Business Context and Reporting Period
Company: Becton, Dickinson and Company (BD)
Filing Type: Form 8-K (Current Report)
Report Date: May 9, 2019
Reporting Period: Second fiscal quarter ended March 31, 2019
This filing announces the issuance of a press release containing financial results for the second quarter of fiscal year 2019. The report focuses on the presentation of non-GAAP financial measures to assist investors in evaluating underlying performance following the acquisition of C.R. Bard, Inc.
Key Financial Metrics
The filing text does not provide specific numerical values for revenue, profit, cash flow, margins, debt, or liquidity. Instead, it defines the methodology for calculating non-GAAP metrics included in the accompanying press release (Exhibit 99.1):
- Currency-Neutral Revenue Growth: Revenue growth rates adjusted to eliminate the effect of foreign currency translation fluctuations.
- Comparable Revenue Growth: Revenue growth on a currency-neutral basis that includes C.R. Bard, Inc. results in the prior year. Adjustments account for product line movements, divestitures, customer rebates, royalty reclassifications, and intercompany revenues.
- Adjusted Earnings Per Share (EPS): Diluted EPS excluding items not part of ordinary operations, such as purchase accounting adjustments, acquisition-related costs, restructuring, hurricane recovery, debt extinguishment losses, litigation, recall charges, and the dilutive impact of shares issued for the Bard acquisition.
Material Changes and Comparability
The filing highlights significant adjustments made to ensure year-to-year comparability following the C.R. Bard acquisition:
- Acquisition Impact: Management adjusts prior-year results to include Bard's performance to facilitate comparison with the combined company's current results.
- Segment Reclassification: Adjustments reflect the movement of certain product lines between the Medical and Interventional segments.
- One-Time Items: Adjusted EPS excludes specific one-time costs and gains, including hurricane recovery costs and losses from the extinguishment of long-term debt.
The filing explicitly states that adjusted comparable revenues are for illustrative purposes only and do not necessarily indicate what operating results would have been if the Bard acquisition had occurred at the beginning of fiscal 2018.
Guidance, Outlook, and Management Commentary
Management Commentary: BD management utilizes these non-GAAP measures for internal evaluation, budget planning, and peer comparison. They believe these metrics provide a reasonable measure of underlying performance by removing the effects of items outside ordinary operations or those affecting period-to-period comparability.
Guidance and Outlook: The filing mentions that the press release contains estimated revenue growth and estimated adjusted EPS for the full fiscal year 2019, including growth estimates after adjusting for anticipated foreign currency translation impacts. Specific guidance figures are not included in this 8-K text.
Risks and Contingencies: Management notes that non-GAAP results should not be considered in isolation or as a substitute for GAAP results. They caution that items excluded from non-GAAP measures may have a material impact on net income, EPS, or cash flows calculated under GAAP.
Investor Verification Checklist
- Review Exhibit 99.1 (Press Release) for specific numerical values regarding Q2 2019 revenue, net income, and EPS.
- Verify the reconciliation between GAAP and non-GAAP measures to understand the magnitude of excluded items (e.g., Bard acquisition costs, hurricane recovery).
- Confirm the specific full-year 2019 revenue and adjusted EPS guidance figures provided in the press release.
- Assess the impact of foreign currency translation on reported growth versus currency-neutral growth.
- Examine the details of the "comparable" revenue adjustments to ensure accurate year-over-year analysis.