-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Eanks6vBrOhpzLXarn9WhbUhI2SuY365HvctzF+SQ2fiOgTYg1iTO7pD7cJ1bQ6L k38iI+3IexhEw/GXBa6g7w== 0000910647-97-000160.txt : 19970702 0000910647-97-000160.hdr.sgml : 19970702 ACCESSION NUMBER: 0000910647-97-000160 CONFORMED SUBMISSION TYPE: 11-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19961231 FILED AS OF DATE: 19970701 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: BOSTON SCIENTIFIC CORP CENTRAL INDEX KEY: 0000885725 STANDARD INDUSTRIAL CLASSIFICATION: SURGICAL & MEDICAL INSTRUMENTS & APPARATUS [3841] IRS NUMBER: 042695240 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 11-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-11083 FILM NUMBER: 97634882 BUSINESS ADDRESS: STREET 1: ONE BOSTON SCIENTIFIC PL CITY: NATICK STATE: MA ZIP: 01760-1537 BUSINESS PHONE: 5086508000 11-K 1 BODY OF 11-K 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, Effective October 7, 1996). For the fiscal year ended December 31, 1996 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 401(k) Savings Plan Years ended December 31, 1996 and 1995 Boston Scientific Corporation 401(k) Savings Plan Audited Financial Statements and Schedules Years ended December 31, 1996 and 1995 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................... 8 Schedule of Reportable Transactions............................... 9 Report of 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 Boston Scientific Corporation 401(k) Savings Plan (the Plan) as of December 31, 1996 and 1995, and the related statements of changes in net assets available for plan 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 benefits of the plan at December 31, 1996 and 1995, and the changes in its 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, 1996, 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 plan benefits is presented for the purpose of additional analysis rather than to present the changes in net assets available for plan benefits of each fund. The supplemental schedules and fund information have been subjected to the auditing procedures applied in our audit of the 1996 financial statements and, in our opinion, are fairly stated in all material respects in relation to the financial statements taken as a whole. /s/ Ernst & Young LLP ------------------------------------- Ernst & Young LLP Boston, Massachusetts June 3, 1997 Boston Scientific Corporation 401(k) Savings Plan Statements of Net Assets Available for Plan Benefits
December 31 1996 1995 -------------------------- Assets Investments, at fair value: Money market assets $ 81,038 $ 332,884 Investment funds 91,494,333 30,946,607 Participants' notes receivable 3,325,994 1,252,842 -------------------------- 94,901,365 32,532,333 Receivables: Contributions receivable from participants 800,332 198,815 Contributions receivable from Plan Sponsor 481,507 134,301 Due from Fidelity Capital Appreciation Fund -- 4,432,662 -------------------------- Total assets 96,183,204 37,298,111 Liabilities: Accrued expenses 91,991 12,878 -------------------------- Total liabilities 91,991 12,878 -------------------------- Net assets available for plan benefits $96,091,213 $37,285,233 ==========================
See accompanying notes. Boston Scientific Corporation 401(k) Savings Plan Statements of Changes in Net Assets Available for Plan Benefits Years Ended December 31, 1996 and 1995
1996 -------------------------------------------------------------------------------------------- (Information by Fund) -------------------------------------------------------------------------------- Fidelity Fidelity Scudder Vanguard BSC A/R, Loans Combined Income Balanced Magellan Global Index Stock and Other Total Fund Fund Fund Fund Trust Fund Balances -------------------------------------------------------------------------------------------- Additions to net assets attributed to: Investment income: Interest and dividend income $ 5,145,355 $ 555,234 $ 233,580 $ 3,356,771 $ 501,235 $ 325,635 $ - $ 172,900 Net realized gains on sale of investments 4,613,823 338,575 298,131 64,892 54,595 3,857,630 Net appreciation in fair value of investments 2,959,002 543,711 2,415,291 -------------------------------------------------------------------------------------------- 12,718,180 555,234 572,155 3,654,902 1,109,838 2,795,521 3,857,630 172,900 -------------------------------------------------------------------------------------------- Contribtuions: Contributions and rollovers from participants 49,563,545 8,324,280 2,277,434 11,463,010 3,912,739 7,048,370 16,068,685 469,027 Contributions from Plan Sponsor 3,291,869 345,977 217,787 1,017,469 309,318 570,462 830,856 -------------------------------------------------------------------------------------------- 52,855,414 8,670,257 2,495,221 12,480,479 4,222,057 7,618,832 16,899,541 469,027 -------------------------------------------------------------------------------------------- Total additions 65,573,594 9,225,491 3,067,376 16,135,381 5,331,895 10,414,353 20,757,171 641,927 Deductions from net assets attributed to: Benefits paid to participants 5,800,969 1,886,553 272,643 1,431,333 262,555 504,249 1,297,375 146,261 Net depreciation in fair value of investments 966,645 82,380 884,265 -------------------------------------------------------------------------------------------- Total deductions 6,767,614 1,886,553 355,023 2,315,598 262,555 504,249 1,297,375 146,261 -------------------------------------------------------------------------------------------- Net increase prior to loans, transfers and other activity 58,805,980 7,338,938 2,712,353 13,819,783 5,069,340 9,910,104 19,459,796 495,666 Loans, transfers and other activity, net (2,606,820) (165,607) (3,516,687) 1,338,283 3,029,405 343,940 1,577,486 -------------------------------------------------------------------------------------------- Net increase (decrease) 58,805,980 4,732,118 2,546,746 10,303,096 6,407,623 12,939,509 19,803,736 2,073,152 Net assets available for plan benefits: Beginning 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 -------------------------------------------------------------------------------------------- End of year $96,091,213 $11,537,468 $5,683,716 $23,506,635 $9,092,500 $17,513,323 $25,431,577 $3,325,994 ============================================================================================
1995 ------------------------------------------------------------------------------------------------------- (Information by Fund) ------------------------------------------------------------------------------------------- Fidelity Fidelity Fidelity Capital Scudder Vanguard BSC A/R, Loans Combined Income Balanced Magellan Appreciation Global Index Stock and Other Total Fund Fund Fund Fund Fund Trust Fund Balances ------------------------------------------------------------------------------------------------------- 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 Net realized gains on sale of investments 556,923 25,755 191,858 290,139 49,171 Net 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 ------------------------------------------------------------------------------------------------------- Contribtuions: Contributions and rollovers 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 Net realized loss on sale of Net depreciation in fair value of investments ------------------------------------------------------------------------------------------------------- Total deductions 1,197,151 318,297 198,418 371,557 194,550 54,905 59,424 ------------------------------------------------------------------------------------------------------- Net increase prior to loans, transfers and other activity 14,119,103 1,446,135 1,675,714 5,653,469 1,580,366 47,252 83,939 3,603,059 29,169 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) 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 =======================================================================================================
Boston Scientific Corporation 401(k) Savings Plan Notes To Financial Statements December 31, 1996 1. Description of the Plan The Plan was amended and restated effective January 1, 1996 and renamed the Boston Scientific Corporation 401(k) Savings Plan (the 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. 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. At the discretion of the Boston Scientific Corporation Board of Directors (the Board), 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 1996 or 1995. A participant can allocate his or her account among various alternative 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 in relation to all participants' account balances. Each participant is immediately 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. Vested balances related to terminated participants approximated $9,051,000 and $5,052,000, respectively, at December 31, 1996 and 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 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 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 New York Life Benefit Services, Inc. (the Plan Administrator). Interest rates on loans outstanding at December 31, 1996 ranged from 6.3% to 10.5%. 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 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, 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" 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 1995, the Company completed five strategic acquisitions. The Company merged one of the defined contribution plans of the acquired companies into the Plan during 1995, one during 1996, and two in January 1997. The defined contribution plan of the other acquired company was terminated in 1996. During 1996, the Company completed two additional strategic acquisitions. The Company merged the defined contribution plan of one of the acquired companies into the Plan on May 31, 1996. The defined contribution plan of the other acquired company was merged into the Plan in January 1997. 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 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, at the last reported sales price on the last business day of the Plan 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 or depreciation on investments represents the difference between the current value and cost 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 is used to determine the equitable share of each participating trust in the fund. The crediting interest rate as of December 31, 1996 and the average yield for the year then ended were 5.9%. 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. 4. Investments PNC Bank (the Trustee) holds the funds to manage, invest and reinvest in accordance with the provisions of the trustee's agreements. The fair values of individual investments that represent 5% or more of the Plan's net assets are as follows:
1996 1995 --------------------------------------------------- Number Number of Shares Fair Value of Shares Fair Value --------------------------------------------------- Investments at fair value as determined by quoted market price: Bankers Trust Income Fund 6,962,458 $ 6,962,458 6,592,690 $ 6,592,690 Fidelity Balanced Fund 400,625 5,640,802 411,576 5,564,507 Fidelity Magellan Fund 295,553 23,836,362 157,552 13,546,287 BSC Stock Fund 418,393 25,103,676 106,458 5,243,123 Scudder Global Fund 305,428 8,796,313 -- -- Vanguard Index Trust - 500 Fund 246,841 17,071,554 -- --
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 Company. These fees were based on customary and reasonable rates for such services. During 1996 and 1995, the Company 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 Footnote 2. The Plan's management believes 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.
Net Appreciation Net in Fair Value of Realized Gain Investments --------------------------------- Balance per the Form 5500 $ 1,565,130 $ 5,041,050 Adjustments to reflect different calculation methods 3,048,693 (3,048,693) ------------------------------- Balance per accompanying financial statements $ 4,613,823 $ 1,992,357 ===============================
The above difference has 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 second quarter of 1997, the Company completed a strategic acquisition. The Company presently intends to merge the defined contribution plan of the acquired company into the Plan during the 1998 Plan year. The 401(k) Administrative Committee voted to transfer administrative responsibilities from New York Life Benefit Services to The Vanguard Group effective July 1, 1997. Due to the conversion, Plan funds will be transferred to similar funds under the Vanguard administration. Participants will be given the opportunity to self direct these transfers if desired. Boston Scientific Corporation 401(k) Savings Plan Schedule of Assets Held for Investment Purposes December 31, 1996
Current Shares or Units Cost Value -------------------------------------------- Bankers Trust: Income Fund 6,962,458 $ 6,962,458 $ 6,962,458 Fidelity Funds: Balanced Fund 400,625 5,361,207 5,640,802 Magellan Fund 295,553 22,571,433 23,836,362 Scudder Funds: Global Fund 305,428 8,423,657 8,796,313 Vanguard Funds: Index Trust 500 Portfolio Fund 246,841 14,795,226 17,071,554 Money Market Reserves Prime Portfolio 4,083,168 4,083,168 4,083,168 Boston Scientific Corporation:* Stock Fund 418,393 12,717,739 25,103,676 PNC Bank: Money Market Money Market Account Account 81,038 81,038 Participants' notes receivable with terms up to 10 years at interest rates of 6.3% to 10.5% 3,325,994 3,325,994 ------------------------- $78,321,920 $94,901,365 ========================= Indicates party-in-interest to the Plan.
Boston Scientific Corporation 401(k) Savings Plan Schedule of Reportable Transactions Year Ended December 31, 1996
Purchase Selling Cost of Fair Value on Net Identity of Party Involved Description of Assets Price Price Asset Transaction Date Realized Gain - ----------------------------------------------------------------------------------------------------------------------------- Category (i)--A single transaction in excess of 5% - -------------------------------------------------- of plan assets -------------- Fidelity Investments Fidelity Balanced Fund $3,281,407 $3,035,301 $3,281,407 $246,106 Fidelity Investments Fidelity Balanced Fund $3,281,407 $3,281,407 $3,281,407
There were no category (ii) or (iv) reportable transactions during 1996. - ------------------------------------------------------------------------ Boston Scientific Corporation 401(k) Savings Plan Schedule of Reportable Transactions Year Ended December 31, 1996
Total Number of Transactions Made by the Plan Total Dollar Total Dollar During the Year Value of Value of Net Identity of Party Involved Description of Assets Purchases Sales Purchases Sales Gain(Loss) - ------------------------------------------------------------------------------------------------------------------------------- Category (iii)--Series of transactions in excess of 5% - ------------------------------------------------------ of plan assets -------------- Vanguard Money Market Reserves Income Fund 34 41 $10,581,036 $6,497,868 $ Fidelity Investments Fidelity Balanced Fund 37 33 4,952,705 5,107,648 338,575 Fidelity Investments Fidelity Magellan Fund 37 34 16,402,171 5,323,517 298,131 Vanguard Funds Vanguard Index Trust 500 Fund 48 23 15,315,597 574,967 54,595 Scudder Funds Scudder Global Fund 45 25 9,539,741 1,180,976 64,892 Boston Scientific Corporation* BSC Stock Fund 132 138 24,112,902 7,594,910 3,857,630 Indicates a party-in-interest.
SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the trustees (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: June 30, 1997 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 EX-23 2 EXHIBIT 23.1 CONSENT Exhibit 23.1 Consent of Independent Auditors We consent to the incorporation by reference in the Registration Statement (Form S-8 No. 33-89772) pertaining to the Boston Scientific Corporation 401(k) Savings Plan of our report dated June 3, 1997, with respect to the financial statements and schedules of the Boston Scientific Corporation 401(k) Savings Plan included in this Annual Report (Form 11-K) for the year ended December 31, 1996. /s/ Ernst & Young LLP --------------------------------- ERNST & YOUNG LLP Boston, Massachusetts June 25, 1997 -----END PRIVACY-ENHANCED MESSAGE-----