Boston Scientific Corporation Q1 2009 Earnings Call Transcript

Apr.21.09 | About: Boston Scientific (BSX)

Boston Scientific Corporation (NYSE:BSX)

Q1 2009 Earnings Call Transcript

April 21, 2009 8:00 am ET

Executives

Larry Neumann – VP, IR

Jim Tobin – President and CEO

Sam Leno – CFO and EVP of Finance and Information Systems

Analysts

Bob Hopkins – Banc of America Securities/Merrill Lynch

Mike Weinstein – JP Morgan

Tao Levy – Deutsche Bank

Larry Biegelsen – Wachovia

Kristen Stewart – Credit Suisse

David Lewis – Morgan Stanley

Bruce Nudell – UBS

Timothy Lee – Piper Jaffray

Rick Wise – Leerink Swann

Joanne Wuensch – BMO Capital Markets

Brooks West – Craig-Hallum Capital

Sara Michelmore – Cowen

Glenn Novarro – RBC

Spencer Nam – Summer Street Research

Operator

Ladies and gentlemen, thank you for standing by. Welcome to the Q1 2009 Boston Scientific Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question and answer session, with instructions being given at that time. (Operator instructions) As a reminder, this conference is being recorded. I would now like to turn the conference over to our host, Mr. Larry Neumann. Please go ahead.

Larry Neumann

Thank you, Julia. Good morning, everyone, and thank you for joining us. With me on the call today are Jim Tobin, Chief Executive Officer; Sam Leno, Chief Financial Officer; and Jeff Capella, Corporate Controller and Chief Accounting Officer.

We issued a press release yesterday afternoon announcing our Q1 results and attached to the release our key financials. We have also posted some support schedules to our web site, which you may find useful as well. The agenda for the call this morning will be a review of the Q1 financials as well as Q2 and updated full year 2009 guidance from Sam, and an update on our business performance in the quarter from Jim, as well as some overall perspective on the quarter. We'll then open it up to questions.

Before we begin, I'd like to remind everyone on the safe harbor statement. This call contains forward-looking statements. The company wishes to caution the listener that actual results may differ from those discussed in forward-looking statements and may be affected by, among other things, risks associated with our financial performance, our restructuring plan, our programs to increase shareholder value, new product development and launch, regulatory approvals, litigation, our competitive position, our growth strategy, the company's overall business strategy, and other factors described in the company's filings with the Securities and Exchange Commission.

I will now turn it over to Sam for a review of the first quarter results.

Sam Leno

Thanks, Larry.

I'm pleased to report very good results for the quarter on a number of fronts. In summary, we saw organic top line growth for the quarter on a constant currency basis, excluding divestitures of about 4% compared to the first quarter of 2008. These results were highlighted by outstanding performances in our CRM division and our worldwide DES business, as well as solid performances in our endoscopy, gynecology, urology and neuromodulation businesses.

While we continue to monitor the potential negative effects of the external economic conditions around the world, to date, we have seen very little impact on our businesses overall. We have returned to a gross profit margin rate that begins with 2007, and overall the next several years, we will look to make continued improvements as we begin the implementations of a multi year plant network optimization program, and prepare for the upcoming launch of our Promus Element stent in Europe in the fourth quarter of this year.

Our expense and headcount controls have been firmly in place for the past six quarters and as a result of the success of these programs, we have redeployed some of our savings into additional direct sales headcount, as well as development related positions, both of which are targeted to drive incremental and profitable sales growth. As a result of our continued focus on improving gross profit and operating profit margins, we were able to deliver first quarter EPS at the high end of the guidance range that we provided during our fourth quarter earnings call.

We also continued to improve the strength of our balance sheet by successfully completing an amendment of our credit facility and delivering strong free cash flow. The success we have had at improving our financial discipline and strengthening our balance sheet have resulted in receiving upgrades from two research analysts that cover the Boston Scientific as well as improvements in the ratings outlook for Moody's and a double improvement jump to positive from Standard & Poor's.

Finally, our general counsel, Tim Pratt and his team have been intensely focused on mitigating our legal risk, and as a result we have successfully negotiated closure to several long-standing legal matters, and we've seen a number of key legal decisions during the quarter which continue to lower or remove uncertainty related to litigation risk faced by the company.

Now let us turn to the operating results for the first quarter. Consolidated revenue for the first quarter was $2.01 billion and in the middle of our guidance range of $1.950 billion to $2.070 billion. This represents a 2% reported decreased in the first quarter last year but included in our reported results are a negative 4% contribution from foreign currency and a negative 2% contribution from divested businesses. Excluding the impact of foreign currency and the divested businesses, first quarter revenue was up 4%. Compared to the foreign currency contribution assumed in our first quarter guidance range, foreign currency contributed an additional negative $30 million to our first quarter sales results.

Without this additional currency headwind, our sales would have been $2.04 billion and much closer to the top end of our guidance range. Overall, the contribution of foreign currency to sales growth for the first quarter of 2009 was negative $85 million dollars or negative 4%. Compared to the first quarter of last year, excluding divestitures, domestic revenue increased 5% while international revenue decreased to reported 7%. In constant currency, international revenue was up 2% over last year, and this includes a negative 1% contribution from the loss of our JLL distributor in Japan. Altogether, our international businesses excluding the impact of JLL in Japan increased 3% in constant currency.

Jim will provide a broader overview of our businesses by major product categories, I will address our sales results for all of our businesses at a much higher level here. Worldwide drug eluting stents came in at $445 million exceeding the top end of our guidance range of $435 million and up 4% from the first quarter of 2008, which represents an 8% constant currency increase over the prior year. Our worldwide drug eluting stent r revenue includes $294 million for Taxus and $151 million dollars for Promus, and this represents a 66/34 split between Taxus and Promus.

We continued to sustain our worldwide drug eluting stent leadership during the first quarter with an estimated market share of 44%, while at the same time we held our mix of Taxus and Promus steady, further reinforcing the strength of our paclitaxel franchise. Geographically, US drug eluting stent revenue was $246 million, again exceeding the top end of our guidance range of $235 million and it was 13% higher than the first quarter of last year. This includes $132 million of Taxus and $114 million of Promus revenue and represents a 54/46 mix of Taxus and Promus in the US compared to a 50/50 mix in the fourth quarter of 2008.

This favorable change in the mix of our Taxus Promus sales demonstrates the strength of our Taxus franchise following the launch of Taxus Liberté late in the fourth quarter of last year as well as the selling and serviceabilities of our commercial team which we believe is the best in the world. During the quarter, we completed the launch of Taxus Liberté and released the remaining $14 million of sales reserves given the strong sales performance of the Taxus Liberté stent. We estimate that our combined US market share for the first quarter to be approximately 50% including the impact of replenished reserves or 49% excluding them. This is three percentage points higher than our share for the fourth quarter of 2008 and consistent with our stated objectives of maximizing total drug eluting stent market share.

We also estimate that Taxus is commanding 27% of the US market while Promus is at 23%. We remain the only company in the industry with a two drug strategy affording our physician to greater choice in treating their patients. Coupled with the best commercial team in the industry, we have demonstrated our commercial strength and the ability necessary to maintain significant leadership in the competitive drug eluting stent market, with 23 more share point, or almost twice the market share than our next nearest competitor. Based on our estimate of the US market for the first quarter, we believe that Abbott had the market share of approximately 27%, while J&J and Medtronic achieved approximately 14% and 9% respectively.

International drug eluting sales were $199 million, which is at the top end of our guidance range of $170 million to $200 million and represents a decrease of 5% compared to the first quarter of last year, but up 2% in constant currency. This includes $162 million in Taxus and $37 million in Promus sales and represents an 81/19 mix of Taxus versus Promus internationally. We have also reorganized our international businesses to provide more direct sales focus in the marketplace. We now have four international regions including the EMEA, Japan, Asia Pacific and the Americas. Last year, our international businesses was organized around a two region structure.

Boston Scientific's drug eluting stent market share in EMEA is estimated to be 36% and that is up 2% sequentially in the fourth quarter of last year and up 1% compared to the first quarter of 2008. Taxus market share was approximately 25% with revenue of $57 million and Promus market share was 11% with revenue of $27 million. Together, this represents a Taxus Promus mix in EMEA of 68/32. Our drug eluting stent share in Japan was up 8% to 54% with revenue of about $70 million and as a direct result of launching our Taxus Liberté stent in the beginning of March. Currently, our sales in Japan are 100% Taxus. We do expect that the market will see the launch of Endeavor in May while the launch of Promus and Xience is expected to occur in the fourth quarter of this year. We estimate our Asia-Pacific drug eluting stent share was 20% during the first quarter and that is up two points from 18% in the fourth quarter and split 13% Taxus with $16 million in revenue and 7% Promus with $7 million in revenue or again a Taxus Promus mix of 70/30.

Drug eluting stent sales in the Americas were $21 million representing approximately 58% market share with 49% Taxus and 9% Promus. This represents an 81/19 mix of Taxus and Promus. Combining our international drug eluting stent performance with our US market share, we estimate our first quarter worldwide market share to be up four points from the fourth quarter of last year to 44% with 29% Taxus and 15% Promus. This represents a worldwide Taxus Promus mix of 66/34. This gives us clear worldwide drug eluting stent leadership of nearly twice the market share of our next nearest competitor.

Now let us look at the drug eluting stent market dynamics during the first quarter. We estimate the worldwide drug eluting stent market in Q1, including Taxus Liberté sales of $14 million required to replenished customer owned Taxus Express inventory at approximately $1.019 billion. This is a decrease of 2% versus the first quarter of last year with an approximate increase in unit volume of 13% offset by approximately 10% in ASP declines and a decline of 5% in foreign currency. Excluding the impact of foreign currency, we estimate the worldwide DES market increased approximately 3%.

The US market is estimated to be about $493 million and flat with the fourth quarter of 2008, but represents a 13% increase over the first quarter of 2008. This includes an increase in unit volume of about 21%, offset by an 8% decline in ASPs for the entire industry. Taxus stent pricing was down approximately 7% from the prior year and that was in line with our expectations. US PCI volume in the quarter was approximately 252,000 procedures, that is down 2% from the last quarter, but up 1% compared to the first quarter of 2008. We estimate that the US drug eluting stent penetration was 75% in the quarter, which represents a two percentage point increase from last quarter's 73%, and a 12 percentage points increase over the first quarter of 2008. Based on MRG data, the US penetration rate for the month of March was also 75%. So this is the fifth quarter in a row of increasing US penetration rates.

Combined with the stability and stented procedure rates and stents per procedure, we estimate that the total unit US market stents in Q1 was 337,000 units, and that includes 253,000 units of drug eluting stents. The international DES market remains strong for the quarter with 308,000 PCI procedures in EMEA, 54,000 procedures in Japan, 87,000 procedures in Asia Pacific, and 55,000 procedures in the Americas. Penetration rates in international markets remain consistent with EMEA flat at 51%, Japan holding at 66%, Asia Pacific at 69%, and the Americas at 33%.

Turning to our CRM business, we continue to see very good progress driven by the launch of several new products during 2008. Most notably, we began the launch of our Cognis and Teligen platforms worldwide excluding Japan during the third quarter of 2008 and are seeing solid growth in all markets where we have launched these new products. We are targeting to be fully completed with our global launch of these products except for Japan by the end of this year. We expect to receive approval in Japan for Cognis and Teligen in the fourth quarter of this year and the full product launch will continue into 2010.

Reported worldwide first quarter CRM revenues of $589 million represented a 4% increase, but in constant currency it grew 9% over the $565 million reported in the first quarter of last year. US CRM revenues were $396 million representing an 11% increase over the prior year and that's the fourth consecutive quarter of double-digit year-over-year growth while international CRM sales were $193 million, a decrease reported of 8% over prior year, but up in constant currency 6%. While ICD sales of $444 million met the midpoint of the guidance range of $420 million to $460 million, this does represent a reported increase over the first quarter of 2008 of 8%, but a constant currency increase of 13%. ICD sales in the US were $312 million, a 14% increase over the last year, and at the midpoint of our guidance range of $300 million to $325 million. International ICD sales of $132 million were near the high end of our guidance range of $120 million to $135 million, and represents a 3% decrease reported from last year, but up double digits 11% constant currency growth.

Excluding sales from our five divested non-core businesses, our non-drug eluting stent and non-CRM worldwide revenue decreased 5% compared to the first quarter of last year to $972 million and on a constant currency basis they decreased 1%. This includes constant currency increases of 7% in urology and gynecology, up 6% in endoscopy, and an increase of 9% in neuromodulation, with our neurovascular business flat from last year. In our other cardiology and peripheral intervention businesses, we saw a constant currency decrease of 7%. With renewed sales focus in our new product pipeline, we do expect the growth in these divisions to accelerate and begin to exceed market growth rates later this year. Jim will talk more about some of the new product launches in these businesses in just a few minutes.

Reported gross profit margin for the quarter was 69.8% and adjusted gross profit margin for the quarter excluding restructuring related charges was 70.3% which is a 150 basis points higher than the last quarter of 2008 – of last year and 150 basis points lower than the first quarter of 2008. Revenue mix continues to be a key contributor to the lower gross profit margin compared to prior years and the change in the volume and mix of drug eluting stent revenue between Taxus and Promus contributed to the gross profit margin reduction of about 230 basis points compared to the first quarter of last year. We expect to earn back this 230 basis points of gross profit margin reduction with the launch of Promus Element.

The strengthening of the US dollar and the resulting settlement of our foreign currency hedge contracts and cost of sales improved our gross profit margin by about 120 basis points compared to the first quarter of the prior year. With prevailing foreign currency rates and as a result of the success of the Taxus market share during the quarter, we continue to expect gross profit for the full year of 2009 to be in the range of 70% to 71%. We expect further gross profit margin improvements going into 2010 as we launch Promus Element in Europe during the fourth quarter of this year and begin to realize some of the benefits of our implant network optimization program in 2010.

Our reported SG&A expense in the first quarter was $651 million and adjusted SG&A expense excluding restructuring related items were $648 million which is 1% lower than the last quarter and $4 million or 1% lower than the first quarter of 2008. Our expense reduction program which we announced in late 2007 timeframe it is still running ahead of plan and we're managing our expenses cautiously to ensure that we stay aligned with our top line performance.

Research and development was $257 million in the quarter. Adjusted R&D expenses were $256 million and 12.7% of sales and were consistent with last quarter's spending. Our research and development investment remain consistent and support our commitment to advancing medical technologies. We will accomplish this by investing in both internal research and development as well as strategic acquisition opportunities.

We reported GAAP operating income of $11 million for the quarter, but on an adjusted basis excluding large litigation charges, restructuring related charges and amortization expense, adjusted operating income for the quarter was $463 million and 23.1% of sales. That is up 270 basis points from last quarter and down 280 basis points from the first quarter of 2008. Factors contributing to our reduction in gross profit margins also contributed to our year-over-year reduction in operating profit margins.

I would like to highlight the GAAP to adjusted operating profit reconciling items in just a bit more detail. We recorded a litigation related charge of $237 million pretax or $197 million after-tax associated with the previously announced decision of the Court of Appeals with the Federal Court Circuit Court upholding the District Court's decision that some of our stents infringed certain Johnson & Johnson patents. This charge represents an estimate of the low end of the range of potential outcomes related to this matter and this range is subject to substantial estimation and as a result we cannot reasonably estimate the high end of the range at this time.

We recorded a litigation related charge of $50 million pretax, $43 million after-tax related to the previously announced settlement agreement with Dr. Bruce Saffran. We do not plan to record any additional amounts related to this final settlement. As a reminder, this was a case that originally awarded by $500 million to the plaintiff, but we were able to successfully negotiate a better conclusion during our appeal process. Total amortization expense was $128 million pretax and $101 million after-tax which is $15 million lower than the first quarter of 2008. Our run rate amortization of $128 million is in line with our expectations for the quarter.

We also recorded $37 million pretax and $26 million after-tax of restructuring related charges in the quarter which are primarily related to severance and production transfer costs in connection with our previously announced expense and headcount reduction initiatives as well as our plant network optimization program. And these charges again are also in line with our previous estimates. The cumulative effect of these items was $452 million pretax and $367 million after-tax. Operating expenses in total remained well-controlled and our headcount management and approval process has provided us with the tools necessary to maintain tight control over expenses in the future.

Based upon our results for the first quarter, combined with our internal forecast for the balance of this year, we still expect to spend approximately $3.6 billion in a combination of SG&A and R&D expenses for the full year. And this is very consistent with the expectations that we communicated for 2009 when we announced our restructuring program at the end of 2007. Interest expense was $102 million in the quarter which was $29 million lower than the first quarter of 2008, and that is primarily as a result of our $1.3 billion in debt repayments during the last 12 months, together with experiencing lower interest rates. Interest expense in the quarter was also $5 million lower than the fourth quarter of 2008, due primarily to our $500 million debt prepayment in the quarter, together with lower interest rates.

Our first quarter 2009 average interest expense was 5.9%, that compares to 6.3% in the first quarter of last year and consistent with the same 5.9% that we reported in the fourth quarter of 2008. Other net expense was $9 million in the quarter and included interest income of $4 million, which was $30 million lower than the first quarter of 2008 and $4 million lower than the fourth quarter of 2008 primarily due to lower rates of return on our investments. That expense also included miscellaneous net expense of approximately $10 million in the quarter including a $6 million foreign currency transaction loss and hedging costs. And in the first quarter of 2008, our other expenses included miscellaneous expenses of approximately $4 million.

The reported GAAP tax rate for the first quarter was 87%. On an adjusted basis, our tax rate was 18% for the quarter, including discrete tax benefits of about $11 million, which have a three point favorable impact on our first quarter expected federal tax rate. Our adjusted tax rate excludes the current tax effects on any item excluded from adjusted pretax earnings, whether excluded in the current period or any previous period. In addition to the tax effect of the items affecting operating profit I mentioned earlier, our adjusted taxes also excludes divestiture related credits of $63 million to adjust for the tax impact on the company's previous divestiture of non-strategic businesses. We do expect our operational tax rate on adjusted earnings for the remainder of 2009 will be approximately 21%.

GAAP earnings per share for the first quarter was a loss of $0.01 compared to income of $0.21 per share in the first quarter of last year. GAAP results for the quarter include an income tax benefit related to certain tax positions taken in prior periods for litigation, divestiture, restructuring related charges, and amortization that I mentioned earlier. Our adjusted earnings per share in the first quarter excluding these items was 19% compared to – $0.19 compared to $0.24 in the first quarter of 2008. As a reminder, in the first quarter of 2008, adjusted earnings per share excluded $0.08 per share related to amortization and $0.01 per share related to acquisition related charges, and $0.08 per share of divestiture related gains, and a $0.02 per share of restructuring related charges. The adjusted $0.24 per share in the first quarter of 2008 also included $0.03 per share benefit from discrete tax items and $0.01 per share benefit associated with the divesting of businesses. The $0.19 achieved this quarter includes $0.01 per share benefit for discrete tax items and is at the high-end of our guidance range of $0.15 to $0.20 per share. Stock compensation was $45 million in the quarter and all per share calculations were computed using 1.5 billion shares outstanding.

Turning to the balance sheet, we continued our progress in improving the management of our working capital. Days sales outstanding was 61 days, and that is a three day reduction from the fourth quarter of 2008 and a six day reduction from the first quarter of 2008. In spite of the current economic conditions, cash collections, particularly in the US and Japan were strong, and contributed well to this improvement. We have also made significant improvements in days payable outstanding during the quarter, which also contributed, to our strong cash flow. Our days payable outstanding of 38 days were three days better than the fourth quarter of last year and also three days better than the first quarter of 2008. Days inventory on hand were 126 days and that is relatively flat with the fourth quarter of 2008 and up three days from March of 2008. The increase in days over last year were mainly driven by the inventory bills required to support new product launches. These product launches included Cognis and Teligen for CRM as well as Promus and Taxus Liberte in our cardiovascular division.

Reported operating cash flow was $261 million in the first quarter of 2009, which is $5 million lower than the first quarter of 2008. Q1 2009 operating cash flow includes $36 million in payments related to legal settlements and $22 million in restructuring payments compared to $9 million of legal payments and $83 million of restructuring payments in the first quarter of 2008. Excluding these two items, Q1 2009 adjusted operating cash flow was $319 million compared to $358 million in the first quarter of last year, reflecting lower operating income driven primarily by the mix of Taxus and Promus sales and related gross profit margins differentials.

Capital expenditures were $60 million in the quarter, which is in line with Q1 2008 and reported free cash flow was $201 million compared to $209 million last year. In the first quarter, we completed the monetization of our non-strategic investment portfolios under the definitive agreements that we first announced in June and received cash proceeds of $50 million including full repayment of our note receivables. Pursuant to these definitive agreements, we received total cash proceeds of $144 million pretax or $228 million after-tax.

We closed the quarter with $6.2 billion in total debt and $897 million of cash on hand resulting in net debt of $5.35 billion. Net debt is $250 million higher than the fourth quarter of last year primarily as a result of our $500 million Advanced Bionics payments offset by free cash flow. We also prepaid $500 million of our bank term loan in the first quarter of 2009 bringing the total debt payments to $2.7 billion in the last 24 months. Our next debt maturity of $325 million is not due until April 2010, and we have a long 24 month runway to determine the best way to repay this debt that will mature in April 2011.

In the first quarter of 2009, we amended our term loan and revolving credit facility agreement to increase flexibility under our financial covenants. The amendment provides for an exclusion to the calculation of EBITDA of up to $346 million of restructuring charges and exclusion for any litigation related charges until such items are paid and an exclusion of up to $1.1 billion of any cash payments for litigation settlements as well as all cash payments related to amounts that were previously recorded in the financial statements before January 1 of 2009.

As part of the amendment, we prepaid by $500 million of our term loan that was due in April of 2010 and we reduced our revolving credit facility by $250 million down to $1.75 billion. The amendment also provides for an increased interest rates of our term loan borrowings by 75 basis points to LIBOR plus 1.75 basis at our current credit rate. We currently have access to approximately $2.2 billion of liquidity consisting of $900 million of cash on hand and approximately $1.3 billion in our revolving bank credit facility and our account receivables securitization facility. At the end of the first quarter, our debt to EBITDA credit facility covenant ratio was 2.9 times which is well below the maximum committed level of four times, providing us with $600 million of EBITDA cushion. This covenant steps down to 3.5 times at the end of the third quarter of this year.

As I mentioned earlier, during the quarter, Standard & Poor's ratings services raised the company's rating outlook two notches to positive from negative and Moody's investor services raised the company's rating outlook to stable from negative. Both rating agencies did reaffirm the company's corporate credit rating at BB+ and BA1. Revised rating outlook reflects the maintenance of our leading market share in the drug eluting stent market, our ongoing debt repayment over the past two years, and cost-cutting measures, prospects for growth in the cardiac rhythm management devices, and improved covenant cushions provided by the recent amendments to our term loan and our revolving credit facility agreement.

I am pleased to say that we continue to be ahead of schedule in reducing our targeted expenses. We exited 2008 with expense savings in excess of $500 million annually and we continue to show good discipline with respect to our expenses reduction and our headcount initiatives. We will continue to selectively invest some of the savings in excess of our planned reductions in areas that contribute directly to driving incremental profit sales growth as well as increases in shareholder value.

Turning to sales guidance for the second quarter of 2009, reported consolidated revenues are expected to be in the range of $1,960,000,000 to $2,080,000,000, down 2% to up 4% reported from the $2,005,000,000 reported in the second quarter of 2008 excluding divestitures. And if current foreign exchange rates hold constant through the second quarter, the negative contribution from FX should be approximately $100 million or approximately 5% relative to the second quarter of 2008. So on a constant currency basis, Q2 consolidated sales growth guidance should be in the range of up 3% to up 9%. For drug eluting stents, we are targeting worldwide revenue to be in the range of $400 m million to $440 million with US revenue of $220 million to $240 million and OUS revenue of $180 million to $200 million. For our defibrillator business, we expect revenue of $445 million to $480 million worldwide and $310 million to $330 million in the US and $135 million to $150 million OUS.

We're beginning to see the strength of our renewed product pipeline across all of our businesses resulting in solid top line performance, even during turbulent economic climates around the world. The good news for us is that only a small portion of our business is considered elective, and we're seeing only limited effects of the economy on the results of those franchises. Additionally, the strength across our diversified portfolio of businesses is more than offset by any broad economic effects. For the second quarter, adjusted earnings per share excluding charges related to acquisitions, divestitures and restructuring as well as amortization expense are expected to be in the range of $0.16 to $0.21 per share. This includes an effective tax rate on adjusted earnings of about 21% in the second quarter of 2009 compared to 17.4% in the second quarter of 2008. The company expects earnings per share on a GAAP basis in the first quarter of 2009 to be in the range of $.07 to $0.13 per share. Included in our GAAP EPS estimate is approximately $0.01 to $0.02 per share of restructuring related charges and $0.07 per share of amortization expense.

During the second quarter, we will continue to see the effect of last year's transition in the drug eluting stent business, and the shifting of market share points from Taxus to Promus. And as we have previously disclosed, the profit contribution of Promus stent is 50% of the dollar contribution of selling a Taxus stent. So the bad news is, we have an adverse mix of Promus and Taxus compared to expectations of a year ago, but the good news is that we have more total US market share than anyone outside of Boston Scientific ever expected. While this reduced profit contribution will be restored over time with the launch of Promus Element, it continues to contribute to difficult year over year comparisons this year, and that is especially true during the first half of this year. The strength of our Taxus franchise in the first quarter along with our improvement in market share has helped to offset some of this impact and we anticipate this benefit beneficial mix continuing throughout the balance of this year and into next year.

We're also seeing the benefits of CRM acquisition with significant improvements in operating margin that are helping us to offset the impact of the shift in profitability of our DES franchise. We're also reaffirming our guidance for the full year with unexpected revenues in the range of $8 billion to $8.5 billion. We have also expect to achieve adjusted earnings per share for the full year between $0.80 and $0.90, and that excludes acquisition divestiture, major litigation, and restructuring related charges, as well as a large discrete tax item and amortization expense. The company now expects net income on a GAAP basis between $0.46 and $0.57 per share for the year as a result of first quarter litigation related charges that were partially offset by one large favorable discreet tax item.

So that's it for guidance. Our second quarter earnings call will be at 8 AM Eastern Daylight Time on July 21, 2009. And now let me turn over to Jim for a more in-depth revenue of our businesses.

Jim Tobin

Thank you, Sam.

I would like to start by updating everybody on the progress we have made towards resolving the corporate warning letter. While the corporate warning letter is still in place pending final remediation of some MDR issues, we continue to work actively with the FDA to resolve those. We have informed the FDA that we will be ready for re-inspection at the impacted sites in early May, and we expect the FDA to begin those re-inspection soon thereafter. We are pleased that we have received approval for all pending class III products and we look forward to future approvals.

Let me move to the non-financial aspects of the business starting with CRM and then share my overall perspective on the quarter. First quarter results for CRM showed continued momentum from our new product introductions, particularly Cognis and Teligen. As Sam detailed, we've delivered steady growth in CRM revenues, due mainly to the strength of our US defibrillator sales, which grew at 14%. This marks the fourth consecutive quarter of double-digit sales growth in our US CRM business. While international defibrillator sales were down slightly year-over-year, they were up 11% on a constant currency basis. While difficult to confirm until all competitors have reported, we believe that the strong sales growth in both the US and international defib markets will ultimately represent continued defib share gains. Additionally, we anticipate even stronger international performance as we begin to roll out our Latitude Patient Management System in Europe during Q2. Overall, CRM sales for the quarter both worldwide and in the US were at their highest levels since we purchased Guidant three years ago to day.

We have accomplished a great deal in that time. We have turned CRM into the major growth engine that we envisioned while significantly diversifying our product mix. Much of our future success will depend on our ability to continue to develop and deliver innovative products with industry leading quality. We're maintaining a consistently high level of R&D spending and we continue to invest in our global sales force. As you know, 2008 was a banner year for new product introductions as we delivered on an impressive pipeline of technologies. The clear evidence of that success is reflected in the fact that new products are expected to generate 67% of CRM's total worldwide sales in 2009, up from an impressive 39% last year.

Cognis and Teligen are the latest examples of how we plan to keep raising the bar on innovation. We continue to see increases in daily sales. Just recently, we introduced an enhanced version of the set screw design for both Cognis and Teligen we are receiving positive feedback from physicians. The full rollout of this is expected to be complete before HRS and inventory constraints will be resolved soon thereafter. These products are already the smallest and thinnest devices on the market but they will soon become even smaller with the launch of our new IS-4 header and defibrillator leads that will combine the current three defibrillator connections into a single pin to port connection. These improvements will be introduced in a major US and European launch later this year.

Upgrades to the other major product lines are also helping drive sales adoption and physician preference. We recently launched the Altrua EL family of pacemakers. These advanced devices extend battery life by two years. In Q2, we will begin to roll out our Latitude Patient Management System in Europe. In addition, we plan to launch the Acuity breakaway Lead Delivery System during the third quarter which will significantly add to our already strong portfolio of left ventricular leads and lead delivery systems.

On the clinical side, I want to highlight progress towards the completion of the MADIT CRT trial. This is an 1800 patient trial, the largest device trial for asymptomatic and mildly symptomatic heart failure patients. Trial completion is expected in the near future and the findings will be presented later this year. They may come as early as Heart Rhythm Society Conference next month.

Let me take a moment to give you some perspective on what a positive MADIT CRT outcome would mean. We believe a positive outcome has the potential to significantly expand CRT and D indications. This population is a subset of the historically under penetrated ICD primary intervention population. We anticipate that the added value of heart failure therapy would drive this population's penetration up. We are blinded to the trial data but we are optimistic about the results. We are pleased to be the sole sponsor of this landmark trial which we hope will bring this life enhancing and life-saving therapy to a much broader group of patients.

Let me provide a quick update on our EP business. Our product development efforts remain on track. The Blazer DX 20, a securable diagnostic catheter received FDA approval in Q1 and is scheduled for launch in Q2. Additionally, the Blazer Prime, improved versions of the Blazer ablation catheter is also on target for launch this quarter. We look forward to both these products being available to EPs and anticipate they will help grow our share of the market this year. The integration of CryoCor is progressing well and we plan to bring clinical studies on our proprietary cryo energy technology next year. We believe that over time we will be one of only two players in this exciting technology.

As I said today marks the three year anniversary of the Guidant acquisition. Our two biggest objectives with this purchase were diversification and growth and we have achieved growth. We now have a much more balanced product portfolio and CRM is expected to be the primary driver of our growth this year. It was not easy getting here, this is renewed and revitalized business. In the process, we kept the best of what Guidant offered, its people, its ability to innovate, and its clinical signs. But we completely transformed other areas like quality, our ability to deliver our pipeline and our Latitude strategy.

2009 will be the first full year we benefit from these significant investments. This market is still under penetrated. I believe we are now the best positioned company to take advantage of the improving dynamics of the CRM market. Our actions prove we are deeply committed to this business and we will continue to work hard toward our long-term goal of market leadership.

Now let me turn to the cardiovascular business. We reported excellent DES results for the quarter. In the US, our ongoing rollout of Taxus Liberte and Taxus Atom complemented by our Promus position resulted in 50% market share. This includes Taxus with 27 and Promus with 23. This performance demonstrates the strength of our Taxus franchise as well as the selling and serviceabilities of our world-class commercial organization. We have a long tenured commercial organization able to offer physicians the choice of two drugs and the significant breadth of our other cardiology products with a strong history of continuous innovation that is unmatched in the industry.

We also saw continued strengthening of the market. PCI growth year-over-year was approximately 1% while penetration increased for the fifth considered a quarter to an estimated 75%. Based on this data, we believe that Xience also has a 27% share for the quarter matching Taxus, while Cypher and Endeavor are 14 and 9 respectively, giving us a 23 share point lead in the US over our nearest competitor. Those strong DES results in the US were achieved concurrent with the launch of the Apex PTCA Balloon Catheter and ICross IVUS Catheter, continuing our robust series of new product launches over the past three quarters.

In Europe, DES penetration is up to approximately 51%, and our DES share is estimated at 36, split approximately 25 Taxus and 11 Promus. In Japan, the launch of Liberte has gone very well with Q1 shares estimated at 54%. On a worldwide basis, this brings our Q1 share to an estimated 44%, and clearly demonstrates the value of our two drug strategy, and solid sustained commercial execution.

Looking forward, our pipeline includes the DES launches of Taxus Liberte Atom 225, and Taxus Liberte Long 38 in the US in the second half of this year. Our Taxus Element and Promus Element product introductions are progressing as planned. Taxus Element has already been launched in unregulated markets with very positive feedback while Promus Element and Taxus Element are on target to launch in Europe in the fourth quarter of 2009. The Promus Element US and Japan launches are on target for mid 2012 with the Taxus Element US and Japan launches on target for mid 2011.

Also slated for launch in Q4 this year is Promus in Japan. In addition we are pleased with the progress on the integration of LabCoat which we view as a true next-generation DES beyond Taxus Element and Promus Element. LabCoat has a log less polymer and drug load than our current DES, and the polymer and drug are all on the outside of the stent. Further, the polymer and drug are gone within six months. The goal is to provide a level of restinosis that is consistent with current DES with faster and more consistent healing in terms of tissue coverage as measured by OCT. Finally, we have a completed European trial with others coming due later this year. Bottom line, we like the LabCoat approach because the performance of this design is good and we believe meeting the stated goal of faster and more consistent healing with results comparable to current DES is most likely to actually happen than concepts cons of being pursued by other companies.

On the technical front, the Syntax trial results showed comparable safety between Taxus Express and CABG for left main and multi vessel patients. CABG patients showed a statistically higher rate of stroke and as expected DES patients had increased rates of revascularization, most of which were successfully treated with another PCI. What we have come to appreciate is that in the simpler subsets of three vessel disease and in left mains, Taxus appears to be a better choice than CABG. This would be highlighted by the official launch of the Syntax Score website at Euro PCR, which will be the beginning of a worldwide educational effort to inform physicians and patients as to the best treatment options for the left main and three vessel disease. Coupled with a very positive Syntax cost-effectiveness data and quality-of-life data, these efforts could have a positive impact on PCI volume worldwide in the years to come.

Looking briefly at other CV product lines, our US leadership in PTCA Balloon Catheters continue with a 59% share including the launch of Apex. Overall physician feedback from Apex has been quite positive. The same is true for ICross Catheter, a new imaging catheter with improved deliverability, which was recently launched in the US. In our peripheral intervention business, we hold a strong worldwide position in a growing market with number one multiple product category positions. The recent US launches of the Sterling ES PTA Balloon Catheter, the Carotid Wallstent, and the Express Renal SD, as well as the international launch of the Epic Vascular Stent have created positive momentum for this business. With these launches we expect to continue to grow our leadership position. In summary, we continue to be well positioned as the only company with a two drug offering, a long list of leading franchises, improving market fundamentals, and a robust product launch gains in 2009 and beyond. We believe our relative strength as an overall cath lab leader will increase over the next two years.

Moving on, our neurovascular business experienced solid performance in nearly all of its franchises, remaining the overall market leader with 46% market share, despite new competitive launches in coils and adjunctive stenting. Matrix II which launched in Japan in August of last year continues to do well representing 62% of the Japanese coated coil market. We continue to be optimistic about the prospects of neurovascular market and our position should improve in the back half of this year as we launch new products in both the coil and stent markets. We are also developing new technologies for the treatment of hemorrhagic stroke, intracranial athero disease, and acute ischemic stroke. On the clinical front, we have now enrolled approximately 75% of the patients in the global maps [ph] post market clinical trial. This is a groundbreaking trial that will establish clinically relevant aneurysm recurrence rates that result in aneurysm rupture or re-rupture, re-intervention or neurologic death. Enrollment has also begun in the NIH funded SAMMPRIS trial. This trial tests Boston Scientific's Wingspan Stent System and Gateway PTA Balloon against intensive medical therapy alone to determine which is superior in preventing is ischemic stroke or death in patients with 70 to 99% stenosis of a major intracranial artery.

Turning to Endo, Endosurgery continued its solid performance up 7% constant currency for the quarter with endoscopy growing six and urology and gynecology growing seven. Global endoscopy growth was driven by our biliary and hemostasis franchises. We continue to see strong adoption of our SpyGlass Direct Visualization System and increased utilization of our resolution play. In addition, the introduction of WallFlex esophageal stent added momentum to our market leading GI stent franchise.

Urology and gynecology maintained its leadership in the endo urology business growing this segment in line with the market at 3%. Our women's health business continues to accelerate and grew 19% in the quarter on the strength of several new product launches. This growth was led by our line of sling based devices and kits, including our recently launched Solyx Single Incision Sling System and Pinnacle Pelvic Floor Repair Kit. These devices are used in the treatment of a variety of stress and age-related disorders. Endosurgery's pipeline is beginning to return the business to its historic growth rate. Looking forward to the rest of the year, endoscopy will continue to roll out more coats of WallFlex biliary stent line, expanded indication for SpyGlass Direct Visualization System and new RX Biliary Catheters. Within urology and gynecology, we will continue to launch new products including additional pelvic floor repair kits as well as several other women's health and endo urology products.

Finally our worldwide neuromodulation business constant currency sales growth was 9%. We experienced some softening of permanent implant procedure volumes primarily related to the economic environment. However trial implant, a significant leading indicator for permanent implant procedures, were up 20% in the quarter and were especially strong in March. During the second quarter, we're beginning to launch of our lead adapter, the M1, which allows a Precision Plus System to connect to the leads of a competitive primary cell non-rechargeable system. This will allow us to enter an otherwise captive replacement market as well as offer additional alternatives to physicians and patients without the need to remove or replace the previously implanted leads.

Let me close with some overall perspective on the quarter. We are off to a good start. I see Q1 as a solid foundation on which we can build a very strong 2009. A lot of the elements needed for a strong year represent in the quarter. Our performance in CRM and CV was impressive with double-digit US growth in both businesses. And it was another standout quarter for defibrillator sales which grew 40% in US and 30% worldwide on a constant currency basis. In CV, our US drug eluting stent sales grew 13% and exceeded the top end of our guidance range. Our US DES market share for the quarter was 50%, up from 47% in Q4. The distance between us and our nearest competitor is greater than has ever been. We are not only maintaining leadership, we are increasing it. This is the result of superb execution by our team coupled with the fact that we're the only company to offer two drugs. Our Taxus franchise has gained market share since the launch of Taxus Liberté at the end of last year. The US DES penetration was another bright spot in Q1. As I said earlier, it was estimated to be at 75%, which is a big jump from the 63% we saw in Q1 of 2008.

We have also seen DES penetration increased slightly in international markets. In early March, we launched Taxus Liberté in Japan to a very enthusiastic reception. We estimate our shared of the market for the quarter was 54%. So we're off to a good start in Japan and we're looking to build on this start and reassert leadership in the Japanese DES market. The combined picture across all businesses looked especially good in the area of gross margins which were over 70% and that 70% included a healthy contribution from CRM. It is good to see a gross margin figure that starts with a seven again. This has been an area of intense focus for us and our efforts are bearing fruit. We're moving in the right direction on gross margins and we are committed to building on our progress.

It was another quarter in which we continued to reduce risk. We settled additional litigation and won a critical Appeals Court decision against J&J. We prepaid $500 million of debt, we amended our credit facility positively, and we maintained financial discipline and strong cash flow. The progress we made here and elsewhere won some important recognition during the quarter from Moody and Standard and Poor's, both raised their rating outlook, with S&P boasting us two steps from negative to positive.

I'm going to close by reiterating a point I made earlier. Today is the third anniversary of our acquisition of Guidant. It seems more like ten. The Q1 numbers are the latest indication that this acquisition is providing us the growth and diversification we have always believed it would. In addition to four consecutive quarters of double-digit CRM growth, we are increasing our lead in the DES market thanks in part to Promus which also came to us from the Guidant deal.

There's something else in the Q1 numbers that bears calling out. CRM had a very good quarter, not only in sales, but in profitability. In addition to all the CRM that accomplished in the past three years, they have also significantly improved their profitability. This has basically filled the hole created by the introduction of Promus to our DES mix. CV has done a magnificent job of maintaining total market share but Promus is less profitable. In Taxus, CRM has stepped in and picked up the slack. And in doing so they're making a major contribution. So we're off to a good start in Q1. We have one more quarter of tough comparisons to last year, but then you're going to see a great Q3 and even greater Q4. Our momentum is building, and we're optimistic about the growth potential for all our businesses, which are benefiting from our renewed focus on product development and profitable sales growth.

And with that I will turn it back to Larry to moderate the Q&A.

Larry Neumann

Thank you, Jim. What I would like to do now, Julia, is open it up to questions. And so that we can take as many questions as possible, I ask that each person limit their questions to no more than two, and then return to the queue if they have additional questions.

Question-and-Answer Session

Operator

(Operator instructions) And our first question comes from the line of Bob Hopkins of Merrill Lynch. Please go ahead.

Bob Hopkins – Banc of America Securities-Merrill Lynch

Hi. Thanks and good morning. Can you hear me okay?

Jim Tobin

Yes. Hi Bob.

Bob Hopkins – Banc of America Securities-Merrill Lynch

Hi. Great. Good morning. A question for Sam and then a question for Jim. Sam to just start out on gross margins, I think you said on the fourth quarter call that excluding one-time items your gross margin was about 70%. And now you're on this call, excluding one-time items your gross margin is a little bit above that, and yet it looks like you might have had slightly improved currency benefit on the gross margin, so I was just wondering, could you talk about the sequential change in gross margin, are my numbers correct, and because it would seem to be that you might have seen or should have seen a little bit greater gross margin benefit given some of the improvement in CRM and DES sequentially? Thanks.

Sam Leno

Yes. So it is still primarily driven by mix as well as what you don't see going on behind the scenes is manufacturing variances. So we start the year because we have VIPs programs built into our standards through the course of the year, we start the year with some negative manufacturing variances and we finish it with positive variances. So some of it is timing differences, the variances, but most of it though is while we are very pleased with the Taxus Promus mix, Promus is still a major contributor to declining – the downward pressure on gross profit margins.

Bob Hopkins – Banc of America Securities-Merrill Lynch

But those numbers are right on an adjusted basis about 70% and then a little bit above that for this quarter?

Sam Leno

It is – I have to go back to my first quarter script, I thought it was a little less than 75, but hence it is not a big difference.

Bob Hopkins – Banc of America Securities-Merrill Lynch

Okay.

Jim Tobin

69.8 is the number I remember but I could be wrong.

Sam Leno

Yes.

Bob Hopkins – Banc of America Securities-Merrill Lynch

And then for Jim, two quick things, one MADIT CRT, what do you think the probabilities are that we do see it at HRS versus later in the year? And then secondly, Cognis and Teligen, you mentioned the supply constraints, and you have talked about that before, can you just give us a sense in the US where we are with that rollout, like where we were we at the end of the fourth quarter, where are you at the end of the first quarter and when is that product a 100% rolled out in the US?

Jim Tobin

The 100% roll out is end May, and that is defined as rollout to all accounts, version II header, full inventory in the bags of the reps. That is what I would consider to be full rollout. And so we are like six weeks away from that maybe, something like that. As far as the timing of MADIT CRT goes, we don't have any special insight on that because that trial is measured in Rochester, but the – I mean we're not that far from HRS now. So there is only a few weeks to go. But the trial is – I mean it is either going to be at HRS or shortly thereafter. It is – we're very, very close.

Bob Hopkins – Banc of America Securities-Merrill Lynch

And at the end of the first quarter on Cognis and Teligen, just where were you in terms of the rollout, as a percentage?

Jim Tobin

Well in terms of accounts that have the V2 header, it is probably approaching half, this week it'll probably be half. And we have got infantry flowing now of the V2 version so it is just a matter of few weeks to finish up the rest of the accounts and pour the right mix of devices into the salesman's bags.

Bob Hopkins – Banc of America Securities-Merrill Lynch

Thanks so much.

Sam Leno

Hey, Bob, let me go back. Also one more thing just occurred to me is because of the timing of when manufacturing variances actually find their way through the profit and loss statement is many analysts probably know but in case they don't, when the manufacturing variances is incurred, it is put up on the balance sheet, and it finds its way to the P&L in the month that the inventory that is related to it is sold. So what we're experiencing in the first quarter this year are negative manufacturing variances that were incurred in the back part of last year with some ups and downs in the manufacturing cycle for some of our products and that is rolling into this year. Those complete their transitions to the P&L early into the second quarter.

Bob Hopkins – Banc of America Securities-Merrill Lynch

Great. Thanks Sam.

Operator

Thank you. And next we will go to the line of Mike Weinstein of JP Morgan. Please go ahead.

Mike Weinstein – JP Morgan

Good morning. Thanks for taking the question, guys. I want to focus, Jim, if we can just on the non-DES, non-CRM businesses. You have been giving these businesses some more attention lately and it looks like the part at this point still really dragging down those businesses is the cardiovascular businesses that is not in the peripheral vascular business. If I look at the overall company, I get to just over 3% organic sales growth, but the coronary vascular business is down 7%, peripheral vascular down 7% constant currency, and that is obviously offsetting some of your stronger performances elsewhere. So if you could focus maybe on those two parts of the business, how those turn, and then more broadly how do you take that non-DES, non-CRM from down 1% constant currency this quarter to better growth as we go further into the year? Thanks.

Sam Leno

The secret, if you can call it that, to the non-DES CV and the peripheral part is the new product flow. For a host of reasons, we had I think lost focus on these businesses over the last few years, and so starting mid last year, we organized things, got focused, put back on these product lines, kick started the pipeline, and basically set some new expectations. Those are beginning to bear fruit. We're seeing product start to pop out of the pipeline now that at a rate that we haven't seen in years. So that will drive the rehabilitation so to speak of those businesses and we're not talking about three years down the road. It is sooner rather than later.

Mike Weinstein – JP Morgan

And so if we look at the expectations around the non-DES, non-CRM franchises, so if we can aggregate of that, I think the math that we had, it sounds like the math that you guys have was somewhere around that 1% constant currency this quarter. Can that get to mid-to high single digits by the end of the year, b because that is basically what you're implying by your commentary relative to the market growth?

Jim Tobin

Yes. I think what you will see is sort of breakeven in Q2 or something along those lines. It is – you're not going to see that much progress in Q2, but by the time we get to the back half of the year, the numbers will be the reasonably strong and accelerating. So it is just a matter of focus.

Mike Weinstein – JP Morgan

Okay. Jim, I wanted to clarify your comment about – you ran through the timeline through your drug eluting stent pipeline, Taxus Element in the US, I wasn't clear if you were saying 2012 or 2011, I think previously you've said 2012?

Jim Tobin

Taxus Element US 2011.

Mike Weinstein – JP Morgan

And is that a pull forward?

Jim Tobin

Not really. That is what we have been expecting. You know there's so many of these things that you may have misheard or somewhere along the line but that has been our expectation all along.

Mike Weinstein – JP Morgan

Okay, last question. Long-term pipeline, do you guys have anything going at this point in the hypertension because there is a lot of talk about hypertension in ACC? Thanks.

Jim Tobin

Not specifically. We have a lot of eyes on that and there are a number of technologies that show promise, and that could be a big deal. But we don't have an internal project. We have our eyes on something outside.

Mike Weinstein – JP Morgan

Okay. Thank you.

Operator

Thank you. And our next question comes from the line of Tao Levy of Deutsche Bank. Please go ahead.

Tao Levy – Deutsche Bank

Great thanks. Good morning. (inaudible) your guidance for ICD, what would you need to do to get to the upper end of the ICD guidance? Is that more market growth needs to happen or continued share gains or both?

Sam Leno

Well, you know little more robust market growth could be a really nice thing. But we're not really counting on that. We see continued share growth, that is driven by the version II header, that is driven by full availability of inventory, that is driven by the rollout of Latitude in Europe which has the lack of a remote monitoring system has kept us from bidding on chunks of business in Europe. So now we can be fully competitive there. So it is not one thing, it is a series of things, but we are a long way from being done with Cognis and Teligen.

Tao Levy – Deutsche Bank

Okay. And on the neuromodulation side, if you are seeing 20% increase in trialing, historically what has that been in terms of implants?

Jim Tobin

Well, we generally get something like two thirds of the trials. So – but that has been a fairly constant number for a long time now, so two thirds of whatever the number is will be two thirds – still be 20% is the point I'm getting to. You don't succeed in all your trials but that two thirds number has been fairly constant for several years. So the outlook, there seemed to be a pause, a little bit of a pause in the market. The three areas where we have seen some market weakness we think driven by the economy and the co-pays and that sort of stuff where pain management, where people can basically decide to live a little while longer, have normal uterine bleeding, same thing, BPH, same thing. Those together represent less than 5% of sales. So it is not been – and the effect has been modest, and it is only on a small portion of the sales. So it hasn't really been big deal for us to this point.

Tao Levy – Deutsche Bank

And if MADIT CRT is not going to be at HRS, is there – are you just going to put the press, are you just going to put the headline, release it sort of thereafter whenever the data comes out, or are you going to wait till AHA down in the fall or the heart failure meeting?

Jim Tobin

No. If it were right before one of those, we would wait, but I don't think that is going to be the case. So when this thing is available either at or soon after HRS, you will see it.

Tao Levy – Deutsche Bank

Okay, thanks.

Operator

Thank you. And next we will go to the line of Larry Biegelsen of Wachovia. Please go ahead.

Larry Biegelsen – Wachovia

Good morning and thanks for taking my question. What is the constant currency growth rate embedded in your sales guidance? I think you said it was 2% to 8% on the last call, but FX has gone against you since then, but you have maintained your sales guidance. So have you raised your constant currency growth outlook for 2009?

Sam Leno

For the full year?

Larry Biegelsen – Wachovia

Yes.

Sam Leno

No, we haven't raised it. The reason we have the range that we have from $8 billion to $8.5 billion is to try to incorporate a number of things. One is some degree of unpredictability in FX but also differences in market movements and geographic spread. So we tried to incorporate a lot of moving parts in that Larry so I can't say that we have intentionally increased our constant currency growth rate.

Larry Biegelsen – Wachovia

Sam, what did you assume FX, the negative impact from FX would be on the last call compared to what it is going to be today for 2009?

Sam Leno

I would have to go back – I don't have my note from the last call, I have to go back and look at it, Larry.

Larry Biegelsen – Wachovia

But it is higher now than it was last quarter, or is that fair?

Sam Leno

I think the FX effect is higher now than last quarter, yes.

Larry Biegelsen – Wachovia

Okay. And then –

Sam Leno

And the reason we don't – we try not to change our guidance dramatically every time FX changes because you know it goes up and down, so…

Larry Biegelsen – Wachovia

But FX is higher now than it was last quarter?

Sam Leno

Yes, it is bigger right now. And for the full year, our best estimate now is somewhere between $250 million to $300 million for the full year in sales growth.

Larry Biegelsen – Wachovia

Right. Okay, and you don't have the number for what it was when you gave the guidance last call?

Sam Leno

I don't.

Larry Biegelsen – Wachovia

Okay.

Sam Leno

I don't want to guess it but I can give you a call back if…

Larry Neumann

It was about 150, Larry.

Larry Biegelsen – Wachovia

150? So it is about $100 million increase basically in constant currency sales for your guidance, is that fair?

Sam Leno

Assuming everything else constant and the foreign currency not going anymore, yes.

Larry Biegelsen – Wachovia

Okay. But you left the EPS guidance alone, so you're basically reinvesting that?

Sam Leno

Well, there is very little effect from foreign currency on EPS because of our hedging program. It really is very, very modest.

Larry Biegelsen – Wachovia

Okay. And one other question, on drug eluting stents. Last quarter, you gave us your exit rate in the United States. This quarter you just gave us your full first quarter share. Could you give us the exit rates please?

Jim Tobin

50%.

Larry Biegelsen – Wachovia

You exited at 50%. And Taxus was what and Promus was what, Jim?

Jim Tobin

Taxus is 27 and Promus is 23.

Larry Biegelsen – Wachovia

So those are the exit rates in the first quarter in the US?

Jim Tobin

Yes. And they're pretty close to average too, so…

Larry Biegelsen – Wachovia

Thank you very much.

Operator

Thank you. And our next question comes from the line of Kristen Stewart of Credit Suisse. Please go ahead.

Kristen Stewart – Credit Suisse

Hi, good morning. Thanks for taking my question. I was just wondering if you could just maybe go through if there is any additional litigation that is out there that haven't settled. Can you just kind of help us quantify maybe what is the risk of that going forward or just what the next upcoming litigation case is outstanding?

Jim Tobin

Yes, the – no, we gave full disclosure for all litigation cases in the Q and you see that again in this Q. But you want from learn much newer than what we have already put out in our press releases publicly and talked about. So there's nothing in the short term that we expect to be new. Obviously we can't predict any new cases coming but we don't expect any short-term resolution to any of the pre-existing cases.

Kristen Stewart – Credit Suisse

Okay. And then just with regards to the tax rate, there has obviously been a lot of talk in Washington just about the future outlook, and I know that to comment on that would probably be premature, but I was just wondering if you have any kind of thoughts on that? And then specifically there have been some companies that have business receiving some IRS notifications with respect to their Ireland tax positions, can you comment if you've received any specific notifications on that?

Jim Tobin

In reverse order, I'm not aware if we received any IRS notifications for Ireland at all. And I have paid attention to what others CFOs have said about the same question more broadly and I have to say, give the same answer they have, which is there has been no specific proposals, a lot of talk and hoopla. And we as well as probably every multinational company in the country have provided input into the legislators, and a lot of it and we keep on doing that, trying to reinforce the reminder that it is not just about the tax rate, but it is the whole balance of trade that is at issue, and the strength of our economy isn't just 4% of tax rate, it is where we source products, where jobs are, and what kind of profit margins we all deal with. So the bottom uncertain though is we don't know anything more than anybody else does. We are proceeding cautiously.

Kristen Stewart – Credit Suisse

And then lastly just on the international ICD market, is it correct if I exclude out the impact from the JLL distributor that your base CRM business would have grown closer to 15% constant currency international? I just want to make sure that that number is right.

Sam Leno

That might be a little high but it certainly would add a couple of points of growth. So maybe 13, 14.

Kristen Stewart – Credit Suisse

Are you seeing any slowdown in the overall international market?

Sam Leno

You know it seems to be – you know I guess I would call it spotty. There is some places where we have seen some weakness. There are other places where we have seen surprising strength, and it nets out to about what you would expect.

Kristen Stewart – Credit Suisse

Thanks for taking the questions.

Sam Leno

You're welcome.

Operator

Thank you. And the next question comes from the line of David Lewis of Morgan Stanley. Please go ahead.

David Lewis – Morgan Stanley

Hi, good morning.

Jim Tobin

Hi David.

David Lewis – Morgan Stanley

Jim, in terms of stent penetration and just market share, it is it safe to assume the next six months that these levels you gave 44% worldwide and sort of 54/46 mix in the US are going to be relatively stable, give or take 100 to 200 BPS before Promus Element in the back half?

Jim Tobin

Yes, I think so. I don't see anything changing dramatically. I think the market and the mix has stabilized finally and so that will persist for a bit here. The only thing that changes is Japan towards the end of this year when Promus and Xience are approved and the roll out of that will begin. That will move the overall mix numbers toward more towards Promus but that is like a November event.

David Lewis – Morgan Stanley

Okay, helpful. Sam, a couple of questions here on margins. I guess first off, can you give us for CRM operating margin on either absolute or relative basis some indication of how the first quarter went? So how was that up from the fourth quarter?

Sam Leno

They went great.

David Lewis – Morgan Stanley

Okay.

Sam Leno

We won't give any numbers, but it was a very strong quarter, both sequentially from an operating margin improvement point of view, as well as year over year.

David Lewis – Morgan Stanley

So several hundred basis points of sequential improvement will not be impossible?

Sam Leno

It was a very good improvement.

David Lewis – Morgan Stanley

Okay. So second question, Sam, you mentioned 230 basis points of GM could be gained back post Promus Element. Over what time period is that likely?

Sam Leno

Yes. The time period comes in two blocks. The smaller of the two blocks is when we introduced Promus Element in Europe in the fourth quarter of this year, we will get all that back immediately. And then in the middle of 2012 when we launched Promus Element in both the US and Japan.

David Lewis – Morgan Stanley

And should we assume that it is 50/50, one thirds, two thirds?

Sam Leno

It is probably more like less than a fourth, three fourths, something like that.

David Lewis – Morgan Stanley

Okay, thanks. Just, Sam, I'm to trying to figure out, looking into the second quarter, from Jim's comments, that mixes going to be relatively stable, CRM had a very strong first quarter. By your guidance, it looks like the second quarter is going to look very strong as well. So the second quarter earnings number given those two factors seems conservative to me. Is there something I'm missing on margins?

Sam Leno

Well, again, the one major issue that happens and we expect Endeavor to be launched in Japan. It is difficult to predict just how successful that would be, so some of our guidance range is around that issue. And in general, we continue to be a bit cautious about the markets overall. Now we don't know what the global economy will mean to us in any one of our major markets, but the reason we have the wide range for the year in both sales and earnings per share is consistent with the reason we have a bit of a wider range than you might expect for the quarter as well.

David Lewis – Morgan Stanley

Okay. Just last question for Jim, and I will jump back into queue…

Sam Leno

One more issue too. We also had, if you recall from our comments, we have a penny contribution from with discrete tax item that was $10 million net income which is about a penny a share, that goes away in the second quarter. For tax rate in the first quarter is 18%, it goes back to 21% in Q2.

David Lewis – Morgan Stanley

Okay. So the sequential compare obviously is more challenging? That is very helpful. And then Jim just lastly here on selective reinvestment, you have obviously talked about this for the last six months. Can you kind of quantify the magnitude of the investment, and if not, can you kind of tell us where we're spending these dollars? Is it largely in CRM?

Jim Tobin

That is the biggest chunk. It is field force. And the strategy basically boils down to you've got to have the products, check, you've got to have the people, check. We're adding to the people because the products are there. Walking it up in a measured way but you can't take share which I believe we're doing without also having more people because in the CRM business, the sales presence is almost like direct labor. They are there for the procedures. If you're going to have more procedures, you've got to have more people.

David Lewis – Morgan Stanley

Okay. Would you consider it all this year taking some of that selective reinvestment and pulling it away for your non-core businesses to stimulate some market share gains?

Jim Tobin

You know we have pretty well done that, okay? And that is what you see in the non-DES business, the PI business. We took focus of off those businesses to put focus on DES, and we're paying the price now. And so I'm in the process of turning that back.

David Lewis – Morgan Stanley

Great. Thank you very much.

Operator

Thank you. And next we will go to Bruce Nudell of UBS.

Bruce Nudell – UBS

Thanks for taking the question. I have a DES question and then a CRM question. So on the DES front, Jim, you have 50% share with the dual platform strategy in the US, 30% – 36%, I am sorry, in Europe. You know with your new family of products – you know first of all, what is the reason for the difference EMEA versus US? Secondly, with your new family of products, what sort of share do you think you could attain? And thirdly, with regard to DES, can you get a price reset with these new products, and do you feel that there will be the vicious sort of price erosion continuing in the future? And then I have a follow-up on CRM.

Jim Tobin

Let me start here. We – the place where we have the best metrics on price are the US. And according to MRG, our prices for both Promus and Taxus are a hundred bucks above the competition, and that has persisted now for quite some time. So that is real. And so there is – you can't – with two drugs you have the ability – two drugs and a full pack of everything else, you have the ability to provide whole solutions to hospitals, and that let's us not have to compete on price as directly as the guy that has one, all right? So we have I think being very responsible on the price side and you're seeing that in the results. And so I mean having a premium and having a 50% share, I don't think anybody would have predicted that.

As far as the difference between US and Europe, you know there is depending on how you count, four or five competitors in the US, if you count Xience and Promus separately. There are 19 in Europe. So let us start there. The other column, column 14, have on average about one share point each. So the available market for us starts at 85, not at hundred, and you see some of that reflected in the share difference. The other piece of that is we launched in Europe under a different strategy than we launched in US, and we're not going to be able to fix that until we launch Promus Element, which is a hell of a product. And when that happens, which is soon, that will give us an opportunity to reset share expectations.

Bruce Nudell – UBS

So basically 40% – putting words in your mouth, 40% worldwide share when everybody is in the game in all geographies is attainable in your mind?

Jim Tobin

Yes. I don't see why not. I think we will do – I mean the biggest chunk that has to kind of settle out is Japan, and that is TBD. And that the game will be played in Q4 and Q1 of next year. So a year from now, you're going to know the answer to the question. But I don't see any reason, given our pipeline and given our commercial heft, why we cannot maintain a worldwide market share that starts with four.

Bruce Nudell – UBS

And turning to CRM, you talked about MADIT CRT, and you know, since 2005, the US market has been give or take 4 billion bucks. How much of an impact in dollars do you think MADIT CRT could have? And you know, when we look at rivers, I mean it really looked as though the benefit was centered in very wide QRS patients with very low ejection fractions, and you know to what extent do you think that the group is already preferentially receiving therapy? I know asymptomatic patients at the haven't of the ejection traction spectrum are not touched, but do you think that there is any risk of already having been penetration of that – low ejection fraction, very wide QRS complex group?

Jim Tobin

What you paint is a picture where what happens is instead of getting an ICD they get a CRT-D. So you get basically a price uplift when that happens. That is about a $5000 difference in selling price for an ICD and a CRT-D. So at a minimum, that is what you get. If the market is already penetrated the way you describe, you would still get that uplift. At a maximum, people see that there is a mortality benefit to the delay, the reduction in the number of the de-compensations results in a slower slide towards the end with heart failure and people start putting these things in as a way to actually extend life. That is at the other lunatic fringe. The truth is probably going to be somewhere in between, so it is very hard to predict, and I couldn't put a dollar on it if my life depended on it. But it is hard to imagine that it is going to be negative, a negative impact, and it is likely to be positive. The only question is how much? The trial itself, first of all, the reverse trial, actually I think met its end point at two years, it just didn't meet it at one. In terms of patients it is now a little more than third the number of patients. So we should see a positive impact just from the end factor alone. And the endpoint we chose is I think more likely to be a positive endpoint at reverse. Use this endpoint, they would have been positive in the first year too. So the net of all this is, this is going to turn out to be a good investment, may turn out to be a great investment.

Bruce Nudell – UBS

And just from minus, what is the endpoint in MADIT CRT?

Jim Tobin

It's death and MI, and hospitalization is the other piece. So it is keeping people out of the hospital which that is another point here. That is going to have a big economic impact. So a lot of – I mean because a de-compensation episode can be tens of thousands of dollars, somebody has got to pay for it. So if the economic – if the reduction in the number of hospitalizations is great enough, the economic impact is going to make the implant of the CRT-D look like a really good investment for somebody that expects to have a patient for more than about 18 months. So all of that stuff is going to take a while to play out. It won't be strictly an issue for Boston Scientific, it'll be an issue for the industry. And all of us will have an incentive to make sure that this kind of positive data, if that's the way it turns out, will be understood and appreciated by a wide range of audiences.

Bruce Nudell – UBS

Just one final, is IPPS going to be a non-event?

Jim Tobin

Must be, because I really don't know what you're talking about.

Bruce Nudell – UBS

The Medicare Perspective Payment System.

Jim Tobin

I don't see any huge impact of that in the short-term. That may change over time, okay. But in the short-term I don't think it is going to have any impact.

Bruce Nudell – UBS

Thanks so much.

Operator

Thanks you. And next we will go to the line of Timothy Lee of Piper Jaffray.

Timothy Lee – Piper Jaffray

Hi. Good morning, guys. Thanks for taking the question. Just a couple on the drug eluting stent side, just in terms of Taxus Liberte here in the US, how sticky is that market share? I mean is some of the up tick tied to physician trailing and could we see some of the wane, or are you seeing the utilization rates here in April hold up?

Jim Tobin

Seems to be holding up. I mean it is being what four months now, four, five months. And you know if we were going to see a trend away from the product, it would have started already. We have not seen that.

Timothy Lee – Piper Jaffray

Okay, thank you. And then just in Japan, very strong showing, 54% share for Taxus Liberte. Again was there anything unusual going on there in terms of field inventory stocking or should we think about that 54% as kind of a run rate basis?

Jim Tobin

No. You know Liberte – Taxus Liberte is a hell of a product. It has been under appreciated by you guys for years now and when we had the opportunity to launch this thing right in Japan, we blew the doors off.

Timothy Lee – Piper Jaffray

Okay, fair enough. And then just one last one, are you seeing any impact from FFR in terms of decrease in stents per procedure, or is that FFR still not widely adopted enough to have an impact on stent usage?

Jim Tobin

No impact whatsoever.

Timothy Lee – Piper Jaffray

Okay, perfect. Get back in line.

Jim Tobin

Okay, thank you.

Operator

Thank you. And next we will go to the line of Rick Wise from Leerink Swann.

Rick Wise – Leerink Swann

Good morning everybody. First, maybe a P&L question, Sam, amortization royalties, amortization was you know below last year's run rate, I assume because of the write off of goodwill. When do we go from here? And royalty is also down sequentially sharply, maybe I'm forgetting why, but again where do we go from here with those two lines?

Sam Leno

Yes. The first one, the write off of goodwill did not affect the amortization because goodwill was not amortized. But as a result of writing down some of our assets as we're obligated to do under GAAP, that also lowers the – when we write them down, it also lowers the amortization of what remains.

Rick Wise – Leerink Swann

So we're staying at the 128 rate, that is a good quarterly run rate?

Sam Leno

Yes, for now that is a good quarterly run rate. Yes. We're not forecasting or expecting to rate anymore assets down, but if you we that, it might come down further later. And what was the second part?

Rick Wise – Leerink Swann

Royalties.

Sam Leno

Royalties, I think they're pretty – well, we paid the last of ICD royalties in CRM, and that is in round numbers around 30 million a year, 40 million a year, something like that. So that goes away after this quarter I believe. So that goes away and won't come back.

Rick Wise – Leerink Swann

So again that first-quarter run rate looks reasonable quarterly run rate from here or…

Sam Leno

Yes, I think so.

Rick Wise – Leerink Swann

Okay. And turning to back to the DES, Jim, you highlighted the US volume is up 13% and price down 10%. Appreciating that new product is going to have a big impact on the volume side, but most of the doctors we talked to suggest that DES penetration at 75%, that is about where we are until we get to truly next generation stents. So two part question, one, does that penetration (inaudible) if you will temporarily slow your US volumes and does SPIRIT II three year data have any kind of breaking impact on Taxus for the rest of the year now that you're sort of out in the market, if you will?

Jim Tobin

As far as penetration goes, it is very interesting, because we and everybody else bottomed out at 61%, and we were thinking about 65 is kind of where it was going to get back to. And then we were thinking about 70 as where it was going to get back to, then we were thinking about 75 as where it was going to get back to. Well it is there, and so far we have always been conservative. We includes the doctors, all right? So the trajectory is on, it seems to be headed towards the high 70s, but I think if you use 75 in your model, you will be safe.

As far as SPIRIT II and III, there has been absolutely no impact that I can detect. You know I mean SPIRIT II was going to be the thing to trash Taxus, and then it was going to be SPIRIT III that trashed Taxus, and now it is going to be SPIRIT IV that trashed Taxus. What that ignores it that everybody has used Taxus, they know the results they get from Taxus. They have run their own trial. And so there's a big chunk in the market out there that is quite happy with Taxus, and feels comfortable with it, and understands the data. And Liberte is a definite step forward in terms of deliverability and Element will be a further step forward in terms of performance, acute performance, and people love this product.

Rick Wise – Leerink Swann

Okay. J&J said ASPs were down 5%, you're saying down 10% in the US. Can you just help us reconcile the differences? I know there is no perfect answer here but…

Jim Tobin

Yes. I couldn't tell you. I have no idea. I look at – I look at the MRG data. It says what it says. We're down seven-ish and I think we're going to be down eight-ish, and that is the same number, and that is what MRG says too, so...

Rick Wise – Leerink Swann

Okay. So just I will sneak it one last one, you highlighted the multiyear plant restructuring, maybe if you could remind us at all what the dollar impacted and/or gross margin impact could be over the next couple of years, just as you proceed to that? What is left essentially? Thanks.

Sam Leno

What we indicated in our fourth quarter call is that the benefit, the full year run rate benefit that would accrue to us is a little over hundred million dollars in improved gross profit.

Rick Wise – Leerink Swann

Thanks.

Operator

Thank you. And next, we will go to the line of Joanne Wuensch of BMO Capital Markets. Please go ahead.

Joanne Wuensch – BMO Capital Markets

Thank you for taking my question. Briefly, can you comment on the ICD pricing environment in the market? And second of all, over time, what do you think your top line growth can look like? Thank you.

Sam Leno

Yes. ICD pricing, we've gotten a little bit of an uplift with Cognis and Teligen. The kinds of pricing, sort of trends we see are the same that the other guys described. There is no mystery there, couple of percent a year of decline, but you get some of that back when you introduce a new product. As far as top line growth, looking out, our growth is accelerating, and will continue to accelerate through the rest of this year. We haven't gotten to the planning for out years, but we are thinking made to high single digits as we look forward, that is kind of what we're shooting for. We're trying to angle things so that is where we end up. So it is hard to call what could change in the economic environment, all those things could impact all of this, but we're pretty confident that we can get into the high single digit range.

Jim Tobin

Yes. We also said on the last call that on a constant currency basis we have about just two years, 2010, 2011, where we're estimating 5% to 7% constant currency growth. We also thought that over this year and each of those next two years or three years that we would be able to expand our operating profit margins on average by about 150 basis points a year for a three year period. So that would give us operating profit growth on that sort of revenue growth in excess of 15% a year.

Joanne Wuensch – BMO Capital Markets

Thank you.

Operator

Thank you. And next we will go to the line of Brooks West from Craig-Hallum Capital. Please go ahead.

Brooks West – Craig-Hallum Capital

A nice quarter.

Jim Tobin

Thanks.

Brooks West – Craig-Hallum Capital

Just a quick one on DES mix, we have heard about some success that you guys have had taking share in the Promus versus Xience battle, could you give a little more color there, and Jim, maybe relate that back to your comment on mix for the rest of the year?

Jim Tobin

Yes. You know, we win some and we lose some. It is a battle out there and we are winning our fair share I would say. They are call it 26%, 27% share. Now we are at, call it 23. I'm comfortable with that success rate. And we're doing well with Taxus. I like the dynamic right now I guess is the bottom line.

Brooks West – Craig-Hallum Capital

Okay. I mean is there upside there, are you saying that you're comfortable with where it is right now for the rest of the year?

Jim Tobin

No. I think this is where it'll all land. I think things looking forward are going to be pretty stable in the US, and the only thing that will change dramatically will be Japan when Xience and Promus are launched. And then we will see movement at the end of this year when Promus Element is launched as well. But those are November events, we're a long way from there.

Brooks West – Craig-Hallum Capital

Great. Thank you.

Operator

Thank you. And next we will go to the line of Sara Michelmore of Cowen. Please go ahead.

Sara Michelmore – Cowen

Yes. Thanks for taking the question. Jim, can you talk a little bit about the significance of this version II header release, and maybe just as backdrop, kind of talk through it, and has the prior version of the product been a constraint in terms of your ability to take share, people to try the product?

Jim Tobin

The way I characterize this, Sara, is, version one, we just made it too hard. It works fine, if you put the time into it to do it right. version II takes those elements of the procedure away. It works, it works beautifully. People will notice. We will see an acceleration of our share gains with Cognis and Teligen with the V2 header. I have personalized talked to doctors who said you know when you've got that V2 works as advertised, let me know, because that is when I'm going to start using this product. So that is happening and I think we're going to do well.

Sara Michelmore – Cowen

Okay. And when might we see some data on Promus Element, Jim?

Jim Tobin

Not for a while.

Sara Michelmore – Cowen

Okay. And then if you could give us an update on MRI compliant product development, either for pacemakers or ICDs, that would be helpful also? Thanks.

Jim Tobin

Yeah, that's a good question. You've heard a lot about some of the competition's MRI compatible products. That is being more hype than reality. It is really a pacer lead that they're talking about. What we're doing is a comprehensive offering of both pacer and ICD leads, CRT leads as well. Looking forward, everything we're going to do will be MRI compatible. It will take a couple of years to start at rollout but this is something that is a good idea conceptually. We're going to make it real.

Sara Michelmore – Cowen

Okay, thanks.

Operator

Thank you. And next we will go to the line of Glenn Novarro of RBC. Please go ahead.

Glenn Novarro – RBC

Hi, thanks. Good morning. Two quick DES questions. One you mentioned on the call Promus and Xience in Japan being launched in November. I think Abbott is saying they expect approval in November and then it takes a couple of months just to work through pricing and reimbursement. So are you saying approval and launch in November, or approval in November and then launch a few months later such as the first quarter of 2010 in Japan for Promus ? That is question one. And then two, just, Jim, I know you don't want to go into too much specifics on the pathway of Promus Element in Europe, but can you at least tell us whether or not your discussions with the European regulatory bodies, are they going smoothly as planned? Do you feel incrementally better about a November launch of Promus Element in Europe at this stage? Thanks.

Jim Tobin

Okay. You're right. I'm not going to tell you what I'm going but we are on track, have been on track, remain on track, things are on track for Promus Element in Europe.

Glenn Novarro – RBC

You're just as confident today as you were two months ago, three months ago?

Jim Tobin

Well, we are three months closer, so I am more confident.

Glenn Novarro – RBC

Okay, good. All right, that's what we want to hear.

Jim Tobin

As far as the timing of Promus and Xience in Japan, it is hard to call. We have been very successful lately with approvals in Japan, and that we would hope would continue. So it is possible that you would see even an earlier approval. There is on average a 30 day delay between approval and reimbursement, depends on what day of the month you get approval, whether it is three weeks or six weeks, but bottom line is we expect to launch this product in the fourth quarter in Japan, and we expect it will be well-received.

Glenn Novarro – RBC

Okay. And then just one quick follow-up, do you have any sense of when the insiders will stop selling?

Jim Tobin

No. You don't ask me if they want to sell.

Glenn Novarro – RBC

Okay. Because it is just that every single day we continue to see the headlines roll across the tape about insider selling and I was just wondering if we were any closer to that. I know that it is not something you can control, I know they're not selling because they're worried about the outlook, they have their own personal issues, but I was just wondering if you had any recent conversations with Pete, and said, when are you going to stop selling shares?

Jim Tobin

Well I had dinner with him last night and we did not address this subject.

Glenn Novarro – RBC

Okay. Well, the next time you talk to him, can you ask him for us?

Jim Tobin

Yes. He still owns a lot of shares (inaudible).

Glenn Novarro – RBC

All right. Thank you.

Operator

thank you. And we do have a follow-up question from Mike Weinstein of JP Morgan. Please go ahead.

Mike Weinstein – JP Morgan

Great. Thanks for taking the follow-up. Just a quick question was last night Stryker announced that they had an IRS tax question relative to their Ireland sub. You guys have a large presence in Ireland, just wondering if you received a similar letter. Thanks.

Jim Tobin

We have not.

Mike Weinstein – JP Morgan

Okay, great. Thanks, Sam.

Operator

Okay, thank you. Next, we will go to the line of Spencer Nam of Summer Street Research. Please go ahead.

Spencer Nam – Summer Street Research

Thanks for taking my questions. Just a couple of quick questions for Jim. First of all, with this Promus Element launch expected in Europe at the end of this year, do you expect – is there a possibility of some supply issue with the Promus, with Abbott here, or how does the Promus relationship play out once the Element hits the market?

Jim Tobin

Well, the contract, their obligation to supply us ends in November of this year, and we expect to have Promus Element available, approved and ready to ship by then. And so we are ordering under the contract up to that point and they continue to supply. And we have to order well in advance . So we gave them forecast out for six months; the first three months of those six are firm. So we're out into with firm forecast out into mid-summer already. And I don't expect that there will be any interruption, any gap, any sort of that thing. I just don't see that.

Spencer Nam – Summer Street Research

So just a quick follow-up on that, if the contract ends in November of this year, how does this apply – are you going to manufacturing directly, you know in 2010 and 2011, until you come to the US market with Promus Element?

Jim Tobin

We are making Promus Element today for trials. This isn't a mystery. We can make that stuff. And when we launch the product at the end of this year, it would be self manufactured product, and we will be continuing to make product out from there forward.

Sam Leno

But the clarification to that point is that the contract with Abbott on supply has different expiration dates for each of the countries and therefore even though it expires in Europe, it continues in the US and Japan, and they will continue to supply product for those countries going forward until it expires.

Spencer Nam – Summer Street Research

When does the US and Japan contracts expire?

Sam Leno

They expire in the middle of 2012.

Spencer Nam – Summer Street Research

Okay, good. Great. And then one quick question, back to Jim, the US ICD competitive dynamics, are you guys taking share from Medtronic or St. Jude or both at this point?

Jim Tobin

Well, we won't know until they report. And so we believe we're taking share because we don't believe the market is growing 15%. But where it comes from, we get some from here, we get some from there. I think overall Medtronic seem to be the net giver and we and St. Jude seem to be the net taker of share. But that is – those trends have been in place for a while now, and I don't think they have shifted noticeably in Q1.

Spencer Nam – Summer Street Research

Great, thanks very much. Very helpful.

Larry Neumann

Julia, I think we will take one more question and then we will end the call for now.

Operator

All right. And our last question is a follow-up from Kristen Stewart of Credit Suisse. Please go ahead.

Kristen Stewart – Credit Suisse

Hi. Thanks for taking it. Sorry if I missed it earlier but, Jim, are you still seeing in the US kind of flat to declining primary implants volumes for ICDs?

Jim Tobin

Yes. It hasn't shifted much. The data I have seen basically say that the implant growth rate has been diminishing for some time now. But it seems like it is not getting worse. It had been getting worse, now it seems to be have bottomed out now at a modest single-digit negative number. But that is the trend over the last few quarters from a modest positive single-digit number to a modest negative single number. it feels though like it stopped getting worse.

Kristen Stewart – Credit Suisse

And can you just comment a little bit about the mix of CRT-D versus maybe a dual chamber, because anecdotally we are hearing that some EPs were a little hesitant to put in this CRT-D because of the extra lead with all the lead issues out there? How has the mix shifts changed recently over the last year for CRT-Ds versus the dual chambers, or even single chambers?

Jim Tobin

You know we have seen more growth on the ICD side than we have the CRT-D side. So there has been some shift. What is driving that is hard to call. I'm hopeful that MADIT CRT, when that pops, will turn that dynamic around remains to be seen. Now I don't understand it I guess is what I'm saying. And so if I don't understand it, I can't figure out what the fix is.

Kristen Stewart – Credit Suisse

Okay. So CRT-Ds as a percentage of unit mix has decreased over the last year or so?

Jim Tobin

Modestly. I mean it is really lost in rounding.

Kristen Stewart – Credit Suisse

Okay. Thanks very much. Nice quarter.

Jim Tobin

Thanks.

Larry Neumann

Thank you everybody for joining us today and for your continued interest in Boston Scientific. With that I will turn it back over to the operator to give you information on details of the replay. Thank you.

Operator

Ladies and gentlemen, this conference will be made available for replay today after 10:30 and until May 5 at 11:59. You may access the AT&T playback service at 800-475-6701 and entering access code of 994907. Again, you may access the replay information by dialing 1800 and entering 475-6701 and entering the access code of 994907. That does conclude our conference for today. Thank you for your participation and for using the AT&T Executive Teleconference Service. You may now disconnect.

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