FORM 10-Q UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2003 ------------- OR [_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ____________ to ______________ Commission file number 001-4802 -------- Becton, Dickinson and Company ---------------------------------------------------------------- (Exact name of registrant as specified in its charter) New Jersey 22-0760120 - ---------------------------------- -------------------------------------- (State or other jurisdiction of (I.R.S. Employer Identification No.) incorporation or organization) 1 Becton Drive, Franklin Lakes, New Jersey 07417-1880 -------------------------------------------------------------- (Address of principal executive offices) (Zip Code) (201) 847-6800 --------------------------------------------------------------- (Registrant's telephone number, including area code) N/A --------------------------------------------------------------- (Former name, former address and former fiscal year, if changed since last report) 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 checkmark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act). Yes [X] No [_] Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.

Class of Common Stock Shares Outstanding as of July 31, 2003 - ----------------------------- -------------------------------------- Common stock, par value $1.00 253,939,600

BECTON, DICKINSON AND COMPANY FORM 10-Q For the quarterly period ended June 30, 2003 TABLE OF CONTENTS

Page Number ----------- Part I. FINANCIAL INFORMATION - ------- --------------------- Item 1. Financial Statements (Unaudited) Condensed Consolidated Balance Sheets ..................... 3 Condensed Consolidated Statements of Income ............... 4 Condensed Consolidated Statements of Cash Flows ........... 5 Notes to Condensed Consolidated Financial Statements ...... 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations ................................. 15 Item 3. Quantitative and Qualitative Disclosures About Market Risk ... 22 Item 4. Controls and Procedures ...................................... 22 Part II. OTHER INFORMATION - ------- ----------------- Item 1. Legal Proceedings ............................................ 23 Item 2. Changes in Securities and Use of Proceeds .................... 24 Item 3. Defaults Upon Senior Securities .............................. 24 Item 4. Submission of Matters to a Vote of Security Holders .......... 24 Item 5. Other Information ............................................ 24 Item 6. Exhibits and Reports on Form 8-K ............................. 25 Signatures ................................................................ 27 Exhibits .................................................................. 28

2 ITEM 1. FINANCIAL STATEMENTS BECTON, DICKINSON AND COMPANY CONDENSED CONSOLIDATED BALANCE SHEETS Thousands of Dollars

June 30, September 30, 2003 2002 ----------- ------------- (Unaudited) Assets - ------ Current Assets: Cash and equivalents $ 455,217 $ 243,115 Short-term investments -- 1,850 Trade receivables, net 825,155 745,998 Inventories: Materials 130,469 137,688 Work in process 152,513 132,051 Finished products 528,213 427,957 ----------- ----------- 811,195 697,696 Prepaid expenses, deferred taxes and other 264,989 240,048 ----------- ----------- Total Current Assets 2,356,556 1,928,707 Property, plant and equipment 3,845,886 3,621,361 Less allowances for depreciation and amortization 2,030,539 1,855,631 ----------- ----------- 1,815,347 1,765,730 Goodwill, Net 533,514 492,327 Core and Developed Technology, Net 243,949 283,166 Other Intangibles, Net 114,839 126,758 Capitalized Software, Net 304,379 284,109 Other 189,605 159,663 ----------- ------------ Total Assets $ 5,558,189 $ 5,040,460 =========== =========== Liabilities and Shareholders' Equity - ------------------------------------ Current Liabilities: Short-term debt $ 163,628 $ 434,642 Payables and accrued expenses 849,007 817,811 ----------- ----------- Total Current Liabilities 1,012,635 1,252,453 Long-Term Debt 1,218,061 802,967 Long-Term Employee Benefit Obligations 316,599 391,607 Deferred Income Taxes and Other 112,812 105,459 Commitments and Contingencies -- -- Shareholders' Equity: Preferred stock 35,140 37,945 Common stock 332,662 332,662 Capital in excess of par value 252,754 185,122 Retained earnings 3,821,582 3,514,465 Unearned ESOP compensation (10,053) (7,847) Deferred compensation 8,770 8,496 Common shares in treasury - at cost (1,298,516) (1,137,583) Accumulated other comprehensive loss (244,257) (445,286) ----------- ----------- Total Shareholders' Equity 2,898,082 2,487,974 ----------- ----------- Total Liabilities and Shareholders' Equity $ 5,558,189 $ 5,040,460 =========== ===========

See notes to condensed consolidated financial statements 3 BECTON, DICKINSON AND COMPANY CONDENSED CONSOLIDATED STATEMENTS OF INCOME Thousands of Dollars, Except Per-share Data (Unaudited)

Three Months Ended Nine Months Ended June 30, June 30, --------------------- ----------------------- 2003 2002 2003 2002 ---------- -------- ---------- ---------- Revenues $1,165,369 $998,460 $3,351,058 $2,956,377 Cost of products sold 622,387 514,071 1,750,854 1,536,966 Selling and administrative 308,475 253,857 891,454 749,811 Research and development 60,042 53,037 179,921 164,588 Special charges -- 11,571 -- 21,508 ---------- -------- ---------- ---------- Total Operating Costs and Expenses 990,904 832,536 2,822,229 2,472,873 ---------- -------- ---------- ---------- Operating Income 174,465 165,924 528,829 483,504 Interest expense, net (9,658) (8,678) (26,944) (27,088) Other (expense) income, net (2,036) 1,313 (3,799) 189 ---------- -------- ---------- ---------- Income Before Income Taxes 162,771 158,559 498,086 456,605 Income tax provision 32,753 38,834 112,390 108,019 ---------- -------- ---------- ---------- Net Income $ 130,018 $119,725 $ 385,696 $ 348,586 ========== ======== ========== ========== Earnings Per Share: Basic $ .51 $ .46 $ 1.51 $ 1.34 ========== ======== ========== ========== Diluted $ .49 $ .44 $ 1.46 $ 1.29 ========== ======== ========== ========== Dividends Per Common Share $ .10 $ .0975 $ .30 $ .2925 ========== ======== ========== ==========

See notes to condensed consolidated financial statements 4 BECTON, DICKINSON AND COMPANY CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS Thousands of Dollars (Unaudited)

Nine Months Ended June 30, --------------------- 2003 2002 --------- --------- Operating Activities Net income $ 385,696 $ 348,586 Adjustments to net income to derive net cash provided by operating activities: Depreciation and amortization 259,632 224,486 Pension contribution (100,000) (100,000) Impairment of intangible assets 30,089 -- Non-cash special charges -- 6,526 Change in working capital (90,857) 34,388 Other, net 24,406 18,415 --------- --------- Net Cash Provided by Operating Activities 508,966 532,401 --------- --------- Investing Activities Capital expenditures (168,181) (163,041) Capitalized software (47,286) (61,638) Sales of investments, net 1,975 6,826 Other, net (30,728) (24,090) --------- --------- Net Cash Used for Investing Activities (244,220) (241,943) --------- --------- Financing Activities Change in short-term debt (270,145) 18,674 Proceeds from long-term debt 410,091 4,496 Payments of long-term debt (1,230) (3,842) Repurchase of common stock (205,636) (173,750) Issuance of common stock from treasury 81,481 33,980 Dividends paid (78,839) (77,335) --------- --------- Net Cash Used for Financing Activities (64,278) (197,777) --------- --------- Effect of exchange rate changes on cash and equivalents 11,634 1,171 --------- --------- Net increase in cash and equivalents 212,102 93,852 Opening Cash and Equivalents 243,115 82,129 --------- --------- Closing Cash and Equivalents $ 455,217 $ 175,981 ========= =========

See notes to condensed consolidated financial statements 5 BECTON, DICKINSON AND COMPANY NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS Dollar and Share Amounts in Thousands, Except Per-share Data June 30, 2003 Note 1 - Basis of Presentation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and, in the opinion of the management of the Company, include all adjustments which are of a normal recurring nature, necessary for a fair presentation of financial position and the results of operations and cash flows for the periods presented. However, the financial statements do not include all information and footnotes required for a presentation in accordance with generally accepted accounting principles. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and the notes thereto included or incorporated by reference in the Company's 2002 Annual Report on Form 10-K. The results of operations for the interim periods are not necessarily indicative of the results of operations to be expected for the full year. The Company has reclassified certain prior year information to conform with the current year presentation. Note 2 - Inventory Valuation The Company uses the last-in, first-out ("LIFO") method of determining cost for substantially all inventories in the United States. An actual valuation of inventory under the LIFO method will be made only at the end of each fiscal year based on the inventory levels and costs at that time. Accordingly, interim LIFO calculations are based on management's estimates of expected year-end inventory levels and costs. All other inventories are accounted for using the first-in, first-out ("FIFO") method. Note 3 - Comprehensive Income Comprehensive income for the Company is comprised of the following:

Three Months Ended Nine Months Ended June 30, June 30, ------------------- -------------------- 2003 2002 2003 2002 -------- -------- --------- -------- Net Income $130,018 $119,725 $385,696 $348,586 Other Comprehensive Income, Net of Tax Foreign currency translation adjustments 119,524 73,429 201,099 38,167 Unrealized gains (losses) on investments, net of amounts recognized 4,081 (1,991) 6,929 1,536 Unrealized losses on cash flow hedges, net of amounts realized (4,909) (6,855) (6,999) (3,006) -------- -------- -------- -------- Comprehensive Income $248,714 $184,308 $586,725 $385,283 ======== ======== ======== ========

6 The amount of unrealized gains or losses on investments and cash flow hedges in comprehensive income has been adjusted to reflect any realized gains and recognized losses included in net income during the three and nine months ended June 30, 2003 and 2002. Note 4 - Earnings per Share The following table sets forth the computations of basic and diluted earnings per share:

Three Months Ended Nine Months Ended June 30, June 30, ------------------- ------------------- 2003 2002 2003 2002 -------- -------- -------- -------- Net Income $130,018 $119,725 $385,696 $348,586 Preferred stock dividends (578) (634) (1,779) (1,934) -------- -------- -------- -------- Income available to common shareholders (A) 129,440 119,091 383,917 346,652 Preferred stock dividends - using "if converted" method 578 634 1,779 1,934 Additional ESOP contribution - Using "if converted" method (116) (145) (375) (455) -------- -------- -------- -------- Income available to common shareholders after assumed conversions (B) $129,902 $119,580 $385,321 $348,131 ======== ======== ======== ======== Average common shares outstanding (C) 255,038 258,067 255,008 258,568 Dilutive stock equivalents from stock plans 6,239 6,754 5,176 6,976 Shares issuable upon conversion of preferred stock 3,811 4,190 3,811 4,190 -------- -------- -------- -------- Average common and common equivalent shares outstanding - assuming dilution (D) 265,088 269,011 263,995 269,734 ======== ======== ======== ======== Basic earnings per share (A/C) $ .51 $ .46 $ 1.51 $ 1.34 ======== ======== ======== ======== Diluted earnings per share (B/D) $ .49 $ .44 $ 1.46 $ 1.29 ======== ======== ======== ========

7 Note 5 - Contingencies The Company is involved, both as a plaintiff and a defendant, in various legal proceedings and claims which arise in the ordinary course of business. The Company currently is engaged in discovery or is otherwise in the early stages with respect to certain of the litigation to which it is a party, and therefore, it is difficult to predict the outcome of such litigation. In addition, given the uncertain nature of litigation generally and of the current litigation environment, it is difficult to predict the outcome of any litigation regardless of its stage. A number of the cases pending against the Company present complex factual and legal issues and are subject to a number of variables, including, but not limited to, the facts and circumstances of each particular case, the jurisdiction in which each suit is brought, and differences in applicable law. As a result, the Company is not able to estimate the amount or range of loss that could result from an unfavorable outcome of each and every matter. In accordance with generally accepted accounting principles, the Company establishes reserves to the extent probable future losses are estimable. While the Company believes that the claims against it, upon resolution, should not have a material adverse effect on the Company, in view of the uncertainties discussed above, the Company could incur charges in excess of currently established reserves and, to the extent available, excess liability insurance. Accordingly, in the opinion of management any such future charges, individually or in the aggregate, could have a material adverse effect on the Company's consolidated results of operations and consolidated net cash flows in the period or periods in which they are recorded or paid. Further discussion of legal proceedings is included in Part II of this Report on Form 10-Q. Note 6 - Segment Data The Company's organizational structure is based upon its three principal business segments: BD Medical Systems ("Medical"), BD Clinical Laboratory Solutions ("Clinical Lab"), and BD Biosciences ("Biosciences"). The Company evaluates performance based upon operating income. Segment operating income represents revenues reduced by product costs and operating expenses. Financial information for the Company's segments is as follows:

Three Months Ended Nine Months Ended June 30, June 30, --------------------- ----------------------- 2003 2002 2003 2002 ---------- -------- ---------- ---------- Revenues Medical $ 648,428 $544,176 $1,821,884 $1,577,590 Clinical Lab 338,183 298,030 1,026,637 910,436 Biosciences 178,758 156,254 502,537 468,351 ---------- -------- ---------- ---------- Total Revenues (A) $1,165,369 $998,460 $3,351,058 $2,956,377 ========== ======== ========== ==========

8

Three Months Ended Nine Months Ended June 30, June 30, ------------------- --------------------- 2003 2002 2003 2002 -------- -------- --------- --------- Segment Operating Income (B) Medical $150,218 $119,284 $ 402,827 $ 329,412 Clinical Lab 72,385 57,661 223,412 181,111 Biosciences (C) (318) 23,377 46,896 81,267 -------- -------- --------- --------- Total Segment Operating Income 222,285 200,322 673,135 591,790 Unallocated Items (D) (59,514) (41,763) (175,049) (135,185) -------- -------- --------- --------- Income Before Income Taxes $162,771 $158,559 $ 498,086 $ 456,605 ======== ======== ========= =========

(A) Intersegment revenues are not material. (B) Prior year amounts include special charges of $11,571 for the quarter and $21,508 for the nine months, as discussed in Note 8. The allocation of special charges for the prior year's quarter is as follows: $12,663 for Medical, $(468) for Clinical Lab, $(447) for Biosciences, and $(177) for Unallocated. The allocation of special charges for the prior year's nine months is as follows: $22,600 for Medical, $(468) for Clinical Lab, $(447) for Biosciences, and $(177) for Unallocated. (C) Current year amounts include $34,231 of charges for the quarter and nine months related to the write down of intangible assets and inventory. (D) Includes primarily interest, net; corporate expenses; net gains and losses on sales of investments; certain legal costs; and foreign exchange. Note 7 - Stock-Based Compensation Effective with the quarter ended March 31, 2003, the Company adopted the additional disclosure provisions of Statement of Financial Accounting Standards ("SFAS") No. 148, "Accounting for Stock-Based Compensation - Transition and Disclosure," which amended SFAS No. 123, "Accounting for Stock-Based Compensation." SFAS No. 148 requires more prominent and frequent disclosure of the effects of an entity's accounting policy with respect to stock-based compensation. As permitted by SFAS No. 123, as amended, the Company will continue to account for stock-based employee compensation using the intrinsic value method prescribed by Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees," and related interpretations. Under the intrinsic value method, compensation cost of stock options is measured as the excess, if any, of the quoted market price of the Company's stock at the date of the grant over the exercise price. Accordingly, no stock-based compensation cost has been reflected in the Company's net income for the three and nine months ended June 30, 2003 and 2002, as all options granted under the Company's stock option plans had an exercise price equal to the market value of the underlying common stock on the date of grant. The following table illustrates the effect on net income and earnings per share if the Company were to have applied the fair value recognition provisions of SFAS No. 123, as amended, to account for stock-based compensation for the periods indicated. These pro forma amounts may not be representative of the effects on net income in future years since options generally vest over several years and additional awards may be made each year. 9

Three Months Ended June 30, Nine Months Ended June 30, --------------------------- -------------------------- 2003 2002 2003 2002 ------------- ---------- ----------- ------------ Net income, as reported $130,018 $119,725 $385,696 $348,586 Less stock-based compensation expense, net of tax (8,863) (8,290) (26,501) (26,282) -------- -------- -------- -------- Pro forma net income $121,155 $111,435 $359,195 $322,304 ======== ======== ======== ======== Reported earnings per share: Basic $ .51 $ .46 $ 1.51 $ 1.34 Diluted $ .49 $ .44 $ 1.46 $ 1.29 ======== ======== ======== ======== Pro forma earnings per share: Basic $ .47 $ .43 $ 1.40 $ 1.24 Diluted $ .46 $ .41 $ 1.37 $ 1.19 ======== ======== ======== ========

The Company estimated the fair value of stock options using the Black-Scholes option-pricing model, modified for dividends and using certain assumptions for stock price volatility, risk free interest rates, dividend yields and expected terms until exercise. The value determined by the Black-Scholes option-pricing model is based on assumptions at the time of grant and subsequent modifications to such assumptions are not reflected in the value of prior grants. The Black-Scholes model is a trading option-pricing model that does not reflect the non-traded nature of employee stock options nor the limited transferability of options. This model also does not consider restrictions on trading for all employees, including restrictions imposed on senior management of the Company, who are only permitted to trade in the Company's securities during a stated 30-day period each quarter. Therefore, if the Company had used an option-pricing model other than Black-Scholes, pro forma results different from those shown above may have been reported. Note 8 - Special Charges The Company recorded special charges of $21,508, $57,514 and $90,945 in fiscal years 2002, 2000 and 1998, respectively, as discussed in the Company's 2002 Annual Report on Form 10-K. Fiscal Year 2002 In fiscal year 2002, the Company recorded special charges of $9,937 and $15,760 during the second and third quarters, respectively, related to a manufacturing restructuring program in the Medical segment that was aimed at optimizing manufacturing efficiencies and improving the Company's competitiveness in the different markets in which it operates. Partly offsetting special charges in the third quarter of 2002 were $4,189 of reversals of fiscal 2000 special charges. The Medical manufacturing restructuring program involves the termination of 533 employees in China, France, Germany, Ireland, Mexico and the United States. As of June 30, 2003, 490 of the targeted employees had been severed. The Company expects the remaining 10 terminations to be completed and the related accrued severance to be substantially paid by the end of fiscal 2003. A summary of the 2002 special charge accrual activity during the first nine months of fiscal 2003 follows:

Severance Restructuring --------- ------------- Accrual Balance at September 30, 2002 $ 13,400 $ 600 Payments (10,200) (400) -------- ----- Accrual Balance at June 30, 2003 $ 3,200 $ 200 ======== =====

Fiscal Year 2000 The Company developed a worldwide organizational restructuring plan to align its existing infrastructure with its projected growth programs. This plan included the elimination of open positions and employee terminations from all businesses, functional areas and regions for the sole purpose of cost reduction. Of the 600 employees originally targeted for termination under this plan, 15 remained to be severed as of June 30, 2003. The remaining terminations and related accrued severance are expected to be substantially completed and paid by March 2004, which is approximately six months later than previously reported due to delays in the transition of the Company's operations at one facility to a new location. A summary of the 2000 special charge accrual activity during the first nine months of fiscal 2003 follows:

Severance Other --------- ------- Accrual Balance at September 30, 2002 $ 700 $ 2,400 Payments (100) (2,400) ----- ------- Accrual Balance at June 30, 2003 $ 600 $ -- ===== =======

Fiscal Year 1998 In an effort to improve manufacturing efficiencies at certain of its locations, the Company initiated a restructuring plan in 1998, which included the closing of a surgical blade plant in Hancock, New York. The move of a production line from Hancock to another location was delayed, as more fully described in the Company's 2002 Annual Report on Form 10-K. Production at the Hancock facility ceased in September 2002. Of the 200 planned terminations, 50 employees were terminated in September 1999 and 122 employees were terminated in September 2002. The remaining terminations were substantially completed as of June 30, 2003 and the remaining accruals are expected to be paid over the next three months. 11 A summary of the 1998 special charge accrual activity during the first nine months of fiscal 2003 follows:

Severance Restructuring Other --------- ------------- ------ Accrual Balance at September 30, 2002 $ 5,800 $400 $1,000 Payments (5,600) -- (300) ------- ---- ------ Accrual Balance at June 30, 2003 $ 200 $400 700 ======= ==== ======

Note 9 - Goodwill and Other Intangible Assets The components of intangible assets are as follows:

June 30, 2003 September 30, 2002 ----------------------- ----------------------- Gross Gross Carrying Accumulated Carrying Accumulated Amount Amortization Amount Amortization -------- ------------ -------- ------------ Amortized intangible assets: Core and Developed Technology $347,465 $103,516 $370,044 $ 86,878 Patents, Trademarks, & Other 309,641 209,939 308,202 199,065 -------- -------- -------- -------- Total $657,106 $313,455 $678,246 $285,943 ======== ======== ======== ======== Unamortized intangible assets: Goodwill $533,514 $492,327 Trademarks 15,137 17,621 -------- -------- Total $548,651 $509,948 ======== ========

The estimated intangible amortization expense for the fiscal years ending September 30, 2003 to 2008 are as follows: 2003 - $38,500; 2004 - $34,700; 2005 - - $33,100; 2006 - $30,300; 2007 - $30,000; 2008 - $29,200. During the third quarter of fiscal 2003, the Company decided to discontinue the development of certain products and product applications associated with the BD IMAGN'TM' instrument platform in the Biosciences segment. As a result, the Company recorded an impairment loss of $26,717 in cost of products sold. This loss included the write-down of $25,230 of core and developed technology, $960 of indefinite-lived trademarks, and $527 of licenses. The impairment loss was calculated using estimated discounted future cash flows. 12 Note 10 - Adoption of New Accounting Standards In January 2003, the Financial Accounting Standards Board ("FASB") issued Interpretation No. 46, "Consolidation of Variable Interest Entities" ("FIN 46"). FIN 46 significantly changes whether entities included in its scope are consolidated by their sponsors, transferors, or investors. The Interpretation introduces a new consolidation model, "the variable interests model," which determines control based on potential variability in gains and losses of the entity being evaluated for consolidation. Under FIN 46, variable interest entities are to be evaluated for consolidation based on their variable interests. Variable interests are contractual, ownership, or other interest in an entity that expose their holders to the risks and rewards of the variable interest entity. Variable interests include equity investments, leases, derivatives, guarantees, and other instruments whose values change with changes in the variable interest entity's assets. The provisions of the Interpretation are effective for the Company as of July 1, 2003 for variable interest entities acquired before February 1, 2003 and immediately for any variable interest entities acquired after January 31, 2003. The Company is in the process of evaluating the applicability and impact of FIN 46 to certain interests entered into prior to February 1, 2003 on the Company's consolidated financial statements. On April 30, 2003, the FASB issued SFAS No. 149, "Amendment of Statement No. 133 on Derivative Instruments and Hedging Activities." This Statement amends and clarifies the financial accounting and reporting for derivative instruments, including certain derivative instruments embedded in other contracts, and for hedging activities under SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities." Statement No. 149 includes decisions made as part of the Derivatives Implementation Group process that effectively required amendments to Statement No. 133. Statement No. 149 is effective for contracts entered into or modified after June 30, 2003 and for hedging relationships designated after June 30, 2003. The provisions of Statement No. 149 that relate to SFAS No. 133 Implementation Issues and that have been effective for fiscal quarters that began prior to June 15, 2003 will continue to be applied in accordance with their respective effective dates. The Company expects that this Statement will have no impact on its consolidated financial position or result of operations in 2003. In May 2003, the FASB issued Emerging Issues Task Force Issue No. 00-21, "Accounting for Revenue Arrangements with Multiple Deliverables, " ("EITF 00-21"). EITF 00-21 provides criteria for determining whether an arrangement with multiple deliverables consists of more than one unit of accounting. If an arrangement is deemed to have multiple units of accounting, then a portion of the revenue for the sales arrangement can be recognized upon delivery of one of the separate units of accounting, even though there are items that remain undelivered under the terms of the sales arrangement. While the guidance included in EITF 00-21 has no impact on sales transactions as they are currently structured, it may have an impact on future transactions. 13 Note 11 - Debt Issuance On April 9, 2003, the Company issued $200,000 of 4.55% Notes due on April 15, 2013 and $200,000 of 4.9% Notes due on April 15, 2018. The effective yields of these note issues were 4.71% and 5.03%, respectively, including the results of hedging activity and other financing costs. In the beginning of April 2003, the Company entered into an interest rate swap agreement, with an effective date of April 9, 2003, on $200,000 of 4.9% Notes due April 15, 2018. Under this agreement, the Company will pay interest at a variable rate in exchange for fixed rate payments, effectively transforming these Notes to floating rate obligations. This swap is designated as a fair value hedge with no ineffectiveness, as defined by SFAS No. 133. Changes in the fair value of the interest rate swap offset changes in the fair value of the fixed rate debt due to changes in market interest rates. 14 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Results of Operations Third quarter revenues for Becton Dickinson and Company ("BD") were $1.165 billion, an increase of 17% from the same period a year ago. After excluding the favorable impact of foreign currency translation, revenues for the quarter increased approximately 11%. For the nine months, reported revenues of $3.351 billion represented a 13% increase from a year ago, or approximately nine percent at constant foreign exchange rates. International revenue growth of 24% and 18% for the three and nine months, respectively, was favorably affected by foreign currency translation, primarily the Euro. After excluding the favorable impact of foreign currency translation, international revenues grew approximately 11% and eight percent for the three and nine months, respectively. International revenues benefited from good performance in Europe, Canada, Japan, and Asia Pacific, offset in part by the effects of unfavorable performance and economic conditions in Latin America. BD Medical Systems ("Medical") revenues of $648 million increased 19% for the quarter, or 13% at constant foreign exchange rates. Revenues for the medical surgical unit grew 14% to $370 million, and the pharmaceutical systems unit reported worldwide revenues of $127 million, an increase of 40%. Included in Medical revenues were U.S. safety-engineered product sales of $101 million compared to $88 million in the prior year's quarter. Medical revenue growth was partly offset by reduced sales of conventional devices in the U.S. due to the transition to safety-engineered devices. Revenue growth in the consumer health care area, which also reported double-digit revenue growth, benefited from a favorable comparison to the prior year's quarter. Reported sales of branded insulin syringes, which are recognized upon sell-through to the end customer, were negatively impacted by $8 million in the third quarter of 2002 due to incorrect reporting of U.S. inventory levels by a distributor. BD Clinical Laboratory Solutions ("Clinical Lab") revenues of $338 million increased 13% for the quarter, or eight percent after excluding the favorable impact of foreign currency translation. Revenues in the preanalytical solutions unit grew 11% to $180 million. This growth was attributable in part to U.S. safety-engineered device sales, which were $66 million compared with $57 million in the prior year's quarter. Clinical Lab revenue growth attributable to the transition to safety-engineered devices was partly offset by reduced sales of conventional devices. Revenues from the diagnostic systems unit grew 17% to $158 million, reflecting strong worldwide sales of its molecular diagnostic platform, BD ProbeTec'TM'ET, which reported sales of $19 million compared with $10 million in the prior year's quarter. Diagnostic systems revenue growth also benefited from a favorable comparison to the prior year's quarter, as second quarter inventory stocking by U.S. distributors in advance of the installation of a new enterprise resource planning system had adversely impacted revenues in the third quarter of fiscal 2002. BD Biosciences ("Biosciences") revenues of $179 million grew 14% for the quarter, or seven percent after excluding the favorable impact of foreign currency translation. Revenue growth was driven by strong sales of the new BD FACSAria'TM' cell sorter, which we began shipping at the end of March, and by sales of immunology/cell biology reagents. Worldwide molecular 15 biology reagent revenues (Clontech) decreased 13% to $16 million. This decline was due to continued weaker demand for certain molecular biology reagents, largely caused by a slowdown in research spending and a shift in industry focus from gene discovery, an area where many of our products are used, to understanding gene function. Refer to Note 6 in Notes to Condensed Consolidated Financial Statements for additional segment data. Excluding the impact of the non-cash charges in the current year and special charges in the prior year as more fully described below, changes in segment operating income were primarily driven by fluctuations in revenue, as discussed above. Operating income for all segments was also favorably impacted by increased sales of products with higher overall gross profit margins compared to products sold in the same period in the prior year. Partially offsetting the growth in Medical segment operating income was higher incremental spending for the launch of the blood glucose monitoring product line. During the third quarter, we recorded non-cash charges of $34 million in cost of products sold. The majority of these charges related to the third quarter decision to discontinue the development of certain products and product applications associated with the BD IMAGN'TM' instrument platform in the Biosciences segment. As a result, we recorded an impairment charge of $27 million for the related intangible assets and inventory. In addition, as the result of a review of under-performing portions of its molecular biology product line, the Biosciences segment also wrote down the value of related inventory and intellectual property by $7 million. See Note 9 in Notes to Condensed Consolidated Financial Statements ("Note 9") for further discussion of the write down of the intangible assets. Gross profit margin was 46.6% for the quarter and 47.8% for the nine months, compared with 48.5% and 48.0%, respectively, for the prior year. The increase in gross profit margin excluding the aforementioned non-cash charges of $34 million primarily reflects increased sales of safety-engineered products, which have higher overall gross profit margins, compared to the prior year. Gross profit margin also benefited from a favorable comparison to the prior year, which included the impact of $3 million of other manufacturing costs, primarily accelerated depreciation, related to the restructuring program in the Medical segment, as more fully described in Note 8 of the Notes to Condensed Consolidated Financial Statements ("Note 8"), as well as unfavorable variances associated with an inventory reduction program in the Medical segment. The impact of this favorable comparison was offset in part by increased costs associated with the launch of our new blood glucose monitoring products and increased pension costs. Selling and administrative expense increased to 26.5% of revenues for the quarter and 26.6% of revenues for the nine months, compared with the prior year's ratio of 25.4% for both the quarter and nine months. This increase was primarily the result of incremental spending on key initiatives, including our enterprise-wide program to upgrade our business information systems and processes and the launch of our blood glucose monitoring products. Investment in research and development was 5.2% of revenues for the quarter and 5.4% of revenues for the nine months, compared with 5.3% and 5.6% of revenues, respectively, for the prior year. Operating margin was 15.0% for the quarter and 15.8% for the nine months, compared with 16.6% and 16.4%, respectively, in the prior year. Operating income of $174 million for the 16 current quarter included $34 million of non-cash charges, as discussed earlier. Operating income of $166 million for the prior year's quarter included $12 million of special charges, as discussed in Note 8. Net interest expense for the quarter increased $1 million, due to higher long-term debt levels. Other expense, net of $2 million for the quarter and $4 million for the nine months consist primarily of asset write-downs, which were partly offset by foreign exchange gains. The income tax rate was 20% for the quarter, which includes the effect of the aforementioned non-cash charges. The prior year's reported tax rate was 25% for the quarter, or 24% excluding the impact of special charges. We expect the reported tax rate for the fiscal year to be approximately 23%, which includes the impact from the aforementioned non-cash charges. Net income and diluted earnings per share for the current quarter were $130 million and 49 cents, respectively, compared with $120 million and 44 cents in the prior year. Non-cash charges in the current quarter, as discussed earlier, reduced net income by $20 million and diluted earnings per share by 8 cents. Excluding the 4-cent impact of special charges discussed in Note 8, diluted earnings per share for the prior year's quarter would have been 48 cents. Reported net income and diluted earnings per share for the current nine months were $386 million and $1.46, respectively. Prior Year Special Charges In fiscal 2002, we recorded special charges of $10 million and $16 million during the second and third quarters, respectively, relating to a manufacturing restructuring program in the Medical segment, as discussed in Note 8 and in the 2002 Annual Report on Form 10-K. Offsetting special charges in the third quarter of 2002 were $4 million of reversals of fiscal 2000 special charges. In the second half of fiscal 2002, we also recorded $7 million of other manufacturing costs, primarily accelerated depreciation, related to this restructuring program that were included in cost of products sold. For fiscal 2003, we expect any cost savings from this program to be fully offset by the remaining manufacturing restructuring costs. Beginning in fiscal 2004, we expect to achieve savings of approximately $15 million related to this restructuring program. We recorded special charges of $58 million and $91 million in fiscal years 2000 and 1998, respectively, as described in Note 8. For the 2000 restructuring plan, the annual savings from the reduction in salaries and wages expense were estimated to be $30 million. As anticipated, these savings offset incremental costs during fiscal 2002 and 2001 relating to certain BD initiatives, such as advanced protection technologies and molecular oncology, and continue to offset costs associated with our enterprise-wide program to upgrade our business information systems, known internally as Genesis. The estimated annual benefits of $3 million from the 1998 restructuring plan consisting of reduced manufacturing costs and tax savings associated with the move of a surgical blade plant are expected to be realized in 2004. See Note 8 for further discussion. 17 Liquidity and Capital Resources During the first nine months of fiscal 2003, cash provided by operating activities was $509 million compared to $532 million during the first nine months of last year. Cash provided by operations was reduced by $100 million in the first nine months of both fiscal 2003 and 2002, reflecting the impact of cash contributions to the U.S. pension plan. The decrease in cash provided by changes in working capital reflects higher inventory levels in 2003, primarily due to the build-up of blood glucose monitoring products in anticipation of future sales. Capital expenditures during the first nine months were $168 million, compared with last year's amount of $163 million. We expect capital spending for fiscal 2003 to be about $275 million. Cash used for financing activities in the first nine months of the year included the repurchase of 5.9 million shares of our common stock for $206 million. As of June 30, 2003, authorization to repurchase an additional 7.4 million common shares remained under a January 2003 resolution of the Board of Directors. As of June 30, 2003, total debt of $1.4 billion represented 31.6% of total capital (shareholders' equity, net non-current deferred income tax liabilities, and debt), down from 32.5% at September 30, 2002. In the beginning of April 2003, we issued $200 million of 4.55% Notes due on April 15, 2013 and $200 million of 4.9% Notes due on April 15, 2018. The effective yields of these Notes were 4.71% and 5.03%, respectively, including the results of hedging activity and other financing costs. In the beginning of April 2003, we entered into an interest rate swap agreement, with an effective date of April 9, 2003, on $200 million of 4.9% Notes due April 15, 2018. Under this agreement, we will pay interest at a variable rate in exchange for fixed rate payments, effectively transforming these Notes to floating rate obligations. This swap is designated as a fair value hedge with no ineffectiveness, as defined by SFAS No. 133. Changes in the fair value of the interest rate swap offset changes in the fair value of the fixed rate debt due to changes in market interest rates. We use commercial paper to meet our short-term financing needs, including working capital requirements. As discussed in our 2002 Annual Report on Form 10-K, we currently have in place two syndicated credit facilities totaling $900 million, consisting of a $450 million line of credit expiring in August 2003 and a $450 million line of credit expiring in August 2006. These facilities are available to provide backup support for our commercial paper program and for other general corporate purposes. Each contains a single financial covenant relating to our interest coverage ratio. We will be renewing and extending the $450 million line due to expire in August 2003 for an additional 364-day period. Given the availability of these facilities and our strong credit ratings, we continue to have a high degree of confidence in our ability to refinance maturing short-term and long-term debt, as well as to incur substantial additional debt, if required. At the beginning of April 2003, we entered into an interest rate swap on which we will pay a fixed rate of 5.8% and receive a floating interest rate for the 13-year period beginning April 2005, on a notional amount of $200 million. This transaction is designated as a cash flow hedge of expected interest obligations on the renewal of $200 million of commercial paper obligations over the term of the swap. Changes in the fair value of the swap are recorded in Other comprehensive income. 18 Use of Non-GAAP Financial Measures When discussing the Company's financial performance, the Company at times will present certain non-GAAP (generally accepted accounting principles) financial measures, as follows: o The Company presents its revenue growth rates at constant foreign exchange rates. Management believes that presenting growth rates at constant foreign exchange rates allows investors to view the actual operating results of the Company and of its segments without the impact of fluctuations in foreign currency exchange rates, thereby facilitating comparisons to prior periods. o The Company presents its earnings per share and other financial measures after excluding the impact of significant charges, and the impact of unusual or non-recurring items. Management believes that excluding such impact from earnings per share and other financial measures allows investors to more easily compare the Company's financial performance to prior periods and to understand the operating results of the Company without the effects of these significant charges and unusual or non-recurring items. The Company's management considers these non-GAAP financial measures internally in evaluating the Company's performance. Investors should consider these non-GAAP measures in addition to, not as a substitute for or as superior to, measures of financial performance prepared in accordance with GAAP. This Report on Form 10-Q contains certain non-GAAP financial measures. A reconciliation of these measures to the comparable GAAP measures is included in Exhibit 99 of this Report on Form 10-Q. Cautionary Statement Pursuant to Private Securities Litigation Reform Act of 1995 -- "Safe Harbor" for Forward-Looking Statements The Private Securities Litigation Reform Act of 1995 (the "Act") provides a safe harbor for forward-looking statements made by or on behalf of Becton, Dickinson and Company ("BD"). BD and its representatives may from time to time make certain forward-looking statements in publicly-released materials, both written and oral, including statements contained in this report and filings with the Securities and Exchange Commission and in our other reports to shareholders. Forward-looking statements may be identified by the use of words like "plan," "expect," "believe," "intend," "will," "anticipate," "estimate" and other words of similar meaning in conjunction with, among other things, discussions of future operations and financial performance, as well as our strategy for growth, product development, regulatory approvals, market position and expenditures. All statements which address operating performance or events or developments that we expect or anticipate will occur in the future -- including statements relating to volume growth, sales and earnings per share growth and statements expressing views about future operating results -- are forward-looking statements within the meaning of the Act. Forward-looking statements are based on current expectations of future events. The forward-looking statements are and will be based on management's then current views and assumptions regarding future events and operating performance, and speak only as of their dates. Investors 19 should realize that if underlying assumptions prove inaccurate or unknown risks or uncertainties materialize, actual results could vary materially from our expectations and projections. Investors are therefore cautioned not to place undue reliance on any forward-looking statements. Furthermore, we undertake no obligation to update or revise any forward-looking statements whether as a result of new information, future events and developments or otherwise. The following are some important factors that could cause our actual results to differ from our expectations in any forward-looking statements: o Regional, national and foreign economic factors, including inflation and fluctuations in interest rates and foreign currency exchange rates and the potential effect of such fluctuations on revenues, expenses and resulting margins. o Competitive product and pricing pressures and our ability to gain or maintain market share in the global market as a result of actions by competitors, including technological advances achieved and patents attained by competitors as patents on our products expire. While we believe our opportunities for sustained, profitable growth are considerable, actions of competitors could impact our earnings, share of sales and volume growth. o Changes in domestic and foreign healthcare resulting in pricing pressures, including the continued consolidation among healthcare providers, trends toward managed care and healthcare cost containment and government laws and regulations relating to sales and promotion, reimbursement and pricing generally. o The effects, if any, of governmental and media activities relating to U.S. Congressional hearings regarding the business practices of group purchasing organizations, which negotiate product prices on behalf of their member hospitals with BD and other suppliers. o Fluctuations in the cost and availability of raw materials and the ability to maintain favorable supplier arrangements and relationships. o Our ability to obtain the anticipated benefits of any restructuring programs that we may undertake. o Adoption of or changes in government laws and regulations affecting domestic and foreign operations, including those relating to trade, monetary and fiscal policies, taxation, public health, environmental matters, sales practices, price controls, licensing and regulatory approval of new products, or changes in enforcement practices with respect to any such laws and regulations. o The effects, if any, of the Severe Acute Respiratory Syndrome ("SARS") epidemic. o Difficulties inherent in product development, including the potential inability to successfully continue technological innovation, complete clinical trials, obtain regulatory approvals in the United States and abroad, or gain and maintain market approval of products, and the possibility of encountering infringement claims by competitors with respect to patent or other intellectual property rights, all of which can preclude or delay commercialization of a 20 product. o Significant litigation adverse to BD, including product liability claims, patent infringement claims, and antitrust claims, as well as other risks and uncertainties detailed from time to time in our Securities and Exchange Commission filings. o The effects, if any, of adverse media exposure or other publicity regarding BD's business, operations or allegations made or related to litigation pending against BD. o Our ability to achieve earnings forecasts, which are generated based on projected volumes and sales of many product types, some of which are more profitable than others. There can be no assurance that we will achieve the projected level or mix of product sales. o The effect of market fluctuations on the value of assets in BD's pension plans and the possibility that BD may need to make additional contributions to the plans as a result of any decline in the value of such assets. o Our ability to effect infrastructure enhancements and incorporate new systems technologies into our operations. o Product efficacy or safety concerns resulting in product recalls, regulatory action on the part of the Food and Drug Administration (or foreign counterparts) or declining sales. o Economic and political conditions in international markets, including civil unrest, governmental changes and restrictions on the ability to transfer capital across borders. o Our ability to penetrate developing and emerging markets, which also depends on economic and political conditions, and our ability to successfully acquire or form strategic business alliances with local companies and make necessary infrastructure enhancements to production facilities, distribution networks, sales equipment and technology. o The impact of business combinations, including acquisitions and divestitures, both internally for BD and externally, in the healthcare industry. o Issuance of new or revised accounting standards by the American Institute of Certified Public Accountants, the Financial Accounting Standards Board or the Securities and Exchange Commission. The foregoing list sets forth many, but not all, of the factors that could impact our ability to achieve results described in any forward-looking statements. Investors should understand that it is not possible to predict or identify all such factors and should not consider this list to be a complete statement of all potential risks and uncertainties. 21 Item 3. Quantitative and Qualitative Disclosures About Market Risk There have been no material changes in information reported since the fiscal year ended September 30, 2002. Item 4. Controls and Procedures An evaluation was carried out by BD's management, with the participation of our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of BD's disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934) as of June 30, 2003. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the design and operation of these disclosure controls and procedures were, as of the end of the period covered by this report, effective and designed to ensure that material information relating to BD and its consolidated subsidiaries would be made known to them by others within these entities. There were no changes in our internal control over financial reporting during the quarter ended June 30, 2003 identified in connection with the above-referenced evaluation that has materially affected, or is reasonably likely to materially affect our internal control over financial reporting. 22 PART II - OTHER INFORMATION Item 1. Legal Proceedings. We are involved, both as a plaintiff and a defendant, in various legal proceedings which arise in the ordinary course of business, including product liability and environmental matters. A more complete description of legal proceedings has been set forth in our 2002 Annual Report on Form 10-K (the "10-K"). For the quarter ended June 30, 2003, the following changes have occurred. Litigation - Other than Environmental Latex Cases We have received a total of 523 claims to date, relating to alleged reactions caused by exposure to latex resulting from the use, over time, of latex gloves. The facts and circumstances of new claims filed since the 10-K are similar to those previously filed and we are of the same opinion as stated in the 10-K. Since the inception of this litigation, 306 of these cases have been closed with no liability to BD (247 of which have been closed with prejudice) and 24 cases have been settled for an aggregate de minimis amount. We are vigorously defending the remaining lawsuits. RTI Litigation In the action entitled Retractable Technologies, Inc. vs. Becton Dickinson and Company, et al. (Civil Action No. 501 CV 036, United States District Court, Eastern District of Texas), the trial date has been set for February 3, 2004. We continue to vigorously defend this matter. Class Action Cases In New York, in the action entitled Benner vs. Becton Dickinson et al. (Case No. 99Civ4798(WHP)), the Court, on July 29, 2003, entered into the record a stipulation dismissing the case without prejudice. Summary We currently are engaged in discovery or are otherwise in the early stages with respect to certain of the litigation to which we are a party, and therefore, it is difficult to predict the outcome of such litigation. In addition, given the uncertain nature of litigation generally and of the current litigation environment, it is difficult to predict the outcome of any litigation regardless of its stage. A number of the cases pending against BD present complex factual and legal issues and are subject to a number of variables, including, but not limited to, the facts and circumstances of each particular case, the jurisdiction in which each suit is brought, and differences in applicable law. As a result, we are not able to estimate the amount or range of loss that could result from an unfavorable outcome of each and every matter. In accordance with generally accepted accounting principles, we establish reserves to the extent probable future losses are estimable. While we believe that the claims against BD are without merit and, upon resolution, should not have a material adverse effect on BD, in view of the uncertainties discussed above, we could incur charges in excess 23 of currently established reserves and, to the extent available, excess liability insurance. Accordingly, in the opinion of management, any such future charges, individually or in the aggregate, could have a material adverse effect on BD's consolidated results of operations and consolidated net cash flows in the period or periods in which they are recorded or paid. We continue to believe that we have a number of valid defenses to each of the suits pending against BD and are engaged in a vigorous defense of each of these matters. Environmental Matters We are also a party to a number of Federal proceedings in the United States brought under the Comprehensive Environment Response, Compensation and Liability Act, also known as "Superfund," and similar state laws. For all sites, there are other potentially responsible parties that may be jointly or severally liable to pay all cleanup costs. We accrue costs for estimated environmental liabilities based upon our best estimate within the range of probable losses, without considering possible third-party recoveries. While we believe that, upon resolution, the environmental claims against BD should not have a material adverse effect on BD, we could incur charges in excess of presently established reserves and, to the extent available, excess liability insurance. Accordingly, in the opinion of management, any such future charges, individually or in the aggregate, could have a material adverse effect on BD's consolidated results of operations and consolidated net cash flows in the period or periods in which they are recorded or paid. Item 2. Changes in Securities and Use of Proceeds. Not applicable. Item 3. Defaults Upon Senior Securities. Not applicable. Item 4. Submission of Matters to a Vote of Security Holders. Not applicable. Item 5. Other Information. Not applicable. 24 Item 6. Exhibits and Reports on Form 8-K. a) Exhibits Exhibit 31 Certification of Chief Executive Officer and Chief Financial Officer, pursuant to SEC Rule 13(a) - 14(a). Exhibit 32 Certification of Chief Executive Officer and Chief Financial Officer, pursuant to Section 1350 of Chapter 63 of Title 18 of the U.S. Code. Exhibit 99 Supplemental Revenue Information. b) Reports on Form 8-K During the three-month period ended June 30, 2003, we filed seven Current Reports on Form 8-K: (i) Under Item 5 - Other Events and Regulation FD Disclosure, in a report dated April 22, 2003, we announced the election of Edward F. DeGraan to our Board of Directors. (ii) Under Item 9 - Regulation FD Disclosure, in a report dated April 25, 2003, we furnished information regarding our financial results for the second quarter ended March 31, 2003. (iii) Under Item 9 - Regulation FD Disclosure, in a report dated April 30, 2003 (as amended on May 1, 2003), we furnished information regarding a stock option exercise and charitable contribution by Edward J. Ludwig, Chairman, President and Chief Executive Officer. (iv) Under Item 9 - Regulation FD Disclosure, in a report dated May 2, 2003, we furnished information regarding stock option exercises by three executive officers. (v) Under Item 5 - Other Events and Regulation FD Disclosure, in a report dated May 20, 2003, we announced the declaration of our quarterly dividend. (vi) Under Item 9 - Regulation FD Disclosure, in a report dated June 13, 2003, we furnished information regarding a stock option exercise by an executive officer. (vii) Under Item 5 - Other Events and Regulation FD Disclosure, in a report dated June 16, 2003, we announced developments in a class action lawsuit in Ohio. 25 We also filed a Current Report on Form 8-K dated July 23, 2003 in which we furnished information regarding a voluntary product recall in Canada. 26 SIGNATURES Pursuant to the requirements 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 (Registrant) Date August 13, 2003 /s/ John R. Considine ---------------------------------------------------- John R. Considine Executive Vice President and Chief Financial Officer (Principal Financial Officer) /s/ William A. Tozzi ---------------------------------------------------- William A. Tozzi Vice President and Controller (Chief Accounting Officer) 27 EXHIBIT INDEX

Exhibit Number Description - -------------- ----------- 31 Certifications of Chief Executive Officer and Chief Financial Officer, pursuant to SEC Rule 13(a)-14(a). 32 Certifications of Chief Executive Officer and Chief Financial Officer, pursuant to Section 1350 of Chapter 63 of Title 18 of the U.S. Code. 99 Supplemental Revenue Information.

28 STATEMENT OF DIFFERENCES The trademark symbol shall be expressed as.................................'TM'