sale of the shares of Stock acquired pursuant to the Stock Option) in accordance with local foreign exchange rules and regulations in your country of residence (and country of employment, if different). In addition, you agree to take any and all actions, and consent to any and all actions taken by the Company and the Employer, as may be required to allow the Company and the Employer to comply with local laws, rules and regulations in your country of residence (and country of employment, if different). Finally, you agree to take any and all actions as may be required to comply with your personal legal and tax obligations under local laws, rules and regulations in your country of residence (and country of employment, if different).

11. Data Privacy . The collection, processing and transfer of your personal data as it relates to the Stock Option is necessary for the Company's administration of the Plan and your participation in the Plan, and your denial and/or objection to the collection, processing and transfer of personal data may affect your ability to participate in the Plan. As such, you voluntarily acknowledge, consent and agree (where required under applicable law) to the collection, use, processing and transfer of personal data as described in this Section 11.

You understand that the Company or the Employer (if applicable) holds certain personal information about you, including (but not limited to) your name, home address and telephone number, date of birth, social security number or other employee identification number, salary, nationality, job title, any shares of Stock held in the Company, and details of all Stock Options awarded to you (vested and unvested) for the purpose of managing and administering the Plan (“Data”). The Data may be provided by you or collected, where lawful, from the Company, its Affiliates or third parties, and the Company or the Employer will process the Data for the exclusive purpose of implementing, administering and managing your participation in the Plan. The data processing will take place through electronic and non-electronic means according to logics and procedures strictly correlated to the purposes for which the Data is collected and with confidentiality and security provisions as set forth by applicable laws and regulations in your country of residence.

Rev. 6.2013 6

or E*Trade (or its successor) may engage to assist with the administration of the Plan from time to time. You also consent to the transfer of Data outside your country of residence or employment (if applicable), including to the United States. You hereby authorize (where required under applicable law) the recipients to receive, possess, use, retain and transfer the Data, in electronic or other form, for purposes of implementing, administering and managing your participation in the Plan, including any requisite transfer of such Data as may be required for the administration of the Plan and/or the subsequent holding of shares of Stock on your behalf to a broker or other third party with whom you may elect to deposit any shares of Stock acquired pursuant to the Plan.

12. No Rights to Continued Employment . The Stock Option granted under the Plan and this Agreement (and any applicable Addendum to this Agreement) shall not confer upon you any right to continue in the employ of the Company or the Employer, and this Agreement (and any applicable Addendum to this Agreement) shall not be construed in any way to limit the Company's (or Employer's, as the case may be) right to terminate or change the terms of your employment (as otherwise may be permitted under local law).

13. Discretionary Nature of Plan . You acknowledge and agree that the Plan is discretionary in nature and may be amended, cancelled or terminated by the Administrator, in its sole discretion, at any time. The Stock Option granted under the Plan is a one-time benefit and does not create any contractual or other right to receive Stock Options or benefits in lieu of Stock Options in the future. Future Awards under the Plan, if any, will be at the sole discretion of the Administrator, including, but not limited to, the form and timing of the Award, the number of shares of Stock subject to such Award, the vesting provisions and the grant price. Any amendment, modification or termination of the Plan shall not constitute a change or impairment of the terms and conditions of your employment with the Company or the Employer.

14. Voluntary Participation in Plan . You acknowledge that your participation in the Plan is voluntary.

15. Extraordinary Item of Compensation . The value of the Stock Option granted under the Plan is an extraordinary item of compensation outside the scope of your employment (and your employment contract, if any). Any Award granted under the Plan, including this Stock Option, is not part of normal or expected compensation for purposes of calculating any severance, resignation, redundancy, end of service payments, bonuses, long-service awards, pension or retirement benefits or similar payments, and, in no event, should be considered as compensation for, or relating in any way to, past services for the Company or the Employer.

16. Waiver of Entitlement to Compensation or Damages . In consideration of the grant of the Stock Option under this Agreement, no claim or entitlement to compensation or damages shall arise from termination of the Stock Option or diminution in value of the shares of Stock acquired upon vesting of the Stock Option resulting from termination of your employment by the Company or the Employer (for any reason whatsoever and whether or not in breach of local labor laws) and you irrevocably release the Company and the Employer from any such claim that may arise. Notwithstanding the foregoing, if any such claim is

Rev. 6.2013 7

found by a court of competent jurisdiction to have arisen, then, by accepting this Agreement, you will be deemed to have irrevocably waived your entitlement to pursue such claim.

17. Securities Laws . Upon the acquisition of any shares of Stock pursuant to the exercise of the Stock Option, you will make or enter into such written representations, warranties and agreements as the Company may reasonably request in order to comply with applicable securities laws or with the Plan.

18. Not a Public Offering . Neither the grant of the Stock Option under the Plan nor the issuance of the underlying shares of Stock upon exercise of the Stock Option is intended to be a public offering of securities in your country of residence (and country of employment, if different). The Company has not submitted any registration statement, prospectus or other filings to the local securities authorities unless otherwise required under local law.

19. No Advice Regarding Grant . No Employee of the Company is permitted to advise you regarding whether you should purchase shares of Stock under the Plan. Investment in shares of Stock involves a degree of risk. Before deciding to purchase shares of Stock pursuant to the Stock Option, you should carefully consider all risk factors relevant to the acquisition of shares of Stock under the Plan, and you should carefully review all of the materials related to the Stock Option and the Plan. You are hereby advised to consult with your own personal tax, legal and financial advisors before taking any action related to the Plan.

20. Award Subject to the Plan . The Award to be made pursuant to this Agreement is made subject to the Plan. The terms and provisions of the Plan, as it may be amended from time to time, are hereby incorporated herein by reference. In the event of a conflict between any term or provision contained in this Agreement and a term or provision of the Plan, the applicable terms and conditions of the Plan will govern and prevail. However, no amendment of the Plan after the date hereof may adversely alter or impair the issuance of the shares of Stock to be made pursuant to this Agreement. You hereby accept the Stock Option subject to all the terms and provisions of the Plan and this Agreement and agree that all decisions under, and interpretations of, the Plan and this Agreement by the Administrator, Committee or the Board shall be final, binding and conclusive upon you and your heirs and legal representatives.

21. Electronic Delivery of Documents . The Company may, in its sole discretion, deliver any documents related to the Stock Option and participation in the Plan, or future grants of Stock Options that may be granted under the Plan, by electronic means unless otherwise prohibited by local law. You hereby consent to receive such documents by electronic delivery and agree to participate in the Plan through an on-line or electronic system established and maintained by the Company or a third party-designated by the Company.

22. Language . If you are resident outside of the United States, you hereby acknowledge and agree that it is your express intent that this Agreement and any applicable Addendum, the Plan and all other documents, notices and legal proceedings entered into, given or instituted pursuant to the Stock Option, be drawn up in English. If you have received this Agreement and any applicable Addendum, the Plan or any other documents related to the Stock Option translated into a language other than English, and if the meaning of the translated version is different than the English version, the English version will control.

Rev. 6.2013 8

23. Addendum . Notwithstanding any provision of this Agreement to the contrary, the Stock Option shall be subject to any special terms and conditions for your country of residence (and country of employment, if different) as are forth in the applicable addendum to the Agreement (the “Addendum”). Further, if you transfer your residence and/or employment to another country reflected in the Addenda to this Agreement, the special terms and conditions for such country will apply to you to the extent the Company determines, in its sole discretion, that the application of such terms and conditions is necessary or advisable in order to comply with local laws, rules, and regulations, or to facilitate the operation and administration of the Award and the Plan (or the Company may establish alternative terms and conditions as may be necessary or advisable to accommodate your transfer). Any applicable Addendum shall constitute part of this Agreement.

24. Additional Requirements . The Administrator reserves the right to impose other requirements on the Stock Option, any shares of Stock acquired pursuant to the Stock Option and your participation in the Plan to the extent the Administrator determines, in its sole discretion, that such other requirements are necessary or advisable in order to comply with local laws, rules, and regulations or to facilitate the operation and administration of the Award and the Plan. Such requirements may include (but are not limited to) requiring you to sign any agreements or undertakings that may be necessary to accomplish the foregoing.

25. Legal Notices . Any legal notice necessary under this Agreement shall be addressed to the Company in care of its Secretary at the principal executive office of the Company and to you at the address appearing in the personnel records of the Company for you or to either party at such other address as either party may designate in writing to the other. Any such notice shall be deemed effective upon receipt thereof by the addressee.

26. Choice of Law . The interpretation, performance and enforcement of this Agreement shall be governed by the laws of The Commonwealth of Massachusetts (without regard to the conflicts of laws principles) and applicable federal laws. For purposes of litigating any dispute that arises directly or indirectly from the relationship of the parties evidenced by this Agreement, the parties hereby submit and consent to the exclusive jurisdiction of the Commonwealth of Massachusetts and agree that such litigation shall be conducted only in the Commonwealth of Massachusetts, or the federal courts for the United States for the District of Massachusetts, and no other courts, where this Award is made and/or to be performed.

27. Conflicts . The Stock Option granted by this Agreement and any applicable Addendum is subject to the Plan. The terms and provisions of the Plan as it may be amended from time to time are hereby incorporated herein by reference. This Agreement contains terms and provisions established by the Committee specifically for the grant described herein. Unless the Committee has exercised its authority under the Plan to establish specific terms of an Award, the terms of the Plan shall govern. Subject to the limitations set forth in the Plan, the Committee retains the right to alter or modify the Stock Option granted under this Agreement as the Committee may determine are in the best interests of the Company.

27. Headings . The headings contained in this Agreement are for convenience only and shall not affect the meaning or interpretation of this Agreement.

29. Counterparts . This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original and all of which together shall be deemed to be one and the same instrument.

Rev. 6.2013 9

IN WITNESS WHEREOF, the Company, by its duly authorized officer, and the Optionee have executed and delivered this Agreement effective as of the date and year first above written.

Option Shares of Stock: <<XXXX>>

Grant Price: $

Vesting Schedule:



Percent of Stock Option
25%		Month dd, yyyy
25%		Month dd, yyyy
25%		Month dd, yyyy
25%		Month dd, yyyy

PARTICIPANT:

Signature _____________________________

<<Employee Name>>

BOSTON SCIENTIFIC CORPORATION

Michael F. Mahoney

President and Chief Executive Officer

Rev. 6.2013 10

BOSTON SCIENTIFIC CORPORATION

ADDENDUM TO THE AWARD AGREEMENT

RELATING TO NON-QUALIFIED STOCK OPTIONS GRANTED

PURSUANT TO THE 2011 LONG-TERM INCENTIVE PLAN

In addition to the terms of the Plan and the Agreement, the Stock Option is subject to the following additional terms and conditions. All defined terms contained in this Addendum shall have the same meaning as set forth in the Plan and the Agreement. Pursuant to Section 23 of the Agreement, if you transfer your residence and/or employment to another country reflected in an Addendum, the additional terms and conditions for such country (if any) will apply to you to the extent the Company determines, in its sole discretion, that the application of such terms and conditions is necessary or advisable in order to comply with local laws, rules, and regulations or to facilitate the operation and administration of the Award and the Plan (or the Company may establish alternative terms and conditions as may be necessary or advisable to accommodate your transfer).

BELGIUM

1. Acceptance of Stock Options . In order for the Stock Options to be subject to taxation at the time of grant, you must affirmatively accept the Stock Options in writing within 60 days of the Grant Date specified above by signing below and returning this original executed Addendum to:

[INSERT CONTACT NAME AND ADDRESS]

I hereby accept the ________ (number) Stock Options granted to me by the Company on the Grant Date.

The undersigned acknowledges that he/she has been encouraged to discuss this matter with a financial and/or tax advisor and that this decision is made in full knowledge.

Employee Signature: _______________________________

Employee Printed Name: _______________________________

Date of Acceptance: _______________________________

If you fail to affirmatively accept the Stock Options in writing within 60 days of the Grant Date, the Stock Options will not be subject to taxation at the time of grant but instead will be subject to taxation on the date you exercise the Stock Options (or such other treatment as may apply under Belgian tax law at the time of exercise).

2. Undertaking for Qualifying Options . If you are accepting the Stock Options in writing within 60 days of the Grant Date and wish to have the Stock Options subject to a lower valuation for Belgium tax purposes pursuant to the article 43, §6 of the Belgian law of 26 March 1999, you may agree and undertake to (a) not exercise the Stock Options before the end of the third calendar year following the calendar year in which the Grant Date falls, and (b) not transfer the Stock Options under any circumstances (except upon on rights your heir might have in the Stock Options upon your death). If you wish to make this undertaking, you must sign below and return this executed Addendum to the address listed above by [INSERT DATE].

Employee Signature: _______________________________

Rev. 6.2013 11

Employee Printed Name: _______________________________

CANADA

1. Use of Previously Owned Shares . Notwithstanding any provision in Section 3 of the Agreement or the Plan to the contrary, if you are resident in Canada, you may not use previously-owned shares of Stock to pay the Grant Price or any Tax-Related Items in connection with the Stock Option.

2. Securities Law Notice . You are permitted to sell shares of Stock acquired under the Plan through the designated broker appointed under the Plan, if any, provided the resale of shares of Stock acquired under the Plan takes place outside of Canada through the facilities of a stock exchange on which the shares of Stock are listed. The shares of Stock are currently listed on the New York Stock Exchange.

CHILE

Private Placement . In accordance with Circular 99 of 2001, from Chile's Superintendence of Securities, the grant of the Stock Options hereunder is not intended to be a public offering of securities in Chile but instead is intended to be a private placement. As a private placement, the Company has not submitted any registration statement, prospectus or other filings with the local securities authorities, and the Plan is not subject to the supervision of the local securities authorities.

CHINA

1. Mandatory Cashless Sell-All Exercise . As permitted under Section 3 of the Agreement and unless and until the Committee determines otherwise, the method of exercise of the Stock Option shall be limited to mandatory cashless, sell-all exercise.

2. Limitations on Exercisability Following Termination of Service if Required by Law . Notwithstanding any provision in the Agreement or Plan to the contrary, the period during which you may exercise the Stock Option following your termination of employment for any reason may be shortened to the extent necessary or appropriate to comply with local laws, rules and regulations (including, but not limited to, requirements imposed by the State Administration of Foreign Exchange).

Rev. 6.2013 12

3. Exchange Control Restrictions . You understand and agree that, if you are subject to exchange control laws in China, you will be required to repatriate to China immediately the proceeds from the sale of any shares of Stock acquired under the Plan. You further understand that such repatriation of proceeds may need to be effected through a special bank account established by the Company or its Affiliate, and you hereby consent and agree that proceeds from the sale of shares of Stock acquired under the Plan may be transferred to such account by the Company on your behalf prior to being delivered to you and that no interest shall be paid with respect to funds held in such account. The proceeds may be paid to you in U.S. dollars or local currency at the Company's discretion. If the proceeds are paid to you in U.S. dollars, you understand that a U.S. dollar bank account in China must be established and maintained so that the proceeds may be deposited into such account. If the proceeds are paid to you in local currency, you acknowledge that the Company is under no obligation to secure any particular exchange conversion rate and that the Company may face delays in converting the proceeds to local currency due to exchange control restrictions. You agree to bear any currency fluctuation risk between the time the shares of Stock are sold and the net proceeds are converted into local currency and distributed to you. You further agree to comply with any other requirements that may be imposed by the Company and its Affiliates in the future in order to facilitate compliance with exchange control requirements in China.

4. Administration . The Company shall not be liable for any costs, fees, lost interest or dividends or other losses you may incur or suffer resulting from the enforcement of the terms of this Addendum or otherwise from the Company's operation and enforcement of the Plan, the Agreement and the Award in accordance with Chinese law including, without limitation, any applicable SAFE rules, regulations and requirements.

BY SIGNING BELOW, YOU ACKNOWLEDGE, UNDERSTAND AND AGREE TO THE TERMS AND CONDITIONS OF THE PLAN, YOUR AWARD AGREEMENT AND THIS ADDENDUM.

By no later than [INSERT DATE] , please sign and return this addendum to: [INSERT CONTACT NAME AND ADDRESS].

___________________________________ ______________________________

Employee Signature Employee Name (Printed)

Employee ID: _______________________________

_____________________

Date

DENMARK

Treatment of Stock Option Upon Termination of Employment . Notwithstanding any provisions in the Agreement to the contrary, the treatment of the Stock Option upon your termination of employment shall be governed by the Act on Stock Option in Employment Relations.

FRANCE

Rev. 6.2013 13

entré dans, donné ou instituté conformément ci-annexé ou relatant directement ou indirectement ci-annexé, est formulé dans l'anglais.

HONG KONG

IMPORTANT NOTICE/WARNING . The Agreement, the Addendum thereto for Hong Kong, and all other materials pertaining to the Stock Option have not been reviewed by any regulatory authority in Hong Kong. You are hereby advised to exercise caution in relation to the offer. If you have any doubts about any of the contents of the materials pertaining to the Stock Option, you should obtain independent professional advice.

INDIA

ITALY

Mandatory Cashless Sell-All Exercise . As permitted under Section 3 of the Agreement and unless and until the Committee determines otherwise, the method of exercise of the Stock Option shall be limited to mandatory cashless, sell-all exercise.

MEXICO

1. Acknowledgement of the Agreement . By accepting the Stock Option, you acknowledge that you have received a copy of the Plan and the Agreement, including this Addendum, which you have reviewed. You acknowledge further that you accept all the provisions of the Plan and the Agreement, including this Addendum. You also acknowledge that you have read and specifically and expressly approve the terms and conditions set forth in the Agreement, which clearly provide as follows:


(1)	Your participation in the Plan does not constitute an acquired right;


(2)	The Plan and your participation in it are offered by the Company on a wholly discretionary basis;


(3)	Your participation in the Plan is voluntary; and


(4)	The Company and its Affiliates are not responsible for any decrease in the value of any shares of Stock acquired at vesting of the Stock Option.

Rev. 6.2013 14

not constitute an employment relationship between you and the Company because you are participating in the Plan on a wholly commercial basis and your sole employer is [INSERT NAME OF LOCAL ENTITY]. Based on the foregoing, you expressly acknowledge that the Plan and the benefits that you may derive from participation in the Plan do not establish any rights between you and your employer, and do not form part of the employment conditions and/or benefits provided by your employer, and any modification of the Plan or its termination shall not constitute a change or impairment of the terms and conditions of your employment.

Spanish Translation

1. Reconocimiento del Acuerdo . Al aceptar la Opción, usted reconoce que ha recibido una copia del Plan, y el Acuerdo, con inclusión de este apéndice, que le han examinado. Usted reconoce, además, que usted acepta todas las disposiciones del Plan, y en el Acuerdo. Usted también reconoce que ha leído y, concretamente, y aprobar de forma expresa los términos y condiciones establecidos en el Acuerdo, que claramente dispone lo siguiente:


(1)	Su participación en el Plan no constituye un derecho adquirido;


(2)	El Plan y su participación en el Plan se ofrecen por la Compañía en su totalidad sobre una base discrecional;

(3) Su participación en el Plan es voluntaria; y


(4)	La Compañía y sus Afiliadas no son responsables de ninguna disminución en el valor de las acciones adquiridas en la adquisición de la « Opción».

2. Reconocimiento de Ausencia de Relación Laboral y Declaración de la Política . Al aceptar la Opción, usted reconoce que la Compañía, con domicilio social en, One Boston Scientifc Place, Natick, Masachusetts 01760, Estados Unidos de América, es el único responsable de la administración del Plan. Además, usted acepta que su participación en el Plan, la concesión de la Opción y cualquier adquisición de acciones en el marco del Plan no constituyen una relación laboral entre usted y la Compañía porque usted está participando en el Plan en su totalidad sobre una base comercial y su único empleador es [INSERT NAME OF LOCAL ENTITY]. Derivado de lo anterior, usted expresamente reconoce que el Plan y los beneficios que pueden derivarse de la participación en el Plan no establece ningún derecho entre usted y su empleador y que no forman parte de las condiciones de empleo y / o prestaciones previstas por su empleador, y cualquier modificación del Plan o la terminación de su contrato no constituirá un cambio o deterioro de los términos y condiciones de su empleo.

Rev. 6.2013 15

BY SIGNING BELOW, YOU ACKNOWLEDGE, UNDERSTAND AND AGREE TO THE TERMS AND CONDITIONS OF THE PLAN, YOUR AWARD AGREEMENT AND THIS ADDENDUM.

By no later than [INSERT DATE] , please sign and return this addendum to: [INSERT CONTACT NAME AND ADDRESS].

___________________________________ ______________________________

Employee Signature Employee Name (Printed)

Employee ID: _______________________________

_____________________

Date

NETHERLANDS

Waiver of Termination Rights . As a condition to the grant of the Stock Options, you hereby waive any and all rights to compensation or damages as a result of the termination of employment with the Company and the Employer for any reason whatsoever, insofar as those rights result or may result from (i) the loss or diminution in value of such rights or entitlements under the Plan, or (ii) your ceasing to have rights under, or ceasing to be entitled to any awards under the Plan as a result of such termination.

PHILIPPINES

SINGAPORE

1. Director Notification Requirement . Directors of a Singaporean Subsidiary and/or Affiliate are subject to certain notification requirements under the Singapore Companies Act. Directors must notify the Singapore Subsidiary and/or Affiliate in writing of an interest ( e.g. , unvested Stock Options, shares of Stock, etc.) in the Company or any Subsidiary and/or Affiliate within two (2) days of (i) its acquisition or disposal, (ii) any change in previously disclosed interest ( e.g. , when shares of Stock acquired at vesting are sold), or (iii) becoming a director.

2. Private Placement . The grant of the Stock Option under the Plan is being made pursuant to the “Qualifying Person” exemption” under section 273(1)(f) of the Securities and Futures Act (Chapter 289, 2006 Ed.) (“SFA”). The Plan has not been and will not be lodged or registered as a prospectus with the Monetary Authority of Singapore and is not regulated by any financial supervisory authority pursuant to any legislation in Singapore. Accordingly, statutory liability under the SFA in relation to the content of prospectuses would not apply. You should note that the Stock Option is subject to section 257 of the SFA

Rev. 6.2013 16

and you will not be able to make (i) any subsequent sale of the shares of Stock in Singapore or (ii) any offer of such subsequent sale of the shares of Stock subject to the Stock Option in Singapore, unless such sale or offer is made pursuant to the exemptions under Part XIII Division (1) Subdivision (4) (other than section 280) of the SFA (Chapter 289, 2006 Ed.).

SOUTH AFRICA

1. Withholding Taxes . The following provision supplements Section 9 of the Agreement:

By accepting the Stock Options, you agree to notify the Employer of the amount of any gain realized upon exercise of the Stock Options. If you fail to advise the Employer of the gain realized upon exercise of the Stock Options, you may be liable for a fine. You will be responsible for paying any difference between the actual tax liability and the amount withheld.

SPAIN

Acknowledgement of Discretionary Nature of the Plan; No Vested Rights . This provision supplements the terms of the Agreement.

In accepting the Stock Option grant, you acknowledge that you consent to participation in the Plan and have received a copy of the Plan.

You understand that the Company has unilaterally, gratuitously and in its sole discretion granted Stock Options under the Plan to individuals who may be employees of the Company or its Affiliates throughout the world. The decision is a limited decision that is entered into upon the express assumption and condition that any grant will not economically or otherwise bind the Company or any of its Affiliates on an ongoing basis. Consequently, you understand that the Stock Option is granted on the assumption and condition that the Stock Option and the shares of Stock acquired upon exercise of the Stock Option shall not become a part of any employment contract (either with the Company or any of its Affiliates) and shall not be considered a mandatory benefit, salary for any purposes (including severance compensation) or any other right whatsoever. In addition, you understand that this grant would not be made to you but for the assumptions and conditions referenced above; thus, you acknowledge and freely accept that should any or all of the assumptions be mistaken or should any of the conditions not be met for any reason, the Stock Option grant shall be null and void.

You understand and agree that, as a condition of the Stock Option grant, your termination of employment for any reason (including the reasons listed below) will automatically result in the loss of the Stock Option to the extent the Stock Option has not vested as of date the you cease active employment. In particular, you understand and agree that any unvested Stock Option as of the date you cease active employment and any vested portion of the Stock Option not exercised within the post-termination exercise period set out in the Agreement will be forfeited without entitlement to the underlying shares of Stock or to any amount of indemnification in the event of the termination of employment by reason of, but not limited to, resignation,

Rev. 6.2013 17

retirement, disability prior to the first anniversary of the Grant Date, disciplinary dismissal adjudged to be with cause, disciplinary dismissal adjudged or recognized to be without cause, individual or collective dismissal on objective grounds, whether adjudged or recognized to be with or without cause, material modification of the terms of employment under Article 41 of the Workers' Statute, relocation under Article 40 of the Workers' Statute, Article 50 of the Workers' Statute, unilateral withdrawal by the Employer and under Article 10.3 of the Royal Decree 1382/1985. You acknowledge that you have read and specifically accept the conditions referred to in the Agreement regarding the impact of a termination of employment on your Stock Option.

BY SIGNING BELOW, YOU ACKNOWLEDGE, UNDERSTAND AND AGREE TO THE TERMS AND CONDITIONS OF THE PLAN, YOUR AWARD AGREEMENT AND THIS ADDENDUM.

By no later than [INSERT DATE] , please sign and return this addendum to: [INSERT CONTACT NAME AND ADDRESS].

___________________________________ ______________________________

Employee Signature Employee Name (Printed)

_____________________

Date

UNITED KINGDOM

1. Tax and Social Insurance Contribution Withholding . The following provision shall replace Section 9 of the Agreement:

Regardless of any action the Company or the Affiliate that employs you (the “Employer”) (if applicable) takes with respect to any or all income tax, primary and secondary Class 1 National Insurance contributions, payroll tax or other tax-related withholding attributable to or payable in connection with or pursuant to the grant or exercise of any Stock Option and the acquisition of shares of Stock, or the release or assignment of any Stock Option for consideration, or the receipt of any other benefit in connection with the Stock Option (“Tax-Related Items”), you acknowledge and agree that the ultimate liability for all Tax-Related Items legally due by you is and remains your responsibility. Furthermore, the Company and/or the Employer (a) make no representations or undertakings regarding the treatment of any Tax-Related Items in connection with any aspect of the Stock Option, including the grant or exercise of the Stock Option and the acquisition of shares of Stock, the subsequent sale of any shares of Stock acquired upon exercise and the receipt of any dividends; and (b) do not commit to structure the terms of the grant or any aspect of the Stock Option to reduce or eliminate your liability for Tax-Related Items.

As a condition of the issuance of shares of Stock upon exercise of the Stock Option, the Company and/or the Employer shall be entitled to withhold and you agree to pay, or make adequate arrangements satisfactory to the Company and/or the Employer to satisfy, all obligations of the Company and/or the Employer to account to HM Revenue & Customs (“HMRC”) for any Tax-Related Items. In this regard, you authorize the Company and/or the Employer to withhold all applicable Tax-Related Items legally payable by you from any wages or other cash compensation paid to you by the Company and/or the Employer. Alternatively, or in addition, if permissible under local law, you authorize the Company and/or the Employer, at its discretion and pursuant to such procedures as it may specify from time to time, to satisfy the obligations with regard to all Tax-Related Items legally payable by you by one or a combination of the following: (a) withholding a sufficient number of whole shares of Stock otherwise deliverable; (b) arranging for the sale of a sufficient

Rev. 6.2013 18

number of whole shares of Stock otherwise deliverable to you (on your behalf and at your direction pursuant to this authorization); or (c) withholding from the proceeds of the sale of shares of Stock acquired upon exercise of the Stock Option. If the obligation for Tax-Related Items is satisfied by withholding a whole number of shares of Stock as described herein, you are deemed to have been issued the full number of shares of Stock subject to the Stock Option, notwithstanding that a number of the shares of Stock are held back solely for the purpose of paying the Tax-Related Items due as a result of any aspect of the Stock Option.

If payment or withholding is not made within 90 days of the Chargeable Event or such other period as required under U.K. law (the "Due Date"), you agree that the amount of any uncollected Tax-Related Items shall (assuming you are not a director or executive officer of the Company (within the meaning of Section 13(k) of the U.S. Securities and Exchange Act of 1934, as amended), constitute a loan owed by you to the Employer, effective on the Due Date. You agree that the loan will bear interest at the then-current HMRC Official Rate and it will be immediately due and repayable, and the Company and/or the Employer may recover it at any time thereafter by any of the means referred to above. Notwithstanding the foregoing, if you are a director or executive officer of the Company (within the meaning of Section 13(k) of the U.S. Securities and Exchange Act of 1934, as amended), you shall not be eligible for a loan from the Company to cover the income tax liability. In the event that you are a director or executive officer and the income tax is not collected from or paid by you by the Due Date, the amount of any uncollected income tax may constitute a benefit to you on which additional income tax and national insurance contributions (“NICs”) will be payable. You will be responsible for paying and reporting any income tax due on this additional benefit directly to HMRC under the self-assessment regime, and the Company or Employer (as applicable) will hold you liable for the cost of any emplyee NICs due on this additional benefit. The Company or the Employer (as applicable) may recover the cost of any such employee NICs from you at any time by any of the means referred to in this Section 9.

2. Exclusion of Claim. You acknowledge and agree that you will have no entitlement to compensation or damages insofar as such entitlement arises or may arise from your ceasing to have rights under or to be entitled to the Award, whether or not as a result of the termination of your employment with the Company or its Affiliates for any reason whatsoever (whether the termination is in breach of contract or otherwise), or from the loss or diminution in value of the Award. Upon the grant of the Award, you shall be deemed irrevocably to have waived any such entitlement.

Rev. 6.2013 19

Exhibit 10.5

Boston Scientific Corporation

Severance Pay and Layoff Notification Plan

As Amended and Restated

(Bridge Plan)

Effective as of August 1, 2013

Table of Contents



A	Introduction		1
B	Eligibility and Participation in the Plan		1
C	Source of Severance Benefits		1
D	Severance Benefits		1
		1. Conditions for Receiving Severance Benefits	1
		2. Layoff	2
		3. Release Agreement	3
		4. Severance Benefits	3
		5. Payment of Severance Benefits	5
		6. Death	6
		7. Reporting Obligations	6
		8. Benefits Not Vested; Limitation of Rights	7
		9. Expatriate Employees	7
		10. Coordination With Other Plans and Arrangements	7
		11. No Assignment of Benefits	7
E	Layoff Notification		8
		1. WARN Notice	8
		2. Notice in Other Circumstances; Pay in Lieu of Notice	8
		3. Employee Rights and Obligations During Notice Period	8
		4. Effect of Layoff on Annual Performance Incentive Plan Payment	8
F	Plan Administration		9
G	Claim and Appeal Procedures		9
H	Amendment and Termination of the Plan		10
I	Section 409A		10
J	Governing Law		10
K	Glossary		10

- i -

Boston Scientific Corporation

Severance Pay and Layoff Notification Plan

As Amended and Restated

(Bridge Plan)


A.	Introduction

This document is a complete restatement, effective August 1, 2013, of the Boston Scientific Corporation Severance Pay and Layoff Notification Plan, which was previously restated effective January 1, 2012 ("Plan"). This Plan, which is also known as the Bridge Plan, applies to eligible Employees who were hired or rehired by the Company prior to January 1, 2012 and receive Notice after December 31, 2011 and before January 1, 2014 (except as provided in Schedule B). For these Employees, this restated Plan serves as both the Plan's official document and its summary plan description, and it supersedes and replaces any Plan document, summary, or description previously provided with respect to the Plan. The Prior Plan continued to apply to eligible Employees who received Notice prior to January 1, 2012 and eligible Employees described in Schedule B.

The purpose of the Plan is to provide severance benefits to eligible Employees who lose their jobs with the Company involuntarily under the circumstances specified in the Plan. The Plan is also designed to meet the requirements of the federal law known as WARN for those Employees who are entitled to notice under WARN.

The Glossary in Section K defines the capitalized terms used in this Plan (or identifies for you where in this document to find a term's meaning). When you see a capitalized term, turn to the Glossary to find its meaning.


B.	Eligibility and Participation in the Plan

You are eligible to participate in the Plan if you are a Regular Employee hired or most recently rehired by the Company prior to January 1, 2012, and you did not receive Notice under the Prior Plan by December 31, 2011. If you are eligible, you automatically became a Plan participant on January 1, 2012.

Plan participation ends upon any of the following:


•	When you no longer meet the eligibility requirements to participate in the Plan;


•	When all Severance Benefits to which you are entitled have been paid;


•	When your employment ends for any reason other than a Layoff;


•	When a Plan amendment makes you ineligible for Plan participation; or


•	When the Plan terminates before you have received Notice.


C.	Source of Severance Benefits

The Company pays the entire cost of all Severance Benefits from its general assets.


D.	Severance Benefits


1.	Conditions for Receiving Severance Benefits

The Plan provides Severance Benefits only in the event of a Layoff. If your employment terminates due to a Layoff while you are a Plan participant, you will be entitled to receive Severance Benefits only if you satisfy all of the following conditions:


•	After December 31, 2011 and before January 1, 2014, you are given Notice that your employment will be involuntarily terminated due to a Layoff;


•	You remain employed by the Company and actively at work until the date determined by the Company to be your last day of work (for this purpose, you are considered to be actively at work during an Authorized Leave of Absence); and


•	You continue to honor all contractual obligations you may have to the Company, including, without limitation, any confidentiality and nondisclosure agreement and restrictions on post-employment activities.

In addition , to be entitled to receive Severance Pay under the Plan, you must sign a Release Agreement by the deadline specified in that document, and you must not validly revoke it within the Revocation Period. (Also, Outplacement Assistance will be subject to a specified dollar limitation if you do not timely sign, or if you timely revoke, a Release Agreement.)

To receive Severance Benefits, you must continue to satisfy all applicable conditions and eligibility requirements to the date you receive those benefits, and you must continue to honor all contractual obligations you may have to the Company, including, without limitation, any confidentiality and nondisclosure agreement and restrictions on post-employment activities. You must also comply with the reporting obligations described in Section D.7. If you fail to satisfy an applicable condition or eligibility requirement before all Severance Benefits have been provided to you, you will not be entitled to any Severance Benefits that have not yet been paid or otherwise provided. For example, if you receive Notice that your employment will terminate due to a Layoff but you terminate your employment before the date determined by the Company to be your last day of work, you will not be entitled to any Severance Benefits that have not been provided to you as of the date you terminate your employment. In addition, if within one year of your receipt of Severance Pay you violate any applicable restrictions on post-termination activities or any other contractual obligation you may have to the Company, you will have the repayment obligations described in Section D.8.


2.	Layoff

A Layoff is a termination by the Company of your employment with the Company that is either:


•	Due to an anticipated facility relocation or closing or a reduction in staffing levels, and you have not refused or otherwise failed to accept a Similar Position with the Company that remains available at the time of Notice; or


•	The result of an anticipated Transaction or Reorganization, and you are not provided an opportunity to be employed in a Similar Position with the acquiring or resulting entity.

For purposes of the Plan, if you are not a Field Employee, a new position will be considered a Similar Position if it results in no more than a 10% reduction in Base Salary and is located within 35 miles of your place of work as of the date you are offered the new position. If you are a Field Employee, a new position will be considered a Similar Position if it results in no more than a 10% reduction in Target Total Cash Compensation and is located within 35 miles of your place of work as of the date you are offered the new position.

Regardless of whether you receive Notice, your termination of employment will not be considered a Layoff, and you will not receive Severance Benefits, if your employment terminates for any reason other than a Layoff. For example, you will not be considered to have a Layoff, and, therefore, you will not receive Severance Benefits, if your employment terminates for any of the following reasons:


•	Voluntary Resignation;


•	Job abandonment;


•	Failure to timely return from an Authorized Leave of Absence;


•	Performance-related problems;


•	Misconduct or other "cause," as determined by the Company in its sole discretion;


•	You do not accept an offer of employment in a Similar Position from the Company that remains available at the time of Notice, or, in the event of a Transaction or Reorganization, you have an opportunity to be employed in a Similar Position by the acquiring or resulting entity; or

•

The Company, or an acquiring or resulting entity following a Transaction or Reorganization, offers you a Similar Position after you receive Notice but before your Termination Date. After your Termination Date, the offer of a Similar Position will not cause you to be considered not to have a Layoff or otherwise affect your eligibility for Severance Benefits. However, if you accept such an offer after your Termination Date, you will be required to repay a portion of your Severance Pay as provided in Section D.5.(b).

In addition, you will not be considered to have a Layoff if you accept an offer of employment in any position with the Company or any Affiliate or, in the event of a Transaction or Reorganization, with the acquiring or resulting entity.


3.	Release Agreement

Your receipt of Severance Pay (and certain Outplacement Assistance) under the Plan is conditioned on your execution of a Release Agreement. The Release Agreement will be a written document, in a form determined by the Company, that creates a binding agreement by you to release any claims that you have or may have against the Company (and certain related entities and individuals) that arise on or before the date you sign the Release Agreement, including without limitation, any claims under the ADEA.

If you are covered by the ADEA (or a similar state law), you will generally have a period of either 21 days or 45 days, as specified in the Release Agreement, to consider the Release Agreement before signing it, and you will be advised to consult an attorney before signing the Release Agreement. If you are covered by the ADEA (or a similar state law), you will also have the right to revoke the Release Agreement within the Revocation Period.

Although you may be given a copy of the Release Agreement before your Termination Date, you cannot sign it earlier than your Termination Date. The Plan Administrator reserves the right not to accept any Release Agreement signed before your Termination Date. If you do not sign the Release Agreement by the deadline set by the Plan Administrator, or, if applicable, you revoke the Release Agreement within the Revocation Period, you will not receive Severance Pay under the Plan. Except as expressly provided in Section D.4(b), your receipt of Other Severance Benefits will not be conditioned on your execution of the Release Agreement (so you may begin receiving those benefits before you have signed the Release Agreement and before the Revocation Period has expired).

If for any reason, you are provided Severance Pay and you either did not sign a Release Agreement or you timely revoked the Release Agreement, then you are required to reimburse the Company for the Severance Pay you received.


4.	Severance Benefits

If you satisfy all of the applicable conditions and eligibility requirements, you will become entitled to Severance Benefits, which consist of Severance Pay, Outplacement Assistance, and, if applicable, Subsidized COBRA Coverage.


(a)	Severance Pay . Severance Pay will be calculated, as shown in the table below, based on your position classification, Pay, and Years of Service. Your Severance Pay will be equal to a number of weeks of Pay, up to a maximum of 52 weeks,

based on your position classification and Years of Service, subject to the applicable minimum for your position classification, as shown in the following table:



Position classification*	Weeks of Pay per Year of Service	Minimum number of weeks of Pay
Non-Exempt Positions	2 weeks per Year of Service	4 weeks
Exempt Positions below director level	4 weeks per Year of Service	8 weeks
Exempt Positions director level and above	4 weeks per Year of Service	26 weeks

Maximum of 52 weeks for all classifications.

(b)

Outplacement Assistance . Severance Benefits include Outplacement Assistance to help you in your transition. Outplacement Assistance will be provided through a third-party vendor selected by the Company. You will be given information about the Outplacement Assistance available to you when, or shortly after, you receive Notice. Subject to the terms of the particular Outplacement Assistance program available to you, Outplacement Assistance may become available to you shortly after you receive Notice. Basic Outplacement Assistance is not conditioned on signing a Release Agreement, so you may begin to access Outplacement Assistance before your Termination Date. However, if you do not timely sign, or if you timely revoke, a Release Agreement, your Outplacement Assistance will be limited to assistance having a cost to the Company of no more than $1,800 . The Company, in its sole discretion, will determine the nature, level, terms and conditions, and duration of the Outplacement Assistance available under the Plan, which may vary by position classification and other factors. The Company will pay the cost of Outplacement Assistance directly to the vendor, and you will not be entitled to a cash payment or any other benefit in lieu of Outplacement Assistance under any circumstances .

(c)

Subsidized COBRA Coverage . Under the terms of the Company's benefit plans, health coverage (medical, dental, and vision) ends on your Termination Date, but you will have the opportunity to elect COBRA continuation coverage for you (and, if applicable, your covered dependents) under any of the Company's health plans that cover you as of your Termination Date. Normally, former employees who elect COBRA coverage must pay the full cost of that coverage (that is, both the employee and employer portions of the applicable cost). However, if you are entitled to Severance Benefits, and you (and, if applicable, your covered dependents) timely elect COBRA continuation coverage under any of those plans, then, as part of your Severance Benefits, the Company will subsidize the cost of the elected COBRA coverage for the number of months indicated on the chart below, up to a maximum of 12 months of Subsidized COBRA Coverage . For the applicable number of months indicated on the chart, you will be required to pay only the monthly contribution amount that then applies to active employees under the plan(s) and coverage option(s) applicable to you (and/or your dependent(s)). The Company will be responsible for the remaining cost of the COBRA coverage during that period. If your COBRA coverage ends before the total number months of Subsidized COBRA Coverage available to you, then your Subsidized COBRA Coverage will end when your COBRA coverage ends. If you wish to continue COBRA coverage longer than the total number of months of Subsidized COBRA Coverage available to you, then you will be required to pay the full monthly cost for

COBRA coverage in months after the subsidy ends. Please note that your eligibility for Subsidized COBRA Coverage depends on your initial and continued eligibility for, and your timely election of, COBRA continuation coverage under one or more of the Company's health plans. You will not be entitled to a cash payment or any other benefit in lieu of Subsidized COBRA Coverage under any circumstances .

The number of months of Subsidized COBRA available to you is determined, according to the chart below, by your position classification (determined in the same manner as for calculating Severance Pay) and your Years of Service:



Position classification	Months of Subsidized COBRA Coverage per Year of Service	Minimum number of months of Subsidized COBRA coverage
Non-exempt positions	1 month per Year of Service	1 month
Exempt positions below director level	1 month per Year of Service	2 months
Exempt positions director level and above	1 month per Year of Service	6 months

Maximum of 12 months for all classifications


5.	Payment of Severance Benefits


(a)	Time and Form of Payment for Severance Pay . Your Severance Pay will be paid in one lump sum payment within 30 days after your Revocation Period ends. Note that if you are not entitled by law to revoke the Release Agreement, your lump sum payment will be made within 30 days after the date you sign the Release Agreement.

(b)

Reemployment by the Company . If you are Reemployed by the Company or an Affiliate within 6 months after your Termination Date, then as a condition of that Reemployment, you will be required to repay to the Company a portion of your Severance Pay. The portion you will be required to repay will be a fraction of the total amount of Severance Pay you received. The denominator of the fraction will be 6, and the numerator will be 6 minus the number of months between your Termination Date and your Reemployment Date. For purposes of determining the number of months, a period of 15 days or more will be treated as a month, and a period of less than 15 days will be disregarded. For example, if your Termination Date is June 15 and you become Reemployed by the Company effective September 21 (3 months and 6 days after your Termination Date), you will be required to repay 3/6 of the total amount of Severance Pay you received. (The 6-day period after the third whole month is less than 15 days and is, therefore, disregarded.) If instead you become Reemployed on September 30 (3 months and 16 days after your Termination Date), you will be required to repay 2/6 of the total amount of Severance Pay you received. (The 15-day period after the third whole month counts as a month, so you would be considered Reemployed 4 months after your Termination Date.)


(c)	Deductions From Severance Pay . Applicable federal, state, and local income and employment taxes (and any other deductions required by applicable law) will be withheld from your Severance Pay. In addition, the Company reserves the right to deduct any of the following from your Severance Pay, to the extent permitted by applicable law:


•	Any amount you owe the Company or an Affiliate (for example, amounts owed for insurance plan premiums, borrowed vacation days, loans, relocation obligations, or unsubstantiated credit card charges and other non-reimbursable expenses).


•	For U.S. expatriates, an amount equal to any payments of severance required to be paid by law in any country other than the U.S. and tax equalization payments due to the Company or an Affiliate.

In addition, Severance Pay will be reduced for benefits payable under certain other plans and arrangements as provided in Section D.10.

(d)

Correction of Errors . The Plan Administrator reserves the right to correct any errors that may occur in administering the Plan, including, without limitation, the right to recover any Severance Benefits paid in excess of those due to you because of a mistake, incorrect information about your entitlement to Severance Benefits, your failure to notify the Plan Administrator or COBRA administrator of an event affecting your continued eligibility for COBRA coverage, or any other reason. The Plan Administrator may recover any excess Severance Benefits by reducing or suspending future Severance Benefits, requesting direct payment from you, withholding wages or any other monies owed to you (if permitted by applicable law), or by using any other appropriate legal means.


(e)	How Other Benefits Are Affected . Severance Benefits are not considered compensation for purposes of any qualified or nonqualified deferred compensation or retirement plan (which means, for example, that 401(k) plan deferrals cannot be taken from Severance Pay).


(f)	Limitation on Severance Pay . Notwithstanding anything to the contrary in this Plan, your total Severance Pay will not exceed an amount that is twice the dollar limitation in effect under Code section 401(a)(17) for the calendar year immediately preceding the calendar year in which you separate from service with the Company and all Affiliates. For 2013, that dollar limitation is $255,000.


6.	Death

If you die after you are given Notice of Layoff but before all of your Severance Benefits have been paid or provided, the Severance Pay that would have been payable to you under the Plan will be payable to your estate, and your eligible covered dependents (if any) will be eligible for Subsidized COBRA Coverage to the same extent as if you had not died, subject to any conditions that would have applied to you under the Plan, including the timely execution of a Release Agreement by the authorized representative of your estate.


7.	Reporting Obligations

Employees who receive Severance Benefits are expected to report benefit coverage (for example, from new employment) or other events that may affect eligibility for Severance Benefits. The

Plan Administrator may condition your continued eligibility for Severance Benefits on your compliance with this reporting obligation, including your full and prompt response to requests for information.


8.	Benefits Not Vested; Limitation of Rights

The Plan does not give any Employee a nonforfeitable or vested right to Severance Benefits. The Plan Administrator may discontinue benefits otherwise payable to you if you do not abide by the conditions specified in the Plan or the Release Agreement. In addition, for the one-year period following your receipt of a lump sum payment of Severance Pay under the Plan, your Severance Pay will be subject to an equitable lien by agreement, and the Plan Administrator will have the right to require you to repay the full amount of your Severance Pay to the Company if, within that one-year period, (1) you violate any applicable restriction on post-termination activities or other contractual obligation you may have to the Company, or (2) facts are disclosed or discovered that would have constituted “cause” for termination, as determined by the Plan Administrator in its sole discretion. You must make the repayment to the Company within 30 calendar days of receiving written notice from the Plan Administrator demanding the repayment.

Neither the establishment of the Plan, nor any amendment of it, will be construed as giving any Employee or other person any legal or equitable right against the Company, and this Plan does not modify or in any way affect the terms of employment or service of any Employee. Nothing contained in the Plan, nor any action taken under it, will be construed as a contract of employment or as giving any Employee any right to continued employment with the Company.


9.	Expatriate Employees

This Plan applies to Employees on expatriate assignments. If, while you are on an expatriate assignment, the Company notifies you in writing that, following your expatriate assignment, you will not be offered a job with the Company or an Affiliate in the United States that results in no more than a 10% reduction in pay, that notification will be treated as Notice for purposes of this Plan, unless the reason for the Company's decision not to offer you a job in the United States is a reason that would disqualify you from eligibility for Severance Benefits under this Plan.


10.	Coordination With Other Plans and Arrangements

If you have a change in control agreement, employment agreement, or any similar arrangement with the Company or an Affiliate, any Severance Benefits payable to you under this Plan will be reduced by the amount of payments or benefits that you are or will be entitled to receive under that agreement or arrangement in connection with the termination of your employment, regardless of whether that other agreement or arrangement expressly refers to this Plan. Similarly, any Severance Pay payable to you under this Plan will be reduced by the amount of any payments that you are or will become entitled to receive under any Company or Affiliate plan designed as full or partial income replacement, including, but not limited to, payments under the Boston Scientific Corporation Executive Retirement Plan or under any of the Company's or Affiliates' short-term disability, long-term disability, or workers' compensation plans or coverages. Also, you will not be entitled to Other Severance Benefits in connection with a Layoff if you are also entitled to benefits under the Boston Scientific Corporation Executive Retirement Plan. In addition, any Severance Benefits payable to you under this Plan will be reduced by any and all other benefits or payments prescribed under any applicable law or regulation requiring severance benefits or payments. Any reduction under this Section D.10. will be effective on the day after your Termination Date.


11.	No Assignment of Benefits

You may not, in any manner, sell, pledge, transfer, assign, encumber, or otherwise dispose of any of your Severance Benefits before they are paid to you. Any attempt to do so will be void.


E.	Layoff Notification


1.	WARN Notice

When a Layoff results in a facility closing or relocation, or a significant reduction in staffing levels over a 30-day period of time through involuntary termination, and the Layoff requires advance notice under WARN, affected Employees will receive at least 60 days Notice. The Company will determine whether a Layoff requires advance notice under WARN and, if so, the appropriate notification period.


2.	Notice in Other Circumstances; Pay in Lieu of Notice

If the Company determines that a Layoff will not require advance notice under WARN, the Company will generally provide affected Employees with at least 30 days advance Notice. If for any reason the Company does not provide you with at least 30 days' Notice, your Severance Pay will be increased by the Pay that otherwise would have been due to you for the period from your Termination Date to the end of the 30-day period that begins on the date Notice is given. Notwithstanding the preceding sentence, the Company will not be obligated to provide 30 days' advance Notice or additional Severance Pay in the event of a Layoff due to a Transaction.


3.	Employee Rights and Obligations During Notice Period

At the time the Company provides you Notice, or at any later time, the Company may notify you that you are no longer required to report for active work. In that event, the Company reserves the right to change that determination and require you to report to active work during the Notice period. Even if you are not required to report to active work during your Notice period, the Company will continue to pay you your Base Salary, and will continue your benefits to the extent permitted by, and in accordance with, the applicable governing plan documents, until the end of the Notice period. As a condition of continued employment and continued eligibility for Severance Benefits, you may not be employed by another employer during the Notice period, except to the extent that the Company approved the other employment in writing before giving you Notice. Base salary continued during the Notice period (maximum of 60 days from the date of the Notice) will be paid in accordance with the Company's then current payroll cycle.


4.	Effect of Layoff on Annual Bonus Plan Payment

Generally, Employees are not entitled to a bonus payment under the Company's Annual Bonus Plan for a calendar year if they terminate employment with the Company and Affiliates before the payment date for that bonus (which occurs by March 15 ^th of the following year). If you terminate employment due to a Layoff during a calendar year, you are not entitled to any bonus under the Annual Bonus Plan for that calendar year, except that if your Termination Date occurs on or after October 1 of a calendar year and you were employed in a Bonus Eligible Position for at least 9 months in the calendar year, you will be entitled to a prorated bonus for that calendar year. Notwithstanding the preceding sentence, if you receive Notice of Layoff on or after August 1, 2012 and prior to January 1, 2014, you will be entitled to a prorated bonus for a calendar year if your Termination Date occurs on or after July 1 of that calendar year and you were employed in a Bonus Eligible Position for at least 6 months in the calendar year. The prorated bonus will be calculated by multiplying the amount of the bonus you would have received for the calendar year had you remained employed by the Company until the bonus payment date (or, if less, the target bonus) times a fraction, the denominator of which is the number of days in the calendar year, and the numerator of which is the number of days in which you were an Employee in a Bonus Eligible Position during the calendar year. The prorated bonus will be paid to you on the same day that bonuses for the calendar year are paid under the Annual Bonus Plan to active Employees.


F.	Plan Administration

The Plan Administrator administers the Plan and is a named fiduciary of the Plan under ERISA. The Plan Administrator has the discretionary authority to construe and interpret all Plan provisions and to decide all issues arising under the Plan, including issues of eligibility, coverage, and benefits. Any determination by the Plan Administrator will be final and binding, in the absence of clear and convincing evidence that the Plan Administrator acted arbitrarily and capriciously. The Plan Administrator's discretionary authority includes the discretion to determine whether and when to enforce or exercise any terms or rights under the Plan. The Plan Administrator's failure to enforce any provision of this Plan does not affect its right later to enforce that provision or any other Plan provision. In addition, the Plan Administrator has the authority, at its discretion, to delegate its responsibilities under the Plan to others.


G.	Claim and Appeal Procedures

If you (or your beneficiary) believe that you are entitled to a benefit that has not been provided or to a greater or different benefit than has been provided, or if you disagree with any other action taken by the Plan Administrator, you (or your beneficiary) may file a claim by writing to the Plan Administrator. The Plan Administrator will notify you of its decision on your claim within 90 days after you file it. If special circumstances require extension of the 90-day period, the Plan Administrator may extend the period for up to an additional 90 days by notifying you, in writing, of the extension, the reason for it, and the date by which the Plan Administrator expects to render a decision. If your claim is denied, in whole or in part, the Plan Administrator will notify you in writing, and the notice will include the following:


•	the specific reason(s) for denying the claim,


•	specific reference to the Plan provision(s) on which the denial is based,


•	a description of any additional material or information that you may need to provide with respect to the claim, with an explanation of why the material or information is necessary, and


•	an explanation of your right to appeal the claim denial under the Plan's review procedures and your right to bring a civil court action following any further denial of your claim on review.

If your claim is denied, in whole or in part, you may appeal to the Plan Administrator for a review of the denial. For these purposes, you may consider your claim to have been denied if the Plan Administrator does not respond to your claim within 90 days after receiving it. The following rules apply to your right of appeal:


•	You or your duly authorized representative must file a written request for review with the Plan Administrator within 60 days after you receive the Plan Administrator's written denial of your claim or within 150 days after the Plan Administrator received the request if you have not received a written response.


•	Your written request must be signed by you or your authorized representative.


•	Upon reasonable request and free of charge, you may review, or obtain copies of, records, documents, and other information in the Plan Administrator's possession relevant to your claim.


•	You may also submit issues, arguments, and other comments in writing to the Plan Administrator, along with any documentary evidence in support of your claim.


•	You may have representation throughout the appeal procedure.

In its review of your claim, the Plan Administrator will take into account all comments, documents, records and other information you submit, regardless of whether the information was submitted or considered in the initial claim decision. The Plan Administrator will give you its decision, in writing, within 60 days after it receives your written request for review. If special circumstances require extension of the 60-day period, the Plan Administrator may extend the period for an additional 60 days by notifying you, in writing, of the extension, the reason for it, and the date by which you can expect a decision.

If the Plan Administrator again denies your claim, in whole or in part, it will notify you, in writing, and the notice will include the following:


•	the specific reason(s) for the denial,


•	specific references to the Plan provision(s) on which the denial is based,


•	a description of your right to receive, upon request and free of charge, reasonable access to, and copies of, all documents, records, and other information in the Plan Administrator's possession relevant to your claim, and


•	an explanation of your right to bring a civil court action under Section 502(a) of ERISA.


H.	Amendment and Termination of the Plan

Boston Scientific Corporation, as Plan sponsor, reserves the right to terminate or amend the Plan, in whole or in part, at any time in its sole discretion, by action of its duly authorized officer.

The Plan is a transitional plan that will remain in effect only until all Severance Benefits due have been provided to those eligible Employees who receive Notice after January 1, 2012, and before January 1, 2014. The Plan will automatically terminate once all of those Severance Benefit obligations have been satisfied.


I.	Section 409A

Code section 409A is a federal tax law governing deferred compensation. To the fullest extent possible, Severance Benefits payable under the Plan are intended to be exempt from Code section 409A's definition of "deferred compensation" under one or more exemptions available under the final Treasury regulations interpreting Code section 409A. To the extent that any such amount or benefit becomes subject to Code section 409A, the Plan is intended to comply with the applicable requirements of Code section 409A with respect to those amounts or benefits, so as to avoid the imposition of taxes and penalties. The Plan will be interpreted and administered, to the extent possible, consistent with this statement of intent.

Under Code section 409A, special payment standards apply to Specified Employees of publicly traded companies. Notwithstanding anything to the contrary in this Plan, in the event that any portion of the Severance Benefits due to an Employee constitutes deferred compensation subject to Code section 409A, and the Employee is a Specified Employee as of his or her Termination Date, then payment of that portion of the Severance Benefits will be delayed until the first business day following the date that is six (6) calendar months after the Employee's Termination Date (or, if earlier, the date of the Employee's death following his or her termination of employment).


J.	Governing Law

The Plan will be governed by, and construed in accordance with, the laws of the Commonwealth of Massachusetts, to the extent not preempted by ERISA or other federal law.


K.	Glossary

When used in this document, the following words and terms have the following meanings, unless the context clearly indicates a different meaning.

ADEA means the federal Age Discrimination in Employment Act, as amended.

Affiliate means any corporation, trust, partnership, or any other entity that is considered to be a single employer with the Company under Code sections 414(b), (c), (m), or (o), such as a wholly-owned (or at least 80%-owned) subsidiary of Boston Scientific Corporation.

Annual Bonus Plan means, for any calendar year, the applicable Boston Scientific Corporation Annual Bonus Plan.

Authorized Leave of Absence means a leave of absence granted by the Company in accordance with its established personnel policies.

Base Salary means your regular established rate of pay, not including overtime, shift differential, bonuses (such as the Annual Bonus Plan award), incentives, commissions, or any element of compensation other than base salary or base wages. For a full-time Regular Employee, your weekly Base Salary is your annual Base Salary divided by 52. For a part-time Regular Employee, your weekly Base Salary is your regular straight time hourly rate of pay (excluding any shift differential) multiplied the average number of hours per week (not exceeding 40) that you worked during the 12 months (or, if less, your most recent period of employment as a part-time Regular Employee) immediately preceding your Termination Date.

Board means the board of directors of Boston Scientific Corporation.

Bonus Eligible Position means a position eligible for participation in the Annual Bonus Plan.

COBRA means the continuation coverage requirements of the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended.

Code means the Internal Revenue Code of 1986, as amended, and its interpretive regulations.

Company means Boston Scientific Corporation and those of its domestic participating Affiliates identified on the attached Schedule A, as it may be amended and updated from time to time.

Employee means an individual who is employed by the Company on its United States payroll (not including any payroll in Puerto Rico) and is classified by the Company as a common law employee who receives regular and stated compensation (other than a retainer or a pension) initially reported on a federal wage and tax statement (Form W-2). An Employee does not include any worker who is classified by the Company as an independent contractor or leased worker (employed and paid by an unaffiliated third-party agency), even if the worker is later deemed by a court, arbitrator, or governmental agency to be a common law employee of the Company or an Affiliate.

ERISA means the Employee Retirement Income Security Act of 1974, as amended, and its interpretive rules and regulations.

Exempt Position is a position that the Company has determined to be exempt from the minimum wage and overtime requirements of the Fair Labor Standards Act of 1938, as amended (FLSA).

Field Employee means an Employee who participates in a field commission plan, typically in lieu of the Annual Bonus Plan (e.g., receives territory, regional, area, or national commissions).

Human Resources Department means the human resources department of Boston Scientific Corporation.

Layoff is defined in Section D.2.

Non-Exempt Position means a position that the Company has determined to be covered by (that is, not exempt from) the minimum wage and overtime requirements of the Fair Labor Standards Act of 1938, as amended (FLSA).

Notice is a written notification that your employment with the Company will be involuntarily terminated due to a Layoff. Except as provided in Section D.9 (regarding expatriate Employees), a notification of termination of employment is not Notice unless it is in writing and specifies (1) a projected Termination Date, or (2) a time period within which your Termination Date is anticipated to occur.

Other Severance Benefits means Outplacement Assistance and Subsidized COBRA Coverage.

Outplacement Assistance is defined and described in paragraph (b) of Section D.4.

Pay means, if you are not a Field Employee, your weekly Base Salary at the rate in effect on your Termination Date. If you are a Field Employee, Pay means the sum of (1) your weekly Base Salary at the rate in effect on your Termination Date, plus (2) your weekly commissions. For this purpose, your weekly commissions will be determined by multiplying 12 times the average monthly commissions actually paid to you during the 12 months (or, if less, your most recent period of employment as a Field Employee) immediately preceding the date of your Notice, and then dividing that product by 52.

Plan or Bridge Plan means the Boston Scientific Corporation Severance Pay and Layoff Notification Plan, as Amended and Restated (Bridge Plan), as set forth in this document and as amended from time to time.

Plan Administrator means Boston Scientific Corporation or the person or committee appointed by the Board or its designee to supervise the administration of the Plan.

Prior Plan means the Boston Scientific Severance Pay and Layoff Notification Plan, as amended and restated effective as of August 1, 2008, as in effect immediately prior to January 1, 2012.

Reemployment or Reemployed means that, after your Termination Date, you are rehired by the Company or an Affiliate as a Regular Employee or as a defined-term employee or you are otherwise engaged by the Company or an Affiliate as an independent contractor or consultant, unless you are engaged through a contract with a bona fide third party entity that provides consulting services to other companies and that arrangement is approved in advance by the Plan Administrator.

Regular Employee means an Employee who is classified by the Company as a regular full-time or regular part-time Employee and who is not any of the following:


•	classified by the Company as an intern, summer student, co-op employee, or similar short-term employee; or


•	classified by the Company as a consultant, temporary or defined-term employee (such as temporary fellowship program employees), or similar category of limited-term employment, regardless of their work schedule or number of hours worked.

If you would be a Regular Employee but for your being on an Authorized Leave of Absence, then for purposes of the Plan you will continue to be a Regular Employee during your Authorized Leave of Absence.

Release Agreement is defined in Section D.3. Your Release Agreement is part of, and subject to the terms and conditions of, the Plan.

Reorganization means any form of corporate reorganization.

applicable state law) from the date you sign the Release Agreement. You do not have a Revocation Period if you are not covered by the ADEA (for example, because you are under age 40) or a similar state law that provides you a revocation right.

Severance Benefits are defined and described in Section D.4.

Severance Pay is defined and described in paragraph (a) of Section D.4.

Similar Position is defined in Section D.2.

Specified Employee has the meaning given in Code Section 409A(a)(2)(b)(i). (It basically means as one of the 50 highest paid officers of the Company.) The determination of which individuals are Specified Employees will be made in accordance with the rules and practices, consistent with Code Section 409A, established from time to time by the Board, or its designee, in its discretion.

Subsidized COBRA Coverage is defined and described in paragraph (c) of Section D.4.

Termination Date means the date the employer-employee relationship ends between you and the Company and all Affiliates.

Target Total Cash Compensation means, with respect to a Field Employee, Base Salary and target field commission plan.

Transaction means a sale or merger of all or a significant part of the Company's business or assets or an acquisition of the Company.

WARN means the federal Worker Adjustment and Retraining Notification Act, as amended.

Year of Service means each complete 12‑consecutive‑month period, beginning on the date you were most recently hired by the Company, during which you were continuously a Regular Employee of the Company or an Affiliate. In addition, for a partial year of service after the first full year, you will be credited with either (1) a Year of Service, if you have completed 6 or more full months of service between your most recent service anniversary and your Termination Date, or (2) 50% of a Year of Service if you have completed fewer than 6 full months of service between your most recent service anniversary and your Termination Date. If you most recently became an Employee through the Company's acquisition of another entity, your Years of Service will be calculated from your date of hire by the acquired entity (as reflected in the acquired entity's records).

This restatement of the Boston Scientific Corporation Severance Pay and Layoff Notification Plan as Amended and Restated (Bridge Plan), effective as of August 1, 2013, is executed by the authorized representative of the Company on this 29th day of July, 2013.

BOSTON SCIENTIFIC CORPORATION

By: /s/ Wendy Carruthers_____________

Wendy Carruthers

Senior Vice President, Human Resources

SCHEDULE A

Boston Scientific Corporation Domestic Participating Entities

Updated as of August 1, 2013



Name of Company	Domestic Jurisdiction
Asthmatx, Inc.	Delaware
Atritech, Inc.	Delaware
Boston Scientific Foundation, Inc.	Massachusetts
Boston Scientific Funding LLC	Delaware
Boston Scientific Miami Corporation	Florida
Boston Scientific Neuromodulation Corporation	Delaware
Boston Scientific Scimed, Inc.	Minnesota
Boston Scientific Wayne Corporation	New Jersey
Bridgepoint Medical, Inc.	Minnesota
CAM Acquisition Corp.	Delaware
Cameron Health, Inc.	California
Cardiac Pacemakers, Inc.	Minnesota
Corvita Corporation	Florida
CryoCor, Inc.	Delaware
DCI Merger Corp.	Delaware
EndoVascular Technologies, Inc.	Delaware
ENTERIC MEDICAL TECHNOLOGIES, INC.	Delaware
EP Technologies, Inc.	Delaware
GCI Acquisition Corp.	Delaware
Guidant Delaware Holding Corporation	Delaware
Guidant Holdings, Inc.	Indiana
Guidant Intercontinental Corporation	Indiana
Guidant LLC	Indiana
Guidant Sales LLC	Indiana
Intelect Medical, Inc.	Delaware
Precision Vascular Systems, Inc.	Utah
Remon Medical Technologies, Inc.	Delaware
Revascular Therapeutics, Inc.	Delaware
Rhythmia Medical, Inc.	Massachusetts
RMI Acquisition Corp.	California
Sadra Medical, Inc.	Delaware
Stream Enterprises LLC	Delaware
Vessix Vascular, Inc.	California

SCHEDULE B

Description of Additional Employees Covered by Prior Plan

The Prior Plan will continue to apply to Acquired Asthmatx Employees without regard to their date of Notice. For purposes of this Schedule B, "Acquired Asthmatx Employees" means Regular Employees of Asthmatx, Inc. who became Employees of the Company as a result of, or within one year after, Boston Scientific Corporation's acquisition of Asthmatx, Inc.

Exhibit 10.6

Boston Scientific Corporation

U.S. Severance Plan For Exempt Employees

As Amended and Restated

Effective August 1, 2013

Table of Contents



A	Introduction		1
B	Eligibility and Participation in the Plan		1
C	Source of Severance Benefits		1
D	Severance Benefits		2
		1. Conditions for Receiving Severance Benefits	2
		2. Layoff	2
		3. Release Agreement	3
		4. Severance Benefits	4
		5. Payment of Severance Benefits	5
		6. Death	7
		7. Reporting Obligations	7
		8. Benefits Not Vested; Limitation of Rights	7
		9. Expatriate Employees	7
		10. Coordination With Other Plans and Arrangements	7
		11. No Assignment of Benefits	8
E	Layoff Notification		8
		1. WARN Notice	8
		2. Notice in Other Circumstances; Pay in Lieu of Notice	8
		3. Employee Rights and Obligations During Notice Period	8
		4. Effect of Layoff on Annual Performance Incentive Plan Payment	9
F	Plan Administration		9
G	Claim and Appeal Procedures		9
H	Amendment and Termination of the Plan		10
I	Section 409A		10
J	Governing Law		11
K	Glossary		11

- i -

Boston Scientific Corporation

U.S. Severance Plan For Exempt Employees

As Amended and Restated Effective August 1, 2013

Effective January 1, 2012


A.	Introduction

This document is a complete restatement, effective as of August 1, 2013, of the Boston Scientific Corporation has established the Boston Scientific Corporation U.S. Severance Plan For Exempt Employees ("Plan"), which was originally effective January 1, 2012. The Plan applies to eligible Exempt Employees who are hired or rehired by the Company on or after January 1, 2012. This document serves as both the Plan's official document and its summary plan description, and it reflects the terms of the Plan as of the Effective Date. Effective as of January 1, 2014, this Plan will also apply to eligible Exempt Employees hired or rehired prior to January 1, 2012 who are not given Notice by December 31, 2013.

The purpose of the Plan is to provide severance benefits to eligible Exempt Employees who lose their jobs with the Company involuntarily under the circumstances specified in the Plan. The Plan is also designed to meet the requirements of the federal law known as WARN for those Exempt Employees who are entitled to notice under WARN.


B.	Eligibility and Participation in the Plan

You are eligible to participate in the Plan if you are a Regular Exempt Employee hired or most recently rehired by the Company on or after January 1, 2012. If you are eligible, you will automatically become a Plan participant on the date you become a Regular Exempt Employee. If you are a Regular Exempt Employee hired or most recently rehired before January 1, 2012, you will become a Plan participant on January 1, 2014, if you are not given Notice by December 31, 2013.

Plan participation ends upon any of the following:


·	When you no longer meet the eligibility requirements to participate in the Plan;


·	When all Severance Benefits to which you are entitled have been paid;


·	When your employment ends for any reason other than a Layoff;


·	When a Plan amendment makes you ineligible for Plan participation; or


·	When the Plan terminates.


C.	Source of Severance Benefits

The Company pays the entire cost of all Severance Benefits from its general assets.


D.	Severance Benefits


1.	Conditions for Receiving Severance Benefits


·	You are given Notice that your employment will be involuntarily terminated due to a Layoff;


·	You remain employed by the Company and actively at work until the date determined by the Company to be your last day of work (for this purpose, you are considered to be actively at work during an Authorized Leave of Absence); and


·	You continue to honor all contractual obligations you may have to the Company, including, without limitation, any confidentiality and nondisclosure agreement and restrictions on post-employment activities.


2.	Layoff

A Layoff is a termination by the Company of your employment with the Company that is either:


·	Due to an anticipated facility relocation or closing or a reduction in staffing levels, and you have not refused or otherwise failed to accept a Similar Position with the Company that remains available at the time of Notice; or


·	The result of an anticipated Transaction or Reorganization, and you are not provided an opportunity to be employed in a Similar Position with the acquiring or resulting entity.

reduction in Total Target Cash Compensation and is located within 35 miles of your place of work as of the date you are offered the new position.


·	Voluntary Resignation;


·	Job abandonment;


·	Failure to timely return from an Authorized Leave of Absence;


·	Performance-related problems;


·	Misconduct or other "cause," as determined by the Company in its sole discretion;


·	You do not accept an offer of employment in a Similar Position from the Company that remains available at the time of Notice, or, in the event of a Transaction or Reorganization, you have an opportunity to be employed in a Similar Position by the acquiring or resulting entity; or


3.	Release Agreement

conditioned on your execution of the Release Agreement (so you may begin receiving those benefits before you have signed the Release Agreement and before the Revocation Period has expired).

If for any reason you are provided Severance Pay and you either did not sign a Release Agreement or you timely revoked the Release Agreement, then you are required to reimburse the Company for the Severance Pay you received.


4.	Severance Benefits


(a)	Severance Pay . Severance Pay will be calculated, as shown in the table below, based on your position classification, Pay, and Years of Service. Your Severance Pay will be equal to a number of weeks of Pay, up to a maximum of 52 weeks, based on your position classification and Years of Service, subject to the applicable minimum for your position classification, as shown in the following table:



Position classification	Weeks of Pay per Year of Service	Minimum number of weeks of Pay
Exempt positions below director level	2 weeks per Year of Service	8 weeks
Exempt positions director level and above	2 weeks per Year of Service	26 weeks

Maximum of 52 weeks for all classifications.

(b)

Outplacement Assistance . Severance Benefits include Outplacement Assistance to help you in your transition. Outplacement Assistance will be provided through a third-party vendor selected by the Company. You will be given information about the Outplacement Assistance available to you when, or shortly after, you receive Notice. Subject to the terms of the particular Outplacement Assistance program available to you, Outplacement Assistance may become available to you shortly after you receive Notice. Basic Outplacement Assistance is not conditioned on signing a Release Agreement, so you may begin to access Outplacement Assistance before your Termination Date. However, if you do not timely sign, or if you timely revoke, a Release Agreement, your Outplacement Assistance will be limited to assistance having a cost to the Company of no more than $2,000 . The Company, in its sole discretion, will determine the nature, level, terms and conditions, and duration of the Outplacement Assistance available under the Plan, which may vary by position classification and other factors. The Company will pay the cost of Outplacement Assistance directly to the vendor, and you will not be entitled to a cash payment or any other benefit in lieu of Outplacement Assistance under any circumstances .


(c)	Subsidized COBRA Coverage . Under the terms of the Company's benefit plans, health coverage (medical, dental, and vision) ends on your Termination Date, but you will have the opportunity to elect COBRA continuation coverage for you (and, if

applicable, your covered dependents) under any of the Company's health plans that cover you as of your Termination Date. Normally, former employees who elect COBRA coverage must pay the full cost of that coverage (that is, both the employee and employer portions of the applicable cost). However, if you are entitled to Severance Benefits, and you (and, if applicable, your covered dependents) timely elect COBRA continuation coverage under any of those plans, then, as part of your Severance Benefits, the Company will subsidize the cost of the elected COBRA coverage for the number of months indicated on the chart below, up to a maximum of 12 months of Subsidized COBRA Coverage . For the applicable number of months indicated on the chart, you will be required to pay only the monthly contribution amount that then applies to active employees under the plan(s) and coverage option(s) applicable to you (and/or your dependent(s)). The Company will be responsible for the remaining cost of the COBRA coverage during that period. If your COBRA coverage ends before the total number months of Subsidized COBRA Coverage available to you, then your Subsidized COBRA Coverage will end when your COBRA coverage ends. If you wish to continue COBRA coverage longer than the total number of months of Subsidized COBRA Coverage available to you, then you will be required to pay the full monthly cost for COBRA coverage in months after the subsidy ends. Please note that your eligibility for Subsidized COBRA Coverage depends on your initial and continued eligibility for, and your timely election of, COBRA continuation coverage under one or more of the Company's health plans. You will not be entitled to a cash payment or any other benefit in lieu of Subsidized COBRA Coverage under any circumstances .



Position classification	Months of Subsidized COBRA Coverage per Year of Service	Minimum number of months of Subsidized COBRA coverage
Exempt positions below director level	1 month per Year of Service	2 months
Exempt positions director level and above	1 month per Year of Service	6 months

Maximum of 12 months for all classifications


5.	Payment of Severance Benefits


(a)	Time and Form of Payment for Severance Pay . Your Severance Pay will be paid in one lump sum payment within 30 days after your Revocation Period ends. Note that if you are not entitled by law to revoke the Release Agreement, your lump sum payment will be made within 30 days after the date you sign the Release Agreement.


(b)	Reemployment by the Company . If you are Reemployed by the Company or an Affiliate within 6 months after your Termination Date, then as a condition of that Reemployment, you will be required to repay to the Company a portion of your

Severance Pay. The portion you will be required to repay will be a fraction of the total amount of Severance Pay you received. The denominator of the fraction will be 6, and the numerator will be 6 minus the number of months between your Termination Date and your Reemployment Date. For purposes of determining the number of months, a period of 15 days or more will be treated as a month, and a period of less than 15 days will be disregarded. For example, if your Termination Date is June 15 and you become Reemployed by the Company effective September 21 (3 months and 6 days after your Termination Date), you will be required to repay 3/6 of the total amount of Severance Pay you received. (The 6-day period after the third whole month is less than 15 days and is, therefore, disregarded). If instead you become Reemployed on September 30 (3 months and 15 days after your Termination Date), you will be required to repay 2/6 of the total amount of Severance Pay you received. (The 15-day period after the third whole month counts as a month, so you would be considered Reemployed 4 months after your Termination Date.)


(c)	Deductions From Severance Pay . Applicable federal, state, and local income and employment taxes (and any other deductions required by applicable law) will be withheld from your Severance Pay. In addition, the Company reserves the right to deduct any of the following from your Severance Pay to the extent permitted by applicable law:


·	Any amount you owe the Company or an Affiliate (for example, amounts owed for insurance plan premiums, borrowed vacation days, loans, relocation obligations, or unsubstantiated credit card charges and other non-reimbursable expenses).


·	For U.S. expatriates, an amount equal to any payments of severance required to be paid by law in any country other than the U.S. and tax equalization payments due to the Company or an Affiliate.

In addition, Severance Pay will be reduced for benefits payable under certain other plans and arrangements as provided in Section D.10.

(d)


(e)	How Other Benefits Are Affected . Severance Benefits are not considered compensation for purposes of any qualified or nonqualified deferred compensation or retirement plan (which means, for example, that 401(k) plan deferrals cannot be taken from Severance Pay).


(f)	Limitation on Severance Pay . Notwithstanding anything to the contrary in this Plan, your total Severance Pay will not exceed an amount that is twice the dollar limitation in effect under Code section 401(a)(17) for the calendar year immediately

preceding the calendar year in which you separate from service with the Company and all Affiliates. For 2013, that dollar limitation is $255,000.


6.	Death


7.	Reporting Obligations

Employees who receive Severance Benefits are expected to report benefit coverage (for example, from new employment) or other events that may affect eligibility for Severance Benefits. The Plan Administrator may condition your continued eligibility for Severance Benefits on your compliance with this reporting obligation, including your full and prompt response to requests for information.


8.	Benefits Not Vested; Limitation of Rights


9.	Expatriate Employees

This Plan applies to Exempt Employees on expatriate assignments. If, while you are on an expatriate assignment, the Company notifies you in writing that, following your expatriate assignment, you will not be offered a job with the Company or an Affiliate in the United States that results in no more than a 10% reduction in pay, that notification will be treated as Notice for purposes of this Plan, unless the reason for the Company's decision not to offer you a job in the United States is a reason that would disqualify you from eligibility for Severance Benefits under this Plan.


10.	Coordination With Other Plans and Arrangements

that other agreement or arrangement expressly refers to this Plan. Similarly, any Severance Pay payable to you under this Plan will be reduced by the amount of any payments that you are or will become entitled to receive under any Company or Affiliate plan designed as full or partial income replacement, including, but not limited to, payments under the Boston Scientific Corporation Executive Retirement Plan or under any of the Company's or Affiliates' short-term disability, long-term disability, or workers' compensation plans or coverages. Also, you will not be entitled to Other Severance Benefits in connection with a Layoff if you are also entitled to benefits under the Boston Scientific Corporation Executive Retirement Plan. In addition, any Severance Benefits payable to you under this Plan will be reduced by any and all other benefits or payments prescribed under any applicable law or regulation requiring severance benefits or payments. Any reduction under this Section D.10. will be effective on the day after your Termination Date.


11.	No Assignment of Benefits

You may not, in any manner, sell, pledge, transfer, assign, encumber, or otherwise dispose of any of your Severance Benefits before they are paid to you. Any attempt to do so will be void.


E.	Layoff Notification


1.	WARN Notice

When a Layoff results in a facility closing or relocation, or a significant reduction in staffing levels over a 30-day period of time through involuntary termination, and the Layoff requires advance notice under WARN, affected Exempt Employees will receive at least 60 days' Notice. The Company will determine whether a Layoff requires advance notice under WARN and, if so, the appropriate notification period.


2.	Notice in Other Circumstances; Pay in Lieu of Notice

If the Company determines that a Layoff will not require advance notice under WARN, the Company will generally provide affected Exempt Employees with at least 30 days' advance Notice. If for any reason the Company does not provide you with at least 30 days' Notice, your Severance Pay will be increased by the Pay that otherwise would have been due to you for the period from your Termination Date to the end of the 30-day period that begins on the date Notice is given. Notwithstanding the preceding sentence, the Company will not be obligated to provide 30 days' advance Notice or additional Severance Pay in the event of a Layoff due to a Transaction.


3.	Employee Rights and Obligations During Notice Period


4.	Effect of Layoff on Annual Bonus Plan Payment


F.	Plan Administration


G.	Claim and Appeal Procedures


·	the specific reason(s) for denying the claim,


·	specific reference to the Plan provision(s) on which the denial is based,


·	a description of any additional material or information that you may need to provide with respect to the claim, with an explanation of why the material or information is necessary, and


·	an explanation of your right to appeal the claim denial under the Plan's review procedures and your right to bring a civil court action following any further denial of your claim on review.


·	You or your duly authorized representative must file a written request for review with the Plan Administrator within 60 days after you receive the Plan Administrator's written denial of your claim or within 150 days after the Plan Administrator received the request if you have not received a written response.


·	Your written request must be signed by you or your authorized representative.


·	Upon reasonable request and free of charge, you may review, or obtain copies of, records, documents, and other information in the Plan Administrator's possession relevant to your claim.


·	You may also submit issues, arguments, and other comments in writing to the Plan Administrator, along with any documentary evidence in support of your claim.


·	You may have representation throughout the appeal procedure.

If the Plan Administrator again denies your claim, in whole or in part, it will notify you, in writing, and the notice will include the following:


·	the specific reason(s) for the denial,


·	specific references to the Plan provision(s) on which the denial is based,


·	a description of your right to receive, upon request and free of charge, reasonable access to, and copies of, all documents, records, and other information in the Plan Administrator's possession relevant to your claim, and


·	an explanation of your right to bring a civil court action under Section 502(a) of ERISA.


H.	Amendment and Termination of the Plan

Boston Scientific Corporation, as Plan sponsor, reserves the right to terminate or amend the Plan, in whole or in part, at any time in its sole discretion, by action of its duly authorized officer.


I.	Section 409A

and penalties. The Plan will be interpreted and administered, to the extent possible, consistent with this statement of intent.


J.	Governing Law

The Plan will be governed by, and construed in accordance with, the laws of the Commonwealth of Massachusetts, to the extent not preempted by ERISA or other federal law.


K.	Glossary