Business Context and Reporting Period
Company: Becton, Dickinson and Company (BD)
Filing Type: Form 8-K (Current Report)
Date of Report: November 1, 2007
Reporting Period: Fourth fiscal quarter and full fiscal year ended September 30, 2007.
Context: This filing announces the release of financial results for the period and provides a press release (Exhibit 99.1) containing both GAAP and non-GAAP financial measures.
Key Financial Metrics
The filing text serves as a disclosure of methodology for non-GAAP measures and does not contain specific numerical values for revenue, profit, cash flow, margins, debt, or liquidity. The actual figures are located in the referenced press release (Exhibit 99.1), which is not included in the provided text.
Non-GAAP Adjustments Disclosed:
- Revenue: Growth rates presented at constant foreign exchange rates to remove currency fluctuation impacts.
- Selling and Administrative Expense: Adjusted for fiscal year 2006 to exclude insurance settlements not considered part of ordinary operations.
- Operating Income: Adjusted for fiscal year 2007 to exclude in-process R&D charges from the acquisitions of Plasso Technology, Ltd. and TriPath Imaging, Inc. Fiscal year 2006 figures are adjusted for insurance settlements and in-process R&D charges from the GeneOhm Sciences, Inc. acquisition.
- Income Taxes/Effective Tax Rate: Adjusted to exclude non-tax-deductible in-process R&D charges (2007) and insurance settlements (2006).
- Income from Continuing Operations & Earnings Per Share: Adjusted similarly to exclude the aforementioned acquisition-related R&D charges and insurance settlements to reflect underlying performance.
Material Changes and Unusual Items
The filing identifies specific items excluded from non-GAAP calculations as they are not considered part of ordinary operations:
- Acquisition Charges (2007): In-process R&D charges related to the acquisitions of Plasso Technology, Ltd. and TriPath Imaging, Inc.
- Acquisition Charges (2006): In-process R&D charges related to the acquisition of GeneOhm Sciences, Inc.
- Insurance Settlements (2006): Settlements that reduced reported selling and administrative expenses and increased reported income tax expense.
Management states these items affected reported results in the periods they occurred but are excluded from adjusted measures to facilitate period-to-period comparability.
Guidance, Outlook, and Management Commentary
Management Commentary: Management utilizes these non-GAAP measures for internal performance evaluation, budget planning, and to provide investors with insight into underlying operational results. They assert that these adjusted measures are more indicative of BD's performance than GAAP results alone when comparing periods.
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 provided text does not contain specific forward-looking guidance, numerical outlooks, or risk factor updates beyond the standard disclosure regarding the limitations of non-GAAP measures.
Investor Verification Checklist
- Verify Exhibit 99.1: Review the attached press release to obtain the actual numerical values for revenue, net income, and earnings per share for Q4 and FY 2007.
- Reconcile GAAP to Non-GAAP: Confirm the specific dollar amounts of the in-process R&D charges for Plasso, TriPath, and GeneOhm, as well as the insurance settlement impacts, to understand the magnitude of the adjustments.
- Assess Currency Impact: Evaluate the difference between reported revenue growth and constant currency revenue growth to gauge the impact of foreign exchange rates.
- Review Tax Implications: Verify the effective tax rate calculations, noting that the excluded R&D charges were non-tax-deductible, which artificially inflated the GAAP tax rate.