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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 11-K
ANNUAL REPORT PURSUANT TO SECTION 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
(Mark One):
|X| Annual report pursuant to Section 15(d) of the Securities
Exchange Act of 1934 (No Fee Required)
For the fiscal year ended December 31, 1999
OR
|_| Transition report pursuant to Section 15(d) of the Securities
Exchange Act of 1934 (No Fee Required)
For the transition period from to
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Commission file number: 1-11083
A. Full title of the plan and the address of the plan, if different
from that of the issuer named below:
Boston Scientific Corporation
401(k) Savings Plan
B. Name of issuer of the securities held pursuant to the plan and
the address of its principal executive office:
Boston Scientific Corporation
One Boston Scientific Place
Natick, MA 01760-1537
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<PAGE>
AUDITED FINANCIAL STATEMENTS
AND SUPPLEMENTAL SCHEDULE
BOSTON SCIENTIFIC CORPORATION
401(K) SAVINGS PLAN
YEAR ENDED DECEMBER 31, 1999
<PAGE>
BOSTON SCIENTIFIC CORPORATION 401(K) SAVINGS PLAN
AUDITED FINANCIAL STATEMENTS
AND SUPPLEMENTAL SCHEDULE
YEAR ENDED DECEMBER 31, 1999
CONTENTS
Report of Ernst & Young LLP, Independent Auditors..................... 1
Audited Financial Statements
Statements of Net Assets Available for Plan Benefits.................. 2
Statement of Changes in Net Assets Available for Plan Benefits........ 3
Notes to Financial Statements......................................... 4-7
Supplemental Schedule
Schedule H, Line 4i - Schedule of Assets Held for Investment
Purposes At End of Year.......................................... 8
<PAGE>
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
401(k) Plan Committee
Boston Scientific Corporation
401(k) Savings Plan
We have audited the accompanying statements of net assets available for plan
benefits of the Boston Scientific Corporation 401(k) Savings Plan (the Plan) as
of December 31, 1999 and 1998, and the related statement of changes in net
assets available for plan benefits for the year ended December 31, 1999. These
financial statements are the responsibility of the Plan's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for plan benefits of the Plan at
December 31, 1999 and 1998, and the changes in its net assets available for plan
benefits for the year ended December 31, 1999, in conformity with accounting
principles generally accepted in the United States.
Our audits were performed for the purpose of forming an opinion on the financial
statements taken as a whole. The accompanying supplemental schedule of assets
held for investment purposes at end of year as of December 31, 1999, is
presented for purposes of additional analysis and is not a required part of the
financial statements but is supplementary information required by the Department
of Labor's Rules and Regulations for Reporting and Disclosure under the Employee
Retirement Income Security Act of 1974. The supplemental schedule is the
responsibility of the Plan's management. The supplemental schedule has been
subjected to the auditing procedures applied in our audits of the financial
statements and, in our opinion, is fairly stated in all material respects in
relation to the financial statements taken as a whole.
Ernst & Young LLP
Boston, Massachusetts
April 26, 2000
1
<PAGE>
Boston Scientific Corporation 401(k) Savings Plan
Statements of Net Assets Available for Plan Benefits
<TABLE><CAPTION>
DECEMBER 31
1999 1998
------------------------------------
<S> <C> <C>
Assets
Investments, at fair value:
Shares of Registered investment companies $ 168,724,367 $ 129,235,270
BSC Stock 58,510,327 51,666,674
Pfizer Stock 28,050,447 49,563,851
Participants' notes receivable 9,933,509 9,248,682
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96,494,283 110,479,207
Investments, at contract value
Income Fund 18,599,150 15,088,490
Receivables:
Contributions receivable from participants -- 1,234,353
Contributions receivable from Plan Sponsor -- 294,056
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-- 1,528,409
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Net assets available for plan benefits $ 283,817,800 $ 256,331,376
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</TABLE>
SEE ACCOMPANYING NOTES.
2
<PAGE>
Boston Scientific Corporation 401(k) Savings Plan
Statement of Changes in Net Assets Available for Plan Benefits
Year Ended December 31, 1999
<TABLE><CAPTION>
<S> <C>
Additions to net assets attributed to:
Investment income:
Interest and dividend income $ 9,728,731
Net realized and unrealized gain on investments 2,406,567
Contributions:
Contributions and rollovers from participants 39,898,170
Contributions from Plan Sponsor 7,930,182
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47,828,352
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Total additions 59,963,650
Deductions from net assets attributed to:
Benefits paid to participants 32,477,226
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Net increase 27,486,424
Net assets available for plan benefits:
Beginning Balance, January 1, 1999 256,331,376
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Ending Balance, December 31, 1999 $ 283,817,800
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</TABLE>
SEE ACCOMPANYING NOTES.
3
<PAGE>
Boston Scientific Corporation 401(k) Savings Plan
Notes To Financial Statements
Year Ended December 31, 1999
1. DESCRIPTION OF THE PLAN
The Boston Scientific Corporation 401(k) Savings Plan (the Plan) is a defined
contribution plan covering all eligible employees who have completed 30 days 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 1% and 15% of his or her pretax annual compensation each
year. In addition, a participant may contribute between 1% and 10% of his or her
compensation on an after-tax basis each year. Boston Scientific Corporation's
(the Company) matching contribution is the lesser of 50% of the participant's
elective contribution or 2% of eligible compensation, as defined. The Plan was
amended, effective January 1, 2000 to modify the Company matching contribution.
The amount of the Company's matching contribution shall be equal to (i) 75% of
the elective contributions made on behalf of the participant for the period
which do not exceed 1% of the participant's compensation for such period, plus
(ii) 50% of the elective contributions made on behalf of the participant for the
period which exceed 1% but do not exceed 4% of the participant's compensation.
The Plan was amended, effective January 1, 1998, to include other employer
contributions. The Company shall contribute to the Plan such amounts as
determined by the Board of Directors (the Board) on behalf of certain eligible
participants.
The Plan was amended effective September 11, 1998, to include a special matching
contribution by the Company on behalf of participants who were employed by
certain subsidiaries of Pfizer, Inc. which were acquired by the Company on
September 10, 1998. The special matching contribution shall be equal to (i) 50%
of the elective contributions made on behalf of such eligible participant with
respect to each applicable period which do not exceed 2% of the eligible
participant's compensation for such period, and (ii) 50% of the elective
contributions which exceed 4% but do not exceed 6% of such eligible
participant's compensation for such period. This was in effect through December
31, 1999. The Plan was amended, effective January 1, 2000 to modify the Company
special matching contribution. For the period January 1, 2000 through September
9, 2000, the special matching contribution shall be equal to (i) 25% of the
elective contributions made on behalf of such eligible participant which do not
exceed 1% of the eligible participant's compensation for such period, plus (ii)
50% of the elective contributions made on behalf of such eligible participant
which exceed 1% but do not exceed 2% of the eligible participant's compensation
for such period, plus (iii) 50% of the elective contributions which exceed 4%
but do not exceed 6% of such eligible participant's compensation for such
period.
The September 11, 1998 amendment also established an investment fund to hold
shares of Pfizer Inc. Common stock transferred from the Pfizer Savings and
Investment Plan for Schneider employees. No contributions can be made to this
fund and any earnings on this fund will be allocated to a participant's current
investment elections under the Plan. A participant can transfer amounts out of
the Pfizer stock fund to other investment funds within the Plan.
The Plan was amended effective November 16, 1998 allowing withdrawals from a
rollover account for any reason and allowing totally disabled participants, as
defined in the long term disability contract, to take withdrawals at any time
regardless of age. Participants may also make withdrawals for any reason after
attaining age 59 1/2.
For the Plan year beginning January 1, 1999 and the period from January 1, 2000
to September 9, 2000, the Company shall contribute on behalf of each former
Schneider Participant, 3% of such eligible participant's compensation paid
during such period. 4
<PAGE>
Boston Scientific Corporation 401(k) Savings Plan
Notes To Financial Statements (continued)
1. DESCRIPTION OF THE PLAN (CONTINUED)
At the discretion of the Board, the Company may also make an additional
discretionary contribution. Employees with three of more years of credited
service on December 31, 1992 will be fully vested in such amounts and all other
employees will become fully vested in such amounts after five years of credited
service (20% vesting after each year). No additional discretionary contribution
was made in 1999 or 1998.
A participant can allocate his or her account among various investment funds.
Each participant's account is credited with the participant's contribution, the
Company's contribution and an allocation of Plan earnings. The allocations of
earnings are based upon each participant's account balance by fund in relation
to all participants' account balances by fund. Each participant is fully vested
in his or her account, except as discussed above regarding discretionary
contributions. The benefit to which a participant is entitled is the benefit
included in the participant's account.
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 or up to 10 years for the purchase of a primary
residence. However, participants of the defined contribution plans of the
acquired companies (refer to Note 2) may retain the loan terms granted under
their former 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, 1999 ranged
from 8.25% to 11.42%. Principal and interest are 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, a variable or a fixed
installment option. If a participant's balance is greater than a preset amount,
he or she has the option of leaving the funds invested in the Plan. A
participant may withdraw all or a portion of his or her 401(k) contributions and
employee contributions to the extent necessary to meet a financial hardship.
Although it has not expressed any intent to do so, the Company has the right
under the Plan to discontinue its contributions at any time and to terminate the
Plan subject to the provisions of ERISA.
The foregoing description of the Plan provides only general information.
Participants should refer to the "Summary Plan Description" and the Plan
document for a more complete description of the Plan's provisions. Copies are
available from the 401(k) Administrative Committee.
2. BOSTON SCIENTIFIC CORPORATION MERGERS AND ACQUISITIONS
During 1998, the Company completed a strategic acquisition. The Company merged
the participant's loan fund of the defined contribution plan of the acquired
company into the Plan in October 1998, the Pfizer stock fund in November 1998
and the remaining funds in January 1999.
5
<PAGE>
Boston Scientific Corporation 401(k) Savings Plan
Notes To Financial Statements (continued)
3. 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 that represent the net asset value of shares held by the
fund. Securities listed on a registered stock exchange are valued by the Plan
Administrator at the last reported sales price on the last business day of the
Plan year. The participant notes receivable are valued at cost which
approximates fair value.
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 is used to determine the equitable share of each participating trust in
the fund and the fund is intended to maintain a share value of one dollar. The
crediting interest rate as of December 31, 1999 and the average yield for the
year then ended was 5.7%.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates that affect the
amounts reported in the financial statements and accompanying notes. Actual
results could differ from these estimates.
The Plan has adopted SOP 99-3, ACCOUNTING FOR AND REPORTING OF CERTAIN DEFINED
CONTRIBUTION BENEFIT PLAN INVESTMENTS AND OTHER DISCLOSURE MATTERS, for the 1999
financial statement presentation. Accordingly, 1998 amounts have been
reclassified to conform with SOP 99-3.
4. TRANSACTIONS WITH PARTIES-IN-INTEREST
Fees for legal, accounting and other services rendered during the year by
parties-in-interest were paid by the Company.
On November 30, 1998, the Company paid a two-for-one stock split in the form of
a 100% stock dividend to stockholders of record as of November 13, 1998.
Accordingly, the Plan received a common stock dividend as a result of its
investment in the BSC Stock Fund.
5. INCOME TAX STATUS
The Plan has received a determination letter from the Internal Revenue Service
dated February 20, 1998, stating that the Plan is qualified under Section 401
(a) of the Internal Revenue Code (the "Code") and, therefore, the related trust
is exempt from taxation. Once qualified, the Plan is required to operate in
conformity with the Code to maintain its qualification. The Plan Administrator
believes the Plan is being operated in compliance with the applicable
requirements of the Code and, therefore, believes that the Plan is qualified and
the related trust is tax exempt.
6
<PAGE>
Boston Scientific Corporation 401(k) Savings Plan
Notes To Financial Statements (continued)
6. INVESTMENTS
Investments that represent more than 5% of the Plan's net assets available for
plan benefits at December 31, 1999 and 1998 are as follows:
1999 1998
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Vanguard 500 Index Fund $ 61,683,418 $ 44,021,032
Vanguard International Growth Fund 16,021,205 12,783,403
Vanguard US Growth Fund 61,094,307 47,633,348
Vanguard Wellington Fund 14,525,410 14,477,989
Boston Scientific Common Stock 58,510,327 51,666,674
Pfizer Common Stock 28,050,447 49,563,851
7
<PAGE>
Boston Scientific Corporation 401(k) Savings Plan
EIN #04-2695240
Plan #001
Schedule H, Line 4i - Schedule of Assets Held for
Investment Purposes At End of Year
December 31, 1999
<TABLE><CAPTION>
Shares Current
Identity of Issue or Units Value
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<S> <C> <C>
Bankers Trust:
Income Fund 5,683,468 $ 5,683,468
Warburg Pincus:
Emerging Growth Fund 126,796 6,322,037
Vanguard Group:*
500 Index Fund 455,800 61,683,418
Money Market Reserves Prime Portfolio 12,915,682 12,915,682
Total Bond Market Index Fund 408,875 3,908,845
International Growth Fund 712,370 16,021,205
U.S. Growth Fund 1,403,499 61,094,307
Wellington Fund 519,507 14,525,410
Windsor II Fund 207,014 5,169,145
Boston Scientific Corporation
Common Stock * 2,674,758 58,510,327
Pfizer Common Stock 864,754 28,050,447
Participants' notes receivable 8.25% to 11.42% 9,933,509
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$283,817,800
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* Indicates party-in-interest to the Plan.
</TABLE>
8
<PAGE>
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
Date: June 28, 2000 By: /s/ Lawrence C. Best
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Lawrence C. Best
Plan Administrator and Senior Vice President -
Finance and Administration and Chief Financial
Officer of Boston Scientific Corporation
