Boston Scientific's BBB, A-2 Ratings Affirmed by S&P.

NEW YORK--(BUSINESS WIRE)--Standard & Poor's CreditWire 11/4/98-- Standard & Poor's today affirmed its triple-`B' senior unsecured debt, bank loan, and corporate credit ratings on Boston Scientific Corp. and its `A-2' commercial paper rating on the company. The outlook is stable.

The company's investment-grade ratings continue to reflect its leading positions in a broad range of medical devices, offset by challenges associated with controlling operations following a frenetic acquisition spree.

Natick, Mass.-based Boston Scientific is a designer, manufacturer, and supplier of medical devices and maintains leading positions in several segments of the minimally invasive surgery device markets, including angioplasty catheters, intravascular imaging, and vascular grafting products. In response to customers' desire to deal with fewer vendors, Boston Scientific has been an active consolidator in this highly fragmented industry. Acquisitions, totaling nearly $6 billion over the last four years, have greatly broadened its product offerings and improved its market positions. The September 1998 acquisition of Schneider provides important intellectual property, a leading peripheral stent product, and augments Boston Scientific's cardiac catheterization laboratory product portfolio. Growth approaching 20% per year is bolstered by a strong commitment to research and development. The company's diversity, leading market positions, and strong pipeline of new products provide some protection against changes in technology.

Still, Boston will remain challenged to control and integrate diverse global operations. The announcement that the company discovered business irregularities in its Japanese operations highlights this risk. Moreover, the company participates in markets that are characterized by rapid technological changes. In addition, lackluster international economies are constraining pricing flexibility. The company is highly exposed to economic conditions in Japan, where it derives about 20% of its sales. Furthermore, the company is exposed to overall currency changes. Nevertheless, Standard & Poor's expects the company to generate operating margins (before depreciation and amortization) in excess of 30%.

OUTLOOK: STABLE

Standard & Poor's expects Boston Scientific to issue some equity and use its free operating cash flow to reduce its expanded debt burden in the near term. The rating does not incorporate the expectation that the business irregularities discovered in Japan reflect a systemic problem, Standard & Poor's said.---CreditWire