Business Context and Reporting Period
Company: Becton, Dickinson and Company (BD)
Filing Type: Form 8-K (Current Report)
Date of Report: November 2, 2017
Reporting Period: Fourth fiscal quarter ending September 30, 2017
This filing announces the issuance of a press release containing financial results for the fourth quarter and full 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
The filing text does not provide specific numerical values for revenue, profit, cash flow, margins, debt, or liquidity. Instead, it details the definitions and adjustments used to calculate non-GAAP metrics:
- Revenues: Presented as "comparable" revenue growth rates. Adjustments eliminate the impact of divestitures (specifically the Respiratory Solutions business) and foreign currency translation fluctuations.
- Earnings Per Share (EPS): Presented as "adjusted EPS" for the fourth quarter and full fiscal year 2017. Adjustments exclude items affecting comparability, including:
- Acquisition-related transaction, integration, and restructuring costs.
- Financing costs and loss from extinguishment of long-term debt.
- Lease contract modification charges and pension settlement charges.
- Reversal of litigation reserves.
- Dilutive impact of shares issued for the pending acquisition of C.R. Bard, Inc. and related preferred stock dividends.
Material Changes and Comparability
The filing highlights specific factors that impact period-to-period comparability:
- Divestitures: The sale of the Respiratory Solutions business affects revenue comparisons.
- Foreign Currency: Exchange rate fluctuations are significant; management presents growth rates on a foreign currency neutral basis.
- Acquisition Activity: The pending acquisition of C.R. Bard, Inc. introduces specific financing costs and dilution effects excluded from adjusted EPS.
Guidance, Outlook, and Management Commentary
Management Commentary: Management utilizes these non-GAAP measures for internal budget planning, performance evaluation against peers, and to provide investors with insight into underlying operational results. They assert that excluded items are not part of ordinary operations.
Outlook and Guidance: The filing mentions that management presents estimated revenue growth for fiscal year 2017 on a foreign currency neutral basis and estimated adjusted EPS for fiscal year 2018. However, the specific numerical guidance targets for 2018 are not included in this text; they are contained within the referenced press release (Exhibit 99.1).
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, non-GAAP 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 Q4 and full-year 2017 revenue, EPS, and cash flow.
- Verify the specific dollar amounts of the adjustments made to derive "adjusted EPS," particularly those related to the C.R. Bard acquisition and debt extinguishment.
- Confirm the specific foreign currency neutral growth estimates for fiscal year 2017 and the adjusted EPS guidance for fiscal year 2018.
- Assess the impact of the Respiratory Solutions divestiture on the "comparable" revenue growth calculation.