10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the quarterly period ended September 30, 2013

OR

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

Commission File No. 1-11083

BOSTON SCIENTIFIC CORPORATION

(Exact name of registrant as specified in its charter)

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

ONE BOSTON SCIENTIFIC PLACE, NATICK, MASSACHUSETTS 01760-1537

(Address of principal executive offices) (zip code)

(508) 650-8000

(Registrant’s telephone number, including area code)

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

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

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

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

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

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

	Shares outstanding
Class	as of October 31, 2013
Common Stock, $.01 par value	1,335,221,407

TABLE OF CONTENTS

		Page No.
PART I	FINANCIAL INFORMATION	3
ITEM 1.	Condensed Consolidated Financial Statements	3
	Condensed Consolidated Statements of Operations	3
	Condensed Consolidated Statements of Comprehensive Income (Loss)	4
	Condensed Consolidated Balance Sheets	5
	Condensed Consolidated Statements of Cash Flows	6
	Notes to the Condensed Consolidated Financial Statements	7
ITEM 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	41
ITEM 3.	Quantitative and Qualitative Disclosures About Market Risk	72
ITEM 4.	Controls and Procedures	72
PART II	OTHER INFORMATION	73
ITEM 1.	Legal Proceedings	73
ITEM 1A.	Risk Factors	73
ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	73
ITEM 6.	Exhibits	75
SIGNATURE		76

2

PART I

FINANCIAL INFORMATION

ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

BOSTON SCIENTIFIC CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

	Three Months Ended September 30,						Nine Months Ended September 30,
in millions, except per share data	2013			2012			2013			2012
Net sales	$	1,735		$	1,735		$	5,305		$	5,428
Cost of products sold	510			558			1,618			1,767
Gross profit	1,225			1,177			3,687			3,661
Operating expenses:
Selling, general and administrative expenses	658			589			1,950			1,895
Research and development expenses	217			220			644			648
Royalty expense	28			29			115			125
Amortization expense	101			99			305			294
Goodwill impairment charges	—			748			423			4,350
Intangible asset impairment charges	—			13			53			142
Contingent consideration (benefit) expense	23			(20		)	(18		)	(9		)
Restructuring charges	19			54			55			93
Litigation-related charges	76			50			206			119
Gain on divestiture	—			(11		)	(40		)	(11		)
	1,122			1,771			3,693			7,646
Operating income (loss)	103			(594		)	(6		)	(3,985		)
Other income (expense):
Interest expense	(137		)	(65		)	(266		)	(197		)
Other, net	(6		)	(4		)	(10		)	23
Income (loss) before income taxes	(40		)	(663		)	(282		)	(4,159		)
Income tax expense (benefit)	(35		)	1			(53		)	(30		)
Net income (loss)	$	(5	)	$	(664	)	$	(229	)	$	(4,129	)
Net income (loss) per common share — basic	$	0.00		$	(0.48	)	$	(0.17	)	$	(2.91	)
Net income (loss) per common share — assuming dilution	$	0.00		$	(0.48	)	$	(0.17	)	$	(2.91	)
Weighted-average shares outstanding
Basic	1,340.3			1,392.5			1,345.2			1,420.3
Assuming dilution	1,340.3			1,392.5			1,345.2			1,420.3

See notes to the unaudited condensed consolidated financial statements.

3

BOSTON SCIENTIFIC CORPORATION AND SUBSIDIARIES

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

	Three Months Ended September 30,						Nine Months Ended September 30,
(in millions)	2013			2012			2013			2012
Net income (loss)	$	(5	)	$	(664	)	$	(229	)	$	(4,129	)
Other comprehensive income:
Foreign currency translation adjustment	10			2			8			9
Net change in unrealized gains and losses on derivative financial instruments, net of tax	(38		)	(27		)	81			17
Total other comprehensive income (loss)	(28		)	(25		)	89			26
Total comprehensive income (loss)	$	(33	)	$	(689	)	$	(140	)	$	(4,103	)

See notes to the unaudited condensed consolidated financial statements.

4

BOSTON SCIENTIFIC CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

	As of
	September 30,			December 31,
in millions, except share and per share data	2013			2012
	(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	571		$	207
Trade accounts receivable, net	1,238			1,217
Inventories	895			884
Deferred income taxes	536			433
Prepaid expenses and other current assets	285			281
Total current assets	3,525			3,022
Property, plant and equipment, net	1,530			1,564
Goodwill	5,553			5,973
Other intangible assets, net	5,936			6,289
Other long-term assets	373			306
	$	16,917		$	17,154
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Current debt obligations	$	3		$	4
Accounts payable	238			232
Accrued expenses	1,346			1,284
Other current liabilities	315			252
Total current liabilities	1,902			1,772
Long-term debt	4,246			4,252
Deferred income taxes	1,623			1,713
Other long-term liabilities	2,583			2,547
Commitments and contingencies
Stockholders’ equity
Preferred stock, $.01 par value - authorized 50,000,000 shares, none issued and outstanding
Common stock, $.01 par value - authorized 2,000,000,000 shares and issued 1,557,892,509 shares as of September 30, 2013 and 1,542,347,188 shares as of December 31, 2012	16			15
Treasury stock, at cost - 219,056,477 shares as of September 30, 2013 and 186,635,532 shares as of December 31, 2012	(1,367		)	(1,092		)
Additional paid-in capital	16,536			16,429
Accumulated deficit	(8,678		)	(8,449		)
Accumulated other comprehensive income (loss), net of tax	56			(33		)
Total stockholders’ equity	6,563			6,870
	$	16,917		$	17,154

See notes to the unaudited condensed consolidated financial statements.

5

BOSTON SCIENTIFIC CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

	Nine Months Ended September 30,
in millions	2013			2012
Cash provided by operating activities	$	809		$	891
Investing activities:
Purchases of property, plant and equipment	(161		)	(164		)
Proceeds from sale of property, plant and equipment	53			—
Purchases of privately held securities	(13		)	—
Purchase of notes receivable	(8		)	—
Payments for acquisitions of businesses, net of cash acquired	—			(134		)
Payments for investments in companies and acquisitions of certain technologies	(13		)	(18		)
Proceeds from business divestitures, net of costs	30			10
Cash used for investing activities	(112		)	(306		)
Financing activities:
Payments on long-term borrowings	(1,450		)	(9		)
Proceeds from long-term borrowings, net of debt issuance costs	1,440			—
Payments on borrowings from credit facilities	(240		)	(260		)
Proceeds from borrowings on credit facilities	240			251
Payment of contingent consideration	(107		)	(4		)
Payments for acquisitions of treasury stock	(275		)	(500		)
Proceeds from issuances of shares of common stock	59			20
Cash used for financing activities	(333		)	(502		)
Effect of foreign exchange rates on cash	—			2
Net increase in cash and cash equivalents	364			85
Cash and cash equivalents at beginning of period	207			267
Cash and cash equivalents at end of period	$	571		$	352
Supplemental Information
Non-cash operating activities:
Stock-based compensation expense	$	77		$	85

See notes to the unaudited condensed consolidated financial statements.

6

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE A – BASIS OF PRESENTATION

The accompanying unaudited condensed consolidated financial statements of Boston Scientific Corporation have been prepared in accordance with accounting principles generally accepted in the United States (U.S. GAAP) and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments (consisting only of normal recurring adjustments) considered necessary for fair presentation have been included. Operating results for the three and nine months ended September 30, 2013 are not necessarily indicative of the results that may be expected for the year ending December 31, 2013. For further information, refer to the consolidated financial statements and footnotes thereto included in Item 8 of our 2012 Annual Report filed on Form 10-K.

Effective as of January 1, 2013, we reorganized our business from geographic regions to fully operationalized global business units. Our reorganization changed our reporting structure and changed the composition of our reporting units. As a result, we have reclassified certain prior year amounts to conform to the current year’s presentation. See Note D - Goodwill and Other Intangible Assets and Note L – Segment Reporting for further details.

Subsequent Events

We evaluate events occurring after the date of our most recent accompanying unaudited condensed consolidated balance sheets for potential recognition or disclosure in our financial statements. We did not identify any material subsequent events requiring adjustment to our accompanying unaudited condensed consolidated financial statements (recognized subsequent events) for the three and nine month periods ended September 30, 2013. Those items requiring disclosure (unrecognized subsequent events) in the financial statements have been disclosed accordingly. Refer to Note J - Commitments and Contingencies and Note B - Acquisitions for more information.

NOTE B – ACQUISITIONS

We did not close any material acquisitions during the first nine months of 2013. On November 1, 2013, we completed the acquisition of the electrophysiology business of C.R. Bard Inc., for $275 million in cash. We believe that this transaction brings a strong commercial team and complementary portfolio of ablation catheters, diagnostic tools, and electrophysiology recording systems, and will allow us to better serve the global Electrophysiology market through a more comprehensive portfolio offering and sales infrastructure.

2012 Acquisition

Cameron Health, Inc.

On June 8, 2012, we completed the acquisition of the remaining equity of Cameron Health, Inc. (Cameron). Cameron has developed the world's first and only commercially available subcutaneous implantable cardioverter defibrillator - the S-ICD® system.

Our unaudited condensed consolidated financial statements include the operating results for the acquired entity from its date of acquisition. We do not present pro forma financial information for this acquisition given the results are not material to our consolidated financial statements. Transaction costs associated with this acquisition were expensed as incurred and were not material for the three and nine months ended September 30, 2013 and 2012.

Purchase Price Allocation

The components of the Cameron purchase price as of the acquisition date were as follows (in millions):

Cash, net of cash acquired	$	134
Fair value of contingent consideration	259
Fair value of prior interests	79
Fair value of debt assumed	9
	$	481

7

Prior to the acquisition, we had an equity interest in Cameron and held $40 million of notes receivable. We re-measured our previously held investments to their estimated acquisition-date fair value of $79 million and recorded a gain of $39 million in other, net in the accompanying condensed consolidated statements of operations during the second quarter of 2012. We measured the fair values of the previously held investments based on the liquidation preferences and priority of the equity interests and debt, including accrued interest. In addition, we prepaid the assumed debt obligation of Cameron for approximately $9 million during the second quarter of 2012.

Total consideration includes an initial $150 million cash payment at closing of the transaction, a payment of $150 million upon FDA approval of the S-ICD® system and up to an additional $1.050 billion of potential payments upon achievement of specified revenue-based milestones through the third quarter of 2018, which represents the end of a six-year period following FDA approval. Due to our receipt of FDA approval of Cameron's S-ICD® system, we paid the related $150 million milestone payment to the former shareholders of Cameron during the fourth quarter of 2012.

The following summarizes the Cameron purchase price allocation (in millions):

Goodwill	$	314
Amortizable intangible assets	42
Indefinite-lived intangible assets	48
Other net assets	1
Deferred income taxes	76
	$	481

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

	Amount Assigned (in millions)	Weighted Average Amortization Period (in years)	Risk-Adjusted Discount Rates used in Purchase Price Allocation
Amortizable intangible assets:
Technology-related	40	11	14.0	%
Customer relationships	2	5	14.0	%
Indefinite-lived intangible assets:
Purchased research and development	48		14.0	%
	90

The technology-related intangible assets consist of technical processes, intellectual property, and institutional understanding with respect to products and processes that we expect to leverage in future products or processes and carry forward from one product generation to the next. The technology-related intangible assets are being amortized on a straight-line basis over their assigned estimated useful lives.

Purchased research and development represents the estimated fair value of acquired in-process research and development projects which have not yet reached technological feasibility. These indefinite-lived intangible assets are tested for impairment on an annual basis, or more frequently if impairment indicators are present, in accordance with U.S. GAAP and our accounting policies described in our 2012 Annual Report filed on Form 10-K. Upon completion of the associated research and development efforts, we determine the useful life of the technology and begin amortizing the assets to reflect their use over their remaining lives. Upon receiving FDA approval for Cameron's S-ICD® system in September 2012, we reclassified approximately $47 million of in-process research and development (IPR&D) to technology-related amortizable intangible assets. The total estimated costs to complete the remaining IPR&D program associated with Cameron are immaterial.

We believe that the estimated intangible asset values represent the fair value at the date of acquisition and do not exceed the amount a third party would pay for the assets. We used the income approach, specifically the discounted cash flow method and excess earnings method, to derive the fair value of the amortizable intangible assets and purchased research and development. These fair value measurements are based on significant unobservable inputs, including management estimates and assumptions and, accordingly, are classified as Level 3 within the fair value hierarchy prescribed by ASC Topic 820, Fair Value Measurements and Disclosures.

8

We recorded the excess of the aggregate purchase price over the estimated fair values of the identifiable assets acquired as goodwill, which is non-deductible for tax purposes. Goodwill was established due primarily to revenue and cash flow projections associated with future technologies, as well as synergies expected to be gained from the integration of this business into our Cardiac Rhythm Management (CRM) business and was allocated to our former geographic reportable segments based on the relative expected benefit from the business combination. Effective as of January 1, 2013, we reorganized our business from geographic regions to fully operationalized global business units. Our reorganization changed our reporting structure and changed the composition of our reporting units for goodwill impairment testing purposes. Following the reorganization, based on information regularly reviewed by our chief operating decision maker, we have three new global reportable segments consisting of: Cardiovascular, Rhythm Management, and MedSurg. See Note D - Goodwill and Other Intangible Assets for further details.

Contingent Consideration

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

We recorded a net expense related to the change in fair value of our contingent consideration liabilities of $23 million in the third quarter of 2013 and a net benefit of $18 million in the first nine months of 2013, and recorded $20 million and $9 million of a net benefit during the third quarter and first nine months of 2012, respectively. We paid $100 million and $115 million in the third quarter and first nine months of 2013, respectively, we did not make any payments in the third quarter of 2012 and made payments of $4 million during the first nine months of 2012. As of September 30, 2013, the maximum amount of future contingent consideration (undiscounted) that we could be required to pay is approximately $2.179 billion.

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

Balance as of December 31, 2012	$	(663	)
Amounts recorded to acquisition purchase accounting	(6		)
Net fair value adjustments	18
Payments made	115
Balance as of September 30, 2013	$	(536	)

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

Contingent Consideration Liability	Fair Value as of September 30, 2013	Valuation Technique	Unobservable Input	Range
Research and Development, Regulatory and Commercialization-based Milestones	$126 million	Probability Weighted Discounted Cash Flow	Discount Rate	0.8% - 1.1%
			Probability of Payment	70% - 98%
			Projected Year of Payment	2013 - 2014
Revenue-based Payments	$144 million	Discounted Cash Flow	Discount Rate	12% - 18%
			Probability of Payment	15% - 100%
			Projected Year of Payment	2013 - 2018
	$266 million	Monte Carlo	Revenue Volatility	13% - 28%
			Risk Free Rate	LIBOR Term Structure
			Projected Year of Payment	2013 - 2018

9

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

NOTE C – DIVESTITURES

In January 2011, we closed the sale of our Neurovascular business to Stryker Corporation for a purchase price of $1.500 billion, $1.450 billion of which we received at closing. We received an additional $10 million during 2012, $30 million during the second quarter of 2013, and we will receive the final $10 million of consideration contingent upon the FDA approval of the transfer of certain manufacturing facilities.

Due to our continuing involvement in the operations of the Neurovascular business, the divestiture does not meet the criteria for presentation as a discontinued operation. Revenue generated by the Neurovascular business was $2 million in the third quarter of 2013, $56 million in the first nine months of 2013, $32 million in the third quarter of 2012, and $91 million in the first nine months of 2012.

NOTE D – GOODWILL AND OTHER INTANGIBLE ASSETS

The gross carrying amount of goodwill and other intangible assets and the related accumulated amortization for intangible assets subject to amortization and accumulated write-offs of goodwill as of September 30, 2013 and December 31, 2012 is as follows:

	As of
	September 30, 2013					December 31, 2012
	Gross Carrying		Accumulated Amortization/			Gross Carrying		Accumulated Amortization/
(in millions)	Amount		Write-offs			Amount		Write-offs
Amortizable intangible assets
Technology-related	$	8,118	$	(3,254	)	$	8,020	$	(3,005	)
Patents	504		(322		)	559		(352		)
Other intangible assets	815		(465		)	810		(428		)
	$	9,437	$	(4,041	)	$	9,389	$	(3,785	)
Unamortizable intangible assets
Goodwill	$	15,453	$	(9,900	)	$	15,450	$	(9,477	)
Technology-related	197		—			242		—
	$	15,650	$	(9,900	)	$	15,692	$	(9,477	)

During the third quarter of 2013, we reclassified approximately $45 million of core technology not previously subject to amortization to amortizable intangible assets due to projected changes in the market for this technology. We tested the intangible asset for impairment prior to this reclassification and determined that the asset was not impaired. In addition, we had $343 million and $443 million of purchased research and development intangible assets as of September 30, 2013 and December 31, 2012, respectively.

10

2013 Reorganization

We assess goodwill for impairment at the reporting unit level, which is defined as an operating segment or one level below an operating segment, referred to as a component. Effective as of January 1, 2013, we reorganized our business from geographic regions to fully operationalized global business units. Our reorganization changed our reporting structure and changed the composition of our reporting units for goodwill impairment testing purposes. Following the reorganization, based on information regularly reviewed by our chief operating decision maker, we have three new global reportable segments consisting of: Cardiovascular, Rhythm Management, and MedSurg. We determined our new global reporting units by identifying our operating segments and assessing whether any components of these segments constituted a business for which discrete financial information is available and whether segment management regularly reviews the operating results of any components. Through this process, we identified the following new global reporting units effective as of January 1, 2013: Interventional Cardiology, Peripheral Interventions, Cardiac Rhythm Management (CRM), Electrophysiology, Endoscopy, Urology/Women's Health, and Neuromodulation.

To determine the amount of goodwill within our new global reporting units, on a relative fair value basis we reallocated $1.764 billion of goodwill previously allocated to our former Europe, Middle East and Africa (EMEA), Asia Pacific, Japan, and Americas international reporting units to our new global reporting units. In addition, we reallocated the goodwill previously allocated to the former U.S. divisional reporting units to each respective new global reporting unit, with the exception of the goodwill allocated to the former U.S. Cardiovascular reporting unit. The $2.380 billion of goodwill allocated to the former U.S. Cardiovascular reporting unit was reallocated between the new global Interventional Cardiology and global Peripheral Interventions reporting units on a relative fair value basis.

The following represents our goodwill balance by new global reportable segment. We restated the prior period information to conform to the current presentation:

(in millions)	Cardiovascular		Rhythm Management			MedSurg		Total
Balance as of December 31, 2012 (restated)	$	3,249	$	577		$	2,147	$	5,973
Purchase price adjustments	3		—			—		3
Goodwill acquired	—		—			—		—
Goodwill written off	—		(423		)	—		(423		)
Balance as of September 30, 2013	$	3,252	$	154		$	2,147	$	5,553

2013 Goodwill Impairment Testing and Charge

We test our goodwill balances during the second quarter of each year for impairment, or more frequently if indicators are present or changes in circumstances suggest that impairment may exist. Following our reorganization from regions to global business units and our reallocation of goodwill on a relative fair value basis, we conducted the first step of the goodwill impairment test for all new global reporting units as of January 1, 2013. The first step requires a comparison of the carrying value of the reporting units to the fair value of these units. The fair value of each new global reporting unit exceeded its carrying value, with the exception of the global CRM reporting unit. The global CRM reporting unit carrying value exceeded its fair value primarily due to the carrying value of its amortizable intangible assets. The carrying value of amortizable intangible assets allocated to the global CRM reporting unit was $4.636 billion as of January 1, 2013. In accordance with ASC Topic 350, Intangibles—Goodwill and Other (Topic 350), we tested the global CRM amortizable intangible assets for impairment in conjunction with the interim goodwill impairment test of our global CRM reporting unit. We performed the impairment analysis of the amortizable intangible assets on an undiscounted cash flow basis, and concluded that these assets were not impaired.

The second step of the goodwill impairment test compares the estimated fair value of a reporting unit’s goodwill to its carrying value. We performed the second step of the goodwill impairment test on the global CRM reporting unit and recorded a non-cash goodwill impairment charge of $423 million ($421 million after-tax) to write-down the goodwill to its implied fair value as of January 1, 2013. The primary driver of this impairment charge was our reorganization from geographic regions to global business units as of January 1, 2013, which changed the composition of our reporting units. As a result of the reorganization, any goodwill allocated to the global CRM reporting unit was no longer supported by the cash flows of other businesses. Under our former reporting unit structure, the goodwill allocated to our regional reporting units was supported by the cash flows from all businesses in each international region. The hypothetical tax structure of the global CRM business and the global CRM business discount rate applied were also contributing factors to the goodwill impairment charge. We finalized the second step of the global CRM goodwill impairment test during the second quarter of 2013, in accordance with ASC Topic 350, Intangibles - Goodwill and Other, and determined that no adjustments to the charge were required. After recording the impairment charge in the first quarter of 2013, there was no remaining goodwill allocated to the global CRM reporting unit as of March 31, 2013.

11

The goodwill impairment charge taken during the first quarter of 2013 was determined on a global CRM basis pursuant to our new organizational structure. We used the income approach, specifically the DCF method, to derive the fair value of the global CRM reporting unit. We completed a DCF model associated with our new global CRM business, including the amount and timing of future expected cash flows, tax attributes, the terminal value growth rate of approximately two percent and the appropriate market-participant risk-adjusted weighted average cost of capital (WACC) of approximately 12 percent.

In the second quarter of 2013, we performed our annual goodwill impairment test for all of our reporting units. In conjunction with our annual test, the fair value of each reporting unit exceeded its carrying value except CRM, for which no goodwill remains. Therefore, it was deemed not necessary to proceed to the second step of the impairment test. We have identified our global Neuromodulation reporting unit as being at higher risk of potential failure of the first step of the goodwill impairment test in future reporting periods. Our global Neuromodulation reporting unit holds $1.356 billion of allocated goodwill. The level of excess fair value over carrying value for this reporting unit identified during our annual goodwill impairment test was approximately 16 percent. Future changes in our reporting units or in the structure of our business as a result of future reorganizations, acquisitions or divestitures of assets or businesses could result in future impairments of goodwill within our reporting units including global CRM. Further, the recoverability of our CRM-related amortizable intangibles ($4.442 billion globally as of September 30, 2013) is sensitive to future cash flow assumptions and our global CRM business performance. The $4.442 billion of CRM-related amortizable intangibles are at higher risk of potential failure of the first step of the amortizable intangible recoverability test in future reporting periods. An impairment of a material portion of our CRM-related amortizable intangibles carrying value would occur if the second step of the amortizable intangible test is required in a future reporting period. Refer to Critical Accounting Policies and Estimates within our Management's Discussion and Analysis of Financial Condition and Results of Operations contained in Item 2 of this Quarterly Report on Form 10-Q for a discussion of key assumptions used in our testing.

On a quarterly basis, we monitor the key drivers of fair value to detect events or other changes that would warrant an interim impairment test of our goodwill and intangible assets. The key variables that drive the cash flows of our reporting units and amortizable intangibles are estimated revenue growth rates and levels of profitability. Terminal value growth rate assumptions, as well as the WACC rate applied are additional key variables for reporting unit cash flows. These assumptions are subject to uncertainty, including our ability to grow revenue and improve profitability levels. Relatively small declines in the future performance and cash flows of a reporting unit or asset group or small changes in other key assumptions may result in the recognition of significant asset impairment charges. For example, keeping all other variables constant, an increase in the WACC applied of 80 basis points or a 200 basis point decrease in the terminal value growth rate would require that we perform the second step of the goodwill impairment test for the global Neuromodulation reporting unit. The estimates used for our future cash flows and discount rates represent management's best estimates, which we believe to be reasonable, but future declines in business performance may impair the recoverability of our goodwill and intangible asset balances.

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

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

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

• decreases in our forecasted profitability due to an inability to successfully implement and achieve timely and sustainable cost improvement measures consistent with our expectations, increases in our market-participant tax rate, and/or changes in tax laws;

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

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

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

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

12

• increases in our market-participant risk-adjusted WACC; and

• declines in revenue as a result of loss of key members of our sales force or other key personnel.

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

2012 Charges

In the second quarter of 2012, we performed our annual goodwill impairment test for all of our reporting units and concluded that the goodwill within our former EMEA reporting unit was impaired and recorded a $3.602 billion ($3.579 billion after-tax) charge in the second quarter of 2012. As a result of revised estimates developed during our annual strategic planning process and analysis performed in conjunction with our annual goodwill impairment test, we concluded that the revenue growth rates projected for the EMEA reporting unit were slightly lower than our previous estimates primarily driven by macro-economic factors and our performance in the European market. We updated short-term operating projections based on our most recent strategic plan for EMEA prepared by management. We reduced the EMEA long-term growth rates and terminal value growth rate projections and increased the discount rate within our 15-year DCF model for EMEA by approximately 100 basis points due to increased risk associated with our projections in this market primarily as a result of economic uncertainty in Europe. In addition, our expectations for future growth and profitability were lowered as compared to our previous estimates and reflected declines in average selling prices and volume pressures due to austerity measures. The declines expected in the EMEA market did not impact our assumptions related to other reporting units.

In the third quarter of 2012, we performed an interim goodwill impairment test and recorded a non-cash $748 million (pre- and after-tax) charge associated with our former U.S. Cardiac Rhythm Management (U.S. CRM) reporting unit, primarily driven by a reduction in the estimated size of the U.S. CRM market, related adjustments to our business and other competitive factors, which led to lower projected U.S. CRM results compared to prior forecasts. The U.S. CRM market is dynamic, highly competitive and difficult to forecast; in the third quarter of 2012, we lowered our projections for the U.S. CRM market size and our future revenue levels within this market, primarily to reflect changes in expectations of average selling prices and unit growth, adjustments to our business and other competitive factors. The increased pricing pressure and lower unit volumes were primarily due to physician alignment with hospitals, efforts to reduce health care costs, focus on appropriate device usage, replacement volumes and competition, and were more impactful to the U.S. CRM business than previously estimated. In addition, we adjusted certain elements of our business and shifted investments to focus on areas expected to provide the highest future growth and financial return. As a result of these factors, we reduced the compound annual revenue growth rate of our 15 year DCF model for the U.S. CRM reporting unit by approximately 250 basis points. The declines expected in the U.S. CRM market did not impact our assumptions related to other reporting units.

The following is a rollforward of accumulated goodwill write-offs by global reportable segment. We restated the prior period information to conform to the current period presentation:

(in millions)	Cardiovascular			Rhythm Management			MedSurg			Total
Accumulated write-offs as of December 31, 2012 (restated)	$	(1,479	)	$	(6,537	)	$	(1,461	)	$	(9,477	)
Goodwill written off	—			(423		)	—			(423		)
Accumulated write-offs as of September 30, 2013	$	(1,479	)	$	(6,960	)	$	(1,461	)	$	(9,900	)

Intangible Asset Impairment Charges

On a quarterly basis, we monitor for events or other potential indicators of impairment that would warrant an interim impairment test of our intangible assets. See Goodwill Impairment Charges above for discussion of future events that could have a negative impact on the recoverability of our amortizable intangible assets.

2013 Charges

During the third quarter of 2013, we performed our annual impairment test of all in-process research and development projects, and our indefinite lived core technology assets, and recorded no impairments based on the results of our testing. These indefinite-lived intangible assets are tested for impairment on an annual basis, or more frequently if impairment indicators are present, in accordance with U.S. GAAP and our accounting policies described in our 2012 Annual Report filed on Form 10-K.

13

During the second quarter of 2013 as a result of revised estimates developed in conjunction with our annual strategic planning process and annual goodwill impairment test, we performed an interim impairment test of our in-process research and development projects associated with certain of our acquisitions. Based on the results of our impairment analyses, we revised our expectations of the market size related to Sadra Medical, Inc. (Sadra), and the resulting timing and amount of future revenue and cash flows associated with the technology acquired from Sadra. As a result of these changes, we recorded pre-tax impairment charges of $51 million to write-down the balance of these intangible assets to their fair value during the second quarter of 2013. During the second quarter of 2013, we also recorded an additional $2 million intangible asset impairment charge associated with changes in the amount of the expected cash flows related to certain other acquired in-process research and development projects.

In-process research and development fair value is measured using projected revenues, projected expenses, discount rates, and

probability of expected launch. The nonrecurring Level 3 fair value measurements of the impairment analysis performed in the second quarter of 2013 included the following significant unobservable inputs:

Intangible Asset	Valuation Date	Fair Value	Valuation Technique	Unobservable Input	Rate
In-Process R&D	June 30, 2013	$178 million	Income Approach - Excess Earnings Method	Discount Rate	16.5%

2012 Charges

During the third quarter of 2012, we recorded a $13 million intangible asset impairment charge attributable to increased expectations in the cost to bring an in-process project to market in a certain geographic region and lower future revenue expectations associated with an in-process project. During the second quarter of 2012, we recorded a $129 million intangible asset impairment charge attributable to in-process research and development assets associated with Sadra due to revised expectations of the required effort, time and cost involved in completing the in-process projects and bringing the related products to market.

We recorded these amounts in the intangible assets impairment charges caption in our accompanying unaudited condensed consolidated statements of operations.

NOTE E – FAIR VALUE MEASUREMENTS

Derivative Instruments and Hedging Activities

We develop, manufacture and sell medical devices globally and our earnings and cash flows are exposed to market risk from changes in foreign 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 ASC Topic 815, Derivatives and Hedging (Topic 815). In accordance with Topic 815, 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 Topic 815.

Currency Hedging

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

14

Designated Foreign Currency Hedges

All of our designated currency hedge contracts outstanding as of September 30, 2013 and December 31, 2012 were cash flow hedges under Topic 815 intended to protect the U.S. dollar value of our forecasted foreign currency denominated transactions. We record the effective portion of any change in the fair value of foreign currency cash flow hedges in other comprehensive income (OCI) until the related third-party transaction occurs. Once the related third-party transaction occurs, we reclassify the effective portion of any related gain or loss on the foreign currency cash flow hedge to earnings. In the event the hedged forecasted transaction does not occur, or it becomes no longer probable that it will occur, we reclassify the amount of any gain or loss on the related cash flow hedge to earnings at that time. We had currency derivative instruments designated as cash flow hedges outstanding in the contract amount of $2.647 billion as of September 30, 2013 and $2.469 billion as of December 31, 2012.

We recognized net gains of $15 million in earnings on our cash flow hedges during the third quarter of 2013 and $15 million for the first nine months of 2013, as compared to net losses of $3 million during the third quarter of 2012 and $29 million for the first nine months of 2012. All currency cash flow hedges outstanding as of September 30, 2013 mature within 36 months. As of September 30, 2013, $113 million of net gains, net of tax, were recorded in accumulated other comprehensive income (AOCI) to recognize the effective portion of the fair value of any currency derivative instruments that are, or previously were, designated as foreign currency cash flow hedges, as compared to net gains of $31 million as of December 31, 2012. As of September 30, 2013, $58 million of net gains, net of tax, may be reclassified to earnings within the next twelve months.

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

Non-designated Foreign Currency Contracts

We use currency forward contracts as a part of our strategy to manage exposure related to foreign currency denominated monetary assets and liabilities. These currency forward contracts are not designated as cash flow, fair value or net investment hedges under Topic 815; are marked-to-market with changes in fair value recorded to earnings; and are entered into for periods consistent with currency transaction exposures, generally less than one year. We had currency derivative instruments not designated as hedges under Topic 815 outstanding in the contract amount of $1.757 billion as of September 30, 2013 and $1.942 billion as of December 31, 2012.

Interest Rate Hedging

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

We designate these derivative instruments either as fair value or cash flow hedges under Topic 815. We record changes in the value of fair value hedges in interest expense, which is generally offset by changes in the fair value of the hedged debt obligation. Interest payments made or received related to our interest rate derivative instruments are included in interest expense. We record the effective portion of any change in the fair value of derivative instruments designated as cash flow hedges as unrealized gains or losses in OCI, net of tax, until the hedged cash flow occurs, at which point the effective portion of any gain or loss is reclassified to earnings. We record the ineffective portion of our cash flow hedges in interest expense. In the event the hedged cash flow does not occur, or it becomes no longer probable that it will occur, we reclassify the amount of any gain or loss on the related cash flow hedge to interest expense at that time. We had no interest rate derivative contracts outstanding as of September 30, 2013 or December 31, 2012.

15

In prior years, we terminated certain interest rate derivative contracts, including fixed-to-floating interest rate contracts, designated as fair value hedges, and floating-to-fixed treasury locks, designated as cash flow hedges. We are amortizing the gains and losses on these derivative instruments upon termination into earnings as a reduction of interest expense over the remaining term of the hedged debt, in accordance with Topic 815. The carrying amount of certain of our senior notes included unamortized gains of $56 million as of September 30, 2013 and $64 million as of December 31, 2012, and unamortized losses of $3 million as of September 30, 2013 and $3 million as of December 31, 2012, related to the fixed-to-floating interest rate contracts. In addition, we had pre-tax net gains within AOCI related to terminated floating-to-fixed treasury locks of $3 million as of September 30, 2013 and $4 million as of December 31, 2012. We recorded $3 million during the third quarter of 2013 and $8 million during the first nine months of 2013 as a reduction to interest expense, resulting from the amortization of previously terminated interest rate derivative contracts. As of September 30, 2013, $9 million of pre-tax net gains may be reclassified to earnings within the next twelve months as a reduction to interest expense from amortization of our previously terminated interest rate derivative contracts.

Counterparty Credit Risk

We do not have significant concentrations of credit risk arising from our derivative financial instruments, whether from an individual counterparty or a related group of counterparties. We manage 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 to each counterparty, and by actively monitoring their credit ratings and outstanding fair values on an on-going basis. Furthermore, none of our derivative transactions are subject to collateral or other security arrangements and none contain provisions that are dependent on our credit ratings from any credit rating agency.

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

Fair Value of Derivative Instruments

The following presents the effect of our derivative instruments designated as cash flow hedges under Topic 815 on our accompanying unaudited condensed consolidated statements of operations during the third quarter and first nine months of 2013 and 2012 (in millions):

	Amount of Pre-tax Gain (Loss) Recognized in OCI (Effective Portion)			Amount of Pre-tax Gain (Loss) Reclassified from AOCI into Earnings (Effective Portion)			Location in Statement of Operations
Three Months Ended September 30, 2013
Currency hedge contracts	$	(45	)	$	15		Cost of products sold
	$	(45	)	$	15
Three Months Ended September 30, 2012
Currency hedge contracts	$	(44	)	$	(3	)	Cost of products sold
	$	(44	)	$	(3	)
Nine Months Ended September 30, 2013
Currency hedge contracts	$	144		$	15		Cost of products sold
	$	144		$	15
Nine Months Ended September 30, 2012
Currency hedge contracts	$	2		$	(29	)	Cost of products sold
	$	2		$	(29	)

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

16

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

(in millions)	Location in Statement of Operations	Three Months Ended September 30,						Nine Months Ended September 30,
		2013			2012			2013			2012
Gain (loss) on currency hedge contracts	Other, net	$	12		$	(14	)	$	66		$	—
Gain (loss) on foreign currency transaction exposures	Other, net	(15		)	11			(72		)	(13		)
Net foreign currency gain (loss)	Other, net	$	(3	)	$	(3	)	$	(6	)	$	(13	)

Topic 815 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 ASC Topic 820, Fair Value Measurements and Disclosures (Topic 820), by considering the estimated amount we would receive or pay to transfer these instruments at the reporting date and by taking into account current interest rates, foreign 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 September 30, 2013, we have classified all of our derivative assets and liabilities within Level 2 of the fair value hierarchy prescribed by Topic 820, as discussed below, because these observable inputs are available for substantially the full term of our derivative instruments.

The following are the balances of our derivative assets and liabilities as of September 30, 2013 and December 31, 2012:

		As of
(in millions)	Location in Balance Sheet (1)	September 30, 2013		December 31, 2012
Derivative Assets:
Designated Hedging Instruments
Currency hedge contracts	Prepaid and other current assets	$	88	$	25
Currency hedge contracts	Other long-term assets	95		63
		183		88
Non-Designated Hedging Instruments
Currency hedge contracts	Prepaid and other current assets	17		33
Total Derivative Assets		$	200	$	121
Derivative Liabilities:
Designated Hedging Instruments
Currency hedge contracts	Other current liabilities	$	8	$	20
Currency hedge contracts	Other long-term liabilities	9		10
		17		30
Non-Designated Hedging Instruments
Currency hedge contracts	Other current liabilities	27		27
Total Derivative Liabilities		$	44	$	57

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

17

Other Fair Value Measurements

Recurring Fair Value Measurements

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

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

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

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

Assets and liabilities measured at fair value on a recurring basis consist of the following as of September 30, 2013 and December 31, 2012:

	As of September 30, 2013								As of December 31, 2012
(in millions)	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Assets
Money market and government funds	$	155	—		—		$	155	$	39	—		—		$	39
Currency hedge contracts	—		$	200	—		200		—		$	121	—		121
	$	155	$	200	—		$	355	$	39	$	121	—		$	160
Liabilities
Currency hedge contracts	—		$	44	—		$	44	—		$	57	—		$	57
Accrued contingent consideration	—		—		$	536	536		—		—		$	663	663
	—		$	44	$	536	$	580	—		$	57	$	663	$	720

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

In addition to $155 million invested in money market and government funds as of September 30, 2013, we had $281 million in short-term time deposits and $135 million in interest bearing and non-interest bearing bank accounts. In addition to $39 million invested in money market and government funds as of December 31, 2012, we had $168 million in interest bearing and non-interest bearing bank accounts.

Changes in the fair value of assets and liabilities measured on a recurring basis using significant unobservable inputs (Level 3) during the first nine months of 2013 related solely to our contingent consideration liabilities. Refer to Note B - Acquisitions for a discussion of the fair value measurements related to our contingent consideration liabilities.

Non-Recurring Fair Value Measurements

We have 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 $22 million as of September 30, 2013 and $13 million as of December 31, 2012.

During the third quarter of 2013, we recorded $4 million of losses to write down certain investments to their fair values. These adjustments fall within Level 3 of the fair value hierarchy, due to the use of significant unobservable inputs to determine fair value.

18

During the second quarter of 2013, we recorded $53 million of intangible asset impairment charges, representing a decrease in the estimated fair value of the related intangible asset balances. During the first quarter of 2013, we recorded a $423 million charge to adjust our goodwill balances to their fair value. As a result, during the first nine months of 2013, we recorded $476 million of losses, to adjust our goodwill and certain other intangible asset balances to their fair value. Refer to Note D - Goodwill and Other Intangible Assets, for further detailed information related to these charges and significant unobservable inputs (Level 3).

The fair value of our outstanding debt obligations was $4.599 billion as of September 30, 2013 and $4.793 billion as of December 31, 2012, which was determined by using primarily quoted market prices for our publicly registered senior notes, classified as Level 1 within the fair value hierarchy. Refer to Note F – Borrowings and Credit Arrangements for a discussion of our debt obligations.

NOTE F – BORROWINGS AND CREDIT ARRANGEMENTS

We had total debt of $4.249 billion as of September 30, 2013 and $4.256 billion as of December 31, 2012. During the third quarter of 2013, we refinanced our public debt obligations maturing in June 2014 and January 2015 (see Senior Notes below). The debt maturity schedule for the significant components of our debt obligations as of September 30, 2013 is as follows:

(in millions)	2013	2014		2015		2016		2017		Thereafter		Total
Senior notes	—	$	—	$	400	$	600	$	250	$	2,550	$	3,800
Term loan	—	$	—	$	—	$	80	$	80	$	240	$	400
	—	$	—	$	400	$	680	$	330	$	2,790	$	4,200

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

Revolving Credit Facility

We maintain a $2.0 billion revolving credit facility, maturing in April 2017, with a global syndicate of commercial banks. Eurodollar and multicurrency loans under this revolving credit facility bear interest at LIBOR plus an interest margin of between 0.875 percent and 1.475 percent, based on our corporate credit ratings and consolidated leverage ratio (1.275 percent as of September 30, 2013). In addition, we are required to pay a facility fee based on our credit ratings, consolidated leverage ratio, and the total amount of revolving credit commitments, regardless of usage, under the agreement (0.225 percent as of September 30, 2013). There were no amounts borrowed under our revolving credit facility as of September 30, 2013 or December 31, 2012.

Our revolving credit facility agreement in place as of September 30, 2013 requires that we maintain certain financial covenants, as follows:

	Covenant Requirement	Actual as of September 30, 2013
Maximum leverage ratio (1)	3.5 times	2.4 times
Minimum interest coverage ratio (2)	3.0 times	5.4 times

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

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

The credit agreement provides for an exclusion from the calculation of consolidated EBITDA, as defined by the agreement, through the credit agreement maturity, of any non-cash charges up to $500 million in restructuring charges and restructuring-related expenses related to our current or future restructuring plans. As of September 30, 2013, we had $287 million of the restructuring charge exclusion remaining. In addition, any cash litigation payments (net of any cash litigation receipts), as defined by the agreement, are excluded from the calculation of consolidated EBITDA and any new debt issued to fund any tax deficiency payments is excluded from consolidated total debt, as defined in the agreement, provided that the sum of any excluded net cash litigation payments and any new debt issued to fund any tax deficiency payments shall not exceed $2.300 billion in the aggregate. As of September 30, 2013, we had approximately $2.278 billion of the combined legal and debt exclusion remaining. As of and through September 30, 2013, we were in compliance with the required covenants.

19

Any inability to maintain compliance with these covenants could require us to seek to renegotiate the terms of our credit facilities or seek waivers from compliance with these covenants, both of which could result in additional borrowing costs. Further, there can be no assurance that our lenders would agree to such new terms or grant such waivers.

Term Loan

In August 2013, we entered into a new $400 million, unsecured term loan facility. Term loan borrowings under this facility bear interest at LIBOR plus an interest margin of between 1.0 percent and 1.75 percent (currently 1.5 percent), based on our corporate credit ratings and consolidated leverage ratio. The term loan borrowings are payable over a 5-year period, with quarterly principal payments of $20 million commencing in the first quarter of 2016 and the remaining principal amount due at the final maturity date in August 2018, and are repayable at any time without premium or penalty. Our term loan facility requires that we comply with certain covenants, including financial covenants with respect to maximum leverage and minimum interest coverage; the maximum leverage ratio requirement is 3.5 times, our actual leverage ratio as of September 30, 2013 is 2.4 times and the minimum interest coverage ratio requirement is 3.0 times, our actual interest coverage ratio as of September 30, 2013 is 5.4 times. We had $400 million outstanding under this facility as of September 30, 2013 and no borrowings outstanding as of December 31, 2012.

Senior Notes

We had senior notes outstanding of $3.800 billion and $4.200 billion as of September 30, 2013 and December 31, 2012 respectively. In August 2013, we issued $600 million of 2.650% senior notes due in 2018, and $450 million of 4.125% senior notes due in 2023. In September 2013, we used the proceeds, together with borrowings under our new $400 million term loan facility, to prepay $600 million of senior notes maturing in June 2014 and $850 million maturing in January 2015. We recorded a one-time charge of $70 million ($44 million after-tax) for premiums, accelerated amortization of debt issuance costs and investor discount costs net of interest rate hedge gains related to the early debt extinguishment. Our senior notes are publicly registered securities, are redeemable prior to maturity and are not subject to any sinking fund requirements. Our senior notes are unsecured, unsubordinated obligations and rank on parity with each other. These notes are effectively junior to borrowings under our credit and security facility and liabilities of our subsidiaries (see Other Arrangements below).

Other Arrangements

We also maintain a credit and security facility secured by our U.S. trade receivables. In June 2013, we extended the maturity of this facility through June 2015, subject to further extension, reduced the size of the facility from $350 million to $300 million and added a maximum leverage covenant consistent with our revolving credit facility. The maximum leverage ratio requirement is 3.5 times and our actual leverage ratio as of September 30, 2013 is 2.4 times. We had no borrowings outstanding under this facility as of September 30, 2013 and December 31, 2012.

We have accounts receivable factoring programs in certain European countries that we account for as sales under ASC Topic 860, Transfers and Servicing. These agreements provide for the sale of accounts receivable to third parties, without recourse, of up to approximately $306 million as of September 30, 2013. We have no retained interests in the transferred receivables, other than collection and administrative responsibilities and, once sold, the accounts receivable are no longer available to satisfy creditors in the event of bankruptcy. We de-recognized $166 million of receivables as of September 30, 2013 at an average interest rate of 3.3 percent, and $191 million as of December 31, 2012 at an average interest rate of 1.6 percent. Within Italy, Spain, Portugal and Greece the number of days our receivables are outstanding has increased above historical levels. We believe we have adequate allowances for doubtful accounts related to our Italy, Spain, Portugal and Greece accounts receivable; however, we continue to monitor the European economic environment for any collectibility issues related to our outstanding receivables. As of September 30, 2013, our net receivables in these countries greater than 180 days past due totaled $78 million, of which $28 million were past due greater than 365 days.

In addition, we have uncommitted credit facilities with a commercial Japanese bank that provide for borrowings, promissory notes discounting, and receivables factoring of up to 21.0 billion Japanese yen (approximately $214 million as of September 30, 2013). We de-recognized $156 million of notes receivable as of September 30, 2013 at an average interest rate of 1.8 percent and $182 million of notes receivable as of December 31, 2012 at an average interest rate of 1.6 percent. De-recognized accounts and notes receivable are excluded from trade accounts receivable, net in the accompanying unaudited condensed consolidated balance sheets.

As of September 30, 2013, we had outstanding letters of credit of $74 million, as compared to $94 million as of December 31, 2012, which consisted primarily of bank guarantees and collateral for workers' compensation insurance arrangements. As of September 30, 2013 and December 31, 2012, none of the beneficiaries had drawn upon the letters of credit or guarantees; accordingly, we did not recognize a related liability for our outstanding letters of credit in our consolidated balance sheets as of September 30, 2013 or December 31, 2012. We believe we will generate sufficient cash from operations to fund these payments and intend to fund these payments without drawing on the letters of credit.

20

NOTE G – RESTRUCTURING-RELATED ACTIVITIES

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

2014 Restructuring plan

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

We estimate that the implementation of the 2014 Restructuring plan will result in total pre-tax charges of approximately $175 million to $225 million, of which approximately $160 million to $210 million is expected to result in future cash outlays. The following table provides a summary of our estimates of costs associated with the 2014 Restructuring plan by major type of cost:

Type of cost	Total estimated amount expected to be incurred
Restructuring charges:
Termination benefits	$120 million to $150 million
Other (1)	$5 million to $15 million
Restructuring-related expenses:
Other (2)	$50 million to $60 million
	$175 million to $225 million

(1) Consists primarily of consultant fees and costs associated with contractual cancellations.

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

2011 Restructuring plan

On July 26, 2011, our Board of Directors approved, and we committed to, a restructuring initiative (the 2011 Restructuring plan) designed to strengthen operational effectiveness and efficiencies, increase competitiveness and support new investments, thereby increasing stockholder value. Key activities under the 2011 Restructuring plan include standardizing and automating certain processes and activities; relocating select administrative and functional activities; rationalizing organizational reporting structures; leveraging preferred vendors; and other efforts to eliminate inefficiency. Among these efforts, we are expanding our ability to deliver best-in-class global shared services for certain functions and divisions at several locations in emerging markets. This action is intended to enable us to grow our global commercial presence in key geographies and take advantage of many cost-reducing and productivity-enhancing opportunities. In addition, we are undertaking efforts to streamline various corporate functions, eliminate bureaucracy, increase productivity and better align corporate resources to our key business strategies. On January 25, 2013, our Board of Directors approved, and we committed to, an expansion of the 2011 Restructuring plan (the Expansion). The Expansion is intended to further strengthen our operational effectiveness and efficiencies and support new investments. Activities under the 2011 Restructuring plan were initiated in the third quarter of 2011 and all activities, including those related to the Expansion, are expected to be substantially complete by the end of 2013.

21

We estimate that the 2011 Restructuring plan, including the Expansion, will result in total pre-tax charges of approximately $300 million to $355 million, and that approximately $270 million to $300 million of these charges will result in future cash outlays, of which we have made payments of $235 million, which were partially offset by proceeds of $53 million on facility and fixed asset sales, as of September 30, 2013. As of September 30, 2013, we recorded costs of $260 million since the inception of the 2011 Restructuring plan, including the Expansion, and recorded a portion of these expenses as restructuring charges and the remaining portion through other lines within our unaudited condensed consolidated statements of operations.

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

Type of cost	Total estimated amount expected to be incurred
Restructuring charges:
Termination benefits	$160 million to $185 million
Other (1)	$100 million to $120 million
Restructuring-related expenses:
Other (2)	$40 million to $50 million
	$300 million to $355 million

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

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

2010 Restructuring plan

On February 6, 2010, our Board of Directors approved, and we committed to, a series of management changes and restructuring initiatives (the 2010 Restructuring plan) designed to focus our business, drive innovation, accelerate profitable revenue growth and increase both accountability and stockholder value. Key activities under the 2010 Restructuring plan included the restructuring of certain of our businesses and corporate functions; the re-alignment of our international structure to reduce our administrative costs and invest in expansion opportunities including significant investments in emerging markets; and the re-prioritization and diversification of our product portfolio. Activities under the 2010 Restructuring plan were initiated in the first quarter of 2010 and were complete by the end of 2012.

The execution of the 2010 Restructuring plan resulted in total pre-tax charges of $160 million, and required cash outlays of $145 million.

The following provides a summary of our costs associated with the 2010 Restructuring plan by major type of cost:

Type of cost	Total amount incurred
Restructuring charges:
Termination benefits	$90 million
Fixed asset write-offs	$11 million
Other (1)	$51 million
Restructuring-related expenses:
Other (2)	$8 million
	$160 million

(1) Includes primarily consulting fees and costs associated with contractual cancellations.

(2) Comprised of other costs directly related to the 2010 Restructuring plan, including accelerated depreciation and infrastructure-related costs.

22

Plant Network Optimization program

In January 2009, our Board of Directors approved, and we committed to, a plant network optimization initiative (the Plant Network Optimization program), intended to simplify our manufacturing plant structure by transferring certain production lines among facilities and by closing certain other facilities. The program was a complement to the restructuring initiatives approved by our Board of Directors in 2007, and was intended to improve overall gross profit margins. Activities under the Plant Network Optimization program were initiated in the first quarter of 2009 and were substantially completed during 2012.

We estimate that the execution of the Plant Network Optimization program will result in total pre-tax charges of approximately $130 million, and that approximately $105 million to $110 million of these charges will result in cash outlays, of which we made payments of $103 million as of September 30, 2013. As of September 30, 2013, we recorded costs of $127 million since the inception of the plan, and recorded a portion of these expenses as restructuring charges and the remaining portion through cost of products sold within our unaudited condensed consolidated statements of operations.

The following provides a summary of our estimates of costs associated with the Plant Network Optimization program by major type of cost:

Type of cost	Total estimated amount expected to be incurred
Restructuring charges:
Termination benefits	$33 million
Restructuring-related expenses:
Accelerated depreciation	$22 million
Transfer costs (1)	$75 million
	$130 million

(1) Consists primarily of costs to transfer product lines among facilities, including costs of transfer teams, freight, idle facility and product line validations.

In the aggregate, we recorded net restructuring charges pursuant to our restructuring plans of $19 million in the third quarter of 2013, $54 million in the third quarter of 2012, $55 million in the first nine months of 2013, and $93 million in the first nine months of 2012. During the first nine months of 2013, our restructuring charges were partially offset by a $19 million gain recognized on the sale of our Natick, Massachusetts headquarters. We are currently in the process of consolidating our Natick, Massachusetts headquarters into our Marlborough, Massachusetts location, where we are establishing a new global headquarters campus. In addition, we recorded expenses within other lines of our accompanying unaudited condensed consolidated statements of operations related to our restructuring initiatives of $7 million in the third quarter of 2013 and $4 million in the third quarter of 2012, and $16 million in the first nine months of 2013 and $15 million in the first nine months of 2012.

23

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

Three Months Ended September 30, 2013
(in millions)	Termination Benefits			Accelerated Depreciation		Transfer Costs		Fixed Asset Write-offs		Other		Total
Restructuring charges	$	5		$	—	$	—	$	—	$	14	$	19
Restructuring-related expenses:
Cost of products sold	—			—		—		—		—		—
Selling, general and administrative expenses	—			1		—		—		6		7
	—			1		—		—		6		7
	$	5		$	1	$	—	$	—	$	20	$	26
(in millions)	Termination Benefits			Accelerated Depreciation		Transfer Costs		Fixed Asset Write-offs		Other		Total
2011 Restructuring plan	$	5		$	1	$	—	$	—	$	20	$	26
2010 Restructuring plan	—			—		—		—		—		—
Plant Network Optimization program	—			—		—		—		—		—
	$	5		$	1	$	—	$	—	$	20	$	26
Three Months Ended September 30, 2012
(in millions)	Termination Benefits			Accelerated Depreciation		Transfer Costs		Fixed Asset Write-offs		Other		Total
Restructuring charges	$	44		$	—	$	—	$	—	$	10	$	54
Restructuring-related expenses:
Cost of products sold	—			—		1		—		—		1
Selling, general and administrative expenses	—			—		—		—		3		3
	—			—		1		—		3		4
	$	44		$	—	$	1	$	—	$	13	$	58
(in millions)	Termination Benefits			Accelerated Depreciation		Transfer Costs		Fixed Asset Write-offs		Other		Total
2011 Restructuring plan	$	43		$	—	$	—	$	—	$	13	$	56
2010 Restructuring plan	2			—		—		—		—		2
Plant Network Optimization program	(1		)	—		1		—		—		—
	$	44		$	—	$	1	$	—	$	13	$	58

24

Nine Months Ended September 30, 2013
(in millions)	Termination Benefits			Accelerated Depreciation		Transfer Costs		Fixed Asset Write-offs			Other		Total
Restructuring charges	$	26		$	—	$	—	$	(16	)	$	45	$	55
Restructuring-related expenses:
Cost of products sold	—			—		—		—			—		—
Selling, general and administrative expenses	—			2		—		—			14		16
	—			2		—		—			14		16
	$	26		$	2	$	—	$	(16	)	$	59	$	71
(in millions)	Termination Benefits			Accelerated Depreciation		Transfer Costs		Fixed Asset Write-offs			Other		Total
2011 Restructuring plan	$	30		$	2	$	—	$	(16	)	$	59	$	75
2010 Restructuring plan	—			—		—		—			—		—
Plant Network Optimization program	(4		)	—		—		—			—		(4		)
	$	26		$	2	$	—	$	(16	)	$	59	$	71
Nine Months Ended September 30, 2012
(in millions)	Termination Benefits			Accelerated Depreciation		Transfer Costs		Fixed Asset Write-offs			Other		Total
Restructuring charges	$	64		$	—	$	—	$	—		$	29	$	93
Restructuring-related expenses:
Cost of products sold	—			—		7		—			—		7
Selling, general and administrative expenses	—			—		—		—			8		8
	—			—		7		—			8		15
	$	64		$	—	$	7	$	—		$	37	$	108
(in millions)	Termination Benefits			Accelerated Depreciation		Transfer Costs		Fixed Asset Write-offs			Other		Total
2011 Restructuring plan	$	65		$	—	$	—	$	—		$	34	$	99
2010 Restructuring plan	—			—		—		—			3		3
Plant Network Optimization program	(1		)	—		7		—			—		6
	$	64		$	—	$	7	$	—		$	37	$	108

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 ASC Topic 712, Compensation – Non-retirement Postemployment Benefits and ASC Topic 420, Exit or Disposal Cost Obligations (Topic 420). We expect to record additional termination benefits related to our restructuring initiatives in 2013 when we identify with more specificity the job classifications, functions and locations of the remaining head count to be eliminated. Other restructuring costs, which represent primarily consulting fees, are being recorded as incurred in accordance with Topic 420. Accelerated depreciation is being recorded over the adjusted remaining useful life of the related assets, and production line transfer costs are being recorded as incurred.

25

As of September 30, 2013, we have incurred cumulative restructuring charges related to our 2011 Restructuring plan (including the Expansion), 2010 Restructuring plan and Plant Network Optimization program of $411 million and restructuring-related costs of $136 million since we committed to each plan. The following presents these costs by major type and by plan:

(in millions)	2011 Restructuring plan (including the Expansion)		2010 Restructuring plan		Plant Network Optimization Program		Total
Termination benefits	$	130	$	90	$	31	$	251
Fixed asset write-offs	—		11		—		11
Other	98		51		—		149
Total restructuring charges	228		152		31		411
Accelerated depreciation	—		—		22		22
Transfer costs	—		—		74		74
Other	32		8		—		40
Restructuring-related expenses	32		8		96		136
	$	260	$	160	$	127	$	547

We made cash payments of $36 million in the third quarter of 2013 and $107 million in the first nine months of 2013 associated with restructuring initiatives pursuant to these plans, and as of September 30, 2013, we had made total cash payments of $483 million related to our 2011 Restructuring plan (including the Expansion), 2010 Restructuring plan and Plant Network Optimization program since committing to each plan, partially offset by $53 million of proceeds received on facility and fixed asset sales in the first nine months of 2013. Payments were made using cash generated from operations, and are comprised of the following:

(in millions)	2011 Restructuring plan (including the Expansion)		2010 Restructuring plan		Plant Network Optimization Program		Total
Three Months Ended September 30, 2013
Termination benefits	$	16	$	—	$	—	$	16
Transfer costs	—		—		—		—
Other	20		—		—		20
	$	36	$	—	$	—	$	36
Nine Months Ended September 30, 2013
Termination benefits	$	49	$	—	$	1	$	50
Transfer costs	—		—		—		—
Other	57		—		—		57
	$	106	$	—	$	1	$	107
Program to Date
Termination benefits	$	113	$	90	$	30	$	233
Transfer costs	—		—		73		73
Other	122		55		—		177
	$	235	$	145	$	103	$	483

26

Our restructuring liability is primarily comprised of accruals for termination benefits. The following is a rollforward of the termination benefit liability associated with our 2011 Restructuring plan (including the Expansion), 2010 Restructuring plan and Plant Network Optimization program, since the inception of the respective plans, which is reported as a component of accrued expenses included in our accompanying unaudited condensed balance sheets:

	Restructuring Plan Termination Benefits
(in millions)	2011			2010			Plant Network Optimization			Total
Accrued as of December 31, 2012	$	36		$	3		$	9		48
Charges (credits)	30			—			(4		)	26
Cash payments	(49		)	—			(1		)	(50		)
Other adjustments	—			(3		)	—			(3		)
Accrued as of September 30, 2013	$	17		$	—		$	4		$	21

In addition to our accrual for termination benefits, we had an $10 million liability as of September 30, 2013 and a $5 million liability as of December 31, 2012 for other restructuring-related items.

NOTE H – SUPPLEMENTAL BALANCE SHEET INFORMATION

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

Trade accounts receivable, net

	As of
(in millions)	September 30, 2013			December 31, 2012
Accounts receivable	$	1,360		$	1,336
Less: allowance for doubtful accounts	(85		)	(88		)
Less: allowance for sales returns	(37		)	(31		)
	$	1,238		$	1,217

The following is a rollforward of our allowance for doubtful accounts for the third quarter and first nine months of 2013 and 2012:

	Three Months Ended September 30,						Nine Months Ended September 30,
(in millions)	2013			2012			2013			2012
Beginning balance	$	84		$	83		$	88		$	81
Net (credits) charges to expenses	2			1			7			7
Utilization of allowances	(1		)	(2		)	(10		)	(6		)
Ending balance	$	85		$	82		$	85		$	82

Inventories

	As of
(in millions)	September 30, 2013		December 31, 2012
Finished goods	$	592	$	598
Work-in-process	87		70
Raw materials	216		216
	$	895	$	884

27

Property, plant and equipment, net

	As of
(in millions)	September 30, 2013		December 31, 2012
Land	$	81	$	81
Buildings and improvements	912		873
Equipment, furniture and fixtures	2,446		2,348
Capital in progress	177		218
	3,616		3,520
Less: accumulated depreciation	2,086		1,956
	$	1,530	$	1,564

Depreciation expense was $72 million for the third quarter of 2013 and $70 million for the third quarter of 2012, $199 million for the first nine months of 2013, and $205 million for the first nine months of 2012.

Accrued expenses

	As of
(in millions)	September 30, 2013		December 31, 2012
Payroll and related liabilities	$	450	$	452
Accrued contingent consideration	170		120
Legal reserves	159		100
Other	567		612
	$	1,346	$	1,284

Other long-term liabilities

	As of
(in millions)	September 30, 2013		December 31, 2012
Accrued income taxes	$	1,274	$	1,215
Accrued contingent consideration	366		543
Legal reserves	524		391
Other long-term liabilities	419		398
	$	2,583	$	2,547

28

Accrued warranties

We offer warranties on certain of our product offerings. The majority of our warranty liability as of September 30, 2013 related to implantable devices offered by our CRM business, which include defibrillator and pacemaker systems. Our CRM products come with a standard limited warranty covering the replacement of these devices. We offer a full warranty for a portion of the period post-implant, and a partial warranty over the substantial remainder of the useful life of the product. We estimate the costs that we may incur under our warranty programs based on the number of units sold, historical and anticipated rates of warranty claims and cost per claim, and record a liability equal to these estimated costs as cost of products sold at the time the product sale occurs. We reassess the adequacy of our recorded warranty liabilities on a quarterly basis and adjust these amounts as necessary. The current portion of our warranty accrual is included in other accrued expenses in the table above and the non-current portion of our warranty accrual is included in other long-term liabilities in the table above. Changes in our product warranty accrual during the first nine months of 2013 and 2012 consisted of the following (in millions):

	Nine Months Ended September 30,
	2013			2012
Beginning Balance	$	26		$	30
Provision	11			6
Settlements/reversals	(9		)	(9		)
Ending Balance	$	28		$	27

29

NOTE I – INCOME TAXES

Tax Rate

The following tables provide a summary of our reported tax rate:

	Three Months Ended September 30,
	2013		2012
Reported tax rate	87.6	%	(0.1	)%
Impact of certain receipts/charges*	(74.5	)%	16.2	%
	13.1	%	16.1	%

	Nine Months Ended September 30,
	2013		2012
Reported tax rate	18.9	%	0.7	%
Impact of certain receipts/charges*	(5.2	)%	14.5	%
	13.7	%	15.2	%

*These receipts/charges are taxed at different rates than our effective tax rate.

The change in our reported tax rate for the third quarter and first nine months of 2013, as compared to the same periods in 2012, relates primarily to the impact of certain receipts and charges that are taxed at different rates than our effective tax rate and the impact of certain discrete tax items. In the third quarter of 2013, the receipts and charges included debt extinguishment charges, and acquisition-, litigation- and restructuring-related charges. In addition, the reported tax rate in the third quarter of 2013 was affected favorably by discrete tax items, primarily related to re-measurement of uncertain tax positions. In the first nine months of 2013, the receipts and charges included goodwill and intangible asset impairment charges, debt extinguishment charges, acquisition- and divestiture-related net credits, and litigation- and restructuring-related charges. In addition, the reported tax rate for the first nine months of 2013 was affected favorably by discrete tax items primarily related to the reinstatement of tax legislation that has been retroactively applied, offset in part by re-measurement and resolution of uncertain tax positions. In the third quarter of 2012, the receipts and charges included goodwill and intangible asset impairment charges, acquisition- and divestiture-related net credits, and litigation- and restructuring-related charges. In addition, the reported tax rate in the third quarter of 2012 was affected unfavorably by discrete tax items primarily related to the re-measurement of an uncertain tax position. In the first nine months of 2012, the receipts and charges included goodwill and intangible asset impairment charges; litigation and restructuring-related net charges; and divestiture- and acquisition-related credits. In addition, the reported tax rate in the first nine months of 2012 was affected unfavorably by discrete tax items primarily related to the resolution and re-measurement of uncertain tax positions.

As of September 30, 2013, we had $1.080 billion of gross unrecognized tax benefits, of which a net $940 million, if recognized, would affect our effective tax rate. As of December 31, 2012, we had $1.052 billion of gross unrecognized tax benefits, of which a net $902 million, if recognized, would affect our effective tax rate.

We are subject to U.S. federal income tax as well as income tax of multiple state and foreign jurisdictions. We have concluded all U.S. federal income tax matters through 2000 and substantially all material state, local, and foreign income tax matters through 2001.

We have received Notices of Deficiency from the Internal Revenue Service (IRS) reflecting proposed audit adjustments for Guidant Corporation (Guidant) for its 2001 through 2006 tax years and Boston Scientific Corporation for its 2006 and 2007 tax years (Notices). Subsequent to issuing these Notices, the IRS conceded a portion of its original assessment. The total incremental tax liability now asserted by the IRS for the applicable periods is $1.162 billion plus interest. The primary issue in dispute for all years is the transfer pricing in connection with the technology license agreements between domestic and foreign subsidiaries of Guidant. In addition, the IRS has proposed adjustments in connection with the financial terms of our Transaction Agreement with Abbott Laboratories (Abbott) pertaining to the sale of Guidant's vascular intervention business to Abbott in April 2006. We do not agree with the transfer pricing methodologies applied by the IRS or its resulting assessment and we believe that the IRS has exceeded its authority by attempting to adjust the terms of our negotiated third-party agreement with Abbott. In addition, we believe that the IRS positions with regard to these matters are inconsistent with the applicable tax laws and the existing Treasury regulations.

30

We believe we have meritorious defenses for our tax filings and we have filed petitions with the U.S. Tax Court contesting the Notices for the tax years in challenge. No payments on the net assessment would be required until the dispute is definitively resolved, which, based on experiences of other companies, could take several years. We believe that our income tax reserves associated with these matters are adequate and the final resolution will not have a material impact on our financial condition or results of operations. However, final resolution is uncertain and could have a material impact on our financial condition, results of operations, or cash flows.

We recognize interest and penalties related to income taxes as a component of income tax expense. We had $408 million accrued for gross interest and penalties as of September 30, 2013 and $364 million as of December 31, 2012. The increase in gross interest and penalties was $43 million, which was recognized in our unaudited condensed consolidated statements of operations. We recognized net tax expense related to interest and penalties of $9 million during the third quarter of 2013, $15 million during the third quarter of 2012, $28 million in the first nine months of 2013, and $26 million in the first nine months of 2012.

It is reasonably possible that within the next 12 months we will resolve multiple issues including transfer pricing and transactional-related issues with foreign, federal and state taxing authorities, in which case we could record a reduction in our balance of unrecognized tax benefits of up to approximately $41 million.

NOTE J – COMMITMENTS AND CONTINGENCIES

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

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

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

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

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

31

Our accrual for legal matters that are probable and estimable was $683 million as of September 30, 2013 and $491 million as of December 31, 2012, and includes estimated costs of settlement, damages and defense. The increase in our legal accrual was primarily due to $206 million in litigation-related charges recorded during the first nine months of 2013. During the first nine months of 2012, we recorded $119 million of litigation related charges, which consisted of charges of $135 million, partially offset by credits of $16 million. We continue to assess certain litigation and claims to determine the amounts, if any, that management believes will be paid as a result of such claims and litigation and, therefore, additional losses may be accrued and paid in the future, which could materially adversely impact our operating results, cash flows and/or our ability to comply with our debt covenants.

In management’s opinion, we are not currently involved in any legal proceedings other than those disclosed in our 2012 Annual Report filed on Form 10-K, our Quarterly Reports filed on Form 10-Q for the quarters ended March 31, 2013 and June 30, 2013, and those specifically identified below, which, individually or in the aggregate, could have a material adverse effect on our financial condition, operations and/or cash flows. Unless included in our legal accrual or otherwise indicated below, a range of loss associated with any individual material legal proceeding cannot be estimated.

Patent Litigation

On February 1, 2008, Wyeth Corporation and Cordis Corporation filed an amended complaint for patent infringement against Abbott Laboratories, adding us and Boston Scientific Scimed, Inc. as additional defendants to the complaint. The suit alleged that the PROMUS® coronary stent system, supplied to us by Abbott, infringes three U.S. patents (the Morris patents) owned by Wyeth and licensed to Cordis. The suit was filed in the U.S. District Court for the District of New Jersey seeking monetary and injunctive relief. Wyeth and Cordis subsequently withdrew their infringement claim as to one of the patents, and the District Court found the remaining two patents invalid. Wyeth and Cordis filed an appeal and on June 26, 2013, the Court of Appeals for the Federal Circuit affirmed the District Court’s judgment in favor of Boston Scientific. On October 13, 2013, Wyeth’s motion for rehearing or rehearing en banc was denied.

On May 25, 2010, Dr. Jang filed suit against Boston Scientific Scimed, Inc. and us alleging breach of contract relating to certain patent rights covering stent technology. In October 2011, the U.S. District Court for the District of Delaware entered judgment in favor of us on the pleadings. On July 31, 2012, the District Court denied Dr. Jang's October 2011 motion for reconsideration or, in the alternative, permission to amend his complaint. Dr. Jang filed an appeal on August 28, 2012. On September 5, 2013, the Court of Appeals for the Third Circuit vacated the ruling and remanded the case to the District Court.

On May 16, 2013, Vascular Solutions, Inc. filed suit against the Company, alleging that its Guidezilla™ guide extension catheter infringes three U.S. patents owned by Vascular Solutions.  The suit was filed in the U.S. District Court for the District of Minnesota seeking monetary and injunctive relief.  On May 28, 2013 Vascular Solutions filed an amended complaint adding an allegation of copyright infringement.  On June 10, 2013, Vascular Solutions filed a motion requesting a preliminary injunction.  On July 11, 2013 the Company answered the amended complaint and filed a counterclaim against Vascular Solutions, alleging that its Guideliner™ guide extension catheter infringes a U.S. patent owned by the Company. A hearing on the motion for preliminary injunction was held on August 27, 2013.

On August 2, 2013, Medtronic Ardian Luxembourg S.a.r.l. filed a complaint against Boston Scientific Corporation and Boston Scientific Medizintechnik, GmbH in the Düsseldorf District Court in Germany alleging that the sale of the Company’s Vessix renal denervation product infringes a German patent owned by Medtronic Ardian. A hearing is scheduled for August 12, 2014.

On September 23, 2013, Kardiametrics, LLC filed a complaint in the United States District Court for the District of Delaware alleging that the sale of the Company’s FilterWire EZ Embolic Protection System, Sterling balloon catheters, Carotid NexStent and Carotid Wallstent products infringe two patents (the Azizi patents) owned by Kardiametrics.

Product Liability Litigation

As of November 4, 2013, there were over 17,000 product liability cases or claims asserted against us in various federal and state courts in the United States, inclusive of seven putative class actions. There were also over ten cases in Canada, inclusive of three putative class actions. Generally, the plaintiffs allege personal injury associated with use of our transvaginal surgical mesh products designed to treat stress urinary incontinence and pelvic organ prolapse, design and manufacturing claims, failure to warn, breach of warranty, fraud, violations of state consumer protection laws and loss of consortium claims.  Many of the cases have been specially assigned to one judge in state court in Massachusetts. On February 7, 2012, the Judicial Panel on Multi-District Litigation (MDL) established MDL-2326 in the U.S. District Court for the Southern District of West Virginia and transferred the federal court transvaginal surgical mesh cases to MDL-2326 for coordinated pretrial proceedings. In addition, we were contacted by the Attorney General for the State of California in October 2012 informing us that their office and certain other state attorneys general offices intend to initiate a civil investigation into our sale of transvaginal surgical mesh products. We have established a product

32

liability accrual for known and estimated future cases and claims asserted against us as well as costs of defense thereof associated with our transvaginal surgical mesh products. While we believe that our accrual associated with this matter is adequate, changes to this accrual may be required in the future as additional information becomes available. We intend to vigorously contest the cases and claims asserted against us; however, the final resolution is uncertain and could have a material impact on our results of operations, financial condition and/or liquidity.

Governmental Investigations and Qui Tam Matters

On October 17, 2008, we received a subpoena from the U.S. Department of Health and Human Services, Office of the Inspector General, requesting information related to the alleged use of a skin adhesive in certain of our CRM products. In early 2010, we learned that this subpoena was related to a qui tam action filed in the U.S. District Court for the Western District of New York. After the federal government declined to intervene in the original complaint, the relator in the qui tam action filed an amended complaint alleging that Guidant violated the False Claims Act by selling certain PRIZM 2 devices and seeking monetary damages. In July 2010, we were served with the amended unsealed qui tam complaint filed by James Allen, an alleged device recipient. The civil division of the U.S. Department of Justice (DOJ) was later allowed to intervene in the Allen qui tam action and to transfer the litigation to the U.S. District Court for the District of Minnesota. In January 2011, the DOJ filed a civil False Claims Act complaint against us and Guidant (and other related entities) in the Allen qui tam action. On May 7, 2013, the Chief Magistrate Judge stayed the previously set deadlines in the case while the parties were in settlement discussions. In October 2013 we entered into a settlement agreement with the parties pursuant to which we agreed to pay $30 million to the DOJ and $1 million in legal fees to Mr. Allen’s counsel, and we filed a joint motion with the parties to dismiss the case.

On August 3, 2012, we were served with a qui tam complaint that had previously been filed under seal against Boston Scientific Neuromodulation Corp. in the U.S. District Court for the District of New Jersey on March 2, 2011. On August 8, 2012, we learned that the federal government had previously declined to intervene in this matter. The relators’ complaint, now unsealed, alleges that Boston Scientific Neuromodulation Corp. violated the federal and various states' false claims acts through submission of fraudulent bills for implanted devices, under-reporting of certain adverse events, and promotion of off-label uses. On September 10, 2012, the relators filed an amended complaint revising and restating certain of the claims in the original complaint. Our motion to dismiss, filed subsequently, was denied on May 31, 2013, and on June 28, 2013, we answered the amended complaint and brought certain counterclaims arising from relators’ unauthorized removal of documents from the business during their employments, which the relators moved to dismiss on July 22, 2013.

Other Proceedings

On October 5, 2007, Dr. Tassilo Bonzel filed a complaint against Pfizer, Inc. and our Schneider subsidiaries and us in the District Court in Kassel, Germany alleging that a 1995 license agreement related to a catheter patent is invalid under German law and seeking monetary damages. In June 2009, the District Court dismissed all but one of Dr. Bonzel's claims and in October 2009, he added new claims. We opposed the addition of the new claims. The District Court ordered Dr. Bonzel to select the claims he would pursue and in January 2011, he made that selection. A hearing is scheduled for March 28, 2014.

On September 28, 2011, we served a complaint against Mirowski Family Ventures LLC in the U.S. District Court for the Southern District of Indiana for a declaratory judgment that we have paid all royalties owed and did not breach any contractual or fiduciary obligations arising out of a license agreement. Mirowski answered and filed counterclaims requesting damages. On May 13, 2013, Mirowski Family Ventures served the Company with a complaint alleging breach of contract in Montgomery County Circuit Court, Maryland, and they amended this complaint on August 1, 2013. On July 29, 2013, the Indiana case was dismissed. On September 10, 2013, the company removed the case to the United States District Court for the District of Maryland.

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

Matters Concluded Since December 31, 2012

On December 4, 2009, we, along with Boston Scientific Scimed, Inc., filed a complaint for patent infringement against Cordis Corporation alleging that its Cypher Mini™ stent product infringes a U.S. patent (the Jang patent) owned by us. In April 2011, the U.S. District Court for the District of Delaware granted summary judgment that Cordis willfully infringed the Jang patent. After a trial on damages in May 2011, the jury found in favor of Boston Scientific for lost profits of approximately $18.5 million and royalties of approximately $1 million. On March 13, 2012, the District Court granted our motion for enhanced damages, resulting in a total damages award of approximately $41 million. On February 12, 2013, the Court of Appeals affirmed the District Court's judgment in favor of Boston Scientific.

33

On November 17, 2009, Boston Scientific Scimed, Inc. filed suit against OrbusNeich Medical, Inc. and certain of its subsidiaries in the Hague District Court in the Netherlands alleging that OrbusNeich's sale of the Genous stent infringes a patent owned by us (the Keith patent) and seeking monetary damages and injunctive relief. On March 13, 2012, the Hague Court of Appeals denied our request for preliminary relief. On April 2, 2013, the Hague Court of Appeals found the Keith patent invalid.

In December 2007, we were informed by the U.S. Attorney's Office for the Northern District of Texas that it was conducting an investigation of allegations related to improper promotion of biliary stents for off-label uses. The allegations were set forth in a qui tam complaint, which named us and certain of our competitors. Following the federal government's decision not to intervene in the case, the U.S. District Court for the Northern District of Texas unsealed the complaint. In March 2011, the District Court issued an order granting our motion to dismiss and, in March 2012, issued its opinion ordering that all claims against us be dismissed, some of which were dismissed with prejudice and some of which were dismissed without prejudice to the relator's right to amend those claims. On September 14, 2012, the relator filed and served an amended complaint restating the claims that the District Court dismissed without prejudice. On January 17, 2013, the District Court granted our motion to dismiss with prejudice all of the relator's remaining claims against us, and on April 12, 2013, the District Court amended its order of dismissal to specify that it was final and appealable. On May 3, 2013, the relator voluntarily moved to dismiss his appeal of the January 17, 2013 order of dismissal, which he had filed with the U.S. Court of Appeals for the Fifth Circuit on February 15, 2013. The deadline for further appeals lapsed on May 13, 2013.

On January 15, 2010, Cordis Corporation filed a complaint against us and Boston Scientific Scimed, Inc. alleging that the PROMUS® coronary stent system, supplied to us by Abbott Laboratories, infringes three patents (the Fischell patents) owned by Cordis. The suit was filed in the U.S. District Court for the District of Delaware and sought monetary and injunctive relief. We filed counterclaims of invalidity and non-infringement. The District Court found that the PROMUS stent system does not infringe the Fischell patents and that our sales of this product were authorized. On May 13, 2013, the Court of Appeals for the Federal Circuit affirmed the District Court’s judgment in favor of Boston Scientific. The deadline for further appeals lapsed on August 12, 2013.

On October 21, 2011, the U.S. District Court for the District of Massachusetts unsealed a qui tam complaint that related to the subject matter of a U.S. Attorney for the District of Massachusetts investigation, which investigation has been discontinued and is described below, after the federal government declined to intervene in the matter. Subsequently, on January 30, 2012, the relator filed an amended complaint. On July 5, 2012, the District Court issued an opinion and order dismissing the amended complaint for lack of subject matter jurisdiction. On July 12, 2012, the relator appealed the judgment of dismissal to the U.S. Court of Appeals for the First Circuit, and oral argument was held on February 7, 2013. On May 31, 2013, the Court of Appeals rejected the relator's appeal and affirmed the dismissal of the amended complaint. The deadline for further appeals lapsed on August 29, 2013.

On March 16, 2009, OrbusNeich Medical, Inc. filed suit against us alleging that our VeriFLEX™ (Liberté®) bare-metal coronary stent system infringes two U.S. patents (the Addonizio and Pazienza patents) owned by it. The complaint also alleged breach of contract and misappropriation of trade secrets and seeks monetary and injunctive relief. The suit is pending in the U.S. District Court for the District of Massachusetts. In September 2009, OrbusNeich filed an amended complaint against us alleging additional state law claims. In March 2010, the District Court dismissed OrbusNeich's unjust enrichment and fraud claims, but denied our motion to dismiss the remaining state law claims. OrbusNeich amended its complaint in April 2010 to add another patent (another Addonizio patent). In January 2011, OrbusNeich amended its complaint to drop its misappropriation of trade secret, statutory and unfair competition claims and in July 2011, it further amended its complaint to include allegations that our ION™ coronary stent system infringes two additional patents. On February 24, 2012, the District Court granted our motion to stay the patent claims, and on June 4, 2012, the District Court stayed the breach of contract claim, in each case, pending re-examination of the patents in suit. In addition, in February 2013, Orbus International B.V. filed suits against the Company and two Dutch subsidiaries in the Hague District Court in the Netherlands and Orbus Medical GmbH filed suit against the Company and one of its subsidiaries in the Dusseldorf District Court in Germany. In March 2013, Orbus Medical Inc. and Orbus International B.V. filed suit against the Company and two of its Irish subsidiaries in the Irish Commercial Court in Dublin, Ireland. Each of these matters alleges that the Company’s sale of stent systems using the Element design infringe European patents owned by Orbus Medical Inc. and licensed to other Orbus entities. In one Dutch matter, Orbus sought cross-border, preliminary injunctive relief, which the court denied on July 9, 2013. In the other Dutch matter, Orbus is seeking damages and injunctive relief, and a hearing is scheduled for December 20, 2013. In one German matter, Orbus sought preliminary injunctive relief, which the Dusseldorf District Court granted on April 30, 2013. On that same date, we appealed the injunction to the Court of Appeals of Dusseldorf. In the other German matter, Orbus is seeking damages and injunctive relief, and a hearing is scheduled for May 14, 2014. In the Irish matter, Orbus is seeking damages and injunctive relief. In March 2013, two of the Company’s subsidiaries filed suit against Orbus Medical Inc. in the English High Court seeking a declaration that the sale of the stent systems with the Element design does not infringe two Orbus patents and seeking to have the two patents found invalid. On June 5, 2013, Orbus cancelled one of the two UK patents. On September 15, 2013, the parties entered into a settlement agreement that resolves all stent-related cases brought by the parties in Germany, the Netherlands, Ireland, the United Kingdom and the United States.  The agreement includes a one-time payment from Boston

34

Scientific to OrbusNeich, with no future financial obligations.

On March 22, 2010, we received a subpoena from the U.S. Attorney's Office for the District of Massachusetts seeking documents relating to the former Market Development Sales Organization that operated within our CRM business. On October 21, 2011, the U.S. District Court for the District of Massachusetts unsealed a qui tam complaint that related to the subject matter of the U.S. Attorney's investigation, after the federal government declined to intervene in the matter. Subsequently, on January 30, 2012, the relator filed an amended complaint. The District Court case has been concluded and is described above. On October 30, 2013, the U.S. Attorney’s office informed us that the government was discontinuing its investigation. 

NOTE K – WEIGHTED AVERAGE SHARES OUTSTANDING

	Three Months Ended September 30,				Nine Months Ended September 30,
(in millions)	2013		2012		2013		2012
Weighted average shares outstanding - basic	1,340.3		1,392.5		1,345.2		1,420.3
Net effect of common stock equivalents	—	*	—	**	—	*	—	**
Weighted average shares outstanding - assuming dilution	1,340.3		1,392.5		1,345.2		1,420.3

* We generated net losses in the third quarter and first nine months of 2013. Our weighted-average shares outstanding for earnings per share calculations exclude common stock equivalents of 23.6 million for the third quarter of 2013 and 17.2 million for the first nine months of 2013 due to our net loss position in these periods.

** We generated net losses in the third quarter and first nine months of 2012. Our weighted-average shares outstanding for earnings per share calculations exclude common stock equivalents of 6.8 million for the third quarter of 2012 and 7.2 million for the first nine months of 2012 due to our net loss position in these periods.

Weighted average shares outstanding, assuming dilution, excludes the impact of 18 million stock options for the third quarter of 2013, 62 million stock options for the third quarter of 2012, 18 million stock options for the first nine months of 2013, and 61 million stock options for the first nine months of 2012, due to the exercise prices of these stock options being greater than the average fair market value of our common stock during the period.

We issued approximately six million shares of our common stock in the third quarter of 2013 and approximately 16 million shares in the first nine months of 2013, following the exercise or vesting of underlying stock options or deferred stock units, or purchases under our employee stock purchase plans. We repurchased approximately seven million shares of our common stock during the third quarter of 2013 for $75 million, and approximately 32 million shares during the first nine months of 2013 for $275 million, pursuant to our authorized repurchase programs as discussed in Note L – Stockholders' Equity to our audited financial statements contained in Item 8 of our 2012 Annual Report on Form 10-K.

35

NOTE L – SEGMENT REPORTING

Effective as of January 1, 2013, we reorganized our business from geographic regions to fully operationalized global business units. Following the reorganization, based on information regularly reviewed by our chief operating decision maker, we have three new reportable segments comprised of: Cardiovascular, Rhythm Management, and MedSurg. Our reportable segments represent an aggregate of operating segments. We have restated the prior period to conform to the current year presentation of our reportable segments.

Each of our reportable segments generates revenues from the sale of medical devices. We measure and evaluate our reportable segments based on segment net sales and operating income, excluding the impact of changes in foreign currency exchange rates and sales from divested businesses. Sales generated from reportable segments and divested businesses, as well as operating results of reportable segments and corporate expenses, are based on internally-derived standard currency exchange rates, which may differ from year to year, and do not include intersegment profits. We restated segment information for the prior period based on standard currency exchange rates used for the current period in order to remove the impact of foreign currency exchange fluctuations. Based on information regularly reviewed by our chief operating decision maker following our reorganization, we also restated certain expenses associated with our manufacturing and corporate operations. We exclude from segment operating income certain corporate-related expenses and certain transactions or adjustments that our chief operating decision maker considers to be non-recurring and/or non-operational, such as amounts related to goodwill and other intangible asset impairment charges; acquisition-, divestiture-, restructuring-, and litigation-related charges and credits; and amortization expense. Although we exclude these amounts from segment operating income, they are included in reported consolidated operating income (loss) and are included in the reconciliation below.

36

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

	Three Months Ended September 30,						Nine Months Ended September 30,
(in millions)	2013			2012*			2013			2012*
Net sales
Interventional Cardiology	$	487		$	496		$	1,538		$	1,646
Peripheral Interventions	202			188			601			571
Cardiovascular	689			684			2,139			2,217
Cardiac Rhythm Management	474			467			1,445			1,466
Electrophysiology	35			35			106			109
Rhythm Management	509			502			1,551			1,575
Endoscopy	331			308			979			916
Urology/Women's Health	134			124			378			367
Neuromodulation	116			88			316			263
MedSurg	581			520			1,673			1,546
Net sales allocated to reportable segments	1,779			1,706			5,363			5,338
Sales generated from divested businesses	2			32			56			91
Impact of foreign currency fluctuations	(46		)	(3		)	(114		)	(1		)
	$	1,735		$	1,735		$	5,305		$	5,428
Income (loss) before income taxes
Cardiovascular	$	184		$	175		$	548		$	561
Rhythm Management	68			58			192			218
MedSurg	187			169			521			452
Operating income allocated to reportable segments	439			402			1,261			1,231
Corporate expenses and currency exchange	(103		)	(58		)	(251		)	(214		)
Goodwill and other intangible asset impairment charges; and acquisition-, divestiture-, restructuring-, and litigation related charges and credits	(132		)	(839		)	(711		)	(4,708		)
Amortization expense	(101		)	(99		)	(305		)	(294		)
Operating (loss) income	103			(594		)	(6		)	(3,985		)
Other expense, net	(143		)	(69		)	(276		)	(174		)
Income (loss) before income taxes	$	(40	)	$	(663	)	$	(282	)	$	(4,159	)

* We have restated prior year detail to conform to current year presentation.

37

NOTE M – CHANGES IN OTHER COMPREHENSIVE INCOME

The following table provides the reclassifications out of other comprehensive income for the three and nine months ended September 30, 2013 and September 30, 2012. Amounts in the chart below are presented net of tax.

Three Months Ended September 30, 2013
(in millions)	Foreign currency translation adjustments	Unrealized gains/losses on derivative financial instruments	Defined benefit pension items / Other	Total
Beginning Balance	$(28)	$153	$(41)	$84
Other comprehensive income (loss) before reclassifications	10	(29)	—	(19)
Amounts reclassified from accumulated other comprehensive income	—	(9)	—	(9)
Net current-period other comprehensive income	10	(38)	—	(28)
Ending Balance	$(18)	$115	$(41)	$56
Three Months Ended September 30, 2012
(in millions)	Foreign currency translation adjustments	Unrealized gains/losses on derivative financial instruments	Defined benefit pension items / Other	Total
Beginning Balance	$(51)	$(4)	$(32)	$(87)
Other comprehensive income (loss) before reclassifications	2	(29)	—	(27)
Amounts reclassified from accumulated other comprehensive income	—	2	—	2
Net current-period other comprehensive income	2	(27)	—	(25)
Ending Balance	$(49)	$(31)	$(32)	$(112)

38

Nine Months Ended September 30, 2013
(in millions)	Foreign currency translation adjustments	Unrealized gains/losses on derivative financial instruments	Defined benefit pension items / Other	Total
Beginning Balance	$(26)	$34	$(41)	$(33)
Other comprehensive income (loss) before reclassifications	8	91	—	99
Amounts reclassified from accumulated other comprehensive income	—	(10)	—	(10)
Net current-period other comprehensive income	8	81	—	89
Ending Balance	$(18)	$115	$(41)	$56
Nine Months Ended September 30, 2012
(in millions)	Foreign currency translation adjustments	Unrealized gains/losses on derivative financial instruments	Defined benefit pension items / Other	Total
Beginning Balance	$(58)	$(48)	$(32)	$(138)
Other comprehensive income (loss) before reclassifications	9	—	—	9
Amounts reclassified from accumulated other comprehensive income	—	17	—	17
Net current-period other comprehensive income	9	17	—	26
Ending Balance	$(49)	$(31)	$(32)	$(112)

The income tax impact of the amounts in other comprehensive income for unrealized gains/losses on derivative financial instruments before reclassifications was a benefit of $16 million in the third quarter of 2013, an expense of $53 million in the first nine months of 2013, a benefit of $17 million in the third quarter of 2012, and an expense of $1 million in the first nine months of 2012. The income tax impact of the amounts reclassified from unrealized gains/losses on derivative financial instruments was a benefit of $6 million in the third quarter and a benefit of $5 million in the first nine months of 2013, an expense of $1 million in the third quarter of 2012, and an expense of $9 million in the first nine months of 2012. Refer to Note E – Fair Value Measurements for further detail on the reclassifications related to derivatives.

NOTE N – NEW ACCOUNTING PRONOUNCEMENTS

Standards Implemented

ASC Update No. 2013-02

In February 2013, the FASB issued ASC Update No. 2013-02, Comprehensive Income (Topic 220): Reporting of Amounts Reclassified out of Accumulated Other Comprehensive Income. Update No. 2013-02 requires that entities provide information about amounts reclassified out of accumulated other comprehensive income by component. The amendment also requires entities to present significant amounts by the respective line items of net income, either on the face of the income statement or in the notes to the financial statements for amounts required to be reclassified out of accumulated other comprehensive income in their entirety in the same reporting period. For other amounts that are not required to be reclassified to net income in their entirety, a cross-reference is required to other disclosures that provide additional details about those amounts. We adopted Update No. 2013-02 beginning in our first quarter ended March 31, 2013. Update No. 2013-02 is related to presentation only and its adoption did not impact our results of operations or financial position.

39

ASC Update No. 2013-01

In January 2013, the FASB issued ASC Update No. 2013-01, Balance Sheet (Topic 210): Clarifying the Scope of Disclosures about Offsetting Assets and Liabilities. Update No. 2013-01 clarifies the FASB's intent about requiring enhanced disclosures about certain financial instruments and derivative instruments that are offset in the statement of financial position or that are subject to enforceable master netting arrangements or similar agreements, previously issued ASC Update No. 2011-11, Disclosures about Offsetting Assets and Liabilities (Topic 210). We adopted Update No. 2013-01 beginning in our first quarter ended March 31, 2013. The adoption of Update No. 2013-01 did not impact our results of operations or financial position.

Standards to be Implemented

ASC Update No. 2013-11

In July 2013, the FASB issued ASC Update No. 2013-11, Income Taxes (Topic 740): Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists. Update No. 2013-11 requires that entities present an unrecognized tax benefit, or portion of an unrecognized tax benefit, as a reduction to a deferred tax asset in the financial statements for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward, with certain exceptions. We are required to adopt Update No. 2013-11 for our first quarter ending March 31, 2014, and early adoption is permitted. Update No. 2013-11 is related to presentation only and its adoption will not impact our results of operations or financial position.

40

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

OPERATIONS

Introduction

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

Effective as of January 1, 2013, we reorganized our business into fully operationalized global business units. We have three new global reportable segments comprised of Cardiovascular, Rhythm Management, and MedSurg. We have restated prior period information for 2012 to conform to the current year presentation of our segments.

Financial Summary

Three Months Ended September 30, 2013

Our net sales for the third quarter of 2013 were $1.735 billion, consistent with the third quarter of 2012. Excluding the impact of changes in foreign currency exchange rates, which had a $43 million negative impact on our third quarter 2013 net sales as compared to the same period in the prior year, and the decrease in net sales from divested businesses of $30 million, our net sales increased $73 million, or four percent.¹ Refer to Quarterly Results and Business Overview for a discussion of our net sales by global business.

Our reported net loss for the third quarter of 2013 was $5 million, or $0.00 per share. Our reported results for the third quarter of 2013 included acquisition-, restructuring-, and litigation-related charges, debt extinguishment charges, and amortization expense totaling $235 million (after-tax), or $0.17 per share. Excluding these items, net income for the third quarter of 2013 was $230 million, or $0.17 per share.¹ Our reported net loss for the third quarter of 2012 was $664 million, or $0.48 per share, driven primarily by a goodwill impairment charge related to our former U.S. Cardiac Rhythm Management (CRM) business unit. Our reported results for the third quarter of 2012 included goodwill and other intangible asset impairment charges, acquisition- and divestiture-related net credits, restructuring- and litigation-related charges, discrete tax items and amortization expense totaling $885 million (after-tax), or $0.64 per share. Excluding these items, net income for the third quarter of 2012 was $221 million, or $0.16 per share.¹ 

¹Sales growth rates that exclude the impact of changes in foreign currency exchange rates and net income and net income per share excluding certain items required by GAAP are not prepared in accordance with generally accepted accounting principles in the United States (U.S. GAAP). Refer to Additional Information for a discussion of management’s use of these non-GAAP financial measures.

41

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

	Three Months Ended September 30, 2013
				Tax						Impact per
(in millions, except per share data)	Pre-Tax			Impact			After-Tax			share
GAAP net income (loss)	$	(40	)	$	35		$	(5	)	$	0.00
Non-GAAP adjustments:
Acquisition-related charges	30			(2		)	28			0.02		*
Restructuring and restructuring-related net charges	26			(8		)	18			0.01		*
Litigation-related net charges	76			(19		)	57			0.04		*
Debt extinguishment charges	70			(26		)	44			0.03		*
Amortization expense	101			(13		)	88			0.07		*
Adjusted net income	$	263		$	(33	)	$	230		$	0.17
* Assumes dilution of 23.6 million shares for the three months ended September 30, 2013 for all or a portion of these non-GAAP adjustments.

	Three Months Ended September 30, 2012
				Tax						Impact per
(in millions, except per share data)	Pre-Tax			Impact			After-Tax			share
GAAP net income (loss)	$	(663	)	$	(1	)	$	(664	)	$	(0.48	)
Non-GAAP adjustments:
Goodwill impairment charge	748			—			748			0.54			**
Intangible asset impairment charges	13			(3		)	10			0.01			**
Acquisition-related charges (credits)	(20		)	—			(20		)	(0.01		)	**
Divestiture-related charges (credits)	(10		)	2			(8		)	(0.01		)	**
Restructuring and restructuring-related net charges	58			(19		)	39			0.03			**
Litigation-related net charges	50			(18		)	32			0.02			**
Discrete tax items	—			1			1			0.00			**
Amortization expense	99			(16		)	83			0.06			**
Adjusted net income	$	275		$	(54	)	$	221		$	0.16
** Assumes dilution of 6.8 million shares for the three months ended September 30, 2012 for all or a portion of these non-GAAP adjustments.

Cash provided by operating activities was $250 million in the third quarter of 2013, as compared to $271 million in the third quarter of 2012. Our cash generated from operations continued to be a significant source of available funds for investing in our growth and buying back shares of our common stock pursuant to our share repurchase programs. During the third quarter of 2013, we used $75 million of cash generated from operations to repurchase approximately seven million shares of our common stock. As of September 30, 2013, we had total debt of $4.249 billion, cash and cash equivalents of $571 million and working capital of $1.623 billion. Refer to Liquidity and Capital Resources for further discussion.

Nine Months Ended September 30, 2013

Our net sales for the first nine months of 2013 were $5.305 billion, as compared to net sales of $5.428 billion for the first nine months of 2012, a decrease of $123 million, or two percent. Excluding the impact of changes in foreign currency exchange rates, which had a $113 million negative impact on our net sales for the nine months ended September 30, 2013 as compared to the same period in the prior year, and the decrease in net sales from divested businesses of $34 million, our net sales increased $25 million, remaining consistent with the prior year.¹ Refer to Quarterly Results and Business Overview for a discussion of our net sales by business.

42

Our reported net loss for the first nine months of 2013 was $229 million, or $0.17 per share, driven primarily by a goodwill impairment charge related to our global Cardiac Rhythm Management (CRM) business unit recorded in conjunction with interim goodwill impairment testing required following the change in composition of our segments and reporting units in the first quarter of 2013. Refer to Quarterly Results and Critical Accounting Policies and Estimates for a discussion of our goodwill valuation and this impairment charge. Our reported net loss for the first nine months of 2013 included goodwill and other intangible asset impairment charges, debt extinguishment charges, acquisition- and divestiture-related credits, restructuring- and litigation-related charges and amortization expense totaling $930 million (after-tax), or $0.68 per share. Excluding these items, net income for the first nine months of 2013 was $701 million, or $0.51 per share.¹ Our reported net loss for the first nine months of 2012 was $4.129 billion, or $2.91 per share, driven primarily by goodwill impairment charges related to our former U.S. CRM and Europe, Middle East, and Africa (EMEA) business units. Our reported results for the first nine months of 2012 included goodwill and other intangible asset impairment charges, acquisition- and divestiture-related net credits, restructuring- and litigation-related charges, discrete tax items and amortization expense totaling $4.809 billion (after-tax), or $3.39 per share. Excluding these items, net income for the first nine months of 2012 was $680 million, or $0.48 per share.¹ The following is a reconciliation of results of operations prepared in accordance with U.S. GAAP to those adjusted results considered by management. Refer to Quarterly Results and Business Overview for a discussion of each reconciling item:

¹Sales growth rates that exclude the impact of changes in foreign currency exchange rates and net income and net income per share excluding certain items required by GAAP are not prepared in accordance with generally accepted accounting principles in the United States (U.S. GAAP). Refer to Additional Information for a discussion of management’s use of these non-GAAP financial measures.

	Nine Months Ended September 30, 2013
				Tax						Impact per
(in millions, except per share data)	Pre-Tax			Impact			After-Tax			share
GAAP net income (loss)	$	(282	)	$	53		$	(229	)	$	(0.17	)
Non-GAAP adjustments:
Goodwill impairment charge	423			(2		)	421			0.31			*
Intangible asset impairment charges	53			(8		)	45			0.03			*
Acquisition-related charges (credits)	(5		)	(3		)	(8		)	(0.01		)	*
Divestiture-related charges (credits)	(37		)	12			(25		)	(0.02		)	*
Restructuring and restructuring-related net charges	71			(20		)	51			0.04			*
Litigation-related net charges	206			(67		)	139			0.10			*
Debt extinguishment charges	70			(26		)	44			0.03			*
Amortization expense	305			(42		)	263			0.20			*
Adjusted net income	$	804		$	(103	)	$	701		$	0.51
* Assumes dilution of 17.2 million shares for the nine months ended September 30, 2013 for all or a portion of these non-GAAP adjustments.

43

	Nine Months Ended September 30, 2012
				Tax						Impact per
(in millions, except per share data)	Pre-Tax			Impact			After-Tax			share
GAAP net income (loss)	$	(4,159	)	$	30		$	(4,129	)	$	(2.91	)
Non-GAAP adjustments:
Goodwill impairment charges	4,350			(23		)	4,327			3.05			**
Intangible asset impairment charges	142			(23		)	119			0.09			**
Acquisition-related charges (credits)	(41		)	11			(30		)	(0.02		)	**
Divestiture-related charges (credits)	(7		)	2			(5		)	0.00			**
Restructuring and restructuring-related net charges	108			(32		)	76			0.05			**
Litigation-related net charges	119			(47		)	72			0.05			**
Discrete tax items	—			1			1			0.00			**
Amortization expense	294			(45		)	249			0.17			**
Adjusted net income	$	806		$	(126	)	$	680		$	0.48
** Assumes dilution of 7.2 million shares for the nine months ended September 30, 2012 for all or a portion of these non-GAAP adjustments.

Cash provided by operating activities was $809 million in the first nine months of 2013, as compared to $891 million in the first nine months of 2012. During the first nine months of 2013, we used $275 million of cash generated from operations to repurchase approximately 32 million shares of our common stock.

Quarterly Results and Business Overview

Effective as of January 1, 2013, we reorganized our business into fully operationalized global business units. We have three new global reportable segments comprised of Cardiovascular, Rhythm Management, and MedSurg.

Net Sales

We manage our global businesses on a constant currency basis, and we manage market risk from currency exchange rate changes at the corporate level. Management excludes the impact of changes in foreign currency exchange rates for purposes of reviewing global revenue growth rates to facilitate an evaluation of current operating performance and comparison to past operating performance. To calculate revenue growth rates that exclude the impact of changes in foreign currency exchange rates, we convert actual net sales from local currency to U.S. dollars using constant foreign currency exchange rates in the current and prior period. The constant currency growth rates in the tables below can be recalculated from our net sales presented in Note L – Segment Reporting to our unaudited condensed consolidated financial statements contained in Item 1 of this Quarterly Report on Form 10-Q.

44

The following table provides our worldwide net sales by business and the relative change on an as reported and constant currency basis, both excluding and including divested businesses. Net sales that exclude the impact of changes in foreign currency exchange rates are not financial measures prepared in accordance with U.S. GAAP and should not be considered in isolation from, or as a replacement for, the most directly comparable GAAP financial measure. Refer to Additional Information for a further discussion of management’s use of this non-GAAP financial measure.

					Change
	Three Months Ended September 30,				As Reported Currency Basis			Constant Currency Basis
(in millions)	2013		2012
Interventional Cardiology	$	472	$	494	(4	)	%	(2	)	%
Peripheral Interventions	195		189		3		%	7		%
Cardiovascular	667		683		(2	)	%	1		%
Cardiac Rhythm Management	464		462		1		%	1		%
Electrophysiology	34		35		(3	)	%	(1	)	%
Rhythm Management	498		497		0		%	1		%
Endoscopy	322		310		4		%	8		%
Urology and Women’s Health	131		125		5		%	8		%
Neuromodulation	115		88		32		%	32		%
MedSurg	568		523		9		%	12		%
Subtotal Core Businesses	1,733		1,703		2		%	4		%
Divested Businesses	2		32		(95	)	%	(95	)	%
Worldwide	$	1,735	$	1,735	0		%	2		%

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

					Change
	Nine Months Ended September 30,				As Reported Currency Basis			Constant Currency Basis
(in millions)	2013		2012
Interventional Cardiology	$	1,497	$	1,646	(9	)	%	(7	)	%
Peripheral Interventions	585		575		2		%	5		%
Cardiovascular	2,082		2,221		(6	)	%	(3	)	%
Cardiac Rhythm Management	1,417		1,451		(2	)	%	(1	)	%
Electrophysiology	105		109		(4	)	%	(3	)	%
Rhythm Management	1,522		1,560		(2	)	%	(2	)	%
Endoscopy	956		922		4		%	7		%
Urology and Women’s Health	373		371		1		%	3		%
Neuromodulation	315		263		20		%	20		%
MedSurg	1,644		1,556		6		%	8		%
Subtotal Core Businesses	5,248		5,337		(2	)	%	0		%
Divested Businesses	57		91		(38	)	%	(38	)	%
Worldwide	$	5,305	$	5,428	(2	)	%	0		%

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

45

Cardiovascular

Interventional Cardiology

Our Interventional Cardiology division develops, manufactures and markets technologies for diagnosing and treating coronary artery disease and other cardiovascular disorders. Product offerings include coronary stents, including drug-eluting and bare metal stent systems, balloon catheters, rotational atherectomy systems, guide wires, guide catheters, embolic protection devices, and diagnostic catheters used in percutaneous transluminal coronary angioplasty (PTCA) procedures, as well as intravascular ultrasound (IVUS) imaging systems.

During the fourth quarter of 2012, we received CE Mark approval for our next generation SYNERGY™ Everolimus-Eluting Platinum Chromium Coronary Stent System featuring an ultra-thin abluminal (outer) bioabsorbable polymer coating and commenced a limited commercial launch. We expect to expand the launch in Europe in the first half of 2014. The SYNERGY Stent System is unique in that its polymer is gone shortly after drug elution is complete at three months. This innovation has the potential to improve post-implant vessel healing and eliminate long-term polymer exposure, a possible cause of late adverse events. We have completed patient enrollment in the EVOLVE II clinical trial, which is designed to further assess the safety and effectiveness of the SYNERGY Stent System and support U.S. Food and Drug Administration (FDA) and Japanese regulatory approvals for this technology. In the first quarter of 2013, we received CE Mark approval and launched our Promus PREMIER™ Everolimus-Eluting Platinum Chromium Coronary Stent System in Europe and other select geographies. The Promus PREMIER Stent System is designed to provide physicians improved drug-eluting stent (DES) performance in treating patients with coronary artery disease.  We expect to launch the Promus PREMIER Stent System in the U.S. in the fourth quarter of 2013 following FDA approval.

Our worldwide net sales of Interventional Cardiology products were $472 million in the third quarter of 2013, or approximately 27 percent of our consolidated net sales in the third quarter of 2013. Our worldwide net sales of Interventional Cardiology products decreased $22 million, or four percent, in the third quarter of 2013, as compared to 2012. Excluding the impact of changes in foreign currency exchange rates, which had a $13 million negative impact on our Interventional Cardiology net sales in the third quarter of 2013, as compared to the same period in the prior year, net sales of these products decreased $9 million, or two percent. This decrease was primarily due to lower coronary stent system sales, partially offset by higher sales of our non-stent Interventional Cardiology products.

Our coronary stent system sales represent a significant portion of our Interventional Cardiology net sales. The following are the components of our worldwide coronary stent system sales:

	Three Months Ended						Three Months Ended
(in millions)	September 30, 2013						September 30, 2012
	U.S.		International		Total		U.S.		International		Total
Drug-eluting	$	106	$	156	$	262	$	123	$	160	$	283
Bare-metal	5		10		15		6		15		21
	$	111	$	166	$	277	$	129	$	175	$	304

Our worldwide net sales of coronary stent systems decreased $27 million, or nine percent, in the third quarter of 2013, as compared to 2012. Excluding the impact of changes in foreign currency exchange rates, which had a $8 million negative impact on our coronary stent system net sales in the third quarter of 2013, as compared to the same period in the prior year, net sales of these products decreased $19 million, or six percent. This decrease was primarily related to declines in U.S. DES revenue due to lower procedural volumes and declines in average selling prices. We believe that our U.S. DES market share was stable during the third quarter of 2013 as compared to both the second quarter of 2013 and the third quarter of 2012. Our international DES revenue grew two percent, excluding the impact of changes in foreign currency exchange rates, driven by our Promus PREMIER and SYNERGY stent system launches in Europe and growth in the emerging markets of China and India, partially offset by pricing declines in Europe and a loss of DES sales in Germany due to an injunction during the third quarter of 2013. Refer to Note J - Commitments and Contingencies to our unaudited condensed consolidated financial statements contained in Item 1 of this Quarterly Report on Form 10-Q for further discussion of legal matters.

Historically, the worldwide coronary stent market has been dynamic and highly competitive with significant market share volatility. We believe that we will continue to maintain a strong position within the worldwide DES market for a variety of reasons, including:

• the performance benefits of our current and future technology;

• the strength of our pipeline of DES products, which has shown favorable results in clinical trials to date;

• the breadth and depth of our interventional cardiology product portfolio;

46

• the broad and consistent long-term results of our clinical trials;

• our overall position in the interventional medical device market and our experienced interventional cardiology sales force;

• the strength of our clinical, selling, marketing and manufacturing capabilities; and

• our increased presence and investment in rapidly growing emerging markets, including Brazil, Russia, India and China.

However, a decline in net sales from our DES systems could have a significant adverse impact on our operating results. Significant variables that may impact the size of the DES market and our position within this market include, but are not limited to:

• the impact of competitive pricing pressure on average selling prices of DES systems available in the market;

• the impact and outcomes of on-going and future clinical trials involving our or our competitors’ products, including those trials sponsored by our competitors or other third parties, or perceived product performance of our or our competitors’ products;

• new product launches by our competitors;

• our ability to timely and successfully launch new or next-generation products and technologies, in line with our commercialization strategies;

• physician and patient confidence in our current and next-generation technology;

• changes in the overall number of percutaneous coronary intervention procedures performed, drug-eluting stent penetration rates and the average number of stents used per procedure;

• delayed or limited regulatory approvals and unfavorable reimbursement policies; and

• the outcome of intellectual property litigation.

In January 2011, we completed the acquisition of Sadra Medical, Inc. (Sadra). Through our acquisition of Sadra, we have developed a fully repositionable and retrievable device for transcatheter aortic valve replacement (TAVR) to treat patients with severe aortic stenosis. The Lotus™ Valve System consists of a stent-mounted tissue valve prosthesis and catheter delivery system for guidance and placement of the valve. The low-profile delivery system and introducer sheath are designed to enable accurate positioning, repositioning and retrieval at any time prior to release of the aortic valve implant. In April 2013, we completed enrollment in the REPRISE II clinical trial to evaluate the safety and performance of the Lotus™ Valve System. In October 2013, we received CE Mark approval for the Lotus ™ Valve System.

In March 2011, we completed the acquisition of Atritech, Inc. (Atritech). Atritech developed a novel device designed to close the left atrial appendage in patients with atrial fibrillation who are at risk for ischemic stroke. The WATCHMAN^® Left Atrial Appendage Closure Technology is the first device proven in a randomized clinical trial to offer an alternative to anticoagulant drugs, and is marketed in CE Mark countries. In the U.S., we completed the PREVAIL trial to evaluate the safety and efficacy of the WATCHMAN® device in patients with nonvalvular atrial fibrillation versus long-term warfarin therapy. During the second quarter of 2013, we submitted the final clinical module to the FDA. We expect to receive FDA approval and commence our launch in the first half of 2014. We are leveraging expertise from both our Electrophysiology and Interventional Cardiology businesses in the commercialization of the WATCHMAN^® device.

Peripheral Interventions (PI)

Our PI product offerings include stents, balloon catheters, wires, peripheral embolization devices and other devices used to diagnose and treat peripheral vascular disease. Our worldwide net sales of these products were $195 million in the third quarter of 2013, as compared to $189 million in the third quarter of 2012, an increase of $6 million. Excluding the impact of changes in foreign currency exchange rates, our worldwide PI net sales increased $14 million, or seven percent, in the third quarter of 2013, as compared to the third quarter of 2012. The year-over-year increase in worldwide PI net sales was primarily driven by growth in our core PI franchise, including stents and balloons, as well as the launch of the Vessix renal denervation system in Europe.

During the fourth quarter of 2012, we completed the acquisition of Vessix Vascular, Inc. (Vessix), a developer of catheter-based renal denervation systems for the treatment of uncontrolled hypertension. Through the acquisition of Vessix, we added a second generation, highly differentiated technology to our hypertension strategy. During the second quarter of 2013, we launched this technology in Europe, and we expect to begin enrollment in our U.S. Investigational Device Exemption (IDE) clinical trial during the first half of 2014.

47

Rhythm Management

Cardiac Rhythm Management (CRM)

Our CRM division develops, manufactures and markets a variety of implantable devices including implantable cardioverter defibrillator (ICD) systems and pacemaker systems that monitor the heart and deliver electricity to treat cardiac abnormalities. Worldwide net sales of our CRM products of $464 million in the third quarter of 2013, represented approximately 27 percent of our consolidated net sales for the third quarter of 2013. Our worldwide CRM net sales increased $2 million, or one percent, in the third quarter of 2013, as compared to the same period in the prior year. Excluding the impact of changes in foreign currency exchange rates, which had a $5 million negative impact on our third quarter 2013 CRM net sales as compared to the same period in the prior year, our CRM net sales increased $7 million, or one percent.

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

	Three Months Ended						Three Months Ended
(in millions)	September 30, 2013						September 30, 2012
	U.S.		International		Total		U.S.		International		Total
ICD systems	$	212	$	118	$	330	$	205	$	122	$	327
Pacemaker systems	70		64		134		68		67		135
CRM products	$	282	$	182	$	464	$	273	$	189	$	462

The increase in our worldwide CRM net sales during the third quarter of 2013 as compared to the third quarter of 2012 was principally the result of an increase in net sales of our defibrillator systems due to slight increases in our denovo market share and the resumption of our controlled launch of our S-ICD system late in the third quarter of 2013. Our pacemaker system net sales decreased one percent during the third quarter of 2013, as compared to the third quarter of 2012, but increased slightly excluding the impact of changes in foreign currency exchange rates, due to the continued strong performance of our INGENIO family of pacemaker systems.

During the second quarter of 2012, we completed the acquisition of Cameron Health, Inc. (Cameron). Cameron developed the world's first and only commercially available subcutaneous implantable cardioverter defibrillator, the S-ICD® System, which we believe is a differentiated technology that will provide us the opportunity to both increase our market share in the existing ICD market and expand that market over time. The S-ICD® system has received CE Mark and FDA approval. We have been supply constrained since early March 2013 and were only able to provide a very limited supply of S-ICD systems during the second and third quarters of 2013. We continued to make progress in our efforts to enhance the S-ICD supply chain; and late in the third quarter of 2013 we were able to resume our controlled launch of our S-ICD system. We are managing our S-ICD supply with our customers and we continue to work diligently to expand our production capacity to meet the global demand for the S-ICD therapy.

Net sales from our CRM products represent a significant source of our overall net sales. Therefore, increases or decreases in our CRM net sales could have a significant impact on our consolidated results of operations. Variables that may impact the size of the CRM market and/or our share of that market include, but are not limited to:

• the on-going impact of physician alignment to hospitals, government investigations and audits of hospitals, and other market and economic conditions on the overall number of procedures performed and average selling prices;

• our ability to retain and attract key members of our CRM sales force and other key CRM personnel;

• the ability of CRM manufacturers to maintain the trust and confidence of the implanting physician community, the referring physician community and prospective patients in CRM technologies;

• future product field actions or new physician advisories issued by us or our competitors;

• our ability to timely and successfully acquire or develop, launch and supply new or next-generation competitive products and technologies worldwide, in line with our commercialization strategies, including the S-ICD® system;

• new product launches by our competitors;

• variations in clinical results, reliability or product performance of our and our competitors’ products; and

• delayed or limited regulatory approvals and unfavorable reimbursement policies.

48

Electrophysiology

Our Electrophysiologybusiness develops less-invasive medical technologies used in the diagnosis and treatment of rate and rhythm disorders of the heart. Our products include the Blazer™ line of ablation catheters, designed to deliver enhanced performance, responsiveness and durability. Worldwide net sales of our Electrophysiology products were $34 million in the third quarter of 2013 as compared to $35 million in the third quarter of 2012, a decline of $1 million. Changes in foreign currency exchange rates did not materially affect our Electrophysiology net sales in the third quarter of 2013, as compared to the same period in the prior year.

During the fourth quarter of 2012, we completed the acquisition of Rhythmia Medical, Inc. (Rhythmia), a developer of next-generation mapping and navigation solutions for use in cardiac catheter ablations and other electrophysiology procedures, including atrial fibrillation and atrial flutter. We received CE Mark approval for the Rhythmia technology during the second quarter of 2013 and received FDA approval during July of 2013. We believe that this acquisition, as well as our other expected product launches, will help to position us to competitively participate in the fast-growing Electrophysiology market.

On November 1, 2013, we completed the acquisition of the electrophysiology business of C.R. Bard Inc., which generated $111 million of sales in 2012. We believe that this transaction brings a strong commercial team and complementary portfolio of ablation catheters, diagnostic tools, and electrophysiology recording systems, and will allow us to better serve the global Electrophysiology market through a more comprehensive portfolio offering and sales infrastructure. See Note B - Acquisitions to our unaudited condensed consolidated financial statements contained in Item 1 of this Quarterly Report on Form 10-Q for additional details related to the acquisition.

MedSurg

Endoscopy

Our Endoscopy division develops and manufactures devices to treat a variety of medical conditions including diseases of the digestive and pulmonary systems. Our worldwide net sales of these products were $322 million for the third quarter in 2013, as compared to $310 million in the third quarter of 2012, an increase of $12 million, or four percent. Our Endoscopy net sales increased $23 million, or eight percent, in the third quarter of 2013, as compared to the third quarter of 2012 excluding the impact of changes in foreign currency exchange rates, which had an $11 million negative impact on our Endoscopy net sales in the third quarter of 2013. Our Endoscopy sales performance was primarily the result of growth across several of our key product franchises, including our hemostasis franchise on the continued adoption and utilization of our Resolution Clip for gastrointestinal bleeding; our biliary device franchise driven by our endoscopic ultrasound platform and recent launches within our biliary access and retrieval product lines; our metal stent franchise driven by our WallFlex® product family; and improved adoption of the Alair® Bronchial Thermoplasty system.

During the fourth quarter of 2010, we completed our acquisition of Asthmatx, Inc. (Asthmatx) and currently design, manufacture and market a less-invasive, catheter-based bronchial thermoplasty procedure for the treatment of severe persistent asthma. The Alair System, developed by Asthmatx, has both CE Mark and FDA approval and is the first device-based asthma treatment approved by the FDA. Beginning January 1, 2013, the American Medical Association (AMA) Current Procedural Terminology (CPT) editorial panel assigned category I CPT codes specifically for bronchial thermoplasty. The Category I CPT procedure codes are recognized by all public and private health insurance payers in the United States, which will allow physicians and hospitals to seek reimbursement for bronchial thermoplasty procedures. In addition, during the third quarter of 2013, the five-year data from the AIR2 clinical trial was published in the Journal of Allergy and Clinical Immunology, which showed that the Alair System provided long-term asthma control, demonstrated by a sustained reduction in the rate of severe exacerbations and emergency room visits over a five year period after treatment. We expect that the Alair technology will continue to strengthen our existing offering of pulmonary devices and contribute to future sales growth and diversification of the Endoscopy business.

Urology and Women’s Health

Our Urology and Women’s Health division develops and manufactures devices to treat various urological and gynecological disorders. Our worldwide net sales of these products were $131 million in the third quarter of 2013, as compared to $125 million in the third quarter of 2012, an increase of approximately $6 million, or five percent. Excluding the impact of changes in foreign currency exchange rates, our worldwide Urology and Women's Health net sales increased $10 million in the third quarter of 2013, as compared to the third quarter of 2012, or eight percent. The increase in worldwide Urology and Women's Health net sales was primarily due to new product launches and growth in the international business as a result of our global commercial expansion.

49

Neuromodulation

Our Neuromodulation business offers the Precision® and Precision Spectra™ Spinal Cord Stimulation (SCS) systems, used for the management of chronic pain. Our worldwide net sales of Neuromodulation products were $115 million in the third quarter of 2013, as compared to $88 million in the third quarter of 2012, an increase of $27 million, or 32 percent. Foreign currency fluctuations did not significantly impact our Neuromodulation net sales in the third quarter of 2013, as compared to the same period in the prior year. The sales growth was primarily driven by net sales of our Precision Spectra System. We received CE Mark approval for the Precision Spectra System during the fourth quarter of 2012 and we received FDA approval and commenced our U.S. commercial launch of the device during the first quarter of 2013. The Precision Spectra System is the world's first and only SCS system with 32 contacts and 32 dedicated power sources and is designed to provide improved pain relief to a wide range of patients who suffer from chronic pain.

During the third quarter of 2012, we received CE Mark approval for use of our Vercise™ Deep Brain Stimulation (DBS) System for the treatment of Parkinson's disease in Europe, and we began our U.S. pivotal trial for the treatment of Parkinson's disease during the second quarter of 2013. We believe we have an exciting opportunity in DBS with our ability to customize the field designed to precisely stimulate the target without extraneous stimulation of adjacent areas that may cause unwanted side effects.

Emerging Markets

As part of our strategic imperatives to drive global expansion, described in our 2012 Annual Report filed on Form 10-K, we are seeking to grow net sales and market share by expanding our global presence. In particular, we are focusing our efforts and increasing our investment in certain countries whose economies and healthcare sectors are growing rapidly, as well as others, in order to maximize opportunities in those countries. As a result of these efforts, in the third quarter of 2013, we increased net sales in Brazil, Russia, India and China by approximately 28 percent over the same period in the prior year on an as reported basis and continued investments in infrastructure in those countries.

Gross Profit

Our gross profit was $1.225 billion for the third quarter of 2013, $1.177 billion for the third quarter of 2012, $3.687 billion for the first nine months of 2013, and $3.661 billion for the first nine months of 2012. As a percentage of net sales, our gross profit increased to 70.6 percent in the third quarter of 2013, as compared to 67.8 percent in the third quarter of 2012 and was 69.5 percent for the first nine months of 2013, as compared to 67.5 percent for the first nine months of 2012. The following is a reconciliation of our gross profit margins and a description of the drivers of the change from period to period:

	Three Months		Nine Months
Gross profit margin - period ended September 30, 2012	67.8	%	67.5	%
Manufacturing cost reductions	1.9		2.0
Sales from divested businesses	1.1		0.4
Sales pricing	(0.9	)	(1.0	)
All other	0.7		0.6
Gross profit margin - period ended September 30, 2013	70.6	%	69.5	%

The primary factors contributing to the increase in our gross profit margin during the three and nine months ended September 30, 2013, as compared to the same periods in 2012, were the positive impact of cost reductions as a result of our restructuring and other process improvement programs. Our gross profit margin was also positively impacted by lower sales related to our divested businesses, as these sales are at significantly lower gross profit margins. Partially offsetting these factors was the negative impact of pricing related primarily to sales of our drug-eluting stent and CRM products. In addition, during the second quarter of 2013, we recorded a $16 million credit to cost of products sold related to the final retroactive pricing adjustment pursuant to our PROMUS® supply arrangement with Abbott for historical purchases of PROMUS® stent systems.

50

Operating Expenses

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

	Three Months Ended September 30,						Nine Months Ended September 30,
	2013			2012			2013			2012
		% of Net			% of Net			% of Net			% of Net
(in millions)	$	Sales		$	Sales		$	Sales		$	Sales
Selling, general and administrative expenses	658	37.9	%	589	33.9	%	1,950	36.8	%	1,895	34.9	%
Research and development expenses	217	12.5	%	220	12.7	%	644	12.1	%	648	11.9	%
Royalty expense	28	1.6	%	29	1.7	%	115	2.2	%	125	2.3	%

Selling, General and Administrative (SG&A) Expenses

In the third quarter of 2013, our SG&A expenses increased $69 million, or 12 percent, as compared to the third quarter of 2012, and were 400 basis points higher as a percentage of net sales. This increase was driven primarily by our increased investment related to acquisitions and our expansion efforts in emerging markets, as well as $18 million of expense associated with the new excise tax on U.S. sales of Class I, II and III medical devices that went into effect January 1, 2013. Partially offsetting these increases were declines in spending as a result of our restructuring and other cost reduction initiatives and the impact of changes in foreign currency exchange rates.

In the first nine months of 2013, our SG&A expenses increased $55 million, or three percent, as compared to the first nine months of 2012 and were approximately 200 basis points higher as a percentage of net sales. The increase in SG&A expenses was driven primarily by our increased investment related to acquisitions and our expansion efforts in emerging markets, as well as $53 million of expense associated with the new excise tax on U.S. sales of Class I, II and III medical devices that went into effect January 1, 2013. Partially offsetting these increases were declines in spending as a result of our restructuring and other cost reduction initiatives and the impact of changes in foreign currency exchange rates.

Research and Development (R&D) Expenses

In the third quarter of 2013, our R&D expenses decreased $3 million, or one percent, as compared to the third quarter of 2012, and were 20 basis points lower as a percentage of net sales. The decrease was due primarily to our continued focus on cost reduction initiatives associated with our restructuring programs and the benefits from our strategy to transform our research and development efforts to be more effective and cost efficient. Partially offsetting the decrease was R&D funding for our acquisitions. In the first nine months of 2013, our R&D expenses decreased $4 million, or one percent, as compared to the first nine months of 2012. We remain committed to advancing medical technologies and investing in meaningful research and development projects across our businesses in order to maintain a healthy pipeline of new products that we believe will contribute to profitable sales growth.

Royalty Expense

In the third quarter of 2013, our royalty expense remained consistent with the third quarter of 2012. In the first nine months of 2013, our royalty expense decreased $10 million, or eight percent, as compared to the first nine months of 2012, and was slightly lower as a percentage of net sales. This decrease relates primarily to lower sales of our royalty-bearing products within our Interventional Cardiology business.

Amortization Expense

Our amortization expense was $101 million in the third quarter of 2013, as compared to $99 million in the third quarter of 2012, and $305 million in the first nine months of 2013, as compared to $294 million in the first nine months of 2012. This increase was due primarily to amortizable intangible assets acquired during 2012. This non-cash charge is excluded by management for purposes of evaluating operating performance and assessing liquidity.

51

Goodwill Impairment Charge

2013 Charge

We test our goodwill balances during the second quarter of each year for impairment, or more frequently if indicators are present or changes in circumstances suggest that impairment may exist. Following our reorganization from regions to global business units and our reallocation of goodwill on a relative fair value basis, we conducted the first step of the goodwill impairment test for all new global reporting units as of January 1, 2013. The first step requires a comparison of the carrying value of the reporting units to the fair value of these units. The fair value of each new global reporting unit exceeded its carrying value, with the exception of the global CRM reporting unit. The global CRM reporting unit carrying value exceeded its fair value primarily due to the carrying value of its amortizable intangible assets. The carrying value of amortizable intangible assets allocated to the global CRM reporting unit was $4.636 billion as of January 1, 2013. In accordance with ASC Topic 350, Intangibles—Goodwill and Other (Topic 350), we tested the global CRM amortizable intangible assets for impairment in conjunction with the interim goodwill impairment test of our global CRM reporting unit. We performed the impairment analysis of the amortizable intangible assets on an undiscounted cash flow basis, and concluded that these assets were not impaired.

The second step of the goodwill impairment test compares the estimated fair value of a reporting unit’s goodwill to its carrying value. We performed the second step of the goodwill impairment test on the global CRM reporting unit and recorded a non-cash goodwill impairment charge of $423 million ($421 million after-tax) to write-down the goodwill to its implied fair value as of January 1, 2013. The primary driver of this impairment charge was our reorganization from geographic regions to global business units as of January 1, 2013, which changed the composition of our reporting units. As a result of the reorganization, any goodwill allocated to the global CRM reporting unit was no longer supported by the cash flows of other businesses. Under our former reporting unit structure, the goodwill allocated to our regional reporting units was supported by the cash flows from all businesses in each international region. The hypothetical tax structure of the global CRM business and the global CRM business discount rate applied were also contributing factors to the goodwill impairment charge. We finalized the second step of the global CRM goodwill impairment test during the second quarter of 2013 and determined that no adjustments to the charge were required. After recording the impairment charge in the first quarter of 2013, there was no remaining goodwill allocated to the global CRM reporting unit as of March 31, 2013.

The goodwill impairment charge taken during the first quarter of 2013 was determined on a global CRM basis pursuant to our new organizational structure. We used the income approach, specifically the discounted cash flow (DCF) method, to derive the fair value of the global CRM reporting unit. We completed a DCF model associated with our new global CRM business, including the amount and timing of future expected cash flows, tax attributes, the terminal value growth rate of approximately two percent and the appropriate market-participant risk-adjusted weighted average cost of capital (WACC) of approximately 12 percent.

In the second quarter of 2013, we performed our annual goodwill impairment test for all of our reporting units. In conjunction with our annual test, the fair value of each reporting unit exceeded its carrying value except CRM, for which no goodwill remains. Therefore, it was deemed not necessary to proceed to the second step of the impairment test. We have identified our global Neuromodulation reporting unit as being at higher risk of potential failure of the first step of the goodwill impairment test in future reporting periods. Our global Neuromodulation reporting unit holds $1.356 billion of allocated goodwill. The level of excess fair value over carrying value for this reporting unit identified during our annual goodwill impairment test was approximately 16 percent. Future changes in our reporting units or in the structure of our business as a result of future reorganizations, acquisitions or divestitures of assets or businesses could result in future impairments of goodwill within our reporting units including global CRM. Further, the recoverability of our CRM-related amortizable intangibles ($4.442 billion globally as of September 30, 2013) is sensitive to future cash flow assumptions and our global CRM business performance. The $4.442 billion of CRM-related amortizable intangibles are at higher risk of potential failure of the first step of the amortizable intangible recoverability test in future reporting periods. An impairment of a material portion of our CRM-related amortizable intangibles carrying value would occur if the second step of the amortizable intangible test is required in a future reporting period.

52

2012 Charge

During the second quarter of 2012, we performed our annual goodwill impairment test for all of our reporting units and concluded that the goodwill within our former EMEA reporting unit was impaired and recorded a charge of $3.602 billion ($3.579 billion after-tax). As a result of revised estimates developed during our annual strategic planning process and analysis performed in conjunction with our annual goodwill impairment test, we concluded that the revenue growth rates projected for the EMEA reporting unit were slightly lower than our previous estimates primarily driven by macro-economic factors and our performance in the European market. We updated short-term operating projections based on our most recent strategic plan for EMEA prepared by management. We reduced the EMEA long-term growth rates and terminal value growth rate projections and increased the discount rate within our 15-year DCF model for EMEA by approximately 100 basis points due to increased risk associated with our projections in this market primarily as a result of economic uncertainty in Europe. In addition, our expectations for future growth and profitability were lowered as compared to our previous estimates and reflected declines in average selling prices and volume pressures due to austerity measures. The declines expected in the EMEA market did not impact our assumptions related to other reporting units.

In the third quarter of 2012, we performed an interim goodwill impairment test and recorded a non-cash $748 million (pre- and after-tax) charge associated with our former U.S. Cardiac Rhythm Management (U.S. CRM) reporting unit, primarily driven by a reduction in the estimated size of the U.S. CRM market, related adjustments to our business and other competitive factors, which led to lower projected U.S. CRM results compared to prior forecasts. The U.S. CRM market is dynamic, highly competitive and difficult to forecast; in the third quarter of 2012, we lowered our projections for the U.S. CRM market size and our future revenue levels within this market, primarily to reflect changes in expectations of average selling prices and unit growth, adjustments to our business and other competitive factors. The increased pricing pressure and lower unit volumes were primarily due to physician alignment with hospitals, efforts to reduce health care costs, focus on appropriate device usage, replacement volumes and competition, and were more impactful to the U.S. CRM business than previously estimated. In addition, we adjusted certain elements of our business and shifted investments to focus on areas expected to provide the highest future growth and financial return. As a result of these factors, we reduced the compound annual revenue growth rate of our 15 year DCF model for the U.S. CRM reporting unit by approximately 250 basis points. The declines expected in the U.S. CRM market did not impact our assumptions related to other reporting units.

Refer to Critical Accounting Policies and Estimates for a discussion of key assumptions used in our testing and future events that could have a negative impact on the recoverability of our goodwill and amortizable intangible assets. Goodwill impairment charges are excluded by management for purposes of evaluating operating performance and assessing liquidity.

Intangible Asset Impairment Charges

2013 Charges

During the third quarter of 2013, we performed our annual impairment test of all in-process research and development projects,

and our indefinite lived core technology assets, and recorded no impairments based on the results of our testing. These indefinite-lived intangible assets are tested for impairment on an annual basis, or more frequently if impairment indicators are present, in accordance with U.S. GAAP and our accounting policies described in our 2012 Annual Report filed on Form 10-K.

During the second quarter of 2013 as a result of revised estimates developed in conjunction with our annual strategic planning process and annual goodwill impairment test, we performed an interim impairment test of our in-process research and development projects associated with certain of our acquisitions. Based on the results of our impairment analyses, we revised our expectations of the market size related to Sadra Medical, Inc. (Sadra), and the resulting timing and amount of future revenue and cash flows associated with the technology acquired from Sadra. As a result of these changes, we recorded pre-tax impairment charges of $51 million to write-down the balance of these intangible assets to their fair value during the second quarter of 2013. We continue to believe that the technology associated with our acquisition of Sadra represents a significant future opportunity for us in the structural heart market. During the second quarter of 2013, we also recorded an additional $2 million intangible asset impairment charge associated with changes in the amount of the expected cash flows related to certain other acquired in-process research and development projects.

53

2012 Charges

During the third quarter of 2012, we recorded a $13 million intangible asset impairment charge attributable to increased expectations in the cost to bring an in-process project to market in a certain geographic region and lower future revenue expectations associated with an in-process project. During the second quarter of 2012, we recorded a $129 million intangible asset impairment charge attributable to in-process research and development assets associated with Sadra due to revised expectations of the required effort, time and cost involved in completing the in-process projects and bringing the related products to market.

Refer to Critical Accounting Policies and Estimates for a discussion of key assumptions used in our testing and future events that could have a negative impact on the recoverability of our goodwill and amortizable intangible assets. Intangible asset impairment charges are excluded by management for purposes of evaluating operating performance and assessing liquidity.

Contingent Consideration Expense

Certain of our acquisitions involve contingent consideration arrangements. Payment of additional consideration is generally contingent on the acquired company reaching certain performance milestones, including attaining specified revenue levels, achieving product development targets or obtaining regulatory approvals. In accordance with U.S. GAAP, we recognize a liability equal to the fair value of the contingent payments we expect to make as of the acquisition date. We remeasure this liability each reporting period and record changes in the fair value through a separate line item within our consolidated statements of operations. Increases or decreases in the fair value of the contingent consideration liability can result from changes in discount periods and rates, as well as changes in the timing and amount of revenue estimates or in the timing or likelihood of achieving regulatory, revenue or commercialization-based milestones.

We recorded net expense related to the change in fair value of our contingent consideration liabilities of $23 million during the third quarter of 2013 and net credits of $18 million during the first nine months of 2013; and net credits of $20 million and $9 million during the third quarter and first nine months of 2012. Contingent consideration expense is excluded by management for purposes of evaluating performance.

Restructuring Charges and Restructuring-related Activities

2014 Restructuring plan

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

We estimate that the 2014 Restructuring plan will reduce gross annual pre-tax operating expenses by approximately $150 million to $200 million exiting 2015, and we expect a substantial portion of the savings to be reinvested in strategic growth initiatives. We estimate that the implementation of the 2014 Restructuring plan will result in total pre-tax charges of approximately $175 million to $225 million, of which approximately $160 million to $210 million is expected to result in future cash outlays.

2011 Restructuring plan

On July 26, 2011, our Board of Directors approved, and we committed to, a restructuring initiative (the 2011 Restructuring plan) designed to strengthen operational effectiveness and efficiencies, increase competitiveness and support new investments, thereby increasing stockholder value. Key activities under the 2011 Restructuring plan include standardizing and automating certain processes and activities; relocating select administrative and functional activities; rationalizing organizational reporting structures; leveraging preferred vendors; and other efforts to eliminate inefficiency. Among these efforts, we are expanding our ability to deliver best-in-class global shared services for certain functions and divisions at several locations in emerging markets. This action is intended to enable us to grow our global commercial presence in key geographies and take advantage of many cost-reducing and productivity-enhancing opportunities. In addition, we are undertaking efforts to streamline various corporate functions, eliminate bureaucracy, increase productivity and better align corporate resources to our key business strategies. On

54

January 25, 2013, our Board of Directors approved, and we committed to, an expansion of the 2011 Restructuring plan (the Expansion). The Expansion is intended to further strengthen our operational effectiveness and efficiencies and support new investments. Activities under the 2011 Restructuring plan were initiated in the third quarter of 2011 and all activities, including those related to the Expansion, are expected to be substantially complete by the end of 2013. We expect that the execution of the 2011 Restructuring plan, including the Expansion, will reduce gross annual pre-tax operating expenses by approximately $340 million to $375 million exiting 2013. We expect a substantial portion of these savings to be reinvested in targeted areas for future growth, including strategic growth initiatives and emerging markets.

We estimate that the 2011 Restructuring plan, including the Expansion, will result in total pre-tax charges of approximately $300 million to $355 million, and that approximately $270 million to $300 million of these charges will result in future cash outlays, of which we have made payments of $235 million, which were partially offset by proceeds of $53 million on facility and fixed asset sales, as of September 30, 2013. As of September 30, 2013, we have recorded costs of $260 million since the inception of the 2011 Restructuring plan, including the Expansion, and recorded a portion of these expenses as restructuring charges and the remaining portion through other lines within our unaudited condensed consolidated statements of operations.

In the aggregate, we recorded net restructuring charges pursuant to our restructuring plans of $19 million and $55 million in the third quarter and first nine months of 2013, respectively, and $54 million and $93 million during the third quarter and first nine months of 2012. During the first nine months of 2013, our restructuring charges were partially offset by a $19 million gain recognized on the sale of our Natick, Massachusetts headquarters. We are currently in the process of consolidating our Natick, Massachusetts headquarters into our Marlborough, Massachusetts location, where we are establishing a new global headquarters campus. In addition, we recorded expenses within other lines of our accompanying unaudited condensed consolidated statements of operations related to our restructuring initiatives of $7 million in the third quarter of 2013 and $16 million during the first nine months of 2013, and $4 million in the third quarter of 2012 and $15 million during the first nine months of 2012. Restructuring and restructuring-related costs are excluded by management for purposes of evaluating operating performance.

We made cash payments of $107 million, associated with our restructuring initiatives during the first nine months of 2013, which were partially offset by $53 million of cash proceeds on facility and fixed asset sales.

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

Litigation-related net charges

We recorded $76 million net litigation-related charges in the third quarter of 2013 and $206 million in the first nine months of 2013, and $50 million for the third quarter and $119 million in the first nine months of 2012. Significant litigation-related charges and credits are excluded by management for purposes of evaluating operating performance. Refer to Note J – Commitments and Contingencies to our unaudited condensed consolidated financial statements contained in Item 1 of this Quarterly Report on Form 10-Q for discussion of our material legal proceedings.

Gain on divestiture

In January 2011, we closed the sale of our Neurovascular business to Stryker Corporation for a purchase price of $1.500 billion, $1.450 billion of which we received at closing. During the third quarter of 2013, there were no gains recorded related to this divestiture, and we recorded gains of $40 million during the first nine months of 2013, as compared to gains of $11 million recorded during the three and nine months ended September 30, 2012. During the second quarter of 2013, we received an additional $30 million of consideration related to this divestiture, and we expect to receive an additional $10 million, contingent upon the transfer or separation of certain manufacturing facilities. Divestiture-related gains or charges are excluded by management for purposes of evaluating operating performance.

55

Interest Expense

Our interest expense was $137 million in the third quarter of 2013 and $266 million in the first nine months of 2013, as compared to $65 million in the third quarter of 2012 and $197 million in the first nine months of 2012. The increase for the first three and nine months of 2013 was primarily due to $70 million of debt extinguishment charges, representing premiums, accelerated amortization of debt issuance costs and investor discount costs net of interest rate hedge gains related to the early extinguishment of $1.450 billion of debt during the third quarter of 2013. Debt extinguishment charges are excluded by management for purposes of evaluating operating performance. Our average borrowing rate was 5.1 percent in the third quarter of 2013 and 5.5 percent in the first nine months of 2013, as compared to 5.5 percent in the third quarter of 2012 and 5.6 percent in the first nine months of 2012. Refer to Liquidity and Capital Resources and Note F – Borrowings and Credit Arrangements to our unaudited condensed consolidated financial statements contained in Item 1 of this Quarterly Report on Form 10-Q for information regarding our debt obligations.

Other, net

Our other, net reflects expense of $6 million in the third quarter of 2013, expense of $4 million in the third quarter of 2012, expense of $10 million in the first nine months of 2013, and income of $23 million in the first nine months of 2012. The following are the components of other, net:

	Three Months Ended September 30,						Nine Months Ended September 30,
(in millions)	2013			2012			2013			2012
Interest income	$	1		$	1		$	5		$	2
Foreign currency losses	(3		)	(3		)	(6		)	(13		)
Net gains (losses) on investments	(5		)	1			(7		)	37
Other income (expense), net	1			(3		)	(2		)	(3		)
	$	(6	)	$	(4	)	$	(10	)	$	23

During the second quarter of 2012, we recognized gains of $39 million associated with the acquisition of Cameron in June 2012, related to previously-held investments.

Tax Rate

The following tables provide a summary of our reported tax rate:

	Three Months Ended September 30,
	2013		2012
Reported tax rate	87.6	%	(0.1	)%
Impact of certain receipts/charges*	(74.5	)%	16.2	%
	13.1	%	16.1	%
	Nine Months Ended September 30,
	2013		2012
Reported tax rate	18.9	%	0.7	%
Impact of certain receipts/charges*	(5.2	)%	14.5	%
	13.7	%	15.2	%

*These receipts/charges are taxed at different rates than our effective tax rate.

The change in our reported tax rate for the third quarter and first nine months of 2013, as compared to the same periods in 2012, relates primarily to the impact of certain receipts and charges that are taxed at different rates than our effective tax rate and the impact of certain discrete tax items. In the third quarter of 2013, the receipts and charges included debt extinguishment charges, and acquisition-, litigation- and restructuring-related charges. In addition, the reported tax rate in the third quarter of 2013 was affected favorably by discrete tax items, primarily related to re-measurement of uncertain tax positions. In the first nine months of 2013, the receipts and charges included goodwill and intangible asset impairment charges, debt extinguishment charges,

56

acquisition- and divestiture-related net credits, and litigation- and restructuring-related charges. In addition, the reported tax rate for the first nine months of 2013 was affected favorably by discrete tax items primarily related to the reinstatement of tax legislation that has been retroactively applied, offset in part by re-measurement and resolution of uncertain tax positions. In the third quarter of 2012, the receipts and charges included goodwill and intangible asset impairment charges, acquisition- and divestiture-related net credits, and litigation- and restructuring-related charges. In addition, the reported tax rate in the third quarter of 2012 was affected unfavorably by discrete tax items primarily related to the re-measurement of an uncertain tax position. In the first nine months of 2012, the receipts and charges included goodwill and intangible asset impairment charges; litigation and restructuring-related net charges; and divestiture- and acquisition-related credits. In addition, the reported tax rate in the first nine months of 2012 was affected unfavorably by discrete tax items primarily related to the resolution and re-measurement of uncertain tax positions.

We have received Notices of Deficiency from the Internal Revenue Service (IRS) reflecting proposed audit adjustments for Guidant Corporation (Guidant) for its 2001 through 2006 tax years and Boston Scientific Corporation for its 2006 and 2007 tax years (Notices). Subsequent to issuing these Notices, the IRS conceded a portion of its original assessment. The total incremental tax liability now asserted by the IRS for the applicable periods is $1.162 billion plus interest. The primary issue in dispute for all years is the transfer pricing in connection with the technology license agreements between domestic and foreign subsidiaries of Guidant. In addition, the IRS has proposed adjustments in connection with the financial terms of our Transaction Agreement with Abbott Laboratories (Abbott) pertaining to the sale of Guidant's vascular intervention business to Abbott in April 2006. We do not agree with the transfer pricing methodologies applied by the IRS or its resulting assessment and we believe that the IRS has exceeded its authority by attempting to adjust the terms of our negotiated third-party agreement with Abbott. In addition, we believe that the IRS positions with regard to these matters are inconsistent with the applicable tax laws and the existing Treasury regulations.

We believe we have meritorious defenses for our tax filings and we have filed petitions with the U.S. Tax Court contesting the Notices for the tax years in challenge. No payments on the net assessment would be required until the dispute is definitively resolved, which, based on experiences of other companies, could take several years. We believe that our income tax reserves associated with these matters are adequate and the final resolution will not have a material impact on our financial condition or results of operations. However, final resolution is uncertain and could have a material impact on our financial condition, results of operations, or cash flows.

57

Critical Accounting Policies and Estimates

Our financial results are affected by the selection and application of accounting policies and methods. With the exception of our reorganization from regions to global business units effective January 1, 2013 and its impact to our goodwill and intangible asset valuation, there were no material changes in the nine months ended September 30, 2013 to the application of critical accounting policies and estimates as described in our 2012 Annual Report filed on Form 10-K for the year ended December 31, 2012.

Valuation of Intangible Assets

Certain of our amortizable intangible assets that relate to our CRM business ($4.442 billion globally as of September 30, 2013) are at higher risk of potential failure of the first step of the amortizable intangible recoverability test in future reporting periods. Key assumptions we have made in determining the recoverability of these assets include how we grouped our assets for purposes of measuring cash flows, the estimated life of those cash flows and our expectations for the amount of cash flows generated by these assets over their remaining useful life.

For purposes of testing the CRM-related amortizable intangible assets, we grouped the intangible assets with the other assets and liabilities of the global CRM reporting unit, as a result of having identified the CRM reporting unit as the lowest level of identifiable cash flows because our CRM core technology, which is the primary asset within the CRM asset group, is utilized by all CRM revenue-generating products. As a result, we include cash flows generated by our CRM products in our recoverability analysis through the core technology useful life, which is estimated to end in 2031. We determined the useful life of the core technology based on our expectation of the period during which the technology is expected to contribute to the cash flows of our business. Our core technology represents know-how, patented and unpatented technology, testing methodologies and hardware that is integral to our current and future CRM product generations. This core technology includes battery and capacitor technology, lead technology, software algorithms and interfacing for shocking and pacing used in each therapy franchise.

The recoverability of our CRM-related amortizable intangible assets is sensitive to future cash flow assumptions and our global CRM business performance. The amount of future cash flows within our recoverability analysis include our future projections of revenue, expenses and capital expenditures, which are based on our most recent operational budgets, long range strategic plans and other estimates. These future cash flow assumptions consider the significant investments we have made to renew the CRM reporting unit's product portfolio within its existing core franchises and to develop what we believe to be unique innovative solutions that utilize our core technology; the increased impact to the CRM reporting unit of our emerging markets; and demographic trends toward an aging population. Further, while our CRM revenue has declined over the last three years as a result of factors specific to our CRM business and contraction in the overall CRM market, we believe our CRM revenue will return to low growth over the remaining useful life of our CRM amortizing intangible assets. Events specific to our CRM business included the 2010 product ship hold actions and resulting market share losses, and lower replacement volumes due to historical product recalls. We believe that the contraction in the CRM market was primarily due to lower procedural volumes principally due to a focus on appropriate device usage and increased pressure on selling prices; however, we believe that there has been a recent trend toward stabilization in procedural volumes across the market.

We continue to perform thorough reviews of the CRM market and our recent business results within the market, and consider the impacts on future expectations of performance to determine if any adverse conditions exist or a change in circumstances has occurred that would indicate impairment or a change in the remaining useful life.

Goodwill Valuation

We allocate any excess purchase price over the fair value of the net tangible and identifiable intangible assets acquired in a business combination to goodwill. When allocating goodwill from business combinations to our reporting units, we assign goodwill to the reporting units that we expect to benefit from the respective business combination at the time of acquisition. We assess goodwill for impairment at the reporting unit level, which is defined as an operating segment or one level below an operating segment, referred to as a component. We test our goodwill balances during the second quarter of each year for impairment, or more frequently if indicators are present or changes in circumstances suggest that impairment may exist. In performing the assessment, we utilize the two-step approach prescribed under ASC Topic 350, Intangibles-Goodwill and Other.

58

Effective as of January 1, 2013, we reorganized our business from geographic regions to fully operationalized global business units. Our reorganization changed our reporting structure and changed the composition of our reporting units for goodwill impairment testing purposes. Following the reorganization, we have three new global reportable segments consisting of: Cardiovascular, Rhythm Management, and MedSurg. We determined our new global reporting units by identifying our operating segments and assessing whether any components of these segments constituted a business for which discrete financial information is available and whether segment management regularly reviews the operating results of any components. Through this process, we identified the following new global reporting units as of January 1, 2013: Interventional Cardiology, Peripheral Interventions, Cardiac Rhythm Management (CRM), Electrophysiology, Endoscopy, Urology/Women's Health, and Neuromodulation.

To determine the amount of goodwill within our new global reporting units, on a relative fair value basis we reallocated $1.764 billion of goodwill previously allocated to our former Europe, Middle East and Africa (EMEA), Asia Pacific, Japan, and Americas international reporting units to our new global reporting units. In addition, we reallocated the goodwill previously allocated to the former U.S. divisional reporting units to each respective new global reporting unit, with the exception of the goodwill allocated to the former U.S. Cardiovascular reporting unit. The $2.380 billion of goodwill previously allocated to the former U.S. Cardiovascular reporting unit was reallocated between the global Interventional Cardiology and global Peripheral Interventions reporting units on a relative fair value basis. Following this reallocation, we tested the goodwill remaining in the new reporting units by conducting the first step of the goodwill impairment test for all global reporting units as of January 1, 2013. The first step requires a comparison of the carrying value of the reporting units to the fair value of these units. Refer to Quarterly Results for discussion of the results of our interim goodwill testing during the first quarter of 2013.

For our 2013 and our 2012 goodwill impairment testing, we used only the income approach, specifically the discounted cash flow (DCF) method, to derive the fair value of each of our reporting units in preparing our goodwill impairment assessments. This approach calculates fair value by estimating the after-tax cash flows attributable to a reporting unit and then discounting these after-tax cash flows to a present value using a risk-adjusted discount rate. We selected this method as being the most meaningful in preparing our goodwill assessments because we believe the income approach most appropriately measures our income producing assets. We have considered using the market approach and cost approach but concluded they are not appropriate in valuing our reporting units given differences in our reporting units' mix of currently marketed products, market shares, future product launch cadence, and expected profitability levels that render the market comparisons less relevant for application of the market approach and the inability to replicate the value of the specific technology-based assets within our reporting units for application of the cost approach. Therefore, we believe that the income approach represents the most appropriate valuation technique for which sufficient data is available to determine the fair value of our reporting units.

In applying the income approach to our accounting for goodwill, we make assumptions about the amount and timing of future expected cash flows, terminal value growth rates and appropriate discount rates. The amount and timing of future cash flows within our DCF analysis is based on our most recent operational budgets, long range strategic plans and other estimates. The terminal value growth rate is used to calculate the value of cash flows beyond the last projected period in our DCF analysis and reflects our best estimates for stable, perpetual growth of our reporting units. We use estimates of market-participant risk-adjusted WACC as a basis for determining the discount rates to apply to our reporting units’ future expected cash flows. In addition, for purposes of performing our goodwill impairment tests, assets and liabilities, including corporate assets, which relate to a reporting unit’s operations, and would be considered in determining its fair value, are allocated to the individual reporting units. We allocate assets and liabilities not directly related to a specific reporting unit, but from which the reporting unit benefits, based primarily on the respective revenue contribution of each reporting unit.

If the carrying value of a reporting unit exceeds its fair value, we then perform the second step of the goodwill impairment test to measure the amount of impairment loss, if any. The second step of the goodwill impairment test compares the estimated fair value of a reporting unit’s goodwill to its carrying value. If we were unable to complete the second step of the test prior to the issuance of our financial statements and an impairment loss was probable and could be reasonably estimated, we would recognize our best estimate of the loss in our current period financial statements and disclose that the amount is an estimate. We would then recognize any adjustment to that estimate in subsequent reporting periods, once we have finalized the second step of the impairment test.

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

59

As of September 30, 2013, we continue to identify our global Neuromodulation reporting unit as being at higher risk of potential failure of the first step of the goodwill impairment test in future reporting periods. Our global Neuromodulation reporting unit holds $1.356 billion of allocated goodwill. The level of excess fair value over carrying value for this reporting unit identified during our annual goodwill impairment test was approximately 16 percent. In addition, future changes in our reporting units or in the structure of our business as a result of future reorganizations, acquisitions or divestitures of assets or businesses could result in future impairments of goodwill within the global CRM reporting unit or other reporting units.

On a quarterly basis, we monitor the key drivers of fair value to detect events or other changes that would warrant an interim impairment test of our goodwill and intangible assets. The key variables that drive the cash flows of our reporting units and amortizable intangibles are estimated revenue growth rates and levels of profitability. Terminal value growth rate assumptions, as well as the WACC rate applied are additional key variables for reporting unit cash flows. These assumptions are subject to uncertainty, including our ability to grow revenue and improve profitability levels. Relatively small declines in the future performance and cash flows of a reporting unit or asset group or small changes in other key assumptions may result in the recognition of significant asset impairment charges. For example, keeping all other variables constant, an increase in the WACC applied of 80 basis points or a 200 basis point decrease in the terminal value growth rate would require that we perform the second step of the goodwill impairment test for the global Neuromodulation reporting unit. The estimates used for our future cash flows and discount rates represent management's best estimates, which we believe to be reasonable, but future declines in business performance may impair the recoverability of our goodwill and intangible asset balances.

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

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

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

• decreases in our forecasted profitability due to an inability to successfully implement and achieve timely and sustainable cost improvement measures consistent with our expectations, increases in our market-participant tax rate, and/or changes in tax laws;

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

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

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

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

• increases in our market-participant risk-adjusted WACC; and

• declines in revenue as a result of loss of key members of our sales force or other key personnel.

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

60

Liquidity and Capital Resources

As of September 30, 2013, we had $571 million of cash and cash equivalents on hand, comprised of $155 million invested in money market and government funds, $281 million invested in short-term time deposits, and $135 million in interest bearing and non-interest bearing bank accounts. We invest excess cash on hand in short-term financial instruments that earn market interest rates while mitigating principal risk through instrument and counterparty diversification, as well as what we believe to be prudent instrument selection.  We limit our direct exposure to securities in any one industry or issuer. We also have full access to our $2.000 billion revolving credit facility and $300 million of available borrowings under our credit and security facility secured by our U.S. trade receivables, both described below.

The following provides a summary and description of our net cash inflows (outflows) for the nine months ended September 30, 2013 and 2012:

	Nine Months Ended September 30,
(in millions)	2013			2012
Cash provided by operating activities	$	809		$	891
Cash used for investing activities	(112		)	(306		)
Cash used for financing activities	(333		)	(502		)

Operating Activities

During the first nine months of 2013, we generated $809 million from operating activities, as compared to $891 million generated during the first nine months of 2012, a decrease of $82 million. This decrease was primarily driven by increases in our working capital, partially offset by a final cash receipt associated with our PROMUS® supply agreement with Abbott and a litigation-related cash receipt.

Investing Activities

During the first nine months of 2013, cash used for investing activities included $26 million of payments to acquire certain technologies and privately-held securities. Cash used for investing activities also included purchases of property, plant and equipment of $161 million that were partially offset by $53 million of proceeds received from the sale of our Natick, Massachusetts headquarters in March 2013. We are currently in the process of consolidating our Natick, Massachusetts headquarters into our Marlborough, Massachusetts location, where we are establishing a new global headquarters campus. In addition, our cash flow from investing activities included $30 million of proceeds related to the 2011 sale of our Neurovascular business to Stryker Corporation. During the first nine months of 2012, cash used for investing activities was comprised primarily of the acquisition of Cameron and purchases of property, plants and equipment.

Financing Activities

Our cash flows from financing activities reflect issuances and repayments of debt, proceeds from stock issuances related to our equity incentive programs and repurchases of common stock pursuant to our authorized repurchase programs, discussed in Note L - Stockholders' Equity to our consolidated financial statements included in Item 8 of our 2012 Annual Report filed on Form 10-K. During the first nine months of 2013, we repurchased approximately 32 million shares of our common stock for $275 million, pursuant to our authorized repurchase programs. During the first nine months of 2012, we repurchased approximately 87 million shares of our common stock for $500 million.

61

Debt

We hold investment-grade ratings with all three major credit-rating agencies. We believe our investment grade credit profile reflects the size and diversity of our product portfolio, our share position in several of our served markets, our strong cash flow, our solid financial fundamentals and our financial strategy. We had total debt of $4.249 billion as of September 30, 2013 and $4.256 billion as of December 31, 2012. During the third quarter of 2013, we refinanced our public debt obligations maturing in June 2014 and January 2015 (see Senior Notes below). The debt maturity schedule for the significant components of our debt obligations as of September 30, 2013 is as follows:

(in millions)	2013		2014		2015		2016		2017		Thereafter		Total
Senior notes	$	—	$	—	$	400	$	600	$	250	$	2,550	$	3,800
Term loan	—		$	—	$	—	$	80	$	80	$	240	$	400
	$	—	$	—	$	400	$	680	$	330	$	2,790	$	4,200

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

Revolving Credit Facility

We maintain a $2.0 billion revolving credit facility, maturing in April 2017, with a global syndicate of commercial banks. Eurodollar and multicurrency loans under this revolving credit facility bear interest at LIBOR plus an interest margin of between 0.875 percent and 1.475 percent, based on our corporate credit ratings and consolidated leverage ratio (1.275 percent as of September 30, 2013). In addition, we are required to pay a facility fee based on our credit ratings, consolidated leverage ratio, and the total amount of revolving credit commitments, regardless of usage, under the agreement (0.225 percent as of September 30, 2013). There were no amounts borrowed under our revolving credit facility as of September 30, 2013 or December 31, 2012.

Our revolving credit facility agreement requires that we maintain certain financial covenants, as follows:

	Covenant Requirement	Actual as of September 30, 2013
Maximum leverage ratio (1)	3.5 times	2.4 times
Minimum interest coverage ratio (2)	3.0 times	5.4 times

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

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

The credit agreement provides for an exclusion from the calculation of consolidated EBITDA, as defined by the agreement, through the credit agreement maturity, of any non-cash charges and up to $500 million in restructuring charges and restructuring-related expenses related to our current or future restructuring plans. As of September 30, 2013, we had $287 million of the restructuring exclusion remaining. In addition, any cash litigation payments (net of any cash litigation receipts), as defined by the agreement, are excluded from the calculation of consolidated EBITDA and any new debt issued to fund any tax deficiency payments is excluded from consolidated total debt, as defined in the agreement, provided that the sum of any net excluded cash litigation payments and any new debt issued to fund any tax deficiency payments shall not exceed $2.300 billion in the aggregate. As of September 30, 2013, we had approximately $2.278 billion of the combined legal and debt exclusion remaining. As of and through September 30, 2013, we were in compliance with the required covenants.

Any inability to maintain compliance with these covenants could require us to seek to renegotiate the terms of our credit facilities or seek waivers from compliance with these covenants, both of which could result in additional borrowing costs. Further, there can be no assurance that our lenders would agree to such new terms or grant such waivers.

62

Term Loan

In August 2013, we entered into a new $400 million, unsecured term loan facility. Term loan borrowings under this facility bear interest at LIBOR plus an interest margin of between 1.0 percent and 1.75 percent (currently 1.5 percent), based on our corporate credit ratings and consolidated leverage ratio. The term loan borrowings are payable over a 5-year period, with quarterly principal payments of $20 million commencing in the first quarter of 2016 and the remaining principal amount due at the final maturity date in August 2018, and are repayable at any time without premium or penalty. Our term loan facility requires that we comply with certain covenants, including financial covenants with respect to maximum leverage and minimum interest coverage; the maximum leverage ratio requirement is 3.5 times, our actual leverage ratio as of September 30, 2013 is 2.4 times and the minimum interest coverage ratio requirement is 3.0 times, our actual interest coverage ratio as of September 30, 2013 is 5.4 times. We had $400 million outstanding under this facility as of September 30, 2013 and no borrowings outstanding as of December 31, 2012.

Senior Notes

We had senior notes outstanding of $3.800 billion and $4.200 billion as of September 30, 2013 and December 31, 2012 respectively. In August 2013, we issued $600 million of 2.65% senior notes due in 2018, and $450 million of 4.125% senior notes due in 2023. In September 2013, we used the proceeds, together with borrowings under our new $400 million term loan facility, to prepay $600 million of senior notes maturing in June 2014 and $850 million maturing in January 2015. We recorded a one-time charge of $70 million ($44 million after-tax) for premiums, accelerated amortization of debt issuance costs and investor discount costs net of interest rate hedge gains related to the early debt extinguishment. Our senior notes are publicly registered securities, are redeemable prior to maturity and are not subject to any sinking fund requirements. Our senior notes are unsecured, unsubordinated obligations and rank on parity with each other. These notes are effectively junior to borrowings under our credit and security facility and liabilities of our subsidiaries (see Other Arrangements below).

Other Arrangements

We also maintain a credit and security facility secured by our U.S. trade receivables. In June 2013, we extended the maturity of this facility through June 2015, subject to further extension, reduced the size of the facility from $350 million to $300 million and added a maximum leverage covenant consistent with our revolving credit facility. The maximum leverage ratio requirement is 3.5 times and our actual leverage ratio as of September 30, 2013 is 2.4 times. We had no borrowings outstanding under this facility as of September 30, 2013 and December 31, 2012.

We have accounts receivable factoring programs in certain European countries that we account for as sales under ASC Topic 860, Transfers and Servicing. These agreements provide for the sale of accounts receivable to third parties, without recourse, of up to approximately $306 million as of September 30, 2013. We have no retained interests in the transferred receivables, other than collection and administrative responsibilities and, once sold, the accounts receivable are no longer available to satisfy creditors in the event of bankruptcy. We de-recognized $166 million of receivables as of September 30, 2013 at an average interest rate of 3.3 percent, and $191 million as of December 31, 2012 at an average interest rate of 1.6 percent. Within Italy, Spain, Portugal and Greece the number of days our receivables are outstanding has increased above historical levels. We believe we have adequate allowances for doubtful accounts related to our Italy, Spain, Portugal and Greece accounts receivable; however, we continue to monitor the European economic environment for any collectibility issues related to our outstanding receivables. As of September 30, 2013, our net receivables in these countries greater than 180 days past due totaled $78 million, of which $28 million were past due greater than 365 days.

In addition, we have uncommitted credit facilities with a Japanese bank that provide for borrowings, promissory notes discounting, and receivables factoring of up to 21.0 billion Japanese yen (converted to approximately $214 million as of September 30, 2013). We de-recognized $156 million of notes receivables as of September 30, 2013 at an average interest rate of 1.8 percent and $182 million of notes receivables as of December 31, 2012 at an average interest rate of 1.6 percent. De-recognized accounts and notes receivable are excluded from trade accounts receivable, net in the accompanying unaudited condensed consolidated balance sheets.

As of September 30, 2013, we had outstanding letters of credit of $74 million, as compared to $94 million as of December 31, 2012, which consisted primarily of bank guarantees and collateral for workers' compensation insurance arrangements. As of September 30, 2013 and December 31, 2012, none of the beneficiaries had drawn upon the letters of credit or guarantees; accordingly, we did not recognize a related liability for our outstanding letters of credit in our consolidated balance sheets as of September 30, 2013 or December 31, 2012. We believe we will generate sufficient cash from operations to fund these payments and intend to fund these payments without drawing on the letters of credit.

63

Equity

During the first nine months of 2013 and 2012, we received $59 million and $20 million, respectively, in proceeds from stock issuances related to our stock option and employee stock purchase plans. Proceeds from the exercise of employee stock options and employee stock purchases vary from period to period based upon, among other factors, fluctuations in the trading price of our common stock and in the exercise and stock purchase patterns of employees. We repurchased approximately 32 million shares of our common stock during the first nine months of 2013 for $275 million, pursuant to our authorized repurchase programs discussed in Note L - Stockholders' Equity to our consolidated financial statements included in Item 8 of our 2012 Annual Report filed on Form 10-K. As of September 30, 2013, we had $885 million remaining authorization under our 2013 share repurchase program and no remaining shares authorized under our previous share repurchase program.

Stock-based compensation expense related to our stock ownership plans was approximately $77 million for the first nine months of 2013 and $85 million for the first nine months of 2012.

Contractual Obligations and Commitments

During the third quarter of 2013, we re-paid $1.450 billion of previously existing senior notes and issued $1.050 billion of new senior notes and entered into a new $400 million, unsecured term loan facility. See Liquidity and Capital Resources and Note F - Borrowings and Credit Arrangements for further details regarding these transactions and the terms of our new senior notes and term loan. In addition, certain of our acquisitions involve the payment of contingent consideration. See Note B - Acquisitions to our unaudited condensed consolidated financial statements contained in Item 1 of this Quarterly Report on Form 10-Q for further details regarding the estimated potential amount of future contingent consideration we could be required to pay associated with our acquisitions. There have been no other material changes to our contractual obligations and commitments as reported in our 2012 Annual Report filed on Form 10-K.

Legal Matters

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

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

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

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

64

Our accrual for legal matters that are probable and estimable was $683 million as of September 30, 2013 and $491 million as of December 31, 2012, and includes estimated costs of settlement, damages and defense. We continue to assess certain litigation and claims to determine the amounts, if any, that management believes will be paid as a result of such claims and litigation and, therefore, additional losses may be accrued and paid in the future, which could materially adversely impact our operating results, cash flows and/or our ability to comply with our debt covenants.

See further discussion of our material legal proceedings in Note J – Commitments and Contingencies to our unaudited condensed consolidated financial statements contained in Item 1 of this Quarterly Report on Form 10-Q and in Note K – Commitments and Contingencies to our audited financial statements contained in Item 8 of our 2012 Annual Report filed on Form 10-K.

Recent Accounting Pronouncements

ASC Update No. 2013-02

In February 2013, the FASB issued ASC Update No. 2013-02, Comprehensive Income (Topic 220): Reporting of Amounts Reclassified out of Accumulated Other Comprehensive Income. Update No. 2013-02 requires that entities provide information about amounts reclassified out of accumulated other comprehensive income by component. The amendment also requires entities to present significant amounts by the respective line items of net income, either on the face of the income statement or in the notes to the financial statements for amounts required to be reclassified out of accumulated other comprehensive income in their entirety in the same reporting period. For other amounts that are not required to be reclassified to net income in their entirety, a cross-reference is required to other disclosures that provide additional details about those amounts. We adopted Update No. 2013-02 beginning in our first quarter ended March 31, 2013. Update No. 2013-02 is related to presentation only and its adoption did not impact our results of operations or financial position. See our unaudited condensed consolidated statements of comprehensive income and Note M - Changes in Other Comprehensive Income to our unaudited condensed consolidated financial statements contained in Item 1 of this Quarterly Report on Form 10-Q.

ASC Update No. 2013-01

In January 2013, the FASB issued ASC Update No. 2013-01, Balance Sheet (Topic 210): Clarifying the Scope of Disclosures about Offsetting Assets and Liabilities. Update No. 2013-01 clarifies the FASB's intent about requiring enhanced disclosures about certain financial instruments and derivative instruments that are offset in the statement of financial position or that are subject to enforceable master netting arrangements or similar agreements. We adopted Update No. 2013-01 beginning in our first quarter ended March 31, 2013. See related disclosures in Note E - Fair Value Measurements to our unaudited condensed consolidated financial statements contained in Item 1 of this Quarterly Report on Form 10-Q.

Standards to be Implemented

ASC Update No. 2013-11

In July 2013, the FASB issued ASC Update No. 2013-11, Income Taxes (Topic 740): Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists. Update No. 2013-11 requires that entities present an unrecognized tax benefit, or portion of an unrecognized tax benefit, as a reduction to a deferred tax asset in the financial statements for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward, with certain exceptions. We are required to adopt Update No. 2013-11 for our first quarter ending March 31, 2014, and early adoption is permitted. Update No. 2013-11 is related to presentation only and its adoption will not impact our results of operations or financial position.

Additional Information

Use of Non-GAAP Financial Measures

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

65

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

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

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

The following is an explanation of each of the adjustments that management excluded as part of these non-GAAP financial measures for the three and nine months ended September 30, 2013 and 2012, as well as reasons for excluding each of these individual items:

Adjusted Net Income and Adjusted Net Income per Share

• Goodwill and other intangible asset impairment charges - This amount represent (a) a non-cash write-down of our goodwill balance attributable to our global Cardiac Rhythm Management reporting unit in the first quarter of 2013; (b) non-cash write-downs of certain intangible asset balances in the second quarter of 2013; (c) a non-cash write-down of our goodwill balance attributable to our U.S. Cardiac Rhythm Management reporting unit in the third quarter of 2012; (d) a non-cash write-down of our goodwill balance attributable to our Europe, Middle East and Africa (EMEA) reporting unit in the second quarter of 2012; and (e) non-cash write-downs of certain intangible asset balances in the second and third quarters of 2012. We remove the impact of non-cash impairment charges from our operating performance to assist in assessing our cash generated from operations. We believe this is a critical metric for us in measuring our ability to generate cash and invest in our growth. Therefore, these charges are excluded from management's assessment of operating performance and are also excluded for purposes of calculating these non-GAAP financial measures to facilitate an evaluation of our current operating performance and a comparison to our past operating performance, particularly in terms of liquidity.

• Acquisition-related charges (credits) - These adjustments consist of (a) contingent consideration fair value adjustments; and (b) due diligence, other fees and exit costs. The contingent consideration adjustments represent accounting adjustments to state contingent consideration liabilities at their estimated fair value. These adjustments can be highly variable depending on the assessed likelihood and amount of future contingent consideration payments. Due diligence, other fees and exit costs include legal, tax, severance and other expenses associated with prior acquisitions that are not representative of on-going operations. Accordingly, management excluded these amounts for purposes of calculating these non-GAAP financial measures to facilitate an evaluation of our current operating performance and a comparison to our past operating performance.

• Divestiture-related charges (credits) - These amounts represent separation costs or recognized gains associated with the sale of our Neurovascular business in January 2011. Separation costs and gains represent those associated with the divestiture and are not representative of on-going operations. Accordingly, management excluded these amounts for purposes of calculating these non-GAAP financial measures to facilitate an evaluation of our current operating performance and a comparison to our past operating performance.

66

• Restructuring and restructuring-related net charges (credits) - These adjustments represent primarily severance and other direct costs associated with our 2011 Restructuring plan. These costs are excluded by management in assessing our operating performance, as well as from our operating segments' measures of profit and loss used for making operating decisions and assessing performance. Accordingly, management excluded these charges for purposes of calculating these non-GAAP financial measures to facilitate an evaluation of our current operating performance and a comparison to our past operating performance.

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

• Debt extinguishment charges - This item represents premiums, accelerated amortization of debt issuance costs and investor discount costs net of interest rate hedge gains related to the early extinguishment of $1.450 billion of debt during the third quarter of 2013. These adjustments do not reflect expected on-going operating results. Accordingly, management excluded these amounts for purposes of calculating these non-GAAP financial measures to facilitate an evaluation of our current operating performance and a comparison to our past operating performance.

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

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

Revenue Growth Rates Excluding the Impact of Changes in Foreign Currency Exchange Rates

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

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

Safe Harbor for Forward-Looking Statements

Certain statements that we may make from time to time, including statements contained in this Quarterly Report on Form 10-Q and information incorporated by reference herein, constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (Exchange Act). Forward-looking statements may be identified by words like “anticipate,” “expect,” “project,” “believe,” “plan,” “may,” “estimate,” “intend” and similar words. These forward-looking statements are based on our beliefs, assumptions and estimates using information available to us at the time and are not intended to be guarantees of future events or performance. These forward-looking statements include, among other things, statements regarding our financial performance; our business and results of operations; our business strategy and related financial returns; our growth initiatives, including our emerging markets strategy and investments; acquisitions and related payments, and the integration and impact of acquired businesses and technologies; finalizing the separation of our Neurovascular business and associated payments; the timing and impact of our restructuring and plant network optimization initiatives, including expected costs and cost savings; our cash flow and use thereof; our outstanding accounts receivable in Europe; changes in the market and our market share for our businesses; procedural volumes and pricing pressures;

67

competitive pressures facing our businesses; clinical trials, including timing and results; our product portfolio; product development and iterations; new and existing product launches, including their timing and acceptance, and their impact on the market, our market share and our business; competitive product launches; product performance and our ability to gain a competitive advantage; the strength of our technologies and pipeline; regulatory approvals, including their timing; our regulatory and quality compliance; expected research and development efforts and the allocation of research and development expenditures; our sales and marketing strategy; reimbursement practices; our ability to meet customer demand; goodwill and other intangible asset impairment analysis and charges; the effect of new accounting pronouncements on our financial results; the impact of healthcare reform legislation and new and proposed tax laws; the outcome and timing of transfer pricing and transactional-related matters pending before taxing authorities; our tax position and income tax reserves; the outcome and impact of intellectual property, qui tam actions, governmental investigations and proceedings and litigation matters; adequacy of our reserves; the drivers and impact of our investment ratings; anticipated expenses and capital expenditures and our ability to finance them; and our ability to meet the financial covenants contained in our credit facilities. If our underlying assumptions turn out to be incorrect, or if certain risks or uncertainties materialize, actual results could vary materially from the expectations and projections expressed or implied by our forward-looking statements. As a result, readers are cautioned not to place undue reliance on any of our forward-looking statements. Except as required by law, we do not intend to update any forward-looking statements even if new information becomes available or other events occur in the future.

The forward-looking statements in this Quarterly Report on Form 10-Q are based on certain risks and uncertainties, including the risk factors described in “Item 1A. Risk Factors” of this Quarterly Report on Form 10-Q, “Part I, Item 1A. Risk Factors” in our 2012 Annual Report on Form 10-K and the specific risk factors discussed below and in connection with forward-looking statements throughout this Quarterly Report on Form 10-Q, which could cause actual results to vary materially from the expectations and projections expressed or implied by our forward-looking statements. These factors, in some cases, have affected and in the future could affect our ability to implement our business strategy and may cause actual results to differ materially from those contemplated by the forward-looking statements. These additional factors include, among other things, future political, economic, competitive, reimbursement and regulatory conditions; new product introductions; demographic trends; intellectual property; litigation and governmental investigations; financial market conditions; and future business decisions made by us and our competitors, all of which are difficult or impossible to predict accurately and many of which are beyond our control. We caution each reader of this Quarterly Report on Form 10-Q to consider carefully these factors.

The following are some of the important risk factors that could cause our actual results to differ materially from our expectations in any forward-looking statements. For further discussion of these and other risk factors, see “Item 1A. Risk Factors” of this Quarterly Report on Form 10-Q and “Part I, Item 1A. Risk Factors” in our 2012 Annual Report on Form 10-K.

Our Businesses

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

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

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

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

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

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

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

68

• Our ability to timely and successfully acquire or develop, launch and supply new or next-generation products and technologies worldwide and across our businesses in line with our commercialization strategies, including our S-ICD® system;

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

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

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

• The impact of U.S. government sequestration, failure to increase the debt ceiling and/or future government shutdowns;

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

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

Regulatory Compliance and Litigation

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

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

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

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

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

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

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

Innovation and Certain Growth Initiatives

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

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

69

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

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

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

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

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

International Markets

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

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

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

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

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

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

Liquidity

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

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

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

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

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

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

70

Cost Reduction and Optimization Initiatives

• Risks associated with significant changes made or expected to be made to our organizational and operational structure, pursuant to our 2014 Restructuring plan, 2011 Restructuring plan as expanded, and as a result of our 2010 Restructuring plan and Plant Network Optimization program, as well as any further restructuring or optimization plans we may undertake in the future, and our ability to recognize benefits and cost reductions from such programs; and

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

71

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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

Our currency risk consists primarily of foreign currency denominated firm commitments, forecasted foreign currency denominated intercompany and third-party transactions and net investments in certain subsidiaries. We use both nonderivative (primarily European manufacturing and distribution operations) and derivative instruments to manage our earnings and cash flow exposure to changes in currency exchange rates. We had currency derivative instruments outstanding in the contract amount of $4.404 billion as of September 30, 2013 and $4.411 billion as of December 31, 2012. We recorded $200 million of other assets and $44 million of other liabilities to recognize the fair value of these derivative instruments as of September 30, 2013, as compared to $121 million of other assets and $57 million of other liabilities as of December 31, 2012. A ten percent appreciation in the U.S. dollar’s value relative to the hedged currencies would increase the derivative instruments’ fair value by $268 million as of September 30, 2013 and $270 million as of December 31, 2012. A ten percent depreciation in the U.S. dollar’s value relative to the hedged currencies would decrease the derivative instruments’ fair value by $328 million as of September 30, 2013 and by $319 million as of December 31, 2012. Any increase or decrease in the fair value of our currency exchange rate sensitive derivative instruments would be substantially offset by a corresponding decrease or increase in the fair value of the hedged underlying asset, liability or forecasted transaction, resulting in minimal impact on our consolidated statements of operations.

Our interest rate risk relates primarily to U.S. dollar borrowings partially offset by U.S. dollar cash investments. We have historically used interest rate derivative instruments to manage our earnings and cash flow exposure to changes in interest rates. We had no interest rate derivative contracts outstanding as of September 30, 2013 and December 31, 2012. As of September 30, 2013, we had $4.249 billion of outstanding debt obligations, of which approximately 91% was at fixed interest rates and approximately 9% at a floating rate.

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

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our Chief Executive Officer (CEO), and our Executive Vice President and Chief Financial Officer (CFO), evaluated the effectiveness of our disclosure controls and procedures as of September 30, 2013 pursuant to Rule 13a-15(b) of the Exchange Act. Disclosure controls and procedures are designed to ensure that material information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and that such material information is accumulated and communicated to our management, including our CEO and CFO, as appropriate, to allow timely decisions regarding required disclosure. Based on their evaluation, our CEO and CFO concluded that, as of September 30, 2013, our disclosure controls and procedures were effective.

Changes in Internal Control Over Financial Reporting

During the quarter ended September 30, 2013, there were no changes in our internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

72

PART II

OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

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

ITEM 1A. RISK FACTORS

In addition to the information set forth below and other information contained elsewhere in this report, you should carefully consider the factors discussed in “Part I, Item 1A. Risk Factors” in our 2012 Annual Report filed on Form 10-K, and in “Part II, Item 1A. Risk Factors” in our Quarterly Reports filed on Form 10-Q for the quarters ended March 31, 2013 and June 30, 2013, which could materially affect our business, financial condition or future results.

We may not realize the expected benefits from our restructuring and optimization initiatives; our long-term expense reduction programs may result in an increase in short-term expense; and our efforts may lead to additional unintended consequences.

In October 2013, we announced a restructuring initiative (the 2014 Restructuring plan). The 2014 Restructuring plan is intended to build on the progress we have made to address financial pressures in a changing global marketplace, further strengthen its operational effectiveness and efficiency and support new growth investments. Key activities under the plan include continued implementation of our ongoing Plant Network Optimization (PNO) strategy, continued focus on driving operational efficiencies and ongoing business and commercial model changes. The PNO strategy is intended to simplify our manufacturing plant structure by transferring certain production lines among facilities. Other activities involve rationalizing organizational reporting structures to streamline various functions, eliminate bureaucracy, increase productivity and better align resources to business strategies and marketplace dynamics. Also, in January 2013, we announced an expansion of our 2011 Restructuring plan (the Expansion), which is intended to further strengthen our operational effectiveness and efficiencies and support new investments, which we expect to increase stockholder value. Key activities under the Expansion include further initiatives to: standardize and automate certain processes and activities; relocate select administrative and functional activities; rationalize organizational reporting structures; expand shared services; and align expenses to revenues within certain divisions and geographic regions. In addition, they include further efforts to streamline various corporate functions, eliminate bureaucracy, increase productivity and better align corporate resources to our key business strategies. Further, in February 2010, we announced a 2010 Restructuring plan designed to strengthen and position us for long-term success. Key activities under the 2010 Restructuring plan included the integration of our Cardiovascular and CRM businesses, as well as the restructuring of certain other businesses and corporate functions; the realignment of our international structure; and the reprioritization and diversification of our product portfolio. Additionally, in January 2009, we announced our Plant Network Optimization program, aimed at simplifying our plant network, reducing our manufacturing costs and improving gross margins. Activities under our 2010 Restructuring plan were completed in 2012, and our Plant Network Optimization program was substantially completed in 2012. Cost reduction initiatives under these collective plans include various cost and efficiency improvement measures, which may include headcount reductions; the relocation of certain resources as well as administrative and functional activities; the closure of certain facilities; the transfer of certain production lines; the sale of certain non-strategic assets and other efforts to streamline our business, among other actions. These measures could yield unintended consequences, such as distraction of our management and employees, business disruption, attrition beyond our planned reduction in workforce and reduced employee productivity. We may be unable to attract or retain key personnel. Attrition beyond our planned reduction in workforce or a material decrease in employee morale or productivity could negatively affect our business, sales, financial condition and results of operations. In addition, headcount reductions may subject us to the risk of litigation, which could result in substantial cost. Moreover, our expense reduction programs result in charges and expenses that impact our operating results. We cannot guarantee that these measures, or other expense reduction measures we take in the future, will result in the expected cost savings.

73

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

The following table provides information with respect to purchases by Boston Scientific Corporation of equity securities that are registered by us pursuant to Section 12 of the Exchange Act during the three months ended September 30, 2013:

Period	Total Number of Shares Purchased	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs *	Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs *
07/01/13 - 07/31/13	—	$	—	—	$	—
08/01/13 - 08/31/13	6,762,586	$	11.07	6,762,586	$	884,544,387
09/01/13 - 09/30/13	—	$	—	—	$	—
Total	6,762,586	$	11.07	6,762,586	$	884,544,387
*On July 28, 2011, we announced that our Board of Directors had re-approved approximately 37 million shares for repurchase which remained available under a previous share repurchase program at such time. On January 29, 2013, we announced that our Board of Directors had approved a new program authorizing the repurchase of up to $1.0 billion of our common stock. As of September 30, 2013, we had $885 million remaining authorization under our 2013 share repurchase program and no remaining shares authorized under our previous share repurchase program.

74

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

4.1	2.650% Senior Notes due 2018 (incorporated herein by reference to Exhibit 4.2, Current Report on Form 8-K filed August 13, 2013, File No. 001-11083)
4.2	4.125% Senior Notes due 2023 (incorporated herein by reference to Exhibit 4.3, Current Report on Form 8-K filed August 13, 2013, File No. 001-11083)
10.1	Form of Transition and Separation Agreement between Jeffrey D. Capello and Boston Scientific Corporation (incorporated herein by reference to Exhibit 10.1, Current Report on Form 8-K filed October 24, 2013, File No. 011-11083)#
10.2	Form of Offer Letter dated October 22, 2013 between Daniel J. Brennan and Boston Scientific Corporation (incorporated herein by reference to Exhibit 10.2, Current Report on Form 8-K filed October 24, 2013, File No. 011-11083)#
10.3	Boston Scientific Corporation 2014 Annual Bonus Plan, effective as of January 1, 2014 (incorporated herein by reference to Exhibit 10.1, Current Report on Form 8-K filed October 25, 2013, File No. 011-11083)#
10.4	Boston Scientific Corporation 2014 Total Shareholder Return Performance Share Program (incorporated herein by reference to Exhibit 10.2, Current Report on Form 8-K filed October 25, 2013, File No. 011-11083)#
10.5	Boston Scientific Corporation 2014 Free Cash Flow Performance Share Program (incorporated herein by reference to Exhibit 10.3, Current Report on Form 8-K filed October 25, 2013, File No. 011-11083)#
10.6*	Boston Scientific Corporation Non-Employee Director Deferred Compensation Plan, Amended and Restated effective as of January 1, 2014#
31.1*	Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2*	Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1**	Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, Chief Executive Officer
32.2**	Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, Executive Vice President and Chief Financial Officer
101*	Interactive Data Files Pursuant to Rule 405 of Regulation S-T: (i) the Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2013 and 2012, (ii) the Condensed Consolidated Statements of Comprehensive Income for the three and nine months ended September 30, 2013 and 2012, (iii) the Condensed Consolidated Balance Sheets as of September 30, 2013 and December 31, 2012, (iv) the Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2013 and 2012 and (v) the notes to the Condensed Consolidated Financial Statements.

75

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized on November 5, 2013.

BOSTON SCIENTIFIC CORPORATION
By:	/s/ Jeffrey D. Capello
	Name:	Jeffrey D. Capello
	Title:	Executive Vice President and Chief Financial Officer

76

EX-10.6

EXHIBIT 10.6

BOSTON SCIENTIFIC CORPORATION

NON-EMPLOYEE DIRECTOR

DEFERRED COMPENSATION PLAN

As Amended and Restated Effective January 1, 2014

BOSTON SCIENTIFIC CORPORATION

NON-EMPLOYEE DIRECTOR

DEFERRED COMPENSATION PLAN

As Amended and Restated Effective January 1, 2014

Table of Contents

Page

ARTICLE 1	Nature and Purpose of Plan	1
1.1	Nature	1
1.2	Purpose	1
ARTICLE 2	Participation	1
2.1	Commencement of Participation	1
2.2	Duration of Participation	1
ARTICLE 3	Elections and Accounts	1
3.1	Deferral Election	1
3.2	Deemed Elections	2
3.3	Deferred Cash Account	2
3.4	Deferred DSU Account	2
3.5	Account Statements	3
ARTICLE 4	Payment of Deferred Amounts	3
4.1	Payment Events for Deferred Cash Accounts	3
4.2	Form of Payment of Deferred Cash Accounts	3
4.3	Payment of Deferred Cash Accounts	4
4.4	Payment of Deferred DSU Accounts	4
4.5	Designation of Beneficiary	4
4.6	Delay For Specified Employees	5
4.7	Change in Control	5
ARTICLE 5	Nature of Claims for Benefit Payments	5
5.1	Obligation of the Company	5
5.2	Participants' Rights Unsecured	5
5.3	Establishment of Grantor Trust	5
ARTICLE 6	Administration	6
6.1	Plan Administrator	6

6.2	Powers of the Committee as Administrator	6
6.3	Finality of Committee Determinations	6
6.4	Claims Procedures	6
6.5	Indemnification	7
6.6	Right to Suspend Benefits and Correct Errors	7
6.7	Incapacity	7
6.8	Legal Holidays	7
ARTICLE 7	Amendment or Termination of the Plan	7
ARTICLE 8	Miscellaneous	8
8.1	No Assignment or Alienation	8
8.2	Limitation of Rights	8
8.3	Receipt and Release	8
8.4	No Effect on Future Service as a Director	8
8.5	Severability	8
8.6	Successor Company	8
8.7	Headings and Subheadings	8
8.8	Governing Law	8
ARTICLE 9	Definitions and Rules of Construction	8
9.1	Definitions	9
9.2	Rules of Construction	11

ARTICLE 1

Nature and Purpose of Plan

1.1Nature. This document is an amendment and complete restatement, effective January 1, 2014, of the Boston Scientific Corporation Non-Employee Director Deferred Compensation Plan. Amounts deferred under the Plan prior to January 1, 2014 will be governed by the terms of the Plan as in effect immediately prior to the effective date of this restatement. The Plan is intended to be a nonqualified deferred compensation plan within the meaning of Code section 409A, to be construed and administered in accordance with the Section 409A Standards.

1.2Purpose. The purpose of the Plan is to provide deferred compensation for the Company’s non-employee directors by providing Eligible Directors with an opportunity to defer a portion of their Compensation.

ARTICLE 2

Participation

2.1Commencement of Participation. An Eligible Director will become a Participant by filing an election form in accordance with the provisions of Section 3.1.

2.2Duration of Participation. A Participant will remain a Participant until he or she has received all payments to which he or she is entitled under the terms of the Plan.

ARTICLE 3

Elections and Accounts

3.1Deferral Election.

(a)Prior to the beginning of each Plan Year, each Eligible Director may elect in writing, in the manner and on the form prescribed by the Committee, to defer payment of all or a portion of the Eligible Director’s Compensation by making one or more of the following elections:

(i)An election to defer payment of all or a portion, in increments of 25%, of the Director's Cash Compensation and have that deferred amount credited to a Deferred Cash Account pursuant to Section 3.3;

(ii)An election to defer payment of all or a portion, in increments of 25%, of the Director’s Cash Compensation and have that deferred amount converted to Deferred DSUs and credited to a Deferred DSU Account pursuant to Section 3.4.

(iii)An election to defer payment of all or a portion, in increments of 25%, of the Director’s Equity Compensation and have that portion credited, as Deferred DSUs, to a Deferred DSU Account pursuant to Section 3.4.

A Participant's deferral election for a Plan Year will become irrevocable on the day preceding the first day of the Plan Year.

(b)If an individual becomes an Eligible Director after the beginning of a Plan Year and has not been eligible to participate in this Plan (or any other plan required to be aggregated with this Plan under the Section 409A Standards) at any time during the 24-month period ending on the date he or she becomes an Eligible Director, then, within thirty (30) days after the date the individual becomes an Eligible Director, he or she may make one or more of the elections described in Section 3.1(a) above with respect to Compensation for the Plan Year for services performed after the date the election is made, subject to any prorating that may be required under the Section 409A Standards. A deferral election made under this paragraph (b) will become irrevocable on the date the election is made.

3.2Deemed Elections. If a Participant fails to make a timely deferral election in accordance with Section 3.1 for a Plan Year, the Participant will be deemed to have made the following elections:

(a)The Participant will be deemed to have elected not to defer any portion of his Cash Compensation for the Plan Year.

(b)The Participant will be deemed to have elected not to defer any portion of his Equity Compensation for the Plan Year.

3.3Deferred Cash Account. A Deferred Cash Account will be established for any Participant who makes an election described in Section 3.1(a)(i) for any Plan Year. For each Plan Year for which a Participant makes an election described in Section 3.1(a)(i), the Participant’s Deferred Cash Account is credited with the amount of the Cash Compensation that the Participant elected to defer. A Participant’s Deferred Cash Account may be comprised of separate sub-accounts for each Plan Year with respect to which the Participant makes an election described in Section 3.1(a)(i), as necessary to keep accurate and complete records of when deferred amounts are to be distributed in accordance with the Participant’s deferral elections and Section 4.3. For each day on which the New York Stock Exchange is open for business, the Committee’s designated record keeper will adjust each Participant’s Deferred Cash Account to reflect investment returns or losses of the Participant’s selected Measuring Investment(s). In accordance with rules and procedures established by the Committee or its designee, the Committee’s designated record keeper will permit Participants to select the Measuring Investment(s) for specified portions of their respective Deferred Cash Accounts from among the available Measuring Investments. If a Participant fails to designate any Measuring Investments, the Participant will be deemed to have selected the default Measuring Investment designated by the Committee or its designee.

3.4Deferred DSU Account. A Deferred DSU Account will be established for any Participant who makes an election described in Section 3.1(a)(ii) or (a)(iii) for any Plan Year.

For each Plan Year for which a Participant makes an election described in Section 3.1(a)(ii), the Participant’s Deferred DSU Account will be credited with Deferred DSUs equal to the quotient (rounded down to the next whole number) of (A) divided by (B), where (A) is the dollar value of the Cash Compensation that the Participant elected to defer, and (B) is the closing price per share of Company Stock on the date the Cash Compensation would have been paid to the Participant in the absence of the Participant making an election described in Section. 3.1(a)(ii). For each Plan Year for which a Participant makes an election described in Section 3.1(a)(iii) with respect to a portion of his or her Equity Compensation (the “Deferred Portion”), the Participant’s Deferred DSU Account will be credited with a number of Deferred DSUs equal to the number of Deferred Stock Units that would have been granted to the Participant under the LTIP if the Participant had elected to receive the Deferred Portion in the form of Deferred Stock Units rather than as Deferred DSUs under the Plan.

3.5Account Records. Participants will be able to access records of their Deferred Cash Account and Deferred DSU Account balances online or telephonically through the appropriate record keeper.

ARTICLE 4

Payment of Deferred Amounts

4.1Payment Events for Deferred Cash Accounts. In each deferral election that a Participant makes as described in Section 3.1(a)(i), the Participant may elect a payment event from the following options:

(a)the Participant’s Separation From Service; or

(b)the earlier of (i) the Participant’s Separation From Service, or (ii) the calendar year irrevocably designated by the Participant in his or her deferral election described in Section 3.1(a)(i), which cannot be earlier than the second calendar year following the Plan Year to which the deferral election relates.

If a Participant makes an election described in Section 3.1(a)(i) but fails to specify a payment event, the Participant will be deemed to have elected the payment event described in paragraph (a) above. If the Participant elects (or is deemed to have elected) the payment event described in paragraph (a), then payment will be made (or commence) within 60 days following the Participant’s Separation From Service. If the Participant elects the payment event described in paragraph (b), then payment will be made (or commence) in January of the year designated in the Participant’s election, unless the Participant’s Separation From Service occurs before the beginning of that designated year, in which case payment will be made (or commence) within 60 days following the Participant’s Separation From Service.

4.2Form of Payment of Deferred Cash Accounts. In each deferral election that a Participant makes as described in Section 3.1(a)(i), the Participant may elect a form of payment from the following options:

(a)a single lump sum payment; or

(b)annual installments over a period of two to five years, as specified by the Participant.

If a Participant makes an election described in Section 3.1(a)(i) but fails to specify a form of payment, the Participant will be deemed to have elected the form of payment described in paragraph (a) of this Section 4.2. Under the form of payment described in paragraph (a) of this Section 4.2, the amount of lump sum will be equal to the amount credited to the Participant's Deferred Cash Account as of the date of the payment. Under the payment option described in paragraph (b) of this Section 4.2, the amount of each installment will be equal to the amount credited to the Participant's Deferred Cash Account as of the date of the installment payment divided by the number of installment payments that have not yet been made. All payments from Deferred Cash Accounts under the Plan will be made in cash.

4.3Payment of Deferred Cash Accounts. Except as otherwise provided in this Section 4.3, payment of a Participant’s Deferred Cash Account will be made to the Participant in accordance with the Participant’s elections from the options available under Sections 4.1 and 4.2. Notwithstanding a Participant's election of the payment option described in Section 4.1(b), if the total value of the Participant's Accounts does not exceed the applicable dollar amount under Code section 402(g)(1)(B) at any time following the year in which the Participant's Separation From Service occurs, the Committee may pay out the amount credited to the Participant's Deferred Cash Account in a lump sum. Any lump sum payment made pursuant to the preceding sentence will include the entire amount of the Participant's interest in the Plan and in any agreements, methods, programs, or other arrangements with respect to which deferrals of compensation are treated as having been deferred under a single nonqualified plan under Treasury Regulation §1.409A-1(c)(2). In addition, if a Participant who elected the payment option described in Section 4.1(b) dies before all amounts due from the Participant’s Deferred Cash Account have been paid, then the unpaid balance credited to the Participant’s Deferred Cash Account will be paid in a lump sum to the Participant’s Beneficiary within 60 days following the Participant’s death.

4.4Payment of Deferred DSU Accounts. Upon the Participant's Separation From Service for any reason, the total number of vested Deferred DSUs credited to the Participant's Deferred DSU Account will be settled in shares of Company Stock (with one share of Company Stock payable for each whole Deferred DSU) and distributed to the Participant within 60 days after the Participant's Separation From Service. Any Deferred DSUs that are not vested as of the date of the Participant’s Separation From Service will be forfeited. The extent to which Deferred DSUs are vested will be determined by the terms of the LTIP and any applicable award agreement.

4.5Designation of Beneficiary. A Participant may designate a Beneficiary or Beneficiaries under the Plan to receive payment of the Participant's Accounts upon the Participant's death by submitting a completed Beneficiary designation to the Committee's designated record keeper, in the form and manner prescribed by the Committee or its designee, before the Participant's death. If the Participant fails to designate a Beneficiary, or if no designated Beneficiary survives the Participant, the Participant's Beneficiary will be the Participant's estate.

4.6Delay For Specified Employees. Because the Plan is only for Eligible Directors (those who are not employees of the Company), it is not expected that any Participants will be Specified Employees. However, in the event that a Participant is a Specified Employee at the time of his Separation From Service, then notwithstanding any other provision of the Plan, unless the Participant’s Separation From Service is by reason of the Participant’s death, then any amount that becomes payable under the Plan due to the Participant’s Separation From Service will be paid on the first day that is six months after the date on which the Participant's Separation From Service occurs.

4.7Change in Control Event. Notwithstanding any other Plan provision, if a Change in Control Event occurs, then:

(a)the unpaid balance of a Participant’s Deferred Cash Account will be paid in a single lump sum payment within 60 days following the date on which the Change in Control Event occurs; and

(b)any unvested Deferred DSUs credited to the Participant's Deferred DSU Account will become vested, and all Deferred DSUs credited to the Participant’s Deferred DSU Account will be settled in shares of Company Stock (with one share of Company Stock payable for each whole Deferred DSU) and distributed to the Participant following the date on which the Change in Control Event occurs.

ARTICLE 5

Nature of Claims for Benefit Payments

5.1Obligation of the Company. The Company will establish on its books a liability with respect to its obligations for benefits payable under the Plan to Participants and their Beneficiaries.

5.2Participants' Rights Unsecured. The Plan is unfunded. The right of any Participant to receive payment of deferred amounts under the provisions of the Plan will be an unsecured claim against the general assets of the Company. The maintenance of individual Participant Accounts is for bookkeeping purposes only. The Company is not obligated to acquire, segregate, or set aside, in trust or otherwise, any assets of any kind for the discharge of its obligations under the Plan, nor will any Participant have any property rights in any particular assets held by the Company, whether or not held for the purpose of funding the Company's obligations under the Plan.

5.3Establishment of Grantor Trust. The Company is responsible for the payment of amounts owing to Participants and Beneficiaries under the Plan. At the Company's sole discretion, the Company may establish one or more trusts of which the Company is the owner under Subpart E of Subchapter J, Chapter 1 of the Code (known as a grantor trust) and may deposit with the Trustee funds sufficient to pay amounts credited to Participants’ Deferred Cash Accounts under the Plan. Whether or not any such trust is irrevocable, its assets will at all times

be subject to the claims of the Company's general creditors in the event of insolvency or bankruptcy. To the extent any benefits provided under the Plan are paid from a grantor trust, the Company will have no further obligation to pay Plan benefits. Any Plan benefits not paid from the grantor trust(s) will remain the Company's obligation.

ARTICLE 6

Administration

6.1Plan Administrator. The Committee will be the administrator of the Plan and will have full discretionary power and authority to administer the Plan in all of its details.

6.2Powers of the Committee as Administrator. The Committee's powers as administrator of the Plan will include, but will not be limited to, the following discretionary authority, in addition to all powers and authority provided elsewhere in the Plan:

(a)to make and enforce such rules, regulations, and procedures, consistent with the terms of the Plan, as the Committee deems necessary or proper for the efficient administration of the Plan;

(b)to interpret the terms and provisions of the Plan and to decide any and all questions arising under the Plan, including, without limitation, the right to remedy possible ambiguities, inconsistencies, or omissions by a general rule or particular decision;

(c)to determine the amounts to be distributed to any Participant or Beneficiary in accordance with the terms of the Plan and determine the person or persons to whom such amounts will be distributed;

(d)to allocate or delegate its powers to other persons; and

(e)to appoint persons to carry out administrative and recordkeeping functions with respect to the Plan.

6.3Finality of Committee Determinations. Determinations by the Committee and any interpretation, rule, or decision adopted by the Committee under the Plan, or in carrying out or administering the Plan, will be final and binding for all purposes and upon all interested persons in the absence of clear and convincing evidence that the determination or interpretation was made arbitrarily or capriciously.

6.4Claims Procedures. Any person making a claim for benefits under the Plan must submit the claim in writing to the Committee or its designee. If the Committee or its designee denies the claim in whole or in part, it will issue to the claimant a written notice explaining the reasons for the denial (with specific reference to the Plan provisions on which the denial is based) and identifying any additional information or documentation that might enable the claimant to perfect the claim. The claimant may, within 60 days of receiving a written notice of denial, submit a written request for reconsideration to the Committee or its designee, together with a written explanation of the basis for the request. The Committee or its designee will

consider any such request and will provide the claimant with a written decision, which will include a written explanation of the reasons for the decision (with reference to the specific Plan provisions on which the decision is based). All interpretations, determinations, and decisions of the Committee with respect to any claim will be final and conclusive in the absence of clear and convincing evidence that the interpretation, determination, or decision was made arbitrarily or capriciously.

6.5Indemnification. The Company agrees to indemnify and hold harmless any member of the Committee, any employee or former employee to whom the Committee delegates or allocates any of the Committee's responsibilities under the Plan, and any employee or former employee who has been asked to assist the Committee in any way (together, the "indemnified persons") against any liability (including, without limitation, payment of attorney's fees) that the indemnified person may incur as a result of the discharge of his or her duties and responsibilities in good faith under the Plan.

6.6Right to Suspend Benefits and Correct Errors. To the extent consistent with the Section 409A Standards, the Committee or its designee may delay any payment until satisfied as to the correctness of the payment or the person to receive the payment or to allow filing in any court of competent jurisdiction for a legal determination of the benefits to be paid and the person to receive them. The Committee specifically reserves the right to correct errors of every sort, and each Participant hereby agrees, on his own behalf and on behalf of any Beneficiary, to any method of error correction specified by the Committee or its designee. The Committee is authorized to recover any payment made in error.

6.7Incapacity. If the Committee or its designee determines that any person entitled to benefits under the Plan is a minor, an incompetent person, or other person incapable of providing a valid receipt, then any payment due to that person may be paid for the benefit of that person to the person's spouse, parent, or other party providing or reasonably appearing to provide for the care of that person, unless a duly qualified guardian or other legal representative has been appointed, in which case payment will be made to that guardian or legal representative.

6.8Legal Holidays. If any day on (or on or before) which action under the Plan must be taken falls on a Saturday, Sunday, or legal holiday, that action may be taken on (or on or before) the next succeeding day that is not a Saturday, Sunday, or legal holiday; provided that this Section 6.8 does not permit any action that must be taken in one calendar year to be taken in any subsequent calendar year.

ARTICLE 7

Amendment or Termination of the Plan

The Company hopes and expects to continue the Plan in effect, but it reserves the right to amend the Plan, by action of the Board of Directors or its designee, in any respect at any time (retroactively if the Company so provides) and to terminate the Plan. Any amendment or termination will be set forth in a written instrument and signed by a duly authorized representative of the Company. In the event of an amendment or termination of the Plan, a

Participant's benefits will not be less than the amount credited to the Participant's Accounts immediately prior to the amendment or termination.

ARTICLE 8

Miscellaneous

8.1No Assignment or Alienation. No payee may assign any payment due him under the Plan. No benefits at any time payable under the Plan will be subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge, attachment, garnishment, levy, execution, or other legal or equitable process or encumbrance of any kind. Any attempt to alienate, sell, transfer, assign, or otherwise encumber any Plan benefit, whether payable presently or in the future, will be void.

8.2Limitation of Rights. Neither the establishment nor amendment of the Plan, nor the payment of any benefits, will be construed as giving any individual any legal or equitable right against the Company, the Committee, or any Trustee. In no event will the Plan be deemed to constitute a contract between any individual and the Company, the Committee, or any Trustee.

8.3Receipt and Release. Any payment of a benefit under the Plan to any Participant or Beneficiary will be in full satisfaction of all claims with respect to the benefit under the Plan against the Company, the Committee, and any Trustee.

8.4No Effect on Future Service as a Director. Nothing in the Plan, nor any action taken under the Plan, shall be construed as giving any Participant a right to continue as a Director or require the nomination of a Participant for a future term as a Director.

8.5Severability. If any provision of the Plan is held by a court of competent jurisdiction to be invalid or unenforceable, the remaining provisions will remain fully enforceable.

8.6Successor Company. In the event of the dissolution, sale, merger, consolidation, or reorganization of the Company, provision may be made by which a successor to all or a major portion of the Company will have all of the powers, duties, and responsibilities of the Company under the Plan.

8.7Headings and Subheadings. Headings and subheadings are inserted for convenience only and are not to be considered in the construction of the provisions of the Plan.

8.8Governing Law. To the extent not preempted by federal law, the Plan will be governed by, and construed and administered in accordance with, the laws of the Commonwealth of Massachusetts.

ARTICLE 9

Definitions and Rules of Construction

9.1Definitions. As used in the Plan, the following words and phrases, when capitalized, have the following meanings:

(a)"Account" means, with respect to a Participant, a bookkeeping account established for the Participant pursuant to Article 3 as a Deferred Cash Account or a Deferred DSU Account.

(b)"Affiliate" means (1) any corporation that is a member of a controlled group of corporations (as defined in Code section 414(b)) of which the Company is also a member, (2) any trade or business, whether or not incorporated, that is under common control (as defined in Code section 414(c)) with the Company, (3) any trade or business that is a member of an affiliated service group (as defined in Code section 414(m)) of which the Company is also a member, or (4) to the extent required by regulations issued under Code section 414(o), any other organization. The term "Affiliate," however, does not include any corporation or unincorporated trade or business prior to the date on which that corporation, trade, or business satisfies the affiliation or control tests of (1), (2), (3), or (4) above.

(c)"Beneficiary" means the person or persons designated pursuant to Section 4.5 to receive benefits under the Plan in the event of a Participant's death.

(d)"Board of Directors" means the Board of Directors of the Company.

(e) “Cash Compensation” means, with respect to an Eligible Director for a Plan Year, the Compensation payable to the Eligible Director for the Plan Year in the form of cash as an annual retainer or committee chair fees.

(f)"Change in Control Event" means a change in the ownership or effective control of the Company or a change in the ownership of a substantial portion of the assets of the Company, as determined in accordance with the Section 409A Standards, including §1.409A-3(i)(5).

(g)“Code" means the Internal Revenue Code of 1986, as amended from time to time. Reference to a particular section of the Code includes reference to any regulations issued by the Department of Treasury under that section and any notices and other releases issued by the Internal Revenue Service interpreting or implementing that section.

(h)"Committee" means the Executive Human Resources and Compensation Committee of the Board of Directors.

(i)"Company" means Boston Scientific Corporation.

(j)“Company Stock” means common stock of the Company.

(k)“Compensation” means, with respect to an Eligible Director for a Plan Year, the annual fees payable by the Company to the Eligible Director for the Plan Year, including retainer fees and committee chair fees and equity-based awards to be granted under the LTIP, for serving as a member of the Board of Directors.

(l)“Deferred Cash Account” means, with respect to a Participant, the Account established for the Participant pursuant to Section 3.3.

(m)“Deferred DSU Account” means, with respect to a Participant, the Account established for the Participant pursuant to Section 3.4.

(n)“Deferred DSUs” means Deferred Stock Units that become vested one year after the date of grant and are settled and distributed to a Participant in shares of Company Stock in accordance with Section 4.4 following the Participant’s Separation From Service.

(o)“Deferred Stock Units” means equity compensation awarded to a grantee in the form of notional units of Company Stock, in accordance with section 10 (Defined Terms) of the LTIP, and that are settled and paid to the grantee in the form of shares of Company Stock at the rate of one share of Company Stock for each Deferred Stock Unit.

(p)“Director” means a member of the Board of Directors.

(q)"Eligible Director" means a Director who is not an employee of the Company or any of its Affiliates.

(r)“Equity Compensation” means, with respect to an Eligible Director for a Plan Year, Compensation for the Plan Year that is payable to the Eligible Director in the form of equity-based awards under the LTIP. For avoidance of doubt this does not included Cash Compensation converted to equity.

(s)"401(k) Plan" means the Boston Scientific Corporation 401(k) Retirement Savings Plan.

(t)“LTIP” means the Boston Scientific Corporation 2011 Long-Term Incentive Plan, as amended from time to time, and any successor to that plan.

(u)"Measuring Investments" means the investment funds selected by the Committee or its designee from time to time from among which a Participant can choose to serve as a measure the of earnings (positive or negative) on amounts credited to the Participant’s Deferred Cash Account, as provided in Section 3.3. The Committee or its designee will select Measuring Investments that replicate, to the extent the Committee deems practicable, the investment options made available from time to time under the 401(k) Plan, provided, however, that the Committee or its designee will be not be under any obligation to provide a Measuring Investment with respect to Company Stock. The Committee or its designee may, in its sole discretion, add or eliminate Measuring Investments from time to time for any reason.

(v)"Participant" means an Eligible Director who becomes a participant in the Plan pursuant to Section 2.1 and has not ceased to be a Participant pursuant to Section 2.2.

(w)"Plan" means the Boston Scientific Corporation Non-Employee Director Deferred Compensation Plan, as set forth in this document, as amended from time to time.

(x)“Plan Year” means a calendar year beginning on or after January 1, 2014.

(y)"Section 409A Standards" means the applicable requirements and standards for nonqualified deferred compensation plans established by Code section 409A.

(z)"Separation From Service" means, with respect to a Participant, the expiration of the contract under which services are performed by the Participant for the Company and its Affiliates if the expiration constitutes a good-faith and complete termination of the Participant’s contractual relationship with the Company and all of its Affiliates within the meaning of the Section 409A Standards, including §ì1.409A-1(h).Whether a Separation From Service has occurred will be determined in accordance with the Section 409A Standards, including §1.409A-1(h). The Committee may, but need not, elect in writing, subject to the applicable limitations under the Section 409A Standards, any of the special elective rules prescribed in §1.409A-1(h) for purposes of determining whether a Separation From Service has occurred. Any such written election will be deemed to be part of the Plan.

(aa)"Specified Employee" has the meaning given in Code section 409A(a)(2)(B)(i).

(bb)"Trustee" means a trustee of a trust established under Section 5.3.

9.2Rules of Construction. The following rules of construction will govern in interpreting the Plan:

(a)Words used in the masculine gender will be construed to include the feminine gender, where appropriate, and vice versa.

(b)Words used in the singular will be construed to include the plural, where appropriate, and vice versa.

(c)If any provision of the Plan is held to be illegal or invalid for any reason, that provision will be deemed to be null and void, but the invalidation of that provision will not otherwise impair or affect the Plan.

(d)The Plan is intended to comply with Code section 409A, and it will be construed and administered accordingly. The provisions of the Plan and all deferral elections under Plan will be effected, construed, interpreted, and applied in a manner consistent with Section 409A Standards. To the extent that any terms of the Plan or a deferral election would subject any Participant to gross income inclusion, interest, or additional tax pursuant to Code section 409A, those terms are to that extent superseded by the applicable Section

EX-31.1

EXHIBIT 31.1

CERTIFICATIONS

I, Michael F. Mahoney, certify that:

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

Date:  November 5, 2013	/s/ Michael F. Mahoney
	Michael F. Mahoney
	President and Chief Executive Officer

EX-31.2

EXHIBIT 31.2

CERTIFICATIONS

I, Jeffrey D. Capello, certify that:

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

Date:  November 5, 2013	/s/ Jeffrey D. Capello
	Jeffrey D. Capello
	Executive Vice President and Chief Financial Officer

EX-32.1

EXHIBIT 32.1

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

SECTION 1350 AS ADOPTED PURSUANT TO SECTION 906 OF THE

SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of Boston Scientific Corporation (the “Company”) for the period ending September 30, 2013 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned Chief Executive Officer of the Company hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that based on his knowledge:

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

By:	/s/ Michael F. Mahoney
	Michael F. Mahoney
	President and Chief Executive Officer
	November 5, 2013

EX-32.2

EXHIBIT 32.2

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

SECTION 1350 AS ADOPTED PURSUANT TO SECTION 906 OF THE

SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of Boston Scientific Corporation (the “Company”) for the period ending September 30, 2013 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned Chief Financial Officer of the Company hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that based on his knowledge:

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

By:	/s/ Jeffrey D. Capello
	Jeffrey D. Capello
	Executive Vice President and Chief Financial Officer
	November 5, 2013

XML

Weighted Average Shares Outstanding

9 Months Ended

Sep. 30, 2013

Earnings Per Share [Abstract]

Weighted Average Number Of Shares Outstanding [Text Block]

WEIGHTED AVERAGE SHARES OUTSTANDING

	Three Months Ended September 30,				Nine Months Ended September 30,
(in millions)	2013		2012		2013		2012
Weighted average shares outstanding - basic	1,340.3		1,392.5		1,345.2		1,420.3
Net effect of common stock equivalents	—	*	—	**	—	*	—	**
Weighted average shares outstanding - assuming dilution	1,340.3		1,392.5		1,345.2		1,420.3

* We generated net losses in the third quarter and first nine months of 2013. Our weighted-average shares outstanding for earnings per share calculations exclude common stock equivalents of 23.6 million for the third quarter of 2013 and 17.2 million for the first nine months of 2013 due to our net loss position in these periods.

** We generated net losses in the third quarter and first nine months of 2012. Our weighted-average shares outstanding for earnings per share calculations exclude common stock equivalents of 6.8 million for the third quarter of 2012 and 7.2 million for the first nine months of 2012 due to our net loss position in these periods.

Weighted average shares outstanding, assuming dilution, excludes the impact of 18 million stock options for the third quarter of 2013, 62 million stock options for the third quarter of 2012, 18 million stock options for the first nine months of 2013, and 61 million stock options for the first nine months of 2012, due to the exercise prices of these stock options being greater than the average fair market value of our common stock during the period.

We issued approximately six million shares of our common stock in the third quarter of 2013 and approximately 16 million shares in the first nine months of 2013, following the exercise or vesting of underlying stock options or deferred stock units, or purchases under our employee stock purchase plans. We repurchased approximately seven million shares of our common stock during the third quarter of 2013 for $75 million, and approximately 32 million shares during the first nine months of 2013 for $275 million, pursuant to our authorized repurchase programs as discussed in Note L – Stockholders' Equity to our audited financial statements contained in Item 8 of our 2012 Annual Report on Form 10-K.

XML

Condensed Consolidated Balance Sheets (Unaudited) (USD $) In Millions, unless otherwise specified	Sep. 30, 2013	Dec. 31, 2012
Current assets:
Cash and cash equivalents	$ 571	$ 207
Trade accounts receivable, net	1,238	1,217
Inventories	895	884
Deferred income taxes	536	433
Prepaid expenses and other current assets	285	281
Total current assets	3,525	3,022
Property, plant and equipment, net	1,530	1,564
Goodwill	5,553	5,973
Other intangible assets, net	5,936	6,289
Other long-term assets	373	306
TOTAL ASSETS	16,917	17,154
Current liabilities:
Current debt obligations	3	4
Accounts payable	238	232
Accrued expenses	1,346	1,284
Other current liabilities	315	252
Total current liabilities	1,902	1,772
Long-term debt	4,246	4,252
Deferred income taxes	1,623	1,713
Other long-term liabilities	2,583	2,547
Commitments and contingencies
Stockholders’ equity
Preferred stock, $.01 par value - authorized 50,000,000 shares, none issued and outstanding
Common stock, $.01 par value - authorized 2,000,000,000 shares and issued 1,557,892,509 shares as of September 30, 2013 and 1,542,347,188 shares as of December 31, 2012	16	15
Treasury stock, at cost - 219,056,477 shares as of September 30, 2013 and 186,635,532 shares as of December 31, 2012	(1,367)	(1,092)
Additional paid-in capital	16,536	16,429
Accumulated deficit	(8,678)	(8,449)
Accumulated other comprehensive income (loss), net of tax	56	(33)
Total stockholders’ equity	6,563	6,870
LIABILITIES AND STOCKHOLDERS' EQUITY	$ 16,917	$ 17,154

XML

Goodwill and Other Intangible Assets

9 Months Ended

Sep. 30, 2013

Goodwill and Other Intangible Assets [Abstract]

GOODWILL AND OTHER INTANGIBLE ASSETS

GOODWILL AND OTHER INTANGIBLE ASSETS

The gross carrying amount of goodwill and other intangible assets and the related accumulated amortization for intangible assets subject to amortization and accumulated write-offs of goodwill as of September 30, 2013 and December 31, 2012 is as follows:

	As of
	September 30, 2013					December 31, 2012
	Gross Carrying		Accumulated Amortization/			Gross Carrying		Accumulated Amortization/
(in millions)	Amount		Write-offs			Amount		Write-offs
Amortizable intangible assets
Technology-related	$	8,118	$	(3,254	)	$	8,020	$	(3,005	)
Patents	504		(322		)	559		(352		)
Other intangible assets	815		(465		)	810		(428		)
	$	9,437	$	(4,041	)	$	9,389	$	(3,785	)
Unamortizable intangible assets
Goodwill	$	15,453	$	(9,900	)	$	15,450	$	(9,477	)
Technology-related	197		—			242		—
	$	15,650	$	(9,900	)	$	15,692	$	(9,477	)

During the third quarter of 2013, we reclassified approximately $45 million of core technology not previously subject to amortization to amortizable intangible assets due to projected changes in the market for this technology. We tested the intangible asset for impairment prior to this reclassification and determined that the asset was not impaired. In addition, we had $343 million and $443 million of purchased research and development intangible assets as of September 30, 2013 and December 31, 2012, respectively.

2013 Reorganization

We assess goodwill for impairment at the reporting unit level, which is defined as an operating segment or one level below an operating segment, referred to as a component. Effective as of January 1, 2013, we reorganized our business from geographic regions to fully operationalized global business units. Our reorganization changed our reporting structure and changed the composition of our reporting units for goodwill impairment testing purposes. Following the reorganization, based on information regularly reviewed by our chief operating decision maker, we have three new global reportable segments consisting of: Cardiovascular, Rhythm Management, and MedSurg. We determined our new global reporting units by identifying our operating segments and assessing whether any components of these segments constituted a business for which discrete financial information is available and whether segment management regularly reviews the operating results of any components. Through this process, we identified the following new global reporting units effective as of January 1, 2013: Interventional Cardiology, Peripheral Interventions, Cardiac Rhythm Management (CRM), Electrophysiology, Endoscopy, Urology/Women's Health, and Neuromodulation.

To determine the amount of goodwill within our new global reporting units, on a relative fair value basis we reallocated $1.764 billion of goodwill previously allocated to our former Europe, Middle East and Africa (EMEA), Asia Pacific, Japan, and Americas international reporting units to our new global reporting units. In addition, we reallocated the goodwill previously allocated to the former U.S. divisional reporting units to each respective new global reporting unit, with the exception of the goodwill allocated to the former U.S. Cardiovascular reporting unit. The $2.380 billion of goodwill allocated to the former U.S. Cardiovascular reporting unit was reallocated between the new global Interventional Cardiology and global Peripheral Interventions reporting units on a relative fair value basis.

The following represents our goodwill balance by new global reportable segment. We restated the prior period information to conform to the current presentation:

(in millions)	Cardiovascular		Rhythm Management			MedSurg		Total
Balance as of December 31, 2012 (restated)	$	3,249	$	577		$	2,147	$	5,973
Purchase price adjustments	3		—			—		3
Goodwill acquired	—		—			—		—
Goodwill written off	—		(423		)	—		(423		)
Balance as of September 30, 2013	$	3,252	$	154		$	2,147	$	5,553

2013 Goodwill Impairment Testing and Charge

We test our goodwill balances during the second quarter of each year for impairment, or more frequently if indicators are present or changes in circumstances suggest that impairment may exist. Following our reorganization from regions to global business units and our reallocation of goodwill on a relative fair value basis, we conducted the first step of the goodwill impairment test for all new global reporting units as of January 1, 2013. The first step requires a comparison of the carrying value of the reporting units to the fair value of these units. The fair value of each new global reporting unit exceeded its carrying value, with the exception of the global CRM reporting unit. The global CRM reporting unit carrying value exceeded its fair value primarily due to the carrying value of its amortizable intangible assets. The carrying value of amortizable intangible assets allocated to the global CRM reporting unit was $4.636 billion as of January 1, 2013. In accordance with ASC Topic 350, Intangibles—Goodwill and Other (Topic 350), we tested the global CRM amortizable intangible assets for impairment in conjunction with the interim goodwill impairment test of our global CRM reporting unit. We performed the impairment analysis of the amortizable intangible assets on an undiscounted cash flow basis, and concluded that these assets were not impaired.

The second step of the goodwill impairment test compares the estimated fair value of a reporting unit’s goodwill to its carrying value. We performed the second step of the goodwill impairment test on the global CRM reporting unit and recorded a non-cash goodwill impairment charge of $423 million ($421 million after-tax) to write-down the goodwill to its implied fair value as of January 1, 2013. The primary driver of this impairment charge was our reorganization from geographic regions to global business units as of January 1, 2013, which changed the composition of our reporting units. As a result of the reorganization, any goodwill allocated to the global CRM reporting unit was no longer supported by the cash flows of other businesses. Under our former reporting unit structure, the goodwill allocated to our regional reporting units was supported by the cash flows from all businesses in each international region. The hypothetical tax structure of the global CRM business and the global CRM business discount rate applied were also contributing factors to the goodwill impairment charge. We finalized the second step of the global CRM goodwill impairment test during the second quarter of 2013, in accordance with ASC Topic 350, Intangibles - Goodwill and Other, and determined that no adjustments to the charge were required. After recording the impairment charge in the first quarter of 2013, there was no remaining goodwill allocated to the global CRM reporting unit as of March 31, 2013.

The goodwill impairment charge taken during the first quarter of 2013 was determined on a global CRM basis pursuant to our new organizational structure. We used the income approach, specifically the DCF method, to derive the fair value of the global CRM reporting unit. We completed a DCF model associated with our new global CRM business, including the amount and timing of future expected cash flows, tax attributes, the terminal value growth rate of approximately two percent and the appropriate market-participant risk-adjusted weighted average cost of capital (WACC) of approximately 12 percent.

In the second quarter of 2013, we performed our annual goodwill impairment test for all of our reporting units. In conjunction with our annual test, the fair value of each reporting unit exceeded its carrying value except CRM, for which no goodwill remains. Therefore, it was deemed not necessary to proceed to the second step of the impairment test. We have identified our global Neuromodulation reporting unit as being at higher risk of potential failure of the first step of the goodwill impairment test in future reporting periods. Our global Neuromodulation reporting unit holds $1.356 billion of allocated goodwill. The level of excess fair value over carrying value for this reporting unit identified during our annual goodwill impairment test was approximately 16 percent. Future changes in our reporting units or in the structure of our business as a result of future reorganizations, acquisitions or divestitures of assets or businesses could result in future impairments of goodwill within our reporting units including global CRM. Further, the recoverability of our CRM-related amortizable intangibles ($4.442 billion globally as of September 30, 2013) is sensitive to future cash flow assumptions and our global CRM business performance. The $4.442 billion of CRM-related amortizable intangibles are at higher risk of potential failure of the first step of the amortizable intangible recoverability test in future reporting periods. An impairment of a material portion of our CRM-related amortizable intangibles carrying value would occur if the second step of the amortizable intangible test is required in a future reporting period. Refer to Critical Accounting Policies and Estimates within our Management's Discussion and Analysis of Financial Condition and Results of Operations contained in Item 2 of this Quarterly Report on Form 10-Q for a discussion of key assumptions used in our testing.

On a quarterly basis, we monitor the key drivers of fair value to detect events or other changes that would warrant an interim impairment test of our goodwill and intangible assets. The key variables that drive the cash flows of our reporting units and amortizable intangibles are estimated revenue growth rates and levels of profitability. Terminal value growth rate assumptions, as well as the WACC rate applied are additional key variables for reporting unit cash flows. These assumptions are subject to uncertainty, including our ability to grow revenue and improve profitability levels. Relatively small declines in the future performance and cash flows of a reporting unit or asset group or small changes in other key assumptions may result in the recognition of significant asset impairment charges. For example, keeping all other variables constant, an increase in the WACC applied of 80 basis points or a 200 basis point decrease in the terminal value growth rate would require that we perform the second step of the goodwill impairment test for the global Neuromodulation reporting unit. The estimates used for our future cash flows and discount rates represent management's best estimates, which we believe to be reasonable, but future declines in business performance may impair the recoverability of our goodwill and intangible asset balances.

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

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

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

• decreases in our forecasted profitability due to an inability to successfully implement and achieve timely and sustainable cost improvement measures consistent with our expectations, increases in our market-participant tax rate, and/or changes in tax laws;

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

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

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

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

• increases in our market-participant risk-adjusted WACC; and

• declines in revenue as a result of loss of key members of our sales force or other key personnel.

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

2012 Charges

In the second quarter of 2012, we performed our annual goodwill impairment test for all of our reporting units and concluded that the goodwill within our former EMEA reporting unit was impaired and recorded a $3.602 billion ($3.579 billion after-tax) charge in the second quarter of 2012. As a result of revised estimates developed during our annual strategic planning process and analysis performed in conjunction with our annual goodwill impairment test, we concluded that the revenue growth rates projected for the EMEA reporting unit were slightly lower than our previous estimates primarily driven by macro-economic factors and our performance in the European market. We updated short-term operating projections based on our most recent strategic plan for EMEA prepared by management. We reduced the EMEA long-term growth rates and terminal value growth rate projections and increased the discount rate within our 15-year DCF model for EMEA by approximately 100 basis points due to increased risk associated with our projections in this market primarily as a result of economic uncertainty in Europe. In addition, our expectations for future growth and profitability were lowered as compared to our previous estimates and reflected declines in average selling prices and volume pressures due to austerity measures. The declines expected in the EMEA market did not impact our assumptions related to other reporting units.

In the third quarter of 2012, we performed an interim goodwill impairment test and recorded a non-cash $748 million (pre- and after-tax) charge associated with our former U.S. Cardiac Rhythm Management (U.S. CRM) reporting unit, primarily driven by a reduction in the estimated size of the U.S. CRM market, related adjustments to our business and other competitive factors, which led to lower projected U.S. CRM results compared to prior forecasts. The U.S. CRM market is dynamic, highly competitive and difficult to forecast; in the third quarter of 2012, we lowered our projections for the U.S. CRM market size and our future revenue levels within this market, primarily to reflect changes in expectations of average selling prices and unit growth, adjustments to our business and other competitive factors. The increased pricing pressure and lower unit volumes were primarily due to physician alignment with hospitals, efforts to reduce health care costs, focus on appropriate device usage, replacement volumes and competition, and were more impactful to the U.S. CRM business than previously estimated. In addition, we adjusted certain elements of our business and shifted investments to focus on areas expected to provide the highest future growth and financial return. As a result of these factors, we reduced the compound annual revenue growth rate of our 15 year DCF model for the U.S. CRM reporting unit by approximately 250 basis points. The declines expected in the U.S. CRM market did not impact our assumptions related to other reporting units.

The following is a rollforward of accumulated goodwill write-offs by global reportable segment. We restated the prior period information to conform to the current period presentation:

(in millions)	Cardiovascular			Rhythm Management			MedSurg			Total
Accumulated write-offs as of December 31, 2012 (restated)	$	(1,479	)	$	(6,537	)	$	(1,461	)	$	(9,477	)
Goodwill written off	—			(423		)	—			(423		)
Accumulated write-offs as of September 30, 2013	$	(1,479	)	$	(6,960	)	$	(1,461	)	$	(9,900	)

Intangible Asset Impairment Charges

On a quarterly basis, we monitor for events or other potential indicators of impairment that would warrant an interim impairment test of our intangible assets. See Goodwill Impairment Charges above for discussion of future events that could have a negative impact on the recoverability of our amortizable intangible assets.

2013 Charges

During the third quarter of 2013, we performed our annual impairment test of all in-process research and development projects, and our indefinite lived core technology assets, and recorded no impairments based on the results of our testing. These indefinite-lived intangible assets are tested for impairment on an annual basis, or more frequently if impairment indicators are present, in accordance with U.S. GAAP and our accounting policies described in our 2012 Annual Report filed on Form 10-K.

During the second quarter of 2013 as a result of revised estimates developed in conjunction with our annual strategic planning process and annual goodwill impairment test, we performed an interim impairment test of our in-process research and development projects associated with certain of our acquisitions. Based on the results of our impairment analyses, we revised our expectations of the market size related to Sadra Medical, Inc. (Sadra), and the resulting timing and amount of future revenue and cash flows associated with the technology acquired from Sadra. As a result of these changes, we recorded pre-tax impairment charges of $51 million to write-down the balance of these intangible assets to their fair value during the second quarter of 2013. During the second quarter of 2013, we also recorded an additional $2 million intangible asset impairment charge associated with changes in the amount of the expected cash flows related to certain other acquired in-process research and development projects.

In-process research and development fair value is measured using projected revenues, projected expenses, discount rates, and

probability of expected launch. The nonrecurring Level 3 fair value measurements of the impairment analysis performed in the second quarter of 2013 included the following significant unobservable inputs:

Intangible Asset	Valuation Date	Fair Value	Valuation Technique	Unobservable Input	Rate
In-Process R&D	June 30, 2013	$178 million	Income Approach - Excess Earnings Method	Discount Rate	16.5%

2012 Charges

During the third quarter of 2012, we recorded a $13 million intangible asset impairment charge attributable to increased expectations in the cost to bring an in-process project to market in a certain geographic region and lower future revenue expectations associated with an in-process project. During the second quarter of 2012, we recorded a $129 million intangible asset impairment charge attributable to in-process research and development assets associated with Sadra due to revised expectations of the required effort, time and cost involved in completing the in-process projects and bringing the related products to market.

We recorded these amounts in the intangible assets impairment charges caption in our accompanying unaudited condensed consolidated statements of operations.

XML

Fair Value Measurements (Tables)

9 Months Ended

Sep. 30, 2013

Fair Value Measurements (Tables) [Abstract]

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

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

(in millions)	Location in Statement of Operations	Three Months Ended September 30,						Nine Months Ended September 30,
		2013			2012			2013			2012
Gain (loss) on currency hedge contracts	Other, net	$	12		$	(14	)	$	66		$	—
Gain (loss) on foreign currency transaction exposures	Other, net	(15		)	11			(72		)	(13		)
Net foreign currency gain (loss)	Other, net	$	(3	)	$	(3	)	$	(6	)	$	(13	)

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

The following presents the effect of our derivative instruments designated as cash flow hedges under Topic 815 on our accompanying unaudited condensed consolidated statements of operations during the third quarter and first nine months of 2013 and 2012 (in millions):

	Amount of Pre-tax Gain (Loss) Recognized in OCI (Effective Portion)			Amount of Pre-tax Gain (Loss) Reclassified from AOCI into Earnings (Effective Portion)			Location in Statement of Operations
Three Months Ended September 30, 2013
Currency hedge contracts	$	(45	)	$	15		Cost of products sold
	$	(45	)	$	15
Three Months Ended September 30, 2012
Currency hedge contracts	$	(44	)	$	(3	)	Cost of products sold
	$	(44	)	$	(3	)
Nine Months Ended September 30, 2013
Currency hedge contracts	$	144		$	15		Cost of products sold
	$	144		$	15
Nine Months Ended September 30, 2012
Currency hedge contracts	$	2		$	(29	)	Cost of products sold
	$	2		$	(29	)

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

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

Classification of derivative assets and liabilities within level 2

The following are the balances of our derivative assets and liabilities as of September 30, 2013 and December 31, 2012:

		As of
(in millions)	Location in Balance Sheet (1)	September 30, 2013		December 31, 2012
Derivative Assets:
Designated Hedging Instruments
Currency hedge contracts	Prepaid and other current assets	$	88	$	25
Currency hedge contracts	Other long-term assets	95		63
		183		88
Non-Designated Hedging Instruments
Currency hedge contracts	Prepaid and other current assets	17		33
Total Derivative Assets		$	200	$	121
Derivative Liabilities:
Designated Hedging Instruments
Currency hedge contracts	Other current liabilities	$	8	$	20
Currency hedge contracts	Other long-term liabilities	9		10
		17		30
Non-Designated Hedging Instruments
Currency hedge contracts	Other current liabilities	27		27
Total Derivative Liabilities		$	44	$	57

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

Assets and liabilities measured at fair value on a recurring basis

Assets and liabilities measured at fair value on a recurring basis consist of the following as of September 30, 2013 and December 31, 2012:

	As of September 30, 2013								As of December 31, 2012
(in millions)	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Assets
Money market and government funds	$	155	—		—		$	155	$	39	—		—		$	39
Currency hedge contracts	—		$	200	—		200		—		$	121	—		121
	$	155	$	200	—		$	355	$	39	$	121	—		$	160
Liabilities
Currency hedge contracts	—		$	44	—		$	44	—		$	57	—		$	57
Accrued contingent consideration	—		—		$	536	536		—		—		$	663	663
	—		$	44	$	536	$	580	—		$	57	$	663	$	720

XML

Segment Reporting

9 Months Ended

Sep. 30, 2013

Segment Reporting [Abstract]

SEGMENT REPORTING

SEGMENT REPORTING

Effective as of January 1, 2013, we reorganized our business from geographic regions to fully operationalized global business units. Following the reorganization, based on information regularly reviewed by our chief operating decision maker, we have three new reportable segments comprised of: Cardiovascular, Rhythm Management, and MedSurg. Our reportable segments represent an aggregate of operating segments. We have restated the prior period to conform to the current year presentation of our reportable segments.

Each of our reportable segments generates revenues from the sale of medical devices. We measure and evaluate our reportable segments based on segment net sales and operating income, excluding the impact of changes in foreign currency exchange rates and sales from divested businesses. Sales generated from reportable segments and divested businesses, as well as operating results of reportable segments and corporate expenses, are based on internally-derived standard currency exchange rates, which may differ from year to year, and do not include intersegment profits. We restated segment information for the prior period based on standard currency exchange rates used for the current period in order to remove the impact of foreign currency exchange fluctuations. Based on information regularly reviewed by our chief operating decision maker following our reorganization, we also restated certain expenses associated with our manufacturing and corporate operations. We exclude from segment operating income certain corporate-related expenses and certain transactions or adjustments that our chief operating decision maker considers to be non-recurring and/or non-operational, such as amounts related to goodwill and other intangible asset impairment charges; acquisition-, divestiture-, restructuring-, and litigation-related charges and credits; and amortization expense. Although we exclude these amounts from segment operating income, they are included in reported consolidated operating income (loss) and are included in the reconciliation below.

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

	Three Months Ended September 30,						Nine Months Ended September 30,
(in millions)	2013			2012*			2013			2012*
Net sales
Interventional Cardiology	$	487		$	496		$	1,538		$	1,646
Peripheral Interventions	202			188			601			571
Cardiovascular	689			684			2,139			2,217
Cardiac Rhythm Management	474			467			1,445			1,466
Electrophysiology	35			35			106			109
Rhythm Management	509			502			1,551			1,575
Endoscopy	331			308			979			916
Urology/Women's Health	134			124			378			367
Neuromodulation	116			88			316			263
MedSurg	581			520			1,673			1,546
Net sales allocated to reportable segments	1,779			1,706			5,363			5,338
Sales generated from divested businesses	2			32			56			91
Impact of foreign currency fluctuations	(46		)	(3		)	(114		)	(1		)
	$	1,735		$	1,735		$	5,305		$	5,428
Income (loss) before income taxes
Cardiovascular	$	184		$	175		$	548		$	561
Rhythm Management	68			58			192			218
MedSurg	187			169			521			452
Operating income allocated to reportable segments	439			402			1,261			1,231
Corporate expenses and currency exchange	(103		)	(58		)	(251		)	(214		)
Goodwill and other intangible asset impairment charges; and acquisition-, divestiture-, restructuring-, and litigation related charges and credits	(132		)	(839		)	(711		)	(4,708		)
Amortization expense	(101		)	(99		)	(305		)	(294		)
Operating (loss) income	103			(594		)	(6		)	(3,985		)
Other expense, net	(143		)	(69		)	(276		)	(174		)
Income (loss) before income taxes	$	(40	)	$	(663	)	$	(282	)	$	(4,159	)

* We have restated prior year detail to conform to current year presentation.

XML

Restructuring Related Activities (Details in Narrative) (USD $) In Millions, unless otherwise specified	3 Months Ended		9 Months Ended		53 Months Ended	56 Months Ended	3 Months Ended	9 Months Ended	53 Months Ended	56 Months Ended	3 Months Ended	9 Months Ended	23 Months Ended	26 Months Ended	3 Months Ended	9 Months Ended	41 Months Ended	3 Months Ended		9 Months Ended		53 Months Ended		3 Months Ended	9 Months Ended	53 Months Ended		3 Months Ended	9 Months Ended	23 Months Ended		3 Months Ended	9 Months Ended	41 Months Ended		3 Months Ended		9 Months Ended		3 Months Ended		9 Months Ended		53 Months Ended	3 Months Ended	9 Months Ended	53 Months Ended	3 Months Ended	9 Months Ended	23 Months Ended	3 Months Ended	9 Months Ended	41 Months Ended	3 Months Ended		9 Months Ended		53 Months Ended		3 Months Ended	9 Months Ended	53 Months Ended	3 Months Ended	9 Months Ended	23 Months Ended	3 Months Ended	9 Months Ended	41 Months Ended	9 Months Ended						3 Months Ended	9 Months Ended	3 Months Ended		9 Months Ended							3 Months Ended	9 Months Ended	3 Months Ended		9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012	Jun. 30, 2013	Sep. 30, 2013	Sep. 30, 2013 Plant Network Optimization [Member]	Sep. 30, 2013 Plant Network Optimization [Member]	Jun. 30, 2013 Plant Network Optimization [Member]	Sep. 30, 2013 Plant Network Optimization [Member]	Sep. 30, 2013 2011 Restructuring Plan [Member]	Sep. 30, 2013 2011 Restructuring Plan [Member]	Jun. 30, 2013 2011 Restructuring Plan [Member]	Sep. 30, 2013 2011 Restructuring Plan [Member]	Sep. 30, 2013 2010 Restructuring Plan [Member]	Sep. 30, 2013 2010 Restructuring Plan [Member]	Jun. 30, 2013 2010 Restructuring Plan [Member]	Sep. 30, 2013 Termination Benefits [Member]	Sep. 30, 2012 Termination Benefits [Member]	Sep. 30, 2013 Termination Benefits [Member]	Sep. 30, 2012 Termination Benefits [Member]	Jun. 30, 2013 Termination Benefits [Member]	Dec. 31, 2012 Termination Benefits [Member]	Sep. 30, 2013 Termination Benefits [Member] Plant Network Optimization [Member]	Sep. 30, 2013 Termination Benefits [Member] Plant Network Optimization [Member]	Jun. 30, 2013 Termination Benefits [Member] Plant Network Optimization [Member]	Dec. 31, 2012 Termination Benefits [Member] Plant Network Optimization [Member]	Sep. 30, 2013 Termination Benefits [Member] 2011 Restructuring Plan [Member]	Sep. 30, 2013 Termination Benefits [Member] 2011 Restructuring Plan [Member]	Jun. 30, 2013 Termination Benefits [Member] 2011 Restructuring Plan [Member]	Dec. 31, 2012 Termination Benefits [Member] 2011 Restructuring Plan [Member]	Sep. 30, 2013 Termination Benefits [Member] 2010 Restructuring Plan [Member]	Sep. 30, 2013 Termination Benefits [Member] 2010 Restructuring Plan [Member]	Jun. 30, 2013 Termination Benefits [Member] 2010 Restructuring Plan [Member]	Dec. 31, 2012 Termination Benefits [Member] 2010 Restructuring Plan [Member]	Sep. 30, 2013 Accelerated depreciation [Member]	Sep. 30, 2012 Accelerated depreciation [Member]	Sep. 30, 2013 Accelerated depreciation [Member]	Sep. 30, 2012 Accelerated depreciation [Member]	Sep. 30, 2013 Transfer costs [Member]	Sep. 30, 2012 Transfer costs [Member]	Sep. 30, 2013 Transfer costs [Member]	Sep. 30, 2012 Transfer costs [Member]	Jun. 30, 2013 Transfer costs [Member]	Sep. 30, 2013 Transfer costs [Member] Plant Network Optimization [Member]	Sep. 30, 2013 Transfer costs [Member] Plant Network Optimization [Member]	Jun. 30, 2013 Transfer costs [Member] Plant Network Optimization [Member]	Sep. 30, 2013 Transfer costs [Member] 2011 Restructuring Plan [Member]	Sep. 30, 2013 Transfer costs [Member] 2011 Restructuring Plan [Member]	Jun. 30, 2013 Transfer costs [Member] 2011 Restructuring Plan [Member]	Sep. 30, 2013 Transfer costs [Member] 2010 Restructuring Plan [Member]	Sep. 30, 2013 Transfer costs [Member] 2010 Restructuring Plan [Member]	Jun. 30, 2013 Transfer costs [Member] 2010 Restructuring Plan [Member]	Sep. 30, 2013 Other [Member]	Sep. 30, 2012 Other [Member]	Sep. 30, 2013 Other [Member]	Sep. 30, 2012 Other [Member]	Jun. 30, 2013 Other [Member]	Dec. 31, 2012 Other [Member]	Sep. 30, 2013 Other [Member] Plant Network Optimization [Member]	Sep. 30, 2013 Other [Member] Plant Network Optimization [Member]	Jun. 30, 2013 Other [Member] Plant Network Optimization [Member]	Sep. 30, 2013 Other [Member] 2011 Restructuring Plan [Member]	Sep. 30, 2013 Other [Member] 2011 Restructuring Plan [Member]	Jun. 30, 2013 Other [Member] 2011 Restructuring Plan [Member]	Sep. 30, 2013 Other [Member] 2010 Restructuring Plan [Member]	Sep. 30, 2013 Other [Member] 2010 Restructuring Plan [Member]	Jun. 30, 2013 Other [Member] 2010 Restructuring Plan [Member]	Sep. 30, 2013 Restructuring Plan [Member] Termination Benefits [Member] Plant Network Optimization [Member]	Sep. 30, 2013 Restructuring Plan [Member] Termination Benefits [Member] 2010 Restructuring Plan [Member]	Sep. 30, 2013 Restructuring Plan [Member] Other [Member] 2010 Restructuring Plan [Member]	Sep. 30, 2013 Restructuring Related To Plan [Member] Accelerated depreciation [Member] Plant Network Optimization [Member]	Sep. 30, 2013 Restructuring Related To Plan [Member] Transfer costs [Member] Plant Network Optimization [Member]	Sep. 30, 2013 Restructuring Related To Plan [Member] Other [Member] 2010 Restructuring Plan [Member]	Sep. 30, 2013 Minimum [Member] 2014 Restructuring plan [Member]	Sep. 30, 2013 Minimum [Member] 2014 Restructuring plan [Member]	Sep. 30, 2013 Minimum [Member] Plant Network Optimization [Member]	Sep. 30, 2013 Minimum [Member] 2011 Restructuring Plan [Member]	Sep. 30, 2013 Minimum [Member] 2011 Restructuring Plan [Member]	Sep. 30, 2013 Minimum [Member] Restructuring Plan [Member] Termination Benefits [Member] 2014 Restructuring plan [Member]	Sep. 30, 2013 Minimum [Member] Restructuring Plan [Member] Termination Benefits [Member] 2011 Restructuring Plan [Member]	Sep. 30, 2013 Minimum [Member] Restructuring Plan [Member] Other [Member] 2014 Restructuring plan [Member]	Sep. 30, 2013 Minimum [Member] Restructuring Plan [Member] Other [Member] 2011 Restructuring Plan [Member]	Sep. 30, 2013 Minimum [Member] Restructuring Related To Plan [Member] Other [Member] 2014 Restructuring plan [Member]	Sep. 30, 2013 Minimum [Member] Restructuring Related To Plan [Member] Other [Member] 2011 Restructuring Plan [Member]	Sep. 30, 2013 Maximum [Member] 2014 Restructuring plan [Member]	Sep. 30, 2013 Maximum [Member] 2014 Restructuring plan [Member]	Sep. 30, 2013 Maximum [Member] Plant Network Optimization [Member]	Sep. 30, 2013 Maximum [Member] 2011 Restructuring Plan [Member]	Sep. 30, 2013 Maximum [Member] 2011 Restructuring Plan [Member]	Sep. 30, 2013 Maximum [Member] Restructuring Plan [Member] Termination Benefits [Member] 2014 Restructuring plan [Member]	Sep. 30, 2013 Maximum [Member] Restructuring Plan [Member] Termination Benefits [Member] 2011 Restructuring Plan [Member]	Sep. 30, 2013 Maximum [Member] Restructuring Plan [Member] Other [Member] 2014 Restructuring plan [Member]	Sep. 30, 2013 Maximum [Member] Restructuring Plan [Member] Other [Member] 2011 Restructuring Plan [Member]	Sep. 30, 2013 Maximum [Member] Restructuring Related To Plan [Member] Other [Member] 2014 Restructuring plan [Member]	Sep. 30, 2013 Maximum [Member] Restructuring Related To Plan [Member] Other [Member] 2011 Restructuring Plan [Member]
Restructuring and Related Cost [Line Items]
Restructuring Charges	$ 19	$ 54	$ 55	$ 93	$ 411													$ 5	$ 44	$ 26	$ 64															$ 0	$ 0	$ 0	$ 0	$ 0	$ 0	$ 0	$ 0											$ 14	$ 10	$ 45	$ 29
Gain (Loss) on Sale of Properties			19
Restructuring Reserve																		21		21			48	4	4		9	17	17		36	0	0		3																			10		10			5
Estimated costs of restructuring program by major type of cost
Expected total costs associated with the plan							130	130							160	160																																																					33	90	51	22	75	8	175	175		300	300	120	160	5	100	50	40	225	225		355	355	150	185	15	120	60	50
Restructuring and Related Cost, Cost Incurred to Date					547				127	127			260	260			160
Restructuring plan estimated future cash outflow															145																																																												160		105	270								210		110	300
Payments for Restructuring	36		107		483	483	0	1	103	103	36	106	235	235	0	0	145	16		50		233		0	1	30		16	49	113		0	0	90						0		0		73	0	0	73	0	0	0	0	0	0	20		57		177		0	0	0	20	57	122	0	0	55
Proceeds from Sale of Property, Plant, and Equipment			53	0
Restructuring Related Expenses	$ 7	$ 4	$ 16	$ 15	$ 136													$ 0	$ 0	$ 0	$ 0															$ 1	$ 0	$ 2	$ 0	$ 0	$ 1	$ 0	$ 7											$ 6	$ 3	$ 14	$ 8

XML

Supplemental Balance Sheet Information (Tables)

9 Months Ended

Sep. 30, 2013

Supplemental Balance Sheet Information (Tables) [Abstract]

Inventory Disclosure [Text Block]

	As of
(in millions)	September 30, 2013		December 31, 2012
Finished goods	$	592	$	598
Work-in-process	87		70
Raw materials	216		216
	$	895	$	884

Trade accounts receivable, net

	As of
(in millions)	September 30, 2013			December 31, 2012
Accounts receivable	$	1,360		$	1,336
Less: allowance for doubtful accounts	(85		)	(88		)
Less: allowance for sales returns	(37		)	(31		)
	$	1,238		$	1,217

Rollforward of allowances for doubtful accounts

	Three Months Ended September 30,						Nine Months Ended September 30,
(in millions)	2013			2012			2013			2012
Beginning balance	$	84		$	83		$	88		$	81
Net (credits) charges to expenses	2			1			7			7
Utilization of allowances	(1		)	(2		)	(10		)	(6		)
Ending balance	$	85		$	82		$	85		$	82

Property, plant and equipment, net

	As of
(in millions)	September 30, 2013		December 31, 2012
Land	$	81	$	81
Buildings and improvements	912		873
Equipment, furniture and fixtures	2,446		2,348
Capital in progress	177		218
	3,616		3,520
Less: accumulated depreciation	2,086		1,956
	$	1,530	$	1,564

Accrued expenses

	As of
(in millions)	September 30, 2013		December 31, 2012
Payroll and related liabilities	$	450	$	452
Accrued contingent consideration	170		120
Legal reserves	159		100
Other	567		612
	$	1,346	$	1,284

Other long-term liabilities

	As of
(in millions)	September 30, 2013		December 31, 2012
Accrued income taxes	$	1,274	$	1,215
Accrued contingent consideration	366		543
Legal reserves	524		391
Other long-term liabilities	419		398
	$	2,583	$	2,547

Accrued warranties

	Nine Months Ended September 30,
	2013			2012
Beginning Balance	$	26		$	30
Provision	11			6
Settlements/reversals	(9		)	(9		)
Ending Balance	$	28		$	27

XML

Restructuring Related Activities (Tables)

9 Months Ended

Sep. 30, 2013

Restructuring and Related Cost [Line Items]

Impact of restructuring costs on the accompanying financial statements

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

Three Months Ended September 30, 2013
(in millions)	Termination Benefits			Accelerated Depreciation		Transfer Costs		Fixed Asset Write-offs		Other		Total
Restructuring charges	$	5		$	—	$	—	$	—	$	14	$	19
Restructuring-related expenses:
Cost of products sold	—			—		—		—		—		—
Selling, general and administrative expenses	—			1		—		—		6		7
	—			1		—		—		6		7
	$	5		$	1	$	—	$	—	$	20	$	26
(in millions)	Termination Benefits			Accelerated Depreciation		Transfer Costs		Fixed Asset Write-offs		Other		Total
2011 Restructuring plan	$	5		$	1	$	—	$	—	$	20	$	26
2010 Restructuring plan	—			—		—		—		—		—
Plant Network Optimization program	—			—		—		—		—		—
	$	5		$	1	$	—	$	—	$	20	$	26
Three Months Ended September 30, 2012
(in millions)	Termination Benefits			Accelerated Depreciation		Transfer Costs		Fixed Asset Write-offs		Other		Total
Restructuring charges	$	44		$	—	$	—	$	—	$	10	$	54
Restructuring-related expenses:
Cost of products sold	—			—		1		—		—		1
Selling, general and administrative expenses	—			—		—		—		3		3
	—			—		1		—		3		4
	$	44		$	—	$	1	$	—	$	13	$	58
(in millions)	Termination Benefits			Accelerated Depreciation		Transfer Costs		Fixed Asset Write-offs		Other		Total
2011 Restructuring plan	$	43		$	—	$	—	$	—	$	13	$	56
2010 Restructuring plan	2			—		—		—		—		2
Plant Network Optimization program	(1		)	—		1		—		—		—
	$	44		$	—	$	1	$	—	$	13	$	58

Nine Months Ended September 30, 2013
(in millions)	Termination Benefits			Accelerated Depreciation		Transfer Costs		Fixed Asset Write-offs			Other		Total
Restructuring charges	$	26		$	—	$	—	$	(16	)	$	45	$	55
Restructuring-related expenses:
Cost of products sold	—			—		—		—			—		—
Selling, general and administrative expenses	—			2		—		—			14		16
	—			2		—		—			14		16
	$	26		$	2	$	—	$	(16	)	$	59	$	71
(in millions)	Termination Benefits			Accelerated Depreciation		Transfer Costs		Fixed Asset Write-offs			Other		Total
2011 Restructuring plan	$	30		$	2	$	—	$	(16	)	$	59	$	75
2010 Restructuring plan	—			—		—		—			—		—
Plant Network Optimization program	(4		)	—		—		—			—		(4		)
	$	26		$	2	$	—	$	(16	)	$	59	$	71
Nine Months Ended September 30, 2012
(in millions)	Termination Benefits			Accelerated Depreciation		Transfer Costs		Fixed Asset Write-offs			Other		Total
Restructuring charges	$	64		$	—	$	—	$	—		$	29	$	93
Restructuring-related expenses:
Cost of products sold	—			—		7		—			—		7
Selling, general and administrative expenses	—			—		—		—			8		8
	—			—		7		—			8		15
	$	64		$	—	$	7	$	—		$	37	$	108
(in millions)	Termination Benefits			Accelerated Depreciation		Transfer Costs		Fixed Asset Write-offs			Other		Total
2011 Restructuring plan	$	65		$	—	$	—	$	—		$	34	$	99
2010 Restructuring plan	—			—		—		—			3		3
Plant Network Optimization program	(1		)	—		7		—			—		6
	$	64		$	—	$	7	$	—		$	37	$	108

Cumulative restructuring charges

The following presents these costs by major type and by plan:

(in millions)	2011 Restructuring plan (including the Expansion)		2010 Restructuring plan		Plant Network Optimization Program		Total
Termination benefits	$	130	$	90	$	31	$	251
Fixed asset write-offs	—		11		—		11
Other	98		51		—		149
Total restructuring charges	228		152		31		411
Accelerated depreciation	—		—		22		22
Transfer costs	—		—		74		74
Other	32		8		—		40
Restructuring-related expenses	32		8		96		136
	$	260	$	160	$	127	$	547

Cash payments associated with restructuring initiatives

Payments were made using cash generated from operations, and are comprised of the following:

(in millions)	2011 Restructuring plan (including the Expansion)		2010 Restructuring plan		Plant Network Optimization Program		Total
Three Months Ended September 30, 2013
Termination benefits	$	16	$	—	$	—	$	16
Transfer costs	—		—		—		—
Other	20		—		—		20
	$	36	$	—	$	—	$	36
Nine Months Ended September 30, 2013
Termination benefits	$	49	$	—	$	1	$	50
Transfer costs	—		—		—		—
Other	57		—		—		57
	$	106	$	—	$	1	$	107
Program to Date
Termination benefits	$	113	$	90	$	30	$	233
Transfer costs	—		—		73		73
Other	122		55		—		177
	$	235	$	145	$	103	$	483

Summary of accrued expenses within accompanying unaudited condensed consolidated balance sheets

The following is a rollforward of the termination benefit liability associated with our 2011 Restructuring plan (including the Expansion), 2010 Restructuring plan and Plant Network Optimization program, since the inception of the respective plans, which is reported as a component of accrued expenses included in our accompanying unaudited condensed balance sheets:

	Restructuring Plan Termination Benefits
(in millions)	2011			2010			Plant Network Optimization			Total
Accrued as of December 31, 2012	$	36		$	3		$	9		48
Charges (credits)	30			—			(4		)	26
Cash payments	(49		)	—			(1		)	(50		)
Other adjustments	—			(3		)	—			(3		)
Accrued as of September 30, 2013	$	17		$	—		$	4		$	21

2014 Restructuring plan [Member]

Restructuring and Related Cost [Line Items]

Impact of restructuring costs on the accompanying financial statements

We estimate that the implementation of the 2014 Restructuring plan will result in total pre-tax charges of approximately $175 million to $225 million, of which approximately $160 million to $210 million is expected to result in future cash outlays. The following table provides a summary of our estimates of costs associated with the 2014 Restructuring plan by major type of cost:

Type of cost	Total estimated amount expected to be incurred
Restructuring charges:
Termination benefits	$120 million to $150 million
Other (1)	$5 million to $15 million
Restructuring-related expenses:
Other (2)	$50 million to $60 million
	$175 million to $225 million

(1) Consists primarily of consultant fees and costs associated with contractual cancellations.

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

2011 Restructuring Plan [Member]

Restructuring and Related Cost [Line Items]

Impact of restructuring costs on the accompanying financial statements

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

Type of cost	Total estimated amount expected to be incurred
Restructuring charges:
Termination benefits	$160 million to $185 million
Other (1)	$100 million to $120 million
Restructuring-related expenses:
Other (2)	$40 million to $50 million
	$300 million to $355 million

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

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

2010 Restructuring Plan [Member]

Restructuring and Related Cost [Line Items]

Impact of restructuring costs on the accompanying financial statements

The following provides a summary of our costs associated with the 2010 Restructuring plan by major type of cost:

Type of cost	Total amount incurred
Restructuring charges:
Termination benefits	$90 million
Fixed asset write-offs	$11 million
Other (1)	$51 million
Restructuring-related expenses:
Other (2)	$8 million
	$160 million

(1) Includes primarily consulting fees and costs associated with contractual cancellations.

(2) Comprised of other costs directly related to the 2010 Restructuring plan, including accelerated depreciation and infrastructure-related costs.

Plant Network Optimization [Member]

Restructuring and Related Cost [Line Items]

Impact of restructuring costs on the accompanying financial statements

The following provides a summary of our estimates of costs associated with the Plant Network Optimization program by major type of cost:

Type of cost	Total estimated amount expected to be incurred
Restructuring charges:
Termination benefits	$33 million
Restructuring-related expenses:
Accelerated depreciation	$22 million
Transfer costs (1)	$75 million
	$130 million

(1) Consists primarily of costs to transfer product lines among facilities, including costs of transfer teams, freight, idle facility and product line validations.

XML

Goodwill and Other Intangible Assets (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended					9 Months Ended
	Sep. 30, 2013	Jun. 30, 2013	Mar. 31, 2013	Sep. 30, 2012	Jun. 30, 2012	Sep. 30, 2013 reportablesegments	Sep. 30, 2012	Dec. 31, 2012
Goodwill [Line Items]
Intangible assets reclassified from unamortizable to amortizable	$ 45
In process research and development associated with Sadra		178
Goodwill	5,553					5,553		5,973
Goodwill, Impaired, Accumulated Impairment Loss	(9,900)					(9,900)		(9,477)
Goodwill								1,764
Goodwill, Purchase Accounting Adjustments						3
Goodwill, Acquired During Period						0
Finite-Lived Intangible Assets, Accumulated Amortization	(4,041)					(4,041)		(3,785)
Indefinite-lived intangible assets, including goodwill	15,650					15,650		15,692
Finite-Lived Intangible Assets, Gross	9,437					9,437		9,389
Indefinite-lived intangible assets, accumulated write-offs	(9,900)					(9,900)		(9,477)
Goodwill (Textuals) [Abstract]
Goodwill impairment charge	0		423	748	3,602	423	4,350
Intangible Assets, Net (Excluding Goodwill)	5,936					5,936		6,289
Goodwill, Impairment Loss, Net of Subsequent Adjustment								2,380
Number of Reportable Segments						3
Intangible asset impairment charges	0	53		13		53	142
Goodwill, Impairment Loss, Net of Tax			421		3,579
Discount rate used for measurement of fair value of Sadra IPRD asset		16.50%
Fair Value Inputs, Long-term Revenue Growth Rate				25.00%
Global CRM Reporting Unit [Member]
Goodwill (Textuals) [Abstract]
Terminal value growth rate			2.00%
Fair Value Inputs, Discount Rate			12.00%
Finite-Lived Intangible Assets, Net								4,636
Neuromodulation [Member]
Goodwill (Textuals) [Abstract]
Level of excess fair value over carrying value for reporting unit					16.00%
Hypothetical change in WACC		0.80%
Hypothetical change in revenue growth rates		2.00%
Cardiovascular [Member]
Goodwill [Line Items]
Goodwill	3,252					3,252		3,249
Goodwill, Impaired, Accumulated Impairment Loss	(1,479)					(1,479)		(1,479)
Goodwill, Purchase Accounting Adjustments						3
Goodwill, Acquired During Period						0
Goodwill (Textuals) [Abstract]
Goodwill impairment charge						0
Global Neuromodulation (NM) Reporting Unit [Member]
Goodwill (Textuals) [Abstract]
Allocated Goodwill		1,356
Rhythm Management [Member]
Goodwill [Line Items]
Goodwill	154					154		577
Goodwill, Impaired, Accumulated Impairment Loss	(6,960)					(6,960)		(6,537)
Goodwill, Purchase Accounting Adjustments						0
Goodwill, Acquired During Period						0
Goodwill (Textuals) [Abstract]
Goodwill impairment charge						423
MedSurg [Member]
Goodwill [Line Items]
Goodwill	2,147					2,147		2,147
Goodwill, Impaired, Accumulated Impairment Loss	(1,461)					(1,461)		(1,461)
Goodwill, Purchase Accounting Adjustments						0
Goodwill, Acquired During Period						0
Goodwill (Textuals) [Abstract]
Goodwill impairment charge						0
Unclassified Indefinite-lived Intangible Assets [Member]
Goodwill [Line Items]
Goodwill, Impaired, Accumulated Impairment Loss	(9,900)					(9,900)		(9,477)
Goodwill, Gross	15,453					15,453		15,450
Purchased research and development [Member]
Goodwill [Line Items]
Indefinite-Lived Intangible Assets (Excluding Goodwill)	343					343		443
Technology-related [Member]
Goodwill [Line Items]
Indefinite-Lived Intangible Assets (Excluding Goodwill)	197					197		242
Technology Developed [Member]
Goodwill (Textuals) [Abstract]
Finite-Lived Intangible Assets, Net	4,442					4,442
Technology-related [Member]
Goodwill [Line Items]
Finite-Lived Intangible Assets, Accumulated Amortization	(3,254)					(3,254)		(3,005)
Finite-Lived Intangible Assets, Gross	8,118					8,118		8,020
Other Intangible Assets [Member]
Goodwill [Line Items]
Finite-Lived Intangible Assets, Accumulated Amortization	(465)					(465)		(428)
Finite-Lived Intangible Assets, Gross	815					815		810
Patents [Member]
Goodwill [Line Items]
Finite-Lived Intangible Assets, Accumulated Amortization	(322)					(322)		(352)
Finite-Lived Intangible Assets, Gross	504					504		559
EMEA [Member]
Goodwill (Textuals) [Abstract]
Change in WACC					1.00%
Sadra Medical Inc [Member]
Goodwill (Textuals) [Abstract]
Intangible asset impairment charges		51			129
2011 Acquisitions, excluding Sadra [Member]
Goodwill (Textuals) [Abstract]
Intangible asset impairment charges		$ 2

XML

Supplemental Balance Sheet Information (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012	Dec. 31, 2012
Allowance for doubtful accounts
Beginning balance	$ 84	$ 83	$ 88	$ 81
Charges to expenses	2	1	7	7
Utilization of allowances	(1)	(2)	(10)	(6)
Ending balance	85	82	85	82
Trade accounts receivable, net
Accounts receivable	1,360		1,360		1,336
Less: allowance for doubtful accounts	(85)		(85)		(88)
Less: allowance for sales returns	(37)		(37)		(31)
Trade accounts receivable, net	1,238		1,238		1,217
Inventories
Finished goods	592		592		598
Work-in-process	87		87		70
Raw materials	216		216		216
Inventories	895		895		884
Property, plant and equipment, net
Land	81		81		81
Buildings and improvements	912		912		873
Equipment, furniture and fixtures	2,446		2,446		2,348
Capital in progress	177		177		218
Property, plant and equipment	3,616		3,616		3,520
Less: accumulated depreciation	2,086		2,086		1,956
Property, plant and equipment, net	1,530		1,530		1,564
Accrued expenses
Legal reserves	450		450		452
Payroll and related liabilities	170		170		120
Accrued contingent consideration	159		159		100
Other	567		567		612
Accrued expenses	1,346		1,346		1,284
Other long-term liabilities
Legal reserves	1,274		1,274		1,215
Accrued income taxes	366		366		543
Accrued contingent consideration	524		524		391
Other Long-Term Liabilities	419		419		398
Other long-term liabilities	2,583		2,583		2,547
Accrued warranties
Beginning Balance			26	30
Provision			11	6
Settlements/ reversals			(9)	(9)
Ending Balance	28	27	28	27
Supplemental Balance Sheet Information (Textuals) [Abstract]
Depreciation expense	$ 72	$ 70	$ 199	$ 205

XML

Changes in Other Comprehensive Income (Tables)

9 Months Ended

Sep. 30, 2013

Changes in Other Comprehensive Income [Abstract]

Changes in Other Comprehensive Income [Table Text Block]

Three Months Ended September 30, 2013
(in millions)	Foreign currency translation adjustments	Unrealized gains/losses on derivative financial instruments	Defined benefit pension items / Other	Total
Beginning Balance	$(28)	$153	$(41)	$84
Other comprehensive income (loss) before reclassifications	10	(29)	—	(19)
Amounts reclassified from accumulated other comprehensive income	—	(9)	—	(9)
Net current-period other comprehensive income	10	(38)	—	(28)
Ending Balance	$(18)	$115	$(41)	$56
Three Months Ended September 30, 2012
(in millions)	Foreign currency translation adjustments	Unrealized gains/losses on derivative financial instruments	Defined benefit pension items / Other	Total
Beginning Balance	$(51)	$(4)	$(32)	$(87)
Other comprehensive income (loss) before reclassifications	2	(29)	—	(27)
Amounts reclassified from accumulated other comprehensive income	—	2	—	2
Net current-period other comprehensive income	2	(27)	—	(25)
Ending Balance	$(49)	$(31)	$(32)	$(112)

Nine Months Ended September 30, 2013
(in millions)	Foreign currency translation adjustments	Unrealized gains/losses on derivative financial instruments	Defined benefit pension items / Other	Total
Beginning Balance	$(26)	$34	$(41)	$(33)
Other comprehensive income (loss) before reclassifications	8	91	—	99
Amounts reclassified from accumulated other comprehensive income	—	(10)	—	(10)
Net current-period other comprehensive income	8	81	—	89
Ending Balance	$(18)	$115	$(41)	$56
Nine Months Ended September 30, 2012
(in millions)	Foreign currency translation adjustments	Unrealized gains/losses on derivative financial instruments	Defined benefit pension items / Other	Total
Beginning Balance	$(58)	$(48)	$(32)	$(138)
Other comprehensive income (loss) before reclassifications	9	—	—	9
Amounts reclassified from accumulated other comprehensive income	—	17	—	17
Net current-period other comprehensive income	9	17	—	26
Ending Balance	$(49)	$(31)	$(32)	$(112)

XML

Weighted Average Shares Outstanding (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount	23.6	6.8	17.2	7.2
Stock Issued During Period, Shares, New Issues	6		16
Treasury Stock, Shares, Acquired	7		32
Payments for repurchase of common stock, rounded	$ 75		$ 275
Weighted average shares outstanding
Weighted average shares outstanding - basic	1,340.3	1,392.5	1,345.2	1,420.3
Weighted Average Number Diluted Shares Outstanding Adjustment	0	0	0	0
Weighted average shares outstanding - assuming dilution	1,340.3	1,392.5	1,345.2	1,420.3
Stock Options [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount	18.0	62.0	18.0	61.0

XML

Borrowings and Credit Arrangements (Tables)

9 Months Ended

Sep. 30, 2013

Borrowings and Credit Arrangements (Tables) [Abstract]

Schedule of debt maturities

The debt maturity schedule for the significant components of our debt obligations as of September 30, 2013 is as follows:

(in millions)	2013	2014		2015		2016		2017		Thereafter		Total
Senior notes	—	$	—	$	400	$	600	$	250	$	2,550	$	3,800
Term loan	—	$	—	$	—	$	80	$	80	$	240	$	400
	—	$	—	$	400	$	680	$	330	$	2,790	$	4,200

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

Summary of revolving credit facility agreement compliance with debt covenants

Our revolving credit facility agreement in place as of September 30, 2013 requires that we maintain certain financial covenants, as follows:

	Covenant Requirement	Actual as of September 30, 2013
Maximum leverage ratio (1)	3.5 times	2.4 times
Minimum interest coverage ratio (2)	3.0 times	5.4 times

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

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

XML

Condensed Consolidated Statements of Cash Flows (Unaudited) (USD $) In Millions, unless otherwise specified	9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012
Cash provided by operating activities	$ 809	$ 891
Investing activities:
Purchases of property, plant and equipment	(161)	(164)
Proceeds from sale of property, plant and equipment	53	0
Purchases of privately held securities	(13)	0
Purchase of notes receivable	(8)	0
Payments for acquisitions of businesses, net of cash acquired	0	134
Payments for investments in companies and acquisitions of certain technologies	(13)	(18)
Proceeds from business divestitures, net of costs	30	10
Cash used for investing activities	(112)	(306)
Financing activities:
Payments on long-term borrowings	(1,450)	(9)
Proceeds from Issuance of Long-term Debt	1,440	0
Repayments of Long-term Lines of Credit	240	260
Proceeds from Long-term Lines of Credit	240	251
Payment of contingent consideration	(107)	(4)
Payments for acquisitions of treasury stock	(275)	(500)
Proceeds from issuances of shares of common stock	59	20
Cash used for financing activities	(333)	(502)
Effect of foreign exchange rates on cash	0	2
Net increase in cash and cash equivalents	364	85
Cash and cash equivalents at beginning of period	207	267
Cash and cash equivalents at end of period	571	352
Non-cash operating activities:
Stock-based compensation expense	$ 77	$ 85

XML

Acquisitions

9 Months Ended

Sep. 30, 2013

Acquisitions [Abstract]

ACQUISITIONS

ACQUISITIONS

We did not close any material acquisitions during the first nine months of 2013. On November 1, 2013, we completed the acquisition of the electrophysiology business of C.R. Bard Inc., for $275 million in cash. We believe that this transaction brings a strong commercial team and complementary portfolio of ablation catheters, diagnostic tools, and electrophysiology recording systems, and will allow us to better serve the global Electrophysiology market through a more comprehensive portfolio offering and sales infrastructure.

2012 Acquisition

Cameron Health, Inc.

On June 8, 2012, we completed the acquisition of the remaining equity of Cameron Health, Inc. (Cameron). Cameron has developed the world's first and only commercially available subcutaneous implantable cardioverter defibrillator - the S-ICD® system.

Our unaudited condensed consolidated financial statements include the operating results for the acquired entity from its date of acquisition. We do not present pro forma financial information for this acquisition given the results are not material to our consolidated financial statements. Transaction costs associated with this acquisition were expensed as incurred and were not material for the three and nine months ended September 30, 2013 and 2012.

Purchase Price Allocation

The components of the Cameron purchase price as of the acquisition date were as follows (in millions):

Cash, net of cash acquired	$	134
Fair value of contingent consideration	259
Fair value of prior interests	79
Fair value of debt assumed	9
	$	481

Prior to the acquisition, we had an equity interest in Cameron and held $40 million of notes receivable. We re-measured our previously held investments to their estimated acquisition-date fair value of $79 million and recorded a gain of $39 million in other, net in the accompanying condensed consolidated statements of operations during the second quarter of 2012. We measured the fair values of the previously held investments based on the liquidation preferences and priority of the equity interests and debt, including accrued interest. In addition, we prepaid the assumed debt obligation of Cameron for approximately $9 million during the second quarter of 2012.

Total consideration includes an initial $150 million cash payment at closing of the transaction, a payment of $150 million upon FDA approval of the S-ICD® system and up to an additional $1.050 billion of potential payments upon achievement of specified revenue-based milestones through the third quarter of 2018, which represents the end of a six-year period following FDA approval. Due to our receipt of FDA approval of Cameron's S-ICD® system, we paid the related $150 million milestone payment to the former shareholders of Cameron during the fourth quarter of 2012.

The following summarizes the Cameron purchase price allocation (in millions):

Goodwill	$	314
Amortizable intangible assets	42
Indefinite-lived intangible assets	48
Other net assets	1
Deferred income taxes	76
	$	481

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

	Amount Assigned (in millions)	Weighted Average Amortization Period (in years)	Risk-Adjusted Discount Rates used in Purchase Price Allocation
Amortizable intangible assets:
Technology-related	40	11	14.0	%
Customer relationships	2	5	14.0	%
Indefinite-lived intangible assets:
Purchased research and development	48		14.0	%
	90

The technology-related intangible assets consist of technical processes, intellectual property, and institutional understanding with respect to products and processes that we expect to leverage in future products or processes and carry forward from one product generation to the next. The technology-related intangible assets are being amortized on a straight-line basis over their assigned estimated useful lives.

Purchased research and development represents the estimated fair value of acquired in-process research and development projects which have not yet reached technological feasibility. These indefinite-lived intangible assets are tested for impairment on an annual basis, or more frequently if impairment indicators are present, in accordance with U.S. GAAP and our accounting policies described in our 2012 Annual Report filed on Form 10-K. Upon completion of the associated research and development efforts, we determine the useful life of the technology and begin amortizing the assets to reflect their use over their remaining lives. Upon receiving FDA approval for Cameron's S-ICD® system in September 2012, we reclassified approximately $47 million of in-process research and development (IPR&D) to technology-related amortizable intangible assets. The total estimated costs to complete the remaining IPR&D program associated with Cameron are immaterial.

We believe that the estimated intangible asset values represent the fair value at the date of acquisition and do not exceed the amount a third party would pay for the assets. We used the income approach, specifically the discounted cash flow method and excess earnings method, to derive the fair value of the amortizable intangible assets and purchased research and development. These fair value measurements are based on significant unobservable inputs, including management estimates and assumptions and, accordingly, are classified as Level 3 within the fair value hierarchy prescribed by ASC Topic 820, Fair Value Measurements and Disclosures.

We recorded the excess of the aggregate purchase price over the estimated fair values of the identifiable assets acquired as goodwill, which is non-deductible for tax purposes. Goodwill was established due primarily to revenue and cash flow projections associated with future technologies, as well as synergies expected to be gained from the integration of this business into our Cardiac Rhythm Management (CRM) business and was allocated to our former geographic reportable segments based on the relative expected benefit from the business combination. Effective as of January 1, 2013, we reorganized our business from geographic regions to fully operationalized global business units. Our reorganization changed our reporting structure and changed the composition of our reporting units for goodwill impairment testing purposes. Following the reorganization, based on information regularly reviewed by our chief operating decision maker, we have three new global reportable segments consisting of: Cardiovascular, Rhythm Management, and MedSurg. See Note D - Goodwill and Other Intangible Assets for further details.

Contingent Consideration

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

We recorded a net expense related to the change in fair value of our contingent consideration liabilities of $23 million in the third quarter of 2013 and a net benefit of $18 million in the first nine months of 2013, and recorded $20 million and $9 million of a net benefit during the third quarter and first nine months of 2012, respectively. We paid $100 million and $115 million in the third quarter and first nine months of 2013, respectively, we did not make any payments in the third quarter of 2012 and made payments of $4 million during the first nine months of 2012. As of September 30, 2013, the maximum amount of future contingent consideration (undiscounted) that we could be required to pay is approximately $2.179 billion.

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

Balance as of December 31, 2012	$	(663	)
Amounts recorded to acquisition purchase accounting	(6		)
Net fair value adjustments	18
Payments made	115
Balance as of September 30, 2013	$	(536	)

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

Contingent Consideration Liability	Fair Value as of September 30, 2013	Valuation Technique	Unobservable Input	Range
Research and Development, Regulatory and Commercialization-based Milestones	$126 million	Probability Weighted Discounted Cash Flow	Discount Rate	0.8% - 1.1%
			Probability of Payment	70% - 98%
			Projected Year of Payment	2013 - 2014
Revenue-based Payments	$144 million	Discounted Cash Flow	Discount Rate	12% - 18%
			Probability of Payment	15% - 100%
			Projected Year of Payment	2013 - 2018
	$266 million	Monte Carlo	Revenue Volatility	13% - 28%
			Risk Free Rate	LIBOR Term Structure
			Projected Year of Payment	2013 - 2018

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

XML

Fair Value Measurements

9 Months Ended

Sep. 30, 2013

Fair Value Measurements [Abstract]

FAIR VALUE MEASUREMENTS

FAIR VALUE MEASUREMENTS

Derivative Instruments and Hedging Activities

We develop, manufacture and sell medical devices globally and our earnings and cash flows are exposed to market risk from changes in foreign 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 ASC Topic 815, Derivatives and Hedging (Topic 815). In accordance with Topic 815, 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 Topic 815.

Currency Hedging

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

Designated Foreign Currency Hedges

All of our designated currency hedge contracts outstanding as of September 30, 2013 and December 31, 2012 were cash flow hedges under Topic 815 intended to protect the U.S. dollar value of our forecasted foreign currency denominated transactions. We record the effective portion of any change in the fair value of foreign currency cash flow hedges in other comprehensive income (OCI) until the related third-party transaction occurs. Once the related third-party transaction occurs, we reclassify the effective portion of any related gain or loss on the foreign currency cash flow hedge to earnings. In the event the hedged forecasted transaction does not occur, or it becomes no longer probable that it will occur, we reclassify the amount of any gain or loss on the related cash flow hedge to earnings at that time. We had currency derivative instruments designated as cash flow hedges outstanding in the contract amount of $2.647 billion as of September 30, 2013 and $2.469 billion as of December 31, 2012.

We recognized net gains of $15 million in earnings on our cash flow hedges during the third quarter of 2013 and $15 million for the first nine months of 2013, as compared to net losses of $3 million during the third quarter of 2012 and $29 million for the first nine months of 2012. All currency cash flow hedges outstanding as of September 30, 2013 mature within 36 months. As of September 30, 2013, $113 million of net gains, net of tax, were recorded in accumulated other comprehensive income (AOCI) to recognize the effective portion of the fair value of any currency derivative instruments that are, or previously were, designated as foreign currency cash flow hedges, as compared to net gains of $31 million as of December 31, 2012. As of September 30, 2013, $58 million of net gains, net of tax, may be reclassified to earnings within the next twelve months.

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

Non-designated Foreign Currency Contracts

We use currency forward contracts as a part of our strategy to manage exposure related to foreign currency denominated monetary assets and liabilities. These currency forward contracts are not designated as cash flow, fair value or net investment hedges under Topic 815; are marked-to-market with changes in fair value recorded to earnings; and are entered into for periods consistent with currency transaction exposures, generally less than one year. We had currency derivative instruments not designated as hedges under Topic 815 outstanding in the contract amount of $1.757 billion as of September 30, 2013 and $1.942 billion as of December 31, 2012.

Interest Rate Hedging

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

We designate these derivative instruments either as fair value or cash flow hedges under Topic 815. We record changes in the value of fair value hedges in interest expense, which is generally offset by changes in the fair value of the hedged debt obligation. Interest payments made or received related to our interest rate derivative instruments are included in interest expense. We record the effective portion of any change in the fair value of derivative instruments designated as cash flow hedges as unrealized gains or losses in OCI, net of tax, until the hedged cash flow occurs, at which point the effective portion of any gain or loss is reclassified to earnings. We record the ineffective portion of our cash flow hedges in interest expense. In the event the hedged cash flow does not occur, or it becomes no longer probable that it will occur, we reclassify the amount of any gain or loss on the related cash flow hedge to interest expense at that time. We had no interest rate derivative contracts outstanding as of September 30, 2013 or December 31, 2012.

In prior years, we terminated certain interest rate derivative contracts, including fixed-to-floating interest rate contracts, designated as fair value hedges, and floating-to-fixed treasury locks, designated as cash flow hedges. We are amortizing the gains and losses on these derivative instruments upon termination into earnings as a reduction of interest expense over the remaining term of the hedged debt, in accordance with Topic 815. The carrying amount of certain of our senior notes included unamortized gains of $56 million as of September 30, 2013 and $64 million as of December 31, 2012, and unamortized losses of $3 million as of September 30, 2013 and $3 million as of December 31, 2012, related to the fixed-to-floating interest rate contracts. In addition, we had pre-tax net gains within AOCI related to terminated floating-to-fixed treasury locks of $3 million as of September 30, 2013 and $4 million as of December 31, 2012. We recorded $3 million during the third quarter of 2013 and $8 million during the first nine months of 2013 as a reduction to interest expense, resulting from the amortization of previously terminated interest rate derivative contracts. As of September 30, 2013, $9 million of pre-tax net gains may be reclassified to earnings within the next twelve months as a reduction to interest expense from amortization of our previously terminated interest rate derivative contracts.

Counterparty Credit Risk

We do not have significant concentrations of credit risk arising from our derivative financial instruments, whether from an individual counterparty or a related group of counterparties. We manage 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 to each counterparty, and by actively monitoring their credit ratings and outstanding fair values on an on-going basis. Furthermore, none of our derivative transactions are subject to collateral or other security arrangements and none contain provisions that are dependent on our credit ratings from any credit rating agency.

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

Fair Value of Derivative Instruments

The following presents the effect of our derivative instruments designated as cash flow hedges under Topic 815 on our accompanying unaudited condensed consolidated statements of operations during the third quarter and first nine months of 2013 and 2012 (in millions):

	Amount of Pre-tax Gain (Loss) Recognized in OCI (Effective Portion)			Amount of Pre-tax Gain (Loss) Reclassified from AOCI into Earnings (Effective Portion)			Location in Statement of Operations
Three Months Ended September 30, 2013
Currency hedge contracts	$	(45	)	$	15		Cost of products sold
	$	(45	)	$	15
Three Months Ended September 30, 2012
Currency hedge contracts	$	(44	)	$	(3	)	Cost of products sold
	$	(44	)	$	(3	)
Nine Months Ended September 30, 2013
Currency hedge contracts	$	144		$	15		Cost of products sold
	$	144		$	15
Nine Months Ended September 30, 2012
Currency hedge contracts	$	2		$	(29	)	Cost of products sold
	$	2		$	(29	)

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

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

(in millions)	Location in Statement of Operations	Three Months Ended September 30,						Nine Months Ended September 30,
		2013			2012			2013			2012
Gain (loss) on currency hedge contracts	Other, net	$	12		$	(14	)	$	66		$	—
Gain (loss) on foreign currency transaction exposures	Other, net	(15		)	11			(72		)	(13		)
Net foreign currency gain (loss)	Other, net	$	(3	)	$	(3	)	$	(6	)	$	(13	)

Topic 815 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 ASC Topic 820, Fair Value Measurements and Disclosures (Topic 820), by considering the estimated amount we would receive or pay to transfer these instruments at the reporting date and by taking into account current interest rates, foreign 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 September 30, 2013, we have classified all of our derivative assets and liabilities within Level 2 of the fair value hierarchy prescribed by Topic 820, as discussed below, because these observable inputs are available for substantially the full term of our derivative instruments.

The following are the balances of our derivative assets and liabilities as of September 30, 2013 and December 31, 2012:

		As of
(in millions)	Location in Balance Sheet (1)	September 30, 2013		December 31, 2012
Derivative Assets:
Designated Hedging Instruments
Currency hedge contracts	Prepaid and other current assets	$	88	$	25
Currency hedge contracts	Other long-term assets	95		63
		183		88
Non-Designated Hedging Instruments
Currency hedge contracts	Prepaid and other current assets	17		33
Total Derivative Assets		$	200	$	121
Derivative Liabilities:
Designated Hedging Instruments
Currency hedge contracts	Other current liabilities	$	8	$	20
Currency hedge contracts	Other long-term liabilities	9		10
		17		30
Non-Designated Hedging Instruments
Currency hedge contracts	Other current liabilities	27		27
Total Derivative Liabilities		$	44	$	57

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

Other Fair Value Measurements

Recurring Fair Value Measurements

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

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

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

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

Assets and liabilities measured at fair value on a recurring basis consist of the following as of September 30, 2013 and December 31, 2012:

	As of September 30, 2013								As of December 31, 2012
(in millions)	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Assets
Money market and government funds	$	155	—		—		$	155	$	39	—		—		$	39
Currency hedge contracts	—		$	200	—		200		—		$	121	—		121
	$	155	$	200	—		$	355	$	39	$	121	—		$	160
Liabilities
Currency hedge contracts	—		$	44	—		$	44	—		$	57	—		$	57
Accrued contingent consideration	—		—		$	536	536		—		—		$	663	663
	—		$	44	$	536	$	580	—		$	57	$	663	$	720

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

In addition to $155 million invested in money market and government funds as of September 30, 2013, we had $281 million in short-term time deposits and $135 million in interest bearing and non-interest bearing bank accounts. In addition to $39 million invested in money market and government funds as of December 31, 2012, we had $168 million in interest bearing and non-interest bearing bank accounts.

Changes in the fair value of assets and liabilities measured on a recurring basis using significant unobservable inputs (Level 3) during the first nine months of 2013 related solely to our contingent consideration liabilities. Refer to Note B - Acquisitions for a discussion of the fair value measurements related to our contingent consideration liabilities.

Non-Recurring Fair Value Measurements

We have 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 $22 million as of September 30, 2013 and $13 million as of December 31, 2012.

During the third quarter of 2013, we recorded $4 million of losses to write down certain investments to their fair values. These adjustments fall within Level 3 of the fair value hierarchy, due to the use of significant unobservable inputs to determine fair value.

During the second quarter of 2013, we recorded $53 million of intangible asset impairment charges, representing a decrease in the estimated fair value of the related intangible asset balances. During the first quarter of 2013, we recorded a $423 million charge to adjust our goodwill balances to their fair value. As a result, during the first nine months of 2013, we recorded $476 million of losses, to adjust our goodwill and certain other intangible asset balances to their fair value. Refer to Note D - Goodwill and Other Intangible Assets, for further detailed information related to these charges and significant unobservable inputs (Level 3).

The fair value of our outstanding debt obligations was $4.599 billion as of September 30, 2013 and $4.793 billion as of December 31, 2012, which was determined by using primarily quoted market prices for our publicly registered senior notes, classified as Level 1 within the fair value hierarchy. Refer to Note F – Borrowings and Credit Arrangements for a discussion of our debt obligations.

XML

Divestitures

9 Months Ended

Sep. 30, 2013

Divestitures and Assets Held for Sale [Abstract]

DIVESTITURES

DIVESTITURES

In January 2011, we closed the sale of our Neurovascular business to Stryker Corporation for a purchase price of $1.500 billion, $1.450 billion of which we received at closing. We received an additional $10 million during 2012, $30 million during the second quarter of 2013, and we will receive the final $10 million of consideration contingent upon the FDA approval of the transfer of certain manufacturing facilities.

Due to our continuing involvement in the operations of the Neurovascular business, the divestiture does not meet the criteria for presentation as a discontinued operation. Revenue generated by the Neurovascular business was $2 million in the third quarter of 2013, $56 million in the first nine months of 2013, $32 million in the third quarter of 2012, and $91 million in the first nine months of 2012.

XML

Income Taxes (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2014	Dec. 31, 2012
Income Taxes, Tax Rate [Line Items]
Unrecognized Tax Benefits	$ 1,080		$ 1,080			$ 1,052
Unrecognized Tax Benefits that Would Impact Effective Tax Rate	940		940			902
Interest Expense Related To Income Taxes	9	15	28	26
Gross interest and penalties recognized in period			43
Effective Income Tax Rate, Continuing Operations, Tax Rate Reconciliation [Abstract]
Effective Income Tax Rate, Continuing Operations	87.60%	(0.10%)	18.90%	0.70%
Effective Tax Rate	13.10%	16.10%	13.70%	15.20%
Impact of certain receipts charges	(74.50%)	16.20%	(5.20%)	14.50%
Incremental tax liability asserted by IRS	1,162		1,162
Accrued Interest And Penalties Gross	408		408			364
Potential Reduction In Unrecognized Tax Benefits Over Next Twelve Months As Result Of Concluding Certain Matters					$ 41

XML

Income Taxes (Tables)

9 Months Ended

Sep. 30, 2013

Income Taxes (Tables) [Abstract]

Tax rate

The following tables provide a summary of our reported tax rate:

	Three Months Ended September 30,
	2013		2012
Reported tax rate	87.6	%	(0.1	)%
Impact of certain receipts/charges*	(74.5	)%	16.2	%
	13.1	%	16.1	%

	Nine Months Ended September 30,
	2013		2012
Reported tax rate	18.9	%	0.7	%
Impact of certain receipts/charges*	(5.2	)%	14.5	%
	13.7	%	15.2	%

*These receipts/charges are taxed at different rates than our effective tax rate.

XML

Acquisitions (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended		9 Months Ended				3 Months Ended						9 Months Ended									9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013 reportablesegments	Sep. 30, 2012	Dec. 31, 2012	Jun. 08, 2012	Jun. 30, 2012 twenty twelve acquisitions [Domain]	Sep. 30, 2013 twenty twelve acquisitions [Domain]	Jun. 08, 2012 twenty twelve acquisitions [Domain]	Sep. 30, 2013 R&D- and commercialization-based milestones [Member]	Sep. 30, 2013 R&D- and commercialization-based milestones [Member] Minimum [Member]	Sep. 30, 2013 R&D- and commercialization-based milestones [Member] Maximum [Member]	Sep. 30, 2013 Technology-related [Member] twenty twelve acquisitions [Domain]	Sep. 30, 2013 Customer Contracts [Member] twenty twelve acquisitions [Domain]	Sep. 30, 2013 Purchased research and development [Member] twenty twelve acquisitions [Domain]	Sep. 30, 2013 Discounted cash flow [Member] revenue-based payments [Member]	Sep. 30, 2013 Discounted cash flow [Member] revenue-based payments [Member] Minimum [Member]	Sep. 30, 2013 Discounted cash flow [Member] revenue-based payments [Member] Maximum [Member]	Sep. 30, 2013 Monte Carlo [Member] revenue-based payments [Member]	Sep. 30, 2013 Monte Carlo [Member] revenue-based payments [Member] Minimum [Member]	Sep. 30, 2013 Monte Carlo [Member] revenue-based payments [Member] Maximum [Member]	Sep. 30, 2013 Monte Carlo [Member] revenue-based payments [Member] Low end of range [Member]	Sep. 30, 2013 Monte Carlo [Member] revenue-based payments [Member] High end of range [Member]
Business Acquisition [Line Items]
Potential payment due upon closing of Bard acquisition	$ 275		$ 275
InProcessResearchandDevelopmentReclassified		47
Number of Reportable Segments			3
Note Receivable									40
Business Acquisition, Purchase Price Allocation, Goodwill Amount								314
Business Combination, Contingent Consideration Arrangements, Change in Amount of Contingent Consideration, Liability	23	(20)	18	(9)
Business Acquisition, Cost of Acquired Entity, Cash Paid									134
Maximum future contingent consideration for acquisitions completed after January 1, 2009	2,179		2,179
Benefit related to change in fair value of contingent liability			18
Contingent payment related to business combination	100		115	4
Fair value of contingent consideration									(259)	(126)						(144)			(266)
Revenue Volatility - Contingent Consideration																						13.00%	28.00%
contingent consideration liability, projected year of payment											2013	2014					2013	2018		2013	2018
contingent consideration liability, probability of payment											70.00%	98.00%					15.00%	100.00%
Risk-adjusted discount rate for contingent consideration											0.80%	1.10%					12.00%	18.00%
Accrued Contingent Consideration	(536)		(536)		(663)
Business Combination, Liabilities Arising from Contingencies, Amount Recognized			(6)
Business Acquisition, Cost of Acquired Entity, Equity Interests Issued and Issuable									79
Business Combination, Step Acquisition, Equity Interest in Acquiree, Remeasurement Gain							39
Business Acquisition, Purchase Price Allocation, Notes Payable and Long-term Debt									9
Business Acquisition, Cost of Acquired Entity, Purchase Price								481	481
Business Acquisition, Purchase Price Allocation, Amortizable Intangible Assets								42					40	2
Business Acquisition, Purchase Price Allocation, Intangible Assets Not Amortizable								48							48
Business Acquisition, Purchase Price Allocation, Other Noncurrent Assets								1
Business Acquisition, Purchase Price Allocation, Deferred Taxes Asset (Liability), Net, Noncurrent								76
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life													11 years	5 years
Range Of Risk Adjusted Discount Rates Used In Purchase Price Allocation													14.00%	14.00%	14.00%
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Intangibles								90
Initial cash payment for Cameron acquisition						150
Potential payment due upon FDA approval of S-ICD system					150
Maximum potential payment due upon achievement of certain milestones, per Cameron agreement	$ 1,050		$ 1,050

XML

Borrowings and Credit Arrangements (Details)	3 Months Ended	9 Months Ended	12 Months Ended					18 Months Ended												3 Months Ended
	Sep. 30, 2013 USD ($)	Sep. 30, 2013 USD ($)	Dec. 31, 2012 USD ($)	Sep. 30, 2013 Covenant Requirement [Member]	Sep. 30, 2013 Actual, Covenant [Member]	Sep. 30, 2013 Credit Facility Two [Member] USD ($)	Mar. 31, 2013 Credit Facility Two [Member] USD ($)	Sep. 30, 2013 Revolving credit facility [Member] USD ($)	Apr. 18, 2012 Revolving credit facility [Member] USD ($)	Sep. 30, 2013 Unsecured Term Loan Facility [Member] USD ($)	Aug. 06, 2013 Unsecured Term Loan Facility [Member] USD ($)	Sep. 30, 2013 Uncommitted Credit Facilities With A Commercial Japanese Banks [Member] USD ($)	Sep. 30, 2013 Uncommitted Credit Facilities With A Commercial Japanese Banks [Member] JPY (¥)	Dec. 31, 2012 Uncommitted Credit Facilities With A Commercial Japanese Banks [Member] USD ($)	Sep. 30, 2013 Senior Notes [Member] USD ($)	Sep. 30, 2013 Unsecured Term Loan Facility [Member] USD ($)	Sep. 30, 2013 Italy, Spain, Portugal and Greece [Member] USD ($)	Aug. 13, 2013 $600 million, Senior Note [Member] USD ($)	Aug. 13, 2013 $450 million, Senior Note [Member] USD ($)	Sep. 30, 2013 $600 million, Snr Note [Member] USD ($)	Sep. 30, 2013 $850 million, Senior Note [Member] USD ($)
Schedule of debt maturities
Long-term Debt, Maturities, Repayments of Principal in Current Year	$ 0	$ 0													$ 0	$ 0
Long-term Debt, Maturities, Repayments of Principal in Year Two	0	0													0	0
Long-term Debt, Maturities, Repayments of Principal in Year Three	400,000,000	400,000,000													400,000,000	0
Long-term Debt, Maturities, Repayments of Principal in Year Four	680,000,000	680,000,000													600,000,000	80,000,000
Long-term Debt, Maturities, Repayments of Principal in Year Five	330,000,000	330,000,000													250,000,000	80,000,000
Long-term Debt, Maturities, Repayments of Principal After Year Five	2,790,000,000	2,790,000,000													2,550,000,000	240,000,000
Long-term Debt, Maturities, Total Repayments of Principal	4,200,000,000	4,200,000,000													3,800,000,000	400,000,000
Summary of compliance with debt covenants
Maximum Leverage Ratio				3.5	2.4
Minimum interest coverage ratio				3.0	5.4
Borrowings and Credit Arrangements (Textuals) [Abstract]
Total debt	4,249,000,000	4,249,000,000	4,256,000,000
Interest Margin above LIBOR, Minimum									0.875%		1.00%
Interest Margin above LIBOR, Maximum									1.475%		1.75%
Line of Credit Facility, Current Interest Rate								1.275%
Commitment fee percentage								0.225%
Restructuring charges remaining to be excluded from calculation of consolidated EBITDA								287,000,000
Legal payments and debt remaining to be excluded from calculation of consolidated EBITDA								2,278,000,000
Senior notes	3,800,000,000.00	3,800,000,000.00	4,200,000,000															600,000,000	450,000,000
Long-term Debt, Percentage Bearing Fixed Interest, Percentage Rate																		2.70%	4.10%
Line of Credit Facility, Maximum Borrowing Capacity						300,000,000	350,000,000		2,000,000,000
Maximum amount of proceeds from sale of finance receivables	306,000,000	306,000,000										214,000,000	21,000,000,000
Derecognized receivables From Sale Of Finance Receivables	166,000,000	166,000,000
De-recognized receivables			191,000,000									156,000,000		182,000,000
Average interest rate of de-recognized receivables		3.30%	1.60%
Average discounted rates of notes receivables												2.00%	2.00%	1.60%
Litigation and Debt Exclusion from EBITDA									2,300,000,000
Exclusion from EBITDA for Restructuring Charges									500,000,000
Unsecured Term Loan Facility, Interest Rate During Period										1.50%
Repayments of Long-term Debt										20,000,000
Long-term Debt, Gross											400,000,000
Repayments of Long-term Debt																				600,000,000	850,000,000
Payments of Debt Extinguishment Costs	70,000,000
Payment of Debt Extinguishment Costs, net of tax	44,000,000
Letters of Credit Outstanding, Amount	74,000,000	74,000,000	94,000,000
Accounts receivable 180 days past due																	78,000,000
Accounts receivable 365 days past due																	$ 28,000,000

XML

Changes in Other Comprehensive Income (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012	Dec. 31, 2012	Dec. 31, 2011
Changes in Other Comprehensive Income [Abstract]
Other Comprehensive Income (Loss), Unrealized Gain (Loss) on Derivatives Arising During Period, Tax	$ 16	$ 17	$ 53	$ 1
Accumulated Other Comprehensive Income (Loss), Foreign Currency Translation Adjustment, Net of Tax	(18)	(49)	(18)	(49)	(26)	(58)
Accumulated Other Comprehensive Income (Loss), Cumulative Changes in Net Gain (Loss) from Cash Flow Hedges, Effect Net of Tax	115	(31)	115	(31)	34	(48)
Accumulated Other Comprehensive Income (Loss), Pension and Other Postretirement Benefit Plans, Net of Tax	(41)	(32)	(41)	(32)	(41)	(32)
Accumulated Other Comprehensive Income (Loss), Net of Tax	56	(112)	56	(112)	(33)	(138)
Cumulative Translation Adjustment, Net of Tax, Period Increase (Decrease)			8	9
Other Comprehensive Income (Loss), Unrealized Gain (Loss) on Derivatives Arising During Period, Before Reclassifications, Net of Tax			91	0
Other Comprehensive Income (Loss), before Reclassifications, Net of Tax			99	9
Other Comprehensive Income (Loss), Unrealized Gain (Loss) on Derivatives Arising During Period, Reclassified from OCI, Net of Tax			(10)	17
Other Comprehensive Income (Loss), Reclassifications out of OCI, Net of Tax			(10)	17
Other Comprehensive Income (Loss), Foreign Currency Transaction and Translation Adjustment, Net of Tax	10	2	8	9
Other Comprehensive Income (Loss), Unrealized Gain (Loss) on Derivatives Arising During Period, Net of Tax	(38)	(27)	81	17
Other Comprehensive Income (Loss), Net of Tax	(28)	(25)	89	26
Other Comprehensive Income (Loss), Unrealized Gain (Loss) on Derivatives Arising Reclassed from OCI, Tax	$ 6	$ 1	$ 5	$ 9

XML

Condensed Consolidated Statements of Comprehensive Income (Unaudited) (USD $) In Millions, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012
Net income (loss)	$ (5)	$ (664)	$ (229)	$ (4,129)
Foreign currency translation adjustment	10	2	8	9
Net change in unrealized gains and losses on derivative financial instruments, net of tax	(38)	(27)	81	17
Total other comprehensive income (loss)	(28)	(25)	89	26
Total comprehensive income (loss)	$ (33)	$ (689)	$ (140)	$ (4,103)

XML

Supplemental Balance Sheet Information

9 Months Ended

Sep. 30, 2013

Supplemental Balance Sheet Information [Abstract]

SUPPLEMENTAL BALANCE SHEET INFORMATION

SUPPLEMENTAL BALANCE SHEET INFORMATION

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

Trade accounts receivable, net

	As of
(in millions)	September 30, 2013			December 31, 2012
Accounts receivable	$	1,360		$	1,336
Less: allowance for doubtful accounts	(85		)	(88		)
Less: allowance for sales returns	(37		)	(31		)
	$	1,238		$	1,217

The following is a rollforward of our allowance for doubtful accounts for the third quarter and first nine months of 2013 and 2012:

	Three Months Ended September 30,						Nine Months Ended September 30,
(in millions)	2013			2012			2013			2012
Beginning balance	$	84		$	83		$	88		$	81
Net (credits) charges to expenses	2			1			7			7
Utilization of allowances	(1		)	(2		)	(10		)	(6		)
Ending balance	$	85		$	82		$	85		$	82

Inventories

	As of
(in millions)	September 30, 2013		December 31, 2012
Finished goods	$	592	$	598
Work-in-process	87		70
Raw materials	216		216
	$	895	$	884

Property, plant and equipment, net

	As of
(in millions)	September 30, 2013		December 31, 2012
Land	$	81	$	81
Buildings and improvements	912		873
Equipment, furniture and fixtures	2,446		2,348
Capital in progress	177		218
	3,616		3,520
Less: accumulated depreciation	2,086		1,956
	$	1,530	$	1,564

Depreciation expense was $72 million for the third quarter of 2013 and $70 million for the third quarter of 2012, $199 million for the first nine months of 2013, and $205 million for the first nine months of 2012.

Accrued expenses

	As of
(in millions)	September 30, 2013		December 31, 2012
Payroll and related liabilities	$	450	$	452
Accrued contingent consideration	170		120
Legal reserves	159		100
Other	567		612
	$	1,346	$	1,284

Other long-term liabilities

	As of
(in millions)	September 30, 2013		December 31, 2012
Accrued income taxes	$	1,274	$	1,215
Accrued contingent consideration	366		543
Legal reserves	524		391
Other long-term liabilities	419		398
	$	2,583	$	2,547

Accrued warranties

We offer warranties on certain of our product offerings. The majority of our warranty liability as of September 30, 2013 related to implantable devices offered by our CRM business, which include defibrillator and pacemaker systems. Our CRM products come with a standard limited warranty covering the replacement of these devices. We offer a full warranty for a portion of the period post-implant, and a partial warranty over the substantial remainder of the useful life of the product. We estimate the costs that we may incur under our warranty programs based on the number of units sold, historical and anticipated rates of warranty claims and cost per claim, and record a liability equal to these estimated costs as cost of products sold at the time the product sale occurs. We reassess the adequacy of our recorded warranty liabilities on a quarterly basis and adjust these amounts as necessary. The current portion of our warranty accrual is included in other accrued expenses in the table above and the non-current portion of our warranty accrual is included in other long-term liabilities in the table above. Changes in our product warranty accrual during the first nine months of 2013 and 2012 consisted of the following (in millions):

	Nine Months Ended September 30,
	2013			2012
Beginning Balance	$	26		$	30
Provision	11			6
Settlements/reversals	(9		)	(9		)
Ending Balance	$	28		$	27

XML

Condensed Consolidated Balance Sheets (Parenthetical) (USD $)	Sep. 30, 2013	Dec. 31, 2012
Stockholders' equity
Preferred stock, par value	$ 0.01	$ 0.01
Preferred stock, shares authorized	50,000,000	50,000,000
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Common stock, par value	$ 0.01	$ 0.01
Common stock, shares authorized	2,000,000,000	2,000,000,000
Common stock, shares issued	1,557,892,509	1,542,347,188
Common stock, shares outstanding	1,338,836,032	1,355,711,656
Treasury shares	219,056,477	186,635,532

XML

Condensed Consolidated Statements of Operations (Unaudited) (USD $) In Millions, except Per Share data, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012
Net sales	$ 1,735	$ 1,735	$ 5,305	$ 5,428
Cost of products sold	510	558	1,618	1,767
Gross profit	1,225	1,177	3,687	3,661
Operating expenses:
Selling, general and administrative expenses	658	589	1,950	1,895
Research and development expenses	217	220	644	648
Royalty expense	28	29	115	125
Amortization expense	101	99	305	294
Goodwill impairment charges	0	748	423	4,350
Intangible asset impairment charges	0	13	53	142
Contingent consideration (benefit) expense	23	(20)	(18)	(9)
Restructuring charges	19	54	55	93
Litigation-related charges	76	50	206	119
Gain on divestiture	0	(11)	(40)	(11)
Operating expenses	1,122	1,771	3,693	7,646
Operating income (loss)	103	(594)	(6)	(3,985)
Other income (expense):
Interest expense	(137)	(65)	(266)	(197)
Other, net	(6)	(4)	(10)	23
Income (loss) before income taxes	(40)	(663)	(282)	(4,159)
Income tax expense (benefit)	(35)	1	(53)	(30)
Net income (loss)	$ (5)	$ (664)	$ (229)	$ (4,129)
Net income (loss) per common share — basic	$ 0.00	$ (0.48)	$ (0.17)	$ (2.91)
Net income (loss) per common share — assuming dilution	$ 0.00	$ (0.48)	$ (0.17)	$ (2.91)
Weighted-average shares outstanding
Basic	1,340.3	1,392.5	1,345.2	1,420.3
Assuming dilution	1,340.3	1,392.5	1,345.2	1,420.3

XML

Weighted Average Shares Outstanding (Tables)

9 Months Ended

Sep. 30, 2013

Earnings Per Share (Tables) [Abstract]

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

	Three Months Ended September 30,				Nine Months Ended September 30,
(in millions)	2013		2012		2013		2012
Weighted average shares outstanding - basic	1,340.3		1,392.5		1,345.2		1,420.3
Net effect of common stock equivalents	—	*	—	**	—	*	—	**
Weighted average shares outstanding - assuming dilution	1,340.3		1,392.5		1,345.2		1,420.3

XML

Goodwill and Other Intangible Assets Goodwill (Tables)

9 Months Ended

Sep. 30, 2013

Goodwill [Line Items]

Schedule of Goodwill [Table Text Block]

The following represents our goodwill balance by new global reportable segment. We restated the prior period information to conform to the current presentation:

(in millions)	Cardiovascular		Rhythm Management			MedSurg		Total
Balance as of December 31, 2012 (restated)	$	3,249	$	577		$	2,147	$	5,973
Purchase price adjustments	3		—			—		3
Goodwill acquired	—		—			—		—
Goodwill written off	—		(423		)	—		(423		)
Balance as of September 30, 2013	$	3,252	$	154		$	2,147	$	5,553

The following is a rollforward of accumulated goodwill write-offs by global reportable segment. We restated the prior period information to conform to the current period presentation:

(in millions)	Cardiovascular			Rhythm Management			MedSurg			Total
Accumulated write-offs as of December 31, 2012 (restated)	$	(1,479	)	$	(6,537	)	$	(1,461	)	$	(9,477	)
Goodwill written off	—			(423		)	—			(423		)
Accumulated write-offs as of September 30, 2013	$	(1,479	)	$	(6,960	)	$	(1,461	)	$	(9,900	)

Goodwill

The gross carrying amount of goodwill and other intangible assets and the related accumulated amortization for intangible assets subject to amortization and accumulated write-offs of goodwill as of September 30, 2013 and December 31, 2012 is as follows:

	As of
	September 30, 2013					December 31, 2012
	Gross Carrying		Accumulated Amortization/			Gross Carrying		Accumulated Amortization/
(in millions)	Amount		Write-offs			Amount		Write-offs
Amortizable intangible assets
Technology-related	$	8,118	$	(3,254	)	$	8,020	$	(3,005	)
Patents	504		(322		)	559		(352		)
Other intangible assets	815		(465		)	810		(428		)
	$	9,437	$	(4,041	)	$	9,389	$	(3,785	)
Unamortizable intangible assets
Goodwill	$	15,453	$	(9,900	)	$	15,450	$	(9,477	)
Technology-related	197		—			242		—
	$	15,650	$	(9,900	)	$	15,692	$	(9,477	)

Impairment of Intangible Assets [Member]

Goodwill [Line Items]

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

In-process research and development fair value is measured using projected revenues, projected expenses, discount rates, and

probability of expected launch. The nonrecurring Level 3 fair value measurements of the impairment analysis performed in the second quarter of 2013 included the following significant unobservable inputs:

Intangible Asset	Valuation Date	Fair Value	Valuation Technique	Unobservable Input	Rate
In-Process R&D	June 30, 2013	$178 million	Income Approach - Excess Earnings Method	Discount Rate	16.5%

XML

Segment Reporting (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013 reportablesegments	Sep. 30, 2012
Net sales
Net sales allocated to reportable segments	$ 1,779	$ 1,706	$ 5,363	$ 5,338
Segment Reporting, Sales from Divested Businesses	2	32	56	91
Impact of foreign currency fluctuations	(46)	(3)	(114)	(1)
Net sales	1,735	1,735	5,305	5,428
Operating Income Allocated to Reportable Segments	439	402	1,261	1,231
Amortization expense	(101)	(99)	(305)	(294)
Operating (loss) income allocated to reportable segments	103	(594)	(6)	(3,985)
Other expense, net	(143)	(69)	(276)	(174)
Income (loss) before income taxes	(40)	(663)	(282)	(4,159)
Segment Reporting (Textuals) [Abstract]
Number of reportable segments			3
Global Interventional Cardiology (IC) Reporting Unit [Member]
Net sales
Net sales allocated to reportable segments	487	496	1,538	1,646
Global Peripheral Interventions (PI) Reporting Unit [Member]
Net sales
Net sales allocated to reportable segments	202	188	601	571
Cardiovascular [Member]
Net sales
Net sales allocated to reportable segments	689	684	2,139	2,217
Operating Income Allocated to Reportable Segments	184	175	548	561
Global CRM Reporting Unit [Member]
Net sales
Net sales allocated to reportable segments	474	467	1,445	1,466
Global Electrophysiology (EP) Reporting Unit [Member]
Net sales
Net sales allocated to reportable segments	35	35	106	109
Rhythm Management [Member]
Net sales
Net sales allocated to reportable segments	509	502	1,551	1,575
Operating Income Allocated to Reportable Segments	68	58	192	218
Global Endoscopy (Endo) Reporting Unit [Member]
Net sales
Net sales allocated to reportable segments	331	308	979	916
Global Urology (Uro) Reporting Unit [Member]
Net sales
Net sales allocated to reportable segments	134	124	378	367
Global Neuromodulation (NM) Reporting Unit [Member]
Net sales
Net sales allocated to reportable segments	116	88	316	263
MedSurg [Member]
Net sales
Net sales allocated to reportable segments	581	520	1,673	1,546
Operating Income Allocated to Reportable Segments	187	169	521	452
Corporate expenses and currency exchange [Member]
Net sales
Operating (Loss) Income Unallocated to Segment	(103)	(58)	(251)	(214)
Special Charges [Member]
Net sales
Operating (Loss) Income Unallocated to Segment	$ (132)	$ (839)	$ (711)	$ (4,708)

XML

Restructuring Related Activities (Details in Tables) (USD $)	3 Months Ended		9 Months Ended		53 Months Ended	56 Months Ended	3 Months Ended		9 Months Ended		53 Months Ended	56 Months Ended	3 Months Ended		9 Months Ended		23 Months Ended	26 Months Ended	3 Months Ended		9 Months Ended		41 Months Ended	3 Months Ended		9 Months Ended		53 Months Ended		3 Months Ended		9 Months Ended		53 Months Ended		3 Months Ended		9 Months Ended		23 Months Ended		3 Months Ended		9 Months Ended		41 Months Ended		3 Months Ended		9 Months Ended		53 Months Ended	3 Months Ended		9 Months Ended		53 Months Ended	3 Months Ended		9 Months Ended		23 Months Ended	3 Months Ended	9 Months Ended		41 Months Ended	3 Months Ended		9 Months Ended		53 Months Ended	3 Months Ended		9 Months Ended		53 Months Ended	3 Months Ended		9 Months Ended		23 Months Ended	3 Months Ended	9 Months Ended	41 Months Ended	3 Months Ended		9 Months Ended		53 Months Ended		3 Months Ended		9 Months Ended		53 Months Ended	3 Months Ended		9 Months Ended		23 Months Ended	3 Months Ended		9 Months Ended		41 Months Ended	3 Months Ended		9 Months Ended		53 Months Ended	3 Months Ended		9 Months Ended		53 Months Ended	3 Months Ended		9 Months Ended		23 Months Ended	3 Months Ended	9 Months Ended	41 Months Ended	9 Months Ended							3 Months Ended		9 Months Ended				3 Months Ended		9 Months Ended				3 Months Ended		9 Months Ended		3 Months Ended		9 Months Ended		3 Months Ended		9 Months Ended		3 Months Ended		9 Months Ended		3 Months Ended		9 Months Ended		3 Months Ended		9 Months Ended		3 Months Ended		9 Months Ended		3 Months Ended		9 Months Ended		3 Months Ended		9 Months Ended		3 Months Ended		9 Months Ended		3 Months Ended		9 Months Ended		3 Months Ended		9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012	Jun. 30, 2013	Sep. 30, 2013	Sep. 30, 2013 Plant Network Optimization [Member]	Sep. 30, 2012 Plant Network Optimization [Member]	Sep. 30, 2013 Plant Network Optimization [Member]	Sep. 30, 2012 Plant Network Optimization [Member]	Jun. 30, 2013 Plant Network Optimization [Member]	Sep. 30, 2013 Plant Network Optimization [Member]	Sep. 30, 2013 2011 Restructuring Plan [Member]	Sep. 30, 2012 2011 Restructuring Plan [Member]	Sep. 30, 2013 2011 Restructuring Plan [Member]	Sep. 30, 2012 2011 Restructuring Plan [Member]	Jun. 30, 2013 2011 Restructuring Plan [Member]	Sep. 30, 2013 2011 Restructuring Plan [Member]	Sep. 30, 2013 2010 Restructuring Plan [Member]	Sep. 30, 2012 2010 Restructuring Plan [Member]	Sep. 30, 2013 2010 Restructuring Plan [Member]	Sep. 30, 2012 2010 Restructuring Plan [Member]	Jun. 30, 2013 2010 Restructuring Plan [Member]	Sep. 30, 2013 Termination Benefits [Member]	Sep. 30, 2012 Termination Benefits [Member]	Sep. 30, 2013 Termination Benefits [Member]	Sep. 30, 2012 Termination Benefits [Member]	Jun. 30, 2013 Termination Benefits [Member]	Dec. 31, 2012 Termination Benefits [Member]	Sep. 30, 2013 Termination Benefits [Member] Plant Network Optimization [Member]	Sep. 30, 2012 Termination Benefits [Member] Plant Network Optimization [Member]	Sep. 30, 2013 Termination Benefits [Member] Plant Network Optimization [Member]	Sep. 30, 2012 Termination Benefits [Member] Plant Network Optimization [Member]	Jun. 30, 2013 Termination Benefits [Member] Plant Network Optimization [Member]	Dec. 31, 2012 Termination Benefits [Member] Plant Network Optimization [Member]	Sep. 30, 2013 Termination Benefits [Member] 2011 Restructuring Plan [Member]	Sep. 30, 2012 Termination Benefits [Member] 2011 Restructuring Plan [Member]	Sep. 30, 2013 Termination Benefits [Member] 2011 Restructuring Plan [Member]	Sep. 30, 2012 Termination Benefits [Member] 2011 Restructuring Plan [Member]	Jun. 30, 2013 Termination Benefits [Member] 2011 Restructuring Plan [Member]	Dec. 31, 2012 Termination Benefits [Member] 2011 Restructuring Plan [Member]	Sep. 30, 2013 Termination Benefits [Member] 2010 Restructuring Plan [Member]	Sep. 30, 2012 Termination Benefits [Member] 2010 Restructuring Plan [Member]	Sep. 30, 2013 Termination Benefits [Member] 2010 Restructuring Plan [Member]	Sep. 30, 2012 Termination Benefits [Member] 2010 Restructuring Plan [Member]	Jun. 30, 2013 Termination Benefits [Member] 2010 Restructuring Plan [Member]	Dec. 31, 2012 Termination Benefits [Member] 2010 Restructuring Plan [Member]	Sep. 30, 2013 Accelerated depreciation [Member]	Sep. 30, 2012 Accelerated depreciation [Member]	Sep. 30, 2013 Accelerated depreciation [Member]	Sep. 30, 2012 Accelerated depreciation [Member]	Jun. 30, 2013 Accelerated depreciation [Member]	Sep. 30, 2013 Accelerated depreciation [Member] Plant Network Optimization [Member]	Sep. 30, 2012 Accelerated depreciation [Member] Plant Network Optimization [Member]	Sep. 30, 2013 Accelerated depreciation [Member] Plant Network Optimization [Member]	Sep. 30, 2012 Accelerated depreciation [Member] Plant Network Optimization [Member]	Jun. 30, 2013 Accelerated depreciation [Member] Plant Network Optimization [Member]	Sep. 30, 2013 Accelerated depreciation [Member] 2011 Restructuring Plan [Member]	Sep. 30, 2012 Accelerated depreciation [Member] 2011 Restructuring Plan [Member]	Sep. 30, 2013 Accelerated depreciation [Member] 2011 Restructuring Plan [Member]	Sep. 30, 2012 Accelerated depreciation [Member] 2011 Restructuring Plan [Member]	Jun. 30, 2013 Accelerated depreciation [Member] 2011 Restructuring Plan [Member]	Sep. 30, 2013 Accelerated depreciation [Member] 2010 Restructuring Plan [Member]	Sep. 30, 2013 Accelerated depreciation [Member] 2010 Restructuring Plan [Member]	Sep. 30, 2012 Accelerated depreciation [Member] 2010 Restructuring Plan [Member]	Jun. 30, 2013 Accelerated depreciation [Member] 2010 Restructuring Plan [Member]	Sep. 30, 2013 Transfer costs [Member]	Sep. 30, 2012 Transfer costs [Member]	Sep. 30, 2013 Transfer costs [Member]	Sep. 30, 2012 Transfer costs [Member]	Jun. 30, 2013 Transfer costs [Member]	Sep. 30, 2013 Transfer costs [Member] Plant Network Optimization [Member]	Sep. 30, 2012 Transfer costs [Member] Plant Network Optimization [Member]	Sep. 30, 2013 Transfer costs [Member] Plant Network Optimization [Member]	Sep. 30, 2012 Transfer costs [Member] Plant Network Optimization [Member]	Jun. 30, 2013 Transfer costs [Member] Plant Network Optimization [Member]	Sep. 30, 2013 Transfer costs [Member] 2011 Restructuring Plan [Member]	Sep. 30, 2012 Transfer costs [Member] 2011 Restructuring Plan [Member]	Sep. 30, 2013 Transfer costs [Member] 2011 Restructuring Plan [Member]	Sep. 30, 2012 Transfer costs [Member] 2011 Restructuring Plan [Member]	Jun. 30, 2013 Transfer costs [Member] 2011 Restructuring Plan [Member]	Sep. 30, 2013 Transfer costs [Member] 2010 Restructuring Plan [Member]	Sep. 30, 2013 Transfer costs [Member] 2010 Restructuring Plan [Member]	Jun. 30, 2013 Transfer costs [Member] 2010 Restructuring Plan [Member]	Sep. 30, 2013 Other [Member]	Sep. 30, 2012 Other [Member]	Sep. 30, 2013 Other [Member]	Sep. 30, 2012 Other [Member]	Jun. 30, 2013 Other [Member]	Dec. 31, 2012 Other [Member]	Sep. 30, 2013 Other [Member] Plant Network Optimization [Member]	Sep. 30, 2012 Other [Member] Plant Network Optimization [Member]	Sep. 30, 2013 Other [Member] Plant Network Optimization [Member]	Sep. 30, 2012 Other [Member] Plant Network Optimization [Member]	Jun. 30, 2013 Other [Member] Plant Network Optimization [Member]	Sep. 30, 2013 Other [Member] 2011 Restructuring Plan [Member]	Sep. 30, 2012 Other [Member] 2011 Restructuring Plan [Member]	Sep. 30, 2013 Other [Member] 2011 Restructuring Plan [Member]	Sep. 30, 2012 Other [Member] 2011 Restructuring Plan [Member]	Jun. 30, 2013 Other [Member] 2011 Restructuring Plan [Member]	Sep. 30, 2013 Other [Member] 2010 Restructuring Plan [Member]	Sep. 30, 2012 Other [Member] 2010 Restructuring Plan [Member]	Sep. 30, 2013 Other [Member] 2010 Restructuring Plan [Member]	Sep. 30, 2012 Other [Member] 2010 Restructuring Plan [Member]	Jun. 30, 2013 Other [Member] 2010 Restructuring Plan [Member]	Sep. 30, 2013 Impairment of an asset in value [Member]	Sep. 30, 2012 Impairment of an asset in value [Member]	Sep. 30, 2013 Impairment of an asset in value [Member]	Sep. 30, 2012 Impairment of an asset in value [Member]	Jun. 30, 2013 Impairment of an asset in value [Member]	Sep. 30, 2013 Impairment of an asset in value [Member] Plant Network Optimization [Member]	Sep. 30, 2012 Impairment of an asset in value [Member] Plant Network Optimization [Member]	Sep. 30, 2013 Impairment of an asset in value [Member] Plant Network Optimization [Member]	Sep. 30, 2012 Impairment of an asset in value [Member] Plant Network Optimization [Member]	Jun. 30, 2013 Impairment of an asset in value [Member] Plant Network Optimization [Member]	Sep. 30, 2013 Impairment of an asset in value [Member] 2011 Restructuring Plan [Member]	Sep. 30, 2012 Impairment of an asset in value [Member] 2011 Restructuring Plan [Member]	Sep. 30, 2013 Impairment of an asset in value [Member] 2011 Restructuring Plan [Member]	Sep. 30, 2012 Impairment of an asset in value [Member] 2011 Restructuring Plan [Member]	Jun. 30, 2013 Impairment of an asset in value [Member] 2011 Restructuring Plan [Member]	Sep. 30, 2013 Impairment of an asset in value [Member] 2010 Restructuring Plan [Member]	Sep. 30, 2013 Impairment of an asset in value [Member] 2010 Restructuring Plan [Member]	Jun. 30, 2013 Impairment of an asset in value [Member] 2010 Restructuring Plan [Member]	Sep. 30, 2013 Restructuring Plan [Member] Termination Benefits [Member] Plant Network Optimization [Member]	Sep. 30, 2013 Restructuring Plan [Member] Termination Benefits [Member] 2010 Restructuring Plan [Member]	Sep. 30, 2013 Restructuring Plan [Member] Other [Member] 2010 Restructuring Plan [Member]	Sep. 30, 2013 Restructuring Plan [Member] Impairment of an asset in value [Member] 2010 Restructuring Plan [Member]	Sep. 30, 2013 Restructuring Related To Plan [Member] Accelerated depreciation [Member] Plant Network Optimization [Member]	Sep. 30, 2013 Restructuring Related To Plan [Member] Transfer costs [Member] Plant Network Optimization [Member]	Sep. 30, 2013 Restructuring Related To Plan [Member] Other [Member] 2010 Restructuring Plan [Member]	Sep. 30, 2013 Minimum [Member] Plant Network Optimization [Member]	Sep. 30, 2013 Minimum [Member] 2011 Restructuring Plan [Member]	Sep. 30, 2013 Minimum [Member] 2011 Restructuring Plan [Member]	Sep. 30, 2013 Minimum [Member] Restructuring Plan [Member] Termination Benefits [Member] 2011 Restructuring Plan [Member]	Sep. 30, 2013 Minimum [Member] Restructuring Plan [Member] Other [Member] 2011 Restructuring Plan [Member]	Sep. 30, 2013 Minimum [Member] Restructuring Related To Plan [Member] Other [Member] 2011 Restructuring Plan [Member]	Sep. 30, 2013 Maximum [Member] Plant Network Optimization [Member]	Sep. 30, 2013 Maximum [Member] 2011 Restructuring Plan [Member]	Sep. 30, 2013 Maximum [Member] 2011 Restructuring Plan [Member]	Sep. 30, 2013 Maximum [Member] Restructuring Plan [Member] Termination Benefits [Member] 2011 Restructuring Plan [Member]	Sep. 30, 2013 Maximum [Member] Restructuring Plan [Member] Other [Member] 2011 Restructuring Plan [Member]	Sep. 30, 2013 Maximum [Member] Restructuring Related To Plan [Member] Other [Member] 2011 Restructuring Plan [Member]	Sep. 30, 2013 Cost of products sold [Member]	Sep. 30, 2012 Cost of products sold [Member]	Sep. 30, 2013 Cost of products sold [Member]	Sep. 30, 2012 Cost of products sold [Member]	Sep. 30, 2013 Cost of products sold [Member] Termination Benefits [Member]	Sep. 30, 2012 Cost of products sold [Member] Termination Benefits [Member]	Sep. 30, 2013 Cost of products sold [Member] Termination Benefits [Member]	Sep. 30, 2012 Cost of products sold [Member] Termination Benefits [Member]	Sep. 30, 2013 Cost of products sold [Member] Accelerated depreciation [Member]	Sep. 30, 2012 Cost of products sold [Member] Accelerated depreciation [Member]	Sep. 30, 2013 Cost of products sold [Member] Accelerated depreciation [Member]	Sep. 30, 2012 Cost of products sold [Member] Accelerated depreciation [Member]	Sep. 30, 2013 Cost of products sold [Member] Transfer costs [Member]	Sep. 30, 2012 Cost of products sold [Member] Transfer costs [Member]	Sep. 30, 2013 Cost of products sold [Member] Transfer costs [Member]	Sep. 30, 2012 Cost of products sold [Member] Transfer costs [Member]	Sep. 30, 2013 Cost of products sold [Member] Other [Member]	Sep. 30, 2012 Cost of products sold [Member] Other [Member]	Sep. 30, 2013 Cost of products sold [Member] Other [Member]	Sep. 30, 2012 Cost of products sold [Member] Other [Member]	Sep. 30, 2013 Cost of products sold [Member] Impairment of an asset in value [Member]	Sep. 30, 2012 Cost of products sold [Member] Impairment of an asset in value [Member]	Sep. 30, 2013 Cost of products sold [Member] Impairment of an asset in value [Member]	Sep. 30, 2012 Cost of products sold [Member] Impairment of an asset in value [Member]	Sep. 30, 2013 Selling, General and Administrative Expenses [Member]	Sep. 30, 2012 Selling, General and Administrative Expenses [Member]	Sep. 30, 2013 Selling, General and Administrative Expenses [Member]	Sep. 30, 2012 Selling, General and Administrative Expenses [Member]	Sep. 30, 2013 Selling, General and Administrative Expenses [Member] Termination Benefits [Member]	Sep. 30, 2012 Selling, General and Administrative Expenses [Member] Termination Benefits [Member]	Sep. 30, 2013 Selling, General and Administrative Expenses [Member] Termination Benefits [Member]	Sep. 30, 2012 Selling, General and Administrative Expenses [Member] Termination Benefits [Member]	Sep. 30, 2013 Selling, General and Administrative Expenses [Member] Accelerated depreciation [Member]	Sep. 30, 2012 Selling, General and Administrative Expenses [Member] Accelerated depreciation [Member]	Sep. 30, 2013 Selling, General and Administrative Expenses [Member] Accelerated depreciation [Member]	Sep. 30, 2012 Selling, General and Administrative Expenses [Member] Accelerated depreciation [Member]	Sep. 30, 2013 Selling, General and Administrative Expenses [Member] Transfer costs [Member]	Sep. 30, 2012 Selling, General and Administrative Expenses [Member] Transfer costs [Member]	Sep. 30, 2013 Selling, General and Administrative Expenses [Member] Transfer costs [Member]	Sep. 30, 2012 Selling, General and Administrative Expenses [Member] Transfer costs [Member]	Sep. 30, 2013 Selling, General and Administrative Expenses [Member] Other [Member]	Sep. 30, 2012 Selling, General and Administrative Expenses [Member] Other [Member]	Sep. 30, 2013 Selling, General and Administrative Expenses [Member] Other [Member]	Sep. 30, 2012 Selling, General and Administrative Expenses [Member] Other [Member]	Sep. 30, 2013 Selling, General and Administrative Expenses [Member] Impairment of an asset in value [Member]	Sep. 30, 2012 Selling, General and Administrative Expenses [Member] Impairment of an asset in value [Member]	Sep. 30, 2013 Selling, General and Administrative Expenses [Member] Impairment of an asset in value [Member]	Sep. 30, 2012 Selling, General and Administrative Expenses [Member] Impairment of an asset in value [Member]
Restructuring and Related Cost [Line Items]
Restructuring Reserve																								$ 21,000,000		$ 21,000,000			$ 48,000,000	$ 4,000,000		$ 4,000,000			$ 9,000,000	$ 17,000,000		$ 17,000,000			$ 36,000,000	$ 0		$ 0			$ 3,000,000																																						$ 10,000,000		$ 10,000,000			$ 5,000,000
Restructuring Charges Incurred to Date					411,000,000						31,000,000						228,000,000						152,000,000					251,000,000						31,000,000						130,000,000						90,000,000																																											149,000,000						0					98,000,000					51,000,000					11,000,000					0					0			11,000,000
Restructuring-related Costs Incurred to Date					136,000,000						96,000,000						32,000,000						8,000,000																													22,000,000					22,000,000					0				0					74,000,000					74,000,000					0			0					40,000,000						0					32,000,000					8,000,000
Restructuring Charges	19,000,000	54,000,000	55,000,000	93,000,000	411,000,000																			5,000,000	44,000,000	26,000,000	64,000,000																					0	0	0	0																0	0	0	0															14,000,000	10,000,000	45,000,000	29,000,000																		0	0	(16,000,000)	0
Restructuring Related Expenses	7,000,000	4,000,000	16,000,000	15,000,000	136,000,000																			0	0	0	0																					1,000,000	0	2,000,000	0																0	1,000,000	0	7,000,000															6,000,000	3,000,000	14,000,000	8,000,000																		0	0	0	0																																		0	1,000,000	0	7,000,000	0	0	0	0	0	0	0	0	0	1,000,000	0	7,000,000	0	0	0	0	0	0	0	0	7,000,000	3,000,000	16,000,000	8,000,000	0	0	0	0	1,000,000	0	2,000,000	0	0	0	0	0	6,000,000	3,000,000	14,000,000	8,000,000	0	0	0	0
Restructuring and Related Cost, Cost Incurred to Date					547,000,000						127,000,000	127,000,000					260,000,000	260,000,000					160,000,000
Impact of restructuring costs on the accompanying financial statements
Restructuring plan estimated future cash outflow																			145,000,000																																																																																																																105,000,000	270,000,000					110,000,000	300,000,000
Cash payments associated with restructuring initiatives	36,000,000		107,000,000		483,000,000	483,000,000	0		1,000,000		103,000,000	103,000,000	36,000,000		106,000,000		235,000,000	235,000,000	0		0		145,000,000	16,000,000		50,000,000		233,000,000		0		1,000,000		30,000,000		16,000,000		49,000,000		113,000,000		0		0		90,000,000																					0		0		73,000,000	0		0		73,000,000	0		0		0	0	0	0	20,000,000		57,000,000		177,000,000		0		0		0	20,000,000		57,000,000		122,000,000	0		0		55,000,000
Restructuring and Related Cost, Incurred Cost	26,000,000	58,000,000	71,000,000	108,000,000			0	0	(4,000,000)	6,000,000			26,000,000	56,000,000	75,000,000	99,000,000			0	2,000,000	0	3,000,000		5,000,000	44,000,000	26,000,000	64,000,000			0	(1,000,000)	(4,000,000)	(1,000,000)			5,000,000	43,000,000	30,000,000	65,000,000			0	2,000,000	0	0			1,000,000	0	2,000,000	0		0	0	0	0		1,000,000	0	2,000,000	0		0	0	0		0	1,000,000	0	7,000,000		0	1,000,000	0	7,000,000		0	0	0	0		0	0		20,000,000	13,000,000	59,000,000	37,000,000			0	0	0	0		20,000,000	13,000,000	59,000,000	34,000,000		0	0	0	3,000,000		0	0	(16,000,000)	0		0	0	0	0		0	0	(16,000,000)	0		0	0
Expected total costs associated with the plan							130,000,000		130,000,000										160,000,000		160,000,000																																																																																																							33,000,000	90,000,000	51,000,000	11,000,000	22,000,000	75,000,000	8,000,000		300,000,000	300,000,000	160,000,000	100,000,000	40,000,000		355,000,000	355,000,000	185,000,000	120,000,000	50,000,000
Restructuring Reserve, Settled with Cash																										50,000,000						1,000,000						49,000,000						0
Adjustments to the restructuring reserve																										$ (3,000,000)																		$ (3,000,000)

XML

Fair Value Measurements (Details in Narrative) (USD $) In Millions, unless otherwise specified	3 Months Ended					9 Months Ended
	Sep. 30, 2013	Jun. 30, 2013	Mar. 31, 2013	Sep. 30, 2012	Jun. 30, 2012	Sep. 30, 2013	Sep. 30, 2012	Dec. 31, 2012
Derivative Instruments, Gain (Loss) [Line Items]
Intangible asset impairment charges	$ 0	$ 53		$ 13		$ 53	$ 142
Goodwill impairment charges	0		423	748	3,602	423	4,350
Unamortized losses on senior notes	3					3		3
Unrealized gain on interest rate cash flow hedges, pretax, AOCI	3					3		4
reduction of interest expense, related to amortization of previously terminated interest rate contracts	3					8
Notional Amount of Foreign Currency Cash Flow Hedge Derivatives	2,647					2,647		2,469
Foreign Currency Cash Flow Hedge Gain (Loss) Reclassified to Earnings, Net	15			(3)		15	(29)
Gain (Loss) in AOCI for effective portion of cash flow hedges	113					113		31
Foreign Currency Cash Flow Hedge Gain (Loss) to be Reclassified During Next 12 Months	58					58
Foreign Currency Derivative Instruments Not Designated as Hedging Instruments at Fair Value, Net	1,757					1,757		1,942
Unamortized gains on senior notes	56					56		64
Interest Rate Cash Flow Hedge Gain (Loss) to be Reclassified During Next 12 Months, Net	9					9
Time Deposits, at Carrying Value	281					281
Cash	135					135		168
Cost-method Investments, Aggregate Carrying Amount	22					22		13
Other Asset Impairment Charges	4
Asset Impairment Charges						476
Debt Instrument, Fair Value Disclosure	4,599					4,599		4,793
Fair Value, Measurements, Recurring [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Money Market Funds, at Carrying Value	155					155		39
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 1 [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Money Market Funds, at Carrying Value	$ 155					$ 155		$ 39

XML

Fair Value Measurements (Details in Tables) (USD $) In Millions, unless otherwise specified																	3 Months Ended		9 Months Ended		3 Months Ended		9 Months Ended		3 Months Ended		9 Months Ended
	Sep. 30, 2013	Dec. 31, 2012	Sep. 30, 2013 Designated as Hedging Instrument [Member]	Dec. 31, 2012 Designated as Hedging Instrument [Member]	Sep. 30, 2013 Designated as Hedging Instrument [Member] Prepaid And Other Current Assets [Member]	Dec. 31, 2012 Designated as Hedging Instrument [Member] Prepaid And Other Current Assets [Member]	Sep. 30, 2013 Designated as Hedging Instrument [Member] Other Long Term Assets [Member]	Dec. 31, 2012 Designated as Hedging Instrument [Member] Other Long Term Assets [Member]	Sep. 30, 2013 Designated as Hedging Instrument [Member] Other current liabilities [Member]	Dec. 31, 2012 Designated as Hedging Instrument [Member] Other current liabilities [Member]	Sep. 30, 2013 Designated as Hedging Instrument [Member] Other Long Term Liabilities [Member]	Dec. 31, 2012 Designated as Hedging Instrument [Member] Other Long Term Liabilities [Member]	Sep. 30, 2013 Not Designated as Hedging Instrument [Member] Prepaid And Other Current Assets [Member]	Dec. 31, 2012 Not Designated as Hedging Instrument [Member] Prepaid And Other Current Assets [Member]	Sep. 30, 2013 Not Designated as Hedging Instrument [Member] Other current liabilities [Member]	Dec. 31, 2012 Not Designated as Hedging Instrument [Member] Other current liabilities [Member]	Sep. 30, 2013 Other, net [Member] Not Designated as Hedging Instrument [Member]	Sep. 30, 2012 Other, net [Member] Not Designated as Hedging Instrument [Member]	Sep. 30, 2013 Other, net [Member] Not Designated as Hedging Instrument [Member]	Sep. 30, 2012 Other, net [Member] Not Designated as Hedging Instrument [Member]	Sep. 30, 2013 Cash Flow Hedging [Member] Designated as Hedging Instrument [Member]	Sep. 30, 2012 Cash Flow Hedging [Member] Designated as Hedging Instrument [Member]	Sep. 30, 2013 Cash Flow Hedging [Member] Designated as Hedging Instrument [Member]	Sep. 30, 2012 Cash Flow Hedging [Member] Designated as Hedging Instrument [Member]	Sep. 30, 2013 Cash Flow Hedging [Member] Cost of products sold [Member] Foreign Exchange Contract [Member] Designated as Hedging Instrument [Member]	Sep. 30, 2012 Cash Flow Hedging [Member] Cost of products sold [Member] Foreign Exchange Contract [Member] Designated as Hedging Instrument [Member]	Sep. 30, 2013 Cash Flow Hedging [Member] Cost of products sold [Member] Foreign Exchange Contract [Member] Designated as Hedging Instrument [Member]	Sep. 30, 2012 Cash Flow Hedging [Member] Cost of products sold [Member] Foreign Exchange Contract [Member] Designated as Hedging Instrument [Member]	Sep. 30, 2013 Fair Value, Inputs, Level 2 [Member]	Sep. 30, 2013 Fair Value, Measurements, Recurring [Member]	Dec. 31, 2012 Fair Value, Measurements, Recurring [Member]	Sep. 30, 2013 Fair Value, Measurements, Recurring [Member] Fair Value, Inputs, Level 3 [Member]	Dec. 31, 2012 Fair Value, Measurements, Recurring [Member] Fair Value, Inputs, Level 3 [Member]	Sep. 30, 2013 Fair Value, Measurements, Recurring [Member] Fair Value, Inputs, Level 1 [Member]	Dec. 31, 2012 Fair Value, Measurements, Recurring [Member] Fair Value, Inputs, Level 1 [Member]	Sep. 30, 2013 Fair Value, Measurements, Recurring [Member] Fair Value, Inputs, Level 2 [Member]	Dec. 31, 2012 Fair Value, Measurements, Recurring [Member] Fair Value, Inputs, Level 2 [Member]
Derivatives Fair Value [Line Items]
Money Market Funds, at Carrying Value																													$ 0	$ 155	$ 39	$ 0	$ 0	$ 155	$ 39		$ 0
Derivative Instruments Not Designated as Hedging Instruments, Gain (Loss), Net																	12	(14)	66	0
Derivative Instruments, Gain (Loss) Recognized in Other Comprehensive Income (Loss), Effective Portion, Net																					(45)	(44)	144	2	(45)	(44)	144	2
Derivative Instruments, Gain (Loss) Reclassified from Accumulated OCI into Income, Effective Portion, Net																					15	(3)	15	(29)	15	(3)	15	(29)
Net gain (loss) from foreign currency transaction exposures																	(15)	11	(72)	(13)
Derivative Instruments in Hedges, Assets, at Fair Value			183	88	88	25	95	63
Derivative Instruments Not Designated as Hedging Instruments, Liability, at Fair Value															27	27
Derivative Assets	200	121
Derivative Instruments Not Designated as Hedging Instruments, Asset, at Fair Value													17	33
Derivative Instruments in Hedges, Liabilities, at Fair Value			17	30					8	20	9	10
Derivative Liabilities	44	57
Foreign Currency Transaction Gain (Loss), Realized																	(3)	(3)	(6)	(13)
Foreign Currency Contract, Asset, Fair Value Disclosure																														200	121	0	0	0	0	200	121
Assets, Fair Value Disclosure																														355	160	0	0	155	39	200	121
Foreign Currency Contracts, Liability, Fair Value Disclosure																														44	57	0	0	0	0	44	57
Accrued Contingent Consideration	536	663																												536	663	536	663	0	0	0	0
Liabilities, Fair Value Disclosure																														$ 580	$ 720	$ 536	$ 663	$ 0	$ 0	$ 44	$ 57

XML

Restructuring Related Activities

9 Months Ended

Sep. 30, 2013

Restructuring Charges [Abstract]

RESTRUCTURING-RELATED ACTIVITIES

RESTRUCTURING-RELATED ACTIVITIES

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

2014 Restructuring plan

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

We estimate that the implementation of the 2014 Restructuring plan will result in total pre-tax charges of approximately $175 million to $225 million, of which approximately $160 million to $210 million is expected to result in future cash outlays. The following table provides a summary of our estimates of costs associated with the 2014 Restructuring plan by major type of cost:

Type of cost	Total estimated amount expected to be incurred
Restructuring charges:
Termination benefits	$120 million to $150 million
Other (1)	$5 million to $15 million
Restructuring-related expenses:
Other (2)	$50 million to $60 million
	$175 million to $225 million

(1) Consists primarily of consultant fees and costs associated with contractual cancellations.

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

2011 Restructuring plan

On July 26, 2011, our Board of Directors approved, and we committed to, a restructuring initiative (the 2011 Restructuring plan) designed to strengthen operational effectiveness and efficiencies, increase competitiveness and support new investments, thereby increasing stockholder value. Key activities under the 2011 Restructuring plan include standardizing and automating certain processes and activities; relocating select administrative and functional activities; rationalizing organizational reporting structures; leveraging preferred vendors; and other efforts to eliminate inefficiency. Among these efforts, we are expanding our ability to deliver best-in-class global shared services for certain functions and divisions at several locations in emerging markets. This action is intended to enable us to grow our global commercial presence in key geographies and take advantage of many cost-reducing and productivity-enhancing opportunities. In addition, we are undertaking efforts to streamline various corporate functions, eliminate bureaucracy, increase productivity and better align corporate resources to our key business strategies. On January 25, 2013, our Board of Directors approved, and we committed to, an expansion of the 2011 Restructuring plan (the Expansion). The Expansion is intended to further strengthen our operational effectiveness and efficiencies and support new investments. Activities under the 2011 Restructuring plan were initiated in the third quarter of 2011 and all activities, including those related to the Expansion, are expected to be substantially complete by the end of 2013.

We estimate that the 2011 Restructuring plan, including the Expansion, will result in total pre-tax charges of approximately $300 million to $355 million, and that approximately $270 million to $300 million of these charges will result in future cash outlays, of which we have made payments of $235 million, which were partially offset by proceeds of $53 million on facility and fixed asset sales, as of September 30, 2013. As of September 30, 2013, we recorded costs of $260 million since the inception of the 2011 Restructuring plan, including the Expansion, and recorded a portion of these expenses as restructuring charges and the remaining portion through other lines within our unaudited condensed consolidated statements of operations.

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

Type of cost	Total estimated amount expected to be incurred
Restructuring charges:
Termination benefits	$160 million to $185 million
Other (1)	$100 million to $120 million
Restructuring-related expenses:
Other (2)	$40 million to $50 million
	$300 million to $355 million

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

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

2010 Restructuring plan

On February 6, 2010, our Board of Directors approved, and we committed to, a series of management changes and restructuring initiatives (the 2010 Restructuring plan) designed to focus our business, drive innovation, accelerate profitable revenue growth and increase both accountability and stockholder value. Key activities under the 2010 Restructuring plan included the restructuring of certain of our businesses and corporate functions; the re-alignment of our international structure to reduce our administrative costs and invest in expansion opportunities including significant investments in emerging markets; and the re-prioritization and diversification of our product portfolio. Activities under the 2010 Restructuring plan were initiated in the first quarter of 2010 and were complete by the end of 2012.

The execution of the 2010 Restructuring plan resulted in total pre-tax charges of $160 million, and required cash outlays of $145 million.

The following provides a summary of our costs associated with the 2010 Restructuring plan by major type of cost:

Type of cost	Total amount incurred
Restructuring charges:
Termination benefits	$90 million
Fixed asset write-offs	$11 million
Other (1)	$51 million
Restructuring-related expenses:
Other (2)	$8 million
	$160 million

(1) Includes primarily consulting fees and costs associated with contractual cancellations.

(2) Comprised of other costs directly related to the 2010 Restructuring plan, including accelerated depreciation and infrastructure-related costs.

Plant Network Optimization program

In January 2009, our Board of Directors approved, and we committed to, a plant network optimization initiative (the Plant Network Optimization program), intended to simplify our manufacturing plant structure by transferring certain production lines among facilities and by closing certain other facilities. The program was a complement to the restructuring initiatives approved by our Board of Directors in 2007, and was intended to improve overall gross profit margins. Activities under the Plant Network Optimization program were initiated in the first quarter of 2009 and were substantially completed during 2012.

We estimate that the execution of the Plant Network Optimization program will result in total pre-tax charges of approximately $130 million, and that approximately $105 million to $110 million of these charges will result in cash outlays, of which we made payments of $103 million as of September 30, 2013. As of September 30, 2013, we recorded costs of $127 million since the inception of the plan, and recorded a portion of these expenses as restructuring charges and the remaining portion through cost of products sold within our unaudited condensed consolidated statements of operations.

The following provides a summary of our estimates of costs associated with the Plant Network Optimization program by major type of cost:

Type of cost	Total estimated amount expected to be incurred
Restructuring charges:
Termination benefits	$33 million
Restructuring-related expenses:
Accelerated depreciation	$22 million
Transfer costs (1)	$75 million
	$130 million

(1) Consists primarily of costs to transfer product lines among facilities, including costs of transfer teams, freight, idle facility and product line validations.

In the aggregate, we recorded net restructuring charges pursuant to our restructuring plans of $19 million in the third quarter of 2013, $54 million in the third quarter of 2012, $55 million in the first nine months of 2013, and $93 million in the first nine months of 2012. During the first nine months of 2013, our restructuring charges were partially offset by a $19 million gain recognized on the sale of our Natick, Massachusetts headquarters. We are currently in the process of consolidating our Natick, Massachusetts headquarters into our Marlborough, Massachusetts location, where we are establishing a new global headquarters campus. In addition, we recorded expenses within other lines of our accompanying unaudited condensed consolidated statements of operations related to our restructuring initiatives of $7 million in the third quarter of 2013 and $4 million in the third quarter of 2012, and $16 million in the first nine months of 2013 and $15 million in the first nine months of 2012.

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

Three Months Ended September 30, 2013
(in millions)	Termination Benefits			Accelerated Depreciation		Transfer Costs		Fixed Asset Write-offs		Other		Total
Restructuring charges	$	5		$	—	$	—	$	—	$	14	$	19
Restructuring-related expenses:
Cost of products sold	—			—		—		—		—		—
Selling, general and administrative expenses	—			1		—		—		6		7
	—			1		—		—		6		7
	$	5		$	1	$	—	$	—	$	20	$	26
(in millions)	Termination Benefits			Accelerated Depreciation		Transfer Costs		Fixed Asset Write-offs		Other		Total
2011 Restructuring plan	$	5		$	1	$	—	$	—	$	20	$	26
2010 Restructuring plan	—			—		—		—		—		—
Plant Network Optimization program	—			—		—		—		—		—
	$	5		$	1	$	—	$	—	$	20	$	26
Three Months Ended September 30, 2012
(in millions)	Termination Benefits			Accelerated Depreciation		Transfer Costs		Fixed Asset Write-offs		Other		Total
Restructuring charges	$	44		$	—	$	—	$	—	$	10	$	54
Restructuring-related expenses:
Cost of products sold	—			—		1		—		—		1
Selling, general and administrative expenses	—			—		—		—		3		3
	—			—		1		—		3		4
	$	44		$	—	$	1	$	—	$	13	$	58
(in millions)	Termination Benefits			Accelerated Depreciation		Transfer Costs		Fixed Asset Write-offs		Other		Total
2011 Restructuring plan	$	43		$	—	$	—	$	—	$	13	$	56
2010 Restructuring plan	2			—		—		—		—		2
Plant Network Optimization program	(1		)	—		1		—		—		—
	$	44		$	—	$	1	$	—	$	13	$	58

Nine Months Ended September 30, 2013
(in millions)	Termination Benefits			Accelerated Depreciation		Transfer Costs		Fixed Asset Write-offs			Other		Total
Restructuring charges	$	26		$	—	$	—	$	(16	)	$	45	$	55
Restructuring-related expenses:
Cost of products sold	—			—		—		—			—		—
Selling, general and administrative expenses	—			2		—		—			14		16
	—			2		—		—			14		16
	$	26		$	2	$	—	$	(16	)	$	59	$	71
(in millions)	Termination Benefits			Accelerated Depreciation		Transfer Costs		Fixed Asset Write-offs			Other		Total
2011 Restructuring plan	$	30		$	2	$	—	$	(16	)	$	59	$	75
2010 Restructuring plan	—			—		—		—			—		—
Plant Network Optimization program	(4		)	—		—		—			—		(4		)
	$	26		$	2	$	—	$	(16	)	$	59	$	71
Nine Months Ended September 30, 2012
(in millions)	Termination Benefits			Accelerated Depreciation		Transfer Costs		Fixed Asset Write-offs			Other		Total
Restructuring charges	$	64		$	—	$	—	$	—		$	29	$	93
Restructuring-related expenses:
Cost of products sold	—			—		7		—			—		7
Selling, general and administrative expenses	—			—		—		—			8		8
	—			—		7		—			8		15
	$	64		$	—	$	7	$	—		$	37	$	108
(in millions)	Termination Benefits			Accelerated Depreciation		Transfer Costs		Fixed Asset Write-offs			Other		Total
2011 Restructuring plan	$	65		$	—	$	—	$	—		$	34	$	99
2010 Restructuring plan	—			—		—		—			3		3
Plant Network Optimization program	(1		)	—		7		—			—		6
	$	64		$	—	$	7	$	—		$	37	$	108

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 ASC Topic 712, Compensation – Non-retirement Postemployment Benefits and ASC Topic 420, Exit or Disposal Cost Obligations (Topic 420). We expect to record additional termination benefits related to our restructuring initiatives in 2013 when we identify with more specificity the job classifications, functions and locations of the remaining head count to be eliminated. Other restructuring costs, which represent primarily consulting fees, are being recorded as incurred in accordance with Topic 420. Accelerated depreciation is being recorded over the adjusted remaining useful life of the related assets, and production line transfer costs are being recorded as incurred.

As of September 30, 2013, we have incurred cumulative restructuring charges related to our 2011 Restructuring plan (including the Expansion), 2010 Restructuring plan and Plant Network Optimization program of $411 million and restructuring-related costs of $136 million since we committed to each plan. The following presents these costs by major type and by plan:

(in millions)	2011 Restructuring plan (including the Expansion)		2010 Restructuring plan		Plant Network Optimization Program		Total
Termination benefits	$	130	$	90	$	31	$	251
Fixed asset write-offs	—		11		—		11
Other	98		51		—		149
Total restructuring charges	228		152		31		411
Accelerated depreciation	—		—		22		22
Transfer costs	—		—		74		74
Other	32		8		—		40
Restructuring-related expenses	32		8		96		136
	$	260	$	160	$	127	$	547

We made cash payments of $36 million in the third quarter of 2013 and $107 million in the first nine months of 2013 associated with restructuring initiatives pursuant to these plans, and as of September 30, 2013, we had made total cash payments of $483 million related to our 2011 Restructuring plan (including the Expansion), 2010 Restructuring plan and Plant Network Optimization program since committing to each plan, partially offset by $53 million of proceeds received on facility and fixed asset sales in the first nine months of 2013. Payments were made using cash generated from operations, and are comprised of the following:

(in millions)	2011 Restructuring plan (including the Expansion)		2010 Restructuring plan		Plant Network Optimization Program		Total
Three Months Ended September 30, 2013
Termination benefits	$	16	$	—	$	—	$	16
Transfer costs	—		—		—		—
Other	20		—		—		20
	$	36	$	—	$	—	$	36
Nine Months Ended September 30, 2013
Termination benefits	$	49	$	—	$	1	$	50
Transfer costs	—		—		—		—
Other	57		—		—		57
	$	106	$	—	$	1	$	107
Program to Date
Termination benefits	$	113	$	90	$	30	$	233
Transfer costs	—		—		73		73
Other	122		55		—		177
	$	235	$	145	$	103	$	483

Our restructuring liability is primarily comprised of accruals for termination benefits. The following is a rollforward of the termination benefit liability associated with our 2011 Restructuring plan (including the Expansion), 2010 Restructuring plan and Plant Network Optimization program, since the inception of the respective plans, which is reported as a component of accrued expenses included in our accompanying unaudited condensed balance sheets:

	Restructuring Plan Termination Benefits
(in millions)	2011			2010			Plant Network Optimization			Total
Accrued as of December 31, 2012	$	36		$	3		$	9		48
Charges (credits)	30			—			(4		)	26
Cash payments	(49		)	—			(1		)	(50		)
Other adjustments	—			(3		)	—			(3		)
Accrued as of September 30, 2013	$	17		$	—		$	4		$	21

In addition to our accrual for termination benefits, we had an $10 million liability as of September 30, 2013 and a $5 million liability as of December 31, 2012 for other restructuring-related items.

XML

Segment Reporting (Tables)

9 Months Ended

Sep. 30, 2013

Segment Reporting (Tables) [Abstract]

Segment Reporting Information By Segment

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

	Three Months Ended September 30,						Nine Months Ended September 30,
(in millions)	2013			2012*			2013			2012*
Net sales
Interventional Cardiology	$	487		$	496		$	1,538		$	1,646
Peripheral Interventions	202			188			601			571
Cardiovascular	689			684			2,139			2,217
Cardiac Rhythm Management	474			467			1,445			1,466
Electrophysiology	35			35			106			109
Rhythm Management	509			502			1,551			1,575
Endoscopy	331			308			979			916
Urology/Women's Health	134			124			378			367
Neuromodulation	116			88			316			263
MedSurg	581			520			1,673			1,546
Net sales allocated to reportable segments	1,779			1,706			5,363			5,338
Sales generated from divested businesses	2			32			56			91
Impact of foreign currency fluctuations	(46		)	(3		)	(114		)	(1		)
	$	1,735		$	1,735		$	5,305		$	5,428
Income (loss) before income taxes
Cardiovascular	$	184		$	175		$	548		$	561
Rhythm Management	68			58			192			218
MedSurg	187			169			521			452
Operating income allocated to reportable segments	439			402			1,261			1,231
Corporate expenses and currency exchange	(103		)	(58		)	(251		)	(214		)
Goodwill and other intangible asset impairment charges; and acquisition-, divestiture-, restructuring-, and litigation related charges and credits	(132		)	(839		)	(711		)	(4,708		)
Amortization expense	(101		)	(99		)	(305		)	(294		)
Operating (loss) income	103			(594		)	(6		)	(3,985		)
Other expense, net	(143		)	(69		)	(276		)	(174		)
Income (loss) before income taxes	$	(40	)	$	(663	)	$	(282	)	$	(4,159	)

* We have restated prior year detail to conform to current year presentation.

XML

Commitments and Contingencies (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended			9 Months Ended		12 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Mar. 31, 2012	Sep. 30, 2013	Sep. 30, 2012	Dec. 31, 2011	Nov. 04, 2013 claims	Dec. 31, 2012
Loss Contingencies (Textuals) [Abstract]
Accrual for legal matters that are probable and estimable	$ 683			$ 683				$ 491
litigation-related charges (credits)	76	50		206	119
Settlement for lost profits related to the Jang patent litigation						18.5
Settlement for royalties related to Jang patent						1
Total damages awarded to BSC related to Jang patent			41
Litigation-related charges					135
Litigationrelatedcredit					16
Product liability cases or claims related to mesh product							17,000
Putative class actions in the U.S., Mesh							7
Product liability cases or claims in Canada, Mesh							10
Putative class actions in Canada, Mesh							3
Payments for Legal Settlements	30
Legal Fees	$ 1

XML

Commitments and Contingencies

9 Months Ended

Sep. 30, 2013

Commitments and Contingencies [Abstract]

COMMITMENTS AND CONTINGENCIES

COMMITMENTS AND CONTINGENCIES

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

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

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

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

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

Our accrual for legal matters that are probable and estimable was $683 million as of September 30, 2013 and $491 million as of December 31, 2012, and includes estimated costs of settlement, damages and defense. The increase in our legal accrual was primarily due to $206 million in litigation-related charges recorded during the first nine months of 2013. During the first nine months of 2012, we recorded $119 million of litigation related charges, which consisted of charges of $135 million, partially offset by credits of $16 million. We continue to assess certain litigation and claims to determine the amounts, if any, that management believes will be paid as a result of such claims and litigation and, therefore, additional losses may be accrued and paid in the future, which could materially adversely impact our operating results, cash flows and/or our ability to comply with our debt covenants.

In management’s opinion, we are not currently involved in any legal proceedings other than those disclosed in our 2012 Annual Report filed on Form 10-K, our Quarterly Reports filed on Form 10-Q for the quarters ended March 31, 2013 and June 30, 2013, and those specifically identified below, which, individually or in the aggregate, could have a material adverse effect on our financial condition, operations and/or cash flows. Unless included in our legal accrual or otherwise indicated below, a range of loss associated with any individual material legal proceeding cannot be estimated.

Patent Litigation

On February 1, 2008, Wyeth Corporation and Cordis Corporation filed an amended complaint for patent infringement against Abbott Laboratories, adding us and Boston Scientific Scimed, Inc. as additional defendants to the complaint. The suit alleged that the PROMUS® coronary stent system, supplied to us by Abbott, infringes three U.S. patents (the Morris patents) owned by Wyeth and licensed to Cordis. The suit was filed in the U.S. District Court for the District of New Jersey seeking monetary and injunctive relief. Wyeth and Cordis subsequently withdrew their infringement claim as to one of the patents, and the District Court found the remaining two patents invalid. Wyeth and Cordis filed an appeal and on June 26, 2013, the Court of Appeals for the Federal Circuit affirmed the District Court’s judgment in favor of Boston Scientific. On October 13, 2013, Wyeth’s motion for rehearing or rehearing en banc was denied.

On May 25, 2010, Dr. Jang filed suit against Boston Scientific Scimed, Inc. and us alleging breach of contract relating to certain patent rights covering stent technology. In October 2011, the U.S. District Court for the District of Delaware entered judgment in favor of us on the pleadings. On July 31, 2012, the District Court denied Dr. Jang's October 2011 motion for reconsideration or, in the alternative, permission to amend his complaint. Dr. Jang filed an appeal on August 28, 2012. On September 5, 2013, the Court of Appeals for the Third Circuit vacated the ruling and remanded the case to the District Court.

On May 16, 2013, Vascular Solutions, Inc. filed suit against the Company, alleging that its Guidezilla™ guide extension catheter infringes three U.S. patents owned by Vascular Solutions.  The suit was filed in the U.S. District Court for the District of Minnesota seeking monetary and injunctive relief.  On May 28, 2013 Vascular Solutions filed an amended complaint adding an allegation of copyright infringement.  On June 10, 2013, Vascular Solutions filed a motion requesting a preliminary injunction.  On July 11, 2013 the Company answered the amended complaint and filed a counterclaim against Vascular Solutions, alleging that its Guideliner™ guide extension catheter infringes a U.S. patent owned by the Company. A hearing on the motion for preliminary injunction was held on August 27, 2013.

On August 2, 2013, Medtronic Ardian Luxembourg S.a.r.l. filed a complaint against Boston Scientific Corporation and Boston Scientific Medizintechnik, GmbH in the Düsseldorf District Court in Germany alleging that the sale of the Company’s Vessix renal denervation product infringes a German patent owned by Medtronic Ardian. A hearing is scheduled for August 12, 2014.

On September 23, 2013, Kardiametrics, LLC filed a complaint in the United States District Court for the District of Delaware alleging that the sale of the Company’s FilterWire EZ Embolic Protection System, Sterling balloon catheters, Carotid NexStent and Carotid Wallstent products infringe two patents (the Azizi patents) owned by Kardiametrics.

Product Liability Litigation

As of November 4, 2013, there were over 17,000 product liability cases or claims asserted against us in various federal and state courts in the United States, inclusive of seven putative class actions. There were also over ten cases in Canada, inclusive of three putative class actions. Generally, the plaintiffs allege personal injury associated with use of our transvaginal surgical mesh products designed to treat stress urinary incontinence and pelvic organ prolapse, design and manufacturing claims, failure to warn, breach of warranty, fraud, violations of state consumer protection laws and loss of consortium claims.  Many of the cases have been specially assigned to one judge in state court in Massachusetts. On February 7, 2012, the Judicial Panel on Multi-District Litigation (MDL) established MDL-2326 in the U.S. District Court for the Southern District of West Virginia and transferred the federal court transvaginal surgical mesh cases to MDL-2326 for coordinated pretrial proceedings. In addition, we were contacted by the Attorney General for the State of California in October 2012 informing us that their office and certain other state attorneys general offices intend to initiate a civil investigation into our sale of transvaginal surgical mesh products. We have established a product liability accrual for known and estimated future cases and claims asserted against us as well as costs of defense thereof associated with our transvaginal surgical mesh products. While we believe that our accrual associated with this matter is adequate, changes to this accrual may be required in the future as additional information becomes available. We intend to vigorously contest the cases and claims asserted against us; however, the final resolution is uncertain and could have a material impact on our results of operations, financial condition and/or liquidity.

Governmental Investigations and Qui Tam Matters

On October 17, 2008, we received a subpoena from the U.S. Department of Health and Human Services, Office of the Inspector General, requesting information related to the alleged use of a skin adhesive in certain of our CRM products. In early 2010, we learned that this subpoena was related to a qui tam action filed in the U.S. District Court for the Western District of New York. After the federal government declined to intervene in the original complaint, the relator in the qui tam action filed an amended complaint alleging that Guidant violated the False Claims Act by selling certain PRIZM 2 devices and seeking monetary damages. In July 2010, we were served with the amended unsealed qui tam complaint filed by James Allen, an alleged device recipient. The civil division of the U.S. Department of Justice (DOJ) was later allowed to intervene in the Allen qui tam action and to transfer the litigation to the U.S. District Court for the District of Minnesota. In January 2011, the DOJ filed a civil False Claims Act complaint against us and Guidant (and other related entities) in the Allen qui tam action. On May 7, 2013, the Chief Magistrate Judge stayed the previously set deadlines in the case while the parties were in settlement discussions. In October 2013 we entered into a settlement agreement with the parties pursuant to which we agreed to pay $30 million to the DOJ and $1 million in legal fees to Mr. Allen’s counsel, and we filed a joint motion with the parties to dismiss the case.

On August 3, 2012, we were served with a qui tam complaint that had previously been filed under seal against Boston Scientific Neuromodulation Corp. in the U.S. District Court for the District of New Jersey on March 2, 2011. On August 8, 2012, we learned that the federal government had previously declined to intervene in this matter. The relators’ complaint, now unsealed, alleges that Boston Scientific Neuromodulation Corp. violated the federal and various states' false claims acts through submission of fraudulent bills for implanted devices, under-reporting of certain adverse events, and promotion of off-label uses. On September 10, 2012, the relators filed an amended complaint revising and restating certain of the claims in the original complaint. Our motion to dismiss, filed subsequently, was denied on May 31, 2013, and on June 28, 2013, we answered the amended complaint and brought certain counterclaims arising from relators’ unauthorized removal of documents from the business during their employments, which the relators moved to dismiss on July 22, 2013.

Other Proceedings

On October 5, 2007, Dr. Tassilo Bonzel filed a complaint against Pfizer, Inc. and our Schneider subsidiaries and us in the District Court in Kassel, Germany alleging that a 1995 license agreement related to a catheter patent is invalid under German law and seeking monetary damages. In June 2009, the District Court dismissed all but one of Dr. Bonzel's claims and in October 2009, he added new claims. We opposed the addition of the new claims. The District Court ordered Dr. Bonzel to select the claims he would pursue and in January 2011, he made that selection. A hearing is scheduled for March 28, 2014.

On September 28, 2011, we served a complaint against Mirowski Family Ventures LLC in the U.S. District Court for the Southern District of Indiana for a declaratory judgment that we have paid all royalties owed and did not breach any contractual or fiduciary obligations arising out of a license agreement. Mirowski answered and filed counterclaims requesting damages. On May 13, 2013, Mirowski Family Ventures served the Company with a complaint alleging breach of contract in Montgomery County Circuit Court, Maryland, and they amended this complaint on August 1, 2013. On July 29, 2013, the Indiana case was dismissed. On September 10, 2013, the company removed the case to the United States District Court for the District of Maryland.

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

Matters Concluded Since December 31, 2012

On December 4, 2009, we, along with Boston Scientific Scimed, Inc., filed a complaint for patent infringement against Cordis Corporation alleging that its Cypher Mini™ stent product infringes a U.S. patent (the Jang patent) owned by us. In April 2011, the U.S. District Court for the District of Delaware granted summary judgment that Cordis willfully infringed the Jang patent. After a trial on damages in May 2011, the jury found in favor of Boston Scientific for lost profits of approximately $18.5 million and royalties of approximately $1 million. On March 13, 2012, the District Court granted our motion for enhanced damages, resulting in a total damages award of approximately $41 million. On February 12, 2013, the Court of Appeals affirmed the District Court's judgment in favor of Boston Scientific.

On November 17, 2009, Boston Scientific Scimed, Inc. filed suit against OrbusNeich Medical, Inc. and certain of its subsidiaries in the Hague District Court in the Netherlands alleging that OrbusNeich's sale of the Genous stent infringes a patent owned by us (the Keith patent) and seeking monetary damages and injunctive relief. On March 13, 2012, the Hague Court of Appeals denied our request for preliminary relief. On April 2, 2013, the Hague Court of Appeals found the Keith patent invalid.

In December 2007, we were informed by the U.S. Attorney's Office for the Northern District of Texas that it was conducting an investigation of allegations related to improper promotion of biliary stents for off-label uses. The allegations were set forth in a qui tam complaint, which named us and certain of our competitors. Following the federal government's decision not to intervene in the case, the U.S. District Court for the Northern District of Texas unsealed the complaint. In March 2011, the District Court issued an order granting our motion to dismiss and, in March 2012, issued its opinion ordering that all claims against us be dismissed, some of which were dismissed with prejudice and some of which were dismissed without prejudice to the relator's right to amend those claims. On September 14, 2012, the relator filed and served an amended complaint restating the claims that the District Court dismissed without prejudice. On January 17, 2013, the District Court granted our motion to dismiss with prejudice all of the relator's remaining claims against us, and on April 12, 2013, the District Court amended its order of dismissal to specify that it was final and appealable. On May 3, 2013, the relator voluntarily moved to dismiss his appeal of the January 17, 2013 order of dismissal, which he had filed with the U.S. Court of Appeals for the Fifth Circuit on February 15, 2013. The deadline for further appeals lapsed on May 13, 2013.

On January 15, 2010, Cordis Corporation filed a complaint against us and Boston Scientific Scimed, Inc. alleging that the PROMUS® coronary stent system, supplied to us by Abbott Laboratories, infringes three patents (the Fischell patents) owned by Cordis. The suit was filed in the U.S. District Court for the District of Delaware and sought monetary and injunctive relief. We filed counterclaims of invalidity and non-infringement. The District Court found that the PROMUS stent system does not infringe the Fischell patents and that our sales of this product were authorized. On May 13, 2013, the Court of Appeals for the Federal Circuit affirmed the District Court’s judgment in favor of Boston Scientific. The deadline for further appeals lapsed on August 12, 2013.

On October 21, 2011, the U.S. District Court for the District of Massachusetts unsealed a qui tam complaint that related to the subject matter of a U.S. Attorney for the District of Massachusetts investigation, which investigation has been discontinued and is described below, after the federal government declined to intervene in the matter. Subsequently, on January 30, 2012, the relator filed an amended complaint. On July 5, 2012, the District Court issued an opinion and order dismissing the amended complaint for lack of subject matter jurisdiction. On July 12, 2012, the relator appealed the judgment of dismissal to the U.S. Court of Appeals for the First Circuit, and oral argument was held on February 7, 2013. On May 31, 2013, the Court of Appeals rejected the relator's appeal and affirmed the dismissal of the amended complaint. The deadline for further appeals lapsed on August 29, 2013.

On March 16, 2009, OrbusNeich Medical, Inc. filed suit against us alleging that our VeriFLEX™ (Liberté®) bare-metal coronary stent system infringes two U.S. patents (the Addonizio and Pazienza patents) owned by it. The complaint also alleged breach of contract and misappropriation of trade secrets and seeks monetary and injunctive relief. The suit is pending in the U.S. District Court for the District of Massachusetts. In September 2009, OrbusNeich filed an amended complaint against us alleging additional state law claims. In March 2010, the District Court dismissed OrbusNeich's unjust enrichment and fraud claims, but denied our motion to dismiss the remaining state law claims. OrbusNeich amended its complaint in April 2010 to add another patent (another Addonizio patent). In January 2011, OrbusNeich amended its complaint to drop its misappropriation of trade secret, statutory and unfair competition claims and in July 2011, it further amended its complaint to include allegations that our ION™ coronary stent system infringes two additional patents. On February 24, 2012, the District Court granted our motion to stay the patent claims, and on June 4, 2012, the District Court stayed the breach of contract claim, in each case, pending re-examination of the patents in suit. In addition, in February 2013, Orbus International B.V. filed suits against the Company and two Dutch subsidiaries in the Hague District Court in the Netherlands and Orbus Medical GmbH filed suit against the Company and one of its subsidiaries in the Dusseldorf District Court in Germany. In March 2013, Orbus Medical Inc. and Orbus International B.V. filed suit against the Company and two of its Irish subsidiaries in the Irish Commercial Court in Dublin, Ireland. Each of these matters alleges that the Company’s sale of stent systems using the Element design infringe European patents owned by Orbus Medical Inc. and licensed to other Orbus entities. In one Dutch matter, Orbus sought cross-border, preliminary injunctive relief, which the court denied on July 9, 2013. In the other Dutch matter, Orbus is seeking damages and injunctive relief, and a hearing is scheduled for December 20, 2013. In one German matter, Orbus sought preliminary injunctive relief, which the Dusseldorf District Court granted on April 30, 2013. On that same date, we appealed the injunction to the Court of Appeals of Dusseldorf. In the other German matter, Orbus is seeking damages and injunctive relief, and a hearing is scheduled for May 14, 2014. In the Irish matter, Orbus is seeking damages and injunctive relief. In March 2013, two of the Company’s subsidiaries filed suit against Orbus Medical Inc. in the English High Court seeking a declaration that the sale of the stent systems with the Element design does not infringe two Orbus patents and seeking to have the two patents found invalid. On June 5, 2013, Orbus cancelled one of the two UK patents. On September 15, 2013, the parties entered into a settlement agreement that resolves all stent-related cases brought by the parties in Germany, the Netherlands, Ireland, the United Kingdom and the United States.  The agreement includes a one-time payment from Boston Scientific to OrbusNeich, with no future financial obligations.

On March 22, 2010, we received a subpoena from the U.S. Attorney's Office for the District of Massachusetts seeking documents relating to the former Market Development Sales Organization that operated within our CRM business. On October 21, 2011, the U.S. District Court for the District of Massachusetts unsealed a qui tam complaint that related to the subject matter of the U.S. Attorney's investigation, after the federal government declined to intervene in the matter. Subsequently, on January 30, 2012, the relator filed an amended complaint. The District Court case has been concluded and is described above. On October 30, 2013, the U.S. Attorney’s office informed us that the government was discontinuing its investigation.

XML

Borrowings and Credit Arrangements

9 Months Ended

Sep. 30, 2013

Borrowings and Credit Arrangements [Abstract]

BORROWINGS AND CREDIT ARRANGEMENTS

BORROWINGS AND CREDIT ARRANGEMENTS

We had total debt of $4.249 billion as of September 30, 2013 and $4.256 billion as of December 31, 2012. During the third quarter of 2013, we refinanced our public debt obligations maturing in June 2014 and January 2015 (see Senior Notes below). The debt maturity schedule for the significant components of our debt obligations as of September 30, 2013 is as follows:

(in millions)	2013	2014		2015		2016		2017		Thereafter		Total
Senior notes	—	$	—	$	400	$	600	$	250	$	2,550	$	3,800
Term loan	—	$	—	$	—	$	80	$	80	$	240	$	400
	—	$	—	$	400	$	680	$	330	$	2,790	$	4,200

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

Revolving Credit Facility

We maintain a $2.0 billion revolving credit facility, maturing in April 2017, with a global syndicate of commercial banks. Eurodollar and multicurrency loans under this revolving credit facility bear interest at LIBOR plus an interest margin of between 0.875 percent and 1.475 percent, based on our corporate credit ratings and consolidated leverage ratio (1.275 percent as of September 30, 2013). In addition, we are required to pay a facility fee based on our credit ratings, consolidated leverage ratio, and the total amount of revolving credit commitments, regardless of usage, under the agreement (0.225 percent as of September 30, 2013). There were no amounts borrowed under our revolving credit facility as of September 30, 2013 or December 31, 2012.

Our revolving credit facility agreement in place as of September 30, 2013 requires that we maintain certain financial covenants, as follows:

	Covenant Requirement	Actual as of September 30, 2013
Maximum leverage ratio (1)	3.5 times	2.4 times
Minimum interest coverage ratio (2)	3.0 times	5.4 times

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

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

The credit agreement provides for an exclusion from the calculation of consolidated EBITDA, as defined by the agreement, through the credit agreement maturity, of any non-cash charges up to $500 million in restructuring charges and restructuring-related expenses related to our current or future restructuring plans. As of September 30, 2013, we had $287 million of the restructuring charge exclusion remaining. In addition, any cash litigation payments (net of any cash litigation receipts), as defined by the agreement, are excluded from the calculation of consolidated EBITDA and any new debt issued to fund any tax deficiency payments is excluded from consolidated total debt, as defined in the agreement, provided that the sum of any excluded net cash litigation payments and any new debt issued to fund any tax deficiency payments shall not exceed $2.300 billion in the aggregate. As of September 30, 2013, we had approximately $2.278 billion of the combined legal and debt exclusion remaining. As of and through September 30, 2013, we were in compliance with the required covenants.

Any inability to maintain compliance with these covenants could require us to seek to renegotiate the terms of our credit facilities or seek waivers from compliance with these covenants, both of which could result in additional borrowing costs. Further, there can be no assurance that our lenders would agree to such new terms or grant such waivers.

Term Loan

In August 2013, we entered into a new $400 million, unsecured term loan facility. Term loan borrowings under this facility bear interest at LIBOR plus an interest margin of between 1.0 percent and 1.75 percent (currently 1.5 percent), based on our corporate credit ratings and consolidated leverage ratio. The term loan borrowings are payable over a 5-year period, with quarterly principal payments of $20 million commencing in the first quarter of 2016 and the remaining principal amount due at the final maturity date in August 2018, and are repayable at any time without premium or penalty. Our term loan facility requires that we comply with certain covenants, including financial covenants with respect to maximum leverage and minimum interest coverage; the maximum leverage ratio requirement is 3.5 times, our actual leverage ratio as of September 30, 2013 is 2.4 times and the minimum interest coverage ratio requirement is 3.0 times, our actual interest coverage ratio as of September 30, 2013 is 5.4 times. We had $400 million outstanding under this facility as of September 30, 2013 and no borrowings outstanding as of December 31, 2012.

Senior Notes

We had senior notes outstanding of $3.800 billion and $4.200 billion as of September 30, 2013 and December 31, 2012 respectively. In August 2013, we issued $600 million of 2.650% senior notes due in 2018, and $450 million of 4.125% senior notes due in 2023. In September 2013, we used the proceeds, together with borrowings under our new $400 million term loan facility, to prepay $600 million of senior notes maturing in June 2014 and $850 million maturing in January 2015. We recorded a one-time charge of $70 million ($44 million after-tax) for premiums, accelerated amortization of debt issuance costs and investor discount costs net of interest rate hedge gains related to the early debt extinguishment. Our senior notes are publicly registered securities, are redeemable prior to maturity and are not subject to any sinking fund requirements. Our senior notes are unsecured, unsubordinated obligations and rank on parity with each other. These notes are effectively junior to borrowings under our credit and security facility and liabilities of our subsidiaries (see Other Arrangements below).

Other Arrangements

We also maintain a credit and security facility secured by our U.S. trade receivables. In June 2013, we extended the maturity of this facility through June 2015, subject to further extension, reduced the size of the facility from $350 million to $300 million and added a maximum leverage covenant consistent with our revolving credit facility. The maximum leverage ratio requirement is 3.5 times and our actual leverage ratio as of September 30, 2013 is 2.4 times. We had no borrowings outstanding under this facility as of September 30, 2013 and December 31, 2012.

We have accounts receivable factoring programs in certain European countries that we account for as sales under ASC Topic 860, Transfers and Servicing. These agreements provide for the sale of accounts receivable to third parties, without recourse, of up to approximately $306 million as of September 30, 2013. We have no retained interests in the transferred receivables, other than collection and administrative responsibilities and, once sold, the accounts receivable are no longer available to satisfy creditors in the event of bankruptcy. We de-recognized $166 million of receivables as of September 30, 2013 at an average interest rate of 3.3 percent, and $191 million as of December 31, 2012 at an average interest rate of 1.6 percent. Within Italy, Spain, Portugal and Greece the number of days our receivables are outstanding has increased above historical levels. We believe we have adequate allowances for doubtful accounts related to our Italy, Spain, Portugal and Greece accounts receivable; however, we continue to monitor the European economic environment for any collectibility issues related to our outstanding receivables. As of September 30, 2013, our net receivables in these countries greater than 180 days past due totaled $78 million, of which $28 million were past due greater than 365 days.

In addition, we have uncommitted credit facilities with a commercial Japanese bank that provide for borrowings, promissory notes discounting, and receivables factoring of up to 21.0 billion Japanese yen (approximately $214 million as of September 30, 2013). We de-recognized $156 million of notes receivable as of September 30, 2013 at an average interest rate of 1.8 percent and $182 million of notes receivable as of December 31, 2012 at an average interest rate of 1.6 percent. De-recognized accounts and notes receivable are excluded from trade accounts receivable, net in the accompanying unaudited condensed consolidated balance sheets.

As of September 30, 2013, we had outstanding letters of credit of $74 million, as compared to $94 million as of December 31, 2012, which consisted primarily of bank guarantees and collateral for workers' compensation insurance arrangements. As of September 30, 2013 and December 31, 2012, none of the beneficiaries had drawn upon the letters of credit or guarantees; accordingly, we did not recognize a related liability for our outstanding letters of credit in our consolidated balance sheets as of September 30, 2013 or December 31, 2012. We believe we will generate sufficient cash from operations to fund these payments and intend to fund these payments without drawing on the letters of credit.

XML

Basis of Presentation

9 Months Ended

Sep. 30, 2013

Basis of Presentation [Abstract]

BASIS OF PRESENTATION

BASIS OF PRESENTATION

The accompanying unaudited condensed consolidated financial statements of Boston Scientific Corporation have been prepared in accordance with accounting principles generally accepted in the United States (U.S. GAAP) and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments (consisting only of normal recurring adjustments) considered necessary for fair presentation have been included. Operating results for the three and nine months ended September 30, 2013 are not necessarily indicative of the results that may be expected for the year ending December 31, 2013. For further information, refer to the consolidated financial statements and footnotes thereto included in Item 8 of our 2012 Annual Report filed on Form 10-K.

Effective as of January 1, 2013, we reorganized our business from geographic regions to fully operationalized global business units. Our reorganization changed our reporting structure and changed the composition of our reporting units. As a result, we have reclassified certain prior year amounts to conform to the current year’s presentation. See Note D - Goodwill and Other Intangible Assets and Note L – Segment Reporting for further details.

Subsequent Events

We evaluate events occurring after the date of our most recent accompanying unaudited condensed consolidated balance sheets for potential recognition or disclosure in our financial statements. We did not identify any material subsequent events requiring adjustment to our accompanying unaudited condensed consolidated financial statements (recognized subsequent events) for the three and nine month periods ended September 30, 2013. Those items requiring disclosure (unrecognized subsequent events) in the financial statements have been disclosed accordingly. Refer to Note J - Commitments and Contingencies and Note B - Acquisitions for more information.

XML

Divestitures (Details) (USD $) In Millions, unless otherwise specified	1 Months Ended	3 Months Ended			9 Months Ended		12 Months Ended
	Jan. 31, 2011	Sep. 30, 2013	Jun. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012	Dec. 31, 2012
Divestitures (Textuals) [Abstract]
Purchase price for divestiture of business/controlling interest	$ 1,500
Proceeds from divestiture of business, excluding amounts placed in escrow	1,450
Contingent receivable for divestiture of business		10			10
Revenues generated by the Neurovascular business		2		32	56	91
Proceeds from Divestiture of Businesses			$ 30		$ 30	$ 10	$ 10

XML

Changes in Other Comprehensive Income

9 Months Ended

Sep. 30, 2013

Changes in Other Comprehensive Income [Abstract]

Comprehensive Income (Loss) Note [Text Block]

CHANGES IN OTHER COMPREHENSIVE INCOME

The following table provides the reclassifications out of other comprehensive income for the three and nine months ended September 30, 2013 and September 30, 2012. Amounts in the chart below are presented net of tax.

Three Months Ended September 30, 2013
(in millions)	Foreign currency translation adjustments	Unrealized gains/losses on derivative financial instruments	Defined benefit pension items / Other	Total
Beginning Balance	$(28)	$153	$(41)	$84
Other comprehensive income (loss) before reclassifications	10	(29)	—	(19)
Amounts reclassified from accumulated other comprehensive income	—	(9)	—	(9)
Net current-period other comprehensive income	10	(38)	—	(28)
Ending Balance	$(18)	$115	$(41)	$56
Three Months Ended September 30, 2012
(in millions)	Foreign currency translation adjustments	Unrealized gains/losses on derivative financial instruments	Defined benefit pension items / Other	Total
Beginning Balance	$(51)	$(4)	$(32)	$(87)
Other comprehensive income (loss) before reclassifications	2	(29)	—	(27)
Amounts reclassified from accumulated other comprehensive income	—	2	—	2
Net current-period other comprehensive income	2	(27)	—	(25)
Ending Balance	$(49)	$(31)	$(32)	$(112)

Nine Months Ended September 30, 2013
(in millions)	Foreign currency translation adjustments	Unrealized gains/losses on derivative financial instruments	Defined benefit pension items / Other	Total
Beginning Balance	$(26)	$34	$(41)	$(33)
Other comprehensive income (loss) before reclassifications	8	91	—	99
Amounts reclassified from accumulated other comprehensive income	—	(10)	—	(10)
Net current-period other comprehensive income	8	81	—	89
Ending Balance	$(18)	$115	$(41)	$56
Nine Months Ended September 30, 2012
(in millions)	Foreign currency translation adjustments	Unrealized gains/losses on derivative financial instruments	Defined benefit pension items / Other	Total
Beginning Balance	$(58)	$(48)	$(32)	$(138)
Other comprehensive income (loss) before reclassifications	9	—	—	9
Amounts reclassified from accumulated other comprehensive income	—	17	—	17
Net current-period other comprehensive income	9	17	—	26
Ending Balance	$(49)	$(31)	$(32)	$(112)

The income tax impact of the amounts in other comprehensive income for unrealized gains/losses on derivative financial instruments before reclassifications was a benefit of $16 million in the third quarter of 2013, an expense of $53 million in the first nine months of 2013, a benefit of $17 million in the third quarter of 2012, and an expense of $1 million in the first nine months of 2012. The income tax impact of the amounts reclassified from unrealized gains/losses on derivative financial instruments was a benefit of $6 million in the third quarter and a benefit of $5 million in the first nine months of 2013, an expense of $1 million in the third quarter of 2012, and an expense of $9 million in the first nine months of 2012. Refer to Note E – Fair Value Measurements for further detail on the reclassifications related to derivatives.

XML

Income Taxes

9 Months Ended

Sep. 30, 2013

Income Tax Expense (Benefit) [Abstract]

INCOME TAXES

INCOME TAXES

Tax Rate

The following tables provide a summary of our reported tax rate:

	Three Months Ended September 30,
	2013		2012
Reported tax rate	87.6	%	(0.1	)%
Impact of certain receipts/charges*	(74.5	)%	16.2	%
	13.1	%	16.1	%

	Nine Months Ended September 30,
	2013		2012
Reported tax rate	18.9	%	0.7	%
Impact of certain receipts/charges*	(5.2	)%	14.5	%
	13.7	%	15.2	%

*These receipts/charges are taxed at different rates than our effective tax rate.

The change in our reported tax rate for the third quarter and first nine months of 2013, as compared to the same periods in 2012, relates primarily to the impact of certain receipts and charges that are taxed at different rates than our effective tax rate and the impact of certain discrete tax items. In the third quarter of 2013, the receipts and charges included debt extinguishment charges, and acquisition-, litigation- and restructuring-related charges. In addition, the reported tax rate in the third quarter of 2013 was affected favorably by discrete tax items, primarily related to re-measurement of uncertain tax positions. In the first nine months of 2013, the receipts and charges included goodwill and intangible asset impairment charges, debt extinguishment charges, acquisition- and divestiture-related net credits, and litigation- and restructuring-related charges. In addition, the reported tax rate for the first nine months of 2013 was affected favorably by discrete tax items primarily related to the reinstatement of tax legislation that has been retroactively applied, offset in part by re-measurement and resolution of uncertain tax positions. In the third quarter of 2012, the receipts and charges included goodwill and intangible asset impairment charges, acquisition- and divestiture-related net credits, and litigation- and restructuring-related charges. In addition, the reported tax rate in the third quarter of 2012 was affected unfavorably by discrete tax items primarily related to the re-measurement of an uncertain tax position. In the first nine months of 2012, the receipts and charges included goodwill and intangible asset impairment charges; litigation and restructuring-related net charges; and divestiture- and acquisition-related credits. In addition, the reported tax rate in the first nine months of 2012 was affected unfavorably by discrete tax items primarily related to the resolution and re-measurement of uncertain tax positions.

As of September 30, 2013, we had $1.080 billion of gross unrecognized tax benefits, of which a net $940 million, if recognized, would affect our effective tax rate. As of December 31, 2012, we had $1.052 billion of gross unrecognized tax benefits, of which a net $902 million, if recognized, would affect our effective tax rate.

We are subject to U.S. federal income tax as well as income tax of multiple state and foreign jurisdictions. We have concluded all U.S. federal income tax matters through 2000 and substantially all material state, local, and foreign income tax matters through 2001.

We have received Notices of Deficiency from the Internal Revenue Service (IRS) reflecting proposed audit adjustments for Guidant Corporation (Guidant) for its 2001 through 2006 tax years and Boston Scientific Corporation for its 2006 and 2007 tax years (Notices). Subsequent to issuing these Notices, the IRS conceded a portion of its original assessment. The total incremental tax liability now asserted by the IRS for the applicable periods is $1.162 billion plus interest. The primary issue in dispute for all years is the transfer pricing in connection with the technology license agreements between domestic and foreign subsidiaries of Guidant. In addition, the IRS has proposed adjustments in connection with the financial terms of our Transaction Agreement with Abbott Laboratories (Abbott) pertaining to the sale of Guidant's vascular intervention business to Abbott in April 2006. We do not agree with the transfer pricing methodologies applied by the IRS or its resulting assessment and we believe that the IRS has exceeded its authority by attempting to adjust the terms of our negotiated third-party agreement with Abbott. In addition, we believe that the IRS positions with regard to these matters are inconsistent with the applicable tax laws and the existing Treasury regulations.

We believe we have meritorious defenses for our tax filings and we have filed petitions with the U.S. Tax Court contesting the Notices for the tax years in challenge. No payments on the net assessment would be required until the dispute is definitively resolved, which, based on experiences of other companies, could take several years. We believe that our income tax reserves associated with these matters are adequate and the final resolution will not have a material impact on our financial condition or results of operations. However, final resolution is uncertain and could have a material impact on our financial condition, results of operations, or cash flows.

We recognize interest and penalties related to income taxes as a component of income tax expense. We had $408 million accrued for gross interest and penalties as of September 30, 2013 and $364 million as of December 31, 2012. The increase in gross interest and penalties was $43 million, which was recognized in our unaudited condensed consolidated statements of operations. We recognized net tax expense related to interest and penalties of $9 million during the third quarter of 2013, $15 million during the third quarter of 2012, $28 million in the first nine months of 2013, and $26 million in the first nine months of 2012.

It is reasonably possible that within the next 12 months we will resolve multiple issues including transfer pricing and transactional-related issues with foreign, federal and state taxing authorities, in which case we could record a reduction in our balance of unrecognized tax benefits of up to approximately $41 million.

XML

Acquisitions (Tables)

9 Months Ended

Sep. 30, 2013

Business Acquisition [Line Items]

Schedule of Purchase Price Allocation [Table Text Block]

The following summarizes the Cameron purchase price allocation (in millions):

Goodwill	$	314
Amortizable intangible assets	42
Indefinite-lived intangible assets	48
Other net assets	1
Deferred income taxes	76
	$	481

The components of the Cameron purchase price as of the acquisition date were as follows (in millions):

Cash, net of cash acquired	$	134
Fair value of contingent consideration	259
Fair value of prior interests	79
Fair value of debt assumed	9
	$	481

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

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

Balance as of December 31, 2012	$	(663	)
Amounts recorded to acquisition purchase accounting	(6		)
Net fair value adjustments	18
Payments made	115
Balance as of September 30, 2013	$	(536	)

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

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

	Amount Assigned (in millions)	Weighted Average Amortization Period (in years)	Risk-Adjusted Discount Rates used in Purchase Price Allocation
Amortizable intangible assets:
Technology-related	40	11	14.0	%
Customer relationships	2	5	14.0	%
Indefinite-lived intangible assets:
Purchased research and development	48		14.0	%
	90

Contingent Consideration Liability [Member]

Business Acquisition [Line Items]

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

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

Contingent Consideration Liability	Fair Value as of September 30, 2013	Valuation Technique	Unobservable Input	Range
Research and Development, Regulatory and Commercialization-based Milestones	$126 million	Probability Weighted Discounted Cash Flow	Discount Rate	0.8% - 1.1%
			Probability of Payment	70% - 98%
			Projected Year of Payment	2013 - 2014
Revenue-based Payments	$144 million	Discounted Cash Flow	Discount Rate	12% - 18%
			Probability of Payment	15% - 100%
			Projected Year of Payment	2013 - 2018
	$266 million	Monte Carlo	Revenue Volatility	13% - 28%
			Risk Free Rate	LIBOR Term Structure
			Projected Year of Payment	2013 - 2018

XML

New Accounting Pronouncements

9 Months Ended

Sep. 30, 2013

New Accounting Pronouncements and Changes in Accounting Principles [Abstract]

NEW ACCOUNTING PRONOUNCEMENTS

NEW ACCOUNTING PRONOUNCEMENTS

Standards Implemented

ASC Update No. 2013-02

In February 2013, the FASB issued ASC Update No. 2013-02, Comprehensive Income (Topic 220): Reporting of Amounts Reclassified out of Accumulated Other Comprehensive Income. Update No. 2013-02 requires that entities provide information about amounts reclassified out of accumulated other comprehensive income by component. The amendment also requires entities to present significant amounts by the respective line items of net income, either on the face of the income statement or in the notes to the financial statements for amounts required to be reclassified out of accumulated other comprehensive income in their entirety in the same reporting period. For other amounts that are not required to be reclassified to net income in their entirety, a cross-reference is required to other disclosures that provide additional details about those amounts. We adopted Update No. 2013-02 beginning in our first quarter ended March 31, 2013. Update No. 2013-02 is related to presentation only and its adoption did not impact our results of operations or financial position.

ASC Update No. 2013-01

In January 2013, the FASB issued ASC Update No. 2013-01, Balance Sheet (Topic 210): Clarifying the Scope of Disclosures about Offsetting Assets and Liabilities. Update No. 2013-01 clarifies the FASB's intent about requiring enhanced disclosures about certain financial instruments and derivative instruments that are offset in the statement of financial position or that are subject to enforceable master netting arrangements or similar agreements, previously issued ASC Update No. 2011-11, Disclosures about Offsetting Assets and Liabilities (Topic 210). We adopted Update No. 2013-01 beginning in our first quarter ended March 31, 2013. The adoption of Update No. 2013-01 did not impact our results of operations or financial position.

Standards to be Implemented

ASC Update No. 2013-11

In July 2013, the FASB issued ASC Update No. 2013-11, Income Taxes (Topic 740): Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists. Update No. 2013-11 requires that entities present an unrecognized tax benefit, or portion of an unrecognized tax benefit, as a reduction to a deferred tax asset in the financial statements for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward, with certain exceptions. We are required to adopt Update No. 2013-11 for our first quarter ending March 31, 2014, and early adoption is permitted. Update No. 2013-11 is related to presentation only and its adoption will not impact our results of operations or financial position.

XML

Document and Entity Information	9 Months Ended
	Sep. 30, 2013	Oct. 31, 2013
Document and Entity Information [Abstract]
Entity Registrant Name	BOSTON SCIENTIFIC CORPORATION
Entity Central Index Key	0000885725
Document Type	10-Q
Document Period End Date	Sep. 30, 2013
Amendment Flag	false
Document Fiscal Year Focus	2013
Document Fiscal Period Focus	Q3
Current Fiscal Year End Date	--12-31
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding		1,335,221,407

XML

Accounting Policies (Policies)

9 Months Ended

Sep. 30, 2013

Accounting Policies (Policies) [Abstract]

Legal Costs, Policy [Policy Text Block]

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

ASC Topic 820, Fair Value Measurements and Disclosures

We determine the fair value of our derivative instruments using the framework prescribed by ASC Topic 820, Fair Value Measurements and Disclosures (Topic 820), by considering the estimated amount we would receive or pay to transfer these instruments at the reporting date and by taking into account current interest rates, foreign 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.

ASC Topic 815, Derivatives and Hedging

We recognize all derivative financial instruments in our consolidated financial statements at fair value in accordance with ASC Topic 815, Derivatives and Hedging (Topic 815). In accordance with Topic 815, 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 Topic 815.

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

Termination benefits represent amounts incurred pursuant to our on-going benefit arrangements and amounts for “one-time” involuntary termination benefits, and have been recorded in accordance with ASC Topic 712, Compensation – Non-retirement Postemployment Benefits and ASC Topic 420, Exit or Disposal Cost Obligations (Topic 420). We expect to record additional termination benefits related to our restructuring initiatives in 2013 when we identify with more specificity the job classifications, functions and locations of the remaining head count to be eliminated. Other restructuring costs, which represent primarily consulting fees, are being recorded as incurred in accordance with Topic 420. Accelerated depreciation is being recorded over the adjusted remaining useful life of the related assets, and production line transfer costs are being recorded as incurred.

ASC Topic 2013-01, Balance Sheet

ASC Update No. 2013-01

In January 2013, the FASB issued ASC Update No. 2013-01, Balance Sheet (Topic 210): Clarifying the Scope of Disclosures about Offsetting Assets and Liabilities. Update No. 2013-01 clarifies the FASB's intent about requiring enhanced disclosures about certain financial instruments and derivative instruments that are offset in the statement of financial position or that are subject to enforceable master netting arrangements or similar agreements, previously issued ASC Update No. 2011-11, Disclosures about Offsetting Assets and Liabilities (Topic 210). We adopted Update No. 2013-01 beginning in our first quarter ended March 31, 2013. The adoption of Update No. 2013-01 did not impact our results of operations or financial position.

Subsequent Events, Policy [Policy Text Block]

Subsequent Events

We evaluate events occurring after the date of our most recent accompanying unaudited condensed consolidated balance sheets for potential recognition or disclosure in our financial statements. We did not identify any material subsequent events requiring adjustment to our accompanying unaudited condensed consolidated financial statements (recognized subsequent events) for the three and nine month periods ended September 30, 2013. Those items requiring disclosure (unrecognized subsequent events) in the financial statements have been disclosed accordingly. Refer to Note J - Commitments and Contingencies and Note B - Acquisitions for more information.

ASC Topic 2013-02, Comprehensive Income

ASC Update No. 2013-02

In February 2013, the FASB issued ASC Update No. 2013-02, Comprehensive Income (Topic 220): Reporting of Amounts Reclassified out of Accumulated Other Comprehensive Income. Update No. 2013-02 requires that entities provide information about amounts reclassified out of accumulated other comprehensive income by component. The amendment also requires entities to present significant amounts by the respective line items of net income, either on the face of the income statement or in the notes to the financial statements for amounts required to be reclassified out of accumulated other comprehensive income in their entirety in the same reporting period. For other amounts that are not required to be reclassified to net income in their entirety, a cross-reference is required to other disclosures that provide additional details about those amounts. We adopted Update No. 2013-02 beginning in our first quarter ended March 31, 2013. Update No. 2013-02 is related to presentation only and its adoption did not impact our results of operations or financial position.

ASC Update No. 2013-11, Income Taxes (Topic 740) [Policy Text Block]

ASC Update No. 2013-11

In July 2013, the FASB issued ASC Update No. 2013-11, Income Taxes (Topic 740): Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists. Update No. 2013-11 requires that entities present an unrecognized tax benefit, or portion of an unrecognized tax benefit, as a reduction to a deferred tax asset in the financial statements for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward, with certain exceptions. We are required to adopt Update No. 2013-11 for our first quarter ending March 31, 2014, and early adoption is permitted. Update No. 2013-11 is related to presentation only and its adoption will not impact our results of operations or financial position.