Business Context and Reporting Period
Company: Becton, Dickinson and Company (BD)
Filing Type: Form 8-K (Current Report)
Reporting Period: Third fiscal quarter of fiscal year 2006
Date of Report: July 28, 2006
This filing serves to announce the financial results for the third fiscal quarter of 2006 via a press release furnished as Exhibit 99.1. The report details the company's methodology for presenting non-GAAP financial measures to highlight underlying operating performance.
Key Financial Metrics
Revenue, Profit, Cash Flow, Margins, Debt, Liquidity: The filing text does not provide specific numerical values for revenue, profit, cash flow, margins, debt, or liquidity. These figures are contained within the referenced press release (Exhibit 99.1) but are not included in the body of this 8-K document.
Non-GAAP Adjustments: Management presents adjusted financial measures excluding the following items to reflect underlying performance:
- Revenues: Growth rates presented at constant foreign exchange rates to remove currency fluctuation impacts.
- Selling and Administrative Expense: Excludes insurance settlements.
- Research and Development Expense: Excludes the in-process research and development charge related to the acquisition of GeneOhm Sciences Inc.
- Operating Income: Excludes insurance settlements and the GeneOhm acquisition charge.
- Income Taxes/Effective Tax Rate: Excludes insurance settlements, significant reversals of tax reserves, and effects of changes in tax laws.
- Earnings Per Share: Excludes insurance settlements, the GeneOhm charge, tax reserve reversals, and tax impacts from the American Jobs Creation Act.
Material Changes and Unusual Items
The filing identifies specific non-recurring or unusual items that management excludes from its non-GAAP analysis:
- Acquisition Charge: A non-cash in-process research and development charge associated with the acquisition of GeneOhm Sciences Inc.
- Insurance Settlements: Settlements occurring during the period, deemed not part of ordinary operations.
- Tax Variations: Significant reversals of tax reserves and effects of changes in tax laws or regulations (including the American Jobs Creation Act) that caused the effective tax rate to vary from expectations.
- Currency Fluctuations: Foreign exchange rate impacts on revenue growth.
Guidance, Outlook, and Management Commentary
Management Commentary: Management utilizes these non-GAAP measures for internal evaluation, budget planning, and to assist investors in comparing period-to-period performance. They assert that these adjusted measures are more indicative of BD's underlying operational results than GAAP figures alone.
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, earnings per share, or cash flows calculated under GAAP.
Guidance: The filing text does not provide specific forward-looking guidance or numerical outlooks for future periods.
Investor Verification Checklist
- Review Exhibit 99.1 (Press Release) for specific GAAP and non-GAAP numerical results for Q3 2006.
- Verify the magnitude of the in-process research and development charge related to the GeneOhm Sciences Inc. acquisition.
- Assess the impact of insurance settlements on selling and administrative expenses and operating income.
- Compare the reported effective tax rate against the adjusted rate to understand the impact of tax reserve reversals and legislative changes.
- Confirm the constant currency exchange rates used to calculate revenue growth.