content: As filed with the Securities and Exchange Commission
                                  on July 13, 1998.
  
  
                         SECURITIES AND EXCHANGE COMMISSION
                               Washington, D.C. 20549
  
                                      FORM 8-K
  
                                   CURRENT REPORT
  
                       Pursuant to Section 13 or 15(d) of the
                           Securities Exchange Act of 1934
  
                                    July 13, 1998
                                  (Date of Report)
  
                              BALLARD MEDICAL PRODUCTS
                             (Exact name of registrant 
                            as specified in its charter)
  
                                       1-12318
                              (Commission file number)
  
                                        UTAH
                   (State or other jurisdiction of incorporation 
                                  or organization)
  
                                     87-0340144
                        (I.R.S. Employer Identification No.)  
                   
  
                   12050 Lone Peak Parkway, Draper, Utah  84020  
                               (Address and Zip Code 
                           of principal executive offices)
  
                                   (801) 572-6800
                          (Registrant's telephone number, 
                                including area code)   
  
  
  
                                     DEFINITIONS
  
                 As used  herein, the following terms  have the meanings
            indicated:
  
            GENERAL DEFINITIONS 
  
                  1.  "Ballard" refers to Ballard Medical Products.
  
                  2.  "BI"  refers to  Ballard  International,  Inc.,  a
                      wholly owned subsidiary of Ballard.
  
                  3.  "BPC"  refers to  Ballard Purchase  Corporation, a
                      wholly owned subsidiary of Ballard.
  
                  4.  "BREH"  refers  to Ballard  Real  Estate Holdings,
                      Inc., a wholly owned subsidiary of Ballard.
  
                  5.  "Cardiotronics"  refers to  Cardiotronics Systems,
                      Incorporated, a wholly owned subsidiary.
  
                  6.  The   "Company"  and  the  "Registrant"  refer  to
                      Ballard and its subsidiaries.
  
                  7.  "MIC" refers to Medical Innovations Corporation, a
                      wholly owned subsidiary of Ballard.
  
                  8.  "PEPCO" refers to Plastic Engineered Products Co.,
                      a wholly owned subsidiary of Ballard.
  
                  9.  "PMP" refers to Ballard Medical Products Canada, a
                      wholly owned subsidiary of Ballard, doing business
                      as Preferred Medical Products. 
  
                 10.  "R2" refers to R2  Medical Systems, Inc., a wholly
                      owned subsidiary of Cardiotronics.
  
                 11.  "Tri-Med" refers  to Tri-Med Specialties,  Inc., a
                      wholly owned subsidiary of Ballard.
  
  
            GLOSSARY OF TECHNICAL AND MEDICAL TERMS
  
            CATHETER is a flexible  tube that is inserted into  the body
            to  deliver or  remove fluid,  retrieve blood,  or act  as a
            conduit to pass other devices.
  
            CLOSED  SUCTION CATHETER  is  a sleeved  catheter used  with
            endotracheal   tubes   on   patients  receiving   mechanical
            ventilation,  enabling the  airways  to  be suctioned  while
            maintaining mechanical ventilatory support.
  
            ENTERAL FEEDING CATHETER is a catheter used for the delivery
            of nutritional liquids  into the  gastrointestinal tract  of  
            the patient.
  
            HELICOBACTER PYLORI, or H. PYLORI, is a bacteria which lives
            only in the  lining of the  stomach and is  one of the  most
            common chronic infections in humans. 
  
            ITEM 5.  OTHER EVENTS
  
                 The  following  financial   statements  and   financial
            information  amends and  restates  the  Company's  financial
            information  previously reported  for the fiscal  year ended
            September 30,  1997, to  reflect the acquisition  of Tri-Med
            Specialties, Inc., accounted for  as a pooling of interests.
            These statements are voluntarily reported under this Item 5,
            since they are not required to be reported under Item 7.
              
                                FINANCIAL HIGHLIGHTS
  
            SELECTED CONSOLIDATED FINANCIAL DATA (1)(2)
  
  <TABLE>
  <CAPTION>
  
                      1997          1996          1995          1994        1993
  <S>         <C>           <C>            <C>           <C>         <C>
  
  Net Sales   $132,743,037  $109,881,342   $90,041,201   $71,421,894 $69,551,865
  
  Other
  Income,
  Net            5,539,812     5,309,380     4,101,037     3,518,832   3,711,891
  
  Net Income    31,262,739    25,909,521    21,939,876    15,851,591  19,454,216
  
  Net
  Income
  Per
  Common
  Share 
  Assuming
  Full
  Dilution
  (3)                 1.03           .87           .75           .56         .68
  
  Total
  Assets       194,192,382   144,164,584   115,216,589    94,361,714  81,593,906
  
  Cash
  Dividends
  Declared 
  Per Share
  (4)                0.111         0.109         0.096         0.072       0.049
  
  </TABLE>
  
            (1)  The  consolidated financial  data shown  above includes
                 the   accounts  of   Ballard  and   its   wholly  owned
                 subsidiaries,  MIC, BREH, BI,  Tri-Med, PMP,  BPC, Mist  
                 Assist, PEPCO and Cardiotronics.   The accounts of Mist
                 Assist, PMP  and Cardiotronics are included  as of July
                 19,  1996,  August 28,  1996,  and  December 10,  1996,
                 respectively,    which    reflect   their    respective
                 acquisition dates.
  
            (2)  The combinations of Ballard with PEPCO and Tri-Med were
                 accounted for  as pooling  of interests.   The selected
                 consolidated financial  data have been  prepared as  if
                 Ballard, PEPCO,  and Tri-Med had been  combined for all
                 periods presented.
  
            (3)  Does not include the  cumulative effect of a  change in
                 accounting for income taxes in fiscal year 1994.
  
            (4)  Includes cash distributions paid by PEPCO and Tri-Med.
  
  SELECTED CONSOLIDATED QUARTERLY FINANCIAL DATA (1)(2)
  (UNAUDITED)
  
  <TABLE>
  <CAPTION>
  
  FISCAL YEAR 1997
  QUARTERS ENDED:          9/30/97      6/30/97      3/31/97     12/31/96
  
     <S>               <C>          <C>          <C>          <C>
  
     Net Sales         $36,111,363  $33,961,010  $32,517,823  $30,152,841
  
     Gross Margin       23,617,233   21,684,191   21,117,431   19,296,755
  
     Net Income          8,574,114    7,777,121    7,826,526    7,084,978
  
     Net Income Per
     Common Share
     Assuming Full
     Dilution                0.280        0.256        0.259        0.236
  
  </TABLE>
  
  <TABLE>
  <CAPTION>
  
  FISCAL YEAR 1996
  QUARTERS ENDED:          9/30/96      6/30/96      3/31/96     12/31/95
  
     <S>               <C>          <C>          <C>          <C>    
  
     Net Sales         $28,856,891  $28,476,196  $27,377,385  $25,170,870
  
     Gross Margin       18,691,513   18,655,433   17,986,520   16,498,997
  
     Net Income          6,650,828    6,927,214    6,679,578    5,651,901
  
     Net Income Per 
     Common Share
     Assuming Full
     Dilution                 .224         .234         .227         .192
  
  </TABLE>
  
            (1)  See additional analysis of  net sales, margins, and net
                 income  in  "Management's  Discussion and  Analysis  of
                 Financial Condition and Results of Operations."
  
            (2)  See  footnote  explanations  to "Selected  Consolidated
                 Financial Data."  
  
  
                            INDEPENDENT AUDITORS' REPORT
  
            To  the  Board  of  Directors and  Stockholders  of  Ballard
            Medical Products:
  
                 We  have audited the  accompanying consolidated balance
            sheets of  Ballard Medical  Products and subsidiaries  as of
            September 30, 1997  and 1996 (as restated),  and the related
            consolidated statements of operations, stockholders' equity,
            and cash flows  for each of  the three  years in the  period
            ended  September 30,  1997 (as  restated).   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.    The
            consolidated financial statements give retroactive effect to
            the  merger   of  Ballard  Medical   Products  and   Tri-Med
            Specialties, Inc., which has been accounted for as a pooling
            of  interests as described  in Note  12 to  the consolidated
            financial statements.   We did not audit  the balance sheets
            of Tri-Med  Specialties, Inc. as  of September 30,  1997 and
            1996, or the related statements of operations, stockholders'
            equity, and cash flows of Tri-Med  Specialties, Inc. for the
            year  ended September  30,  1997, which  statements  reflect
            total assets  of $7,743,715  and $1,699,496 as  of September
            30,  1997  and 1996,  respectively,  and  total revenues  of
            $7,435,859 for  the year  ended September  30, 1997.   Those
            statements were  audited by other auditors  whose report has
            been furnished to us, and our opinion, insofar as it relates
            to the  amounts included  for Tri-Med Specialties,  Inc. for
            1997 and 1996, is based solely  on the report of such  other
            auditors.
  
                 We conducted our  audits in  accordance with  generally
            accepted auditing standards.   Those standards require  that
            we plan and perform the audit to obtain reasonable assurance
            about whether the financial  statements 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 and the
            report of other  auditors provide a reasonable basis for our
            opinion.
  
                 In our opinion, based  on our audits and the  report of
            the  other auditors,  the consolidated  financial statements
            referred to above present  fairly, in all material respects,
            the  financial  position  of  Ballard  Medical Products  and
            subsidiaries  as of  September  30, 1997  and 1996,  and the
            results of their operations and their cash flows for each of
            the  three years in the  period ended September  30, 1997 in
            conformity with generally accepted accounting principles.  
  
                 As  discussed  in Notes  1  and 2  to  the consolidated
            financial statements, effective October 1, 1994 the  Company
            changed its  method of accounting for  investment securities
            to  conform with Statement of Financial Accounting Standards
            No. 115.
  
            Deloitte & Touche LLP
            Salt Lake City, Utah
  
            November 13, 1997
            (February 25, 1998 as to Note 12)
  
  
            REPORT OF INDEPENDENT ACCOUNTANTS
  
            To the Board of Directors and Stockholders of
            Tri-Med Specialties, Inc.:
  
                 We have audited the accompanying balance sheets of Tri-
            Med Specialties, Inc. (the Company) as of September 30, 1997
            and 1996, and the  related statements of operations, changes
            in stockholders' equity,  and cash flows for  the year ended
            September  30, 1997.    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  generally
            accepted  auditing standards.   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  Tri-Med  Specialties,  Inc.  as  of
            September   30,  1997  and  1996  and  the  results  of  its
            operations  and its cash flows  for the year ended September
            30, 1997,  in conformity with  generally accepted accounting
            principles.
  
            PricewaterhouseCoopers L.L.P.
            Coopers & Lybrand L.L.P
  
            Kansas City, Missouri
            January 30, 1998
  
  
  
  <TABLE>
  CONSOLIDATED BALANCE SHEETS  
  SEPTEMBER 30, 1997 AND 1996
  <CAPTION>
                                                          1997           1996 
                                                  (As restated,  (As restated,
          ASSETS                                   see Note 12)   see Note 12)
  
          <S>                                     <C>            <C>
  
          CURRENT ASSETS:
  
          Cash and cash equivalents                $21,624,043    $14,518,835 
  
          Investments available for sale            26,628,312     26,662,598 
  
          Accounts receivable - trade
          (less allowance for doubtful
          accounts:  1997 - $858,000, 1996 -
          $192,000; and allowance
          for sales returns:  1997 -
          $1,660,000, 1996 - $805,000)              26,380,031     20,631,159 
  
          Royalties receivable                         375,673      1,351,885 
  
          Other receivables                            908,753        644,619 
  
          Inventories:
  
             Raw materials                          10,856,390      7,440,376 
  
             Work-in-process                         5,527,765      3,915,690 
  
             Finished goods                          4,507,579      2,950,659 
  
          Deferred income taxes                      2,233,042      1,057,303 
  
          Income tax refund receivable               1,830,946      3,274,000 
  
          Prepaid expenses                              64,139        179,333 
  
             Total current assets                  100,936,673     82,626,457 
  
          PROPERTY AND EQUIPMENT:
  
          Land                                         873,865      3,944,701 
  
          Buildings                                 28,922,203     20,131,728 
  
          Molds                                      4,891,734      3,608,228 
  
          Machinery and equipment                   11,097,145      9,257,669 
  
          Vehicles                                     785,440      1,039,175 
  
          Furniture and fixtures                     3,264,578      2,248,003 
  
          Leasehold improvements                       116,850        359,349 
  
          Construction in progress                   4,142,563      3,053,296 
  
             Total                                  54,094,378     43,642,149 
  
          Less accumulated depreciation            (10,746,905)    (8,182,072)
  
             Property and equipment - net           43,347,473     35,460,077   
  
          INTANGIBLE ASSETS: 
  
          Cost in excess of purchase price
          (less accumulated amortization:
          1997 - $5,246,166; 1996 - $3,212,520)     29,443,283     15,645,151 
  
          Patents and other
          intangibles (less accumulated
          amortization:  1997 - $1,898,336;
          1996 - $711,431)                          13,068,452      5,018,277 
  
              Total intangible assets               42,511,735     20,663,428 
  
          DEFERRED INCOME TAXES                      2,139,902 
  
          OTHER ASSETS                               5,256,599      5,414,622 
  
          TOTAL                                   $194,192,382   $144,164,584 
  
  </TABLE>
  See notes to consolidated financial statements.
  
  <TABLE>
  <CAPTION>
                                                          1997           1996 
                                                  (As restated,  (As restated,
          LIABILITIES AND STOCKHOLDERS' EQUITY     see Note 12)   see Note 12)
  
          <S>                                     <C>            <C> 
  
          CURRENT LIABILITIES:
  
          Line of credit                            $1,425,000 
  
          Contract payable                           3,975,000 
  
          Accounts payable                           3,216,908     $2,552,697 
  
          Accrued liabilities:
  
             Employee compensation                   3,438,849      2,308,615 
  
             Royalties                                 432,617        326,492 
  
             Other                                     462,045        845,183 
  
             Total current liabilities              12,950,419      6,032,987 
  
          DEFERRED INCOME TAXES                                     1,110,764 
  
             Total liabilities                      12,950,419      7,143,751 
  
          COMMITMENTS AND CONTINGENT
          LIABILITIES (Note 6)  
  
          STOCKHOLDERS' EQUITY:  
          Common stock - $.10 par value;
          75,000,000 shares authorized;
          issued and outstanding:
          1997 - 30,062,733 shares,
          1996 - 28,770,056 shares                   3,006,273      2,877,005 
  
          Additional paid-in capital                54,942,666     38,839,119   
  
          Unrealized losses on investments
          available for sale                          (223,783)      (156,564)
  
          Retained earnings                        123,516,807     95,461,273 
    
             Total stockholders' equity            181,241,963    137,020,833 
  
          TOTAL                                   $194,192,382   $144,164,584 
  
  </TABLE>
  
  See notes to consolidated financial statements.
  
  <TABLE>
  
  CONSOLIDATED STATEMENTS OF OPERATIONS
  FOR THE YEARS ENDED SEPTEMBER 30, 1997, 1996, AND 1995
  
  <CAPTION>
                                          1997            1996           1995 
                                  (As restated,   (As restated,  (As restated,
                                   see Note 12)    see Note 12)   see Note 12)
  
          <S>                      <C>             <C>             <C>                                 
  
          NET SALES                $132,743,037    $109,881,342    $90,041,201
  
          COST OF PRODUCTS SOLD      47,027,428      38,048,879     30,166,070
  
          GROSS MARGIN               85,715,609      71,832,463     59,875,131
  
          OPERATING EXPENSES:
  
          Selling, general, and
          administrative             37,503,070      31,593,508     26,839,297
  
          Research and                2,856,409       3,184,151      2,438,616
          development
  
          Royalties                   1,849,203       1,687,542      1,509,480
  
             Total operating
             expenses                42,208,682      36,465,201     30,787,393
  
          OPERATING INCOME           43,506,927      35,367,262     29,087,738
  
          OTHER INCOME:
  
          Interest income             2,129,276       1,917,925      1,923,257
  
          Royalty income              2,465,840       2,400,000      2,147,620
  
          Other                         944,696         991,455         30,160
  
             Total other income- 
             net                      5,539,812       5,309,380      4,101,037
  
          INCOME BEFORE 
          INCOME TAXES               49,046,739      40,676,642     33,188,775
  
          INCOME TAX EXPENSE         17,784,000      14,767,121     11,248,899
  
          NET INCOME                $31,262,739     $25,909,521    $21,939,876  
  
          NET INCOME PER SHARE
          Common and common
          equivalent share               $1.032          $0.873         $0.759
  
          Common share assuming
          full dilution                  $1.027          $0.863         $0.746
  
          WEIGHTED AVERAGE
          NUMBER 
          OF SHARES OUTSTANDING:
          Common and common
          equivalent share           30,290,221      29,681,869     28,911,844
  
          Common share assuming
          full dilution              30,443,353      30,036,588     29,407,679
  
  </TABLE>
  
  See notes to consolidated financial statements.
  
  <TABLE>
  
  CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
  FOR THE YEARS ENDED SEPTEMBER 30, 1997, 1996, AND 1995 (AS RESTATED)
  
  <CAPTION>
                                                       Unrealized
                                                        Losses on
                                                          Invest-
                                          Additional        ments
                     Common                  Paid-in    Available     Retained
                     Shares      Amount      Capital     for Sale     Earnings
  
     <S>        <C>         <C>         <C>            <C>        <C>
  
     BALANCE,
     OCTOBER
     1, 1994                                                                  
     (As pre-                                                                 
     viously
     reported)  26,694,589  $2,669,459  $28,287,388               $59,959,522 
  
     Pooling
     of
     interest
     combin-
     ation
     (Note 12)   1,067,733     106,773      (96,773)                  930,243 
  
     As
     restated   27,762,322   2,776,232   28,190,615                60,889,765 
  
     Net                                                           21,939,876 
     income
  
     Cash
     dividends
     paid                                                          (2,656,343)  
  
     Common                            
     stock                             
     issued 
     from
     exercise
     of stock
     options       205,425      20,543       432,869
  
     Acquisi-
     tion and
     retire-
     ment of 
     treasury
     stock        (100,000)    (10,000)                            (1,464,985)
  
     Tax bene-
     fit
     attribut-
     able to
     apprecia-
     tion in
     value of
     stock 
     issued
     in con-
     junction 
     with the
     exercise
     and
     disqual-
     ifying
     disposi-
     tion of
     incentive
     stock 
     options                                 489,517
  
     Unre-
     alized
     losses on
     invest-
     ments -
     net of
     tax                                               $(142,728)
  
     BALANCE,
     SEPTEMBER
     30,1995    27,867,747   2,786,775   29,113,001     (142,728)  78,708,313 
  
     Net
     income                                                        25,909,521   
  
     Cash
     divi-
     dends
     paid                                                          (3,030,140)
  
     Common
     stock
     issued
     from
     exercise
     of stock
     options     1,252,309     125,230    9,689,509 
     Acqui-
     sition
     and
     retire-
     ment of
     treasury
     stock        (350,000)    (35,000)                            (6,126,421)
  
     Tax
     benefit
     attri-
     butable
     to appre-
     ciation
     in value
     of stock
     issued in
     conjunc-
     tion with
     the exer-
     cise and
     disquali-
     fying
     dispo-
     sitions
     of incen-
     tive
     stock
     options                                 36,609 
  
     Unre-
     alized
     losses on
     invest-
     ments -
     net of
     tax                                                 (13,836)
  
     BALANCE,
     SEPTEM-
     BER 30,
     1996      28,770,056    2,877,005    38,839,119    (156,564)  95,461,273   
  
     Net
     income                                                        31,262,739 
  
     Cash
     divi-
     dends
     paid                                                          (3,207,205)
  
     Common
     stock
     issued
     from
     exer-
     cise
     of stock
     options     1,292,677    129,268     11,129,231
  
     Tax
     benefit
     attri-
     butable
     to appre-
     ciation
     in value
     of stock
     issued in
     conjunc-
     tion with
     the exer-
     cise and
     dis-
     quali-
     fying
     dispo-
     sitions
     of incen-
     tive
     stock
     options                               4,974,316
  
     Unre-
     alized
     losses on
     invest-
     ments -
     net of
     tax                                                 (67,219)
  
     BALANCE,
     SEPTEM-
     BER 30,
     1997        30,062,733 $3,006,273   $54,942,666   $(223,783) $123,516,807
  
  </TABLE>
  
  See notes to consolidated financial statements.  
  
  <TABLE>
  
  CONSOLIDATED STATEMENTS OF CASH FLOWS
  FOR THE YEARS ENDED SEPTEMBER 30, 1997, 1996, AND 1995
  
  <CAPTION>
                                    1997              1996               1995 
                            (As restated,     (As restated,      (As restated,
                             see Note 12)      see Note 12)       see Note 12)
  
     <S>                     <C>               <C>                <C>
  
     CASH FLOWS FROM
     OPERATING
     ACTIVITIES:
  
     Net income              $31,262,739       $25,909,521        $21,939,876 
  
     Adjustments to
     reconcile net
     income to net
     cash provided by
     operating
     activities:
  
     Depreciation and
     amortization              7,002,801         3,947,487          3,142,867 
  
     (Gain) loss on
     disposal of
     property                 (6,246,680)         (446,320)             7,044 
  
     Impairment of
     investment                4,900,000 
  
     Tax benefit from
     disqualifying
     dispositions of
     incentive stock
     options                   4,974,316            36,609            489,517 
  
     Provision for
     losses on
     accounts
     receivable -
     trade and sales
     returns and
     rebates                   2,191,000           365,000            225,000 
  
     Deferred income
     taxes                      (373,168)          442,122            373,655 
  
     Changes in
     operating assets
     and liabilities-
     net of effects
     from purchases of
     subsidiaries:  
  
     Accounts
     receivable -
     trade                    (7,454,819)       (6,193,073)          (127,171)
  
     Royalties and
     other receivables           712,078          (106,639)            37,544 
  
     Inventories              (5,829,249)       (1,382,921)        (1,537,133)
  
     Income tax refund
     receivable                1,443,054        (1,170,430)           897,815 
  
     Prepaid expenses            250,872           102,417           (191,116)
  
     Other assets                 (1,600)
  
     Accounts payable           (643,857)          936,506            206,861 
  
     Accrued
     liabilities                (754,491)          243,121          1,147,264 
  
        Total
        adjustments              170,257        (3,226,121)         4,672,147 
  
        Net cash
        provided by
        operating
        activities            31,432,996        22,683,400         26,612,023 
  
     CASH FLOWS FROM
     INVESTING
     ACTIVITIES:
  
     Capital
     expenditures for
     property and
     equipment               (14,515,895)      (15,398,935)        (2,831,273)
  
     Proceeds from
     sales of property
     and equipment             6,514,131           564,418             45,250 
  
     Purchases of
     investments
     available for
     sale                    (46,959,814)      (30,569,641)       (38,534,828)
  
     Proceeds from
     maturities of
     investments 
     available for
     sale                     46,902,342        22,231,406         36,288,627 
  
     Investment in
     and advances to
     affiliates               (1,281,661)       (4,462,625)          (800,000)
  
     Purchases of
     intangible assets          (714,952)       (2,852,331)        (1,335,646)  
  
     Purchases of
     other assets               (108,338)          (12,532)          (109,579)
  
     Payments for
     purchase of
     subsidiaries,
     net of cash
     acquired                (12,323,417)       (5,618,432)        (3,283,650)
  
     Investment in 
     notes receivable            (34,134)
  
        Net cash used
        in investing
        activities           (22,521,738)      (36,118,672)       (10,561,099)
  
     CASH FLOWS FROM
     FINANCING
     ACTIVITIES:
  
     Cash dividends
     paid                     (3,207,205)       (3,030,140)        (2,656,343)
  
     Proceeds from
     issuance of
     common stock and
     exercise of
     options                  11,258,499         9,814,739            453,412 
  
     Proceeds from
     borrowings on
     line of credit            1,750,000 
  
     Proceeds from
     notes payable                12,651 
  
     Payments on line
     of credit                  (325,000)
  
     Payments on 
     contract payable         (1,850,000)
  
     Purchase of
     treasury stock                             (6,161,421)        (1,474,985)
  
     Repayment of
     long-term debt
     assumed in
     acquisitions             (9,444,995)         (517,754)           (18,446)
  
        Net cash
        used in
        (provided by)
        financing 
        activities            (1,806,050)          105,424         (3,696,362)  
  
     NET INCREASE
     (DECREASE) IN
     CASH AND CASH
     EQUIVALENTS               7,105,208       (13,329,848)        12,354,562 
  
     CASH AND CASH
     EQUIVALENTS,
     BEGINNING OF YEAR        14,518,835        27,848,683         15,494,121 
  
     CASH AND CASH
     EQUIVALENTS, END
     OF YEAR                 $21,624,043       $14,518,835        $27,848,683 
  
     SUPPLEMENTAL
     DISCLOSURE OF
     CASH FLOW
     INFORMATION: 
  
     Cash paid during
     the year for
     income taxes             $11,993,115      $15,458,820         $9,487,912 
  
     Cash paid during
     the year for
     interest                     $16,435             None               None 
  
  </TABLE>
  
            SUPPLEMENTAL DISCLOSURES OF  NONCASH INVESTING AND FINANCING
            ACTIVITIES:
  
                 On  February  25,  1998,  the Company  entered  into  a
            business  combination  with  Tri-Med  Specialties,  Inc.  in
            exchange for 1,067,733 shares of the Company's common stock.
            This  transaction has been accounted for by the Company as a
            "pooling"   and   as   such,   the   Company's  accompanying
            consolidated financial statements as  of September 30,  1997
            and  1996  and  for the  three  years  in  the period  ended
            September 30, 1997 have been restated as  if the transaction
            had occurred on October 1, 1994 (see Note 12).
  
                 During  1997, the  Company sold  a parcel  of land  for
            $3,265,700 in cash and a promissory note of $3,973,920.
  
                 On December 10,  1996, the Company acquired all  of the
            outstanding  capital  stock of  Cardiotronics  Systems, Inc.
            (Cardiotronics) in a purchase transaction for $12,722,404 in
            cash.   In  conjunction  with the  merger, liabilities  were
            assumed as follows:
  
                      Fair value of assets acquired
                      (including goodwill of $13,136,000)    $25,070,528
  
                      Cash paid                               12,722,404
  
                      Liabilities assumed                    $12,348,124  
  
                 On July  2, 1997,  Tri-Med acquired certain  rights and
            licenses  of Delta  West  Pty. Limited  for  a note  payable
            totaling $5,825,000 (see Note 8).
  
                 On  September  27, 1996,  the  Company  entered into  a
            business  combination  with   Plastic  Engineered   Products
            Corporation in exchange for  238,727 shares of the Company's
            common stock.   This transaction  has been accounted  for by
            the  Company  as  a  "pooling" and  as  such,  the Company's
            accompanying   consolidated   financial  statements   as  of
            September 30, 1996 and for the two years in the period ended
            September 30, 1996 were restated  as if this transaction had
            occurred on October 1, 1994.
  
                 In addition, during the  year ended September 30, 1996,
            the  Company entered  into  three  acquisition  transactions
            accounted for as purchases as follows (see Note 8):
  
                 *    On   April  19,   1996,   the   Company   acquired
            substantially  all of  the assets  of Endovations,  Inc. for
            approximately $1,220,000  cash.   In  conjunction with  this
            purchase,  the  Company recorded  goodwill  of approximately
            $400,000 and the fair  value of assets acquired approximated
            $820,000.
  
                 *    On July 19, 1996, the Company purchased all of the
            outstanding  capital   stock  of   Mist  Assist,  Inc.   for
            approximately  $673,600  cash.    In  conjunction  with  the
            acquisition, liabilities were assumed as follows:
  
                      Fair value of assets acquired 
                      (including goodwill of $680,000)          $800,000
  
                      Cash paid                                  673,600
             
                      Liabilities assumed                       $126,400
  
                 *    On August  28, 1996, the Company  purchased all of
            the  outstanding capital stock of Preferred Medical Products
            for  approximately  $3,600,000  cash   (see  Note  8).    In
            conjunction with  the acquisition, liabilities  were assumed
            as follows:
  
                 Fair value of assets acquired
                 (including goodwill of $2,900,000)           $4,320,970
  
                 Cash paid                                     3,604,440
  
                 Liabilities assumed                            $716,530
  
                 *    On May 2, 1995, the Company acquired substantially
            all of the net  assets of Cox Medical Enterprises,  Inc. for
            approximately $3,313,000 cash (see  Note 8).  In conjunction
            with the acquisition, liabilities were assumed as follows:  
  
                 Fair value of assets acquired
                 (including good will)                        $4,000,000
  
                 Cash paid                                     3,313,310
  
                 Liabilities assumed                             686,690
  
            See notes to consolidated financial statements.
  
  
            BALLARD MEDICAL PRODUCTS AND SUBSIDIARIES
  
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
            FOR THE YEARS ENDED SEPTEMBER 30, 1997, 1996, AND 1995
            (AS RESTATED)
  
            1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 
  
                 ORGANIZATION  - Ballard Medical  Products (Ballard) and
            its   subsidiaries   develop,   manufacture,    and   market
            specialized medical products.
  
                 BASIS  OF PRESENTATION  -  The  consolidated  financial
            statements include  the accounts  of Ballard and  its wholly
            owned subsidiaries, Tri-Med Specialties, Inc. (Tri-Med) (see
            Note  12),  Medical Innovations  Corporation  (MIC), Ballard
            Real   Estate  Holdings,   Inc.  (BREH),   Ballard  Purchase
            Corporation (BPC), Ballard International, Inc. (BI), Plastic
            Engineered   Products   Company  (PEPCO),   Ballard  Medical
            Products (Canada) Inc. dba Preferred Medical Products (PMP),
            Mist Assist, Inc. (Mist Assist), and Cardiotronics  Systems,
            Inc.  (Cardiotronics)  (collectively,  the  Company).    All
            significant intercompany accounts and transactions have been
            eliminated in consolidation.
  
                 USE  OF ESTIMATES IN  PREPARING FINANCIAL  STATEMENTS -
            The preparation  of financial statements in  conformity with
            generally accepted accounting principles requires management
            to make  estimates and assumptions that  affect the reported
            amounts  of  assets   and  liabilities  and   disclosure  of
            contingent  assets  and  liabilities  at  the  date  of  the
            financial statements  and the  reported amounts of  revenues
            and expenses  during the  reporting period.   Actual results
            could differ from those estimates.
  
                 INVESTMENTS AVAILABLE FOR SALE -  Investments available
            for sale  consist of tax-free municipal  bonds.  Investments
            are  recorded at  fair market  value.  Effective  October 1,
            1994, the  Company adopted Statement of Financial Accounting
            Standards   (SFAS)  No.   115,   "Accounting   for   Certain
            Investments in  Debt and Equity  Securities."  SFAS  No. 115
            requires  the  classification  of  investment  securities as
            either held  to maturity securities, trading  securities, or
            available for sale  securities.  Upon adoption  of SFAS 115,
            the Company reclassified all of its investments as available  
            for sale.
  
                 INVENTORIES -  Inventories are  stated at the  lower of
            cost (on a first-in, first-out basis) or market.
  
                 PROPERTY  AND EQUIPMENT  - Property  and  equipment are
            stated  at cost.  Depreciation  is computed on the straight-
            line method over the estimated useful lives as follows:
  
                      Buildings                30 to 40 years
                      Molds                           5 years
                      Machinery and equipment   5 to 10 years
                      Vehicles                   3 to 5 years
                      Furniture and fixtures     3 to 5 years
                      Leasehold improvements     3 to 5 years
                      
                 INTANGIBLE ASSETS - Intangible assets include goodwill,
            patent  rights, and license  costs which are  stated at cost
            and are being amortized  using the straight-line method over
            their estimated  lives, which  range from four  to seventeen
            years.
  
                 REVENUE RECOGNITION - Revenues are recognized when  the
            related  product  is  shipped.     The  Company  records  an
            allowance for estimated sales returns and rebates.
  
                 INCOME  TAXES  -  The  Company utilizes  an  asset  and
            liability  approach for  financial accounting  and reporting
            for income  taxes.  Deferred  income taxes are  provided for
            temporary differences in the bases of assets and liabilities
            as reported for financial statement and income tax purposes.
  
                 INCOME  PER SHARE - Income per share is computed on the
            basis of  the weighted average number  of shares outstanding
            plus the common stock equivalents which would arise from the
            exercise  of stock options.   Such income  per share amounts
            are  adjusted to  give  retroactive effect  for all  periods
            presented for the acquisition  by the Company of Tri-Med  in
            1998 (see Note 12).
  
                 STOCK-BASED COMPENSATION  - Effective October  1, 1996,
            the  Company adopted  SFAS No.  123, "Accounting  for Stock-
            Based  Compensation."    SFAS   No.  123  requires  expanded
            disclosures of  stock-based compensation arrangements.   The
            Company  has  elected  to  continue  to  apply  APB  25  (as
            permitted  by  SFAS  No.  123).   The  appropriate  required
            disclosure  of the effects of  SFAS No. 123  are included in
            Note 5.
  
                 STATEMENTS  OF  CASH  FLOWS   -  For  purposes  of  the
            consolidated statements of cash flows, the Company considers
            cash   and   interest  bearing   securities   with  original
            maturities of less than three months to be cash equivalents.  
  
                 LONG-LIVED ASSETS - The  Company evaluates the carrying
            value of  long-term assets based on  current and anticipated
            undiscounted cash flows and  recognizes impairment when such
            cash flows will be less than the carrying values.
  
                 OTHER - Certain reclassifications have been made to the
            prior    year   financial    statements   to    conform   to
            classifications adopted in the current year.
  
            2.  INVESTMENTS AVAILABLE FOR SALE
  
                 Investments available for  sale at  September 30,  1997
            and 1996 consist of municipal bonds.
  
                 The  amortized  cost  and  fair  value  of  investments
            available for sale  at September  30, 1997 and  1996 are  as
            follows:
  
                                               1997                1996
  
             Amortized cost            $26,972,594         $26,915,121 
  
             Gross unrealized                                          
             gains                             None                None
  
             Gross unrealized
             losses                       (344,282)           (252,523)
  
             Fair value                $26,628,312         $26,662,598 
  
                 As of September 30, 1997  and 1996, all municipal bonds
            had a contractual maturity of one  year or less.  During the
            years ended September 30, 1997 and 1996, there were no gross
            realized  gains  or  gross  realized losses  from  sales  of
            investments classified as available for sale.
  
            3.  LINE OF CREDIT
  
                 In July  1997, Tri-Med (see  Note 12) entered  into two
            line of  credit agreements with a bank.   Under the terms of
            the first agreement, the  outstanding balance may not exceed
            $1,000,000 and interest, payable  monthly through May  1998,
            and bears  interest  at  the  bank's  prime  rate  (8.5%  at
            September  30,  1997).    Under  the  terms  of  the  second
            agreement, the  outstanding balance may  not exceed $750,000
            and interest,  payable monthly  through May 1998,  and bears
            interest at the bank's prime rate plus 1% (9.5% at September
            30, 1997).  The amount available for borrowing is limited to
            the lesser of  $1,750,000 or the sum  of certain agreements,
            with  such  inventory  amount  limited  to  $200,000.    The
            outstanding balance on the  credit agreements was $1,425,000
            as  of September 30, 1997.  Immediately following the merger
            with Tri-Med,  all outstanding  balances under the  lines of
            credit  were   paid  in   full  and  both   agreements  were
            terminated.  
  
                 At  September 30,  1997, the  Company had  an unsecured
            line of credit with a bank totaling $5,000,000 which expires
            February  15, 1998.  The line, if drawn upon, bears interest
            at the  bank's base rate (8.5%  at September 30, 1997).   No
            compensating cash  balances are  required.  As  of September
            30,  1997  and during  the year  then  ended, there  were no
            borrowings under the line of credit.
  
            4.  INCOME TAXES
  
                 The Company  has recorded  net deferred tax  assets and
            liabilities at  September 30, 1997 and  1996 which consisted
            of  the following  temporary  differences  and  carryforward
            items:
  
                                       1997                     1996
                               Current      Long-Term     Current    Long-Term
  
          Deferred income
          tax assets:
  
          Allowance for 
          uncollectible
          accounts
          receivable          $320,513                    $69,121
  
          Allowance for
          sales returns,
          rebates, and
          allowances           664,785                    305,729
  
          Allowance
          for obsolete
          inventory            451,658                    185,277
  
          Accrued
          expenses             280,925                    168,549
  
          Unrealized
          losses on
          investments          120,498                     95,959
  
          Net operating
          loss carry-
          forwards of
          acquired 
          subsidiaries         394,663    $3,416,727      121,442     $99,562 
  
          Research and
          development
          credits                                         111,226
  
          Total              2,233,042     3,416,727    1,057,303      99,562   
  
          Deferred income
          tax liabilities-
          differences
          between tax
          basis and 
          financial
          reporting basis
          of property
          and equipment                   (1,276,825)              (1,210,326)
  
          Net               $2,233,042    $2,139,902   $1,057,303 $(1,110,764)
  
                 The components of income  tax expense (benefit) for the
            years  ended   September  30,  1997,  1996,   and  1995  are
            summarized as follows:
  
                                       1997              1996             1995
  
          Current:
  
          Federal              $16,243,278        $12,421,679       $9,425,942
  
          State                  1,913,890          1,903,320        1,449,302
  
                                18,157,168         14,324,999       10,875,244
  
          Deferred:
  
          Federal                 (324,388)           402,473          323,859
  
          State                    (48,780)            39,649           49,796
  
                                  (373,168)           442,122          373,655
  
          Total                $17,784,000        $14,767,121      $11,248,899
  
                 Income tax  expense differed from  amounts computed  by
            applying the statutory Federal tax rate to pretax income  as
            follows:
  
                                     1997           1996           1995
  
             Computed
             Federal income
             tax expense at
             statutory rate  $17,166,358    $14,236,825    $11,425,754 
  
             State income
             tax expense,
             net of Federal
             benefit           1,590,940      1,317,054        990,493 
  
             Environmental
             tax                                 16,614         30,000 
  
             Tax exempt
             income             (410,736)      (553,876)      (624,750)  
  
             Foreign sales
             corporation        (429,833)      (236,250)      (121,756)
  
             Amortization
             of goodwill         642,986        335,763        316,969 
  
             Nontaxable
             income from
             pooled
             Subchapter S
             corporation        (292,758)      (107,269)      (343,322)
  
             Other              (482,957)      (241,740)      (424,489)
  
             Total           $17,784,000    $14,767,121    $11,248,899 
  
                 As a result of the Company's acquisitions (see Note 8),
            the Company has net operating loss carryforwards for Federal
            income tax purposes  of approximately $9,964,000,  which can
            only  be used  to offset future  taxable income  of acquired
            subsidiaries.  The utilization of the tax loss carryforwards
            is subject  to  certain limitations  and  the  carryforwards
            expire at various dates through the year 2011.
  
            5.  COMMON STOCK AND STOCK OPTIONS
  
                 During the years ended September 30, 1996 and 1995, the
            Company  repurchased  350,000  and  100,000  shares  of  its
            outstanding  common stock  for  $6,161,421  and  $1,474,985,
            respectively.    In accordance  with  Utah  State law,  this
            treasury stock  was accounted  for as retired  common stock.
            The  Company  did not  repurchase any  shares of  its common
            stock during the year ended September 30, 1997.
  
                 The Company  has adopted several incentive stock option
            plans for key employees and  reserved shares of common stock
            totaling approximately 2,380,780, 2,926,400 and 3,483,028 at
            September  30,  1997,  1996,  and  1995,  respectively,  for
            issuance  under the plans.   Options are granted  at a price
            not less than  the fair market  value on the date  of grant,
            become exercisable  between one  to two years  following the
            date of grant, and expire in ten years.
  
                 Changes  in stock options are  as follows for the years
            ended September 30:
                                                       Weighted Average
             1997                            Shares      Exercise Price
  
             Outstanding at
             beginning of year           2,517,553               $10.06
  
             Granted                       856,475                19.71
  
             Exercised                  (1,292,677)                8.71
  
             Forfeited                     (61,700)               15.46  
  
             Outstanding at end
             of year                     2,019,651               $14.85
  
             Options
             exercisable at
             year end                    1,056,976 
  
             Weighted average
             fair value of
             options granted
             during year                     $9.24 
  
                                                       Weighted Average
             1996                            Shares      Exercise Price
  
             Outstanding at
             beginning of year           3,331,162                $8.26
  
             Granted                       516,900                16.63
  
             Exercised                  (1,252,309)                7.84
  
             Forfeited                     (78,200)               12.32
  
             Outstanding at
             end of year                 2,517,553               $12.32
  
             Options
             exercisable at
             year end                    1,799,351
  
             Weighted average
             fair value of
             options granted
             during year                     $7.79
  
                                                            Price Range
             1995                            Shares           Per Share
  
             Outstanding at 
             beginning of year           2,898,253         $1.46-$13.50
  
             Granted                       740,000           9.38-14.25
  
             Exercised                    (205,425)          1.46-11.00
  
             Forfeited                    (101,666)          8.63-13.50
  
             Outstanding at end
             of year                     3,331,162           1.46-14.25
  
             Options
             exercisable at
             year end                    2,410,490
  
                 The  following table summarizes information about stock  
            options outstanding at September 30, 1997:
  
                         Options Outstanding                Options Exercisable
                                      Weighted
                                       Average
                                     Remaining  Weighted               Weighted
            Range of       Number  Contractual   Average      Number    Average
            Exercise         Out-         Life  Exercise       Exer-   Exercise
              Prices     standing   (in years)     Price     cisable      Price
  
              $2.96-
               $4.36       92,002          2.1     $3.95      92,002      $3.95
  
               8.63-
               12.88      709,174          7.1      9.51     709,174       9.51
  
              13.50-
               19.88    1,212,275          9.5     18.76     255,800      16.57
    
              23.00-
               23.63        6,200         10.0     23.43
  
              $2.96-
              $23.63    2,019,651          8.3    $14.85   1,056,976     $10.73
  
                 The  Company accounts for  stock options  granted using
            APB Opinion 25.  Accordingly, no compensation cost has  been
            recognized  for its  stock option  plans.   Had compensation
            cost for  the Company's stock-based compensation  plans been
            determined  based on the fair  value at the  grant dates for
            awards  under those plans consistent with  SFAS No. 123, the
            Company's  net income and  net income per  common and common
            equivalent share would have changed to the pro forma amounts
            indicated below:
  
                                               1997                1996
  
             Net income:
  
                  As reported           $31,262,739         $25,909,521
  
                  Pro forma              26,230,287          24,514,540
  
             Net income 
             per common and 
             common equivalent
             share:
  
                  As reported                $1.032              $0.873
  
                  Pro forma                   0.866               0.826
  
             Net income
             per common and
             common equivalent
             share assuming
             full dilution:  
  
                  As reported                $1.027              $0.863
  
                  Pro forma                   0.862               0.816
  
            The fair value of each option grant is estimated on the date
            of grant  using the Black-Scholes  option-pricing model with
            the  following weighted-average assumptions  used for grants
            in  1997   and  1996,  dividend  yield   of  0.5%;  expected
            volatility  of 33%;  risk-free interest  rate of  5.68%; and
            expected lives of approximately 8 years.
  
            6.  COMMITMENTS AND CONTINGENT LIABILITIES
  
                 The Company leases office and production facilities and
            office equipment under long-term operating lease agreements.
            Rent expense on the above operating leases was approximately
            $910,647,  $753,010,   and  $514,990  for  the  years  ended
            September  30,  1997, 1996,  and  1995,  respectively.   The
            following represents the Company's future  commitments under
            such leases:
  
                      Year ending
                      September 30:
  
                       1998                          $615,891
  
                       1999                           288,464
  
                       2000                           165,610
  
                       2001                            86,560
  
                       2002                           101,520
  
                       Thereafter                     397,620
  
                       Total                       $1,655,665
  
                 The  Company  has  agreements  with  the  inventors  of
            certain of  its products  which provide for  the payment  of
            royalties ranging  from 2% to 6.5% of defined net sales or a
            fixed rate per unit sold of the related products.
  
                 The Company is involved  in certain litigation  matters
            in  the normal course of  business which, in  the opinion of
            management, will not result  in any material adverse effects
            on the Company.
  
                 R2,  a wholly-owned  subsidiary of Cardiotronics,  is a
            co-defendant   in   an  ongoing   product   liability  case.
            Plaintiff  in this  case alleges,  among other  things, that
            defibrillation  pads manufactured by  R2 were  defective and
            seeks  damages of $20 million.  The Company believes that it
            has  valid  defenses;  however,  in  view  of  the  inherent
            uncertainties  surrounding the litigation,  no assurance can  
            be given that  R2 will prevail in this  case.  Attorneys for
            R2 are  attempting to negotiate  an out-of-court  settlement
            for an amount that will be covered by R2's product liability
            insurance policy.   Management  believes  that a  settlement
            will  be  reached that  does not  exceed  the amount  of the
            policy.
             
            7.  PROFIT SHARING PLAN
  
                 The Company sponsors an Employee Retirement and Savings
            Plan (the Plan) under Section 401(k) of the Internal Revenue
            Code.  The Plan is designed to allow participating employees
            to  accumulate  savings  for retirement  or  other purposes.
            Under  the Plan, all employees, who  have completed at least
            one year of service and have reached age 21, are eligible to
            participate.      The   Plan   allows   employees   to  make
            contributions to the plan  from salary reductions each year,
            up   to  a  maximum   of  15%  of   a  participant's  annual
            compensation.   Under the Plan, the Company matches up to 4%
            of  a participant's  contribution.   The Company may,  if it
            desires, make additional contributions to the 401(k) Plan on
            behalf  of its employees.  For the years ended September 30,
            1997,  1996, and  1995,  the Company  expensed approximately
            $757,000, $621,000, and $545,000, respectively,  as matching
            contributions  to  the Plan.    Employees  are always  fully
            vested in their own contributions and become fully vested in
            any  contributions made by  the Company  after six  years of
            service.  Employees are allowed to direct the investment  of
            their  Plan  contributions  within  a  group  of  designated
            investment funds.
  
            8.  BUSINESS COMBINATIONS
  
                 In July  1997, Tri-Med  acquired the rights  to license
            and  distribute  the  product  CLOtest  for   $5,825,000  in
            exchange  for a note payable to Delta  West, Inc.  Under the
            terms of  this agreement,  the  Company is  required to  pay
            royalties  as a  percentage of  products sold.   The royalty
            percentage   varies   based   on   the   level   of   sales.
            Substantially  all of  the purchase  price was  allocated to
            trademarks, a  covenant not to  compete, and goodwill  to be
            amortized using the straight-line method over 15 years.  The
            purchase price was allocated as follows:
  
                      Plant and equipment         $60,800
  
                      Intellectual property 
                      other than trademarks       615,600
  
                      Trademarks                4,172,600
  
                      Covenant not to compete      76,000
  
                      All other assets and   
                      rights including goodwill   900,000
  
                           Total               $5,825,000
  
                 Effective December 10,  1996, the Company acquired  all
            of the issued and outstanding capital stock of Cardiotronics
            for $12,723,000  in cash  and the assumption  of liabilities
            totaling $12,348,000.   The  acquisition is  being accounted
            for  using  the  purchase  method of  accounting;  as  such,
            results of operations have been included in the accompanying
            consolidated   financial  statements   from   the  date   of
            acquisition.    In  conjunction  with the  acquisition,  the
            Company  recorded  goodwill  of approxi-mately  $13,136,000,
            which is being amortized over 15 years.
  
            The pro forma results  of operations of the Company  for the
            years  ended  September  30,  1997 and  1996  (assuming  the
            acquisitions of Cardiotronics had  occurred as of October 1,
            1995) are as follows:
  
                                                1997                1996
  
            Net sales                   $133,971,074        $119,391,331
  
            Net income                    30,703,183          21,243,285
  
            Net income per share
            assuming full dilution              1.009              0.707
  
                 On  September  27,  1996, the  Company  issued  238,727
            shares  of its  common  stock in  exchange  for all  of  the
            outstanding common  stock of  PEPCO, a medical  research and
            manufacturing company incorporated in 1987 and headquartered
            in  Canal Fulton, Ohio.  The assets and liabilities of PEPCO
            at the  date of combination were  approximately $684,000 and
            $88,000, respectively.  The combination was accounted for as
            a  pooling  of  interests.   The  accompanying  consolidated
            financial statements  have been  prepared as if  Ballard and
            PEPCO had been combined for all periods presented.
  
                 On  April 19, 1996,  the Company acquired substantially
            all  of the  assets of  Endovations, Inc.  (Endovations) for
            approximately $1,220,000 in cash.   The acquisition has been
            accounted for  using the  purchase method of  accounting; as
            such,  Endovations' results of operations have been included
            in the  accompanying consolidated financial  statements from
            the  date   of  acquisition.    In   conjunction  with  this
            acquisition,  the Company recorded goodwill of approximately
            $400,000, which is being  amortized on a straight-line basis
            over 10 years.
  
                 Effective July  19, 1996,  the Company acquired  all of
            the issued and outstanding common  stock of Mist Assist  for  
            approximately  $673,600  in  cash   and  the  assumption  of
            liabilities totally approximately $126,400.  The acquisition
            has  been  accounted  for   using  the  purchase  method  of
            accounting;   as  such,  results  of  operations  have  been
            included   in   the   accompanying  consolidated   financial
            statements  from the  date of  acquisition.   In conjunction
            with  the  acquisition,  the  Company  recorded goodwill  of
            approximately  $680,000,  which  is  being  amortized  on  a
            straight-line basis over 15 years.
  
                 On  August 28,  1996, the  Company acquired all  of the
            issued  and outstanding  common  stock of  PMP  for cash  of
            approximately   $3,600,000.     The  acquisition   has  been
            accounted for  using the  purchase method of  accounting; as
            such,  results  of  operations  have been  included  in  the
            accompanying consolidated financial statements from the date
            of acquisition.   In  conjunction with the  acquisition, the
            Company recorded goodwill of approximately  $2,900,000 which
            is being amortized on a straight-line basis over 15 years.
  
                 On May 2, 1995,  the Company acquired substantially all
            of  the assets  of Cox  for a  purchase price  of $4,000,000
            consisting  of  $3,313,310 in  cash  and  the assumption  of
            liabilities   in  the  amount   of  $686,690.     Cox  is  a
            manufacturer   of  disposable   endoscopic  devices.     The
            acquisition has been accounted for using the purchase method
            of  accounting; as  such, Cox's  results of  operations have
            been  included  in the  accompanying  consolidated financial
            statements from the date  of acquisition.  The cost  of this
            acquisition  exceeded  the  estimated  fair  value  of   the
            acquired  net assets  by $423,000  which is  being amortized
            over 10 years.
  
                 On  November  14,  1995, the  Company  acquired 200,000
            shares   of  the  preferred   stock  of  Neuro  Navigational
            Corporation (Neuro) representing a  19.5% equity interest in
            Neuro for $2,000,000.   In addition,  on November 14,  1995,
            the Company  paid Neuro $500,000  for an option  to purchase
            substantially all of its assets.   The Company exercised the
            option  on  February 28,  1997  and  acquired the  remaining
            assets  of Neuro  for $4,245,422.   The  price paid  for the
            option and  amounts advanced  to Neuro were  applied to  the
            purchase price.
  
            9.  SALES
  
                 During the  years ended  September 30, 1997,  1996, and
            1995, the Company had  foreign export sales of approximately
            $12,557,000, $8,048,000, and $6,344,000, respectively.
  
            10.     EFFECT  OF  RECENTLY   ISSUED  FINANCIAL  ACCOUNTING
            STANDARDS
  
                 In  February 1997,  the Financial  Accounting Standards  
            Board  issued  SFAS  No.  128,  Earnings  Per  Share.   This
            standard establishes standards  for computing and presenting
            earnings  per share  (EPS).   SFAS  No.  128 simplifies  the
            approach for computing  earnings per share  previously found
            in Accounting Principles Board Opinion No. 15.   It replaces
            the presentation of primary EPS with a presentation of basic
            EPS.   It  also  requires dual  presentation  of  basic  and
            diluted  EPS on  the face  of the  income statement  for all
            entities with complex capital structures.
  
                 Under  the new  structure, basic EPS  excludes dilution
            and  is  computed by  dividing  income  available to  common
            stockholders by the weighted-average number of common shares
            outstanding  for  the  period.   Diluted  EPS  reflects  the
            potential dilution  that could occur if  securities or other
            contracts to issue common  stock were exercised or converted
            into common stock.
  
                 SFAS  No.  128 is  effective  for  financial statements
            issued for  periods ending  after December  15,  1997.   The
            computation  of basic  EPS  under SFAS  No.  128 would  have
            resulted in net income  per common share of  $1.063, $0.922,
            and $0.796  for the fiscal  years ended September  30, 1997,
            1996, and  1995, respectively.   Diluted EPS  computed under
            SFAS  No. 128 would have  resulted in net  income per common
            share of  $1.032, $0.874,  and $0.754  for the  fiscal years
            ended September 30, 1997, 1996, and 1995, respectively.
  
            11.  OTHER INCOME
  
                 During 1997,  the Company  recorded an  impairment loss
            totaling   approximately  $4,900,000  as  a  result  of  the
            Company's  assessment  that  the  carrying   amount  of  the
            remaining Neuro assets,  consisting primarily of  inventory,
            fixed assets,  and  intangible assets,  exceeded their  fair
            values  as estimated based on  analysis of cash  flows.  The
            Company also recorded a gain on the sale of a parcel of land
            totaling approximately $6,300,000.   The impairment loss and
            the gain on the sale of land are included in other income in
            the accompanying consolidated statements of operations.
  
            12.  SUBSEQUENT EVENT
  
            Effective February 25, 1998, Ballard issued 1,067,733 shares
            of its common stock  in exchange for all of  the outstanding
            common stock  of Tri-Med,  a  medical devices  manufacturing
            company  incorporated  in 1983  with  operations  in Kansas,
            Virginia, and Australia.  The assets and liabilities of Tri-
            Med  at  the  date  of the  combination  were  approximately
            $8,276,000  and $6,321,000,  respectively.   The combination
            was  accounted  for   as  a  pooling  of  interests.     The
            accompanying supplemental  consolidated financial statements
            for  1997, 1996, and 1995  have been restated  as if Ballard
            and Tri-Med had  been combined  as of October  1, 1994,  the  
            beginning  of   the  reporting   period.    There   were  no
            intercompany transactions between  Ballard and Tri-Med prior
            to the date of  merger.  Net sales,  net income, and  income
            per share  amounts of the previously  separate companies for
            the years  ended  September  30,  1997, 1996,  and  1995  as
            previously reported and combined are as follows:
  
                                             Ballard
                                      (As Previously
                                           Reported)     Tri-Med    As Restated
  
           1997
   
              Net sales                 $125,307,178  $7,435,859   $132,743,037
  
              Net income                  30,426,287     836,452     31,262,739
  
              Net income per share:
                 Common and
                 common equivalent
                 share                         1.041         N/A          1.032
  
                 Common share
                 assuming full
                 dilution                      1.036         N/A          1.027
  
           1996
  
              Net sales                  103,525,263   6,356,079    109,881,342
  
              Net income                  25,603,039     306,482     25,909,521
  
              Net income per share:
  
                 Common and
                 common equivalent
                 share                          .895         N/A          0.873
  
                 Common share
                 assuming full
                 dilution                       .884         N/A          0.863
  
           1995
  
              Net sales                   84,152,967   5,888,234     90,041,201
  
              Net income                  20,942,616     997,260     21,939,876
  
              Net income per share:
  
                 Common and
                 common equivalent
                 share                          .752         N/A          0.759
  
                 Common share
                 assuming full
                 dilution                       .739         N/A          0.746  
  
  
                      MANAGEMENT'S DISCUSSION AND ANALYSIS OF 
                    FINANCIAL CONDITION AND RESULTS OF OPERATIONS
  
                 This  analysis of the Company's operations encompassing
            the  fiscal years ended September 30,  1997, 1996, and 1995,
            should be  considered in  conjunction with the  consolidated
            balance sheets, statements of operations, and  statements of
            cash flows.  All  of the figures discussed herein  have been
            adjusted to reflect the  Company s stock and asset purchases
            (see  Notes to Consolidated Financial Statements ).
  
                 Fiscal year 1997 was a  another record setting year for
            the Company  in terms of sales  and income.   Net sales were
            $132.7  million,  representing  an  increase  of 20.8%  over
            fiscal 1996.  Net income and net income per share were $31.3
            million and $1.03, respectively, increasing 20.7% and 18.2%,
            respectively, over  fiscal year 1996.   The continued steady
            growth  in  sales  and  income is  the  result  of strategic
            acquisitions,   internal   development   of  new   products,
            acquisition of  national contracts,  rapid expansion in  the
            international marketplace,  and  the overall  efforts of  an
            outstanding  sales  force.   Income  growth  continues as  a
            result of stable, high margins and manufacturing expertise.
  
                 With   a   continued   emphasis   on   growth   through
            acquisitions,   the   Company   acquired  Cardiotronics   in
            December,    1996   and    Tri-Med   in    February,   1998.
            Cardiotronics,  located  in   Carlsbad,  California,  is   a
            manufacturer of medical devices  for the acute management of
            heart rate  disorders.  Its principal  product, a disposable
            defibrillator  pad, provided  approximately $7.6  million in
            net sales during fiscal year 1997.  The Company expects 1998
            sales from this  acquisition to exceed $10.0 million.   Tri-
            Med, with locations in Kansas, Virginia, and Australia, is a
            manufacturer of  diagnostic  products for  the detection  of
            Helicobacter  Pylori, a  causative  factor  in peptic  ulcer
            disease.   1997 sales  from Tri-Med were  approximately $7.4
            million.     The  Company  expects  1998   sales  from  this
            acquisition to exceed $13.0 million.
  
                 During fiscal  year 1997 the Company  focused its sales
            efforts and  internally  reported based  upon  two  separate
            business  units:   (1)  TRACH  CARE/EASI-LAV ("TRACH  CARE")
            which  includes  the TRACH  CARE  and  EASI-LAV families  of
            products  as  well  as  the  new  additions  from  the  1996
            acquisitions of  Mist Assist,  PMP  and PEPCO  and the  1997
            acquisition of Cardiotronics; and (2)  MIC/FOAM CARE ("MIC")
            which  includes the  MIC,  FOAM  CARE  and  gastrointestinal
            products as well as the product line additions acquired from
            Tri-Med.
  
            RESULTS OF OPERATIONS
  
                 SALES  -  For  the   year  ended  September  30,  1997,  
            consolidated net sales increased $22,861,695, or 20.8%, over
            fiscal  year 1996.  For  the year ended  September 30, 1996,
            consolidated net sales increased $19,840,141, or 22.0%, over
            fiscal year 1995.  The steady, solid growth in 1997 and 1996
            is  due principally  to  the Company s  ability to  increase
            volume, both  internally and through acquisitions.  Although
            prices  on   isolated  TRACH  CARE  and   MIC  products  and
            accessories increased  slightly, pricing for  other products
            during  1997 were reduced  in order to  meet competition and
            price  reductions required  by  hospitals  and large  buying
            groups.   The Company believes that the signing of exclusive
            long-term contracts with major hospital buying groups should
            stabilize prices for certain products over the next three to
            five years.
  
                 The Company's MIC enteral feeding catheters and related
            products continue to contribute significantly to the overall
            growth  in net  sales,  as is  the  rapid expansion  of  the
            Company's international operations.   Net  sales within  the
            MIC product  line increased 33.2% in fiscal 1997 over fiscal
            1996. International net sales (all products) increased 56.1%
            during the same period.
  
                 The  following   table   summarizes  sales   by   sales
            force/business  unit (see description above) as a percentage
            of total net sales:
  
            Year ended September 30,           1997      1996      1995
  
            Trach Care                         70.0%     72.2%     76.3%
  
            MIC                                30.0%     27.8%     23.7%
  
                 The   table  below   summarizes   U.S.   sales   versus
            international sales as a percentage of total net sales:
  
            Year ended September 30,           1997      1996      1995
  
            Domestic                           91.5%     92.7%     93.0%
  
            International                       8.5%      7.3%      7.0%
  
            All  sales of the Company  and related receipts  are in U.S.
            dollars.
  
                 COST OF PRODUCTS  SOLD - For  the year ended  September
            30,  1997,  consolidated  cost  of   products  sold  totaled
            $47,027,428, compared  with $38,048,879 for fiscal year 1996
            and $30,166,070 for fiscal year 1995, increases of 23.6% and
            26.1%, respectively.   As a  percent of net  sales, cost  of
            products sold was 35.4%  and 34.6% for fiscal year  1997 and
            1996, respectively.  The 1% increase in product costs during
            fiscal year  1997 can  be attributed  to the  acquisition of
            lower  margin product  lines,  the closure  and transfer  of  
            PEPCO s,   PMP s,  and  MIC s  manufacturing  operations  to
            Draper, Utah  and Pocatello, Idaho,  and continued increases
            in material  and labor  costs. Margins  also continue  to be
            impacted  by  the  health  care  industry's  focus  on  cost
            restraints and  competitive pricing pressures,  resulting in
            increased product rebates and price reductions.
              
                 During  the year  the Company  continued to  refine and
            automate its  manufacturing processes as well  as expand its
            injection molding  capacity.  The Company  closed its PEPCO,
            PMP,  and  MIC  facilities  and  integrated  them  into  the
            Company s two manufacturing sites in  Utah and Idaho.  Gross
            margins will continue to be impacted  by these closures into
            the  first quarter  of  1998 but  the Company  expects these
            combinations to create manufacturing benefits in the future.
            Pricing pressures, new  product acquisitions, and  continued
            increases  in labor  and materials  will continue  to impact
            margins  in  1998.   Margins will  also  be impacted  by the
            Company's planned move of its  Cardiotronics operations from
            Carlsbad, California  to Pocatello,  Idaho during the  first
            quarter of fiscal year 1998.
  
                 OPERATING  EXPENSES  -  Operating expenses  consist  of
            selling, general, and administrative expenses,  research and
            development  expenses,  and royalties.    Total consolidated
            operating  expenses for  the year  ended September  30, 1997
            were $42,208,682,  compared with $36,465,201 for fiscal year
            1996 and $30,787,393  for fiscal year  1995.  The  following
            table  is a summary of  operating expenses by  category as a
            percentage of net sales:
  
            Year ended September 30,           1997      1996      1995
  
            Selling, general, and
            administrative                     28.3%     28.8%     29.8%
  
            Research and development            2.1%      2.9%      2.7%
  
            Royalties                           1.4%      1.5%      1.7%
  
                 Selling, general, and administrative expenses increased
            $5,909,562 during  fiscal  year 1997  and $4,754,211  during
            fiscal   year  1996.     These   increases  are   attributed
            principally  to  increased  sales  volumes, as  well  as  to
            increases in period costs  due to intangible write-offs from
            acquisitions.  Consolidated expenses related to research and
            development and royalties,  as a percentage of  consolidated
            net sales  for fiscal years  1997, 1996, and  1995, remained
            fairly consistent.
  
                 OTHER  INCOME  -  Other  income  generally  consists of
            interest  income from short-term investments, royalty income
            from the licensing of the  TRACH CARE closed suction system,
            and the netting of insignificant  gains and losses from  the  
            sale or retirement of property and equipment.  Also included
            in other  income during fiscal 1997 was the sale of 61 acres
            of real estate  located south of the  Company s Draper plant
            for a net  gain of  $6,304,670 (see   Liquidity and  Capital
            Resources ) and   the impairment loss  of $4,900,000 related
            to  the Company's  investment in  the assets  and technology
            acquired  from Neuro Navigational Corporation ("Neuro") (see
             Liquidity and Capital Resources ).
  
                 Interest   and   royalty  income   remained  relatively
            consistent   between  the   periods,  bringing   a  combined
            $4,595,116,  $4,317,925,  and  $4,070,877  for  fiscal years
            1997, 1996, and 1995, respectively.
  
                 NET INCOME  - Consolidated  net income  from operations
            for the  year ended September 30,  1997 totaled $31,262,739,
            an increase of 20.7%  over fiscal year 1996.   The following
            table reflects net income  as a percentage of net  sales for
            each of the reporting periods:
  
            Year ended September 30,      1997      1996      1995
  
            Net Income                    23.6%     23.6%     24.4%
  
                 The  overall  increase in  net  income  over the  prior
            period  and  the outstanding  after-tax margin  reflects the
            increased  sales  volume,  continued  strong   margins,  and
            management's  efforts to control  the costs of manufacturing
            and other operating costs.
             
                 INFLATION    - Inflation  can  be expected  to  have an
            effect  on  most  of   the  Company's  operating  costs  and
            expenses.   The extent to which  inflationary cost increases
            can be offset  by price increases depends on competition and
            other   factors.     The  effect   of  inflation   has  been
            insignificant during the periods reported herein.
  
            LIQUIDITY AND CAPITAL RESOURCES
  
                 The Consolidated Balance  Sheets present the  Company's
            financial position at the end of each of the last two fiscal
            years.    Each  statement  lists the  Company's  assets  and
            liabilities,  and the  equity  of its  stockholders.   Major
            changes in  the Company's financial  position are summarized
            in the Consolidated Statement of Cash Flows.  This statement
            summarizes  the  changes  in  the Company's  cash  and  cash
            equivalents  balance for  each of  the last three  years and
            helps to show the relationship between operations (presented
            in  the Consolidated Statement  of Operations) and liquidity
            and  financial  resources  (presented  in  the  Consolidated
            Balance Sheets).
  
                 For  the year  ended September  30, 1997  the Company's
            operating activities  provided  $31,432,996 in  cash  flows,  
            comparable to  the $22,683,400  provided during  fiscal year
            1996.    At  September  30, 1997,  working  capital  totaled
            $87,986,254 compared with $76,593,470 at September 30, 1996.
            The  Company's current ratio was  7.8 to 1  at September 30,
            1997 compared  with 13.7 at  September 30, 1996.   Available
            cash,  which   includes  cash   and  cash  equivalents   and
            investments  available  for  sale,  at  September  30,  1997
            totaled $48,252,355  compared with $41,181,433  at September
            30,  1996.  In addition  to its strong  liquid position, the
            Company does not have any long-term debt nor does management
            intend to  utilize debt to  fund future expansion.   Ballard
            maintains  a $5,000,000  unsecured line  of credit  with its
            bank  but has  not drawn on  this line during  either of the
            years ended  September 30, 1997  or 1996.   Tri-Med utilized
            lines of credit to fund its operations but as of the date of
            combination  with Ballard, the lines  of credit were paid in
            full.
  
                 Continued growth in  cash and investments provides  the
            Company financial  stability and flexibility to fund current
            operations,  an  aggressive  acquisitions   program,  future
            internal growth  and expansion, and the  ability to continue
            its dividend payment policy.
  
                 During the  year ended September 30,  1997, the Company
            completed  expansion   of  its  manufacturing   facility  in
            Pocatello,  Idaho.    See discussion  of  Pocatello facility
            under  "Capital  Expenditures".      Total  development  and
            construction  costs  of  the  first phase  of  the  facility
            totaled approximately $7,243,000.  Completion of the  second
            phase cost  approximately $5,500,000.  The  Company expended
            an additional  $8,900,000 during fiscal year  1997 to expand
            and upgrade  existing facilities and operations  in order to
            meet the growing needs of present and new business.
  
                 Cash outlay  for the acquisition of  Cardiotronics, net
            of cash acquired, was approximately $12,722,000.
  
                 During  February 1997, the Company exercised its option
            to  purchase the assets of  Neuro at a  total purchase price
            $4,245,422.  In March, 1997, the Company sold certain of the
            assets  it acquired  from Neuro  to  an unrelated  party for
            $961,459, which  approximated the  purchased price  of those
            assets.   In  June,  1997 the  Company  determined that  the
            remaining carrying value in its investment in  Neuro was not
            entirely recoverable based  upon expected future  cash flows
            from  the  sale  of  the  remaining  assets  and  technology
            acquired  from Neuro.   Although  the Company  believes that
            remaining  assets and  technology  of Neuro  have value,  an
            impairment  loss  of  $4,900,000  has  been  recognized  and
            included  in  "Other  Income."   The  remaining  assets  and
            technology acquired  from Neuro are being  marketed for sale
            by the Company.  
  
                 A valuation allowance has not been provided on deferred
            tax asset balances due to the Company's projection of future
            taxable income in excess of such tax assets.
  
                 In  addition to  capital and  acquisition expenditures,
            other  items which  affected cash  flows during  fiscal year
            1997 included  the payment  of dividends of  $3,207,205, and
            purchases of intangible assets of $714,952.
  
            IMPACT OF THE YEAR 2000 ISSUE
  
                 The Year 2000 Issue is the result of potential problems
            with computer  systems or any equipment  with computer chips
            that use dates where  the date has been  stored as just  two
            digits (e.g., 97  for 1997).  On January 1,  2000, any clock
            or   date  recording  mechanism,  including  date  sensitive
            software, which uses only two  digits to represent the year,
            may recognize a date  using 00 as the year  1900 rather than
            the year 2000.   The Company has also been advised that some
            computer chips may not have the ability to function properly
            when  reading certain  dates  in calendar  year 1999  (e.g.,
            9/9/99).  These computer  problems could result in  a system
            failure or miscalculations causing disruption of operations,
            including  among  other  things, a  temporary  inability  to
            process  transactions, send  invoices, or engage  in similar
            activities.
  
                 In 1997, the  Company began and  is still continuing  a
            comprehensive program of assessing changes and upgrades that
            will need to  be implemented in order to be prepared for the
            Year 2000 and even the Year 1999.  The scope  of the project
            covers  all computer systems, computer and network hardware,
            production  process  controllers,  office equipment,  access
            control, maintenance machinery, manufacturing  equipment and
            the Company's products.
  
                 To assist  with this  project, the Company  has engaged
            the  services  and  expertise of  Quantified  Management,  a
            computer services consulting firm from Salt Lake City, Utah.
            The Company  has acquired  a project management  package (QM
            System 2000)  from Quantified  Management intended to  guide
            the Company  through all  aspects of solving  the Year  2000
            Issue.  This tool bundles a comprehensive project management
            program with  interactive coaching services  from Quantified
            Management,  to   assist  the  Company  in   its  Year  2000
            compliance efforts.
  
                 The  Company has  already determined  that it  would be
            required  to  replace or  modify  portions  of its  business
            application  software so  that  its  computer systems  would
            properly  utilize  dates  beyond  December 31,  1999.    The
            Company  presently believes  that  with  conversions to  new
            systems and modifications to existing software the Year 2000
            Issue can be mitigated.  However, if  such modifications and  
            conversions are not made,  or are not timely, the  Year 2000
            Issue  could have a material impact on the operations of the
            Company.
  
                 The  Company has  initiated formal  communications with
            all  of its  significant  suppliers and  large customers  to
            determine  the extent to which  the Company is vulnerable to
            their  failure to remediate their own Year 2000 Issues.  The
            Company can  give  no guarantee  that the  systems of  other
            companies  on  which  the  Company's systems  rely  will  be
            converted  on time or that  a failure to  convert by another
            company  or  a  conversion  that is  incompatible  with  the
            Company's systems, would not  have a material adverse effect
            on the Company.
  
                 The  Company  will  continue  to  utilize  internal and
            external resources  to implement, reprogram, or  replace and
            test software and related assets  affected by the Year  2000
            Issue.   The Company expects to complete the majority of its
            efforts  in this area by early 1999 leaving adequate time to
            assess   and  correct  any   significant  issues   that  may
            materialize.  The  total cost  of the Year  2000 project  is
            estimated  at  $500,000  to  $600,000 and  is  being  funded
            through operating cash flows.   The Company will be  able to
            capitalize a substantial portion of this cost.
  
                 The costs of the project and the timetable in which the
            Company   plans  to  complete   the  Year   2000  compliance
            requirements are based on management's best estimates, which
            were derived utilizing numerous assumptions of future events
            including the continued  availability of certain  resources,
            third party modification plans  and other factors.  However,
            there can  be  no guarantee  that  these estimates  will  be
            achieved  and actual  results could  differ  materially from
            these  plans.    Specific  factors which  might  cause  such
            material differences  include, but  are not limited  to, the
            availability and cost of personnel trained in this area, the
            ability  to locate  and correct  all relevant  computer chip
            codes, and similar uncertainties.
  
            RISK FACTORS
  
                 From  time to time the  Company may report, through its
            press releases, its Annual  Report, and SEC filings, certain
            matters  that  could  be  characterized  as  forward-looking
            statements subject  to risks  and  uncertainties that  could
            cause  actual  results  to  differ   materially  from  those
            projected.  Such risks  and uncertainties may include, among
            other things,  the factors  discussed below.   Such forward-
            looking  statements are  made  pursuant to  the safe  harbor
            provisions of  the Private Securities  Litigation Reform Act
            of 1995.
  
                 COMPETITION.      The   medical   device   industry  is  
            characterized by rapidly  evolving technology and  increased
            competition.  There are a number of companies that currently
            offer, or  are in the  process of developing,  products that
            compete with products offered  by the Company, including the
            Company's flagship TRACH CARE closed suction catheter.  Some
            of  these  competitors  have  substantially  greater capital
            resources, research and development staffs and experience in
            the medical device industry.   These competitors may succeed
            in  developing  technologies  and  products  that  are  more
            effective  than  those currently  used  or  produced by  the
            Company or  that would render  some products offered  by the
            Company obsolete or  noncompetitive.   Competition based  on
            price  is  becoming  an  increasingly  important  factor  in
            customer purchasing patterns as a result of cost containment
            pressures  on,   and  consolidation  in,  the   health  care
            industry.  Such  competition has exerted,  and is likely  to
            continue  to  exert, downward  pressure  on  the prices  the
            Company is able to charge for its products.  The Company may
            not be  able to offset such downward  price pressure through
            corresponding cost  reductions.  Price reductions could have
            an adverse impact on the  business, results of operations or
            financial condition of the Company. 
  
                 INTELLECTUAL PROPERTY  RIGHTS.  From time  to time, the
            Company has received, and in the future may receive, notices
            of  claims  with respect  to  possible  infringement of  the
            intellectual  property   rights  of  others  or  notices  of
            challenges  to the  Company's intellectual  property rights.
            In some instances such notices have given rise to, or may in
            the  future  give  rise  to,  litigation.    Any  litigation
            involving the  intellectual property  rights of  the Company
            may  be resolved by means  of a negotiated  settlement or by
            contesting the  claim through  the judicial process.   There
            can be no assurance that the business, results of operations
            or the financial condition of the Company will not suffer an
            adverse impact  as a result of  intellectual property claims
            that  may be  commenced against the  Company in  the future.
            The Company owns certain patents and proprietary information
            acquired   while   developing   its   products   or  through
            acquisitions,  and the  Company is  the licensee  of certain
            other  technology.     As  patents  expire,  more  competing
            products  may  be released  into  the  marketplace by  other
            companies.   The  ability  of the  Company  to  continue  to
            compete effectively with other medical device companies  may
            be materially dependent upon  the protection afforded by its
            patents  and  the  confidentiality  of  certain  proprietary
            information.  There can be no assurance that patents will be
            issued  for  products  and  product   improvements  recently
            released into  the  marketplace or  for  products  presently
            being developed.
  
                 MANAGED   CARE   AND   OTHER   HEALTH   CARE   PROVIDER
            ORGANIZATIONS.  Managed care  and other health care provider
            organizations  have  grown  substantially  in terms  of  the  
            percentage  of  the population  in  the  United States  that
            receives medical benefits through such organizations and  in
            terms of the  influence and  control that they  are able  to
            exert over an increasingly large portion  of the health care
            industry.  These organizations are continuing to consolidate
            and grow,  increasing the ability of  these organizations to
            influence the practices and pricing involved in the purchase
            of  medical  devices, including  the  products  sold by  the
            Company.
  
                 HEALTH CARE REFORM/PRICING  PRESSURE.  The  health care
            industry  in  the  United  States  continues  to  experience
            change.   Health care reform proposals  have been formulated
            by  members of  Congress.   In addition,  state legislatures
            periodically consider various health care  reform proposals.
            Federal, state and local government representatives will, in
            all likelihood,  continue to  review and  assess alternative
            health  care delivery systems and payment methodologies, and
            ongoing public debate of these issues can be expected.  Cost
            containment  initiatives,  market  pressures   and  proposed
            changes  in  applicable  laws  and regulations  may  have  a
            dramatic effect  on pricing or potential  demand for medical
            devices, the  relative costs associated  with doing business
            and  the  amount of  reimbursement  by  both government  and
            third-party  payors.     In  particular,  the   industry  is
            experiencing  market-driven reforms  from forces  within the
            industry that are exerting pressure on health care companies
            to reduce  health care  costs.  These  market-driven reforms
            are  resulting   in  industry-wide  consolidation   that  is
            expected  to  increase  the  downward  pressure  on  product
            margins, as  larger buyer and supplier  groups exert pricing
            pressure on  providers of  medical devices and  other health
            care  products.     Both  short-term   and  long-term   cost
            containment  pressures,   as  well  as  the  possibility  of
            regulatory  reform,  may  have  an  adverse  impact  on  the
            Company's results  of  operations and  financial  condition.
            The  Company's  products  consist  primarily  of  disposable
            medical devices.   Cost  containment pressures  on hospitals
            are  leading  some  facilities  to  use  certain  disposable
            devices  longer than they have  been used in  the past, even
            longer than permitted by product labelling.  This phenomenon
            could  result  in  a  reduction in  Company  sales,  because
            extended use and device reuse mean fewer unit purchases.
  
                 GOVERNMENT  REGULATION.   There  has  been  a trend  in
            recent years,  both in  the  United States  and outside  the
            United  States,  toward more  stringent  regulation  of, and
            enforcement  of requirements  applicable to,  medical device
            manufacturers.    The  continuing  trend  of more  stringent
            regulatory  oversight in  product clearance  and enforcement
            activities  has  caused  medical  device   manufacturers  to
            experience longer approval cycles, more uncertainty, greater
            risk and greater expense.  At the present time, there are no
            meaningful indications that this trend  will be discontinued  
            in  the  near-term or  the  long-term either  in  the United
            States  or abroad.  The Company expects to continue to incur
            additional  operating expenses  associated with  its ongoing
            regulatory compliance  program,  but  the  amount  of  these
            incremental costs cannot  be completely  predicted and  will
            depend upon  a variety of factors,  including future changes
            in  statutes  and   regulations  governing  medical   device
            manufacturers.    There  can   be  no  assurance  that  such
            compliance requirements and quality assurance  programs will
            not  have  an adverse  impact  on the  business,  results of
            operations or financial condition of the Company or that the
            Company  will  not experience  problems associated  with FDA
            regulatory compliance.
  
                 NEW PRODUCT INTRODUCTIONS.  As the existing products of
            the Company become more mature and its existing markets more
            saturated,  the importance  of developing  or acquiring  new
            products  will  increase.    The  development  of  any  such
            products   will  entail   considerable  time   and  expense,
            including research  and development  costs and the  time and
            expense  required to obtain  necessary regulatory approvals,
            which  could  adversely  affect  the  business,  results  of
            operations or financial condition of the Company.  There can
            be no assurance that  such development activities will yield
            products that can be  commercialized profitably, or that any
            product  acquisition  can  be  consummated  on  commercially
            reasonable  terms  or at  all.   Any  failure to  acquire or
            develop new  products  to supplement  more  mature  products
            could  have an  adverse impact  on the business,  results of
            operations or financial condition of the Company.
  
                 TECHNOLOGICAL  CHANGE.     The  medical  technology  as
            utilized  by the Company has been subject to rapid advances.
            While  the Company  feels  that it  currently possesses  the
            technology   necessary  to  carry   on  its   business,  its
            commercial  success will  depend  on its  ability to  remain
            current with  respect to such technological  advances and to
            retain experienced technical  personnel.  Furthermore, there
            can be  no assurance that other  technological advances will
            not  render  the Company's  technology and  certain products
            uneconomical or obsolete.
  
                 PRODUCT LIABILITY  EXPOSURE.  Because its  products are
            intended  to be used in health care settings on patients who
            are physiologically  unstable and  may also be  seriously or
            critically ill, the Company  is exposed to potential product
            liability  claims.   From time  to time, patients  using the
            Company's products  have suffered  serious injury or  death,
            which  has  led  to  product liability  claims  against  the
            Company.  Some product  liability claims have been inherited
            by the  Company through business acquisitions.   The Company
            does  not believe that any  of these claims, individually or
            in the aggregate, will have a material adverse impact on its
            business,  results  of  operations  or  financial condition.  
            However,  the  Company may,  in  the future,  be  subject to
            product  liability claims  that could  have such  an adverse
            impact.
  
                 The  Company maintains  product  liability coverage  in
            amounts that it deems sufficient for its business.  However,
            there can be no assurance that such coverage will ultimately
            prove to be adequate, or that such coverage will continue to
            remain available on acceptable terms or any terms at all.
  
                 ACQUISITIONS.   In  order to continue  increasing sales
            volume and profits, the Company  relies heavily on a program
            of  acquiring  business and  new  product  lines from  other
            companies.   There is always a significant risk that a given
            acquisition  by the Company will prove to be unsuccessful or
            end  up not  contributing sufficiently  to sales  and profit
            growth   of  the  Company.    There  is  also  a  risk  that
            undiscovered  or  contingent  liabilities  of   an  acquired
            company  could negatively  impact  the  Company's  financial
            position or  even the  acquisition transaction itself.   The
            integration of any businesses that the Company might acquire
            could require substantial management  resources.  The moving
            of acquired  product lines can also  result in interruptions
            in production  and backorders.   There can  be no  assurance
            that any  such  integration  will  be  accomplished  without
            having a  short or  potentially long-term adverse  impact on
            the business, results of  operations or financial  condition
            of the Company or  that the benefits expected from  any such
            integration will be fully realized.
  
                 LACK  OF  DIVIDENDS.     Prior  to  January,  1990,  no
            dividends  had been  paid by  the Company  on its  shares of
            Common Stock.  The Company has paid dividends since January,
            1990.   However, there  can be  no assurance that  dividends
            will be paid on shares in the future, particularly since the
            Company  prefers to reserve  its cash and  liquid assets for
            growth and possible business acquisitions.
  
                 UNCERTAINTY OF  FINANCIAL  RESULTS AND  CAPITAL  NEEDS.
            There  may  be  substantial  fluctuations in  the  Company's
            results of operations because of the timing and recording of
            revenues and market acceptance of existing Company products.
            The  ability of the Company  to expand its manufacturing and
            marketing operations cannot be predicted with certainty.  If
            revenues do not continue to increase as rapidly as they have
            in the past  few years, or  if manufacturing, marketing,  or
            research and development are  not successful or require more
            money than  is anticipated,  the Company  may have  to scale
            back product marketing,  development and production  efforts
            and attempt to obtain  external financing.  There can  be no
            assurance  that the Company  would be able  to obtain timely
            external  financing in  the  amounts required  or that  such
            financing, if  available, would be on  terms advantageous to
            the Company.   
  
                 SUPPLY  OF RAW  MATERIALS.   Certain  of the  Company's
            products are  dependent upon  raw materials for  which there
            are single  or few sources.  So far, the Company has not had
            any  serious  problems   obtaining  needed  raw   materials.
            However,  there can be no assurance that the Company will be
            able  to continue to  depend on existing  sources of certain
            materials. 
  
                 IMPACT OF CURRENCY FLUCTUATIONS; IMPORTANCE  OF FOREIGN
            SALES.   Because  certain sales of  products by  the Company
            outside the United States typically are denominated in local
            currencies,  the results  of operations  of the  Company are
            expected to continue to  be affected by changes  in exchange
            rates between  certain  foreign currencies  and  the  United
            States Dollar.  There  can be no assurance that  the Company
            will not  experience currency fluctuation  effects in future
            periods, which could have an adverse impact on its business,
            results of operation or financial condition.  The operations
            and   financial  results   of  the   Company  also   may  be
            significantly  affected  by  other   international  factors,
            including changes in governmental regulations or  import and
            export  restrictions, and  foreign  economic  and  political
            conditions generally.
  
                 The Company's ability to continue to sell products into
            Europe  is dependent  to a  large extent  on its  ability to
            maintain the  important ISO  9001/EN 4601 certification  and
            the CE  marking of conformity.  If  the Company were to lose
            such  certifications,  such  loss  would  have  a  material,
            adverse impact on international sales and profits.
  
                 POSSIBLE VOLATILITY  OF STOCK PRICE.   The market price
            of  the Company's stock is,  and is expected  to continue to
            be,  subject to  significant  fluctuations  in  response  to
            variations in  quarterly  operating results,  trends in  the
            health  care  industry in  general  and  the medical  device
            industry in particular, and certain other factors beyond the
            control  of   the  Company.    In   addition,  broad  market
            fluctuations, as  well  as  general  economic  or  political
            conditions and initiatives, may adversely  impact the market
            price of  the Company's  stock, regardless of  the Company's
            operating performance.
  
                 YEAR  2000 ISSUES.    The approaching  Year 2000  could
            result  in   challenges   related  to   computer   software,
            manufacturing   and  communications   equipment,  accounting
            records,  and relationships  with  suppliers and  customers.
            The  Company is in the  process of addressing  the Year 2000
            Issue.  See "IMPACT OF THE YEAR 2000 ISSUE."
  
            ITEM 7.  FINANCIAL STATEMENTS AND EXHIBITS
  
                 (c)  EXHIBITS  
  
            EXHIBIT        DESCRIPTION         SEQUENTIALLY     NUMBERED
            PAGE
  
               23.1        Independent
                           Auditor's Consent             33
  
               23.2        Consent of 
                           Independent
                           Accountants                   34
  
               27          Financial Data
                           Schedule                      35
  
  
                                     SIGNATURES
             
                 Pursuant to the requirements of the Securities Exchange
            Act of 1934, the  Registrant has duly caused this  report to
            be  signed on  its behalf by  the undersigned  hereunto duly
            authorized.
  
                                          BALLARD MEDICAL PRODUCTS
  
            Dated:  July 13, 1998         By:  Dale H. Ballard,
                                               President
metadata_documents: [{"type": "8-K", "sequence": "1", "secsgml_size_bytes": 110139}]
metadata_filer: {"company-data": {"conformed-name": "BALLARD MEDICAL PRODUCTS", "cik": "0000723534", "assigned-sic": "3841", "irs-number": "870340144", "state-of-incorporation": "UT", "fiscal-year-end": "0930"}, "filing-values": {"form-type": "8-K", "act": "34", "file-number": "001-12318", "film-number": "98665431"}, "business-address": {"street1": "12050 LONE PEAK PKWY", "city": "DRAPER", "state": "UT", "zip": "84020", "phone": "8015726800"}, "mail-address": {"street1": "12050 LONE PEAK PKWY", "street2": "12050 LONE PEAK PKWY", "city": "DRAPER", "state": "UT", "zip": "84020"}}
text: As filed with the Securities and Exchange Commission
                                  on July 13, 1998.
  
                         SECURITIES AND EXCHANGE COMMISSION
                               Washington, D.C. 20549
  
                                      FORM 8-K
  
                                   CURRENT REPORT
  
                       Pursuant to Section 13 or 15(d) of the
                           Securities Exchange Act of 1934
  
                                    July 13, 1998
                                  (Date of Report)
  
                              BALLARD MEDICAL PRODUCTS
                             (Exact name of registrant 
                            as specified in its charter)
  
                                       1-12318
                              (Commission file number)
  
                                        UTAH
                   (State or other jurisdiction of incorporation 
                                  or organization)
  
                                     87-0340144
                        (I.R.S. Employer Identification No.)  
                   
  
                   12050 Lone Peak Parkway, Draper, Utah  84020  
                               (Address and Zip Code 
                           of principal executive offices)
  
                                   (801) 572-6800
                          (Registrant's telephone number, 
                                including area code)   
  
                                     DEFINITIONS
  
                 As used  herein, the following terms  have the meanings
            indicated:
  
            GENERAL DEFINITIONS 
  
                  1.  "Ballard" refers to Ballard Medical Products.
  
                  2.  "BI"  refers to  Ballard  International,  Inc.,  a
                      wholly owned subsidiary of Ballard.
  
                  3.  "BPC"  refers to  Ballard Purchase  Corporation, a
                      wholly owned subsidiary of Ballard.
  
                  4.  "BREH"  refers  to Ballard  Real  Estate Holdings,
                      Inc., a wholly owned subsidiary of Ballard.
  
                  5.  "Cardiotronics"  refers to  Cardiotronics Systems,
                      Incorporated, a wholly owned subsidiary.
  
                  6.  The   "Company"  and  the  "Registrant"  refer  to
                      Ballard and its subsidiaries.
  
                  7.  "MIC" refers to Medical Innovations Corporation, a
                      wholly owned subsidiary of Ballard.
  
                  8.  "PEPCO" refers to Plastic Engineered Products Co.,
                      a wholly owned subsidiary of Ballard.
  
                  9.  "PMP" refers to Ballard Medical Products Canada, a
                      wholly owned subsidiary of Ballard, doing business
                      as Preferred Medical Products. 
  
                 10.  "R2" refers to R2  Medical Systems, Inc., a wholly
                      owned subsidiary of Cardiotronics.
  
                 11.  "Tri-Med" refers  to Tri-Med Specialties,  Inc., a
                      wholly owned subsidiary of Ballard.
  
            GLOSSARY OF TECHNICAL AND MEDICAL TERMS
  
            CATHETER is a flexible  tube that is inserted into  the body
            to  deliver or  remove fluid,  retrieve blood,  or act  as a
            conduit to pass other devices.
  
            CLOSED  SUCTION CATHETER  is  a sleeved  catheter used  with
            endotracheal   tubes   on   patients  receiving   mechanical
            ventilation,  enabling the  airways  to  be suctioned  while
            maintaining mechanical ventilatory support.
  
            ENTERAL FEEDING CATHETER is a catheter used for the delivery
            of nutritional liquids  into the  gastrointestinal tract  of  
            the patient.
  
            HELICOBACTER PYLORI, or H. PYLORI, is a bacteria which lives
            only in the  lining of the  stomach and is  one of the  most
            common chronic infections in humans. 
  
            ITEM 5.  OTHER EVENTS
  
                 The  following  financial   statements  and   financial
            information  amends and  restates  the  Company's  financial
            information  previously reported  for the fiscal  year ended
            September 30,  1997, to  reflect the acquisition  of Tri-Med
            Specialties, Inc., accounted for  as a pooling of interests.
            These statements are voluntarily reported under this Item 5,
            since they are not required to be reported under Item 7.
              
                                FINANCIAL HIGHLIGHTS
  
            SELECTED CONSOLIDATED FINANCIAL DATA (1)(2)
  1997          1996          1995          1994        1993
  Net Sales   $132,743,037  $109,881,342   $90,041,201   $71,421,894 $69,551,865
  
  Other
  Income,
  Net            5,539,812     5,309,380     4,101,037     3,518,832   3,711,891
  
  Net Income    31,262,739    25,909,521    21,939,876    15,851,591  19,454,216
  
  Net
  Income
  Per
  Common
  Share 
  Assuming
  Full
  Dilution
  (3)                 1.03           .87           .75           .56         .68
  
  Total
  Assets       194,192,382   144,164,584   115,216,589    94,361,714  81,593,906
  
  Cash
  Dividends
  Declared 
  Per Share
  (4)                0.111         0.109         0.096         0.072       0.049
  (1)  The  consolidated financial  data shown  above includes
                 the   accounts  of   Ballard  and   its   wholly  owned
                 subsidiaries,  MIC, BREH, BI,  Tri-Med, PMP,  BPC, Mist  
                 Assist, PEPCO and Cardiotronics.   The accounts of Mist
                 Assist, PMP  and Cardiotronics are included  as of July
                 19,  1996,  August 28,  1996,  and  December 10,  1996,
                 respectively,    which    reflect   their    respective
                 acquisition dates.
  
            (2)  The combinations of Ballard with PEPCO and Tri-Med were
                 accounted for  as pooling  of interests.   The selected
                 consolidated financial  data have been  prepared as  if
                 Ballard, PEPCO,  and Tri-Med had been  combined for all
                 periods presented.
  
            (3)  Does not include the  cumulative effect of a  change in
                 accounting for income taxes in fiscal year 1994.
  
            (4)  Includes cash distributions paid by PEPCO and Tri-Med.
  
  SELECTED CONSOLIDATED QUARTERLY FINANCIAL DATA (1)(2)
  (UNAUDITED)
  FISCAL YEAR 1997
  QUARTERS ENDED:          9/30/97      6/30/97      3/31/97     12/31/96
  Net Sales         $36,111,363  $33,961,010  $32,517,823  $30,152,841
  
     Gross Margin       23,617,233   21,684,191   21,117,431   19,296,755
  
     Net Income          8,574,114    7,777,121    7,826,526    7,084,978
  
     Net Income Per
     Common Share
     Assuming Full
     Dilution                0.280        0.256        0.259        0.236
  FISCAL YEAR 1996
  QUARTERS ENDED:          9/30/96      6/30/96      3/31/96     12/31/95
  Net Sales         $28,856,891  $28,476,196  $27,377,385  $25,170,870
  
     Gross Margin       18,691,513   18,655,433   17,986,520   16,498,997
  
     Net Income          6,650,828    6,927,214    6,679,578    5,651,901
  
     Net Income Per 
     Common Share
     Assuming Full
     Dilution                 .224         .234         .227         .192
  (1)  See additional analysis of  net sales, margins, and net
                 income  in  "Management's  Discussion and  Analysis  of
                 Financial Condition and Results of Operations."
  
            (2)  See  footnote  explanations  to "Selected  Consolidated
                 Financial Data."  
  
                            INDEPENDENT AUDITORS' REPORT
  
            To  the  Board  of  Directors and  Stockholders  of  Ballard
            Medical Products:
  
                 We  have audited the  accompanying consolidated balance
            sheets of  Ballard Medical  Products and subsidiaries  as of
            September 30, 1997  and 1996 (as restated),  and the related
            consolidated statements of operations, stockholders' equity,
            and cash flows  for each of  the three  years in the  period
            ended  September 30,  1997 (as  restated).   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.    The
            consolidated financial statements give retroactive effect to
            the  merger   of  Ballard  Medical   Products  and   Tri-Med
            Specialties, Inc., which has been accounted for as a pooling
            of  interests as described  in Note  12 to  the consolidated
            financial statements.   We did not audit  the balance sheets
            of Tri-Med  Specialties, Inc. as  of September 30,  1997 and
            1996, or the related statements of operations, stockholders'
            equity, and cash flows of Tri-Med  Specialties, Inc. for the
            year  ended September  30,  1997, which  statements  reflect
            total assets  of $7,743,715  and $1,699,496 as  of September
            30,  1997  and 1996,  respectively,  and  total revenues  of
            $7,435,859 for  the year  ended September  30, 1997.   Those
            statements were  audited by other auditors  whose report has
            been furnished to us, and our opinion, insofar as it relates
            to the  amounts included  for Tri-Med Specialties,  Inc. for
            1997 and 1996, is based solely  on the report of such  other
            auditors.
  
                 We conducted our  audits in  accordance with  generally
            accepted auditing standards.   Those standards require  that
            we plan and perform the audit to obtain reasonable assurance
            about whether the financial  statements 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 and the
            report of other  auditors provide a reasonable basis for our
            opinion.
  
                 In our opinion, based  on our audits and the  report of
            the  other auditors,  the consolidated  financial statements
            referred to above present  fairly, in all material respects,
            the  financial  position  of  Ballard  Medical Products  and
            subsidiaries  as of  September  30, 1997  and 1996,  and the
            results of their operations and their cash flows for each of
            the  three years in the  period ended September  30, 1997 in
            conformity with generally accepted accounting principles.  
  
                 As  discussed  in Notes  1  and 2  to  the consolidated
            financial statements, effective October 1, 1994 the  Company
            changed its  method of accounting for  investment securities
            to  conform with Statement of Financial Accounting Standards
            No. 115.
  
            Deloitte & Touche LLP
            Salt Lake City, Utah
  
            November 13, 1997
            (February 25, 1998 as to Note 12)
  
            REPORT OF INDEPENDENT ACCOUNTANTS
  
            To the Board of Directors and Stockholders of
            Tri-Med Specialties, Inc.:
  
                 We have audited the accompanying balance sheets of Tri-
            Med Specialties, Inc. (the Company) as of September 30, 1997
            and 1996, and the  related statements of operations, changes
            in stockholders' equity,  and cash flows for  the year ended
            September  30, 1997.    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  generally
            accepted  auditing standards.   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  Tri-Med  Specialties,  Inc.  as  of
            September   30,  1997  and  1996  and  the  results  of  its
            operations  and its cash flows  for the year ended September
            30, 1997,  in conformity with  generally accepted accounting
            principles.
  
            PricewaterhouseCoopers L.L.P.
            Coopers & Lybrand L.L.P
  
            Kansas City, Missouri
            January 30, 1998
  
  CONSOLIDATED BALANCE SHEETS  
  SEPTEMBER 30, 1997 AND 1996
  1997           1996 
                                                  (As restated,  (As restated,
          ASSETS                                   see Note 12)   see Note 12)
  CURRENT ASSETS:
  
          Cash and cash equivalents                $21,624,043    $14,518,835 
  
          Investments available for sale            26,628,312     26,662,598 
  
          Accounts receivable - trade
          (less allowance for doubtful
          accounts:  1997 - $858,000, 1996 -
          $192,000; and allowance
          for sales returns:  1997 -
          $1,660,000, 1996 - $805,000)              26,380,031     20,631,159 
  
          Royalties receivable                         375,673      1,351,885 
  
          Other receivables                            908,753        644,619 
  
          Inventories:
  
             Raw materials                          10,856,390      7,440,376 
  
             Work-in-process                         5,527,765      3,915,690 
  
             Finished goods                          4,507,579      2,950,659 
  
          Deferred income taxes                      2,233,042      1,057,303 
  
          Income tax refund receivable               1,830,946      3,274,000 
  
          Prepaid expenses                              64,139        179,333 
  
             Total current assets                  100,936,673     82,626,457 
  
          PROPERTY AND EQUIPMENT:
  
          Land                                         873,865      3,944,701 
  
          Buildings                                 28,922,203     20,131,728 
  
          Molds                                      4,891,734      3,608,228 
  
          Machinery and equipment                   11,097,145      9,257,669 
  
          Vehicles                                     785,440      1,039,175 
  
          Furniture and fixtures                     3,264,578      2,248,003 
  
          Leasehold improvements                       116,850        359,349 
  
          Construction in progress                   4,142,563      3,053,296 
  
             Total                                  54,094,378     43,642,149 
  
          Less accumulated depreciation            (10,746,905)    (8,182,072)
  
             Property and equipment - net           43,347,473     35,460,077   
  
          INTANGIBLE ASSETS: 
  
          Cost in excess of purchase price
          (less accumulated amortization:
          1997 - $5,246,166; 1996 - $3,212,520)     29,443,283     15,645,151 
  
          Patents and other
          intangibles (less accumulated
          amortization:  1997 - $1,898,336;
          1996 - $711,431)                          13,068,452      5,018,277 
  
              Total intangible assets               42,511,735     20,663,428 
  
          DEFERRED INCOME TAXES                      2,139,902 
  
          OTHER ASSETS                               5,256,599      5,414,622 
  
          TOTAL                                   $194,192,382   $144,164,584
  See notes to consolidated financial statements.
  1997           1996 
                                                  (As restated,  (As restated,
          LIABILITIES AND STOCKHOLDERS' EQUITY     see Note 12)   see Note 12)
  CURRENT LIABILITIES:
  
          Line of credit                            $1,425,000 
  
          Contract payable                           3,975,000 
  
          Accounts payable                           3,216,908     $2,552,697 
  
          Accrued liabilities:
  
             Employee compensation                   3,438,849      2,308,615 
  
             Royalties                                 432,617        326,492 
  
             Other                                     462,045        845,183 
  
             Total current liabilities              12,950,419      6,032,987 
  
          DEFERRED INCOME TAXES                                     1,110,764 
  
             Total liabilities                      12,950,419      7,143,751 
  
          COMMITMENTS AND CONTINGENT
          LIABILITIES (Note 6)  
  
          STOCKHOLDERS' EQUITY:  
          Common stock - $.10 par value;
          75,000,000 shares authorized;
          issued and outstanding:
          1997 - 30,062,733 shares,
          1996 - 28,770,056 shares                   3,006,273      2,877,005 
  
          Additional paid-in capital                54,942,666     38,839,119   
  
          Unrealized losses on investments
          available for sale                          (223,783)      (156,564)
  
          Retained earnings                        123,516,807     95,461,273 
    
             Total stockholders' equity            181,241,963    137,020,833 
  
          TOTAL                                   $194,192,382   $144,164,584
  See notes to consolidated financial statements.
  
  CONSOLIDATED STATEMENTS OF OPERATIONS
  FOR THE YEARS ENDED SEPTEMBER 30, 1997, 1996, AND 1995
  1997            1996           1995 
                                  (As restated,   (As restated,  (As restated,
                                   see Note 12)    see Note 12)   see Note 12)
  NET SALES                $132,743,037    $109,881,342    $90,041,201
  
          COST OF PRODUCTS SOLD      47,027,428      38,048,879     30,166,070
  
          GROSS MARGIN               85,715,609      71,832,463     59,875,131
  
          OPERATING EXPENSES:
  
          Selling, general, and
          administrative             37,503,070      31,593,508     26,839,297
  
          Research and                2,856,409       3,184,151      2,438,616
          development
  
          Royalties                   1,849,203       1,687,542      1,509,480
  
             Total operating
             expenses                42,208,682      36,465,201     30,787,393
  
          OPERATING INCOME           43,506,927      35,367,262     29,087,738
  
          OTHER INCOME:
  
          Interest income             2,129,276       1,917,925      1,923,257
  
          Royalty income              2,465,840       2,400,000      2,147,620
  
          Other                         944,696         991,455         30,160
  
             Total other income- 
             net                      5,539,812       5,309,380      4,101,037
  
          INCOME BEFORE 
          INCOME TAXES               49,046,739      40,676,642     33,188,775
  
          INCOME TAX EXPENSE         17,784,000      14,767,121     11,248,899
  
          NET INCOME                $31,262,739     $25,909,521    $21,939,876  
  
          NET INCOME PER SHARE
          Common and common
          equivalent share               $1.032          $0.873         $0.759
  
          Common share assuming
          full dilution                  $1.027          $0.863         $0.746
  
          WEIGHTED AVERAGE
          NUMBER 
          OF SHARES OUTSTANDING:
          Common and common
          equivalent share           30,290,221      29,681,869     28,911,844
  
          Common share assuming
          full dilution              30,443,353      30,036,588     29,407,679
  See notes to consolidated financial statements.
  
  CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
  FOR THE YEARS ENDED SEPTEMBER 30, 1997, 1996, AND 1995 (AS RESTATED)
  Unrealized
                                                        Losses on
                                                          Invest-
                                          Additional        ments
                     Common                  Paid-in    Available     Retained
                     Shares      Amount      Capital     for Sale     Earnings
  BALANCE,
     OCTOBER
     1, 1994                                                                  
     (As pre-                                                                 
     viously
     reported)  26,694,589  $2,669,459  $28,287,388               $59,959,522 
  
     Pooling
     of
     interest
     combin-
     ation
     (Note 12)   1,067,733     106,773      (96,773)                  930,243 
  
     As
     restated   27,762,322   2,776,232   28,190,615                60,889,765 
  
     Net                                                           21,939,876 
     income
  
     Cash
     dividends
     paid                                                          (2,656,343)  
  
     Common                            
     stock                             
     issued 
     from
     exercise
     of stock
     options       205,425      20,543       432,869
  
     Acquisi-
     tion and
     retire-
     ment of 
     treasury
     stock        (100,000)    (10,000)                            (1,464,985)
  
     Tax bene-
     fit
     attribut-
     able to
     apprecia-
     tion in
     value of
     stock 
     issued
     in con-
     junction 
     with the
     exercise
     and
     disqual-
     ifying
     disposi-
     tion of
     incentive
     stock 
     options                                 489,517
  
     Unre-
     alized
     losses on
     invest-
     ments -
     net of
     tax                                               $(142,728)
  
     BALANCE,
     SEPTEMBER
     30,1995    27,867,747   2,786,775   29,113,001     (142,728)  78,708,313 
  
     Net
     income                                                        25,909,521   
  
     Cash
     divi-
     dends
     paid                                                          (3,030,140)
  
     Common
     stock
     issued
     from
     exercise
     of stock
     options     1,252,309     125,230    9,689,509 
     Acqui-
     sition
     and
     retire-
     ment of
     treasury
     stock        (350,000)    (35,000)                            (6,126,421)
  
     Tax
     benefit
     attri-
     butable
     to appre-
     ciation
     in value
     of stock
     issued in
     conjunc-
     tion with
     the exer-
     cise and
     disquali-
     fying
     dispo-
     sitions
     of incen-
     tive
     stock
     options                                 36,609 
  
     Unre-
     alized
     losses on
     invest-
     ments -
     net of
     tax                                                 (13,836)
  
     BALANCE,
     SEPTEM-
     BER 30,
     1996      28,770,056    2,877,005    38,839,119    (156,564)  95,461,273   
  
     Net
     income                                                        31,262,739 
  
     Cash
     divi-
     dends
     paid                                                          (3,207,205)
  
     Common
     stock
     issued
     from
     exer-
     cise
     of stock
     options     1,292,677    129,268     11,129,231
  
     Tax
     benefit
     attri-
     butable
     to appre-
     ciation
     in value
     of stock
     issued in
     conjunc-
     tion with
     the exer-
     cise and
     dis-
     quali-
     fying
     dispo-
     sitions
     of incen-
     tive
     stock
     options                               4,974,316
  
     Unre-
     alized
     losses on
     invest-
     ments -
     net of
     tax                                                 (67,219)
  
     BALANCE,
     SEPTEM-
     BER 30,
     1997        30,062,733 $3,006,273   $54,942,666   $(223,783) $123,516,807
  See notes to consolidated financial statements.  
  
  CONSOLIDATED STATEMENTS OF CASH FLOWS
  FOR THE YEARS ENDED SEPTEMBER 30, 1997, 1996, AND 1995
  1997              1996               1995 
                            (As restated,     (As restated,      (As restated,
                             see Note 12)      see Note 12)       see Note 12)
  CASH FLOWS FROM
     OPERATING
     ACTIVITIES:
  
     Net income              $31,262,739       $25,909,521        $21,939,876 
  
     Adjustments to
     reconcile net
     income to net
     cash provided by
     operating
     activities:
  
     Depreciation and
     amortization              7,002,801         3,947,487          3,142,867 
  
     (Gain) loss on
     disposal of
     property                 (6,246,680)         (446,320)             7,044 
  
     Impairment of
     investment                4,900,000 
  
     Tax benefit from
     disqualifying
     dispositions of
     incentive stock
     options                   4,974,316            36,609            489,517 
  
     Provision for
     losses on
     accounts
     receivable -
     trade and sales
     returns and
     rebates                   2,191,000           365,000            225,000 
  
     Deferred income
     taxes                      (373,168)          442,122            373,655 
  
     Changes in
     operating assets
     and liabilities-
     net of effects
     from purchases of
     subsidiaries:  
  
     Accounts
     receivable -
     trade                    (7,454,819)       (6,193,073)          (127,171)
  
     Royalties and
     other receivables           712,078          (106,639)            37,544 
  
     Inventories              (5,829,249)       (1,382,921)        (1,537,133)
  
     Income tax refund
     receivable                1,443,054        (1,170,430)           897,815 
  
     Prepaid expenses            250,872           102,417           (191,116)
  
     Other assets                 (1,600)
  
     Accounts payable           (643,857)          936,506            206,861 
  
     Accrued
     liabilities                (754,491)          243,121          1,147,264 
  
        Total
        adjustments              170,257        (3,226,121)         4,672,147 
  
        Net cash
        provided by
        operating
        activities            31,432,996        22,683,400         26,612,023 
  
     CASH FLOWS FROM
     INVESTING
     ACTIVITIES:
  
     Capital
     expenditures for
     property and
     equipment               (14,515,895)      (15,398,935)        (2,831,273)
  
     Proceeds from
     sales of property
     and equipment             6,514,131           564,418             45,250 
  
     Purchases of
     investments
     available for
     sale                    (46,959,814)      (30,569,641)       (38,534,828)
  
     Proceeds from
     maturities of
     investments 
     available for
     sale                     46,902,342        22,231,406         36,288,627 
  
     Investment in
     and advances to
     affiliates               (1,281,661)       (4,462,625)          (800,000)
  
     Purchases of
     intangible assets          (714,952)       (2,852,331)        (1,335,646)  
  
     Purchases of
     other assets               (108,338)          (12,532)          (109,579)
  
     Payments for
     purchase of
     subsidiaries,
     net of cash
     acquired                (12,323,417)       (5,618,432)        (3,283,650)
  
     Investment in 
     notes receivable            (34,134)
  
        Net cash used
        in investing
        activities           (22,521,738)      (36,118,672)       (10,561,099)
  
     CASH FLOWS FROM
     FINANCING
     ACTIVITIES:
  
     Cash dividends
     paid                     (3,207,205)       (3,030,140)        (2,656,343)
  
     Proceeds from
     issuance of
     common stock and
     exercise of
     options                  11,258,499         9,814,739            453,412 
  
     Proceeds from
     borrowings on
     line of credit            1,750,000 
  
     Proceeds from
     notes payable                12,651 
  
     Payments on line
     of credit                  (325,000)
  
     Payments on 
     contract payable         (1,850,000)
  
     Purchase of
     treasury stock                             (6,161,421)        (1,474,985)
  
     Repayment of
     long-term debt
     assumed in
     acquisitions             (9,444,995)         (517,754)           (18,446)
  
        Net cash
        used in
        (provided by)
        financing 
        activities            (1,806,050)          105,424         (3,696,362)  
  
     NET INCREASE
     (DECREASE) IN
     CASH AND CASH
     EQUIVALENTS               7,105,208       (13,329,848)        12,354,562 
  
     CASH AND CASH
     EQUIVALENTS,
     BEGINNING OF YEAR        14,518,835        27,848,683         15,494,121 
  
     CASH AND CASH
     EQUIVALENTS, END
     OF YEAR                 $21,624,043       $14,518,835        $27,848,683 
  
     SUPPLEMENTAL
     DISCLOSURE OF
     CASH FLOW
     INFORMATION: 
  
     Cash paid during
     the year for
     income taxes             $11,993,115      $15,458,820         $9,487,912 
  
     Cash paid during
     the year for
     interest                     $16,435             None               None
  SUPPLEMENTAL DISCLOSURES OF  NONCASH INVESTING AND FINANCING
            ACTIVITIES:
  
                 On  February  25,  1998,  the Company  entered  into  a
            business  combination  with  Tri-Med  Specialties,  Inc.  in
            exchange for 1,067,733 shares of the Company's common stock.
            This  transaction has been accounted for by the Company as a
            "pooling"   and   as   such,   the   Company's  accompanying
            consolidated financial statements as  of September 30,  1997
            and  1996  and  for the  three  years  in  the period  ended
            September 30, 1997 have been restated as  if the transaction
            had occurred on October 1, 1994 (see Note 12).
  
                 During  1997, the  Company sold  a parcel  of land  for
            $3,265,700 in cash and a promissory note of $3,973,920.
  
                 On December 10,  1996, the Company acquired all  of the
            outstanding  capital  stock of  Cardiotronics  Systems, Inc.
            (Cardiotronics) in a purchase transaction for $12,722,404 in
            cash.   In  conjunction  with the  merger, liabilities  were
            assumed as follows:
  
                      Fair value of assets acquired
                      (including goodwill of $13,136,000)    $25,070,528
  
                      Cash paid                               12,722,404
  
                      Liabilities assumed                    $12,348,124  
  
                 On July  2, 1997,  Tri-Med acquired certain  rights and
            licenses  of Delta  West  Pty. Limited  for  a note  payable
            totaling $5,825,000 (see Note 8).
  
                 On  September  27, 1996,  the  Company  entered into  a
            business  combination  with   Plastic  Engineered   Products
            Corporation in exchange for  238,727 shares of the Company's
            common stock.   This transaction  has been accounted  for by
            the  Company  as  a  "pooling" and  as  such,  the Company's
            accompanying   consolidated   financial  statements   as  of
            September 30, 1996 and for the two years in the period ended
            September 30, 1996 were restated  as if this transaction had
            occurred on October 1, 1994.
  
                 In addition, during the  year ended September 30, 1996,
            the  Company entered  into  three  acquisition  transactions
            accounted for as purchases as follows (see Note 8):
  
                 *    On   April  19,   1996,   the   Company   acquired
            substantially  all of  the assets  of Endovations,  Inc. for
            approximately $1,220,000  cash.   In  conjunction with  this
            purchase,  the  Company recorded  goodwill  of approximately
            $400,000 and the fair  value of assets acquired approximated
            $820,000.
  
                 *    On July 19, 1996, the Company purchased all of the
            outstanding  capital   stock  of   Mist  Assist,  Inc.   for
            approximately  $673,600  cash.    In  conjunction  with  the
            acquisition, liabilities were assumed as follows:
  
                      Fair value of assets acquired 
                      (including goodwill of $680,000)          $800,000
  
                      Cash paid                                  673,600
             
                      Liabilities assumed                       $126,400
  
                 *    On August  28, 1996, the Company  purchased all of
            the  outstanding capital stock of Preferred Medical Products
            for  approximately  $3,600,000  cash   (see  Note  8).    In
            conjunction with  the acquisition, liabilities  were assumed
            as follows:
  
                 Fair value of assets acquired
                 (including goodwill of $2,900,000)           $4,320,970
  
                 Cash paid                                     3,604,440
  
                 Liabilities assumed                            $716,530
  
                 *    On May 2, 1995, the Company acquired substantially
            all of the net  assets of Cox Medical Enterprises,  Inc. for
            approximately $3,313,000 cash (see  Note 8).  In conjunction
            with the acquisition, liabilities were assumed as follows:  
  
                 Fair value of assets acquired
                 (including good will)                        $4,000,000
  
                 Cash paid                                     3,313,310
  
                 Liabilities assumed                             686,690
  
            See notes to consolidated financial statements.
  
            BALLARD MEDICAL PRODUCTS AND SUBSIDIARIES
  
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
            FOR THE YEARS ENDED SEPTEMBER 30, 1997, 1996, AND 1995
            (AS RESTATED)
  
            1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 
  
                 ORGANIZATION  - Ballard Medical  Products (Ballard) and
            its   subsidiaries   develop,   manufacture,    and   market
            specialized medical products.
  
                 BASIS  OF PRESENTATION  -  The  consolidated  financial
            statements include  the accounts  of Ballard and  its wholly
            owned subsidiaries, Tri-Med Specialties, Inc. (Tri-Med) (see
            Note  12),  Medical Innovations  Corporation  (MIC), Ballard
            Real   Estate  Holdings,   Inc.  (BREH),   Ballard  Purchase
            Corporation (BPC), Ballard International, Inc. (BI), Plastic
            Engineered   Products   Company  (PEPCO),   Ballard  Medical
            Products (Canada) Inc. dba Preferred Medical Products (PMP),
            Mist Assist, Inc. (Mist Assist), and Cardiotronics  Systems,
            Inc.  (Cardiotronics)  (collectively,  the  Company).    All
            significant intercompany accounts and transactions have been
            eliminated in consolidation.
  
                 USE  OF ESTIMATES IN  PREPARING FINANCIAL  STATEMENTS -
            The preparation  of financial statements in  conformity with
            generally accepted accounting principles requires management
            to make  estimates and assumptions that  affect the reported
            amounts  of  assets   and  liabilities  and   disclosure  of
            contingent  assets  and  liabilities  at  the  date  of  the
            financial statements  and the  reported amounts of  revenues
            and expenses  during the  reporting period.   Actual results
            could differ from those estimates.
  
                 INVESTMENTS AVAILABLE FOR SALE -  Investments available
            for sale  consist of tax-free municipal  bonds.  Investments
            are  recorded at  fair market  value.  Effective  October 1,
            1994, the  Company adopted Statement of Financial Accounting
            Standards   (SFAS)  No.   115,   "Accounting   for   Certain
            Investments in  Debt and Equity  Securities."  SFAS  No. 115
            requires  the  classification  of  investment  securities as
            either held  to maturity securities, trading  securities, or
            available for sale  securities.  Upon adoption  of SFAS 115,
            the Company reclassified all of its investments as available  
            for sale.
  
                 INVENTORIES -  Inventories are  stated at the  lower of
            cost (on a first-in, first-out basis) or market.
  
                 PROPERTY  AND EQUIPMENT  - Property  and  equipment are
            stated  at cost.  Depreciation  is computed on the straight-
            line method over the estimated useful lives as follows:
  
                      Buildings                30 to 40 years
                      Molds                           5 years
                      Machinery and equipment   5 to 10 years
                      Vehicles                   3 to 5 years
                      Furniture and fixtures     3 to 5 years
                      Leasehold improvements     3 to 5 years
                      
                 INTANGIBLE ASSETS - Intangible assets include goodwill,
            patent  rights, and license  costs which are  stated at cost
            and are being amortized  using the straight-line method over
            their estimated  lives, which  range from four  to seventeen
            years.
  
                 REVENUE RECOGNITION - Revenues are recognized when  the
            related  product  is  shipped.     The  Company  records  an
            allowance for estimated sales returns and rebates.
  
                 INCOME  TAXES  -  The  Company utilizes  an  asset  and
            liability  approach for  financial accounting  and reporting
            for income  taxes.  Deferred  income taxes are  provided for
            temporary differences in the bases of assets and liabilities
            as reported for financial statement and income tax purposes.
  
                 INCOME  PER SHARE - Income per share is computed on the
            basis of  the weighted average number  of shares outstanding
            plus the common stock equivalents which would arise from the
            exercise  of stock options.   Such income  per share amounts
            are  adjusted to  give  retroactive effect  for all  periods
            presented for the acquisition  by the Company of Tri-Med  in
            1998 (see Note 12).
  
                 STOCK-BASED COMPENSATION  - Effective October  1, 1996,
            the  Company adopted  SFAS No.  123, "Accounting  for Stock-
            Based  Compensation."    SFAS   No.  123  requires  expanded
            disclosures of  stock-based compensation arrangements.   The
            Company  has  elected  to  continue  to  apply  APB  25  (as
            permitted  by  SFAS  No.  123).   The  appropriate  required
            disclosure  of the effects of  SFAS No. 123  are included in
            Note 5.
  
                 STATEMENTS  OF  CASH  FLOWS   -  For  purposes  of  the
            consolidated statements of cash flows, the Company considers
            cash   and   interest  bearing   securities   with  original
            maturities of less than three months to be cash equivalents.  
  
                 LONG-LIVED ASSETS - The  Company evaluates the carrying
            value of  long-term assets based on  current and anticipated
            undiscounted cash flows and  recognizes impairment when such
            cash flows will be less than the carrying values.
  
                 OTHER - Certain reclassifications have been made to the
            prior    year   financial    statements   to    conform   to
            classifications adopted in the current year.
  
            2.  INVESTMENTS AVAILABLE FOR SALE
  
                 Investments available for  sale at  September 30,  1997
            and 1996 consist of municipal bonds.
  
                 The  amortized  cost  and  fair  value  of  investments
            available for sale  at September  30, 1997 and  1996 are  as
            follows:
  
                                               1997                1996
  
             Amortized cost            $26,972,594         $26,915,121 
  
             Gross unrealized                                          
             gains                             None                None
  
             Gross unrealized
             losses                       (344,282)           (252,523)
  
             Fair value                $26,628,312         $26,662,598 
  
                 As of September 30, 1997  and 1996, all municipal bonds
            had a contractual maturity of one  year or less.  During the
            years ended September 30, 1997 and 1996, there were no gross
            realized  gains  or  gross  realized losses  from  sales  of
            investments classified as available for sale.
  
            3.  LINE OF CREDIT
  
                 In July  1997, Tri-Med (see  Note 12) entered  into two
            line of  credit agreements with a bank.   Under the terms of
            the first agreement, the  outstanding balance may not exceed
            $1,000,000 and interest, payable  monthly through May  1998,
            and bears  interest  at  the  bank's  prime  rate  (8.5%  at
            September  30,  1997).    Under  the  terms  of  the  second
            agreement, the  outstanding balance may  not exceed $750,000
            and interest,  payable monthly  through May 1998,  and bears
            interest at the bank's prime rate plus 1% (9.5% at September
            30, 1997).  The amount available for borrowing is limited to
            the lesser of  $1,750,000 or the sum  of certain agreements,
            with  such  inventory  amount  limited  to  $200,000.    The
            outstanding balance on the  credit agreements was $1,425,000
            as  of September 30, 1997.  Immediately following the merger
            with Tri-Med,  all outstanding  balances under the  lines of
            credit  were   paid  in   full  and  both   agreements  were
            terminated.  
  
                 At  September 30,  1997, the  Company had  an unsecured
            line of credit with a bank totaling $5,000,000 which expires
            February  15, 1998.  The line, if drawn upon, bears interest
            at the  bank's base rate (8.5%  at September 30, 1997).   No
            compensating cash  balances are  required.  As  of September
            30,  1997  and during  the year  then  ended, there  were no
            borrowings under the line of credit.
  
            4.  INCOME TAXES
  
                 The Company  has recorded  net deferred tax  assets and
            liabilities at  September 30, 1997 and  1996 which consisted
            of  the following  temporary  differences  and  carryforward
            items:
  
                                       1997                     1996
                               Current      Long-Term     Current    Long-Term
  
          Deferred income
          tax assets:
  
          Allowance for 
          uncollectible
          accounts
          receivable          $320,513                    $69,121
  
          Allowance for
          sales returns,
          rebates, and
          allowances           664,785                    305,729
  
          Allowance
          for obsolete
          inventory            451,658                    185,277
  
          Accrued
          expenses             280,925                    168,549
  
          Unrealized
          losses on
          investments          120,498                     95,959
  
          Net operating
          loss carry-
          forwards of
          acquired 
          subsidiaries         394,663    $3,416,727      121,442     $99,562 
  
          Research and
          development
          credits                                         111,226
  
          Total              2,233,042     3,416,727    1,057,303      99,562   
  
          Deferred income
          tax liabilities-
          differences
          between tax
          basis and 
          financial
          reporting basis
          of property
          and equipment                   (1,276,825)              (1,210,326)
  
          Net               $2,233,042    $2,139,902   $1,057,303 $(1,110,764)
  
                 The components of income  tax expense (benefit) for the
            years  ended   September  30,  1997,  1996,   and  1995  are
            summarized as follows:
  
                                       1997              1996             1995
  
          Current:
  
          Federal              $16,243,278        $12,421,679       $9,425,942
  
          State                  1,913,890          1,903,320        1,449,302
  
                                18,157,168         14,324,999       10,875,244
  
          Deferred:
  
          Federal                 (324,388)           402,473          323,859
  
          State                    (48,780)            39,649           49,796
  
                                  (373,168)           442,122          373,655
  
          Total                $17,784,000        $14,767,121      $11,248,899
  
                 Income tax  expense differed from  amounts computed  by
            applying the statutory Federal tax rate to pretax income  as
            follows:
  
                                     1997           1996           1995
  
             Computed
             Federal income
             tax expense at
             statutory rate  $17,166,358    $14,236,825    $11,425,754 
  
             State income
             tax expense,
             net of Federal
             benefit           1,590,940      1,317,054        990,493 
  
             Environmental
             tax                                 16,614         30,000 
  
             Tax exempt
             income             (410,736)      (553,876)      (624,750)  
  
             Foreign sales
             corporation        (429,833)      (236,250)      (121,756)
  
             Amortization
             of goodwill         642,986        335,763        316,969 
  
             Nontaxable
             income from
             pooled
             Subchapter S
             corporation        (292,758)      (107,269)      (343,322)
  
             Other              (482,957)      (241,740)      (424,489)
  
             Total           $17,784,000    $14,767,121    $11,248,899 
  
                 As a result of the Company's acquisitions (see Note 8),
            the Company has net operating loss carryforwards for Federal
            income tax purposes  of approximately $9,964,000,  which can
            only  be used  to offset future  taxable income  of acquired
            subsidiaries.  The utilization of the tax loss carryforwards
            is subject  to  certain limitations  and  the  carryforwards
            expire at various dates through the year 2011.
  
            5.  COMMON STOCK AND STOCK OPTIONS
  
                 During the years ended September 30, 1996 and 1995, the
            Company  repurchased  350,000  and  100,000  shares  of  its
            outstanding  common stock  for  $6,161,421  and  $1,474,985,
            respectively.    In accordance  with  Utah  State law,  this
            treasury stock  was accounted  for as retired  common stock.
            The  Company  did not  repurchase any  shares of  its common
            stock during the year ended September 30, 1997.
  
                 The Company  has adopted several incentive stock option
            plans for key employees and  reserved shares of common stock
            totaling approximately 2,380,780, 2,926,400 and 3,483,028 at
            September  30,  1997,  1996,  and  1995,  respectively,  for
            issuance  under the plans.   Options are granted  at a price
            not less than  the fair market  value on the date  of grant,
            become exercisable  between one  to two years  following the
            date of grant, and expire in ten years.
  
                 Changes  in stock options are  as follows for the years
            ended September 30:
                                                       Weighted Average
             1997                            Shares      Exercise Price
  
             Outstanding at
             beginning of year           2,517,553               $10.06
  
             Granted                       856,475                19.71
  
             Exercised                  (1,292,677)                8.71
  
             Forfeited                     (61,700)               15.46  
  
             Outstanding at end
             of year                     2,019,651               $14.85
  
             Options
             exercisable at
             year end                    1,056,976 
  
             Weighted average
             fair value of
             options granted
             during year                     $9.24 
  
                                                       Weighted Average
             1996                            Shares      Exercise Price
  
             Outstanding at
             beginning of year           3,331,162                $8.26
  
             Granted                       516,900                16.63
  
             Exercised                  (1,252,309)                7.84
  
             Forfeited                     (78,200)               12.32
  
             Outstanding at
             end of year                 2,517,553               $12.32
  
             Options
             exercisable at
             year end                    1,799,351
  
             Weighted average
             fair value of
             options granted
             during year                     $7.79
  
                                                            Price Range
             1995                            Shares           Per Share
  
             Outstanding at 
             beginning of year           2,898,253         $1.46-$13.50
  
             Granted                       740,000           9.38-14.25
  
             Exercised                    (205,425)          1.46-11.00
  
             Forfeited                    (101,666)          8.63-13.50
  
             Outstanding at end
             of year                     3,331,162           1.46-14.25
  
             Options
             exercisable at
             year end                    2,410,490
  
                 The  following table summarizes information about stock  
            options outstanding at September 30, 1997:
  
                         Options Outstanding                Options Exercisable
                                      Weighted
                                       Average
                                     Remaining  Weighted               Weighted
            Range of       Number  Contractual   Average      Number    Average
            Exercise         Out-         Life  Exercise       Exer-   Exercise
              Prices     standing   (in years)     Price     cisable      Price
  
              $2.96-
               $4.36       92,002          2.1     $3.95      92,002      $3.95
  
               8.63-
               12.88      709,174          7.1      9.51     709,174       9.51
  
              13.50-
               19.88    1,212,275          9.5     18.76     255,800      16.57
    
              23.00-
               23.63        6,200         10.0     23.43
  
              $2.96-
              $23.63    2,019,651          8.3    $14.85   1,056,976     $10.73
  
                 The  Company accounts for  stock options  granted using
            APB Opinion 25.  Accordingly, no compensation cost has  been
            recognized  for its  stock option  plans.   Had compensation
            cost for  the Company's stock-based compensation  plans been
            determined  based on the fair  value at the  grant dates for
            awards  under those plans consistent with  SFAS No. 123, the
            Company's  net income and  net income per  common and common
            equivalent share would have changed to the pro forma amounts
            indicated below:
  
                                               1997                1996
  
             Net income:
  
                  As reported           $31,262,739         $25,909,521
  
                  Pro forma              26,230,287          24,514,540
  
             Net income 
             per common and 
             common equivalent
             share:
  
                  As reported                $1.032              $0.873
  
                  Pro forma                   0.866               0.826
  
             Net income
             per common and
             common equivalent
             share assuming
             full dilution:  
  
                  As reported                $1.027              $0.863
  
                  Pro forma                   0.862               0.816
  
            The fair value of each option grant is estimated on the date
            of grant  using the Black-Scholes  option-pricing model with
            the  following weighted-average assumptions  used for grants
            in  1997   and  1996,  dividend  yield   of  0.5%;  expected
            volatility  of 33%;  risk-free interest  rate of  5.68%; and
            expected lives of approximately 8 years.
  
            6.  COMMITMENTS AND CONTINGENT LIABILITIES
  
                 The Company leases office and production facilities and
            office equipment under long-term operating lease agreements.
            Rent expense on the above operating leases was approximately
            $910,647,  $753,010,   and  $514,990  for  the  years  ended
            September  30,  1997, 1996,  and  1995,  respectively.   The
            following represents the Company's future  commitments under
            such leases:
  
                      Year ending
                      September 30:
  
                       1998                          $615,891
  
                       1999                           288,464
  
                       2000                           165,610
  
                       2001                            86,560
  
                       2002                           101,520
  
                       Thereafter                     397,620
  
                       Total                       $1,655,665
  
                 The  Company  has  agreements  with  the  inventors  of
            certain of  its products  which provide for  the payment  of
            royalties ranging  from 2% to 6.5% of defined net sales or a
            fixed rate per unit sold of the related products.
  
                 The Company is involved  in certain litigation  matters
            in  the normal course of  business which, in  the opinion of
            management, will not result  in any material adverse effects
            on the Company.
  
                 R2,  a wholly-owned  subsidiary of Cardiotronics,  is a
            co-defendant   in   an  ongoing   product   liability  case.
            Plaintiff  in this  case alleges,  among other  things, that
            defibrillation  pads manufactured by  R2 were  defective and
            seeks  damages of $20 million.  The Company believes that it
            has  valid  defenses;  however,  in  view  of  the  inherent
            uncertainties  surrounding the litigation,  no assurance can  
            be given that  R2 will prevail in this  case.  Attorneys for
            R2 are  attempting to negotiate  an out-of-court  settlement
            for an amount that will be covered by R2's product liability
            insurance policy.   Management  believes  that a  settlement
            will  be  reached that  does not  exceed  the amount  of the
            policy.
             
            7.  PROFIT SHARING PLAN
  
                 The Company sponsors an Employee Retirement and Savings
            Plan (the Plan) under Section 401(k) of the Internal Revenue
            Code.  The Plan is designed to allow participating employees
            to  accumulate  savings  for retirement  or  other purposes.
            Under  the Plan, all employees, who  have completed at least
            one year of service and have reached age 21, are eligible to
            participate.      The   Plan   allows   employees   to  make
            contributions to the plan  from salary reductions each year,
            up   to  a  maximum   of  15%  of   a  participant's  annual
            compensation.   Under the Plan, the Company matches up to 4%
            of  a participant's  contribution.   The Company may,  if it
            desires, make additional contributions to the 401(k) Plan on
            behalf  of its employees.  For the years ended September 30,
            1997,  1996, and  1995,  the Company  expensed approximately
            $757,000, $621,000, and $545,000, respectively,  as matching
            contributions  to  the Plan.    Employees  are always  fully
            vested in their own contributions and become fully vested in
            any  contributions made by  the Company  after six  years of
            service.  Employees are allowed to direct the investment  of
            their  Plan  contributions  within  a  group  of  designated
            investment funds.
  
            8.  BUSINESS COMBINATIONS
  
                 In July  1997, Tri-Med  acquired the rights  to license
            and  distribute  the  product  CLOtest  for   $5,825,000  in
            exchange  for a note payable to Delta  West, Inc.  Under the
            terms of  this agreement,  the  Company is  required to  pay
            royalties  as a  percentage of  products sold.   The royalty
            percentage   varies   based   on   the   level   of   sales.
            Substantially  all of  the purchase  price was  allocated to
            trademarks, a  covenant not to  compete, and goodwill  to be
            amortized using the straight-line method over 15 years.  The
            purchase price was allocated as follows:
  
                      Plant and equipment         $60,800
  
                      Intellectual property 
                      other than trademarks       615,600
  
                      Trademarks                4,172,600
  
                      Covenant not to compete      76,000
  
                      All other assets and   
                      rights including goodwill   900,000
  
                           Total               $5,825,000
  
                 Effective December 10,  1996, the Company acquired  all
            of the issued and outstanding capital stock of Cardiotronics
            for $12,723,000  in cash  and the assumption  of liabilities
            totaling $12,348,000.   The  acquisition is  being accounted
            for  using  the  purchase  method of  accounting;  as  such,
            results of operations have been included in the accompanying
            consolidated   financial  statements   from   the  date   of
            acquisition.    In  conjunction  with the  acquisition,  the
            Company  recorded  goodwill  of approxi-mately  $13,136,000,
            which is being amortized over 15 years.
  
            The pro forma results  of operations of the Company  for the
            years  ended  September  30,  1997 and  1996  (assuming  the
            acquisitions of Cardiotronics had  occurred as of October 1,
            1995) are as follows:
  
                                                1997                1996
  
            Net sales                   $133,971,074        $119,391,331
  
            Net income                    30,703,183          21,243,285
  
            Net income per share
            assuming full dilution              1.009              0.707
  
                 On  September  27,  1996, the  Company  issued  238,727
            shares  of its  common  stock in  exchange  for all  of  the
            outstanding common  stock of  PEPCO, a medical  research and
            manufacturing company incorporated in 1987 and headquartered
            in  Canal Fulton, Ohio.  The assets and liabilities of PEPCO
            at the  date of combination were  approximately $684,000 and
            $88,000, respectively.  The combination was accounted for as
            a  pooling  of  interests.   The  accompanying  consolidated
            financial statements  have been  prepared as if  Ballard and
            PEPCO had been combined for all periods presented.
  
                 On  April 19, 1996,  the Company acquired substantially
            all  of the  assets of  Endovations, Inc.  (Endovations) for
            approximately $1,220,000 in cash.   The acquisition has been
            accounted for  using the  purchase method of  accounting; as
            such,  Endovations' results of operations have been included
            in the  accompanying consolidated financial  statements from
            the  date   of  acquisition.    In   conjunction  with  this
            acquisition,  the Company recorded goodwill of approximately
            $400,000, which is being  amortized on a straight-line basis
            over 10 years.
  
                 Effective July  19, 1996,  the Company acquired  all of
            the issued and outstanding common  stock of Mist Assist  for  
            approximately  $673,600  in  cash   and  the  assumption  of
            liabilities totally approximately $126,400.  The acquisition
            has  been  accounted  for   using  the  purchase  method  of
            accounting;   as  such,  results  of  operations  have  been
            included   in   the   accompanying  consolidated   financial
            statements  from the  date of  acquisition.   In conjunction
            with  the  acquisition,  the  Company  recorded goodwill  of
            approximately  $680,000,  which  is  being  amortized  on  a
            straight-line basis over 15 years.
  
                 On  August 28,  1996, the  Company acquired all  of the
            issued  and outstanding  common  stock of  PMP  for cash  of
            approximately   $3,600,000.     The  acquisition   has  been
            accounted for  using the  purchase method of  accounting; as
            such,  results  of  operations  have been  included  in  the
            accompanying consolidated financial statements from the date
            of acquisition.   In  conjunction with the  acquisition, the
            Company recorded goodwill of approximately  $2,900,000 which
            is being amortized on a straight-line basis over 15 years.
  
                 On May 2, 1995,  the Company acquired substantially all
            of  the assets  of Cox  for a  purchase price  of $4,000,000
            consisting  of  $3,313,310 in  cash  and  the assumption  of
            liabilities   in  the  amount   of  $686,690.     Cox  is  a
            manufacturer   of  disposable   endoscopic  devices.     The
            acquisition has been accounted for using the purchase method
            of  accounting; as  such, Cox's  results of  operations have
            been  included  in the  accompanying  consolidated financial
            statements from the date  of acquisition.  The cost  of this
            acquisition  exceeded  the  estimated  fair  value  of   the
            acquired  net assets  by $423,000  which is  being amortized
            over 10 years.
  
                 On  November  14,  1995, the  Company  acquired 200,000
            shares   of  the  preferred   stock  of  Neuro  Navigational
            Corporation (Neuro) representing a  19.5% equity interest in
            Neuro for $2,000,000.   In addition,  on November 14,  1995,
            the Company  paid Neuro $500,000  for an option  to purchase
            substantially all of its assets.   The Company exercised the
            option  on  February 28,  1997  and  acquired the  remaining
            assets  of Neuro  for $4,245,422.   The  price paid  for the
            option and  amounts advanced  to Neuro were  applied to  the
            purchase price.
  
            9.  SALES
  
                 During the  years ended  September 30, 1997,  1996, and
            1995, the Company had  foreign export sales of approximately
            $12,557,000, $8,048,000, and $6,344,000, respectively.
  
            10.     EFFECT  OF  RECENTLY   ISSUED  FINANCIAL  ACCOUNTING
            STANDARDS
  
                 In  February 1997,  the Financial  Accounting Standards  
            Board  issued  SFAS  No.  128,  Earnings  Per  Share.   This
            standard establishes standards  for computing and presenting
            earnings  per share  (EPS).   SFAS  No.  128 simplifies  the
            approach for computing  earnings per share  previously found
            in Accounting Principles Board Opinion No. 15.   It replaces
            the presentation of primary EPS with a presentation of basic
            EPS.   It  also  requires dual  presentation  of  basic  and
            diluted  EPS on  the face  of the  income statement  for all
            entities with complex capital structures.
  
                 Under  the new  structure, basic EPS  excludes dilution
            and  is  computed by  dividing  income  available to  common
            stockholders by the weighted-average number of common shares
            outstanding  for  the  period.   Diluted  EPS  reflects  the
            potential dilution  that could occur if  securities or other
            contracts to issue common  stock were exercised or converted
            into common stock.
  
                 SFAS  No.  128 is  effective  for  financial statements
            issued for  periods ending  after December  15,  1997.   The
            computation  of basic  EPS  under SFAS  No.  128 would  have
            resulted in net income  per common share of  $1.063, $0.922,
            and $0.796  for the fiscal  years ended September  30, 1997,
            1996, and  1995, respectively.   Diluted EPS  computed under
            SFAS  No. 128 would have  resulted in net  income per common
            share of  $1.032, $0.874,  and $0.754  for the  fiscal years
            ended September 30, 1997, 1996, and 1995, respectively.
  
            11.  OTHER INCOME
  
                 During 1997,  the Company  recorded an  impairment loss
            totaling   approximately  $4,900,000  as  a  result  of  the
            Company's  assessment  that  the  carrying   amount  of  the
            remaining Neuro assets,  consisting primarily of  inventory,
            fixed assets,  and  intangible assets,  exceeded their  fair
            values  as estimated based on  analysis of cash  flows.  The
            Company also recorded a gain on the sale of a parcel of land
            totaling approximately $6,300,000.   The impairment loss and
            the gain on the sale of land are included in other income in
            the accompanying consolidated statements of operations.
  
            12.  SUBSEQUENT EVENT
  
            Effective February 25, 1998, Ballard issued 1,067,733 shares
            of its common stock  in exchange for all of  the outstanding
            common stock  of Tri-Med,  a  medical devices  manufacturing
            company  incorporated  in 1983  with  operations  in Kansas,
            Virginia, and Australia.  The assets and liabilities of Tri-
            Med  at  the  date  of the  combination  were  approximately
            $8,276,000  and $6,321,000,  respectively.   The combination
            was  accounted  for   as  a  pooling  of  interests.     The
            accompanying supplemental  consolidated financial statements
            for  1997, 1996, and 1995  have been restated  as if Ballard
            and Tri-Med had  been combined  as of October  1, 1994,  the  
            beginning  of   the  reporting   period.    There   were  no
            intercompany transactions between  Ballard and Tri-Med prior
            to the date of  merger.  Net sales,  net income, and  income
            per share  amounts of the previously  separate companies for
            the years  ended  September  30,  1997, 1996,  and  1995  as
            previously reported and combined are as follows:
  
                                             Ballard
                                      (As Previously
                                           Reported)     Tri-Med    As Restated
  
           1997
   
              Net sales                 $125,307,178  $7,435,859   $132,743,037
  
              Net income                  30,426,287     836,452     31,262,739
  
              Net income per share:
                 Common and
                 common equivalent
                 share                         1.041         N/A          1.032
  
                 Common share
                 assuming full
                 dilution                      1.036         N/A          1.027
  
           1996
  
              Net sales                  103,525,263   6,356,079    109,881,342
  
              Net income                  25,603,039     306,482     25,909,521
  
              Net income per share:
  
                 Common and
                 common equivalent
                 share                          .895         N/A          0.873
  
                 Common share
                 assuming full
                 dilution                       .884         N/A          0.863
  
           1995
  
              Net sales                   84,152,967   5,888,234     90,041,201
  
              Net income                  20,942,616     997,260     21,939,876
  
              Net income per share:
  
                 Common and
                 common equivalent
                 share                          .752         N/A          0.759
  
                 Common share
                 assuming full
                 dilution                       .739         N/A          0.746  
  
                      MANAGEMENT'S DISCUSSION AND ANALYSIS OF 
                    FINANCIAL CONDITION AND RESULTS OF OPERATIONS
  
                 This  analysis of the Company's operations encompassing
            the  fiscal years ended September 30,  1997, 1996, and 1995,
            should be  considered in  conjunction with the  consolidated
            balance sheets, statements of operations, and  statements of
            cash flows.  All  of the figures discussed herein  have been
            adjusted to reflect the  Company s stock and asset purchases
            (see  Notes to Consolidated Financial Statements ).
  
                 Fiscal year 1997 was a  another record setting year for
            the Company  in terms of sales  and income.   Net sales were
            $132.7  million,  representing  an  increase  of 20.8%  over
            fiscal 1996.  Net income and net income per share were $31.3
            million and $1.03, respectively, increasing 20.7% and 18.2%,
            respectively, over  fiscal year 1996.   The continued steady
            growth  in  sales  and  income is  the  result  of strategic
            acquisitions,   internal   development   of  new   products,
            acquisition of  national contracts,  rapid expansion in  the
            international marketplace,  and  the overall  efforts of  an
            outstanding  sales  force.   Income  growth  continues as  a
            result of stable, high margins and manufacturing expertise.
  
                 With   a   continued   emphasis   on   growth   through
            acquisitions,   the   Company   acquired  Cardiotronics   in
            December,    1996   and    Tri-Med   in    February,   1998.
            Cardiotronics,  located  in   Carlsbad,  California,  is   a
            manufacturer of medical devices  for the acute management of
            heart rate  disorders.  Its principal  product, a disposable
            defibrillator  pad, provided  approximately $7.6  million in
            net sales during fiscal year 1997.  The Company expects 1998
            sales from this  acquisition to exceed $10.0 million.   Tri-
            Med, with locations in Kansas, Virginia, and Australia, is a
            manufacturer of  diagnostic  products for  the detection  of
            Helicobacter  Pylori, a  causative  factor  in peptic  ulcer
            disease.   1997 sales  from Tri-Med were  approximately $7.4
            million.     The  Company  expects  1998   sales  from  this
            acquisition to exceed $13.0 million.
  
                 During fiscal  year 1997 the Company  focused its sales
            efforts and  internally  reported based  upon  two  separate
            business  units:   (1)  TRACH  CARE/EASI-LAV ("TRACH  CARE")
            which  includes  the TRACH  CARE  and  EASI-LAV families  of
            products  as  well  as  the  new  additions  from  the  1996
            acquisitions of  Mist Assist,  PMP  and PEPCO  and the  1997
            acquisition of Cardiotronics; and (2)  MIC/FOAM CARE ("MIC")
            which  includes the  MIC,  FOAM  CARE  and  gastrointestinal
            products as well as the product line additions acquired from
            Tri-Med.
  
            RESULTS OF OPERATIONS
  
                 SALES  -  For  the   year  ended  September  30,  1997,  
            consolidated net sales increased $22,861,695, or 20.8%, over
            fiscal  year 1996.  For  the year ended  September 30, 1996,
            consolidated net sales increased $19,840,141, or 22.0%, over
            fiscal year 1995.  The steady, solid growth in 1997 and 1996
            is  due principally  to  the Company s  ability to  increase
            volume, both  internally and through acquisitions.  Although
            prices  on   isolated  TRACH  CARE  and   MIC  products  and
            accessories increased  slightly, pricing for  other products
            during  1997 were reduced  in order to  meet competition and
            price  reductions required  by  hospitals  and large  buying
            groups.   The Company believes that the signing of exclusive
            long-term contracts with major hospital buying groups should
            stabilize prices for certain products over the next three to
            five years.
  
                 The Company's MIC enteral feeding catheters and related
            products continue to contribute significantly to the overall
            growth  in net  sales,  as is  the  rapid expansion  of  the
            Company's international operations.   Net  sales within  the
            MIC product  line increased 33.2% in fiscal 1997 over fiscal
            1996. International net sales (all products) increased 56.1%
            during the same period.
  
                 The  following   table   summarizes  sales   by   sales
            force/business  unit (see description above) as a percentage
            of total net sales:
  
            Year ended September 30,           1997      1996      1995
  
            Trach Care                         70.0%     72.2%     76.3%
  
            MIC                                30.0%     27.8%     23.7%
  
                 The   table  below   summarizes   U.S.   sales   versus
            international sales as a percentage of total net sales:
  
            Year ended September 30,           1997      1996      1995
  
            Domestic                           91.5%     92.7%     93.0%
  
            International                       8.5%      7.3%      7.0%
  
            All  sales of the Company  and related receipts  are in U.S.
            dollars.
  
                 COST OF PRODUCTS  SOLD - For  the year ended  September
            30,  1997,  consolidated  cost  of   products  sold  totaled
            $47,027,428, compared  with $38,048,879 for fiscal year 1996
            and $30,166,070 for fiscal year 1995, increases of 23.6% and
            26.1%, respectively.   As a  percent of net  sales, cost  of
            products sold was 35.4%  and 34.6% for fiscal year  1997 and
            1996, respectively.  The 1% increase in product costs during
            fiscal year  1997 can  be attributed  to the  acquisition of
            lower  margin product  lines,  the closure  and transfer  of  
            PEPCO s,   PMP s,  and  MIC s  manufacturing  operations  to
            Draper, Utah  and Pocatello, Idaho,  and continued increases
            in material  and labor  costs. Margins  also continue  to be
            impacted  by  the  health  care  industry's  focus  on  cost
            restraints and  competitive pricing pressures,  resulting in
            increased product rebates and price reductions.
              
                 During  the year  the Company  continued to  refine and
            automate its  manufacturing processes as well  as expand its
            injection molding  capacity.  The Company  closed its PEPCO,
            PMP,  and  MIC  facilities  and  integrated  them  into  the
            Company s two manufacturing sites in  Utah and Idaho.  Gross
            margins will continue to be impacted  by these closures into
            the  first quarter  of  1998 but  the Company  expects these
            combinations to create manufacturing benefits in the future.
            Pricing pressures, new  product acquisitions, and  continued
            increases  in labor  and materials  will continue  to impact
            margins  in  1998.   Margins will  also  be impacted  by the
            Company's planned move of its  Cardiotronics operations from
            Carlsbad, California  to Pocatello,  Idaho during the  first
            quarter of fiscal year 1998.
  
                 OPERATING  EXPENSES  -  Operating expenses  consist  of
            selling, general, and administrative expenses,  research and
            development  expenses,  and royalties.    Total consolidated
            operating  expenses for  the year  ended September  30, 1997
            were $42,208,682,  compared with $36,465,201 for fiscal year
            1996 and $30,787,393  for fiscal year  1995.  The  following
            table  is a summary of  operating expenses by  category as a
            percentage of net sales:
  
            Year ended September 30,           1997      1996      1995
  
            Selling, general, and
            administrative                     28.3%     28.8%     29.8%
  
            Research and development            2.1%      2.9%      2.7%
  
            Royalties                           1.4%      1.5%      1.7%
  
                 Selling, general, and administrative expenses increased
            $5,909,562 during  fiscal  year 1997  and $4,754,211  during
            fiscal   year  1996.     These   increases  are   attributed
            principally  to  increased  sales  volumes, as  well  as  to
            increases in period costs  due to intangible write-offs from
            acquisitions.  Consolidated expenses related to research and
            development and royalties,  as a percentage of  consolidated
            net sales  for fiscal years  1997, 1996, and  1995, remained
            fairly consistent.
  
                 OTHER  INCOME  -  Other  income  generally  consists of
            interest  income from short-term investments, royalty income
            from the licensing of the  TRACH CARE closed suction system,
            and the netting of insignificant  gains and losses from  the  
            sale or retirement of property and equipment.  Also included
            in other  income during fiscal 1997 was the sale of 61 acres
            of real estate  located south of the  Company s Draper plant
            for a net  gain of  $6,304,670 (see   Liquidity and  Capital
            Resources ) and   the impairment loss  of $4,900,000 related
            to  the Company's  investment in  the assets  and technology
            acquired  from Neuro Navigational Corporation ("Neuro") (see
             Liquidity and Capital Resources ).
  
                 Interest   and   royalty  income   remained  relatively
            consistent   between  the   periods,  bringing   a  combined
            $4,595,116,  $4,317,925,  and  $4,070,877  for  fiscal years
            1997, 1996, and 1995, respectively.
  
                 NET INCOME  - Consolidated  net income  from operations
            for the  year ended September 30,  1997 totaled $31,262,739,
            an increase of 20.7%  over fiscal year 1996.   The following
            table reflects net income  as a percentage of net  sales for
            each of the reporting periods:
  
            Year ended September 30,      1997      1996      1995
  
            Net Income                    23.6%     23.6%     24.4%
  
                 The  overall  increase in  net  income  over the  prior
            period  and  the outstanding  after-tax margin  reflects the
            increased  sales  volume,  continued  strong   margins,  and
            management's  efforts to control  the costs of manufacturing
            and other operating costs.
             
                 INFLATION    - Inflation  can  be expected  to  have an
            effect  on  most  of   the  Company's  operating  costs  and
            expenses.   The extent to which  inflationary cost increases
            can be offset  by price increases depends on competition and
            other   factors.     The  effect   of  inflation   has  been
            insignificant during the periods reported herein.
  
            LIQUIDITY AND CAPITAL RESOURCES
  
                 The Consolidated Balance  Sheets present the  Company's
            financial position at the end of each of the last two fiscal
            years.    Each  statement  lists the  Company's  assets  and
            liabilities,  and the  equity  of its  stockholders.   Major
            changes in  the Company's financial  position are summarized
            in the Consolidated Statement of Cash Flows.  This statement
            summarizes  the  changes  in  the Company's  cash  and  cash
            equivalents  balance for  each of  the last three  years and
            helps to show the relationship between operations (presented
            in  the Consolidated Statement  of Operations) and liquidity
            and  financial  resources  (presented  in  the  Consolidated
            Balance Sheets).
  
                 For  the year  ended September  30, 1997  the Company's
            operating activities  provided  $31,432,996 in  cash  flows,  
            comparable to  the $22,683,400  provided during  fiscal year
            1996.    At  September  30, 1997,  working  capital  totaled
            $87,986,254 compared with $76,593,470 at September 30, 1996.
            The  Company's current ratio was  7.8 to 1  at September 30,
            1997 compared  with 13.7 at  September 30, 1996.   Available
            cash,  which   includes  cash   and  cash  equivalents   and
            investments  available  for  sale,  at  September  30,  1997
            totaled $48,252,355  compared with $41,181,433  at September
            30,  1996.  In addition  to its strong  liquid position, the
            Company does not have any long-term debt nor does management
            intend to  utilize debt to  fund future expansion.   Ballard
            maintains  a $5,000,000  unsecured line  of credit  with its
            bank  but has  not drawn on  this line during  either of the
            years ended  September 30, 1997  or 1996.   Tri-Med utilized
            lines of credit to fund its operations but as of the date of
            combination  with Ballard, the lines  of credit were paid in
            full.
  
                 Continued growth in  cash and investments provides  the
            Company financial  stability and flexibility to fund current
            operations,  an  aggressive  acquisitions   program,  future
            internal growth  and expansion, and the  ability to continue
            its dividend payment policy.
  
                 During the  year ended September 30,  1997, the Company
            completed  expansion   of  its  manufacturing   facility  in
            Pocatello,  Idaho.    See discussion  of  Pocatello facility
            under  "Capital  Expenditures".      Total  development  and
            construction  costs  of  the  first phase  of  the  facility
            totaled approximately $7,243,000.  Completion of the  second
            phase cost  approximately $5,500,000.  The  Company expended
            an additional  $8,900,000 during fiscal year  1997 to expand
            and upgrade  existing facilities and operations  in order to
            meet the growing needs of present and new business.
  
                 Cash outlay  for the acquisition of  Cardiotronics, net
            of cash acquired, was approximately $12,722,000.
  
                 During  February 1997, the Company exercised its option
            to  purchase the assets of  Neuro at a  total purchase price
            $4,245,422.  In March, 1997, the Company sold certain of the
            assets  it acquired  from Neuro  to  an unrelated  party for
            $961,459, which  approximated the  purchased price  of those
            assets.   In  June,  1997 the  Company  determined that  the
            remaining carrying value in its investment in  Neuro was not
            entirely recoverable based  upon expected future  cash flows
            from  the  sale  of  the  remaining  assets  and  technology
            acquired  from Neuro.   Although  the Company  believes that
            remaining  assets and  technology  of Neuro  have value,  an
            impairment  loss  of  $4,900,000  has  been  recognized  and
            included  in  "Other  Income."   The  remaining  assets  and
            technology acquired  from Neuro are being  marketed for sale
            by the Company.  
  
                 A valuation allowance has not been provided on deferred
            tax asset balances due to the Company's projection of future
            taxable income in excess of such tax assets.
  
                 In  addition to  capital and  acquisition expenditures,
            other  items which  affected cash  flows during  fiscal year
            1997 included  the payment  of dividends of  $3,207,205, and
            purchases of intangible assets of $714,952.
  
            IMPACT OF THE YEAR 2000 ISSUE
  
                 The Year 2000 Issue is the result of potential problems
            with computer  systems or any equipment  with computer chips
            that use dates where  the date has been  stored as just  two
            digits (e.g., 97  for 1997).  On January 1,  2000, any clock
            or   date  recording  mechanism,  including  date  sensitive
            software, which uses only two  digits to represent the year,
            may recognize a date  using 00 as the year  1900 rather than
            the year 2000.   The Company has also been advised that some
            computer chips may not have the ability to function properly
            when  reading certain  dates  in calendar  year 1999  (e.g.,
            9/9/99).  These computer  problems could result in  a system
            failure or miscalculations causing disruption of operations,
            including  among  other  things, a  temporary  inability  to
            process  transactions, send  invoices, or engage  in similar
            activities.
  
                 In 1997, the  Company began and  is still continuing  a
            comprehensive program of assessing changes and upgrades that
            will need to  be implemented in order to be prepared for the
            Year 2000 and even the Year 1999.  The scope  of the project
            covers  all computer systems, computer and network hardware,
            production  process  controllers,  office equipment,  access
            control, maintenance machinery, manufacturing  equipment and
            the Company's products.
  
                 To assist  with this  project, the Company  has engaged
            the  services  and  expertise of  Quantified  Management,  a
            computer services consulting firm from Salt Lake City, Utah.
            The Company  has acquired  a project management  package (QM
            System 2000)  from Quantified  Management intended to  guide
            the Company  through all  aspects of solving  the Year  2000
            Issue.  This tool bundles a comprehensive project management
            program with  interactive coaching services  from Quantified
            Management,  to   assist  the  Company  in   its  Year  2000
            compliance efforts.
  
                 The  Company has  already determined  that it  would be
            required  to  replace or  modify  portions  of its  business
            application  software so  that  its  computer systems  would
            properly  utilize  dates  beyond  December 31,  1999.    The
            Company  presently believes  that  with  conversions to  new
            systems and modifications to existing software the Year 2000
            Issue can be mitigated.  However, if  such modifications and  
            conversions are not made,  or are not timely, the  Year 2000
            Issue  could have a material impact on the operations of the
            Company.
  
                 The  Company has  initiated formal  communications with
            all  of its  significant  suppliers and  large customers  to
            determine  the extent to which  the Company is vulnerable to
            their  failure to remediate their own Year 2000 Issues.  The
            Company can  give  no guarantee  that the  systems of  other
            companies  on  which  the  Company's systems  rely  will  be
            converted  on time or that  a failure to  convert by another
            company  or  a  conversion  that is  incompatible  with  the
            Company's systems, would not  have a material adverse effect
            on the Company.
  
                 The  Company  will  continue  to  utilize  internal and
            external resources  to implement, reprogram, or  replace and
            test software and related assets  affected by the Year  2000
            Issue.   The Company expects to complete the majority of its
            efforts  in this area by early 1999 leaving adequate time to
            assess   and  correct  any   significant  issues   that  may
            materialize.  The  total cost  of the Year  2000 project  is
            estimated  at  $500,000  to  $600,000 and  is  being  funded
            through operating cash flows.   The Company will be  able to
            capitalize a substantial portion of this cost.
  
                 The costs of the project and the timetable in which the
            Company   plans  to  complete   the  Year   2000  compliance
            requirements are based on management's best estimates, which
            were derived utilizing numerous assumptions of future events
            including the continued  availability of certain  resources,
            third party modification plans  and other factors.  However,
            there can  be  no guarantee  that  these estimates  will  be
            achieved  and actual  results could  differ  materially from
            these  plans.    Specific  factors which  might  cause  such
            material differences  include, but  are not limited  to, the
            availability and cost of personnel trained in this area, the
            ability  to locate  and correct  all relevant  computer chip
            codes, and similar uncertainties.
  
            RISK FACTORS
  
                 From  time to time the  Company may report, through its
            press releases, its Annual  Report, and SEC filings, certain
            matters  that  could  be  characterized  as  forward-looking
            statements subject  to risks  and  uncertainties that  could
            cause  actual  results  to  differ   materially  from  those
            projected.  Such risks  and uncertainties may include, among
            other things,  the factors  discussed below.   Such forward-
            looking  statements are  made  pursuant to  the safe  harbor
            provisions of  the Private Securities  Litigation Reform Act
            of 1995.
  
                 COMPETITION.      The   medical   device   industry  is  
            characterized by rapidly  evolving technology and  increased
            competition.  There are a number of companies that currently
            offer, or  are in the  process of developing,  products that
            compete with products offered  by the Company, including the
            Company's flagship TRACH CARE closed suction catheter.  Some
            of  these  competitors  have  substantially  greater capital
            resources, research and development staffs and experience in
            the medical device industry.   These competitors may succeed
            in  developing  technologies  and  products  that  are  more
            effective  than  those currently  used  or  produced by  the
            Company or  that would render  some products offered  by the
            Company obsolete or  noncompetitive.   Competition based  on
            price  is  becoming  an  increasingly  important  factor  in
            customer purchasing patterns as a result of cost containment
            pressures  on,   and  consolidation  in,  the   health  care
            industry.  Such  competition has exerted,  and is likely  to
            continue  to  exert, downward  pressure  on  the prices  the
            Company is able to charge for its products.  The Company may
            not be  able to offset such downward  price pressure through
            corresponding cost  reductions.  Price reductions could have
            an adverse impact on the  business, results of operations or
            financial condition of the Company. 
  
                 INTELLECTUAL PROPERTY  RIGHTS.  From time  to time, the
            Company has received, and in the future may receive, notices
            of  claims  with respect  to  possible  infringement of  the
            intellectual  property   rights  of  others  or  notices  of
            challenges  to the  Company's intellectual  property rights.
            In some instances such notices have given rise to, or may in
            the  future  give  rise  to,  litigation.    Any  litigation
            involving the  intellectual property  rights of  the Company
            may  be resolved by means  of a negotiated  settlement or by
            contesting the  claim through  the judicial process.   There
            can be no assurance that the business, results of operations
            or the financial condition of the Company will not suffer an
            adverse impact  as a result of  intellectual property claims
            that  may be  commenced against the  Company in  the future.
            The Company owns certain patents and proprietary information
            acquired   while   developing   its   products   or  through
            acquisitions,  and the  Company is  the licensee  of certain
            other  technology.     As  patents  expire,  more  competing
            products  may  be released  into  the  marketplace by  other
            companies.   The  ability  of the  Company  to  continue  to
            compete effectively with other medical device companies  may
            be materially dependent upon  the protection afforded by its
            patents  and  the  confidentiality  of  certain  proprietary
            information.  There can be no assurance that patents will be
            issued  for  products  and  product   improvements  recently
            released into  the  marketplace or  for  products  presently
            being developed.
  
                 MANAGED   CARE   AND   OTHER   HEALTH   CARE   PROVIDER
            ORGANIZATIONS.  Managed care  and other health care provider
            organizations  have  grown  substantially  in terms  of  the  
            percentage  of  the population  in  the  United States  that
            receives medical benefits through such organizations and  in
            terms of the  influence and  control that they  are able  to
            exert over an increasingly large portion  of the health care
            industry.  These organizations are continuing to consolidate
            and grow,  increasing the ability of  these organizations to
            influence the practices and pricing involved in the purchase
            of  medical  devices, including  the  products  sold by  the
            Company.
  
                 HEALTH CARE REFORM/PRICING  PRESSURE.  The  health care
            industry  in  the  United  States  continues  to  experience
            change.   Health care reform proposals  have been formulated
            by  members of  Congress.   In addition,  state legislatures
            periodically consider various health care  reform proposals.
            Federal, state and local government representatives will, in
            all likelihood,  continue to  review and  assess alternative
            health  care delivery systems and payment methodologies, and
            ongoing public debate of these issues can be expected.  Cost
            containment  initiatives,  market  pressures   and  proposed
            changes  in  applicable  laws  and regulations  may  have  a
            dramatic effect  on pricing or potential  demand for medical
            devices, the  relative costs associated  with doing business
            and  the  amount of  reimbursement  by  both government  and
            third-party  payors.     In  particular,  the   industry  is
            experiencing  market-driven reforms  from forces  within the
            industry that are exerting pressure on health care companies
            to reduce  health care  costs.  These  market-driven reforms
            are  resulting   in  industry-wide  consolidation   that  is
            expected  to  increase  the  downward  pressure  on  product
            margins, as  larger buyer and supplier  groups exert pricing
            pressure on  providers of  medical devices and  other health
            care  products.     Both  short-term   and  long-term   cost
            containment  pressures,   as  well  as  the  possibility  of
            regulatory  reform,  may  have  an  adverse  impact  on  the
            Company's results  of  operations and  financial  condition.
            The  Company's  products  consist  primarily  of  disposable
            medical devices.   Cost  containment pressures  on hospitals
            are  leading  some  facilities  to  use  certain  disposable
            devices  longer than they have  been used in  the past, even
            longer than permitted by product labelling.  This phenomenon
            could  result  in  a  reduction in  Company  sales,  because
            extended use and device reuse mean fewer unit purchases.
  
                 GOVERNMENT  REGULATION.   There  has  been  a trend  in
            recent years,  both in  the  United States  and outside  the
            United  States,  toward more  stringent  regulation  of, and
            enforcement  of requirements  applicable to,  medical device
            manufacturers.    The  continuing  trend  of more  stringent
            regulatory  oversight in  product clearance  and enforcement
            activities  has  caused  medical  device   manufacturers  to
            experience longer approval cycles, more uncertainty, greater
            risk and greater expense.  At the present time, there are no
            meaningful indications that this trend  will be discontinued  
            in  the  near-term or  the  long-term either  in  the United
            States  or abroad.  The Company expects to continue to incur
            additional  operating expenses  associated with  its ongoing
            regulatory compliance  program,  but  the  amount  of  these
            incremental costs cannot  be completely  predicted and  will
            depend upon  a variety of factors,  including future changes
            in  statutes  and   regulations  governing  medical   device
            manufacturers.    There  can   be  no  assurance  that  such
            compliance requirements and quality assurance  programs will
            not  have  an adverse  impact  on the  business,  results of
            operations or financial condition of the Company or that the
            Company  will  not experience  problems associated  with FDA
            regulatory compliance.
  
                 NEW PRODUCT INTRODUCTIONS.  As the existing products of
            the Company become more mature and its existing markets more
            saturated,  the importance  of developing  or acquiring  new
            products  will  increase.    The  development  of  any  such
            products   will  entail   considerable  time   and  expense,
            including research  and development  costs and the  time and
            expense  required to obtain  necessary regulatory approvals,
            which  could  adversely  affect  the  business,  results  of
            operations or financial condition of the Company.  There can
            be no assurance that  such development activities will yield
            products that can be  commercialized profitably, or that any
            product  acquisition  can  be  consummated  on  commercially
            reasonable  terms  or at  all.   Any  failure to  acquire or
            develop new  products  to supplement  more  mature  products
            could  have an  adverse impact  on the business,  results of
            operations or financial condition of the Company.
  
                 TECHNOLOGICAL  CHANGE.     The  medical  technology  as
            utilized  by the Company has been subject to rapid advances.
            While  the Company  feels  that it  currently possesses  the
            technology   necessary  to  carry   on  its   business,  its
            commercial  success will  depend  on its  ability to  remain
            current with  respect to such technological  advances and to
            retain experienced technical  personnel.  Furthermore, there
            can be  no assurance that other  technological advances will
            not  render  the Company's  technology and  certain products
            uneconomical or obsolete.
  
                 PRODUCT LIABILITY  EXPOSURE.  Because its  products are
            intended  to be used in health care settings on patients who
            are physiologically  unstable and  may also be  seriously or
            critically ill, the Company  is exposed to potential product
            liability  claims.   From time  to time, patients  using the
            Company's products  have suffered  serious injury or  death,
            which  has  led  to  product liability  claims  against  the
            Company.  Some product  liability claims have been inherited
            by the  Company through business acquisitions.   The Company
            does  not believe that any  of these claims, individually or
            in the aggregate, will have a material adverse impact on its
            business,  results  of  operations  or  financial condition.  
            However,  the  Company may,  in  the future,  be  subject to
            product  liability claims  that could  have such  an adverse
            impact.
  
                 The  Company maintains  product  liability coverage  in
            amounts that it deems sufficient for its business.  However,
            there can be no assurance that such coverage will ultimately
            prove to be adequate, or that such coverage will continue to
            remain available on acceptable terms or any terms at all.
  
                 ACQUISITIONS.   In  order to continue  increasing sales
            volume and profits, the Company  relies heavily on a program
            of  acquiring  business and  new  product  lines from  other
            companies.   There is always a significant risk that a given
            acquisition  by the Company will prove to be unsuccessful or
            end  up not  contributing sufficiently  to sales  and profit
            growth   of  the  Company.    There  is  also  a  risk  that
            undiscovered  or  contingent  liabilities  of   an  acquired
            company  could negatively  impact  the  Company's  financial
            position or  even the  acquisition transaction itself.   The
            integration of any businesses that the Company might acquire
            could require substantial management  resources.  The moving
            of acquired  product lines can also  result in interruptions
            in production  and backorders.   There can  be no  assurance
            that any  such  integration  will  be  accomplished  without
            having a  short or  potentially long-term adverse  impact on
            the business, results of  operations or financial  condition
            of the Company or  that the benefits expected from  any such
            integration will be fully realized.
  
                 LACK  OF  DIVIDENDS.     Prior  to  January,  1990,  no
            dividends  had been  paid by  the Company  on its  shares of
            Common Stock.  The Company has paid dividends since January,
            1990.   However, there  can be  no assurance that  dividends
            will be paid on shares in the future, particularly since the
            Company  prefers to reserve  its cash and  liquid assets for
            growth and possible business acquisitions.
  
                 UNCERTAINTY OF  FINANCIAL  RESULTS AND  CAPITAL  NEEDS.
            There  may  be  substantial  fluctuations in  the  Company's
            results of operations because of the timing and recording of
            revenues and market acceptance of existing Company products.
            The  ability of the Company  to expand its manufacturing and
            marketing operations cannot be predicted with certainty.  If
            revenues do not continue to increase as rapidly as they have
            in the past  few years, or  if manufacturing, marketing,  or
            research and development are  not successful or require more
            money than  is anticipated,  the Company  may have  to scale
            back product marketing,  development and production  efforts
            and attempt to obtain  external financing.  There can  be no
            assurance  that the Company  would be able  to obtain timely
            external  financing in  the  amounts required  or that  such
            financing, if  available, would be on  terms advantageous to
            the Company.   
  
                 SUPPLY  OF RAW  MATERIALS.   Certain  of the  Company's
            products are  dependent upon  raw materials for  which there
            are single  or few sources.  So far, the Company has not had
            any  serious  problems   obtaining  needed  raw   materials.
            However,  there can be no assurance that the Company will be
            able  to continue to  depend on existing  sources of certain
            materials. 
  
                 IMPACT OF CURRENCY FLUCTUATIONS; IMPORTANCE  OF FOREIGN
            SALES.   Because  certain sales of  products by  the Company
            outside the United States typically are denominated in local
            currencies,  the results  of operations  of the  Company are
            expected to continue to  be affected by changes  in exchange
            rates between  certain  foreign currencies  and  the  United
            States Dollar.  There  can be no assurance that  the Company
            will not  experience currency fluctuation  effects in future
            periods, which could have an adverse impact on its business,
            results of operation or financial condition.  The operations
            and   financial  results   of  the   Company  also   may  be
            significantly  affected  by  other   international  factors,
            including changes in governmental regulations or  import and
            export  restrictions, and  foreign  economic  and  political
            conditions generally.
  
                 The Company's ability to continue to sell products into
            Europe  is dependent  to a  large extent  on its  ability to
            maintain the  important ISO  9001/EN 4601 certification  and
            the CE  marking of conformity.  If  the Company were to lose
            such  certifications,  such  loss  would  have  a  material,
            adverse impact on international sales and profits.
  
                 POSSIBLE VOLATILITY  OF STOCK PRICE.   The market price
            of  the Company's stock is,  and is expected  to continue to
            be,  subject to  significant  fluctuations  in  response  to
            variations in  quarterly  operating results,  trends in  the
            health  care  industry in  general  and  the medical  device
            industry in particular, and certain other factors beyond the
            control  of   the  Company.    In   addition,  broad  market
            fluctuations, as  well  as  general  economic  or  political
            conditions and initiatives, may adversely  impact the market
            price of  the Company's  stock, regardless of  the Company's
            operating performance.
  
                 YEAR  2000 ISSUES.    The approaching  Year 2000  could
            result  in   challenges   related  to   computer   software,
            manufacturing   and  communications   equipment,  accounting
            records,  and relationships  with  suppliers and  customers.
            The  Company is in the  process of addressing  the Year 2000
            Issue.  See "IMPACT OF THE YEAR 2000 ISSUE."
  
            ITEM 7.  FINANCIAL STATEMENTS AND EXHIBITS
  
                 (c)  EXHIBITS  
  
            EXHIBIT        DESCRIPTION         SEQUENTIALLY     NUMBERED
            PAGE
  
               23.1        Independent
                           Auditor's Consent             33
  
               23.2        Consent of 
                           Independent
                           Accountants                   34
  
               27          Financial Data
                           Schedule                      35
  
                                     SIGNATURES
             
                 Pursuant to the requirements of the Securities Exchange
            Act of 1934, the  Registrant has duly caused this  report to
            be  signed on  its behalf by  the undersigned  hereunto duly
            authorized.
  
                                          BALLARD MEDICAL PRODUCTS
  
            Dated:  July 13, 1998         By:  Dale H. Ballard,
                                               President