Business Context and Reporting Period
Company: Becton, Dickinson and Company (BD)
Filing Type: Form 8-K (Current Report)
Report Date: November 4, 2014
Period Covered: Fourth fiscal quarter and full fiscal year ended September 30, 2014.
This filing announces the issuance of a press release (Exhibit 99.1) detailing financial results for the specified period. The report focuses on the methodology for presenting non-GAAP financial measures to facilitate period-to-period comparisons.
Key Financial Metrics
Note: This 8-K filing describes the methodology for non-GAAP adjustments but does not contain the specific numerical values for revenue, profit, cash flow, or debt. Those figures are located in the referenced press release (Exhibit 99.1).
- Revenue: The company presents international and total revenue growth rates excluding the effect of foreign currency translation.
- Earnings Per Share (EPS): Adjusted EPS is presented for the fourth quarter and full fiscal year, excluding specific charges and costs.
- Adjustments: Non-GAAP measures exclude workforce reduction charges, non-cash pension charges, litigation verdicts, foreign currency translation impacts, the medical device excise tax, and amortization of acquisition-related intangibles.
Material Changes and Adjustments
The filing outlines specific adjustments made to GAAP results to reflect underlying business performance:
- Q4 2014 Adjustments: Excluded a charge related to workforce reduction.
- Prior Year Comparisons: Excluded a non-cash pension charge and a litigation verdict charge against Retractable Technologies, Inc.
- Fiscal Year 2014 Adjustments: Excluded the incremental impact of the medical device excise tax (effective January 2013) and non-cash amortization of acquisition-related intangibles.
- Currency Impact: Growth rates are presented both with and without the elimination of foreign currency translation effects.
Guidance, Outlook, and Risks
Guidance: The company presents estimated EPS and EPS growth for fiscal year 2015. These estimates are adjusted for amortization of acquisition-related intangibles and the anticipated impact of foreign currency translation to allow comparison with adjusted 2014 results.
Management Commentary: Management utilizes these non-GAAP measures for internal evaluation, budget planning, and peer comparisons, believing they better reflect underlying operational results.
Risks and Limitations:
- Non-GAAP results are not a substitute for GAAP results and should not be considered in isolation.
- Items excluded from non-GAAP measures (e.g., litigation, taxes, currency) may have a material impact on net income and cash flows.
- Non-GAAP measures may differ from similar metrics used by other companies.
Investor Verification Checklist
- Review Exhibit 99.1 (Press Release) for the actual numerical values of revenue, EPS, and cash flow, as they are not listed in this 8-K text.
- Verify the specific dollar amounts of the excluded items: workforce reduction charges, pension charges, and the Retractable Technologies litigation verdict.
- Confirm the reconciliation between GAAP and non-GAAP EPS for both Q4 and the full fiscal year 2014.
- Assess the magnitude of the foreign currency translation impact on reported growth rates.
- Review the specific assumptions used for the fiscal year 2015 EPS guidance regarding currency and amortization.