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ý
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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¨
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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New Jersey
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22-0760120
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(State or other jurisdiction of
incorporation or organization)
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(I.R.S. Employer
Identification No.)
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Page
Number
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Part I.
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FINANCIAL INFORMATION
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Item 1.
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Item 2.
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Item 3.
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Item 4.
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Part II.
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Item 1.
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Item 1A.
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Item 2.
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Item 3.
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Item 4.
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Item 5.
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Item 6.
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March 31,
2017 |
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September 30,
2016 |
||||
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(Unaudited)
|
|
|
||||
Assets
|
|
|
|
||||
Current Assets:
|
|
|
|
||||
Cash and equivalents
|
$
|
548
|
|
|
$
|
1,541
|
|
Short-term investments
|
8
|
|
|
27
|
|
||
Trade receivables, net
|
1,569
|
|
|
1,618
|
|
||
Current portion of net investment in sales-type leases
|
355
|
|
|
339
|
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||
Inventories:
|
|
|
|
||||
Materials
|
305
|
|
|
316
|
|
||
Work in process
|
292
|
|
|
274
|
|
||
Finished products
|
1,150
|
|
|
1,129
|
|
||
|
1,747
|
|
|
1,719
|
|
||
Assets held for sale
|
—
|
|
|
642
|
|
||
Prepaid expenses and other
|
664
|
|
|
480
|
|
||
Total Current Assets
|
4,891
|
|
|
6,367
|
|
||
Property, Plant and Equipment
|
8,351
|
|
|
8,419
|
|
||
Less allowances for depreciation and amortization
|
4,411
|
|
|
4,518
|
|
||
Property, Plant and Equipment, Net
|
3,941
|
|
|
3,901
|
|
||
Goodwill
|
7,405
|
|
|
7,419
|
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||
Customer Relationships, Net
|
2,923
|
|
|
3,022
|
|
||
Developed Technology, Net
|
2,539
|
|
|
2,655
|
|
||
Other Intangibles, Net
|
579
|
|
|
604
|
|
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Capitalized Software, Net
|
77
|
|
|
70
|
|
||
Net Investment in Sales-Type Leases, Less Current Portion
|
817
|
|
|
796
|
|
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Other Assets
|
948
|
|
|
753
|
|
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Total Assets
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$
|
24,121
|
|
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$
|
25,586
|
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Liabilities and Shareholders’ Equity
|
|
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|
||||
Current Liabilities:
|
|
|
|
||||
Short-term debt
|
$
|
1,224
|
|
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$
|
1,001
|
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Payables and accrued expenses
|
2,794
|
|
|
3,210
|
|
||
Liabilities held for sale
|
—
|
|
|
189
|
|
||
Total Current Liabilities
|
4,018
|
|
|
4,400
|
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||
Long-Term Debt
|
9,082
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|
10,550
|
|
||
Long-Term Employee Benefit Obligations
|
1,356
|
|
|
1,319
|
|
||
Deferred Income Taxes and Other
|
1,702
|
|
|
1,684
|
|
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Commitments and Contingencies (See Note 5)
|
|
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|
|
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Shareholders’ Equity
|
|
|
|
||||
Common stock
|
333
|
|
|
333
|
|
||
Capital in excess of par value
|
4,742
|
|
|
4,693
|
|
||
Retained earnings
|
13,321
|
|
|
12,727
|
|
||
Deferred compensation
|
22
|
|
|
22
|
|
||
Common stock in treasury - at cost
|
(8,445
|
)
|
|
(8,212
|
)
|
||
Accumulated other comprehensive loss
|
(2,009
|
)
|
|
(1,929
|
)
|
||
Total Shareholders’ Equity
|
7,963
|
|
|
7,633
|
|
||
Total Liabilities and Shareholders’ Equity
|
$
|
24,121
|
|
|
$
|
25,586
|
|
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Three Months Ended
March 31, |
|
Six Months Ended
March 31, |
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Revenues
|
$
|
2,969
|
|
|
$
|
3,067
|
|
|
$
|
5,892
|
|
|
$
|
6,054
|
|
Cost of products sold
|
1,537
|
|
|
1,584
|
|
|
3,007
|
|
|
3,162
|
|
||||
Selling and administrative expense
|
724
|
|
|
732
|
|
|
1,432
|
|
|
1,480
|
|
||||
Research and development expense
|
187
|
|
|
182
|
|
|
368
|
|
|
369
|
|
||||
Acquisitions and other restructurings
|
76
|
|
|
104
|
|
|
163
|
|
|
225
|
|
||||
Other operating income (See Note 5)
|
—
|
|
|
—
|
|
|
(336
|
)
|
|
—
|
|
||||
Total Operating Costs and Expenses
|
2,523
|
|
|
2,601
|
|
|
4,634
|
|
|
5,236
|
|
||||
Operating Income
|
446
|
|
|
466
|
|
|
1,257
|
|
|
818
|
|
||||
Interest expense
|
(86
|
)
|
|
(99
|
)
|
|
(181
|
)
|
|
(196
|
)
|
||||
Interest income
|
7
|
|
|
3
|
|
|
12
|
|
|
9
|
|
||||
Other (expense) income, net
|
(5
|
)
|
|
6
|
|
|
(35
|
)
|
|
11
|
|
||||
Income Before Income Taxes
|
362
|
|
|
376
|
|
|
1,054
|
|
|
642
|
|
||||
Income tax provision
|
18
|
|
|
38
|
|
|
148
|
|
|
75
|
|
||||
Net Income
|
344
|
|
|
338
|
|
|
905
|
|
|
567
|
|
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Basic Earnings per Share
|
$
|
1.61
|
|
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$
|
1.59
|
|
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$
|
4.24
|
|
|
$
|
2.67
|
|
Diluted Earnings per Share
|
$
|
1.58
|
|
|
$
|
1.56
|
|
|
$
|
4.15
|
|
|
$
|
2.62
|
|
Dividends per Common Share
|
$
|
0.73
|
|
|
$
|
0.66
|
|
|
$
|
1.46
|
|
|
$
|
1.32
|
|
|
Three Months Ended
March 31, |
|
Six Months Ended
March 31, |
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Net Income
|
$
|
344
|
|
|
$
|
338
|
|
|
$
|
905
|
|
|
$
|
567
|
|
Other Comprehensive Income (Loss), Net of Tax
|
|
|
|
|
|
|
|
||||||||
Foreign currency translation adjustments
|
136
|
|
|
179
|
|
|
(139
|
)
|
|
63
|
|
||||
Defined benefit pension and postretirement plans
|
15
|
|
|
12
|
|
|
29
|
|
|
24
|
|
||||
Cash flow hedges
|
2
|
|
|
1
|
|
|
30
|
|
|
4
|
|
||||
Other Comprehensive Gain (Loss), Net of Tax
|
153
|
|
|
193
|
|
|
(80
|
)
|
|
91
|
|
||||
Comprehensive Income
|
$
|
497
|
|
|
$
|
531
|
|
|
$
|
826
|
|
|
$
|
658
|
|
|
Six Months Ended
March 31, |
||||||
|
2017
|
|
2016
|
||||
Operating Activities
|
|
|
|
||||
Net income
|
$
|
905
|
|
|
$
|
567
|
|
Adjustments to net income to derive net cash provided by operating activities:
|
|
|
|
||||
Depreciation and amortization
|
523
|
|
|
569
|
|
||
Share-based compensation
|
99
|
|
|
119
|
|
||
Deferred income taxes
|
(43
|
)
|
|
(112
|
)
|
||
Change in operating assets and liabilities
|
(474
|
)
|
|
(194
|
)
|
||
Pension obligation
|
55
|
|
|
40
|
|
||
Excess tax benefits from payments under share-based compensation plans
|
48
|
|
|
—
|
|
||
Other, net
|
(74
|
)
|
|
30
|
|
||
Net Cash Provided by Operating Activities
|
1,040
|
|
|
1,020
|
|
||
Investing Activities
|
|
|
|
||||
Capital expenditures
|
(272
|
)
|
|
(258
|
)
|
||
Proceeds from sale of investments, net
|
26
|
|
|
10
|
|
||
Acquisitions of businesses, net of cash acquired
|
(40
|
)
|
|
—
|
|
||
Proceeds from divestitures, net
|
165
|
|
|
111
|
|
||
Other, net
|
(34
|
)
|
|
(33
|
)
|
||
Net Cash Used for Investing Activities
|
(155
|
)
|
|
(170
|
)
|
||
Financing Activities
|
|
|
|
||||
Change in short-term debt
|
(50
|
)
|
|
(300
|
)
|
||
Proceeds from long-term debt
|
1,054
|
|
|
—
|
|
||
Payments of debt
|
(2,189
|
)
|
|
(1
|
)
|
||
Repurchase of common stock
|
(220
|
)
|
|
—
|
|
||
Excess tax benefits from payments under share-based compensation plans
|
—
|
|
|
51
|
|
||
Dividends paid
|
(312
|
)
|
|
(280
|
)
|
||
Other, net
|
(144
|
)
|
|
(45
|
)
|
||
Net Cash Used for Financing Activities
|
(1,861
|
)
|
|
(576
|
)
|
||
Effect of exchange rate changes on cash and equivalents
|
(17
|
)
|
|
(2
|
)
|
||
Net (decrease) increase in cash and equivalents
|
(993
|
)
|
|
272
|
|
||
Opening Cash and Equivalents
|
1,541
|
|
|
1,424
|
|
||
Closing Cash and Equivalents
|
$
|
548
|
|
|
$
|
1,696
|
|
(Millions of dollars)
|
Total
|
|
Foreign Currency
Translation
|
|
Benefit Plans
|
|
Cash Flow Hedges
|
|
||||||||
Balance at September 30, 2016
|
$
|
(1,929
|
)
|
|
$
|
(1,011
|
)
|
|
$
|
(883
|
)
|
|
$
|
(35
|
)
|
|
Other comprehensive (loss) income before reclassifications, net of taxes
|
(114
|
)
|
|
(139
|
)
|
|
—
|
|
|
25
|
|
|
||||
Amounts reclassified into income, net of taxes
|
34
|
|
|
—
|
|
|
29
|
|
|
5
|
|
|
||||
Balance at March 31, 2017
|
$
|
(2,009
|
)
|
|
$
|
(1,151
|
)
|
|
$
|
(853
|
)
|
|
$
|
(5
|
)
|
|
|
Three Months Ended
March 31, |
|
Six Months Ended
March 31, |
||||||||||||
(Millions of dollars)
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Benefit Plans
|
|
|
|
|
|
|
|
||||||||
Reclassification of losses into income
|
$
|
22
|
|
|
$
|
19
|
|
|
$
|
44
|
|
|
$
|
37
|
|
Associated tax benefits
|
(7
|
)
|
|
(6
|
)
|
|
(14
|
)
|
|
(13
|
)
|
||||
Amounts reclassified into income, net of taxes (A)
|
$
|
15
|
|
|
$
|
12
|
|
|
$
|
29
|
|
|
$
|
24
|
|
|
|
|
|
|
|
|
|
||||||||
Cash Flow Hedges
|
|
|
|
|
|
|
|
||||||||
Reclassification of losses into income
|
$
|
2
|
|
|
$
|
5
|
|
|
$
|
8
|
|
|
$
|
9
|
|
Associated tax benefits
|
(1
|
)
|
|
(2
|
)
|
|
(3
|
)
|
|
(3
|
)
|
||||
Amounts reclassified into income, net of taxes (B)
|
$
|
1
|
|
|
$
|
3
|
|
|
$
|
5
|
|
|
$
|
6
|
|
(A)
|
These reclassifications were not recorded into income in their entirety and were included in the computation of net periodic benefit plan costs. Additional details regarding the Company's benefit plans are provided in Note
8
.
|
(B)
|
These reclassifications were recorded to
Interest expense
and
Cost of products sold
. Additional details regarding the Company's cash flow hedges are provided in Note
12
.
|
|
Three Months Ended
March 31, |
|
Six Months Ended
March 31, |
||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||
Average common shares outstanding
|
213,583
|
|
|
212,469
|
|
|
213,321
|
|
|
212,077
|
|
Dilutive share equivalents from share-based plans (A)
|
4,283
|
|
|
4,069
|
|
|
4,665
|
|
|
4,618
|
|
Average common and common equivalent shares outstanding – assuming dilution
|
217,866
|
|
|
216,538
|
|
|
217,986
|
|
|
216,695
|
|
(A)
|
The prior-period adjustments to calculate diluted share equivalents from share-based plans included excess tax benefits relating to share-based compensation awards. Upon the Company's adoption, as discussed in Note 2, of new accounting requirements relating to share-based compensation award-related income tax effects, the adjustments in the current-year periods excluded these excess tax benefits.
|
|
Three Months Ended
March 31, |
|
Six Months Ended
March 31, |
||||||||||||
(Millions of dollars)
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Revenues
(A)
|
|
|
|
|
|
|
|
||||||||
Medical
|
$
|
1,987
|
|
|
$
|
2,131
|
|
|
$
|
3,951
|
|
|
$
|
4,185
|
|
Life Sciences
|
982
|
|
|
936
|
|
|
1,940
|
|
|
1,869
|
|
||||
Total Revenues
|
$
|
2,969
|
|
|
$
|
3,067
|
|
|
$
|
5,892
|
|
|
$
|
6,054
|
|
Income Before Income Taxes
|
|
|
|
|
|
|
|
||||||||
Medical
|
$
|
537
|
|
|
$
|
513
|
|
|
$
|
1,085
|
|
|
$
|
978
|
|
Life Sciences
|
177
|
|
|
202
|
|
|
376
|
|
|
404
|
|
||||
Total Segment Operating Income
|
714
|
|
|
715
|
|
|
1,461
|
|
|
1,381
|
|
||||
Acquisitions and other restructurings
|
(76
|
)
|
|
(104
|
)
|
|
(163
|
)
|
|
(225
|
)
|
||||
Net interest expense
|
(79
|
)
|
|
(96
|
)
|
|
(169
|
)
|
|
(187
|
)
|
||||
Other unallocated items (B)
|
(197
|
)
|
|
(139
|
)
|
|
(76
|
)
|
|
(328
|
)
|
||||
Income Before Income Taxes
|
$
|
362
|
|
|
$
|
376
|
|
|
$
|
1,054
|
|
|
$
|
642
|
|
(A)
|
Intersegment revenues are not material.
|
(B)
|
Primarily comprised of foreign exchange, corporate expenses, and share-based compensation expense. The amount for the
six
months ended
March 31, 2017
also included a
$336 million
reversal of certain reserves related to an appellate court decision which, among other things, reversed an unfavorable antitrust judgment in the RTI case. Additional disclosures regarding this legal matter are provided Note 5.
|
|
Three Months Ended
March 31, |
|
Six Months Ended
March 31, |
||||||||||||
(Millions of dollars)
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Revenues
|
|
|
|
|
|
|
|
||||||||
United States
|
$
|
1,627
|
|
|
$
|
1,719
|
|
|
$
|
3,257
|
|
|
$
|
3,410
|
|
International
|
1,342
|
|
|
1,349
|
|
|
2,635
|
|
|
2,644
|
|
||||
Total Revenues
|
$
|
2,969
|
|
|
$
|
3,067
|
|
|
$
|
5,892
|
|
|
$
|
6,054
|
|
|
2017
|
|
2016
|
||||
Risk-free interest rate
|
2.33
|
%
|
|
2.17
|
%
|
||
Expected volatility
|
20.00
|
%
|
|
19.00
|
%
|
||
Expected dividend yield
|
1.71
|
%
|
|
1.76
|
%
|
||
Expected life
|
7.5 years
|
|
|
7.6 years
|
|
||
Fair value derived
|
$
|
33.81
|
|
|
$
|
27.69
|
|
|
Pension Plans
|
|
Other Postretirement Benefits
|
||||||||||||
(Millions of dollars)
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Service cost
|
$
|
27
|
|
|
$
|
20
|
|
|
$
|
1
|
|
|
$
|
1
|
|
Interest cost
|
18
|
|
|
18
|
|
|
1
|
|
|
1
|
|
||||
Expected return on plan assets
|
(33
|
)
|
|
(27
|
)
|
|
—
|
|
|
—
|
|
||||
Amortization of prior service credit
|
(4
|
)
|
|
(4
|
)
|
|
(1
|
)
|
|
(1
|
)
|
||||
Amortization of loss
|
28
|
|
|
19
|
|
|
—
|
|
|
—
|
|
||||
Settlements
|
—
|
|
|
1
|
|
|
—
|
|
|
—
|
|
||||
Net pension and postretirement cost
|
$
|
35
|
|
|
$
|
27
|
|
|
$
|
1
|
|
|
$
|
1
|
|
|
Pension Plans
|
|
Other Postretirement Benefits
|
||||||||||||
(Millions of dollars)
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Service cost
|
$
|
51
|
|
|
$
|
41
|
|
|
$
|
1
|
|
|
$
|
1
|
|
Interest cost
|
35
|
|
|
37
|
|
|
2
|
|
|
3
|
|
||||
Expected return on plan assets
|
(63
|
)
|
|
(55
|
)
|
|
—
|
|
|
—
|
|
||||
Amortization of prior service credit
|
(8
|
)
|
|
(7
|
)
|
|
(2
|
)
|
|
(2
|
)
|
||||
Amortization of loss
|
52
|
|
|
39
|
|
|
1
|
|
|
1
|
|
||||
Settlements
|
—
|
|
|
1
|
|
|
—
|
|
|
—
|
|
||||
Net pension and postretirement cost
|
$
|
67
|
|
|
$
|
55
|
|
|
$
|
2
|
|
|
$
|
3
|
|
(Millions of dollars)
|
Employee
Termination
|
|
Other
|
|
Total
|
||||||
Balance at September 30, 2016
|
$
|
67
|
|
|
$
|
2
|
|
|
$
|
69
|
|
Charged to expense
|
18
|
|
|
29
|
|
|
46
|
|
|||
Cash payments
|
(28
|
)
|
|
(17
|
)
|
|
(45
|
)
|
|||
Non-cash settlements
|
—
|
|
|
(6
|
)
|
|
(6
|
)
|
|||
Other adjustments
|
—
|
|
|
(7
|
)
|
|
(7
|
)
|
|||
Balance at March 31, 2017
|
$
|
57
|
|
|
$
|
1
|
|
|
$
|
58
|
|
|
March 31, 2017
|
|
September 30, 2016
|
||||||||||||
(Millions of dollars)
|
Gross
Carrying
Amount
|
|
Accumulated
Amortization
|
|
Gross
Carrying
Amount
|
|
Accumulated
Amortization
|
||||||||
Amortized intangible assets
|
|
|
|
|
|
|
|
||||||||
Customer relationships
|
$
|
3,374
|
|
|
$
|
451
|
|
|
$
|
3,360
|
|
|
$
|
339
|
|
Developed technology
|
3,417
|
|
|
879
|
|
|
3,409
|
|
|
754
|
|
||||
Product rights
|
122
|
|
|
46
|
|
|
125
|
|
|
43
|
|
||||
Trademarks
|
405
|
|
|
56
|
|
|
405
|
|
|
45
|
|
||||
Patents and other
|
351
|
|
|
265
|
|
|
349
|
|
|
254
|
|
||||
Amortized intangible assets
|
$
|
7,670
|
|
|
$
|
1,696
|
|
|
$
|
7,648
|
|
|
$
|
1,435
|
|
Unamortized intangible assets
|
|
|
|
|
|
|
|
||||||||
Acquired in-process research and development
|
$
|
65
|
|
|
|
|
$
|
66
|
|
|
|
||||
Trademarks
|
2
|
|
|
|
|
2
|
|
|
|
||||||
Unamortized intangible assets
|
$
|
67
|
|
|
|
|
$
|
68
|
|
|
|
(Millions of dollars)
|
Medical
|
|
Life Sciences
|
|
Total
|
||||||
Goodwill as of September 30, 2016
|
$
|
6,688
|
|
|
$
|
731
|
|
|
$
|
7,419
|
|
Acquisitions
|
—
|
|
|
24
|
|
|
24
|
|
|||
Divestiture (A)
|
(25
|
)
|
|
—
|
|
|
(25
|
)
|
|||
Currency translation
|
(10
|
)
|
|
(3
|
)
|
|
(13
|
)
|
|||
Goodwill as of March 31, 2017
|
$
|
6,653
|
|
|
$
|
752
|
|
|
$
|
7,405
|
|
(A)
|
Represents goodwill derecognized upon the Company's sale of a
50.1%
controlling financial interest in the Respiratory Solutions business, as further discussed in Note
9
.
|
|
Three Months Ended
March 31, |
|
Six Months Ended
March 31, |
||||||||||||
(Millions of dollars)
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
(Losses) gains on fair value hedges
|
$
|
(1
|
)
|
|
$
|
11
|
|
|
$
|
(16
|
)
|
|
$
|
24
|
|
(Millions of dollars)
|
March 31,
2017 |
|
September 30,
2016 |
||||
Asset derivatives-designated for hedge accounting
|
|
|
|
||||
Interest rate swaps
|
$
|
7
|
|
|
$
|
23
|
|
Asset derivatives-undesignated for hedge accounting
|
|
|
|
||||
Forward exchange contracts
|
6
|
|
|
3
|
|
||
Total asset derivatives (A)
|
$
|
12
|
|
|
$
|
25
|
|
Liability derivatives-designated for hedge accounting
|
|
|
|
||||
Interest rate swaps
|
4
|
|
|
18
|
|
||
Liability derivatives-undesignated for hedge accounting
|
|
|
|
||||
Forward exchange contracts
|
5
|
|
|
13
|
|
||
Total liability derivatives (B)
|
$
|
8
|
|
|
$
|
31
|
|
(A)
|
All asset derivatives are included in
Prepaid expenses and other
.
|
(B)
|
All liability derivatives are included in
Payables and accrued expenses
.
|
|
Location of (Loss) Gain
Recognized in
Income on
Derivatives
|
|
Amount of (Loss) Gain Recognized in Income on Derivatives
|
|
Amount of (Loss) Gain Recognized in Income on Derivatives
|
||||||||||||
Derivatives Not Designated as Hedging Instruments
|
Three Months Ended
March 31, |
|
Six Months Ended
March 31, |
||||||||||||||
(Millions of dollars)
|
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Forward exchange contracts (A)
|
Other income (expense), net
|
|
$
|
15
|
|
|
$
|
15
|
|
|
$
|
(7
|
)
|
|
$
|
26
|
|
(A)
|
The gains and losses on forward contracts and currency options utilized to hedge the intercompany transactional foreign exchange exposures are largely offset by gains and losses on the underlying hedged items in
Other income (expense), net
.
|
|
|
|
Basis of Fair Value Measurement
|
||||||||||||
(Millions of dollars)
|
March 31, 2017
Total
|
|
Quoted Prices in
Active Markets
for Identical
Assets (Level 1)
|
|
Significant Other
Observable
Inputs (Level 2)
|
|
Significant
Unobservable
Inputs (Level 3)
|
||||||||
Assets
|
|
|
|
|
|
|
|
||||||||
Institutional money market investments
|
$
|
20
|
|
|
$
|
20
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Interest rate swaps
|
7
|
|
|
—
|
|
|
7
|
|
|
—
|
|
||||
Forward exchange contracts
|
6
|
|
|
—
|
|
|
6
|
|
|
—
|
|
||||
Total Assets
|
$
|
32
|
|
|
$
|
20
|
|
|
$
|
12
|
|
|
$
|
—
|
|
Liabilities
|
|
|
|
|
|
|
|
||||||||
Forward exchange contracts
|
$
|
5
|
|
|
$
|
—
|
|
|
$
|
5
|
|
|
$
|
—
|
|
Interest rate swaps
|
4
|
|
|
—
|
|
|
4
|
|
|
—
|
|
||||
Contingent consideration liabilities
|
63
|
|
|
—
|
|
|
—
|
|
|
63
|
|
||||
Total Liabilities
|
$
|
71
|
|
|
$
|
—
|
|
|
$
|
8
|
|
|
$
|
63
|
|
|
|
|
Basis of Fair Value Measurement
|
||||||||||||
(Millions of dollars)
|
September 30,
2016
Total
|
|
Quoted Prices in
Active Markets
for Identical
Assets (Level 1)
|
|
Significant Other
Observable
Inputs (Level 2)
|
|
Significant
Unobservable
Inputs (Level 3)
|
||||||||
Assets
|
|
|
|
|
|
|
|
||||||||
Institutional money market investments
|
$
|
224
|
|
|
$
|
224
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Interest rate swaps
|
23
|
|
|
—
|
|
|
23
|
|
|
—
|
|
||||
Forward exchange contracts
|
3
|
|
|
—
|
|
|
3
|
|
|
—
|
|
||||
Total Assets
|
$
|
249
|
|
|
$
|
224
|
|
|
$
|
25
|
|
|
$
|
—
|
|
Liabilities
|
|
|
|
|
|
|
|
||||||||
Forward exchange contracts
|
$
|
13
|
|
|
$
|
—
|
|
|
$
|
13
|
|
|
$
|
—
|
|
Interest rate swaps
|
18
|
|
|
—
|
|
|
18
|
|
|
—
|
|
||||
Contingent consideration liabilities
|
54
|
|
|
—
|
|
|
—
|
|
|
54
|
|
||||
Total Liabilities
|
$
|
86
|
|
|
$
|
—
|
|
|
$
|
31
|
|
|
$
|
54
|
|
Interest Rate and Maturity
|
|
Aggregate Principal Amount
(Millions of dollars)
|
||
1.450% Notes due May 15, 2017
|
|
$
|
226
|
|
1.800% Notes due December 15, 2017
|
|
250
|
|
|
5.000% Notes due May 15, 2019
|
|
153
|
|
|
6.375% Notes due August 1, 2019
|
|
338
|
|
|
2.675% Notes due December 15, 2019
|
|
125
|
|
|
3.875% Notes due May 15, 2024
|
|
221
|
|
|
3.734% Notes due December 15, 2024
|
|
375
|
|
|
Total notes purchased
|
|
$
|
1,689
|
|
•
|
Medical segment volume growth in the
second
quarter was driven by the Medication and Procedural Solutions and Medication Management Solutions units.
Second
quarter revenues in the Diabetes Care and Pharmaceutical Systems units were unfavorably impacted by the timing of orders that were expected to occur in the second quarter but were received in the first quarter.
|
•
|
Life Sciences segment volume growth in the
second
quarter was driven by the Preanalytical Systems and Diagnostic Systems units. Life Sciences segment volume growth in the
second
quarter was partially offset by the unfavorable timing of instrument orders and the impact of sales fulfillment delays in the Biosciences unit.
|
•
|
Worldwide sales of safety-engineered products reflected growth that was attributable to both segments.
Second
quarter sales in the United States of safety-engineered devices of $
459
million increased
3.7%
and
second
quarter international sales of safety-engineered devices of $
315
million grew
8.6%
over the prior year’s period, inclusive of an estimated
1.7%
unfavorable impact due to foreign currency translation.
|
|
Three months ended March 31,
|
|||||||||||||||
(Millions of dollars)
|
2017
|
|
2016
|
|
Total
Change (B)
|
|
Estimated
FX
Impact
|
|
FXN Change (B)
|
|||||||
Medication and Procedural Solutions
|
$
|
865
|
|
|
$
|
831
|
|
|
4.1
|
%
|
|
(0.7
|
)%
|
|
4.8
|
%
|
Medication Management Solutions (A)
|
567
|
|
|
533
|
|
|
6.3
|
%
|
|
(0.7
|
)%
|
|
7.0
|
%
|
||
Diabetes Care
|
243
|
|
|
243
|
|
|
—
|
%
|
|
(0.5
|
)%
|
|
0.5
|
%
|
||
Pharmaceutical Systems
|
312
|
|
|
311
|
|
|
0.4
|
%
|
|
(2.2
|
)%
|
|
2.6
|
%
|
||
Respiratory Solutions (A)
|
—
|
|
|
213
|
|
|
NM
|
|
|
—
|
%
|
|
NM
|
|
||
Total Medical Revenues
|
$
|
1,987
|
|
|
$
|
2,131
|
|
|
(6.8
|
)%
|
|
(0.9
|
)%
|
|
(5.9
|
)%
|
|
|
|
|
|
|
|
|
|
|
|||||||
Medical segment safety-engineered products
|
$
|
485
|
|
|
$
|
465
|
|
|
4.3
|
%
|
|
(0.4
|
)%
|
|
4.7
|
%
|
(A)
|
The presentation of prior-period amounts has been revised to conform with the presentation of current-period amounts, which does not separately present an immaterial adjustment for the amortization of a deferred revenue balance write-down relating to the CareFusion acquisition.
|
|
Six months ended March 31,
|
|||||||||||||||
(Millions of dollars)
|
2017
|
|
2016
|
|
Total
Change |
|
Estimated
FX Impact |
|
FXN Change
|
|||||||
Total Medical Revenues
|
$
|
3,951
|
|
|
$
|
4,185
|
|
|
(5.6
|
)%
|
|
(0.7
|
)%
|
|
(4.9
|
)%
|
|
|
|
|
|
|
|
|
|
|
|||||||
Medical segment safety-engineered products
|
$
|
968
|
|
|
$
|
932
|
|
|
3.9
|
%
|
|
(0.3
|
)%
|
|
4.2
|
%
|
|
Three months ended March 31,
|
|
Six months ended March 31,
|
||||||||||||
(Millions of dollars)
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Medical segment operating income
|
$
|
537
|
|
|
$
|
513
|
|
|
$
|
1,085
|
|
|
$
|
978
|
|
|
|
|
|
|
|
|
|
||||||||
Segment operating income as % of Medical revenues
|
27.0
|
%
|
|
24.1
|
%
|
|
27.5
|
%
|
|
23.4
|
%
|
|
Three months ended March 31,
|
|||||||||||||||
(Millions of dollars)
|
2017
|
|
2016
|
|
Total
Change
|
|
Estimated
FX
Impact
|
|
FXN Change
|
|||||||
Preanalytical Systems
|
$
|
363
|
|
|
$
|
340
|
|
|
6.6
|
%
|
|
(0.9
|
)%
|
|
7.5
|
%
|
Diagnostic Systems
|
350
|
|
|
319
|
|
|
9.8
|
%
|
|
(0.7
|
)%
|
|
10.5
|
%
|
||
Biosciences
|
269
|
|
|
277
|
|
|
(2.8
|
)%
|
|
(1.0
|
)%
|
|
(1.8
|
)%
|
||
Total Life Sciences Revenues
|
$
|
982
|
|
|
$
|
936
|
|
|
4.9
|
%
|
|
(0.9
|
)%
|
|
5.8
|
%
|
|
|
|
|
|
|
|
|
|
|
|||||||
Life Sciences segment safety-engineered products
|
$
|
289
|
|
|
$
|
268
|
|
|
8.0
|
%
|
|
(1.0
|
)%
|
|
9.0
|
%
|
|
Six months ended March 31,
|
|||||||||||||||
(Millions of dollars)
|
2017
|
|
2016
|
|
Total
Change |
|
Estimated
FX Impact |
|
FXN Change
|
|||||||
Total Life Sciences Revenues
|
$
|
1,940
|
|
|
$
|
1,869
|
|
|
3.8
|
%
|
|
(0.7
|
)%
|
|
4.5
|
%
|
|
|
|
|
|
|
|
|
|
|
|||||||
Life Sciences segment safety-engineered products
|
$
|
569
|
|
|
$
|
538
|
|
|
5.7
|
%
|
|
(1.0
|
)%
|
|
6.7
|
%
|
|
Three months ended March 31,
|
|
Six months ended March 31,
|
||||||||||||
(Millions of dollars)
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Life Sciences segment operating income
|
$
|
177
|
|
|
$
|
202
|
|
|
$
|
376
|
|
|
$
|
404
|
|
|
|
|
|
|
|
|
|
||||||||
Segment operating income as % of Life Sciences revenues
|
18.0
|
%
|
|
21.6
|
%
|
|
19.4
|
%
|
|
21.6
|
%
|
|
Three months ended March 31,
|
|||||||||||||||
(Millions of dollars)
|
2017
|
|
2016
|
|
Total
Change
|
|
Estimated
FX
Impact
|
|
FXN Change
|
|||||||
United States
|
$
|
1,627
|
|
|
$
|
1,719
|
|
|
(5.4
|
)%
|
|
—
|
|
|
(5.4
|
)%
|
International
|
1,342
|
|
|
1,349
|
|
|
(0.5
|
)%
|
|
(2.0
|
)%
|
|
1.5
|
%
|
||
Total Revenues
|
$
|
2,969
|
|
|
$
|
3,067
|
|
|
(3.2
|
)%
|
|
(0.8
|
)%
|
|
(2.4
|
)%
|
|
Three months ended March 31,
|
|
Six months ended March 31,
|
||||||||||||
(Millions of dollars)
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Integration costs (A)
|
63
|
|
|
40
|
|
|
109
|
|
|
75
|
|
||||
Restructuring costs (A)
|
11
|
|
|
64
|
|
|
46
|
|
|
149
|
|
||||
Transaction costs (A)
|
8
|
|
|
—
|
|
|
14
|
|
|
—
|
|
||||
Purchase accounting adjustments (B)
|
129
|
|
|
115
|
|
|
255
|
|
|
268
|
|
||||
Litigation-related item (C)
|
—
|
|
|
—
|
|
|
(336
|
)
|
|
—
|
|
||||
Loss on debt extinguishment (D)
|
—
|
|
|
—
|
|
|
42
|
|
|
—
|
|
||||
Total specified items
|
211
|
|
|
218
|
|
|
130
|
|
|
492
|
|
||||
Tax impact of specified items
|
54
|
|
|
85
|
|
|
27
|
|
|
164
|
|
||||
After-tax impact of specified items
|
$
|
157
|
|
|
$
|
134
|
|
|
$
|
103
|
|
|
$
|
329
|
|
(A)
|
Represents integration, restructuring and transaction costs substantially associated with our fiscal year 2015 acquisition of CareFusion and other portfolio rationalization initiatives. The integration and restructuring costs were recorded in
Acquisitions and other restructurings
. The transactions costs were recorded in
Acquisitions and other restructurings
and
Other (expense) income, net
.
|
(B)
|
Primarily represents non-cash amortization expense associated with acquisition-related identifiable intangible assets. BD’s amortization expense is primarily recorded in
Costs of products sold
.
|
(C)
|
Represents the reversal of certain reserves related to an appellate court decision recorded in
Other operating income
, as further discussed below.
|
(D)
|
Represents a loss recognized in
Other (expense) income, net
upon our extinguishment of certain long-term senior notes, as further discussed below.
|
|
Three-month period
|
|
Six-month period
|
||
March 31, 2016 gross profit margin %
|
48.4
|
%
|
|
47.8
|
%
|
Operating performance
|
0.2
|
%
|
|
1.0
|
%
|
Impact of divestitures
|
0.8
|
%
|
|
0.8
|
%
|
Foreign currency translation
|
(1.2
|
)%
|
|
(0.6
|
)%
|
March 31, 2017 gross profit margin %
|
48.2
|
%
|
|
49.0
|
%
|
|
Three months ended March 31,
|
|
Increase (decrease) in basis points
|
|
Six months ended March 31,
|
|
Increase (decrease) in basis points
|
||||||||||||||
|
2017
|
|
2016
|
|
|
2017
|
|
2016
|
|
||||||||||||
(Millions of dollars)
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Selling and administrative expense
|
$
|
724
|
|
|
$
|
732
|
|
|
|
|
$
|
1,432
|
|
|
$
|
1,480
|
|
|
|
||
% of revenues
|
24.4
|
%
|
|
23.9
|
%
|
|
50
|
|
|
24.3
|
%
|
|
24.5
|
%
|
|
(20
|
)
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Research and development expense
|
$
|
187
|
|
|
$
|
182
|
|
|
|
|
$
|
368
|
|
|
$
|
369
|
|
|
|
||
% of revenues
|
6.3
|
%
|
|
5.9
|
%
|
|
40
|
|
|
6.2
|
%
|
|
6.1
|
%
|
|
10
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Acquisitions and other restructurings
|
$
|
76
|
|
|
$
|
104
|
|
|
|
|
$
|
163
|
|
|
$
|
225
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Other operating income
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
$
|
(336
|
)
|
|
$
|
—
|
|
|
|
|
Three months ended March 31,
|
|
Six months ended March 31,
|
||||||||||||
(Millions of dollars)
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Interest expense
|
$
|
(86
|
)
|
|
$
|
(99
|
)
|
|
$
|
(181
|
)
|
|
$
|
(196
|
)
|
Interest income
|
7
|
|
|
3
|
|
|
12
|
|
|
9
|
|
||||
Net interest expense
|
$
|
(79
|
)
|
|
$
|
(96
|
)
|
|
$
|
(169
|
)
|
|
$
|
(187
|
)
|
|
Three months ended March 31,
|
|
Six months ended March 31,
|
||||||||||||
(Millions of dollars)
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Loss on debt extinguishment
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(42
|
)
|
|
$
|
—
|
|
Share of Vyaire Medical joint venture results, net of income from transition services agreements
|
(9
|
)
|
|
—
|
|
|
5
|
|
|
—
|
|
||||
Gains (losses) on undesignated foreign exchange derivatives, net
|
1
|
|
|
3
|
|
|
(3
|
)
|
|
3
|
|
||||
Other
|
3
|
|
|
3
|
|
|
5
|
|
|
8
|
|
||||
Other (expense) income, net
|
$
|
(5
|
)
|
|
$
|
6
|
|
|
$
|
(35
|
)
|
|
$
|
11
|
|
|
Three months ended March 31,
|
|
Six months ended March 31,
|
||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||
Effective income tax rate
|
4.9
|
%
|
|
10.0
|
%
|
|
14.1
|
%
|
|
11.7
|
%
|
|
|
|
|
|
|
|
|
||||
Favorable impact, in basis points, from specified items
|
760
|
|
|
1,060
|
|
|
70
|
|
|
930
|
|
|
Three months ended March 31,
|
|
Six months ended March 31,
|
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Net Income (Millions of dollars)
|
$
|
344
|
|
|
$
|
338
|
|
|
$
|
905
|
|
|
$
|
567
|
|
Diluted Earnings per Share
|
$
|
1.58
|
|
|
$
|
1.56
|
|
|
$
|
4.15
|
|
|
$
|
2.62
|
|
|
|
|
|
|
|
|
|
||||||||
Unfavorable impact-specified items
|
$
|
(0.72
|
)
|
|
$
|
(0.62
|
)
|
|
$
|
(0.47
|
)
|
|
$
|
(1.52
|
)
|
Unfavorable impact-foreign currency translation
|
$
|
(0.16
|
)
|
|
|
|
$
|
(0.17
|
)
|
|
|
|
Six months ended March 31,
|
||||||
(Millions of dollars)
|
2017
|
|
2016
|
||||
Net cash provided by (used for)
|
|
|
|
||||
Operating activities
|
$
|
1,040
|
|
|
$
|
1,020
|
|
Investing activities
|
$
|
(155
|
)
|
|
$
|
(170
|
)
|
Financing activities
|
$
|
(1,861
|
)
|
|
$
|
(576
|
)
|
(Millions of dollars)
|
March 31, 2017
|
|
September 30, 2016
|
||||
Total debt
|
$
|
10,306
|
|
|
$
|
11,551
|
|
|
|
|
|
||||
Short-term debt as a percentage of total debt
|
11.9
|
%
|
|
8.7
|
%
|
||
Weighted average cost of total debt
|
3.5
|
%
|
|
3.6
|
%
|
||
Total debt as a percentage of total capital*
|
53.3
|
%
|
|
57.2
|
%
|
•
|
Weakness in the global economy and financial markets, which could increase the cost of operating our business, weaken demand for our products and services, negatively impact the prices we can charge for our products and services, or impair our ability to produce our products.
|
•
|
Competitive factors that could adversely affect our operations, including new product introductions (for example, new forms of drug delivery) by our current or future competitors, increased pricing pressure due to the impact of low-cost manufacturers as certain competitors have established manufacturing sites or have contracted with suppliers in low-cost manufacturing locations as a means to lower their costs, patents attained by competitors (particularly as patents on our products expire), and new entrants into our markets.
|
•
|
The adverse financial impact resulting from unfavorable changes in foreign currency exchange rates.
|
•
|
Regional, national and foreign economic factors, including inflation, deflation, and fluctuations in interest rates, and their potential effect on our operating performance.
|
•
|
Our ability to achieve our projected level or mix of product sales, as our earnings forecasts are based on projected sales volumes and pricing of many product types, some of which are more profitable than others.
|
•
|
Changes in reimbursement practices of third-party payers or adverse decisions relating to our products by such payers, which could reduce demand for our products or the price we can charge for such products.
|
•
|
The impact of the Patient Protection and Affordable Care Act (the "PPACA") in the United States, which implemented an excise tax on U.S. sales of certain medical devices (which has been suspended until January 1, 2018), and which could result in reduced demand for our products, increased pricing pressures or otherwise adversely affect our business.
|
•
|
Future healthcare reform in the United States and other countries in which we do business that may involve changes in government pricing and reimbursement policies or other cost containment reforms.
|
•
|
Changes in domestic and foreign healthcare industry practices that result in a reduction in procedures using our products or increased pricing pressures, including the continued consolidation among healthcare providers and trends toward managed care and healthcare cost containment.
|
•
|
The impact of changes in U.S. federal laws and policy adopted under the new administration and Congress, including the effect that such changes will have on fiscal and tax policies, the potential repeal of all or portions of the PPACA, and international trade agreements and policies.
|
•
|
Fluctuations in the cost and availability of oil-based resins and other raw materials, as well as certain components, used in our products, the ability to maintain favorable supplier arrangements and relationships (particularly with respect to sole-source suppliers), and the potential adverse effects of any disruption in the availability of such items.
|
•
|
Security breaches of our information technology systems or our products, which could impair our ability to conduct business, result in the loss of BD trade secrets or otherwise compromise sensitive information of BD or its customers, suppliers and other business partners, or of customers' patients, or result in product efficacy or safety concerns for certain of our products.
|
•
|
Difficulties inherent in product development, including the potential inability to successfully continue technological innovation, successfully complete clinical trials, obtain regulatory approvals in the United States and abroad, obtain intellectual property protection for our products, obtain coverage and adequate reimbursement for new products, or gain and maintain market approval of products, as well as the possibility of infringement claims by competitors with respect to patents or other intellectual property rights, all of which can preclude or delay commercialization of a product. Delays in obtaining necessary approvals or clearances from the FDA or other regulatory agencies or changes in the regulatory process may also delay product launches and increase development costs.
|
•
|
The impact of business combinations, including any volatility in earnings relating to acquisition-related costs, and our ability to successfully integrate any business we may acquire.
|
•
|
Our ability to penetrate or expand our operations in emerging markets, which depends on local economic and political conditions, and how well we are able to acquire or form strategic business alliances with local companies and make necessary infrastructure enhancements to production facilities and distribution networks. Our international operations also increase our compliance risks, including risks under the Foreign Corrupt Practices Act and other anti-corruption laws.
|
•
|
Political conditions in international markets, including civil unrest, terrorist activity, governmental changes, trade barriers, restrictions on the ability to transfer capital across borders and governmental expropriation of assets. This includes the possible impact of the June 2016 advisory referendum by British voters to exit the European Union, which has created uncertainties affecting business operations in the United Kingdom and the EU.
|
•
|
Deficit reduction efforts or other actions that reduce the availability of government funding for healthcare and research, which could weaken demand for our products and result in additional pricing pressures, as well as create potential collection risks associated with such sales.
|
•
|
Fluctuations in university or U.S. and international governmental funding and policies for life sciences research.
|
•
|
Fluctuations in the demand for products we sell to pharmaceutical companies that are used to manufacture, or are sold with, the products of such companies, as a result of funding constraints, consolidation or otherwise.
|
•
|
The effects of events that adversely impact our ability to manufacture our products (particularly where production of a product line is concentrated in one or more plants) or our ability to source materials or components from suppliers (including sole-source suppliers) that are needed for such manufacturing.
|
•
|
Pending and potential future litigation or other proceedings adverse to BD, including antitrust, product liability, environmental and patent infringement, and the availability or collectability of insurance relating to any such claims.
|
•
|
New or changing laws and regulations affecting our domestic and foreign operations, or changes in enforcement practices, including laws relating to trade, monetary and fiscal policies, taxation (including tax reforms that could adversely impact multinational corporations), sales practices, environmental protection, price controls, and licensing and regulatory requirements for new products and products in the postmarketing phase. In particular, the U.S. and other countries may impose new requirements regarding registration, labeling or prohibited materials that may require us to re-register products already on the market or otherwise impact our ability to market our products. Environmental laws, particularly with respect to the emission of greenhouse gases, are also becoming more stringent throughout the world, which may increase our costs of operations or necessitate changes in our manufacturing plants or processes or those of our suppliers, or result in liability to BD.
|
•
|
Product efficacy or safety concerns regarding our products resulting in product recalls, regulatory action on the part of the U.S. Food and Drug Administration (FDA) or foreign counterparts, declining sales and product liability claims, particularly in light of the current regulatory environment, in which there has been increased enforcement activity by the FDA. As a result of the CareFusion acquisition, we are operating under a consent decree with the FDA relating to our U.S. infusion pump business. The consent decree authorizes the FDA, in the event of any violations in the future, to order us to cease manufacturing and distributing products, recall products or take other actions, and we may be required to pay significant monetary damages if we fail to comply with any provision of the consent decree.
|
•
|
Risks relating to our acquisition of CareFusion, including our ability to continue to successfully combine and integrate the CareFusion operations in order to fully obtain the anticipated benefits and costs savings from the transaction.
|
•
|
Risks related to our pending acquisition of Bard, including:
|
◦
|
The failure to satisfy the conditions to completing the transaction, including obtaining required regulatory approvals or approval of the Bard stockholders.
|
◦
|
Conditions to obtaining regulatory approval that may place restrictions on the business of the combined company.
|
◦
|
Our failure to obtain the anticipated benefits and costs savings from the acquisition.
|
◦
|
The impact of the additional debt we will incur and the equity and equity-linked securities that we will issue to finance the acquisition, including on our credit ratings and costs of borrowing.
|
•
|
The effect of adverse media exposure or other publicity regarding BD’s business or operations, including the effect on BD’s reputation or demand for its products.
|
•
|
The effect of market fluctuations on the value of assets in BD’s pension plans and on actuarial interest rate and asset return assumptions, which could require BD to make additional contributions to the plans or increase our pension plan expense.
|
•
|
Our ability to obtain the anticipated benefits of restructuring programs, if any, that we may undertake.
|
•
|
Issuance of new or revised accounting standards by the Financial Accounting Standards Board or the Securities and Exchange Commission.
|
•
|
the market price of our common stock could decline;
|
•
|
if the Bard merger agreement is terminated and our board of directors seeks another business combination, our stockholders cannot be certain that we will be able to find a party willing to enter into a transaction on terms equivalent to or more attractive than the terms that Bard has agreed to in the Bard merger agreement;
|
•
|
time and resources, financial and other, committed by our management to matters relating to the Bard acquisition could otherwise have been devoted to pursuing other beneficial opportunities for our company;
|
•
|
we may experience negative reactions from the financial markets or from our customers or employees; and
|
•
|
we will be required to pay our respective costs relating to the Bard acquisition, including legal, accounting, financial advisory, financing and printing fees, whether or not the Bard acquisition is completed.
|
•
|
the diversion of management’s attention from ongoing business concerns and performance shortfalls at one or both of the companies as a result of the devotion of management’s attention to the Bard acquisition;
|
•
|
managing a larger combined company;
|
•
|
maintaining employee morale and retaining key management and other employees;
|
•
|
the possibility of faulty assumptions underlying expectations regarding the integration process;
|
•
|
retaining existing business and operational relationships and attracting new business and operational relationships;
|
•
|
consolidating corporate and administrative infrastructures and eliminating duplicative operations and inconsistencies in standards, controls, procedures and policies;
|
•
|
coordinating geographically separate organizations;
|
•
|
unanticipated issues in integrating information technology, communications and other systems; and
|
•
|
unforeseen expenses or delays associated with the Bard acquisition.
|
•
|
investors’ anticipation of the potential resale in the market of a substantial number of additional shares of our common stock, including common stock received upon conversion of any equity-linked securities;
|
•
|
possible sales of our common stock by investors who view the equity-linked securities as a more attractive means of equity participation in us than owning shares of our common stock; and
|
•
|
hedging or arbitrage trading activity that may develop involving the equity or equity-linked securities.
|
For the three months ended March 31, 2017
|
Total Number of
Shares Purchased (1)
|
|
Average Price
Paid per
Share
|
|
Total Number of
Shares Purchased
as Part of
Publicly
Announced Plans
or Programs
|
|
Maximum Number
of Shares that May
Yet Be Purchased
Under the Plans or
Programs (2)
|
|||||
January 1 – 31, 2017
|
2,217
|
|
|
$
|
164.51
|
|
|
—
|
|
|
7,857,742
|
|
February 1 – 28, 2017
|
392
|
|
|
179.46
|
|
|
—
|
|
|
7,857,742
|
|
|
March 1 – 31, 2017
|
—
|
|
|
—
|
|
|
—
|
|
|
7,857,742
|
|
|
Total
|
2,609
|
|
|
$
|
166.76
|
|
|
—
|
|
|
7,857,742
|
|
(1)
|
Includes 2,609 shares purchased during the quarter in open market transactions by the trust relating to BD’s Deferred Compensation and Retirement Benefit Restoration Plan and 1996 Directors’ Deferral Plan.
|
(2)
|
Represents shares available under a repurchase program authorized by the Board of Directors on September 24, 2013 for 10 million shares, for which there is no expiration date.
|
Exhibit 2
|
Agreement and Plan of Merger, dated as of April 23, 2017, among C.R. Bard, Inc., Becton, Dickinson and Company and Lambda Corp. (incorporated by reference to Exhibit 2.1 of the registrant’s Current Report on Form 8-K dated April 24, 2017).
|
Exhibit 3
|
Amended and Restated Bylaws (incorporated by reference to Exhibit 3.1 of the registrant’s Current Report on Form 8-K dated April 24, 2017).
|
Exhibit 10.1
|
Performance Incentive Plan, amended and restated as of January 24, 2017.
|
Exhibit 10.2
|
Commitment Letter (incorporated by reference to Exhibit 10.1 of the registrant’s Current Report on Form 8-K dated April 24, 2017).
|
Exhibit 31
|
Certifications of Chief Executive Officer and Chief Financial Officer, pursuant to SEC Rule 13a - 14(a).
|
Exhibit 32
|
Certifications of Chief Executive Officer and Chief Financial Officer, pursuant to Rule 13a - 14(b) and Section 1350 of Chapter 63 of Title 18 of the U.S. Code.
|
Exhibit 101
|
The following materials from this report, formatted in XBRL (Extensible Business Reporting Language): (i) the Condensed Consolidated Balance Sheets, (ii) the Condensed Consolidated Statements of Income, (iii) the Condensed Consolidated Statements of Comprehensive Income, (iv) the Condensed Consolidated Statements of Cash Flows, and (v) Notes to Condensed Consolidated Financial Statements.
|
|
Becton, Dickinson and Company
|
|
(Registrant)
|
|
/s/ Christopher Reidy
|
|
Christopher Reidy
|
|
Executive Vice President, Chief Financial Officer and Chief Administrative Officer
|
|
(Principal Financial Officer)
|
|
|
|
/s/ John Gallagher
|
|
John Gallagher
|
|
Senior Vice President, Corporate Finance, Controller and Treasurer
|
|
(Principal Accounting Officer)
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Exhibit
Number
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Description of Exhibits
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2
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Agreement and Plan of Merger, dated as of April 23, 2017, among C.R. Bard, Inc., Becton, Dickinson and Company and Lambda Corp. (incorporated by reference to Exhibit 2.1 of the registrant’s Current Report on Form 8-K dated April 24, 2017).
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3
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Amended and Restated Bylaws (incorporated by reference to Exhibit 3.1 of the registrant’s Current Report on Form 8-K dated April 24, 2017).
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10.1
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Performance Incentive Plan, amended and restated as of January 24, 2017.
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10.2
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Commitment Letter (incorporated by reference to Exhibit 10.1 of the registrant’s Current Report on Form 8-K dated April 24, 2017).
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31
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Certifications of Chief Executive Officer and Chief Financial Officer, pursuant to SEC Rule 13a - 14(a).
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32
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Certifications of Chief Executive Officer and Chief Financial Officer, pursuant to Rule 13a - 14(b) and Section 1350 of Chapter 63 of Title 18 of the U.S. Code.
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101
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The following materials from this report, formatted in XBRL (Extensible Business Reporting Language): (i) the Condensed Consolidated Balance Sheets, (ii) the Condensed Consolidated Statements of Income, (iii) the Condensed Consolidated Statements of Comprehensive Income, (iv) the Condensed Consolidated Statements of Cash Flows, and (v) Notes to Condensed Consolidated Financial Statements.
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(a)
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Theoretical Incentive
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(b)
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Incentive Factors
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(c)
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Communication
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(d)
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Incentive Payment Recommendations
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(a)
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Payment
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(b)
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Exceptions
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1.
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I have reviewed this Quarterly Report on Form 10-Q of Becton, Dickinson and Company;
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2.
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Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
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3.
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Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
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4.
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The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
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(a)
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Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
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(b)
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Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
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(c)
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Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
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(d)
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Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
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5.
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The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
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(a)
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All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
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(b)
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Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
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/s/ Vincent A. Forlenza
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Vincent A. Forlenza
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Chairman and Chief Executive Officer
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1.
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I have reviewed this Quarterly Report on Form 10-Q of Becton, Dickinson and Company;
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2.
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Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
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3.
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Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
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4.
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The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
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(a)
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Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
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(b)
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Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
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(c)
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Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
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(d)
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Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
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5.
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The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
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(a)
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All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
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(b)
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Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
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/s/ Christopher Reidy
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Christopher Reidy
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Executive Vice President, Chief Financial Officer and Chief Administrative Officer
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1.
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such Report fully complies with the requirements of Section 13(a) of the Exchange Act; and
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2.
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the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Becton, Dickinson and Company.
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/s/ Vincent A. Forlenza
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Name: Vincent A. Forlenza
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Chief Executive Officer
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1.
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such Report fully complies with the requirements of Section 13(a) of the Exchange Act; and
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2.
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the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Becton, Dickinson and Company.
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/s/ Christopher Reidy
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Name: Christopher Reidy
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Chief Financial Officer
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