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 December 31, 2000

Commission File Number 1-6926

C. R. BARD, INC.

(Exact name of registrant as specified in its charter)

730 Central Avenue, Murray Hill, New Jersey 07974

(Address of principal executive offices)

Registrant's telephone number, including area code: (908) 277-8000

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 amendments to this Form 10-K. [ X ]

The aggregate market value of the voting stock held by nonaffiliates of the registrant was approximately $2,300,000,000 based on the closing price of stock traded on the New York Stock Exchange on February 28, 2001. As of February 28, 2001, there were 50,747,873 shares of Common Stock, $.25 par value per share, outstanding.

The company's definitive Proxy Statement dated March 9, 2001 has been incorporated by reference with respect to certain information contained therein in Part III and Part IV of this Form 10-K.

The exhibit index is located in Part IV, Item 14, Page IV-1.

Item 1. Business

C. R. Bard, Inc. (the "company" or "Bard") was started by Charles Russell Bard in 1907. One of its first medical products was the silk urethral catheter imported from France. In 1923, the company was incorporated as C. R. Bard, Inc. and distributed an assortment of urological and surgical products. Bard became a publicly traded company in 1963 and five years later was traded on the New York Stock Exchange.

In 1966, Bard acquired the United States Catheter & Instrument Co., a supplier of urological and cardiovascular specialty products. In 1980, Bard acquired its major production source for the Foley catheter, Davol, Inc. Numerous other acquisitions were made over the last thirty-five years broadening Bard's product lines. Today, Bard is a leading multinational developer, manufacturer and marketer of health care products.

2000 sales of $1.099 billion increased 6% from 1999. Net income for 2000 totaled $106.9 million compared with $118.1 million in 1999. Basic and diluted earnings per share were $2.11 and $2.09, respectively, in 2000. Basic and diluted earnings per share were $2.31 and $2.28, respectively, in 1999.

Cardiology Dispositions - In 1998, the company announced a series of strategic dispositions of its cardiology businesses. The first in this series was the company's 1998 sale of its cardiac cath lab business. This sale resulted in a 1998 pretax gain of $329.2 million ($3.03 per share after tax). Following the sale of the cardiac cath lab business, the company completed in 1999 the sale of its cardiopulmonary business. This disposition resulted in a 1999 pretax gain of $9.2 million ($0.12 per share after tax). In the first quarter of 2000, the company settled all remaining open issues related to the 1998 dispositions of its cardiology businesses and recorded a gain of $15.4 million ($0.19 per share after tax).

Endologix - In 1999, the company entered into an exclusive agreement with Endologix, Inc., a California-based company that had developed an endoluminal graft (ELG) used for the minimally invasive treatment of abdominal aortic aneurysms. The agreement, as amended, included an exclusive and irrevocable option to acquire before the end of the year 2000 all of the remaining capital stock of Endologix, Inc. not already owned by Bard for approximately $42 million. On December 14, 2000 the company announced that it would not exercise its option to acquire the remaining stock of Endologix, Inc. The company recorded a pretax charge of $40.3 million ($0.53 per share after tax) for the write-off of the Endologix option and related assets and liabilities.

In addition to the items described above, in 1998 the company reported a pretax loss of $17.5 million ($0.18 per share after tax) on the sale of several other product lines (including the loss on the sale of the Diagnostic Sciences Division.)

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Bard is engaged in the design, manufacture, packaging, distribution and sale of medical, surgical, diagnostic and patient care devices. Hospitals, physicians and nursing homes purchase approximately 90% of the company's products, most of which are used once and discarded. The company reports its sales around the concept of disease state management. Three of Bard's four major product group categories are: vascular diagnosis and intervention, urological diagnosis and intervention, and oncological diagnosis and intervention. In addition the company maintains and grows its fourth major product group, surgical specialties, and also has a product group of other ongoing products. The divested products category contains divested and discontinued product lines.

The following table sets forth for the last three years ended December 31, 2000, the approximate percent contribution by product line to Bard's consolidated net sales on a worldwide basis.

General - Historically, Bard has been known for its products in the urological field, where its Foley catheter is the leading device for bladder drainage. Bard's largest product group is the urological diagnosis and intervention category, contributing approximately 33% of consolidated net sales in 2000.

Bard continually expands its research toward the improvement of existing products and the development of new ones. It has pioneered the development of disposable medical products for standardized procedures.

Vascular Diagnosis and Intervention - Bard's line of vascular diagnosis and intervention products includes peripheral angioplasty stents, catheters, guidewires, introducers and accessories, vena cava filters and biopsy devices; electrophysiology products including cardiac mapping and electrophysiology laboratory systems, and diagnostic and temporary pacing electrode catheters; fabrics and meshes and implantable blood vessel replacements.

Urological Diagnosis and Intervention - Bard offers a complete line of urological diagnosis and intervention products including Foley catheters, procedure kits and trays and related urine monitoring and collection systems; ureteral stents; and specialty devices for incontinence, endoscopic procedures and stone removal.

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Oncological Diagnosis and Intervention - Bard's line of oncological diagnosis and intervention products include specialty access catheters and ports and gastroenterological products.

Surgical Specialties - Bard's surgical specialties products include meshes for hernia repair, irrigation devices for orthopaedic and laparoscopic procedures, laparoscopic accessories and topical hemostasis.

International - Bard markets vascular, urological, oncological and surgical specialties products throughout the world. Principal markets are Japan, Canada, the United Kingdom and continental Europe. Approximately 41% of the sales outside the United States are of products manufactured by Bard in its facilities in Australia, Canada, France, Germany, Malaysia and the United Kingdom. The balance of the sales are from products manufactured in the continental United States, Puerto Rico or Mexico for export. Bard's foreign operations are subject to the usual risks of doing business abroad, including restrictions on currency transfer, exchange fluctuations and possible adverse government regulations. See Note 10 in the Notes to Consolidated Financial Statements for additional information.

Competition - The company knows of no published statistics permitting a general industry classification that would be meaningful as applied to the company's variety of products. However, products sold by the company are in substantial competition with those of many other firms, including a number of larger well-established companies. The company depends more on its consistently reliable product quality, dependable service and its ability to develop products to meet market needs than on patent protection, although many of its products are patented or are the subject of patent applications.

Marketing - The company's products are distributed domestically directly to hospitals and other institutions as well as through numerous hospital/surgical supply and other medical specialty distributors with whom the company has distributor agreements. In international markets, products are distributed either directly or through distributors with the practice varying by country. Full-time representatives of the company in domestic and international markets carry on sales promotion.

Sales to distributors, which supply the company's products to many end users, accounted for approximately 38% of the company's net sales in 2000, and the five largest distributors combined accounted for approximately 63% of such sales.

In order to service its customers, both within and outside the U.S., the company maintains inventories at distribution facilities in most of its principal marketing areas. Orders are normally shipped within a matter of days after receipt, except for items temporarily out of stock, and backlog is normally not significant for the company.

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 Regulation - The development, manufacture, sale and distribution of the company's products are subject to comprehensive government regulation both within and outside the United States. Government regulation, including detailed inspection of and controls over, research and laboratory procedures, clinical investigations, manufacturing, marketing, sampling, distribution, record keeping, storage and disposal practices, substantially increases the time, difficulty and costs incurred in obtaining and maintaining the approval to market newly developed and existing products. Government regulatory actions can result in the seizure or recall of products, suspension or revocation of the authority necessary for their production and sale, and other civil or criminal sanctions.

In the early 1990's, the review time by the United States Food and Drug Administration ("FDA") to clear medical devices for commercial release lengthened and the number of clearances, both of 510(k) submissions and pre-market approval applications, decreased. In response to public and congressional concern, the FDA Modernization Act of 1997 was adopted with the intent of bringing better definition to the clearance process. While FDA review times have improved since passage of the 1997 Act, there can be no assurance that the FDA review process will not involve delays or that clearances will be granted on a timely basis.

Medical device laws are also in effect in many of the countries in which the company does business outside the United States. These range from comprehensive device approval requirements for some or all of the company's medical device products to requests for product data or certifications. The number and scope of these requirements are increasing.

Government and private sector initiatives to limit the growth of health care costs, including price regulation and competitive pricing, are continuing in many countries where the company does business, including the United States. These changes are causing the marketplace to put increased emphasis on the delivery of more cost-effective medical therapies. Although the company believes it is well positioned to respond to changes resulting from this worldwide trend toward cost containment, the uncertainty as to the outcome of any proposed legislation or changes in the marketplace precludes the company from predicting the impact these changes may have on future operating results.

In keeping with the increased emphasis on cost-effectiveness in health care delivery, the current trend among hospitals and other customers of medical device manufacturers is to consolidate into larger purchasing groups to enhance purchasing power. The medical device industry has also experienced some consolidation, partly in order to offer a broader range of products to large purchasers. As a result, transactions with customers are more significant, more complex and tend to involve more long-term contracts than in the past. This enhanced purchasing power may also increase the pressure on product pricing, although management is unable to estimate the potential impact at this time. 

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Employees - The company employs approximately 8,100 persons.

Seasonality - The company's business is not affected to any material extent by seasonal factors.

Research and Development - The company's research and development expenditures amounted to approximately $53,200,000 in 2000, $53,800,000 in 1999 and $72,700,000 in 1998.

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Item 2. Properties

The executive offices of the company are located in Murray Hill, New Jersey, in facilities that the company owns. Domestic manufacturing and development units are located in Arizona, Georgia, Kansas, Massachusetts, New Jersey, New York, Ohio, Pennsylvania, Puerto Rico, Rhode Island, South Carolina, Texas and Utah. Sales offices and distribution points are in these locations as well as others.

Outside the U.S., the company has plants or offices in Australia, Belgium, Canada, China, France, Germany, Hong Kong, India, Italy, Korea, Malaysia, Mexico, the Netherlands, Norway, Portugal, Singapore, Spain, Sweden, Switzerland and the United Kingdom.

The company owns approximately 1,700,000 square feet in 18 locations and leases approximately 1,300,000 square feet of space in 43 locations.

All these facilities are well maintained and suitable for the operations conducted in them.

Item 3. Legal Proceedings

During 1993, the United States Environmental Protection Agency (the "EPA") notified the company's Urological division that it might be a Potentially Responsible Party ("PRP") relative to cleanup of the Frontier Chemical site in Niagara Falls, New York. In September 1993, the company entered into a consent order concerning the first phase of the cleanup, which was a drum removal action. The company's liability for the first phase was $119,000. A second phase of remedial action involves removal of waste in several large tanks. The company's liability for this phase was assessed at less than $15,000. The third phase of remedial action involves soil and groundwater contamination. The company's responsibility, if any, for cleanup of this phase is unknown at this time, but the final resolution of this matter is not expected to have a material adverse financial impact on the company.

During 1992, the EPA notified the company that it had been identified as a PRP in connection with an ongoing investigation of the Solvents Recovery Service of New England site in Southington, Connecticut. Although the full extent of liability in this case is unknown, the company has been identified with less than one-half percent of the total gallonage of waste materials. Beginning in 1995, the company, together with several hundred other parties, entered into two consent orders to perform the remedial investigation and feasibility study and two removal actions with respect to groundwater contamination. In or about May 2000, the EPA notified the company that it is a PRP with respect to a satellite site, the Angellio Superfund Site, also in Southington, Connecticut, to which hazardous waste had allegedly been transhipped from the Solvents Recovery Service of New England site. The final resolution of these matters is not expected to have a material adverse financial impact on the company.

Davol Inc., a Bard subsidiary, has been identified as a PRP by the Massachusetts Department of Environmental Protection for two new Superfund sites in Dartmouth and Freetown, Massachusetts. The allegations stem from transhipments of waste from the ReSolve hazardous waste reprocessing facility in Dartmouth, Massachusetts to each of the sites associated with the H&M Drum Company. At this time, Davol Inc. and the other former ReSolve waste generators have agreed to contribute $1,000 towards a fund to finance a site investigation. The final resolution of this matter is not expected to have a material adverse financial impact on the company.

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 On June 7, 2000, the Casmalia Resources Site Steering Committee ("Casmalia Committee") notified the company that in the Committee's view, the company is a PRP in connection with the remediation of the Casmalia Disposal Site located in Santa Barbara County, California. The Casmalia Committee identified itself as a group of 54 PRP's that in 1997 entered into a consent decree with the EPA regarding remediation of the site. The Casmalia Committee's stated estimate of the costs of total site remediation was $271,900,000. The EPA has not given any notice to the company with regard to this site. The final resolution of this matter is not expected to have a material adverse financial impact on the company.

The company is subject to various legal proceedings and claims including claims of alleged personal injuries as a result of exposure to natural rubber latex gloves distributed by the company and other product liability matters, intellectual property matters and disputes on agreements which arise in the ordinary course of business. The company believes that these legal matters will likely be disposed of over an extended period of time and should not have a material adverse impact on the company's consolidated financial position or results of operations.

Item 4. Results of Votes of Security Holders

Not applicable. 

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Set forth below is the name, age, position, five-year business history and other information with respect to each executive officer of the company as of March 1, 2001. No family relationships exist among the officers of the company.

The Board of Directors elects all officers of the company annually. 

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Executive Officers of the Registrant (continued)

William H. Longfield joined Bard in 1989 as Executive Vice President and Chief Operating Officer. Prior to joining the company, he was President and Chief Executive Officer of Cambridge Group, Inc. Previously Mr. Longfield was Executive Vice President - Operations of Lifemark, Inc. and prior thereto, he was employed by American Hospital Supply Corporation where he held a number of positions including President of the Convertors Division. Mr. Longfield was elected Bard's President and Chief Operating Officer in 1991 and delegated the duties and responsibilities of Chairman and Chief Executive Officer in 1993. He was elected President and Chief Executive Officer in 1994 and elected to his present position in 1995. Mr. Longfield was elected to the Board of Directors in 1990.

Guy J. Jordan joined Bard in 1986 as Director of Research and Development for USCI. He was promoted to Vice President for specialty access products in 1990 for Davol. In 1991, Mr. Jordan was promoted to Vice President and General Manager of Bard Access Systems and became President of the division in 1993. He was elected to Group Vice President in October 1996 and to his present position in April 1997. Prior to joining Bard, Mr. Jordan was with the American Cyanamid Corporation.

Timothy M. Ring joined Bard in 1992 as Vice President - Human Resources. Prior to joining the company, he was with Abbott Laboratories, Inc. for ten years, most recently with their Hospital Products Division as Director of Personnel. Mr. Ring was elected to Group Vice President in 1993 and to his present position in 1997.

John H. Weiland joined Bard in 1996 as Group Vice President. Prior to joining the company, he was Senior Vice President at Dentsply International. Mr. Weiland previously served as President and Chief Executive Officer of Pharmacia Diagnostics, Inc. and was with American Hospital Supply and Baxter Healthcare. Mr. Weiland served one year as a White House Fellow in the role of Special Assistant in the Office of Management and Budget. He was elected to his present position in 1997.

Charles P. Slacik joined Bard in 1999 as Senior Vice President and Chief Financial Officer. Prior to joining the company, he was with American Home Products Corporation since 1982 in various financial and operating positions. Mr. Slacik's most recent position at American Home Products was as Chief Operating Officer for Solgar Vitamin and Herb Company. In addition, he served as Senior Vice President of Finance for American Home Products' Whitehall-Robins Healthcare Division and Sherwood-Davis & Geck Corp.; Corporate Controller for American Home Products and Executive Vice President of Whitehall-Robins Healthcare Division.

Nadia C. Adler joined Bard in 1999 as Vice President, General Counsel and Secretary. Prior to joining Bard, she was Senior Vice President, General Counsel and Assistant Secretary of Montefiore Medical Center in New York City since 1987. Before Montefiore, Ms. Adler was a partner in the law firm of Rosenman & Colin where she served as a member of the litigation department and later their corporate department.

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Executive Officers of the Registrant (continued)

Susan Alpert, Ph.D., M.D. joined Bard in 2000 in her current position. Prior to joining the company, she was with the Food and Drug Administration in the Center for Devices and Radiological Health as Director of the Office of Device Evaluation from 1993-1999 and most recently in the Center for Food Safety and Applied Nutrition as the Director of Food Safety.

E. Robert Ernest joined Bard in 1977 as Director of Market Research and Business Development. Prior to joining, Bard he was with Abbott Laboratories for ten years. Mr. Ernest was promoted to Vice President - Business Development in 1979 and named to his present position in 1994.

Hope Greenfield joined Bard in 1995 in her present position. Prior to joining the company, she was with Digital Equipment Corporation for sixteen years where she served as Human Resources Director and Vice President for various divisions .

Charles P. Grom joined Bard in 1977 as Corporate Accounting Manager and was promoted to Corporate Cost and Budget Manager in 1980. Mr. Grom served as Division Controller for various Bard divisions between 1981 and 1988 when he was promoted to Assistant Corporate Controller. He was elected Controller in 1994 and to his present position in 1995.

Todd C. Schermerhorn joined Bard in 1985 as cost analyst and has held various financial positions including Controller of the Vascular Systems Division and Vice President and Controller of the USCI Division. Most recently Mr. Schermerhorn was promoted to Vice President and Group Controller for Bard's Global Cardiology Unit. He was promoted to his present position in 1998. 

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The company's common stock is traded on the New York Stock Exchange under the symbol: BCR. The following table illustrates the high and low sales prices as traded on the New York Stock Exchange for each quarter during the last two years.

In December 2000, the first quarter dividend of $.21 per share was declared, indicating an annual rate of $.84 per share. The first quarter dividend was paid on February 2, 2001 to shareholders of record on January 22, 2001. 

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Item 7. Management's Discussion and Analysis of Results of Operations and of Financial Conditions

For more than 90 years, C. R. Bard, Inc. has committed its resources to creating innovative solutions to meet the needs of both health care providers and their patients. The company is a global leader in the development, manufacture and supply of products and services to the health care industry. Bard addresses the health care opportunity through disease state management - an approach that expands the focus from products and technologies to the underlying clinical condition, thereby positioning the company as an indispensable partner to the deliverers of health care. Bard is committed to developing leadership franchises within these disease states and using these strategic positions to leverage the company's growth.

Bard reported 2000 net sales of $1,098.8 million, up 6% over 1999 net sales of $1,036.5 million. Holding currency rates constant, Bard would have recorded an 8% increase in total net sales over the prior-year period. The company demonstrated growth in each of its four product groups: vascular, urology, oncology and surgery. Bard reported net income of $106.9 million or $2.09 of diluted earnings per share in 2000 compared with net income of $118.1 million or $2.28 of diluted earnings per share in 1999. Both years' earnings include one-time items. Without these one-time items, diluted earnings per share were $2.45 in 2000 and $2.27 in 1999, an 8% increase. Net of one-time items, Bard's margin of net income to net sales improved to 11.4% from 11.3% in 1999.

Net sales for 2000 totaled $1,098.8 million. Bard reported total net sales for 1999 of $1,036.5 million, a 7% increase over ongoing net product sales in 1998. Price reductions and the impact of a stronger dollar had the effect of reducing 2000 net sales by 1.3% and 2.3%, respectively. Excluding negative currency effects, total net sales would have increased 8% in 2000 and 7% in 1999. Due to these negative currency effects, certain comparisons between 2000 and 1999, where indicated, are made holding currency rates constant.

Sales of vascular products increased 7% in 2000 to $241.2 million. On a constant currency basis, these sales increased 12% over the prior year. The electrophysiology and peripheral technology franchises continued to show strong worldwide growth.

Urology product group sales increased 2% in 2000 to $361.2 million and increased 4% on a constant currency basis over the prior year. Both the Infection Control Foley catheter and brachytheraphy products demonstrated solid sales growth.

Sales of oncology products increased 6% in 2000 to $253.0 million despite the impact of the dialysis catheter recall. Adjusting for the currency impact, these product sales would have increased 8% over the prior year. EndoCinch^TM endoscopic suturing system, a device used to treat gastroesophageal reflux disease (GERD) and bronchoscopy products were introduced this year. Gastroenterological products showed particularly strong growth internationally. 

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Sales of surgery products grew 11% in 2000 to $182.6 million, paced by the mesh product lines, used primarily in hernia repair. On a constant currency basis, these sales increased 12% over the prior year.

Other ongoing product sales grew 12% in 2000 to $60.8 million and increased 13% on a constant currency basis over the prior year. This product group includes irrigation, wound drainage and certain OEM products.

Net sales by product group for the last three years (in thousands) are:

Sales in the U. S. rose 8% to $788.3 million and represented 72% of total net sales. Surgery products provided the best growth domestically. Sales outside the U.S. increased 2% to $310.5 million and represented 28% of total net sales. Oncology products demonstrated the best growth internationally. For the year, excluding negative currency effects, net sales outside the U.S. would have increased 9%.

Bard markets its products through direct selling organizations and selected distributors throughout the world. The geographic breakdown, in percent, of net sales for each of the last three years is presented below:

Cost of goods sold as a percent of net sales increased to 45.4% in 2000 from 44.6% in 1999. Pricing pressures, the impact of currency, product recalls and lower margin OEM business all contributed to this increase.

As a percent of sales, marketing, selling and administrative expense was 32.0%, essentially flat as compared with the prior-year figure of 31.9%. Research and development expense remained consistent with the prior year at $53.2 million and was complemented by $68.6 million of spending for acquired technologies. Interest expense was $19.3 million in 2000, also consistent with the prior year.

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Please refer to Note 9, Other (Income) Expense, Net, of the Notes to Consolidated Financial Statements for a summary of items in this category for the last three years. In 2000, the company announced that it would not exercise its option to acquire the remaining capital stock of Endologix, Inc., a California-based company that had developed an endoluminal graft (ELG) used for the minimally invasive treatment of abdominal aortic aneurysms. As a result, the company recorded a pretax charge of $40.3 million ($0.53 per share after tax) for the write-off of the Endologix option and related assets and liabilities.

The company recorded one-time gains in 2000, 1999 and 1998 related to the series of dispositions of its cardiology product lines. In the first quarter of 2000, the company settled all remaining open issues related to these dispositions and recorded a gain of $15.4 million ($0.19 per share after tax). Please refer to Note 2, Acquisitions and Dispositions, of the Notes to Consolidated Financial Statements for additional disclosure.

The effective tax rate was 30.6% in 2000 and 31.9% in 1999.

In 2000, Bard reported net income of $106.9 million or diluted earnings per share of $2.09. Foreign exchange and the company's dialysis catheter recall negatively impacted 2000 results by approximately $0.11 and $0.09 per share, respectively. The company recorded several one-time items during 2000. Excluding the after-tax charge relating to the company's decision not to exercise the Endologix option ($0.53 per share after tax), and the net after-tax gain associated with other one-time items, primarily asset dispositions and legal settlements ($0.17 per share after tax), diluted earnings per share was $2.45.

In 1999, Bard reported net income of $118.1 million or diluted earnings per share of $2.28. Excluding the impact of the after-tax gain on the sale of the cardiopulmonary business of $0.12 per share and the after-tax loss associated with the fourth quarter write-down of impaired assets of $0.11 per share, diluted earnings per share was $2.27.

In 1998, Bard reported net income of $252.3 million or diluted earnings per share of $4.51. Excluding the impact of the after-tax gain on the sale of the cardiology businesses of $2.93 per share, the net after-tax loss from one-time items of $0.13 per share and the after-tax loss from Year 2000 costs of $0.05 per share, diluted earnings per share was $1.76.

Net sales for 1999 totaled $1,036.5 million, which represented a 7% increase over the prior year net sales of ongoing products of $968.9 million. Price reductions and the impact of a stronger dollar had the effect of reducing 1999 reported net sales by 1.1% and 0.4%, respectively.

Sales of vascular products rose 8% in 1999. Peripheral technology and electrophysiology devices showed strong worldwide growth.

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Urology product sales grew 4% in 1999. Basic drainage products experienced double-digit growth, fueled by outstanding sales of infection control catheters.

Sales of oncology products increased 12% in 1999. Specialty access devices showed good growth particularly in international markets.

Sales of surgery products grew 11% in 1999, propelled by high worldwide growth of mesh products, used primarily for hernia repair.

Net sales in the U.S. of ongoing products rose 7% to $730.8 million. The oncology and surgery products provided the best growth.

Net sales of ongoing products outside the U.S. increased 7% to $305.7 million with growth demonstrated by vascular and oncology products.

Cost of goods sold as a percent of net sales declined from 47.6% in 1998 to 44.6% in 1999. This improvement was due to the company's manufacturing restructuring programs and the divestitures of the lower margin cardiology businesses.

Marketing, selling and administrative expense declined 13% in 1999. As a percent of net sales, these expenses declined to 31.9% from 32.6% in 1998. This reduction was attributed to the cardiology divestitures and improved efficiency in the company's sales and administration efforts. Reported research and development expense declined 26% in 1999 due to the impact of the cardiology divestiture.

Interest expense declined 27% in 1999 due to lower average debt levels and improved operating cash flow.

Other (income) expense, net, in 1999 included a pretax charge of $8.4 million for the write-down of impaired assets.

The company recorded one-time gains in both 1999 and 1998 related to the dispositions of its cardiology businesses. A pretax gain of $9.2 million was recorded in the fourth quarter of 1999 and a pretax gain of $329.2 million was recorded in the fourth quarter of 1998. Please refer to Note 2, Acquisitions and Dispositions, of the Notes to Consolidated Financial Statements for additional disclosure.

The effective tax rate was 31.9% in 1999 and 45.7% in 1998. The 1998 effective tax rate was impacted by the disposition of the cardiology business, which was taxed at approximately a 50% rate.

In 1999, net income was $118.1 million or diluted earnings per share of $2.28. Excluding the impact of the after-tax gain on the sale of the cardiopulmonary business of $0.12 per share and the after-tax loss from the fourth quarter write-down of impaired assets of $0.11 per share, diluted earnings per share was $2.27.

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Bard's financial condition remains strong. Total debt was $205.1 million at December 31, 2000, down from $288.7 million at December 31, 1999. This decrease was the result of improved operating cash flow and the repayment of certain 1999 year-end contingent borrowings. Total debt to total capitalization was 25.0% at December 31, 2000, compared to 33.5% at December 31, 1999, while net debt, or debt less cash and short-term investments, to total capitalization was 12.2% at December 31, 2000, compared to 25.1% at December 31, 1999. Shareholders' investment was impacted in 2000 by the repurchase of $17.8 million of common stock.

Cash provided from operations continued to be the company's primary source of funds to finance operating needs, capital expenditures and dividend payments. The company believes it could borrow adequate funds at competitive terms and rates, should it be necessary. This overall financial strength gives Bard sufficient financing flexibility.

Total cash outlays made for the purchase of businesses, patents, trademarks, purchase rights, and other related items were approximately $69 million in 2000, $48 million in 1999 and $50 million in 1998. The majority of these investments were for intangible assets, reflecting the premium over book value for these purchases. These cash outlays were financed with cash from operations and additional debt.

Periodically, the company purchases its common stock in the open market to provide shares for issuance under various employee stock plans. In connection with the announced sale of the cardiology businesses, the Board of Directors in July of 1998 authorized the purchase from time to time of up to 10 million shares of common stock. Total shares purchased were 420,300 in 2000, 1,629,600 in 1999, and 6,295,200 in 1998.

The company periodically enters into foreign exchange contracts and options to reduce its exposure to fluctuations in currency values. Contracts have been exclusively for the forward purchase of, and options in, currencies in which the company has known or anticipated sales or payments. Monetary assets of the company held in foreign currencies have relatively short maturities and are denominated in currencies that have not experienced wide, short-term fluctuations in their equivalent U.S. dollar values. Please refer to Note 4, Short-Term Borrowings and Long-Term Debt, of the Notes to Consolidated Financial Statements for details of the company's foreign exchange contracts.

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On January 1, 1999, the eleven original member countries of the European Union began the transition to a common currency, the Euro. These participating countries expect the Euro transition to be completed by July 2002. The company continues to evaluate potential Euro-related issues including pricing/marketing strategy, conversion of computer systems, existing contracts and currency risk in the participating countries. At the present time, management does not believe the Euro conversion will have a materially adverse impact on our business.

In January 2001, the company announced a series of strategic initiatives aimed at providing greater operating efficiencies, enhancing future funding of research and development and accelerating long-term revenue growth.

These initiatives include the consolidation of all nonmanufacturing U.S. operations into a single location in central New Jersey. In addition, the company will begin a multiyear project to substantially reduce the number of manufacturing facilities worldwide. Finally, the company is exploring alternatives for the consolidation of international administrative functions.

The company expects that the New Jersey consolidation and the manufacturing restructuring will require up to three years to complete and will require a net cash investment of between $140 and $150 million for facilities, software and related infrastructure including personnel costs. The majority of these investments will occur in 2002 and 2003. The company anticipates both one-time charges and incremental operating expenses of approximately $21 million or $0.30 per share after tax in 2001. These costs would be associated with the first phase of the company's manufacturing consolidation project.

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Item 8. Financial Statements and Supplementary Data

To the Shareholders and Board of Directors of C. R. Bard, Inc.:

We have audited the accompanying consolidated balance sheets of C. R. Bard, Inc. (a New Jersey corporation) and subsidiaries as of December 31, 2000 and 1999, and the related consolidated statements of income, shareholders' investment and cash flows for each of the three years in the period ended December 31, 2000. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. 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 referred to above present fairly, in all material respects, the financial position of C. R. Bard, Inc. and subsidiaries as of December 31, 2000 and 1999, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2000 in conformity with accounting principles generally accepted in the United States.

ARTHUR ANDERSEN LLP

Roseland, New Jersey

January 23, 2001

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The accompanying notes to consolidated financial statements are an integral part of these statements. 

II-11

The accompanying notes to consolidated financial statements are an integral part of these statements.

II-12

The accompanying notes to consolidated financial statements are an integral part of these statements.

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The accompanying notes to consolidated financial statements are an integral part of these statements.

II-14

C. R. Bard, Inc. (the "company" or "Bard") is a leading multinational developer, manufacturer and marketer of health care products. The company markets its products worldwide to hospitals, individual health care professionals, extended care facilities and alternate site facilities. Bard holds strong positions in products used for vascular, urological and oncological diagnosis and intervention. Bard also has a surgical products group.

1. Significant Accounting Policies

Consolidation The consolidated financial statements include the accounts of the company and its majority-owned subsidiaries. All significant intercompany accounts and transactions are eliminated in consolidation. The accounts of most foreign subsidiaries are consolidated as of November 30. No events occurred related to these foreign subsidiaries in December 2000, 1999 or 1998 that materially affected the financial position or results of operations. Unincorporated joint ventures are recorded under the equity method of accounting. The company has a 50% ownership in Medicon, a Japanese joint venture. The company's investment in Medicon was $10,500,000 at December 31, 2000 and $7,600,000 at December 31, 1999.

Foreign Currency Translation Financial statements of foreign subsidiaries are translated into U.S. dollars at current rates, except that the revenues, costs and expenses are translated at average current rates during each reporting period. Net exchange gains or losses resulting from the translation of foreign financial statements and the effect of exchange rate changes on intercompany transactions of a long-term investment nature are accumulated and credited or charged directly to a separate component of shareholders' investment.

Revenue Recognition The company recognizes revenue from product sales when the goods are shipped to its customers. For certain products, the company maintains consigned inventory at customer locations. For these products, revenue is recognized at the time the company is notified that the product has been used by the customer.

Earnings Per Share "Basic earnings per share" represents net income divided by the weighted average shares outstanding. "Diluted earnings per share" represents net income divided by weighted average shares outstanding adjusted for the incremental dilution of outstanding employee stock options and awards. Unless indicated otherwise, per share amounts are calculated on a diluted basis. 

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1. Significant Accounting Policies (continued)

 A reconciliation of weighted average common shares outstanding to weighted average common shares outstanding assuming dilution follows:

Approximately 2,000,000 potentially dilutive shares have been excluded from diluted average common shares outstanding because their effect would be antidilutive. As part of the company's periodic program of share repurchases, approximately 320,000 shares were repurchased between December 31, 2000 and January 23, 2001.

Short-term Investments Short-term investments that have a maturity of ninety days or less are considered cash equivalents and amounted to $92,800,000 and $75,400,000 as of December 31, 2000 and 1999, respectively. Short-term investments are stated at cost, which approximates their market value.

Inventories Inventories are stated at the lower of cost or market. Certain domestic inventories are accounted for using the last-in-first-out ("LIFO") method of determining costs. All other inventories are accounted for using the first-in-first-out ("FIFO") method. Due to changing technologies and cost containment the difference between the valuation under the LIFO method and the FIFO method is not significant. The following is a summary of inventories at December 31:

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Long-lived Assets The company periodically evaluates its long-lived assets to determine whether an impairment has occurred. If this evaluation indicates that the remaining estimated useful life of an asset requires revision or that an asset is unrecoverable, the carrying amount of the asset is reduced by the estimated shortfall of cash flows on a discounted basis. Please refer to Note 9, Other (Income) Expense, Net, for a discussion of the company's asset impairment charges.

Property, plant and equipment are stated at cost. Major renewals and improvements are capitalized, while maintenance and repairs are expensed when incurred. Depreciation is computed over the estimated useful lives of depreciable assets using the straight-line method. Useful lives for property and equipment are as follows:

Depreciation expense was approximately $24,800,000 in 2000, $25,900,000 in 1999 and $28,500,000 in 1998.

Goodwill is amortized using the straight-line method over periods of 15-40 years as appropriate. Other intangible assets are amortized primarily over periods of 2-15 years, as appropriate. The largest item in goodwill relates to the company's acquisition of IMPRA in 1996. The net amount of goodwill for IMPRA was approximately $124,800,000 and $128,400,000 at December 31, 2000 and 1999, respectively.

As of December 31, intangible assets include the following:

Amortization expense was approximately $24,800,000 in 2000, $23,200,000 in 1999 and $30,200,000 in 1998.

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1. Significant Accounting Policies (continued)

Concentrations of Credit Risk Financial instruments, which potentially subject the company to significant concentrations of credit risk, consist principally of cash investments and trade accounts receivable.

The company maintains cash and cash equivalents, investments, and certain other financial instruments with various major financial institutions. The company performs periodic evaluations of the relative credit standing of these financial institutions and limits the amount of credit exposure with any one institution.

Concentrations of credit risk with respect to trade accounts receivable are limited due to the large number of customers and their dispersion across many geographic areas. However, a significant amount of trade receivables are with national health care systems in several countries. Although the company does not currently foresee a credit risk associated with these receivables, repayment is dependent upon the financial stability of those countries' national economies.

Sales to distributors, which supply the company's products to many end users, accounted for approximately 38% of the company's net sales in 2000, and the five largest distributors combined accounted for approximately 63% of such sales.

Derivative Instruments The Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 133, "Accounting for Derivative Instruments and Hedging Activities" as amended by Statement of Financial Accounting Standards No. 138, ("FAS 133"). FAS 133 is effective for Bard as of January 1, 2001. FAS 133 establishes accounting and reporting standards requiring that every derivative instrument be recorded in the balance sheet as either an asset or liability measured at its fair value. FAS 133 requires that changes in the derivative's fair value be recognized in either income or other comprehensive income, depending on the designated purpose of the derivative. The company does not believe the adoption of FAS 133 will have a material effect on its consolidated financial statements.

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1. Significant Accounting Policies (continued)

Use of Estimates The preparation of the company's consolidated financial statements, in conformity with generally accepted accounting principles, requires management to make estimates and assumptions. These estimates and assumptions affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from these estimates.

Reclassifications Certain prior-year amounts have been reclassified to conform with the current year presentation.

2. Acquisitions and Dispositions

Cardiology Dispositions In 1998, the company announced a series of strategic dispositions of its cardiology businesses. The first in the series was the company's 1998 sale of its cardiac cath lab business. This sale resulted in a 1998 pretax gain of $329.2 million ($3.03 per share after tax). Following the sale of the cardiac cath lab business, the company completed in 1999 the sale of its cardiopulmonary business. This disposition resulted in a 1999 pretax gain of $9.2 million ($0.12 per share after tax). In the first quarter of 2000, the company settled all remaining open issues related to the 1998 dispositions of its cardiology businesses and recorded a pretax gain of $15.4 million ($0.19 per share after tax).

Endologix In 1999, the company entered into an exclusive agreement with Endologix, Inc., a California-based company that had developed an endoluminal graft (ELG) used for the minimally invasive treatment of abdominal aortic aneurysms. The agreement, as amended, included an exclusive and irrevocable option to acquire before the end of 2000 all of the remaining capital stock of Endologix, Inc. not already owned by Bard for approximately $42 million. On December 14, 2000 the company announced that it would not exercise its option to acquire the remaining stock of Endologix, Inc. The company recorded a pretax charge of $40.3 million ($0.53 per share after tax) for the write-off of the Endologix options and related assets and liabilities. Please refer to Note 9, Other (Income) Expense, Net.

In addition to the items described above, in 1998 the company reported a pretax loss of $17.5 million ($0.18 per share after tax) on the sale of several other product lines (including the loss on the sale of the Diagnostic Sciences Division.)

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3. Income Tax Expense

Income tax expense consists of the following:

Deferred income taxes are recognized for the tax consequences of "temporary differences" by applying enacted statutory tax rates, applicable to future years, to differences between the financial reporting and the tax basis of assets and liabilities. At December 31, 2000, the company's net deferred tax assets amounted to approximately $19,800,000, which are recorded in other current assets and other assets. This amount principally comprises the tax effects of the differences between tax and financial accounting treatment of employee benefits of $15,300,000, accrued expenses and other temporary differences of $11,500,000, offset by the effect of accelerated depreciation of $7,000,000.

The following is a reconciliation between the effective tax rates and the statutory rates, excluding the impact of the gain from the disposition of the cardiology businesses in 1998 which was taxed at approximately a 50% rate:

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3. Income Tax Expense (continued)

Cash payments for income taxes were $30,200,000, $52,500,000 and $183,100,000 in 2000, 1999 and 1998, respectively. The company has not provided for federal income taxes on the undistributed earnings of its foreign operations as it is the company's intention to permanently reinvest undistributed earnings (approximately $644,800,000 as of December 31, 2000).

4. Short-Term Borrowings and Long-Term Debt

The company maintains uncommitted lines of credit, a commercial paper program and committed credit facilities that support the company's commercial paper program. The committed facilities can also be used for other corporate purposes. Commercial paper borrowings amounted to $47,100,000 and $129,400,000 at December 31, 2000 and 1999, respectively. The maximum amount of commercial paper outstanding during 2000 was approximately $131,300,000 with an average outstanding balance of $89,500,000 and an effective interest rate of 6.51%.

At December 31, 2000, the company had no short-term uncommitted borrowings and had available unused lines under its uncommitted lines of credit of $75,000,000. In 2000, the company replaced its maturing $300 million committed credit facility with a $200 million five-year committed facility that matures in May 2005 and a $100 million 364-day committed facility that matures in May 2001. At December 31, 2000 there were no borrowings under these facilities, which carry a variable market rate of interest and require an annual commitment fee. The entire balance of commercial paper outstanding at December 31, 2000 was classified as long-term debt since the company has both the intention and ability through its renegotiated committed credit lines to refinance these amounts on a long-term basis.

The following is a summary of long-term debt at December 31:

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4. Short-Term Borrowings and Long-Term Debt (continued)

The 6.70% notes due 2026 may be redeemed at the option of the note holder on December 1, 2006, at a redemption price equal to the principal amount. The market value of the notes approximates $141,200,000 at December 31, 2000. Interest expense in 2000, 1999 and 1998 approximated the cash outlay in each year. At December 31, 2000, the aggregate maturities of long-term debt were as follows: 2001 - $800,000; 2002 - $800,000; 2003 - $800,000; 2004 - $4,100,000; 2005 - $47,100,000; 2006 and thereafter - $151,500,000.

Certain of the company's debt agreements contain customary representations, warranties and default provisions as well as restrictions that, among other things, require the maintenance of minimum net worth and operating cash flow levels and limit the amount of debt that the company may have outstanding.

In 1999, the company had three deposit loan agreements with a bank, through which $50,000,000 had been borrowed at average floating rates with various maturity dates. At maturity, the loans were to be repaid through matured certificates of deposit held by the company at the same bank. Because the company had the right of offset under these agreements and it was the company's intention to present these certificates of deposit for repayment of these loans at their maturity, the borrowings were offset against these certificates of deposit in the December 31, 1999 consolidated balance sheet. In addition, during 1999 the related interest income was offset against the related interest expense. During 2000, the company terminated these agreements.

The company enters into foreign exchange forward contracts and options to help reduce the exposure to fluctuations between certain currencies. At December 31, 2000 there were forward contracts outstanding with a notional amount of approximately $500,000. At December 31, 1999 there were forward contracts outstanding with a notional amount of approximately $600,000. These contracts create limited earnings volatility because gains and losses associated with exchange rate movements are generally offset by movements in the underlying hedged item. See Note 1, Significant Accounting Policies for a discussion of Derivative Instruments.

5. Commitments and Contingencies

The company is subject to various legal proceedings and claims, including claims of alleged personal injuries as a result of exposure to natural rubber latex gloves distributed by the company and other product liability matters, intellectual property matters and disputes on agreements which arise in the ordinary course of business. The company believes that these legal matters will likely be disposed of over an extended period of time and should not have a material adverse impact on the company's consolidated financial position or results of operations.

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5. Commitments and Contingencies (continued)

The company is committed under noncancelable operating leases involving certain facilities and equipment. The minimum annual rentals under the terms of these leases are as follows: 2001 - $20,100,000; 2002 - $17,100,000; 2003 - $15,200,000; 2004 - $12,500,000; 2005 - $3,200,000 and thereafter - $5,100,000. Total rental expense for all leases approximated $20,600,000 in 2000, $19,600,000 in 1999 and $20,100,000 in 1998.

6. Stock Rights

In October 1995, the company's Board of Directors declared a dividend distribution of one Common Share Purchase Right (the "Rights") for each outstanding share of Bard common stock. These Rights, which will expire in October 2005, trade with the company's common stock. Such Rights are not presently exercisable and have no voting power. In the event a person acquires 20% or more, or makes a tender or exchange offer for 30% or more of Bard's common stock, the Rights detach from the common stock and become exercisable and entitle a holder to buy one share of common stock at $120.00 (adjustable to prevent dilution).

If, after the Rights become exercisable, Bard is acquired or merged, each Right will entitle its holder to purchase $240 market value of the surviving company's stock for $120, based upon the current exercise price of the Rights. The company may redeem the Rights, at its option, at $0.05 per Right, prior to a public announcement that any person has acquired beneficial ownership of at least 20% of Bard's common stock. These Rights are designed primarily to encourage anyone interested in acquiring Bard to negotiate with the Board of Directors. There are 60 million shares of common stock reserved for issuance upon exercise of the Rights.

7. Shareholders' Investment

The company grants stock options, stock awards and restricted stock under various plans to certain directors, officers and employees. At December 31, 2000, approximately 581,000 shares were reserved for issuance under these plans. In addition, the company has two share purchase plans.

Stock Options The company grants stock options to directors and certain officers and employees at prices equal to the market value of the shares at the date of grant. Currently outstanding options become exercisable over a four to nine year period. Certain option grants in 1997 and substantially all option grants in 1998, 1999 and 2000 have acceleration features based upon performance criteria. During 1999, the company made a special award of approximately 661,500 performance-based stock options at a price equal to the market value of the shares at the date of grant. These performance-based stock options become exercisable on their ninth anniversary after the date of grant or on an accelerated basis when the company reaches certain performance criteria.

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7. Shareholders' Investment (continued)

The following tables summarize information about stock option activity and amounts:

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7. Shareholders' Investment (continued)

In accordance with Statement of Financial Accounting Standards No. 123, "Accounting for Stock-Based Compensation" ("FAS 123"), the fair value of stock-based compensation is estimated on the date of grant using the Black-Scholes option-pricing model for pro forma disclosure purposes.

As permitted by FAS 123, the company has chosen to continue accounting for stock options at their intrinsic value. Accordingly, no compensation expense has been recognized for its stock option plans. Had the fair value method of accounting been applied to the company's stock option plans, the tax-affected impact would be as follows:

This pro forma impact takes into account only options granted since January 1, 1995 and increases as additional options are granted and amortized ratably over the vesting period.

Stock Purchase Plans Under the company's management stock purchase plan, management-level employees are granted the right to purchase the company's stock with their annual bonus at a discounted price. Restrictions limit the sale or transfer of these shares during a three-year period from the purchase date. Certain shares may be forfeited if the employee terminates during this three-year period. In 2000, employees purchased approximately 123,000 shares at a per share price of $32.53. In 1999, employees purchased approximately 122,000 shares at a per share price of $28.43. The company recorded compensation expense related to existing and anticipated stock purchases of $1,500,000 and $1,300,000 for the years ended December 31, 2000 and 1999, respectively. The unamortized portion was $800,000 at December 31, 2000 and 1999. 

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7. Shareholders' Investment (continued)

Under the company's employee stock purchase plan, employees are granted the right to purchase certain amounts of the company's stock at a 15% discount. In 2000 and 1999, employees purchased 29,000 and 28,000 shares, respectively, at a per share price of $41.09 and $40.48, respectively.

Stock Awards The company awards stock to certain key employees and directors. Shares are granted at no cost to the recipients and are distributed in three separate installments. During 2000, the company substituted its stock award program with a cash bonus. Restrictions limit the sale or transfer of stock awards until distributed. During 2000, 1999 and 1998 the company granted approximately 2,000, 21,000 and 25,000 shares, respectively. The fair value of these awards is charged to expense as the shares are distributed. The company recorded compensation expense related to these awards of $500,000, $1,000,000 and $900,000 for the years ended December 31, 2000, 1999 and 1998, respectively.

Restricted Stock The company grants restricted stock at no cost to certain management-level employees. Shares are issued to the participants at the date of grant, entitling the participants to dividends and the right to vote their respective shares. Restrictions limit the sale or transfer of currently outstanding shares during a five-year period from the grant date. During 2000, 1999 and 1998 the company granted approximately 77,000, 82,000 and 95,000 shares, respectively, of restricted stock to eligible employees. The fair value of these restricted shares at the date of grant is amortized to expense ratably over the restriction period. The company recorded compensation expense related to restricted stock of $2,800,000, $2,000,000 and $2,900,000 for the years ended December 31, 2000, 1999 and 1998, respectively. The unamortized portion was $7,600,000, $7,000,000 and $5,300,000 at December 31, 2000, 1999 and 1998, respectively.

Performance-Based Restricted Stock During 1999 and 1997 the company granted 152,000 and 130,000 shares, respectively, of performance-based restricted stock to certain officers. Shares were issued at no cost to the officers entitling them to dividends and the right to vote their respective shares. Restrictions that limit the sale or transfer of these shares expire five years after the company achieves certain performance criteria. The estimated fair value of these performance-based restricted shares is adjusted and amortized to expense ratably over the restriction period. The company recorded compensation expense related to performance-based restricted stock of $2,100,000, $1,900,000 and $2,600,000 in 2000, 1999 and 1998, respectively. The unamortized portion was $6,900,000, $9,000,000 and $2,800,000 at December 31, 2000, 1999 and 1998, respectively. As of December 31, 2000, 152,000 shares continued to be subject to performance restrictions.  

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8. Postretirement Benefits

The company has defined benefit pension plans that cover substantially all domestic and certain foreign employees. These plans provide benefits based upon a participant's compensation and years of service. In addition, the company has a defined contribution plan covering substantially all domestic employees and a supplemental defined contribution plan for certain officers and key employees. The amounts charged to income for these plans amounted to $11,100,000 in 2000, $10,900,000 in 1999 and $13,500,000 in 1998.

The following tables set forth information relative to the company's defined benefit plans:

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

8. Postretirement Benefits (continued)

Pension costs related to the defined benefit pension plans for the years ended December 31, 2000, 1999 and 1998 are as follows:

The company does not provide postretirement health care benefits and life insurance coverage except to a limited number of former employees. The amounts charged to income for this plan were approximately $750,000 in 2000, $700,000 in 1999 and $720,000 in 1998. The accumulated postretirement benefit obligation included in other long-term liabilities amounted to $10,100,000 and $10,600,000 for the years ended December 31, 2000 and December 31, 1999, respectively.

Actuarial assumptions included a discount rate of 7.50% and an ultimate health care cost trend rate of 5%. The effect of a 1% annual increase in the assumed cost trend rate would increase the accumulated postretirement benefit obligation at December 31, 2000 by $850,000 and postretirement benefit cost by $62,000. The effect of a 1% annual decrease in the assumed cost trend rate would decrease the accumulated postretirement benefit obligation at December 31, 2000 by $730,000 and postretirement benefit cost by $53,000.

9. Other (Income) Expense, Net

During 2000, the company announced that it would not exercise its option to acquire the remaining capital stock of Endologix, Inc., a California-based company that had developed an endoluminal graft (ELG) used for the minimally invasive treatment of abdominal aortic aneurysms. This decision resulted in a pretax charge of $40,300,000. The net after-tax effect of this charge amounted to $27,200,000 ($0.53 per share after tax).

Additionally during 2000, other (income) expense, net included a net gain of $5,000,000 from the settlement of legal and patent infringement claims, a gain of $11,000,000 from asset dispositions, a charge of $9,300,000 related to the acquisition of several businesses and a charge of $7,300,000 related to other items, including $2,800,000 in contributions. In addition the company settled all

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9. Other (Income) Expense, Net (continued)

remaining open issues related to the 1998 dispositions of its cardiology businesses and recorded a pretax gain of $15,400,000 ($0.19 per share after tax). The cardiology gain was recorded separately in gain from dispositions of cardiology businesses. The net after-tax effect of these items (excluding the Endologix write-off described above) amounted to an after-tax gain of $8,700,000 ($0.17 per share after tax). The net after-tax effect of all these 2000 items (including the Endologix write-off) amounted to an after-tax charge of $18,500,000 ($0.36 per share after tax).

During 1999, the company recorded a charge of $9,700,000 related to investments made in several ventures no longer deemed to be financially viable. The net after-tax effect of this charge amounted to $6,300,000 ($0.12 per share after tax).

Other income and expense for 1998 includes a net gain of $48,600,000 from patent and legal settlements, a charge of $34,100,000 for the write down of several businesses, a charge of $6,400,000 related to business acquisitions, a charge of $3,200,000 related to a manufacturing restructuring and a charge of $10,100,000 related to other items including the retiring of $60,000,000 of long-term debt. The net after-tax effect of these items amounted to an after-tax loss of $7,100,000 ($0.13 per share after tax).

Other (income) expense, net in the Consolidated Statements of Income is summarized as follows:

10. Segment Information

The company's management considers its business to be a single segment entity - the manufacture and sale of medical devices. The company's products generally share similar distribution channels and customers. The company designs, manufactures, packages, distributes and sells medical, surgical, diagnostic and patient care devices which, for the most part, are purchased by hospitals, physicians and nursing homes; used once and discarded. Management evaluates its various global product portfolios on a revenue basis, which is presented below, and profitability is generally evaluated on an enterprise-wide basis due to shared infrastructures.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

10. Segment Information (continued)

The following table presents sales of ongoing products by geography based on the location of the external customer:

The following table presents identifiable assets by geography:

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Note: In the first quarter the company settled all remaining open issues related to the 1998 dispositions of its cardiology businesses and recorded a pretax gain of $15,400 ($0.19 per share after tax). In addition the first quarter included a charge of $9,300 ($0.11 per share after tax) related to product line acquisitions and a charge of $5,400 ($0.07 per share after tax) related to legal settlements and research grants. The second quarter included a gain of $5,000 ($0.06 per share after tax) related to legal settlements and asset dispositions. The third quarter included a net gain of $4,100 ($0.04 per share after tax) related primarily to legal settlements and asset dispositions. The fourth quarter included a charge of $40,300 ($0.53 per share after tax) related to not exercising an option to acquire a company involved in product development. In addition the fourth quarter included a net gain of $5,000 ($0.06 per share after tax) related primarily to legal settlements.

Note: The fourth quarter included a gain of $9,200 ($0.12 per share after tax) for the sale of the company's cardiopulmonary business and a charge of $8,400 ($0.11 per share after tax) for asset impairments.

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Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

Not applicable.

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Item 10. Directors and Executive Officers of the Registrant

Information with respect to Directors of the company is incorporated herein by reference to the material contained under the heading "Proposal No. 1 - Election of Directors" in the company's definitive Proxy Statement dated March 9, 2001.

Information with respect to Executive Officers of the Registrant is on pages I-8 through I-10 of this filing.

Item 11. Executive Compensation

The information contained under the caption "Executive Compensation" in the company's definitive Proxy Statement dated March 9, 2001 is incorporated herein by reference.

Item 12. Security Ownership of Certain Beneficial Owners and Management

The information contained under the captions "Securities Ownership of Certain Beneficial Owners" and "Securities Ownership of Management" in the company's definitive Proxy Statement dated March 9, 2001 is incorporated herein by reference.

Item 13. Certain Relationships and Related Transactions

The information contained under the caption "Related Transactions" in the company's definitive Proxy Statement dated March 9, 2001 is incorporated herein by reference.

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Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K

(a)

l. Financial Statements and Supplementary Data

Included in Part II Item 8 of this report:

II-10 Report of Independent Public Accountants.

II-11 Consolidated Statements of Income for the years ended December 31, 2000, 1999 and 1998.

II-12 Consolidated Statements of Shareholders' Investment for the years ended

December 2000, 1999 and 1998

II-13 Consolidated Balance Sheets at December 31, 2000 and 1999.

II-14 Consolidated Statements of Cash Flows for the years ended December 31, 2000, 1999 and 1998.

II-15 Notes to Consolidated Financial Statements.

II-31 Quarterly Financial Data.

2. Financial Statement Schedules

IV-1

3. Exhibits, No. (Continued)

C. R. BARD, INC. AND SUBSIDIARIES

3. Exhibits, No. (Continued)

All other exhibits are not applicable.

(b) Reports on Form 8-K

IV-5

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.

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

IV-6

IV-7