Business Context and Reporting Period
Company: Becton, Dickinson and Company (BD)
Filing Type: Form 8-K (Current Report)
Report Date: February 3, 2016
Reporting Period: First fiscal quarter ended December 31, 2015
This filing announces the issuance of a press release (Exhibit 99.1) detailing financial results for the first quarter of fiscal year 2016. The report focuses on the presentation of non-GAAP financial measures to facilitate comparisons with prior periods and peer companies, particularly in light of the March 2015 acquisition of CareFusion Corporation.
Key Financial Metrics
Note: The provided text describes the methodology for calculating financial metrics but does not contain specific numerical values for revenue, profit, cash flow, margins, debt, or liquidity.
- Revenue: The filing discusses presenting U.S. and total revenues (including safety revenues) adjusted for a write-down of deferred revenue related to the CareFusion acquisition. It also mentions presenting revenue growth rates excluding foreign currency translation effects and on a "comparable" basis (assuming the CareFusion acquisition occurred at the start of fiscal 2015).
- Earnings Per Share (EPS): The company presents diluted EPS adjusted for financing, transaction, integration, and restructuring costs associated with the CareFusion acquisition, as well as purchase accounting adjustments and litigation charges.
- Non-GAAP Adjustments: Adjustments are made to exclude items management considers outside of ordinary operations to better reflect underlying performance.
Material Changes and Comparability
The filing highlights significant adjustments required to ensure comparability between the current period and prior periods due to the CareFusion acquisition:
- Acquisition Impact: Reported revenues for the period were lowered by a write-down of deferred revenue connected to the CareFusion acquisition.
- Foreign Currency: Revenue growth rates and EPS growth are presented after eliminating the effect of foreign currency translation to isolate underlying operational performance.
- Comparable Basis: The company provides a "comparable" revenue metric assuming the CareFusion acquisition was in place for the entirety of fiscal 2015 to allow for a clearer view of the combined company's performance.
Guidance, Outlook, and Management Commentary
Management Commentary: 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 before the effects of items outside ordinary operations.
Guidance: The filing references anticipated total revenue growth for fiscal year 2016 and estimated EPS guidance for fiscal year 2016 compared to fiscal year 2015. These estimates exclude the aforementioned acquisition-related costs, certain employee termination costs, the dilutive impact of shares issued in the CareFusion transaction, and the anticipated impact of foreign currency translation.
Risks and Limitations: Management cautions that non-GAAP results should not be considered in isolation or as a substitute for GAAP results. Items excluded from non-GAAP measures may have a material impact on net income, EPS, or cash flows calculated in accordance with GAAP.
Investor Verification Checklist
- Review the full text of the press release (Exhibit 99.1) to obtain specific numerical values for Q1 2016 revenue, EPS, and cash flow, which are not included in this 8-K summary.
- Verify the reconciliation between the reported GAAP figures and the non-GAAP adjusted figures to understand the magnitude of the CareFusion-related write-downs and restructuring costs.
- Assess the specific impact of foreign currency translation on the reported growth rates versus the adjusted growth rates.
- Confirm the details of the "comparable" basis calculations to ensure accurate year-over-year performance analysis.