10-Q 1 bsx-20240331.htm 10-Q bsx-20240331
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2024
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File No. 1-11083
BOSTON SCIENTIFIC CORPORATION
(Exact name of registrant as specified in its charter)
Delaware04-2695240
(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification No.)
    300 Boston Scientific Way, Marlborough, Massachusetts                    01752-1234
        (Address of Principal Executive Offices)                         (Zip Code)
508 683-4000
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, par value $0.01 per shareBSXNew York Stock Exchange
0.625% Senior Notes due 2027BSX27New York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filerAccelerated filer
Non-accelerated filerSmaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No
The number of shares outstanding of Common Stock, $0.01 par value per share, as of April 29, 2024 was 1,470,179,843.


TABLE OF CONTENTS
  Page No.
 
   
   
 
   
 
   
 
   
 
   
   
   
   
   
   
 
2

PART I
FINANCIAL INFORMATION

ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS

BOSTON SCIENTIFIC CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

Three Months Ended
March 31,
(in millions, except per share data)20242023
Net sales$3,856 $3,389 
Cost of products sold1,209 1,040 
Gross profit2,648 2,349 
Operating expenses:
Selling, general and administrative expenses1,364 1,215 
Research and development expenses366 337 
Royalty expense10 11 
Amortization expense214 203 
Contingent consideration net expense (benefit)17 12 
Restructuring net charges (credits)3 20 
 1,973 1,797 
Operating income (loss)675 552 
Other income (expense):
Interest expense(69)(65)
Other, net2 (43)
Income (loss) before income taxes608 444 
Income tax expense (benefit)115 131 
Net income (loss)493 314 
Preferred stock dividends (14)
Net income (loss) attributable to noncontrolling interests(1) 
Net income (loss) attributable to Boston Scientific common stockholders$495 $300 
Net income (loss) per common share — basic$0.34 $0.21 
Net income (loss) per common share — diluted$0.33 $0.21 
Weighted-average shares outstanding
Basic1,468.4 1,435.8 
Diluted1,481.7 1,446.0 

Refer to notes to the unaudited consolidated financial statements. Amounts may not foot due to rounding.
3

BOSTON SCIENTIFIC CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (UNAUDITED)

Three Months Ended
March 31,
(in millions)20242023
Net income (loss)$493 $314 
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustment57 (42)
Net change in derivative financial instruments22 (43)
Net change in defined benefit pensions and other items(0)(5)
Other comprehensive income (loss)78 (91)
Comprehensive income (loss)$572 $223 
Comprehensive income (loss) attributable to noncontrolling interests(6) 
Comprehensive income attributable to Boston Scientific common stockholders$578 $223 





































Refer to notes to the unaudited consolidated financial statements. Amounts may not foot due to rounding.
4

BOSTON SCIENTIFIC CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
 As of
(in millions, except share and per share data)March 31, 2024December 31, 2023
ASSETS  
Current assets:  
Cash and cash equivalents$2,329 $865 
Trade accounts receivable, net2,304 2,228 
Inventories2,561 2,484 
Prepaid income taxes319 315 
Other current assets671 621 
Total current assets8,185 6,514 
Property, plant and equipment, net2,897 2,859 
Goodwill14,361 14,387 
Other intangible assets, net5,839 6,003 
Deferred tax assets3,792 3,841 
Other long-term assets1,596 1,531 
TOTAL ASSETS$36,669 $35,136 
LIABILITIES AND STOCKHOLDERS’ EQUITY  
Current liabilities:  
Current debt obligations$1,085 $531 
Accounts payable921 942 
Accrued expenses2,083 2,646 
Other current liabilities827 814 
Total current liabilities4,916 4,933 
Long-term debt9,534 8,571 
Deferred income taxes132 134 
Other long-term liabilities1,919 1,967 
Commitments and contingencies
Stockholders’ equity  
Preferred stock, $0.01 par value - authorized 50,000,000 shares - 0 shares issued as of March 31, 2024 and December 31, 2023
  
Common stock, $0.01 par value - authorized 2,000,000,000 shares - issued 1,733,293,885 shares as of March 31, 2024 and 1,729,000,224 shares as of December 31, 2023
17 17 
Treasury stock, at cost - 263,289,848 shares as of March 31, 2024 and December 31, 2023
(2,251)(2,251)
Additional paid-in capital20,713 20,647 
Retained earnings1,314 819 
Accumulated other comprehensive income (loss), net of tax132 49 
Total stockholders’ equity19,926 19,282 
Noncontrolling interests242 248 
Total equity20,168 19,530 
TOTAL LIABILITIES AND EQUITY$36,669 $35,136 



Refer to notes to the unaudited consolidated financial statements. Amounts may not foot due to rounding.
5

BOSTON SCIENTIFIC CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (UNAUDITED)
Three Months Ended
March 31,
(in millions, except share data)20242023
Preferred stock shares issued
   Beginning 10,062,500 
Preferred stock issuance  
   Ending 10,062,500 
Common stock shares issued
   Beginning1,729,000,224 1,696,633,993 
Impact of stock-based compensation plans4,293,661 4,194,880 
   Ending1,733,293,885 1,700,828,873 
Preferred stock
   Beginning$ $0 
Preferred stock issuance  
   Ending$ $0 
Common stock
   Beginning$17 $17 
Impact of stock-based compensation plans0 0 
   Ending$17 $17 
Treasury stock
Beginning$(2,251)$(2,251)
Repurchase of common stock  
Ending$(2,251)$(2,251)
Additional paid-in capital
Beginning$20,647 $20,289 
Impact of stock-based compensation plans66 68 
Ending$20,713 $20,356 
Retained earnings/(Accumulated deficit)
Beginning$819 $(750)
Net income (loss)493 314 
Net (income) loss attributable to noncontrolling interests1  
Preferred stock dividends (14)
Ending$1,314 $(450)
Accumulated other comprehensive income (loss), net of tax
Beginning$49 $269 
Changes in other comprehensive income (loss)83 (91)
Ending$132 $178 
Total stockholders' equity$19,926 $17,850 
Noncontrolling interests
Beginning$248 $ 
Net income (loss) attributable to noncontrolling interests(1) 
Changes in other comprehensive income (loss)(5) 
Changes to noncontrolling ownership interest 259 
Ending$242 $259 
Total equity$20,168 $18,109 



Refer to notes to the unaudited consolidated financial statements. Amounts may not foot due to rounding.
6

BOSTON SCIENTIFIC CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

Three Months Ended March 31,
(in millions)20242023
Net income (loss)$493 $314 
Adjustments to reconcile net income (loss) to cash provided by (used for) operating activities
Depreciation and amortization304 285 
Deferred and prepaid income taxes31 19 
Stock-based compensation expense63 55 
Net loss (gain) on investments and notes receivable2 31 
Contingent consideration net expense (benefit)17 12 
Other, net(4)(2)
Increase (decrease) in operating assets and liabilities, excluding purchase accounting:
Trade accounts receivable(114)(86)
Inventories(124)(185)
Other assets(55)(41)
Accounts payable, accrued expenses and other liabilities(450)(211)
Cash provided by (used for) operating activities164 190 
Investing activities:  
Purchases of property, plant and equipment and internal use software(179)(111)
Proceeds from sale of property, plant and equipment1 3 
Payments for acquisitions of businesses, net of cash acquired(47)(375)
Payments for investments and acquisitions of certain technologies, net of investment proceeds(66)(10)
Proceeds from royalty rights7 9 
Cash provided by (used for) investing activities(285)(484)
Financing activities:  
Payment of contingent consideration previously established in purchase accounting(34)(34)
Payments for royalty rights(15)(34)
Payments for finance leases(25) 
Payments on short-term borrowings(504) 
Proceeds from long-term borrowings, net of debt issuance costs2,145  
Cash dividends paid on preferred stock (14)
Cash used to net share settle employee equity awards(78)(50)
Proceeds from issuances of common stock pursuant to employee stock compensation and purchase plans80 63 
Cash provided by (used for) financing activities1,569 (69)
Effect of foreign exchange rates on cash(7) 
Net increase (decrease) in cash, cash equivalents, restricted cash and restricted cash equivalents1,441 (363)
Cash, cash equivalents, restricted cash and restricted cash equivalents at beginning of period1,055 1,126 
Cash, cash equivalents, restricted cash and restricted cash equivalents at end of period$2,496 $763 





Refer to notes to the unaudited consolidated financial statements. Amounts may not foot due to rounding.
7

BOSTON SCIENTIFIC CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(SUPPLEMENTAL INFORMATION)

Three Months Ended March 31,
(in millions)20242023
Supplemental Information
Stock-based compensation expense$63 $55 
Non-cash impact of transferred royalty rights(7)(9)

As of March 31,
Reconciliation to amounts within the unaudited consolidated balance sheets:20242023
Cash and cash equivalents$2,329 $570 
Restricted cash and restricted cash equivalents included in Other current assets
93 135 
Restricted cash equivalents included in Other long-term assets
74 57 
Cash, cash equivalents, restricted cash and restricted cash equivalents at end of period$2,496 $763 
























Refer to notes to the unaudited consolidated financial statements. Amounts may not foot due to rounding.
8

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE A – BASIS OF PRESENTATION

The accompanying unaudited consolidated financial statements of Boston Scientific Corporation have been prepared in accordance with accounting principles generally accepted in the United States (GAAP) and with the instructions to Form 10-Q and Article 10 of Regulation S-X, and they do not include all of the information and footnotes required by GAAP for complete financial statements. When used in this report, the terms, "we," "us," "our," and "the Company" mean Boston Scientific Corporation and its divisions and subsidiaries. In the opinion of management, all adjustments (consisting only of normal recurring adjustments) considered necessary for fair presentation have been included. Operating results for the three months ended March 31, 2024 are not necessarily indicative of the results that may be expected for the year ending December 31, 2024. Accordingly, our unaudited consolidated financial statements and footnotes thereto should be read in conjunction with our audited consolidated financial statements and footnotes thereto included in Item 8 of our most recent Annual Report on Form 10-K.

The accompanying unaudited consolidated financial statements include the accounts of the Company's wholly owned- subsidiaries and entities for which the Company has a controlling financial interest. All intercompany balances and transactions have been eliminated in consolidation.

Amounts reported in millions within this Quarterly Report on Form 10-Q are computed based on the amounts in thousands. As a result, the sum of the components may not equal the total amount reported in millions due to rounding. Certain columns and rows within tables may not add due to the use of rounded numbers. Percentages presented are calculated from the underlying unrounded amounts.
Subsequent Events
We evaluate events occurring after the date of our accompanying unaudited consolidated balance sheet for potential recognition or disclosure within our financial statements. Those items requiring recognition in the financial statements have been recorded and disclosed accordingly.
Those items requiring disclosure (non-recognized subsequent events) in the financial statements have been disclosed accordingly. Refer to Note H – Commitments and Contingencies for further details.

NOTE B – ACQUISITIONS AND STRATEGIC INVESTMENTS

Our accompanying unaudited consolidated financial statements include the operating results for acquired entities from the respective dates of acquisition. We have not presented supplemental pro forma financial information for completed acquisitions or divestitures given their results are not material to our accompanying unaudited consolidated financial statements. Further, transaction costs were immaterial to our accompanying unaudited consolidated financial statements and were expensed as incurred.

On January 8, 2024, we announced our entry into a definitive agreement to acquire 100 percent of Axonics, Inc. (Axonics), a publicly traded medical technology company primarily focused on the development and commercialization of devices to treat urinary and bowel dysfunction. The purchase price is $71.00 in cash per share, or approximately $3.670 billion for 100% of the fully diluted equity. On April 3, 2024, we and Axonics each received a request for additional information (Second Request) from the United States Federal Trade Commission (FTC) in connection with the FTC's review of the transaction. The issuance of the Second Request extends the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (HSR Act), until 30 days after both we and Axonics have substantially complied with the Second Request, unless the waiting period is extended voluntarily by the parties or terminated earlier by the FTC. We and Axonics expect to promptly respond to the Second Request and to continue to work cooperatively with the FTC in its review. The transaction is expected to be completed in the second half of 2024, subject to the expiration or termination of the waiting period under the HSR Act and the satisfaction (or waiver) of other customary closing conditions. The Axonics business will be integrated into our Urology division.

2023 Acquisition

On February 20, 2023, we completed the acquisition of a majority stake investment in Acotec Scientific Holdings Limited (Acotec), a publicly traded Chinese manufacturer of drug-coated balloons and other products used in the treatment of vascular and other diseases. We consolidated this majority stake investment in Acotec based on the conclusion we control the entity, and
9

recorded a noncontrolling interest for the portion we do not own. We acquired approximately 65 percent of the outstanding shares of Acotec, for an upfront cash payment of HK$20.00 per share, or $519 million at foreign currency exchange rates at closing. The Acotec portfolio complements our existing Peripheral Interventions portfolio.

Purchase Price Allocation

We accounted for our majority stake investment in Acotec as a business combination in accordance with Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic 805, Business Combinations (FASB ASC Topic 805). The final purchase price was comprised of the amount presented below:

(in millions)
Acotec(1)
Payment for majority stake investment$381 
$381 
(1) Excludes approximately $140 million of cash on hand at the closing of the transaction

We recorded the assets acquired, liabilities assumed and the noncontrolling interest at their respective fair values as of the closing date of the transaction. The final purchase price allocation was comprised of the components presented below, with the excess of the purchase price over the fair value of net assets acquired recorded to goodwill:

(in millions)Acotec
Goodwill$337 
Amortizable intangible assets334 
Other assets acquired93 
Liabilities assumed(48)
Net deferred tax liabilities(76)
Fair value of noncontrolling interest(259)
$381 

The fair value of Acotec's noncontrolling interest was based on the publicly traded market value of the remaining 35 percent of the outstanding shares we did not acquire as of the transaction date and is presented in Stockholders' equity within our accompanying unaudited consolidated balance sheets. Goodwill was primarily established for Acotec due to opportunities for collaboration in research and development, manufacturing and commercial strategies and was not deductible for tax purposes.

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

Amount Assigned
(in millions)
Weighted Average Amortization Period
(in years)
Risk-Adjusted Discount
Rates used in Purchase Price Allocation
Amortizable intangible assets:
Technology-related$308 1114%
Customer relationships15 1114%
Other intangible assets11 1314%
$334 
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Contingent Consideration
Changes in the fair value of our contingent consideration liability during the first quarter of 2024 associated with prior period acquisitions were as follows:

(in millions)
Balance as of December 31, 2023$404 
Contingent consideration net expense (benefit)17 
Contingent consideration payments and other adjustments(148)
Balance as of March 31, 2024$273 

The payments made during the first quarter of 2024 primarily related to our acquisition of Farapulse, Inc (Farapulse) following the achievement of revenue-based earnouts as a result of over-performance. The maximum amount we could be required to pay for certain contingent consideration is not determinable as it is uncapped and based on a percent of certain sales. As of March 31, 2024, the fair value of such uncapped contingent consideration is estimated at $164 million. As of March 31, 2024, the maximum amount that we could be required to pay under our other contingent consideration arrangements (undiscounted) is approximately $275 million. Refer to Note B – Acquisitions and Strategic Investments to our audited financial statements contained in Item 8. Financial Statements and Supplementary Data of our most recent Annual Report on Form 10-K for additional information.

The recurring Level 3 fair value measurements of our contingent consideration liability that we expect to be required to settle include the following significant unobservable inputs:
Contingent Consideration LiabilityFair Value as of March 31, 2024Valuation TechniqueUnobservable InputRange
Weighted Average(1)
Revenue-based Payments and Milestones$273 millionDiscounted Cash FlowDiscount Rate6%-11%6%
Probability of Payment100%100%
Projected Year of Payment2024-20272025
(1) Unobservable inputs were weighted by the relative fair value of the contingent consideration liability. For projected year of payment, the amount represents the median of the inputs and is not a weighted average.

Projected contingent payment amounts related to our revenue-based payments and milestones are discounted back to the current period, primarily using a discounted cash flow model. Significant increases or decreases in projected revenues, probabilities of payment, discount rates or the time until payment is made would have resulted in a significantly lower or higher fair value measurement as of March 31, 2024.

Strategic Investments

The aggregate carrying amount of our strategic investments was comprised of the following:

As of
(in millions)March 31, 2024December 31, 2023
Equity method investments$211 $219 
Measurement alternative investments(1, 2)
218 194 
$429 $413 
(1) Measurement alternative investments are privately-held equity securities without readily determinable fair values that are measured at cost less impairment, if any, adjusted to fair value for any observable price changes in orderly transactions for the identical or a similar investment of the same issuer, recognized in Other, net within our accompanying unaudited consolidated statements of operations.
(2) Includes publicly-held securities and convertible notes measured at fair value with changes in fair value recognized in Other, net within our accompanying unaudited consolidated statements of operations.

These investments are classified as Other long-term assets within our accompanying unaudited consolidated balance sheets, in accordance with GAAP and our accounting policies.

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As of March 31, 2024, the cost of our aggregated equity method investments exceeded our share of the underlying equity in net assets by $237 million, which represents amortizable intangible assets, in-process research and development (IPR&D), goodwill and deferred tax liabilities.

NOTE C – GOODWILL AND OTHER INTANGIBLE ASSETS

The gross carrying amount of goodwill and other intangible assets and the related accumulated amortization for intangible assets subject to amortization and accumulated goodwill impairment charges are as follows:
As of March 31, 2024As of December 31, 2023
(in millions)Gross Carrying AmountAccumulated Amortization/ Write-offsGross Carrying AmountAccumulated Amortization/ Write-offs
Technology-related$13,223 $(8,287)$13,207 $(8,101)
Patents480 (385)480 (387)
Other intangible assets2,159 (1,527)2,130 (1,500)
Amortizable intangible assets$15,863 $(10,198)$15,817 $(9,988)
    
Goodwill$24,261 $(9,900)$24,287 $(9,900)
IPR&D$54 $54 
Technology-related120 120 
Indefinite-lived intangible assets$174 $174 

The following represents a roll-forward of our goodwill balance by reportable segment:
(in millions)MedSurgCardiovascularTotal
As of December 31, 2023$5,347 $9,041 $14,387 
Goodwill acquired24  24 
Impact of foreign currency fluctuations and purchase price and other adjustments(29)(22)(51)
As of March 31, 2024$5,342 $9,019 $14,361 

Goodwill and Other Intangible Asset Impairments

We did not record any goodwill or intangible asset impairment charges in the first quarter of 2024 or 2023. Refer to Note A – Significant Accounting Policies to our audited financial statements contained in Item 8. Financial Statements and Supplementary Data of our most recent Annual Report on Form 10-K for further discussion of our annual goodwill and intangible asset impairment testing.

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NOTE D – HEDGING ACTIVITIES AND FAIR VALUE MEASUREMENTS

Derivative Instruments and Hedging Activities

We address market risk from changes in foreign currency exchange rates and interest rates through risk management programs which include the use of derivative and nonderivative financial instruments. We manage concentration of counterparty credit risk by limiting acceptable counterparties to major financial institutions with investment grade credit ratings, limiting the amount of credit exposure to individual counterparties and by actively monitoring counterparty credit ratings and the amount of individual credit exposure. We also employ master netting arrangements that limit the risk of counterparty non-payment on a particular settlement date to the net gain that would have otherwise been received from the counterparty. Although not completely eliminated, we do not consider the risk of counterparty default to be significant as a result of these protections. Further, none of our derivative instruments are subject to collateral or other security arrangements, nor do they contain provisions that are dependent on our credit ratings from any credit rating agency.

Currency Hedging Instruments

Risk Management Strategy

Our risk from changes in currency exchange rates consists primarily of monetary assets and liabilities; forecasted intercompany and third-party transactions; and net investments in certain subsidiaries. We manage currency exchange rate risk at a consolidated level to reduce the cost of hedging by taking advantage of offsetting transactions. We employ derivative and nonderivative instruments, primarily forward currency contracts, to reduce the risk to our earnings and cash flows associated with changes in currency exchange rates.

The success of our currency risk management program depends, in part, on forecasted transactions denominated primarily in euro, Chinese renminbi, Japanese yen, British pound sterling, Australian dollar and Swiss franc. We may experience unanticipated currency exchange gains or losses to the extent the actual activity is different than forecasted. In addition, changes in currency exchange rates related to any unhedged transactions may impact our earnings and cash flows.

Hedge Designations and Relationships

Certain of our currency derivative instruments are designated as cash flow hedges under FASB ASC Topic 815, Derivatives and Hedging (FASB ASC Topic 815), and are intended to protect the U.S. dollar value of forecasted transactions. The gain or loss on a derivative instrument designated as a cash flow hedge is recorded in the Net change in derivative financial instruments component of Other comprehensive income (loss), net of tax (OCI) within our unaudited consolidated statements of comprehensive income (loss) until the underlying third-party transaction occurs. When the underlying third-party transaction occurs, we recognize the gain or loss in earnings within Cost of products sold within our unaudited consolidated statements of operations. In the event the hedging relationship is no longer effective, or if the occurrence of the hedged forecast transaction becomes no longer probable, we reclassify the gains or losses within Accumulated other comprehensive income (loss), net of tax (AOCI) to earnings at that time. The cash flows related to the derivative instruments designated as cash flow hedges are reported as operating activities within our unaudited consolidated statements of cash flows.

We also designate certain forward currency contracts as net investment hedges to hedge a portion of our net investments in certain of our entities with functional currencies denominated in the Chinese renminbi and Japanese yen. For these derivative instruments, we elected to use the spot method to assess hedge effectiveness. We also elected to exclude the spot-forward difference, referred to as the excluded component, from the assessment of hedge effectiveness and are amortizing this amount separately, as calculated at the date of designation, on a straight-line basis over the term of the currency forward contracts. As such, we defer recognition of foreign currency gains and losses within the Foreign currency translation adjustment (CTA) component of OCI, and we reclassify amortization of the excluded component from AOCI to current period earnings within Interest expense within our unaudited consolidated statements of operations.

We designate certain euro-denominated debt as net investment hedges to hedge a portion of our net investments in certain of our entities with functional currencies denominated in the euro. As of March 31, 2024 and December 31, 2023, we designated as a net investment hedge our €900 million in aggregate principal amount of 0.625% senior notes issued in November 2019 and due in 2027 (2027 Notes). For these nonderivative instruments, we defer recognition of the foreign currency remeasurement gains and losses within the CTA component of OCI. We reclassify these gains and losses to current period earnings within Other, net within our accompanying unaudited consolidated statements of operations only when the hedged item affects earnings, which would occur upon disposal or substantial liquidation of the underlying foreign subsidiary.

13

We also use forward currency contracts that are not part of designated hedging relationships as a part of our strategy to manage our exposure to currency exchange rate risk related to monetary assets and liabilities and related forecast transactions. These non-designated currency forward contracts have an original time to maturity consistent with the hedged currency transaction exposures, generally less than one year, and are marked-to-market with changes in fair value recorded to earnings within Other, net within our accompanying unaudited consolidated statements of operations.

Interest Rate Hedging Instruments

Risk Management Strategy

Our interest rate risk relates primarily to U.S. dollar and euro-denominated borrowings partially offset by U.S. dollar cash investments. We use interest rate derivative instruments to mitigate the risk to our earnings and cash flows associated with exposure to changes in interest rates. Under these agreements, we and the counterparty, at specified intervals, exchange the difference between fixed and floating interest amounts calculated by reference to an agreed-upon notional principal amount. We designate these derivative instruments either as fair value or cash flow hedges in accordance with FASB ASC Topic 815.

Hedge Designations and Relationships

We had no interest rate derivative instruments designated as cash flow hedges outstanding as of March 31, 2024 or December 31, 2023. In the event that we designate outstanding interest rate derivative instruments as cash flow hedges, we record the changes in the fair value of the derivatives within OCI until the underlying hedged transaction occurs.

We had no interest rate derivative instruments designated as fair value hedges outstanding as of March 31, 2024 or December 31, 2023. In the event that we designate outstanding interest rate derivative instruments as fair value hedges, we record the changes in the fair values of interest-rate derivatives designated as fair value hedges and of the underlying hedged debt instruments in Interest expense, which generally offset.

The following table presents the contractual amounts of our hedging instruments outstanding:
(in millions)FASB ASC Topic 815 DesignationAs of
March 31, 2024December 31, 2023
Forward currency contractsCash flow hedge$2,242 $2,284 
Forward currency contractsNet investment hedge645 333 
Foreign currency-denominated debt(1)
Net investment hedge997 997 
Forward currency contractsNon-designated3,070 3,282 
Total Notional Outstanding$6,954 $6,896 
(1) Foreign currency-denominated debt is the €900 million debt principal associated with our 2027 Notes designated as a net investment hedge.

The remaining time to maturity as of March 31, 2024 is within 36 months for all forward currency contracts designated as cash flow hedges and generally less than one year for all non-designated forward currency contracts. The forward currency contracts designated as net investment hedges generally mature between one and two years. The euro-denominated debt principal designated as a net investment hedge has a contractual maturity of December 1, 2027.

The following presents the effect of our derivative and nonderivative instruments designated as cash flow and net investment hedges under FASB ASC Topic 815 within our accompanying unaudited consolidated statements of operations. Refer to Note M – Changes in Other Comprehensive Income for the total amounts relating to derivative and nonderivative instruments presented within our accompanying unaudited consolidated statements of comprehensive income (loss).

14

Effect of Hedging Relationships on Accumulated Other Comprehensive Income
Amount Recognized in OCI on Hedges
Unaudited Consolidated Statements of Operations(1)
Amount Reclassified from AOCI into Earnings
(in millions)Pre-Tax Gain (Loss)Tax Benefit (Expense)Gain (Loss) Net of TaxLocation of Amount Reclassified and Total Amount of Line ItemPre-Tax (Gain) LossTax (Benefit) Expense(Gain) Loss Net of Tax
Three Months Ended March 31, 2024
Forward currency contracts
Cash flow hedges$76 $(17)$59 Cost of products sold$1,209 $(49)$11 $(38)
Net investment hedges(2)
27 (6)21 Interest expense69 (4)1 (3)
Foreign currency-denominated debt
Net investment hedges(3)
23 (5)18 Other, net(2)   
Interest rate derivative contracts
Cash flow hedges   Interest expense69 1 (0)0 

Effect of Hedging Relationships on Accumulated Other Comprehensive Income
Amount Recognized in OCI on Hedges
Unaudited Consolidated Statements of Operations(1)
Amount Reclassified from AOCI into Earnings
(in millions)Pre-Tax Gain (Loss)Tax Benefit (Expense)Gain (Loss) Net of TaxLocation of Amount Reclassified and Total Amount of Line ItemPre-Tax (Gain) LossTax (Benefit) Expense(Gain) Loss Net of Tax
Three Months Ended March 31, 2023
Forward currency contracts
Cash flow hedges$13 $(3)$10 Cost of products sold$1,040 $(69)$16 $(54)
Net investment hedges(2)
6 (1)4 Interest expense65 (3)1 (2)
Foreign currency-denominated debt
Net investment hedges(3)
(19)4 (14)Other, net43    
Interest rate derivative contracts
Cash flow hedges   Interest Expense65 1  1 
(1) In all periods presented in the table above, the pre-tax (gain) loss amounts reclassified from AOCI to earnings represent the effect of the hedging relationships on earnings.
(2) For our outstanding forward currency contracts designated as net investment hedges, the net gain or loss reclassified from AOCI to earnings as a reduction of Interest expense represents the straight-line amortization of the excluded component as calculated at the date of designation. This initial value of the excluded component has been excluded from the assessment of effectiveness in accordance with FASB ASC Topic 815. In the current and prior periods, we did not recognize any gains or losses on the components included in the assessment of hedge effectiveness in earnings.
(3) For our outstanding euro-denominated debt principal designated as a net investment hedge, the change in fair value attributable to changes in the spot rate is recorded in the CTA component of OCI. No amounts were reclassified from AOCI to current period earnings.

As of March 31, 2024, pre-tax net gains or losses for our derivative instruments designated, or previously designated, as cash flow and net investment hedges under FASB ASC Topic 815 that may be reclassified from AOCI to earnings within the next twelve months are presented below (in millions):
FASB ASC Topic 815 DesignationLocation on Unaudited Consolidated Statements of OperationsAmount of Pre-Tax Gain (Loss) that may be Reclassified to Earnings
Designated Hedging Instrument
Forward currency contractsCash flow hedgeCost of products sold$173 
Forward currency contractsNet investment hedgeInterest expense15 
Interest rate derivative contractsCash flow hedgeInterest expense(1)

15

Net gains and losses on currency hedge contracts not designated as hedging instruments offset by net gains and losses from currency transaction exposures are presented below:
Location on Unaudited Consolidated Statements of OperationsThree Months Ended March 31,
(in millions)20242023
Net gain (loss) on currency hedge contractsOther, net$15 $(8)
Net gain (loss) on currency transaction exposuresOther, net(20)(6)
Net currency exchange gain (loss)$(5)$(14)

Fair Value Measurements

FASB ASC Topic 815 requires all derivative and nonderivative instruments to be recognized at their fair values as either assets or liabilities on the balance sheet. We determine the fair value of our derivative and nonderivative instruments using the framework prescribed by FASB ASC Topic 820, Fair Value Measurements and Disclosures (FASB ASC Topic 820), and considering the estimated amount we would receive or pay to transfer these instruments at the reporting date with respect to current currency exchange rates, interest rates, the creditworthiness of the counterparty for unrealized gain positions and our own creditworthiness for unrealized loss positions. In certain instances, we may utilize financial models to measure fair value of our derivative and nonderivative instruments. In doing so, we use inputs that include quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, other observable inputs for the asset or liability and inputs derived principally from, or corroborated by, observable market data by correlation or other means. The following are the balances of our derivative and nonderivative assets and liabilities:

 
Location on Unaudited Consolidated Balance Sheets(1)
As of
(in millions)March 31, 2024December 31, 2023
Derivative and Nonderivative Assets:   
Designated Hedging Instruments  
Forward currency contractsOther current assets$160 $140 
Forward currency contractsOther long-term assets125 107 
  285 246 
Non-Designated Hedging Instruments   
Forward currency contractsOther current assets17 20 
Total Derivative and Nonderivative Assets $302 $266 
Derivative and Nonderivative Liabilities:   
Designated Hedging Instruments  
Forward currency contractsOther current liabilities$3 $15 
Forward currency contractsOther long-term liabilities1 9 
Foreign currency-denominated debt(2)
Long-term debt966 988 
  969 1,012 
Non-Designated Hedging Instruments   
Forward currency contractsOther current liabilities17 38 
Total Derivative and Nonderivative Liabilities $986 $1,050 
(1) We classify derivative and nonderivative assets and liabilities as current when the settlement date of the contract is one year or less.
(2) Foreign currency-denominated debt is the €900 million debt principal associated with our 2027 Notes designated as a net investment hedge. A portion of this notional is subject to de-designation and re-designation based on changes in the underlying hedged item.

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Recurring Fair Value Measurements
On a recurring basis, we measure certain financial assets and financial liabilities at fair value based upon quoted market prices. Where quoted market prices or other observable inputs are not available, we apply valuation techniques to estimate fair value. FASB ASC Topic 820 establishes a three-level valuation hierarchy for disclosure of fair value measurements. The category of a financial asset or a financial liability within the valuation hierarchy is based upon the lowest level of input that is significant to the measurement of fair value. The three levels of the hierarchy are defined as follows:
Level 1 – Inputs to the valuation methodology are quoted market prices for identical assets or liabilities.
Level 2 – Inputs to the valuation methodology are other observable inputs, including quoted market prices for similar assets or liabilities and market-corroborated inputs.
Level 3 – Inputs to the valuation methodology are unobservable inputs based on management’s best estimate of inputs market participants would use in pricing the asset or liability at the measurement date, including assumptions about risk.
Assets and liabilities measured at fair value on a recurring basis consist of the following:
As of
 March 31, 2024December 31, 2023
(in millions)Level 1Level 2Level 3TotalLevel 1Level 2Level 3Total
Assets        
Money market funds and time deposits$1,979 $ $ $1,979 $454 $ $ $454 
Publicly-held equity securities20   20 18   18 
Hedging instruments 302  302  266  266 
Licensing arrangements  66 66   77 77 
 $1,999 $302 $66 $2,367 $472 $266 $77 $816 
Liabilities        
Hedging instruments$ $986 $ $986 $ $1,050 $ $1,050 
Contingent consideration liability  273 273   404 404 
Licensing arrangements  71 71   90 90 
 $ $986 $344 $1,330 $ $1,050 $494 $1,545 

Our investments in money market funds and time deposits are classified within Level 1 of the fair value hierarchy because they are valued using quoted market prices. These investments are classified as Cash and cash equivalents or Other current assets within our accompanying unaudited consolidated balance sheets, in accordance with GAAP and our accounting policies. In addition to $1.979 billion invested in money market funds and time deposits as of March 31, 2024 and $454 million as of December 31, 2023, we held $384 million in interest-bearing and non-interest-bearing bank accounts as of March 31, 2024 and $411 million as of December 31, 2023.

Our recurring fair value measurements using Level 3 inputs include those related to our contingent consideration liability. Refer to Note B – Acquisitions and Strategic Investments for a discussion of the changes in the fair value of our contingent consideration liability. In addition, our recurring fair value measurements using Level 3 inputs related to our licensing arrangements, including the contractual right to receive future royalty payments related to the Zytiga™ Drug. We maintain a financial asset and associated liability for our licensing arrangements measured at fair value within our unaudited consolidated balance sheets in accordance with FASB ASC Topic 825, Financial Instruments. We elected the fair value option to measure the financial asset and associated liability as it provides for consistency and comparability of these financial instruments with others. Refer to Note D – Hedging Activities and Fair Value Measurements to our audited financial statements contained in Item 8. Financial Statements and Supplementary Data of our most recent Annual Report on Form 10-K for additional information.

The recurring Level 3 fair value measurements of our licensing arrangements recognized within our accompanying unaudited consolidated balance sheets as of March 31, 2024 include the following significant unobservable inputs:
17

Licensing ArrangementsFair Value as of March 31, 2024Valuation TechniqueUnobservable InputRange
Weighted Average (1)
Financial Asset$66 millionDiscounted Cash FlowDiscount Rate15%15%
Projected Year of Payment2024-20252025
Financial Liability$71 millionDiscounted Cash FlowDiscount Rate12 %-15%13%
Projected Year of Payment2024-20262025
(1) Unobservable inputs relate to a single financial asset and liability. As such, unobservable inputs were not weighted by the relative fair value of the instruments. For projected year of payment, the amount represents the median of the inputs and is not a weighted average.

Changes in the fair value of our licensing arrangements' financial asset were as follows:
(in millions)
Balance as of December 31, 2023$77 
Proceeds from royalty rights(14)
Fair value adjustment (expense) benefit2 
Balance as of March 31, 2024$66 

Changes in the fair value of our licensing arrangements' financial liability were as follows:
(in millions)
Balance as of December 31, 2023$90 
Payments for royalty rights(22)
Fair value adjustment expense (benefit)2 
Balance as of March 31, 2024$71 

Non-Recurring Fair Value Measurements

We hold certain assets and liabilities that are measured at fair value on a non-recurring basis in periods after initial recognition. The fair value of a measurement alternative investment is not estimated if there are no identified events or changes in circumstances that may have a significant adverse effect on the fair value of the investment. Refer to Note B – Acquisitions and Strategic Investments for a discussion of our strategic investments and Note C – Goodwill and Other Intangible Assets for a discussion of the fair values of our intangible assets including goodwill.

The fair value of our outstanding debt obligations, excluding finance leases, was $10.224 billion as of March 31, 2024 and $8.735 billion as of December 31, 2023. We determined fair value by using quoted market prices for our publicly registered senior notes, classified as Level 1 within the fair value hierarchy, and face value for commercial paper, term loans and credit facility borrowings outstanding. Refer to Note E – Contractual Obligations and Commitments for a discussion of our debt obligations.

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NOTE E – CONTRACTUAL OBLIGATIONS AND COMMITMENTS

Borrowings and Credit Arrangements

We had total debt outstanding of $10.619 billion as of March 31, 2024 and $9.102 billion as of December 31, 2023, with current obligations of $1.085 billion as of March 31, 2024 and $531 million as of December 31, 2023. The debt maturity schedule for our long-term debt obligations is presented below:
(in millions, except interest rates)Issuance DateMaturity DateAs of
Coupon Rate(1)
March 31,
2024
December 31,
2023
March 2025 Senior Notes(3)
March 2022March 2025 1,105 0.750%
June 2025 Senior NotesMay 2020June 2025500 500 1.900%
March 2026 Senior NotesFebruary 2019March 2026255 255 3.750%
December 2027 Senior Notes(3)
November 2019December 2027972 995 0.625%
March 2028 Senior Notes(3)
March 2022March 2028810 829 1.375%
March 2028 Senior NotesFebruary 2018March 2028344 344 4.000%
March 2029 Senior NotesFebruary 2019March 2029272 272 4.000%
March 2029 Senior Notes(3)
February 2024March 2029810  3.375%
June 2030 Senior NotesMay 2020June 20301,200 1,200 2.650%
March 2031 Senior Notes(3)
March 2022March 2031810 829 1.625%
March 2032 Senior Notes(3)
February 2024March 20321,349  3.500%
March 2034 Senior Notes(3)
March 2022March 2034540 553 1.875%
November 2035 Senior Notes(2)
November 2005November 2035350 350 6.500%
March 2039 Senior NotesFebruary 2019March 2039450 450 4.550%
January 2040 Senior NotesDecember 2009January 2040300 300 7.375%
March 2049 Senior NotesFebruary 2019March 2049650 650 4.700%
Unamortized Debt Issuance Discount and Deferred Financing Costs2024 - 2049(81)(65)
Finance Lease ObligationVarious4 5 
Long-term debt$9,534 $8,571 
(1) Coupon rates are semi-annual, except for the euro-denominated notes, which bear an annual coupon.
(2) Corporate credit rating improvements may result in a decrease in the adjusted interest rate on our November 2035 Notes to the extent that our lowest credit rating is above BBB- or Baa3. The interest rates on our November 2035 Notes will be permanently reinstated to the issuance rate of 6.25% if the lowest credit ratings assigned to these senior notes is either A- or A3 or higher.
(3) These notes are euro-denominated and presented in U.S. dollars based on the exchange rate in effect as of March 31, 2024 and December 31, 2023, respectively.

Revolving Credit Facility

On May 10, 2021, we entered into a $2.750 billion revolving credit facility (2021 Revolving Credit Facility) with a global syndicate of commercial banks, initially scheduled to mature on May 10, 2026, with one-year extension options, subject to certain conditions. On March 1, 2023, we entered into an amendment of the 2021 Revolving Credit Facility credit agreement, which provided for an extension of the scheduled maturity date to May 10, 2027 and replaced the London Interbank Offered Rate (LIBOR) with the Secured Overnight Financing Rate (SOFR) as the Eurocurrency Rate for Dollars, including applicable credit spread adjustments and relevant SOFR benchmark provisions, among other things described under Financial Covenant below. This facility provides backing for our commercial paper program, and outstanding commercial paper directly reduces borrowing capacity under the 2021 Revolving Credit Facility. We had no amounts outstanding under the 2021 Revolving Credit Facility as of March 31, 2024 or December 31, 2023.

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Financial Covenant

As of March 31, 2024, we were in compliance with the financial covenant required by the 2021 Revolving Credit Facility.
Covenant RequirementActual
 as of March 31, 2024as of March 31, 2024
Maximum permitted leverage ratio(1)
3.75 times2.08 times
(1) Ratio of total debt to deemed consolidated Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA), as defined by the 2021 Revolving Credit Facility credit agreement, as amended.

The 2021 Revolving Credit Facility includes the financial covenant requirement for all of our credit arrangements that we maintain the maximum permitted leverage ratio of 3.75 times for the remaining term. The credit agreement provides for higher leverage ratios, at our election, for the period following a Qualified Acquisition, as defined by the agreement, for which consideration exceeds $1.000 billion. In the event of such an acquisition, for the four succeeding quarters immediately following, including the quarter in which the acquisition occurs, the maximum permitted leverage ratio is 4.75 times. It steps down for the fifth, sixth and seventh succeeding quarters to 4.50 times, 4.25 times and 4.00 times, respectively. Thereafter, a maximum leverage ratio of 3.75 times is required through the remaining term of the 2021 Revolving Credit Facility. We have elected to designate the Axonics acquisition as a Qualified Acquisition under the credit agreement, and upon closing, will increase the maximum permitted leverage ratio at that time. The agreement also provides for an exclusion of any debt incurred to fund a Qualified Acquisition, until the earlier of the acquisition close date or date of abandonment, termination or expiration of the acquisition agreement. As of March 31, 2024, we excluded $2.138 billion of debt incurred from our leverage ratio calculation in connection with the Axonics acquisition.

The financial covenant requirement, as amended on March 1, 2023, provides for an exclusion from the calculation of consolidated EBITDA, as defined by the credit agreement, through maturity, of certain charges and expenses. The credit agreement amendment reset the starting date for purposes of calculating such permitted exclusions in each case from March 31, 2021 to December 31, 2022. Permitted exclusions include any non-cash charges and up to $500 million in restructuring charges and restructuring-related expenses related to our current or future restructuring plans. As of March 31, 2024, we had $273 million of the restructuring charge exclusion remaining. In addition, any cash litigation payments (net of any cash litigation receipts), as defined by the agreement, are excluded from the calculation of consolidated EBITDA, as defined by the agreement, provided that the sum of any excluded net cash litigation payments do not exceed $1.000 billion plus all accrued legal liabilities as of December 31, 2022. As of March 31, 2024, we had $1.457 billion of the litigation exclusion remaining.

Any inability to maintain compliance with this covenant could require us to seek to renegotiate the terms of our credit arrangements or seek waivers from compliance with this covenant, both of which could result in additional borrowing costs. Further, there can be no assurance that our lenders would agree to such new terms or grant such waivers on terms acceptable to us. In this case, all 2021 Revolving Credit Facility commitments would terminate, and any amounts borrowed under the facility would become immediately due and payable. Furthermore, any termination of our 2021 Revolving Credit Facility may negatively impact the credit ratings assigned to our commercial paper program, which may impact our ability to refinance any then outstanding commercial paper as it becomes due and payable.

Commercial Paper

Our commercial paper program is backed by the 2021 Revolving Credit Facility. We did not have any commercial paper outstanding as of March 31, 2024 and December 31, 2023.

Senior Notes

We had senior notes outstanding of $10.690 billion as of March 31, 2024 and $9.136 billion as of December 31, 2023. Our senior notes were issued in public offerings, are redeemable prior to maturity and are not subject to sinking fund requirements. Our senior notes are unsecured, unsubordinated obligations and rank on parity with each other. These notes are effectively junior to liabilities of our subsidiaries (refer to Other Arrangements below).

In February 2024, American Medical Systems Europe B.V. (AMS Europe), an indirect, wholly owned subsidiary of Boston Scientific, completed a registered public offering (the Offering) of €2.000 billion in aggregate principal amount of euro-denominated senior notes comprised of €750 million of 3.375% Senior Notes due 2029 and €1.250 billion of 3.500% Senior Notes due 2032 (collectively, the 2024 Eurobonds). Boston Scientific has fully and unconditionally guaranteed all of AMS Europe's obligations under the 2024 Eurobonds, and no other subsidiary of Boston Scientific will guarantee these obligations.
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AMS Europe is a “finance subsidiary” as defined in Rule 13-01(a)(4)(vi) of Regulation S-X. The financial condition, results of operations and cash flows of AMS Europe are consolidated in the financial statements of Boston Scientific. The Offering resulted in cash proceeds of $2.145 billion, net of investor discounts and issuance costs.

We used the net proceeds from the Offering of the 2024 Eurobonds to fund the repayment at maturity of our 3.450% Senior Notes due March 2024 and to pay accrued and unpaid interest with respect to such notes. Additionally, we plan to use the remaining net proceeds from the Offering to fund a portion of the purchase price of the Axonics acquisition and to pay related fees and expenses, and for general corporate purposes. The transaction is expected to be completed in the second half of 2024, subject to the expiration or termination of the waiting period under the HSR Act and the satisfaction (or waiver) of other customary closing conditions. If (i) the Axonics acquisition is not consummated on or before the later of (x) January 8, 2025 (as such date may be extended in accordance with the merger agreement to no later than January 8, 2026) and (y) the date that is five business days after any later date to which we and Axonics may agree to extend the "Outside Date" in the merger agreement or (ii) AMS Europe notifies the trustee that we will not pursue consummation of the Axonics Acquisition, AMS Europe will be required to redeem each series of the notes at a special mandatory redemption price equal to 101% of the aggregate principal amount of such series of notes, plus accrued and unpaid interest, if any, to, but excluding, the date on which the notes will be redeemed. Refer to Note B – Acquisitions and Strategic Investments for more information on the Axonics acquisition.

Other Arrangements

We have accounts receivable factoring programs in certain European countries and with commercial banks in China and Japan which include promissory notes discounting programs. We account for our factoring programs as sales under FASB ASC Topic 860. We have no retained interest in the transferred receivables, other than collection and administration, and once sold, the accounts receivable are no longer available to satisfy creditors in the event of bankruptcy. Amounts de-recognized for accounts and notes receivable, which are excluded from Trade accounts receivable, net within our accompanying unaudited consolidated balance sheets, are aggregated by contract denominated currency below (in millions):
Factoring ArrangementsAs of March 31, 2024As of December 31, 2023
Amount
De-recognized
Weighted Average
Interest Rate
Amount
De-recognized
Weighted Average
Interest Rate
Euro denominated$175 5.5 %$206 5.1 %
Yen denominated191 0.6 %214 0.6 %
Renminbi denominated
21 1.8 %14 2.9 %

Other Contractual Obligations and Commitments

We had outstanding letters of credit of $174 million as of March 31, 2024 and December 31, 2023, which consisted primarily of bank guarantees and collateral for workers' compensation insurance arrangements. As of March 31, 2024 and December 31, 2023 we had not recognized a related liability for our outstanding letters of credit within our accompanying unaudited consolidated balance sheets.

We have a supplier financing program offered primarily in the U.S. that enables our suppliers to opt to receive early payment at a nominal discount, while allowing us to lengthen our payment terms and optimize working capital. Our standard payment term in the U.S. is 90 days. All outstanding payables related to the supplier finance program are classified within Accounts Payable within our unaudited consolidated balance sheets and were $140 million as of March 31, 2024 and $152 million as of December 31, 2023.

Refer to Note E – Contractual Obligations and Commitments to our audited financial statements contained in Item 8. Financial Statements and Supplementary Data of our most recent Annual Report on Form 10-K for additional information on our borrowings and credit agreements.

21

NOTE F – SUPPLEMENTAL BALANCE SHEET INFORMATION

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

Trade accounts receivable, net
 As of
(in millions)March 31, 2024December 31, 2023
Trade accounts receivable$2,413 $2,338 
Allowance for credit losses(109)(110)
 $2,304 $2,228 

The following is a roll forward of our Allowance for credit losses:
Three Months Ended March 31,
(in millions)20242023
Beginning balance$110 $109 
Credit loss expense9 16 
Write-offs(10)(6)
Ending balance$109 $118 

Inventories
 As of
(in millions)March 31, 2024December 31, 2023
Finished goods$1,555 $1,537 
Work-in-process188 174 
Raw materials818 773 
 $2,561 $2,484 
Other current assets
 As of
(in millions)March 31, 2024December 31, 2023
Restricted cash and restricted cash equivalents$93 $130 
Derivative assets177 159 
Licensing arrangements44 47 
Other357 285 
 $671 $621 
22


Property, plant and equipment, net
 As of
(in millions)March 31, 2024December 31, 2023
Land$141 $140 
Buildings and improvements1,856 1,843 
Equipment, furniture and fixtures3,550 3,503 
Capital in progress880 857 
 6,427 6,343 
Less: accumulated depreciation3,530 3,484 
 $2,897 $2,859 

Depreciation expense was $90 million for the first quarter of 2024 and $82 million for the first quarter of 2023.

Other long-term assets

 As of
(in millions)March 31, 2024December 31, 2023
Restricted cash equivalents$74 $60 
Operating lease right-of-use assets430 439 
Derivative assets125 107 
Investments429 413 
Licensing arrangements22 30 
Indemnification asset175 176 
Other341 306 
 $1,596 $1,531 
Accrued expenses
 As of
(in millions)March 31, 2024December 31, 2023
Legal reserves$129 $206 
Payroll and related liabilities749 1,051 
Rebates384 389 
Contingent consideration182 304 
Other639 696 
 $2,083