Business Context and Reporting Period
Company: Becton, Dickinson and Company (BD)
Filing Type: Form 8-K (Current Report)
Date of Report: April 26, 2006
Reporting Period: Second fiscal quarter of fiscal year 2006
This filing announces the issuance of a press release containing financial results for the second fiscal quarter of 2006. The report focuses on the methodology used to present non-GAAP financial measures to highlight underlying operating performance.
Key Financial Metrics
The filing text does not provide specific numerical values for revenue, profit, cash flow, margins, debt, or liquidity. Instead, it details the adjustments management applies to these metrics to derive non-GAAP figures:
- Revenues: Growth rates are presented at constant foreign exchange rates to remove currency fluctuation impacts.
- Selling and Administrative Expense: Adjusted to exclude insurance settlements.
- Research and Development Expense: Adjusted to exclude the in-process research and development charge related to the acquisition of GeneOhm Sciences Inc.
- Operating Income: Adjusted to exclude insurance settlements and the GeneOhm acquisition charge.
- Income Taxes/Effective Tax Rate: Adjusted to exclude insurance settlements, significant reversals of tax reserves, and effects of changes in tax laws.
- Earnings Per Share (EPS): Adjusted to exclude insurance settlements, the GeneOhm charge, and the dilutive impact of the GeneOhm acquisition.
Material Changes and Unusual Items
The filing identifies several specific items excluded from non-GAAP calculations to ensure comparability with prior periods:
- GeneOhm Acquisition: A non-cash in-process research and development charge was incurred. Management excludes this and the dilutive impact of the acquisition from adjusted EPS to improve period-to-period comparability.
- Insurance Settlements: These are excluded from selling/administrative expenses, operating income, and tax calculations as they are not part of ordinary operations.
- Tax Rate Variations: Adjustments are made for significant reversals of tax reserves, changes in tax laws, and the planned repatriation of foreign earnings under the American Jobs Creation Act.
- Foreign Exchange: Revenue growth is adjusted for currency fluctuations to show underlying operational trends.
Guidance, Outlook, and Management Commentary
Management Commentary: Management utilizes these non-GAAP measures for internal evaluation, budget planning, and to assist investors in understanding underlying performance. They assert that excluded items cause fluctuations unrelated to core operating performance.
Limitations: The filing explicitly states that non-GAAP results should not be considered in isolation or as a substitute for GAAP results. Management acknowledges that excluded items may have a material impact on net income and cash flows calculated under GAAP.
Guidance: The filing text does not contain specific forward-looking guidance or numerical outlooks for future periods.
Investor Verification Checklist
- Verify the specific GAAP financial figures for Q2 2006 in the attached press release (Exhibit 99.1), as this 8-K summary does not list them.
- Confirm the magnitude of the non-cash in-process research and development charge related to the GeneOhm Sciences Inc. acquisition.
- Review the details of the insurance settlements excluded from operating expenses and tax calculations.
- Assess the impact of the American Jobs Creation Act on the effective tax rate and foreign earnings repatriation.
- Compare the constant currency revenue growth rates against reported GAAP revenue growth to quantify the impact of foreign exchange fluctuations.