Business Context and Reporting Period
Company: Becton, Dickinson and Company (BD)
Filing Type: Form 8-K (Current Report)
Date of Report: May 1, 2014
Reporting Period: Second fiscal quarter ended March 31, 2014
This filing announces the issuance of a press release containing financial results for the second quarter of fiscal year 2014. The document primarily details the company's methodology for presenting non-GAAP financial measures to facilitate period-over-period comparisons.
Key Financial Metrics
Note: This 8-K filing serves as a disclosure of non-GAAP methodologies and does not contain specific numerical values for revenue, profit, cash flow, margins, debt, or liquidity. These figures are contained in the referenced press release (Exhibit 99.1) which is not included in the source text.
- Revenue Growth: Presented on a constant currency basis (eliminating foreign currency translation effects) for total company, segments, and safety-engineered devices.
- Earnings Per Share (EPS): Reported for Q2 2014 and the first six months of 2014, with adjustments for foreign currency and specific "Second Quarter Items."
- Second Quarter Items: Defined as asset write-offs (BD Biosciences), termination costs (Diagnostic segment), and gains from equity investment sales.
- Medical Device Excise Tax: Adjustments made for the incremental impact of the tax effective January 2013.
Material Changes and Adjustments
The filing outlines specific adjustments made to GAAP results to derive non-GAAP measures, highlighting items management views as outside ordinary operations:
- Q2 2014 Adjustments: Exclusion of foreign currency translation impacts and "Second Quarter Items" (asset write-offs, distributor termination costs, equity sale gains).
- YTD 2014 Adjustments: In addition to Q2 items, exclusion of the incremental impact of the medical device excise tax for the first quarter.
- Fiscal Year 2013 Adjustments: Exclusion of charges related to an antitrust class action settlement, litigation verdict with Retractable Technologies, Inc., and non-cash pension settlements.
Guidance, Outlook, and Risks
Guidance Methodology: BD provides estimated EPS guidance for fiscal year 2014 adjusted for "Second Quarter Items," anticipated foreign currency translation impacts, and the one-quarter incremental impact of the medical device excise tax compared to fiscal 2013.
Management Commentary: Management utilizes these non-GAAP measures for internal evaluation, budget planning, and peer comparisons. They assert these measures provide a reasonable view of underlying performance.
Risks and Limitations:
- Non-GAAP results are not a substitute for GAAP results and should not be considered in isolation.
- Excluded items (e.g., litigation, write-offs) 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
- Verify the specific numerical values for Q2 2014 revenue and EPS in the attached press release (Exhibit 99.1).
- Review the reconciliation tables in the press release to quantify the exact dollar impact of the "Second Quarter Items" and foreign currency adjustments.
- Confirm the specific amount of the medical device excise tax impact excluded from YTD 2014 results.
- Assess the magnitude of the litigation and settlement charges excluded from the 2013 comparative period.
- Compare the adjusted EPS guidance for fiscal 2014 against the unadjusted GAAP guidance to understand the variance.