Boston Scientific Corp (BSX) 2002 Q2 法說會逐字稿

Ladies and gentlemen, thank you for standing by.

Good afternoon and welcome to Boston Scientific Corporation's 2nd quarter 2002 earnings results.

At this time, all phone lines are muted or in a listen-only mode, however, after the presentation today, there will be opportunities for questions and the instructions will be given at that time.

If you require assistance during today's earnings results, you may reach an AT&T Operator by pressing zero, then star on your phone keypad.

As a reminder, today's call is being recorded for replay purposes.

Standby at the conclusion of today's meeting to receive the replay information.

With that being said, here with our opening remarks is Boston Scientific Corporation's Senior Vice President and Chief Financial Officer, Mr. Larry Best.

Go ahead, sir.

Thank you and good afternoon.

Thanks for joining us to focus on our 2nd quarter results.

Today, on the conference call, we have with us Jim Tobin, our Chief Executive Officer, we have also Steve Moreci, President and group President of our Endo Vascular Group or Endosurgery Group and we also have Paul LaVoilette, who heads up our Cardiovascular businesses.

Before we begin, because we will reofficer to forward-looking statements and making comments of forward-looking nature, I turn it over to Paul Donovan with the safe harbor clause.

Thank you, Larry.

This conference call contains forward-looking statements.

The company wishes to caution the listener that actual results may differ than those discussed and may be affected by, among other things, risk associate we did new product development and introduction, clinical trials, regulatory approvals, competitive offerings, operational improvement and the company's overall business strategy, its relationship with third parties and other factors described in the company's filing with the Securities and Exchange Commission.

Thank you, Paul.

What I'd like do now is just refer briefly to our press release.

Some of you may not have caught up with it.

I will then have some highlight commentary regarding the financial results.

Then I will turn it over to Steve Moreci, head of the Endosurgery group to talk about the business during the second quarter in his area.

Then over to Paul LaViolette to focus on the cardiovascular businesses and then ask Jim Tobin for some brief commentary on the quarter from his perspective.

Let me just read briefly from the press release as to our results for the 2nd quarter.

Net sales for the 2nd quarter were $708 million as compared to $672 million for the 2nd quarter of 2001.

An increase of 5% on the top line.

The impact of foreign currency was not material compared to the prior year.

Net income, excluding special charges, increased 19% to $95 million or 23 cents per share diluted as compared to $80 million or 20 cents per share in the 2nd quarter of 2001.

Reported net income including special charges of $70 million after tax was $25 million or 6 cents per share as compared to a reported net loss including special charges of $252 million after tax or $172 million loss last year or a loss of 43 cents per share in the 2nd quarter of 2001.

The special charges in the quarter include costs associated with Company's global operations plan, purchase research and development, primarily related to the acquisition of Terrick medical and an endowment fund newly created by Boston Scientific and funded and initiated in the 2nd quarter.

Let me -- for those of you that have the press release, you will notice attached to it is a number of schedules that outline in some detail the sales -- worldwide sales numbers by geography and by division.

Let me just highlight some of the takeaways and -- and give you some perspective on how we viewed the 2nd quarter.

First off, we did come in at $708 million, that was above what we expected several months ago.

So that was good to see.

A very, very solid showing acrossed all of our businesses and we were happy to see that in the 2nd quarter.

We -- we measure ourselves on a constant of currency basis.

This quarter, the as-reported basis and constant currency basis is really almost exactly the same.

And on that basis, our overall business domesticly grew 4%.

International grew 7%.

Worldwide, 5%.

However, as we've talked about over the past number of quarters, our overall results at the top line continue to be burdened by transitioning in our coronary extent franchise from the near-platform, which has become a bit stale and as we transition to a new express platform we are going to continue to experience competitive pressures in the coronary extent market where we do not have our new platform.

In the 2nd quarter, we had our expressed platform in Europe and certain intercontinental countries, but we still only have the near platform and not the express platform in the U.S. and Japan.

Now, if -- if you look at our business without the coronary stent product line, you get a better picture of the breath and depth of Boston Scientific and our growth prospects.

In the 2nd quarter, without coronary stents, our domestic business grew 12%.

Europe grew 11%.

Japan grew 7%.

And intercontinental grew 25% for an overall worldwide growth rate, again, without coronary stent in it of a 12% growth rate, a nice, double-digit growth rate for the quarter across all of our businesses except coronary stents.

If you then go to the next schedule that focuses on divisions, the good news is without coronary stents we grew each division double-digits and let me refer you that schedule.

You will see that cy-med without the stents grew 10% in the 2nd quarter.

EPT grew 38% in the quarter.

Target theraputics, our neurovascular unit, grew 10% for an overall cardiovascular growth rate of 11% in the quarter.

Moving on to endosurgery group, it had a good quarter, overall grew 12% and the breakdown there was a 10% growth rate for Medi Tech, a 13% growth rate in our Gi Endoscopy business and a 12% growth rate in the Micro Vasive Urology business for an overall growth rate of 12%.

That goes to the 12% overall without coronary tents.

We were very pleased with the growth in all of our divisions.

Double-digit growth and we were very excited and Paul LaViolette will talk more about the progress we're making in the coronary stent business.

For those of you who keep track of the domestic numbers as well as international, let me read quickly the actual numbers by division for domestic.

You can do the math, carving out of our worldwide numbers.

For the 2nd quarter, cy-med was $236 million in the U.S.

Ept at $17 million.

Target at $13 million.

Meditech at $34 million.

Endoscopy at $33 million.

Urology came in at $37 million.

For an overall domestic business of $420 million and hopefully that will be helpful if you're breaking out domestic versus international in the analysis.

To put the quarter in perspective, I think if -- if I take you through a bridge of the top line from last year's 2nd quarter of $672 million to the $708 million we reported for the 2nd quarter this year it might be helpful.

First off, let's go back to last year's 2nd quarter.

We reported $672 million at the sales line.

Immediately, when you compare the two periods, we had a reduction in coronary stent business year-to-year on the 2nd quarter of $30 million.

We -- we lost $16 million of coronary stent business in Japan, again, largely because of the near stent platform versus the other competitors.

And also in the U.S. where we only have the near as the primarily platform, we lost $24 million in these sales.

That adds up to a $30 million decline in stents and so the 672, that takes us down to a $642 million comparive basis from the prior year.

The good news is all the other divisions and all the other -- the segments of our business grew some $66 million and that's how we get to the $708 million for the quarter reported.

I'd also like to just mention briefly that if -- that the quarter -- the 2nd quarter last year to this year is somewhat of an apples and apples.

We -- most of our acquisitions last year were done in the 1st quarter and were put to bed well into the early parts of the 2nd quarter.

So, we do have an apples to apples comparison.

However, the acquisitions we did make in the 1st quarter of 2001 saw good growth, also.

Overall, when you add up the growth contribution in -- in the 2nd quarter from catheter innovations, cardiac pathways, EPI, RPC, ITC, we grew those businesses from a $23 million contribution last year to a $46/47 million contribution this year.

So, the -- the business base from those acquisitions that were in our numbers last year grew almost 100%.

So, those acquisitions all contributed, they're all doing extremely well and of course, the cutting balloon that Paul will talk more about,itself grew 71% in the 2nd quarter relative to the 2nd quarter of the prior year.

Paul LaViolette will go over our specific stent numbers.

So I won't do that at this time.

Let me focus quickly on the income statement.

You'll see in the schedule attached that we had some special charges that may take us from the base business to the ads-reported numbers.

Let me take you through those.

Three special charges, first, the last component of our global operations plan that we announced a year and a half ago that, program has now been completed and you will not see any more charges related to that program.

That program is complete and for those of you that have been following Boston Scientific for some time that, was a program we announced roughly a year and a half ago to rerationalize our global operations and planned facilities and streamline them and that charge in the 2nd quarter was $19 million.

Moving down in to the operating expense line we had a special charge of $45 million, that was exclusively related to the purchase during the quarter of Terrick medical technologies, EMT, it is a technology focused on the treatment of gurd.

We did acquire and close that transaction in the 2nd quarter and allocated the purchase price and there was a purchase research and development of $45 million that represents a special charge in the 2nd quarter.

And then, thirdly, we established for the first time in Boston Scientific a charitable foundation and we funded it with $18 million in the 2nd quarter and that is also treated as a special charge, a non-recurring or somewhat of an unusual event in the 2nd quarter.

It was purely discretionary and obviously not a part of the 2nd quarter results.

So, we treated that as a special charge.

And that reconciles us from a 6% as-reported to a 23-cents per share EPS number.

Just a few additional highlights on the income statement and results for the 2nd quarter, we did get an improvement of gross margin, gross margin in absolute terms grew 7%.

That's good on a top line 5% number.

The gross margin went from roughly 7 -- 70% gross margin last year at this time to a 71% gross margin in the 2nd quarter just ended.

So, gross margin grew 7%.

We took some of that back when we grew SG&A 7%, largely as a result of expanding our sales force.

We also took some of that back with a significant increase in R&D spend, up 20% for the quarter.

Most of that increase in R&D had to do with increased clinical spends regarding our coronary stent platform, both the express and the drug clinical trials.

And then there was also a clang in change in accounting required that most of you are familiar with, where amortization of goodwill has been reduced.

Certain parts of intangible assets, such as goodwill are no longer amortized.

That brought amortization down by roughly 38% in the quarter.

All in all, operating expenses grew 5% based on a top-line 5%.

That gave us a bit of leverage on the bottom line, where our bottom line grew 19% and our EPS grew 15%, 23 versus 20 cents a share.

And then lastly, we continue to generate substantial cash flow during the 3rd -- 2nd quarter of this year just completed.

We generated roughly $140 million of free operating cash.

So, we continue to generate substantial cash flow to fund the growth of our business.

And then lastly, let me just speak to where we are in the year in terms of guidance.

We -- at mid-year looking into the second half, and specifically the 3rd quarter, our guidance has not really changed much for the 3rd quarter.

As we look out in the 3rd quarter, we believe our top line, keep in mind that the 3rd quarter is always our slowest quarter with -- especially in Europe with most everyone taking long vacations in July and August.

We -- our guidance for the 3rd quarter is top line roughly in the ballpark of $700 million in sales and we believe we will be able to achieve earnings per share of 22 cents a share diluted.

And then in the 4th quarter, we have not revised our guidance yet.

We have -- we still believe the express stent will get approved and will be launched sometime this quarter and that should bode well for the 4th quarter.

We're still sticking to our guidance of around $780 million of sales in the 4th quarter and a EPS somewhere in the neighborhood of 33 cents a share.

So, our guidance has not changed.

Our guidance for the year is still at the top line around 28 -- $2.8 billion.

Right now it is $2.863 billion.

If we do make the 4th quarter and express gets approved and we take the kind of share we think we can, if you add up the numbers, that would show up a dollar EPS number for the year.

We're going to take a hard look at the 4th quarter, at the TCT Conference.

We do have an analyst meeting scheduled at the TCT.

It's scheduled for September 26th and I believe it is at 5:00.

So, please join us at that point in time.

We will have a better feel for where we are with our Express launch as well as our drug-coded program and think will help us to take a hard look at the -- at the 4th quarter and at that point, update you on our thoughts regarding completing the year 2002.

We also just as a reminder, are planning to have a -- our annual analyst meeting in New York in January.

I believe the date is January 21st and at that time we will be of course, updating our guidance for 2003 and also providing some guidance regarding 2004.

With that, let me turn it over to Steve Moreci to give you his thoughts on the quarter, the 2nd quarter, in the endosurgery businesses.

Steve?

Thanks very much, Larry.

Just as a reminder, the endosurgery group is made up of the urology business, with a gynecology component.

The meditech is part of endosurgery.

And endoscopy which focuses on pulmonary medicine.

I'm very happy with the 2nd quarter results.

Worries target for the goals we set for ourselves at the analyst meeting January.

As Larry reported, we had 12% growth worldwide in the group. 10% domestically and an outstanding 17% growth internationally.

So, we're right on target to make the numbers that we projected for the year and are looking good nor next year, as well.

In addition to the revenue line, we see an improving financial contribution for the group, Boston Scientific, as gross margins improved as well as operating income contribution.

This is really driven by the more positive mix in the group, good plant productivity, we see improving supply chain performance across the three business units and our team has done a great job of controlling spending to bring in the appropriate financial results.

We had strong performance in several key franchised in endosurgery.

First with the endoscopy group.

The largest group is in endoscopy.

It is the billion-dollar franchise.

We've been talking about the expansion of this through new technologies for a single operator approach to the disease.

That business is up worldwide 17%, so, it is good to have your biggest franchise growing.

Also continuing, our other franchises, driven primarily by the outstanding growth and procedures for colon cancer screening.

We've been talking about it for a while, but the growth continues.

It was up 17% worldwide and that -- we don't see anything letting up in that kind of growth.

It is an outstanding performance of our teams, particularly international markets with pending opportunities.

In the United States, we have done some investing as Larry reported in the sales organization and one of the franchises, or two of them that benefited the most is the balloon and stent business in endoscopy.

They were up 10% combined worldwide.

So, endoscopy solid growth across the four top franchises and we're seeing continuing performance from the group going into the 3rd quarter.

Our urology and gynecology business was not to be left out.

We had a very solid quarter in our management and in our pelvic floor businesses.

You've been hearing about the luminous relationship, that's a laser company that we have a deal with on fibers.

That was up 88% in the quarter.

Outstanding performance in the franchise.

We also had a deal that we announced in the 1st quarter, for the product I will talk about in a second further.

That helped drive the pelvic floor franchise in urology up 33% for the quarter on a global basis.

So, not too shabby in the urology gynecology business, as well.

Our oncology vascular surgery franchise was up 10%, as Larry mentioned, but not as strong as we wanted.

On the positive side, we're getting great pull-through from the catheter innovation acquisitions we visited last year.

Sales up this quarter, 200% worldwide.

We're doing a great job of leveraging the franchise and see continued growth there.

The RTC acquisition we've included in the 1st quarter is up 40% worldwide.

Good numbers.

That's driven by positive reimbursement news we got in the quarter for APC and PCT.

The two acquisitions we had done late last year and early this year for the oncology group are paying off handsomely.

A new product we talked about last time, the renegade high flow is helping to drive the franchise in the oncology business.

It was up 26% domestically.

So, strong growth across those franchises.

On the downside, we had a recall of a product in the venus axis franchise it caused us in a downward trap of 5% on net line.

That pulled back the top line for meditech.

The good news, we've began shipping the product again in the first part of this week and have a strong updraft from the replacement product going in the market.

Additionally, I also mentioned to you that group that the vascular graph bais on a rebound after doing replacement of the order by the Japanese government, particularly in other markets.

That graph business is now rebounding, we're at a break even status.

So, the oncology service was kind of a mixed bag.

A strong quarter, yet we still see stronger growth if we can get back in business, particularly in the venus axis franchise.

A big quarter for major events for endosurgery.

A lot of press releases, some early in the quarter, some later.

Larry mentioned a couple of them in his comments.

For the urology and gynecology, we had a major acquisition of BEI Medical Systems.

That was acquired July 3rd.

Very excited about this product.

This is the hydro thermo glader used for abnormal uterine bleeding.

Sales at BEI closed July 3rd.

We're just now getting involves.

Sales have been increasing 40% per quarter and they have $1,082,000 in the 2nd quarter.

We expect to do over $3 million in sales in the second half of this year and we have a goal of $15 million for that franchise.

The merger is going very, very well.

The teams are simulating and we're very excited about having this product added to a number of products in our franchise for female health care and we're expecting to have all of that make us one of the market leaders in the segment.

We closed the CMT distribution deal in the 1st quarter.

I thought I'd let you know how we're doing.

We closed the distribution arrangement.

In the 2nd quarter, the product was up 15% over the 1 st sf quarter.

The team of Boston Scientific sales people are doing an outstanding job of driving that franchise.

That will make a complementary franchise as we go into the slate business more seriously here in the 4th quarter.

So, a very busy time for the urology and gynecology business.

Endoscopy had three events which were more for the future than for present sales, the first one was the EMT acquisition that Larry referred to.

We close that he did on June 12th.

It is a subsidiary of Boston Scientific now.

It is an injectable material used for gurd.

We project market potential of $300 million worldwide.

The product is now in the FDA under review.

Clinical studies are continuing and we're feeling very positive about the results.

We can't talk about them at this point, but they're moving in the right direction.

Depending when the product comes out of the FDA determines on the size and revenue for next year.

We're feeling bullish about the acquisition and the prospects for that market.

Larry's new business team as well as the division included two other investment distribution deals, one is broncus medical, it's for asthma and emphysema, very important for us down the road.

And we also concluded a distribution agreement with onyx medical for ulcer disease.

So, there are three plays for the future, EMT among two others.

So, very important quarter of activity in the new business side.

We hope to drive growth in the future.

Bottom line for the 3rd quarter, we feel very strong about the franchises and think we will make our numbers, as I said earlier, it looks like the biopsy and venus axis franchises will have strong quarters.

We seek strong growth in the acquisition alliances we pulled together in the last 18 months.

They are all contributing.

We have new product development activity coming fourth in the 3rd quarter and the Rapid Exchange franchise.

We see new activity in the slings and new products coming from catheter innovations.

So, bottom line, good quarter, good prospects for the 3rd quarter and for '03.

Now back to Paul LaViolette.

Thank you, Steve.

I guess I would summarize cardiovascular as having a strong overall 2nd quarter, good for the group, good for cy-med.

Worldwide, our performance is still quite variable as a direct relationship as to whether or not we have launched Express in a given geography, but clearly we have learned that our stent performance as a product is outstanding, our non-stent business growth continues to be very impressive and diverse.

We've continued to make excellent progress on the drug eluding stent front, so, things are shaping up well.

To update taxes program activity, as aware, we're in the follow-up phase now for patients in the second cohort of taxes 2 using the moderate release dose.

We're very please we did taxes two in general as a clinical program for execution.

We've seen extremely high follow-up rates in our anographic and iva subsets.

Those performances have been outstanding, it's yielding very clean data and bodes very well for our opportunity project good execution on the taxes 4 follow-up phase.

As you're aware, we plan to announce taxes 2 clinical results for both cohorts at the TCT in September.

Taxes 4 enrollment, as you're also aware, in the aggregate and in all of our sizes and subsets is completed and that study in the follow-up period and we will provide more detail on that later in the year.

We continue to make solid progress in taxes 5 pre-clinical work, we have to do additional complex subset animal work.

That's progress.

Taxes 6, our moderate release human trial in Europe has initiated and taxes 5, a similar protocol in the United States should initiate enrollment in the 4th quarter of this year.

We have filed for CE mark on the slow release, it is filed and pending.

We remain focused on a 4th quarter launch.

As you're aware, we've initiated an intercontinental registry outside of Europe in markets where we have commercial access without CE mark.

That process is gathering real world experience for us.

We're going to continue to expand that up through the point of CE mark approval and our commencement of a broader international product launch toward the end of the year.

Internally, we're very focused and progressing well scaling up capabilities, defining processes, validating the processes and preparing for commercialzation.

So, we're in good shape for the TCT.

And as a program note before talking about specific quarter 2 results, Express 2 is on plan for a September launch as we've conveyed previously.

We have all of our launch quantities on the shelf today.

Our sales forces in the cardiology and peripheral vascular organizations have been trained for the launch of the coronary and non-coronary stents.

We will be launching all sizes from two millimeter up to 10 millimeter non-coronary sizes s imultaneously.

And as you're also aware, we have started international shipments of those products as of June for both the express 2 coronary and the express peripheral device internationally.

Now, cy-med domestic performance in the 2nd quarter was very healthy.

We did lose a very small amount of market share in near stent sales from Q1 to Q2 and currently hold an 8% market share position that, is a $25 million revenue base for the quarter, down from essentially $50 million a year ago.

So, down about half.

We clearly expect a reverseal of fortunes with the Express 2 launch in September.

The rest of the business, the non-stent business is very strong. 2nd quarter grew 5% over the 1st quarter.

Without stents, the 2nd quarter grew 12% over last year.

And year to date, our non-stent business is 13% up over last year.

And we've seen very strong growth in the peripheral vascular franchises, 7% growth over last year for the 2nd quarter.

So, clearly stents remains a weak spot.

We have a fix in place and plan to execute the fix shortly.

We have strong performance in the remainder of the franchises.

In balloons, we've increased our business in the 2nd quarter 10% vesler year and 6% in the 2nd quarter versus the 1st quarter.

We've moved our market share to about 62, 63% in PTCA balloons, based the performance of the Maverick Technology platform.

In the past 20 months, the franchise gained 20 points in overall balloons.

The Maverick 2, an upgrade to the existing maverick will launch this quarter in the United States.

We actually started shiping last month in Japan.

By the way, worldwide balloons without the cutting balloon, unit growth was 17% in the 2nd quarter vestler year on the strength of Maverick.

And I believe you don't need to be reminded that that balloon platform is the stent delivery system for the express 2 stent.

The cutting balloon has demonstrated continued strength in the United States as Larry mentioned.

Ivt sales up worldwide 71%.

U.S., cutting balloon sales up 64%.

Year-over-year, 19% sequentially over the 1st quarter.

That's based on partially on continued penetration, we've achieved 16% procedural penetration with the cutting balloon and also based on the Monorail launch.

Now, I'm also pleased to announce that as of today, we received FDA approval for a line extension of the cutting balloon.

A 6-millimeter blade length.

Current length are 10 and 15 millimeters.

We expect the shorter blade to give us better tracking and better balloon location control for the physician.

We expect that will begin shipping the 3rd quarter.

We received PMA supplement approval on that in approximately 100 days.

Outside of balloons and stents, again, more strength.

Guide wire franchise, 8% sequential growth.

Guide catheters, 17% year-over-year, 8% sequential growth.

All driven by new products launched and developed by cy-med.

Our ivus franchise up 7%.

We are now number one in guide catheters with a 39% market share as we exited Q2.

Our -- the rest of our accessory business has also shown annual and sequential growth and our guide wire franchise actually now has 41% share.

The first time we've had market shares over 40% for that franchise.

In summary, we could not be stronger or better-positioned to lay in the Express 2 platform on the broad and growing team and broad and growing cardiology business and we, again, expect to do that within a matter of a few months.

In a few other notes, we will complete the enrollment in the fire trial in the same graphs in less than 30 days.

We are now enrolling patients in the 3 trial and in the cutting balloon trial.

The pipeline continues, the clinical activity continues and I think that bodes well for continued growth.

I'd like to shift focus to outside the United States, just for a few minutes, as you know, overall, our business, primarily weighed down by eroding stent sales in Japan was flat year-over-year and yet without stents factored in, grew 10% in the past year.

Japan now has been an area of weakness for a quarter or two based primarily on new competition in the stent area.

Our near sales based on a lack of change and a lack of innovation are down 63% year-over-year.

And that, obviously; hurting us in Japan.

We will talk about the other regions and obviously we have markedly different performance where we are currently selling express.

A little additional pressure in Japan based on balloon activity.

As you know, the mhw instituted annual price rollbacks, commencing in April.

That was a 9% reduction in ASPS for balloons where we are the market leader.

That was expected and negotiated.

We also incurred an unexpected change as the mhw imposed a coverage change, which is to say they will pay for only one balloon officer lesion.

One balloon, one lesion.

That has led to an erosion in the unit utilization of balloons in Japan, which we believe has hurt us about 6% versus our plans.

So, the 6% unit erosion based on coverage changes, the 9% pricing erosion based on reimbursement changes led to a 15% hit on our balloon angioplasty product in Japan.

All other parts of our Japan Cardiology business and all other parts of our Japan Boston Scientific business are doing well.

In fact, those businesses are up 14% year-over-year in the aggregate.

We will incur a little bit more of this painful time in Japan while we await the approval of Express 2, which we anticipate for about 12 months from now.

We are launching Maverick 2, currently and expect that will begin to draft some resurgence in the balloon business and we do expect some stablization and maybe some recovery in the balloon business as physicians come to understand this balloon utilization requirement a little better and perhaps begin to increase their balloon usage per procedure back town normal rates.

I want to turn our focus now to our international business outside of Japan where we are commercially viable with the Express platform, have been now for some time and are -- as you're aware, currently launching the Express 2 for the past 30 days or so.

It's safe to say where BFC is competitive with stent, we are an entirely different competitor.

Year-over-year, snaels these markets are up 67%. 100% growth in Europe. 44% growth in the intercontinental markets.

Sales are up 9% Q2 over Q1 in the markets.

And in these markets, we now hold a 20% market share.

I mention that Express 2 has really only launched for a few weeks in June and has really not begun to contribute materially to the stent share as reported.

In Europe, Boston Scientific grew stent share sequentially.

Q2 over Q1 despite the launch based on Maxis data, which is data compiled by the four major manufacturers and calculated with an independent 3rd party.

That's based on hard sales data.

We have grown share in the past quarter.

We have seen very strong growth in the intercontinental markets.

So, we understand that we're growing share there, as well.

Now, while stents are a major growth driver for us in these regions, our total non-stent cy-med business up 17%, Q2 over Q2 in the international markets.

So, we're combining 67% year-over-year stent growth with 17% non-stent growth for total international cardiology growth outside of Japan of 27%.

As of september, we expect to be selling these very same products in the United States.

Maverick 2, Express 2, the rest of the portfolio.

And, of course, we will commence taxes internationally at the end of their year.

So, you can imagine that we have a fair amount of optimism about our future.

Just to comment on the non cy-med businesses in cardiovascular target as you heard Larry describe, had 10% growth, a solid quarter worldwide.

We're seeing fairly intense coil competition as several companies are vying for evaluation activity and consuming case volume.

Which is highly sensitive indicator of overall market growth.

We remain extremely bullish about our GDC product line and its performance, we are seeing numerous anycdotal cases where competitive offerings are flawed clinically.

We expect to emerge from the competitive window with very high shares in tact.

We are now enrolling Naishts our post approval matrix registry, which, as you know, promotes active aneurysm healing and will redefine coiling in the same way that stents may redefine coronary stenting.

All signs are favorable on the matrix patriotic.

We plan to extend this into a launch phase at the end of the 3rd quarter and into the 4th quarter.

So, very strong outlook for target.

Ept up 38%, driven by strong internal performance as well as favorable year-over-year comparisons with the cardiac pathways acquisition, which will become fully annualized in our base as of August of this year.

We are aggressively driving product conversions to merge the pathways and the Ept technology features.

We've filed our PMA for the a-flutter indication, which is the fastest-growing element of ablation today.

So, we have very solid clinical data and expect good progress with the FDA and between that new indication and our combination technology platforms, we see Ept continuing to grow rapidly, as well.

Those are my comments.

Jim?

Let me sort of reiterate the main themes here, I think sales overall were higher than expected despite the challenges in Japan and stents.

Driven by performance in endo, Europe and intercontinental in general and good performance in the acquisitions that we've done over the last 18 months.

We were able to support investments in -- in clinical trials, field core the acquisitions and still leverage the P&L to 15% EPS growth.

At least largely on the back of margin improvement and the Express U.S. filing the faxes Europe filing, all track and okay.

We've got additional taxes data that is moving forward.

You will see it in September.

And I guess basically the bottom line from me is we have one more quarter to go here and we're going to blow the doors off.

That, I turn it over.

Thank you, Jim.

Thank you, Paul.

Thank you, Steve.

Just one other observation is -- is in the 2nd quarter, to give you some idea of why we do without coronary stent number and most of you realize coronary stents is clearly the largest opportunity in interventional medicine, bar none, with drug eluded stents on the horizon, it is obviously even bigger than that.

But...as far as our upside in the coronary stent market, we're getting to the point where we're as low as we can go, we hope.

To put it in perspective, we now sell in the U.S. more cutting balloon than coronary stents.

And, so, that gives you some indication of where we are in coronary stents.

We don't plan to stay there.

The Express is a -- what we think is going to be clearly an elite competitive stent platform, if not better than that.

And also if we -- if the data holds up well on the taxes trial, we should be positioned well for some nice upside from this, almost non-existing coronary stent business that we have in the U.S. as of the 2nd quarter.

With that, I think that's a pretty good overview of the quarter.

We're -- we're -- we're feeling good about the fundamentals.

We think the fundamentals at Boston Scientific is probably better than they've ever been in terms of positions that we have in various markets and hopefully we will continue to see progress quarter by quarter in terms of these bigger market opportunities.

With that, let's open it up for questions, we'd be glad to take this questions regarding the 2nd quarter that you have.

Thank you, sir.

Ladies and gentlemen, as you just heard, you idea have any questions or comments, we welcome them at this time, queue up by pressing the 1 on your phone keypad.

You will hear a tone indicating that you've been place made queue and just as a note, should your question or concern be addressed before you're called on, you may remove yourself from the queue by pressing the pound key.

Once again, to queue up for a question, just press the 1 on your touch-tone phone and, ladies and gentlemen, we are showing a strong from in the 2nd quarter earnings today.

So, please limit yourself to one initial question and if time allows, we will take follow-up questions.

Representing J.P.

Morgan, our first question is from the line of Michael Winestein.

Go ahead.

Thank you, can you hear me?

Yes, Mike.

Congratulations, 2 for 2 so far this year.

Another nice quarter.

We have a few questions.

Let me start with maybe reviewing your confidence with the Express launch and the timing of that launch.

Two, can we -- since we haven't really heard that much about the moderate release data from taxes 2 rand really the issue there is that you're increasing the amount of drugs diluting into the vessel in a relatively short period of time, same amount of drug, but the timing is different, since we haven't heard from a safety standpoint, does that look comparable from a minimum of what we saw it in taxes 2, what we think about in taxes 2 and I will follow from there.

Thanks.

Regarding express launch confidence, Michael, our confidence is quite high.

Regarding all things that we can control, we are completely prepared and we've trained all 300 of our field force.

We have all of our launch quantities on the shelf.

So, it comes down to what we can't control, which is FDA approval.

Now, just a quick reminder, we submit made mid-march, so, the six-month process would lead to us mid-september.

We've received an approval letter with a short list of requirements for to us reply.

We've already replied to those and basically we're now in, I think, relatively goodstead to have our answers factored into the process and to allow FDA to go through its final stages.

It's very difficult to peg that.

But I'd say the process has gone smoothly and we're pleased with did how it's gone.

So, it -- we have every reason to believe we will object time with that.

Regarding the moderate release data, of course, there is no data.

We've made no claims about how that will perform.

We have seen really no safety issues and I think safety is not a concern of ours but there is no visibility to the data as yet and there will not be until the TCT.

Next question?

And thank you.

Next we go to Matthew Dodds with SG Cowen.

Go ahead.

Thank you, just a couple of questions.

First, on the 3rd quarter forecast of $700 million, that's 4% growth year-over-year much you did 5 in the current quarter and currency should help you next quarter.

So, is there any business you expect to be slower growth with?

No, to be honest with you, the $700 million -- no -- if you look at our past history, 3rd quarter has always been the one that's been difficult for us to -- to get right.

And, so, I -- I would say that the guidance of $700 million is conservative, our goal -- our goal -- let me capture it as a goal in the 3rd quarter is to come in somewhere between, you know, 710, 720, but, you know, a lot depends when we get the Express approved.

A lot depends on our continuing performance in Japan and, yes, if currency says where it is, you know, we -- the 700 is very conservative.

And thank you, Mr. Dodds.

Next we go the line of John with CIBC World Markets.

Go ahead.

Hi, guys.

I will ask Steve a question.

Steve, can you tell us how big the interconnell business is today and you've been -- you've had good activity in that area.

Where did you start the year in terms of size of that business and -- and what is the run rate or will the run rate westbound some much these deals and acquisitions you've entered in to?

I don't have the float right in front of me, John, but you've heard me talk about the intercontinental piece with the duo sphere product line.

We feel very strong about its growth.

You heard me talk about our anchor business, which is roughly strong considering the taped products that are out there.

It is holding up.

We do have a new signature I talked to you about last time coming in the 3rd quarter to compete with TVT.

And the smark product for EMS.

So, bottom line is we feel very good about the franchise and about the prospects.

I don't have the exact numbers in front of me.

I can help you out.

The annual business is approaching $40 million as far as our intercould not naens franchise on an annualized worldwide basis.

And how big do you expect the duo sphere business to be, they sold independently, right?

They sold about $5 million.

They had a run rate of 4 to $5 million.

We think we can do 8 to 10 in the next 12 months.

And Steve, has anything changed there?

We've heard feedback that ada this year there was talk of using it in incontinence as well as the indication, are you going to expand the market?

Not really.

We've been focusing mostly on the sub coastal injection technique to improve the uptake.

And training and education for the customers.

And certainly they've had a lot more people to the program.

That's where the success is coming from our product.

Thank you.

Merrill Lynch with Dan has our next question.

Okay, just the one question, then I will go to Paul.

I'm struggling with the European numbers because the J&J folks intimated their European sales were $30 million or more.

Guiding said the same thing.

If I'm backing into the numbers off of you, I've got your European stent sales somewhere in the, I don't know, maybe $12 million vicinity and can't get to a 20% market share.

Can you -- can you just help me with maybe the math and how 12 is -- if 12 is the right number, close to a 20% market share?

The 20% market share number I gave, Dan, was for our international business outside of Japan.

That is a blend of Europe and intercontinental markets.

Okay.

The maxis database shows courtis gaining about a point of market share in thend quarter.

And that is inclusive of cipher and actually guidance, courtis and Boston Scientific together gained a few share points and med electronic and the other categories lost.

Our share is up slightly over Q2 and the share number is blended for our international markets.

So, you'd put -- you'd put Europe per se, then maybe somewhere in the low-teens then?

Exactly.

Perfect.

Thank you.

Dan, we look at our -- our stents, Japan, U.S.

And then everything else; and obviously our business is -- is stronger.

Our shares are more like 25 plus percent in intercould not -- intercontinental markets and Europe is always the weakest stent number.

Thanks, Larry.

Next we go the line of Jason with Earnst and Young.

Go ahead.

No question.

Very good, sir.

Thank you.

And Kirk Curter with the Banc of America Securities has our next questions.

Thank you.

Larry, you said you had an increase in the sales force, can you tell whaus rough numbers and where those people -- what divisions those people were in?

I will let Steve Moreci talk about the split in the sales force and urology and endoscopy.

Thank you, Larry.

We, over year-over-year we've had probably around 20% to the manpower in both endoand in euro.

And that's where most of the sales people ryt we have not done any real increases in the oncology or medi tech business.

One more -- a quick question on stents pricing in europe, have you seen a decline in pricing or has the express 2 enabled you to hold or even get a price increase?

We're not getting a price increase in part we have eroded primarily because we have so much more of a competitive platform now that we can vie for very large accounts and large tenders, where quite frankly our technology of the pasture wouldn't have enabled us to participate.

So, that's been the overall trend.

I would say the most recent activity stimulated by Cipher's availability and a lot of budget concerns has not really led to noticeable short term fall off in ASPS.

And I mean this market just continues to be one where you have fragmented strength and lack of tying with stents.

Do you think it will stay that way in the next several quarters, year, whatever?

We fully expect that with our presence in all of these franchises that layering in a stent that is highly competitive, that performs exceptionally well and really second to none that, our -- our presence in the lab are -- our sales force experience and -- and frankly effort will lead to a lot of pull-through.

We don't sea a reason we can't continue this.

Our pipeline of new product launches in the non-stent area is extremely rich.

I think that's a by-product of having retooled the product development bross within Boston Scientific in the last two years.

Association we're seeing good productivity.

I'd say the only thing we're contemplating over time is some additional sales heads and probably some additional structure to provide focus so that we can continue to sell some of these lower-priced products -- products that take more time, products like vascular ceiling and district protection alongside stents, alongside cutting balloon, alongside ivus.

I'd say we have an absolutely commendable franchise and it's only going to get stronger in the presence of an equally strong stent.

Thank you very much.

Next, a question from U.S.

Bancorp's Tom Gunnedderson.

Go ahead.

Hi, good afternoon.

Paul, on the Express and the approvalable letter, have they -- has the FDA come out and inspected and can you give us an update on what the result of that was and then just a quick question on wisdom registry, can you give us color on the actual numbers and the asps?

Yes, the manufacturing inspection is part of the PMA was scheduled, has taken place, has resulted in a essentially a closed audit, the auditor is writing a report.

We expect that to go in to the federal office of compliance and, of course, the compliance report will then merge with the PMA supplement.

So, it is safe to say the plant activity is fully behind us.

Regarding wisdom, it is difficult to really comment on numbers and on pricing.

I define this as a transitional registry.

We're transitioning from a clinical protocol environment into a commercial environment.

So, these patients being enrolled under a clinical protocol.

As a result, it's not really equitable to describe it in terms of units placed and look at it from a sales or share position.

We are pricing the stent in a variety -- it is a very broadly-diversed array of countries, but we are pricing the stent anywhere between 2200 and $2700, but I will also say we are defaming that cost somewhat with some clinical expenses.

So, those patients are being followed and we're looking to gather some -- some data there.

So, it's a combination clinical trial, post-market study release and that makes it difficult to really give numbers that are comparable to a commercial release.

Thank you very much.

We go Rick Wise now with Bear Stearns for our next question.

Go ahead.

Good afternoon.

Can you -- just update us on the thoughts of your guidance litigation, having your discussions with guidant and on the balance sheet, receivables grew twice as fast as sales.

What's happening there, Larry?

And your cash outlook, you know, for year-end.

Thank you.

Sure.

On the litigation front with regards to our dispute with cook guidant, I would just say that the process is still in -- still moving forward.

The next stage is -- we're in the middle of the remedy stage.

The judge was very clear on his opinion and we're -- we've submitted our first, you know, memorandum to the judge at his request.

Cook will respond and then we will have an opportunity respond and a judge will make a decision on remedy based on his opinion that their agreement was a sham.

Where we head from there, it remains to be seen of our first goal is to figure out exactly where we are in the court system.

With regards to any discussion with any of the parties it would not be appropriate to comment on those in the nature of any discussions at this time.

In terms of medinol, there is no new news in that litigation.

That litigation continues to plod along.

There is a status hearing in September but to my knowledge, there is no trial date established at this time.

In terms of, I think I remember your other questions, in terms of accounts receivable at the end of the quarter, I think that the -- if you look at our accounts receivables, we've got the lowest day sales outstanding in a receivables of anyone in the industry, I think, very well managed by the team.

The growth had something to do with top line growth and it's probably a bit higher than top line growth when you do the math because of some of the international receivables that take a little longer to recover.

But -- so, I don't think there is anything unusual there.

In terms of cash position at year-end, you know it really depends on how much cash we spend on acquisitions and alliances and things like that.

We are -- we are active in building all of our businesses.

There is no change in strategy there.

We always have a lot of things in the nill and we will be announcing more in the 2nd half.

We announced, I think, a fair number of deals in the 1st half and -- and we have quite a -- quite a few events planned for the second half and those all, you know, obviously absorb cash.

But right now it is fair to say that -- that we've got very strong cash flows.

We're using a lot of that cash flow from operation to build the business, buying additional technology, additional intellectual property, across all of our lines and will continue to do that.

I hope that answers all your questions.

Yes, sir, thank you.

Thank you very much.

Cheryl Zimmer you have your next question.

She's with Deutsche Banc.

Go head.

Hi, guys, just for Larry, can you just quantify the foreign currency impact in the back half of the year, just at current rates?

And if you have the number, if you could just remind us where that was last quarter?

I'm just trying to get a sense for how much better it's become.

And then just quickly for Paul, did you say or could you say what the protocol for taxes 5 will look like?

Do you want to start out with taxes 5?

Yeah, cheryl, actually, we're still finalizing the protocol for taxes 5.

It clearly will incorporate the Express stent on a Maverick 2 and the moderate release and a more complex lesion subset certainly to include longer lesions, probably lesions up to 40 or 42 millimeters, probably up to 48 millimeters of stenting, allowing for overlapping stents and probably in a series of subsets for some of the other indication that's are likely to be real ripe targets for drug eluding prospect, like small vessels, as an example.

But that protocol is still being finalized.

We expect to file that early in Q4.

So, we have a little time to work out the details.

Great.

On the foreign currency side, Cheryl, we -- we obviously on the -- in terms of the P&L, we do continue to hedge both the Euro and the Yen.

Your question probably has to to do with the top line versus our -- our guidance of say last quarter.

I think that the -- the movement in the dollar, otherwise the weakening of the dolly -- dollar will help us going forward, from our guidance, my best guess is that if -- if the currencies would not move from this day, we would probably pick up another oh, 15 million top line.

Okay, that helps, thank you.

Thank you very much, Ms. Zimmer.

We have a question from Steve Dubois now.

Go ahead.

Mr. Dubois has disconnected.

Next to Glen with Credit Suisse First Boston.

Go ahead.

Hi, it's -- I have a question for Paul.

Paul, can you -- can you talk a little bit about the reimbursement outlook in Europe for drug-coated stents, particularly in the major markets of Germany, France and Italy?

And, you know, any chance of reimbursement actually being favorable by the time you launch in the 4th quarter to help your launch, because I believe that's one of the roadblocks that J&J is facing as it launches its product inEurope.

Yes, Glen, good question.

Complex answer.

First of all, I agree, it is a major road block.

The budgets in Europe represent a hard stop, if you will, for technology adoption.

The -- I don't think there is any question that price that's have been put forth so far are supportable from a cost effectiveness perspective, but if the money is not available, that doesn't really matter.

The reimbursement processes vary literally country by country and as you may an wear, even within country between the private and public healthcare systems.

I think we're comfortable seeing progress in some of the major markets and some of those segments like italy.

Even Germany, France, as you may an wear, has been the most and really there hasn't been reimbursement of any form in france as of yet.

I suspect we will see some in some of the private markets relatively shortly.

So, I think we will see bits and pieces of Europe fall in to place in reimbursement.

I suspect some of that will in place by Q4, which would facilitate our entry, but I think it will be sort of bit by bit across Europe throughout the -- really the next 12 months.

Okay, great, thanks, Paul.

Thank you very much.

We have a question from Larry Kirsch now with Goldman Sachs.

Go ahead.

Yeah.

Just following on on that, Paul, if you could talk a little bit about your thoughts for average selling prices of reimbursement for drug eluding stents in the U.S. There.

Continues to be a loft noise out there that $3,000 is not necessarily a sustainable price for this technology?

And then also, just quickly for larry, the global ops plan, does that mean now that we will not see any more charges in the coming quarters and could you just let us know if there are severance charges in the $19 million fiscal period?

The -- first -- first answer is yes, this is the last quarter the -- the program has been completed.

There are severance charges, there have been severance charges but I think -- I think they -- they -- we've had severance charges in most of the quarters that we reported on the global plan as we trasferred product lines from the U.S. into international markets.

I think the severance charge was in the $7 million range in the quarter. 7 out of the 19 were of that nature.

Okay.

Just on U.S.

Reimbursement, I think we -- we continue to expect that CMS will not actually provide funds for reimbursement until the October time frame of next year.

That -- that's our guess, and we will be stuck with the tracking code between now and then.

There obviously is no stent for sale.

I don't know what price is sustainable.

It is not atypical for to us see a 1.5, 1.6 ratio of asps in -- in the united states versus europe, so certainly over 2,000 to 3,000 is an area most people are targeting.

What's sustainable really does remain to be seen and I think we will continue to be driven by the clinical data and certainly the reimbursement levels.

Thanks very much.

Representing Buckingham Research, go go to the line of Robert Goldman for our next question of the go ahead.

Just a few quick things on aggregate sales of the of the 5% reported sales growth, could you just break it out on what contribution acquisitions made and separately what contribution, if any price increases made?

And on the price issue, as long as we've got Jim Tobin, if you could speak, Jim, perhaps to aggregate price trends that you're seeing.

I know it's difficult because of so many products, but your sense on price trends in the marketplace broadly this year compared to last year and the year before.

Let me take the first question on -- on the 5% growth and, you know, how much from price.

Basically we -- we don't grow by price.

We -- we grow by units and I think Paul LaViolette talked about the unit gross that we've seen.

I mean unit growth is quite handsome.

It's retaining price or maintaining price that's the challenge.

So, if you follow the medical device companies more closely, you'll -- you'll understand that most of them do not grow by price.

They grow by units.

So, our growth has always been driven primarily by units.

And, Jim, do you want to elaborate on the pricing?

The other issue there is prices are so much higher in Japan than anywhere else in the world and we do so well in Japan that, when Japan suffers as it is now, our weighted average pricing comes down even though nothing else changes.

So, add a general tilt downwards to pricing to a mix shift among countries and clearly our unit improvement is much greater than the 5% that you're looking at top line.

Yeah, I do -- to Larry's question, there are a couple of medical device companies that are suggesting for the first time in several years, they're seeing price gains.

I think Larry is correct historically, but we do have a few companies of late reporting price increases.

I'm wondering if you're seeing that?

I would say in almost all of our markets and this is -- you know, we obviously only know the interventional market and in the interventional world, you -- you basically launch a new product and that's probably your best price point and from there, it all depends on how long that product is out there and then the nature of competition, kind of going back to Larry's question on coronary stents in the U.S.

There's been a lot of -- of discussion about a $3,000 drug-eluded stent.

You know, that -- that could occur.

How long it will occur has to do with the clinical data and the competitive landscape and obviously first to market, obviously gets the riches of the highest price point, but soon after that, position obviously takes hold and you no longer grow by price, you try to hold price, you grow by units and market share.

And thank you very much.

Representing Morgan Stanley, we have a question from Glen, go ahead, please.

A bunch of housekeeping questions.

Can you hear me?

Just a follow-up to the last question.

Maybe you can go through the acquired businesses and give us, for those businesses that are not annualized, can you give us the growth or the dollar contribution?

Question one.

Question number two, you gave us the dollar numbers in the U.S. for the major businesses, there is some rounding, obviously, can you just give us the growth rates?

And then can you give us also what the cy-med peripheral numbers are?

Actually, one general question before even less detail than that.

Jim, do you have any problem signing onto the financials in early August?

No problem at all.

We have five sets set up to take Larry and I through the gorey details of all of this stuff prior to actually doing the signing.

That process will start basically tomorrow morning.

I don't expect to have any problem signing those -- those documents now or any other time.

Let me speak to that issue just briefly, Glen.

We -- we historically have had rather conservative tilt in terms of financial reporting and accounting and disclosures and we've had that since we've gone public and we've built a very, very talented and competent controllership organization worldwide.

I -- I can tell you I have no reservation about the strength of our team and the conservative nature of our approach to financial accounting reporting and have no reservation about signing my nine to any financial staples we publish.

After we spend more time with Jim and get deeper into the detail under the new requirements I'm sure he's not going to have any reservations.

So, occasionly, in the past we had a problem in Japan, most of that was acquired as a problem and that's going to happen from time to time but we at Boston Scientific caught that issue through our internal controls and promptly dealt with it.

So, I think we feel very comfortable where we're at and no one should have a concern with the financial reporting of Boston Scientific.

In terms of your question on cy-med peripheral business, in the 2nd quarter overall it's about $115 million in the 2nd quarter.

Most of that is in the U.S., approximately $83 million, and the US around $32 million.

In terms of acquisitions, I'm not sure exactly what you're looking for, but let me try to give you some numbers.

In the 2nd quarter of this year, the total contribution from acquisitions, now, keep in mine, the acquisitions are apples to apples at this point, most of our acquisitions were completed in the numbers of the 2nd quarter of last year.

The good news is the base business of the assets guide have grown 100% in 12 months.

But the specific numbers in the quarter was ivt contributed $38.9 million in sales.

Rtc contributed, call it $800,000 in sales.

Eti contributed $1.8 million in sales.

Keep in mind EPI is only in the European market at this point.

It hopefully will get approved with the EPI filter wire sometime in the 1st quarter of next year and we expect a nice ramp there.

Cardiac pathways contributed call it $3.7 million in the 2nd quarter and catheter innovations contributed $1.7 million in the quarter.

The growth rates, if you look at them on the individual or in the 100 percentile, the only one below 100% growth is ivt and that's merely because of the size of the base.

Last year's 2nd quarter it was a $16 million product and in the 2nd quarter this year it grew to a $39 million product.

So, you can see you know, the acquisition strategy is working quite well and we're very pleased with the build.

And we have a question now from the line of Tim Nelson with U.S.

Bancorp Piper Jaffray.

Go ahead.

Hi.

Given the fact that you hit 20% market share for the Express in a couple of quarters working at it, can you update us on your goals for the U.S. before it goes on the market?

And the LP, as well?

Paul, it is important, I think, to point out that the physicians in the U.S. have not really seen Express 2.

And that's where I think maybe this, you know, we're, we're, we're, we're, we're, we're feeling good about it.

The Express platform.

There is a market difference between Express 1 that physicians used in the clinical trial and Express 2, with a more elegant catheter delivery or catheter system on it, being the maverick, so, you know, the physicians in the U.S., with we launch express 2, this is to be the first time they see the real product.

That's absolutely right and the delivery system makes an enormous difference.

The sales force is pretty strong.

We have pretty solid market shares in most every business.

We feel we're going to enter the market with a fairly solid push.

Timing is everything, you asked the question as it relates to the timing of several quarters of sales prior to drug eluding are approval.

I think the two critical questions are expagtly when do we get approval this year and exactly how long do we sell next year before drug eluding phenomenon commences?

We expect, based on the current plan, to exit the year with around 20%.

So, we think we will increase our business from 8% to 20% or if we lose another share point between now and september, 7% to 20% from September through December.

So, very rapid uptake, very rapid penetration Friday that point forward, we do project continuous increase in market share against existing stents until the cipher stent from J&J is approved.

So, it depends on tiling but I think you will justice continue to see it grow from 20 to the upper 20s through the first quarter and then remains to be seen based those timeframes.

So, we're very confident based on technology, based on our current position about our ability to -- to really capture sustainable share there.

Very good.

Thank you, Mr. Nelson.

We have two follow-ups now.

Our first is from Matthew Dodds, once again from SG Cowen.

Go ahead.

Thank you, one question on taxes 2 and the launch.

Do you plan on launching the year and express and possibly Express 2 as well, or are you just focused on the Express?

We're just focused on the Express 2, essentially.

The taxes product will be the Express stent and we will ultimately mount it on the Maverick 2, which is a process change in our product line that's already under way for the international markets and we will launch the Maverick 2 as a device here in the U.S.

In the -- in the August time frame.

Thank you, sir.

Our final question today, ladies and gentlemen, comes from Robert Goldman with Buckingham Research.

Go ahead.

I, I want to be sure that I heard correctly your guidance for the 4th quarter, where I thought I heard 33 cents on earnings and $780 million on revenues, 7-8-0.

I thought you said there was no change from prior guidance.

I notice that's quite in excess of first call consensus at the present moment.

Could you just clarify that or comment on that?

I believe the 780 was our original guidance, at least it was the most recent guidance a quarter ago.

I think that when we presented our guidance at the beginning of the year most realized that the 4th quarter was the most aggressive quarter and, you know, bhth it is aggressive or not really depends on the -- the express launch and how well we do express in the 4th quarter.

But our overall guidance for the year was originally 20 -- $2.8 billion 35, I believe, and obviously if we make our numbers in the next two quarters, we're probably $30 million above that.

But we haven't had much change in guidance during the year and we -- we -- this is, somebody said 2 for 2.

Hopefully we will have 3 for 3 and 4 for 4.

But the biggest, biggest exposure, if you will, than the numbers, would probably be in the 4th quarter.

That has everything to do with FDA approval of the Express and a successful launch.

Now, after saying that, the team's very excited about the Express and what they will be able to do with it in the 4th quarter.

Hopefully that helps.

Thank you very much.

And that, today, we will wrap up our conference call.

We -- we appreciate all of the questions and we'll keep you up to date as we progress through the year.

Thank you very much.

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