2			Accounting Changes

		2002		2001		2000
Reported Net Income	$	479,982	$	401,652	$	392,897
Goodwill Amortization		-		25,943		25,590
Amortization of Indefinite-Lived Intangible Assets		-		1,307		1,311
Adjusted Net Income	$	479,982	$	428,902	$	419,798
Basic Earnings Per Share	$	1.85	$	1.55	$	1.54
Goodwill Amortization		-		.10		.10
Amortization of Indefinite-Lived Intangible Assets		-		.01		.01
Adjusted Basic Earnings Per Share	$	1.85	$	1.66	$	1.65
Diluted Earnings Per Share	$	1.79	$	1.49	$	1.49
Goodwill Amortization		-		.10		.10
Amortization of Indefinite-Lived Intangible Assets		-		-		-
Adjusted Diluted Earnings Per Share	$	1.79	$	1.59	$	1.59

Intangible amortization expense was $37,753 in fiscal 2002. The estimated aggregate amortization expense for the fiscal years ending September 30, 2003 to 2007 are as follows: 2003-$37,500; 2004-$36,900; 2005-$35,200; 2006-$32,200; 2007-$32,100.
    Intangible assets at September 30 consisted of:

			2002					2001
	Gross Carrying Amount		Accumulated Amortization			Gross Carrying Amount		Accumulated Amortization
Amortized intangible assets Core and Developed Technology	$	370,044	$	86,878		$	370,044	$	65,356
Patents, Trademarks, & Other		308,202		199,065			358,604		193,961
Goodwill		-		-			594,695		163,243
Total	$	678,246	$	285,943		$	1,323,343	$	422,560
Unamortized intangible assets Goodwill(A)	$	492,327					-
Trademarks(B)		17,621					-
Total	$	509,948	$				-

(A) Net of accumulated amortization of $175,903.
(B) Net of accumulated amortization of $6,175.

    On March 31, 2002, the Company completed its goodwill impairment assessment as required by SFAS No. 142. The adoption of this aspect of SFAS No. 142 did not result in a goodwill impairment and therefore had no impact on the results of operations or financial condition of the Company.

Revenue Recognition
Effective October 1, 2000, the Company changed its method of revenue recognition for certain products in accordance with Staff Accounting Bulletin No. 101, "Revenue Recognition in Financial Statements," ("SAB 101"). As a result, the Company recorded the following accounting changes.
    The Company changed its accounting method for revenue recognition related to branded insulin syringe products that are sold to distributors in the U.S. consumer trade channel. These products were predominantly sold under incentive programs and these distributors have implied rights of return on unsold merchandise held by them. The Company previously recognized this revenue upon shipment to these distributors, net of appropriate allowances for sales returns. Effective October 1, 2000, the Company changed its method of accounting for revenue related to these product sales to recognize such revenues upon the sell-through of the respective product from the distribution channel partner to the end customer. The Company believes this change in accounting principle is the preferable method. The cumulative effect of this change in accounting method was a charge of $52,184 or $30,789, net of taxes.
    The Company also changed its accounting method for recognizing revenue on certain instruments in the Biosciences segment. Prior to the adoption of SAB 101, the Company's accounting policy was to recognize revenue upon delivery of instruments to customers but prior to installation at the customer's site. The Company had routinely completed such installation services successfully in the past, but a substantive effort is required for the installation of these instruments and only the Company can perform the service. Therefore, effective October 1, 2000, the Company recognizes revenues for these instruments upon completion of installation at the customer's site. The cumulative effect of this change in accounting method was a charge of $9,772, or $5,961 net of taxes.
    The total cumulative effect of these accounting changes on prior years resulted in an after-tax charge to income of $36,750 for the year ended September 30, 2001. Of the $80,700 of revenues included in the cumulative effect adjustment, $44,300 and $28,500 were included in the restated revenues for the first and second quarters of fiscal 2001, respectively, with the remainder substantially recognized by the end of the third quarter. The adoption of SAB 101 increased Biosciences revenues for 2001 by approximately $3,400 and decreased Medical Systems revenues for 2001 by about $3,100. Consequently, the adoption of SAB 101 had an immaterial effect on revenues for the year ended September 30, 2001.
    As of September 30, 2002 and 2001, the deferred profit balances recorded as Accrued Expenses were $10,807 and $62,100, respectively.
    If the accounting change were made retroactively, the unaudited pro forma consolidated net income, basic earnings per share, and diluted earnings per share for the year ended September 30, 2000, would have been $385,721, $1.52, and $1.46, respectively.

Adoption of New Accounting Standards
In August 2001, the FASB issued SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets." This Statement requires that one accounting model be used for long-lived assets to be disposed of by sale and it broadens the presentation of discontinued operations to include more disposal transactions. The provisions relating to long-lived assets to be disposed of by sale or otherwise are effective for disposal activities initiated by a commitment to a plan after the effective date of the Statement. The Company will adopt the provisions of this Statement effective October 1, 2002, and does not expect that this Statement will have a material impact on its consolidated financial position or results of operations in 2003.
    In June 2002, the FASB issued SFAS No. 146, "Accounting for Costs Associated with Exit or Disposal Activities." This Statement requires that a liability for a cost associated with an exit or disposal activity be recognized when the liability is incurred. Previous guidance had required that liabilities for exit costs be recognized at the date of an entity's commitment to an exit plan. The Company is required to adopt the provisions of this Statement for any exit or disposal activities that are initiated after December 31, 2002, and does not expect that this Statement will have a material impact on its consolidated financial position or results of operations in 2003.