BDX

Business Context and Reporting Period

Company: Becton, Dickinson and Company (BD)
Filing Type: Form 8-K (Current Report)
Date of Report: May 7, 2015
Reporting Period: Second fiscal quarter ended March 31, 2015

This filing announces the issuance of a press release containing financial results for the second quarter of fiscal year 2015. The report focuses on the methodology for presenting non-GAAP financial measures to facilitate comparisons with prior periods and to reflect the impact of the CareFusion Corporation acquisition.

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 applied to non-GAAP measures referenced in the accompanying press release (Exhibit 99.1):

• Revenue Growth: Presented on an organic basis (excluding foreign currency translation) and adjusted to assume the CareFusion acquisition occurred at the start of fiscal 2015.
• Earnings Per Share (EPS): Adjusted for financing, transaction, integration, and restructuring costs related to the CareFusion acquisition; non-cash amortization of acquisition-related intangible assets; dilutive impact of shares issued for the acquisition; and specific litigation charges (Retractable Technologies, Inc.).
• Comparability: Prior year (2014) EPS is adjusted for amortization charges, asset write-offs, distributor termination costs, and equity investment gains to ensure period-to-period comparability.

Material Changes and Non-GAAP Adjustments

The filing highlights significant adjustments made to financial results to reflect underlying operational performance:

• Acquisition Impact: Results are adjusted to account for the CareFusion acquisition, including transaction costs and the dilutive effect of new shares.
• Foreign Currency: Revenue growth and EPS growth are presented excluding the impact of foreign currency translation to isolate operational performance.
• One-Time Items: Adjustments exclude non-recurring items such as plaintiff attorney fees for antitrust litigation, asset write-offs for terminated product programs, and distributor termination costs.

Guidance, Outlook, and Management Commentary

Guidance: Management provides estimated revenue growth and EPS guidance for the full fiscal year 2015. This guidance is presented on two bases:

1. For the legacy BD business as it existed at the time of the CareFusion acquisition.
2. On an entire-company basis including CareFusion.

Both guidance figures are adjusted for anticipated costs, charges, and foreign currency translation impacts.

Management Commentary: Management utilizes these non-GAAP measures for internal budget planning and performance evaluation against peer companies. They assert that these measures provide a reasonable view of underlying performance by excluding items outside ordinary operations. However, the filing explicitly states that non-GAAP results should not be considered in isolation or as a substitute for GAAP results, as excluded items may materially impact net income and cash flows.

Investor Verification Checklist

• Review Exhibit 99.1 (Press Release) for specific numerical values of revenue, EPS, and cash flow, as the 8-K text only defines the metrics.
• Verify the reconciliation between GAAP and non-GAAP EPS to understand the magnitude of acquisition-related costs and amortization charges.
• Assess the impact of foreign currency translation on reported revenue growth versus organic growth.
• Confirm the status and potential financial exposure of the antitrust and false advertising litigation with Retractable Technologies, Inc.
• Compare the "organic" revenue growth guidance against the full-year GAAP guidance to understand the expected contribution of the CareFusion acquisition.