Business Context and Reporting Period
Company: Becton, Dickinson and Company (BD)
Filing Type: Form 8-K (Current Report)
Date of Report: August 3, 2017
Reporting Period: Third fiscal quarter ended June 30, 2017
This filing announces the issuance of a press release (Exhibit 99.1) detailing financial results for the third quarter of fiscal year 2017. The report focuses on the methodology for presenting non-GAAP financial measures to assist investors in evaluating underlying performance.
Key Financial Metrics
Note: This 8-K filing serves as a disclosure of the press release and non-GAAP methodology. It does not contain specific numerical values for revenue, profit, cash flow, or debt.
- Revenue: The filing discusses the presentation of "comparable" revenue growth rates, which exclude the impact of divestitures (specifically the Respiratory Solutions business) and foreign currency translation effects.
- Earnings Per Share (EPS): The company presents "adjusted EPS" for the third quarter and first nine months of 2017. This metric excludes items affecting comparability, such as purchase accounting adjustments, acquisition-related costs, restructuring costs, financing costs, debt extinguishment losses, lease contract modifications, litigation reserve reversals, and pension settlement charges.
- Non-GAAP Adjustments: Adjustments are made to remove the dilutive impact of shares issued for the pending acquisition of C.R. Bard, Inc. and dividends on preferred stock issued for that financing.
Material Changes and Comparability
The filing highlights several factors that impact period-to-period comparability, necessitating the use of non-GAAP measures:
- Divestitures: The sale of the Respiratory Solutions business affects revenue growth comparisons.
- Foreign Currency: Exchange rate fluctuations are significant factors in operating results and are neutralized in certain growth rate presentations.
- Acquisition Activity: The pending acquisition of C.R. Bard, Inc. introduces specific financing costs and share dilution impacts that are excluded from adjusted EPS.
- One-Time Items: Various charges and reversals (litigation, restructuring, debt extinguishment) are excluded to show underlying operational performance.
Guidance, Outlook, and Management Commentary
Management Commentary: Management utilizes these non-GAAP measures for internal evaluation, budget planning, and peer comparisons. They believe these adjustments provide a reasonable measure of underlying performance by removing items outside of ordinary operations.
Guidance: The filing mentions that the company presents estimated revenue growth and estimated EPS for the full fiscal year 2017 on a comparable, foreign currency-neutral basis. However, specific numerical guidance targets are not included in this text.
Risks and Limitations: Management cautions that non-GAAP results should not be considered in isolation or as a substitute for GAAP results. Excluded items may have a material impact on net income and cash flows. Additionally, these measures may differ from similar metrics used by other companies.
Investor Verification Checklist
- Review the full text of the press release (Exhibit 99.1) for specific numerical values regarding Q3 2017 revenue, net income, and EPS.
- Verify the reconciliation between GAAP and non-GAAP financial measures to understand the magnitude of excluded items.
- Assess the impact of the pending C.R. Bard acquisition on future capital structure and dilution.
- Monitor the status of the Respiratory Solutions divestiture and its ongoing effect on revenue comparability.
- Check for updates on foreign currency exchange rates and their potential impact on full-year 2017 results.