Question-and-Answer Session
Operator
(Operator Instructions). Our first question is coming from Rick Weiss with Leerink Swann.
Rick Weiss - Leerink Swann
Let me start off with the ERP system spend and the impact on gross margin. If I understood, you're saying the pension and the ERP spend was impacting by three percentage points. Pension is ongoing. What is the ERP spend done and maybe what do you hope to get out of it after it is done?
Ed Ludwig
Well, I'll take a shot at that. It was an impact really on our bottom line growth.
Vince Forlenza
Most of it is going to reside in SSG&A on the ERP and of the 3% headwind, about half of it is ERP and about half of it is an increase in pension expense as a result of this discount rate. You may recall that in 1998 we implemented a program here of SAP which really covered about 40% to 50% of our then known universe, and really got us moving very nicely down the road of homogenizing our systems for global information flow and continuous improvement.
It is now 2009 and that system has pretty well run its course, plus the remainder of the company remains in diverse and non-related systems that have a hard time talking with each other. So, the goal of the program, as Vince pointed out is; A, to upgrade the ERP Environment from Version 4 and change to Version 6 and the other part of the program is to get whatever is not SAP of BD into SAP, and we've gotten very smart about doing this. So I'm not going to be projecting dollars and cents.
We have a very strong team based on people who experienced this the first time at BD. People we brought in from other companies and our consulting partners. Overall, this will enable us to continue to be confident in our margin expansion commitment, which is in the order of 50 basis points a year recently, and next year, more of that's coming out of SSG&A. Each of our overhead functions, our G&A functions, human resources, finance and IT in particular, have global transformation efforts underway which will result in productivity.
So, we're very positive about that. It's a good investment for the future. However, once it ramps up in 2010, we think that that's not going to recur in 2011. So you get to a certain run rate which is the headwind we're experiencing in '10, after that it kind of gets blended in and we move on from there.
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