Business Context and Reporting Period
Company: Becton, Dickinson and Company (BD)
Filing Type: Form 8-K (Current Report)
Report Date: November 2, 2006
Period Covered: Fourth fiscal quarter and full fiscal year ended September 30, 2006.
This filing announces the issuance of a press release (Exhibit 99.1) detailing financial results. The report focuses on the methodology for presenting non-GAAP financial measures to exclude specific one-time items and facilitate period-over-period comparisons.
Key Financial Metrics and Adjustments
The filing text does not provide specific numerical values for revenue, profit, cash flow, or debt. Instead, it outlines the adjustments management applies to GAAP figures to derive non-GAAP metrics:
- Revenues: Presented at constant foreign exchange rates. Adjusted to exclude estimated customer returns associated with the exit from the blood glucose monitoring (BGM) market.
- Cost of Product Sold & Gross Profit: Adjusted to exclude one-time costs related to the BGM market exit.
- Selling and Administrative Expense: Adjusted to exclude BGM exit costs and insurance settlements.
- Research and Development (R&D): Adjusted to exclude the in-process R&D charge from the acquisition of GeneOhm Sciences Inc.
- Operating Income & Income from Continuing Operations: Adjusted to exclude BGM exit costs, insurance settlements, and the GeneOhm in-process R&D charge.
- Income Taxes/Effective Tax Rate: Adjusted to exclude BGM exit costs, insurance settlements, changes in tax laws, repatriation of foreign earnings under the American Jobs Creation Act, and reversals of tax reserves.
- Earnings Per Share (EPS): Adjusted for the same items listed above to reflect underlying performance.
Material Changes and Unusual Items
Management identifies several material items excluded from non-GAAP measures to highlight underlying operational performance:
- BGM Market Exit: One-time costs and estimated customer returns associated with the decision to exit the blood glucose monitoring market in September 2006.
- GeneOhm Acquisition: A non-cash in-process R&D charge related to the acquisition of GeneOhm Sciences Inc.
- Insurance Settlements: Settlements occurring during the period, deemed not part of ordinary operations.
- Tax Variations: Fluctuations caused by the American Jobs Creation Act (repatriation of foreign earnings), changes in tax laws, and significant reversals of tax reserves following examinations in four non-U.S. jurisdictions.
Guidance, Outlook, and Management Commentary
Management Commentary: Management utilizes these non-GAAP measures for internal evaluation, budget planning, and to assist investors in comparing performance across periods without the distortion of one-time events. The filing explicitly states that non-GAAP results are not a substitute for GAAP results and should not be considered in isolation.
Guidance and Risks: The filing text does not contain specific forward-looking guidance, numerical outlooks, or a detailed discussion of risks beyond the disclosure that excluded items may have a material impact on GAAP net income and cash flows.
Investor Verification Checklist
- Review the full press release (Exhibit 99.1) for specific GAAP and non-GAAP numerical values for revenue, earnings, and cash flow.
- Verify the reconciliation between GAAP and non-GAAP figures to quantify the exact impact of the BGM exit costs and GeneOhm acquisition charges.
- Assess the magnitude of the insurance settlements and tax reserve reversals excluded from the effective tax rate calculations.
- Confirm the strategic rationale and financial impact of exiting the blood glucose monitoring market.