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SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 11-K
Annual Report Pursuant to Section 15(d) of the
Securities Exchange Act of 1934
(Mark One):
|X| Annual report pursuant to Section 15(d) of the Securities Exchange Act
of 1934 (No Fee Required)
For the fiscal year ended December 31, 2001
OR
|_| Transition report pursuant to Section 15(d) of the Securities Exchange
Act of 1934 (No Fee Required)
For the transition period from to
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Commission file number: 1-11083
A. Full title of the plan and the address of the plan, if different from
that of the issuer named below:
Boston Scientific Corporation
401(k) Retirement Savings Plan
(formerly Boston Scientific Corporation
401(k) Savings Plan)
B. Name of issuer of the securities held pursuant to the plan and the
address of its principal executive office:
Boston Scientific Corporation
One Boston Scientific Place
Natick, MA 01760-1537
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AUDITED FINANCIAL STATEMENTS
AND SUPPLEMENTAL SCHEDULE
BOSTON SCIENTIFIC CORPORATION
401(K) RETIREMENT SAVINGS PLAN
(FORMERLY BOSTON SCIENTIFIC CORPORATION
401(K) SAVINGS PLAN)
YEAR ENDED DECEMBER 31, 2001
BOSTON SCIENTIFIC CORPORATION 401(K) RETIREMENT SAVINGS PLAN
(FORMERLY BOSTON SCIENTIFIC CORPORATION 401(K) SAVINGS PLAN)
AUDITED FINANCIAL STATEMENTS
AND SUPPLEMENTAL SCHEDULE
YEAR ENDED DECEMBER 31, 2001
CONTENTS
Report of Ernst & Young LLP, Independent Auditors..................... 1
AUDITED FINANCIAL STATEMENTS
Statements of Net Assets Available for Plan Benefits.................. 2
Statement of Changes in Net Assets Available for Plan Benefits........ 3
Notes to Financial Statements......................................... 4-8
SUPPLEMENTAL SCHEDULE
Schedule H, Line 4i - Schedule of Assets (Held at End of Year)........ 9
Report of Ernst & Young LLP, Independent Auditors
401(k) Plan Committee
Boston Scientific Corporation 401(k) Retirement Savings Plan (formerly Boston
Scientific Corporation 401(k) Savings Plan)
We have audited the accompanying statements of net assets available for plan
benefits of the Boston Scientific Corporation 401(k) Retirement Savings Plan
(the Plan) (formerly Boston Scientific Corporation 401(k) Savings Plan) as of
December 31, 2001 and 2000, and the related statement of changes in net assets
available for plan benefits for the year ended December 31, 2001. These
financial statements are the responsibility of the Plan's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for plan benefits of the Plan at
December 31, 2001 and 2000, and the changes in its net assets available for plan
benefits for the year ended December 31, 2001, in conformity with accounting
principles generally accepted in the United States.
Our audits were performed for the purpose of forming an opinion on the basic
financial statements taken as a whole. The accompanying supplemental schedule of
assets (held at end of year) as of December 31, 2001, is presented for purposes
of additional analysis and is not a required part of the financial statements
but is supplementary information required by the Department of Labor's Rules and
Regulations for Reporting and Disclosure under the Employee Retirement Income
Security Act of 1974. The supplemental schedule is the responsibility of the
Plan's management. The supplemental schedule has been subjected to the auditing
procedures applied in our audits of the basic financial statements and, in our
opinion, is fairly stated in all material respects in relation to the financial
statements taken as a whole.
/s/ ERNST & YOUNG LLP
Boston, Massachusetts
April 19, 2002
Boston Scientific Corporation 401(k) Retirement Savings Plan
(formerly Boston Scientific Corporation 401(k) Savings Plan)
Statements of Net Assets Available for Plan Benefits
December 31
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2001 2000
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Assets
Investments $285,569,203 $255,840,616
Receivables:
Participant contributions 785,529 891,223
Employer contribution 1,438,809 280,598
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Total receivables 2,224,338 1,171,821
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Net assets available for plan benefits $287,793,541 $257,012,437
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See accompanying notes to the financial statements.
2
Boston Scientific Corporation 401(k) Retirement Savings Plan
(formerly Boston Scientific Corporation 401(k) Savings Plan)
Statement of Changes in Net Assets Available for Plan Benefits
Year Ended December 31, 2001
Additions to net assets attributed to:
Investment Income:
Interest $ 2,059,236
Dividends 3,130,739
Net depreciation in fair value of investments (492,793)
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4,697,182
Contributions:
Participants 32,749,940
Employer 12,087,610
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44,837,550
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Total additions 49,534,732
Deductions from net assets attributed to:
Benefits paid to participants 18,716,808
Service fees 36,820
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Total deductions 18,753,628
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Net increase 30,781,104
Net assets available for plan benefits:
Beginning of year 257,012,437
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End of year $ 287,793,541
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See accompanying notes to the financial statements.
3
Boston Scientific Corporation 401(k) Retirement Savings Plan
(formerly Boston Scientific Corporation 401(k) Savings Plan)
Notes To Financial Statements
December 31, 2001
1. DESCRIPTION OF THE PLAN
The following description of the Boston Scientific Corporation (the Company)
401(k) Retirement Savings Plan (the Plan) (formerly Boston Scientific
Corporation 401(k) Savings Plan) provides only general information. Participants
should refer to the Summary Plan Description and the Plan document for a more
complete description of the Plan's provisions. Copies are available from the
401(k) Plan Committee.
GENERAL
The Plan is a defined contribution plan covering all eligible employees who have
completed thirty days of service and have attained twenty-one years of age. It
is subject to the provisions of the Employee Retirement Income Security Act of
1974 (ERISA).
CONTRIBUTIONS
A participant may contribute between 1% and 15% of his or her pretax annual
compensation each year, as defined. In addition, a participant may contribute
between 1% and 10% of his or her compensation on an after-tax basis each year.
The Plan was amended, effective January 1, 2000, to modify the Company matching
contribution. The amount of the Company's matching contribution shall be equal
to (i) 75% of the elective contributions made on behalf of the participant for
the period which do not exceed 1% of the participant's compensation for such
period, plus (ii) 50% of the elective contributions made on behalf of the
participant for the period which exceed 1% but do not exceed 4% of the
participant's compensation.
The Plan was amended, effective January 1, 2001, to further modify the Company's
matching contribution. The amount of the Company's matching contribution shall
be equal to (i) 100% of the elective contributions made on behalf of the
participant for the period which do not exceed 2% of the participant's
compensation for such period, plus (ii) 50% of the elective contributions made
on behalf of the participant for the period which exceed 2% but do not exceed 4%
of the participant's compensation.
In 1998, a Plan amendment established an investment fund to hold shares of
Pfizer Inc. common stock transferred from the Pfizer Savings and Investment Plan
for Schneider employees. No contributions can be made to this fund and any
earnings on this fund will be allocated to a participant's current investment
elections under the Plan. A participant can transfer amounts out of the Pfizer
stock fund to other investment funds within the Plan.
4
Boston Scientific Corporation 401(k) Retirement Savings Plan
(formerly Boston Scientific Corporation 401(k) Savings Plan)
Notes To Financial Statements (continued)
1. DESCRIPTION OF THE PLAN (CONTINUED)
At the discretion of the Board, the Company may make an additional discretionary
contribution. Employees with three or more years of credited service on December
31, 1992 will be fully vested in such amounts and all other employees will
become fully vested in such amounts after five years of credited service (20%
vesting after each year). No additional discretionary contribution was made in
2001.
PARTICIPANT ACCOUNTS AND VESTING
A participant can allocate his or her account among various investment funds.
Each participant's account is credited with the participant's contribution, the
Company's contribution and an allocation of Plan earnings. The allocations of
earnings are based upon each participant's account balance by fund in relation
to all participants' account balances by fund. Each participant is fully vested
in his or her account, except as discussed above regarding discretionary
contributions. The benefit to which a participant is entitled is the benefit
included in the participant's account.
PARTICIPANT LOANS
A participant may borrow from his or her fund account a minimum of $1,000 up to
a maximum equal to the lesser of $50,000 or 50 percent of his or her account
balance. Loan terms range up to 5 years or up to 10 years for the purchase of a
primary residence. However, participants of the defined contribution plans of
acquired companies may retain the loan terms granted under their former plans.
Loans are secured by the balance in the participant's account and bear interest
at a rate commensurate with local prevailing rates as determined by the
Company's 401(k) Plan Committee. Interest rates on loans outstanding at December
31, 2001 ranged from 7.00% to 10.75%. Principal and interest are paid ratably
through payroll deductions.
PAYMENT OF BENEFITS
Upon retirement or termination of service, a participant either receives a
lump-sum amount equal to the value of his or her account, a variable or a fixed
installment option. If a participant's balance is greater than a preset amount,
he or she has the option of leaving the funds invested in the Plan. While
employed at the Company, a participant may withdraw all or a portion of his or
her 401(k) contributions to the extent necessary to meet a financial hardship,
as defined. Effective May 1, 2002, the Plan will no longer provide for annuity
or installment forms of distribution for employees (1) who terminate employment
on or after that date or (2) who terminate their employment before that date and
have not yet begun receiving their Plan benefits by that date.
The Plan also allows withdrawals from a rollover account, for any reason, and
allows totally disabled participants, as defined in the long-term disability
contract, to take withdrawals at any time regardless of age. Participants may
also make withdrawals for any reason after attaining age 59 1/2.
5
Boston Scientific Corporation 401(k) Retirement Savings Plan
(formerly Boston Scientific Corporation 401(k) Savings Plan)
Notes To Financial Statements (continued)
1. DESCRIPTION OF THE PLAN (CONTINUED)
PLAN TERMINATION
Although it has not expressed any intent to do so, the Company has the right
under the Plan to discontinue its contributions at any time and to terminate the
Plan subject to the provisions of ERISA.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF ACCOUNTING
The accounting records of the Plan are maintained on the accrual basis.
INVESTMENT VALUATION AND INCOME RECOGNITION
The Plan's investments are stated at fair value. Shares of registered investment
companies are valued at quoted market prices, which represent the net asset
value of shares held by the Plan at year-end. Units of the Retirement Savings
Trust are valued at net asset value at year-end. Securities listed on a
registered stock exchange are valued by the Plan Administrator at the last
reported sales price on the last business day of the Plan year. Participant
notes receivable are valued at cost, which approximates fair value.
Purchases and sales of investments are recorded on a trade-date basis. Interest
income is accrued when earned. Dividend income is recorded on the ex-dividend
date. Capital gain distributions are included in dividend income.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of additions and deductions during the reporting period.
Actual results could differ from these estimates.
6
Boston Scientific Corporation 401(k) Retirement Savings Plan
(formerly Boston Scientific Corporation 401(k) Savings Plan)
Notes To Financial Statements (continued)
3. INVESTMENTS
The following presents investments that represent 5 percent or more of the
Plan's net assets.
December 31,
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2001 2000
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Boston Scientific Common Stock $77,771,753 $42,040,677
Vanguard 500 Index Fund 52,724,101 54,289,743
Vanguard US Growth Fund 37,240,298 50,389,362
Vanguard Retirement Savings Trust 24,363,100 18,235,862
Pfizer Common Stock 23,376,027 29,617,226
Vanguard Wellington Fund 19,508,308 15,525,165
Vanguard International Growth Fund -- 15,784,211
During 2001, the Plan's investments (including gains and losses on investments
bought and sold, as well as held during the year) depreciated in value by
$492,793 as follows:
Mutual funds $(30,259,494)
Common stock 29,766,701
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$ (492,793)
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4. TRANSACTIONS WITH PARTIES-IN-INTEREST
The Plan invests in shares of mutual funds managed by an affiliate of Vanguard
Fiduciary Trust Company (Vanguard). Vanguard acts as trustee for only those
investments as defined by the Plan. Transactions in such investments qualify as
party-in-interest transactions, which are exempt from the prohibited transaction
rules.
Fees for legal, accounting and other services rendered during the year by
parties-in-interest were paid by the Company.
7
Boston Scientific Corporation 401(k) Retirement Savings Plan
(formerly Boston Scientific Corporation 401(k) Savings Plan)
Notes To Financial Statements (continued)
5. INCOME TAX STATUS
The Plan has received a determination letter from the Internal Revenue Service
dated March 4, 2002, stating that the Plan is qualified under Section 401(a) of
the Internal Revenue Code (the Code) and, therefore, the related trust is exempt
from taxation. Once qualified, the Plan is required to operate in conformity
with the Code to maintain its qualification. The Plan Sponsor has indicated that
it will take the necessary steps, if any, to maintain the Plan's qualified
status.
6. SUBSEQUENT EVENTS
Subsequent to year-end, assets totaling $3,679,155 from Company acquisitions
made during 2001 were merged into the Plan.
8
Boston Scientific Corporation 401(k) Retirement Savings Plan
(formerly Boston Scientific Corporation 401(k) Savings Plan)
EIN #04-2695240
Plan #001
Schedule H, Line 4i - Schedule of Assets (Held at End of Year)
December 31, 2001
Current
Identity of Issue Shares or Units Value
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INVESCO:
Dynamics Fund 572,892 $ 9,126,164
* Vanguard Group:
500 Index Fund 497,914 52,724,101
Total Bond Market Index Fund 863,759 8,758,513
International Growth Fund 925,282 13,888,480
U.S. Growth Fund 1,975,613 37,240,298
Wellington Fund 715,639 19,508,308
Windsor II Fund 378,018 9,673,479
Retirement Savings Trust 24,363,100 24,363,100
* Boston Scientific Corporation
Common Stock Fund 3,224,368 77,771,753
Pfizer Common Stock Fund 586,600 23,376,027
* Participants' notes receivable 7% - 10.75% 9,138,980
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$ 285,569,203
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* Indicates party-in-interest to the Plan.
9
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
trustee (or other persons who administer the employee benefit plan) have duly
caused this annual report to be signed on its behalf by the undersigned hereunto
duly authorized.
Boston Scientific Corporation
401(k) Retirement Savings Plan
Date: June 26, 2002 By: /s/ Lawrence C. Best
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Lawrence C. Best
Plan Administrator and Senior Vice President -
Finance and Administration and Chief Financial
Officer of Boston Scientific Corporation