BD’s management operates the business consistent with the following core strategies:
In assessing the outcomes of these strategies and BD’s financial condition and operating performance, management generally reviews quarterly forecast data, monthly actual results, segment sales and other similar information. We also consider trends related to certain key financial data, including gross profit margin, selling and administrative expense, investment in research and development and cash flows.
The results of our strategies are reflected in our first quarter 2007 financial and operational performance. BD reported first quarter revenues of $1.502 billion, an increase of 8% from the same period a year ago, and reflected volume increases of approximately 6% and favorable foreign currency translation of approximately 2%. Sales in the United States of safety-engineered devices grew 8% to $247 million in the first quarter of 2007, compared with the prior year’s period. International sales of safety-engineered devices grew 30% to $96 million in the first quarter of 2007, compared with the prior year’s period. Overall, international revenue growth of 7% for the three-month period included a 4% favorable impact of foreign currency translation. As further discussed in our 2006 Annual Report on Form 10-K, we face currency exposure that arises from translating the results of our worldwide operations to the U.S. dollar at exchange rates that fluctuate from the beginning of the period. We purchase option and forward contracts to partially protect against adverse foreign exchange rate movements.
Our balance sheet remains strong, with net cash provided by continuing operations at approximately $276 million for the three months ended December 31, 2006, and our debt-to-capitalization ratio (shareholders' equity, net non-current deferred income tax liabilities, and debt) decreasing to 21.9% at December 31, 2006 from 25.8% at September 30, 2006.
Our ability to sustain our long-term growth will depend on a number of factors, including our ability to expand our core business (including geographical expansion), develop innovative new products with higher gross profit margins across our business segments, and continue to improve operating efficiency and organizational effectiveness. Numerous factors can affect our ability to achieve these goals, including without limitation, U.S. and global economic conditions, increased competition and healthcare cost containment initiatives. We believe that there are several important factors relating to our business that tend to reduce the impact on BD of any potential economic or political events in countries in which we do business, including the effects of possible healthcare system reforms. For example, since many of our products are used in essential medical care, demand for such products tends not to be significantly affected by economic fluctuations. Other factors include the international nature of our business and our ability to meet the needs of the worldwide healthcare industry with cost-effective and innovative products.
BD purchases supplies of resins, which are oil-based components used in the manufacture of certain products. During the first quarter of fiscal 2007, we incurred slightly higher resin purchase costs, primarily due to increases in world oil prices during the late summer 2006. While the impact of further increases, if any, in resin purchase costs is not expected to be significant on our fiscal 2007 operating results, such increases could impact future operating results. We would attempt to mitigate any such impact through continued improvement in our profit margins resulting from increased sales of products with higher margins, cost reduction programs, productivity improvements and, to a lesser extent, periodic price increases and adjustments.
Our anticipated revenue growth over the next three years, excluding any impact relating to foreign exchange, is expected to come from the following:
On December 20, 2006, we acquired the 93.8% of the outstanding stock of TriPath Imaging, Inc. (“TriPath”) which we did not previously own, for a cash purchase price of $9.25 per share, or approximately $362 million. TriPath develops, manufactures, markets and sells innovative solutions to improve the clinical management of cancer, including detection, diagnosis, staging and treatment. In connection with the acquisition, BD incurred a charge of $115 million for acquired in-process research and development. See Note 8 of the Condensed Consolidated Financial Statements for additional discussion.
During the first quarter of 2007, we received an unsolicited offer for the purchase of the BGM product line. On December 11, 2006, we sold the product line for $20 million and recognized a pre-tax gain on sale of $15 million. Following the sale, prior period Condensed Consolidated
15
Statements of Income and Cash Flows and related discussions have been restated to separately present the results of the BGM product line as discontinued operations.
Results of Operations
Revenues
Refer to Note 5 in the Notes to Condensed Consolidated Financial Statements for segment financial data.
Medical Segment
First quarter revenues of $826 million represented an increase of $76 million, or 10%, from the prior year’s quarter, including an estimated $15 million, or 2%, favorable impact due to foreign currency translation. Strong sales of Pharmaceutical Systems products and safety-engineered devices contributed to this growth. Global sales of safety-engineered products were $173 million, as compared with $154 million in the prior year’s quarter.
Diagnostics Segment
First quarter revenues of $442 million represented an increase of $8 million, or 2%, over the prior year quarter, including an estimated $7 million, or 2%, favorable impact due to foreign currency translation. The Preanalytical Systems unit of the segment reported revenue growth of 8% over the prior year’s quarter. Global sales of safety-engineered products totaled $169 million, compared with $148 million in the prior year’s quarter due, in large part, to strong sales ofBD Vacutainer Push Button Blood Collection Sets in the current year’s quarter. Revenues in the Diagnostic Systems unit of the segment decreased 5%. The decrease is primarily related to an approximate $24 million decline in sales of flu diagnostics test sales in Japan, as compared to the prior year period. This decrease in flu diagnostics sales more than offset the growth from theBD ProbeTec ET andBD Phoenix instruments. Revenue in the prior year’s quarter reflected strong sales of flu diagnostics tests to distributors in Japan. Also contributing to the decline in the first quarter is a relatively mild flu season in Japan and the United States in 2007 and the transition to an internally-sourced flu test that has yet to receive market acceptance in Japan. There can be no assurance that our flu test will achieve market acceptance in Japan.
Biosciences Segment
First quarter revenues of $233 million represented an increase of $24 million, or 11%, over the prior year’s quarter, including an estimated $4 million, or 2%, favorable impact due to foreign currency translation. Research instruments and reagent sales continued to be the primary growth contributors, driven by increased demand for research analyzers and clinical reagents.
Segment Operating Income
Medical Segment
Segment operating income for the first quarter was $246 million of Medical revenues, compared with $224 million in the prior year’s quarter, or 29.8% of Medical revenues in both years. Gross profit margin declined slightly due to unfavorable mix between business units, combined with higher resin-based raw material costs. See further discussion on gross profit margin below. Selling and administrative expense as a percent of Medical revenues in the first quarter of 2007 was moderately lower than the first quarter of 2006, due to tight controls in administrative
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expenses. Research and development expenses for the quarter increased $3.5 million, or 17%, reflecting increased investment in new products and platforms.
Diagnostics Segment
Segment operating income for the first quarter decreased $120 million from $119 million in the prior year’s quarter, primarily due to the in-process research and development charge of $115 million associated with the TriPath acquisition, as well as the operating results of GeneOhm, which was acquired in the second quarter of 2006. Gross profit margin was higher than the first quarter of 2006, primarily due to a favorable sales mix of products with higher margins, as well as productivity gains. See further discussion on gross profit margin below. Selling and administrative expense as a percentage of Diagnostics revenues in the first quarter of 2007 was higher than the comparable amount in the first quarter of 2006, largely due to the impact of GeneOhm, partially offset by tight controls on spending. Research and development expenses in the first quarter of 2007 increased $119 million, which includes the in-process research and development charge. Research and development expenses also reflect investment in new products and incremental GeneOhm expenses.
Biosciences Segment
Segment operating income for the first quarter was $56 million, or 24.1%, of Biosciences revenues, compared with $49 million, or 23.6%, in the prior year’s quarter. The increase in operating income as a percentage of revenues reflected increased sales of products with higher margins. See further discussion on gross profit margin below. Selling and administrative expense as a percent of Biosciences revenues for the quarter was slightly lower compared with the prior year’s quarter. Research and development expenses in the quarter increased $2.2 million, or 14%, reflecting increased spending on new product development.
Gross Profit Margin
Gross profit margin was 52.8% for the first quarter, compared with 52.2% for the comparable prior year period. Gross profit margin in the first quarter of fiscal 2007 as compared with the prior period reflected an estimated 0.7% net improvement relating to increased sales of products with relatively higher margins and an estimated 0.2% improvement associated primarily with productivity gains. These improvements were partially offset by an estimated 0.3% impact from foreign currency translation. We expect gross profit margin to improve, on a reported basis, by about 70 basis points in fiscal 2007, with TriPath operations accounting for 20 basis points.
Selling and Administrative Expense
Selling and administrative expense was 25.6% of revenues for the first quarter, compared with 25.0% for the prior year’s period. Aggregate expenses for the current period reflect increases in base spending of $12 million, in line with inflation, and in expenses associated with the GeneOhm and TriPath operations of $10 million. Increases in selling and administrative expense also reflect the absence of proceeds from insurance settlements of $7 million received in the prior year’s quarter in connection with the Company’s previously owned latex glove business, as well as an unfavorable foreign exchange impact of $6 million. Selling and administrative expense as a percentage of revenues is expected to increase, on a reported basis, by about 10 basis points in fiscal 2007, with 20 basis points attributable to TriPath’s operations.
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Research and Development Expense
Research and development expense was $195 million, or 13.0% of revenues for the first quarter, compared with the prior year’s amount of $68 million, or 4.9% of revenues. The in-process research and development charge of $115 million associated with the TriPath acquisition was included in Research and development expense in the first quarter of 2007. Research and development expenditures also reflects increased spending for new programs in each of our segments. We anticipate Research and development expense to increase, on a reported basis, about 35% for fiscal 2007, with approximately 15% due to the impact of the in-process research and development charges for TriPath in fiscal 2007 and GeneOhm in fiscal 2006 and 5% due to the impact of TriPath’s operations in fiscal 2007.
Non-Operating Expense and Income
Interest income was $16 million in the first quarter, compared with $15 million in the prior year’s period, and reflected higher interest rates and cash balances. Interest expense was $13 million in the first quarter, compared with $17 million in the prior year’s period, which reflects lower debt levels.
Income Taxes
The income tax rate was 39.0% for the first quarter, compared with the prior year’s rate of 27.2% . The increase is principally due to the non-deductibility of the acquired in-process research and development charge associated with the TriPath acquisition, partially offset by the impact of approximately 2.0% resulting from the retroactive reinstatement of the research and experimentation tax credit. The prior year’s first quarter rate also reflected the impact of approximately 0.3% relating to proceeds received from insurance settlements. The Company expects the reported tax rate for the full year to be approximately 29%.
Income from Continuing Operations and Diluted Earnings Per Share from ContinuingOperations
Income from continuing operations and diluted earnings per share from continuing operations for the first quarter of 2007 were $131 million and 51 cents, respectively. Income from continuing operations and diluted earnings per share from continuing operations for the prior year’s first quarter were $224 million and 87 cents, respectively. The in-process research and development charge associated with the TriPath acquisition reduced income from continuing operations for the current quarter by $115 million and diluted earnings per share from continuing operations by 45 cents. Proceeds from insurance settlements increased income from continuing operations in the prior year’s quarter by $4 million and diluted earnings per share from continuing operations by 2 cents.
Liquidity and Capital Resources
Net cash provided by continuing operating activities, which continues to be our primary source of funds to finance operating needs and capital expenditures, was $276 million during the first quarter of 2007, compared with $173 million in the same period in 2006. Change in working capital was $24 million in the first three months of 2007, as compared with the prior year’s period of $61 million, and reflects an increase in accounts payable and accrued expenses. Net cash provided by continuing operations in the first quarters of 2007 and 2006 was reduced by changes in the pension obligation, resulting primarily from discretionary cash contributions of $75 million and $150 million, respectively.
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Net cash used for continuing investing activities for the first quarter of the current year was $450 million, compared with $89 million in the prior year period. The current year amount reflects the payment in the first quarter of $340 million of net cash paid for the TriPath acquisition. Capital expenditures were $111 million in the first three months of 2007 and $64 million in the same period in 2006. We expect capital spending for 2007 to be in the $600 to $650 million range.
Net cash used for continuing financing activities for the first quarter of the current year was $306 million, while in the prior year period there was net cash provided by continuing financing activities of $50 million. As of December 31, 2006, total debt of $1.2 billion represented 21.9% of total capital (shareholders' equity, net non-current deferred income tax liabilities, and debt), versus 25.8% at September 30, 2006. Short-term debt decreased to 18% of total debt at the end of the three-month period, from 31% at September 30, 2006.
For the first quarter of the current year, the Company repurchased approximately $112 million of its common stock, compared with approximately $101 million of its common stock in the prior year period. At December 31, 2006, authorization to repurchase an additional 5.5 million common shares remained. Stock repurchases were offset, in part, by the issuance of common stock from treasury upon the exercise of stock options by employees.
We have in place a commercial paper borrowing program that is available to meet our short-term financing needs, including working capital requirements. Borrowings outstanding under this program were $200 million at December 31, 2006. During the quarter, we amended our syndicated credit facility to increase the amount available from $900 million to $1 billion and extend the expiration date from August 2009 to December 2011. This credit facility, under which there were no borrowings outstanding at December 31, 2006, provides backup support for our commercial paper program and can also be used for other general corporate purposes. This credit facility includes a single financial covenant that requires BD to maintain an interest expense coverage ratio (ratio of earnings before income taxes, depreciation and amortization to interest expense) of not less than 5-to-1 for the most recent four consecutive fiscal quarters. On the last eight measurement dates, this ratio has ranged from 17-to-1 to 21-to-1. In addition, we have informal lines of credit outside the United States.
BD’s ability to generate cash flow from operations, issue debt, enter into other financing arrangements and attract long-term capital on acceptable terms could be adversely affected in the event there was a material decline in the demand for BD’s products, deterioration in BD’s key financial ratios or credit ratings or other significantly unfavorable changes in conditions. While a deterioration in the Company’s credit ratings would increase the costs associated with maintaining and borrowing under its existing credit arrangements, such a downgrade would not affect the Company’s ability to draw on these credit facilities, nor would it result in an acceleration of the scheduled maturities of any outstanding debt.
Adoption of New Accounting Standards
In July 2006, the Financial Accounting Standards Board (the “FASB”) issued Interpretation No. 48 “Accounting for Uncertainty in Income Taxes” (“FIN 48”). FIN 48 prescribes guidance for recognition, measurement, and disclosure of uncertain tax positions recognized in financial statements in accordance with Statement of Financial Accounting Standards No. 109 “Accounting for Income Taxes”. The provisions of this interpretation will be applied to all tax positions upon its initial adoption. The Company is required to adopt this interpretation in fiscal
19
year 2008 and the cumulative effect, if any, of applying this interpretation will be reported as an adjustment to the opening balance of retained earnings for such fiscal year. The Company is currently evaluating the impact of FIN 48 on its consolidated financial statements.
In September 2006, the FASB issued SFAS No. 158 “Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans, an amendment of FASB Statements No. 87, 88, 106 and 132(R)” (“SFAS No. 158”). This statement requires the Company to recognize the overfunded or underfunded status of a defined benefit postretirement plan as an asset or liability in its consolidated balance sheet and to recognize changes in the funded status in the year in which the changes occur through comprehensive income. SFAS No. 158 also requires the funded status of a plan to be measured as of the balance sheet date and provides for additional disclosure requirements. As required, the Company will adopt the recognition and disclosure provision of this statement at the end of fiscal year 2007. Based on the underfunded status of the plans as of September 30, 2006, this provision is expected to be material to the Company’s consolidated balance sheet. The Company expects no impact to the measurement date of its plans, as the plans are currently measured at its fiscal year-end.
Cautionary Statement Pursuant to Private Securities Litigation Reform Act of 1995 -- “SafeHarbor” for Forward-Looking Statements
The Private Securities Litigation Reform Act of 1995 (the “Act”) provides a safe harbor for forward-looking statements made by or on behalf of BD. BD and its representatives may from time to time make certain forward-looking statements, both written and oral, including statements contained in this report and filings with the Securities and Exchange Commission (“SEC”) and in our other reports to shareholders. Forward-looking statements may be identified by the use of words like “plan,” “expect,” “believe,” “intend,” “will,” “anticipate,” “estimate” and other words of similar meaning in conjunction with, among other things, discussions of future operations and financial performance, as well as our strategy for growth, product development, regulatory approvals, market position and expenditures. All statements which address operating performance or events or developments that we expect or anticipate will occur in the future -- including statements relating to volume growth, sales and earnings per share growth, gross profit margins, various expenditures and statements expressing views about future operating results -- are forward-looking statements within the meaning of the Act.
Forward-looking statements are based on current expectations of future events. The forward-looking statements are and will be based on management's then-current views and assumptions regarding future events and operating performance, and speak only as of their dates. Investors should realize that if underlying assumptions prove inaccurate or unknown risks or uncertainties materialize, actual results could vary materially from our expectations and projections. Investors are therefore cautioned not to place undue reliance on any forward-looking statements. Furthermore, we undertake no obligation to update or revise any forward-looking statements whether as a result of new information, future events and developments or otherwise.
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The following are some important factors that could cause our actual results to differ from our expectations in any forward-looking statements:
Regional, national and foreign economic factors, including inflation and fluctuations ininterest rates and foreign currency exchange rates and the potential effect of such fluctuationson revenues, expenses and resulting margins.
We operate in a highly competitive environment. New product introductions by our currentor future competitors could adversely affect our ability to compete in the global market. Forexample, new forms of inhaled or other methods of insulin delivery, such as the new inhaledform of insulin approved by the U.S. Food and Drug Administration (“FDA”) and Europeanauthorities, could adversely impact sales of our insulin injection devices. Patents attained bycompetitors, particularly as patents on our products expire, may also adversely impact ourcompetitive position.
Changes in domestic and foreign healthcare industry practices and regulations resulting inincreased pricing pressures, including the continued consolidation among healthcareproviders; trends toward managed care and healthcare cost containment and government lawsand regulations relating to sales and promotion, reimbursement and pricing generally.
The effects, if any, of governmental and media activities relating to U.S. Congressionalhearings regarding the business practices of group purchasing organizations, which negotiateproduct prices on behalf of their member hospitals with BD and other suppliers.
Fluctuations in the cost and availability of raw materials and the ability to maintain favorablesupplier arrangements and relationships (particularly with respect to sole-source suppliers)and the potential adverse effects of any disruption in the availability of such raw materials.
- Our ability to obtain the anticipated benefits of any restructuring programs, if any, that wemay undertake.
Adoption of or changes in government laws and regulations affecting domestic and foreignoperations, including those relating to trade, monetary and fiscal policies, taxation,environmental matters, sales practices, price controls, licensing and regulatory approval ofnew products, or changes in enforcement practices with respect to any such laws andregulations.
- Fluctuations in U.S. and international governmental funding and policies for life scienceresearch.
Difficulties inherent in product development, including the potential inability to successfullycontinue technological innovation, complete clinical trials, obtain regulatory approvals in theUnited States and abroad, or gain and maintain market approval of products, as well as thepossibility of encountering infringement claims by competitors with respect to patent or otherintellectual property rights, all of which can preclude or delay commercialization of aproduct.
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Pending and potential litigation or other proceedings adverse to BD, including antitrustclaims, product liability claims, and patent infringement claims, as well as other risks anduncertainties detailed from time to time in our SEC filings.
- The effects, if any, of adverse media exposure or other publicity regarding BD’s business oroperations.
Our ability to achieve earnings forecasts, which are generated based on projected volumesand sales of many product types, some of which are more profitable than others. There canbe no assurance that we will achieve the projected level or mix of product sales.
The effect of market fluctuations on the value of assets in BD’s pension plans and thepossibility that BD may need to make additional contributions to the plans as a result of anydecline in the value of such assets.
- Our ability to effect infrastructure enhancements and incorporate new systems technologiesinto our operations.
Product efficacy or safety concerns resulting in product recalls, regulatory action on the partof the FDA (or foreign counterparts) or declining sales.
Economic and political conditions in international markets, including civil unrest, terroristactivity, governmental changes and restrictions on the ability to transfer capital acrossborders.
The effects of natural disasters, including hurricanes or pandemic diseases, on our ability tomanufacture our products, particularly where production of a product line is concentrated inone or more plants, or on our ability to source components from suppliers that are needed forsuch manufacturing.
Our ability to penetrate developing and emerging markets, which also depends on economicand political conditions, and how well we are able to acquire or form strategic businessalliances with local companies and make necessary infrastructure enhancements toproduction facilities, distribution networks, sales equipment and technology.
The impact of business combinations, including acquisitions and divestitures, both internallyfor BD and externally, in the healthcare industry.
- Issuance of new or revised accounting standards by the Financial Accounting StandardsBoard or the SEC.
The foregoing list sets forth many, but not all, of the factors that could impact our ability to achieve results described in any forward-looking statements. Investors should understand that it is not possible to predict or identify all such factors and should not consider this list to be a complete statement of all potential risks and uncertainties.
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Item 3. Quantitative and Qualitative Disclosures About Market Risk
There have been no material changes in information reported since the end of the fiscal year ended September 30, 2006.
Item 4. Controls and Procedures
An evaluation was carried out by BD’s management, with the participation of our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of BD’s disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934) as of December 31, 2006. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the design and operation of these disclosure controls and procedures were, as of the end of the period covered by this report, adequate and effective to ensure that material information relating to BD and its consolidated subsidiaries would be made known to them by others within these entities. There were no changes in our internal control over financial reporting during the fiscal quarter ended December 31, 2006 identified in connection with the above-referenced evaluation that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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PART II - OTHER INFORMATION
| Item 1. | Legal Proceedings We are involved, both as a plaintiff and a defendant, in various legal proceedings which arise in the ordinary course of business, including product liability and environmental matters as set forth in our 2006 Annual Report on Form 10-K. Since September 30, 2006, the following developments have occurred with respect to the legal proceedings in which we are involved: Healthcare Research & Development Institute, LLC As previously reported, BD has received a subpoena issued by the Connecticut Attorney General and a subpoena issued by the Illinois Attorney General, each seeking documents and information relating to BD’s participation as a member of Healthcare Research & Development Institute, LLC (“HRDI”), a healthcare trade organization. In January 2007, it was reported that HRDI entered into a settlement with the Attorneys General of Connecticut and Florida with respect to the investigation being conducted by the Connecticut Attorney General, although the Connecticut Attorney General is still investigating certain corporate members of HRDI. The investigation of the Illinois Attorney General is ongoing. BD believes that its participation in HRDI complied fully with the law and has responded to these subpoenas. BD has not received any communication with respect to either investigation since completing its document production. Summary Given the uncertain nature of litigation generally, BD is not able in all cases to estimate the amount or range of loss that could result from an unfavorable outcome of the litigation to which BD is a party. In accordance with U.S. generally accepted accounting principles, BD establishes accruals to the extent probable future losses are estimable (in the case of environmental matters, without considering possible third-party recoveries). In view of the uncertainties of litigation, BD could incur charges in excess of any currently established accruals and, to the extent available, excess liability insurance. In the opinion of management, any such future charges, individually or in the aggregate, could have a material adverse effect on BD’s consolidated results of operations and consolidated cash flows in the period or periods in which they are recorded or paid. |
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| Item 1A. | Risk Factors |
| | |
| | There have been no material changes from the risk factors disclosed in Part 1, Item 1A, of our Annual Report on Form 10-K for the 2006 fiscal year. |
| | |
| Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds |
| | |
| | The table below sets forth certain information regarding our purchases of common stock of BD during the fiscal quarter ended December 31, 2006. |
| | |
Issuer Purchases of Equity Securities
| | | | | | | Total Number of | | |
| | | | | | | Shares Purchased | | Maximum Number |
| | | | | | | as Part of | | of Shares that May |
| | | | | Average Price | | Publicly | | Yet Be Purchased |
| For the three months ended | | Total Number of | | Paid per | | Announced Plans | | Under the Plans or |
| December 31, 2006 | | Shares Purchased (1) | Share | | or Programs (2) | | Programs (2) |
|
|
|
|
|
|
| October 1 – 31, 2006 | | 952 | | $70.13 | | - | | 7,063,814 |
|
|
|
|
|
|
| November 1 – 30, 2006 | | 753,376 | | $71.42 | | 750,000 | | 6,313,814 |
|
|
|
|
|
|
| December 1 – 31, 2006 | | 810,769 | | $72.55 | | 810,000 | | 5,503,814 |
|
|
|
|
|
|
| Total | | 1,565,097 | | $72.00 | | 1,565,000 | | 5,503,814 |
|
|
|
|
|
|
| | (1) | Includes 3,491 shares purchased during the quarter in open market transactions by the trustee under BD’s Deferred Compensation Plan and 1996 Directors’ Deferral Plan, and 1,606 shares delivered to BD in connection with stock option exercises. |
| | | |
| | (2) | These repurchases were made pursuant to a repurchase program covering 10 million shares authorized by the Board of Directors of BD on November 22, 2005 (the “2005 Program”). There is no expiration date for the 2005 Program. |
| |
| Item 3. | Defaults Upon Senior Securities. |
| | |
| | Not applicable. |
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Item 4. Submission of Matters to a Vote of Security Holders.
There were no matters submitted to a vote of security holders during the fiscal quarter ended December 31, 2006.
Our Annual Meeting of Shareholders was held on January 30, 2007, at which the following matters were voted upon:
| i.) | A management proposal for the election of five directors for the terms indicated below was voted upon as follows: |
| | | | | | | | |
| | | | | Votes |
| Nominee | | Term | | For Votes | | Withheld | |
| Claire M. Fraser-Liggett | | 2 Years | | 221,040,823 | | 3,017,370 | |
| Henry P. Becton, Jr. | | 3 Years | | 219,133,338 | | 4,924,855 | |
| Edward F. DeGraan | | 3 Years | | 214,048,405 | | 10,009,788 | |
| Adel A. F. Mahmoud | | 3 Years | | 221,372,532 | | 2,685,661 | |
| James F. Orr | | 3 Years | | 220,025,639 | | 4,032,554 | |
The directors whose term of office as a director continued after the meeting are: Basil L. Anderson, Edward J. Ludwig, Gary A. Mecklenburg, Willard J. Overlock, Jr., James E. Perrella, Bertram L. Scott and Alfred Sommer.
| ii.) | A management proposal to ratify the selection of Ernst & Young, LLP as independent registered public accounting firm for the fiscal year ending September 30, 2007 was voted upon. 220,918,988 shares were voted for the proposal, 1,649,598 shares were voted against, and 1,489,607 shares abstained. |
| | |
| iii.) | A management proposal to amend the 2004 Employee and Director Equity-Based Compensation Plan was voted upon. 183,174,467 shares were voted for the proposal, 18,429,334 shares were voted against, 1,914,459 shares abstained, and there were 20,539,933 broker non-votes. |
| |
| iv.) | A shareholder proposal requesting that the Board of Directors take the necessary steps to provide for cumulative voting in the election of directors was voted upon. 84,694,869 shares were voted for the proposal, 116,625,302 shares were voted against, 2,196,731 shares abstained, and there were 20,541,291 broker non-votes. |
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| Item 5. | Other Information. | | |
| | | | |
| | Not applicable. | | |
| | | | |
| Item 6. | Exhibits | | |
| | | | |
| | Exhibit 10 (d)(i) | | Deferred Compensation Plan, as amended and restated as of January 30, 2007. |
| | | | |
| | Exhibit 10(d)(ii) | | 1996 Directors’ Deferral Plan, as amended and restated as of January 30, 2007. |
| | | | |
| | Exhibit 31 | | Certifications of Chief Executive Officer and Chief Financial Officer, pursuant to SEC Rule 13a - 14(a). |
| | | | |
| | Exhibit 32 | | Certifications of Chief Executive Officer and Chief Financial Officer, pursuant to Rule 13a - 14(b) and Section 1350 of Chapter 63 of Title 18 of the U.S. Code. |
| | | | |
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SIGNATURES
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 |
| | | (Registrant) |
| |
| Dated: February 6, 2007 | | |
| |
| |
| |
| | | /s/ John R. Considine |
| | | John R. Considine |
| | | Senior Executive Vice President and |
| | | Chief Financial Officer |
| | | (Principal Financial Officer) |
| |
| |
| |
| |
| | | /s/ William A. Tozzi |
| | | William A. Tozzi |
| | | Vice President and Controller |
| | | (Chief Accounting Officer) |
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INDEX TO EXHIBITS
| Exhibit Number | | Description of Exhibits |
| |
| 10(d)(i) | | Deferred Compensation Plan, as amended and restated as of January 30, 2007. |
| |
| 10(d)(ii) | | 1996 Directors’ Deferral Plan, as amended and restated as of January 30, 2007. |
| |
| 31 | | Certifications of Chief Executive Officer and Chief Financial Officer, pursuant to SEC Rule 13a - 14(a). |
| |
| 32 | | Certifications of Chief Executive Officer and Chief Financial Officer, pursuant to Rule 13a - 14(b) and Section 1350 of Chapter 63 of Title 18 of the U.S. Code. |
| | | |
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