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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, 1996 COMMISSION FILE NUMBER 1-4802
BECTON, DICKINSON AND COMPANY
(Exact name of registrant as specified in its charter)
22-0760120
NEW JERSEY (I.R.S. Employer Identification No.)
(State or other jurisdiction of
incorporation or organization)
1 BECTON DRIVE
FRANKLIN LAKES, NEW JERSEY 07417-1880
(Zip Code)
(Address of principal executive
offices)
(201) 847-6800
(Registrant's telephone number, including area code)
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
NAME OF EACH EXCHANGE ON WHICH
TITLE OF EACH CLASS REGISTERED
Common Stock, Par Value $1.00 New York Stock Exchange
Preferred Stock Purchase Rights New York Stock Exchange
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
NONE
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [X]
As of November 30, 1996, 122,971,548 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 $5,142,009,390.
DOCUMENTS INCORPORATED BY REFERENCE
(1) Portions of the registrant's Annual Report to Shareholders for the fiscal
year ended September 30, 1996 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 11, 1997 are incorporated by reference into
Part III hereof.
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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, 1996 (the "1996 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 specialty and surgical blades. This segment also includes
specialty needles, drug infusion systems, disposable scrubs, elastic support
products and thermometers.
DIAGNOSTIC SYSTEMS SEGMENT
The major products in this segment are manual and instrumented microbiology
products, sample collection products, flow cytometry systems for cellular
analysis, tissue culture labware, hematology instruments and other diagnostic
systems including immunodiagnostic test kits.
DISPOSITIONS OF BUSINESSES
The Company's contract packaging services business was sold in January 1996,
and in August 1996, the Company also sold its pre-surgery patient prep
business. 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.
ACQUISITION OF BUSINESS
In July 1996, the Company acquired Med-Safe Systems, Inc., a manufacturer of
sharps disposal containers. The operating results of this business from its
date of acquisition 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 infusion therapy products. The Company
has manufacturing operations in Australia, Brazil, China, France, Germany,
Ireland, Japan, Mexico, Singapore, Spain and the United Kingdom and in 1996
commenced construction of a hypodermic syringe manufacturing facility in India.
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 activities in some countries outside of the United
States involve greater risk than its domestic business due to the foregoing
factors as well as local commercial and economic policies and political
uncertainties.
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 11% of total Company revenues in fiscal
1996, 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 $154,220,000 on research and development during the fiscal
year ended September 30, 1996 and $144,201,000 and $144,227,000, 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. The Company does not believe,
however, that any single patent or trademark is material in relation to the
Company's business as a whole.
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
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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, 1996, the Company had approximately 17,900 employees, of
whom approximately 9,100 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 10,574,870 square feet of
manufacturing, warehousing, administrative and research facilities throughout
the world. The domestic facilities, including Puerto Rico, comprise
approximately 5,467,440 square feet of owned and 1,908,460 square feet of
leased space. The foreign facilities comprise approximately 2,144,090 square
feet of owned and 1,054,880 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 3,520,050 square feet of
owned and 1,050,980 square feet of leased space.
--Central Sector includes facilities in Indiana, Missouri, Nebraska, Texas
and Wisconsin and is comprised of approximately 978,680 square feet of
owned and 473,760 square feet of leased space.
--Western Sector includes facilities in Arizona, California and Utah and
is comprised of approximately 968,710 square feet of owned and 383,720
square feet of leased space.
The foreign facilities are grouped as follows:
--Canada includes approximately 3,650 square feet of leased space.
--Europe includes facilities in Austria, Belgium, Denmark, Finland,
France, Germany, Greece, Ireland, Italy, the Netherlands, Spain, Sweden,
Switzerland and the United Kingdom and is comprised of approximately
1,067,110 square feet of owned and 712,180 square feet of leased space.
--Latin America includes facilities in Brazil, Colombia, Mexico and Panama
and is comprised of approximately 576,890 square feet of owned and
170,340 square feet of leased space.
3
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--Asia-Pacific includes facilities in Australia, China, Hong Kong, India,
Indonesia, Japan, Kenya, Korea, Malaysia, Philippines, Singapore, Taiwan,
Thailand and United Arab Emirates and is comprised of approximately
500,090 square feet of owned and 168,720 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> <C>
Owned
Facilities............. 14 20 10 44
Square feet............ 2,847,365 2,628,196 2,135,971 7,611,532
Manufacturing (B)...... 1,620,325(14) 1,145,080(14) 475,663(5) 3,241,068(33)
Leased
Facilities............. 25 14 71 110
Square feet............ 489,846 259,416 2,214,076 2,963,338
Manufacturing (B)...... 230,530(6) 47,398(7) 112,112(4) 390,040(17)
Total
Facilities............. 39 34 81 154
Square feet............ 3,337,211 2,887,612 4,350,047 10,574,870
Manufacturing (B)...... 1,850,855(20) 1,192,478(21) 587,775(9) 3,631,108(50)
</TABLE>
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(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, 1996)
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........ 61 Director, Chairman of the Board, President and
Chief Executive Officer since June 1994 and prior
thereto Sector President -- Medical.
John W. Galiardo......... 62 Director, Vice Chairman of the Board and General
Counsel since June 1994 and prior thereto Vice
President and General Counsel.
</TABLE>
4
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<TABLE>
<CAPTION>
AGE POSITION
NAME --- --------
<S> <C> <C>
Robert F. Adrion........ 55 President--Worldwide Infusion Therapy since October
1995; President--Worldwide Becton Dickinson
Vascular Access from July 1994 to September 1995;
and prior thereto, Vice President--Research and
Development, Becton Dickinson Vascular Access.
Gary M. Cohen........... 37 President--Worldwide Sample Collection since
October 1996; President--Becton Dickinson
Division/Worldwide Hypodermic from August 1994 to
September 1996; Vice President, Marketing and
Development from July 1993 to July 1994; and prior
thereto, Director of Marketing.
Vincent L. De Caprio.... 46 Senior Vice President and Chief Technology Officer
since October 1996; Senior Vice President--
Planning and Technology from July 1995 to
September 1996; Sector President--Technique
Products from October 1994 to June 1995; and prior
thereto, President--Becton Dickinson Vascular
Access.
Vincent A. Forlenza..... 43 President--Worldwide Microbiology Systems since
October 1996; President--Diagnostic Instrument
Systems from October 1995 to September 1996; and
prior thereto, Division President--Becton
Dickinson Advanced Diagnostics.
Andrew J. Kaslow........ 46 Vice President--Human Resources since April 1996;
and prior thereto, Vice President--Human
Resources, Pepsico Inc.
William A. Kozy......... 44 President--Worldwide Injection Systems since
October 1996; President--Worldwide Blood
Collection from July 1995 to September 1996; and
prior thereto, Division President--Vacutainer
Systems.
Edward J. Ludwig........ 45 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........ 53 Senior Vice President--Strategy and Development
since October 1996; Senior Vice President from
July 1995 to September 1996; Sector President--
Infectious Disease Diagnostics from October 1994
to June 1995; and prior thereto, Sector
President--Diagnostic.
Deborah J. Neff......... 43 President--Worldwide Immunocytometry Systems since
October 1996; President--Becton Dickinson
Immunocytometry Systems from January 1995 to
September 1996; Vice President--General Manager
from October 1992 to December 1994; and prior
thereto, Vice President--Operations.
</TABLE>
5
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<TABLE>
<CAPTION>
AGE POSITION
NAME --- --------
<S> <C> <C>
Mark C. Throdahl........ 45 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.... 46 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, 1996, there were approximately 8,171 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 1996 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 1996 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 1996 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 1996 Annual Report and is incorporated herein by reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
Not applicable.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
The information relating to directors required by this item will be contained
under the captions "Board of Directors", "Election of Directors" and
"Continuing Directors" in a definitive Proxy Statement involving the election
of directors which the registrant will file with the Securities
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and Exchange Commission not later than 120 days after September 30, 1996 (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 "Section 16(a) Beneficial Ownership Reporting
Compliance" 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 1996 Annual Report at the pages indicated in parentheses, are
incorporated by reference in Item 8 hereof:
Consolidated Statements of Income--Years ended September 30, 1996, 1995
and 1994 (page 34)
Consolidated Balance Sheets--September 30, 1996 and 1995 (page 35)
Consolidated Statements of Cash Flows--Years ended September 30, 1996,
1995 and 1994 (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 11)
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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 12, 13 and 14 hereof for a list of all management
contracts, compensatory plans and arrangements required by this item (Exhibit
Nos. 10(a)(i) through 10(k)), and all other Exhibits filed or incorporated by
reference as a part of this report.
(b) REPORTS ON FORM 8-K
During the three-month period ended September 30, 1996, the registrant filed
no reports on Form 8-K.
8
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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 18, 1996
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THIS
REPORT HAS BEEN SIGNED BELOW ON THE 18TH DAY OF DECEMBER, 1996 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/ Albert J. Costello Director
- -------------------------------------
ALBERT J. COSTELLO
/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/ 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
9
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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, 1996 and 1995, and the consolidated results of its operations and its cash
flows for each of the three years in the period ended September 30, 1996 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.
/s/ Ernst & Young LLP
-----------------------
Ernst & Young LLP
Hackensack, New Jersey
November 7, 1996
10
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BECTON, DICKINSON AND COMPANY
SCHEDULE II--VALUATION AND QUALIFYING ACCOUNTS
YEARS ENDED SEPTEMBER 30, 1996, 1995, AND 1994
(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>
1996
Against trade receivables:
For doubtful accounts............ $16,924 $ 6,209 $ 3,525(A) $19,608
For cash discounts............... 8,122 28,713 28,387 8,448
------- ------- ------- -------
Total........................ $25,046 $34,922 $31,912 $28,056
======= ======= ======= =======
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
======= ======= ======= =======
</TABLE>
- --------
(A) Accounts written off.
11
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION METHOD OF FILING
------- ----------- ----------------
<S> <C> <C>
3(a)(i) 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(a)(ii) Amendment to the Restated Certificate Incorporated by reference to Exhibit
of Incorporation, as of August 5, 3(a) to the registrant's Quarterly
1996 Report on Form 10-Q for the period
ended June 30, 1996
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 The Chase Manhattan trant on January 12, 1995 (the regis-
Bank (formerly known as Chemical trant hereby agrees to furnish to the
Bank, the successor by merger to Man- Commission upon request a copy of any
ufacturers Hanover Trust Company) other instruments which define the
rights of holders of long-term debt
of the registrant)
4(d) Rights Agreement, dated as of November Incorporated by reference to Exhibit 1
28, 1995, between the registrant and to Form 8-K filed by the registrant
First Chicago Trust Company of New on December 14, 1995
York, which includes as Exhibit A
thereto, the Form of Right Certifi-
cate
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
</TABLE>
12
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION METHOD OF FILING
------- ----------- ----------------
<S> <C> <C>
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
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 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(g)(i) Salary and Bonus Deferral Plan, as Incorporated by reference to Exhibit 4
amended and restated as of August 15, to Registration Statement No. 333-
1996 11885 on Form S-8 filed by the regis-
trant
10(g)(ii) 1996 Directors' Deferral Plan Incorporated by reference to Exhibit 4
to Registration Statement No. 333-
16091 on Form S-8 filed by the regis-
trant
10(h) 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(i) 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(j)(i) 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(j)(ii) Amendment to the 1994 Restricted Stock Filed with this report
Plan for Non-Employee Directors as of
November 26, 1996
10(k) 1995 Stock Option Plan Incorporated by reference to Exhibit A
to the registrant's Proxy Statement
dated December 29, 1994
</TABLE>
13
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION METHOD OF FILING
- ------- ----------- ----------------
<S> <C> <C>
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 1996 (graphic material contained
under the caption "Financial Review"
is not included in the electronic
filing of this report)
21 Subsidiaries of the registrant Filed with this report
23 Consent of independent auditors Filed with this report
27 Financial Data Schedule Filed with this report
</TABLE>
Copies of any Exhibits not accompanying this Form 10-K are available at a
charge of 25 cents per page by contacting: Investor Relations, Becton,
Dickinson and Company, 1 Becton Drive, Franklin Lakes, New Jersey 07417-
1880, Phone: 1-800-284-6845.
14
<PAGE>
EXHIBIT 10(j)(ii)
AMENDMENT TO THE 1994 RESTRICTED STOCK PLAN
FOR NON-EMPLOYEE DIRECTORS (THE "PLAN")
1. Section 6 of the Plan is hereby amended to add to the end thereof the
following phrase:
"; provided, however, that the last such mandatory acquisition of
Restricted Shares shall occur on the April 1996 Payment Date."
2. Section 7(a) of the Plan is hereby amended to modify the second line
thereof to delete the words "July, October and January."
3. Section 7(c) of the Plan is hereby amended to add at the end thereof the
following additional language:
"; provided, however, that, on or before December 5, 1996, an Eligible
Director may make an election to acquire Restricted Shares in lieu of
Director's Fees otherwise payable on the April 1997 Payment Date and/or
may revoke a previously-made election to acquire Restricted Shares on
the January 1997 Payment Date."
4. Section 8(b) of the Plan is amended to add at the end thereof the
following sentence:
"This Section 8(b) shall not apply to any Restricted Shares surrendered
to the Company pursuant to Section 3.2(a) of the 1996 Directors'
Deferral Plan."
5. Section 8 of the Plan is hereby amended to add at the end thereof the
following new subsection:
"(d) Notwithstanding any other provision of this Plan, any Eligible
Director who has acquired Restricted Shares as of December 1, 1996, as
a consequence of either a mandatory acquisition pursuant to Section 6
above or a voluntary acquisition pursuant to Section 7 above, may make
an election pursuant to Section 3.2(a) of the 1996 Directors' Deferral
Plan to surrender for cancellation some or all of his or her Restricted
Shares to the Company and be credited with an equal number of shares of
Stock in a Deferred Stock Account under such latter Plan."
6. Section 12 of the Plan is hereby amended by adding the following language
to the end of the first sentence thereof:
"; provided, however, that cash dividends paid on Restricted Shares
acquired under this Plan may be deferred in accordance with a timely
election under Section 3.2(c) of the 1996 Directors' Deferral Plan."
7. Section 13 of the Plan is hereby amended to add at the end thereof the
following language:
"; provided, however, that this Section 13 shall not apply to any
Restricted Shares surrendered to the Company pursuant to an election
under Section 3.2(a) of the 1996 Directors' Deferral Plan."
<PAGE>
EXHIBIT 11
BECTON, DICKINSON AND COMPANY
COMPUTATION OF EARNINGS PER SHARE
YEARS ENDED SEPTEMBER 30, 1996, 1995 AND 1994
(ALL AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1996 1995 1994
- ---------------------------------------------------------------------------------
PRIMARY EARNINGS PER SHARE
--------------------------
<S> <C> <C> <C>
Net income......................................... $283,555 $251,696 $227,174
Less preferred stock dividends..................... (3,484) (3,596) (3,711)
-------- -------- --------
Net income applicable to common stock.............. $280,071 $248,100 $223,463
======== ======== ========
Shares: (A)
Average shares outstanding...................... 126,709 134,144 144,474
Add dilutive stock equivalents from stock plans. 6,086 4,258 2,192
-------- -------- --------
Weighted average number of common and common
equivalent shares outstanding during the year.. 132,795 138,402 146,666
======== ======== ========
Earnings per share (A)............................. $ 2.11 $ 1.79 $ 1.52
======== ======== ========
<CAPTION>
FULLY DILUTED EARNINGS PER SHARE
--------------------------------
<S> <C> <C> <C>
Net income applicable to common stock.............. $280,071 $248,100 $223,463
Add preferred stock dividends using the "if
converted" method................................. 3,484 3,596 3,711
Less additional ESOP contribution, using the "if
converted" method................................. (1,288) (1,420) (1,540)
-------- -------- --------
Net income for fully diluted earnings per share.... $282,267 $250,276 $225,634
======== ======== ========
Shares: (A)
Average shares outstanding...................... 126,709 134,144 144,474
Add:
Dilutive stock equivalents from stock plans... 6,667 5,450 3,898
Shares issuable upon conversion of preferred
stock........................................ 2,871 2,968 3,056
-------- -------- --------
Weighted average number of common shares used in
calculating fully diluted earnings per share... 136,247 142,562 151,428
======== ======== ========
Fully diluted earnings per share (A)............... $ 2.07 $ 1.76 $ 1.49
======== ======== ========
</TABLE>
- --------
(A) All share and per share data reflect the two-for-one stock split, the
shares for which were distributed on August 15, 1996.
<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.
STOCK SPLIT
In August 1996, the Company distributed shares to effect a two-for-one stock
split to shareholders of record on August 5, 1996. Share and per share
data for all periods have been restated to reflect the stock split.
REVENUES AND EARNINGS
Worldwide revenues of $2.8 billion rose 2%. Excluding the estimated impacts of
unfavorable foreign currency translation of 1% and the decrease in revenues
related to divested businesses, the resulting underlying growth rate was 6%.
This growth rate resulted primarily from volume increases and an improved
product mix in both segments. Price increases averaged less than 1%.
While health care cost containment continues to be pursued around the
world, the Company has responded by improving operating efficiencies which help
to reduce cost and by improving the quality of patient care. Sales forces and
supply chain services have been reorganized in the United States so that the
Company can continue to effectively serve its customers, including larger, more
integrated health care providers. In other regions, similar steps are being
taken to better serve customers in the changing health care environment. These
efforts will enable the Company to continue to successfully reach all major
distribution channels and customer segments as marketplaces evolve around the
world.
Medical segment revenues of $1.5 billion increased 1% over last year.
Excluding the impact of divested businesses, the most significant of which was
the medical glove business sold in June 1995, Medical segment revenues increased
6%. Revenue growth was led by strong sales of injection systems products due to
the continuing shift toward the use of devices with safety features and
increased use of prefillable syringes by pharmaceutical companies. Sales of
infusion therapy products also continued to grow from market share gains,
geographic expansion, and new product introductions.
Medical segment operating income of $342 million increased 4% over 1995.
During 1996, the Company recorded a $6 million charge to write off intangible
assets associated with its decision to exit a small product line. Excluding the
effects of this write-off, the divested businesses, and the favorable impact of
a net cash settlement of $11 million received in 1995 relating to one of the
Company's patents, Medical segment operating income increased 11%. This growth
was primarily due to improved product mix and increased manufacturing
productivity.
Diagnostic segment revenues of $1.3 billion increased 4%, or 5% excluding
the estimated unfavorable impact of foreign currency translation. Growth in
21
<PAGE>
sample collection was led by the continued strong demand for safety products,
the introduction of several new and innovative products, and overall increased
demand outside the United States. FACS brand flow cytometry systems also
exhibited strong sales growth. Sales of infectious disease products were about
the same as last year, which was consistent with the overall market trend for
infectious disease testing, and reflected the continuing worldwide focus on cost
containment by health care providers. The Company is working with health care
providers to develop products that are cost-effective and improve patient care.
Diagnostic segment operating income of $175 million increased 11% over
1995. Last year, 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 slower than anticipated market
growth of this business would not result in previously expected returns.
Excluding the write-down of assets and other provisions relating to this
business, a favorable net cash settlement of $8 million received in 1996 in
connection with one of the Company's patents, and the estimated impact of
unfavorable foreign currency translation, Diagnostic segment operating income
increased 4%. This performance reflected the increased funding of research and
development directed toward emerging new platforms for long-term growth, such as
DNA probe technology, and next generation products for sample collection.
On a geographic basis, revenues outside the United States of $1.3 billion
rose 6%. Excluding the estimated impacts of unfavorable foreign currency
translation of 1% and the divested businesses, such revenues increased 9%. This
growth reflects the Company's successful efforts to expand internationally.
Double-digit revenue increases were achieved by FACS brand products, which were
led by sales of the FASCalibur flow cytometry system that was launched in 1995.
VACUTAINER brand and pharmaceutical systems products also recorded strong growth
rates. In addition, increased revenues in Japan and Asia-Pacific also
contributed to the strong performance.
Revenues in the United States of $1.4 billion were about the same as last
year. Excluding the impact of business divestitures, revenues increased 3%.
Sales of VACUTAINER brand products continued to be strong, reflecting the
increased use of safety products. Strong growth was also achieved in infusion
therapy products, reflecting market share gains and new product introductions.
As discussed earlier, sales of infectious disease products were about the same
as last year. In addition, revenues of certain non-core medical product lines
were down slightly compared with last year.
The Company's gross profit margin rose to 48.4%, compared with 47.0% last
year, reflecting a more profitable mix of products sold, continued productivity
improvements and the absence of lower margins associated with divested
businesses.
[3 Charts appear here]
[Chart--Revenues Per Employee--Plot points]
(Thousands of Dollars)
1992 125.5
1993 129.3
1994 136
1995 147.8
1996 153.8
[Chart--Gross Profit Margin--Plot points]
(Percent)
1992 45
1993 44.5
1994 45.3
1995 47
1996 48.4
[Chart--Research and Development Expense--Plot points]
(Millions of Dollars)
1992 125.207
1993 139.141
1994 144.227
1995 144.201
1996 154.22
22
<PAGE>
Selling and administrative expense of $755 million was 27.3% of revenues,
about the same as last year. Higher spending relating to a refocusing of sales
and marketing resources toward critical strategic initiatives and international
expansion was largely offset by savings achieved through reorganizations in the
United States and Europe, including the consolidation of certain field sales
organizations.
Investment in research and development increased to $154 million, or 5.6%
of revenues, reflecting the additional funding directed toward safety products,
as well as emerging new platforms for long-term growth, such as DNA probe
technology, and next generation products for blood glucose monitoring and sample
collection. Sales of new products introduced in the last five years represented
17% and 18% of revenues in 1996 and 1995, respectively.
Operating income in 1996 was $431 million, an increase of 9%. Excluding the
estimated impacts of divestitures and unfavorable foreign exchange, as well as
the write-down of certain assets and other provisions, as discussed earlier,
operating income grew 11%, primarily from improved gross profit margin. The
Company's operating margin improved to 15.6% of revenues compared with 14.6% in
1995.
Net interest expense of $37 million in 1996 was $5 million lower than in
1995, primarily due to higher short-term investments in Europe, lower financing
expense in Japan and higher capitalized interest primarily related to a capital
project in China.
"Other (expense) income, net" in 1996 included income of $8 million from a
net cash settlement received in connection with one of the Company's patents,
and foreign exchange losses of $8 million, including hedging costs.
In accordance with Statement of Financial Accounting Standards (SFAS) No.
52, Foreign Currency Translation, the net monetary assets ($9 million and $7
million at September 30, 1996 and 1995, 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, whose 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 currency 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 $907 million and $881 million at
September 30, 1996 and 1995, respectively.
The Company utilizes simple derivative instruments to manage its interest
rate and foreign exchange
[3 Charts appear here]
[Chart--Operating Income--Plot points]
(Percent of Revenues)
1992 13.9
1993 11
1994 12.7
1995 14.6
1996 15.6
[Chart--Income Before Cumulative Effect of Accounting Changes-Plot points]
(Millions of Dollars)
1992 200.753
1993 212.84
1994 227.174
1995 251.696
1996 283.447
[Chart--Capital Expenditure--Plot points]
(Millions of Dollars)
1992 185.559
1993 184.168
1994 123.017
1995 123.76
1996 145.929
23
<PAGE>
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 or 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 the same as the rate in
1995. It is expected that the Company's 1997 tax rate will be slightly higher
than the 1996 tax rate.
Net income was $283 million, an increase of 13% over $252 million in 1995.
Earnings per share were $2.11, an increase of 18% over $1.79 in 1995.
In March 1995, SFAS No. 121, Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to Be Disposed Of, was issued. This Statement
establishes accounting standards for the assessment and measurement of
impairment of such assets and is required to be adopted by the Company by the
first quarter of fiscal 1997. Adoption of this Statement is not expected to have
a material impact on the Company's results of operations or financial condition.
In October 1995, SFAS No. 123, Accounting for Stock-Based Compensation, was
issued, which requires companies to measure employee stock compensation based on
the fair value method of accounting. However, the Statement allows the
alternative of continued use of Accounting Principles Board (APB) Opinion No.
25, Accounting for Stock Issued to Employees, with pro forma disclosure of net
income and earnings per share determined as if the fair value based method had
been applied in measuring compensation expense. The Company is required to adopt
SFAS No. 123 in fiscal 1997 and expects to elect the continued use of APB
Opinion No. 25.
FINANCIAL CONDITION
Cash provided by operations continues to be the Company's primary source of
funds to finance operating needs and capital expenditures. In 1996, net cash
provided by operating activities was $460 million, compared with $472 million in
1995.
Capital expenditures were $146 million, compared with $124 million in the
prior year. Medical segment capital spending, which totaled $91 million in 1996,
included the acquisition of equipment for the ongoing expansion of the
prefillable syringe, diabetes health care, hypodermic and vascular access
businesses. In addition, funds were expended to construct a new manufacturing
facility in China, which will begin producing hypodermic syringes, intravenous
catheters and anesthesia needles. Operations in China are scheduled to commence
by the end of calendar 1996. In addition, work commenced on a new manufacturing
facility in India, which will initially produce diabetes syringes. Funds were
also expended to support global manufacturing productivity improvement programs.
Diagnostic segment capital spending, which totaled $50 million in 1996, included
the acquisition of equipment by the sample collection business for the new
SAFETY-LOK blood collection set. In addition, funds were expended for the
acquisition of equipment to support capacity
[3 Charts appear here]
[Chart--Debt to Capitalization--Plot points]
(Percent)
1992 36.1
1993 37.8
1994 36.1
1995 35.2
1996 34.3
[Chart--Return on Revenues*--Plot points]
(Percent)
1992 8.5
1993 8.6
1994 8.9
1995 9.3
1996 10.2
[Chart--Dividends Per Common Share--Plot points]
(Dollars)
1992 0.3
1993 0.33
1994 0.37
1995 0.41
1996 0.46
*Excludes cumulative effect of accounting changes in 1993.
24
<PAGE>
expansion and cost reduction programs, primarily in the sample collection,
infectious disease diagnostics and flow cytometry businesses. The Company
expects capital expenditures in 1997 to be slightly higher than in 1996.
Business divestitures in 1996 resulted in cash proceeds of $38 million. The
divested operations included a contract packaging business, and certain product
lines relating to the Company's surgical product business.
Net cash used for financing activities was $412 million during 1996 as
compared with $421 million in 1995. This change was primarily due to the
Company's repurchase of 8.4 million of its common shares at an average cost of
$38.67 for a total expenditure of $325 million in 1996, compared with spending
of $300 million in 1995. These purchases fully utilized the authority to
purchase up to 20 million common shares under a September 1994 Board of
Directors' resolution. Accordingly, in September 1996, the Board of Directors
approved a new resolution authorizing the repurchase of up to 15 million
additional shares. At September 30, 1996, 14.8 million shares remained to be
purchased under this resolution. 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 1996, total debt decreased $68 million as a result of strong cash
flow from operations and proceeds from business divestitures. Short-term debt
was 33% of total debt at year end, compared with 27% in 1995. The change in the
ratio was principally attributable to an increase in commercial paper
outstanding and the Company's early redemption on June 1, 1996, of $66.4 million
of its outstanding 9.25% Sinking Fund Debentures due June 1, 2016. The Company's
weighted average cost of total debt at the end of 1996 was 7.7% compared with
7.8% at the end of last year. Total debt to capitalization at year end declined
to 34.3% from 35.2% last year.
At September 30, 1996, the Company had domestic unused committed short-term
and long-term lines of credit of $300 million and $70 million, respectively. In
addition, the Company has unconfirmed lines of credit outside the United States.
In November 1996, the Company entered into a five year revolving credit facility
which increased its committed lines of credit to $500 million. In October 1996,
the Company issued $100 million of ten year non-redeemable notes with a coupon
rate of 6.9% and an effective rate of 7.34% through a public debt issue.
Proceeds of the notes will be used to repay a portion of outstanding commercial
paper which was classified as long-term debt at September 30, 1996. The Company
has a high degree of confidence in its ability to refinance maturing short-term
and long-term debt 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
[3 Charts appear here]
[Chart--Return on Total Assets*--Plot points]
(Percent)
1992 11.1
1993 9.2
1994 11.5
1995 13.3
1996 15.2
[Chart--Book Value Per Share--Plot points]
(Dollars)
1992 10.5
1993 9.75
1994 10.54
1995 10.74
1996 10.72
[Chart--Inventories--Plot points]
(Millions of Dollars)
1992 453.418
1993 445.877
1994 420.001
1995 408.635
1996 402.482
*Excludes cumulative effect of accounting changes in 1993.
25
<PAGE>
proceeds of which can be used by the Company. At year end, the Company had
approximately $49 million invested in marketable securities in Puerto Rico.
During 1996, the Company repatriated $129 million from certain of these
subsidiaries.
Return on equity increased to 20.8% in 1996, from 17.5% in 1995, thus
achieving the Company's initial short-term goal of 20%. The Company expects
further improvements in return on equity in the future.
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. While the Brazilian economy
has experienced very high inflation rates and significant devaluation of its
currency in the past, inflation and the rate of currency devaluation have
declined significantly more recently. 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. Recently, Mexico's economy and
currency have shown signs of stabilizing. The Brazilian and Mexican economies
have the potential for volatility in the recording of revenues and earnings of
the Company's operations in these countries, as well as the risk of foreign
exchange losses as a result of fluctuations in these local 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 constitute 7% 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 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.
1995 COMPARED WITH 1994
Worldwide revenues for 1995 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 was also 6%, which resulted primarily from volume
increases and an improved product mix in both segments. Price increases averaged
less than 1%. 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 business. 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,
hypodermic safety devices, prefillable syringes and 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. 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
26
<PAGE>
revenues increased 5%. Revenue growth was led by strong sales of VACUTAINER
brand blood collection products and FACS brand flow cytometry systems.
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 was 27.1% of revenues, compared with the
1994 rate of 25.8%, reflecting the 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. 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 in 1994, and equaled 5.3% of revenues.
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.
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 in 1995 included income
of $11 million from a net cash settlement 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 foreign exchange losses of $12 million, including hedging
costs.
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.
Net income was $252 million, an increase of 11% over $227 million in 1994.
Earnings per share were $1.79, an increase of 18% over $1.52 in 1994. Foreign
currency translation had an estimated $.09 favorable impact on earnings per
share in 1995.
Cash provided by operations was the Company's primary source of funds to
finance operating needs and capital expenditures. Capital expenditures were $124
million, compared with $123 million in 1994. Medical and Diagnostic segment
capital spending totaled $77 million and $44 million, respectively, in 1995.
Business divestitures in 1995 resulted in cash proceeds of $79 million. 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 11.6 million of its common shares on the open market at
an average cost of $25.97 per share, totaling $300 million, an increase from
$210 million in 1994.
During 1995, total debt decreased $79 million as a result of strong cash
flow from operations, working capital management and proceeds from business
divestitures.
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.
Return on equity was 17.5% in 1995 compared with 15.5% in 1994.
27
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- ---------------------------------------------------------------
SIX YEAR SUMMARY OF SELECTED FINANCIAL DATA
Becton, Dickinson and Company
Years Ended September 30
<TABLE>
<CAPTION>
Thousands of dollars, except per share amounts 1996
===============================================================
<S> <C> <C>
Operations Revenues $2,769,756
Gross Profit Margin 48.4%
Operating Income 431,249
Interest Expense, Net 37,409
Income Before Income
Taxes and
Cumulative Effect of
Accounting Changes 393,676
Income Tax Provision 110,229
Income Before
Cumulative Effect of
Accounting Changes 283,447
Net Income 283,447
Earnings Per Share:
-Before Cumulative
Effect of
Accounting Changes 2.11
-Net Income 2.11
Dividends Per Common
Share .46
Average Common and
Common Equivalent
Shares Outstanding 132,795
---------------------------------
Financial Current Assets $1,276,841
Position Current Liabilities 766,122
Current Ratio 1.7
Property, Plant and
Equipment, Net 1,244,148
Total Assets 2,889,752
Long-Term Debt 468,223
Shareholders' Equity 1,325,183
Book Value Per
Common Share 10.72
---------------------------------
Financial Income Before Income
Relationships Taxes and Cumulative
Effect of Accounting
Changes as
a Percent of Revenues 14.2%
Return on Total
Assets (B) 15.2%
Return on Equity 20.8%
Debt to
Capitalization (D) 34.3%
---------------------------------
Additional Data Depreciation and
Amortization $ 200,482
Capital Expenditures 145,929
Research and
Development Expense 154,220
Number of Employees 17,900
Number of
Shareholders 8,027
==============================================================
</TABLE>
28
<PAGE>
<TABLE>
<CAPTION>
Thousands of dollars, except per share amounts 1995 1994 1993 1992 1991
<S> <C> <C> <C> <C> <C> <C>
Operations Revenues $2,712,525 $2,559,461 $2,465,405 $2,365,317 $2,172,168
Gross Profit Margin 47.0% 45.3% 44.5% 45.0% 46.0%
Operating Income 396,650 325,038 270,425 328,592 313,746
Interest Expense, Net 42,833 47,624 53,412 49,116 50,051
Income Before Income
Taxes and
Cumulative Effect of
Accounting Changes 349,578 296,159 222,894 269,457 267,303
Income Tax Provision 97,882 68,985 10,054 68,704 77,514
Income Before
Cumulative Effect of
Accounting Changes 251,696 227,174 212,840 200,753 189,789
Net Income 251,696 227,174 71,783(A) 200,753 189,789
Earnings Per Share:
-Before Cumulative
Effect of
Accounting Changes 1.79 1.52 1.35 1.28 1.21
-Net Income 1.79 1.52 .44(A) 1.28 1.21
Dividends Per Common
Share .41 .37 .33 .30 .29
Average Common and
Common Equivalent
Shares Outstanding 138,402 146,666 153,860 154,056 154,192
Financial Current Assets $1,327,518 $1,326,551 $1,150,742 $1,221,209 $1,031,581
Position Current Liabilities 720,035 678,321 636,062 713,335 531,277
Current Ratio 1.8 2.0 1.8 1.7 1.9
Property, Plant and
Equipment, Net 1,281,031 1,376,349 1,403,070 1,429,519 1,351,387
Total Assets 2,999,505 3,159,533 3,087,565 3,177,675 2,779,975
Long-Term Debt 557,594 669,157 680,581 685,081 739,076
Shareholders' Equity 1,398,385 1,481,694 1,456,953 1,594,926 1,363,786
Book Value Per
Common Share 10.74 10.54 9.75 10.50 9.03
Financial Income Before Income
Relationships Taxes and Cumulative
Effect of Accounting
Changes as
a Percent of Revenues 12.9% 11.6% 9.0% 11.4% 12.3%
Return on Total
Assets (B) 13.3% 11.5% 9.2%(C) 11.1% 12.3%
Return on Equity 17.5% 15.5% 13.3%(C) 13.6% 14.6%
Debt to
Capitalization (D) 35.2% 36.1% 37.8% 36.1% 37.5%
Additional Data Depreciation and
Amortization $ 207,756 $ 203,705 $ 189,756 $ 169,638 $ 149,897
Capital Expenditures 123,760 123,017 184,168 185,559 211,136
Research and
Development Expense 144,201 144,227 139,141 125,207 113,045
Number of Employees 18,100 18,600 19,000 19,100 18,600
Number of
Shareholders 7,712 7,489 7,463 7,086 7,007
</TABLE>
All share and per share data have been restated to reflect the
two-for-one stock split, the shares for which were distributed in
August 1996.
(A) Includes after-tax charge of $141,057, or $.91 per share, for the
cumulative effect of accounting changes.
(B) Earnings 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.
29
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[Artwork Appears Here]
SUMMARY BY BUSINESS SEGMENT
(See Note 13 to Financial Statements)
Thousands of dollars
<TABLE>
<CAPTION>
1996 1995 1994
============================================================================================================
<S> <C> <C> <C> <C>
Revenues Medical Supplies and Devices $1,509,417 $1,500,075 $1,421,435
Diagnostic Systems 1,260,339 1,212,450 1,138,026
-------------------------------------------------------------------
Total Segments $2,769,756 $2,712,525 $2,559,461
============================================================================================================
Segment Medical Supplies and Devices $ 342,015 $ 330,368 $ 274,498(A)
Operating Diagnostic Systems 174,656 157,673 110,989(A)
Income -------------------------------------------------------------------
Total Segments 516,671 488,041 385,487
Unallocated Expenses (122,995) (138,463) (89,328)(B)
-------------------------------------------------------------------
Income Before Income Taxes $ 393,676 $ 349,578 $ 296,159
============================================================================================================
Identifiable Medical Supplies and Devices $1,337,355 $1,348,860 $1,433,145
Assets Diagnostic Systems 1,209,970 1,210,888 1,267,331
-------------------------------------------------------------------
Total Segments 2,547,325 2,559,748 2,700,476
Corporate (C) 342,427 439,757 459,057
-------------------------------------------------------------------
Total $2,889,752 $2,999,505 $3,159,533
============================================================================================================
Capital Medical Supplies and Devices $ 90,918 $ 77,062 $ 66,181
Expenditures Diagnostic Systems 49,651 43,776 55,024
-------------------------------------------------------------------
Total Segments 140,569 120,838 121,205
Corporate 5,360 2,922 1,812
-------------------------------------------------------------------
Total $ 145,929 $ 123,760 $ 123,017
============================================================================================================
Depreciation Medical Supplies and Devices $ 89,727 $ 96,517 $ 99,420
and Diagnostic Systems 101,618 102,540 96,407
Amortization -------------------------------------------------------------------
Total Segments 191,345 199,057 195,827
Corporate 9,137 8,699 7,878
-------------------------------------------------------------------
Total $ 200,482 $ 207,756 $ 203,705
============================================================================================================
</TABLE>
(A) Includes $8,016 in Medical Supplies and Devices segment and
$20,598 in Diagnostic Systems segment of the special charges
discussed in Note 4.
(B) Net of a gain of $35,868 from the disposition of a corporate
investment.
(C) Consists principally of cash and cash equivalents, short-term and
long-term investments in marketable securities, buildings and
equipment, and investments in non-affiliated companies.
30
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[Artwork Appears Here]
SUMMARY BY GEOGRAPHIC AREA
(See Note 13 to Financial Statements)
<TABLE>
<CAPTION>
Thousands of dollars 1996 1995 1994
============================================================================================================
<S> <C> <C> <C> <C>
Revenues United States $1,423,883 $1,438,459 $1,423,060
Europe 835,984 792,908 704,116
Other 509,889 481,158 432,285
-------------------------------------------------------------------
Total(A) $2,769,756 $2,712,525 $2,559,461
============================================================================================================
Area United States $ 349,560 $ 341,277 $ 264,117(B)
Operating Europe 148,812 116,229 82,040(B)
Income Other 18,299 30,535 39,330(B)
-------------------------------------------------------------------
Total 516,671 488,041 385,487
Unallocated Expenses (122,995) (138,463) (89,328)(C)
-------------------------------------------------------------------
Income Before Income Taxes $ 393,676 $ 349,578 $ 296,159
============================================================================================================
Identifiable United States $1,459,260 $1,466,376 $1,601,569
Assets Europe 649,206 673,546 667,467
Other 438,859 419,826 431,440
-------------------------------------------------------------------
Total 2,547,325 2,559,748 2,700,476
Corporate(D) 342,427 439,757 459,057
-------------------------------------------------------------------
Total $2,889,752 $2,999,505 $3,159,533
============================================================================================================
</TABLE>
(A) Interarea revenues to affiliates amounted to $368,834 in 1996,
$346,905 in 1995 and $350,207 in 1994. These revenues, which are
principally from the United States, are eliminated in
consolidation. Intersegment revenues are not material.
(B) Includes $26,186 in the United States, $2,188 in Europe and $240
in Other, of the special charges as discussed in Note 4.
(C) Net of a gain of $35,868 from the disposition of a corporate
investment.
(D) Consists principally of cash and cash equivalents, short-term and
long-term investments in marketable securities, buildings and
equipment, and investments in non-affiliated companies.
31
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[Artwork Appears Here]
CONSOLIDATED STATEMENTS OF INCOME
Becton, Dickinson and Company
Years Ended September 30
<TABLE>
<CAPTION>
Thousands of dollars, except per share amounts 1996 1995 1994
====================================================================================================
<S> <C> <C> <C> <C>
Operations Revenues $2,769,756 $2,712,525 $2,559,461
Cost of products sold 1,429,177 1,436,358 1,399,634
Selling and administrative expense 755,110 735,316 660,072
Research and development expense 154,220 144,201 144,227
Special charges -- -- 30,490
------------------------------------------------------------------------
Total Operating Costs and Expenses 2,338,507 2,315,875 2,234,423
------------------------------------------------------------------------
Operating Income 431,249 396,650 325,038
Interest expense, net (37,409) (42,833) (47,624)
Other (expense) income, net (164) (4,239) 18,745
------------------------------------------------------------------------
Income Before Income Taxes 393,676 349,578 296,159
------------------------------------------------------------------------
Income tax provision 110,229 97,882 68,985
------------------------------------------------------------------------
Net Income $ 283,447 $ 251,696 $ 227,174
====================================================================================================
Earnings
Per Share Earnings Per Share $2.11 $1.79 $ 1.52
====================================================================================================
</TABLE>
See notes to consolidated financial statements
34
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Cultivating Our Next Century of Success
[Artwork Appears Here]
CONSOLIDATED BALANCE SHEETS
Becton, Dickinson and Company
September 30
<TABLE>
<CAPTION>
Thousands of dollars, except per share amounts 1996 1995
=============================================================================================================
<S> <C> <C> <C>
Assets Current Assets
Cash and equivalents $ 135,151 $ 198,506
Short-term investments 29,949 41,495
Trade receivables, net 580,313 573,093
Inventories 402,482 408,635
Prepaid expenses, deferred taxes and other 128,946 105,789
-------------------------------------------------------------------------------------------
Total Current Assets 1,276,841 1,327,518
Investments in Marketable Securities 23,800 44,400
Property, Plant and Equipment, Net 1,244,148 1,281,031
Intangibles, Net 175,865 181,501
Other 169,098 165,055
-------------------------------------------------------------------------------------------
Total Assets $ 2,889,752 $2,999,505
=============================================================================================================
Liabilities Currrent Liabilities
Short-term debt $ 227,424 $ 205,799
Accounts payable 128,046 124,155
Accrued expenses 210,987 189,354
Income taxes 62,377 64,337
Salaries, wages and related items 137,288 136,390
-------------------------------------------------------------------------------------------
Total Current Liabilities 766,122 720,035
Long-Term Debt 468,223 557,594
Long-Term Employee Benefit Obligations 295,122 289,711
Deferred Income Taxes and Other 35,102 33,780
Commitments and Contingencies -- --
Shareholders' ESOP convertible preferred stock --
Equity $1 par value: authorized -- 1,016,949 shares;
issued and outstanding -- 897,046 shares in
1996 and 927,338 shares in 1995 52,927 54,713
Common stock -- $1 par value:
authorized -- 320,000,000 shares;
issued -- 170,484,080 shares in 1996 and
170,698,092 shares in 1995 170,484 170,698
Capital in excess of par value 58,378 32,852
Cumulative currency translation adjustments (14,959) 6,767
Retained earnings 2,160,279 1,946,636
Unearned ESOP compensation (32,787) (36,941)
Common shares in treasury -- at cost --
46,873,585 shares in 1996 and 40,547,380
shares in 1995 (1,069,139) (776,340)
-------------------------------------------------------------------------------------------
Total Shareholders' Equity 1,325,183 1,398,385
-------------------------------------------------------------------------------------------
Total Liabilities and Shareholders' Equity $ 2,889,752 $2,999,505
=============================================================================================================
</TABLE>
See notes to consolidated financial statements
35
<PAGE>
Cultivating Our Next Century of Success
[Artwork Appears Here]
CONSOLIDATED STATEMENTS OF CASH FLOWS
Becton, Dickinson and Company
Years Ended September 30
<TABLE>
<CAPTION>
Thousands of dollars 1996 1995 1994
===========================================================================================================
<S> <C> <C> <C> <C>
Operating Net income $ 283,447 $ 251,696 $ 227,174
Activities Adjustments to net income to derive net cash
provided by operating activities:
Depreciation and amortization 200,482 207,756 203,705
Special charges -- -- 30,490
Gain on sale of equity investment -- -- (35,868)
Deferred income taxes (13,497) (13,540) (31,418)
Change in:
Trade receivables (21,589) 21,930 (20,720)
Inventories (10,141) (7,866) 30,988
Prepaid expenses, deferred taxes and other (20,581) (6,218) 9,394
Accounts payable, income taxes
and other liabilities 28,596 (2,609) 55,756
Other, net 13,726 21,049 10,048
-------------------------------------------------------------------------------
Net cash provided by operating activities 460,443 472,198 479,549
-------------------------------------------------------------------------------
Investing Capital expenditures (145,929) (123,760) (123,017)
Activities Proceeds from sale of equity investment -- 47,805 22,159
Acquisitions of businesses (16,501) (3,839) (12,750)
Proceeds from dispositions of businesses 38,027 79,479 --
Proceeds (purchases) of short-term
investments, net 5,190 69,577 (6,031)
Proceeds from sales of long-term investments 29,208 6,926 8
Purchase of long-term investment (3,125) -- --
Other, net (16,736) (20,240) (12,809)
-------------------------------------------------------------------------------
Net cash (used for) provided by investing
activities (109,866) 55,948 (132,440)
-------------------------------------------------------------------------------
Financing Change in short-term debt 71,103 (12,680) (51,063)
Activities Proceeds of long-term debt -- 107,278 39,606
Payment of long-term debt (130,597) (177,226) (43,606)
Issuance of common stock 35,366 19,789 30,865
Repurchase of common stock (325,874) (299,723) (210,285)
Dividends paid (61,660) (58,347) (57,034)
-------------------------------------------------------------------------------
Net cash used for financing activities (411,662) (420,909) (291,517)
-------------------------------------------------------------------------------
Effect of exchange rate changes on cash
and equivalents (2,270) (3,644) 195
-------------------------------------------------------------------------------
Net (decrease) increase in cash and
equivalents (63,355) 103,593 55,787
-------------------------------------------------------------------------------
Opening Cash
and Equivalents 198,506 94,913 39,126
-------------------------------------------------------------------------------
Closing Cash
and Equivalents $ 135,151 $ 198,506 $ 94,913
===========================================================================================================
</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 majority owned subsidiaries after the elimination of
intercompany transactions.
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 132,795,000 in 1996, 138,402,000 in 1995
and 146,666,000 in 1994, all of which reflect the two-for-one stock split, the
shares for which were distributed in August 1996. Common equivalent shares
relate to employee stock plans.
USE OF ESTIMATES
The financial statements are prepared in conformity with generally accepted
accounting principles and, accordingly, include amounts that are based on
management's best estimates and judgments. Actual results could differ from
these estimates.
37
<PAGE>
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 3.2 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:
- ----------------------------------------------------
1996 1995 1994
- ----------------------------------------------------
Total expense of the
savings plan $ 5,115 $ 7,659 $ 9,347
Compensation expense
(included in total
expense above) $ 2,693 $ 5,080 $ 6,543
Dividends on ESOP
shares used for
debt service $ 3,484 $ 3,596 $ 3,711
Number of preferred
shares allocated
at September 30 325,632 288,785 248,766
====================================================
The Company guarantees employees' contributions to the fixed income fund of the
Savings Plan. The amount guaranteed was $90,452 at September 30, 1996.
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:
- -------------------------------------------------------
1996 1995 1994
- -------------------------------------------------------
Service cost: benefits
earned during
the year $ 20,217 $ 16,884 $ 20,040
Interest cost on
projected benefit
obligation 29,204 27,312 28,641
Return on assets:
Actual gain (53,055) (71,964) (1,280)
Deferred portion 18,014 42,790 (34,986)
- -------------------------------------------------------
Expected return (35,041) (29,174) (36,266)
Special termination
benefits -- -- 3,498
- -------------------------------------------------------
Net pension cost $ 14,380 $ 15,022 $ 15,913
=======================================================
Rate assumptions used in accounting for the defined benefit plans were:
- -------------------------------------------------------
1996 1995 1994
- -------------------------------------------------------
Discount rate:
End of year 7.75% 7.50% 8.00%
Beginning of year 7.50 8.00 7.25
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
=======================================================
The following table sets forth the funded status and amounts recognized in the
consolidated balance sheets at September 30, 1996 and 1995 for the Company's
domestic defined benefit pension plans:
- ----------------------------------------------------------
1996 1995
- ----------------------------------------------------------
Actuarial present value of
benefit obligations:
Vested benefit obligation $294,564 $287,637
==========================================================
Accumulated benefit obligation $308,208 $301,700
==========================================================
Projected benefit obligation $413,062 $406,888
Plan assets at fair value 385,468 352,510
==========================================================
Plan assets under projected
benefit obligation 27,594 54,378
Unrecognized net gain 33,579 3,576
Unrecognized net asset at
October 1, 1985, net of
amortization 2,427 3,033
- ----------------------------------------------------------
Net pension liability recognized
in the consolidated balance sheets $ 63,600 $ 60,987
==========================================================
38
<PAGE>
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:
- ---------------------------------------------------------
1996 1995 1994
- ---------------------------------------------------------
Service cost: benefits
earned during
the year $ 2,251 $ 2,108 $ 2,537
Interest cost on projected
benefit obligation 10,925 10,860 9,671
Amortization of gain
from plan amendments (6,334) (6,499) (6,312)
- ---------------------------------------------------------
Postretirement
benefit cost $ 6,842 $ 6,469 $ 5,896
=========================================================
The postretirement benefit plans other than pensions are not funded. The
present value of the Company's obligation included in the consolidated balance
sheets at September 30, 1996 and 1995 was as follows:
- ---------------------------------------------------------
1996 1995
- ---------------------------------------------------------
Accumulated postretirement
benefit obligation:
Retirees $113,377 $112,649
Fully eligible active participants 14,157 12,452
Other active participants 26,060 26,063
- ---------------------------------------------------------
Total 153,594 151,164
Unrecognized gain from plan
amendments 75,744 82,056
Unrecognized actuarial loss (11,246) (11,489)
- ---------------------------------------------------------
Accrued postretirement
benefit liability $218,092 $221,731
=========================================================
At September 30, 1996 and 1995, health care cost trends of 12% and 13%,
respectively, pre-age 65 and 9% and 10%, respectively, post-age 65 were assumed.
These rates were assumed to decrease gradually to an ultimate rate of 6%
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, 1996 by $4,753 and the
postretirement benefit cost for 1996 by $368. The discount rate used to estimate
the postretirement benefit cost was 7.5% and 8.0%, in 1996 and 1995,
respectively. The discount rate used to estimate the accumulated postretirement
benefit obligation at September 30, 1996 and 1995 was 7.75% and 7.5%,
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 benefit obligation was
reduced as a result of these changes. In accordance with Statement of Financial
Accounting Standards (SFAS) No. 106, Employers' Accounting for Postretirement
Benefits Other Than Pensions, this reduction in the obligation is being
amortized as a component of the postretirement benefit cost.
39
<PAGE>
The Company utilizes a service-based approach in applying the provisions of
SFAS No. 112, Employers' Accounting for Postemployment Benefits, 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.
- ---------------------------------------------------
1996 1995 1994
- ---------------------------------------------------
Postemployment
benefit costs: $12,200 $10,300 $7,100
===================================================
NOTE 4 - SPECIAL CHARGES
In 1994, the Company recorded special charges of $30,490, primarily to write off
property, plant and equipment, inventories and other assets associated with
exited product lines.
NOTE 5 - OTHER (EXPENSE) INCOME, NET
Other (expense), net in 1996 includes income of $8,216 from a net cash
settlement received in connection with one of the Company's patents and foreign
exchange losses, including hedging costs, of $8,127.
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 offset by losses of $6,301 from the sale of the medical
glove business and foreign exchange losses of $12,074.
Other income, net in 1994 includes a gain of $35,868 from the disposition
of a foreign investment offset by foreign exchange losses of $10,608.
NOTE 6 - INCOME TAXES
The provision for income taxes is composed of the following charges (benefits):
- ----------------------------------------------------------
1996 1995 1994
- ----------------------------------------------------------
Current:
Domestic:
Federal $ 70,769 $ 53,388 $ 42,514
State and local,
including
Puerto Rico 33,521 28,212 20,148
Foreign 19,436 29,822 37,741
- ----------------------------------------------------------
123,726 111,422 100,403
- ----------------------------------------------------------
Deferred:
Domestic (19,769) (7,070) (21,728)
Foreign 6,272 (6,470) (9,690)
- ----------------------------------------------------------
(13,497) (13,540) (31,418)
- ----------------------------------------------------------
$110,229 $ 97,882 $ 68,985
==========================================================
In accordance with SFAS No. 109, Accounting for Income Taxes, deferred tax
assets and liabilities are netted on the balance sheet by separate tax
jurisdictions. At September 30, 1996 and 1995, net current deferred tax assets
of $44,845 and $37,438, respectively, were included in Prepaid expenses,
deferred taxes and other. Net non-current deferred tax assets of $43,602 and
$32,735, respectively, were included in Other non-current assets. Net non-
current deferred tax liabilities of $8,274 and $8,761, 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, 1996, the cumulative
amount of such undistributed earnings approximated $923,000 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>
- ------------------------------------------------------------------------------------------------------------------------
1996 1995 1994
- ------------------------------------------------------------------------------------------------------------------------
Assets Liabilities Assets Liabilities Assets Liabilities
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Compensation and benefits $133,061 $ -- $128,676 $ -- $130,962 $ --
Property and equipment -- 108,455 -- 117,748 -- 126,539
Other 89,853 27,400 79,858 19,899 68,890 13,393
- ------------------------------------------------------------------------------------------------------------------------
222,914 135,855 208,534 137,647 199,852 139,932
Valuation allowance (6,886) -- (9,475) -- (7,100) --
- ------------------------------------------------------------------------------------------------------------------------
$216,028 $135,855 $199,059 $137,647 $192,752 $139,932
========================================================================================================================
</TABLE>
A reconciliation of the federal statutory tax rate to the Company's effective
tax rate follows:
- ------------------------------------------------
1996 1995 1994
- ------------------------------------------------
Federal statutory tax rate 35.0% 35.0% 35.0%
State and local income
taxes, net of federal
tax benefit 1.4 1.5 .7
Effect of foreign and
Puerto Rican income (4.2) (6.0) (8.4)
Foreign tax credits (2.5) (1.9) (2.3)
Research tax credit (.3) (.2) (.5)
Other, net (1.4) (.4) (1.2)
- ------------------------------------------------
28.0% 28.0% 23.3%
================================================
The approximate dollar and per share amounts of tax reductions related to
tax holidays in various countries in which the Company does business were:
1996 -$17,700 and $.13; 1995 - $18,400 and $.13; and 1994 - $23,300 and $.16.
The tax holidays expire at various dates through 2010.
The Company made income tax payments, net of refunds, of $126,236 in 1996,
$132,650 in 1995 and $65,481 in 1994.
The components of income before income taxes follow:
- ---------------------------------------------------
1996 1995 1994
- ---------------------------------------------------
Domestic, including
Puerto Rico $231,021 $218,695 $166,563
Foreign 162,655 130,883 129,596
- ---------------------------------------------------
$393,676 $349,578 $296,159
===================================================
NOTE 7 - SUPPLEMENTAL BALANCE
SHEET INFORMATION
TRADE RECEIVABLES
Allowances for doubtful accounts and cash discounts netted against trade
receivables were $28,056 and $25,046 at September 30, 1996 and 1995,
respectively.
- ---------------------------------------
Inventories 1996 1995
- ---------------------------------------
Materials $ 91,154 $ 87,116
Work in process 66,005 71,316
Finished products 245,323 250,203
- ---------------------------------------
$402,482 $408,635
=======================================
Inventories valued under the LIFO method were $233,714 in 1996 and $205,608
in 1995. Inventories valued under the LIFO method would have been higher by
approximately $33,700 in 1996 and $37,000 in 1995, if valued on a current cost
basis.
- -----------------------------------------------------------
Property, Plant and Equipment 1996 1995
- -----------------------------------------------------------
Land $ 52,090 $ 53,921
Buildings 879,316 890,393
Machinery, equipment and fixtures 1,500,969 1,449,639
Leasehold improvements 29,860 29,127
- -----------------------------------------------------------
2,462,235 2,423,080
Less allowances for depreciation
and amortization 1,218,087 1,142,049
- -----------------------------------------------------------
$1,244,148 $1,281,031
===========================================================
- -----------------------------------------------------------
Intangibles 1996 1995
- -----------------------------------------------------------
Patents and other $ 212,928 $ 197,761
Goodwill 139,676 134,736
- -----------------------------------------------------------
352,604 332,497
Less accumulated amortization 176,739 150,996
- -----------------------------------------------------------
$ 175,865 $ 181,501
===========================================================
41
<PAGE>
NOTE 8 - DEBT
The components of short-term debt follow:
- -------------------------------------------------------
1996 1995
- -------------------------------------------------------
Loans payable:
Domestic $ 51,700 $ 31,400
Foreign 54,497 107,064
Current portion of long-term debt 121,227 67,335
- -------------------------------------------------------
$227,424 $205,799
=======================================================
Domestic loans payable consist of commercial paper supported by committed
lines of credit. Foreign loans payable consist of short-term borrowings from
financial institutions. The weighted average interest rates for loans payable
were 4.9% and 3.7% at September 30, 1996 and 1995, respectively. At September
30, 1996 and 1995, the Company had domestic unused committed short-term lines of
credit of $300,000 and $225,000, respectively, and domestic unused committed
long-term lines of credit of $70,000 and $145,000, respectively. In addition,
the Company had unused foreign lines of credit pursuant to informal arrangements
of approximately $200,000 and $223,000 at September 30, 1996 and 1995,
respectively.
Subsequent to September 30, 1996, the Company entered into a $500,000 five
year revolving credit facility with a group of banks. Restrictive covenants
under this agreement include a minimum tangible net worth level. This agreement
replaces the domestic committed short-term and long-term lines of credit.
The components of long-term debt follow:
- ---------------------------------------------------------------
1996 1995
- ---------------------------------------------------------------
Domestic notes due through 2013
(average year-end interest rate:
5.4%) $109,691 $ 9,188
Foreign notes due through 2011
(average year-end interest rate:
6.1%-1996; 6.4%-1995) 20,768 25,219
7.875% Notes due
December 15, 1996 -- 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 37,764 41,787
9.25% Sinking Fund Debentures
due through June 1, 2016 -- 81,400
8.70% Debentures
due January 15, 2025 100,000 100,000
- ---------------------------------------------------------------
$468,223 $557,594
===============================================================
In June 1996, the Company redeemed $66,400 principal amount of its
outstanding 9.25% Sinking Fund Debentures at a price of 104.375% of the
principal amount. The remaining $15,000 is included in current portion of long-
term debt, reflecting the Company's intention to accelerate repayment under the
terms of the issue.
On October 11, 1996, the Company issued $100,000 of 6.90% notes due on
October 1, 2006. The Company entered into an interest rate hedge agreement to
protect itself from the impact of fluctuating interest rates during the period
in which the sale of the notes was being arranged. The results of the interest
rate hedge will be amortized over the life of the notes. The effective interest
rate of the notes, including the results of the interest rate hedge and other
financing costs, is 7.34%. The proceeds of the notes will be used to repay a
portion of outstanding commercial paper which was classified as long-term debt
at September 30, 1996.
The aggregate annual maturities of long-term debt during the fiscal years
ending September 30, 1998 to 2001 are as follows: 1998 - $7,762; 1999 -
$106,172; 2000- $6,447; 2001 - $106,905.
The Company capitalizes interest costs as a component of the cost of
construction in progress. The following is a summary of interest costs:
- --------------------------------------------------
1996 1995 1994
- --------------------------------------------------
Charged to operations $54,162 $60,628 $62,472
Capitalized 5,368 4,064 5,946
- --------------------------------------------------
$59,530 $64,692 $68,418
==================================================
Interest paid, net of amounts capitalized, was $59,053 in 1996, $58,726 in
1995 and $63,670 in 1994.
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, 1996 and 1995 were as follows:
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------
1996 1995
- ----------------------------------------------------------------------------------------------
Carrying Fair Carrying Fair
Value Value Value Value
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Assets:
Investments in marketable securities (non-current) $ 23,800 $ 23,518 $ 44,400 $ 43,509
Forward exchange contracts (A) 3,417 3,069 3,969 3,084
Purchased currency options (B) 170 166 360 311
Interest rate cap -- -- -- 13
Liabilities:
Long-term debt $468,223 $493,402 $557,594 $604,537
Interest rate swaps 135 921 55 1,155
Rate hedge agreement -- 807 -- --
==============================================================================================
</TABLE>
(A) Included in Prepaid expenses, deferred taxes and other and Accrued
expenses.
(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 and losses
related to these hedges are recognized in income as part of, and concurrent
with, the hedged transactions. 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:
- ------------------------------------------------------------
1996 1995
- ------------------------------------------------------------
Forward exchange contracts $787,521 $738,541
Purchased currency options:
Colombian peso put, U.S. dollar call $ 2,300 $ --
German mark put, U.S. dollar call -- 5,000
Brazilian real put, U.S. dollar call 15,000 7,000
Italian lira put, German mark call -- 11,021
Mexican peso call, U.S. dollar put 12,000 --
============================================================
At September 30, 1996, $612,961 of the forward exchange contracts mature
within 90 days and $174,560 at various other dates in fiscal 1997. The purchased
currency options at September 30, 1996 expire within 180 days.
Significant forward exchange contracts and the purchased currency options
which represent hedges of currency transaction exposures at September 30, 1996
were as follows:
- -------------------------------------------------------------------
U.S. Dollar Equivalents
- -------------------------------------------------------------------
September 30, 1996
- ------------------------------------------------------
Currency Average
Transaction Contracts
Notional Exposure-Asset During
Amount (Liability) Fiscal 1996
- -------------------------------------------------------------------
Commitments to sell
foreign currencies:
French francs $101,762 $ 101,762 $ 91,157
Italian lire 67,297 67,297 61,696
Spanish pesetas 45,541 47,221 44,011
Japanese yen 63,966 63,966 46,661
German marks 18,482 18,482 19,286
Commitments to purchase
foreign currencies:
Irish pounds $248,275 $(248,275) $226,410
Singapore dollars 70,804 (70,804) 65,961
Mexican pesos 12,000 (12,000) --
===================================================================
At September 30, 1996, the Company had offsetting foreign exchange
contracts with notional amounts totaling $51,973. The contracts hedged
intercompany transactions which were settled prior to September 30, 1996. The
carrying values of these contracts at September 30, 1996 were not material.
43
<PAGE>
Significant forward exchange contracts which represented hedges of currency
transaction exposures at September 30, 1995 were as follows:
- --------------------------------------------------------------------
U.S. Dollar Equivalents
- --------------------------------------------------------------------
September 30, 1995
- ----------------------------------------------------
Currency Average
Transaction Contracts
Notional Exposure-Asset During
Amount (Liability) Fiscal 1995
- --------------------------------------------------------------------
Commitments to sell
foreign currencies:
French francs $ 78,809 $ 80,214 $ 81,256
Italian lire 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
====================================================================
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 and investments outside the U.S. At
September 30, 1996 and 1995, 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 and receive, at
specified intervals, fixed rate payments in exchange for variable rate payments,
calculated on an agreed-upon notional amount.
- -------------------------------------------------------
Notional
Amount Average
U.S. Dollar Fixed Variable
Equivalent Rate Rate
- -------------------------------------------------------
Interest Rate Swaps:
September 30, 1996
French francs $19,369 4.63% 4.18%
Japanese yen 7,628 2.48 0.58
Japanese yen 4,487 2.61 0.59
Japanese yen 8,974 2.61 0.58
Japanese yen 3,590 1.87 0.63
Japanese yen 8,077 1.74 0.64
Japanese yen 7,628 2.44 0.58
Italian lire 13,123 8.29 8.63
Irish pounds 32,070 6.64 5.81
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, 1996 and 1995, the Company had a foreign interest rate cap
agreement with a notional U.S. dollar equivalent amount of $8,077 and $9,023,
respectively, which limits the potential interest rate fluctuations on a portion
of the Company's Japanese yen denominated short-term debt. This agreement
effectively entitles the Company to receive from a financial institution the
amount, if any, by which the Company's interest payments on $8,077 of its
floating rate yen denominated short-term debt exceed 2%. The cap expires in May
1997.
CONCENTRATION OF CREDIT RISK
Substantially all of the Company's trade receivables are due from entities in
the health care industry. Due to the large number and diversity of the Company's
customer base, concentrations of credit risk with respect to trade receivables
are limited. The Company does not normally require collateral. The Company is
exposed to credit loss in the event of nonperformance by financial institutions
with which it conducts business. The Company minimizes exposure to such risk,
however, 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, 1993 $58,108 $170,698 $19,605 $1,581,196 $(45,249) (21,244,860) $ (305,357)
Net income 227,174
Cash dividends:
Common ($.37 per share) (53,292)
Preferred ($3.835 per share),
net of tax benefits (2,718)
Common stock issued for
employee stock plans, net 6,355 1,748,618 23,160
Repurchase of common stock (10,719,200) (210,285)
Reduction in unearned ESOP
compensation for the year 4,153
Adjustment for redemption
provisions and other (1,777) 291 73,180 1,059
- ------------------------------------------------------------------------------------------------------------------------------
Balance at September 30, 1994 56,331 170,698 26,251 1,752,360 (41,096) (30,142,262) (491,423)
Net income 251,696
Cash dividends:
Common ($.41 per share) (54,725)
Preferred ($3.835 per share),
net of tax benefits (2,695)
Common stock issued for
employee stock plans, net 6,251 1,047,936 13,538
Repurchase of common stock (11,540,800) (299,723)
Reduction in unearned ESOP
compensation for the year 4,155
Adjustment for redemption
provisions and other (1,618) 350 87,746 1,268
- ------------------------------------------------------------------------------------------------------------------------------
Balance at September 30, 1995 54,713 170,698 32,852 1,946,636 (36,941) (40,547,380) (776,340)
Net income 283,447
Cash dividends:
Common ($.46 per share) (58,147)
Preferred ($3.835 per share),
net of tax benefits (2,675)
Common stock issued for:
Employee stock plans, net 17,164 1,456,040 18,202
Business acquisition 8,077 331,734 4,176
Repurchase of common stock (8,424,907) (325,874)
Retirement of common stock (214) (101) (8,982) 214,012 9,297
Reduction in unearned ESOP
compensation for the year 4,154
Adjustment for redemption
provisions and other (1,786) 386 96,916 1,400
- ------------------------------------------------------------------------------------------------------------------------------
Balance at September 30, 1996 $52,927 $170,484 $58,378 $2,160,279 $(32,787) (46,873,585) $(1,069,139)
==============================================================================================================================
</TABLE>
On July 23, 1996, the Board of Directors authorized a two-for-one stock
split, the shares for which were distributed on August 15, 1996 to shareholders
of record on August 5, 1996. All share and per share data in the Annual Report
have been restated to reflect the split, and the amounts of Common stock and
Capital in excess of par value have been adjusted for all periods presented.
The excess of cost over par value of common stock retirements is charged
proportionally to Capital in excess of par value and Retained earnings.
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:
- --------------------------------------------------------
1996 1995 1994
- --------------------------------------------------------
Balance at October 1 $ 6,767 $ 8,573 $(22,048)
Translation adjustment (21,726) (1,587) 37,900
Disposition of foreign
investment -- -- (6,348)
Allocated income taxes -- (219) (931)
- --------------------------------------------------------
Balance at
September 30 $(14,959) $ 6,767 $ 8,573
========================================================
PREFERRED STOCK PURCHASE RIGHTS
In November 1995, the Board of Directors adopted a new shareholder rights plan
(the "New Plan") to replace the original rights plan upon its expiration in
April 1996. In accordance with the New Plan, after giving effect to the August
1996 two-for-one stock split, each certificate representing a share of
outstanding common stock of the Company also represents one-half of a Preferred
Stock Purchase Right (a "Right"). Each whole Right will entitle the registered
holder to purchase from the Company one two-hundredth of a share of Preferred
Stock, Series A, par value $1.00 per share, at a price of $270. The Rights,
however, will not become exercisable unless and until, among other things, any
third party acquires 20% or more of the outstanding stock. The new Rights are
redeemable under certain circumstances at $.01 per Right and will expire, unless
earlier redeemed, on April 25, 2006. There are 500,000 shares of preferred stock
designated Series A, none of which has been issued.
NOTE 11 - COMMITMENTS AND CONTINGENCIES
COMMITMENTS
Rental expense for all operating leases amounted to $52,000 in 1996, $53,000 in
1995 and $49,900 in 1994. Future minimum rental commitments on non-cancelable
leases are as follows: 1997 - $32,700; 1998 - $25,900; 1999 - $19,600; 2000 -
$15,500; 2001 - $13,000 and an aggregate of $26,400 thereafter.
As of September 30, 1996, the Company had entered into certain commitments
for future capital expenditures aggregating approximately $28,000 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 8,000,000 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 1995, made available an additional 12,000,000 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. There was no such compensation
expense in 1996 or 1994. In 1995 such compensation expense amounted to $1,961.
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>
- ----------------------------------------------------------------------------------------------------------------------------------
1996 1995 1994
- ----------------------------------------------------------------------------------------------------------------------------------
Shares Price Range Shares Price Range Shares Price Range
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at October 1 11,830,092 $13.05 - $25.10 10,161,918 $ 6.34 - $20.05 9,344,088 $ 4.21 - $19.75
Granted 3,285,684 37.66 - 41.82 2,817,636 23.31 - 25.10 2,516,740 17.28 - 20.05
Exercised (1,395,540) 13.44 - 25.10 (976,742) 6.34 - 25.10 (1,512,700) 4.21 - 20.05
Canceled (194,524) 17.28 - 40.07 (172,720) 6.34 - 25.10 (186,210) 4.21 - 19.39
- ----------------------------------------------------------------------------------------------------------------------------------
Balance at
September 30 13,525,712 $13.05 - $41.82 11,830,092 $13.05 - $25.10 10,161,918 $ 6.34 - $20.05
==================================================================================================================================
Exercisable at
September 30 10,937,251 8,778,116 7,100,934
==================================================================================================================================
Available for grant at:
October 1, 1995 11,422,976
September 30, 1996 8,331,816
==================================================================================================================================
</TABLE>
Options outstanding as of September 30, 1996 expire at various times from
June 1997 through July 2006.
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 1996,
80,232 shares were distributed. No awards were granted in 1996 and 1995. Awards
for 117,170 shares (net of cancellations) were granted in 1994. At September 30,
1996, 1,459,040 shares were reserved for future issuance, of which awards for
408,346 shares have been granted.
The Company has a compensatory Restricted Stock Plan for Non-Employee
Directors which reserves for issuance 150,000 shares of the Company's common
stock. Restricted shares of 4,970, 7,550 and 30,458 were issued in 1996, 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 specialty and surgical blades. The Medical Supplies and Devices
segment also includes specialty needles, drug infusion systems, disposable
scrubs, elastic support products and thermometers. 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 manual and instrumented microbiology
products, sample collection products, flow cytometry systems for cellular
analysis, 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 11% of revenues in 1996, 13% of revenues in
1995 and 12% of revenues in 1994, and were from both the Diagnostic Systems and
Medical Supplies and Devices segments. No other customer accounted for 10% or
more of revenues in each of the three years presented.
The countries in which the Company has local revenue-generating operations
have been combined into the following geographic areas: the United States,
including Puerto Rico; Europe; and Other, which is 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 and interest expense, net.
Financial information with respect to business segment and geographic data
for the years ended September 30, 1996, 1995 and 1994 is presented on pages 30
and 31 and is considered to be an integral part of the notes to the consolidated
financial statements.
47
<PAGE>
QUARTERLY DATA (UNAUDITED)
Thousands of dollars, except per share amounts
- ----------------------------------------------------------------------------
1996 1st 2nd 3rd 4th Year
- ----------------------------------------------------------------------------
Revenues $639,935 $705,725 $692,945 $731,151 $2,769,756
Gross Profit 291,189 337,016 341,094 371,280 1,340,579
Net Income 44,522 74,790 77,167 86,968 283,447
Earnings Per Share (A) .32 .55 .58 .66 2.11
- ----------------------------------------------------------------------------
1995 1st 2nd 3rd 4th Year
- ----------------------------------------------------------------------------
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 (A) .23 .46 .47 .63 1.79
============================================================================
(A) Restated to reflect 1996 two-for-one stock split.
48
<PAGE>
Common Stock Prices and Dividends
- ----------------------------------------------
1996 by Quarter High Low Dividends
==============================================
First $38 $31 1/8 $.11 1/2
Second 44 5/8 36 7/8 .11 1/2
Third 42 3/4 37 1/2 .11 1/2
Fourth 44 7/8 35 3/8 .11 1/2
- ----------------------------------------------
1995 by Quarter High Low Dividends
- ----------------------------------------------
First $25 $22 5/8 $.10 1/4
Second 28 5/8 24 .10 1/4
Third 29 7/8 27 .10 1/4
Fourth 31 3/4 27 7/8 .10 1/4
==============================================
Data for both years have been restated to reflect the two-for-one stock split,
the shares for which were distributed in August 1996.
Corporate Data
Annual Meeting
2:30 p.m.
Tuesday, February 11, 1997
1 Becton Drive
Franklin Lakes, NJ 07417-1880
Dividend Reinvestment
The Becton Dickinson Dividend Reinvestment Plan offers shareholders an
opportunity to purchase additional shares, commission-free, through automatic
dividend reinvestment 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
E-mail: [email protected]
Internet: http://www.fctc.com
Shareholder Information
Shareholders may receive, without charge, a copy of the company's 1996 Annual
Report to the Securities and Exchange Commission on Form 10-K
by contacting:
Investor Relations
Becton Dickinson and Company
1 Becton Drive
Franklin Lakes, NJ 07417-1880
Phone: 1-800-284-6845
NYSE Symbol [LOGO]
BDX
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.
Cover illustration adapted from FROM FLOWER TO FRUIT.
(C) 1984 by Anne Ophelia Dowden.
Reprinted by permission of Houghton Mifflin Company.
All rights reserved.
51
<PAGE>
EXHIBIT 21
SUBSIDIARIES OF BECTON, DICKINSON AND COMPANY
<TABLE>
<CAPTION>
STATE OF PERCENTAGE
JURISDICTION OF VOTING
OF SECURITIES
NAME OF SUBSIDIARY INCORPORATION OWNED
- ------------------ ----------------- ----------
<S> <C> <C>
Alchem, Inc. ...................................... Massachusetts 100%(1)
A.M.P. San Juan, S.A. ............................. Argentina 20%(1)
Bauer & Black, Inc. ............................... Delaware 100%
BBL Realty, Inc. .................................. Maryland 100%(1)
B D Polska, Ltd. Sp. z.o.o. ....................... Poland 100%(1)
B-D (Cambridge, U.K.) Ltd. ........................ United Kingdom 100%(1)
B-D U.K. Holdings Limited.......................... United Kingdom 100%(1)
Becton Dickinson AcuteCare Holdings, Inc. ......... Delaware 100%
Becton Dickinson AcuteCare, Inc. .................. Massachusetts 100%(1)
Becton, Dickinson A.G. ............................ Switzerland 100%(1)
Becton, Dickinson Aktiebolag....................... Sweden 100%(1)
Becton Dickinson Asia Limited...................... Singapore 100%(1)
Becton Dickinson (Braunschweig) GmbH............... Germany 100%(1)
Becton, Dickinson and Company, Ltd. ............... Ireland 100%
Becton Dickinson Benelux N.V. ..................... Belgium 100%(1)
Becton, Dickinson B.V. ............................ Netherlands 100%
Becton Dickinson Canada Inc. ...................... Canada 100%(1)
Becton Dickinson Chile, S.A. ...................... Chile 100%(1)
Becton Dickinson de Columbia Ltda. ................ Columbia 100%(1)
Becton Dickinson del Uruguay S.A. ................. Uruguay 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--France, S.A. ................... France 100%
Becton Dickinson Enterprises Incorporated.......... New Jersey 100%(1)
Becton Dickinson Ithalat Ihracit Ltd., Sirketi..... Turkey 100%(1)
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, S.A. ..... Brazil 100%(1)
Becton Dickinson India Pvt. Ltd. .................. India 100%(1)
Becton Dickinson Insulin Syringe, Ltd. ............ British W. Indies 100%(1)
Becton, Dickinson--Italia S.p.A. .................. Italy 100%(1)
Becton Dickinson Korea, Inc. ...................... Korea 100%(1)
Becton Dickinson (Mauritius) Limited............... Mauritis 100%(1)
Becton Dickinson Medical Devices Co. Ltd. Suzhou... China 70%(1)
Becton Dickinson Medical Products Pte. Ltd. ....... Singapore 100%(1)
Becton Dickinson Monoclonal Center, Inc. .......... Delaware 100%(1)
Becton Dickinson New Zealand....................... New Zealand 100%(1)
Becton Dickinson Overseas Services Ltd. ........... Nevada 100%(1)
Becton Dickinson O.Y. ............................. Finland 100%
Becton Dickinson Pen Limited....................... Ireland 100%
Becton Dickinson Penel Limited..................... Ireland 100%
Becton Dickinson Philippines, Inc. ................ Philippines 100%(1)
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
STATE OF PERCENTAGE
JURISDICTION OF VOTING
OF SECURITIES
NAME OF SUBSIDIARY INCORPORATION OWNED
- ------------------ -------------- ----------
<S> <C> <C>
Becton Dickinson Pty. Ltd. ........................... Australia 100%
Becton Dickinson Research Corporation................. Nevada 100%
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 Infusion Therapy 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%(1)
Johnston Ferguson Vestal, Inc. ....................... Maryland 100%
Johnston Laboratories, Inc. .......................... Maryland 100%
Med-Safe Systems, Inc. ............................... California 100%(1)
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)
Radem Medical, S.A. .................................. South Africa 100%(1)
Rindanor BD Sociodad Anomina Uruguay.................. Uruguay 100%(1)
228 Coshocton, Inc. .................................. Nevada 100%(1)
</TABLE>
- --------
(1) Owned by a subsidiary of Becton, Dickinson and Company
<PAGE>
EXHIBIT 23
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in Registration Statement Nos.
33-22871, 33-23055, 33-33791, 33-40787, 33-53375, 33-58367, 33-64115, 333-11885
and 333-16091 on Form S-8 of Becton, Dickinson and Company and the related
Prospectuses of our report dated November 7, 1996, 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,
1996.
/s/ Ernst & Young LLP
------------------------------
Ernst & Young LLP
Hackensack, New Jersey
December 18, 1996
<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, 1996, 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-30-1996
<PERIOD-END> SEP-30-1996
<CASH> 135151
<SECURITIES> 29949
<RECEIVABLES> 608369
<ALLOWANCES> 28056
<INVENTORY> 402482
<CURRENT-ASSETS> 1276841
<PP&E> 2462235
<DEPRECIATION> 1218087
<TOTAL-ASSETS> 2889752
<CURRENT-LIABILITIES> 766122
<BONDS> 468223
0
52927
<COMMON> 170484
<OTHER-SE> 1101772
<TOTAL-LIABILITY-AND-EQUITY> 2889752
<SALES> 2769756
<TOTAL-REVENUES> 2769756
<CGS> 1429177
<TOTAL-COSTS> 1429177
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 6209
<INTEREST-EXPENSE> 54162
<INCOME-PRETAX> 393676
<INCOME-TAX> 110229
<INCOME-CONTINUING> 283447
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 283447
<EPS-PRIMARY> 2.11
<EPS-DILUTED> 2.07
</TABLE>
