10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

þ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2015

OR

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File No. 1-11083

BOSTON SCIENTIFIC CORPORATION

(Exact name of registrant as specified in its charter)

DELAWARE	04-2695240
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

300 BOSTON SCIENTIFIC WAY, MARLBOROUGH, MASSACHUSETTS 01752-1234

(Address of principal executive offices) (zip code)

(508) 683-4000

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).Yes þ No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer þ	Accelerated filer o	Non-Accelerated filer o	Smaller reporting company o
		(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No þ

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

	Shares outstanding
Class	as of October 30, 2015
Common Stock, $.01 par value	1,345,195,041

TABLE OF CONTENTS

		Page No.
PART I	FINANCIAL INFORMATION	3
ITEM 1.	Condensed Consolidated Financial Statements	3
	Condensed Consolidated Statements of Operations (Unaudited)	3
	Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited)	4
	Condensed Consolidated Balance Sheets (Unaudited as of September 30, 2015)	5
	Condensed Consolidated Statements of Cash Flows (Unaudited)	7
	Notes to the Condensed Consolidated Financial Statements (Unaudited)	8
ITEM 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	42
ITEM 3.	Quantitative and Qualitative Disclosures About Market Risk	66
ITEM 4.	Controls and Procedures	67
PART II	OTHER INFORMATION	68
ITEM 1.	Legal Proceedings	68
ITEM 1A.	Risk Factors	68
ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	68
ITEM 6.	Exhibits	70
SIGNATURE		71

2

PART I

FINANCIAL INFORMATION

ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

BOSTON SCIENTIFIC CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

	Three Months Ended September 30,						Nine Months Ended September 30,
in millions, except per share data	2015			2014			2015			2014
Net sales	$	1,888		$	1,846		$	5,499		$	5,493
Cost of products sold	539			550			1,600			1,651
Gross profit	1,349			1,296			3,899			3,842
Operating expenses:
Selling, general and administrative expenses	729			741			2,095			2,150
Research and development expenses	221			212			632			609
Royalty expense	17			21			53			86
Amortization expense	131			109			361			327
Intangible asset impairment charges	10			12			19			177
Contingent consideration expense (benefit)	40			(4		)	86			(122		)
Restructuring charges	7			2			16			37
Litigation-related charges (credits)	457			139			649			399
Pension termination charges	36			—			44			—
Gain on divestiture	—			—			—			(12		)
	1,648			1,232			3,955			3,651
Operating income (loss)	(299		)	64			(56		)	191
Other income (expense):
Interest expense	(58		)	(54		)	(225		)	(161		)
Other, net	(10		)	(7		)	(31		)	15
Income (loss) before income taxes	(367		)	3			(312		)	45
Income tax expense (benefit)	(169		)	(40		)	(215		)	(135		)
Net income (loss)	$	(198	)	$	43		$	(97	)	$	180
Net income (loss) per common share — basic	$	(0.15	)	$	0.03		$	(0.07	)	$	0.14
Net income (loss) per common share — assuming dilution	$	(0.15	)	$	0.03		$	(0.07	)	$	0.13
Weighted-average shares outstanding
Basic	1,344.0			1,325.5			1,339.7			1,323.5
Assuming dilution	1,344.0			1,347.6			1,339.7			1,347.3

See notes to the unaudited condensed consolidated financial statements.

3

BOSTON SCIENTIFIC CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (UNAUDITED)

	Three Months Ended September 30,						Nine Months Ended September 30,
(in millions)	2015			2014			2015			2014
Net income (loss)	$	(198	)	$	43		$	(97	)	$	180
Other comprehensive income (loss):
Foreign currency translation adjustment	(12		)	(15		)	(42		)	(23		)
Net change in unrealized gains and losses on derivative financial instruments, net of tax	(27		)	83			(42		)	28
Net change in certain retirement plans, net of tax	16			—			21			(1		)
Total other comprehensive income (loss)	(23		)	68			(63		)	4
Total comprehensive income (loss)	$	(221	)	$	111		$	(160	)	$	184

See notes to the unaudited condensed consolidated financial statements.

4

BOSTON SCIENTIFIC CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

	As of
	September 30,			December 31,
in millions, except share and per share data	2015			2014
	(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	350		$	587
Trade accounts receivable, net	1,274			1,183
Inventories	1,086			946
Deferred and prepaid income taxes	367			447
Other current assets	385			443
Total current assets	3,462			3,606
Property, plant and equipment, net	1,479			1,507
Goodwill	6,468			5,898
Other intangible assets, net	6,228			5,606
Other long-term assets	578			425
TOTAL ASSETS	$	18,215		$	17,042
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Current debt obligations	$	63		$	403
Accounts payable	210			262
Accrued expenses	1,605			1,950
Other current liabilities	360			231
Total current liabilities	2,238			2,846
Long-term debt	5,796			3,859
Deferred income taxes	770			1,214
Other long-term liabilities	3,001			2,666
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 1,592,429,606 shares as of September 30, 2015 and 1,575,018,236 shares as of December 31, 2014	16			16
Treasury stock, at cost - 247,566,270 shares as of September 30, 2015 and 247,566,270 shares as of December 31, 2014	(1,717		)	(1,717		)
Additional paid-in capital	16,815			16,703
Accumulated deficit	(8,785		)	(8,689		)
Accumulated other comprehensive income (loss), net of tax	81			144
Total stockholders’ equity	6,410			6,457
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	18,215		$	17,042

5

See notes to the unaudited condensed consolidated financial statements.

6

BOSTON SCIENTIFIC CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

	Nine Months Ended September 30,
in millions	2015			2014
Cash provided by (used for) operating activities	$	271		$	829
Investing activities:
Purchases of property, plant and equipment	(162		)	(180		)
Purchases of privately held securities	(209		)	(6		)
Purchases of notes receivable	(1		)	(12		)
Proceeds from sales of publicly traded and privately held equity securities and collections of notes receivable	—			12
Payments for acquisitions of businesses, net of cash acquired	(1,642		)	(487		)
Payments for investments and acquisitions of certain technologies	(2		)	(1		)
Proceeds from business divestitures, net of costs	—			12
Cash provided by (used for) investing activities	(2,016		)	(662		)
Financing activities:
Payments on long-term borrowings	(1,000		)	—
Proceeds from long-term borrowings, net of debt issuance costs	2,580			—
Payment of contingent consideration	(102		)	(15		)
Proceeds from borrowings on credit facilities	565			810
Payments on borrowings from credit facilities	(565		)	(810		)
Payments for acquisitions of treasury stock	—			(125		)
Cash used to net share settle employee equity awards	(62		)	(48		)
Proceeds from issuances of shares of common stock	97			52
Cash provided by (used for) financing activities	1,513			(136		)
Effect of foreign exchange rates on cash	(5		)	(2		)
Net increase (decrease) in cash and cash equivalents	(237		)	29
Cash and cash equivalents at beginning of period	587			217
Cash and cash equivalents at end of period	$	350		$	246
Supplemental Information
Stock-based compensation expense	$	79		$	79
Fair value of contingent consideration recorded in purchase accounting	31			—

See notes to the unaudited condensed consolidated financial statements.

7

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE A – BASIS OF PRESENTATION

The accompanying unaudited condensed consolidated financial statements of Boston Scientific Corporation have been prepared in accordance with accounting principles generally accepted in the United States (U.S. GAAP) and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments (consisting only of normal recurring adjustments) considered necessary for fair presentation have been included. Operating results for the three and nine month periods endedSeptember 30, 2015 are not necessarily indicative of the results that may be expected for the year ending December 31, 2015. For further information, refer to the consolidated financial statements and footnotes thereto included in Item 8 of our 2014 Annual Report on Form 10-K.

Subsequent Events

We evaluate events occurring after the date of our most recent accompanying unaudited condensed consolidated balance sheets for potential recognition or disclosure in our financial statements. We did not identify any material subsequent events requiring adjustment to our accompanying unaudited condensed consolidated financial statements (recognized subsequent events) for the three and nine month periods endedSeptember 30, 2015. Those items requiring disclosure (unrecognized subsequent events) in the financial statements have been disclosed accordingly. Refer to Note J - Commitments and Contingencies for more information.

NOTE B – ACQUISITIONS AND STRATEGIC INVESTMENTS

2015 Acquisitions

AMS Portfolio Acquisition

On August 3, 2015, we completed the acquisition of the American Medical Systems male urology portfolio (AMS Portfolio Acquisition), which includes the men's health and prostate health businesses, from Endo International plc. Total consideration was comprised of $1.616 billion in up-front cash plus related fees and expenses, and a potential additional $50 million in consideration based on 2016 sales. The AMS male urology portfolio is being integrated with our formerly named Urology and Women's Health business, and the joint businesses have become Urology and Pelvic Health. In addition, as part of the acquisition agreement, we made a $60 million Series B non-voting preferred stock investment in the women's health business of Endo Health Solutions, a wholly owned subsidiary of Endo International, plc., representing the remaining Women's Health business of the American Medical Systems' Portfolio.

Xlumena, Inc.

On April 2, 2015, we acquired Xlumena, Inc. (Xlumena), a medical device company that developed minimally invasive devices for Endoscopic Ultrasound (EUS) guided transluminal drainage of targeted areas within the gastrointestinal tract. The purchase agreement called for an upfront payment of $63 million, an additional payment of $13 million upon FDA clearance of the HOT AXIOS™ product, and further sales-based milestones based on sales achieved through 2018. We are in the process of integrating Xlumena into our Endoscopy business, and expect the integration to be substantially complete by the end of 2016.

Purchase Price Allocation

We accounted for these acquisitions as business combinations and, in accordance with Financial Accounting Standards Board (FASB) Accounting Standards Codification^® (ASC) Topic 805, Business Combinations, we have recorded the assets acquired and liabilities assumed at their respective fair values as of the acquisition dates. The components of the aggregate preliminary purchase prices are as follows (in millions):

Cash, net of cash acquired, including amounts payable as of September 30, 2015	$	1,659
Fair value of contingent consideration	31
	$	1,690

8

The following summarizes the aggregate preliminary purchase price allocation for the 2015 acquisitions as of September 30, 2015 (in millions):

Goodwill	$	568
Amortizable intangible assets	992
Inventory	102
Property, Plant and Equipment	42
Other net assets	39
Deferred income taxes	(53		)
	$	1,690

We allocated a portion of the purchase price to specific intangible asset categories as follows:

	Amount Assigned (in millions)		Weighted Average Amortization Period (in years)	Range of Risk- Adjusted Discount Rates used in Purchase Price Allocation
Amortizable intangible assets:
Technology-related	$	358	11-12	13.5% - 15%
Customer relationships	616		12	13.5%
Other intangible assets	18		13	13.5%
	$	992

2014 Acquisitions

Interventional Business of Bayer AG

On August 29, 2014, we completed the acquisition of the Interventional Division of Bayer AG (Bayer), for total cash consideration of $414 million. We believe that this acquisition enhances our ability to offer physicians and healthcare systems a more complete portfolio of solutions to treat challenging vascular conditions. The transaction includes the AngioJet® Thrombectomy System and the Fetch® 2 Aspiration Catheter, which are used in endovascular procedures to remove blood clots from blocked arteries and veins, and the JetStream® Atherectomy System, used to remove plaque and thrombi from diseased arteries. We are in the process of integrating Bayer into our Peripheral Intervention and Interventional Cardiology businesses, and expect the integration to be substantially complete by the middle of 2016.

IoGyn, Inc.

On May 7, 2014, we completed the acquisition of the remaining fully diluted equity of IoGyn, Inc. (IoGyn). Prior to the acquisition, we held approximately 28 percent minority interest in IoGyn in addition to notes receivable of $8 million. Total consideration was comprised of a net cash payment of $65 million at closing to acquire the remaining 72 percent of IoGyn equity and repay outstanding debt. IoGyn developed the Symphion^TM System, a next generation system for hysteroscopic intrauterine tissue removal including fibroids (myomas) and polyps. We have substantially completed the process of integrating the operations of the IoGyn business with our gynecological surgery business, which is part of our Urology and Pelvic Health business.

Purchase Price Allocation

We accounted for these acquisitions as business combinations and, in accordance with FASB ASC Topic 805, Business Combinations, we have recorded the assets acquired and liabilities assumed at their respective fair values as of the acquisition dates. The components of the aggregate purchase prices are as follows (in millions):

Cash, net of cash acquired	$	479
Fair value of prior interests	31
	$	510

9

We re-measured our previously held investments to their estimated acquisition-date fair value of $31 million and recorded a gain of $19 million in Other, net, in the accompanying condensed consolidated statements of operations during the second quarter of 2014. We measured the fair values of the previously held investments based on the liquidation preferences and priority of the equity interests and debt, including accrued interest.

The following summarizes the aggregate purchase price allocation for the 2014 acquisitions as of September 30, 2014 (in millions):

Goodwill	$	210
Amortizable intangible assets	263
Inventory	23
Property, Plant and Equipment	17
Prepaid Transaction Service Agreements	5
Other net assets	(1		)
Deferred income taxes	(7		)
	$	510

We allocated a portion of the purchase price to specific intangible asset categories as follows:

	Amount Assigned (in millions)		Weighted Average Amortization Period (in years)	Range of Risk- Adjusted Discount Rates used in Purchase Price Allocation
Amortizable intangible assets:
Technology-related	$	233	10 - 14	14 - 18 %
Customer relationships	29		10	18%
Other intangible assets	1		2	14%
	$	263

Our technology-related intangible assets consist of technical processes, intellectual property, and institutional understanding with respect to products and processes that we will leverage in future products or processes and will carry forward from one product generation to the next. We used the income approach to derive the fair value of the technology-related intangible assets, and are amortizing them on a straight-line basis over their assigned estimated useful lives.

Customer relationships represent the estimated fair value of non-contractual customer and distributor relationships. Customer relationships are direct relationships with physicians and hospitals performing procedures with the acquired products, and distributor relationships are relationships with third parties used to sell products, both as of the acquisition date. These relationships were valued separately from goodwill because there is a history and pattern of conducting business with customers and distributors. We used the income approach or the replacement cost and lost profits methodology to derive the fair value of the customer relationships. The customer relationships intangible assets are amortized on a straight-line basis over their assigned estimated useful lives.

Other intangible assets primarily include acquired tradenames. These tradenames include brand names that we expect to continue using in our product portfolio and related marketing materials. The tradenames are valued using a relief from royalty methodology and are amortized on a straight-line basis over their assigned estimated useful lives.

We believe that the estimated intangible asset values represent the fair value at the date of acquisition and do not exceed the amount a third party would pay for the assets. These fair value measurements are based on significant unobservable inputs, including management estimates and assumptions and, accordingly, are classified as Level 3 within the fair value hierarchy prescribed by FASB ASC Topic 820, Fair Value Measurements and Disclosures.

10

We recorded the excess of the aggregate purchase price over the estimated fair values of the identifiable assets acquired as goodwill. Goodwill was established due primarily to synergies expected to be gained from leveraging our existing operations as well as revenue and cash flow projections associated with future technologies, and has been allocated to our reportable segments based on the relative expected benefit. Of the goodwill recorded, approximately $500 million, based on preliminary estimates, related to our 2015 acquisitions and approximately $150 million related to our 2014 acquisitions is deductible for tax purposes. See Note D - Goodwill and Other Intangible Assets for more information related to goodwill allocated to our reportable segments.

Contingent Consideration

Certain of our acquisitions involve contingent consideration arrangements. Payment of additional consideration is generally contingent on the acquired company reaching certain performance milestones, including attaining specified revenue levels, achieving product development targets and/or obtaining regulatory approvals. In accordance with U.S. GAAP, we recognize a liability equal to the fair value of the contingent payments we expect to make as of the acquisition date. We re-measure this liability each reporting period and record changes in the fair value through a separate line item within our consolidated statements of operations.

We recorded a net expense related to the change in fair value of our contingent consideration liabilities of $40 million during the third quarter of 2015 and $86 million during the first nine months of2015. We recorded net benefits of $4 million during the third quarter of 2014 and $122 million during the first nine months of2014. We paid contingent consideration of $15 million during the third quarter of 2015 and $125 million during the first nine months of2015. We made no payments of contingent consideration during the third quarter of 2014 and we made payments of $15 million during the first nine months of2014.

Changes in the fair value of our contingent consideration liability were as follows (in millions):

Balance as of December 31, 2014	$	274
Amounts recorded related to new acquisitions	31
Other amounts recorded related to prior acquisitions	—
Net fair value adjustments	86
Payments made	(125		)
Balance as of September 30, 2015	$	266

As of September 30, 2015, the maximum amount of future contingent consideration (undiscounted) that we could be required to pay was approximately $1.893 billion.

Contingent consideration liabilities are re-measured to fair value each reporting period using projected revenues, discount rates, probabilities of payment and projected payment dates. The recurring Level 3 fair value measurements of our contingent consideration liability include the following significant unobservable inputs:

Contingent Consideration Liability	Fair Value as of September 30, 2015	Valuation Technique	Unobservable Input	Range
Revenue-based Payments	$84 million	Probability Weighted Discounted Cash Flow	Discount Rate	11.5% - 15%
			Projected Year of Payment	2015 - 2019
	$182 million	Monte Carlo	Revenue Volatility	11% - 20%
			Risk Free Rate	LIBOR Term Structure
			Projected Year of Payment	2015 - 2018

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Increases or decreases in the fair value of our contingent consideration liability can result from changes in discount periods and rates, as well as changes in the timing and amount of revenue estimates or in the timing or likelihood of achieving milestones. Projected contingent payment amounts related to certain revenue-based milestones are discounted back to the current period using a discounted cash flow (DCF) model. Other revenue-based payments are valued using a Monte Carlo valuation model, which simulates future revenues during the earn-out period using management's best estimates. Projected revenues are based on our most recent internal operational budgets and long-range strategic plans. Increases in projected revenues and probabilities of payment may result in higher fair value measurements. Increases in discount rates and the time to payment may result in lower fair value measurements. Increases or decreases in any of those inputs together, or in isolation, may result in a significantly lower or higher fair value measurement.

Strategic Investments

On April 30, 2015, we acquired a 27 percent ownership interest in Preventice, Inc. (Preventice), which includes 18.5 percent of Preventice's common stock. Preventice is a privately-held company headquartered in Minneapolis, MN, and a leading developer of mobile health solutions and services. Preventice offers a full portfolio of wearable cardiac monitors, including Holter monitors, cardiac event monitors and mobile cardiac telemetry. In addition to the equity agreement, we entered into a commercial agreement with Preventice, under which we will become Preventice’s exclusive, worldwide sales and marketing representative. We believe this partnership strengthens our portfolio of cardiac monitoring and broader disease management capabilities.

On April 13, 2015, we acquired 25 percent of the common stock of Frankenman Medical Equipment Company (Frankenman). Frankenman is a private company headquartered in Suzhou, China, and is a local market leader in surgical staplers. Additionally, we entered into co-promotional and co-selling agreements with Frankenman to jointly commercialize selected products in China. We believe this alliance will enable us to reach more clinicians and treat more patients in China by providing access to training on less invasive endoscopic technologies with clinical and economic benefits.

We are accounting for our investments in Preventice and Frankenman as equity method investments, in accordance with FASB ASC Topic 323, Investments - Equity Method and Joint Ventures. As of September 30, 2015, the book value of our equity method investments exceeded our share of the book value of the investees’ underlying net assets by approximately $40 million, which represents amortizable intangible assets and corresponding deferred tax liabilities, and goodwill. During the three and nine months ended September 30, 2015, the net losses from our equity method adjustments, presented within the Other, net caption of our condensed consolidated statement of operations were de minimis.

We did not close any material strategic investments in the third quarter or first nine months of 2014.

NOTE C – DIVESTITURES AND PENSION TERMINATION

In January 2011, we closed the sale of our Neurovascular business to Stryker Corporation for a purchase price of $1.500 billion in cash. We received $1.450 billion during 2011, an additional $10 million during 2012, $30 million during 2013 and the final amount due to us in 2014. At the time of divestiture, due to our continuing involvement in the operations of the Neurovascular business following the transaction, the divestiture did not meet the criteria for presentation as a discontinued operation. We recorded a gain of $12 million during the first nine months of 2014 associated with the Neurovascular divestiture.

Following our 2006 acquisition of Guidant Corporation, we sponsored the Guidant Retirement Plan, a frozen noncontributory defined benefit plan covering a select group of current and former employees. The plan was partially frozen as of September 25, 1995 and completely frozen as of May 31, 2007, and was terminated effective December 1, 2014. During 2015, we finalized the termination process and settled the plan’s obligations, and as a result, we have recorded pension termination charges of $36 million and $44 million during the third quarter and first nine months of2015.

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NOTE D – GOODWILL AND OTHER INTANGIBLE ASSETS

The gross carrying amount of goodwill and other intangible assets and the related accumulated amortization for intangible assets subject to amortization and accumulated write-offs of goodwill as of September 30, 2015 and December 31, 2014 are as follows:

	As of
	September 30, 2015					December 31, 2014
	Gross Carrying		Accumulated Amortization/			Gross Carrying		Accumulated Amortization/
(in millions)	Amount		Write-offs			Amount		Write-offs
Amortizable intangible assets
Technology-related	$	8,874	$	(3,952	)	$	8,406	$	(3,697	)
Patents	519		(354		)	519		(342		)
Other intangible assets	1,512		(584		)	875		(533		)
	$	10,905	$	(4,890	)	$	9,800	$	(4,572	)
Unamortizable intangible assets
Goodwill	$	16,368	$	(9,900	)	$	15,798	$	(9,900	)
In-process research and development (IPR&D)	93		—			181		—
Technology-related	120		—			197		—
	$	16,581	$	(9,900	)	$	16,176	$	(9,900	)

During the third quarter of 2015, we reclassified approximately $77 million of core technology not previously subject to amortization to amortizable intangible assets due to projected changes in the market for this technology. We tested the intangible asset for impairment prior to this reclassification and determined that the asset was not impaired.

In addition, during the third quarter of 2015, we reclassified $1 million of IPR&D not previously subject to amortization to amortizable intangible assets, as a result of regulatory approvals, for a total of $77 million of IPR&D assets not previously subject to amortization reclassified as amortizable intangible assets during the first nine months of 2015. The IPR&D reclassified to amortizable intangible assets during the first nine months of2015 primarily related to the receipt of FDA approval of the WATCHMAN^® device.

The following represents our goodwill balance by global reportable segment:

(in millions)	Cardiovascular		Rhythm Management		MedSurg		Total
Balance as of December 31, 2014	$	3,426	$	290	$	2,182	$	5,898
Purchase price adjustments	—		2		—		2
Goodwill acquired	—		—		568		568
Balance as of September 30, 2015	$	3,426	$	292	$	2,750	$	6,468

Goodwill Impairment Testing

We test our goodwill balances during the second quarter of each year for impairment, or more frequently if indicators are present or changes in circumstances suggest that an impairment may exist.

In the second quarter of 2015, we performed our annual goodwill impairment test for all of our reporting units and concluded the fair value of each reporting unit exceeded its carrying value. As a result of the 2015 annual goodwill impairment test, we identified our global Electrophysiology reporting unit as being at higher risk of potential failure of the first step of the goodwill impairment test in future reporting periods. As of the date of our annual goodwill impairment test, our global Electrophysiology reporting unit had excess fair value over carrying value of approximately 28 percent and held $292 million of allocated goodwill. Also, as of the date of our annual goodwill impairment test, our global Cardiac Rhythm Management (CRM) reporting unit had excess fair value over carrying value of approximately 26 percent; however, due to goodwill impairment charges in prior years, no goodwill remains within our CRM reporting unit. Changes in our reporting units or in the structure of our business as a result of future reorganizations, acquisitions or divestitures of assets or businesses could result in future impairments of goodwill within our reporting units. Refer to Critical Accounting Policies and Estimates within our Management's Discussion and Analysis of Financial Condition and Results of Operations contained in Item 2 of this Quarterly Report on Form 10-Q for a discussion of key assumptions used in our testing.

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On a quarterly basis, we monitor the key drivers of fair value to detect events or other changes that would warrant an interim impairment test of our goodwill. The key variables that drive the cash flows of our reporting units and amortizable intangibles are estimated revenue growth rates and levels of profitability. Terminal value growth rate assumptions, as well as the Weighted Average Cost of Capital (WACC) rate applied are additional key variables for reporting unit cash flows. These assumptions are subject to uncertainty, including our ability to grow revenue and improve profitability levels. Relatively small declines in the future performance and cash flows of a reporting unit or asset group or small changes in other key assumptions may result in the recognition of significant goodwill impairment charges. For example, as of the date of our annual goodwill impairment test, keeping all other variables constant, a combined increase of 50 basis points in the WACC along with a simultaneous decrease of 150 basis points in the long term growth rate applied would require that we perform the second step of the goodwill impairment test for our global Electrophysiology reporting unit. The estimates used for our future cash flows and discount rates represent management's best estimates, which we believe to be reasonable, but future declines in business performance may impair the recoverability of our goodwill.

Future events that could have a negative impact on the levels of excess fair value over carrying value of our reporting units include, but are not limited to:

• decreases in estimated market sizes or market growth rates due to greater-than-expected declines in procedural volumes, pricing pressures, reductions in reimbursement levels, product actions, and/or competitive technology developments;

• declines in our market share and penetration assumptions due to increased competition, an inability to develop or launch new and next-generation products and technology features in line with our commercialization strategies, and market and/or regulatory conditions that may cause significant launch delays or product recalls;

• decreases in our forecasted profitability due to an inability to successfully implement and achieve timely and sustainable cost improvement measures consistent with our expectations;

• negative developments in intellectual property litigation that may impact our ability to market certain products or increase our costs to sell certain products;

• the level of success of ongoing and future research and development efforts, including those related to recent acquisitions, and increases in the research and development costs necessary to obtain regulatory approvals and launch new products;

• the level of success in managing the growth of acquired companies, achieving sustained profitability consistent with our expectations, establishing government and third-party payer reimbursement, supplying the market, and increases in the costs and time necessary to integrate acquired businesses into our operations successfully;

• changes in our reporting units or in the structure of our business as a result of future reorganizations, acquisitions or divestitures of assets or businesses; and

• increases in our market-participant risk-adjusted WACC, and increases in our market-participant tax rate, and/or changes in tax laws or macroeconomic conditions.

Negative changes in one or more of these factors, among others, could result in impairment charges.

The following is a rollforward of accumulated goodwill write-offs by global reportable segment:

(in millions)	Cardiovascular			Rhythm Management			MedSurg			Total
Accumulated write-offs as of December 31, 2014	$	(1,479	)	$	(6,960	)	$	(1,461	)	$	(9,900	)
Goodwill written off	—			—			—			—
Accumulated write-offs as of September 30, 2015	$	(1,479	)	$	(6,960	)	$	(1,461	)	$	(9,900	)

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Intangible Asset Impairment Testing

2015 Charges

During the third quarter of 2015, we performed our annual impairment test of all IPR&D projects and our indefinite-lived core technology assets. Indefinite-lived intangible assets are tested for impairment on an annual basis during the third quarter of each year, or more frequently if impairment indicators are present, in accordance with U.S. GAAP and our accounting policies described in our 2014 Annual Report on Form 10-K. In addition, as a result of revised estimates in conjunction with our annual operating plan, we performed an interim impairment test of certain definite-lived core technology associated with certain of our acquisitions. Based on the results of our testing, we recorded impairment charges of $10 million in the third quarter of 2015.

During the second quarter of 2015, in conjunction with our annual strategic planning process and annual goodwill impairment test, we performed an interim impairment test on certain of our IPR&D projects and core technology assets. Based on our impairment assessment, we recorded an impairment charge of $9 million in the second quarter of 2015.

2014 Charges

During the third quarter of 2014, we performed our annual impairment test of all IPR&D projects, and our indefinite-lived core technology assets. Based on the results of our annual test, we recorded total impairment charges of $4 million to write-down the balances of certain in-process projects to their fair value. In addition, as a result of revised estimates in conjunction with our annual operating plan, we performed an interim impairment test of core technology associated with certain of our acquisitions, and we recorded an impairment charge of $8 million, for a total of $12 million of impairment charges in the third quarter of 2014.

During the second quarter of 2014, as a result of revised estimates developed in conjunction with our annual strategic planning process and annual goodwill impairment test, we performed an interim impairment test of our IPR&D projects and core technology associated with certain of our acquisitions. Based on our impairment assessment, and lower expected future cash flows associated with our intangible assets, we recorded pre-tax impairment charges of $110 million in the second quarter of 2014. As a result of changes in our clinical strategy and lower estimates of the European and global hypertension markets, and the resulting amount of future revenue and cash flows associated with the technology acquired from Vessix Vascular Inc. (Vessix), we recorded impairment charges of $67 million related to technology intangible assets during the second quarter of 2014. In addition, in the second quarter of 2014, due to revised expectations and timing as a result of the announcement of a third FDA Circulatory System Devices Panel, we recorded impairment charges of $35 million related to the IPR&D intangible assets acquired from Atritech, Inc. (Atritech). We also recorded an additional $8 million intangible asset impairment charge associated with changes in the amount of the expected cash flows related to certain other acquired IPR&D projects.

During the first quarter of 2014, as a result of lower estimates of the resistant hypertension market following the announcement of data from a competitor's clinical trial, we performed an interim impairment test of our IPR&D projects and core technology associated with our acquisition of Vessix. The impairment assessments were based upon probability-weighted cash flows of potential future scenarios. Based on our impairment assessment, and lower expected future cash flows associated with our Vessix-related intangible assets, we recorded pre-tax impairment charges of $55 million in the first quarter of 2014 to write-down the balance of these intangible assets to their calculated fair value.

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The nonrecurring Level 3 fair value measurements of our intangible asset impairment analysis included the following significant unobservable inputs:

Intangible Asset	Valuation Date	Fair Value	Valuation Technique	Unobservable Input	Rate
Core Technology	September 30, 2015	$8 million	Income Approach -Excess Earnings Method	Discount Rate	10%
In-Process R&D	June 30, 2015	$6 million	Income Approach - Excess Earnings Method	Discount Rate	16.5 - 20%
In-Process R&D	September 30, 2014	$16 million	Income Approach - Excess Earnings Method	Discount Rate	16.5 - 20%
In-Process R&D	June 30, 2014	$83 million	Income Approach - Excess Earnings Method	Discount Rate	16.5 - 20%
Core Technology	June 30, 2014	$8 million	Income Approach - Excess Earnings Method	Discount Rate	15%
In-Process R&D	March 31, 2014	$6 million	Income Approach - Excess Earnings Method	Discount Rate	20%
Core Technology	March 31, 2014	$64 million	Income Approach - Excess Earnings Method	Discount Rate	15%

NOTE E – FAIR VALUE MEASUREMENTS

Derivative Instruments and Hedging Activities

We address market risk from changes in foreign currency exchange rates and interest rates through a risk management program that includes the use of derivative financial instruments, and we operate the program pursuant to documented corporate risk management policies. Our derivative instruments do not subject our earnings or cash flows to material risk, as gains and losses on these derivatives generally offset losses and gains on the item being hedged. We do not enter into derivative transactions for speculative purposes, and we do not have any non-derivative instruments that are designated as hedging instruments pursuant to FASB ASC Topic 815, Derivatives and Hedging (Topic 815).

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Currency Hedging

We are exposed to currency risk consisting primarily of foreign currency denominated monetary assets and liabilities, forecasted foreign currency denominated intercompany and third-party transactions and net investments in certain subsidiaries. We manage our exposure to changes in foreign currency exchange rates on a consolidated basis to take advantage of offsetting transactions. We use derivative instruments, and non-derivative transactions to reduce the risk that our earnings and cash flows associated with these foreign currency denominated balances and transactions will be adversely affected by foreign currency exchange rate changes.

Currently or Previously Designated Foreign Currency Hedges

All of our designated currency hedge contracts outstanding as of September 30, 2015 and December 31, 2014 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 no longer probable that it will occur, we reclassify the amount of any gain or loss on the related cash flow hedge to earnings at that time. We had currency derivative instruments currently or previously designated as cash flow hedges outstanding in the contract amount of $1.517 billion as of September 30, 2015 and $2.178 billion as of December 31, 2014.

We recognized net gains of $54 million in earnings on our cash flow hedges during the third quarter of 2015 and $156 million for the first nine months of2015, as compared to net gains of $25 million during the third quarter of 2014 and $68 million for the first nine months of2014. All currency cash flow hedges outstanding as of September 30, 2015 mature within 36 months. As of September 30, 2015, $171 million of net gains, 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 gains of $217 million as of December 31, 2014. As of September 30, 2015, $114 million of net gains, net of tax, may be reclassified to earnings within the next twelve months.

The success of our hedging program depends, in part, on forecasts of transaction activity in various currencies (primarily Japanese yen, Euro, British pound sterling, Australian dollar and Canadian dollar). We may experience unanticipated currency exchange gains or losses to the extent that there are differences between forecasted and actual activity during periods of currency volatility. In addition, changes in foreign currency exchange rates related to any unhedged transactions may impact our earnings and cash flows.

Non-designated Foreign Currency Contracts

We use currency forward contracts as a part of our strategy to manage exposure related to foreign currency denominated monetary assets and liabilities. 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 less than one year. We had currency derivative instruments not designated as hedges under Topic 815 outstanding in the contract amount of $1.947 billion as of September 30, 2015 and $2.470 billion as of December 31, 2014.

Interest Rate Hedging

Our interest rate risk relates primarily to U.S. dollar borrowings, partially offset by U.S. dollar cash investments. We have historically used interest rate derivative instruments to manage our earnings and cash flow exposure to changes in interest rates by converting floating-rate debt into fixed-rate debt or fixed-rate debt into floating-rate debt.

We designate these derivative instruments either as fair value or cash flow hedges under Topic 815. We record changes in the value of fair value hedges in interest expense, which is generally offset by changes in the fair value of the hedged debt obligation. Interest payments made or received related to our interest rate derivative instruments are included in interest expense. We record the effective portion of any change in the fair value of derivative instruments designated as cash flow hedges as unrealized gains or losses in OCI, net of tax, until the hedged cash flow occurs, at which point the effective portion of any gain or loss is reclassified to earnings. We record the ineffective portion of our cash flow hedges in interest expense. In the event the hedged cash flow does not occur, or it becomes no longer probable that it will occur, we reclassify the amount of any gain or loss on the related cash flow hedge to interest expense at that time.

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In the fourth quarter of 2013, we entered into interest rate derivative contracts having a notional amount of $450 million to convert fixed-rate debt into floating-rate debt, which we designated as fair value hedges. During the first quarter of 2015, we terminated these hedges and we received total proceeds of approximately $35 million, which included approximately $7 million of net accrued interest receivable. We assessed at inception, and re-assessed on an ongoing basis, whether the interest rate derivative contracts were highly effective in offsetting changes in the fair value of the hedged fixed-rate debt. We recognized no gains or losses in interest expense, related to fair value hedges, during the third quarter of 2015. During the first nine months of2015, we recognized, in interest expense, an $8 millionloss on our hedged debt and an $8 milliongain on the related interest rate derivative contract. During the third quarter of 2014, we recognized, in interest expense, a $1 milliongain on our hedged debt and a $1 millionloss on the related interest rate derivative contract. During the first nine months of2014, we recognized, in interest expense, a $17 millionloss on our hedged debt and a $17 milliongain on the related interest rate derivative contract.

During the second quarter of 2015, we entered into forward starting interest rate derivative contracts having a notional amount of $450 million to hedge interest rate risk associated with a planned issuance of fixed-rate senior notes, which we designated as cash flow hedges. These hedges were terminated during the second quarter at the time we issued the fixed-rate senior notes and we received total proceeds of approximately $11 million. We had no amounts outstanding under these hedges as of September 30, 2015. We assessed, at inception, and re-assessed, on an ongoing basis, whether the cash flow derivative contracts were highly effective in offsetting changes in interest rates. The gain on this derivative contract was recorded within accumulated other comprehensive income, and is being amortized into earnings as a credit to interest expense over the life of the related senior notes.

We are amortizing the gains and losses on previously terminated interest rate derivative instruments, including fixed-to-floating interest rate contracts designated as fair value hedges and forward starting interest rate derivative contracts and treasury locks designated as cash flow hedges upon termination into earnings as a component of interest expense over the remaining term of the hedged debt, in accordance with Topic 815. The carrying amount of certain of our senior notes included unamortized gains of $66 million as of September 30, 2015 and $45 million as of December 31, 2014, and unamortized losses of $1 million as of September 30, 2015 and $2 million as of December 31, 2014 related to the fixed-to-floating interest rate contracts that we terminated in prior periods. In addition, we had pre-tax net gains within AOCI related to terminated forward starting interest rate derivative contracts and treasury locks of $10 million as of September 30, 2015 and $2 million as of December 31, 2014. We recorded approximately $3 million during the third quarter of 2015 and $10 million during the first nine months of2015 as a reduction to interest expense, resulting from the amortization of terminated interest rate derivative contracts. As of September 30, 2015, $13 million of pre-tax net gains may be reclassified to earnings within the next twelve months as a reduction to interest expense from amortization of our terminated interest rate derivative contracts.

Counterparty Credit Risk

We do not have significant concentrations of credit risk arising from our derivative financial instruments, whether from an individual counterparty or a related group of counterparties. We manage the concentration of counterparty credit risk on our derivative instruments by limiting acceptable counterparties to a diversified group of major financial institutions with investment grade credit ratings, limiting the amount of credit exposure to each counterparty, and actively monitoring their credit ratings and outstanding fair values on an ongoing basis. Furthermore, none of our derivative transactions are subject to collateral or other security arrangements and none contain provisions that are dependent on our credit ratings from any credit rating agency.

We also employ master netting arrangements that reduce our counterparty payment settlement risk on any given maturity date to the net amount of any receipts or payments due between us and the counterparty financial institution. Thus, the maximum loss due to counterparty credit risk is limited to the unrealized gains in such contracts net of any unrealized losses should any of these counterparties fail to perform as contracted. Although these protections do not eliminate concentrations of credit risk, as a result of the above considerations, we do not consider the risk of counterparty default to be significant.

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Fair Value of Derivative Instruments

The following presents the effect of our derivative instruments designated as cash flow hedges under Topic 815 on our accompanying unaudited condensed consolidated statements of operations during the third quarter and first nine months of2015 and 2014 (in millions):

	Amount of Pre-tax Gain (Loss) Recognized in OCI (Effective Portion)		Amount of Pre-tax Gain (Loss) Reclassified from AOCI into Earnings (Effective Portion)		Location in Statement of Operations
Three Months Ended September 30, 2015
Currency hedge contracts	$	13	$	54	Cost of products sold
	$	13	$	54
Three Months Ended September 30, 2014
Currency hedge contracts	$	156	$	25	Cost of products sold
	$	156	$	25
Nine Months Ended September 30, 2015
Currency hedge contracts	$	81	$	156	Cost of products sold
Interest rate derivative contracts	11		2		Interest Expense
	$	92	$	158
Nine Months Ended September 30, 2014
Currency hedge contracts	$	115	$	68	Cost of products sold
	$	115	$	68

The amount of gain (loss) recognized in earnings related to the ineffective portion of hedging relationships was de minimis for all periods presented.

Net gains and losses on currency hedge contracts not designated as hedging instruments were offset by net losses and gains from foreign currency transaction exposures, as shown in the following table:

in millions	Location in Statement of Operations	Three Months Ended						Nine Months Ended
		September 30,						September 30,
		2015			2014			2015			2014
Gain (loss) on currency hedge contracts	Other, net	$	32		$	40		$	46		$	20
Gain (loss) on foreign currency transaction exposures	Other, net	(36		)	(45		)	(64		)	(31		)
Net foreign currency gain (loss)	Other, net	$	(4	)	$	(5	)	$	(18	)	$	(11	)

Topic 815 requires all derivative instruments to be recognized at their fair values as either assets or liabilities on the balance sheet. Generally, we use inputs that include quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; other observable inputs for the asset or liability; and inputs derived principally from, or corroborated by, observable market data by correlation or other means. As of September 30, 2015, we have classified all of our derivative assets and liabilities within Level 2 of the fair value hierarchy prescribed by FASB ASC Topic 820, Fair Value Measurements and Disclosures (Topic 820), as discussed below, because these observable inputs are available for substantially the full term of our derivative instruments.

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The following are the balances of our derivative assets and liabilities as of September 30, 2015 and December 31, 2014:

		As of
		September 30,		December 31,
(in millions)	Location in Balance Sheet (1)	2015		2014
Derivative Assets:
Currently or Previously Designated Hedging Instruments
Currency hedge contracts	Other current assets	$	152	$	178
Currency hedge contracts	Other long-term assets	89		141
Interest rate contracts	Other current assets	—		3
Interest rate contracts	Other long-term assets	—		22
		241		344
Non-Designated Hedging Instruments
Currency hedge contracts	Other current assets	49		100
Total Derivative Assets		$	290	$	444
Derivative Liabilities:
Currently or Previously Designated Hedging Instruments
Currency hedge contracts	Other current liabilities	$	1	$	1
		1		1
Non-Designated Hedging Instruments
Currency hedge contracts	Other current liabilities	29		35
Total Derivative Liabilities		$	30	$	36

(1) We classify derivative assets and liabilities as current when the remaining term of the derivative contract is one year or less.

Other Fair Value Measurements

Recurring Fair Value Measurements

On a recurring basis, we measure certain financial assets and financial liabilities at fair value based upon quoted market prices, where available. Where quoted market prices or other observable inputs are not available, we apply valuation techniques to estimate fair value. Topic 820 establishes a three-level valuation hierarchy for disclosure of fair value measurements. The categorization of financial assets and financial liabilities within the valuation hierarchy is based upon the lowest level of input that is significant to the measurement of fair value. The three levels of the hierarchy are defined as follows:

• Level 1 – Inputs to the valuation methodology are quoted market prices for identical assets or liabilities.

• Level 2 – Inputs to the valuation methodology are other observable inputs, including quoted market prices for similar assets or liabilities and market-corroborated inputs.

• Level 3 – Inputs to the valuation methodology are unobservable inputs based on management’s best estimate of inputs market participants would use in pricing the asset or liability at the measurement date, including assumptions about risk.

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Assets and liabilities measured at fair value on a recurring basis consist of the following as of September 30, 2015 and December 31, 2014:

	September 30, 2015								As of December 31, 2014
(in millions)	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Assets
Money market and government funds	$	27	$	—	$	—	$	27	$	151	$	—	$	—	$	151
Currency hedge contracts	—		290		—		290		—		419		—		419
Interest rate contracts	—		—		—		—		—		25		—		25
	$	27	$	290	$	—	$	317	$	151	$	444	$	—	$	595
Liabilities
Currency hedge contracts	$	—	$	30	$	—	$	30	$	—	$	36	$	—	$	36
Accrued contingent consideration	—		—		266		266		—		—		274		274
	$	—	$	30	$	266	$	296	$	—	$	36	$	274	$	310

Our investments in money market and government funds are generally classified within Level 1 of the fair value hierarchy because they are valued using quoted market prices. These investments are classified as cash and cash equivalents within our accompanying unaudited condensed consolidated balance sheets, in accordance with U.S. GAAP and our accounting policies.

In addition to $27 million invested in money market and government funds as of September 30, 2015, we had $115 million in short-term time deposits and $208 million in interest bearing and non-interest bearing bank accounts. In addition to $151 million invested in money market and government funds as of December 31, 2014, we had $255 million in short-term deposits and $181 million in interest bearing and non-interest bearing bank accounts.

Our recurring fair value measurements using significant unobservable inputs (Level 3) relate solely to our contingent consideration liabilities. Refer to Note B - Acquisitions and Strategic Investments in this Quarterly Report on Form 10-Q, for a discussion of the changes in the fair value of our contingent consideration liabilities.

Non-Recurring Fair Value Measurements

We hold certain assets and liabilities that are measured at fair value on a non-recurring basis in periods subsequent to initial recognition. The fair value of a cost method investment is not estimated if there are no identified events or changes in circumstances that may have a significant adverse effect on the fair value of the investment. The aggregate carrying amount of our cost method investments was $121 million as of September 30, 2015 and $27 million as of December 31, 2014.

We recorded $10 million of losses to adjust our intangible assets to their fair value during the third quarter of 2015 and $19 million of losses for the first nine months of2015. We recorded $12 million of losses to adjust our intangible assets to their fair value during the third quarter of 2014 and $177 million of losses for the first nine months of2014. Refer to Note D - Goodwill and Other Intangible Assets in this Quarterly Report on Form 10-Q, for further information related to these charges and significant unobservable inputs (Level 3).

The fair value of our outstanding debt obligations was $6.080 billion as of September 30, 2015 and $4.613 billion as of December 31, 2014, which was determined by using primarily quoted market prices for our publicly registered senior notes, classified as Level 1 within the fair value hierarchy. Refer to Note F – Borrowings and Credit Arrangements in this Quarterly Report on Form 10-Q, for a discussion of our debt obligations.

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NOTE F – BORROWINGS AND CREDIT ARRANGEMENTS

We had total debt of $5.859 billion as of September 30, 2015 and $4.262 billion as of December 31, 2014. The debt maturity schedule for the significant components of our debt obligations as of September 30, 2015 is as follows:

(in millions)	2015		2016		2017		2018		2019		Thereafter		Total
Senior notes	$	—	$	—	$	250	$	600	$	—	$	3,800	$	4,650
Term loan	—		80		155		390		150		375		1,150
	$	—	$	80	$	405	$	990	$	150	$	4,175	$	5,800

Note: The table above does not include unamortized discounts associated with our senior notes, or amounts related to interest rate contracts used to hedge the fair value of certain of our senior notes.

Revolving Credit Facility

On April 10, 2015, we entered into a new $2.000 billion revolving credit facility (the 2015 Facility) with a global syndicate of commercial banks and terminated our previous $2.000 billionrevolving credit facility. The 2015 Facility matures on April 10, 2020. Eurodollar and multicurrency loans under the 2015 Facility bear interest at LIBOR plus an interest margin of between 0.900 percent and 1.500 percent, based on our corporate credit ratings and consolidated leverage ratio (1.300 percent as of September 30, 2015). In addition, we are required to pay a facility fee based on our credit ratings, consolidated leverage ratio and the total amount of revolving credit commitment, regardless of usage, under the credit agreement (0.200 percent per year as of September 30, 2015).The 2015 Facility contains covenants which, among other things, require that we maintain a minimum interest coverage ratio of 3.0 times consolidated EBITDA and a maximum leverage ratio of 4.5 times consolidated EBITDA for the first four fiscal quarter-ends following the closing of the AMS Portfolio Acquisition on August 3, 2015, and decreasing to 4.25 times, 4.0 times, and 3.75 times consolidated EBITDA for the next three fiscal quarter-ends after such four fiscal quarter-ends, respectively, and then to 3.5 times for each fiscal quarter-end thereafter. There were no amounts borrowed under our current and prior revolving credit facilities as of September 30, 2015 or December 31, 2014.

	Covenant Requirement as of September 30, 2015	Actual as of September 30, 2015
Maximum leverage ratio (1)	4.5 times	3.1 times
Minimum interest coverage ratio (2)	3.0 times	6.7 times

(1) Ratio of total debt to consolidated EBITDA, as defined by the credit agreement, for the preceding four consecutive fiscal quarters.

(2) Ratio of consolidated EBITDA, as defined by the credit agreement, to interest expense for the preceding four consecutive fiscal quarters.

The credit agreement for the 2015 Facility provides for an exclusion from the calculation of consolidated EBITDA, as defined by the credit agreement, through the credit agreement maturity, of any non-cash charges and up to $620 million in restructuring charges and restructuring-related expenses related to our current or future restructuring plans. As of September 30, 2015, we had$584 million of the restructuring charge exclusion remaining. In addition, any cash litigation payments (net of any cash litigation receipts), as defined by the agreement, are excluded from the calculation of consolidated EBITDA and any new debt issued to fund any tax deficiency payments is excluded from consolidated total debt, as defined in the agreement, provided that the sum of any excluded net cash litigation payments and any new debt issued to fund any tax deficiency payments not exceed $2.000 billionin the aggregate. As of September 30, 2015, we had $1.633 billion of the combined legal and debt exclusion remaining.

As of and through September 30, 2015, we were in compliance with the required covenants.

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Term Loans

As of September 30, 2015, we had an aggregate of $1.150 billion outstanding under our unsecured term loan facilities and $400 million outstanding as of December 31, 2014. This includes $400 million outstanding under an unsecured term loan facility (2013 Term Loan) as of September 30, 2015 andDecember 31, 2014. Term loan borrowings under this facility bear interest at LIBOR plus an interest margin of between 1.00 percent and 1.75 percent (currently 1.50 percent), based on our corporate credit ratings and consolidated leverage ratio. The term loan borrowings are payable over a five-year period, with quarterly principal payments of $20 million commencing in the first quarter of 2016 and the remaining principal amount due at the final maturity date in August 2018, and are repayable at any time without premium or penalty. Our term loan facility requires that we comply with certain covenants, including financial covenants with respect to maximum leverage and minimum interest coverage, consistent with our revolving credit facility. The maximum leverage ratio requirement is 4.5 times, and our actual leverage ratio as of September 30, 2015 is 3.1 times. The minimum interest coverage ratio requirement is 3.0 times, and our actual interest coverage ratio as of September 30, 2015 is 6.7 times.

On April 10, 2015, we entered into a new $750 million unsecured term loan credit facility (2015 Term Loan) which matures on August 3, 2020. The 2015 Term Loan was funded on August 3, 2015 and was used to partially fund the AMS Portfolio Acquisition, including the payment of fees and expenses. Term loan borrowings under this facility bear interest at LIBOR plus an interest margin of between 1.00 percent and 1.75 percent (currently 1.50 percent), based on our corporate credit ratings and consolidated leverage ratio. The 2015 Term Loan requires quarterly principal payments of $38 million commencing in the third quarter of 2017, and the remaining principal amount is due at the final maturity date of August 3, 2020. The 2015 Term Loan agreement requires that we comply with certain covenants, including financial covenants with respect to maximum leverage and minimum interest coverage, consistent with our revolving credit facility. The maximum leverage ratio requirement is 4.5 times, and our actual leverage ratio as of September 30, 2015 is 3.1 times. The minimum interest coverage ratio requirement is 3.0 times, and our actual interest coverage ratio as of September 30, 2015 is 6.7 times.

Senior Notes

We had senior notes outstanding of $4.650 billion as ofSeptember 30, 2015 and $3.800 billion as ofDecember 31, 2014. In May 2015, we completed the offering of$1.850 billion in aggregate principal amount of senior notes consisting of $600 million in aggregate principal amount of 2.850%notes due 2020, $500 million in aggregate principal amount of 3.375% notes due 2022 and$750 million in aggregate principal amount of 3.850% notes due 2025. The net proceeds from the offering of the notes, after deducting underwriting discounts and estimated offering expenses, were approximately $1.831 billion. We used a portion of the net proceeds from the senior notes offering to redeem $400 million aggregate principal amount of our 5.500% notes due November 2015 and $600 million aggregate principal amount of our6.400% notes due June 2016. The remaining senior notes offering proceeds, together with the 2015 Term Loan, were used to fund the AMS Portfolio Acquisition. We recorded a charge of$45 million in interest expense for premiums, accelerated amortization of debt issuance costs, and investor discount costs net of interest rate hedge gains related to the early debt extinguishment.

Our senior notes were issued in public offerings, are redeemable prior to maturity and are not subject to any sinking fund requirements. Our senior notes are unsecured, unsubordinated obligations and rank on parity with each other. These notes are effectively junior to borrowings under our credit and security facility and to liabilities of our subsidiaries (see Other Arrangements below).

Other Arrangements

We maintain a $300 million credit and security facility secured by our U.S. trade receivables maturing on June 9, 2017. The credit and security facility requires that we maintain a maximum leverage covenant consistent with our revolving credit facility. The maximum leverage ratio requirement is 4.5 times, and our actual leverage ratio as of September 30, 2015 is 3.1 times. We had no borrowings outstanding under this facility as of September 30, 2015 and December 31, 2014.

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We have accounts receivable factoring programs in certain European countries that we account for as sales under FASB ASC Topic 860, Transfers and Servicing. These agreements provide for the sale of accounts receivable to third parties, without recourse, of up to approximately$387 million as of September 30, 2015. We have no retained interests in the transferred receivables, other than collection and administrative responsibilities and, once sold, the accounts receivable are no longer available to satisfy creditors in the event of bankruptcy. We de-recognized $173 million of receivables as of September 30, 2015 at an average interest rate of2.5 percent, and $167 million as of December 31, 2014 at an average interest rate of 3.2 percent. Within Italy, Spain, Portugal and Greece, the number of days our receivables are outstanding has remained above historical levels. We believe we have adequate allowances for doubtful accounts related to our Italy, Spain, Portugal and Greece accounts receivable; however, we continue to monitor the European economic environment for any collectability issues related to our outstanding receivables. As ofSeptember 30, 2015, our net receivables in these countries greater than 180 days past due totaled $28 million, of which $13 millionwere past due greater than 365 days.

In addition, we have uncommitted credit facilities with a commercial Japanese bank that provide for borrowings, promissory notes discounting and receivables factoring of up to 21.000 billion Japanese yen (approximately $176 million as ofSeptember 30, 2015). We de-recognized $135 million of notes receivable as of September 30, 2015 at an average interest rate of 1.7 percent and $134 million of notes receivable as of December 31, 2014 at an average interest rate of 1.8 percent. De-recognized accounts and notes receivable are excluded from trade accounts receivable, net in the accompanying unaudited condensed consolidated balance sheets.

As of September 30, 2015 we had outstanding letters of credit of $65 million, as compared to $59 million as of December 31, 2014, which consisted primarily of bank guarantees and collateral for workers' compensation insurance arrangements. As ofSeptember 30, 2015 and December 31, 2014, none of the beneficiaries had drawn upon the letters of credit or guarantees; accordingly, we did not recognize a related liability for our outstanding letters of credit in our consolidated balance sheets as ofSeptember 30, 2015 or December 31, 2014. We believe we will generate sufficient cash from operations to fund these arrangements and intend to fund these arrangements without drawing on the letters of credit.

NOTE G – RESTRUCTURING-RELATED ACTIVITIES

On an ongoing basis, we monitor the dynamics of the economy, the healthcare industry, and the markets in which we compete. We continue to assess opportunities for improved operational effectiveness and efficiency, and better alignment of expenses with revenues, while preserving our ability to make the investments in research and development projects, capital and our people that we believe are essential to our long-term success. As a result of these assessments, we have undertaken various restructuring initiatives in order to enhance our growth potential and position us for long-term success. These initiatives are described below.

2014 Restructuring Plan

On October 22, 2013, our Board of Directors approved, and we committed to, a restructuring initiative (the 2014 Restructuring plan). The 2014 Restructuring plan is intended to build on the progress we have made to address financial pressures in a changing global marketplace, further strengthen our operational effectiveness and efficiency and support new growth investments. Key activities under the plan include continued implementation of our ongoing Plant Network Optimization (PNO) strategy, continued focus on driving operational efficiencies and ongoing business and commercial model changes. The PNO strategy is intended to simplify our manufacturing plant structure by transferring certain production lines among facilities. Other activities involve rationalizing organizational reporting structures to streamline various functions, eliminate bureaucracy, increase productivity and better align resources to business strategies and marketplace dynamics. These activities were initiated in the fourth quarter of 2013 and are expected to be substantially completed by the end of 2015, with the exception of certain ongoing actions associated with our PNO strategy. These ongoing actions associated with our PNO strategy will be substantially completed by the end of 2016.

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We estimate that the implementation of the 2014 Restructuring plan will result in total pre-tax charges of approximately $250 million to $300 million, and approximately $235 million to $285 million of these charges are estimated to result in cash outlays, of which we have made payments of $159 million through September 30, 2015. We have recorded related costs of $204 million since the inception of the plan, and recorded a portion of these expenses as restructuring charges and the remaining portion through other lines within our consolidated statements of operations.

The following table provides a summary of our estimates of costs associated with the 2014 Restructuring plan by major type of cost:

Type of cost	Total estimated amount expected to be incurred
Restructuring charges:
Termination benefits	$115 million to $135 million
Other (1)	$25 million to $35 million
Restructuring-related expenses:
Other (2)	$110 million to $130 million
	$250 million to $300 million

(1) Consists primarily of consulting fees and costs associated with contract cancellations.

(2) Comprised of other costs directly related to the 2014 Restructuring plan, including program management, accelerated depreciation, and costs to transfer product lines among facilities.

2011 Restructuring Plan

On July 26, 2011, our Board of Directors approved, and we committed to, a restructuring initiative (the 2011 Restructuring plan) designed to strengthen operational effectiveness and efficiencies, increase competitiveness and support new investments. Key activities under the 2011 Restructuring plan included standardizing and automating certain processes and activities; relocating select administrative and functional activities; rationalizing organizational reporting structures; leveraging preferred vendors; and other efforts to eliminate inefficiency. Among these efforts, we expanded our ability to deliver best-in-class global shared services for certain functions and businesses at several locations in emerging markets. On January 25, 2013, our Board of Directors approved, and we committed to, an expansion of the 2011 Restructuring plan (the Expansion). The Expansion was intended to further strengthen our operational effectiveness and efficiencies and support new investments. Activities under the 2011 Restructuring plan were initiated in the third quarter of 2011 and all activities, including those related to the Expansion, were substantially completed by the end of 2013.

The 2011 Restructuring plan, including the Expansion, resulted in net pre-tax charges of $286 million, and $287 million of cash outlays. In addition, we received $53 million of cash proceeds on facility and fixed asset sales. We recorded a portion of these expenses as restructuring charges and the remaining portion through other lines within our consolidated statements of operations.

The following provides a summary of our total costs associated with the 2011 Restructuring plan, including the Expansion, by major type of cost:

Type of cost	Total amounts incurred
Restructuring charges:
Termination benefits	$135 million
Other (1)	$112 million
Restructuring-related expenses:
Other (2)	$39 million
	$286 million

(1) Includes primarily consulting fees, gains and losses on disposals of fixed assets and costs associated with contract cancellations.

(2) Comprised of other costs directly related to the 2011 Restructuring plan, including the Expansion, such as program management, accelerated depreciation, retention and infrastructure-related costs.

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We recorded net restructuring charges pursuant to our restructuring plans of $7 million in the third quarter of 2015, $2 million in the third quarter of 2014, $16 million in the first nine months of2015 and $37 million in the first nine months of2014. In addition, we recorded expenses within other lines of our accompanying unaudited condensed consolidated statements of operations related to our restructuring initiatives of $14 million in the third quarter of 2015, $15 million in the third quarter of 2014, $42 million in the first nine months of2015 and $33 million in the first nine months of2014.

The following presents these costs (credits) by major type and line item within our accompanying unaudited condensed consolidated statements of operations, as well as by program:

Three Months Ended September 30, 2015
(in millions)	Termination Benefits		Accelerated Depreciation		Transfer Costs		Other		Total
Restructuring charges	$	5	$	—	$	—	$	2	$	7
Restructuring-related expenses:
Cost of products sold	—		—		5		—		5
Selling, general and administrative expenses	—		1		—		8		9
	—		1		5		8		14
	$	5	$	1	$	5	$	10	$	21

All charges incurred in the third quarter of 2015 are related to the 2014 Restructuring Plan.

Three Months Ended September 30, 2014
(in millions)	Termination Benefits			Accelerated Depreciation		Transfer Costs		Other		Total
Restructuring charges	$	—		$	—	$	—	$	2	$	2
Restructuring-related expenses:
Cost of products sold	—			—		9		—		9
Selling, general and administrative expenses	—			1		—		5		6
	—			1		9		5		15
	$	—		$	1	$	9	$	7	$	17
(in millions)	Termination Benefits			Accelerated Depreciation		Transfer Costs		Other		Total
2014 Restructuring plan	$	(1	)	$	1	$	9	$	7	$	16
2011 Restructuring plan (including the Expansion)	1			—		—		—		1
	$	—		$	1	$	9	$	7	$	17

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Nine Months Ended September 30, 2015
(in millions)	Termination Benefits			Accelerated Depreciation		Transfer Costs		Other		Total
Restructuring charges	$	13		$	—	$	—	$	3	$	16
Restructuring-related expenses:
Cost of products sold	—			—		20		—		20
Selling, general and administrative expenses	—			3		—		19		22
	—			3		20		19		42
	$	13		$	3	$	20	$	22	$	58
(in millions)	Termination Benefits			Accelerated Depreciation		Transfer Costs		Other		Total
2014 Restructuring plan	$	17		$	3	$	20	$	22	$	62
2011 Restructuring plan (including the Expansion)	(4		)	—		—		—		(4		)
	$	13		$	3	$	20	$	22	$	58
Nine Months Ended September 30, 2014
(in millions)	Termination Benefits			Accelerated Depreciation		Transfer Costs		Other		Total
Restructuring charges	$	19		$	—	$	—	$	18	$	37
Restructuring-related expenses:
Cost of products sold	—			—		15		—		15
Selling, general and administrative expenses	—			3		—		15		18
	—			3		15		15		33
	$	19		$	3	$	15	$	33	$	70
(in millions)	Termination Benefits			Accelerated Depreciation		Transfer Costs		Other		Total
2014 Restructuring plan	$	18		$	3	$	15	$	30	$	66
2011 Restructuring plan (including the Expansion)	1			—		—		3		4
	$	19		$	3	$	15	$	33	$	70

Termination benefits represent amounts incurred pursuant to our ongoing benefit arrangements and amounts for “one-time” involuntary termination benefits, and have been recorded in accordance with FASB ASC Topic 712, Compensation – Non-retirement Postemployment Benefits and FASB ASC Topic 420, Exit or Disposal Cost Obligations (Topic 420). We expect to record additional termination benefits related to our restructuring initiatives throughout 2015 when we identify with more specificity the job classifications, functions and locations of the remaining head count to be eliminated. Other restructuring costs, which represent primarily consulting fees and costs related to contract cancellations, are being recorded as incurred in accordance with Topic 420. Accelerated depreciation is being recorded over the adjusted remaining useful life of the related assets, and production line transfer costs are being recorded as incurred.

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As of September 30, 2015, we incurred cumulative restructuring charges related to our 2014 Restructuring plan and 2011 Restructuring plan (including the Expansion) of $361 million and restructuring-related costs of $129 million since we committed to each plan. The following presents these costs by major type and by plan:

(in millions)	2014 Restructuring plan		2011 Restructuring plan (including the Expansion)			Total
Termination benefits	$	86	$	135		$	221
Net loss (gain) on fixed asset disposals	—		(1		)	(1		)
Other	28		113			141
Total restructuring charges	114		247			361
Accelerated depreciation	8		5			13
Transfer costs	45		—			45
Other	37		34			71
Restructuring-related expenses	90		39			129
	$	204	$	286		$	490

We made cash payments of $20 million in the third quarter of 2015 and $66 million in the first nine months of2015 associated with our restructuring initiatives and as of September 30, 2015, we had made total cash payments of $446 million related to our 2014 Restructuring plan and 2011 Restructuring plan (including the Expansion) since committing to each plan. These payments were made using cash generated from operations, and are comprised of the following:

(in millions)	2014 Restructuring plan		2011 Restructuring plan (including the Expansion)		Total
Three Months Ended September 30, 2015
Termination benefits	$	6	$	—	$	6
Transfer costs	5		—		5
Other	9		—		9
	$	20	$	—	$	20
Nine Months Ended September 30, 2015
Termination benefits	$	24	$	—	$	24
Transfer costs	20		—		20
Other	22		—		22
	$	66	$	—	$	66
Program to Date
Termination benefits	$	55	$	133	$	188
Transfer costs	45		—		45
Other	59		154		213
	$	159	$	287	$	446

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Our restructuring liability is primarily comprised of accruals for termination benefits. The following is a rollforward of the termination benefit liability associated with our 2014 Restructuring plan and 2011 Restructuring plan (including the Expansion), which is reported as a component of accrued expenses included in our accompanying unaudited condensed balance sheets:

(in millions)	2014 Restructuring plan			2011 Restructuring plan (including the Expansion)			Total
Accrued as of December 31, 2014	$	39		$	4		$	43
Charges (credits)	17			(4		)	13
Cash payments	(24		)	—			(24		)
Accrued as of September 30, 2015	$	32		$	—		$	32

In addition to our accrual for termination benefits, we had a $5 million liability as of September 30, 2015 and a $6 million liability as of December 31, 2014 for other restructuring-related items.

NOTE H – SUPPLEMENTAL BALANCE SHEET INFORMATION

Components of selected captions in our accompanying unaudited condensed consolidated balance sheets are as follows:

Trade accounts receivable, net

	As of
(in millions)	September 30, 2015			December 31, 2014
Accounts receivable	$	1,390		$	1,288
Less: allowance for doubtful accounts	(77		)	(76		)
Less: allowance for sales returns	(39		)	(29		)
	$	1,274		$	1,183

The following is a rollforward of our allowance for doubtful accounts for the third quarter and first nine months of2015 and 2014:

	Three Months Ended September 30,						Nine Months Ended September 30,
(in millions)	2015			2014			2015			2014
Beginning balance	$	77		$	80		$	76		$	81
Charges to expenses	3			—			11			4
Utilization of allowances	(3		)	(5		)	(10		)	(10		)
Ending balance	$	77		$	75		$	77		$	75

Inventories

	As of
(in millions)	September 30, 2015		December 31, 2014
Finished goods	$	751	$	649
Work-in-process	110		97
Raw materials	225		200
	$	1,086	$	946

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Property, plant and equipment, net

	As of
(in millions)	September 30, 2015		December 31, 2014
Land	$	87	$	80
Buildings and improvements	965		944
Equipment, furniture and fixtures	2,787		2,633
Capital in progress	195		189
	4,034		3,846
Less: accumulated depreciation	2,555		2,339
	$	1,479	$	1,507

Depreciation expense was $68 million for the third quarter of 2015, $71 million for the third quarter of 2014, $198 million for the first nine months of2015 and $205 million for the first nine months of2014.

Accrued expenses

	As of
(in millions)	September 30, 2015		December 31, 2014
Legal reserves	$	383	$	694
Payroll and related liabilities	469		512
Accrued contingent consideration	164		158
Other	589		586
	$	1,605	$	1,950

Other long-term liabilities

	As of
(in millions)	September 30, 2015		December 31, 2014
Accrued income taxes	$	1,287	$	1,231
Legal reserves	1,176		883
Accrued contingent consideration	102		116
Other long-term liabilities	436		436
	$	3,001	$	2,666

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Accrued warranties

We offer warranties on certain of our product offerings. The majority of our warranty liability relates to implantable devices offered by our Cardiac Rhythm Management (CRM) business, which include defibrillator and pacemaker systems. Our CRM products come with a standard limited warranty covering the replacement of these devices. We offer a full warranty for a portion of the period post-implant, and a partial warranty over the substantial remainder of the useful life of the product. We estimate the costs that we may incur under our warranty programs based on the number of units sold, historical and anticipated rates of warranty claims and cost per claim, and record a liability equal to these estimated costs as cost of products sold at the time the product sale occurs. We reassess the adequacy of our recorded warranty liabilities on a quarterly basis and adjust these amounts as necessary. The current portion of our warranty accrual is included in other accrued expenses in the table above and the non-current portion of our warranty accrual is included in other long-term liabilities in the table above. Changes in our product warranty accrual during the first nine months of2015 and 2014 consisted of the following (in millions):

	Nine Months Ended September 30,
	2015			2014
Beginning Balance	$	25		$	28
Provision	11			6
Settlements/reversals	(11		)	(9		)
Ending Balance	$	25		$	25

NOTE I – INCOME TAXES

Our effective tax rates from continuing operations for the three months ended September 30, 2015 and September 30, 2014, were 45.9% and (1,343.2)%, respectively. For the first nine months of2015 and 2014 our effective tax rates from continuing operations were 68.9% and (296.0)%, respectively. The change in our reported tax rate for the third quarter and first nine months of2015, as compared to the same periods in 2014, relates primarily to the impact of certain receipts and charges that are taxed at different rates than our effective tax rate, including intangible asset impairment charges, acquisition-related items, litigation- and restructuring-related items, pension termination charges, debt extinguishment charges, as well as the impact of certain discrete tax items.

As of September 30, 2015, we had $1.086 billion of gross unrecognized tax benefits, of which a net $925 million, if recognized, would affect our effective tax rate. As of December 31, 2014, we had $1.047 billion of gross unrecognized tax benefits, of which a net $903 million, if recognized, would affect our effective tax rate.

We have received Notices of Deficiency from the Internal Revenue Service (IRS) reflecting proposed audit adjustments for Guidant Corporation for its 2001 through 2006 tax years and Boston Scientific Corporation for its 2006 and 2007 tax years. The total incremental tax liability asserted by the IRS for the applicable periods is $1.162 billion plus interest. The primary issue in dispute for all years is the transfer pricing associated with the technology license agreements between domestic and foreign subsidiaries of Guidant. In addition, the IRS has proposed adjustments in connection with the financial terms of our Transaction Agreement with Abbott Laboratories pertaining to the sale of Guidant's vascular intervention business to Abbott in April 2006. In addition to the Notices of Deficiency, during 2014, we received a Revenue Agent Report from the IRS reflecting significant proposed audit adjustments to our 2008, 2009, and 2010 tax years based upon the same transfer pricing methodologies that the IRS applied to our 2001 through 2007 tax years.

We do not agree with the transfer pricing methodologies applied by the IRS or its resulting assessment. In addition, we believe that the IRS positions with regard to these matters are inconsistent with the applicable tax laws and the existing Treasury regulations. We believe we have meritorious defenses for our tax filings and we have filed petitions with the U.S. Tax Court contesting the Notices of Deficiency for the 2001 - 2007 tax years in challenge. We currently expect the trial in this matter to occur in the second half of 2016. Furthermore, we have submitted a letter to the IRS protesting the Revenue Agent’s Report for the 2008 - 2010 tax years and requesting an administrative appeal hearing. We do not believe that the IRS will hear our appeal until the Tax Court case is concluded.

No payments on the net assessments would be required until the dispute is definitively resolved, which, based on experiences of other companies, could take several years. We believe our income tax reserves associated with these matters are adequate as of September 30, 2015. However, final resolution is uncertain and could have a material impact on our financial condition, results of operations, or cash flows.

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We recognize interest and penalties related to income taxes as a component of income tax expense. We had $491 million accrued for gross interest and penalties as of September 30, 2015 and $443 million as of December 31, 2014. We recognized net tax expense related to interest and penalties of $11 million during the third quarter of 2015, $9 million during the third quarter of 2014, $32 million during the first nine months of2015 and $28 million during the first nine months of2014.

It is reasonably possible that within the next 12 months we will resolve multiple issues including transfer pricing and transactional-related issues with foreign, federal and state taxing authorities, in which case we could record a reduction in our balance of unrecognized tax benefits of up to approximately $10 million.

NOTE J – COMMITMENTS AND CONTINGENCIES

The medical device market in which we primarily participate is largely technology driven. As a result, intellectual property rights, particularly patents and trade secrets, play a significant role in product development and differentiation. Over the years, there has been litigation initiated against us by others, including our competitors, claiming that our current or former product offerings infringe patents owned or licensed by them. Intellectual property litigation is inherently complex and unpredictable. In addition, competing parties frequently file multiple suits to leverage patent portfolios across product lines, technologies and geographies and to balance risk and exposure between the parties. In some cases, several competitors are parties in the same proceeding, or in a series of related proceedings, or litigate multiple features of a single class of devices. These forces frequently drive settlement not only for individual cases, but also for a series of pending and potentially related and unrelated cases. Although monetary and injunctive relief is typically sought, remedies and restitution are generally not determined until the conclusion of the trial court proceedings and can be modified on appeal. Accordingly, the outcomes of individual cases are difficult to time, predict or quantify and are often dependent upon the outcomes of other cases in other geographies.

During recent years, we successfully negotiated closure of several long-standing legal matters and have received favorable legal rulings in several other matters; however, there continues to be outstanding intellectual property litigation. Adverse outcomes in one or more of these matters could have a material adverse effect on our ability to sell certain products and on our operating margins, financial position, results of operations and/or liquidity.

In the normal course of business, product liability, securities and commercial claims are asserted against us. Similar claims may be asserted against us in the future related to events not known to management at the present time. We maintain an insurance policy providing limited coverage against securities claims, and we are substantially self-insured with respect to product liability claims and fully self-insured with respect to intellectual property infringement claims. The absence of significant third-party insurance coverage increases our potential exposure to unanticipated claims or adverse decisions. Product liability claims, securities and commercial litigation, and other legal proceedings in the future, regardless of their outcome, could have a material adverse effect on our financial position, results of operations and/or liquidity.

In addition, like other companies in the medical device industry, we are subject to extensive regulation by national, state and local government agencies in the United States and other countries in which we operate. From time to time we are the subject of qui tam actions and governmental investigations often involving regulatory, marketing and other business practices. These qui tam actions and governmental investigations could result in the commencement of civil and criminal proceedings, substantial fines, penalties and administrative remedies and have a material adverse effect on our financial position, results of operations and/or liquidity.

In accordance with FASB ASC Topic 450, Contingencies, we accrue anticipated costs of settlement, damages, losses for product liability claims and, under certain conditions, costs of defense, based on historical experience or to the extent specific losses are probable and estimable. Otherwise, we expense these costs as incurred. If the estimate of a probable loss is a range and no amount within the range is more likely, we accrue the minimum amount of the range.

Our accrual for legal matters that are probable and estimable was $1.559 billion as of September 30, 2015 and $1.577 billion as of December 31, 2014, and includes estimated costs of settlement, damages and defense. We recorded $649 million of litigation-related charges during the first nine months of2015 and $399 million of litigation-related charges during the first nine months of2014. We continue to assess certain litigation and claims to determine the amounts, if any, that management believes will be paid as a result of such claims and litigation and, therefore, additional losses may be accrued and paid in the future, which could materially adversely impact our operating results, cash flows and/or our ability to comply with our debt covenants.

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In management's opinion, we are not currently involved in any legal proceedings other than those disclosed in our 2014 Annual Report on Form 10-K and our Quarterly Reports on Form 10-Q for the quarters ended March 31, 2015 and June 30, 2015 and those specifically identified below, which, individually or in the aggregate, could have a material adverse effect on our financial condition, operations and/or cash flows. Unless included in our legal accrual or otherwise indicated below, a range of loss associated with any individual material legal proceeding cannot be estimated.

Patent Litigation

On September 22, 2009, Cordis Corporation, Cordis LLC and Wyeth Corporation filed a complaint for patent infringement against Abbott Laboratories, Abbott Cardiovascular Systems, Inc., Boston Scientific Scimed, Inc. and us alleging that the PROMUS® coronary stent system, supplied to us by Abbott, infringes a patent (the Llanos patent) owned by Cordis and Wyeth. The suit was filed in the U.S. District Court for the District of New Jersey seeking monetary and injunctive relief. In August 2010, Cordis filed an amended complaint to add an additional patent and in September 2010, we filed counterclaims of invalidity and non-infringement. On October 26, 2011, the District Court granted Cordis' motion to add the Promus Element stent system to the case. On February 6, 2012, the District Court granted our motion to stay the action until the conclusion of the reexaminations against the Llanos patents that are pending in the U.S. Patent and Trademark Office.On February 27, 2015, the U.S. Patent and Trademark Office issued a decision in which certain claims of the Llanos patent were deemed unpatentable. On April 24, 2015, Cordis filed an appeal before the Federal Circuit.

On May 19, 2005, G. David Jang, M.D. filed suit against us alleging breach of contract relating to certain patent rights covering stent technology. The suit was filed in the U.S. District Court for the Central District of California seeking monetary damages and rescission of contract. After a Markman ruling relating to the Jang patent rights, Dr. Jang stipulated to the dismissal of certain claims alleged in the complaint with a right to appeal and the parties subsequently agreed to settle the other claims. In May 2007, Dr. Jang filed an appeal with respect to the remaining patent claims and in July 2008, the Court of Appeals vacated the District Court's consent judgment and remanded the case back to the District Court for further clarification. In August 2011, the District Court entered a stipulated judgment that we did not infringe the Jang patent. Dr. Jang filed an appeal on September 21, 2011 and on August 22, 2012, the Court of Appeals vacated the District Court's judgment and remanded the case to the District Court for further proceedings. On April 18, 2014, the case was stayed pending consideration of an interlocutory appeal. On September 16, 2014, the Court of Appeals for the Federal Circuit denied our request for an interlocutory appeal. On July 8, 2015, a jury found that our Express Stent family did not literally infringe a Jang patent, but that the stents infringed under the doctrine of equivalents. The court reserved judgment until the conclusion of further proceedings related to the doctrine of equivalents finding. On September 29, 2015, the court ruled that our Express Stent family did not infringe under the doctrine of equivalents and, on October 30, 2015, the court entered judgment in our favor.

On February 18, 2014, Atlas IP, LLC filed a complaint in the United States District Court for the Southern District of Florida alleging that the sale of our LATITUDE® Patient Management System and implantable devices that communicate with the LATITUDE® device infringe a patent owned by Atlas. On July 9, 2014, the District Court granted our motion to transfer venue to the United States District Court for the District of Minnesota. On January 12, 2015, Atlas dismissed its complaint. On September 22, 2015, Atlas IP LLC filed a complaint in Federal Court in Ottawa, Ontario, Canada alleging that the sale of our LATITUDE® Patient Management System and implantable devices that communicate with the LATITUDE® device infringe certain claims of a Canadian patent owned by Atlas.

On September 22, 2014, The Board of Trustees for the University of Alabama filed a complaint in the United States District Court for the Northern District of Alabama alleging that the sale of our cardiac resynchronization therapy devices infringe a patent owned by the University of Alabama. On August 21, 2015, the court ordered a stay pending our request for inter partes review of all claims related to the patent before the Patent Trial and Appeal Board of the U.S. Patent and Trademark Office.

On October 30, 2015, a subsidiary of Boston Scientific filed suit against Edwards Lifesciences Corporation and Edwards Lifesciences Services GmbH in Düsseldorf District Court in Germany for patent infringement. We allege that Edwards’ SAPIEN 3 heart valve infringes our patent related to adaptive sealing technology.

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Product Liability Litigation

As of November 2, 2015, there were over 30,000 product liability cases or claims related to transvaginal surgical mesh products designed to treat stress urinary incontinence and pelvic organ prolapse pending against us. The cases are pending in various federal and state courts in the United States and include eight putative class actions. There were also fewer than 20 cases in Canada, inclusive of four putative class actions, and fewer than 15 claims in the United Kingdom. Generally, the plaintiffs allege personal injury associated with use of our transvaginal surgical mesh products. The plaintiffs assert design and manufacturing claims, failure to warn, breach of warranty, fraud, violations of state consumer protection laws and loss of consortium claims. Over 3,100 of the cases have been specially assigned to one judge in state court in Massachusetts. On February 7, 2012, the Judicial Panel on Multi-District Litigation (MDL) established MDL-2326 in the U.S. District Court for the Southern District of West Virginia and transferred the federal court transvaginal surgical mesh cases to MDL-2326 for coordinated pretrial proceedings. During the fourth quarter of 2013, we received written discovery requests from certain state attorneys general offices regarding our transvaginal surgical mesh products. We have responded to those requests. During April 2015, we entered into an initial master settlement agreement with certain plaintiffs’ counsel to settle 2,970 pending cases and claims, including the case in the District Court of Dallas County (TX) for which there is a judgment of approximately $35 million that is currently subject to appeal, for approximately $119 million. Subsequently, we entered into several additional master settlement agreements with certain plaintiffs’ counsel. As of November 2, 2015, we have entered into master settlement agreements to resolve an aggregate of over 6,000 cases and claims. Each master settlement agreement was entered into solely by way of compromise and without any admission or concession by us of any liability or wrongdoing and provides that the settlement and the distribution of settlement funds to participating claimants are conditioned upon, among other things, achieving minimum required claimant participation thresholds. If the participation thresholds under a master settlement agreement are not satisfied, we may terminate that agreement. In addition, we continue to engage in discussions with various plaintiffs’ counsel regarding potential resolution of pending cases and claims

We have established a product liability accrual for known and estimated future cases and claims asserted against us as well as with respect to the actions that have resulted in verdicts against us and the costs of defense thereof associated with our transvaginal surgical mesh products. While we believe that our accrual associated with this matter is adequate, changes to this accrual may be required in the future as additional information becomes available. While we continue to engage in discussions with plaintiffs’ counsel regarding potential resolution of pending cases and claims and intend to vigorously contest the cases and claims asserted against us; that do not settle, the final resolution of the cases and claims is uncertain and could have a material impact on our results of operations, financial condition and/or liquidity. Initial trials involving our transvaginal surgical mesh products have resulted in both favorable and unfavorable judgments for us. We do not believe that the judgment in any one trial is representative of potential outcomes of all cases or claims related to our transvaginal surgical mesh products.

Governmental Investigations and Qui Tam Matters

On July 11, 2014, we were served with a subpoena from the U.S. Attorney for the District of New Jersey. The subpoena seeks information relating to BridgePoint Medical, Inc., which we acquired in October 2012, including information relating to its sale of CrossBoss^® and Stingray^® products, educational and training activities that relate to those sales and our acquisition of BridgePoint Medical. We are cooperating with this request. A qui tam complaint, originally filed under seal on April 22, 2014, was unsealed on August 20, 2015, along with a notice from the U.S. Attorney for the District of New Jersey that was declining to intervene in the lawsuit. The relator is a former Boston Scientific employee named Robin Levy. The complaint claims that we marketed the Chronic Total Occlusion (“CTO”) procedure as one requiring in-patient treatment and required purchases of coronary stents in order to receive training on the CTO procedure. The claims are both allegedly in violation of the federal, and various state, false claims acts. The complaint has not yet been served on us.

Refer to Note I - Income Taxes for information regarding our tax litigation.

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Matters Concluded Since December 31, 2014

On September 25, 2006, Johnson & Johnson filed a lawsuit against us, Guidant and Abbott Laboratories in the U.S. District Court for the Southern District of New York. The complaint alleges that Guidant breached certain provisions of the amended merger agreement between Johnson & Johnson and Guidant (Merger Agreement) as well as the implied duty of good faith and fair dealing. The complaint further alleges that Abbott and we tortiously interfered with the Merger Agreement by inducing Guidant's breach. The complaint seeks certain factual findings, damages in an amount no less than $5.500 billion and attorneys' fees, costs, and interest. In August 2007, the judge dismissed the tortious interference claims against us and Abbott and the implied duty of good faith and fair dealing claim against Guidant. On June 20, 2011, Guidant filed a motion for summary judgment, and the hearing on this motion was held on July 25, 2012. On July 7, 2014, the judge denied Guidant’s motion. The bench trial was held in November and December. On February 13, 2015, the parties reached a settlement agreement pursuant to which Guidant made aggregate payments to Johnson & Johnson totaling $600 million, we agreed that neither we nor our affiliates will commence, or assist any third party in commencing, proceedings of any kind, against Johnson & Johnson or its affiliates for patent infringement or seeking any remedy for patent infringement based on Johnson & Johnson or its affiliates making, having made, using, selling, offering for sale or importing the S.M.A.R.T^®, S.M.A.R.T^® Control^®, and S.M.A.R.T^® Flex stent products and Johnson & Johnson dismissed its actions against Guidant with prejudice.

On October 5, 2007, Dr. Tassilo Bonzel filed a complaint against Pfizer, Inc. and our Schneider subsidiaries and us in the District Court in Kassel, Germany alleging that a 1995 license agreement related to a catheter patent is invalid under German law and seeking monetary damages. In June 2009, the District Court dismissed all but one of Dr. Bonzel's claims and in October 2009, he added new claims. We opposed the addition of the new claims. The District Court ordered Dr. Bonzel to select the claims he would pursue and in January 2011, he made that selection. A hearing was held on March 28, 2014 and a decision was made to take evidence at a hearing to be set at a later date. On January 23, 2015, the parties reached a confidential settlement agreement. On April 15, 2015, all remaining Boston Scientific affiliates were dismissed from the case.

On June 27, 2008, the Republic of Iraq filed a complaint against our wholly-owned subsidiary, BSSA France, and 92 other defendants in the U.S. District Court of the Southern District of New York. The complaint alleges that the defendants acted improperly in connection with the sale of products under the United Nations Oil for Food Program. The complaint also alleges Racketeer Influenced and Corrupt Organizations Act (RICO) violations, conspiracy to commit fraud and the making of false statements and improper payments, and it seeks monetary and punitive damages. On February 6, 2013, the District Court dismissed the complaint with prejudice on standing and jurisdictional grounds. On September 18, 2014, the U.S. Court of Appeals for the Second Circuit affirmed the District Court’s decision to dismiss the complaint with prejudice. On October 2, 2014, the plaintiff filed a petition for rehearing en banc. On December 2, 2014, the Second Circuit denied the petition for rehearing en banc. On March 2, 2015, the plaintiff filed a Petition for Writ of Certiorari with the United States Supreme Court requesting judicial review of the Second Circuit’s decision. On June 15, 2015, the United States Supreme Court denied the plaintiff’s Petition for Writ of Certiorari.

On May 17, 2010, Dr. Luigi Tellini filed suit against us and certain of our subsidiaries, Guidant Italia S.r.l. and Boston Scientific S.p.A., in the Civil Tribunal in Milan, Italy alleging certain of our Cardiac Rhythm Management products infringe an Italian patent (the Tellini patent) owned by Dr. Tellini and seeking monetary damages. In January 2011, Dr. Tellini refiled amended claims after his initial claims were dismissed without prejudice to refile. On February 12, 2015, the Tribunal found the Tellini patent invalid and dismissed the case.

On October 14, 2014, MK Optics, LLC filed a complaint in the United States District Court for the District of Delaware alleging that the sale of our Spyglass Direct Visualization System infringes a patent owned by MK Optics. The parties entered into a confidential settlement agreement and the case was dismissed on April 6, 2015.

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NOTE K – WEIGHTED AVERAGE SHARES OUTSTANDING

	Three Months Ended September 30,			Nine Months Ended September 30,
(in millions)	2015		2014	2015		2014
Weighted average shares outstanding - basic	1,344.0		1,325.5	1,339.7		1,323.5
Net effect of common stock equivalents	—	*	22.1	—	*	23.8
Weighted average shares outstanding - assuming dilution	1,344.0		1,347.6	1,339.7		1,347.3

* We generated a net loss in the third quarter and first nine months of2015. Our weighted-average shares outstanding for earnings per share calculations exclude common stock equivalents of 20.2 million and 21.5 million for the third quarter and first nine months of2015, respectively, due to our net loss position in these periods.

Weighted average shares outstanding, assuming dilution, excludes the impact of two million stock options for the third quarter of 2015, 13 million stock options for the third quarter of 2014, two million stock options for the first nine months of2015 and 13 million stock options for the first nine months of2014, due to the exercise prices of these stock options being greater than the average fair market value of our common stock during the period.

We issued approximately three million shares of our common stock in the third quarter of 2015, two million shares of our common stock in the third quarter of 2014, 17 million shares of our common stock for the first nine months of2015 and 13 million shares of our common stock for the first nine months of2014, following the exercise or vesting of underlying stock options or deferred stock units, or purchases under our employee stock purchase plans. We did not repurchase any shares of our common stock during the third quarter of 2015 or 2014. We did not repurchase any shares of our common stock during the first nine months of 2015 and repurchased 10 million shares of our common stock during the first nine months of2014 for approximately $125 million.

NOTE L – SEGMENT REPORTING

We have three reportable segments comprised of Cardiovascular, Rhythm Management, and MedSurg. Our reportable segments represent an aggregate of operating segments. Each of our reportable segments generates revenues from the sale of medical devices. We measure and evaluate our reportable segments based on segment net sales and operating income, excluding the impact of changes in foreign currency and sales from divested businesses. Sales generated from reportable segments and divested businesses, as well as operating results of reportable segments, are based on internally-derived standard currency exchange rates, which may differ from year to year, and do not include intersegment profits. We restate segment information for the prior period based on our internally-derived standard currency exchange rates used for the current period in order to remove the impact of foreign currency exchange fluctuation. We exclude from segment operating income certain corporate-related expenses and certain charges or credits that our chief operating decision maker considers to be non-recurring and/or non-operational, such as amounts related to intangible asset impairment charges; acquisition-, divestiture-, restructuring- and litigation-related charges and credits; pension termination charges; and amortization expense. Although we exclude these amounts from segment operating income, they are included in reported consolidated operating income (loss) and are included in the reconciliation below.

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A reconciliation of the totals reported for the reportable segments to the applicable line items in our accompanying unaudited condensed consolidated statements of operations is as follows:

	Three Months Ended September 30,						Nine Months Ended September 30,
(in millions)	2015			2014			2015			2014
Net sales
Interventional Cardiology	$	551		$	514		$	1,659		$	1,543
Peripheral Interventions	246			217			723			631
Cardiovascular	797			731			2,382			2,174
Cardiac Rhythm Management	483			482			1,456			1,441
Electrophysiology	61			54			182			167
Rhythm Management	544			536			1,638			1,608
Endoscopy	362			340			1,042			990
Urology and Pelvic Health	207			138			479			397
Neuromodulation	128			115			369			338
MedSurg	697			593			1,890			1,725
Net sales allocated to reportable segments	2,038			1,860			5,910			5,507
Sales generated from divested businesses	—			1			—			4
Impact of foreign currency fluctuations	(150		)	(15		)	(411		)	(18		)
	$	1,888		$	1,846		$	5,499		$	5,493
Income (loss) before income taxes
Cardiovascular	$	249		$	201		$	732		$	565
Rhythm Management	97			76			252			209
MedSurg	235			192			590			535
Operating income allocated to reportable segments	581			469			1,574			1,309
Corporate expenses and currency exchange	(145		)	(90		)	(334		)	(205		)
Intangible asset impairment charges; pension termination charges; acquisition-, divestiture-, restructuring-, and litigation-related net charges and credits	(604		)	(206		)	(935		)	(586		)
Amortization expense	(131		)	(109		)	(361		)	(327		)
Operating income (loss)	(299		)	64			(56		)	191
Other expense, net	(68		)	(61		)	(256		)	(146		)
Income (loss) before income taxes	$	(367	)	$	3		$	(312	)	$	45

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NOTE M – CHANGES IN OTHER COMPREHENSIVE INCOME

The following table provides the reclassifications out of other comprehensive income for the three and nine month periods endedSeptember 30, 2015 and September 30, 2014. Amounts in the chart below are presented net of tax.

Three Months Ended September 30, 2015
(in millions)	Foreign currency translation adjustments			Unrealized gains/losses on derivative financial instruments			Defined benefit pension items / Other			Total
Balance as of June 30, 2015	$	(68	)	$	204		$	(32	)	$	104
Other comprehensive income (loss) before reclassifications	(12		)	8			—			(4		)
Amounts reclassified from accumulated other comprehensive income	—			(35		)	16			(19		)
Net current-period other comprehensive income	(12		)	(27		)	16			(23		)
Balance as of September 30, 2015	$	(80	)	$	177		$	(16	)	$	81
Three Months Ended September 30, 2014
(in millions)	Foreign currency translation adjustments			Unrealized gains/losses on derivative financial instruments			Defined benefit pension items / Other			Total
Balance as of June 30, 2014	$	(24	)	$	86		$	(20	)	$	42
Other comprehensive income (loss) before reclassifications	(15		)	99			—			84
Amounts reclassified from accumulated other comprehensive income	—			(16		)	—			(16		)
Net current-period other comprehensive income	(15		)	83			—			68
Balance as of September 30, 2014	$	(39	)	$	169		$	(20	)	$	110

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Nine Months Ended September 30, 2015
(in millions)	Foreign currency translation adjustments			Unrealized gains/losses on derivative financial instruments			Defined benefit pension items / Other			Total
Balance as of December 31, 2014	$	(38	)	$	219		$	(37	)	$	144
Other comprehensive income (loss) before reclassifications	(42		)	59			—			17
Amounts reclassified from accumulated other comprehensive income	—			(101		)	21			(80		)
Net current-period other comprehensive income	(42		)	(42		)	21			(63		)
Balance as of September 30, 2015	$	(80	)	$	177		$	(16	)	$	81
Nine Months Ended September 30, 2014
(in millions)	Foreign currency translation adjustments			Unrealized gains/losses on derivative financial instruments			Defined benefit pension items / Other			Total
Balance as of December 31, 2013	$	(16	)	$	141		$	(19	)	$	106
Other comprehensive income (loss) before reclassifications	(23		)	72			(1		)	48
Amounts reclassified from accumulated other comprehensive income	—			(44		)	—			(44		)
Net current-period other comprehensive income	(23		)	28			(1		)	4
Balance as of September 30, 2014	$	(39	)	$	169		$	(20	)	$	110

The income tax impact of the amounts in other comprehensive income for unrealized gains and losses on derivative financial instruments before reclassifications was an expense of $5 million in the third quarter of 2015, an expense of $57 million in the third quarter of 2014, an expense of $33 million in the first nine months of2015 and an expense of $42 million in the first nine months of2014. The gains and losses on derivative financial instruments reclassified were reduced by income tax impacts of $19 million in the third quarter of 2015, $9 million in the third quarter of 2014, $57 million in the first nine months of2015 and $25 million in the first nine months of2014. Refer to Note E – Fair Value Measurements in this Quarterly Report on Form 10-Q for further detail on the reclassifications related to derivatives.

The losses on defined benefit and pension related items reclassified from accumulated other comprehensive income were reduced by income tax impacts of $14 million for the third quarter of 2015 and $17 million for the nine months ended September 30, 2015.

NOTE N – NEW ACCOUNTING PRONOUNCEMENTS

From time to time, new accounting pronouncements are issued by the FASB or other standard setting bodies. Recently issued standards typically do not require adoption until a future effective date. Prior to their effective date, we evaluate the pronouncements to determine the potential effects of adoption on our consolidated financial statements. Unless otherwise discussed, we do not believe that the future adoption of recently issued standards will have an impact on our financial position or results of operation.

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Standards Implemented

ASC Update No. 2014-08

In April 2014, the FASB issued ASC Update No. 2014-08, Presentation of Financial Statements (Topic 205) and Property, Plant, and Equipment (Topic 360): Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity. Update No. 2014-08 changed the criteria for reporting discontinued operations and enhanced convergence of the FASB's and the International Accounting Standard Board's (IASB) reporting requirements for discontinued operations. We were required to apply this amendment, prospectively to: (1) all disposals (or classifications as held for sale) of components of an entity that occurred within annual periods beginning on or after December 15, 2014 and interim periods within those years and (2) all businesses that, on acquisition, are classified as held for sale that occurred within annual periods beginning on or after December 15, 2014 and interim periods within those years. We adopted Update No. 2014-08 beginning in our first quarter ended March 31, 2015. The adoption of Update No. 2014-08 did not impact our results of operations or financial position.

Standards to be Implemented

ASC Update No. 2014-09

In May 2014, the FASB issued ASC Update No. 2014-09, Revenue from Contracts with Customers (Topic 606). Update No. 2014-09 provides enhancements to the quality and consistency of how revenue is reported while also improving comparability in the financial statements of companies using International Financial Reporting Standards and U.S. GAAP. The core principle requires entities to recognize revenue in a manner that depicts the transfer of goods or services to customers in amounts that reflect the consideration an entity expects to be entitled to in exchange for those goods or services. In July 2015, the FASB voted to approve a one year deferral, making the standard effective for public entities for annual and interim periods beginning after December 15, 2017. As such, the standard will be effective for us on January 1, 2018. Under the deferral, early application is still permitted but not before the original public organization effective date, which is for annual reporting periods beginning after December 15, 2016. We are in the process of determining the effect that the adoption of this standard will have on our financial position and results of operations.

ASC Update No. 2015-03

In April 2015, the FASB issued ASC Update No. 2015-03, Interest-Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs. Update No. 2015-03 requires debt issuance costs related to a recognized debt liability to be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. Update No. 2015-03 is effective for annual reporting periods beginning after December 15, 2015 and interim periods within those reporting periods. Early adoption is permitted for financial statements that have not been previously issued. The adoption of Update No. 2015-03 will require us to reclassify our debt issuance costs from deferred charges to direct deductions of our debt liabilities. The adoption of Update No. 2015-03 is not expected to have a material impact on our financial position or results of operations.

ASC Update No. 2015-05

In May 2015, the FASB issued ASC Update No. 2015-05, Intangibles- Goodwill and Other - Internal -Use Software (Subtopic 350-40): Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement. Update No. 2015-05 provides accounting guidance on how customers should treat cloud computing arrangements. If a cloud computing arrangement includes a software license, then the customer should account for the software license element of the arrangement consistent with the acquisition of other software licenses. If a cloud computing arrangement does not include a software license, the customer should account for the arrangement as a service contract. Update No. 2015-05 is effective for annual reporting periods beginning after December 15, 2015 and interim periods within those reporting periods. An entity can elect to adopt the amendments either (1) prospectively to all arrangements entered into or materially modified after the effective date or (2) retrospectively. The adoption of Update No. 2015-05 is not expected to have a material impact on our financial position or results of operations.

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ASC Update No. 2015-12

In August 2015, the FASB issued ASC Update No. 2015-12, Plan Accounting: Defined Benefit Pension Plans (Topic 960), Defined Contribution Pension Plans (Topic 962), and Health and Welfare Benefit Plans (Topic 965). Update No. 2015-12 has three parts. Part I designates contract value as the only required measure for fully benefit-responsive investment contracts. Part II simplifies the investment disclosure requirements under Topics 820, 960, 962, and 965 for employee benefits plans and Part III provides an alternative measurement date for fiscal periods that do not coincide with a month-end date. Update No. 2015-12 is effective for fiscal years beginning after December 15, 2015. The adoption of Update No. 2015-12 is not expected to have a material impact on our financial position or results of operations.

ASC Update No. 2015-16

In September 2015, the FASB issued ASC Update No. 2015-16, Business Combinations (Topic 805): Simplifying the Accounting for Measurement - Period Adjustments. Update No. 2015-16 eliminates the requirement to restate prior period financial statements for measurement period adjustments following a business combination. Update No. 2015-16 requires that the cumulative impact of a measurement period adjustment (including the impact on prior periods) be recognized in the reporting period in which the adjustment is identified. The prior period impact of the adjustment should be either presented separately on the face of the income statement or disclosed in the notes. Update No. 2015-16 is effective for fiscal years beginning after December 15, 2015. The adoption of Update No. 2015-16 is not expected to have a material impact on our financial position or results of operations.

No other new accounting pronouncements, issued or effective, during the period had, or is expected to have, a material impact on our condensed consolidated financial statements.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Introduction

Boston Scientific Corporation is a worldwide developer, manufacturer and marketer of medical devices that are used in a broad range of interventional medical specialties. Our mission is to transform lives through innovative medical solutions that improve the health of patients around the world. Our products and technologies are used to diagnose or treat a wide range of medical conditions, including heart, vascular, digestive, pulmonary, urological, pelvic health, and chronic pain conditions. We continue to innovate in these areas and are intent on extending our innovations into new geographies and high-growth adjacency markets.

On August 3, 2015, we completed the acquisition of the American Medical Systems male urology portfolio (AMS Portfolio Acquisition), which includes the men's health and prostate health businesses, from Endo International plc. Total consideration was comprised of $1.616 billion in up-front cash plus related fees and expenses, and a potential additional $50 million in consideration based on 2016 sales. The AMS male urology portfolio is being integrated with our formerly named Urology and Women's Health business, and the joint businesses have become Urology and Pelvic Health. 

Financial Summary

Three Months Ended September 30, 2015

Our net sales for the third quarter of 2015 were $1.888 billion, as compared to net sales of $1.846 billion for the third quarter of 2014, an increase of $42 million, or two percent. Excluding the impact of changes in foreign currency exchange rates, which had a negative impact of $135 million on our third quarter 2015 net sales, as compared to the same period in the prior year, along with a decrease in net sales from divested businesses of $1 million, our net sales increased$178 million, or nine percent.¹ This increase included net sales of approximately $80 million in the current period, but with no prior period related net sales, due to the acquisition of the Interventional Division of Bayer AG (Bayer) and the AMS Portfolio Acquisition. Refer to Quarterly Results and Business Overview for a discussion of our net sales by global business.

Our reported net loss for the third quarter of 2015 was $198 million, or $(0.15) per share. Our reported results for the third quarter of 2015 included intangible asset impairment charges, acquisition- and divestiture-related net charges, restructuring and restructuring-related net charges, litigation-related net charges, pension termination charges and amortization expense totaling $524 million (after-tax), or $0.39 per share. Excluding these items, net income for the third quarter of 2015 was $326 million, or $0.24 per share.¹ Our reported net income for the third quarter of 2014 was $43 million, or $0.03 per share. Our reported results for the third quarter of 2014 included intangible asset impairment charges, acquisition- and divestiture-related net charges, restructuring and restructuring-related net charges, litigation-related net charges and amortization expense totaling $230 million (after-tax), or $0.17 per share. Excluding these items, net income for the third quarter of 2014 was $273 million, or $0.20 per share.¹ 

¹ Sales growth rates that exclude the impact of sales from divested businesses and/or changes in foreign currency exchange rates and net income and net income per share excluding certain items required by GAAP are not prepared in accordance with U.S. GAAP. Refer to Additional Information for a discussion of management’s use of these non-GAAP financial measures.

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The following is a reconciliation of our results of operations prepared in accordance with U.S. GAAP to those adjusted results considered by management. Refer to Quarterly Results and Business Overview for a discussion of each reconciling item:

	Three Months Ended September 30, 2015
in millions, except per share data	Pre-Tax			Tax Impact			After-Tax			Impact per share
GAAP net income (loss)	$	(367	)	$	169		$	(198	)	$	(0.15	)
Non-GAAP adjustments:
Intangible asset impairment charges	10			(1		)	9			0.01			*
Acquisition- and divestiture-related net charges	80			(12		)	68			0.05			*
Restructuring and restructuring-related net charges	21			(3		)	18			0.01			*
Litigation-related net charges	457			(165		)	292			0.22			*
Pension termination charges	36			(13		)	23			0.02			*
Amortization expense	131			(17		)	114			0.08			*
Adjusted net income	$	368		$	(42	)	$	326		$	0.24

*Assumes dilution of 20.2 million shares for the three months ended September 30, 2015 for all or a portion of these non-GAAP Adjustments

	Three Months Ended September 30, 2014
in millions, except per share data	Pre-Tax		Tax Impact			After-Tax		Impact per share
GAAP net income (loss)	$	3	$	40		$	43	$	0.03
Non-GAAP adjustments:
Intangible asset impairment charges	12		(2		)	10		0.01
Acquisition- and divestiture-related net charges	38		(15		)	23		0.02
Restructuring and restructuring-related net charges	17		(3		)	14		0.01
Litigation-related net charges	139		(50		)	89		0.06
Amortization expense	109		(15		)	94		0.07
Adjusted net income	$	318	$	(45	)	$	273	$	0.20

Cash provided by operating activities was $408 million in the third quarter of 2015, as compared to cash provided by operating activities of $346 million in the third quarter of 2014. As of September 30, 2015, we had total debt of $5.859 billion, cash and cash equivalents of $350 million and working capital of $1.224 billion. Refer to Liquidity and Capital Resources for further discussion.

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Nine Months Ended September 30, 2015

Our net sales for the first nine months of2015 were $5.499 billion, as compared to net sales of $5.493 billion for the first nine months of2014, an increase of $6 million, or zero percent. Excluding the impact of changes in foreign currency exchange rates, which had a negative impact of $393 million on our first nine months of2015 net sales, as compared to the same period in the prior year, along with a decrease in net sales from divested businesses of $4 million, our net sales increased$403 million, or seven percent.¹ The increase included net sales of approximately $143 million in the current period, but with no prior period related net sales, due to the acquisition of Bayer and the AMS Portfolio Acquisition. Refer to Quarterly Results and Business Overview for a discussion of our net sales by global business.

Our reported net loss for the first nine months of2015 was $97 million, or $(0.07) per share. Our reported results for the first nine months of2015 included intangible asset impairment charges, acquisition- and divestiture-related net charges, restructuring and restructuring-related net charges, litigation-related net charges, debt extinguishment charges, pension termination charges and amortization expense totaling $1.002 billion (after-tax), or $0.74 per share. Excluding these items, net income for the first nine months of2015 was $905 million, or $0.67 per share.¹ Our reported net income for the first nine months of2014 was $180 million, or $0.13 per share. Our reported results for the first nine months of2014 included intangible asset impairment charges, acquisition- and divestiture-related net credits, restructuring and restructuring-related net charges, litigation-related net charges, and amortization expense totaling $646 million (after-tax), or $0.48 per share. Excluding these items, net income for the first nine months of2014 was $826 million, or $0.61 per share.¹ 

¹ Sales growth rates that exclude the impact of sales from divested businesses and/or changes in foreign currency exchange rates and net income and net income per share excluding certain items required by GAAP are not prepared in accordance with U.S. GAAP. Refer to Additional Information for a discussion of management’s use of these non-GAAP financial measures.

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The following is a reconciliation of our results of operations prepared in accordance with U.S. GAAP to those adjusted results considered by management. Refer to Quarterly Results and Business Overview for a discussion of each reconciling item:

	Nine Months Ended September 30, 2015
				Tax						Impact per
in millions, except per share data	Pre-Tax			Impact			After-Tax			share
GAAP net income (loss)	$	(312	)	$	215		$	(97	)	$	(0.07	)
Non-GAAP adjustments:
Intangible asset impairment charges	19			(3		)	16			0.01			*
Acquisition- and divestiture-related net charges	169			(17		)	152			0.11			*
Restructuring and restructuring-related net charges	58			(10		)	48			0.04			*
Litigation-related net charges	649			(235		)	414			0.31			*
Pension termination charges	44			(16		)	28			0.02			*
Debt extinguishment charges	45			(16		)	29			0.02			*
Amortization expense	361			(46		)	315			0.23			*
Adjusted net income	$	1,033		$	(128	)	$	905		$	0.67

*Assumes dilution of 21.5 million shares for the nine months ended September 30, 2015 for all or a portion of these non-GAAP Adjustments

	Nine Months Ended September 30, 2014
				Tax						Impact per
in millions, except per share data	Pre-Tax			Impact			After-Tax			share
GAAP net income (loss)	$	45		$	135		$	180		$	0.13
Non-GAAP adjustments:
Intangible asset impairment charges	177			(27		)	150			0.11
Acquisition- and divestiture-related net credits	(80		)	(16		)	(96		)	(0.07		)
Restructuring and restructuring-related net charges	70			(16		)	54			0.04
Litigation-related net charges	399			(149		)	250			0.19
Amortization expense	327			(39		)	288			0.21
Adjusted net income	$	938		$	(112	)	$	826		$	0.61

Cash provided by operating activities was $271 million in the first nine months of2015, as compared to cash provided by operating activities of $829 million in the first nine months of2014. The decrease was primarily due to litigation-related payments of $600 million during the first nine months of2015.

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Quarterly Results and Business Overview

Net Sales

The following table provides our worldwide net sales by business and the relative change on an as reported and constant currency basis, both excluding and including divested businesses. The constant currency growth rates in the tables below can be recalculated from our net sales presented in Note L – Segment Reporting to our unaudited condensed consolidated financial statements contained in Item 1 of this Quarterly Report on Form 10-Q. Net sales that exclude the impact of changes in foreign currency exchange rates are not financial measures prepared in accordance with U.S. GAAP and should not be considered in isolation from, or as a replacement for, the most directly comparable GAAP financial measure. Refer to Additional Information for a further discussion of management’s use of this non-GAAP financial measure.

					Change
	Three Months Ended September 30,				As Reported Currency Basis			Constant Currency Basis
(in millions)	2015		2014
Interventional Cardiology	$	500	$	508	(2	)	%	7	%
Peripheral Interventions	227		215		6		%	13	%
Cardiovascular	727		723		0		%	9	%
Cardiac Rhythm Management	451		480		(6	)	%	0	%
Electrophysiology	57		54		6		%	13	%
Rhythm Management	508		534		(5	)	%	2	%
Endoscopy	331		336		(1	)	%	7	%
Urology and Pelvic Health	198		137		44		%	50	%
Neuromodulation	124		115		8		%	11	%
MedSurg	653		588		11		%	17	%
Subtotal Core Businesses	1,888		1,845		2		%	9	%
Divested Businesses	—		1		N/A		%	N/A	%
Worldwide	$	1,888	$	1,846	2		%	9	%

Growth rates are based on actual, non-rounded amounts and may not recalculate precisely.

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					Change
	Nine Months Ended September 30,				As Reported Currency Basis			Constant Currency Basis
(in millions)	2015		2014
Interventional Cardiology	$	1,510	$	1,533	(2	)	%	7	%
Peripheral Interventions	672		629		7		%	15	%
Cardiovascular	2,182		2,162		1		%	9	%
Cardiac Rhythm Management	1,367		1,443		(5	)	%	1	%
Electrophysiology	172		168		2		%	9	%
Rhythm Management	1,539		1,611		(5	)	%	2	%
Endoscopy	962		983		(2	)	%	6	%
Urology and Pelvic Health	456		395		15		%	21	%
Neuromodulation	360		338		7		%	8	%
MedSurg	1,778		1,716		4		%	10	%
Subtotal Core Businesses	5,499		5,489		0		%	7	%
Divested Businesses	—		4		N/A		%	N/A	%
Worldwide	$	5,499	$	5,493	0		%	7	%

Growth rates are based on actual, non-rounded amounts and may not recalculate precisely.

Cardiovascular

Interventional Cardiology

Our Interventional Cardiology business develops, manufactures and markets technologies for diagnosing and treating coronary artery disease and other cardiovascular disorders. Product offerings include coronary stents, including drug-eluting and bare metal stent systems, balloon catheters, rotational atherectomy systems, guide wires, guide catheters, embolic protection devices, crossing and re-entry devices for the treatment of chronically occluded coronary vessels, diagnostic catheters used in percutaneous transluminal coronary angioplasty procedures, and intravascular ultrasound (IVUS) imaging systems. We also offer structural heart products in certain markets, which include a device for transcatheter aortic valve replacement and a device designed to close the left atrial appendage in patients with atrial fibrillation that are at risk for ischemic stroke.

Our drug-eluting stent systems include our next generation SYNERGY™ Everolimus-Eluting Platinum Chromium Coronary Stent System and our Promus PREMIER™ Everolimus-Eluting Platinum Chromium Coronary Stent System, both of which are designed to provide physicians with improved drug-eluting stent performance in treating patients with coronary artery disease. SYNERGY™ features an ultra-thin abluminal (outer) bioabsorbable polymer coating, while PREMIER™ features a unique customized platinum chromium alloy stent architecture and an enhanced stent delivery system. We received FDA approval of the SYNERGY™ technology in October 2015 and expect Japanese regulatory approval in the first half of 2016.

Our structural heart product offerings include our Lotus™ Valve System, a device for transcatheter aortic valve replacement, and our WATCHMAN^® device designed to close the left atrial appendage in patients with non-valvular atrial fibrillation who are at risk for ischemic stroke. The Lotus™ Valve System consists of a stent-mounted tissue valve prosthesis and catheter delivery system for guidance and placement of the valve. In October 2013, we received CE mark approval and launched the Lotus™ Valve System in Europe. In September 2014, we enrolled the first patient in the REPRISE III clinical trial, which marks the beginning of the process required to support FDA premarket approval for the Lotus^TM Valve System. Full trial enrollment is expected to be complete by the end of 2015. The WATCHMAN^® Left Atrial Appendage Closure Technology (WATCHMAN^®) is the first device studied in a randomized clinical trial to offer an alternative to warfarin, and is marketed in CE-mark countries and other international countries, as well as the U.S. following FDA approval in March 2015.

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Worldwide net sales of our Interventional Cardiology products of $500 million represented 26 percent of our consolidated net sales for the third quarter of 2015. Our worldwide Interventional Cardiology net sales decreased $8 million, or two percent, in the third quarter of 2015, as compared to the same period in the prior year. Excluding the impact of changes in foreign currency exchange rates, which had a negative impact of$45 million on our third quarter Interventional Cardiology net sales, as compared to the same period in the prior year, our Interventional Cardiology net sales increased $37 million, or seven percent.

Excluding the impact of foreign currency, the year-over-year increase in our worldwide Interventional Cardiology net sales was primarily related to sales of our WATCHMAN^® device following the U.S. commercial launch during the first quarter of 2015 and our Lotus™ Valve System in Europe; along with operational growth in our other cardiology product lines, including our OptiCross™ Coronary Imaging Catheter; our iLab^® Intravascular Ultrasound Imaging System and our Polaris^® Imaging System; balloon catheters and our AngioJet™ Thrombectomy product offerings.

Peripheral Interventions

Our Peripheral Interventions (PI) product offerings include stents, balloon catheters, wires, peripheral embolization devices and other devices used to diagnose and treat peripheral vascular disease, along with certain products to diagnose and ease various forms of cancer. We also offer Vessix^TM catheter-based renal denervation systems in certain markets for the treatment of hypertension.

Worldwide net sales of our PI products of $227 million represented 12 percent of our consolidated net sales for the third quarter of 2015. Our worldwide PI net sales increased $12 million, or six percent, in the third quarter of 2015, as compared to the same period in the prior year. Excluding the impact of changes in foreign currency exchange rates, which had a negative impact of$17 million on our third quarter PI net sales, as compared to the same period in the prior year, our PI net sales increased $29 million, or 13 percent. Excluding the impact of foreign currency, the year-over-year increase in worldwide PI net sales was primarily driven by revenues from Bayer, as well as growth in our core PI franchises, particularly our stent franchise following FDA approval and launch of our Innova™ Vascular self-expanding stent system in the U.S. and our drug-eluting product franchise.

On August 29, 2014, we completed the acquisition of Bayer for $414 million in cash. We believe that this acquisition enhances our ability to offer physicians and healthcare systems a more complete portfolio of solutions to treat challenging vascular conditions. The addition of Bayer's strong commercial organization and innovative technologies supports our strategy to provide a comprehensive portfolio of leading solutions to treat peripheral vascular disease. The transaction included the leading AngioJet® Thrombectomy System and the Fetch® 2 Aspiration Catheter, which are used in endovascular procedures to remove blood clots from blocked arteries and veins, and the JetStream® Atherectomy System, used in an innovative and fast-growing therapy to remove plaque and thrombi from diseased arteries.

Rhythm Management

Cardiac Rhythm Management

Our Cardiac Rhythm Management (CRM) business develops, manufactures and markets a variety of implantable devices including implantable cardioverter defibrillator systems, including the world's first and only commercially available subcutaneous implantable cardioverter defibrillator, the S-ICD® System, and pacemaker systems that monitor the heart and deliver electricity to treat cardiac abnormalities.

Worldwide net sales of our CRM products of $451 million represented 24 percent of our consolidated net sales for the third quarter of 2015. Our worldwide CRM net sales decreased $29 million, or six percent, in the third quarter of 2015, as compared to the same period in the prior year. Excluding the impact of changes in foreign currency exchange rates, which had a negative impact of$30 million on our third quarter CRM net sales, as compared to the same period in the prior year, our CRM net sales increased $1 million, or zero percent. The flat year-over-year CRM net sales were primarily driven by declines in our core defibrillator and cardiac resynchronization therapy defibrillator (CRT-D) replacement procedures. These declines were largely offset by growth in our S-ICD® net sales following the launch of our Emblem S-ICD® in Europe and the U.S. during the second and third quarters of 2015, as well as growth in our International CRM business as we are increasing market share following recent product launches.

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The following are the components of our worldwide CRM net sales:

	Three Months Ended						Three Months Ended
(in millions)	September 30, 2015						September 30, 2014
	U.S.		International		Total		U.S.		International		Total
Defibrillator systems	$	216	$	110	$	326	$	222	$	126	$	348
Pacemaker systems	63		62		125		64		68		132
CRM products	$	279	$	172	$	451	$	286	$	194	$	480

In February 2014, our European business initiated the full launch of our new X4 line of quadripolar CRT-D systems, including the AUTOGEN™ X4, DYNAGEN™ X4, and INOGEN™ X4 CRT-Ds, a suite of ACUITY™ X4 quadripolar LV leads and the ACUITY™ PRO lead delivery system. In addition, in April 2014, we received FDA approval for the DYNAGEN™ MINI and INOGEN™ MINI ICDs, the smallest fully-powered standard longevity ICD on the market,as well as the DYNAGEN™ X4 and INOGEN™ X4 CRT-Ds. In addition, our new EL (extended longevity) line of ICDs, was launched in the U.S. in the first quarter of 2015. We also completed U.S. Phase I enrollment in our Acuity X4 quadripolar LV lead clinical trial in the fourth quarter of 2014. We expect FDA approval of this lead in the first half of 2016. We initiated the full launch of our new X4 quadripolar CRT-D systems in Japan and Australia in the first quarter of 2015.

Further, we believe our S-ICD® System is a differentiated technology, and following its U.S. launch in 2013, we have seen strong physician and patient interest. We received both U.S. and European approval of the Emblem S-ICD® System in the first quarter of 2015, a next generation S-ICD® System that is smaller in size and offers improved battery longevity and remote monitoring capabilities. We commenced a full launch of the Emblem S-ICD® System in Europe during the second quarter of 2015 and in the U.S. during the third quarter of 2015. We expect Japanese regulatory approval of the Emblem S-ICD® System in the first half of 2016.

Our global pacemaker revenue increased on a constant currency basis due to the continued adoption of the ACCOLADE™ family of pacemakers and cardiac resynchronization therapy pacemakers, and the Ingevity™ MRI pacing lead in many international markets. We are encouraged by physician feedback on our next generation Ingevity™ family of MRI compatible pacing leads in select international markets. Ingevity™ MRI pacing leads are part of the ImageReady™ MRI-conditional pacemaker system, which includes VITALIO™ MRI, FORMIO™ MRI, ADVANTIO™ MRI and INGENIO™ MRI pulse generators. When used with the LATITUDE™ NXT Patient Management System, these devices wirelessly monitor patients for conditions such as atrial arrhythmias. During the second half of 2014, we also received FDA approval of our new ACCOLADE™ family of pacemakers and cardiac resynchronization therapy pacemakers, including an X4 quadripolar CRT-P header design. We initiated the full U.S. and European launches of this new technology in the first quarter of 2015. We have experienced strong U.S. and Europe demand for our Visionist™ & Valitude™ X4 quadripolar CRT-P device.

Electrophysiology

Our Electrophysiology business develops less-invasive medical technologies used in the diagnosis and treatment of rate and rhythm disorders of the heart. Our leading products include the Blazer™ line of ablation catheters, designed to deliver enhanced performance and responsiveness, and the Rhythmia^TM Mapping System, a next-generation, catheter-based, 3D cardiac mapping and navigation solution designed to help diagnose and treat a variety of arrhythmias.

Worldwide net sales of our Electrophysiology products of $57 million represented three percent of our consolidated net sales for the third quarter of 2015. Our worldwide Electrophysiology net sales increased $3 million, or six percent, in the third quarter of 2015, as compared to the same period in the prior year. Excluding the impact of changes in foreign currency exchange rates, which had a negative impact of$4 million on our third quarter Electrophysiology net sales, as compared to the same period in the prior year, our Electrophysiology net sales increased $7 million, or 13 percent, primarily due to increased sales of our Rhythmia™ Mapping System.

MedSurg

Endoscopy

Our Endoscopy business develops and manufactures devices to treat a variety of medical conditions including diseases of the gastrointestinal and pulmonary space.

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Worldwide net sales of our Endoscopy products of $331 million represented 18 percent of our consolidated net sales for the third quarter of 2015. Our worldwide Endoscopy net sales decreased $5 million, or one percent, in the third quarter of 2015, as compared to the same period in the prior year. Excluding the impact of changes in foreign currency exchange rates, which had a negative impact of$27 million on our third quarter Endoscopy net sales, as compared to the same period in the prior year, our Endoscopy net sales increased $22 million, or seven percent. Excluding the impact of foreign currency, the increase in net sales was primarily driven by growth across several of our key product franchises, including our biliary device franchise with the launch of SpyGlass™ DS Direct Visualization System, our metal stent franchise driven by our Biliary WallFlex® product family, and our Biopsy and Polypectomy franchises, featuring our industry leading products such as forceps and snares.

On April 2, 2015, we acquired Xlumena, Inc. (Xlumena), a medical device company that developed minimally invasive devices for Endoscopic Ultrasound (EUS) guided transluminal drainage of targeted areas within the gastrointestinal tract. Refer to Note B - Acquisitions and Strategic Investments to our unaudited condensed consolidated financial statements contained in Item 1 of this Quarterly Report on Form 10-Q for further discussion.

Urology and Pelvic Health

Our Urology and Pelvic Health business develops and manufactures devices to treat various urological and pelvic conditions. Worldwide net sales of our Urology and Pelvic Health products of $198 million represented 10 percent of our consolidated net sales for the third quarter of 2015. Urology and Pelvic Health net sales increased $61 million, or 44 percent, in the third quarter of 2015, as compared to the same period in the prior year. Excluding the impact of changes in foreign currency exchange rates, which had a negative impact of$8 million on our third quarter Urology and Pelvic Health net sales, as compared to the same period in the prior year, our Urology and Pelvic Health net sales increased $69 million, or 50 percent. Excluding the impact of foreign currency, the increase in worldwide Urology and Pelvic Health net sales was primarily attributable to revenue of approximately $57 million related to the AMS Portfolio Acquisition along with growth across all of our other global franchises.

On August 3, 2015, we completed the AMS Portfolio Acquisition, which includes the men's health and prostate health businesses, from Endo International plc for $1.616 billion in up-front cash plus related fees and expenses, and a potential additional $50 million in consideration based on 2016 sales. The AMS Portfolio Acquisition includes the procurement of leading products for the treatment of a variety of urologic conditions, including the minimally invasive GreenLight XPS™ and HPS™ Laser Therapy Systems for treating benign prostatic hyperplasia, the AMS 700™ Inflatable Penile Prosthesis for treating erectile dysfunction, and the AMS 800™ Urinary Control System for treating male stress urinary incontinence. We are in the process of integrating the AMS male urology portfolio into our company. The AMS male urology portfolio is being combined with our Urology and Women's Health business and the joint businesses have become Urology and Pelvic Health. 

On May 7, 2014, we completed the acquisition of the remaining fully diluted equity of IoGyn, Inc. (IoGyn). IoGyn developed the Symphion^TM System, a next generation system for hysteroscopic intrauterine tissue removal including fibroids (myomas) and polyps. In March 2014, IoGyn received U.S. FDA approval for the system, and in October 2014, we launched the system in the United States.

Refer to Note B - Acquisitions and Strategic Investments to our unaudited condensed consolidated financial statements contained in Item 1 of this Quarterly Report on Form 10-Q for further discussion on our recent acquisitions.

Neuromodulation

Our Neuromodulation business offers the Precision™and Precision Spectra™ Spinal Cord Stimulator Systems, used for the management of chronic pain. The Precision Spectra System is the world's first and only spinal cord stimulation (SCS) system with 32 contacts and 32 dedicated power sources and is designed to provide improved pain relief to a wide range of patients who suffer from chronic pain. Additionally, in June 2015, we launched the Precision Novi™ SCS System in Europe. The Precision Novi™ System offers patients and physicians the smallest 16-contact high capacity primary cell (PC), also referred to as non-rechargeable, device for the treatment of chronic pain. We also have CE mark approval for use of our Vercise™ Deep Brain Stimulation (DBS) System in Europe for the treatment of Parkinson's disease, tremor and intractable primary and secondary dystonia, a neurological movement disorder characterized by involuntary muscle contractions. In September 2015, we gained CE mark approvals for the Vercise™ PC DBS System with its Navigator™ programming software. The system allows for programming flexibility, designed to treat a greater range of patients throughout their disease progression. In addition, we received CE mark and launched the only commercially available Directional Lead powered by current steering.  The Directional Lead uses multi-directional stimulation for greater precision, intended to minimize side effects for patients.  We are currently in U.S. pivotal trial with our Vercise™ DBS System for the treatment of Parkinson’s disease.  

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Worldwide net sales of our Neuromodulation products of $124 million represented seven percent of our consolidated net sales for the third quarter of 2015. Our worldwide Neuromodulation net sales increased $9 million, or eight percent, in the third quarter of 2015, as compared the same period in the prior year. Excluding the impact of changes in foreign currency exchange rates, which had a negative impact of$4 million on our third quarter Neuromodulation net sales, as compared to the same period in the prior year, our Neuromodulation net sales increased $13 million, or 11 percent. Excluding the impact of foreign currency, the year-over-year increase was primarily driven by share gains from our CoverEdge™ 32-contact Paddle Lead and continued adoption of the Precision Spectra™ Spinal Cord Stimulator System in the U.S. and increased net sales in Europe driven by our Vercise™ DBS System and sales of Precision Novi™.

Emerging Markets

As part of our strategic imperatives to drive global expansion, described in our 2014 Annual Report on Form 10-K, we are seeking to grow net sales and market share by expanding our global presence, including in Emerging Markets. We define Emerging Markets as 20 countries that we believe have strong growth potential based on their economic conditions, healthcare sectors, and our global capabilities. We are seeking to expand our presence and strengthen relationships in order to grow net sales and market share within our Emerging Markets, and we have increased our investment in infrastructure in these countries in order to maximize opportunities. Our Emerging Markets net sales represented approximately 10 percent of our consolidated net sales in the third quarter of 2015 and 2014.

Gross Profit

Our gross profit was $1.349 billion for the third quarter of 2015, $1.296 billion for the third quarter of 2014, $3.899 billion for the first nine months of2015 and $3.842 billion for the first nine months of2014. As a percentage of net sales, our gross profit increased to 71.5 percent in the third quarter of 2015, as compared to 70.2 percent in the third quarter of 2014 and increased to 70.9 percent in the first nine months of2015, as compared to 69.9 percent in the first nine months of2014. The following is a reconciliation of our gross profit margins and a description of the drivers of the change from period to period:

	Three Months		Nine Months
Gross profit margin - period ended September 30, 2014	70.2	%	69.9	%
Manufacturing cost reductions	2.1		1.9
Sales pricing and mix	(0.4	)	(1.0	)
Inventory step-up due to acquisition accounting	(0.7	)	(0.3	)
Net impact of foreign currency	0.3		0.7
All other, including other inventory charges and other period expense	—		(0.3	)
Gross profit margin - period ended September 30, 2015	71.5	%	70.9	%

The primary factor contributing to the increase in our gross profit margin during the third quarter and first nine months of2015, as compared to the same periods in 2014, was the positive impact of cost reductions as a result of our restructuring and other process improvement programs. Partially offsetting these factors was the negative impact of pricing related primarily to sales of our drug-eluting stent and CRM products, as well as changes in the mix of our product sales. In addition, in connection with the accounting for the AMS Portfolio acquisition, we wrote up acquired inventory from manufacturing cost to fair value. The step-up in value is amortized through gross profit over an average estimated inventory turnover period. In the third quarter of 2015, we recorded charges of $14 million associated with the step-up.

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Operating Expenses

The following table provides a summary of certain of our operating expenses:

	Three Months Ended September 30,						Nine Months Ended September 30,
	2015			2014			2015			2014
		% of Net			% of Net			% of Net			% of Net
(in millions)	$	Sales		$	Sales		$	Sales		$	Sales
Selling, general and administrative expenses	729	38.6	%	741	40.1	%	2,095	38.1	%	2,150	39.1	%
Research and development expenses	221	11.7	%	212	11.5	%	632	11.5	%	609	11.1	%
Royalty expense	17	0.9	%	21	1.1	%	53	1.0	%	86	1.6	%

Selling, General and Administrative (SG&A) Expenses

In the third quarter of 2015, our SG&A expenses decreased $12 million, or two percent, as compared to the third quarter of 2014, and were 150basis points lower as a percentage of net sales. In the first nine months of2015, our SG&A expenses decreased $55 million, or three percent, as compared to the first nine months of2014, and were 100basis points lower as a percentage of net sales. The decrease in SG&A was primarily driven by declines in spending as a result of our restructuring and other cost reduction initiatives.

Research and Development (R&D) Expenses

In the third quarter of 2015, our R&D expenses increased $9 million, or four percent, as compared to the third quarter of 2014, and were 20basis points higher as a percentage of net sales. In the first nine months of2015, our R&D expenses increased $23 million, or four percent, as compared to the first nine months of2014, and were 40basis points higher as a percentage of net sales. We remain committed to advancing medical technologies and investing in meaningful research and development projects across our businesses in order to maintain a healthy pipeline of new products that we believe will contribute to profitable sales growth.

Royalty Expense

In the third quarter of 2015, our royalty expense decreased $4 million, or 19 percent, as compared to the third quarter of 2014, and was 20basis points lower as a percentage of net sales. In the first nine months of2015, our royalty expense decreased $33 million, or 38 percent, as compared to the first nine months of2014, and was 60basis points lower as a percentage of net sales. This decrease relates primarily to a renegotiation of a royalty agreement in the second quarter of 2014 that resulted in a lower royalty rate structure.

Amortization Expense

Our amortization expense was $131 million in the third quarter of 2015, as compared to $109 million in the third quarter of 2014, and $361 million in the first nine months of2015, as compared to $327 million in the first nine months of2014. This increase was primarily due to amortizable intangible assets acquired or other intangible assets that began amortizing during the fourth quarter of 2014 and first nine months of 2015. Amortization expense is excluded by management for purposes of evaluating operating performance and assessing liquidity.

Intangible Asset Impairment Charges

We incurred intangible asset impairment charges, including charges for impairments of in-process research and development, of $10 million during the third quarter of 2015, $12 million during the third quarter of 2014, $19 million in the first nine months of2015, and $177 million in the first nine months of2014.

Refer to Note D - Goodwill and Other Intangible Assets to our unaudited condensed consolidated financial statements contained in Item 1 of this Quarterly Report on Form 10-Q for additional details related to our intangible asset impairment charges. Intangible asset impairment charges are excluded by management for purposes of evaluating operating performance and assessing liquidity.

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Contingent Consideration Expense

We recorded net expenses of $40 million and $86 million during the third quarter and first nine months of2015, respectively, and net benefits of $4 million and $122 million during the third quarter and first nine months of2014, respectively, related to the change in fair value of our contingent consideration liabilities. Refer to Note B - Acquisitions and Strategic Investments to our unaudited condensed consolidated financial statements contained in Item 1 of this Quarterly Report on Form 10-Q for additional details related to our contingent consideration expenses. Contingent consideration expense is excluded by management for purposes of evaluating operating performance.

Restructuring Charges and Restructuring-related Activities

We have one active restructuring program, our 2014 Restructuring plan, which was approved on October 22, 2013. We estimate that the 2014 Restructuring plan will reduce our gross annual expenses by approximately $175 million to $225 million exiting 2016, and we expect a substantial portion of the savings to be reinvested in growth initiatives. We estimate that the implementation of the 2014 Restructuring plan will result in total pre-tax charges of approximately $250 million to $300 million, of which approximately $235 million to $285 million is expected to result in future cash outlays. We have recorded costs of $204 million since the inception of the 2014 Restructuring plan, and we expect to substantially complete activities under the plan by the end of 2015, with the exception of certain actions associated with our Plant Network Optimization strategy, which we expect to complete by the end of 2016.

We recorded restructuring charges pursuant to our restructuring plans of $7 million in the third quarter of 2015, $2 million in the third quarter of 2014, $16 million during the first nine months of2015 and $37 million during the first nine months of2014. In addition, we recorded expenses within other lines of our accompanying unaudited condensed consolidated statements of operations related to our restructuring initiatives of $14 million in the third quarter of 2015, $15 million in the third quarter of 2014, $42 million in the first nine months of2015 and $33 million in the first nine months of2014. Restructuring and restructuring-related costs are excluded by management for purposes of evaluating operating performance.

We made cash payments of $66 million during the first nine months of2015 and $80 million during the first nine months of2014, associated with our restructuring initiatives.

Refer to Note G - Restructuring Related Activities to our unaudited condensed consolidated financial statements contained in Item 1 of this Quarterly Report on Form 10-Q for additional details related to our restructuring plans.

Litigation-related charges and credits

We recorded litigation-related net charges of $457 million in the third quarter of 2015 and net charges of $649 million in the first nine months of2015. We recorded litigation-related net charges of $139 million in the third quarter of 2014 and $399 million in the first nine months of2014. Litigation-related charges and credits are excluded by management for purposes of evaluating operating performance. Refer to Note J – Commitments and Contingencies to our unaudited condensed consolidated financial statements contained in Item 1 of this Quarterly Report on Form 10-Q for discussion of our material legal proceedings.

Pension termination charges

We recorded pension termination charges of $36 million and $44 million during the third quarter and first nine months of2015, respectively, which are associated with the termination of the Guidant Retirement Plan, a frozen defined benefit plan. No pension termination charges were recorded during the first nine months of2014. We do not expect to incur any additional charges in the future related to the termination of the Guidant Retirement Plan. The pension termination charges are excluded by management for purposes of evaluating operating performance.

Gain on divestiture

In January 2011, we closed the sale of our Neurovascular business to Stryker Corporation. We recorded a gain of $12 million in the first nine months of2014 related to this divestiture. Divestiture-related gains or charges are excluded by management for purposes of evaluating operating performance.

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Interest Expense

Our interest expense was $58 million in the third quarter of 2015 and $225 million during the first nine months of2015, as compared to $54 million in the third quarter of 2014 and $161 million during the first nine months of2014. The increase primarily relates to the re-financing of our senior notes and pre-funding a portion of the AMS portfolio acquisition, along with a pre-tax charge of approximately $45 million associated with debt extinguishment charges, representing premiums, accelerated amortization of debt issuance costs and investor discount costs net of interest rate hedge gains related to the early extinguishment of $1.000 billion of debt during the second quarter of 2015. Debt extinguishment charges are excluded by management for purposes of evaluating operating performance. Our average borrowing rate was 3.9 percent in the third quarter of 2015 and 5.7 percent in the first nine months of2015 and 4.7 percent the third quarter of 2014 and 4.8 percent in the first nine months of2014. Refer to Liquidity and Capital Resources and Note E - Fair Value Measurements and Note F – Borrowings and Credit Arrangements to our unaudited condensed consolidated financial statements contained in Item 1 of this Quarterly Report on Form 10-Q for information regarding our debt obligations and related derivative instruments and hedging activities.

Other, net

Our other, net reflected expense of $10 million and $7 million in the third quarter of 2015 and 2014, respectively. During the first nine months of2015 and 2014, our other, net reflected expense of $31 million and income of $15 million, respectively. The following are the components of other, net:

	Three Months Ended September 30,						Nine Months Ended September 30,
(in millions)	2015			2014			2015			2014
Interest income	$	1		$	1		$	2		$	3
Foreign currency losses	(4		)	(5		)	(18		)	(11		)
Net gains (losses) on investments	(5		)	(2		)	(6		)	27
Other income (expense), net	(2		)	(1		)	(9		)	(4		)
	$	(10	)	$	(7	)	$	(31	)	$	15

During the first nine months of2014, we recognized gains of $19 million associated with the acquisition of IoGyn, Inc. related to previously held investments. The acquisition-related gains from previously held investments are excluded by management for purposes of evaluating operating performance. Refer to Note B – Acquisitions and Strategic Investments to our unaudited condensed consolidated financial statements contained in Item 1 of this Quarterly Report on Form 10-Q for information regarding the IoGyn acquisition.

Tax Rate

Our effective tax rates from continuing operations for the three months ended September 30, 2015 and September 30, 2014, were 45.9% and (1,343.2)%, respectively. For the first nine months of2015 and 2014 our effective tax rates from continuing operations were 68.9% and (296.0)%, respectively. The change in our reported tax rate for the third quarter and first nine months of2015, as compared to the same periods in 2014, relates primarily to the impact of certain receipts and charges that are taxed at different rates than our effective tax rate, including intangible asset impairment charges, acquisition- related items, litigation- and restructuring-related items, pension termination charges, and debt extinguishment charges, as well as the impact of certain discrete tax items.

During 2014, we received a Revenue Agent Report from the Internal Revenue Services (IRS) reflecting significant proposed audit adjustments for our 2008, 2009 and 2010 tax years based upon the same transfer pricing methodologies that are currently being contested in U.S. Tax Court for our tax years from 2001 to 2007. We disagree with the transfer pricing methodologies being applied by the IRS and we expect to contest any adjustments received through applicable IRS and judicial procedures, as appropriate. We believe that our income tax reserves associated with these matters are adequate as of September 30, 2015. However, final resolution is uncertain and could have a material impact on our financial condition, results of operations, or cash flows. Also, in connection with the IRS issues, a number of agreed adjustments were contained in the IRS report. However, no tax was paid on these amounts as there are outstanding tax receivables from the IRS that are currently being withheld due to the pending U.S. Tax Court case.

Refer to Note I – Income Taxes to our unaudited condensed consolidated financial statements contained in Item 1 of this Quarterly Report on Form 10-Q for information regarding our tax litigation.

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Critical Accounting Policies and Estimates

Our financial results are affected by the selection and application of accounting policies and methods. In the three and nine month periods endedSeptember 30, 2015, there were no material changes to the application of critical accounting policies and estimates as described in our 2014 Annual Report on Form 10-K.

Goodwill Valuation

We allocate any excess purchase price over the fair value of the net tangible and identifiable intangible assets acquired in a business combination to goodwill. We test our goodwill balances during the second quarter of each year for impairment, or more frequently if indicators are present or changes in circumstances suggest that impairment may exist. In performing the assessment, we utilize the two-step approach prescribed under FASB ASC Topic 350, Intangibles - Goodwill and Other. The first step requires a comparison of the carrying value of the reporting units, as defined, to the fair value of these units. We assess goodwill for impairment at the reporting unit level, which is defined as an operating segment or one level below an operating segment, referred to as a component. We determine our reporting units by first identifying our operating segments, and then assess whether any components of these segments constitute a business for which discrete financial information is available and where segment management regularly reviews the operating results of that component. We aggregate components within an operating segment that have similar economic characteristics.

For our 2015 and 2014 annual impairment assessment we identified seven reporting units, including Interventional Cardiology, Peripheral Interventions, Cardiac Rhythm Management, Electrophysiology, Endoscopy, Urology and Pelvic Health and Neuromodulation.

For our 2015 and 2014 annual impairment assessment, we used only the income approach, specifically the discounted cash flow (DCF) method, to derive the fair value of each of our reporting units in preparing our goodwill impairment assessments. This approach calculates fair value by estimating the after-tax cash flows attributable to a reporting unit and then discounting these after-tax cash flows to a present value using a risk-adjusted discount rate. We selected this method as being the most meaningful in preparing our goodwill assessments because we believe the income approach most appropriately measures our income producing assets. We have considered using the market approach and cost approach but concluded they are not appropriate in valuing our reporting units given the lack of relevant market comparisons available for application of the market approach and the inability to replicate the value of the specific technology-based assets within our reporting units for application of the cost approach. Therefore, we believe that the income approach represents the most appropriate valuation technique for which sufficient data are available to determine the fair value of our reporting units.

In applying the income approach to our accounting for goodwill, we make assumptions about the amount and timing of future expected cash flows, terminal value growth rates and appropriate discount rates. The amount and timing of future cash flows within our DCF analysis is based on our most recent operational budgets, long range strategic plans and other estimates. The terminal value growth rate is used to calculate the value of cash flows beyond the last projected period in our DCF analysis and reflects our best estimates for stable, perpetual growth of our reporting units. We use estimates of market-participant risk-adjusted weighted-average cost of capital (WACC) as a basis for determining the discount rates to apply to our reporting units’ future expected cash flows.

If the carrying value of a reporting unit exceeds its fair value, we then perform the second step of the goodwill impairment test to measure the amount of impairment loss, if any. If the carrying value of a reporting unit is zero or negative, we evaluate whether it is more likely than not that a goodwill impairment exists. If we determine adverse qualitative factors exist that would indicate it is more likely than not an impairment exists, we then perform the second step of the goodwill test. The second step of the goodwill impairment test compares the estimated fair value of a reporting unit’s goodwill to its carrying value.

Although we use consistent methodologies in developing the assumptions and estimates underlying the fair value calculations used in our impairment tests, these estimates are uncertain by nature and can vary from actual results. The use of alternative valuation assumptions, including estimated revenue projections, growth rates, cash flows and discount rates could result in different fair value estimates.

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In the second quarter of 2015, we performed our annual goodwill impairment test for all of our reporting units and concluded the fair value of each reporting unit exceeded its carrying value. As a result of the 2015 annual goodwill impairment test, we identified our global Electrophysiology reporting unit as being at higher risk of potential failure of the first step of the goodwill impairment test in future reporting periods. As of the date of our annual goodwill impairment test, our global Electrophysiology reporting unit had excess fair value over carrying value of approximately 28 percent and held $292 million of allocated goodwill. Our global Cardiac Rhythm Management (CRM) reporting unit had excess fair value over carrying value of approximately 26 percent; however, due to goodwill impairment charges in prior years, no goodwill remains within our CRM reporting unit. Changes in our reporting units or in the structure of our business as a result of future reorganizations, acquisitions or divestitures of assets or businesses could result in future impairments of goodwill within our reporting units.

Refer to Note D - Goodwill and Other Intangible Assets to our unaudited condensed consolidated financial statements contained in Item 1 of this Quarterly Report on Form 10-Q for additional details related to our annual goodwill impairment test performed in the second quarter of 2015.

Liquidity and Capital Resources

Based on our current business plan, we believe our existing balance of cash and cash equivalents, future cash generated from operations and access to capital markets and our revolving credit facility will be sufficient to fund our operations, invest in our infrastructure, pay our legal-related liabilities, fund possible mergers and/or acquisitions and service our existing debt for the next twelve months. As of September 30, 2015, we had $350 million of cash and cash equivalents on hand, comprised of $27 million invested in money market and government funds, $115 million invested in short-term time deposits, and $208 million in interest bearing and non-interest bearing bank accounts. We invest excess cash on hand in short-term financial instruments that earn market interest rates while mitigating principal risk through instrument and counterparty diversification, as well as what we believe to be prudent instrument selection. We limit our direct exposure to securities in any one industry or issuer. We also have full access to our $2.000 billion revolving credit facility and our $300 million credit and security facility secured by our U.S. trade receivables, both described below.

On August 3, 2015, we completed the AMS Portfolio Acquisition. Total consideration was comprised of $1.616 billion in up-front cash plus related fees and expenses, and a potential additional $50 million payment in consideration based on 2016 sales. To fund the AMS Portfolio Acquisition, we used approximately $750 million of our cash and cash equivalents on hand, approximately $750 million of our new unsecured term loan credit facility (2015 Term Loan) which matures on August 3, 2020, and we funded the remaining portion through borrowings under our $300 million credit and security facility secured by our U.S. trade receivables. See Note F - Borrowings and Credit Arrangements for further details regarding the terms of our term loan and credit facilities.

The following provides a summary and description of our net cash inflows (outflows) for the nine months endedSeptember 30, 2015 and 2014:

	Nine Months Ended September 30,
(in millions)	2015			2014
Cash provided by (used for) operating activities	$	271		$	829
Cash used for investing activities	(2,016		)	(662		)
Cash provided by (used for) financing activities	1,513			(136		)

Operating Activities

During the first nine months of2015, cash provided by operating activities was $271 million, as compared to cash provided by operating activities of $829 million during the first nine months of2014, a decrease of $558 million. This decrease was primarily due to $600 million of payments to Johnson & Johnson as a result of the settlement agreement signed on February 13, 2015 to settle the breach of merger agreement lawsuit brought by Johnson & Johnson against Guidant, stemming from our acquisition of Guidant in 2006. As a result of the settlement agreement, Johnson & Johnson agreed to dismiss permanently its action without acknowledgment of liability by Guidant. In exchange, Guidant agreed to make aggregate payments totaling $600 million to Johnson & Johnson. Under the terms of the agreement, Guidant agreed to pay Johnson & Johnson $300 million within 10 days of the date of the agreement and an additional $300 million within 60 days of the date of the agreement.

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Investing Activities

During the first nine months of2015, cash used for investing activities primarily included payments of $1.642 billion for the AMS portfolio acquisition and the acquisition of Xlumena, both net of cash acquired. Cash used for investing activities also included purchases of privately held equity securities of $209 million and purchases of property, plant and equipment of $162 million. During the first nine months of2014, cash used for investing activities included payments of $487 million for the acquisitions of IoGyn and Bayer, net of cash acquired. Cash used for investing activities also included purchases of property, plant and equipment for $180 million. This was partially offset by proceeds related to our divested businesses of $12 million.

Financing Activities

Our cash flows from financing activities in the first nine months of2015 reflect issuances and repayments of debt, payments of acquisition-related contingent consideration and proceeds from, and cash used to net share settle, stock issuances related to our equity incentive programs. Our cash flows from financing activities in the first nine months of2014 reflect issuances and repayments of debt, payments of acquisition-related contingent consideration, proceeds from, and cash used to net share settle, stock issuances related to our equity incentive programs and repurchases of common stock pursuant to our authorized repurchase programs.

Debt

We had total debt of $5.859 billion as of September 30, 2015 and $4.262 billion as of December 31, 2014. The debt maturity schedule for the significant components of our debt obligations as of September 30, 2015 is as follows:

(in millions)	2015		2016		2017		2018		2019		Thereafter		Total
Senior notes	$	—	$	—	$	250	$	600	$	—	$	3,800	$	4,650
Term Loan	—		80		155		390		150		375		1,150
	$	—	$	80	$	405	$	990	$	150	$	4,175	$	5,800

Note: The table above does not include unamortized discounts associated with our senior notes, or amounts related to interest rate contracts used to hedge the fair value of certain of our senior notes.

Revolving Credit Facility

On April 10, 2015, we entered into a new $2.000 billion revolving credit facility (the 2015 Facility) with a global syndicate of commercial banks and terminated our previous $2.000 billionrevolving credit facility. The 2015 Facility matures on April 10, 2020. Eurodollar and multicurrency loans under the 2015 Facility bear interest at LIBOR plus an interest margin of between 0.900 percent and 1.500 percent, based on our corporate credit ratings and consolidated leverage ratio (1.300 percent as of September 30, 2015). In addition, we are required to pay a facility fee based on our credit ratings, consolidated leverage ratio and the total amount of revolving credit commitment, regardless of usage, under the credit agreement (0.200 percent per year as of September 30, 2015).The 2015 Facility contains covenants which, among other things, require that we maintain a minimum interest coverage ratio of 3.0 times consolidated EBITDA and a maximum leverage ratio of 4.5 times consolidated EBITDA for the first four fiscal quarter-ends following the closing of the AMS Portfolio Acquisition on August 3, 2015, and decreasing to 4.25 times, 4.0 times, and 3.75 times consolidated EBITDA for the next three fiscal quarter-ends after such four fiscal quarter-ends, respectively, and then to 3.5 times for each fiscal quarter-end thereafter. There were no amounts borrowed under our current and prior revolving credit facilities as of September 30, 2015 or December 31, 2014.

	Covenant Requirement as of September 30, 2015	Actual as of September 30, 2015
Maximum leverage ratio (1)	4.5 times	3.1 times
Minimum interest coverage ratio (2)	3.0 times	6.7 times

(1) Ratio of total debt to consolidated EBITDA, as defined by the credit agreement, for the preceding four consecutive fiscal quarters.

(2) Ratio of consolidated EBITDA, as defined by the credit agreement, to interest expense for the preceding four consecutive fiscal quarters.

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The credit agreement for the 2015 Facility provides for an exclusion from the calculation of consolidated EBITDA, as defined by the credit agreement, through the credit agreement maturity, of any non-cash charges and up to $620 million in restructuring charges and restructuring-related expenses related to our current or future restructuring plans. As of September 30, 2015, we had$584 million of the restructuring charge exclusion remaining. In addition, any cash litigation payments (net of any cash litigation receipts), as defined by the agreement, are excluded from the calculation of consolidated EBITDA and any new debt issued to fund any tax deficiency payments is excluded from consolidated total debt, as defined in the agreement, provided that the sum of any excluded net cash litigation payments and any new debt issued to fund any tax deficiency payments not exceed $2.000 billionin the aggregate. As of September 30, 2015, we had $1.633 billion of the combined legal and debt exclusion remaining.

As of and through September 30, 2015, we were in compliance with the required covenants.

Term Loans

As of September 30, 2015, we had an aggregate of $1.150 billion outstanding under our unsecured term loan facilities and $400 million outstanding as of December 31, 2014. This includes $400 million outstanding under an unsecured term loan facility (2013 Term Loan) as of September 30, 2015 andDecember 31, 2014. Term loan borrowings under this facility bear interest at LIBOR plus an interest margin of between 1.00 percent and 1.75 percent (currently 1.50 percent), based on our corporate credit ratings and consolidated leverage ratio. The term loan borrowings are payable over a five-year period, with quarterly principal payments of $20 million commencing in the first quarter of 2016 and the remaining principal amount due at the final maturity date in August 2018, and are repayable at any time without premium or penalty. Our term loan facility requires that we comply with certain covenants, including financial covenants with respect to maximum leverage and minimum interest coverage, consistent with our revolving credit facility. The maximum leverage ratio requirement is 4.5 times and our actual leverage ratio as of September 30, 2015 is 3.1 times. The minimum interest coverage ratio requirement is 3.0 times and our actual interest coverage ratio as of September 30, 2015 is 6.7 times.

Our 2015 Term Loan for $750 million was funded on August 3, 2015 and was used to partially fund the AMS Portfolio Acquisition, including the payment of fees and expenses. Term loan borrowings under this facility bear interest at LIBOR plus an interest margin of between 1.00 percent and 1.75 percent (currently 1.50 percent), based on our corporate credit ratings and consolidated leverage ratio. The 2015 Term Loan requires quarterly principal payments of $38 million commencing in the third quarter of 2017, and the remaining principal amount is due at the final maturity date of August 3, 2020. The 2015 Term Loan agreement requires that we comply with certain covenants, including financial covenants with respect to maximum leverage and minimum interest coverage, consistent with our revolving credit facility. The maximum leverage ratio requirement is 4.5 times and our actual leverage ratio as of September 30, 2015 is 3.1 times. The minimum interest coverage ratio requirement is 3.0 times and our actual interest coverage ratio as of September 30, 2015 is 6.7 times.

Senior Notes

We had senior notes outstanding of $4.650 billion as ofSeptember 30, 2015 and $3.800 billion as ofDecember 31, 2014. In May 2015, we completed the offering of$1.850 billion in aggregate principal amount of senior notes consisting of $600 million in aggregate principal amount of 2.850%notes due 2020, $500 million in aggregate principal amount of 3.375% notes due 2022 and$750 million in aggregate principal amount of 3.850% notes due 2025. The net proceeds from the offering of the notes, after deducting underwriting discounts and estimated offering expenses, were approximately $1.831 billion. We used a portion of the net proceeds from the senior notes offering to redeem $400 million aggregate principal amount of our 5.500% notes due November 2015 and $600 million aggregate principal amount of our6.400% notes due June 2016. The remaining senior notes offering proceeds, together with the 2015 Term Loan, were used to fund the AMS Portfolio Acquisition. We recorded a charge of$45 million in interest expense for premiums, accelerated amortization of debt issuance costs, and investor discount costs net of interest rate hedge gains related to the early debt extinguishment.

Our senior notes were issued in public offerings, are redeemable prior to maturity and are not subject to any sinking fund requirements. Our senior notes are unsecured, unsubordinated obligations and rank on parity with each other. These notes are effectively junior to borrowings under our credit and security facility and to liabilities of our subsidiaries (see Other Arrangements below).

Other Arrangements

We maintain a $300 million credit and security facility secured by our U.S. trade receivables maturing on June 9, 2017. The credit and security facility requires that we maintain a maximum leverage covenant consistent with our revolving credit facility. The maximum leverage ratio requirement is 4.5 times and our actual leverage ratio as of September 30, 2015 is 3.1 times. We had no borrowings outstanding under this facility as of September 30, 2015 and December 31, 2014.

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We have accounts receivable factoring programs in certain European countries that we account for as sales under FASB ASC Topic 860, Transfers and Servicing. These agreements provide for the sale of accounts receivable to third parties, without recourse, of up to approximately$387 million as of September 30, 2015. We have no retained interests in the transferred receivables, other than collection and administrative responsibilities and, once sold, the accounts receivable are no longer available to satisfy creditors in the event of bankruptcy. We de-recognized $173 million of receivables as of September 30, 2015 at an average interest rate of2.5 percent, and $167 million as of December 31, 2014 at an average interest rate of 3.2 percent. Within Italy, Spain, Portugal and Greece, the number of days our receivables are outstanding has remained above historical levels. We believe we have adequate allowances for doubtful accounts related to our Italy, Spain, Portugal and Greece accounts receivable; however, we continue to monitor the European economic environment for any collectability issues related to our outstanding receivables. As ofSeptember 30, 2015, our net receivables in these countries greater than 180 days past due totaled $28 million, of which $13 millionwere past due greater than 365 days.

In addition, we have uncommitted credit facilities with a commercial Japanese bank that provide for borrowings, promissory notes discounting and receivables factoring of up to 21.000 billion Japanese yen (approximately $176 million as ofSeptember 30, 2015). We de-recognized $135 million of notes receivable as of September 30, 2015 at an average interest rate of 1.7 percent and $134 million of notes receivable as of December 31, 2014 at an average interest rate of 1.8 percent. De-recognized accounts and notes receivable are excluded from trade accounts receivable, net in the accompanying unaudited condensed consolidated balance sheets.

As of September 30, 2015 we had outstanding letters of credit of $65 million, as compared to $59 million as of December 31, 2014, which consisted primarily of bank guarantees and collateral for workers' compensation insurance arrangements. As ofSeptember 30, 2015 and December 31, 2014, none of the beneficiaries had drawn upon the letters of credit or guarantees; accordingly, we did not recognize a related liability for our outstanding letters of credit in our consolidated balance sheets as ofSeptember 30, 2015 or December 31, 2014. We believe we will generate sufficient cash from operations to fund these arrangements and intend to fund these arrangements without drawing on the letters of credit.

Equity

During the first nine months of2015 and 2014, we received $97 million and $52 million, respectively, in proceeds from stock issuances related to our stock option and employee stock purchase plans. Proceeds from the exercise of employee stock options and employee stock purchases vary from period to period based upon, among other factors, fluctuations in the trading price of our common stock and in the exercise and stock purchase patterns of our employees. We did not repurchase any shares of our common stock during the first nine months of2015. We repurchased 10 million shares of our common stock during the first nine months of2014 for $125 million, pursuant to our authorized repurchase programs. As of September 30, 2015, we had $535 million remaining authorization under our 2013 share repurchase program.

Stock-based compensation expense related to our stock ownership plans was approximately $79 million for the first nine months of2015 and $79 million for the first nine months of2014.

Contractual Obligations and Commitments

During the first nine months of2015, we redeemed $1.000 billion of our outstanding senior notes, issued $1.850 billion of new senior notes, and entered into a new $750 million unsecured term loan facility. See Liquidity and Capital Resources and Note F - Borrowings and Credit Arrangements for further details regarding these transactions and the terms of our new senior notes and term loan. In addition, certain of our acquisitions involve the payment of contingent consideration. See Note B - Acquisitions and Strategic Investments to our unaudited condensed consolidated financial statements contained in Item 1 of this Quarterly Report on Form 10-Q for further details regarding the estimated potential amount of future contingent consideration we could be required to pay associated with our acquisitions. There have been no other material changes to our contractual obligations and commitments as reported in our 2014 Annual Report filed on Form 10-K.

Legal Matters

For a discussion of our material legal proceedings see Note J - Commitments and Contingencies to our unaudited condensed consolidated financial statements contained in Item 1 of this Quarterly Report on Form 10-Q and Note K – Commitments and Contingencies to our audited financial statements contained in Item 8 of our 2014 Annual Report on Form 10-K.

Recent Accounting Pronouncements

Information regarding new accounting pronouncements is included in Note N - New Accounting Pronouncements to our unaudited condensed consolidated financial statements contained in Item 1 of this Quarterly Report on Form 10-Q.

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Additional Information

Use of Non-GAAP Financial Measures

To supplement our unaudited condensed consolidated financial statements presented on a GAAP basis, we disclose certain non-GAAP financial measures, including adjusted net income and adjusted net income per share that exclude certain amounts, and revenue growth rates that exclude the impact of changes in foreign currency exchange rates. These non-GAAP financial measures are not in accordance with generally accepted accounting principles in the United States.

The GAAP financial measure most directly comparable to adjusted net income is GAAP net income and the GAAP financial measure most directly comparable to adjusted net income per share is GAAP net income per share. To calculate revenue growth rates that exclude the impact of changes in foreign currency exchange rates, we convert actual net sales from local currency to U.S. dollars using constant foreign currency exchange rates in the current and prior period. The GAAP financial measure most directly comparable to this non-GAAP financial measure is growth rate percentages using net sales on a GAAP basis. Reconciliations of each of these non-GAAP financial measures to the corresponding GAAP financial measure are included elsewhere in this Quarterly Report on Form 10-Q.

Management uses these supplemental non-GAAP financial measures to evaluate performance period over period, to analyze the underlying trends in our business, to assess our performance relative to our competitors, and to establish operational goals and forecasts that are used in allocating resources. In addition, management uses these non-GAAP financial measures to further its understanding of the performance of our operating segments. The adjustments excluded from our non-GAAP financial measures are consistent with those excluded from our operating segments’ measures of net sales and profit or loss. These adjustments are excluded from the segment measures that are reported to our chief operating decision maker that are used to make operating decisions and assess performance.

We believe that presenting adjusted net income and adjusted net income per share that exclude certain amounts, and revenue growth rates that exclude the impact of sales from divested businesses and/or changes in foreign currency exchange rates, in addition to the corresponding GAAP financial measures, provides investors greater transparency to the information used by management for its financial and operational decision-making and allows investors to see our results “through the eyes” of management. We further believe that providing this information assists our investors in understanding our operating performance and the methodology used by management to evaluate and measure such performance.

Adjusted net income and adjusted net income per share that exclude certain amounts, and revenue growth rates that exclude the impact of sales from divested businesses and/or changes in foreign currency exchange rates, are not in accordance with U.S. GAAP and should not be considered in isolation from or as a replacement for the most directly comparable GAAP financial measures. Further, other companies may calculate these non-GAAP financial measures differently than we do, which may limit the usefulness of those measures for comparative purposes.

The following is an explanation of each of the adjustments that management excluded as part of these non-GAAP financial measures for the three and nine month periods endedSeptember 30, 2015 and 2014, as well as reasons for excluding each of these individual items:

Adjusted Net Income and Adjusted Net Income per Share

• Intangible asset impairment charges - This amount represents non-cash write-downs of certain intangible asset balances in the first nine months of 2015 and 2014. We remove the impact of non-cash impairment charges from our operating performance to assist in assessing our cash generated from operations. We believe this is a critical metric for us in measuring our ability to generate cash and invest in our 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 our current operating performance and a comparison to our past operating performance, particularly in terms of liquidity.

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• Acquisition and divestiture-related net charges (credits) - These adjustments consist of (a) contingent consideration fair value adjustments; (b) gains on previously held investments; (c) purchased and/or funded in-process research and development expenses incurred outside of a business combination; (d) due diligence, other fees and exit costs; and (e) separation costs and gains primarily associated with the sale of our Neurovascular business in January 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. Due diligence, other fees and exit costs include legal, tax, severance and other expenses associated with prior and potential future acquisitions and divestitures that can be highly variable and not representative of ongoing operations. Separation costs and gains on the sale of a business unit primarily represent those associated with the Neurovascular divestiture and are not representative of ongoing operations. Accordingly, management excluded these amounts for purposes of calculating these non-GAAP financial measures to facilitate an evaluation of our current operating performance and a comparison to our past operating performance.

• Restructuring and restructuring-related net charges (credits) - These adjustments represent primarily severance and other direct costs associated with our 2014 Restructuring program. These costs are excluded by management in assessing our operating performance, as well as from our operating segments' measures of profit and loss used for making operating decisions and assessing performance. Accordingly, management excluded these costs for purposes of calculating these non-GAAP financial measures to facilitate an evaluation of our current operating performance and a comparison to our past operating performance.

• Litigation-related net charges (credits) - These adjustments include certain significant product liability and other litigation-related charges and credits. These amounts are excluded by management in assessing our operating performance, as well as from our 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 our current operating performance and a comparison to our past operating performance.

• Debt extinguishment charges - This item represents premiums, accelerated amortization of debt issuance costs and investor discount costs net of interest rate hedge gains related to the early extinguishment of $1.0 billion of public senior notes during the second quarter of 2015. These adjustments are not expected to recur and do not reflect expected ongoing operating results. Accordingly, management excluded these amounts for purposes of calculating these non-GAAP financial measures to facilitate an evaluation of our current operating performance and a comparison to our past operating performance.

• Pension termination charges - This item represents charges associated with the termination of the Guidant Retirement Plan, a frozen defined benefit plan. These charges are not expected to recur after 2015 and do not reflect expected ongoing operating results. Accordingly, management has excluded these amounts for purposes of calculating these non-GAAP financial measures to facilitate an evaluation of our current operating performance and a comparison to our past operating performance.

• Amortization expense - Amortization expense is a non-cash expense and does not impact our liquidity or compliance with the financial covenants included in our credit facility or our term loan facility agreements. Management removes the impact of amortization from our operating performance to assist in assessing our cash generated from operations. We believe this is a critical metric for measuring our ability to generate cash and invest in our growth. Therefore, amortization expense is excluded from management's assessment of operating performance and is also excluded from our operating segments' measures of profit and loss used for making operating decisions and assessing performance. Accordingly, management has excluded amortization expense for purposes of calculating these non-GAAP financial measures to facilitate an evaluation of our current operating performance, particularly in terms of liquidity.

Revenue Growth Rates Excluding the Impact of Sales from Divested Businesses and/or Changes in Foreign Currency Exchange Rates

• Sales from divested businesses are primarily associated with the Neurovascular divestiture and are not representative of ongoing operations. The impact of changes in foreign currency exchange rates is highly variable and difficult to predict. Accordingly, management excludes the impact of sales from divested businesses and/or changes in foreign currency exchange rates for purposes of reviewing revenue growth rates to facilitate an evaluation of our current operating performance and a comparison to our past operating performance.

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Safe Harbor for Forward-Looking Statements

Certain statements that we may make from time to time, including statements contained in this Quarterly Report on Form 10-Q and information incorporated by reference herein, constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements may be identified by words like “anticipate,” “expect,” “project,” “believe,” “plan,” “may,” “estimate,” “intend” and similar words. These forward-looking statements are based on our beliefs, assumptions and estimates using information available to us at the time and are not intended to be guarantees of future events or performance. If our underlying assumptions turn out to be incorrect, or if certain risks or uncertainties materialize, actual results could vary materially from the expectations and projections expressed or implied by our forward-looking statements. As a result, readers are cautioned not to place undue reliance on any of our forward-looking statements. Except as required by law, we do not intend to update any forward-looking statements even if new information becomes available or other events occur in the future.

The forward-looking statements in this Quarterly Report on Form 10-Q are based on certain risks and uncertainties, including the risk factors described in “Item 1A. Risk Factors” of this Quarterly Report on Form 10-Q, “Part I, Item 1A. Risk Factors” in our 2014 Annual Report on Form 10-K and the specific risk factors discussed below and in connection with forward-looking statements throughout this Quarterly Report on Form 10-Q, which could cause actual results to vary materially from the expectations and projections expressed or implied by our forward-looking statements. These factors, in some cases, have affected and in the future could affect our ability to implement our business strategy and may cause actual results to differ materially from those contemplated by the forward-looking statements. These additional factors include, among other things, future political, economic, competitive, reimbursement and regulatory conditions; new product introductions; demographic trends; intellectual property; litigation and governmental investigations; financial market conditions; and future business decisions made by us and our competitors, all of which are difficult or impossible to predict accurately and many of which are beyond our control. We caution each reader of this Quarterly Report on Form 10-Q to consider carefully these factors.

The following are some of the important risk factors that could cause our actual results to differ materially from our expectations in any forward-looking statements. For further discussion of these and other risk factors, see “Item 1A. Risk Factors” of this Quarterly Report on Form 10-Q and “Part I, Item 1A. Risk Factors” in our 2014 Annual Report on Form 10-K.

Our Businesses

• Our ability to increase CRM net sales, including for both new and replacement units, expand the market and capture market share;

• The volatility of the coronary stent market and our ability to increase our drug-eluting stent systems net sales, including with respect to our SYNERGY™, Promus PREMIER™ and PROMUS® Element™ stent systems, and capture market share;

• The ongoing impact on our business, including CRM and coronary stent businesses, of physician alignment to hospitals, governmental investigations and audits of hospitals, and other market and economic conditions on the overall number of procedures performed, including with respect to the drug-eluting coronary stent market the average number of stents used per procedure, and average selling prices;

• Competitive offerings and related declines in average selling prices for our products, particularly our drug-eluting coronary stent systems and our CRM products;

• The performance of, and physician and patient confidence in, our products and technologies, including our coronary drug-eluting stent systems, CRM, and spinal cord stimulation products, or those of our competitors;

• The impact and outcome of ongoing and future clinical trials, including Interventional Cardiology and CRM clinical trials, and market studies undertaken by us, our competitors or other third parties, or perceived product performance of our or our competitors' products;

• Variations in clinical results, reliability or product performance of our and our competitors' products;

• Our ability to acquire or develop, launch and supply new or next-generation products and technologies worldwide and across our businesses in line with our commercialization strategies in a timely and successful manner, including our S-ICD® system and the acquisition and integration of the Interventional Division of Bayer AG and Xlumena, Inc. and the American Medical Systems male urology portfolio;

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• The effect of consolidation and competition in the markets in which we do business, or plan to do business;

• Disruption in the manufacture or supply of certain components, materials or products, or the failure to timely secure alternative manufacturing or additional or replacement components, materials or products;

• Our ability to retain and attract key personnel, including in our cardiology and CRM sales force and other key cardiology and CRM personnel;

• The impact of enhanced requirements to obtain regulatory approval in the United States and around the world, including the associated timing and cost of product approval;

• The impact of increased pressure on the availability and rate of third-party reimbursement for our products and procedures in the United States and around the world, including with respect to the timing and costs of creating and expanding markets for new products and technologies; and

• Risk associated with counterparty default on our derivative financial instruments.

Regulatory Compliance and Litigation

• The impact of healthcare policy changes and legislative or regulatory efforts in the United States and around the world to modify product approval or reimbursement processes, including a trend toward demonstrating clinical outcomes, comparative effectiveness and cost efficiency, as well as the impact of other healthcare reform legislation;

• Risks associated with our regulatory compliance and quality systems and activities in the United States and around the world, including meeting regulatory standards applicable to manufacturing and quality processes;

• Our ability to minimize or avoid future field actions or FDA warning letters relating to our products and processes and the ongoing inherent risk of potential physician advisories related to medical devices;

• The impact of increased scrutiny of and heightened global regulatory enforcement facing the medical device industry arising from political and regulatory changes, economic pressures or otherwise, including under U.S. Anti-Kickback Statute, U.S. False Claims Act and similar laws in other jurisdictions; U.S. Foreign Corrupt Practices Act (FCPA) and/or similar laws in other jurisdictions, and U.S. and foreign export control, trade embargo and customs laws;

• Costs and risks associated with litigation;

• The effect of our litigation and risk management practices, including self-insurance, and compliance activities on our loss contingencies, legal provision and cash flows;

• The impact of, diversion of management attention as a result of, and costs to cooperate with, litigate and/or resolve, governmental investigations and our class action, product liability, contract and other legal proceedings; and

• Risks associated with a failure to protect our intellectual property rights and the outcome of patent litigation.

Innovation and Certain Growth Initiatives

• The timing, size and nature of our strategic growth initiatives and market opportunities, including with respect to our internal research and development platforms and externally available research and development platforms and technologies, and the ultimate cost and success of those initiatives and opportunities;

• Our ability to complete planned clinical trials successfully, obtain regulatory approvals and launch new and next generation products in a timely manner consistent with cost estimates, including the successful completion of in-process projects from in-process research and development;

• Our ability to identify and prioritize our internal research and development project portfolio and our external investment portfolio on profitable revenue growth opportunities as well as to keep them in line with the estimated timing and costs of such projects and expected revenue levels for the resulting products and technologies;

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• Our ability to successfully develop, manufacture and market new products and technologies in a timely manner and the ability of our competitors and other third parties to develop products or technologies that render our products or technologies noncompetitive or obsolete;

• The impact of our failure to succeed at or our decision to discontinue, write-down or reduce the funding of any of our research and development projects, including in-process projects from in-process research and development, in our growth adjacencies or otherwise;

• Dependence on acquisitions, alliances or investments to introduce new products or technologies and to enter new or adjacent growth markets, and our ability to fund them or to fund contingent payments with respect to those acquisitions, alliances and investments; and

• The failure to successfully integrate and realize the expected benefits from the strategic acquisitions, alliances and investments we have consummated or may consummate in the future.

International Markets

• Our dependency on international net sales to achieve growth, including in emerging markets;

• The impact of changes in our international structure and leadership;

• Risks associated with international operations and investments, including the timing and collectibility of customer payments, political and economic conditions, protection of our intellectual property, compliance with established and developing U.S. and foreign legal and regulatory requirements, including FCPA and similar laws in other jurisdictions and U.S. and foreign export control, trade embargo and customs laws, as well as changes in reimbursement practices and policies;

• Our ability to maintain or expand our worldwide market positions in the various markets in which we compete or seek to compete, including through investments in product diversification and emerging markets such as Brazil, Russia, India and China;

• Our ability to execute and realize anticipated benefits from our investments in emerging markets; and

• The potential effect of foreign currency fluctuations and interest rate fluctuations on our net sales, expenses and resulting margins.

Liquidity

• Our ability to generate sufficient cash flow to fund operations, capital expenditures, global expansion initiatives, any litigation settlements and judgments, share repurchases and strategic investments and acquisitions as well as maintaining our investment grade ratings and managing our debt levels and covenant compliance;

• Our ability to access the public and private capital markets when desired and to issue debt or equity securities on terms reasonably acceptable to us;

• The unfavorable resolution of open tax matters, exposure to additional tax liabilities and the impact of changes in U.S. and international tax laws;

• The impact of examinations and assessments by domestic and international taxing authorities on our tax provision, financial condition or results of operations;

• The impact of goodwill and other intangible asset impairment charges, including on our results of operations; and

• Our ability to collect outstanding and future receivables and/or sell receivables under our factoring programs.

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Cost Reduction and Optimization Initiatives

• Risks associated with significant changes made or expected to be made to our organizational and operational structure, pursuant to our 2014 Restructuring plan, 2011 Restructuring plan as expanded, as well as any further restructuring or optimization plans we may undertake in the future, and our ability to recognize benefits and cost reductions from such programs; and

• Business disruption and employee distraction as we execute our global compliance program, restructuring and optimization plans and divestitures of assets or businesses and implement our other strategic and cost reduction initiatives.

Rule 10b5-1 Trading Plans by Executive Officers

Periodically, certain of our executive officers adopt written stock trading plans in accordance with Rule 10b5-1 under the Exchange Act and our own Stock Trading Policy (a Rule 10b5-1 Trading Plan). A Rule 10b5-1 Trading Plan is a written document that pre-establishes the amount, prices and dates (or formulas for determining the amounts, prices and dates) of future purchases or sales of our stock, including shares issued upon exercise of stock options or vesting of deferred stock units. These plans are entered into at a time when the person is not in possession of material non-public information about Boston Scientific Corporation.

On August 12, 2015, Kevin J. Ballinger, our Senior Vice President and President, Interventional Cardiology, entered into a Rule 10b5-1 Trading Plan. Mr. Ballinger’s plan covers the sale of up to 32,819 shares of our stock held by him and the sale of shares of our stock to be acquired upon (A) exercise of up to 189,929 stock options, (B) vesting of deferred stock units representing 11,633 shares (the amount to be sold will be net of shares withheld to satisfy applicable tax withholding obligations upon vesting) and (C) vesting of the 2013 Free Cash Flow Performance Share Units (the amount to be sold will be the total amount of shares issued net of shares withheld to satisfy applicable tax withholding obligations upon vesting). Transactions under Mr. Ballinger’s plan are based upon pre-established dates and stock price thresholds. Mr. Ballinger’s plan will terminate on the earlier of (among other things) July 30, 2016 and the date all shares subject to the plan have been sold.

On August 21, 2015, Jeffrey B. Mirviss, our Senior Vice President and President, Peripheral Interventions, entered into a Rule 10b5-1 Trading Plan. Mr. Mirviss’s plan covers the sale of 37,867 shares of our stock held by him. Transactions under Mr. Mirviss’s plan are based upon pre-established dates and stock price thresholds. Mr. Mirviss’s plan will terminate on the earlier of (among other things) August 14, 2016 and the date all shares subject to the plan have been sold.

On August 31, 2015, Timothy A. Pratt, our Executive Vice President, General Counsel and Chief Administrative Officer, entered into a Rule 10b5-1 Trading Plan. Mr. Pratt’s plan covers the sale of 145,545 shares of our stock held by him and the sale of shares of our stock to be acquired upon (A) exercise of up to 205,761 stock options, (B) vesting of deferred stock units representing 36,572 shares (the amount to be sold will be net of shares withheld to satisfy applicable tax withholding obligations upon vesting). In addition, Mr. Pratt’s plan covers the sale of 25 percent of the shares of our stock to be acquired upon vesting of the 2013 Free Cash Flow Performance Share Units and the 2013 Total Stockholder Return Performance Share Unit (in each case the amount to be sold will be 25 percent of the total amount of shares issued net of shares withheld to satisfy applicable tax withholding obligations upon vesting). Transactions under Mr. Pratt’s plan are based upon pre-established dates and stock price thresholds. Mr. Pratt’s plan will terminate on the earlier of (among other things) December 31, 2016 and the date all shares subject to the plan have been sold.

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We develop, manufacture and sell medical devices globally and our earnings and cash flows are exposed to market risk from changes in currency exchange rates and interest rates. We address these risks through a risk management program that includes the use of derivative financial instruments. We operate the program pursuant to documented corporate risk management policies. We do not enter derivative transactions for speculative purposes. Gains and losses on derivative financial instruments substantially offset losses and gains on underlying hedged exposures. Furthermore, we manage our exposure to counterparty risk on derivative instruments by entering into contracts with a diversified group of major financial institutions and by actively monitoring outstanding positions.

Our currency risk consists primarily of foreign currency denominated firm commitments, forecasted foreign currency denominated intercompany and third-party transactions and net investments in certain subsidiaries. We use both nonderivative (primarily European manufacturing operations) and derivative instruments to manage our earnings and cash flow exposure to changes in currency exchange rates. We had currency derivative instruments outstanding in the contract amount of $3.464 billion as of September 30, 2015 and $4.648 billion as of December 31, 2014. We recorded $290 million of other assets and $30 million of other liabilities to recognize the fair value of these derivative instruments as of September 30, 2015, as compared to $419 million of other assets and $36 million of other liabilities as of December 31, 2014. A ten percent appreciation in the U.S. dollar’s value relative to the hedged currencies would increase the derivative instruments’ fair value by $176 million as of September 30, 2015 and $210 million as of December 31, 2014. A ten percent depreciation in the U.S. dollar’s value relative to the hedged currencies would decrease the derivative instruments’ fair value by $216 million as of September 30, 2015 and by $257 million as of December 31, 2014. Any increase or decrease in the fair value of our currency exchange rate sensitive derivative instruments would be substantially offset by a corresponding decrease or increase in the fair value of the hedged underlying asset, liability or forecasted transaction, resulting in minimal impact on our consolidated statements of operations.

Our interest rate risk relates primarily to U.S. dollar borrowings partially offset by U.S. dollar cash investments. We have historically used interest rate derivative instruments to manage our earnings and cash flow exposure to changes in interest rates. We entered into interest rate derivative contracts having a notional amount of $450 million in the fourth quarter of 2013 to convert fixed-rate debt associated with certain of our senior notes into floating-rate debt, and subsequently terminated these hedges during the first quarter of 2015. We had no interest rate derivative instruments outstanding as of September 30, 2015. As of September 30, 2015, $4.706 billion of our outstanding debt obligations were at fixed interest rates, representing approximately 80 percent of our total debt.

Refer to Note E – Fair Value Measurements to our unaudited condensed consolidated financial statements contained in Item 1 of this Quarterly Report on Form 10-Q for further information regarding our derivative financial instruments.

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ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our Chief Executive Officer (CEO), and our Chief Financial Officer (CFO), evaluated the effectiveness of our disclosure controls and procedures as of September 30, 2015 pursuant to Rule 13a-15(b) of the Securities Exchange Act of 1934, as amended (the Exchange Act). Disclosure controls and procedures are designed to ensure that material information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and that such material information is accumulated and communicated to our management, including our CEO and CFO, as appropriate, to allow timely decisions regarding required disclosure. Based on their evaluation, our CEO and CFO concluded that, as of September 30, 2015, our disclosure controls and procedures were effective.

Changes in Internal Control Over Financial Reporting

During the quarter ended September 30, 2015, there were no changes in our internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II

OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

See Note I – Income Taxes and Note J – Commitments and Contingencies to our unaudited condensed consolidated financial statements contained in Item 1 of this Quarterly Report on Form 10-Q, which is incorporated herein by reference.

ITEM 1A. RISK FACTORS

In addition to the other information contained elsewhere in this report, you should carefully consider the factors discussed in “Part I, Item 1A. Risk Factors” in our 2014 Annual Report filed on Form 10-K, which could materially affect our business, financial condition or future results.

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ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None.

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ITEM 6. EXHIBITS (* documents filed or furnished with this report, # compensatory plans or arrangements)

10.1	Boston Scientific Corporation 2016 Annual Bonus Plan, effective as of January 1, 2016 (incorporated herein by reference to Exhibit 10.1, Current Report on Form 8-K filed October 5, 2015, File No. 001-11083)#
10.2	Boston Scientific Corporation 2016 Total Shareholder Return Performance Share Program (incorporated herein by reference to Exhibit 10.2, Current Report on Form 8-K filed October 5, 2015, File No. 001-11083)#
10.3	Boston Scientific Corporation 2016 Free Cash Flow Performance Share Program (incorporated herein by reference to Exhibit 10.3, Current Report on Form 8-K filed October 5, 2015, File No. 001-11083)#
10.4*	Form of Performance Share Unit Award Agreement under the 2011 Long-Term Incentive Plan (Total Shareholder Return) #
10.5*	Form of Performance Share Unit Award Agreement under the 2011 Long-Term Incentive Plan (Free Cash Flow) #
31.1*	Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2*	Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1*	Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, Chief Executive Officer
32.2*	Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, Executive Vice President and Chief Financial Officer
101*	Interactive Data Files Pursuant to Rule 405 of Regulation S-T: (i) the Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2015 and 2014, (ii) the Condensed Consolidated Statements of Comprehensive Income for the three and nine months ended September 30, 2015 and 2014, (iii) the Condensed Consolidated Balance Sheets as of September 30, 2015 and December 31, 2014, (iv) the Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2015 and 2014 and (v) the notes to the Condensed Consolidated Financial Statements.

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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized on November 4, 2015.

BOSTON SCIENTIFIC CORPORATION
By:	/s/ Daniel J. Brennan
	Name:	Daniel J. Brennan
	Title:	Executive Vice President and Chief Financial Officer

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EX-10.4

EXHIBIT 10.4

Boston Scientific Corporation

Participant:

Employee ID:

Award Type: Performance Share Unit Award Agreement

Plan Name: Total Shareholder Return Performance Share Program

Award Date: [__]-Feb-2016

BOSTON SCIENTIFIC

INTENT TO GRANT

PERFORMANCE SHARE UNIT AWARD AGREEMENT

This Agreement, dated as of the [__] day of February, 2016 (the “Grant Date”), is between Boston Scientific Corporation, a Delaware corporation (the “Company”), and the “Participant”, an employee of the Company or any of its affiliates or subsidiaries. All capitalized terms not otherwise defined herein shall have the meaning ascribed thereto in either the Company’s 2011 Long‑Term Incentive Plan (the “Plan”) or in the Total Shareholder Return Performance Share Program (the “Program”) for the period beginning January 1, 2016 and ending on December 31, 2018 (the “Performance Period”).

1.    Grant and Acceptance of Award. The Company hereby indicates its award to the Participant that number of Performance Share Units (the “Units”) set forth herein this Agreement (the “Award”). Each Unit represents the Company’s commitment to issue to the Participant shares of the Company’s common stock, par value $.01 per share (the “Stock”), subject to certain eligibility, performance and other conditions set forth herein. The Award is intended to be granted pursuant to and is subject to the terms and conditions of this Agreement and the provisions of the Plan and the Program.

2.    Eligibility Conditions upon Award of Units. The Participant hereby acknowledges the intent of the Company to award Units subject to certain eligibility, performance and other conditions set forth herein.

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EXHIBIT 10.4

3.    Satisfaction of Performance-Based Conditions. Subject to the eligibility conditions described in Section 7 of this Agreement, except as otherwise provided in Section 8 of this Agreement and Appendix B, and the satisfaction of the performance conditions set forth on Appendix A to this Agreement during the Performance Period, the Company intends to award shares of Stock hereunder to the Participant at the end of the Performance Period. Except as set forth in Section 8 of this Agreement, no shares of Stock in settlement of the Units shall be issued to the Participant prior to the end of the Performance Period.

4.    Participant’s Rights in Stock. The shares of Stock, if and when issued hereunder, shall be registered in the name of the Participant and evidenced in the manner as the Company may determine. During the period prior to the issuance of Stock, the Participant will have no rights of a stockholder of the Company with respect to the Stock, including no right to receive dividends or vote the shares of Stock underlying each Award.

5.    Death. In the event that the Participant’s employment with the Company or its subsidiaries or affiliates is terminated due to death after December 31, 2016, but prior to the end of the Performance Period, shares of Stock shall be issued on a prorated basis based on actual performance as determined at the first Committee meeting following the Performance Period. The number of shares of Stock to be issued under the prorated Award shall be determined by calculating (a)(i) the number of Units set forth herein multiplied by (ii) the quotient of the number of full and partial months that the Participant worked during the Performance Period (rounded up to the nearest whole month) divided by 36, and then multiplying the product of (a)(i) and (a)(ii) by (b) the percentile performance amount as calculated in accordance with the terms of the Program. In the event of the Participant’s death prior to January 1, 2017, the Award shall be forfeited in its entirety.

6.    Retirement or Disability. In the event that the Participant’s employment with the Company or its subsidiaries or affiliates is terminated due to Retirement or Disability after December 31, 2016, but prior to the end of the Performance Period, shares of Stock shall be issued on a prorated basis based on actual performance as determined at the first Committee meeting following the Performance Period. The number of shares of Stock to be issued under the prorated Award shall be determined by calculating (a)(i) the number of Units set forth herein multiplied by (ii) the quotient of the number of full and partial months that the Participant worked during the Performance Period (rounded up to the nearest whole month) divided by 36, and then multiplying the product of (a)(i) and (a)(ii) by the percentile performance amount, as calculated in accordance with the terms of the Program. In the event that the Participant terminates his employment due to Retirement or Disability prior to January 1, 2017, the Award shall be forfeited in its entirety.

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EXHIBIT 10.4

7.    Other Termination of Employment -- Eligibility Conditions. If the employment of the Participant with the Company and its affiliates or subsidiaries is terminated or the Participant separates from the Company and its affiliates or subsidiaries for any reason other than death, Retirement or Disability, any Units that remain subject to eligibility conditions shall be void and no Stock shall be issued. Except as set forth in Sections 5, 6 and 8, eligibility to be issued shares of Stock is conditioned on the Participant’s continuous employment with the Company through and on the last day of the Performance Period .

8.    Change in Control of the Company. Subject to the terms of any separate Change in Control or similar agreement to which the Participant is bound, in the event of a Change in Control of the Company after December 31, 2016, but prior to the end of the Performance Period, shares of Stock shall be issued on a prorated basis based on actual performance using the last day of the month preceding the date on which the Change in Control is consummated as the ending date of the Performance Period in lieu of December 31, 2018 as determined by the Committee immediately prior to the consummation of the Change in Control. The number of shares of Stock to be issued under the prorated Award shall be determined by calculating (a)(i) the number of Units set forth herein multiplied by (ii) the quotient of the number of full and partial months during the Performance Period (rounded up to the nearest whole month) prior to the consummation of the Change in Control divided by 36, and then multiplying the product of (a)(i) and (a)(ii) by (b) the percentile performance amount as calculated in accordance with the terms of the Program. In the event that a Change in Control occurs prior to January 1, 2017, the Award shall be forfeited in its entirety.

9.    Recoupment Policy.

(a)    Current Recoupment Policy. Pursuant to the Company's recoupment policy and to the extent permitted by governing law, the Board, in its discretion, may seek Recovery of the Award granted to you if you are a Current Executive Officer or Former Executive Officer and if, in the judgment of the Board, you commit misconduct or a gross dereliction of duty that results in a material violation of Company policy and causes significant harm to the Company while serving in your capacity as Executive Officer.

(i)    Definitions. The following terms, when used in this Section 9, shall have the meaning set forth below:

(1)    "Current Executive Officer" means any individual currently designated as an “officer” by the Board for purposes of Section 16 of the Securities Exchange Act of 1934, as amended.

(2)    "Executive Officer" means any Current Executive Officer or Former Executive Officer.

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EXHIBIT 10.4

(3)    "Former Executive Officer" means any individual previously (but not currently) designated as an “officer” by the Board for purposes of Section 16 of the Securities Exchange Act of 1934, as amended.

(4)    "Recovery" means the forfeiture or cancellation of unvested Units.

(b)    Provisions Required by Law. If the Company subsequently determines that it is required by law to apply a "clawback" or alternate recoupment provision to outstanding Awards, under the Dodd-Frank Wall Street Reform and Consumer Protection Act or otherwise, then such clawback or recoupment provision also shall apply to this Award, as applicable, as if it had been included on the Grant Date and the Company shall notify you of such additional provision.

10.    Consideration for Stock. The shares of Stock are intended to be issued for no cash consideration.

11.    Issuance of Stock. The Company shall not be obligated to issue any shares of Stock until (i) all federal and state laws and regulations as the Company may deem applicable have been complied with; (ii) the shares have been listed or authorized for listing upon official notice to the New York Stock Exchange, Inc. or have otherwise been accorded trading privileges; and (iii) all other legal matters in connection with the issuance and delivery of the shares have been approved by the Company’s legal department.

12.    Tax Withholding. The Participant shall be responsible for the payment of any taxes of any kind required by any national, state or local law to be paid with respect to the Units or the shares of Stock to be awarded hereunder, including, without limitation, the payment of any applicable withholding, income, social and similar taxes or obligations. Except as otherwise provided in this Section 12, upon the issuance of Stock or the satisfaction of any eligibility conditionwith respect to the Stock to be issued hereunder, or upon any other event giving rise to any tax liability, the Company shall hold back from the total number of shares of Stock to be delivered to the Participant, and shall cause to be transferred to the Company, whole shares of Stock having a Fair Market Value on the date the Stock is subject to issuance or taxation an amount as nearly as possible equal to (rounded to the next whole share) the Company’s withholding, income, social and similar taxobligations with respect to the Stock at such time. To the extent of the Fair Market Value of the withheld shares, the Participant shall be deemed to have satisfied the Participant’s responsibility under this Section 12 to pay these obligations. The Participant shall satisfy the Participant’s responsibility to pay any other withholding, income, social or similar tax obligations with respect to the Stock, and (subject to such rules as the Committee may prescribe) may satisfy the Participant’s responsibility to pay the tax obligations described in the immediately preceding sentence, by so indicating to the Company or its designee in writing at least one (1) business day prior to the date the shares of stock are subject to issuance and by paying the amount of these tax obligations in cash to the Company or its designee within fifteen (15) business days following the date the Units vest or by making other arrangements satisfactory to the Committee for payment of these obligations. In no event shall whole

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EXHIBIT 10.4

shares be withheld by or delivered to the Company in satisfaction of tax withholding requirements in excess of the maximum statutory tax withholding required by law. The Participant agrees to indemnify the Company against any and all liabilities, damages, costs and expenses that the Company may hereafter incur, suffer or be required to pay with respect to the payment or withholding of any taxes. The obligations of the Company under this Agreement, the Plan and the Program shall be conditional upon such payment or arrangements, and the Company shall, to the extent permitted by law, have the right to deduct any such taxes from any payment of any kind otherwise due to the Participant.

13.    Investment Intent. The Participant acknowledges that the acquisition of the Stock to be issued hereunder is for investment purposes without a view to distribution thereof.

14.    Limits on Transferability; Restrictions on Shares; Legend on Certificate. Until the eligibility conditions of this Award have been satisfied and shares of Stock have been issued in accordance with the terms of this Agreement or by action of the Committee, the Units awarded hereunder are not transferable and shall not be sold, transferred, assigned, pledged, gifted, hypothecated or otherwise disposed of or encumbered by the Participant. Transfers of shares of Stock by the Participant are subject to the Company’s Stock Trading Policy and applicable securities laws. Shares of Stock issued to the Participant in certificate form or to the Participant’s book entry account upon satisfaction of the vesting and other conditions of this Award may be restricted from transfer or sale by the Company and evidenced by stop-transfer instructions upon the Participant’s book entry account or restricted legend(s) affixed to certificates in the form as the Company or its counsel may require with respect to any applicable restrictions on sale or transfer.

15.    Award Subject to the Plan and the Program. The Award to be made pursuant to this Agreement is made subject to the Plan and the Program. The terms and provisions of the Plan and the Program, as each may be amended from time to time are hereby incorporated herein by reference. In the event of a conflict between any term or provision contained in this Agreement and a term or provision of the Plan or the Program, the applicable terms and conditions of the Plan or Program will govern and prevail. However, no amendment of the Plan or the Program after the date hereof may adversely alter or impair the issuance of the Stock to be made pursuant to this Agreement.

16.    No Rights to Continued Employment. The Company’s intent to issue the shares of Stock hereunder shall not confer upon the Participant any right to continued employment or other association with the Company or any of its affiliates or subsidiaries; and this Agreement shall not be construed in any way to limit the right of the Company or any of its subsidiaries or affiliates to terminate the employment or other association of the Participant with the Company or to change the terms of such employment or association at any time.

17.    Legal Notices. Any legal notice necessary under this Agreement shall be addressed to the Company in care of its General Counsel at the principle executive offices of the Company and to the Participant at the address appearing in the personnel records of the Company for such Participant or to either party at such other address as either party may

TSR Program

EXHIBIT 10.4

designate in writing to the other. Any such notice shall be deemed effective upon receipt thereof by the addressee.

18.    Governing Law. The interpretation, performance and enforcement of this Agreement shall be governed by the laws of The Commonwealth of Massachusetts (without regard to the conflict of laws principles thereof) and applicable federal laws. For purposes of litigating any dispute that arises directly or indirectly from the relationship of the parties evidenced by this Agreement, the parties hereby submit and consent to the exclusive jurisdiction of the Commonwealth of Massachusetts and agree that such litigation shall be conducted only in the Commonwealth of Massachusetts, or the federal courts for the United States for the District of Massachusetts, and no other courts, where this Award is made and/or to be performed.

19.    Headings. The headings contained in this Agreement are for convenience only and shall not affect the meaning or interpretation of this Agreement.

20.    Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original and all of which together shall be deemed to the one and the same instrument.

[remainder of page intentionally left blank]

TSR Program

EXHIBIT 10.4

APPENDIX A

PLAN: 2011 LONG-TERM INCENTIVE PLAN

The Performance Share Units will pay out in shares of Stock in a range of 0% to 200% of the number of Performance Share Units as follows:

TSR Performance Percentile Rank	Performance Share Units as a Percent of Target
90th Percentile or above	200%
80th Percentile	150%
50th Percentile	100%
30th Percentile	40%
Below 30th Percentile	0%

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EXHIBIT 10.4

APPENDIX B

Nature of Grant. In accepting the grant, I acknowledge that:

(1)    the Plan is established voluntarily by the Company, is discretionary in nature and may be modified, amended, suspended or terminated by the Company at any time;

(2)    this Award is does not create any contractual or other right to receive future awards, or other benefits in lieu of an award, even if awards have been given repeatedly in the past, and all decisions with respect to future awards, if any, will be at the sole discretion of the Company;

(3)    this Award is not part of normal or expected compensation or salary for any purposes, including, but not limited to, calculating any severance, termination, bonuses, retirement benefits or similar payments;

(4)    the future value of the Stock is unknown and cannot be predicted with certainty; and

(5)    in consideration of the Award, no claim or entitlement to compensation or damages shall arise from termination of the Award resulting from termination of my employment by the Company (for any reason whatsoever and whether or not in breach of local labor laws) and I irrevocably release the Company from any such claim that may arise; if, notwithstanding the foregoing, any such claim is found by a court of competent jurisdiction to have arisen, then, by accepting this Award, I shall be deemed irrevocably to have waived my entitlement to pursue such claim.

Data Privacy.  I hereby explicitly and unambiguously consent to the collection, use and transfer, in electronic or other form, of my personal data as described herein by and among, as applicable, the Company and its subsidiaries and affiliates for the exclusive purpose of implementing, administering and managing my participation in the Plan.

I understand that the Company holds certain personal information about me, including, but not limited to, my name, home address and telephone number, date of birth, social insurance number or other identification number, salary, nationality, job title, any shares of stock or directorships held in the Company, details of all options or any other entitlement to shares of stock awarded, canceled, exercised, vested, unvested or outstanding in my favor, for the purpose of implementing, administering and managing the Plan (“Data”). I understand that Data may be transferred to any third parties assisting in the implementation, administration and management of the Plan, that these recipients may be located in my country or elsewhere, and that the recipient’s country may have different data privacy laws and protections than my country. I understand that I may request a list with the names and addresses of any potential recipients of the Data by contacting my local human resources representative. I authorize the recipients to receive, possess, use, retain and transfer the Data, in electronic or other form, for the purposes of implementing, administering and managing my participation in the Plan, including any requisite transfer of such Data as may be required to a broker or other third party with whom I may elect to deposit any shares of stock acquired upon exercise of the option. I understand that Data will be held only as long as is necessary to implement, administer and manage my participation in the Plan. I understand that I may, at any time, view Data, request additional information about the storage and processing of Data, require any necessary amendments to Data or refuse or withdraw the consents herein, in any case without cost, by contacting in writing my local human resources representative. I understand, however, that refusing or withdrawing my consent may affect my ability to participate in the Plan. For more information on the consequences of my refusal to consent or withdrawal of consent, I understand that I may contact my local human resources representative.

Electronic Delivery of Documents. The Company may, in its sole discretion, decide to deliver any documents related to the option granted under and participation in the Plan or future options that may be granted under the Plan by electronic means or to request my consent to participate in the Plan by electronic means. I hereby consent to receive such documents by electronic delivery and, if requested, to agree to participate in the Plan

TSR Program

EXHIBIT 10.4

through an on-line or electronic system established and maintained by the Company or another third party designated by the Company.

TSR Program

EX-10.5

EXHIBIT 10.5

Boston Scientific Corporation

Participant:

Employee ID:

Award Type: Performance Share Unit Award Agreement

Plan Name: Free Cash Flow Performance Share Program

Award Date: [__]-Feb-2016

Total Granted:

BOSTON SCIENTIFIC

INTENT TO GRANT

PERFORMANCE SHARE UNIT AWARD AGREEMENT

This Agreement, dated as of the [__] day of February, 2016 (the “Grant Date”), is between Boston Scientific Corporation, a Delaware corporation (the “Company”), and the “Participant”, an employee of the Company or any of its affiliates or subsidiaries. All capitalized terms not otherwise defined herein shall have the meaning ascribed thereto in either the Company’s 2011 Long‑Term Incentive Plan (the “Plan”) or in the Free Cash Flow Performance Share Program (the “Program”) for the performance period beginning January 1, 2016 and ending on December 31, 2016 (the “Performance Period”) and the three-year service period beginning on January 1, 2016 and ending on December 31, 2018 (the “Service Period”).

1.    Grant and Acceptance of Award. The Company hereby indicates its award to the Participant that number of Performance Share Units (the “Units”) set forth herein this Agreement (the “Award”). Each Unit represents the Company’s commitment to issue to the Participant shares of the Company’s common stock, par value $.01 per share (the “Stock”), subject to certain eligibility, performance and other conditions set forth herein. The Award is intended to be granted pursuant to and is subject to the terms and conditions of this Agreement and the provisions of the Plan and the Program.

2.    Eligibility Conditions upon Award of Units. The Participant hereby acknowledges the intent of the Company to award Units subject to certain eligibility, performance and other conditions set forth herein.

FCF Program

3.    Satisfaction of Performance-Based Conditions and Service Period. Subject to the eligibility conditions described in Section 7 of this Agreement, except as otherwise provided in Sections 5, 6 and 8 of this Agreement and Appendix B, and the satisfaction of the performance conditions set forth on Appendix A to this Agreement during the Performance Period, the Company intends to award shares of Stock hereunder to the Participant at the end of the Service Period (December 31, 2018). Except as set forth in Sections 5, 6 and 8 of this Agreement, no shares of Stock in settlement of the Units shall be issued to the Participant prior to the end of the Service Period.

4.    Participant’s Rights in Stock. The shares of Stock, if and when issued hereunder, shall be registered in the name of the Participant and evidenced in the manner as the Company may determine. During the period prior to the issuance of Stock, the Participant will have no rights of a stockholder of the Company with respect to the Stock, including no right to receive dividends or vote the shares of Stock underlying each Award.

5.    Death. In the event that the Participant’s employment with the Company or its subsidiaries or affiliates is terminated due to death after December 31, 2016, but prior to the end of the Service Period, shares of Stock shall be issued on a prorated basis based on actual performance as determined at the first Committee meeting following the Participant’s death. The number of shares of Stock to be issued under the prorated Award shall be determined by calculating (a)(i) the number of Units set forth herein multiplied by (ii) the quotient of the number of full and partial months that the Participant worked during the Service Period (rounded up to the nearest whole month) divided by 36, and then multiplying the product of (a)(i) and (a)(ii) by (b) the percentile performance amount, as calculated in accordance with the terms of the Program. In the event of the Participant’s death prior to January 1, 2017, the Award shall be forfeited in its entirety.

6.    Retirement or Disability. In the event that the Participant’s employment with the Company or its subsidiaries or affiliates is terminated due to Retirement or Disability after December 31, 2016, but prior to the end of the Service Period, shares of Stock shall be issued on a prorated basis based on actual performance as determined at the first Committee meeting following the Participant’s termination of employment due to Retirement or Disability. The number of shares of Stock to be issued under the prorated Award shall be determined by calculating (a)(i) the number of Units set forth herein multiplied by (ii) the quotient of the number of full and partial months that the Participant worked during the Service Period (rounded up to the nearest whole month) divided by 36, and then multiplying the product of (a)(i) and (a)(ii) by the percentile performance amount, as calculated in accordance with the terms of the Program. In the event that the Participant terminates his employment due to Retirement or Disability prior to January 1, 2017, the Award shall be forfeited in its entirety.

7.    Other Termination of Employment -- Eligibility Conditions. If the employment of the Participant with the Company and its affiliates or subsidiaries is terminated or the Participant separates from the Company and its affiliates or subsidiaries for any reason other than death, Retirement or Disability, any Units that remain subject to eligibility conditions shall be void and no Stock shall be issued. Except as set forth in Sections

FCF Program

5, 6 and 8, eligibility to be issued shares of Stock is conditioned on the Participant’s continuous employment with the Company through and on the last day of the Service Period as set forth in Section 3 above.

8.    Change in Control of the Company. Subject to the terms of any separate Change in Control or similar agreement to which the Participant is bound, in the event of a Change in Control of the Company after December 31, 2016, but prior to the end of the Service Period, shares of Stock shall be issued on a prorated basis based on actual performance as determined by the Committee immediately prior to the consummation of the Change in Control. The number of shares of Stock to be issued under the prorated Award shall be determined by calculating (a)(i) the number of Units set forth herein multiplied by (ii) the quotient of the number of full and partial months during the Service Period (rounded up to the nearest whole month) prior to the consummation of the Change in Control divided by 36, and then multiplying the product of (a)(i) and (a)(ii) by the percentile performance amount, as calculated in accordance with terms of the Program. In the event that Change in Control occurs prior to January 1, 2017, the Award shall be forfeited in its entirety.

9.    Recoupment Policy.

(a)    Current Recoupment Policy. Pursuant to the Company's recoupment policy and to the extent permitted by governing law, the Board, in its discretion, may seek Recovery of the Award granted to you if you are a Current Executive Officer or Former Executive Officer and you, in the judgment of the Board, commit misconduct or a gross dereliction of duty that results in a material violation of Company policy and causes significant harm to the Company while serving in your capacity as Executive Officer.

(i)    Definitions. The following terms, when used in this Section 9, shall have the meaning set forth below:

(1)    "Current Executive Officer" means any individual currently designated as an “officer” by the Board for purposes of Section 16 of the Securities Exchange Act of 1934, as amended.

(2)    "Executive Officer" means any Current Executive Officer or Former Executive Officer.

(3)    "Former Executive Officer" means any individual previously (but not currently) designated as an “officer” by the Board for purposes of Section 16 of the Securities Exchange Act of 1934, as amended.

(4)    "Recovery" means the forfeiture or cancellation of unvested Units.

(b)    Provisions Required by Law. If the Company subsequently determines that it is required by law to apply a "clawback" or alternate recoupment provision to outstanding Awards, under the Dodd-Frank Wall Street Reform and Consumer Protection Act or

FCF Program

otherwise, then such clawback or recoupment provision also shall apply to this Award, as applicable, as if it had been included on the Grant Date and the Company shall notify you of such additional provision.

10.    Consideration for Stock. The shares of Stock are intended to be issued for no cash consideration.

11.    Issuance of Stock. The Company shall not be obligated to issue any shares of Stock until (i) all federal and state laws and regulations as the Company may deem applicable have been complied with; (ii) the shares have been listed or authorized for listing upon official notice to the New York Stock Exchange, Inc. or have otherwise been accorded trading privileges; and (iii) all other legal matters in connection with the issuance and delivery of the shares have been approved by the Company’s legal department.

12.    Tax Withholding. The Participant shall be responsible for the payment of any taxes of any kind required by any national, state or local law to be paid with respect to the Units or the shares of Stock to be awarded hereunder, including, without limitation, the payment of any applicable withholding, income, social and similar taxes or obligations. Except as otherwise provided in this Section 12, upon the issuance of Stock or the satisfaction of any eligibility conditionwith respect to the Stock to be issued hereunder, or upon any other event giving rise to any tax liability, the Company shall hold back from the total number of shares of Stock to be delivered to the Participant, and shall cause to be transferred to the Company, whole shares of Stock having a Fair Market Value on the date the Stock is subject to issuance or taxation an amount as nearly as possible equal to (rounded to the next whole share) the Company’s withholding, income, social and similar taxobligations with respect to the Stock at such time. To the extent of the Fair Market Value of the withheld shares, the Participant shall be deemed to have satisfied the Participant’s responsibility under this Section 12 to pay these obligations. The Participant shall satisfy the Participant’s responsibility to pay any other withholding, income, social or similar tax obligations with respect to the Stock, and (subject to such rules as the Committee may prescribe) may satisfy the Participant’s responsibility to pay the tax obligations described in the immediately preceding sentence, by so indicating to the Company or its designee in writing at least one (1) business day prior to the date the shares of Stock are subject to issuance and by paying the amount of these tax obligations in cash to the Company or its designee within fifteen (15) business days following the date the Units vest or by making other arrangements satisfactory to the Committee for payment of these obligations. In no event shall whole shares be withheld by or delivered to the Company in satisfaction of tax withholding requirements in excess of the maximum statutory tax withholding required by law. The Participant agrees to indemnify the Company against any and all liabilities, damages, costs and expenses that the Company may hereafter incur, suffer or be required to pay with respect to the payment or withholding of any taxes. The obligations of the Company under this Agreement, the Plan and the Program shall be conditional upon such payment or arrangements, and the Company shall, to the extent permitted by law, have the right to deduct any such taxes from any payment of any kind otherwise due to the Participant.

FCF Program

13.    Investment Intent. The Participant acknowledges that the acquisition of the Stock to be issued hereunder is for investment purposes without a view to distribution thereof.

14.    Limits on Transferability; Restrictions on Shares; Legend on Certificate. Until the eligibility conditions of this Award have been satisfied and shares of Stock have been issued in accordance with the terms of this Agreement or by action of the Committee, the Units awarded hereunder are not transferable and shall not be sold, transferred, assigned, pledged, gifted, hypothecated or otherwise disposed of or encumbered by the Participant. Transfers of shares of Stock by the Participant are subject to the Company’s Stock Trading Policy and applicable securities laws. Shares of Stock issued to the Participant in certificate form or to the Participant’s book entry account upon satisfaction of the vesting and other conditions of this Award may be restricted from transfer or sale by the Company and evidenced by stop-transfer instructions upon the Participant’s book entry account or restricted legend(s) affixed to certificates in the form as the Company or its counsel may require with respect to any applicable restrictions on sale or transfer.

15.    Award Subject to the Plan and the Program. The Award to be made pursuant to this Agreement is made subject to the Plan and the Program. The terms and provisions of the Plan and the Program, as each may be amended from time to time are hereby incorporated herein by reference. In the event of a conflict between any term or provision contained in this Agreement and a term or provision of the Plan or the Program, the applicable terms and conditions of the Plan or Program will govern and prevail. However, no amendment of the Plan or the Program after the date hereof may adversely alter or impair the issuance of the Stock to be made pursuant to this Agreement.

16.    No Rights to Continued Employment. The Company’s intent to issue the shares of Stock hereunder shall not confer upon the Participant any right to continued employment or other association with the Company or any of its affiliates or subsidiaries; and this Agreement shall not be construed in any way to limit the right of the Company or any of its subsidiaries or affiliates to terminate the employment or other association of the Participant with the Company or to change the terms of such employment or association at any time.

17.    Legal Notices. Any legal notice necessary under this Agreement shall be addressed to the Company in care of its General Counsel at the principle executive offices of the Company and to the Participant at the address appearing in the personnel records of the Company for such Participant or to either party at such other address as either party may designate in writing to the other. Any such notice shall be deemed effective upon receipt thereof by the addressee.

18.    Governing Law. The interpretation, performance and enforcement of this Agreement shall be governed by the laws of The Commonwealth of Massachusetts (without regard to the conflict of laws principles thereof) and applicable federal laws. For purposes of litigating any dispute that arises directly or indirectly from the relationship of the parties evidenced by this Agreement, the parties hereby submit and consent to the exclusive jurisdiction of the Commonwealth of Massachusetts and agree that such litigation shall be

FCF Program

conducted only in the Commonwealth of Massachusetts, or the federal courts for the United States for the District of Massachusetts, and no other courts, where this Award is made and/or to be performed.

19.    Headings. The headings contained in this Agreement are for convenience only and shall not affect the meaning or interpretation of this Agreement.

20.    Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original and all of which together shall be deemed to the one and the same instrument.

[remainder of page intentionally left blank]

FCF Program

EXHIBIT 10.5

APPENDIX A

PLAN: 2011 LONG-TERM INCENTIVE PLAN

The Performance Share Units will pay out in shares of Stock in a range of 0% to 150% of the number of Performance Share Units as follows:

Performance Percent to Plan	Units Vesting
125% or above	150%
110%	120%
100%	100%
90%	80%
50%	25%
Less than 50%	0%

FCF Program

EXHIBIT 10.5

APPENDIX B

Nature of Grant. In accepting the grant, I acknowledge that:

(1)    the Plan is established voluntarily by the Company, is discretionary in nature and may be modified, amended, suspended or terminated by the Company at any time;

(2)    this Award is does not create any contractual or other right to receive future awards, or other benefits in lieu of an award, even if awards have been given repeatedly in the past, and all decisions with respect to future awards, if any, will be at the sole discretion of the Company;

(3)    this Award is not part of normal or expected compensation or salary for any purposes, including, but not limited to, calculating any severance, termination, bonuses, retirement benefits or similar payments;

(4)    the future value of the Stock is unknown and cannot be predicted with certainty; and

(5)    in consideration of the Award, no claim or entitlement to compensation or damages shall arise from termination of the Award resulting from termination of my employment by the Company (for any reason whatsoever and whether or not in breach of local labor laws) and I irrevocably release the Company from any such claim that may arise; if, notwithstanding the foregoing, any such claim is found by a court of competent jurisdiction to have arisen, then, by accepting this Award, I shall be deemed irrevocably to have waived my entitlement to pursue such claim.

Data Privacy.  I hereby explicitly and unambiguously consent to the collection, use and transfer, in electronic or other form, of my personal data as described herein by and among, as applicable, the Company and its subsidiaries and affiliates for the exclusive purpose of implementing, administering and managing my participation in the Plan.

I understand that the Company holds certain personal information about me, including, but not limited to, my name, home address and telephone number, date of birth, social insurance number or other identification number, salary, nationality, job title, any shares of stock or directorships held in the Company, details of all options or any other entitlement to shares of stock awarded, canceled, exercised, vested, unvested or outstanding in my favor, for the purpose of implementing, administering and managing the Plan (“Data”). I understand that Data may be transferred to any third parties assisting in the implementation, administration and management of the Plan, that these recipients may be located in my country or elsewhere, and that the recipient’s country may have different data privacy laws and protections than my country. I understand that I may request a list with the names and addresses of any potential recipients of the Data by contacting my local human resources representative. I authorize the recipients to receive, possess, use, retain and transfer the Data, in electronic or other form, for the purposes of implementing, administering and managing my participation in the Plan, including any requisite transfer of such Data as may be required to a broker or other third party with whom I may elect to deposit any shares of stock acquired upon exercise of the option. I understand that Data will be held only as long as is necessary to implement, administer and manage my participation in the Plan. I understand that I may, at any time, view Data, request additional information about the storage and processing of Data, require any necessary amendments to Data or refuse or withdraw the consents herein, in any case without cost, by contacting in writing my local human resources representative. I understand, however, that refusing or withdrawing my consent may affect my ability to participate in the Plan. For more information on the consequences of my refusal to consent or withdrawal of consent, I understand that I may contact my local human resources representative.

Electronic Delivery of Documents. The Company may, in its sole discretion, decide to deliver any documents related to the option granted under and participation in the Plan or future options that may be granted under the Plan by electronic means or to request my consent to participate in the Plan by electronic means. I hereby consent to receive such documents by electronic delivery and, if requested, to agree to participate in the Plan

FCF Program

EXHIBIT 10.5

through an on-line or electronic system established and maintained by the Company or another third party designated by the Company.

FCF Program

EX-31.1

EXHIBIT 31.1

CERTIFICATIONS

I, Michael F. Mahoney, certify that:

1	I have reviewed this Quarterly Report on Form 10-Q of Boston Scientific Corporation;
2	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4	The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
	a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
	b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
	c)	Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
	d)	Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5	The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
	a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
	b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date:	November 4, 2015	/s/ Michael F. Mahoney
		Michael F. Mahoney
		President and Chief Executive Officer

EX-31.2

EXHIBIT 31.2

CERTIFICATIONS

I, Daniel J. Brennan, certify that:

1	I have reviewed this Quarterly Report on Form 10-Q of Boston Scientific Corporation;
2	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4	The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
	a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
	b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
	c)	Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
	d)	Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5	The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
	a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
	b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date:	November 4, 2015	/s/ Daniel J. Brennan
		Daniel J. Brennan
		Executive Vice President and Chief Financial Officer

EX-32.1

EXHIBIT 32.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TO 18 U.S.C.

SECTION 1350 AS ADOPTED PURSUANT TO SECTION 906 OF THE

SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of Boston Scientific Corporation (the “Company”) for the period ending September 30, 2015 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned Chief Executive Officer of the Company hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that based on his knowledge:

(1)	the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2)	the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Boston Scientific Corporation.

This certification shall not be deemed "filed" for any purpose, nor shall it be deemed to be incorporated by reference into any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934 regardless of any general incorporation language in such filing.

By:	/s/ Michael F. Mahoney
	Michael F. Mahoney
	President and Chief Executive Officer
	November 4, 2015

EX-32.2

EXHIBIT 32.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT TO 18 U.S.C.

SECTION 1350 AS ADOPTED PURSUANT TO SECTION 906 OF THE

SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of Boston Scientific Corporation (the “Company”) for the period ending September 30, 2015 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned Chief Financial Officer of the Company hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that based on his knowledge:

(1)	the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2)	the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Boston Scientific Corporation.

This certification shall not be deemed "filed" for any purpose, nor shall it be deemed to be incorporated by reference into any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934 regardless of any general incorporation language in such filing.

By:	/s/ Daniel J. Brennan
	Daniel J. Brennan
	Executive Vice President and Chief Financial Officer
	November 4, 2015

XML

Income Taxes (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2016	Dec. 31, 2014
Effective Income Tax Rate Reconciliation, Percent [Abstract]
Unrecognized Tax Benefits	$ 1,086		$ 1,086			$ 1,047
Unrecognized Tax Benefits that Would Impact Effective Tax Rate	925		925			903
Incremental tax liability asserted by IRS	$ 1,162		$ 1,162
Reported tax rate	45.90%	(1343.20%)	68.90%	(296.00%)
Net tax expense/benefits related to interest and penalties	$ 11	$ 9	$ 32	$ 28
Unrecognized Tax Benefits, Income Tax Penalties and Interest Accrued, Total	$ 491		$ 491			$ 443
Subsequent Event [Member]
Effective Income Tax Rate Reconciliation, Percent [Abstract]
Potential Reduction In Unrecognized Tax Benefits Over Next Twelve Months As Result Of Concluding Certain Matters					$ 10

XML

Divestitures and Pension Termination (Details) - USD ($) $ in Millions	1 Months Ended	3 Months Ended		9 Months Ended		12 Months Ended
	Jan. 31, 2011	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Divestitures and Assets Held for Sale [Abstract]
Purchase price for divestiture of business/controlling interest	$ 1,500
Proceeds from business divestitures, net of costs				$ 0	$ 12	$ 30	$ 10	$ 1,450
Pension termination charges		$ 36	$ 0	$ 44	$ 0

XML

Borrowings and Credit Arrangements (Tables)

9 Months Ended

Sep. 30, 2015

Debt Disclosure [Abstract]

Schedule of debt maturities

The debt maturity schedule for the significant components of our debt obligations as of September 30, 2015 is as follows:

(in millions)	2015		2016		2017		2018		2019		Thereafter		Total
Senior notes	$	—	$	—	$	250	$	600	$	—	$	3,800	$	4,650
Term loan	—		80		155		390		150		375		1,150
	$	—	$	80	$	405	$	990	$	150	$	4,175	$	5,800

Note: The table above does not include unamortized discounts associated with our senior notes, or amounts related to interest rate contracts used to hedge the fair value of certain of our senior notes.

Summary of revolving credit facility agreement compliance with debt covenants

	Covenant Requirement as of September 30, 2015	Actual as of September 30, 2015
Maximum leverage ratio (1)	4.5 times	3.1 times
Minimum interest coverage ratio (2)	3.0 times	6.7 times

(1) Ratio of total debt to consolidated EBITDA, as defined by the credit agreement, for the preceding four consecutive fiscal quarters.

(2)

XML

Segment Reporting (Details) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2015 USD ($)	Sep. 30, 2014 USD ($)	Sep. 30, 2015 USD ($) reportablesegments	Sep. 30, 2014 USD ($)
Net sales
Net sales allocated to reportable segments	$ 2,038	$ 1,860	$ 5,910	$ 5,507
Segment Reporting, Sales from Divested Businesses	0	1	0	4
Impact of foreign currency fluctuations	(150)	(15)	(411)	(18)
Net sales	1,888	1,846	5,499	5,493
Operating Income Allocated to Reportable Segments	581	469	1,574	1,309
Amortization expense	(131)	(109)	(361)	(327)
Operating (loss) income allocated to reportable segments	(299)	64	(56)	191
Other expense, net	(68)	(61)	(256)	(146)
Income (loss) before income taxes	(367)	3	$ (312)	45
Segment Reporting (Textuals) [Abstract]
Number of reportable segments | reportablesegments			3
Global Interventional Cardiology (IC) Reporting Unit [Member]
Net sales
Net sales allocated to reportable segments	551	514	$ 1,659	1,543
Global Peripheral Interventions (PI) Reporting Unit [Member]
Net sales
Net sales allocated to reportable segments	246	217	723	631
Cardiovascular [Member]
Net sales
Net sales allocated to reportable segments	797	731	2,382	2,174
Operating Income Allocated to Reportable Segments	249	201	732	565
Global CRM Reporting Unit [Member]
Net sales
Net sales allocated to reportable segments	483	482	1,456	1,441
Global Electrophysiology (EP) Reporting Unit [Member]
Net sales
Net sales allocated to reportable segments	61	54	182	167
Rhythm Management [Member]
Net sales
Net sales allocated to reportable segments	544	536	1,638	1,608
Operating Income Allocated to Reportable Segments	97	76	252	209
Global Endoscopy (Endo) Reporting Unit [Member]
Net sales
Net sales allocated to reportable segments	362	340	1,042	990
Global Urology (Uro) Reporting Unit [Member]
Net sales
Net sales allocated to reportable segments	207	138	479	397
Global Neuromodulation (NM) Reporting Unit [Member]
Net sales
Net sales allocated to reportable segments	128	115	369	338
MedSurg [Member]
Net sales
Net sales allocated to reportable segments	697	593	1,890	1,725
Operating Income Allocated to Reportable Segments	235	192	590	535
Corporate expenses and currency exchange [Member]
Net sales
Operating (Loss) Income Unallocated to Segment	(145)	(90)	(334)	(205)
Special Charges [Member]
Net sales
Operating (Loss) Income Unallocated to Segment	$ (604)	$ (206)	$ (935)	$ (586)

XML

Restructuring Related Activities (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended		23 Months Ended	50 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2015	Dec. 31, 2014	Mar. 31, 2014
Restructuring and Related Cost [Line Items]
Restructuring Charges Incurred to Date						$ 361
Restructuring-related Costs Incurred to Date						129
Estimated costs of restructuring program by major type of cost
Restructuring and Related Cost, Cost Incurred to Date	$ 490		$ 490		$ 490	490
Payments for Restructuring	(20)		(66)			(446)
Restructuring Related Expenses	14	$ 15	42	$ 33
Restructuring and Related Cost, Incurred Cost	21	17	58	70
Restructuring Charges	7	2	16	37
2014 Restructuring plan [Member]
Restructuring and Related Cost [Line Items]
Restructuring Charges Incurred to Date					114
Restructuring-related Costs Incurred to Date					90
Estimated costs of restructuring program by major type of cost
Restructuring and Related Cost, Cost Incurred to Date	204		204		204	204
Payments for Restructuring	(20)		(66)		(159)
Restructuring and Related Cost, Incurred Cost		16	62	66
2011 Restructuring Plan [Member]
Restructuring and Related Cost [Line Items]
Restructuring Charges Incurred to Date						247
Restructuring-related Costs Incurred to Date						39
Estimated costs of restructuring program by major type of cost
Expected total costs associated with the plan	286		286		286	286
Restructuring and Related Cost, Cost Incurred to Date	286		286		286	286
Payments for Restructuring	0		0			(287)
Restructuring and Related Cost, Incurred Cost		1	4	4
Termination Benefits [Member]
Restructuring and Related Cost [Line Items]
Restructuring Reserve	32		32		32	32	$ 43
Restructuring Charges Incurred to Date						221
Estimated costs of restructuring program by major type of cost
Payments for Restructuring	(6)		(24)			(188)
Restructuring Related Expenses	0	0	0	0
Restructuring and Related Cost, Incurred Cost	5	0	13	19
Restructuring Charges	5	0	13	19
Termination Benefits [Member] | 2014 Restructuring plan [Member]
Restructuring and Related Cost [Line Items]
Restructuring Reserve	32		32		32	32	39
Restructuring Charges Incurred to Date					86
Estimated costs of restructuring program by major type of cost
Payments for Restructuring	(6)		(24)		(55)
Restructuring and Related Cost, Incurred Cost		(1)	17	18
Restructuring Charges			17
Termination Benefits [Member] | 2011 Restructuring Plan [Member]
Restructuring and Related Cost [Line Items]
Restructuring Reserve	0		0		0	0	4
Restructuring Charges Incurred to Date						135
Estimated costs of restructuring program by major type of cost
Payments for Restructuring	0		0			(133)
Restructuring and Related Cost, Incurred Cost		1	(4)	1
Restructuring Charges			(4)
Accelerated depreciation [Member]
Restructuring and Related Cost [Line Items]
Restructuring-related Costs Incurred to Date						13
Estimated costs of restructuring program by major type of cost
Restructuring Related Expenses	1	1	3	3
Restructuring and Related Cost, Incurred Cost	1	1	3	3
Restructuring Charges	0	0	0	0
Accelerated depreciation [Member] | 2014 Restructuring plan [Member]
Restructuring and Related Cost [Line Items]
Restructuring-related Costs Incurred to Date					8
Estimated costs of restructuring program by major type of cost
Restructuring and Related Cost, Incurred Cost		1	3	3
Accelerated depreciation [Member] | 2011 Restructuring Plan [Member]
Restructuring and Related Cost [Line Items]
Restructuring-related Costs Incurred to Date						5
Estimated costs of restructuring program by major type of cost
Restructuring and Related Cost, Incurred Cost		0	0	0
Transfer costs [Member]
Restructuring and Related Cost [Line Items]
Restructuring-related Costs Incurred to Date						45
Estimated costs of restructuring program by major type of cost
Payments for Restructuring	(5)		(20)			(45)
Restructuring Related Expenses	5	9	20	15
Restructuring and Related Cost, Incurred Cost	5	9	20	15
Restructuring Charges	0	0	0	0
Transfer costs [Member] | 2014 Restructuring plan [Member]
Restructuring and Related Cost [Line Items]
Restructuring-related Costs Incurred to Date					45
Estimated costs of restructuring program by major type of cost
Payments for Restructuring	(5)		(20)		(45)
Restructuring and Related Cost, Incurred Cost		9	20	15
Transfer costs [Member] | 2011 Restructuring Plan [Member]
Restructuring and Related Cost [Line Items]
Restructuring-related Costs Incurred to Date						0
Estimated costs of restructuring program by major type of cost
Payments for Restructuring	0		0			0
Restructuring and Related Cost, Incurred Cost		0	0	0
Impairment of an asset in value [Member]
Restructuring and Related Cost [Line Items]
Restructuring Charges Incurred to Date						(1)
Impairment of an asset in value [Member] | 2014 Restructuring plan [Member]
Restructuring and Related Cost [Line Items]
Restructuring Charges Incurred to Date					0
Impairment of an asset in value [Member] | 2011 Restructuring Plan [Member]
Restructuring and Related Cost [Line Items]
Restructuring Charges Incurred to Date						(1)
Other [Member]
Restructuring and Related Cost [Line Items]
Restructuring Reserve	5		5		5	5	$ 6
Restructuring Charges Incurred to Date						141
Restructuring-related Costs Incurred to Date						71
Estimated costs of restructuring program by major type of cost
Payments for Restructuring	(9)		(22)			(213)
Restructuring Related Expenses	8	5	19	15
Restructuring and Related Cost, Incurred Cost	10	7	22	33
Restructuring Charges	2	2	3	18
Other [Member] | 2014 Restructuring plan [Member]
Restructuring and Related Cost [Line Items]
Restructuring Charges Incurred to Date					28
Restructuring-related Costs Incurred to Date					37
Estimated costs of restructuring program by major type of cost
Payments for Restructuring	(9)		(22)		(59)
Restructuring and Related Cost, Incurred Cost		7	22	30
Other [Member] | 2011 Restructuring Plan [Member]
Restructuring and Related Cost [Line Items]
Restructuring Charges Incurred to Date						113
Restructuring-related Costs Incurred to Date						34
Estimated costs of restructuring program by major type of cost
Payments for Restructuring	0		0			(154)
Restructuring and Related Cost, Incurred Cost		0	0	3
Restructuring Plan [Member] | Termination Benefits [Member] | 2011 Restructuring Plan [Member]
Estimated costs of restructuring program by major type of cost
Expected total costs associated with the plan	135		135		135	135
Restructuring Plan [Member] | Other [Member] | 2011 Restructuring Plan [Member]
Estimated costs of restructuring program by major type of cost
Expected total costs associated with the plan	112		112		112	112
Restructuring Related To Plan [Member] | Other [Member] | 2011 Restructuring Plan [Member]
Estimated costs of restructuring program by major type of cost
Expected total costs associated with the plan	39		39		39	39
Minimum [Member] | 2014 Restructuring plan [Member]
Estimated costs of restructuring program by major type of cost
Expected total costs associated with the plan	250		250		250	250
Restructuring plan estimated future cash outflow	235
Minimum [Member] | Restructuring Plan [Member] | Termination Benefits [Member] | 2014 Restructuring plan [Member]
Estimated costs of restructuring program by major type of cost
Expected total costs associated with the plan	115		115		115	115
Minimum [Member] | Restructuring Plan [Member] | Other [Member] | 2014 Restructuring plan [Member]
Estimated costs of restructuring program by major type of cost
Expected total costs associated with the plan	25		25		25	25
Minimum [Member] | Restructuring Related To Plan [Member] | Other [Member] | 2014 Restructuring plan [Member]
Estimated costs of restructuring program by major type of cost
Expected total costs associated with the plan	110		110		110	110
Maximum [Member] | 2014 Restructuring plan [Member]
Estimated costs of restructuring program by major type of cost
Expected total costs associated with the plan	300		300		300	300
Restructuring plan estimated future cash outflow	285
Maximum [Member] | 2011 Restructuring Plan [Member]
Estimated costs of restructuring program by major type of cost
Restructuring and Related Cost, Cost Incurred to Date								$ 53
Maximum [Member] | Restructuring Plan [Member] | Termination Benefits [Member] | 2014 Restructuring plan [Member]
Estimated costs of restructuring program by major type of cost
Expected total costs associated with the plan	135		135		135	135
Maximum [Member] | Restructuring Plan [Member] | Other [Member] | 2014 Restructuring plan [Member]
Estimated costs of restructuring program by major type of cost
Expected total costs associated with the plan	35		35		35	35
Maximum [Member] | Restructuring Related To Plan [Member] | Other [Member] | 2014 Restructuring plan [Member]
Estimated costs of restructuring program by major type of cost
Expected total costs associated with the plan	130		130		$ 130	$ 130
Cost of products sold [Member]
Estimated costs of restructuring program by major type of cost
Restructuring Related Expenses	5	9	20	15
Cost of products sold [Member] | Termination Benefits [Member]
Estimated costs of restructuring program by major type of cost
Restructuring Related Expenses	0	0	0	0
Cost of products sold [Member] | Accelerated depreciation [Member]
Estimated costs of restructuring program by major type of cost
Restructuring Related Expenses	0	0	0	0
Cost of products sold [Member] | Transfer costs [Member]
Estimated costs of restructuring program by major type of cost
Restructuring Related Expenses	5	9	20	15
Cost of products sold [Member] | Other [Member]
Estimated costs of restructuring program by major type of cost
Restructuring Related Expenses	0	0	0	0
Selling, General and Administrative Expenses [Member]
Estimated costs of restructuring program by major type of cost
Restructuring Related Expenses	9	6	22	18
Selling, General and Administrative Expenses [Member] | Termination Benefits [Member]
Estimated costs of restructuring program by major type of cost
Restructuring Related Expenses	0	0	0	0
Selling, General and Administrative Expenses [Member] | Accelerated depreciation [Member]
Estimated costs of restructuring program by major type of cost
Restructuring Related Expenses	1	1	3	3
Selling, General and Administrative Expenses [Member] | Transfer costs [Member]
Estimated costs of restructuring program by major type of cost
Restructuring Related Expenses	0	0	0	0
Selling, General and Administrative Expenses [Member] | Other [Member]
Estimated costs of restructuring program by major type of cost
Restructuring Related Expenses	$ 8	$ 5	$ 19	$ 15

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Divestitures and Pension Termination

9 Months Ended

Sep. 30, 2015

Divestitures and Assets Held for Sale [Abstract]

DIVESTITURES AND PENSION TERMINATION

DIVESTITURES AND PENSION TERMINATION

In January 2011, we closed the sale of our Neurovascular business to Stryker Corporation for a purchase price of $1.500 billion in cash. We received $1.450 billion during 2011, an additional $10 million during 2012, $30 million during 2013 and the final amount due to us in 2014. At the time of divestiture, due to our continuing involvement in the operations of the Neurovascular business following the transaction, the divestiture did not meet the criteria for presentation as a discontinued operation. We recorded a gain of $12 million during the first nine months of 2014 associated with the Neurovascular divestiture.

Following our 2006 acquisition of Guidant Corporation, we sponsored the Guidant Retirement Plan, a frozen noncontributory defined benefit plan covering a select group of current and former employees. The plan was partially frozen as of September 25, 1995 and completely frozen as of May 31, 2007, and was terminated effective December 1, 2014. During 2015, we finalized the termination process and settled the plan’s obligations, and as a result, we have recorded pension termination charges of $36 million and $44 million during the third quarter and first nine months of2015.

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Changes in Other Comprehensive Income (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014	Jun. 30, 2015	Dec. 31, 2014	Jun. 30, 2014	Dec. 31, 2013
Changes in Other Comprehensive Income [Abstract]
Accumulated Other Comprehensive Income (Loss), Foreign Currency Translation Adjustment, Net of Tax	$ (80)	$ (39)	$ (80)	$ (39)	$ (68)	$ (38)	$ (24)	$ (16)
Accumulated Other Comprehensive Income (Loss), Cumulative Changes in Net Gain (Loss) from Cash Flow Hedges, Effect Net of Tax	177	169	177	169	204	219	86	141
Accumulated Other Comprehensive Income (Loss), Pension and Other Postretirement Benefit Plans, Net of Tax	(16)	(20)	(16)	(20)	(32)	(37)	(20)	(19)
Accumulated Other Comprehensive Income (Loss), Net of Tax	81	110	81	110	$ 104	$ 144	$ 42	$ 106
Cumulative Translation Adjustment, Net of Tax, Period Increase (Decrease)	(12)	(15)	(42)	(23)
Other Comprehensive Income (Loss), Unrealized Gain (Loss) on Derivatives Arising During Period, Before Reclassifications, Net of Tax	8	99	59	72
Other Comprehensive (Income) Loss, Pension and Other Postretirement Benefit Plans, Adjustment, before Reclassification Adjustments, Net of Tax	0	0	0	(1)
Other Comprehensive Income (Loss), before Reclassifications, Net of Tax	(4)	84	17	48
Other Comprehensive Income (Loss), Unrealized Gain (Loss) on Derivatives Arising During Period, Reclassified from OCI, Net of Tax	(35)	(16)	(101)	(44)
Other Comprehensive (Income) Loss, Reclassification Adjustment from AOCI, Pension and Other Postretirement Benefit Plans, Net of Tax	16		21
Other Comprehensive Income (Loss), Reclassifications out of OCI, Net of Tax	(19)	(16)	(80)	(44)
Other Comprehensive Income (Loss), Foreign Currency Transaction and Translation Adjustment, Net of Tax	(12)	(15)	(42)	(23)
Other Comprehensive Income (Loss), Unrealized Gain (Loss) on Derivatives Arising During Period, Net of Tax	(27)	83	(42)	28
Net change in certain retirement plans, net of tax	16	0	21	(1)
Other Comprehensive Income (Loss), Net of Tax	(23)	68	(63)	4
Other Comprehensive Income (Loss), Unrealized Gain (Loss) on Derivatives Arising During Period, Tax	(5)	(57)	(33)	(42)
Other Comprehensive Income (Loss), Unrealized Gain (Loss) on Derivatives Arising Reclassed from OCI, Tax	19	$ 9	57	$ 25
Other Comprehensive Income (Loss) for defined benefit and pension items, reclassified out of OCI, tax impact	$ 14		$ 17

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Segment Reporting (Tables)

9 Months Ended

Sep. 30, 2015

Segment Reporting [Abstract]

Segment Reporting Information By Segment

A reconciliation of the totals reported for the reportable segments to the applicable line items in our accompanying unaudited condensed consolidated statements of operations is as follows:

	Three Months Ended September 30,						Nine Months Ended September 30,
(in millions)	2015			2014			2015			2014
Net sales
Interventional Cardiology	$	551		$	514		$	1,659		$	1,543
Peripheral Interventions	246			217			723			631
Cardiovascular	797			731			2,382			2,174
Cardiac Rhythm Management	483			482			1,456			1,441
Electrophysiology	61			54			182			167
Rhythm Management	544			536			1,638			1,608
Endoscopy	362			340			1,042			990
Urology and Pelvic Health	207			138			479			397
Neuromodulation	128			115			369			338
MedSurg	697			593			1,890			1,725
Net sales allocated to reportable segments	2,038			1,860			5,910			5,507
Sales generated from divested businesses	—			1			—			4
Impact of foreign currency fluctuations	(150		)	(15		)	(411		)	(18		)
	$	1,888		$	1,846		$	5,499		$	5,493
Income (loss) before income taxes
Cardiovascular	$	249		$	201		$	732		$	565
Rhythm Management	97			76			252			209
MedSurg	235			192			590			535
Operating income allocated to reportable segments	581			469			1,574			1,309
Corporate expenses and currency exchange	(145		)	(90		)	(334		)	(205		)
Intangible asset impairment charges; pension termination charges; acquisition-, divestiture-, restructuring-, and litigation-related net charges and credits	(604		)	(206		)	(935		)	(586		)
Amortization expense	(131		)	(109		)	(361		)	(327		)
Operating income (loss)	(299		)	64			(56		)	191
Other expense, net	(68		)	(61		)	(256		)	(146		)
Income (loss) before income taxes	$	(367	)	$	3		$	(312	)	$	45

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Weighted Average Shares Outstanding (Tables)

9 Months Ended

Sep. 30, 2015

Earnings Per Share [Abstract]

Schedule of Weighted Average Number of Shares [Table Text Block]

	Three Months Ended September 30,			Nine Months Ended September 30,
(in millions)	2015		2014	2015		2014
Weighted average shares outstanding - basic	1,344.0		1,325.5	1,339.7		1,323.5
Net effect of common stock equivalents	—	*	22.1	—	*	23.8
Weighted average shares outstanding - assuming dilution	1,344.0		1,347.6	1,339.7		1,347.3

* We generated a net loss in the third quarter and first nine months of2015. Our weighted-average shares outstanding for earnings per share calculations exclude common stock equivalents of 20.2 million and 21.5 million for the third quarter and first nine months of2015, respectively, due to our net loss position in these periods.

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Changes in Other Comprehensive Income (Tables)

9 Months Ended

Sep. 30, 2015

Changes in Other Comprehensive Income [Abstract]

Changes in Other Comprehensive Income [Table Text Block]

The following table provides the reclassifications out of other comprehensive income for the three and nine month periods endedSeptember 30, 2015 and September 30, 2014. Amounts in the chart below are presented net of tax.

Three Months Ended September 30, 2015
(in millions)	Foreign currency translation adjustments			Unrealized gains/losses on derivative financial instruments			Defined benefit pension items / Other			Total
Balance as of June 30, 2015	$	(68	)	$	204		$	(32	)	$	104
Other comprehensive income (loss) before reclassifications	(12		)	8			—			(4		)
Amounts reclassified from accumulated other comprehensive income	—			(35		)	16			(19		)
Net current-period other comprehensive income	(12		)	(27		)	16			(23		)
Balance as of September 30, 2015	$	(80	)	$	177		$	(16	)	$	81
Three Months Ended September 30, 2014
(in millions)	Foreign currency translation adjustments			Unrealized gains/losses on derivative financial instruments			Defined benefit pension items / Other			Total
Balance as of June 30, 2014	$	(24	)	$	86		$	(20	)	$	42
Other comprehensive income (loss) before reclassifications	(15		)	99			—			84
Amounts reclassified from accumulated other comprehensive income	—			(16		)	—			(16		)
Net current-period other comprehensive income	(15		)	83			—			68
Balance as of September 30, 2014	$	(39	)	$	169		$	(20	)	$	110

Nine Months Ended September 30, 2015
(in millions)	Foreign currency translation adjustments			Unrealized gains/losses on derivative financial instruments			Defined benefit pension items / Other			Total
Balance as of December 31, 2014	$	(38	)	$	219		$	(37	)	$	144
Other comprehensive income (loss) before reclassifications	(42		)	59			—			17
Amounts reclassified from accumulated other comprehensive income	—			(101		)	21			(80		)
Net current-period other comprehensive income	(42		)	(42		)	21			(63		)
Balance as of September 30, 2015	$	(80	)	$	177		$	(16	)	$	81
Nine Months Ended September 30, 2014
(in millions)	Foreign currency translation adjustments			Unrealized gains/losses on derivative financial instruments			Defined benefit pension items / Other			Total
Balance as of December 31, 2013	$	(16	)	$	141		$	(19	)	$	106
Other comprehensive income (loss) before reclassifications	(23		)	72			(1		)	48
Amounts reclassified from accumulated other comprehensive income	—			(44		)	—			(44		)
Net current-period other comprehensive income	(23		)	28			(1		)	4
Balance as of September 30, 2014	$	(39	)	$	169		$	(20	)	$	110

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Acquisitions and Strategic Investments (Details) - USD ($) $ in Millions					3 Months Ended		9 Months Ended		12 Months Ended
	Aug. 03, 2015	Apr. 03, 2015	Sep. 02, 2014	May. 07, 2014	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014	Dec. 31, 2014
Business Acquisition [Line Items]
Business Acquisition, Goodwill, Expected Tax Deductible Amount					$ 500		$ 500		$ 150
Goodwill					6,468		6,468		5,898
Accrued Contingent Consideration					266		266		274
Business Combination, Liabilities Arising from Contingencies, Amount Recognized							31	$ 0
Adjustments to accrued contingent consideration							0
Maximum future contingent consideration for acquisitions					1,893		1,893
Payments to Acquire Businesses, Net of Cash Acquired							1,642	487
Payment of contingent consideration					(15)		(102)	(15)
Business Combination, Contingent Consideration Arrangements, Change in Amount of Contingent Consideration, Liability					40	$ (4)	86	(122)
Contingent payment related to business combination							125
Business Combination, Step Acquisition, Equity Interest in Acquiree, Fair Value								31
Business Combination, Step Acquisition, Equity Interest in Acquiree, Remeasurement Gain						19
Total payout [Member]
Business Acquisition [Line Items]
Payment of contingent consideration							(125)
revenue-based payments [Member] | Discounted cash flow [Member]
Business Acquisition [Line Items]
Business Combination, Contingent Consideration, Liability					(84)		$ (84)
revenue-based payments [Member] | Discounted cash flow [Member] | Minimum [Member]
Business Acquisition [Line Items]
Fair Value Inputs, Discount Rate							11.50%
contingent consideration liability, projected year of payment							2015
revenue-based payments [Member] | Discounted cash flow [Member] | Maximum [Member]
Business Acquisition [Line Items]
Fair Value Inputs, Discount Rate							15.00%
contingent consideration liability, projected year of payment							2019
revenue-based payments [Member] | Monte Carlo [Member]
Business Acquisition [Line Items]
Business Combination, Contingent Consideration, Liability					(182)		$ (182)
revenue-based payments [Member] | Monte Carlo [Member] | Minimum [Member]
Business Acquisition [Line Items]
Revenue Volatility - Contingent Consideration							11.00%
contingent consideration liability, projected year of payment							2015
revenue-based payments [Member] | Monte Carlo [Member] | Maximum [Member]
Business Acquisition [Line Items]
Revenue Volatility - Contingent Consideration							20.00%
contingent consideration liability, projected year of payment							2018
Bayer and IoGyn [Member]
Business Acquisition [Line Items]
Business Combination, Consideration Transferred, Liabilities Incurred						510
Goodwill						210		210
Payments to Acquire Businesses, Net of Cash Acquired						479
Business Combination, Consideration Transferred, Including Equity Interest in Acquiree Held Prior to Combination						510
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Finite-Lived Intangibles						263		263	263
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Inventory									23
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Property, Plant, and Equipment									17
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Current Assets, Prepaid Expense and Other Assets									$ 5
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Deferred Tax Assets, Current						(7)		(7)
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Current Assets, Other						(1)		$ (1)
Bayer [Member]
Business Acquisition [Line Items]
Payments to Acquire Businesses, Net of Cash Acquired			$ 414
IoGyn [Member]
Business Acquisition [Line Items]
Minority interest owned of IoGyn				28.00%
Business Combination, Consideration Transferred, Liabilities Incurred				$ 8
Payments to Acquire Businesses, Net of Cash Acquired						$ 65
Remaining equity of IoGyn purchased						72.00%		72.00%
2015 Acquisitions [Member]
Business Acquisition [Line Items]
Goodwill					568		$ 568
Business Combination, Liabilities Arising from Contingencies, Amount Recognized							31
Payments to Acquire Businesses, Net of Cash Acquired							1,659
Business Combination, Consideration Transferred, Including Equity Interest in Acquiree Held Prior to Combination							1,690
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Finite-Lived Intangibles					992		992
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Inventory					102		102
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Property, Plant, and Equipment					42		42
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Other Noncurrent Assets					39		39
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Deferred Tax Assets, Current					$ (53)		$ (53)
AMS urology portfolio [Member]
Business Acquisition [Line Items]
Payments to Acquire Businesses, Net of Cash Acquired	$ 1,616
Potential payments based on acheiving certain milestones	50
Non-voting Preferred Stock Investment Amount	$ 60
Xlumena [Member]
Business Acquisition [Line Items]
Payments to Acquire Businesses, Net of Cash Acquired		$ 63
Potential payments based on acheiving certain milestones		$ 13
Technology-Based Intangible Assets [Member] | Minimum [Member]
Business Acquisition [Line Items]
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life							11 years		10 years
Range of Risk Adjusted Discount Rates used in Purchase Price Allocation					13.50%		13.50%		14.00%
Technology-Based Intangible Assets [Member] | Maximum [Member]
Business Acquisition [Line Items]
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life							12 years		14 years
Range of Risk Adjusted Discount Rates used in Purchase Price Allocation					15.00%		15.00%		18.00%
Technology-Based Intangible Assets [Member] | Bayer and IoGyn [Member]
Business Acquisition [Line Items]
Finite-lived Intangible Assets Acquired						$ 233
Technology-Based Intangible Assets [Member] | 2015 Acquisitions [Member]
Business Acquisition [Line Items]
Finite-lived Intangible Assets Acquired							$ 358
Customer Relationships [Member] | Bayer and IoGyn [Member]
Business Acquisition [Line Items]
Finite-lived Intangible Assets Acquired									$ 29
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life									10 years
Range of Risk Adjusted Discount Rates used in Purchase Price Allocation									18.00%
Customer Relationships [Member] | 2015 Acquisitions [Member]
Business Acquisition [Line Items]
Finite-lived Intangible Assets Acquired							$ 616
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life							12 years
Range of Risk Adjusted Discount Rates used in Purchase Price Allocation					13.50%		13.50%
Other Intangible Assets [Member] | Bayer and IoGyn [Member]
Business Acquisition [Line Items]
Finite-lived Intangible Assets Acquired									$ 1
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life									2 years
Range of Risk Adjusted Discount Rates used in Purchase Price Allocation									14.00%
Other Intangible Assets [Member] | 2015 Acquisitions [Member]
Business Acquisition [Line Items]
Finite-lived Intangible Assets Acquired							$ 18
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life							13 years
Range of Risk Adjusted Discount Rates used in Purchase Price Allocation					13.50%		13.50%

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Acquisitions and Strategic Investments

9 Months Ended

Sep. 30, 2015

Business Combinations [Abstract]

ACQUISITIONS AND STRATEGIC INVESTMENTS

ACQUISITIONS AND STRATEGIC INVESTMENTS

2015 Acquisitions

AMS Portfolio Acquisition

On August 3, 2015, we completed the acquisition of the American Medical Systems male urology portfolio (AMS Portfolio Acquisition), which includes the men's health and prostate health businesses, from Endo International plc. Total consideration was comprised of $1.616 billion in up-front cash plus related fees and expenses, and a potential additional $50 million in consideration based on 2016 sales. The AMS male urology portfolio is being integrated with our formerly named Urology and Women's Health business, and the joint businesses have become Urology and Pelvic Health. In addition, as part of the acquisition agreement, we made a $60 million Series B non-voting preferred stock investment in the women's health business of Endo Health Solutions, a wholly owned subsidiary of Endo International, plc., representing the remaining Women's Health business of the American Medical Systems' Portfolio.

Xlumena, Inc.

On April 2, 2015, we acquired Xlumena, Inc. (Xlumena), a medical device company that developed minimally invasive devices for Endoscopic Ultrasound (EUS) guided transluminal drainage of targeted areas within the gastrointestinal tract. The purchase agreement called for an upfront payment of $63 million, an additional payment of $13 million upon FDA clearance of the HOT AXIOS™ product, and further sales-based milestones based on sales achieved through 2018. We are in the process of integrating Xlumena into our Endoscopy business, and expect the integration to be substantially complete by the end of 2016.

Purchase Price Allocation

We accounted for these acquisitions as business combinations and, in accordance with Financial Accounting Standards Board (FASB) Accounting Standards Codification^® (ASC) Topic 805, Business Combinations, we have recorded the assets acquired and liabilities assumed at their respective fair values as of the acquisition dates. The components of the aggregate preliminary purchase prices are as follows (in millions):

Cash, net of cash acquired, including amounts payable as of September 30, 2015	$	1,659
Fair value of contingent consideration	31
	$	1,690

The following summarizes the aggregate preliminary purchase price allocation for the 2015 acquisitions as of September 30, 2015 (in millions):

Goodwill	$	568
Amortizable intangible assets	992
Inventory	102
Property, Plant and Equipment	42
Other net assets	39
Deferred income taxes	(53		)
	$	1,690

We allocated a portion of the purchase price to specific intangible asset categories as follows:

	Amount Assigned (in millions)		Weighted Average Amortization Period (in years)	Range of Risk- Adjusted Discount Rates used in Purchase Price Allocation
Amortizable intangible assets:
Technology-related	$	358	11-12	13.5% - 15%
Customer relationships	616		12	13.5%
Other intangible assets	18		13	13.5%
	$	992

2014 Acquisitions

Interventional Business of Bayer AG

On August 29, 2014, we completed the acquisition of the Interventional Division of Bayer AG (Bayer), for total cash consideration of $414 million. We believe that this acquisition enhances our ability to offer physicians and healthcare systems a more complete portfolio of solutions to treat challenging vascular conditions. The transaction includes the AngioJet® Thrombectomy System and the Fetch® 2 Aspiration Catheter, which are used in endovascular procedures to remove blood clots from blocked arteries and veins, and the JetStream® Atherectomy System, used to remove plaque and thrombi from diseased arteries. We are in the process of integrating Bayer into our Peripheral Intervention and Interventional Cardiology businesses, and expect the integration to be substantially complete by the middle of 2016.

IoGyn, Inc.

On May 7, 2014, we completed the acquisition of the remaining fully diluted equity of IoGyn, Inc. (IoGyn). Prior to the acquisition, we held approximately 28 percent minority interest in IoGyn in addition to notes receivable of $8 million. Total consideration was comprised of a net cash payment of $65 million at closing to acquire the remaining 72 percent of IoGyn equity and repay outstanding debt. IoGyn developed the Symphion^TM System, a next generation system for hysteroscopic intrauterine tissue removal including fibroids (myomas) and polyps. We have substantially completed the process of integrating the operations of the IoGyn business with our gynecological surgery business, which is part of our Urology and Pelvic Health business.

Purchase Price Allocation

We accounted for these acquisitions as business combinations and, in accordance with FASB ASC Topic 805, Business Combinations, we have recorded the assets acquired and liabilities assumed at their respective fair values as of the acquisition dates. The components of the aggregate purchase prices are as follows (in millions):

Cash, net of cash acquired	$	479
Fair value of prior interests	31
	$	510

We re-measured our previously held investments to their estimated acquisition-date fair value of $31 million and recorded a gain of $19 million in Other, net, in the accompanying condensed consolidated statements of operations during the second quarter of 2014. We measured the fair values of the previously held investments based on the liquidation preferences and priority of the equity interests and debt, including accrued interest.

The following summarizes the aggregate purchase price allocation for the 2014 acquisitions as of September 30, 2014 (in millions):

Goodwill	$	210
Amortizable intangible assets	263
Inventory	23
Property, Plant and Equipment	17
Prepaid Transaction Service Agreements	5
Other net assets	(1		)
Deferred income taxes	(7		)
	$	510

We allocated a portion of the purchase price to specific intangible asset categories as follows:

	Amount Assigned (in millions)		Weighted Average Amortization Period (in years)	Range of Risk- Adjusted Discount Rates used in Purchase Price Allocation
Amortizable intangible assets:
Technology-related	$	233	10 - 14	14 - 18 %
Customer relationships	29		10	18%
Other intangible assets	1		2	14%
	$	263

Our technology-related intangible assets consist of technical processes, intellectual property, and institutional understanding with respect to products and processes that we will leverage in future products or processes and will carry forward from one product generation to the next. We used the income approach to derive the fair value of the technology-related intangible assets, and are amortizing them on a straight-line basis over their assigned estimated useful lives.

Customer relationships represent the estimated fair value of non-contractual customer and distributor relationships. Customer relationships are direct relationships with physicians and hospitals performing procedures with the acquired products, and distributor relationships are relationships with third parties used to sell products, both as of the acquisition date. These relationships were valued separately from goodwill because there is a history and pattern of conducting business with customers and distributors. We used the income approach or the replacement cost and lost profits methodology to derive the fair value of the customer relationships. The customer relationships intangible assets are amortized on a straight-line basis over their assigned estimated useful lives.

Other intangible assets primarily include acquired tradenames. These tradenames include brand names that we expect to continue using in our product portfolio and related marketing materials. The tradenames are valued using a relief from royalty methodology and are amortized on a straight-line basis over their assigned estimated useful lives.

We believe that the estimated intangible asset values represent the fair value at the date of acquisition and do not exceed the amount a third party would pay for the assets. These fair value measurements are based on significant unobservable inputs, including management estimates and assumptions and, accordingly, are classified as Level 3 within the fair value hierarchy prescribed by FASB ASC Topic 820, Fair Value Measurements and Disclosures.

We recorded the excess of the aggregate purchase price over the estimated fair values of the identifiable assets acquired as goodwill. Goodwill was established due primarily to synergies expected to be gained from leveraging our existing operations as well as revenue and cash flow projections associated with future technologies, and has been allocated to our reportable segments based on the relative expected benefit. Of the goodwill recorded, approximately $500 million, based on preliminary estimates, related to our 2015 acquisitions and approximately $150 million related to our 2014 acquisitions is deductible for tax purposes. See Note D - Goodwill and Other Intangible Assets for more information related to goodwill allocated to our reportable segments.

Contingent Consideration

Certain of our acquisitions involve contingent consideration arrangements. Payment of additional consideration is generally contingent on the acquired company reaching certain performance milestones, including attaining specified revenue levels, achieving product development targets and/or obtaining regulatory approvals. In accordance with U.S. GAAP, we recognize a liability equal to the fair value of the contingent payments we expect to make as of the acquisition date. We re-measure this liability each reporting period and record changes in the fair value through a separate line item within our consolidated statements of operations.

We recorded a net expense related to the change in fair value of our contingent consideration liabilities of $40 million during the third quarter of 2015 and $86 million during the first nine months of2015. We recorded net benefits of $4 million during the third quarter of 2014 and $122 million during the first nine months of2014. We paid contingent consideration of $15 million during the third quarter of 2015 and $125 million during the first nine months of2015. We made no payments of contingent consideration during the third quarter of 2014 and we made payments of $15 million during the first nine months of2014.

Changes in the fair value of our contingent consideration liability were as follows (in millions):

Balance as of December 31, 2014	$	274
Amounts recorded related to new acquisitions	31
Other amounts recorded related to prior acquisitions	—
Net fair value adjustments	86
Payments made	(125		)
Balance as of September 30, 2015	$	266

As of September 30, 2015, the maximum amount of future contingent consideration (undiscounted) that we could be required to pay was approximately $1.893 billion.

Contingent consideration liabilities are re-measured to fair value each reporting period using projected revenues, discount rates, probabilities of payment and projected payment dates. The recurring Level 3 fair value measurements of our contingent consideration liability include the following significant unobservable inputs:

Contingent Consideration Liability	Fair Value as of September 30, 2015	Valuation Technique	Unobservable Input	Range
Revenue-based Payments	$84 million	Probability Weighted Discounted Cash Flow	Discount Rate	11.5% - 15%
			Projected Year of Payment	2015 - 2019
	$182 million	Monte Carlo	Revenue Volatility	11% - 20%
			Risk Free Rate	LIBOR Term Structure
			Projected Year of Payment	2015 - 2018

Increases or decreases in the fair value of our contingent consideration liability can result from changes in discount periods and rates, as well as changes in the timing and amount of revenue estimates or in the timing or likelihood of achieving milestones. Projected contingent payment amounts related to certain revenue-based milestones are discounted back to the current period using a discounted cash flow (DCF) model. Other revenue-based payments are valued using a Monte Carlo valuation model, which simulates future revenues during the earn-out period using management's best estimates. Projected revenues are based on our most recent internal operational budgets and long-range strategic plans. Increases in projected revenues and probabilities of payment may result in higher fair value measurements. Increases in discount rates and the time to payment may result in lower fair value measurements. Increases or decreases in any of those inputs together, or in isolation, may result in a significantly lower or higher fair value measurement.

Strategic Investments

On April 30, 2015, we acquired a 27 percent ownership interest in Preventice, Inc. (Preventice), which includes 18.5 percent of Preventice's common stock. Preventice is a privately-held company headquartered in Minneapolis, MN, and a leading developer of mobile health solutions and services. Preventice offers a full portfolio of wearable cardiac monitors, including Holter monitors, cardiac event monitors and mobile cardiac telemetry. In addition to the equity agreement, we entered into a commercial agreement with Preventice, under which we will become Preventice’s exclusive, worldwide sales and marketing representative. We believe this partnership strengthens our portfolio of cardiac monitoring and broader disease management capabilities.

On April 13, 2015, we acquired 25 percent of the common stock of Frankenman Medical Equipment Company (Frankenman). Frankenman is a private company headquartered in Suzhou, China, and is a local market leader in surgical staplers. Additionally, we entered into co-promotional and co-selling agreements with Frankenman to jointly commercialize selected products in China. We believe this alliance will enable us to reach more clinicians and treat more patients in China by providing access to training on less invasive endoscopic technologies with clinical and economic benefits.

We are accounting for our investments in Preventice and Frankenman as equity method investments, in accordance with FASB ASC Topic 323, Investments - Equity Method and Joint Ventures. As of September 30, 2015, the book value of our equity method investments exceeded our share of the book value of the investees’ underlying net assets by approximately $40 million, which represents amortizable intangible assets and corresponding deferred tax liabilities, and goodwill. During the three and nine months ended September 30, 2015, the net losses from our equity method adjustments, presented within the Other, net caption of our condensed consolidated statement of operations were de minimis.

We did not close any material strategic investments in the third quarter or first nine months of 2014.

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Strategic Investments (Details) $ in Millions	Sep. 30, 2015 USD ($)
Schedule of Equity Method Investments [Line Items]
Equity Method Investment, Difference Between Carrying Amount and Underlying Equity	$ 40
Preventis [Member]
Schedule of Equity Method Investments [Line Items]
Equity Method Investment, Ownership Percentage	27.00%
Preventice [Member]
Schedule of Equity Method Investments [Line Items]
Common Stock Interest Acquired	18.50%
Frankenman [Member]
Schedule of Equity Method Investments [Line Items]
Equity Method Investment, Ownership Percentage	25.00%

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Commitments and Contingencies (Details) $ in Millions		1 Months Ended	3 Months Ended		9 Months Ended
	Feb. 13, 2015 USD ($)	Apr. 30, 2015 USD ($)	Sep. 30, 2015 USD ($)	Sep. 30, 2014 USD ($)	Sep. 30, 2015 USD ($)	Sep. 30, 2014 USD ($)	Nov. 02, 2015 claims	Jun. 30, 2015 USD ($)	Apr. 29, 2015 claims	Dec. 31, 2014 USD ($)
Commitments and Contingencies (Textuals) [Abstract]
Accrual for legal matters that are probable and estimable | $			$ 1,559		$ 1,559					$ 1,577
Litigation Settlement, Expense | $			$ 457	$ 139	$ 649	$ 399
Litigation Settlement, Amount | $		$ 119
Loss Contingency, Estimate of Possible Loss | $								$ 5,500
Total Amount Payable To Johnson And Johnson per Settlement Agreement | $	$ 600
Subsequent Event [Member]
Commitments and Contingencies (Textuals) [Abstract]
Product liability cases or claims related to mesh product							30,000
Putative class actions in the U.S., Mesh							8
Product liability cases or claims related to mesh product - Canada							20
Putative class actions in Canada, Mesh							4
Product liability cases or claims related to mesh product - United Kingdom							15
Assigned to one judge in MA [Member] | Subsequent Event [Member]
Commitments and Contingencies (Textuals) [Abstract]
Product liability cases or claims related to mesh product							3,100
Settled Litigation [Member]
Commitments and Contingencies (Textuals) [Abstract]
Product liability cases or claims related to mesh product									2,970
Litigation Settlement, Amount | $		$ 35
Settled Litigation [Member] | Subsequent Event [Member]
Commitments and Contingencies (Textuals) [Abstract]
Product liability cases or claims related to mesh product							6,000

XML

Condensed Consolidated Statements of Operations (Unaudited) - USD ($) shares in Millions, $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Net sales	$ 1,888	$ 1,846	$ 5,499	$ 5,493
Cost of products sold	539	550	1,600	1,651
Gross profit	1,349	1,296	3,899	3,842
Operating expenses:
Selling, general and administrative expenses	729	741	2,095	2,150
Research and development expenses	221	212	632	609
Royalty expense	17	21	53	86
Amortization expense	131	109	361	327
Intangible asset impairment charges	10	12	19	177
Contingent consideration expense (benefit)	40	(4)	86	(122)
Restructuring charges	7	2	16	37
Litigation-related charges (credits)	457	139	649	399
Pension termination charges	36	0	44	0
Gain on divestiture	0	0	0	(12)
Operating expenses	1,648	1,232	3,955	3,651
Operating income (loss)	(299)	64	(56)	191
Other income (expense):
Interest expense	(58)	(54)	(225)	(161)
Other, net	(10)	(7)	(31)	15
Income (loss) before income taxes	(367)	3	(312)	45
Income tax expense (benefit)	(169)	(40)	(215)	(135)
Net income (loss)	$ (198)	$ 43	$ (97)	$ 180
Net income (loss) per common share — basic	$ (0.15)	$ 0.03	$ (0.07)	$ 0.14
Net income (loss) per common share — assuming dilution	$ (0.15)	$ 0.03	$ (0.07)	$ 0.13
Weighted-average shares outstanding
Basic	1,344.0	1,325.5	1,339.7	1,323.5
Assuming dilution	1,344.0	1,347.6	1,339.7	1,347.3

XML

Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Millions	9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014
Cash provided by (used for) operating activities	$ 271	$ 829
Investing activities:
Purchases of property, plant and equipment	(162)	(180)
Purchases of privately held securities	(209)	(6)
Purchases of notes receivable	(1)	(12)
Proceeds from sales of publicly traded and privately held equity securities and collections of notes receivable	0	12
Payments for acquisitions of businesses, net of cash acquired	(1,642)	(487)
Payments for investments and acquisitions of certain technologies	(2)	(1)
Proceeds from business divestitures, net of costs	0	12
Cash provided by (used for) investing activities	(2,016)	(662)
Net Cash Provided by (Used in) Financing Activities [Abstract]
Payments on long-term borrowings	(1,000)	0
Proceeds from long-term borrowings, net of debt issuance costs	2,580	0
Payment of contingent consideration	(102)	(15)
Proceeds from borrowings on credit facilities	565	810
Payments on borrowings from credit facilities	(565)	(810)
Payments for acquisitions of treasury stock	0	(125)
Cash used to net share settle employee equity awards	(62)	(48)
Proceeds from issuances of shares of common stock	97	52
Cash provided by (used for) financing activities	1,513	(136)
Effect of foreign exchange rates on cash	(5)	(2)
Net increase (decrease) in cash and cash equivalents	(237)	29
Cash and cash equivalents at beginning of period	587	217
Cash and cash equivalents at end of period	350	246
Supplemental Information
Stock-based compensation expense	79	79
Fair value of contingent consideration recorded in purchase accounting	$ 31	$ 0

XML

Fair Value Measurements Fair Value Measurements (Details) - USD ($) $ in Millions	3 Months Ended						9 Months Ended
	Sep. 30, 2015	Jun. 30, 2015	Mar. 31, 2015	Sep. 30, 2014	Jun. 30, 2014	Mar. 31, 2014	Sep. 30, 2015	Sep. 30, 2014	Dec. 31, 2014
Derivative Instruments, Gain (Loss) [Line Items]
Derivative, Notional Amount	$ 1,517						$ 1,517		$ 2,178
Foreign Currency Cash Flow Hedge Gain (Loss) Reclassified to Earnings, Net	(54)			$ 25			(156)	$ 68
Foreign Currency Cash Flow Hedge Gain (Loss) to be Reclassified During Next 12 Months	114						114
Accumulated Other Comprehensive Income (Loss), Cumulative Changes in Net Gain (Loss) from Cash Flow Hedges, Effect Net of Tax, Ending Balance	171						171		217
Foreign Currency Derivative Instruments Not Designated as Hedging Instruments at Fair Value, Net	1,947						1,947		2,470
Gain (Loss) on Interest Rate Cash Flow Hedge Ineffectiveness				(1)			8	17
Gain (loss) recognized in earnings for terminated interest rate swaps		$ 11	$ 35
Unamortized gains on senior notes	66						66		45
Unamortized losses on senior notes	(1)						(1)		(2)
Unrealized gain on interest rate cash flow hedges, pretax, AOCI	10						10		2
reduction of interest expense, related to amortization of previously terminated interest rate contracts	3						10
Interest Rate Cash Flow Hedge Gain (Loss) to be Reclassified During Next 12 Months, Net	13						13
Derivative Instruments, Gain (Loss) Recognized in Other Comprehensive Income (Loss), Effective Portion, Net							11
Derivative Instruments, Gain (Loss) Reclassified from Accumulated OCI into Income, Effective Portion, Net							2
Derivative Assets	290						290		444
Derivative Liabilities	30						30		36
Time Deposits, at Carrying Value	115						115		255
Cash	208						208		181
Cost-method Investments, Aggregate Carrying Amount	121						121		27
Intangible asset impairment charges	10	9		12			19	177
Asset Impairment Charges					$ 110	$ 55
Debt Instrument, Fair Value Disclosure	6,080						6,080		4,613
Loss on hedged debt obligation [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Interest Expense, Other				1			(8)	(17)
Fair Value, Inputs, Level 1 [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Interest Rate Derivative Assets, at Fair Value	0						0		0
Fair Value, Inputs, Level 2 [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Money Market Funds, at Carrying Value	0						0
Fair Value, Inputs, Level 3 [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Interest Rate Derivative Assets, at Fair Value	0						0		0
Fair Value, Measurements, Recurring [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Money Market Funds, at Carrying Value	27						27		151
Foreign Currency Contract, Asset, Fair Value Disclosure	290						290		419
Interest Rate Derivative Assets, at Fair Value	0						0		25
Assets, Fair Value Disclosure	317						317		595
Foreign Currency Contracts, Liability, Fair Value Disclosure	30						30		36
Accrued Contingent Consideration	266						266		274
Liabilities, Fair Value Disclosure	296						296		310
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 1 [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Money Market Funds, at Carrying Value	27						27		151
Foreign Currency Contract, Asset, Fair Value Disclosure	0						0		0
Assets, Fair Value Disclosure	27						27		151
Foreign Currency Contracts, Liability, Fair Value Disclosure	0						0		0
Accrued Contingent Consideration	0						0		0
Liabilities, Fair Value Disclosure	0						0		0
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Money Market Funds, at Carrying Value									0
Foreign Currency Contract, Asset, Fair Value Disclosure	290						290		419
Interest Rate Derivative Assets, at Fair Value	0						0		25
Assets, Fair Value Disclosure	290						290		444
Foreign Currency Contracts, Liability, Fair Value Disclosure	30						30		36
Accrued Contingent Consideration	0						0		0
Liabilities, Fair Value Disclosure	30						30		36
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 3 [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Money Market Funds, at Carrying Value	0						0		0
Foreign Currency Contract, Asset, Fair Value Disclosure	0						0		0
Assets, Fair Value Disclosure	0						0		0
Foreign Currency Contracts, Liability, Fair Value Disclosure	0						0		0
Accrued Contingent Consideration	266						266		274
Liabilities, Fair Value Disclosure	266						266		274
Interest Rate Swap [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Derivative, Notional Amount		$ 450							450
Interest rate swaps terminated in Q1 2015 [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Accrued Investment Income Receivable			$ 7
Designated as Hedging Instrument [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Derivative Instruments in Hedges, Assets, at Fair Value	241						241		344
Derivative Instruments in Hedges, Liabilities, at Fair Value	1						1		1
Designated as Hedging Instrument [Member] | Prepaid And Other Current Assets [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Derivative Instruments in Hedges, Assets, at Fair Value	152						152		178
Designated as Hedging Instrument [Member] | Other Long Term Assets [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Derivative Instruments in Hedges, Assets, at Fair Value	89						89		141
Designated as Hedging Instrument [Member] | Other current liabilities [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Derivative Instruments in Hedges, Liabilities, at Fair Value	1						1		1
Not Designated as Hedging Instrument [Member] | Prepaid And Other Current Assets [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Derivative Instruments Not Designated as Hedging Instruments, Asset, at Fair Value	49						49		100
Not Designated as Hedging Instrument [Member] | Other current liabilities [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Derivative Instruments Not Designated as Hedging Instruments, Liability, at Fair Value	29						29		35
Not Designated as Hedging Instrument [Member] | Other, net [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Derivative Instruments Not Designated as Hedging Instruments, Gain (Loss), Net	32			40			46	20
Net gain (loss) from foreign currency transaction exposures	(36)			(45)			(64)	(31)
Foreign Currency Transaction Gain (Loss), Realized	(4)			(5)			(18)	(11)
Cash Flow Hedging [Member] | Designated as Hedging Instrument [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Derivative Instruments, Gain (Loss) Recognized in Other Comprehensive Income (Loss), Effective Portion, Net	13			156			92	115
Derivative Instruments, Gain (Loss) Reclassified from Accumulated OCI into Income, Effective Portion, Net	54			25			158	68
Cash Flow Hedging [Member] | Designated as Hedging Instrument [Member] | Foreign Exchange Contract [Member] | Cost of products sold [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Derivative Instruments, Gain (Loss) Recognized in Other Comprehensive Income (Loss), Effective Portion, Net	13			156			81	115
Derivative Instruments, Gain (Loss) Reclassified from Accumulated OCI into Income, Effective Portion, Net	54			$ 25			156	$ 68
Interest Rate Contract [Member] | Designated as Hedging Instrument [Member] | Prepaid And Other Current Assets [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Derivative Instruments in Hedges, Assets, at Fair Value	0						0		3
Interest Rate Contract [Member] | Designated as Hedging Instrument [Member] | Other Long Term Assets [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Derivative Instruments in Hedges, Assets, at Fair Value	$ 0						$ 0		$ 22

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Acquisitions and Strategic Investments (Tables)

9 Months Ended

Sep. 30, 2015

Business Combinations [Abstract]

Business Combination, Components of Purchase Price [Table Text Block]

The components of the aggregate purchase prices are as follows (in millions):

Cash, net of cash acquired	$	479
Fair value of prior interests	31
	$	510

The components of the aggregate preliminary purchase prices are as follows (in millions):

Cash, net of cash acquired, including amounts payable as of September 30, 2015	$	1,659
Fair value of contingent consideration	31
	$	1,690

Business Combination, Purchase Price Allocation Schedule [Table Text Block]

The following summarizes the aggregate purchase price allocation for the 2014 acquisitions as of September 30, 2014 (in millions):

Goodwill	$	210
Amortizable intangible assets	263
Inventory	23
Property, Plant and Equipment	17
Prepaid Transaction Service Agreements	5
Other net assets	(1		)
Deferred income taxes	(7		)
	$	510

The following summarizes the aggregate preliminary purchase price allocation for the 2015 acquisitions as of September 30, 2015 (in millions):

Goodwill	$	568
Amortizable intangible assets	992
Inventory	102
Property, Plant and Equipment	42
Other net assets	39
Deferred income taxes	(53		)
	$	1,690

Rollforward of Fair Value of Contingent Consideration [Table Text Block]

Changes in the fair value of our contingent consideration liability were as follows (in millions):

Balance as of December 31, 2014	$	274
Amounts recorded related to new acquisitions	31
Other amounts recorded related to prior acquisitions	—
Net fair value adjustments	86
Payments made	(125		)
Balance as of September 30, 2015	$	266

Description of unobservable inputs used in Level 3 fair value measurements [Table Text Block]

The recurring Level 3 fair value measurements of our contingent consideration liability include the following significant unobservable inputs:

Contingent Consideration Liability	Fair Value as of September 30, 2015	Valuation Technique	Unobservable Input	Range
Revenue-based Payments	$84 million	Probability Weighted Discounted Cash Flow	Discount Rate	11.5% - 15%
			Projected Year of Payment	2015 - 2019
	$182 million	Monte Carlo	Revenue Volatility	11% - 20%
			Risk Free Rate	LIBOR Term Structure
			Projected Year of Payment	2015 - 2018

The nonrecurring Level 3 fair value measurements of our intangible asset impairment analysis included the following significant unobservable inputs:

Intangible Asset	Valuation Date	Fair Value	Valuation Technique	Unobservable Input	Rate
Core Technology	September 30, 2015	$8 million	Income Approach -Excess Earnings Method	Discount Rate	10%
In-Process R&D	June 30, 2015	$6 million	Income Approach - Excess Earnings Method	Discount Rate	16.5 - 20%
In-Process R&D	September 30, 2014	$16 million	Income Approach - Excess Earnings Method	Discount Rate	16.5 - 20%
In-Process R&D	June 30, 2014	$83 million	Income Approach - Excess Earnings Method	Discount Rate	16.5 - 20%
Core Technology	June 30, 2014	$8 million	Income Approach - Excess Earnings Method	Discount Rate	15%
In-Process R&D	March 31, 2014	$6 million	Income Approach - Excess Earnings Method	Discount Rate	20%
Core Technology	March 31, 2014	$64 million	Income Approach - Excess Earnings Method	Discount Rate	15%

Business Acquisition, Purchase Price Allocation, Intangible Assets, Description [Table Text Block]

We allocated a portion of the purchase price to specific intangible asset categories as follows:

	Amount Assigned (in millions)		Weighted Average Amortization Period (in years)	Range of Risk- Adjusted Discount Rates used in Purchase Price Allocation
Amortizable intangible assets:
Technology-related	$	233	10 - 14	14 - 18 %
Customer relationships	29		10	18%
Other intangible assets	1		2	14%
	$	263

We allocated a portion of the purchase price to specific intangible asset categories as follows:

	Amount Assigned (in millions)		Weighted Average Amortization Period (in years)	Range of Risk- Adjusted Discount Rates used in Purchase Price Allocation
Amortizable intangible assets:
Technology-related	$	358	11-12	13.5% - 15%
Customer relationships	616		12	13.5%
Other intangible assets	18		13	13.5%
	$	992

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Borrowings and Credit Arrangements (Details) ¥ in Millions, $ in Millions	3 Months Ended			9 Months Ended		12 Months Ended
	Sep. 30, 2015 USD ($)	Jun. 30, 2014 USD ($)	Mar. 31, 2014 USD ($)	Sep. 30, 2015 USD ($)	Sep. 30, 2014 USD ($)	Dec. 31, 2014 USD ($)	Sep. 30, 2015 JPY (¥)	Apr. 10, 2015 USD ($)	Aug. 06, 2013 USD ($)	Apr. 18, 2012 USD ($)
Debt Instrument [Line Items]
Asset Impairment Charges		$ 110	$ 55
Schedule of debt maturities
Long-term Debt, Maturities, Repayments of Principal in Current Year	$ 0			$ 0
Long-term Debt, Maturities, Repayments of Principal in Year Two	80			80
Long-term Debt, Maturities, Repayments of Principal in Year Three	405			405
Long-term Debt, Maturities, Repayments of Principal in Year Four	990			990
Long-term Debt, Maturities, Repayments of Principal in Year Five	150			150
Long-term Debt, Maturities, Repayments of Principal After Year Five	4,175			4,175
Long-term Debt, Maturities, Total Repayments of Principal	5,800			5,800
Borrowings and Credit Arrangements (Textuals) [Abstract]
Total debt	5,859			5,859		$ 4,262
Line of Credit Facility, Maximum Borrowing Capacity	300			300
Proceeds from long-term borrowings, net of debt issuance costs				2,580	$ 0
Maximum amount of proceeds from sale of finance receivables	$ 387			387
Average interest rate of de-recognized receivables	2.50%					3.20%
De-recognized receivables	$ 173			173		$ 167
Letters of Credit Outstanding, Amount	$ 65			$ 65		59
November 2015 Notes [Member]
Schedule of debt maturities
Debt Instrument, Interest Rate, Stated Percentage	5.50%			5.50%			5.50%
Borrowings and Credit Arrangements (Textuals) [Abstract]
Senior notes	$ 400			$ 400
June 2016 Notes [Member]
Schedule of debt maturities
Debt Instrument, Interest Rate, Stated Percentage	6.40%			6.40%			6.40%
Borrowings and Credit Arrangements (Textuals) [Abstract]
Senior notes	$ 600			$ 600
2025 Notes [Member]
Schedule of debt maturities
Debt Instrument, Interest Rate, Stated Percentage	3.85%			3.85%			3.85%
2022 Notes [Member]
Schedule of debt maturities
Debt Instrument, Interest Rate, Stated Percentage	3.375%			3.375%			3.375%
2020 Notes [Member]
Schedule of debt maturities
Debt Instrument, Interest Rate, Stated Percentage	2.85%			2.85%			2.85%
Uncommitted Credit Facilities With A Commercial Japanese Banks [Member]
Borrowings and Credit Arrangements (Textuals) [Abstract]
Maximum amount of proceeds from sale of finance receivables	$ 176			$ 176			¥ 21,000
De-recognized receivables	$ 135			$ 135		$ 134
Average discounted rates of notes receivables	1.70%			1.70%		1.80%	1.70%
Extinguished Debt [Member]
Schedule of debt maturities
Interest Expense, Debt				$ 45
Italy, Spain, Portugal and Greece [Member]
Borrowings and Credit Arrangements (Textuals) [Abstract]
Accounts receivable 180 days past due	$ 28			28
Accounts receivable 365 days past due	$ 13			$ 13
Covenant Requirement [Member]
Summary of compliance with debt covenants
Maximum Leverage Ratio	4.5			4.5			4.5
Minimum interest coverage ratio	3.0			3.0			3.0
Actual, Covenant [Member]
Summary of compliance with debt covenants
Maximum Leverage Ratio	3.1			3.1			3.1
Minimum interest coverage ratio	6.7			6.7			6.7
2015 Term Loan [Member]
Borrowings and Credit Arrangements (Textuals) [Abstract]
Interest Margin above LIBOR, Minimum								1.00%
Interest Margin above LIBOR, Maximum								1.75%
Unsecured Term Loan Facility, Interest Rate During Period	1.50%			1.50%			1.50%
Quarterly term-loan principal payments								$ 38
Revolving credit facility [Member]
Borrowings and Credit Arrangements (Textuals) [Abstract]
Line of Credit Facility, Maximum Borrowing Capacity										$ 2,000
Unsecured Term Loan Facility [Member]
Borrowings and Credit Arrangements (Textuals) [Abstract]
Interest Margin above LIBOR, Minimum									1.00%
Interest Margin above LIBOR, Maximum									1.75%
Unsecured Term Loan Facility, Interest Rate During Period	1.50%			1.50%			1.50%
Quarterly term-loan principal payments									$ 20
the 2015 Facility [Member]
Borrowings and Credit Arrangements (Textuals) [Abstract]
Line of Credit Facility, Maximum Borrowing Capacity								$ 2,000
Interest Margin above LIBOR, Minimum								0.90%
Interest Margin above LIBOR, Maximum								1.50%
Line of Credit Facility, Current Interest Rate	1.30%
Commitment fee percentage	0.20%
Exclusion from EBITDA for Restructuring Charges								$ 620
Restructuring charges remaining to be excluded from calculation of consolidated EBITDA	$ 584			$ 584
Litigation and Debt Exclusion from EBITDA								2,000
Legal payments and debt remaining to be excluded from calculation of consolidated EBITDA	1,633			1,633
2015 Term Loan [Member]
Schedule of debt maturities
Long-term Debt, Maturities, Total Repayments of Principal								$ 750
Senior Notes [Member]
Schedule of debt maturities
Long-term Debt, Maturities, Repayments of Principal in Current Year	0			0
Long-term Debt, Maturities, Repayments of Principal in Year Two	0			0
Long-term Debt, Maturities, Repayments of Principal in Year Three	250			250
Long-term Debt, Maturities, Repayments of Principal in Year Four	600			600
Long-term Debt, Maturities, Repayments of Principal in Year Five	0			0
Long-term Debt, Maturities, Repayments of Principal After Year Five	3,800			3,800
Long-term Debt, Maturities, Total Repayments of Principal	4,650			4,650		$ 3,800
Unsecured Term Loan Facility [Member]
Schedule of debt maturities
Long-term Debt, Maturities, Repayments of Principal in Current Year	0			0
Long-term Debt, Maturities, Repayments of Principal in Year Two	80			80
Long-term Debt, Maturities, Repayments of Principal in Year Three	155			155
Long-term Debt, Maturities, Repayments of Principal in Year Four	390			390
Long-term Debt, Maturities, Repayments of Principal in Year Five	150			150
Long-term Debt, Maturities, Repayments of Principal After Year Five	375			375
Long-term Debt, Maturities, Total Repayments of Principal	1,150			1,150
Offering Completed in May 2015 [Member]
Schedule of debt maturities
Long-term Debt, Maturities, Total Repayments of Principal	1,850			1,850
2020 Notes [Member]
Schedule of debt maturities
Long-term Debt, Maturities, Total Repayments of Principal	600			600
2022 Notes [Member]
Schedule of debt maturities
Long-term Debt, Maturities, Total Repayments of Principal	500			500
2025 Notes [Member]
Schedule of debt maturities
Long-term Debt, Maturities, Total Repayments of Principal	$ 750			$ 750
Periods prior to the closing of the AMS Portfolio Acquisition [Member] | Covenant Requirement [Member]
Summary of compliance with debt covenants
Maximum Leverage Ratio	4.5			4.5			4.5
Fifth fiscal quarter-end following the closing of the AMS Portfolio Acquisition [Member] | Covenant Requirement [Member]
Summary of compliance with debt covenants
Maximum Leverage Ratio	4.25			4.25			4.25
Sixth fiscal quarter-end following the closing of the AMS Portfolio Acquisition [Member] | Covenant Requirement [Member]
Summary of compliance with debt covenants
Maximum Leverage Ratio	4.0			4.0			4.0
Seventh fiscal quarter-end following the closing of the AMS Portfolio Acquisition [Member] | Covenant Requirement [Member]
Summary of compliance with debt covenants
Maximum Leverage Ratio	3.75			3.75			3.75
Eighth fiscal quarter-end and thereafter following the closing of the AMS Portfolio Acquisition [Member] | Covenant Requirement [Member]
Summary of compliance with debt covenants
Maximum Leverage Ratio	3.5			3.5			3.5

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Fair Value Measurements (Tables)

9 Months Ended

Sep. 30, 2015

Fair Value Disclosures [Abstract]

Gains (losses) recognized in earnings for derivatives designed as hedging instruments

The following presents the effect of our derivative instruments designated as cash flow hedges under Topic 815 on our accompanying unaudited condensed consolidated statements of operations during the third quarter and first nine months of2015 and 2014 (in millions):

	Amount of Pre-tax Gain (Loss) Recognized in OCI (Effective Portion)		Amount of Pre-tax Gain (Loss) Reclassified from AOCI into Earnings (Effective Portion)		Location in Statement of Operations
Three Months Ended September 30, 2015
Currency hedge contracts	$	13	$	54	Cost of products sold
	$	13	$	54
Three Months Ended September 30, 2014
Currency hedge contracts	$	156	$	25	Cost of products sold
	$	156	$	25
Nine Months Ended September 30, 2015
Currency hedge contracts	$	81	$	156	Cost of products sold
Interest rate derivative contracts	11		2		Interest Expense
	$	92	$	158
Nine Months Ended September 30, 2014
Currency hedge contracts	$	115	$	68	Cost of products sold
	$	115	$	68

Gains (losses) recognized in earnings for derivatives not designated as hedging instruments

The amount of gain (loss) recognized in earnings related to the ineffective portion of hedging relationships was de minimis for all periods presented.

Net foreign currency gain (loss) [Table Text Block]

Net gains and losses on currency hedge contracts not designated as hedging instruments were offset by net losses and gains from foreign currency transaction exposures, as shown in the following table:

in millions	Location in Statement of Operations	Three Months Ended						Nine Months Ended
		September 30,						September 30,
		2015			2014			2015			2014
Gain (loss) on currency hedge contracts	Other, net	$	32		$	40		$	46		$	20
Gain (loss) on foreign currency transaction exposures	Other, net	(36		)	(45		)	(64		)	(31		)
Net foreign currency gain (loss)	Other, net	$	(4	)	$	(5	)	$	(18	)	$	(11	)

Classification of derivative assets and liabilities within level 2

The following are the balances of our derivative assets and liabilities as of September 30, 2015 and December 31, 2014:

		As of
		September 30,		December 31,
(in millions)	Location in Balance Sheet (1)	2015		2014
Derivative Assets:
Currently or Previously Designated Hedging Instruments
Currency hedge contracts	Other current assets	$	152	$	178
Currency hedge contracts	Other long-term assets	89		141
Interest rate contracts	Other current assets	—		3
Interest rate contracts	Other long-term assets	—		22
		241		344
Non-Designated Hedging Instruments
Currency hedge contracts	Other current assets	49		100
Total Derivative Assets		$	290	$	444
Derivative Liabilities:
Currently or Previously Designated Hedging Instruments
Currency hedge contracts	Other current liabilities	$	1	$	1
		1		1
Non-Designated Hedging Instruments
Currency hedge contracts	Other current liabilities	29		35
Total Derivative Liabilities		$	30	$	36

(1) We classify derivative assets and liabilities as current when the remaining term of the derivative contract is one year or less.

Assets and liabilities measured at fair value on a recurring basis

Assets and liabilities measured at fair value on a recurring basis consist of the following as of September 30, 2015 and December 31, 2014:

	September 30, 2015								As of December 31, 2014
(in millions)	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Assets
Money market and government funds	$	27	$	—	$	—	$	27	$	151	$	—	$	—	$	151
Currency hedge contracts	—		290		—		290		—		419		—		419
Interest rate contracts	—		—		—		—		—		25		—		25
	$	27	$	290	$	—	$	317	$	151	$	444	$	—	$	595
Liabilities
Currency hedge contracts	$	—	$	30	$	—	$	30	$	—	$	36	$	—	$	36
Accrued contingent consideration	—		—		266		266		—		—		274		274
	$	—	$	30	$	266	$	296	$	—	$	36	$	274	$	310

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Basis of Presentation

9 Months Ended

Sep. 30, 2015

Basis of Presentation [Abstract]

BASIS OF PRESENTATION

BASIS OF PRESENTATION

The accompanying unaudited condensed consolidated financial statements of Boston Scientific Corporation have been prepared in accordance with accounting principles generally accepted in the United States (U.S. GAAP) and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments (consisting only of normal recurring adjustments) considered necessary for fair presentation have been included. Operating results for the three and nine month periods endedSeptember 30, 2015 are not necessarily indicative of the results that may be expected for the year ending December 31, 2015. For further information, refer to the consolidated financial statements and footnotes thereto included in Item 8 of our 2014 Annual Report on Form 10-K.

Subsequent Events

We evaluate events occurring after the date of our most recent accompanying unaudited condensed consolidated balance sheets for potential recognition or disclosure in our financial statements. We did not identify any material subsequent events requiring adjustment to our accompanying unaudited condensed consolidated financial statements (recognized subsequent events) for the three and nine month periods endedSeptember 30, 2015. Those items requiring disclosure (unrecognized subsequent events) in the financial statements have been disclosed accordingly. Refer to Note J - Commitments and Contingencies for more information.

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Condensed Consolidated Statements of Comprehensive Income (Loss) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Net income (loss)	$ (198)	$ 43	$ (97)	$ 180
Foreign currency translation adjustment	(12)	(15)	(42)	(23)
Net change in unrealized gains and losses on derivative financial instruments, net of tax	(27)	83	(42)	28
Net change in certain retirement plans, net of tax	16	0	21	(1)
Total other comprehensive income (loss)	(23)	68	(63)	4
Total comprehensive income (loss)	$ (221)	$ 111	$ (160)	$ 184

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Weighted Average Shares Outstanding

9 Months Ended

Sep. 30, 2015

Earnings Per Share [Abstract]

Weighted Average Number Of Shares Outstanding [Text Block]

WEIGHTED AVERAGE SHARES OUTSTANDING

	Three Months Ended September 30,			Nine Months Ended September 30,
(in millions)	2015		2014	2015		2014
Weighted average shares outstanding - basic	1,344.0		1,325.5	1,339.7		1,323.5
Net effect of common stock equivalents	—	*	22.1	—	*	23.8
Weighted average shares outstanding - assuming dilution	1,344.0		1,347.6	1,339.7		1,347.3

* We generated a net loss in the third quarter and first nine months of2015. Our weighted-average shares outstanding for earnings per share calculations exclude common stock equivalents of 20.2 million and 21.5 million for the third quarter and first nine months of2015, respectively, due to our net loss position in these periods.

Weighted average shares outstanding, assuming dilution, excludes the impact of two million stock options for the third quarter of 2015, 13 million stock options for the third quarter of 2014, two million stock options for the first nine months of2015 and 13 million stock options for the first nine months of2014, due to the exercise prices of these stock options being greater than the average fair market value of our common stock during the period.

We issued approximately three million shares of our common stock in the third quarter of 2015, two million shares of our common stock in the third quarter of 2014, 17 million shares of our common stock for the first nine months of2015 and 13 million shares of our common stock for the first nine months of2014, following the exercise or vesting of underlying stock options or deferred stock units, or purchases under our employee stock purchase plans. We did not repurchase any shares of our common stock during the third quarter of 2015 or 2014. We did not repurchase any shares of our common stock during the first nine months of 2015 and repurchased 10 million shares of our common stock during the first nine months of2014 for approximately $125 million.

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Document and Entity Information - shares	9 Months Ended
	Sep. 30, 2015	Oct. 30, 2015
Document and Entity Information [Abstract]
Entity Registrant Name	BOSTON SCIENTIFIC CORPORATION
Entity Central Index Key	0000885725
Document Type	10-Q
Document Period End Date	Sep. 30, 2015
Amendment Flag	false
Document Fiscal Year Focus	2015
Document Fiscal Period Focus	Q3
Current Fiscal Year End Date	--12-31
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding		1,345,195,041

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Segment Reporting

9 Months Ended

Sep. 30, 2015

Segment Reporting [Abstract]

SEGMENT REPORTING

SEGMENT REPORTING

We have three reportable segments comprised of Cardiovascular, Rhythm Management, and MedSurg. Our reportable segments represent an aggregate of operating segments. Each of our reportable segments generates revenues from the sale of medical devices. We measure and evaluate our reportable segments based on segment net sales and operating income, excluding the impact of changes in foreign currency and sales from divested businesses. Sales generated from reportable segments and divested businesses, as well as operating results of reportable segments, are based on internally-derived standard currency exchange rates, which may differ from year to year, and do not include intersegment profits. We restate segment information for the prior period based on our internally-derived standard currency exchange rates used for the current period in order to remove the impact of foreign currency exchange fluctuation. We exclude from segment operating income certain corporate-related expenses and certain charges or credits that our chief operating decision maker considers to be non-recurring and/or non-operational, such as amounts related to intangible asset impairment charges; acquisition-, divestiture-, restructuring- and litigation-related charges and credits; pension termination charges; and amortization expense. Although we exclude these amounts from segment operating income, they are included in reported consolidated operating income (loss) and are included in the reconciliation below.

A reconciliation of the totals reported for the reportable segments to the applicable line items in our accompanying unaudited condensed consolidated statements of operations is as follows:

	Three Months Ended September 30,						Nine Months Ended September 30,
(in millions)	2015			2014			2015			2014
Net sales
Interventional Cardiology	$	551		$	514		$	1,659		$	1,543
Peripheral Interventions	246			217			723			631
Cardiovascular	797			731			2,382			2,174
Cardiac Rhythm Management	483			482			1,456			1,441
Electrophysiology	61			54			182			167
Rhythm Management	544			536			1,638			1,608
Endoscopy	362			340			1,042			990
Urology and Pelvic Health	207			138			479			397
Neuromodulation	128			115			369			338
MedSurg	697			593			1,890			1,725
Net sales allocated to reportable segments	2,038			1,860			5,910			5,507
Sales generated from divested businesses	—			1			—			4
Impact of foreign currency fluctuations	(150		)	(15		)	(411		)	(18		)
	$	1,888		$	1,846		$	5,499		$	5,493
Income (loss) before income taxes
Cardiovascular	$	249		$	201		$	732		$	565
Rhythm Management	97			76			252			209
MedSurg	235			192			590			535
Operating income allocated to reportable segments	581			469			1,574			1,309
Corporate expenses and currency exchange	(145		)	(90		)	(334		)	(205		)
Intangible asset impairment charges; pension termination charges; acquisition-, divestiture-, restructuring-, and litigation-related net charges and credits	(604		)	(206		)	(935		)	(586		)
Amortization expense	(131		)	(109		)	(361		)	(327		)
Operating income (loss)	(299		)	64			(56		)	191
Other expense, net	(68		)	(61		)	(256		)	(146		)
Income (loss) before income taxes	$	(367	)	$	3		$	(312	)	$	45

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Condensed Consolidated Balance Sheets (Unaudited) - USD ($) $ in Millions	Sep. 30, 2015	Dec. 31, 2014
Current assets:
Cash and cash equivalents	$ 350	$ 587
Trade accounts receivable, net	1,274	1,183
Inventories	1,086	946
Deferred and prepaid income taxes	367	447
Other current assets	385	443
Total current assets	3,462	3,606
Property, plant and equipment, net	1,479	1,507
Goodwill	6,468	5,898
Other intangible assets, net	6,228	5,606
Other long-term assets	578	425
TOTAL ASSETS	18,215	17,042
Current liabilities:
Current debt obligations	63	403
Accounts payable	210	262
Accrued expenses	1,605	1,950
Other current liabilities	360	231
Total current liabilities	2,238	2,846
Long-term debt	5,796	3,859
Deferred income taxes	770	1,214
Other long-term liabilities	$ 3,001	$ 2,666
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 1,592,429,606 shares as of September 30, 2015 and 1,575,018,236 shares as of December 31, 2014	$ 16	$ 16
Treasury stock, at cost - 247,566,270 shares as of September 30, 2015 and 247,566,270 shares as of December 31, 2014	(1,717)	(1,717)
Additional paid-in capital	16,815	16,703
Accumulated deficit	(8,785)	(8,689)
Accumulated other comprehensive income (loss), net of tax	81	144
Total stockholders’ equity	6,410	6,457
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$ 18,215	$ 17,042

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Borrowings and Credit Arrangements

9 Months Ended

Sep. 30, 2015

Debt Disclosure [Abstract]

BORROWINGS AND CREDIT ARRANGEMENTS

BORROWINGS AND CREDIT ARRANGEMENTS

We had total debt of $5.859 billion as of September 30, 2015 and $4.262 billion as of December 31, 2014. The debt maturity schedule for the significant components of our debt obligations as of September 30, 2015 is as follows:

(in millions)	2015		2016		2017		2018		2019		Thereafter		Total
Senior notes	$	—	$	—	$	250	$	600	$	—	$	3,800	$	4,650
Term loan	—		80		155		390		150		375		1,150
	$	—	$	80	$	405	$	990	$	150	$	4,175	$	5,800

Note: The table above does not include unamortized discounts associated with our senior notes, or amounts related to interest rate contracts used to hedge the fair value of certain of our senior notes.

Revolving Credit Facility

On April 10, 2015, we entered into a new $2.000 billion revolving credit facility (the 2015 Facility) with a global syndicate of commercial banks and terminated our previous $2.000 billionrevolving credit facility. The 2015 Facility matures on April 10, 2020. Eurodollar and multicurrency loans under the 2015 Facility bear interest at LIBOR plus an interest margin of between 0.900 percent and 1.500 percent, based on our corporate credit ratings and consolidated leverage ratio (1.300 percent as of September 30, 2015). In addition, we are required to pay a facility fee based on our credit ratings, consolidated leverage ratio and the total amount of revolving credit commitment, regardless of usage, under the credit agreement (0.200 percent per year as of September 30, 2015).The 2015 Facility contains covenants which, among other things, require that we maintain a minimum interest coverage ratio of 3.0 times consolidated EBITDA and a maximum leverage ratio of 4.5 times consolidated EBITDA for the first four fiscal quarter-ends following the closing of the AMS Portfolio Acquisition on August 3, 2015, and decreasing to 4.25 times, 4.0 times, and 3.75 times consolidated EBITDA for the next three fiscal quarter-ends after such four fiscal quarter-ends, respectively, and then to 3.5 times for each fiscal quarter-end thereafter. There were no amounts borrowed under our current and prior revolving credit facilities as of September 30, 2015 or December 31, 2014.

	Covenant Requirement as of September 30, 2015	Actual as of September 30, 2015
Maximum leverage ratio (1)	4.5 times	3.1 times
Minimum interest coverage ratio (2)	3.0 times	6.7 times

(1) Ratio of total debt to consolidated EBITDA, as defined by the credit agreement, for the preceding four consecutive fiscal quarters.

(2) Ratio of consolidated EBITDA, as defined by the credit agreement, to interest expense for the preceding four consecutive fiscal quarters.

The credit agreement for the 2015 Facility provides for an exclusion from the calculation of consolidated EBITDA, as defined by the credit agreement, through the credit agreement maturity, of any non-cash charges and up to $620 million in restructuring charges and restructuring-related expenses related to our current or future restructuring plans. As of September 30, 2015, we had$584 million of the restructuring charge exclusion remaining. In addition, any cash litigation payments (net of any cash litigation receipts), as defined by the agreement, are excluded from the calculation of consolidated EBITDA and any new debt issued to fund any tax deficiency payments is excluded from consolidated total debt, as defined in the agreement, provided that the sum of any excluded net cash litigation payments and any new debt issued to fund any tax deficiency payments not exceed $2.000 billionin the aggregate. As of September 30, 2015, we had $1.633 billion of the combined legal and debt exclusion remaining.

As of and through September 30, 2015, we were in compliance with the required covenants.

Term Loans

As of September 30, 2015, we had an aggregate of $1.150 billion outstanding under our unsecured term loan facilities and $400 million outstanding as of December 31, 2014. This includes $400 million outstanding under an unsecured term loan facility (2013 Term Loan) as of September 30, 2015 andDecember 31, 2014. Term loan borrowings under this facility bear interest at LIBOR plus an interest margin of between 1.00 percent and 1.75 percent (currently 1.50 percent), based on our corporate credit ratings and consolidated leverage ratio. The term loan borrowings are payable over a five-year period, with quarterly principal payments of $20 million commencing in the first quarter of 2016 and the remaining principal amount due at the final maturity date in August 2018, and are repayable at any time without premium or penalty. Our term loan facility requires that we comply with certain covenants, including financial covenants with respect to maximum leverage and minimum interest coverage, consistent with our revolving credit facility. The maximum leverage ratio requirement is 4.5 times, and our actual leverage ratio as of September 30, 2015 is 3.1 times. The minimum interest coverage ratio requirement is 3.0 times, and our actual interest coverage ratio as of September 30, 2015 is 6.7 times.

On April 10, 2015, we entered into a new $750 million unsecured term loan credit facility (2015 Term Loan) which matures on August 3, 2020. The 2015 Term Loan was funded on August 3, 2015 and was used to partially fund the AMS Portfolio Acquisition, including the payment of fees and expenses. Term loan borrowings under this facility bear interest at LIBOR plus an interest margin of between 1.00 percent and 1.75 percent (currently 1.50 percent), based on our corporate credit ratings and consolidated leverage ratio. The 2015 Term Loan requires quarterly principal payments of $38 million commencing in the third quarter of 2017, and the remaining principal amount is due at the final maturity date of August 3, 2020. The 2015 Term Loan agreement requires that we comply with certain covenants, including financial covenants with respect to maximum leverage and minimum interest coverage, consistent with our revolving credit facility. The maximum leverage ratio requirement is 4.5 times, and our actual leverage ratio as of September 30, 2015 is 3.1 times. The minimum interest coverage ratio requirement is 3.0 times, and our actual interest coverage ratio as of September 30, 2015 is 6.7 times.

Senior Notes

We had senior notes outstanding of $4.650 billion as ofSeptember 30, 2015 and $3.800 billion as ofDecember 31, 2014. In May 2015, we completed the offering of$1.850 billion in aggregate principal amount of senior notes consisting of $600 million in aggregate principal amount of 2.850%notes due 2020, $500 million in aggregate principal amount of 3.375% notes due 2022 and$750 million in aggregate principal amount of 3.850% notes due 2025. The net proceeds from the offering of the notes, after deducting underwriting discounts and estimated offering expenses, were approximately $1.831 billion. We used a portion of the net proceeds from the senior notes offering to redeem $400 million aggregate principal amount of our 5.500% notes due November 2015 and $600 million aggregate principal amount of our6.400% notes due June 2016. The remaining senior notes offering proceeds, together with the 2015 Term Loan, were used to fund the AMS Portfolio Acquisition. We recorded a charge of$45 million in interest expense for premiums, accelerated amortization of debt issuance costs, and investor discount costs net of interest rate hedge gains related to the early debt extinguishment.

Our senior notes were issued in public offerings, are redeemable prior to maturity and are not subject to any sinking fund requirements. Our senior notes are unsecured, unsubordinated obligations and rank on parity with each other. These notes are effectively junior to borrowings under our credit and security facility and to liabilities of our subsidiaries (see Other Arrangements below).

Other Arrangements

We maintain a $300 million credit and security facility secured by our U.S. trade receivables maturing on June 9, 2017. The credit and security facility requires that we maintain a maximum leverage covenant consistent with our revolving credit facility. The maximum leverage ratio requirement is 4.5 times, and our actual leverage ratio as of September 30, 2015 is 3.1 times. We had no borrowings outstanding under this facility as of September 30, 2015 and December 31, 2014.

We have accounts receivable factoring programs in certain European countries that we account for as sales under FASB ASC Topic 860, Transfers and Servicing. These agreements provide for the sale of accounts receivable to third parties, without recourse, of up to approximately$387 million as of September 30, 2015. We have no retained interests in the transferred receivables, other than collection and administrative responsibilities and, once sold, the accounts receivable are no longer available to satisfy creditors in the event of bankruptcy. We de-recognized $173 million of receivables as of September 30, 2015 at an average interest rate of2.5 percent, and $167 million as of December 31, 2014 at an average interest rate of 3.2 percent. Within Italy, Spain, Portugal and Greece, the number of days our receivables are outstanding has remained above historical levels. We believe we have adequate allowances for doubtful accounts related to our Italy, Spain, Portugal and Greece accounts receivable; however, we continue to monitor the European economic environment for any collectability issues related to our outstanding receivables. As ofSeptember 30, 2015, our net receivables in these countries greater than 180 days past due totaled $28 million, of which $13 millionwere past due greater than 365 days.

In addition, we have uncommitted credit facilities with a commercial Japanese bank that provide for borrowings, promissory notes discounting and receivables factoring of up to 21.000 billion Japanese yen (approximately $176 million as ofSeptember 30, 2015). We de-recognized $135 million of notes receivable as of September 30, 2015 at an average interest rate of 1.7 percent and $134 million of notes receivable as of December 31, 2014 at an average interest rate of 1.8 percent. De-recognized accounts and notes receivable are excluded from trade accounts receivable, net in the accompanying unaudited condensed consolidated balance sheets.

As of September 30, 2015 we had outstanding letters of credit of $65 million, as compared to $59 million as of December 31, 2014, which consisted primarily of bank guarantees and collateral for workers' compensation insurance arrangements. As ofSeptember 30, 2015 and December 31, 2014, none of the beneficiaries had drawn upon the letters of credit or guarantees; accordingly, we did not recognize a related liability for our outstanding letters of credit in our consolidated balance sheets as ofSeptember 30, 2015 or December 31, 2014. We believe we will generate sufficient cash from operations to fund these arrangements and intend to fund these arrangements without drawing on the letters of credit.

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Fair Value Measurements

9 Months Ended

Sep. 30, 2015

Fair Value Disclosures [Abstract]

FAIR VALUE MEASUREMENTS

FAIR VALUE MEASUREMENTS

Derivative Instruments and Hedging Activities

We address market risk from changes in foreign currency exchange rates and interest rates through a risk management program that includes the use of derivative financial instruments, and we operate the program pursuant to documented corporate risk management policies. Our derivative instruments do not subject our earnings or cash flows to material risk, as gains and losses on these derivatives generally offset losses and gains on the item being hedged. We do not enter into derivative transactions for speculative purposes, and we do not have any non-derivative instruments that are designated as hedging instruments pursuant to FASB ASC Topic 815, Derivatives and Hedging (Topic 815).

Currency Hedging

We are exposed to currency risk consisting primarily of foreign currency denominated monetary assets and liabilities, forecasted foreign currency denominated intercompany and third-party transactions and net investments in certain subsidiaries. We manage our exposure to changes in foreign currency exchange rates on a consolidated basis to take advantage of offsetting transactions. We use derivative instruments, and non-derivative transactions to reduce the risk that our earnings and cash flows associated with these foreign currency denominated balances and transactions will be adversely affected by foreign currency exchange rate changes.

Currently or Previously Designated Foreign Currency Hedges

All of our designated currency hedge contracts outstanding as of September 30, 2015 and December 31, 2014 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 no longer probable that it will occur, we reclassify the amount of any gain or loss on the related cash flow hedge to earnings at that time. We had currency derivative instruments currently or previously designated as cash flow hedges outstanding in the contract amount of $1.517 billion as of September 30, 2015 and $2.178 billion as of December 31, 2014.

We recognized net gains of $54 million in earnings on our cash flow hedges during the third quarter of 2015 and $156 million for the first nine months of2015, as compared to net gains of $25 million during the third quarter of 2014 and $68 million for the first nine months of2014. All currency cash flow hedges outstanding as of September 30, 2015 mature within 36 months. As of September 30, 2015, $171 million of net gains, 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 gains of $217 million as of December 31, 2014. As of September 30, 2015, $114 million of net gains, net of tax, may be reclassified to earnings within the next twelve months.

The success of our hedging program depends, in part, on forecasts of transaction activity in various currencies (primarily Japanese yen, Euro, British pound sterling, Australian dollar and Canadian dollar). We may experience unanticipated currency exchange gains or losses to the extent that there are differences between forecasted and actual activity during periods of currency volatility. In addition, changes in foreign currency exchange rates related to any unhedged transactions may impact our earnings and cash flows.

Non-designated Foreign Currency Contracts

We use currency forward contracts as a part of our strategy to manage exposure related to foreign currency denominated monetary assets and liabilities. 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 less than one year. We had currency derivative instruments not designated as hedges under Topic 815 outstanding in the contract amount of $1.947 billion as of September 30, 2015 and $2.470 billion as of December 31, 2014.

Interest Rate Hedging

Our interest rate risk relates primarily to U.S. dollar borrowings, partially offset by U.S. dollar cash investments. We have historically used interest rate derivative instruments to manage our earnings and cash flow exposure to changes in interest rates by converting floating-rate debt into fixed-rate debt or fixed-rate debt into floating-rate debt.

We designate these derivative instruments either as fair value or cash flow hedges under Topic 815. We record changes in the value of fair value hedges in interest expense, which is generally offset by changes in the fair value of the hedged debt obligation. Interest payments made or received related to our interest rate derivative instruments are included in interest expense. We record the effective portion of any change in the fair value of derivative instruments designated as cash flow hedges as unrealized gains or losses in OCI, net of tax, until the hedged cash flow occurs, at which point the effective portion of any gain or loss is reclassified to earnings. We record the ineffective portion of our cash flow hedges in interest expense. In the event the hedged cash flow does not occur, or it becomes no longer probable that it will occur, we reclassify the amount of any gain or loss on the related cash flow hedge to interest expense at that time.

In the fourth quarter of 2013, we entered into interest rate derivative contracts having a notional amount of $450 million to convert fixed-rate debt into floating-rate debt, which we designated as fair value hedges. During the first quarter of 2015, we terminated these hedges and we received total proceeds of approximately $35 million, which included approximately $7 million of net accrued interest receivable. We assessed at inception, and re-assessed on an ongoing basis, whether the interest rate derivative contracts were highly effective in offsetting changes in the fair value of the hedged fixed-rate debt. We recognized no gains or losses in interest expense, related to fair value hedges, during the third quarter of 2015. During the first nine months of2015, we recognized, in interest expense, an $8 millionloss on our hedged debt and an $8 milliongain on the related interest rate derivative contract. During the third quarter of 2014, we recognized, in interest expense, a $1 milliongain on our hedged debt and a $1 millionloss on the related interest rate derivative contract. During the first nine months of2014, we recognized, in interest expense, a $17 millionloss on our hedged debt and a $17 milliongain on the related interest rate derivative contract.

During the second quarter of 2015, we entered into forward starting interest rate derivative contracts having a notional amount of $450 million to hedge interest rate risk associated with a planned issuance of fixed-rate senior notes, which we designated as cash flow hedges. These hedges were terminated during the second quarter at the time we issued the fixed-rate senior notes and we received total proceeds of approximately $11 million. We had no amounts outstanding under these hedges as of September 30, 2015. We assessed, at inception, and re-assessed, on an ongoing basis, whether the cash flow derivative contracts were highly effective in offsetting changes in interest rates. The gain on this derivative contract was recorded within accumulated other comprehensive income, and is being amortized into earnings as a credit to interest expense over the life of the related senior notes.

We are amortizing the gains and losses on previously terminated interest rate derivative instruments, including fixed-to-floating interest rate contracts designated as fair value hedges and forward starting interest rate derivative contracts and treasury locks designated as cash flow hedges upon termination into earnings as a component of interest expense over the remaining term of the hedged debt, in accordance with Topic 815. The carrying amount of certain of our senior notes included unamortized gains of $66 million as of September 30, 2015 and $45 million as of December 31, 2014, and unamortized losses of $1 million as of September 30, 2015 and $2 million as of December 31, 2014 related to the fixed-to-floating interest rate contracts that we terminated in prior periods. In addition, we had pre-tax net gains within AOCI related to terminated forward starting interest rate derivative contracts and treasury locks of $10 million as of September 30, 2015 and $2 million as of December 31, 2014. We recorded approximately $3 million during the third quarter of 2015 and $10 million during the first nine months of2015 as a reduction to interest expense, resulting from the amortization of terminated interest rate derivative contracts. As of September 30, 2015, $13 million of pre-tax net gains may be reclassified to earnings within the next twelve months as a reduction to interest expense from amortization of our terminated interest rate derivative contracts.

Counterparty Credit Risk

We do not have significant concentrations of credit risk arising from our derivative financial instruments, whether from an individual counterparty or a related group of counterparties. We manage the concentration of counterparty credit risk on our derivative instruments by limiting acceptable counterparties to a diversified group of major financial institutions with investment grade credit ratings, limiting the amount of credit exposure to each counterparty, and actively monitoring their credit ratings and outstanding fair values on an ongoing basis. Furthermore, none of our derivative transactions are subject to collateral or other security arrangements and none contain provisions that are dependent on our credit ratings from any credit rating agency.

We also employ master netting arrangements that reduce our counterparty payment settlement risk on any given maturity date to the net amount of any receipts or payments due between us and the counterparty financial institution. Thus, the maximum loss due to counterparty credit risk is limited to the unrealized gains in such contracts net of any unrealized losses should any of these counterparties fail to perform as contracted. Although these protections do not eliminate concentrations of credit risk, as a result of the above considerations, we do not consider the risk of counterparty default to be significant.

Fair Value of Derivative Instruments

The following presents the effect of our derivative instruments designated as cash flow hedges under Topic 815 on our accompanying unaudited condensed consolidated statements of operations during the third quarter and first nine months of2015 and 2014 (in millions):

	Amount of Pre-tax Gain (Loss) Recognized in OCI (Effective Portion)		Amount of Pre-tax Gain (Loss) Reclassified from AOCI into Earnings (Effective Portion)		Location in Statement of Operations
Three Months Ended September 30, 2015
Currency hedge contracts	$	13	$	54	Cost of products sold
	$	13	$	54
Three Months Ended September 30, 2014
Currency hedge contracts	$	156	$	25	Cost of products sold
	$	156	$	25
Nine Months Ended September 30, 2015
Currency hedge contracts	$	81	$	156	Cost of products sold
Interest rate derivative contracts	11		2		Interest Expense
	$	92	$	158
Nine Months Ended September 30, 2014
Currency hedge contracts	$	115	$	68	Cost of products sold
	$	115	$	68

The amount of gain (loss) recognized in earnings related to the ineffective portion of hedging relationships was de minimis for all periods presented.

Net gains and losses on currency hedge contracts not designated as hedging instruments were offset by net losses and gains from foreign currency transaction exposures, as shown in the following table:

in millions	Location in Statement of Operations	Three Months Ended						Nine Months Ended
		September 30,						September 30,
		2015			2014			2015			2014
Gain (loss) on currency hedge contracts	Other, net	$	32		$	40		$	46		$	20
Gain (loss) on foreign currency transaction exposures	Other, net	(36		)	(45		)	(64		)	(31		)
Net foreign currency gain (loss)	Other, net	$	(4	)	$	(5	)	$	(18	)	$	(11	)

Topic 815 requires all derivative instruments to be recognized at their fair values as either assets or liabilities on the balance sheet. Generally, we use inputs that include quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; other observable inputs for the asset or liability; and inputs derived principally from, or corroborated by, observable market data by correlation or other means. As of September 30, 2015, we have classified all of our derivative assets and liabilities within Level 2 of the fair value hierarchy prescribed by FASB ASC Topic 820, Fair Value Measurements and Disclosures (Topic 820), as discussed below, because these observable inputs are available for substantially the full term of our derivative instruments.

The following are the balances of our derivative assets and liabilities as of September 30, 2015 and December 31, 2014:

		As of
		September 30,		December 31,
(in millions)	Location in Balance Sheet (1)	2015		2014
Derivative Assets:
Currently or Previously Designated Hedging Instruments
Currency hedge contracts	Other current assets	$	152	$	178
Currency hedge contracts	Other long-term assets	89		141
Interest rate contracts	Other current assets	—		3
Interest rate contracts	Other long-term assets	—		22
		241		344
Non-Designated Hedging Instruments
Currency hedge contracts	Other current assets	49		100
Total Derivative Assets		$	290	$	444
Derivative Liabilities:
Currently or Previously Designated Hedging Instruments
Currency hedge contracts	Other current liabilities	$	1	$	1
		1		1
Non-Designated Hedging Instruments
Currency hedge contracts	Other current liabilities	29		35
Total Derivative Liabilities		$	30	$	36

(1) We classify derivative assets and liabilities as current when the remaining term of the derivative contract is one year or less.

Other Fair Value Measurements

Recurring Fair Value Measurements

On a recurring basis, we measure certain financial assets and financial liabilities at fair value based upon quoted market prices, where available. Where quoted market prices or other observable inputs are not available, we apply valuation techniques to estimate fair value. Topic 820 establishes a three-level valuation hierarchy for disclosure of fair value measurements. The categorization of financial assets and financial liabilities within the valuation hierarchy is based upon the lowest level of input that is significant to the measurement of fair value. The three levels of the hierarchy are defined as follows:

• Level 1 – Inputs to the valuation methodology are quoted market prices for identical assets or liabilities.

• Level 2 – Inputs to the valuation methodology are other observable inputs, including quoted market prices for similar assets or liabilities and market-corroborated inputs.

• Level 3 – Inputs to the valuation methodology are unobservable inputs based on management’s best estimate of inputs market participants would use in pricing the asset or liability at the measurement date, including assumptions about risk.

Assets and liabilities measured at fair value on a recurring basis consist of the following as of September 30, 2015 and December 31, 2014:

	September 30, 2015								As of December 31, 2014
(in millions)	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Assets
Money market and government funds	$	27	$	—	$	—	$	27	$	151	$	—	$	—	$	151
Currency hedge contracts	—		290		—		290		—		419		—		419
Interest rate contracts	—		—		—		—		—		25		—		25
	$	27	$	290	$	—	$	317	$	151	$	444	$	—	$	595
Liabilities
Currency hedge contracts	$	—	$	30	$	—	$	30	$	—	$	36	$	—	$	36
Accrued contingent consideration	—		—		266		266		—		—		274		274
	$	—	$	30	$	266	$	296	$	—	$	36	$	274	$	310

Our investments in money market and government funds are generally classified within Level 1 of the fair value hierarchy because they are valued using quoted market prices. These investments are classified as cash and cash equivalents within our accompanying unaudited condensed consolidated balance sheets, in accordance with U.S. GAAP and our accounting policies.

In addition to $27 million invested in money market and government funds as of September 30, 2015, we had $115 million in short-term time deposits and $208 million in interest bearing and non-interest bearing bank accounts. In addition to $151 million invested in money market and government funds as of December 31, 2014, we had $255 million in short-term deposits and $181 million in interest bearing and non-interest bearing bank accounts.

Our recurring fair value measurements using significant unobservable inputs (Level 3) relate solely to our contingent consideration liabilities. Refer to Note B - Acquisitions and Strategic Investments in this Quarterly Report on Form 10-Q, for a discussion of the changes in the fair value of our contingent consideration liabilities.

Non-Recurring Fair Value Measurements

We hold certain assets and liabilities that are measured at fair value on a non-recurring basis in periods subsequent to initial recognition. The fair value of a cost method investment is not estimated if there are no identified events or changes in circumstances that may have a significant adverse effect on the fair value of the investment. The aggregate carrying amount of our cost method investments was $121 million as of September 30, 2015 and $27 million as of December 31, 2014.

We recorded $10 million of losses to adjust our intangible assets to their fair value during the third quarter of 2015 and $19 million of losses for the first nine months of2015. We recorded $12 million of losses to adjust our intangible assets to their fair value during the third quarter of 2014 and $177 million of losses for the first nine months of2014. Refer to Note D - Goodwill and Other Intangible Assets in this Quarterly Report on Form 10-Q, for further information related to these charges and significant unobservable inputs (Level 3).

The fair value of our outstanding debt obligations was $6.080 billion as of September 30, 2015 and $4.613 billion as of December 31, 2014, which was determined by using primarily quoted market prices for our publicly registered senior notes, classified as Level 1 within the fair value hierarchy. Refer to Note F – Borrowings and Credit Arrangements in this Quarterly Report on Form 10-Q, for a discussion of our debt obligations.

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Goodwill and Other Intangible Assets Goodwill (Tables)

9 Months Ended

Sep. 30, 2015

Note D - Goodwill and Other Intangible Assets [Abstract]

Goodwill

The gross carrying amount of goodwill and other intangible assets and the related accumulated amortization for intangible assets subject to amortization and accumulated write-offs of goodwill as of September 30, 2015 and December 31, 2014 are as follows:

	As of
	September 30, 2015					December 31, 2014
	Gross Carrying		Accumulated Amortization/			Gross Carrying		Accumulated Amortization/
(in millions)	Amount		Write-offs			Amount		Write-offs
Amortizable intangible assets
Technology-related	$	8,874	$	(3,952	)	$	8,406	$	(3,697	)
Patents	519		(354		)	519		(342		)
Other intangible assets	1,512		(584		)	875		(533		)
	$	10,905	$	(4,890	)	$	9,800	$	(4,572	)
Unamortizable intangible assets
Goodwill	$	16,368	$	(9,900	)	$	15,798	$	(9,900	)
In-process research and development (IPR&D)	93		—			181		—
Technology-related	120		—			197		—
	$	16,581	$	(9,900	)	$	16,176	$	(9,900	)

Schedule of Goodwill [Table Text Block]

The following is a rollforward of accumulated goodwill write-offs by global reportable segment:

(in millions)	Cardiovascular			Rhythm Management			MedSurg			Total
Accumulated write-offs as of December 31, 2014	$	(1,479	)	$	(6,960	)	$	(1,461	)	$	(9,900	)
Goodwill written off	—			—			—			—
Accumulated write-offs as of September 30, 2015	$	(1,479	)	$	(6,960	)	$	(1,461	)	$	(9,900	)

The following represents our goodwill balance by global reportable segment:

(in millions)	Cardiovascular		Rhythm Management		MedSurg		Total
Balance as of December 31, 2014	$	3,426	$	290	$	2,182	$	5,898
Purchase price adjustments	—		2		—		2
Goodwill acquired	—		—		568		568
Balance as of September 30, 2015	$	3,426	$	292	$	2,750	$	6,468

Description of unobservable inputs used in Level 3 fair value measurements [Table Text Block]

The recurring Level 3 fair value measurements of our contingent consideration liability include the following significant unobservable inputs:

Contingent Consideration Liability	Fair Value as of September 30, 2015	Valuation Technique	Unobservable Input	Range
Revenue-based Payments	$84 million	Probability Weighted Discounted Cash Flow	Discount Rate	11.5% - 15%
			Projected Year of Payment	2015 - 2019
	$182 million	Monte Carlo	Revenue Volatility	11% - 20%
			Risk Free Rate	LIBOR Term Structure
			Projected Year of Payment	2015 - 2018

The nonrecurring Level 3 fair value measurements of our intangible asset impairment analysis included the following significant unobservable inputs:

Intangible Asset	Valuation Date	Fair Value	Valuation Technique	Unobservable Input	Rate
Core Technology	September 30, 2015	$8 million	Income Approach -Excess Earnings Method	Discount Rate	10%
In-Process R&D	June 30, 2015	$6 million	Income Approach - Excess Earnings Method	Discount Rate	16.5 - 20%
In-Process R&D	September 30, 2014	$16 million	Income Approach - Excess Earnings Method	Discount Rate	16.5 - 20%
In-Process R&D	June 30, 2014	$83 million	Income Approach - Excess Earnings Method	Discount Rate	16.5 - 20%
Core Technology	June 30, 2014	$8 million	Income Approach - Excess Earnings Method	Discount Rate	15%
In-Process R&D	March 31, 2014	$6 million	Income Approach - Excess Earnings Method	Discount Rate	20%
Core Technology	March 31, 2014	$64 million	Income Approach - Excess Earnings Method	Discount Rate	15%

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Changes in Other Comprehensive Income (Notes)

9 Months Ended

Sep. 30, 2015

Changes in Other Comprehensive Income [Abstract]

Comprehensive Income (Loss) Note [Text Block]

CHANGES IN OTHER COMPREHENSIVE INCOME

The following table provides the reclassifications out of other comprehensive income for the three and nine month periods endedSeptember 30, 2015 and September 30, 2014. Amounts in the chart below are presented net of tax.

Three Months Ended September 30, 2015
(in millions)	Foreign currency translation adjustments			Unrealized gains/losses on derivative financial instruments			Defined benefit pension items / Other			Total
Balance as of June 30, 2015	$	(68	)	$	204		$	(32	)	$	104
Other comprehensive income (loss) before reclassifications	(12		)	8			—			(4		)
Amounts reclassified from accumulated other comprehensive income	—			(35		)	16			(19		)
Net current-period other comprehensive income	(12		)	(27		)	16			(23		)
Balance as of September 30, 2015	$	(80	)	$	177		$	(16	)	$	81
Three Months Ended September 30, 2014
(in millions)	Foreign currency translation adjustments			Unrealized gains/losses on derivative financial instruments			Defined benefit pension items / Other			Total
Balance as of June 30, 2014	$	(24	)	$	86		$	(20	)	$	42
Other comprehensive income (loss) before reclassifications	(15		)	99			—			84
Amounts reclassified from accumulated other comprehensive income	—			(16		)	—			(16		)
Net current-period other comprehensive income	(15		)	83			—			68
Balance as of September 30, 2014	$	(39	)	$	169		$	(20	)	$	110

Nine Months Ended September 30, 2015
(in millions)	Foreign currency translation adjustments			Unrealized gains/losses on derivative financial instruments			Defined benefit pension items / Other			Total
Balance as of December 31, 2014	$	(38	)	$	219		$	(37	)	$	144
Other comprehensive income (loss) before reclassifications	(42		)	59			—			17
Amounts reclassified from accumulated other comprehensive income	—			(101		)	21			(80		)
Net current-period other comprehensive income	(42		)	(42		)	21			(63		)
Balance as of September 30, 2015	$	(80	)	$	177		$	(16	)	$	81
Nine Months Ended September 30, 2014
(in millions)	Foreign currency translation adjustments			Unrealized gains/losses on derivative financial instruments			Defined benefit pension items / Other			Total
Balance as of December 31, 2013	$	(16	)	$	141		$	(19	)	$	106
Other comprehensive income (loss) before reclassifications	(23		)	72			(1		)	48
Amounts reclassified from accumulated other comprehensive income	—			(44		)	—			(44		)
Net current-period other comprehensive income	(23		)	28			(1		)	4
Balance as of September 30, 2014	$	(39	)	$	169		$	(20	)	$	110

The income tax impact of the amounts in other comprehensive income for unrealized gains and losses on derivative financial instruments before reclassifications was an expense of $5 million in the third quarter of 2015, an expense of $57 million in the third quarter of 2014, an expense of $33 million in the first nine months of2015 and an expense of $42 million in the first nine months of2014. The gains and losses on derivative financial instruments reclassified were reduced by income tax impacts of $19 million in the third quarter of 2015, $9 million in the third quarter of 2014, $57 million in the first nine months of2015 and $25 million in the first nine months of2014. Refer to Note E – Fair Value Measurements in this Quarterly Report on Form 10-Q for further detail on the reclassifications related to derivatives.

The losses on defined benefit and pension related items reclassified from accumulated other comprehensive income were reduced by income tax impacts of $14 million for the third quarter of 2015 and $17 million for the nine months ended September 30, 2015.

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Income Taxes

9 Months Ended

Sep. 30, 2015

Income Tax Disclosure [Abstract]

INCOME TAXES

INCOME TAXES

Our effective tax rates from continuing operations for the three months ended September 30, 2015 and September 30, 2014, were 45.9% and (1,343.2)%, respectively. For the first nine months of2015 and 2014 our effective tax rates from continuing operations were 68.9% and (296.0)%, respectively. The change in our reported tax rate for the third quarter and first nine months of2015, as compared to the same periods in 2014, relates primarily to the impact of certain receipts and charges that are taxed at different rates than our effective tax rate, including intangible asset impairment charges, acquisition-related items, litigation- and restructuring-related items, pension termination charges, debt extinguishment charges, as well as the impact of certain discrete tax items.

As of September 30, 2015, we had $1.086 billion of gross unrecognized tax benefits, of which a net $925 million, if recognized, would affect our effective tax rate. As of December 31, 2014, we had $1.047 billion of gross unrecognized tax benefits, of which a net $903 million, if recognized, would affect our effective tax rate.

We have received Notices of Deficiency from the Internal Revenue Service (IRS) reflecting proposed audit adjustments for Guidant Corporation for its 2001 through 2006 tax years and Boston Scientific Corporation for its 2006 and 2007 tax years. The total incremental tax liability asserted by the IRS for the applicable periods is $1.162 billion plus interest. The primary issue in dispute for all years is the transfer pricing associated with the technology license agreements between domestic and foreign subsidiaries of Guidant. In addition, the IRS has proposed adjustments in connection with the financial terms of our Transaction Agreement with Abbott Laboratories pertaining to the sale of Guidant's vascular intervention business to Abbott in April 2006. In addition to the Notices of Deficiency, during 2014, we received a Revenue Agent Report from the IRS reflecting significant proposed audit adjustments to our 2008, 2009, and 2010 tax years based upon the same transfer pricing methodologies that the IRS applied to our 2001 through 2007 tax years.

We do not agree with the transfer pricing methodologies applied by the IRS or its resulting assessment. In addition, we believe that the IRS positions with regard to these matters are inconsistent with the applicable tax laws and the existing Treasury regulations. We believe we have meritorious defenses for our tax filings and we have filed petitions with the U.S. Tax Court contesting the Notices of Deficiency for the 2001 - 2007 tax years in challenge. We currently expect the trial in this matter to occur in the second half of 2016. Furthermore, we have submitted a letter to the IRS protesting the Revenue Agent’s Report for the 2008 - 2010 tax years and requesting an administrative appeal hearing. We do not believe that the IRS will hear our appeal until the Tax Court case is concluded.

No payments on the net assessments would be required until the dispute is definitively resolved, which, based on experiences of other companies, could take several years. We believe our income tax reserves associated with these matters are adequate as of September 30, 2015. However, final resolution is uncertain and could have a material impact on our financial condition, results of operations, or cash flows.

We recognize interest and penalties related to income taxes as a component of income tax expense. We had $491 million accrued for gross interest and penalties as of September 30, 2015 and $443 million as of December 31, 2014. We recognized net tax expense related to interest and penalties of $11 million during the third quarter of 2015, $9 million during the third quarter of 2014, $32 million during the first nine months of2015 and $28 million during the first nine months of2014.

It is reasonably possible that within the next 12 months we will resolve multiple issues including transfer pricing and transactional-related issues with foreign, federal and state taxing authorities, in which case we could record a reduction in our balance of unrecognized tax benefits of up to approximately $10 million.

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Restructuring Related Activities

9 Months Ended

Sep. 30, 2015

Restructuring and Related Activities [Abstract]

RESTRUCTURING-RELATED ACTIVITIES

RESTRUCTURING-RELATED ACTIVITIES

On an ongoing basis, we monitor the dynamics of the economy, the healthcare industry, and the markets in which we compete. We continue to assess opportunities for improved operational effectiveness and efficiency, and better alignment of expenses with revenues, while preserving our ability to make the investments in research and development projects, capital and our people that we believe are essential to our long-term success. As a result of these assessments, we have undertaken various restructuring initiatives in order to enhance our growth potential and position us for long-term success. These initiatives are described below.

2014 Restructuring Plan

On October 22, 2013, our Board of Directors approved, and we committed to, a restructuring initiative (the 2014 Restructuring plan). The 2014 Restructuring plan is intended to build on the progress we have made to address financial pressures in a changing global marketplace, further strengthen our operational effectiveness and efficiency and support new growth investments. Key activities under the plan include continued implementation of our ongoing Plant Network Optimization (PNO) strategy, continued focus on driving operational efficiencies and ongoing business and commercial model changes. The PNO strategy is intended to simplify our manufacturing plant structure by transferring certain production lines among facilities. Other activities involve rationalizing organizational reporting structures to streamline various functions, eliminate bureaucracy, increase productivity and better align resources to business strategies and marketplace dynamics. These activities were initiated in the fourth quarter of 2013 and are expected to be substantially completed by the end of 2015, with the exception of certain ongoing actions associated with our PNO strategy. These ongoing actions associated with our PNO strategy will be substantially completed by the end of 2016.

We estimate that the implementation of the 2014 Restructuring plan will result in total pre-tax charges of approximately $250 million to $300 million, and approximately $235 million to $285 million of these charges are estimated to result in cash outlays, of which we have made payments of $159 million through September 30, 2015. We have recorded related costs of $204 million since the inception of the plan, and recorded a portion of these expenses as restructuring charges and the remaining portion through other lines within our consolidated statements of operations.

The following table provides a summary of our estimates of costs associated with the 2014 Restructuring plan by major type of cost:

Type of cost	Total estimated amount expected to be incurred
Restructuring charges:
Termination benefits	$115 million to $135 million
Other (1)	$25 million to $35 million
Restructuring-related expenses:
Other (2)	$110 million to $130 million
	$250 million to $300 million

(1) Consists primarily of consulting fees and costs associated with contract cancellations.

(2) Comprised of other costs directly related to the 2014 Restructuring plan, including program management, accelerated depreciation, and costs to transfer product lines among facilities.

2011 Restructuring Plan

On July 26, 2011, our Board of Directors approved, and we committed to, a restructuring initiative (the 2011 Restructuring plan) designed to strengthen operational effectiveness and efficiencies, increase competitiveness and support new investments. Key activities under the 2011 Restructuring plan included standardizing and automating certain processes and activities; relocating select administrative and functional activities; rationalizing organizational reporting structures; leveraging preferred vendors; and other efforts to eliminate inefficiency. Among these efforts, we expanded our ability to deliver best-in-class global shared services for certain functions and businesses at several locations in emerging markets. On January 25, 2013, our Board of Directors approved, and we committed to, an expansion of the 2011 Restructuring plan (the Expansion). The Expansion was intended to further strengthen our operational effectiveness and efficiencies and support new investments. Activities under the 2011 Restructuring plan were initiated in the third quarter of 2011 and all activities, including those related to the Expansion, were substantially completed by the end of 2013.

The 2011 Restructuring plan, including the Expansion, resulted in net pre-tax charges of $286 million, and $287 million of cash outlays. In addition, we received $53 million of cash proceeds on facility and fixed asset sales. We recorded a portion of these expenses as restructuring charges and the remaining portion through other lines within our consolidated statements of operations.

The following provides a summary of our total costs associated with the 2011 Restructuring plan, including the Expansion, by major type of cost:

Type of cost	Total amounts incurred
Restructuring charges:
Termination benefits	$135 million
Other (1)	$112 million
Restructuring-related expenses:
Other (2)	$39 million
	$286 million

(1) Includes primarily consulting fees, gains and losses on disposals of fixed assets and costs associated with contract cancellations.

(2) Comprised of other costs directly related to the 2011 Restructuring plan, including the Expansion, such as program management, accelerated depreciation, retention and infrastructure-related costs.

We recorded net restructuring charges pursuant to our restructuring plans of $7 million in the third quarter of 2015, $2 million in the third quarter of 2014, $16 million in the first nine months of2015 and $37 million in the first nine months of2014. In addition, we recorded expenses within other lines of our accompanying unaudited condensed consolidated statements of operations related to our restructuring initiatives of $14 million in the third quarter of 2015, $15 million in the third quarter of 2014, $42 million in the first nine months of2015 and $33 million in the first nine months of2014.

The following presents these costs (credits) by major type and line item within our accompanying unaudited condensed consolidated statements of operations, as well as by program:

Three Months Ended September 30, 2015
(in millions)	Termination Benefits		Accelerated Depreciation		Transfer Costs		Other		Total
Restructuring charges	$	5	$	—	$	—	$	2	$	7
Restructuring-related expenses:
Cost of products sold	—		—		5		—		5
Selling, general and administrative expenses	—		1		—		8		9
	—		1		5		8		14
	$	5	$	1	$	5	$	10	$	21

All charges incurred in the third quarter of 2015 are related to the 2014 Restructuring Plan.

Three Months Ended September 30, 2014
(in millions)	Termination Benefits			Accelerated Depreciation		Transfer Costs		Other		Total
Restructuring charges	$	—		$	—	$	—	$	2	$	2
Restructuring-related expenses:
Cost of products sold	—			—		9		—		9
Selling, general and administrative expenses	—			1		—		5		6
	—			1		9		5		15
	$	—		$	1	$	9	$	7	$	17
(in millions)	Termination Benefits			Accelerated Depreciation		Transfer Costs		Other		Total
2014 Restructuring plan	$	(1	)	$	1	$	9	$	7	$	16
2011 Restructuring plan (including the Expansion)	1			—		—		—		1
	$	—		$	1	$	9	$	7	$	17

Nine Months Ended September 30, 2015
(in millions)	Termination Benefits			Accelerated Depreciation		Transfer Costs		Other		Total
Restructuring charges	$	13		$	—	$	—	$	3	$	16
Restructuring-related expenses:
Cost of products sold	—			—		20		—		20
Selling, general and administrative expenses	—			3		—		19		22
	—			3		20		19		42
	$	13		$	3	$	20	$	22	$	58
(in millions)	Termination Benefits			Accelerated Depreciation		Transfer Costs		Other		Total
2014 Restructuring plan	$	17		$	3	$	20	$	22	$	62
2011 Restructuring plan (including the Expansion)	(4		)	—		—		—		(4		)
	$	13		$	3	$	20	$	22	$	58
Nine Months Ended September 30, 2014
(in millions)	Termination Benefits			Accelerated Depreciation		Transfer Costs		Other		Total
Restructuring charges	$	19		$	—	$	—	$	18	$	37
Restructuring-related expenses:
Cost of products sold	—			—		15		—		15
Selling, general and administrative expenses	—			3		—		15		18
	—			3		15		15		33
	$	19		$	3	$	15	$	33	$	70
(in millions)	Termination Benefits			Accelerated Depreciation		Transfer Costs		Other		Total
2014 Restructuring plan	$	18		$	3	$	15	$	30	$	66
2011 Restructuring plan (including the Expansion)	1			—		—		3		4
	$	19		$	3	$	15	$	33	$	70

Termination benefits represent amounts incurred pursuant to our ongoing benefit arrangements and amounts for “one-time” involuntary termination benefits, and have been recorded in accordance with FASB ASC Topic 712, Compensation – Non-retirement Postemployment Benefits and FASB ASC Topic 420, Exit or Disposal Cost Obligations (Topic 420). We expect to record additional termination benefits related to our restructuring initiatives throughout 2015 when we identify with more specificity the job classifications, functions and locations of the remaining head count to be eliminated. Other restructuring costs, which represent primarily consulting fees and costs related to contract cancellations, are being recorded as incurred in accordance with Topic 420. Accelerated depreciation is being recorded over the adjusted remaining useful life of the related assets, and production line transfer costs are being recorded as incurred.

As of September 30, 2015, we incurred cumulative restructuring charges related to our 2014 Restructuring plan and 2011 Restructuring plan (including the Expansion) of $361 million and restructuring-related costs of $129 million since we committed to each plan. The following presents these costs by major type and by plan:

(in millions)	2014 Restructuring plan		2011 Restructuring plan (including the Expansion)			Total
Termination benefits	$	86	$	135		$	221
Net loss (gain) on fixed asset disposals	—		(1		)	(1		)
Other	28		113			141
Total restructuring charges	114		247			361
Accelerated depreciation	8		5			13
Transfer costs	45		—			45
Other	37		34			71
Restructuring-related expenses	90		39			129
	$	204	$	286		$	490

We made cash payments of $20 million in the third quarter of 2015 and $66 million in the first nine months of2015 associated with our restructuring initiatives and as of September 30, 2015, we had made total cash payments of $446 million related to our 2014 Restructuring plan and 2011 Restructuring plan (including the Expansion) since committing to each plan. These payments were made using cash generated from operations, and are comprised of the following:

(in millions)	2014 Restructuring plan		2011 Restructuring plan (including the Expansion)		Total
Three Months Ended September 30, 2015
Termination benefits	$	6	$	—	$	6
Transfer costs	5		—		5
Other	9		—		9
	$	20	$	—	$	20
Nine Months Ended September 30, 2015
Termination benefits	$	24	$	—	$	24
Transfer costs	20		—		20
Other	22		—		22
	$	66	$	—	$	66
Program to Date
Termination benefits	$	55	$	133	$	188
Transfer costs	45		—		45
Other	59		154		213
	$	159	$	287	$	446

Our restructuring liability is primarily comprised of accruals for termination benefits. The following is a rollforward of the termination benefit liability associated with our 2014 Restructuring plan and 2011 Restructuring plan (including the Expansion), which is reported as a component of accrued expenses included in our accompanying unaudited condensed balance sheets:

(in millions)	2014 Restructuring plan			2011 Restructuring plan (including the Expansion)			Total
Accrued as of December 31, 2014	$	39		$	4		$	43
Charges (credits)	17			(4		)	13
Cash payments	(24		)	—			(24		)
Accrued as of September 30, 2015	$	32		$	—		$	32

In addition to our accrual for termination benefits, we had a $5 million liability as of September 30, 2015 and a $6 million liability as of December 31, 2014 for other restructuring-related items.

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Supplemental Balance Sheet Information

9 Months Ended

Sep. 30, 2015

Supplemental Balance Sheet Information [Abstract]

Supplemental Balance Sheet Disclosures

SUPPLEMENTAL BALANCE SHEET INFORMATION

Components of selected captions in our accompanying unaudited condensed consolidated balance sheets are as follows:

Trade accounts receivable, net

	As of
(in millions)	September 30, 2015			December 31, 2014
Accounts receivable	$	1,390		$	1,288
Less: allowance for doubtful accounts	(77		)	(76		)
Less: allowance for sales returns	(39		)	(29		)
	$	1,274		$	1,183

The following is a rollforward of our allowance for doubtful accounts for the third quarter and first nine months of2015 and 2014:

	Three Months Ended September 30,						Nine Months Ended September 30,
(in millions)	2015			2014			2015			2014
Beginning balance	$	77		$	80		$	76		$	81
Charges to expenses	3			—			11			4
Utilization of allowances	(3		)	(5		)	(10		)	(10		)
Ending balance	$	77		$	75		$	77		$	75

Inventories

	As of
(in millions)	September 30, 2015		December 31, 2014
Finished goods	$	751	$	649
Work-in-process	110		97
Raw materials	225		200
	$	1,086	$	946

Property, plant and equipment, net

	As of
(in millions)	September 30, 2015		December 31, 2014
Land	$	87	$	80
Buildings and improvements	965		944
Equipment, furniture and fixtures	2,787		2,633
Capital in progress	195		189
	4,034		3,846
Less: accumulated depreciation	2,555		2,339
	$	1,479	$	1,507

Depreciation expense was $68 million for the third quarter of 2015, $71 million for the third quarter of 2014, $198 million for the first nine months of2015 and $205 million for the first nine months of2014.

Accrued expenses

	As of
(in millions)	September 30, 2015		December 31, 2014
Legal reserves	$	383	$	694
Payroll and related liabilities	469		512
Accrued contingent consideration	164		158
Other	589		586
	$	1,605	$	1,950

Other long-term liabilities

	As of
(in millions)	September 30, 2015		December 31, 2014
Accrued income taxes	$	1,287	$	1,231
Legal reserves	1,176		883
Accrued contingent consideration	102		116
Other long-term liabilities	436		436
	$	3,001	$	2,666

Accrued warranties

We offer warranties on certain of our product offerings. The majority of our warranty liability relates to implantable devices offered by our Cardiac Rhythm Management (CRM) business, which include defibrillator and pacemaker systems. Our CRM products come with a standard limited warranty covering the replacement of these devices. We offer a full warranty for a portion of the period post-implant, and a partial warranty over the substantial remainder of the useful life of the product. We estimate the costs that we may incur under our warranty programs based on the number of units sold, historical and anticipated rates of warranty claims and cost per claim, and record a liability equal to these estimated costs as cost of products sold at the time the product sale occurs. We reassess the adequacy of our recorded warranty liabilities on a quarterly basis and adjust these amounts as necessary. The current portion of our warranty accrual is included in other accrued expenses in the table above and the non-current portion of our warranty accrual is included in other long-term liabilities in the table above. Changes in our product warranty accrual during the first nine months of2015 and 2014 consisted of the following (in millions):

	Nine Months Ended September 30,
	2015			2014
Beginning Balance	$	25		$	28
Provision	11			6
Settlements/reversals	(11		)	(9		)
Ending Balance	$	25		$	25

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Commitments and Contingencies

9 Months Ended

Sep. 30, 2015

Commitments and Contingencies Disclosure [Abstract]

COMMITMENTS AND CONTINGENCIES

COMMITMENTS AND CONTINGENCIES

The medical device market in which we primarily participate is largely technology driven. As a result, intellectual property rights, particularly patents and trade secrets, play a significant role in product development and differentiation. Over the years, there has been litigation initiated against us by others, including our competitors, claiming that our current or former product offerings infringe patents owned or licensed by them. Intellectual property litigation is inherently complex and unpredictable. In addition, competing parties frequently file multiple suits to leverage patent portfolios across product lines, technologies and geographies and to balance risk and exposure between the parties. In some cases, several competitors are parties in the same proceeding, or in a series of related proceedings, or litigate multiple features of a single class of devices. These forces frequently drive settlement not only for individual cases, but also for a series of pending and potentially related and unrelated cases. Although monetary and injunctive relief is typically sought, remedies and restitution are generally not determined until the conclusion of the trial court proceedings and can be modified on appeal. Accordingly, the outcomes of individual cases are difficult to time, predict or quantify and are often dependent upon the outcomes of other cases in other geographies.

During recent years, we successfully negotiated closure of several long-standing legal matters and have received favorable legal rulings in several other matters; however, there continues to be outstanding intellectual property litigation. Adverse outcomes in one or more of these matters could have a material adverse effect on our ability to sell certain products and on our operating margins, financial position, results of operations and/or liquidity.

In the normal course of business, product liability, securities and commercial claims are asserted against us. Similar claims may be asserted against us in the future related to events not known to management at the present time. We maintain an insurance policy providing limited coverage against securities claims, and we are substantially self-insured with respect to product liability claims and fully self-insured with respect to intellectual property infringement claims. The absence of significant third-party insurance coverage increases our potential exposure to unanticipated claims or adverse decisions. Product liability claims, securities and commercial litigation, and other legal proceedings in the future, regardless of their outcome, could have a material adverse effect on our financial position, results of operations and/or liquidity.

In addition, like other companies in the medical device industry, we are subject to extensive regulation by national, state and local government agencies in the United States and other countries in which we operate. From time to time we are the subject of qui tam actions and governmental investigations often involving regulatory, marketing and other business practices. These qui tam actions and governmental investigations could result in the commencement of civil and criminal proceedings, substantial fines, penalties and administrative remedies and have a material adverse effect on our financial position, results of operations and/or liquidity.

In accordance with FASB ASC Topic 450, Contingencies, we accrue anticipated costs of settlement, damages, losses for product liability claims and, under certain conditions, costs of defense, based on historical experience or to the extent specific losses are probable and estimable. Otherwise, we expense these costs as incurred. If the estimate of a probable loss is a range and no amount within the range is more likely, we accrue the minimum amount of the range.

Our accrual for legal matters that are probable and estimable was $1.559 billion as of September 30, 2015 and $1.577 billion as of December 31, 2014, and includes estimated costs of settlement, damages and defense. We recorded $649 million of litigation-related charges during the first nine months of2015 and $399 million of litigation-related charges during the first nine months of2014. We continue to assess certain litigation and claims to determine the amounts, if any, that management believes will be paid as a result of such claims and litigation and, therefore, additional losses may be accrued and paid in the future, which could materially adversely impact our operating results, cash flows and/or our ability to comply with our debt covenants.

In management's opinion, we are not currently involved in any legal proceedings other than those disclosed in our 2014 Annual Report on Form 10-K and our Quarterly Reports on Form 10-Q for the quarters ended March 31, 2015 and June 30, 2015 and those specifically identified below, which, individually or in the aggregate, could have a material adverse effect on our financial condition, operations and/or cash flows. Unless included in our legal accrual or otherwise indicated below, a range of loss associated with any individual material legal proceeding cannot be estimated.

Patent Litigation

On September 22, 2009, Cordis Corporation, Cordis LLC and Wyeth Corporation filed a complaint for patent infringement against Abbott Laboratories, Abbott Cardiovascular Systems, Inc., Boston Scientific Scimed, Inc. and us alleging that the PROMUS® coronary stent system, supplied to us by Abbott, infringes a patent (the Llanos patent) owned by Cordis and Wyeth. The suit was filed in the U.S. District Court for the District of New Jersey seeking monetary and injunctive relief. In August 2010, Cordis filed an amended complaint to add an additional patent and in September 2010, we filed counterclaims of invalidity and non-infringement. On October 26, 2011, the District Court granted Cordis' motion to add the Promus Element stent system to the case. On February 6, 2012, the District Court granted our motion to stay the action until the conclusion of the reexaminations against the Llanos patents that are pending in the U.S. Patent and Trademark Office.On February 27, 2015, the U.S. Patent and Trademark Office issued a decision in which certain claims of the Llanos patent were deemed unpatentable. On April 24, 2015, Cordis filed an appeal before the Federal Circuit.

On May 19, 2005, G. David Jang, M.D. filed suit against us alleging breach of contract relating to certain patent rights covering stent technology. The suit was filed in the U.S. District Court for the Central District of California seeking monetary damages and rescission of contract. After a Markman ruling relating to the Jang patent rights, Dr. Jang stipulated to the dismissal of certain claims alleged in the complaint with a right to appeal and the parties subsequently agreed to settle the other claims. In May 2007, Dr. Jang filed an appeal with respect to the remaining patent claims and in July 2008, the Court of Appeals vacated the District Court's consent judgment and remanded the case back to the District Court for further clarification. In August 2011, the District Court entered a stipulated judgment that we did not infringe the Jang patent. Dr. Jang filed an appeal on September 21, 2011 and on August 22, 2012, the Court of Appeals vacated the District Court's judgment and remanded the case to the District Court for further proceedings. On April 18, 2014, the case was stayed pending consideration of an interlocutory appeal. On September 16, 2014, the Court of Appeals for the Federal Circuit denied our request for an interlocutory appeal. On July 8, 2015, a jury found that our Express Stent family did not literally infringe a Jang patent, but that the stents infringed under the doctrine of equivalents. The court reserved judgment until the conclusion of further proceedings related to the doctrine of equivalents finding. On September 29, 2015, the court ruled that our Express Stent family did not infringe under the doctrine of equivalents and, on October 30, 2015, the court entered judgment in our favor.

On February 18, 2014, Atlas IP, LLC filed a complaint in the United States District Court for the Southern District of Florida alleging that the sale of our LATITUDE® Patient Management System and implantable devices that communicate with the LATITUDE® device infringe a patent owned by Atlas. On July 9, 2014, the District Court granted our motion to transfer venue to the United States District Court for the District of Minnesota. On January 12, 2015, Atlas dismissed its complaint. On September 22, 2015, Atlas IP LLC filed a complaint in Federal Court in Ottawa, Ontario, Canada alleging that the sale of our LATITUDE® Patient Management System and implantable devices that communicate with the LATITUDE® device infringe certain claims of a Canadian patent owned by Atlas.

On September 22, 2014, The Board of Trustees for the University of Alabama filed a complaint in the United States District Court for the Northern District of Alabama alleging that the sale of our cardiac resynchronization therapy devices infringe a patent owned by the University of Alabama. On August 21, 2015, the court ordered a stay pending our request for inter partes review of all claims related to the patent before the Patent Trial and Appeal Board of the U.S. Patent and Trademark Office.

On October 30, 2015, a subsidiary of Boston Scientific filed suit against Edwards Lifesciences Corporation and Edwards Lifesciences Services GmbH in Düsseldorf District Court in Germany for patent infringement. We allege that Edwards’ SAPIEN 3 heart valve infringes our patent related to adaptive sealing technology.

Product Liability Litigation

As of November 2, 2015, there were over 30,000 product liability cases or claims related to transvaginal surgical mesh products designed to treat stress urinary incontinence and pelvic organ prolapse pending against us. The cases are pending in various federal and state courts in the United States and include eight putative class actions. There were also fewer than 20 cases in Canada, inclusive of four putative class actions, and fewer than 15 claims in the United Kingdom. Generally, the plaintiffs allege personal injury associated with use of our transvaginal surgical mesh products. The plaintiffs assert design and manufacturing claims, failure to warn, breach of warranty, fraud, violations of state consumer protection laws and loss of consortium claims. Over 3,100 of the cases have been specially assigned to one judge in state court in Massachusetts. On February 7, 2012, the Judicial Panel on Multi-District Litigation (MDL) established MDL-2326 in the U.S. District Court for the Southern District of West Virginia and transferred the federal court transvaginal surgical mesh cases to MDL-2326 for coordinated pretrial proceedings. During the fourth quarter of 2013, we received written discovery requests from certain state attorneys general offices regarding our transvaginal surgical mesh products. We have responded to those requests. During April 2015, we entered into an initial master settlement agreement with certain plaintiffs’ counsel to settle 2,970 pending cases and claims, including the case in the District Court of Dallas County (TX) for which there is a judgment of approximately $35 million that is currently subject to appeal, for approximately $119 million. Subsequently, we entered into several additional master settlement agreements with certain plaintiffs’ counsel. As of November 2, 2015, we have entered into master settlement agreements to resolve an aggregate of over 6,000 cases and claims. Each master settlement agreement was entered into solely by way of compromise and without any admission or concession by us of any liability or wrongdoing and provides that the settlement and the distribution of settlement funds to participating claimants are conditioned upon, among other things, achieving minimum required claimant participation thresholds. If the participation thresholds under a master settlement agreement are not satisfied, we may terminate that agreement. In addition, we continue to engage in discussions with various plaintiffs’ counsel regarding potential resolution of pending cases and claims

We have established a product liability accrual for known and estimated future cases and claims asserted against us as well as with respect to the actions that have resulted in verdicts against us and the costs of defense thereof associated with our transvaginal surgical mesh products. While we believe that our accrual associated with this matter is adequate, changes to this accrual may be required in the future as additional information becomes available. While we continue to engage in discussions with plaintiffs’ counsel regarding potential resolution of pending cases and claims and intend to vigorously contest the cases and claims asserted against us; that do not settle, the final resolution of the cases and claims is uncertain and could have a material impact on our results of operations, financial condition and/or liquidity. Initial trials involving our transvaginal surgical mesh products have resulted in both favorable and unfavorable judgments for us. We do not believe that the judgment in any one trial is representative of potential outcomes of all cases or claims related to our transvaginal surgical mesh products.

Governmental Investigations and Qui Tam Matters

On July 11, 2014, we were served with a subpoena from the U.S. Attorney for the District of New Jersey. The subpoena seeks information relating to BridgePoint Medical, Inc., which we acquired in October 2012, including information relating to its sale of CrossBoss^® and Stingray^® products, educational and training activities that relate to those sales and our acquisition of BridgePoint Medical. We are cooperating with this request. A qui tam complaint, originally filed under seal on April 22, 2014, was unsealed on August 20, 2015, along with a notice from the U.S. Attorney for the District of New Jersey that was declining to intervene in the lawsuit. The relator is a former Boston Scientific employee named Robin Levy. The complaint claims that we marketed the Chronic Total Occlusion (“CTO”) procedure as one requiring in-patient treatment and required purchases of coronary stents in order to receive training on the CTO procedure. The claims are both allegedly in violation of the federal, and various state, false claims acts. The complaint has not yet been served on us.

Refer to Note I - Income Taxes for information regarding our tax litigation.

Matters Concluded Since December 31, 2014

On September 25, 2006, Johnson & Johnson filed a lawsuit against us, Guidant and Abbott Laboratories in the U.S. District Court for the Southern District of New York. The complaint alleges that Guidant breached certain provisions of the amended merger agreement between Johnson & Johnson and Guidant (Merger Agreement) as well as the implied duty of good faith and fair dealing. The complaint further alleges that Abbott and we tortiously interfered with the Merger Agreement by inducing Guidant's breach. The complaint seeks certain factual findings, damages in an amount no less than $5.500 billion and attorneys' fees, costs, and interest. In August 2007, the judge dismissed the tortious interference claims against us and Abbott and the implied duty of good faith and fair dealing claim against Guidant. On June 20, 2011, Guidant filed a motion for summary judgment, and the hearing on this motion was held on July 25, 2012. On July 7, 2014, the judge denied Guidant’s motion. The bench trial was held in November and December. On February 13, 2015, the parties reached a settlement agreement pursuant to which Guidant made aggregate payments to Johnson & Johnson totaling $600 million, we agreed that neither we nor our affiliates will commence, or assist any third party in commencing, proceedings of any kind, against Johnson & Johnson or its affiliates for patent infringement or seeking any remedy for patent infringement based on Johnson & Johnson or its affiliates making, having made, using, selling, offering for sale or importing the S.M.A.R.T^®, S.M.A.R.T^® Control^®, and S.M.A.R.T^® Flex stent products and Johnson & Johnson dismissed its actions against Guidant with prejudice.

On October 5, 2007, Dr. Tassilo Bonzel filed a complaint against Pfizer, Inc. and our Schneider subsidiaries and us in the District Court in Kassel, Germany alleging that a 1995 license agreement related to a catheter patent is invalid under German law and seeking monetary damages. In June 2009, the District Court dismissed all but one of Dr. Bonzel's claims and in October 2009, he added new claims. We opposed the addition of the new claims. The District Court ordered Dr. Bonzel to select the claims he would pursue and in January 2011, he made that selection. A hearing was held on March 28, 2014 and a decision was made to take evidence at a hearing to be set at a later date. On January 23, 2015, the parties reached a confidential settlement agreement. On April 15, 2015, all remaining Boston Scientific affiliates were dismissed from the case.

On June 27, 2008, the Republic of Iraq filed a complaint against our wholly-owned subsidiary, BSSA France, and 92 other defendants in the U.S. District Court of the Southern District of New York. The complaint alleges that the defendants acted improperly in connection with the sale of products under the United Nations Oil for Food Program. The complaint also alleges Racketeer Influenced and Corrupt Organizations Act (RICO) violations, conspiracy to commit fraud and the making of false statements and improper payments, and it seeks monetary and punitive damages. On February 6, 2013, the District Court dismissed the complaint with prejudice on standing and jurisdictional grounds. On September 18, 2014, the U.S. Court of Appeals for the Second Circuit affirmed the District Court’s decision to dismiss the complaint with prejudice. On October 2, 2014, the plaintiff filed a petition for rehearing en banc. On December 2, 2014, the Second Circuit denied the petition for rehearing en banc. On March 2, 2015, the plaintiff filed a Petition for Writ of Certiorari with the United States Supreme Court requesting judicial review of the Second Circuit’s decision. On June 15, 2015, the United States Supreme Court denied the plaintiff’s Petition for Writ of Certiorari.

On May 17, 2010, Dr. Luigi Tellini filed suit against us and certain of our subsidiaries, Guidant Italia S.r.l. and Boston Scientific S.p.A., in the Civil Tribunal in Milan, Italy alleging certain of our Cardiac Rhythm Management products infringe an Italian patent (the Tellini patent) owned by Dr. Tellini and seeking monetary damages. In January 2011, Dr. Tellini refiled amended claims after his initial claims were dismissed without prejudice to refile. On February 12, 2015, the Tribunal found the Tellini patent invalid and dismissed the case.

On October 14, 2014, MK Optics, LLC filed a complaint in the United States District Court for the District of Delaware alleging that the sale of our Spyglass Direct Visualization System infringes a patent owned by MK Optics. The parties entered into a confidential settlement agreement and the case was dismissed on April 6, 2015.

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Goodwill and Other Intangible Assets (Details) - USD ($) $ in Millions	3 Months Ended					6 Months Ended	9 Months Ended
	Sep. 30, 2015	Jun. 30, 2015	Sep. 30, 2014	Jun. 30, 2014	Mar. 31, 2014	Jun. 30, 2015	Sep. 30, 2015	Sep. 30, 2014	Dec. 31, 2014
Goodwill [Line Items]
Intangible asset impairment charges	$ 10	$ 9	$ 12				$ 19	$ 177
Research and Development in Process			16		$ 6
Asset Impairment Charges				$ 110	55
Finite-Lived Intangible Assets, Gross	10,905						10,905		$ 9,800
Finite-Lived Intangible Assets, Accumulated Amortization	(4,890)						(4,890)		(4,572)
Indefinite-lived intangible assets, including goodwill	16,581						16,581		16,176
Indefinite-lived intangible assets, accumulated write-offs	(9,900)						(9,900)		(9,900)
Goodwill	6,468						6,468		5,898
Goodwill, Purchase Accounting Adjustments							2
Goodwill, Acquired During Period							568
Goodwill, Impaired, Accumulated Impairment Loss	(9,900)						(9,900)		(9,900)
Goodwill (Textuals) [Abstract]
Goodwill impairment charge							0
Core technology	8			8	$ 64
Electrophysiology [Member]
Goodwill [Line Items]
Hypothetical change in WACC						0.50%
Goodwill (Textuals) [Abstract]
Hypothetical change in revenue growth rates						1.50%
Global CRM Reporting Unit [Member]
Goodwill [Line Items]
Reporting Unit, Percentage of Fair Value in Excess of Carrying Amount		26.00%				26.00%
Cardiovascular [Member]
Goodwill [Line Items]
Goodwill	3,426						3,426		3,426
Goodwill, Purchase Accounting Adjustments							0
Goodwill, Acquired During Period							0
Goodwill, Impaired, Accumulated Impairment Loss	(1,479)						(1,479)		(1,479)
Goodwill (Textuals) [Abstract]
Goodwill impairment charge							0
Rhythm Management [Member]
Goodwill [Line Items]
Goodwill	292						292		290
Goodwill, Purchase Accounting Adjustments							2
Goodwill, Acquired During Period							0
Goodwill, Impaired, Accumulated Impairment Loss	(6,960)						(6,960)		(6,960)
Goodwill (Textuals) [Abstract]
Goodwill impairment charge							0
MedSurg [Member]
Goodwill [Line Items]
Goodwill	2,750						2,750		2,182
Goodwill, Purchase Accounting Adjustments							0
Goodwill, Acquired During Period							568
Goodwill, Impaired, Accumulated Impairment Loss	(1,461)						(1,461)		(1,461)
Goodwill (Textuals) [Abstract]
Goodwill impairment charge							0
Global Electrophysiology (EP) Reporting Unit [Member]
Goodwill [Line Items]
Reporting Unit, Percentage of Fair Value in Excess of Carrying Amount		28.00%				28.00%
Allocated Goodwill		$ 292
Unclassified Indefinite-lived Intangible Assets [Member]
Goodwill [Line Items]
Goodwill, Gross	16,368						16,368		15,798
Goodwill, Impaired, Accumulated Impairment Loss	(9,900)						(9,900)		(9,900)
Technology-related [Member]
Goodwill [Line Items]
Indefinite-Lived Intangible Assets (Excluding Goodwill)	120						120		197
In-process research and development [Member]
Goodwill [Line Items]
Indefinite-Lived Intangible Assets (Excluding Goodwill)	93						93		181
Core technology [Member]
Goodwill [Line Items]
Intangible asset impairment charges			8
In Process Research and Development [Member]
Goodwill [Line Items]
Intangible asset impairment charges			$ 4
Goodwill (Textuals) [Abstract]
Intangible assets reclassified from unamortizable to amortizable	1						77
Technology-related [Member]
Goodwill [Line Items]
Finite-Lived Intangible Assets, Gross	8,874						8,874		8,406
Finite-Lived Intangible Assets, Accumulated Amortization	(3,952)						(3,952)		(3,697)
Goodwill (Textuals) [Abstract]
Intangible assets reclassified from unamortizable to amortizable	77
Patents [Member]
Goodwill [Line Items]
Finite-Lived Intangible Assets, Gross	519						519		519
Finite-Lived Intangible Assets, Accumulated Amortization	(354)						(354)		(342)
Other Intangible Assets [Member]
Goodwill [Line Items]
Finite-Lived Intangible Assets, Gross	1,512						1,512		875
Finite-Lived Intangible Assets, Accumulated Amortization	$ (584)						$ (584)		$ (533)
Vessix Charges [Member]
Goodwill [Line Items]
Asset Impairment Charges				67
Atritech Charges [Member]
Goodwill [Line Items]
Asset Impairment Charges				35
Other In-process Research and Development Project Charges [Member]
Goodwill [Line Items]
Asset Impairment Charges				$ 8
Minimum [Member] | In Process Research and Development [Member]
Goodwill (Textuals) [Abstract]
Fair Value Inputs, Discount Rate		16.50%	16.50%	16.50%
Maximum [Member] | In Process Research and Development [Member]
Goodwill (Textuals) [Abstract]
Fair Value Inputs, Discount Rate		20.00%	20.00%	20.00%
In Process Research and Development 2 [Member]
Goodwill [Line Items]
Research and Development in Process		$ 6		$ 83
In Process Research and Development [Member]
Goodwill (Textuals) [Abstract]
Fair Value Inputs, Discount Rate					20.00%
Core technology [Member]
Goodwill (Textuals) [Abstract]
Fair Value Inputs, Discount Rate	10.00%			15.00%	15.00%

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New Accounting Pronouncements (Policies)

9 Months Ended

Sep. 30, 2015

Accounting Policies [Abstract]

Subsequent Events, Policy [Policy Text Block]

Subsequent Events

We evaluate events occurring after the date of our most recent accompanying unaudited condensed consolidated balance sheets for potential recognition or disclosure in our financial statements. We did not identify any material subsequent events requiring adjustment to our accompanying unaudited condensed consolidated financial statements (recognized subsequent events) for the three and nine month periods endedSeptember 30, 2015. Those items requiring disclosure (unrecognized subsequent events) in the financial statements have been disclosed accordingly. Refer to Note J - Commitments and Contingencies for more information.

ASC Topic 820, Fair Value Measurements and Disclosures

Generally, we use inputs that include quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; other observable inputs for the asset or liability; and inputs derived principally from, or corroborated by, observable market data by correlation or other means.

ASC Topic 815, Derivatives and Hedging

Our derivative instruments do not subject our earnings or cash flows to material risk, as gains and losses on these derivatives generally offset losses and gains on the item being hedged. We do not enter into derivative transactions for speculative purposes, and we do not have any non-derivative instruments that are designated as hedging instruments pursuant to FASB ASC Topic 815, Derivatives and Hedging (Topic 815).

ASC Topic 712, Compensation - Non-retirement Postemployment Benefits and ASC Topic 420, Exit or Disposal Cost Obligations

Termination benefits represent amounts incurred pursuant to our ongoing benefit arrangements and amounts for “one-time” involuntary termination benefits, and have been recorded in accordance with FASB ASC Topic 712, Compensation – Non-retirement Postemployment Benefits and FASB ASC Topic 420, Exit or Disposal Cost Obligations (Topic 420). We expect to record additional termination benefits related to our restructuring initiatives throughout 2015 when we identify with more specificity the job classifications, functions and locations of the remaining head count to be eliminated. Other restructuring costs, which represent primarily consulting fees and costs related to contract cancellations, are being recorded as incurred in accordance with Topic 420. Accelerated depreciation is being recorded over the adjusted remaining useful life of the related assets, and production line transfer costs are being recorded as incurred.

Legal Costs, Policy [Policy Text Block]

In accordance with FASB ASC Topic 450, Contingencies, we accrue anticipated costs of settlement, damages, losses for product liability claims and, under certain conditions, costs of defense, based on historical experience or to the extent specific losses are probable and estimable. Otherwise, we expense these costs as incurred. If the estimate of a probable loss is a range and no amount within the range is more likely, we accrue the minimum amount of the range.

ASC Update No. 2014-08, Presentation of Financial Statements (Topic 205) and Property Plant and Equipment (Topic 360) [Policy Text Block]

ASC Update No. 2014-08

In April 2014, the FASB issued ASC Update No. 2014-08, Presentation of Financial Statements (Topic 205) and Property, Plant, and Equipment (Topic 360): Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity. Update No. 2014-08 changed the criteria for reporting discontinued operations and enhanced convergence of the FASB's and the International Accounting Standard Board's (IASB) reporting requirements for discontinued operations. We were required to apply this amendment, prospectively to: (1) all disposals (or classifications as held for sale) of components of an entity that occurred within annual periods beginning on or after December 15, 2014 and interim periods within those years and (2) all businesses that, on acquisition, are classified as held for sale that occurred within annual periods beginning on or after December 15, 2014 and interim periods within those years. We adopted Update No. 2014-08 beginning in our first quarter ended March 31, 2015. The adoption of Update No. 2014-08 did not impact our results of operations or financial position.

ASC Update No. 2014-09, Revenue from Contracts with Customers (Topic 606) [Policy Text Block]

ASC Update No. 2014-09

In May 2014, the FASB issued ASC Update No. 2014-09, Revenue from Contracts with Customers (Topic 606). Update No. 2014-09 provides enhancements to the quality and consistency of how revenue is reported while also improving comparability in the financial statements of companies using International Financial Reporting Standards and U.S. GAAP. The core principle requires entities to recognize revenue in a manner that depicts the transfer of goods or services to customers in amounts that reflect the consideration an entity expects to be entitled to in exchange for those goods or services. In July 2015, the FASB voted to approve a one year deferral, making the standard effective for public entities for annual and interim periods beginning after December 15, 2017. As such, the standard will be effective for us on January 1, 2018. Under the deferral, early application is still permitted but not before the original public organization effective date, which is for annual reporting periods beginning after December 15, 2016. We are in the process of determining the effect that the adoption of this standard will have on our financial position and results of operations.

ASC Update No. 2015-03, Interest-Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs. [Policy Text Block]

ASC Update No. 2015-03

In April 2015, the FASB issued ASC Update No. 2015-03, Interest-Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs. Update No. 2015-03 requires debt issuance costs related to a recognized debt liability to be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. Update No. 2015-03 is effective for annual reporting periods beginning after December 15, 2015 and interim periods within those reporting periods. Early adoption is permitted for financial statements that have not been previously issued. The adoption of Update No. 2015-03 will require us to reclassify our debt issuance costs from deferred charges to direct deductions of our debt liabilities. The adoption of Update No. 2015-03 is not expected to have a material impact on our financial position or results of operations.

ASC Update No. 2015 -05, Intangibles- Goodwill and Other - Internal -Use Software (Subtopic 350-40): Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement [Policy Text Block]

ASC Update No. 2015-05

In May 2015, the FASB issued ASC Update No. 2015-05, Intangibles- Goodwill and Other - Internal -Use Software (Subtopic 350-40): Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement. Update No. 2015-05 provides accounting guidance on how customers should treat cloud computing arrangements. If a cloud computing arrangement includes a software license, then the customer should account for the software license element of the arrangement consistent with the acquisition of other software licenses. If a cloud computing arrangement does not include a software license, the customer should account for the arrangement as a service contract. Update No. 2015-05 is effective for annual reporting periods beginning after December 15, 2015 and interim periods within those reporting periods. An entity can elect to adopt the amendments either (1) prospectively to all arrangements entered into or materially modified after the effective date or (2) retrospectively. The adoption of Update No. 2015-05 is not expected to have a material impact on our financial position or results of operations.

ASC Update No. 2015-12, Plan Accounting [Policy Text Block]

ASC Update No. 2015-12

In August 2015, the FASB issued ASC Update No. 2015-12, Plan Accounting: Defined Benefit Pension Plans (Topic 960), Defined Contribution Pension Plans (Topic 962), and Health and Welfare Benefit Plans (Topic 965). Update No. 2015-12 has three parts. Part I designates contract value as the only required measure for fully benefit-responsive investment contracts. Part II simplifies the investment disclosure requirements under Topics 820, 960, 962, and 965 for employee benefits plans and Part III provides an alternative measurement date for fiscal periods that do not coincide with a month-end date. Update No. 2015-12 is effective for fiscal years beginning after December 15, 2015. The adoption of Update No. 2015-12 is not expected to have a material impact on our financial position or results of operations.

ASC Update No. 2015-16, Business Combinations [Policy Text Block]

ASC Update No. 2015-16

In September 2015, the FASB issued ASC Update No. 2015-16, Business Combinations (Topic 805): Simplifying the Accounting for Measurement - Period Adjustments. Update No. 2015-16 eliminates the requirement to restate prior period financial statements for measurement period adjustments following a business combination. Update No. 2015-16 requires that the cumulative impact of a measurement period adjustment (including the impact on prior periods) be recognized in the reporting period in which the adjustment is identified. The prior period impact of the adjustment should be either presented separately on the face of the income statement or disclosed in the notes. Update No. 2015-16 is effective for fiscal years beginning after December 15, 2015. The adoption of Update No. 2015-16 is not expected to have a material impact on our financial position or results of operations.

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Restructuring Related Activities (Tables)

9 Months Ended

Sep. 30, 2015

Restructuring and Related Cost [Line Items]

Restructuring and related costs

The following presents these costs (credits) by major type and line item within our accompanying unaudited condensed consolidated statements of operations, as well as by program:

Three Months Ended September 30, 2015
(in millions)	Termination Benefits		Accelerated Depreciation		Transfer Costs		Other		Total
Restructuring charges	$	5	$	—	$	—	$	2	$	7
Restructuring-related expenses:
Cost of products sold	—		—		5		—		5
Selling, general and administrative expenses	—		1		—		8		9
	—		1		5		8		14
	$	5	$	1	$	5	$	10	$	21

All charges incurred in the third quarter of 2015 are related to the 2014 Restructuring Plan.

Three Months Ended September 30, 2014
(in millions)	Termination Benefits			Accelerated Depreciation		Transfer Costs		Other		Total
Restructuring charges	$	—		$	—	$	—	$	2	$	2
Restructuring-related expenses:
Cost of products sold	—			—		9		—		9
Selling, general and administrative expenses	—			1		—		5		6
	—			1		9		5		15
	$	—		$	1	$	9	$	7	$	17
(in millions)	Termination Benefits			Accelerated Depreciation		Transfer Costs		Other		Total
2014 Restructuring plan	$	(1	)	$	1	$	9	$	7	$	16
2011 Restructuring plan (including the Expansion)	1			—		—		—		1
	$	—		$	1	$	9	$	7	$	17

Nine Months Ended September 30, 2015
(in millions)	Termination Benefits			Accelerated Depreciation		Transfer Costs		Other		Total
Restructuring charges	$	13		$	—	$	—	$	3	$	16
Restructuring-related expenses:
Cost of products sold	—			—		20		—		20
Selling, general and administrative expenses	—			3		—		19		22
	—			3		20		19		42
	$	13		$	3	$	20	$	22	$	58
(in millions)	Termination Benefits			Accelerated Depreciation		Transfer Costs		Other		Total
2014 Restructuring plan	$	17		$	3	$	20	$	22	$	62
2011 Restructuring plan (including the Expansion)	(4		)	—		—		—		(4		)
	$	13		$	3	$	20	$	22	$	58
Nine Months Ended September 30, 2014
(in millions)	Termination Benefits			Accelerated Depreciation		Transfer Costs		Other		Total
Restructuring charges	$	19		$	—	$	—	$	18	$	37
Restructuring-related expenses:
Cost of products sold	—			—		15		—		15
Selling, general and administrative expenses	—			3		—		15		18
	—			3		15		15		33
	$	19		$	3	$	15	$	33	$	70
(in millions)	Termination Benefits			Accelerated Depreciation		Transfer Costs		Other		Total
2014 Restructuring plan	$	18		$	3	$	15	$	30	$	66
2011 Restructuring plan (including the Expansion)	1			—		—		3		4
	$	19		$	3	$	15	$	33	$	70

Cumulative restructuring charges

(in millions)	2014 Restructuring plan		2011 Restructuring plan (including the Expansion)			Total
Termination benefits	$	86	$	135		$	221
Net loss (gain) on fixed asset disposals	—		(1		)	(1		)
Other	28		113			141
Total restructuring charges	114		247			361
Accelerated depreciation	8		5			13
Transfer costs	45		—			45
Other	37		34			71
Restructuring-related expenses	90		39			129
	$	204	$	286		$	490

Cash payments associated with restructuring initiatives

We made cash payments of $20 million in the third quarter of 2015 and $66 million in the first nine months of2015 associated with our restructuring initiatives and as of September 30, 2015, we had made total cash payments of $446 million related to our 2014 Restructuring plan and 2011 Restructuring plan (including the Expansion) since committing to each plan. These payments were made using cash generated from operations, and are comprised of the following:

(in millions)	2014 Restructuring plan		2011 Restructuring plan (including the Expansion)		Total
Three Months Ended September 30, 2015
Termination benefits	$	6	$	—	$	6
Transfer costs	5		—		5
Other	9		—		9
	$	20	$	—	$	20
Nine Months Ended September 30, 2015
Termination benefits	$	24	$	—	$	24
Transfer costs	20		—		20
Other	22		—		22
	$	66	$	—	$	66
Program to Date
Termination benefits	$	55	$	133	$	188
Transfer costs	45		—		45
Other	59		154		213
	$	159	$	287	$	446

Summary of accrued expenses within accompanying unaudited condensed consolidated balance sheets

The following is a rollforward of the termination benefit liability associated with our 2014 Restructuring plan and 2011 Restructuring plan (including the Expansion), which is reported as a component of accrued expenses included in our accompanying unaudited condensed balance sheets:

(in millions)	2014 Restructuring plan			2011 Restructuring plan (including the Expansion)			Total
Accrued as of December 31, 2014	$	39		$	4		$	43
Charges (credits)	17			(4		)	13
Cash payments	(24		)	—			(24		)
Accrued as of September 30, 2015	$	32		$	—		$	32

2014 Restructuring plan [Member]

Restructuring and Related Cost [Line Items]

Restructuring and related costs

The following table provides a summary of our estimates of costs associated with the 2014 Restructuring plan by major type of cost:

Type of cost	Total estimated amount expected to be incurred
Restructuring charges:
Termination benefits	$115 million to $135 million
Other (1)	$25 million to $35 million
Restructuring-related expenses:
Other (2)	$110 million to $130 million
	$250 million to $300 million

(1) Consists primarily of consulting fees and costs associated with contract cancellations.

(2) Comprised of other costs directly related to the 2014 Restructuring plan, including program management, accelerated depreciation, and costs to transfer product lines among facilities.

2011 Restructuring Plan [Member]

Restructuring and Related Cost [Line Items]

Restructuring and related costs

The following provides a summary of our total costs associated with the 2011 Restructuring plan, including the Expansion, by major type of cost:

Type of cost	Total amounts incurred
Restructuring charges:
Termination benefits	$135 million
Other (1)	$112 million
Restructuring-related expenses:
Other (2)	$39 million
	$286 million

(1) Includes primarily consulting fees, gains and losses on disposals of fixed assets and costs associated with contract cancellations.

(2) Comprised of other costs directly related to the 2011 Restructuring plan, including the Expansion, such as program management, accelerated depreciation, retention and infrastructure-related costs.

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Weighted Average Shares Outstanding (Details) - USD ($) shares in Millions, $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Weighted average shares outstanding - basic	1,344.0	1,325.5	1,339.7	1,323.5
Weighted Average Number Diluted Shares Outstanding Adjustment	0.0	22.1	0.0	23.8
Weighted average shares outstanding - assuming dilution	1,344.0	1,347.6	1,339.7	1,347.3
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount	20.2		21.5
Stock Issued During Period, Shares, New Issues	3.0	2.0	17.0	13.0
Treasury Stock, Shares, Acquired				10.0
Payments for Repurchase of Common Stock			$ 0	$ 125
Stock Options [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount	2.0	13.0	2.0	13.0

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Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares	Sep. 30, 2015	Dec. 31, 2014
Stockholders' Equity:
Common stock, par value	$ 0.01	$ 0.01
Common stock, shares authorized	2,000,000,000	2,000,000,000
Common stock, shares issued	1,592,429,606	1,575,018,236
Common stock, shares outstanding	1,344,863,336	1,327,451,966
Preferred stock, par value	$ 0.01	$ 0.01
Preferred stock, shares authorized	50,000,000	50,000,000
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Treasury shares	247,566,270	247,566,270

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Goodwill and Other Intangible Assets

9 Months Ended

Sep. 30, 2015

Goodwill and Intangible Assets Disclosure [Abstract]

GOODWILL AND OTHER INTANGIBLE ASSETS

GOODWILL AND OTHER INTANGIBLE ASSETS

The gross carrying amount of goodwill and other intangible assets and the related accumulated amortization for intangible assets subject to amortization and accumulated write-offs of goodwill as of September 30, 2015 and December 31, 2014 are as follows:

	As of
	September 30, 2015					December 31, 2014
	Gross Carrying		Accumulated Amortization/			Gross Carrying		Accumulated Amortization/
(in millions)	Amount		Write-offs			Amount		Write-offs
Amortizable intangible assets
Technology-related	$	8,874	$	(3,952	)	$	8,406	$	(3,697	)
Patents	519		(354		)	519		(342		)
Other intangible assets	1,512		(584		)	875		(533		)
	$	10,905	$	(4,890	)	$	9,800	$	(4,572	)
Unamortizable intangible assets
Goodwill	$	16,368	$	(9,900	)	$	15,798	$	(9,900	)
In-process research and development (IPR&D)	93		—			181		—
Technology-related	120		—			197		—
	$	16,581	$	(9,900	)	$	16,176	$	(9,900	)

During the third quarter of 2015, we reclassified approximately $77 million of core technology not previously subject to amortization to amortizable intangible assets due to projected changes in the market for this technology. We tested the intangible asset for impairment prior to this reclassification and determined that the asset was not impaired.

In addition, during the third quarter of 2015, we reclassified $1 million of IPR&D not previously subject to amortization to amortizable intangible assets, as a result of regulatory approvals, for a total of $77 million of IPR&D assets not previously subject to amortization reclassified as amortizable intangible assets during the first nine months of 2015. The IPR&D reclassified to amortizable intangible assets during the first nine months of2015 primarily related to the receipt of FDA approval of the WATCHMAN^® device.

The following represents our goodwill balance by global reportable segment:

(in millions)	Cardiovascular		Rhythm Management		MedSurg		Total
Balance as of December 31, 2014	$	3,426	$	290	$	2,182	$	5,898
Purchase price adjustments	—		2		—		2
Goodwill acquired	—		—		568		568
Balance as of September 30, 2015	$	3,426	$	292	$	2,750	$	6,468

Goodwill Impairment Testing

We test our goodwill balances during the second quarter of each year for impairment, or more frequently if indicators are present or changes in circumstances suggest that an impairment may exist.

In the second quarter of 2015, we performed our annual goodwill impairment test for all of our reporting units and concluded the fair value of each reporting unit exceeded its carrying value. As a result of the 2015 annual goodwill impairment test, we identified our global Electrophysiology reporting unit as being at higher risk of potential failure of the first step of the goodwill impairment test in future reporting periods. As of the date of our annual goodwill impairment test, our global Electrophysiology reporting unit had excess fair value over carrying value of approximately 28 percent and held $292 million of allocated goodwill. Also, as of the date of our annual goodwill impairment test, our global Cardiac Rhythm Management (CRM) reporting unit had excess fair value over carrying value of approximately 26 percent; however, due to goodwill impairment charges in prior years, no goodwill remains within our CRM reporting unit. Changes in our reporting units or in the structure of our business as a result of future reorganizations, acquisitions or divestitures of assets or businesses could result in future impairments of goodwill within our reporting units. Refer to Critical Accounting Policies and Estimates within our Management's Discussion and Analysis of Financial Condition and Results of Operations contained in Item 2 of this Quarterly Report on Form 10-Q for a discussion of key assumptions used in our testing.

On a quarterly basis, we monitor the key drivers of fair value to detect events or other changes that would warrant an interim impairment test of our goodwill. The key variables that drive the cash flows of our reporting units and amortizable intangibles are estimated revenue growth rates and levels of profitability. Terminal value growth rate assumptions, as well as the Weighted Average Cost of Capital (WACC) rate applied are additional key variables for reporting unit cash flows. These assumptions are subject to uncertainty, including our ability to grow revenue and improve profitability levels. Relatively small declines in the future performance and cash flows of a reporting unit or asset group or small changes in other key assumptions may result in the recognition of significant goodwill impairment charges. For example, as of the date of our annual goodwill impairment test, keeping all other variables constant, a combined increase of 50 basis points in the WACC along with a simultaneous decrease of 150 basis points in the long term growth rate applied would require that we perform the second step of the goodwill impairment test for our global Electrophysiology reporting unit. The estimates used for our future cash flows and discount rates represent management's best estimates, which we believe to be reasonable, but future declines in business performance may impair the recoverability of our goodwill.

Future events that could have a negative impact on the levels of excess fair value over carrying value of our reporting units include, but are not limited to:

• decreases in estimated market sizes or market growth rates due to greater-than-expected declines in procedural volumes, pricing pressures, reductions in reimbursement levels, product actions, and/or competitive technology developments;

• declines in our market share and penetration assumptions due to increased competition, an inability to develop or launch new and next-generation products and technology features in line with our commercialization strategies, and market and/or regulatory conditions that may cause significant launch delays or product recalls;

• decreases in our forecasted profitability due to an inability to successfully implement and achieve timely and sustainable cost improvement measures consistent with our expectations;

• negative developments in intellectual property litigation that may impact our ability to market certain products or increase our costs to sell certain products;

• the level of success of ongoing and future research and development efforts, including those related to recent acquisitions, and increases in the research and development costs necessary to obtain regulatory approvals and launch new products;

• the level of success in managing the growth of acquired companies, achieving sustained profitability consistent with our expectations, establishing government and third-party payer reimbursement, supplying the market, and increases in the costs and time necessary to integrate acquired businesses into our operations successfully;

• changes in our reporting units or in the structure of our business as a result of future reorganizations, acquisitions or divestitures of assets or businesses; and

• increases in our market-participant risk-adjusted WACC, and increases in our market-participant tax rate, and/or changes in tax laws or macroeconomic conditions.

Negative changes in one or more of these factors, among others, could result in impairment charges.

The following is a rollforward of accumulated goodwill write-offs by global reportable segment:

(in millions)	Cardiovascular			Rhythm Management			MedSurg			Total
Accumulated write-offs as of December 31, 2014	$	(1,479	)	$	(6,960	)	$	(1,461	)	$	(9,900	)
Goodwill written off	—			—			—			—
Accumulated write-offs as of September 30, 2015	$	(1,479	)	$	(6,960	)	$	(1,461	)	$	(9,900	)

Intangible Asset Impairment Testing

2015 Charges

During the third quarter of 2015, we performed our annual impairment test of all IPR&D projects and our indefinite-lived core technology assets. Indefinite-lived intangible assets are tested for impairment on an annual basis during the third quarter of each year, or more frequently if impairment indicators are present, in accordance with U.S. GAAP and our accounting policies described in our 2014 Annual Report on Form 10-K. In addition, as a result of revised estimates in conjunction with our annual operating plan, we performed an interim impairment test of certain definite-lived core technology associated with certain of our acquisitions. Based on the results of our testing, we recorded impairment charges of $10 million in the third quarter of 2015.

During the second quarter of 2015, in conjunction with our annual strategic planning process and annual goodwill impairment test, we performed an interim impairment test on certain of our IPR&D projects and core technology assets. Based on our impairment assessment, we recorded an impairment charge of $9 million in the second quarter of 2015.

2014 Charges

During the third quarter of 2014, we performed our annual impairment test of all IPR&D projects, and our indefinite-lived core technology assets. Based on the results of our annual test, we recorded total impairment charges of $4 million to write-down the balances of certain in-process projects to their fair value. In addition, as a result of revised estimates in conjunction with our annual operating plan, we performed an interim impairment test of core technology associated with certain of our acquisitions, and we recorded an impairment charge of $8 million, for a total of $12 million of impairment charges in the third quarter of 2014.

During the second quarter of 2014, as a result of revised estimates developed in conjunction with our annual strategic planning process and annual goodwill impairment test, we performed an interim impairment test of our IPR&D projects and core technology associated with certain of our acquisitions. Based on our impairment assessment, and lower expected future cash flows associated with our intangible assets, we recorded pre-tax impairment charges of $110 million in the second quarter of 2014. As a result of changes in our clinical strategy and lower estimates of the European and global hypertension markets, and the resulting amount of future revenue and cash flows associated with the technology acquired from Vessix Vascular Inc. (Vessix), we recorded impairment charges of $67 million related to technology intangible assets during the second quarter of 2014. In addition, in the second quarter of 2014, due to revised expectations and timing as a result of the announcement of a third FDA Circulatory System Devices Panel, we recorded impairment charges of $35 million related to the IPR&D intangible assets acquired from Atritech, Inc. (Atritech). We also recorded an additional $8 million intangible asset impairment charge associated with changes in the amount of the expected cash flows related to certain other acquired IPR&D projects.

During the first quarter of 2014, as a result of lower estimates of the resistant hypertension market following the announcement of data from a competitor's clinical trial, we performed an interim impairment test of our IPR&D projects and core technology associated with our acquisition of Vessix. The impairment assessments were based upon probability-weighted cash flows of potential future scenarios. Based on our impairment assessment, and lower expected future cash flows associated with our Vessix-related intangible assets, we recorded pre-tax impairment charges of $55 million in the first quarter of 2014 to write-down the balance of these intangible assets to their calculated fair value.

The nonrecurring Level 3 fair value measurements of our intangible asset impairment analysis included the following significant unobservable inputs:

Intangible Asset	Valuation Date	Fair Value	Valuation Technique	Unobservable Input	Rate
Core Technology	September 30, 2015	$8 million	Income Approach -Excess Earnings Method	Discount Rate	10%
In-Process R&D	June 30, 2015	$6 million	Income Approach - Excess Earnings Method	Discount Rate	16.5 - 20%
In-Process R&D	September 30, 2014	$16 million	Income Approach - Excess Earnings Method	Discount Rate	16.5 - 20%
In-Process R&D	June 30, 2014	$83 million	Income Approach - Excess Earnings Method	Discount Rate	16.5 - 20%
Core Technology	June 30, 2014	$8 million	Income Approach - Excess Earnings Method	Discount Rate	15%
In-Process R&D	March 31, 2014	$6 million	Income Approach - Excess Earnings Method	Discount Rate	20%
Core Technology	March 31, 2014	$64 million	Income Approach - Excess Earnings Method	Discount Rate	15%

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Supplemental Balance Sheet Information (Tables)

9 Months Ended

Sep. 30, 2015

Supplemental Balance Sheet Information [Abstract]

Trade accounts receivable, net

	As of
(in millions)	September 30, 2015			December 31, 2014
Accounts receivable	$	1,390		$	1,288
Less: allowance for doubtful accounts	(77		)	(76		)
Less: allowance for sales returns	(39		)	(29		)
	$	1,274		$	1,183

Rollforward of allowances for doubtful accounts

	Three Months Ended September 30,						Nine Months Ended September 30,
(in millions)	2015			2014			2015			2014
Beginning balance	$	77		$	80		$	76		$	81
Charges to expenses	3			—			11			4
Utilization of allowances	(3		)	(5		)	(10		)	(10		)
Ending balance	$	77		$	75		$	77		$	75

Inventory Disclosure [Text Block]

	As of
(in millions)	September 30, 2015		December 31, 2014
Finished goods	$	751	$	649
Work-in-process	110		97
Raw materials	225		200
	$	1,086	$	946

Property, plant and equipment, net

	As of
(in millions)	September 30, 2015		December 31, 2014
Land	$	87	$	80
Buildings and improvements	965		944
Equipment, furniture and fixtures	2,787		2,633
Capital in progress	195		189
	4,034		3,846
Less: accumulated depreciation	2,555		2,339
	$	1,479	$	1,507

Schedule of Accrued Liabilities

	As of
(in millions)	September 30, 2015		December 31, 2014
Legal reserves	$	383	$	694
Payroll and related liabilities	469		512
Accrued contingent consideration	164		158
Other	589		586
	$	1,605	$	1,950

Other long-term liabilities

	As of
(in millions)	September 30, 2015		December 31, 2014
Accrued income taxes	$	1,287	$	1,231
Legal reserves	1,176		883
Accrued contingent consideration	102		116
Other long-term liabilities	436		436
	$	3,001	$	2,666

Accrued warranties

	Nine Months Ended September 30,
	2015			2014
Beginning Balance	$	25		$	28
Provision	11			6
Settlements/reversals	(11		)	(9		)
Ending Balance	$	25		$	25

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Supplemental Balance Sheet Information (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014	Dec. 31, 2014
Trade accounts receivable, net
Accounts receivable	$ 1,390		$ 1,390		$ 1,288
Less: allowance for doubtful accounts	(77)		(77)		(76)
Less: allowance for sales returns	(39)		(39)		(29)
Trade accounts receivable, net	1,274		1,274		1,183
Allowance for doubtful accounts
Beginning balance	77	$ 80	76	$ 81
Charges to expenses	3	0	11	4
Utilization of allowances	(3)	(5)	(10)	(10)
Ending balance	77	75	77	75
Inventories
Finished goods	751		751		649
Work-in-process	110		110		97
Raw materials	225		225		200
Inventories	1,086		1,086		946
Property, plant and equipment, net
Land	87		87		80
Buildings and improvements	965		965		944
Equipment, furniture and fixtures	2,787		2,787		2,633
Capital in progress	195		195		189
Property, plant and equipment	4,034		4,034		3,846
Less: accumulated depreciation	2,555		2,555		2,339
Property, plant and equipment, net	1,479		1,479		1,507
Accrued expenses
Payroll and related liabilities	469		469		512
Business Combination, Contingent Consideration, Liability, Current	164		164		158
Legal reserves	383		383		694
Other	589		589		586
Accrued expenses	1,605		1,605		1,950
Other long-term liabilities
Accrued income taxes	1,287		1,287		1,231
Legal reserves	1,176		1,176		883
Business Combination, Contingent Consideration, Liability, Noncurrent	102		102		116
Other Accrued Liabilities, Noncurrent	436		436		436
Other long-term liabilities	3,001		3,001		$ 2,666
Accrued warranties
Beginning Balance			25	28
Provision			11	6
Settlements/ reversals			(11)	(9)
Ending Balance	25	25	25	25
Supplemental Balance Sheet Information (Textuals) [Abstract]
Depreciation expense	$ 68	$ 71	$ 198	$ 205

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New Accounting Pronouncements

9 Months Ended

Sep. 30, 2015

Accounting Policies [Abstract]

New Accounting Pronouncements and Changes in Accounting Principles [Text Block]

NEW ACCOUNTING PRONOUNCEMENTS

From time to time, new accounting pronouncements are issued by the FASB or other standard setting bodies. Recently issued standards typically do not require adoption until a future effective date. Prior to their effective date, we evaluate the pronouncements to determine the potential effects of adoption on our consolidated financial statements. Unless otherwise discussed, we do not believe that the future adoption of recently issued standards will have an impact on our financial position or results of operation.

Standards Implemented

ASC Update No. 2014-08

In April 2014, the FASB issued ASC Update No. 2014-08, Presentation of Financial Statements (Topic 205) and Property, Plant, and Equipment (Topic 360): Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity. Update No. 2014-08 changed the criteria for reporting discontinued operations and enhanced convergence of the FASB's and the International Accounting Standard Board's (IASB) reporting requirements for discontinued operations. We were required to apply this amendment, prospectively to: (1) all disposals (or classifications as held for sale) of components of an entity that occurred within annual periods beginning on or after December 15, 2014 and interim periods within those years and (2) all businesses that, on acquisition, are classified as held for sale that occurred within annual periods beginning on or after December 15, 2014 and interim periods within those years. We adopted Update No. 2014-08 beginning in our first quarter ended March 31, 2015. The adoption of Update No. 2014-08 did not impact our results of operations or financial position.

Standards to be Implemented

ASC Update No. 2014-09

In May 2014, the FASB issued ASC Update No. 2014-09, Revenue from Contracts with Customers (Topic 606). Update No. 2014-09 provides enhancements to the quality and consistency of how revenue is reported while also improving comparability in the financial statements of companies using International Financial Reporting Standards and U.S. GAAP. The core principle requires entities to recognize revenue in a manner that depicts the transfer of goods or services to customers in amounts that reflect the consideration an entity expects to be entitled to in exchange for those goods or services. In July 2015, the FASB voted to approve a one year deferral, making the standard effective for public entities for annual and interim periods beginning after December 15, 2017. As such, the standard will be effective for us on January 1, 2018. Under the deferral, early application is still permitted but not before the original public organization effective date, which is for annual reporting periods beginning after December 15, 2016. We are in the process of determining the effect that the adoption of this standard will have on our financial position and results of operations.

ASC Update No. 2015-03

In April 2015, the FASB issued ASC Update No. 2015-03, Interest-Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs. Update No. 2015-03 requires debt issuance costs related to a recognized debt liability to be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. Update No. 2015-03 is effective for annual reporting periods beginning after December 15, 2015 and interim periods within those reporting periods. Early adoption is permitted for financial statements that have not been previously issued. The adoption of Update No. 2015-03 will require us to reclassify our debt issuance costs from deferred charges to direct deductions of our debt liabilities. The adoption of Update No. 2015-03 is not expected to have a material impact on our financial position or results of operations.

ASC Update No. 2015-05

In May 2015, the FASB issued ASC Update No. 2015-05, Intangibles- Goodwill and Other - Internal -Use Software (Subtopic 350-40): Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement. Update No. 2015-05 provides accounting guidance on how customers should treat cloud computing arrangements. If a cloud computing arrangement includes a software license, then the customer should account for the software license element of the arrangement consistent with the acquisition of other software licenses. If a cloud computing arrangement does not include a software license, the customer should account for the arrangement as a service contract. Update No. 2015-05 is effective for annual reporting periods beginning after December 15, 2015 and interim periods within those reporting periods. An entity can elect to adopt the amendments either (1) prospectively to all arrangements entered into or materially modified after the effective date or (2) retrospectively. The adoption of Update No. 2015-05 is not expected to have a material impact on our financial position or results of operations.

ASC Update No. 2015-12

In August 2015, the FASB issued ASC Update No. 2015-12, Plan Accounting: Defined Benefit Pension Plans (Topic 960), Defined Contribution Pension Plans (Topic 962), and Health and Welfare Benefit Plans (Topic 965). Update No. 2015-12 has three parts. Part I designates contract value as the only required measure for fully benefit-responsive investment contracts. Part II simplifies the investment disclosure requirements under Topics 820, 960, 962, and 965 for employee benefits plans and Part III provides an alternative measurement date for fiscal periods that do not coincide with a month-end date. Update No. 2015-12 is effective for fiscal years beginning after December 15, 2015. The adoption of Update No. 2015-12 is not expected to have a material impact on our financial position or results of operations.

ASC Update No. 2015-16

In September 2015, the FASB issued ASC Update No. 2015-16, Business Combinations (Topic 805): Simplifying the Accounting for Measurement - Period Adjustments. Update No. 2015-16 eliminates the requirement to restate prior period financial statements for measurement period adjustments following a business combination. Update No. 2015-16 requires that the cumulative impact of a measurement period adjustment (including the impact on prior periods) be recognized in the reporting period in which the adjustment is identified. The prior period impact of the adjustment should be either presented separately on the face of the income statement or disclosed in the notes. Update No. 2015-16 is effective for fiscal years beginning after December 15, 2015. The adoption of Update No. 2015-16 is not expected to have a material impact on our financial position or results of operations.

No other new accounting pronouncements, issued or effective, during the period had, or is expected to have, a material impact on our condensed consolidated financial statements.