What led to the significant drop in net income/loss for the nine months ended September 30, 2001?

The significant decline from net income to a net loss for the nine months ended September 30, 2001, was primarily due to substantial charges. These include $277 million for purchased research and development related to acquisitions, a $49 million provision for excess NIR(R) coronary stent inventory due to declining demand, and $46 million in costs associated with the Company's global operations plan. These one-time and strategic expenses significantly impacted the company's profitability for the period.

How is the company addressing the decline in its coronary stent business?

Boston Scientific is actively addressing the decline in its coronary stent business by launching new products and diversifying its portfolio. The company launched its EXPRESS(TM) coronary stent in international markets and plans a U.S. launch in the second half of 2002. Additionally, they are developing a paclitaxel-eluting stent, expected for European launch in 2002 and U.S. launch in 2003. The company also made strategic acquisitions in electrophysiology and other areas to reduce reliance on the stent market and strengthen its overall offering.

What is the company's liquidity position and outlook?

The company's liquidity position appears stable. Cash and cash equivalents stood at $99 million at the end of Q3 2001. Boston Scientific also secured approximately $1.6 billion in revolving credit facilities, including a newly refinanced $600 million facility. Management believes its cash on hand, operating cash flows, and borrowing capacity are sufficient to meet its projected operating needs, capital expenditures, integration costs for acquisitions, and potential litigation-related payments.

Are there any significant legal proceedings that could materially impact the company?

The company is involved in numerous patent infringement lawsuits and other legal proceedings. A significant ongoing matter is the patent infringement suit with Johnson & Johnson (Cordis), where a jury found infringement of one claim related to the NIR(R) coronary stent, potentially leading to damages of approximately $324 million plus interest. While the company believes it has meritorious defenses and adequate insurance, adverse outcomes in litigation, particularly patent infringement cases, could have a material adverse effect on the company's financial condition and operations.

BSX 10-Q Quarterly Report Q3 FY2001 — Revenue, Net Income, EPS

Summary

Boston Scientific Corporation (BSX) reported its financial results for the quarter and nine months ended September 30, 2001. The company experienced a 3% increase in net sales for the third quarter to $670 million, but a 1% decrease for the nine-month period to $1,996 million, primarily due to adverse foreign currency fluctuations and declining sales in the coronary stent market. While the third quarter saw a net income of $58 million ($0.14 per diluted share), a decrease from the prior year's $85 million ($0.21 per diluted share), the nine-month period resulted in a net loss of $119 million ($0.30 per diluted share), a significant decline from the prior year's net income of $313 million ($0.76 per diluted share). This performance was impacted by substantial charges including purchased research and development costs from recent acquisitions and provisions for excess inventory, particularly for the NIR(R) coronary stent. The company is actively working to mitigate these challenges through a global operations plan and strategic acquisitions to diversify its product offerings and strengthen its market position.

Key Highlights

1Net sales increased by 3% to $670 million in Q3 2001, but declined 1% to $1,996 million year-to-date, impacted by foreign currency and reduced coronary stent sales.
2Third quarter net income was $58 million ($0.14/share), down from $85 million ($0.21/share) in Q3 2000.
3Nine-month net loss was $119 million ($0.30/share), a significant decrease from a $313 million ($0.76/share) profit in the prior year.
4Company incurred significant expenses, including $277 million for purchased research and development from acquisitions and $49 million for excess NIR(R) stent inventory provisions.
5Coronary stent revenue declined significantly, with worldwide sales at $79 million in Q3 2001 vs. $106 million in Q3 2000.
6Boston Scientific completed multiple strategic acquisitions in the first half of 2001 to broaden its product portfolio, notably in electrophysiology.
7The company refinanced its credit facilities, securing $1.6 billion in revolving credit, and maintained adequate liquidity to fund operations and strategic initiatives.

BOSTON SCIENTIFIC CORP Quarterly Report for Q3 Ended Sep 30, 2001

Summary

Key Highlights

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