<PAGE>
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
QUARTERLY REPORT UNDER SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 1993
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OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from
__________________________________to___________
Commission file number 1-4802
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Becton, Dickinson and Company
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(Exact name of registrant as specified in its charter)
New Jersey 22-0760120
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(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
1 Becton Drive Franklin Lakes, New Jersey 07417-1880
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(Address of principal executive offices)
(Zip Code)
(201) 847-6800
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(Registrant's telephone number, including area code)
N/A
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(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X . No .
--- ---
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
Class of Common Stock Shares Outstanding as of January 31, 1994
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Common stock, par value $1.00 72,658,069
Page 1 of 11 Pages (Exhibit Index is on Page 10)
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PART I - FINANCIAL INFORMATION
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Item 1. Financial Statements.
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Condensed Consolidated Balance Sheets at December 31, 1993 and
September 30, 1993
Condensed Consolidated Statements of Operations for the three months
ended December 31, 1993 and 1992
Condensed Consolidated Statements of Cash Flows for the three months
ended December 31, 1993 and 1992
Notes to Condensed Consolidated Financial Statements
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ITEM 1. FINANCIAL STATEMENTS
BECTON, DICKINSON AND COMPANY
CONDENSED CONSOLIDATED BALANCE SHEETS
Thousands of Dollars
<TABLE>
<CAPTION>
December 31, September 30,
1993 1993
------------ ------------
Assets (Unaudited)
- ------
<S> <C> <C>
Current Assets:
Cash and equivalents $ 27,667 $ 39,126
Short-term investments 54,747 25,753
Trade receivables, net 463,341 557,803
Inventories (Note 2):
Materials 89,358 89,549
Work in process 63,592 67,257
Finished products 297,752 289,071
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450,702 445,877
Prepaid expenses, deferred taxes and other 81,178 82,183
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Total Current Assets 1,077,635 1,150,742
Investments in marketable securities 123,597 123,605
Property, plant and equipment 2,378,804 2,363,856
Less allowances for depreciation and
amortization 991,475 960,786
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1,387,329 1,403,070
Intangibles, net
Patents and other 109,719 110,820
Goodwill 102,312 105,272
Other 193,960 194,056
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Total Assets $ 2,994,552 $ 3,087,565
=========== =============
Liabilities and Shareholders' Equity
- ------------------------------------
Current Liabilities:
Short-term debt $ 183,719 $ 206,763
Payables and other liabilities 395,181 429,299
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Total Current Liabilities 578,900 636,062
Long-term debt 702,393 680,581
Long-term employee benefit obligations 295,577 294,054
Deferred income taxes and other 21,040 19,915
Shareholders' Equity:
Preferred stock 57,812 58,108
Common stock 85,349 85,349
Capital in excess of par value 105,426 104,954
Cumulative currency translation adjustments (34,094) (22,048)
Retained earnings 1,592,593 1,581,196
Unearned ESOP compensation (44,969) (45,249)
Shares in treasury - at cost (365,475) (305,357)
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Total Shareholders' Equity 1,396,642 1,456,953
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Total Liabilities and Shareholders' Equity $ 2,994,552 $ 3,087,565
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</TABLE>
See notes to condensed consolidated financial statements
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BECTON, DICKINSON AND COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Thousands of Dollars, Except Per Share Data
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
December 31,
--------------------
1993 1992*
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<S> <C> <C>
REVENUES $ 554,080 $ 560,462
Cost of products sold 312,882 319,108
Selling and administrative 157,376 158,541
Research and development 34,803 32,688
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TOTAL OPERATING COSTS AND EXPENSES 505,061 510,337
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OPERATING INCOME 49,019 50,125
Interest expense, net (10,843) (12,943)
Other expense, net (4,366) (6,746)
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INCOME BEFORE INCOME TAXES AND
CUMULATIVE EFFECT OF ACCOUNTING CHANGES 33,810 30,436
Income tax provision 8,114 7,092
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INCOME BEFORE CUMULATIVE EFFECT OF
ACCOUNTING CHANGES 25,696 23,344
Cumulative effect of accounting changes,
net of taxes - (141,057)
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NET INCOME (LOSS) $ 25,696 $(117,713)
========= =========
EARNINGS (LOSS) PER SHARE
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INCOME BEFORE CUMULATIVE EFFECT OF
ACCOUNTING CHANGES $ .33 $ .30
Cumulative effect of accounting changes
net of taxes - (1.83)
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NET INCOME (LOSS) $ .33 $ (1.53)
========= =========
DIVIDENDS PER SHARE $ .185 $ .165
========= =========
Average common and common
equivalent shares outstanding 74,805 77,504
========= =========
</TABLE>
* Restated to reflect adoption of SFAS Nos. 106, 109, and 112 in the fourth
quarter of fiscal 1993 retroactive to October 1, 1992.
See notes to condensed consolidated financial statements
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BECTON, DICKINSON AND COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Thousands of Dollars
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
December 31,
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<S> <C> <C>
1993 1992*
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Operating Activities:
Net income (loss) $ 25,696 $ (117,713)
Adjustments to net income (loss) to derive
net cash provided by operating activities:
Cumulative effect of accounting changes, net
of taxes - 141,057
Depreciation and amortization 49,725 45,329
Change in working capital 29,882 4,078
Other, net 9,258 10,240
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Net cash provided by operating activities 114,561 82,991
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Investing Activities:
Capital expenditures (29,606) (40,320)
Change in investments, net (28,310) (469)
Other, net (11,875) (10,803)
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Net cash used for investing activities (69,791) (51,592)
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Financing Activities:
Change in short-term debt (16,041) (13,195)
Proceeds of long-term debt 22,917 591
Payments of long-term debt (1,952) (1,290)
Issuance of common stock 1,920 7,321
Repurchase of common stock (61,566) -
Dividends paid (949) (960)
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Net cash used for financing activities (55,671) (7,533)
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Effect of Exchange Rate Changes on Cash and
Equivalents (558) (3,928)
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Net (decrease) increase in cash and equivalents (11,459) 19,938
Opening Cash and Equivalents 39,126 56,631
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Closing Cash and Equivalents $ 27,667 $ 76,569
=========== ============
* Restated to reflect the adoption of SFAS Nos. 106, 109 and 112 in the fourth quarter of fiscal 1993 retroactive
to October 1, 1992.
</TABLE>
See notes to condensed consolidated financial statements
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BECTON, DICKINSON AND COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1993
Note 1 - Basis of Presentation
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The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with the instructions to Form 10-Q and, in the opinion of
the management of the Company, include all adjustments, which are of a normal
recurring nature, necessary for a fair presentation of financial position and
the results of operations and cash flows for the periods presented. However,
the financial statements do not include all information and footnotes required
for a presentation in accordance with generally accepted accounting principles.
These condensed consolidated financial statements should be read in conjunction
with the consolidated financial statements and the notes thereto included or
incorporated by reference in the Company's 1993 Annual Report on Form 10-K. The
results of operations for the interim periods are not necessarily indicative of
the results of operations to be expected for the full year.
Note 2 - Inventory Valuation
- ----------------------------
An actual valuation of inventory under the LIFO method can be made only at the
end of each fiscal year based on the inventory levels and costs at that time.
Accordingly, interim LIFO calculations are based on management's estimates of
expected year-end inventory levels and costs.
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ITEM 2. MANAGEMENT'S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
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Results of Operations
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First quarter reported revenues of $554 million were slightly below the prior
year's revenues of $560 million. Revenues would have increased 3% after
excluding the estimated $23 million adverse impact of foreign currency
translation. In comparison with last year's first quarter double-digit growth
rate, which was the result of a strong surge in revenues related to new
products, the growth rate in the first quarter of 1994 was modest. The growth
rate of high volume Medical and Diagnostic products in the Company's core
businesses continued to be satisfactory. Medical Supplies and Devices segment
revenues of $296 million decreased 2% and Diagnostic Systems segment revenues of
$258 million decreased 1%, but would have increased an estimated 2% and 3.5%,
respectively, after excluding the adverse impact of foreign currency
translation.
Domestic Medical segment revenues were slightly above last year. Proposals for
health care reform in the United States do not appear to have affected the
growth rate of core products, including safety products recently introduced to
address the heightened concern for safety among health care workers.
International Medical segment revenues decreased 4%, but would have increased an
estimated 5% after excluding the unfavorable impact of foreign currency
translation.
Domestic Diagnostic segment revenues increased 2%. International Diagnostic
segment revenues decreased 4%, but would have increased an estimated 5% after
excluding the adverse impact of foreign currency translation. In comparison
with last year, revenue growth was adversely affected by the continuing economic
weakness in southern European countries, especially Italy and Spain, as well as
by the shipments of newly introduced instrumentation in the first quarter of
last year.
The gross profit margin of 43.5% was higher than last year's first quarter rate
of 43.1%. The mix of product revenues, as well as productivity improvements,
were the principal reasons for the improvement. Selling and administrative
expense was 28.4% of revenues, about the same as last year's first quarter ratio
of 28.3%. Reported expense of $157 million was slightly lower than last year,
reflecting a modest favorable impact from foreign currency translation, as well
as tight spending controls. Investment of $35 million in research and
development increased 6% over last year's first quarter expenditures. As a
percent of revenues, research and development expense was 6.3%, compared with
last year's 5.8%.
Operating income of $49 million was slightly below last year. After excluding
the negative effect of foreign currency translation, operating income would have
increased an estimated 8%, reflecting improved gross profit margin and the
successful implementation of spending controls.
Net interest expense of $11 million was $2 million lower than last year's first
quarter. Lower interest rates and lower debt levels more than offset a
reduction in capitalized interest.
Other expense, net of $4 million was $2 million favorable to last year, due to
lower charges related to foreign exchange transactions. The first quarter income
tax rate was 24%, compared with last year's first quarter rate of 23.3%.
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Income before cumulative effect of accounting changes was $26 million compared
with $23 million last year, an increase of 10%. Net income was $26 million,
compared with a net loss of $118 million last year which included an after-tax
charge of $141 million, or $1.83 per share, representing the cumulative effect
of accounting changes adopted in 1993.
Earnings per share were $.33, an increase of 10% over last year's $.30 before
the cumulative effect of accounting changes. Foreign currency translation
decreased earnings per share by an estimated $.04. Without this adverse impact,
earnings per share would have increased 23%.
Financial Condition
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During the first quarter of 1994, cash provided by operations was $115 million,
compared with $83 million during the first quarter of last year. Debt remained
basically unchanged during the first quarter of 1994. The percentage of debt to
capitalization (defined as the sum of shareholders' equity, net non-current
deferred income tax liabilities, and debt) was 38.7%, lower than 39.2% a year
ago. Last year's ratio has been restated to reflect the cumulative effect of
accounting changes adopted in fiscal 1993 retroactive to October 1, 1992.
Capital expenditures for the quarter were $30 million compared with $40 million
during the first quarter of last year. For the full year, capital expenditures
are expected to be more than 15% lower than last year's $184 million.
Because of its strong credit ratings, the Company believes it has the capacity
to arrange significant additional borrowings should the need arise.
During the first quarter of 1994, the Company repurchased 1.7 million shares of
its common stock at an average cost of $36.48. At December 31, 1993,
authorization from the Board of Directors remained to acquire an additional 3.5
million shares.
At its November 1993 meeting, the Board of Directors increased the Company's
quarterly dividend from $.165 to $.185 per common share.
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PART II - OTHER INFORMATION
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Item 6. Exhibits and Reports on Form 8-K.
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a) Exhibits
11 - Computation of Earnings Per Share.
b) Reports on Form 8-K
There were no reports on Form 8-K filed for the quarter ended
December 31, 1993.
SIGNATURE
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 thereunto duly authorized.
Becton, Dickinson and Company
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(Registrant)
Date February 11, 1994
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/s/Robert A. Reynolds
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Robert A. Reynolds
Vice President - Finance and Controller
(Principal Financial and Accounting Officer)
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EXHIBIT INDEX
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<TABLE>
<CAPTION>
Exhibit Method of Sequential
Number Description Filing Page Number
- --------- ----------------------- ----------- -----------
<S> <C> <C> <C>
11 Computation of Earnings Filed with 11
Per Share this report
</TABLE>
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<PAGE>
BECTON, DICKINSON AND COMPANY Exhibit 11
COMPUTATION OF EARNINGS PER SHARE
(All amounts in thousands, except per share data)
<TABLE>
<CAPTION>
Three Months Ended
December 31,
---------------------
PRIMARY EARNINGS PER SHARE 1993 1992*
-------------------------- -------- ---------
<S> <C> <C>
Net Income:
Income before cumulative effect
of accounting changes $25,696 $ 23,344
Less preferred stock dividends (939) (958)
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Income before cumulative effect of
accounting changes applicable to common stock 24,757 22,386
Cumulative effect of accounting changes, net of taxes - (141,057)
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Net income(loss) applicable to common stock $24,757 $(118,671)
======== =========
Shares:
Average shares outstanding 73,888 76,059
Add dilutive stock equivalents from stock plans 917 1,445
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Weighted average number of common and common
equivalent shares outstanding during the year 74,805 77,504
======== =========
Earnings per share:
Income before cumulative effect
of accounting changes $.33 $ .30
Cumulative effect of accounting changes, net of taxes - (1.83)
-------- ---------
Net income(loss) $.33 $(1.53)
======== =========
FULLY DILUTED EARNINGS PER SHARE
--------------------------------
Net Income:
Income before cumulative effect of accounting
changes applicable to common stock $24,757 $ 22,386
Add preferred stock dividends
using the "if converted" method 939 958
Less additional ESOP contribution, using
the "if converted" method (390) (430)
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Income before cumulative effect of accounting
changes for fully diluted earnings per share 25,306 22,914
Cumulative effect of accounting changes, net of taxes - (141,057)
-------- ---------
Net income(loss) for fully diluted earnings per share $25,306 $(118,143)
======== =========
Shares:
Average shares outstanding 73,888 76,059
Add:
Dilutive stock equivalents from stock plans 917 1,445
Shares issuable upon conversion
of preferred stock 1,568 1,594
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Weighted average number of common shares used
in calculating fully diluted earnings per share 76,373 79,098
======== =========
Fully diluted earnings per share:
Income before
cumulative effect of accounting changes $.33 $ .29
Cumulative effect of accounting changes, net of taxes - (1.78)
-------- ---------
Net income(loss) $.33 $(1.49)
======== =========
</TABLE>
* Restated to reflect adoption of SFAS Nos. 106, 109 and 112 in the fourth
quarter of fiscal 1993 retroactive to October 1, 1992.
-11-
