Change

Three Months Ended

As Reported

Constant

December 31,

Currency

Currency

in millions

2012

2011

Basis

Basis

Interventional Cardiology

$                 534

$                 594

(10)%

(9)%

Cardiac Rhythm Management

457

482

(5)%

(4)%

Endoscopy

329

304

8 %

10 %

Peripheral Interventions

199

184

8 %

9 %

Urology/Women's Health

130

127

2 %

3 %

Neuromodulation

104

91

14 %

14 %

Electrophysiology

38

36

4 %

5 %

Subtotal Core Businesses

1,791

1,818

(1)%

(1)%

Divested Businesses

30

30

N/A

N/A

Worldwide

$            1,821

$            1,848

(1)%

-   %

Change

Year Ended

As Reported

Constant

December 31,

Currency

Currency

in millions

2012

2011

Basis

Basis

Interventional Cardiology

$

2,179

$

2,495

(13)

%

(11)

%

Cardiac Rhythm Management

1,908

2,087

(9)

%

(7)

%

Endoscopy

1,252

1,187

5

%

7

%

Peripheral Interventions

774

731

6

%

8

%

Urology/Women's Health

500

498

-

%

1

%

Neuromodulation

367

336

9

%

9

%

Electrophysiology

147

147

-

%

1

%

Subtotal Core Businesses

7,127

7,481

(5)

%

(3)

%

Divested Businesses

122

141

N/A

N/A

Worldwide

$

7,249

$

7,622

(5)

%

(3)

%

BOSTON SCIENTIFIC CORPORATION

CONDENSED CONSOLIDATED GAAP RESULTS OF OPERATIONS

(Unaudited)

Three Months Ended

Year Ended

December 31,

December 31,

in millions, except per share data

2012

2011

2012

2011

Net sales

$

1,821

$

1,848

$

7,249

$

7,622

Cost of products sold

583

660

2,349

2,659

Gross profit

1,238

1,188

4,900

4,963

Operating expenses:

Selling, general and administrative expenses

639

621

2,535

2,487

Research and development expenses

239

230

886

895

Royalty expense

28

33

153

172

Amortization expense

101

96

395

421

Goodwill impairment charges

4,350

697

Intangible asset impairment charges

142

21

Contingent consideration expense (benefit)

4

(12)

(6)

7

Restructuring charges

43

12

136

89

Litigation-related charges

73

48

192

48

Gain on divestiture

(4)

(10)

(15)

(778)

1,123

1,018

8,768

4,059

Operating (loss) income

115

170

(3,868)

904

Other (expense) income:

Interest expense

(64)

(72)

(261)

(281)

Other, net

(1)

2

22

19

(Loss) income before income taxes

50

100

(4,107)

642

Income tax (benefit) expense

(10)

(7)

(39)

201

Net (loss) income

$

60

$

107

$

(4,068)

$

441

Net (loss) income per common share - basic

$

0.04

$

0.07

$

(2.89)

$

0.29

Net (loss) income per common share - assuming dilution

$

0.04

$

0.07

$

(2.89)

$

0.29

Weighted-average shares outstanding

Basic

1,365.9

1,467.6

1,406.7

1,509.3

Assuming dilution

1,375.0

1,479.9

1,406.7

1,519.0

BOSTON SCIENTIFIC CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

As of

December 31,

December 31,

in millions, except share and per share data

2012

2011

(Unaudited)

ASSETS

Current assets:

Cash and cash equivalents

$

207

$

267

Trade accounts receivable, net

1,217

1,246

Inventories

884

931

Deferred income taxes

433

458

Prepaid expenses and other current assets

281

203

Total current assets

3,022

3,105

Property, plant and equipment, net

1,564

1,670

Goodwill

5,973

9,761

Other intangible assets, net

6,289

6,473

Other long-term assets

306

281

$

17,154

$

21,290

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:

Current debt obligations

$

4

$

4

Accounts payable

232

203

Accrued expenses

1,284

1,327

Other current liabilities

252

273

Total current liabilities

1,772

1,807

Long-term debt

4,252

4,257

Deferred income taxes

1,729

1,865

Other long-term liabilities

2,531

2,008

Commitments and contingencies

Stockholders' equity

Preferred stock, $.01 par value - authorized 50,000,000

shares, none issued and outstanding

Common stock, $.01 par value - authorized 2,000,000,000

shares, issued 1,542,347,188 shares as of December 31,

2012 and 1,531,006,390 shares as of December 31, 2011

15

15

Treasury stock, at cost - 186,635,532 as of December 31, 2012

and 81,950,716 shares as of December 31, 2011

(1,092)

(492)

Additional paid-in capital

16,429

16,349

Accumulated deficit

(8,449)

(4,381)

Other stockholders' deficit

(33)

(138)

Total stockholders' equity

6,870

11,353

$

17,154

$

21,290

BOSTON SCIENTIFIC CORPORATION

NON-GAAP NET INCOME AND NET INCOME PER COMMON SHARE RECONCILIATIONS

(Unaudited)

Three Months Ended December 31,

2012

2011

Net

Impact

Impact

(loss)

per diluted

Net

per diluted

in millions, except per share data

income

share

income

share

GAAP net (loss) income

$

60

$

0.04

$

107

$

0.07

Non-GAAP adjustments:

Acquisition-related net (credits) charges

1

(9)

(0.01)

Divestiture-related net credits

(2)

(9)

(0.01)

Restructuring-related charges

47

0.04

14

0.01

Litigation-related charges

46

0.03

30

0.02

Discrete tax items

(5)

Amortization expense

100

0.07

69

0.05

Adjusted net income

$

252

$

0.18

$

197

$

0.13

Year Ended December 31,

2012

2011

Net

Impact

Impact

(loss)

per diluted

Net

per diluted

in millions, except per share data

income

share

income

share

GAAP net (loss) income

$

(4,068)

$

(2.89)

$

441

$

0.29

Non-GAAP adjustments:

Goodwill impairment charges

4,327

3.06

*

697

0.46

Intangible asset impairment charges

119

0.09

*

16

0.01

Acquisition-related net credits

(30)

(0.02)

*

(27)

(0.02)

Divestiture-related net credits

(6)

*

(542)

(0.35)

Restructuring-related charges

122

0.09

*

90

0.06

Litigation-related charges

118

0.08

*

30

0.02

Discrete tax items

2

*

(27)

(0.02)

Amortization expense

349

0.25

*

340

0.22

Adjusted net income

$

933

$

0.66

$

1,018

$

0.67

BOSTON SCIENTIFIC CORPORATION

NON-GAAP NET INCOME AND NET INCOME PER COMMON SHARE RECONCILIATIONS (CONT.)

(Unaudited)

Three Months Ended

Year Ended

in millions

December 31,

December 31,

2012

2011

2012

2011

Goodwill impairment charges:

Goodwill impairment charges

$

4,350

$

697

Income tax benefit (a)

(23)

Goodwill impairment charges, net of tax

$

4,327

$

697

Intangible asset impairment charges:

Intangible asset impairment charges

$

142

$

21

Income tax benefit (a)

(23)

(5)

Intangible asset impairment charges, net of tax

$

119

$

16

Acquisition-related charges (credits):

Contingent consideration (benefit) expense

$

4

$

(12)

$

(6)

$

7

Acquisition-related costs (credits) (b)

(2)

1

4

3

Inventory step-up adjustment (c)

1

3

Gain on previously held investments (d)

(39)

(38)

2

(10)

(41)

(25)

Income tax (expense) benefit (a)

(1)

1

11

(2)

Acquisition-related net (credits) charges, net of tax

$

1

$

(9)

$

(30)

$

(27)

Divestiture-related net credits:

Gain on divestiture

$

(4)

$

(10)

$

(15)

$

(778)

Divestiture-related costs (c)

$

2

$

1

$

6

5

(2)

(9)

(9)

(773)

Income tax expense (a)

3

231

Divestiture-related net credits, net of tax

$

(2)

$

(9)

$

(6)

$

(542)

Restructuring-related charges:

Restructuring charges

$

43

$

12

$

136

$

89

Restructuring-related charges (e)

9

8

24

40

52

20

160

129

Income tax benefit (a)

(5)

(6)

(38)

(39)

Restructuring-related charges, net of tax

$

47

$

14

$

122

$

90

Litigation-related net charges:

Litigation-related net charges

$

73

48

$

192

48

Income tax benefit (a)

(27)

(18)

(74)

(18)

Litigation-related net charges, net of tax

$

46

30

$

118

$

30

Discrete tax items:

Income tax expense (benefit) (a)

$

(5)

$

2

$

(27)

Amortization expense:

Amortization expense

$

101

$

96

$

395

$

421

Income tax benefit (a)

(1)

(27)

(46)

(81)

Amortization expense, net of tax

$

100

$

69

$

349

$

340

(a)  

Amounts are tax affected at the Company's effective tax rate, unless the amount is a significant unusual or infrequently occurring item in accordance with  FASB Accounting Standards Codification section 740-270-30, "General Methodology and Use of Estimated Annual Effective Tax Rate."

(b)  

In the fourth quarter of 2012, recorded a $1 million to selling, general and administrative expenses and a $3 million benefit to research and development expenses.  In 2012, recorded $7 million to selling, general and administrative expenses and $3 million benefit to research and development expenses

(c)  

Recorded to cost of products sold.

(d)  

Recorded to other, net.

(e)  

In the fourth quarter of 2012, recorded $1 million to cost of products sold and $8 million to selling, general and administrative expenses. In the fourth quarter of 2011, recorded $8 million to cost of products sold. In 2012, recorded $8 million to cost of products sold and $16 million to selling, general and administrative expenses. In 2011, recorded $35 million to cost of products sold and $5 million to selling, general and administrative expenses.

BOSTON SCIENTIFIC CORPORATION

WORLDWIDE SALES

(Unaudited)

Change

Three Months Ended

As Reported

Constant

December 31,

Currency

Currency

in millions

2012

2011

Basis

Basis

(restated)

*

United States

$

924

$

957

(3)

%

(3)

%

EMEA

396

409

(3)

%

(1)

%

Japan

236

247

(4)

%

1

%

Inter-Continental

235

205

15

%

14

%

International

867

861

1

%

3

%

Subtotal Core Businesses

1,791

1,818

(1)

%

(1)

%

Divested Businesses

30

30

N/A

N/A

Worldwide

$

1,821

$

1,848

(1)

%

—

%

Change

Three Months Ended

As Reported

Constant

December 31,

Currency

Currency

in millions

2012

2011

Basis

Basis

Interventional Cardiology

$                 534

$                 594

(10)%

(9)%

Cardiac Rhythm Management

457

482

(5)%

(4)%

Endoscopy

329

304

8 %

10 %

Peripheral Interventions

199

184

8 %

9 %

Urology/Women's Health

130

127

2 %

3 %

Neuromodulation

104

91

14 %

14 %

Electrophysiology

38

36

4 %

5 %

Subtotal Core Businesses

1,791

1,818

(1)%

(1)%

Divested Businesses

30

30

N/A

N/A

Worldwide

$            1,821

$            1,848

(1)%

-   %

BOSTON SCIENTIFIC CORPORATION

WORLDWIDE SALES

(Unaudited)

Change

Year Ended

As Reported

Constant

December 31,

Currency

Currency

in millions

2012

2011

Basis

Basis

(restated)

*

United States

$

3,756

$

4,010

(6)

%

(6)

%

EMEA

1,568

1,721

(9)

%

(3)

%

Japan

931

951

(2)

%

(2)

%

Inter-Continental

872

799

9

%

11

%

International

3,371

3,471

(3)

%

1

%

Subtotal Core Businesses

7,127

7,481

(5)

%

(3)

%

Divested Businesses

122

141

N/A

N/A

Worldwide

$

7,249

$

7,622

(5)

%

(3)

%

Change

Year Ended

As Reported

Constant

December 31,

Currency

Currency

in millions

2012

2011

Basis

Basis

Interventional Cardiology

$

2,179

$

2,495

(13)

%

(11)

%

Cardiac Rhythm Management

1,908

2,087

(9)

%

(7)

%

Endoscopy

1,252

1,187

5

%

7

%

Peripheral Interventions

774

731

6

%

8

%

Urology/Women's Health

500

498

—

%

1

%

Neuromodulation

367

336

9

%

9

%

Electrophysiology

147

147

—

%

1

%

Subtotal Core Businesses

7,127

7,481

(5)

%

(3)

%

Divested Businesses

122

141

N/A

N/A

Worldwide

$

7,249

$

7,622

(5)

%

(3)

%

BOSTON SCIENTIFIC CORPORATION

NON-GAAP CONSTANT CURRENCY NET SALES RECONCILIATIONS

(Unaudited)

Q4 2012 Net Sales as compared to Q4 2011

Change

Estimated

As Reported

Constant

Impact of

Currency

Currency

Foreign

in millions

Basis

Basis

Currency

United States

$

(33)

$

(33)

EMEA

(13)

(5)

$

(8)

Japan

(11)

1

(12)

Inter-Continental

30

28

2

International

6

24

(18)

Subtotal Core Businesses

(27)

(9)

(18)

Divested Businesses

Worldwide

$

(27)

$

(9)

$

(18)

Q4 2012 Net Sales as compared to Q4 2011

Change

Estimated

As Reported

Constant

Impact of

Currency

Currency

Foreign

in millions

Basis

Basis

Currency

Interventional Cardiology

$

(60)

$

(53)

$

(7)

Cardiac Rhythm Management

(25)

(20)

(5)

Endoscopy

25

29

(4)

Peripheral Interventions

15

17

(2)

Urology/Women's Health

3

4

(1)

Neuromodulation

13

12

1

Electrophysiology

2

2

Subtotal Core Businesses

(27)

(9)

(18)

Divested Businesses

Worldwide

$

(27)

$

(9)

$

(18)

BOSTON SCIENTIFIC CORPORATION

NON-GAAP CONSTANT CURRENCY NET SALES RECONCILIATIONS

(Unaudited)

Q4 2012 YTD Net Sales as compared to Q4 2011 YTD

Change

Estimated

As Reported

Constant

Impact of

Currency

Currency

Foreign

in millions

Basis

Basis

Currency

United States

$

(254)

$

(254)

EMEA

(153)

(48)

$

(105)

Japan

(20)

(16)

(4)

Inter-Continental

73

86

(13)

International

(100)

22

(122)

Subtotal Core Businesses

(354)

(232)

(122)

Divested Businesses

(19)

(18)

(1)

Worldwide

$

(373)

$

(250)

$

(123)

Q4 2012 YTD Net Sales as compared to Q4 2011 YTD

Change

Estimated

As Reported

Constant

Impact of

Currency

Currency

Foreign

in millions

Basis

Basis

Currency

Interventional Cardiology

$

(316)

$

(266)

$

(50)

Cardiac Rhythm Management

(179)

(145)

(34)

Endoscopy

65

84

(19)

Peripheral Interventions

43

56

(13)

Urology/Women's Health

2

5

(3)

Neuromodulation

31

32

(1)

Electrophysiology

2

(2)

Subtotal Core Businesses

(354)

(232)

(122)

Divested Businesses

(19)

(18)

(1)

Worldwide

$

(373)

$

(250)

$

(123)

BOSTON SCIENTIFIC CORPORATION

WORLDWIDE CARDIAC RHYTHM MANAGEMENT AND CORONARY STENT SYSTEM SALES

(Unaudited)

Three Months Ended December 31

in millions

U.S.

International

Worldwide

Q4 2012

Q4 2011

Q4 2012

Q4 2011

Q4 2012

Q4 2011

Defibrillator systems

$

204

$

214

$

126

$

134

$

330

$

348

Pacemaker systems

61

64

66

70

127

134

Total CRM products

$

265

$

278

$

192

$

204

$

457

$

482

in millions

U.S.

International

Worldwide

Q4 2012

Q4 2011

Q4 2012

Q4 2011

Q4 2012

Q4 2011

Drug-eluting stent systems

$

118

$

168

$

194

$

188

*

$

312

$

356

Bare-metal stent systems

6

7

15

18

21

25

Total coronary stent systems

$

124

$

175

$

209

$

206

$

333

$

381

Year Ended December 31

in millions

U.S.

International

Worldwide

2012

2011

2012

2011

2012

2011

Defibrillator systems

$

858

$

949

$

521

$

569

$

1,379

$

1,518

Pacemaker systems

256

279

273

290

529

569

Total CRM products

$

1,114

$

1,228

$

794

$

859

$

1,908

$

2,087

in millions

U.S.

International

Worldwide

2012

2011

2012

2011

2012

2011

Drug-eluting stent systems

$

557

$

750

$

720

$

759

$

1,277

$

1,509

Bare-metal stent systems

24

32

62

79

86

111

Total coronary stent systems

$

581

$

782

$

782

$

838

$

1,363

$

1,620

BOSTON SCIENTIFIC CORPORATION

WORLDWIDE BRIC* SALES

(Unaudited)

Q4 2012 Percentage change in Net Sales as compared to Q4 2011

Change

Estimated

As Reported

Constant

Impact of

Currency

Currency

Foreign

Basis

Basis

Currency

Three Months Ended December 31, 2012

29

%

35

%

(6)

%

BOSTON SCIENTIFIC CORPORATION

SUPPLEMENTAL NON-GAAP RECONCILIATIONS, CONT.

(Unaudited)

Q1 and Full Year 2013 EPS Guidance

Q1 2013 Estimate

Full Year 2013 Estimate

(Low)

(High)

(Low)

(High)

GAAP results

$

0.04

$

0.07

$

0.29

$

0.37

Estimated acquisition-related net charges (credits)

0.01

0.01

0.03

0.03

Estimated divestiture-related net credits

(0.03)

(0.03)

Estimated restructuring-related charges (credits)

0.02

0.02

0.08

0.06

Estimated amortization expense

0.07

0.07

0.27

0.27

Adjusted results

$

0.14

$

0.17

$

0.64

$

0.70

Goodwill and other intangible asset impairment charges - These amounts represent non-cash write-downs of the Company's goodwill balances attributable to its (a) U.S. Cardiac Rhythm Management reporting unit in the third quarter of 2012, (b) Europe/Middle East/Africa (EMEA) reporting unit recorded in the second quarter of 2012, and (c) U.S. Cardiac Rhythm Management reporting unit recorded in the first quarter of 2011 and non-cash write-downs of certain other intangible asset balances.  Management removes the impact of non-cash goodwill and other intangible asset impairment charges from the Company's operating performance to assist in assessing the Company's cash generated from operations.  Management believes this is a critical metric for the Company in measuring the Company's ability to generate cash and invest in the Company's growth.  Therefore, these charges are excluded from management's assessment of operating performance and are also excluded for purposes of calculating these non-GAAP financial measures to facilitate an evaluation of the Company's current operating performance and a comparison to the Company's past operating performance, particularly in terms of liquidity.

Acquisition-related charges (credits) - These adjustments consist of (a) acquisition-related gains on previously held investments, (b) contingent consideration fair value adjustments,  (c) inventory step-up adjustments, (d) due diligence and other fees, exit costs and other costs and credits related to current and prior period acquisitions, . The acquisition-related gains on previously held investments are non-recurring benefits associated with acquisitions completed in the second quarter of 2012 and the first quarter of 2011. The contingent consideration adjustments represent accounting adjustments to state contingent consideration liabilities at their estimated fair value. These adjustments can be highly variable depending on the assessed likelihood and amount of future contingent consideration payments. The inventory step-up adjustment is a charge related to acquired inventory directly attributable to prior acquisitions and is not indicative of the Company's on-going operations, or on-going cost of products sold.  Due diligence, exit costs and other costs and credits include legal, tax, severance and other expenses and credits associated with prior acquisitions that are not representative of on-going operations.  Accordingly, management excluded these amounts for purposes of calculating these non-GAAP financial measures to facilitate an evaluation of the Company's current operating performance and a comparison to the Company's past operating performance.

Divestiture-related net credits - These amounts represent (a) gains resulting from business divestitures and (b) fees and separation costs associated with business divestitures. The Company completed the sale of its Neurovascular business in January 2011 and the resulting gains are not indicative of future operating performance and are not used by management to assess operating performance. Fees and separation costs represent those associated with the Company's divestiture of its Neurovascular business and are not representative of on-going operations. Accordingly, management excluded these amounts for purposes of calculating these non-GAAP financial measures to facilitate an evaluation of the Company's current operating performance and a comparison to the Company's past operating performance.

Restructuring and restructuring-related costs - These adjustments represent primarily severance, costs to transfer production lines from one facility to another, and other direct costs associated with the Company's 2011 Restructuring plan, 2010 Restructuring plan and Plant Network Optimization program. These expenses are excluded by management in assessing the Company's operating performance, as well as from the Company's operating segments' measures of profit and loss used for making operating decisions and assessing performance. Accordingly, management excluded these charges for purposes of calculating these non-GAAP financial measures to facilitate an evaluation of the Company's current operating performance and a comparison to the Company's past operating performance.

Litigation-related net charges - These adjustments include certain significant product liability and other litigation-related charges and credits. These amounts are excluded by management in assessing the Company's operating performance, as well as from the Company's operating segments' measures of profit and loss used for making operating decisions and assessing performance.  Accordingly, management excluded these amounts for purposes of calculating these non-GAAP financial measures to facilitate an evaluation of the Company's current operating performance and a comparison to the Company's past operating performance.

Discrete tax items - These items represent adjustments of certain tax positions, which were initially established in prior periods as a result of intangible asset impairment charges; acquisition-, divestiture-, restructuring- or litigation-related charges (credits). These adjustments do not reflect expected on-going operating results. Accordingly, management excluded these amounts for purposes of calculating these non-GAAP financial measures to facilitate an evaluation of the Company's current operating performance and a comparison to the Company's past operating performance.

Amortization expense - Amortization expense is a non-cash charge and does not impact the Company's liquidity or compliance with the covenants included in its credit facility agreement. Management removes the impact of amortization from the Company's operating performance to assist in assessing the Company's cash generated from operations. Management believes this is a critical metric for the Company in measuring the Company's ability to generate cash and invest in the Company's growth. Therefore, amortization expense is excluded from management's assessment of operating performance and is also excluded from the measures management uses to set employee compensation. Accordingly, management has excluded amortization expense for purposes of calculating these non-GAAP financial measures to facilitate an evaluation of the Company's current operating performance, particularly in terms of liquidity.

Changes in foreign currency exchange rates - The impact of changes in foreign currency exchange rates is highly variable and difficult to predict. Accordingly, management excludes the impact of changes in foreign currency exchange rates for purposes of reviewing regional and divisional revenue growth rates to facilitate an evaluation of the Company's current operating performance and a comparison to the Company's past operating performance.