Business Context and Reporting Period
Company: Becton, Dickinson and Company (BD)
Filing Type: Form 8-K (Current Report)
Date of Report: July 29, 2010
Reporting Period: Third fiscal quarter ended June 30, 2010, and the first nine months of fiscal year 2010.
Key Financial Metrics
The filing serves as a notification of the issuance of a press release (Exhibit 99.1) containing the financial results. The 8-K text itself does not provide specific numerical values for revenue, profit, cash flow, margins, debt, or liquidity. Instead, it details the methodology for presenting non-GAAP measures:
- Revenues: Presented with foreign currency translation effects eliminated to show underlying operating results.
- Earnings Per Share (EPS): Adjusted to exclude non-cash charges related to health care reform (Medicare Part D), tax benefits from settlements, and charges from pending antitrust class action suits.
- Guidance: EPS guidance for fiscal year 2010 is presented excluding foreign currency translation effects.
Material Changes and Non-GAAP Adjustments
Management highlights specific items excluded from non-GAAP calculations to facilitate period-to-period comparisons:
- Health Care Reform: Non-cash charges impacting Medicare Part D reimbursements are excluded from adjusted EPS for the first nine months of 2010.
- Tax Settlements: Tax benefits relating to various tax settlements are excluded from 2009 EPS comparisons.
- Antitrust Litigation: Charges related to the pending settlement of certain antitrust class action suits are excluded from full-year 2009 EPS.
- Foreign Currency: Gains or losses from hedging activities and currency translation are eliminated from revenue growth rates and EPS growth metrics.
Outlook, Risks, and Management Commentary
Management Commentary: BD management utilizes these non-GAAP measures for internal evaluation, budget planning, and to provide investors with insight into underlying operational performance. They assert that these adjusted measures are more indicative of ordinary operations than GAAP results for the specified periods.
Risks and Limitations: The filing explicitly states that non-GAAP results should not be considered in isolation or as a substitute for GAAP results. Management acknowledges that excluded items may have a material impact on net income, EPS, or cash flows calculated under GAAP. Additionally, these measures may differ from similar metrics used by other companies.
Investor Verification Checklist
- Review Exhibit 99.1 (Press Release) for the specific GAAP and non-GAAP numerical values for revenue, EPS, and cash flow.
- Examine Exhibit 99.2 for the detailed reconciliation between GAAP and non-GAAP financial measures.
- Verify the specific dollar amounts associated with the excluded items: Medicare Part D charges, tax settlement benefits, and antitrust litigation charges.
- Assess the impact of foreign currency fluctuations on the reported revenue growth rates versus the adjusted growth rates.