Business Context and Reporting Period
Company: Becton, Dickinson and Company (BD)
Filing Type: Form 8-K (Current Report)
Date of Report: May 5, 2016
Reporting Period: Second fiscal quarter ended March 31, 2016, and the first six months of fiscal year 2016.
Key Financial Metrics
The filing serves as a notification of the issuance of a press release (Exhibit 99.1) containing detailed financial results. The text of this 8-K does not provide specific numerical values for revenue, profit, cash flow, margins, debt, or liquidity. Instead, it outlines the methodology for presenting non-GAAP measures:
- Revenues: Presented as "adjusted revenues" excluding a write-down of deferred revenue related to the March 2015 acquisition of CareFusion Corporation. Growth rates are also presented on a "comparable" basis, assuming the CareFusion acquisition occurred at the start of fiscal 2015, and adjusted for a distribution agreement change in the Respiratory Solutions unit.
- Earnings Per Share (EPS): Diluted EPS is adjusted to exclude purchase accounting adjustments, acquisition-related financing, transaction, integration, and restructuring costs, litigation charges, and the dilutive impact of shares issued in the CareFusion acquisition prior to consolidation.
- Currency Impact: Growth metrics and guidance are presented after eliminating the effect of foreign currency translation to facilitate period-to-period comparisons.
Material Changes and Adjustments
The filing highlights significant adjustments made to financial metrics to reflect underlying operational performance:
- Acquisition Impact: Adjustments are made to neutralize the effects of the CareFusion acquisition on revenue and EPS to allow for "comparable" growth analysis against prior periods.
- Operational Changes: Revenue growth in the U.S. and total company is adjusted to eliminate the impact of a distribution agreement change relating to the Respiratory Solutions unit.
- One-Time Costs: EPS figures exclude litigation charges, restructuring costs, and employee termination costs deemed outside of ordinary operations.
Guidance, Outlook, and Management Commentary
Management Commentary: Management utilizes these non-GAAP measures for internal evaluation, budget planning, and peer comparisons. They assert that these measures provide a reasonable view of underlying performance by excluding items that affect period-to-period comparability.
Guidance: The filing references the presentation of anticipated total adjusted revenue growth and estimated EPS for fiscal year 2016 compared to fiscal year 2015, adjusted for the aforementioned items and foreign currency translation. Specific guidance numbers are not contained in this text.
Risks and Limitations: Management cautions that non-GAAP results should not be considered in isolation or as a substitute for GAAP results. They note that excluded items may have a material impact on net income and cash flows, and that non-GAAP measures may differ from those used by other companies.
Investor Verification Checklist
- Review Exhibit 99.1 (Press Release dated May 5, 2016) for specific numerical values regarding revenue, EPS, and cash flow, as they are not listed in this 8-K text.
- Verify the reconciliation between the reported GAAP results and the non-GAAP "adjusted" and "comparable" figures provided in the press release.
- Assess the magnitude of the excluded items (CareFusion acquisition costs, litigation, restructuring) to understand their impact on GAAP net income.
- Confirm the specific foreign currency translation adjustments applied to the fiscal year 2016 guidance.