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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10-K
ANNUAL REPORT PURSUANT TO
SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2000 Commission File No. 1-11083
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BOSTON SCIENTIFIC CORPORATION
(Exact name of Company as specified in its charter)
DELAWARE 04-2695240
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
ONE BOSTON SCIENTIFIC PLACE, NATICK, MASSACHUSETTS 01760-1537
(Address, including zip code, of principal executive offices)
(508) 650-8000
(Company's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
COMMON STOCK, $.01 PAR VALUE PER SHARE
(Title of class)
Securities registered pursuant to Section 12(g) of the Act:
NONE
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Indicate by check mark whether the Company (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 Company was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
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Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of Company's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to the
Form 10-K.[ ]
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The aggregate market value of Common Stock held by non-affiliates (persons other
than directors, executive officers, and related family entities) of the Company
was approximately $4.9 billion based on the closing price of the Common Stock
on March 16, 2001.
The number of shares outstanding of the Company's Common Stock as of March 16,
2001 was 400,296,873.
DOCUMENTS INCORPORATED BY REFERENCE
The Company's 2000 Consolidated Financial Statements for the year ended December
31, 2000 which are filed with the Securities and Exchange Commission (the
"Commission") as an exhibit hereto and the Company's 2001 Proxy Statement to be
filed with the Securities and Exchange Commission on or about April 6, 2001 are
incorporated by reference into Parts I, II and III hereof.
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PART I
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ITEM 1. BUSINESS
THE COMPANY
Boston Scientific Corporation (the "Company") is a worldwide developer,
manufacturer and marketer of less invasive medical devices. The Company's
products are used in a broad range of interventional medical specialties,
including interventional cardiology, electrophysiology, gastroenterology,
neuro-endovascular therapy, pulmonary medicine, interventional radiology,
oncology, urology and vascular surgery. The Company's products are generally
inserted into the human body through natural openings or small incisions in the
skin and can be guided to most areas of the anatomy to diagnose and treat a wide
range of medical problems. These products provide effective alternatives to
traditional surgery by reducing risk, trauma, cost, procedure time and the need
for aftercare.
The Company's history began in the late 1960s when the Company's co-founder,
John Abele, acquired an equity interest in Medi-tech, Inc., a development
company. Medi-tech's initial products, a family of steerable catheters, were
introduced in 1969. They were used in some of the first minimally invasive
procedures performed, and versions of these catheters are still being sold
today. In 1979, John Abele joined with Pete Nicholas to form the Company, which
indirectly acquired Medi-tech, Inc. This acquisition began a period of active,
focused marketing, new product development and organizational growth. Since
then, the Company's net sales have increased substantially, growing from $1.8
million in 1979 to $2.7 billion in 2000.
The Company's growth has been fueled in part by strategic acquisitions and
alliances designed to improve the ability of the Company to take advantage of
growth opportunities in less invasive medicine. These acquisitions have helped
the Company to achieve a strategic mass which allows it to offer one of the
broadest product lines in the world for use in less invasive procedures. The
Company's strategic mass has also enabled it to compete more effectively in, and
better absorb the pressures of, the current health care environment of cost
containment, managed care, large buying groups and hospital consolidations.
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BUSINESS STRATEGY
The Company's mission is to improve the quality of patient care and the
productivity of health care delivery through the development and advocacy of
less invasive medical devices and procedures. The Company seeks to accomplish
this mission through the continuing refinement of existing products and
procedures and the investigation and development of new technologies which can
reduce risk, trauma, cost, procedure time and the need for aftercare. The
Company's strategy has been, and will continue to be, to grow by identifying
those specific therapeutic and diagnostic areas which satisfy the Company's
mission and provide attractive opportunities for long-term growth and by making
the investments necessary to capitalize on these opportunities.
As part of its global operations business strategy, the Company initiated during
2000 a worldwide operations plan to increase productivity and enhance innovation
through a series of initiatives designed to improve supply chain effectiveness,
strengthen manufacturing process control, and optimize the Company's network of
plants. Supply chain and manufacturing process control programs are designed to
lower inventory levels and the cost of manufacturing and to minimize inventory
write-downs. The plant optimization initiative is focused on consolidating
manufacturing operations along product lines and shifting significant amounts of
production to Company facilities in Miami and Ireland and contract
manufacturing. As a result of the shift in manufacturing operations among these
facilities, the Company will discontinue manufacturing operations at three of
its United States facilities. Approximately 1,950 manufacturing, manufacturing
support and management employees are expected to be affected by the plan over
the next twelve months.
Key elements of the Company's business strategy are as follows:
Product Diversity. The Company offers products in numerous product categories
which are used by physicians throughout the world in a broad range of diagnostic
and therapeutic procedures. The breadth and diversity of the Company's product
lines permit medical specialists to satisfy many of their less invasive medical
device requirements from a single source. The scope of its products and markets
also reduces the Company's vulnerability to change in the competitive,
regulatory and technological environments for any single product or market.
Product Innovation. The Company is committed to driving growth through
harnessing technological innovation both in the near and long term. The
Company's approach to enhancing innovation includes a mixture of tactical and
strategic initiatives that are designed to offer sustainable growth through
focusing on and delivering the products currently in its pipeline as well as
strengthening its product development processes and tools. The Company believes
that streamlining and coordinating its technology pipeline and new product
development is essential to its ability to stimulate growth and maintain
leadership positions in its markets. By centralizing platform technology
development at the corporate level, the Company is able to pursue technologies
that can be leveraged across multiple markets. Simultaneously, the interaction
of the Company's product management teams and sales representatives with the
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worldwide medical community facilitates new product development at the
divisional level to address the needs and desires of the Company's physician
customers.
Operational Excellence. The Company believes that improving its supply chain
effectiveness, strengthening its manufacturing processes and optimizing its
plant network will increase operational efficiencies within the organization and
generate savings. By centralizing its operations at the corporate level and
shifting manufacturing along product lines, the Company will be better
positioned to leverage its existing resources and concentrate on new product
development and launch.
Focused Marketing. The Company markets its products through six principal
divisions: Scimed, EP Technologies, Medi-tech, Target Therapeutics, Microvasive
Endoscopy and Microvasive Urology. Each of the Company's divisions focuses on
physicians who specialize in the diagnosis and treatment of different medical
conditions and offers products to satisfy their needs. The Company believes that
this focused disease state management enables it to develop highly knowledgeable
and dedicated sales representatives and to foster close professional
relationships with physicians.
International Presence. Maintaining and expanding its international presence is
an important component of the Company's long term growth plan. Currently, the
Company operates international manufacturing facilities in Ireland and has
direct marketing and sales subsidiaries or distribution arrangements throughout
the world. Through its international presence, the Company seeks to increase net
sales and market share, accelerate the time within which new products can be
brought to market and gain access to worldwide technological developments that
may be implemented across its product lines.
Active Participation in the Medical Community. The Company believes that it has
excellent working relationships with physicians and others in the medical
industry which enable it to gain a detailed understanding of new therapeutic and
diagnostic alternatives, and to respond quickly to the changing needs of
physicians and patients. The Company enhances its presence in the medical
community through active participation in medical meetings, by conducting
comprehensive training and educational activities and through employee-authored
articles in medical journals and textbooks. The Company believes that these
activities and its advocacy positions contribute to the medical community's
understanding and adoption of less invasive techniques and the expansion of
these techniques into new therapeutic and diagnostic areas.
Corporate Culture. Management believes that success and leadership evolve from a
motivating corporate culture which rewards achievement, respects and values
individual employees and customers, and has a long-term focus on quality,
technology, integrity and service. The Company believes that its success is
attributable in large part to the high caliber of its employees and the
Company's commitment to respecting the values on which its success has been
based.
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Strategic Acquisitions and Alliances. In recent years, the Company has sought
out strategic acquisitions, alliances and venture opportunities which complement
or expand its existing product lines or enhance its technological position.
Although the Company did not make any significant acquisitions in 2000, it
created several alliances with third parties during the year which further
strengthened and diversified its product offering position.
In addition, during the first quarter of 2001, the Company announced the
following strategic initiatives:
* The Company signed a definitive agreement to acquire Interventional
Therapeutics, Inc.("IVT"), a medical device company that develops,
manufactures and markets less invasive medical devices for use in
interventional cardiology, including the Cutting Balloon(TM) catheter
and the Infiltrator(R) transluminal drug delivery catheter. The
acquisition is scheduled to be completed during the second quarter of
2001.
* The Company acquired Embolic Protection, Inc., a developer of embolic
protection medical devices.
* The Company acquired Quanam Medical Corporation ("Quanam"), a
manufacturer of medical devices that specializes in drug delivery
systems.
* The Company acquired Catheter Innovations, Inc., a developer and
manufacturer of venous access products.
During 2001, the Company expects that it will continue to seek out and review
opportunities for acquisitions and strategic alliances consistent with its
corporate mission.
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PRODUCTS
The Company's products are broadly categorized as vascular or nonvascular,
depending on the anatomical system and procedure in which a product is intended
to be used. Generally, vascular products are employed in procedures affecting
the heart and systems which carry blood, and nonvascular products are employed
in procedures affecting other systems and organs. In 2000, approximately 79% of
the Company's net sales were derived from its vascular business and
approximately 21% from its nonvascular business.
The Company's principal products are offered in the following medical areas:
Coronary Revascularization. The Company markets a broad line of products used to
treat patients with atherosclerosis. Atherosclerosis, a coronary vessel disease
and a principal cause of heart attacks, is characterized by a thickening of the
walls of the arteries and a narrowing of arterial lumens (openings) caused by
the progressive development of deposits of plaque. Atherosclerosis results in
reduced blood flow to the muscle of the heart. The majority of the Company's
products in this market are used in percutaneous transluminal coronary
angioplasty ("PTCA") and percutaneous transluminal coronary rotational
atherectomy. The Company's products in this market include PTCA balloon
catheters, the Rotablator(R) and Rotalink(R) rotational atherectomy systems,
guide wires, guide catheters and diagnostic catheters. During 2000, the Company
received approval from the United States Food and Drug Administration ("FDA") to
market its Maverick(R) balloon dilatation catheter, available in both Rapid
Exchange and Over-the-Wire versions. The Maverick catheter was introduced for
commercial sale in the United States, Japan and certain European countries
during the first quarter of 2001. The Company's pending acquisition of IVT will
also broaden the Company's interventional cardiology product offerings by adding
the Cutting Balloon(TM), a balloon angioplasty device that combines features of
conventional angioplasty with advanced microsurgical procedures.
Coronary Stents. The Company markets both balloon-expandable and self-expanding
coronary stent systems. Coronary stents are tiny, metal devices used in the
treatment of coronary artery disease and implanted in patients to prop open
arteries and facilitate blood flow to the heart. The Company's most important
products in this category incorporate the NIR(R) balloon-expandable coronary
stent developed and manufactured by Medinol Ltd., Israel, with which the Company
has an exclusive worldwide distribution agreement for stent products. During
2000, the Company introduced the NIR(R) w/ SOX(TM) Monorail(TM) stent system in
certain European countries and the NIRoyal(TM) Advance Coronary Monorail(TM)
stent system in the United States. In addition, during the first quarter of
2001, the Company introduced in the United States the NIRoyal(TM) Elite and
NIR(R) Elite(TM) coronary stent systems, each available in Rapid Exchange
and Over-the-Wire versions. The Company has already launched or intends to
launch in 2001 (pending regulatory approval) these products in selected
international markets.
The Company has also expanded its stent development efforts to include an
internally developed stent platform. Generations of this stainless steel,
balloon-expandable stent are designed to be compatible with the Company's SOX
system technology (a stent sleeve that helps protect the ends of the stent for a
smooth interface between the stent system and arterial wall) and leveragable
into both coronary and peripheral applications. The Company's internally
developed coronary stent is expected to be introduced in certain international
markets later in 2001, pending regulatory approval.
Through a strategic alliance with Angiotech Pharmaceuticals, Inc., the Company
holds a co-exclusive license for the use of paclitaxel on intraluminal devices
to inhibit restenosis as well as other applications. In October, the Company,
with the approval of the Freiburg Ethics Commission International, initiated
Phase I clinical trials in Germany of paclitaxel coated coronary stents.
Further, the Company's acquisition of Quanam will help broaden its drug-delivery
portfolio with additional implant-based technologies and a family of proprietary
biomaterials.
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Fluid Management. The Company markets a broad line of fluid delivery sets,
pressure monitoring systems, custom kits and accessories that provide for the
injection of contrast and saline, or withdrawal and the disposal of bodily
waste.
Electrophysiology. The Company's electrophysiology product offerings include
catheters and systems for use in less invasive procedures to diagnose and treat
tachyarrhythmias (abnormally fast heart rhythms). The Company markets RF
generators, mapping systems, intracardiac ultrasound and steerable ablation
catheters, many of which incorporate proprietary steering, temperature
monitoring and control technology, as well as a line of diagnostic catheters and
associated accessories.
Peripheral Vascular Intervention and Venous Access. The Company sells various
products designed to treat patients with peripheral vascular disease (disease
which appears in blood vessels other than in the heart), including a broad line
of catheters used in percutaneous transluminal angioplasty. Additionally, the
Company's peripheral vascular product line includes medical devices used in
thrombolysis (the catheter-based delivery of clot dissolving agents directly to
the site of a blood clot) and thrombectomy catheters. The Company also offers
stents to maintain patency of peripheral lumens, including the Wallstent(R)
endoprosthesis. During 2000, the Company introduced the Gazelle(TM) Balloon
Dilatation Catheter (a catheter Monorail system) and the Talon(TM) Balloon
Dilatation Catheter (an Over-the-Wire system) in the United States for use in
the treatment of peripheral vascular disease, including renal applications. The
Company's acquisition of Catheter Innovations, Inc. will also broaden the
Company's portfolio of venous access products to include both valved and
non-valved product offerings.
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Caval Interruption Systems. The Company markets the Greenfield(R) vena cava
filter system for use in patients who are at risk of developing a pulmonary
embolism due to an existing medical condition or post-surgical complications.
Once the filter is implanted, circulating emboli (blood clots) can be captured
and held by the lattice design of the filter, allowing the clots to dissolve
naturally before they can reach the pulmonary system.
Surgical and Endovascular Grafts. The Company designs vascular grafts and
endovascular stent grafts for the treatment of thoracic dissection, dialysis
access, abdominal aortic aneurysms and peripheral vascular occlusive diseases,
including the Exxcel(TM) vascular graft for peripheral indications and dialysis
access and a line of Hemashield(R) grafts and fabrics for peripheral vascular
and cardiovascular indications.
Intraluminal Ultrasound Imaging. The Company markets a family of intraluminal
catheter-directed ultrasound imaging systems for diagnostic use in blood
vessels, heart chambers and coronary arteries, as well as certain nonvascular
systems. During 2000, the Company introduced the Atlantis(TM) SR 40 mHz imaging
catheter in the United States, Japan and certain European countries. Also during
2000, the Company received FDA clearance to market the Galaxy (TM) ultrasound
imaging console in the United States.
Neuro-Endovascular Therapy. The Company markets a line of micro-guidewires,
micro-catheters, guiding catheters and embolics to treat diseases of the
neurovascular system. The Company also markets the GDC(R) (Guglielmi Detachable
Coil) system to treat and prevent the rupture of cerebral aneurysms that are
otherwise either considered to be inoperable or high risk for surgery. During
2000, the Company introduced the GDC SynerG(TM) Detachment System in the United
States and certain international markets and the GDC(R) Tri-Span (TM) Coil in
certain European markets. Both products are designed for the endovascular
treatment of brain aneurysms.
Esophageal, Gastric and Duodenal (Small Intestine) Intervention. The Company
markets a broad range of products to diagnose, treat and palliate a variety of
gastrointestinal diseases and conditions, including those affecting the
esophagus, stomach, and small intestine. Common disease states include
esophogitis, gastric esophageal reflux disease ("GERD"), portal hypertension,
peptic ulcers and esophageal cancer. The Company's products in this area include
disposable single and multiple biopsy forceps, balloon dilatation catheters,
banding ligation devices and enteral feeding devices. The Company also markets a
family of esophogeal stents designed to offer improved dilatation force and
greater resistance to tumor in-growth. During the first quarter of 2001, the
Company signed an agreement with Enteric Medical Technologies, Inc. ("EMT")
providing for the exclusive distribution of EMT's Enteryx(TM) liquid polymer
technology which is designed to treat symptoms associated with chronic GERD. The
agreement grants the Company exclusive distribution rights in certain
international markets, including most European countries and Japan, and also
includes an option to purchase EMT through the third quarter of 2002.
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Colorectal Intervention. The Company markets a line of hemostatic catheters,
polypectomy snares and dilatation catheters for the diagnosis and treatment of
polyps, inflammatory bowel disease, diverticulitis and colon cancer. During
2000, the Company introduced the Unistep Plus(TM) Wallstent(R) Enteral
Endoprosthesis, an enteral stent designed to provide relief of malignant
obstructions of the colon and duodenum, in the United States and certain
international markets.
Pancreatico-Biliary Intervention. The Company sells a variety of products to
diagnose, treat and palliate benign and malignant strictures of the
pancreatico-biliary system (the gall bladder, common bile duct, hepatic duct,
pancreatic duct and the pancreas) and to remove stones found in the common bile
and hepatic ducts. The Company's products include diagnostic catheters used with
contrast media, balloon dilatation catheters and sphincterotomes. The Company
also markets temporary biliary stents for palliation and drainage of the common
bile duct. During 2000, the Company introduced the NIR(R) Biliary Stent in the
United States and hopes to introduce the product in certain international
markets later in 2001, pending regulatory approval. The Company also during 2000
introduced in the United States and certain European markets, its Unistep
Plus(TM) Permalume(R) Covered Biliary Wallstent(R), a covered metal biliary
stent designed to palliate malignant obstructions of the bile duct.
Pulmonary Intervention. The Company markets devices to diagnose, treat and
palliate chronic bronchitis and lung cancer, including pulmonary biopsy forceps
and balloon catheters used to dilate strictures or for tumor management. During
2000, the Company received clearance to market its Wallgraft(R) Tracheobronchial
Endoprosthesis in the United States and certain European markets. The
Wallgraft(R) Tracheobronchial Endoprosthesis is a covered Wallstent(R) device
designed to treat tracheobronchial strictures.
Urinary Tract Intervention. The Company sells a variety of products designed
primarily to treat patients with urinary stone disease, either via ureteroscopy
or percutaneous nephrolithotomy. Products within this category include ureteral
dilatation balloons used to dilate strictures or openings for scope access;
stone baskets used to manipulate or remove the stone; intracorporeal shock wave
lithotripsy devices and holmium laser systems used to disintegrate stones
ureteroscopically; ureteral stents implanted temporarily in the urinary tract to
provide either short-term or long-term drainage; and a wide variety of
guidewires used to gain access to a specific site.
Prostate Intervention. For the treatment of Benign Prostatic Hypertrophy
("BPH"), the Company currently markets electro-surgical resection devices
designed to resect large diseased tissue sites and reduce the bleeding
attributable to the resection procedure (a major cause of patient morbidity in
connection with traditional surgical treatments for BPH) and an automatic
disposable needle biopsy system, designed to take rapid core prostate biopsies.
Urinary Incontinence and Bladder Disease. The Company markets a line of
less invasive devices and dermal sling materials to treat stress urinary
incontinence. This affliction is commonly treated with various surgical
procedures. The Company's Precision Tack(TM) and Precision Twist (TM) devices
and Vesica(R) systems offer less invasive alternatives for treating
incontinence. The Company has also developed other devices to diagnose and treat
bladder cancer and bladder obstruction.
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INTERNATIONAL OPERATIONS
In 2000, international sales accounted for approximately 41% of the Company's
net sales. Net sales, operating income (excluding special charges) and total
assets attributable to significant geographic areas are presented in Note O to
the Company's 2000 Consolidated Financial Statements, which are filed with the
Securities and Exchange Commission as an exhibit hereto.
As of December 31, 2000, the Company had direct marketing and sales operations
in 40 countries. In recent years, the Company has expanded its direct sales
presence worldwide so as to be in a position to take advantage of expanding
market opportunities. The Company believes that, during 2001, it will continue
to leverage its infrastructure and will continue to use distributors in those
smaller markets where it is not economical or strategic to establish a direct
presence.
The Company has three international manufacturing facilities in Ireland.
Presently, approximately 53% of the Company's products sold internationally are
manufactured at these facilities. The Company also maintains an international
research and development facility in Ireland and a training center in Miyazaki,
Japan.
The Company's international presence exposes it to certain financial and other
risks. Principal among these is the potentially negative impact of foreign
currency fluctuations on the Company's sales and expenses. Although the Company
engages in hedging transactions that may offset the effect of fluctuations in
foreign currency exchange rates on foreign currency denominated assets,
liabilities, earnings and cash flows, financial exposure may nonetheless result,
primarily from the timing of transactions, forecast volatility and the movement
of exchange rates. International markets are also being affected by economic
pressure to contain reimbursement levels and health care costs. The Company's
ability to benefit from its international expansion may be limited by risks and
uncertainties relating to economic conditions in these regions, regulatory and
reimbursement approvals, competitive offerings, infrastructure development,
rights to intellectual property, and the ability of the Company to implement its
overall business strategy. Any significant changes in the competitive,
political, regulatory or economic environment where the Company conducts
international operations may have a material impact on revenues and profits.
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MARKETING AND SALES
The Company markets its products through six principal divisions, each focusing
upon physicians who specialize in the diagnosis and treatment of different
medical conditions and disease states. During 2000, the Company realigned
certain of its sales and marketing organizations in order to better service the
growing needs of its customers. As part of this realignment which became
effective January 1, 2001, Scimed, EP Technologies and the peripheral vascular
business of Medi-tech were centralized under the Company's Cardiovascular Group
while Microvasive Endoscopy, Microvasive Urology and the Surgery/Oncology
business of Medi-tech were centralized under the Company's Endosurgery Group.
The Company's Target Therapeutics division remains a distinct sales and
marketing organization reporting to the Company's Group President of
Cardiovascular.
Scimed: markets devices to interventional cardiologists, interventional
radiologists and vascular surgeons for the diagnosis and
treatment of coronary and peripheral vascular disease and other
cardiovascular disorders.
EP offers a line of electrophysiology catheters and systems for
Technologies: use by interventional electrophysiologists in the diagnosis
and treatment of cardiac tachyarrhythmias.
Target: markets a line of micro-guidewires, micro-catheters, coils,
embolics and other medical devices which aid neuroradiologists
and neurosurgeons in the treatment of neurovascular diseases.
Medi-tech: markets devices to interventional radiologists and vascular
surgeons who treat abdominal aortic aneurysmal disease, vascular
and nonvascular large vessel diseases requiring therapeutic
intervention, diseases requiring management of cancerous and
non-cancerous tumors and patients requiring venous access.
Microvasive markets therapeutic, diagnostic and palliative devices which aid
Endoscopy: gastroenterologists and pulmonologists in performing flexible
endoscopic procedures involving the digestive tract and lungs.
Microvasive offers a line of therapeutic and diagnostic devices which
Urology: aid urologists and urogynecologists in performing ureteroscopic
and other less invasive endoscopic procedures as well as devices
to treat urinary incontinence.
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A dedicated sales force of approximately 1,200 individuals in 40 countries
internationally and over 800 in the United States markets the Company's products
worldwide. Sales in countries where the Company has direct sales organizations
accounted for approximately 99% of the Company's net sales during 2000. A
network of distributors and dealers who offer the Company's products in more
than 25 countries worldwide accounts for the remaining sales. The Company has a
dedicated U.S. corporate sales organization focused principally on selling to
major buying groups and large integrated health care networks. In addition, the
Company joined the Global Healthcare Exchange, an international, supply-side
business-to-business exchange created in 2000 by certain leading health care
companies. The Global Healthcare Exchange is designed to streamline the
procurement of medical products and services for health care professionals by
providing a centralized product procurement system for health care purchases via
the Internet.
In 2000, the Company sold its products to over 10,000 hospitals, clinics,
out-patient facilities and medical offices. The Company is not dependent on any
single institution and no single institution accounted for more than 10% of the
Company's net sales in 2000. Large group purchasing organizations, hospital
networks and other buying groups are, however, becoming increasingly important
to the Company's business. The trend toward managed care and economically
motivated and more sophisticated buyers in the United States may result in
continued pressure on selling prices of certain products and resulting
compression on gross margins. These purchasers of medical devices also tend to
limit the number of suppliers from whom they purchase medical products. There
can be no assurance that these entities will continue to purchase products from
the Company.
The Company markets the NIR ON(R) Ranger(TM), NIR(R) w/SOX(TM), NIROYAL(TM)
Advance and NIR(R) Primo(TM) coronary stent systems which, together with other
NIR(R) coronary stent systems, represented approximately 15% of the Company's
2000 worldwide sales. These stent systems include the NIR(R) coronary stent
which is developed and manufactured by Medinol Ltd., Israel, and a balloon
delivery system which is developed and manufactured by the Company. The Company
also distributes several other products for third parties, including RF
generators, an introducer sheath and certain guidewires. None of these other
products represented more than 10% of the Company's 2000 net sales. Leveraging
its sales and marketing strength, the Company expects to continue to seek out
new opportunities for distributing complementary products as well as new
technologies. Certain of the products distributed by the Company, such as the
NIR(R) stent, are very important to the Company strategically. Any unforeseen
delays, stoppages or interruptions in the supply and/or mix of the NIR(R) stent
or certain other distributed products could adversely affect the Company's
operating results.
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MANUFACTURING; RAW MATERIALS
The Company designs and manufactures the majority of its products in thirteen
manufacturing sites around the world. As part of the Company's global operations
strategy initiated in 2000, the Company will cease manufacturing operations at
three of its thirteen manufacturing facilities over the next twelve months.
Manufacturing operations will be relocated to two of the Company's existing
facilities and contract manufacturing in order to consolidate manufacturing
along product lines.
Most components used in the manufacture of the Company's products are readily
fabricated from commonly available raw materials or off-the-shelf items
available from multiple supply sources. The fabricated items are custom made for
the Company to meet its specifications. The Company believes that in most cases,
redundant capacity exists at the suppliers and that alternative sources of
supply are available or could be developed within a reasonable period of time.
Generally, the Company has been able to obtain adequate supplies of raw
materials and components in a timely manner from established sources. In certain
cases, the Company may not be able to quickly establish additional or
replacement suppliers for specific components or materials, largely due to the
FDA approval system and other regulatory requirements and the complex nature of
the manufacturing processes employed by many suppliers. The reduction or
interruption in supply, an inability to develop alternative sources if required,
or a significant increase in the price of raw materials or components, could
adversely affect the Company's operations and financial condition.
As part of the Company's global operations strategy, the Company initiated a
worldwide operations plan during 2000 to increase productivity and enhance
innovation through a series of initiatives designed to improve supply chain
effectiveness, strengthen manufacturing process control, and optimize the
Company's network of plants. Certain programs under the plan are focused on
reducing inventory levels and write-offs and improving yields and manufacturing
efficiencies. The operational efficiencies and savings resulting under the plan
will help the Company lower its manufacturing costs and improve its cost
competitiveness.
QUALITY ASSURANCE
The Company is committed to providing high quality products to its customers. To
meet this commitment, the Company has implemented modern quality systems and
concepts throughout the organization. The Company's quality system starts with
the initial product specification and continues through the design of the
product, component specification process and the manufacturing, sales and
servicing of the product. The quality system is designed to build in quality and
to utilize continuous improvement concepts throughout the product life.
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Certain of the Company's operations are certified under ISO 9001, ISO 9002, ISO
13485, ISO 13488, EN46001 and EN46002 international quality system standards.
ISO 9002 requires, among other items, an implemented quality system that applies
to component quality, supplier control and manufacturing operations. In
addition, ISO 9001 and EN46001 require an implemented quality system that
applies to product design. These certifications can be obtained only after a
complete audit of a company's quality system by an independent outside auditor.
Maintenance of these certifications require that these facilities undergo
periodic reexamination.
COMPETITION
The Company encounters significant competition across its product lines and in
each market in which its products are sold from various entities, some of which
may have greater financial and marketing resources than the Company. The
Company's primary competitors include C.R. Bard, Inc., Cook, Inc., Guidant
Corporation, Tyco International, Johnson & Johnson (including its subsidiary,
Cordis Corporation), and Medtronic, Inc. (including its subsidiary, Medtronic
AVE, Inc.), as well as a wide range of companies which sell a single or limited
number of competitive products.
In addition, the Company faces competition from non-medical device companies,
such as pharmaceutical companies, which may offer non-surgical alternative
therapies for disease states which are currently treated using the Company's
products.
The Company believes that its products compete primarily on the basis of their
ability to safely and effectively perform diagnostic and therapeutic procedures
in a less invasive manner, ease of product use, product reliability and
physician familiarity. In the current environment of managed care, economically
motivated buyers, consolidation among health care providers, increased
competition and declining reimbursement rates, the Company has also been
increasingly required to compete on the basis of price. The Company believes
that its continued competitive success will depend upon its ability to create or
acquire scientifically advanced technology, apply its technology
cost-effectively across product lines and markets, develop or acquire
proprietary products, attract and retain skilled development personnel, obtain
patent or other protection for its products, obtain required regulatory
approvals, and manufacture and successfully market its products either directly
or through outside parties. There can be no assurance that the Company will be
able to accomplish these objectives or that it will be able to compete
successfully in the future against existing or new competitors.
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RESEARCH AND DEVELOPMENT
The Company is committed to driving growth through harnessing technological
innovation both in the near and long term. The Company believes that
streamlining and coordinating its technology pipeline and new product
development is essential to its ability to stimulate growth and maintain
leadership positions in its markets. By centralizing platform technology
development at the corporate level, the Company is able to pursue technologies
that can be leveraged across multiple markets. Simultaneously, the interaction
of the Company's product management teams and sales representatives with the
worldwide medical community facilitates new product development at the
divisional level to address the needs and desires of the Company's physician
customers. The global operations plan is designed to increase productivity by
creating greater operational efficiencies and generate savings, allowing the
Company to increase its ability to invest in research and development.
In 2000, the Company expended approximately $199 million on research and
development, representing approximately 7% of the Company's 2000 net sales.
These expenditures funded clinical research, licensed technology, regulatory
compliance and a variety of product development programs, including, among
others, its internal stent development program, carotid stenting, molecular
intervention technology (using paclitaxel, angiogenesis technology and gene
therapy) and treatments for cancerous and pre-cancerous conditions.
Enhancements of existing products or expansions of existing product lines, which
are typically developed within the Company's manufacturing and marketing
operations, contribute to each year's sales growth. In addition to internal
development, the Company works with hundreds of leading research institutions,
universities and clinicians around the world in developing, evaluating and
clinically testing its products.
The Company believes its future success will depend upon the strength of its
development efforts. There can be no assurance that the Company will realize
financial benefit from its development programs, will continue to be successful
in identifying, developing and marketing new products or enhancing its existing
products, or that products or technologies developed by others will not render
the Company's products or technologies non-competitive or obsolete.
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REGULATION
The medical devices manufactured and marketed by the Company are subject to
regulation by numerous regulatory bodies, including the FDA and comparable
international regulatory agencies. These agencies require manufacturers of
medical devices to comply with applicable laws and regulations governing the
development, testing, manufacturing, labeling, marketing and distribution of
medical devices. Devices are generally subject to varying levels of regulatory
control, the most comprehensive of which requires that a clinical evaluation
program be conducted before a device receives approval for commercial
distribution.
In the United States, permission to distribute a new device generally can be met
in one of two ways. The first process applies to any new device that is
substantially equivalent to a device first marketed prior to May 1976 and does
not require pre-market approval ("PMA"). In this case, FDA permission to
distribute the device can be accomplished by submission of a pre-market
notification application (a "510(k) Submission"), and issuance by the FDA of an
order permitting commercial distribution of that device for its intended use. A
510(k) Submission must provide information supporting its claim of substantial
equivalence. If clinical data from human experience is required to support a
510(k) Submission, this data must be gathered in compliance with investigational
device exemption ("IDE") regulations for investigations performed in the United
States. The FDA must issue an order finding substantial equivalence before
commercial distribution can occur. Changes to existing devices which do not
significantly affect safety or effectiveness can generally be made by the
Company without additional 510(k) Submissions.
The second, more comprehensive, approval process applies to a new device that is
not substantially equivalent to a pre-1976 product. In this case, two steps of
FDA approval are generally required before marketing in the United States can
begin. First, the Company must comply with IDE regulations in connection with
any human clinical investigation of the device in the United States. Second, the
FDA must review the Company's PMA application which contains, among other
things, clinical information acquired under the IDE. The FDA will approve the
PMA application if it finds that there is a reasonable assurance that the device
is safe and effective for its intended purpose.
The FDA can ban certain medical devices, detain or seize adulterated or
misbranded medical devices, order repair, replacement or refund of these
devices, and require notification of health professionals and others with regard
to medical devices that present unreasonable risks of substantial harm to the
public health. The FDA may also enjoin and restrain certain violations of the
Food, Drug and Cosmetic Act and the Safe Medical Devices Act pertaining to
medical devices, or initiate action for criminal prosecution of such violations.
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International sales of medical devices manufactured in the United States that
are not approved by the FDA for use in the United States, or are banned or
deviate from lawful performance standards, are subject to FDA export
requirements. The Export Reform Act of 1996 has simplified the process of
exporting devices which have not been approved for sale in the United States.
Exported devices are subject to the regulatory requirements of each country to
which the device is exported. In many foreign countries, all regulated medical
products are treated as drugs and the majority of the Company's products are
expected to be so regulated in these countries. Frequently, regulatory approval
may first be obtained in a foreign country prior to application in the United
States to take advantage of differing regulatory requirements. The Company has
achieved International Standards Organization or European Union certification
for its Irish and United States manufacturing facilities. In addition, the
Company has completed CE Mark registrations for substantially all of its
products in accordance with the implementation of various medical device
directives in the European Union.
The process of obtaining clearance to market products is costly and
time-consuming in virtually all of the major markets in which the Company sells
products and can delay the marketing and sale of new products. Countries around
the world have recently adopted more stringent regulatory requirements which are
expected to add to the delays and uncertainties associated with new product
releases, as well as the clinical and regulatory costs of supporting such
releases. No assurance can be given that any of the Company's new medical
devices will be approved on a timely basis, if at all.
In addition, regulations regarding the development, manufacture and sale of
medical devices are subject to future change. The Company cannot predict what
impact, if any, such changes might have on its business. Failure to comply with
regulatory requirements could have a material adverse effect on the Company's
business, financial condition and results of operations.
The Company is also subject to environmental laws and regulations both in the
United States and abroad. The operations of the Company, like those of other
medical device companies, involve the use of substances regulated under
environmental laws, primarily in manufacturing and sterilization processes. The
Company believes that compliance with environmental laws will not have a
material impact on its financial position, results of operations, or liquidity.
Given the scope and nature of these laws, there can, however, be no assurance
that environmental laws will not have a material impact on the Company.
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THIRD-PARTY COVERAGE AND REIMBURSEMENT
The Company's products are purchased by hospitals, doctors and other health care
providers who are reimbursed for the health care services provided to their
patients by third-party payors, such as governmental programs (e.g., Medicare
and Medicaid), private insurance plans and managed care programs. Third party
payors may deny coverage for certain technologies based on assessment criteria
as determined by the third-party payor. Also, third-party payors are
increasingly challenging the prices charged for medical products and services.
There can be no assurance that the Company's products will be automatically
covered by third-party payors, that reimbursement will be available or, if
available, that the third-party payors' coverage policies will not adversely
affect the Company's ability to sell its products profitably.
PROPRIETARY RIGHTS AND PATENT LITIGATION
The Company relies on a combination of patents, trademarks, trade secrets and
non-disclosure agreements to protect its intellectual property. The Company
generally files patent applications in the United States and foreign countries
where patent protection for its technology is appropriate and available. The
Company holds more than 1,900 United States patents (many of which have foreign
counterparts) and has more than 3,500 patent applications pending worldwide that
cover various aspects of its technology. In addition, the Company holds
exclusive and non-exclusive licenses to a variety of third party technologies
covered by patents and patent applications. There can be no assurance that
pending patent applications will result in issued patents, that patents issued
to or licensed by the Company will not be challenged or circumvented by
competitors, or that such patents will be found to be valid or sufficiently
broad to protect the Company's technology or to provide the Company with a
competitive advantage. The Company relies on non-disclosure and non-competition
agreements with employees, consultants and other parties to protect, in part,
trade secrets and other proprietary technology. There can be no assurance that
these agreements will not be breached, that the Company will have adequate
remedies for any breach, that others will not independently develop equivalent
proprietary information or that third parties will not otherwise gain access to
the Company's trade secrets and proprietary knowledge.
There has been substantial litigation regarding patent and other intellectual
property rights in the medical device industry, particularly in the areas in
which the Company competes. The Company has defended, and will likely continue
to defend, itself against claims and legal actions alleging infringement of the
patent rights of others. Adverse determinations in any patent litigation could
subject the Company to significant liabilities to third parties, could require
the Company to seek licenses from third parties and could, if licenses are not
available, prevent the Company from manufacturing, selling or using certain of
its products, any of which could have a material adverse effect on the Company.
Additionally, the Company may find it necessary to initiate litigation to
enforce its patent rights, to protect its trade secrets or know-how and to
determine the scope and validity of the proprietary rights of others. Patent
litigation can be costly and time-consuming, and there can be no assurance that
the Company's litigation
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expenses will not be significant in the future or that the outcome of litigation
will be favorable to the Company. Accordingly, the Company may seek to settle
some or all of its pending litigation. Settlement may include cross-licensing of
the patents which are the subject of the litigation as well as other
intellectual property of the Company and may involve monetary payments to or
from third parties. See the "Legal Proceedings" section below and Note L to the
Company's 2000 Consolidated Financial Statements (Exhibit 13.1 filed herewith)
for a further discussion of patent and other litigation and proceedings
involving the Company.
The Company and its affiliates own the following registered trademarks that are
referred to in this document: Maverick, Rotablator, RotaLink, Wallstent,
Greenfield, Hemashield, GDC, Permalume, Wallgraft, and Vesica. The Company and
its affiliates own the following trademarks that are referred to in this
document: Sox, Monorail, Gazelle, Talon, Exxcel, Atlantis, Galaxy, SynerG,
Tri-Span, Unistep Plus, Precision Twist, Precision Tack, Ranger, and Primo.
The Company references the following registered and unregistered trademarks of
third parties in this document: Bx Velocity is a trademark of Cordis
Corporation. Enteryx is a trademark of EMT. Cutting Balloon is a trademark and
Infiltrator is a registered trademark of IVT, NIR and NIR ON are registered
trademarks and NIROYAL is a trademark of Medinol, Ltd. Jerusalem, Israel. Quanam
is a trademark of Quanam Medical Corporation.
OTHER LITIGATION
The testing, marketing and sale of human health care products entails an
inherent risk of product liability claims. The Company is involved in various
lawsuits arising in the normal course of business from product liability claims,
and product liability claims may be asserted in the future relative to events
not known to management at the present time. The Company has insurance coverage
which management believes is adequate to protect against product liability
losses as could otherwise materially affect the Company's financial position.
However, there can be no assurance that product liability claims will not exceed
such insurance coverage limits or that such insurance will be available in the
future on commercially reasonable terms, if at all. The Company is aware that
the U.S. Department of Justice is conducting an investigation of matters that
include the Company's decision to voluntarily recall the NIR ON(R) Ranger(TM)
with Sox(TM) coronary stent system in the U.S. The Company is cooperating fully
in the investigation. In addition, the U.S. Federal Trade Commission has filed
suit against the Company alleging it has breached a Consent Order dated May 5,
1995, pursuant to which the Company licensed certain intravascular ultrasound
technology to Hewlett-Packard Company. The Company has denied the allegations of
the complaint and intends to vigorously defend itself.
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EMPLOYEES
As of December 31, 2000, the Company had 13,720 employees, including
approximately 8,685 in operations, 924 in administration, 1,322 in research and
development and 2,789 in selling, marketing, distribution and related
administrative support. Of these employees, approximately 2,788 were employed in
the Company's international operations. The Company believes that the continued
success of its business will depend, in part, on its ability to attract and
retain qualified personnel. Competition for qualified, skilled personnel is
intense in the medical device industry. There can be no assurance that the
Company will be able in the future to attract and retain such personnel.
SEASONALITY
Worldwide sales do not reflect any significant degree of seasonality, however
customer purchases have been lighter in the third quarter of prior years than in
other quarters. This reflects, among other factors, lower demand during summer
months, particularly in European countries.
CAUTIONARY STATEMENT FOR PURPOSES OF THE SAFE HARBOR PROVISIONS OF THE PRIVATE
SECURITIES LITIGATION REFORM ACT OF 1995
The Cautionary Statement for Purposes of the Safe Harbor Provisions of the
Private Securities Litigation Reform Act of 1995 appearing on page F-11 through
F-12 of the Company's 2000 Consolidated Financial Statements (Exhibit 13.1 filed
herewith) is incorporated herein by reference.
ITEM 2. PROPERTIES
The Company's world headquarters are located in Natick, Massachusetts. It
maintains regional headquarters in Tokyo, Japan; Paris, France; Buenos Aires,
Argentina; and Singapore. As of December 31, 2000, the Company's worldwide
facilities (including administration, research, manufacturing, distribution and
sales and marketing space) totaled approximately 5.1 million square feet, of
which approximately 77% was owned by the Company and the balance was leased. As
of December 31, 2000, the Company's principal technology centers were located in
Massachusetts, Indiana, Minnesota, New Jersey, Florida, California, Washington,
New York and Ireland, and its major distribution centers were located in
Massachusetts, The Netherlands, Japan and Singapore. As of December 31, 2000,
the Company maintained thirteen manufacturing facilities, ten in the United
States and three in Ireland. Many of these manufacturing facilities produce and
manufacture products for more than one of the Company's divisions and include
research facilities. The Company believes that its facilities are adequate to
meet its current needs and continues to assess its plant network strategy. The
Company has announced that over the next twelve months, it will cease
manufacturing operations in its Washington facility, one of its Massachusetts
facilities and one of its Minnesota facilities.
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ITEM 3. LEGAL PROCEEDINGS
Note L to the Company's 2000 Consolidated Financial Statements, appearing on
pages F-30 through F-35 thereto (Exhibit 13.1 filed herewith), is incorporated
herein by reference. The following paragraphs update the disclosure appearing in
Note L.
RECENT PATENT LITIGATION ACTIVITY
On May 31, 1994, SCIMED Life Systems, Inc. (SCIMED), a subsidiary of the
Company, filed a suit for patent infringement against Advanced Cardiovascular
Systems, Inc. (ACS), a subsidiary of Guidant Corporation, alleging willful
infringement of two of SCIMED's U.S. patents by ACS's RX ELIPSE(TM) PTCA
catheter. The suit was filed in the U.S. District Court for the Northern
District of California seeking monetary and injunctive relief. In January 1998,
the Company added the ACS RX MULTILINK(TM) stent delivery system to its
complaint. On June 6, 1999, the Court granted summary judgment in favor of ACS
affirming that SCIMED'S patents were not infringed. SCIMED appealed the judgment
and a hearing was held on October 2, 2000. On March 14, 2001, the Court affirmed
the judgment in favor of ACS.
On March 24, 2000, the Company (through its subsidiaries) and Medinol Ltd. filed
a cross-border suit against Johnson & Johnson, Cordis Corporation ("Cordis") and
certain of their foreign subsidiaries in The Netherlands alleging Cordis' BX
Velocity(TM) stent delivery system infringes one of Medinol's European patents.
In this action, the Company and Medinol requested monetary and injunctive relief
covering The Netherlands, Austria, Belgium, Switzerland, Germany, Denmark,
Spain, France, Greece, Ireland, Italy, Liechtenstein, Luxembourg, Monaco,
Portugal and Sweden. A hearing was held January 12, 2001. On March 19, 2001, the
Company's request for preliminary injunction was denied by the Court. The
Company intends to appeal this decision.
On March 30, 2000, the Company (through its subsidiary) filed suit for patent
infringement against two subsidiaries of Cordis alleging that Cordis' BX
Velocity stent delivery system infringes a published utility model owned by
Medinol and exclusively licensed to the Company. The complaint was filed in the
District Court of Dusseldorf, Germany seeking monetary and injunctive relief. A
hearing was held on March 15, 2001 and a decision is expected in May 2001.
On July 28, 2000, Dr. Tassilo Bonzel filed a complaint naming certain of the
Company's Schneider Worldwide subsidiaries and Pfizer Inc. ("Pfizer") and
certain of its affiliates as defendants, alleging that Pfizer failed to pay Dr.
Bonzel amounts owed under a license agreement involving Dr. Bonzel's patented
Rapid Exchange technology. The suit was filed in the District Court for the
State of Minnesota seeking monetary relief. Dr. Bonzel has also provided a
notice of breach of the agreement which could lead to its termination. On
September 5, 2000, the Company and Boston Scientific Scimed, Inc. (formerly
known as Schneider (USA), Inc.) filed suit against Dr. Bonzel in the U.S.
District Court for the District of Massachusetts seeking declaratory judgment of
non-infringement because the Company has not breached the terms of the license
agreement and that Dr. Bonzel is estopped from asserting infringement. Dr.
Bonzel filed a motion to dismiss or stay the Massachusetts action and in
February 2001, the Court dismissed the Massachusetts case.
The Company is involved in various lawsuits from time to time. In management's
opinion, the Company is not currently involved in any legal proceedings other
than those specifically identified above or in Note L to the Company's 2000
Consolidated Financial Statements which, individually or in the aggregate, could
have a material effect on the financial condition, operations or cash flows of
the Company.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
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DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY
The Directors and executive officers of the Company as of December 31, 2000 were
as follows:
Name Age Position
- ---- --- --------
John E. Abele 63 Director, Founder Chairman
Lawrence C. Best 50 Senior Vice President--Finance & Administration
and Chief Financial Officer
Joseph A. Ciffolillo 62 Director, Private Investor
Paul Donovan 45 Vice President -- Corporate Communications
Joel L. Fleishman 66 Director, Senior Advisor to The Atlantic Philanthropic Service
Company, Inc. and Professor of Law and Public Policy, Duke
University
Ray J. Groves 65 Director, Chairman of Legg Mason Merchant Banking Inc.
Lawrence L. Horsch 66 Director, Chairman of Eagle Management & Financial Corp.
Paul A. LaViolette 43 Senior Vice President and President, Boston Scientific
International, and Group President Cardiovascular
Robert G. MacLean 57 Senior Vice President--Human Resources
Kshitij Mohan, Ph.D. 55 Senior Vice President and Chief Technology Officer
Stephen F. Moreci 49 Senior Vice President and Group President Endosurgery
N.J. Nicholas, Jr. 61 Director, Private Investor
Pete Nicholas 59 Director, Founder and Chairman of the Board
John E. Pepper 62 Director, Chairman of the Board of Directors, The Procter & Gamble
Company
Arthur L. Rosenthal, Ph.D. 54 Senior Vice President and Chief Scientific Officer
Warren B. Rudman 70 Director, Former U.S. Senator, Partner, Paul, Weiss, Rifkind,
Wharton & Garrison
Paul W. Sandman 53 Senior Vice President, Secretary and General Counsel
James H. Taylor, Jr. 61 Senior Vice President -- Corporate Operations
James R. Tobin 56 Director, President and Chief Executive Officer
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COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors of the Company has standing Audit, Executive Compensation
and Human Resources, and Corporate Governance Committees. Mr. Fleishman, Mr.
Horsch and Mr. Pepper currently serve on the Audit Committee. Mr. Fleishman, Mr.
Groves, Mr. Horsch, and Senator Rudman currently serve on the Executive
Compensation and Human Resources Committee. Mr. Fleishman, Mr. Groves, Mr. Pete
Nicholas, Mr. Pepper and Senator Rudman currently serve on the Corporate
Governance Committee. A description of the committees of the Board of Directors
of the Company is set forth in the Company's definitive Proxy Statement to be
filed with the Commission on or about April 6, 2001 and is incorporated herein
by reference.
BIOGRAPHICAL SUMMARIES
John E. Abele, a co-founder of the Company, has been a Director of the Company
since 1979, Founder Chairman since 1995 and Co-Chairman from 1979 to 1995. Mr.
Abele held the position of Treasurer from 1979 to 1992 and Vice Chairman and
Founder, Office of the Chairman from February 1995 to March 1996. He was
President of Medi-tech, Inc. from 1970 to 1983, and prior to that served in
sales, technical and general management positions for Advanced Instruments, Inc.
Mr. Abele received a B.A. degree from Amherst College.
Lawrence C. Best joined the Company in August 1992 as Senior Vice
President--Finance & Administration and Chief Financial Officer. Previously, Mr.
Best had been a partner at Ernst & Young, certified public accountants, since
1981. From 1979 to 1981, Mr. Best served a two year term as a Professional
Accounting Fellow in the Office of Chief Accountant at the Securities and
Exchange Commission in Washington, D.C. Mr. Best received a B.B.A. degree from
Kent State University.
Joseph A. Ciffolillo joined the Company in 1983 as President of Medi-tech, Inc.
During his tenure at the Company, he also served as President of Microvasive,
Inc. and as Executive Vice President and Chief Operating Officer from 1989 until
his retirement in 1996. In 1992, Mr. Ciffolillo became a director of the
Company. Previously, Mr. Ciffolillo spent twenty years with Johnson & Johnson
where he held a number of management positions including Executive Vice
President, Codman and President, Johnson & Johnson Orthopedic Company, a company
of which he was also a co-founder. Mr. Ciffolillo is a member of the Spray
Venture Fund Investment Committee and serves on a number of for profit and
not-for-profit boards. Mr. Ciffolillo also serves as Chairman of the Advisory
Board of the Health Science Technology Division of Harvard University and the
Massachusetts Institute of Technology. Mr. Ciffolillo received his B.A. from
Bucknell University where he also serves as a Member of the Board of Trustees.
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Paul Donovan joined the Company in March 2000 as Vice President, Corporate
Communications. Most recently, Mr. Donovan was the Executive Director of
External Affairs at Georgetown University Medical Center, where he directed
media, government and community relations as well as employee communications
since 1998. From 1997 to 1998, Mr. Donovan was Chief of Staff at the United
States Department of Commerce. From 1993 to 1997, Mr. Donovan served as Chief of
Staff to Senator Edward M. Kennedy and from 1989 to 1993 as Press Secretary to
Senator Kennedy. Mr. Donovan received a B.A. degree from Dartmouth College.
Joel L. Fleishman joined the Company as a Director in October 1992. Mr.
Fleishman served as President of The Atlantic Philanthropic Service Company,
Inc. from September 1993 until January 2001, when he become Senior Advisor of
that organization. He is also Professor of Law and Public Policy and has served
in various administrative positions, including First Senior Vice President, at
Duke University, since 1971. Mr. Fleishman is a founding member of the governing
board of the Duke Center for Health Policy Research and Education and was the
founding director of Duke University's Terry Sanford Institute of Public Policy.
He is the director of the Samuel and Ronnie Heyman Center for Ethics, Public
Policy and the Professions. Mr. Fleishman also serves as Vice-Chairman of the
Board of Trustees of the Urban Institute and as a director of Polo Ralph Lauren
Corporation. Mr. Fleishman received A.B., M.A. and J.D. degrees from the
University of North Carolina at Chapel Hill, and an LL.M. degree from Yale
University.
Ray J. Groves joined the Company as a Director in May 1999. Mr. Groves is
Chairman of Legg Mason Merchant Banking, Inc., a subsidiary of Legg Mason, Inc.
Mr. Groves served as Chairman and Chief Executive Officer of Ernst & Young for
17 years until his retirement in 1994. Mr. Groves currently serves as a member
of the Boards of Directors of Allegheny Technologies Incorporated, American
Water Works Company, Inc., Electronic Data Systems Corporation, Marsh & McLennan
Companies, Inc., and The New Power Company. Mr. Groves is a managing director,
treasurer and secretary of the Metropolitan Opera Association. He is also Chair
of the Board of Directors of The Ohio State University Foundation and a member
of the Dean's Advisory Council of the Fisher College of Business. Mr. Groves
received a B.S. degree from The Ohio State University.
Lawrence L. Horsch joined the Company as a Director in February 1995.
Previously, he had been Chairman of the Board of SCIMED Life Systems, Inc. from
1977 to 1994, director from 1977 to 1995 and Acting Chief Financial Officer from
1994 to 1995. Since 1990, Mr. Horsch has served as Chairman of Eagle Management
& Financial Corp., a management consulting firm. He was Chairman and Chief
Executive Officer of Munsingwear, Inc., from 1987 to 1990. Mr. Horsch also
serves on several private company boards. Mr. Horsch received a B.A. degree from
the University of St. Thomas and an M.B.A. degree from Northwestern University.
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Paul A. LaViolette joined the Company as President, Boston Scientific
International, and Vice President--International in January 1994. In February
1995, Mr. LaViolette was elected to the position of Senior Vice President and
Group President--Nonvascular Businesses. In October 1998, Mr. LaViolette was
appointed President, Boston Scientific International, and in February 2000
assumed responsibility for the Company's Scimed, EPT and Target businesses as
Group President, Cardiovascular. Prior to joining the Company, he was employed
by C.R. Bard, Inc. in various capacities, including President, U.S.C.I.
Division, from July 1993 to November 1993, President, U.S.C.I. Angioplasty
Division, from January 1993 to July 1993, Vice President and General Manager,
U.S.C.I. Angioplasty Division, from August 1991 to January 1993, and Vice
President U.S.C.I. Division, from January 1990 to August 1991. Mr. LaViolette
received his B.A. degree from Fairfield University and an M.B.A. degree from
Boston College.
Robert G. MacLean joined the Company as Senior Vice President--Human Resources
in April 1996. Prior to joining the Company, he was Vice President--Worldwide
Human Resources for National Semiconductor Corporation in Santa Clara,
California from October 1992 to March 1996. Mr. MacLean has held various human
resources management positions in the U.S. and Europe during his career. Prior
to his business endeavors, he was Economics Professor at the University of the
Pacific. Mr. MacLean received his B.A. and M.A. degrees and completed his
doctoral studies in economics from Stanford University.
Dr. Kshitij Mohan joined the Company as Senior Vice President and Chief
Technology Officer in April 2000. Dr. Mohan served most recently as Corporate
Vice President, Research and Technical Services at Baxter International, Inc.,
where he had held a variety of positions since 1988. From 1983 to 1988, Dr.
Mohan served in various senior positions in the United States Food and Drug
Administration. Prior to that, Dr. Mohan served in the White House Office of
Management and Budget from 1979 to 1983. Dr. Mohan currently serves on the Board
of Directors of the Health Industry Manufacturer's Association, the Advisory
Board of Bourne's College of Engineering at the University of California, and
the Editorial Advisory Board for the Medical Device and Diagnostic Industry
magazine. Dr. Mohan holds a Ph.D. in Physics from Georgetown University.
Stephen F. Moreci was appointed to the Executive Committee of the Company as
Senior Vice President and Group President, Endosurgery in December 2000. Mr.
Moreci joined the Company in 1989 and most recently served as the Company's
President of its Medi-tech division since 1999. From 1989 until 1999, Mr. Moreci
held a variety of management positions within the Company, including Vice
President and General Manager of Cardiac Assist from 1989 to 1991, Vice
President and General Manager of Microvasive Endoscopy from 1991 until 1995,
Group Vice President of Nonvascular from 1995 until 1996 and President of
Microvasive Endoscopy from 1996 until 1999. Mr. Moreci received a B.S. degree
from Pennsylvania State University.
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N.J. Nicholas, Jr. joined the Company as a Director in October 1994. Mr.
Nicholas served as President of Time, Inc. from September 1986 to May 1990 and
Co-Chief Executive Officer of Time Warner, Inc. from May 1990 until February
1992. N.J. Nicholas, Jr. is a director of Xerox Corporation and Priceline.com.
and also serves on the board of several privately-owned media companies. Mr.
Nicholas received an A.B. degree from Princeton University and an M.B.A. degree
from Harvard Business School. He is also the brother of Pete Nicholas, Chairman
of the Board of the Company.
Pete Nicholas, a co-founder of the Company, has been the Chairman of the Board
of the Company since 1995. He has been a Director since 1979 and served as the
Chief Executive Officer from 1979 to March 1999 and Co-Chairman of the Board
from 1979 to 1995. Prior to joining the Company, he was corporate director of
marketing and general manager of the Medical Products Division at Millipore
Corporation, a medical device company, and served in various sales, marketing
and general management positions at Eli Lilly and Company. He is currently Vice
Chairman of the Board of Trustees of Duke University and a member of the Board's
Executive Committee. Mr. Nicholas is also a member of the American Academy of
Achievement and has recently received the Phoenix Lifetime Achievement Award. He
is also a recent recipient of the Ellis Island Medal of Honor, and is a Fellow
of the American Academy of Arts and Sciences. He is a member of the
Massachusetts Business Roundtable and currently serves on the boards of the Boys
& Girls Club of Boston, Massachusetts High Technology Council, and CEO's for
Charter Schools. Mr. Nicholas also serves on several for profit and
not-for-profit boards. After college, Mr. Nicholas served as an officer in the
U.S. Navy, resigning his commission as lieutenant in 1968. Mr. Nicholas received
a B.A. degree from Duke University, and an M.B.A. degree from The Wharton School
of the University of Pennsylvania. He is also the brother of N.J. Nicholas, Jr.,
a Director of the Company.
John E. Pepper joined the Company as a Director in October 1999. Mr. Pepper is
Chairman of the Board of Directors of Procter & Gamble where he also had been
Chief Executive Officer and Chairman of the Board from 1995 to 1999, President
from 1986 to 1995, director since 1984 and served in various positions since
1963. Mr. Pepper is a member of the Board of Directors of Xerox Corporation and
Motorola Inc. Mr. Pepper is a Fellow of The Yale Corporation and a Trustee of
the Christ Church Endowment Fund. He serves on the boards of Partnership for a
Drug Free America and the National Advisory Board of the National Underground
Railroad Freedom Center. Mr. Pepper graduated from Yale University in 1960 and
holds honorary doctorate degrees from Xavier University, The Ohio State
University, Mount St. Joseph College and St. Petersburg University (Russia).
27
28
Dr. Arthur L. Rosenthal joined the Company in January 1994 as Senior Vice
President and Chief Development Officer and became Chief Scientific Officer in
February 2000. Prior to joining the Company, he was Vice President--Research &
Development at Johnson & Johnson Medical, Inc., from April 1990 to January 1994.
Between 1973 and 1990, Dr. Rosenthal held several executive technical management
positions at Pfizer Inc., 3M and C.R. Bard, Inc., primarily in the fields of
device clinical research and biomedical engineering. Dr. Rosenthal received his
B.A. in bacteriology from the University of Connecticut, and his Ph.D. in
biochemistry from the University of Massachusetts.
Senator Warren B. Rudman joined the Company as a Director in October 1999.
Senator Rudman became a partner in the international law firm Paul, Weiss,
Rifkind, Wharton, and Garrison in 1992 after serving two terms as a U.S. Senator
from New Hampshire from 1980 to 1992. Senator Rudman serves as Chairman of the
President's Foreign Intelligence Advisory Board and serves on the Boards of
Trustees of Valley Forge Military Academy, the Brookings Institution, and the
Council on Foreign Relations. He also serves on the boards of Allied Waste
Industries, Inc., the American Stock Exchange, Inc., The Chubb Corporation,
Collins & Aikman Corporation, Raytheon Corporation and several funds managed by
the Dreyfus Corporation. He is also the founding co-chairman of the Concord
Coalition. Senator Rudman received a B.S. from Syracuse University and a LL.B.
from Boston College Law School and served in the U.S. Army during the Korean
War.
Paul W. Sandman joined the Company as Senior Vice President, Secretary and
General Counsel in May 1993. From March 1992 through April 1993, he was Senior
Vice President, General Counsel and Secretary of Wang Laboratories, Inc., where
he was responsible for legal affairs. From 1984 to 1992, Mr. Sandman was Vice
President and Corporate Counsel of Wang Laboratories, Inc., where he was
responsible for corporate and international legal affairs. Mr. Sandman received
his A.B. from Boston College, and his J.D. from Harvard Law School.
James H. Taylor, Jr. joined the Company as Senior Vice President of Corporate
Operations in August 1999. Mr. Taylor most recently served as Vice President of
Global Technology at Nestle Clinical Nutrition from 1995 to 1997. Prior to
joining Nestle, he completed a thirty-year career at Baxter International, where
he held a broad range of positions in operations management, including from 1992
to 1995, the position of Corporate Vice President of Manufacturing Operations
and Strategy. Mr. Taylor received his B.A. degree from the University of North
Carolina.
James R. Tobin joined the Company as Director, President and Chief Executive
Officer in March 1999. Prior to joining the Company, Mr. Tobin served as
President and Chief Executive Officer of Biogen, Inc. from 1997 to 1998 and
Chief Operating Officer of Biogen from 1994 to 1997. From 1972 to 1994, Mr.
Tobin served in a variety of executive positions with Baxter International,
including President and Chief Operating Officer from 1992 to 1994. Previously,
he served at Baxter as Managing Director in Japan, Managing Director in Spain,
President of Baxter's I.V. Systems Group and Executive Vice President. Mr. Tobin
currently serves on the Boards of Directors of Beth Israel Deaconess Medical
Center, the Carl J. Shapiro Institute for Education and Research, Curis, Inc.
and Applera Corporation (formerly PE Corporation). Mr. Tobin holds an A.B. from
Harvard College and an M.B.A. from Harvard Business School. Mr. Tobin also
served as a lieutenant in the U.S. Navy from 1968 to 1972.
28
29
PART II
- --------------------------------------------------------------------------------
ITEM 5. MARKET FOR THE COMPANY'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The Company's common stock is traded on the New York Stock Exchange under the
symbol "BSX".
The information set forth under the caption "Market for the Company's Common
Stock and Related Matters" included in the Company's 2000 Consolidated Financial
Statements (Exhibit 13.1 filed herewith) is incorporated herein by reference.
The closing price of the Company's Common Stock on March 16, 2001 was $18.45.
ITEM 6. SELECTED FINANCIAL DATA
The information set forth under the caption "Five-Year Selected Financial Data"
included in the Company's 2000 Consolidated Financial Statements (Exhibit 13.1
filed herewith) is incorporated herein by reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The statements and information set forth under the caption "Management's
Discussion and Analysis of Financial Condition and Results of Operations"
included in the Company's 2000 Consolidated Financial Statements (Exhibit 13.1
filed herewith) are incorporated herein by reference.
ITEM 7a. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The information set forth under the subcaption "Market Risk Disclosures"
contained under the caption "Management's Discussion and Analysis of Financial
Condition and Results of Operations" included on pages F-10 through F-11 of the
Company's 2000 Consolidated Financial Statements (Exhibit 13.1 filed herewith)
is incorporated herein by reference.
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30
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The consolidated financial statements of the Company and its subsidiaries
included in the Company's 2000 Consolidated Financial Statements (Exhibit 13.1
filed herewith) are incorporated herein by reference.
The statements and information set forth under the caption "Quarterly Results of
Operations" included in the Company's 2000 Consolidated Financial Statements
(Exhibit 13.1 filed herewith) are incorporated herein by reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY
The required information concerning directors and executive officers set forth
in the Company's definitive Proxy Statement to be filed with the Commission on
or about April 6, 2001 is incorporated herein by reference. See also "Directors
and Executive Officers of the Company" following Item 4 herein.
ITEM 11. EXECUTIVE COMPENSATION
The required information concerning executive compensation set forth in the
Company's definitive Proxy Statement to be filed with the Commission on or about
April 6, 2001 is incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The required statements concerning security ownership of certain beneficial
owners and management set forth in the Company's definitive Proxy Statement to
be filed with the Commission on or about April 6, 2001 are incorporated herein
by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The required statements concerning certain relationships and related
transactions set forth in the Company's definitive Proxy Statement to be filed
with the Commission on or about April 6, 2001 are incorporated herein by
reference.
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31
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a)(1) Financial Statements.
The response to this portion of Item 14 is set forth under Item 8.
(a)(2) Financial Schedules.
The response to this portion of Item 14 is filed herewith as a
separate attachment to this report.
(a)(3) Exhibits (* documents filed herewith).
Exhibit
No. Title
------- -----
3.1 Second Restated Certificate of Incorporation of the Company
(Exhibit 3.1, Annual Report on Form 10-K for the year ended
December 31, 1993, File No. 1-11083).
3.2 Certificate of Amendment of the Second Restated Certificate
of Incorporation of the Registrant (Exhibit 3.2, Annual
Report on Form 10-K for the year ended December 31, 1994,
File No. 1-11083).
3.3 Certificate of Second Amendment of the Second Restated
Certificate of Incorporation of the Registrant (Exhibit 3.3,
Annual Report on Form 10-K for the year ended December 31,
1998, File No. 1-11083).
3.4 Restated By-laws of the Company (Exhibit 3.2, Registration
No. 33-46980).
4.1 Specimen Certificate for shares of the Company's Common
Stock (Exhibit 4.1, Registration No. 33-46980).
4.2 Description of Capital Stock contained in Exhibits 3.1, 3.2,
3.3 and 3.4.
31
32
4.3 Form of Debt Securities Indenture (Exhibit 4.4, Registration
Statement on Form S-3 of the Company, BSC Capital Trust, BSC
Capital Trust II and BSC Capital Trust III, File No.
333-64887).
10.1 Boston Scientific Corporation 1992 Long-Term Incentive Plan,
as amended (Exhibit 10.1, Annual Report on Form 10-K for the
year ended December 31, 1996, File No. 1-11083).
10.2 Boston Scientific Corporation 1992 Non-Employee Directors'
Stock Option Plan, as amended (Exhibit 10.2, Annual Report
on Form 10-K for the year ended December 31, 1996, File No.
1-11083).
*10.3 Form of Amendment to Boston Scientific Corporation 1992 Non-
Employee Directors' Stock Option Plan, as amended.
10.4 Boston Scientific Corporation 1995 Long-Term Incentive Plan,
as amended (Exhibit 10.1, Annual Report on Form 10-K for the
year ended December 31, 1996, File No. 1-11083).
10.5 SCIMED Life Systems, Inc. 1987 Non-Qualified Stock Option
Plan, amended and restated (Exhibit 4.3, Registration No.
33-89772 which was incorporated by reference to Exhibit A to
SCIMED's Proxy Statement dated May 23, 1991 for its 1991
Annual Meeting of Shareholders, Commission File No. 0-9301).
10.6 SCIMED Life Systems, Inc. 1991 Directors Stock Option Plan,
as amended (Exhibit 4.2, Registration No. 33-89772 which was
incorporated by reference to Exhibit A to SCIMED's Proxy
Statement dated June 8, 1994 for its 1994 Annual Meeting of
Shareholders, Commission File No. 0-9301).
10.7 SCIMED Life Systems, Inc. 1992 Stock Option Plan (Exhibit
4.1, Registration No. 33-89772 which was incorporated by
reference to Exhibit A to SCIMED's Proxy Statement dated May
26, 1992 for its 1992 Annual Meeting of Shareholders,
Commission File No. 0-9301).
10.8 Heart Technology, Inc. Restated 1989 Stock Option Plan
(Exhibit 4.5, Registration No. 33-99766 which was
incorporated by reference to Exhibit 10.4 to the
Registration Statement on Form S-1 of Heart Technology,
Registration No. 33-45203).
10.9 Heart Technology, Inc. 1992 Stock Option Plan for
Non-Employee Directors (Exhibit 4.6, Registration No.
33-99766 which was incorporated by reference to Exhibit 10.5
to the Registration Statement on Form S-1 of Heart
Technology, Registration No. 33-45203).
32
33
10.10 Heart Technology, Inc. 1995 Stock and Incentive Plan
(Exhibit 4.7, Registration No. 33-99766 which was
incorporated by reference to Exhibit 10.4 to the Quarterly
Report on 10-Q/A of Heart Technology for its fiscal quarter
ended June 30, 1995, filed on August 30, 1995, File No.
0-19812).
10.11 EP Technologies, Inc. 1988 Stock Plan (Exhibit 4.7,
Registration No. 33- 80265 which was incorporated by
reference to EPT's Registration Statement on Form S-8, File
No. 33-67020).
10.12 EP Technologies, Inc. 1991 Stock Option/Stock Issuance Plan
(Exhibit 4.6, Registration No. 33-80265 which was
incorporated by reference to EPT's Registration Statement on
Form S-8, File No. 33-82140).
10.13 EP Technologies, Inc. 1993 Stock Option/Stock Issuance Plan,
(Exhibit 4.5, Registration No. 33-80265 which was
incorporated by reference to EPT's Registration Statement on
Form S-8, File No. 33-93196).
10.14 Target Therapeutics, Inc. 1988 Stock Option Plan,
incorporated by reference to Exhibit 10.2 to Target
Therapeutics, Inc.'s Quarterly Report on Form 10-Q for the
quarter ended September 30, 1996 (File No. 0-19801).
10.15 Target Therapeutics, Inc. 1988 Stock Option Plan,
incorporated by reference to Exhibit 10.3 to Target
Therapeutics, Inc.'s Quarterly Report on Form 10-Q for the
quarter ended September 30, 1996 (File No. 0-19801).
10.16 Boston Scientific Corporation 401(k) Savings Plan, Amended
and Restated, Effective January 1, 1997 (Exhibit 10.17,
Annual Report on Form 10-K for the year ended December 31,
1997, File No. 1-11083).
10.17 Second Amendment to Boston Scientific Corporation 401(k)
Plan (Exhibit 10.1, Quarterly Report on Form 10-Q for the
quarter ended March 31, 1999, File No. 1-11083).
10.18 Third Amendment to Boston Scientific Corporation 401(k) Plan
(Exhibit 10.1, Quarterly Report on Form 10-Q for the quarter
ended September 30, 1999, File No. 1-11083).
*10.19 Form of Fourth Amendment to Boston Scientific Corporation
401(k) Plan.
10.20 Boston Scientific Corporation Global Employee Stock
Ownership Plan, as Amended and Restated (Exhibit 10.18,
Annual Report on Form 10-K for the year ended December 31,
1997, File No. 1-11083).
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34
*10.21 Form of First Amendment to the Boston Scientific Corporation
Global Employee Stock Ownership Plan, as Amended and
Restated.
*10.22 Form of Second Amendment to the Boston Scientific
Corporation Global Employee Stock Ownership Plan, as
Amended and Restated.
10.23 Boston Scientific Corporation Deferred Compensation Plan,
Effective January 1, 1996 (Exhibit 10.17, Annual Report on
Form 10-K for the year ended December 31, 1996, File No.
1-11083).
10.24 Boston Scientific Corporation 2000 Long Term Incentive Plan
(Exhibit 10.20, Annual Report on Form 10-K for the year
ended December 31, 1999, File No. 1-11083).
10.25 Form of Second Amended and Restated Credit Agreement, dated
September 4, 1998 among the Company, The Several Lenders and
certain other parties (Exhibit 10.1, Current Report on Form
8-K dated September 25, 1998, File No. 1-11083).
10.26 Form of Amendment dated February 23, 1999 to Second Amended
and Restated Credit Agreement dated September 4, 1998 among
the Company, The Several Lenders and certain other parties
(Exhibit 10.21, Annual Report on Form 10-K for the year
ended December 31, 1998, File No. 1-11083).
10.27 Form of Second Amendment to the Second Amended and Restated
Credit Agreement among Boston Scientific Corporation, The
Several Lenders and The Chase Manhattan Bank dated as of
June 20, 2000. (Exhibit 10.1, Quarterly Report on Form 10-Q
for the quarter ended June 30, 2000, File No. 1-11083).
34
35
10.28 Form of Second Amended and Restated Credit Agreement among
Boston Scientific Corporation, The Several Lenders and The
Chase Manhattan Bank dated as of August 21, 2000 (Exhibit
10.1, Quarterly Report on Form 10-Q for the quarter ended
September 30, 2000, File No. 1-11083).
10.29 Form of Indemnification Agreement between the Company and
certain Directors and Officers (Exhibit 10.16, Registration
No. 33-46980).
10.30 Letter Agreement, dated June 22, 1992, between the Company
and Lawrence C. Best (Exhibit 10.11, Annual Report on Form
10-K for the year ended December 31, 1993, File No.
1-11083).
10.31 Form of Retention Agreement between the Company and certain
Executive Officers (Exhibit 10.23, Annual Report on Form
10-K for the year ended December 31, 1996, File No.
1-11083).
10.32 Letter Agreement dated March 17, 1999, between the Company
and James R. Tobin (Exhibit 10.34, Annual Report on Form
10-K for the year ended December 31, 1998, File No.
1-11083).
10.33 Agreement Containing Consent Decree, dated as of February
23, 1995, between the Company and the Federal Trade
Commission (Exhibit 10.16, Annual Report on Form 10-K for
the year ended December 31, 1994, File No. 1-11083).
10.34 6.625% Promissory Notes due March 15, 2005 issued by the
Company in the aggregate principal amount of $500 million,
each dated as of March 10, 1998 (Exhibit Nos. 4.1, 4.2 and
4.3 to the Company's Current Report on Form 8-K dated March
10, 1998, File No. 1-11083).
11. Statement regarding computation of per share earnings
(included in Note J to the Company's 2000 Consolidated
Financial Statements for the year ended December 31, 2000,
filed as Exhibit 13.1 hereto).
*12.1 Statement regarding computation of ratios of earnings to
fixed charges.
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36
*13.1 The Company's 2000 Consolidated Financial Statements for the
year ended December 31, 2000.
13.2 Report of Independent Auditors, Ernst & Young LLP (included
in the Company's 2000 Consolidated Financial Statements for
the year ended December 31, 2000, filed as Exhibit 13.1
hereto).
*21. List of the Company's subsidiaries as of March 9, 2001.
Each subsidiary does business under the corporate name
indicated.
*23.1 Consent of Independent Auditors, Ernst & Young LLP.
(b) Reports on Form 8-K.
None.
36
37
SIGNATURE
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Company has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
Dated: March 30, 2001
BOSTON SCIENTIFIC CORPORATION
By: /s/ LAWRENCE C. BEST
----------------------------------------
Lawrence C. Best
Chief Financial Officer
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
Company and in the capacities and on the dates indicated.
Dated: March 30, 2001 /s/ JOHN E. ABELE
----------------------------------------
John E. Abele
Director, Founder
Dated: March 30, 2001 /s/ LAWRENCE C. BEST
----------------------------------------
Lawrence C. Best
Senior Vice President--Finance and
Administration and Chief Financial
Officer (Principal Financial and
Accounting Officer)
Dated: March 30, 2001 /s/ JOSEPH A. CIFFOLILLO
----------------------------------------
Joseph A. Ciffolillo
Director
Dated: March 30, 2001 /s/ JOEL L. FLEISHMAN
----------------------------------------
Joel L. Fleishman
Director
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38
Dated: March 30, 2001 /s/ RAY J. GROVES
----------------------------------------
Ray J. Groves
Director
Dated: March 30, 2001 /s/ LAWRENCE L. HORSCH
----------------------------------------
Lawrence L. Horsch
Director
Dated: March 30, 2001 /s/ N.J. NICHOLAS, JR.
----------------------------------------
N.J. Nicholas, Jr.
Director
Dated: March 30, 2001 /s/ PETER M. NICHOLAS
----------------------------------------
Peter M. Nicholas
Director, Founder, Chairman of the Board
Dated: March 30, 2001 /s/ JOHN E. PEPPER
----------------------------------------
John E. Pepper
Director
Dated: March 30, 2001 /s/ WARREN B. RUDMAN
----------------------------------------
Warren B. Rudman
Director
Dated: March 30, 2001 /s/ JAMES R. TOBIN
----------------------------------------
James R. Tobin
Director, President and
Chief Executive Officer
(Principal Executive Officer)
38
39
FINANCIAL STATEMENT SCHEDULE
The following additional consolidated financial statement schedule should be
considered in conjunction with the Company's 2000 Consolidated Financial
Statements (Exhibit 13.1 filed herewith):
Schedule II - Valuation and Qualifying Accounts
All other schedules have been omitted since the required information is not
present or not sufficiently material to require submission of the schedule, or
because the information required is included in the consolidated financial
statements or the notes thereto.
39
40
SCHEDULE II
VALUATION AND QUALIFYING ACCOUNTS
ADDITIONS
--------------------------------------------
Balance at Charged to Charged to Balance at
Beginning Costs and Other End of
Description of Period Expenses Accounts Deductions Period
- ----------- ------------------------------------------------------------------------------
(In millions)
YEAR ENDED DECEMBER 31, 2000
Reserves and allowances deducted from
asset accounts:
Allowances for uncollectible
amounts and sales returns and allowances......... $63 8 5 (1) 9 (2) $67
YEAR ENDED DECEMBER 31, 1999
Reserves and allowances deducted from
asset accounts:
Allowances for uncollectible
amounts and sales returns and allowances......... $49 11 13 (1) 10 (2) $63
YEAR ENDED DECEMBER 31, 1998
Reserves and allowances deducted from
asset accounts:
Allowances for uncollectible
amounts and sales returns and allowances......... $30 15 16 (1) 12 (2) $49
(1) Charges for sales returns and allowances, net of actual sales returns
(2) Uncollectible accounts written off.
Certain prior years' amounts have been reclassified to conform to the
current year's presentation.