SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
|FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2006||
COMMISSION FILE NUMBER 1-4802
BECTON, DICKINSON AND COMPANY
(Exact name of registrant as specified in its charter)
|(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)|
(Registrants telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
|Name of each exchange on|
|Title of each class||which registered|
|Common Stock, par value $1.00||New York Stock Exchange|
Securities registered pursuant to Section 12(g) of the Act:
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes x No o
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes o No x
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 o
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 registrants 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. o
Indicate by checkmark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer (as defined in Rule 12b-2 of the Act).
Large accelerated filer x Accelerated filer o Non-accelerated filer o
Indicate by check mark whether the registrant is a
shell company (as defined in Rule 12b-2 of the Act).
Yes o No x
As of March 31, 2006, 246,637,424 shares of the registrants common stock were outstanding and the aggregate market value of such common stock held by non-affiliates of the registrant was approximately $15,187,932,570.
Documents Incorporated by Reference
(1) Portions of the registrants Annual Report to Shareholders for the fiscal year ended September 30, 2006 are incorporated by reference into Parts I and II hereof.
(2) Portions of the registrants Proxy Statement for the Annual Meeting of Shareholders to be held January 30, 2007 are incorporated by reference into Part III hereof.
Item 1. Business.
Becton, Dickinson and Company (also known as BD) was incorporated under the laws of the State of New Jersey in November 1906, as successor to a New York business started in 1897. BDs executive offices are located at 1 Becton Drive, Franklin Lakes, New Jersey 07417-1880, and its telephone number is (201) 847-6800. All references in this Form 10-K to BD refer to Becton, Dickinson and Company and its domestic and foreign subsidiaries, unless otherwise indicated by the context.
BD is a medical technology company engaged principally in the manufacture and sale of a broad range of medical supplies, devices, laboratory equipment and diagnostic products used by healthcare institutions, life science researchers, clinical laboratories, industry and the general public.
BDs operations consist of three worldwide business segments: BD Medical, BD Diagnostics and BD Biosciences. Information with respect to BDs business segments is included in Note 15 to the consolidated financial statements contained in the portions of BDs Annual Report to Shareholders for the fiscal year ended September 30, 2006 attached hereto as Exhibit 13, and is incorporated herein by reference.
BD Medical produces a broad array of medical devices that are used in a wide range of healthcare settings. They include many safety-engineered injection, infusion and surgery products. BD Medicals principal product lines include needles, syringes and catheters for medication delivery; syringes and pen needles for the self-injection of insulin and other drugs used in the treatment of diabetes; prefillable drug delivery devices provided to pharmaceutical companies and sold to end-users as drug/device combinations; surgical blades and regional anesthesia needles; critical care monitoring devices; ophthalmic surgery instruments; sharps disposal containers; and home healthcare products such as ACE® brand elastic bandages. The primary markets served by BD Medical are hospitals and clinics; physicians office practices; consumers and retail pharmacies; public health agencies; pharmaceutical companies; and healthcare workers.
BD Diagnostics provides products for the safe collection and transport of diagnostic specimens and instrumentation for analysis across a broad range of infectious disease testing. BD Diagnostics principal products and services include integrated systems for specimen collection; an extensive line of safety-engineered blood collection products and systems; plated media; automated blood culturing systems; molecular testing systems for sexually transmitted diseases and healthcare-associated infections; microorganism identification and drug susceptibility systems; and rapid diagnostic assays. BD Diagnostics serves hospitals, laboratories and clinics; reference laboratories; blood banks; healthcare workers; patients; physicians office practices; and industrial microbiology laboratories.
BD Biosciences produces research and clinical tools that facilitate the study of cells, and the components of cells, to gain a better understanding of normal and disease processes. That information is used to aid the discovery and development of new drugs and vaccines, and to improve the diagnosis and management of diseases. BD Biosciences principal product lines include fluorescence-activated cell sorters and analyzers; cell imaging systems, monoclonal antibodies and kits; reagent systems for life sciences research; tools to aid in drug discovery and growth of tissue and cells; and diagnostic assays. The primary markets served by BD Biosciences are research and clinical laboratories; hospitals and transplant centers; blood banks; and biotechnology and pharmaceutical companies.
On February 14, 2006, BD acquired GeneOhm Sciences, Inc. (GeneOhm), a company that develops molecular diagnostic testing for the rapid detection of bacterial organisms, including those known to cause healthcare-associated infections. The acquisition provides BD with expanded entry into the emerging field of healthcare-associated infections.
On September 8, 2006, BD announced that it had signed a definitive agreement to acquire the 93.5% of the outstanding shares of TriPath Imaging (TriPath) that BD does not currently own. TriPath develops, manufactures, markets and sells innovative solutions to improve the clinical management of cancer, including detection, diagnosis, staging and treatment. Since 2001, BD has been collaborating with the company to identify bio-markers for various cancer diagnostics. Following the requisite approval by the TriPath shareholders, as well as other closing conditions, the acquisition is expected to be completed by the end of BDs first fiscal quarter 2007.
Exit from Blood Glucose Monitoring Market
On September 28, 2006, BD announced a plan to exit the blood glucose monitoring market and discontinued the distribution of the BD Logic® Blood Glucose Monitor. BD plans to continue to distribute test strips for its customers through December 2007.
BDs products are manufactured and sold worldwide. BDs operations outside the United States are conducted in Canada and in five geographic regions: Europe (which includes the Middle East and Africa); Japan; Asia Pacific (which includes Australia and all of Asia except Japan); South Latin America (which includes Brazil); and North Latin America (which includes Mexico). The principal products sold by BD outside of the United States are hypodermic needles and syringes; insulin syringes and pen needles; diagnostic systems; BD Vacutainer brand blood collection products; BD Hypak brand prefillable syringe systems; infusion therapy products; flow cytometry analyzers and sorters; and disposable laboratory products. BD has manufacturing operations outside the United States in Brazil, Canada, China, France, Germany, India, Ireland, Japan, Korea, Mexico, Pakistan, Singapore, Spain, Sweden and the United Kingdom. Geographic information with respect to BDs operations is included under the heading Geographic Information in Note 15 to the consolidated financial statements included in Exhibit 13, and is incorporated herein by reference.
Foreign economic conditions and exchange rate fluctuations have caused the profitability related to foreign revenues to fluctuate more than the profitability related to domestic revenues. BD believes its activities in some countries outside the United States involve greater risk than its domestic business due to the factors cited herein, as well as local commercial and economic policies and political uncertainties. See further discussion of this risk in Item 1A. Risk Factors.
BDs products and services are marketed in the U.S. and internationally through independent sales representatives and independent distribution channels, and directly to end-users. Sales to a single U.S. distributor that supplies products from the BD Medical and BD Diagnostics segments to many end-users accounted for approximately 11% of total BD revenues in fiscal 2006. However, the end-users of BDs products have access to them through other distributors, and, as a result, BD believes that sales to this distributor would be replaced largely, if not entirely, by other sales if BD no longer sold products to this distributor. Order backlog is not material to BDs business inasmuch as orders for BD products generally are received and filled on a current basis, except for items temporarily out of stock. BDs worldwide sales are not generally seasonal, with the exception of certain medical devices in the BD Medical segment and respiratory and flu diagnostic products in the BD Diagnostics segment that relate to seasonal diseases such as influenza.
BD purchases many different types of raw materials, including plastics, glass, metals, textiles, paper products, agricultural products, electronic and mechanical sub-assemblies and various biological, chemical and petrochemical products. While all but a few of BDs principal raw materials are available from multiple sources, for various reasons (e.g., quality assurance and cost effectiveness), BD elects to purchase certain raw materials from sole suppliers. However, certain raw materials (primarily related to the BD Biosciences segment) are not available from multiple sources. In other cases where there are regulatory requirements relating to qualification of suppliers, BD
may not be able to establish additional or replacement sources on a timely basis. While BD works closely with its suppliers to ensure continuity of supply, the termination, reduction or interruption in supply of these sole-sourced raw materials could impact our ability to manufacture and sell certain of our products.
Research and Development
BD conducts its research and development activities at its operating units and at BD Technologies in Research Triangle Park, North Carolina. Substantially all of BDs research and development activities are conducted in the U.S. BD also collaborates with certain universities, medical centers and other entities on research and development programs. BD also retains individual consultants to support its efforts in specialized fields. BD spent approximately $360 million, $272 million and $236 million on research and development during the fiscal years ended September 30, 2006, 2005 and 2004, respectively. Fiscal year 2006 spending included an in-process research and development charge of $53 million related to the acquisition of GeneOhm.
Intellectual Property and Licenses
BD owns significant intellectual property, including patents, patent applications, technology, trade secrets, know-how, copyrights and trademarks in the United States and other countries. BD is also licensed under domestic and foreign patents, patent applications, technology, trade secrets, know-how, copyrights and trademarks owned by others. In the aggregate, these intellectual property assets and licenses are of material importance to BDs business. BD believes, however, that no single patent, technology, trademark, intellectual property asset or license is material in relation to BDs business as a whole.
BD operates in the increasingly complex and challenging medical technology marketplace whose dynamics are changing. Technological advances and scientific discoveries have accelerated the pace of change in medical technology, and regulation of increasingly more sophisticated and complex medical products is increasing. Companies of varying sizes compete in the global medical technology field. Some are more specialized than BD with respect to particular markets, and some have greater financial resources than BD. New companies have entered the field, particularly in the areas of safety-engineered devices and in life sciences, and established companies have diversified their business activities into the medical technology area. Other firms engaged in the distribution of medical technology products have become manufacturers of medical devices and instruments as well. Acquisitions and collaborations by and among other companies seeking a competitive advantage also affect the competitive environment.
BD competes in this evolving marketplace on the basis of many factors, including price, quality, innovation, service, reputation, distribution and promotion. The impact of these factors on BDs competitive position varies among BDs various product offerings. In order to implement one of its core strategiesto increase revenue growth by focusing on products that deliver greater benefits to patients, healthcare workers and researchersand maintain an advantage in the competitive environment in which it operates, BD continues to make investments in research and development, quality management, quality improvement, product innovation and productivity improvement.
Healthcare providers and/or facilities are generally reimbursed for their services through numerous payment systems designed by governmental agencies (e.g., Medicare and Medicaid in the U.S., the National Health Service in the U.K., the Joint Federal Committee in Germany, the Commission dEvaluation des Produits et prestations in France, and the Ministry for Health, Labor and Welfare in Japan), private insurance companies, and managed care programs. The manner and level of reimbursement in any given case typically depends on the procedure(s) performed, the final patient diagnosis, the device(s) and/or drug(s) utilized, or a combination of these factors, and coverage and payment levels are determined at the payers discretion. The coverage policies and reimbursement levels of third-party payers may impact the decisions of healthcare providers and facilities regarding which medical products they purchase and the prices they are willing to pay for those products. Thus, changes in reimbursement level or method may either positively or negatively impact sales of BD products. While BD is actively engaged in promoting the value of its products for payers and patients and it employs various efforts and resources to positively impact coverage, coding and payment processes in this regard, it has no direct control over payer decision-making with respect to coverage and adequate payment level for BD products. Additionally, we expect many payers to continue to explore cost-containment strategies that could potentially impact coverage and/or payment levels for current or future BD products.
As BDs product offerings are diverse across many healthcare settings, they are affected to varying degrees by the many payment systems. Therefore, BD does not believe that significant changes to any one of these systems, while potentially impacting individual product lines or classes, would have a material adverse effect on BD.
BDs medical technology products and operations are subject to regulation by the U.S. Food and Drug Administration (FDA) and various other federal and state agencies, as well as by foreign governmental agencies. These agencies enforce laws and regulations that govern the development, testing, manufacturing, labeling, advertising, marketing and distribution, and market surveillance of BDs medical products. The scope of the activities of these agencies, particularly in the Europe, Japan and Asia Pacific regions in which BD operates, has been increasing.
Prior to marketing or selling most of its products, BD must secure approval from the FDA and counterpart non-U.S. regulatory agencies. Following the introduction of a product, these agencies engage in periodic reviews of BDs manufacturing processes and product performance. These regulatory controls can affect the time and cost associated with the development, introduction and continued availability of new products. Where possible, BD anticipates these factors in its product development and planning processes.
These agencies possess the authority to take various administrative and legal actions against BD, such as product recalls, product seizures and other civil and criminal sanctions. BD also undertakes voluntary compliance actions such as voluntary recalls.
In November 2006, we received a warning letter from the FDA with respect to our facility in San Lorenzo, Puerto Rico, at which we manufacture certain blood collection products. The warning letter makes certain observations regarding our compliance with the Current Good Manufacturing Practice requirements of the FDAs Quality System regulation. We are preparing a response plan for submission to the FDA.
BD believes it is in compliance in all material respects with the regulations promulgated by such agencies, and that such compliance has not had, and, BD believes, should not have, a material adverse effect on BD. BD also believes that its operations comply in all material respects with applicable environmental laws and regulations. Such compliance has not had, and, BD believes, should not have, a material adverse effect on BD. See Item 3. Legal Proceedings.
As of September 30, 2006, BD had 26,990 employees, of whom 12,288 were employed in the United States (including Puerto Rico). BD believes that its employee relations are satisfactory.
Becton Dickinson France, S.A. (BD-France), a subsidiary of BD, was listed among approximately 2,200 other companies in an October 27, 2005 report of the Independent Inquiry Committee (IIC) of the United Nations (UN) as having been involved in humanitarian contracts in which unauthorized payments were suspected of having been made to the Iraqi Government in connection with the UNs Oil-for-Food Programme (the Programme). In connection with the IICs report, Becton Dickinson AG, a Swiss subsidiary of BD, received a letter of inquiry from the Vendor Review Committee (VRC) of the United Nations Procurement Service dated November 22, 2005. The letter of inquiry said that the VRC is reviewing Becton Dickinson AGs registration status in light of BD-France being listed in the IICs report and asked us for any information we might provide relating to the findings of the report. BD conducted an internal review and found no evidence that BD or any BD employee made, authorized, or approved improper payments to the Iraqi Government in connection with the Programme. The representative utilized by BD in Iraq also unequivocally denied having made any such payments, and BD was unable to find any evidence of such payments being made by this representative. BD has also reported the results of its internal review to the VRC.
BD maintains a website at www.bd.com. BD makes available its Annual Reports on Form 10-K, its Quarterly Reports on Form 10-Q, and its Current Reports on Form 8-K (and amendments to those reports) as soon as reasonably practicable after those reports are electronically filed with or furnished to the Securities and Exchange
Commission (SEC). These filings may be found at www.bd.com/investors. Printed copies of the foregoing documents may also be obtained, without charge, by contacting: Investor Relations, Becton, Dickinson and Company, 1 Becton Drive, Franklin Lakes, New Jersey 07417-1880, phone: 1-800-284-6845.
CAUTIONARY STATEMENT PURSUANT TO PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995SAFE 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 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 SEC 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 that 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 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:
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.
We operate in a highly competitive environment. New product introductions by our current or future competitors could adversely affect our ability to compete in the global market. For example, new forms of inhaled or other methods of insulin delivery, such as the new inhaled form of insulin approved by the FDA and European authorities, could adversely impact sales of our insulin injection devices. Patents attained by competitors, particularly as patents on our products expire, may also adversely impact our competitive position.
Changes in domestic and foreign healthcare industry practices and regulations resulting in increased 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.
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.
Fluctuations in the cost and availability of raw materials and the ability to maintain favorable supplier arrangements and relationships (particularly with respect to sole-source suppliers) and the potential adverse effects of any disruption in the availability of such raw materials.
Our ability to obtain the anticipated benefits of any restructuring programs that we may undertake.
Adoption of or changes in government laws and regulations affecting domestic and foreign operations, including those relating to trade, monetary and fiscal policies, taxation, environmental matters, sales
Fluctuations in U.S. and international governmental funding and policies for life science research.
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, as well as 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 product.
Pending and potential litigation or other proceedings adverse to BD, including antitrust claims, product liability claims, and patent infringement claims, as well as other risks and uncertainties detailed from time to time in our SEC filings.
The effects, if any, of adverse media exposure or other publicity regarding BDs business or operations.
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.
The effect of market fluctuations on the value of assets in BDs 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.
Our ability to effect infrastructure enhancements and incorporate new systems technologies into our operations.
Product efficacy or safety concerns resulting in product recalls, regulatory action on the part of the FDA (or foreign counterparts) or declining sales.
Economic and political conditions in international markets, including civil unrest, governmental changes and restrictions on the ability to transfer capital across borders.
The effects of natural disasters, including hurricanes or pandemic diseases, on our ability to manufacture our products, particularly where production of a product line is concentrated in one or more plants, or on our ability to source components from suppliers that are needed for such manufacturing.
Our ability to penetrate developing and emerging markets, which also depends on economic and political conditions, and how well we are able to acquire or form strategic business alliances with local companies and make necessary infrastructure enhancements to production facilities, distribution networks, sales equipment and technology.
The impact of business combinations, including acquisitions and divestitures, both internally for BD and externally in the healthcare industry.
Issuance of new or revised accounting standards by the Financial Accounting Standards Board or the SEC.
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.
Item 1A. Risk Factors.
An investment in BD involves a variety of risks and uncertainties. The following describes some of the significant risks that could impact BDs business, financial condition or operating results.
BDs future growth is dependent upon the development of new products, and there can be no assurance that such products will be developed.
A significant element of our strategy is to increase revenue growth by focusing on products that deliver greater benefits to patients, healthcare workers and researchers. The development of these products requires significant research and development, clinical trials and regulatory approvals. The results of our product development efforts may be affected by a number of factors, including BDs ability to innovate, develop and manufacture new products, complete clinical trials, obtain regulatory approvals and reimbursement in the United States and abroad, or gain and maintain market approval of our products. In addition, patents attained by others can preclude or delay our commercialization of a product. There can be no assurance that any products now in development or that we may seek to develop in the future will achieve technological feasibility, obtain regulatory approval, or gain market acceptance.
The medical device industry is very competitive.
The medical device industry is subject to rapid technological changes, and we face significant competition across our product lines and in each market in which our products are sold. We face this competition from a wide range of companies. These include large medical device companies, some of which may have greater financial and marketing resources than us. We also face competition from firms that are more specialized than us with respect to particular markets. Non-medical device companies, including pharmaceutical companies, also offer alternative therapies for disease states that may be delivered without a medical device. See Competition under Item 1. Business. In addition, some competitors have established manufacturing sites or have contracted with suppliers located in China and other low-cost manufacturing locations as a means to lower their costs. New entrants may also appear, particularly in these low-cost countries.
The development of new or improved products, processes or technologies by other companies may make our products or proposed products obsolete or less competitive and may materially adversely affect our earnings, financial condition or cash flows.
A reduction or interruption in the supply of certain raw materials would adversely affect BDs manufacturing operations and related product sales.
BD purchases many different types of raw materials. We have generally been able to obtain adequate supplies of these materials. However, certain raw materials (primarily related to the BD Biosciences segment) are not available from multiple sources. In addition, for quality assurance, cost-effectiveness and other reasons, BD elects to purchase certain raw materials from sole suppliers. While we work with suppliers to ensure continuity of supply, no assurance can be given that these efforts will be successful. In addition, where there are regulatory requirements relating to the qualification of suppliers, we may not be able to establish additional or replacement sources on a timely basis. The termination, reduction or interruption in supply of these sole-sourced raw materials could impact our ability to manufacture and sell certain of our products and have a material adverse effect on our earnings, financial condition or cash flows.
Interruption of our manufacturing operations could adversely affect BDs future revenues and operating income.
We have manufacturing sites all over the world. In addition, in some instances, the manufacturing of certain of our product lines is concentrated in one or more of our plants. As a result, natural disasters (including pandemic disease), political change, or damage to one or more of our facilities could adversely affect our ability to manufacture our products, which could have a material adverse effect on our earnings, financial condition or cash flows.
BD is subject to a number of pending lawsuits.
BD is a defendant in a number of pending lawsuits, including purported class action lawsuits for alleged antitrust violations and product liability, and could be subject to additional lawsuits in the future. A more detailed description of these lawsuits is contained in Item 3. Legal Proceedings. Given the uncertain nature of litigation generally, we are not able in all cases to estimate the amount or range of loss that could result from an unfavorable outcome of the litigation to which we are a party. In accordance with U.S. generally accepted accounting principles, BD establishes accruals to the extent probable future losses from these actions are estimable. In view of the uncertainties discussed above, we
could incur charges in excess of any currently established accruals and, to the extent available, excess liability insurance. Any such future charges, individually or in the aggregate, could have a material adverse effect on BDs results of operations and cash flows in the period or periods in which they are recorded or paid.
Consolidation in the healthcare industry could adversely affect BDs future revenues and operating income.
The medical device industry has experienced a significant amount of consolidation. As a result of this consolidation, competition to provide goods and services to customers has increased. In addition, group purchasing organizations (GPOs) and integrated health delivery networks (IDNs) have served to concentrate purchasing decisions for some customers, which has placed pricing pressure on medical device suppliers. Further consolidation in the industry could exert additional pressure on the prices of our products and adversely affect BDs earnings, financial condition or cash flows.
Changes in reimbursement practices of third-party payers could affect the demand for our products and the prices at which they are sold.
Our sales depend, in part, on the extent to which healthcare providers and facilities are reimbursed by government authorities, private insurers and other third-party payers for the costs of our products. The coverage policies and reimbursement levels of third-party payers may affect which products customers purchase and the prices they are willing to pay for these products. Legislative or administrative reforms to reimbursement systems in the U.S. or abroad in a manner that significantly reduces reimbursement for procedures using BD medical devices, or that denies coverage for those products, may materially adversely affect our earnings, financial condition or cash flows. See Third-Party Reimbursement under Item 1. Business.
Product defects could adversely affect the results of our operations.
The design, manufacture and marketing of medical devices involve certain inherent risks. Manufacturing or design defects, unanticipated use of our products, or inadequate disclosure of risks relating to the use of the product can lead to injury or other adverse events. These events could lead to recalls or safety alerts relating to our products (either voluntary or required by the FDA or similar governmental authorities in other countries), and could result, in certain cases, in the removal of a product from the market. Any recall could result in significant costs, as well as negative publicity that could reduce demand for our products. Personal injuries relating to the use of our products can also result in product liability claims being brought against us. In some circumstances, such adverse events could also cause delays in new product approvals. Any of the foregoing circumstances could have a material adverse effect on our earnings, financial condition or cash flows.
BD is subject to extensive regulation.
BD is subject to extensive regulation by the FDA pursuant to the Federal Food, Drug and Cosmetic Act, by comparable agencies in foreign countries, and by other regulatory agencies and governing bodies. Most of BDs products must receive clearance or approval from the FDA or counterpart non-U.S. regulatory agencies before they can be marketed or sold. The process for obtaining marketing approval or clearance may take a significant period of time and require the expenditure of substantial resources. The process may also require changes to our products or result in limitations on the indicated uses of the products.
Following the introduction of a product, these agencies also periodically review our manufacturing processes and product performance. Our failure to comply with the applicable good manufacturing practices, adverse event reporting, clinical trial and other requirements of these agencies could delay the production or marketing of our products and result in fines, delays or suspensions of regulatory clearances, or seizures or recalls of products, any of which could materially adversely affect our earnings, financial condition or cash flows.
We cannot guarantee that any of BDs strategic acquisitions, investments or alliances will be successful.
While our strategy to increase revenue growth is driven primarily by internal product development, we will seek to supplement our growth through strategic acquisitions, investments and alliances. Such transactions are inherently risky. The success of any acquisition, investment or alliance may be affected by a number of factors, including our ability to properly assess and value the potential business opportunity or to successfully integrate it into our existing business. There can be no assurance that any past or future transaction will be successful or that the transaction will not materially adversely affect our earnings, financial condition or cash flows.
We are subject to foreign currency exchange risk.
Over half of our fiscal year 2006 revenues were derived from international operations. Our revenues outside the U.S. are affected by fluctuations in foreign currency exchange rates. A discussion of the financial impact of exchange rate fluctuations and the ways and extent to which we attempt to mitigate such impact is contained under the heading Financial Instrument Market Risk under Financial Review contained in Exhibit 13, which is incorporated herein by reference. We cannot predict with any certainty changes in foreign currency exchange rates.
The international operations of BDs business may subject BD to certain business risks.
BD operations outside the U.S. subject BD to certain risks, including the effects of fluctuations in foreign currency exchange (as discussed above), changes in foreign regulatory requirements, potential political instability, trade barriers, weakening of the protection of intellectual property rights in some countries, and restrictions on the transfer of capital across borders. The success of our operations outside the U.S. will depend, in part, on our ability to acquire or form alliances with local companies and make necessary infrastructure enhancements to, among other things, our production facilities and distribution networks.
Reductions in customers research budgets or government funding may adversely affect our BD Biosciences segment.
Our BD Biosciences segment sells products to researchers at pharmaceutical and biotechnology companies, academic institutions, government laboratories and private foundations. Research and development spending of our customers can fluctuate based on spending priorities and general economic conditions. A number of these customers are also dependent upon grants from U.S. government agencies, such as the U.S. National Institutes of Health (NIH), and agencies in other countries for their funding. The level of government funding of research and development is unpredictable. In addition, there have been instances where NIH grants have been frozen or otherwise unavailable for extended periods. Any reduction or delay in governmental funding could cause our customers to delay or forego purchases of our products.
Our operations are dependent in part on patents and other intellectual property rights.
Many of BDs businesses rely on patent, trademark and other intellectual property rights. While we do not believe that the loss of any one patent or other intellectual property asset would materially affect BD operations, these intellectual property assets, in the aggregate, are of material importance to our business. BD can lose the protection afforded by these intellectual property assets through patent expirations, legal challenges or governmental action. Patents attained by competitors, particularly as patents on our products expire, may also adversely affect our competitive position. The loss of a significant portion of our portfolio of intellectual property assets may have a material adverse effect on our earnings, financial condition or cash flows.
Natural disasters, war or terrorism could adversely affect BDs future revenues and operating income.
Natural disasters, war, terrorism and international conflicts, and actions taken by the United States and other governments in response to such events, could cause significant economic disruption and political and social instability in the U.S. and in areas outside of the U.S. in which we operate. These events could result in decreased demand for our products, adversely affect our manufacturing and distribution capabilities or our ability to source materials from our suppliers, and otherwise have a material adverse effect on our earnings, financial condition or cash flows.
Item 1B. Unresolved Staff Comments.
Item 2. Properties.
BDs executive offices are located in Franklin Lakes, New Jersey. As of November 30, 2006, BD owned and leased approximately 14,795,000 square feet of manufacturing, warehousing, administrative and research facilities throughout the world. The U.S. facilities, including Puerto Rico, comprise approximately 5,995,000 square feet of owned and 2,032,000 square feet of leased space. The international facilities comprise approximately 4,268,000
square feet of owned and 2,500,000 square feet of leased space. Sales offices and distribution centers included in the total square footage are also located throughout the world.
Operations in each of BDs business segments are conducted at both U.S. and international locations. Particularly in the international marketplace, facilities often serve more than one business segment and are used for multiple purposes, such as administrative/sales, manufacturing and/or warehousing/distribution. BD generally seeks to own its manufacturing facilities, although some are leased. Most of BDs administrative, sales and warehousing/distribution facilities are leased.
BD 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 U.S. facilities include facilities in Arizona, California, Connecticut, Georgia, Illinois, Indiana, Maryland, Massachusetts, Michigan, Missouri, Nebraska, New Jersey, New York, North Carolina, South Carolina, Tennessee, Texas, Utah, Washington, DC, Washington, Wisconsin and Puerto Rico.
The international facilities are grouped as follows:
Canada includes approximately 153,000 square feet of leased space.
Europe and Eastern Europe, Middle East and Africa include facilities in Austria, Belgium, Denmark, Egypt, England, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Kenya, the Netherlands, Poland, Russia, South Africa, Spain, Sweden, Switzerland, Turkey and the United Arab Emirates, and are comprised of approximately 2,005,000 square feet of owned and 1,271,000 square feet of leased space.
Latin America includes facilities in Argentina, Brazil, Chile, Colombia, Mexico, Peru, Uruguay and Venezuela, and is comprised of approximately 1,018,000 square feet of owned and 687,000 square feet of leased space.
Asia Pacific includes facilities in Australia, China, Hong Kong, India, Indonesia, Japan, Malaysia, New Zealand, Pakistan, the Philippines, Singapore, South Korea, Taiwan, Thailand and Vietnam, and is comprised of approximately 1,245,000 square feet of owned and 389,000 square feet of leased space.
|The following table summarizes property information by business segment|
|Manufacturing square footage||0||30,000||14,000||376,000||0||420,000|
|Manufacturing square footage||0||278,000||1,195,000||3,448,000||298,000||5,219,000|
|Manufacturing square footage||0||308,000||1,209,000||3,824,000||298,000||5,639,000|
(A) Facilities used by all business segments.
Item 3. Legal Proceedings.
BD is named as a defendant in five purported class action suits brought on behalf of direct purchasers of BDs products, such as distributors, alleging that BD violated federal antitrust laws, resulting in the charging of higher prices for BDs products to the plaintiff and other purported class members. The cases filed are as follows:
Louisiana Wholesale Drug Company, Inc., et. al. vs. Becton Dickinson and Company (Civil Action No. 05-1602, U.S. District Court, Newark, New Jersey), filed on March 25, 2005; SAJ Distributors, Inc. et. al. vs. Becton Dickinson & Co. (Case 2:05-CV-04763-JD, United States District Court, Eastern District of Pennsylvania), filed on September 6, 2005; Dik Drug Company, et. al. vs. Becton, Dickinson and Company (Case No. 2:05-CV-04465, U.S. District Court, Newark, New Jersey), filed on September 12, 2005; American Sales Company, Inc. et. al. vs. Becton, Dickinson & Co. (Case No. 2:05-CV-05212-CRM, U.S. District Court, Eastern District of Pennsylvania), filed on October 3, 2005; and Park Surgical Co. Inc. et. al. vs. Becton, Dickinson and Company (Case 2:05-CV-05678-CMR, United States District Court, Eastern District of Pennsylvania), filed on October 26, 2005.
The actions brought by Louisiana Wholesale Drug Company and Dik Drug Company in New Jersey have been consolidated under the caption In re Hypodermic Products Antitrust Litigation.
BD is also named as a defendant in three purported class action suits brought on behalf of indirect purchasers of BDs products, alleging that BD violated federal antitrust laws, resulting in the charging of higher prices for BDs products to the plaintiff and other purported class members. The cases filed are as follows: Jabos Pharmacy, Inc., et. al. v. Becton Dickinson & Company (Case No. 2:05-CV-00162, United States District Court, Greenville, Tennessee) filed on June 7, 2005; Drug Mart Tallman, Inc., et al v. Becton Dickinson and Company, (Case No. 2:06-CV-00174, U.S. District Court, Newark, New Jersey), filed on January 17, 2006; and Medstar v. Becton Dickinson (Case No. 06-CV-03258-JLL (RJH), U.S. District Court, Newark, New Jersey), filed on May 18, 2006.
The plaintiffs in each of the antitrust class action lawsuits seek monetary damages. All of the antitrust class action lawsuits have been consolidated for pre-trial purposes in a Multi-District Litigation (MDL) in federal court in New Jersey.
On August 31, 2005, Daniels Sharpsmart filed suit against BD, another manufacturer and three group purchasing organizations under the caption Daniels Sharpsmart, Inc. v. Tyco International, (US) Inc., et. al. (Civil Action No. 505CV169, United States District Court, Eastern District of Texas). The plaintiff alleges, among other things, that BD and the other defendants conspired to exclude the plaintiff from the sharps-collection market by entering into long-term contracts in violation of federal and state antitrust laws, and seeks monetary damages.
On June 6, 2006, UltiMed, Inc., a Minnesota company, filed suit against BD in the United States District Court in Minneapolis, Minnesota (UltiMed, Inc. v. Becton, Dickinson and Company (06CV2266)). The plaintiff alleges, among other things, that BD excluded the plaintiff from the market for home use insulin syringes by entering into anticompetitive contracts in violation of federal and state antitrust laws. The plaintiff seeks money damages and injunctive relief.
BD, along with another manufacturer and several medical product distributors, is named as a defendant in three product liability lawsuits relating to healthcare workers who allegedly sustained accidental needlesticks, but have not become infected with any disease. Generally, these actions allege that healthcare workers have sustained needlesticks using hollow-bore needle devices manufactured by BD and, as a result, require medical testing, counseling and/or treatment. In some cases, these actions additionally allege that the healthcare workers have sustained mental anguish. Plaintiffs seek money damages in all of these actions. BD had previously been named as a defendant in eight similar suits relating to healthcare workers who allegedly sustained accidental needlesticks, each of which has either been dismissed with prejudice or voluntarily withdrawn. Regarding the three pending suits:
In Ohio, Grant vs. Becton Dickinson et al. (Case No. 98CVB075616, Franklin County Court), on September 21, 2006, the Ohio Court of Appeals reversed the trial courts grant of class certification. The matter has been remanded to the trial court for a determination of whether the class can be redefined.
In Oklahoma and South Carolina, cases have been filed on behalf of an unspecified number of healthcare workers seeking class action certification under the laws of these states 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, and 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.
BD continues to oppose class action certification in these cases, including pursuing all appropriate rights of appeal.
BD, along with a number of other manufacturers, was named as a defendant in approximately 524 product liability lawsuits in various state and Federal courts related to natural rubber latex gloves which BD ceased manufacturing in 1995. 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, New Jersey and New York. 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. Since the inception of this litigation, 465 of these cases have been closed with no liability to BD, and 46 cases have been settled for an aggregate de minimis amount.
On August 8, 2005, BD received a subpoena issued by the Attorney General of the State of Connecticut, which seeks documents and information relating to BDs participation as a member of Healthcare Research & Development Institute, LLC (HRDI), a healthcare trade organization. The subpoena indicates that it was issued as part of an investigation into possible violations of the antitrust laws. On August 21, 2006, BD received a subpoena issued by the Attorney General of the State of Illinois which seeks documents and information relating to BDs participation as a member of HRDI. The subpoena indicates that it was issued as part of an investigation into possible violations of the Illinois Consumer Fraud and Deceptive Business Practices Act, Charitable Trust Act, and Solicitation for Charity Act. An independent member of BDs board of directors, Gary Mecklenburg, also served as a member and the non-executive chairman of HRDI until November 5, 2006. BD believes that its participation in HRDI complies fully with the law and intends to cooperate fully in responding to these subpoenas.
On May 28, 2004, Therasense, Inc. (Therasense) filed suit against BD in the U.S. District Court for the Northern District of California (Case Number: C 04-02123 WDB) asserting that BDs blood glucose monitoring products infringe certain Therasense patents. On August 10, 2004, in response to a motion filed by Therasense in the U.S. District Court for the District of Massachusetts, the court transferred to the court in California an action previously filed by BD against Therasense requesting a declaratory judgment that BDs products do not infringe the Therasense patents and that the Therasense patents are invalid.
BD believes that it has meritorious defenses to each of the above-mentioned suits pending against BD and is engaged in a vigorous defense of each of these matters.
BD is also involved both as a plaintiff and a defendant in other legal proceedings and claims that arise in the ordinary course of business.
BD is 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.
Given the uncertain nature of litigation generally, BD is not able in all cases to estimate the amount or range of loss that could result from an unfavorable outcome of the litigation to which BD is a party. In accordance with U.S. generally accepted accounting principles, BD establishes accruals to the extent probable future losses are estimable (in the case of environmental matters, without considering possible third-party recoveries). In view of the uncertainties discussed above, BD could incur charges in excess of any currently established accruals and, to the extent available, excess liability insurance. In the opinion of management, any such future charges, individually or in the aggregate, could have a material adverse effect on BDs consolidated results of operations and consolidated net cash flows in the period or periods in which they are recorded or paid.
Item 4. Submission of Matters to a Vote of Security Holders.
Executive Officers of the Registrant
The following is a list of the executive officers of BD, their ages and all positions and offices held by each of them during the past five years. There is no family relationship between any executive officer or director of BD.
|Edward J. Ludwig||55||Director since 1999; Chairman, President and Chief Executive|
|Officer since February 2002; and, prior thereto, President and Chief|
|Donna M. Boles||53||Senior Vice PresidentHuman Resources since June 2006; Vice|
|PresidentHuman Resources from June 2005 to June 2006; and,|
|prior thereto, Vice President, Human Resources, BD Medical.|
|Gary M. Cohen||47||Executive Vice President since June 2006; and. prior thereto,|
|John R. Considine||56||Senior Executive Vice President and Chief Financial Officer since|
|June 2006; and, prior thereto, Executive Vice President and Chief|
|David T. Durack||61||Senior Vice PresidentCorporate Medical Affairs since June 2006;|
|and, prior thereto, Vice President-Corporate Medical Affairs.|
|Vincent A. Forlenza||53||Executive Vice President since June 2006; PresidentBD|
|Biosciences from March 2003 to June 2006; and, prior thereto, Senior|
|Vice PresidentTechnology, Strategy and Development.|
|A. John Hanson||62||Executive Vice President since June 2006; and, prior thereto,|
|William A. Kozy||54||Executive Vice President since June 2006; PresidentBD|
|Diagnostics from November 2003 to June 2006; PresidentBD|
|Clinical Laboratory Solutions and Company Operations from May|
|2002 to November 2003; and, prior thereto, Senior Vice President|
|Patricia B. Shrader||56||Senior Vice PresidentCorporate Regulatory and External Affairs|
|since June 2006; Vice President, Corporate Regulatory and External|
|Affairs from February 2005 to June 2006; Vice President, Corporate|
|Regulatory, Public Policy and Communication from March 2004 to|
|Feburary 2005; and, prior thereto, Vice PresidentRegulatory Affairs.|
|Jeffrey S. Sherman||51||Senior Vice President and General Counsel since June 2006; Vice|
|President and General Counsel from January 2004 to June 2006; and,|
|prior thereto, Vice President and Associate General Counsel of|
Item 5. Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.
BDs common stock is listed on the New York Stock Exchange. As of November 28, 2006, there were approximately 9,086 shareholders of record. Additional information required by this item appears under the caption Common Stock Prices and Dividends on page 64 of Exhibit 13, and is incorporated herein by reference. Certain other information required by this item will be contained under the captions Equity Compensation Plan Information and Ownership of BD Stock in BDs Proxy Statement, and such information is incorporated herein by reference.
Issuer Repurchases of Equity Securities
The table below sets forth certain information regarding BDs purchases of its common stock during the fiscal quarter ended September 30, 2006.
|For the Three Months Ended||
|September 30, 2006||
|July 131, 2006||94||$||62.24||-||7,289,514|
|August 131, 2006||3,875||$||66.36||-||7,289,514|
|September 130, 2006||
Includes 6,038 shares purchased during the quarter in open market transactions by the trustee under the Deferred Compensation Plan and the 1996 Directors Deferral Plan, and 3,761 shares delivered to BD in connection with stock option exercises.
These repurchases were made pursuant to a repurchase program for 10 million shares announced on November 22, 2005 (the 2005 Program). There is no expiration date for the 2005 Program.
Item 6. Selected Financial Data.
The information required by this item is included under the caption Ten-Year Summary of Selected Financial Data on pages 18-19 of Exhibit 13 and is incorporated herein by reference.
Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operation.
The information required by this item is included in the text contained under the caption Financial Review on pages 20-32 of Exhibit 13 and is incorporated herein by reference.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk.
The information required by this item is included in the text contained under the caption Financial Instrument Market Risk on page 24 of, and in notes 1 and 9 to, the consolidated financial statements contained in Exhibit 13, and each is incorporated herein by reference.
Item 8. Financial Statements and Supplementary Data.
The information required by this item is included on page 19 herein and on pages 33-62 of Exhibit 13 and is incorporated herein by reference.
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.
Item 9A. Controls and Procedures.
An evaluation was conducted by BDs management, with the participation of BDs Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of BDs disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934) as of September 30, 2006. 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 BDs internal control over financial reporting during the fiscal quarter ended September 30, 2006 identified in connection with the above-referenced evaluations that has materially affected, or is reasonably likely to materially affect, the internal control over financial reporting.
Managements Report on Internal Control Over Financial Reporting and the Report of Independent Registered Public Accounting Firm on pages 33 and 35, respectively, of Exhibit 13 are incorporated herein by reference.
Item 9B. Other Information.
Item 10. Directors, Executive Officers and Corporate Governance.
The information relating to directors and the Audit Committee of the BD Board of Directors required by this item will be contained under the captions Board of DirectorsAudit Committee and Proposal 1. Election of Directors in a definitive Proxy Statement involving the election of directors, which the registrant will file with the SEC not later than 120 days after September 30, 2006 (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.
Certain other information required by this item will be contained under the captions Section 16(a) Beneficial Ownership Reporting Compliance and Corporate GovernanceSignificant Governance PracticesBusiness Conduct and Compliance Guide in BDs 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 DirectorsDirectors Compensation and Compensation of Named Executive Officers in BDs Proxy Statement, and such information is incorporated herein by reference.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.
The information required by this item will be contained under the caption Ownership of BD Common Stock in BDs Proxy Statement, and such information is incorporated herein by reference.
Item 13. Certain Relationships and Related Transactions, and Director Independence.
The information required by this item will be contained under the caption Corporate GovernanceSignificant Governance PracticesDirector Independence/Certain Relationships and Related Transactions in BDs Proxy Statement, and such information is incorporated herein by reference.
Item 14. Principal Accounting Fees and Services.
The information required by this item will be contained under the caption Proposal 2. Ratification of Selection of Independent Registered Public Accounting Firm in BDs Proxy Statement, and such information is incorporated herein by reference.
Item 15. Exhibits, Financial Statement Schedules.
(a) Financial Statements
The following consolidated financial statements of BD included in Exhibit 13 at the pages indicated in parentheses, are incorporated by reference in Item 8 of this report:
Reports of Independent Registered Public Accounting Firm (pages 34-35)
Consolidated Statements of IncomeYears ended September 30, 2006, 2005 and 2004 (page 36)
Consolidated Statements of Comprehensive IncomeYears ended September 30, 2006, 2005 and 2004 (page 37)
Consolidated Balance SheetsSeptember 30, 2006 and 2005 (page 38)
Consolidated Statements of Cash FlowsYears ended September 30, 2006, 2005 and 2004 (page 39)
Notes to Consolidated Financial Statements (pages 40-61)
(b) Financial Statement Schedules
The following consolidated financial statement schedule of BD is included herein at the page indicated in parentheses:
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.
See the Exhibit Index beginning on page 20 hereof for a list of all management contracts, compensatory plans and arrangements required by this item (Exhibit Nos. 10(a)(i) through 10(s)), and all other Exhibits filed or incorporated by reference as a part of this report.
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|
|Dean J. Paranicas|
|Vice President, Corporate Secretary|
|and Public Policy|
Dated: November 30, 2006
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below on the 30th day of November, 2006 by the following persons on behalf of the registrant and in the capacities indicated.
|Chairman, President and|
|(Edward J. Ludwig)||Chief Executive Officer|
|(Principal Executive Officer)|
|Senior Executive Vice President and|
|(John R. Considine)||Chief Financial Officer|
|(Principal Financial Officer)|
|Vice President and Controller|
|(William A. Tozzi)||(Principal Accounting Officer)|
|(Basil L. Anderson)|
|(Henry P. Becton, Jr.)|
|(Edward F. DeGraan)|
|(Claire M. Fraser-Liggett)|
|(Adel A.F. Mahmoud)|
|(Gary A. Mecklenburg)|
|(James F. Orr)|
|(Willard J. Overlock, Jr.)|
|(James E. Perrella)|
|(Bertram L. Scott)|
|(Margaretha af Ugglas)|
BECTON, DICKINSON AND COMPANY
VALUATION AND QUALIFYING ACCOUNTS
Years Ended September 30, 2006, 2005 and 2004
(Thousands of dollars)
Against trade receivables:
|For doubtful accounts||
|For cash discounts||
Against trade receivables:
|For doubtful accounts||
|For cash discounts||
Against trade receivables:
|For doubtful accounts||
|For cash discounts||
(A) Accounts written off.
Method of Filing
|3(a)(i)||Restated Certificate of Incorporation, as||Incorporated by reference to Exhibit 3(a) to the|
|amended January 22, 1990||registrants Annual Report on Form 10-K for fiscal|
|year ended September 30, 1990|
|3(a)(ii)||Amendment to the Restated Certificate of||Incorporated by reference to Exhibit 3(a) to the|
|Incorporation, as of August 5, 1996||registrants Quarterly Report on Form 10-Q for the|
|period ended June 30, 1996|
|3(a)(iii)||Amendment to the Restated Certificate of||Incorporated by reference to Exhibit 3(b) to the|
|Incorporation, as of August 10, 1998||registrants Quarterly Report on Form 10-Q for the|
|period ended June 30, 1998|
|3(b)||By-Laws, as amended and restated as of March||Incorporated by reference to Exhibit 3.1 to the|
|28, 2006||registrants Current Report on Form 8-K dated|
|March 29, 2006|
|4(a)||Indenture, dated as of December 1, 1982||Incorporated by reference to Exhibit 4 to|
|between the registrant and Manufacturers||Registration Statement No. 2-80707 on Form S-3|
|Hanover Trust Company (now JPMorgan Chase||filed by the registrant|
|4(b)||First Supplemental Indenture, dated as of May||Incorporated by reference to Exhibit 4(b) to|
|15, 1986, between the registrant and||Registration Statement No. 33-5663 on Form S-3|
|Manufacturers Hanover Trust Company (now||filed by the registrant|
|JPMorgan Chase Bank)|
|4(c)||Second Supplemental Indenture, dated as of||Incorporated by reference to Exhibit 4 to|
|January 10, 1995, between the registrant and||Registration Statement No. 2-80707 on Form S-3|
|Manufacturers Hanover Trust Company (now||filed by the registrant|
|JPMorgan Chase Bank)|
|4(d)||Indenture, dated as of March 1, 1997, between||Incorporated by reference to Exhibit 4(a) to Form|
|the registrant and The Chase Manhattan Bank||8-K filed by the registrant on July 31, 1997 (the|
|(now JPMorgan Chase Bank)||registrant hereby agrees to furnish to the|
|Commission upon request a copy of any other|
|instruments which define the rights of holders on|
|long-term debt of the registrant)|
Method of Filing
|10(a)(i)||Form of Employment Agreement with executive||Incorporated by reference to Exhibit 10(a)(iii) to|
|officers relating to employment following a||the registrants Annual Report on Form 10-K for|
|change of control of the registrant||the fiscal year ended September 30, 2005|
|10(a)(ii)||Form of Employment Agreement with corporate||Incorporated by reference to Exhibit 10(a)(iv) to the|
|officers (other than executive officers) relating to||registrants Annual Report on Form 10-K for the|
|employment following a change of control of the||fiscal year ended September 30, 2005|
|10(b)||Stock Award Plan, as amended and restated as of||Incorporated by reference to Exhibit 10(c) to the|
|May 25, 2004||registrants Quarterly Report on Form 10-Q for the|
|period ended June 30, 2004|
|10(c)||Performance Incentive Plan, as amended and||Incorporated by reference to Exhibit 10(c) to the|
|restated November 23, 2004||registrants Annual Report on Form 10-K for the|
|fiscal year ended September 30, 2004|
|10(d)(i)||Deferred Compensation Plan, as amended and||Incorporated by reference to Exhibit 10(b) to the|
|restated as of March 22, 2004||registrants Quarterly Report on Form 10-Q for the|
|period ended June 30, 2004|
|10(d)(ii)||1996 Directors Deferral Plan, as amended as of||Filed with this report|
|November 21, 2006|
|10(e)(i)||1990 Stock Option Plan, as amended and restated||Incorporated by reference to Exhibit 10(i) to the|
|February 8, 1994||registrants Annual Report on Form 10-K for the|
|fiscal year ended September 30, 1994|
|10(e)(ii)||Amendment dated as of April 24, 2000 to the||Incorporated by reference to Exhibit 10(h) to the|
|1990 Stock Option Plan, as amended and restated||registrants Quarterly Report on Form 10-K for the|
|February 8, 1994||period ended June 30, 2000|
|10(f)(i)||Retirement Benefit Restoration Plan, as amended||Incorporated by reference to Exhibit 10(i)(i) to the|
|and restated as of November 27, 2000||registrants Annual Report on Form 10-K for the|
|fiscal year ended September 30, 2000|
|10(f)(ii)||Amendment to the Retirement Benefit||Incorporated by reference to Exhibit 10(i)(ii) to the|
|Restoration Plan dated October 16, 2001||registrants Annual Report on Form 10-K for the|
|fiscal year ended September 30, 2001|
|10(f)(iii)||Employee Participation Agreement dated||Incorporated by reference to Exhibit 10(i)(iii) to the|
|November 27, 2000 between the registrant and||registrants Annual Report on Form 10-K for the|
|John R. Considine||period ended September 30, 2000|
|10(f)(iv)||Agreement dated December 18, 2000 between||Incorporated by reference to Exhibit 10(i)(iv) to the|
|the registrant and John R. Considine||registrants Annual Report on Form 10-K for the|
|period ended September 30, 2000|
Method of Filing
|1994 Restricted Stock Plan for Non Employee||Incorporated by reference to Exhibit A to the|
|Directors||registrants Proxy Statement dated January 5, 1994|
|Amendment to the 1994 Restricted Stock Plan||Incorporated by reference to Exhibit 10(j)(ii) to the|
|for Non-Employee Directors as of November 26,||registrants Annual Report on Form 10-K for the|
|1996||fiscal year ended September 30, 1996|
|1995 Stock Option Plan, as amended and restated||Incorporated by reference to Exhibit 10(k) to the|
|January 27, 1998||registrants Annual Report on Form 10-K for the|
|fiscal year ended September 30, 1998|
|Amendments dated as of April 24, 2000 to the||Incorporated by reference to Exhibit 10(k) to the|
|1995 Stock Option Plan, as amended and restated||registrants Quarterly Report on Form 10-Q for the|
|January 27, 1998||period ended June 30, 2000|
|1998 Stock Option Plan||Incorporated by reference to Exhibit 10.1 to the|
|registrants Quarterly Report on Form 10-Q/A for|
|the period ended March 31, 1998|
|Amendments dated as of April 24, 2000 to the||Incorporated by reference to Exhibit 10(l) to the|
|1998 Stock Option Plan||registrants Quarterly Report on Form 10-Q for the|
|period ended June 30, 2000|
|Australian, French and Spanish addenda to the||Incorporated by reference to Exhibit 10(m) to the|
|Becton, Dickinson and Company Stock Option||registrants Annual Report on Form 10-K for the|
|Plans||fiscal year ended September 30, 1998|
|Indian addendum to the Becton, Dickinson and||Incorporated by reference to Exhibit 10(n) to|
|Company Stock Option Plans||registrants Annual Report on Form 10-K for the|
|fiscal year ended September 30, 1999|
|China and Japan addenda to Becton, Dickinson||Incorporated by reference to Exhibit 10(n)(i) to|
|and Company Stock Option Plans||registrants Annual Report on Form 10-K for the|
|fiscal year ended September 30, 2002|
|Non-Employee Directors 2000 Stock Option||Incorporated by reference to Exhibit 10(o) to the|
|Plan||registrants Quarterly Report on Form 10-Q for the|
|period ended March 31, 2000|
|Amendments dated as of April 24, 2000 to the||Incorporated by reference to Exhibit 10(o) to the|
|Non-Employee Directors 2000 Stock Option||registrants Quarterly Report on Form 10-Q for the|
|Plan||period ended June 30, 2000|
|2002 Stock Option Plan||Incorporated by reference to Appendix A to the|
|registrants Proxy Statement dated January 2, 2002|
|2004 Employee and Director Equity-Based||Filed with this report|
|Compensation Plan, as amended and restated as|
|of November 21, 2006|
|Terms of Awards under 2004 Employee and||Incorporated by reference to Exhibit A of the|
|Director Equity-Based Compensation Plan||registrants Current Report on Form 8-K dated|
|November 21, 2005|
|10||(q)||Compensation of non-management members of||Incorporated by reference to Exhibit B of the|
|the Board of Directors of Becton, Dickinson and||registrants Current Report on Form 8-K dated|
|Company||November 21, 2005|
|10||(r)||Amended and Restated Aircraft Time Sharing||Filed with this report|
|Agreement between Becton, Dickinson and|
|Company and Edward J. Ludwig dated as of|
|September 22, 2006|
|10||(s)||Amended and Restated Five-Year Credit||Incorporated by reference to Exhibit 10(d) of the|
|Agreement, dated as of August 13, 2004 among||registrants Quarterly Report on Form 10-Q for the|
|the registrant and the banks named therein||period ended June 30, 2004|
|13||Portions of the registrants Annual Report to||Filed with this report|
|Shareholders for fiscal year 2006|
|21||Subsidiaries of the registrant||Filed with this report|
|23||Consent of independent registered public||Filed with this report|
|31||Certifications of Chief Executive Officer and||Filed with this report|
|Chief Financial Officer, pursuant to SEC Rule|
|32||Certifications of Chief Executive Officer and||Filed with this report|
|Chief Financial Officer, pursuant to Section 1350|
|of Chapter 63 of Title 18 of the U.S. Code|
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.