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, 1997
Business Overview: BD is a global manufacturer of medical supplies, devices, and diagnostic systems. Operations are divided into two segments: Medical Supplies and Devices (hypodermic products, diabetes care, infusion therapy) and Diagnostic Systems (microbiology, flow cytometry, hematology). The company operates in the United States, Europe, and Other regions (Canada, Latin America, Japan, Asia-Pacific).
Key Financial Metrics
Note: Specific consolidated revenue, net income, cash flow, and debt figures are incorporated by reference to the 1997 Annual Report (Exhibit 13) and are not explicitly stated in the provided text.
- Research & Development (R&D): $180,626,000 for fiscal 1997.
- R&D Components: Includes $14,750,000 expensed for in-process R&D acquired with PharMingen and Difco Laboratories.
- Employee Count: Approximately 18,900 employees as of September 30, 1997 (9,600 in the U.S.).
- Market Capitalization (Non-affiliates): Approximately $6.25 billion as of November 30, 1997.
- Shares Outstanding: 121,188,014 shares as of November 30, 1997.
- Debt Issuance: Public offering of 7% Debentures due August 1, 2027, filed July 31, 1997.
- Valuation Accounts: Allowance for doubtful accounts ended at $20,234,000; Allowance for cash discounts ended at $8,499,000.
Material Changes vs. Prior Period
- Acquisitions: In May 1997, BD acquired PharMingen (biomedical research products) and Difco Laboratories (microbiology media). Results are included from the date of acquisition.
- Dispositions: The syringe pump business was sold in October 1996; results prior to sale were included in the 1997 statements.
- R&D Spending: Increased to $180.6 million in 1997, compared to $154.2 million in 1996 and $144.2 million in 1995.
- Facilities: Construction commenced in 1996 on a hypodermic syringe manufacturing facility in India.
Outlook, Risks, and Management Commentary
- Forward-Looking Statements: Management notes that future results depend on current expectations and involve risks including competitive factors, economic conditions, interest rates, foreign currency exchange rates, product introduction delays, and regulatory changes.
- Foreign Operations Risk: Profitability from foreign revenues fluctuates more than domestic revenues due to economic conditions and exchange rates. Operations in certain countries carry greater risk due to local policies and political uncertainties.
- Competition: The market is competitive based on price, quality, service, and reputation. Competitors include specialized firms and distributors that have become manufacturers. Some competitors possess greater financial resources.
- Regulation: Products are subject to FDA and foreign agency regulation. The company believes it is in material compliance with all applicable laws.
- Legal Proceedings: The company is involved in Superfund proceedings and ordinary business litigation, but results are not expected to have a material effect.
Investor Verification Checklist
- Verify the specific consolidated revenue, net income, and operating margin figures in the 1997 Annual Report (Exhibit 13), as they are not detailed in this text.
- Review the impact of the PharMingen and Difco acquisitions on segment profitability and R&D expense trends.
- Assess the exposure to foreign currency exchange rate fluctuations given the significant international operations.
- Confirm the terms and interest rate impact of the 7% Debentures due 2027 issued in July 1997.
- Monitor the status of the new manufacturing facility in India and its contribution to future capacity.