Business Context and Reporting Period
Company: Becton, Dickinson and Company (BD)
Filing Type: Form 8-K (Current Report)
Date of Report: July 26, 2007
Reporting Period: Third fiscal quarter ended June 30, 2007, and the first nine months of fiscal year 2007.
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 methodology for presenting non-GAAP financial measures in the accompanying press release (Exhibit 99.1). Key metrics discussed include:
- Revenues: Presented at constant foreign exchange rates to exclude currency fluctuation impacts.
- Selling and Administrative Expense: Adjusted to exclude insurance settlements from the first nine months of fiscal 2006.
- Operating Income: Adjusted to exclude in-process research and development (R&D) charges related to the acquisitions of Plasso Technology, Ltd. and TriPath Imaging, Inc.
- Income Taxes/Effective Tax Rate: Adjusted to exclude the impact of insurance settlements for the first nine months of fiscal 2006.
- Earnings Per Share (EPS): Adjusted to exclude in-process R&D charges and insurance settlements to reflect underlying performance.
Material Changes and Adjustments
The filing highlights specific non-recurring items that management excludes from non-GAAP measures to facilitate period-to-period comparisons:
- Acquisition Charges: In-process R&D charges associated with the acquisitions of Plasso Technology, Ltd., TriPath Imaging, Inc., and GeneOhm Sciences Inc.
- Insurance Settlements: Settlements occurring in fiscal 2006 that reduced reported selling and administrative expenses but increased reported income tax expense.
- Foreign Exchange: Fluctuations in currency rates affecting revenue growth rates.
Guidance, Outlook, and Management Commentary
Management Commentary: Management utilizes these non-GAAP measures for internal evaluation, budget planning, and to provide investors with insight into underlying operational performance. They assert that these adjusted measures are more indicative of BD's performance than GAAP results, which are impacted by items considered outside of ordinary operations.
Limitations and Risks: 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, EPS, and cash flows calculated under GAAP. Additionally, non-GAAP measures may differ from similar measures used by other companies.
Guidance: The text mentions that projected earnings per share for fiscal year 2007 are presented on an adjusted basis, but specific numerical guidance figures are not included in this filing text.
Investor Verification Checklist
- Review Exhibit 99.1 (Press Release dated July 26, 2007) for specific numerical values of revenue, operating income, and EPS.
- Verify the reconciliation between the reported GAAP figures and the non-GAAP adjusted figures provided in the press release.
- Assess the magnitude of the in-process R&D charges related to Plasso and TriPath acquisitions to understand their impact on GAAP earnings.
- Confirm the impact of foreign exchange rates on reported revenue growth versus constant currency growth.
- Examine the details of the insurance settlements from fiscal 2006 to understand their effect on prior period comparability.