<PAGE>
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- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 1995 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. [_]
As of November 30, 1995, 64,253,730 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 $4,466,837,000.
DOCUMENTS INCORPORATED BY REFERENCE
(1) Portions of the registrant's Annual Report to Shareholders for the fiscal
year ended September 30, 1995 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 13, 1996 are incorporated by reference into
Part III hereof.
- --------------------------------------------------------------------------------
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<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 consist 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 30-31 of the Company's Annual Report to Shareholders for the fiscal
year ended September 30, 1995 (the "1995 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, specialty
and surgical blades and pre-surgery patient prep kits).
This segment also includes specialty needles, drug infusion systems, elastic
support products, thermometers 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.
DISPOSITIONS OF BUSINESSES
The Company's radioimmunoassay business was sold in May 1995 and its medical
glove business in June 1995. The operating results of these businesses until
their respective dates of sale are reflected in the Consolidated Financial
Statements incorporated herein by reference as Exhibit 13.
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, Brazil, France, Germany, Ireland, Japan,
Mexico, Singapore, Spain and the United Kingdom, and in 1995 commenced
construction in China of a new hypodermic facility.
1
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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 13% of total Company revenues in fiscal
1995, 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 $144,201,000 on research and development during the fiscal
year ended September 30, 1995 and $144,227,000 and $139,141,000, 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 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
2
<PAGE>
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, 1995, the Company had approximately 18,100 employees, of
whom approximately 9,600 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 10,686,000 square feet of
manufacturing, warehousing, administrative and research facilities throughout
the world. The domestic facilities, including Puerto Rico, comprise
approximately 5,642,000 square feet of owned and 1,779,000 square feet of
leased space. The foreign facilities comprise approximately 2,248,000 square
feet of owned and 1,017,000 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 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 3,680,000 square feet of
owned and 1,018,000 square feet of leased space.
--Central Sector includes facilities in Illinois, Indiana, Michigan,
Missouri, Nebraska, Ohio, Texas and Wisconsin and is comprised of
approximately 993,000 square feet of owned and 473,000 square feet of
leased space.
--Western Sector includes facilities in California and Utah and is
comprised of approximately 969,000 square feet of owned and 288,000
square feet of leased space.
The foreign facilities are grouped as follows:
--Canada includes approximately 4,000 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 1,219,000 square feet of owned and
708,000 square feet of leased space.
--Latin America includes facilities in Brazil, Colombia, Mexico, Uruguay
and Panama and is comprised of approximately 629,000 square feet of owned
and 157,000 square feet of leased space.
3
<PAGE>
--Asia Pacific includes facilities in Australia, Hong Kong, Japan, Korea,
Malaysia, Philippines, Singapore, Taiwan and Thailand and is comprised of
approximately 400,000 square feet of owned and 148,000 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............. 16 21 10 47
Square feet............ 3,073,000 2,730,000 2,087,000 7,890,000
Manufacturing (B)...... 1,731,000(16) 1,196,000(15) 453,000(5) 3,380,000(36)
Leased
Facilities............. 21 12 60 93
Square feet............ 462,000 256,000 2,078,000 2,796,000
Manufacturing (B)...... 230,000(6) 47,000(7) 15,000(2) 292,000(15)
Total
Facilities............. 37 33 70 140
Square feet............ 3,535,000 2,986,000 4,165,000 10,686,000
Manufacturing (B)...... 1,961,000(22) 1,243,000(22) 468,000(7) 3,672,000(51)
</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.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
Not applicable.
EXECUTIVE OFFICERS OF THE REGISTRANT (AS OF DECEMBER 1, 1995)
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........ 60 Director, Chairman of the Board, President and
Chief Executive Officer since June 1994 and prior
thereto Sector President -- Medical.
John W. Galiardo......... 61 Director, Vice Chairman of the Board and General
Counsel since June 1994 and prior thereto Vice
President and General Counsel.
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
AGE POSITION
NAME --- --------
<S> <C> <C>
Vincent L. De Caprio.... 45 Senior Vice President -- Planning and Technology
since July 1995; Sector President -- Technique
Products from October 1994 to June 1995; and prior
thereto President -- Becton Dickinson Vascular
Access.
Edward J. Ludwig........ 44 Senior Vice President--Finance and Chief Financial
Officer since July 1995; Vice President -- Finance
from May 1995 to June 1995; Vice President --
Finance and Controller from January 1995 to May
1995; and prior thereto President -- Becton
Dickinson Diagnostic Instrument Systems.
Walter M. Miller........ 52 Senior Vice President since July 1995; Sector
President -- Infectious Disease Diagnostics from
October 1994 to June 1995; and prior thereto
Sector President -- Diagnostic.
Mark C. Throdahl........ 44 Senior Vice President since July 1995; Sector
President -- Drug Delivery from October 1994 to
June 1995; President -- Nippon Becton Dickinson
Company, Ltd. from May 1991 to September 1994; and
prior thereto Director -- Corporate Planning.
Kenneth R. Weisshaar.... 45 Senior Vice President since July 1995; Sector
President -- Cellular Analysis Diagnostics from
October 1994 to June 1995; President -- Becton
Dickinson Division from March 1992 to September
1994; and prior thereto Vice President --
Planning, Performance 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, 1995, there were approximately 7,816 shareholders of record. The
balance of the information required by this item appears under the caption
"Common Stock Prices and Dividends" on page 51 of the Company's 1995 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 28-29 of the Company's 1995 Annual
Report and is incorporated herein by reference.
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 21-27 of the Company's 1995 Annual
Report and is incorporated herein by reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
The information required by this item appears on pages 30-31 and pages 34-48
of the Company's 1995 Annual Report and is incorporated herein by reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
Not applicable.
5
<PAGE>
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, 1995 (the "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 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 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
Proxy Statement, and such information is incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
Not applicable.
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 included in
the Company's 1995 Annual Report at the pages indicated in parentheses, are
incorporated by reference in Item 8 hereof:
Consolidated Statements of Income--Years ended September 30, 1995, 1994
and 1993 (page 34)
Consolidated Balance Sheets--September 30, 1995 and 1994 (page 35)
Consolidated Statements of Cash Flows--Years ended September 30, 1995,
1994 and 1993 (page 36)
Notes to Consolidated Financial Statements (pages 37-48)
(a)(2) FINANCIAL STATEMENT SCHEDULES
The following consolidated financial statement schedule of the Company is
included herein at the page indicated in parentheses:
Schedule II--Valuation and Qualifying Accounts (page 10)
6
<PAGE>
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 11, 12 and 13 hereof for a list of all management
contracts, compensatory plans and arrangements required by this item (Exhibit
Nos. 10(a)(i) through 10(l)), and all other Exhibits filed or incorporated by
reference as a part of this report.
(b) REPORTS ON FORM 8-K
The registrant filed no reports on Form 8-K during the last quarter of the
year ended September 30, 1995.
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, 1995
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THIS
REPORT HAS BEEN SIGNED BELOW ON THE 27TH DAY OF DECEMBER, 1995 BY THE FOLLOWING
PERSONS ON BEHALF OF THE REGISTRANT AND IN THE CAPACITIES INDICATED.
NAME CAPACITY
/s/ Clateo Castellini Chairman of the Board, President,
- ------------------------------------- Chief Executive Officer and Director
CLATEO CASTELLINI (Principal Executive Officer)
/s/ Edward J. Ludwig Senior Vice President-Finance and
- ------------------------------------- Chief Financial Officer(Principal
EDWARD J. LUDWIG Financial and Accounting Officer)
/s/ Harry N. Beaty, M.D. Director
- -------------------------------------
HARRY N. BEATY, M.D.
/s/ Henry P. Becton, Jr. Director
- -------------------------------------
HENRY P. BECTON, JR.
/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/ James E. Perrella Director
- -------------------------------------
JAMES E. PERRELLA
/s/ Gloria M. Shatto Director
- -------------------------------------
GLORIA M. SHATTO
/s/ Raymond S. Troubh Director
- -------------------------------------
RAYMOND S. TROUBH
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 schedule of
Becton, Dickinson and Company listed in the accompanying index to financial
statements (Item 14(a)). These financial statements and related schedule are
the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements and related schedule 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
schedule 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 schedule. 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, 1995 and 1994, and the consolidated results of its operations and its cash
flows for each of the three years in the period ended September 30, 1995 in
conformity with generally accepted accounting principles. Also, in our opinion,
the related financial statement schedule, when considered in relation to the
basic financial statements taken as a whole, presents 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 7, 1995
9
<PAGE>
BECTON, DICKINSON AND COMPANY
SCHEDULE II--VALUATION AND QUALIFYING ACCOUNTS
YEARS ENDED SEPTEMBER 30, 1995, 1994, AND 1993
(THOUSANDS OF DOLLARS)
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<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>
1995
Against trade receivables:
For doubtful accounts............ $13,937 $ 4,943 $ 1,956(A) $16,924
For cash discounts............... 8,221 27,295 27,394 8,122
------- -------- ------- -------
Total........................ $22,158 $ 32,238 $29,350 $25,046
======= ======== ======= =======
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
======= ======== ======= =======
</TABLE>
- --------
(A) Accounts written off.
10
<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
4(c) Second Supplemental Indenture, dated Incorporated by reference to Exhibit
as of January 10, 1995, between the 4(c) to Form 8-K filed by the Regis-
Registrant and Chemical Bank (as suc- trant on January 12, 1995 (the regis-
cessor by merger to Manufacturers trant hereby agrees to furnish to the
Hanover Trust Company) Commission upon request 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(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>
11
<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 Incorporated by reference to Exhibit
10(e) to the registrant's Annual Re-
port on Form 10-K for the fiscal year
ended September 30, 1994
10(f) 1982 Incentive Stock Option Plan, as Incorporated by reference to Exhibit
amended and restated February 8, 1994 10(f) to the registrant's Annual Re-
port on Form 10-K for the fiscal year
ended September 30, 1994
10(g) 1982 Unqualified Stock Option Plan, as Incorporated by reference to Exhibit
amended and restated February 8, 1994 10(g) to the registrant's Annual Re-
port on Form 10-K for the fiscal year
ended September 30, 1994
10(h) Salary and Bonus Deferral Plan Incorporated by reference to Exhibit
10(h) to the registrant's Annual Re-
port on Form 10-K for the fiscal year
ended September 30, 1994
10(i) 1990 Stock Option Plan, as amended and Incorporated by reference to Exhibit
restated February 8, 1994 10(i) to the registrant's Annual Re-
port on Form 10-K for the fiscal year
ended September 30, 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
10(l) 1995 Stock Option Plan Incorporated by reference to Exhibit A
to the registrant's Proxy Statement
dated December 29, 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 1995 (graphic material contained
under the caption "Financial Review"
is not included in the electronic
filing of this report)
</TABLE>
12
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION METHOD OF FILING
- ------- ----------- ----------------
<S> <C> <C>
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.
13
<PAGE>
EXHIBIT 11
BECTON, DICKINSON AND COMPANY
COMPUTATION OF EARNINGS PER SHARE
YEARS ENDED SEPTEMBER 30, 1995, 1994 AND 1993
(ALL AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1995 1994 1993
- ---------------------------------------------------------------------------------
PRIMARY EARNINGS PER SHARE
--------------------------
<S> <C> <C> <C>
Net income:
Income before cumulative effect of accounting
changes........................................... $251,696 $227,174 $212,840
Less preferred stock dividends..................... (3,596) (3,711) (3,800)
-------- -------- --------
Income before cumulative effect of accounting
changes applicable to common stock................ 248,100 223,463 209,040
Cumulative effect of accounting changes, net of
taxes............................................. -- -- (141,057)
-------- -------- --------
Net income applicable to common stock.............. $248,100 $223,463 $ 67,983
======== ======== ========
Shares:
Average shares outstanding...................... 67,072 72,237 75,833
Add dilutive stock equivalents from stock plans. 2,129 1,096 1,097
-------- -------- --------
Weighted average number of common and common
equivalent shares outstanding during the year.. 69,201 73,333 76,930
======== ======== ========
Earnings per share:
Income before cumulative effect of accounting
changes........................................... $3.59 $3.05 $ 2.71
Cumulative effect of accounting changes, net of
taxes............................................. -- -- (1.83)
-------- -------- --------
Net income......................................... $3.59 $3.05 $ .88
======== ======== ========
<CAPTION>
FULLY DILUTED EARNINGS PER SHARE (A)
------------------------------------
<S> <C> <C> <C>
Net income:
Income before cumulative effect of accounting
changes applicable to common stock................ $248,100 $223,463 $209,040
Add preferred stock dividends using the "if
converted" method................................. 3,596 3,711 3,800
Less additional ESOP contribution, using the "if
converted" method................................. (1,420) (1,540) (1,652)
-------- -------- --------
Income before cumulative effect of accounting
changes for fully diluted earnings per share...... 250,276 225,634 211,188
Cumulative effect of accounting changes, net of
taxes............................................. -- -- (141,057)
-------- -------- --------
Net income for fully diluted earnings per share.... $250,276 $225,634 $ 70,131
======== ======== ========
Shares:
Average shares outstanding...................... 67,072 72,237 75,833
Add:
Dilutive stock equivalents from stock plans... 2,725 1,949 1,106
Shares issuable upon conversion of preferred
stock........................................ 1,484 1,528 1,576
-------- -------- --------
Weighted average number of common shares used in
calculating fully diluted earnings per share... 71,281 75,714 78,515
======== ======== ========
Fully diluted earnings per share:
Income before cumulative effect of accounting
changes........................................... $3.51 $2.98 $ 2.69
Cumulative effect of accounting changes, net of
taxes............................................. -- -- (1.80)
-------- -------- --------
Net income......................................... $3.51 $2.98 $ .89
======== ======== ========
</TABLE>
- --------
(A) 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
Financial Table of Contents
Financial Review 21
Six Year Summary of Selected Financial Data 28
Summary by Business Segment 30
Summary by Geographic Area 31
Report of Management 32
Report of Ernst & Young LLP, Independent Auditors 33
Consolidated Statements of Income 34
Consolidated Balance Sheets 35
Consolidated Statements of Cash Flows 36
Notes to Consolidated Financial Statements 37
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 $2.7 billion rose 6%. Excluding the estimated impacts of
favorable foreign currency translation of 3% and of certain initiatives which
reduced 1995 revenues, as discussed below, the resulting underlying growth rate
remained at 6%, which resulted primarily from volume increases and an improved
product mix in both segments. Price increases averaged less than 1%. Revenue
growth was achieved in the U.S. and international markets by both segments.
Revenues were unfavorably impacted by programs designed to normalize quarterly
revenue patterns through a reduction in the number of year-end sales promotions.
In addition, the Company divested certain businesses, the most significant of
which were the medical glove business and the radioimmunoassay (RIA) business.
While health care cost containment continues to be pursued in the United States
and Europe, the Company has responded successfully by continuing to develop
cost-effective and innovative products which respond to unmet customer needs and
enhance opportunities in these markets. Sales forces and supply chain services
are being reorganized so that the Company will continue to effectively serve its
customers, including larger, more integrated health care providers. These
efforts will enable the Company to continue to successfully reach all
distribution channels and customer segments as the marketplace evolves.
Medical segment revenues of $1.5 billion increased 6% over last year. The
estimated favorable impact of foreign currency translation of 3% was offset by
the decrease in revenues related to business divestitures and the estimated
impact of reduced levels of year-end sales promotions. Revenue growth was led
by strong sales of the Company's diabetes health care products, a result of both
market share gains and market growth. This market growth was largely
attributable to the gradual trend toward more frequent insulin injections
resulting from more intensive therapies. Strong increases in revenues were also
realized in injection systems by the continuing shift toward the use of
hypodermic safety devices and increased use of prefillable syringes by
pharmaceutical companies for vaccines and other drugs. Revenue growth in
infusion therapy was led by the Company's increasing market share of intravenous
catheters. Revenues of the medical glove business, which was sold on June 30,
1995, were $85 million and $104 million in 1995 and 1994, respectively.
Medical segment operating income of $330 million increased 20% over 1994
primarily due to revenue growth, improved sales mix, manufacturing productivity,
and the benefits gained from the recent centralization of warehousing and
distribution activities in Europe. The estimated favorable impact of foreign
currency translation and the effect of special
21
<PAGE>
charges in 1994 were offset by the decrease in income related to business
divestitures and the estimated impact of reduced levels of year-end sales
promotions.
Diagnostic segment revenues of $1.2 billion increased 7%. Excluding the
estimated impacts of favorable foreign currency translation of 4% and of reduced
levels of year-end sales promotions, as well as the decrease in revenues related
to business divestitures, Diagnostic segment revenues increased 5%. Growth in
sample collection was led by continued strong sales of VACUTAINER brand blood
collection products, fueled by the continued conversion of the market to higher
value, lower cost-in-use safety products. FACS brand flow cytometry systems,
including several new product offerings, also exhibited strong sales growth.
The Company's new FACSCALIBUR four-color flow cytometry system, along with new
products designed to increase efficiency in sample handling and data management,
have received excellent market acceptance. The rate of revenue growth of
infectious disease products, though slightly lower than historical levels, was
at the market rate which is estimated at 2%. Revenue growth in infectious
disease products continues to be impacted by worldwide cost containment
initiatives in diagnostic testing. The Company is responding to these
developments through its ongoing efforts to develop cost-effective and
innovative products.
Diagnostic segment operating income of $158 million increased 42% over 1994.
During the fourth quarter of 1995, the Company recorded a provision of $12
million primarily to write off goodwill associated with the cellular imaging
business. This provision resulted from the Company's recognition that the slower
than anticipated market growth of this business would not result in expected
returns. Excluding the impact of this provision, and the estimated impacts of
favorable foreign currency translation and of reduced levels of year-end sales
promotions, as well as the effect of special charges in 1994, Diagnostic segment
operating income increased 24%. This growth was primarily due to revenue growth,
improved gross profit margins from increased manufacturing productivity and
improved product mix, as well as tight expense management.
On a geographic basis, revenues outside the United States of $1.3 billion
rose 12%. Excluding the estimated impacts of favorable foreign currency
translation of 8% and of reduced levels of year-end sales promotions, as well as
the decrease in revenues related to business divestitures, such revenues
increased 6%. Double-digit revenue increases were achieved by FACS and
VACUTAINER brand products in many markets, while sales of prefillable syringes
to pharmaceutical companies and intravenous catheter revenues were also strong.
In Mexico, revenues were slightly lower than last year as a result of the
weakness of the Mexican peso and the ongoing recession in that country. The
Company's revenue growth benefited from the continued stability of Brazil's
currency. In the aggregate, economic and currency issues in Mexico and Brazil
had an immaterial impact on the Company's net income.
Revenues in the United States were $1.4 billion, an increase of 1%. Excluding
the decrease in revenues related to business divesti-
Operating Income
(Millions of Dollars)
[Graphic material contained under
the caption "Financial Review" is not
included in the electronic filing
of this report]
Return on Revenues*
(Percent)
*Excludes cumulative effect of accounting changes in 1993.
[Graphic material contained under
the caption "Financial Review" is not
included in the electronic filing
of this report]
Gross Profit Margin
(Percent)
[Graphic material contained under
the caption "Financial Review" is not
included in the electronic filing
of this report]
22
<PAGE>
tures and the estimated impact of reduced levels of year-end sales promotions,
such revenues increased 5%. Sales of VACUTAINER and FACS brand products and
insulin syringes grew at double-digit rates, while sales of the hypodermic
business continued to benefit from the increased use of safety products. Strong
performance from core medical and diagnostic products supports the Company's
successful strategy of focusing on cost-effective and innovative products.
The Company's gross profit margin rose to 47.0%, compared with 45.3% last
year, despite significant increases in the cost of certain raw materials,
principally plastic resins and corrugated paper materials. As anticipated, this
improvement was the result of the Company's continued success in increasing
manufacturing efficiency as well as a favorable product mix.
Selling and administrative expense of $735 million was 27% of revenues,
compared with last year's ratio of 25.8%. The percentage increase resulted from
a lower revenue base due to business divestitures, the estimated impact of lower
year-end sales promotions, and the write-off of goodwill associated with the
cellular imaging business, as discussed above. In addition, aggregate expenses
outside the United States were higher, reflecting increased investment in new
markets. Costs associated with relocating the Company's Japanese headquarters
also unfavorably impacted selling and administrative expense.
Investment in research and development was $144 million, the same as last
year, and equaled 5.3% of revenues. The decision made at the end of 1994 to exit
several product lines and refocus certain diagnostic businesses resulted in
discontinued investment in some areas. Additional funding was directed toward
areas with greater opportunities for value and growth, such as DNA probes for
infectious disease diagnostics. Sales of new products introduced in the last
five years represented 18% and 16% of revenues in 1995 and 1994, respectively.
Operating income in 1995 was $397 million, an increase of 22%. Excluding the
estimated impacts of favorable foreign currency translation and of certain
initiatives which reduced 1995 revenues, as well as special charges in 1994,
operating income grew 15%, primarily from improved gross profit margin. As
anticipated, the Company began realizing the benefits from the recent
centralization of its warehousing and distribution activities within Europe.
The Company's operating margin improved to 14.6% of revenues compared with 12.7%
in 1994. This improvement was primarily the consequence of enhanced diagnostic
and international profitability.
Net interest expense of $43 million in 1995 was $5 million lower than in
1994, primarily due to lower financing expense in Brazil and lower working
capital requirements in Europe, partially offset by higher interest expense in
the United States resulting from the issuance in the second quarter of 1995 of
$100 million of long-term debentures with a coupon rate of 8.7%.
"Other (expense) income, net" of $4 million expense included a net settlement
of $11 million received in connection with a favorable arbitration ruling
relating to one of the Company's patents. Also included is a loss of $6 million
resulting from the sale of the medical glove business, as well as
Revenue Per Employee
(Thousands of Dollars)
[Graphic material contained under
the caption "Financial Review" is not
included in the electronic filing
of this report]
Research and Development Expense
(Millions of Dollars)
[Graphic material contained under
the caption "Financial Review" is not
included in the electronic filing
of this report]
Operating Income
(Percent of Revenues)
[Graphic material contained under
the caption "Financial Review" is not
included in the electronic filing
of this report]
23
<PAGE>
foreign exchange losses of $12 million, including hedging costs. Despite
volatility in the Mexican peso and various European currencies, 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 similar to
the prior year.
In accordance with Statement of Financial Accounting Standards (SFAS) No. 52,
Foreign Currency Translation, the net monetary assets ($7 million and $6 million
at September 30, 1995 and 1994, 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.
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 impact reported earnings or current cash flow. The net
assets of these foreign operations were $881 million and $829 million at
September 30, 1995 and 1994, 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 instruments, see Note 9 of the Notes to
Consolidated Financial Statements.
As anticipated, the effective tax rate of 28.0% was significantly higher than
the 23.3% rate in 1994. The higher tax rate in 1995 resulted primarily from a
reduction in the tax benefits generated from operations in Puerto Rico, as
provided in the Omnibus Budget Reconciliation Act of 1993. It is expected that
the Company's 1996 tax rate will be comparable to the 1995 tax rate.
Net income was $252 million, an increase of 11% over $227 million in 1994.
Earnings per share were $3.59 per share, an increase of 18% over $3.05 per share
in 1994. Foreign currency translation had an estimated $.18 favorable impact on
earnings per share in 1995.
In March 1995, the Financial Accounting Standards Board issued SFAS No. 121,
Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
Be Disposed Of. This Statement establishes accounting standards for the
assessment and measurement of impairment of long-lived assets, certain
identifiable intangibles, and goodwill related to those assets to be held and
used and for long-lived assets and certain identifiable intangibles to be
disposed of. The Company is presently assessing the effect of adopting SFAS No.
121, which is required to be adopted by the Company by the first quarter of
fiscal 1997.
Financial Condition
Cash provided by operations continues to be the Company's primary
Inventories
(Millions of Dollars)
[Graphic material contained under
the caption "Financial Review" is not
included in the electronic filing
of this report]
Capital Expenditures
(Millions of Dollars)
[Graphic material contained under
the caption "Financial Review" is not
included in the electronic filing
of this report]
Income Before Cumulative Effect of Accounting Changes
(Millions of Dollars)
[Graphic material contained under
the caption "Financial Review" is not
included in the electronic filing
of this report]
24
<PAGE>
source of funds to finance operating needs and capital expenditures. In 1995,
net cash provided by operating activities was $472 million, compared to $480
million in 1994.
Capital expenditures were $124 million, compared with $123 million in the
prior year. Medical segment capital spending, which totaled $77 million in 1995,
included the acquisition of equipment for the ongoing expansion of the
prefillable syringe business, and for the diabetes health care, hypodermic and
vascular access businesses. In addition, funds were expended to support
manufacturing productivity improvement programs. Diagnostic segment capital
spending, which totaled $44 million in 1995, included the acquisition of
equipment to support quality enhancement and cost reduction programs, primarily
in the sample collection and infectious disease diagnostics businesses. In
addition, funds were expended for routine replacement of machinery and
equipment, primarily in the blood collection and infectious disease businesses,
as well as to support capacity expansion programs in selected regions of the
world for the blood collection business. The Company expects capital
expenditures in 1996 to be slightly higher than in 1995, and will include
spending to manufacture hypodermic syringes, intravenous catheters and
anesthesia needles in China.
Business divestitures in 1995 resulted in cash proceeds of $79 million. In
addition, the Company received proceeds of $48 million from the disposition of a
foreign investment in 1994.
Net cash used for financing activities was $421 million during 1995 as
compared with $292 million in 1994. This change was primarily due to the
Company's repurchase of 5.8 million of its common shares on the open market at
an average cost of $51.94 per share, totaling $300 million, an increase from
$210 million in 1994. At September 30, 1995, 4.1 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 strategic acquisition opportunities and to
continue to repurchase its common shares.
During 1995, total debt decreased $79 million as a result of strong cash flow
from operations, working capital management and proceeds from business divesti-
tures. Short-term debt was 27% of total debt at year end, compared with 21% in
1994. The change in the ratio was principally attributable to a net reduction
in long-term debt as well as a relatively small increase in short-term debt.
The Company's weighted average cost of total debt at the end of 1995 was 7.8%
compared with 7.2% at the end of last year. Total debt to capitalization at
year end declined to 35.2%, compared with 36.1% last year.
The current ratio was 1.8 at the end of 1995 compared to last year's 2.0.
Book value per share increased 2% to $21.49.
In the United States, the Company had unused committed short-term and long-
term lines of credit of $225 million and $145 million, respectively. In
addition, the Company has unconfirmed lines of credit outside of the United
States. The Company has a high degree of confidence in its ability to
Book Value Per Share
(Dollars)
[Graphic material contained under
the caption "Financial Review" is not
included in the electronic filing
of this report]
Debt to Capitalization
(Percent)
[Graphic material contained under
the caption "Financial Review" is not
included in the electronic filing
of this report]
Dividends Per Common Share
(Dollars)
[Graphic material contained under
the caption "Financial Review" is not
included in the electronic filing
of this report]
25
<PAGE>
refinance maturing short-term and long-term debt, including $107 million of
long-term debt maturities in 1997, 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 by the Company. During 1995,
the Company repatriated $112 million from certain of these subsidiaries.
Return on equity was 17.5% in 1995 compared with 15.5% in 1994, reflecting
the Company's progress toward increasing this ratio to an initial target of 20%.
The Company manufactures various 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. The Company also manufactures and imports various
medical and diagnostic products in Mexico for sale in that country. Since
December 1994, the Mexican economy has experienced a period of high inflation,
recession and currency instability. These situations have created volatility in
the recording of revenues and earnings of the Company's Brazilian and Mexican
operations, as well as the risk of foreign exchange losses as a result of
fluctuations in the Brazilian and Mexican currencies. 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. In the aggregate, the Company's Brazilian and Mexican
operations comprise 8% or less of each of the Company's consolidated revenues,
net income and total assets.
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 did not have a material impact on the Company's overall operations.
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, financial condition or cash flows.
1994 Compared With 1993
Worldwide revenues for 1994 of $2.6 billion rose 4%, or 5% after excluding the
estimated unfavorable impact of foreign currency translation. Medical segment
revenues of $1.4 billion increased 5% compared with 1993. 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.
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 flow cytometry systems to research institutions and clinical
laboratories were also adversely impacted by competition, regulatory delays for
new products, and tight research budgets.
The Company's gross profit margin rose to 45.3%, compared with 44.5% in 1993,
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.
Selling and administrative expense was 25.8% of revenues, compared with the
1993 rate of 26.8%, reflecting the Company's
26
<PAGE>
tight spending controls and cost reduction programs. Investment in research and
development increased to $144 million, or 5.6% of revenues.
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 with respect to the 1993 employee
benefit related accounting changes which reduced 1993 earnings before cumulative
effect of accounting changes by $.14 per share.
In 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. No significant changes in estimates used to determine this provision
have been required subsequent to 1994. 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.
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 income included a gain of $36
million, or $.30 per share, from the disposition of a foreign investment. Also
included in "Other income (expense), net" were foreign exchange losses of $11
million in 1994. Included in "Other income (expense), net" in 1993 was a gain
of $11 million from the sale of an investment and foreign exchange losses of $12
million.
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.
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.
In 1993, the Company adopted 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 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. 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.
Cash provided by operations was the Company's primary source of funds to
finance operating needs and capital expenditures in 1994. Capital expenditures
were $123 million, compared with $184 million in 1993. This decline reflects
lower spending as productivity programs were completed at several plant
locations. Medical and Diagnostic segment capital spending totaled $66 million
and $55 million, respectively, in 1994.
During 1994, total debt decreased $45 million. The Company repurchased 5.4
million of its common shares on the open market at an average cost of $39.24 per
share, totaling $210 million.
Short-term debt was 21% of total debt at year end, compared with 23% in 1993.
The decrease is principally attributable to repayments of short-term debt.
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.
27
<PAGE>
Six Year Summary of Selected Financial Data
<TABLE>
<CAPTION>
Becton, Dickinson and Company
Years Ended September 30
Thousands of dollars, except per share amounts 1995
----------
<S> <C> <C>
Operations Revenues $2,712,525
Gross Profit Margin 47.0%
Operating Income 396,650
Interest Expense, Net 42,833
Income Before Income Taxes and
Cumulative Effect of Accounting
Changes 349,578
Income Tax Provision 97,882
Income Before Cumulative Effect of
Accounting Changes 251,696
Net Income 251,696
Earnings Per Share:
- Before Cumulative Effect of
Accounting Changes 3.59
- Net Income 3.59
Dividends Per Common Share .82
Average Common and Common
Equivalent Shares Outstanding 69,201
Financial Current Assets $1,327,518
Position Current Liabilities 720,035
Current Ratio 1.8
Property, Plant and Equipment, Net 1,281,031
Total Assets 2,999,505
Long-Term Debt 557,594
Shareholders' Equity 1,398,385
Book Value Per Common Share 21.49
Financial Income Before Income Taxes and Cumulative
Relationships Effect of Accounting Changes
as a Percent of Revenues 12.9%
Return on Total Assets (B) 13.3%
Return on Equity 17.5%
Debt to Capitalization (D) 35.2%
Additional Depreciation and Amortization $ 207,756
Data Capital Expenditures 123,760
Research and Development Expense 144,201
Number of Employees 18,100
Number of Shareholders 7,712
</TABLE>
(A) Includes after-tax charge of $141,057, or $1.83 per share, for the
cumulative effect of accounting changes.
(B) Net income before interest expense and taxes as a percent of average total
assets.
(C) Excludes the cumulative effect of accounting changes.
(D) Total debt as a percent of the sum of total debt, shareholders' equity and
net non-current deferred income tax liabilities.
28
<PAGE>
<TABLE>
<CAPTION>
1994 1993 1992 1991 1990
- ---------- ---------- ---------- ---------- ----------
<C> <C> <C> <C> <C>
$2,559,461 $2,465,405 $2,365,317 $2,172,168 $2,012,654
45.3% 44.5% 45.0% 46.0% 45.8%
325,038 270,425 328,592 313,746 305,476
47,624 53,412 49,116 50,051 40,235
296,159 222,894 269,457 267,303 274,107
68,985 10,054 68,704 77,514 91,850
227,174 212,840 200,753 189,789 182,257
227,174 71,783(A) 200,753 189,789 182,257
3.05 2.71 2.57 2.43 2.33
3.05 .88(A) 2.57 2.43 2.33
.74 .66 .60 .58 .54
73,333 76,930 77,028 77,096 77,320
$1,326,551 $1,150,742 $1,221,209 $1,031,581 $ 961,874
678,321 636,062 713,335 531,277 573,801
2.0 1.8 1.7 1.9 1.7
1,376,349 1,403,070 1,429,519 1,351,387 1,276,113
3,159,533 3,087,565 3,177,675 2,779,975 2,593,513
669,157 680,581 685,081 739,076 649,287
1,481,694 1,456,953 1,594,926 1,363,786 1,233,555
21.08 19.50 21.00 18.07 16.39
11.6% 9.0% 11.4% 12.3% 13.6%
11.5% 9.2%(C) 11.1% 12.3% 13.6%
15.5% 13.3%(C) 13.6% 14.6% 15.8%
36.1% 37.8% 36.1% 37.5% 38.2%
$ 203,705 $ 189,756 $ 169,638 $ 149,897 $ 135,723
123,017 184,168 185,559 211,136 263,579
144,227 139,141 125,207 113,045 102,826
18,600 19,000 19,100 18,600 18,500
7,489 7,463 7,086 7,007 6,854
</TABLE>
29
<PAGE>
Summary by Business Segment
<TABLE>
<CAPTION>
(See Note 13 to Financial Statements)
Thousands of dollars 1995 1994 1993
---------- ---------- ----------
<S> <C> <C> <C> <C>
Revenues Medical Supplies and Devices $1,500,075 $1,421,435 $1,359,533
Diagnostic Systems 1,212,450 1,138,026 1,105,872
---------- ---------- ----------
Total Segments $2,712,525 $2,559,461 $2,465,405
========== ========== ==========
Segment Medical Supplies and Devices (A) $ 330,368 $ 274,498 $ 228,337
Operating Diagnostic Systems (B) 157,673 110,989 111,460
Income ---------- ---------- ----------
Total Segments 488,041 385,487 339,797
Unallocated Expenses (138,463) (89,328)(C) (116,903)
---------- ---------- ----------
Income Before Income Taxes and
Cumulative Effect of
Accounting Changes $ 349,578 $ 296,159 $ 222,894
========== ========== ==========
Identifiable Medical Supplies and Devices $1,348,860 $1,433,145 $1,422,147
Assets Diagnostic Systems 1,210,888 1,267,331 1,270,037
---------- ---------- ----------
Total Segments 2,559,748 2,700,476 2,692,184
Corporate (D) 439,757 459,057 395,381
---------- ---------- ----------
Total $2,999,505 $3,159,533 $3,087,565
========== ========== ==========
Capital Medical Supplies and Devices $ 77,062 $ 66,181 $ 105,632
Expenditures Diagnostic Systems 43,776 55,024 74,780
---------- ---------- ----------
Total Segments 120,838 121,205 180,412
Corporate 2,922 1,812 3,756
---------- ---------- ----------
Total $ 123,760 $ 123,017 $ 184,168
========== ========== ==========
Depreciation Medical Supplies and Devices $ 96,517 $ 99,420 $ 97,516
and Diagnostic Systems 102,540 96,407 85,595
Amortization ---------- ---------- ----------
Total Segments 199,057 195,827 183,111
Corporate 8,699 7,878 6,645
---------- ---------- ----------
Total $ 207,756 $ 203,705 $ 189,756
========== ========== ==========
</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.
30
<PAGE>
Summary by Geographic Area
<TABLE>
<CAPTION>
(See Note 13 to Financial Statements)
Thousands of dollars 1995 1994 1993
---------- ---------- ----------
<S> <C> <C> <C> <C>
Revenues United States $1,438,459 $1,423,060 $1,371,607
Europe 792,908 704,116 699,839
Other 481,158 432,285 393,959
---------- ---------- ----------
Total (A) $2,712,525 $2,559,461 $2,465,405
========== ========== ==========
Area United States (B) $ 341,277 $ 264,117 $ 232,727
Operating Europe (C) 116,229 82,040 79,453
Income Other (D) 30,535 39,330 27,617
---------- ---------- ----------
Total 488,041 385,487 339,797
Unallocated Expenses (138,463) (89,328)(E) (116,903)
---------- ---------- ----------
Income Before Income Taxes
and Cumulative Effect of
Accounting Changes $ 349,578 $ 296,159 $ 222,894
========== ========== ==========
Identifiable United States $1,466,376 $1,601,569 $1,613,985
Assets Europe 673,546 667,467 665,799
Other 419,826 431,440 412,400
---------- ---------- ----------
Total 2,559,748 2,700,476 2,692,184
Corporate (F) 439,757 459,057 395,381
---------- ---------- ----------
Total $2,999,505 $3,159,533 $3,087,565
========== ========== ==========
</TABLE>
(A) Interarea revenues to affiliates amounted to $346,905 in 1995, $350,207 in
1994 and $383,428 in 1993. 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.
31
<PAGE>
Consolidated Statements of Income
<TABLE>
<CAPTION>
Becton, Dickinson and Company
Years Ended September 30
Thousands of dollars, except per share amounts 1995 1994 1993
---------- ---------- ----------
<S> <C> <C> <C> <C>
Operations Revenues $2,712,525 $2,559,461 $2,465,405
Cost of products sold 1,436,358 1,399,634 1,368,402
Selling and administrative expense 735,316 660,072 660,508
Research and development expense 144,201 144,227 139,141
Special charges - 30,490 26,929
---------- ---------- ----------
Total Operating Costs and Expenses 2,315,875 2,234,423 2,194,980
---------- ---------- ----------
Operating Income 396,650 325,038 270,425
Interest expense, net (42,833) (47,624) (53,412)
Other (expense) income, net (4,239) 18,745 5,881
---------- ---------- ----------
Income Before Income Taxes and Cumulative
Effect of Accounting Changes 349,578 296,159 222,894
Income tax provision 97,882 68,985 10,054
---------- ---------- ----------
Income Before Cumulative Effect of
Accounting Changes 251,696 227,174 212,840
Cumulative effect of accounting changes,
net of taxes - - (141,057)
---------- ---------- ----------
Net Income $ 251,696 $ 227,174 $ 71,783
========== ========== ==========
Earnings Income Before Cumulative Effect of
Per Share Accounting Changes $ 3.59 $ 3.05 $ 2.71
Cumulative effect of accounting changes,
net of taxes - - (1.83)
---------- ---------- ----------
Net Income $ 3.59 $ 3.05 $ .88
========== ========== ==========
</TABLE>
See notes to consolidated financial statements
34
<PAGE>
Consolidated Balance Sheets
<TABLE>
<CAPTION>
Becton, Dickinson and Company
September 30
Thousands of dollars, except per share amounts 1995 1994
---------- ----------
<C> <S> <C> <C>
Assets Current Assets
Cash and equivalents $ 198,506 $ 94,913
Short-term investments 41,495 83,854
Trade receivables, net 573,093 589,918
Inventories 408,635 420,001
Prepaid expenses, deferred taxes and other 105,789 137,865
---------- ----------
Total Current Assets 1,327,518 1,326,551
Investments in Marketable Securities 44,400 71,527
Property, Plant and Equipment, Net 1,281,031 1,376,349
Intangibles, Net 181,501 217,725
Other 165,055 167,381
---------- ----------
Total Assets $2,999,505 $3,159,533
========== ==========
Liabilities Current Liabilities
Short-term debt $ 205,799 $ 173,228
Accounts payable 124,155 118,146
Accrued expenses 189,354 173,284
Income taxes 64,337 93,691
Salaries, wages and related items 136,390 119,972
---------- ----------
Total Current Liabilities 720,035 678,321
Long-Term Debt 557,594 669,157
Long-Term Employee Benefit Obligations 289,711 297,644
Deferred Income Taxes and Other 33,780 32,717
Commitments and Contingencies - -
Shareholders' ESOP convertible preferred stock -
Equity $1 par value: authorized - 1,016,949 shares;
issued and outstanding - 927,338 shares in
1995 and 954,764 shares in 1994 54,713 56,331
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 118,201 111,600
Cumulative currency translation adjustments 6,767 8,573
Retained earnings 1,946,636 1,752,360
Unearned ESOP compensation (36,941) (41,096)
Common shares in treasury - at cost -
20,273,690 shares in 1995 and 15,071,131
shares in 1994 (776,340) (491,423)
---------- ----------
Total Shareholders' Equity 1,398,385 1,481,694
---------- ----------
Total Liabilities and Shareholders' Equity $2,999,505 $3,159,533
========== ==========
</TABLE>
See notes to consolidated financial statements
35
<PAGE>
Consolidated Statements of Cash Flows
<TABLE>
<CAPTION>
Becton, Dickinson and Company
Years Ended September 30
Thousands of dollars 1995 1994 1993
--------- --------- ---------
<C> <S> <C> <C> <C>
Operating Net income $ 251,696 $ 227,174 $ 71,783
Activities Adjustments to net income to derive net cash
provided by operating activities:
Depreciation and amortization 207,756 203,705 189,756
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 (13,540) (31,418) (21,509)
Change in:
Trade receivables 21,930 (20,720) (24,715)
Inventories (7,866) 30,988 (31,205)
Prepaid expenses, deferred taxes and other (6,218) 9,394 (2,930)
Accounts payable, income taxes
and other liabilities (2,609) 55,756 (232)
Other, net 21,049 10,048 (18,444)
--------- --------- ---------
Net cash provided by operating activities 472,198 479,549 319,840
--------- --------- ---------
Investing Capital expenditures (123,760) (123,017) (184,168)
Activities Proceeds from sales of equity investments 47,805 22,159 59,470
Acquisitions of businesses (3,839) (12,750) -
Proceeds from dispositions of businesses 79,479 - -
Proceeds (purchases) of short-term
investments, net 69,577 (6,031) 18,077
Proceeds from sales of long-term investments 6,926 8 384
Purchases of long-term investments - - (28,800)
Other, net (20,240) (12,809) (38,083)
--------- --------- ---------
Net cash provided by (used for) investing
activities 55,948 (132,440) (173,120)
--------- --------- ---------
Financing Change in short-term debt (12,680) (51,063) 206
Activities Proceeds of long-term debt 107,278 39,606 42,062
Payment of long-term debt (177,226) (43,606) (100,067)
Issuance of common stock 19,789 30,865 12,974
Repurchase of common stock (299,723) (210,285) (64,112)
Dividends paid (58,347) (57,034) (53,825)
--------- --------- ---------
Net cash used for financing activities (420,909) (291,517) (162,762)
--------- --------- ---------
Effect of exchange rate changes on cash
and equivalents (3,644) 195 (1,463)
--------- --------- ---------
Net increase (decrease) in cash and
equivalents 103,593 55,787 (17,505)
--------- --------- ---------
Opening Cash
and Equivalents 94,913 39,126 56,631
--------- --------- ---------
Closing Cash
and Equivalents $ 198,506 $ 94,913 $ 39,126
========= ========= =========
</TABLE>
See notes to consolidated financial statements
36
<PAGE>
Notes to Consolidated Financial Statements
Becton, Dickinson and Company
Thousands of dollars, except per share amounts
Index
Note Subject Page
1 Summary of Significant Accounting
Policies 37
2 Employee Stock Ownership Plan
(ESOP)/Savings Plan 38
3 Benefit Plans 38
4 Special Charges 40
5 Other (Expense) Income, Net 40
6 Income Taxes 40
7 Supplemental Balance Sheet Information 41
8 Debt 42
9 Financial Instruments 43
10 Shareholders' Equity 45
11 Commitments and Contingencies 46
12 Stock Plans 46
13 Business Segment Data 47
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 (expense) income, net.
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 five to forty years, using the straight-line method. The
Company continually reviews goodwill and other intangibles to assess
recoverability from estimated future results of operations and cash flows at the
aggregate business unit level. As a result of this review and a change in the
strategic direction for the cellular imaging business, the Company recorded a
provision in the amount of $12,275 in 1995 primarily to write off goodwill
associated with that business.
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 in which 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. The weighted average number
of shares used in the computations was 69,201,000 in 1995, 73,333,000 in 1994
and 76,930,000 in 1993. Common equivalent shares relate to employee stock
plans.
37
<PAGE>
Accounting Changes
Effective October 1, 1992, 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. The cumulative effect
on prior years and the net incremental charges attributable to these adoptions
were 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
</TABLE>
<TABLE>
<CAPTION>
1993 Incremental Effect
---------------------------------
Pre-tax After-tax Per Share
---------- ---------- ---------
<S> <C> <C> <C>
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>
1995 1994 1993
-------- -------- --------
<S> <C> <C> <C>
Total expense of the
savings plan $ 7,659 $ 9,347 $ 9,201
Compensation expense
(included in total
expense above) $ 5,080 $ 6,543 $ 6,194
Dividends on ESOP
shares used for
debt service $ 3,596 $ 3,711 $ 3,800
Number of preferred
shares allocated
at September 30 288,785 248,766 211,465
</TABLE>
The Company guarantees employees' contributions to the fixed income fund of the
Savings Plan. The amount guaranteed was $93,693 at September 30, 1995.
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>
1995 1994 1993
-------- -------- --------
<S> <C> <C> <C>
Service cost: benefits
earned during
the year $ 16,884 $ 20,040 $ 18,497
Interest cost on
projected benefit
obligation 27,312 28,641 27,991
Return on assets:
Actual gain (71,964) (1,280) (58,371)
Deferred portion 42,790 (34,986) 25,990
-------- -------- --------
Expected return (29,174) (36,266) (32,381)
Special termination
benefits - 3,498 -
-------- -------- --------
Net pension cost $ 15,022 $ 15,913 $ 14,107
======== ======== ========
</TABLE>
Rate assumptions used in accounting for the defined benefit plans were:
<TABLE>
<CAPTION>
1995 1994 1993
-------- -------- --------
<S> <C> <C> <C>
Discount rate:
End of year 7.50% 8.00% 7.25%
Beginning of year 8.00 7.25 7.75
Rate of increase in
compensation 5.25 5.25 5.25
Expected long-term
rate of return
on assets 10.00 10.00 10.00
</TABLE>
38
<PAGE>
The following table sets forth the funded status and amounts recognized in
the consolidated balance sheet at September 30, 1995 and 1994 for the Company's
domestic defined benefit pension plans:
<TABLE>
<CAPTION>
1995 1994
-------- --------
<S> <C> <C>
Actuarial present value of
benefit obligations:
Vested benefit obligation $287,637 $253,995
======== ========
Accumulated benefit obligation $301,700 $274,319
======== ========
Projected benefit obligation $406,888 $361,418
Plan assets at fair value 352,510 306,437
-------- --------
Plan assets under projected
benefit obligation (54,378) (54,981)
Unrecognized net (gain) loss (3,576) 10,555
Unrecognized net asset at
October 1, 1985, net of
amortization (3,033) (3,640)
-------- --------
Net pension liability recognized in
the consolidated balance sheet $(60,987) $(48,066)
======== ========
</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>
1995 1994 1993
------- ------- -------
<S> <C> <C> <C>
Service cost: benefits
earned during
the year $ 2,108 $ 2,537 $ 9,645
Interest cost on projected
benefit obligation 10,860 9,671 15,830
Amortization of gain
from plan amendments (6,499) (6,312) -
------- ------- -------
Postretirement
benefit cost $ 6,469 $ 5,896 $25,475
======= ======= =======
</TABLE>
The postretirement benefit plans other than pensions are not funded. The
present value of the Company's obligation included in the consolidated balance
sheet at September 30, 1995 and 1994 was as follows:
<TABLE>
<CAPTION>
1995 1994
-------- --------
<S> <C> <C>
Accumulated postretirement
benefit obligation:
Retirees $112,649 $103,326
Fully eligible active participants 12,452 13,136
Other active participants 26,063 24,262
-------- --------
Total 151,164 140,724
Unrecognized gain from plan
amendments 82,056 88,368
Unrecognized actuarial loss (11,489) (4,545)
-------- --------
Accrued postretirement
benefit liability $221,731 $224,547
======== ========
</TABLE>
At September 30, 1995 and 1994, health care cost trends of 13% and 14%,
respectively, pre-age 65 and 10% and 11%, respectively, post-age 65 were
assumed. These rates were assumed to decrease gradually to an ultimate rate of
5.75% beginning in 2003 for pre-age 65 and 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, 1995 by $6,183
and the postretirement cost for 1995 by $464. The discount rate used to
estimate the postretirement benefit cost was 8.0% and 7.25%, in 1995 and 1994,
respectively. The discount rate used to estimate the accumulated postretirement
benefit obligation at September 30, 1995 and 1994 was 7.5% and 8.0%,
respectively. In 1994, the Company made significant modifications to its U.S.
postretirement benefit plans. These plan changes, which were effective for
retirements after January 1, 1995, consisted primarily of retiree contributions
and an inflation cap. The accumulated postretirement
39
<PAGE>
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.
The Company utilizes a service-based approach in applying the provisions of
SFAS No. 112 for most of its postemployment 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.
<TABLE>
<CAPTION>
1995 1994 1993
------- ------- -------
<S> <C> <C> <C>
Postemployment benefit
costs were: $10,300 $7,100 $6,000
</TABLE>
Note 4 - Special Charges
In 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 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 (Expense) Income, Net
Other (expense), net in 1995 includes a net cash settlement of $10,995 received
in connection with a favorable arbitration ruling relating to one of the
Company's patents. Also included is a loss of $6,301 from the sale of the
medical glove business.
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 were received in three installments, the first of which was
received in September 1994. The balance of the proceeds was received in 1995.
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 $12,074, $10,608 and $11,626 are included in Other
(expense) income, net in 1995, 1994 and 1993, respectively.
Note 6 - Income Taxes
The provision for income taxes is composed of the following charges (benefits):
<TABLE>
<CAPTION>
1995 1994 1993
-------- ------- --------
<S> <C> <C> <C>
Current:
Domestic:
Federal $ 53,388 $ 42,514 $ (7,116)
State and local,
including
Puerto Rico 28,212 20,148 11,439
Foreign 29,822 37,741 27,240
-------- -------- --------
111,422 100,403 31,563
-------- -------- --------
Deferred:
Domestic (7,070) (21,728) (11,448)
Foreign (6,470) (9,690) (10,061)
-------- -------- --------
(13,540) (31,418) (21,509)
-------- -------- --------
$ 97,882 $ 68,985 $ 10,054
======== ======== ========
</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, 1995 and
1994, net current deferred tax assets of $37,438 and $35,725, respectively, were
included in Prepaid expenses, deferred taxes and other. Net non-current
deferred tax assets of $32,735 and $28,961, respectively, were included in Other
non-current assets. Net non-current deferred tax liabilities of $8,761 and
$11,866, 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, 1995, the cumulative
amount of such undistributed earnings approximated $966,000 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.
40
<PAGE>
Deferred income taxes at September 30 consisted of:
<TABLE>
<CAPTION>
September 30, 1995 September 30, 1994 September 30, 1993
--------------------- --------------------- ---------------------
Assets Liabilities Assets Liabilities Assets Liabilities
-------- ----------- -------- ----------- -------- -----------
<S> <C> <C> <C> <C> <C> <C>
Compensation and benefits $128,676 $ - $130,962 $ - $129,518 $ -
Property and equipment - 117,748 - 126,539 - 126,708
Other 79,858 19,899 68,890 13,393 45,175 17,271
-------- -------- -------- -------- -------- --------
208,534 137,647 199,852 139,932 174,693 143,979
Valuation allowance (9,475) - (7,100) - (7,937) -
-------- -------- -------- -------- -------- --------
$199,059 $137,647 $192,752 $139,932 $166,756 $143,979
======== ======== ======== ======== ======== ========
</TABLE>
A reconciliation of the federal statutory tax rate to the Company's effective
tax rate follows:
<TABLE>
<CAPTION>
1995 1994 1993
----- ----- -----
<S> <C> <C> <C>
Federal statutory tax rate 35.0% 35.0% 34.8%
State and local income
taxes, net of Federal
tax benefit 1.5 .7 .3
Effect of foreign and
Puerto Rican income (6.0) (8.4) (13.3)
Adjustments to estimated
liability for prior
years' taxes - - (8.3)
Foreign tax credits (1.9) (2.3) (5.4)
Research tax credit (.2) (.5) (1.4)
Other, net (.4) (1.2) (2.2)
----- ----- -----
28.0% 23.3% 4.5%
===== ===== =====
</TABLE>
The approximate dollar and per share amounts of tax reductions related to tax
holidays in various countries in which the Company does business were: 1995 -
$18,400 and $.27; 1994 - $23,300 and $.32; and 1993 - $24,100 and $.31. The tax
holidays expire at various dates through 2010.
The Company made income tax payments, net of refunds, of $132,650 in 1995,
$65,481 in 1994 and $61,449 in 1993.
The components of income before income taxes and cumulative effect of
accounting changes follow:
<TABLE>
<CAPTION>
1995 1994 1993
-------- -------- --------
<S> <C> <C> <C>
Domestic, including
Puerto Rico $218,695 $166,563 $141,913
Foreign 130,883 129,596 80,981
-------- -------- --------
$349,578 $296,159 $222,894
======== ======== ========
</TABLE>
Note 7 - Supplemental Balance Sheet Information
Trade Receivables
Allowances for doubtful accounts and cash discounts netted against trade
receivables were $25,046 and $22,158 at September 30, 1995 and 1994,
respectively.
<TABLE>
<CAPTION>
1995 1994
-------- --------
<S> <C> <C>
Materials $ 87,116 $ 85,303
Work in process 71,316 69,696
Finished products 250,203 265,002
-------- --------
$408,635 $420,001
======== ========
</TABLE>
Inventories valued under the LIFO method were $205,608 in 1995 and $240,965 in
1994. Inventories valued under the LIFO method would have been higher by
approximately $37,000 in 1995 and $36,500 in 1994, if valued on a current cost
basis.
41
<PAGE>
<TABLE>
<CAPTION>
Property, Plant and Equipment 1995 1994
---------- ----------
<S> <C> <C>
Land $ 53,921 $ 54,410
Buildings 890,393 907,832
Machinery, equipment and fixtures 1,449,639 1,483,334
Leasehold improvements 29,127 34,360
---------- ----------
2,423,080 2,479,936
Less allowances for depreciation
and amortization 1,142,049 1,103,587
---------- ----------
$1,281,031 $1,376,349
========== ==========
<CAPTION>
Intangibles 1995 1994
---------- ----------
<S> <C> <C>
Patents and other $ 197,761 $ 220,927
Goodwill 134,736 147,600
---------- ----------
332,497 368,527
Less accumulated amortization 150,996 150,802
---------- ----------
$ 181,501 $ 217,725
========== ==========
</TABLE>
Note 8 - Debt
The components of short-term debt follow:
<TABLE>
<CAPTION>
1995 1994
---------- ----------
<S> <C> <C>
Loans payable:
Domestic $ 31,400 $ 35,941
Foreign 107,064 110,883
Current portion of long-term debt 67,335 26,404
---------- ----------
$ 205,799 $ 173,228
========== ==========
</TABLE>
Domestic loans payable consist of commercial paper. Foreign loans payable
consist of short-term borrowings from financial institutions. The weighted
average interest rates for loans payable were 3.7% and 4.2% at September 30,
1995 and 1994, respectively. At September 30, 1995 and 1994, the Company had
domestic unused committed short-term lines of credit of $225,000 and $240,000,
respectively, and unused committed long-term lines of credit of $145,000 and
$150,000, respectively. In addition, the Company had unused foreign lines of
credit pursuant to informal arrangements of approximately $223,000 and $209,000
at September 30, 1995 and 1994, respectively.
The components of long-term debt follow:
<TABLE>
<CAPTION>
1995 1994
-------- --------
<S> <C> <C>
Domestic notes due through 2013
(average year-end interest rate:
5.4%-1995; 4.9%-1994) $ 9,188 $162,788
Foreign notes due through 2004
(average year-end interest rate:
6.4%-1995; 6.7%-1994) 25,219 29,522
8.375% Notes due June 1, 1996 - 50,000
7.875% Notes due December 15, 1996 100,000 100,000
9.95% Notes due March 15, 1999 100,000 100,000
8.80% Notes due March 1, 2001 100,000 100,000
9.45% Guaranteed ESOP Notes
due through July 1, 2004 41,787 45,447
9.25% Sinking fund debentures
due through June 1, 2016 81,400 81,400
8.70% Debentures
due January 15, 2025 100,000 -
-------- --------
$557,594 $669,157
======== ========
</TABLE>
At September 30, 1994, domestic notes included $150,000 of commercial paper
which were supported by long-term credit agreements with leading banks.
The aggregate annual maturities of long-term debt during the fiscal years
ending September 30, 1997 to 2000 are as follows: 1997 - $107,125; 1998 -
$7,703; 1999- $106,121; 2000 - $6,449.
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>
1995 1994 1993
------- ------- -------
<S> <C> <C> <C>
Charged to operations $60,628 $62,472 $66,716
Capitalized 4,064 5,946 8,181
------- ------- -------
$64,692 $68,418 $74,897
======= ======= =======
</TABLE>
Interest paid, net of amounts capitalized, was $58,726 in 1995, $63,670 in 1994
and $67,308 in 1993.
42
<PAGE>
Note 9 - Financial Instruments
Fair Value Of Financial Instruments
The carrying values of cash equivalents, short-term investments, other long-term
investments and short-term debt approximate fair values. Fair values were
estimated based on market prices, where available, or dealer quotes. The fair
value of certain long-term debt is based on redemption value. Investments in
marketable securities were primarily composed of Puerto Rico government bonds.
The estimated fair values of the Company's financial instruments at
September 30, 1995 and 1994 were as follows:
<TABLE>
<CAPTION>
1995 1994
------------------ -------------------
Carrying Fair Carrying Fair
Value Value Value Value
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Assets:
Investments in marketable securities (non-current) (A) $ 44,400 $ 43,509 $ 71,527 $ 70,093
Forward exchange contracts (B) 3,969 3,084 (630) (473)
Purchased currency option (B) 360 311 112 112
Interest rate cap - 13 - -
Liabilities:
Long-term debt $557,595 $604,537 $669,157 $689,181
Interest rate swaps 55 1,155 68 (524)
Interest rate collars - - 32 49
</TABLE>
(A) Included in Other assets.
(B) Included in Prepaid expenses, deferred taxes and other.
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 substantially all of
these exposures by entering into forward exchange contracts and purchased
currency options for the future purchase and sale of foreign currencies. Gains
or losses related to these hedges are recognized in income as part of, and
concurrent with, the hedged transaction. In addition, the Company hedged a
portion of its investment in a foreign subsidiary by entering into forward
exchange contracts with a net notional amount of $21,037 at September 30, 1995
to sell French francs and buy U.S. dollars forward. The Company does not use
derivative financial instruments for trading or speculative purposes.
At September 30, the stated or notional amounts of the Company's outstanding
forward exchange contracts and purchased currency options were as follows:
<TABLE>
<CAPTION>
1995 1994
-------- --------
<S> <C> <C>
Forward exchange contracts $738,541 $665,945
Purchased currency options:
German mark put, U.S. dollar call $ 5,000 $ 9,416
Brazilian real put, U.S. dollar call 7,000 -
Italian lira put, German mark call 11,021 -
</TABLE>
At September 30, 1995, $425,367 of the forward exchange contracts mature within
90 days and $313,174 at various other dates in fiscal 1996. The purchased
currency options at September 30, 1995 expire within 120 days.
Significant forward exchange contracts and the purchased currency options
which represent hedges of currency transaction exposures at September 30, 1995
were as follows:
<TABLE>
<CAPTION>
U.S. Dollar Equivalents
-------------------------------------------
September 30, 1995
-----------------------------
Currency Average
Transaction Contracts
Notional Exposure - Asset During
Amount (Liability) Fiscal 1995
-------- ---------------- -----------
<S> <C> <C> <C>
Commitments to sell
foreign currencies:
French francs $ 78,809 $ 80,214 $ 81,256
Italian lira 58,386 59,073 56,253
Belgian francs 22,653 22,653 44,996
Spanish pesetas 46,952 46,952 45,245
British pounds 17,035 17,035 21,579
Japanese yen 43,704 43,733 14,427
German marks 20,073 20,375 9,223
Commitments to purchase
foreign currencies:
Irish pounds $219,361 $(221,428) $195,862
Singapore dollars 72,881 (72,881) 56,911
Japanese yen 18,669 (18,669) 8,443
Belgian francs 10,811 (11,986) 19,555
German marks 34,914 (34,914) 19,554
Canadian dollars 14,859 (15,535) 5,418
</TABLE>
43
<PAGE>
Significant forward exchange contracts which represented hedges of currency
transaction exposures at September 30, 1994 were as follows:
<TABLE>
<CAPTION>
U.S. Dollar Equivalents
-------------------------------------------
September 30, 1994
-----------------------------
Currency Average
Transaction Contracts
Notional Exposure - 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>
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 cap 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, 1995
and 1994, the Company had foreign interest rate swap agreements, with maturities
at various dates through 1998. 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, 1995
French francs $20,312 5.00% 6.39%
Japanese yen 8,521 2.48 1.11
Japanese yen 5,013 2.61 1.83
Japanese yen 10,025 2.61 1.84
Japanese yen 4,010 1.87 1.23
Japanese yen 9,023 1.74 1.05
Japanese yen 8,521 2.44 1.19
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
</TABLE>
At September 30, 1995, the Company had a foreign interest rate cap agreement
with a notional amount of $9,023 which limits the potential interest rate
fluctuations on a portion of the Company's Japanese yen denominated short-term
debt. It effectively entitles the Company to receive from a bank the amount, if
any, by which the Company's interest payments on $9,023 of its floating rate
short-term debt exceed 2%. The cap expires in May 1997.
At September 30, 1994, the Company had a foreign interest rate collar
agreement with a notional amount of $15,800 which limited 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 was
amortized to interest expense over the term of the agreement. The collar
agreement expired 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 of these entities 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 non-
performance 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.
44
<PAGE>
Note 10 - Shareholders' Equity
<TABLE>
<CAPTION>
Series B,
ESOP
Preferred Common Capital in Unearned Treasury Stock
Stock Stock Excess of Retained ESOP ------------------------
Issued Issued Par Value Earnings Compensation Shares Amount
--------- ------- ---------- ---------- ------------ ------------ ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at October 1, 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 ($3.835 per share),
net of tax benefits (2,718)
Issuance of common stock for
employee stock plans, net 6,355 874,309 23,160
Repurchase of common stock (5,359,600) (210,285)
Reduction in unearned ESOP
compensation for the year 4,153
Adjustment for redemption
provisions and other (1,777) 291 36,590 1,059
-------- ------- -------- ---------- -------- ----------- ---------
Balance at September 30, 1994 56,331 85,349 111,600 1,752,360 (41,096) (15,071,131) (491,423)
Net income 251,696
Cash dividends:
Common ($.82 per share) (54,725)
Preferred ($3.835 per share),
net of tax benefits (2,695)
Issuance of common stock for
employee stock plans, net 6,251 523,968 13,538
Repurchase of common stock (5,770,400) (299,723)
Reduction in unearned ESOP
compensation for the year 4,155
Adjustment for redemption
provisions and other (1,618) 350 43,873 1,268
-------- ------- -------- ---------- -------- ----------- ---------
Balance at September 30, 1995 $ 54,713 $85,349 $118,201 $1,946,636 $(36,941) (20,273,690) $(776,340)
======== ======= ======== ========== ======== =========== =========
</TABLE>
45
<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>
1995 1994 1993
------- -------- ---------
<S> <C> <C> <C>
Balance at October 1 $ 8,573 $(22,048) $ 87,300
Translation adjustment (1,587) 37,900 (109,408)
Disposition of foreign
investment - (6,348) -
Allocated income taxes (219) (931) 60
------- -------- ---------
Balance at
September 30 $ 6,767 $ 8,573 $ (22,048)
======= ======== =========
</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
Commitments
Rental expense for all operating leases amounted to $53,000 in 1995, $49,900 in
1994 and $51,500 in 1993. Future minimum rental commitments on noncancelable
leases are as follows: 1996 - $34,500; 1997 - $27,300; 1998 - $21,000; 1999 -
$15,600; 2000 - $13,600 and an aggregate of $43,500 thereafter.
As of September 30, 1995, the Company had entered into certain commitments for
future capital expenditures, mostly in China, aggregating approximately $34,000
which will be expended over the next several years.
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, financial
condition or cash flows 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,
made available 4,000,000 shares of the Company's common stock for the granting
of options, almost all of which have been granted. The 1995 Stock Option Plan,
adopted in the current year, makes available an additional 6,000,000 shares of
the Company's common stock for the granting of options. Both the 1995 and 1990
Plans have 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. In 1995, such
compensation expense amounted to $1,961. There was no such compensation expense
in 1994 or 1993.
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.
46
<PAGE>
A summary of changes in outstanding options is as follows:
<TABLE>
<CAPTION>
1995 1994 1993
----------------------------- ----------------------------- -----------------------------
Shares Price Range Shares Price Range Shares Price Range
--------- --------------- --------- --------------- --------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Balance at October 1 5,080,959 $12.67 - $40.10 4,672,044 $ 8.41 - $39.50 4,161,988 $ 8.41 - $38.78
Granted 1,408,818 46.61 - 50.19 1,258,370 34.56 - 40.10 1,054,764 37.25 - 39.50
Exercised (488,371) 12.67 - 50.19 (756,350) 8.41 - 40.10 (498,979) 8.41 - 38.78
Canceled (86,360) 12.67 - 50.19 (93,105) 8.41 - 38.78 (45,729) 10.05 - 38.78
--------- --------------- --------- --------------- --------- ---------------
Balance at
September 30 5,915,046 $26.10 - $50.19 5,080,959 $12.67 - $40.10 4,672,044 $ 8.41 - $39.50
========= =============== ========= =============== ========= ===============
Exercisable at
September 30 4,389,058 3,550,467 3,380,615
========= ========= =========
Available for grant at:
October 1, 1994 1,046,921
September 30, 1995 5,711,488
=========
</TABLE>
Options outstanding as of September 30, 1995 expire at various times from
June 1996 through May 2005.
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 1995,
46,948 shares were distributed. No awards were granted in 1995. Awards for
58,585 and 47,590 shares (net of cancellations) were granted in 1994 and 1993,
respectively. At September 30, 1995, 769,636 shares were reserved for future
issuance, of which awards for 244,289 shares have been granted.
The Company has a compensatory Restricted Stock Plan for Non-Employee Directors
which reserves for issuance 75,000 shares of the Company's common stock.
Restricted shares of 3,775 and 15,229 were issued in 1995 and 1994,
respectively, in accordance with the provisions of the plan.
Note 13 - Business Segment Data
The Company's operations are composed of two business 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 13% of revenues in 1995 and 12% of revenues in
both 1994 and 1993, 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.
47
<PAGE>
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 composed 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, 1995, 1994 and 1993 is on pages 30 and 31 and
is considered to be an integral part of the notes to the consolidated financial
statements.
Quarterly Data (Unaudited)
Thousands of dollars, except per share amounts
<TABLE>
<CAPTION>
1995 1st 2nd 3rd 4th Year
-------- -------- -------- -------- ----------
<S> <C> <C> <C> <C> <C>
Revenues $593,476 $692,839 $704,096 $722,114 $2,712,525
Gross Profit 266,411 322,602 325,677 361,477 1,276,167
Net Income 33,544 64,929 66,650 86,573 251,696
Earnings Per Share .46 .92 .95 1.26 3.59
-------- -------- -------- -------- ----------
1994 1st 2nd 3rd 4th Year
-------- -------- -------- -------- ----------
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
-------- -------- -------- -------- ----------
</TABLE>
48
<PAGE>
Worldwide Locations
Corporate Headquarters
Becton Dickinson and Company
1 Becton Drive
Franklin Lakes, NJ 07417-1880
Phone: 201-847-6800
U.S. Division Headquarters
Becton Dickinson Cellular
Imaging Systems
2350 Qume Drive
San Jose, CA 95131
Becton Dickinson Consumer Products
1 Becton Drive
Franklin Lakes, NJ 07417
Becton Dickinson Division
1 Becton Drive
Franklin Lakes, NJ 07417
Becton Dickinson Healthcare Systems
1 Becton Drive
Franklin Lakes, NJ 07417
Becton Dickinson
Immunocytometry Systems
2350 Qume Drive
San Jose, CA 95131
Ivers-Lee
147 Clinton Road
West Caldwell, NJ 07006
Becton Dickinson Labware
1 Becton Drive
Franklin Lakes, NJ 07417
Becton Dickinson
Microbiology Systems
7 Loveton Circle
Sparks, MD 21152
Becton Dickinson Pharmaceutical Systems
1 Becton Drive
Franklin Lakes, NJ 07417
Becton Dickinson Primary Care Diagnostics
7 Loveton Circle
Sparks, MD 21152
Becton Dickinson Supply Chain Services
1 Becton Drive
Franklin Lakes, NJ 07417
Becton Dickinson Vacutainer Systems
1 Becton Drive
Franklin Lakes, NJ 07417
Becton Dickinson Vascular Access
9450 South State Street
Sandy, UT 84070
Regional Headquarters
Asia/Pacific
Becton Dickinson Singapore Branch
30 Tuas Avenue 2
Singapore 639461
Brazil/Southern Latin America
Becton Dickinson
Industrias Cirurgicas
Rua Alexandre Dumas, 1976
04717-004 Sao Paulo, SP Brazil
Canada
Becton Dickinson Canada
2464 South Sheridan Way
Mississauga, Ontario
L5J2M8, Canada
Europe/Middle East/Africa
Becton Dickinson European Divisions
5 Chemin des Sources BP 37
38241 Meylan, France
Becton Dickinson
Pharmaceutical Systems
11 Rue Aristide Berges BP 4
38800 Pont de Claix, France
Japan
Nippon Becton Dickinson Co., Ltd.
Akasaka DS Building
5-26 Akasaka 8-chome, Minato-ku
Tokyo, 107 Japan
Mexico/Northern Latin America
Becton Dickinson Mexico
Monte Pelvoux 111
11000 Mexico, D.F.
49
<PAGE>
Board of Directors
Clateo Castellini /1,2,7/
Chairman of the Board, President
and Chief Executive Officer
John W. Galiardo /1,3,7/
Vice Chairman of the Board
and General Counsel
Harry N. Beaty, M.D. /2,4,7/
Professor of Medicine and Dean -
Northwestern University Medical School
Henry P. Becton, Jr. /4,5,6,7/
President and General Manager -
WGBH Educational Foundation
Gerald M. Edelman, M.D., Ph.D. /1,4,6,7/
Director - The Neurosciences Institute; Member -
The Scripps Research Institute
Edmund B. Fitzgerald /2,3,4,5/
Former Chairman of the Board
and Chief Executive Officer -
Northern Telecom Limited
Richard W. Hanselman /1,3,5,6/
Corporate Director
Thomas A. Holmes /3,5,6/
Former Chairman of the Board,
President and Chief Executive
Officer - Ingersoll-Rand Company
Frank A. Olson /1,2,5,6/
Chairman of the Board and
Chief Executive Officer -
The Hertz Corporation
James E. Perrella /3,5,6/
Chairman of the Board, President
and Chief Executive Officer -
Ingersoll-Rand Company
Gloria M. Shatto /1,2,4,7/
President - Berry College,
Mount Berry, Georgia
Raymond S. Troubh /2,3,4,5/
Financial Consultant
Committees Appointed by the Board of Directors
1 - Executive Committee
2 - Finance Committee
3 - Investment Committee
4 - Audit Committee
5 - Compensation and Benefits Committee
6 - Committee on Directors
7 - Corporate Responsibility Committee
Officers
Executive Officers
Clateo Castellini
Chairman of the Board, President
and Chief Executive Officer
John W. Galiardo
Vice Chairman of the Board
and General Counsel
Vincent L. De Caprio
Senior Vice President -
Planning and Technology
Edward J. Ludwig
Senior Vice President - Finance
and Chief Financial Officer
Walter M. Miller
Senior Vice President
Mark C. Throdahl
Senior Vice President
Kenneth R. Weisshaar
Senior Vice President
Corporate Officers
Alfred J. Battaglia
Group President
E. Ralph Biggadike
Vice President -
Strategic Management
Mark H. Borofsky
Vice President - Taxes
Geoffrey D. Cheatham
Vice President and Treasurer
Donald S. Hetzel
Vice President -
Research and Development
William L. Nichols
Vice President and Controller
Raymond P. Ohlmuller
Vice President and Secretary
Thomas A. Reichert, M.D.
Vice President - Medical Affairs
Robert D. Wurzel
Vice President -
Regulatory and Quality Affairs
50
<PAGE>
Common Stock Prices and Dividends
<TABLE>
<CAPTION>
1995 By Quarter High Low Dividends
- --------------- ------- ------- ---------
<S> <C> <C> <C>
First $49 7/8 $45 1/8 $.205
Second 57 1/8 48 .205
Third 59 5/8 54 .205
Fourth 63 1/2 55 5/8 .205
<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
</TABLE>
Corporate Data
Annual Meeting
2:30 p.m.
Tuesday, February 13, 1996
1 Becton Drive
Franklin Lakes, NJ 07417-1880
Dividend Reinvestment
The Becton Dickinson Dividend
Reinvestment Plan offers sharehold-
ers an opportunity to purchase
additional shares, commission-free,
through automatic dividend rein-
vestment and/or optional cash
investments. Additional information
may be obtained by writing to First
Chicago Trust Company of New
York, Dividend Reinvestment Plan,
Becton Dickinson, P.O. Box 2598,
Jersey City, NJ 07303-2598.
Independent Auditors
Ernst & Young LLP
433 Hackensack Avenue
Hackensack, NJ 07601-6371
Phone: 201-343-4095
Transfer Agent and Registrar
First Chicago Trust Company
of New York
P.O. Box 2500
Jersey City, NJ 07303-2500
Phone: 1-800-519-3111
NYSE Symbol
BDX
Shareholder Information
Shareholders may receive, without
charge, copies of the company's
1995 Annual Report to the
Securities and Exchange
Commission on Form 10-K
(including the financial statements
and financial statement schedules)
by contacting:
Investor Relations
Becton Dickinson and Company
1 Becton Drive
Franklin Lakes, NJ 07417-1880
Phone: 1-800-284-6845
The trademarks indicated by
CAPITAL LETTERS are the property of,
licensed to, promoted or distributed
by Becton Dickinson and Company,
its subsidiaries or related companies.
51
<PAGE>tin
EXHIBIT 21
----------
SUBSIDIARIES OF BECTON, DICKINSON AND COMPANY
---------------------------------------------
State or Percentage
Jurisdiction of Voting
of Securities
Name of Subsidiary Incorporation Owned
- ------------------ ------------- ----------
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 Polska, Ltd. Poland 100%
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 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 Enterprises Incorporated New Jersey 100%(1)
Becton Dickinson LOS Turkey 100%(1)
Becton, Dickinson - France, S.A. France 100%
Becton Dickinson GESBMSH 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 India Pvt. Ltd. India 100%(1)
Becton, Dickinson - Italia S.p.A. Italy 100%(1)
Becton Dickinson Korea, Inc. Korea 100%(1)
Becton Dickinson Medical Products PTE LTD Singapore 100%(1)
Becton Dickinson Monoclonal Center, Inc. Delaware 100%(1)
-1-
<PAGE>
State or Percentage
Jurisdiction of Voting
of Securities
Name of Subsidiary Incorporation Owned
- ------------------ ------------- ----------
Becton Dickinson Overseas Services Ltd. Nevada 100%
Becton Dickinson O.Y. Finland 100%
Becton Dickinson Pen Limited Ireland 100%
Becton Dickinson Penel Limited British W. Indies 100%(1)
Becton Dickinson Philippines, Inc. Philippines 100%(1)
Becton Dickinson Pty. Ltd. Australia 100%
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 Vacular 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 Ferguson 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)
(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, 33-53375, 33-58367 and 33-
64115 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 7, 1995, with respect to the consolidated financial statements and
schedule of Becton, Dickinson and Company included in this Annual Report (Form
10-K) for the year ended September 30, 1995.
/s/ ERNST & YOUNG LLP
------------------------------
ERNST & YOUNG LLP
Hackensack, New Jersey
December 21, 1995
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Company's Consolidated Financial Statements for the twelve months ended
September 30, 1995 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-30-1995
<PERIOD-END> SEP-30-1995
<CASH> 198,506
<SECURITIES> 41,495
<RECEIVABLES> 598,139
<ALLOWANCES> 25,046
<INVENTORY> 408,635
<CURRENT-ASSETS> 1,327,518
<PP&E> 2,423,080
<DEPRECIATION> 1,142,049
<TOTAL-ASSETS> 2,999,505
<CURRENT-LIABILITIES> 720,035
<BONDS> 557,594
<COMMON> 85,349
0
54,713
<OTHER-SE> 1,258,323
<TOTAL-LIABILITY-AND-EQUITY> 2,999,505
<SALES> 2,712,525
<TOTAL-REVENUES> 2,712,525
<CGS> 1,436,358
<TOTAL-COSTS> 1,436,358
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 4,943
<INTEREST-EXPENSE> 60,628
<INCOME-PRETAX> 349,578
<INCOME-TAX> 97,882
<INCOME-CONTINUING> 251,696
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 251,696
<EPS-PRIMARY> 3.59
<EPS-DILUTED> 3.51
</TABLE>
