☑
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934, or
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☐
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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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Title of each class
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Trading Symbol
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Name of each exchange on which registered
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Common Stock, $0.01 par value
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BSX
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New York Stock Exchange
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0.625% Senior Notes due 2027
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BSX27
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New York Stock Exchange
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Large accelerated filer
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☑
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Accelerated filer
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☐
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Non-accelerated filer
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☐
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Smaller reporting company
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☐
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Emerging growth company
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☐
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•
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our SpyGlass™ DS II Direct Visualization System, which brings digital imaging, a wider field of view and a simpler set-up (compared to our legacy SpyGlass System), thus enabling cholangioscopy to play a greater role in the diagnosis and treatment of pancreatico-biliary diseases,
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our Resolution 360™ Clip, a hemostatic clipping technology designed to stop and help prevent bleeding during endoscopic procedures,
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our Epic™ Biliary Endoscopic Stent System, indicated for the palliation of malignant strictures, is our first laser cut self-expanding metal stent and complements our braided metal stent portfolio,
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our Acquire™ Endoscopic Ultrasound Fine Needle Biopsy Device, which is designed to obtain larger tissue specimens for histological assessment and is useful when diagnosing diseases such as pancreatic cancer, liver cancer and stomach lesions,
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our AXIOS™ Stent and Electrocautery Enhanced Delivery System, the first, and currently only, stent in the U.S. indicated for endoscopic drainage of pancreatic pseudocysts,
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our infection prevention portfolio, which includes a customizable Compliance EndoKit™ and single-use Orca™ Valves, designed to minimize the risk of infection transmission and improve operational efficiencies by streamlining manual cleaning or eliminating the need for cleaning and tracking, and
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our endoluminal surgery portfolio with ORISE™ Tissue Retractor System, designed to enable tissue retraction and countertraction during en bloc colonic tissue resection procedures and ORISE™ Gel, designed to be used for submucosal lift of polyps, adenomas, early-stage cancers or other gastrointestinal mucosal lesions prior to excision with a snare or other endoscopic device.
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our comprehensive line of stone management products, including ureteral stents, catheters, baskets, guidewires, sheaths and balloons and stone laser devices,
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our LithoVue™ Single-Use Digital Flexible Ureteroscope, which delivers detailed high-resolution digital images for high-quality visualization and seamless navigation,
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our penile implants to treat erectile dysfunction and urinary control systems to treat male urinary incontinence, under our Prosthetic Urology portfolio,
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•
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our GreenLight XPS™ Laser System, our MoXy™ Fiber and Rezūm™ System, purchased as part of the NxThera, Inc. (NxThera) acquisition in the second quarter of 2018, under our BPH therapies,
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our SpaceOAR™ Hydrogel System, purchased as part of the Augmenix, Inc. (Augmenix) acquisition in the fourth quarter of 2018, to help reduce side effects that men may experience after receiving radiotherapy to treat prostate cancer, and
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our range of devices for the treatment of Women's Health conditions such as stress urinary incontinence, heavy menstrual bleeding (menorrhagia) and uterine fibroids and polyps.
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•
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our implantable cardioverter defibrillators (ICD) and implantable cardiac resynchronization therapy defibrillators (CRT-D) as well as the world's first, and currently only, commercially available subcutaneous implantable cardiac defibrillators (S-ICD),
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•
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our pacemakers and implantable cardiac resynchronization therapy pacemakers (CRT-P), and
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our LATITUDE™ Remote Patient Management System, which allows for more frequent monitoring and better guided treatment decisions by enabling physicians in most geographies to monitor implantable system performance remotely.
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our Rhythmia™ Mapping System, a next-generation, catheter-based, 3-D cardiac mapping and navigation solution designed to help diagnose and guide treatment of a variety of arrhythmias,
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our Blazer™ Therapeutic Ablation Catheter line,
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our broad portfolio of diagnostic catheters including Blazer™ Dx-20, Dynamic Tip™ and Viking™ Catheters,
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our IntellaMap OrionTM Mapping Catheter, for use with our Rhythmia Mapping System to provide high-density, high-resolution maps of the heart,
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our intracardiac ultrasound catheters, delivery sheaths and other accessories, and
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our full offering of capital equipment used in Electrophysiology labs, such as recording systems, generators and pumps.
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•
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our Precision™, Precision Spectra™, Precision Montage™, Precision Novi™ and Spectra WaveWriter™ Spinal Cord Stimulator (SCS) Systems, designed to provide improved pain relief to a wide range of patients who suffer from chronic pain,
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our Superion™ Indirect Decompression System, a minimally-invasive device used to improve physical function and reduce pain in patients with lumbar spinal stenosis (LSS) purchased as part of the acquisition of Vertiflex, Inc. in the second quarter of 2019, and
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our Vercise™, Vercise™ PC and Vercise Gevia™ Deep Brain Stimulation (DBS) Systems for the treatment of Parkinson's disease, tremor, and intractable primary and secondary dystonia, a neurological movement disorder characterized by involuntary muscle contractions.
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our SYNERGY™ Everolimus-Eluting Platinum Chromium Coronary Stent System, featuring an ultra-thin abluminal (outer) bioabsorbable polymer coating,
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our Promus ELITE™ Everolimus-Eluting Stent, and
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our Promus PREMIER™ Everolimus-Eluting family of stents.
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our OptiCross™ IVUS Imaging catheter,
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our COMET™ FFR Pressure Guidewire, and
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our iLab™ Ultrasound Imaging System with Polaris Software, designed to enhance the diagnosis and treatment of blocked vessels and other heart disorders, which is compatible with our full line of imaging catheters and coronary physiology devices and continues to be our flagship console.
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our WATCHMAN™ Left Atrial Appendage Closure (LAAC) Technology (WATCHMAN), and WATCHMAN FLX, designed to close the left atrial appendage in patients with non-valvular atrial fibrillation who are at risk for ischemic stroke,
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our ACURATE TA™, ACURATE neo™, and ACURATE TF™ Aortic Valve Systems, which are based on a self-expanding architecture,
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our LOTUS Edge™ Aortic Valve System, which is based on mechanical-expanding architecture, and
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our Sentinel™ Cerebral Embolic Protection System, purchased as part of our acquisition of Claret Medical, Inc. (Claret) in the third quarter of 2018.
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our Mustang™ PTA next-generation Balloon Catheter, a 0.035" balloon with superior crossing and tracking, powerful dilatation, longer lengths and smaller sheath sizes,
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our Coyote™ Balloon Catheter, a highly deliverable and ultra-low profile balloon dilatation catheter designed for a wide range of peripheral angioplasty procedures,
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our Sterling™ Balloon Catheter, a 0.018" PTA balloon catheter designed for post-stent dilatation as well as conventional balloon angioplasty to open blocked peripheral arteries, and
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our Ranger™ Drug-Coated Balloon, an innovative balloon built on the Sterling balloon platform, featuring a low-dose of paclitaxel.
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our EPIC™ Vascular Self-Expanding Stent System, a nitinol stent designed to sustain vessel patency while providing enhanced visibility and accuracy during placement,
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our Innova™ Self-Expanding Stent System, a laser-cut nitinol stent built for the superficial femoral artery (SFA, a large artery in the thigh) with flexibility, strength and fracture resistance, and
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our Eluvia™ Drug Eluting Vascular Stent System, an innovative stent built on the Innova stent platform, designed to deliver a sustained dosage of paclitaxel during the time when restenosis is most likely to occur.
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our AngioJet™ Thrombectomy System, used in endovascular procedures to remove blood clots from blocked arteries and veins,
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our AngioJet Zelante DVT™ Thrombectomy Catheter to treat deep vein thrombosis (DVT) in large-diameter upper and lower limb peripheral veins, in the U.S. and Europe,
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our VICI VENOUS STENT™ System to treat venous obstructive disease, purchased as part of the VENITI, Inc. acquisition in the third quarter of 2018, and
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our EKOS™ Ultrasound Assisted Thrombolysis system used to treat deep vein thrombosis and pulmonary embolism, purchased as part of the BTG acquisition, which closed during the third quarter of 2019.
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our Therasphere™ Y-90 radioactive glass microspheres used in the treatment of hepatocellular carcinoma (HCC or the most common type of liver cancer) purchased as part of the BTG acquisition,
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our Direxion™ Torqueable Microcatheter, and
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our line of interventional oncology solutions, including the Renegade™ HI-FLO™ Fathom™ Microcatheter and Guidewire System and Interlock™ - 35 Fibered IDC™ and 18 Fibered IDC™ Occlusion System for peripheral embolization.
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our CroFab®, the only FDA-approved product derived exclusively from U.S. snakes and approved to treat all North American pit viper envenomations in adult and pediatric patients,
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our DigiFab® Digoxin Immune Fab (Ovine), a treatment for patients with life-threatening or potentially life-threatening digoxin toxicity or overdose that is clinically proven to effectively clear digoxin from the body, and
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our Voraxaze®, a carboxypeptidase indicated to reduce toxic plasma methotrexate concentration (greater than one micromole per liter) in adult and pediatric patients with delayed methotrexate clearance (plasma methotrexate concentrations greater than two standard deviations of the mean methotrexate excretion curve specific for the dose of methotrexate administered) due to impaired renal function.
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internal research and development programs, regulatory design and clinical science, as well as other programs obtained through our strategic acquisitions and alliances, and
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engineering efforts that incorporate customer feedback into continuous improvement efforts for currently marketed and next-generation products.
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offer products and solutions that provide differentiated clinical and economic outcomes,
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create or acquire innovative, scientifically advanced technologies,
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apply our technology and solutions cost-effectively and with superior quality across product lines and markets,
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develop or acquire proprietary products and solutions,
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attract and retain skilled personnel,
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obtain patent or other protection for our products,
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obtain required regulatory and reimbursement approvals,
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compete in regional and national tenders for our products,
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continually enhance our quality systems,
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manufacture and market our products and solutions either directly or through third parties, and
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supply sufficient inventory to meet customer demand.
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Our ability to increase net sales, expand the market, capture market share and adapt to market volatility,
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The ongoing impact on our business of physician alignment to hospitals, governmental investigations and audits of hospitals and other market and economic conditions on the overall number of procedures performed,
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Competitive offerings and related declines in average selling prices for our products,
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The performance of, and physician and patient confidence in, our products and technologies or those of our competitors,
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The impact and outcome of ongoing and future clinical trials and market studies undertaken by us, our competitors or other third parties or perceived product performance of our or our competitors' products,
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Variations in clinical results, reliability or product performance of our and our competitors' products,
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Our ability to acquire or develop, launch and supply new or next-generation products and technologies worldwide and in line with our commercialization strategies in a timely and successful manner and with respect to our recent acquisitions,
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The effect of consolidation and competition in the markets in which we do business or plan to do business,
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Disruption in the manufacture or supply of certain components, materials or products, or the failure to secure in a timely manner alternative manufacturing or additional or replacement components, materials or products,
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Our ability to retain and attract key personnel, including those associated with recent acquisitions,
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The impact of natural disasters, public health crises, and other catastrophic events,
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The impact of enhanced requirements to obtain regulatory approval in the U.S. and around the world, including EU MDR and 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 U.S. and around the world, including with respect to the timing and costs of creating and expanding markets for new products and technologies.
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The impact of healthcare policy changes and legislative or regulatory efforts in the U.S., the EU 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,
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Risks associated with our regulatory compliance and quality systems and activities in the U.S., the EU and around the world, including meeting regulatory standards applicable to manufacturing and quality processes,
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Our ability to minimize or avoid future field actions or FDA warning letters relating to our products and processes and the ongoing inherent risk of potential physician advisories related to our or our competitors' products,
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The impact of increased scrutiny of and heightened global regulatory enforcement facing the medical device industry arising from political and regulatory changes, economic pressures or otherwise, including under U.S. Anti-Kickback Statute, U.S. False Claims Act 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 customs laws,
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Costs and risks associated with current and future asserted litigation,
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The effect of our litigation and risk management practices, including self-insurance and compliance activities on our loss contingencies, legal provision and cash flows,
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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,
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The possibility of failure to protect our intellectual property rights and the outcome of patent litigation, and
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Our ability to operate properly our information systems that support our business operations and protect our data integrity and products from a cyber-attack or other breach that has a material adverse effect on our business, reputation or results of operations.
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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,
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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 projects from in-process research and development,
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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,
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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,
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Our ability to execute appropriate decisions to discontinue, write-down or reduce the funding of any of our research and development projects, including projects from in-process research and development from our acquisitions, in our growth adjacencies or otherwise,
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Our 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
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The potential 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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Our dependency on international net sales to achieve growth, including in emerging markets,
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The impact of changes we may make in the future on our international structure and leadership,
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The timing and collectability of customer payments,
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Geopolitical and economic conditions (including the impact of the United Kingdom's exit from the EU, often referred to as "Brexit"),
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Protection of our intellectual property,
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Our ability to comply with established and developing U.S. and foreign legal and regulatory requirements, including FCPA and similar laws in other jurisdictions
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Our ability to comply with U.S. and foreign export control, trade embargo and custom laws,
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The impact of changes in reimbursement practices and policies,
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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,
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Our ability to execute and realize anticipated benefits from our investments in emerging markets, and
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The potential effect of foreign currency fluctuations and interest rate fluctuations on our net sales, expenses and resulting margins.
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Our ability to generate sufficient cash flow to fund operations, capital expenditures, global expansion initiatives, any litigation settlements and judgments, share repurchases and strategic investments and acquisitions as well as maintaining our investment grade ratings and managing our debt levels and covenant compliance,
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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,
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The unfavorable resolution of open tax matters, exposure to additional tax liabilities and the impact of changes in U.S. and international tax laws,
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The impact of examinations and assessments by domestic and international taxing authorities on our tax provision, financial condition or results of operations,
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The possibility of counterparty default on our derivative financial instruments,
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The impact of potential intangible asset impairment charges, including on our results of operations, and
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Our ability to collect outstanding and future receivables and/or sell receivables under our factoring programs.
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Risks associated with changes made or expected to be made to our organizational and operational structure, pursuant to our restructuring plans 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
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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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our ability to identify suitable opportunities for acquisition, investment or alliance, if at all,
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our ability to manage acquisition, investment or alliance opportunities within our capital capacity and prioritize those investments to execute on our strategy,
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•
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our ability to manage our due diligence process to uncover potential issues with targets,
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our ability to finance any future acquisition, investment or alliance on terms acceptable to us, if at all,
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•
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our ability to complete acquisitions, investments or alliances in a timely manner on terms that are satisfactory to us, if at all,
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•
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our ability to successfully integrate and operate acquired businesses,
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our ability to successfully identify and retain key target employees,
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our ability to comply with applicable laws and regulations, including foreign laws and regulations, and
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our ability to protect intellectual property and to prevail in litigation related to newly acquired technologies.
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take a significant period of time,
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require the expenditure of substantial resources,
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involve rigorous pre-clinical and clinical testing, as well as increased post-market surveillance,
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require changes to products and
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result in limitations on the indicated uses of products.
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Owned (1)
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Leased (2)
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Total
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U.S.
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4,072,000
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1,446,000
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5,518,000
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International
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2,258,000
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1,624,000
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3,882,000
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6,330,000
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3,070,000
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9,400,000
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(1)
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Includes our principal manufacturing facilities in Minnesota, Ireland, Puerto Rico and one facility in Costa Rica, our manufacturing facility in Malaysia, our primary customer fulfillment centers in Massachusetts, the Netherlands and Japan, and our global headquarters location in Marlborough, Massachusetts.
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(2)
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Includes our principal manufacturing facilities in California, Indiana, Brazil, Switzerland and one in Costa Rica, and our regional headquarters located in Singapore and Voisins-le-Bretonneux, France.
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Year Ended December 31,
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2019
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2018
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2017
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2016
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2015
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Net sales
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$
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10,735
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$
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9,823
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$
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9,048
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$
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8,386
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$
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7,477
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Gross profit
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7,620
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7,011
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6,455
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5,962
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5,304
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Total operating expenses
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6,102
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5,504
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5,170
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5,515
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5,587
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|||||
Operating income (loss)
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1,518
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1,506
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|
|
1,285
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|
447
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(283
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)
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|||||
Income (loss) before income taxes
|
687
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|
|
1,422
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|
|
933
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|
|
177
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|
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(650
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)
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|||||
Net income (loss)
|
4,700
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|
|
1,671
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|
|
104
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|
|
347
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|
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(239
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)
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|||||
Net income (loss) per common share:
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||||||||||
Basic
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$
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3.38
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$
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1.21
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|
|
$
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0.08
|
|
|
$
|
0.26
|
|
|
$
|
(0.18
|
)
|
Assuming dilution
|
$
|
3.33
|
|
|
$
|
1.19
|
|
|
$
|
0.08
|
|
|
$
|
0.25
|
|
|
$
|
(0.18
|
)
|
As of December 31,
|
2019
|
|
2018
|
|
2017
|
|
2016
|
|
2015
|
||||||||||
Cash, cash equivalents and marketable securities
|
$
|
217
|
|
|
$
|
146
|
|
|
$
|
188
|
|
|
$
|
196
|
|
|
$
|
319
|
|
Working capital (deficit)
|
(168
|
)
|
|
(1,257
|
)
|
|
(1,832
|
)
|
|
(348
|
)
|
|
1,041
|
|
|||||
Total assets
|
30,565
|
|
|
20,999
|
|
|
19,042
|
|
|
18,096
|
|
|
18,133
|
|
|||||
Borrowings (short-term)
|
1,416
|
|
|
2,253
|
|
|
1,801
|
|
|
64
|
|
|
3
|
|
|||||
Borrowings (long-term)
|
8,592
|
|
|
4,803
|
|
|
3,815
|
|
|
5,420
|
|
|
5,674
|
|
|||||
Stockholders’ equity
|
13,877
|
|
|
8,726
|
|
|
7,012
|
|
|
6,733
|
|
|
6,320
|
|
|||||
Book value per common share †
|
$
|
9.95
|
|
|
$
|
6.30
|
|
|
$
|
5.11
|
|
|
$
|
4.94
|
|
|
$
|
4.69
|
|
†
|
Book value per common share is calculated using shares outstanding as of December 31, for each year, respectively shown.
|
|
Year Ended December 31, 2019
|
||||||
(in millions, except per share data)
|
Net Income (Loss)
|
|
Impact per Share
|
||||
GAAP net income (loss)
|
$
|
4,700
|
|
|
$
|
3.33
|
|
Non-GAAP adjustments:
|
|
|
|
||||
Amortization expense
|
628
|
|
|
0.44
|
|
||
Intangible asset impairment charges
|
102
|
|
|
0.07
|
|
||
Acquisition/divestiture-related net charges (credits)
|
672
|
|
|
0.48
|
|
||
Restructuring and restructuring-related net charges (credits)
|
68
|
|
|
0.05
|
|
||
Litigation-related net charges (credits)
|
72
|
|
|
0.05
|
|
||
Investment impairment charges
|
3
|
|
|
0.00
|
|
||
EU MDR implementation charges
|
5
|
|
|
0.00
|
|
||
Debt extinguishment net charges (credits)
|
67
|
|
|
0.05
|
|
||
Deferred tax expenses (benefits)
|
(4,102
|
)
|
|
(2.91
|
)
|
||
Discrete tax items
|
18
|
|
|
0.01
|
|
||
Adjusted net income
|
$
|
2,234
|
|
|
$
|
1.58
|
|
|
Year Ended December 31, 2018
|
||||||
(in millions, except per share data)
|
Net Income (Loss)
|
|
Impact per Share
|
||||
GAAP net income (loss)
|
$
|
1,671
|
|
|
$
|
1.19
|
|
Non-GAAP adjustments:
|
|
|
|
||||
Amortization expense
|
520
|
|
|
0.37
|
|
||
Intangible asset impairment charges
|
31
|
|
|
0.02
|
|
||
Acquisition-related net charges (credits)
|
5
|
|
|
0.00
|
|
||
Restructuring and restructuring-related net charges (credits)
|
77
|
|
|
0.05
|
|
||
Litigation-related net charges (credits)
|
79
|
|
|
0.06
|
|
||
Investment impairment charges
|
6
|
|
|
0.00
|
|
||
Discrete tax items
|
(328
|
)
|
|
(0.23
|
)
|
||
Adjusted net income
|
$
|
2,060
|
|
|
$
|
1.47
|
|
|
Year Ended December 31,
|
|
2019 versus 2018
|
|
2018 versus 2017
|
||||||||||
(in millions)
|
2019
|
|
2018
|
|
2017
|
|
|
||||||||
Endoscopy
|
$
|
1,894
|
|
|
$
|
1,762
|
|
|
$
|
1,619
|
|
|
7.5%
|
|
8.8%
|
Urology and Pelvic Health
|
1,413
|
|
|
1,245
|
|
|
1,124
|
|
|
13.4%
|
|
10.8%
|
|||
MedSurg
|
3,307
|
|
|
3,007
|
|
|
2,742
|
|
|
10.0%
|
|
9.7%
|
|||
Cardiac Rhythm Management
|
1,939
|
|
|
1,951
|
|
|
1,895
|
|
|
(0.6)%
|
|
2.9%
|
|||
Electrophysiology
|
329
|
|
|
311
|
|
|
278
|
|
|
5.5%
|
|
12.1%
|
|||
Neuromodulation
|
873
|
|
|
779
|
|
|
635
|
|
|
12.0%
|
|
22.7%
|
|||
Rhythm and Neuro
|
3,140
|
|
|
3,041
|
|
|
2,808
|
|
|
3.3%
|
|
8.3%
|
|||
Interventional Cardiology
|
2,816
|
|
|
2,590
|
|
|
2,419
|
|
|
8.7%
|
|
7.1%
|
|||
Peripheral Interventions
|
1,392
|
|
|
1,187
|
|
|
1,081
|
|
|
17.3%
|
|
9.8%
|
|||
Cardiovascular
|
4,208
|
|
|
3,777
|
|
|
3,500
|
|
|
11.4%
|
|
7.9%
|
|||
Medical Devices(1)
|
10,654
|
|
|
9,823
|
|
|
9,048
|
|
|
8.5%
|
|
8.6%
|
|||
Specialty Pharmaceuticals
|
81
|
|
|
n/a
|
|
|
n/a
|
|
|
n/a
|
|
n/a
|
|||
Net Sales
|
$
|
10,735
|
|
|
$
|
9,823
|
|
|
$
|
9,048
|
|
|
9.3%
|
|
8.6%
|
(1)
|
We have three historical reportable segments comprised of Medical Surgical (MedSurg), Rhythm and Neuro, and Cardiovascular, which represent an aggregation of our operating segments that generate revenues from the sale of medical devices (Medical Devices). As part of our acquisition of BTG on August 19, 2019, we acquired an Interventional Medicine business, which is now included in our Peripheral Interventions operating segment's 2019 revenues from the date of acquisition.
|
|
Gross Profit Margin
|
Year Ended December 31, 2017
|
71.3%
|
Manufacturing cost reductions
|
0.8%
|
Sales pricing and mix
|
(0.2)%
|
Inventory step-up due to acquisition accounting
|
(0.1)%
|
Net impact of foreign currency fluctuations
|
(0.8)%
|
All other, including other inventory charges and other period expense
|
0.4%
|
Year Ended December 31, 2018
|
71.4%
|
Manufacturing cost reductions
|
0.8%
|
Sales pricing and mix
|
(0.6)%
|
Inventory step-up due to acquisition accounting
|
(0.4)%
|
Net impact of foreign currency fluctuations
|
0.7%
|
All other, including other inventory charges and other period expense
|
(0.8)%
|
Year Ended December 31, 2019
|
71.0%
|
|
Year Ended December 31,
|
||||||||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||||||||
(in millions)
|
$
|
% of Net Sales
|
|
$
|
% of Net Sales
|
|
$
|
% of Net Sales
|
|||||||||
Selling, general and administrative expenses
|
$
|
3,941
|
|
36.7
|
%
|
|
$
|
3,569
|
|
36.3
|
%
|
|
$
|
3,294
|
|
36.4
|
%
|
Research and development expenses
|
1,174
|
|
10.9
|
%
|
|
1,113
|
|
11.3
|
%
|
|
997
|
|
11.0
|
%
|
|||
Royalty expense
|
65
|
|
0.6
|
%
|
|
70
|
|
0.7
|
%
|
|
68
|
|
0.8
|
%
|
|
Year Ended December 31,
|
||||||||||
(in millions)
|
2019
|
|
2018
|
|
2017
|
||||||
Amortization expense
|
$
|
699
|
|
|
$
|
599
|
|
|
$
|
565
|
|
Intangible asset impairment charges
|
105
|
|
|
35
|
|
|
4
|
|
|||
Contingent consideration expense (benefit)
|
(35
|
)
|
|
(21
|
)
|
|
(80
|
)
|
|||
Restructuring charges (credits)
|
38
|
|
|
36
|
|
|
37
|
|
|||
Litigation-related net charges (credits)
|
115
|
|
|
103
|
|
|
285
|
|
(in millions)
|
Year Ended December 31,
|
||||||||||
2019
|
|
2018
|
|
2017
|
|||||||
Interest expense
|
$
|
(473
|
)
|
|
$
|
(241
|
)
|
|
$
|
(229
|
)
|
Weighted average borrowing rate
|
4.8
|
%
|
|
3.6
|
%
|
|
3.8
|
%
|
|
Year Ended December 31,
|
||||||||||
(in millions)
|
2019
|
|
2018
|
|
2017
|
||||||
Interest income
|
$
|
30
|
|
|
$
|
3
|
|
|
$
|
5
|
|
Net foreign currency gain (loss)
|
(358
|
)
|
|
11
|
|
|
(15
|
)
|
|||
Net gains (losses) on investments
|
(30
|
)
|
|
155
|
|
|
(92
|
)
|
|||
Other income (expense), net
|
(1
|
)
|
|
(14
|
)
|
|
(22
|
)
|
|||
|
$
|
(358
|
)
|
|
$
|
156
|
|
|
$
|
(124
|
)
|
|
Year Ended December 31,
|
|||||||
|
2019
|
|
2018
|
|
2017
|
|||
Reported tax rate
|
(584.0
|
)%
|
|
(17.5
|
)%
|
|
88.8
|
%
|
Impact of certain receipts/charges (1)
|
594.2
|
%
|
|
30.7
|
%
|
|
(75.8
|
)%
|
|
10.2
|
%
|
|
13.2
|
%
|
|
13.0
|
%
|
(1)
|
These receipts/charges are taxed at different rates than our effective tax rate.
|
|
Year Ended December 31,
|
||||||||||
(in millions)
|
2019
|
|
2018
|
|
2017
|
||||||
Cash provided by (used for) operating activities
|
$
|
1,836
|
|
|
$
|
310
|
|
|
$
|
1,426
|
|
Cash provided by (used for) investing activities
|
(5,041
|
)
|
|
(1,921
|
)
|
|
(1,010
|
)
|
|||
Cash provided by (used for) financing activities
|
2,973
|
|
|
1,432
|
|
|
110
|
|
|||
|
|
|
|
|
|
||||||
Cash provided by (used for) operating activities
|
$
|
1,836
|
|
|
$
|
310
|
|
|
$
|
1,426
|
|
Less: Purchases of property, plant and equipment
|
461
|
|
|
316
|
|
|
319
|
|
|||
Add: Proceed on disposals of property, plant and equipment
|
7
|
|
|
14
|
|
|
—
|
|
|||
Free cash flow
|
1,382
|
|
|
8
|
|
|
1,107
|
|
|||
Add: Restructuring and restructuring-related payments
|
66
|
|
|
89
|
|
|
72
|
|
|||
Add: Acquisitions-related payments
|
266
|
|
|
205
|
|
|
95
|
|
|||
Add: EU MDR payments
|
4
|
|
|
—
|
|
|
—
|
|
|||
Add: Certain discrete tax payments (refunds/credits)
|
(42
|
)
|
|
977
|
|
|
(239
|
)
|
|||
Add: Litigation-related settlements
|
330
|
|
|
791
|
|
|
694
|
|
|||
Adjusted free cash flow2
|
$
|
2,007
|
|
|
$
|
2,070
|
|
|
$
|
1,729
|
|
|
As of
|
||||||
(in millions)
|
December 31, 2019
|
|
December 31, 2018
|
||||
Current debt obligations
|
$
|
1,416
|
|
|
$
|
2,253
|
|
Long-term debt
|
8,592
|
|
|
4,803
|
|
||
Total debt
|
$
|
10,008
|
|
|
$
|
7,056
|
|
|
As of
|
||||||
(in millions)
|
December 31, 2019
|
|
December 31, 2018
|
||||
Fixed-rate debt instruments
|
$
|
7,587
|
|
|
$
|
4,797
|
|
Variable rate debt instruments
|
2,421
|
|
|
2,259
|
|
||
Total debt
|
$
|
10,008
|
|
|
$
|
7,056
|
|
(in millions)
|
2020
|
|
2021
|
|
2022
|
|
2023
|
|
2024
|
|
Thereafter
|
|
Total
|
||||||||||||||
Debt obligations (1)
|
$
|
1,411
|
|
|
$
|
—
|
|
|
$
|
1,500
|
|
|
$
|
244
|
|
|
$
|
850
|
|
|
$
|
6,068
|
|
|
$
|
10,072
|
|
Interest payments (2)
|
343
|
|
|
326
|
|
|
308
|
|
|
280
|
|
|
252
|
|
|
2,550
|
|
|
4,059
|
|
|||||||
Lease obligations (2)
|
84
|
|
|
71
|
|
|
59
|
|
|
48
|
|
|
41
|
|
|
79
|
|
|
382
|
|
|||||||
Purchase obligations (2)
|
334
|
|
|
20
|
|
|
7
|
|
|
3
|
|
|
1
|
|
|
1
|
|
|
366
|
|
|||||||
Minimum royalty obligations (2)
|
3
|
|
|
3
|
|
|
2
|
|
|
2
|
|
|
2
|
|
|
2
|
|
|
15
|
|
|||||||
License and software commitments (2)
|
4
|
|
|
5
|
|
|
5
|
|
|
3
|
|
|
3
|
|
|
—
|
|
|
20
|
|
|||||||
Legal reserves
|
470
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
470
|
|
|||||||
One-time transition tax
|
40
|
|
|
40
|
|
|
40
|
|
|
75
|
|
|
100
|
|
|
125
|
|
|
420
|
|
|||||||
|
$
|
2,689
|
|
|
$
|
465
|
|
|
$
|
1,921
|
|
|
$
|
655
|
|
|
$
|
1,249
|
|
|
$
|
8,825
|
|
|
$
|
15,804
|
|
(1)
|
Debt obligations are comprised of our senior notes, term loan and commercial paper outstanding as of December 31, 2019. This does not include unamortized debt issuance discounts, deferred financing costs and gain on fair value hedges or capital lease obligations. Refer to Note E – Contractual Obligations and Commitments to our consolidated financial statements included in Item 8. Financial Statements and Supplementary Data of this Annual Report for additional information. In January 2020, we repaid $300 million of the outstanding balance of the 2020 Term Loan with proceeds from our commercial paper program.
|
(2)
|
In accordance with U.S. GAAP, these obligations relate to expenses associated with future periods and are not reflected in our consolidated balance sheets. Interest payments included above are calculated based on rates and required fees applicable to our outstanding debt obligations as of December 31, 2019 described in Note E – Contractual Obligations and Commitments to our consolidated financial statements included in Item 8. Financial Statements and Supplementary Data of this Annual Report. Interest payments above do not include interest on variable rate debt instruments.
|
•
|
Our long-term liability for legal matters that are probable and estimable of $227 million due to the timing of payment being uncertain. Refer to Note J – Commitments and Contingencies to our consolidated financial statements included in Item 8. Financial Statements and Supplementary Data of this Annual Report for more information,
|
•
|
Unrecognized tax benefits, accrued interest and penalties and other related items totaling $288 million because the timing of their future cash settlement is uncertain and tax payments and interest totaling $5 million related to state obligations of recently settled IRS tax years to be remitted in 2020. Refer to Note I – Income Taxes to our consolidated financial statements included in Item 8. Financial Statements and Supplementary Data of this Annual Report for more information, and
|
•
|
With certain of our acquisitions, we acquired IPR&D projects that require future funding to complete the projects. We estimate that the total remaining R&D cost to complete acquired IPR&D projects is between $200 million and $210 million. Net cash inflows from the projects currently in development are expected to commence in 2020 and will continue through 2037, following the respective launches of these technologies in the U.S., Europe and Japan. Certain of our acquisitions also involve the potential payment of contingent consideration, but the timing and amounts are uncertain. See Note B – Acquisitions and Strategic Investments to our consolidated financial statements included in Item 8. Financial Statements and Supplementary Data of this Annual Report for more information.
|
•
|
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 implement successfully and achieve timely and sustainable cost improvement measures consistent with our expectations,
|
•
|
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 ongoing 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 and
|
•
|
increases in our market-participant risk-adjusted weighted average cost of capital (WACC) and increases in our market-participant tax rate and/or changes in tax laws or macroeconomic conditions.
|
•
|
Amortization expense - We record intangible assets at historical cost and amortize them over their estimated useful lives. Amortization expense is excluded from management's assessment of operating performance and is also excluded from our operating segments' measures of profit and loss used for making operating decisions and assessing performance.
|
•
|
Intangible asset impairment charges - This amount represents write-downs of certain intangible asset balances during each period. We review intangible assets subject to amortization quarterly to determine if any adverse conditions exist or a change in circumstances has occurred that would indicate impairment and test our indefinite-lived intangible assets at least annually for impairment. If we determine the carrying value of the amortizable intangible asset is not recoverable or we conclude that it is more likely than not that the indefinite-lived asset is impaired, we will write the carrying value down to fair value in the period identified. Impairment charges are excluded from management's assessment of operating performance and from our operating segments' measures of profit and loss used for making operating decisions and assessing performance.
|
•
|
Acquisition/divestiture-related net charges (credits) or payments - These adjustments may consist of (a) contingent consideration and Zytiga™ licensing arrangement fair value adjustments; (b) gains on previously held investments; (c) due diligence, deal fees and other fees and costs related to our acquisition and divestiture transactions; (d) inventory step-up amortization and accelerated compensation expense; (e) integration and exit costs; and (f) separation costs and gains primarily associated with the sale of a business or portion of a business. The contingent consideration and Zytiga licensing arrangement fair value adjustments represent accounting adjustments to state contingent consideration liabilities and Zytiga-related assets and liabilities at their estimated fair value. These adjustments can be highly variable depending on the assessed likelihood and amount of future contingent consideration and Zytiga royalty payments. In addition, we have sold our rights to retain any future royalties related to Zytiga. Refer to Note D - Hedging Activities and Fair Value Measurements for further information on the Zytiga licensing arrangement. Gains on previously held investments, due diligence, deal fees and other fees and costs, inventory step-up amortization, accelerated compensation expense, and other expenses and gains associated with prior and potential future acquisitions and divestitures can be highly variable and not representative of ongoing operations. Integration and exit costs, include contract cancellations,
|
•
|
Restructuring and restructuring-related net charges (credits) or payments - These adjustments primarily represent compensation-related charges, fixed asset write-offs, contract cancellations, project management fees and other direct costs associated with our restructuring plans. These restructuring plans each consist of distinct initiatives that are fundamentally different from our ongoing, core cost reduction initiatives in terms of, among other things, the frequency with which each action is performed and the required planning, resourcing, cost and timing. Examples of such initiatives include the movement of business activities, facility consolidations and closures and the transfer of product lines between manufacturing facilities, which, due to the highly regulated nature of our industry, requires a significant investment in time and cost to create duplicate manufacturing lines, run product validations and seek regulatory approvals. Restructuring initiatives take place over a defined timeframe and have a distinct project timeline that begins subsequent to approval by our Board of Directors. In contrast to our ongoing cost reduction initiatives, restructuring initiatives typically result in duplicative cost and exit costs over this period of time, are one-time shut downs or transfers and are not considered part of our core, ongoing operations. These restructuring plans are incremental to the core activities that arise in the ordinary course of our business. Restructuring and restructuring-related net charges (credits) are excluded from management's assessment of operating performance and from our operating segments' measures of profit and loss used for making operating decisions and assessing performance.
|
•
|
Litigation-related net charges (credits) or payments - These adjustments include certain significant product liability and other litigation-related charges and credits. We record these charges and credits, which we consider to be unusual or infrequent and significant, within the litigation-related charges line in our consolidated statements of operations; all other legal and product liability charges, credits and costs are recorded within selling general and administrative expenses. Litigation-related net charges (credits) are excluded from management's assessment of operating performance and from our operating segments' measures of profit and loss used for making operating decisions and assessing performance.
|
•
|
EU MDR implementation charges - These adjustments represent incremental costs or payments specific to complying with the new European Union Medical Device Regulation (EU MDR) for previously registered products. EU MDR is a replacement of the existing European Medical Devices Directive (MDD) regulatory framework, and manufacturers of medical devices are required to comply with EU MDR beginning in May 2020 for new product registrations and by May 2024 for medical devices which have a valid CE Certificate to the current Directives (issued before May 2020). We expect to incur significant expenditures in connection with the adoption of the EU MDR requirements and we consider the adoption of EU MDR to be a significant change to a regulatory framework, and therefore, these expenditures are not considered to be ordinary course expenditures in connection with regulatory matters. As such, these medical device regulation charges are excluded from management's assessment of operating performance and from our operating segments' measures of profit and loss used for making operating decisions and assessing performance.
|
•
|
Debt extinguishment net charges (credits) - These amounts relate to the early extinguishment of certain outstanding principal amounts of our senior notes in November 2019. Certain debt extinguishment net charges (credits) are excluded from management's assessment of operating performance and from our operating segments' measures of profit and loss used for making operating decisions and assessing performance.
|
•
|
Investment impairment charges - These amounts represent write-downs relating to our investment portfolio that are considered unusual or infrequent and significant. Each reporting period, we evaluate our investments to determine if there are any events or circumstances that are likely to have a significant adverse effect on the fair value of the investment. If we identify an impairment indicator, we will estimate the fair value of the investment and compare it to its carrying
|
•
|
Deferred tax expenses (benefits) - This adjustment relates to a $4.1 billion non-cash tax benefit arising from an intra-entity asset transfer of intellectual property completed in the fourth quarter of 2019. The effects of this transfer were excluded from management's assessment of operating performance and from our operating segments' measures of profit and loss used for making operating decisions and assessing performance.
|
•
|
Discrete tax items - These items represent adjustments of certain tax positions including those which a) are related to the finalization of the enactment date impact of the TCJA, or b) are related to the tax consequences of a non-GAAP adjustment item booked in a prior period. These discrete tax items are excluded from management's assessment of operating performance and from our operating segments' measures of profit and loss used for making operating decisions and assessing performance.
|
•
|
The impact of foreign currency fluctuations is highly variable and difficult to predict. Accordingly, management excludes the impact of foreign currency fluctuations for purposes of reviewing the net sales and growth rates to facilitate an evaluation of our current operating performance and a comparison to our past operating performance.
|
|
|
|
|
|
|
|
|
/s/ Michael F. Mahoney
|
|
/s/ Daniel J. Brennan
|
|
||
|
|
|
|
|
||
|
|
Michael F. Mahoney
|
|
|
Daniel J. Brennan
|
|
|
|
President and Chief Executive Officer
|
|
|
Executive Vice President and Chief
Financial Officer
|
|
|
Business Combinations
|
Description of the Matter
|
As disclosed in Note B to the consolidated financial statements, during 2019, the Company completed three acquisitions for total aggregate consideration of $4.38 billion, net of cash acquired. The most significant of these was the acquisition of all outstanding equity of BTG, plc. for consideration of approximately $3.62 billion, net of cash acquired. The transactions were accounted for as business combinations. In certain acquisitions, the Company has recognized a liability for acquisition consideration that is contingent upon achieving either research and development and commercialization milestones, or sales-based milestones. The Company determines the fair value of these arrangements, both as part of the initial purchase price allocation, and on an ongoing basis each reporting period until the arrangements are settled. As of December 31, 2019, the amount accrued for future estimated contingent consideration is $354 million.
Auditing the Company’s accounting for its acquisitions was complex due to the significant estimation required by management to determine the fair value of identified intangible assets, which totaled $2.2 billion and principally consisted of developed technology and assets related to currently marketed products, and to determine the fair value of contingent consideration arrangements. A significant emphasis is placed on the appropriateness of the estimate considerations used by management to determine the fair value of acquired intangible assets due to the sensitivity of the respective fair values to the underlying assumptions. The Company used an income approach to measure the technology-related intangible assets. The significant assumptions used to estimate the value of the intangible assets included discount rates and certain assumptions that form the basis of the forecasted results, including revenue growth rates, estimates of technological obsolescence, operating profit margin and market participant synergies. The significance of the estimations used by management to determine the fair value of contingent consideration was primarily due to the sensitivity of the respective fair values to the significant underlying assumptions. The significant assumptions include estimation of the probability and timing of payment, future sales forecasts, as well as the appropriate discount rate based on the estimated timing of payments. These significant assumptions are forward looking and could be affected by future economic and market conditions.
|
How We Addressed the Matter in Our Audit
|
We obtained an understanding, evaluated the design and tested the operating effectiveness of the controls over the Company’s accounting for acquisitions. For example, we tested controls over the identification and valuation of intangible assets, including the valuation models and underlying assumptions used to develop such estimates. We also tested controls over the valuation of the contingent consideration liability, including the valuation models and underlying assumptions used to develop such estimates.
For each of the Company's acquisitions, we read the purchase agreements, evaluated the significant assumptions and methods used in developing the fair value estimates, and tested the recognition of (1) the tangible assets acquired and liabilities assumed at fair value; (2) the identifiable intangible assets acquired at fair value; and (3) goodwill measured as a residual.
To test the estimated fair value of the intangible assets, we performed audit procedures that included, among others, evaluating the Company's use of the income approach and testing the significant assumptions used in the model, as described above. In testing the valuation of contingent consideration, we assessed, among other things, the terms of the arrangements and the conditions that must be met for the arrangements to become payable. We evaluated the completeness and accuracy of the underlying data used in the analyses. For example, we compared the significant assumptions to current industry, market and economic trends, to the assumptions used to value similar assets in other acquisitions, to the historical results of the acquired business and to other guideline companies within the same industry. We involved our valuation professionals to assist with our evaluation of the methodology used by the Company and significant assumptions included in the fair value estimates.
.
|
|
Year Ended December 31,
|
||||||||||
(in millions, except per share data)
|
2019
|
|
2018
|
|
2017
|
||||||
Net sales
|
$
|
10,735
|
|
|
$
|
9,823
|
|
|
$
|
9,048
|
|
Cost of products sold
|
3,116
|
|
|
2,813
|
|
|
2,593
|
|
|||
Gross profit
|
7,620
|
|
|
7,011
|
|
|
6,455
|
|
|||
|
|
|
|
|
|
||||||
Operating expenses:
|
|
|
|
|
|
||||||
Selling, general and administrative expenses
|
3,941
|
|
|
3,569
|
|
|
3,294
|
|
|||
Research and development expenses
|
1,174
|
|
|
1,113
|
|
|
997
|
|
|||
Royalty expense
|
65
|
|
|
70
|
|
|
68
|
|
|||
Amortization expense
|
699
|
|
|
599
|
|
|
565
|
|
|||
Intangible asset impairment charges
|
105
|
|
|
35
|
|
|
4
|
|
|||
Contingent consideration expense (benefit)
|
(35
|
)
|
|
(21
|
)
|
|
(80
|
)
|
|||
Restructuring charges (credits)
|
38
|
|
|
36
|
|
|
37
|
|
|||
Litigation-related charges (credits)
|
115
|
|
|
103
|
|
|
285
|
|
|||
|
6,102
|
|
|
5,504
|
|
|
5,170
|
|
|||
Operating income (loss)
|
1,518
|
|
|
1,506
|
|
|
1,285
|
|
|||
|
|
|
|
|
|
||||||
Other income (expense):
|
|
|
|
|
|
||||||
Interest expense
|
(473
|
)
|
|
(241
|
)
|
|
(229
|
)
|
|||
Other, net
|
(358
|
)
|
|
156
|
|
|
(124
|
)
|
|||
Income (loss) before income taxes
|
687
|
|
|
1,422
|
|
|
933
|
|
|||
Income tax (benefit) expense
|
(4,013
|
)
|
|
(249
|
)
|
|
828
|
|
|||
Net income (loss)
|
$
|
4,700
|
|
|
$
|
1,671
|
|
|
$
|
104
|
|
|
|
|
|
|
|
||||||
Net income (loss) per common share — basic
|
$
|
3.38
|
|
|
$
|
1.21
|
|
|
$
|
0.08
|
|
Net income (loss) per common share — assuming dilution
|
$
|
3.33
|
|
|
$
|
1.19
|
|
|
$
|
0.08
|
|
|
|
|
|
|
|
||||||
Weighted-average shares outstanding
|
|
|
|
|
|
||||||
Basic
|
1,391.5
|
|
|
1,381.0
|
|
|
1,370.1
|
|
|||
Assuming dilution
|
1,410.6
|
|
|
1,401.4
|
|
|
1,392.7
|
|
|
Year Ended December 31,
|
||||||||||
(in millions)
|
2019
|
|
2018
|
|
2017
|
||||||
Net income (loss)
|
$
|
4,700
|
|
|
$
|
1,671
|
|
|
$
|
104
|
|
Other comprehensive income (loss), net of tax:
|
|
|
|
|
|
||||||
Foreign currency translation adjustment
|
195
|
|
|
(21
|
)
|
|
48
|
|
|||
Net change in derivative financial instruments
|
62
|
|
|
110
|
|
|
(106
|
)
|
|||
Net change in available-for-sale securities
|
—
|
|
|
—
|
|
|
5
|
|
|||
Net change in defined benefit pensions and other items
|
(20
|
)
|
|
2
|
|
|
(6
|
)
|
|||
Total other comprehensive income (loss)
|
237
|
|
|
91
|
|
|
(59
|
)
|
|||
Total comprehensive income (loss)
|
$
|
4,937
|
|
|
$
|
1,761
|
|
|
$
|
45
|
|
|
As of December 31,
|
||||||
(in millions, except share and per share data)
|
2019
|
|
2018
|
||||
ASSETS
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
217
|
|
|
$
|
146
|
|
Trade accounts receivable, net
|
1,828
|
|
|
1,608
|
|
||
Inventories
|
1,579
|
|
|
1,166
|
|
||
Prepaid income taxes
|
195
|
|
|
161
|
|
||
Other current assets
|
880
|
|
|
921
|
|
||
Total current assets
|
4,699
|
|
|
4,003
|
|
||
Property, plant and equipment, net
|
2,079
|
|
|
1,782
|
|
||
Goodwill
|
10,176
|
|
|
7,911
|
|
||
Other intangible assets, net
|
7,886
|
|
|
6,372
|
|
||
Deferred tax assets
|
4,196
|
|
|
87
|
|
||
Other long-term assets
|
1,529
|
|
|
845
|
|
||
TOTAL ASSETS
|
$
|
30,565
|
|
|
$
|
20,999
|
|
|
|
|
|
||||
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Current debt obligations
|
$
|
1,416
|
|
|
$
|
2,253
|
|
Accounts payable
|
542
|
|
|
349
|
|
||
Accrued expenses
|
2,109
|
|
|
2,246
|
|
||
Other current liabilities
|
800
|
|
|
412
|
|
||
Total current liabilities
|
4,866
|
|
|
5,260
|
|
||
Long-term debt
|
8,592
|
|
|
4,803
|
|
||
Deferred tax liabilities
|
595
|
|
|
328
|
|
||
Other long-term liabilities
|
2,635
|
|
|
1,882
|
|
||
|
|
|
|
||||
Commitments and contingencies
|
|
|
|
||||
|
|
|
|
||||
Stockholders’ equity:
|
|
|
|
||||
Preferred stock, $0.01 par value - authorized 50,000,000 shares, none issued and outstanding
|
|
|
|
|
|||
Common stock, $0.01 par value - authorized 2,000,000,000 shares; issued 1,642,488,911 shares as of December 31, 2019 and 1,632,148,030 shares as of December 31, 2018
|
16
|
|
|
16
|
|
||
Treasury stock, at cost - 247,566,270 shares as of December 31, 2019 and December 31, 2018
|
(1,717
|
)
|
|
(1,717
|
)
|
||
Additional paid-in capital
|
17,561
|
|
|
17,346
|
|
||
Accumulated deficit
|
(2,253
|
)
|
|
(6,953
|
)
|
||
Accumulated other comprehensive income (loss), net of tax:
|
|
|
|
||||
Foreign currency translation adjustment
|
142
|
|
|
(53
|
)
|
||
Unrealized gain (loss) on derivative financial instruments
|
173
|
|
|
111
|
|
||
Unrealized costs associated with defined benefit pensions and other items
|
(45
|
)
|
|
(25
|
)
|
||
Total stockholders’ equity
|
13,877
|
|
|
8,726
|
|
||
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
|
$
|
30,565
|
|
|
$
|
20,999
|
|
|
|
|
|
|
Treasury Stock
|
|
Additional Paid-In Capital
|
|
Accumulated Deficit
|
|
Accumulated Other Comprehensive Income (Loss), Net of Tax
|
|||||||||||
|
Common Stock
|
|
|
|
|
|||||||||||||||||
(in millions, except share data)
|
Shares Issued
|
|
Par Value
|
|
|
|
|
|||||||||||||||
Balance as of December 31, 2016
|
1,609,670,817
|
|
|
$
|
16
|
|
|
$
|
(1,717
|
)
|
|
$
|
17,014
|
|
|
$
|
(8,581
|
)
|
|
$
|
1
|
|
Net income (loss)
|
|
|
|
|
|
|
|
|
104
|
|
|
|
||||||||||
Cumulative effect adjustment for ASU 2016-09
|
|
|
|
|
|
|
|
|
86
|
|
|
|
||||||||||
Changes in other comprehensive income (loss), net of tax:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Foreign currency translation adjustment
|
|
|
|
|
|
|
|
|
|
|
48
|
|
||||||||||
Derivative financial instruments
|
|
|
|
|
|
|
|
|
|
|
(106
|
)
|
||||||||||
Available-for-sale securities
|
|
|
|
|
|
|
|
|
|
|
5
|
|
||||||||||
Defined benefit pensions and other items
|
|
|
|
|
|
|
|
|
|
|
(6
|
)
|
||||||||||
Impact of stock-based compensation plans, net of tax
|
11,392,081
|
|
|
|
|
|
|
147
|
|
|
|
|
|
|||||||||
Balance as of December 31, 2017
|
1,621,062,898
|
|
|
$
|
16
|
|
|
$
|
(1,717
|
)
|
|
$
|
17,161
|
|
|
$
|
(8,390
|
)
|
|
$
|
(59
|
)
|
Net income (loss)
|
|
|
|
|
|
|
|
|
|
|
|
1,671
|
|
|
|
|
||||||
Cumulative effect adjustments for ASC Update Adoptions(1)
|
|
|
|
|
|
|
|
|
(233
|
)
|
|
|
||||||||||
Changes in other comprehensive income (loss), net of tax:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Foreign currency translation adjustment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(21
|
)
|
||||||
Derivative financial instruments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
110
|
|
||||||
Defined benefit pensions and other items
|
|
|
|
|
|
|
|
|
|
|
2
|
|
||||||||||
Impact of stock-based compensation plans, net of tax
|
11,085,132
|
|
|
|
|
|
|
|
|
185
|
|
|
|
|
|
|
|
|||||
Balance as of December 31, 2018
|
1,632,148,030
|
|
|
$
|
16
|
|
|
$
|
(1,717
|
)
|
|
$
|
17,346
|
|
|
$
|
(6,953
|
)
|
|
$
|
33
|
|
Net income (loss)
|
|
|
|
|
|
|
|
|
4,700
|
|
|
|
||||||||||
Changes in other comprehensive income (loss), net of tax:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Foreign currency translation adjustment
|
|
|
|
|
|
|
|
|
|
|
195
|
|
||||||||||
Derivative financial instruments
|
|
|
|
|
|
|
|
|
|
|
62
|
|
||||||||||
Defined benefit pensions and other items
|
|
|
|
|
|
|
|
|
|
|
(20
|
)
|
||||||||||
Impact of stock-based compensation plans, net of tax
|
10,340,881
|
|
|
|
|
|
|
|
215
|
|
|
|
|
|
|
|
||||||
Balance as of December 31, 2019
|
1,642,488,911
|
|
|
$
|
16
|
|
|
$
|
(1,717
|
)
|
|
$
|
17,561
|
|
|
$
|
(2,253
|
)
|
|
$
|
270
|
|
BOSTON SCIENTIFIC CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
Year Ended December 31,
|
||||||||||
(in millions)
|
2019
|
|
2018
|
|
2017
|
||||||
Net income (loss)
|
$
|
4,700
|
|
|
$
|
1,671
|
|
|
$
|
104
|
|
Adjustments to reconcile net income (loss) to cash provided by operating activities
|
|
|
|
|
|
||||||
Gain on sale of businesses
|
(8
|
)
|
|
—
|
|
|
—
|
|
|||
Depreciation and amortization
|
1,011
|
|
|
894
|
|
|
844
|
|
|||
Deferred and prepaid income taxes
|
(4,301
|
)
|
|
(87
|
)
|
|
245
|
|
|||
Stock-based compensation expense
|
157
|
|
|
140
|
|
|
127
|
|
|||
Intangible asset impairment charges
|
105
|
|
|
35
|
|
|
4
|
|
|||
Net loss (gain) on investments and notes receivable
|
30
|
|
|
(155
|
)
|
|
92
|
|
|||
Contingent consideration expense (benefit)
|
(35
|
)
|
|
(21
|
)
|
|
(80
|
)
|
|||
Payment of contingent consideration in excess of amount recognized at acquisition
|
(6
|
)
|
|
(9
|
)
|
|
(14
|
)
|
|||
Inventory step-up amortization
|
46
|
|
|
6
|
|
|
10
|
|
|||
Exchange (gain) loss
|
358
|
|
|
(11
|
)
|
|
15
|
|
|||
Other, net
|
63
|
|
|
8
|
|
|
13
|
|
|||
Increase (decrease) in operating assets and liabilities, net of acquisitions:
|
|
|
|
|
|
||||||
Trade accounts receivable
|
(130
|
)
|
|
(110
|
)
|
|
(30
|
)
|
|||
Inventories
|
(290
|
)
|
|
(83
|
)
|
|
(107
|
)
|
|||
Other assets
|
45
|
|
|
(172
|
)
|
|
(20
|
)
|
|||
Accounts payable and accrued expenses
|
111
|
|
|
(631
|
)
|
|
195
|
|
|||
Other liabilities
|
(18
|
)
|
|
(1,164
|
)
|
|
28
|
|
|||
Cash provided by (used for) operating activities
|
1,836
|
|
|
310
|
|
|
1,426
|
|
|||
Purchases of property, plant and equipment
|
(461
|
)
|
|
(316
|
)
|
|
(319
|
)
|
|||
Proceeds on disposals of property, plant and equipment
|
7
|
|
|
14
|
|
|
—
|
|
|||
Payments for acquisitions of businesses, net of cash acquired
|
(4,382
|
)
|
|
(1,448
|
)
|
|
(560
|
)
|
|||
Proceeds from divestiture of certain businesses
|
90
|
|
|
—
|
|
|
—
|
|
|||
Proceeds from royalty rights
|
52
|
|
|
—
|
|
|
—
|
|
|||
Payments for settlements of hedge contracts
|
(199
|
)
|
|
—
|
|
|
—
|
|
|||
Payments for investments and acquisitions of certain technologies
|
(149
|
)
|
|
(172
|
)
|
|
(131
|
)
|
|||
Cash provided by (used for) investing activities
|
(5,041
|
)
|
|
(1,921
|
)
|
|
(1,010
|
)
|
|||
Payment of contingent consideration and royalty rights previously established in purchase accounting
|
(135
|
)
|
|
(19
|
)
|
|
(33
|
)
|
|||
Proceeds from royalty rights transfer
|
256
|
|
|
—
|
|
|
—
|
|
|||
Proceeds from short-term borrowings, net of debt issuance costs
|
700
|
|
|
999
|
|
|
—
|
|
|||
Net increase (decrease) in commercial paper
|
(575
|
)
|
|
21
|
|
|
1,183
|
|
|||
Proceeds from borrowings on credit facilities
|
—
|
|
|
569
|
|
|
2,156
|
|
|||
Payments on borrowings from credit facilities
|
—
|
|
|
(569
|
)
|
|
(2,216
|
)
|
|||
Payments on short-term borrowings
|
(1,000
|
)
|
|
—
|
|
|
—
|
|
|||
Payments on long-term borrowings and debt extinguishment costs
|
(3,560
|
)
|
|
(602
|
)
|
|
(1,000
|
)
|
|||
Proceeds from long-term borrowings, net of debt issuance costs
|
7,229
|
|
|
987
|
|
|
—
|
|
|||
Cash used to net share settle employee equity awards
|
(65
|
)
|
|
(56
|
)
|
|
(65
|
)
|
|||
Proceeds from issuances of shares of common stock
|
123
|
|
|
101
|
|
|
85
|
|
|||
Cash provided by (used for) financing activities
|
2,973
|
|
|
1,432
|
|
|
110
|
|
|||
Effect of foreign exchange rates on cash
|
10
|
|
|
(8
|
)
|
|
4
|
|
|||
Net increase (decrease) in cash, cash equivalents, restricted cash and restricted cash equivalents
|
(222
|
)
|
|
(188
|
)
|
|
530
|
|
|||
Cash, cash equivalents, restricted cash and restricted cash equivalents at beginning of period
|
829
|
|
|
1,017
|
|
|
487
|
|
|||
Cash, cash equivalents, restricted cash and restricted cash equivalents at end of period
|
$
|
607
|
|
|
$
|
829
|
|
|
$
|
1,017
|
|
Supplemental Information
|
|
|
|
|
|
||||||
Cash (received) paid for income taxes, net
|
$
|
242
|
|
|
$
|
1,037
|
|
|
$
|
(42
|
)
|
Cash paid for interest
|
449
|
|
|
262
|
|
|
235
|
|
|||
Fair value of contingent consideration recorded in purchase accounting
|
127
|
|
|
248
|
|
|
94
|
|
|||
|
As of December 31,
|
||||||||||
Reconciliation to amounts within the consolidated balance sheets:
|
2019
|
|
2018
|
|
2017
|
||||||
Cash and cash equivalents
|
$
|
217
|
|
|
$
|
146
|
|
|
$
|
188
|
|
Restricted cash and restricted cash equivalents included in Other current assets
|
346
|
|
|
655
|
|
|
803
|
|
|||
Restricted cash equivalents included in Other long-term assets
|
43
|
|
|
27
|
|
|
26
|
|
|||
Cash, cash equivalents, restricted cash and restricted cash equivalents at end of period
|
$
|
607
|
|
|
$
|
829
|
|
|
$
|
1,017
|
|
•
|
We have a contract with a customer that creates enforceable rights and obligations,
|
•
|
Promised products or services are identified,
|
•
|
The transaction price, or the amount we expect to receive, is determinable and
|
•
|
We have transferred control of the promised items to the customer.
|
(in millions)
|
|
||
Payment for acquisition, net of cash acquired
|
$
|
3,619
|
|
|
Amount Assigned
(in millions)
|
|
Amortization Period
(in years)
|
|
Risk-Adjusted Discount
Rates used in Purchase Price Allocation
|
|||||||
Amortizable intangible assets:
|
|
|
|
|
|
|
|
|
|
|||
Technology-related
|
$
|
1,709
|
|
|
10
|
-
|
18
|
|
11
|
%
|
-
|
12%
|
Other intangible assets
|
75
|
|
|
2
|
-
|
11
|
|
11%
|
||||
|
$
|
1,785
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
||||||
(in millions, except per share data) (Unaudited)
|
2019
|
|
2018
|
||||
Net sales
|
$
|
11,142
|
|
|
$
|
10,429
|
|
Net income (loss)
|
$
|
4,585
|
|
|
$
|
1,244
|
|
Net income (loss) per common share — basic
|
$
|
3.30
|
|
|
$
|
0.90
|
|
Net income (loss) per common share — assuming dilution
|
$
|
3.25
|
|
|
$
|
0.89
|
|
(in millions)
|
|
||
Payments for acquisitions, net of cash acquired
|
$
|
763
|
|
Fair value of contingent consideration
|
127
|
|
|
Fair value of prior interests
|
102
|
|
|
|
$
|
992
|
|
(in millions)
|
|
||
Goodwill
|
$
|
575
|
|
Amortizable intangible assets
|
220
|
|
|
Indefinite-lived intangible assets
|
240
|
|
|
Other assets acquired
|
24
|
|
|
Liabilities assumed
|
(12
|
)
|
|
Net deferred tax liabilities
|
(56
|
)
|
|
|
$
|
992
|
|
|
Amount Assigned
(in millions)
|
|
Amortization Period
(in years)
|
|
Risk-Adjusted Discount
Rates used in Purchase Price Allocation
|
||
Amortizable intangible assets:
|
|
|
|
|
|
||
Technology-related
|
$
|
210
|
|
|
12
|
|
15%
|
Other intangible assets
|
10
|
|
|
12
|
|
15%
|
|
Indefinite-lived intangible assets:
|
|
|
|
|
|
||
In-process research and development
|
240
|
|
|
n/a
|
|
19%
|
|
|
$
|
461
|
|
|
|
|
|
(in millions)
|
|
||
Payments for acquisitions, net of cash acquired
|
$
|
1,449
|
|
Fair value of contingent consideration
|
248
|
|
|
Fair value of prior interests
|
251
|
|
|
|
$
|
1,948
|
|
(in millions)
|
|
||
Goodwill
|
$
|
939
|
|
Amortizable intangible assets
|
939
|
|
|
In-process research and development
|
213
|
|
|
Other assets acquired
|
38
|
|
|
Liabilities assumed
|
(19
|
)
|
|
Net deferred tax liabilities
|
(162
|
)
|
|
|
$
|
1,948
|
|
|
Amount Assigned
(in millions)
|
|
Amortization Period
(in years)
|
|
Risk-Adjusted Discount
Rates used in Purchase Price Allocation
|
|||||||
Amortizable intangible assets
|
|
|
|
|
|
|
|
|
|
|||
Technology-related
|
$
|
908
|
|
|
6
|
-
|
14
|
|
14
|
%
|
-
|
23%
|
Other intangible assets
|
31
|
|
|
6
|
-
|
13
|
|
13
|
%
|
-
|
15%
|
|
Indefinite-lived intangible assets
|
|
|
|
|
|
|
|
|
|
|||
In-process research and development
|
213
|
|
|
n/a
|
|
15%
|
||||||
|
$
|
1,153
|
|
|
|
|
|
|
|
|
|
(in millions)
|
|
||
Payment for acquisitions, net of cash acquired
|
$
|
560
|
|
Fair value of contingent consideration
|
72
|
|
|
|
$
|
632
|
|
(in millions)
|
|
||
Goodwill
|
$
|
287
|
|
Amortizable intangible assets
|
278
|
|
|
Indefinite-lived intangible assets
|
186
|
|
|
Other assets acquired
|
44
|
|
|
Liabilities assumed
|
(61
|
)
|
|
Deferred tax liabilities
|
(102
|
)
|
|
|
$
|
632
|
|
|
Amount Assigned
(in millions)
|
|
Amortization Period
(in years)
|
|
Risk-Adjusted Discount
Rates used in Purchase Price Allocation
|
||||
Amortizable intangible assets
|
|
|
|
|
|
|
|
||
Technology-related
|
$
|
268
|
|
|
13
|
|
24%
|
||
Other intangible assets
|
10
|
|
|
2
|
-
|
13
|
|
24%
|
|
Indefinite-lived intangible assets
|
|
|
|
|
|
|
|
||
In-process research and development
|
$
|
186
|
|
|
n/a
|
|
15%
|
||
|
$
|
464
|
|
|
|
|
|
|
|
(in millions)
|
|
||
Balance as of December 31, 2017
|
$
|
169
|
|
Amounts recorded related to current year acquisitions
|
248
|
|
|
Purchase price adjustments related to prior year acquisitions
|
(22
|
)
|
|
Contingent consideration expense (benefit)
|
(21
|
)
|
|
Contingent consideration payments
|
(28
|
)
|
|
Balance as of December 31, 2018
|
$
|
347
|
|
Amounts recorded related to current year acquisitions
|
127
|
|
|
Contingent consideration arrangements transferred to Varian
|
(16
|
)
|
|
Contingent consideration expense (benefit)
|
(35
|
)
|
|
Contingent consideration payments
|
(68
|
)
|
|
Balance as of December 31, 2019
|
$
|
354
|
|
Contingent Consideration Liability
|
Fair Value as of December 31, 2019
|
Valuation Technique
|
Unobservable Input
|
Range
|
Weighted Average (1)
|
|||
R&D, Regulatory and Commercialization-based Milestones
|
$198 million
|
Discounted Cash Flow
|
Discount Rate
|
2
|
%
|
-
|
3%
|
3%
|
Probability of Payment
|
40
|
%
|
-
|
90%
|
82%
|
|||
Projected Year of Payment
|
2020
|
|
-
|
2027
|
2021
|
|||
Revenue-based Payments
|
$156 million
|
Discounted Cash Flow
|
Discount Rate
|
11
|
%
|
-
|
15%
|
13%
|
Probability of Payment
|
60
|
%
|
-
|
100%
|
99%
|
|||
Projected Year of Payment
|
2020
|
|
-
|
2026
|
2021
|
(1)
|
Unobservable inputs were weighted by the relative fair value of the contingent consideration liability. For projected year of payment, the amount represents the median of the inputs and is not a weighted average.
|
|
As of December 31,
|
||||||
(in millions)
|
2019
|
|
2018
|
||||
Equity method investments
|
$
|
264
|
|
|
$
|
303
|
|
Measurement alternative investments(1)
|
171
|
|
|
94
|
|
||
Publicly-held securities(2)
|
1
|
|
|
—
|
|
||
Notes receivable
|
23
|
|
|
26
|
|
||
|
$
|
458
|
|
|
$
|
424
|
|
(1)
|
Measurement alternative investments are privately-held equity securities without readily determinable fair values that are measured at cost less impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer.
|
(2)
|
Publicly-held equity securities are measured at fair value with changes in fair value recognized currently in Other, net on our accompanying consolidated statements of operations.
|
|
As of December 31, 2019
|
|
As of December 31, 2018
|
||||||||||||
(in millions)
|
Gross Carrying Amount
|
|
Accumulated
Amortization/Write-offs
|
|
Gross Carrying Amount
|
|
Accumulated
Amortization/Write-offs
|
||||||||
Amortizable intangible assets
|
|
|
|
|
|
|
|
||||||||
Technology-related
|
$
|
12,020
|
|
|
$
|
(5,706
|
)
|
|
$
|
10,197
|
|
|
$
|
(5,266
|
)
|
Patents
|
525
|
|
|
(408
|
)
|
|
520
|
|
|
(393
|
)
|
||||
Other intangible assets
|
1,754
|
|
|
(1,081
|
)
|
|
1,666
|
|
|
(958
|
)
|
||||
|
$
|
14,299
|
|
|
$
|
(7,195
|
)
|
|
$
|
12,383
|
|
|
$
|
(6,617
|
)
|
Indefinite-lived intangible assets
|
|
|
|
|
|
|
|
||||||||
Goodwill
|
$
|
20,076
|
|
|
$
|
(9,900
|
)
|
|
$
|
17,811
|
|
|
$
|
(9,900
|
)
|
In-process research and development (IPR&D)
|
662
|
|
|
—
|
|
|
486
|
|
|
—
|
|
||||
Technology-related
|
120
|
|
|
—
|
|
|
120
|
|
|
—
|
|
||||
|
$
|
20,858
|
|
|
$
|
(9,900
|
)
|
|
$
|
18,417
|
|
|
$
|
(9,900
|
)
|
(in millions)
|
MedSurg
|
|
Rhythm and Neuro
|
|
Cardiovascular
|
|
Specialty Pharmaceuticals
|
|
Total
|
||||||||||
Balance as of December 31, 2017
|
$
|
2,877
|
|
|
$
|
417
|
|
|
$
|
3,704
|
|
|
$
|
—
|
|
|
$
|
6,998
|
|
Reportable segment revisions
|
(1,379
|
)
|
|
1,379
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Foreign currency fluctuations and other changes
|
(3
|
)
|
|
(22
|
)
|
|
(3
|
)
|
|
—
|
|
|
(29
|
)
|
|||||
Goodwill acquired
|
568
|
|
|
150
|
|
|
224
|
|
|
—
|
|
|
942
|
|
|||||
Balance as of December 31, 2018
|
$
|
2,063
|
|
|
$
|
1,924
|
|
|
$
|
3,925
|
|
|
$
|
—
|
|
|
$
|
7,911
|
|
Foreign currency fluctuations and other changes
|
(1
|
)
|
|
—
|
|
|
58
|
|
|
9
|
|
|
66
|
|
|||||
Goodwill acquired
|
—
|
|
|
268
|
|
|
1,712
|
|
|
238
|
|
|
2,218
|
|
|||||
Goodwill divested
|
—
|
|
|
—
|
|
|
(19
|
)
|
|
—
|
|
|
(19
|
)
|
|||||
Balance as of December 31, 2019
|
$
|
2,061
|
|
|
$
|
2,192
|
|
|
$
|
5,676
|
|
|
$
|
247
|
|
|
$
|
10,176
|
|
(in millions)
|
|
FASB ASC Topic 815 Designation
|
|
As of December 31,
|
||||||
|
2019
|
|
2018
|
|||||||
Forward currency contracts
|
|
Cash flow hedge
|
|
$
|
3,891
|
|
|
$
|
3,962
|
|
Forward currency contracts
|
|
Net investment hedge
|
|
953
|
|
|
1,483
|
|
||
Foreign currency-denominated debt(1)
|
|
Net investment hedge
|
|
997
|
|
|
—
|
|
||
Forward currency contracts
|
|
Non-designated
|
|
4,377
|
|
|
5,880
|
|
||
Interest rate derivative contracts
|
|
Cash flow hedge
|
|
—
|
|
|
1,000
|
|
||
Total Notional Outstanding
|
|
|
|
$
|
10,218
|
|
|
$
|
12,326
|
|
(1)
|
The €900 million (approximately $1.000 billion) debt principal is a nonderivative instrument designated as a net investment hedge of our net investments in certain of our Euro functional subsidiaries.
|
(1)
|
In all periods presented in the table above, the pre-tax (gain) loss amounts reclassified from AOCI to earnings represent the effect of the hedging relationships on earnings. All other amounts included in earnings related to hedging relationships were immaterial.
|
(2)
|
For our outstanding forward currency contracts designated as net investment hedges, the net gain or loss reclassified from AOCI to earnings as a reduction of Interest expense represents the straight-line amortization of the excluded component as calculated at the date of designation. This initial value of the excluded component has been excluded from the assessment of effectiveness in accordance with FASB ASC Topic 815. In the current period, we did not recognize any gains or losses on the components included in the assessment of hedge effectiveness in earnings.
|
Designated Hedging Instrument
|
|
FASB ASC Topic 815 Designation
|
|
Location on Consolidated Statements of Operations
|
|
Amount of Pre-Tax Gain (Loss) that may be Reclassified to Earnings
|
||
Forward currency contracts
|
|
Cash flow hedge
|
|
Cost of products sold
|
|
$
|
77
|
|
Forward currency contracts
|
|
Net investment hedge
|
|
Interest expense
|
|
24
|
|
|
Interest rate derivative contracts
|
|
Cash flow hedge
|
|
Interest expense
|
|
(5
|
)
|
(in millions)
|
|
Location on Consolidated Statements of Operations
|
|
Year Ended December 31,
|
||||||||||
|
|
2019
|
|
2018
|
|
2017
|
||||||||
Net gain (loss) on currency hedge contracts
|
|
Other, net
|
|
$
|
(343
|
)
|
|
$
|
41
|
|
|
$
|
(25
|
)
|
Net gain (loss) on currency transaction exposures
|
|
Other, net
|
|
(15
|
)
|
|
(30
|
)
|
|
10
|
|
|||
Net currency exchange gain (loss)
|
|
|
|
$
|
(358
|
)
|
|
$
|
11
|
|
|
$
|
(15
|
)
|
(1)
|
We classify derivative and nonderivative assets and liabilities as current when the settlement date of the 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
|
||||||||||||||||||||||||||||||
|
December 31, 2019
|
|
December 31, 2018
|
||||||||||||||||||||||||||||
(in millions)
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||||||||||
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Money market and government funds
|
$
|
50
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
50
|
|
|
$
|
13
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
13
|
|
Publicly-held securities
|
1
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||
Hedging instruments
|
—
|
|
|
321
|
|
|
—
|
|
|
321
|
|
|
—
|
|
|
304
|
|
|
—
|
|
|
304
|
|
||||||||
Licensing arrangements
|
—
|
|
|
—
|
|
|
518
|
|
|
518
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||
|
$
|
51
|
|
|
$
|
321
|
|
|
$
|
518
|
|
|
$
|
890
|
|
|
$
|
14
|
|
|
$
|
304
|
|
|
$
|
—
|
|
|
$
|
318
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Hedging instruments
|
$
|
—
|
|
|
$
|
1,037
|
|
|
$
|
—
|
|
|
$
|
1,037
|
|
|
$
|
—
|
|
|
$
|
80
|
|
|
$
|
—
|
|
|
$
|
80
|
|
Contingent consideration liability
|
—
|
|
|
—
|
|
|
354
|
|
|
354
|
|
|
—
|
|
|
—
|
|
|
347
|
|
|
347
|
|
||||||||
Licensing arrangements
|
—
|
|
|
—
|
|
|
571
|
|
|
571
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||
|
$
|
—
|
|
|
$
|
1,037
|
|
|
$
|
925
|
|
|
$
|
1,963
|
|
|
$
|
—
|
|
|
$
|
80
|
|
|
$
|
347
|
|
|
$
|
427
|
|
Licensing Arrangements
|
Fair Value as of December 31, 2019
|
Valuation Technique
|
Unobservable Input
|
Range
|
Weighted Average (1)
|
|||
Financial Asset
|
$518 million
|
Discounted Cash Flow
|
Discount Rate
|
11
|
%
|
-
|
19%
|
19%
|
Projected Year of Payment
|
2020
|
|
-
|
2028
|
2024
|
|||
Financial Liability
|
$571 million
|
Discounted Cash Flow
|
Discount Rate
|
19%
|
19%
|
|||
Projected Year of Payment
|
2020
|
|
-
|
2027
|
2023
|
(1)
|
Unobservable inputs relate to a single financial asset and liability. As such, unobservable inputs were not weighted by the relative fair value of the instruments. For projected year of payment, the amount represents the median of the inputs and is not a weighted average.
|
|
|
Issuance Date
|
|
Maturity Date
|
|
As of December 31,
|
|
Stated Interest Rate
|
||||||
(in millions, except interest rates)
|
|
|
|
2019
|
|
2018
|
|
|||||||
January 2020 Notes
|
|
December 2009
|
|
January 2020
|
|
$
|
—
|
|
|
$
|
850
|
|
|
6.000%
|
May 2020 Notes
|
|
May 2015
|
|
May 2020
|
|
—
|
|
|
600
|
|
|
2.850%
|
||
May 2022 Notes
|
|
May 2015
|
|
May 2022
|
|
500
|
|
|
500
|
|
|
3.375%
|
||
August 2022 Term Loan
|
|
August 2019
|
|
August 2022
|
|
1,000
|
|
|
—
|
|
|
|
||
October 2023 Notes
|
|
August 2013
|
|
October 2023
|
|
244
|
|
|
450
|
|
|
4.125%
|
||
March 2024 Notes
|
|
February 2019
|
|
March 2024
|
|
850
|
|
|
—
|
|
|
3.450%
|
||
May 2025 Notes
|
|
May 2015
|
|
May 2025
|
|
523
|
|
|
750
|
|
|
3.850%
|
||
March 2026 Notes
|
|
February 2019
|
|
March 2026
|
|
850
|
|
|
—
|
|
|
3.750%
|
||
December 2027 Notes
|
|
November 2019
|
|
December 2027
|
|
1,011
|
|
|
—
|
|
|
0.625%
|
||
March 2028 Notes
|
|
February 2018
|
|
March 2028
|
|
434
|
|
|
1,000
|
|
|
4.000%
|
||
March 2029 Notes
|
|
February 2019
|
|
March 2029
|
|
850
|
|
|
—
|
|
|
4.000%
|
||
November 2035 Notes (1)
|
|
November 2005
|
|
November 2035
|
|
350
|
|
|
350
|
|
|
7.000%
|
||
March 2039 Notes
|
|
February 2019
|
|
March 2039
|
|
750
|
|
|
—
|
|
|
4.550%
|
||
January 2040 Notes
|
|
December 2009
|
|
January 2040
|
|
300
|
|
|
300
|
|
|
7.375%
|
||
March 2049 Notes
|
|
February 2019
|
|
March 2049
|
|
1,000
|
|
|
—
|
|
|
4.700%
|
||
Unamortized Debt Issuance Discount
and Deferred Financing Costs |
|
|
|
2020 - 2049
|
|
(83
|
)
|
|
(29
|
)
|
|
|
||
Unamortized Gain on Fair Value Hedges
|
|
|
|
2020-2023
|
|
7
|
|
|
26
|
|
|
|
||
Finance Lease Obligation (2)
|
|
|
|
Various
|
|
6
|
|
|
6
|
|
|
|
||
Long-term debt
|
|
|
|
|
|
$
|
8,592
|
|
|
$
|
4,803
|
|
|
|
(1)
|
Corporate credit rating improvements may result in a decrease in the adjusted interest rate on our November 2035 Notes to the extent that our lowest credit rating is above BBB- or Baa3. The interest rates on our November 2035 Notes will be permanently reinstated to the issuance rate if the lowest credit ratings assigned to these senior notes is either A- or A3 or higher.
|
(2)
|
Effective January 1, 2019, we adopted FASB ASC Topic 842, which requires that we recognize finance lease obligations in our consolidated balance sheets. As of December 31, 2018, these leases were referred to as capital lease obligations in accordance with FASB ASC Topic 840. Please refer to Note A – Significant Accounting Policies for additional information.
|
|
Covenant
Requirement as of December 31, 2019
|
|
Actual as of December 31, 2019
|
Maximum leverage ratio (1)
|
4.75 times
|
|
3.83 times
|
|
As of December 31,
|
||||||
(in millions, except maturity and yield)
|
2019
|
|
2018
|
||||
Commercial paper outstanding
|
$
|
711
|
|
|
$
|
1,248
|
|
Maximum borrowing capacity
|
2,750
|
|
|
2,750
|
|
||
Borrowing capacity available
|
2,039
|
|
|
1,502
|
|
||
Weighted average maturity
|
55 days
|
|
|
27 days
|
|
||
Weighted average yield
|
2.21
|
%
|
|
3.04
|
%
|
|
As of December 31, 2019
|
|
As of December 31, 2018
|
||||||||||
Factoring Arrangements
|
Amount
De-recognized |
|
Weighted Average Interest Rate
|
|
Amount
De-recognized |
|
Weighted Average Interest Rate
|
||||||
Euro denominated
|
$
|
171
|
|
|
1.4
|
%
|
|
$
|
165
|
|
|
2.7
|
%
|
Yen denominated
|
226
|
|
|
0.6
|
%
|
|
195
|
|
|
0.9
|
%
|
Fiscal Year
|
Unrecorded Purchase Obligations
|
||
2020
|
$
|
334
|
|
2021
|
20
|
|
|
2022
|
7
|
|
|
2023
|
3
|
|
|
2024
|
1
|
|
|
Thereafter
|
1
|
|
|
|
$
|
366
|
|
(in millions)
|
As of December 31, 2019
|
||
Assets
|
|
||
Operating lease right-of-use assets in Other long-term assets
|
$
|
336
|
|
Liabilities
|
|
||
Operating lease liabilities in Other current liabilities
|
67
|
|
|
Operating lease liabilities in Other long-term liabilities
|
276
|
|
|
As of December 31, 2019
|
Weighted average remaining lease term
|
5.8 years
|
Weighted average discount rate
|
3.7%
|
|
Year Ended
|
||
(in millions)
|
December 31, 2019
|
||
Cash paid for amounts included in the measurement of operating lease liabilities
|
|
||
Operating cash flows from operating leases
|
$
|
77
|
|
Fiscal year
|
Operating Leases
|
||
2020
|
$
|
84
|
|
2021
|
71
|
|
|
2022
|
59
|
|
|
2023
|
48
|
|
|
2024
|
41
|
|
|
Thereafter
|
79
|
|
|
Total future minimum operating lease payments
|
382
|
|
|
Less: imputed interest
|
39
|
|
|
Present value of operating lease liabilities
|
$
|
343
|
|
Fiscal year
|
Future Minimum Rental Commitments
|
||
2019
|
$
|
73
|
|
2020
|
61
|
|
|
2021
|
47
|
|
|
2022
|
39
|
|
|
2023
|
31
|
|
|
Thereafter
|
111
|
|
|
|
$
|
362
|
|
Type of Cost
|
Total Estimated Amount Expected to be Incurred
|
||||
Restructuring charges:
|
|
|
|
||
Termination benefits
|
|
$75
|
million
|
to
|
$100 million
|
Other (1)
|
|
$25
|
million
|
to
|
$50 million
|
Restructuring-related expenses:
|
|
|
|
||
Other (2)
|
|
$100
|
million
|
to
|
$150 million
|
|
|
$200
|
million
|
to
|
$300 million
|
(1)
|
Consists primarily of consulting fees and costs associated with contractual cancellations.
|
(2)
|
Comprised of other costs directly related to the restructuring program, including program management, accelerated depreciation, fixed asset write-offs, and costs to transfer product lines among facilities.
|
Type of cost
|
Total Amount Incurred
|
||
Restructuring charges:
|
|
||
Termination benefits
|
$
|
86
|
million
|
Other (1)
|
21
|
million
|
|
Restructuring-related expenses:
|
|
||
Other (2)
|
164
|
million
|
|
|
$
|
271
|
million
|
(1)
|
Consists primarily of consulting fees and costs associated with contract cancellations.
|
(2)
|
Comprised of other costs directly related to the 2016 Restructuring Plan, including program management, accelerated depreciation, fixed asset write-offs and costs to transfer product lines among facilities.
|
Year Ended December 31, 2019
|
Termination
Benefits
|
|
Transfer
Costs
|
|
Other
|
|
Total
|
||||||||
Restructuring charges
|
$
|
38
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
38
|
|
Restructuring-related expenses:
|
|
|
|
|
|
|
|
||||||||
Cost of products sold
|
—
|
|
|
32
|
|
|
—
|
|
|
32
|
|
||||
Selling, general and administrative expenses
|
—
|
|
|
—
|
|
|
13
|
|
|
13
|
|
||||
|
—
|
|
|
32
|
|
|
13
|
|
|
44
|
|
||||
|
$
|
38
|
|
|
$
|
32
|
|
|
$
|
13
|
|
|
$
|
82
|
|
Year Ended December 31, 2018
|
Termination
Benefits
|
|
Transfer
Costs
|
|
Other
|
|
Total
|
||||||||
Restructuring charges
|
$
|
32
|
|
|
$
|
—
|
|
|
$
|
4
|
|
|
$
|
36
|
|
Restructuring-related expenses:
|
|
|
|
|
|
|
|
||||||||
Cost of products sold
|
—
|
|
|
47
|
|
|
—
|
|
|
47
|
|
||||
Selling, general and administrative expenses
|
—
|
|
|
—
|
|
|
12
|
|
|
12
|
|
||||
|
—
|
|
|
47
|
|
|
12
|
|
|
59
|
|
||||
|
$
|
32
|
|
|
$
|
47
|
|
|
$
|
16
|
|
|
$
|
96
|
|
Year Ended December 31, 2017
|
Termination
Benefits
|
|
Transfer Costs
|
|
Other
|
|
Total
|
||||||||
Restructuring charges
|
$
|
25
|
|
|
$
|
—
|
|
|
$
|
12
|
|
|
$
|
37
|
|
Restructuring-related expenses:
|
|
|
|
|
|
|
|
||||||||
Cost of products sold
|
—
|
|
|
45
|
|
|
—
|
|
|
45
|
|
||||
Selling, general and administrative expenses
|
—
|
|
|
—
|
|
|
13
|
|
|
13
|
|
||||
|
—
|
|
|
45
|
|
|
13
|
|
|
58
|
|
||||
|
$
|
25
|
|
|
$
|
45
|
|
|
$
|
25
|
|
|
$
|
95
|
|
(in millions)
|
2016 Restructuring Plan
|
|
2019 Restructuring Plan
|
|
Total
|
||||||
Termination benefits
|
$
|
86
|
|
|
$
|
30
|
|
|
$
|
115
|
|
Other (1)
|
21
|
|
|
2
|
|
|
23
|
|
|||
Total restructuring charges
|
106
|
|
|
32
|
|
|
138
|
|
|||
Transfer costs
|
126
|
|
|
13
|
|
|
139
|
|
|||
Other (2)
|
39
|
|
|
2
|
|
|
41
|
|
|||
Restructuring-related charges
|
164
|
|
|
15
|
|
|
180
|
|
|||
|
$
|
271
|
|
|
$
|
47
|
|
|
$
|
318
|
|
(1)
|
Consists primarily of consulting fees and costs associated with contract cancellations.
|
(2)
|
Comprised of other costs directly related to our Restructuring Plans, including program management, accelerated depreciation, and fixed asset write-offs.
|
(in millions)
|
2016 Restructuring Plan
|
|
2019 Restructuring Plan
|
|
Total
|
||||||
Year Ended December 31, 2019
|
|
|
|
|
|
||||||
Termination benefits
|
$
|
13
|
|
|
$
|
6
|
|
|
$
|
18
|
|
Transfer costs
|
18
|
|
|
13
|
|
|
32
|
|
|||
Other
|
10
|
|
|
4
|
|
|
14
|
|
|||
|
$
|
41
|
|
|
$
|
23
|
|
|
$
|
64
|
|
|
As of December 31,
|
||||||
(in millions)
|
2019
|
|
2018
|
||||
Accounts receivable
|
$
|
1,902
|
|
|
$
|
1,676
|
|
Allowance for doubtful accounts
|
(74
|
)
|
|
(68
|
)
|
||
|
$
|
1,828
|
|
|
$
|
1,608
|
|
|
Year Ended December 31,
|
||||||||||
(in millions)
|
2019
|
|
2018
|
|
2017
|
||||||
Beginning balance
|
$
|
68
|
|
|
$
|
68
|
|
|
$
|
73
|
|
Net charges to expenses
|
23
|
|
|
19
|
|
|
14
|
|
|||
Utilization of allowances
|
(17
|
)
|
|
(19
|
)
|
|
(18
|
)
|
|||
Ending balance
|
$
|
74
|
|
|
$
|
68
|
|
|
$
|
68
|
|
|
As of December 31,
|
||||||
(in millions)
|
2019
|
|
2018
|
||||
Finished goods
|
$
|
971
|
|
|
$
|
760
|
|
Work-in-process
|
192
|
|
|
100
|
|
||
Raw materials
|
416
|
|
|
306
|
|
||
|
$
|
1,579
|
|
|
$
|
1,166
|
|
|
As of December 31,
|
||||||
(in millions)
|
2019
|
|
2018
|
||||
Restricted cash and restricted cash equivalents
|
$
|
346
|
|
|
$
|
655
|
|
Derivative assets
|
105
|
|
|
122
|
|
||
Licensing arrangements
|
186
|
|
|
—
|
|
||
Taxes receivable
|
105
|
|
|
37
|
|
||
Other
|
138
|
|
|
107
|
|
||
|
$
|
880
|
|
|
$
|
921
|
|
|
As of December 31,
|
||||||
(in millions)
|
2019
|
|
2018
|
||||
Land
|
$
|
117
|
|
|
$
|
97
|
|
Buildings and improvements
|
1,198
|
|
|
1,100
|
|
||
Equipment, furniture and fixtures
|
3,411
|
|
|
3,224
|
|
||
Capital in progress
|
442
|
|
|
319
|
|
||
|
5,169
|
|
|
4,740
|
|
||
Less: accumulated depreciation
|
3,089
|
|
|
2,958
|
|
||
|
$
|
2,079
|
|
|
$
|
1,782
|
|
|
As of December 31,
|
||||||
(in millions)
|
2019
|
|
2018
|
||||
Restricted cash equivalents
|
$
|
43
|
|
|
$
|
27
|
|
Operating lease right-of-use assets
|
336
|
|
|
—
|
|
||
Derivative assets
|
216
|
|
|
183
|
|
||
Investments
|
458
|
|
|
424
|
|
||
Licensing arrangements
|
332
|
|
|
—
|
|
||
Other
|
144
|
|
|
211
|
|
||
|
$
|
1,529
|
|
|
$
|
845
|
|
|
As of December 31,
|
||||||
(in millions)
|
2019
|
|
2018
|
||||
Legal reserves
|
$
|
470
|
|
|
$
|
712
|
|
Payroll and related liabilities
|
708
|
|
|
630
|
|
||
Accrued contingent consideration
|
56
|
|
|
138
|
|
||
Rebates
|
298
|
|
|
229
|
|
||
Other
|
576
|
|
|
538
|
|
||
|
$
|
2,109
|
|
|
$
|
2,246
|
|
|
As of December 31,
|
||||||
(in millions)
|
2019
|
|
2018
|
||||
Deferred revenue
|
$
|
144
|
|
|
$
|
115
|
|
Licensing arrangements
|
197
|
|
|
—
|
|
||
Taxes payable
|
265
|
|
|
125
|
|
||
Other
|
195
|
|
|
173
|
|
||
|
$
|
800
|
|
|
$
|
412
|
|
|
As of December 31,
|
||||||
(in millions)
|
2019
|
|
2018
|
||||
Accrued income taxes
|
$
|
667
|
|
|
$
|
739
|
|
Legal reserves
|
227
|
|
|
217
|
|
||
Accrued contingent consideration
|
299
|
|
|
209
|
|
||
Licensing arrangements
|
374
|
|
|
—
|
|
||
Operating lease liabilities
|
276
|
|
|
—
|
|
||
Other
|
792
|
|
|
717
|
|
||
|
$
|
2,635
|
|
|
$
|
1,882
|
|
|
Year Ended December 31,
|
||||||||||
(in millions)
|
2019
|
|
2018
|
|
2017
|
||||||
Domestic
|
$
|
(1,145
|
)
|
|
$
|
35
|
|
|
$
|
(408
|
)
|
Foreign
|
1,832
|
|
|
1,387
|
|
|
1,341
|
|
|||
|
$
|
687
|
|
|
$
|
1,422
|
|
|
$
|
933
|
|
|
Year Ended December 31,
|
|||||||
|
2019
|
|
2018
|
|
2017
|
|||
|
|
|
|
|
(reclassified)(1)
|
|||
U.S. federal statutory income tax rate
|
21.0
|
%
|
|
21.0
|
%
|
|
35.0
|
%
|
State income taxes, net of federal benefit
|
6.7
|
%
|
|
0.4
|
%
|
|
(1.0
|
)%
|
Domestic taxes on foreign earnings
|
21.9
|
%
|
|
0.5
|
%
|
|
0.4
|
%
|
Effect of foreign taxes
|
(47.6
|
)%
|
|
(8.3
|
)%
|
|
(38.9
|
)%
|
Acquisition-related
|
12.2
|
%
|
|
2.1
|
%
|
|
(1.7
|
)%
|
Research credit
|
(4.2
|
)%
|
|
(2.6
|
)%
|
|
(2.6
|
)%
|
Valuation allowance
|
1.1
|
%
|
|
(5.2
|
)%
|
|
(4.1
|
)%
|
Compensation-related
|
(0.3
|
)%
|
|
(1.0
|
)%
|
|
(2.5
|
)%
|
Non-deductible expenses
|
3.3
|
%
|
|
0.3
|
%
|
|
2.2
|
%
|
Uncertain tax positions
|
1.4
|
%
|
|
(22.0
|
)%
|
|
10.7
|
%
|
TCJA net impact
|
—
|
%
|
|
(4.7
|
)%
|
|
91.4
|
%
|
Intra-entity intangible asset transfers
|
(597.0
|
)%
|
|
—
|
%
|
|
—
|
%
|
Other, net
|
(2.5
|
)%
|
|
1.8
|
%
|
|
(0.2
|
)%
|
|
(584.0
|
)%
|
|
(17.5
|
)%
|
|
88.8
|
%
|
(1)
|
Due to the inclusion of new tax provisions in 2018 created by the TJCA, we have reclassified select items in prior years to align with the new categories established in 2018, domestic taxes on foreign earnings and uncertain tax positions.
|
|
As of December 31,
|
||||||
(in millions)
|
2019
|
|
2018
|
||||
Deferred Tax Assets:
|
|
|
|
||||
Inventory costs and related reserves
|
$
|
—
|
|
|
$
|
18
|
|
Tax benefit of net operating loss and credits
|
545
|
|
|
450
|
|
||
Reserves and accruals
|
258
|
|
|
258
|
|
||
Restructuring-related charges
|
20
|
|
|
12
|
|
||
Litigation and product liability reserves
|
168
|
|
|
221
|
|
||
Investment write-down
|
42
|
|
|
28
|
|
||
Compensation related
|
121
|
|
|
106
|
|
||
Federal benefit of uncertain tax positions
|
10
|
|
|
10
|
|
||
Intangible assets
|
3,447
|
|
|
—
|
|
||
Other
|
—
|
|
|
37
|
|
||
|
4,611
|
|
|
1,140
|
|
||
Less: valuation allowance
|
(915
|
)
|
|
(344
|
)
|
||
|
3,696
|
|
|
796
|
|
||
Deferred Tax Liabilities:
|
|
|
|
||||
Property, plant and equipment
|
16
|
|
|
25
|
|
||
Unrealized gains and losses on derivative financial instruments
|
52
|
|
|
44
|
|
||
Intangible assets
|
—
|
|
|
968
|
|
||
Inventory costs and related services
|
2
|
|
|
—
|
|
||
Other
|
25
|
|
|
—
|
|
||
|
95
|
|
|
1,037
|
|
||
Net Deferred Tax Assets / (Liabilities)
|
3,601
|
|
|
(241
|
)
|
||
Prepaid on intercompany profit
|
195
|
|
|
161
|
|
||
Net Deferred Tax Assets / (Liabilities) and Prepaid on Intercompany Profit
|
$
|
3,796
|
|
|
$
|
(80
|
)
|
|
Year Ended December 31,
|
||||||||||
(in millions)
|
2019
|
|
2018
|
|
2017
|
||||||
Beginning Balance
|
$
|
427
|
|
|
$
|
1,238
|
|
|
$
|
1,095
|
|
Additions based on positions related to the current year
|
30
|
|
|
79
|
|
|
134
|
|
|||
Additions based on positions related to prior years
|
45
|
|
|
4
|
|
|
16
|
|
|||
Reductions for tax positions of prior years
|
(34
|
)
|
|
(433
|
)
|
|
(3
|
)
|
|||
Settlements with taxing authorities
|
(4
|
)
|
|
(459
|
)
|
|
(2
|
)
|
|||
Statute of limitation expirations
|
(9
|
)
|
|
(3
|
)
|
|
(2
|
)
|
|||
Ending Balance
|
$
|
455
|
|
|
$
|
427
|
|
|
$
|
1,238
|
|
•
|
On October 30, 2015, a subsidiary of Boston Scientific filed suit against Edwards Lifesciences Corporation and Edwards Lifesciences Services GmbH in Düsseldorf District Court in Germany for patent infringement. We allege that Edwards’
|
•
|
On November 9, 2015, Edwards Lifesciences, LLC filed an invalidity claim against one of our subsidiaries, Sadra Medical, Inc. (Sadra), in the High Court of Justice, Chancery Division Patents Court in the United Kingdom, alleging that a European patent owned by Sadra relating to a repositionable heart valve is invalid. On January 15, 2016, we filed our defense and counterclaim for a declaration that our European patent is valid and infringed by Edwards. On February 25, 2016, we amended our counterclaim to allege infringement of a second patent related to adaptive sealing technology. A trial was held from January 18 to January 27, 2017. On March 3, 2017, the court found one of our patents valid and infringed and some claims of the second patent invalid and the remaining claims not infringed. Both parties have filed an appeal. On March 28, 2018, the Court of Appeals affirmed the decision of the High Court.
|
•
|
On November 23, 2015, Edwards Lifesciences PVT, Inc. filed a patent infringement action against us and one of our subsidiaries, Boston Scientific Medizintechnik GmbH, in the District Court of Düsseldorf, Germany alleging a European patent (Spenser '672) owned by Edwards is infringed by our Lotus™ Valve System. The trial began on February 7, 2017. On March 9, 2017, the court found that we did not infringe the Spenser '672 patent. Edwards filed an appeal.
|
•
|
On November 23, 2015, Edwards Lifesciences Corporation filed a patent infringement action against us and Boston Scientific Medizintechnik GmbH in the District Court of Düsseldorf, Germany alleging an European patent (Bourang) owned by Edwards is infringed by our Lotus Valve System. The trial began on February 7, 2017. On March 28, 2017, the European Patent Office revoked the Bourang patent and on April 3, 2017, the court suspended the infringement action pending Edwards' appeal of the revocation of the patent at the European Patent Office.
|
•
|
On April 19, 2016, a subsidiary of Boston Scientific filed suit against Edwards Lifesciences Corporation (Edwards) in the U.S. District Court for the District of Delaware for patent infringement. We allege that Edwards’ SAPIEN 3™ Valve infringes a patent related to adaptive sealing technology. On June 9, 2016, Edwards filed a counterclaim alleging that our Lotus™ Valve System infringes three patents owned by Edwards. On October 12, 2016, Edwards filed a petition for inter partes review of our patent with the U.S. Patent and Trademark Office (USPTO), Patent Trial and Appeal Board. On March 29, 2017, the USPTO granted the inter partes review request. On April 18, 2017, Edwards filed a second petition for inter partes review of our patent with the USPTO. On March 23, 2018, the USPTO found our patent invalid. The Company filed an appeal before the United States Court of Appeals for the Federal Circuit on May 24, 2018.
|
•
|
On April 19, 2016, a subsidiary of Boston Scientific filed suit against Edwards Lifesciences Corporation in the U.S. District Court for the Central District of California for patent infringement. We allege that Edwards’ aortic valve delivery systems infringe eight of our catheter related patents. On October 13, 2016, Edwards filed a petition for inter partes review of one asserted patent with the USPTO, Patent Trial and Appeal Board. On April 21, 2017, the USPTO denied the petition. On April 19 and 20, 2017, Edwards filed multiple inter partes review petitions against the patents in suit. On September 8, 2017, the court granted a stay of the action pending an inter partes review of the patents in suit.
|
•
|
On April 26, 2016, Edwards Lifesciences PVT, Inc. filed a patent infringement action against us and one of our subsidiaries, Boston Scientific Medizintechnik GmbH, in the District Court of Düsseldorf, Germany alleging a European patent (Spenser '550) owned by Edwards is infringed by our Lotus™ Transcatheter Heart Valve System. The trial began on February 7, 2017. On March 9, 2017, the court found that we infringed the Spenser '550 patent. The Company filed an appeal. On April 13, 2018, the ‘550 patent was revoked by the European Patent Office.
|
•
|
On October 27, 2016, Edwards Lifesciences PVT, Inc. filed a patent infringement action against us and one of our subsidiaries, Boston Scientific, LTD, in the Federal Court of Canada alleging that three Canadian patents (Spenser) owned by Edwards are infringed by our Lotus Transcatheter Heart Valve System.
|
•
|
On December 22, 2016, Edwards Lifesciences PVT, Inc. and Edwards Lifesciences SA (AG) filed a plenary summons against Boston Scientific Limited and Boston Scientific Group Public Company in the High Court of Ireland alleging that a European patent (Spenser) owned by Edwards is infringed by our Lotus Valve System. On April 13, 2018, the ‘550 patent was revoked by the European Patent Office.
|
•
|
On August 1, 2018, the Company filed a patent infringement action on the merits in Dusseldorf, Germany against Edwards Lifesciences Corporation and Edwards Lifesciences GmbH (collectively Edwards) alleging that the Sapien 3™ Device and Sapien 3 Ultra Device infringed a patent owned by the Company.
|
•
|
On August 3, 2018, the Company filed a preliminary injunction request in Dusseldorf, Germany against Edwards Lifesciences Corporation and Edwards Lifesciences GmbH (collectively Edwards) alleging that the Sapien 3 Ultra Device infringed a patent owned by the Company. On October 23, 2018, the court found that the Sapien 3 Ultra Device infringed the patent. Edwards had the right to appeal.
|
•
|
On August 22, 2018, Edwards Lifesciences LLC filed a patent infringement action against Boston Scientific Corporation, in the U. S. District Court of Delaware, alleging that two U.S. patents (Schweich) owned by them are infringed by our Watchman™ Left Atrial Appendage Closure Device, Watchman Delivery System and Watchman Access System.
|
|
Year Ended December 31,
|
||||||||||
(in millions, except per share data)
|
2019
|
|
2018
|
|
2017
|
||||||
Cost of products sold
|
$
|
8
|
|
|
$
|
7
|
|
|
$
|
7
|
|
Selling, general and administrative expenses
|
120
|
|
|
109
|
|
|
98
|
|
|||
Research and development expenses
|
28
|
|
|
24
|
|
|
23
|
|
|||
|
157
|
|
|
140
|
|
|
127
|
|
|||
Income tax (benefit) expense
|
(24
|
)
|
|
(21
|
)
|
|
(32
|
)
|
|||
|
$
|
133
|
|
|
$
|
119
|
|
|
$
|
96
|
|
Net impact per common share - basic
|
$
|
0.10
|
|
|
$
|
0.09
|
|
|
$
|
0.07
|
|
Net impact per common share - assuming dilution
|
$
|
0.09
|
|
|
$
|
0.08
|
|
|
$
|
0.07
|
|
|
Year Ended December 31,
|
|||||||||||||||||||
|
2019
|
|
2018
|
|
2017
|
|||||||||||||||
Options granted (in thousands)
|
2,992
|
|
|
3,491
|
|
|
4,439
|
|
||||||||||||
Weighted-average exercise price
|
$
|
40.20
|
|
|
$
|
27.26
|
|
|
$
|
24.70
|
|
|||||||||
Weighted-average grant-date fair value
|
$
|
11.76
|
|
|
$
|
8.55
|
|
|
$
|
7.16
|
|
|||||||||
Black-Scholes Assumptions
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Expected volatility
|
24
|
%
|
|
26
|
%
|
|
25
|
%
|
||||||||||||
Expected term (in years, weighted)
|
6.1
|
|
|
6.0
|
|
|
6.1
|
|
||||||||||||
Risk-free interest rate
|
1.38
|
%
|
-
|
2.61%
|
|
2.61
|
%
|
-
|
3.01%
|
|
2.03
|
%
|
-
|
2.21%
|
|
Stock Options
(in thousands)
|
|
Weighted
Average
Exercise Price
|
|
Weighted Average
Remaining
Contractual Life
(in years)
|
|
Aggregate
Intrinsic
Value
(in millions)
|
|||||
Outstanding as of December 31, 2016
|
26,644
|
|
|
$
|
11
|
|
|
|
|
|
||
Granted
|
4,439
|
|
|
25
|
|
|
|
|
|
|||
Exercised
|
(3,922
|
)
|
|
10
|
|
|
|
|
|
|||
Cancelled/forfeited
|
(445
|
)
|
|
17
|
|
|
|
|
|
|||
Outstanding as of December 31, 2017
|
26,716
|
|
|
$
|
13
|
|
|
|
|
|
||
Granted
|
3,491
|
|
|
27
|
|
|
|
|
|
|||
Exercised
|
(4,385
|
)
|
|
11
|
|
|
|
|
|
|||
Cancelled/forfeited
|
(519
|
)
|
|
22
|
|
|
|
|
|
|||
Outstanding as of December 31, 2018
|
25,304
|
|
|
$
|
16
|
|
|
|
|
|
||
Granted
|
2,992
|
|
|
40
|
|
|
|
|
|
|||
Exercised
|
(4,872
|
)
|
|
12
|
|
|
|
|
|
|||
Cancelled/forfeited
|
(359
|
)
|
|
24
|
|
|
|
|
|
|||
Outstanding as of December 31, 2019
|
23,065
|
|
|
$
|
19
|
|
|
5.5
|
|
$
|
594
|
|
Exercisable as of December 31, 2019
|
15,091
|
|
|
$
|
14
|
|
|
4.1
|
|
$
|
476
|
|
Expected to vest as of December 31, 2019
|
7,617
|
|
|
30
|
|
|
8.0
|
|
114
|
|
||
Total vested and expected to vest as of December 31, 2019
|
22,707
|
|
|
$
|
19
|
|
|
5.3
|
|
$
|
590
|
|
|
Non-Vested
Stock Award Units
(in thousands)
|
|
Weighted Average
Grant-Date
Fair Value
|
|||
Balance as of December 31, 2016
|
18,797
|
|
|
$
|
14
|
|
Granted
|
4,798
|
|
|
24
|
|
|
Vested (1)
|
(7,663
|
)
|
|
11
|
|
|
Forfeited
|
(683
|
)
|
|
17
|
|
|
Balance as of December 31, 2017
|
15,250
|
|
|
$
|
18
|
|
Granted
|
4,375
|
|
|
28
|
|
|
Vested (1)
|
(6,194
|
)
|
|
16
|
|
|
Forfeited
|
(748
|
)
|
|
22
|
|
|
Balance as of December 31, 2018
|
12,683
|
|
|
$
|
22
|
|
Granted
|
3,656
|
|
|
39
|
|
|
Vested (1)
|
(4,811
|
)
|
|
20
|
|
|
Forfeited
|
(449
|
)
|
|
27
|
|
|
Balance as of December 31, 2019
|
11,079
|
|
|
$
|
29
|
|
(1)
|
The number of restricted stock units vested includes shares withheld on behalf of employees to satisfy statutory tax withholding requirements.
|
|
2019
|
|
2018
|
|
2017
|
||||||
|
Awards
|
|
Awards
|
|
Awards
|
||||||
Stock price on date of grant
|
$
|
40.12
|
|
|
$
|
27.09
|
|
|
$
|
24.55
|
|
Measurement period (in years)
|
2.9
|
|
|
2.9
|
|
|
2.8
|
|
|||
Risk-free rate
|
2.48
|
%
|
|
2.36
|
%
|
|
1.45
|
%
|
|
2019 AFCF
|
|
2018 AFCF
|
|
2017 AFCF
|
||||||
Fair value, net of forfeitures to date (in millions)
|
$
|
8
|
|
|
$
|
11
|
|
|
$
|
6
|
|
Achievement of target payout
|
90
|
%
|
|
118
|
%
|
|
98
|
%
|
|||
Year-end stock price used in determining fair value
|
$
|
45.22
|
|
|
$
|
35.34
|
|
|
$
|
24.79
|
|
|
Unrecognized
Compensation Cost
(in millions) (1)
|
|
Weighted Average Remaining
Vesting Period
(in years)
|
||
Stock options
|
$
|
35
|
|
|
|
Non-vested stock awards
|
169
|
|
|
|
|
|
$
|
204
|
|
|
1.2
|
(1)
|
Amounts presented represent compensation cost, net of estimated forfeitures.
|
|
Year Ended December 31,
|
|||||||
(in millions)
|
2019
|
|
2018
|
|
2017
|
|||
Weighted average shares outstanding - basic
|
1,391.5
|
|
|
1,381.0
|
|
|
1,370.1
|
|
Net effect of common stock equivalents
|
19.0
|
|
|
20.4
|
|
|
22.6
|
|
Weighted average shares outstanding - assuming dilution
|
1,410.6
|
|
|
1,401.4
|
|
|
1,392.7
|
|
|
Year Ended December 31,
|
||||||||||
Net sales
|
2019
|
|
2018
|
|
2017
|
||||||
MedSurg
|
$
|
3,307
|
|
|
$
|
3,007
|
|
|
$
|
2,742
|
|
Rhythm and Neuro
|
3,140
|
|
|
3,041
|
|
|
2,808
|
|
|||
Cardiovascular
|
4,208
|
|
|
3,777
|
|
|
3,500
|
|
|||
Total net sales of reportable segments
|
10,654
|
|
|
9,823
|
|
|
9,048
|
|
|||
All other (Specialty Pharmaceuticals)
|
81
|
|
|
n/a
|
|
|
n/a
|
|
|||
Consolidated net sales
|
$
|
10,735
|
|
|
$
|
9,823
|
|
|
$
|
9,048
|
|
|
Year Ended December 31,
|
||||||||||
Depreciation expense
|
2019
|
|
2018
|
|
2017
|
||||||
MedSurg
|
$
|
75
|
|
|
$
|
72
|
|
|
$
|
68
|
|
Rhythm and Neuro
|
92
|
|
|
91
|
|
|
91
|
|
|||
Cardiovascular
|
138
|
|
|
133
|
|
|
120
|
|
|||
Total depreciation expense of reportable segments
|
306
|
|
|
296
|
|
|
279
|
|
|||
All other (Specialty Pharmaceuticals)
|
6
|
|
|
n/a
|
|
|
n/a
|
|
|||
Consolidated depreciation expense
|
$
|
311
|
|
|
$
|
296
|
|
|
$
|
279
|
|
|
Year Ended December 31,
|
||||||||||
Income (loss) before income taxes
|
2019
|
|
2018
|
|
2017
|
||||||
MedSurg
|
$
|
1,204
|
|
|
$
|
1,102
|
|
|
$
|
984
|
|
Rhythm and Neuro
|
666
|
|
|
655
|
|
|
537
|
|
|||
Cardiovascular
|
1,137
|
|
|
1,117
|
|
|
988
|
|
|||
Total operating income of reportable segments
|
3,007
|
|
|
2,875
|
|
|
2,509
|
|
|||
All other (Specialty Pharmaceuticals)
|
56
|
|
|
n/a
|
|
|
n/a
|
|
|||
Unallocated amounts:
|
|
|
|
|
|
||||||
Corporate expenses, including hedging activities
|
(264
|
)
|
|
(372
|
)
|
|
(252
|
)
|
|||
Intangible asset impairment charges, acquisition/divestiture-related, restructuring- and restructuring-related, litigation-related net (charges) credits and EU MDR implementation costs
|
(582
|
)
|
|
(398
|
)
|
|
(407
|
)
|
|||
Amortization expense
|
(699
|
)
|
|
(599
|
)
|
|
(565
|
)
|
|||
Operating income (loss)
|
1,518
|
|
|
1,506
|
|
|
1,285
|
|
|||
Other expense, net
|
(831
|
)
|
|
(85
|
)
|
|
(353
|
)
|
|||
Income (loss) before income taxes
|
$
|
687
|
|
|
$
|
1,422
|
|
|
$
|
933
|
|
Operating income of reportable segments as a percentage of net sales of reportable segments
|
Year Ended December 31,
|
|||||||
2019
|
|
2018
|
|
2017
|
||||
MedSurg
|
36.4
|
%
|
|
36.7
|
%
|
|
35.9
|
%
|
Rhythm and Neuro
|
21.2
|
%
|
|
21.5
|
%
|
|
19.1
|
%
|
Cardiovascular
|
27.0
|
%
|
|
29.6
|
%
|
|
28.2
|
%
|
|
As of December 31,
|
||||||
Total assets
|
2019
|
|
2018
|
||||
MedSurg
|
$
|
1,803
|
|
|
$
|
1,846
|
|
Rhythm and Neuro
|
1,873
|
|
|
1,696
|
|
||
Cardiovascular
|
2,535
|
|
|
1,954
|
|
||
Total assets of reportable segments
|
6,211
|
|
|
5,497
|
|
||
All other (Specialty Pharmaceuticals)
|
211
|
|
|
—
|
|
||
Goodwill
|
10,176
|
|
|
7,911
|
|
||
Other intangible assets, net
|
7,886
|
|
|
6,372
|
|
||
All other corporate assets
|
6,082
|
|
|
1,219
|
|
||
|
$
|
30,565
|
|
|
$
|
20,999
|
|
|
As of December 31,
|
||||||||||
Long-lived assets
|
2019
|
|
2018
|
|
2017
|
||||||
U.S.
|
$
|
1,148
|
|
|
$
|
1,061
|
|
|
$
|
1,065
|
|
Ireland
|
327
|
|
|
242
|
|
|
210
|
|
|||
Other countries
|
604
|
|
|
478
|
|
|
422
|
|
|||
Property, plant and equipment, net
|
2,079
|
|
|
1,782
|
|
|
1,697
|
|
|||
Goodwill
|
10,176
|
|
|
7,911
|
|
|
6,998
|
|
|||
Other intangible assets, net
|
7,886
|
|
|
6,372
|
|
|
5,837
|
|
|||
Operating lease right-of-use assets in Other long-term assets
|
336
|
|
|
—
|
|
|
—
|
|
|||
|
$
|
20,477
|
|
|
$
|
16,064
|
|
|
$
|
14,531
|
|
|
Year Ended December 31,
|
||||||||||||||||||||||||||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||||||||||||||||||||||||||
Businesses
|
U.S.
|
|
OUS
|
|
Total
|
|
U.S.
|
|
OUS
|
|
Total
|
|
U.S.
|
|
OUS
|
|
Total
|
||||||||||||||||||
Endoscopy
|
$
|
1,080
|
|
|
$
|
814
|
|
|
$
|
1,894
|
|
|
$
|
980
|
|
|
$
|
781
|
|
|
$
|
1,762
|
|
|
$
|
894
|
|
|
$
|
724
|
|
|
$
|
1,619
|
|
Urology and Pelvic Health
|
1,005
|
|
|
408
|
|
|
1,413
|
|
|
864
|
|
|
381
|
|
|
1,245
|
|
|
785
|
|
|
339
|
|
|
1,124
|
|
|||||||||
Cardiac Rhythm Management
|
1,135
|
|
|
804
|
|
|
1,939
|
|
|
1,159
|
|
|
792
|
|
|
1,951
|
|
|
1,135
|
|
|
760
|
|
|
1,895
|
|
|||||||||
Electrophysiology
|
148
|
|
|
180
|
|
|
329
|
|
|
150
|
|
|
161
|
|
|
311
|
|
|
136
|
|
|
142
|
|
|
278
|
|
|||||||||
Neuromodulation
|
695
|
|
|
178
|
|
|
873
|
|
|
624
|
|
|
155
|
|
|
779
|
|
|
517
|
|
|
118
|
|
|
635
|
|
|||||||||
Interventional Cardiology
|
1,293
|
|
|
1,522
|
|
|
2,816
|
|
|
1,154
|
|
|
1,436
|
|
|
2,590
|
|
|
1,122
|
|
|
1,297
|
|
|
2,419
|
|
|||||||||
Peripheral Interventions
|
741
|
|
|
651
|
|
|
1,392
|
|
|
608
|
|
|
579
|
|
|
1,187
|
|
|
575
|
|
|
506
|
|
|
1,081
|
|
|||||||||
Specialty Pharmaceuticals
|
70
|
|
|
11
|
|
|
81
|
|
|
n/a
|
|
|
n/a
|
|
|
n/a
|
|
|
n/a
|
|
|
n/a
|
|
|
n/a
|
|
|||||||||
Net Sales
|
$
|
6,167
|
|
|
$
|
4,569
|
|
|
$
|
10,735
|
|
|
$
|
5,538
|
|
|
$
|
4,286
|
|
|
$
|
9,823
|
|
|
$
|
5,162
|
|
|
$
|
3,885
|
|
|
$
|
9,048
|
|
|
Year Ended December 31,
|
||||||||||
Geographic Regions
|
2019
|
|
2018
|
|
2017
|
||||||
U.S.
|
$
|
6,097
|
|
|
$
|
5,538
|
|
|
$
|
5,162
|
|
EMEA (Europe, Middle East and Africa)
|
2,264
|
|
|
2,176
|
|
|
1,940
|
|
|||
APAC (Asia-Pacific)
|
1,898
|
|
|
1,727
|
|
|
1,587
|
|
|||
LACA (Latin America and Canada)
|
395
|
|
|
383
|
|
|
358
|
|
|||
Medical Devices
|
10,654
|
|
|
9,823
|
|
|
9,048
|
|
|||
U.S.
|
70
|
|
|
n/a
|
|
|
n/a
|
|
|||
OUS
|
11
|
|
|
n/a
|
|
|
n/a
|
|
|||
Specialty Pharmaceuticals
|
81
|
|
|
n/a
|
|
|
n/a
|
|
|||
Net Sales
|
$
|
10,735
|
|
|
$
|
9,823
|
|
|
$
|
9,048
|
|
|
|
|
|
|
|
||||||
Emerging Markets (1)
|
$
|
1,252
|
|
|
$
|
1,097
|
|
|
$
|
931
|
|
(1)
|
We define Emerging Markets as the 20 countries that we believe have strong growth potential based on their economic conditions, healthcare sectors and our global capabilities. Periodically, we assess our list of Emerging Markets; effective January 1, 2019, we updated our list of Emerging Market countries. Our current list is comprised of the following countries: Argentina, Brazil, Chile, China, Colombia, Czech Republic, India, Indonesia, Malaysia, Mexico, Philippines, Poland, Russia, Saudi Arabia, Slovakia, South Africa, South Korea, Thailand, Turkey and Vietnam. We have revised prior year amounts to the current year’s presentation.
|
(in millions)
|
Foreign Currency Translation Adjustments
|
|
Net Change in Derivative Financial Instruments
|
|
Net Change in Available-for-Sale Securities
|
|
Net Change in Defined Benefit Pensions and Other Items
|
|
Total
|
||||||||||
Balance as of December 31, 2018
|
$
|
(53
|
)
|
|
$
|
111
|
|
|
$
|
—
|
|
|
$
|
(25
|
)
|
|
$
|
33
|
|
Other comprehensive income (loss) before reclassifications
|
228
|
|
|
116
|
|
|
—
|
|
|
(22
|
)
|
|
322
|
|
|||||
(Income) loss amounts reclassified from accumulated other comprehensive income
|
(33
|
)
|
|
(54
|
)
|
|
—
|
|
|
2
|
|
|
(86
|
)
|
|||||
Total other comprehensive income (loss)
|
195
|
|
|
62
|
|
|
—
|
|
|
(20
|
)
|
|
237
|
|
|||||
Balance as of December 31, 2019
|
$
|
142
|
|
|
$
|
173
|
|
|
$
|
—
|
|
|
$
|
(45
|
)
|
|
$
|
270
|
|
(in millions)
|
Foreign Currency Translation Adjustments
|
|
Net Change in Derivative Financial Instruments
|
|
Net Change in Available-for-Sale Securities
|
|
Net Change in Defined Benefit Pensions and Other Items
|
|
Total
|
||||||||||
Balance as of December 31, 2017
|
$
|
(32
|
)
|
|
$
|
1
|
|
|
$
|
(1
|
)
|
|
$
|
(27
|
)
|
|
$
|
(59
|
)
|
Other comprehensive income (loss) before reclassifications
|
—
|
|
|
96
|
|
|
—
|
|
|
(2
|
)
|
|
94
|
|
|||||
(Income) loss amounts reclassified from accumulated other comprehensive income
|
(21
|
)
|
|
14
|
|
|
1
|
|
|
4
|
|
|
(3
|
)
|
|||||
Total other comprehensive income (loss)
|
(21
|
)
|
|
110
|
|
|
—
|
|
|
2
|
|
|
91
|
|
|||||
Balance as of December 31, 2018
|
$
|
(53
|
)
|
|
$
|
111
|
|
|
$
|
—
|
|
|
$
|
(25
|
)
|
|
$
|
33
|
|
|
Discount Rate
|
|
Expected Return on Plan Assets
|
|
Rate of Compensation Increase
|
U.K. Plan
|
0.4%
|
|
0.4%
|
|
3.4%
|
|
As of December 31, 2019
|
||||||||||||||
(in millions)
|
Accumulated Benefit Obligation (ABO)
|
|
Projected
Benefit Obligation (PBO) |
|
Fair value of Plan Assets
|
|
Unfunded/Underfunded
PBO Recognized |
||||||||
Domestic Retirement Plans
|
$
|
50
|
|
|
$
|
54
|
|
|
$
|
—
|
|
|
$
|
54
|
|
U.K. Plan
|
212
|
|
|
212
|
|
|
209
|
|
|
3
|
|
||||
Other International Retirement Plans
|
204
|
|
|
223
|
|
|
123
|
|
|
100
|
|
||||
|
$
|
466
|
|
|
$
|
488
|
|
|
$
|
332
|
|
|
$
|
156
|
|
|
As of December 31, 2018
|
||||||||||||||
(in millions)
|
Accumulated Benefit Obligation (ABO)
|
|
Projected
Benefit Obligation (PBO) |
|
Fair value of Plan Assets
|
|
Unfunded/Underfunded PBO Recognized
|
||||||||
Domestic Retirement Plans
|
$
|
47
|
|
|
$
|
50
|
|
|
$
|
—
|
|
|
$
|
50
|
|
International Retirement Plans
|
166
|
|
|
182
|
|
|
107
|
|
|
75
|
|
||||
|
$
|
213
|
|
|
$
|
232
|
|
|
$
|
107
|
|
|
$
|
125
|
|
|
Year Ended December 31,
|
||||||
(in millions)
|
2019
|
|
2018
|
||||
Beginning obligations
|
$
|
232
|
|
|
$
|
207
|
|
Acquired and established plans(1)
|
216
|
|
|
23
|
|
||
Service costs
|
15
|
|
|
14
|
|
||
Interest costs
|
5
|
|
|
4
|
|
||
Actuarial (gain) loss
|
—
|
|
|
(1
|
)
|
||
Plan amendments and assumption changes
|
11
|
|
|
(2
|
)
|
||
Benefits paid
|
(10
|
)
|
|
(10
|
)
|
||
Impact of foreign currency fluctuations
|
19
|
|
|
(3
|
)
|
||
Ending obligation
|
$
|
488
|
|
|
$
|
232
|
|
(1)
|
Plans obtained through acquisition and other increases in connection with our international operations. Refer to Note B – Acquisitions and Strategic Investments for additional information regarding the U.K. Plan we acquired with BTG on August 19, 2019.
|
|
Weighted Average Discount Rate
|
|
Weighted Average Expected Return on Plan
|
|
Weighted Average Rate of Compensation Increase(1)
|
|
|
|
|||
Domestic Retirement Plans
|
2.94%
|
|
n/a
|
|
1.50%
|
U.K. Plan
|
0.60%
|
|
0.60%
|
|
3.00%
|
Other International Retirement Plans
|
0.75%
|
|
2.05%
|
|
2.65%
|
(1)
|
Rates of compensation increase were not weighted by the relative fair value of the instruments. As such, the amount represents the median of the inputs and is not a weighted average.
|
|
Year Ended December 31,
|
||||||
(in millions)
|
2019
|
|
2018
|
||||
Beginning fair value
|
$
|
107
|
|
|
$
|
87
|
|
Acquired and established plans(1)
|
213
|
|
|
16
|
|
||
Actual return on plan assets
|
7
|
|
|
(2
|
)
|
||
Employer contributions
|
13
|
|
|
14
|
|
||
Participant contributions
|
2
|
|
|
2
|
|
||
Actuarial gain (loss)
|
(20
|
)
|
|
—
|
|
||
Benefits paid
|
(10
|
)
|
|
(10
|
)
|
||
Impact of foreign currency fluctuations
|
19
|
|
|
—
|
|
||
Ending fair value
|
$
|
332
|
|
|
$
|
107
|
|
(1)
|
Plans obtained through acquisition and other increases in connection with our international operations. Refer to Note B – Acquisitions and Strategic Investments for additional information regarding the U.K. Plan we acquired with BTG on August 19, 2019.
|
|
As of
|
||||||||||||||
|
December 31, 2019
|
||||||||||||||
(in millions)
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
Buy-in contracts
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
207
|
|
|
$
|
207
|
|
Cash
|
1
|
|
|
—
|
|
|
—
|
|
|
1
|
|
||||
Total assets
|
$
|
1
|
|
|
$
|
—
|
|
|
$
|
207
|
|
|
$
|
209
|
|
(in millions)
|
Buy-in Contracts
|
||
Balance as of December 31, 2018
|
$
|
—
|
|
Acquired plans(1)
|
213
|
|
|
Actuarial gain (loss)
|
(20
|
)
|
|
Benefits paid
|
(4
|
)
|
|
Impact of foreign currency fluctuations
|
19
|
|
|
Balance as of December 31, 2019
|
$
|
209
|
|
(1)
|
Refer to Note B – Acquisitions and Strategic Investments for additional information regarding the U.K. Plan we acquired with BTG on August 19, 2019.
|
|
Three Months Ended
|
||||||||||||||
|
Mar 31,
|
|
June 30,
|
|
Sept 30,
|
|
Dec 31,
|
||||||||
2019
|
|
|
|
|
|
|
|
||||||||
Net sales
|
$
|
2,493
|
|
|
$
|
2,631
|
|
|
$
|
2,707
|
|
|
$
|
2,905
|
|
Gross profit
|
1,763
|
|
|
1,873
|
|
|
1,930
|
|
|
2,054
|
|
||||
Operating income (loss)
|
541
|
|
|
384
|
|
|
383
|
|
|
210
|
|
||||
Net income (loss)
|
424
|
|
|
154
|
|
|
126
|
|
|
3,996
|
|
||||
Net income (loss) per common share - basic
|
$
|
0.31
|
|
|
$
|
0.11
|
|
|
$
|
0.09
|
|
|
$
|
2.87
|
|
Net income (loss) per common share - assuming dilution
|
$
|
0.30
|
|
|
$
|
0.11
|
|
|
$
|
0.09
|
|
|
$
|
2.83
|
|
|
|
|
|
|
|
|
|
||||||||
2018
|
|
|
|
|
|
|
|
||||||||
Net sales
|
$
|
2,379
|
|
|
$
|
2,490
|
|
|
$
|
2,393
|
|
|
$
|
2,561
|
|
Gross profit
|
1,707
|
|
|
1,751
|
|
|
1,720
|
|
|
1,832
|
|
||||
Operating income (loss)
|
407
|
|
|
392
|
|
|
388
|
|
|
319
|
|
||||
Net income (loss)
|
298
|
|
|
555
|
|
|
432
|
|
|
386
|
|
||||
Net income (loss) per common share - basic
|
$
|
0.22
|
|
|
$
|
0.40
|
|
|
$
|
0.31
|
|
|
$
|
0.28
|
|
Net income (loss) per common share - assuming dilution
|
$
|
0.21
|
|
|
$
|
0.40
|
|
|
$
|
0.31
|
|
|
$
|
0.27
|
|
|
|
|
EXHIBIT
NO.
|
TITLE
|
|
|
|
|
|
|
|
2.1
|
|
|
|
|
|
3.1
|
|
|
|
|
|
3.2
|
|
|
|
|
|
4.1
|
|
Specimen Certificate for shares of the Company's Common Stock (incorporated herein by reference to Exhibit 4.1, Registration No. 33-46980).
|
|
|
|
4.2*
|
|
|
|
|
|
4.3
|
|
|
|
|
|
4.4
|
|
|
|
|
|
4.5
|
|
|
|
|
|
4.6
|
|
|
|
|
|
4.7
|
|
|
|
|
4.8
|
|
|
|
|
|
4.9
|
|
|
|
|
|
4.10
|
|
|
|
|
|
4.11
|
|
|
|
|
|
4.12
|
|
|
|
|
|
4.13
|
|
|
|
|
|
4.14
|
|
|
|
|
|
4.15
|
|
|
|
|
|
4.16
|
|
|
|
|
|
4.17
|
|
|
|
|
|
4.18
|
|
|
|
|
|
4.19
|
|
|
|
|
|
4.20
|
|
|
|
|
|
4.21
|
|
|
|
|
|
4.22
|
|
|
|
|
|
4.23
|
|
|
|
|
|
4.24
|
|
|
|
|
|
10.1
|
|
|
|
|
|
10.2
|
|
|
|
|
|
10.3
|
|
|
|
|
|
10.4
|
|
|
|
|
|
10.5
|
|
|
|
|
|
10.6
|
|
|
|
|
|
10.7
|
|
|
|
|
|
10.8
|
|
Transaction Agreement, dated as of January 8, 2006, as amended, between the Company and Abbott Laboratories (incorporated herein by reference to Exhibit 10.47, Exhibit 10.48, Exhibit 10.49 and Exhibit 10.50, Annual Report on Form 10-K for year ended December 31, 2005 and Exhibit 10.1, Current Report on Form 8-K dated April 7, 2006, File No. 1-11083).
|
|
|
|
10.9
|
|
|
|
|
|
10.10
|
|
|
|
|
|
10.11
|
|
|
|
|
|
10.12
|
|
|
|
|
|
10.13
|
|
Form of Boston Scientific Corporation Excess Benefit Plan, as amended (incorporated herein by reference to Exhibit 10.1, Current Report on Form 8-K dated June 29, 2005 and Exhibit 10.4, Current Report on Form 8-K dated December 16, 2008, File No. 1-11083).#
|
|
|
|
10.14
|
|
|
|
|
|
10.15
|
|
|
|
|
|
10.16
|
|
|
|
|
|
10.17
|
|
|
|
|
|
10.18
|
|
|
|
|
|
10.19
|
|
|
|
|
|
10.20
|
|
Boston Scientific Corporation 2000 Long-Term Incentive Plan, as amended (incorporated herein by reference to Exhibit 10.20, Annual Report on Form 10-K for the year ended December 31, 1999, Exhibit 10.18, Annual Report on Form 10-K for the year ended December 31, 2001, Exhibit 10.1, Current Report on Form 8-K dated December 22, 2004, Exhibit 10.3, Current Report on Form 8-K dated May 9, 2005, and Exhibit 10.3, Current Report on Form 8-K dated December 16, 2008, File No. 1-11083).#
|
|
|
|
10.21
|
|
|
|
|
|
10.22
|
|
|
|
|
|
10.23
|
|
|
|
|
|
10.24
|
|
|
|
|
|
10.25
|
|
|
|
|
|
10.26
|
|
|
|
|
|
10.27
|
|
|
|
|
10.28
|
|
|
|
|
|
10.29
|
|
|
|
|
|
10.30
|
|
|
|
|
|
10.31
|
|
|
|
|
|
10.32
|
|
|
|
|
|
10.33
|
|
|
|
|
|
10.34
|
|
|
|
|
|
10.35
|
|
|
|
|
|
10.36
|
|
|
|
|
|
10.37
|
|
|
|
|
|
10.38
|
|
|
|
|
|
10.39
|
|
|
|
|
|
10.40
|
|
|
|
|
|
10.41
|
|
|
|
|
|
10.42
|
|
|
|
|
|
10.43
|
|
|
|
|
|
10.44
|
|
|
|
|
|
10.45
|
|
|
|
|
|
10.46
|
|
|
|
|
|
10.47
|
|
|
|
|
|
10.48
|
|
|
|
|
|
10.49
|
|
|
|
|
|
10.50
|
|
|
|
|
|
10.51
|
|
|
|
|
|
10.52
|
|
|
|
|
|
10.53
|
|
|
|
|
|
10.54
|
|
|
|
|
|
10.55
|
|
|
|
|
|
10.56
|
|
|
|
|
|
10.57
|
|
|
|
|
|
10.58
|
|
|
|
|
|
10.59
|
|
|
|
|
|
10.60
|
|
|
|
|
|
10.61
|
|
|
|
|
|
10.62
|
|
|
|
|
|
10.63
|
|
|
|
|
|
10.64
|
|
|
|
|
|
10.65
|
|
|
|
|
|
10.66
|
|
|
|
|
|
10.67
|
|
|
|
|
|
10.68
|
|
|
|
|
|
10.69
|
|
|
|
|
|
10.70
|
|
|
|
|
|
10.71
|
|
|
|
|
|
10.72
|
|
|
|
|
|
10.73
|
|
|
|
|
|
10.74
|
|
|
|
|
|
10.75
|
|
|
|
|
|
10.76
|
|
|
|
|
|
10.77
|
|
|
|
|
|
10.78
|
|
|
|
|
|
10.79
|
|
|
|
|
|
10.80
|
|
|
|
|
|
10.81
|
|
|
|
|
|
10.82
|
|
|
|
|
|
10.83
|
|
|
|
|
|
10.84
|
|
|
|
|
|
10.85
|
|
|
|
|
|
10.86
|
|
|
|
|
|
10.87
|
|
|
|
|
|
10.88
|
|
|
|
|
|
10.89
|
|
|
|
|
|
10.90
|
|
|
|
|
|
10.91
|
|
|
|
|
|
10.92
|
|
|
|
|
|
10.93
|
|
|
|
|
|
10.94
|
|
|
|
|
|
10.95
|
|
|
|
|
|
10.96
|
|
|
|
|
|
10.97
|
|
|
|
|
|
10.98
|
|
|
|
|
|
10.99
|
|
|
|
|
|
10.100
|
|
|
|
|
|
10.101
|
|
|
|
|
|
10.102
|
|
|
|
|
|
10.103
|
|
|
|
|
|
10.104
|
|
|
|
|
|
10.105
|
|
|
|
|
|
10.106
|
|
|
|
|
|
10.107
|
|
|
|
|
|
10.108
|
|
|
|
|
|
10.109
|
|
|
|
|
|
10.110
|
|
|
|
|
|
10.111
|
|
|
|
|
|
10.112
|
|
|
|
|
|
10.113
|
|
|
|
|
|
10.114
|
|
|
|
|
|
10.115
|
|
|
|
|
|
10.116
|
|
|
|
|
|
10.117
|
|
|
|
|
|
10.118
|
|
|
|
|
|
10.119
|
|
|
|
|
|
10.120
|
|
|
|
|
|
10.121
|
|
|
|
|
|
21*
|
|
|
|
|
|
23*
|
|
|
|
|
|
31.1*
|
|
|
|
|
|
31.2*
|
|
|
|
|
|
32.1*
|
|
|
|
|
|
32.2*
|
|
|
|
|
|
101.SCH*
|
|
XBRL Taxonomy Extension Schema Document.
|
|
|
|
101.CAL*
|
|
XBRL Taxonomy Extension Calculation Linkbase Document.
|
|
|
|
101.DEF*
|
|
XBRL Taxonomy Extension Definition Linkbase Document.
|
|
|
|
101.LAB*
|
|
XBRL Taxonomy Extension Label Linkbase Document.
|
|
|
|
101.PRE*
|
|
XBRL Taxonomy Extension Presentation Linkbase Document.
|
|
|
|
104
|
|
Cover Page Interactive Data File (embedded within the Inline XBRL document and contained in Exhibit 101)
|
|
|
|
|
|
|
|
|
Dated: February 25, 2020
|
|
Boston Scientific Corporation
|
||
|
|
|
|
|
|
|
By:
|
|
/s/ Daniel J. Brennan
|
|
|
|
|
|
|
|
|
|
Daniel J. Brennan
|
|
|
|
|
Executive Vice President and Chief Financial Officer
|
|
|
|
|
(duly authorized officer and principal financial officer)
|
|
|
|
|
|
|
|
|
|
|
Dated: February 25, 2020
|
|
By:
|
|
/s/ Daniel J. Brennan
|
|
|
|
|
|
|
|
|
|
Daniel J. Brennan
|
|
|
|
|
Executive Vice President and Chief Financial Officer
|
|
|
|
|
(Principal Financial Officer)
|
|
|
|
|
|
|
|
|
|
|
Dated: February 25, 2020
|
|
By:
|
|
/s/ Michael F. Mahoney
|
|
|
|
|
|
|
|
|
|
Michael F. Mahoney
|
|
|
|
|
Director, Chairman of the Board,
President and Chief Executive Officer
|
|
|
|
|
(Principal Executive Officer)
|
|
|
|
|
|
|
|
|
|
|
Dated: February 25, 2020
|
|
By:
|
|
/s/ Jonathan R. Monson
|
|
|
|
|
|
|
|
|
|
Jonathan R. Monson
|
|
|
|
|
Vice President, Global Controller and Chief Accounting Officer
|
|
|
|
|
(Principal Accounting Officer)
|
|
|
|
|
|
|
|
|
|
|
Dated: February 25, 2020
|
|
By:
|
|
/s/ Nelda J. Connors
|
|
|
|
|
|
|
|
|
|
Nelda J. Connors
|
|
|
|
|
Director
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dated: February 25, 2020
|
|
By:
|
|
/s/ Charles J. Dockendorff
|
|
|
|
|
|
|
|
|
|
Charles J. Dockendorff
|
|
|
|
|
Director
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dated: February 25, 2020
|
|
By:
|
|
/s/ Yoshiaki Fujimori
|
|
|
|
|
|
|
|
|
|
Yoshiaki Fujimori
|
|
|
|
|
Director
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dated: February 25, 2020
|
|
By:
|
|
/s/ Donna A. James
|
|
|
|
|
|
|
|
|
|
Donna A. James
|
|
|
|
|
Director
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dated: February 25, 2020
|
|
By:
|
|
/s/ Edward J. Ludwig
|
|
|
|
|
|
|
|
|
|
Edward J. Ludwig
|
|
|
|
|
Director
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dated: February 25, 2020
|
|
By:
|
|
/s/ Stephen P. MacMillan
|
|
|
|
|
|
|
|
|
|
Stephen P. MacMillan
|
|
|
|
|
Director
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dated: February 25, 2020
|
|
By:
|
|
/s/ David J. Roux
|
|
|
|
|
|
|
|
|
|
David J. Roux
|
|
|
|
|
Director
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dated: February 25, 2020
|
|
By:
|
|
/s/ John E. Sununu
|
|
|
|
|
|
|
|
|
|
John E. Sununu
|
|
|
|
|
Director
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dated: February 25, 2020
|
|
By:
|
|
/s/ Ellen M. Zane
|
|
|
|
|
|
|
|
|
|
Ellen M. Zane
|
|
|
|
|
Director
|
|
|
|
|
|
Description
|
|
Balance at
Beginning of Year |
|
Charges to
Costs and
Expenses (a)
|
|
Deductions to
Allowances for Uncollectible
Accounts (b)
|
|
Charges to
(Deductions from) Other Accounts (c) |
|
Balance at
End of Year
|
|||||||
Year Ended December 31, 2019:
|
|
|
|
|
|
|
|
|
|
|
|||||||
Allowances for uncollectible accounts (d)
|
|
$
|
68
|
|
|
23
|
|
|
(17
|
)
|
|
—
|
|
|
$
|
74
|
|
Year Ended December 31, 2018:
|
|
|
|
|
|
|
|
|
|
|
|||||||
Allowances for uncollectible accounts (d)
|
|
$
|
98
|
|
|
19
|
|
|
(19
|
)
|
|
(30
|
)
|
|
$
|
68
|
|
Year Ended December 31, 2017:
|
|
|
|
|
|
|
|
|
|
|
|||||||
Allowances for uncollectible accounts and sales returns and allowances
|
|
$
|
119
|
|
|
14
|
|
|
(18
|
)
|
|
(17
|
)
|
|
$
|
98
|
|
•
|
100% of the principal amount of the notes being redeemed, or
|
•
|
as determined by a Quotation Agent (as defined below), the sum of the present values of the remaining scheduled payments of principal and interest thereon to the applicable Par Call Date (not including any portion of such payments of interest accrued to the date of redemption) discounted to the redemption date on an annual basis (ACTUAL/ACTUAL(ICMA)) at the Comparable Government Bond Rate (defined below), plus 20 basis points for the notes,
|
(1)
|
Registration Statement (Form S-3 Nos. 333-223095, 333-76346, 333-61994, and 333-64991) of Boston Scientific Corporation,
|
(2)
|
Registration Statement (Form S-4 Nos. 333-22581 and 333-131608) of Boston Scientific Corporation, and
|
(3)
|
Registration Statement (Form S-8 Nos. 333-25033, 333-25037, 333-36636, 333-61056, 333-61060, 333-76380, 333-98755, 333-111047, 333-131608, 333-133569, 333-134932, 333-151280, 333-174620, 333-174622, 333-188905, and 333-196672) pertaining to the Employees' Savings Plan of Boston Scientific Corporation;
|
1
|
I have reviewed this Annual Report on Form 10-K 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: February 25, 2020
|
|
/s/ Michael F. Mahoney
|
|
||
|
|
Michael F. Mahoney
|
|
||
|
|
Chief Executive Officer
|
|
1
|
I have reviewed this Annual Report on Form 10-K 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: February 25, 2020
|
|
/s/ Daniel J. Brennan
|
|
||
|
|
Daniel J. Brennan
|
|
||
|
|
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
|
|
|
Chief Executive Officer
|
|
|
|
|
|
February 25, 2020
|
|
|
(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/ Daniel J. Brennan
|
|
|
Daniel J. Brennan
|
|
|
Executive Vice President and Chief Financial Officer
|
|
|
|
|
|
February 25, 2020
|
|