10-QPeriod: Q3 FY2004

BECTON DICKINSON & CO Quarterly Report for Q3 Ended Jun 30, 2004

Filed August 13, 2004For Securities:BDX

Summary

Becton Dickinson & Co. (BDX) reported its third-quarter and year-to-date results for the period ending June 30, 2004. The company demonstrated solid revenue growth across its key segments, Medical, Diagnostics, and Biosciences, with overall revenues increasing by 8% year-over-year for the quarter and 11% for the nine-month period. This growth was driven by strong performance in safety-engineered devices and international markets, although currency fluctuations had a notable positive impact on reported international revenue growth. A significant event during the quarter was the $100 million litigation settlement with Retractable Technologies, Inc. (RTI), which impacted net income and earnings per share. Despite this charge, the company maintained a strong balance sheet, with a reduced debt-to-capitalization ratio and robust cash flow from operations. Management continues to focus on strategic initiatives aimed at revenue growth through product innovation, geographical expansion, and operational efficiency.

Key Highlights

  • 1Total revenues increased by 8% to $1.258 billion for the three months ended June 30, 2004, and by 11% to $3.728 billion for the nine months ended June 30, 2004.
  • 2The company paid a $100 million pre-tax charge ($63 million after taxes) to settle litigation with Retractable Technologies, Inc. (RTI), impacting diluted EPS by approximately $0.24.
  • 3Net income for the quarter decreased to $109 million ($0.41 per diluted share) from $130 million ($0.49 per diluted share) in the prior year, primarily due to the litigation settlement.
  • 4Cash flow from operations remained strong, with $822 million generated for the nine months ended June 30, 2004, supporting capital expenditures and debt management.
  • 5The debt-to-capitalization ratio improved to 26.7% at June 30, 2004, down from 30.4% at September 30, 2003.
  • 6The Medical and Diagnostics segments showed steady revenue growth, while the Biosciences segment experienced significant increases driven by new product launches and strong reagent sales.
  • 7The company continues to repurchase its common stock, with approximately $350 million spent on repurchases during the nine-month period.

Frequently Asked Questions

The primary driver for the decrease in net income for the quarter was a $100 million pre-tax charge ($63 million after taxes) related to the settlement of litigation with Retractable Technologies, Inc. (RTI).

All three segments, Medical, Diagnostics, and Biosciences, demonstrated revenue growth. The Medical segment saw a 5% increase in the quarter, Diagnostics grew by 11%, and Biosciences by 12%. International revenue growth was particularly strong, benefiting from favorable foreign currency translation.

The company's financial position remains strong, evidenced by robust cash flow from operations of $822 million for the nine-month period and an improved debt-to-capitalization ratio of 26.7%. Management is confident in its ability to meet financial obligations and pursue strategic growth initiatives.

Yes, the company recorded charges related to its blood glucose monitoring (BGM) products in a prior period, including a voluntary recall of certain test strips and the write-off of inventory. The current period's results were primarily impacted by the RTI litigation settlement.