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                       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, 1996          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. [ ]



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The aggregate market value of Common Stock held by non-affiliates (persons other
than directors, executive officers, and certain family trusts) of the Company
was approximately $7.1 billion based on the closing price of the Common Stock as
reported in the Wall Street Journal on March 14, 1997.

The number of shares outstanding of the Company's Common Stock as of March 14,
1997 was 178,760,320.

                       DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Company's 1996 Consolidated Financial Statements filed with the
Securities and Exchange Commission as an exhibit hereto and the Proxy Statement
to be filed with the Securities and Exchange Commission on or prior to April 30,
1997 are incorporated by reference into Parts I, II and III.


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                                     PART I
- --------------------------------------------------------------------------------

Item 1.  BUSINESS

The Company

Boston Scientific Corporation (the "Company") is a worldwide developer,
manufacturer and marketer of medical devices. The Company sells products in
numerous product categories which are used by physicians to perform minimally
invasive medical procedures. The Company's products are used in a broad range of
interventional medical specialties, including cardiology, gastroenterology,
pulmonary medicine, radiology, 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 procedural trauma,
complexity, risk to the patient, cost and recovery time.

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 minimally 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 $1.46 billion in 1996.

Several strategic acquisitions significantly bolstered the Company's growth over
the past two years. In early 1995, the Company acquired SCIMED Life Systems,
Inc. ("SCIMED"), a leading developer, manufacturer and marketer of devices used
principally to treat cardiovascular disease, Cardiovascular Imaging Systems,
Inc. ("CVIS"), a leading developer, manufacturer and marketer of intraluminal
ultrasound imaging catheters and systems for use in the diagnosis of
cardiovascular and other diseases, and Vesica Medical, Inc. ("Vesica"), a
developer, manufacturer and marketer of medical devices used principally to
treat a form of urinary incontinence. Later in 1995, the Company acquired Meadox
Medicals, Inc. ("Meadox"), a leading developer, manufacturer and marketer of
woven, knitted and collagen-sealed textile vascular prosthesis, and Heart
Technology, Inc. ("Heart Technology"), the developer, manufacturer and marketer
of a rotational ablation system used for the treatment of atherosclerosis in
coronary and peripheral arteries. In 1996, the Company acquired EP Technologies,
Inc. ("EPT"), a developer, manufacturer and marketer of electrophysiology
catheters and systems used to diagnose and treat cardiac tachyarrhythmias,
Symbiosis Corp., formerly a wholly-owned subsidiary of American Home Products
Corporation and a developer and manufacturer of certain specialty medical
devices, including the Radial Jaw(R) and Multibite(TM) biopsy forceps marketed
by the Company, and certain assets of Endotech Ltd. and MinTec Inc. and certain
related companies ("Endotech/MinTec") dedicated to the development and
manufacture of stent grafts for the repair of diseased blood vessels.

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Most recently, on January 20, 1997, the Company entered into an agreement to
acquire Target Therapeutics, Inc. ("Target"), a leading developer, manufacturer
and marketer of micro-catheters and other medical devices used to treat diseases
of the brain associated with stroke and other disease sites accessible through
small vessels of the circulatory system.

A summary of these transactions is set forth below:




                                                                   Consideration
                                                          (rounded to the nearest million)

                                                Date of           Shares      Cash      Transaction
Acquired Company           Market              Acquisition        Issued      Paid         Type
- ----------------           ------              -----------        ------      ----         ----
                                                                                                
   SCIMED                cardiology          February 24, 1995     52.7        --     stock-for-stock
                                                                                      pooling transaction

   CVIS                  radiology           March 9, 1995           --       $ 94    cash purchase

   Vesica                urology             March 23, 1995          --         *     cash purchase

   Meadox                vascular surgery    November 16, 1995     10.2        --     stock-for-stock
                                                                                      pooling transaction

   Heart Technology      cardiology          December 29, 1995     11.9        --     stock-for-stock
                                                                                      pooling transaction

   EPT                   electrophysiology   January 22, 1996       3.4        --     stock-for-stock
                                                                                      pooling transaction

   Symbiosis             endoscopy           March 14, 1996          --       $153    cash purchase

   Endotech/MinTec       endovascular        May 3, 1996             --       $ 72    cash purchase
                         surgery

   Target**              neuro-              Expected to close     16.1        --     stock-for-stock
                         endovascular        on April 8, 1997                         pooling transaction
                         therapy


- ----------
*The purchase price is not material to the Company's financial position or
results of operations and the acquisition did not have a material pro forma
impact on the Company's operations.

**The consummation of this transaction is subject to certain conditions,
including obtaining the approval of Target stockholders.
- ----------
The Company's growth has also been spurred by certain recent corporate
alliances. Principal among these is the strategic alliance formed in 1995
between the Company and Medinol Ltd. ("Medinol"), an Israeli Company, which is a
leading developer and manufacturer of stents. Under this alliance, the Company
has the exclusive worldwide license to market Medinol's stent products,
including the NIR(TM) coronary stent, which is currently being sold
internationally and clinically tested in the United States.


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These acquisitions and alliances have helped to round-out and fill-in gaps in
the Company's product lines, allowing the Company to offer one of the broadest
product lines in the world for use in minimally invasive procedures. The Company
now maintains strong market share positions with respect to its products in each
of the principal markets in which it competes: cardiology, radiology, endoscopy,
urology, electrophysiology and vascular surgery. Following the anticipated
acquisition of Target, the Company also expects to establish a leadership
position in the neuro-endovascular therapy market.

The acquisitions have also helped the Company to reach a certain strategic mass
which should enable it to compete more effectively in, and better absorb the
pressures of, the current healthcare environment of cost containment,
managed-care, large buying groups and hospital consolidations. Management
believes that the leadership companies of the future in the medical device
industry will be those financially strong, technology driven enterprises which
possess strong market shares, broad product lines, sophisticated manufacturing,
and global operations with direct representation in all major markets. The
Company's acquisition and globalization activities over the past two years have
been directed towards these objectives.

The integration of SCIMED, CVIS, Vesica, Meadox, and Heart is substantially
complete and the integration of EPT, Symbiosis, and Endotech/MinTec is expected
to be substantially complete by the end of 1997. Management believes it has
developed a sound plan for continuing and concluding the integration process,
and that it will achieve that plan. However, in view of the number of major
transactions undertaken by the Company, the dramatic changes in the size of the
Company and the complexity of its organization resulting from these
transactions, management also believes that the successful implementation of its
plan presents a significant degree of difficulty. The failure to integrate these
businesses effectively could adversely affect the Company's operating results in
the near term, and could impair the Company's ability to realize the strategic
and financial objectives of these transactions.

Business Strategy

The Company's mission is to improve the quality of patient care and the
productivity of healthcare 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, as well as the acquisition, 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 diagnostic areas which satisfy the
Company's mission and provide attractive opportunities for long-term growth and
by making the investments necessary to capitalize on these opportunities. Key
elements of this 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 vascular and nonvascular procedures throughout the body. The
breadth and diversity of the Company's product lines permit medical specialists
to satisfy many of their minimally invasive medical device requirements from a
single source. The scope of its products and markets also reduces the 

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Company's vulnerability to change in the competitive, regulatory and
technological environments for any single product or market. 

Product Innovation. The Company maintains an aggressive product development
program designed to introduce new products and applications on a regular basis.
The specifications and features of new products are typically developed from
market information generated through the interaction of the Company's product
management teams and sales representatives with the worldwide medical community.
The Company expedites the design and development of new products by leveraging
its proprietary core technologies and applications knowledge across its product
lines. Technological innovations developed for a particular application are
often applied to procedures used in other markets served by the Company.

Focused Marketing. The Company markets its products through six principal
divisions: SCIMED (cardiology), Medi-Tech (radiology), Microvasive Endoscopy
(endoscopy), Microvasive Urology (urology), EPT (electrophysiology) and Meadox
(vascular and endovascular surgery). Each of the Company's divisions focuses on
physicians who specialize in the diagnosis and treatment of different medical
conditions and offers products to satisfy their needs. The Company believes that
this focused marketing approach enables it to develop highly knowledgeable and
dedicated sales representatives and to foster close professional relationships
with physicians.

International Presence. Maintaining and expanding its international presence is
an important component of the Company's long-term growth plan. In 1996,
international sales accounted for approximately 39% of the Company's net sales,
up from approximately 33% in 1995 and 29% in 1994. Currently, the Company
operates international manufacturing subsidiaries in the Bahamas, Denmark,
France and Ireland (the Company expects to close certain of its international
manufacturing operations as part of its Company-wide facilities reorganization
and consolidation plans); direct marketing and sales subsidiaries in over
twenty-five countries; and distribution arrangements in over fifty countries.
Through its international presence, the Company seeks to increase net sales and
market share, 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.

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. The Company enhances its presence in the medical
community through active participation in hundreds of medical meetings each
year, by conducting comprehensive training and educational activities and
through employee-authored articles in medical journals and textbooks. Each year,
numerous scientific papers are published and presentations are made describing
clinical applications of the Company's products. The Company believes that these
activities and its advocacy positions contribute to the medical community's
understanding and adoption of minimally invasive techniques and the expansion of
these techniques into new therapeutic and diagnostic areas.

Corporate Culture. Management believes that success and leadership evolves 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 

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believes that its success is attributable in large part to the high caliber of
its employees and the Company's commitment to maintaining the values on which
its success has been based.

Strategic Acquisitions and Alliances. In recent years, the Company has sought
out strategic acquisitions, alliances and venture opportunities which complement
or expand its existing product lines or enhance its technological position. As
the healthcare environment increasingly shifts towards consolidation and
managed-care, the Company expects that it will continue to make acquisitions and
enter into strategic alliances consistent with its corporate mission.

Products

The Company's products are categorized as vascular or nonvascular, depending on
the anatomical system and procedure in which a product is intended to be used.
Generally, vascular products are employed in procedures affecting the heart and
systems which carry blood, while nonvascular products are employed in procedures
affecting other systems and organs. In 1996, approximately 78% of the Company's
net sales were derived from its vascular business and approximately 22% from its
nonvascular business. The Company's principal vascular and nonvascular products
are offered in the following medical areas:

                                    Vascular

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. Atherosclerosis results in
reduced blood flow to the muscle of the heart. The majority of the Company's
products in this market are used in percutaneous transluminal coronary
angioplasty ("PTCA") and percutaneous transluminal coronary rotational
atherectomy ("PTCRA").

Peripheral Vascular Intervention and Vascular 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 catheters used in percutaneous transluminal angioplasty ("PTA").
Additionally, the Company's peripheral vascular product line includes medical
devices used in thrombolysis, which is the catheter-based delivery of clot
dissolving agents directly to the site of a blood clot. The Company also markets
vascular access ports as well as peripherally inserted central catheters for use
in patients with impaired venous systems, such as cancer and AIDS patients.

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) are captured and
held by the lattice design of the filter, allowing the clots to dissolve
naturally before they can reach the pulmonary system.

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Surgical and Endovascular Grafts. Following the acquisitions of Meadox and
Endotech/Mintec, the Company expanded its product line to include woven, knitted
and collagen-sealed textile grafts, used to repair or replace arteries which
have developed aneurysms or have become partially or completely occluded by
plaque, and endovascular grafts for the treatment of abdominal aortic aneurysms
and peripheral occlusive diseases. Recently, the Company also started marketing
a line of proprietary PTFE grafts used for AV access and the treatment of
peripheral vascular diseases.

Stents. Through its alliance with Medinol, the Company markets the NIR(TM)
coronary stent. The Company also markets a range of other stents for use in both
vascular and non vascular applications, including the Radius(TM) self-expanding
coronary stent, and the Symphony(TM) self-expanding peripheral stent.

Intraluminal Ultrasound Imaging. The Company markets a family of intraluminal
catheter-directed ultrasound imaging systems for diagnostic use in blood
vessels, heart chambers, coronary arteries as well as certain nonvascular
systems. Intraluminal ultrasound imaging is a relatively new technique in which
catheter tip ultrasound transducers provide high resolution internal images of
vascular and nonvascular systems throughout the anatomy.

Electrophysiology ("EP"). The Company's electrophysiology product offerings
include catheters and systems for use in minimally invasive procedures to
diagnose and treat tachyarrhythmias (abnormal heart rhythms). The Company
markets RF generators and steerable ablation catheters, many of which
incorporate proprietary temperature monitoring and control technology, as well
as a line of diagnostic and therapeutic catheters and associated accessories.

Neuro-Endovascular Therapy. The Company currently markets a line of
micro-guidewires and infusion and guiding catheters to treat diseases of the
neurovascular system. With the expected acquisition of Target, the Company would
offer a significantly expanded product line in this market, including the
Guglielmi Detachable Coil(TM) system to treat and prevent the rupture of
cerebral aneurysms that are otherwise either considered to be inoperable or very
high risk for surgery.

                                   Nonvascular

Esophageal, Gastric and Duodenal Intervention. The Company markets a broad range
of products to diagnose, treat and palliate a variety of esophageal, gastric and
duodenal diseases, including esophogitis, gastric esophageal reflux disease,
portal hypertension, peptic ulcers and esophageal cancer. The Company's products
in this area include disposable single and multiple biopsy forceps, balloon
dilatation catheters, multiple banding devices and enteral feeding


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devices. The Company also markets a family of esophogeal stents designed to
offer improved dilatation force and greater resistance to tumor in-growth.

Colorectal Intervention. The Company markets a line of hemostatic catheters,
polypectomy snares 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
treat, diagnose 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
and hepatic ducts. The Company's products include diagnostic catheters used with
contrast medium, balloon dilatation catheters and sphincterotomes. The Company
also markets a temporary biliary stent 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
and balloon catheters used to control bleeding.

Urinary Tract Intervention. The Company sells a variety of products designed
primarily to treat patients with urinary stone disease. Products within this
category include ureteral dilatation balloons used to dilate strictures or
openings for scope access; stone baskets used to manipulate, crush, or remove
the stone; intracorporeal shock wave lithotripsy devices used to disintegrate
stones ureteroscopically; ureteral stents implanted temporarily in the urinary
tract to provide either short-term or long-term drainage; and a wide variety of
guidewires used to gain access to a specific site.

Prostate Intervention. For the treatment of Benign Prostatic Hypertrophy
("BPH"), the Company currently markets an electro-surgical resection device
designed to resect large diseased tissue sites and reduce the bleeding
attributable to the resection procedure (a major cause of patient morbidity in
connection with traditional surgical treatments for BPH), a prostate balloon
dilatation catheter and an automatic disposable needle biopsy system, designed
to take rapid core prostate biopsies. The Company also has the exclusive right
to sell in Europe a microwave based thermotherapy system to treat BPH.

Urinary Incontinence. The Company markets a line of minimally invasive devices
to treat female urinary incontinence. This affliction is commonly treated with
an open bladder neck suspension surgical procedure. The Company's Vesica(R)
system is a less invasive (percutaneous) alternative for treating incontinence
caused by hypermobility that provides suspension and stabilization of the
bladder neck using pelvic bone anchors and support sutures that are deployed
through small incisions. Recently, the Company has expanded its incontinence
product line to include sling technology to treat patients with both
hypermobility and ISD incontinence.

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International Operations

In 1996, international sales accounted for approximately 39% of the Company's
net sales, up from approximately 33% in 1995 and 29% in 1994. Net sales,
operating income and identifiable assets attributable to significant geographic
areas are presented in Note O to the Company's 1996 Consolidated Financial
Statements, filed with the Securities and Exchange Commission as an exhibit
hereto.

Currently, the Company has direct marketing and sales operations in over
twenty-five countries, including Australia, Argentina, Austria, Belgium, Canada,
France, Germany, Hong Kong, Ireland, Italy, Japan, Korea, the Netherlands,
Norway (which serves Norway and Finland), Singapore, Spain, Sweden, Switzerland
and the United Kingdom. In the future, the Company expects to further expand its
direct sales operations in Asia, Eastern Europe and Latin America, as well as
other markets where it can both generate strong net sales and capture a
significant market share. The Company will continue to use distributors in those
smaller markets where it is not economical or strategic to establish a direct
presence. In 1996, less than 4% of net sales were attributable to
distributorship arrangements.

The Company has established international manufacturing operations in the
Bahamas, Denmark, France and Ireland. The Company expects to close certain of
its international manufacturing facilities as part of its Company-wide
facilities reorganization and consolidation plans. Presently, approximately 50%
of the Company's products sold internationally are manufactured at sites outside
of the United States. The Company also maintains an international research and
development facility in Ireland.

The Company's expanded 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. Because the
percentage of sales denominated in foreign currencies has been, and is expected
to continue to be, somewhat greater than the percentage of expenses denominated
in foreign currencies, foreign currency fluctuations may also have some impact
on the Company's margins. Any significant changes in the political, regulatory
or economic environment where the Company conducts international operations may
also have a material impact on revenues and profits. See page F-4 of the
Company's 1996 Consolidated Financial Statements filed as an exhibit hereto.

Marketing and Sales

The Company markets its products through six principal divisions, each focusing
upon physicians who specialize in the diagnosis and treatment of different
medical conditions.

     SCIMED:  markets devices to cardiologists for the nonsurgical diagnosis and
              treatment of coronary vascular disease and other cardiac
              disorders.

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     Medi-Tech:   markets therapeutic and diagnostic devices to physicians who
                  perform interventional image-guided procedures primarily in
                  the fields of radiology and vascular surgery.

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

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

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

     Meadox:      markets woven, knitted and collagen-sealed vascular and
                  endovasular grafts to vascular, cardiothoracic and general 
                  surgeons for use in patients with vessels damaged by 
                  artherosclerosis or aneurysms which need to be bypassed or 
                  replaced.

A dedicated sales force of in excess of 1,200 individuals, including over 600 in
the United States, market the Company's products worldwide. This dedicated force
accounts for over 96% of the Company's net sales. A network of over sixty
dealers, sub-dealers and distributors who offer the Company's products in more
than fifty countries worldwide accounts for the remaining sales. The Company has
also established a dedicated corporate sales force focused principally on
selling to major buying groups and large integrated healthcare networks.

The Company's worldwide customer base includes interventional medical
specialists, including cardiologists, radiologists, gastroenterologists,
urologists, gynecologists, electrophysiologists, pulmonologists and vascular
surgeons. In 1996, 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 institution accounted for more
than 10% of the Company's net sales in 1996.

The majority of the Company's customers typically place frequent, small volume
orders to replace their inventory on a regular basis as specific products are
used. Accordingly, the Company expects delivery to be made within a short period
of time, and the Company ships more than 95% of its products within 24 hours of
receiving an order. Because of this short cycle between order and shipment, the
Company does not have significant backlog. The Company's six distribution
facilities in Watertown, Massachusetts; Maple Grove, Minnesota; Oakland, New
Jersey; Beek, The Netherlands; Tokyo, Japan and Singapore currently serve
substantially all of the Company's distribution needs. In the future, the
Company expects to consolidate its domestic distribution activities into its
Quincy, Massachusetts site. See "Properties".


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Distributed products, which consisted principally of stents, guidewires,
ligating devices and other endoscopic devices, represented approximately 9% of
the Company's 1996 net sales. The Company expects to continue to seek out new
opportunities for distributing complementary products.

Uncertainty remains with regard to future changes within the healthcare
industry. The trend towards managed care and economically motivated buyers in
the United States may result in continued pressure on selling prices of certain
products and resulting compression on gross margins. The United States
marketplace is increasingly characterized by consolidation among healthcare
providers and purchasers of medical devices who prefer 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. In
addition, international markets are also being affected by economic pressure to
contain healthcare costs. Although these factors will continue to impact the
rate at which the Company can grow, management believes that it is well
positioned to take advantage of opportunities for growth that exist in the
markets it serves.

Manufacturing; Raw Materials

The Company designs and manufactures the majority of its products in fourteen
manufacturing and development facilities located in the United States, the
Bahamas, Denmark, France and Ireland. (The Company expects to close certain of
its international manufacturing operations as part of its Company-wide
facilities reorganization and consolidation plans.) The majority of the raw
materials used in the manufacture of the Company's products are off-the-shelf
items readily available from several supply sources. Several items are, however,
custom made for the Company to meet its specifications. The Company believes
that, in most of these cases, alternative sources of supply are available or
could be developed within a reasonable period of time. The Company has generally
been able to obtain adequate supplies of all materials, parts and components in
a timely manner from existing sources. However, the inability to develop
alternative sources, if required, or a reduction or interruption in supply or a
significant increase in the price of materials, parts or components could
adversely affect the Company's operations.

Competition

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

The Company believes that its products compete primarily on the basis of their
ability to perform safely and effectively a variety of diagnostic and
therapeutic procedures in a minimally invasive manner, ease of product use,
product reliability and physician familiarity. In the current environment of
managed care, economically motivated buyers and consolidation among U.S. health
care providers, the Company has also been increasingly required to compete on
the basis of cost. The Company believes that its continued competitive success
will depend upon its ability to create or acquire scientifically advanced
technology, apply its technology cost-


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effectively across product lines and markets, develop or acquire proprietary
products, attract and retain scientific 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. There can be no assurance that the Company will be able to
accomplish these objectives or that it will be able to compete successfully in
the future against existing or new competitors. There can also be no assurance
that the Company's operating results will not be adversely affected by increased
price competition.

Research and Development

The Company maintains an active program of new product and technology research
and development. By leveraging the technical and applications knowledge gained
in one medical specialty to other specialties, the Company believes that its
product development process is accelerated and made more cost effective.
Enhancements of existing products or expansions of existing product lines, which
are typically developed within the Company's manufacturing and marketing
operations, account for a significant portion of each year's sales growth.

The Company maintains internal research and development facilities in Natick,
Massachusetts; Maple Grove, Minnesota; Oakland, New Jersey; Miami, Florida; 
San Jose, California; Redmond, Washington and Galway, Ireland. The Company 
also works with hundreds of leading research institutions, universities and 
clinicians around the world in evaluating, developing 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 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 in the United
States are subject to regulation by the FDA and, in many instances, by
comparable agencies in foreign countries where these devices are manufactured or
distributed. Under the Federal Food, Drug, and Cosmetic Act, as amended (the
"FDC Act"), manufacturers of medical devices must comply with applicable
provisions of the FDC Act and certain regulations governing the testing,
manufacturing, labeling, marketing and distribution of medical devices. Under
the FDC Act, devices are subject to varying levels of regulatory control, the
most comprehensive of which requires that a clinical evaluation program be
conducted before a device receives pre-market approval by the FDA for commercial
distribution in the United States.

FDA permission to distribute a new device generally can be met in one of two
ways. The first, less rigorous, process applies to any new device that is
substantially equivalent to a device first marketed prior to May 1976 and does
not require pre-market approval ("PMA"). In this case, 


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FDA permission to distribute the device can be accomplished by submission of a
pre-market notification submission (a "510(k) Submission"), and issuance by the
FDA of an order permitting commercial distribution. A 510(k) Submission must
provide information supporting its claim of substantial equivalence. If clinical
data from human experience is required to support a 510(k) Submission, this 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.

This process may be completed within 90 to 150 days, but it may take much longer
to satisfy FDA requests for additional information. Recently, the FDA reported
the average time to complete this process was approximately 150 days. Changes to
existing devices which do not significantly affect safety or effectiveness can
generally be made by the Company without a 510(k) Submission.

The second, more comprehensive, approval process applies to a new device that is
not substantially equivalent to an existing product. 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 clinical investigation of the device in the United States. The IDE
regulations require review and approval of clinical testing protocols by an
institutional review board for the participating medical institution. In
addition, for significant risk devices, the FDA itself must approve the IDE.
Second, the FDA must review the Company's PMA application which contains, among
other things, clinical information acquired under the IDE. The PMA application
also contains other information required under the FDC Act such as a full
description of the device and its components; a full description of the methods,
facilities and controls used for manufacturing; and proposed labeling.

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.
Additional restrictions, including additional patient follow-up for an
indefinite period of time, may be imposed by the FDA as part of the PMA
approval. The FDA will subsequently publish an order approving the PMA for the
device. Interested parties can file comments on the order and seek further FDA
review. Although the PMA review process is required to be completed within 180
days from the date the PMA is accepted for filing, this time period is usually
extended. After the Company receives PMA approval for a medical device, it may
then be required to file PMA supplements for approval by the FDA of certain
types of changes. Supplements to a PMA require submission of additional
information needed to support the change.

The Company is also required to register with the FDA as a device manufacturer
and to provide a list of devices it manufactures. The Company is inspected on a
routine basis for compliance with the FDC Act and applicable regulations, in
particular the FDA's Good Manufacturing Practice ("GMP") regulations. These
regulations require that the Company manufacture its products and maintain its
documents in a prescribed manner with respect to manufacturing, testing and
control activities. Further, the Company is required to comply with various FDA
requirements for labeling. The Medical Device Reporting regulation requires that
the Company provide information to the FDA on deaths or serious injuries alleged
to have been associated with the use 


                                       14
   15

of certain Company products as well as product malfunctions that would likely
cause or contribute to death or serious injury if the malfunction were to recur.
In addition, the FDA prohibits an approved device from being marketed for
unapproved indications. If the FDA believes the Company is not in compliance
with the FDC Act or regulations, it can institute proceedings to detain or seize
the Company's products, issue a recall, enjoin future violations and assess
civil and criminal penalties against the Company, its officers or its employees.
The FDA may proceed to ban, or request recall, repair, replacement or refund of
the cost of, any device manufactured or distributed by the Company.

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
achieved International Standards Organization or European Union certification
for most of its United States and European manufacturing facilities. In
addition, the Company is actively pursuing CE Mark qualification in anticipation
of implementation of various medical device directives in the European Union.

The process of obtaining clearance to market products is costly and
time-consuming and can delay the marketing and sale of the Company's products.
No assurance can be given that the FDA would approve a PMA for any of the
Company's new medical devices or that such approval would be received on a
timely basis. Moreover, after approval is given, the FDA can later proceed to
withdraw approval for a cause identified in the FDC Act. In addition, federal
and state regulations regarding the 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 such laws will not have a material impact
on its financial position, results of operations, or liquidity. Given the scope
and nature of such laws, there can, however, be no assurance that such laws
will not have a material impact on the Company.

Third-Party 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. These
third-party payors may deny reimbursement if they should 


                                       15
   16

determine that a device used in a procedure was not used in accordance with
cost-effective treatment methods, as determined by such third-party payor, or
was used for an unapproved indication. Also, third-party payors are increasingly
challenging the prices charged for medical products and services. There can be
no assurance that the Company's products will be considered cost-effective by
third-party payors, that reimbursement will be available or, if available, that
the third-party payors' reimbursement policies will not adversely affect the
Company's ability to sell its products profitably.

Investigation by Office of the Inspector General of Reimbursement Claims made by
Certain Customers

The Office of the Inspector General (the "OIG") of the United States Department
of Health and Human Services ("HHS") has initiated an investigation regarding
the possible submission of improper claims to the Medicare/Medicaid programs for
reimbursement for procedures using cardiovascular medical devices that were not
approved for marketing by the FDA at the time of use. Beginning in June 1994,
approximately 130 hospitals received subpoenas from HHS seeking information with
respect to reimbursement for procedures using cardiovascular medical devices
(including certain products manufactured by the Company, as well as numerous
other manufacturers) that were subject to investigational exemptions or may not
have been approved for marketing by the FDA at the time of use. The subpoenas
also seek information regarding various types of remuneration, including
payments, gifts, stock and stock options, received by the hospital or its
employees from manufacturers of medical devices. Civil and criminal sanctions
may be imposed against any person participating in an improper claim for
reimbursement under Medicare/Medicaid. The OIG's investigation and any related
change in reimbursement practices may discourage hospitals from participating in
clinical trials or from including Medicare and Medicaid patients in clinical
trials, which could lead to increased costs in the development of new products.
The Company is not able to predict the potential outcome of this matter or when
it will be resolved. There can be no assurance that the OIG's investigation or
any changes in third party payors' reimbursement practices will not materially
adversely affect the medical device industry in general or the Company in
particular.

Patents and Proprietary Rights

The Company relies on a combination of patents, trade secrets and non-disclosure
agreements to protect its intellectual property. The Company holds approximately
537 United States and 354 foreign patents and has pending approximately 531
United States and 606 foreign patent applications 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 patents 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
agreements with certain 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


                                       16
   17

remedies for any breach, or 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 generally, particularly in the
areas in which the Company competes. The Company has been, and will likely
continue to be, forced to defend itself against claims and legal actions
alleging infringement of the patent rights of others. Adverse determinations in
any such litigation could subject the Company to significant liabilities to
third parties, could require the Company to seek licenses from third parties and
could, if such licenses are not available, prevent the Company from
manufacturing, selling or using certain of its products, any of which could have
a material adverse effect on the Company. Additionally, the Company may find it
necessary to initiate 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 such
litigation will be favorable to the Company.

Product Liability

The testing, marketing and sale of human health care products entails an
inherent risk of product liability claims and there can be no assurance that
product liability claims will not be asserted against the Company. Although the
Company maintains product liability insurance, 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. The Company is involved in various suits arising in the normal course
of business from product liability claims. The Company believes the outcome of
these suits, individually and in the aggregate, will not have a material adverse
effect on the Company.

Employees

As of December 31, 1996, the Company had 9,580 employees, including 6,344 in
operations, 670 in administration, 857 in research and development and 1,709 in
selling, marketing, distribution and related administrative support. Of these
employees, 2,372 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. Competition for
qualified, skilled personnel is intense in the medical device industry. There
can be no assurance that the Company will be able in the future to attract and
retain such personnel.

Seasonality

The Company's business, taken as a whole, is not materially affected by seasonal
factors.


                                       17
   18

Cautionary Statement for Purposes of the Safe Harbor Provisions of the Private
Securities Litigation Reform Act of 1995

This report contains forward-looking statements. The Company desires to take
advantage of the new 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. Several important factors, in addition to the
specific factors discussed in connection with such forward-looking statements
individually, could affect the future results of the Company and could cause
those results to differ materially from those expressed in the forward-looking
statements contained herein. Such additional factors include, among other
things, future economic, competitive and regulatory conditions, demographic
trends, financial market conditions and future business decisions of the Company
and its competitors, all of which are difficult or impossible to predict
accurately and many of which are beyond the control of the Company. Therefore,
the Company wishes to caution each reader of this report to consider carefully
these factors as well as the specific factors discussed with each
forward-looking statement in this report and as disclosed in the Company's
filings with the Securities and Exchange Commission as such 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 herein.

Item 2.  PROPERTIES

The Company's world headquarters are in Natick, Massachusetts. It maintains
additional principal administrative offices in Maple Grove, Minnesota; San Jose,
California; Oakland, New Jersey and Paris, France. The Company's principal
research facilities are located in Natick, Massachusetts; Maple Grove,
Minnesota; Oakland, New Jersey; Miami, Florida; San Jose, California; Redmond,
Washington and Galway, Ireland, and its distribution centers are located in
Watertown, Massachusetts; Maple Grove, Minnesota; Oakland, New Jersey; Beek, The
Netherlands; Tokyo, Japan and Singapore. The Company maintains fourteen major
manufacturing facilities, ten in the United States, one in Ireland, one in
France, one in the Bahamas and one in Denmark. (The Company expects to close
certain of its international manufacturing operations as part of its
Company-wide facilities reorganization and consolidation plans.) Many of these
manufacturing facilities produce and manufacture products for more than one of
the Company's divisions.

The Company owns or has long-term leases on all of its major facilities. The
facilities leased from third parties are subject to leases whose terms expire,
subject to renewal options, between 1997 and 2010 and whose current monthly base
rental payments range from approximately $2,000 to approximately $125,000. One
property in Mansfield, Massachusetts is leased from a realty trust for the
benefit of the Company's Chief Executive Officer and his wife pursuant to a
lease whose term expires, subject to renewal options, in 2001 and whose monthly
base rental payment is approximately $38,000. The mortgage debt on this
property, in the principal amount of approximately $300,000 as of December 31,
1996, is guaranteed by the Company. Some of these leases contain escalation
provisions and require that the Company pay for utilities, taxes, insurance and
maintenance expenses. In addition, some of these leases contain provisions which
give the Company an option to purchase the property under certain conditions.


                                       18
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Although the Company's facilities are adequate to meet its current needs, the
Company has plans to construct and acquire additional space to accommodate its
growth. In keeping with this strategy, the Company completed in 1996
construction of 130,000 square feet of additional workspace at its Galway,
Ireland facility, and recently began construction of an additional 180,000
square feet of workspace at the same facility. The Company commenced
construction of a 248,000 square foot multi-purpose building in Maple Grove,
Minnesota to help consolidate and centralize many of the Company's Minnesota
operations. Similar consolidation plans are being considered for the Company's
Oakland, New Jersey operations and for San Jose, California, where the Company
has already commenced the consolidation of its two Sunnyvale, California
operations into one 160,000 square foot leased site, and where the Company
expects to lease an additional 52,000 square feet of work space. The Company
also intends to expand its Miami, Florida operations by leasing an additional
140,000 square feet of workspace currently under construction adjacent to its
exiting facilities. A 10.8 acre site, with an existing 318,000 square foot
building located adjacent to the Company's headquarters in Natick,
Massachusetts, was acquired in 1996. The Company also entered into a lease with
an option to purchase a 1.3 million square foot warehouse facility in Quincy,
Massachusetts for the purpose, among other things, of centralizing its domestic
distribution center activities.

Item 3.  LEGAL PROCEEDINGS

Note K to the Company's 1996 Consolidated Financial Statements, appearing on
pages F-21 and F-22 thereto, (contained in the Company's 1996 Annual Report to
Shareholders and included in Exhibit 13.1 hereto) is incorporated herein by
reference.

Recent Patent Proceedings

On February 28, 1997, C.R. Bard, Inc. ("Bard") filed a suit for patent
infringement against SCIMED alleging that SCIMED is infringing a patent
assigned to Bard. Bard did not identify any specific SCIMED products in the
complaint. The suit was filed in the U.S. District Court for the District of
New Jersey seeking monetary and injunctive relief. The Company is currently
evaluating the complaint.

On March 13, 1997, the Company (through its subsidiaries) filed suits against
Johnson & Johnson (through its subsidiaries) in The Netherlands, United Kingdom
and Belgium, and on March 17, 1997 filed suit in France, seeking a declaration
of noninfringement for the NIR(TM) 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. On March 18,
1997, the Company (through its subsidiary) filed a similar suit in Germany, but
seeking only a declaration of noninfringement for the NIR stent relative to the
two patents. Most recently, 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 stent relative to one of the European patents
licensed to Ethicon and a declaration of invalidity in relation to that patent
(in Italy and Spain only). Ethicon and other Johnson & Johnson subsidiaries
filed a cross-border suit in The Netherlands on March 17, 1997, alleging that
the NIR stent infringes one of the European patents licensed to Ethicon. In
this action, they requested relief covering Austria, Belgium, France, Greece,
Italy, The Netherlands, Norway, Spain, Sweden, Switzerland and the United
Kingdom. The Company believes that Johnson & Johnson will be filing shortly a
similar cross-border proceeding in The Netherlands with respect to the second
European patent licensed to Ethicon.

On March 13, 1997, the Company (through its subsidiaries) also filed suits in
The Netherlands and the United Kingdom, and on March 17, 1997 filed suit in
France, seeking a declaration of noninfringement for the Company's LEAP(TM)
balloon in relation to a European patent owned by Cordis Corporation, a Johnson
& Johnson subsidiary.

On March 13, 1997, the Company filed a Motion to Intervene in Johnson & Johnson
Interventional Systems Co. et al. v. Cook, Incorporated et al., an action in
the U.S. District Court for the Southern District of Indiana. The motion seeks
intervention for the purpose of modifying the present protective order to
direct the Clerk of Court to retain, and the parties and their counsel not to
destroy, materials and testimony assembled in that action. In addition, the
Company seeks access to such materials and testimony, and access to materials
filed by the parties in that action under seal. On March 17, 1997, the court
temporarily stayed the return of documents from the court to the parties and
ordered the parties to retain documents relating to the proceeding. A final
decision is expected later in 1997.

On May 31, 1994, SCIMED filed a suit for patent infringement against Advanced
Cardiovascular Systems, Inc. ("ACS"), alleging willful infringement of two of
SCIMED'S U.S. patents by ACS' FLOWTRACK-40(TM) and RX ELIPSE(TM) PTCA
catheters. On November 17, 1995, SCIMED filed a suit for patent infringement
against ACS, alleging willful infringement of three of SCIMED'S U.S. patents by
the ACS RX LIFESTREAM(TM) PTCA catheter. Both suits were filed in the U.S.
District Court for the Northern District of California seeking monetary and
injunctive relief. The cases were sent to consolidated arbitration for a
threshold determination of one issue covered by the November 27, 1991
settlement agreement between the parties. On March 14, 1997, the arbitration
panel reached a final determination in the consolidated arbitration. Pursuant
to this determination, the Company expects to continue its action as to the
ELIPSE product and to dismiss the actions as to the FLOWTRACK and LIFESTREAM
products, as set forth in a supplemental amended complaint filed on March 24, 
1997.

The Company is involved in various other 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 which, individually
or in the aggregate, could have a material effect on the financial condition,
operations or cash flows of the Company.

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.


                                       19
   20
Item 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None.


                                       20
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                DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY

The Directors and executive officers of the Company as of December 31, 1996 are
as follows:

Name                       Age              Position
- ----                       ---              --------
John E. Abele               60     Director, Founder Chairman
Charles J. Aschauer, Jr.    68     Director, Retired Executive Vice 
                                   President and Director of
                                   Abbott Laboratories
Randall F. Bellows          68     Director, Retired Executive Vice President of
                                   Cobe Laboratories, Inc.
Michael Berman              39     President--SCIMED and Group President--
                                   Cardiology Businesses
Lawrence C. Best            46     Senior Vice President--Finance & 
                                   Administration and Chief Financial Officer
Joseph A. Ciffolillo        58     Director, Retired Executive Vice President 
                                   and Chief Operating Officer of Boston 
                                   Scientific Corporation
J. Daniel Cole              50     Senior Vice President and
                                   Group President--Vascular Businesses
James M. Corbett            38     President--Boston Scientific International
Joel L. Fleishman           62     Director, President of The Atlantic 
                                   Philanthropic Service Company, Inc. and 
                                   Professor of Law and Public Policy, Duke
                                   University
Lawrence L. Horsch          62     Director, Chairman of Eagle Management & 
                                   Financial Corp.
Paul A. LaViolette          39     Senior Vice President and
                                   Group President--Nonvascular Businesses
C. Michael Mabrey           55     Senior Vice President--Operations
Robert G. MacLean           53     Senior Vice President--Human Resources
N.J. Nicholas, Jr.          57     Director, Private Investor
Peter M. Nicholas           55     Director, Founder, Chief Executive Officer 
                                   and Chairman of the Board
Arthur L. Rosenthal         50     Senior Vice President and Chief Development 
                                   Officer
Paul W. Sandman             49     Senior Vice President, Secretary and General
                                   Counsel
Dale A. Spencer             51     Director, Former Executive Vice President of 
                                   Boston Scientific Corporation

Mr. Aschauer , Mr. Fleishman, Mr. Horsch and Mr. N.J. Nicholas, Jr. serve on the
Audit Committee of the Company. Mr. Aschauer, Mr. Bellows and Mr. Fleishman
serve on the Compensation Committee of the Company.

John E. Abele, a co-founder of the Company, has been a Director of the Company
since 1979 and was Co-Chairman from 1979 to 1995. As of February 1995, Mr. Abele
was elected to the position of Founder Chairman, Office of the Chairman. 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 received a B.A. degree from Amherst College.


                                       21
   22

Charles J. Aschauer, Jr. joined the Company in May 1992 as a Director. Mr.
Aschauer has been retired since April 1989. From 1971 to 1989, Mr. Aschauer was
responsible for Abbott Laboratories' Hospital Products business and retired as
an Executive Vice President and director of Abbott Laboratories. Mr. Aschauer
received a B.B.A. degree from Northwestern University, and a certificate in
International Business Administration from Centre d'Etudes Industrielles in
Geneva, Switzerland.

Randall F. Bellows joined the Company as a Director in February 1995. Mr.
Bellows is a retired Founder and Executive Vice President of Cobe Laboratories,
Inc., a medical device manufacturer, a post he held from 1964 to 1990, and has
served as a director of Cobe since 1964. He was also a director of SCIMED from
1992 to February 1995, and of Ultimate Electronics Inc. since January 1995. Mr.
Bellows received a B.A. degree from the University of Minnesota.

Michael Berman joined the Company as Vice President of Sales and Marketing of
SCIMED in February 1995. In June 1995, Mr. Berman became President of SCIMED and
in December 1996, he was elected to the position of Group President--Cardiology
Businesses. Mr. Berman served as SCIMED's Vice President of Sales and Marketing,
from January 1995 to June 1995, Vice President and Business Manager of New
Modalities, from July 1993 to January 1995, and Vice President of Marketing,
from July 1989 to June 1993. Mr. Berman received B.S. and M.B.A. degrees from
Cornell University.

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 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. In
1988, he was also named President of Microvasive, and in 1989 he became
Executive Vice President and Chief Operating Officer of the Company. In 1992,
Mr. Ciffolillo became a Director of the Company. In April 1996, he retired from
his position as an executive officer of the Company, but continues to serve as a
Director. From 1962 to 1982, Mr. Ciffolillo was employed by Johnson & Johnson in
a variety of capacities, including Senior Vice President of Codman & Shurtleff,
Inc., a Johnson & Johnson company, and President of Johnson & Johnson Orthopedic
Company. Mr. Ciffolillo also serves as a director of CompDent Corporation,
CardioThoracic Systems, Inc. and Innovasive Devices, Inc. Mr. Ciffolillo
received a B.A. degree from Bucknell University and serves as a trustee for that
institution.

J. Daniel Cole joined the Company as Senior Vice President and Group
President--Vascular Businesses in February 1995. Previously, he had been
President since 1994, Chief Operating Officer since 1993, and Executive Vice
President from April 1993 to May 1994, of SCIMED. From 1990 to 1993, Mr. Cole
was President of Baxter International's Edwards Critical Care Division, a
manufacturer of hemodynamic and pressure monitoring products, and from 1987 to
1990 of Baxter's Minimally invasive Surgery Division, a manufacturer of vascular
surgery and interventional cardiovascular products. Mr. Cole received his B.S.E.
degree from the University of Kansas and a masters degree in engineering from
the U.S. Naval Postgraduate School. After 



                                       22
   23

completing his military service as a Navy pilot, Mr. Cole earned an M.B.A.
degree from the University of California at Los Angeles (UCLA).

James M. Corbett joined the Company as Vice President--International and as
President--Boston Scientific International in February 1995. Previously, he
served as Vice President and Business Manager of SCIMED International, from
October 1992 to February 1995. Prior to joining SCIMED, Mr. Corbett served as
General Manager for Baxter Japan, based in Tokyo, responsible for Baxter's
Cardiovascular Business from December 1989 to October 1992, and held a series of
sales and marketing positions with the Baxter/American Hospital Supply
Organization from 1982 to 1989. Mr. Corbett received a B.S. degree in business
from the University of Kansas.

Joel L. Fleishman joined the Company in October 1992 as a Director. Mr.
Fleishman became President of The Atlantic Philanthropic Service Company, Inc.
in September 1993. 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 a
founding director of Duke University's Terry Sanford Institute of Public Policy.
Mr. Fleishman also serves as Chairman of the Board of Trustees of the Urban
Institute. Mr. Fleishman received A.B., M.A. and J.D. degrees from the
University of North Carolina at Chapel Hill, and an L.L.M. degree from Yale
University.

Lawrence L. Horsch joined the Company as a Director in February, 1995.
Previously, he had been Chairman of the Board of SCIMED from 1977 to June 1994
and a director through February 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., an apparel
company that filed for protection under Chapter 11 of the Federal Bankruptcy
Code in July 1991 and emerged from bankruptcy in September 1991, from 1987 to
1990. 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 in January 1994 as President, Boston
Scientific International, and Vice President--International. In February 1995,
Mr. LaViolette was elected to the position of Senior Vice President and Group
President--Nonvascular Businesses. 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.

C. Michael Mabrey joined the Company in 1987 as Vice President--Operations of
the Medi-Tech division. From March 1988 to February 1989, he was the Vice
President, Operations of the Medical Device Group of the Company. Mr. Mabrey is
currently Senior Vice President--Operations of the Company, a position he has
held since February 1989. Prior to joining the Company, Mr. Mabrey was Vice
President, Operations of the Medical Products Group of Baxter Healthcare
Corporation. Mr. Mabrey received a B.S. degree from Southwest Missouri State
University.


                                       23
   24

Robert G. MacLean joined the Company in April 1996 as Senior Vice
President--Human Resources. 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 bachelor and masters degrees
and completed his doctoral studies in economics from Stanford University.

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 of Bankers Trust
New York Corporation. 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 and Chief Executive Officer of
the Company.

Peter M. Nicholas, a co-founder of the Company, has been the Chief Executive
Officer and a Director of the Company since 1979 and Co-Chairman of the Board
from 1979 to 1995. In February 1995, Mr. Nicholas was elected to the position of
Chairman of the Board. 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 also a trustee
of Duke University. 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.

Dr. Arthur L. Rosenthal joined the Company in January 1994 as Senior Vice
President and Chief Development Officer. Prior to joining the Company, he was
Vice President--Research & Development, at Johnson & Johnson Medical, Inc., in
Arlington, Texas, where he was responsible for new products, research, clinical,
regulatory and quality assurance from April 1990 to January 1994. From August
1982 through April 1990, Dr. Rosenthal worked at Davol, Inc., a division of C.R.
Bard, first as Vice President--Research & Development until June 1989, and then
as Vice President--Specialty Access Products from June 1989 through April 1990.
Dr. Rosenthal received his B.A. in bacteriology from the University of
Connecticut, and his Ph.D. in biochemistry from the University of Massachusetts.

Paul W. Sandman joined the Company in May 1993 as Senior Vice President,
Secretary and General Counsel. Prior to joining the Company, he was Senior Vice
President, General Counsel and Secretary of Wang Laboratories, Inc. (a computer
company that filed a petition for reorganization under Chapter 11 of the Federal
Bankruptcy Code in August 1992 and emerged from bankruptcy in December 1993)
from March 1992 through April 1993, where he was responsible for legal affairs.
Prior to March 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.

Dale A. Spencer joined the Company as a Director and Executive Vice President,
Office of the Chairman, in February 1995. Previously, he had been Chairman of
the Board since 1994, Chief Executive Officer since 1986, and President since
1982, of SCIMED. In March 1996, Mr. 



                                       24
   25

Spencer resigned from his position as an executive officer of the Company, but
continues to serve as a Director to, and a part-time employee of, the Company.
Mr. Spencer received a B.S.E. degree from the University of Maine and an M.B.A.
degree from Southern Illinois University.


                                       25
   26

                                     PART II
- ------------------------------------------------------------------------------

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

The information set forth under the caption "Market for the Company's Common
Stock and Related Matters" included in the Company's 1996 Consolidated Financial
Statements (contained in the Company's 1996 Annual Report to Shareholders and
included in Exhibit 13.1 filed herewith) is incorporated herein by reference.

The closing price of the Company's Common Stock as reported by The Wall Street
Journal on March 14, 1997 was $64.75.

Item 6.  SELECTED FINANCIAL DATA

The information set forth under the caption "Five-Year Selected Financial Data"
included in the Company's 1996 Consolidated Financial Statements (contained in
the Company's 1996 Annual Report to Shareholders and included in 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 1996 Consolidated Financial Statements (contained in
the Company's 1996 Annual Report to Shareholders and included in Exhibit 13.1
filed herewith) are 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 1996 Consolidated Financial Statements (contained in
the Company's 1996 Annual Report to Shareholders and included in 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 1996 Consolidated Financial Statements
(contained in the Company's 1996 Annual Report to Shareholders and included in
Exhibit 13.1 filed herewith) are incorporated herein by reference.

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

None.


                                       26
   27

                                    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 before April 30, 1997 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
before April 30, 1997 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 before April 30, 1997 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 before April 30, 1997 are incorporated herein by
reference.



                                       27
   28

                                     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  -- 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 and 3.3. 
            *10.1  -- Boston Scientific Corporation 1992 Long-Term Incentive
                      Plan, as amended. 
            *10.2  -- Boston Scientific Corporation 1992 Non-Employee
                      Directors' Stock Option Plan, as amended. 
            *10.3  -- Boston Scientific Corporation 1995 Long-Term Incentive
                      Plan, as amended. 
             10.4  -- 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).


                                       28
   29

           Exhibit
             No.                            Title
           -------                          -----
            10.5   -- 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). 
            10.6   -- 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).
            10.7   -- 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). 
            10.8   -- Heart Technology, Inc. 1992 Stock Option Plan for
                      Non-Employee Directors (Exhibit 4.6, Registration No.
                      33-99766 which was incorporated by reference to Exhibit
                      10.5 to the Registration Statement on Form S-1 of Heart
                      Technology, Registration No. 33-45203). 
            10.9   -- Heart Technology, Inc. 1995 Stock and Incentive Plan
                      (Exhibit 4.7, Registration No. 33-99766 which was
                      incorporated by reference to Exhibit 10.4 to the Quarterly
                      Report on 10-Q/A of Heart Technology for its fiscal
                      quarter ended June 30, 1995, filed on August 30, 1995,
                      File No. 0-19812). 
            10.10  -- Cardiovascular Imaging Systems, Inc. 1987 Incentive
                      Stock Option Plan, as amended (Exhibit 4.2, Registration
                      No. 33-93790 which was incorporated by reference to CVIS's
                      Registration Statement on Form S-1 filed on March 11,
                      1992, Registration No. 33-46330). 
            10.11  -- EP Technologies, Inc. 1988 Stock Plan (Exhibit 4.7,
                      Registration No. 33-80265 which was incorporated by
                      reference to EPT's Registration Statement on Form S-8,
                      File No. 33-67020). 
            10.12  -- 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). 
            10.13  -- EP Technologies, Inc. 1992 Stock Option Grant to Dr.
                      Terry E. Spraker, (Exhibit 4.8, Registration No. 33-80265
                      which was incorporated by reference to Exhibit 10.15 to
                      the Annual Report on Form 10-K of EPT for the 1994 Fiscal
                      Year, File No. 0-22060). 
            10.14  -- 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). 
           *10.15  -- Boston Scientific Corporation 401(k) Savings Plan, Amended
                      and Restated, Effective January 1, 1996.


                                       29
   30

           Exhibit
             No.                                Title
          --------                              -----
           *10.16  -- Boston Scientific Corporation Employee Stock Purchase
                      Plan, as amended. 
           *10.17  -- Boston Scientific Corporation Deferred Compensation
                      Plan, Effective January 1, 1996. 
            10.18  -- Form of Credit Agreement, dated as of June 7, 1996,
                      among the Company, The Several Lenders and certain other
                      parties (Exhibit 10.1, Quarterly Report on Form 10-Q for
                      the quarter ended June 30, 1996, File No. 1-11083). 
            10.19  -- Form of Indemnification Agreement between the Company
                      and certain Directors and Officers (Exhibit 10.16,
                      Registration No. 33-46980). 
            10.20  -- 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). 
            10.21  -- Employment Agreement, dated as of November 8, 1995,
                      among the Company, SCIMED and Dale A. Spencer (Exhibit 10,
                      Registration No. 33-88648), as amended by Amendment No. 1,
                      dated as of November 22, 1995, to that certain Employment
                      Agreement (Exhibit 10.19, Annual Report Form 10-K for the
                      year ended December 31, 1995, File No. 1-11083). 
            10.22  -- Change in Control Employment Agreement, dated as of
                      September 30, 1994, between SCIMED and J. Daniel Cole,
                      including executive acknowledgment from the Company dated
                      November 8, 1994 (Exhibit 10.20, Annual Report on Form
                      10-K for the year ended December 31, 1995, File No.
                      1-11083). 
           *10.23  -- Form of Retention Agreement between the Company and
                      certain Executive Officers. 
            10.24  -- 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).
            10.25  -- Agreement and Plan of Merger, dated as of January 20,
                      1997, among the Company, Patriot Acquisition Corp. and
                      Target (Exhibit 2, Registration No. 333-22581).
           *11     -- Statement regarding computation of per share earnings.
           *13.1   -- The Company's 1996 Consolidated Financial Statements
                      and the inside back cover of the Company's Annual Report
                      for the year ended December 31, 1996. 
            13.2   -- Opinion of Ernst & Young LLP (included in the Company's
                      Annual Report for the year ended December 31, 1996, filed
                      as Exhibit 13.1 hereto). 
           *13.3   -- Opinion of Arthur Andersen LLP. 
           *13.4   -- Opinion of Deloitte & Touche LLP. 
           *13.5   -- Opinion of Price Waterhouse LLP.

                                       30
   31


           Exhibit
             No.                              Title
           -------                            -----

            *21    -- List of the Company's subsidiaries as of March 20,
                      1997. Each subsidiary does business under the corporate
                      name indicated. 
            *23.1  -- Consent of Ernst & Young LLP.
            *23.2  -- Consent of Arthur Andersen LLP.
            *23.3  -- Consent of Deloitte & Touche LLP.
            *23.4  -- Consent of Price Waterhouse LLP. 
            *27.1  -- Financial Data Schedule

     (b) Reports on Form 8-K.

         The  following  Reports on Form 8-K were filed during the quarter ended
         December 31, 1996 and the quarter ended March 31, 1997:

             Current  Report on Form 8-K dated January 20, 1997  announcing  the
             Company's execution of a merger agreement with Target.


                                       31
   32
                                    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 28, 1997

                                              BOSTON SCIENTIFIC CORPORATION

                                              By: 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 28, 1997            /s/  JOHN E. ABELE
                                 ------------------
                                 John E. Abele
                                 Director, Founder

Dated: March 28, 1997            /s/  CHARLES J. ASCHAUER, JR.
                                 -----------------------------
                                 Charles J. Aschauer, Jr.
                                 Director

Dated: March 28, 1997            /s/  RANDALL F. BELLOWS
                                 -----------------------
                                 Randall F. Bellows
                                 Director

Dated: March 28, 1997            /s/  LAWRENCE C. BEST
                                 ---------------------
                                 Lawrence C. Best
                                 Senior Vice President--Finance and
                                 Administration and Chief Financial Officer
                                 (Principal Financial and Accounting Officer)

Dated: March 28, 1997            /s/  JOSEPH A. CIFFOLILLO
                                 -------------------------
                                 Joseph A. Ciffolillo
                                 Director


Dated: March 28, 1997            /s/  JOEL L. FLEISHMAN
                                 ----------------------
                                 Joel L. Fleishman
                                 Director


   33

Dated: March 28, 1997            /s/  LAWRENCE L. HORSCH
                                 -----------------------
                                 Lawrence L. Horsch
                                 Director

Dated: March 28, 1997            /s/  N.J. NICHOLAS, JR.
                                 -----------------------
                                 N.J. Nicholas, Jr.
                                 Director

Dated: March 28, 1997            /s/  PETER M. NICHOLAS
                                 ----------------------
                                 Peter M. Nicholas
                                 Director, Founder, Chairman, President and 
                                 Chief Executive Officer
                                 (Principal Executive Officer)

Dated: March 28, 1997            /s/  DALE A. SPENCER
                                 --------------------
                                 Dale A. Spencer
                                 Director



   34

                          FINANCIAL STATEMENT SCHEDULE

The following additional consolidated financial statement schedule should be
considered in conjunction with the Company's 1996 Consolidated Financial
Statements (contained in the Company's 1996 Annual Report to Shareholders and
included in 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.

                                      
   35

                                                                     Schedule II

                        VALUATION AND QUALIFYING ACCOUNTS




                                                             Additions
                                           -----------------------------------------------
                                           Balance at       Charged to      Charged to                        Balance at
                                            Beginning       Costs and          Other                            End of
Description                                 of Period        Expenses       Accounts---     Deductions          Period
- -----------                                -------------------------------------------------------------------------------
                                                                        (in thousands)
                                                                                                     
Year Ended December 31, 1996                 
Reserves and allowances deducted from
    asset accounts:
    Allowance for uncollectible
      amounts.............................    $6,372           $2,797          $5,183 (1)        $115 (2)       $14,237
Year Ended December 31, 1995                 
Reserves and allowances deducted from        
    asset accounts:                          
    Allowance for uncollectible              
      amounts.............................    $3,987           $1,789            $957 (1)        $361 (2)        $6,372
Year Ended December 31, 1994                 
Reserves and allowances deducted from        
    asset accounts:                          
    Allowance for uncollectible              
      amounts.............................    $2,792             $838            $392 (1)         $35 (2)        $3,987
                                                
                                     

(1)  Charges for sales return  allowances,  net of actual sales returns.  In the
     year ended December 31, 1996,  amount  includes  $2,074 related to purchase
     accounting adjustments.

(2)  Uncollectible accounts written off, net of recoveries.


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