8-KEarnings & ResultsFinancial EventsOther Events+1

BOSTON SCIENTIFIC CORP 8-K Report, Financial Results (Oct 8, 2008)

Filed October 8, 2008For Securities:BSX

Summary

Boston Scientific Corporation (BSX) has filed an 8-K report detailing several significant financial events impacting its third quarter 2008 results. The company anticipates a substantial pre-tax operating gain of $250 million ($0.12 per share) from a milestone payment received from Abbott Laboratories related to the Guidant acquisition. However, this positive development is offset by a significant pre-tax charge of $334 million ($0.18 per share) resulting from a federal court ruling in favor of Johnson & Johnson in a patent infringement case concerning the NIR stent product. This ruling includes $406.7 million in damages and $296.1 million in pre-judgment interest.

Key Highlights

  • 1Anticipates a $250 million pre-tax operating gain from a milestone payment by Abbott Laboratories.
  • 2Expects to record a $334 million pre-tax charge due to a Johnson & Johnson patent infringement ruling.
  • 3The Johnson & Johnson ruling includes approximately $703 million in damages and pre-judgment interest.
  • 4Will record an additional pre-tax gain of $15 million from investment portfolio liquidation.
  • 5Determined a non-cash impairment charge on certain intangible assets, estimated between $140 million to $180 million pre-tax.
  • 6The total net impact of these events on earnings per share will depend on the final accounting and tax treatment.

Frequently Asked Questions

The primary positive financial news is the receipt of a $250 million milestone payment from Abbott Laboratories, related to Abbott's acquisition of Guidant's vascular intervention and endovascular solutions businesses.

The most significant negative event is a federal court ruling against Boston Scientific in a patent infringement case brought by Johnson & Johnson. This resulted in an award of approximately $703 million in damages and pre-judgment interest, leading to an expected pre-tax charge of $334 million for the company.

Boston Scientific expects to record a pre-tax operating charge for intangible asset impairment between $140 million and $180 million in the third quarter of 2008.

The milestone payment is expected to add approximately $0.12 per share, while the Johnson & Johnson patent ruling is expected to reduce earnings by approximately $0.18 per share. The impairment charge is estimated to reduce earnings by approximately $0.08 to $0.10 per share. The net impact will depend on the final figures and the timing of their recording.