Business Context and Reporting Period
Company: Becton, Dickinson and Company (BD)
Filing Type: Form 8-K (Current Report)
Report Date: August 4, 2016
Reporting Period: Third fiscal quarter ended June 30, 2016, and the first nine months of fiscal year 2016.
Key Financial Metrics
The filing text does not provide specific numerical values for revenue, profit, cash flow, margins, debt, or liquidity. Instead, it details the methodology for presenting non-GAAP financial measures referenced in the accompanying press release (Exhibit 99.1). Key metrics discussed include:
- Revenues: Presented on an "adjusted" basis to exclude a deferred revenue write-down from the March 2015 CareFusion acquisition. Additional adjustments eliminate foreign currency translation impacts, distribution agreement changes for the Respiratory Solutions unit, and acquisition/divestiture effects to show "organic" and "comparable" growth.
- Earnings Per Share (EPS): Diluted EPS is presented on an adjusted basis, excluding purchase accounting adjustments, acquisition-related financing, transaction/integration/restructuring costs, pension settlement charges, workforce reduction liability adjustments, and litigation charges.
- Currency Impact: Growth rates are presented both with and without the impact of foreign currency translation to isolate underlying performance.
Material Changes and Adjustments
The filing highlights significant adjustments made to financial data to ensure comparability with prior periods:
- CareFusion Acquisition: Revenues and EPS are adjusted to account for the March 2015 acquisition of CareFusion Corporation, including a deferred revenue write-down that lowered reported revenues in prior periods.
- Respiratory Solutions: Revenue growth for the third quarter is adjusted to reflect a distribution agreement change as if it had occurred at the start of fiscal 2015.
- One-Time Costs: EPS adjustments remove the impact of litigation charges, pension settlements, and restructuring costs not considered part of ordinary operations.
Guidance, Outlook, and Management Commentary
Management Commentary: BD management utilizes these non-GAAP measures to evaluate underlying operational performance, facilitate period-to-period comparisons, and conduct budget planning. They believe these adjustments provide a clearer view of performance by removing the effects of currency fluctuations and non-recurring items.
Guidance: The text mentions that the company presents estimated total company and Medical segment revenue growth rates for fiscal year 2016 on a currency-neutral and "organic" basis, as well as estimated EPS for fiscal 2016 compared to 2015. However, the specific numerical targets for this guidance are not included in this filing text.
Risks and Limitations: Management notes that non-GAAP results should not be considered in isolation or as a substitute for GAAP results. Excluded items may have a material impact on net income and cash flows. The filing also notes that non-GAAP measures may differ from similar measures used by peer companies.
Investor Verification Checklist
- Review Exhibit 99.1 (Press Release) for the specific numerical values of GAAP and non-GAAP revenue, EPS, and growth rates.
- Verify the reconciliation between GAAP and non-GAAP measures to understand the magnitude of excluded items (e.g., CareFusion write-down, restructuring costs).
- Assess the impact of foreign currency translation on reported growth versus the "currency neutral" figures provided.
- Confirm the specific details of the Respiratory Solutions distribution agreement change and its effect on revenue comparability.
- Examine the full fiscal year 2016 guidance estimates for revenue and EPS mentioned in the press release.