SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 11-K
ANNUAL REPORT PURSUANT TO SECTION 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
(Mark One):
[X] Annual report pursuant to Section 15(d) of the Securities Exchange
Act of 1934 (Fee Required)
For the fiscal year ended December 31, 1995
OR
[ ] Transition report pursuant to Section 15(d) of the Securities
Exchange Act of 1934 (No Fee Required)
For the transition period from to
Commission file number: 1-11083
A. Full title of the plan and the address of the plan, if different from
that of the issuer named below:
Boston Scientific Corporation 401(k) Savings Plan
(f/k/a Boston Scientific Corporation
Long-Term Savings and Security Plan)
B. Name of issuer of the securities held pursuant to the plan and the
address of its principal executive office:
Boston Scientific Corporation
One Boston Scientific Place
Natick, MA 01760-1537
AUDITED FINANCIAL STATEMENTS
AND SCHEDULES
BOSTON SCIENTIFIC CORPORATION
LONG-TERM SAVINGS AND
SECURITY PLAN
Years ended December 31, 1995 and 1994
Boston Scientific Corporation Long-Term Savings and Security Plan
Audited Financial Statements and Schedules
Years ended December 31, 1995 and 1994
CONTENTS
Report of Independent Auditors...............................................1
Audited Financial Statements
Statements of Net Assets Available for Plan Benefits.........................2
Statements of Changes in Net Assets Available for Plan Benefits .............3
Notes to Financial Statements................................................4
Schedules
Schedule of Assets Held for Investment Purposes..............................9
Schedule of Reportable Transactions ........................................10
Report of Independent Auditors
401(k) Plan Committee
Boston Scientific Corporation
Long-Term Savings and Security Plan
We have audited the accompanying statements of net assets available for benefits
of Boston Scientific Corporation Long-Term Savings and Security Plan (the Plan)
as of December 31, 1995 and 1994, and the related statements of changes in net
assets available for benefits for the years then ended. These financial
statements are the responsibility of the Plan's management. Our responsibility
is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for plan benefits at December
31, 1995 and 1994, and the changes in net assets available for plan benefits for
the years then ended, in conformity with generally accepted accounting
principles.
Our audits were performed for the purpose of forming an opinion on the financial
statements taken as a whole. The accompanying supplemental schedules of assets
held for investment purposes as of December 31, 1995, and reportable
transactions for the year then ended, are presented for purposes of complying
with the Department of Labor's Rules and Regulations for Reporting and
Disclosure under the Employee Retirement Income Security Act of 1974, and are
not a required part of the financial statements. The Fund Information in the
statement of changes in net assets available for benefits is presented for the
purpose of additional analysis rather than to present the changes in net assets
available for benefits of each fund. The supplemental schedules and Fund
Information have been subjected to the auditing procedures applied in our audit
of the 1995 financial statements and, in our opinion, are fairly stated in all
material respects in relation to the 1995 financial statements taken as a whole.
ERNST & YOUNG LLP
June 14, 1996
Boston Scientific Corporation Long-Term Savings and Security Plan
Statements of Net Assets Available for Plan Benefits
<TABLE>
<CAPTION>
DECEMBER 31
1995 1994
----------- -----------
<S> <C> <C>
ASSETS
Investments, at fair value:
Money market assets $ 332,884 $ 321,301
Investment funds 30,946,607 21,692,040
Participants' notes receivable 1,252,842 908,315
-------------------------
32,532,333 22,921,656
Receivables:
Contributions receivable from participants 198,815 137,392
Contributions receivable from Plan Sponsor 134,301 112,506
Due from Fidelity Capital Appreciation Fund 4,432,662
-------------------------
Total assets 37,298,111 23,171,554
LIABILITIES
Accrued expenses 12,878 5,424
-------------------------
Total liabilities 12,878 5,424
-------------------------
Net assets available for plan benefits $37,285,233 $23,166,130
=========================
</TABLE>
See accompanying notes.
Boston Scientific Corporation Long-Term Savings and Security Plan
Statement of Changes in Net Assets Available for Plan Benefits
Years ended December 31, 1995 and 1994
<TABLE>
<CAPTION>
1995
------------------------------------------------------------------------------------------------------
Fidelity
Capital
Fidelity Fidelity Appreci- Scudder Vanguard BSC A/R, Loans
Combined Income Balanced Magellan ation Global Index Stock and Other
Total Fund Fund Fund Fund Fund Trust Fund Balances
----------- ---------- ---------- ------------ ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Additions to net assets
attributed to:
Investment income:
Interest and dividend
income $ 1,732,897 $ 337,447 $ 217,402 $ 768,516 $ 332,574 $ 76 $ 411 $ 3,799 $ 72,672
Realized gains on sale
of investments 556,923 25,755 191,858 290,139 49,171
Appreciation in fair
value of investments 5,013,051 440,608 2,283,439 2,289,004
------------------------------------------------------------------------------------------------------
7,302,871 337,447 683,765 3,243,813 622,713 76 411 2,341,974 72,672
------------------------------------------------------------------------------------------------------
Contributions:
Contributions and roll-
overs from participants 6,485,343 1,130,224 944,006 2,250,209 949,283 25,729 46,366 1,123,605 15,921
Contributions from Plan
Sponsor 1,528,040 296,761 246,361 531,004 202,920 21,447 37,162 192,385
------------------------------------------------------------------------------------------------------
8,013,383 1,426,985 1,190,367 2,781,213 1,152,203 47,176 83,528 1,315,990 15,921
------------------------------------------------------------------------------------------------------
Total additions 15,316,254 1,764,432 1,874,132 6,025,026 1,774,916 47,252 83,939 3,657,964 88,593
------------------------------------------------------------------------------------------------------
Deductions from net assets
attributed to:
Benefits paid to
participants 1,197,151 318,297 198,418 371,557 194,550 54,905 59,424
Realized losses on sale
of investments
Depreciation in fair
value of investments
------------------------------------------------------------------------------------------------------
Total deductions 1,197,151 318,297 198,418 371,557 194,550 54,905 59,424
------------------------------------------------------------------------------------------------------
Loans, transfers and other
activity, net (56,048) (2,973,120) (1,020,525) (4,693,408) 2,637,625 4,489,875 1,300,243 315,358
------------------------------------------------------------------------------------------------------
Net increase (decrease) in
net assets available for
plan benefits 14,119,103 1,390,087 (1,297,406) 4,632,944 (3,113,042) 2,684,877 4,573,814 4,903,302 344,527
Net assets available for
plan benefits:
Beginning of year 23,166,130 5,415,263 4,434,376 8,570,595 3,113,042 724,539 908,315
------------------------------------------------------------------------------------------------------
End of year $37,285,233 $6,805,350 $3,136,970 $13,203,539 $2,684,877 $4,573,814 $5,627,841 $1,252,842
======================================================================================================
<CAPTION>
1994
-----------------------------------------------------------------------------------
Fidelity
Fidelity Fidelity Capital BSC A/R, Loans
Combined Income Balanced Magellan Appreciation Stock and Other
Total Fund Fund Fund Fund Fund Balances
----------- ---------- ---------- ---------- ------------ -------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Additions to net assets
attributed to:
Investment income:
Interest and dividend
income $ 1,048,128 $ 263,569 $ 129,830 $ 289,701 $ 311,429 $ 111 $ 53,488
Realized gains on sale
of investments 24,406 1,108 23,298
Appreciation in fair
value of investments 151,997 151,997
---------------------------------------------------------------------------------
1,224,531 263,569 129,830 289,701 312,537 175,406 53,488
---------------------------------------------------------------------------------
Contributions:
Contributions and roll-
overs from participants 4,760,556 866,540 992,455 1,924,706 786,033 190,822
Contributions from Plan
Sponsor 1,277,577 262,230 271,899 496,560 198,607 48,281
---------------------------------------------------------------------------------
6,038,133 1,128,770 1,264,354 2,421,266 984,640 239,103
---------------------------------------------------------------------------------
Total additions 7,262,664 1,392,339 1,394,184 2,710,967 1,297,177 414,509 53,488
---------------------------------------------------------------------------------
Deductions from net assets
attributed to:
Benefits paid to
participants 860,025 228,652 224,241 258,858 114,582 12,466 21,226
Realized losses on sale
of investments 22,030 12,434 9,596
Depreciation in fair
value of investments 996,664 339,546 406,044 251,074
---------------------------------------------------------------------------------
Total deductions 1,878,719 228,652 576,221 674,498 365,656 12,466 21,226
---------------------------------------------------------------------------------
Loans, transfers and other
activity, net 154,452 (172,174) (348,078) 385,548 913 (20,661)
---------------------------------------------------------------------------------
Net increase (decrease) in
net assets available for
plan benefits 5,383,945 1,318,139 645,789 1,688,391 1,317,069 402,956 11,601
Net assets available for
plan benefits:
Beginning of year 17,782,185 4,097,124 3,788,587 6,882,204 1,795,973 321,583 896,714
---------------------------------------------------------------------------------
End of year $23,166,130 $5,415,263 $4,434,376 $8,570,595 $3,113,042 $724,539 $908,315
=================================================================================
</TABLE>
See accompanying notes.
Boston Scientific Corporation Long-Term Savings and Security Plan
Notes to Financial Statements
December 31, 1995
1. BOSTON SCIENTIFIC CORPORATION ACQUISITIONS
During 1995, Boston Scientific Corporation (BSC or the Company) completed five
strategic acquisitions. The Company merged the defined contribution plan of one
of the acquired companies into the BSC Long-Term Savings and Security Plan (the
Plan) during the 1995 Plan year. The defined contribution plan of another of the
acquired companies is expected to be terminated in the third quarter of 1996,
and the participants of which began contributing to the Plan during 1995. The
defined contribution plan of another of the acquired companies was merged into
the Plan on January 1, 1996. The defined contribution plans of the other two
acquired company are expected to be merged into the Plan during the 1997 Plan
year.
2. SIGNIFICANT ACCOUNTING POLICIES
The accounting records of the Plan are maintained on the accrual basis.
Investments are stated at fair value. Shares of mutual funds are valued at
quoted market prices which represent the net asset value of shares held by the
fund. Securities listed on a registered stock exchange are valued by the Plan
Administrator, NYL Benefit Services Company, at the last reported sales price on
the last business day of the year. Any unlisted securities are valued at their
closing bid price. The participant notes receivable are valued at cost which
approximates fair value.
The net appreciation (depreciation) on investments represents the difference
between the current value and costs of investments in the aggregate. The
realized gain or loss on investments is the difference between the proceeds
received and the cost of investments sold.
The income fund includes guaranteed investment contracts issued by banks,
insurance companies or other financial institutions pursuant to amounts
deposited and interest at such fixed, variable or other rates specified under
the terms of the agreement. Assets are valued at fair market value.
A unit method will be used to determine the equitable share of each
participating trust in the fund.
Certain prior year amounts have been reclassified to conform to the current
year's presentation.
3. DESCRIPTION OF THE PLAN
The Plan is a defined contribution plan covering all eligible employees who have
completed 6 months of service and have attained 21 years of age. It is subject
to the provisions of the Employee Retirement Income Security Act of 1974
(ERISA). A participant may contribute between 2% and 15% of his or her pretax
annual compensation each year. Boston Scientific Corporation's matching
contribution is 50% of the participant's contribution, up to 4% of eligible
compensation, as defined.
At the discretion of the Board of Directors of Boston Scientific Corporation,
the Company may also make an additional discretionary contribution. Employees
with three or more years of credited service on December 31, 1992 will be fully
vested in such amounts and all other employees will become fully vested in such
amounts after five years of credited service. No additional discretionary
contribution was made in 1995 or 1994.
A participant can allocate his or her account among various alternative
investment funds. Each participant's account is credited with the participant's
contribution, Boston Scientific Corporation's contribution and an allocation of
plan earnings. The allocations of earnings are based upon each participant's
account balance in relation to all participants' account balances. Each
participant is immediately fully vested in his or her account. The benefit to
which a participant is entitled is the benefit included in the participant's
account. Vested balances related to terminated participants approximated
$5,052,000 at December 31, 1995.
A participant may borrow from his or her fund account a minimum of $1,000 up to
a maximum equal to the lesser of $50,000 or 50% of his or her account balance.
Loan terms range up to 5 years. However, participants of the defined
contribution plans of the acquired companies may retain the loan terms granted
under their respective plans. Loan terms related to these participants range up
to 5 years or up to 10 years for the purchase of a primary residence. The loan
is secured by the balance in the participant's account and bears interest at a
rate commensurate with local prevailing rates as determined by the Plan
Administrator. Interest rates on loans outstanding at December 31, 1995 ranged
from 6.3% to 13.5%.
Principal and interest is paid ratably through payroll deductions.
Upon retirement or termination of service, a participant either receives a
lump-sum amount equal to the value of his or her account or, if a participant's
balance is greater than $3,500, he or she has the option of leaving the funds
invested in the Plan. A participant may withdraw all or a portion of his or her
contributions to the extent necessary to meet a financial hardship.
Although it has not expressed any intent to do so, Boston Scientific Corporation
has the right under the Plan to discontinue its contributions at any time and to
terminate the Plan subject to the provisions of ERISA.
The foregoing description of the Plan provides only general information.
Participants should refer to the "Summary Plan Description" for a more complete
description of the Plan's provisions. Copies are available from the 401(k) Plan
Committee.
4. INVESTMENTS
PNC Bank (the Trustee) holds the funds to manage, invest and reinvest in
accordance with provisions of the trustee's agreements.
The fair values, as determined by quoted market prices, of individual
investments that represent 5% or more of the Plan's net assets are as follows:
<TABLE>
<CAPTION>
1995 1994
----------------------------------------------------
NUMBER OF NUMBER OF
SHARES FAIR VALUE SHARES FAIR VALUE
----------------------------------------------------
<S> <C> <C> <C> <C>
Bankers Trust Income Fund 6,592,690 $ 6,592,690 5,287,141 $5,287,141
Fidelity Balanced Fund 411,576 5,564,507 356,423 4,380,436
Fidelity Magellan Fund 157,552 13,546,287 127,960 8,547,737
Fidelity Capital Appreciation Fund 183,905 2,815,586
BSC Stock Fund 106,458 5,243,123 38,050 661,140
</TABLE>
The balances per the Statements of Changes in Net Assets Available for Plan
Benefits reflect participant balances, by fund, and do not necessarily reflect
invested balances due to pending transfers.
5. TRANSACTIONS WITH PARTIES-IN-INTEREST
Fees for legal, accounting and other services rendered during the year by
parties-in-interest were paid by the Boston Scientific Corporation. These fees
were based on customary and reasonable rates for such services. During 1995,
Boston Scientific Corporation did not declare any dividends and accordingly, the
Plan did not receive common stock dividends as a result of its BSC Stock Fund
investment.
6. INCOME TAX STATUS
The Internal Revenue Service has determined and informed the Company by letter
dated July 9, 1992, that the Plan and related trust are designed in accordance
with applicable sections of the Internal Revenue Code (IRC). The Company intends
to file for a new determination letter during the 1997 plan year following the
mergers of the defined contribution plans described in Footnotes 1 and 8. The
Plan administrator and the Plan's tax counsel believe that the Plan is designed
and is currently being operated in compliance with the applicable requirements
of the IRC.
7. RECONCILIATION OF FINANCIAL STATEMENTS TO FORM 5500
The accompanying financial statements have been prepared in accordance with
generally accepted accounting principles, whereas the Form 5500 was prepared in
accordance with the rules of ERISA. ERISA requires the calculation of realized
gains (losses) to be based upon the difference between the proceeds from the
asset sale and the fair value at the beginning of the year (or the purchase
price if acquired during the year), whereas generally accepted accounting
principles requires the calculation to be based on historical cost. The table
below sets forth a reconciliation of the differences.
<TABLE>
<CAPTION>
NET
APPRECIATION
IN FAIR
REALIZED VALUE OF
GAIN INVESTMENTS
---------------------------
<S> <C> <C>
Balance per the Form 5500 $ 3,274,646 $ 2,295,328
Adjustments to reflect different calculation methods (2,717,723) (2,717,723)
--------------------------
Balance per accompanying financial statements $ 556,923 $ 5,013,051
==========================
</TABLE>
The above differences have no impact on the Plan's net assets available for plan
benefits as it represents a reclassification within investment income only.
8. SUBSEQUENT EVENTS
During the first quarter of 1996, the Company completed two strategic
acquisitions. The Company presently intends to merge the defined contribution
plan of one of the acquired companies into the Plan during the 1996 Plan year
and the other acquired company plan during the 1997 Plan year.
The Plan was amended and restated effective January 1, 1996 and renamed the
Boston Scientific Corporation 401(k) Savings Plan.
Boston Scientific Corporation Long-Term Savings and Security Plan
Schedule of Assets Held for Investment Purposes
December 31, 1995
<TABLE>
<CAPTION>
CURRENT
SHARES OR UNITS COST VALUE
--------------- ----------- -----------
<S> <C> <C> <C>
Bankers Trust:
Income Fund 6,592,690 $ 6,592,690 $ 6,592,690
Fidelity Funds:
Balanced Fund 411,576 5,177,575 5,564,507
Magellan Fund 157,552 11,194,648 13,546,287
Boston Scientific Corporation:*
Stock Fund 106,458 2,808,597 5,243,123
PNC Bank:
Money Market Account 332,884 332,884
Participants' notes receivable with terms up
to 10 years at interest rates of 6.3% to 13.5% 1,252,842 1,252,842
-------------------------
$27,359,236 $32,532,333
=========================
<FN>
<F1> * Indicates party-in-interest to the Plan
</FN>
</TABLE>
Boston Scientific Corporation Long-Term Savings and Security Plan
Schedule of Reportable Transactions
Year Ended December 31, 1995
<TABLE>
<CAPTION>
PURCHASE SELLING COST OF FAIR VALUE ON
IDENTITY OF PARTY INVOLVED DESCRIPTION OF ASSETS PRICE PRICE ASSET TRANSACTION DATE GAIN
- --------------------------- ---------------------- -------- ---------- ---------- ---------------- --------
<S> <S> <C> <C> <C> <C>
Category (i)--A single transaction in excess of 5% of plan assets
Fidelity Investments Fidelity Capital Appreciation Fund $4,432,662 $4,263,597 $4,432,662 $169,065
</TABLE>
There were no category (ii) or (iv) reportable transactions during 1995.
Boston Scientific Corporation Long-Term Savings and Security Plan
Schedule of Reportable Transactions
Year Ended December 31, 1995
<TABLE>
<CAPTION>
TOTAL NUMBER
OF TRANSACTIONS
MADE BY THE PLAN
DURING THE YEAR TOTAL DOLLAR TOTAL DOLLAR
----------------- VALUE OF VALUE OF
IDENTITY OF PARTY INVOLVED DESCRIPTION OF ASSETS PURCHASES SALES PURCHASES SALES GAIN
- --------------------------- --------------------- --------- ----- ------------ ------------ --------
<S> <S> <C> <C> <C> <C> <C>
Category (iii)--Series of transactions in excess of 5% of plan assets
U.S. Bankers Trust Income Fund 42 38 $2,171,135 $ 865,586
Fidelity Investments Fidelity Balanced Fund 32 28 1,513,587 795,879 $ 25,755
Fidelity Investments Fidelity Magellan Fund 35 27 3,870,320 1,347,067 191,858
Fidelity Investments Fidelity Capital Appreciation Fund 33 27 1,840,398 5,022,032 290,139
Boston Scientific Corporation* BSC Stock Fund 87 56 4,595,810 2,352,002 49,171
<FN>
<F1> * Represents a party-in-interest.
</FN>
</TABLE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
trustee (or other persons who administer the employee benefit plan) have duly
caused this annual report to be signed on its behalf by the undersigned hereunto
duly authorized.
Boston Scientific Corporation 401(k) Savings Plan
{f/k/a Boston Scientific Corporation
Long-Term Savings and Security Plan)
Date: July 2, 1996 By: /s/ Lawrence C. Best
-----------------------------------------
Lawrence C. Best
Plan Administrator and Senior Vice President-
Finance and Administration and Chief Financial
Officer of Boston Scientific Corporation
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration Statement
(Form S-8 No. 33-89772) pertaining to the Long-Term Savings and Security Plan
of Boston Scientific Corporation of our report dated June 14, 1996, with
respect to the financial statements and schedules of the Boston Scientific
Corporation Long-Term Savings and Security Plan included in this Annual
Report (Form 11-K) for the year ended December 31, 1995.
ERNST & YOUNG LLP
Boston, Massachusetts
June 27, 1996
