CONSOLIDATED FINANCIAL STATEMENTS - Boston Scientific

More documents

Recommendations

Info

NOTES to the consolidated financial statements Information related to stock options at December 31 under stock incentive plans is as follows: (option amounts in thousands) Below is additional information related to stock options outstanding and exercisable at December 31, 2004: Shares reserved for future issuance under all of the Company’s incentive plans totaled approximately 94 million at December 31, 2004. A table illustrating the effect on net income and net income per share as if the fair value method prescribed by Statement No.123 had been applied is presented in Note A. Any compensation cost on fixed awards with pro rata vesting is recognized on a straight-line basis over the award’s vesting period. The fair value of the stock options used to calculate the pro forma net income and net income per share was estimated using the Black-Scholes option-pricing model with the following weighted average assumptions: BOSTON SCIENTIFIC AND SUBSIDIARIES 2004 2003 2002 Weighted Weighted Weighted Average Average Average Exercise Exercise Exercise Options Price Options Price Options Price Outstanding at January 1 66,103 $ 15.16 84,218 $ 12.23 87,954 $ 10.78 Granted 2,101 39.72 6,857 33.33 10,668 20.55 Exercised (18,296) 10.64 (24,023) 10.10 (10,752) 8.53 Canceled (880) 18.41 (949) 13.86 (3,652) 12.68 Outstanding at December 31 49,028 17.84 66,103 15.16 84,218 12.23 Exercisable at December 31 34,776 $ 14.32 42,126 $ 12.01 48,878 $ 11.05 (option amounts in thousands) Stock Options Outstanding Stock Options Exercisable Weighted Average Weighted Weighted Remaining Average Average Contractual Exercise Exercise Range of Exercise Prices Options Life Price Options Price $ 0.00 – 8.00 4,980 5.14 $ 6.37 4,750 $ 6.30 8.01 – 16.00 20,161 5.15 11.87 17,749 11.80 16.01 – 24.00 15,764 6.20 19.82 10,742 19.15 24.01 – 32.00 358 8.57 31.02 88 31.08 32.01 – 40.00 6,417 9.01 34.85 1,447 34.71 40.01 – 48.00 1,348 9.43 41.95 49,028 6.13 $ 17.84 34,776 $ 14.32 2004 2003 2002 Dividend yield 0% 0% 0% Expected volatility 46.85% 49.28% 49.80% Risk-free interest rate 3.50% 3.13% 3.18% Forfeitures 615,112 631,561 2,727,872 Expected life 5.0 5.0 5.0 46 The weighted average grant-date fair value per share of options granted, calculated using the Black-Scholes option-pricing model, was $14.36 in 2004, $14.96 in 2003 and $9.58 in 2002. Global Employee Stock Ownership Plan The Company’s Global Employee Stock Ownership Plan (GESOP) provides for the granting of options to purchase up to 15 million shares of the Company’s common stock to all eligible employees. Under the GESOP, each eligible employee is granted, at the beginning of each period designated by the Committee as an offering period, an option to purchase shares of the Company’s common stock equal to not more than 10 percent of the employee’s eligible compensation. Such options may be exercised generally only to the extent of accumulated payroll deductions at the end of the offering period, at a purchase price equal to 85 percent of the fair market value of the Company’s common stock at the beginning or end of each offering period, whichever is less. During 2004, the Company issued approximately 1,004,000 shares at prices ranging from $30.22 to $30.81 per share. During 2003, the Company issued approximately 1,288,000 shares at prices ranging from $12.21 to $18.27 per share and during 2002, the Company issued approximately 1,838,000 shares at prices ranging from $7.47 to $9.67 per share. At December 31, 2004, there were approximately three million shares available for future issuance. NOTE N – EARNINGS PER SHARE The computation of basic and diluted earnings per share is as follows: (in millions, except per share data) Basic 2004 2003 2002 Net income $ 1,062 $ 472 $ 373 Weighted average shares outstanding 838.2 821.0 814.2 Net income per common share $ 1.27 $ 0.57 $ 0.46 Assuming Dilution Net income $ 1,062 $ 472 $ 373 Weighted average shares outstanding 838.2 821.0 814.2 Net effect of common stock equivalents 19.5 24.4 15.8 Total 857.7 845.4 830.0 Net income per common share $ 1.24 $ 0.56 $ 0.45 Potential common shares of one million in 2004, one million in 2003 and 21 million in 2002 were excluded from the computation of earnings per share, assuming dilution, because exercise prices were greater than the average market price of the common shares.
NOTES to the consolidated financial statements NOTE O – SEGMENT REPORTING The Company has four reportable operating segments based on geographic regions: the United States, Europe, Japan and Inter-Continental. Each of the Company’s reportable segments generates revenues from the sale of less-invasive medical devices. The reportable segments represent an aggregate of all operating divisions. Sales and operating results of reportable segments are based on internally derived standard foreign exchange rates, which may differ from year to year and do not include intersegment profits. The segment information for 2003 and 2002 sales and operating results have been restated based on the Company’s standard foreign exchange rates used for 2004. Because of the interdependence of the reportable segments, the operating profit as presented may not be representative of the geographic distribution that would occur if the segments were not interdependent. Enterprise-wide information is based on foreign exchange rates used in the Company’s consolidated financial statements. United Inter- (in millions) 2004 States Europe Japan Continental Total Net sales $ 3,502 $ 894 $ 602 $ 496 $ 5,494 Depreciation Operating income allocated 9 5 3 2 19 to reportable segments 1,752 439 343 224 2,758 2003 Net sales $ 1,924 $ 665 $ 568 $ 344 $ 3,501 Depreciation Operating income allocated 8 3 3 2 16 to reportable segments 684 310 323 145 1,462 2002 Net sales $ 1,756 $ 532 $ 558 $ 233 $ 3,079 Depreciation Operating income allocated 10 3 4 2 19 to reportable segments 657 229 326 75 1,287 47 A reconciliation of the totals reported for the reportable segments to the applicable line items in the consolidated financial statements is as follows: (in millions) Net Sales Total net sales allocated 2004 2003 2002 to reportable segments $ 5,494 $ 3,501 $ 3,079 Foreign exchange 130 (25) (160) $ 5,624 $ 3,476 $ 2,919 Depreciation Total depreciation allocated to reportable segments $ 19 $ 16 $ 19 Manufacturing operations Corporate expenses and 108 67 51 foreign exchange 36 24 19 $ 163 $ 107 $ 89 Income before Income Taxes Total operating income allocated to reportable segments $ 2,758 $ 1,462 $ 1,287 Manufacturing operations Corporate expenses and (376) (293) (271) foreign exchange Litigation-related (charges) (468) (420) (420) credits, net (75) (15) 99 Purchased research and development (65) (37) (85) 401(k) Plan enhancement Stock-compensation charge for (110) certain modifications (90) 1,574 697 610 Other income (expense) (80) (54) (61) $ 1,494 $ 643 $ 549 Enterprise-Wide Information (in millions) Net Sales 2004 2003 2002 Cardiovascular $ 4,490 $ 2,504 $ 2,067 Endosurgery 1,088 972 852 Neuromodulation 46 $ 5,624 $ 3,476 $ 2,919 Long-Lived Assets United States $ 660 $ 536 $ 464 Ireland 149 169 134 Other foreign countries 61 39 38 $ 870 $ 744 $ 636 BOSTON SCIENTIFIC AND SUBSIDIARIES
Page 1 and 2: 2004 CONSOLIDATED FINANCIAL STATEME
Page 3 and 4: MANAGEMENT’S DISCUSSION AND ANALY
Page 19 and 20: MANAGEMENT’S REPORT on internal c
Page 21 and 22: CONSOLIDATED STATEMENTS OF OPERATIO
Page 23 and 24: CONSOLIDATED BALANCE SHEETS (in mil
Page 25 and 26: CONSOLIDATED STATEMENTS OF CASH FLO
Page 27 and 28: NOTES to the consolidated financial
Page 45: NOTES to the consolidated financial
Page 49 and 50: FIVE-YEAR SELECTED FINANCIAL DATA (
Page 51: MARKET FOR THE COMPANY’S COMMON S

CONSOLIDATED FINANCIAL STATEMENTS - Boston Scientific

Create successful ePaper yourself

Delete template?

Save as template?