Business Context and Reporting Period
Company: Becton, Dickinson and Company (BD)
Filing Type: Form 8-K (Current Report)
Date of Report: November 3, 2016
Reporting Period: Fourth fiscal quarter and full fiscal year ended September 30, 2016.
This filing announces the issuance of a press release (Exhibit 99.1) detailing financial results for the period. The report focuses on the methodology for presenting non-GAAP financial measures to assist investors in evaluating underlying performance.
Key Financial Metrics and Methodology
The filing text does not provide specific numerical values for revenue, profit, cash flow, margins, debt, or liquidity. Instead, it outlines the definitions and adjustments applied to these metrics in the accompanying press release:
- Revenues: BD presents "adjusted revenues" excluding the amortization of a deferred revenue write-down from the March 2015 CareFusion acquisition. Adjustments are also made to eliminate foreign currency translation effects and, for Q4, the impact of a distribution agreement change in the Respiratory Solutions unit. "Organic" revenue excludes acquisitions and divestitures.
- Earnings Per Share (EPS): "Adjusted EPS" excludes purchase accounting adjustments, acquisition-related financing, transaction/integration/restructuring costs, pension settlement charges, workforce reduction liability adjustments, and litigation charges (including tax impacts). It also adjusts for the dilutive impact of shares issued in the CareFusion acquisition.
- Comparability: Management provides "comparable basis" revenue for fiscal year 2016, assuming the CareFusion acquisition occurred at the start of fiscal 2015.
Material Changes and Adjustments
The filing details specific adjustments made to ensure period-to-period comparability, noting that without these, results would be significantly impacted by:
- Currency Fluctuations: Foreign currency translation effects are eliminated to show underlying performance.
- Acquisitions and Divestitures: The impact of the CareFusion acquisition and the divestiture of the Respiratory Solutions unit (and other 2016/2017 divestitures) is adjusted for in organic and forward-looking metrics.
- One-Time Costs: Restructuring, integration, and litigation costs are excluded from adjusted EPS.
Guidance, Outlook, and Management Commentary
Outlook: Management presents estimated growth in adjusted revenues for fiscal year 2017, eliminating the estimated impact of foreign currency fluctuations and recent divestitures. Estimated EPS for fiscal 2017 is also provided, adjusted for the same non-recurring items and anticipated currency impacts.
Management Commentary:
- Management uses these non-GAAP measures for internal evaluation, budget planning, and peer comparisons.
- These measures are intended to provide insight into underlying operational results by removing items considered outside of ordinary operations.
- Limitations: The filing explicitly states 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.
Investor Verification Checklist
- Review Exhibit 99.1 (Press Release dated November 3, 2016) for the actual numerical values of revenue, EPS, and cash flow, as this 8-K text only defines the metrics.
- Verify the reconciliation between GAAP and non-GAAP measures to understand the magnitude of excluded items (e.g., restructuring costs, currency impacts).
- Assess the impact of the CareFusion acquisition amortization and the Respiratory Solutions divestiture on reported growth rates.
- Confirm the specific adjustments made to the fiscal 2017 guidance regarding currency and divestitures.