NATICK, Mass., Feb. 7 /PRNewswire-FirstCall/ -- Boston Scientific Corporation today announced financial results for the year and fourth quarter ended December 31, 2005.
2005 HIGHLIGHTS * Net sales of $6.283 billion, as compared to $5.624 billion in 2004, an increase of 12 percent. * Worldwide coronary stent system sales of $2.69 billion, as compared to $2.35 billion in 2004, an increase of 14 percent. * International launch of TAXUS(R) Liberte(TM), our next-generation paclitaxel-eluting stent system. * Worldwide Endosurgery Group sales of $1.228 billion, compared to $1.088 billion in 2004, an increase of 13 percent. * Worldwide Neuromodulation Group sales of $148 million in its first full year with Boston Scientific. * Net income, excluding net special charges, of $1.522 billion, or $1.82 per share, as compared to $1.394 billion, or $1.63 per share for 2004, an increase per share of 12 percent. Reported net income, including net special charges, of $628 million, or $0.75 per share, as compared to $1.062 billion, or $1.24 per share for 2004. YEAR-END 2005
Net sales for 2005 were $6.283 billion as compared to $5.624 billion in 2004, an increase of 12 percent. Worldwide coronary stent system sales for 2005 were $2.69 billion as compared to $2.35 billion in 2004, an increase of 14 percent. Worldwide sales of TAXUS(R) paclitaxel-eluting coronary stent systems for 2005 were $2.56 billion as compared to $2.14 billion in 2004. U.S. sales of TAXUS stent systems for 2005 were $1.76 billion as compared to $1.57 billion in 2004.
Reported net income for 2005, including net special charges, was $628 million, or $0.75 per diluted share, as compared to net income of $1.062 billion, or $1.24 per diluted share, for 2004. Reported results for 2005 included charges (after-tax) of $894 million, or $1.07 per share, which primarily related to: a litigation settlement with Medinol; purchased research and development; expenses related to certain retirement benefits; and costs that resulted from certain business optimization initiatives. Reported results for 2004 included charges (after-tax) of $332 million, or $0.39 per share, which primarily related to: costs for a civil settlement; a one-time enhancement to the 401(k) Plan; purchased research and development; a non-cash stock option modification charge; and a charge related to taxes on the approximately $1 billion that the Company repatriated in 2005 under the American Jobs Creation Act. Net income for 2005, excluding net special charges, was $1.522 billion, or $1.82 per share, as compared to $1.394 billion, or $1.63 per share, for 2004, an increase per share of 12 percent.
"We are very pleased that the Company experienced double-digit growth on a global basis during 2005," said Jim Tobin, President and Chief Executive Officer of Boston Scientific. "In our first full year of TAXUS sales, we continued to be the worldwide leader in drug-eluting stents in the markets we serve. During the second half of the year we launched our next-generation paclitaxel-eluting stent system, TAXUS Liberte, and saw our drug-eluting stent market share settle into a sustainable leadership position. I would like to congratulate the entire Boston Scientific team for another year of considerable achievement."
FOURTH QUARTER 2005
Net sales for the fourth quarter of 2005 were $1.54 billion as compared to $1.60 billion for the fourth quarter of 2004. Worldwide coronary stent system sales for the fourth quarter were $640 million as compared to $730 million for the fourth quarter of 2004. Worldwide sales of TAXUS stent systems were $606 million for the fourth quarter of 2005 as compared to $691 million for the fourth quarter of 2004. U.S. sales of TAXUS coronary stent systems were $398 million for the fourth quarter of 2005 as compared to $503 million for the fourth quarter of 2004.
Net income for the fourth quarter of 2005, including net special charges, was $334 million, or $0.40 per diluted share, as compared to net income of $297 million, or $0.35 per diluted share, for the fourth quarter of 2004. Reported results for the fourth quarter of 2005 included charges (after-tax) of $6 million, or $0.01 per share, which primarily consisted of employee- related costs that resulted from certain business optimization initiatives that commenced in the third quarter of 2005. Reported results for the fourth quarter of 2004 included charges (after-tax) of $122 million, or $0.14 per share, which primarily consisted of a $60 million non-cash charge resulting from certain stock option modifications and a $61 million charge related to taxes on the approximately $1 billion that the Company repatriated in 2005 under the American Jobs Creation Act. Net income for the fourth quarter of 2005, excluding net special charges, was $340 million, or $0.41 per share, as compared to $419 million, or $0.49 per share, for the fourth quarter of 2004.
The company plans to announce financial guidance for 2006 after the completion of its planned merger with Guidant.
Boston Scientific officials will be discussing these and other issues with analysts on a conference call at 9:00 a.m. (ET) Tuesday, February 7, 2006. The Company will webcast the call to all interested parties through its website: http://www.bostonscientific.com. Please see the website for details on how to access the webcast. The webcast will be available for one year on the Boston Scientific website.
Boston Scientific is a worldwide developer, manufacturer and marketer of medical devices whose products are used in a broad range of interventional medical specialties. For more information, please visit: http://www.bostonscientific.com.
The Company discloses non-GAAP or pro forma measures that exclude certain charges. These supplemental measures exclude the impact of certain charges such as litigation settlement costs and purchased in-process research and development that are highly variable and difficult to predict. Management uses these supplemental measures to evaluate performance period over period, to analyze the underlying trends in the Company's business and to establish operational goals and forecasts that are used in allocating resources. Since management finds these measures to be useful, the Company believes that its investors benefit from seeing the Company's results through the eyes of management in addition to seeing its GAAP results.
The Company recognizes that items such as litigation settlements can have a material impact on the Company's cash flows and net income. Although the Company believes it is useful for investors to see its core performance free of certain charges, investors should understand that the excluded items are actual expenses that impact the cash available to the Company for other uses. To gain a complete picture of all effects on the Company's profit and loss from any and all events, management does (and investors should) rely upon the GAAP income statement. The non-GAAP numbers focus instead upon the core business of the company, which is only a subset, albeit a critical one, of the Company's performance.
Readers are reminded that non-GAAP numbers are merely a supplement to, and not a replacement for, GAAP financial measures. They should be read in conjunction with the GAAP financial measures. It should be noted as well that the Company's non-GAAP information may be different from the non-GAAP information provided by other companies.
Forward.Looking Statements
This press release contains "forward-looking statements," including, among other statements, statements regarding the proposed business combination between Boston Scientific Corporation and Guidant Corporation, and the anticipated consequences and benefits of such transaction. Statements made in the future tense, and words such as "anticipate", "expect", "project", "believe", "plan", "estimate", "intend", "will", "may" and similar expressions are intended to identify forward-looking statements. These statements are based on current expectations but are subject to certain risks and uncertainties, many of which are difficult to predict and are beyond the control of Boston Scientific or Guidant. Relevant risks and uncertainties include those referenced in Boston Scientific's and Guidant's filings with the Securities and Exchange Commission ("SEC") (which can be obtained as described in "Additional Information" below), and include: general industry conditions and competition; economic conditions, such as interest rate and currency exchange rate fluctuations; technological advances and patents attained by competitors; challenges inherent in new product development, including obtaining regulatory approvals; domestic and foreign health care reforms and governmental laws and regulations; and trends toward health care cost containment. Risks and uncertainties relating to the proposed transaction include: required regulatory approvals will not be obtained in a timely manner, if at all; the proposed transaction will not be consummated; the anticipated benefits of the proposed transaction will not be realized; and the integration of Guidant's operations with Boston Scientific will be materially delayed or will be more costly or difficult than expected. These risks and uncertainties could cause actual results to differ materially from those expressed in or implied by the forward-looking statements, and therefore should be carefully considered. Neither Boston Scientific nor Guidant assumes any obligation to update any forward-looking statements as a result of new information or future events or developments.
Additional Information
Boston Scientific and Guidant have filed a preliminary prospectus/proxy statement with the SEC in connection with the proposed transaction. The material contained herein is not a substitute for the preliminary prospectus/proxy statement or any other documents that Boston Scientific and Guidant have filed or will file with the SEC. Investors and security holders are urged to read the preliminary prospectus/proxy statement and any other relevant documents filed or to be filed by Boston Scientific or Guidant, including the definitive prospectus/proxy statement when available, because they contain or will contain important information about the proposed transaction. The preliminary prospectus/proxy statement is, and other documents filed or to be filed by Boston Scientific and Guidant with the SEC are or will be, available free of charge at the SEC's website (http://www.sec.gov) or from Boston Scientific by directing a request to Boston Scientific Corporation, One Boston Scientific Place, Natick, Massachusetts 01760-1537, Attention: Milan Kofol, Investor Relations, or from Guidant by directing a request to Guidant Corporation, 111 Monument Circle, 29th Floor, Indianapolis, Indiana 46204, Attention: Investor Relations.
Neither Boston Scientific nor Guidant is currently engaged in a solicitation of proxies from the security holders of Boston Scientific or Guidant in connection with Boston Scientific's proposed acquisition of Guidant. If a proxy solicitation commences, Boston Scientific, Guidant and their respective directors, executive officers and other employees may be deemed to be participants in such solicitation. Information about Boston Scientific's directors and executive officers is available in Boston Scientific's proxy statement, dated April 4, 2005, for its 2005 annual meeting of stockholders, and information about Guidant's directors and executive officers is available in Guidant's most recent filing on Form 10-K. Additional information about the interests of potential participants is included in the preliminary prospectus/proxy statement referred to above.
CONTACT: Milan Kofol 508-650-8569 Investor Relations Boston Scientific Corporation Paul Donovan 508-650-8541 Media Relations Boston Scientific Corporation BOSTON SCIENTIFIC CORPORATION GAAP RESULTS OF OPERATIONS (FULL YEAR) (Unaudited) Year Ended December 31, In millions, except per share data 2005 2004 Net sales $6,283 $5,624 Cost of products sold 1,386 1,292 Gross profit 4,897 4,332 Selling, general and administrative expenses 1,814 1,742 Research and development expenses 680 569 Royalty expense 227 195 Amortization expense 152 112 Litigation-related charges 780 75 Purchased research and development 276 65 3,929 2,758 Operating income 968 1,574 Other income/(expense): Interest expense (90) (64) Other, net 13 (16) Income before income taxes 891 1,494 Income taxes 263 432 Net income $628 $1,062 Net income per common share - assuming dilution $0.75 $1.24 Weighted average shares outstanding - assuming dilution 837.6 857.7 NON-GAAP NET INCOME AND NET INCOME PER COMMON SHARE RECONCILIATION (Unaudited) Year Ended Year Ended December 31, 2005 December 31, 2004 Impact Impact per per Net diluted Net diluted In millions, except per share data income share income share GAAP results $ 628 $ 0.75 $1,062 $1.24 Non-GAAP adjustments (pre-tax): Costs of certain business optimization initiatives (1) 39 0.05 Enhancement of certain retirement benefits (2) 17 0.02 110 0.13 Certain stock option modifications (2) 90 0.10 Purchased research and development 276 0.33 65 0.08 Litigation-related charges 780 0.93 75 0.09 Charges/(credits) related to the American Jobs Creation Act (3) (6) (0.01) 61 0.07 Tax impact of non-GAAP adjustments (212) (0.25) (69) (0.08) Adjusted results $1,522 $ 1.82 $1,394 $1.63 (1) Recorded $21 million to selling, general and administrative expenses, $10 million to amortization expense, $7 million to research and development expenses, and $1 million to cost of products sold (2) Recorded to selling, general and administrative expenses (3) Recorded to income taxes The Company provides adjusted net income and adjusted net income per share amounts in order to provide meaningful supplemental information regarding its operational performance and its prospects for the future. These supplemental measures exclude the impact of certain charges such as litigation settlement costs and purchased in-process research and development that are highly variable and difficult to predict. Management uses these supplemental measures to evaluate performance period over period, to analyze the underlying trends in the Company's business and to establish operational goals and forecasts that are used in allocating resources. Since management finds these measures to be useful, the Company believes that its investors benefit from seeing the Company's results ''through the eyes'' of management in addition to seeing its GAAP results. The Company recognizes that items such as litigation settlements can have a material impact on the Company's cash flows and net income. Although the Company believes it is useful for investors to see core performance free of special items, investors should understand that the excluded items are actual expenses that may impact the cash available to the Company for other uses. To gain a complete picture of all effects on the Company's net income and net income per share from any and all events, management does (and investors should) rely upon the GAAP income statement. The non-GAAP numbers focus instead upon the core business of the company, which is only a subset, albeit a critical one, of the Company's performance. Readers are therefore reminded that non-GAAP numbers are merely a supplement to, and not a replacement for, GAAP financial measures. They should be read in conjunction with the GAAP financial measures. It should be noted as well that the Company's non-GAAP information may be different from the non-GAAP information provided by other companies. BOSTON SCIENTIFIC CORPORATION GAAP RESULTS OF OPERATIONS (FOURTH QUARTER) (Unaudited) Three Months Ended December 31, In millions, except per share data 2005 2004 Net sales $1,540 $1,600 Cost of products sold 342 328 Gross profit 1,198 1,272 Selling, general and administrative expenses 468 515 Research and development expenses 174 158 Royalty expense 53 64 Amortization expense 38 30 Purchased research and development 1 733 768 Operating income 465 504 Other income/(expense): Interest expense (32) (20) Other, net 5 (25) Income before income taxes 438 459 Income taxes 104 162 Net income $334 $297 Net income per common share - assuming dilution $0.40 $0.35 Weighted average shares outstanding - assuming dilution 829.6 854.6 NON-GAAP NET INCOME AND NET INCOME PER COMMON SHARE RECONCILIATION (Unaudited) Three Months Three Months Ended Ended December 31, 2005 December 31, 2004 Impact Impact per per Net diluted Net diluted In millions, except per share data income share income share GAAP results $334 $0.40 $297 $0.35 Non-GAAP adjustments (pre-tax): Costs of certain business optimization initiatives (4) 11 0.01 Certain stock option modifications (5) 90 0.11 Purchased research and development 1 Charges related to the American Jobs Creation Act (6) 61 0.07 Tax impact of non-GAAP adjustments (5) (30) (0.04) Adjusted results $340 $0.41 $419 $0.49 (4) Recorded $10 million to selling, general and administrative expenses, and $1 million to cost of products sold (5) Recorded to selling, general and administrative expenses (6) Recorded to income taxes BOSTON SCIENTIFIC CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) December 31, December 31, In millions 2005 2004 Assets Current assets: Cash, cash equivalents and short-term investments $848 $1,640 Trade accounts receivable, net 932 900 Inventories 418 360 Other current assets 433 389 Total current assets 2,631 3,289 Property, plant and equipment, net 1,011 870 Intangible assets, net 3,735 3,340 Investments 594 529 Other assets 225 142 $8,196 $8,170 Liabilities and Stockholders' Equity Current liabilities: Borrowings due within one year $156 $1,228 Accounts payable and accrued expenses 1,229 1,010 Other current liabilities 94 367 Total current liabilities 1,479 2,605 Long-term debt 1,864 1,139 Other long-term liabilities 571 401 Stockholders' equity 4,282 4,025 $8,196 $8,170 BOSTON SCIENTIFIC CORPORATION WORLDWIDE SALES REGIONAL SUMMARY (Unaudited) Year Ended December 31, Change As Reported Constant In millions Currency Currency 2005 2004 Basis Basis DOMESTIC $3,852 $3,502 10% 10% EUROPE 1,161 994 17% 17% JAPAN 579 613 (6%) (4%) INTER-CONTINENTAL 691 515 34% 28% INTERNATIONAL 2,431 2,122 15% 13% WORLDWIDE $6,283 $5,624 12% 11% Three Months Ended December 31, Change As Reported Constant In millions Currency Currency 2005 2004 Basis Basis DOMESTIC $928 $1,003 (7%) (7%) EUROPE 290 287 1% 10% JAPAN 139 157 (11%) (2%) INTER-CONTINENTAL 183 153 20% 16% INTERNATIONAL 612 597 3% 8% WORLDWIDE $1,540 $1,600 (4%) (2%) BOSTON SCIENTIFIC CORPORATION WORLDWIDE SALES DIVISIONAL SUMMARY (Unaudited) Year Ended December 31, Change As Reported Constant In millions Currency Currency 2005 2004 Basis Basis Cardiovascular $4,498 $4,107 10% 9% Electrophysiology 132 130 2% 2% Neurovascular 277 253 9% 9% CARDIOVASCULAR 4,907 4,490 9% 9% Oncology 207 186 11% 11% Endoscopy 697 641 9% 9% Urology 324 261 24% 24% ENDOSURGERY 1,228 1,088 13% 13% Neuromodulation 148 46 222% 222% WORLDWIDE $6,283 $5,624 12% 11% Three Months Ended December 31, Change As Reported Constant In millions Currency Currency 2005 2004 Basis Basis Cardiovascular $1,070 $1,185 (10%) (8%) Electrophysiology 35 35 0% 5% Neurovascular 71 67 6% 9% CARDIOVASCULAR 1,176 1,287 (9%) (7%) Oncology 53 49 8% 11% Endoscopy 178 167 7% 10% Urology 86 72 19% 21% ENDOSURGERY 317 288 10% 13% Neuromodulation 47 25 88% 90% WORLDWIDE $1,540 $1,600 (4%) (2%) BOSTON SCIENTIFIC CORPORATION DOMESTIC SALES DIVISIONAL SUMMARY (Unaudited) Year Ended December 31, Change As Reported In millions Currency 2005 2004 Basis Cardiovascular $2,791 $2,619 7% Electrophysiology 95 90 6% Neurovascular 96 81 19% CARDIOVASCULAR 2,982 2,790 7% Oncology 127 112 13% Endoscopy 378 361 5% Urology 253 202 25% ENDOSURGERY 758 675 12% Neuromodulation 112 37 203% DOMESTIC $3,852 $3,502 10% Three Months Ended December 31, Change As Reported In millions Currency 2005 2004 Basis Cardiovascular $640 $762 (16%) Electrophysiology 27 24 13% Neurovascular 26 21 24% CARDIOVASCULAR 693 807 (14%) Oncology 33 30 10% Endoscopy 98 91 8% Urology 67 55 22% ENDOSURGERY 198 176 13% Neuromodulation 37 20 85% DOMESTIC $928 $1,003 (7%)
Boston Scientific Corporation
CONTACT: Milan Kofol, Investor Relations, +1-508-650-8569, or PaulDonovan, Media Relations, +1-508-650-8541, both of Boston ScientificCorporation
Web site: http://www.bostonscientific.com/
