10-K: Annual report pursuant to Section 13 and 15(d)

Published on December 16, 1997




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SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549
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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, 1997 COMMISSION FILE NUMBER 1-4802

BECTON, DICKINSON AND COMPANY
(Exact name of registrant as specified in its charter)


NEW JERSEY 22-0760120
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)

1 BECTON DRIVE
FRANKLIN LAKES, NEW JERSEY 07417-1880
(Address of principal executive (Zip Code)
offices)

(201) 847-6800
(Registrant's telephone number, including area code)

SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:

NAME OF EACH EXCHANGE
TITLE OF EACH CLASS ON WHICH REGISTERED
------------------- ---------------------
Common Stock, Par Value $1.00 New York Stock Exchange
Preferred Stock Purchase Rights New York Stock Exchange

SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:

NONE

Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.

Yes X No
--- ---

Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [_]

As of November 30, 1997, 121,188,014 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 $6,248,454,002.

DOCUMENTS INCORPORATED BY REFERENCE
(1) Portions of the registrant's Annual Report to Shareholders for the fiscal
year ended September 30, 1997 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 10, 1998 are incorporated by reference into
Part III hereof.

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FORWARD LOOKING STATEMENTS

This Annual Report on Form 10-K, including information incorporated herein
by reference, contains certain forward looking statements (as defined under
federal securities laws) regarding future revenues, products and income which
are based upon current expectations of the Company and involve a number of
business risks and uncertainties. Actual results could vary materially from
anticipated results described in any forward looking statement. Factors that
could cause actual results to vary materially include, but are not limited to,
competitive factors, changes in regional, national or foreign economic
conditions, changes in interest or foreign currency exchange rates, delays in
product introductions, and changes in health care or other governmental
regulation, as well as other factors discussed herein and in the Company's
filings with the Securities and Exchange Commission.

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, 1997 (the "1997 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,
infusion therapy products and elastic support products and thermometers. This
segment also includes disposable scrubs, specialty needles and specialty and
surgical blades.

DIAGNOSTIC SYSTEMS SEGMENT

The major products in this segment are clinical and industrial 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 BUSINESS

The Company's syringe pump business was sold in October 1996. The operating
results of this business until its date of sale are reflected in the
Consolidated Financial Statements incorporated herein by reference as part of
Exhibit 13.

ACQUISITION OF BUSINESSES

In May 1997, the Company acquired PharMingen, a manufacturer of products for
biomedical research. Also, in May 1997, the Company acquired Difco
Laboratories Incorporated, a manufacturer of microbiology media and supplies.
The operating results of these businesses from their respective

1

dates of acquisition are reflected in the Consolidated Financial Statements
incorporated herein by reference as part of 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.

Foreign economic conditions and exchange rate fluctuations have caused the
profitability from foreign revenues to fluctuate more than profitability from
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 10% of total Company revenues in fiscal
1997, 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, medical centers and other entities.
The Company also retains individual consultants to support its efforts in
specialized fields. The Company spent $180,626,000 on research and development
during the fiscal year ended September 30, 1997 and $154,220,000 and
$144,201,000, respectively, during the two immediately preceding fiscal years.
Included in fiscal year 1997 is an aggregate $14,750,000 related to in-process
research and development acquired in connection with the Difco and PharMingen
acquisitions, that was expensed at the date of acquisition.

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.

INTELLECTUAL PROPERTY AND LICENSES

The Company owns significant intellectual property, including patents, patent
applications, trade secrets, know-how and trademarks in the United States and
other countries. The Company is also

2

licensed under domestic and foreign patents, patent applications, trade
secrets, know-how and trademarks owned by others. In the aggregate, these
intellectual property assets and licenses are of material importance to the
Company's business. The Company does not believe, however, that any single
patent, trademark or intellectual property asset or single license 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 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, 1997, the Company had approximately 18,900 employees, of
whom approximately 9,600 were employed in the United States. The Company
believes that its employee relations are satisfactory.

ITEM 2. PROPERTIES.

The executive offices of the Company are located in Franklin Lakes, New
Jersey. The Company owns and leases approximately 10,992,350 square feet of
manufacturing, warehousing, administrative and research facilities throughout
the world. The domestic facilities, including Puerto Rico, comprise
approximately 5,454,830 square feet of owned and 1,602,370 square feet of
leased space. The foreign facilities comprise approximately 2,703,230 square
feet of owned and 1,231,930 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 include facilities in Arizona, California, Colorado,
Connecticut, Georgia, Indiana, Maryland, Massachusetts, Michigan, Missouri,
Nebraska, New Jersey, New York, North Carolina, South Carolina, Texas, Utah,
Wisconsin and Puerto Rico.

The foreign facilities are grouped as follows:

--Canada includes approximately 68,930 square feet of leased space.

--Europe includes facilities in Austria, Belgium, Czech Republic, Denmark,
Dubai, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Kenya,
the Netherlands, Poland, South Africa, Spain, Sweden, Switzerland,
Turkey, the United Arab Emirates, and the United Kingdom and is comprised
of approximately 1,067,110 square feet of owned and 692,870 square feet
of leased space.


3

--Latin America includes facilities in Brazil, Colombia, Mexico, Panama
and Venezuela and is comprised of approximately 1,136,030 square feet of
owned and 266,700 square feet of leased space.

--Asia-Pacific includes facilities in Australia, China, Hong Kong, India,
Indonesia, Japan, Korea, Malaysia, Philippines, Singapore, Taiwan,
Thailand and Vietnam and is comprised of approximately 500,090 square
feet of owned and 203,430 square feet of leased space.

The table below summarizes property information by business segment:



BUSINESS SEGMENT
------------------------------------------------------------------
MEDICAL
SUPPLIES AND DIAGNOSTIC
CATEGORY DEVICES SYSTEMS MIXED(A) CORPORATE TOTAL
-------- ------------ ---------- --------- --------- -----

Owned
Facilities............. 11 28 10 6 55
Square feet............ 2,080,862 3,221,567 2,384,365 471,260 8,158,054
Manufacturing (B)...... 1,195,138(11) 1,450,880(21) 1,074,560(6) 0(0) 3,720,578(38)
Leased
Facilities............. 21 17 77 3 118
Square feet............ 629,431 326,810 1,806,272 71,780 2,834,293
Manufacturing (B)...... 295,316(7) 61,802(4) 10,650(1) 22,300(2) 390,068(14)
Total
Facilities............. 32 45 87 9 173
Square feet............ 2,710,293 3,548,377 4,190,637 543,040 10,992,347
Manufacturing (B)...... 1,490,454(18) 1,512,682(25) 1,085,210(7) 22,300(2) 4,110,646(52)


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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, 1997)

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.



AGE POSITION
NAME --- --------

Clateo Castellini........ 62 Director, Chairman of the Board, President and
Chief Executive Officer since June 1994 and prior
thereto Sector President -- Medical.
John W. Galiardo......... 63 Director, Vice Chairman of the Board and General
Counsel since June 1994 and prior thereto Vice
President and General Counsel.


4



AGE POSITION
NAME --- --------

Robert F. Adrion........ 56 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........... 38 President--Becton Dickinson Europe and Worldwide
Sample Collection since October 1997; President--
Worldwide Sample Collection from October 1996 to
September 1997; 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.... 47 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..... 44 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........ 47 Vice President--Human Resources since April 1996;
Vice President--Human Resources, Pepsico Inc. from
August 1994 to March 1996; and prior thereto, Vice
President--Human Resources, KFC International,
Inc.
William A. Kozy......... 45 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........ 46 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........ 54 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......... 44 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.



5



AGE POSITION
NAME --- --------

Mark C. Throdahl........ 46 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.... 47 President--Worldwide Consumer Health Care since
October 1997; Senior Vice President from July 1995
to September 1997; 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.


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, 1997, there were approximately 8,993 shareholders of record. The
balance of the information required by this item appears under the caption
"Common Stock Prices and Dividends" on the inside back cover of the Company's
1997 Annual Report and is incorporated herein by reference as part of Exhibit
13.

ITEM 6. SELECTED FINANCIAL DATA.

The information required by this item is included under the caption "Six-Year
Summary of Selected Financial Data" on page 29 of the Company's 1997 Annual
Report and is incorporated herein by reference as part of Exhibit 13.

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 21-28 of the Company's 1997 Annual
Report and is incorporated herein by reference as part of Exhibit 13.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

The information required by this item is included in the text contained on
pages 24 through and including the second paragraph on page 25 of the Company's
1997 Annual Report, and in Notes 1 and 9 to the consolidated financial
statements contained in the Company's 1997 Annual Report, and each is
incorporated herein by reference as part of Exhibit 13.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

The information required by this item appears on pages 30-31 and pages 34-50
of the Company's 1997 Annual Report and is incorporated herein by reference as
part of Exhibit 13.

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

6

and Exchange Commission not later than 120 days after September 30, 1997 (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 1997 Annual Report at the pages indicated in parentheses, are
incorporated by reference in Item 8 hereof:

Consolidated Statements of Income--Years ended September 30, 1997, 1996
and 1995 (page 34)

Consolidated Balance Sheets--September 30, 1997 and 1996 (page 35)

Consolidated Statements of Cash Flows--Years ended September 30, 1997,
1996 and 1995 (page 36)

Notes to Consolidated Financial Statements (pages 37-50)

(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)

7

All other schedules for which provision is made in the applicable accounting
regulations 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)(ii)), and all other Exhibits filed or incorporated
by reference as a part of this report.

(b) REPORTS ON FORM 8-K

On July 31, 1997, the registrant filed a report on Form 8-K for purposes of
filing certain agreements and instruments executed in connection with the
public offering by the registrant of its 7% Debentures due August 1, 2027. No
other reports on Form 8-K were filed by the registrant during the three-month
period ended September 30, 1997.

8

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 16, 1997

PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THIS
REPORT HAS BEEN SIGNED BELOW ON THE 16TH DAY OF DECEMBER, 1997 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/ 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

/s/ Margaretha AF Ugglas Director
- -------------------------------------
MARGARETHA AF UGGLAS


9

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, 1997 and 1996, and the consolidated results of its operations and its cash
flows for each of the three years in the period ended September 30, 1997 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 6, 1997

10

BECTON, DICKINSON AND COMPANY

SCHEDULE II--VALUATION AND QUALIFYING ACCOUNTS

YEARS ENDED SEPTEMBER 30, 1997, 1996, AND 1995
(THOUSANDS OF DOLLARS)

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- --------------------------------------------------------------------------------


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
- --------------------------------------------------------------------------------

1997
Against trade receivables:
For doubtful accounts............ $19,608 $ 3,289 $ 2,663(A) $20,234
For cash discounts............... 8,448 30,532 30,481 8,499
------- ------- ------- -------
Total........................ $28,056 $33,821 $33,144 $28,733
======= ======= ======= =======
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
======= ======= ======= =======

- --------
(A) Accounts written off.

11

EXHIBIT INDEX



EXHIBIT
NUMBER DESCRIPTION METHOD OF FILING
------- ----------- ----------------

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 September 23, 1997 Filed with this report
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
Bank (formerly known as Chemical
Bank, the successor by merger to Man-
ufacturers Hanover Trust Company)
4(d) Indenture, dated as of March 1, 1997, Incorporated by reference to Exhibit
between the registrant and The Chase 4(a) to Form 8-K filed by the regis-
Manhattan Bank trant on July 31, 1997 (the regis-
trant hereby agrees to furnish to the
Commission upon request a copy of any
other instruments which define the
rights of holders of long-term debt
of the registrant)
4(e) 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 10(b)(v) to the registrant's Annual
Walter M. Miller Report on Form 10-K for the fiscal
year ended September 30, 1989



12



EXHIBIT
NUMBER DESCRIPTION METHOD OF FILING
------- ----------- ----------------

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) 1997 Management Incentive Plan Filed with this report
10(f)(i) 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(f)(ii) Addendum to 1982 Unqualified Stock Op- Filed with this report
tion Plan
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)(i) 1990 Stock Option Plan, as amended and Incorporated by reference to Exhibit
restated February 8, 1994 10(i) to the registrant's Annual Re-
port on Form 10-K for the fiscal year
ended September 30, 1994
10(h)(ii) Addendum to 1990 Stock Option Plan Filed with this report
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



13



EXHIBIT
NUMBER DESCRIPTION METHOD OF FILING
------- ----------- ----------------

10(j)(ii) Amendment to the 1994 Restricted Stock Incorporated by reference to Exhibit
Plan for Non-Employee Directors as of 10(j)(ii) to the registrant's Annual
November 26, 1996 Report on Form 10-K for the fiscal
year ended September 30, 1996
10(k)(i) 1995 Stock Option Plan, as amended and Filed with this report
restated January 27, 1997
10(k)(ii) Addendum to 1995 Stock Option Plan Filed with this report
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 1997
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


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