BECTON DICKINSON & CO — Earnings Release 2005

Nov 3, 2005

8-K 1 a40738.htm BECTON, DICKINSON AND COMPANY

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UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549

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FORM 8-K

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CURRENT REPORT PURSUANTTO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported) November 3, 2005

| BECTON, DICKINSON AND
COMPANY |
| --- |
| (Exact Name of Registrant as Specified in Its Charter) |

New Jersey
(State or Other Jurisdiction of Incorporation)

001-4802	22-0760120
(Commission File Number)	(IRS Employer Identification No.)

| 1 Becton Drive, Franklin
Lakes, New Jersey | 07417-1880 |
| --- | --- |
| (Address
of Principal Executive Offices) | (Zip
Code) |

(201) 847-6800
(Registrant’s Telephone Number, Including Area Code)

N/A
(Former Name or Former Address, if Changed Since Last Report)

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Check the appropriate box below if the Form 8-K Filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

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o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230425)

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o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

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o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

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o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

ITEM 2.02 RESULTS OF OPERATIONS AND FINANCIAL CONDITION.

On November 3, 2005, Becton, Dickinson and Company (“BD”) issued a press release announcing its financial results for the fourth fiscal quarter and for the fiscal year ended September 30, 2005. A copy of the press release is furnished as Exhibit 99.1 to this report.

The press release furnished as Exhibit 99.1 contains certain financial measures that differ from those presented in accordance with U.S. generally accepted principles (GAAP), as follows:

| • | Revenues .
We present revenue growth rates at constant foreign exchange rates. We
believe that presenting growth rates at constant foreign exchange rates
allows investors to view the underlying operating results of BD and of
its segments without the impact of fluctuations in foreign currency exchange
rates, thereby facilitating comparisons to prior periods. |
| --- | --- |
| • | Cost
of Products Sold . We present cost of products
sold, both alone and as a percentage of revenues, after excluding the
impact of share-based compensation expense for the period. Management
presents these adjusted measures in order to assist investors in comparing
BD’s cost of products sold for the period to prior periods in which
such expense was not recognized. |
| • | Gross
Profit/Gross Profit Margin . We present gross profit
and gross profit margin after excluding the impact of share-based compensation
expense for the period. Management presents these adjusted measures in
order to assist investors in comparing BD’s gross profit and gross
profit margin for the period to prior periods in which such expense was
not recognized. |
| | We
also separately present gross profit and gross profit margin after excluding
the impact of significant charges. Management believes that these adjusted
measures of gross profit and gross profit margin are more indicative of
BD’s underlying performance, and also allow investors to better understand
BD’s comparative operating performance for the period presented. |

| • |
| --- |
| We
also separately present these measures after excluding the impact of significant
charges. Management believes that these adjusted measures of operating
income are more indicative of BD’s underlying performance, and also
allow investors to better understand BD’s comparative operating performance
for the period presented. |

• Income from Continuing Operations . We present operating income from continuing operations, both alone and as a percentage of revenues, after excluding (i) the impact of share-based

| | compensation
expense for the period, (ii) the impact on taxes of the planned repatriation
of foreign earnings under the provisions of the American Jobs Creation Act,
and (iii) the effects of significant reversals of tax reserves (for the
full 2005 fiscal year) or the effects of changes in tax laws and regulations
(including without limitation, rate changes) and other events that cause
the tax rate for the fourth quarter of fiscal year 2005 to vary from BD’s
expected effective tax rate for the full year. Management eliminates the
effect of share-based compensation and the repatriation of foreign earnings
in these instances in order to improve comparability to prior periods in
which such expenses were not recognized. In addition, significant reversals
of tax reserves and the items mentioned above that affect our periodic effective
tax rate cause fluctuations in BD’s operating income from continuing
operations from period to period that management believes are unrelated
to BD’s underlying operating performance. Accordingly, management believes
that providing the impact of such effects allows investors to better understand
BD’s comparative operating performance for the period presented. |
| --- | --- |
| | We also separately
present these measures after excluding the impact of significant charges.
Managment believes these adjusted measures of income from continuing operations
are more indicative of BD's underlying performance, and also allow investors
to better understand BD’s comparative operating performance for the
period presented. |
| • | Net
Income . We present BD’s net income, both
alone and as a percentage of revenues, after excluding the impact of significant
charges. Management believes that these adjusted measures of net income
are more indicative of BD’s underlying performance, and also allow
investors to better understand BD’s comparative operating performance
for the period presented. |
| • | Earnings
Per Share . We present earnings per share and earnings
per share from continuing operations after excluding the impact of significant
charges. Management believes that this adjusted measure of earnings per
share is more indicative of BD’s underlying performance, and also
allow investors to better understand BD’s comparative operating performance
for the period presented. |
| | We also
present earnings per share and earnings per share from continuing operations
after excluding (i) the impact of share-based compensation expense for the
period, (ii) the impact on taxes of the planned repatriation of foreign
earnings under the provisions of the American Jobs Creation Act, and (iii)
the effects of significant reversals of tax reserves, (for the full 2005
fiscal year) or the effects of changes in tax laws and regulations and other
events that cause the tax rate for the fourth quarter of fiscal year 2005
to vary from BD’s expected effective tax rate for the full year. Management
eliminates the effect of share-based compensation and the repatriation of
foreign earnings in these instances in order to improve comparability to
prior periods in which such expenses were not recognized. In addition, significant
reversals of tax reserves and the items mentioned above that effect our
periodic effective tax rate cause fluctuations in BD’s operating income
from continuing operations from period to period that management believes
are unrelated to BD’s underlying operating performance. Accordingly,
management believes that providing the impact of such effects allows investors
to better understand BD’s comparative operating performance for the
period presented. |

• Selling and Administrative Expense . We present selling and administrative expense, both alone and as a percentage of revenues, after excluding the impact of share-based compensation expense for the period. Management presents these adjusted measures in order to assist investors in comparing BD’s selling and administrative expense for the period to prior periods in which such share-based compensation expense was not recognized.

| • | Research
and Development Expense . We present research and
development expense, both alone and as a percentage of revenues, after
excluding the impact of share-based compensation expense for the period.
Management presents these adjusted measures in order to assist investors
in comparing BD’s investment in research and development for the
period to prior periods in which such share-based compensation expense
was not recognized. |
| --- | --- |
| • | Income
Taxes/Effective Tax Rate . We present income taxes
and effective tax rate after excluding (i) the impact of share-based compensation
expense for the period, (ii) the impact on taxes of the planned repatriation
of foreign earnings under the provisions of the American Jobs Creation
Act, and (iii) the effects of significant reversals of tax reserves (for
the full 2005 fiscal year) or the effects of changes in tax laws and regulations
and other events that cause the tax rate for the fourth quarter of fiscal
year 2005 to vary from BD’s expected effective tax rate for the full
year. Management provides these adjusted measures of income taxes and
effective tax rate in order to facilitate comparisons to prior periods
and to allow investors to reconcile the effective tax rate for the period
being presented with the effective tax rate for the full fiscal year. |

BD’s management uses each of these non-GAAP measures in its own evaluation of BD’s performance, particularly when comparing performance to past periods. Management also uses the non-GAAP results for budget planning purposes on a quarterly and annual basis.

Non-GAAP results should not be considered in isolation and are not in accordance with, or a substitute for, GAAP results. Our non-GAAP results may differ from similar measures used by other companies, even if similar terms are used to identify such measures. Although BD’s management believes non-GAAP results are useful in evaluating the performance of its business, its reliance on these measures is limited since items excluded from such measures may have a material impact on BD’s net income, earnings per share or cash flows calculated in accordance with GAAP. Therefore, management typically uses non-GAAP results in conjunction with GAAP results to address these limitations. Investors should also consider these limitations when evaluating BD’s results.

BD provides non-GAAP measures to investors on a supplemental basis, as they provide additional insight into BD’s financial results. Management believes the non-GAAP results provide a reasonable measure of BD’s underlying performance before the effects of items that are considered by management to be outside of BD’s underlying operational results or that affect period to period comparability.

ITEM 8.01 OTHER EVENTS.

On September 12, 2005, Dik Drug Company filed a purported class action lawsuit against BD in the United States District Court in Newark, New Jersey (2:05-cv-04465-JLL-RJH). On October 3, 2005, American Sales Company, Inc. filed a purported class action against BD in the United States District Court in Philadelphia, Pennsylvania (2:05-cv-05212-CMR). On October 26, 2005, Park Surgical Co. Inc., a New York corporation, filed a purported class action lawsuit against BD in the United States District Court in Philadelphia, Pennsylvania (2:05-cv-05678-CMR). The complaints allege that BD violated federal antitrust laws, resulting in the charging of higher prices for certain BD products to plaintiffs and other purported class members. These complaints are similar to the previously reported complaints filed in March 2005 against BD in the United States District Court in Newark, New Jersey by Louisiana Wholesale Drug Company, and in September 2005 against BD in the United States District Court in Philadelphia, Pennsylvania by SAJ Distributors, Inc., in that they are brought on behalf of direct purchasers such as distributors. The plaintiffs seek money damages in as yet undisclosed amounts.

The actions brought by Louisiana Wholesale Drug Company and Dik Drug Company in New Jersey have been consolidated and are now captioned “In re Hypodermic Products Antitrust Litigation.” In addition, BD has made a motion before the Judicial Panel on Multidistrict Litigation to transfer the actions brought by Louisiana Wholesale Drug Company, Dik Drug Company, American Sales Company, Inc., and SAJ Distributors, Inc., along with the previously reported action brought by Jabo’s Pharmacy, Inc. against BD in the United States District Court in Greeneville, Tennessee, for coordinated or consolidated pre-trial proceedings. BD expects that the action brought by Park Surgical Co. Inc. will be added to BD’s motion to the Judicial Panel on Multidistrict Litigation in the near future.

BD believes it has meritorious defenses to these claims and intends to defend these lawsuits vigorously.

ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS.

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Exhibits. — Exhibit 99.1 Press release dated November 3, 2005, which is furnished pursuant to Item 2.02.

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SIGNATURES

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Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

BECTON, DICKINSON AND COMPANY (Registrant)
By: /s/ Dean J. Paranicas
Dean J. Paranicas Vice President, Corporate Secretary and Public Policy

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Date: November 3, 2005

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INDEX TO EXHIBITS

| Exhibit Number | Description
of Exhibits |
| --- | --- |
| 99.1 | Press
release dated November 3, 2005, which is furnished pursuant to Item 2.02. |