0000885725 2008-01-01 2008-12-31 0000885725 2007-12-31 0000885725 2008-06-30 0000885725 2009-07-31 0000885725 2009-06-30 0000885725 2008-12-31 0000885725 2009-04-01 2009-06-30 0000885725 2008-04-01 2008-06-30 0000885725 2008-01-01 2008-06-30 0000885725 2009-01-01 2009-06-30 iso4217:USD xbrli:shares xbrli:shares iso4217:USD

<html> <head></head> <body>  <div style="font-family: 'Times New Roman',Times,serif"> <div align="left"> </div>  <div align="left" style="font-size: 10pt; margin-top: 0pt"><b></b> </div> <div align="left" style="font-size: 10pt; margin-top: 12pt"><b>NOTE A — BASIS OF PRESENTATION</b> </div> <div align="justify" style="font-size: 10pt; margin-top: 6pt">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) for interim financial information 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 six months ended June 30, 2009 are not necessarily indicative of the results that may be expected for the year ending December 31, 2009. For further information, refer to the consolidated financial statements and footnotes thereto included in our 2008 Annual Report on Form 10-K. </div> <div align="justify" style="font-size: 10pt; margin-top: 6pt">Certain prior year amounts have been reclassified to conform to the current year presentation. See <i>Note M — Segment Reporting </i>for further details. </div> </div> </body> </html>

<html> <head></head> <body>  <div style="font-family: 'Times New Roman',Times,serif"> <div align="left" style="font-size: 10pt; margin-top: 18pt"><b>NOTE B — FINANCIAL INSTRUMENTS</b> </div> <div align="justify" style="font-size: 10pt; margin-top: 6pt"><b><i>Derivative Instruments and Hedging Activities</i></b> </div> <div align="justify" style="font-size: 10pt; margin-top: 6pt">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, and operate the program pursuant to documented corporate risk management policies. We recognize all derivative financial instruments in our consolidated financial statements at fair value in accordance with Financial Accounting Standards Board (FASB) Statement No. 133, <i>Accounting for Derivative Instruments and Hedging Activities</i>. In accordance with Statement No. 133, for those derivative instruments that are designated and qualify as hedging instruments, the hedging instrument must be designated, based upon the exposure being hedged, as a fair value hedge, cash flow hedge, or a hedge of a net investment in a foreign operation. The accounting for changes in the fair value (i.e., gains or losses) of a derivative instrument depends on whether it has been designated and qualifies as part of a hedging relationship and, further, on the type of hedging relationship. 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 Statement No. 133. </div> <div align="justify" style="font-size: 10pt; margin-top: 6pt"><u>Currency Hedging</u> </div> <div align="justify" style="font-size: 10pt; margin-top: 6pt">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 use non-derivatives (primarily European manufacturing operations) and derivatives (currency forward and option contracts) to reduce the risk that our earnings and cash flows associated with these foreign currency denominated balances and transactions will be adversely affected by currency exchange rate changes. </div> <div align="left" style="font-size: 10pt; margin-top: 12pt"><i>Designated Foreign Currency Hedges</i> </div> <div align="justify" style="font-size: 10pt; margin-top: 6pt">All of our designated currency hedge contracts outstanding as of June 30, 2009 and December 31, 2008 were cash flow hedges under Statement No. 133. 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 probable that it will not occur, we would reclassify the amount of any gain or loss on the related cash flow hedge to earnings at that time. We had currency derivative instruments designated as cash flow hedges outstanding in the contract amount of $2.693 billion as of June 30, 2009 and $2.587 billion as of December 31, 2008. </div> <div align="justify" style="font-size: 10pt; margin-top: 6pt">We recognized in earnings net gains of $8 million on our cash flow hedges during the second quarter of 2009 and $24 million for the first half of 2009. All currency cash flow hedges outstanding as of June 30, 2009 mature within 36 months. As of June 30, 2009, $4 million of net losses, 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 losses of $6 million as of December 31, 2008. As of June 30, 2009, $10 million of net losses, net of tax, may be reclassified to earnings within the next twelve months. </div> <div align="justify" style="font-size: 10pt; margin-top: 6pt">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. Changes in currency exchange rates related to any unhedged transactions may impact our earnings and cash flows. </div> <div align="left" style="font-size: 10pt; margin-top: 12pt"><i>Non-designated Foreign Currency Contracts</i> </div> <div align="justify" style="font-size: 10pt; margin-top: 6pt">We manage our exposure to changes in foreign currency on a consolidated basis to take advantage of offsetting transactions and balances. We use currency forward contracts as a part of our strategy to manage exposure related to foreign currency denominated monetary assets and liabilities and certain short-term earnings and cash flow exposures related to our Japanese operations that do not qualify for hedge accounting under Statement No. 133. These currency forward contracts are not designated as cash flow, fair value or net investment hedges under Statement No. 133; are marked-to-market with changes in fair value recorded to earnings; and are entered into for periods consistent with currency transaction exposures, generally one to six months. We had currency derivative instruments not designated as hedges under Statement No. 133 outstanding in the contract amount of $1.832 billion as of June 30, 2009 and $1.809 billion as of December 31, 2008. </div> <div align="justify" style="font-size: 10pt; margin-top: 6pt"><u>Interest Rate Hedging</u> </div> <div align="justify" style="font-size: 10pt; margin-top: 6pt">Our interest rate risk relates primarily to U.S. dollar borrowings, partially offset by U.S. dollar cash investments. We use 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. </div> <div align="justify" style="font-size: 10pt; margin-top: 6pt">We designate these derivative instruments either as fair value or cash flow hedges under Statement No. 133. We record changes in the fair value of fair value hedges in other, net, which is offset by changes in the fair value of the hedged debt obligation to the extent the hedge is effective. 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. All of our interest rate swap contracts outstanding as of June 30, 2009 and December 31, 2008 were designated as cash flow hedges in accordance with Statement No. 133. </div> <div align="justify" style="font-size: 10pt; margin-top: 6pt">We had floating-to-fixed interest rate swap contracts indexed to three-month LIBOR outstanding in the notional amount of $4.100 billion as of June 30, 2009 and $4.900 billion as of December 31, 2008. The objective of these derivative instruments is to hedge against potential variability in our future interest payments on our expected LIBOR-indexed floating-rate loans as a result of changes in LIBOR. Three-month LIBOR approximated 0.595 percent as of June 30, 2009 and 1.425 percent as of December 31, 2008. These interest rate swap contracts fix the interest rate on $2.200 billion of our expected LIBOR-indexed floating-rate loans for the remainder of 2009 at approximately 2.72 percent, and $1.900 billion of our expected 2010 loans at approximately 2.08 percent. </div>   </div>  <div style="font-family: 'Times New Roman',Times,serif"> <div align="justify" style="font-size: 10pt; margin-top: 6pt">In addition, in prior years we terminated certain interest rate derivative instruments, including fixed-to-floating interest rate swap contracts and floating-to-fixed treasury locks. We are amortizing the related gains and losses realized upon termination into earnings over the term of the hedged debt in accordance with Statement No. 133. </div> <div align="justify" style="font-size: 10pt; margin-top: 6pt">We recognized in earnings $10 million of net losses related to our currently outstanding and previously terminated interest rate derivative contracts for the second quarter of 2009, and $23 million of net losses in the first half of 2009. As of June 30, 2009, $13 million of net losses, net of tax, are recorded in AOCI to recognize the effective portion of our interest rate derivative contracts, as compared to $20 million of net losses as of December 31, 2008. As of June 30, 2009, $16 million of net losses, net of tax, may be reclassified to earnings within the next twelve months. </div> <div align="justify" style="font-size: 10pt; margin-top: 6pt"><u>Counterparty Credit Risk</u> </div> <div align="justify" style="font-size: 10pt; margin-top: 6pt">We do not have significant concentrations of credit risk arising from our derivative financial instruments, whether from an individual counterparty or group of counterparties. We reduce our 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 by each counterparty to $50 million, and by actively monitoring their credit ratings and outstanding positions on an on-going basis. Furthermore, none of our derivative transactions are subject to collateral or other security arrangements and do not contain provisions that are dependent on our credit ratings from any credit rating agency. </div> <div align="justify" style="font-size: 10pt; margin-top: 6pt">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 credit risk by counterparty 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, as a result of the above considerations, we do not consider the risk of counterparty default to be significant. </div> <div align="justify" style="font-size: 10pt; margin-top: 6pt"><u>Fair Value of Derivative Instruments</u> </div> <div align="justify" style="font-size: 10pt; margin-top: 6pt">The following tables present the effect of our derivative instruments designated as cash flow hedges and those not designated as hedging instruments under Statement No. 133 on our unaudited condensed consolidated statement of operations for the second quarter and first half of 2009 (in millions). </div>   </div>  <div style="font-family: 'Times New Roman',Times,serif"> <div align="center"> <table style="font-size: 8pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">  <tr valign="bottom"> <td width="40%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> </tr> <tr style="font-size: 7pt" valign="bottom"> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2"></td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2"> </td> <td> </td> </tr> <tr style="font-size: 7pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2"><b>Amount of Gain</b></td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2"><b>Amount of Gain</b></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2"><b>Amount of Gain (Loss)</b></td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2"> </td> <td> </td> </tr> <tr style="font-size: 7pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2"><b>(Loss) Recognized</b></td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2"><b>(Loss) Reclassified</b></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2"><b>Recognized in Earnings</b></td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2"> </td> <td> </td> </tr> <tr style="font-size: 7pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2"><b>in OCI</b></td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2"><b>from AOCI into</b></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2"><b>on</b> <b>Ineffective Portion and</b></td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2"> </td> <td> </td> </tr> <tr style="font-size: 7pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2"><b>(Effective</b></td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2"><b>Earnings</b></td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2"><b>Location in Statement of</b></td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2"><b>Amount Excluded from</b></td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2"><b>Location in Statement of</b></td> <td> </td> </tr> <tr style="font-size: 7pt" valign="bottom"> <td nowrap="nowrap" align="center"><b>Cash Flow Hedges</b></td> <td> </td> <td nowrap="nowrap" align="center" colspan="2"><b>Portion), (pre tax)</b></td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2"><b>(Effective Portion)</b></td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2"><b>Operations</b></td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2"><b>Effectiveness Testing (*)</b></td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2"><b>Operations</b></td> <td> </td> </tr>   <tr style="font-size: 1px"> <td colspan="21" align="left" style="border-top: 1px solid #000000"> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px"><b><u>Three Months Ended June 30, 2009</u></b> </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Interest rate swap contracts </div></td> <td> </td> <td nowrap="nowrap" align="left">$</td> <td align="right">(6</td> <td nowrap="nowrap">)</td> <td> </td> <td nowrap="nowrap" align="left">$</td> <td align="right">(10</td> <td nowrap="nowrap">)**</td> <td> </td> <td colspan="3" nowrap="nowrap" align="center">Interest expense</td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Currency hedge contracts </div></td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(101</td> <td nowrap="nowrap">)</td> <td> </td> <td> </td> <td align="right">8</td> <td> </td> <td> </td> <td colspan="3" align="center">Cost of products sold</td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr style="font-size: 1px"> <td> </td> <td> </td> <td colspan="7" align="left" style="border-top: 1px solid #000000">   </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" align="left"><b>$</b></td> <td align="right"><b>(107</b></td> <td nowrap="nowrap"><b>)</b></td> <td> </td> <td nowrap="nowrap" align="left"><b>$</b></td> <td align="right"><b>(2</b></td> <td nowrap="nowrap"><b>)</b></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr style="font-size: 1px"> <td> </td> <td> </td> <td colspan="7" align="left" style="border-top: 3px double #000000">   </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px"><b><u>Six Months Ended June 30, 2009</u></b> </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Interest rate swap contracts </div></td> <td> </td> <td nowrap="nowrap" align="left">$</td> <td align="right">(8</td> <td nowrap="nowrap">)</td> <td> </td> <td nowrap="nowrap" align="left">$</td> <td align="right">(20</td> <td nowrap="nowrap">)**</td> <td> </td> <td colspan="3" nowrap="nowrap" align="center">Interest expense</td> <td> </td> <td nowrap="nowrap" align="left">$</td> <td align="right">(2</td> <td nowrap="nowrap">)***</td> <td> </td> <td colspan="3" nowrap="nowrap" align="center">Interest expense</td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Currency hedge contracts </div></td> <td> </td> <td> </td> <td align="right">27</td> <td> </td> <td> </td> <td> </td> <td align="right">24</td> <td> </td> <td> </td> <td colspan="3" align="center">Cost of products sold</td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr style="font-size: 1px"> <td> </td> <td> </td> <td colspan="7" align="left" style="border-top: 1px solid #000000">   </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td colspan="2" align="left" style="border-top: 1px solid #000000">   </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td align="left"><b>$</b></td> <td align="right"><b>19</b></td> <td> </td> <td> </td> <td align="left"><b>$</b></td> <td align="right"><b>4</b></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td nowrap="nowrap" align="left"><b>$</b></td> <td align="right"><b>(2</b></td> <td nowrap="nowrap"><b>)</b></td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr style="font-size: 1px"> <td> </td> <td> </td> <td colspan="7" align="left" style="border-top: 3px double #000000">   </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000; border-top: 0px double #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000; border-top: 3px double #000000"> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr>  </table> </div> <div align="left"> <div style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">  </div> </div> <table width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 8pt; text-align: left"> <tr> <td width="3%"></td> <td width="1%"></td> <td width="96"></td> </tr> <tr valign="top"> <td nowrap="nowrap" align="left">*</td> <td> </td> <td> <div align="justify">Other than described in ***, the amount of gain (loss) recognized in earnings related to the ineffective portion of hedging relationships was de minimis in the second quarter and first half of 2009. </div></td> </tr> <tr style="font-size: 3pt"> <td> </td> </tr> <tr valign="top"> <td nowrap="nowrap" align="left">**</td> <td> </td> <td> <div align="justify">We had $12 million of gains recorded in AOCI as of June 30, 2009 related to floating-to-fixed treasury locks terminated during 2005 and 2006. We recognized approximately $1 million as a reduction in interest expense during the first half of 2009 related to these instruments. </div></td> </tr> <tr style="font-size: 3pt"> <td> </td> </tr> <tr valign="top"> <td nowrap="nowrap" align="left">***</td> <td> </td> <td> <div align="justify">During the first quarter of 2009, we prepaid $500 million of our term loan debt, and recognized $2 million of ineffectiveness in accordance with Statement No. 133 on interest rate swaps for which there was no longer an underlying exposure. </div></td> </tr> </table> <div align="center"> <table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">  <tr valign="bottom"> <td width="24%"> </td> <td width="25%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="25%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="5%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="7"><b>Amount of Gain (Loss)</b></td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="7" style="border-bottom: 1px solid #000000"><b>Recognized in Earnings</b> (in millions)</td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="3"><b>Location</b></td> <td> </td> <td nowrap="nowrap" align="center" colspan="3"><b>Three Months</b></td> <td> </td> <td nowrap="nowrap" align="center" colspan="3"><b>Six Months</b></td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td nowrap="nowrap" align="left"><b>Derivatives Not Designated as</b></td> <td> </td> <td nowrap="nowrap" align="center" colspan="3"><b>in Statement of</b></td> <td> </td> <td nowrap="nowrap" align="center" colspan="3"><b>Ended</b></td> <td> </td> <td nowrap="nowrap" align="center" colspan="3"><b>Ended</b></td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td nowrap="nowrap" align="center" style="border-bottom: 1px solid #ffffff"><b>Hedging Instruments</b></td> <td> </td> <td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #ffffff"><b>Operations</b></td> <td> </td> <td nowrap="nowrap" align="center" colspan="3"><b>June 30, 2009</b></td> <td> </td> <td nowrap="nowrap" align="center" colspan="3"><b>June 30, 2009</b></td> </tr>   <tr style="font-size: 1px"> <td colspan="13" align="left" style="border-top: 1px solid #000000"> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Currency hedge contracts </div></td> <td> </td> <td colspan="3" align="center">Other, net</td> <td> </td> <td nowrap="nowrap" align="right">$</td> <td align="right">(20</td> <td nowrap="nowrap">)</td> <td> </td> <td align="right">$</td> <td align="right">33</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Currency hedge contracts </div></td> <td> </td> <td colspan="3" align="center" nowrap="nowrap">Cost of products sold</td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">(1</td> <td nowrap="nowrap">)</td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">(1</td> <td nowrap="nowrap">)</td> </tr> <tr style="font-size: 1px"> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td colspan="7" align="left" style="border-top: 1px solid #000000">   </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td nowrap="nowrap" align="right"><b>$</b></td> <td align="right"><b>(21</b></td> <td nowrap="nowrap"><b>)</b></td> <td> </td> <td align="right"><b>$</b></td> <td align="right"><b>32</b></td> <td> </td> </tr> <tr style="font-size: 1px"> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td colspan="7" align="left" style="border-top: 3px double #000000">   </td> </tr>  </table> </div> <div align="justify" style="font-size: 10pt; margin-top: 6pt">Losses and gains on currency hedge contracts not designated as hedged instruments were substantially offset by $22 million in gains from foreign currency transaction exposures during the second quarter of 2009 and by $37 million in losses on foreign currency transaction exposures for the first half of 2009.  As a result, we recorded a net foreign currency gain of $2 million during the second quarter of 2009 and a net foreign currency loss of $4 million during the first half of 2009 within other, net in our accompanying unaudited condensed consolidated financial statements. </div> <div align="justify" style="font-size: 10pt; margin-top: 6pt">We did not have fair value hedges or net investment hedges outstanding as of June 30, 2009. However, prior to 2006, we entered into fixed-to-floating interest rate swaps, which we designated as fair value hedges under Statement No. 133. We terminated these hedges during 2006 and, as of June 30, 2009, the carrying amount of certain of our senior notes included $3 million of unamortized gains and $9 million of unamortized losses related to these interest rate swaps. We recognized approximately $1 million of interest expense during the first half of 2009 related to these instruments. </div> <div align="justify" style="font-size: 10pt; margin-top: 6pt">Statement No. 133 requires all derivative instruments to be recognized at their fair values as either assets or liabilities on the balance sheet. We determine the fair value of our derivative instruments using the framework prescribed by FASB Statement No. 157, <i>Fair Value Measurements</i>, by considering the estimated amount we would receive to sell or transfer these instruments at the reporting date and by taking into account current interest rates, currency exchange rates, the creditworthiness of the counterparty for assets, and our creditworthiness for liabilities. In certain instances, we may utilize financial models to measure fair value. 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 June 30, 2009, we have classified all of our derivative assets and liabilities within Level 2 of the fair value hierarchy prescribed by Statement No. 157, as discussed below, because these observable inputs are available for substantially the full term of our derivative instruments. </div>   </div>  <div style="font-family: 'Times New Roman',Times,serif"> <div align="justify" style="font-size: 10pt; margin-top: 6pt">The following table presents the fair value of our derivative instruments as they appear in our unaudited condensed consolidated balance sheets as of June 30, 2009 by type of contract and whether it is a qualifying hedge under Statement No. 133. </div> <div align="center"> <table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">  <tr valign="bottom"> <td width="39%"> </td> <td width="3%"> </td> <td width="50%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="1%"> </td> <td width="1%"> </td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center"><b>Location in</b></td> <td> </td> <td nowrap="nowrap" align="center" colspan="2"><b>Balance as of</b></td> <td> </td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td nowrap="nowrap" align="left"><i>(in millions)</i></td> <td> </td> <td nowrap="nowrap" align="center"><b>Balance Sheet</b></td> <td> </td> <td nowrap="nowrap" align="center" colspan="2"><b>June 30, 2009</b></td> <td> </td> </tr>   <tr style="font-size: 1px"> <td colspan="7" valign="top" align="left" style="border-top: 1px solid #000000"> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td align="left" valign="top"><b>Derivative Assets:</b></td> <td> </td> <td align="center"> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom"> <td align="left" valign="top"> </td> <td> </td> <td align="center"> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom"> <td align="left" valign="top"> <div style="margin-left:30px; text-indent:-15px"><u>Designated Hedging Instruments</u> </div></td> <td> </td> <td align="center"> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td align="left" valign="top"> <div style="margin-left:30px; text-indent:-15px">Currency Hedge Contracts </div></td> <td> </td> <td align="center">Prepaid expenses and other current assets</td> <td> </td> <td align="left">$</td> <td align="right">31</td> <td> </td> </tr> <tr valign="bottom"> <td align="left" valign="top"> <div style="margin-left:30px; text-indent:-15px">Currency Hedge Contracts </div></td> <td> </td> <td align="center">Other long-term assets</td> <td> </td> <td> </td> <td align="right">27</td> <td> </td> </tr> <tr style="font-size: 1px"> <td align="left" valign="top"> </td> <td> </td> <td align="center"> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td align="left" valign="top"> </td> <td> </td> <td align="center"> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td> </td> <td align="right">58</td> <td> </td> </tr> <tr valign="bottom"> <td align="left" valign="top"> </td> <td> </td> <td align="center"> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom"> <td align="left" valign="top"> <div style="margin-left:30px; text-indent:-15px"><u>Non-Designated Hedging Instruments</u> </div></td> <td> </td> <td align="center"> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td align="left" valign="top"> <div style="margin-left:30px; text-indent:-15px">Currency Hedge Contracts </div></td> <td> </td> <td align="center">Prepaid expenses and other current assets</td> <td> </td> <td> </td> <td align="right">12</td> <td> </td> </tr> <tr style="font-size: 1px"> <td align="left" valign="top"> </td> <td> </td> <td align="center"> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> </tr> <tr valign="bottom"> <td align="left" valign="top"> </td> <td> </td> <td align="center"> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom"> <td align="left" valign="top"><b>Total Derivative Assets</b></td> <td> </td> <td align="center"> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td align="left"><b>$</b></td> <td align="right"><b>70</b></td> <td> </td> </tr> <tr style="font-size: 1px"> <td align="left" valign="top"> </td> <td> </td> <td align="center"> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> </tr> <tr valign="bottom"> <td align="left" valign="top"> </td> <td> </td> <td align="center"> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td align="left" valign="top"><b>Derivative Liabilities:</b></td> <td> </td> <td align="center"> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom"> <td align="left" valign="top"> </td> <td> </td> <td align="center"> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom"> <td align="left" valign="top"> <div style="margin-left:30px; text-indent:-15px"><u>Designated Hedging Instruments</u> </div></td> <td> </td> <td align="center"> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td align="left" valign="top"> <div style="margin-left:30px; text-indent:-15px">Currency Hedge Contracts </div></td> <td> </td> <td align="center">Other current liabilities</td> <td> </td> <td align="left">$</td> <td align="right">43</td> <td> </td> </tr> <tr valign="bottom"> <td align="left" valign="top"> <div style="margin-left:30px; text-indent:-15px">Currency Hedge Contracts </div></td> <td> </td> <td align="center">Other long-term liabilities</td> <td> </td> <td> </td> <td align="right">17</td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td align="left" valign="top"> <div style="margin-left:30px; text-indent:-15px">Interest Rate Swap Contracts </div></td> <td> </td> <td align="center">Other current liabilities</td> <td> </td> <td> </td> <td align="right">26</td> <td> </td> </tr> <tr valign="bottom"> <td align="left" valign="top"> <div style="margin-left:30px; text-indent:-15px">Interest Rate Swap Contracts </div></td> <td> </td> <td align="center">Other long-term liabilities</td> <td> </td> <td> </td> <td align="right">8</td> <td> </td> </tr> <tr style="font-size: 1px"> <td align="left" valign="top"> </td> <td> </td> <td align="center"> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td align="left" valign="top"> </td> <td> </td> <td align="center"> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td> </td> <td align="right">94</td> <td> </td> </tr> <tr valign="bottom"> <td align="left" valign="top"> </td> <td> </td> <td align="center"> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom"> <td align="left" valign="top"> <div style="margin-left:30px; text-indent:-15px"><u>Non-Designated Hedging Instruments</u> </div></td> <td> </td> <td align="center"> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td align="left" valign="top"> <div style="margin-left:30px; text-indent:-15px">Currency Hedge Contracts </div></td> <td> </td> <td align="center">Other current liabilities</td> <td> </td> <td> </td> <td align="right">23</td> <td> </td> </tr> <tr valign="bottom"> <td align="left" valign="top"> </td> <td> </td> <td align="center"> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr style="font-size: 1px"> <td align="left" valign="top"> </td> <td> </td> <td align="center"> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> </tr> <tr valign="bottom"> <td align="left" valign="top"><b>Total Derivative Liabilities</b></td> <td> </td> <td align="center"> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td align="left"><b>$</b></td> <td align="right"><b>117</b></td> <td> </td> </tr> <tr style="font-size: 1px"> <td align="left" valign="top"> </td> <td> </td> <td align="center"> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> </tr>  </table> </div> <div align="left" style="font-size: 10pt; margin-top: 12pt"><b><i>Other Fair Value Measurements</i></b> </div> <div align="justify" style="font-size: 10pt; margin-top: 6pt">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. Statement No. 157 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: </div> <div style="margin-top: 6pt"> <table width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; text-align: left"> <tr valign="top" style="font-size: 10pt; color: #000000; background: transparent"> <td width="2%" style="background: transparent"> </td> <td width="3%" nowrap="nowrap" align="left"><b>•</b></td> <td width="1%"> </td> <td> <div align="justify">Level 1 — Inputs to the valuation methodology are quoted market prices for identical assets or liabilities. </div></td> </tr> <tr> <td style="font-size: 6pt"> </td> </tr> <tr valign="top" style="font-size: 10pt; color: #000000; background: transparent"> <td width="2%" style="background: transparent"> </td> <td width="3%" nowrap="nowrap" align="left"><b>•</b></td> <td width="1%"> </td> <td> <div align="justify">Level 2 — Inputs to the valuation methodology are other observable inputs, including quoted market prices for similar assets or liabilities and market-corroborated inputs. </div></td> </tr> <tr> <td style="font-size: 6pt"> </td> </tr> <tr valign="top" style="font-size: 10pt; color: #000000; background: transparent"> <td width="2%" style="background: transparent"> </td> <td width="3%" nowrap="nowrap" align="left"><b>•</b></td> <td width="1%"> </td> <td> <div align="justify">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. </div></td> </tr> </table> </div> <div align="justify" style="font-size: 10pt; margin-top: 6pt">Our investments in money market funds, as well as available-for-sale investments carried at fair value, are generally classified within Level 1 of the fair value hierarchy because they are valued using quoted market prices. Our money market funds are classified as cash and cash equivalents within our accompanying unaudited condensed consolidated balance sheets, in accordance with our accounting policies, as these funds are highly liquid and readily convertible to known amounts of cash. </div> <div align="justify" style="font-size: 10pt; margin-top: 6pt">Financial assets and financial liabilities measured at fair value on a recurring basis consist of the following as of June 30, 2009: </div>   </div>  <div style="font-family: 'Times New Roman',Times,serif"> <div align="center"> <table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">  <tr valign="bottom"> <td width="52%"> </td> <td width="5%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="5%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="5%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="5%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td nowrap="nowrap" align="left"><i>(in millions)</i></td> <td> </td> <td nowrap="nowrap" align="center" colspan="3"><b>Level 1</b></td> <td> </td> <td nowrap="nowrap" align="center" colspan="3"><b>Level 2</b></td> <td> </td> <td nowrap="nowrap" align="center" colspan="3"><b>Level 3</b></td> <td> </td> <td nowrap="nowrap" align="center" colspan="3"><b>Total</b></td> </tr>   <tr style="font-size: 1px"> <td colspan="17" align="left" style="border-top: 1px solid #000000"> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px"><b>Assets</b> </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Money market funds </div></td> <td> </td> <td align="right">$</td> <td align="right">564</td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td align="right">$</td> <td align="right">564</td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Available-for-sale investments </div></td> <td> </td> <td> </td> <td align="right">1</td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td align="right">1</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Currency and interest rate hedge contracts </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td align="right">$</td> <td align="right">70</td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td align="right">70</td> <td> </td> </tr> <tr style="font-size: 1px"> <td> </td> <td> </td> <td colspan="15" align="left" style="border-top: 1px solid #000000"> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td align="right"><b>$</b></td> <td align="right"><b>565</b></td> <td> </td> <td> </td> <td align="right"><b>$</b></td> <td align="right"><b>70</b></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td align="right"><b>$</b></td> <td align="right"><b>635</b></td> <td> </td> </tr> <tr style="font-size: 1px"> <td> </td> <td> </td> <td colspan="15" align="left" style="border-top: 3px double #000000"> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px"><b>Liabilities</b> </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Currency and interest rate hedge contracts </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td align="right">$</td> <td align="right">117</td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td align="right">$</td> <td align="right">117</td> <td> </td> </tr> <tr style="font-size: 1px"> <td> </td> <td> </td> <td colspan="15" align="left" style="border-top: 1px solid #000000"> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td align="right"><b>$</b></td> <td align="right"><b>117</b></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td align="right"><b>$</b></td> <td align="right"><b>117</b></td> <td> </td> </tr> <tr style="font-size: 1px"> <td> </td> <td> </td> <td colspan="15" align="left" style="border-top: 3px double #000000"> </td> </tr>  </table> </div> <div align="justify" style="font-size: 10pt; margin-top: 6pt">In addition to $564 million invested in money market funds as of June 30, 2009, we had $504 million of cash invested in short-term time deposits, and $126 million in interest bearing and non-interest bearing bank accounts. </div> <div align="justify" style="font-size: 10pt; margin-top: 6pt">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 $69 million as of June 30, 2009 and $67 million as of December 31, 2008. Our assets and liabilities measured at fair value on a non-recurring basis using significant unobservable inputs (Level 3) were $7 million as of June 30, 2009. </div> <div align="justify" style="font-size: 10pt; margin-top: 6pt">The fair value of our debt obligations was $5.965 billion as of June 30, 2009 and $6.184 billion as of December 31, 2008. Refer to <i>Note D — Borrowings and Credit Arrangements </i>for a discussion of our debt obligations. </div> </div> </body> </html>

<html> <head></head> <body>  <div style="font-family: 'Times New Roman',Times,serif"> <div align="left" style="font-size: 10pt; margin-top: 18pt"><b>NOTE F — RESTRUCTURING-RELATED ACTIVITIES</b> </div> <div align="justify" style="font-size: 10pt; margin-top: 6pt">In October 2007, our Board of Directors approved, and we committed to, an expense and head count reduction plan (the 2007 Restructuring plan), which resulted in the elimination of approximately 2,300 positions worldwide. We are providing affected employees with severance packages, outplacement services and other appropriate assistance and support. The plan is intended to bring expenses in line with revenues as part of our initiatives to enhance short- and long-term shareholder value. Key activities under the plan include the restructuring of several businesses, corporate functions and product franchises in order to better utilize resources, strengthen competitive positions, and create a more simplified and efficient business model; the elimination, suspension or reduction of spending on certain R&D projects; and the transfer of certain production lines among facilities. We initiated these activities in the fourth quarter of 2007 and expect to be substantially complete in 2010. </div> <div align="justify" style="font-size: 10pt; margin-top: 6pt">We expect that the execution of this plan will result in total pre-tax expenses of approximately $425 million to $450 million. We are recording a portion of these expenses as restructuring charges and the remaining portion through other lines within our consolidated statements of operations. We expect the plan to result in cash payments of approximately $390 million to $405 million. The following provides a summary of our expected total costs associated with the plan by major type of cost: </div>   </div>  <div style="font-family: 'Times New Roman',Times,serif"> <div align="center"> <table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="75%">  <tr valign="bottom"> <td width="88%"> </td> <td width="5%"> </td> <td width="7%"> </td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center"><b>Total estimated amount expected to</b></td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td nowrap="nowrap" align="center" style="border-bottom: 1px solid #000000"><b>Type of cost</b></td> <td> </td> <td nowrap="nowrap" align="center" style="border-bottom: 1px solid #000000"><b>be incurred</b></td> </tr>   <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px"><b>Restructuring charges:</b> </div></td> <td> </td> <td align="center" valign="top"> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Termination benefits </div></td> <td> </td> <td align="center" valign="top">$215 million to $225 million</td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Fixed asset write-offs </div></td> <td> </td> <td align="center" valign="top">$20 million to $25 million</td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Other (1) </div></td> <td> </td> <td align="center" valign="top">$70 million to $75 million</td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td align="center" valign="top"> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px"><b>Restructuring-related expenses:</b> </div></td> <td> </td> <td align="center" valign="top"> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Retention incentives </div></td> <td> </td> <td align="center" valign="top">$70 million</td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Accelerated depreciation </div></td> <td> </td> <td align="center" valign="top">$15 million to $20 million</td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Transfer costs (2) </div></td> <td> </td> <td align="center" valign="top">$35 million</td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td align="center" valign="top" style="border-top: 1px solid #000000"> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td align="center" valign="top"><b>$425 million to $450 million</b></td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td align="center" valign="top" style="border-top: 3px double #000000"> </td> </tr>  </table> </div> <div align="left"> <div style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">  </div> </div> <table width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 8pt; text-align: left"> <tr> <td width="3%"></td> <td width="1%"></td> <td width="96"></td> </tr> <tr valign="top"> <td nowrap="nowrap" align="left">(1)</td> <td> </td> <td> <div align="justify">Consists primarily of consulting fees, contractual cancellations, relocation costs and other costs. </div></td> </tr> <tr style="font-size: 3pt"> <td> </td> </tr> <tr valign="top"> <td nowrap="nowrap" align="left">(2)</td> <td> </td> <td> <div align="justify">Consists primarily of costs to transfer product lines among facilities, including costs of transfer teams, freight and product line validations. </div></td> </tr> </table> <div align="justify" style="font-size: 10pt; margin-top: 6pt">In addition, in January 2009, our Board of Directors approved, and we committed to, a Plant Network Optimization plan, which is intended to simplify our manufacturing plant structure by transferring certain production lines among facilities and by closing certain other facilities. The plan is a complement to our 2007 Restructuring plan, and is intended to improve overall gross profit margins. Activities under the Plant Network Optimization plan were initiated in the first quarter of 2009 and are expected to be substantially complete by the end of 2011. We estimate that the execution of this plan will result in total pre-tax charges of approximately $135 million to $150 million, and that approximately $120 million to $130 million of these charges will result in future cash outlays. The following provides a summary of our estimates of costs associated with the Plant Network Optimization plan by major type of cost: </div> <div align="center"> <table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="75%">  <tr valign="bottom"> <td width="88%"> </td> <td width="5%"> </td> <td width="7%"> </td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center"><b>Total estimated amount expected to</b></td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td nowrap="nowrap" align="center" style="border-bottom: 1px solid #000000"><b>Type of cost</b></td> <td> </td> <td nowrap="nowrap" align="center" style="border-bottom: 1px solid #000000"><b>be incurred</b></td> </tr>   <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px"><b>Restructuring charges:</b> </div></td> <td> </td> <td align="center" valign="top"> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Termination benefits </div></td> <td> </td> <td align="center" valign="top">$45 million to $50 million</td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td align="center" valign="top"> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px"><b>Restructuring-related expenses:</b> </div></td> <td> </td> <td align="center" valign="top"> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Accelerated depreciation </div></td> <td> </td> <td align="center" valign="top">$15 million to $20 million</td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Transfer costs (1) </div></td> <td> </td> <td align="center" valign="top">$75 million to $80 million</td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td align="center" valign="top" style="border-top: 1px solid #000000"> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td align="center" valign="top"><b>$135 million to $150 million</b></td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td align="center" valign="top" style="border-top: 3px double #000000"> </td> </tr>  </table> </div> <div align="left"> <div style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">  </div> </div> <table width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 8pt; text-align: left"> <tr> <td width="3%"></td> <td width="1%"></td> <td width="96"></td> </tr> <tr valign="top"> <td nowrap="nowrap" align="left">(1)</td> <td> </td> <td> <div align="justify">Consists primarily of costs to transfer product lines among facilities, including costs of transfer teams, freight and product line validations. </div></td> </tr> </table> <div align="justify" style="font-size: 10pt; margin-top: 6pt">We recorded restructuring charges of $13 million in the second quarter of 2009 and $10 million in the second quarter of 2008. In addition, we recorded expenses within other lines of our unaudited condensed consolidated statements of operations related to our restructuring initiatives of $17 million in the second quarter of 2009 and $11 million in the second quarter of 2008. The following presents these costs by major type and line item within our accompanying unaudited condensed consolidated statements of operations: </div>   </div>  <div style="font-family: 'Times New Roman',Times,serif"> <div align="justify" style="font-size: 10pt; margin-top: 6pt"><b><u>Three Months Ended June 30, 2009</u></b> </div> <div align="center"> <table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">  <tr valign="bottom"> <td width="23%"> </td> <td width="4%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="4%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="4%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="4%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="4%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="4%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="4%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="3"><b>Termination</b></td> <td> </td> <td nowrap="nowrap" align="center" colspan="3"><b>Retention</b></td> <td> </td> <td nowrap="nowrap" align="center" colspan="3"><b>Accelerated</b></td> <td> </td> <td nowrap="nowrap" align="center" colspan="3"><b>Transfer </b></td> <td> </td> <td nowrap="nowrap" align="center" colspan="3"><b>Fixed Asset</b></td> <td> </td> <td nowrap="nowrap" align="center" colspan="3"> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="3"> </td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td nowrap="nowrap" align="left"><i>(in millions)</i></td> <td> </td> <td nowrap="nowrap" align="center" colspan="3"><b>Benefits</b></td> <td> </td> <td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 0px solid #000000"><b>Incentives</b></td> <td> </td> <td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 0px solid #000000"><b>Depreciation</b></td> <td> </td> <td nowrap="nowrap" align="center" colspan="3"><b> Costs</b></td> <td> </td> <td nowrap="nowrap" align="center" colspan="3"><b>Write-offs</b></td> <td> </td> <td nowrap="nowrap" align="center" colspan="3"><b>Other</b></td> <td> </td> <td nowrap="nowrap" align="center" colspan="3"><b>Total</b></td> </tr>   <tr style="font-size: 1px"> <td colspan="29" align="left" style="border-top: 1px solid #000000"> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px"><b>Restructuring charges</b> </div></td> <td> </td> <td align="right"><b>$</b></td> <td align="right"><b>3</b></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td align="right"><b>$</b></td> <td align="right"><b>3</b></td> <td> </td> <td> </td> <td align="right"><b>$</b></td> <td align="right"><b>7</b></td> <td> </td> <td> </td> <td align="right"><b>$</b></td> <td align="right"><b>13</b></td> <td> </td> </tr> <tr valign="bottom" STYLE="FONT-SIZE:8PT"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px"><b>Restructuring-related expenses:</b> </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:30px; text-indent:-15px">Cost of products sold </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td align="right">$</td> <td align="right">1</td> <td> </td> <td> </td> <td align="right">$</td> <td align="right">2</td> <td> </td> <td> </td> <td align="right">$</td> <td align="right">9</td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td align="right">12</td> <td> </td> </tr> <tr valign="bottom"> <td nowrap="nowrap"> <div style="margin-left:30px; text-indent:-15px">Selling, general and administrative expenses </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td align="right">4</td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td align="right">4</td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:30px; text-indent:-15px">Research and development expenses </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td align="right">1</td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td align="right">1</td> <td> </td> </tr> <tr style="font-size: 1px"> <td> </td> <td> </td> <td colspan="27" align="left" style="border-top: 1px solid #000000"> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td align="right"><b>6</b></td> <td> </td> <td> </td> <td> </td> <td align="right"><b>2</b></td> <td> </td> <td> </td> <td> </td> <td align="right"><b>9</b></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td align="right"><b>17</b></td> <td> </td> </tr> <tr style="font-size: 1px"> <td> </td> <td> </td> <td colspan="27" align="left" style="border-top: 1px solid #000000"> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td align="right"><b>$</b></td> <td align="right"><b>3</b></td> <td> </td> <td> </td> <td align="right"><b>$</b></td> <td align="right"><b>6</b></td> <td> </td> <td> </td> <td align="right"><b>$</b></td> <td align="right"><b>2</b></td> <td> </td> <td> </td> <td align="right"><b>$</b></td> <td align="right"><b>9</b></td> <td> </td> <td> </td> <td align="right"><b>$</b></td> <td align="right"><b>3</b></td> <td> </td> <td> </td> <td align="right"><b>$</b></td> <td align="right"><b>7</b></td> <td> </td> <td> </td> <td align="right"><b>$</b></td> <td align="right"><b>30</b></td> <td> </td> </tr> <tr style="font-size: 1px"> <td> </td> <td> </td> <td colspan="27" align="left" style="border-top: 1px solid #000000"> </td> </tr>  </table> </div> <div align="left" style="font-size: 10pt; margin-top: 12pt"><b><u>Three Months Ended June 30, 2008</u></b> </div> <div align="center"> <table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">  <tr valign="bottom"> <td width="23%"> </td> <td width="4%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="4%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="4%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="4%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="4%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="4%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="4%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="3"><b>Termination</b></td> <td> </td> <td nowrap="nowrap" align="center" colspan="3"><b>Retention</b></td> <td> </td> <td nowrap="nowrap" align="center" colspan="3"><b>Accelerated</b></td> <td> </td> <td nowrap="nowrap" align="center" colspan="3"><b>Transfer </b></td> <td> </td> <td nowrap="nowrap" align="center" colspan="3"><b>Fixed Asset</b></td> <td> </td> <td nowrap="nowrap" align="center" colspan="3"> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="3"> </td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td nowrap="nowrap" align="left"><i>(in millions)</i></td> <td> </td> <td nowrap="nowrap" align="center" colspan="3"><b>Benefits</b></td> <td> </td> <td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 0px solid #000000"><b>Incentives</b></td> <td> </td> <td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 0px solid #000000"><b>Depreciation</b></td> <td> </td> <td nowrap="nowrap" align="center" colspan="3"><b> Costs</b></td> <td> </td> <td nowrap="nowrap" align="center" colspan="3"><b>Write-offs</b></td> <td> </td> <td nowrap="nowrap" align="center" colspan="3"><b>Other</b></td> <td> </td> <td nowrap="nowrap" align="center" colspan="3"><b>Total</b></td> </tr>   <tr style="font-size: 1px"> <td colspan="29" align="left" style="border-top: 1px solid #000000"> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px"><b>Restructuring charges</b> </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td align="right"><b>$</b></td> <td align="right"><b>10</b></td> <td> </td> <td> </td> <td align="right"><b>$</b></td> <td align="right"><b>10</b></td> <td> </td> </tr> <tr valign="bottom" STYLE="FONT-SIZE:8PT"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px"><b>Restructuring-related expenses:</b> </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:30px; text-indent:-15px">Cost of products sold </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td align="right">$</td> <td align="right">2</td> <td> </td> <td> </td> <td align="right">$</td> <td align="right">1</td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td align="right">3</td> <td> </td> </tr> <tr valign="bottom"> <td nowrap="nowrap"> <div style="margin-left:30px; text-indent:-15px">Selling, general and administrative expenses </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td align="right">6</td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td align="right">6</td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:30px; text-indent:-15px">Research and development expenses </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td align="right">2</td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td align="right">2</td> <td> </td> </tr> <tr style="font-size: 1px"> <td> </td> <td> </td> <td colspan="27" align="left" style="border-top: 1px solid #000000"> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td align="right"><b>10</b></td> <td> </td> <td> </td> <td> </td> <td align="right"><b>1</b></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td align="right"><b>11</b></td> <td> </td> </tr> <tr style="font-size: 1px"> <td> </td> <td> </td> <td colspan="27" align="left" style="border-top: 1px solid #000000"> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td align="right"><b>$</b></td> <td align="right"><b>10</b></td> <td> </td> <td> </td> <td align="right"><b>$</b></td> <td align="right"><b>1</b></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td align="right"><b>$</b></td> <td align="right"><b>10</b></td> <td> </td> <td> </td> <td align="right"><b>$</b></td> <td align="right"><b>21</b></td> <td> </td> </tr> <tr style="font-size: 1px"> <td> </td> <td> </td> <td colspan="27" align="left" style="border-top: 3px double #000000"> </td> </tr>  </table> </div> <div align="justify" style="font-size: 10pt; margin-top: 16pt">Restructuring and restructuring-related costs recorded in the second quarter of 2009 by plan were as follows: </div> <div align="center"> <table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">  <tr valign="bottom"> <td width="23%"> </td> <td width="4%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="4%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="4%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="4%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="4%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="4%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="4%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="3"><b>Termination</b></td> <td> </td> <td nowrap="nowrap" align="center" colspan="3"><b>Retention</b></td> <td> </td> <td nowrap="nowrap" align="center" colspan="3"><b>Accelerated</b></td> <td> </td> <td nowrap="nowrap" align="center" colspan="3"><b>Transfer</b></td> <td> </td> <td nowrap="nowrap" align="center" colspan="3"><b>Fixed Asset</b></td> <td> </td> <td nowrap="nowrap" align="center" colspan="3"> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="3"> </td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td nowrap="nowrap" align="left"><i>(in millions)</i></td> <td> </td> <td nowrap="nowrap" align="center" colspan="3"><b>Benefits</b></td> <td> </td> <td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 0px solid #000000"><b>Incentives</b></td> <td> </td> <td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 0px solid #000000"><b>Depreciation</b></td> <td> </td> <td nowrap="nowrap" align="center" colspan="3"><b>Costs</b></td> <td> </td> <td nowrap="nowrap" align="center" colspan="3"><b>Write-offs</b></td> <td> </td> <td nowrap="nowrap" align="center" colspan="3"><b>Other</b></td> <td> </td> <td nowrap="nowrap" align="center" colspan="3"><b>Total</b></td> </tr>   <tr style="font-size: 1px"> <td colspan="29" align="left" style="border-top: 1px solid #000000"> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">2007 Restructuring plan </div></td> <td> </td> <td align="right">$</td> <td align="right">2</td> <td> </td> <td> </td> <td align="right">$</td> <td align="right">6</td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td align="right">$</td> <td align="right">6</td> <td> </td> <td> </td> <td align="right">$</td> <td align="right">3</td> <td> </td> <td> </td> <td align="right">$</td> <td align="right">7</td> <td> </td> <td> </td> <td align="right">$</td> <td align="right">24</td> <td> </td> </tr> <tr valign="bottom"> <td nowrap="nowrap"> <div style="margin-left:15px; text-indent:-15px">Plant Network Optimization plan </div></td> <td> </td> <td> </td> <td align="right">1</td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td align="right">$</td> <td align="right">2</td> <td> </td> <td> </td> <td> </td> <td align="right">3</td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td align="right">6</td> <td> </td> </tr> <tr style="font-size: 1px"> <td> </td> <td> </td> <td colspan="27" align="left" style="border-top: 1px solid #000000"> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td align="right"><b>$</b></td> <td align="right"><b>3</b></td> <td> </td> <td> </td> <td align="right"><b>$</b></td> <td align="right"><b>6</b></td> <td> </td> <td> </td> <td align="right"><b>$</b></td> <td align="right"><b>2</b></td> <td> </td> <td> </td> <td align="right"><b>$</b></td> <td align="right"><b>9</b></td> <td> </td> <td> </td> <td align="right"><b>$</b></td> <td align="right"><b>3</b></td> <td> </td> <td> </td> <td align="right"><b>$</b></td> <td align="right"><b>7</b></td> <td> </td> <td> </td> <td align="right"><b>$</b></td> <td align="right"><b>30</b></td> <td> </td> </tr> <tr style="font-size: 1px"> <td> </td> <td> </td> <td colspan="27" align="left" style="border-top: 3px double #000000"> </td> </tr>  </table> </div> <div align="justify" style="font-size: 10pt; margin-top: 16pt">We recorded restructuring charges of $36 million in the first half of 2009 and $39 million in the first half of 2008. In addition, we recorded expenses within other lines of our unaudited condensed consolidated statements of operations related to our restructuring initiatives of $30 million in the first half of 2009 and $26 million in the first half of 2008. The following presents these costs by major type and line item within our accompanying unaudited condensed consolidated statements of operations: </div> <div align="left" style="font-size: 10pt; margin-top: 12pt"><b><u>Six Months Ended June 30, 2009</u></b> </div> <div align="center"> <table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">  <tr valign="bottom"> <td width="23%"> </td> <td width="4%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="4%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="4%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="4%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="4%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="4%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="4%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="3"><b>Termination</b></td> <td> </td> <td nowrap="nowrap" align="center" colspan="3"><b>Retention</b></td> <td> </td> <td nowrap="nowrap" align="center" colspan="3"><b>Accelerated</b></td> <td> </td> <td nowrap="nowrap" align="center" colspan="3"><b>Transfer </b></td> <td> </td> <td nowrap="nowrap" align="center" colspan="3"><b>Fixed Asset</b></td> <td> </td> <td nowrap="nowrap" align="center" colspan="3"> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="3"> </td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td nowrap="nowrap" align="left"><i>(in millions)</i></td> <td> </td> <td nowrap="nowrap" align="center" colspan="3"><b>Benefits</b></td> <td> </td> <td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 0px solid #000000"><b>Incentives</b></td> <td> </td> <td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 0px solid #000000"><b>Depreciation</b></td> <td> </td> <td nowrap="nowrap" align="center" colspan="3"><b> Costs</b></td> <td> </td> <td nowrap="nowrap" align="center" colspan="3"><b>Write-offs</b></td> <td> </td> <td nowrap="nowrap" align="center" colspan="3"><b>Other</b></td> <td> </td> <td nowrap="nowrap" align="center" colspan="3"><b>Total</b></td> </tr>   <tr style="font-size: 1px"> <td colspan="29" align="left" style="border-top: 1px solid #000000"> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px"><b>Restructuring charges</b> </div></td> <td> </td> <td align="right"><b>$</b></td> <td align="right"><b>21</b></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td align="right"><b>$</b></td> <td align="right"><b>3</b></td> <td> </td> <td> </td> <td align="right"><b>$</b></td> <td align="right"><b>12</b></td> <td> </td> <td> </td> <td align="right"><b>$</b></td> <td align="right"><b>36</b></td> <td> </td> </tr> <tr valign="bottom" STYLE="FONT-SIZE:8PT"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px"><b>Restructuring-related expenses:</b> </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:30px; text-indent:-15px">Cost of products sold </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td align="right">$</td> <td align="right">3</td> <td> </td> <td> </td> <td align="right">$</td> <td align="right">4</td> <td> </td> <td> </td> <td align="right">$</td> <td align="right">15</td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td align="right">22</td> <td> </td> </tr> <tr valign="bottom"> <td nowrap="nowrap"> <div style="margin-left:30px; text-indent:-15px">Selling, general and administrative expenses </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td align="right">6</td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td align="right">6</td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:30px; text-indent:-15px">Research and development expenses </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td align="right">2</td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td align="right">2</td> <td> </td> </tr> <tr style="font-size: 1px"> <td> </td> <td> </td> <td colspan="27" align="left" style="border-top: 1px solid #000000"> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td align="right"><b>11</b></td> <td> </td> <td> </td> <td> </td> <td align="right"><b>4</b></td> <td> </td> <td> </td> <td> </td> <td align="right"><b>15</b></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td align="right"><b>30</b></td> <td> </td> </tr> <tr style="font-size: 1px"> <td> </td> <td> </td> <td colspan="27" align="left" style="border-top: 1px solid #000000"> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td align="right"><b>$</b></td> <td align="right"><b>21</b></td> <td> </td> <td> </td> <td align="right"><b>$</b></td> <td align="right"><b>11</b></td> <td> </td> <td> </td> <td align="right"><b>$</b></td> <td align="right"><b>4</b></td> <td> </td> <td> </td> <td align="right"><b>$</b></td> <td align="right"><b>15</b></td> <td> </td> <td> </td> <td align="right"><b>$</b></td> <td align="right"><b>3</b></td> <td> </td> <td> </td> <td align="right"><b>$</b></td> <td align="right"><b>12</b></td> <td> </td> <td> </td> <td align="right"><b>$</b></td> <td align="right"><b>66</b></td> <td> </td> </tr> <tr style="font-size: 1px"> <td> </td> <td> </td> <td colspan="27" align="left" style="border-top: 3px double #000000"> </td> </tr>  </table> </div> <div align="left" style="font-size: 10pt; margin-top: 12pt"><b><u>Six Months Ended June 30, 2008</u></b> </div> <div align="center"> <table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">  <tr valign="bottom"> <td width="23%"> </td> <td width="4%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="4%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="4%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="4%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="4%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="4%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="4%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="3"><b>Termination</b></td> <td> </td> <td nowrap="nowrap" align="center" colspan="3"><b>Retention</b></td> <td> </td> <td nowrap="nowrap" align="center" colspan="3"><b>Accelerated</b></td> <td> </td> <td nowrap="nowrap" align="center" colspan="3"><b>Transfer </b></td> <td> </td> <td nowrap="nowrap" align="center" colspan="3"><b>Fixed Asset</b></td> <td> </td> <td nowrap="nowrap" align="center" colspan="3"> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="3"> </td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td nowrap="nowrap" align="left"><i>(in millions)</i></td> <td> </td> <td nowrap="nowrap" align="center" colspan="3"><b>Benefits</b></td> <td> </td> <td nowrap="nowrap" align="center" colspan="3"><b>Incentives</b></td> <td> </td> <td nowrap="nowrap" align="center" colspan="3"><b>Depreciation</b></td> <td> </td> <td nowrap="nowrap" align="center" colspan="3"><b>Costs</b></td> <td> </td> <td nowrap="nowrap" align="center" colspan="3"><b>Write-offs</b></td> <td> </td> <td nowrap="nowrap" align="center" colspan="3"><b>Other</b></td> <td> </td> <td nowrap="nowrap" align="center" colspan="3"><b>Total</b></td> </tr>   <tr style="font-size: 1px"> <td colspan="29" align="left" style="border-top: 1px solid #000000"> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px"><b>Restructuring charges</b> </div></td> <td> </td> <td align="right"><b>$</b></td> <td align="right"><b>20</b></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td align="right"><b>$</b></td> <td align="right"><b>19</b></td> <td> </td> <td> </td> <td align="right"><b>$</b></td> <td align="right"><b>39</b></td> <td> </td> </tr> <tr valign="bottom" STYLE="FONT-SIZE:8PT"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px"><b>Restructuring-related expenses:</b> </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:30px; text-indent:-15px">Cost of products sold </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td align="right">$</td> <td align="right">5</td> <td> </td> <td> </td> <td align="right">$</td> <td align="right">2</td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td align="right">7</td> <td> </td> </tr> <tr valign="bottom"> <td nowrap="nowrap"> <div style="margin-left:30px; text-indent:-15px">Selling, general and administrative expenses </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td align="right">12</td> <td> </td> <td> </td> <td> </td> <td align="right">3</td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td align="right">15</td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:30px; text-indent:-15px">Research and development expenses </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td align="right">4</td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td align="right">4</td> <td> </td> </tr> <tr style="font-size: 1px"> <td> </td> <td> </td> <td colspan="27" align="left" style="border-top: 1px solid #000000"> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td align="right"><b>21</b></td> <td> </td> <td> </td> <td> </td> <td align="right"><b>5</b></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td align="right"><b>26</b></td> <td> </td> </tr> <tr style="font-size: 1px"> <td> </td> <td> </td> <td colspan="27" align="left" style="border-top: 1px solid #000000"> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td align="right"><b>$</b></td> <td align="right"><b>20</b></td> <td> </td> <td> </td> <td align="right"><b>$</b></td> <td align="right"><b>21</b></td> <td> </td> <td> </td> <td align="right"><b>$</b></td> <td align="right"><b>5</b></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td align="right"><b>$</b></td> <td align="right"><b>19</b></td> <td> </td> <td> </td> <td align="right"><b>$</b></td> <td align="right"><b>65</b></td> <td> </td> </tr> <tr style="font-size: 1px"> <td> </td> <td> </td> <td colspan="27" align="left" style="border-top: 3px double #000000"> </td> </tr>  </table> </div>   </div>  <div style="font-family: 'Times New Roman',Times,serif"> <div align="justify" style="font-size: 10pt; margin-top: 6pt">Restructuring and restructuring-related costs recorded in the first half of 2009 by plan were as follows: </div> <div align="center"> <table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">  <tr valign="bottom"> <td width="23%"> </td> <td width="4%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="4%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="4%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="4%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="4%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="4%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="4%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="3"><b>Termination</b></td> <td> </td> <td nowrap="nowrap" align="center" colspan="3"><b>Retention</b></td> <td> </td> <td nowrap="nowrap" align="center" colspan="3"><b>Accelerated</b></td> <td> </td> <td nowrap="nowrap" align="center" colspan="3"><b>Transfer</b></td> <td> </td> <td nowrap="nowrap" align="center" colspan="3"><b>Fixed Asset</b></td> <td> </td> <td nowrap="nowrap" align="center" colspan="3"> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="3"> </td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td nowrap="nowrap" align="left"><i>(in millions)</i></td> <td> </td> <td nowrap="nowrap" align="center" colspan="3"><b>Benefits</b></td> <td> </td> <td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 0px solid #000000"><b>Incentives</b></td> <td> </td> <td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 0px solid #000000"><b>Depreciation</b></td> <td> </td> <td nowrap="nowrap" align="center" colspan="3"><b>Costs</b></td> <td> </td> <td nowrap="nowrap" align="center" colspan="3"><b>Write-offs</b></td> <td> </td> <td nowrap="nowrap" align="center" colspan="3"><b>Other</b></td> <td> </td> <td nowrap="nowrap" align="center" colspan="3"><b>Total</b></td> </tr>   <tr style="font-size: 1px"> <td colspan="29" align="left" style="border-top: 1px solid #000000"> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">2007 Restructuring plan </div></td> <td> </td> <td align="right">$</td> <td align="right">4</td> <td> </td> <td> </td> <td align="right">$</td> <td align="right">11</td> <td> </td> <td> </td> <td align="right">$</td> <td align="right">1</td> <td> </td> <td> </td> <td align="right">$</td> <td align="right">10</td> <td> </td> <td> </td> <td align="right">$</td> <td align="right">3</td> <td> </td> <td> </td> <td align="right">$</td> <td align="right">12</td> <td> </td> <td> </td> <td align="right">$</td> <td align="right">41</td> <td> </td> </tr> <tr valign="bottom"> <td nowrap="nowrap"> <div style="margin-left:15px; text-indent:-15px">Plant Network Optimization plan </div></td> <td> </td> <td> </td> <td align="right">17</td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td align="right">3</td> <td> </td> <td> </td> <td> </td> <td align="right">5</td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td align="right">25</td> <td> </td> </tr> <tr style="font-size: 1px"> <td> </td> <td> </td> <td colspan="27" align="left" style="border-top: 1px solid #000000"> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td align="right"><b>$</b></td> <td align="right"><b>21</b></td> <td> </td> <td> </td> <td align="right"><b>$</b></td> <td align="right"><b>11</b></td> <td> </td> <td> </td> <td align="right"><b>$</b></td> <td align="right"><b>4</b></td> <td> </td> <td> </td> <td align="right"><b>$</b></td> <td align="right"><b>15</b></td> <td> </td> <td> </td> <td align="right"><b>$</b></td> <td align="right"><b>3</b></td> <td> </td> <td> </td> <td align="right"><b>$</b></td> <td align="right"><b>12</b></td> <td> </td> <td> </td> <td align="right"><b>$</b></td> <td align="right"><b>66</b></td> <td> </td> </tr> <tr style="font-size: 1px"> <td> </td> <td> </td> <td colspan="27" align="left" style="border-top: 1px solid #000000"> </td> </tr>  </table> </div> <div align="justify" style="font-size: 10pt; margin-top: 6pt">Termination benefits represent amounts incurred pursuant to our on-going benefit arrangements and amounts for “one-time” involuntary termination benefits, and have been recorded in accordance with FASB Statement No. 112, <i>Employer’s Accounting for Postemployment Benefits </i>and FASB Statement No. 146, <i>Accounting for Costs Associated with Exit or Disposal Activities. </i>We expect to record the additional termination benefits throughout the remainder of 2009 and 2010 when we identify with more specificity the job classifications, functions and locations of the remaining head count to be eliminated. Retention incentives represent cash incentives, which are being recorded over the future service period during which eligible employees must remain employed with us in order to retain the payment. Other restructuring costs, which represent primarily consulting fees, are being recognized and measured at their fair value in the period in which the liability is incurred in accordance with Statement No. 146. Accelerated depreciation is being recorded over the new remaining useful life of the related assets, and production line transfer costs are being recorded as incurred. </div> <div align="justify" style="font-size: 10pt; margin-top: 6pt">We have incurred cumulative restructuring charges of $290 million and restructuring-related costs of $93 million since we committed to each plan. The following presents these costs by major type and by plan: </div> <div align="center"> <table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="75%">  <tr valign="bottom"> <td width="64%"> </td> <td width="5%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="5%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="5%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="3"><b>2007</b></td> <td> </td> <td nowrap="nowrap" align="center" colspan="3"><b>Plant</b></td> <td> </td> <td nowrap="nowrap" align="center" colspan="3"> </td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="3"><b>Restructuring</b></td> <td> </td> <td nowrap="nowrap" align="center" colspan="3"><b>Network</b></td> <td> </td> <td nowrap="nowrap" align="center" colspan="3"> </td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td nowrap="nowrap" align="left"><i>(in millions)</i></td> <td> </td> <td nowrap="nowrap" align="center" colspan="3"><b>Plan</b></td> <td> </td> <td nowrap="nowrap" align="center" colspan="3"><b>Optimization</b></td> <td> </td> <td nowrap="nowrap" align="center" colspan="3"><b>Total</b></td> </tr>   <tr style="font-size: 1px"> <td colspan="13" align="left" style="border-top: 1px solid #000000"> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:30px; text-indent:-15px">Termination benefits </div></td> <td> </td> <td align="right">$</td> <td align="right">196</td> <td> </td> <td> </td> <td align="right">$</td> <td align="right">17</td> <td> </td> <td> </td> <td align="right">$</td> <td align="right">213</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:30px; text-indent:-15px">Fixed asset write-offs </div></td> <td> </td> <td> </td> <td align="right">21</td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td align="right">21</td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:30px; text-indent:-15px">Other </div></td> <td> </td> <td> </td> <td align="right">56</td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td align="right">56</td> <td> </td> </tr> <tr style="font-size: 1px"> <td> </td> <td> </td> <td colspan="11" align="left" style="border-top: 1px solid #000000"> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px"><b>Total restructuring charges</b> </div></td> <td> </td> <td> </td> <td align="right"><b>273</b></td> <td> </td> <td> </td> <td> </td> <td align="right"><b>17</b></td> <td> </td> <td> </td> <td> </td> <td align="right"><b>290</b></td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:30px; text-indent:-15px">Retention incentives </div></td> <td> </td> <td> </td> <td align="right">59</td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td align="right">59</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:30px; text-indent:-15px">Accelerated depreciation </div></td> <td> </td> <td> </td> <td align="right">12</td> <td> </td> <td> </td> <td> </td> <td align="right">3</td> <td> </td> <td> </td> <td> </td> <td align="right">15</td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:30px; text-indent:-15px">Transfer costs </div></td> <td> </td> <td> </td> <td align="right">14</td> <td> </td> <td> </td> <td> </td> <td align="right">5</td> <td> </td> <td> </td> <td> </td> <td align="right">19</td> <td> </td> </tr> <tr style="font-size: 1px"> <td> </td> <td> </td> <td colspan="11" align="left" style="border-top: 1px solid #000000"> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px"><b>Restructuring-related expenses</b> </div></td> <td> </td> <td> </td> <td align="right"><b>85</b></td> <td> </td> <td> </td> <td> </td> <td align="right"><b>8</b></td> <td> </td> <td> </td> <td> </td> <td align="right"><b>93</b></td> <td> </td> </tr> <tr style="font-size: 1px"> <td> </td> <td> </td> <td colspan="11" align="left" style="border-top: 1px solid #000000"> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td align="right"><b>$</b></td> <td align="right"><b>358</b></td> <td> </td> <td> </td> <td align="right"><b>$</b></td> <td align="right"><b>25</b></td> <td> </td> <td> </td> <td align="right"><b>$</b></td> <td align="right"><b>383</b></td> <td> </td> </tr> <tr style="font-size: 1px"> <td> </td> <td> </td> <td colspan="11" align="left" style="border-top: 3px double #000000"> </td> </tr>  </table> </div> <div align="justify" style="font-size: 10pt; margin-top: 6pt">In the second quarter of 2009, we made cash payments of approximately $20 million associated with restructuring initiatives pursuant to our 2007 Restructuring plan, which related to termination benefits and retention incentives, production line transfer costs and other restructuring costs. We have made cumulative cash payments of approximately $270 million since we committed to the 2007 Restructuring plan. These payments were made using cash generated from our operations. We expect to record the remaining costs associated with the 2007 Restructuring plan during the remainder of 2009 and make future cash payments throughout the remainder of 2009 and into 2010 using cash generated from operations. In the second quarter of 2009, we made cash payments of approximately $3 million associated with our Plant Network Optimization plan, which related to production line transfer costs. We have made cumulative cash payments of $5 million since committing to the Plant Network Optimization plan. These payments were made using cash generated from our operations. We expect to record the remaining costs associated with the Plant Network Optimization plan through 2011, and make future cash payments through 2011 using cash generated from operations. </div> <div align="justify" style="font-size: 10pt; margin-top: 6pt">The following is a rollforward of the liability associated with our restructuring initiatives, since the inception of the respective plan, which is reported as a component of accrued expenses included in our accompanying unaudited condensed consolidated balance sheets. </div>   </div>  <div style="font-family: 'Times New Roman',Times,serif"> <div align="center"> <table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">  <tr valign="bottom"> <td width="40%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2"><b>Plant</b></td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2"> </td> <td> </td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2"><b>Network</b></td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2"> </td> <td> </td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="10" style="border-bottom: 1px solid #000000"><b>2007 Restructuring Plan</b></td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>Optimization</b></td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2"> </td> <td> </td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2"><b>Termination</b></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2"><b>Termination</b></td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2"> </td> <td> </td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td nowrap="nowrap" align="left"><i>(in millions)</i></td> <td> </td> <td nowrap="nowrap" align="center" colspan="2"><b>Benefits</b></td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2"><b>Other</b></td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2"><b>Subtotal</b></td> <td> </td> <td> </td> <td style="border-bottom: 1px solid #000000" nowrap="nowrap" align="center" colspan="2"><b>Benefits</b></td> <td> </td> <td> </td> <td style="border-bottom: 1px solid #000000" nowrap="nowrap" align="center" colspan="2"><b>Total</b></td> <td style="border-top: 0px solid #000000"> </td> </tr>   <tr style="font-size: 1px"> <td STYLE="border-top:1px solid black"> </td> <td> </td> <td colspan="11" align="left" style="border-top: 1px solid #000000"> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Charges </div></td> <td> </td> <td align="left">$</td> <td align="right">158</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">10</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">168</td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">168</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Cash payments </div></td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(23</td> <td nowrap="nowrap">)</td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(8</td> <td nowrap="nowrap">)</td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(31</td> <td nowrap="nowrap">)</td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(31</td> <td nowrap="nowrap">)</td> </tr> <tr style="font-size: 1px"> <td> </td> <td> </td> <td colspan="11" nowrap="nowrap" align="left" style="border-top: 1px solid #000000"> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000; border-top: 1px solid #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000; border-top: 1px solid #000000"> </td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px"><b>Balance as of December 31, 2007</b> </div></td> <td> </td> <td> </td> <td align="right"><b>135</b></td> <td> </td> <td> </td> <td> </td> <td align="right"><b>2</b></td> <td> </td> <td> </td> <td> </td> <td align="right"><b>137</b></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td align="right"><b>137</b></td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Charges </div></td> <td> </td> <td> </td> <td align="right">34</td> <td> </td> <td> </td> <td> </td> <td align="right">34</td> <td> </td> <td> </td> <td> </td> <td align="right">68</td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td align="right">68</td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Cash payments </div></td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(128</td> <td nowrap="nowrap">)</td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(35</td> <td nowrap="nowrap">)</td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(163</td> <td nowrap="nowrap">)</td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(163</td> <td nowrap="nowrap">)</td> </tr> <tr style="font-size: 1px"> <td> </td> <td> </td> <td colspan="11" nowrap="nowrap" align="left" style="border-top: 1px solid #000000"> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000; border-top: 1px solid #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000; border-top: 1px solid #000000"> </td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px"><b>Balance as of December 31, 2008</b> </div></td> <td> </td> <td> </td> <td align="right"><b>41</b></td> <td> </td> <td> </td> <td> </td> <td align="right"><b>1</b></td> <td> </td> <td> </td> <td> </td> <td align="right"><b>42</b></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td align="right"><b>42</b></td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Charges </div></td> <td> </td> <td> </td> <td align="right">4</td> <td> </td> <td> </td> <td> </td> <td align="right">12</td> <td> </td> <td> </td> <td> </td> <td align="right">16</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">17</td> <td> </td> <td> </td> <td> </td> <td align="right">33</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Cash payments </div></td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(13</td> <td nowrap="nowrap">)</td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(12</td> <td nowrap="nowrap">)</td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(25</td> <td nowrap="nowrap">)</td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(25</td> <td nowrap="nowrap">)</td> </tr> <tr style="font-size: 1px"> <td> </td> <td> </td> <td colspan="11" nowrap="nowrap" align="left" style="border-top: 1px solid #000000"> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000; border-top: 1px solid #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000; border-top: 1px solid #000000"> </td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px"><b>Balance as of June 30, 2009</b> </div></td> <td> </td> <td align="left"><b>$</b></td> <td align="right"><b>32</b></td> <td> </td> <td> </td> <td align="left"><b>$</b></td> <td align="right"><b>1</b></td> <td> </td> <td> </td> <td align="left"><b>$</b></td> <td align="right"><b>33</b></td> <td> </td> <td> </td> <td align="left"><b>$</b></td> <td align="right"><b>17</b></td> <td> </td> <td> </td> <td align="left"><b>$</b></td> <td align="right"><b>50</b></td> <td> </td> </tr> <tr style="font-size: 1px"> <td> </td> <td> </td> <td colspan="11" align="left" style="border-top: 3px double #000000"> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000; border-top: 3px double #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000; border-top: 3px double #000000"> </td> <td> </td> </tr>  </table> </div> <div align="justify" style="font-size: 10pt; margin-top: 6pt">In addition to the amounts in the rollforward above, we have incurred cumulative charges of $106 million associated with retention incentives, asset write-offs, accelerated depreciation and transfer costs pursuant to our 2007 Restructuring plan, and made cumulative cash payments of approximately $38 million associated with retention incentives and $14 million associated with transfer costs. We have also incurred cumulative charges of $9 million associated with accelerated depreciation and transfer costs pursuant to our Plant Network Optimization plan and made cumulative cash payments of $5 million. </div> </div> </body> </html>

<html> <head></head> <body>  <div style="font-family: 'Times New Roman',Times,serif"> <div align="left" style="font-size: 10pt; margin-top: 18pt"><b>NOTE N— NEW ACCOUNTING PRONOUNCEMENTS</b> </div> <div align="justify" style="font-size: 10pt; margin-top: 6pt"><i>Statement No. 141(R)</i> </div> <div align="justify" style="font-size: 10pt; margin-top: 6pt">In December 2007, the FASB issued Statement No. 141(R), <i>Business Combinations</i>, a replacement for Statement No. 141. Statement No. 141(R) retains the fundamental requirements of Statement No. 141, but requires the recognition of all assets acquired and liabilities assumed in a business combination at their fair values as of the acquisition date. It also requires the recognition of assets acquired and liabilities assumed arising from contractual contingencies at their acquisition date fair values. Additionally, Statement No. 141(R) supersedes FASB Interpretation No. 4, <i>Applicability of FASB Statement No. 2 to Business Combinations Accounted for by the Purchase Method</i>, which required research and development assets acquired in a business combination that had no alternative future use to be measured at their fair values and expensed at the acquisition date. Statement No. 141(R) now requires that purchased research and development be recognized as an indefinite-lived intangible asset until the completion or abandonment of the associated research and development efforts. We were required to adopt Statement No. 141(R) prospectively for any acquisitions on or after January 1, 2009. During the first half of 2009, we did not consummate any material business combinations. </div> <div align="left" style="font-size: 10pt; margin-top: 12pt"><i>Statement No. 161</i> </div> <div align="justify" style="font-size: 10pt; margin-top: 6pt">In March 2008, the FASB issued Statement No. 161, <i>Disclosures about Derivative Instruments and Hedging Activities</i>, which amends Statement No. 133, <i>Accounting for Derivative Instruments and Hedging Activities</i>, by requiring expanded disclosures about an entity’s derivative instruments and hedging activities. Statement No. 161 requires increased qualitative, quantitative, and credit-risk disclosures, including (a) how and why an entity uses derivative instruments, (b) how derivative instruments and related hedged items are accounted for under Statement No. 133 and its related interpretations, and (c) how derivative instruments and related hedged items affect an entity’s financial position and financial performance. We adopted Statement No. 161 as of our first quarter ended March 31, 2009. Refer to <i>Note B — Financial Instruments </i>for more information. </div> <div align="left" style="font-size: 10pt; margin-top: 12pt"><i>Statement No. 165</i> </div> <div align="justify" style="font-size: 10pt; margin-top: 6pt">In May 2009, the FASB issued Statement No. 165, <i>Subsequent Events, </i>which establishes general standards of accounting for and disclosure of events occurring after the balance sheet date, but before the financial statements are issued or available to be issued. Statement No. 165 also requires entities to disclose the date through which it has evaluated subsequent events and the basis for that date. We adopted Statement No. 165 for our second quarter ended June 30, 2009. Its adoption did not impact our results of operations or financial condition. Refer to<br /> <i>Note O — Subsequent Events </i>for more information regarding our evaluation of subsequent events. </div> <div align="left" style="font-size: 10pt; margin-top: 12pt"><i>Statement No. 168</i> </div> <div align="justify" style="font-size: 10pt; margin-top: 6pt">In June 2009, the FASB issued Statement No. 168, <i>The FASB Accounting Standards Codification</i><font style="font-family: Symbol">Ô</font> <i>and the Hierarchy of Generally Accepted Accounting Principles, </i>which establishes the FASB Accounting Standards Codification<font style="font-family: Symbol">Ô</font> as the single source of authoritative U.S. GAAP. The Codification<font style="font-family: Symbol">Ô</font> will supersede all existing non-SEC accounting and reporting standards. As a result, upon adoption, all references to accounting literature in our SEC filings will conform to the appropriate reference within the Codification<font style="font-family: Symbol">Ô</font>. We are required to adopt Statement No. 168 for our third quarter ending September 30, 2009. We do not expect the adoption of this standard to have an impact on our financial position or results of operations. </div> </div> </body> </html>

250000000 0 0 0 0 0 287000000 0 0 0 16000000 16000000 645000000 410000000 29000000 16000000 17000000 17000000 false --12-31 2009-06-30 10-Q 0000885725 1507498546 Yes Large Accelerated Filer 16800000000 Boston Scientific Corporation No Yes

1402000000

1444000000

239000000

213000000

2612000000

2021000000

-53000000

-22000000

15944000000

16009000000

279000000

135000000

255000000

126000000

10000000

27139000000

26193000000

5452000000

4796000000

1452000000

1616000000

1641000000

1194000000

164000000

-447000000

0.01

2000000000

1501635679

1507258301

15000000

1185000000

604000000

1237000000

630000000

2000000

330000000

911000000

870000000

2262000000

2165000000

0.28

0.07

0.1

0.28

0.07

0.1

2000000

4000000

12421000000

12425000000

2886000000

1420000000

2847000000

1444000000

562000000

100000000

83000000

180000000

142000000

2000000

-62000000

22000000

7244000000

6981000000

249000000

118000000

194000000

92000000

853000000

878000000

27139000000

26193000000

3233000000

2750000000

6743000000

5920000000

-860000000

-487000000

498000000

-640000000

524000000

680000000

2003000000

1117000000

2560000000

1169000000

883000000

303000000

287000000

275000000

294000000

272000000

380000000

186000000

1727000000

1944000000

-72000000

-85000000

-10000000

-3000000

11000000

35000000

669000000

517000000

21000000

4000000

136000000

134000000

0.01

50000000

1288000000

48000000

13000000

-912000000

-500000000

47000000

50000000

420000000

98000000

145000000

158000000

1728000000

1719000000

497000000

253000000

520000000

263000000

39000000

10000000

36000000

13000000

-2732000000

-2588000000

94000000

48000000

98000000

53000000

4071000000

2024000000

4084000000

2074000000

1315000000

655000000

1321000000

671000000

13174000000

13414000000

1502600000

1505200000

1511600000

1514500000

1495800000

1497600000

1505800000

1506800000