<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 1994 COMMISSION FILE NUMBER 1-4802
BECTON, DICKINSON AND COMPANY
(Exact name of registrant as specified in its charter)
NEW JERSEY 22-0760120
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
1 BECTON DRIVE
FRANKLIN LAKES, NEW JERSEY 07417-1880
(Address of principal executive (Zip Code)
offices)
(201) 847-6800
(Registrant's telephone number, including area code)
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
NAME OF EACH EXCHANGE ON WHICH
TITLE OF EACH CLASS REGISTERED
Common Stock, Par Value $1.00 New York Stock Exchange
Preferred Stock Purchase Rights New York Stock Exchange
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
NONE
Indicate by check mark whether the registrant (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
registrant 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 registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [X]
As of November 30, 1994, 68,307,934 shares of the registrant's common stock
were outstanding and the aggregate market value of such common stock held by
nonaffiliates of the registrant was approximately $3,215,990,000.
DOCUMENTS INCORPORATED BY REFERENCE
(1) Portions of the registrant's Annual Report to Shareholders for the fiscal
year ended September 30, 1994 are incorporated by reference into Parts I and II
hereof.
(2) Portions of the registrant's Proxy Statement for the Annual Meeting of
Shareholders to be held February 14, 1995 are incorporated by reference into
Part III hereof.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
PART I
ITEM 1. BUSINESS.
GENERAL
Becton, Dickinson and Company was incorporated under the laws of the State of
New Jersey in November 1906, as successor to a New York business started in
1897. Its executive offices are located at 1 Becton Drive, Franklin Lakes, New
Jersey 07417-1880 and its telephone number is (201) 847-6800. All references
herein to "the Company" refer to Becton, Dickinson and Company and its domestic
and foreign subsidiaries unless otherwise indicated by the context.
The Company is engaged principally in the manufacture and sale of a broad
line of medical supplies and devices and diagnostic systems used by health care
professionals, medical research institutions and the general public.
BUSINESS SEGMENTS AND GEOGRAPHIC AREAS
The Company's operations are comprised of two worldwide business segments,
Medical Supplies and Devices, and Diagnostic Systems. The countries in which
the Company has local revenue-generating operations have been combined into the
following geographic areas: United States (including Puerto Rico); Europe; and
Other (which is comprised of Canada, Latin America, Japan and Asia Pacific).
Information with respect to revenues, operating income and identifiable
assets attributable to each of the Company's business segments and geographic
areas of operation, as well as capital expenditures and depreciation and
amortization attributable to each of the Company's business segments, appears
on pages 32-33 of the Company's Annual Report to Shareholders for the fiscal
year ended September 30, 1994 (the "1994 Annual Report"), and is incorporated
herein by reference.
MEDICAL SUPPLIES AND DEVICES SEGMENT
The major products in this segment are hypodermic products, specially
designed devices for diabetes care, prefillable drug delivery systems, vascular
access products and surgical devices (including disposable scrubs, surgical
gloves, specialty and surgical blades and pre-surgery patient prep kits).
This segment also includes specialty needles, drug infusion systems, elastic
support products, thermometers, examination gloves and contract packaging
services. The Company's contract packaging services are provided to
pharmaceutical, cosmetic and toiletry companies.
DIAGNOSTIC SYSTEMS SEGMENT
The major products in this segment are classical and instrumented
microbiology products, blood collection products, instrumentation systems for
cellular analysis, including flow cytometry and cellular imaging products,
tissue culture labware, hematology instruments and other diagnostic systems,
including immunodiagnostic test kits.
1
<PAGE>
FOREIGN OPERATIONS
The Company's products are manufactured and sold worldwide. The principal
markets for the Company's products outside the United States are Europe, Japan,
Mexico, Asia Pacific, Canada and Brazil. The principal products sold by the
Company outside of the United States are hypodermic needles and syringes,
diagnostic systems, VACUTAINER (R) brand blood collection products, HYPAK (R)
brand prefillable syringe systems, and intravenous catheters. The Company has
manufacturing operations in Australia, Belgium, Brazil, Canada, France,
Germany, Ireland, Japan, Mexico, Singapore, Spain and the United Kingdom.
Foreign economic conditions and exchange rate fluctuations have caused the
profitability on foreign revenues to fluctuate more than on domestic revenues.
The Company believes its foreign business involves greater risk than its
domestic business due to the foregoing factors as well as local political and
governmental conditions.
REVENUES AND DISTRIBUTION
The Company's products and services are marketed in the United States both
through independent distribution channels and directly to end-users. The
Company's products are marketed outside the United States through independent
distributors and sales representatives, and in some markets directly to end-
users. Sales to a distributor, which supplies the Company's products to many
end-users, accounted for approximately 12% of total Company revenues in fiscal
1994, and were from both business segments. Order backlog is not material to
the Company's business inasmuch as orders for the Company's products are
generally received and filled on a current basis, except for items temporarily
out of stock. Substantially all revenue is recognized when products are shipped
to customers.
RESEARCH AND DEVELOPMENT
The Company conducts its research and development activities at its operating
units, its Research Center in Research Triangle Park, North Carolina and in
collaboration with selected universities and medical centers. The Company also
retains individual consultants to support its efforts in specialized fields.
The Company spent $144,227,000 on research and development during the fiscal
year ended September 30, 1994 and $139,141,000 and $125,207,000, respectively,
during the two immediately preceding fiscal years.
COMPETITION
A number of companies, some of which are more specialized than the Company,
compete in the medical technology field. In each such case, competition
involves only a part of the Company's product lines. Competition in the
Company's markets is based on a combination of factors including price,
quality, service, reputation, distribution and promotion. Ongoing investments
in research, quality management, quality and product improvement and
productivity improvement are required to maintain an advantage in the
competitive environments in which the Company operates.
New companies have entered the medical technology field and established
companies have diversified their business activities into this area. Other
firms engaged in the distribution of medical technology products have become
manufacturers as well. Some of the Company's competitors have greater financial
resources than the Company. The Company is also faced with competition from
products manufactured outside the United States.
PATENTS, TRADEMARKS AND LICENSES
The Company owns numerous patents, patent applications and trademarks in the
United States and other countries. The Company is also licensed under domestic
and foreign patents, patent
2
<PAGE>
applications and trademarks owned by others. In the aggregate, these patents,
patent applications, trademarks and licenses are of material importance to the
Company's business.
RAW MATERIALS
The Company purchases many different types of raw materials including
plastics, glass, metals, yarn and yarn goods, paper products, agricultural
products, electronic and mechanical sub-assemblies and various biological,
chemical and petrochemical products. All but a few of the Company's principal
raw materials are available from multiple sources.
REGULATION
The Company's medical technology products and operations are subject to
regulation by the federal Food and Drug Administration and various other
federal and state agencies, as well as by a number of foreign governmental
agencies. The Company believes it is in compliance in all material respects
with the regulations promulgated by such agencies, and that such compliance has
not had, and is not expected to have, a material adverse effect on its
business.
The Company also believes that its operations comply in all material respects
with applicable environmental laws and regulations. Such compliance has not
had, and is not expected to have, a material adverse effect on the Company's
capital expenditures, earnings or competitive position.
EMPLOYEES
As of September 30, 1994, the Company had approximately 18,600 employees, of
whom approximately 9,900 were employed in the United States. The Company
believes that its employee relations are satisfactory.
ITEM 2. PROPERTIES.
The executive offices of the Company are located in Franklin Lakes, New
Jersey. The Company owns and leases approximately 11,670,000 square feet of
manufacturing, warehousing, administrative and research facilities throughout
the world. The domestic facilities, including Puerto Rico, comprise
approximately 6,378,000 square feet of owned and 1,726,000 square feet of
leased space. The foreign facilities comprise approximately 2,500,000 square
feet of owned and 1,066,000 square feet of leased space. Sales offices and
distribution centers included in the total square footage are also located
throughout the world.
Operations in both of the Company's business segments are carried on at both
domestic and foreign locations. Primarily at foreign locations, facilities
often serve both business segments and are used for multiple purposes, such as
administrative/sales, manufacturing and/or warehousing/distribution. The
Company generally seeks to own its manufacturing facilities, although some,
particularly at foreign locations, are leased. Most of the Company's
administrative, sales and warehousing/distribution facilities are leased.
The Company believes that its facilities are of good construction and in good
physical condition, are suitable and adequate for the operations conducted at
those facilities, and are, with minor exceptions, fully utilized and operating
at normal capacity.
The domestic facilities are grouped as follows:
--Eastern Sector includes facilities in Connecticut, Georgia, Maryland,
Massachusetts, New Jersey, New York, North Carolina, South Carolina and
Puerto Rico and is comprised of approximately 3,931,000 square feet of
owned and 1,037,000 square feet of leased space.
3
<PAGE>
--Central Sector includes facilities in Illinois, Indiana, Michigan,
Missouri, Nebraska, Ohio, Texas and Wisconsin and is comprised of
approximately 1,043,000 square feet of owned and 481,000 square feet of
leased space.
--Western Sector includes facilities in California and Utah and is
comprised of approximately 1,404,000 square feet of owned and 208,000
square feet of leased space.
The foreign facilities are grouped as follows:
--Canada includes approximately 161,000 square feet of owned and 46,000
square feet of leased space.
--Europe includes facilities in Belgium, France, Germany, Greece, Ireland,
Italy, the Netherlands, Spain, Sweden, Switzerland and the United Kingdom
and is comprised of approximately 1,315,000 square feet of owned and
725,000 square feet of leased space.
--Latin America includes facilities in Brazil, Colombia, Mexico and Panama
and is comprised of approximately 629,000 square feet of owned and
145,000 square feet of leased space.
--Asia Pacific includes facilities in Australia, Hong Kong, Japan, Korea,
Malaysia, Philippines, Singapore, Taiwan and Thailand and is comprised of
approximately 395,000 square feet of owned and 150,000 square feet of
leased space.
The table below summarizes property information by business segment:
<TABLE>
<CAPTION>
BUSINESS SEGMENT
---------------------------------------------------------------
MEDICAL
SUPPLIES AND DIAGNOSTIC
CATEGORY DEVICES SYSTEMS MIXED(A) TOTAL
-------- ------------ ---------- --------- -----
<S> <C> <C> <C> <C>
Owned
Facilities............. 20 22 17 59
Square feet............ 3,522,000 2,823,000 2,533,000 8,878,000
Manufacturing (B)...... 1,968,000(20) 1,245,000(16) 595,000(6) 3,808,000(42)
Leased
Facilities............. 22 9 60 91
Square feet............ 493,000 262,000 2,037,000 2,792,000
Manufacturing (B)...... 217,000(6) 67,000(5) 27,000(4) 311,000(15)
Total
Facilities............. 42 31 77 150
Square feet............ 4,015,000 3,085,000 4,570,000 11,670,000
Manufacturing (B)...... 2,185,000(26) 1,312,000(21) 622,000(10) 4,119,000(57)
</TABLE>
- --------
(A) Facilities used by both business segments.
(B) Aggregate square footage and number of facilities (noted in parentheses) by
category used for manufacturing purposes.
ITEM 3. LEGAL PROCEEDINGS.
The Company is a party to a number of federal proceedings in the United
States brought under the Comprehensive Environmental Response, Compensation and
Liability Act, also known as Superfund, and similar state laws. The Company is
also involved in other legal proceedings and claims which arise in the ordinary
course of business, both as a plaintiff and a defendant. The results of these
matters, individually and in the aggregate, are not expected to have a material
effect on the Company.
4
<PAGE>
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
Not applicable.
EXECUTIVE OFFICERS OF THE REGISTRANT (AS OF DECEMBER 1, 1994)
The following is a list of the executive officers of the Company, their ages
and all positions and offices held by each of them during the past five years.
There is no family relationship between any of the named persons.
<TABLE>
<CAPTION>
AGE POSITION
NAME --- --------
<S> <C> <C>
Clateo Castellini....... 59 Director, Chairman of the Board, President and
Chief Executive Officer since June 1994 and prior
thereto Sector President -- Medical.
John W. Galiardo........ 60 Director, Vice Chairman of the Board and General
Counsel since June 1994 and prior thereto Vice
President and General Counsel.
Vincent L. De Caprio.... 44 Sector President -- Technique Products since Octo-
ber 1994 and prior thereto President -- Becton
Dickinson Vascular Access.
Walter M. Miller........ 51 Sector President -- Infectious Disease Diagnostics
since October 1994 and prior thereto Sector Presi-
dent -- Diagnostic.
Robert A. Reynolds...... 62 Vice President -- Finance and Controller.
Mark C. Throdahl........ 43 Sector President -- Drug Delivery since October
1994; President -- Nippon Becton Dickinson Compa-
ny, Ltd. from May 1991 to September 1994; and
prior thereto Director -- Corporate Planning.
Kenneth R. Weisshaar.... 44 Sector President -- Cellular Analysis Diagnostics
since October 1994; President -- Becton Dickinson
Division from March 1992 to September 1994; and
prior thereto Vice President -- Planning, Perfor-
mance and Development.
</TABLE>
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
The Company's common stock is listed on the New York Stock Exchange. As of
November 30, 1994, there were approximately 7,586 shareholders of record. The
balance of the information required by this item appears under the caption
"Common Stock Prices and Dividends" on page 52 of the Company's 1994 Annual
Report and is incorporated herein by reference.
ITEM 6. SELECTED FINANCIAL DATA.
The information required by this item is included under the caption "Six Year
Summary of Selected Financial Data" on pages 30-31 of the Company's 1994 Annual
Report and is incorporated herein by reference.
5
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
The information required by this item is included in the text contained under
the caption "Financial Review" on pages 23-29 of the Company's 1994 Annual
Report and is incorporated herein by reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
The information required by this item appears on pages 32-33, 35-51 and under
the caption "Quarterly Data (Unaudited)" on page 52 of the Company's 1994
Annual Report and is incorporated herein by reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
Not applicable.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
The information relating to directors required by this item will be contained
under the captions "Board of Directors", "Election of Directors" and
"Continuing Directors" in a definitive Proxy Statement involving the election
of directors which the registrant will file with the Securities and Exchange
Commission not later than 120 days after September 30, 1994 (the "1995 Proxy
Statement"), and such information is incorporated herein by reference.
The information relating to executive officers required by this item is
included herein in Part I under the caption "Executive Officers of the
Registrant".
The information required pursuant to Item 405 of Regulation S-K will be
contained under the caption "Compliance with Section 16(a) of the Securities
Exchange Act of 1934" in the Company's 1995 Proxy Statement, and such
information is incorporated herein by reference.
ITEM 11. EXECUTIVE COMPENSATION.
The information required by this item will be contained under the captions
"Board of Directors" and "Executive Compensation" in the Company's 1995 Proxy
Statement, and such information is incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The information required by this item will be contained under the caption
"Share Ownership of Management and Certain Beneficial Owners" in the Company's
1995 Proxy Statement, and such information is incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
Not applicable.
6
<PAGE>
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.
(A)(1) FINANCIAL STATEMENTS
The following consolidated financial statements of the Company and the Report
of Ernst & Young LLP, Independent Auditors, included in the Company's 1994
Annual Report at the pages indicated in parentheses, are incorporated by
reference in Item 8 hereof:
Report of Ernst & Young LLP, Independent Auditors (page 35)
Consolidated Statements of Income--Years ended September 30, 1994, 1993
and 1992 (page 36)
Consolidated Balance Sheets--September 30, 1994 and 1993 (page 37)
Consolidated Statements of Cash Flows--Years ended September 30, 1994,
1993 and 1992 (page 38)
Notes to Consolidated Financial Statements (pages 39-51)
(A)(2) FINANCIAL STATEMENT SCHEDULES
The following consolidated financial statement schedules of the Company are
included herein at the pages indicated in parentheses:
Schedule V--Property, Plant and Equipment (page 10)
Schedule VI--Accumulated Depreciation, Depletion and Amortization of
Property, Plant and Equipment (page 11)
Schedule VIII--Valuation and Qualifying Accounts (page 12)
Schedule IX--Short-Term Borrowings (page 13)
Schedule X--Supplementary Income Statement Information (page 14)
All other schedules for which provision is made in the applicable accounting
regulation of the Securities Exchange Act of 1934 are not required under the
related instructions or are inapplicable, and therefore have been omitted.
(A)(3) EXHIBITS
See Exhibit Index on pages 15-16 hereof for a list of all management
contracts, compensatory plans and arrangements required by this item (Exhibit
Nos. 10(a)(i) through 10(k)), and all other Exhibits filed or incorporated by
reference as a part of this report.
(B) REPORTS ON FORM 8-K
None.
7
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934, THE REGISTRANT HAS DULY CAUSED THIS REPORT TO BE SIGNED
ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED.
Becton, Dickinson and Company
/s/ John W. Galiardo
By___________________________________
(JOHN W. GALIARDO
VICE CHAIRMAN OF THE BOARD
AND GENERAL COUNSEL)
Dated: December 27, 1994
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THIS
REPORT HAS BEEN SIGNED BELOW ON THE 27TH DAY OF DECEMBER, 1994 BY THE FOLLOWING
PERSONS ON BEHALF OF THE REGISTRANT AND IN THE CAPACITIES INDICATED.
NAME CAPACITY
---- --------
/s/ Harry N. Beaty, M.D. Director
- ------------------------------------
(HARRY N. BEATY, M.D.)
/s/ Henry P. Becton, Jr. Director
- ------------------------------------
(HENRY P. BECTON, JR.)
/s/ Clateo Castellini Director, Chairman of the Board,
- ------------------------------------ President and Chief Executive
(CLATEO CASTELLINI) Officer (Principal Executive
Officer)
/s/ Gerald M. Edelman, M.D. Director
- ------------------------------------
(GERALD M. EDELMAN, M.D.)
/s/ Edmund B. Fitzgerald Director
- ------------------------------------
(EDMUND B. FITZGERALD)
/s/ John W. Galiardo Director
- ------------------------------------
(JOHN W. GALIARDO)
/s/ Richard W. Hanselman Director
- ------------------------------------
(RICHARD W. HANSELMAN)
/s/ Thomas A. Holmes Director
- ------------------------------------
(THOMAS A. HOLMES)
/s/ Frank A. Olson Director
- ------------------------------------
(FRANK A. OLSON)
/s/ Gloria M. Shatto Director
- ------------------------------------
(GLORIA M. SHATTO)
/s/ Raymond S. Troubh Director
- ------------------------------------
(RAYMOND S. TROUBH)
/s/ Robert A. Reynolds Vice President--Finance and
- ------------------------------------ Controller (Principal Financial
(ROBERT A. REYNOLDS) and Accounting Officer)
8
<PAGE>
REPORT OF INDEPENDENT AUDITORS
To the Shareholders and Board of Directors
Becton, Dickinson and Company
We have audited the consolidated financial statements and related schedules
of Becton, Dickinson and Company listed in the accompanying index to financial
statements (Item 14(a)). These financial statements and related schedules are
the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements and related schedules based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and related
schedules are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements and related schedules. An audit also includes assessing the
accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe
that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements listed in the accompanying index to
financial statements (Item 14(a)) present fairly, in all material respects, the
consolidated financial position of Becton, Dickinson and Company at September
30, 1994 and 1993, and the consolidated results of its operations and its cash
flows for each of the three years in the period ended September 30, 1994 in
conformity with generally accepted accounting principles. Also, in our opinion,
the related financial statement schedules, when considered in relation to the
basic financial statements taken as a whole, present fairly in all material
respects the information set forth therein.
As discussed in Note 1 to the financial statements, in 1993 the Company
changed its methods of accounting for postretirement benefits other than
pensions, postemployment benefits, and income taxes.
/s/Ernst & Young LLP
Ernst & Young LLP
Hackensack, New Jersey
November 8, 1994
9
<PAGE>
BECTON, DICKINSON AND COMPANY
SCHEDULE V--PROPERTY, PLANT AND EQUIPMENT
YEARS ENDED SEPTEMBER 30, 1994, 1993 AND 1992
(THOUSANDS OF DOLLARS)
<TABLE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<CAPTION>
COL. A COL. B COL. C COL. D COL. E COL. F
- -------------------------------------------------------------------------------
OTHER
BALANCE AT ADDITIONS CHANGES-- BALANCE AT
BEGINNING AT COST RETIRE- ADD (DEDUCT) END OF
DESCRIPTION OF PERIOD (A) MENTS (B) PERIOD
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1994
Land.................... $ 52,842 $ 18 $ 51 $ 1,601 $ 54,410
Buildings............... 881,643 13,326 693 13,556 907,832
Machinery, equipment and
fixtures............... 1,401,319 101,386 34,743 15,372 1,483,334
Leasehold improvements.. 28,052 8,287 29 (1,950) 34,360
---------- -------- -------- -------- ----------
Total................. $2,363,856 $123,017 $ 35,516 $ 28,579 $2,479,936
========== ======== ======== ======== ==========
1993
Land.................... $ 52,060 $ 604 $ -- $ 178 $ 52,842
Buildings............... 862,510 37,743 4,095 (14,515) 881,643
Machinery, equipment and
fixtures............... 1,356,460 135,778 22,550 (68,369) 1,401,319
Leasehold improvements.. 23,758 10,043 1,754 (3,995) 28,052
---------- -------- -------- -------- ----------
Total................. $2,294,788 $184,168 $ 28,399 $(86,701) $2,363,856
========== ======== ======== ======== ==========
1992
Land.................... $ 48,478 $ -- $ 193 $ 3,775 $ 52,060
Buildings............... 805,314 47,187 831 10,840 862,510
Machinery, equipment and
fixtures............... 1,215,969 142,290 34,546 32,747 1,356,460
Leasehold improvements.. 27,468 3,197 3,891 (3,016) 23,758
---------- -------- -------- -------- ----------
Total................. $2,097,229 $192,674 $ 39,461 $ 44,346 $2,294,788
========== ======== ======== ======== ==========
</TABLE>
- --------
(A) Includes the following amounts related to acquisitions of businesses:
1992 - $7,115
(B) Reclassifications and currency translation adjustments and, in 1994, $1,135
of special charges.
Depreciation and amortization are provided on a straight-line basis over the
estimated useful lives, generally as follows:
<TABLE>
<S> <C>
Buildings................................................... 20 to 45 years
Machinery, equipment and fixtures........................... 4 to 10 years
</TABLE>
The cost of leasehold improvements is being amortized over the terms of the
respective leases or the lives of the assets, whichever is shorter.
10
<PAGE>
BECTON, DICKINSON AND COMPANY
SCHEDULE VI--ACCUMULATED DEPRECIATION, DEPLETION AND
AMORTIZATION OF PROPERTY, PLANT AND EQUIPMENT
YEARS ENDED SEPTEMBER 30, 1994, 1993 AND 1992
(THOUSANDS OF DOLLARS)
<TABLE>
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
<CAPTION>
COL. A COL. B COL. C COL. D COL. E COL. F
- ----------------------------------------------------------------------------------
ADDITIONS
BALANCE AT CHARGED TO OTHER CHANGES -- BALANCE AT
BEGINNING COSTS AND RETIRE- ADD (DEDUCT) END OF
DESCRIPTION OF PERIOD EXPENSES MENTS (A) PERIOD
- ----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1994
Buildings.............. $174,106 $ 25,862 $ 570 $ 2,871 $ 202,269
Machinery, equipment
and fixtures.......... 776,697 126,458 28,981 13,661 887,835
Leasehold improvements. 9,983 2,692 29 837 13,483
-------- -------- ------- -------- ----------
Total............ $960,786 $155,012 $29,580 $ 17,369 $1,103,587
======== ======== ======= ======== ==========
1993
Buildings.............. $150,562 $ 25,658 $ 3,219 $ 1,105 $ 174,106
Machinery, equipment
and fixtures.......... 703,336 119,024 19,636 (26,027) 776,697
Leasehold improvements. 11,371 1,719 1,283 (1,824) 9,983
-------- -------- ------- -------- ----------
Total............ $865,269 $146,401 $24,138 $(26,746) $ 960,786
======== ======== ======= ======== ==========
1992
Buildings.............. $125,236 $ 21,209 $ 437 $ 4,554 $ 150,562
Machinery, equipment
and fixtures.......... 608,318 111,179 31,390 15,229 703,336
Leasehold improvements. 12,288 3,494 3,720 (691) 11,371
-------- -------- ------- -------- ----------
Total............ $745,842 $135,882 $35,547 $ 19,092 $ 865,269
======== ======== ======= ======== ==========
</TABLE>
- --------
(A) Reclassifications, currency translation adjustments and $4,484 and $15,655
in 1994 and 1993, respectively, of special charges.
11
<PAGE>
BECTON, DICKINSON AND COMPANY
SCHEDULE VIII--VALUATION AND QUALIFYING ACCOUNTS
YEARS ENDED SEPTEMBER 30, 1994, 1993, AND 1992
(THOUSANDS OF DOLLARS)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
COL. A COL. B COL. C COL. D COL. E
- --------------------------------------------------------------------------------
ADDITIONS
---------
BALANCE CHARGED
AT TO COSTS BALANCE AT
BEGINNING AND END OF
DESCRIPTION OF PERIOD EXPENSES DEDUCTIONS PERIOD
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1994
Against trade receivables:
For doubtful accounts............ $12,077 $ 5,323 $ 3,463(A) $13,937
For cash discounts............... 6,821 28,813 27,413 8,221
------- ------- ------- -------
Total........................ $18,898 $34,136 $30,876 $22,158
======= ======= ======= =======
1993
Against trade receivables:
For doubtful accounts............ $13,090 $ 4,906 $ 5,919(A) $12,077
For cash discounts............... 7,509 25,173 25,861 6,821
------- ------- ------- -------
Total........................ $20,599 $30,079 $31,780 $18,898
======= ======= ======= =======
1992
Against trade receivables:
For doubtful accounts............ $11,662 $ 2,616 $ 1,188(A) $13,090
For cash discounts............... 5,606 25,221 23,318 7,509
------- ------- ------- -------
Total........................ $17,268 $27,837 $24,506 $20,599
======= ======= ======= =======
</TABLE>
- --------
(A) Accounts written off.
12
<PAGE>
BECTON, DICKINSON AND COMPANY
SCHEDULE IX--SHORT-TERM BORROWINGS
YEARS ENDED SEPTEMBER 30, 1994, 1993 AND 1992
(THOUSANDS OF DOLLARS)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
COL. A COL. B COL. C COL. D COL. E COL. F
- -------------------------------------------------------------------------------
MAXIMUM AVERAGE WEIGHTED
BALANCE WEIGHTED AMOUNT AMOUNT AVERAGE
AT AVERAGE OUTSTANDING OUTSTANDING INTEREST
CATEGORY OF AGGREGATE END OF INTEREST DURING THE DURING THE RATE DURING
SHORT-TERM BORROWINGS PERIOD RATE PERIOD(A) PERIOD(A) THE PERIOD
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1994
Commercial paper(B).... $ 35,941 5% $120,200 $ 73,600 3 3/4%
Notes payable to
banks(C).............. 110,883 4 121,000 101,300 11 1/2
1993
Commercial paper(B).... $108,000 3 1/4% $166,700 $116,000 3 1/2%
Notes payable to
banks(C).............. 81,752 5 1/2 131,000 93,900 13
1992
Commercial paper(B).... $101,000 3 1/2% $154,000 $ 83,100 4 1/2%
Notes payable to
banks(C).............. 99,674 8 1/2 138,100 114,200 16
</TABLE>
- --------
(A) The maximum and average amount outstanding during the year was computed
based on month-end amounts.
(B) Commercial paper generally matures six months or less from date of issue
with no provision for the extension of its maturity.
(C) Notes payable to banks represent borrowings under credit arrangements that
are subject to periodic renewal. Weighted average interest rates include
the impact of borrowing in the currencies of countries with rates of
inflation which vary from those in the United States.
13
<PAGE>
BECTON, DICKINSON AND COMPANY
SCHEDULE X--SUPPLEMENTARY INCOME STATEMENT INFORMATION
YEARS ENDED SEPTEMBER 30, 1994, 1993 AND 1992
(THOUSANDS OF DOLLARS)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
COL. A COL. B
- --------------------------------------------------------------------------------
ITEM CHARGED TO COSTS AND EXPENSES
- --------------------------------------------------------------------------------
1994 1993 1992
---- ---- ----
<S> <C> <C> <C>
Maintenance and repairs........................... $39,136 $37,298 $35,306
Advertising costs................................. -- -- 24,578
</TABLE>
Amortization of intangible assets, taxes (other than payroll and income taxes)
and royalties are less than one percent of revenues for all years presented.
Advertising costs are less than one percent of revenues for 1994 and 1993.
14
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION METHOD OF FILING
------- ----------- ----------------
<S> <C> <C>
3(a) Restated Certificate of Incorporation, Incorporated by reference to Exhibit
as amended January 22, 1990 3(a) to the registrant's Annual Re-
port on Form 10-K for the fiscal year
ended September 30, 1990
3(b) By-Laws, as amended May 30, 1989 Incorporated by reference to Exhibit
3(b) to the registrant's Annual Re-
port on Form 10-K for the fiscal year
ended September 30, 1989
4(a) Indenture, dated as of December 1, Incorporated by reference to Exhibit 4
1982, between the registrant and Man- to Registration Statement No. 2-80707
ufacturers Hanover Trust Company on Form S-3 filed by the registrant
4(b) First Supplemental Indenture, dated as Incorporated by reference to Exhibit
of May 15, 1986, between the regis- 4(b) to Registration Statement No.
trant and Manufacturers Hanover Trust 33-5663 on Form S-3 filed by the reg-
Company istrant (the registrant hereby agrees
to furnish to the Commission upon re-
quest a copy of any other instruments
which define the rights of holders of
long-term debt of the registrant)
10(a)(i) Employment Agreement, dated June 18, Incorporated by reference to Exhibit
1986, between the registrant and 10(b)(i) to the registrant's Annual
Clateo Castellini Report on Form 10-K for the fiscal
year ended September 30, 1986
10(a)(ii) Employment Agreement, dated June 18, Incorporated by reference to Exhibit
1986, between the registrant and John 10(b)(ii) to the registrant's Annual
W. Galiardo Report on Form 10-K for the fiscal
year ended September 30, 1986
10(a)(iii) Employment Agreement, dated June 9, Incorporated by reference to Exhibit
1987, between the registrant and Wal- 10(b)(v) to the registrant's Annual
ter M. Miller Report on Form 10-K for the fiscal
year ended September 30, 1989
10(a)(iv) Employment Agreement, dated June 18, Incorporated by reference to Exhibit
1986, between the registrant and Rob- 10(b)(vi) to the registrant's Annual
ert A. Reynolds Report on Form 10-K for the fiscal
year ended September 30, 1990
10(b) Certified Resolution authorizing cer- Incorporated by reference to Exhibit
tain payments to certain corporate 10(k) to the registrant's Annual Re-
officers in the event of a discharge, port on Form 10-K for the fiscal year
resignation due to removal from posi- ended September 30, 1986
tion or a significant change in such
officers' respective duties within
two years after a change in control
of the registrant
</TABLE>
15
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION METHOD OF FILING
- ------- ----------- ----------------
<S> <C> <C>
10(c) Form of Split Dollar Agreement and re- Incorporated by reference to Exhibit
lated Collateral Assignment covering 10(e) to the registrant's Annual Re-
the providing to corporate officers port on Form 10-K for the fiscal year
of a life insurance policy in an ended September 30, 1987
amount equal to two times base salary
in lieu of full participation in the
registrant's group life insurance
program
10(d) Stock Award Plan, as amended and re- Incorporated by reference to Exhibit
stated effective February 11, 1992 10(d) to the registrant's Annual Re-
port on Form 10-K for the fiscal year
ended September 30, 1992
10(e) Executive Bonus Plans Filed with this report
10(f) 1982 Incentive Stock Option Plan, as Filed with this report
amended and restated February 8, 1994
10(g) 1982 Unqualified Stock Option Plan, as Filed with this report
amended and restated February 8, 1994
10(h) Salary and Bonus Deferral Plan Filed with this report
10(i) 1990 Stock Option Plan, as amended and Filed with this report
restated February 8, 1994
10(j) Retirement Benefit Restoration Plan Incorporated by reference to Exhibit
and related Benefit Restoration Plan 10(j) to the registrant's Annual Re-
Trust port on Form 10-K for the fiscal year
ended September 30, 1992
10(k) 1994 Restricted Stock Plan for Non- Incorporated by reference to Exhibit A
Employee Directors to the registrant's Proxy Statement
dated January 5, 1994
11 Computation of Earnings Per Share Filed with this report
13 Portions of the registrant's Annual Filed with this report
Report to Shareholders for fiscal
year 1994 (graphic material contained
under the caption "Financial Review"
is not included in the electronic
filing of this report)
21 Subsidiaries of the registrant Filed with this report
23 Consent of independent auditors Filed with this report
27 Financial Data Schedule Filed with this report
</TABLE>
Copies of any Exhibits not accompanying this Form 10-K are available at a
charge of 25 cents per page by contacting: Investor Relations, Becton,
Dickinson and Company, 1 Becton Drive, Franklin Lakes, New Jersey 07417-
1880, Phone: 1-800-284-6845.
16
<PAGE>
EXHIBIT 10(e)
BECTON DICKINSON AND COMPANY
EXECUTIVE BONUS PLANS
---------------------
Table of Contents
-----------------
1.0 PURPOSE
2.0 EXECUTIVE BONUS COMMITTEE
3.0 ELIGIBILITY
4.0 PARTICIPATION LEVELS
5.0 THEORETICAL BONUS AMOUNTS
6.0 PERFORMANCE RATING
6.1 Business Unit
a. Financial
b. Strategic
6.2 Corporate
a. Financial
b. Strategic
6.3 Factor Scales and Multipliers
7.0 DETERMINATION OF DIVISION AND CORPORATE BONUS POTS
a. Unit Theoretical Bonus
b. Unit Performance Ratings
8.0 BONUS FACTORS
a. Minimum Earnings Requirements
b. Communication
c. Bonus Recommendations
9.0 FINAL REVIEW AND APPROVAL
a. Adjustments
b. Maximum Payout Guideline
c. Payment
d. Deferral Options
e. Exceptions
10.0 EXHIBITS
Exhibit 1 Financial Thresholds
---------
Exhibit 2 Bonus Plan Formula
---------
Exhibit 3 Bonus % Ranges
---------
As Amended
December, 1994
<PAGE>
BECTON DICKINSON AND COMPANY
EXECUTIVE BONUS PLANS
---------------------
1.0 PURPOSE
-------
Annual incentive bonuses are intended to provide key members of management
with financial incentives geared to annual performance on three levels:
. The overall financial performance of the company, sector, or division, as
appropriate.
. The attainment of world-wide business team or function strategic
objectives.
. The performance of the individual executive.
THE PAYMENT OF SUCH ANNUAL INCENTIVE BONUSES IS SOLELY WITHIN THE DISCRETION OF
MANAGEMENT, WITHIN THESE GUIDELINES. NO EMPLOYEE HAS ANY VESTED RIGHT TO ANY
SUCH PAYMENT.
2.0 EXECUTIVE BONUS COMMITTEE
-------------------------
An Executive Bonus Committee will be responsible for administering this plan.
The committee will consist of the Chairman, President and Chief Executive
Officer and other senior executives as designated by the Chairman, President
and Chief Executive Officer, from time to time.
3.0 ELIGIBILITY
-----------
Participation is extended to employees in all operating units, Corporate
staff groups (departments) and subsidiaries world-wide. Acquisitions which
have pre-existing executive bonus, profit sharing, or similar programs will
not participate in this plan until and unless those plans are superseded by
this plan.
Participation in any particular fiscal year is restricted to employees in
exempt (or management) grade 9 and above (other than those covered under
Sales Incentive Plans), who are actively employed on October 1st (the
beginning of the fiscal year). Current employees promoted to grade 9 and
above positions in bonus Level 5 between October 1st and April 1st may be
considered for pro-rata bonus. New employees will be considered for bonus
participation commencing the fiscal year following employment.
Employees who retire, become disabled or die during the fiscal year are
eligible for pro-rata bonus consideration.
4.0 PARTICIPATION LEVELS
--------------------
There are five levels of participation. Assignments to each level will be
reviewed annually by the Executive Bonus Committee based on recommendations
from unit heads. Applicable assignments must be approved each year by the
Executive Bonus Committee.
-2-
<PAGE>
<TABLE>
<CAPTION>
PARTICIPATION TARGET BONUS PARTICIPANTS
LEVEL PERCENTAGE
(% OF OCTOBER 1ST
SALARY)
- ---------------------------------------------------------------------------------------------------
<S> <C> <C>
1 70 Chairman, President and Chief Executive
Officer
- ---------------------------------------------------------------------------------------------------
2 50 Vice Chairman and General Counsel
Sector Presidents
Corporate Executive Officers*
- ---------------------------------------------------------------------------------------------------
3 35 Other Corporate Officers
Division Presidents
Vice President/General Managers
- ---------------------------------------------------------------------------------------------------
4 25 Key Reporting Staff
Division and Staff Function Management
- ---------------------------------------------------------------------------------------------------
5 10 Other employees grade 9 and above approved
for participation
- ---------------------------------------------------------------------------------------------------
Levels 1, 2 and 3 constitute the Company's "Executive Bonus Plan". Levels 4 and 5 constitute the
Company's "Management Bonus Plan".
*Certain individual participants are grandfathered at 40%.
</TABLE>
5.0 THEORETICAL BONUS AMOUNTS
-------------------------
On or about January 15th of each year, a theoretical bonus pot for all
participating units will be developed for interim accruals and reporting. The
theoretical bonus is established by multiplying the total October 1st
salaries for approved participants in a participation level by the
appropriate Target Bonus Percentages (above).
6.0 PERFORMANCE RATING
------------------
6.1 Business Unit (Division, Sector)
-------------
(a) Financial Rating: Financial ratings will be based upon the units FX
----------------
neutral OIBT (operating income before taxes) compared to the approved
budget for the fiscal year. Any significant unplanned internal or
---------
external factors which, in the aggregate, offset financial results in
either direction by more than 5% of Plan can be recommended by the
Sector President to the Executive Bonus Committee for its
consideration. Smaller or startup divisions may be evaluated on a
qualitative basis, with the prior approval of the Executive Bonus
Committee.
(b) Strategic Rating: Strategic ratings will be based upon the evaluation
-----------------
of the performance of each World-wide Business Team. This evaluation
will be done each
-3-
<PAGE>
year by the respective Sector President and submitted to the Executive
Bonus Committee for review and approval. Each division and sector
will be assigned a composite strategic rating, based upon its
participation in and contribution to the performance of the various
world-wide teams.
6.2 Corporate
--- ---------
(a) Financial Rating: The corporate financial rating is based upon after-
-----------------
tax Earnings-per-Share compared to the target approved by the Board of
Directors. Normally all operating results will be included in the
---------
calculation. Gains or losses from non-operating items such as
divestitures or accounting charges will be excluded. Participants at
Levels 1 and 2 are evaluated on EPS as reported, others on EPS on an
FX neutral basis.
(b) Strategic Rating: The Company's strategic performance will be
-----------------
evaluated against achievement of its long term strategic goals. Each
corporate staff function will be evaluated versus strategic objectives
and contributions by a special committee consisting of the Chairman,
President and CEO, the Vice Chairman and General Counsel and the
Sector Presidents. Strategic ratings are based upon the following
---------
scale:
RATING INTERPRETATION
------ --------------
110 & above Competitive advantage CREATED or improved
-------
105 Competitive advantage MAINTAINED, with directional
-----------
progress evident
100 Competitive advantage MAINTAINED
----------
95 Competitive advantage MAINTAINED, but additional progress
----------
needed to prevent competitive risk
90 & below Competitive position DECLINED
--------
6.3 Factor Scales and Multipliers:
------------------------------
Financial factors are based upon financial ratings as described above, and
---------
shall be subject to a 5:1 multiplier for performance above 100, up to a
maximum score of 150. Ratings below 100 are subject to a 2:1 penalty, and
fall to zero if below the applicable threshold.
Strategic factors are computed using a multiplier or penalty, as above,
except that no penalty applies to a rating of 95 and a rating below 75
results in a factor of zero.
-4-
<PAGE>
7.0 DETERMINATION OF DIVISION AND CORPORATE BONUS POTS
--------------------------------------------------
(a) Unit Theoretical Bonus
----------------------
On or about October 15th following the close of each fiscal year, Division
Presidents and Corporate Officers will be provided with a list of approved
participants for their unit, showing base salaries as of the October 1
start of the fiscal year and target bonuses. All such employees will be
included on the bonus listing even if their individual performance rating
is below the level required to qualify for a bonus award.
(b) Unit Performance Ratings
------------------------
On or about October 15th following the close of each fiscal year, the
Executive Bonus Committee will determine the final unit and company
performance ratings used to determine bonus factors for the fiscal year.
The bonus pot is determined by applying the bonus factors to the
theoretical bonus.
8.0 BONUS FACTORS
--------------
Bonus factors for each bonus level will be established as a composite of
unit, sector, corporate and individual performance ratings. Weighting of
factors will be determined in accordance with the distribution in Exhibit 2.
----------
(a) Minimum Earnings Requirement
----------------------------
If the financial performance of a unit is below a minimum level the bonus
payout will be restricted as follows. These thresholds are illustrated in
Exhibit 1.
Corporate Factor
----------------
If the EPS of the corporation is less than 80% of target;
-------------
1. The corporate factor will be zero in all Corporate, Sector and Unit
bonus formulas.
2. No bonus will be paid to Corporate Officers.
Sector Factor
-------------
If the Sector OIBT is less than 80% of plan then;
-------------
1. The sector factor will be zero in all bonus formulas for that sector.
2. The individual factor will be zero for Sector Staff (Level 4).
3. No bonus will be paid to Sector Presidents.
-5-
<PAGE>
Unit Factor
-----------
If the unit OIBT is less than 75% of plan then;
-------------
1. The unit factor will be zero in all bonus formulas for that unit.
2. The unit and individual factors will be zero for the Division
---
President and Key Staff (Levels 3 and 4).
(b) Communication
-------------
The operating unit and Corporate ratings will be communicated to the
Division Presidents by the Sector Presidents and to the Corporate staff by
the Chairman, President and Chief Executive Officer, respectively.
(c) Bonus Recommendations
---------------------
The Sector Presidents, Division Presidents and Corporate Officers will
apply the final unit factors to the individual bonus targets to develop
the recommended bonus amounts. They will have discretion to recommend
bonuses that differ from the formula with the provision that no individual
may receive a bonus that will exceed the bonus range for the participation
level. (See Exhibit 3)
---------
The recommendations will be made by completing the bonus listings and
submitting a copy to the appropriate level of supervision (Sector
President, Corporate Executive Officer, or Chief Executive Officer).
9.0 FINAL REVIEW AND APPROVAL
-------------------------
The recommendations for all bonus payments will be reviewed and approved by
the Sector Presidents and Corporate Executive Officers, and Chief Executive
Officer for their respective areas of responsibility. In the case of
participants at Levels 1, 2 and 3, recommendations will be subject to final
review and approval by the Compensation and Benefits Committee of the Board
of Directors.
(a) Adjustments
-----------
If the overall performance of the Company will not support the total bonus
produced by the plan formula, or if such bonus is subject to government
regulation or other external or internal limitations, any required
adjustment will be determined by the Executive Bonus Committee and applied
across the board to all units as a final step in the bonus calculation.
(b) Maximum Payout Guideline
----------------------------
Total bonus payments to participants in Levels 1, 2 and 3 should not,
barring special
-6-
<PAGE>
circumstances, exceed 3% of the Company's after tax net income, as
reported, for the fiscal year.
(c) Payment
-------
Bonuses will normally be paid in January of the calendar year following
the year in which they are awarded. An employee may elect, in writing
prior to October 31st, to accelerate any bonus payable under this Plan to
December. Except as provided in Section 3, no bonus payments will be made
to individuals who are not active employees on the final day of the fiscal
year. Employees who are terminated for cause prior to the distribution
date will forfeit their bonuses.
Bonuses awarded to any employee who dies prior to the distribution date
may be made, at the discretion of management, to the survivors of the
employee.
(d) Deferral Options
----------------
Certain participants are eligible to defer receipt of their bonus in
accordance with the Company's Salary and Bonus Deferral Plan. Eligibility
to defer, and terms and conditions of deferral, are governed by that
plan.
(e) Exceptions
----------
Any recommendations for exceptions to the provisions of the Plan must be
submitted to the Executive Bonus Committee for review and are subject to
final approval by the Chief Executive Officer in the case of employees at
Levels 4 and 5. Any exceptions applicable to participants at Levels 1, 2
and 3 is further subject to approval by the Compensation and Benefits
Committee of the Board of Directors.
-7-
<PAGE>
EXHIBIT 1
---------
(pg 1 of 2)
FINANCIAL THRESHOLDS
EXECUTIVE PLAN
--------------
<TABLE>
<CAPTION>
Company Company Sector Division
Reported FX Neutral FX Neutral FX Neutral
EPS EPS OIBT OIBT
(less than)80% of Budget (less than)80% of Budget (less than)80% of Budget (less than)75% of Budget
------------------------ ------------------------ ------------------------ ------------------------
<S> <C> <C> <C> <C>
Senior Corporate
Executives No Bonus
Sector Presidents
No Bonus No Bonus
Corporate Officers
No Bonus No Company
Factor (75%)
Divison Presidents and
Others No Bonus No Sector No Division/WW
Factors (25%) Factors (75%)
</TABLE>
OVERALL LIMIT
. TOTAL PAYOUT MAY NOT EXCEED 3% OF COMPANY NET INCOME (AFTER-TAX)
<PAGE>
EXHIBIT 1
---------
(pg 2 of 2)
FINANCIAL THRESHOLDS
MANAGEMENT PLAN
---------------
<TABLE>
<CAPTION>
Company Company Sector Division
Reported FX Neutral FX Neutral FX Neutral
EPS EPS OIBT OIBT
(less than)80% of Budget (less than)80% of Budget (less than)80% of Budget (less than)75% of Budget
------------------------ ------------------------ ------------------------ ------------------------
<S> <C> <C> <C> <C>
Director or V.P./
Operating Committee/
or Equivalent
- ----------------------
(LEVEL IV)
. Corporate No Company No Company
Factor (75%) Factor (75%)
. Sector No Company No Company No Sector
Factor (25%) Factor (25%) Factors (75%)
. Division No Sector No Division/WW
Factors (25%) Factors (75%)
Manager/
or Equivalent
- ----------------------
(LEVEL V)
. Corporate No Company No Company
Factor (50%) Factor (50%)
. Sector No Sector
Factors (50%)
. Division No Division/WW
Factors (50%)
</TABLE>
<PAGE>
Exhibit 2
---------
(page 1 of 2)
BONUS PLAN FORMULA
SECTOR PRESIDENTS
COMPANY
25% (EPS vs Budget)
SECTOR FINANCIAL
50% (OIBT vs Budget)
25% SECTOR STRATEGIC
CORPORATE OFFICERS
COMPANY
75% EPS vs Budget
25% UNIT STRATEGIC
DIVISION PRESIDENTS
SECTOR
25% (65% OIBT vs Budget,
35% Strategic)
UNIT FINANCIAL
50% (OIBT vs Budget)
UNIT STRATEGIC
25% (Blend of WW Team Ratings)
<PAGE>
EXHIBIT 2
---------
(pg 2 of 2)
BONUS PLAN FORMULAS
-------------------
<TABLE>
<CAPTION>
LEVELS III, IV LEVEL V
-------------- -------
DIVISION
<S> <C>
25% Sector
(65% OIBT vs Budget,
35% Strategic)
50% Unit Financial 50% Unit
(OIBT vs Budget) (65% OIBT vs Budget,
35% Strategic)
25% Unit Strategic
(WW Teams) 50% Individual
SECTOR
25% Company
EPS vs Budget
75% Sector 50% Sector
(65% OIBT vs Budget, (65% OIBT vs Budget,
35% Strategic) 35% Strategic)
50% Individual
CORPORATE
75% Company 50% Company
EPS vs Budget EPS vs Budget
25% Unit Strategic 25% Unit Strategic
25% Individual
</TABLE>
*ALL FINANCIAL RATINGS BASED UPON FX NEUTRAL PERFORMANCE VERSUS BUDGET
<PAGE>
EXHIBIT 3
<TABLE>
<CAPTION>
BONUS % RANGES
--------------
Participation Level Minimum Target Bonus Maximum
- ------------------- ------- ------------- -------
(Theoretical)
<S> <C> <C> <C>
1 35 70 110
2 25 50 80
20 40 70
3 15 35 60
4 10 25 40
5 5 10 20
</TABLE>
<PAGE>
EXHIBIT 10(f)
BECTON, DICKINSON AND COMPANY
1982 INCENTIVE STOCK OPTION PLAN
AS AMENDED AND RESTATED FEBRUARY 8, 1994
________________________________________________________________________________
SECTION 1. PURPOSE
The purpose of this Incentive Stock Option Plan is to provide an
additional incentive to key employees of Becton, Dickinson and Company and its
subsidiaries, and to aid in attracting and retaining employees of outstanding
ability.
SECTION 2. DEFINITIONS
Unless the context clearly indicates otherwise, the following terms, when
used in this Plan, shall have the meanings set forth in this Section 2.
(a) "Board" shall mean the Board of Directors of Becton, Dickinson and
Company.
(b) "Change of Control". A change in control of the Company shall be
deemed to have occurred if, over the initial opposition of the then
incumbent Board (whether or not such Board ultimately acquiesces therein),
(i) any person or group of persons shall acquire, directly or indirectly,
stock of the Company having at least 25% of the voting power, or (ii) any
shareholder or group of shareholders shall elect a majority of the members
of the Board.
(c) "Code" shall mean the Internal Revenue Code of 1954 as it may be
amended from time to time.
(d) "Committee" shall mean the Compensation and Benefits Committee of the
Board or such other committee as may be designated by the Board. The
Committee shall consist of three or more members of the Board who are not
eligible to participate in the Plan and who, within one year prior to their
appointment, have not been eligible to participate in the Plan.
(e) "Company" shall mean Becton, Dickinson and Company.
(f) "Date of Exercise" shall mean the earlier of the date on which written
notice of exercise, together with payment in full, is received at the
office of the Secretary of the Company or the date on which such notice and
payment are mailed to the Secretary of the Company at its principal office
by certified or registered mail.
(g) "Employee" shall mean any employee, including any officer, of the
Company or any of its Subsidiaries.
-1-
<PAGE>
(h) "Fair Market Value" shall mean for any day the mean of the highest and
lowest selling prices of the Stock as reported by the New York Stock
Exchange (Composite Transactions).
(i) "Grantee" shall mean an Employee granted an Incentive Stock Option.
(j) "Granting Date" shall mean the date on which the Committee authorizes
the issuance of an Incentive Stock Option for a specified number of shares
of Stock to a specified Employee.
(k) "Incentive Stock Option" shall mean an option granted pursuant to the
Plan to purchase shares of Stock.
(l) "Plan" shall mean the Becton, Dickinson and Company 1982 Incentive
Stock Option Plan as set forth herein and as amended from time to time.
(m) "Stock" shall mean the Common Stock, par value $1 per share, of the
Company.
(n) "Stock Appreciation Right" shall mean a right granted pursuant to the
Plan to receive Stock, cash, or a combination thereof, upon the surrender
of the right to purchase all or part of the Stock covered by an Incentive
Stock Option.
(o) "Subsidiary" shall mean any subsidiary corporation as defined in
Section 425 of the Code.
SECTION 3. SHARES OF STOCK SUBJECT TO THE PLAN
Subject to the provisions of Section 9, a pool of 3,500,000 shares of Stock
shall be reserved for issuance upon the exercise of Incentive Stock Options
granted pursuant to this Plan as well as options granted pursuant to the
1982 Unqualified Stock Option Plan also adopted by the Company. Thus,
options granted under this Plan and the 1982 Unqualified Stock Option Plan
shall be limited to 3,500,000 shares in the aggregate, subject to
adjustment. The exercise of all or any part of an Incentive Stock Option
shall not result in the cancellation or limitation of rights to exercise
options granted under the 1982 Unqualified Stock Option Plan. Shares
delivered under the Plan may be authorized but previously unissued shares
or issued shares which have been reacquired by the Company. If an
Incentive Stock Option expires, is surrendered or is otherwise terminated
without the issuance of Stock for the full amount of such option, the
unpurchased shares shall again be available for options.
SECTION 4. ADMINISTRATION OF THE PLAN
The Plan shall be administered by the Committee. Subject to the express
provisions of the Plan, the Committee shall have authority to interpret the
Plan, to prescribe, amend, and rescind rules and regulations relating to
it, to determine the terms and
-2-
<PAGE>
provisions of Incentive Stock Option agreements, and to make all other
determinations necessary or advisable for the administration of the Plan. Any
controversy or claim arising out of or related to this Plan shall be determined
unilaterally by and at the sole discretion of the Committee.
SECTION 5. GRANTING OF INCENTIVE STOCK OPTIONS
(a) Only key Employees of the Corporation shall be eligible to receive
Incentive Stock Options under the Plan. Directors of the Corporation who
are not also Employees shall not be eligible for Incentive Stock Options.
(b) The purchase price of each share of Stock subject to an Incentive
Stock Option shall be 100% of the Fair Market Value of a share of the Stock
on the Granting Date.
(c) The Committee shall determine and designate from time to time those
key Employees who are to be granted Incentive Stock Options and specify the
number of shares subject to each Incentive Stock Option.
(d) With respect to Incentive Stock Options granted after December 31,
1986 the aggregate fair market value (determined at the time the option is
granted) of the stock with respect to which incentive stock options are
exercisable for the first time by any individual during any calendar year
(under all such plans of the individual's employer corporation and its
parent and subsidiary corporations) shall not exceed $100,000.
(e) An Incentive Stock Option shall be exercisable during such period or
periods and in such installments as shall be fixed by the Committee at the
time the option is granted; but each Incentive Stock Option shall expire
not later than ten years from the Granting Date.
(f) Each Incentive Stock Option shall provide by its terms that it is not
transferable otherwise than by will or the laws of descent and distribution
and is exercisable, during the Grantee's lifetime, only by the Grantee.
(g) The Committee may make such other provisions as may appear desirable
to the Committee or necessary to qualify its grants under the provisions of
Section 422A of the Code.
(h) Incentive Stock Options may be granted to an Employee who has
previously received Incentive Stock Options or other options whether such
prior Incentive Stock Options or other options are still outstanding, have
previously been exercised or surrendered in whole or in part, or are
cancelled in connection with the issuance of new Incentive Stock Options.
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SECTION 6. EXERCISE OF INCENTIVE STOCK OPTIONS
(a) Except as provided in Section 8, no Incentive Stock Option may be
exercised at any time unless the Grantee is an employee of the Company or a
Subsidiary on the Date of Exercise.
(b) The Grantee shall pay the option price in full on the Date of Exercise
of an Incentive Stock Option in cash, by check, by delivery of full shares
of Stock of the Company, duly endorsed for transfer to the Company with
signature guaranteed, or by any combination thereof. Stock will be
accepted at its Fair Market Value on the Date of Exercise.
(c) The number of shares which are issued pursuant to the exercise of an
Incentive Stock Option shall be charged against the maximum number of
shares authorized under the Plan.
(d) No Incentive Stock Option granted before January 1, 1987, shall be
exercisable while there is outstanding any incentive stock option which was
granted before the granting of such Incentive Stock Option to the Grantee
to purchase stock of the Company or a Subsidiary (determined at the time of
granting of the Incentive Stock Option) or a predecessor of any of such
corporations. An option shall be treated as outstanding for this purpose
until it is exercised in full or expires by reason of lapse of time. The
exercise of Stock Appreciation Rights shall constitute the exercise of the
related Incentive Stock Option to the extent of the number of shares as to
which option rights are surrendered.
SECTION 7. STOCK APPRECIATION RIGHTS
(a) The Committee may grant Stock Appreciation Rights in connection with
any Incentive Stock Option.
(b) Stock Appreciation Rights shall be exercisable at such times and to
the extent that the related Incentive Stock Option shall be exercisable,
unless the Committee specifies a more restrictive period.
(c) Upon the exercise of a Stock Appreciation Right, the Grantee shall
surrender the related Incentive Stock Option or a portion thereof and shall
be entitled to receive payment of an amount determined by multiplying the
number of shares as to which option rights are surrendered by the
difference obtained by subtracting the exercise price per share of the
related Incentive Stock Option from the Fair Market Value of a share of
Stock on the Date of Exercise of the Stock Appreciation Right.
(d) Payment of the amount determined under subparagraph 7(c) above shall
be made in Stock, in cash, or partly in cash and partly in Stock as the
Committee shall determine in its sole discretion.
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(e) Except as provided in Section 10(b), the exercise of a Stock
Appreciation Right for cash may be made only during the period beginning on
the third business day following the release of quarterly or annual
financial data and ending on the twelfth business day following such date.
(f) Shares covered by Incentive Stock Options which are surrendered upon
the exercise of Stock Appreciation Rights shall not be charged against the
maximum number of shares authorized under the Plan.
SECTION 8. TERMINATION OF EMPLOYMENT
If a Grantee ceases to be an Employee, then:
(a) if termination of employment is voluntary or involuntary without
cause, the Grantee may exercise each Incentive Stock Option held by him
within three months after such termination (but not after the expiration
date of the option) to the extent of the number of shares subject to the
option which are purchasable pursuant to its terms at the date of
termination;
(b) if termination is for cause, all Incentive Stock Options held by the
Grantee shall be cancelled as of the date of termination;
(c) if termination is by reason of retirement at a time when the Grantee
is entitled to the current receipt of benefits under any retirement plan
maintained by the Company or any Subsidiary or by reason of disability, the
Grantee may exercise each Incentive Stock Option held by him within three
months after such termination (but not after the expiration date of the
option) to the extent of the total number of shares subject to the option,
irrespective of the number which would have otherwise been purchasable
pursuant to the terms of the option at the date of termination;
(d) if termination is by death of the Grantee, or if the Grantee dies
within three months following retirement pursuant to Section 8(c), each
Incentive Stock Option held by the Grantee may be exercised by the
Grantee's estate, or by any person who acquires the right to exercise the
option by reason of the optionee's death, at any time within a period of
one year after death (but not after the expiration date of the option) to
the extent of the total number of shares subject to option, irrespective of
the number which would have otherwise been purchasable pursuant to the
terms of the option at the date of death; or
(e) if the Grantee should die within three months after voluntary
termination of employment or involuntary termination without cause, as
contemplated in Section 8(a), each Incentive Stock Option held by the
Grantee may be exercised by the Grantee's estate, or by any person who
acquires the right to exercise by reason of the optionee's death, at any
time within a period of one year after death (but not after the expiration
date of the option) to the extent of the number of shares subject to the
option which were purchasable pursuant to its terms at the date of
termination.
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SECTION 9. ADJUSTMENTS
There shall be proportionate adjustments of the aggregate number of shares
available under the Plan, the number of shares subject to each outstanding
Incentive Stock Option and Stock Appreciation Right and the option prices in the
event of an increase in the number of issued shares of Stock by reason of any
stock dividend, stock split-up, or other issuance of shares without
consideration.
SECTION 10. TENDER OFFER; CHANGE IN CONTROL
(a) An Incentive Stock Option shall become immediately exercisable to the
extent of the total number of shares subject to the option in the event of
(i) a tender offer by a person or persons other than the Company for all or
any part of the outstanding Stock if, upon consummation of the purchases
contemplated the offeror or offerors would own, beneficially or of record,
an aggregate of more than 25% of the outstanding Stock, or (ii) a Change in
Control of the Company.
(b) The Committee may authorize the payment of cash upon the exercise of a
Stock Appreciation Right during a period (i) beginning on the date on which
a tender offer as described in (a), above, is first published or sent or
given to holders of Stock and ending on the date which is seven days after
its termination or expiration, or (ii) beginning on the date on which a
Change in Control of the Company occurs and ending on the twelfth business
day following such date.
SECTION 11. GENERAL PROVISIONS
(a) Each Incentive Stock Option shall be evidenced by a written instrument
containing such terms and conditions, not inconsistent with this Plan, as
the Committee shall approve.
(b) The granting of an Incentive Stock Option in any year shall not give
the Grantee any right to similar grants in future years or any right to be
retained in the employ of the Company or any Subsidiary or interfere in any
way with the right of the Company or such Subsidiary to terminate an
Employee's employment at any time.
(c) Notwithstanding any other provision of the Plan, the Company shall not
be required to issue or deliver any certificate or certificates for shares
of Stock under the Plan prior to fulfillment of all of the following
conditions:
(i) The listing, or approval for listing upon notice of issuance,
of such shares on the New York Stock Exchange;
(ii) Any registration or other qualification of such shares under
any state or federal law or regulation, or the maintaining in effect of any
such registration or
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other qualification which the Committee may, in its discretion upon the
advice of counsel, deem necessary or advisable; and
(iii) The obtaining of any other consent, approval or permit from any
state or federal governmental agency which the Committee may, in its
discretion upon the advice of counsel, determine to be necessary or
advisable.
SECTION 12. AMENDMENT AND TERMINATION
(a) The Plan shall terminate on May 24, 1992, and no Incentive Stock
Option shall be granted hereunder after that date, provided that the Board
may terminate the Plan at any time.
(b) The Board may amend the Plan at any time without notice; provided
however, that the Board may not, without prior approval by the
shareholders, (i) increase the maximum number of shares for which options
may be granted (except as contemplated by the provisions of Section 9
hereof), (ii) change the eligibility requirements for individuals entitled
to receive options, (iii) change the purchase price of options, (iv)
withdraw the administration of the Plan from a committee of directors of
the Company who are not eligible to receive options, or (v) materially
increase the benefits accruing to Grantees.
(c) No termination or amendment of the Plan may, without consent of a
Grantee to whom an Incentive Stock Option shall theretofore have been
granted, adversely affect the rights of such Grantee under such option.
SECTION 13. EFFECTIVE DATE AND SHAREHOLDERS APPROVAL
The Plan shall become effective May 25, 1982 upon its approval by the
Board, subject to approval or ratification by a majority of the votes cast by
the holders of shares entitled to vote thereon at the next Annual Meeting of
Shareholders of the Company or any adjournment or postponement thereof. The
Committee may grant Incentive Stock Options the exercise of which shall be
expressly subject to the condition that the Plan shall have been approved or
ratified by the shareholders of the Company.
* * * *
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<PAGE>
EXHIBIT 10(g)
BECTON, DICKINSON AND COMPANY
1982 UNQUALIFIED STOCK OPTION PLAN
AS AMENDED AND RESTATED FEBRUARY 8, 1994
__________________________________________________________________________
SECTION 1. PURPOSE
The purpose of this Unqualified Stock Option Plan is to provide an
additional incentive to key employees of Becton, Dickinson and Company and its
subsidiaries, and to aid in attracting and retaining employees of outstanding
ability.
SECTION 2. DEFINITIONS
Unless the context clearly indicates otherwise, the following terms, when
used in this Plan, shall have the meanings set forth in this Section 2.
(a) "Board" shall mean the Board of Directors of Becton, Dickinson and
Company.
(b) "Change of Control". A change in control of the Company shall be
deemed to have occurred if, over the initial opposition of the then
incumbent Board (whether or not such Board ultimately acquiesces therein),
(i) any person or group of persons shall acquire, directly or indirectly,
stock of the Company having at least 25% of the voting power, or (ii) any
shareholder or group of shareholders shall elect a majority of the members
of the Board.
(c) "Code" shall mean the Internal Revenue Code of 1954 as it may be
amended from time to time.
(d) "Committee" shall mean the Compensation and Benefits Committee of the
Board or such other committee as may be designated by the Board. The
Committee shall consist of three or more members of the Board who are not
eligible to participate in the Plan and who, within one year prior to their
appointment, have not been eligible to participate in the Plan.
(e) "Company" shall mean Becton, Dickinson and Company.
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(f) "Date of Exercise" shall mean the earlier of the date on which written
notice of exercise, together with payment in full, is received at the
office of the Secretary of the Company or the date on which such notice and
payment are mailed to the Secretary of the Company at its principal office
by certified or registered mail.
(g) "Employee" shall mean any employee, including any officer, of the
Company or any of its Subsidiaries.
(h) "Fair Market Value" shall mean for any day the mean of the highest and
lowest selling prices of the Stock as reported by the New York Stock
Exchange (Composite Transactions).
(i) "Grantee" shall mean an Employee granted an Unqualified Stock Option.
(j) "Granting Date" shall mean the date on which the Committee authorizes
the issuance of an Unqualified Stock Option for a specified number of
shares of Stock to a specified Employee.
(k) "Plan" shall mean the Becton, Dickinson and Company 1982 Unqualified
Stock Option Plan as set forth herein and as amended from time to time.
(l) "Stock" shall mean the Common Stock, par value $1 per share, of the
Company.
(m) "Stock Appreciation Right" shall mean a right granted pursuant to the
Plan to receive Stock, cash, or a combination thereof, upon the surrender
of the right to purchase all or part of the Stock covered by an Unqualified
Stock Option.
(n) "Subsidiary" shall mean any subsidiary corporation as defined in
Section 425 of the Code.
(o) "Unqualified Stock Option" shall mean an option granted pursuant to the
Plan to purchase shares of Stock.
SECTION 3. SHARES OF STOCK SUBJECT TO THE PLAN
Subject to adjustment pursuant to Section 9, a pool of 3,500,000 shares of
Stock shall be reserved for issuance upon the exercise of Unqualified Stock
Options
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granted pursuant to this Plan as well as options granted pursuant to the
1982 Incentive Stock Option Plan also adopted by the Company. Thus, options
granted under this Plan and the 1982 Incentive Stock Option Plan shall be
limited to 3,500,000 shares in the aggregate, subject to adjustment. The
exercise of all or any part of an Unqualified Stock Option shall not result in
the cancellation or limitation of rights to exercise options granted under the
1982 Incentive Stock Option Plan. Shares delivered under the Plan may be
authorized but previously unissued shares or issued shares which have been
reacquired by the Company. If an Incentive Stock Option expires, is surrendered
or is otherwise terminated without the issuance of Stock for the full amount of
such option, the unpurchased shares shall again be available for options.
SECTION 4. ADMINISTRATION OF THE PLAN
The Plan shall be administered by the Committee. Subject to the express
provisions of the Plan, the Committee shall have authority to interpret the
Plan, to prescribe, amend, and rescind rules and regulations relating to it, to
determine the terms and provisions of Unqualified Stock Option agreements, and
to make all other determinations necessary or advisable for the administration
of the Plan. Any controversy or claim arising out of or related to this Plan
shall be determined unilaterally by and at the sole discretion of the Committee.
SECTION 5. GRANTING OF UNQUALIFIED STOCK OPTIONS
(a) Only key Employees of the Corporation shall be eligible to receive
Unqualified Stock Options under the Plan. Directors of the Corporation who
are not also Employees shall not be eligible for Unqualified Stock Options.
(b) The purchase price of each share of Stock subject to an Unqualified
Stock Option shall be 100% of the Fair Market Value of a share of the Stock
on the Granting Date.
(c) The Committee shall determine and designate from time to time those key
Employees who are to be granted Unqualified Stock Options and specify the
number of shares subject to each Unqualified Stock Option.
(d) An Unqualified Stock Option shall be exercisable during such period or
periods and in such installments as shall be fixed by the Committee at the
time the option is granted; but each Unqualified Stock Option shall expire
not later than ten years from the Granting Date.
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(e) Each Unqualified Stock Option shall provide by its terms that it is not
transferable otherwise than by will or the laws of descent and distribution
and is exercisable, during the Grantee's lifetime, only by the Grantee.
(f) Unqualified Stock Options may be granted to an Employee who has
previously received Unqualified Stock Options or other options whether such
prior Unqualified Stock Options or other options are still outstanding,
have previously been exercised or surrendered in whole or in part, or are
cancelled in connection with the issuance of new Unqualified Stock Options.
SECTION 6. EXERCISE OF UNQUALIFIED STOCK OPTIONS
(a) Except as provided in Section 8, no Unqualified Stock Option may be
exercised at any time unless the Grantee is an employee of the Company or a
Subsidiary on the Date of Exercise.
(b) The Grantee shall pay the option price in full on the Date of Exercise
of an Unqualified Stock Option in cash, by check or by delivery of full
shares of Stock of the Company, duly endorsed for transfer to the Company
with signature guaranteed, or by any combination thereof. Stock will be
accepted at its Fair Market Value on the Date of Exercise.
(c) The number of shares which are issued pursuant to the exercise of an
Unqualified Stock Option shall be charged against the maximum number of
shares authorized under the Plan.
SECTION 7. STOCK APPRECIATION RIGHTS
(a) The Committee may grant Stock Appreciation Rights in connection with
any Unqualified Stock Option.
(b) Stock Appreciation Rights shall be exercisable at such times and to the
extent that the related Unqualified Stock Option shall be exercisable,
unless the Committee specifies a more restrictive period.
(c) Upon the exercise of a Stock Appreciation Right, the Grantee shall
surrender the related Unqualified Stock Option or a portion thereof and
shall be entitled to receive payment of an amount determined by multiplying
the number of shares as to which option rights are surrendered by the
difference obtained by subtracting the exercise price per share of the
related
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Unqualified Stock Option from the Fair Market Value of a share of
Stock on the Date of Exercise of the Stock Appreciation Right.
(d) Payment of the amount determined under subparagraph 7(c) above shall be
made in Stock, in cash, or partly in cash and partly in Stock as the
Committee shall determine in its sole discretion.
(e) Except as provided in Section 10(b), the exercise of a Stock Apprecia-
tion Right for cash may be made only during the period beginning on the
third business day following the release of quarterly or annual financial
data and ending on the twelfth business day following such date.
(f) Shares covered by Unqualified Stock Options which are surrendered upon
the exercise of Stock Appreciation Rights shall not be charged against the
maximum number of shares authorized under the Plan.
SECTION 8. TERMINATION OF EMPLOYMENT
If a Grantee ceases to be an Employee, then:
(a) if termination of employment is voluntary or involuntary without cause,
the Grantee may exercise each Unqualified Stock Option held by him within
three months after such termination (but not after the expiration date of
the option) to the extent of the number of shares subject to the option
which are purchasable pursuant to its terms at the date of termination;
(b) if termination is for cause, all Unqualified Stock Options held by the
Grantee shall be cancelled as of the date of termination;
(c) if termination is by reason of retirement at a time when the Grantee is
entitled to the current receipt of benefits under any retirement plan
maintained by the Company or any Subsidiary or by reason of disability,
each Unqualified Stock Option held by the Grantee shall remain in full
force and effect in accordance with its terms, subject to the provisions of
Section 8(d);
(d) if termination is by death of the Grantee, or if the Grantee dies after
retirement pursuant to Section 8(c), each Unqualified Stock Option held by
the Grantee may be exercised by the Grantee's estate, or by any person who
acquires the right to exercise the option by reason of the optionee's
death, at any time within a period of one year after death (but not after
the expiration date of the option) to the extent of the total number of
shares subject to
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option, irrespective of the number which would have otherwise been
purchasable pursuant to the terms of the option at the date of death; or
(e) if the Grantee should die within three months after voluntary
termination of employment or involuntary termination without cause, as
contemplated in Section 8(a), each Unqualified Stock Option held by the
Grantee may be exercised by the Grantee's estate, or by any person who
acquires the right to exercise by reason of the optionee's death, at any
time within a period of one year after death (but not after the expiration
date of the option) to the extent of the number of shares subject to the
option which were purchasable pursuant to its terms at the date of
termination.
SECTION 9. ADJUSTMENTS
There shall be proportionate adjustments of the aggregate number of shares
available under the Plan, the number of shares subject to each outstanding
Unqualified Stock Option and Stock Appreciation Right and the option prices
in the event of an increase in the number of issued shares of Stock by
reason of any stock dividend, stock split-up, or other issuance of shares
without consideration.
SECTION 10. TENDER OFFER; CHANGE IN CONTROL
(a) An Unqualified Stock Option shall become immediately exercisable to the
extent of the total number of shares subject to the option in the event of
(i) a tender offer by a person or persons other than the Company for all or
any part of the outstanding Stock if, upon consummation of the purchases
contemplated, the offeror or offerors would own, beneficially or of record,
an aggregate of more than 25% of the outstanding Stock, or (ii) a Change in
Control of the Company.
(b) The Committee may authorize the payment of cash upon the exercise of a
Stock Appreciation Right during a period (i) beginning on the date on which
a tender offer as described in (a), above, is first published or sent or
given to holders of Stock and ending on the date which is seven days after
its termination or expiration, or (ii) beginning on the date on which a
Change in Control of the Company occurs and ending on the twelfth business
day following such date.
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SECTION 11. GENERAL PROVISIONS
(a) Each Unqualified Stock Option shall be evidenced by a written
instrument containing such terms and conditions, not inconsistent with this
Plan, as the Committee shall approve.
(b) The granting of an Unqualified Stock Option in any year shall not give
the Grantee any right to similar grants in future years or any right to be
retained in the employ of the Company or any Subsidiary or interfere in any
way with the right of the Company or such Subsidiary to terminate an
Employee's employment at any time.
(c) Notwithstanding any other provision of the Plan, the Company shall not
be required to issue or deliver any certificate or certificates for shares
of Stock under the Plan prior to fulfillment of all of the following
conditions:
(i) The listing, or approval for listing upon notice of issuance,
of such shares on the New York Stock Exchange;
(ii) Any registration or other qualification of such shares under
any state or federal law or regulation, or the maintaining in effect of any
such registration or other qualification which the Committee may, in its
discretion upon the advice of counsel, deem necessary or advisable; and
(iii) The obtaining of any other consent, approval or permit from any
state or federal governmental agency which the Committee may, in its
discretion upon the advice of counsel, determine to be necessary or
advisable.
SECTION 12. AMENDMENT AND TERMINATION
(a) The Plan shall terminate on May 24, 1992, and no Unqualified Stock
Option shall be granted hereunder after that date, provided that the Board
may terminate the Plan at any time.
(b) The Board may amend the Plan at any time without notice; provided
however, that the Board may not, without prior approval by the share-
holders, (i) increase the maximum number of shares for which options may be
granted (except as contemplated by the provisions of Section 9 hereof),
(ii) change the eligibility requirements for individuals entitled to
receive options, (iii) change the purchase price of options, (iv) withdraw
the administration of the Plan from a committee of directors of the Company
who are not eligible to receive options, or (v) materially increase the
benefits accruing to Grantees.
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(c) No termination or amendment of the Plan may, without consent of a
Grantee to whom an Unqualified Stock Option shall theretofore have been
granted, adversely affect the rights of such Grantee under such option.
SECTION 13. EFFECTIVE DATE AND SHAREHOLDERS APPROVAL
The Plan shall become effective May 25, 1982 upon its approval by the
Board, subject to approval or ratification by a majority of the votes cast by
the holders of shares entitled to vote thereon at the next Annual Meeting of
Shareholders of the Company or any adjournment or postponement thereof. The
Committee may grant Unqualified Stock Options the exercise of which shall be
expressly subject to the condition that the Plan shall have been approved or
ratified by the shareholders of the Company.
* * * * *
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EXHIBIT 10(h)
BECTON, DICKINSON AND COMPANY
SALARY AND BONUS DEFERRAL PLAN
Effective August 1, 1994
<PAGE>
FOREWORD
Effective as of August 1, 1994 (the "Effective Date"), Becton, Dickinson and
Company has adopted the Becton, Dickinson and Company Salary and Bonus Deferral
Plan (the "Plan") for the benefit of certain of its employees. The Plan is
intended to be an unfunded plan of deferred compensation primarily for the
benefit of a select group of management and highly compensated employees. To
the extent that the Plan permits the voluntary deferral of bonuses, the Plan is
intended to amend and replace the Bonus Deferral Option of the Becton Dickinson
and Company Executive Bonus Plan.
The purpose of the Plan is to permit those employees of the Company who are part
of a select group of management or highly compensated employees to defer a part
of the salary or bonus paid to them, pursuant to the provisions of the Plan.
1
<PAGE>
ARTICLE I
Definitions
-----------
1.1 "Board of Directors" means the Board of Directors of the Company.
1.2 "Code" means the Internal Revenue Code of 1986, as amended.
1.3 "Company" means Becton, Dickinson and Company and any successor to such
corporation by merger, purchase or otherwise.
1.4 "Deferred Bonus" means the amount of a participant's bonus that such
participant has elected to defer until a later year pursuant to an election
under Section 3.2 of this Plan.
1.5 "Deferred Bonus Account" means the bookkeeping account established under
Section 3.2 on behalf of a participant, and includes any investment return
credited thereon pursuant to Section 3.3.
1.6 "Deferred Salary" means the amount of a participant's salary that such
participant has elected to defer until a later year pursuant to an election
under Section 3.1 of this Plan.
1.7 "Deferred Salary Account" means the bookkeeping account established under
Section 3.1 on behalf of a participant, and includes any investment return
credited thereon pursuant to Section 3.3.
1.8 "Fiscal Year" means the fiscal year of the Company which is the twelve
month period commencing on the first day of October and ending on the last
day of September of the following year.
1.9 "Plan" means the Becton, Dickinson and Company Salary and Bonus Deferral
Plan as from time to time in effect.
1.10 "Salary and Bonus Deferral Committee" or "Committee" means the committee
that is responsible for administering the Plan. The committee shall consist
of three or more employees of the Company as determined by, and appointed
by, the Board of Directors.
1
<PAGE>
ARTICLE II
Participation
-------------
2.1 Participation
-------------
Participation in the Plan shall be limited to:
(a) for purposes of Section 3.1, those individuals (i) who are U.S.
citizens who are employed by the Company or its subsidiaries in the U.S.
or abroad and (ii) whose base salary is $100,000 or more effective August
1 of the year before the calendar year in which the salary is earned.
(b) for purposes of Section 3.2, those individuals (i) who are U.S. citizens
who are employed by the Company or its subsidiaries in the U.S. or abroad
and (ii) whose base salary is $100,000 or more effective August 1 of the
fiscal year for which the bonus is earned.
The Committee shall have the ability to adjust the dollar limitations
specified above for any calendar year or fiscal year on a uniform and
nondiscriminatory basis.
2
<PAGE>
ARTICLE III
Salary Deferral Elections and Bonus Deferral Elections
------------------------------------------------------
3.1 Salary Deferral Election
------------------------
With respect to an individual who is eligible to participate in this Plan
in accordance with Section 2.1(a), elections of Deferred Salary shall be
made on forms furnished by the Committee. A Deferred Salary election shall
apply only to base salary for the particular year specified in the
election. Participants may elect to defer from 5% of salary to 25% of
salary (in increments of 1%).
A Deferred Salary election with respect to compensation for a particular
calendar year (i) must be made on or before the November 30 preceding the
commencement of such calendar year, and (ii) once made, cannot be changed
or revoked except as provided herein. Such Deferred Salary shall be
credited to the participant's Deferred Salary Account as of each payroll
period of the calendar year to which it pertains. Revocation of any Salary
Deferral Election shall, only with respect to salary to be earned in the
future, reduce the participant's deferral percentage to zero. Notice of
revocation must be filed with the Committee by the fifteenth day of the
month before the month in which such revocation is to be effective. Such
revocation shall not affect any balances credited to the participant's
Deferred Salary Account before the effective date of the Salary Deferral
Election revocation.
An individual eligible to participate may defer the payment of any salary
and any investment return credited thereon pursuant to Section 3.3 (i)
until the participant's retirement, permanent and total disability, death
or termination of employment, or (ii) until the January 31 following the
participant's retirement, permanent and total disability, death or
termination of employment, or (iii) until a period no less than five years
from the first day of the calendar year beginning immediately following the
first date of deferral (or any later period determined in calendar year
increments). In the event of any such deferral election, the form of
payment of any distribution (i.e., lump sum or five approximately equal
annual installments, where available) shall be elected at the same time.
3.2 Bonus Deferral Election
-----------------------
With respect to an individual who is eligible to participate in this Plan
in accordance with Section 2.1(b), elections of Deferred Bonus shall be
made on forms furnished by the Committee. A Deferred Bonus election shall
apply only to a bonus for the particular year specified in the election.
Participants may elect to defer 25%, 50%, 75% or 100% of the earned bonus,
but in no event less than $5,000.
3
<PAGE>
A Deferred Bonus election with respect to compensation for a particular
Fiscal Year (i) must be made on or before September 30 of such Fiscal Year,
and (ii) once made, cannot be changed or revoked. Such Deferred Bonus
shall be credited to the participant's Deferred Bonus Account as of the
January 1 of the fiscal year following the participant's election.
An individual eligible to participate may defer the payment of any bonus
and any investment return credited thereon pursuant to Section 3.3 (i)
until the participant's retirement, permanent and total disability, death
or termination of employment, (ii) until the January 31 following the
participant's retirement, permanent and total disability, death or
termination of employment, or (iii) until a period no less than five years
from the first day of the calendar year beginning immediately following the
first date of deferral (or any later period determined in calendar year
increments). In the event of any such deferral election, the form of
payment of any distribution (i.e., lump sum or five approximately equal
annual installments, where available) shall be elected at the same time.
3.3 Investment Return on Deferred Salary Account and Deferred Bonus Account
-----------------------------------------------------------------------
As of the end of each calendar year, the Committee shall credit interest
with respect to the participant's Deferred Salary Account and/or Deferred
Bonus Account during the calendar year. Such balance shall include all
interest credited to the account in previous years. The interest to be
credited for each calendar year shall be calculated by multiplying the
average daily balance in the Deferred Salary Account and/or Deferred Bonus
Account by the Moody's Seasoned AAA Corporate Bond Rate in effect on the
first business day of September of the previous calendar year, as
published in the weekly Federal Reserve Statistical Release (Publication
H.15).
Within 60 days following the end of each calendar year, the Committee shall
furnish the individual with a statement of account which shall set forth
the balance of the individual's account as of the end of such calendar
year, inclusive of investment return.
3.4 Distributions
-------------
(a) The amount of a participant's Deferred Salary Account and/or Deferred
Bonus Account shall be paid to the participant or his or her
beneficiary, as applicable, upon occurrence of the event specified in
the participant's Deferred Salary election and/or Deferred Bonus
election, from the general assets of the Company in accordance with
this Section 3.4. Such payment shall be made as soon as practicable
following the occurrence of the event making payment necessary.
Notwithstanding the foregoing, in the case of a deferral period
described in subpart (iii) of the third paragraph of Section 3.1 and/or
Section 3.2, if an event described in subpart (i) or (ii) of such
Section(s) precedes the date to which the participant has otherwise
deferred a payment, then payment shall be made at the latest of the
events described in such subparts (i) or (ii) to occur.
4
<PAGE>
(b) Unless other arrangements are specified by the Salary and Bonus
Deferral Committee on a uniform and nondiscriminatory basis, deferred
amounts shall be paid on the following basis:
Retirement - Lump sum payment, or in five approximately equal annual
installments
Disability - Lump sum payment, or in five approximately equal annual
installments
Death - Lump sum payment, or in five approximately equal annual
installments to the beneficiary
Termination - Lump sum payment
Withdrawal - Lump sum payment
while active
(c) In case of unforeseeable emergency, a participant may request the
Committee, on a form provided by the Committee, that payment be made
earlier than the date to which it was deferred. For purposes of this
Section 3.4(c) "unforeseeable emergency" shall be limited to (i) a
severe financial hardship to the participant resulting from a sudden
and unexpected illness or accident of the participant or of a dependent
(as defined in section 152(a) of the Code) of the participant, loss of
the participant's property due to casualty, or other similar
extraordinary and unforeseeable circumstances arising as a result of
events beyond the control of the participant. The circumstances that
will constitute an unforeseeable emergency will depend upon the facts
of each case, but, in any case, payment may not be made to the extent
that such hardship is or may be relieved.
(i) Through reimbursement or compensation by insurance or
otherwise,
(ii) By liquidation of the participant's assets, to the extent the
liquidation of such assets would not itself cause severe
financial hardship, or
(iii) By cessation of deferrals under the plan.
Examples of what are not considered to be unforeseeable emergencies
include the need to send a participant's child to college or the desire
to purchase a home. The Committee shall consider any requests for
payment under this Section 3.4(c) on a uniform and nondiscriminatory
basis and in accordance with the standards of interpretation described
in section 457 of the Code and the regulations thereunder. The minimum
payment under this Section 3.4(c) shall be $5,000.
(d) The Company shall make any required federal, state, and local
withholding deductions from all payments.
5
<PAGE>
3.5 General Provisions
------------------
(a) The Company shall make no provision for the funding of any Deferred
Salary Accounts and/or Deferred Bonus Accounts payable hereunder that (i)
would cause the Plan to be a funded plan for purposes of section
404(a)(5) of the Code, or Title I of the Employee Retirement Income
Security Act of 1974 ("ERISA") or (ii) would cause the Plan to be other
than an "unfunded and unsecured promise to pay money or other property in
the future" under Treasury Regulations section 1.83-3(e); and shall have
no obligation to make any arrangement for the accumulation of funds to
pay any amounts under this Plan. Subject to the restrictions of the
preceding sentence and paragraph (c) below, the Company, in its sole
discretion, may establish a grantor trust described in Treasury
Regulations section 1.677(a)-1(d) to accumulate funds to pay amounts
under this Plan, provided that the assets of the trust shall be required
to be used to satisfy the claims of the Company's general creditors in
the event of the Company's bankruptcy or insolvency.
(b) In the event that the Company shall decide to establish an advance
accrual reserve on its books against the future expense of payments from
Deferred Salary Accounts and/or Deferred Bonus Accounts, such reserve
shall not under any circumstances be deemed to be an asset of this Plan
but, at all times, shall remain a part of the general assets of the
Company, subject to claims of the Company's creditors.
(c) A person entitled to any amount under this Plan shall be a general
unsecured creditor of the Company with respect to such amount.
Furthermore, a person entitled to a Deferred Salary Account and/or
Deferred Bonus Account shall have a claim upon the Company only to the
extent of the Deferred Salary Account and/or Deferred Bonus Account.
(d) The participant's beneficiary under this Plan with respect to his or
her Deferred Salary Account and/or Deferred Bonus Account shall be the
person designated to receive benefits on accounts of the participant's
death on a form provided by the Committee.
3.6 Pension Credit
--------------
Amounts deferred under this Plan shall be included in the computation of
compensation under the Becton Dickinson and Company Retirement Benefit
Restoration Plan and shall earn pension credit in the Restoration Plan at
the same rate as undeferred salary or bonus amounts.
3.7 Non-Assignability
-----------------
Participants or legal representatives shall have no right to assign or
transfer their interests in the Plan.
6
<PAGE>
3.8 Mandatory Deferral
------------------
Notwithstanding any other provision of this Plan, the Compensation and
Benefits Committee of the Board of Directors may require an employee to
defer the portion of any salary and/or bonus amount that the Company
anticipates would be nondeductible to it pursuant to Section 162(m) of the
Code.
7
<PAGE>
ARTICLE IV
Administration
--------------
4.1 Plan Administrator
------------------
The Committee shall be the "administrator" of the Plan within the meaning of
ERISA. The Committee shall have the exclusive right to interpret the Plan
and the decisions, actions and records of the Committee shall be conclusive
and binding upon the Company and all persons having or claiming to have any
right or interest in or under the Plan.
The Committee may delegate to such officers, employees or departments of the
Company such authority, duties, and responsibilities of the Committee as it,
in its sole discretion, considers necessary or appropriate for the proper
and efficient operation of the Plan, including, without limitation, (i)
interpretation of the Plan, (ii) approval and payment of claims, and (iii)
establishment of procedures for administration of the Plan.
8
<PAGE>
ARTICLE V
Amendment and Termination
-------------------------
5.1 Amendment of the Plan
---------------------
Subject to the provisions of Section 5.3, the Plan may be wholly or
partially amended or otherwise modified at any time by written action of the
Board of Directors.
5.2 Termination of the Plan
-----------------------
Subject to the provisions of Section 5.3, the Plan may be terminated at any
time by written action of the Board of Directors.
5.3 No Impairment of Benefits
-------------------------
Notwithstanding the provisions of Sections 5.1 and 5.2, no amendment to or
termination of the Plan shall impair any rights to benefits which have
accrued hereunder.
9
<PAGE>
EXHIBIT 10(i)
BECTON, DICKINSON AND COMPANY
1990 STOCK OPTION PLAN
AS AMENDED AND RESTATED FEBRUARY 8, 1994
- --------------------------------------------------------------------------------
SECTION 1. PURPOSE
The purpose of this Stock Option Plan is to provide an additional incentive
to key employees of Becton, Dickinson and Company and its subsidiaries, and to
aid in attracting and retaining employees of outstanding ability.
SECTION 2. DEFINITIONS
Unless the context clearly indicates otherwise, the following terms, when
used in this Stock Option Plan, shall have the meanings set forth in this
Section 2.
(a) "Board" shall mean the Board of Directors of Becton, Dickinson and
Company.
(b) "Change of Control". A change in control of the Company shall be
deemed to have occurred if, over the initial opposition of the then
incumbent Board (whether or not such Board ultimately acquiesces
therein), (i) any person or group of persons shall acquire, directly or
indirectly, stock of the Company having at least 25% of the combined
voting power of the Company's then outstanding securities, or (ii) any
shareholder or group of shareholders shall elect a majority of the
members of the Board.
(c) "Code" shall mean the Internal Revenue Code of 1986 as it may be
amended from time to time.
(d) "Committee" shall mean the Compensation and Benefits Committee of the
Board or such other committee as may be designated by the Board. The
Committee shall consist of three or more members of the Board who are
not eligible to participate in the Plan and who, within one year prior
to their appointment, have not been eligible to participate in the
Plan.
-1-
<PAGE>
(e) "Company" shall mean Becton, Dickinson and Company.
(f) "Date of Exercise" shall mean the earlier of the date on which written
notice of exercise, together with payment in full, is received at the
office of the Secretary of the Company or the date on which such notice
and payment are mailed to the Secretary of the Company at its principal
office by certified or registered mail.
(g) "Employee" shall mean any employee, including any officer, of the
Company or any of its Subsidiaries.
(h) "Fair Market Value" shall mean for any day the mean of the highest and
lowest selling prices of the Stock as reported on the Composite Tape
for securities traded on the New York Stock Exchange.
(i) "Grantee" shall mean an Employee granted a Stock Option.
(j) "Granting Date" shall mean the date on which the Committee authorizes
the issuance of a Stock Option for a specified number of shares of
Stock to a specified Employee.
(k) "Plan" shall mean the Becton, Dickinson and Company 1990 Stock Option
Plan as set forth herein and amended from time to time.
(l) "Stock" shall mean the Common Stock, par value $1.00 per share, of the
Company.
(m) "Stock Appreciation Right" shall mean a right granted pursuant to the
Plan to receive Stock, cash, or a combination thereof, upon the
surrender of the right to purchase all or part of the shares of Stock
covered by a Stock Option.
(n) "Stock Option" shall mean an Incentive or Unqualified Stock Option
granted pursuant to the Plan to purchase shares of Stock.
(o) "Subsidiary" shall mean any subsidiary corporation as defined in
Section 425 of the Code.
-2-
<PAGE>
SECTION 3. SHARES OF STOCK SUBJECT TO THE PLAN
Subject to adjustment pursuant to Section 9, 2,000,000 shares of Stock shall
be reserved for issuance upon the exercise of Stock Options granted pursuant to
this Plan. Shares delivered under the Plan may be authorized and unissued
shares or issued shares held by the Company in its treasury. If any Stock
Options expire or terminate without having been exercised, the shares of Stock
covered by such Stock Options shall become available again for the grant of
Stock Options hereunder. Similarly, if any Stock Options are surrendered for
cash pursuant to the provisions of Section 7, the shares of Stock covered by
such Stock Options shall also become available again for the grant of Stock
Options hereunder. Shares of Stock covered by Stock Options surrendered for
Stock pursuant to Section 7, however, shall not become available again for the
grant of Stock Options hereunder.
SECTION 4. ADMINISTRATION OF THE PLAN
The Plan shall be administered by the Committee. Subject to the express
provisions of the Plan, the Committee shall have authority to interpret the
Plan, to prescribe, amend and rescind rules and regulations relating to it, to
determine the terms and provisions of Stock Option grants, and to make all other
determinations necessary or advisable for the administration of the Plan. Any
controversy or claim arising out of or related to this Plan shall be determined
unilaterally by and at the sole discretion of the Committee.
SECTION 5. GRANTING OF STOCK OPTIONS
(a) Only key Employees of the Company shall be eligible to receive Stock
Options under the Plan. Directors of the Company who are not also
Employees shall not be eligible for Stock Options.
(b) The purchase price of each share of Stock subject to an Incentive Stock
Option shall be 100% of the Fair Market Value of a share of the Stock
on the Granting Date.
(c) The purchase price of each share of Stock subject to an Unqualified
Stock Option shall be 100% of the Fair Market Value of a share of the
Stock on the Granting Date, or such other price either less than or
greater than the Fair Market Value as the
-3-
<PAGE>
Committee shall determine appropriate to the purpose of the Plan and to
the Company's total compensation program.
(d) The Committee shall determine and designate from time to time those key
Employees who are to be granted Stock Options and whether the
particular Stock Options are to be Incentive Stock Options or
Unqualified Stock Options, and shall also specify the number of shares
covered by and the exercise price per share of each Stock Option.
(e) The aggregate fair market value (determined at the time the option is
granted) of the Stock with respect to which Incentive Stock Options are
exercisable for the first time by any individual during any calendar
year (under all such plans of the individual's employer corporation and
its parent and subsidiary corporations) shall not exceed $100,000.
(f) A Stock Option shall be exercisable during such period or periods and
in such installments as shall be fixed by the Committee at the time the
option is granted; but each Stock Option shall expire not later than
ten years from the Granting Date.
(g) Each Stock Option shall provide by its terms that it is not
transferable otherwise than by will or the laws of descent and
distribution and is exercisable, during the Grantee's lifetime, only by
the Grantee.
(h) Stock Options may be granted to an Employee who has previously received
Stock Options or other options whether such prior Stock Options or
other options are still outstanding, have previously been exercised or
surrendered in whole or in part, or are canceled in connection with the
issuance of new Stock Options.
SECTION 6. EXERCISE OF STOCK OPTIONS
(a) Except as provided in Section 8, no Stock Option may be exercised at
any time unless the Grantee is an employee of the Company or a
subsidiary on the Date of Exercise.
(b) The Grantee shall pay the option price in full on the Date of Exercise
of a Stock Option in cash, by check, or by delivery of full shares of
Stock of the Company, duly endorsed for transfer to the Company with
-4-
<PAGE>
signature guaranteed, or by any combination thereof. Stock will be
accepted at its Fair Market Value on the Date of Exercise.
SECTION 7. STOCK APPRECIATION RIGHTS
(a) The Committee may grant Stock Appreciation Rights in connection with
any Stock Option.
(b) Stock Appreciation Rights shall be exercisable at such times and to the
extent that the related Stock Option shall be exercisable, unless the
Committee specifies a more restrictive period.
(c) Upon the exercise of a Stock Appreciation Right, the Grantee shall
surrender the related Stock Option or a portion thereof and shall be
entitled to receive payment of an amount determined by multiplying the
number of shares as to which option rights are surrendered by the
difference obtained by subtracting the exercise price per share of the
related Stock Option from the Fair Market Value of a share of Stock on
the Date of Exercise of the Stock Appreciation Right.
(d) Payment of the amount determined under Section 7(c) shall be made in
Stock, in cash, or partly in cash and partly in Stock as the Committee
shall determine in its sole discretion.
(e) Except as provided in Section 10(b), the exercise of a Stock
Appreciation Right for cash may be made only during the period
beginning on the third business day following the release of quarterly
or annual financial data and ending on the twelfth business day
following such date.
SECTION 8. TERMINATION OF EMPLOYMENT
If a Grantee ceases to be an Employee, then:
(a) if termination of employment is voluntary or involuntary
without cause, the Grantee may exercise each Stock Option held by him
within three months after such termination (but not after the
expiration date of the option) to the extent of the number of shares
subject to the option which are purchasable pursuant to its terms at
the date of termination;
-5-
<PAGE>
(b) if termination is for cause, all Stock Options held by the Grantee
shall be canceled as of the date of termination;
(c) if termination is by reason of retirement at a time when the Grantee is
entitled to the current receipt of benefits under any retirement plan
maintained by the Company or any Subsidiary or by reason of disability,
each Stock Option held by the Grantee shall remain in full force and
effect in accordance with its terms, subject to the provisions of
Section 8(d);
(d) if termination is by reason of the death of the Grantee, or if the
Grantee dies after retirement or disability as referred to in Section
8(c), each Stock Option held by the Grantee may be exercised by the
Grantee's estate, or by any person who acquires the right to exercise
the option by reason of the Grantee's death, at any time within a
period of one year after death (but not after the expiration date of
the option) to the extent of the total number of shares subject to
option, irrespective of the number which would have otherwise been
purchasable pursuant to the terms of the option at the date of death;
or
(e) if the Grantee should die within three months after voluntary
termination of employment or involuntary termination without cause, as
contemplated in Section 8(a), each Stock Option held by the Grantee may
be exercised by the Grantee's estate, or by any person who acquires the
right to exercise by reason of the Grantee's death, at any time within
a period of one year after death (but not after the expiration date of
the option) to the extent of the number of shares subject to the option
which were purchasable pursuant to its terms at the date of
termination.
SECTION 9. ADJUSTMENTS
There shall be proportionate adjustments of the aggregate number of shares
available under the Plan, the number of shares subject to each outstanding Stock
Option and Stock Appreciation Right and the option prices in the event of an
increase in the number of issued shares of Stock by reason of any stock
dividend, stock split-up, or other issuance of shares without consideration.
-6-
<PAGE>
No exercise of conversion rights with respect to the shares of the Company's
Series B ESOP Convertible Preferred Stock shall call for any adjustment under
this Section 9.
SECTION 10. TENDER OFFER; CHANGE IN CONTROL
(a) A Stock Option shall become immediately exercisable to the extent of
the total number of shares subject to the option in the event of (i) a
tender offer by a person or persons other than the Company for all or
any part of the outstanding Stock if, upon consummation of the
purchases contemplated, the offeror or offerors would own, beneficially
or of record, an aggregate of more than 25% of the outstanding Stock,
or (ii) a Change in Control of the Company.
(b) The Committee may authorize the payment of cash upon the exercise of a
Stock Appreciation Right during a period (i) beginning on the date on
which a tender offer as described in (a), above, is first published or
sent or given to holders of Stock and ending on the date which is seven
days after its termination or expiration, or (ii) beginning on the date
on which a Change in Control of the Company occurs and ending on the
twelfth business day following such date.
SECTION 11. GENERAL PROVISIONS
(a) Each Stock Option shall be evidenced by a written instrument containing
such terms and conditions, not inconsistent with this Plan, as the
Committee shall approve.
(b) The granting of a Stock Option in any year shall not give the Grantee
any right to similar grants in future years or any right to be retained
in the employ of the Company or any Subsidiary or interfere in any way
with the right of the Company or such Subsidiary to terminate an
Employee's employment at any time.
(c) Notwithstanding any other provision of the Plan, the Company shall not
be required to issue or deliver any certificate or certificates for
shares of Stock under the Plan prior to fulfillment of all of the
following conditions:
-7-
<PAGE>
(i) The listing, or approval for listing upon notice of issuance, of
such shares on the New York Stock Exchange;
(ii) Any registration or other qualification of such shares under any
state or federal law or regulation, or the maintaining in effect
of any such registration or other qualification which the
Committee may, in its discretion upon the advice of counsel, deem
necessary or advisable; and
(iii) The obtaining of any other consent, approval or permit from any
state or federal governmental agency which the Committee may, in
its discretion upon the advice of counsel, determine to be
necessary or advisable.
(d) The Company shall have the right to deduct from any payment or
distribution under the Plan any federal, state or local taxes of any
kind required by law to be withheld with respect to such payments or to
take such other action as may be necessary to satisfy all obligations
for the payment of such taxes. In case distributions are made in
shares of Stock, the Company shall have the right to retain the value
of sufficient shares to equal the amount of tax to be withheld for such
distributions or require a recipient to pay the Company for any such
taxes required to be withheld on such terms and conditions prescribed
by the Committee.
SECTION 12. AMENDMENT AND TERMINATION
(a) The Plan shall terminate on November 26, 2000 and no Stock Option shall
be granted hereunder after that date, provided that the Board may
terminate the Plan at any time prior thereto.
(b) The Board may amend the Plan at any time without notice; provided
however, that the Board may not, without prior approval by the
shareholders, (i) increase the maximum number of shares for which
options may be granted (except as contemplated by the provisions of
Section 9), (ii) change the purchase price of options, (iii) withdraw
the administration of the Plan from a committee of directors of the
Company who are not eligible to receive options, or (iv) materially
increase the benefits accruing to Grantees.
-8-
<PAGE>
(c) No termination or amendment of the Plan may, without the consent of a
Grantee to whom a Stock Option shall theretofore have been granted,
adversely affect the rights of such Grantee under such Stock Option.
SECTION 13. EFFECTIVE DATE AND SHAREHOLDERS' APPROVAL
The Plan shall become effective November 27, 1990 upon its approval by the
Board, subject to approval or ratification by a majority of the votes cast by
the holders of shares entitled to vote thereon at the next Annual Meeting of
Shareholders of the Company or any adjournment or postponement thereof. The
Committee may grant Stock Options, the exercise of which shall be expressly
subject to the condition that the Plan shall have been approved or ratified by
the shareholders of the Company.
-9-
<PAGE>
EXHIBIT 11
BECTON, DICKINSON AND COMPANY
COMPUTATION OF EARNINGS PER SHARE
YEARS ENDED SEPTEMBER 30, 1994, 1993 AND 1992
(ALL AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1994 1993 1992
- ----------------------------------------------------------------------------------
PRIMARY EARNINGS PER SHARE
--------------------------
<S> <C> <C> <C>
Net income:
Income before cumulative effect of accounting
changes........................................ $227,174 $212,840 $200,753
Less preferred stock dividends.................. (3,711) (3,800) (2,545)(A)
-------- -------- --------
Income before cumulative effect of accounting
changes applicable to common stock............. 223,463 209,040 198,208
Cumulative effect of accounting changes, net of
taxes.......................................... -- (141,057) --
-------- -------- --------
Net income applicable to common stock........... $223,463 $ 67,983 $198,208
======== ======== ========
Shares:
Average shares outstanding................... 72,237 75,833 75,676
Add dilutive stock equivalents from stock
plans....................................... 1,096 1,097 1,352
-------- -------- --------
Weighted average number of common and common
equivalent shares outstanding during the
year........................................ 73,333 76,930 77,028
======== ======== ========
Earnings per share:
Income before cumulative effect of accounting
changes........................................ $3.05 $2.71 $2.57
Cumulative effect of accounting changes, net of
taxes.......................................... -- (1.83) --
-------- -------- --------
Net income...................................... $3.05 $ .88 $2.57
======== ======== ========
<CAPTION>
FULLY DILUTED EARNINGS PER SHARE (B)
------------------------------------
<S> <C> <C> <C>
Net income:
Income before cumulative effect of accounting
changes applicable to common stock............. $223,463 $209,040 $198,208
Add preferred stock dividends using the "if
converted" method.............................. 3,711 3,800 2,545 (A)
Less additional ESOP contribution, using the "if
converted" method.............................. (1,540) (1,652) (1,735)
-------- -------- --------
Income before cumulative effect of accounting
changes for fully diluted earnings per share... 225,634 211,188 199,018
Cumulative effect of accounting changes, net of
taxes.......................................... -- (141,057) --
-------- -------- --------
Net income for fully diluted earnings per share. $225,634 $ 70,131 $199,018
======== ======== ========
Shares:
Average shares outstanding................... 72,237 75,833 75,676
Add:
Dilutive stock equivalents from stock
plans..................................... 1,949 1,106 1,522
Shares issuable upon conversion of pre-
ferred stock.............................. 1,528 1,576 1,600
-------- -------- --------
Weighted average number of common shares used
in calculating fully diluted earnings per
share....................................... 75,714 78,515 78,798
======== ======== ========
Fully diluted earnings per share:
Income before cumulative effect of accounting
changes........................................ $2.98 $2.69 $2.53
Cumulative effect of accounting changes, net of
taxes.......................................... -- (1.80) --
-------- -------- --------
Net income...................................... $2.98 $ .89 $2.53
======== ======== ========
</TABLE>
- --------
(A) Net of tax benefit.
(B) Excluding the assumed conversion of preferred shares in 1993 would yield
the following results: Income before cumulative effect of accounting
changes: $2.71; Cumulative effect of accounting changes, net of taxes:
($1.83); and Net income: $.88.
<PAGE>
EXHIBIT 13
PORTIONS OF THE REGISTRANT'S ANNUAL
- -----------------------------------
REPORT TO SHAREHOLDERS FOR FISCAL YEAR 1994
- -------------------------------------------
FINANCIAL TABLE OF CONTENTS
Financial Review 23
Six Year Summary of Selected Financial Data 30
Summary by Business Segment 32
Summary by Geographic Area 33
Report of Management 34
Report of Ernst & Young LLP, Independent Auditors 35
Consolidated Statements of Income 36
Consolidated Balance Sheets 37
Consolidated Statements of Cash Flows 38
Notes to Consolidated Financial Statements 39
Quarterly Data (Unaudited) 52
FINANCIAL REVIEW
Becton Dickinson is a medical technology company which manufactures and
sells a broad range of medical supplies and devices and diagnostic systems for
use by health care professionals, medical research institutions and the general
public. The Company focuses strategically on achieving growth in two worldwide
business segments - Medical Supplies and Devices (Medical) and Diagnostic
Systems (Diagnostic). The Company's financial results and the operating
performance of the segments are discussed below.
REVENUES AND EARNINGS
Worldwide revenues of $2.6 billion rose 4%, or 5% after excluding the
estimated unfavorable impact of foreign currency translation. Revenue growth was
achieved in the U.S. and international markets by both segments.
Medical segment revenues of $1.4 billion increased 5% compared with last
year. Excluding the estimated unfavorable impact of foreign currency
translation, Medical segment revenues increased 6%, almost all of which was from
unit volume increases and shifts in product mix. Growth was led by strong sales
of hypodermic products, notably safety products, as well as insulin and
prefillable syringes. The market for disposable insulin syringes has grown in
part from the widely published results of an independent and respected study
which suggests that closer monitoring of blood glucose levels and more frequent
insulin injections are beneficial to people with diabetes.
Medical segment operating income of $274 million increased 20% from the
prior year. Excluding the estimated unfavorable impact of foreign currency
translation and the effects of special charges in 1994 and 1993, as discussed
below, Medical segment operating income would have increased 18%, primarily from
improved product mix, manufacturing cost reductions and focused control of
selling and administrative expense.
Diagnostic segment revenues of $1.1 billion increased 3%, or 4% after
excluding the estimated unfavorable impact of foreign currency translation.
Volume growth contributed approximately 2%, with the balance from shifts in
product mix and price increases. Growth was led by strong sales of VACUTAINER
brand blood collection products, including the Company's newer proprietary
safety products, and increased placements of the BACTEC brand 9000 blood culture
systems. The rate of growth of traditional microbiology products was slower
than historical levels as a result of some adjustments being made in
microbiology test protocols due to cost containment initiatives in the United
States and Europe. Sales of FACS brand cellular analysis systems to research
institutions and clinical laboratories were also adversely impacted by
competition, regulatory delays for new products, and tight research budgets.
The Company is responding to these developments, which are expected to continue,
through its ongoing efforts to develop additional cost-effective, innovative
products which will maximize its opportunities in these markets.
Diagnostic segment operating income of $111 million was about the same as
the prior year. Excluding the estimated unfavorable impact of foreign currency
translation and the effects of special charges in 1994 and 1993, Diagnostic
segment operating income would have increased 17%, primarily from improved
product mix, manufacturing cost reductions and focused control of selling and
administrative expense. As discussed further below, the Company recorded
special charges during the year, primarily related to decisions to exit product
lines and refocus certain businesses within the
23
<PAGE>
Diagnostic segment. The exited product lines consisted of those where the
market potential was reassessed and long-term profitability was projected at
less than acceptable levels. These product lines included thyroid, pregnancy,
fertility and anemia testing. In addition, the refocusing of certain businesses
will allow the Company to adjust infrastructure and research spending
commensurate with perceived market opportunities, which includes a refocus
around DNA probes for infectious disease diagnostics and clinical cellular
analysis.
On a geographic basis, revenues outside of the United States of $1.1
billion rose 4%, or 7% after excluding the estimated unfavorable impact of
foreign currency translation. This growth continued to be driven by double-
digit increases in Japan and Asia-Pacific, where significant investments have
been made in recent years. Cost containment measures by government agencies in
Europe have adversely impacted sales volume, particularly for instrumented
systems in Italy, Spain and Germany. Revenues in the United States were $1.4
billion, an increase of 4%. Revenues from the Company's core medical and
diagnostic products were strong, reflecting the Company's successful strategy of
focusing on cost-effective, innovative products which complement efforts to
provide lower cost and higher quality health care. As mentioned earlier, growth
of certain diagnostic products was impacted by the cost containment environment
in the United States.
The Company's gross profit margin rose to 45.3%, compared with 44.5% last
year, primarily due to favorable product mix and manufacturing cost reductions.
Also contributing to this improvement was the favorable impact of medical plan
changes, as discussed below. The effects on gross profit margin of recent and
projected price increases in certain key raw materials, principally
polypropylene and corrugated cartons, are expected to be largely offset
primarily through anticipated manufacturing efficiencies.
Selling and administrative expense was 25.8% of revenues, better than last
year's rate of 26.8%, reflecting the Company's tight spending controls and cost
reduction programs.
Investment in research and development increased to $144 million, or 5.6%
of revenues, reflecting the Company's continuing efforts to bring new products
to market to help achieve long-term growth objectives, as well as increasing
investments in higher technology platforms with good future market
opportunities. Sales of new products introduced in the last five years
represented 16% and 15% of revenues in 1994 and 1993, respectively.
In 1994, the Company recorded a one-time expense of $5 million in
connection with an early retirement program offered to certain eligible
employees. In addition, the Company made significant modifications to its U.S.
medical plans including employee and retiree contributions, higher deductibles
and a medical cost inflation cap. As expected, the favorable impact of these
plan changes more than offset the ongoing costs in 1994 related to the 1993
employee benefit related accounting changes which reduced 1993 earnings before
cumulative effect of accounting changes by $.14 per share.
[graphic material contained under the caption "Financial Review"
is not included in the electronic filing of this report]
24
<PAGE>
In the fourth quarter of 1994, the Company recorded special charges of $30
million, or $.26 per share, primarily related to write-offs of property, plant
and equipment, inventories and other assets associated with exited product lines
and refocused businesses. Revenues associated with exited product lines
approximated $19 million and $22 million in 1994 and 1993, respectively.
Operating income in 1994 was $325 million, an increase of 20%. Excluding
the estimated unfavorable impact of foreign currency translation and the effects
of special charges in 1994 and 1993, operating income increased 22% primarily
from improved gross profit margin and better control of selling and
administrative expense. In order to take full advantage of European economic
integration, the Company began centralizing its warehousing and distribution
activities within Europe in 1993. In 1995, the Company expects to begin
realizing long-term benefits from this centralization, such as enhanced customer
service and more efficient inventory management.
Net interest expense of $48 million in 1994 was $6 million lower than in
1993, primarily due to lower financing costs in Brazil.
"Other income (expense), net" of $19 million included a gain of $36
million, or $.30 per share, from the disposition of a foreign investment.
Proceeds from the disposition are being received in three installments, the
first of which was received in September 1994. Also included in "Other income
(expense), net" is a foreign exchange loss of $11 million in 1994. The net
monetary assets ($6 million and $5 million at September 30, 1994 and 1993,
respectively) of the Company's Brazilian subsidiary, where the functional
currency is the U.S. dollar, are translated at current exchange rates, with the
related translation gains and losses included in net earnings. The Company also
has certain receivables, payables and short-term borrowings denominated in
currencies other than the functional currencies of its subsidiaries. The
functional currency is almost always the currency of the country in which the
subsidiary is located. Despite volatility in European currency markets and the
rapid depreciation of the Brazilian currency in the first nine months of the
year, the Company's management and hedging of these foreign exchange exposures
mitigated the impact of exchange rate fluctuations on earnings, holding losses
to a level which was approximately $1 million below the prior year.
The net assets of foreign operations, where the functional currencies are
the local currencies, are translated at current exchange rates. The Company
does not generally hedge these translation exposures since such amounts are
recorded as cumulative translation adjustments, a separate component of
shareholders' equity, and do not represent current economic gains and losses.
The net assets of these foreign operations represented $829 million and $740
million at September 30, 1994 and 1993, respectively.
The Company utilizes simple derivative instruments to manage its interest
rate and foreign exchange risks. These instruments are selectively employed
solely to hedge exposures in those instances where their use will reduce the
volatility of the impact of foreign exchange and interest rate movements. For
further discussion of derivative
[graphic material contained under the caption "Financial Review"
is not included in the electronic filing of this report]
25
<PAGE>
instruments, see Note 9 of the Notes to Consolidated Financial Statements.
The effective tax rate was 23.3% compared with 4.5% in 1993. The lower tax
rate in 1993 resulted principally from adjustments relating to the conclusion of
tax examinations in various jurisdictions and the tax benefits associated with
specific transactions consummated in certain international locations. It is
expected that the Company's tax rate will be higher in 1995, although consistent
with historical levels, primarily due to a reduction in the tax benefits
generated from operations in Puerto Rico, as provided in the Omnibus Budget
Reconciliation Act of 1993.
Income before cumulative effect of accounting changes was $227 million, or
$3.05 per share, an increase of 13% compared with $2.71 per share in 1993.
Foreign currency translation had an estimated $.07 unfavorable impact on
earnings per share in 1994.
Net income was $227 million, compared with $72 million in 1993.
In 1993, the Financial Accounting Standards Board issued SFAS No. 115,
Accounting for Certain Investments in Debt and Equity Securities, which requires
adoption in fiscal year 1995. This Statement requires certain investments in
debt and equity securities to be reported at fair value. The adoption of SFAS
No. 115 is not expected to have a material impact on the Company's results of
operations or financial condition.
FINANCIAL CONDITION
Cash provided by operations continues to be the Company's primary source of
funds to finance operating needs and capital expenditures. In 1994, net cash
provided by operating activities was $480 million, compared with $320 million in
1993, reflecting the continued growth of the Company's earnings.
Capital expenditures were $123 million, compared with $184 million in the
prior year. The decline reflects lower spending as productivity programs were
completed at several plant locations. Medical segment capital spending, which
totaled $66 million in 1994, included the acquisition of equipment for the
ongoing expansion of the prefillable syringe systems business, and for the
hypodermic, vascular access and diabetes health care businesses. In addition,
funds were expended to support the Company's continuing emphasis on cost
reduction programs, especially in the hypodermic products area. Diagnostic
segment capital spending, which totaled $55 million in 1994, included the
acquisition of equipment for the expansion of manufacturing capacity for the
blood collection business, as well as the expansion of a building and the
acquisition of equipment for the microbiology business. In addition, funds were
expended to support the Company's continuing emphasis on cost reduction,
primarily in the microbiology and blood collection businesses. The Company
expects capital expenditures in 1995 to be slightly above the level in 1994.
Net cash used for financing activities was $292 million during 1994 as
compared with $163 million in 1993. This change was primarily due to the
Company's repurchase of 5.4 million of its common shares on the open market at
an average cost of $39.24 per share,
[graphic material contained under the caption "Financial Review"
is not included in the electronic filing of this report]
26
<PAGE>
totaling $210 million. At September 30, 1994, 9.9 million shares remained to
be purchased under a September 1994 Board of Directors' resolution that
authorized the repurchase of up to 10 million common shares. It is the
Company's intention to use substantial amounts of excess cash that is expected
to be generated over the next several years to pursue potential strategic
acquisition opportunities and to continue to purchase common shares. During
1994, total debt decreased $45 million. Total debt at the end of 1995 is
expected to remain at approximately the 1994 year-end level.
Total debt to capitalization at year end declined to 36.1%, compared with
37.8% last year.
Short-term debt was 21% of total debt at year end, compared with 23% in
1993. The decrease is principally attributable to the repayment of short-term
debt as a result of the Company's strong cash generation during the year. The
Company's weighted average cost of total debt at the end of 1994 was 7.2%
compared with 6.8% at the end of last year.
The current ratio improved to 2.0 at the end of 1994 compared with last
year's 1.8, primarily as a result of the decline in short-term debt. Book value
per share increased 8% to $21.08.
In the United States, the Company has unused confirmed short-term lines of
credit of $240 million as well as unused confirmed long-term credit lines of
$150 million. The Company has additional unconfirmed lines of credit outside of
the United States. The Company has a high degree of confidence in its ability
to refinance maturing short-term and long-term debt, including $211 million of
long-term debt maturities in 1996, as well as to incur substantial additional
debt, if required, based on its strong financial condition.
Subsidiaries operating in Puerto Rico have invested in high-grade
marketable securities, the cash proceeds of which can be used to provide cash
for use by the Company. During 1994, the Company repatriated $89 million from
certain of these subsidiaries. It is the Company's intention to accelerate the
repatriation of funds from Puerto Rico over the next few years, taking into
consideration the related tax effects.
Return on equity was 15.5% in 1994 compared with 4.7% in 1993. The 1993
ratio would have been 13.3% excluding the cumulative effect of 1993 accounting
changes.
The Company manufactures certain medical products in Brazil for sale in
that country and for export. In addition, the Company imports other medical and
diagnostic products for distribution within Brazil. Although the economic
situation in Brazil has recently shown signs of stabilizing, the Brazilian
economy has experienced very high inflation rates and significant devaluations
of its currency in the past. This situation creates volatility in the recording
of revenues and earnings of the Company's Brazilian operations, as well as the
risk of foreign exchange losses as a result of fluctuations in the Brazilian
currency. The Company has successfully managed these risks by raising the
selling prices of its products in line with inflation and by taking steps to
limit the size of its foreign exchange exposures, as discussed earlier. The
Company's Brazilian operations comprise 3% or less of each of the Company's
consolidated revenues, net income and total assets.
[graphic material contained under the caption "Financial Review"
is not included in the electronic filing of this report]
27
<PAGE>
The Company believes that the fundamentally non-cyclical nature of its core
medical and diagnostic businesses, its international diversification, and its
ability to meet the needs of the worldwide health care industry for cost-
effective and innovative products will continue to cushion the long-term impact
on the Company of economic or political dislocations in the countries in which
it does business, including possible reforms of their health care systems.
Inflation has not had a material impact on operations in recent years.
The Company believes that its operations comply in all material respects
with applicable laws and regulations. The Company is a party to a number of
federal proceedings in the United States brought under the Comprehensive
Environmental Response, Compensation and Liability Act, also known as Superfund,
and similar state laws. The Company is also involved in other legal proceedings
and claims which arise in the ordinary course of business, both as a plaintiff
and a defendant. In the opinion of the Company, the results of these matters,
individually and in the aggregate, are not expected to have a material effect on
its results of operations or financial condition.
1993 COMPARED WITH 1992
Worldwide revenues for 1993 of $2.5 billion rose 4%, or 6% after excluding the
estimated unfavorable impact of foreign currency translation. Medical segment
revenues of $1.4 billion increased 3% compared with 1992. Excluding the
estimated unfavorable impact of foreign currency translation, Medical segment
revenues increased 5%, almost all of which was from unit volume growth and
shifts in product mix. Recently introduced hypodermic safety products,
prefillable syringes sold to pharmaceutical companies, and the ULTRA-FINE brand
insulin syringe experienced strong revenue growth. Diagnostic segment revenues
of $1.1 billion increased 5%, or 8% after excluding the estimated unfavorable
impact of foreign currency translation. Volume growth contributed 6% and shifts
in product mix and price increases added 2%. Growth was led by strong revenues
from VACUTAINER brand blood collection products and FACS brand cellular analysis
instrumentation and reagents. Growth in revenues from traditional microbiology
products was aided by the full year's impact of the acquisition of the
microbiology business of Hoffmann-La Roche in May 1992. The continued recession
in much of Europe adversely impacted revenues, particularly from instrumented
systems in Italy and Spain.
The Company's gross profit margin was 44.5%. It would have been 45.0%, the
same as 1992, excluding the effect of 1993 accounting changes. The gross profit
margin percentage was favorably impacted by net changes in Medical segment
product mix offset by unfavorable mix related to certain instrumented
businesses.
Selling and administrative expense was 26.8% of revenues, which was higher
than the 1992 rate of 25.8%. As expected, the 1993 percentage was adversely
affected by start-up costs of centralizing warehousing and distribution
activities in Europe. Investment in research and development increased 11%,
which exceeded the revenues growth rate.
During 1993, the Company recorded special charges of $27 million consisting
principally of a
[graphic material contained under the caption "Financial Review"
is not included in the electronic filing of this report]
28
<PAGE>
provision to adjust the carrying values of idle and underperforming assets to
estimated net realizable values. The provision was based on a periodic review
of worldwide assets to determine whether there had been a permanent decline in
the value of any assets due to manufacturing productivity improvements,
refinements in strategic direction or declines in general real estate or market
values. No significant changes in estimates used to determine this provision
have been required subsequent to 1993.
Operating income decreased $58 million due primarily to the unfavorable
effects in 1993 of foreign currency translation, accounting changes and special
charges. Without the effects of these items, operating income would have been
about the same as in 1992.
Net interest expense increased $4 million over 1992 primarily due to the
reduction of capitalized interest as a result of the completion of several major
facilities.
"Other income (expense), net" in 1993 included a gain of $11 million from
the sale of an investment. Also included are $12 million of foreign exchange
losses.
The effective tax rate was 4.5% compared with 25.5% in 1992. The lower tax
rate resulted principally from adjustments relating to the conclusion of tax
examinations in various jurisdictions covering a total of eighteen open years
($.24 per share), and the tax benefits resulting from specific transactions
consummated in certain international locations in the latter part of the year
($.16 per share). In addition, a shift in the mix of earnings between tax
jurisdictions and the retroactive reinstatement by Congress of the research and
development tax credit in the United States contributed to the lower tax rate.
Income before cumulative effect of accounting changes was $213 million, or
$2.71 per share, compared with $201 million, or $2.57 per share in 1992. The
results for 1993 include an unfavorable impact of $.22 per share for special
charges, an $.11 per share unfavorable impact of accounting changes, an $.11 per
share gain related to the sale of an investment and an estimated $.11 per share
unfavorable impact of foreign currency translation.
In 1993, the Company adopted Statement of Financial Accounting Standards
(SFAS) No. 106, Employers' Accounting for Postretirement Benefits Other Than
Pensions; SFAS No. 112, Employers' Accounting for Postemployment Benefits; and
SFAS No. 109, Accounting for Income Taxes, all retroactive to October 1, 1992.
SFAS Nos. 106 and 112 require the use of the accrual method of accounting for
related costs, as compared with the former cash basis. The cumulative effect of
these accounting changes on fiscal years prior to 1993 was recorded as a one-
time charge, net of related income tax benefits, of $119 million, or $1.55 per
share, for SFAS No. 106, and $30 million, or $.38 per share, for SFAS No. 112.
The effect of these changes on 1993 operating results, excluding the cumulative
effect for fiscal years prior to 1993, was to recognize additional after-tax
expense of $10 million, or $.14 per share. The Company also changed its method
of accounting for income taxes in accordance with SFAS No. 109, which changes
the criteria for the recognition and measurement of deferred tax assets and
liabilities. The cumulative effect of this accounting change on fiscal years
prior to 1993 was recorded as a one-time credit of $8 million, or $.10 per
share. The effect of this change on 1993 net income, excluding the cumulative
effect for fiscal years prior to 1993, was a credit of $4 million, or $.03 per
share. Net income was $72 million, or $.88 per share, after reflecting the one-
time after-tax charge of $1.83 per share for the cumulative effect of these
accounting changes.
The major source of funds in 1993 was net income adjusted for non-cash
charges for depreciation and the cumulative effect of accounting changes.
Capital expenditures were $184 million compared with $186 million in 1992.
Medical and Diagnostic segment capital spending totaled $106 million and $75
million, respectively, in 1993. During the third quarter of 1993, the sale of
an investment resulted in cash proceeds of $59 million.
During 1993, debt decreased $83 million, and the Company purchased 1.8
million of its common shares on the open market at an average cost of $35.74 per
share, totaling $64 million.
Short-term debt was 23% of total debt at year end compared with 29% in
1992. The decrease is principally attributable to the repayment of the current
portion of long-term debt as a result of the Company's strong cash generation.
The Company has a high degree of confidence in its ability to refinance maturing
short-term and long-term debt, including $155 million of long-term debt
maturities in 1995, as well as to incur substantial additional debt, if
required, based on its strong financial condition.
Return on equity was 4.7% in 1993, or 13.3% excluding the cumulative impact
of accounting changes, compared with 13.6% in 1992.
29
<PAGE>
SIX YEAR SUMMARY OF SELECTED FINANCIAL DATA
Becton, Dickinson and Company
Years Ended September 30
<TABLE>
<CAPTION>
Thousands of dollars, except per share amounts 1994
----------
<S> <C> <C>
OPERATIONS Revenues $2,559,461
Gross Profit Margin 45.3%
Operating Income 325,038
Interest Expense, Net 47,624
Income From Continuing Operations
Before Income Taxes and Cumulative
Effect of Accounting Changes 296,159
Income Tax Provision 68,985
Income From Continuing Operations
Before Cumulative Effect of
Accounting Changes 227,174
Net Income 227,174
Earnings Per Share:
- Continuing Operations Before Cumulative
Effect of Accounting Changes 3.05
- Net Income 3.05
Dividends Per Common Share .74
Average Common and Common Equivalent
Shares Outstanding 73,333
FINANCIAL Current Assets $1,326,551
POSITION Current Liabilities 678,321
Current Ratio 2.0
Property, Plant and Equipment, Net 1,376,349
Total Assets 3,159,533
Long-Term Debt 669,157
Shareholders' Equity 1,481,694
Book Value Per Common Share 21.08
FINANCIAL Income From Continuing Operations
RELATIONSHIPS Before Income Taxes and Cumulative Effect of
Accounting Changes as a Percent of Revenues 11.6%
Return on Total Assets (C)(D) 11.5%
Return on Equity (D) 15.5%
Debt to Capitalization (E) 36.1%
ADDITIONAL DATA Depreciation and Amortization $ 203,705
Capital Expenditures 123,017
Research and Development Expense 144,227
Number of Employees 18,600
Number of Shareholders 7,489
</TABLE>
(A) Includes after-tax charge of $141,057, or $1.83 per share, for the
cumulative effect of accounting changes.
(B) Includes after-tax gain of $44,658, or $.56 per share, on the sale of
Edmont.
(C) Net income before interest expense and taxes as a percent of average total
assets.
30
<PAGE>
SIX YEAR SUMMARY OF SELECTED FINANCIAL DATA
Becton, Dickinson and Company
Years Ended September 30
<TABLE>
<CAPTION>
Thousands of dollars, except per share amounts 1993 1992 1991 1990 1989
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
OPERATIONS Revenues $2,465,405 $2,365,317 $2,172,168 $2,012,654 $1,811,456
Gross Profit Margin 44.5% 45.0% 46.0% 45.8% 45.7%
Operating Income 270,425 328,592 313,746 305,476 255,795
Interest Expense, Net 53,412 49,116 50,051 40,235 34,527
Income From Continuing Operations
Before Income Taxes and Cumulative
Effect of Accounting Changes 222,894 269,457 267,303 274,107 227,786
Income Tax Provision 10,054 68,704 77,514 91,850 69,784
Income From Continuing Operations
Before Cumulative Effect of
Accounting Changes 212,840 200,753 189,789 182,257 158,002
Net Income 71,783(A) 200,753 189,789 182,257 213,596(B)
Earnings Per Share:
- Continuing Operations Before Cumulative
Effect of Accounting Changes 2.71 2.57 2.43 2.33 2.00
- Net Income .88(A) 2.57 2.43 2.33 2.70(B)
Dividends Per Common Share .66 .60 .58 .54 .50
Average Common and Common Equivalent
Shares Outstanding 76,930 77,028 77,096 77,320 79,172
FINANCIAL Current Assets $1,150,742 $1,221,209 $1,031,581 $ 961,874 $ 868,630
POSITION Current Liabilities 636,062 713,335 531,277 573,801 567,761
Current Ratio 1.8 1.7 1.9 1.7 1.5
Property, Plant and Equipment, Net 1,403,070 1,429,519 1,351,387 1,276,113 1,100,567
Total Assets 3,087,565 3,177,675 2,779,975 2,593,513 2,270,130
Long-Term Debt 680,581 685,081 739,076 649,287 516,047
Shareholders' Equity 1,456,953 1,594,926 1,363,786 1,233,555 1,071,497
Book Value Per Common Share 19.50 21.00 18.07 16.39 14.00
FINANCIAL Income From Continuing Operations
RELATIONSHIPS Before Income Taxes and Cumulative Effect of
Accounting Changes as a Percent of Revenues 9.0% 11.4% 12.3% 13.6% 12.6%
Return on Total Assets (C)(D) 9.2% 11.1% 12.3% 13.6% 14.0%
Return on Equity (D) 13.3% 13.6% 14.6% 15.8% 17.0%
Debt to Capitalization (E) 37.8% 36.1% 37.5% 38.2% 38.3%
ADDITIONAL DATA Depreciation and Amortization $ 189,756 $ 169,638 $ 149,897 $ 135,723 $ 121,947
Capital Expenditures 184,168 185,559 211,136 263,579 314,367
Research and Development Expense 139,141 125,207 113,045 102,826 97,543
Number of Employees 19,000 19,100 18,600 18,500 18,800
Number of Shareholders 7,463 7,086 7,007 6,854 7,134
</TABLE>
(D) Excludes the cumulative effect of accounting changes in 1993 and gain on
sale of Edmont in 1989.
(E) Total debt as a percent of the sum of total debt, shareholder's equity and
net non-current deferred income tax liabilities.
31
<PAGE>
SUMMARY BY BUSINESS SEGMENT
<TABLE>
<CAPTION>
(See Note 13 to Financial Statements)
Thousands of dollars 1994 1993 1992
---------- ---------- ----------
<S> <C> <C> <C> <C>
REVENUES Medical Supplies and Devices $1,421,435 $1,359,533 $1,315,513
Diagnostic Systems 1,138,026 1,105,872 1,049,804
---------- ---------- ----------
Total Segments $2,559,461 $2,465,405 $2,365,317
========== ========== ==========
SEGMENT Medical Supplies and Devices (A) $ 274,498 $ 228,337 $ 246,080
OPERATING Diagnostic Systems (B) 110,989 111,460 130,660
INCOME ---------- ---------- ----------
Total Segments 385,487 339,797 376,740
Unallocated Expenses (89,328)(C) (116,903) (107,283)
---------- ---------- ----------
Income Before Income Taxes
and Cumulative Effect of
Accounting Changes $ 296,159 $ 222,894 $ 269,457
========== ========== ==========
IDENTIFIABLE Medical Supplies and Devices $1,433,145 $1,422,147 $1,487,103
ASSETS Diagnostic Systems 1,267,331 1,270,037 1,234,938
---------- ---------- ----------
Total Segments 2,700,476 2,692,184 2,722,041
Corporate (D) 459,057 395,381 455,634
---------- ---------- ----------
Total $3,159,533 $3,087,565 $3,177,675
========== ========== ==========
CAPITAL Medical Supplies and Devices $ 66,181 $ 105,632 $ 102,311
EXPENDITURES Diagnostic Systems 55,024 74,780 79,529
---------- ---------- ----------
Total Segments 121,205 180,412 181,840
Corporate 1,812 3,756 3,719
---------- ---------- ----------
Total $ 123,017 $ 184,168 $ 185,559
========== ========== ==========
DEPRECIATION Medical Supplies and Devices $ 99,420 $ 97,516 $ 91,333
AND Diagnostic Systems 96,407 85,595 73,026
AMORTIZATION ---------- ---------- ----------
Total Segments 195,827 183,111 164,359
Corporate 7,878 6,645 5,279
---------- ---------- ----------
Total $ 203,705 $ 189,756 $ 169,638
========== ========== ==========
</TABLE>
(A) Includes $8,016 and $14,592 of the special charges discussed in Note 4 in
1994 and 1993, respectively, as well as an incremental charge in 1993 of
$8,260 in connection with the adoption of SFAS No. 106 and No. 112.
(B) Includes $20,598 and $3,892 of the special charges discussed in Note 4 in
1994 and 1993, respectively, as well as an incremental charge in 1993 of
$7,357 in connection with the adoption of SFAS No. 106 and No. 112.
(C) Net of a gain of $35,868 from the disposition of a corporate investment.
(D) Consists principally of short-term and long-term investments in marketable
securities, buildings and equipment, and investments in non-affiliated
companies.
32
<PAGE>
SUMMARY BY GEOGRAPHIC AREA
(See Note 13 to Financial Statements)
<TABLE>
<CAPTION>
Thousands of dollars 1994 1993 1992
---------- ---------- ----------
<S> <C> <C> <C> <C>
REVENUES United States $1,423,060 $1,371,607 $1,313,675
Europe 704,116 699,839 696,268
Other 432,285 393,959 355,374
---------- ---------- ----------
Total (A) $2,559,461 $2,465,405 $2,365,317
========== ========== ==========
AREA United States (B) $ 264,117 $ 232,727 $ 275,932
OPERATING Europe (C) 82,040 79,453 80,828
INCOME Other (D) 39,330 27,617 19,980
---------- ---------- ----------
Total 385,487 339,797 376,740
Unallocated Expenses (89,328)(E) (116,903) (107,283)
---------- ---------- ----------
Income Before Income Taxes
and Cumulative Effect of
Accounting Changes $ 296,159 $ 222,894 $ 269,457
========== ========== ==========
IDENTIFIABLE United States $1,601,569 $1,613,985 $1,558,514
ASSETS Europe 667,467 665,799 763,241
Other 431,440 412,400 400,286
---------- ---------- ----------
Total 2,700,476 2,692,184 2,722,041
Corporate (F) 459,057 395,381 455,634
---------- ---------- ----------
Total $3,159,533 $3,087,565 $3,177,675
========== ========== ==========
</TABLE>
(A) Interarea revenues to affiliates amounted to $350,207 in 1994, $383,428 in
1993 and $362,778 in 1992. These revenues, which are principally from the
United States, are eliminated in consolidation. Intersegment revenues are
not material.
(B) Includes $26,186 and $15,187 of the special charges as discussed in Note 4,
in 1994 and 1993, respectively, as well as an incremental charge in 1993 of
$17,574 in connection with the Company's adoption of SFAS No. 106 and No.
112.
(C) Includes $2,188 and $250 of the special charges as discussed in Note 4, in
1994 and 1993, respectively, as well as an incremental benefit in 1993 of
$1,563 in connection with the Company's adoption of SFAS No. 112.
(D) Includes $240 and $3,047 of the special charges as discussed in Note 4, in
1994 and 1993, respectively, as well as an incremental benefit in 1993 of
$394 in connection with the Company's adoption of SFAS No. 112.
(E) Net of a gain of $35,868 from the disposition of a corporate investment.
(F) Consists principally of short-term and long-term investments in marketable
securities, buildings and equipment, and investments in non-affiliated
companies.
33
<PAGE>
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
To the Shareholders and Board of Directors
Becton, Dickinson and Company
We have audited the accompanying consolidated balance sheets of Becton,
Dickinson and Company as of September 30, 1994 and 1993, and the related
consolidated statements of income and cash flows for each of the three years in
the period ended September 30, 1994. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Becton, Dickinson
and Company at September 30, 1994 and 1993, and the consolidated results of its
operations and its cash flows for each of the three years in the period ended
September 30, 1994 in conformity with generally accepted accounting principles.
As discussed in Note 1 to the financial statements, in 1993 the Company changed
its methods of accounting for postretirement benefits other than pensions,
postemployment benefits, and income taxes.
/s/ Ernst & Young LLP
Hackensack, New Jersey
November 8, 1994
35
<PAGE>
CONSOLIDATED STATEMENTS OF INCOME
Becton, Dickinson and Company
Years Ended September 30
<TABLE>
<CAPTION>
Thousands of dollars, except per share amounts 1994 1993 1992
---------- ---------- ----------
<S> <C> <C> <C>
OPERATIONS Revenues $2,559,461 $2,465,405 $2,365,317
Cost of products sold 1,399,634 1,368,402 1,301,621
Selling and administrative expense 660,072 660,508 609,897
Research and development expense 144,227 139,141 125,207
Special charges 30,490 26,929 --
---------- ---------- ----------
Total Operating Costs and Expenses 2,234,423 2,194,980 2,036,725
---------- ---------- ----------
Operating Income 325,038 270,425 328,592
Interest expense, net (47,624) (53,412) (49,116)
Other income (expense), net 18,745 5,881 (10,019)
---------- ---------- ----------
Income Before Income Taxes
and Cumulative Effect of
Accounting Changes 296,159 222,894 269,457
Income tax provision 68,985 10,054 68,704
---------- ---------- ----------
Income Before Cumulative Effect of
Accounting Changes 227,174 212,840 200,753
Cumulative effect of accounting changes,
net of taxes -- (141,057) --
---------- ---------- ----------
Net Income $ 227,174 $ 71,783 $ 200,753
========== ========== ==========
EARNINGS Income Before Cumulative Effect of
PER SHARE Accounting Changes $ 3.05 $ 2.71 $ 2.57
Cumulative effect of accounting changes,
net of taxes -- (1.83) --
---------- ---------- ----------
Net Income $ 3.05 $ .88 $ 2.57
========== ========== ==========
</TABLE>
See notes to consolidated financial statements
36
<PAGE>
CONSOLIDATED BALANCE SHEETS
Becton, Dickinson and Company
September 30
<TABLE>
<CAPTION>
Thousands of dollars, except per share amounts 1994 1993
---------- ----------
<S> <C> <C>
ASSETS Current Assets
Cash and equivalents $ 94,913 $ 39,126
Short-term investments 83,854 25,753
Trade receivables, net 589,918 557,803
Inventories 420,001 445,877
Prepaid expenses, deferred taxes and other 137,865 82,183
---------- ----------
Total Current Assets 1,326,551 1,150,742
Investments in Marketable Securities 71,527 123,605
Property, Plant and Equipment, Net 1,376,349 1,403,070
Intangibles, Net 217,725 216,092
Other 167,381 194,056
---------- ----------
Total Assets $3,159,533 $3,087,565
========== ==========
LIABILITIES Current Liabilities
Short-term debt $ 173,228 $ 206,763
Accounts payable 118,146 110,690
Accrued expenses 173,284 153,588
Income taxes 93,691 63,406
Salaries, wages and related items 119,972 101,615
---------- ----------
Total Current Liabilities 678,321 636,062
Long-Term Debt 669,157 680,581
Long-Term Employee Benefit Obligations 297,644 294,054
Deferred Income Taxes and Other 32,717 19,915
Commitments and Contingencies -- --
SHAREHOLDERS' ESOP convertible preferred stock -
EQUITY $1 par value: authorized - 1,016,949 shares;
issued and outstanding - 954,764 shares in
1994 and 984,890 shares in 1993 56,331 58,108
Common stock - $1 par value:
authorized - 160,000,000 shares;
issued - 85,349,046 shares 85,349 85,349
Capital in excess of par value 111,600 104,954
Cumulative currency translation adjustments 8,573 (22,048)
Retained earnings 1,752,360 1,581,196
Unearned ESOP compensation (41,096) (45,249)
Common shares in treasury - at cost - 15,071,131
shares in 1994 and 10,622,430 shares in 1993 (491,423) (305,357)
---------- ----------
Total Shareholders' Equity 1,481,694 1,456,953
---------- ----------
Total Liabilities and Shareholders' Equity $3,159,533 $3,087,565
========== ==========
</TABLE>
See notes to consolidated financial statements
37
<PAGE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
Becton, Dickinson and Company
Years Ended September 30
<TABLE>
<CAPTION>
Thousands of dollars 1994 1993 1992
--------- --------- ---------
<S> <C> <C> <C>
OPERATING Net income $ 227,174 $ 71,783 $ 200,753
ACTIVITIES Adjustments to net income to derive net cash
provided by operating activities:
Depreciation and amortization 203,705 189,756 169,638
Cumulative effect of accounting changes,
net of taxes -- 141,057 --
Special charges 30,490 26,929 --
Gains on sales of equity investments (35,868) (10,650) --
Deferred income taxes (31,418) (21,509) 7,066
Change in:
Trade receivables (20,720) (24,715) (96,075)
Inventories 30,988 (31,205) (6,164)
Prepaid expenses, deferred taxes and other 9,394 (2,930) (3,551)
Accounts payable, income taxes and
other liabilities 55,756 (232) 43,909
Other, net 10,048 (18,444) (7,330)
--------- --------- ---------
Net cash provided by operating activities 479,549 319,840 308,246
--------- --------- ---------
INVESTING Capital expenditures (123,017) (184,168) (185,559)
ACTIVITIES Sales of equity investments 22,159 59,470 --
Acquisitions of businesses (12,750) -- (98,767)
(Purchases) proceeds of short-term investments, net (6,031) 18,077 9,566
Proceeds from sales of long-term investments 8 384 2
Purchases of long-term investments -- (28,800) (20,626)
Other, net (12,809) (38,083) (34,349)
--------- --------- ---------
Net cash used for investing activities (132,440) (173,120) (329,733)
--------- --------- ---------
FINANCING Change in short-term debt (51,063) 206 91,708
ACTIVITIES Proceeds of long-term debt 39,606 42,062 2,077
Payment of long-term debt (43,606) (100,067) (7,895)
Issuance of common stock 30,865 12,974 15,807
Repurchase of common stock (210,285) (64,112) (3,812)
Dividends paid (57,034) (53,825) (49,277)
--------- --------- ---------
Net cash (used for) provided by
financing activities (291,517) (162,762) 48,608
--------- --------- ---------
Effect of exchange rate changes on cash
and equivalents 195 (1,463) (776)
--------- --------- ---------
Net increase (decrease) in cash and
equivalents 55,787 (17,505) 26,345
--------- --------- ---------
OPENING CASH
AND EQUIVALENTS 39,126 56,631 30,286
--------- --------- ---------
CLOSING CASH
AND EQUIVALENTS $ 94,913 $ 39,126 $ 56,631
========= ========= =========
</TABLE>
See notes to consolidated financial statements
38
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Becton, Dickinson and Company
Thousands of dollars, except per share amounts
<TABLE>
<CAPTION>
INDEX
<S> <C> <C>
Note Subject Page
1 Summary of Significant Accounting Policies 39
2 Employee Stock Ownership Plan (ESOP)/Savings Plan 40
3 Benefit Plans 40
4 Special Charges 42
5 Other Income (Expense), Net 42
6 Income Taxes 42
7 Supplemental Balance Sheet Information 44
8 Debt 44
9 Financial Instruments 45
10 Shareholders' Equity 48
11 Commitments and Contingencies 49
12 Stock Plans 49
13 Business Segment Data 51
</TABLE>
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of Becton, Dickinson
and Company and its wholly-owned subsidiaries after the elimination of
intercompany transactions. Investments in other entities in which the Company
has significant management influence are accounted for using the equity method
of accounting. These investments are included in Other assets at cost plus the
Company's equity in undistributed earnings since the date of acquisition. The
proportionate share of income (loss) from equity investments is included in
Other income (expense), net.
RECLASSIFICATIONS
The Company has reclassified certain prior year information to conform with the
current year presentation.
CASH EQUIVALENTS
Cash equivalents are stated at cost plus accrued interest, which approximates
market. The Company considers all highly liquid investments with a maturity of
90 days or less when purchased to be cash equivalents.
INVENTORIES
Inventories are stated at the lower of cost or market. The Company uses the
last-in, first-out (LIFO) method of determining cost for substantially all
inventories in the United States. All other inventories are accounted for using
the first-in, first-out (FIFO) method.
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment are stated at cost, less accumulated depreciation
and amortization. The cost of additions, improvements, and interest on
construction are capitalized, while maintenance and repairs are charged to
expense when incurred. Depreciation and amortization are provided on the
straight-line basis over estimated useful lives.
INTANGIBLES
Intangibles include goodwill, which represents costs in excess of net assets of
businesses acquired, and patents. Goodwill and patents are being amortized over
periods ranging from eight to forty years, using the straight-line method.
REVENUE RECOGNITION
Substantially all revenue is recognized when products are shipped to customers.
WARRANTY
Estimated future warranty obligations related to certain products are provided
by charges to operations in the period that the related revenue is recognized.
INCOME TAXES
United States income taxes are not provided on substantially all undistributed
earnings of foreign and Puerto Rican subsidiaries since the subsidiaries
reinvest such earnings or remit them to the Company without tax consequence.
Income taxes have been provided and tax credits have been recognized based on
tax laws in effect at the dates of the financial statements.
EARNINGS PER SHARE
Earnings per share are computed using the weighted average number of common and
common equivalent shares outstanding during the year, and related income amounts
after adjustment for dividends on preferred shares (net of related tax benefits
in 1992).
39
<PAGE>
The weighted average number of shares used in the computations were 73,333,000
in 1994, 76,930,000 in 1993 and 77,028,000 in 1992. Common equivalent shares
relate to employee stock plans.
ACCOUNTING CHANGES
Effective October 1, 1992, the Company adopted three Statements of Financial
Accounting Standards (SFAS). The cumulative effect on prior years and the net
incremental charges attributable to the adoption of SFAS No. 106, Employers'
Accounting For Postretirement Benefits Other Than Pensions; SFAS No. 112,
Employers' Accounting For Postemployment Benefits; and SFAS No. 109, Accounting
For Income Taxes, are included in the determination of net income in 1993, as
detailed below:
<TABLE>
<CAPTION>
Cumulative Effect
----------------------------------
Pre-tax After-tax Per Share
--------- --------- ---------
<S> <C> <C> <C>
SFAS No. 106 $(189,150) $(119,130) $(1.55)
SFAS No. 112 (46,155) (29,765) (.38)
SFAS No. 109 -- 7,838 .10
1993 Incremental Effect
----------------------------------
Pre-tax After-tax Per Share
--------- --------- ---------
SFAS No. 106 $ (19,600) $ (12,420) $ (.17)
SFAS No. 112 3,632 2,325 .03
SFAS No. 109 -- 3,725 .03
</TABLE>
NOTE 2 - EMPLOYEE STOCK OWNERSHIP PLAN (ESOP)/SAVINGS PLAN
The Company has an Employee Stock Ownership Plan (ESOP) as part of its voluntary
defined contribution plan (savings plan) covering most domestic employees. The
ESOP is intended to satisfy all or part of the Company's obligation to match 50%
of employees' contributions, up to a maximum of 3% of each participant's salary.
To accomplish this, in 1990, the ESOP borrowed $60,000 in a private debt
offering and used the proceeds to buy the Company's ESOP convertible preferred
stock. Each share of preferred stock has a guaranteed liquidation value of $59
per share and is convertible into 1.6 shares of the Company's common stock. The
preferred stock pays an annual dividend of $3.835 per share, a portion of which
is used by the ESOP, together with the Company's contributions, to repay the
ESOP debt. Since the ESOP debt is guaranteed by the Company, it is reflected on
the consolidated balance sheet as short-term and long-term debt with a related
amount shown in the shareholders' equity section as unearned ESOP compensation.
The amount of ESOP expense recognized is equal to the cost of the preferred
shares allocated to plan participants and the ESOP interest expense for the
year, reduced by the amount of dividends paid on the preferred stock.
Selected financial data pertaining to the ESOP/Savings Plan follow:
<TABLE>
<CAPTION>
1994 1993 1992
-------- -------- --------
<S> <C> <C> <C>
Total expense of the
savings plan $ 9,347 $ 9,201 $ 8,880
Compensation expense
(included in total
expense above) $ 6,543 $ 6,194 $ 5,725
Number of preferred
shares allocated
at September 30 248,766 211,465 158,588
</TABLE>
The Company guarantees employees' contributions to the fixed income fund of the
Savings Plan. The amount guaranteed was $92,935 at September 30, 1994.
NOTE 3 - BENEFIT PLANS
The Company and certain of its subsidiaries have defined benefit pension plans
which cover a substantial number of its employees. The largest plan, covering
most of the Company's domestic employees, is a "final average pay" plan.
A summary of the costs of the domestic defined benefit pension plans follows:
<TABLE>
<CAPTION>
1994 1993 1992
-------- -------- --------
<S> <C> <C> <C>
Service cost: benefits
earned during
the year $ 20,040 $ 18,497 $ 16,833
Interest cost on
projected benefit
obligation 28,641 27,991 26,058
Return on assets:
Actual gain (1,280) (58,371) (36,474)
Deferred portion (34,986) 25,990 5,924
-------- -------- --------
Expected return (36,266) (32,381) (30,550)
Special termination
benefits 3,498 - -
-------- -------- --------
Net pension cost $ 15,913 $ 14,107 $ 12,341
======== ======== ========
</TABLE>
40
<PAGE>
Rate assumptions used in accounting for the defined benefit plans were:
<TABLE>
<CAPTION>
1994 1993 1992
------ ------ ------
<S> <C> <C> <C>
Discount rate:
End of year 8.00% 7.25% 7.75%
Beginning of year 7.25 7.75 7.75
Rate of increase in
compensation 5.25 5.25 6.25
Expected long-term rate
of return on assets 10.00 10.00 10.00
</TABLE>
The following table sets forth the funded status and amounts recognized in the
consolidated balance sheets at September 30, 1994 and 1993 for the Company's
domestic defined benefit pension plans:
<TABLE>
<CAPTION>
1994 1993
-------- --------
<S> <C> <C>
Actuarial present value of
benefit obligations:
Vested benefit obligation $253,995 $279,507
======== ========
Accumulated benefit
obligation $274,319 $301,242
======== ========
Projected benefit obligation $361,418 $402,377
Plan assets at fair value 306,437 364,705
-------- --------
Plan assets under projected
benefit obligation (54,981) (37,672)
Unrecognized net loss 10,555 9,190
Unrecognized net asset at
October 1, 1985, net of
amortization (3,640) (4,247)
-------- -------
Net pension liability
recognized in the
consolidated
balance sheet $(48,066) $(32,729)
======== ========
</TABLE>
Plan assets are composed primarily of investments in publicly traded securities.
The Company's funding policy is to contribute amounts to the plans sufficient to
meet the minimum funding requirements set forth in the Employee Retirement
Income Security Act of 1974, as amended, plus such additional amounts as the
Company may determine to be appropriate from time to time.
Employees in foreign countries are covered by various postretirement benefit
arrangements, some of which are considered to be defined benefit plans for
accounting purposes. Such plans are immaterial to the Company's consolidated
financial position and results of operations.
In addition to providing pension benefits, the Company and its domestic
subsidiaries provide certain health care and life insurance benefits for retired
employees. Substantially all of the Company's domestic employees may become
eligible for these benefits upon retirement from the Company. The Company's
cost of benefits for foreign retirees is minimal as health care and life
insurance coverage is generally provided through government plans.
Postretirement benefit costs include the following components:
<TABLE>
<CAPTION>
1994 1993
------- -------
<S> <C> <C>
Service cost: benefits
earned during the year $ 2,537 $ 9,645
Interest cost on
projected benefit obligation 9,671 15,830
Amortization of prior
service cost (6,312) -
------- -------
Postretirement benefit cost $ 5,896 $25,475
======= =======
</TABLE>
The amount included in expense for 1992 under the cash basis method was
approximately $5,800.
The postretirement benefit plans other than pensions are not funded. The
present value of the Company's obligation included in the September 30, 1994 and
1993 balance sheet was as follows:
<TABLE>
<CAPTION>
1994 1993
-------- --------
<S> <C> <C>
Accumulated postretirement
benefit obligation:
Retirees $103,326 $ 78,220
Fully eligible active participants 13,136 38,250
Other active participants 24,262 110,240
-------- --------
Total 140,724 226,710
Unrecognized prior service cost 88,368 --
Unrecognized actuarial loss (4,545) --
-------- --------
Accrued postretirement
benefit liability $224,547 $226,710
======== ========
</TABLE>
In 1994 and 1993, health care cost trends of 14% and 15%, respectively, pre-age
65 and 11% and 12%, respectively, post-age 65 were assumed. These rates were
assumed to decrease gradually to an ultimate rate of 6.25% beginning in 2003 for
pre-age 65 and
41
<PAGE>
2000 for post-age 65. The effect of a 1% annual increase in these assumed cost
trend rates would increase the accumulated postretirement benefit obligation at
September 30, 1994 by $6,264 and the postretirement cost for 1994 by $501. The
discount rate used to estimate the postretirement benefit cost was 7.25% and
7.75%, in 1994 and 1993, respectively. The discount rate used to estimate the
accumulated postretirement benefit obligation at September 30, 1994 and 1993 was
8.0% and 7.25%, respectively. In 1994, the Company made significant
modifications to its U.S. postretirement benefit plans. These plan changes,
which are effective for retirements after January 1, 1995, consist primarily of
retiree contributions and an inflation cap. The accumulated postretirement
benefit obligation was reduced as a result of these changes. In accordance with
SFAS No. 106, this reduction in the obligation is being amortized as a component
of the postretirement benefit cost.
In accordance with SFAS No. 112, the Company recorded a provision of $7,100 in
1994 and $6,000 in 1993, for postemployment benefits. The amount included in
expense for 1992 prior to the adoption of SFAS No. 112 was approximately $4,300.
The Company utilizes a service-based approach in applying the provisions of SFAS
No. 112 for most of its post-employment benefits. Such an approach recognizes
that actuarial gains and losses may result from experience that differs from
baseline assumptions. Such actuarial gains and losses, if material, are
amortized over future service periods.
NOTE 4 - SPECIAL CHARGES
In the fourth quarter of 1994, the Company recorded special charges of $30,490,
primarily related to write-offs of property, plant and equipment, inventories
and other assets associated with decisions made in the fourth quarter to exit
specific product lines and refocus certain businesses.
In 1993, the Company recorded special charges of $26,929 consisting principally
of a provision to adjust the carrying values of idle and underperforming assets
to estimated net realizable values. The provision was based on a periodic
review of worldwide assets to determine whether there had been a permanent
decline in the value of any assets due to manufacturing productivity
improvements, refinements in strategic direction or declines in general real
estate or market values.
NOTE 5 - OTHER INCOME (EXPENSE), NET
Other income, net in 1994 includes a gain of $35,868 from the disposition of a
foreign investment previously accounted for using the equity method. Proceeds
from the disposition are being received in three installments, the first of
which was received in September 1994. The balance of the receivable of $42,563
is classified in Prepaid expenses, deferred taxes and other at September 30,
1994.
Other income, net in 1993 includes a gain of $10,650 from the disposition of an
investment previously accounted for using the equity method.
Foreign exchange losses of $10,608, $11,626 and $10,845 are included in Other
income (expense), net in 1994, 1993 and 1992, respectively.
NOTE 6 - INCOME TAXES
The provision for income taxes is comprised of the following charges (benefits).
The 1994 and 1993 amounts reflect the use of the liability method under SFAS No.
109, while the 1992 amounts reflect the use of the deferred method under APB No.
11.
<TABLE>
<CAPTION>
1994 1993 1992
-------- -------- -------
<S> <C> <C> <C>
Current:
Domestic:
Federal $ 42,514 $ (7,116) $34,053
State and local,
including Puerto Rico 20,148 11,439 10,051
Foreign 37,741 27,240 17,534
-------- -------- -------
100,403 31,563 61,638
-------- -------- -------
Deferred:
Domestic (21,728) (11,448) 975
Foreign (9,690) (10,061) 6,091
-------- -------- -------
(31,418) (21,509) 7,066
-------- -------- -------
$ 68,985 $ 10,054 $68,704
======== ======== =======
</TABLE>
42
<PAGE>
Effective October 1, 1992, the Company adopted the provisions of SFAS No. 109.
Deferred income taxes at September 30, 1994 and 1993 and October 1, 1992
consisted of:
<TABLE>
<CAPTION>
September 30, 1994 September 30, 1993 October 1, 1992
---------------------- ---------------------- ----------------------
Assets Liabilities Assets Liabilities Assets Liabilities
-------- ----------- -------- ----------- -------- -----------
<S> <C> <C> <C> <C> <C> <C>
Compensation
and benefits $130,962 $ -- $129,518 $ -- $112,674 $ --
Property and
equipment -- 126,539 -- 126,708 -- 121,651
Other 68,890 13,393 45,175 17,271 40,623 31,468
-------- ----------- -------- ----------- -------- -----------
199,852 139,932 174,693 143,979 153,297 153,119
Valuation
allowance (7,100) -- (7,937) -- (5,906) --
-------- ----------- -------- ----------- -------- -----------
$192,752 $139,932 $166,756 $143,979 $147,391 $153,119
======== =========== ======== =========== ======== ===========
</TABLE>
In accordance with SFAS No. 109, deferred tax assets and liabilities are netted
on the balance sheet by separate tax jurisdictions. At September 30, 1994 and
1993, net current deferred tax assets of $35,725 and $15,484, respectively, were
included in Prepaid expenses, deferred taxes and other. Net non-current deferred
tax assets of $28,961 and $10,212, respectively, were included in Other non-
current assets. Net non-current deferred tax liabilities of $11,866 and $2,919,
respectively, were included in Deferred income taxes and other.
Deferred taxes are not provided on substantially all undistributed earnings of
foreign and Puerto Rican subsidiaries. At September 30, 1994, the cumulative
amount of such undistributed earnings approximated $927,000 against which United
States tax-free liquidation provisions or substantial tax credits are available.
Determining the tax liability that would arise if these earnings were remitted
is not practicable.
The components of the 1992 deferred income tax provision follow:
<TABLE>
<CAPTION>
1992
-------
<S> <C>
Depreciation $10,482
Capitalized interest 1,553
Joint venture and equity investments 941
Compensation and benefits (3,347)
Other (2,563)
-------
$ 7,066
=======
</TABLE>
A reconciliation of the federal statutory tax rate to the Company's effective
tax rate follows:
<TABLE>
<CAPTION>
1994 1993 1992
---- ---- ----
<S> <C> <C> <C>
Federal statutory tax rate 35.0% 34.8% 34.0%
State and local income
taxes, net of Federal
tax benefit .7 .3 2.8
Effect of foreign and
Puerto Rican income (8.4) (13.3) (8.9)
Adjustments to estimated
liability for prior
years' taxes - (8.3) -
Foreign tax credits (2.3) (5.4) -
Research tax credit (.5) (1.4) (.5)
Benefit from sale
of subsidiary - - (1.9)
Other, net (1.2) (2.2) -
---- ---- ----
23.3% 4.5% 25.5%
==== ==== ====
</TABLE>
43
<PAGE>
The approximate dollar and per share amounts of tax reductions related to tax
holidays in various countries in which the Company does business were: 1994 -
$23,300 and $.32; 1993 - $24,100 and $.31; and 1992 - $21,100 and $.28. The tax
holidays expire at various dates through 2010.
The Company made income tax payments, net of refunds, of $65,481 in 1994,
$61,449 in 1993 and $35,848 in 1992.
The components of income before income taxes and cumulative effect of accounting
changes follow:
<TABLE>
<CAPTION>
1994 1993 1992
-------- -------- --------
<S> <C> <C> <C>
Domestic, including
Puerto Rico $166,563 $141,913 $202,080
Foreign 129,596 80,981 67,377
-------- -------- --------
$296,159 $222,894 $269,457
======== ======== ========
</TABLE>
NOTE 7 - SUPPLEMENTAL BALANCE SHEET INFORMATION
TRADE RECEIVABLES
Allowances for doubtful accounts and cash discounts netted against trade
receivables were $22,158 and $18,898 at September 30, 1994 and 1993,
respectively.
<TABLE>
<CAPTION>
INVENTORIES
1994 1993
-------- --------
<S> <C> <C>
Materials $ 85,303 $ 89,549
Work in process 69,696 67,257
Finished products 265,002 289,071
-------- --------
$420,001 $445,877
======== ========
</TABLE>
Inventories valued under the LIFO method were $240,965 in 1994 and $227,539 in
1993. Inventories valued under the LIFO method would have been higher by
approximately $36,500 in both 1994 and 1993, if valued on a current cost basis.
PROPERTY, PLANT AND EQUIPMENT
<TABLE>
<CAPTION>
1994 1993
---------- ----------
<S> <C> <C>
Land $ 54,410 $ 52,842
Buildings 907,832 881,643
Machinery, equipment
and fixtures 1,483,334 1,401,319
Leasehold improvements 34,360 28,052
---------- ----------
2,479,936 2,363,856
Less allowances for
depreciation and
amortization 1,103,587 960,786
---------- ----------
$1,376,349 $1,403,070
========== ==========
INTANGIBLES
1994 1993
---------- ----------
Patents and other $ 220,927 $ 211,847
Goodwill 147,600 132,170
---------- ----------
368,527 344,017
Less accumulated
amortization 150,802 127,925
---------- ----------
$ 217,725 $ 216,092
========== ==========
NOTE 8 - DEBT
The components of short-term debt follow:
1994 1993
---------- ----------
Loans payable:
Domestic $ 35,941 $ 108,000
Foreign 110,883 81,752
Current portion of
long-term debt 26,404 17,011
---------- ----------
$ 173,228 $ 206,763
========== ==========
</TABLE>
Domestic loans payable consist of commercial paper supported by committed lines
of credit. Foreign loans payable consist of short-term borrowings from
financial institutions. The weighted average interest rate for loans payable
was 4.2% at both September 30, 1994 and 1993. At September 30, 1994, the
Company had domestic unused confirmed short-term lines of credit of $240,000 and
unused confirmed long-term lines of credit of $150,000. In addition, the
Company had unused foreign lines of credit pursuant to informal arrangements of
approximately $209,000 at September 30, 1994.
44
<PAGE>
The components of long-term debt follow:
<TABLE>
<CAPTION>
1994 1993
-------- --------
<S> <C> <C>
Domestic notes due through 2013
(average year-end interest rate:
4.9%-1994; 3.5%-1993) $162,788 $166,603
Foreign notes due through 2004
(average year-end interest rate:
6.7%-1994; 6.0%-1993) 29,522 33,801
7.875% Notes due
December 15, 1996 100,000 100,000
8.375% Notes due
June 1, 1996 50,000 50,000
8.80% Notes due
March 1, 2001 100,000 100,000
9.25% Sinking fund
debentures due
through June 1, 2016 81,400 81,400
9.45% Guaranteed ESOP
Notes due through
July 1, 2004 45,447 48,777
9.95% Notes due
March 15, 1999 100,000 100,000
-------- --------
$669,157 $680,581
======== ========
</TABLE>
Domestic notes include $150,000 of commercial paper which are supported by long-
term credit agreements with leading banks, at both September 30, 1994 and 1993.
The aggregate annual maturities of long-term debt during the fiscal years ending
September 30, 1996 to 1999 are as follows: 1996 - $211,290; 1997 - $105,394;
1998 - $7,653; 1999 - $106,123.
The Company capitalizes interest costs as a component of the cost of
construction in progress. The following is a summary of interest costs:
<TABLE>
<CAPTION>
1994 1993 1992
------- ------- -------
<S> <C> <C> <C>
Charged to operations $62,472 $66,716 $60,577
Capitalized 5,946 8,181 21,176
------- ------- -------
$68,418 $74,897 $81,753
======= ======= =======
</TABLE>
Interest paid, net of amounts capitalized, was $63,670 in 1994, $67,308 in 1993
and $59,766 in 1992.
NOTE 9 - FINANCIAL INSTRUMENTS
FAIR VALUE OF FINANCIAL INSTRUMENTS
The carrying values of cash equivalents, short-term investments and short-term
debt approximate fair values. Fair values were estimated based on market
prices, where available, or dealer quotes.
The estimated fair values of the Company's financial instruments at September
30, 1994 and 1993 were as follows:
<TABLE>
<CAPTION>
1994 1993
------------------ -------------------
CARRYING FAIR Carrying Fair
VALUE VALUE Value Value
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Assets:
Investments in marketable
securities (non-current) $ 71,527 $ 70,093 $123,605 $128,616
Other long-term investments 9,112 10,117 11,113 13,051
Purchased currency option 112 112 - -
Liabilities:
Long-term debt $669,157 $689,181 $680,581 $753,879
Forward exchange contracts 630 473 9,586 8,790
Interest rate swaps 68 (524) (31) 354
Interest rate collars 32 49 (57) 153
</TABLE>
45
<PAGE>
OFF-BALANCE-SHEET RISK
The Company has certain receivables, payables and short-term borrowings
denominated in currencies other than the functional currency of the Company and
its subsidiaries. During the year, the Company hedged in excess of 75% of these
exposures by entering into forward exchange contracts and purchased currency
options for the future purchase and sale of foreign currencies. In addition,
the Company hedged a portion of its investment in a foreign subsidiary by
entering into forward exchange contracts with a stated value of $55,482 to sell
French francs and buy U.S. dollars forward.
At September 30, the stated or notional amounts of the Company's outstanding
forward exchange contracts and purchased currency option were as follows:
<TABLE>
<CAPTION>
1994 1993
-------- --------
<S> <C> <C>
Forward exchange
contracts $665,945 $512,988
Purchased currency option,
German mark put,
U.S. dollar call $ 9,416 $ -
</TABLE>
At September 30, 1994, $506,732 of the forward exchange contracts mature within
90 days, $124,037 at various dates in 1995 and $35,176 in March 1996. The
purchased currency option at September 30, 1994 expires October 1994.
Significant forward exchange contracts and the purchased currency option which
represent hedges of currency transaction exposures at September 30, 1994 were as
follows:
<TABLE>
<CAPTION>
U.S. Dollar Equivalents
----------------------------------------
September 30, 1994
--------------------------
Currency
Transaction Average
Exposure- Contracts
Notional Asset During
Amount (Liability) Fiscal 1994
--------- ----------- -----------
<S> <C> <C> <C>
Commitments to
sell foreign
currencies:
French francs $ 73,485 $ 73,485 $ 69,576
Italian lira 57,888 57,888 51,781
Belgian francs 46,202 46,202 45,582
Spanish pesetas 45,141 45,141 43,801
British pounds 26,041 26,041 11,145
Japanese yen 6,417 6,417 7,627
Commitments to
purchase foreign
currencies:
Irish pounds $182,290 $(182,485) $156,207
Singapore dollars 46,798 (46,798) 45,697
Japanese yen 17,287 (17,287) 8,218
Belgian francs 14,058 (25,413) 14,702
British pounds 11,243 (11,497) 14,367
German marks 11,319 (11,319) 7,017
</TABLE>
46
<PAGE>
Significant forward exchange contracts which represent hedges of currency
transaction exposures at September 30, 1993 were as follows:
<TABLE>
<CAPTION>
U.S. Dollar Equivalents
------------------------------------
September 30, 1993
----------------------
Currency
Transaction Average
Exposure- Contracts
Notional Asset During
Amount (Liability) Fiscal 1993
-------- ----------- -----------
<S> <C> <C> <C>
Commitments to
sell foreign
currencies:
French francs $ 65,026 $ 65,026 $ 59,588
Italian lira 50,085 50,085 52,412
Belgian francs 42,236 42,236 71,117
Spanish pesetas 36,216 39,730 35,541
British pounds 33,936 40,837 29,945
Japanese yen 9,385 9,385 10,044
Irish pounds 8,834 8,834 2,463
Commitments to
purchase foreign
currencies:
Irish pounds $156,024 $(156,024) $165,868
Singapore dollars 42,855 (42,855) 39,218
British pounds 15,617 (15,617) 17,714
Belgian francs 9,743 (26,219) 22,188
Japanese yen 6,804 (6,804) 567
</TABLE>
The Company's foreign exchange hedging activities do not generally create
exchange rate risk since gains and losses on these contracts generally offset
losses and gains on the related non-functional currency denominated receivables,
payables and short-term borrowings.
The Company enters into interest rate swap and interest rate collar agreements
in order to reduce the impact of fluctuating interest rates on its foreign
currency short-term floating rate debt outside the U.S. At September 30, 1994
and 1993, the Company had foreign interest rate swap agreements, with maturities
at various dates through 1997. Under these agreements the Company agrees with
other parties to pay, at specified intervals, fixed rate payments in exchange
for variable rate payments, calculated on an agreed-upon notional amount.
<TABLE>
<CAPTION>
Notional
Amount Average
U.S. Dollar Fixed Variable
Equivalent Rate Rate
----------- ------ --------
<S> <C> <C> <C>
Interest Rate Swaps:
September 30, 1994
French francs $18,886 8.16% 6.41%
French francs 18,886 5.00 6.80
British pounds 15,795 5.85 5.40
Japanese yen 5,041 2.61 2.23
Japanese yen 10,082 2.61 2.25
September 30, 1993
French francs $17,535 8.16% 10.01%
British pounds 14,960 5.85 6.06
</TABLE>
At September 30, 1994 and 1993, the Company had a foreign interest rate collar
agreement with a notional amount of $15,800 which limits the potential interest
rate fluctuations on a portion of the Company's British pound denominated short-
term debt to a range of 6.5%-8.0%. The premium paid on the collar agreement is
amortized to interest expense over the term of the agreement. The collar
agreement expires in October 1994.
CONCENTRATION OF CREDIT RISK
Substantially all of the Company's trade receivables are due from entities in
the health care industry. Due to the large number and diversity of the
Company's customer base, concentrations of credit risk with respect to trade
receivables are limited. The Company does not normally require collateral. The
Company is exposed to credit loss in the event of nonperformance by financial
institutions with which it conducts business. However, the Company minimizes
exposure to such risk by dealing only with major international banks and
financial institutions.
47
<PAGE>
NOTE 10 - SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
Series B,
ESOP
Preferred Common Capital In Treasury Stock
Stock Stock Excess of Retained Unearned ESOP -------------------------
Issued Issued Par Value Earnings Compensation Shares Amount
--------- ------- ---------- ---------- ------------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at October 1, 1991 $55,032 $85,349 $105,682 $1,409,376 $(49,048) (9,866,668) $(266,942)
Net income 200,753
Cash dividends:
Common ($.60 per share) (45,408)
Preferred ($3.835 per
share), net of tax benefits (2,545)
Issuance of common stock
for employee stock plans, net (16) 600,136 15,664
Repurchase of common stock (127,400) (3,812)
Reduction in unearned ESOP
compensation for the year 4,039
Adjustment for redemption
provisions and other 3,995 (4,652) 5,286 159
------- ------- -------- ---------- -------- ---------- ---------
Balance at September 30, 1992 59,027 85,349 105,666 1,562,176 (49,661) (9,388,646) (254,931)
Net income 71,783
Cash dividends:
Common ($.66 per share) (50,014)
Preferred ($3.835 per share),
net of tax benefits (2,749)
Issuance of common stock for
employee stock plans, net (825) 545,964 13,284
Repurchase of common stock (1,793,650) (64,112)
Reduction in unearned ESOP
compensation for the year 4,412
Adjustment for redemption
provisions and other (919) 113 13,902 402
------- ------- -------- ---------- -------- ---------- ---------
Balance at September 30, 1993 58,108 85,349 104,954 1,581,196 (45,249) (10,622,430) (305,357)
Net income 227,174
Cash dividends:
Common ($.74 per share) (53,292)
Preferred ($3.835 per share),
net of tax benefits (2,718)
Issuance of common stock for
employee stock plans, net 6,355 874,309 23,160
Repurchase of common stock (5,359,600) (210,285)
Reduction in unearned ESOP
compensation for the year 4,153
Adjustment for redemption
provisions and other (1,777) 291 36,590 1,059
------- ------- -------- ---------- -------- ---------- ---------
Balance at September 30, 1994 $56,331 $85,349 $111,600 $1,752,360 $(41,096) (15,071,131) $(491,423)
======= ======= ======== ========== ======== ========== =========
</TABLE>
48
<PAGE>
CUMULATIVE CURRENCY TRANSLATION ADJUSTMENTS
Generally, the net assets of foreign operations are translated into U.S. dollars
using current exchange rates. The U.S. dollar results that arise from such
translation, as well as exchange gains and losses on intercompany balances of a
long-term investment nature (net of allocated income taxes), are included in the
cumulative currency translation adjustment account in Shareholders' Equity. The
following is an analysis of the account:
<TABLE>
<CAPTION>
1994 1993 1992
-------- --------- -------
<S> <C> <C> <C>
Balance at October 1 $(22,048) $ 87,300 $24,337
Translation adjustment 37,900 (109,408) 65,367
Disposition of foreign
investment (6,348) - -
Allocated income taxes (931) 60 (2,404)
-------- --------- -------
Balance at September 30 $ 8,573 $ (22,048) $87,300
======== ========= =======
</TABLE>
PREFERRED STOCK PURCHASE RIGHTS
In 1986, the Board of Directors declared a distribution of one Preferred Stock
Purchase Right (Right) for each outstanding share of the Company's common stock.
Each Right will entitle a shareholder to buy one one-hundredth of a share of
Series A preferred stock at an exercise price of $88. The Rights will be
exercisable only if a third party acquires 20% or more of the Company's common
stock or commences a tender or exchange offer for 30% or more of the common
stock. After the Rights become exercisable and in the event of certain
transactions, principally involving significant changes in control of the
Company, each holder of a Right will be entitled to receive, upon exercise, a
number of shares of the surviving company's common stock which would have a
market value of twice the exercise price. The Company will be entitled to
redeem the Rights for $.01 per Right at any time until ten days after a 20% or
more position has been acquired. The Rights will expire April 25, 1996. There
are 500,000 shares of preferred stock designated Series A, none of which have
been issued.
NOTE 11 - COMMITMENTS AND CONTINGENCIES
LEASE COMMITMENTS
Rental expense for all operating leases amounted to $49,900 in 1994, $51,500 in
1993 and $45,800 in 1992. Future minimum rental commitments on noncancelable
leases are as follows: 1995 - $33,300; 1996 - $28,300; 1997 - $22,300; 1998 -
$16,700; 1999 - $13,800 and an aggregate of $58,900 thereafter.
CONTINGENCIES
The Company believes that its operations comply in all material respects with
applicable laws and regulations. The Company is a party to a number of federal
proceedings in the United States brought under the Comprehensive Environmental
Response, Compensation and Liability Act, also known as Superfund, and similar
state laws. The Company is also involved in other legal proceedings and claims
which arise in the ordinary course of business, both as a plaintiff and a
defendant. The results of these matters, individually and in the aggregate, are
not expected to have a material effect on the results of operations or financial
condition of the Company.
NOTE 12 - STOCK PLANS
STOCK OPTION PLANS
The Company has stock option plans under which key employees have been granted
options to purchase shares of the Company's common stock at the fair market
value at the time of the grant. The 1990 Stock Option Plan, adopted in 1991,
makes available 4,000,000 shares of the Company's common stock for the granting
of options. The 1990 Plan has a provision whereby unqualified options may be
granted at, below, or above market value of the Company's stock. If the option
price is less than the market value of the Company's stock on the date of grant,
the discount is recorded as compensation expense over the service period. There
was no such compensation expense in each of the three years presented.
Under certain circumstances, the stock option plans permit the optionee the
right to receive cash and/or stock at the Company's discretion equal to the
difference between the market value on the date of election and the option
price. This difference would be recorded as compensation expense over the
vesting period.
49
<PAGE>
A summary of changes in outstanding options is as follows:
<TABLE>
<CAPTION>
1994 1993 1992
--------------------------- --------------------------- ---------------------------
Shares Price Range Shares Price Range Shares Price Range
--------- --------------- --------- --------------- --------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Balance at October 1 4,672,044 $ 8.41 - $39.50 4,161,988 $ 8.41 - $38.78 3,879,858 $ 8.33 - $38.78
Granted 1,258,370 34.56 - 40.10 1,054,764 37.25 - 39.50 816,450 35.85 - 36.71
Exercised (756,350) 8.41 - 40.10 (498,979) 8.41 - 38.78 (487,070) 8.33 - 31.57
Canceled (93,105) 8.41 - 38.78 (45,729) 10.05 - 38.78 (47,250) 26.88 - 38.78
--------- --------- ---------
Balance at September 30 5,080,959 $12.67 - $40.10 4,672,044 $ 8.41 - $39.50 4,161,988 $ 8.41 - $38.78
========= ========= =========
Exercisable at
September 30 3,550,467 3,380,615 3,096,904
Available for grant at:
October 1, 1993 2,249,016
September 30, 1994 1,046,921
</TABLE>
Options outstanding as of September 30, 1994 expire at various times from June
1995 through June 2004.
OTHER STOCK PLANS
The Company has a compensatory Stock Award Plan which provides for grants of
common shares to certain key employees. Distribution of 25% or more of each
award, as elected by the grantee, is deferred until after retirement or
involuntary termination. Commencing on the first anniversary of a grant, the
remainder is distributable in five equal annual installments. During 1994,
109,044 shares were distributed. Awards for 58,585, 47,590 and 49,300 shares
(net of cancellations) were granted in 1994, 1993 and 1992, respectively. At
September 30, 1994, 816,584 shares were reserved for future issuance, of which
awards for 292,171 shares have been granted.
During 1994, the Company adopted the 1994 Restricted Stock Plan for Non-Employee
Directors. The Restricted Stock Plan, which is compensatory, reserves for
issuance 75,000 shares of the Company's common stock. During 1994, 15,229
restricted shares were issued in accordance with the provisions of the plan.
50
<PAGE>
NOTE 13 - BUSINESS SEGMENT DATA
The Company's operations are comprised of two segments, Medical Supplies and
Devices and Diagnostic Systems.
MEDICAL SUPPLIES AND DEVICES
The major products in this segment are hypodermic products, specially designed
devices for diabetes care, prefillable drug delivery systems, vascular access
products and surgical devices (including disposable scrubs, surgical gloves,
specialty and surgical blades and pre-surgery patient prep kits). The Medical
Supplies and Devices segment also includes specialty needles, drug infusion
systems, elastic support products, thermometers, examination gloves and contract
packaging services. Distribution of these products is both through distributors
and directly to hospitals, laboratories and other end users.
DIAGNOSTIC SYSTEMS
The major products in this segment are classical and instrumented microbiology
products, blood collection products, instrumentation systems for cellular
analysis, including flow cytometry and cellular imaging products, tissue culture
labware, hematology instruments and other diagnostic systems, including
immunodiagnostic test kits. Distribution of these products is both through
distributors and directly to hospitals, laboratories and other end users.
Sales to a distributor which supplies the Company's products to many end users
accounted for approximately 12% of revenues in both 1994 and 1993 and 11% of
revenues in 1992, and were from both the Diagnostic Systems and Medical Supplies
and Devices segments. No other customer accounted for 10% or more of revenues
in each of the three years presented.
The countries in which the Company has local revenue-generating operations have
been combined into the following geographic areas: the United States, including
Puerto Rico; Europe; and Other, which is comprised of Canada, Latin America,
Japan and Asia Pacific.
Segment and geographic area operating income represent revenues reduced by
product costs and operating expenses. Unallocated expenses include costs
related to management of corporate assets, foreign exchange, the results of
investments accounted for by the equity method and interest expense, net.
Financial information with respect to business segment and geographic data for
the years ended September 30, 1994, 1993 and 1992 is on pages 32 and 33 and is
considered to be an integral part of the notes to the consolidated financial
statements.
51
<PAGE>
QUARTERLY DATA (UNAUDITED)
Thousands of dollars, except per share amounts
<TABLE>
<CAPTION>
1994 1st 2nd 3rd 4th Year
-------- -------- -------- -------- ----------
<S> <C> <C> <C> <C> <C>
Revenues $554,080 $634,814 $652,988 $717,579 $2,559,461
Gross Profit 241,198 291,732 295,131 331,766 1,159,827
Net Income 25,696 57,093 58,074 86,311 227,174
Earnings Per Share .33 .76 .78 1.18 3.05
1993 1st 2nd 3rd 4th Year
-------- -------- -------- -------- ----------
Revenues $560,462 $612,534 $625,356 $667,053 $2,465,405
Gross Profit 241,354 272,285 279,538 303,826 1,097,003
Income Before Cumulative Effect
of Accounting Changes 23,344 55,996 57,060 76,440 212,840
Net Income (117,713)(A) 55,996 57,060 76,440 71,783(A)
Earnings Per Share:
Income Before Cumulative Effect
of Accounting Changes .30 .71 .72 .98 2.71
Net Income (1.53)(A) .71 .72 .98 .88(A)
</TABLE>
(A) Includes an after-tax charge of $141,057, or $1.83 per share, for the
cumulative effect of accounting changes.
COMMON STOCK PRICES AND DIVIDENDS
<TABLE>
<CAPTION>
1994 By Quarter High Low Dividends
-------- ------- -----------
<S> <C> <C> <C>
First $ 39 $34 $ .185
Second 40 3/4 34 .185
Third 41 1/2 35 3/8 .185
Fourth 48 1/4 40 1/8 .185
1993 By Quarter High Low Dividends
-------- ------- -----------
First $42 1/16 $36 1/8 $.165
Second 40 3/4 33 7/8 .165
Third 40 32 5/8 .165
Fourth 40 1/4 34 1/2 .165
</TABLE>
52
<PAGE>
EXHIBIT 21
----------
SUBSIDIARIES OF BECTON, DICKINSON AND COMPANY
---------------------------------------------
<TABLE>
<CAPTION>
State or Percentage
Jurisdiction of Voting
of Securities
Name of Subsidiary Incorporation Owned
- ------------------ ----------------- --------------
<S> <C> <C>
Alchem, Inc. Massachusetts 100%(1)
Bauer & Black, Inc. Delaware 100%
BBL Realty, Inc. Maryland 100%(1)
B D Finance B.V. Netherlands 100%(1)
B-D (Cambridge, U.K.) Ltd. United Kingdom 100%(1)
B-D U.K. Holdings Limited United Kingdom 100%(1)
Becton Dickinson AcuteCare Holdings, Inc. Delaware 100%
Becton Dickinson AcuteCare, Inc. Massachusetts 100%(1)
Becton, Dickinson A.G. Switzerland 100%(1)
Becton, Dickinson Aktiebolag Sweden 100%(1)
Becton Dickinson Asia Limited Singapore 100%(1)
Becton Dickinson (Braunschweig) GmbH Germany 100%(1)
Becton, Dickinson and Company, Ltd. Ireland 100%
Becton, Dickinson and Company, S.A. Panama 100%(1)
Becton Dickinson Benelux N.V. Belgium 100%(1)
Becton, Dickinson B.V. Netherlands 100%
Becton Dickinson Canada Inc. Canada 100%(1)
Becton Dickinson de Columbia Ltda. Columbia 100%(1)
Becton, Dickinson de Mexico, S.A. de C.V. Mexico 100%(1)
Becton Dickinson Diagnostics Inc. Delaware 100%
Becton Dickinson Distribution Center N.V. Belgium 100%
Becton Dickinson Export Import Ltd. Co. Turkey 100%(1)
Becton, Dickinson - France, S.A. France 100%
Becton Dickinson GESMBSH Austria 100%(1)
Becton, Dickinson GmbH Germany 100%(1)
Becton Dickinson Hellas S.A. Greece 100%
Becton Dickinson Image Cytometry B.V. Netherlands 100%(1)
Becton, Dickinson Industrias Cirurgicas Ltda. Brazil 100%(1)
Becton Dickinson Insulin Syringe, Ltd. British W. Indies 100%(1)
Becton Dickinson International Business
Corporation British W. Indies 100%(1)
Becton, Dickinson - Italia S.p.A. Italy 100%(1)
Becton Dickinson Korea, Inc. Korea 100%(1)
Becton Dickinson Korea Limited Korea 100%
Becton Dickinson Medical Products PTE LTD Singapore 100%(1)
BECTON DICKINSON MEXICAN HOLDING, INC. Nevada 100%
Becton Dickinson Monoclonal Center, Inc. Delaware 100%(1)
</TABLE>
-1-
<PAGE>
<TABLE>
<CAPTION>
State of Percentage
Jurisdiction of Voting
of Securities
Name of Subsidiary Incorporation Owned
- ------------------ ------------- ---------------
<S> <C> <C>
Becton, Dickinson Overseas, Inc. Panama 100%(1)
Becton Dickinson Overseas Services Ltd. Nevada 100%
Becton Dickinson O.Y. Finland 100%
Becton Dickinson Pen Limited Ireland 100%
Becton Dickinson Philippines, Inc. Philippines 100%(1)
Becton Dickinson Pty. Ltd. Australia 100%
Becton Dickinson Real Estate Incorporated New Jersey 100%(1)
Becton Dickinson Research Corporation Nevada 100%
Becton Dickinson (Roysten) Ltd. United Kingdom 100%(1)
Becton Dickinson, S.A. Spain 100%(1)
Becton Dickinson Sdn. Bhd. Malaysia 100%(1)
Becton Dickinson (Thailand) Limited Thailand 100%(1)
Becton, Dickinson U.K. Limited United Kingdom 100%(1)
Becton Dickinson Vascular Access Inc. Delaware 100%
Becton Dickinson Vascular Access, S.A. de C.V. Mexico 100%(1)
Becton Dickinson Venezuela, C.A. Venezuela 100%(1)
Becton Dickinson Worldwide, Inc. Delaware 100%
Bedins Ltd. Bermuda 100%(1)
Belvedere, Inc. New Hampshire 100%(1)
Benex Ltd. Ireland 100%
BMS Realty, Inc. Maryland 100%(1)
Cascade Medical Leasing, Inc. Oregon 100%(1)
Cell Analysis Systems, Inc. Illinois 100%
Collaborative Biomedical Products, Inc. Delaware 100%
DWS, Inc. Oregon 100%
JLI Leasing, Inc. Maryland 100%
Johnston Fergusson Vestal, Inc. Maryland 100%(1)
Johnston Laboratories, Inc. Maryland 100%
MICROPETTE, Inc. Delaware 100%
Nippon Becton Dickinson Company, Ltd. Japan 100%(1)
Phase Medical, Inc. California 100%(1)
Promedicor de Mexico, S.A. de C.V. Mexico 100%(1)
Rudolph Beaver FSC, Inc. Virgin Islands 100%(1)
228 Coshocton, Inc. Nevada 100%(1)
</TABLE>
(1) Owned 100% by a subsidiary of Becton, Dickinson and Company.
-2-
<PAGE>
EXHIBIT 23
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in Registration Statement Nos.
2-84788, 33-22871, 33-23055, 33-33791, 33-40787 and 033-53375 on Form S-8 and
Registration Statement No. 33-47957 on Form S-3 of Becton, Dickinson and
Company and the related Prospectuses of our report dated November 8, 1994, with
respect to the consolidated financial statements and schedules of Becton,
Dickinson and Company included in this Annual Report (Form 10-K) for the year
ended September 30, 1994.
/s/ Ernst & Young LLP
Ernst & Young LLP
Hackensack, New Jersey
December 20, 1994
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
The Schedule contains summary financial information extracted from the Company's
Consolidated Financial Statements for the fiscal year ended September 30, 1994,
and is qualified in its entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> SEP-30-1994
<PERIOD-END> SEP-30-1994
<CASH> 94,913
<SECURITIES> 83,854
<RECEIVABLES> 612,076
<ALLOWANCES> 22,158
<INVENTORY> 420,001
<CURRENT-ASSETS> 1,326,551
<PP&E> 2,479,936
<DEPRECIATION> 1,103,587
<TOTAL-ASSETS> 3,159,533
<CURRENT-LIABILITIES> 678,321
<BONDS> 669,157
<COMMON> 85,349
0
56,331
<OTHER-SE> 1,340,014
<TOTAL-LIABILITY-AND-EQUITY> 3,159,533
<SALES> 2,559,461
<TOTAL-REVENUES> 2,559,461
<CGS> 1,399,634
<TOTAL-COSTS> 1,399,634
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 5,323
<INTEREST-EXPENSE> 62,472
<INCOME-PRETAX> 296,159
<INCOME-TAX> 68,985
<INCOME-CONTINUING> 227,174
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 227,174
<EPS-PRIMARY> 3.05
<EPS-DILUTED> 2.98
</TABLE>
