Business Context and Reporting Period
Company: Becton, Dickinson and Company (BD)
Filing Type: Form 8-K (Current Report)
Date of Report: May 3, 2018
Reporting Period: Second fiscal quarter ended March 31, 2018
This filing announces the issuance of a press release containing financial results for the second fiscal quarter of 2018. The report details the company's use of specific non-GAAP financial measures to supplement GAAP results.
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 used in the accompanying press release (Exhibit 99.1):
- Currency-Neutral Revenue Growth: Revenue growth adjusted to eliminate the effect of foreign currency translation.
- Comparable Revenue Growth: Adjusted revenue growth assuming the acquisition of C.R. Bard, Inc. occurred at the start of fiscal 2017. Adjustments include product line movements, pending divestitures, royalty reclassifications, and the elimination of intercompany revenues. Further adjustments account for Hurricane Maria impacts and changes in the dispensing business model.
- Adjusted Earnings Per Share (EPS): Diluted EPS excluding purchase accounting adjustments, acquisition-related costs, restructuring, financing costs, hurricane recovery costs, debt extinguishment losses, litigation reserve reversals, dilution from Bard acquisition shares, and tax expenses related to recent U.S. tax legislation.
Material Changes and Non-GAAP Adjustments
The filing highlights several material items that management excludes from non-GAAP measures to ensure period-to-period comparability:
- Acquisition Impact: Significant adjustments related to the C.R. Bard, Inc. acquisition, including transaction costs, integration expenses, and share dilution.
- Disaster Recovery: Costs associated with Hurricane Maria recovery in Puerto Rico.
- Debt and Litigation: Losses from the extinguishment of long-term debt and the reversal of a litigation reserve.
- Tax Legislation: Additional tax expense resulting from recent U.S. tax law changes.
- Business Model Changes: Adjustments for the previously announced change in the dispensing business model.
Guidance, Outlook, and Management Commentary
Management utilizes these non-GAAP measures for internal budget planning, performance evaluation against peers, and to provide investors with insight into underlying operational performance. The filing notes that management presents estimated adjusted EPS and revenue growth for the full fiscal year 2018, further adjusted for anticipated foreign currency translation impacts.
Risks and Limitations: Management cautions that non-GAAP results should not be considered in isolation or as a substitute for GAAP results. The filing explicitly states that adjusted comparable revenues for fiscal 2017 are for illustrative purposes only and do not guarantee future results. Excluded items may have a material impact on net income and cash flows.
Investor Verification Checklist
- Review the full press release (Exhibit 99.1) for specific GAAP and non-GAAP numerical results for Q2 2018.
- Verify the reconciliation between GAAP and non-GAAP measures to understand the magnitude of excluded items (e.g., tax legislation impact, Bard acquisition costs).
- Assess the specific impact of Hurricane Maria on the Interventional segment and total company revenue.
- Confirm the details of the dispensing business model change and its estimated financial impact.
- Compare the "Comparable Revenue Growth" assumptions against actual historical performance to evaluate the validity of the pro-forma adjustments.