Boston Scientific Corporation (BSX) Q4 2012 Earnings Report, Transcript and Summary

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

Thank you, Greg. Good morning, everyone, and thanks for joining us. With me on today's call are Mike Mahoney, President and Chief Executive Officer; and Jeff Capello, Executive Vice President and Chief Financial Officer. We issued a press release earlier this morning announcing our Q4 and full year results for 2012, which included reconciliations of the non-GAAP measures used in the release. We have posted a copy of that release, as well as reconciliations of the non-GAAP measures used in today's call, along with other supporting schedules, to the Investor Relations section of our website under the heading Financial Information. The duration of this morning's call will be approximately 1 hour. Mike will begin our prepared remarks with an update on our business progress and his perspectives on the quarter and 2013. Jeff will then review our Q4 financial results and business performance, as well as Q1 and full year 2013 guidance. We will then open the call up to questions. During today's Q&A session, 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 laws, which may be identified by words like anticipate, expect, believe, estimate and other similar words. These forward-looking statements include, among other things, statements about our growth and market share; our products including new product approvals, launches and performance; procedural volumes and pricing; clinical trials and results; cost savings and growth opportunities; our cash flow and expected uses; our expected financial performance including sales, margins, earnings and other guidance for Q1 and full year 2013; as well as expected tax rates, R&D spend and other expenses. Actual results may differ materially from those discussed in the forward-looking statements. Factors that may cause such differences include those described in our 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 today's date and we disclaim any intention or obligation to update them. At this point, I'll turn it over to Mike for his comments. Mike?

Thank you, Michael, and good morning, everyone, and thanks for joining us this morning. So I'll begin today with some comments regarding our fourth quarter performance, which Jeff will cover in more detail in a few minutes. Overall, we demonstrated improved performance during the quarter. We delivered sales of $1,821,000,000, down 1% on both a reported and an operational basis, which excludes the impact of foreign exchange and the divested Neurovascular business. This was above our guidance range and Street consensus. Meanwhile our adjusted EPS of $0.18 was at the higher end of our guidance range and above Street consensus. We also generated strong operating cash flow of $370 million and used a portion of our cash flow to buy back approximately 18 million shares of stock in the quarter. We saw a continued above-market growth in several of our businesses. And the growth figures that I'll highlight are all on a constant currency basis. So starting off. Neuromodulation grew at 14%, Endoscopy grew at 10% and our Peripheral Interventions or our PI business grew at 9%. We also continued to see strong returns on our investments in the emerging markets with combined revenue in Brazil, Russia, India and China growing 35% in the quarter. As we further build our capabilities in these countries, we expect this growth trend to continue into 2013. We continue to make progress on strengthening our CRM and EP business with the U.S. launch of the S-ICD System and the completion of the acquisition of Rhythmia Medical. Additionally, we continue to expand the high-growth adjacent markets such as hypertension by completing our acquisition of Vessix Vascular. So let me now go into more detail regarding our business performance for the quarter. In 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 low to mid-single digits. During the quarter, IC revenues declined 9%. While we're disappointed in our lack of growth, we believe that our U.S. DES share is stabilizing and we were able to grow international DES revenue mid-single digits. In the U.S., our PROMUS Element Plus long-length stents have been well received and we expect them to provide access to more competitive accounts as those accounts come up for contract renewal. We estimate our fourth quarter U.S. DES share to be in the mid-30s. And in terms of our U.S. -- I'm sorry, in terms of our DES pipeline, our next generation of SYNERGY Stent continues to progress according to plan with CE Mark Approval received in late October and a controlled limited launch currently underway in Europe. The early feedback from customers has been very positive. And further, we commenced our SYNERGY U.S. IDE trial called EVOLVE II and enrollment is tracking on schedule. Also, our launch of PROMUS Element Plus long lesion and small vessel stents in Japan has delivered solid share gains in that market. So with our PROMUS and SYNERGY platforms, we believe that we have the most compelling DES portfolio and pipeline in the industry as backed by clinical evidence. And the continued focus on commercial execution of our overall IC pipeline and the continued favorable clinical evidence of our DES platforms, we believe that we will stabilize our DES share in the first half of 2013 and grow our DES share in the second half of the year. In our core IC business, we improved our performance sequentially. We continued the launch of the Emerge balloon catheter during the quarter and we've continued to receive positive feedback from customers. In addition, we commenced our commercial rollout of the BridgePoint Medical suite of coronary CTO devices that add to our unique and clinically differentiated portfolio of IC products, all of which enable us to be uniquely positioned to provide treatment for complex PCI procedures. On the structural heart front, we continued to make progress in TAVR with the Lotus Valve. Lotus is a differentiated, second-generation valve that is fully repositionable and recapture-able post deployment. At TCT, favorable 3-month data from the REPRISE I trial were presented. And we expect to complete REPRISE II in the first half of 2013 with projected CE Mark approval and European launch of the Lotus Valve to occur in the second half of 2013. So moving on to our PI business, Peripheral Interventions. PI delivered strong growth of 9%, resulting from a cadence of new product launches. We continued to see growth around the world with the U.S. and Asia Pac regions showing double-digit growth during the quarter. And this year, we're very excited to announce the acquisition of Vessix Vascular, which closed in the fourth quarter. This technology is a second generation of renal denervation platform for the treatment of uncontrolled hypertension. This platform is highly differentiated and it accelerates our entry into what we expect to be a multibillion-dollar market in the next 5 to 10 years. We expect to launch this platform commercially in Europe and other international markets in the second half of 2013. Overall, we believe that the end markets in PI are healthy, they're growing mid-single digits and we will continue to drive above-market growth both in the U.S. and globally in 2013. In Endoscopy, we had a strong quarter with 10% growth worldwide. During the quarter, several of our key product franchises in Endo experienced strong growth, namely our biliary, biopsy, metal stents and hemostasis franchises. Also, effective January 1, 2013, Category I CPT codes are now in place for the Alair platform, which is our bronchial thermoplasty system. This is a major reimbursement milestone for BT and we believe it also reflects the strength of the clinical evidence and the growing support for this procedure among pulmonary physicians. We expect those codes to provide greater access for treatment for patients with poorly controlled, severe asthma, it'll facilitate easier claims processing and accelerate private payer's coverage of this important treatment option. In the quarter, we surpassed our year-end goal exiting 2012 with approximately 230 sites and 18 countries using our BT platform. Overall, we believe that the end markets in Endo are healthy, and we will continue to drive above-market growth on a global basis in 2013. In our Urology and Women's Health division, we returned to growth with a 3% increase during the quarter. The Urology business continued to perform very well with strong growth due to our commercial expansion and effective product launches. Our Women's Health business continues to be pressured, particularly in the U.S., due to the market declines in the pelvic floor procedures. In 2013, we have a strong pipeline in Women's Health and Urology with 7 expected new product launches. And in addition, we plan to continue expanding the global footprint of this business. In Neuromodulation, we delivered 14% growth during the quarter and we now have a clear #2 position in spinal cord stimulation in the U.S., driven by a leading technology and excellent consistent execution. We recently launched the Precision Spectra Spinal Cord Stimulation System in Europe. Precision Spectra is the industry's first 32-contact spinal cord stimulation system offering several market-differentiating features that are designed to provide clinicians with greater flexibility in treating the broadest spectrum of pain patients. We are pleased with the physician enthusiasm that Spectra has received, and we expect the launches in the U.S. in the first half of 2013. So now, let's move to the CRM business. Our worldwide CRM business declined 4% during the quarter, and we believe that the worldwide CRM market continued to show signs of stabilization during the quarter, declining to low to mid-single digits for the full year. In the U.S., we continued to see the easing of year-over-year comparisons as we sunset the significant 2011 market declines. In the U.S., we estimate the defib market decline in the mid-single digits in the fourth quarter. And from a share perspective, we estimate that overall U.S. de novo defib share continue to increase sequentially, thanks to the continued strong performance of our INCEPTA and ENERGEN family of ICDs and our highly reliable RELIANCE lead platform. In addition, sales of our RELIANCE leads remain strong in the quarter, driving continued increase of our defib lead-to-port ratio. So now, let's turn to our innovative S-ICD platform. So during the fourth quarter, we continued to manage a controlled launch of the S-ICD System. We are continuing to enhance our supply chain to meet the very strong clinical demand for this technology that follows early FDA approval. We believe that the growing demand for the S-ICD highlights the strategic importance of this innovative technology for patients and to our CRM business. We believe that the S-ICD technology provides us with the opportunity to both take share in the existing ICD market and to expand the market over time. Also, the recently announced results of the 1,500 patient MADIT-RIT trial highlights the potential of the S-ICD. This trial demonstrated that very simple ICD device programming with limited antitachycardia pacing and relatively long delays before giving therapy resulted in significantly better outcomes for participating patients. And thus, simple programming, limited pacing at longer delays before therapy are all design features of the S-ICD. On the pacing side, we believe we've taken modest share both in the U.S. and internationally with our INGENIO family of pacemakers and CRTPs, thanks to an upgraded platform that now includes wireless telemetry, RPM-enabled devices and other significant new design features. In terms of our pacer pricing, our pricing has remained relatively stable versus last year, thanks in part to price uplifts we realized on this new platform. Now, turning to left atrial appendage. The WATCHMAN product line continues to show strong growth in international markets, both on a sequential and year-over-year comparison. Specifically, WATCHMAN implants in the fourth quarter grew by more than 65% year-over-year. And finally, in our EP business which grew 5% during the quarter, we're focused on making good progress on several new internal AFib-focused projects. We have CE Mark for our Blazer Open-Irrigated Catheter, and we are currently enrolling 2 IDE trials for approval of the open-irrigated Catheter in the U.S. BLOCk-CTI study for AFib -- I'm sorry, for atrial flutter, and ZERO-AF for atrial fibrillation. In addition, we're excited about the recent acquisition of Rhythmia Medical and its next-generation mapping and navigation solutions. This acquisition is a decisive step by Boston Scientific and it shows our commitment to the Electrophysiology business and better positions the company to participate in the fast-growing EP market. So we expect CE Mark approval of Rhythmia platform in the first half of 2013 with FDA approval in the second half and a full EU and U.S. launch in 2014. So to wrap up the rhythm management section. We believe that the combination of the S-ICD, WATCHMAN and newly rejuvenated pacing and ICD platform, combined with a stronger EP and mapping portfolio, will provide BSC a truly differentiated offering for EP that we expect to improve our future growth profile. So in summary, in 2012, although we're encouraged by our performance in the fourth quarter, we're clearly not satisfied. Overall, 2012 was a challenging year in terms of top line performance. However, we were successful in hitting our adjusted earnings for the year and continued to generate significant adjusted free cash flow. So despite these challenges, we believe that there's a lot to be positive about: we continue to see above-market growth in several of our businesses; we expanded our capabilities in emerging markets; and we began to see some encouraging signs of stabilization in our core IC and CRM markets. We're also encouraged by the recent progress we've made on strengthening our largest core businesses with the early launch of the S-ICD System in the U.S., the acquisition of BridgePoint in the CTO device segment and CE Mark approval for our next-generation stent system called SYNERGY. We've also seen continued strategic push in the higher-growth adjacent markets by acquiring Vessix Vascular for the treatment of hypertension and Rhythmia Medical for mapping and navigation. So finally, we continued our share repurchase program and now bought back 12% of the outstanding shares of the company in the last 18 months. So taken together, we believe that our progress in '12 puts us in a stronger position going forward and will lead to improve shareholder returns, particularly given our current stock price valuation. So before moving to 2013, I want to highlight our new strategic imperatives and provide an overview to the changes being made right now to strengthen our global execution. These imperatives will be used to guide the company going forward. So first, we plan to improve our execution to increase share in our core markets by adding new capabilities and innovation to drive clinical and economic value to our customers. Secondly, we're entering new and faster-growing adjacent markets. We're leveraging our current capabilities, including our global manufacturing, clinical and sales organizations to grow in these markets. Third, we're driving global expansion through a strong and continued focus on our international markets, including the BRIC countries and other emerging markets. And fourth, we plan to fund our growth strategy and improve margins by focusing on continuous improvement and following a disciplined approach to restructuring as evidenced by today's announcement, which Jeff will discuss in more detail later. Lastly, we continue to develop new capabilities and programs for our employees to compete and lead in the shifting global med tech environment. Now, I would also like to highlight the important leadership and operational changes that we're already making and will continue to work on as we strengthen our global execution. Number one, we're moving a global operating structure across our business units. We believe this structure will enable us to operate more efficiently and effectively by improving our speed in global resource allocation. Two, we're streamlining our commercial sales model, both in the U.S. and Europe, by reducing layers and complexity. We're also building a stronger corporate solutions organization to meet the demands of the large integrated health networks and emerging accountable care organizations. We strengthened our leadership team with a number of important organizational changes and experienced hires across the company. And we continue to strengthen our focus on emerging markets that's demonstrated by our plus-30% growth in 2012. We're shifting more of our R&D dollars into higher-growth markets and we're improving the leverage of our R&D capabilities across the company to unlock more synergies and growth opportunities. And lastly, we continue to be focused on continuous improvement and scaling back our corporate infrastructure to reduce costs and improve our overall speed. We believe that these actions taken together demonstrate that we're thinking differently and acting decisively to improve our global execution and growth profile. So with that, I'll now offer some comments regarding 2013, which Jeff will cover in more detail. So as we look forward in 2013, we expect improved global execution and improved revenue and earnings performance. So with respect to revenue growth, we're projecting a range of negative 2% to positive 2% growth and we encourage you to model at the midpoint. We expect a slower first quarter with sequential improvement throughout the year, ending with a return to growth in the second half of 2013. Looking across the company, we expect to see continued above-market growth in our PI and our MedSurg businesses, which consist of our Endoscopy, Urology and Women's Health and Neuromodulation divisions. We expect to see continued growth in the emerging markets, driven by accelerated top line performance in the BRIC countries. And lastly, we believe that our IC and CRM businesses will deliver improved performance versus 2012 and we expect to grow our market share in the second half in those businesses in 2013. We expect to continue to drive our continuous improvement and restructuring initiatives while we invest in our strategic growth initiatives. We believe that the first half of 2013, and particularly the first quarter, will be a more challenging from a top line perspective due to tougher 2012 comparisons, primarily driven by competitive pressures in DES and the impact of fewer selling days in the first quarter. We expect to continue delivering on our continuous improvement opportunities to reduce costs and boost our overall speed. Unfortunately, we will also need to absorb the impact of the medical device tax under the U.S. Affordable Care Act that begins in 2013. And with respect to operating margins and earnings, our 2013 EPS range is $0.64 to $0.70. At the midpoint of our guidance range, we're projecting a low single-digit adjusted EPS growth, but this includes the full impact of the medical device tax. Lastly, we expect to generate strong cash flow, which we believe would enable us to fund more share purchases under our newly authorized $1 billion program and to continue to look at acquisitions to improve our future growth profile, which we expect will enhance shareholder return. So in summary, we believe the steps we are taking are what's needed to turn around our performance and return Boston Scientific to growth. We plan to go into greater detail during our upcoming Investor Conference, which will be February 12 in New York City. Let me now turn the call over to Jeff.

Thanks, Mike. Let me begin by providing some overall perspective on the quarter before getting into the details. Despite continued challenging global economic and market conditions, we generated adjusted earnings per share of $0.18, which was at the higher end of our guidance range of $0.15 to $0.18 and above consensus. This solid profitability was driven by better top line performance, continued gross margin improvement and a favorable tax rate and fewer shares outstanding, partially offset by increased investments in our strategic growth initiatives. In addition to our solid adjusted earnings performance, we also generated $376 million in adjusted free cash flow and repurchased approximately 18 million more in shares in this quarter. Consolidated revenue for the fourth quarter of $1,821,000,000 represents a decrease of 1% on both a reported and an operational basis, which excludes the impact of foreign exchange and the divested Neurovascular business. The actual headwind from foreign exchange on sales was $19 million and slightly higher than what we had assumed in our fourth 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 revenue came in at $534 million in the fourth quarter, representing a constant currency decrease of 9% compared to the fourth quarter of 2011. Worldwide DES revenues came in at $312 million in the fourth quarter, representing a constant currency decrease of 11% compared to the fourth quarter of 2011. U.S. DES revenues were $118 million in the quarter, representing a decline of 29% compared to the fourth quarter last year. This decrease was primarily due to a strong comparison to the prior year quarter, driven by the launch of PROMUS Element Plus in the fourth quarter of 2011, lower share due to competitive products, lower ASPs and continued softness in PCI volumes and the number of devices used per procedure. We estimate that our U.S. DES share was stable sequentially in the mid-30s for the fourth quarter. International DES sales of $194 million represented an increase of 6% in constant currency compared to the fourth quarter last year, primarily driven by over 25% growth in the emerging markets of Brazil, India and China. Worldwide non-stent Interventional Cardiology was down 5% constant currency. However, with the upcoming launches of new products along with the acquisition of BridgePoint Medical suite of CTO devices, we expect to see continued improvement in this business over the course of 2013. Now, moving on to CRM. Worldwide revenue was $457 million in the fourth quarter, representing a constant currency decrease of 4% compared to the fourth quarter of last year. In the U.S., CRM revenue of $265 million represented a 5% decrease from the fourth quarter of 2011. International CRM sales of $192 million were down 3% in constant currency compared to the prior year quarter. On a worldwide basis, defib sales were $330 million in Q4, which was down 5% in constant currency from the fourth quarter of last year. In the U.S., defib sales were $204 million. This was down 5% compared to the fourth quarter of last year, due primarily to overall market declines. International defib sales of $126 million represented a 4% decrease in constant currency from last year. Finally, worldwide pacer sales declined 3% on a constant currency basis as we continued to gain share in the quarter. In the U.S., pacer revenue declined 5% while international revenues declined 2% in constant currency for the quarter. Moving on to Electrophysiology business. EP delivered a strong quarter with worldwide growth of 5% on a constant currency basis. Our Peripheral Interventions business delivered the fourth quarter in a row of above-market growth as worldwide revenue was up 9% in constant currency. Global growth was driven by impressive 12% growth in U.S. and 8% internationally. Our Endoscopy business had another solid quarter of significant growth with worldwide sales up 10% in constant currency, led by 10% growth internationally and 9% growth in the U.S. In constant currency, our worldwide Urology/Women's Health business returned to growth this quarter with a 3% increase in sales. Growth was particularly strong internationally at 11%. The Urology business maintained its leadership position and delivered 6% worldwide constant currency growth driven by strong international growth of 10%. Our Women's Health business declined 7% on a worldwide constant currency basis versus a decline of 11% in the prior quarter. We continue to see pressure on elective procedures and concerns around the use of surgical mesh for pelvic organ prolapse, specifically in the U.S. market. In Neuromodulation, we ended 2012 on a strong note with 14% revenue growth on a worldwide basis driven by strong uptake of our 16-contact Infinion lead and our focus on commercial execution. We expect to sustain this momentum in 2013 as we work on bringing Precision Spectra to the spinal cord stimulation market. Let me now briefly address full year 2012 revenue. On a reported basis, consolidated 2012 revenue was $7,249,000,000, which represents a 5% decrease from the prior year on a reported basis. In constant currency and excluding the impact of the Neurovascular divestiture, sales decreased 3% compared to 2012. For the full year, foreign currency negatively impacted reported full year sales growth by approximately 160 basis points or about $124 million. Moving on from sales. Adjusted gross profit margin for the fourth quarter was 68.1% or 330 basis point higher than the fourth 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 U.S. and Japan, as well as benefits from our Plant Network Optimization plan and value improvement programs partially offset by price erosion and some product transition charges. For the full year 2012, adjusted gross profit margin was 67.8%. Adjusted SG&A expenses were at $630 million or 34.6% of sales in the fourth quarter of 2012 compared to $620 million or 33.6% of sales in the fourth quarter of 2011. During the fourth quarter 2012, benefits from cost-saving programs were offset by continued investments in emerging markets and costs associated with our strategic growth initiatives, including our recent acquisitions. For the full year 2012, adjusted SG&A expenses were $2,511,000,000 or 34.6% of sales. Adjusted research and development expenses were $241 million for the fourth quarter or 13.2% of sales primarily driven by continued investments in our strategic growth initiatives, including costs associated with our SYNERGY U.S. IDE trial, EVOLVE II. This compares to $230 million in the fourth quarter of 2011. For the full year 2012, adjusted research and development expenses were $889 million or 12.3% of sales. Royalty expense was $28 million or 1.6% of sales, compared to $33 million in the fourth quarter of last year. For the full year 2012, royalty expense was $153 million or 2.1% of sales. On an adjusted basis, pretax operating income was $341 million or 18.7% of sales, up 170 basis points from the fourth 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 income, which includes GAAP to adjusted items that had negative effect of $226 million on a pretax basis, was $115 million in the fourth quarter. The primary GAAP to adjusted items in the quarter were pretax restructuring costs of $52 million; pretax net litigation-related charges of $73 million; and pretax amortization expense of $101 million. Now, I'll move on to other income expense. Interest expense was $64 million in the fourth quarter, which was $8 million lower than the fourth quarter of last year, primarily due to the collection of Spanish government receivables and the refinancing of our revolving credit facility in mid-2012. Our average interest expense rate in the fourth quarter of 2012 was 5.5% or about 40 basis points lower than the fourth quarter of last year. 2012 interest expense was $261 million or $21 million lower than 2011, primarily due to a lower average debt balance as a result of prepaying our term loan in 2011 and the refinancing of our $2 billion credit facility in mid-2012. Our tax rate for the fourth quarter was a negative 19.3% on a reported GAAP basis and 8.5% on adjusted basis. The difference between a 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 2012 tax rates do not include any benefit for the U.S. federal R&D credit due to timing of approval. Our adjusted tax rate for the fourth quarter reflects an operational tax rate of approximately 12%, increased by discrete tax charges and reduced by a true up to the expense booked in previous quarters based upon our estimated full year operational tax rate. Our actual full year operational rate was lower than expected due to a change in the geographic mix of earnings. For the full year, we reported adjusted earnings per share of $0.66 per share. On a reported GAAP basis, 2012 EPS was a loss of $2.89 per share. The GAAP results for 2012 included goodwill and intangible asset impairment charges, acquisition- and divestiture-related net credits, litigation and restructuring-related charges, discrete tax items and amortization expense after-tax of $5 billion or $3.55 per share. Now I'll move on to the balance sheet. DSO of 61 days improved 1 day compared to December of last year due to good performance in emerging markets and U.S., offsetting weakness in EMEA. Despite lower inventory levels, days inventory on hand of 140 days was up 10 days compared to Q4 last year primarily due to lower cost of goods sold driven by the PROMUS Element transition. Reported operating cash flow in the quarter was $370 million compared to $349 million last year. Q4 2011 included the receipt of $76 million from Abbott to settle our outstanding PROMUS cost adjustments. Excluding this receipt, reported operating cash flow for the fourth quarter of 2012 is $97 million higher than the fourth quarter 2011, primarily due to higher adjusted operating income and improved working capital management. Q4 2012 reported operating cash flow included $61 million of restructuring payments compared to $25 million in the fourth quarter of last year. For the full year, restructuring payments in 2012 were $155 million compared to $121 million in 2011. In addition, the fourth quarter 2012 included $8 million of milestone earn-out payments related to prior acquisitions. Capital expenditures were $63 million in the fourth quarter of this year compared to $81 million in the fourth quarter 2011. For the full year, capital expenditures were $226 million in 2012 compared to $304 million in 2011. The lower capital expenditure in 2012 compared to 2011 was primarily due to the timing of infrastructure investments. Based on the above, full year reported operating cash flow was $1,260,000,000 compared to $1 billion in 2011. 2011 included $296 million to settle a legacy GUIDE legal claim. Turning to share repurchases. We repurchased another 18 million shares for approximately $100 million in the fourth quarter of 2011. In 2012, we repurchased 105 million shares for approximately $600 million. Since July 2011, we have now repurchased 187 million or approximately 12% of our outstanding shares. In addition, we announced today that a new program was authorized for the repurchase of up to $1 billion of the company's common stock, bringing the total authorization up to approximately $1.1 billion. We continue to believe that our stock price is undervalued and we currently expect to utilize approximately 1/2 of our available adjusted free cash flow for the repurchases of shares in 2013, subject to business development opportunities, market conditions, our stock price, regulatory trading windows and other factors. Today, we also announced an expansion of our 2011 restructuring program intended to build on the progress made under that program to strengthen our operational effectiveness and efficiencies and support our new investments, which we expect to increase shareholder value. The company estimates that the expansion will reduce gross annual pretax operating expenses by approximately $100 million to $115 million exiting 2013. From a cost prospective, we expect that a substantial portion of the Total Program savings will be reinvested in targeted areas for future growth, including our strategic growth initiatives in emerging markets. Key activities under the Total Program including the expansion. [Audio Gap] so we estimate that the implementation of expansion results in total pretax charges of approximately $140 million to $160 million, of which $40 million should be noncash. Let me now briefly provide some perspective on our outlook and walk you through our guidance for the first quarter and full year 2013. As we enter 2013, we continue to expect dynamic market conditions with the risks of macroeconomic weakness, particularly in Europe and some softening procedural volumes in the U.S. However, despite these uncertainties, we believe there's reason to be positive. We have recently acquired new technologies and launched key new products in most of our businesses and are seeing high 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. We also believe despite the medical device tax that we have the opportunities to enhance profitability and expect to continue to generate strong cash flow. In addition, we are leaving 2012 with encouraging signs of stabilization in both of our 2 largest end markets and related businesses. Having considered those factors, we estimate that our consolidated 2013 sales will be between $7,050,000,000 and $7,350,000,000. Assuming that the current foreign exchange rates hold constant, we expect full year tailwind from FX to be approximately $15 million. On an operational basis, which excludes the impact of foreign exchange and the divested Neurovascular business, we estimate that consolidated 2013 sales will be in the range of up 2% to down 2% and we encourage you to model to the midpoint. The range assumes that the IC and CRM markets continue to stabilize and our revenue performance improves sequentially throughout the year, driven primarily by tougher year-over-year comparisons in the first half. We expect our adjusted gross margin for the year, as a percent of sales, to be similar to 2012. Although we expect to continue to see downward pricing pressure, we expect this headwind to be offset by improved price management and manufacturing value improvement programs. We believe that the impact of these benefits will increase as we progress through the year. As we forecast ongoing SG&A expense, please note that this includes the estimated impact of approximately 100 basis points from the medical device tax under the U.S. Affordable Care Act that begins in 2013. In addition, we expect to make investments in our strategic growth initiatives and continue to build our capabilities in emerging markets. However, the cost of these investments should be partially offset by restructuring savings. For the full year, we expect adjusted SG&A as a percent of sales to be between 35% and 36%. We continue to transform our R&D organization and refocus our spending to drive innovation and growth. In 2013, we expect R&D spending, as a percent of sales, to be similar to 2012. We expect R&D expense to be higher in the first half of the year and gradually decline as a percentage of sales in the second half as savings initiatives are expected to partially offset spending on several of our strategic growth initiatives. We currently expect royalties and other income and expense to be relatively flat to last year. We expect our adjusted tax rate for the full year 2013 to be between 11% and 13%. This reflects an operational tax rate for 2013 between 13% and 15%, reduced by 2% for the retroactive extension of the U.S. R&D tax credit for 2012, which will be recorded in the first quarter of 2013. This excludes any other discrete tax items that may arise during the year. We are subject to tax authority examinations and many jurisdictions are scheduled to conclude in 2013. The final resolution of the exams may result in additional favorable or unfavorable discrete tax savings during the year that are difficult to forecast, but may impact our full year adjusted tax rate. As a result, we expect adjusted earnings per share for the full year 2013 to be in a range of $0.64 to $0.70 and we encourage you to model to the midpoint of the range. The range reflects the estimated impact of approximately $0.04 per share from the medical device tax. Excluding any onetime items that may arise, we expect adjusted EPS to increase sequentially as we progress to the year with Q4 being the strongest quarter, driven by improved revenue performance and the timing of certain investments and cost benefits we expect to realize. On a reported basis, we expect EPS to be in a range of $0.29 to $0.37. Lastly for 2013, we expect adjusted free cash flow to exceed $1.2 billion, CapEx of approximately $300 million, pretax amortization expense of roughly $100 million per quarter and stock comp expense of approximately $110 million. Now turning to the first quarter. We expect consolidated revenues to be in the range of $1,740,000,000 to $1,850,000,000. If current foreign exchange rates hold constant, the headwind from FX should be approximately $10 million or 50 basis points relative to the first quarter of last year. On an operational basis, we expect consolidated Q1 sales to be in a range of down 2% to down 6% and we encourage you to model at midpoint. The forecasted decline in Q1 is primarily driven by tougher year-over-year comparisons and the impact of less selling days than in the prior period. On an adjusted days basis, Q1 operational revenues are expected to be more in the range of down 0 or flat to down 4%. On a worldwide basis, we expect DES revenue to be in a range of $280 million to $310 million and CRM revenue to be in a range of $455 million to $475 million. For the first quarter, adjusted EPS is expected to be in a range of $0.14 to $0.17 per share and reported GAAP EPS is expected to be in a range of $0.04 to $0.07. That's it for guidance. So with that, I'll turn it back over to Michael who will moderate the Q&A. Michael?

Thanks, Jeff. Greg, let's open it up to questions for the next 20 minutes or so.

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

Two questions. One, can you elaborate a little bit more on the restructuring that is new going forward? In the press release, you talked about headcount reduction and some of the savings, but can you talk to us about which divisions is it -- are we coming from? Is this coming from CRM? Is it stents? Is it U.S., o-U.S.? Any type of color would be helpful.

Glenn, this is Jeff. Let me respond to that one. So as you remember, a couple of years ago, we talked about the opportunity through the emerging markets initiative and Zero Based Budgeting to take out $100 million to $200 million out of the cost structure of the company focused primarily on kind of the corporate infrastructure. And we've been saying all along throughout this year that we felt that we could do in excess of that. We came out with a restructuring plan midway through 2011 and said we would do somewhere between $225 million to $275 million in total savings by focusing primarily on those corporate infrastructure-type departments. So this program here is an extension of that. It's predominantly centered around the corporate functions that currently are larger than they need to be relative to the size of the business. There are some adjustments we are making to some of the businesses that are primarily outside of the commercial infrastructure. And so it's more or less right in line with what we anticipated doing relative to a couple of years ago and then the step-up we'd done a year ago.

Okay. And then just as a follow-up on the ICDs, your U.S. number did come in line with our expectation, so probably better execution. You talked about the new products gaining traction, but I was also wondering with the subcutaneous ICD in the marketplace today, have you been able to pick up any new accounts that you were previously cut out of?

Sure. I'll touch on that, Glenn. We did have a controlled launch in 2012, 2013 as we continue to ramp up supply chain to meet the demand. But the uniqueness of the product, one, is allowing us to open up new accounts in Europe and the U.S. to sell S-ICD, which we do sell at a premium and does enable some pull-through as well. So we think that, combined with a broader portfolio, that we touched on in the discussion points with our investments in EP and Rhythmia as well are also assisting with that.

Your next question comes from the line of David Lewis from Morgan Stanley.

Jeff, just a couple of quick questions here on 2013. I guess, first off, you mentioned the Vessix and Rhythmia and Mike did as well in his prepared remarks. Can you just give us a sense of what contribution you could expect in '13 from inorganic drivers, specifically Vessix and Rhythmia and others?

So David, we're probably not going to get into as much depth as you'd like right now on those contributions. At our Investor Day, on the 12th of February, we're going to get into a little more detail in terms of what we expect the programs to generate. And I guess what I can help you with is we said all along that we've got 3 or 4 programs we expect to contribute to earnings in '13 and that'll be accelerated in '14 with another 3 to 4 programs, and we'll take you through that in more detail at the Investor Day.

Okay, very helpful. And then just one more quick one on margins. The restructuring announcement and clearly your buyback sentiments are very positive and a little higher than what we would have expected for '13. But it still looks like based on your guidance, Jeff, operating margins are expected to be down year-on-year. And I guess the biggest disconnect there, if that's correct, is gross margin. Maybe help us understand what are some maybe the key headwinds in gross margin that we're sort of not appreciating because we expected obviously this year to be a little stronger given some of those headwinds in '12 began to fade?

Yes, so if you look at gross margins, we exited 2012 with gross margin of 67.8%. And as you look forward, we continue to expect that price will be a headwind and I think we can do better on price and we've got a number of things that we're working on, on the pricing side. However, as a percentage basis, we think our standard cost improvement can largely offset the margin erosion on price. So that's good and we're stepping up more, and the manufacturing team's doing a great job on that front. So that pretty much neutralizes those 2 impacts from a margin perspective. And then we've got some benefits coming through for the last segment of the PROMUS Element transition. The 2 factors that weigh a little bit on gross margins, one is the impact of acquisitions. Some of these acquisitions are a little smaller in terms of revenue and as we ramp them up, they're below our average gross margins, so that has an impact. And the second impact is we did do, for consistency purposes, some reclasses between R&D and gross margins for next year, which moves some costs out of R&D up into gross margins to be consistent across all the businesses. The combination of the acquisitions and the movement of R&D is worth about 100 basis points on gross margins. So margins would be up more. I would tell you, though, that we expect to end the year at a higher rate gross margin-wise. So our margins will start off a little bit slower because of some of these smaller acquisitions and they'll end at a higher rate.

Your next question comes from the line of Rick Wise from Stifel, Nicolaus. Frederick A. Wise - Stifel, Nicolaus & Co., Inc., Research Division: A couple of questions. First, on WATCHMAN, pretty extraordinary performance. We were at Boston Nature [ph] recently, and frankly, we were really impressed and surprised and excited by the physician reactions. It seems like they're very excited. Can you talk to us about when is the data coming out? What are we looking for? Do you expect another panel? And maybe talk about the launch and the uptick, just the -- and market potential, just all that background with WATCHMAN.

Yes, this Mike. I'll make a couple of comments, then we turn it over to Ken Stein who's on the phone as well. We're very encouraged about the size of the market as you indicate. We think it's about -- it could grow to a $500 million to $750 million market. We're seeing nice uptick in Europe as we continue to train more physicians and drive growth there. Relating to the clinical data, the PREVAIL enrollment was completed, say, early third quarter of 2012. And we're currently analyzing the data and we'll be looking to discuss with the FDA the submission strategy in the near future here. So we'll be able to provide a very detailed update on WATCHMAN at the upcoming Investor Day. Frederick A. Wise - Stifel, Nicolaus & Co., Inc., Research Division: Okay. Two last quick ones. Can you talk about what it would take to get to the upper end of your 2013 sales guidance. Is it market, is it product timing, launches, execution? And maybe on the asthmatic front you've got your CPT I code. Can you characterize at all the 2013 outlook there and the uptick potential?

A lot of components to that one, Rick, but I'll say a couple of things. One on the end markets. We see the end markets very consistent and stable versus 2012. So across BSC portfolio, we think of the end markets as kind of 0% range. With our -- if you want to classify, our DES and CRM markets, in the globally, the negative 3% to 5% range. In our other businesses, market's about 3%. So we think neutralize for all that, our markets are essentially flat. So when you look at potential for the future, we see ourselves continue to grow very effectively in our MedSurg businesses and our PI where we'll grow faster than market. And our second focus area is to significantly improve our execution in IC and CRM. So on a combined basis, those businesses grew last year, call it, negative 9%. And so, we're going to put a lot of focus on that and improve those results. So you'll see the 45% of our business, MedSurg and PI, continue to grow faster than market and a lot of execution to improve our results and performance for 2012. And then as you mentioned, on top of our core business, we'll layer on the impact of Alair, WATCHMAN, the S-ICD, as well as Vessix new adjacencies. And the results of that, combined with our focus on BRIC, provide us upside. I hope that's helpful for you.

Your next question comes from the line of Mike Weinstein from JPMorgan. Michael N. Weinstein - JP Morgan Chase & Co, Research Division: Just a couple of clarifications first. Jeff, you had mentioned difference in selling days in the first quarter. Were they the same in the fourth quarter year-over-year?

Yes. Michael N. Weinstein - JP Morgan Chase & Co, Research Division: Okay, and then you were talking about gross margins, Jeff, in 2013. And one component that I thought was left out was the transition service agreements. My math had the expiration of those TSAs adding them up 60 basis points to the gross margin and that really kind of kicking in the second half the year. Did that change?

No, no. There is a benefit associated with the Neurovascular transition, and it's not far off. There's some other various factors that kind of add up that neutralized that, so I kind of gave you a more condensed version of the lot, I guess. Michael N. Weinstein - JP Morgan Chase & Co, Research Division: Okay, and then can you talk about sustainability of the tax rate? Obviously the tax rate is coming in below what people were modeling in for 2013. And you had the lowest tax rate in the sector. Can you talk us a little bit about that over the next few years, in particular as you go out to the period in which those Guidant transfers, intercompany transfers expire and then roll off and then what will your tax profile look like once that occurs?

Yes. So tax rate was lower this year than we anticipated due to kind of geographic mix of earnings. I explained that in the prepared comments. As we look forward, as we continue to migrate more manufacturing offshore, that pulls down our tax rate. And so some of the activities we had commenced as part of the Plant Network Optimization program and some other things we'd done in our international locations were putting downward pressure on the rate, so kind of the 13% to 15%. I think I said last quarter kind of 16-percent-ish was what we thought for this year. We're now a little bit lower than that. We continue to kind of migrate more things offshore. That looks fairly sustainable as far as we see today. I think everyone knows we had this dispute with the IRS relative to the Guidant transfer pricing and we do reserve for that in our rates. That's built into the rate on a normal basis. And so our 13% to 15% reflects that. And we think we're appropriately reserved and we're appropriately positioned. We'll have to see how that plays out. And as a reminder, that's probably a couple of years out, 2 to 3 years out in terms in terms of full resolution. Michael N. Weinstein - JP Morgan Chase & Co, Research Division: And then what I was asking, Jeff, was just when your intercompany debt transfers, when you basically played all those out -- going back to the Guidant acquisition, what will your tax rate look like once that's done, which I think is 14%, 15%?

Yes, you're referring to now the repatriation of cash, not the tax rate. Michael N. Weinstein - JP Morgan Chase & Co, Research Division: Yes.

Okay, sorry, misunderstood. So we have at least a couple of years left with those intercompany notes to kind of bring cash back assuming we don't do something different from a tax structure perspective, which is always possible. So it's probably a couple of years. And thereafter, we'll be in a position similar to other companies that are kind of building more cash outside the U.S. and less cash within the U.S. One of the things, though, that's helpful for that is as we continue to migrate more activity offshore, which we're doing as part of this restructuring, that rebalances our expense base and our cash flow mix. So we're naturally readjusting where we generate and consume cash by moving more activities outside the U.S. So that helps as well.

Your next question comes from the line of Bruce Nudell from Credit Suisse. Bruce M. Nudell - Crédit Suisse AG, Research Division: Jeff, clearly you're reinvesting next year, but you've kind of set the table with savings. And just looking at your operating cash margins around 19% in 2012, could you just give us a flavor of where that margin might go kind of in the midterm?

So we're going to -- as we did a couple of years ago, we're going to step the investment community, investors through kind of our margin expansion opportunity at the upcoming Investor Day in February. But we're confident we can -- we continue to improve our operating margins. As you look at kind of the $650 million to $750 million of short-term cost-saving opportunities and just kind of tick down kind of what's left, as you look at the PROMUS Element transition, there's a piece of that, that's left for '13. The value improvement programs we had said historically 5% cost savings consistently every year, we're going to be able to do better than that. We've got a line of sight for increased ability to kind of take out costs over the next 5 years, so that'll continue to expand gross margins and offset price. Our project transformation on the R&D side we think will continue to offer opportunities. We're done, our Plant Network Optimization programs, we still have 12 plants in the network, so we'll continue to look at whether that makes sense. And then we've got the expanded restructuring program we talked about today that'll throw off more savings in '13 and '14. So those, we've got pieces left of the $650 million to $750 million and on top of that you've got a pretty high level of spend associated with these new programs, which we expect to grow out of as the revenue comes. And as the programs finished their development cycles, so that'll be helpful. We think we can do better on price. We're going to talk a lot about continuous improvement at the Investor Day in terms of getting our costs down even further. So there's certainly no shortage of opportunities to drive our cost base down. And as the revenue comes, it'll be on a lower base of costs, which will naturally help with the margin expansion. Bruce M. Nudell - Crédit Suisse AG, Research Division: Okay, and I guess my follow-up is you guys have repeatedly said that you're doing reasonably well in the de novo part of the ICD business and that your replacements or headwind and certainly the data on FactSet confirms that. Do you feel that, first of all, when is that replacement headwind going to begin to abate? And are the new products, including the S-ICD, enough to stabilize share and actually move forward on a share basis?

Yes, it's Mike, here. So you nailed it. We continue to see some improved sequential share gain in de novo of implants, both in the ICDs and also core pacer. And the headwind on the replacement back from the -- the Guidant recall back in 2005, we believe that, that headwind will begin to soften up more the second half of 2013. So we think the replacement performance will improve in the second half of 2013. That's what -- in the prepared comments, we discussed stabilizing our share in CRM in the first half and improving our share position in the second half to be based on the softening of the replacement headwind, continued impact of S-ICD and also the continued impact of the new pacer and ICD new launches we had in 2012.

Your next question comes from the line of Matthew Dodds from Citigroup.

On Neuromodulation, that business saw a nice uptick. How much of that do you think was due to a competitor's restructuring the business versus the new products cycle you're just under way with? And then also, what's your expectation for DBS in Europe? Is that going to do much at all, do you think, in 2013?

Matt, difficult to determine how much of it was our execution or maybe disruption with some competitors, so tough for us to gauge that. I guess, just the good news, as you saw the results for the fourth quarter are very strong. We had very early launch of Spectra in Europe and we see a full launch of Spectra in the U.S., which we think will be very innovative, the next breakthrough for paying patients. And you'll see the full launch of that -- the results of that in the second half of 2013. So we're very bullish on our guidance for Neuromodulation for 2013. And DBS will just initiate our clinical trial in the U.S. in 2013. And got to get that information. I'm sure we completed enrollment in Europe at this point, so we've completed enrollment in Europe and so we'll see some improvements, obviously, to our DBS sales in Europe and we're launching our clinical trial in the U.S.

And then, Jeff, just a quick one for you. I just want to make sure I had this right. For the model in '13, share repurchase, 1/2 the operating cash flow, that's -- it was in the guidance?

Yes, it'll be 1/2 the available cash flow. So we have, if you look at kind of our legacy acquisitions, we have approximately a couple of hundred million dollars of earn-out payments that we expect to have to make here in 2013. So if you look at the $1.2 billion of adjusted free cash flow, after we make those payments, approximately 1/2 of that cash we'd look to kind of use for share repurchases subject to the business development environment, the price of the stock and regulatory issues.

Okay, but that's what you have in the guidance?

More or less, yes.

Your next question comes from the line of Matt Taylor from Barclays.

Just wanted to ask about the stent performance sequentially better and get your view on expectations for SYNERGY and pricing in stents in the coming year. You should be lapping a bit of a Medtronic headwind, so I'm just curious to get your thoughts there.

Yes, so in the DES market, similar to CRM, we believe we will stabilize our share position. Clearly stabilize that in the first half and we'll drive share gains in the second half of 2013. We do anniversary the Medtronic launch in second quarter. And similar to the prepared remarks, we believe we'll have more of a challenging first quarter based on less days selling and also very difficult competitive comps in first quarter. And we'll lap the Medtronic launch in the second quarter. And the combination of new launches with SYNERGY, trialing increasing and our long lengths will drive share gains in the second half.

And you talked about your share repurchase plans for the year and stock being undervalued. I'm just curious as the stock continues to perform here, when do you start to think about potentially initiating a dividend or changing that kind of a program?

Matt, I think we've been -- this is Jeff, I think we've been fairly consistent with that. That we think from an investor perspective and shareholder value perspective, there's a lot bigger return to driving the growth rate of the company into the low single digits and up north of that versus kind of putting in a dividend program. So we're very focused on getting back to growth the second half of this year in '13 and then moving that growth rate up. I think once we do that and accomplish that, then we can really look at that capital allocation whether we make a dividend more of priority, but it's not -- for the next short while, it's not as much of a priority as is bringing in new technology to drive the growth rate of the company up.

Your next question comes from the line of Bob Hopkins from Bank of America.

So Jeff, just to clarify, your SG&A guidance for 2013, excluding the med tech tax, is roughly in the 34% to 35% range, is that right?

That's correct.

And that's roughly the same as what you did in 2012. And just kind of going back to some of your comments in the Q3 call where you were talking about SG&A and hopefully seeing a good-sized benefit from some of your ongoing programs in 2013, I'm just wondering kind of what's changed between Q3 and Q4 as it relates to SG&A expense and the outlook for some real fall-through as a result of some of the programs you have going on?

Yes, it's a fair question, Bob. And I think as we considered kind of the best potential return from a shareholder perspective, we are getting more than what we anticipated relative to the cost savings. So I think we're doing really well in the cost savings. I think what we're finding is we found a great asset in Vessix, we found a great asset in Rhythmia, both that can be significant revenue growth drivers for us in the next couple of years. So we put more of an onus on investing for growth in the short term versus letting an incremental amount drop through on the SG&A side. So there's a little bit more of a lean towards investing for growth given the very attractive assets and the great position that leaves us in from a growth perspective.

Yes, I'll just add on to that. In the emerging markets, we're seeing very good growth in 2012 and we plan for that to continue to accelerate in '13. And so we're adding quite a significant amount of commercial capabilities in BRIC and other emerging markets.

Okay. So it's incremental investments in SG&A. And then, I just wanted to follow-up, just quickly on S-ICD. I know it's early in the year, but can you give us a sense as to what sort of contribution you expect from that business line in 2013? Is that roughly $40 million to $50 million or is it less than that?

Bob, as David Lewis had asked the same question about the broader contributions, we're going to hold those questions to the Investor Day in the 12th then we're going to walk you through by growth driver what we think it can contribute to '13 and thereafter.

Your next question comes from the line of Kristen Stewart from Deutsche Bank.

I just wanted to just make sure I heard it correctly. On the tax examination with the Guidant, I guess, back tax years, did you say that would be another 2 to 3 years that you expect that to be finalized? And is the viability still in that $1.2 billion range?

Yes, yes. Both are correct. We expect that'll take at least a couple of years to play out through Tax Court and we currently have reserves of about $1 billion in the balance sheet.

Okay, and then the commentary I guess that you made with respect to the S-ICD talking about, I believe, is the MADIT trial where you're talking about how there was a benefit of a more simplified ICD. What do you guys see as the risk moving forward, just overall for the CRM market, to the extent that physicians look at that and not only move to an S-ICD, but more to a basic single-chamber defibrillator. Could that be something that puts pressure on the ICD market incrementally in 2013?

I think we'll have Ken Stein provide some color on that question.

Yes, thanks, Kristen. I think it's a good question. I think the first thing to recognize, so MADIT-RIT was a dual-chamber ICD study and I think the lessons from it bear less on the issue of single versus dual chamber and more on the issue of what's the importance of giving rapid therapy versus a delay to giving therapy, what's the importance of a lot of sophisticated antitachycardia pacing. And so I think I agree with the commentary Mike provided, which is MADIT-RIT, although it's a transvenous ICD trial, supports the design features of the S-ICD. I don't think it says anything at all within transvenous ICDs about single versus dual.

We're running a little past the hour, so we have time for 2 more questions.

Okay, your next question comes from the line of Larry Biegelsen from Wells Fargo.

Jeff or Mike, could you talk a little bit about the drug-eluting stent performance in the quarter. Outside the U.S., it was very strong. Where was the strength? Was it Japan, Europe, emerging markets? And given that I was a little bit surprised with the guidance for the first quarter was a little bit weaker, the growth rate, than what you saw in Q4 and I think resolute anniversaries, I think, in January 2013.

Yes, in terms of our o-U.S. performance in DES, you hit the major regions, starting -- start with Japan first, where we had very strong fourth quarter and a second half in share gains in Japan. So good strength there in the fourth quarter. Similarly, remaining pieces of Asia Pac. You saw the growth numbers for BRIC. We don't break out China and India specifically, but they're big contributors to that, plus 35% and those markets are heavy DES revenue drivers for us. Europe had some improvement in performance as well in the fourth quarter. In terms of first quarter guidance, we mentioned the impact on days and also we see a larger impact on that days challenge in Japan, which is part of the drivers of the first quarter guidance. We also have a difficult comparable in first quarter 2012 as well. So we're -- similar to the comments, we're optimistic we're going to stabilize share performance in first half and gain share for the full year, just that you see the timing of the quarters consistent what Jeff outlined.

And Larry, just to provide some clarification, our U.S. DES share was 45% in the fourth quarter in 2011, then it went to 47% in the first quarter of '12. So when Mike says comparisons, actually the first quarter of '13 versus first quarter '12 was a more difficult comp than the fourth quarter of '12 versus the fourth quarter of '11.

I got it, that's helpful. Jeff, how many extra days are there -- or less days, I'm sorry, in Q1 2013, if you could just give us those numbers. And just lastly, on asthmatics, at the investor day you guys did last year, if you look at the slides, it was about -- your expectation was about $20 million in 2012 and it was clearly $40 million to $50 million in 2013. Could you just give us a little bit of an update if those goals are on track?

So in terms of the numbers of days, it's approximately -- it rounds to kind of 2 days, so it's not insignificant relative to the first quarter of '13 versus the first quarter of '12. And then the second part of your question, Larry, you were -- I didn't quite follow kind of what you were referring to.

So asthmatics, when you did the Analyst Meeting in 2012, you did give some sales expectations and you had about, if I look at the -- when I looked at the slides, about $20 million was the expectation in 2012 and $40 million to $50 million in 2013. And I was just wondering if you were on track to meet those goals?

So as I responded to David Lewis and Bob Hopkins, we're going to go through each of the major growth drivers and kind of tell you kind of what we did in revenue in '12 and our expectation for '13, so we're going to reserve those questions and that discussion for the Investor Day.

Your next question comes from the line of Jose Haresco from JMP Securities.

Just wrapping up, could you first just refresh us on the what the expectation is for the overall market growth for both CRM and DES? And then on S-ICD, could you just give us an update on how we should think about the inventory build-out and the training schedule for the rest of the CRM team?

So we've got -- this is Jeff, we've got the DES market pegged to be kind of low, to be down low single digits to mid-single digit next year and very similar for the CRM market, both market to be slightly unchanged from this year. The CRM market will be a little bit better because we have now the lapsing of kind of the difficult comps from '11. And then relative to the S-ICD, I'm going to hold that response. We're going to have a separate section on the whole CRM business and our President will talk about kind of the S-ICD plan and that would be a probably a more appropriate time to kind of get into any more details on the S-ICD.

With that, we will conclude the call. Thanks for joining us today. We appreciate your interest in Boston Scientific, and we're looking forward to our Investor Day on February 12. Before you disconnect, Greg will give you all the pertinent details for the replay. Have a good day.

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