Business Context and Reporting Period
Company: Becton, Dickinson and Company (BD)
Filing Type: Form 8-K (Current Report)
Date of Report: April 26, 2011
Reporting Period: Second fiscal quarter ended March 31, 2011
This filing announces the issuance of a press release containing financial results for the second quarter of fiscal year 2011. The report focuses on the methodology for presenting non-GAAP financial measures to better reflect underlying operational performance.
Key Financial Metrics
Note: This 8-K filing serves as a notification of the press release and defines non-GAAP measures. It does not contain specific numerical values for revenue, profit, cash flow, margins, debt, or liquidity. Those figures are located in the attached press release (Exhibit 99.1).
- Revenue Growth: Presented excluding the effect of foreign currency translation and hedging gains/losses to show underlying growth.
- Earnings Per Share (EPS):
- Historical (FY 2010): Adjusted to exclude a non-cash charge related to health care reform impacting Medicare Part D reimbursements.
- Current (FY 2011): Growth and guidance presented excluding the effect of foreign currency translation.
Material Changes and Non-GAAP Adjustments
The filing details specific adjustments management makes to GAAP results to facilitate period-to-period comparisons:
- Foreign Currency: Revenue growth rates and EPS growth/guidance are adjusted to eliminate the impact of foreign currency translation and hedging activities.
- Health Care Reform Charge: EPS for fiscal year 2010 is adjusted to remove a non-cash charge associated with Medicare Part D reimbursement changes, which management does not consider part of ordinary operations.
Guidance, Outlook, and Management Commentary
Management Rationale: Management utilizes these non-GAAP measures for internal evaluation, budget planning, and to provide investors with a clearer view of underlying performance. They believe these adjustments allow for better assessment of FY 2011 EPS guidance.
Limitations and Risks:
- Non-GAAP results are not a substitute for GAAP results and should not be viewed in isolation.
- Excluded items (such as the Medicare Part D charge or currency fluctuations) may have a material impact on net income and cash flows under GAAP.
- Non-GAAP measures may differ from similar metrics used by other companies.
Investor Verification Checklist
- Review Exhibit 99.1 (the press release) for the actual numerical values of revenue, net income, and EPS for Q2 2011.
- Verify the specific dollar amount of the non-cash Medicare Part D charge excluded from FY 2010 EPS.
- Compare the GAAP vs. Non-GAAP EPS figures to understand the magnitude of the currency and regulatory adjustments.
- Confirm the full-year 2011 EPS guidance provided in the press release, noting whether it is presented on a GAAP or non-GAAP basis.