Boston Scientific Corporation (BSX) Q3 2012 Earnings Report, Transcript and Summary

Ladies and gentlemen, thank you for standing by, and welcome to the Boston Scientific Q3 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to our host, Mr. Michael Campbell. Please go ahead, sir.

Thank you, Brad. Good morning, everyone, and thanks for joining us. With me on today's call are Hank Kucheman, Chief Executive Officer; Mike Mahoney, President; and Jeff Capello, Executive Vice President and Chief Financial Officer. We issued a press release earlier this morning announcing our Q3 2012 results, which included key financials and reconciliations of the non-GAAP financial measures used in the release. We have posted a copy of that press release, as well as reconciliations of the non-GAAP financial measures used in today's conference call to the comparable GAAP measures and other supporting schedules to the Investor Relations section of our website under the heading Financial Information. During this morning's call, we will be approximately 1 hour, Hank will begin our prepared remarks with an update on our business progress and his perspectives on the quarter. Jeff will then review our Q3 financial results and business performance, as well as Q4 and updated full year 2012 guidance. Hank and Mike will then make some final comments before we open the call up to questions and answers. During today's Q&A session, Hank, Mike and Jeff will be joined by our Chief Medical Officers, Dr. Dawkins and Dr. Stein. Before we begin, I'd like to remind everyone that this call contains forward-looking statements within the meaning of federal securities law, which may be identified by words like anticipate, expect, project, believe, plan, estimate, intend, should and similar words. These forward-looking statements include, among other things, statements regarding our growth; market share; our products and markets for them; new product approvals, launches and performance; procedural volumes and pricing; clinical trials and data; cost savings and growth opportunities; cash flow and its uses; foreign exchange rates; our financial performance, including sales, margins, earnings, losses and other guidance for the fourth quarter and full year 2012; goodwill impairment; tax rates; R&D spending; and other expenses. Actual results may differ materially from those discussed or implied in these forward-looking statements. Factors that may cause such differences include those described in the Risk Factors section of our most recent 10-K and subsequent 10-Qs and 8-Ks filed with the SEC. These statements speak only as of the date hereof, and we disclaim any intention or obligation to update them. At this point, I'll turn it over to Hank for his comments. Hank?

Thank you, Michael, and good morning, everyone, and thanks again for joining us. Let me begin today with some comments on our third quarter performance, which Jeff will cover in more detail later. Our third quarter revenue of $1.735 billion was down 7% on a reported basis and down 5% on constant currency, excluding the neurovascular divestiture, and resulted in us coming in at the lower end of our third quarter range. But despite challenging economic and competitive environment, we remain keenly focused on our strategy of returning to top line growth in the near term and building on that over time. And I'll outline our progress against that here in a minute. On an adjusted basis, our earnings performance was a positive in the quarter as we delivered adjusted EPS of $0.16 driven primarily by continued gross margin improvement and cost control. This was in line with street consensus and at the higher end of our guidance range of $0.14 to $0.17. Adjusted operating cash flow remained strong at $295 million. We used a portion of our cash flow to buy back approximately 46 million shares of stock in the quarter. We continue to believe our stock price remains undervalued, and we expect that this belief will continue to influence our balance capital allocation strategy moving forward. From a business performance standpoint, another significant positive in the quarter was the continued constant currency growth we saw in several of our businesses. Our Endoscopy and Neuromodulation businesses delivered mid- to high-single digit sales growth in the quarter. Even more impressive was the performance of our PI business, which grew U.S. sales by 12% and worldwide sales 7% compared to third quarter last year. And in the emerging markets of Brazil, Russia, India and China, we also grew at approximately 30% on a combined basis contributing close to 100 basis points of growth to the company as we begin to see some returns on our investments. In total, 7 of our 12 business units grew greater than market. We expect to see continued above-market growth from these businesses and regions, which is a key element of our expected path back to top line growth for the company. The U.S. CRM market continues to be challenging and volatile. We have upgraded -- we have updated our future expectations in this market and realigned elements of our business, which resulted in an estimated $809 million noncash goodwill impairment charge within the quarter, which Jeff will further outline in a few moments. On a worldwide basis and the Interventional Cardiology or IC market, global PCIs continue to grow mid-single digits with growth in international markets offset by declines in the U.S., which combined with global pricing dynamics are yielding a global market that we believe is declining in the low- to mid-single digits in dollar terms. This market continues to be strategically important for Boston Scientific despite end-market challenges and the competitive pressures we have experienced, particularly in the last few quarters. We now have successfully converted substantially all of our worldwide PROMUS share to our Element platform, which is one of the reasons we see improved gross margin performance. In the U.S., our PROMUS Element Plus long lengths have been well received and we expect them to continue to provide access to more competitive accounts as those accounts come up for contract renewal. We estimate our third quarter U.S. DES share to be in the mid- to high-30s. In terms of our DES pipeline, our next-generation Synergy Stent continues to progress according to plan, and we continue to expect both CE Mark and the commencement of our IDE trial, EVOLVE II, by the end of this year. In our core IC business, we launched the Emerge PTCA balloon catheter, the Convey 5 fringe range for guiding catheters during the quarter, and have received positive feedback from customers. In addition, we acquired BridgePoint Medical with a suite of coronary CTO devices that add to our unique and clinically differentiated portfolio of IC products such as Rotablator, IVUS cutting balloon, all of which enable us to be a one-stop shop for complex PCI procedures. In short, we are leveraging the play book we use to successfully rejuvenate the Peripheral business and as result, we expect the portfolio of IC core products to grow faster than market and help support Boston Scientific's return to top line growth. On the structural heart front, we are excited by the Lotus Valve and look forward to the REPRISE I 3-month data, which will be presented next Tuesday at TCT. In addition, we achieved another important milestone last week with the first patients enrolled in our CE Mark study REPRISE II, which we expect to be completed in the first half of next year. We continue to expect the use of data from that trial to support CE Mark approval and European launch of the Lotus Valve in the second half of 2013. In Peripheral Interventions, we expect to continue strong above-market growth in the U.S. as we execute the launches of key products including Epic Self-Expanding Vascular Stent, TruePath CTO Device, Victory guidewire and PTA balloons. We continue to see growth around the world with certain countries in Asia Pac and Latin America showing impressive double-digit growth during the quarter. In addition, our launch of the INNOVA Self-Expanding SFA stent in Europe is contributing to PI growth internationally. In Endoscopy, we continue to expect the recent product launches to bolster our already strong Endoscopy above-market growth profile. During the quarter, we experienced broad growth across several of our key product franchises. Our biopsy business, our Biliary device franchise driven by continued growth in our Expect EUS needles and access products, our Metal Stent franchise, led by our industry-leading WallFlex product family and our hemostasis franchise on the continued adoption utilization of a resolution clip for GI bleeding, which has been a significant market share gainer. In the quarter, we were pleased with the American Medical Association, CPT editorial panel's decision to sign Category 1 CPT codes specifically for our bronchial thermoplasty therapy beginning January 1, 2013. Category 1 CPT procedure codes are recognized by all public and private health insurance payers in the U.S. This is a major reimbursement milestone for bronchial thermoplasty, and we believe it also reflects the strength of the clinical evidence and the tremendous support for the procedure amongst pulmonary physicians. These codes should provide greater access to treatment for patients with poorly controlled severe asthma, facilitate easier claims processing and accelerate private payers' coverage of this much-needed treatment option. We are very close to surpassing our year-end goal of establishing 200 worldwide treatment sites. We're experiencing good reorder rates, as well as consistent rates of cases being approved by large payers as predetermination. In Urology and Women's Health, we launched the AccuTrac and Flexiva TracTip Laser Fibers. Both products are designed to improve the scope trackability of the laser fiber during kidney stone lithotripsy procedures. In addition, we continue to expand the commercial launch of our BackStop Gel, which is designed to prevent stone migration during stone management procedures. We continue to believe this business has considerable above-market growth potential and expect to introduce several new and differentiated technologies in both our pelvic floor and urology franchises over the next couple of quarters to help realize that potential. In Neuromodulation, we launched the Vercise Deep Brain Stimulation System for Parkinson's disease in Europe. The Vercise System leverages our differentiated technology platform and is designed to enable physicians to selectively stimulate targeted areas in the brain. Vercise also offers the longest battery life and the smallest footprint of all stimulators currently in the DBS market. Over the next few years, we expect that DBS opportunity will enable us to enter a $0.5 billion global market and to contribute significantly to the growth of our international Neuromodulation business. This is yet another example where we have introduced clinically relevant innovations that allow physicians to offer more treatment options to their patients. Now let me move to CRM, where we believe that the worldwide CRM market will continue to be challenged in 2012, declining to low- to mid-single-digits in dollar terms for the full year on a constant currency basis. In the U.S., we're starting to see the easing year-over-year comparisons as we sense that significant 2011 market declines. In the U.S., we estimate the defib market decline in the mid-single digits in dollar terms in the third quarter. From a share perspective, we estimate that overall U.S. defib share would stable sequentially. Our highly reliable RELIANCE lead continues to sell very well in the market, further driving our defib lead report ratio to higher levels. On the pacing side, we believe we are taking share, both in the U.S. and internationally with our INGENIO family of pacemakers in CRTPs. In addition, pacemaker pricing was stable versus last year and sequentially our pricing was up. We believe this reflects us having upgraded our pacer offering significantly, including a wireless, RPM-enabled device along with significant new features like light rate and respiratory rate trend. As you would anticipate, we are extremely pleased with the early FDA approval of the unique Cameron S-ICD technology and congratulate our colleagues from Cameron for this most significant achievement. Based upon recent customer visits, we believe now more than ever, that this technology is strategically important to our CRM business and that the S-ICD technology provides us with the opportunity to both take share in existing ICD market and to expand the market over time. Let me reinforce 3 key beliefs for why we feel so strongly about this growth potential. First, with the S-ICD, we will establish the first new category of CRM devices since the introduction of CRT. The S-ICD is the world's first and only commercially available completely subcutaneous ICD that leaves the heart and vascular untouched while providing protection as transvenous ICDs. The new subcu category provides physicians and their patients with a new alternative that only BSC can offer. Second, we expect the ICD to capture de novo share in the ICD market. In addition to de novo share, we also expect to take share in complex ICD replacements as evidenced by market research where EPs surveyed said they would choose the S-ICD to manage complex replacements more than 50% of the time. For example, 2 of the first 4 U.S.A. commercial implants came from competitive changeouts. Finally, we believe the S-ICD will be the preferred device among referring cardiologists who have indicated in their research that they would preferentially refer patients for the S-ICD. Furthermore, referring cardiologists also indicated that they would actually increase the number of ICD referrals they make as a result of the S-ICD, which could help expand the market. We have initiated a controlled rollout of the S-ICD technology that has Medicare reimbursement in place under the existing national coverage policy for ICDs. We continue to believe that the S-ICD has potential to be the major, what's next in this market. More importantly, many in the EP community agree as well. Turning to Left Atrial Appendage Closure or LAAC, we continue to roll out the WATCHMAN Device both commercially and clinically. The WATCHMAN product line continues to show strong growth in both sequential and year-over-year comparisons. Specifically, third quarter WATCHMAN implants grew by over 60% year-over-year, and we expect full year 2012 sales to be more than double from last year. In addition, we received an expanded indication in Europe for patients who do not tolerate anticoagulants. We continue to expect our FDA PMA submission around year end with approval anticipated by the end of 2013. We believe the combination of WATCHMAN and the S-ICD, coupled with a newly rejuvenated pacing platform and a very competitive ICD platform gives us for the first time in some time a truly differentiated CRM offering that is expected to translate to an improved CRM growth profile. Finally, in our EP business, we continue to leverage our expertise in catheter and ablation technologies, we execute our global AFib strategy and progress on our internal AFib focused projects. Our core business in EP is centered on solid tip catheters for cardiac ablation. Over the last few years, our strategic investments have been focused on entering the open-irrigated catheter category. We have a CE Mark for our Blazer Open-Irrigated Catheter, and we market that device in Europe and other international markets. We are currently enrolling 2 IDE trials for approval of the open-irrigated catheter in the United States, one for AFlutter, the study is called BLOCk-CTI, and one for AFib, the study is called ZERO-AF. Future RF catheter investments are expected to build on the core Blazer and Blazer Open-Irrigated platform to bring additional sensors and intelligence to the tip of the catheter. In addition to catheters, we're investing in other large growing segments within the AFib space specifically, Intracardiac Ultrasound imaging for atrial septal crossings, durable sheets and other components that facilitate these cases. In addition, we are excited by the recent acquisition of Rhythmia Medical and its next-generation mapping and navigation solutions for using cardiac catheter ablations. This acquisition is a decisive step forward in Boston Scientific's commitment to the EP business and better positions the company to participate strategically in the fast-growing EP market. Treating complex cardiac arrhythmias, including AFib and AFlutter represent a key growth area for the company. Rhythmia Medical technology is expected to add tremendous strength to our current suite of solutions to better manage these conditions and provide synergies with the common customer across electrophysiology, cardiac rhythm management and Left Atrial Appendage Closure businesses. In summary, we are encouraged by the progress we have made on our strategic initiatives, the early FDA approval of the Cameron S-ICD device and the positive feedback that we have received on our recently announced acquisitions. We also grew above market, 7 of our 12 business units. We continue to achieve key milestones relating to our cost-reduction opportunities to drive earnings growth and to generate strong cash flow. And we continue to believe there is a clear path back to near-term sales growth and achieving our objectives through share gains from new and recently introduced products and improved sales execution, as well as increased penetration in emerging markets. That's it for my comments, so now let me turn the call over to Jeff. Jeff?

Thanks, Hank. Let me begin by providing some overall perspective on the quarter before getting into the details. Despite challenging global economic and end-market conditions, we generated adjusted earnings per share of $0.16, which was at the higher end of our guidance range of $0.14 to $0.17 and in line with street consensus. This solid profitability was driven by higher gross margins due largely to the transition to PROMUS Element in the U.S. and Japan and continued strong attention to cost control. In addition to our solid adjusted earnings performance, we also generated $271 million in operating cash flow and repurchased approximately 46 million more shares in this quarter. During the quarter, we recorded an estimated $809 million impairment charge to write down goodwill associated with our U.S. CRM reporting unit, primarily driven by the reduction in the estimated size of the U.S. CRM market and related adjustments to our business, which led to lower projected U.S. CRM results over the mid- to long-term compared to prior forecasts. It is important to note that given the size of our goodwill balance in this business unit, even small changes to expectations can have an impact on these carry-in amounts. We still believe CRM represents a future growth opportunity for the company given our new products and future technology offerings. The amount of the goodwill impairment charge is subject to finalization and is expected to be within a range of $700 million and $900 million when finalized. As a reminder, this is a noncash charge with minimal tax consequences and has no impact on our expected cash flows or our bank covenant ratios. We will continue to monitor all of our goodwill balances for potential impairments as required. Consolidated revenue for the third quarter of $1,735,000,000 represents a decrease of 7% on a reported basis and 5% on an operational basis, which excludes the impact of foreign exchange and the divested Neurovascular business. The actual headwind from foreign exchange on sales was $48 million and in line with what we had assumed in our third quarter guidance range. Now I'll move to the detailed review of our business performance and operating results in the quarter. Starting with Interventional Cardiology, worldwide revenues came in at $494 million in the third quarter, representing a constant currency decrease of 17% compared to the third quarter of 2011. Worldwide DES revenues came in at $283 million in the third quarter, representing a constant currency decrease of 22% compared to the third quarter of 2011. U.S. DES revenues were $123 million in the quarter, representing a decline of 35% compared to Q3 last year. This decrease was primarily due to a strong comparison to the prior year quarter driven by the launch of ION in the second quarter of 2011, lower share due to recent competitive product launches, lower ASPs and continued softness in PCI volumes. We estimate that our U.S. DES share was in the mid- to high-30s for the third quarter. We expect over time to leverage our PROMUS Element Plus long sizes to enter competitive contracts within previously locked [indiscernible]. International DES sales of $160 million represented a decrease of 7% in constant currency compared to the third quarter of last year, primarily driven by the clients in EMEA and Japan, partially offset by strong market growth in the emerging markets. As expected, sales were lower in Japan as we've lost some share due to recent competitive product launches. We expect this decline to abate and to gain share in the fourth quarter with the launch of PROMUS Element Plus long lengths and small vessel. We are also continuing to build momentum with our Element platform in the emerging markets including India, Brazil and China and expect this to continue to accelerate through the end of this year and into 2013. Worldwide non-stent Interventional Cardiology was down 7% in constant currency. However, with recent launches of new products and vascular access and balloons along with the acquisition of BridgePoint Medical suite of CTO devices, we expect to see a continued improvement in this business. Moving on to CRM. Worldwide revenue was $462 million in the third quarter, representing a constant currency decrease of 6% compared to the third quarter of last year. In the U.S., CRM revenue of $273 million represented a 8% decrease from the third quarter of 2011. International CRM sales of $189 million were down 2% in constant currency compared to the prior year quarter. On a worldwide basis, defib sales were $327 million in the third quarter, which was down 7% in constant currency from the third quarter of 2011. In the U.S., defib sales were $205 million. This was down 9% compared to the third quarter last year due primarily to overall market declines and replacement headwinds in our business. However, these factors were partially offset by continued success of our highly reliable RELIANCE defib lead and Progeny platforms in the quarter. Looking at the broader U.S. market, de novo defib implant volumes look like they continued to be relatively stable sequentially, based on the data we have so far for the third quarter. International defib sales of $122 million represented a 3% decrease in constant currency from the third quarter of last year. Finally in pacer, the launches of our INGENIO pacemaker family in both the U.S. and Europe are going very well, and we have received positive feedback from customers. In particular, in the U.S. we received price uplifts that stabilize our ASPs year-over-year with sequential prices up, which is great news. Moving on to our Peripheral Interventions business, PI delivered another very strong quarter, driven by 12% growth in the U.S. and double-digit increases in certain countries in Asia Pacific and Latin America. Worldwide revenue was up over 7% in constant currency, again, in the third quarter, making it the third straight quarter of 7% global growth. Again this quarter, we drove higher growth from new product launches in stents, balloons, CTO devices, and we expect this growth to continue. Worldwide Electrophysiology was flat in constant currency over the previous year due to do some softness in both the small tip and large tip U.S. businesses, offset by growth in other segments including capital equipment, cooled ablation and diagnostics. Our Endoscopy business had another very strong quarter with worldwide sales up 7% in constant currency led by 8% growth internationally and 6% growth in the U.S. This performance was the result of broad growth across several of our key product franchises. In constant currency, our worldwide Urology/Women's Health business grew 1% versus the third quarter last year but was up 11% internationally. The Urology business maintained its leadership position and delivered 6% worldwide constant currency growth driven by strong international growth of 11%. Our Women's Health business declined 11% on a worldwide constant currency basis, primarily due to continued pressure on electric procedures and concerns around the use of surgical mesh for pelvic organ prolapse. Outside the U.S., however, our international Women's Health business experienced excellent growth. It was up 13% in constant currency driven by new product introductions, increased sales investments and the penetration of new therapies. In Neuromodulation, we had a good quarter with worldwide sales up 5%, driven by 3% growth in the U.S. and 60% growth in international markets through a very strong sales execution. Moving on from sales. Adjusted gross profit margin for the third quarter was 68% or 380 basis points higher than the third quarter of last year. The increase was largely attributable to the continued mix shift towards self-manufactured product in DES as a result of the launches of PROMUS Element in the U.S. and Japan, as well as benefits from our Plant Network Optimization plan and value improvement programs partially offset by price erosion. Looking forward, we expect adjusted gross margins to be between 67% and 68% for the fourth quarter. Adjusted SG&A expenses were $586 million or 33.8% of sales in the third quarter of this year compared to $626 million or 33.4% of sales in the third quarter of last year. During the third quarter of this year, benefits from cost saving initiatives were partially offset by weaker sales than expected. Looking ahead, we expect adjusted SG&A to be between 33% and 34% as a percentage of sales in the fourth quarter of this year. Research and development expenses were $220 million for the third quarter or 12.7% of sales as compared to $229 million in the third quarter of last year. We expect R&D spending to be in the range of 12% to 13% of sales in the fourth quarter of this year. Royalty expense was $29 million or 1.7% of sales compared to $36 million in the third quarter of last year. We expect royalty expense as a percentage of sales to be relatively flat as compared to the third quarter. On an adjusted basis, pretax operating income was $344 million or 19.9% of sales, up 330 basis points from the third quarter of last year. The increase in adjusted operating margins was primarily due to higher adjusted gross margins, which were partially offset by the impact of lower sales. GAAP operating loss, which includes GAAP to adjusted items that had a net negative effect of $946 million on a pretax basis was $725 million in the third quarter. The primary GAAP to adjusted items in the quarter were the estimated pretax goodwill impairment charge of $809 million that I discussed earlier, pretax net litigation-related charges of $50 million and pretax amortization expense of $99 million. Now I'll move on to other income expense. Interest expense was $65 million in the third quarter which was $3 million higher than the third quarter of last year due primarily to a one-time benefit associated with terminating fixed to floating interest rate swaps in the third quarter of last year. Our average interest expense rate in the third quarter this year was 5.5% or about 20 basis points higher than last year. Our tax rate for the third quarter was a negative 0.1% on a reported GAAP basis and 19.7% on an adjusted basis. The difference between our reported and adjusted tax rates for the quarter is attributable to the net benefit of restructuring, litigation and other net charges excluded in determining our non-GAAP results. Our adjusted tax rate in the third quarter included a net charge of approximately $10 million for discrete tax items, primarily related to an unfavorable court decision in a foreign jurisdiction. Excluding this charge, our operational tax rate for the third quarter was slightly lower than our expected full year operational tax rate of 16% due to timing items that were reversed in the fourth quarter. Accordingly, we expect our adjusted tax rate in the fourth quarter to be slightly higher than 16% as these timing items reverse. Furthermore, our expected full year tax rate does not include any benefit for the U.S. federal R&D tax credit. If this credit is reenacted with retroactive effect before the end of this calendar year, then the benefit of the full year's credit will be recorded in the fourth quarter. Moving on to the balance sheet. Days sales outstanding of 63 days was up 2 days compared to the third quarter of last year due to continued weakness in Europe with good performance in other major geographies. Despite lower inventory levels, days of inventory on hand of 150 days was up 19 days compared to the third quarter last year, primarily due to lower cost of goods sold driven by the PROMUS Element transition. Reported operating cash flow for the quarter was $271 million compared to $366 million in the third quarter of last year. Q3 2011 operating cash flow included an $82 million benefit primarily related to the $850 million fixed to floating rate interest rate swaps on our public bonds. We terminated these interest rate swaps during the third quarter of last year. Q3 2012 reported operating cash flow included $24 million of restructuring payments compared to $25 million in last year. Excluding restructuring payments, Q3 2012 operating cash flow was $295 million compared to $391 million in the third quarter of last year. Capital expenditures were $46 million in the third quarter this year compared to $69 million last year. We continue to expect our full year 2012 adjusted free cash flow to be approximately $1.1 billion. Turning to share repurchases, we repurchased 46 million shares in the quarter for approximately $250 million. Year-to-date, we have now repurchased 87 million shares for approximately $500 million. Since July 2011, we have now repurchased 169 million shares or approximately 11% of our outstanding shares. At our current stock price, we estimate we have over 200 million of capacity remaining under our authorized share repurchase programs. We continue to believe that our stock price is undervalued, however, we expect to use most of our cash flow generated in the fourth quarter primarily to cover upcoming acquisition-related obligations. Let me now briefly provide some prospective on our outlook and walk you through our guidance for the fourth quarter, as well as updated guidance for the full year. Looking ahead, over the remainder of the year, we expect to continue to face a challenging competitive environment and dynamic market conditions. We believe the risks of increasing macroeconomic weakness, particularly in Europe, and softening procedural volumes are real. As a result, we are carefully monitoring conditions and have applied what we believe is a reasonable level of conservatism in our guidance to account for these factors. However, despite these uncertainties, we believe there's a reason to be positive. We have recently acquired new technologies and launched key new products in most of our businesses and are seeing mid-single-digit or better sales growth in several of them. As a result, we remain focused on returning to top line growth in the near term. At the same time, we also believe we have significant incremental opportunities to enhance profitability and expect to continue to generate strong cash flow. With that background, we expect consolidated fourth quarter revenues to be in the range of $1,740,000,000 to $1,815,000,000. If current foreign exchange rates hold constant, we estimate that the headwind from FX will be approximately $10 million or around 50 basis points relative to the fourth quarter of last year. On an operational basis, we expect consolidated fourth quarter sales to be in a range of down 2% to down 6% compared to the fourth quarter of last year. On a worldwide basis, we expect DES revenue to be in the range of $275 million to $295 million and CRM revenue to be in the range of $445 million to $470 million. We expect the fourth quarter EPS on an adjusted basis to be in a range of $0.15 to $0.18 per share and reported GAAP EPS to be in a range of $0.07 to $0.10 per share. Moving to the full year, we now estimate that consolidated 2012 sales will be between $7,170,000,000 and $7,240,000,000 assuming that current foreign exchange rates hold constant. We expect the full year headwinds from FX to be approximately $115 million and the Neurovascular divestiture to be approximately $15 million. On an operational basis, consolidated 2012 sales should be in a range of down 3% to down 4%. From an earnings standpoint, we now expect adjusted earnings per share for the full year to be in a range of $0.63 to $0.66 and would again encourage you to model the midpoint of that range. On a reported GAAP basis, we expect the net loss for the year to be in a range of $2.86 to $2.89 per share. That's it for guidance. So with that, I'll turn it back over to Hank, who will make some closing remarks. Hank?

Thanks, Jeff. Finally, let me close with a couple of personal perspectives. First despite continued pressure on global health care costs, I clearly believe the opportunity in this industry continues to be significant. Economic realities dictate that companies like Boston Scientific not only continue to develop technology that improves health care but do so in ways that contribute to reducing the overall episode of treatment cost, the frequency and or need for patient reintervention or hospital readmission, or even potentially the co-pays that patients incur from their insurance carrier. These are technologies that will be truly differentiated. These are technologies like Alair, like Synergy, like S-ICD, like BridgePoint, like Lotus and WATCHMAN, all of which spell opportunity for revenue growth. And we, as a company, remain focused on capitalizing on this opportunity in the months and years to come. Finally, we as a company are fortunate to have a very experienced and capable executive team and have Mike Mahoney as our incoming CEO. Mike and I have worked closely and very effectively together in our respective roles over this past year. Together we embrace the philosophy of 1 plus 1 equals 3, and focus on those imperatives which we collectively believe will return Boston to growth. Some of these are known today, others will manifest themselves in the future. Simply put, Mike Mahoney is the right leader at the right time to return BSC to its rightful place in the medical device marketplace, period. So that's my final and most important perspective. And I'll now turn the call over to Mike for a few comments. Mike?

Thank you very much, Hank, for those very kind words. And with the expected CEO transition date fast approaching on November 1, I would like to thank Hank on behalf of our employees for his tremendous dedication, commitment and leadership during his tenure as CEO. Hank has made a significant leadership contribution to the company for a number of years, and I want to thank Hank for his collaboration and your excellent support over the last 12 months. I truly appreciate it. So I was able to celebrate my 1 year anniversary yesterday, and I feel more strongly than ever that I made the right decision in joining this company. I have great respect for what Boston Scientific represents today, and I have tremendous optimism for our future. I have complete confidence in the company and the senior leadership team and in our employees around the world. This health care industry is certainly dynamic. It is under challenging cost pressures. However, for Boston Scientific, the global opportunity continues to be significant. And I'm excited and committed to lead Boston Scientific over the long term. So I look forward to leading the fourth quarter earnings call in January and to our upcoming Investor Day conference, which we expect to hold in February 2013. So with that, I would like to turn the call back over to Michael and go on with the questions and answers.

Thanks, Mike. Brad, let's open it up to questions for the next 20 minutes or so. [Operator Instructions] Brad, please go ahead.

[Operator Instructions] Our first question today comes from the line of Glenn Novarro with RBC Capital Markets.

So a little bit -- a little question here, first, on the CRM business. You are guiding a little bit below -- if I look at the midpoints, a little bit below what you've done in the third quarter. And usually you get a little bit of a seasonality bump in the fourth quarter. So is that just being extra conservative given that the market is still uncertain? And then I have a follow-up on stents.

So, Glenn, it's Jeff. So, if you look at the midpoint of our guidance from a CRM perspective globally, it's down about 5% year-over-year. That's more or less what we're calling the market. So from a market perspective, I think you kind of have to kind of do the year-over-year comparables from a market perspective. And I think as Hank kind of laid out, I think we're quite optimistic with the new technology we have coming in, the Cameron S-ICD launch which is now ramping up in the U.S., that we're going to see some strength in that market, of course.

And then just a follow-up on stents. As stents came in light again, and again as I look at your fourth quarter guidance, the guidance actually, if you take the midpoint of that guidance, it suggests a sequential uptick. So what are your expectations there? Have you really kind of stabilized the U.S. business and then have more confidence in the o-U.S. business?

Glenn, this is Hank. As I said earlier, I think in the U.S., we estimate mid to high 30s in terms of share position today and, obviously, that needs to be once Medtronic announces true DAP. We believe the competitive launch environment is essentially complete, and we expect to be in a position to drive our share position higher growing -- going forward. And that's going to be with better sales execution, quite frankly. And as I think we both, Jeff and I, alluded to, the longs, I think, will help us in some of the accounts that we've been locked out. The thing I'm really feeling good about is that we have successfully converted substantially all of our worldwide PROMUS share to the Element platform. So in a nutshell, obviously we lost some share this past quarter. The sales organizations in the U.S. and Europe are very much focused on this. And at the end of the day, in terms of how we perform in fourth quarter is going to be a function of how well we execute.

Just as a follow-up, is the confidence because you saw a share recovery throughout the quarter, in other words, September coming back strong, which is giving you the confidence that things can be better in the fourth quarter?

I think my confidence relies in the -- this is a U.S. -- more of a U.S. comment, but in the tenure and experience of the U.S. team. We've recently had them in and talked to them about the current situation. I think the confidence is also a function of the fact that we believe that the competitive launch environment is essentially complete. So we can now focus on getting back to clinically differentiated selling and do that in a way that we have been known to do it traditionally.

Okay. And then one last one just for Jeff, the gross margin guidance is 68% in 4Q. So that's a little bit below where you were in the third quarter. Is some of that FX? If you can give us anymore guidance, that'd be helpful.

Well, I think what we did is we ranged it 67% to 68%, be disappointed if we weren't close to the high end of that range which is more or less where we were in the fourth quarter -- third quarter. So if you look at kind of the gross margin performance for the third quarter, it was actually very strong. If you look at the benefits we got from the PROMUS Element conversion and some of the cost actions, the Plant Network Optimization, the VIP programs. I mean, these programs are really starting to pay off and so those benefits offset but by some price at a 300 basis -- 380-basis-point expansion. And that expansion will be as big, if not bigger in the fourth quarter. So I think 67% to 68%; I'd lean a little bit more to the higher end of that range. And I would just say that you could imagine where we'd be if we had a better performance in the DES business.

We do have a question from the line of David Lewis with Morgan Stanley.

Mike, I wonder if you appreciate your preamble comments and just thinking about things we've seen from Boston in the last couple of months. I mean it seems as if the message heading into next year is going to do reinvest for growth. But if you think about the last several quarters for Boston, the leverage stasis in light of a weaker top line has actually been at the highlight for a lot of investors. So kind of help us understand, as we go into 2013, if you're going to reinvest to drive this top line back in the positive territory, how confident do you feel that you can still execute on the positive leverage and earnings momentum that you've seen in the bottom line?

Well, a couple comments. As Jeff has indicated and we've talked about at a number of analyst calls in terms of how we utilize our cash, we're committed to looking at using about 1/2 our cash for share repurchase, another 1/2 for acquisitions that make strategic sense for the company. And so with that as a backdrop, if you look at our business today, as Jeff outlined and Hank did in the call, we have about 45% of our business today that's growing quite well, in our PI business, our Endo business, our Urology business and our recent EP acquisition. So we believe with the pipeline that we have in that -- in those businesses which are representing the higher concentration of our overall revenue, that'll be a big -- the nice platform for us to grow off of. And we need to work really hard, as Hank just talked about, to stabilize our core market share in DES. That'll come through once the long size launch that we talked about, the acquisition of BridgePoint which will put us in a unique position with complex lesions and then continue to improve our momentum in CRM. And I think as you've seen with the portfolio, we've done quite a bit in that area with the S-ICD launch and the new INGENIO and Progeny launch. That, combined with the lot of efforts that we have on globalizing the company more effectively. So we've hired new leaders in key markets. We're aligning our organization to be more nimble and more globally oriented to take advantage of that. At the same time, there's a lot of cost structuring -- restructuring initiatives in place. So there's a number of things we're working on, but if you look at that formula, the pieces of our business that are growing will continue to grow with our pipeline, and we have a lot of efforts to improve our execution and share position in CRM and DES and to leverage those global opportunities. And you've heard about the acquisitions we've made.

That's very helpful, Mike. And just maybe a quick follow-up. Obviously, I think the company wanted to be more successful perhaps in taking share in high-voltage ICDs in light of competitor pressures. But now you have Cameron, and there's some optimism about maybe driving your share gains. Can you just help us understand, in the first 12 to 18 months, so what's the strategy for Cameron in terms of number of centers, pricing, share expectations? Anything you can share would be helpful.

Sure. What I've learned so far in a year here, share gains in CRM is -- maybe the marathon is a bad example, but it's more of a marathon than a sprint here. And I think what you're seeing in the CRM is just a -- the strength of the portfolio that we're building and the appeal that it has to electrophysiologists, in our defibrillator line, our pacer line, Atritech, S-ICD, as you mentioned, and the recent acquisition of Rhythmia for mapping for RF ablation. So our reputation and clout within the EP community will continue to grow. And, yes, you leverage our reliability of our leads, and the S-ICD, which is just recently FDA approved. And I think you'll see us build momentum in the future in the overall CRM and EP business. And with the S-ICD, we'll do with this very smartly with important physician training in select sites. And we expect to continue to increase the penetration level of the current sites that are using S-ICD in EMEA.

And we do have a question from the line of Mike Weinstein with JPMorgan. Michael N. Weinstein - JP Morgan Chase & Co, Research Division: Just a couple quick follow-ups here. First, just on the fourth quarter gross margin guidance. Jeff, I know you said on the 2Q call that second half gross margins would be in the 68%, 69% range, you came in at 68% here. You guided at 67%, 68% for the fourth quarter. So is the difference there between what you thought a quarter ago and today, is that just the performance in the DES business?

Yes, Mike, as Glenn asked earlier, I think it would lean more towards the higher end of that range, 67% to 68%, and we're -- year-over-year the DES performance is still going to be down more than the market. And anytime you lose that type of gross margin, it has a mix implication for the business. So that's the biggest factor, differential factor. Michael N. Weinstein - JP Morgan Chase & Co, Research Division: And, Jeff, so help us out a bit if we're trying to go forward here. Let's assume that your DES share basically stabilizes at or around the current level, say, it's plus or minus where it is today. What's your ability to grow gross margins in 2013 assuming no changes in your net market share amount to DES or CRM and the current market environment remains as it is with pricing pressure and some volume pressure as well?

Yes, I think that's a fair question. We're not in any position to be able to share guidance, we're still working through our plan. But what I can tell you is as we step through the infamous $650 million to $750 million that we laid out a couple years ago, maybe I can help you from that perspective. So if you look at the PROMUS Element transition, it was deemed to be a $200 million benefit. I've said along about 2/3 of that would be consumed in '12. I'd say another 1/3 probably is left for '13, maybe a little bit smaller given our share is going to be a little bit smaller. So there'll be some margin expansion based on what's left of the PROMUS Element transition. The Plant Network Optimization program is mostly done but hasn't fully rolled through, so we'll get some benefit from that in '13 as well. That was $100 million, probably a smaller portion will hit in '13. I think you'll find from a value improvement program, our cost initiatives. We continue to do very well. We kind of targeted 5% as kind of the number to take out of our standard cost of goods sold every year. I think our manufacturing group will overdeliver on that next year, which will provide some uplift from gross margin perspective. So those are the 3 from a margin perspective that give us some tailwind going into '13, offset obviously by price. However, from an operating margin perspective, I wouldn't want you to lose focus of the SG&A programs we have, as Mike highlighted, and I mentioned and I think Hank did as well. We were originally in the $100 million to $200 million range when we kind of did the Investor Day 2 years ago. In the second quarter of last year, we said it's more like $225 million to $275 million and I've been saying pretty clearly all along, it's going to be north of $275 million. And most of those benefits, you haven't seen yet. So there's going to be a good-sized benefit that comes through '13 and a piece in '14 as well. And then you got project transformation in which you're seeing a little bit lower R&D levels today. And then the final piece is the med tech tax. We had kind of put that at $150 million 2 years ago with a higher revenue. That number is slightly under $100 million. So if you put all those components together, I still don't think any of our competitors have those types of cost improvement programs lined up. Some of them are scrambling to put some in place as I kind of dissect as I've kind of watched what they're doing. But we have a number of them that are in place that have been in place and in movement now for a couple years. And now against that, we've got weaker end markets, so we'll just have to kind of sort everything through. Michael N. Weinstein - JP Morgan Chase & Co, Research Division: Got you. So let me just ask a couple -- just some really quick follow-ups here. The WATCHMAN performance this quarter and the expectation on the PMA submission to the FDA, when do we get to see the PREVAIL data?

Ken, you want to answer that one?

Yes, very much. So we finished enrollment in PREVAIL in June of this year. Last end point is at 6 months, so we expect to have a data in hand and analyzed early first quarter next year. And at that point, submit to FDA, as well as present it at one of the major scientific meetings. Michael N. Weinstein - JP Morgan Chase & Co, Research Division: Okay, and then last one is, maybe Ken can try and answer this one as well. Given the state of the current drug-eluting stent market and the share loss that's occurred in the U.S. a few times this year, why not accelerate Synergy? Not only in its launch in Europe but its path to the U.S. I know you're still waiting to start the U.S. trial. Why isn't that a bigger priority?

Well, I think it is a high priority for us. And I think Dr. Dawkins, Mike, can walk you through kind of what the strategy is from a clinical perspective. So Keith, why don't you just walk Mike through what the plans are here in the coming months?

Yes, sure, Mike. As you know, the EVOLVE first human use trail was presented 12 months ago at TCT. EVOLVE II, which is the pivotal IDE trial, will start within a few weeks, which is both U.S. and out of U.S. And then in the first half of next year, the EVOLVE short DAP trial will be a global trial, 8,000 to 10,000 patients comparing 3 to 12 months dual-antiplatelet therapy. Of course, we think this is a truly differentiated product, which will allow short DAP, which we plan to confirm in a formal trial. So once we have CE Mark, which we anticipate within a few weeks, then we'll roll out the Synergy launch in countries where the CE Mark is applicable starting in 2013.

And we do have a question from the line of Bob Hopkins with Bank of America.

Jeff, a question for you on capital allocation and M&A plans going forward. You guys have been very busy acquiring technologies, and I'm just curious as to where you think you stand with that process. Is that something that we're going to continue to see over the next 12 months, is more of these technology deals? Or as we look out the next 12, 18 months, are we more in integration mode and we'll see maybe fewer of these types of technology deals that you've been putting forward?

Yes, a lot of that's going to depend on kind of what's available in the marketplace. I think as we've outlined, we're very positive about the technology we've brought in. And we're making good strides to kind of finish the products or get the commercialization efforts moving along. And I would characterize our capital allocation process as very balanced, having used roughly 1/2 of our free cash flow to buy back shares this 1.5 years to do technology acquisitions. I think it's just going to depend on kind of what's available, a slight bias for bringing in companies that have revenue today. That can be helpful on the top line, in the operating income and EPS line right away. Given that we've got a number of technologies already brought in there that were earlier in their maturity cycle, let's say. So I think I'd look for us to kind of do a bit of both, both strong commitment to share repurchase will continue, good cash flow will support that and then a part of the cash flow will go to bring in companies with a bias towards more operational entities.

And just so I understand the free cash flow generation this quarter. I think you said x restructuring, you had $290-plus million in cash flow, but there's maybe an $82 million one-time benefit in there and then CapEx in the $40 million. So free cash flow was below $200 million, if I'm doing the math correct. And I'm just -- I just want to gauge -- is that wrong?

No. No, that's all right, Bob. So let me clarify it for you. So the point we were making was adjusted operating cash flow before CapEx was $290 million this quarter compared to $380 million last quarter, but last quarter had an $80 million benefit in it for the termination of a swap agreement. So the $380 million, the $80 million was in the last year, so the comparables aren't really comparable. If you look at them from a comparable perspective, the cash flow is more or less equal year-over-year.

So, okay. So you're still on a run rate generating free cash flow of close to $1 billion right now and you're still comfortable with your guidance. And so I guess my question there is, one, for how long do you anticipate you'll have free access to both your U.S. and o-U.S. cash? And your comments today about the stock price seemed to suggest to me at least that the bias would be towards more buybacks as a percentage of total free cash flow relative to history as we look going forward, given the comments you just made about the stock price.

Well, with regard to the trajectory of the cash flows, this business has always thrown off very strong cash flow and we continue to do so even in an environment where performance in the top line is frankly disappointing, there's no other way to put it. And I think there are -- and if you look at kind of our cost saving initiatives, when I was speaking to Mike kind of laying -- Mike Weinstein, laying out kind of the different cost savings programs, those are all going to improve the profitability of the company, right? Now there'll be some investment against those, but those should help drive more cash flow. Our CapEx has been high historically. I think we'll relook at that, and then working capital-wise, this company has carried a lot of inventory, and I think inventory and receivables are a source. So it will depend, to a certain extent, on kind of where the guidance goes and where the end markets go, but I think we're pretty comfortable that $1 billion -- it'll be $1.1 billion this year in terms of free cash flow. We'll continue to generate strong cash flow. And we're going to be committed to buying back shares. I think the senior team and the board is committed, given where the stock price is that, that's a pretty good investment for shareholders.

And then, just lastly, you guys are in a unique position relative to a lot of your peers in that you do have access to your U.S. and o-U.S. cash. And I guess my question is I just want to make sure that you think that, that will continue going forward for the foreseeable future.

Yes, sorry about that, Bob. I forgot that part of the question. Yes, so by virtue of the fact that when we did the guidance acquisition, the way it was structured, we have intercompany loans set up between the foreign affiliates and the domestic affiliates, which allows us to bring back cash at least for the next couple of years without any impact from either a FX perspective or tax perspective. So not terribly worried about it for the next couple of years at least.

And we do have a question from the line of Bruce Nudell from Crédit Suisse. Bruce M. Nudell - Crédit Suisse AG, Research Division: I realize that Synergy is the next play in drug-eluting stents for you, and it's clearly important to maintain that franchise. We've been calling around Europe, and we've been very surprised to hear that the bioabsorbable stents getting something like EUR 3,500, and the doctors, even though they acknowledge it's going to be hard to prove a clinical benefit, have an intuitive bias towards using it in young patients especially in easier lesions. And so my question to you guys is do you feel that -- do you still maintain your position that, that genre of devices is simply too expensive and mechanically not flexible enough to really garner measurable share even at a level of 10% to 20%?

Bruce, this is Hank, and then I'll let Dr. Dawkins comment on your question as well. But I think I have said publicly several times that at least in my opinion, that BVS will not be a commercially viable platform, and what I mean by that is a workhorse platform. A workhorse platform has to deliver in today's environment the same safety and efficacy result that you're seeing from the current generation DES. A viable platform has to have the same matrix size that current stent platforms have today. A viable platform has to have the same acute performance that the current stent platforms have today. And it also has to be, in today's environment, I think economically competitive. So I think from that dimension, if BVS makes it across the goal line here in the U.S. or rolls it out in Europe, I see it to your point being probably a device for large bore vessels or perhaps younger patients. But I'll let Dr. Dawkins comment as well. Keith?

Thanks. And thanks, Bruce. Interventional cardiologists like acute performance and they like safety and efficacy. And as you know, the data around BVS are very limited. In fact there are no published data in what you might call workhorse lesions, bifurcations and so on. And we feel therefore that metallic stents and now thin strip metallic stents that have been with us for 20 years will prevail in terms of workhorse lesions. Also you will have seen now there are recent circa intervention paper published this week which showed this late last strip with BVS, 16 millimeters to 27 millimeters over 24 months. And this is another watch out. We need to see the long-term data. We know that the stent takes 2 or even 3 years BVS to disperse. And therefore, this negates any potential benefit of short dual-antiplatelet therapy, whereas in Synergy, the polymer and the drug have gone essentially by 3 months. So we're very confident with Synergy as it will combine acute performance and will be applicable to long-term, to complex day-to-day patients that the average interventional cardiologists sees all the time. Bruce M. Nudell - Crédit Suisse AG, Research Division: And my follow-up question is another clinical question. There was a guideline change in CRT-D where the guidelines are basically now saying for all classes of patients, if you lack both a very wide QRS complex and/or a left bundle branch block that really CRT and CRT-D, therefore -- or CRT is really not highly recommended. Do you think that this will have a measurable drag on the U.S. market where I think certainly a small minority of patients lack both of those elements?

I think, Dr. Stein, we're going to let you answer that.

All right, I'm happy to take that one, Bruce. And the short answer is no. I don't think that's going to have any impact. If you look at the guidelines, typically physicians follow not just what are Class 1 guidelines but what are called Class 2A guidelines where the weight of the evidence supports the indication. And those guidelines are really fully in-line with our labeling for our CRT-D devices where we have labeling for use in patients with all of New York Heart Association classes of congestive heart failure and left bundle branch block and a wide QRS complex. Bruce M. Nudell - Crédit Suisse AG, Research Division: So you feel that the QRS -- that a very small minority of patients lack both a QRS over 150 or a left bundle branch block?

That's right.

And our next question comes from the line of Derrick Sung with Sanford Bernstein. Derrick Sung - Sanford C. Bernstein & Co., LLC., Research Division: I wanted to just follow up on your U.S. DES share position because that's such a critical piece to both your margin and top line performance moving forward. On this call last quarter, you had expressed sort of similar confidence in the stabilization of your share and you'd actually pointed out to improving share performance throughout sort of May and June. Obviously, that must have reversed itself given your further share loss. Can you maybe, in hindsight, talk about what changed over the months kind of to reverse that stabilization trend kind of last quarter into this quarter? And what gives you confidence that we won't see the same sort of reversal next quarter?

Derrick, this is Hank. That's a fair question. And if you recall what happened in the quarter, and I think Mike and Jeff mentioned this on another call, is we did a little bit of a reorganization within the CRV Group where we realigned some of the senior sales management people to have a stronger connection with our corporate sales team. And that happened over the course of third quarter. So obviously, whenever you do something like that, there's a little bit of a distraction that's associated with. And I think that was a part of what happened. That's behind us. You now have the team, as I alluded to earlier in my comments, completely focused on interventional cardiology, DES sales and they were in here recently. And I, for one, expect better sales execution in the months ahead. Derrick Sung - Sanford C. Bernstein & Co., LLC., Research Division: And as a follow-up, I wanted to ask about your launch strategy for your S-ICD because that seems like that is the significant growth driver for you and ICD is moving forward in back half of this year, back end of this year and to next. Our understanding is that the gross margins on that device, and correct me if I'm wrong, are significantly lower than your margins on your current ICD product. And so my question is, first off, how do you prevent sales of your ICD from cannibalizing your existing ICD sales in a -- particularly in this environment where most hospitals are doing -- are working with multiple vendors and they're just allocating a share of their product to one vendor or the other? And then kind of related to the margin question, how do we think about a successful S-ICD launch and its impact on your gross margins moving forward?

A couple of points. One, on the S-ICD, we think it'll be a -- it'll open up new markets and as well as be a share taker. And so in the U.S., in our recent post-FDA approval, our initial launches were actually competitive x plants where there were lead issues with some competitive products. So clearly there potentially could be some risk of cannibalization of our own share, but we don't have the larger share in the U.S. in ICDs, so we see this as a way to position the S-ICD to take competitive share with changeouts. And we also see it as a -- to grow the market. So we've seen a number of patients come in with primary care patients who have elected to choose the S-ICD because of their age. So we think it'll expand the market and be a share enabler for us in terms of the growth profile of it. That's one of the big reasons why we did the deal. In terms of gross margins, we have a lot of focus on this and a lot of it will be based on volume. So post the acquisition, our teams are working on integrating the manufacturing capability into our proven battery manufacturing at [indiscernible] Minnesota, as well as in Ireland, and so you'll see us transfer the manufacturing processes into our more high-volume CRM capabilities over time, which will drive gross margin improvements. You'll see us over time drive new releases that will improve gross margin to get the cost profile of the product down, and also, thirdly, with volume. As we continue to sell this, the volume will help with the gross margin. So in the short term, within the CRM family it will be slightly dilutive to gross margins, but we'll see that improve over time.

The other dimension I would just add is that we expect there to be to be pull-through revenue, so we expect to get into accounts, and we're already seeing doors are being opened that were not opened to us previously. When we get into those accounts, not only will we sell the S-ICD, we will sell the ICD and we'll also sell the pacemaker. And that all comes through at our variable contribution margin. So you kind of have to look at it as a bundle, and as a bundle, we're happy to kind of get that revenue. That's good revenue for us from a profitability perspective.

And we do have a question from the line of Larry Biegelsen from Wells Fargo.

Jeff, just quickly for you. The R&D tax credit, could you please remind us of how much that's worth in 2012?

Yes, so that's not insignificant, Larry. It's about a 200-basis-point reduction in our rate overall for the year, if it passes. And given the activities happening with the election and the expected transition period of the government, the lame duck government that'll exist, our assumption is that, that does not get passed. So if does get passed, our tax rate overall will go down a couple hundred basis points for the full year, which will have a more dramatic impact on the fourth quarter.

Great. And then I just wanted to ask a follow-up question on Synergy, and I did have one question after that. I just wanted to clarify, Dr. Dawkins, is the launch in 2013 still considered a limited launch in your view? And if so, why? I mean, are you still -- are you waiting for the 3 to 6 month dual-antiplatelet therapy data? Is that why it's a limited launch in 2013? And again, I just have one follow-up after that.

Sure, Larry. So in 2013, it'll be targeted accounts. It'll be accounts that are involved in the EVOLVE II IDE trial. And it'll be accounts involved in the short DAP trial. And so it won't be that limited. It won't be limited like the BVS launch was limited, to answer that question. So it'll have a good profile in Europe and other CE Mark countries.

And, Jeff, at the Analyst Meeting in 2010, I think your near-term revenue goal was 2% to 4% growth. Has the environment changed such that those goals are no longer realistic looking ahead to 2013? Recognizing, of course, you haven't given guidance but just directionally, any color would be helpful.

Yes. So say 2% to 4% 2 years ago, that's where it was. Pick the midpoint, 3%. So the markets were growing 3%. I think as we look at kind of the composite of our market growth today as we stand here, it's probably flat to negative 1%. So it's definitely changed. There's definitely more headwind than there was before, which is going to be more challenging for us. And we're working through our plans with the business leaders today around the world to figure out what implication that has.

With that, we will conclude the call. Thanks for joining us today. We appreciate your interest in Boston Scientific. Before you disconnect, Brad will give you all the pertinent details for the replay. Have a good day.

And, ladies and gentlemen, today's conference will be available for replay after 11 a.m. today, the 18th, through November 1 at midnight. You may access the AT&T teleconference replay system by dialing 1 (800) 475-6701, entering the access code 260361. International participants may dial (320) 365-3844. That does conclude your conference for today. Thank you for your participation and for using the AT&T executive teleconference service. You may now disconnect.