FRANKLIN LAKES, N.J., Nov. 3 /PRNewswire-FirstCall/ -- BD (Becton, Dickinson and Company) today reported quarterly revenues of $1.379 billion for the fourth fiscal quarter ended September 30, 2005, representing an increase of 10 percent over the prior year period. This quarter’s growth rate includes an estimated 2 percent benefit from foreign currency translation. Revenue growth in all segments benefited from foreign currency translation, driven primarily by favorable exchange rates in Latin America, Asia Pacific, and Canada.
“Our excellent results this year were driven, in particular, by our strong international performance, new product revenue growth, and significant margin improvement,” said Edward J. Ludwig, Chairman, President and Chief Executive Officer. “Our Asia Pacific/Japan, Canada, Europe, and Latin American regions contributed double-digit revenue growth and the combination of higher margin products and increased operating effectiveness drove margin expansion. Performance such as this will allow us to continue to increase the pace of our R&D spending while also targeting double-digit earnings growth.”
“Our strong fourth quarter provides a solid foundation for fiscal 2006,” added Mr. Ludwig. “We feel confident in our expectation that earnings will grow by approximately 10 percent. On a performance basis, this equates to about 14 percent, excluding the expected negative impact of foreign currency translation.”
Analyses of Fourth Quarter and Full Fiscal Year 2005 and 2004 Earnings
The following analyses of diluted earnings per share from continuing operations for the fourth quarter and full fiscal year 2005 and 2004 identify specified items and share-based compensation expense that affect comparability of results between periods. Three Months Ended Twelve-month Period (Table 1) September 30, Ended September 30, % % Incr. Incr. FY2005 FY2004 (Decr.) FY2005 FY2004 (Decr.) Reported Diluted EPS $0.58 $0.26 $2.77 $1.77 Diluted EPS from Discontinued Operations: Income from Clontech - - (0.01) - Gain on Sale of Clontech (0.11) - (0.11) - Write-down of Clontech Net Assets - 0.44 - 0.44 Rounding - - 0.01 - (0.11) 0.44 (0.11) 0.44 Diluted EPS from Continuing Operations 0.47 0.70 -33% 2.66 2.21 20% Specified Items: Tax Examinations(1) - - (0.04) - Tax Rate Impact(2) 0.02 - - - Repatriation Tax Charge(3) 0.27 - 0.27 - BGM Charges(4) - - - 0.11 Litigation Settlement(5) - - - 0.24 Rounding - - (0.01) - 0.29 - 0.22 0.35 Diluted EPS from Continuing Operations Excluding Specified Items 0.76 0.70 2.88 2.56 Share-based Compensation Expense(6) 0.07 - 0.19 - Diluted EPS from Continuing Operations Excluding Specified Items and Share-based Compensation Expense $0.83 $0.70 19% $3.07 $2.56 20% (1) Included in diluted earnings per share from continuing operations for the full fiscal year ended September 30, 2005 is a benefit of approximately 4 cents per diluted share due to the reversal of tax reserves in connection with the conclusion of tax examinations in four non-U.S. jurisdictions that occurred in the first quarter. (2) Represents the effect on diluted earnings per share from continuing operations of tax-related events that caused the tax rate to vary from the expected effective tax rate for the year. The effective tax rate for the year, without taking into account the tax impact of the items described in notes (1), (3) and (6) herein, is 25.5%. (3) Included in diluted earnings per share from continuing operations for the fourth quarter of fiscal 2005 is 27 cents per diluted share substantially related to the impact on taxes of the planned repatriation of $1.3 billion of foreign earnings under the provisions of the American Jobs Creation Act. (4) Included in fiscal 2004 diluted earnings per share from continuing operations is a first quarter charge of 11 cents per diluted share related to the voluntary recall and write-off of certain blood glucose strip inventory and other actions taken with respect to our blood glucose monitoring products. (5) Included in fiscal 2004 diluted earnings per share from continuing operations is a third quarter charge of 24 cents per diluted share related to a litigation settlement. (6) Represents the effect on diluted earnings per share from continuing operations relating to share-based compensation expense in accordance with the first quarter adoption of FASB Statement No. 123 (revised), “Share-Based Payment.”
Based on the foregoing analyses, diluted earnings per share from continuing operations for the fourth fiscal quarter of 2005, excluding specified items and share-based compensation expense, of 83 cents increased by 19 percent over diluted earnings per share from continuing operations of 70 cents for the fourth fiscal quarter of 2004. For the year, diluted earnings per share from continuing operations, excluding specified items and share- based compensation expense, of $3.07 increased by 20 percent over diluted earnings per share from continuing operations, excluding specified items, of $2.56 for fiscal 2004.
Reported diluted earnings per share for the fourth quarter of fiscal 2005 were 58 cents, including a 27 cents per diluted share tax charge that relates substantially to the Company’s planned repatriation of $1.3 billion of foreign earnings under the provisions of the American Jobs Creation Act, and a gain of 11 cents per diluted share from discontinued operations resulting from the sale of Clontech on August 31, 2005.
Reported diluted earnings per share for the fourth quarter of fiscal 2004 were 26 cents, reflecting a loss of 44 cents per share from discontinued operations and diluted earnings per share from continuing operations of 70 cents.
For the full fiscal year ended September 30, 2005, reported revenues were $5.415 billion, representing a 10 percent increase from the prior year, including an estimated 3 percent benefit from foreign currency translation, which was based on favorable exchange rates in all regions. Reported diluted earnings per share for the full fiscal year ended September 30, 2005 were $2.77, including the previously noted fourth quarter tax charge of 27 cents per share and a gain of 11 cents per share from discontinued operations resulting from the sale of Clontech.
For fiscal year 2004, reported diluted earnings per share were $1.77, which reflected diluted earnings per share of $2.21 from continuing operations, and a loss of 44 cents per share from discontinued operations. Included in the results of continuing operations for the year were a first quarter charge of 11 cents per share related to our blood glucose monitoring products and a third quarter charge of 24 cents per share related to a litigation settlement.
Segment Results
In the BD Medical segment, worldwide revenues for the quarter were $762 million, representing an increase of 11 percent from the prior year period. Contributing to the growth of the segment were strong sales in the Diabetes Care unit. Also contributing to growth were solid sales in the Medical Surgical Systems and Pharmaceutical Systems units. U.S. sales of safety- engineered products totaled $130 million, compared with $122 million in the prior year’s quarter. Included in BD Medical revenues for the quarter were international sales of safety-engineered products of $21 million, compared with $16 million in the prior year’s quarter.
For the full fiscal year ended September 30, 2005, total BD Medical segment revenues of $2.958 billion increased by 10 percent from the prior year. U.S. sales of safety-engineered products totaled $490 million, compared with $459 million in the prior year. International sales of safety-engineered products totaled $81 million, compared with $63 million in the prior year.
In the BD Diagnostics segment, worldwide revenues for the quarter were $403 million, representing an increase of 8 percent from the prior year period. The Diagnostic Systems unit of the segment reported revenue growth of 9 percent, due primarily to increased worldwide sales of its newer instrument platforms, BD Phoenix(TM) and BD ProbeTec(TM) ET. The Preanalytical Systems unit of the segment reported revenue growth of 7 percent. U.S. sales of safety-engineered products, benefiting from BD Vacutainer(R) Push Button Blood Collection Set activity, totaled $94 million, compared with $85 million in the prior year’s quarter. Included in Preanalytical Systems revenues for the quarter were international sales of safety-engineered products of $49 million, compared with $39 million in the prior year’s quarter.
For the full fiscal year ended September 30, 2005, total BD Diagnostics segment revenues of $1.657 billion increased by 8 percent from the prior year. U.S. sales of safety-engineered products totaled $352 million, compared with $317 million in the prior year. International sales of safety-engineered products totaled $192 million, compared with $140 million in the prior year.
In the BD Biosciences segment, worldwide revenues from continuing operations for the quarter were $214 million, representing an increase of 12 percent from the prior year period. Research instrument and reagent sales continued to be the primary growth contributors, driven by increased demand for research analyzers. As in the previous two quarters, increased sales of Discovery Labware products also contributed to revenue growth.
For the full fiscal year ended September 30, 2005, total BD Biosciences segment revenues of $800 million increased by 11 percent from the prior year, representing continued strong sales of flow cytometry instruments and reagents.
Geographic Results
Fourth quarter revenues in the U.S. of $687 million represented an increase of 9 percent over the prior year period. Revenues outside the U.S. of $692 million represented an increase of 11 percent over the prior year period, including an estimated 3 percent benefit from foreign currency translation.
For the full fiscal year ended September 30, 2005, revenues in the U.S. of $2.591 billion represented an increase of 6 percent over the prior year. Revenues outside of the U.S. of $2.824 billion represented an increase of 13 percent over the prior year, including an estimated 5 percent benefit from foreign currency translation.
Fiscal 2006 Outlook for Full Year and First Quarter
The Company estimates that diluted earnings per share from continuing operations for the full fiscal year 2006 will increase approximately 10 percent over diluted earnings per share from continuing operations, excluding specified items, of $2.88 for the fiscal year 2005.
The Company also estimates that diluted earnings per share from continuing operations for the first fiscal quarter of 2006 will increase approximately 10 percent over diluted earnings per share from continuing operations, excluding specified items, of 68 cents for the first fiscal quarter of 2005.
The following analyses of estimated diluted earnings per share from continuing operations for the first fiscal quarter and full year identify specified items that affect the comparability of results between periods.
(Table 2) Three Months Ended Twelve Months Ended December 31, September 30, % % FY2006 FY2005 Incr. FY2006 FY2005 Incr. (Estimated) (Estimated) Diluted EPS from Continuing Operations $0.74-$0.75 $0.74 0%-1% $3.15-$3.19 $2.66 18%-20% Specified Items: Tax Examinations(1) - (0.04) - (0.04) Tax Rate Impact(2) - (0.02) - - Repatriation Tax Charge(3) - - - 0.27 Rounding - - - (0.01) - (0.06) - 0.22 Diluted EPS from Continuing Operations Excluding Specified Items $0.74-$0.75 $0.68 9%-10% $3.15-$3.19 $2.88 9%-11% (1) Represents the effect on estimated diluted earnings per share from continuing operations of the reversal of tax reserves in the first fiscal quarter in connection with the conclusion of tax examinations in four non-U.S. jurisdictions. (2) Represents the effect on diluted earnings per share from continuing operations of tax-related events that caused the tax rate to vary from the expected effective tax rate for fiscal 2005. (3) Included in diluted earnings per share from continuing operations for the fourth quarter of fiscal 2005 is 27 cents per diluted share substantially related to the impact on taxes of the planned repatriation of $1.3 billion of foreign earnings under the provisions of the American Jobs Creation Act. Conference Call Information
A conference call regarding BD’s fourth fiscal quarter and full year results and its expectations for the first fiscal quarter and full fiscal year 2006 will be broadcast live on BD’s website, http://www.bd.com/investors, at 10:00 a.m. (ET) Thursday, November 3, 2005. The conference call will be available for replay on BD’s website, http://www.bd.com/investors, or at 1-866-347-5807 (domestic) and 1-203-369-0023 (international) through the close of business on November 10, 2005.
This news release contains certain non-GAAP financial measures. A reconciliation of these and other measures to the comparable GAAP measures is included in this release and in the attached financial tables.
BD is a medical technology company that serves healthcare institutions, life science researchers, clinical laboratories, industry and the general public. BD manufactures and sells a broad range of medical supplies, devices, laboratory equipment and diagnostic products. To learn more about BD, please visit http://www.bd.com.
This press release, including the section entitled “Fiscal 2006 Outlook for Full Year and First Quarter,” contains certain estimates and other forward-looking statements (as defined under Federal securities laws) regarding BD’s performance, including future revenues, earnings per share and income, or events or developments that BD expects to occur or anticipates occurring in the future. All such statements are based upon current expectations of BD and involve a number of business risks and uncertainties. Actual results could vary materially from anticipated results described, implied or projected in any forward-looking statement. With respect to forward-looking statements contained herein, factors that could cause actual results to vary materially from any forward-looking statement include, but are not limited to: competitive factors; pricing and market share pressures; changes in interest or foreign currency exchange rates; difficulties inherent in product development and delays in product introductions; changes in regional, national or foreign economic conditions; increases in energy costs and their effect on, among other things, the cost of producing BD’s products; fluctuations in costs and availability of raw materials and in BD’s ability to maintain favorable supplier arrangements and relationships; uncertainties of litigation (as described in BD’s filings with the Securities and Exchange Commission); changes in healthcare or other governmental regulation; and issuance of new or revised accounting standards, as well as other factors discussed in this press release and in BD’s filings with the Securities and Exchange Commission. We do not intend to update any forward-looking statements to reflect events or circumstances after the date hereof except as required by applicable laws or regulations.
BECTON DICKINSON AND COMPANY CONSOLIDATED INCOME STATEMENTS (Unaudited; Amounts in thousands, except per-share data) Three Months Ended September 30, 2005 2004 % Change REVENUES $1,379,476 $1,253,278 10.1 Cost of products sold 662,746 (1) 620,978 6.7 Selling and administrative 376,510 (1) 320,269 17.6 Research and development 76,552 (1) 58,708 30.4 TOTAL OPERATING COSTS AND EXPENSES 1,115,808 999,955 11.6 OPERATING INCOME 263,668 253,323 4.1 Interest expense, net (2,013) (8,592) (76.6) Other expense, net (977) (161) NM INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES 260,678 244,570 6.6 Income tax provision 139,103 61,236 NM INCOME FROM CONTINUING OPERATIONS 121,575 183,334 (33.7) INCOME (LOSS) FROM DISCONTINUED OPERATIONS NET OF INCOME TAX BENEFIT OF $15,986 IN 2005 AND $8,349 IN 2004, RESPECTIVELY 27,519 (115,890) NM NET INCOME $149,094 $67,444 NM EARNINGS PER SHARE Basic: Income from continuing operations $0.49 $0.73 (32.9) Income (loss) from discontinued operations $0.11 $(0.46) NM Net income $0.60 $0.27 NM Diluted: Income from continuing operations $0.47 $0.70 (32.9) Income (loss) from discontinued operations $0.11 $(0.44) NM Net income $0.58 $0.26 NM AVERAGE SHARES OUTSTANDING Basic 249,236 250,202 Diluted 256,878 261,334 NM - Not Meaningful (1) Includes share-based compensation expense in accordance with the first quarter adoption of SFAS No. 123 (revised), “Share-Based Payment”. BECTON DICKINSON AND COMPANY SUPPLEMENTAL INFORMATION Three Months Ended September 30, (Unaudited; Amounts in thousands, except per-share data) 2005 SFAS#123 Tax Repatriation (revised) Rate Tax As Adoption Impact Charge Excluding Reported (1) (2) (3) Items Cost of products sold $662,746 $ (3,456) $ - $ - $659,290 as a % of revenues 48.0% 47.8% Gross profit 716,730 3,456 - - 720,186 as a % of revenues 52.0% 52.2% Selling and administrative 376,510 (19,570) - - 356,940 as a % of revenues 27.3% 25.9% Research and development 76,552 (2,149) - - 74,403 as a % of revenues 5.5% 5.4% Operating Income 263,668 25,175 - - 288,843 as a % of revenues 19.1% 20.9% Income taxes 139,103 7,610 (4,181) (69,638) 72,894 effective tax rate 53.4% 25.5% Income from continuing operations 121,575 17,565 4,181 69,638 212,959 as a % of revenues 8.8% 15.4% Diluted earnings per share Income from continuing operations $ 0.47 $ 0.07 $ 0.02 $ 0.27 $ 0.83 Income from discontinued operations $ 0.11 $ - $ - $ - $ 0.11 Diluted earnings per share $ 0.58 $ 0.07 $ 0.02 $ 0.27 $ 0.94 (1) Relates to the first quarter adoption of SFAS No. 123 (revised), “Share-Based Payment”. Fiscal 2004 amounts have not been restated. (2) Represents the effect on diluted earnings per share from continuing operations of tax-related events that caused the tax rate to vary from the expected effective tax rate for the year. (3) Relates substantially to the planned repatriation of $1.3 billion of foreign earnings under the provisions of the American Jobs Creation Act. BECTON DICKINSON AND COMPANY CONSOLIDATED INCOME STATEMENTS (Unaudited; Amounts in thousands, except per-share data) Twelve Months Ended September 30, 2005 2004 % Change REVENUES $5,414,681 $4,934,745 9.7 Cost of products sold 2,662,029 (1) 2,500,362 (2) 6.5 Selling and administrative 1,449,856 (1) 1,311,467 10.6 Research and development 271,626 (1) 235,649 15.3 Litigation settlement - 100,000 NM TOTAL OPERATING COSTS AND EXPENSES 4,383,511 4,147,478 5.7 OPERATING INCOME 1,031,170 787,267 31.0 Interest expense, net (19,252) (29,607) (35.0) Other (expense) income, net (7,064) (4,792) 47.4 INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES 1,004,854 752,868 33.5 Income tax provision 312,571 170,364 83.5 INCOME FROM CONTINUING OPERATIONS 692,283 582,504 18.8 INCOME (LOSS) FROM DISCONTINUED OPERATIONS NET OF INCOME TAX BENEFIT OF $14,439 IN 2005 AND $7,961 IN 2004, RESPECTIVELY 29,980 (115,102) NM NET INCOME $ 722,263 $ 467,402 54.5 EARNINGS PER SHARE Basic: Income from continuing operations $ 2.75 $ 2.30 19.6 Income (loss) from discontinued operations $ 0.12 $ (0.46) NM Net income (3) $ 2.87 $ 1.85 55.1 Diluted: Income from continuing operations $ 2.66 $ 2.21 20.4 Income (loss) from discontinued operations $ 0.11 $ (0.44) NM Net income $ 2.77 $ 1.77 56.5 AVERAGE SHARES OUTSTANDING Basic 251,429 252,011 Diluted 260,712 263,337 NM - Not Meaningful (1) Includes share-based compensation expense in accordance with the first quarter adoption of SFAS No. 123 (revised), “Share-Based Payment”. (2) Includes a $45,024 charge associated with blood glucose monitoring (BGM) products. (3) Total per share amounts may not add due to rounding. BECTON DICKINSON AND COMPANY SUPPLEMENTAL INFORMATION Twelve Months Ended September 30, (Unaudited; Amounts in thousands, except per-share data) 2005 SFAS#123 Repatriation (revised) Tax Tax As Adoption Examinations Charge Excluding Reported (1) (2) (3) Items Cost of products sold $2,662,029 $(9,749) $ - $ - $2,652,280 as a % of revenues 49.2% 49.0% Gross profit 2,752,652 9,749 - - 2,762,401 as a % of revenues 50.8% 51.0% Selling and administrative 1,449,856 (54,454) - - 1,395,402 as a % of revenues 26.8% 25.8% Research and development 271,626 (5,996) - - 265,630 as a % of revenues 5.0% 4.9% Operating Income 1,031,170 70,199 - - 1,101,369 as a % of revenues 19.0% 20.3% Income taxes 312,571 19,941 11,265 (69,638) 274,139 effective tax rate 31.1% 25.5% Income from continuing operations 692,283 50,258 (11,265) 69,638 800,914 as a % of revenues 12.8% 14.8% Diluted earnings per share Income from continuing operations (4) $ 2.66 $ 0.19 $ (0.04) $ 0.27 $ 3.07 Income from discontinued operations $ 0.11 $ - $ - $ - $ 0.11 Diluted earnings per share $ 2.77 $ 0.19 $ (0.04) $ 0.27 $ 3.19 (1) Relates to the first quarter adoption of SFAS No. 123 (revised), “Share-Based Payment”. Fiscal 2004 amounts have not been restated. (2) Relates to the reversal of tax reserves in connection with the conclusion of tax examinations in four non-U.S. jurisdictions that occurred in the first quarter. (3) Relates substantially to the planned repatriation of $1.3 billion of foreign earnings under the provisions of the American Jobs Creation Act. (4) Total per share amounts may not add due to rounding. 2004 BGM Litigation As Charges Settlement Excluding Reported (5) (6) Charges Gross Profit $2,434,383 $45,024 $ - $2,479,407 as a % of revenues 49.3% 50.2% Operating Income 787,267 45,024 100,000 932,291 as a % of revenues 16.0% 18.9% Income from continuing operations 582,504 27,915 63,000 673,419 as a % of revenues 11.8% 13.6% Diluted earnings per share Income from continuing operations $ 2.21 $ 0.11 $ 0.24 $ 2.56 Loss from discontinued operations $ (0.44) $ - $ - $ (0.44) Diluted earnings per share $ 1.77 $ 0.11 $ 0.24 $ 2.12 (5) Relates to the fiscal 2004 charge associated with blood glucose monitoring (BGM) products. (6) Relates to the fiscal 2004 charge associated with a litigation settlement. BECTON DICKINSON AND COMPANY SUPPLEMENTAL REVENUE INFORMATION REVENUES BY SEGMENT AND GEOGRAPHIC AREA (Unaudited; Amounts in thousands) Three Months Ended September 30, 2005 2004 % Change BD MEDICAL United States $ 368,752 $ 334,189 10.3 International 393,631 353,822 11.3 TOTAL $ 762,383 $ 688,011 10.8 BD DIAGNOSTICS United States $ 218,768 $ 207,979 5.2 International 184,001 165,645 11.1 TOTAL $ 402,769 $ 373,624 7.8 BD BIOSCIENCES United States $ 99,623 $ 89,157 11.7 International 114,701 102,486 11.9 TOTAL $ 214,324 $ 191,643 11.8 TOTAL REVENUES United States $ 687,143 $ 631,325 8.8 International 692,333 621,953 11.3 TOTAL $1,379,476 $1,253,278 10.1 BECTON DICKINSON AND COMPANY SUPPLEMENTAL REVENUE INFORMATION REVENUES BY SEGMENT AND GEOGRAPHIC AREA (Unaudited; Amounts in thousands) Twelve Months Ended September 30, 2005 2004 % Change BD MEDICAL United States $1,366,688 $1,274,936 7.2 International 1,591,400 1,405,229 13.2 TOTAL $2,958,088 $2,680,165 10.4 BD DIAGNOSTICS United States $ 869,187 $ 839,157 3.6 International 787,877 692,482 13.8 TOTAL $1,657,064 $1,531,639 8.2 BD BIOSCIENCES United States $ 355,076 $ 321,796 10.3 International 444,453 401,145 10.8 TOTAL $ 799,529 $ 722,941 10.6 TOTAL REVENUES United States $2,590,951 $2,435,889 6.4 International 2,823,730 2,498,856 13.0 TOTAL $5,414,681 $4,934,745 9.7 BECTON DICKINSON AND COMPANY SUPPLEMENTAL REVENUE INFORMATION REVENUES BY BUSINESS SEGMENTS AND UNITS Three Months Ended September 30, (Unaudited; Amounts in thousands) United States 2005 2004 % Change BD MEDICAL Medical Surgical Systems $ 224,809 $ 208,185 8.0 Diabetes Care 111,160 91,397 21.6 Pharmaceutical Systems 27,273 29,014 (
