FRANKLIN LAKES, N.J., July 28 /PRNewswire-FirstCall/ -- BD (Becton, Dickinson and Company) today reported record quarterly revenues of $1.484 billion for the third fiscal quarter ended June 30, 2006, representing an increase of 7 percent over the prior year period. This quarter’s growth rate reflects an overall estimated 1 percent unfavorable impact from foreign currency translation, which affected all segments.
“Our continued strong performance this quarter indicates that the strategy we are implementing is succeeding,” said Edward J. Ludwig, Chairman, President and Chief Executive Officer. “Strong operating performance is enabling us to make investments such as the acquisition of GeneOhm, which is performing as expected and is a key component of our strategy to reduce healthcare- associated infections. We’re also increasing the pace of our R&D spending to fuel growth through innovation. Additionally, I’m very pleased to announce that, once again, we’re raising earnings guidance for fiscal 2006.”
Analysis of Third Quarter and Nine-month Period of Fiscal Year 2006 and 2005 Earnings
The following analysis of diluted earnings per share from continuing operations for the third quarter and nine-month period of fiscal 2006 and 2005 identifies specified items that affect the comparability of results between periods. (Table 1) Three Months Ended Nine Months Ended June 30, June 30, FY2006 FY2005 %Incr. FY2006 FY2005 %Incr. Diluted EPS from Continuing Operations:(1) $0.81 $0.73 11% $2.26 $2.18 4% Specified Items: Insurance Settlements(2) - - (0.04) - In-Process Research and Development Charge(3) - - 0.21 - Tax Examinations(4) - - - (0.04) Tax Rate Impact(5) - 0.01 - (0.02) - 0.01 0.17 (0.06) Diluted EPS from Continuing Operations Excluding Specified Items:(1) $0.81 $0.74 9% $2.43 $2.12 15% (1) Includes the effect on diluted earnings per share from continuing operations of a 2 cent reduction in the third quarter and a 3 cent reduction in the nine-month period ended June 30, 2006 relating to GeneOhm operations, which were acquired in February 2006. (2) Represents the effect on diluted earnings per share from continuing operations related to proceeds received from insurance settlements regarding the Company’s previously owned latex glove business. (3) Represents the effect on diluted earnings per share from continuing operations of the in-process research and development charge recorded in the second quarter of fiscal 2006 related to the GeneOhm acquisition. (4) Represents the effect on diluted earnings per share from continuing operations of the reversal of tax reserves in the first fiscal quarter of 2005 in connection with the conclusion of tax examinations in four non-U.S. jurisdictions. (5) Represents the effect on diluted earnings per share from continuing operations of tax-related events that caused the quarterly tax rate to vary from the then-expected effective tax rate for fiscal year 2005.
As illustrated in Table 1, diluted earnings per share from continuing operations of 81 cents for the third fiscal quarter of 2006 increased by 9 percent over diluted earnings per share from continuing operations, excluding specified items, of 74 cents for the third fiscal quarter of 2005. For the nine-month period, diluted earnings per share from continuing operations, excluding specified items, of $2.43 for fiscal 2006 increased by 15 percent over diluted earnings per share from continuing operations, excluding specified items, of $2.12 for fiscal 2005.
Segment Results
In the BD Medical segment, worldwide revenues for the quarter were $828 million, representing an increase of 8 percent from the prior year period. Strong sales in the Diabetes Care unit contributed to growth. U.S. sales of safety-engineered products totaled $132 million compared with $119 million in the prior year’s quarter. For the nine-month period ended June 30, 2006, U.S. sales of safety-engineered products totaled $387 million compared with $360 million in the prior year’s period. Included in BD Medical revenues were international sales of safety-engineered products of $24 million compared with $22 million in the prior year’s quarter. For the nine-month period ended June 30, 2006, international sales of safety-engineered products totaled $68 million compared with $60 million in the prior year’s period. For the nine- month period ended June 30, 2006, the BD Medical segment reported 9 percent revenue growth over the prior year period.
In the BD Diagnostics segment, worldwide revenues for the quarter were $436 million, representing an increase of 6 percent from the prior year period. The Diagnostic Systems unit of the segment reported revenue growth of 5 percent. The Preanalytical Systems unit of the segment reported revenue growth of 7 percent. U.S. sales of safety-engineered products totaled $102 million compared with $92 million in the prior year’s quarter. For the nine- month period ended June 30, 2006, U.S. sales of safety-engineered products totaled $295 million compared with $258 million in the prior year’s period. Included in Preanalytical Systems revenues were international sales of safety- engineered products of $60 million, compared with $52 million in the prior year’s quarter. For the nine-month period ended June 30, 2005, international sales of safety-engineered products totaled $167 million compared with $143 million in the prior year’s period. For the nine-month period ended June 30, 2006, the BD Diagnostics segment reported 5 percent revenue growth over the prior year period.
In the BD Biosciences segment, worldwide revenues from continuing operations for the quarter were $219 million, representing an increase of 9 percent from the prior year period. Sales of flow cytometry instruments and reagents as well as cell imaging products contributed to sales growth. For the nine-month period ended June 30, 2006, the BD Biosciences segment reported 9 percent revenue growth over the prior year period.
Geographic Results
Third quarter revenues in the U.S. were $719 million, representing an increase of 11 percent over the prior year period. Revenues outside the U.S. were $765 million, representing an increase of 5 percent over the prior year period, and reflected an estimated 1 percent unfavorable impact from foreign currency translation.
For the nine-month period ended June 30, 2006, revenues in the U.S. were $2.102 billion, representing an increase of 10 percent over the prior year period. Revenues outside of the U.S. were $2.246 billion, representing an increase of 5 percent over the prior year period, and reflected an estimated 3 percent unfavorable impact from foreign currency translation.
Fiscal 2006 Outlook for Fourth Quarter and Full Year
The following analysis of estimated diluted earnings per share from continuing operations for the fourth fiscal quarter and full fiscal year identifies specified items that affect the comparability of results between periods. (Table 2) Three Months Ended September 30, FY2006 FY2005 % Incr. (Estimated) Diluted EPS from Continuing Operations: (1) $0.83-$0.84 $0.47 77-79% Specified Items: Insurance Settlements(2) - - In-Process Research and Development Charge(3) - - Tax Examinations(4) - - Tax Rate Impact(5) - 0.02 Repatriation Tax Charge(6) - 0.27 Rounding - - - 0.29 Diluted EPS from Continuing Operations Excluding Specified Items:(1) $0.83-$0.84 $0.76 9-11% (Table 2) Twelve Months Ended September 30, Y2006 FY2005 % Incr. (Estimated) Diluted EPS from Continuing Operations: (1) $3.09-$3.10 $2.66 16-17% Specified Items: Insurance Settlements(2) (0.04) - In-Process Research and Development Charge(3) 0.21 - Tax Examinations(4) - (0.04) Tax Rate Impact(5) - - Repatriation Tax Charge(6) - 0.27 Rounding - (0.01) 0.17 0.22 Diluted EPS from Continuing Operations Excluding Specified Items:(1) $3.26-$3.27 $2.88 13-14% (1) Includes the effect on estimated diluted earnings per share from continuing operations of a 3 cent reduction in the fourth quarter and a 6 cent reduction in the twelve-month period ended September 30, 2006 relating to GeneOhm operations, which were acquired in February 2006. (2) Represents the effect on estimated diluted earnings per share from continuing operations related to proceeds received from insurance settlements regarding the Company’s previously owned latex glove business. (3) Represents the effect on estimated diluted earnings per share from continuing operations of the in-process research and development charge recorded in the second quarter of fiscal 2006 related to the GeneOhm acquisition. (4) Represents the effect on diluted earnings per share from continuing operations of the reversal of tax reserves in the first fiscal quarter of 2005 in connection with the conclusion of tax examinations in four non-U.S. jurisdictions. (5) Represents the effect on diluted earnings per share from continuing operations of tax-related events that caused the quarterly tax rate to vary from the then-expected effective tax rate for fiscal year 2005. (6) 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.
As illustrated in Table 2, the Company estimates that diluted earnings per share from continuing operations will increase approximately 9 to 11 percent for the fourth fiscal quarter of 2006 over diluted earnings per share from continuing operations, excluding specified items, of 76 cents for the fourth fiscal quarter of 2005.
For the full fiscal year 2006, the Company estimates that diluted earnings per share from continuing operations, excluding specified items, are expected to be in the $3.26 to $3.27 range, representing an increase of approximately 13 to 14 percent over diluted earnings per share from continuing operations, excluding specified items, of $2.88 for the fiscal year 2005.
Conference Call Information
A conference call regarding BD’s third fiscal quarter results and its expectations for the fourth fiscal quarter and full fiscal year will be broadcast live on BD’s website, www.bd.com/investors, at 10:00 a.m. (ET) Friday, July 28, 2006. The conference call will be available for replay through the close of business on August 4, 2006 on BD’s website, www.bd.com/investors, or at 1-888-203-1112 (domestic) and 1-719-457-0820 (international), pass code 4856925.
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.
About BD
BD, a leading global medical technology company that makes and sells medical devices, instrumented systems and reagents, is dedicated to improving people’s health throughout the world. BD is focused on improving drug therapy, enhancing the quality and speed of diagnosing infectious diseases, and advancing research and discovery of new drugs and vaccines. The Company’s capabilities are instrumental in combating many of the world’s most pressing diseases. Founded in 1897 and headquartered in Franklin Lakes, New Jersey, BD employs more than 25,000 people in approximately 50 countries throughout the world. The Company serves healthcare institutions, life science researchers, clinical laboratories, industry and the general public. For more information, please visit www.bd.com.
This press release, including the section entitled “Fiscal 2006 Outlook for Fourth Quarter and Full Year,” 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; further 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); the effects of potential pandemic diseases; 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 June 30, 2006 2005 % Change REVENUES $1,483,698 $1,381,306 7.4 Cost of products sold 732,943 686,764 6.7 Selling and administrative 393,782 365,919 7.6 Research and development 77,967 67,003 16.4 TOTAL OPERATING COSTS AND EXPENSES 1,204,692 1,119,686 7.6 OPERATING INCOME 279,006 261,620 6.6 Interest expense (15,425) (13,695) 12.6 Interest income 12,146 10,134 19.9 Other expense, net (2,386) (984) NM INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES 273,341 257,075 6.3 Income tax provision 66,968 67,274 (0.5) INCOME FROM CONTINUING OPERATIONS 206,373 189,801 8.7 LOSS FROM DISCONTINUED OPERATIONS NET OF INCOME TAX BENEFIT OF $91 IN 2005 - (133) NM NET INCOME $ 206,373 $ 189,668 8.8 EARNINGS PER SHARE Basic: Income from continuing operations $ 0.84 $ 0.75 12.0 Loss from discontinued operations $ - $ - - Net income $ 0.84 $ 0.75 12.0 Diluted: Income from continuing operations $ 0.81 $ 0.73 11.0 Loss from discontinued operations $ - $ - - Net income $ 0.81 $ 0.73 11.0 AVERAGE SHARES OUTSTANDING Basic 246,633 251,866 Diluted 255,070 260,099 NM - Not Meaningful BECTON DICKINSON AND COMPANY SUPPLEMENTAL INFORMATION Three Months Ended June 30, (Unaudited; Amounts in thousands, except per-share data) 2005 As Tax Excluding Reported Rate Impact(1) Items Income taxes 67,274 (2,059) 65,215 effective tax rate 26.2% 25.4% Income from continuing operations 189,801 2,059 191,860 as a % of revenues 13.7% 13.9% Diluted earnings per share Income from continuing operations $0.73 $0.01 $0.74 (1) Represents the effect on diluted earnings per share from continuing operations of tax-related events that caused the quarterly tax rate to vary from the then expected effective tax rate for fiscal year 2005. BECTON DICKINSON AND COMPANY CONSOLIDATED INCOME STATEMENTS (Unaudited; Amounts in thousands, except per-share data) Nine Months Ended June 30, 2006 2005 % Change REVENUES $4,347,076 $4,035,205 7.7 Cost of products sold 2,119,320 1,999,283 6.0 Selling and administrative 1,131,434 1,073,346 5.4 Research and development 276,391(1) 195,074 41.7 TOTAL OPERATING COSTS AND EXPENSES 3,527,145 3,267,703 7.9 OPERATING INCOME 819,931 767,502 6.8 Interest expense (51,990) (41,066) 26.6 Interest income 43,808 23,827 83.9 Other expense, net (3,999) (6,087) (34.3) INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES 807,750 744,176 8.5 Income tax provision 227,279 173,468 31.0 INCOME FROM CONTINUING OPERATIONS 580,471 570,708 1.7 (LOSS) INCOME FROM DISCONTINUED OPERATIONS NET OF INCOME TAX (BENEFIT) PROVISION OF $(1,330) AND $1,547, RESPECTIVELY (2,170)(2) 2,461 NM NET INCOME $ 578,301 $ 573,169 0.9 EARNINGS PER SHARE Basic: Income from continuing operations $ 2.34 $ 2.26 3.5 (Loss) income from discontinued operations $ (0.01) $ 0.01 NM Net income (3) $ 2.34 $ 2.27 3.1 Diluted: Income from continuing operations $ 2.26 $ 2.18 3.7 (Loss) income from discontinued operations $ (0.01) $ 0.01 NM Net income $ 2.25 $ 2.19 2.7 AVERAGE SHARES OUTSTANDING Basic 247,588 252,167 Diluted 256,500 261,897 NM - Not Meaningful (1) Includes the in-process research and development (“IPR&D”) charge related to the GeneOhm acquisition. (2) Represents certain adjustments relating to the divestiture of Clontech. (3) Total per share amounts may not add due to rounding. BECTON DICKINSON AND COMPANY SUPPLEMENTAL INFORMATION Nine Months Ended June 30, (Unaudited; Amounts in thousands, except per-share data) 2006 As Insurance GeneOhm Excluding Reported Settlement(1) R&D (2) Items Selling and administrative 1,131,434 17,000 - 1,148,434 as a % of revenues 26.0% 26.4% Research and development 276,391 - (53,300) 223,091 as a % of revenues 6.4% 5.1% Operating Income 819,931 (17,000) 53,300 856,231 as a % of revenues 18.9% 19.7% Income taxes 227,279 (6,460) - 220,819 effective tax rate 28.1% 26.2% Income from continuing operations 580,471 (10,540) 53,300 623,231 as a % of revenues 13.4% 14.3% Diluted earnings per share Income from continuing operations $ 2.26 $ (0.04) 0.21 $ 2.43 (1) Represents the effect in 2006 related to proceeds received from insurance settlements in connection with the Company’s previously owned latex glove business. (2) Represents the in-process research and development (“IPR&D”) charge related to the GeneOhm acquisiton. 2005 As Tax Tax Excluding Reported Examinations(3) Rate Impact(4) Charges Income taxes 173,468 11,265 4,181 188,914 effective tax rate 23.3% 25.4% Income from continuing operations 570,708 (11,265) (4,181) 555,262 as a % of revenues 14.1% 13.8% Diluted earnings per share Income from continuing operations $ 2.18 $ (0.04) $ (0.02) $ 2.12 (3) Relates to the reversal of tax reserves in the first quarter 2005 in connection with the conclusion of tax examinations in four non-U.S. jurisdictions. (4) Represents the effect on diluted earnings per share from continuing operations of tax-related events that caused the quarterly tax rate to vary from the then expected effective tax rate for fiscal year 2005. BECTON DICKINSON AND COMPANY SUPPLEMENTAL REVENUE INFORMATION REVENUES BY SEGMENT AND GEOGRAPHIC AREA (Unaudited; Amounts in thousands) Three Months Ended June 30, 2006 2005 % Change BD MEDICAL United States $ 383,030 $ 338,238 13.2 International 445,439 431,980 3.1 TOTAL $ 828,469 $ 770,218 7.6 BD DIAGNOSTICS United States $ 237,817 $ 218,536 8.8 International 198,596 192,207 3.3 TOTAL $ 436,413 $ 410,743 6.2 BD BIOSCIENCES United States $ 98,158 $ 92,809 5.8 International 120,658 107,536 12.2 TOTAL $ 218,816 $ 200,345 9.2 TOTAL REVENUES United States $ 719,005 $ 649,583 10.7 International 764,693 731,723 4.5 TOTAL $1,483,698 $1,381,306 7.4 BECTON DICKINSON AND COMPANY SUPPLEMENTAL REVENUE INFORMATION REVENUES BY SEGMENT AND GEOGRAPHIC AREA (Unaudited; Amounts in thousands) Nine Months Ended June 30, 2006 2005 % Change BD MEDICAL United States $1,122,928 $ 997,936 12.5 International 1,271,578 1,197,769 6.2 TOTAL $2,394,506 $2,195,705 9.1 BD DIAGNOSTICS United States $ 699,818 $ 650,419 7.6 International 614,529 603,876 1.8 TOTAL $1,314,347 $1,254,295 4.8 BD BIOSCIENCES United States $ 278,788 $ 255,453 9.1 International 359,435 329,752 9.0 TOTAL $ 638,223 $ 585,205 9.1 TOTAL REVENUES United States $2,101,534 $1,903,808 10.4 International 2,245,542 2,131,397 5.4 TOTAL $4,347,076 $4,035,205 7.7 BECTON DICKINSON AND COMPANY SUPPLEMENTAL REVENUE INFORMATION REVENUES BY BUSINESS SEGMENTS AND UNITS Three Months Ended June 30, (Unaudited; Amounts in thousands) United States 2006 2005 % Change BD MEDICAL Medical Surgical Systems $230,123 $208,818 10.2 Diabetes Care 112,432 97,006 15.9 Pharmaceutical Systems 34,612 27,034 28.0 Ophthalmic Systems 5,863 5,380 9.0 TOTAL $383,030 $338,238 13.2 BD DIAGNOSTICS Preanalytical Systems $131,909 $120,283 9.7 Diagnostic Systems 105,908 98,253 7.8 TOTAL $237,817 $218,536 8.8 BD BIOSCIENCES Discovery Labware $ 31,276 $ 29,374 6.5 Immunocytometry Systems 47,027 43,908 7.1 Pharmingen 19,855 19,527 1.7 TOTAL $ 98,158 $ 92,809 5.8 TOTAL UNITED STATES $719,005 $649,583 10.7 BECTON DICKINSON AND COMPANY SUPPLEMENTAL REVENUE INFORMATION REVENUES BY BUSINESS SEGMENTS AND UNITS Three Months Ended June 30, (continued) (Unaudited; Amounts in thousands) International % Change FX FX 2006 2005 Reported Neutral Impact BD MEDICAL Medical Surgical Systems $217,993 $211,676 3.0 2.5 0.5 Diabetes Care 77,660 74,309 4.5 5.3 (0.8) Pharmaceutical Systems 139,468 136,003 2.5 5.8 (3.3) Ophthalmic Systems 10,318 9,992 3.3 6.0 (2.7) TOTAL $445,439 $431,980 3.1 4.1 (1.0) BD DIAGNOSTICS Preanalytical Systems $107,589 $102,543 4.9 5.7 (0.8) Diagnostic Systems 91,007 89,664 1.5 3.1 (1.6) TOTAL $198,596 $192,207 3.3 4.5 (1.2) BD BIOSCIENCES Discovery Labware $ 24,271 $ 23,716 2.3 4.6 (2.3) Immunocytometry Systems 76,947 66,945 14.9 16.6 (1.7) Pharmingen 19,440 16,875 15.2 17.7 (2.5) TOTAL $120,658 $107,536 12.2 14.1 (1.9) TOTAL INTERNATIONAL $764,693 $731,723 4.5 5.7 (1.2) BECTON DICKINSON AND COMPANY SUPPLEMENTAL REVENUE INFORMATION REVENUES BY BUSINESS SEGMENTS AND UNITS Three Months Ended June 30, (continued) (Unaudited; Amounts in thousands) Total % Change FX FX 2006 2005 Reported Neutral Impact BD MEDICAL Medical Surgical Systems $ 448,116 $ 420,494 6.6 6.3 0.3 Diabetes Care 190,092 171,315 11.0 11.3 (0.3) Pharmaceutical Systems 174,080 163,037 6.8 9.5 (2.7) Ophthalmic Systems 16,181 15,372 5.3 7.1 (1.8) TOTAL $ 828,469 $ 770,218 7.6 8.1 (0.5) BD DIAGNOSTICS Preanalytical Systems $ 239,498 $ 222,826 7.5 7.8 (0.3) Diagnostic Systems 196,915 187,917 4.8 5.5 (0.7) TOTAL $ 436,413 $ 410,743 6.2 6.8 (0.6) BD BIOSCIENCES Discovery Labware $ 55,547 $ 53,090 4.6 5.6 (1.0) Immunocytometry Systems 123,974 110,853 11.8 12.8 (1.0) Pharmingen 39,295 36,402 7.9 9.1 (1.2) TOTAL $ 218,816 $ 200,345 9.2 10.3 (1.1) TOTAL REVENUES $1,483,698 $1,381,306 7.4 8.0 (0.6) BECTON DICKINSON AND COMPANY SUPPLEMENTAL REVENUE INFORMATION REVENUES BY BUSINESS SEGMENTS AND UNITS Nine Months Ended June 30, (Unaudited; Amounts in thousands) United States 2006 2005 % Change BD MEDICAL Medical Surgical Systems $ 672,438 $ 627,995 7.1 Diabetes Care 338,558 279,949 20.9 Pharmaceutical Systems 95,040 73,855 28.7 Ophthalmic Systems 16,892 16,137 4.7 TOTAL $1,122,928 $ 997,936 12.5 BD DIAGNOSTICS
