Business Context and Reporting Period
This Form 8-K filing by Becton, Dickinson and Company (BD) is dated July 30, 2013. The report primarily serves to announce the company's financial results for the third fiscal quarter ended June 30, 2013, via a press release furnished as Exhibit 99.1. Additionally, the filing discloses a significant legal settlement reached on July 30, 2013.
Key Financial Metrics and Non-GAAP Adjustments
The filing text does not provide specific GAAP values for revenue, profit, cash flow, margins, debt, or liquidity. Instead, it details the methodology for non-GAAP measures included in the accompanying press release:
- Revenue Growth: Presented after eliminating the effect of foreign currency translation to facilitate period-to-period comparisons.
- Earnings Per Share (EPS): Growth rates for the third quarter and first nine months of fiscal 2013 are adjusted to exclude foreign currency translation, the impact of a pending antitrust class action settlement, and the medical device excise tax effective January 2013.
- Full Year Guidance: Estimated EPS for fiscal 2013 is adjusted for the antitrust settlement. Comparisons to fiscal 2012 exclude a pension settlement charge incurred in that prior year.
Material Changes and Legal Settlement
On July 30, 2013, BD entered into a settlement agreement regarding multiple antitrust class actions brought by indirect purchasers of BD products. The specific cases include:
- Jabo's Pharmacy, Inc., et. al. v. Becton Dickinson & Company
- Drug Mart Tallman, Inc., et. al. v. Becton Dickinson and Company
- Medstar v. Becton Dickinson
- The Hebrew Home for the Aged at Riverdale v. Becton Dickinson and Company
Under the terms of the agreement, BD will pay $22 million into a settlement fund. This payment secures a release of indirect purchaser claims and a dismissal of the cases with prejudice, subject to court approval. The filing notes that this settlement charge is excluded from management's non-GAAP EPS calculations as it is not considered part of ordinary operations.
Outlook, Risks, and Management Commentary
Management utilizes non-GAAP measures to evaluate underlying performance, budget planning, and peer comparisons. The filing highlights the following risks and contingencies:
- Regulatory Impact: The medical device excise tax, effective January 2013, impacts comparability with prior periods and is excluded from adjusted EPS metrics.
- Legal Contingency: The $22 million antitrust settlement is subject to preliminary and final court approval. Class members may opt out of the settlement.
- Limitations of Non-GAAP Data: Management cautions that non-GAAP results should not be viewed 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 dated August 1, 2013) for specific GAAP and non-GAAP financial figures for Q3 2013.
- Verify the status of the $22 million antitrust settlement and confirm court approval timelines.
- Assess the quantitative impact of the medical device excise tax on full-year 2013 earnings.
- Compare the adjusted EPS guidance for fiscal 2013 against the adjusted EPS for fiscal 2012 (excluding the pension settlement charge).