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<SEC-DOCUMENT>0000912057-02-011989.txt : 20020415
<SEC-HEADER>0000912057-02-011989.hdr.sgml : 20020415
ACCESSION NUMBER: 0000912057-02-011989
CONFORMED SUBMISSION TYPE: 10-K
PUBLIC DOCUMENT COUNT: 9
CONFORMED PERIOD OF REPORT: 20011231
FILED AS OF DATE: 20020327

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: 10-K
SEC ACT: 1934 Act
SEC FILE NUMBER: 001-11083
FILM NUMBER: 02589352

BUSINESS ADDRESS:
STREET 1: ONE BOSTON SCIENTIFIC PL
CITY: NATICK
STATE: MA
ZIP: 01760-1537
BUSINESS PHONE: 5086508000
</SEC-HEADER>
<DOCUMENT>
<TYPE>10-K
<SEQUENCE>1
<FILENAME>a2074671z10-k.txt
<DESCRIPTION>10-K
<TEXT>
<PAGE>

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

--------------------------------------
FORM 10-K

ANNUAL REPORT PURSUANT TO
SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2001 Commission File No. 1-11083
--------------------------------------
BOSTON SCIENTIFIC CORPORATION
(EXACT NAME OF COMPANY AS SPECIFIED IN ITS CHARTER)

DELAWARE 04-2695240
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER IDENTIFICATION NO.)
INCORPORATION OR ORGANIZATION)

ONE BOSTON SCIENTIFIC PLACE, NATICK, MASSACHUSETTS 01760-1537
(ADDRESS, INCLUDING ZIP CODE, OF PRINCIPAL EXECUTIVE OFFICES)

(508) 650-8000
(COMPANY'S TELEPHONE NUMBER, INCLUDING AREA CODE)

Securities registered pursuant to Section 12(b) of the Act:

COMMON STOCK, $.01 PAR VALUE PER SHARE
(TITLE OF CLASS)

Securities registered pursuant to Section 12(g) of the Act:

NONE

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

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

Yes X No ______
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of Company's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to the
Form 10-K. / /

<Page>

The aggregate market value of Common Stock held by non-affiliates (persons
other than directors, executive officers, and related family entities) of the
Company was approximately $7.5 billion based on the closing price of the
Common Stock on March 15, 2002.

The number of shares outstanding of the Company's Common Stock as of March
15, 2002 was 402,794,350.

DOCUMENTS INCORPORATED BY REFERENCE

The Company's 2001 Consolidated Financial Statements for the year ended December
31, 2001 which are filed with the Securities and Exchange Commission (the
"Commission") as an exhibit hereto and the Company's 2002 Proxy Statement to be
filed with the Securities and Exchange Commission on or about April 5, 2002 are
incorporated by reference into Parts I, II and III hereof.

<Page>

PART I

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

ITEM 1. BUSINESS

THE COMPANY

Boston Scientific Corporation (the "Company") is a worldwide developer,
manufacturer and marketer of less-invasive medical devices. The Company's
products are used in a broad range of interventional medical specialties,
including interventional cardiology, electrophysiology, gastroenterology,
neurovascular intervention, pulmonary medicine, interventional radiology,
oncology, urology and vascular surgery. The Company's products are generally
inserted into the human body through natural openings or small incisions in the
skin and can be guided to most areas of the anatomy to diagnose and treat a wide
range of medical problems. These products provide effective alternatives to
traditional surgery by reducing risk, trauma, cost, procedure time and the need
for aftercare.

The Company's history began in the late 1960s when the Company's co-founder,
John Abele, acquired an equity interest in Medi-tech, Inc., a development
company. Medi-tech's initial products, a family of steerable catheters, were
introduced in 1969. They were used in some of the first less-invasive procedures
performed, and versions of these catheters are still being sold today. In 1979,
John Abele joined with Pete Nicholas to form the Company, which indirectly
acquired Medi-tech, Inc. This acquisition began a period of active, focused
marketing, new product development and organizational growth. Since then, the
Company's net sales have increased substantially, growing from $1.8 million in
1979 to almost $2.7 billion in 2001.

The Company's growth has been fueled in part by strategic acquisitions and
alliances designed to improve the ability of the Company to take advantage of
growth opportunities in less-invasive medicine. These acquisitions have helped
the Company to achieve a strategic mass which allows it to offer one of the
broadest product lines in the world for use in less-invasive procedures. The
Company's strategic mass has also enabled it to compete more effectively in, and
better absorb the pressures of, the current health care environment of cost
containment, managed care, large buying groups and hospital consolidations.

<Page>

SIGNIFICANT 2001 EVENTS

During 2001, the Company received 22 product approvals and clearances from the
U.S. Food and Drug Administration ("FDA") and 25 CE Mark approvals in Europe.

The Company's internally developed Express(TM) coronary stent was launched in
European and international markets during September 2001. The Express stent is a
laser cut, balloon-expandable stent designed and built to meet the real-world
needs of clinicians. The technology has also been designed so that it may be
leveraged by the Company for use as the platform for additional product
offerings in interventional cardiology, peripheral vascular and neurovascular
interventions.

The Company also made progress during the year on its TAXUS(TM) drug-eluting
coronary stent program. The Company has planned numerous TAXUS trials to test
the safety and efficacy of its new stent technology under a wide range of
clinical conditions in several countries. The Company expects to launch the
TAXUS paclitaxel-eluting stent for the treatment of coronary artery disease.

4
<Page>

During 2001, the Company also completed several strategic acquisitions and
alliances, each intended to further expand the Company's ability to offer its
customers effective, quality medical devices that satisfy their interventional
needs. Over the last year, the Company completed the following acquisitions and
added new or complementary technologies to its already diverse portfolio:

<Table>

<S> <C>>
- ------------------------------------------------------------------------------------------------------------------------------------
* Cardiac Pathways Corporation Chilli(R) Cooled Ablation Catheter and Realtime Position Management(R)
System technologies broaden existing product line and bring highly
advanced diagnostic and treatment tools to electrophysiology
laboratories.
- ------------------------------------------------------------------------------------------------------------------------------------
* Catheter Innovations, Inc. Expands the Company's technology portfolio in the $500 million venous
access market.
- ------------------------------------------------------------------------------------------------------------------------------------
* Embolic Protection, Inc. Marks the Company's entry into the U.S. embolic protection market with
a proprietary technology for interventional cardiovascular procedures.
Also develops carotid endovascular therapies for the prevention of
stroke.
- ------------------------------------------------------------------------------------------------------------------------------------
* Interventional Technologies, Inc. Unique, proprietary Cutting Balloon(R) device combines the features of
conventional angioplasty with advanced microsurgical procedures.
Additional metallurgy technologies have broad applications to numerous
Company products.
- ------------------------------------------------------------------------------------------------------------------------------------
* Quanam Medical Corporation Broadens Company's drug-delivery portfolio with an additional
implant-based, drug-delivery technology and a family of proprietary
biomaterials.
- ------------------------------------------------------------------------------------------------------------------------------------
* RadioTherapeutics Corporation Expands the Company's oncology technology portfolio with proprietary
radiofrequency-based therapeutic devices in the field of interventional
oncology for the ablation (destruction) of various forms of soft-tissue
lesions (tumors).
- ------------------------------------------------------------------------------------------------------------------------------------

</table>

5
<Page>

The Company also focused on key clinical trials involving its core technologies
as well as technologies recently acquired. The trials have been designed to
study the safety and efficacy of new products or new uses for existing products.
Significant clinical programs include:

* TAXUS - A series of clinical trials designed to assess the
safety and efficacy of the Company's TAXUS(TM)drug-eluting
stent under a wide range of clinical conditions. Six- and
nine-month follow up results of the TAXUS I trial, a trial
designed to assess the safety of a slow-release dose
formulation paclitaxel-eluting stent, confirmed safety, and
showed zero percent thrombosis and zero percent restenosis.
TAXUS I is the first of several Company-sponsored
paclitaxel-eluting stent clinical trials. The remaining TAXUS
trials are at various stages of completion or have yet to
commence. In March 2002, the Company reported that
preliminary results from its TAXUS II and III trials have
provided further support for the safety of its
paclitaxel-eluting stent. The Company also announced that it
received approval from the FDA to initiate the TAXUS IV
trial, a trial designed to support product commercialization
in the U.S.

* Express(TM)and Express2(TM)coronary stent systems - During
2001, the Company initiated clinical trials in the United
States and Europe to study the safety and efficacy of its
Express and Express2 coronary stent systems. Following the
completion of these trials, in March 2002, the Company filed
an application with the FDA for pre-market approval of these
products. The Express stent is the company's newest
internally developed coronary stent and is designed to
provide outstanding performance by optimizing flexibility,
deliverability and scaffolding characteristics. The Express2
stent system is an Express stent combined with the Company's
advanced Maverick(R)balloon catheter technology and features
a laser-bonded, flexible tip with a long, low profile
designed for easier tracking.

* Filterwire EX(TM) embolic protection device - Two U.S.
clinical trials are in progress, designed to evaluate
the benefits of stenting in conjunction with embolic
protection for the treatment of carotid artery disease and
saphenous vein grafts.

BUSINESS STRATEGY

The Company's mission is to improve the quality of patient care and the
productivity of health care delivery through the development and advocacy of
less-invasive medical devices and procedures. The Company seeks to accomplish
this mission through the continuing refinement of existing products and
procedures and the investigation and development of new technologies which can
reduce risk, trauma, cost, procedure time and the need for aftercare. The
Company's strategy has been, and will continue to be, to grow by identifying
those specific therapeutic and

6
<Page>

diagnostic areas which satisfy the Company's mission and by making the
investments necessary to capitalize on these opportunities. During 2001, the
Company executed its growth strategy by enhancing its internal development
programs as well as adding to its existing technology portfolio through external
acquisition and licensing activity. The Company will continue to seek out and
review opportunities for acquisitions and strategic alliances consistent with
its corporate mission.

Key elements of the Company's overall business strategy are as follows:

PRODUCT DIVERSITY. The Company offers products in numerous product categories
which are used by physicians throughout the world in a broad range of diagnostic
and therapeutic procedures. The breadth and diversity of the Company's product
lines permit medical specialists to satisfy many of their less-invasive medical
device requirements from a single source.

INNOVATION. The Company is committed to driving growth through harnessing
technological innovation both in the near and long term. The Company's approach
to enhancing innovation includes a mixture of tactical and strategic initiatives
that are designed to offer sustainable growth. Combining internally developed
products and technologies with those obtained through acquisition and licensing
arrangements allows the Company to focus on and deliver new products currently
in its pipeline as well as strengthen the Company's technology portfolio and
development processes and tools.

CLINICAL EXCELLENCE. The Company's commitment to innovation is further
demonstrated by its rapidly expanding clinical capabilities. The Company's
clinical teams have been organized by therapeutic specialty to better align with
research and development, marketing and sales teams. During 2001, the clinical
teams focused clinical trials that support regulatory requirements and
demonstrate safe and effective clinical performance of products and technologies
with the greatest market potential.

OPERATIONAL EXCELLENCE. The Company believes that improving its supply chain
effectiveness, strengthening its manufacturing processes and optimizing its
plant network will increase operational efficiencies within the organization and
generate savings. By centralizing its operations at the corporate level and
shifting global manufacturing along product lines, the Company will be better
positioned to leverage its existing resources and concentrate on new product
development and launch.

FOCUSED MARKETING. Each of the Company's business groups maintain dedicated
sales forces and marketing teams focusing on physicians who specialize in the
diagnosis and treatment of different medical conditions and offer products to
satisfy their needs. The Company believes that this focused disease state
management enables it to develop highly knowledgeable and dedicated sales
representatives and to foster close professional relationships with physicians.

7
<Page>

ACTIVE PARTICIPATION IN THE MEDICAL COMMUNITY. The Company believes that it has
excellent working relationships with physicians and others in the medical
industry which enable it to gain a detailed understanding of new therapeutic and
diagnostic alternatives, and to respond quickly to the changing needs of
physicians and patients. Active participation in the medical community
contributes to physician understanding and adoption of less-invasive techniques
and the expansion of these techniques into new therapeutic and diagnostic areas.

CORPORATE CULTURE. Management believes that success and leadership evolve from a
motivating corporate culture which rewards achievement, respects and values
individual employees and customers, and has a long-term focus on quality,
technology, integrity and service. The Company believes that its success is
attributable in large part to the high caliber of its employees and the
Company's commitment to respecting the values on which its success has been
based.

PRODUCTS

The Company's products are offered by two dedicated business groups -
Cardiovascular and Endosurgery. The Cardiovascular organization focuses on
products and technologies for use in the Company's interventional cardiology,
interventional radiology, peripheral vascular and neurovascular procedures. The
Endosurgery organization focuses on products and technologies for use growth in
oncology, vascular surgery, endoscopy, urology and gynecology procedures. During
2001, approximately 69% of the Company's net sales were derived from the
Company's Cardiovascular business and approximately 31% from its Endosurgery
business.

The Company's principal Cardiovascular and Endosurgery products are offered in
the following medical areas:

CARDIOVASCULAR

CORONARY REVASCULARIZATION. The Company markets a broad line of products used to
treat patients with atherosclerosis. Atherosclerosis, a coronary vessel disease
and a principal cause of heart attacks, is characterized by a thickening of the
walls of the arteries and a narrowing of arterial lumens (openings) caused by
the progressive development of deposits of plaque. The majority of the Company's
products in this market are used in percutaneous transluminal coronary
angioplasty ("PTCA") and percutaneous transluminal coronary rotational
atherectomy and include PTCA balloon catheters, the Rotablator(R) and
Rotalink(R) rotational atherectomy systems, guide wires, guide catheters and
diagnostic catheters.

During 2001, the Company introduced the Maverick(R) balloon dilatation catheter
for commercial sale in the United States, Japan and certain European markets.
With the needs of clinicians in mind, the Maverick balloon catheter was designed
to provide enhanced crossabililty (the ability

8
<Page>

of the catheter or delivery system to track and get through difficult lesions).
The catheter features TrakTip(TM) technology, a soft tubing that is attached to
the end of the balloon using the Company's patented laser-bonding technology.
The material of the TrakTip is resilient and exceptionally flexible, enhancing
trackability.

During the year, the Company also added the Cutting Balloon(R) catheter, a
balloon angioplasty device that combines features of conventional angioplasty
with advanced microsurgical technology, to its interventional cardiology
product offerings through the Company's acquisition of Interventional
Technologies, Inc. ("IVT").

CORONARY STENTS. The Company markets both balloon-expandable and self-expanding
coronary stent systems. Coronary stents are tiny, metal devices used in the
treatment of coronary artery disease and implanted in patients to prop open
arteries and facilitate blood flow to the heart.

During 2000, the Company expanded its stent development efforts to include an
internally developed stent platform - the Express(TM) stent which was launched
in European and other international markets during September 2001. The Express
stent is a laser-cut balloon-expandable stent that features a new design concept
called Tandem(TM) architecture (the integration of two separate structural
elements into a single design for enhanced deliverability, conformability and
consistent vessel support). Generations of the Express stent are designed to be
leveragable into coronary, peripheral and neurovascular applications. The
Company anticipates launching the Express stent in the United States during the
second half of 2002 pending regulatory approval.

Despite the significant improvement stents offer over traditional balloon
angioplasty for the treatment of coronary artery disease, in-stent restenosis -
the regrowth of diseased tissue into a previously stented artery - continues to
be a serious challenge for clinicians. In-stent restenosis occurs after
approximately 15-20 percent of all stent placements and can reach as high as 50
percent in complex lesions. Many patients with complex coronary artery disease
suffer from in-stent restenosis. The Company believes that the combination of
drugs and coronary stents offers the possibility of a more lasting solution for
coronary artery disease, particularly the occurrence of in-stent restenosis.

Through a strategic alliance with Angiotech Pharmaceuticals, Inc., the Company
holds a co-exclusive license for the use of paclitaxel on intraluminal devices
to inhibit restenosis as well as other applications. Paclitaxel is an active
component of a chemotherapeutic agent and has demonstrated promising results in
pre-clinical studies for reducing the processes leading to restenosis. During
2001, the Company entered into an exclusive agreement with Natural
Pharmaceuticals, Inc. for the supply of paclitaxel for use in a wide range of
drug-delivery devices.

9
<Page>

The Company is currently conducting several clinical trials - known as TAXUS -
involving the Company's drug-eluting stent technology. This TAXUS(TM)
drug-eluting stent is designed to provide direct delivery of paclitaxel through
a polymer on a stent at the desired location with a predictable and controlled
release to reduce restenosis. Six- and nine-month follow up results of the
Company's TAXUS I trial, a trial designed to assess the safety of a slow-release
dose formulation paclitaxel-eluting stent, confirmed safety, and showed zero
percent thrombosis and zero percent restenosis. The Company expects to launch a
paclitaxel-eluting stent in certain international markets during 2002, in Europe
in late 2002 or early 2003 and in the U.S. in late 2003 pending regulatory
approval.

The Company also markets stents and stent delivery systems which incorporate the
NIR(R) balloon-expandable coronary stent, a product developed and manufactured
by Medinol Ltd., Israel with which the Company has an exclusive worldwide
distribution agreement covering stent products.

FLUID MANAGEMENT. The Company markets a broad line of fluid delivery sets,
pressure monitoring systems, custom kits and accessories that provide for the
injection of contrast and saline, or withdrawal and the disposal of bodily
waste.

ELECTROPHYSIOLOGY. The Company's electrophysiology product offerings include
catheters and systems for use in less-invasive procedures to diagnose and treat
tachyarrhythmias (abnormally fast heart rhythms). The Company markets RF
generators, mapping systems, intracardiac ultrasound and steerable ablation
catheters, many of which incorporate proprietary steering, temperature
monitoring and control technology, as well as a line of diagnostic catheters and
associated accessories. The Chilli(R) cooled ablation catheter and Realtime
Position Management(R) system are important additions to the Company's
electrophysiology product portfolio through the Company's 2001 acquisition of
Cardiac Pathways Corporation. These products are designed for ablating
(neutralizing) the tissue in the heart that is responsible for starting or
maintaining the tachyarrhythmia and for navigating EP catheters within the
heart.

PERIPHERAL VASCULAR INTERVENTION AND VENOUS ACCESS. The Company sells various
products designed to treat patients with peripheral vascular disease (disease
which appears in blood vessels other than in the heart), including a broad line
of medical devices used in percutaneous transluminal angioplasty and
thrombolysis (the catheter-based delivery of clot dissolving agents directly to
the site of a blood clot). Additionally, the Company's peripheral vascular
product line includes balloon catheters, thrombectomy catheters, and stents
(including the Wallstent(R) endoprosthesis). During the year, the Company's
product offerings in its venous access line have increased through the Company's
acquisition of Catheter Innovations, Inc. and now include both valved and
non-valved product offerings.

10
<Page>

EMBOLIC PROTECTION. One of the most promising areas in interventional
medicine is embolic protection. In February of 2001, the Company acquired
Embolic Protection, Inc., a developer and manufacturer of embolic protection
filters, including the FilterWire EX(TM) device. This device is designed to
capture material dislodged into the bloodstream during cardiovascular
interventions, potentially preventing a heart attack or stroke. The
FilterWire EX was introduced for use in coronary, carotid and saphenous vein
graft applications in certain European markets during 2001. The Company also
announced during 2001 that it entered into a series of agreements with
ENDOTEX Interventional Systems, Inc. The Company and ENDOTEX have agreed to
collaborate on clinical trials that will study the use of the ENDOTEX carotid
stent (the NEXSTENT(TM)) in combination with the Company's Filterwire embolic
protection device to treat carotid artery disease. The Company will also
serve as the primary distributor for ENDOTEX in international markets.

CAVAL INTERRUPTION SYSTEMS. The Company markets the Greenfield(R) vena cava
filter system for use in patients who are at risk of developing a pulmonary
embolism due to an existing medical condition or post-surgical complications.
Once the filter is implanted, circulating emboli (blood clots) can be captured
and held by the lattice design of the filter, allowing the clots to dissolve
naturally before they can reach the pulmonary system.

INTRALUMINAL ULTRASOUND IMAGING. The Company markets a family of intraluminal
catheter-directed ultrasound imaging catheters and systems for diagnostic use in
blood vessels, heart chambers and coronary arteries, as well as certain
nonvascular systems.

NEUROVASCULAR INTERVENTIONS. The Company markets a line of micro-guidewires,
micro-catheters, guiding catheters and embolics to treat diseases of the
neurovascular system. The Company also markets the GDC(R) (Guglielmi Detachable
Coil) system to treat and prevent the rupture of cerebral aneurysms that are
otherwise either considered to be inoperable or high risk for surgery. During
2001, the Company exercised a pre-existing option to acquire Smart Therapeutics,
Inc., a company that has developed a stent system for treating "wide neck"
aneurysms, which are among the most difficult to treat. The combination of
Smart's stent and the Company's GDC coil may provide a less-invasive treatment
alternative for patients whose only previous option may have been open surgery.

ENDOSURGERY

ESOPHAGEAL, GASTRIC AND DUODENAL (SMALL INTESTINE) INTERVENTION. The Company
markets a broad range of products to diagnose, treat and palliate a variety of
gastrointestinal diseases and conditions, including those affecting the
esophagus, stomach and colon. Common disease states include esophogitis, gastric
esophageal reflux disease ("GERD"), portal hypertension, peptic ulcers and
esophageal cancer. The Company's products in this area include disposable single
and multiple biopsy forceps, balloon dilatation catheters devices and enteral
feeding devices. The

11
<Page>

Company also markets a family of esophogeal stents designed to offer improved
dilatation force and greater resistance to tumor in-growth. During the first
quarter of 2001, the Company signed an agreement with Enteric Medical
Technologies, Inc. ("EMT") providing for the exclusive distribution of EMT's
Enteryx(TM) liquid polymer technology which is designed to treat symptoms
associated with chronic GERD. The agreement grants the Company exclusive
distribution rights in certain international markets, including most European
countries and Japan, and also includes an exclusive option to purchase EMT.

COLORECTAL INTERVENTION. The Company markets a line of hemostatic catheters,
polypectomy snares, biopsy forceps, enteral stents and dilatation catheters for
the diagnosis and treatment of polyps, inflammatory bowel disease,
diverticulitis and colon cancer.

PANCREATICO-BILIARY INTERVENTION. The Company sells a variety of products to
diagnose, treat and palliate benign and malignant strictures of the
pancreatico-biliary system (the gall bladder, common bile duct, hepatic duct,
pancreatic duct and the pancreas) and to remove stones found in the common bile
duct. The Company's products include diagnostic catheters used with contrast
media, balloon dilatation catheters and sphincterotomes. The Company also
markets self-expanding metal and temporary biliary stents for palliation and
drainage of the common bile duct.

PULMONARY INTERVENTION. The Company markets devices to diagnose, treat and
palliate chronic bronchitis and lung cancer, including pulmonary biopsy forceps,
stents and balloon catheters used to dilate strictures or for tumor management.
Included in this product offering is the Company's Wallgraft(R) Tracheobronchial
Endoprosthesis, a covered Wallstent(R) device designed to treat tracheobronchial
strictures.

URINARY TRACT INTERVENTION. The Company sells a variety of products designed
primarily to treat patients with urinary stone disease, including ureteral
dilatation balloons used to dilate strictures or openings for scope access;
stone baskets used to manipulate or remove the stone; intracorporeal shock wave
lithotripsy devices and holmium laser systems used to disintegrate stones
ureteroscopically; ureteral stents implanted temporarily in the urinary tract to
provide short-term or long-term drainage; and a wide variety of guidewires used
to gain access to a specific site. During 2001, the Company announced its
alliance with ESC Medical Systems, Ltd. (Lumenis, Ltd.), the world's largest
marketer of holmium laser systems used for kidney stone removal. This alliance
will greatly enhance the Company's kidney stone management product offering in
the United States and Japan.

PROSTATE INTERVENTION. For the treatment of Benign Prostatic Hypertrophy
("BPH"), the Company currently markets electro-surgical resection devices
designed to resect large diseased tissue sites and reduce the bleeding
attributable to the resection procedure (a major cause of patient

12
<Page>

morbidity in connection with traditional surgical treatments for BPH) and an
automatic disposable needle biopsy system, designed to take rapid core prostate
biopsies.

URINARY INCONTINENCE AND BLADDER DISEASE. The Company markets a line of
less-invasive devices and dermal sling materials to treat stress urinary
incontinence. This affliction is commonly treated with various surgical
procedures. The Company's Precision Tack(TM) and Precision Twist(TM) devices and
Vesica(R) systems offer less-invasive alternatives for treating incontinence.
The Company has also developed other devices to diagnose and treat bladder
cancer and bladder obstruction.

ONCOLOGY INTERVENTION. The Company markets a broad line of products designed to
treat, diagnose and palliate various forms of cancer. Its current suite of
products include a variety of microcatheters, embolic materials, coils and other
products used to restrict blood supply to targeted organs of other areas of the
body as well as biopsy devices. During 2001, the Company acquired
RadioTherapeutics Corporation, a developer and manufacturer of radiofrequency
based therapeutic devices for the ablation (destruction) of various forms of
soft tissue lesions (tumors).

SURGICAL AND ENDOVASCULAR GRAFTS. The Company designs vascular grafts and
endovascular stent grafts for the treatment of thoracic dissection, dialysis
access, abdominal aortic aneurysms and peripheral vascular occlusive diseases,
including the Exxcel(TM) vascular graft for peripheral indications and dialysis
access and a line of Hemashield(R) grafts and fabrics for peripheral vascular
and cardiovascular indications.

13
<Page>

MARKETING AND SALES

Within its Cardiovascular and Endosurgery groups, the Company markets its
products through six principal operating divisions, each focusing upon
physicians who specialize in the diagnosis and treatment of different medical
conditions and disease states.

Scimed: markets devices to interventional cardiologists,
interventional radiologists and vascular surgeons for the
diagnosis and treatment of coronary and peripheral vascular
disease and other cardiovascular disorders.

EP Technologies: offers a line of electrophysiology catheters and systems for
use by interventional electrophysiologists in the diagnosis
and treatment of tachyarrhythmias.

Target: markets a line of micro-guidewires, micro-catheters, coils,
embolics and other medical devices which aid
neuroradiologists and neurosurgeons in the treatment of
neurovascular diseases.

Medi-tech: markets devices to interventional radiologists and vascular
surgeons who treat abdominal aortic aneurysmal disease,
diseases requiring management of cancerous and non-cancerous
tumors and patients requiring venous access.

Microvasive markets therapeutic, diagnostic and palliative devices,
Endoscopy: which aid gastroenterologists and pulmonologists in
performing flexible endoscopic procedures involving the
digestive tract and lungs.

Microvasive offers a line of therapeutic and diagnostic devices which
Urology: aid urologists and urogynecologists in performing
ureteroscopic and other less-invasive endoscopic procedures
as well as devices to treat urinary incontinence.

A dedicated sales force of approximately 1,200 individuals in 40 countries
internationally and over 800 in the United States market the Company's
products worldwide. Sales in countries where the Company has direct sales
organizations accounted for approximately 99% of the Company's net sales
during 2001. A network of distributors and dealers who offer the Company's
products in approximately 30 countries worldwide accounts for the remaining
sales. The Company also has a dedicated U.S. corporate sales organization
focused principally on selling to major buying groups and large integrated
health care networks.

In 2001, the Company sold its products to over 10,000 hospitals, clinics,
out-patient facilities and medical offices. The Company is not dependent on any
single institution and no single

14
<Page>

institution accounted for more than 10% of the Company's net sales in 2001.
Large group purchasing organizations, hospital networks and other buying groups
are, however, becoming increasingly important to the Company's business. The
trend toward managed care and economically motivated and more sophisticated
buyers in the United States may result in continued pressure on selling prices
of certain products and resulting compression on gross margins. These purchasers
of medical devices also tend to limit the number of suppliers from whom they
purchase medical products. There can be no assurance that these entities will
continue to purchase products from the Company.

The Company markets NIR(R) coronary stent systems which represented
approximately 11% of the Company's 2001 worldwide sales compared to
approximately 15% in 2000. Sales of the NIR(R) coronary stent declined
throughout 2001; sales of the NIR(R) coronary stent in the fourth quarter of
2001 decreased by approximately 50% as compared to NIR(R) coronary stent sales
recorded in the first quarter of 2001. The Company anticipates that its global
NIR(R) coronary stent market share will continue to decline during 2002 as
physician acceptance of the current NIR(R) coronary stent platform continues to
erode. The NIR(R) coronary stent system consists of a NIR(R) coronary stent
developed and manufactured by Medinol Ltd., Israel, and a balloon delivery
system developed and manufactured by the Company. The Company is currently in
litigation with Medinol with respect to the stent supply agreement and the
management of Medinol.

The Company also distributes several other products for third parties, including
an introducer sheath and certain guidewires. None of these other products
represented more than 10% of the Company's 2001 net sales. Leveraging its sales
and marketing strength, the Company expects to continue to seek new
opportunities for distributing complementary products as well as new
technologies. The Company expects that it will continue to enter into
distribution arrangements that include options to acquire technology from third
parties at pre-established future dates. These distribution arrangements allow
the Company to evaluate new technologies prior to acquisition.

INTERNATIONAL OPERATIONS

Maintaining and expanding its international presence is an important component
of the Company's long-term growth plan. Through its international presence, the
Company seeks to increase net sales and market share, leverage relationships
with leading physicians and their clinical research programs, accelerate the
time within which new products can be brought to market and gain access to
worldwide technological developments that may be implemented across its product
lines.

In 2001, international sales accounted for approximately 40% of the Company's
net sales. Net sales, operating income (excluding special charges) and total
assets attributable to significant geographic areas are presented in Note O to
the Company's 2001 Consolidated Financial

15
<Page>

Statements, which are filed with the Securities and Exchange Commission as an
exhibit to this document.

In recent years, the Company has expanded its direct sales presence worldwide
so as to be in a position to take advantage of expanding market
opportunities. As of December 31, 2001, the Company had direct marketing and
sales operations in 40 countries internationally. The Company believes that
it will continue to leverage its infrastructure in markets where commercially
appropriate and to use distributors in those smaller markets where it is not
economical or strategic to establish a direct presence.

The Company has four international manufacturing facilities in Ireland.
Presently, approximately 51% of the Company's products sold internationally are
manufactured at these facilities. The Company also maintains an international
research and development facility in Ireland and a training and research and
development center in Miyazaki, Japan.

The Company's international presence exposes it to certain financial and other
risks. Principal among these is the potentially negative impact of foreign
currency fluctuations on the Company's sales and expenses. Although the Company
engages in nonspeculative hedging transactions that may offset the effect of
fluctuations in foreign currency exchange rates on foreign currency denominated
assets, liabilities, earnings and cash flows, financial exposure may nonetheless
result, primarily from the timing of transactions, forecast volatility and the
movement of exchange rates. International markets are also being affected by
economic pressure to contain reimbursement levels and health care costs. The
Company's ability to benefit from its international expansion may be limited by
risks and uncertainties relating to economic conditions in these regions,
regulatory and reimbursement approvals, competitive offerings, infrastructure
development, rights to intellectual property, and the ability of the Company to
implement its overall business strategy. Any significant changes in the
competitive, political, regulatory or economic environment where the Company
conducts international operations may have a material impact on revenues and
profits.

MANUFACTURING; RAW MATERIALS

The Company designs and manufactures the majority of its products in sixteen
manufacturing sites around the world. During 2000, the Company approved and
committed to a global operations plan consisting of a series of strategic
initiatives designed to increase productivity and enhance innovation. The
plan

16
<Page>

includes manufacturing process and supply chain programs and a plant
optimization initiative. The manufacturing process and supply chain programs
are designed to lower inventory levels and the cost of manufacturing and to
minimize inventory write-downs. The intent of the plant optimization
initiative is to better allocate the Company's resources by creating a more
effective network of manufacturing and research and development facilities.
The Company is currently in the process of consolidating manufacturing
operations along product lines and shifting significant amounts of production
to the Company's facilities in Miami and Ireland and to contract
manufacturing. The Company's plan includes the discontinuation of
manufacturing activities at three facilities in the U.S., and includes the
planned displacement of approximately 1,800 manufacturing, manufacturing
support and management employees. The Company expects the plan will be
substantially completed during the first half of 2002.

Most components used in the manufacture of the Company's products are readily
fabricated from commonly available raw materials or off-the-shelf items
available from multiple supply sources. The fabricated items are custom made
for the Company to meet its specifications. The Company believes that in most
cases, redundant capacity exists at the suppliers and that alternative
sources of supply are available or could be developed within a reasonable
period of time. Generally, the Company has been able to obtain adequate
supplies of raw materials and components in a timely manner from established
sources. In certain cases, the Company may not be able to quickly establish
additional or replacement suppliers for specific components or materials,
largely due to the FDA approval system and other regulatory requirements and
the complex nature of the manufacturing processes employed by many suppliers.
The reduction or interruption in supply, an inability to develop alternative
sources if required, or a significant increase in the price of raw materials
or components, could adversely affect the Company's operations and financial
condition.

17
<Page>

QUALITY ASSURANCE

The Company is committed to providing high quality products to its customers. To
meet this commitment, the Company has implemented state-of-the-art quality
systems and concepts throughout the organization. The Company's quality system
starts with the initial product specification and continues through the design
of the product, component specification process and the manufacturing, sales and
servicing of the product. The quality system is designed to build in quality and
to utilize continuous improvement concepts throughout the product life.

Certain of the Company's operations are certified under ISO 9001, ISO 9002, ISO
13485, ISO 13488, EN46001 and EN46002 international quality system standards.
ISO 9002 requires, among other items, an implemented quality system that applies
to component quality, supplier control and manufacturing operations. In
addition, ISO 9001 and EN46001 require an implemented quality system that
applies to product design. These certifications can be obtained only after a
complete audit of a company's quality system by an independent outside auditor.
Maintenance of these certifications requires that these facilities undergo
periodic reexamination. During 2001, the Company established an initiative to
become ISO 14000 certified. This initiative will continue until our facilities
become certified.

COMPETITION

The Company encounters significant competition across its product lines and in
each market in which its products are sold from various entities, some of which
may have greater financial and marketing resources than the Company. The
Company's primary competitors include C.R. Bard, Inc., Cook, Inc., Guidant
Corporation, Tyco International, Johnson & Johnson (including its subsidiary,
Cordis Corporation), and Medtronic, Inc. (including its subsidiary, Medtronic
AVE, Inc.), as well as a wide range of companies which sell a single or limited
number of competitive products.

In addition, the worldwide coronary stent market is dynamic and highly
competitive, with significant market share volatility. Technology and
competitive offerings, particularly the earlier introduction of drug-eluting
stents by the Company's competitors, may negatively impact the Company's
revenues. The Company also faces competition from non-medical device companies,
such as pharmaceutical companies, which may offer non-surgical alternative
therapies for disease states which are currently treated using the Company's
products.

The Company believes that its products compete primarily on the basis of their
ability to safely and effectively perform diagnostic and therapeutic procedures
in a less-invasive manner, ease of product use, product reliability and
physician familiarity. In the current environment of managed care, economically
motivated buyers, consolidation among health care providers, increased
competition and declining reimbursement rates, the Company has also been
increasingly required

18
<Page>

to compete on the basis of price. The Company believes that its continued
competitive success will depend upon its ability to create or acquire
scientifically advanced technology, apply its technology cost-effectively across
product lines and markets, develop or acquire proprietary products, attract and
retain skilled development personnel, obtain patent or other protection for its
products, obtain required regulatory approvals, and manufacture and successfully
market its products either directly or through outside parties.

RESEARCH AND DEVELOPMENT

Enhancements of existing products or expansions of existing product lines, which
are typically developed within the Company's manufacturing and marketing
operations, contribute to each year's sales growth. The Company believes that
streamlining and coordinating its technology pipeline and new product
development is essential to its ability to stimulate growth and maintain
leadership positions in its markets. By centralizing platform technology
development at the corporate level, the Company is able to pursue technologies
that can be leveraged across multiple markets. The Company's approach to new
product design and development is through focused, cross functional efforts. The
Company believes that its formal process for technology and product development
aids in its ability to offer innovative and manufacturable products in a
consistent and timely manner. Involvement of the R&D, clinical, quality,
regulatory, manufacturing and marketing teams early in the process is the
cornerstone of a product development cycle. This collaboration allows the team
to concentrate resources on the most viable and profitable new products and
technologies and get them to market in a timely manner.

In 2001, the Company expended approximately $275 million on research and
development, representing approximately 10% of the Company's 2001 net sales. The
investment in research and development dollars reflects spending on new product
development programs as well as regulatory compliance and clinical research. The
increase in research and development is primarily due to increased funding for
the development of, and the clinical trials related to, new products, including
the Company's Express(TM) coronary stent platform, its TAXUS(TM) drug-eluting
stent program, its carotid program and programs acquired in connection with the
Company's business combinations consummated in 2001. In 2002, the Company
expects to increase its investment in research and development over 2001 levels
in order to fund the development of new products and to expand clinical trials,
including the Company's Taxus drug-eluting stent program, carotid program and
Express coronary stent platform.

In addition to internal development, the Company works with hundreds of leading
research institutions, universities and clinicians around the world in
developing, evaluating and clinically testing its products.

The Company believes its future success will depend upon the strength of its
development efforts. There can be no assurance that the Company will realize
financial benefit from its

19
<Page>

development programs, will continue to be successful in identifying, developing
and marketing new products or enhancing its existing products, or that products
or technologies developed by others will not render the Company's products or
technologies non-competitive or obsolete.

REGULATION

The medical devices manufactured and marketed by the Company are subject to
regulation by numerous regulatory bodies, including the FDA and comparable
international regulatory agencies. These agencies require manufacturers of
medical devices to comply with applicable laws and regulations governing the
development, testing, manufacturing, labeling, marketing and distribution of
medical devices. Devices are generally subject to varying levels of regulatory
control, the most comprehensive of which requires that a clinical evaluation
program be conducted before a device receives approval for commercial
distribution.

In the United States, permission to distribute a new device generally can be met
in one of two ways. The first process requires that a pre-market notification
(the "510(k) Submission") be made to FDA to demonstrate that the device is as
safe and effective, that is, substantially equivalent to a legally marketed
device that is not subject to pre-market approval ("PMA"). Applicants must
compare this device to one or more similar devices commercially available in the
United States and make and support their substantial equivalency claims. A
legally marketed device is a device that (i) was legally marketed prior to May
28, 1976, (ii) has been reclassified from Class III to Class II or I, or (iii)
has been found to be substantially equivalent to a device following a 510(k)
Submission. The legally marketed device(s) to which equivalence is drawn is
known as the "predicate" device(s). Applicants must submit descriptive data and,
when necessary, performance data to establish that the device is substantially
equivalent to a predicate device. If clinical data from human experience are
required to support a 510(k) Submission, these data must be gathered in
compliance with investigational device exemption ("IDE") regulations for
investigations performed in the United States. The FDA must issue an order
finding substantial equivalence before commercial distribution can occur.
Changes to existing devices which do not significantly affect safety or
effectiveness can generally be made by the Company without additional 510(k)
Submissions.

The second process requires that an application for PMA be made to the FDA to
demonstrate that the device is safe and effective for its intended use as
manufactured. This approval process applies to certain Class III devices. In
this case, two steps of FDA approval are generally required before marketing in
the United States can begin. First, the Company must comply with IDE regulations
in connection with any human clinical investigation of the device in the United
States. Second, the FDA must review the Company's PMA application which
contains, among other things, clinical information acquired under the IDE. The
FDA will approve the PMA application if it finds that there is a reasonable
assurance that the device is safe and effective for its intended purpose.

20
<Page>

The FDA can ban certain medical devices, detain or seize adulterated or
misbranded medical devices, order repair, replacement or refund of these
devices, and require notification of health professionals and others with regard
to medical devices that present unreasonable risks of substantial harm to the
public health. The FDA may also enjoin and restrain certain violations of the
Food, Drug and Cosmetic Act and the Safe Medical Devices Act pertaining to
medical devices, or initiate action for criminal prosecution of such violations.

International sales of medical devices manufactured in the United States that
are not approved by the FDA for use in the United States, or are banned or
deviate from lawful performance standards, are subject to FDA export
requirements. The Export Reform Act of 1996 has simplified the process of
exporting devices which have not been approved for sale in the United States.
Exported devices are subject to the regulatory requirements of each country to
which the device is exported. In many foreign countries, all regulated medical
products are treated as drugs and the majority of the Company's products are
expected to be so regulated in these countries. Frequently, regulatory approval
may first be obtained in a foreign country prior to application in the United
States to take advantage of differing regulatory requirements. The Company has
completed CE Mark registrations for substantially all of its products in
accordance with the implementation of various medical device directives in the
European Union.

The process of obtaining clearance to market products is costly and
time-consuming in virtually all of the major markets in which the Company sells
products and can delay the marketing and sale of new products. Countries around
the world have recently adopted more stringent regulatory requirements which are
expected to add to the delays and uncertainties associated with new product
releases, as well as the clinical and regulatory costs of supporting such
releases. No assurance can be given that any of the Company's new medical
devices will be approved on a timely basis, if at all.

In addition, regulations regarding the development, manufacture and sale of
medical devices are subject to future change. The Company cannot predict what
impact, if any, such changes might have on its business. Failure to comply with
regulatory requirements could have a material adverse effect on the Company's
business, financial condition and results of operations.

The Company is also subject to environmental laws and regulations both in the
United States and abroad. The operations of the Company, like those of other
medical device companies, involve the use of substances regulated under
environmental laws, primarily in manufacturing and sterilization processes. The
Company believes that compliance with environmental laws will not have a
material impact on its financial position, results of operations, or liquidity.
Given the scope and nature of these laws, there can, however, be no assurance
that environmental laws will not have a material impact on the Company.

21
<Page>

THIRD-PARTY COVERAGE AND REIMBURSEMENT

The Company's products are purchased by hospitals, doctors and other health care
providers who are reimbursed for the health care services provided to their
patients by third-party payors, such as governmental programs (e.g., Medicare
and Medicaid), private insurance plans and managed care programs. Third party
payors may deny coverage for certain technologies based on assessment criteria
as determined by the third-party payor. Also, third-party payors are
increasingly adjusting reimbursement rates and challenging the prices charged
for medical products and services. There can be no assurance that the Company's
products will be automatically covered by third-party payors, that reimbursement
will be available or, if available, that the third-party payors' coverage
policies will not adversely affect the Company's ability to sell its products
profitably.

PROPRIETARY RIGHTS AND PATENT LITIGATION

The Company relies on a combination of patents, trademarks, trade secrets and
non-disclosure agreements to protect its intellectual property. The Company
generally files patent applications in the United States and foreign countries
where patent protection for its technology is appropriate and available. The
Company holds more than 2,400 United States patents (many of which have foreign
counterparts) and has more than 4,500 patent applications pending worldwide that
cover various aspects of its technology. In addition, the Company holds
exclusive and non-exclusive licenses to a variety of third party technologies
covered by patents and patent applications. There can be no assurance that
pending patent applications will result in issued patents, that patents issued
to or licensed by the Company will not be challenged or circumvented by
competitors, or that such patents will be found to be valid or sufficiently
broad to protect the Company's technology or to provide the Company with a
competitive advantage. The Company relies on non-disclosure and non-competition
agreements with employees, consultants and other parties to protect, in part,
trade secrets and other proprietary technology. There can be no assurance that
these agreements will not be breached, that the Company will have adequate
remedies for any breach, that others will not independently develop equivalent
proprietary information or that third parties will not otherwise gain access to
the Company's trade secrets and proprietary knowledge.

There has been substantial litigation regarding patent and other intellectual
property rights in the medical device industry, particularly in the areas in
which the Company competes. The Company has defended, and will likely continue
to defend, itself against claims and legal actions alleging infringement of the
patent rights of others. Adverse determinations in any patent litigation could
subject the Company to significant liabilities to third parties, could require
the Company to seek licenses from third parties and could, if licenses are not
available, prevent the Company from manufacturing, selling or using certain of
its products, some of which could have a material adverse effect on the Company.
Additionally, the Company may find it necessary to initiate

22
<Page>

litigation to enforce its patent rights, to protect its trade secrets or
know-how and to determine the scope and validity of the proprietary rights of
others. Patent litigation can be costly and time-consuming, and there can be no
assurance that the Company's litigation expenses will not be significant in the
future or that the outcome of litigation will be favorable to the Company.
Accordingly, the Company may seek to settle some or all of its pending
litigation. Settlement may include cross-licensing of the patents which are the
subject of the litigation as well as other intellectual property of the Company
and may involve monetary payments to or from third parties.

OTHER LITIGATION

The testing, marketing and sale of human health care products entails an
inherent risk of product liability claims. The Company is involved in various
lawsuits arising in the normal course of business from product liability
claims, and product liability claims may be asserted in the future relative
to events not known to management at the present time. The Company has
insurance coverage which management believes is adequate to protect against
product liability losses as could otherwise materially affect the Company's
financial position. However, there can be no assurance that product liability
claims will not exceed such insurance coverage limits or that such insurance
will be available in the future on commercially reasonable terms, if at all.

See the "Legal Proceedings" section below and Note L - Commitments and
Contingencies to the Company's 2001 Consolidated Financial Statements
(Exhibit 13.1 filed herewith) for a further discussion of patent and other
litigation and proceedings involving the Company.

EMPLOYEES

As of December 31, 2001, the Company had approximately 14,400 employees,
including approximately 8,500 in operations, 1,700 in administration, 1,200
in research and development and 3,000 in selling, marketing, distribution and
related administrative support. Of these employees, approximately 3,300 were
employed in the Company's international operations. The Company believes that
the continued success of its business will depend, in part, on its ability to
attract and retain qualified personnel.

SEASONALITY

Worldwide sales do not reflect any significant degree of seasonality, however
customer purchases have been lighter in the third quarter of prior years than in
other quarters. This reflects, among other factors, lower demand during summer
months, particularly in European countries.

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<Page>

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

The Cautionary Statement for Purposes of the Safe Harbor Provisions of the
Private Securities Litigation Reform Act of 1995 appearing on pages 11
through 12 of the Company's 2001 Consolidated Financial Statements (Exhibit
13.1 filed herewith) is incorporated herein by reference.

ITEM 2. PROPERTIES

The Company's world headquarters are located in Natick, Massachusetts. It
maintains regional headquarters in Tokyo, Japan; Paris, France and Singapore.
As of December 31, 2001, the Company's worldwide facilities (including
administration, research, manufacturing, distribution and sales and marketing
space) totaled approximately 5.3 million square feet, of which approximately
76% was owned by the Company and the balance was leased. As of December 31,
2001, the Company's principal technology centers were located in
Massachusetts, Indiana, Minnesota, New Jersey, Florida, California,
Washington, Utah, New York and Ireland, and its distribution centers were
located in Massachusetts, The Netherlands, Japan and Singapore. As of
December 31, 2001, the Company maintained sixteen manufacturing facilities,
twelve in the United States and four in Ireland. Many of these manufacturing
facilities produce and manufacture products for more than one of the
Company's divisions and include research facilities. The Company believes
that its facilities are adequate to meet its current needs and continues to
assess its plant network strategy.

ITEM 3. LEGAL PROCEEDINGS

Note L - Commitments and Contingencies to the Company's 2001 Consolidated
Financial Statements, appearing on pages 28 through 33 thereto (Exhibit 13.1
filed herewith), is incorporated herein by reference. The following
paragraphs update the disclosure appearing in Note L.

RECENT PATENT LITIGATION ACTIVITY

24
<Page>

On April 14, 2000, the Company (through its subsidiaries) and Medinol filed suit
for patent infringement against Johnson & Johnson, Cordis Corporation, a
subsidiary of Johnson & Johnson ("Cordis") and a subsidiary of Cordis alleging
that a patent owned by Medinol and exclusively licensed to the Company is
infringed by Cordis' BX Velocity(TM) stent delivery system. The complaint was
filed in the U.S. District Court for the District of Delaware seeking monetary
and injunctive relief. The Minnesota action was transferred to the U.S. District
Court for the District of Delaware and consolidated with the Delaware action
filed by the Company. A trial was held in August 2001 on both actions. On
September 7, 2001, a jury found that Cordis' BX Velocity, Crown, and MINICrown
stents do not infringe the patents, and that the asserted claims of those
patents are invalid. The jury also found that Cordis' CORINTHIAN stent infringes
a valid Medinol patent claim and awarded the Company and Medinol $8.3 million in
damages. Post-trial briefing motions were held through December 2001 and on
January 25, 2002, the court entered final judgment on the Corinthian stent in
favor of the Company. A post-trial hearing was held on February 26, 2002.
Judgment has not yet been entered by the Court.

On February 14, 2002, the Company and certain of its subsidiaries filed suit for
patent infringement against Medtronic, Inc. ("Medtronic"), Medtronic AVE, Inc.,
a subsidiary of Medtronic, Johnson & Johnson and Cordis alleging certain balloon
catheters, stent delivery systems and guide catheters sold by Medtronic and
Medtronic AVE infringe six U.S. patents owned by the Company and certain balloon
catheters, stent delivery systems and guide catheters sold by Johnson & Johnson
and Cordis infringe five 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 14, 2002, Scimed Life Systems, Inc. ("Scimed") filed suit for patent
infringement against Medtronic and Medtronic AVE alleging Medtronic AVE's
Guardwire Plus(TM) product infringes one U.S. patent owned by the Company. The
complaint was filed in the U.S. District Court for the District of Delaware
seeking monetary and injunctive relief.

On February 14, 2002, Scimed and Corvita Corporation, a subsidiary of the
Company filed suit for patent infringement against Medtronic and Medtronic AVE
alleging Medtronic's AneuRx product infringes seven U.S. patents owned by the
Company. The complaint was filed in the U.S. District Court for the District of
Delaware seeking monetary and injunctive relief.

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., Cook and the Company (the "Agreement").
On October 10, 2001, pursuant to the terms of the Agreement, the Company filed a
demand for arbitration with the American Arbitration Association. On October 11,
2001, Guidant and its subsidiary, Advanced Cardiovascular Systems, Inc. (ACS),
and Cook filed suit against the Company relating to the Agreement. The suit was
filed in the U.S. District Court for the Southern District of Indiana and

25
<Page>

sought declaratory and injunctive relief. The parties subsequently negotiated an
agreement under which the dispute would be litigated on an expedited basis in
the Northern District of Illinois without Guidant or ACS as parties. On December
13, 2001, the Indiana case was dismissed and Cook filed a similar 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 February 28, 2002, the Court dismissed certain claims and
set June 6, 2002 to rule on summary judgment motions.

On April 5, 2001, Medinol filed a complaint against the Company and certain of
its current and former employees alleging breaches of contract, fraud and other
claims. Medinol supplies NIR(R) stents exclusively to the Company. The suit was
filed in the U.S. District Court for the Southern District of New York seeking
monetary and injunctive relief. On April 26, 2001, Medinol amended its complaint
to add claims alleging misappropriation of trade secrets in relation to the
Company's Express(TM) stent development program. Medinol seeks monetary and
injunctive relief, as well as an end to the Company's right to distribute
Medinol stents and access to certain Company intellectual property. On April 30,
2001, the Company answered and countersued Medinol and its principals, charging
them with fraud, multiple breaches of contract, unfair and deceptive practices
and defamation. The Company seeks monetary and injunctive relief. During the
last quarter of 2001, the Court dismissed several of the individuals and claims
from the case. A trial date has not yet been set. On February 28, 2002, the
Company received from Medinol, a letter purporting to terminate the supply
agreement between the two companies alleging breaches of the supply agreement by
the Company. The Company intends to challenge Medinol's assertion that the
supply agreement has been terminated.

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. On March
14, 2002, the Court accepted jurisdiction with respect to certain claims and
ruled that certain claims fall within the jurisdiction of the New York Court.

The Company is involved in various lawsuits from time to time. In
management's opinion, the Company is not currently involved in any legal
proceedings other than those specifically identified above or in Note L -
Commitments and Contingencies to the Company's 2001 Consolidated Financial
Statements which, individually or in the aggregate, could have a material
effect on the financial condition, operations or cash flows of the Company.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.

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DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY

The Directors and executive officers of the Company as of December 31, 2001 were
as follows:

NAME AGE POSITION
- ---- --- --------

<S> <C> <C>
John E. Abele 64 Director, Founder Chairman
Lawrence C. Best 51 Senior Vice President-Finance & Administration and
Chief Financial Officer
Joseph A. Ciffolillo 63 Director, Private Investor
Fred A. Colen 49 Senior Vice President and Chief Technology Officer
Paul Donovan 46 Vice President, Corporate Communications
Joel L. Fleishman 67 Director, Senior Advisor to the Atlantic Philanthropies and
Professor of Law and Public Policy, Duke University
Marye Anne Fox, Ph.D. 54 Director, Chancellor of North Carolina State University
Ray J. Groves 66 Director, President and Chief Operating Officer of Marsh Inc.
Lawrence L. Horsch 67 Director, Chairman of Eagle Management & Financial Corp.
Paul A. LaViolette 44 Senior Vice President and Group President, Cardiovascular
Robert G. MacLean 58 Senior Vice President-Human Resources
Ernest Mario, Ph.D. 63 Director, Founder of Apothogen, Inc.
Stephen F. Moreci 50 Senior Vice President and Group President, Endosurgery
N.J. Nicholas, Jr. 62 Director, Private Investor
Peter M. Nicholas 60 Director, Chairman of the Board
Arthur L. Rosenthal, Ph.D. 55 Senior Vice President and Chief Scientific Officer
Warren B. Rudman 71 Director, Former U.S. Senator, Partner, Paul, Weiss, Rifkind,
Wharton, & Garrison
Paul W. Sandman 54 Senior Vice President, Secretary and General Counsel
James H. Taylor, Jr. 62 Senior Vice President, Corporate Operations
James R. Tobin 57 Director, President and Chief Executive Officer
</table>

At the Company's 2002 Annual Meeting of Stockholders, stockholders will be asked
to vote for the election of Ursula M. Burns and Uwe E. Reinhardt, Ph.D. as new
members of the Board of Directors of the Company.

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<Page>

COMMITTEES OF THE BOARD OF DIRECTORS

The Board of Directors of the Company has standing Audit, Executive Compensation
and Human Resources, Strategic Investment and Governance Committees. Joseph A.
Ciffolillo, Joel L. Fleishman, Lawrence L. Horsch and Ernest Mario currently
serve on the Audit Committee. Joel L. Fleishman, Marye Anne Fox, Ray J. Groves,
Lawrence L. Horsch and Senator Warren B. Rudman currently serve on the Executive
Compensation and Human Resources Committee. Marye Anne Fox, Ernest Mario, N.J.
Nicholas, Jr. and James R. Tobin currently serve on the Strategic Investment
Committee. Joel L. Fleishman, Ray J. Groves, Peter M. Nicholas, and Senator
Warren B. Rudman currently serve on the Corporate Governance Committee. A
description of the committees of the Board of Directors of the Company is set
forth in the Company's definitive Proxy Statement to be filed with the
Commission on or about April 5, 2002 and is incorporated herein by reference.

BIOGRAPHICAL SUMMARIES

John E. Abele, a co-founder of the Company, has been a Director of the Company
since 1979, Founder Chairman since 1995 and Co-Chairman from 1979 to 1995. Mr.
Abele held the position of Treasurer from 1979 to 1992 and Vice Chairman and
Founder, Office of the Chairman from February 1995 to March 1996. He was
President of Medi-tech, Inc. from 1970 to 1983, and prior to that served in
sales, technical and general management positions for Advanced Instruments, Inc.
Mr. Abele is the Vice Chairman of the Board and Treasurer of the FIRST (For
Inspiration and Recognition of Science and Technology) Foundation and is also a
member of numerous not-for-profit boards. Mr. Abele received a B.A. degree from
Amherst College.

Lawrence C. Best joined the Company in August 1992 as Senior Vice
President--Finance & Administration and Chief Financial Officer. Previously, Mr.
Best had been a partner at Ernst & Young, certified public accountants, since
1981. From 1979 to 1981, Mr. Best served a two year term as a Professional
Accounting Fellow in the Office of Chief Accountant at the Securities and
Exchange Commission in Washington, D.C. Mr. Best received a B.B.A. degree from
Kent State University.

Joseph A. Ciffolillo joined the Company in 1983 as President of Medi-tech,
Inc. During his tenure at the Company, he also served as President of
Microvasive, Inc. and as Executive Vice President and Chief Operating Officer
from 1989 until his retirement in 1996. In 1992, Mr. Ciffolillo became a
director of the Company. Previously, Mr. Ciffolillo spent twenty years with
Johnson & Johnson where he held a number of management positions including
Executive Vice President, Codman and President, Johnson & Johnson Orthopedic
Company, a company of which he was also a co-founder. Mr. Ciffolillo is a
member of the Spray Venture Fund Investment Committee and a member of the
Board of Directors of MedSource Technologies, Inc. He also serves on a number
of for-profit and not-for-profit boards. Mr. Ciffolillo is Chairman of the
Advisory Board of the Health Science Technology Division of Harvard
University and the Massachusetts

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Institute of Technology. Mr. Ciffolillo received his B.A. from Bucknell
University where he also serves as a Member of the Board of Trustees.

Fred A. Colen was appointed to the Executive Committee of the Company as Senior
Vice President and Chief Technology Officer in July 2001. Mr. Colen joined the
Company in 1999 as Vice President of Research and Development of Scimed and in
February 2001, he was appointed Senior Vice President, Cardiovascular Technology
of Scimed. Prior to joining the Company, Mr. Colen was Executive Vice President
of Quality/Speed to Market at St. Jude Medical - CRMD Division from 1996 where
he was responsible for St. Jude's global bradycardia research and development
and product planning operations. Mr. Colen received an M.S. in Electrical
Engineering, Medical Technology from Technical University, RWTH Aachen, Germany.

Paul Donovan joined the Company in March 2000 as Vice President, Corporate
Communications. Most recently, Mr. Donovan was the Executive Director of
External Affairs at Georgetown University Medical Center, where he directed
media, government and community relations as well as employee communications
since 1998. From 1997 to 1998, Mr. Donovan was Chief of Staff at the United
States Department of Commerce. From 1993 to 1997, Mr. Donovan served as Chief of
Staff to Senator Edward M. Kennedy and from 1989 to 1993 as Press Secretary to
Senator Kennedy. Mr. Donovan received a B.A. degree from Dartmouth College.

Joel L. Fleishman joined the Company as a Director in October 1992. Mr.
Fleishman served as President of The Atlantic Philanthropies from September 1993
until January 2001, when he became Senior Advisor of that organization. He is
also Professor of Law and Public Policy and has served in various administrative
positions, including First Senior Vice President, at Duke University, since
1971. Mr. Fleishman is a founding member of the governing board of the Duke
Center for Health Policy Research and Education and was the founding director of
Duke University's Terry Sanford Institute of Public Policy. He is the director
of the Samuel and Ronnie Heyman Center for Ethics, Public Policy and the
Professions. Mr. Fleishman also serves as Chairman of the Board of Trustees of
The John and Mary Markle Foundation, Vice-Chairman of the Board of Trustees of
the Urban Institute and as a director of Polo Ralph Lauren Corporation. Mr.
Fleishman received A.B., M.A. and J.D. degrees from the University of North
Carolina at Chapel Hill, and an LL.M. degree from Yale University.

Marye Anne Fox became a director of the Company in October 2001. Dr. Fox is
Chancellor of North Carolina State University and Professor of Chemistry. From
1976 to 1998, she was a member of the faculty at the University of Texas, where
she taught chemistry and held the Waggoner Regents Chair in Chemistry from 1991
to 1998. She served as the University's Vice President for Research from 1994 to
1998. Dr. Fox is the Co-Chair of the National Academy of Sciences'
Government-University-Industry Research Roundtable and serves on President
Bush's Council of Advisors on Science and Technology. She has served as the Vice
Chair of the National Science Board. She also serves on the boards of a number
of other scientific,

29
<Page>

technological and civic organizations, and is a member of the Board of Directors
of Red Hat Corp. and the Camille and Henry Dreyfus Foundation. Dr. Fox also
serves on the Board of Directors of W.R. Grace Co., a specialty chemical company
that filed a petition for reorganization under Chapter 11 of the Federal
Bankruptcy Code in April 2001. She has been honored by a wide range of
educational and professional organizations, and she has authored more than 350
publications, including five books. Dr. Fox holds a B.S. in Chemistry from Notre
Dame College, an M.S. in Organic Chemistry from Cleveland State University, and
a Ph.D. in Organic Chemistry from Dartmouth College.

Ray J. Groves joined the Company as a Director in May 1999. Mr. Groves is
President and Chief Operating Officer of Marsh Inc., a subsidiary of Marsh &
McLennan Companies, Inc. He served as Chairman of Legg Mason Merchant Banking,
Inc. from 1995 to 2001. Mr. Groves served as Chairman and Chief Executive
Officer of Ernst & Young for 17 years until his retirement in 1994. Mr. Groves
currently serves as a member of the Boards of Directors of American Water Works
Company, Inc., Electronic Data Systems Corporation and Marsh & McLennan
Companies, Inc. Mr. Groves serves on the Boards of Trustees of the New York
State Public Policy Institute and is a member of the Council on Foreign
Relations. He is a former member of the Board of Governors of the American Stock
Exchange and the National Association of Securities Dealers. Mr. Groves is
former Chairman of the Board of Directors of the American Institute of Certified
Public Accountants. He is a member and former Chair of the Board of Directors of
The Ohio State University Foundation and a member of the Dean's Advisory Council
of the Fisher College of Business. He is a former member of the Board of
Overseers of The Wharton School, University of Pennsylvania and served as the
Chairman of its Center for the Study of the Service Sector. Mr. Groves is a
managing director, a member of the executive committee and Secretary-Treasurer
of the Metropolitan Opera Association. Mr. Groves received a B.S. degree from
The Ohio State University.

Lawrence L. Horsch joined the Company as a Director in February 1995.
Previously, he had been Chairman of the Board of SCIMED Life Systems, Inc. from
1977 to 1994, director from 1977 to 1995 and Acting Chief Financial Officer from
1994 to 1995. Since 1990, Mr. Horsch has served as Chairman of Eagle Management
& Financial Corp., a management consulting firm. He was Chairman and Chief
Executive Officer of Munsingwear, Inc., from 1987 to 1990. Mr. Horsch also
serves on several private company boards. Mr. Horsch received a B.A. degree from
the University of St. Thomas and an M.B.A. degree from Northwestern University.

Paul A. LaViolette joined the Company as President, Boston Scientific
International, and Vice President--International in January 1994. In February
1995, Mr. LaViolette was elected to the position of Senior Vice President and
Group President--Nonvascular Businesses. In October 1998, Mr. LaViolette was
appointed President, Boston Scientific International, and in February 2000
assumed responsibility for the Company's Scimed, EPT and Target businesses as
Group President, Cardiovascular. In March, 2001, he also assumed the position
of President, SCIMED.

30
<Page>

Prior to joining the Company, he was employed by C.R. Bard, Inc. in various
capacities, including President, U.S.C.I. Division, from July 1993 to
November 1993, President, U.S.C.I. Angioplasty Division, from January 1993 to
July 1993, Vice President and General Manager, U.S.C.I. Angioplasty Division,
from August 1991 to January 1993, and Vice President U.S.C.I. Division, from
January 1990 to August 1991. Mr. LaViolette received his B.A. degree from
Fairfield University and an M.B.A. degree from Boston College.

Robert G. MacLean joined the Company as Senior Vice President--Human Resources
in April 1996. Prior to joining the Company, he was Vice President--Worldwide
Human Resources for National Semiconductor Corporation in Santa Clara,
California from October 1992 to March 1996. Mr. MacLean has held various human
resources management positions in the U.S. and Europe during his career. Prior
to his business endeavors, he was Economics Professor at the University of the
Pacific. Mr. MacLean received his B.A. and M.A. degrees and completed his
doctoral studies in economics from Stanford University.

Ernest Mario became a director of the Company in October 2001. Dr. Mario is
the Founder of Apothogen, Inc., a pharmaceutical development company and has
served as a senior executive of a number of major international companies.
From 1993 to 1997, Dr. Mario served as Co-Chairman and Chief Executive
Officer of ALZA Corporation, a research-based pharmaceutical company with
leading drug-delivery technologies, and Chairman and Chief Executive Officer
from 1997 to 2001. Dr. Mario presently serves on the Boards of Directors of
Catalytica Energy Systems, Inc., Maxygen, Inc., Millenium Pharmaceuticals,
Inc., Orchid Biosciences, Inc., Pharmaceutical Product Development, Inc. and
SonoSite, Inc. He is also a Trustee of Duke University and Chairman of the
Board of the Duke University Health System. He is the Chairman of the
American Foundation for Pharmaceutical Education and serves as an advisor to
the colleges of pharmacy at the University of Maryland, the University of
Rhode Island and Rutgers University. Dr. Mario holds a B.S. in Pharmacy from
Rutgers, and an M.S. and a Ph.D. in Physical Sciences from the University of
Rhode Island.

Stephen F. Moreci was appointed to the Executive Committee of the Company as
Senior Vice President and Group President, Endosurgery in December 2000. Mr.
Moreci joined the Company in 1989 and most recently served as the Company's
President of its Medi-tech division since 1999. From 1989 until 1999, Mr. Moreci
held a variety of management positions within the Company, including Vice
President and General Manager of Cardiac Assist from 1989 to 1991, Vice
President and General Manager of Microvasive Endoscopy from 1991 until 1995,
Group Vice President of Nonvascular from 1995 until 1996 and President of
Microvasive Endoscopy from 1996 until 1999. Mr. Moreci received a B.S. degree
from Pennsylvania State University.

31
<Page>

N.J. Nicholas, Jr. joined the Company as a Director in October 1994. Mr.
Nicholas served as President of Time, Inc. from September 1986 to May 1990 and
Co-Chief Executive Officer of Time Warner, Inc. from May 1990 until February
1992. N.J. Nicholas, Jr. is a director of Xerox Corporation and Priceline.com.
Mr. Nicholas received an A.B. degree from Princeton University and an M.B.A.
degree from Harvard Business School. He is also the brother of Pete Nicholas,
Chairman of the Board of the Company.

Peter M. Nicholas, a co-founder of the Company, has been the Chairman of the
Board of the Company since 1995. He has been a Director since 1979 and served
as the Chief Executive Officer from 1979 to March 1999 and Co-Chairman of the
Board from 1979 to 1995. Prior to joining the Company, he was corporate
director of marketing and general manager of the Medical Products Division at
Millipore Corporation, a medical device company, and served in various sales,
marketing and general management positions at Eli Lilly and Company. He is
currently Vice Chairman of the Board of Trustees of Duke University and a
member of the Board's Executive Committee. Mr. Nicholas is also a member of
the American Academy of Achievement and has recently received the Phoenix
Lifetime Achievement Award. He is also a recent recipient of the Ellis Island
Medal of Honor, and is a Fellow of the American Academy of Arts and Sciences.
He is a member of the Massachusetts Business Roundtable and currently serves
on the boards of the Boys & Girls Club of Boston, Massachusetts High
Technology Council, and CEO's for Charter Schools. Mr. Nicholas also serves
on several for profit and not-for-profit boards. After college, Mr. Nicholas
served as an officer in the U.S. Navy, resigning his commission as lieutenant
in 1968. Mr. Nicholas received a B.A. degree from Duke University, and an
M.B.A. degree from The Wharton School of the University of Pennsylvania. He
is also the brother of N.J. Nicholas, Jr., a Director of the Company.

Dr. Arthur L. Rosenthal joined the Company in January 1994 as Senior Vice
President and Chief Development Officer and became Chief Scientific Officer in
February 2000. Prior to joining the Company, he was Vice President--Research &
Development at Johnson & Johnson Medical, Inc., from April 1990 to January 1994.
Between 1973 and 1990, Dr. Rosenthal held several executive technical management
positions at Pfizer Inc., 3M and C.R. Bard, Inc., primarily in the fields of
device clinical research and biomedical engineering. Dr. Rosenthal received his
B.A. in bacteriology from the University of Connecticut, and his Ph.D. in
biochemistry from the University of Massachusetts.

Senator Warren B. Rudman joined the Company as a Director in October 1999.
Senator Rudman became a partner in the international law firm Paul, Weiss,
Rifkind, Wharton, and Garrison in 1992 after serving two terms as a U.S. Senator
from New Hampshire from 1980 to 1992. Senator Rudman serves on the Boards of
Trustees of Valley Forge Military Academy, the Brookings Institution, and the
Council on Foreign Relations. He also serves on the boards of Allied Waste
Industries, Inc., The Chubb Corporation, Collins & Aikman Corporation, Raytheon
Corporation and several funds managed by the Dreyfus Corporation. He is also the

32
<Page>

founding co-chairman of the Concord Coalition. Senator Rudman received a B.S.
from Syracuse University and a LL.B. from Boston College Law School and served
in the U.S. Army during the Korean War.

Paul W. Sandman joined the Company as Senior Vice President, Secretary and
General Counsel in May 1993. From March 1992 through April 1993, he was Senior
Vice President, General Counsel and Secretary of Wang Laboratories, Inc., where
he was responsible for legal affairs. From 1984 to 1992, Mr. Sandman was Vice
President and Corporate Counsel of Wang Laboratories, Inc., where he was
responsible for corporate and international legal affairs. Mr. Sandman received
his A.B. from Boston College, and his J.D. from Harvard Law School.

James H. Taylor, Jr. joined the Company as Senior Vice President of Corporate
Operations in August 1999. Mr. Taylor most recently served as Vice President of
Global Technology at Nestle Clinical Nutrition from 1995 to 1997. Prior to
joining Nestle, he completed a thirty-year career at Baxter International, where
he held a broad range of positions in operations management, including from 1992
to 1995, the position of Corporate Vice President of Manufacturing Operations
and Strategy. Mr. Taylor received his B.A. degree from the University of North
Carolina.

James R. Tobin joined the Company as Director, President and Chief Executive
Officer in March 1999. Prior to joining the Company, Mr. Tobin served as
President and Chief Executive Officer of Biogen, Inc. from 1997 to 1998 and
Chief Operating Officer of Biogen from 1994 to 1997. From 1972 to 1994, Mr.
Tobin served in a variety of executive positions with Baxter International,
including President and Chief Operating Officer from 1992 to 1994. Previously,
he served at Baxter as Managing Director in Japan, Managing Director in Spain,
President of Baxter's I.V. Systems Group and Executive Vice President. Mr. Tobin
currently serves on the Boards of Directors of Beth Israel Deaconess Medical
Center, the Carl J. Shapiro Institute for Education and Research, Curis, Inc.
and Applera Corporation (formerly PE Corporation). Mr. Tobin holds an A.B. from
Harvard College and an M.B.A. from Harvard Business School. Mr. Tobin also
served as a lieutenant in the U.S. Navy from 1968 to 1972.

33
<Page>

PART II

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

ITEM 5. MARKET FOR THE COMPANY'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

The Company's common stock is traded on the New York Stock Exchange under the
symbol "BSX".

The information set forth under the caption "Market for the Company's Common
Stock and Related Matters" included in the Company's 2001 Consolidated Financial
Statements (Exhibit 13.1 filed herewith) is incorporated herein by reference.

On December 11, 2001, the Company issued an aggregate of 925,862 shares of its
common stock pursuant to the acquisition by the Company of RadioTherapeutics
Corporation. All of the Company's common shares issued in this transaction were
issued in a non-public offering pursuant to an exemption from the registration
requirements of the Securities Act of 1933, as amended (the "Act"), under
Section 4(2) of the Act. This sale was made without general solicitation or
advertising. The Company has a currently effective Registration Statement on
Form S-3 (Reg. No. 333-76346) covering the resale of these securities. All net
proceeds from the sale of the securities will go to the selling stockholders who
offer and sell these shares. The Company has not received and will not receive
any proceeds from the sale of these shares.

The closing price of the Company's Common Stock on March 15, 2002 was $24.06.

ITEM 6. SELECTED FINANCIAL DATA

The information set forth under the caption "Five-Year Selected Financial Data"
included in the Company's 2001 Consolidated Financial Statements (Exhibit 13.1
filed herewith) is incorporated herein by reference.

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS

The statements and information set forth under the caption "Management's
Discussion and Analysis of Financial Condition and Results of Operations"
included in the Company's 2001 Consolidated Financial Statements (Exhibit 13.1
filed herewith) are incorporated herein by reference.

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<Page>

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The information set forth under the subcaption "Market Risk Disclosures"
contained under the caption "Management's Discussion and Analysis of Financial
Condition and Results of Operations" included on page 10 of the Company's 2001
Consolidated Financial Statements (Exhibit 13.1 filed herewith) is incorporated
herein by reference.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The consolidated financial statements of the Company and its subsidiaries
included in the Company's 2001 Consolidated Financial Statements (Exhibit 13.1
filed herewith) are incorporated herein by reference.

The statements and information set forth under the caption "Quarterly Results of
Operations" included in the Company's 2001 Consolidated Financial Statements
(Exhibit 13.1 filed herewith) are incorporated herein by reference.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE

None.

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<Page>

PART III

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

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY

The required information concerning directors and executive officers set forth
in the Company's definitive Proxy Statement to be filed with the Commission on
or about April 5, 2002 is incorporated herein by reference. See also "Directors
and Executive Officers of the Company" following Item 4 herein.

ITEM 11. EXECUTIVE COMPENSATION

The required information concerning executive compensation set forth in the
Company's definitive Proxy Statement to be filed with the Commission on or about
April 5, 2002 is incorporated herein by reference.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT

The required statements concerning security ownership of certain beneficial
owners and management set forth in the Company's definitive Proxy Statement to
be filed with the Commission on or about April 5, 2002 are incorporated herein
by reference.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The required statements concerning certain relationships and related
transactions set forth in the Company's definitive Proxy Statement to be filed
with the Commission on or about April 5, 2002 are incorporated herein by
reference.

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<Page>

PART IV

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

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

(a)(1) Financial Statements.

The response to this portion of Item 14 is set forth under
Item 8.

(a)(2) Financial Schedules.

The response to this portion of Item 14 is filed herewith as a
separate attachment to this report.

(a)(3) Exhibits (* documents filed herewith).

EXHIBIT NO. TITLE

3.1 Second Restated Certificate of Incorporation of the Company
(Exhibit 3.1, Annual Report on Form 10-K for the year ended
December 31, 1993, File No. 1-11083).

3.2 Certificate of Amendment of the Second Restated Certificate of
Incorporation of the Registrant (Exhibit 3.2, Annual Report on
Form 10-K for the year ended December 31, 1994, File No.
1-11083).

3.3 Certificate of Second Amendment of the Second Restated
Certificate of Incorporation of the Registrant (Exhibit 3.3,
Annual Report on Form 10-K for the year ended December 31,
1998, File No. 1-11083).

3.4 Restated By-laws of the Company (Exhibit 3.2, Registration No.
33-46980).

4.1 Specimen Certificate for shares of the Company's Common Stock
(Exhibit 4.1, Registration No. 33-46980).

4.2 Description of Capital Stock contained in Exhibits 3.1, 3.2,
3.3 and 3.4.

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<Page>

4.3 Form of Debt Securities Indenture (Exhibit 4.4, Registration
Statement on Form S-3 of the Company, BSC Capital Trust, BSC
Capital Trust II and BSC Capital Trust III, File No.
333-64887).

*4.4 Form of First Supplemental Indenture dated as of December 6,
2001

10.1 Boston Scientific Corporation 1992 Long-Term Incentive Plan, as
amended (Exhibit 10.1, Annual Report on Form 10-K for the year
ended December 31, 1996, File No. 1-11083).

*10.2 Form of Amendment to the Boston Scientific Corporation 1992
Long-Term Incentive Plan

10.3 Boston Scientific Corporation 1992 Non-Employee Directors'
Stock Option Plan, as amended (Exhibit 10.2, Annual Report on
Form 10-K for the year ended December 31, 1996, Exhibit 10.3,
Annual Report on Form 10-K for the year ended December 31,
2000, File No. 1-11083).

10.4 Boston Scientific Corporation 1995 Long-Term Incentive Plan, as
amended (Exhibit 10.1, Annual Report on Form 10-K for the year
ended December 31, 1996, File No. 1-11083).

*10.5 Form of Amendment to the Boston Scientific Corporation 1995
Long-Term Incentive Plan

10.6 SCIMED Life Systems, Inc. 1987 Non-Qualified Stock Option Plan,
amended and restated (Exhibit 4.3, Registration No. 33-89772
which was incorporated by reference to Exhibit A to SCIMED's
Proxy Statement dated May 23, 1991 for its 1991 Annual Meeting
of Shareholders, Commission File No. 0-9301).

10.7 SCIMED Life Systems, Inc. 1991 Directors Stock Option Plan, as
amended (Exhibit 4.2, Registration No. 33-89772 which was
incorporated by reference to Exhibit A to SCIMED's Proxy
Statement dated June 8, 1994 for its 1994 Annual Meeting of
Shareholders, Commission File No. 0-9301).

10.8 SCIMED Life Systems, Inc. 1992 Stock Option Plan (Exhibit 4.1,
Registration No. 33-89772 which was incorporated by reference
to Exhibit A to SCIMED's Proxy Statement dated May 26, 1992 for
its 1992 Annual Meeting of Shareholders, Commission File No.
0-9301).

10.9 Heart Technology, Inc. Restated 1989 Stock Option Plan (Exhibit
4.5, Registration No. 33-99766 which was incorporated by
reference to Exhibit 10.4 to the Registration Statement on Form
S-1 of Heart Technology, Registration No. 33-45203).

10.10 EP Technologies, Inc. 1991 Stock Option/Stock Issuance Plan
(Exhibit 4.6, Registration No. 33-80265 which was incorporated
by reference to EPT's Registration Statement on Form S-8, File
No. 33-82140).

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<Page>

10.11 EP Technologies, Inc. 1993 Stock Option/Stock Issuance Plan,
(Exhibit 4.5, Registration No. 33-80265 which was incorporated
by reference to EPT's Registration Statement on Form S-8, File
No. 33-93196).

10.12 Target Therapeutics, Inc. 1988 Stock Option Plan (Exhibit 10.2,
Quarterly Report of Target Therapeutics, Inc. on Form 10-Q for
the quarter ended September 30, 1996, File No. 0-19801).

10.13 Target Therapeutics, Inc. 1988 Stock Option Plan, (Exhibit 10.3
Quarterly Report of Target Therapeutics, Inc. on Form 10-Q for
the quarter ended September 30, 1996, File No. 0-19801).

10.14 Boston Scientific Corporation 401(k) Retirement Savings Plan,
as Amended and Restated, Effective January 1, 1997 (Exhibit
10.17, Annual Report on Form 10-K for the year ended December
31, 1997, Exhibit 10.1, Quarterly Report on Form 10-Q for the
quarter ended March 31, 1999, Exhibit 10.1, Quarterly Report on
Form 10-Q for the quarter ended September 30, 1999, Exhibit
10.19, Annual Report on Form 10-K for the year ended December
31, 2000, and Exhibit 10.1, Quarterly Report on Form 10-Q for
the quarter ended June 30, 2001, File No. 1-11083).

10.15 Boston Scientific Corporation Global Employee Stock Ownership
Plan, as Amended and Restated (Exhibit 10.18, Annual Report on
Form 10-K for the year ended December 31, 1997, Exhibit 10.21,
Annual Report on Form 10-K for the year ended December 31,
2000, Exhibit 10.22, Annual Report on Form 10-K for the year
ended December 31, 2000, File No. 1-11083).

10.16 Boston Scientific Corporation Deferred Compensation Plan,
Effective January 1, 1996 (Exhibit 10.17, Annual Report on Form
10-K for the year ended December 31, 1996, File No. 11083).

10.17 Boston Scientific Corporation 2000 Long Term Incentive Plan
(Exhibit 10.20, Annual Report on Form 10-K for the year ended
December 31, 1999, File No. 1-11083).

*10.18 Form of Amendment to the Boston Scientific Corporation 2000
Long-Term Incentive Plan

10.19 Embolic Protection Incorporated 1999 Stock Plan (Exhibit 10.1,
Registration Statement on Form S-8 of the Company, File No.
333-61060).

10.20 Quanam Medical Corporation 1996 Equity Incentive Plan (Exhibit
10.2, Registration Statement on Form S-8 of the Company, File
No. 333-61060).

10.21 Quanam Medical Corporation 1996 Stock Plan (Exhibit 10.3,
Registration Statement on Form S-8 of the Company, File No.
333-61060).

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<Page>

10.22 RadioTherapeutics Corporation 1994 Stock Incentive Plan
(Exhibit 10.1, Registration Statement on Form S-8 of the
Company, File No. 333-76380).

10.23 Form of Second Amended and Restated Credit Agreement, dated
September 4, 1998 among the Company, The Several Lenders and
certain other parties (Exhibit 10.1, Current Report on Form 8-K
dated September 25, 1998, File No. 1-11083).

10.24 Form of Second Amendment to the Second Amended and Restated
Credit Agreement among Boston Scientific Corporation, The
Several Lenders and The Chase Manhattan Bank dated as of June
20, 2001. (Exhibit 10.1, Quarterly Report on Form 10-Q for the
quarter ended June 30, 2000, File No. 1-11083).

10.25 Form of Amendment to the Second Amended and Restated Credit
Agreement among Boston Scientific Corporation, The Several
Lenders and The Chase Manhattan Bank dated as of August 21,
2001 (Exhibit 10.1, Quarterly Report on Form 10-Q for the
quarter ended September 30, 2001, File No. 1-11083).

10.26 Form of Credit Agreement among the Company, The Several Lenders
and Banc of America Securities LLC dated as of August 15, 2001
(Exhibit 10.2, Quarterly Report on Form 10-Q for the quarter
ended September 30, 2001, File No. 1-11083).

10.27 Form of Indemnification Agreement between the Company and
certain Directors and Officers (Exhibit 10.16, Registration No.
33-46980).

10.28 Letter Agreement, dated June 22, 1992, between the Company and
Lawrence C. Best (Exhibit 10.11, Annual Report on Form 10-K for
the year ended December 31, 1993, File No. 1-11083).

10.29 Form of Retention Agreement between the Company and certain
Executive Officers (Exhibit 10.23, Annual Report on Form 10-K
for the year ended December 31, 1996, File No. 1-11083).

10.30 Letter Agreement dated March 17, 1999, between the Company and
James R. Tobin (Exhibit 10.34, Annual Report on Form 10-K for
the year ended December 31, 1998, File No. 1-11083).

10.31 Agreement Containing Consent Decree, dated as of February 23,
1995, between the Company and the Federal Trade Commission
(Exhibit 10.16, Annual Report on Form 10-K for the year ended
December 31, 1994, File No. 1-11083).

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<Page>

10.32 6.625% Promissory Notes due March 15, 2005 issued by the
Company in the aggregate principal amount of $500 million, each
dated as of March 10, 1998 (Exhibit Nos. 4.1, 4.2 and 4.3 to
the Company's Current Report on Form 8-K dated March 30, 1998,
File No. 1-11083).

11 Statement regarding computation of per share earnings (included
in Note J to the Company's 2001 Consolidated Financial
Statements for the year ended December 31, 2001, filed as
Exhibit 13.1 hereto).

*12.1 Statement regarding computation of ratios of earnings to fixed
charges.

*13.1 The Company's 2001 Consolidated Financial Statements for the
year ended December 31, 2001.

13.2 Report of Independent Auditors, Ernst & Young LLP (included in
the Company's 2001 Consolidated Financial Statements for the
year ended December 31, 2001, filed as Exhibit 13.1 hereto).

*21. List of the Company's subsidiaries as of March 15, 2002. Each
subsidiary does business under the corporate name indicated.

*23.1 Consent of Independent Auditors, Ernst & Young LLP.

(b) Reports on Form 8-K.

None.

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<Page>

SIGNATURE

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Company has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.

Dated: March 27, 2002 BOSTON SCIENTIFIC CORPORATION

BY: /s/ LAWRENCE C. BEST
--------------------------------------------
Lawrence C. Best
Chief Financial Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the Company and in
the capacities and on the dates indicated.

Dated: March 27, 2002 /s/ JOHN E. ABELE
--------------------------------------------
John E. Abele
Director, Founder

Dated: March 27, 2002 /s/ LAWRENCE C. BEST
---------------------------------------------
Lawrence C. Best
Senior Vice President--Finance and
Administration and Chief Financial
Officer (Principal Financial and
Accounting Officer)

Dated: March 27, 2002 /s/ JOSEPH A. CIFFOLILLO
--------------------------------------------
Joseph A. Ciffolillo
Director

Dated: March 27, 2002 /s/ JOEL L. FLEISHMAN
---------------------------------------------
Joel L. Fleishman
Director

42
<Page>

Dated: March 27, 2002 /s/ RAY J. GROVES
--------------------------------------------
Ray J. Groves
Director

Dated: March 27, 2002 /s/ LAWRENCE L. HORSCH
--------------------------------------------
Lawrence L. Horsch
Director

Dated: March 27, 2002 /s/ ERNEST MARIO
--------------------------------------------
Ernest Mario
Director

Dated: March 27, 2002 /s/ N.J. NICHOLAS, JR.
---------------------------------------------
N.J. Nicholas, Jr.
Director

Dated: March 27, 2002 /s/ PETER M. NICHOLAS
---------------------------------------------
Peter M. Nicholas
Director, Chairman of the Board

Dated: March 27, 2002 /s/ WARREN B. RUDMAN
--------------------------------------------
Warren B. Rudman
Director

Dated: March 27, 2002 /s/ JAMES R. TOBIN
---------------------------------------------
James R. Tobin
Director, President and
Chief Executive Officer
(Principal Executive Officer)

43
<Page>

FINANCIAL STATEMENT SCHEDULE

The following additional consolidated financial statement schedule should be
considered in conjunction with the Company's 2001 Consolidated Financial
Statements (Exhibit 13.1 filed herewith):

Schedule II - Valuation and Qualifying Accounts

All other schedules have been omitted since the required information is not
present or not sufficiently material to require submission of the schedule, or
because the information required is included in the consolidated financial
statements or the notes thereto.

<Page>

SCHEDULE II

VALUATION AND QUALIFYING ACCOUNTS

<Table>
<Caption>
Charges to
Balance at Charges to (Deductions from) Balance at
Beginning Costs and Other End of
Description of Period Expenses Deductions Accounts Period
- ----------- ---------------------------------------------------------------------------------
(In millions)
<S> <C> <C> <C> <C> <C>
YEAR ENDED DECEMBER 31, 2001
Reserves and allowances deducted from
asset accounts:
Allowances for uncollectible
amounts and sales returns and allowances.... $67 9 (7)(a) (7)(b) $62

YEAR ENDED DECEMBER 31, 2000
Reserves and allowances deducted from
asset accounts:
Allowances for uncollectible
amounts and sales returns and allowances.... $63 8 (9)(a) 5 (b) $67

YEAR ENDED DECEMBER 31, 1999
Reserves and allowances deducted from
asset accounts:
Allowances for uncollectible
amounts and sales returns and allowances.... $49 11 (10)(a) 13 (b) $63
</Table>

(a) Uncollectible accounts written off.

(b) Charges for sales returns and allowances, net of actual sales returns

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

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-4.4
<SEQUENCE>3
<FILENAME>a2074671zex-4_4.txt
<DESCRIPTION>EXHIBIT 4.4
<TEXT>

<Page>

EXHIBIT 4.4

FORM OF FIRST SUPPLEMENTAL INDENTURE
- --------------------------------------------------------------------------------

BOSTON SCIENTIFIC CORPORATION

AS ISSUER

JPMORGAN CHASE BANK
(f/k/a The Chase Manhattan Bank)

AS TRUSTEE

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

First Supplemental Indenture

Dated as of December 6, 2001

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

$500,000,000

6 5/8% Notes due March 15, 2005

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

<Page>

FIRST SUPPLEMENTAL INDENTURE

First Supplemental Indenture (this "Supplemental Indenture") dated as
of December 6, 2001 between BOSTON SCIENTIFIC CORPORATION, a Delaware
corporation (the "Company"), and JPMORGAN CHASE BANK (f/k/a The Chase Manhattan
Bank), as Trustee (the "Trustee").

WITNESSETH:

WHEREAS, in accordance with Section 902 of the Indenture relating to
the 6[SYMBOL]% Notes due 2005 of the Company (the "Securities"), dated as of
September 1, 1997 (the "Indenture"), the Trustee, the Company and the Holders of
at least a majority in principal amount at maturity of the Securities
outstanding as of the date hereof desire to amend certain terms of the Indenture
as described below;

WHEREAS, the Company intends to increase its financing flexibility to
permit, among other things, an increased ability to secure its payment
obligations with respect to possible future financings of the accounts
receivable of the Company or its subsidiaries;

WHEREAS, in accordance with the terms of the Indenture, Holders of or
in excess of a majority in aggregate principal amount of the outstanding
Securities have consented to the amendments set forth herein;

WHEREAS, the execution and delivery of this Supplemental Indenture has
been duly authorized by the parties hereto and the Trustee has received an
Opinion of Counsel pursuant to Section 903 of the Indenture, and all other acts
necessary to make this Supplemental Indenture a valid and binding supplement to
the Indenture and effectively amending the Indenture as set forth herein have
been duly taken;

NOW, THEREFORE, the parties hereto agree as follows:

SECTION 101. DEFINITIONS.

All capitalized terms used and not defined herein shall have the
meanings ascribed thereto in the Indenture.

SECTION 201. AMENDMENTS TO THE INDENTURE.

Subject to Section 301 hereof, the Indenture is hereby amended as
follows:

(a) AMENDMENT TO SECTION 101. Section 101 of the Indenture is hereby
amended by adding the following definitions:

"CONSOLIDATED TANGIBLE ASSETS": at any date, Consolidated Total Assets
minus (without duplication) the net book value of all assets which would be
treated as intangible assets, as determined on a consolidated basis in
accordance with GAAP.

<Page>

"CONSOLIDATED TOTAL ASSETS": at any date, the net book value of all
assets of the Company and its Subsidiaries as determined on a consolidated basis
in accordance with GAAP.

"RECEIVABLES": any accounts receivable of any Person, including,
without limitation, any thereof constituting or evidenced by chattel paper,
instruments or general intangibles, and all proceeds thereof and rights
(contractual and other) and collateral related thereto.

"RECEIVABLES TRANSACTION": any transactions or series of related
transactions providing for the financing of Receivables of the Company or any of
its Subsidiaries.

(b) AMENDMENT TO SECTION 1009. Section 1009 of the Indenture is
hereby amended by deleting the "." from the end of clause (i) thereof and
substituting in lieu thereof the following:

";(j) Liens pursuant to any Receivables Transactions in an aggregate
principal amount not exceeding 15% of Consolidated Tangible Assets."

SECTION 301. CONFIRMATION; EFFECTIVENESS. As amended by this
Supplemental Indenture, the Indenture and the Securities are ratified and
confirmed in all respects and the Indenture as so amended shall be read, taken
and construed as one and the same instrument. The provisions of this
Supplemental Indenture shall become operative as of the date of this
Supplemental Indenture. This Supplemental Indenture may be executed in any
number of counterparts, each of which counterparts together shall constitute but
one and the same instrument.

SECTION 401. TRUST INDENTURE ACT. If and to the extent that any
provision of this Supplemental Indenture limits, qualifies or conflicts with
another provision included in this Supplemental Indenture or in the Indenture,
which is required to be included in this Supplemental Indenture or the Indenture
by the Trust Indenture Act of 1939, as amended (the "TIA"), such required
provision of the TIA shall control.

SECTION 501. GOVERNING LAW. This Supplemental Indenture shall be
deemed governed by the internal laws of the State of New York.

SECTION 601. RIGHTS OF TRUSTEE. Without limiting any other protections
or rights afforded the Trustee at law, by contract or otherwise, the Trustee
will be entitled to the full benefits afforded by Sections 602 and 603 of the
Indenture in connection with its execution and delivery of this Supplemental
Indenture.

2
<Page>

IN WITNESS WHEREOF, the parties hereto have caused this Supplemental
Indenture to be duly executed as of the date first written above.

BOSTON SCIENTIFIC CORPORATION

By:
--------------------------------
Title:

JPMORGAN CHASE BANK (f/k/a The Chase
Manhattan Bank), as Trustee

By:
--------------------------------
Title:

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.2
<SEQUENCE>4
<FILENAME>a2074671zex-10_2.txt
<DESCRIPTION>EXHIBIT 10.2
<TEXT>
<Page>

EXHIBIT 10.2

BOSTON SCIENTIFIC CORPORATION
1992 LONG-TERM INCENTIVE PLAN

FORM OF
AMENDMENT

Pursuant to Section 12 of the Boston Scientific Corporation 1992 Long-Term
Incentive Plan (the "Plan"), Boston Scientific Corporation hereby amends the
Plan effective for all Awards granted on or after October 30, 2001 as follows:

1. Section 2(o) of the Plan is amended by adding the following after the last
sentence of this Section:

"For any Stock Option granted on or after October 30, 2001, RETIREMENT
means, unless the Committee expressly provides otherwise, cessation of
employment or other service relationship with the Company and its
subsidiaries and affiliates if, as of the date of such cessation, (i)
the Participant has attained age 50 or has accrued at least five years
of service with the Company and its subsidiaries and affiliates, and
(ii) the sum of the Participant's age and years of service as of such
date equals or exceeds 62."

2. Section 6.2(g) of the Plan is amended by adding the following after the
last sentence of this Section:

"For any Stock Option granted on or after October 30, 2001, unless
otherwise determined by the Committee at or after grant, if an
optionee's employment by or association with the Company and its
subsidiaries and affiliates terminates by reason of death, any Stock
Option held by such optionee shall thereafter be fully exercisable by
the legal representative of the estate or by the legatee of the
optionee under the will of the optionee, until the expiration of the
stated term of the Stock Option (or such shorter period as the
Committee may specify at or after grant)."

3. Section 6.2(h) of the Plan is amended by adding the following language
after the last sentence of this Section:

"For any Stock Option granted on or after October 30, 2001, unless
otherwise determined by the Committee at or after grant, if an
optionee's employment by or association with the Company and its
subsidiaries and affiliates terminates by reason of Disability or
Retirement, any Stock Option held by such optionee shall thereafter be
exercisable by the optionee until the expiration of the stated term of
the Stock Option (or such shorter period as the Committee may specify
at or after grant)."

<Page>

4. Section 6.2(i) of the Plan is amended by adding the following language
after the last sentence of this Section:

"For any Stock Option granted on or after October 30, 2001, unless
otherwise determined by the Committee on or after grant, if an
optionee's employment by or association with the Company and its
subsidiaries and affiliates terminates for any reason other than
death, Disability or Retirement, the Stock Option shall thereupon
terminate, except that such Stock Option may be exercised, to the
extent exercisable, at termination, or on such accelerated basis as
the Committee may determine at or after grant, for a period of twelve
months (or such other period as the Committee may specify at or after
grant) from the date of such termination or until the expiration of
the stated term of the Stock Option, whichever is shorter, provided
that the Stock Option shall not be exercisable after the date of
termination if the optionee is terminated by the Company with Cause."

5. Section 6.2 is amended by adding the following new subsection (m) at the
end thereof effective for all Awards granted on or after October 30, 2001:

"(m) EMPLOYMENT TERMINATION/LEAVE OF ABSENCE. Unless the Committee
expressly provides otherwise, a Participant's "employment by or
association with the Company and its subsidiaries and affiliates" will
be deemed to have ceased when the individual is no longer employed by
or in a service relationship with the Company or its subsidiaries or
affiliates. Except as the Committee otherwise determines, with respect
to a Participant who is an employee of the Company or its subsidiaries
or its affiliates, such Participant's "employment by or association
with the Company and its subsidiaries and affiliates" will not be
deemed to have ceased during a military, sick or other bona fide leave
of absence if such absence does not exceed 180 days or, if longer, so
long as the Participant retains a right by statute or by contract to
return to employment or other service relationship with the Company
and its subsidiaries and affiliates."

6. Section 11 of the Plan is amended for all Awards granted under the Plan on
or after October 30, 2001 by adding the following language to the end of
this Section:

"For all Awards made under this Plan on or after October 30, 2001, the
following provisions shall apply:

11.1 CHANGE IN CONTROL. Except as the Committee may otherwise
determine in connection with the grant of an Award, immediately prior
to a Change in Control, each Award shall vest (and if relevant shall
become exercisable), all conditions to an Award shall be deemed
satisfied, and all Award deferrals shall be accelerated.

11.2 COVERED TRANSACTIONS. In the event of a Covered Transaction,
(and in addition to the provisions of Section 11.1 if also
constituting a Change in Control), all stock-based Awards, except to
the extent consisting of outstanding shares of Stock that are then
free of any restrictions under the Plan, shall terminate immediately
prior to the Covered Transaction unless assumed in accordance with the
immediately following sentence. If there is a surviving or

<Page>

acquiring entity, the Committee may provide for a substitution or
assumption of Awards by the acquiring or surviving entity on such
terms as the Committee determines. If there is no surviving or
acquiring entity, or if the Committee does not provide for a
substitution or assumption of an Award, the Award shall vest (and to
the extent relevant, become exercisable) at least ten days prior to
the effective date of the Covered Transaction.

11.3 DEFINITION OF CHANGE IN CONTROL. For purposes of the Plan, a
"Change in Control" means the happening of any of the following:

(a) an acquisition, consolidation or merger in which the Company
is not the surviving corporation or with respect to which all or
substantially all of the beneficial owners of the outstanding stock of
the Company and the combined voting power of the outstanding voting
securities of the Company entitled to vote generally in the election
of directors immediately prior to such transaction do not own
beneficially, directly or indirectly, and in substantially the same
proportion, more than 60% of, respectively, the then outstanding
shares of common stock and the combined voting power of the then
outstanding voting securities entitled to vote generally in the
election of directors, as the case may be, of the corporation
resulting from such transaction;

(b) a sale or transfer of all or substantially all the Company's
assets;

(d) continuing directors constitute less than a majority of the
Board, where a "continuing director" includes (A) each person who was
a director of the Company on January 3, 2000, and (B) each person who
subsequently becomes a director of the Company with approval by a vote
of at least a majority of the "continuing directors" in office at the
time of such person's election or nomination as a director unless that
person became a director in connection with an actual or threatened
election contest.

Notwithstanding clauses (a) through (d) above, none of the following
shall constitute a "Change in Control" for purposes of this
definition:

(i) the shares of common stock of the Company or the voting
securities of the Company entitled to vote generally in the election
of directors are acquired directly from the Company;

(ii) the shares of common stock of the Company or the voting
securities of the Company entitled to vote generally in the election
of directors are acquired by any employee benefit plan (or related
trust) sponsored or maintained by the Company or any corporation
controlled by the Company; or

(iii) (A) the beneficial owners of the outstanding shares of
common stock of the Company, and of the securities of the Company
entitled to vote generally in the election of directors, immediately
prior to such transaction beneficially own, directly or indirectly, in
substantially the same proportions immediately following such
transaction more than 60% of the outstanding shares of common stock
and of the combined voting power of the then outstanding

<Page>

voting securities entitled to vote generally in the election of
directors of the corporation (including, without limitation, a
corporation which as a result of such transaction owns the Company or
all or substantially all of the Company's assets either directly or
through one or more subsidiaries) resulting from such transaction and
(B) at least a majority of the members of the board of directors of
the corporation resulting from such transaction were members of the
board of directors at the time of the execution of the initial
agreement, or of the action of the Board, authorizing such
transaction.

11.4 DEFINITION OF COVERED TRANSACTION. For purposes of this
Plan, a Covered Transaction is any of the following:

(a) a consolidation or merger in which the Company is not the
surviving corporation or which results in the acquisition of all or
substantially all of the Company's outstanding stock by a single
person or entity or by a group of persons and/or entities acting in
concert;

(b) a sale or transfer of all or substantially all the Company's
assets, or

IN WITNESS WHEREOF, Boston Scientific Corporation has caused this instrument to
be signed in its name and on its behalf by its duly authorized officer this 30th
day of October, 2001.

BOSTON SCIENTIFIC CORPORATION

By:
---------------------------------------------
Name: Paul W. Sandman
Title: Senior Vice President and General Counsel

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.5
<SEQUENCE>5
<FILENAME>a2074671zex-10_5.txt
<DESCRIPTION>EXHIBIT 10.5
<TEXT>
<Page>

EXHIBIT 10.5

BOSTON SCIENTIFIC CORPORATION
1995 LONG-TERM INCENTIVE PLAN

FORM OF
AMENDMENT

Pursuant to Section 12 of the Boston Scientific Corporation 1995 Long-Term
Incentive Plan, as amended (the "Plan"), Boston Scientific Corporation hereby
amends the Plan effective for all Awards granted on or after October 30, 2001 as
follows:

1. Section 2(o) of the Plan is amended by adding the following after the last
sentence of this Section:

2. Section 6.2(g) of the Plan is amended by adding the following after the
last sentence of this Section:

3. Section 6.2(h) of the Plan is amended by adding the following after the
last sentence of this Section:

"For any Stock Option granted on or after October 30, 2001, unless
otherwise determined by the Committee at or after grant, if an
optionee's employment by or association with the Company and its
subsidiaries and affiliates terminates by reason of Disability or
Retirement, any Stock Option held by such optionee shall thereafter be
exercisable by the optionee until the expiration of the stated term of
the Stock Option (or such shorter period as the Committee may specify
at or after grant)."

<Page>

4. Section 6.2(i) of the Plan is amended by adding the following language
after the last sentence of this Section:

"For any Stock Option granted to an optionee on or after October 30,
2001, unless otherwise determined by the Committee at or after grant,
if an optionee's employment by or association with the Company and its
subsidiaries and affiliates terminates for any reason other than
death, Disability or Retirement, the Stock Option shall thereupon
terminate, except that if the optionee is involuntarily terminated by
the Company without Cause, such Stock Option may be exercised, to the
extent exercisable, at termination, or on such accelerated basis as
the Committee may determine at or after grant, for a period of twelve
months (or such other period as the Committee may specify at or after
grant) from the date of termination or until the expiration of the
stated term of the Stock Option, whichever is shorter, provided that
the Stock Option shall not be exercisable after the date of
termination if the optionee is terminated by the Company with Cause."

5. Section 6.2 is amended by adding the following new subsection (m) at the
end thereof effective for all Awards granted on or after October 30, 2001:

6. Section 11 of the Plan is amended for all Awards granted under the Plan on
or after October 30, 2001 by adding the following language to the end of
this Section:

"For all Awards made under this Plan on or after October 30,
2001, the following provisions shall apply:

<Page>

terminate immediately prior to the Covered Transaction unless assumed
in accordance with the immediately following sentence. If there is a
surviving or acquiring entity, the Committee may provide for a
substitution or assumption of Awards by the acquiring or surviving
entity on such terms as the Committee determines. If there is no
surviving or acquiring entity, or if the Committee does not provide
for a substitution or assumption of an Award, the Award shall vest
(and to the extent relevant, become exercisable) at least ten days
prior to the effective date of the Covered Transaction.

11.3 DEFINITION OF CHANGE IN CONTROL. For purposes of the Plan, a
"Change in Control" means the happening of any of the following:

(b) a sale or transfer of all or substantially all the Company's
assets;

Notwithstanding clauses (a) through (d) above, none of the following
shall constitute a "Change in Control" for purposes of this
definition:

(i) the shares of common stock of the Company or the voting
securities of the Company entitled to vote generally in the election
of directors are acquired directly from the Company;

<Page>

immediately following such transaction more than 60% of the
outstanding shares of common stock and of the combined voting power of
the then outstanding voting securities entitled to vote generally in
the election of directors of the corporation (including, without
limitation, a corporation which as a result of such transaction owns
the Company or all or substantially all of the Company's assets either
directly or through one or more subsidiaries) resulting from such
transaction and (B) at least a majority of the members of the board of
directors of the corporation resulting from such transaction were
members of the board of directors at the time of the execution of the
initial agreement, or of the action of the Board, authorizing such
transaction.

11.4 DEFINITION OF COVERED TRANSACTION. For purposes of this
Plan, a Covered Transaction is any of the following:

(b) a sale or transfer of all or substantially all the Company's
assets, or

IN WITNESS WHEREOF, Boston Scientific Corporation has caused this instrument to
be signed in its name and on its behalf by its duly authorized officer this 30th
day of October, 2001.

BOSTON SCIENTIFIC CORPORATION

By:
---------------------------------------------
Name: Paul W. Sandman
Title: Senior Vice President and General Counsel

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.18
<SEQUENCE>6
<FILENAME>a2074671zex-10_18.txt
<DESCRIPTION>EXHIBIT 10.18
<TEXT>
<Page>

EXHIBIT 10.18

BOSTON SCIENTIFIC CORPORATION
2000 LONG-TERM INCENTIVE PLAN

FORM OF
AMENDMENT

Pursuant to Section 7 of the Boston Scientific Corporation 2000 Long-Term
Incentive Plan (the "Plan"), Boston Scientific Corporation hereby amends the
Plan effective for all Awards granted on or after October 30, 2001 as follows:

1. Section 5(A) of the Plan is amended by adding the following language
to the last sentence of this Section:

"for all Awards granted on or after October 30, 2001, immediately upon
the cessation of a Participant's employment or other service
relationship with the Company and its Affiliates by reason of the
Participant's Disability, or with respect to a Participant who is an
employee or director of the Company or its Affiliates, by reason of
such Participant's Retirement, all Stock Options, SARs and Restricted
Stock Awards held by the Participant (or by a permitted transferee
under Section 4.a.(4)) immediately prior to such Disability or, as
applicable, Retirement, will become vested and, where exercisability
is relevant, will remain exercisable until the expiration of the
stated term of the Stock Option or SAR, unless otherwise determined by
the Administrator at or after grant;"

2. Section 5(B) of the Plan is amended by adding the following language
after the last sentence of this Section:

"for all Awards granted on or after October 30, 2001, all Stock
Options, SARs and Restricted Stock Awards held by a Participant (or by
a permitted transferee under Section 4.a.(4)) immediately prior to the
Participant's death will become vested and, where exercisability is
relevant, will remain exercisable until the expiration of the stated
term of the Stock Option or SAR, unless otherwise determined by the
Administrator on or after grant;"

3. Section 5(C) of the Plan is amended by adding the following language
after the last sentence of this Section:

"for all Awards granted on or after October 30, 2001, except as
provided in (D) below, all Stock Options, SARs and Restricted Stock
Awards held by a Participant (or by a permitted transferee under
Section 4.a.(4)) immediately prior to the cessation (other than by
reason of death or Disability, or with respect to a Participant who is
an employee or director of the Company or its Affiliates, Retirement)
of the Participant's employment or other service relationship with the
Company and its Affiliates, to the extent not vested shall terminate,
and to the extent then exercisable, will remain exercisable for the
lesser of twelve months or until the expiration of the stated term of
the Stock Option or SAR unless otherwise determined by the
Administrator at or after grant;"

<Page>

4. To correct a typographical error, the defined term "Retirement" is
amended by deleting the definition in its entirety and replacing it
with the following:

"Unless the Administrator expressly provides otherwise, cessation of
employment or other service relationship with the Company and its
Affiliates if, as of the date of such cessation, (i) the Participant
has attained age 50 or has accrued at least five years of service with
the Company and its Affiliates, and (ii) the sum of the Participant's
age and years of service as of such date equals or exceeds 62."

IN WITNESS WHEREOF, Boston Scientific Corporation has caused this
instrument to be signed in its name and on its behalf by its duly
authorized officer this 30th day of October, 2001.

BOSTON SCIENTIFIC CORPORATION

By:
--------------------------------------------
Name: Paul W. Sandman
Title: Senior Vice President and General Counsel

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-12.1
<SEQUENCE>7
<FILENAME>a2074671zex-12_1.txt
<DESCRIPTION>EXHIBIT 12.1
<TEXT>
<Page>

EXHIBIT 12.1

BOSTON SCIENTIFIC CORPORATION

STATEMENT OF COMPUTATION OF RATIOS OF EARNINGS TO FIXED CHARGES (Unaudited)
(In thousands)

<Table>
<Caption>
Year Ended December 31,
--------------------------------------------------------------------
2001 2000 1999 1998 1997
--------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Fixed charges:
Interest expense $ 59,644 $ 69,502 $ 117,567 $ 67,573 $ 14,285
Capitalized interest 650 4,460 4,976
Debt issuance costs 1,436 1,300 3,521 1,675 65
Interest portion of rental expense 11,563 14,748 15,126 16,361 14,354
--------------------------------------------------------------------
Total fixed charges $ 72,643 $ 85,550 $ 136,864 $ 90,069 $ 33,680
====================================================================

Earnings:
Income (loss) before income taxes and cumulative
effect of change in accounting $ 42,916 $ 526,751 $ 562,468 ($275,314) $ 215,131
Fixed charges per above 72,643 85,550 136,864 90,069 33,680
Net distributed/(undistributed) equity in
earnings of equity investees (13,200) 12,926 (1,375)
Less: capitalized interest 650 4,460 4,976
--------------------------------------------------------------------
Total earnings, as adjusted $ 102,359 $ 625,227 $ 697,307 ($189,705) $ 243,835
====================================================================

Ratio of earnings to fixed charges 1.41 7.31 5.09 7.24
====================================================================

Coverage deficiency (1) ($279,774)
=============

Supplamental pro forma coverage deficiency (2) ($345,507)
=============
</Table>

(1)Includes noncash special charges of $646 million recorded in connection
with the acquisition of Schneider Worldwide and other merger-related
initiatives.

(2)Reflects the coverage deficiency as if the acquisition of Schneider
Worldwide occurred at the beginning of 1998, with pro forma adjustments
to give effect to amortization of intangibles, an increase in interest
expense on acquisition financing and certain other adjustments.

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-13.1
<SEQUENCE>8
<FILENAME>a2074671zex-13_1.txt
<DESCRIPTION>EXHIBIT 13.1
<TEXT>
<Page>

Exhibit 13.1

2001

Consolidated Financial Statements

BOSTON SCIENTIFIC AND SUBSIDIARIES
<Page>

Financial Table of Contents

Management's Discussion and Analysis of Financial Condition
and Results of Operations 1

Consolidated Statements of Operations 13

Consolidated Balance Sheets 14

Consolidated Statements of Stockholders' Equity 16

Consolidated Statements of Cash Flows 17

Notes to Consolidated Financial Statements 18

Report of Independent Auditors 38

Five-Year Selected Financial Data 39

Quarterly Results of Operations 40

Market for the Company's Common Stock and Related Matters 41

<page>

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS

RESULTS OF OPERATIONS

YEARS ENDED DECEMBER 31, 2001 AND 2000

Net sales for the year ended December 31, 2001 were $2,673 million as compared
to $2,664 million in 2000. Without the adverse impact of approximately $92
million arising from foreign currency fluctuations, net sales for 2001 increased
4 percent. The reported net loss for 2001 was $54 million, or $0.13 per share,
as compared to reported net income of $373 million, or $0.91 per share
(diluted), in 2000. The reported results for 2001 include after-tax charges of
$377 million, which include a provision for purchased research and development
related to acquisitions consummated in 2001; costs associated with the Company's
global operations plan; a provision for excess inventory due to declining demand
for the current NIR(R) coronary stent technology; and a write-down of intangible
assets related to discontinued technology platforms. The reported results for
2000 include after-tax charges of $47 million, which include costs associated
with the Company's global operations plan and a provision for excess NIR(R)
coronary stent inventory. Exclusive of these charges, net income for 2001 was
$323 million, or $0.80 per share (diluted), as compared to net income of $420
million, or $1.03 per share, in 2000.

United States (U.S.) revenues increased approximately 1 percent to $1,598
million during 2001, while international revenues decreased approximately 1
percent to $1,075 million. U.S. revenues increased due to revenue growth in the
Company's product lines, including revenue generated by businesses acquired in
2001, offset by decreases in coronary stent sales. On a constant currency basis,
international revenues increased approximately 7 percent to $1,167 million. The
increase in international revenues, on a constant currency basis, was due to
growth in the Company's product lines, including acquisitions, and the launch of
the Company's internally developed Express(TM) coronary stent in European and
other international markets offset by decreases in NIR(R) coronary stent sales.

The worldwide coronary stent market is dynamic and highly competitive, with
significant market share volatility. Technology and competitive offerings,
particularly the earlier introduction of drug-eluting stents by the Company's
competitors, may negatively impact the Company's revenues. Worldwide coronary
stent revenues were approximately $344 million for the year ended December 31,
2001, compared to $427 million for the year ended December 31, 2000. Worldwide
NIR(R) coronary stent sales as a percentage of worldwide sales were
approximately 11 percent in 2001 compared to approximately 15 percent in 2000.
Sales of the NIR(R) coronary stent declined throughout 2001; sales of the NIR(R)
coronary stent recorded in the fourth quarter of 2001 decreased by approximately
50 percent as compared to NIR(R) coronary stent sales recorded in the first
quarter of 2001. The Company anticipates that its global NIR(R) coronary stent
market share will continue to decline during 2002 as physician acceptance of the
current NIR(R) coronary stent platform continues to erode. However, during the
fourth quarter of 2001, the Company launched its Express coronary stent in
European and other international markets, increasing its share of these coronary
stent markets by more than 30 percent in the first three months following the
launch. The Company anticipates launching the Express coronary stent in the U.S.
during the second half of 2002.

The Company expects to launch a paclitaxel-eluting stent in certain
international markets in 2002 and in the U.S. in late 2003. The Company believes
that drug-eluting stents present a significant growth opportunity for the
Company. However, significant delays in the timing to launch or the inability to
launch a drug-eluting stent could adversely affect the revenues and/or operating
results of the Company. Additionally, the timing of submission for and receipt
of regulatory approvals to market the Express coronary stents, drug-eluting
stents and other coronary and peripheral stent platforms in the U.S. and
international markets may influence the Company's ability to offer competitive
stent products.

Gross profit as a percentage of net sales decreased to 65.6 percent in 2001 from
68.8 percent in 2000. The decline in gross margin in 2001 is primarily due to a
provision recorded in the second quarter of 2001 of $49 million ($34 million,
net of tax) for excess NIR(R) coronary stent inventory. The excess position was
driven primarily by declining demand for the current NIR(R) coronary stent
technology. Gross margin for the year ended December 31, 2001 was also
negatively impacted by $62 million ($44 million, net of tax) of expenses
associated with the Company's global operations plan. Excluding charges in both
years for excess NIR(R) coronary stent inventories and expenses associated with
the global operations plan, gross

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margins improved to 69.8 percent in 2001 from 69.4 percent in 2000. The
improvement in gross margin is primarily due to operational cost improvements
and the Company's hedging activities. The Company's ability to effectively
manage its mix and levels of inventory, including consignment inventory, as the
Company transitions to new products will be critical in minimizing excess
inventories.

Medinol Ltd. (Medinol), an Israeli company, is the supplier of the NIR(R) stent.
As described below, the Company is currently in litigation with Medinol with
respect to the stent supply agreement and the management of Medinol. At December
31, 2001, the Company had approximately $34 million of net NIR(R) stent
inventory and was committed to purchase approximately $7 million of NIR(R)
stents from Medinol. The Company believes that it has recorded adequate reserves
for excess NIR(R) coronary stent inventory as of December 31, 2001. Inventory
reserves are primarily based on management's estimates of forecasted sales
levels. Further declines in the demand for NIR(R) coronary stent technology at a
rate or magnitude greater than that expected by the Company as of December 31,
2001 could result in the recording of additional provisions for excess NIR(R)
coronary stent inventory.

On April 5, 2001, Medinol filed a lawsuit against the Company and a number of
its current and former employees, alleging fraud, breaches of contract, and
other claims. On April 26, 2001, Medinol amended its complaint to add claims
alleging misappropriation of trade secrets. In the suit, Medinol is seeking,
among other things, to end the Company's right to distribute Medinol stents and
to gain access to certain Company intellectual property. On April 30, 2001, the
Company answered and countersued Medinol and its principals charging them with
fraud, multiple breaches of contract, unfair and deceptive practices and
defamation. During the last quarter of 2001, the judge dismissed several of the
individuals and claims from the case. A trial date has not yet been set. 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, injunctive relief and
costs. The Company's ability to manage its relationship with Medinol during the
pendency of the litigation and the outcome of the litigation with Medinol could
impact the future operating results of the Company.

The intent of the plant optimization initiative is to better allocate the
Company's resources by creating a more effective network of manufacturing and
research and development facilities. The Company is currently in the process of
consolidating manufacturing operations along product lines and shifting
significant amounts of production to the Company's facilities in Miami and
Ireland and to contract manufacturing. The Company's plan includes the
discontinuation of manufacturing activities at three facilities in the U.S., and
includes the planned displacement of approximately 1,800 manufacturing,
manufacturing support and management employees. The Company recorded a pre-tax
special charge of approximately $58 million associated with the plant
optimization initiative during 2000. As of December 31, 2001, approximately $23
million had been charged against the restructuring accrual for the approximately
1,000 employees terminated pursuant to the plan. The Company expects that the
plan will be substantially completed during the first half of 2002. The
Company's estimated timing for completion of the plan has been extended
primarily due to increased demand for certain product lines and delays in the
movement of these product lines from, and other product lines to, the Company's
facility in Miami. The Company does not expect this extension to significantly
impact the costs of the plan or the anticipated savings resulting from the plan.
During 2001, the Company recorded pre-tax expenses of $62 million ($44 million,
net of tax) as cost of sales primarily related to transition costs associated
with the plant optimization plan and accelerated depreciation on fixed assets
whose useful lives have been reduced as a result of the initiative. The Company
estimates that it will record pre-tax expenses of approximately $15 million as
cost of sales during 2002 related to the plant optimization

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initiative, primarily for transition costs and abnormal production variances
related to underutilized plant capacity.

During 2001, the Company achieved pre-tax operating savings, relative to the
plan's base year of 1999, of approximately $130 million. The Company estimates
that the global operations plan will achieve future pre-tax operating savings,
relative to the base year of 1999, of approximately $220 million in 2002 and
$250 million in annualized savings thereafter. These savings will be realized
primarily as reduced cost of sales and are expected to help mitigate gross
margin pressures resulting from price erosion and unfavorable product mix.
Additionally, the Company intends to use a portion of these savings to fund its
increased investment in research and development.

Selling, general and administrative expenses as a percentage of sales increased
to 35 percent of sales in 2001 from 33 percent in 2000 and increased
approximately $59 million from 2000 to $926 million in 2001. The increase in
expenses in 2001 is primarily attributable to costs associated with the
businesses acquired in 2001 and incremental costs incurred to strengthen the
Company's field salesforce.

Amortization expense increased to $136 million in 2001 from $91 million in 2000
and increased as a percentage of sales to 5 percent from 3 percent. The increase
in expense dollars for 2001 is primarily a result of a $24 million ($17 million,
net of tax) write-down of intangible assets related to discontinued technology
platforms and amortization of intangible assets related to businesses acquired
in 2001. The Company regularly reviews its excess of cost over net assets
acquired and other intangible assets to determine if any adverse conditions
exist that would indicate impairment. Conditions that would trigger an
impairment assessment include, but are not limited to, a significant adverse
change in legal factors or business climate that could affect the value of an
asset or an adverse action or assessment by a regulator. If the carrying amount
of an asset exceeds the sum of its undiscounted cash flows, the carrying value
is written down to fair value in the period identified. Fair value is calculated
as the present value of estimated future cash flows using a risk-adjusted
discount rate commensurate with the Company's weighted-average cost of capital.

Effective July 1, 2001, the Company adopted the provisions of Financial
Accounting Standards Board (FASB) Statement No. 142, "Goodwill and Other
Intangible Assets, " applicable to business combinations completed after June
30, 2001. Effective January 1, 2002, the Company will adopt Statement No. 142
relating to business combinations completed prior to July 1, 2001. Under the
provisions of Statement No. 142, goodwill and intangible assets deemed to
have indefinite useful lives are no longer subject to amortization. These
assets are subject to an initial impairment review upon adoption of Statement
No. 142 and annual impairment reviews thereafter. For acquisitions prior to
July 2001, the Company anticipates approximately $35 million of annual
amortization reductions in 2002 relative to 2001 as a result of the adoption
of Statement No.142, partially offset by the effect of a full year of
amortization of intangible assets related to businesses acquired in 2001. The
Company is in the process of determining whether any impairment will be
recognized upon the adoption of Statement No. 142, but does not believe any
significant impairment will be recognized.

Royalties decreased to $35 million in 2001 from $37 million in 2000 and remained
at approximately 1 percent of sales. The reduction in royalties is primarily due
to a reduction in sales of royalty-bearing products. The Company continues to
enter into strategic technological alliances, some of which include royalty
commitments.

Research and development expenses increased to $275 million in 2001 from $199
million in 2000 and increased as a percentage of sales to 10 percent from 7
percent. The investment in research and development dollars reflects spending on
new product development programs as well as regulatory compliance and clinical
research. The increase in research and development is primarily due to increased
funding for the development of, and the clinical trials related to, new
products, including the Company's Express(TM) coronary stent platform, its
Taxus(TM) drug-eluting stent program, its carotid program and programs acquired
in connection with the Company's business combinations consummated in 2001. The
Company continues to be committed to refining existing products and procedures
and to developing new technologies that can reduce risk, trauma, cost, procedure
time and the need for aftercare.

In 2002, the Company expects to increase its investment in research and
development over 2001 levels to fund the development of new products and to
expand clinical trials,

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including the Company's Taxus drug-eluting stent program, the carotid program
and the Express coronary stent platform. The Taxus program is a series of
studies designed to collect clinical information on the Company's proprietary
paclitaxel-eluting stent technology for reducing coronary restenosis, the
regrowth of vascular tissue within an artery after angioplasty and stenting.
Taxus I is the first of several Company-sponsored paclitaxel-eluting stent
clinical trials. Six- and nine-month Taxus I follow-up results confirmed safety,
and showed zero percent restenosis and zero percent thrombosis. The remaining
Taxus trials are at various stages of completion or have yet to commence. The
Company's ability to market and the timing to market a paclitaxel-eluting stent
will be dependent on the timing of and results from these trials and on the
receipt of regulatory approvals.

On February 27, 2001, the Company completed its acquisition of 100 percent of
the outstanding shares of Embolic Protection, Inc. (EPI) for approximately $70
million in cash plus contingent payments. EPI develops embolic protection
filters for use in interventional cardiovascular procedures and also develops
carotid endovascular therapies for the prevention of stroke. The acquisition is
intended to accelerate the Company's entry into the embolic protection market.

On March 5, 2001, the Company completed its acquisition of 100 percent of the
outstanding shares of Catheter Innovations, Inc. (CI) for approximately $20
million in cash plus contingent payments. CI develops and manufactures
catheter-based venous access products used by clinicians to treat critically ill
patients through the delivery of chemotherapy drugs, antibiotics and nutritional
support. The acquisition is intended to expand the Company's technology
portfolio in the venous access market.

On March 30, 2001, the Company completed its acquisition of 100 percent of the
outstanding shares of Quanam Medical Corporation (Quanam) through the issuance
of approximately 1 million shares of Company common stock valued at
approximately $15 million plus contingent payments. Quanam develops medical
devices using novel polymer technology, with a concentration on drug-delivery
stent systems for use in cardiovascular applications. The acquisition is
intended to broaden the Company's drug-delivery portfolio.

On April 2, 2001, the Company completed its acquisition of 100 percent of the
outstanding shares of Interventional Technologies, Inc. (IVT). During 2001, the
Company paid $430 million in cash in connection with its acquisition of IVT; in
addition, other contingent payments remain outstanding related to IVT. IVT
develops, manufactures and markets less-invasive devices for use in
interventional cardiology, including the Cutting Balloon(R) catheter and the
Infiltrator(R) transluminal drug-delivery catheter. The acquisition is intended
to strengthen the Company's market leadership position in interventional
cardiology.

On August 9, 2001, the Company completed its acquisition of 100 percent of the
outstanding shares of Cardiac Pathways Corporation (CPC) in an all cash
transaction for approximately $115 million. CPC designs and markets
less-invasive systems to diagnose and treat cardiac tachyarrhythmias (abnormally
rapid heart rhythms). The acquisition is intended to strengthen and broaden the
Company's product offerings in the field of electrophysiology.

On December 11, 2001, the Company completed its acquisition of the remaining 72
percent of the outstanding shares of RadioTherapeutics Corporation (RTC) through
the issuance of approximately 900,000 shares of Company common stock valued at
approximately $25 million plus contingent payments. RTC develops and
manufactures proprietary radiofrequency-based therapeutic devices in the field
of interventional oncology for the ablation (destruction) of various forms of
soft tissue lesions (tumors). The acquisition is intended to expand the
Company's oncology technology portfolio.

The Company's acquisitions were accounted for using the purchase method of
accounting. The consolidated financial statements include the operating results
for each acquired entity from its respective date of acquisition. Pro forma
information is not presented, as the acquired companies' results of operations
prior to their date of acquisition are not material, individually or in the
aggregate, to the Company. The EPI, CI, Quanam, IVT and RTC acquisitions involve
potential earn-out payments based on the acquired companies' reaching certain
performance and other milestones. These payments, some of which may be made in
the Company's common stock, would be allocated to specific intangible asset
categories with the remainder assigned to excess of cost over net assets
acquired on the basis that the consideration had been paid as of the date of
acquisition.

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As of December 31, 2001, the Company had recorded $4 million for trademarks and
approximately $50 million for goodwill acquired in connection with the Company's
acquisitions of CPC and RTC, which are not subject to amortization in accordance
with FASB Statement No. 142. The goodwill acquired in connection with CPC and
RTC is not deductible for tax purposes.

The aggregate purchase price for each acquisition 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, as valued by an independent appraiser using information and assumptions
provided by management. Based upon these valuations, the Company recorded
charges of $282 million to account for purchased research and development
related to businesses acquired during 2001. The valuation of purchased research
and development, for which management is primarily responsible, represents the
estimated fair value at the date of acquisition related to in-process projects.
As of the date of acquisition, the in-process projects had not yet reached
technological feasibility and had no alternative future uses. The primary basis
for determining the technological feasibility of these projects is obtaining
regulatory approval. Accordingly, the value attributable to these projects,
which had not yet obtained regulatory approval, was expensed in conjunction with
the acquisition. If the projects are not successful or completed in a timely
manner, the Company may not realize the financial benefits expected for these
projects. Other intangible assets subject to amortization recorded in connection
with these acquisitions are being amortized on a straight-line basis ranging
from 9 to 25 years.

The income approach was used to establish the fair values of purchased research
and development. This approach established the fair value of an asset by
estimating the after-tax cash flows attributable to the in-process project over
its useful life and then discounting these after-tax cash flows back to a
present value. Revenue estimates were based on estimates of relevant market
sizes, expected market growth rates, expected trends in technology and expected
product introductions by competitors. In arriving at the value of the in-process
research and development projects, the Company considered, among other factors,
the in-process project's stage of completion, the complexity of the work
completed as of the acquisition date, the costs already incurred, the projected
costs to complete, the contribution of core technologies and other acquired
assets, the expected introduction date and the estimated useful life of the
technology. The discount rate used to arrive at a present value as of the date
of acquisition was based on the time value of money and medical technology
investment risk factors. For the purchased research and development programs,
risk-adjusted discount rates ranging from 16 percent to 28 percent were utilized
to discount the projected cash flows. The Company believes that the estimated
purchased research and development amounts so determined represent the fair
value at the date of acquisition and do not exceed the amount a third party
would pay for the projects.

The most significant projects, relative to the purchased research and
development charge recorded in connection with the acquisitions consummated in
2001, are the next-generation Cutting Balloon(R) catheter, the next-generation
Infiltrator(R) transluminal drug-delivery catheter and next-generation embolic
protection devices, which collectively represent approximately 63 percent of the
in-process value. The Cutting Balloon is a novel balloon angioplasty device with
mounted scalpels that relieve stress in the artery, reducing the force necessary
to expand the vessel. This contributes to less inadvertent arterial trauma and
injury as compared to standard balloon angioplasty. The Infiltrator transluminal
drug-delivery catheter is designed to directly deliver therapeutic agents into
the wall of the artery with high levels of efficiency. The embolic protection
devices are filters that are mounted on a guidewire and are used to capture
embolic material that is dislodged during cardiovascular interventions. As of
the date of acquisition, the projects were expected to be completed and the
products to be commercially available on a worldwide basis within one to four
years, with an estimated cost to complete of approximately $30 million to $45
million.

Interest expense decreased to $59 million in 2001 from $70 million in 2000. The
overall decrease in interest expense is primarily attributable to lower average
interest rates. Other income, net, decreased to approximately $3 million in 2001
from approximately $17 million in 2000. The change is primarily due to net gains
recognized on sales of available-for-sale securities in 2000 and to net gains
recorded on derivative financial instruments in 2000.

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The Company's effective tax rate, excluding the impact of in-process research
and development related to 2001 acquisitions and other merger and
restructuring-related charges, was 30 percent for both 2001 and 2000. Management
currently estimates that the 2002 effective tax rate will remain at
approximately 30 percent. However, the effective tax rate could be positively or
negatively impacted by changes in the geographic mix of the Company's income or
acquisitions, if any.

In addition, the Company operates within multiple taxing jurisdictions and is
subject to audit in these jurisdictions. These audits can involve complex
issues, which may require an extended period of time to resolve. In management's
opinion, adequate provisions for income taxes have been made for all years.

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 resulting compression on gross margins. In
addition to impacting selling prices, the trend to managed care in the U.S. has
also resulted in more complex billing and collection procedures. The Company's
ability to react effectively to the changing environment may impact its bad debt
and sales allowances in the future. 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.
Deterioration in the Japanese and/or emerging markets economies may impact the
Company's ability to grow its business and to collect its accounts receivable.
Additionally, the trend in countries around the world toward more stringent
regulatory requirements for product clearance, changing reimbursement rates 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.

The preparation of financial statements in conformity with accounting principles
generally accepted in the United States requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements, and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates. The Company
has formal accounting policies in place including those that address critical
and complex accounting areas. (See "Note A -Significant Accounting Policies" and
discussion herein.)

YEARS ENDED DECEMBER 31, 2000 AND 1999

Net sales for the year ended December 31, 2000 were $2,664 million as compared
to $2,842 million in 1999, a decline of 6 percent. Net sales were adversely
affected by approximately $30 million arising from foreign currency fluctuations
compared to the prior year. Net income for 2000 was $373 million, or $0.91 per
share (diluted), as compared to net income for 1999 of $371 million, or $0.90
per share.

U.S. revenues decreased approximately 9 percent to $1,577 million during 2000,
while international revenues decreased approximately 1 percent to $1,087
million. The decrease in worldwide sales was principally attributable to a
decline in the Company's sales of coronary stents and balloons, primarily in the
U.S. Worldwide coronary stent revenues and worldwide coronary balloon revenues
were approximately $427 million and $357 million, respectively, during 2000,
compared to $604 million and $429 million, respectively, during 1999.

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Gross profit as a percentage of net sales increased to 68.8 percent in 2000 from
65.3 percent in 1999. The improvement in gross margin in 2000 is due primarily
to the recording of a pre-tax provision of $62 million for excess NIR(R)
coronary stent inventories and purchase commitments during the third quarter of
1999. The improvement is also due to benefits that the Company realized through
its increased ability to better manage inventory and lower product costs,
partially offset by a shift in the Company's product sales mix.

Selling, general and administrative expenses as a percentage of sales increased
to 33 percent in 2000 from 30 percent of sales in 1999 and increased
approximately $25 million from 1999 to $867 million. The increase in expenses as
a percentage of sales in 2000 is primarily attributable to the reduction in
sales combined with an increase in costs incurred to strengthen and retain the
Company's field salesforce and to expand its direct sales presence in
international regions.

Amortization expense remained at approximately 3 percent of net sales while
decreasing 1 percent to $91 million in 2000 from $92 million in 1999.

Royalties decreased approximately 20 percent to $37 million in 2000 from $46
million in 1999. The reduction in royalties is primarily due to nonrecurring
expenses of approximately $7 million recorded during 1999.

Research and development expenses remained at approximately 7 percent of net
sales while increasing 1 percent to $199 million in 2000 from $197 million in
1999.

During 2000, the Company recorded a pre-tax special charge of approximately $58
million associated with the plant optimization initiative. In addition, during
2000, the Company recorded pre-tax costs of $11 million as cost of sales related
to transition costs associated with the plant optimization plan and accelerated
depreciation on fixed assets whose useful lives had been reduced as a result of
the initiative. During the third quarter of 1999, the Company identified and
reversed restructuring and merger-related charges of $10 million no longer
deemed necessary. These amounts related primarily to restructuring charges
accrued in 1998 and reflect the reclassification of assets from
held-for-disposal to held-for-use resulting from management's decision to resume
a development program previously planned to be eliminated.

Interest expense decreased to $70 million in 2000 from $118 million in 1999. The
overall decrease in interest expense is primarily attributable to a lower
average debt balance. Other income (expense), net, changed to income of
approximately $17 million in 2000 from expense of approximately $9 million in
1999. The change is primarily due to an increase in net gains recognized on
sales of available-for-sale securities and to an increase in gains on derivative
financial instruments.

The Company's effective tax rate, excluding the impact of restructuring-related
charges and credits, decreased to 30 percent in 2000 from 34 percent in 1999.
The decrease was primarily attributable to a shift in the mix of the Company's
U.S. and international businesses.

LIQUIDITY AND CAPITAL RESOURCES

Cash and short-term investments totaled $185 million at December 31, 2001,
compared to $60 million at December 31, 2000. The Company had $275 million of
working capital at December 31, 2001, as compared to $173 million at December
31, 2000. Cash proceeds during 2001 were primarily generated from operating
activities, which totaled $490 million in 2001, as compared to $739 million in
2000. The decrease is primarily due to the Company's increased investment in
internal research and development, costs to strengthen the Company's field
salesforce, incremental operating costs associated with companies acquired in
2001 and by fluctuations in certain working capital accounts in 2001 as compared
to 2000. Cash generated by operating activities along with cash provided by the
Company's borrowings in 2001 were primarily used to fund acquisitions and other
strategic alliances and capital expenditures during 2001.

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facility that terminates in June 2002 and a $600 million credit facility that
terminates in August 2006. The revolving credit facilities also support the
Company's commercial paper borrowings. Use of the borrowings is unrestricted and
the borrowings are unsecured. The revolving credit facilities require the
Company to maintain a specific ratio of consolidated total debt (as defined) to
consolidated earnings before interest, taxes, depreciation and amortization
(EBITDA) (as defined) of less than or equal to 3.5 to 1. The ratio was
approximately 1.9 to 1 at December 31, 2001. In addition, the revolving credit
facilities require the Company to maintain a specific ratio of consolidated
EBITDA (as defined) to consolidated interest expense (as defined) of greater
than or equal to 3.5 to 1. The ratio was approximately 10.4 to 1 at December 31,
2001. The Company intends to refinance its $1 billion credit facility
terminating in June 2002 with a new credit facility of up to $1 billion having
similar terms and conditions.

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 a
minimum of $471 million of its short-term borrowings will remain outstanding
beyond the next twelve months and, accordingly, has classified this portion as
long-term borrowings at December 31, 2001, compared to no such classification at
December 31, 2000.

The Company had $500 million of senior notes (the Notes) outstanding at December
31, 2001. The Notes mature in March 2005, bear a semi-annual coupon of 6.625
percent, and are not redeemable prior to maturity or subject to any sinking fund
requirements. During 2001, the Company entered into a fixed to floating interest
rate swap to hedge changes in the fair value of the Notes. In accordance with
Statement No. 133, the Company has recorded changes in the fair value of the
Notes since the inception of the interest rate swap (see Note K for further
discussion). The carrying amount of the Notes at December 31, 2001 was
approximately $485 million.

The Company had 6 billion Japanese yen (translated to approximately $46 million
and $53 million at December 31, 2001 and 2000, respectively) of borrowings
outstanding with a syndicate of Japanese banks. The interest rate on the
borrowings is 2.37 percent and the borrowings are payable in 2002. In addition,
the Company had approximately 1 billion Japanese yen (translated to
approximately $7 million) and 1.1 billion Japanese yen (translated to
approximately $9 million) of borrowings outstanding from a Japanese bank used to
finance a facility construction project at December 31, 2001 and 2000,
respectively. The interest rate on the borrowings is 2.1 percent and semi-annual
principal payments are due through 2012.

The Company has uncommitted Japanese credit facilities with several Japanese
banks, which provided for borrowings and promissory notes discounting of up to
15 billion Japanese yen (translated to approximately $115 million and $131
million) at December 31, 2001 and 2000, respectively. There were $8 million in
borrowings outstanding under the Japanese credit facilities at an interest rate
of 1.38 percent at December 31, 2001, compared to $12 million in borrowings at
an interest rate of 1.5 percent at December 31, 2000. At December 31, 2001,
approximately $88 million of notes receivable were discounted at average
interest rates of approximately 1.38 percent compared to $108 million of
discounted notes receivable at average interest rates of approximately 1.5
percent at December 31, 2000.

The Company has future minimum rental commitments under noncancelable capital
and operating lease agreements of $152 million as of December 31, 2001. The
related lease agreements expire on various dates over the next fifteen years.
The Company expects to make payments of $34 million under its noncancelable
capital and operating lease agreements during 2002.

The Company has recognized net deferred tax assets aggregating $131 million at
December 31, 2001 and $226 million at December 31, 2000. The assets relate
principally to the establishment of inventory and product-related reserves and
purchased research and development. In light of the Company's historical
financial performance, the Company believes that these assets will be
substantially recovered.

The Company expects that it will make total cash outlays of approximately $160
million for the plant optimization initiative. As of December 31, 2001, the
Company has made cash outlays of approximately $105 million for the plan. The
Company anticipates that these cash outlays will be funded from cash flows from
operating activities and from the Company's borrowing capacity. The cash outlays
include severance and outplacement costs, transition costs and capital
expenditures related to the plan.

8
<Page>

In December 2000, a jury found that the Company's NIR(R) coronary stent
infringed one claim of a patent owned by Johnson & Johnson. A final decision has
not yet been entered by the court. The Company could be found liable and owe
damages of approximately $324 million for past sales, plus interest, and
additional damages for sales occurring after the date of the jury verdict. The
Company expects to appeal any adverse determination and post the necessary bond
pending appeal. As of December 31, 2001, the Company has not accrued a loss
contingency related to the suit.

On July 18, 2001, an arbitration panel determined that rapid exchange delivery
systems and balloon dilatation catheters sold in the U.S. by Medtronic AVE, Inc.
willfully infringe a patent exclusively licensed to the Company. The panel
awarded the Company $169 million in damages, as well as costs and attorneys'
fees, and a permanent injunction against Medtronic AVE's sales of the infringing
devices for the duration of the patent. On September 18, 2001, the U.S. District
Court for the Northern District of California confirmed the arbitration award.
On October 17, 2001, Medtronic AVE appealed the confirmation of the award. As of
December 31, 2001, the Company has not recorded a gain contingency related to
the suit.

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. Pursuant to the settlement agreement, the Company would acquire
the Monorail technology and pay Dr. Bonzel approximately $80 million contingent
upon the occurrence of certain events. On December 17, 2001, the remaining claim
was dismissed without prejudice with leave to refile the suit in Germany. The
Company has not recorded the contingent amount in its financial statements
related to the settlement agreement as of December 31, 2001.

On December 13, 2001, the Company announced that it had exercised a pre-existing
option to acquire Smart Therapeutics, Inc. (Smart), a development company that
focuses on self-expanding technologies for intracranial therapies. The Company
expects to complete the acquisition prior to receipt of regulatory approval to
market the product in the U.S., and, under the terms of the agreement, the
Company must complete the acquisition upon the occurrence of certain events.

Management believes it is developing a sound plan to integrate businesses
acquired in 2001. The failure to successfully integrate these businesses could
impair the Company's ability to realize the strategic and financial objectives
of these transactions. As the health care environment continues to undergo rapid
change, management expects that it will continue to focus on strategic
initiatives and/or make additional investments in existing relationships. The
IVT, EPI, CI, Quanam and RTC acquisition transactions involve earn-out payments
based on the acquired companies reaching certain performance and other
milestones. In aggregate through 2006, the Company anticipates it will make
approximately $400 million in contingent payments in connection with the
acquisitions consummated in 2001. In connection with these and other
acquisitions consummated during the last five years, the Company has acquired
numerous in-process research and development projects. As the Company continues
to undertake strategic initiatives, it is reasonable to assume that it will
acquire additional in-process research and development platforms.

Additionally, the Company expects to incur capital expenditures of approximately
$150 million during 2002. 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, including capital expenditures, rental commitments, tax payments,
restructuring and other strategic initiatives and acquisition-related payments.

The Company was engaged in negotiations to acquire Medinol prior to Medinol's
lawsuit against the Company. In the event the negotiations were to recommence,
or the disputes were to be otherwise resolved, the Company may need to borrow
funds under its credit facilities.

9
<Page>

MARKET RISK DISCLOSURES

In the normal course of business, the Company is exposed to market risk from
changes in foreign currency exchange rates and interest rates. The Company
addresses these risks through a risk management program that includes the use of
derivative instruments. The program is operated pursuant to documented corporate
risk management policies. The Company does not enter into any derivative
transactions for speculative purposes.

The Company uses derivative instruments to manage its overall exposure to market
risks. Gains and losses on the derivative instruments substantially offset the
losses and gains on the underlying hedged exposures. Furthermore, the Company
enters into derivative instrument contracts with a diversified group of major
financial institutions to manage its credit exposure to nonperformance on such
derivative instruments.

The Company uses foreign currency derivative instruments to manage its earnings
and cash flow exposure to changes in foreign currency rates. The Company's
earnings and cash flow exposure to foreign exchange rates consists primarily of
firmly committed and forecasted foreign currency denominated intercompany and
third-party transactions and net investments in certain of its international
subsidiaries. The Company had foreign currency derivative instruments
outstanding in the notional amounts of $845 million and $452 million as of
December 31, 2001 and 2000, respectively. The Company has recorded $76 million
of assets to recognize the fair value of these instruments at December 31, 2001,
compared to $37 million of assets and $1 million of liabilities at December 31,
2000. As of December 31, 2001, a 10 percent change in the U.S. dollar's value
relative to the hedged foreign currencies would change the derivative
instruments' fair value by approximately $70 million. 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 also uses derivative financial instruments to manage its exposure to
interest rate movements and to reduce borrowing costs. The Company's net
earnings and cash flow exposure to interest rates consists of fixed and floating
debt instruments that are denominated primarily in U.S. dollars and Japanese
yen. The Company manages this risk by using interest rate swaps to convert
floating rate debt to fixed rate debt or fixed rate debt to floating rate debt.
The Company had interest rate swap contracts outstanding in the notional amounts
of $557 million as of December 31, 2001, compared to no such contracts
outstanding at December 31, 2000. The Company has recorded approximately $15
million of other long-term liabilities to recognize the fair value of these
instruments at December 31, 2001. As of December 31, 2001, a 100 basis point
change in interest rates would not result in a material change in the derivative
instruments' fair value. 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.

EURO CONVERSION

On January 1, 1999, eleven of the fifteen member countries of the European Union
established fixed conversion rates among existing sovereign currencies and the
euro. On January 1, 2001, Greece became the twelfth member of the participating
countries to agree to adopt the euro as their common legal currency. On January
1, 2002, the euro became legal tender within the participating countries. The
Company has addressed and continues to address the potential impact resulting
from the euro conversion, including competitive implications related to pricing
and foreign currency considerations. In addition, during 2001, the Company
successfully completed the adaptation of its information technology systems to
be euro compatible.

Management currently believes that the euro conversion will not have a material
impact related to its overall business. However, uncertainty exists as to the
effects the euro may have on the marketplace. The increased price transparency
resulting from the use of a single currency in the twelve participating
countries may affect the ability of the Company to price its products
differently in the various European markets. A possible result of this is price
harmonization at lower average prices for products sold in some markets.

10
<Page>

LITIGATION

The Company is involved in various lawsuits, 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 the notes to the
consolidated financial statements 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.

Further, product liability claims may be asserted in the future relative to
events not known to management at the present time. The Company has insurance
coverage that management believes is adequate to protect against such product
liability losses as could otherwise materially affect the Company's financial
position.

The Company accrues costs of settlement, damages and, under certain conditions,
costs of defense when such costs are probable and estimable. Otherwise, such
costs are expensed as incurred. As of December 31, 2001, the potential exposure
for litigation-related accruable costs is estimated to range from $6 million to
$13 million. The Company's total accrual for litigation-related reserves as of
December 31, 2001 and 2000 was approximately $6 million and $16 million,
respectively. As of December 31, 2001, the range of loss for reasonably possible
contingencies that can be estimated is $0 to $404 million, plus interest, and
additional damages for sales occurring after the date of the jury verdict
related to the December 2000 Johnson & Johnson verdict.

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

This annual 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: (a) volatility in the coronary stent
market, competitive offerings and the timing of submission for and receipt of
regulatory approvals to market Express(TM) coronary stents, Taxus(TM)
drug-eluting stents and other coronary and peripheral stent platforms; (b) the
Company's ability to timely launch the Express coronary stent and the Taxus
drug-eluting stent in the U.S. and international markets; (c) the Company's
ability to compete in the coronary and drug-eluting stent markets; (d) the
Company's ability to effectively manage its mix and inventory levels as the
Company transitions to new products; (e) the continued decline in NIR(R)
coronary stent sales, NIR(R) coronary stent sales as a percentage of worldwide
sales and the mix of coronary stent platforms; (f) the ability of the Company to
manage its relationship with Medinol during the pendency of the litigation and
the outcome of the Medinol litigation; (g) the Company's ability to timely
implement the global operations plan within its cost estimates, to effectively
manage inventories during the plan's transition period and to achieve estimated
operating savings; (h) the Company's ability to achieve manufacturing cost
declines, gross margin benefits and inventory reductions from its manufacturing
process and supply chain programs; (i) the ability of the Company to manage
accounts receivable and gross margins and to react effectively to the changing
managed care environment, reimbursement levels and worldwide economic and
political conditions; (j) the Company's ability to realize benefits from the
EPI, CI, Quanam, IVT, CPC and RTC acquisitions, including purchased research and
development, and from the Company's other strategic alliances; (k) the Company's
estimate of contingent amounts payable in connection with 2001 acquisitions and
its ability to timely close the Smart acquisition; (l) the Company's

11
<Page>

ability to increase its investment in research and development, to successfully
complete planned clinical trials and to develop and launch products on a timely
basis, including products resulting from purchased research and development; (m)
the impact of adoption of new accounting standards; (n) the Company's ability to
maintain its effective tax rate for 2002 and to substantially recover its net
deferred tax assets; (o) the potential impacts of continued consolidation among
health care providers, trends toward managed care, disease state management and
economically motivated buyers, health care cost containment, the financial
viability of health care providers, more stringent regulatory requirements and
more vigorous enforcement activities; (p) management's ability to position the
Company to take advantage of opportunities that exist in the markets it serves;
(q) the development and introduction of competing or technologically advanced
products by the Company's competitors; (r) the timing, size and nature of
strategic initiatives, market opportunities and research and development
platforms available to the Company; (s) the characterization of debt as long
term and the Company's ability to refinance its $1 billion credit facility
maturing in June 2002 with a new credit facility of up to $1 billion having
similar terms and conditions; (t) the ability of the Company to meet its
projected cash needs; (u) risks associated with international operations; (v)
the potential impact resulting from the euro conversion, including competitive
implications related to pricing and foreign currency considerations; (w) the
potential effect of foreign currency fluctuations on revenues, expenses and
resulting margins and the trend toward increasing sales and expenses denominated
in foreign currencies; (x) the effect of litigation and compliance activities on
the Company's legal provision and cash flow; and (y) the impact of stockholder,
patent, product liability, Federal Trade Commission, Medinol and other
litigation, as well as the outcome of the U.S. Department of Justice
investigation and the adequacy of the Company's product liability insurance.

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 annual 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 annual report to
consider carefully these factors as well as the specific factors discussed with
each forward-looking statement in this annual 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 annual report.

12
<Page>

CONSOLIDATED STATEMENTS OF OPERATIONS (in millions, except per share data)

YEAR ENDED DECEMBER 31, 2001 2000 1999
------- ------- -------
<S> <C> <C> <C>
Net sales $ 2,673 $ 2,664 $ 2,842
Cost of products sold 919 832 986
------- ------- -------
Gross profit 1,754 1,832 1,856

Selling, general and administrative expenses 926 867 842
Amortization expense 136 91 92
Royalties 35 37 46
Research and development expenses 275 199 197
Purchased research and development 282
Restructuring and merger-related charges (credits) 58 (10)
------- ------- -------
1,654 1,252 1,167
------- ------- -------
Operating income 100 580 689
Other income (expense):
Interest expense (59) (70) (118)
Other, net 3 17 (9)
------- ------- -------
Income before income taxes 44 527 562
Income taxes 98 154 191
------- ------- -------
NET INCOME (LOSS) $ (54) $ 373 $ 371
======= ======= =======
NET INCOME (LOSS) PER COMMON SHARE - BASIC $ (0.13) $ 0.92 $ 0.92
======= ======= =======
NET INCOME (LOSS) PER COMMON SHARE - ASSUMING DILUTION $ (0.13) $ 0.91 $ 0.90
======= ======= =======
</table>

(see notes to consolidated financial statements)

13
<Page>

CONSOLIDATED BALANCE SHEETS (in millions, except share and per share data)

DECEMBER 31, 2001 2000
------ ------
<S> <C> <C>
ASSETS
Current assets:

Cash and cash equivalents ............................. $ 180 $ 54
Short-term investments ................................ 5 6
Trade accounts receivable, net ........................ 370 361
Inventories ........................................... 303 354
Deferred income taxes ................................. 174 152
Prepaid expenses and other current assets ............. 74 65
------ ------
Total current assets ................................ 1,106 992

Property, plant and equipment, net ....................... 592 567

Other assets:
Excess of cost over net assets acquired, net .......... 916 821
Technology - core, net ................................ 541 347
Technology - developed, net ........................... 221 160
Patents, net .......................................... 264 211
Trademarks and other intangibles, net ................. 122 132
Deferred income taxes ................................. 74
Investments ........................................... 154 99
Other assets .......................................... 58 24
------ ------
$3,974 $3,427
====== ======
</table>

(see notes to consolidated financial statements)

14
<Page>

CONSOLIDATED BALANCE SHEETS (in millions, except share and per share data)

<Table>
<Caption>
DECEMBER 31, 2001 2000
------- -------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
<S> <C> <C>
Commercial paper ............................................... $ 99 $ 56
Bank obligations ............................................... 132 204
Accounts payable ............................................... 54 67
Accrued expenses ............................................... 421 352
Income taxes payable ........................................... 115 137
Other current liabilities ...................................... 10 3
------- -------
Total current liabilities ................................. 831 819

Long-term debt .................................................... 973 574
Deferred income taxes ............................................. 43
Other long-term liabilities ....................................... 112 99

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,
414,922,050 shares issued at December 31, 2001 and 2000 ...... 4 4
Additional paid-in capital ..................................... 1,225 1,210
Treasury stock, at cost - 9,668,427 shares at December 31, 2001
and 15,074,381 shares at December 31, 2000 ................... (173) (282)
Deferred compensation .......................................... (10) (15)
Retained earnings .............................................. 1,031 1,116
Accumulated other comprehensive income (loss)
Foreign currency translation adjustment ................... (131) (142)
Unrealized gain on available-for-sale securities, net ..... 25 17
Unrealized gain on derivative financial instruments, net .. 44 27
------- -------
Total stockholders' equity ..................................... 2,015 1,935
------- -------
$ 3,974 $ 3,427
======= =======
</Table>
(see notes to consolidated financial statements)

15
<Page>

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (in millions, except share data)

<Table>
<Caption>
Accumulated
Other
Common Stock Compre- Compre-
Shares Additional hensive hensive
Issued (in Par Paid-In Treasury Deferred Retained Income Income
thousands) Value Capital Stock Compensation Earnings (Loss) (Loss)
----------- ------ ---------- -------- ------------ -------- ----------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
BALANCE AT DECEMBER 31, 1998 394,186 $ 4 $ 507 $ 381 $ (71) $ (258)
-------
Comprehensive income:
Net income 371 $ 371
Other comprehensive income (expense), net
of tax:
Foreign currency translation adjustment (51) (51)
Net change in equity investments 6 6
Issuance of common stock 20,736 654 $ 1
Purchases of common stock for treasury (127)
Tax benefit relating to incentive stock option
and employee stock purchase plans 49
------- --- ----- ---- ------- ----- ------ ------
BALANCE AT DECEMBER 31, 1999 414,922 4 1,210 (126) 752 (116) $ 326
------
Comprehensive income:
Net income 373 $ 373
Other comprehensive income (expense), net
of tax:
Foreign currency translation adjustment (19) (19)
Net change in equity investments 10 10
Net change in derivative financial
instruments 27 27
Issuance of common stock (7) 45 (9)
Issuance of restricted stock 2 24 $ (26)
Cancellation of restricted stock (3) 3
Purchases of common stock for treasury (222)
Tax benefit relating to incentive stock option
and employee stock purchase plans 5
Amortization of deferred compensation 8
------- --- ----- ---- ------- ----- ------ ------
BALANCE AT DECEMBER 31, 2000 414,922 4 1,210 (282) (15) 1,116 (98) $ 391
------
Comprehensive loss:
Net loss (54) $ (54)
Other comprehensive income, net of tax:
Foreign currency translation adjustment 11 11
Net change in equity investments 8 8
Net change in derivative financial 17 17
instruments
Issuance of common stock (6) 75 (27)
Issuance of common stock for acquisitions 13 36 (9) (4)
Cancellation of restricted stock (2) 2
Tax benefit relating to incentive stock option
and employee stock purchase plans 8
Amortization of deferred compensation 12
------- --- ----- ---- ------- ------ ------ -----
BALANCE AT DECEMBER 31, 2001 414,922 $ 4 $ 1,225 $ (173) $ (10) $1,031 $ (62) $ (18)
======= === ===== ==== ======= ====== ====== =====
</Table>

(see notes to consolidated financial statements)

16
<Page>

CONSOLIDATED STATEMENTS OF CASH FLOWS (in millions)

YEAR ENDED DECEMBER 31, 2001 2000 1999
<S> <C> <C> <C>
OPERATING ACTIVITIES:
Net income (loss) $ (54) $ 373 $ 371
Adjustments to reconcile net income (loss) to cash provided by operating activities:
Gain on sale of equity investments (11) (14)
Depreciation and amortization 232 181 178
Deferred income taxes 8 2 (29)
Noncash special credits (5)
Purchased research and development 282
Tax benefit relating to stock option and employee stock purchase plans 8 5 49
Increase (decrease) in cash flows from operating assets and liabilities:
Trade accounts receivable (6) 78 82
Inventories 53 15 68
Prepaid expenses and other current assets (9) (24) 8
Accounts payable and accrued expenses 28 (27) 38
Accrual for restructuring and merger-related charges (31) 45 (45)
Other liabilities (22) 91 58
OTHER, NET 12 14 3
------- ------- -------
Cash provided by operating activities 490 739 776

INVESTING ACTIVITIES:
Purchases of property, plant and equipment (121) (76) (80)
Proceeds from sales of property, plant and equipment 5 4 21
Sales of available-for-sale securities 20 15 5
Acquisitions of businesses, net of cash acquired (620)
Payments related to 1998 acquisition (128)
PAYMENTS FOR ACQUISITIONS OF AND/OR INVESTMENTS IN CERTAIN TECHNOLOGIES, NET (84) (50) (3)
------- ------- -------
Cash used for investing activities (800) (107) (185)

FINANCING ACTIVITIES:
Net increase (decrease) in commercial paper 43 (221) (1,539)
Net proceeds from (payments on) borrowings on revolving credit facilities 360 (234) 421
Proceeds from notes payable and long-term borrowings 4 22 8
Payments on notes payable, capital leases and long-term borrowings (12) (14) (10)
Proceeds from issuances of shares of common stock 42 29 655
Acquisitions of treasury stock (222) (127)
OTHER, NET 2 (1)
------- ------- -------
Cash provided by (used for) financing activities 437 (638) (593)
EFFECT OF FOREIGN EXCHANGE RATES ON CASH (1) (4) (4)
------- ------- -------
Net increase (decrease) in cash and cash equivalents 126 (10) (6)
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 54 64 70
------- ------- -------
CASH AND CASH EQUIVALENTS AT END OF YEAR $ 180 $ 54 $ 64
======= ======= =======
(see notes to consolidated financial statements)

17
<Page>

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE A - SIGNIFICANT ACCOUNTING POLICIES

PRINCIPLES OF CONSOLIDATION: The consolidated financial statements include the
accounts of Boston Scientific Corporation (Boston Scientific or the Company) and
its subsidiaries, substantially all of which are wholly owned. Investments in
companies, representing 20 percent to 50 percent of their ownership, are
primarily accounted for under the equity method, including the Company's 22
percent ownership in Medinol Ltd. (Medinol). Income recorded in connection with
these investments did not have a material impact on the Company's operating
results during the periods presented. Investments in companies, representing
less than 20 percent of their ownership, are accounted for under the cost
method.

ACCOUNTING ESTIMATES: The preparation of financial statements in conformity with
accounting principles generally accepted in the United States (U.S.) requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements, and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those
estimates.

TRANSLATION OF FOREIGN CURRENCY: All assets and liabilities of foreign
subsidiaries are translated at the rate of exchange at year end while sales and
expenses are translated at the average rates in effect during the year. The net
effect of these translation adjustments is shown in the accompanying financial
statements as a component of stockholders' equity.

CASH AND CASH EQUIVALENTS: The Company considers all highly liquid investments
purchased with a maturity of three months or less to be cash equivalents.

SHORT-TERM INVESTMENTS: Short-term investments are recorded at fair value, which
approximates cost.

CONCENTRATIONS OF CREDIT RISK: Financial instruments that potentially subject
the Company to concentrations of credit risk consist primarily of temporary cash
and cash equivalents, marketable securities, derivative instrument contracts and
accounts receivable. The Company invests its excess cash primarily in
high-quality securities and limits the amount of credit exposure to any one
financial institution. The Company's investment policy limits exposure to
concentrations of credit risk and changes in market conditions. Counterparties
to financial instruments expose the Company to credit-related losses in the
event of nonperformance. The Company transacts derivative instrument contracts
with major financial institutions to limit its credit exposure.

The Company provides credit, in the normal course of business, primarily to
hospitals, private and governmental institutions and health care agencies,
clinics and doctors' offices. The Company performs ongoing credit evaluations of
its customers and maintains allowances for potential credit losses.

INVENTORIES: Inventories are stated at the lower of first-in, first-out cost or
market. Generally, write-downs of consignment inventory are charged to selling,
general and administrative expenses.

PROPERTY, PLANT AND EQUIPMENT: Property, plant, equipment and leaseholds are
stated at historical cost. Expenditures for maintenance and repairs are charged
to expense; betterments are capitalized. The Company provides for depreciation
and amortization by the straight-line method at rates that are intended to
depreciate and amortize the cost of these assets over their estimated useful
lives. Buildings and improvements are depreciated over a 15 to 40 year life;
equipment, furniture and fixtures are depreciated over a 2 to 12 year life.
Leasehold improvements are amortized on a straight-line basis over the shorter
of the useful life of the improvement or the term of the lease.

The Company receives grant money equal to a percentage of expenditures on
eligible capital equipment, which is recorded as deferred income and recognized
ratably over the life of the underlying assets. The grant money would be
repayable, in whole or in part, should the Company fail to meet certain
employment goals.

INTANGIBLE ASSETS: Intangible assets are recorded at historical cost and
amortized using the straight-line method over the following lives: patents and
trademarks, 3 to 20 years; licenses, 2 to 20 years; core and developed
technology, 3 to 25 years; excess of cost over net assets acquired, 8 to 40
years; other intangibles, various.

The Company regularly reviews its excess of cost over net assets acquired and
other intangible assets to determine if

18
<Page>

any adverse conditions exist that would indicate impairment. Conditions that
would trigger an impairment assessment include, but are not limited to, a
significant adverse change in legal factors or business climate that could
affect the value of an asset or an adverse action or assessment by a regulator.
If the carrying amount of an asset exceeds the sum of its undiscounted cash
flows, the carrying value is written down to fair value in the period
identified. Fair value is calculated as the present value of estimated future
cash flows using a risk-adjusted discount rate commensurate with the Company's
weighted-average cost of capital.

INCOME TAXES: The Company utilizes the asset and liability method for accounting
for income taxes. Under this method, deferred tax assets and liabilities are
determined based on differences between financial reporting and tax bases of
assets and liabilities. Deferred tax assets and liabilities are measured using
the enacted tax rates and laws that will be in effect when the differences are
expected to reverse.

Income taxes are provided on unremitted earnings of subsidiaries outside the
U.S. if such earnings are expected to be repatriated. The Company determines
annually the amount of unremitted earnings of non-U.S. subsidiaries to invest
indefinitely in its non-U.S. operations. It is not practical to estimate the
amount of taxes payable on earnings determined to be invested indefinitely in
non-U.S. operations. At December 31, 2001, unremitted earnings of non-U.S.
subsidiaries were $906 million.

REVENUE RECOGNITION: The Company recognizes revenue from the sale of its
products when the products are shipped to its customers unless a consignment
arrangement exists. Revenue from consignment customers is recognized based on
notification from the customer of usage indicating sales are complete. The
Company allows its customers to return certain products for credit. The Company
also allows customers to return defective or damaged products for credit or
replacement. Accruals are made and evaluated for adequacy for all returns.

LEGAL COSTS: The Company accrues costs of settlement, damages and, under certain
conditions, costs of defense when such costs are probable and estimable.
Otherwise, such costs are expensed as incurred.

RESEARCH AND DEVELOPMENT: Research and development costs are expensed as incurred.

STOCK COMPENSATION ARRANGEMENTS: The Company accounts for its stock compensation
arrangements under the provisions of Accounting Principles Board (APB) Opinion
No. 25, "Accounting for Stock Issued to Employees, " and Financial Accounting
Standards Board (FASB) Interpretation (FIN) 44, "Accounting for Certain
Transactions involving Stock Compensation, " and intends to continue to do so.
The Company has adopted the disclosure-only provisions of FASB Statement No.
123," Accounting for Stock-Based Compensation. " Any compensation cost on fixed
awards with pro rata vesting is recognized on a straight-line basis over the
award's vesting period.

DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES: The Company recognizes all
derivative financial instruments in the consolidated financial statements at
fair value, regardless of the purpose or intent for holding the instrument, in
accordance with Statement No. 133. Changes in the fair value of derivative
financial instruments are either recognized periodically in earnings or in
stockholders' equity as a component of comprehensive income depending on whether
the derivative financial instrument qualifies for hedge accounting. Changes in
fair values of derivatives not qualifying for hedge accounting are reported in
earnings.

NEW ACCOUNTING STANDARDS: In July 2001, the FASB issued Statement No. 141,
"Business Combinations, " and Statement No. 142, "Goodwill and Other Intangible
Assets, " which were effective July 1, 2001 and January 1, 2002, respectively,
for the Company. The Company has adopted Statement No. 141, which requires that
the purchase method of accounting be used for all business combinations
subsequent to June 30, 2001 and specifies criteria for recognizing intangible
assets acquired in a business combination. Statement No. 142 requires that
goodwill and intangible assets with indefinite useful lives no longer be
amortized upon adoption of this standard, but instead be tested for impairment
at least annually. In addition, goodwill and intangible assets with indefinite
useful lives recorded as a result of business combinations completed during the
six-month period ending December 31, 2001 will not be amortized. Intangible
assets with definite useful lives will continue to be amortized over their
estimated useful lives. The Company anticipates approximately $35 million of
annual amortization reductions in 2002 relative to 2001 as a result of adoption
of Statement No. 142, partially offset by the effect of a full year or
amortization

19
<Page>

of intangible assets related to businesses acquired in 2001. The Company is in
the process of determining whether any impairment will be recognized upon the
adoption of Statement No. 142, but does not believe any significant impairment
will be recognized.

In October 2001, the FASB issued Statement No. 144, "Accounting for the
Impairment or Disposal of Long-Lived Assets, " which is effective for fiscal
years beginning after December 15, 2001. Statement No. 144 addresses financial
accounting and reporting for the impairment or disposal of long-lived assets. It
supersedes, with exceptions, Statement No. 121, " Accounting for the Impairment
of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of. " The Company
is in the process of determining the effect of adoption of this statement on its
consolidated financial statements and related disclosures.

SHIPPING AND HANDLING COSTS: The Company does not generally recognize revenue
from shipping and handling of its products. Shipping and handling costs are
recorded as selling, general and administrative expenses.

NET INCOME PER COMMON SHARE: Net income (loss) per common share is based upon
the weighted-average number of common shares and common share equivalents
outstanding each year.

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

NOTE B - OTHER BALANCE SHEET INFORMATION

Components of selected captions in the Consolidated Balance Sheets at December
31 consisted of:

(in millions) 2001 2000
------ ------
<S> <C> <C>
TRADE ACCOUNTS RECEIVABLE
Accounts receivable $ 432 $ 428
Less allowances 62 67
------ ------
$ 370 $ 361
====== ======
INVENTORIES
Finished goods $ 146 $ 172
Work-in-process 69 59
Raw materials 88 123
------ ------
$ 303 $ 354
====== ======
PROPERTY, PLANT AND EQUIPMENT
Land $ 59 $ 56
Buildings and improvements 392 365
Equipment, furniture and fixtures 594 521
------ ------
1,045 942
Less accumulated depreciation and amortization 453 375
------ ------
$ 592 $ 567
====== ======
EXCESS OF COST OVER NET ASSETS ACQUIRED
Excess of cost over net assets acquired $1,016 $ 879
Less accumulated amortization 100 58
------ ------
$ 916 $ 821
====== ======
TECHNOLOGY - CORE AND DEVELOPED
Core technology $ 612 $ 421
Developed technology 317 220
------ ------
929 641
Less accumulated amortization 167 134
------ ------
$ 762 $ 507
====== ======
PATENTS, TRADEMARKS AND OTHER
Patents and trademarks $ 372 $ 296
Licenses 99 102
Other 82 77
------ ------
553 475
Less accumulated amortization 167 132
------ ------
$ 386 $ 343
====== ======
ACCRUED EXPENSES
Payroll and related liabilities $ 146 $ 112
Other 275 240
------ ------
$ 421 $ 352
====== ======
</Table>

During the second quarter of 2001, the Company recorded a provision of $49
million ($34 million, net of tax) for excess NIR(R) coronary stent inventory.
The Company had approximately $34 million of net NIR(R) stent inventory on hand
as of December 31, 2001. Worldwide NIR(R) coronary stent sales were
approximately 11 percent of 2001 worldwide sales.

20
<Page>

NOTE C - CASH, CASH EQUIVALENTS AND INVESTMENTS

Cash, cash equivalents and investments, stated at fair value, consisted of the
following:

<Table>
<Caption>
GROSS GROSS
FAIR UNREALIZED UNREALIZED AMORTIZED
(in millions) VALUE GAINS LOSSES COST
---- --- -- ----
<S> <C> <C> <C> <C>
DECEMBER 31, 2001
AVAILABLE-FOR-SALE:

Cash and money market accounts $180 $180
Equity securities (with a readily
determinable fair value) 52 $40 $1 13
---- --- -- ----
$232 $40 $1 $193
---- --- -- ----
DECEMBER 31, 2000
AVAILABLE-FOR-SALE:

Cash and money market accounts $ 54 $ 54
Equity securities (with a readily
determinable fair value) 42 $28 $1 15
---- --- -- ----
$ 96 $28 $1 $ 69
---- --- -- ----
</Table>

The Company has no trading securities. Unrealized gains and temporary losses for
available-for-sale securities are excluded from earnings and are reported, net
of tax, as a separate component of stockholders' equity until realized. The cost
of available-for-sale securities is based on the specific identification method.

At December 31, 2001 and 2000, the Company had investments, including its
investment in Medinol, totaling $107 million and $63 million, respectively, in
which the fair value was not readily determinable. The Company received no cash
dividends from Medinol during 2001, compared to dividends of approximately $25
million, net of tax, during 2000.

NOTE D - BORROWINGS AND CREDIT ARRANGEMENTS

The Company's borrowings at December 31 consisted of:

<Table>
<Caption>
(in millions) 2001 2000
---- ----
<S> <C> <C>
Commercial paper $ 99 $ 56
Bank obligations - short-term 132 204
Long-term debt - fixed rate 492 562
Long-term debt - floating rate 471
Capital leases (see note E) 10 12
---- ----
</Table>

The Company had approximately $99 million and $56 million of commercial paper
outstanding at December 31, 2001 and 2000, respectively, at weighted-average
interest rates of 2.33 percent and 8.00 percent, respectively. In addition, the
Company had approximately $547 million and $187 million in revolving credit
facility borrowings outstanding at December 31, 2001 and 2000, respectively, at
weighted-average interest rates of 1.95 percent and 4.54 percent, respectively.
At December 31, 2001, the revolving credit facilities were approximately $1.6
billion, consisting of a $1 billion credit facility that terminates in June 2002
and a $600 million credit facility that terminates in August 2006. The revolving
credit facilities also support the Company's commercial paper borrowings. Use of
the borrowings is unrestricted and the borrowings are unsecured. The revolving
credit facilities require the Company to maintain a specific ratio of
consolidated total debt (as defined) to consolidated earnings before interest,
taxes, depreciation and amortization (EBITDA) (as defined) of less than or equal
to 3.5 to 1. The ratio was approximately 1.9 to 1 at December 31, 2001. In
addition, the revolving credit facilities require the Company to maintain a
specific ratio of consolidated EBITDA (as defined) to consolidated interest
expense (as defined) of greater than or equal to 3.5 to 1. The ratio was
approximately 10.4 to 1 at December 31, 2001. The Company intends to refinance
its $1 billion credit facility terminating in June 2002 with a new credit
facility of up to $1 billion having similar terms and conditions.

21
<Page>

interest rate swap (see Note K for further discussion). The carrying amount of
the Notes at December 31, 2001 was approximately $485 million.

In addition, the Company had other outstanding short-term bank obligations of $2
million and $5 million at December 31, 2001 and 2000, respectively.

Interest paid, including interest paid under capital leases and mortgage loans,
amounted to $59 million in 2001, $69 million in 2000, and $117 million in 1999.

NOTE E - LEASES

Rent expense amounted to $39 million in 2001, $36 million in 2000 and $37
million in 1999. Future minimum rental commitments as of December 31, 2001 under
noncancelable capital and operating lease agreements are as follows:

<Table>
<Caption>
CAPITAL OPERATING
YEAR ENDED DECEMBER 31, (in millions) LEASES LEASES
- -------------------------------------- ------ ------
<S> <C> <C>
2002 $ 2 $ 32
2003 2 26
2004 2 14
2005 2 10
2006 2 8
Thereafter 5 47
---- -----
TOTAL MINIMUM LEASE PAYMENTS 15 $ 137
==== =====
Amount representing interest 5
- ---------------------------- -
PRESENT VALUE OF MINIMUM LEASE PAYMENTS $ 10
====
</Table>

NOTE F - FAIR VALUE OF FINANCIAL INSTRUMENTS

The following methods and assumptions were used by the Company in estimating its
fair value disclosures for financial instruments. However, considerable judgment
is required in interpreting market data to develop the estimates of fair value.
Accordingly, the estimates presented herein are not necessarily indicative of
the amounts that the Company could realize in a current market exchange.

CASH AND CASH EQUIVALENTS: The carrying amounts reported in the balance sheets
for cash and cash equivalents are valued at cost, which approximates their fair
value.

INVESTMENTS: The fair values for marketable debt and equity securities are based
on quoted market prices when readily determinable.

COMMERCIAL PAPER AND BANK OBLIGATIONS: The carrying amounts of the Company's
borrowings under its commercial paper program and its financing agreements
approximate their fair value.

22
<Page>

LONG-TERM DEBT: The fair value of the Company's fixed rate long-term debt is
estimated based on quoted market prices. The carrying amounts of the Company's
floating rate long-term debt approximate their fair value.

DERIVATIVE INSTRUMENTS: The fair values of derivative instruments are estimated
based on the amount that the Company would receive or pay to terminate the
agreements at the reporting date. The Company had foreign exchange forward and
option contracts and cross-currency interest rate swap contracts outstanding in
the notional amounts of $845 million and $452 million as of December 31, 2001
and 2000, respectively. In addition, the Company had interest rate swap
contracts outstanding in the notional amounts of $557 million as of December 31,
2001, compared to no such contracts outstanding as of December 31, 2000.

The carrying amounts and fair values of the Company's financial instruments at
December 31, 2001 and 2000 are as follows:

2001 2000
----------------- ---------------
CARRYING FAIR CARRYING FAIR
(in millions) AMOUNT VALUE AMOUNT VALUE
-------- ----- -------- -----
<S> <C> <C> <C> <C>
ASSETS:

Cash, cash equivalents and
investments $232 $232 $ 96 $ 96
Foreign exchange contracts 57 57 37 37
Cross-currency interest rate
swap contracts 19 19

LIABILITIES:

Commercial paper $ 99 $ 99 $ 56 $ 56
Bank obligations - short-term 132 132 204 204
Long-term debt - fixed rate 492 496 562 518
Long-term debt - floating rate 471 471
Foreign exchange contracts 1 1
Interest rate swap contracts 15 15
---- ---- ---- -----
</Table>

NOTE G - INCOME TAXES

Income before income taxes consisted of:

YEAR ENDED DECEMBER 31, (in millions) 2001 2000 1999
- ------------------------------------ ----- ----- -----

<S> <C> <C> <C>
Domestic $(226) $ 272 $ 422
Foreign 270 255 140
----- ----- -----
$ 44 $ 527 $ 562
===== ===== =====
</Table>

The related provision for income taxes consisted of:

<Table>
YEAR ENDED DECEMBER 31, (in millions) 2001 2000 1999
- ------------------------------------ ----- ----- -----

<S> <C> <C> <C>
CURRENT:
Federal $ 40 $ 115 $ 164
State 5 8 17
Foreign 45 29 39
----- ----- -----
90 152 220

DEFERRED:
Federal 16 (9) (8)
State 2 (1) (1)
Foreign (10) 12 (20)
----- ----- -----
8 2 (29)
----- ----- -----
$ 98 $ 154 $ 191
===== ===== =====
</Table>

The reconciliation of taxes on income at the federal statutory rate to the
actual provision for income taxes is:

YEAR ENDED DECEMBER 31, (in millions) 2001 2000 1999
- ------------------------------------ ---- ---- ----
<S> <C> <C> <C>
Tax at statutory rate $ 15 $184 $197
State income taxes, net of federal benefit 3 5 11
Effect of foreign taxes (38) (36) (20)
Purchased research and development 111
Other, net 7 1 3
---- ---- ----
$ 98 $154 $191
==== ==== ====
</Table>

23
<Page>

Significant components of the Company's deferred tax assets and liabilities at
December 31 consisted of:

(in millions) 2001 2000
----- -----
<S> <C> <C>
DEFERRED TAX ASSETS:
Inventory costs, intercompany profit and
related reserves $ 107 $ 92
Tax benefit of net operating loss and tax credits 85 33
Reserves and accruals 71 38
Restructuring and merger-related charges,
including purchased research and development 206 228
Property, plant and equipment 6
Other 16 28
----- -----
491 419
Less valuation allowance on deferred tax assets 37 27
----- -----
$ 454 $ 392
===== =====
DEFERRED TAX LIABILITIES:
Property, plant and equipment $ (4)
Intangible assets $(195) (66)
Unremitted earnings of subsidiaries (71) (58)
Unrealized gains and losses on
available-for-sale securities (14) (10)
Unrealized gains and losses on derivative
financial instruments (26) (16)
Other (17) (12)
----- -----
(323) (166)
===== =====
$ 131 $ 226
===== =====
</Table>

At December 31, 2001, the Company had U.S. tax net operating loss carryforwards
and tax credits, the tax effect of which is approximately $70 million. In
addition, the Company had foreign tax net operating loss carryforwards, the tax
effect of which is approximately $15 million. These carryforwards will expire
periodically beginning in the year 2002. The Company established a valuation
allowance of $37 million against these carryforwards.The increase in the
valuation allowance from 2000 to 2001 is primarily attributable to the
limitation on the use of tax credits.

Income taxes paid amounted to $108 million in 2001, $50 million in 2000 and $93
million in 1999. The income tax provision (benefit) of the unrealized gain or
loss component of other comprehensive income (loss) was approximately $14
million, $21 million and $4 million, for 2001, 2000 and 1999, respectively.

NOTE H - STOCKHOLDERS' EQUITY

PREFERRED STOCK: The Company is authorized to issue 50 million shares of
preferred stock in one or more series and to fix the powers, designations,
preferences and relative participating, option or other rights thereof,
including dividend rights, conversion rights, voting rights, redemption terms,
liquidation preferences and the number of shares constituting any series,
without any further vote or action by the Company's stockholders. At December
31, 2001, the Company had no shares of preferred stock outstanding.

COMMON STOCK: The Company is authorized to issue 600 million shares of common
stock, $.01 par value per share. Holders of common stock are entitled to one
vote per share. Holders of common stock are entitled to receive dividends when
and if declared by the Board of Directors and to share ratably in the assets of
the Company legally available for distribution to its stockholders in the event
of liquidation. Holders of common stock have no preemptive, subscription,
redemption or conversion rights. The holders of common stock do not have
cumulative voting rights. The holders of a majority of the shares of common
stock can elect all of the directors and can control the management and affairs
of the Company.

On June 30, 1999, the Company completed a public offering of 14.950 million
shares of its common stock at a price of $39.875 per share under a $1.2 billion
shelf registration filed with the Securities and Exchange Commission in
September 1998. The Company used the net proceeds from the public offering of
approximately $578 million to repay borrowings under the revolving credit
facilities. Approximately $604 million remain available for the issuance of
various debt or equity securities under the shelf registration.

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 would principally be 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 2001, the Company did
not repurchase any shares as compared to approximately 12 million shares at an
aggregate cost of $222 million repurchased by the Company in 2000. As of
December 31, 2001, a total of approximately 38 million shares of the Company's
common stock have been repurchased.

24
<Page>

NOTE I - STOCK OWNERSHIP PLANS

EMPLOYEE AND DIRECTOR STOCK INCENTIVE PLANS

Boston Scientific's 1992, 1995 and 2000 Long-Term Incentive Plans provide for
the issuance of up to 60 million shares of common stock. The terms of these
three plans are similar. Together, the plans cover officers of, directors of,
employees of and consultants to the Company and provide for the grant of various
incentives, including qualified and non-qualified options, stock grants, share
appreciation rights and performance awards. Options granted to purchase shares
of common stock are either immediately exercisable or exercisable in
installments as determined by the Compensation Committee of the Board of
Directors, consisting of two or more non-employee directors (the Committee), and
expire within ten years from date of grant. In the case of qualified options, if
an employee owns more than 10 percent of the voting power of all classes of
stock, the option granted will be at 110 percent of the fair market value of the
Company's common stock on the date of grant and will expire over a period not to
exceed five years.

The Committee may also make stock grants in which shares of common stock may be
issued to directors, officers, employees and consultants at a purchase price
less than fair market value. The terms and conditions of such issuances,
including whether achievement of individual or Company performance targets is
required for the retention of such awards, are determined by the Committee. The
Committee may also issue shares of common stock and/or authorize cash awards
under the incentive plans in recognition of the achievement of long-term
performance objectives established by the Committee.

In January 2000, the Company granted under its 1992 and 1995 Long-Term Incentive
Plans approximately 1.1 million shares of its common stock to a limited group of
employees subject to certain forfeiture restrictions. The purpose of the program
was to help retain key employees. The market value of these shares was
approximately $26 million on the date of issuance and the vesting period is
three years. This amount was recorded as deferred compensation and is shown as a
separate component of stockholders' equity. The deferred compensation is being
amortized to expense over the vesting period and amounted to approximately $7
million and $8 million for the years ended December 31, 2001 and 2000.

Stock grants for 50,000 shares were issued to employees during 2001; no stock
grants were issued in 1999. During the years ended December 31, 2001 and 2000,
approximately 91,000 shares and 143,000 shares, respectively, of restricted
stock were forfeited. No stock grants were issued in 1999.

Boston Scientific's 1992 Non-Employee Directors' Stock Option Plan provides for
the issuance of up to 200,000 shares of common stock and authorizes the
automatic grant to outside directors of options to acquire a specified number of
shares of common stock generally on the date of each annual meeting of the
stockholders of the Company or on the date a non-employee director is first
elected to the Board of Directors. Options under this plan are exercisable
ratably over a three-year period and expire ten years from the date of grant.
This plan expires on March 31, 2002 at which time future shares will be issued
under the 2000 Long-Term Incentive Plan, or the then current incentive plan.

Shares reserved for future issuance under all of the Company's incentive plans
totaled approximately 50 million at December 31, 2001.

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
(loss) and earnings (loss) per share would have been reported as the following
pro forma amounts:

YEAR ENDED DECEMBER 31, 2001 2000 1999
(in millions, except per share data)
-------- -------- --------
<S> <C> <C> <C>
Net income (loss)
As reported $ (54) $ 373 $ 371
Pro forma (94) 333 329
-------- -------- --------
Earnings (loss) per common share -
assuming dilution
As reported $ (0.13) $ 0.91 $ 0.90
Pro forma (0.23) 0.83 0.80
-------- -------- --------
</Table>

25
<Page>

The weighted-average grant-date fair value per share of options granted during
2001, 2000 and 1999, calculated using the Black-Scholes options pricing model,
is $12.70, $8.67 and $13.81, respectively.

The fair value of the stock options used to calculate the pro forma net income
(loss) and earnings (loss) per share amounts above is estimated using the
Black-Scholes options pricing model with the following weighted-average
assumptions:

2001 2000 1999
--------- --------- ---------
<S> <C> <C> <C>
Dividend yield 0% 0% 0%
Expected volatility 51.40% 47.20% 48.60%
Risk-free interest rate 4.86% 6.01% 5.37%
Actual forfeitures 3,316,000 2,737,000 1,272,000
Expected life 6.0 4.6 4.2

</Table>

Information related to stock options at December 31 under stock
incentive plans is as follows:

(option amounts in thousands) 2001 2000 1999
------------------------- ------------------------- -----------------------
WEIGHTED WEIGHTED WEIGHTED
AVERAGE AVERAGE AVERAGE
EXERCISE EXERCISE EXERCISE
OPTIONS PRICE OPTIONS PRICE OPTIONS PRICE
------- --------- ------- --------- ------- ------
<S> <C> <C> <C> <C> <C> <C>
Outstanding at January 1 44,573 $ 21.36 31,511 $ 23.63 32,048 $ 20.45
Granted 6,007 21.66 18,441 18.22 6,634 31.57
Exercised (2,482) 12.13 (1,348) 11.23 (5,195) 12.39
Canceled (4,121) 25.16 (4,031) 28.18 (1,976) 28.29
------- --------- ------- --------- ------- ------
OUTSTANDING AT DECEMBER 31 43,977 21.56 44,573 21.36 31,511 23.63
======= ========= ======= ========= ====== =========
EXERCISABLE AT DECEMBER 31 21,709 $ 21.03 16,921 $ 19.56 13,346 $ 16.22
======= ========= ======= ========= ====== =========
</Table>

Below is additional information related to stock options outstanding and
exercisable at December 31, 2001:

(option amounts in thousands) STOCK OPTIONS OUTSTANDING STOCK OPTIONS EXERCISABLE
------------------------------------------ ----------------------------
WEIGHTED WEIGHTED WEIGHTED
AVERAGE AVERAGE AVERAGE
REMAINING EXERCISE EXERCISE
RANGE OF EXERCISE PRICES OPTIONS CONTRACTUAL LIFE PRICE OPTIONS PRICE
--------- ---------------- -------- ------- -----------------
<S> <C> <C> <C> <C> <C>
$ 0.00-8.00 3,205 2.75 $ 4.89 2,910 $ 5.23
8.01-16.00 10,509 7.55 12.89 4,975 13.05
16.01-24.00 8,703 7.43 18.62 4,090 19.61
24.01-32.00 14,352 7.67 26.00 5,452 25.70
32.01-40.00 7,009 6.79 36.08 4,179 36.25
40.01-48.00 199 7.53 44.90 103 44.78
--------- ---------------- ------- ------- -------
43,977 7.09 $ 21.56 21,709 $ 21.03
========= ================ ======= ======= =======
</Table>

26
<Page>

STOCK PURCHASE PLAN

Boston Scientific's Global Employee Stock Ownership Plan (Stock Purchase Plan)
provides for the granting of options to purchase up to 7.5 million shares of the
Company's common stock to all eligible employees. Under the Stock Purchase Plan,
each eligible employee is granted, at the beginning of each period designated by
the Committee as an offering period, an option to purchase shares of the
Company's common stock equal to not more than 10 percent of the employee's
eligible compensation. Such options may be exercised generally only to the
extent of accumulated payroll deductions at the end of the offering period, at a
purchase price equal to 85 percent of the fair market value of the Company's
common stock at the beginning or end of each offering period, whichever is less.

During 2001, approximately 1,106,000 shares were issued at prices ranging from
$11.48 to $11.64 per share. During 2000, approximately 754,000 shares were
issued at prices ranging from $18.59 to $18.65 per share, and during 1999,
approximately 603,000 shares were issued at prices ranging from $22.47 to $22.79
per share. At December 31, 2001, there were approximately 3.6 million shares
available for future issuance.

NOTE J - EARNINGS PER SHARE

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

YEAR ENDED DECEMBER 31, 2001 2000 1999
(in millions, except share and per share data)
--------- -------- ---------

<S> <C> <C> <C>
BASIC:
Net income (loss) $ (54) $ 373 $ 371
========= ========= =========
Weighted average shares
outstanding (in thousands) 401,389 405,271 404,783
========= ========= =========
Net income (loss) per common share $ (0.13) $ 0.92 $ 0.92
========= ========= =========
ASSUMING DILUTION:
Net income (loss) $ (54) $ 373 $ 371
========= ========= =========
Weighted average shares outstanding
(in thousands) 401,389 405,271 404,783
--------- --------- ---------
Net effect of dilutive stock-based
compensation (in thousands) 3,051 6,568
TOTAL 401,389 408,322 411,351
========= ========= =========
NET INCOME (LOSS) PER COMMON SHARE $ (0.13) $ 0.91 $ 0.90
========= ========= =========
</Table>

During 2001, 2000 and 1999, approximately 24 million, 24 million and 7 million
potential common shares, respectively, were not included in the computation of
earnings per share, assuming dilution, because exercise prices were greater than
the average market price of the common shares. In addition, during 2001,
approximately 5 million stock options were not included in the computation of
earnings per share, assuming dilution, because they would have been
antidilutive.

NOTE K - DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

In the normal course of business, the Company is exposed to market risk from
changes in foreign currency exchange rates and interest rates. The Company
addresses these risks through a risk management program that includes the use of
derivative financial instruments. The program is operated pursuant to documented
corporate risk management policies. The Company does not enter into any
derivative transactions for speculative purposes.

The Company hedges its net recognized foreign currency transaction exposures
with both foreign currency borrowings (primarily Japanese yen) and forward
foreign exchange contracts to reduce the risk that the Company's earnings and
cash flows will be adversely affected by changes in foreign currency exchange
rates. These foreign exchange contracts are not designated as cash flow, fair
value or net investment hedges under Statement No. 133 and therefore, are marked
to market with the change in fair value recorded into income. These derivative
instruments do not subject the Company's earnings or cash flows to material risk
due to exchange rate movements because gains and losses on these derivatives
offset losses and gains on the assets and liabilities being hedged. These
foreign exchange contracts are entered into for periods consistent with
commitments, generally one to six months.

In addition, the Company hedges a portion of its forecasted intercompany and
third-party transactions with foreign exchange forward and option contracts.
These contracts are entered into to reduce the risk that the Company's earnings
and cash flows resulting from certain forecasted transactions will be adversely
affected by changes in foreign currency

27
<Page>

exchange rates. However, the Company may be impacted by changes in foreign
currency exchange rates related to the unhedged portion. The success of the
hedging program depends, in part, on forecasts of transaction activity in
various currencies (currently the Japanese yen and the euro). The Company may
experience unanticipated foreign currency exchange gains or losses to the extent
that there are timing differences between forecasted and actual activity during
periods of currency volatility. The effective portion of any changes in the fair
value of the derivative instruments, designated as cash flow hedges, is recorded
in accumulated other comprehensive income/(loss) (AOCI) until the third-party
transaction associated with the hedged forecasted transaction occurs. Once the
third-party transaction associated with the hedged forecasted transaction
occurs, the effective portion of any related gain or loss on the cash flow hedge
is reclassified from AOCI to earnings. In the event the hedged forecasted
transaction does not occur, or it becomes probable that it will not occur, the
effective portion of any gain or loss on the related cash flow hedge would be
reclassified from AOCI to earnings at that time. The Company did not recognize
material gains or losses resulting from either hedge ineffectiveness or changes
in forecast probability during 2001 or 2000. The Company recognized a net gain
of approximately $43 million and $8 million in earnings from derivative
instruments designated as cash flow hedges of forecasted transactions during
2001 and 2000, respectively. All of the derivative instruments, designated as
cash flow hedges, outstanding at December 31, 2001, mature within the subsequent
24-month period. As of December 31, 2001, approximately $44 million of
unrealized net gains are recorded in AOCI, net of tax, to recognize the
effective portion of any fair value of derivative instruments that are, or
previously were, designated as cash flow hedges. Of this amount, a gain of
approximately $32 million, net of tax, is expected to be reclassified to
earnings within the next twelve months to mitigate foreign exchange risk.

Also, during 2001, the Company hedged a portion of its foreign currency
denominated net investments in affiliates with cross-currency interest rate swap
contracts. These hedging contracts reduce the risk that the Company's
accumulated shareholders' equity will be adversely affected by changes in
foreign currency exchange rates (primarily Japanese yen). These derivative
instruments are designated as net investment hedges under Statement No. 133. The
effective portion of any changes in the fair value of the derivative
instruments, designated as net investment hedges, is recorded in AOCI. The
ineffective portion of any changes in the fair value is recorded in interest
expense. The Company recognized an immaterial amount of hedge ineffectiveness
during 2001. As of December 31, 2001, approximately $19 million of unrealized
net gains are recorded in AOCI to recognize the effective portion of the fair
value of derivative instruments that are designated as net investment hedges.
None of this amount is expected to be reclassified to earnings.

The Company's primary interest rate risk exposure results from changes in U.S.
and Japanese interest rates related to its debt obligations. In order to manage
interest rate exposures, the Company seeks to achieve an acceptable balance
between fixed and floating interest rate obligations in these currencies. During
2001, the Company initiated a program to hedge its interest rate risk exposures
with interest rate swaps. These hedging contracts are designated as either fair
value or cash flow hedges under Statement No.133. Any changes in the fair value
of derivative instruments, designated as fair value hedges, is recorded in other
income and expense and is offset by changes in the fair value of the hedged debt
obligation. Interest expense related to the hedged debt obligation is adjusted
to reflect interest payments made or received under the interest rate swap
agreements. Any changes in the fair value of derivative instruments, designated
as cash flow hedges, is recorded in AOCI, net of tax, and reclassified to
interest expense during the hedged interest payment period. The Company
recognized an immaterial amount of net interest income related to interest rate
swaps during 2001. As of December 31, 2001, approximately $15 million of
unrealized net losses are recorded on the balance sheet as other long-term
liabilities to recognize the fair value of interest rate swaps that are
designated as either fair value or cash flow hedges.

NOTE L - COMMITMENTS AND CONTINGENCIES

The Company is involved in various lawsuits from time to time. In management's
opinion, the Company is not currently involved in any legal proceedings other
than those specifically identified below which, individually or in the
aggregate, could have a material effect on the financial condition, operations
or cash flows of the Company. As of December 31, 2001,

28
<Page>

the potential exposure for litigation-related accruable costs is estimated to
range from $6 million to $13 million. The Company's total accrual for
litigation-related reserves as of December 31, 2001 and 2000 was approximately
$6 million and $16 million, respectively. As of December 31, 2001, the range of
loss for reasonably possible contingencies that can be estimated is $0 to $404
million, plus interest, and additional damages for sales occurring after the
date of the December 2000 Johnson & Johnson jury verdict discussed below.

The Company believes that it has meritorious defenses against claims that it has
infringed patents of others. However, there can be no assurance that the Company
will prevail in any particular case. An adverse outcome in one or more cases in
which the Company's products are accused of patent infringement could have a
material adverse effect on the Company. Further, product liability claims may be
asserted in the future relative to events not known to management at the present
time. The Company has insurance coverage, which management believes is adequate
to protect against product liability losses as could otherwise materially affect
the Company's financial position.

LITIGATION WITH JOHNSON & JOHNSON

On October 22, 1997, Cordis Corporation (Cordis), a subsidiary of Johnson &
Johnson, filed a suit for patent infringement against the Company and Scimed
Life Systems, Inc. (Scimed), a subsidiary of the Company, alleging that the
importation and use of the NIR(R) stent infringes two patents owned by Cordis.
On April 13, 1998, Cordis filed a suit for patent infringement against the
Company and Scimed alleging that the Company's NIR(R) stent infringes two
additional patents owned by Cordis. The suits were filed in the U.S. District
Court for the District of Delaware seeking monetary damages, injunctive relief
and that the patents be adjudged valid, enforceable and infringed. A trial on
both actions was held in late November through early December 2000. A jury found
that the NIR(R) stent does not infringe three Cordis patents, but does infringe
one claim of one Cordis patent and awarded damages of approximately $324 million
to Cordis. A post-trial hearing was held July 26, 2001. Judgment has not yet
been entered by the Court.

On March 13, 1997, the Company (through its subsidiaries) filed suits against
Johnson & Johnson (through its subsidiaries) in The Netherlands, the United
Kingdom and Belgium, and on March 17, 1997 filed suit in France, seeking a
declaration of noninfringement for the NIR(R) stent relative to two European
patents licensed to Ethicon, Inc. (Ethicon), a Johnson & Johnson subsidiary,
as well as a declaration of invalidity with respect to those patents. After a
trial on the merits in the United Kingdom during March 1998, the Court ruled
on June 26, 1998 that neither of the patents is infringed by the NIR(R)
stent, and that both patents are invalid. Ethicon appealed, and on March 20,
2000, the appellate court upheld the trial outcome. On October 28, 1998, the
Company's motion for a declaration of noninfringement in France was dismissed
for failure to satisfy statutory requirements; the French invalidity suits
were not affected. A hearing related to the French invalidity suits was held
on November 19, 2001. On January 16, 2002, the Court found one of the patents
to be valid and the other to be invalid. A written decision has not yet been
rendered.

On March 20, 21 and 22, 1997, the Company (through its subsidiaries) filed
additional suits against Johnson & Johnson (through its subsidiaries) in Sweden,
Italy and Spain, respectively, seeking a declaration of noninfringement for the
NIR(R) stent relative to one of the European patents licensed to Ethicon in
Sweden, Italy and Spain and a declaration of invalidity in Italy and Spain. In
Italy, a technical expert was appointed by the court and a hearing is scheduled
for January 30, 2002. On August 21, 2001, the Company withdrew its
noninfringement action in Sweden under an agreement signed by all parties.
Ethicon and other Johnson & Johnson subsidiaries filed a cross-border suit in
The Netherlands on March 17, 1997, alleging that the NIR(R) stent infringes one
of the European patents licensed to Ethicon. In this action, the Johnson &
Johnson entities requested relief, including provisional relief (a preliminary
injunction), covering Austria, Belgium, France, Greece, Italy, The Netherlands,
Norway, Spain, Sweden, Switzerland and the United Kingdom. On April 2, 1997, the
Johnson & Johnson entities filed a similar cross-border proceeding in The
Netherlands with respect to a second European patent licensed to Ethicon.
Johnson & Johnson subsequently withdrew its request for cross-border relief in
the United Kingdom. In October 1997, Johnson & Johnson's request for provisional
cross-border relief on both patents was denied by the Dutch Court, on the ground
that it is "very likely" that the NIR(R) stent will be found not to infringe the
patents. Johnson & Johnson appealed this decision with

29
<Page>

respect to the second patent; the appeal has been denied on the ground that
there is a "ready chance" that the patent will be declared null and void. In
January 1999, Johnson & Johnson amended the claims of the second patent, changed
the action from a cross-border case to a Dutch national action, and indicated
its intent not to pursue its action on the first patent. On June 23, 1999, the
Dutch Court affirmed that there were no remaining infringement claims with
respect to either patent. In late 1999, Johnson & Johnson appealed this
decision. A hearing on the appeal has not yet been scheduled.

On May 6, 1997, Ethicon Endosurgery, Inc., a subsidiary of Johnson & Johnson,
sued the Company in Dusseldorf, Germany, alleging that the Company's NIR(R)
stent infringes one of Ethicon's patents. On June 23, 1998, the case was stayed
following a decision in an unrelated nullity action in which the Ethicon patent
was found to be invalid.

On August 22, 1997, Johnson & Johnson filed a suit for patent infringement
against the Company alleging that the sale of the NIR(R) stent infringes certain
Canadian patents owned by Johnson & Johnson. Suit was filed in the federal court
of Canada seeking a declaration of infringement, monetary damages and injunctive
relief. The Company has answered, denying the allegations of the complaint. A
trial is expected to begin in late 2003.

On June 7, 1999, the Company, Scimed and Medinol filed suit for patent
infringement against Johnson & Johnson, Johnson & Johnson Interventional Systems
and Cordis, alleging two U.S. patents owned by Medinol and exclusively licensed
to the Company are infringed by Cordis' Crown(TM), MiniCrown(TM) and
Corinthian(TM) stents. The suit was filed in the U.S. District Court for the
District of Minnesota seeking injunctive and monetary relief.

On April 14, 2000, the Company (through its subsidiaries) and Medinol filed suit
for patent infringement against Johnson & Johnson, Cordis, and a subsidiary of
Cordis alleging that a patent owned by Medinol and exclusively licensed to the
Company is infringed by Cordis' BX Velocity(TM) stent delivery system. The
complaint was filed in the U.S. District Court for the District of Delaware
seeking monetary and injunctive relief. The Minnesota action was transferred to
the U.S. District Court for the District of Delaware and consolidated with the
Delaware action filed by the Company. A trial was held in August 2001 on both
actions. On September 7, 2001, a jury found that Cordis' BX Velocity, Crown, and
MiniCrown stents do not infringe the patents, and that the asserted claims of
those patents are invalid. A hearing on the post-trial motions is scheduled for
February 26, 2002. The jury also found that Cordis' Corinthian stent infringes a
valid Medinol patent claim and awarded the Company and Medinol $8.3 million in
damages. Post-trial briefing motions were filed through December 2001, and on
January 25, 2002, the Court entered final judgment on the Corinthian stent in
favor of the Company.

On March 24, 2000, the Company (through its subsidiaries) and Medinol filed a
cross-border suit against Johnson & Johnson, Cordis 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, Portugal and Sweden. A hearing was
held January 12, 2001. On March 19, 2001, the Company's request for preliminary
injunction was denied by the Court. On May 11, 2001, the Company appealed this
decision. A hearing on the appeal is expected to be scheduled during the fall of
2002.

On March 30, 2000, the Company (through its subsidiary) filed suit for patent
infringement against two subsidiaries of Cordis alleging that Cordis' BX
Velocity stent delivery system infringes a published utility model owned by
Medinol and exclusively licensed to the Company. The complaint was filed in the
District Court of Dusseldorf, Germany seeking monetary and injunctive relief. A
hearing was held on March 15, 2001, and on June 6, 2001, the Court issued a
written decision that Cordis' BX Velocity stent delivery system infringes the
Medinol published utility model. Cordis appealed the decision of the German
court. A hearing on the appeal has been scheduled for November 14, 2002.

On March 25, 1996, Cordis filed a suit for patent infringement against Scimed
alleging the infringement of five U.S. patents by Scimed's Leap(TM) balloon
material used in certain Scimed catheter products, including Scimed's Bandit(TM)
and Express Plus(TM) catheters. The suit was filed in the U.S. District Court
for the District of Minnesota and seeks monetary and injunctive relief. Scimed
has answered, denying the allega-

30
<Page>

tions of the complaint. Pursuant to an agreement between the parties, this
action has been stayed.

On March 27, 1997, Scimed filed suit for patent infringement against Cordis,
alleging willful infringement of several Scimed U.S. patents by Cordis'
Trackstar 14,(TM) Trackstar 18,(TM) Olympix,(TM) Powergrip,(TM) Sleek,(TM)
Sleuth,(TM) Thor,(TM) Titan(TM) and Valor(TM) catheters. The suit was filed
in the U.S. District Court for the District of Minnesota, seeking monetary
and injunctive relief. The parties have agreed to add Cordis' Charger(TM) and
Helix(TM) catheters to the suit. Cordis has answered, denying the allegations
of the complaint. Pursuant to an agreement between the parties, this action
has been stayed.

LITIGATION WITH MEDTRONIC, INC.

On March 28, 2000, the Company and certain subsidiaries filed suit for patent
infringement against Medtronic AVE, Inc. (Medtronic AVE), a subsidiary of
Medtronic, Inc. (Medtronic), alleging that Medtronic AVE's S670(TM) rapid
exchange coronary stent system infringes a patent exclusively licensed to the
Company. The suit was filed in the U.S. District Court for the Northern District
of California seeking monetary and injunctive relief. In July 2000, this matter
was sent to arbitration. An arbitration hearing was held in April 2001 to
determine whether Medtronic AVE's S670 and S660(TM) rapid exchange coronary
stent delivery systems and the R1 rapid exchange catheter are licensed. On July
18, 2001, the arbitration panel determined that the accused Medtronic AVE
products sold in the United States willfully infringe the patent exclusively
licensed to the Company. The Company was awarded $169 million in damages, as
well as costs and attorneys' fees, and a permanent injunction against Medtronic
AVE's sales of its S670, S660 and BeStent 2(TM) stent delivery systems and R1S
rapid exchange catheter. On September 18, 2001, the U.S. District Court for the
Northern District of California confirmed the arbitration decision. On October
17, 2001, Medtronic AVE appealed the confirmation of the award.

On March 10, 1999, the Company (through its subsidiary Schneider (Europe) AG)
filed suit against Medtronic AVE alleging that Medtronic AVE's AVE GFX, AVE
GFX2, AVE LTX, Calypso Rely,(TM) Pronto Samba(TM) and Samba Rely(TM) rapid
exchange catheters and stent delivery systems infringe one of the Company's
German patents. The suit was filed in the District Court of Dusseldorf, Germany
seeking injunctive and monetary relief. A hearing was held on January 27, 2000.
The Court has delayed its decision pending expert advice and on May 15, 2000,
the Court appointed a technical expert. The expert's report was submitted to the
Court on November 6, 2001. A hearing is scheduled for May 2, 2002.

On July 7, 1999, Medtronic filed suit against the Company and Scimed, alleging
that Scimed's Radius(TM) stent infringes two patents owned by Medtronic. The
suit was filed in the U.S. District Court for the Fourth District Court of
Minnesota seeking injunctive and monetary relief. The Company has answered,
denying allegations of the complaint. A trial date has not been set.

On August 13, 1998, Medtronic AVE (formerly Arterial Vascular Engineering,
Inc.), 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. The parties have filed a
stipulation requesting the Court stay the case until the third quarter of 2002.

On April 6, 1999, Medtronic AVE filed suit against Scimed and another subsidiary
of the Company alleging that the Company's NIR(R) stent infringes one of
Medtronic AVE's European patents. The suit was filed in the District Court of
Dusseldorf, Germany seeking injunctive and monetary relief. A hearing was held
in Germany on September 23, 1999, and on November 4, 1999, the Court dismissed
the complaint. On December 21, 1999, Medtronic AVE appealed the dismissal. The
appeal is stayed pending the outcome of a related nullity action.

LITIGATION WITH 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 Angio-tech Pharmaceuticals, Inc., Cook and the Company (the Agreement). On
October 10, 2001, pursuant to the terms of the Agreement, the Company filed a
demand for arbitration with the American Arbitration Association. On October 11,
2001, Guidant and its subsidiary, Advanced Cardiovascular Systems, Inc. (ACS),
and Cook filed suit

31
<Page>

against the Company relating to the Agreement. The suit was filed in the U.S.
District Court for the Southern District of Indiana and sought declaratory and
injunctive relief. The parties subsequently negotiated an agreement under which
the dispute would be litigated on an expedited basis in the Northern District of
Illinois without Guidant or ACS as parties. On December 13, 2001, the Indiana
case was dismissed and Cook filed a similar 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. A trial date has
not yet been set.

On March 18, 1999, Cook filed suit against the Company and Scimed, alleging that
Scimed's Radius(TM) coronary stent infringes a certain U.S. patent owned by
Cook. The suit was filed in the U.S. District Court for the Southern District of
Indiana seeking monetary damages and injunctive relief. On July 14, 1999, Cook
filed an amended complaint adding Meadox Medicals, Inc. (Meadox), a wholly owned
subsidiary of the Company, as a party to the suit, and adding a breach of
contract claim. The Company, Scimed and Meadox have answered, denying the
allegations of the complaint. A trial date has not yet been set.

On May 23, 2001, Cook filed suit against the Company alleging that the Company's
VortX(R) embolization coils infringe a patent owned by Cook. The suit was filed
in the U.S. District Court for the Southern District of Indiana seeking monetary
damages and injunctive relief. On July 27, 2001, the Company answered, denying
the allegations of the complaint and countersued Cook alleging that certain Cook
products infringe a patent owned by the Company. On November 14, 2001, the
Company amended its complaint against Cook to include two additional patents
exclusively licensed to the Company. Cook answered and denied the allegations of
the counterclaim. A trial date has not yet been set.

On March 7, 1996, Cook filed suit in the Regional Court, Munich Division for
Patent Disputes, in Munich, Germany against MinTec, Inc. Minimally Invasive
Technologies, alleging that the Cragg EndoPro(TM) System I and Stentor(TM)
endovascular device infringe a certain Cook patent. Following the purchase of
the assets of the Endotech/MinTec companies by the Company, the Company assumed
control of the litigation. A final hearing was held on May 12, 1999, and the
court held no infringement of the Cook patents. The case was dismissed in June
1999. Cook has appealed the decision. On July 27, 2000, the Court stayed the
action pending the outcome of a nullity action filed by the Company against the
patent.

On June 30, 1998, Cook filed suit in the Regional Court, Dusseldorf Division for
Patent Disputes, in Dusseldorf, Germany against the Company alleging that the
Company's Passager(TM) peripheral vascular stent graft and Vanguard(TM)
endovascular aortic graft products infringe the same Cook patent. A hearing was
held on July 22, 1999, and a decision was received in September 1999 finding
that the Company's products infringe the Cook patent. The Company appealed the
decision. A hearing originally scheduled for August 2001 has been postponed
pending the outcome of a nullity action filed by the Company against the patent.

OTHER PATENT LITIGATION

On August 13, 2001, Joseph Grayzel filed suit against the Company in the U.S.
District Court of New Jersey alleging that the Company's Cutting Balloon(R)
catheter infringes a patent owned by him. The suit requests monetary and
injunctive relief. The Company has answered, denying the allegations of the
complaint.

On August 27, 2001, RITA Medical Systems (RITA) filed suit against
RadioTherapeutics Corporation (RTC) alleging that RTC's LeVeen(TM)
radiofrequency ablation devices infringe six patents owned by RITA. The suit was
filed in the U.S. District Court for the Northern District of California seeking
monetary damages and injunctive relief. RTC has answered, denying

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<Page>

the allegations of the complaint. On December 11, 2001, the Company acquired RTC
and assumed defense of the litigation.

OTHER PROCEEDINGS

On April 5, 2001, Medinol filed a complaint against the Company and certain of
its current and former employees alleging breaches of contract, fraud and other
claims. Medinol supplies NIR(R) stents exclusively to the Company. The suit was
filed in the U.S. District Court for the Southern District of New York seeking
monetary and injunctive relief. On April 26, 2001, Medinol amended its complaint
to add claims alleging misappropriation of trade secrets in relation to the
Company's Express(TM) stent development program. Medinol seeks monetary and
injunctive relief, as well as an end to the Company's right to distribute
Medinol stents and to gain access to certain Company intellectual property. On
April 30, 2001, the Company answered and countersued Medinol and its principals,
charging them with fraud, multiple breaches of contract, unfair and deceptive
practices and defamation. The Company seeks monetary and injunctive relief.
During the last quarter of 2001, the Court dismissed several of the individuals
and claims from the case. A trial date has not yet been set.

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. Decisions
on the motions have not yet been entered.

The Company is aware that the U.S. Department of Justice is conducting an
investigation of matters that include the Company's NIR ON(R) Ranger(TM) with
Sox(TM) coronary stent delivery system, which was voluntarily recalled by the
Company in October 1998 following reports of balloon leaks. The Company is
cooperating fully in the investigation.

Beginning November 4, 1998, a number of shareholders of the Company, on
behalf of themselves and all others similarly situated, filed purported
stockholders' class action suits in the U.S. District Court for the District
of Massachusetts alleging that the Company and certain of its officers
violated certain sections of the Securities Exchange Act of 1934. The
complaints principally alleged that as a result of certain accounting
irregularities involving the improper recognition of revenue by the Company's
subsidiary in Japan, the Company's previously issued financial statements
were materially false and misleading. In August 1999, lead plaintiffs and
lead counsel filed a purported consolidated class action complaint adding
allegations that the Company issued false and misleading statements with
respect to the launch of its NIR ON(R) Ranger with Sox coronary stent
delivery system and the system's subsequent recall. Following a hearing on a
motion by the Company and its officers, the Court dismissed the case without
prejudice on August 16, 2001. On October 12, 2001, the plaintiffs notified
the Court that they would not amend their complaint, and the Court
administratively closed the case.

On January 10, 2002 and January 15, 2002, Alan Schuster and Antoinette Loeffler,
respectively, putatively initiated shareholder derivative lawsuits for and on
behalf of the Company in the U.S. District Court for the Southern District of
New York against the Company's current directors and the Company as a nominal
defendant. Both complaints allege, among other things, that with regard to the
Company's relationship with Medinol, the defendants breached their fiduciary
duties to the Company and its shareholders in the management and affairs of the
Company, and in the use and preservation of the Company's assets. The suits seek
a declaration of the directors' alleged breach, damages sustained by the Company
as a result of the alleged breach and monetary and injunctive relief. The
Company and members of the Board have not yet answered the complaints.

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. A hearing on damages has been scheduled for
August 5, 2002.

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<Page>

NOTE M - BUSINESS COMBINATIONS

The Company's acquisitions were accounted for using the purchase method of
accounting. The consolidated financial statements include the operating results
for each acquired entity from its respective date of acquisition. Pro forma
information is not presented, as the acquired companies' results of operations
prior to their date of acquisition are not material, individually or in the
aggregate, to the Company. The EPI, CI, Quanam, IVT and RTC acquisitions involve
potential earn-out payments based on the acquired companies reaching certain
performance and other milestones. These payments, some of which may be made in
the Company's common stock, would be allocated to specific intangible asset
categories with the remainder assigned to excess of cost over net assets
acquired on the basis that the consideration had been paid as of the date of
acquisition. In aggregate through 2006, the Company anticipates it will make
approximately $400 million in contingent payments in connection with the
acquisitions consummated in 2001.

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<Page>

assumptions provided by management. Based upon these valuations, the Company
recorded charges of $282 million to account for purchased research and
development related to businesses acquired during 2001. The valuation of
purchased research and development, for which management is primarily
responsible, represents the estimated fair value at the date of acquisition
related to in-process projects. As of the date of acquisition, the in-process
projects had not yet reached technological feasibility and had no alternative
future uses. The primary basis for determining the technological feasibility of
these projects is obtaining regulatory approval. Accordingly, the value
attributable to these projects, which had not yet obtained regulatory approval,
was expensed in conjunction with the acquisition. If the projects are not
successful or completed in a timely manner, the Company may not realize the
financial benefits expected for these projects. Other intangible assets subject
to amortization recorded in connection with these acquisitions are being
amortized on a straight-line basis ranging from 9 to 25 years.

NOTE N - RESTRUCTURING AND MERGER-RELATED CHARGES

At December 31, 2001, the Company had accruals for restructuring and
merger-related charges comprised of $35 million of accrued severance and related
costs associated with the Company's 2000 plant optimization initiative and $21
million for costs accrued in connection with the 2001 acquisitions (primarily
costs for canceling contractual commitments and for severance and related
costs).

During 2001, the Company established an accrual of $9 million for severance and
related costs associated with the 2001 acquisitions. The approximately 60
affected employees include executive management and other employees of the
acquired companies, the majority of whom were terminated as of December 31,
2001. The $9 million accrual was capitalized as part of the purchase prices of
the respective acquisitions, and approximately $4 million had been charged to
the accrual as of December 31, 2001. The Company also established an accrual of
$18 million for estimated costs to cancel contractual commitments, primarily
with distributors, in conjunction with the 2001 acquisitions. The $18 million

35
<Page>

accrual was capitalized as part of the purchase prices of the respective
acquisitions, and approximately $2 million had been charged to the accrual as of
December 31, 2001.

During 2000, the Company approved and committed to a global operations plan
consisting of a series of strategic initiatives designed to increase
productivity and enhance innovation. The plan includes manufacturing process and
supply chain programs and a plant optimization initiative. The intent of the
plant optimization initiative is to better allocate the Company's resources by
creating a more effective network of manufacturing and research and development
facilities. The Company's plan includes the discontinuation of manufacturing
activities at three facilities in the U.S., and includes the planned
displacement of approximately 1,800 manufacturing, manufacturing support and
management employees. The Company recorded a pre-tax special charge of
approximately $58 million associated with the plant optimization initiative
during 2000. As of December 31, 2001, approximately $23 million had been charged
against the restructuring accrual for the approximately 1,000 employees
terminated pursuant to the plan. The Company expects that the plan will be
substantially completed during the first half of 2002. The extension in the
Company's estimated timing for completion of the plan results primarily from
delays in the movement of certain product lines to the Company's facility in
Miami.

The activity impacting the accrual for restructuring and merger-related charges
is summarized in the table below.

CHARGES BALANCE PURCHASE CHARGES BALANCE
TO OPERATIONS AT DECEMBER PRICE ADJUSTMENT UTILIZED AT DECEMBER
(in millions) IN 2000 31, 2000 IN 2001 IN 2001 31, 2001
------------- ----------- ---------------- -------- ------------
<S> <C> <C> <C> <C> <C>
2000 RESTRUCTURING INITIATIVE:
Workforce reductions $ 58 $ 58 $(23) $ 35
==== ==== ==== ==== ====
2001 PURCHASE PRICE ADJUSTMENTS:
Workforce reductions $ 9 $ (4) $ 5
Contractual commitments 18 (2) 16
---- ---- ---- ---- ----
$ 27 $ (6) $ 21
==== ==== ==== ==== ====
TOTAL:
Workforce reductions $ 58 $ 58 $ 9 $(27) $ 40
Contractual commitments 18 (2) 16
---- ---- ---- ---- ----
$ 58 $ 58 $ 27 $(29) $ 56
==== ==== ==== ==== ====
</Table>

NOTE O - 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 revenues
from the sale of less-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 for 2000 and 1999
sales and operating results has been restated based on the Company's standard
foreign exchange rates used for 2001. 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

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not interdependent. Total assets and purchases of property, plant and equipment
are based on foreign exchange rates used in the Company's consolidated financial
statements.

UNITED INTER-
(in millions) STATES EUROPE JAPAN CONTINENTAL TOTAL
------ ------ ------ ----------- ------

2001:
<S> <C> <C> <C> <C> <C>
Net sales $1,598 $ 369 $ 575 $ 200 $2,742
Depreciation and amortization 64 17 4 3 88
Operating income excluding
special charges 570 107 354 26 1,057
Total assets 1,338 472 194 104 2,108
Purchases of property, plant and
equipment 82 31 5 3 121
------ ------ ------ ------ ------

2000:

Net sales $1,577 $ 353 $ 545 $ 166 $2,641
Depreciation and amortization 63 17 4 3 87
Operating income excluding
special charges 592 96 342 8 1,038
Total assets 1,251 391 201 101 1,944
Purchases of property, plant and
equipment 51 16 5 4 76
------ ------ ------ ------ ------

1999:

Net sales $1,741 $ 367 $ 518 $ 161 $2,787
Depreciation and amortization 60 15 3 3 81
Operating income excluding
special charges 662 95 315 20 1,092
Total assets 1,257 458 215 101 2,031
Purchases of property, plant and
equipment 50 21 6 3 80
------ ------ ------ ------ ------
</Table>

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

YEAR ENDED DECEMBER 31, (in millions) 2001 2000 1999
------- ------- -------
<S> <C> <C> <C>
NET SALES:
Total net sales for reportable segments $ 2,742 $ 2,641 $ 2,787
Foreign exchange (69) 23 55
------- ------- -------
$ 2,673 $ 2,664 $ 2,842
======= ======= =======
DEPRECIATION AND AMORTIZATION:
Total depreciation and amortization
allocated to reportable segments $ 88 $ 87 $ 81
Corporate expenses and foreign exchange 144 94 97
------- ------- -------
$ 232 $ 181 $ 178
======= ======= =======

INCOME (LOSS) BEFORE INCOME TAXES:
Total operating income excluding special
charges for reportable segments $ 1,057 $ 1,038 $ 1,092
Manufacturing operations (105) (100) (184)
Corporate expenses and foreign exchange (570) (300) (229)
Purchased research and development (282)
Restructuring and merger-related
(charges) credits (58) 10
------- ------- -------
100 580 689
Other income (expense) (56) (53) (127)
------- ------- -------
$ 44 $ 527 $ 562
======= ======= =======

TOTAL ASSETS:
Total assets for reportable segments $ 2,108 $ 1,944 $ 2,031
Corporate assets 1,866 1,483 1,541
------- ------- -------
$ 3,974 $ 3,427 $ 3,572
======= ======= =======

ENTERPRISE-WIDE INFORMATION

(in millions) 2001 2000 1999
------- ------- -------
NET SALES:

Cardiovascular $ 1,841 $ 1,893 $ 2,309
Endosurgery 832 771 533
------- ------- -------
$ 2,673 $ 2,664 $ 2,842
======= ======= =======
LONG-LIVED ASSETS:

United States $ 439 $ 422 $ 446
Ireland 111 103 110
Other foreign countries 42 42 48
------- ------- -------
$ 592 $ 567 $ 604
======= ======= =======
</Table>

37
<Page>

REPORT OF INDEPENDENT AUDITORS

BOARD OF DIRECTORS
BOSTON SCIENTIFIC CORPORATION

We have audited the accompanying consolidated balance sheets of Boston
Scientific Corporation and subsidiaries as of December 31, 2001 and 2000, and
the related consolidated statements of operations, stockholders' equity, and
cash flows for each of the three years in the period ended December 31, 2001.
These financial statements are the responsibility of the Company'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 consolidated financial position of Boston Scientific
Corporation and subsidiaries at December 31, 2001 and 2000, and the consolidated
results of their operations and their cash flows for each of the three years in
the period ended December 31, 2001 in conformity with accounting principles
generally accepted in the United States.

/s/ Ernst & Young LLP

Boston, Massachusetts
January 29, 2002

38
<Page>

FIVE-YEAR SELECTED FINANCIAL DATA (unaudited) (in millions, except share and per
share data)

YEAR ENDED DECEMBER 31, 2001 2000 1999 1998 1997
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
OPERATING DATA:
Net sales $ 2,673 $ 2,664 $ 2,842 $ 2,234 $ 1,831
Gross profit 1,754 1,832 1,856 1,499 1,285
Selling, general and administrative expenses 926 867 842 755 663
Amortization expense 136 91 92 53 33
Royalties 35 37 46 31 22
Research and development expenses 275 199 197 200 167
Purchased research and development 282 682 29
Restructuring and merger-related charges (credits) 58 (10) (15) 146
Total operating expenses 1,654 1,252 1,167 1,706 1,060
Operating income (loss) 100 580 689 (207) 225
Income (loss) before cumulative effect of change
in accounting (54) 373 371 (264) 131
Cumulative effect of change in accounting (net of tax) (21)
--------- --------- --------- --------- ---------
NET INCOME (LOSS) $ (54) $ 373 $ 371 $ (264) $ 110
========= ========= ========= ========= =========
Income (loss) per common share before cumulative effect of
change in accounting:
Basic $ (0.13) $ 0.92 $ 0.92 $ (0.68) $ 0.34
Assuming dilution $ (0.13) $ 0.91 $ 0.90 $ (0.68) $ 0.33

Net income (loss) per common share:
Basic $ (0.13) $ 0.92 $ 0.92 $ (0.68) $ 0.28

Assuming dilution $ (0.13) $ 0.91 $ 0.90 $ (0.68) $ 0.28

Weighted-average shares outstanding - assuming
dilution (in thousands) 401,389 408,322 411,351 390,836 399,776
</Table>

YEAR ENDED DECEMBER 31, 2001 2000 1999 1998 1997
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Working capital $ 275 $ 173 $ (353) $ 227
Total assets 3,974 3,427 $ 3,572 3,893 1,924
Commercial paper 99 56 277 1,016 423
Bank obligations - short-term 132 204 323 11 24
Long-term debt, net of current portion 973 574 688 1,377 56
Stockholders' equity 2,015 1,935 1,724 821 957
Book value per common share $ 4.97 $ 4.84 $ 4.21 $ 2.08 $ 2.47
--------- --------- --------- --------- ---------
</Table>

The Company paid a two-for-one stock split on November 30, 1998.

All historical amounts have been restated to reflect the stock split.

(see notes to consolidated financial statements)

39
<Page>

QUARTERLY RESULTS OF OPERATIONS (unaudited) (in millions, except per share data)

THREE MONTHS ENDED MARCH 31, JUNE 30, SEPTEMBER 30, DECEMBER 31,
--------- --------- ------------- ------------
<S> <C> <C> <C> <C>
YEAR ENDED DECEMBER 31, 2001
Net sales $ 654 $ 672 $ 670 $ 677
Gross profit 432 404 456 462
Operating income (loss) 40 (150) 102 108
Net income (loss) (5) (172) 58 65
Net income per common share - basic $(0.01) $(0.43) $0.14 $0.16
Net income per common share - assuming dilution $(0.01) $(0.43) $0.14 $0.16
------ ------ ----- -----
YEAR ENDED DECEMBER 31, 2000
Net sales $ 679 $ 695 $ 652 $ 638
Gross profit 466 478 452 436
Operating income 169 182 132 97
Net income 106 122 85 60
Net income per common share - basic $0.26 $0.30 $0.21 $0.15
Net income per common share - assuming dilution $0.26 $0.30 $0.21 $0.15
------ ------ ----- -----
</Table>

During the first, second, third and fourth quarters of 2001, the Company
recorded after-tax charges of $88 million, $252 million, $20 million and $17
million, respectively. The charges represent purchased research and development
related to the acquisitions consummated in 2001, a write-down of intangible
assets related to discontinued technology platforms, a provision for excess
inventories due to declining demand for the current NIR(R) coronary stent
technology and costs associated with the Company's previously announced global
operations plan.

During the third and fourth quarters of 2000, the Company recorded after-tax
charges of $15 million and $23 million, respectively, representing estimated
severance and other related costs associated with the global operations plan.

(see notes to consolidated financial statements)
40
<Page>

MARKET FOR THE COMPANY'S COMMON STOCK AND RELATED MATTERS (unaudited)

The following table shows the market range for the Company's common stock based
on reported sales prices on the New York Stock Exchange.

2001 HIGH LOW
- ---- ---- ---
<S> <C> <C>
First Quarter $ 20.79 $ 13.25
Second Quarter 20.50 14.50
Third Quarter 21.00 16.99
Fourth Quarter 27.89 20.30
</Table>

2000 HIGH LOW
- ---- ---- ---
<S> <C> <C>
First Quarter $ 25.88 $ 17.63
Second Quarter 29.19 19.38
Third Quarter 26.81 15.50
Fourth Quarter 16.88 12.19
</Table>

The Company has not paid a cash dividend during the past five years. The Company
currently intends to retain all of its earnings to finance the continued growth
of its business. Boston Scientific may consider declaring and paying a dividend
in the future; however, there can be no assurance that it will do so.

At December 31, 2001, there were 10,419 recordholders of the Company's common
stock.

(see notes to consolidated financial statements)

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-21
<SEQUENCE>9
<FILENAME>a2074671zex-21.txt
<DESCRIPTION>EXHIBIT 21
<TEXT>
<Page>

EXHIBIT 21

Boston Scientific Corporation and Subsidiaries
Dated March 15, 2002

<Table>
<Caption>
NAME OF COMPANY JURISDICTION OR INCORPORATION
- -------------- -----------------------------
<S> <C>
AMS Medinvent S.A. Switzerland
BSC Capital S.a.r.l. Luxembourg
BSC FSC, Inc. Barbados
BSC Finance Corporation Indiana
BSC Finance Trust Massachusetts
BSC International Corporation Massachusetts
BSC International Holding Limited Ireland
BSC International Medical Trading (Shanghai) Co., Ltd. People's Republic of China
BSC Medical (Shanghai) Consulting Co. Ltd. People's Republic of China
BSC Securities Corporation Massachusetts
BSM Tip Gerecleri Limited Sirketi Turkey
Boston Scientific (Malaysia) Sdn. Bhd. Malaysia
Boston Scientific (South Africa) (Proprietary) Limited South Africa
Boston Scientific (Thailand) Ltd. Thailand
Boston Scientific (Zurich) GmbH Switzerland
Boston Scientific AG Switzerland
Boston Scientific Argentina S.A. Argentina
Boston Scientific Asia Pacific Pte. Ltd. Singapore
Boston Scientific B.V. The Netherlands
Boston Scientific Benelux B.V. The Netherlands
Boston Scientific Benelux SA Belgium
Boston Scientific Ceska Repulika, s.r.o. Czech Republic
Boston Scientific Colombia Limitada Colombia
Boston Scientific Cork Limited Ireland
Boston Scientific Corporation Northwest Technology Center, Inc. Washington
Boston Scientific Distribution Company Ireland
Boston Scientific Distribution Ireland Limited Ireland
Boston Scientific Eastern Europe B.V. The Netherlands
Boston Scientific Europe S.P.R.L. Belgium
Boston Scientific Far East B.V. The Netherlands
Boston Scientific Foundation, Inc. Massachusetts
Boston Scientific Ges.m.b.H. Austria
Boston Scientific Holland B.V. The Netherlands
Boston Scientific Hong Kong Limited Hong Kong
Boston Scientific Hungary Trading Limited Liability Company Hungary
Boston Scientific Iberica, S.A. Spain
Boston Scientific International B.V. The Netherlands
Boston Scientific International Distribution Limited Ireland
Boston Scientific International Finance Limited Ireland
Boston Scientific International Holding B.V. The Netherlands
Boston Scientific International S.A. France
Boston Scientific Ireland Limited Ireland
Boston Scientific Israel Limited Israel
Boston Scientific Japan K.K. Japan
Boston Scientific Korea Co., Ltd. Korea
Boston Scientific Latin America B.V. The Netherlands
Boston Scientific Latin America B.V. (Chile) Limitada Chile
Boston Scientific Limited England
Boston Scientific Limited Ireland
Boston Scientific Ltd. Canada
Boston Scientific Medizintechnik GmbH Germany
Boston Scientific New Zealand Limited New Zealand
</Table>

<Page>

<Table>
<S> <C>
Boston Scientific Nordic AB Sweden
Boston Scientific Puerto Rico, Inc. Puerto Rico
Boston Scientific Philippines, Inc. Philippines
Boston Scientific Polska Sp. z.o.o. Poland
Boston Scientific Pty. Ltd. Australia
Boston Scientific S.p.A. Italy
Boston Scientific S.a.r.l. Luxembourg
Boston Scientific Scimed, Inc. Minnesota
Boston Scientific Switzerland S.a.r.l. en liquidation Switzerland
Boston Scientific TIP Gerecleri Limited Sirketi Turkey
Boston Scientific Tullamore Limited Ireland
Boston Scientific Uruguay S.A. Uruguay
Boston Scientific de Mexico, S.A. de C.V. Mexico
Boston Scientific de Venezuela Venezuela
Boston Scientific do Brasil Ltda. Brazil
Boston Scientific S.A. France
Cardiac Pathways B.V. Netherlands
Cardiac Pathways Corporation Delaware
Cardiologic Gesellschaft fur Medizintechnologien mbH Germany
Catheter Innovations, Inc. Delaware
CathNet Science Holding A/S Denmark
CathNet Science France France
Corvita Canada, Inc. Canada
Corvita Corporation Florida
Corvita Europe S.A. Belgium
Embolic Protection, Inc. Delaware
EP Technologies, Inc. Delaware
Forwich Limited Ireland
InterVentional Technologies Europe Limited Ireland
Interventional Technologies, Inc. California
Interventional Therapeutics Corporation California
Interventional Therapeutics Int'l California
Laboratories Corvita S.A.R.L. France
Meadox Medicals, Inc. New Jersey
NAMIC International Inc. Virgin Islands
Neopharm (2001) Minimally Invasive Medical Instruments Ltd. Israel
Nilo Holding SA Switzerland
Norse Ventures B.V. The Netherlands
Quanam Medical Corporation California
RadioTherapeutics Corporation
SCHNEIDER/NAMIC Delaware
Schneider (Europe) GmbH Switzerland
Schneider Belgium N.V. Belgium
Schneider Puerto Rico Delaware
Scimed Life Systems, Inc. Minnesota
Symbiosis Corporation Florida
Target Therapeutics International Sales Corporation Barbados
Target Therapeutics International, Inc. California
Target Therapeutics, Inc. Delaware
</Table>

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-23.1
<SEQUENCE>10
<FILENAME>a2074671zex-23_1.txt
<DESCRIPTION>EXHIBIT 23.1
<TEXT>
<page>
Consent of Independent Auditors

We consent to the incorporation by reference in this Annual Report (Form 10-K)
of Boston Scientific Corporation of our report dated January 29, 2002, included
in the 2001 Annual Report to Shareholders of Boston Scientific Corporation.

Our audits also included the financial statement schedule of Boston Scientific
Corporation listed in Item 14(a). This schedule is the responsibility of the
Company's management. Our responsibility is to express an opinion based on our
audits. In our opinion, the financial statement schedule referred to above, when
considered in relation to the basic financial statements taken as a whole,
presents fairly in all material respects the information set forth therein.

We also consent to the incorporation by reference in the Registration Statements
(Forms S-8 Nos. 333-76380, 333-61060, 333-61056, 33-57242, 33-89772, 33-93790,
33-99766, 33-80265, 333-02256, 333-25033, 333-25037, and 333-36636) and in the
Registration Statements (Forms S-3 Nos. 333-76346, 333-61994, 333-37255,
333-64887, and 333-64991) of our report dated January 29, 2002, with respect to
the consolidated financial statements incorporated herein by reference, and our
report included in the preceding paragraph with respect to the financial
statement schedule included in this Annual Report (Form 10-K) of Boston
Scientific Corporation.

/s/ ERNST & YOUNG LLP

Boston, Massachusetts
March 25, 2002

</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
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