Business Context and Reporting Period
Company: Becton, Dickinson and Company (BD)
Filing Type: Form 10-K (Annual Report)
Reporting Period: Fiscal year ended September 30, 1999
Business Overview: BD manufactures and sells supplies, devices, and systems for health care professionals, medical research institutions, and the general public. Operations are organized into three segments: Medical Systems, Biosciences, and Preanalytical Solutions. As of September 30, 1999, the Company employed approximately 24,000 people globally.
Key Financial Metrics
Note: Specific consolidated revenue, net income, cash flow, and debt figures are incorporated by reference to the 1999 Annual Report (Exhibit 13) and are not explicitly stated in the provided text.
- Research and Development (R&D): $254,016,000 for fiscal 1999 (compared to $217,900,000 in 1998 and $180,626,000 in 1997).
- R&D Write-offs: Included $48,800,000 in write-offs of acquired in-process R&D in 1999.
- Valuation Accounts: Total allowance for doubtful accounts and cash discounts against trade receivables was $49,036,000 at period end.
- Stockholders: Approximately 11,500 shareholders of record as of November 30, 1999.
- Market Value: Aggregate market value of common stock held by nonaffiliates was approximately $6.85 billion as of November 30, 1999.
Material Changes and Acquisitions
BD acquired ten businesses during fiscal 1999, integrating their operating results from the respective acquisition dates. Notable acquisitions include:
- Clontech Laboratories, Inc. (August 1999): Developer of reagents for gene-based drug discovery and molecular biology research.
- Critical Device Corporation (June 1999): Manufacturer of needleless intravenous access products.
- SAF-T-MED, Inc. (July 1999): Developer of safety-needle technology.
- Biometric Imaging, Inc. (February 1999): Manufacturer of cellular analysis systems.
- Luther Medical Products, Inc. (January 1999): Manufacturer of extended dwell peripheral catheters.
Executive Leadership Changes: Edward J. Ludwig became President in May 1999. Gary M. Cohen became President of Worldwide Medical Systems in May 1999. Richard O. Brajer became President of Worldwide Preanalytical Solutions in July 1999.
Outlook, Risks, and Contingencies
Legal Proceedings:
- Latex Litigation: BD is a defendant in approximately 310 product liability lawsuits regarding natural rubber latex allergies. The Company divested its glove business in 1995 but continues to defend these suits.
- Needle Stick Litigation: BD is a defendant in eleven lawsuits regarding accidental needle sticks. While some cases were dismissed or withdrawn, nine remain pending in various state and federal courts. Plaintiffs seek damages for medical testing, counseling, and mental anguish. Class action certification is being contested.
- Antitrust Action: A pending antitrust action in Texas alleges BD conspired with Group Purchasing Organizations (GPOs) to exclude competitors from the syringe market.
- Environmental: BD is a party to proceedings under the Comprehensive Environmental Response, Compensation and Liability Act (Superfund).
Management Assessment: The Company believes the results of these legal matters, individually and in the aggregate, are not expected to have a material effect on its results of operations, financial condition, or cash flows.
Forward-Looking Risks: Risks include competitive factors, economic conditions, interest and foreign currency exchange rate fluctuations, product introduction delays, Year 2000 issues, and changes in health care regulations.
Investor Verification Checklist
- Verify the specific consolidated revenue, net income, and cash flow figures in the 1999 Annual Report (Exhibit 13), as they are not detailed in this filing text.
- Review the "Financial Review" section of the 1999 Annual Report for detailed segment performance and margin analysis.
- Monitor the status of the pending needle stick class action certifications and the Texas antitrust lawsuit.
- Assess the integration progress and financial contribution of the ten businesses acquired in fiscal 1999, particularly Clontech and Critical Device Corporation.
- Confirm the impact of foreign currency exchange rate fluctuations on international profitability, as noted by management.