BECTON DICKINSON & CO — Annual Report 1998

Dec 16, 1998

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON DECEMBER 16, 1998 - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ---------------- FORM 10-K ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 1998 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 INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.) 1 BECTON DRIVE 07417-1880 FRANKLIN LAKES, NEW JERSEY (ZIP CODE) (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (201) 847-6800 (REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE) SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:

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, 1998, 248,183,293 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 $10,512,801,743. DOCUMENTS INCORPORATED BY REFERENCE (1) Portions of the registrant's Annual Report to Shareholders for the fiscal year ended September 30, 1998 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 9, 1999 are incorporated by reference into Part III hereof. - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- 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 the Company's performance, including future revenues, products and income and events or developments that the Company expects to occur or anticipates occurring in the future. All such statements 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, Year 2000 issues, and changes in health care or other governmental practices or regulation, as well as other factors discussed herein and in other Company 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 44-45 of the Company's Annual Report to Shareholders for the fiscal year ended September 30, 1998 (the "1998 Annual Report"), and is incorporated herein by reference as part of Exhibit 13. 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, 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 (including reagents for cellular analysis), tissue culture labware, hematology instruments and other diagnostic systems, including immunodiagnostic test kits. 3 ACQUISITION OF BUSINESSES In December 1997, the Company acquired Visitec, a manufacturer of opthalmic surgical products. In January 1998, the Company acquired the IntelliCode Intelligent Bar Coding Systems division of MedPlus, Inc., a producer of electronic bar coding products. In February 1998, the Company acquired Tru-Fit Marketing Corporation, a manufacturer of sports health care products. In April 1998, the Company acquired the Medical Devices Division ("MDD"), a leading European marketer of intravenous catheters for infusion therapy, from The BOC Group. Also, in May 1998, the Company acquired Concepts in Healthcare, Inc. which provides consulting services to the healthcare industry. In September 1998, the Company acquired Boin Medica Co., Ltd., a Korean manufacturer of medical devices, including hypodermic products. The operating results of these businesses, from their respective dates of acquisition, are reflected in the Consolidated Financial Statements incorporated herein by reference as part of Exhibit 13. In addition, in October 1998, the Company acquired MDI Instruments, Inc., a company with patented electronic devices for the detection of ear fluids and infections, and in December 1998, the Company acquired Glentech, Inc., a reagent developer and manufacturer of cell biology products. 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 Brazil, China, France, Germany, India, Ireland, Japan, Korea, Mexico, Pakistan, Singapore, Spain, Sweden and the United Kingdom, and construction of a hypodermic syringe manufacturing facility in India is scheduled for completion in December 1998. Foreign economic conditions and exchange rate fluctuations have caused the profitability from foreign revenues to fluctuate more than the 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 11% of total Company revenues in fiscal 1998, 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, at Becton Dickinson Technologies 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 $217,900,000 on research and development during the fiscal year ended September 30, 1998, and $180,626,000 and $154,220,000, respectively, during the two immediately preceding fiscal years. Research and development spending in fiscal years 1998 and 1997 included the write-off of acquired in-process research and development of $30,000,000 and $14,750,000, respectively. 4 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, technology, trade secrets, know-how and trademarks in the United States and other countries. The Company is also licensed under domestic and foreign patents, patent applications, technology, 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, technology, trademark, intellectual property asset or 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, 1998, the Company had approximately 21,700 employees, of whom approximately 10,100 were employed in the United States. The Company believes that its employee relations are satisfactory. 5 ITEM 2. PROPERTIES. The executive offices of the Company are located in Franklin Lakes, New Jersey. The Company owns and leases approximately 11,903,445 square feet of manufacturing, warehousing, administrative and research facilities throughout the world. The domestic facilities, including Puerto Rico, comprise approximately 5,462,325 square feet of owned and 1,664,576 square feet of leased space. The foreign facilities comprise approximately 3,379,136 square feet of owned and 1,397,408 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, Florida, Georgia, Illinois, Indiana, Louisiana, Maryland, Massachusetts, Michigan, Missouri, Nebraska, New Hampshire, New Jersey, New York, North Carolina, Ohio, Pennsylvania, South Carolina, Tennessee, Texas, Utah, Virginia, Wisconsin, and Puerto Rico. The foreign facilities are grouped as follows: --Canada includes approximately 68,930 square feet of leased space. --Europe and Eastern Europe, Middle East and Africa includes facilities in Austria, Belgium, the Czech Republic, Denmark, England, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Kenya, the Netherlands, Poland, Russia, Saudi Arabia, South Africa, Spain, Sweden, Switzerland, Turkey, and the United Arab Emirates and is comprised of approximately 1,420,000 square feet of owned and 775,330 square feet of leased space. --Latin America includes facilities in Argentina, Bolivia, Brazil, Chile, Colombia, Guatemala, Mexico, Panama, Paraguay, Peru, Uruguay, and Venezuela and is comprised of approximately 1,158,010 square feet of owned and 226,940 square feet of leased space. --Asia Pacific includes facilities in Australia, China, Hong Kong, India, Indonesia, Japan, Korea, Malaysia, New Zealand, the Philippines, Singapore, South Korea, Taiwan, Thailand, and Vietnam and is comprised of approximately 801,120 square feet of owned and 326,210 square feet of leased space. 6 The table below summarizes property information by business segment:

• -------- (A) Facilities used by both business segments. ITEM 3. LEGAL PROCEEDINGS. The Company, along with a number of other manufacturers, has been named as a defendant in approximately 196 products liability lawsuits related to natural rubber latex that have been filed in various state and Federal courts. Cases pending in Federal Court are being coordinated under the matter In re Latex Gloves Products Liability Litigation (MDL Docket No. 1148) in Philadelphia, and analogous procedures have been implemented in the state courts of California, Pennsylvania and New Jersey. Generally, these actions allege that medical personnel have suffered allergic reactions ranging from skin irritation to anaphylaxis as a result of exposure to medical gloves containing natural rubber latex. In 1986, the Company acquired a business which manufactured, among other things, latex surgical gloves. In 1995, the Company divested this glove business. The Company is vigorously defending these lawsuits. The Company, along with another manufacturer and several medical products distributors, has been named as a defendant in nine product liability lawsuits relating to health care workers who allegedly sustained accidental needle sticks, but have not become infected with any disease. The cases have been filed on behalf of an unspecified number of health care workers in nine different states, seeking class action certification under the laws of these states. To date, no class has been certified in any of these cases. The actions are pending in state court in Texas, under the caption Calvin vs. Becton Dickinson et al. (Case No. 342-173329-98, Tarrant County District Court), filed on April 9, 1998; in Federal Court in Ohio, under the caption Grant vs. Becton Dickinson et al. (Case No. C2 98-844, Southern District of Ohio), filed on July 22, 1998; in state court in California, under the caption Chavez vs. Becton Dickinson (Case No. 722978, San Diego County Superior Court), filed on August 4, 1998; in state court in Illinois, under the caption McCaster vs. Becton Dickinson et al. (Case No. 98L09478, Cook County Circuit Court), filed on August 13, 1998; in state court in Oklahoma, under the caption Palmer vs. Becton Dickinson et al. (Case No. CJ-98-685, Sequoyah County District Court), filed on October 27, 1998; in state court in Alabama, under the caption Daniels vs. Becton Dickinson et al. (Case No. CV 1998 2757, Montgomery County Circuit Court), filed on October 30, 1998; in state court in Florida, under the caption Delgado vs. Becton Dickinson et al. (Case No. 98- 5608, Hillsborough County Circuit Court), filed on November 9, 1998; in state court in South Carolina, under the caption Bales vs. Becton Dickinson et al. (Case No. 98-CP-40-4343, Richland County Court of Common Pleas), filed on November 25, 1998; and in state court in New Jersey, under the caption Swartley vs. Becton Dickinson et al. (Case No. L-9449-98, Camden County Superior Court), filed on December 7, 1998. 7 Generally, these actions allege that health care workers have sustained needle sticks using hollow-bore needle devices manufactured by the Company and, as a result, require medical testing, counseling and/or treatment. Several actions additionally allege that the health care workers have sustained mental anguish. In addition, in the Chavez matter, the plaintiff asserts a claim for unfair competition, alleging the Company has suppressed the market for safety-engineered products through various means. Plaintiffs seek money damages in all actions. The plaintiff in the Chavez matter, in addition to money damages, seeks disgorgement of profits the Company has purportedly obtained as a result of alleged unfair competition. The pending class actions are in preliminary stages. The Company intends to vigorously oppose class certification and defend these lawsuits. The Company, along with another manufacturer, a group purchasing organization ("GPO") and three hospitals, has been named as a defendant in an antitrust action brought pursuant to the Texas Free Enterprise Act ("TFEA"). The action is pending in state court in Texas, under the caption Retractable Technologies Inc. vs. Becton Dickinson and Company et al. (Case No. 533*JG98, Brazoria County District Court), filed on August 4, 1998. Plaintiff, a manufacturer of retractable syringes, alleges that the Company's contracts with GPOs exclude plaintiff from the market in syringes and blood collection products, in violation of the TFEA. Plaintiff also alleges that the Company has conspired with other manufacturers to maintain its market share in these products. Plaintiff seeks money damages. The pending action is in preliminary stages. The Company intends to mount a vigorous defense in this action. The Company is a party to a number of federal proceedings in the United States brought under the Comprehensive Environmental Response, Compensation and Liability Act, also known as Superfund, and similar state laws. The Company is also involved in other legal proceedings and claims which arise in the ordinary course of business, both as a plaintiff and a defendant. In the opinion of the Company, the results of the above matters, individually and in the aggregate, are not expected to have a material effect on its results of operations, financial condition or cash flows. On October 10, 1997, the New Jersey Department of Environmental Protection ("NJDEP") filed three Notices of Civil Administrative Penalty Assessment against the Company relating to the Company's previously owned Ivers-Lee division. The NJDEP alleged operating exceedences on certain air pollution control equipment, failure to submit required emission reports, and excess usage of certain printing materials, and sought civil administrative penalties totaling $461,200. In June 1998, the Company entered into a Consent Order with the NJDEP for a full and final settlement of these matters with the payment of a $345,000 penalty, without any admission of liability. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. Not applicable. EXECUTIVE OFFICERS OF THE REGISTRANT (AS OF DECEMBER 1, 1998) 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.

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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, 1998, there were approximately 10,058 shareholders of record. The balance of the information required by this item appears under the caption "Common Stock Prices and Dividends" on page 66 of the Company's 1998 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 "Seven- Year Summary of Selected Financial Data" on page 43 of the Company's 1998 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 35-42 of the Company's 1998 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 page 37 of the "Financial Review" section of the Company's 1998 Annual Report, and in Notes 1 and 10 to the consolidated financial statements contained in the Company's 1998 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 is included on pages 44-45 and pages 48-64 of the Company's 1998 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. 10 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 and Exchange Commission not later than 120 days after September 30, 1998 (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 1998 Annual Report at the pages indicated in parentheses, are incorporated by reference in Item 8 hereof: Consolidated Statements of Income--Years ended September 30, 1998, 1997 and 1996 (page 48) Consolidated Balance Sheets--September 30, 1998 and 1997 (page 49) Consolidated Statements of Cash Flows--Years ended September 30, 1998, 1997 and 1996 (page 50) Notes to Consolidated Financial Statements (pages 51-64) (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 16) 11 All other schedules for which provisions are 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 17, 18 and 19 hereof for a list of all management contracts, compensatory plans and arrangements required by this item (Exhibit Nos. 10(a)(i) through 10(m)), and all other Exhibits filed or incorporated by reference as a part of this report. (b) Reports on Form 8-K On August 4, 1998, the registrant filed a report on Form 8-K for purposes of filing certain agreements and instruments executed in connection with a public offering by the registrant of its 6.7% Debenture due August 1, 2028. On July 27, 1998 the registrant filed a report on Form 8-K (as amended by a report on Form 8-K/A filed by the registrant on July 29, 1998) for purposes of reporting its results of operations for the third quarter ended June 30, 1998. No other reports on Form 8-K were filed by the registrant during the three-month period ended September 30, 1998. 12 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, 1998 PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THIS REPORT HAS BEEN SIGNED BELOW ON THE 16TH DAY OF DECEMBER, 1998 BY THE FOLLOWING PERSONS ON BEHALF OF THE REGISTRANT AND IN THE CAPACITIES INDICATED.

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14 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, 1998 and 1997, and the consolidated results of its operations and its cash flows for each of the three years in the period ended September 30, 1998 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 5, 1998 15 BECTON, DICKINSON AND COMPANY SCHEDULE II--VALUATION AND QUALIFYING ACCOUNTS YEARS ENDED SEPTEMBER 30, 1998, 1997, AND 1996 (THOUSANDS OF DOLLARS)

• -------- (A)Accounts written off. 16 EXHIBIT INDEX

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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. 19