Boston Scientific Corp. (BSX) filed Quarterly Report for the period ended 2009-09-30.
Boston Scientific Corporation is a worldwide developer manufacturer and marketer of minimally invasive medical devices. The company's products are used in a broad range of interventional medical specialties including cardiology electrophysiology gastroenterology neuro-endovascular therapy pulmonary medicine radiology urology and vascular surgery. Boston Scientific Corp. has a market cap of $12.14 billion; its shares were traded at around $8.05 with a P/E ratio of 14.1 and P/S ratio of 1.5. Boston Scientific Corp. had an annual average earning growth of 11.6% over the past 10 years. GuruFocus rated Boston Scientific Corp. the business predictability rank of 3.5-star.
Highlight of Business Operations:
We have evaluated events occurring after the date of our accompanying unaudited condensed consolidated balance sheets through the time of the filing of this Quarterly Report on Form 10-Q on November 6, 2009. On November 3, 2009, we reached an agreement in principle with the U.S. Department of Justice to pay $296 million in order to resolve the U.S. Government investigation of Guidant Corporation related to product advisories issued in 2005, discussed further in Note L — Commitments and Contingencies. This subsequent event provided additional evidence about conditions that existed as of the date of the balance sheet in our accompanying unaudited condensed consolidated financial statements, including the estimates inherent in the process of preparing financial statements and is, therefore, a ‘recognized subsequent event,’ as defined by Financial Accounting Standards Board (FASB) Accounting Standards CodificationTM (ASC) Topic 855, Subsequent Events. Accordingly, we have recorded a loss of $294 million in the third quarter of 2009 in our accompanying unaudited condensed consolidated statements of operations, and increased our associated litigation-related reserves in our accompanying unaudited condensed consolidated balance sheets by $294 million as of September 30, 2009. Those items requiring disclosure (unrecognized subsequent events) in the financial statements have been disclosed accordingly. Refer to Note L — Commitments and Contingencies for more information.
All of our designated currency hedge contracts outstanding as of September 30, 2009 and December 31, 2008 were cash flow hedges under Topic 815 intended to protect the U.S. dollar value of our forecasted foreign currency denominated transactions. We record the effective portion of any change in the fair value of foreign currency cash flow hedges in other comprehensive income (OCI) until the related third-party transaction occurs. Once the related third-party transaction occurs, we reclassify the effective portion of any related gain or loss on the foreign currency cash flow hedge to earnings. In the event the hedged forecasted transaction does not occur, or it becomes probable that it will not occur, we would reclassify the amount of any gain or loss on the related cash flow hedge to earnings at that time. We had currency derivative instruments designated as cash flow hedges outstanding in the contract amount of $2.762 billion as of September 30, 2009 and $2.587 billion as of December 31, 2008.
We recognized in earnings net losses of less than $1 million on our cash flow hedges during the third quarter of 2009 and net gains of $23 million for the first nine months of 2009. All currency cash flow hedges outstanding as of September 30, 2009 mature within 36 months. As of September 30, 2009, $87 million of net losses, net of tax, were recorded in accumulated other comprehensive income (AOCI) to recognize the effective portion of the fair value of any currency derivative instruments that are, or previously were, designated as foreign currency cash flow hedges, as compared to net losses of $6 million as of December 31, 2008. As of September 30, 2009, $52 million of net losses, net of tax, may be reclassified to earnings within the next twelve months.
We use currency forward contracts as a part of our strategy to manage exposure related to foreign currency denominated monetary assets and liabilities and certain short-term earnings and cash flow exposures related to our Japanese operations that do not qualify for hedge accounting under Topic 815. These currency forward contracts are not designated as cash flow, fair value or net investment hedges under Topic 815; are marked-to-market with changes in fair value recorded to earnings; and are entered into for periods consistent with currency transaction exposures, generally one to six months. We had currency derivative instruments not designated as hedges under Topic 815 outstanding in the contract amount of $2.040 billion as of September 30, 2009 and $1.809 billion as of December 31, 2008.
We had floating-to-fixed interest rate swap contracts indexed to three-month LIBOR outstanding in the notional amount of $4.000 billion as of September 30, 2009 and $4.900 billion as of December 31, 2008. The objective of these derivative instruments is to hedge against potential variability in our future interest payments on our expected LIBOR-indexed floating-rate loans as a result of changes in LIBOR. Three-month LIBOR approximated 0.29 percent as of September 30, 2009 and 1.43 percent as of December 31, 2008. These interest rate swap contracts fix the interest rate on $2.100 billion of our expected LIBOR-indexed floati
BSX is in the portfolios of John Paulson of Paulson & Co., Charles Brandes of Brandes Investment, Robert Olstein of Olstein Financial Alert Fund, PRIMECAP Management, Dodge & Cox, Richard Aster Jr of Meridian Fund, Arnold Schneider of Schneider Capital Management, Richard Pzena of Pzena Investment Management LLC, George Soros of Soros Fund Management LLC, Jean-Marie Eveillard of Arnhold & S. Bleichroeder Advisers, LLC.
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