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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549



FORM 10-Q


/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
ACT OF 1934

For the quarterly period ended: March 31, 2003


Commission file number: 1-11083


BOSTON SCIENTIFIC CORPORATION
(Exact name of registrant as specified in its charter)

DELAWARE 04-2695240
-------- ----------
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)

One Boston Scientific Place, Natick, Massachusetts 01760-1537
- -------------------------------------------------- ----------
(Address of principal executive offices) (Zip Code)

Registrant's telephone number, including area code: (508) 650-8000
--------------


- --------------------------------------------------------------------------------

Former name, former address and former fiscal year, if changed since last
report.

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.

Yes X No
--- ---

Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act).

Yes X No
--- ---

Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the last practicable date.

Shares Outstanding
Class as of March 31, 2003
----- --------------------
Common Stock, $.01 Par Value 410,166,879

- --------------------------------------------------------------------------------

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TABLE OF CONTENTS

PAGE
PART I FINANCIAL INFORMATION NO.

ITEM 1. Condensed Consolidated Financial Statements 3

Condensed Consolidated Balance Sheets 3

Condensed Consolidated Statements of Operations 5

Condensed Consolidated Statements of Cash Flows 6

Notes to Condensed Consolidated Financial Statements 7

ITEM 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 19

ITEM 3. Quantitative and Qualitative Disclosures About Market Risk 29

ITEM 4. Controls and Procedures 30

PART II OTHER INFORMATION 31

ITEM 1. Legal Proceedings 31

ITEM 6. Exhibits and Reports on Form 8-K 31

SIGNATURE 32

CERTIFICATIONS 33

2


PART I
FINANCIAL INFORMATION

ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

BOSTON SCIENTIFIC CORPORATION AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(Unaudited)

March 31, December 31,
In millions, except share and per share data 2003 2002
==============================================================================

Assets
Current assets:
Cash and cash equivalents $ 294 $ 277
Trade accounts receivable, net 452 435
Inventories 241 243
Other current assets 253 253
----------------------------
Total current assets $ 1,240 $ 1,208

Property, plant and equipment 1,160 1,117
Less: accumulated depreciation 504 481
----------------------------
656 636

Excess of cost over net assets acquired $ 1,232 $ 1,168
Technology - core, net 556 553
Technology - developed, net 209 217
Patents, net 324 316
Licenses and other intangibles, net 116 113
Other assets 279 239
----------------------------
$ 4,612 $ 4,450
============================




See notes to unaudited condensed consolidated financial statements.

3


BOSTON SCIENTIFIC CORPORATION AND SUBSIDIARIES
Condensed Consolidated Balance Sheets (continued)
(Unaudited)



March 31, December 31,
In millions, except share and per share data 2003 2002
==============================================================================

Liabilities and Stockholders' Equity
Current liabilities:
Commercial paper $ 421 $ 88
Bank obligations 4
Accounts payable 71 66
Accrued expenses 446 639
Other current liabilities 150 130
----------------------------
Total current liabilities 1,092 923

Long-term debt 826 847
Other long-term liabilities 219 213

Commitments and contingencies

Stockholders' equity:
Preferred stock, $ .01 par value -
authorized 50,000,000 shares,
none issued and outstanding
Common stock, $ .01 par value -
authorized 600,000,000 shares,
414,882,413 shares issued at
March 31, 2003 and December 31, 2002 4 4
Additional paid-in capital 1,293 1,250
Treasury stock, at cost - 4,715,534
shares at March 31, 2003 and 3,490,451
shares at December 31, 2002 (195) (54)
Retained earnings 1,491 1,394
Accumulated other comprehensive loss (118) (127)
----------------------------
Total stockholders' equity 2,475 2,467
----------------------------
$ 4,612 $ 4,450
============================




See notes to unaudited condensed consolidated financial statements.

4


BOSTON SCIENTIFIC CORPORATION AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
(Unaudited)



Three Months Ended
March 31,
In millions, except per share data 2003 2002
==============================================================================

Net sales $ 807 $ 675
Cost of products sold 226 207
----------------------------
Gross profit 581 468

Selling, general and administrative expenses 271 241
Amortization expense 20 17
Royalties 12 9
Research and development expenses 103 76
Litigation-related charges 7
Purchased research and development 13
----------------------------
426 343
----------------------------
Operating income 155 125

Other income (expense):
Interest expense (11) (12)
Other, net (4) 4
----------------------------

Income before income taxes 140 117
Income taxes 43 35
----------------------------
Net income $ 97 $ 82
============================

Net income per common share - basic $ 0.24 $ 0.20
============================

Net income per common share - assuming dilution $ 0.23 $ 0.20
============================



See notes to unaudited condensed consolidated financial statements.

5


BOSTON SCIENTIFIC CORPORATION AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(Unaudited)



Three Months Ended
March 31,
In millions 2003 2002
==============================================================================

Cash provided by operating activities $ 109 $ 59

Investing activities:
Purchases of property, plant and equipment, net (35) (39)
Acquisitions of businesses, net of cash acquired (13)
Payments related to prior year acquisitions (196)
Payments for acquisitions of and/or investments
in certain technologies, net (45) (63)
Other, net 9
------------------------
Cash used for investing activities (289) (93)

Financing activities:
Net increase in commercial paper 333 292
Net payments on revolving borrowings (10) (204)
Payments on notes payable, capital leases and
long-term borrowings (7) (47)
Purchases of common stock for treasury (189)
Proceeds from issuances of shares of common stock 68 14
------------------------
Cash provided by financing activities 195 55
Effect of foreign exchange rates on cash 2
------------------------
Net increase in cash and cash equivalents 17 21
Cash and cash equivalents at beginning of period 277 180
------------------------
Cash and cash equivalents at end of period $ 294 $ 201
========================





See notes to unaudited condensed consolidated financial statements.

6


Notes to Condensed Consolidated Financial Statements
(Unaudited)
March 31, 2003

NOTE A - BASIS OF PRESENTATION

The accompanying unaudited condensed consolidated financial statements of Boston
Scientific Corporation (Boston Scientific or the Company) have been prepared in
accordance with accounting principles generally accepted in the United States
for interim financial information and with the instructions to Form 10-Q and
Article 10 of Regulation S-X. Accordingly, they do not include all of the
information and footnotes required by accounting principles generally accepted
in the United States for complete financial statements. In the opinion of
management, all adjustments (consisting only of normal recurring adjustments)
considered necessary for a fair presentation have been included. Operating
results for the three months ended March 31, 2003 are not necessarily indicative
of the results that may be expected for the year ending December 31, 2003. For
further information, refer to the consolidated financial statements and
footnotes thereto incorporated by reference in Boston Scientific's Annual Report
on Form 10-K for the year ended December 31, 2002.

Certain prior year's amounts have been reclassified to conform to the current
year presentation.

NOTE B - STOCK COMPENSATION ARRANGEMENTS

The Company accounts for its stock compensation arrangements under the intrinsic
value method in accordance with Accounting Principles Board Opinion No. 25,
ACCOUNTING FOR STOCK ISSUED TO EMPLOYEES, and related Interpretations. The
Company has adopted the disclosure-only provisions of FASB Statement No. 123,
ACCOUNTING FOR STOCK-BASED COMPENSATION.

If the Company had elected to recognize compensation expense for the granting of
options under stock option plans based on the fair values at the grant dates
consistent with the methodology prescribed by Statement No. 123, net income and
net income per share would have been reported as the following pro forma
amounts:

Three Months Ended
March 31,
(In millions, except per share data) 2003 2002
- ------------------------------------------------------------------------------

Net income, as reported $ 97 $ 82

Add: Stock-based employee compensation
expense included in net income, net of related
tax effects 2

Less: Total stock-based employee compensation
expense determined under fair value based method
for all awards, net of related tax effects (13) (11)
------ ------
PRO FORMA NET INCOME $ 84 $ 73
====== ======
Net income per common share -

Basic:
Reported 0.24 0.20
Pro forma 0.20 0.18

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Assuming dilution:
Reported 0.23 0.20
Pro forma 0.20 0.18


The fair value of the stock compensation used to calculate the pro forma net
income and earnings per share amounts above was estimated using the
Black-Scholes options pricing model.

NOTE C - COMPREHENSIVE INCOME

For the three months ended March 31, 2003 and 2002, the Company reported
comprehensive income of $106 million and $71 million, respectively.

NOTE D - EARNINGS PER SHARE

The following table sets forth the computations of basic and diluted earnings
per share:

Three Months
Ended March 31,
(In millions, except share and per share data) 2003 2002
- --------------------------------------------------------------------------------
Basic:
Net income $ 97 $ 82
Weighted average shares outstanding (in thousands) 410,994 405,280
Net income per common share $ 0.24 $ 0.20
========= =========

Assuming dilution:
Net income $ 97 $ 82
Weighted average shares outstanding (in thousands) 410,994 405,280
Net effect of dilutive stock-based compensation
(in thousands) 11,022 5,817
--------- ---------
Total (in thousands) 422,016 411,097
Net income per common share $ 0.23 $ 0.20
========= =========

NOTE E - BUSINESS COMBINATIONS

On February 12, 2003, the Company completed its acquisition of InFlow Dynamics
Inc. (InFlow) for approximately $13 million in cash plus contingent payments. In
addition, the Company recorded approximately $13 million of acquisition-related
obligations at the date of acquisition. InFlow is a stent technology development
company that focuses on reducing the rate of restenosis, improving the
visibility of stents during procedures and enhancing the overall vascular
compatibility of the stent. The acquisition is intended to provide the Company
with an expanded stent technology and intellectual property portfolio.

The condensed consolidated financial statements include InFlow's operating
results from the date of acquisition. Pro forma information is not presented, as
InFlow's results of operations prior to its date of acquisition are not material
to the Company. The aggregate purchase price for InFlow has been allocated to
the assets acquired and liabilities assumed based on their fair values at the
date of acquisition. The estimated

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excess of purchase price over the fair value of the net tangible assets acquired
was allocated to identifiable intangible assets, including purchased research
and development, as valued by an independent appraiser using information and
assumptions provided by management.

Certain of the Company's business combinations involve contingent consideration.
These payments would be allocated to specific intangible asset categories,
including purchased research and development, with the remainder assigned to
excess of cost over net assets acquired as if the consideration had been paid as
of the date of acquisition. Payment of the additional consideration is generally
contingent upon the acquired companies' reaching certain performance milestones,
including achieving specified revenue levels, product development targets or
regulatory approvals. At March 31, 2003, the Company had an accrual for
acquisition-related obligations of approximately $60 million. These accruals
were recorded during the first quarter of 2003, primarily as an adjustment to
goodwill. At March 31, 2003, the maximum potential amount of future contingent
consideration (undiscounted) that the Company could be required to make
associated with its business combinations is approximately $600 million, some of
which may be payable in the Company's common stock. The milestones associated
with the contingent consideration must be reached in certain future periods
ranging from 2003 through 2013. The cumulative revenue level associated with
the maximum future contingent payments is approximately $1.4 billion.

NOTE F - BORROWINGS AND CREDIT ARRANGEMENTS

The Company had approximately $421 million and $88 million of commercial paper
outstanding at March 31, 2003 and December 31, 2002, respectively, at weighted
average interest rates of 1.43 percent and 1.50 percent, respectively. In
addition, the Company had approximately $100 million and $113 million in
revolving credit facility borrowings outstanding at March 31, 2003 and December
31, 2002, respectively, at weighted average interest rates of 0.57 percent and
0.58 percent, respectively.

At March 31, 2003, the Company's revolving credit facilities totaled
approximately $1.6 billion, consisting of a $1 billion credit facility that
terminates in May 2003 and a $600 million credit facility that terminates in
August 2006. The Company expects to refinance its $1 billion credit facility
with a new credit facility of $600 million that will terminate in May 2004. The
new credit facility is expected to contain substantially similar terms to the
expiring credit facility; however, the new credit facility will contain an
option to convert credit facility borrowings into a one-year term loan expiring
in May 2005, provided that certain conditions are satisfied. As of December 31,
2002, the Company had short term borrowing capacity in excess of its outstanding
borrowings of approximately $1.4 billion; therefore, the Company decided to
reduce its 364-day credit facility from $1 billion to $600 million.

In addition, the Company had approximately $200 million and $197 million of
borrowings outstanding under its revolving credit and security facility, which
is secured by the Company's domestic trade receivables, at March 31, 2003 and
December 31, 2002, respectively. The borrowings bore interest rates of 1.67
percent and 1.89 percent at

9


March 31, 2003 and December 31, 2002, respectively. The revolving credit and
security facility provides for up to $200 million of borrowing capacity.

The Company has the ability to refinance a portion of its short-term debt on a
long-term basis through its revolving credit facilities. The Company expects
that a minimum of $300 million of its short-term bank obligations will remain
outstanding beyond the next twelve months and, accordingly, has classified this
portion as long-term borrowings at March 31, 2003, compared to $320 million of
short-term bank obligations classified as long-term at December 31, 2002.

NOTE G - INVENTORIES

The components of inventory consist of the following:

March 31, December 31,
(In millions) 2003 2002
- ----------------------------------------------------------
Finished goods $152 $145
Work-in-process 46 48
Raw materials 43 50
---- ----
$241 $243
==== ====

NOTE H - NEW ACCOUNTING STANDARD

In January 2003, the FASB issued Interpretation No. 46, CONSOLIDATION OF
VARIABLE INTEREST ENTITIES, to clarify the conditions under which the assets,
liabilities and activities of another entity should be consolidated into the
financial statements of a company. Interpretation No. 46 requires the
consolidation of a variable interest entity by a company that bears the majority
of the risk of loss from the variable interest entity's activities or is
entitled to receive the majority of the variable interest entity's residual
returns. The provisions of Interpretation No. 46 are required to be adopted by
the Company in 2003. The Company is in the process of determining the effect of
adoption of Interpretation No. 46, but does not believe it will materially
impact the Company's consolidated financial statements.

NOTE I - COMMITMENTS AND CONTINGENCIES

The Company is involved in various legal proceedings, including patent
infringement and product liability suits, from time to time in the normal course
of business. In management's opinion, the Company is not currently involved in
any legal proceeding other than those specifically identified in this Quarterly
Report and in the Company's Annual Report on Form 10-K for the year ended
December 31, 2002, which,

10


individually or in the aggregate, could have a material effect on the financial
condition, operations and/or cash flows of the Company. Additionally, legal
costs associated with asserting the Company's patent portfolio and defending
against claims that the Company's products infringe the intellectual property of
others are significant, and legal costs associated with non-patent litigation
and compliance activities are rising. Depending on the prevalence, significance
and complexity of these matters, the Company's legal provision could be
adversely affected in the future. As of March 31, 2003, the potential exposure
for litigation-related accruable costs is estimated to range from $13 million to
$18 million, including approximately $7 million for a charge related to
litigation with the Federal Trade Commission. The Company's total accrual for
litigation-related reserves as of March 31, 2003 and December 31, 2002 was
approximately $13 million and $4 million, respectively. As of March 31, 2003,
the range of loss for reasonably possible contingencies that can be estimated is
not material.

LITIGATION WITH JOHNSON & JOHNSON

On March 24, 2000, the Company (through its subsidiaries) and Medinol Ltd.
(Medinol) filed a cross-border suit against Johnson & Johnson, Cordis
Corporation (Cordis), a subsidiary of Johnson & Johnson, and certain of their
foreign subsidiaries in The Netherlands alleging Cordis' BX Velocity 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, Portugaland Sweden.
On March 19, 2001, the Company's request for preliminary injunction was denied
by the Court. On May 11, 2001, Medinol appealed this decision. The Company has
withdrawn from this action.

On January 13, 2003, Cordis filed suit for patent infringement against the
Company and SCIMED Life Systems, Inc. (SCIMED), a subsidiary of the Company,
alleging the Company's Express(2)(TM) coronary stent infringes a U.S. patent
owned by Cordis. The suit was filed in the U.S. District Court for the District
of Delaware seeking monetary and injunctive relief. On February 14, 2003, Cordis
filed a motion requesting a preliminary injunction. On March 5, 2003, the
Company answered the complaint, denying the allegations, and filed a
counterclaim against Cordis, alleging that certain products sold by Cordis
infringe a patent owned by the Company. A hearing on the preliminary injunction
motion has been scheduled for July 21 and 22, 2003, with post-hearing briefing
to follow.

On March 13, 2003, the Company and Boston Scientific Scimed, Inc. filed suit for
patent infringement against the Johnson & Johnson and Cordis, alleging that its
Cypher(TM) drug-eluting stent infringes a patent owned by the Company. The suit
was filed in the District Court of Delaware seeking monetary and injunctive
relief. On March 20, 2003, the Company filed a motion seeking a preliminary
injunction with respect to the sale of the Cypher stent in the United States. On
April 7, 2003, Cordis answered the complaint, denying the allegations, and filed
a counterclaim against the Company alleging that the patent is not valid and is
unenforceable. A hearing on the preliminary injunction motion has been scheduled
for July 23 and 24, 2003, with post-hearing briefing to follow.

On February 20, 2003, Janssen Pharmaceuticals NV, an affiliate of Johnson &
Johnson, filed suit against the Company (through its subsidiaries) and Medinol
alleging that BX Velocity stents manufactured in Belgium do not infringe a
European patent owned by Medinol and exclusively licensed to the Company.

11


The suit was filed in Belgium seeking a declaration of invalidity and
noninfringement of the Medinol patent and monetary relief. A hearing is
scheduled for June 16, 2003.

LITIGATION WITH MEDTRONIC, INC.

On August 13, 1998, Medtronic AVE, Inc. (Medtronic AVE), a subsidiary of
Medtronic, Inc. (Medtronic), filed a suit for patent infringement against the
Company and SCIMED alleging that the Company's NIR(R) stent infringes two
patents owned by Medtronic AVE. The suit was filed in the U.S. District Court
for the District of Delaware seeking injunctive and monetary relief. On May 25,
2000, Medtronic AVE amended the complaint to include a third patent. The Company
and SCIMED have answered denying the allegations of the complaint. Trial is
expected in 2004.

LITIGATION WITH GUIDANT CORPORATION

On October 15, 2002, Advanced Cardiovascular Systems, Inc. (ACS), a subsidiary
of Guidant Corporation (Guidant), filed suit for patent infringement against the
Company and SCIMED alleging the Company's Express stent infringes a U.S. patent
owned by ACS. The suit was filed in the U.S. District Court for the Northern
District of California seeking monetary damages and injunctive relief. On
December 6, 2002, the Company answered, denying the allegations of the complaint
and counterclaimed seeking a declaration of invalidity, noninfringement and
enforceability. The Company has asked the court to stay the litigation pending
the outcome of a related arbitration proceeding.

On December 3, 2002, ACS filed suit for patent infringement against the Company
and SCIMED alleging the Company's Express stent infringes a U.S. patent owned by
ACS. The suit was filed in the U.S. District Court for the Northern District of
California seeking monetary and injunctive relief. On January 30, 2003, the
Company filed an answer denying allegations of the complaint and concurrently
filed a counterclaim seeking declaratory judgment of patent invalidity and
noninfringement and alleging that certain ACS products infringe five U.S.
patents owned by the Company. The Company seeks monetary and injunctive relief.
On March 17, 2003, ACS filed an amended complaint alleging an additional patent
is infringed by the Company's product. The Company has asked the court to stay
the litigation pending the outcome of a related arbitration proceeding.

On January 28, 2003, ACS filed suit for patent infringement against the Company
and SCIMED alleging the Company's Express stent infringes a U.S. patent owned by
ACS. The suit was filed in the U.S. District Court for the

12


Northern District of California seeking monetary and injunctive relief. The
Company has answered denying the allegations of the complaint.

On December 30, 2002, the Company and certain of its subsidiaries filed suit for
patent infringement against Guidant, Guidant Sales Corporation and ACS alleging
that certain stent delivery systems (Multi-Link Zeta(TM) and Multi-Link
Penta(TM)) and balloon catheter products (Agil-Trac(TM)) sold by Guidant and ACS
infringe nine U.S. patents owned by the Company. The complaint was filed in the
U.S. District Court for the Northern District of California seeking monetary and
injunctive relief. On February 21, 2003, Guidant filed an answer denying the
allegations of the complaint and filed a counterclaim seeking declaratory
judgment of patent invalidity and noninfringement and alleging that certain
Company products infringe patents owned by ACS. A scheduling conference was
held on May 9, 2003.

LITIGATION RELATING TO COOK, INC.

On September 10, 2001, the Company delivered a Notice of Dispute to Cook, Inc.
(Cook) asserting that Cook breached the terms of a certain License Agreement
among Angiotech Pharmaceuticals, Inc. (Angiotech), Cook and the Company (the
Agreement) relating to an improper arrangement between Cook and Guidant. On
December 13, 2001, Cook filed suit in the U.S. District Court for the Northern
District of Illinois seeking declaratory and injunctive relief. The Company
answered the complaint on December 26, 2001, denying the allegations and filed
counterclaims seeking declaratory and injunctive relief. On June 27, 2002, the
Court found in favor of the Company, ruling that Cook breached the Agreement. On
October 1, 2002, the Court granted the Company's request for a permanent
injunction prohibiting certain activities under the Agreement and enjoining the
use of the clinical data and technologies developed by Cook or Guidant in
violation of the Agreement. Cook appealed the decision to the U.S. Court of
Appeals for the Seventh Circuit. On April 16, 2003, the Court heard oral
arguments, but has not yet issued a ruling.

On July 30, 2002, Guidant and Cook Group Incorporated, the parent of Cook,
announced their agreement to merge Cook Group Incorporated into a wholly owned
subsidiary of Guidant. On the same day, Guidant filed suit against the Company
seeking a declaratory judgment that upon completion of the merger, the license
under the Agreement may be assigned or sublicensed by Cook to ACS and that ACS
is entitled to use the information, data or technology generated or gathered for
the purposes of obtaining regulatory approval for a coronary stent utilizing the
Angiotech technology. The Company has answered the complaint and counterclaimed
for declaratory and injunctive relief alleging that Guidant is tortiously
interfering with Cook's performance under the Agreement. Guidant has announced
the termination of their agreement to merge with Cook, and on March 13, 2003,
the Company and Guidant filed a joint motion to dismiss the

13


claims and counterclaims between the parties without prejudice. On March 14,
2003, the Court granted the joint motion.


OTHER PATENT LITIGATION

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
Monorail(TM) technology. The suit was filed in the District Court for the State
of Minnesota seeking monetary relief. On September 26, 2001, Dr. Bonzel and the
Company reached a contingent settlement involving all but one claim asserted in
the complaint. The contingency has been satisfied and the settlement is now
final. On December 17, 2001, the remaining claim was dismissed without prejudice
with leave to refile the suit in Germany. Dr. Bonzel has filed an appeal of the
dismissal of the remaining claim. A hearing is scheduled for June 3, 2003.

On January 21, 2003, Dendron GmbH, EV3 Ltd., EV3 International, Inc., Microvena
Corporation and Microtherapeutics, Inc. (the EV3 Parties) filed suit against The
Regents of the University of California in the United Kingdom seeking a
declaration that certain of the EV3 Parties' detachable coil and microcatheter
products do not infringe a patent licensed by the Company from The Regents of
the University of California and revocation of the patent. The Company has
answered, denying the allegations of the complaint and filed a counterclaim
against the EV3 Parties alleging that the products infringe a patent licensed to
the Company and owned by the University.

On April 4, 2003, the Company, SCIMED and RadioTherapeutics Corporation (RTC), a
subsidiary of the Company, together with the University of Kansas and the
University of Nebraska, entered into an agreement with RITA Medical Systems,
Inc. (RITA) to settle outstanding litigation among the companies. The Company
and RITA had pending a number of lawsuits involving radiofrequency ablation
technology in

14


which each had accused the other of patent infringement. As part of the
settlement, the parties agreed to cross license certain patents. All related
suits among the parties were dismissed.

On November 26, 2002, the Company filed suit against Artes Medical USA, Inc.
(Artes) alleging that the Company's Contour SE(TM) embolic agent does not
infringe a certain patent owned by Artes, and that the patent is not valid. The
suit was filed in the U.S. District Court for the District of Massachusetts
seeking monetary and injunctive relief. On April 21, 2003, Artes filed a motion
to dismiss the suit for lack of jurisdiction. A hearing date for the motion has
not yet been set.

LITIGATION WITH MEDINOL LTD.

On June 11, 2001, the Company filed suit in the Jerusalem District Court in
Israel against Medinol and its controlling shareholders, alleging among other
things, loss of faith among Medinol's shareholders, breach of duty by Medinol
management and misappropriation of corporate opportunities, including trade
secrets and intellectual property. The suit seeks, among other things, monetary
relief and costs. Preliminary motions were heard on October 29, 2001. Medinol
and its shareholders requested the Court to strike the claim on the grounds of
lack of jurisdiction. The Court rejected the motion except for the nomination of
a director to Medinol, which was referred to the District Court of New York. A
preliminary hearing is scheduled for June 9, 2003.

On January 21, 2003, Medinol filed suit against several of the Company's
international subsidiaries in the District Court of The Hague, Netherlands
seeking cross-border, monetary and injunctive relief covering The Netherlands,
Austria, Belgium, United Kingdom, Ireland, Switzerland, Sweden, Spain, France,
Portugal and Italy, alleging the Company's Express(TM) stent infringes four
European patents owned by Medinol. A hearing is scheduled for October 10, 2003.

15


OTHER PROCEEDINGS

In October 1998, the Company recalled its NIR ON(R) Ranger(TM) with Sox(TM)
coronary stent delivery system following reports of balloon leaks. In November
1998, the U.S. Department of Justice began an investigation regarding the
shipment and sale of the NIR ON(R) Ranger(TM) with Sox(TM) stent delivery system
and other aspects of the Company's relationship with Medinol, the vendor of the
stent. The Company and two senior officials have been advised that they are
targets of the federal grand jury investigation, but that no final decision has
been made as to whether any potential charges would be brought. The Company
believes that the statute of limitations for certain charges, which could
potentially arise from the investigation, may expire during the year 2003 and
that this may serve as a catalyst for activity during the year. There can be no
assurance that the investigation will result in an outcome favorable to the
Company; that charges would not be brought; or that the Company would not agree
to an extension of the statute. The Company believes that it will ultimately be
demonstrated that the Company and its officials acted responsibly and
appropriately.

On October 31, 2000, the Federal Trade Commission (FTC) filed suit against the
Company for alleged violations of a Consent Order dated May 5, 1995, pursuant to
which the Company had licensed certain intravascular ultrasound technology to
Hewlett-Packard Company (HP). The suit was filed in the U.S. District Court for
the District of Massachusetts seeking civil penalties and injunctive relief. The
Company filed a motion to dismiss the complaint and the FTC filed a motion for
summary judgment. On October 5, 2001, the Court dismissed three of the five
claims against the Company and granted summary judgment of liability in favor of
the FTC on the two remaining claims. On March 28, 2003, the Court entered a
judgment against the Company in the amount of approximately $7 million.

16


Further, product liability claims against the Company may be asserted in the
future related to events not known to management at the present time. The
Company is substantially self-insured with respect to general and product
liability claims. Losses for claims in excess of the limits of purchased
insurance would be recorded at the time and to the extent they are probable and
estimable. Management believes that the Company's risk management practices,
including limited insurance coverage, are reasonably adequate to protect against
anticipated general and product liability losses. However, unanticipated
catastrophic losses could have a material adverse impact on the Company's
financial position, results of operations and liquidity.

NOTE J - SEGMENT REPORTING

Boston Scientific is a worldwide developer, manufacturer and marketer of medical
devices for less invasive procedures. The Company has four reportable operating
segments based on geographic regions: the United States, Europe, Japan and
Inter-Continental. Each of the Company's reportable segments generates revenue
from the sale of minimally invasive medical devices. The reportable segments
represent an aggregate of operating divisions.

Sales and operating results of reportable segments are based on internally
derived standard foreign exchange rates, which may differ from year to year and
do not include inter-segment profits. The segment information presented for 2002
has been restated based on the Company's standard foreign exchange rates used
for 2003. Because of the interdependence of the reportable segments, the
operating profit as presented may not be representative of the geographic
distribution that would occur if the segments were not interdependent.



United Inter-
(In millions) States Europe Japan Continental Total
- -----------------------------------------------------------------------------------------

Three months ended March 31, 2003
Net sales $479 $135 $120 $54 $788
Operating income excluding special
charges 185 59 68 16 328

Three months ended March 31, 2002
Net sales $405 $120 $122 $47 $694
Operating income excluding special
charges 136 49 72 10 267





17


A reconciliation of the totals reported for the reportable segments to the
applicable line items in the condensed consolidated financial statements is as
follows:

Three Months Ended
March 31,
(In millions) 2003 2002
- ------------------------------------------------------------------------------
Net sales:
Total net sales for reportable segments $ 788 $ 694
Foreign exchange 19 (19)
------ ------
$ 807 $ 675
====== ======
Income before income taxes:
Total operating income for reportable segments
excluding special charges $ 328 $ 267
Manufacturing operations (66) (71)
Corporate expenses and foreign exchange (87) (71)
Litigation-related charges (7)
Purchased research and development (13)
------ ------
155 125

Other expense, net (15) (8)
------ ------
$ 140 $ 117
====== ======



18


ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS

OVERVIEW

Boston Scientific Corporation (Boston Scientific or the Company) is a worldwide
developer, manufacturer and marketer of medical devices that are used in a broad
range of interventional medical specialties. 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.
This is accomplished through the continuing refinement of existing products and
procedures and the investigation and development of new technologies that can
reduce risk, trauma, cost, procedure time and the need for aftercare. The
Company's approach to innovation combines internally developed products and
technologies with those obtained externally through strategic acquisitions and
alliances.

The Company's products are used in a broad range of interventional medical
specialties, including interventional cardiology, peripheral intervention,
neurovascular intervention, electrophysiology, vascular surgery,
gastroenterology, gynecology, oncology and urology.

RESULTS OF OPERATIONS

FINANCIAL SUMMARY
Net sales for the first quarter of 2003 were $807 million as compared to $675
million in the first quarter of 2002, an increase of 20 percent. Excluding the
favorable impact of $38 million of foreign currency fluctuations, net sales were
$769 million, an increase of 14 percent. The reported net income for the first
quarter of 2003 was $97 million, or $0.23 per share (diluted), as compared to
$82 million, or $0.20 per share, in the first quarter of 2002. The reported
results for the first quarter of 2003 include after-tax charges of $20 million,
or $0.05 per share, consisting of purchased in-process research and development
costs of $13 million primarily related to the recent acquisition of InFlow
Dynamics, Inc. (InFlow), and a $7 million charge related to litigation with the
Federal Trade Commission. The reported results for the first quarter of 2002
include after-tax charges of $7 million, or $0.02 per share, associated with the
Company's previously announced global operations strategy, which was completed
in 2002.

NET SALES
During the first quarter of 2003, United States (U.S.) revenues increased
approximately 18 percent to $479 million relative to the first quarter of 2002.
U.S. revenues increased primarily due to sales of the Company's internally
developed Express2(TM)coronary stent, partially offset by decreases in NIR(R)
coronary stent sales. The U.S. revenue increase was also due to growth in the
Company's Endosurgery and coronary angioplasty balloon product lines.

19


International revenues increased approximately 21 percent to $328 million
relative to the first quarter of 2002, or approximately 8 percent on a constant
currency basis. The increase in international revenues, on a constant currency
basis, for the first quarter of 2003 was primarily due to increased sales of
coronary stents within the Company's Europe and Inter-Continental operating
segments and growth in the Company's Endoscopy product lines.

Worldwide coronary stent sales increased approximately 80 percent to $115
million relative to the first quarter of 2002, primarily due to sales of
Express2 coronary stent systems. The Company anticipates the launch of its
Express2 coronary stent system in Japan in the third or fourth quarter of 2003.
In addition, late in the first quarter of 2003, the Company initiated a limited
launch of its TAXUS drug-eluting coronary stent system in Europe and other
international markets.

The following table provides worldwide sales by region and relative change on an
actual and constant foreign currency basis for the three months ended March 31,
2003 and 2002, respectively.

Three Months Ended Change
March 31, At Actual At Constant
(In millions) 2003 2002 Currency Basis Currency Basis
---- ---- -------------- --------------

United States $ 479 $ 405 18% 18 %
Europe 145 106 37% 13 %
Japan 126 116 9% (2)%
Inter-Continental 57 48 19% 18 %
------ ------ ----- -----
WORLDWIDE $ 807 $ 675 20% 14 %
====== ====== ===== =====

The following table provides worldwide sales by division and relative change on
an actual and constant foreign currency basis for the three months ended March
31, 2003 and 2002, respectively.

Three Months Ended Change
March 31, At Actual At Constant
(In millions) 2003 2002 Currency Basis Currency Basis
---- ---- -------------- --------------

Cardiovascular $ 502 $ 416 21% 15%
Electrophysiology 27 22 23% 17%
Neurovascular 51 41 24% 15%
------ ------ ----- -----
CARDIOVASCULAR GROUP $ 580 $ 479 21% 15%

Oncology $ 38 $ 33 15% 11%
Endoscopy 138 119 16% 10%
Urology 51 44 16% 14%
------ ------ ----- -----
ENDOSURGERY GROUP $ 227 $ 196 16% 11%
------ ------ ----- -----
WORLDWIDE $ 807 $ 675 20% 14%
====== ====== ===== =====

20


The Company's international operating regions and divisions are managed on a
constant currency basis, while market risk from changes in currency exchange
rates is managed at the corporate level.

GROSS PROFIT
Gross profit increased to $581 million, or 72.0 percent of net sales, in the
first quarter of 2003 from $468 million, or 69.3 percent of net sales, in the
first quarter of 2002. The increase in gross profit was primarily due to the
reduction of costs associated with the Company's global operations strategy,
operational cost improvements and shifts in the Company's product sales mix
toward higher margin products, primarily the Express2(TM) coronary stent,
partially offset by reductions in hedging gains.

SELLING, GENERAL AND ADMINISTRATIVE (SG&A) EXPENSES
SG&A expenses as a percentage of net sales decreased to 34 percent in the first
quarter of 2003 from 36 percent in the first quarter of 2002 and increased
approximately $30 million to $271 million. The increase in expenses in the first
quarter of 2003 is primarily attributable to foreign currency fluctuations, and
an increase in selling expenses due to sales force expansion and market
development for the Company's drug-eluting stent business. General and
administrative expenses remained flat in the first quarter of 2003 relative to
the first quarter of 2002.

AMORTIZATION EXPENSE
Amortization expense increased to $20 million in the first quarter of 2003 from
$17 million in the first quarter of 2002 and decreased as a percentage of sales
to 2 percent from 3 percent. The increase in expense dollars during the first
quarter of 2003 is primarily a result of amortization of intangible assets
acquired during 2002.

ROYALTIES
Royalties were approximately $12 million during the first quarter of 2003 and $9
million during the first quarter of 2002 and remained at approximately 1 percent
of sales. The increase is primarily due to increases in sales of royalty-bearing
products. The Company expects that its royalty expenses will increase throughout
2003 primarily due to royalties payable on sales of the Company's TAXUS(TM)
paclitaxel-eluting stent system. In addition, the Company continues to enter
into strategic technological alliances, some of which include royalty
commitments.

RESEARCH AND DEVELOPMENT (R&D) EXPENSE
R&D expense increased to $103 million in the first quarter of 2003 from $76
million in the first quarter of 2002 and increased as a percentage of sales to
13 percent from 11 percent. The investment in research and development dollars
reflects spending on new product development programs as well as clinical
research and regulatory compliance. The increase in research and development
expense during the first quarter of 2003 is primarily attributable to investment
in the development of and clinical trials relating to the Company's TAXUS
drug-eluting stent program.

The TAXUS clinical program is a series of studies designed to collect data on
Boston Scientific's proprietary polymer-based, paclitaxel-eluting stent
technology for reducing

21


coronary restenosis, the growth of neointimal tissue within an artery after
angioplasty and stenting. Prior studies have demonstrated promising results by
dramatically reducing restenosis. Paclitaxel is a multifunctional microtubular
inhibitor that controls platelets, smooth muscle cells and white blood cells,
all of which are believed to contribute to restenosis. The proprietary polymer
on the stent allows for controlled delivery of paclitaxel. The Company initiated
the TAXUS program in 1997. The TAXUS program is generally progressing in line
with the estimates set forth in the Company's Annual Report on Form 10-K.

INTEREST EXPENSE AND OTHER, NET
Interest expense decreased to $11 million in the first quarter of 2003 from $12
million in the first quarter of 2002. The decrease was primarily due to lower
short-term market interest rates during the first quarter of 2003 relative to
the first quarter of 2002. Other, net, was an expense of approximately $4
million in the first quarter of 2003 and income of approximately $4 million in
the first quarter of 2002. The change in other, net, is primarily due to net
gains recognized on sales of available-for-sale securities in the first quarter
of 2002.

TAX RATE
The Company's reported tax rate was 31 percent and 30 percent for the first
quarter of 2003 and 2002, respectively. The increase was due to the increase in
special charges during the first quarter of 2003. The special charges included
purchased in-process research and development costs and litigation-related
charges during the first quarter of 2003, and costs associated with the
Company's global operations strategy during the first quarter of 2002. These
special charges are either not deductible for income tax purposes or are taxed
at rates that vary from the Company's blended effective tax rate. Management
currently estimates that the effective tax rate during the remainder of 2003,
excluding the impact of net special charges, will be approximately 27 percent.
However, the effective tax rate could be positively or negatively impacted by
changes in the geographic mix of the Company's income or by business
acquisitions.

The Company has recognized net deferred tax assets aggregating $65 million at
March 31, 2003 and $68 million at December 31, 2002. The assets relate
principally to the establishment of inventory and product-related reserves,
purchased research and development and net operating loss carryforwards. In
light of the Company's historical financial performance, the Company believes
that these assets will be substantially recovered.

LITIGATION-RELATED CHARGES
On October 31, 2000, the Federal Trade Commission (FTC) filed suit against the
Company for alleged violations of a Consent Order dated May 5, 1995. On March
28, 2003, the Court entered a judgment against the Company in the amount of
approximately $7 million. The Company recorded this amount as a charge to
operating income in the first quarter of 2003.

PURCHASED RESEARCH AND DEVELOPMENT
The Company's purchased research and development charges recorded during the
first

22


quarter of 2003 primarily relate to its acquisition of InFlow. The Company
completed its acquisition of InFlow on February 12, 2003, for approximately $13
million in cash plus contingent payments. In addition, the Company recorded
approximately $13 million of acquisition-related obligations at the date of
acquisition. InFlow is a stent technology development company that focuses on
reducing the rate of restenosis, improving the visibility of stents during
procedures and enhancing the overall vascular compatibility of the stent. The
acquisition is intended to provide the Company with an expanded stent technology
and intellectual property portfolio.

The condensed consolidated financial statements include InFlow's operating
results from the date of acquisition. Pro forma information is not presented, as
InFlow's results of operations prior to its date of acquisition are not material
to the Company. The aggregate purchase price for InFlow has been allocated to
the assets acquired and liabilities assumed based on their fair values at the
date of acquisition. The estimated excess of purchase price over the fair value
of the net tangible assets acquired was allocated to identifiable intangible
assets, including purchased research and development, as valued by an
independent appraiser using information and assumptions provided by management.

The Company's research and development projects acquired in connection with its
2001 and 2002 business combinations are generally progressing in line with the
estimates set forth in the Company's 2002 Annual Report on Form 10-K. The
Company expects to continue to pursue these research and development efforts and
believes it has a reasonable chance of completing the projects.

OUTLOOK
The worldwide coronary stent market is dynamic and highly competitive with
significant market share volatility. The introduction of drug-eluting stents is
likely to have a significant impact on the market size for coronary stents and
on the distribution of market share across the industry. The Company believes
drug-eluting stent technology represents one of the largest market opportunities
in the history of the medical device industry. It is estimated that the annual
worldwide market for coronary stents, including drug-eluting stents, may grow to
$5 billion by 2005, compared to approximately $2.2 billion today. Although the
Company believes it is positioned to be one of only two early entrants in this
market, uncertainties exist about the rate of development and size of this new
market.

The Company believes it is poised to take advantage of the drug-eluting stent
opportunity for a variety of reasons, including its more than five years of
scientifically rigorous research and development, the promising clinical results
of its TAXUS program, the combined strength of the components of its technology,
its overall market leadership, and the largest sales force in interventional
cardiology. In addition, in order to capitalize on this opportunity, the Company
is making significant investments in its sales, clinical and manufacturing
capabilities.

23


Recognizing the promise and benefits of drug-eluting stents, physicians are
expected to rapidly adopt this new technology in the U.S. In addition, initial
reimbursement rates have already been set in the United States. However, certain
international markets are still in the process of setting reimbursement levels,
which has delayed physician adoption rates in these markets.

The Company's success with drug-eluting stents, and its ability to improve
operating margins, could be adversely affected by more gradual physician
adoption rates, changes in reimbursement policies, delayed or limited regulatory
approvals, unexpected variations in clinical results, the earlier availability
of a competitor's technology, third-party intellectual property, the outcome of
litigation and the availability of inventory to meet customer demand. A more
gradual physician adoption rate may limit the number of procedures in which the
technology may be used and the price at which institutions may be willing to
purchase the technology. Together, these and other factors contribute to the
uncertainty surrounding the evolution of the drug-eluting stent market and the
Company's position in it.

During the first quarter of 2003, the FDA granted the TAXUS system "expedited
review" status. Granting of expedited review status means that the application
is designated to receive priority review before other pending applications. In
addition, during the first quarter of 2003, the Company received CE Mark
approval for its TAXUS paclitaxel-eluting stent system, and initiated a limited
launch of the product in Europe and other international markets. The Company
continues to make progress in improving product yields and the availability of
inventory, expanding to an unconstrained launch in Europe and other
international markets in May of 2003.

During the second quarter of 2003, one of the Company's competitors launched a
drug-eluting stent into the U.S. market, while the Company's drug-eluting stent
product is expected to be launched in the U.S. in late 2003. In addition,
several of the Company's competitors are expected to launch bare metal stent
products into the U.S. market during 2003. Until the Company launches its
drug-eluting stent product, it is likely that its U.S. coronary stent business
will be subject to significant share and price pressure; however, the Company
expects to achieve growth in its U.S. coronary stent business in 2003 as
compared to 2002. The Company plans to launch its drug-eluting stent product in
Japan in 2005, subject to regulatory approvals.

As the health care environment continues to undergo rapid change, management
expects that it will continue to focus on strategic initiatives and make
additional investments in existing relationships. Since early 2001, the Company
has consummated several business acquisitions and strategic alliances.
Management believes it has developed a sound plan to integrate these businesses.
The failure to successfully integrate these businesses could impair the
Company's ability to realize the strategic and financial objectives of these
transactions. In connection with these acquisitions, the Company has acquired
numerous in-process research and development platforms. As the Company continues
to undertake strategic initiatives, it is reasonable to assume that it will
acquire additional in-process research and development platforms.

24


Uncertainty remains with regard to future changes within the health care
industry. The trend toward managed care and economically motivated and more
sophisticated buyers in the U.S. may result in continued pressure on selling
prices of certain products and compression of gross margins. Further, the U.S.
marketplace is increasingly characterized by consolidation among health care
providers and purchasers of medical devices who prefer to limit the number of
suppliers from which they purchase medical products. There can be no assurance
that these entities will continue to purchase products from the Company.

International markets are also being affected by economic pressure to contain
reimbursement levels and health care costs. The Company's profitability from its
international operations may be limited by risks and uncertainties related 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,
reimbursement or economic environment where the Company conducts international
operations may have a material impact on revenues and profits, especially in
Japan, given its high profitability relative to its contribution to revenues.
The Company's Japan business is expected to be under continued pressure,
particularly in coronary stents, due to competitive product offerings and the
lack of physician acceptance of the NIR(R) coronary stent platform. The Company
anticipates the launch of its Express(2)(TM) coronary stent system in Japan in
the third or fourth quarter of 2003. Deterioration in the Japanese or emerging
markets economies may impact the Company's ability to grow its business and to
collect its accounts receivable in international markets. In addition, in
certain of these markets, there has been a reduction in procedural volume in
response to Severe Acute Respiratory Syndrome (SARS); the Company does not
believe the financial impact will be material. Further, the trend in countries
around the world toward more stringent regulatory requirements for product
clearance, changing reimbursement models and more vigorous enforcement
activities has generally caused or may cause medical device manufacturers to
experience more uncertainty, greater risk and higher expenses.

These factors may impact the rate at which the Company can grow. However,
management believes that it is positioning the Company to take advantage of
opportunities that exist in the markets it serves.

LIQUIDITY AND CAPITAL RESOURCES
Cash generated by operations provides a major source of funds for investing in
the Company's growth. Cash provided by operating activities increased to $109
million during the first quarter of 2003 from $59 million during the first
quarter of 2002. The increase is primarily due to the growth in the Company's
earnings and a reduction of cash payments associated with the Company's global
operations strategy. In addition, the Company increased its borrowings by
approximately $316 million and received approximately $68 million in connection
with the issuance of shares pursuant to its stock option and employee stock
purchase plans during the first quarter of 2003. Cash proceeds, including the
increase in borrowings during the period, were primarily used

25


to make acquisition-related payments, repurchase shares, and fund strategic
alliances, new acquisitions and capital expenditures.

The Company's net debt (borrowings less cash and cash equivalents) was $957
million and $658 million at March 31, 2003 and December 31, 2002, respectively.
As of March 31, 2003, net debt represented 26 percent of capital (total
stockholders' equity plus total debt), as compared to 19 percent at December 31,
2002. The increase in net debt was primarily due to an increase in commercial
paper borrowings as a result of acquisition-related payments and share
repurchases during the first quarter of 2003. The Company had working capital of
$148 million and $285 million as of March 31, 2003 and December 31, 2002,
respectively. The decrease in the working capital position was due to the
increase in commercial paper borrowings, partially offset by a decrease in
accrued liabilities.

The Company had approximately $421 million and $88 million of commercial paper
outstanding at March 31, 2003 and December 31, 2002, respectively, at weighted
average interest rates of 1.43 percent and 1.50 percent, respectively. In
addition, the Company had approximately $100 million and $113 million in
revolving credit facility borrowings outstanding at March 31, 2003 and December
31, 2002, respectively, at weighted average interest rates of 0.57 percent and
0.58 percent, respectively.

At March 31, 2003, the Company's revolving credit facilities totaled
approximately $1.6 billion, consisting of a $1 billion credit facility that
terminates in May 2003 and a $600 million credit facility that terminates in
August 2006. The Company expects to refinance its $1 billion credit facility
with a new credit facility of $600 million that will terminate in May 2004. The
new credit facility is expected to contain substantially similar terms to the
expiring credit facility; however, the new credit facility will contain an
option to convert credit facility borrowings into a one-year term loan expiring
in May 2005, provided that certain conditions are satisfied. As of December 31,
2002, the Company had excess short term borrowing capacity (approximately $1.4
billion was available under the Company's revolving credit facilities);
therefore, the Company decided to reduce its 364-day credit facility from $1
billion to $600 million.

In addition, the Company had approximately $200 million and $197 million of
borrowings outstanding under its revolving credit and security facility, which
is secured by the Company's domestic trade receivables, at March 31, 2003 and
December 31, 2002, respectively. The borrowings bore interest rates of 1.67
percent and 1.89 percent at March 31, 2003 and December 31, 2002, respectively.
The revolving credit and security facility provides for up to $200 million of
borrowing capacity.

The Company has the ability to refinance a portion of its short-term debt on a
long-term basis through its revolving credit facilities. The Company expects
that a minimum of $300 million of its short-term bank obligations will remain
outstanding beyond the next twelve months and, accordingly, has classified this
portion as long-term borrowings at March 31, 2003, compared to $320 million of
short-term bank obligations classified as long-term at December 31, 2002.

26


Certain of the Company's business combinations involve contingent consideration.
These payments would be allocated to specific intangible asset categories,
including purchased research and development, with the remainder assigned to
excess of cost over net assets acquired as if the consideration had been paid as
of the date of acquisition. Payment of the additional consideration is generally
contingent upon the acquired companies' reaching certain performance milestones,
including achieving specified revenue levels, product development targets or
regulatory approvals. At March 31, 2003, the Company had an accrual for
acquisition-related obligations of approximately $60 million. At March 31, 2003,
the maximum potential amount of future contingent consideration (undiscounted)
that the Company could be required to make associated with its business
combinations is approximately $600 million, some of which may be payable in the
Company's common stock. The milestones associated with the contingent
consideration must be reached in certain future periods ranging from 2003
through 2013. The cumulative revenue level associated with the maximum future
contingent payments is approximately $1.4 billion.

The Company is authorized to purchase on the open market and in private
transactions up to approximately 60 million shares of the Company's common
stock. Stock repurchased is principally used to satisfy the Company's
obligations pursuant to its equity incentive plans, but may also be used for
general corporate purposes, including acquisitions. During the first quarter of
2003, the Company repurchased approximately 4.5 million shares at an aggregate
cost of $189 million. As of March 31, 2003, a total of approximately 42 million
shares of the Company's common stock had been repurchased under its
authorization.

The Company expects to incur capital expenditures of approximately $150 million
during the remaining quarters of 2003. The Company expects that its cash and
cash equivalents, marketable securities, cash flows from operating activities
and borrowing capacity will be sufficient to meet its projected operating cash
needs over the next twelve months, including anticipated capital expenditures,
additional share repurchases, acquisition-related payments and other strategic
initiatives.

LEGAL PROCEEDINGS
The Company is involved in various legal proceedings, including patent
infringement and product liability suits, from time to time in the normal course
of business. In management's opinion, the Company is not currently involved in
any legal proceeding other than those specifically identified in Note I to the
condensed consolidated financial statements contained herein and the
consolidated financial statements contained in the Company's 2002 Annual Report
on Form 10-K, which, individually or in the aggregate, could have a material
effect on the financial condition, operations and/or cash flows of the Company.
Additionally, legal costs associated with asserting the Company's patent
portfolio and defending against claims that the Company's products infringe the
intellectual property of others are significant, and legal costs associated with
non-patent litigation and compliance activities are rising. Depending on the
prevalence, significance and complexity of these matters, the Company's legal
provision could be adversely affected in the future.

27


Further, product liability claims against the Company may be asserted in the
future related to events not known to management at the present time. The
Company is substantially self-insured with respect to general and product
liability claims. Losses for claims in excess of the limits of purchased
insurance would be recorded at the time and to the extent they are probable and
estimable. Management believes that the Company's risk management practices,
including limited insurance coverage, are reasonably adequate to protect against
anticipated general and product liability losses. However, unanticipated
catastrophic losses could have a material adverse impact on the Company's
financial position, results of operations and liquidity.

CAUTIONARY STATEMENTS FOR PURPOSES OF THE SAFE HARBOR PROVISIONS OF THE PRIVATE
SECURITIES LITIGATION REFORM ACT OF 1995

This report contains forward-looking statements. The Company desires to take
advantage of the safe harbor provisions of the Private Securities Litigation
Reform Act of 1995 and is including this statement for the express purpose of
availing itself of the protections of the safe harbor with respect to all
forward-looking statements. Forward-looking statements discussed in this report
include, but are not limited to, statements with respect to, and the Company's
performance may be affected by:

- - volatility in the coronary stent market, competitive offerings and the
timing of submission for and receipt of regulatory approvals to market
TAXUS(TM) drug-eluting stents and other coronary and peripheral stent
platforms;
- - the Company's ability to launch the Express(2)(TM) coronary stent in the
Japanese market in the third or fourth quarter of 2003 and the TAXUS
drug-eluting stent in the U.S. in late 2003 and in Japan in 2005;
- - the impact of the introduction of drug-eluting stents on the size and
distribution of share within the coronary stent market in the U.S. and
around the world;
- - the Company's ability to capitalize on the opportunity in the drug-eluting
stent market for significant growth in revenue and earnings and to supply
sufficient inventory to meet customer demand;
- - the Company's ability to achieve growth in its worldwide and domestic
coronary stent business in the face of competitive pressure and the
introduction of drug-eluting stents;
- - the continued decline in NIR(R) coronary stent sales in Japan and changes in
the mix of the Company's coronary stent platforms;
- - the ability of the Company to manage accounts receivable and gross margins
and to react effectively to the changing managed care environment,
reimbursement models and worldwide economic and political conditions;
- - the Company's ability to integrate the acquisitions and other strategic
alliances consummated since early 2001;
- - the Company's ability to successfully complete planned clinical trials and
to develop and launch products on a timely basis within cost estimates,
including products resulting from purchased research and development;
- - the Company's ability to position itself as one of two early entrants in the
drug-eluting stent market and to take advantage of opportunities that exist
in the markets it serves;
- - the timing, size and nature of strategic initiatives, market opportunities
and research and development platforms available to the Company and the
ultimate success of these initiatives;
- - the Company's ability to maintain a 27 percent effective tax rate, excluding
net special charges, during the remainder of 2003 and to substantially
recover its net deferred tax assets;

28


- - the ability of the Company to meet its projected cash needs over the next
twelve months, to refinance expiring credit facilities and to maintain its
borrowings beyond the next twelve months;
- - the financial impact of SARS on the Company;
- - risks associated with international operations;
- - the potential effect of foreign currency fluctuations on revenues, expenses
and resulting margins;
- - the effect of litigation, risk management practices and compliance
activities on the Company's loss contingency, legal provision and cash flow;
and
- - the impact of stockholder, patent, product liability, Medinol Ltd. and other
litigation, as well as the ultimate outcome of the U.S. Department of
Justice investigation.

Several important factors, in addition to the specific factors discussed in
connection with each forward-looking statement individually, could affect the
future results and growth rates of the Company and could cause those results and
rates to differ materially from those expressed in the forward-looking
statements contained in this report. These additional factors include, among
other things, future economic, competitive, reimbursement and regulatory
conditions, new product introductions, demographic trends, third-party
intellectual property, financial market conditions and future business decisions
of the Company and its competitors, all of which are difficult or impossible to
predict accurately and many of which are beyond the control of the Company.
Therefore, the Company wishes to caution each reader of this report to consider
carefully these factors as well as the specific factors discussed with each
forward-looking statement in this report and as disclosed in the Company's
filings with the Securities and Exchange Commission. These factors, in some
cases, have affected, and in the future (together with other factors) could
affect, the ability of the Company to implement its business strategy and may
cause actual results to differ materially from those contemplated by the
statements expressed in this report.


ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company had currency derivative instruments outstanding in the notional
amounts of $1.5 billion and $1.3 billion as of March 31, 2003 and December 31,
2002, respectively. The Company recorded $12 million of assets and $28 million
of liabilities to recognize the fair value of these instruments at March 31,
2003, compared to $15 million of assets and $27 million of liabilities at
December 31, 2002. A 10 percent appreciation in

29


the U.S. dollar's value relative to the hedged foreign currencies would increase
the derivative instruments' fair value by approximately $85 million as of March
31, 2003. A 10 percent depreciation in the U.S. dollar's value relative to the
hedged foreign currencies would decrease the derivative instruments' fair value
by approximately $101 million as of March 31, 2003. Any increase or decrease in
the fair value of the Company's foreign exchange rate sensitive derivative
instruments would be substantially offset by a corresponding decrease or
increase in the fair value of the hedged underlying asset, liability or cash
flow.

The Company had interest rate derivative instruments outstanding in the notional
amount of $63 million at March 31, 2003 and December 31, 2002, respectively. The
Company recorded an immaterial amount to recognize the fair value of these
instruments at March 31, 2003 and December 31, 2002. A 100 basis point change in
global interest rates would not change the derivative instruments' fair value by
a material amount at March 31, 2003 and December 31, 2002, respectively. Any
increase or decrease in the fair value of the Company's interest rate sensitive
derivative instruments would be substantially offset by a corresponding decrease
or increase in the fair value of the hedged underlying liability.


ITEM 4: CONTROLS AND PROCEDURES

EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES

Within 90 days prior to the date of this report (the Evaluation Date), the
Company carried out an evaluation, under the supervision of its President and
Chief Executive Officer and Senior Vice President - Finance & Administration and
Chief Financial Officer, of the effectiveness of the design and operation of the
Company's disclosure controls and procedures. Based on this evaluation, the
Company's President and Chief Executive Officer and Senior Vice President -
Finance & Administration and Chief Financial Officer concluded that as of the
Evaluation Date, the Company's disclosure controls and procedures are effective
in ensuring that material information relating to the Company required to be
included in the Company's periodic SEC filings was made known to them on a
timely basis. It should be noted that any system of controls is designed to
provide reasonable, but not absolute, assurances that the system will achieve
its stated goals under all potential circumstances.

CHANGES IN INTERNAL CONTROLS

There were no significant changes in the Company's internal controls, or to the
Company's knowledge, in other factors that could significantly affect the
Company's disclosure controls and procedures subsequent to the Evaluation Date.


30

PART II
OTHER INFORMATION



ITEM 1: LEGAL PROCEEDINGS

Note I - Commitments and Contingencies to the Company's unaudited condensed
consolidated financial statements contained elsewhere in this Quarterly Report
is incorporated herein by reference.



ITEM 6: EXHIBITS AND REPORTS ON FORM 8-K

(a) Exhibits

10.1 Amendment No. 1 to Credit and Security Agreement dated as
of January 30, 2003 among Boston Scientific Funding
Corporation, as Borrower, the Company, as Servicer,
Wachovia Bank, N.A. and others

99.1 Certification Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002, President and Chief Executive
Officer

99.2 Certification Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002, Senior Vice President and
Chief Financial Officer


(b) The following reports were filed during the quarter ended March
31, 2003:

None.


31


SIGNATURE


Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized on May 15, 2003.


BOSTON SCIENTIFIC CORPORATION


By: /s/ Lawrence C. Best
-------------------------------------
Name: Lawrence C. Best
Title: Chief Financial Officer and Senior
Vice President - Finance and
Administration
















32

CERTIFICATIONS

I, James R. Tobin, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Boston Scientific
Corporation;

2. Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect to
the period covered by this quarterly report;

3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and
cash flows of the registrant as of, and for, the periods presented in
this quarterly report;

4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and
we have:

a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its a
consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this
quarterly report is being prepared;

b) evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date
of this quarterly report (the "Evaluation Date"); and

c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on
our evaluation as of the Evaluation Date;

5. The registrant's other certifying officers and I have disclosed, based
on our most recent evaluation, to the registrant's auditors and the
audit committee of registrant's board of directors (or persons
performing the equivalent functions):

a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have
identified for the registrant's auditors any material weaknesses in
internal controls; and

b) any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's
internal controls; and

6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in
internal controls or in other factors that could significantly affect
internal controls subsequent to the date of our most recent evaluation,
including any corrective actions with regard to significant
deficiencies and material weaknesses.

Date: May 15, 2003 /s/ James R. Tobin
-------------------------------------
James R. Tobin
President and Chief Executive Officer


33

CERTIFICATIONS

I, Lawrence C. Best, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Boston Scientific
Corporation;

2. Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect to
the period covered by this quarterly report;

3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and
cash flows of the registrant as of, and for, the periods presented in
this quarterly report;

4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and
we have:

a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its a
consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this
quarterly report is being prepared;

b) evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date
of this quarterly report (the "Evaluation Date"); and

c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on
our evaluation as of the Evaluation Date;

5. The registrant's other certifying officers and I have disclosed, based
on our most recent evaluation, to the registrant's auditors and the
audit committee of registrant's board of directors (or persons
performing the equivalent functions):

a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have
identified for the registrant's auditors any material weaknesses in
internal controls; and

b) any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's
internal controls; and

6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in
internal controls or in other factors that could significantly affect
internal controls subsequent to the date of our most recent evaluation,
including any corrective actions with regard to significant
deficiencies and material weaknesses.

Date: May 15, 2003 /s/ Lawrence C. Best
-------------------------------------
Lawrence C. Best
Senior Vice President - Finance &
Administration and Chief Financial
Officer

34