þ
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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o
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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DELAWARE
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04-2695240
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(State or other jurisdiction of incorporation or organization)
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(I.R.S. Employer Identification No.)
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Large accelerated filer
þ
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Accelerated filer
o
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Non-Accelerated filer
o
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Smaller reporting company
o
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(Do not check if a smaller reporting company)
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Shares outstanding
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Class
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as of October 31, 2013
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Common Stock, $.01 par value
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1,335,221,407
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Page No.
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Unregistered Sales of Equity Securities and Use of Proceeds
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||
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Three Months Ended
September 30, |
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Nine Months Ended
September 30, |
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in millions, except per share data
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2013
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2012
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2013
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2012
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||||||||
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Net sales
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$
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1,735
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$
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1,735
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$
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5,305
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$
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5,428
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Cost of products sold
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510
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558
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1,618
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1,767
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Gross profit
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1,225
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1,177
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3,687
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3,661
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Operating expenses:
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Selling, general and administrative expenses
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658
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589
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1,950
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1,895
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||||
Research and development expenses
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217
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220
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644
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648
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Royalty expense
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28
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|
29
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|
|
115
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|
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125
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||||
Amortization expense
|
101
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99
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305
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294
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||||
Goodwill impairment charges
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—
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748
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423
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4,350
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Intangible asset impairment charges
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—
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13
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53
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142
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Contingent consideration (benefit) expense
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23
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(20
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)
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(18
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)
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(9
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)
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Restructuring charges
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19
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54
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55
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93
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Litigation-related charges
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76
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50
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206
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119
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Gain on divestiture
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—
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(11
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)
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(40
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)
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(11
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)
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||||
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1,122
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1,771
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3,693
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7,646
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Operating income (loss)
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103
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(594
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)
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(6
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)
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(3,985
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)
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Other income (expense):
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Interest expense
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(137
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)
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(65
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)
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(266
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)
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(197
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)
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Other, net
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(6
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)
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(4
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)
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(10
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)
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23
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Income (loss) before income taxes
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(40
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)
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(663
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)
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(282
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)
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(4,159
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)
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Income tax expense (benefit)
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(35
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)
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1
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(53
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)
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(30
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)
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Net income (loss)
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$
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(5
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)
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$
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(664
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)
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$
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(229
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)
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$
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(4,129
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)
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Net income (loss) per common share — basic
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$
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0.00
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$
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(0.48
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)
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$
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(0.17
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)
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$
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(2.91
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)
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Net income (loss) per common share — assuming dilution
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$
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0.00
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$
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(0.48
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)
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$
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(0.17
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)
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$
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(2.91
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)
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Weighted-average shares outstanding
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Basic
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1,340.3
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1,392.5
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1,345.2
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1,420.3
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Assuming dilution
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1,340.3
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1,392.5
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1,345.2
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1,420.3
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Three Months Ended
September 30, |
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Nine Months Ended
September 30, |
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(in millions)
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2013
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2012
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2013
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|
2012
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Net income (loss)
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$
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(5
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)
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$
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(664
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)
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$
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(229
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)
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$
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(4,129
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)
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Other comprehensive income:
|
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Foreign currency translation adjustment
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10
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2
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8
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9
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Net change in unrealized gains and losses on derivative financial instruments, net of tax
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(38
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)
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(27
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)
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81
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17
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Total other comprehensive income (loss)
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(28
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)
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(25
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)
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89
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26
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Total comprehensive income (loss)
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$
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(33
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)
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$
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(689
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)
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$
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(140
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)
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$
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(4,103
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)
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As of
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||||||
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September 30,
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December 31,
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||||
in millions, except share and per share data
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2013
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2012
|
||||
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(Unaudited)
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ASSETS
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Current assets:
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Cash and cash equivalents
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$
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571
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$
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207
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Trade accounts receivable, net
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1,238
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1,217
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Inventories
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895
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884
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Deferred income taxes
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536
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433
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Prepaid expenses and other current assets
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285
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281
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Total current assets
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3,525
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3,022
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Property, plant and equipment, net
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1,530
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1,564
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Goodwill
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5,553
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5,973
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Other intangible assets, net
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5,936
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6,289
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Other long-term assets
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373
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|
306
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||
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$
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16,917
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$
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17,154
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||||
LIABILITIES AND STOCKHOLDERS’ EQUITY
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|
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Current liabilities:
|
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|
||||
Current debt obligations
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$
|
3
|
|
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$
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4
|
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Accounts payable
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238
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|
|
232
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|
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Accrued expenses
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1,346
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|
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1,284
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||
Other current liabilities
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315
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|
|
252
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Total current liabilities
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1,902
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1,772
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Long-term debt
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4,246
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4,252
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Deferred income taxes
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1,623
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1,713
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|
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Other long-term liabilities
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2,583
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2,547
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|
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Commitments and contingencies
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|
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Stockholders’ equity
|
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|
||||
Preferred stock, $.01 par value - authorized 50,000,000 shares, none issued and outstanding
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Common stock, $.01 par value - authorized 2,000,000,000 shares and issued 1,557,892,509 shares as of September 30, 2013 and 1,542,347,188 shares as of December 31, 2012
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16
|
|
|
15
|
|
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Treasury stock, at cost - 219,056,477 shares as of September 30, 2013 and 186,635,532 shares as of December 31, 2012
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(1,367
|
)
|
|
(1,092
|
)
|
||
Additional paid-in capital
|
16,536
|
|
|
16,429
|
|
||
Accumulated deficit
|
(8,678
|
)
|
|
(8,449
|
)
|
||
Accumulated other comprehensive income (loss), net of tax
|
56
|
|
|
(33
|
)
|
||
Total stockholders’ equity
|
6,563
|
|
|
6,870
|
|
||
|
$
|
16,917
|
|
|
$
|
17,154
|
|
|
Nine Months Ended
September 30, |
||||||
in millions
|
2013
|
|
2012
|
||||
Cash provided by operating activities
|
$
|
809
|
|
|
$
|
891
|
|
|
|
|
|
||||
Investing activities:
|
|
|
|
||||
Purchases of property, plant and equipment
|
(161
|
)
|
|
(164
|
)
|
||
Proceeds from sale of property, plant and equipment
|
53
|
|
|
—
|
|
||
Purchases of privately held securities
|
(13
|
)
|
|
—
|
|
||
Purchase of notes receivable
|
(8
|
)
|
|
—
|
|
||
Payments for acquisitions of businesses, net of cash acquired
|
—
|
|
|
(134
|
)
|
||
Payments for investments in companies and acquisitions of certain technologies
|
(13
|
)
|
|
(18
|
)
|
||
Proceeds from business divestitures, net of costs
|
30
|
|
|
10
|
|
||
|
|
|
|
||||
Cash used for investing activities
|
(112
|
)
|
|
(306
|
)
|
||
|
|
|
|
||||
Financing activities:
|
|
|
|
||||
Payments on long-term borrowings
|
(1,450
|
)
|
|
(9
|
)
|
||
Proceeds from long-term borrowings, net of debt issuance costs
|
1,440
|
|
|
—
|
|
||
Payments on borrowings from credit facilities
|
(240
|
)
|
|
(260
|
)
|
||
Proceeds from borrowings on credit facilities
|
240
|
|
|
251
|
|
||
Payment of contingent consideration
|
(107
|
)
|
|
(4
|
)
|
||
Payments for acquisitions of treasury stock
|
(275
|
)
|
|
(500
|
)
|
||
Proceeds from issuances of shares of common stock
|
59
|
|
|
20
|
|
||
|
|
|
|
||||
Cash used for financing activities
|
(333
|
)
|
|
(502
|
)
|
||
|
|
|
|
||||
Effect of foreign exchange rates on cash
|
—
|
|
|
2
|
|
||
|
|
|
|
||||
Net increase in cash and cash equivalents
|
364
|
|
|
85
|
|
||
Cash and cash equivalents at beginning of period
|
207
|
|
|
267
|
|
||
Cash and cash equivalents at end of period
|
$
|
571
|
|
|
$
|
352
|
|
|
|
|
|
||||
Supplemental Information
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|
||||
Non-cash operating activities:
|
|
|
|
||||
Stock-based compensation expense
|
$
|
77
|
|
|
$
|
85
|
|
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
|
|
Goodwill
|
$
|
314
|
|
|
Amortizable intangible assets
|
42
|
|
||
Indefinite-lived intangible assets
|
48
|
|
||
Other net assets
|
1
|
|
||
Deferred income taxes
|
76
|
|
||
|
$
|
481
|
|
|
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
|
|
|
|
|
|
Balance as of December 31, 2012
|
$
|
(663
|
)
|
Amounts recorded to acquisition purchase accounting
|
(6
|
)
|
|
Net fair value adjustments
|
18
|
|
|
Payments made
|
115
|
|
|
Balance as of September 30, 2013
|
$
|
(536
|
)
|
Contingent Consideration Liability
|
Fair Value as of September 30, 2013
|
Valuation Technique
|
Unobservable Input
|
Range
|
Research and Development, Regulatory and Commercialization-based Milestones
|
$126 million
|
Probability Weighted Discounted Cash Flow
|
Discount Rate
|
0.8% - 1.1%
|
Probability of Payment
|
70% - 98%
|
|||
Projected Year of Payment
|
2013 - 2014
|
|||
Revenue-based Payments
|
$144 million
|
Discounted Cash Flow
|
Discount Rate
|
12% - 18%
|
Probability of Payment
|
15% - 100%
|
|||
Projected Year of Payment
|
2013 - 2018
|
|||
$266 million
|
Monte Carlo
|
Revenue Volatility
|
13% - 28%
|
|
Risk Free Rate
|
LIBOR Term Structure
|
|||
Projected Year of Payment
|
2013 - 2018
|
|
|
As of
|
||||||||||||||
|
|
September 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
|
|
$
|
8,118
|
|
|
$
|
(3,254
|
)
|
|
$
|
8,020
|
|
|
$
|
(3,005
|
)
|
Patents
|
|
504
|
|
|
(322
|
)
|
|
559
|
|
|
(352
|
)
|
||||
Other intangible assets
|
|
815
|
|
|
(465
|
)
|
|
810
|
|
|
(428
|
)
|
||||
|
|
$
|
9,437
|
|
|
$
|
(4,041
|
)
|
|
$
|
9,389
|
|
|
$
|
(3,785
|
)
|
Unamortizable intangible assets
|
|
|
|
|
|
|
|
|
||||||||
Goodwill
|
|
$
|
15,453
|
|
|
$
|
(9,900
|
)
|
|
$
|
15,450
|
|
|
$
|
(9,477
|
)
|
Technology-related
|
|
197
|
|
|
—
|
|
|
242
|
|
|
—
|
|
||||
|
|
$
|
15,650
|
|
|
$
|
(9,900
|
)
|
|
$
|
15,692
|
|
|
$
|
(9,477
|
)
|
(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 September 30, 2013
|
|
$
|
3,252
|
|
|
$
|
154
|
|
|
$
|
2,147
|
|
|
$
|
5,553
|
|
•
|
decreases in estimated market sizes or market growth rates due to greater-than-expected declines in procedural volumes, pricing pressures, reductions in reimbursement levels, 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.
|
(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 September 30, 2013
|
$
|
(1,479
|
)
|
|
$
|
(6,960
|
)
|
|
$
|
(1,461
|
)
|
|
$
|
(9,900
|
)
|
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%
|
|
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 September 30, 2013
|
|
|
|
|
|
||||
Currency hedge contracts
|
$
|
(45
|
)
|
|
$
|
15
|
|
|
Cost of products sold
|
|
$
|
(45
|
)
|
|
$
|
15
|
|
|
|
Three Months Ended September 30, 2012
|
|
|
|
|
|
||||
Currency hedge contracts
|
$
|
(44
|
)
|
|
$
|
(3
|
)
|
|
Cost of products sold
|
|
$
|
(44
|
)
|
|
$
|
(3
|
)
|
|
|
Nine Months Ended September 30, 2013
|
|
|
|
|
|
||||
Currency hedge contracts
|
$
|
144
|
|
|
$
|
15
|
|
|
Cost of products sold
|
|
$
|
144
|
|
|
$
|
15
|
|
|
|
Nine Months Ended September 30, 2012
|
|
|
|
|
|
||||
Currency hedge contracts
|
$
|
2
|
|
|
$
|
(29
|
)
|
|
Cost of products sold
|
|
$
|
2
|
|
|
$
|
(29
|
)
|
|
|
(in millions)
|
|
Location in Statement of Operations
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
2013
|
|
2012
|
|
2013
|
|
2012
|
||||||||||||
Gain (loss) on currency hedge contracts
|
|
Other, net
|
|
$
|
12
|
|
|
$
|
(14
|
)
|
|
$
|
66
|
|
|
$
|
—
|
|
Gain (loss) on foreign currency transaction exposures
|
|
Other, net
|
|
(15
|
)
|
|
11
|
|
|
(72
|
)
|
|
(13
|
)
|
||||
Net foreign currency gain (loss)
|
|
Other, net
|
|
$
|
(3
|
)
|
|
$
|
(3
|
)
|
|
$
|
(6
|
)
|
|
$
|
(13
|
)
|
|
|
As of
|
||||||
(in millions)
|
Location in Balance Sheet (1)
|
September 30, 2013
|
|
December 31, 2012
|
||||
Derivative Assets:
|
|
|
|
|
||||
Designated Hedging Instruments
|
|
|
|
|
||||
Currency hedge contracts
|
Prepaid and other current assets
|
$
|
88
|
|
|
$
|
25
|
|
Currency hedge contracts
|
Other long-term assets
|
95
|
|
|
63
|
|
||
|
|
183
|
|
|
88
|
|
||
Non-Designated Hedging Instruments
|
|
|
|
|
||||
Currency hedge contracts
|
Prepaid and other current assets
|
17
|
|
|
33
|
|
||
Total Derivative Assets
|
|
$
|
200
|
|
|
$
|
121
|
|
|
|
|
|
|
||||
Derivative Liabilities:
|
|
|
|
|
||||
Designated Hedging Instruments
|
|
|
|
|
||||
Currency hedge contracts
|
Other current liabilities
|
$
|
8
|
|
|
$
|
20
|
|
Currency hedge contracts
|
Other long-term liabilities
|
9
|
|
|
10
|
|
||
|
|
17
|
|
|
30
|
|
||
Non-Designated Hedging Instruments
|
|
|
|
|
||||
Currency hedge contracts
|
Other current liabilities
|
27
|
|
|
27
|
|
||
Total Derivative Liabilities
|
|
$
|
44
|
|
|
$
|
57
|
|
(1)
|
We classify derivative assets and liabilities as current when the remaining term of the derivative contract is one year or less.
|
•
|
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.
|
|
As of September 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
|
$
|
155
|
|
|
—
|
|
|
—
|
|
|
$
|
155
|
|
|
$
|
39
|
|
|
—
|
|
|
—
|
|
|
$
|
39
|
|
||||
Currency hedge contracts
|
—
|
|
|
$
|
200
|
|
|
—
|
|
|
200
|
|
|
—
|
|
|
$
|
121
|
|
|
—
|
|
|
121
|
|
||||||
|
$
|
155
|
|
|
$
|
200
|
|
|
—
|
|
|
$
|
355
|
|
|
$
|
39
|
|
|
$
|
121
|
|
|
—
|
|
|
$
|
160
|
|
||
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Currency hedge contracts
|
—
|
|
|
$
|
44
|
|
|
—
|
|
|
$
|
44
|
|
|
—
|
|
|
$
|
57
|
|
|
—
|
|
|
$
|
57
|
|
||||
Accrued contingent consideration
|
—
|
|
|
—
|
|
|
$
|
536
|
|
|
536
|
|
|
—
|
|
|
—
|
|
|
$
|
663
|
|
|
663
|
|
||||||
|
—
|
|
|
$
|
44
|
|
|
$
|
536
|
|
|
$
|
580
|
|
|
—
|
|
|
$
|
57
|
|
|
$
|
663
|
|
|
$
|
720
|
|
(in millions)
|
2013
|
|
2014
|
|
2015
|
|
2016
|
|
2017
|
|
Thereafter
|
|
Total
|
|||||||||||||
Senior notes
|
—
|
|
|
$
|
—
|
|
|
$
|
400
|
|
|
$
|
600
|
|
|
$
|
250
|
|
|
$
|
2,550
|
|
|
$
|
3,800
|
|
Term loan
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
80
|
|
|
$
|
80
|
|
|
$
|
240
|
|
|
$
|
400
|
|
|
—
|
|
|
$
|
—
|
|
|
$
|
400
|
|
|
$
|
680
|
|
|
$
|
330
|
|
|
$
|
2,790
|
|
|
$
|
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.
|
|
Covenant
Requirement
|
|
Actual as of
September 30, 2013
|
Maximum leverage ratio (1)
|
3.5 times
|
|
2.4 times
|
Minimum interest coverage ratio (2)
|
3.0 times
|
|
5.4 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.
|
Type of cost
|
Total estimated amount expected to
be incurred
|
Restructuring charges:
|
|
Termination benefits
|
$120 million to $150 million
|
Other (1)
|
$5 million to $15 million
|
Restructuring-related expenses:
|
|
Other (2)
|
$50 million to $60 million
|
|
$175 million to $225 million
|
Type of cost
|
Total estimated amount expected to
be incurred
|
Restructuring charges:
|
|
Termination benefits
|
$160 million to $185 million
|
Other (1)
|
$100 million to $120 million
|
Restructuring-related expenses:
|
|
Other (2)
|
$40 million to $50 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.
|
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.
|
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.
|
Three Months Ended September 30, 2013
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
(in millions)
|
Termination
Benefits
|
|
Accelerated
Depreciation
|
|
Transfer
Costs
|
|
Fixed Asset
Write-offs
|
|
Other
|
|
Total
|
||||||||||||
Restructuring charges
|
$
|
5
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
14
|
|
|
$
|
19
|
|
Restructuring-related expenses:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Cost of products sold
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Selling, general and administrative expenses
|
—
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
6
|
|
|
7
|
|
||||||
|
—
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
6
|
|
|
7
|
|
||||||
|
$
|
5
|
|
|
$
|
1
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
20
|
|
|
$
|
26
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
(in millions)
|
Termination
Benefits
|
|
Accelerated
Depreciation
|
|
Transfer
Costs
|
|
Fixed Asset
Write-offs
|
|
Other
|
|
Total
|
||||||||||||
2011 Restructuring plan
|
$
|
5
|
|
|
$
|
1
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
20
|
|
|
$
|
26
|
|
2010 Restructuring plan
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Plant Network Optimization program
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
|
$
|
5
|
|
|
$
|
1
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
20
|
|
|
$
|
26
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Three Months Ended September 30, 2012
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
(in millions)
|
Termination
Benefits
|
|
Accelerated
Depreciation
|
|
Transfer
Costs
|
|
Fixed Asset
Write-offs
|
|
Other
|
|
Total
|
||||||||||||
Restructuring charges
|
$
|
44
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
10
|
|
|
$
|
54
|
|
Restructuring-related expenses:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Cost of products sold
|
—
|
|
|
—
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
1
|
|
||||||
Selling, general and administrative expenses
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3
|
|
|
3
|
|
||||||
|
—
|
|
|
—
|
|
|
1
|
|
|
—
|
|
|
3
|
|
|
4
|
|
||||||
|
$
|
44
|
|
|
$
|
—
|
|
|
$
|
1
|
|
|
$
|
—
|
|
|
$
|
13
|
|
|
$
|
58
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
(in millions)
|
Termination
Benefits
|
|
Accelerated
Depreciation
|
|
Transfer
Costs
|
|
Fixed Asset
Write-offs
|
|
Other
|
|
Total
|
||||||||||||
2011 Restructuring plan
|
$
|
43
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
13
|
|
|
$
|
56
|
|
2010 Restructuring plan
|
2
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2
|
|
||||||
Plant Network Optimization program
|
(1
|
)
|
|
—
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
|
$
|
44
|
|
|
$
|
—
|
|
|
$
|
1
|
|
|
$
|
—
|
|
|
$
|
13
|
|
|
$
|
58
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Nine Months Ended September 30, 2013
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
(in millions)
|
Termination
Benefits
|
|
Accelerated
Depreciation
|
|
Transfer
Costs
|
|
Fixed Asset
Write-offs
|
|
Other
|
|
Total
|
||||||||||||
Restructuring charges
|
$
|
26
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(16
|
)
|
|
$
|
45
|
|
|
$
|
55
|
|
Restructuring-related expenses:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Cost of products sold
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Selling, general and administrative expenses
|
—
|
|
|
2
|
|
|
—
|
|
|
—
|
|
|
14
|
|
|
16
|
|
||||||
|
—
|
|
|
2
|
|
|
—
|
|
|
—
|
|
|
14
|
|
|
16
|
|
||||||
|
$
|
26
|
|
|
$
|
2
|
|
|
$
|
—
|
|
|
$
|
(16
|
)
|
|
$
|
59
|
|
|
$
|
71
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
(in millions)
|
Termination
Benefits
|
|
Accelerated
Depreciation
|
|
Transfer
Costs
|
|
Fixed Asset
Write-offs
|
|
Other
|
|
Total
|
||||||||||||
2011 Restructuring plan
|
$
|
30
|
|
|
$
|
2
|
|
|
$
|
—
|
|
|
$
|
(16
|
)
|
|
$
|
59
|
|
|
$
|
75
|
|
2010 Restructuring plan
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Plant Network Optimization program
|
(4
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(4
|
)
|
||||||
|
$
|
26
|
|
|
$
|
2
|
|
|
$
|
—
|
|
|
$
|
(16
|
)
|
|
$
|
59
|
|
|
$
|
71
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Nine Months Ended September 30, 2012
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
(in millions)
|
Termination
Benefits
|
|
Accelerated
Depreciation
|
|
Transfer
Costs
|
|
Fixed Asset
Write-offs
|
|
Other
|
|
Total
|
||||||||||||
Restructuring charges
|
$
|
64
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
29
|
|
|
$
|
93
|
|
Restructuring-related expenses:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Cost of products sold
|
—
|
|
|
—
|
|
|
7
|
|
|
—
|
|
|
—
|
|
|
7
|
|
||||||
Selling, general and administrative expenses
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
8
|
|
|
8
|
|
||||||
|
—
|
|
|
—
|
|
|
7
|
|
|
—
|
|
|
8
|
|
|
15
|
|
||||||
|
$
|
64
|
|
|
$
|
—
|
|
|
$
|
7
|
|
|
$
|
—
|
|
|
$
|
37
|
|
|
$
|
108
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
(in millions)
|
Termination
Benefits
|
|
Accelerated
Depreciation
|
|
Transfer
Costs
|
|
Fixed Asset
Write-offs
|
|
Other
|
|
Total
|
||||||||||||
2011 Restructuring plan
|
$
|
65
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
34
|
|
|
$
|
99
|
|
2010 Restructuring plan
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3
|
|
|
3
|
|
||||||
Plant Network Optimization program
|
(1
|
)
|
|
—
|
|
|
7
|
|
|
—
|
|
|
—
|
|
|
6
|
|
||||||
|
$
|
64
|
|
|
$
|
—
|
|
|
$
|
7
|
|
|
$
|
—
|
|
|
$
|
37
|
|
|
$
|
108
|
|
(in millions)
|
2011
Restructuring
plan (including the Expansion)
|
|
2010
Restructuring
plan
|
|
Plant
Network
Optimization Program
|
|
Total
|
||||||||
Termination benefits
|
$
|
130
|
|
|
$
|
90
|
|
|
$
|
31
|
|
|
$
|
251
|
|
Fixed asset write-offs
|
—
|
|
|
11
|
|
|
—
|
|
|
11
|
|
||||
Other
|
98
|
|
|
51
|
|
|
—
|
|
|
149
|
|
||||
Total restructuring charges
|
228
|
|
|
152
|
|
|
31
|
|
|
411
|
|
||||
Accelerated depreciation
|
—
|
|
|
—
|
|
|
22
|
|
|
22
|
|
||||
Transfer costs
|
—
|
|
|
—
|
|
|
74
|
|
|
74
|
|
||||
Other
|
32
|
|
|
8
|
|
|
—
|
|
|
40
|
|
||||
Restructuring-related expenses
|
32
|
|
|
8
|
|
|
96
|
|
|
136
|
|
||||
|
$
|
260
|
|
|
$
|
160
|
|
|
$
|
127
|
|
|
$
|
547
|
|
(in millions)
|
2011
Restructuring
plan (including the Expansion)
|
|
2010
Restructuring
plan
|
|
Plant
Network
Optimization Program
|
|
Total
|
||||||||
Three Months Ended September 30, 2013
|
|
|
|
|
|
|
|
||||||||
Termination benefits
|
$
|
16
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
16
|
|
Transfer costs
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Other
|
20
|
|
|
—
|
|
|
—
|
|
|
20
|
|
||||
|
$
|
36
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
36
|
|
|
|
|
|
|
|
|
|
||||||||
Nine Months Ended September 30, 2013
|
|
|
|
|
|
|
|
||||||||
Termination benefits
|
$
|
49
|
|
|
$
|
—
|
|
|
$
|
1
|
|
|
$
|
50
|
|
Transfer costs
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Other
|
57
|
|
|
—
|
|
|
—
|
|
|
57
|
|
||||
|
$
|
106
|
|
|
$
|
—
|
|
|
$
|
1
|
|
|
$
|
107
|
|
|
|
|
|
|
|
|
|
||||||||
Program to Date
|
|
|
|
|
|
|
|
||||||||
Termination benefits
|
$
|
113
|
|
|
$
|
90
|
|
|
$
|
30
|
|
|
$
|
233
|
|
Transfer costs
|
—
|
|
|
—
|
|
|
73
|
|
|
73
|
|
||||
Other
|
122
|
|
|
55
|
|
|
—
|
|
|
177
|
|
||||
|
$
|
235
|
|
|
$
|
145
|
|
|
$
|
103
|
|
|
$
|
483
|
|
|
|
As of
|
||||||
(in millions)
|
|
September 30, 2013
|
|
December 31, 2012
|
||||
Accounts receivable
|
|
$
|
1,360
|
|
|
$
|
1,336
|
|
Less: allowance for doubtful accounts
|
|
(85
|
)
|
|
(88
|
)
|
||
Less: allowance for sales returns
|
|
(37
|
)
|
|
(31
|
)
|
||
|
|
$
|
1,238
|
|
|
$
|
1,217
|
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
(in millions)
|
|
2013
|
|
2012
|
|
2013
|
|
2012
|
||||||||
Beginning balance
|
|
$
|
84
|
|
|
$
|
83
|
|
|
$
|
88
|
|
|
$
|
81
|
|
Net (credits) charges to expenses
|
|
2
|
|
|
1
|
|
|
7
|
|
|
7
|
|
||||
Utilization of allowances
|
|
(1
|
)
|
|
(2
|
)
|
|
(10
|
)
|
|
(6
|
)
|
||||
Ending balance
|
|
$
|
85
|
|
|
$
|
82
|
|
|
$
|
85
|
|
|
$
|
82
|
|
|
|
As of
|
||||||
(in millions)
|
|
September 30, 2013
|
|
December 31, 2012
|
||||
Finished goods
|
|
$
|
592
|
|
|
$
|
598
|
|
Work-in-process
|
|
87
|
|
|
70
|
|
||
Raw materials
|
|
216
|
|
|
216
|
|
||
|
|
$
|
895
|
|
|
$
|
884
|
|
|
|
As of
|
||||||
(in millions)
|
|
September 30, 2013
|
|
December 31, 2012
|
||||
Land
|
|
$
|
81
|
|
|
$
|
81
|
|
Buildings and improvements
|
|
912
|
|
|
873
|
|
||
Equipment, furniture and fixtures
|
|
2,446
|
|
|
2,348
|
|
||
Capital in progress
|
|
177
|
|
|
218
|
|
||
|
|
3,616
|
|
|
3,520
|
|
||
Less: accumulated depreciation
|
|
2,086
|
|
|
1,956
|
|
||
|
|
$
|
1,530
|
|
|
$
|
1,564
|
|
|
|
As of
|
||||||
(in millions)
|
|
September 30, 2013
|
|
December 31, 2012
|
||||
Payroll and related liabilities
|
|
$
|
450
|
|
|
$
|
452
|
|
Accrued contingent consideration
|
|
170
|
|
|
120
|
|
||
Legal reserves
|
|
159
|
|
|
100
|
|
||
Other
|
|
567
|
|
|
612
|
|
||
|
|
$
|
1,346
|
|
|
$
|
1,284
|
|
|
|
As of
|
||||||
(in millions)
|
|
September 30, 2013
|
|
December 31, 2012
|
||||
Accrued income taxes
|
|
$
|
1,274
|
|
|
$
|
1,215
|
|
Accrued contingent consideration
|
|
366
|
|
|
543
|
|
||
Legal reserves
|
|
524
|
|
|
391
|
|
||
Other long-term liabilities
|
|
419
|
|
|
398
|
|
||
|
|
$
|
2,583
|
|
|
$
|
2,547
|
|
|
|
Nine Months Ended
September 30, |
||||||
|
|
2013
|
|
2012
|
||||
Beginning Balance
|
|
$
|
26
|
|
|
$
|
30
|
|
Provision
|
|
11
|
|
|
6
|
|
||
Settlements/reversals
|
|
(9
|
)
|
|
(9
|
)
|
||
Ending Balance
|
|
$
|
28
|
|
|
$
|
27
|
|
|
|
Three Months Ended
September 30, |
||||
|
|
2013
|
|
2012
|
||
Reported tax rate
|
|
87.6
|
%
|
|
(0.1
|
)%
|
Impact of certain receipts/charges*
|
|
(74.5
|
)%
|
|
16.2
|
%
|
|
|
13.1
|
%
|
|
16.1
|
%
|
|
|
|
|
|
||
|
|
Nine Months Ended
September 30, |
||||
|
|
2013
|
|
2012
|
||
Reported tax rate
|
|
18.9
|
%
|
|
0.7
|
%
|
Impact of certain receipts/charges*
|
|
(5.2
|
)%
|
|
14.5
|
%
|
|
|
13.7
|
%
|
|
15.2
|
%
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
|
||||||||
(in millions)
|
|
2013
|
|
2012
|
|
2013
|
|
2012
|
|
||||
Weighted average shares outstanding - basic
|
|
1,340.3
|
|
|
1,392.5
|
|
|
1,345.2
|
|
|
1,420.3
|
|
|
Net effect of common stock equivalents
|
|
—
|
|
*
|
—
|
|
**
|
—
|
|
*
|
—
|
|
**
|
Weighted average shares outstanding - assuming dilution
|
|
1,340.3
|
|
|
1,392.5
|
|
|
1,345.2
|
|
|
1,420.3
|
|
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
|
||||||||||||
(in millions)
|
|
2013
|
|
2012*
|
|
2013
|
|
2012*
|
|
||||||||
Net sales
|
|
|
|
|
|
|
|
|
|
||||||||
Interventional Cardiology
|
|
$
|
487
|
|
|
$
|
496
|
|
|
$
|
1,538
|
|
|
$
|
1,646
|
|
|
Peripheral Interventions
|
|
202
|
|
|
188
|
|
|
601
|
|
|
571
|
|
|
||||
Cardiovascular
|
|
689
|
|
|
684
|
|
|
2,139
|
|
|
2,217
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
||||||||
Cardiac Rhythm Management
|
|
474
|
|
|
467
|
|
|
1,445
|
|
|
1,466
|
|
|
||||
Electrophysiology
|
|
35
|
|
|
35
|
|
|
106
|
|
|
109
|
|
|
||||
Rhythm Management
|
|
509
|
|
|
502
|
|
|
1,551
|
|
|
1,575
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
||||||||
Endoscopy
|
|
331
|
|
|
308
|
|
|
979
|
|
|
916
|
|
|
||||
Urology/Women's Health
|
|
134
|
|
|
124
|
|
|
378
|
|
|
367
|
|
|
||||
Neuromodulation
|
|
116
|
|
|
88
|
|
|
316
|
|
|
263
|
|
|
||||
MedSurg
|
|
581
|
|
|
520
|
|
|
1,673
|
|
|
1,546
|
|
|
||||
Net sales allocated to reportable segments
|
|
1,779
|
|
|
1,706
|
|
|
5,363
|
|
|
5,338
|
|
|
||||
Sales generated from divested businesses
|
|
2
|
|
|
32
|
|
|
56
|
|
|
91
|
|
|
||||
Impact of foreign currency fluctuations
|
|
(46
|
)
|
|
(3
|
)
|
|
(114
|
)
|
|
(1
|
)
|
|
||||
|
|
$
|
1,735
|
|
|
$
|
1,735
|
|
|
$
|
5,305
|
|
|
$
|
5,428
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Income (loss) before income taxes
|
|
|
|
|
|
|
|
|
|
||||||||
Cardiovascular
|
|
$
|
184
|
|
|
$
|
175
|
|
|
$
|
548
|
|
|
$
|
561
|
|
|
Rhythm Management
|
|
68
|
|
|
58
|
|
|
192
|
|
|
218
|
|
|
||||
MedSurg
|
|
187
|
|
|
169
|
|
|
521
|
|
|
452
|
|
|
||||
Operating income allocated to reportable segments
|
|
439
|
|
|
402
|
|
|
1,261
|
|
|
1,231
|
|
|
||||
Corporate expenses and currency exchange
|
|
(103
|
)
|
|
(58
|
)
|
|
(251
|
)
|
|
(214
|
)
|
|
||||
Goodwill and other intangible asset impairment charges; and acquisition-, divestiture-, restructuring-, and litigation related charges and credits
|
|
(132
|
)
|
|
(839
|
)
|
|
(711
|
)
|
|
(4,708
|
)
|
|
||||
Amortization expense
|
|
(101
|
)
|
|
(99
|
)
|
|
(305
|
)
|
|
(294
|
)
|
|
||||
Operating (loss) income
|
|
103
|
|
|
(594
|
)
|
|
(6
|
)
|
|
(3,985
|
)
|
|
||||
Other expense, net
|
|
(143
|
)
|
|
(69
|
)
|
|
(276
|
)
|
|
(174
|
)
|
|
||||
Income (loss) before income taxes
|
|
$
|
(40
|
)
|
|
$
|
(663
|
)
|
|
$
|
(282
|
)
|
|
$
|
(4,159
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30, 2013
|
|
|
|
|
(in millions)
|
Foreign currency translation adjustments
|
Unrealized gains/losses on derivative financial instruments
|
Defined benefit pension items / Other
|
Total
|
Beginning Balance
|
$(28)
|
$153
|
$(41)
|
$84
|
Other comprehensive income (loss) before reclassifications
|
10
|
(29)
|
—
|
(19)
|
Amounts reclassified from accumulated other comprehensive income
|
—
|
(9)
|
—
|
(9)
|
Net current-period other comprehensive income
|
10
|
(38)
|
—
|
(28)
|
Ending Balance
|
$(18)
|
$115
|
$(41)
|
$56
|
|
|
|
|
|
Three Months Ended September 30, 2012
|
|
|
|
|
(in millions)
|
Foreign currency translation adjustments
|
Unrealized gains/losses on derivative financial instruments
|
Defined benefit pension items / Other
|
Total
|
Beginning Balance
|
$(51)
|
$(4)
|
$(32)
|
$(87)
|
Other comprehensive income (loss) before reclassifications
|
2
|
(29)
|
—
|
(27)
|
Amounts reclassified from accumulated other comprehensive income
|
—
|
2
|
—
|
2
|
Net current-period other comprehensive income
|
2
|
(27)
|
—
|
(25)
|
Ending Balance
|
$(49)
|
$(31)
|
$(32)
|
$(112)
|
|
|
|
|
|
|
Change
|
||||||||||
|
|
Three Months Ended
September 30, |
|
As Reported
Currency
Basis
|
|
Constant
Currency
Basis
|
||||||||||
(in millions)
|
|
2013
|
|
2012
|
|
|
||||||||||
Interventional Cardiology
|
|
$
|
472
|
|
|
$
|
494
|
|
|
(4
|
)
|
%
|
|
(2
|
)
|
%
|
Peripheral Interventions
|
|
195
|
|
|
189
|
|
|
3
|
|
%
|
|
7
|
|
%
|
||
Cardiovascular
|
|
667
|
|
|
683
|
|
|
(2
|
)
|
%
|
|
1
|
|
%
|
||
|
|
|
|
|
|
|
|
|
|
|
||||||
Cardiac Rhythm Management
|
|
464
|
|
|
462
|
|
|
1
|
|
%
|
|
1
|
|
%
|
||
Electrophysiology
|
|
34
|
|
|
35
|
|
|
(3
|
)
|
%
|
|
(1
|
)
|
%
|
||
Rhythm Management
|
|
498
|
|
|
497
|
|
|
0
|
|
%
|
|
1
|
|
%
|
||
|
|
|
|
|
|
|
|
|
|
|
||||||
Endoscopy
|
|
322
|
|
|
310
|
|
|
4
|
|
%
|
|
8
|
|
%
|
||
Urology and Women’s Health
|
|
131
|
|
|
125
|
|
|
5
|
|
%
|
|
8
|
|
%
|
||
Neuromodulation
|
|
115
|
|
|
88
|
|
|
32
|
|
%
|
|
32
|
|
%
|
||
MedSurg
|
|
568
|
|
|
523
|
|
|
9
|
|
%
|
|
12
|
|
%
|
||
|
|
|
|
|
|
|
|
|
|
|
||||||
Subtotal Core Businesses
|
|
1,733
|
|
|
1,703
|
|
|
2
|
|
%
|
|
4
|
|
%
|
||
Divested Businesses
|
|
2
|
|
|
32
|
|
|
(95
|
)
|
%
|
|
(95
|
)
|
%
|
||
Worldwide
|
|
$
|
1,735
|
|
|
$
|
1,735
|
|
|
0
|
|
%
|
|
2
|
|
%
|
|
|
|
|
|
|
Change
|
||||||||||
|
|
Nine Months Ended
September 30, |
|
As Reported
Currency
Basis
|
|
Constant
Currency
Basis
|
||||||||||
(in millions)
|
|
2013
|
|
2012
|
|
|
||||||||||
Interventional Cardiology
|
|
$
|
1,497
|
|
|
$
|
1,646
|
|
|
(9
|
)
|
%
|
|
(7
|
)
|
%
|
Peripheral Interventions
|
|
585
|
|
|
575
|
|
|
2
|
|
%
|
|
5
|
|
%
|
||
Cardiovascular
|
|
2,082
|
|
|
2,221
|
|
|
(6
|
)
|
%
|
|
(3
|
)
|
%
|
||
|
|
|
|
|
|
|
|
|
|
|
||||||
Cardiac Rhythm Management
|
|
1,417
|
|
|
1,451
|
|
|
(2
|
)
|
%
|
|
(1
|
)
|
%
|
||
Electrophysiology
|
|
105
|
|
|
109
|
|
|
(4
|
)
|
%
|
|
(3
|
)
|
%
|
||
Rhythm Management
|
|
1,522
|
|
|
1,560
|
|
|
(2
|
)
|
%
|
|
(2
|
)
|
%
|
||
|
|
|
|
|
|
|
|
|
|
|
||||||
Endoscopy
|
|
956
|
|
|
922
|
|
|
4
|
|
%
|
|
7
|
|
%
|
||
Urology and Women’s Health
|
|
373
|
|
|
371
|
|
|
1
|
|
%
|
|
3
|
|
%
|
||
Neuromodulation
|
|
315
|
|
|
263
|
|
|
20
|
|
%
|
|
20
|
|
%
|
||
MedSurg
|
|
1,644
|
|
|
1,556
|
|
|
6
|
|
%
|
|
8
|
|
%
|
||
|
|
|
|
|
|
|
|
|
|
|
||||||
Subtotal Core Businesses
|
|
5,248
|
|
|
5,337
|
|
|
(2
|
)
|
%
|
|
0
|
|
%
|
||
Divested Businesses
|
|
57
|
|
|
91
|
|
|
(38
|
)
|
%
|
|
(38
|
)
|
%
|
||
Worldwide
|
|
$
|
5,305
|
|
|
$
|
5,428
|
|
|
(2
|
)
|
%
|
|
0
|
|
%
|
|
|
Three Months Ended
|
|
Three Months Ended
|
||||||||||||||||||||
(in millions)
|
|
September 30, 2013
|
|
September 30, 2012
|
||||||||||||||||||||
|
|
U.S.
|
|
International
|
|
Total
|
|
U.S.
|
|
International
|
|
Total
|
||||||||||||
Drug-eluting
|
|
$
|
106
|
|
|
$
|
156
|
|
|
$
|
262
|
|
|
$
|
123
|
|
|
$
|
160
|
|
|
$
|
283
|
|
Bare-metal
|
|
5
|
|
|
10
|
|
|
15
|
|
|
6
|
|
|
15
|
|
|
21
|
|
||||||
|
|
$
|
111
|
|
|
$
|
166
|
|
|
$
|
277
|
|
|
$
|
129
|
|
|
$
|
175
|
|
|
$
|
304
|
|
•
|
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.
|
•
|
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.
|
|
|
Three Months Ended
|
|
Three Months Ended
|
||||||||||||||||||||
(in millions)
|
|
September 30, 2013
|
|
September 30, 2012
|
||||||||||||||||||||
|
|
U.S.
|
|
International
|
|
Total
|
|
U.S.
|
|
International
|
|
Total
|
||||||||||||
ICD systems
|
|
$
|
212
|
|
|
$
|
118
|
|
|
$
|
330
|
|
|
$
|
205
|
|
|
$
|
122
|
|
|
$
|
327
|
|
Pacemaker systems
|
|
70
|
|
|
64
|
|
|
134
|
|
|
68
|
|
|
67
|
|
|
135
|
|
||||||
CRM products
|
|
$
|
282
|
|
|
$
|
182
|
|
|
$
|
464
|
|
|
$
|
273
|
|
|
$
|
189
|
|
|
$
|
462
|
|
•
|
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.
|
|
Three Months
|
Nine Months
|
||
Gross profit margin - period ended September 30, 2012
|
67.8
|
%
|
67.5
|
%
|
Manufacturing cost reductions
|
1.9
|
|
2.0
|
|
Sales from divested businesses
|
1.1
|
|
0.4
|
|
Sales pricing
|
(0.9
|
)
|
(1.0
|
)
|
All other
|
0.7
|
|
0.6
|
|
Gross profit margin - period ended September 30, 2013
|
70.6
|
%
|
69.5
|
%
|
|
|
Three Months Ended
September 30,
|
|
Nine Months Ended
September 30,
|
||||||||||||||||||||
|
|
2013
|
|
2012
|
|
2013
|
|
2012
|
||||||||||||||||
|
|
|
|
% of Net
|
|
|
|
% of Net
|
|
|
|
% of Net
|
|
|
|
% of Net
|
||||||||
(in millions)
|
|
$
|
|
Sales
|
|
$
|
|
Sales
|
|
$
|
|
Sales
|
|
$
|
|
Sales
|
||||||||
Selling, general and administrative expenses
|
|
658
|
|
|
37.9
|
%
|
|
589
|
|
|
33.9
|
%
|
|
1,950
|
|
|
36.8
|
%
|
|
1,895
|
|
|
34.9
|
%
|
Research and development expenses
|
|
217
|
|
|
12.5
|
%
|
|
220
|
|
|
12.7
|
%
|
|
644
|
|
|
12.1
|
%
|
|
648
|
|
|
11.9
|
%
|
Royalty expense
|
|
28
|
|
|
1.6
|
%
|
|
29
|
|
|
1.7
|
%
|
|
115
|
|
|
2.2
|
%
|
|
125
|
|
|
2.3
|
%
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
|
|
||||||||||||||
(in millions)
|
|
2013
|
|
2012
|
|
2013
|
|
2012
|
||||||||
Interest income
|
|
$
|
1
|
|
|
$
|
1
|
|
|
$
|
5
|
|
|
$
|
2
|
|
Foreign currency losses
|
|
(3
|
)
|
|
(3
|
)
|
|
(6
|
)
|
|
(13
|
)
|
||||
Net gains (losses) on investments
|
|
(5
|
)
|
|
1
|
|
|
(7
|
)
|
|
37
|
|
||||
Other income (expense), net
|
|
1
|
|
|
(3
|
)
|
|
(2
|
)
|
|
(3
|
)
|
||||
|
|
$
|
(6
|
)
|
|
$
|
(4
|
)
|
|
$
|
(10
|
)
|
|
$
|
23
|
|
|
|
Three Months Ended
September 30, |
||||
|
|
2013
|
|
2012
|
||
Reported tax rate
|
|
87.6
|
%
|
|
(0.1
|
)%
|
Impact of certain receipts/charges*
|
|
(74.5
|
)%
|
|
16.2
|
%
|
|
|
13.1
|
%
|
|
16.1
|
%
|
|
|
|
|
|
||
|
|
Nine Months Ended
September 30, |
||||
|
|
2013
|
|
2012
|
||
Reported tax rate
|
|
18.9
|
%
|
|
0.7
|
%
|
Impact of certain receipts/charges*
|
|
(5.2
|
)%
|
|
14.5
|
%
|
|
|
13.7
|
%
|
|
15.2
|
%
|
•
|
decreases in estimated market sizes or market growth rates due to greater-than-expected declines in procedural volumes, pricing pressures, reductions in reimbursement levels, 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.
|
|
|
Nine Months Ended
September 30, |
||||||
(in millions)
|
|
2013
|
|
2012
|
||||
Cash provided by operating activities
|
|
$
|
809
|
|
|
$
|
891
|
|
Cash used for investing activities
|
|
(112
|
)
|
|
(306
|
)
|
||
Cash used for financing activities
|
|
(333
|
)
|
|
(502
|
)
|
(in millions)
|
2013
|
|
2014
|
|
2015
|
|
2016
|
|
2017
|
|
Thereafter
|
|
Total
|
||||||||||||||
Senior notes
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
400
|
|
|
$
|
600
|
|
|
$
|
250
|
|
|
$
|
2,550
|
|
|
$
|
3,800
|
|
Term loan
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
80
|
|
|
$
|
80
|
|
|
$
|
240
|
|
|
$
|
400
|
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
400
|
|
|
$
|
680
|
|
|
$
|
330
|
|
|
$
|
2,790
|
|
|
$
|
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.
|
|
Covenant
Requirement
|
|
Actual as of
September 30, 2013
|
Maximum leverage ratio (1)
|
3.5 times
|
|
2.4 times
|
Minimum interest coverage ratio (2)
|
3.0 times
|
|
5.4 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.
|
•
|
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 U.S. Cardiac Rhythm Management reporting unit in the third quarter of 2012; (d) 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 (e) non-cash write-downs of certain intangible asset balances in the second and third quarters 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, these charges are excluded from management's assessment of operating performance and are also excluded for purposes of calculating these non-GAAP financial measures to facilitate an evaluation of our current operating performance and a comparison to our past operating performance, particularly in terms of liquidity.
|
•
|
Acquisition-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 charges (credits) - 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 net charges (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 net charges (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.
|
•
|
Debt extinguishment charges - This item represents premiums, accelerated amortization of debt issuance costs and investor discount costs net of interest rate hedge gains related to the early extinguishment of $1.450 billion of debt during the third quarter of 2013. These adjustments do not reflect expected on-going operating results. Accordingly, management excluded these amounts for purposes of calculating these non-GAAP financial measures to facilitate an evaluation of our current operating performance and a comparison to our past operating performance.
|
•
|
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.
|
•
|
Discrete tax items - These items represent adjustments of certain tax positions, which were initially established in prior periods as a result of intangible asset impairment charges; acquisition-, divestiture-, restructuring- or litigation-related charges (credits). These adjustments do not reflect expected on-going operating results. Accordingly, management excluded these amounts for purposes of calculating these non-GAAP financial measures to facilitate an evaluation of our current operating performance and a comparison to our past operating performance.
|
•
|
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.
|
•
|
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 U.S. government sequestration, failure to increase the debt ceiling and/or future government shutdowns;
|
•
|
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
|
•
|
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.
|
•
|
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.
|
•
|
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.
|
•
|
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 the timing and collectibility of customer payments, 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.
|
•
|
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.
|
•
|
Risks associated with significant changes made or expected to be made to our organizational and operational structure, pursuant to our 2014 Restructuring plan, 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.
|
ITEM 3.
|
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|
ITEM 4.
|
CONTROLS AND PROCEDURES
|
4.1
|
|
2.650% Senior Notes due 2018 (incorporated herein by reference to Exhibit 4.2, Current Report on Form 8-K filed August 13, 2013, File No. 001-11083)
|
|
|
|
4.2
|
|
4.125% Senior Notes due 2023 (incorporated herein by reference to Exhibit 4.3, Current Report on Form 8-K filed August 13, 2013, File No. 001-11083)
|
|
|
|
10.1
|
|
Form of Transition and Separation Agreement between Jeffrey D. Capello and Boston Scientific Corporation (incorporated herein by reference to Exhibit 10.1, Current Report on Form 8-K filed October 24, 2013, File No. 011-11083)#
|
|
|
|
10.2
|
|
Form of Offer Letter dated October 22, 2013 between Daniel J. Brennan and Boston Scientific Corporation (incorporated herein by reference to Exhibit 10.2, Current Report on Form 8-K filed October 24, 2013, File No. 011-11083)#
|
|
|
|
10.3
|
|
Boston Scientific Corporation 2014 Annual Bonus Plan, effective as of January 1, 2014 (incorporated herein by reference to Exhibit 10.1, Current Report on Form 8-K filed October 25, 2013, File No. 011-11083)#
|
|
|
|
10.4
|
|
Boston Scientific Corporation 2014 Total Shareholder Return Performance Share Program (incorporated herein by reference to Exhibit 10.2, Current Report on Form 8-K filed October 25, 2013, File No. 011-11083)#
|
|
|
|
10.5
|
|
Boston Scientific Corporation 2014 Free Cash Flow Performance Share Program (incorporated herein by reference to Exhibit 10.3, Current Report on Form 8-K filed October 25, 2013, File No. 011-11083)#
|
|
|
|
10.6*
|
|
Boston Scientific Corporation Non-Employee Director Deferred Compensation Plan, Amended and Restated effective as of January 1, 2014#
|
|
|
|
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 nine months ended September 30, 2013 and 2012, (ii) the Condensed Consolidated Statements of Comprehensive Income for the three and nine months ended September 30, 2013 and 2012, (iii) the Condensed Consolidated Balance Sheets as of September 30, 2013 and December 31, 2012, (iv) the Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2013 and 2012 and (v) the notes to the Condensed Consolidated Financial Statements.
|
|
BOSTON SCIENTIFIC CORPORATION
|
||
|
By:
|
/s/ Jeffrey D. Capello
|
|
|
|
|
|
|
|
Name:
|
Jeffrey D. Capello
|
|
|
Title:
|
Executive Vice President and
Chief Financial Officer
|
ARTICLE 1
|
Nature and Purpose of Plan
|
1
|
|
1.1
|
Nature
|
1
|
|
1.2
|
Purpose
|
1
|
|
ARTICLE 2
|
Participation
|
1
|
|
2.1
|
Commencement of Participation
|
1
|
|
2.2
|
Duration of Participation
|
1
|
|
ARTICLE 3
|
Elections and Accounts
|
1
|
|
3.1
|
Deferral Election
|
1
|
|
3.2
|
Deemed Elections
|
2
|
|
3.3
|
Deferred Cash Account
|
2
|
|
3.4
|
Deferred DSU Account
|
2
|
|
3.5
|
Account Statements
|
3
|
|
ARTICLE 4
|
Payment of Deferred Amounts
|
3
|
|
4.1
|
Payment Events for Deferred Cash Accounts
|
3
|
|
4.2
|
Form of Payment of Deferred Cash Accounts
|
3
|
|
4.3
|
Payment of Deferred Cash Accounts
|
4
|
|
4.4
|
Payment of Deferred DSU Accounts
|
4
|
|
4.5
|
Designation of Beneficiary
|
4
|
|
4.6
|
Delay For Specified Employees
|
5
|
|
4.7
|
Change in Control
|
5
|
|
ARTICLE 5
|
Nature of Claims for Benefit Payments
|
5
|
|
5.1
|
Obligation of the Company
|
5
|
|
5.2
|
Participants' Rights Unsecured
|
5
|
|
5.3
|
Establishment of Grantor Trust
|
5
|
|
ARTICLE 6
|
Administration
|
6
|
|
6.1
|
Plan Administrator
|
6
|
|
6.2
|
Powers of the Committee as Administrator
|
6
|
|
6.3
|
Finality of Committee Determinations
|
6
|
|
6.4
|
Claims Procedures
|
6
|
|
6.5
|
Indemnification
|
7
|
|
6.6
|
Right to Suspend Benefits and Correct Errors
|
7
|
|
6.7
|
Incapacity
|
7
|
|
6.8
|
Legal Holidays
|
7
|
|
ARTICLE 7
|
Amendment or Termination of the Plan
|
7
|
|
ARTICLE 8
|
Miscellaneous
|
8
|
|
8.1
|
No Assignment or Alienation
|
8
|
|
8.2
|
Limitation of Rights
|
8
|
|
8.3
|
Receipt and Release
|
8
|
|
8.4
|
No Effect on Future Service as a Director
|
8
|
|
8.5
|
Severability
|
8
|
|
8.6
|
Successor Company
|
8
|
|
8.7
|
Headings and Subheadings
|
8
|
|
8.8
|
Governing Law
|
8
|
|
ARTICLE 9
|
Definitions and Rules of Construction
|
8
|
|
9.1
|
Definitions
|
9
|
|
9.2
|
Rules of Construction
|
11
|
|
1
|
I have reviewed this Quarterly Report on Form 10-Q of Boston Scientific Corporation;
|
|
|
|
|
2
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
|
|
|
|
3
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
|
|
|
|
4
|
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
|
|
|
|
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
|
|
|
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
|
|
|
|
c)
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
|
|
|
|
d)
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
|
|
|
5
|
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
|
|
|
|
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
|
|
|
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
Date: November 5, 2013
|
|
/s/ Michael F. Mahoney
|
||
|
|
Michael F. Mahoney
|
||
|
|
President and Chief Executive Officer
|
1
|
I have reviewed this Quarterly Report on Form 10-Q of Boston Scientific Corporation;
|
|
|
|
|
2
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
|
|
|
|
3
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
|
|
|
|
4
|
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
|
|
|
|
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
|
|
|
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
|
|
|
|
c)
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
|
|
|
|
d)
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
|
|
|
5
|
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
|
|
|
|
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
|
|
|
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
Date: November 5, 2013
|
|
/s/ Jeffrey D. Capello
|
||
|
|
Jeffrey D. Capello
|
||
|
|
Executive Vice President and Chief Financial Officer
|
|
(1)
|
the Report fully complies with the requirements of Section 13 (a) or 15 (d) of the Securities Exchange Act of 1934; and
|
|
(2)
|
the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Boston Scientific Corporation.
|
|
|
By:
|
/s/ Michael F. Mahoney
|
|
Michael F. Mahoney
|
|
President and Chief Executive Officer
|
|
|
|
November 5, 2013
|
|
(1)
|
the Report fully complies with the requirements of Section 13 (a) or 15 (d) of the Securities Exchange Act of 1934; and
|
|
(2)
|
the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Boston Scientific Corporation.
|
|
|
|
By:
|
/s/ Jeffrey D. Capello
|
|
|
Jeffrey D. Capello
|
|
|
Executive Vice President and Chief Financial Officer
|
|
|
|
|
|
November 5, 2013
|
|