Introduction

Boston Scientific Corporation is a worldwide developer, manufacturer and marketer of medical devices that are used in a broad range of interventional medical specialties. Our 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. We accomplish this mission through the continuing refinement of existing products and procedures and the investigation and development of new technologies that can reduce risk, trauma, cost, procedure time and the need for aftercare. Our approach to innovation combines internally developed products and technologies with those we obtain externally through our acquisitions and alliances. The growth and success of our organization is dependent upon the shared values of our people. Our quality policy, applicable to all employees, is "I improve the quality of patient care and all things Boston Scientific." This personal commitment connects our people with the vision and mission of Boston Scientific.

Financial Summary

Three Months Ended June 30, 2008

Our net sales for the second quarter of 2008 were $2.024 billion, as compared to $2.071 billion for the second quarter of 2007, a decrease of $47 million or two percent. See Quarterly Results section below for a discussion of our net sales for the quarter. Our reported net income for the second quarter of 2008 was $98 million, or $0.07 per diluted share, as compared to net income of $115 million, or $0.08 per diluted share, for the second quarter of 2007. Our reported results for the second quarter of 2008 included acquisition-, divestiture-, and restructuring-related charges (after-tax) of $98 million, or $0.06 per share, consisting of: losses of $64 million associated with the divestiture of certain non-strategic investments, $15 million of restructuring-related costs, and charges of $19 million for purchased research and development associated with our acquisition of CryoCor, Inc. Our reported results for the second quarter of 2007 did not include any significant acquisition-, divestiture- or restructuring-related charges.

Six Months Ended June 30, 2008

Our net sales for the first half of 2008 were $4.071 billion, as compared to $4.157 billion for the first half of 2007, a decrease of $86 million or two percent. See Quarterly Results section below for a discussion of our net sales for the first half of 2008. Our reported net income for the first half of 2008 was $420 million, or $0.28 per diluted share, as compared to net income of $235 million, or $0.16 per diluted share, for the first half of 2007. Our reported results for the first half of 2008 included acquisition, divestiture-, and restructuring-related net charges (after-tax) of $23 million, or $0.01 per share, consisting of: a $51 million net credit associated with gains on the divestiture of certain of our non-strategic businesses and investments, $47 million of restructuring-related costs, and charges of $27 million for purchased research and development. Our reported results for the first half of 2007 included acquisition-related charges (after-tax) of $22 million, or $0.01 per share, consisting primarily of integration costs related to our 2006 acquisition of Guidant Corporation and an adjustment representing a decrease in fair value of the sharing of proceeds feature of the Abbott Laboratories stock purchase discussed in further detail in our 2007 Annual Report on Form 10-K.

Coronary Stent Business

Coronary stent revenue represented approximately 22 percent of our consolidated net sales during the second quarter of 2008, as compared to 24 percent in the second quarter of 2007. We estimate that the worldwide coronary stent market will approximate $4.8 billion in 2008, as compared to approximately $5.0 billion in 2007, and estimate that drug-eluting stents will represent approximately 80 percent of the dollar value of worldwide coronary stent market sales in 2008, as they did in 2007. Market size is driven primarily by the number of percutaneous coronary intervention (PCI) procedures performed; the number of devices used per procedure; average drug-eluting stent selling prices; and the drug-eluting stent penetration rate (a measure of the mix between bare-metal and drug-eluting stents used across procedures). Uncertainty regarding the safety and efficacy of drug-eluting stents, as well as the increased perceived risk of late stent thrombosis 1 following the use of drug-eluting stents, has contributed to a decline in the worldwide drug-eluting stent market size as compared to prior years. However, data addressing the risk of late stent thrombosis and supporting the safety of drug-eluting stent systems appear to have had a stabilizing effect on the size of the drug-eluting stent market, as cardiologists regain confidence in this technology. The second quarter of 2008 represented the second consecutive quarter of increasing penetration rates in the U.S., estimated to be 66 percent, as compared to 63 percent for the first quarter of 2008 and 62 percent for the fourth quarter of 2007. We believe that these increases, along with an increase in PCI procedural volume, indicate that the health of the U.S. drug-eluting stent market is improving.

The following are the components of our worldwide coronary stent system sales:

                           Three Months Ended                         Three Months Ended
(in millions)                June 30, 2008                              June 30, 2007
                  U.S.        International      Total       U.S.        International      Total
Drug-eluting     $   175     $           207     $  382     $   249     $           188     $  437
Bare-metal            25                  33         58          26                  35         61

                 $   200     $           240     $  440     $   275     $           223     $  498

During the second quarter of 2008, U.S. sales of our drug-eluting stent systems declined $74 million, or 30 percent, to $175 million from $249 million during the second quarter of 2007, due primarily to declines in our share of the market as a result of a recent competitive launch. We believe that our share of the U.S. drug-eluting stent market was 45 percent for the second quarter of 2008, excluding a $22 million reduction in sales as a result of the establishment of sales returns reserves in anticipation of the launch of our TAXUS® Liberté® coronary stent system, as compared to 54 percent for the second quarter of 2007. Until recently, our TAXUS paclitaxel-eluting coronary stent system was one of only two drug-eluting stent products available in the U.S. market. However, late in the first quarter of 2008, Medtronic launched its Endeavor® zotarolimus-eluting coronary stent system and, in July 2008, Abbott Laboratories launched its XIENCE™ V everolimus-eluting coronary stent system, putting increased pressure on our U.S. drug-eluting stent system sales. We expect that our share of the U.S. drug-eluting stent market, as well as unit prices, will continue to be impacted as the market acclimates to new competitive product offerings. Simultaneous with Abbott's U.S. launch of XIENCE V, we launched our PROMUS™ everolimus-eluting coronary stent system, an identical, private-labeled XIENCE V stent system supplied to us by Abbott. We believe that being the only company to offer two distinct drug-eluting stent platforms provides us a considerable advantage in the U.S. drug-eluting stent market and will enable us to achieve a sustainable leadership position in this market.

Under the terms of our supply arrangement with Abbott, the gross profit margin of a PROMUS stent system is significantly lower than that of our TAXUS stent system. Therefore, an increase in PROMUS stent system 1 Late stent thrombosis is the formation of a clot, or thrombus, within the stented area one year or more after implantation of the stent.

During the second quarter of 2008, our international drug-eluting stent system net sales increased $19 million, or ten percent, as compared to the second quarter of 2007. The increase was driven largely by the favorable impact of foreign currency exchange rates, in addition to sales of our TAXUS® Express2™ drug-eluting coronary stent system in Japan, following its launch in May 2007. These increases were partially offset by decreases in our share of the drug-eluting stent market in our Europe/Middle East/Africa (EMEA) region. However, we believe that international PCI procedural volume increased as compared to the second quarter of 2007 and international penetration rates grew as compared to the first quarter of 2008.

Historically, the worldwide coronary stent market has been dynamic and highly competitive with significant market share volatility. In addition, in the ordinary course of our business, we conduct and participate in numerous clinical trials with a variety of study designs, patient populations and trial end points. Unfavorable or inconsistent clinical data from existing or future clinical trials conducted by us, by our competitors or by third parties, or the market's perception of these clinical data, may adversely impact our position in, and share of the drug-eluting stent market and may contribute to increased volatility in the market. In addition, the FDA has informed stent manufacturers of new requirements for clinical trial data for pre-market approval (PMA) applications and post-market surveillance studies for drug-eluting stent products, which could affect our new product launch schedules and increase the cost of product approval and compliance.

We believe that we can achieve a sustainable leadership position within the worldwide drug-eluting stent market for a variety of reasons, including:

· our two drug-eluting stent platform strategy, including our TAXUS® paclitaxel-eluting and PROMUS™ everolimus-eluting coronary stent systems;

· the broad and consistent long-term results of our TAXUS clinical trials, including up to five years of clinical follow up;

· the performance benefits of our current and future technology;

· the strength of our pipeline of drug-eluting stent products, including opportunities to expand indications for use;

· our overall position in the worldwide interventional medicine market and our experienced interventional cardiology sales force; and

· the strength of our clinical, marketing and manufacturing capabilities.

However, a further decline in revenues from our drug-eluting stent systems could continue to have a significant adverse impact on our operating results and operating cash flows. The most significant variables that may impact the size of the drug-eluting stent market and our position within this market include:

· our ability to launch next-generation products and technology features, including our TAXUS® Liberté® paclitaxel-eluting stent system, in the U.S. market;

· our ability to successfully launch our PROMUS™ everolimus-eluting coronary stent system in the U.S. market;

· physician and patient confidence in our technology and attitudes toward drug-eluting stents, including the continued abatement of prior concerns regarding the risk of late stent thrombosis;

· changes in drug-eluting stent penetration rates, the overall number of PCI procedures performed, average number of stents used per procedure, and average selling prices of drug-eluting stent systems;

· variations in clinical results or perceived product performance of our or our competitors' products;

· delayed or limited regulatory approvals and unfavorable reimbursement policies;

· the outcomes of intellectual property litigation;

· our ability to retain key members of our sales force and other key personnel; and

· changes in FDA clinical trial data and post-market surveillance requirements and the associated impact on new product launch schedules and the cost of product approvals and compliance.

Cardiac Rhythm Management Products

Cardiac rhythm management (CRM) product revenue represented approximately 29 percent of our consolidated net sales for the second quarter of 2008, as compared to approximately 25 percent for the second quarter of 2007. We estimate that the worldwide CRM market will approximate $10.8 billion in 2008, as compared to approximately $10.1 billion in 2007, and estimate that U.S. implantable cardioverter defibrillator (ICD) system sales will represent approximately 40 percent of the worldwide CRM market in 2008, as they did in 2007.

The following are the components of our worldwide CRM sales:

                              Three Months Ended                         Three Months Ended
(in millions)                   June 30, 2008                              June 30, 2007
                     U.S.        International      Total       U.S.        International      Total
ICD systems         $   276     $           144     $  420     $   253     $           124     $  377
Pacemaker systems        88                  70        158          79                  68        147

                    $   364     $           214     $  578     $   332     $           192     $  524

Our U.S. sales of ICD systems for the second quarter of 2008 increased $23 million, or nine percent, as compared to the second quarter of 2007. In addition, U.S. sales of our pacemaker systems for the second quarter of 2008 increased $9 million, or 11 percent, as compared to the second quarter of 2007. Our U.S. sales benefited from the launch of new products during the first half of 2008, including the CONFIENT™ ICD system, the LIVIAN™ cardiac resynchronization therapy defibrillator (CRT-D) system, and the ALTRUA™ family of pacemaker systems. International ICD system sales increased $20 million, or 16 percent, in the

Worldwide CRM market growth rates over the past two years, including the U.S. ICD market, have been below those experienced in prior years, resulting primarily from previous industry field actions and from a lack of new indications for use. While we have begun to see modest signs of improvement and expect that growth rates in the worldwide CRM market will improve over time, there can be no assurance that the market will return to its historical growth rates or that we will be able to increase net sales in a timely manner, if at all. The most significant variables that may impact the size of the CRM market and our position within that market include:

· our ability to increase the trust and confidence of the implanting physician community, the referring physician community and prospective patients in our technology;

· future product field actions or new physician advisories by us or our competitors;

· our ability to successfully launch next-generation products and technology in the U.S. market, including our next-generation COGNIS™ CRT-D and TELIGEN™ ICD systems as well as the ALTRUA™ family of pacemaker systems;

· the successful conclusion and positive outcomes of on-going clinical trials that may provide opportunities to expand indications for use;

· variations in clinical results, reliability or product performance of our and our competitors' products;

· delayed or limited regulatory approvals and unfavorable reimbursement policies;

· our ability to retain key members of our sales force and other key personnel;

· new competitive launches;

· average selling prices and the overall number of procedures performed; and

· the outcome of legal proceedings related to our CRM business.

In April 2007, following FDA reinspections of our CRM facilities, we resolved the warning letter issued to Guidant in December 2005 and all associated restrictions were removed. Following the resolution of the warning letter, we received numerous FDA approvals and have since launched several CRM products. In August 2008, we launched our next-generation COGNIS CRT-D and TELIGEN ICD systems in the U.S. We received CE Mark approval for these systems in the first quarter of 2008 and initiated an international launch in June 2008. In addition, during the quarter we launched our ACUITY® Spiral left ventricular lead for use with CRT-Ds and cardiac resynchronization therapy pacemakers (CRT-P) in the U.S., as well as the ALTRUA family of pacemaker systems. We believe that these launches position us for growth within the worldwide CRM market.

Regulatory Compliance

In January 2006, legacy Boston Scientific received a corporate warning letter from the FDA notifying us of serious regulatory problems at three of our facilities and advising us that our corporate-wide corrective action plan relating to three site-specific warning letters issued to us in 2005 was inadequate. We believe we have

There can be no assurances regarding the length of time or cost it will take us to resolve our quality issues to our satisfaction and to the satisfaction of the FDA. If our remedial actions are not satisfactory to the FDA, we may need to devote additional financial and human resources to our efforts, and the FDA may take further regulatory actions. Our inability to resolve these quality issues in a timely manner may further delay product launch schedules, including the anticipated U.S. launch of our next-generation TAXUS® Liberté® drug-eluting stent system, which may weaken our competitive position in the market. We have received an approvable letter for our TAXUS Liberté stent system from the FDA. As a result, we believe that the agency will approve the device upon the resolution of the restrictions imposed by the corporate warning letter.

In addition, enhanced reporting requirements and modifications to our quality systems may result in incremental medical device and vigilance reporting, which could adversely impact physician perception of our products.

Strategic Initiatives

In 2007, we announced several new initiatives designed to enhance short- and long-term shareholder value, including the restructuring of several of our businesses and product franchises; the sale of non-strategic businesses and investments; and significant expense and head count reductions. Our goal is to better align expenses with revenues, while preserving our ability to make needed investments in quality, research and development (R&D), capital and our people that are essential to our long-term success. We expect these initiatives to help provide better focus on our core businesses and priorities, which will strengthen Boston Scientific for the future and position us for increased, sustainable and profitable sales growth. Our plan is to reduce R&D and selling, general and administrative (SG&A) expenses by $475 million to $525 million against a $4.1 billion baseline, which represented our estimated annual R&D and SG&A expenses at the time we committed to these initiatives in 2007. This range represents the annualized run rate amount of reductions we expect to achieve as we exit 2008, as the implementation of these initiatives will take place throughout the year; however, we expect to realize the majority of these savings in 2008. In addition, we expect to reduce our R&D and SG&A expenses by an additional $25 million to $50 million in 2009.

Restructuring

In October 2007, our Board of Directors approved, and we committed to, an expense and head count reduction plan, which we anticipate will result in the elimination of approximately 2,300 positions worldwide. The plan is intended to bring expenses in line with revenues as a part of our initiatives to enhance short- and long-term shareholder value. We initiated activities under the plan in the fourth quarter of 2007 and expect to be substantially complete worldwide by the end of 2008. Refer to Quarterly Results and Note G - Restructuring-related Activities to our unaudited condensed consolidated financial statements included in Item 1 of this Quarterly Report for more information on these costs.

Divestitures

During 2007, we determined that our Auditory, Vascular Surgery, Cardiac Surgery, Venous Access and Fluid Management businesses were no longer strategic to our on-going operations. Therefore, we initiated the process of selling these businesses in 2007, and completed their sale in 2008, as discussed below. We received pre-tax proceeds of $1.288 billion from the sale of these businesses and our TriVascular Endovascular Aortic Repair (EVAR) program, and eliminated approximately an additional 2,000 positions in connection with these divestitures.

Further, in March 2008, we sold our EVAR program obtained in connection with our 2005 acquisition of TriVascular, Inc. for $30 million in cash. We discontinued our EVAR program in 2006. In connection with the sale, we recorded a pre-tax gain of $16 million ($35 million after-tax) in the first quarter of 2008.

In addition, in June 2008, we signed definitive agreements to sell the majority of our investments in, and notes receivable from, certain publicly traded and privately held entities for gross proceeds of approximately $140 million. In connection with these agreements, and the sale of certain other non-strategic investments during the quarter, we recognized pre-tax losses of $96 million ($64 million after-tax) in the second quarter of 2008 and expect to recognize estimated pre-tax gains of approximately $30 million ($20 million after-tax) upon the closing of the transactions during the second half of 2008. Refer to our Other, net discussion, as well as Note D - Investments and Notes Receivable to our unaudited condensed consolidated financial statements included in Item 1 of this Quarterly Report for more information on our investment portfolio activity.

Quarterly Results

Net Sales

In the first quarter of 2008, we reorganized our international structure in order to allow for better utilization of infrastructure and resources. Accordingly, we have revised our reportable segments to reflect the way we currently manage and view our business. We now have three reportable segments based on geographic regions: the United States; EMEA, consisting of Europe, the Middle East and Africa; and Inter-Continental. We combined our Middle East and Africa operations, previously included in our Inter-Continental segment, with Europe to form a new EMEA region and merged our former Asia Pacific region into our Inter-Continental segment. The following table provides our second quarter net sales by region and the relative change on an as reported and constant currency basis. We have reclassified previously reported 2007 results to be consistent with the 2008 presentation.

                                                             Change
                        Three Months Ended         As Reported       Constant
                             June 30,               Currency         Currency
(in millions)            2008          2007           Basis            Basis

United States         $    1,088      $ 1,118                (3 %)          (3 %)

EMEA                         531          457                16 %            3 %
Inter-Continental            386          357                 8 %           (3 %)
International                917          814                13 %            0 %

Divested Businesses           19          139               N/A            N/A

Worldwide             $    2,024      $ 2,071                (2 %)          (7 %)

                                                           Change
                        Six Months Ended         As Reported       Constant
                            June 30,              Currency         Currency
(in millions)           2008         2007           Basis            Basis

United States         $   2,205     $ 2,287                (4 %)          (4 %)

EMEA                      1,039         926                12 %           (1 %)
Inter-Continental           776         670                16 %            4 %
International             1,815       1,596                14 %            1 %

Divested Businesses          51         274               N/A            N/A

Worldwide             $   4,071     $ 4,157                (2 %)          (7 %)