ý
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
¨
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
New Jersey
|
|
22-0760120
|
(State or other jurisdiction of
incorporation or organization) |
|
(I.R.S. Employer
Identification No.)
|
|
|
|
1 Becton Drive, Franklin Lakes, New Jersey 07417-1880
|
|
(201) 847-6800
|
(Address of principal executive offices) (Zip Code)
|
|
(Registrant’s telephone number, including area code)
|
Title of Each Class
|
|
Trading Symbol
|
|
Name of Each Exchange on
Which Registered
|
Common stock, par value $1.00
|
|
BDX
|
|
New York Stock Exchange
|
Depositary Shares, each representing a 1/20th interest in a share of 6.125% Cumulative Preferred Stock Series A
|
|
BDXA
|
|
New York Stock Exchange
|
0.368% Notes due June 6, 2019
|
|
BDX19D
|
|
New York Stock Exchange
|
1.000% Notes due December 15, 2022
|
|
BDX22A
|
|
New York Stock Exchange
|
1.900% Notes due December 15, 2026
|
|
BDX26
|
|
New York Stock Exchange
|
1.401% Notes due May 24, 2023
|
|
BDX23A
|
|
New York Stock Exchange
|
3.020% Notes due May 24, 2025
|
|
BDX25
|
|
New York Stock Exchange
|
|
|
|
Page
Number
|
Part I.
|
FINANCIAL INFORMATION
|
|
|
|
|
Item 1.
|
|
|
|
||
|
||
|
||
|
||
|
||
Item 2.
|
||
Item 3.
|
||
Item 4.
|
||
|
|
|
Part II.
|
|
|
|
|
|
Item 1.
|
||
Item 1A.
|
||
Item 2.
|
||
Item 3.
|
||
Item 4.
|
||
Item 5.
|
||
Item 6.
|
||
|
|
|
|
||
|
|
|
|
|
March 31,
2019 |
|
September 30,
2018 |
||||
Assets
|
(Unaudited)
|
|
|
||||
Current Assets:
|
|
|
|
||||
Cash and equivalents
|
$
|
686
|
|
|
$
|
1,140
|
|
Restricted cash
|
81
|
|
|
96
|
|
||
Short-term investments
|
10
|
|
|
17
|
|
||
Trade receivables, net
|
2,279
|
|
|
2,319
|
|
||
Inventories:
|
|
|
|
||||
Materials
|
555
|
|
|
510
|
|
||
Work in process
|
325
|
|
|
297
|
|
||
Finished products
|
1,748
|
|
|
1,644
|
|
||
|
2,627
|
|
|
2,451
|
|
||
Assets held for sale
|
—
|
|
|
137
|
|
||
Prepaid expenses and other
|
1,161
|
|
|
1,251
|
|
||
Total Current Assets
|
6,844
|
|
|
7,411
|
|
||
Property, Plant and Equipment
|
10,875
|
|
|
10,485
|
|
||
Less allowances for depreciation and amortization
|
5,402
|
|
|
5,111
|
|
||
Property, Plant and Equipment, Net
|
5,473
|
|
|
5,375
|
|
||
Goodwill
|
23,513
|
|
|
23,600
|
|
||
Developed Technology, Net
|
11,625
|
|
|
12,184
|
|
||
Customer Relationships, Net
|
3,564
|
|
|
3,723
|
|
||
Other Intangibles, Net
|
518
|
|
|
534
|
|
||
Other Assets
|
1,061
|
|
|
1,078
|
|
||
Total Assets
|
$
|
52,598
|
|
|
$
|
53,904
|
|
Liabilities and Shareholders’ Equity
|
|
|
|
||||
Current Liabilities:
|
|
|
|
||||
Short-term debt
|
$
|
3,057
|
|
|
$
|
2,601
|
|
Payables and accrued expenses
|
4,050
|
|
|
4,615
|
|
||
Total Current Liabilities
|
7,108
|
|
|
7,216
|
|
||
Long-Term Debt
|
17,556
|
|
|
18,894
|
|
||
Long-Term Employee Benefit Obligations
|
815
|
|
|
1,056
|
|
||
Deferred Income Taxes and Other
|
5,810
|
|
|
5,743
|
|
||
Commitments and Contingencies (See Note 5)
|
|
|
|
|
|
||
Shareholders’ Equity
|
|
|
|
||||
Preferred stock
|
2
|
|
|
2
|
|
||
Common stock
|
347
|
|
|
347
|
|
||
Capital in excess of par value
|
16,177
|
|
|
16,179
|
|
||
Retained earnings
|
12,792
|
|
|
12,596
|
|
||
Deferred compensation
|
23
|
|
|
22
|
|
||
Common stock in treasury - at cost
|
(6,192
|
)
|
|
(6,243
|
)
|
||
Accumulated other comprehensive loss
|
(1,839
|
)
|
|
(1,909
|
)
|
||
Total Shareholders’ Equity
|
21,309
|
|
|
20,994
|
|
||
Total Liabilities and Shareholders’ Equity
|
$
|
52,598
|
|
|
$
|
53,904
|
|
|
Three Months Ended
March 31, |
|
Six Months Ended
March 31, |
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Revenues
|
$
|
4,195
|
|
|
$
|
4,222
|
|
|
$
|
8,355
|
|
|
$
|
7,302
|
|
Cost of products sold
|
2,221
|
|
|
2,616
|
|
|
4,408
|
|
|
4,143
|
|
||||
Selling and administrative expense
|
1,089
|
|
|
1,056
|
|
|
2,161
|
|
|
1,829
|
|
||||
Research and development expense
|
252
|
|
|
259
|
|
|
510
|
|
|
451
|
|
||||
Acquisitions and other restructurings
|
101
|
|
|
104
|
|
|
191
|
|
|
458
|
|
||||
Other operating expense, net
|
396
|
|
|
—
|
|
|
61
|
|
|
—
|
|
||||
Total Operating Costs and Expenses
|
4,059
|
|
|
4,036
|
|
|
7,332
|
|
|
6,881
|
|
||||
Operating Income
|
136
|
|
|
186
|
|
|
1,024
|
|
|
422
|
|
||||
Interest expense
|
(171
|
)
|
|
(185
|
)
|
|
(342
|
)
|
|
(343
|
)
|
||||
Interest income
|
18
|
|
|
4
|
|
|
6
|
|
|
48
|
|
||||
Other income (expense), net
|
20
|
|
|
1
|
|
|
30
|
|
|
(15
|
)
|
||||
Income Before Income Taxes
|
3
|
|
|
6
|
|
|
718
|
|
|
111
|
|
||||
Income tax (benefit) provision
|
(17
|
)
|
|
18
|
|
|
98
|
|
|
260
|
|
||||
Net Income (Loss)
|
20
|
|
|
(12
|
)
|
|
619
|
|
|
(148
|
)
|
||||
Preferred stock dividends
|
(38
|
)
|
|
(38
|
)
|
|
(76
|
)
|
|
(76
|
)
|
||||
Net (loss) income applicable to common shareholders
|
$
|
(18
|
)
|
|
$
|
(50
|
)
|
|
$
|
544
|
|
|
$
|
(224
|
)
|
|
|
|
|
|
|
|
|
||||||||
|
|
|
|
|
|
|
|
||||||||
Basic (Loss) Earnings per Share
|
$
|
(0.07
|
)
|
|
$
|
(0.19
|
)
|
|
$
|
2.02
|
|
|
$
|
(0.90
|
)
|
Diluted (Loss) Earnings per Share
|
$
|
(0.07
|
)
|
|
$
|
(0.19
|
)
|
|
$
|
1.98
|
|
|
$
|
(0.90
|
)
|
Dividends per Common Share
|
$
|
0.77
|
|
|
$
|
0.75
|
|
|
$
|
1.54
|
|
|
$
|
1.50
|
|
|
Three Months Ended
March 31, |
|
Six Months Ended
March 31, |
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Net Income (Loss)
|
$
|
20
|
|
|
$
|
(12
|
)
|
|
$
|
619
|
|
|
$
|
(148
|
)
|
Other Comprehensive Income (Loss), Net of Tax
|
|
|
|
|
|
|
|
||||||||
Foreign currency translation adjustments
|
76
|
|
|
128
|
|
|
42
|
|
|
92
|
|
||||
Defined benefit pension and postretirement plans
|
13
|
|
|
(90
|
)
|
|
28
|
|
|
(72
|
)
|
||||
Cash flow hedges
|
(1
|
)
|
|
(2
|
)
|
|
—
|
|
|
(1
|
)
|
||||
Other Comprehensive Income, Net of Tax
|
88
|
|
|
36
|
|
|
70
|
|
|
18
|
|
||||
Comprehensive Income (Loss)
|
$
|
108
|
|
|
$
|
24
|
|
|
$
|
689
|
|
|
$
|
(130
|
)
|
|
Six Months Ended
March 31, |
||||||
|
2019
|
|
2018
|
||||
Operating Activities
|
|
|
|
||||
Net income (loss)
|
$
|
619
|
|
|
$
|
(148
|
)
|
Adjustments to net income (loss) to derive net cash provided by operating activities:
|
|
|
|
||||
Depreciation and amortization
|
1,126
|
|
|
844
|
|
||
Share-based compensation
|
152
|
|
|
207
|
|
||
Deferred income taxes
|
(109
|
)
|
|
(400
|
)
|
||
Change in operating assets and liabilities
|
(531
|
)
|
|
702
|
|
||
Pension obligation
|
(202
|
)
|
|
(72
|
)
|
||
Excess tax benefits from payments under share-based compensation plans
|
38
|
|
|
56
|
|
||
Gain on sale of business
|
(335
|
)
|
|
—
|
|
||
Product liability-related charge
|
331
|
|
|
—
|
|
||
Other, net
|
(63
|
)
|
|
(172
|
)
|
||
Net Cash Provided by Operating Activities
|
1,027
|
|
|
1,017
|
|
||
Investing Activities
|
|
|
|
||||
Capital expenditures
|
(362
|
)
|
|
(391
|
)
|
||
Proceeds from sale of investments, net
|
5
|
|
|
7
|
|
||
Acquisitions of businesses, net of cash acquired
|
—
|
|
|
(15,006
|
)
|
||
Proceeds from divestitures, net
|
477
|
|
|
100
|
|
||
Other, net
|
(90
|
)
|
|
(84
|
)
|
||
Net Cash Provided by (Used for) Investing Activities
|
30
|
|
|
(15,373
|
)
|
||
Financing Activities
|
|
|
|
||||
Change in credit facility borrowings
|
—
|
|
|
380
|
|
||
Proceeds from long-term debt and term loans
|
—
|
|
|
3,622
|
|
||
Payments of debt and term loans
|
(905
|
)
|
|
(1,833
|
)
|
||
Dividends paid
|
(491
|
)
|
|
(449
|
)
|
||
Other, net
|
(135
|
)
|
|
(155
|
)
|
||
Net Cash (Used for) Provided by Financing Activities
|
(1,532
|
)
|
|
1,565
|
|
||
Effect of exchange rate changes on cash and equivalents and restricted cash
|
5
|
|
|
29
|
|
||
Net decrease in cash and equivalents and restricted cash
|
(469
|
)
|
|
(12,762
|
)
|
||
Opening Cash and Equivalents and Restricted Cash
|
1,236
|
|
|
14,179
|
|
||
Closing Cash and Equivalents and Restricted Cash
|
$
|
767
|
|
|
$
|
1,417
|
|
|
|
|
|
||||
Non-Cash Investing Activities
|
|
|
|
||||
Fair value of shares issued as acquisition consideration
|
$
|
—
|
|
|
$
|
8,004
|
|
Fair value of equity awards issued as acquisition consideration
|
$
|
—
|
|
|
$
|
613
|
|
|
Common
Stock Issued
at Par Value
|
|
Capital in
Excess of
Par Value
|
|
Retained
Earnings
|
|
Deferred
Compensation
|
|
Treasury Stock
|
|||||||||||||
(Millions of dollars)
|
Shares (in
thousands)
|
|
Amount
|
|||||||||||||||||||
Balance at September 30, 2018
|
$
|
347
|
|
|
$
|
16,179
|
|
|
$
|
12,596
|
|
|
$
|
22
|
|
|
(78,463
|
)
|
|
$
|
(6,243
|
)
|
Net income
|
—
|
|
|
—
|
|
|
599
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Common dividends ($0.77 per share)
|
—
|
|
|
—
|
|
|
(207
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Preferred dividends
|
—
|
|
|
—
|
|
|
(38
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Common stock issued for share-based compensation and other plans, net
|
—
|
|
|
(97
|
)
|
|
—
|
|
|
2
|
|
|
851
|
|
|
9
|
|
|||||
Share-based compensation
|
—
|
|
|
92
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Common stock held in trusts, net (a)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(12
|
)
|
|
—
|
|
|||||
Effect of changes in accounting principles (see Note 2)
|
—
|
|
|
—
|
|
|
68
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Balance at December 31, 2018
|
$
|
347
|
|
|
$
|
16,174
|
|
|
$
|
13,018
|
|
|
$
|
24
|
|
|
(77,624
|
)
|
|
$
|
(6,235
|
)
|
Net income
|
—
|
|
|
—
|
|
|
20
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Common dividends ($0.77 per share)
|
—
|
|
|
—
|
|
|
(208
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Preferred dividends
|
—
|
|
|
—
|
|
|
(38
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Common stock issued for share-based compensation and other plans, net
|
—
|
|
|
(57
|
)
|
|
(1
|
)
|
|
(1
|
)
|
|
618
|
|
|
42
|
|
|||||
Share-based compensation
|
—
|
|
|
60
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Common stock held in trusts, net (a)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
50
|
|
|
—
|
|
|||||
Balance at March 31, 2019
|
$
|
347
|
|
|
$
|
16,177
|
|
|
$
|
12,792
|
|
|
$
|
23
|
|
|
(76,955
|
)
|
|
$
|
(6,192
|
)
|
|
Common
Stock Issued
at Par Value
|
|
Capital in
Excess of
Par Value
|
|
Retained
Earnings
|
|
Deferred
Compensation
|
|
Treasury Stock
|
|||||||||||||
(Millions of dollars)
|
Shares (in
thousands)
|
|
Amount
|
|||||||||||||||||||
Balance at September 30, 2017
|
$
|
347
|
|
|
$
|
9,619
|
|
|
$
|
13,111
|
|
|
$
|
19
|
|
|
(118,745
|
)
|
|
$
|
(8,427
|
)
|
Net loss
|
—
|
|
|
—
|
|
|
(136
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Common dividends ($0.75 per share)
|
—
|
|
|
—
|
|
|
(172
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Preferred dividends
|
—
|
|
|
—
|
|
|
(38
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Common stock issued for acquisition
|
—
|
|
|
6,487
|
|
|
—
|
|
|
—
|
|
|
37,306
|
|
|
2,121
|
|
|||||
Common stock issued for share-based compensation and other plans, net
|
—
|
|
|
(51
|
)
|
|
—
|
|
|
—
|
|
|
1,021
|
|
|
(37
|
)
|
|||||
Share-based compensation
|
—
|
|
|
142
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Common stock held in trusts, net (a)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(27
|
)
|
|
—
|
|
|||||
Balance at December 31, 2017
|
$
|
347
|
|
|
$
|
16,197
|
|
|
$
|
12,765
|
|
|
$
|
19
|
|
|
(80,445
|
)
|
|
$
|
(6,343
|
)
|
Net loss
|
—
|
|
|
—
|
|
|
(12
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Common dividends ($0.75 per share)
|
—
|
|
|
—
|
|
|
(201
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Preferred dividends
|
—
|
|
|
—
|
|
|
(38
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Common stock issued for acquisition
|
—
|
|
|
(9
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Common stock issued for share-based compensation and other plans, net
|
—
|
|
|
(94
|
)
|
|
(1
|
)
|
|
2
|
|
|
943
|
|
|
44
|
|
|||||
Share-based compensation
|
—
|
|
|
76
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Common stock held in trusts, net (a)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
17
|
|
|
—
|
|
|||||
Effect of changes in accounting principles (see Note 2)
|
—
|
|
|
—
|
|
|
103
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Balance at March 31, 2018
|
$
|
347
|
|
|
$
|
16,170
|
|
|
$
|
12,616
|
|
|
$
|
21
|
|
|
(79,485
|
)
|
|
$
|
(6,300
|
)
|
(a)
|
Common stock held in trusts represents rabbi trusts in connection with deferred compensation under the Company’s employee salary and bonus deferral plan and directors’ deferral plan.
|
(Millions of dollars)
|
Total
|
|
Foreign Currency
Translation
|
|
Benefit Plans
|
|
Cash Flow Hedges
|
||||||||
Balance at September 30, 2018
|
$
|
(1,909
|
)
|
|
$
|
(1,162
|
)
|
|
$
|
(729
|
)
|
|
$
|
(17
|
)
|
Other comprehensive (loss) income before reclassifications, net of taxes
|
(32
|
)
|
|
(35
|
)
|
|
3
|
|
|
(1
|
)
|
||||
Amounts reclassified into income, net of taxes
|
14
|
|
|
—
|
|
|
13
|
|
|
1
|
|
||||
Balance at December 31, 2018
|
$
|
(1,927
|
)
|
|
$
|
(1,197
|
)
|
|
$
|
(714
|
)
|
|
$
|
(16
|
)
|
Other comprehensive income (loss) before reclassifications, net of taxes
|
74
|
|
|
76
|
|
|
—
|
|
|
(2
|
)
|
||||
Amounts reclassified into income, net of taxes
|
14
|
|
|
—
|
|
|
13
|
|
|
1
|
|
||||
Balance at March 31, 2019
|
$
|
(1,839
|
)
|
|
$
|
(1,121
|
)
|
|
$
|
(701
|
)
|
|
$
|
(17
|
)
|
(Millions of dollars)
|
Total
|
|
Foreign Currency
Translation
|
|
Benefit Plans
|
|
Cash Flow Hedges
|
||||||||
Balance at September 30, 2017
|
$
|
(1,723
|
)
|
|
$
|
(1,001
|
)
|
|
$
|
(703
|
)
|
|
$
|
(18
|
)
|
Other comprehensive loss before reclassifications, net of taxes
|
(36
|
)
|
|
(36
|
)
|
|
—
|
|
|
—
|
|
||||
Amounts reclassified into income, net of taxes
|
18
|
|
|
—
|
|
|
17
|
|
|
1
|
|
||||
Balance at December 31, 2017
|
$
|
(1,740
|
)
|
|
$
|
(1,037
|
)
|
|
$
|
(686
|
)
|
|
$
|
(17
|
)
|
Other comprehensive income before reclassifications, net of taxes
|
128
|
|
|
128
|
|
|
—
|
|
|
—
|
|
||||
Amounts reclassified into income, net of taxes
|
11
|
|
|
—
|
|
|
9
|
|
|
2
|
|
||||
Tax effects reclassified into retained earnings
|
(103
|
)
|
|
—
|
|
|
(99
|
)
|
|
(4
|
)
|
||||
Balance at March 31, 2018
|
$
|
(1,704
|
)
|
|
$
|
(909
|
)
|
|
$
|
(776
|
)
|
|
$
|
(20
|
)
|
|
|
|
|
|
|
|
|
|
Three Months Ended
March 31, |
|
Six Months Ended
March 31, |
||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||
Average common shares outstanding
|
269,882
|
|
|
267,341
|
|
|
269,454
|
|
|
248,484
|
|
Dilutive share equivalents from share-based plans
|
—
|
|
|
—
|
|
|
4,975
|
|
|
—
|
|
Average common and common equivalent shares outstanding – assuming dilution
|
269,882
|
|
|
267,341
|
|
|
274,429
|
|
|
248,484
|
|
|
|
|
|
|
|
|
|
||||
Share equivalents excluded from the diluted shares outstanding calculation because the result would have been antidilutive:
|
|
|
|
|
|
|
|
||||
Mandatory convertible preferred stock
|
11,685
|
|
|
11,685
|
|
|
11,685
|
|
|
11,685
|
|
Share-based plans
|
4,405
|
|
|
6,352
|
|
|
—
|
|
|
5,439
|
|
|
Three Months Ended March 31,
|
||||||||||||||||||||||
(Millions of dollars)
|
2019
|
|
2018
|
||||||||||||||||||||
|
United States
|
|
International
|
|
Total
|
|
United States
|
|
International
|
|
Total
|
||||||||||||
Medical
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Medication Delivery Solutions
|
$
|
484
|
|
|
$
|
446
|
|
|
$
|
929
|
|
|
$
|
504
|
|
|
$
|
454
|
|
|
$
|
958
|
|
Medication Management Solutions
|
497
|
|
|
118
|
|
|
615
|
|
|
461
|
|
|
120
|
|
|
581
|
|
||||||
Diabetes Care
|
137
|
|
|
133
|
|
|
270
|
|
|
131
|
|
|
136
|
|
|
267
|
|
||||||
Pharmaceutical Systems
|
93
|
|
|
273
|
|
|
366
|
|
|
82
|
|
|
284
|
|
|
366
|
|
||||||
Total segment revenues
|
$
|
1,211
|
|
|
$
|
969
|
|
|
$
|
2,180
|
|
|
$
|
1,178
|
|
|
$
|
994
|
|
|
$
|
2,172
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Life Sciences
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Preanalytical Systems
|
$
|
171
|
|
|
$
|
195
|
|
|
$
|
366
|
|
|
$
|
181
|
|
|
$
|
200
|
|
|
$
|
381
|
|
Diagnostic Systems
|
180
|
|
|
209
|
|
|
389
|
|
|
201
|
|
|
209
|
|
|
410
|
|
||||||
Biosciences
|
120
|
|
|
177
|
|
|
297
|
|
|
116
|
|
|
191
|
|
|
307
|
|
||||||
Total segment revenues
|
$
|
470
|
|
|
$
|
582
|
|
|
$
|
1,052
|
|
|
$
|
498
|
|
|
$
|
600
|
|
|
$
|
1,098
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Interventional
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Surgery
|
$
|
271
|
|
|
$
|
75
|
|
|
$
|
345
|
|
|
$
|
276
|
|
|
$
|
75
|
|
|
$
|
351
|
|
Peripheral Intervention
|
194
|
|
|
148
|
|
|
342
|
|
|
194
|
|
|
145
|
|
|
338
|
|
||||||
Urology and Critical Care
|
195
|
|
|
80
|
|
|
275
|
|
|
180
|
|
|
84
|
|
|
264
|
|
||||||
Total segment revenues
|
$
|
659
|
|
|
$
|
303
|
|
|
$
|
963
|
|
|
$
|
649
|
|
|
$
|
303
|
|
|
$
|
952
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Total Company revenues
|
$
|
2,341
|
|
|
$
|
1,854
|
|
|
$
|
4,195
|
|
|
$
|
2,325
|
|
|
$
|
1,898
|
|
|
$
|
4,222
|
|
|
Six Months Ended March 31,
|
||||||||||||||||||||||
(Millions of dollars)
|
2019
|
|
2018
|
||||||||||||||||||||
|
United States
|
|
International
|
|
Total
|
|
United States
|
|
International
|
|
Total
|
||||||||||||
Medical
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Medication Delivery Solutions
|
$
|
1,004
|
|
|
$
|
883
|
|
|
$
|
1,887
|
|
|
$
|
874
|
|
|
$
|
826
|
|
|
$
|
1,700
|
|
Medication Management Solutions
|
1,003
|
|
|
236
|
|
|
1,239
|
|
|
932
|
|
|
237
|
|
|
1,168
|
|
||||||
Diabetes Care
|
282
|
|
|
261
|
|
|
544
|
|
|
277
|
|
|
267
|
|
|
544
|
|
||||||
Pharmaceutical Systems
|
161
|
|
|
485
|
|
|
646
|
|
|
136
|
|
|
475
|
|
|
612
|
|
||||||
Total segment revenues
|
$
|
2,450
|
|
|
$
|
1,865
|
|
|
$
|
4,316
|
|
|
$
|
2,218
|
|
|
$
|
1,806
|
|
|
$
|
4,024
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Life Sciences
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Preanalytical Systems
|
$
|
371
|
|
|
$
|
387
|
|
|
$
|
758
|
|
|
$
|
366
|
|
|
$
|
391
|
|
|
$
|
756
|
|
Diagnostic Systems
|
355
|
|
|
416
|
|
|
771
|
|
|
367
|
|
|
423
|
|
|
791
|
|
||||||
Biosciences
|
228
|
|
|
350
|
|
|
579
|
|
|
224
|
|
|
372
|
|
|
596
|
|
||||||
Total segment revenues
|
$
|
954
|
|
|
$
|
1,153
|
|
|
$
|
2,108
|
|
|
$
|
957
|
|
|
$
|
1,186
|
|
|
$
|
2,143
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Interventional
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Surgery
|
$
|
545
|
|
|
$
|
148
|
|
|
$
|
693
|
|
|
$
|
428
|
|
|
$
|
99
|
|
|
$
|
528
|
|
Peripheral Intervention
|
385
|
|
|
294
|
|
|
679
|
|
|
198
|
|
|
146
|
|
|
344
|
|
||||||
Urology and Critical Care
|
393
|
|
|
168
|
|
|
560
|
|
|
180
|
|
|
84
|
|
|
264
|
|
||||||
Total segment revenues
|
$
|
1,323
|
|
|
$
|
609
|
|
|
$
|
1,932
|
|
|
$
|
806
|
|
|
$
|
329
|
|
|
$
|
1,135
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Total Company revenues
|
$
|
4,728
|
|
|
$
|
3,628
|
|
|
$
|
8,355
|
|
|
$
|
3,982
|
|
|
$
|
3,321
|
|
|
$
|
7,302
|
|
|
Three Months Ended
March 31, |
|
Six Months Ended
March 31, |
||||||||||||
(Millions of dollars)
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Income Before Income Taxes
|
|
|
|
|
|
|
|
||||||||
Medical (a) (b)
|
$
|
599
|
|
|
$
|
588
|
|
|
$
|
1,265
|
|
|
$
|
1,211
|
|
Life Sciences
|
293
|
|
|
336
|
|
|
598
|
|
|
652
|
|
||||
Interventional (b)
|
231
|
|
|
(154
|
)
|
|
441
|
|
|
(72
|
)
|
||||
Total Segment Operating Income
|
1,123
|
|
|
770
|
|
|
2,303
|
|
|
1,791
|
|
||||
Acquisitions and other restructurings
|
(101
|
)
|
|
(104
|
)
|
|
(191
|
)
|
|
(458
|
)
|
||||
Net interest expense
|
(153
|
)
|
|
(181
|
)
|
|
(336
|
)
|
|
(295
|
)
|
||||
Other unallocated items (c)
|
(866
|
)
|
|
(479
|
)
|
|
(1,058
|
)
|
|
(926
|
)
|
||||
Income Before Income Taxes
|
$
|
3
|
|
|
$
|
6
|
|
|
$
|
718
|
|
|
$
|
111
|
|
(a)
|
The amounts in 2019 include
$65 million
of estimated remediation costs recorded to
Other operating expense, net
relating to a recall of a product component, which generally pre-dated the Company's acquisition of CareFusion in fiscal year 2015, within the Medication Management Solutions unit's infusion systems platform.
|
(b)
|
The amounts in 2018 included expense of
$53 million
and
$369 million
for the Medical and Interventional segments, respectively, related to the recognition of a fair value step-up adjustment of
$422 million
related to Bard's inventory on the acquisition date.
|
(c)
|
Primarily comprised of foreign exchange, certain general and administrative expenses and share-based compensation expense. The amounts in 2019 include a pre-tax charge of
$331 million
related to certain product liability matters, which is further discussed in Note 5. In addition, the amount for the
six
months ended
March 31, 2019
included the pre-tax gain recognized on the Company's sale of its Advanced Bioprocessing business of approximately
$335 million
, which is further discussed in Note 10.
|
|
Three Months Ended
March 31, |
|
Six Months Ended
March 31, |
||||||||||||
(Millions of dollars)
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Service cost
|
$
|
33
|
|
|
$
|
34
|
|
|
$
|
68
|
|
|
$
|
64
|
|
Interest cost
|
26
|
|
|
22
|
|
|
54
|
|
|
41
|
|
||||
Expected return on plan assets
|
(45
|
)
|
|
(40
|
)
|
|
(91
|
)
|
|
(72
|
)
|
||||
Amortization of prior service credit
|
(3
|
)
|
|
(3
|
)
|
|
(7
|
)
|
|
(7
|
)
|
||||
Amortization of loss
|
19
|
|
|
19
|
|
|
39
|
|
|
39
|
|
||||
Settlements
|
—
|
|
|
2
|
|
|
—
|
|
|
2
|
|
||||
Net pension cost
|
$
|
31
|
|
|
$
|
35
|
|
|
$
|
63
|
|
|
$
|
67
|
|
(Millions of dollars)
|
Employee
Termination
|
|
Other
|
|
Total
|
||||||||||||||||||
|
Bard
|
|
Other Initiatives
|
|
Bard (a)
|
|
Other Initiatives
|
|
Bard
|
|
Other Initiatives
|
||||||||||||
Balance at September 30, 2018
|
$
|
33
|
|
|
$
|
23
|
|
|
$
|
—
|
|
|
$
|
4
|
|
|
$
|
33
|
|
|
$
|
27
|
|
Charged to expense
|
9
|
|
|
8
|
|
|
38
|
|
|
17
|
|
|
47
|
|
|
25
|
|
||||||
Cash payments
|
(22
|
)
|
|
(11
|
)
|
|
(2
|
)
|
|
(14
|
)
|
|
(24
|
)
|
|
(25
|
)
|
||||||
Non-cash settlements
|
—
|
|
|
—
|
|
|
(36
|
)
|
|
(4
|
)
|
|
(36
|
)
|
|
(4
|
)
|
||||||
Balance at March 31, 2019
|
$
|
20
|
|
|
$
|
20
|
|
|
—
|
|
|
$
|
3
|
|
|
$
|
20
|
|
|
$
|
23
|
|
(a)
|
Largely represents the cost associated with certain pre-acquisition equity awards of Bard which, to encourage post-acquisition employee retention, were converted to BD equity awards with substantially the same terms and conditions as were applicable under such Bard awards immediately prior to the acquisition date.
|
|
March 31, 2019
|
|
September 30, 2018
|
||||||||||||
(Millions of dollars)
|
Gross
Carrying
Amount
|
|
Accumulated
Amortization
|
|
Gross
Carrying
Amount
|
|
Accumulated
Amortization
|
||||||||
Amortized intangible assets
|
|
|
|
|
|
|
|
||||||||
Developed technology
|
$
|
13,976
|
|
|
$
|
2,352
|
|
|
$
|
13,966
|
|
|
$
|
1,782
|
|
Customer relationships
|
4,586
|
|
|
1,022
|
|
|
4,584
|
|
|
861
|
|
||||
Product rights
|
118
|
|
|
60
|
|
|
121
|
|
|
58
|
|
||||
Trademarks
|
407
|
|
|
93
|
|
|
407
|
|
|
84
|
|
||||
Patents and other
|
407
|
|
|
295
|
|
|
397
|
|
|
288
|
|
||||
Amortized intangible assets
|
$
|
19,495
|
|
|
$
|
3,822
|
|
|
$
|
19,475
|
|
|
$
|
3,073
|
|
Unamortized intangible assets
|
|
|
|
|
|
|
|
||||||||
Acquired in-process research and development
|
$
|
31
|
|
|
|
|
$
|
37
|
|
|
|
||||
Trademarks
|
2
|
|
|
|
|
2
|
|
|
|
||||||
Unamortized intangible assets
|
$
|
33
|
|
|
|
|
$
|
39
|
|
|
|
(Millions of dollars)
|
Medical
|
|
Life Sciences
|
|
Interventional
|
|
Total
|
||||||||
Goodwill as of September 30, 2018
|
$
|
10,054
|
|
|
$
|
775
|
|
|
$
|
12,771
|
|
|
$
|
23,600
|
|
Divestiture-related adjustments
|
—
|
|
|
3
|
|
|
—
|
|
|
3
|
|
||||
Purchase accounting adjustments (a)
|
(15
|
)
|
|
—
|
|
|
(70
|
)
|
|
(84
|
)
|
||||
Currency translation
|
(3
|
)
|
|
(2
|
)
|
|
—
|
|
|
(5
|
)
|
||||
Goodwill as of March 31, 2019
|
$
|
10,036
|
|
|
$
|
776
|
|
|
$
|
12,701
|
|
|
$
|
23,513
|
|
(a)
|
The purchase accounting adjustments were primarily driven by adjustments to tax-related balances.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Millions of dollars)
|
March 31, 2019
|
|
September 30, 2018
|
||||
Cash and equivalents
|
$
|
686
|
|
|
$
|
1,140
|
|
Restricted cash
|
81
|
|
|
96
|
|
||
Cash and equivalents and restricted cash
|
$
|
767
|
|
|
$
|
1,236
|
|
•
|
Medical segment volume growth in the
second
quarter reflected growth in all of the segment's units, particularly in the Medication Management Solutions unit.
|
•
|
Life Sciences segment volume growth in the
second
quarter was mainly driven by the segment's Preanalytical Systems and Biosciences units.
|
•
|
Interventional segment volume growth in the
second
quarter reflected sales growth in all units, particularly in the Peripheral Intervention unit as well as in the Urology and Critical Care unit.
|
|
Three months ended March 31,
|
|||||||||||||||
(Millions of dollars)
|
2019
|
|
2018
|
|
Total
Change
|
|
Estimated
FX
Impact
|
|
FXN Change
|
|||||||
Medication Delivery Solutions
|
$
|
929
|
|
|
$
|
958
|
|
|
(3.0
|
)%
|
|
(3.2
|
)%
|
|
0.2
|
%
|
Medication Management Solutions
|
615
|
|
|
581
|
|
|
5.9
|
%
|
|
(1.4
|
)%
|
|
7.3
|
%
|
||
Diabetes Care
|
270
|
|
|
267
|
|
|
1.1
|
%
|
|
(3.4
|
)%
|
|
4.5
|
%
|
||
Pharmaceutical Systems
|
366
|
|
|
366
|
|
|
(0.1
|
)%
|
|
(4.0
|
)%
|
|
3.9
|
%
|
||
Total Medical Revenues
|
$
|
2,180
|
|
|
$
|
2,172
|
|
|
0.4
|
%
|
|
(2.9
|
)%
|
|
3.3
|
%
|
|
Six months ended March 31,
|
|||||||||||||||
(Millions of dollars)
|
2019
|
|
2018
|
|
Total
Change |
|
Estimated
FX Impact |
|
FXN Change
|
|||||||
Total Medical Revenues
|
$
|
4,316
|
|
|
$
|
4,024
|
|
|
7.2
|
%
|
|
(2.4
|
)%
|
|
9.6
|
%
|
|
Three months ended March 31,
|
|
Six months ended March 31,
|
||||||||||||
(Millions of dollars)
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Medical segment operating income
|
$
|
599
|
|
|
$
|
588
|
|
|
$
|
1,265
|
|
|
$
|
1,211
|
|
|
|
|
|
|
|
|
|
||||||||
Segment operating income as % of Medical revenues
|
27.5
|
%
|
|
27.1
|
%
|
|
29.3
|
%
|
|
30.1
|
%
|
•
|
Gross profit margin was higher in the
second
quarter of
2019
as compared with the
second
quarter of
2018
primarily due to the unfavorable prior-year impact of recognizing a fair value step-up adjustment relating to Bard's inventory on the acquisition date. Gross margin in the
second
quarter of
2019
was also favorably impacted by lower manufacturing costs resulting from continuous improvement projects which enhanced the efficiency of our operations. These favorable impacts to the Medical segment's gross margin were partially offset by unfavorable foreign currency translation, higher raw material costs and pricing pressures.
|
•
|
Selling and administrative expense as a percentage of revenues was slightly higher in the
second
quarter of
2019
as compared with the prior-year period primarily due to higher general administrative expenses.
|
•
|
Research and development expense as a percentage of revenues was lower in the
second
quarter of
2019
as compared with the
second
quarter of
2018
.
|
•
|
The Medical segment's operating income in the
second
quarter of 2019 additionally reflected the estimated cumulative costs of a product recall of $65 million recorded within
Other operating expense, net.
The recall relates to a product component, which generally pre-dated the Company's acquisition of CareFusion in fiscal year 2015, within the Medication Management Solutions unit's infusion systems platform.
|
|
Three months ended March 31,
|
|||||||||||||||
(Millions of dollars)
|
2019
|
|
2018
|
|
Total
Change
|
|
Estimated
FX
Impact
|
|
FXN Change
|
|||||||
Preanalytical Systems
|
$
|
366
|
|
|
$
|
381
|
|
|
(4.1
|
)%
|
|
(3.9
|
)%
|
|
(0.2
|
)%
|
Diagnostic Systems
|
389
|
|
|
410
|
|
|
(5.1
|
)%
|
|
(3.0
|
)%
|
|
(2.1
|
)%
|
||
Biosciences
|
297
|
|
|
307
|
|
|
(3.0
|
)%
|
|
(3.0
|
)%
|
|
—
|
%
|
||
Total Life Sciences Revenues
|
$
|
1,052
|
|
|
$
|
1,098
|
|
|
(4.2
|
)%
|
|
(3.3
|
)%
|
|
(0.9
|
)%
|
|
Six months ended March 31,
|
|||||||||||||||
(Millions of dollars)
|
2019
|
|
2018
|
|
Total
Change |
|
Estimated
FX Impact |
|
FXN Change
|
|||||||
Total Life Sciences Revenues
|
$
|
2,108
|
|
|
$
|
2,143
|
|
|
(1.6
|
)%
|
|
(2.6
|
)%
|
|
1.0
|
%
|
|
Three months ended March 31,
|
|
Six months ended March 31,
|
||||||||||||
(Millions of dollars)
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Life Sciences segment operating income
|
$
|
293
|
|
|
$
|
336
|
|
|
$
|
598
|
|
|
$
|
652
|
|
|
|
|
|
|
|
|
|
||||||||
Segment operating income as % of Life Sciences revenues
|
27.8
|
%
|
|
30.6
|
%
|
|
28.4
|
%
|
|
30.4
|
%
|
•
|
Gross profit margin in the
second
quarter of fiscal year
2019
was lower compared with the
second
quarter of
2018
primarily due to unfavorable foreign currency translation and an unfavorable impact from product mix as a result of the less severe flu season in the current-year period.
Second
quarter gross margin was also unfavorably impacted by customer rebate and incentive fees, as previously discussed above. These unfavorable impacts to the Life Sciences segment's gross margin were partially offset by licensing revenues, which are noted above, and lower manufacturing costs resulting from continuous improvement projects which enhanced the efficiency of our operations.
|
•
|
Selling and administrative expense as a percentage of revenues in the
second
quarter of
2019
was relatively flat compared with the prior-year period as unfavorable foreign currency translation was offset by the timing of certain selling and general administrative expenses.
|
•
|
Research and development expense as a percentage of revenues was slightly higher in the
second
quarter of
2019
as compared with the
second
quarter of
2018
.
|
|
Three months ended March 31,
|
|||||||||||||||
(Millions of dollars)
|
2019
|
|
2018
|
|
Total
Change
|
|
Estimated
FX
Impact
|
|
FXN Change
|
|||||||
Surgery
|
$
|
345
|
|
|
$
|
351
|
|
|
(1.5
|
)%
|
|
(1.2
|
)%
|
|
(0.3
|
)%
|
Peripheral Intervention
|
342
|
|
|
338
|
|
|
1.1
|
%
|
|
(2.7
|
)%
|
|
3.8
|
%
|
||
Urology and Critical Care
|
275
|
|
|
264
|
|
|
4.5
|
%
|
|
(1.5
|
)%
|
|
6.0
|
%
|
||
Total Interventional Revenues
|
$
|
963
|
|
|
$
|
952
|
|
|
1.1
|
%
|
|
(1.8
|
)%
|
|
2.9
|
%
|
|
Six months ended March 31,
|
|||||||||||||||
(Millions of dollars)
|
2019
|
|
2018
|
|
Total
Change |
|
Estimated
FX Impact |
|
FXN Change
|
|||||||
Total Interventional Revenues
|
$
|
1,932
|
|
|
$
|
1,135
|
|
|
70.2
|
%
|
|
(2.3
|
)%
|
|
72.5
|
%
|
|
Three months ended March 31,
|
|
Six months ended March 31,
|
||||||||||||
(Millions of dollars)
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Interventional segment operating income
|
$
|
231
|
|
|
$
|
(154
|
)
|
|
$
|
441
|
|
|
$
|
(72
|
)
|
|
|
|
|
|
|
|
|
||||||||
Segment operating income as % of Interventional revenues
|
24.0
|
%
|
|
(16.2
|
)%
|
|
22.8
|
%
|
|
(6.4
|
)%
|
•
|
Gross profit margin was higher in the
second
quarter of
2019
as compared with the
second
quarter of
2018
primarily due to the unfavorable prior-year impact of recognizing a fair value step-up adjustment relating to Bard's inventory on the acquisition date.
|
•
|
Selling and administrative expense as a percentage of revenues in the
second
quarter of
2019
was relatively flat compared with the prior-year period.
|
•
|
Research and development expense as a percentage of revenues was lower in the
second
quarter of
2019
as compared with the
second
quarter of
2018
.
|
|
Three months ended March 31,
|
|||||||||||||||
(Millions of dollars)
|
2019
|
|
2018
|
|
Total
Change |
|
Estimated
FX Impact |
|
FXN Change
|
|||||||
United States
|
$
|
2,341
|
|
|
$
|
2,325
|
|
|
0.7
|
%
|
|
—
|
%
|
|
0.7
|
%
|
International
|
1,854
|
|
|
1,898
|
|
|
(2.3
|
)%
|
|
(6.1
|
)%
|
|
3.8
|
%
|
||
Total Revenues
|
$
|
4,195
|
|
|
$
|
4,222
|
|
|
(0.6
|
)%
|
|
(2.7
|
)%
|
|
2.1
|
%
|
|
Three months ended March 31,
|
|
Six months ended March 31,
|
||||||||||||
(Millions of dollars)
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Integration costs (a)
|
$
|
70
|
|
|
$
|
79
|
|
|
$
|
143
|
|
|
$
|
153
|
|
Restructuring costs (a)
|
31
|
|
|
19
|
|
|
72
|
|
|
255
|
|
||||
Transaction costs (a)
|
1
|
|
|
7
|
|
|
2
|
|
|
51
|
|
||||
Financing impacts (b)
|
—
|
|
|
—
|
|
|
—
|
|
|
49
|
|
||||
Purchase accounting adjustments (c)
|
379
|
|
|
790
|
|
|
757
|
|
|
925
|
|
||||
Transaction gain/loss and product-related matters (d)
|
396
|
|
|
—
|
|
|
61
|
|
|
—
|
|
||||
European regulatory initiative-related costs (e)
|
10
|
|
|
—
|
|
|
15
|
|
|
—
|
|
||||
Hurricane recovery costs
|
—
|
|
|
5
|
|
|
—
|
|
|
12
|
|
||||
Losses on debt extinguishment (f)
|
1
|
|
|
13
|
|
|
1
|
|
|
13
|
|
||||
Total specified items
|
888
|
|
|
912
|
|
|
1,051
|
|
|
1,457
|
|
||||
Less: tax impact of specified items and tax reform (g)
|
160
|
|
|
137
|
|
|
143
|
|
|
2
|
|
||||
After-tax impact of specified items
|
$
|
729
|
|
|
$
|
775
|
|
|
$
|
908
|
|
|
$
|
1,455
|
|
(a)
|
Represents integration, restructuring and transaction costs which are primarily recorded in
Acquisitions and other restructurings
and are further discussed below.
|
(b)
|
Represents financing impacts associated with the Bard acquisition, which were recorded in
Interest income
and
Interest expense
.
|
(c)
|
Primarily represents non-cash amortization expense associated with acquisition-related identifiable intangible assets. BD’s amortization expense is primarily recorded in
Cost of products sold
. The amounts in 2018 also included a fair value step-up adjustment of $422 million relating to Bard's inventory on the acquisition date.
|
(d)
|
Represents amounts recorded to
Other operating expense, net
relating to certain product liability matters and the estimated cost of a product recall, as further discussed below. The amount in the
six-month
period also included the pre-tax gain recognized in
Other operating expense, net
on BD's sale of its Advanced Bioprocessing business, which is further discussed below.
|
(e)
|
Represents initial costs required to develop processes and systems to comply with emerging regulations such as the European Union Medical Device Regulation ("EUMDR") and General Data Protection Regulation ("GDPR"). These costs were recorded in
Cost of products sold
and
Research and development expense.
|
(f)
|
Represents losses recognized in
Other income (expense), net
upon our extinguishment of certain long-term senior notes.
|
(g)
|
The amounts in the
six-month
periods of fiscal years
2019
and
2018
included additional tax expense, net, of $20 million and $275 million, respectively relating to new U.S. tax legislation, as further discussed below.
|
|
Three-month period
|
|
Six-month period
|
||
March 31, 2018 gross profit margin %
|
38.0
|
%
|
|
43.3
|
%
|
Impact of purchase accounting adjustments and other specified items
|
10.1
|
%
|
|
3.9
|
%
|
Operating performance
|
—
|
%
|
|
1.0
|
%
|
Foreign currency translation
|
(1.0
|
)%
|
|
(1.0
|
)%
|
March 31, 2019 gross profit margin %
|
47.1
|
%
|
|
47.2
|
%
|
|
Three months ended March 31,
|
|
Increase (decrease) in basis points
|
|
Six months ended
March 31, |
|
Increase (decrease) in basis points
|
||||||||||||||
|
2019
|
|
2018
|
|
|
2019
|
|
2018
|
|
||||||||||||
(Millions of dollars)
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Selling and administrative expense
|
$
|
1,089
|
|
|
$
|
1,056
|
|
|
|
|
$
|
2,161
|
|
|
$
|
1,829
|
|
|
|
||
% of revenues
|
25.9
|
%
|
|
25.0
|
%
|
|
90
|
|
|
25.9
|
%
|
|
25.0
|
%
|
|
90
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Research and development expense
|
$
|
252
|
|
|
$
|
259
|
|
|
|
|
$
|
510
|
|
|
$
|
451
|
|
|
|
||
% of revenues
|
6.0
|
%
|
|
6.1
|
%
|
|
(10
|
)
|
|
6.1
|
%
|
|
6.2
|
%
|
|
(10
|
)
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Acquisitions and other restructurings
|
$
|
101
|
|
|
$
|
104
|
|
|
|
|
$
|
191
|
|
|
$
|
458
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Other operating expense, net
|
$
|
396
|
|
|
$
|
—
|
|
|
|
|
$
|
61
|
|
|
$
|
—
|
|
|
|
|
Three months ended March 31,
|
|
Six months ended March 31,
|
||||||||||||
(Millions of dollars)
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Interest expense
|
$
|
(171
|
)
|
|
$
|
(185
|
)
|
|
$
|
(342
|
)
|
|
$
|
(343
|
)
|
Interest income
|
18
|
|
|
4
|
|
|
6
|
|
|
48
|
|
||||
Net interest expense
|
$
|
(153
|
)
|
|
$
|
(181
|
)
|
|
$
|
(336
|
)
|
|
$
|
(295
|
)
|
|
Three months ended March 31,
|
|
Six months ended March 31,
|
||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||
Effective income tax rate
|
(540.4
|
)%
|
|
288.8
|
%
|
|
13.7
|
%
|
|
233.3
|
%
|
|
|
|
|
|
|
|
|
||||
Impact, in basis points, from specified items
|
(55,640
|
)
|
|
27,190
|
|
|
10
|
|
|
21,660
|
|
|
Three months ended March 31,
|
|
Six months ended March 31,
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Net Income (Loss) (Millions of dollars)
|
$
|
20
|
|
|
$
|
(12
|
)
|
|
$
|
619
|
|
|
$
|
(148
|
)
|
Diluted (Loss) Earnings per Share
|
$
|
(0.07
|
)
|
|
$
|
(0.19
|
)
|
|
$
|
1.98
|
|
|
$
|
(0.90
|
)
|
|
|
|
|
|
|
|
|
||||||||
Unfavorable impact-specified items
|
$
|
(2.70
|
)
|
|
$
|
(2.90
|
)
|
|
$
|
(3.31
|
)
|
|
$
|
(5.86
|
)
|
Dilutive impact of BD shares
|
$
|
0.04
|
|
|
$
|
0.06
|
|
|
$
|
—
|
|
|
$
|
(0.20
|
)
|
Unfavorable impact-foreign currency translation
|
$
|
(0.25
|
)
|
|
|
|
$
|
(0.39
|
)
|
|
|
|
Six months ended March 31,
|
||||||
(Millions of dollars)
|
2019
|
|
2018
|
||||
Net cash provided by (used for)
|
|
|
|
||||
Operating activities
|
$
|
1,027
|
|
|
$
|
1,017
|
|
Investing activities
|
$
|
30
|
|
|
$
|
(15,373
|
)
|
Financing activities
|
$
|
(1,532
|
)
|
|
$
|
1,565
|
|
|
Six months ended March 31,
|
||||||
(Millions of dollars)
|
2019
|
|
2018
|
||||
Cash inflow (outflow)
|
|
|
|
||||
Change in credit facility borrowings
|
$
|
—
|
|
|
$
|
380
|
|
Proceeds from long-term debt and term loans
|
$
|
—
|
|
|
$
|
3,622
|
|
Payments of debt and term loans
|
$
|
(905
|
)
|
|
$
|
(1,833
|
)
|
Dividends paid
|
$
|
(491
|
)
|
|
$
|
(449
|
)
|
(Millions of dollars)
|
March 31, 2019
|
|
September 30, 2018
|
||||
Total debt
|
$
|
20,613
|
|
|
$
|
21,496
|
|
|
|
|
|
||||
Short-term debt as a percentage of total debt
|
14.8
|
%
|
|
12.1
|
%
|
||
Weighted average cost of total debt
|
3.3
|
%
|
|
3.2
|
%
|
||
Total debt as a percentage of total capital*
|
46.5
|
%
|
|
47.8
|
%
|
•
|
We are required to maintain an interest expense coverage ratio of not less than 4-to-1 as of the last day of each fiscal quarter.
|
•
|
We are required to have a leverage coverage ratio, as applicable depending upon commencement and maturity of the facility, of no more than:
|
◦
|
6-to-1 from the closing date of the Bard acquisition until and including the first fiscal quarter-end thereafter;
|
◦
|
5.75-to-1 for the subsequent four fiscal quarters thereafter;
|
◦
|
5.25-to-1 for the subsequent four fiscal quarters thereafter;
|
◦
|
4.5-to-1 for the subsequent four fiscal quarters thereafter;
|
◦
|
4-to-1 for the subsequent four fiscal quarters thereafter;
|
◦
|
3.75-to-1 thereafter.
|
•
|
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 and technologies (for example, new forms of drug delivery) by our current or future competitors, consolidation or strategic alliances among healthcare companies, distributors and/or payers of healthcare to improve their competitive position or develop new models for the delivery of healthcare, increased pricing pressure due to the impact of low-cost manufacturers, patents attained by competitors (particularly as patents on our products expire), and new entrants into our markets.
|
•
|
Risks relating to our acquisition of Bard, including our ability to successfully combine and integrate the Bard operations in order to obtain the anticipated benefits and costs savings from the transaction, and the significant additional indebtedness we incurred in connection with the financing of the acquisition and the impact this increased indebtedness may have on our ability to operate the combined company.
|
•
|
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 medical device excise tax under the Patient Protection and Affordable Care Act in the United States. While this tax has been suspended through December 31, 2019, it is uncertain whether the suspension will be extended beyond that date.
|
•
|
Healthcare reform in the U.S. or in other countries in which we do business that may involve changes in government pricing and reimbursement policies or other cost containment reforms.
|
•
|
Changes in the domestic and foreign healthcare industry or in medical 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 that could affect fiscal and tax policies, healthcare, and international trade, including import and export regulation and international trade agreements. Recently, the U.S., China and other countries have imposed tariffs on certain products imported into their respective countries. Additional tariffs or other trade barriers imposed by the U.S., China or other countries could adversely impact our supply chain costs or otherwise adversely impact our results of operations.
|
•
|
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, and result in actions by regulatory bodies or civil litigation.
|
•
|
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 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 or divestitures, 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 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, as well as regulatory and privacy laws.
|
•
|
Conditions in international markets, including social and political conditions, civil unrest, terrorist activity, governmental changes, trade barriers, restrictions on the ability to transfer capital across borders, difficulties in protecting and enforcing our intellectual property rights and governmental expropriation of assets. This includes the possible impact of the United Kingdom's exit from the European Union, which has created uncertainties affecting our 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 supply chain, including our ability to manufacture our products (particularly where production of a product line is concentrated in one or more plants) or source materials or components from suppliers (including sole-source suppliers) that are needed for such manufacturing, or our ability to provide products to our customers, including events that impact key distributors.
|
•
|
Pending and potential future litigation or other proceedings asserting, and/or subpoenas seeking information with respect to, alleged violations of law (including in connection with federal and/or state healthcare programs (such as Medicare or Medicaid) and/or sales and marketing practices (such as investigative subpoenas and the civil investigative demands received by BD and Bard)), antitrust claims, product liability (which may involve lawsuits seeking class action status or seeking to establish multi-district litigation proceedings, including claims relating to our hernia repair implant products, surgical continence products for women and vena cava filter products), claims with respect to environmental matters, 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 holds or recalls, regulatory action on the part of the FDA or foreign counterparts (including restrictions on future product clearances and civil penalties), declining sales and product liability claims, and damage to our reputation. 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. Also, in March 2019, the FDA issued a letter to healthcare professionals regarding the use of paclitaxel-coated devices in the treatment of peripheral artery disease, advising clinicians to consider using alternative options. We estimate that the FDA letter will lead to a fifty percent decrease in sales of BD’s drug-coated balloons for the balance of fiscal year 2019 compared to our original forecast, although the actual impact could be greater. The extent and duration of the impact from the FDA letter beyond fiscal year 2019 is difficult to predict, and no assurance can be given that it will not have a material impact on our results of operations in future periods.
|
•
|
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.
|
For the three months ended March 31, 2019
|
|
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, 2019
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
7,857,742
|
|
February 1 – 28, 2019
|
|
676
|
|
|
246.60
|
|
|
—
|
|
|
7,857,742
|
|
|
March 1 – 31, 2019
|
|
—
|
|
|
—
|
|
|
—
|
|
|
7,857,742
|
|
|
Total
|
|
676
|
|
|
$
|
246.60
|
|
|
—
|
|
|
7,857,742
|
|
(1)
|
Consists of
676
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 10.1
|
Offer letter of Patrick Kaltenbach, dated March 29, 2018.
|
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/ Charles Bodner
|
|
Charles Bodner
|
|
Senior Vice President, Corporate Finance, and Chief Accounting Officer
|
|
(Principal Accounting Officer)
|
Exhibit
Number
|
|
Description of Exhibits
|
|
|
|
|
|
|
|
Offer letter of Patrick Kaltenbach, dated March 29, 2018.
|
|
|
Certifications of Chief Executive Officer and Chief Financial Officer, pursuant to SEC Rule 13a - 14(a).
|
|
|
|
|
|
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.
|
|
|
|
|
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.
|
1.
|
I have reviewed this Quarterly Report on Form 10-Q of Becton, Dickinson and Company;
|
2.
|
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;
|
3.
|
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;
|
4.
|
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:
|
(a)
|
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;
|
(b)
|
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;
|
(c)
|
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
|
(d)
|
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
|
5.
|
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):
|
(a)
|
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
|
(b)
|
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.
|
|
|
|
/s/ Vincent A. Forlenza
|
|
Vincent A. Forlenza
|
|
Chairman and Chief Executive Officer
|
1.
|
I have reviewed this Quarterly Report on Form 10-Q of Becton, Dickinson and Company;
|
2.
|
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;
|
3.
|
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;
|
4.
|
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:
|
(a)
|
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;
|
(b)
|
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;
|
(c)
|
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
|
(d)
|
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
|
5.
|
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):
|
(a)
|
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
|
(b)
|
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.
|
|
|
|
/s/ Christopher Reidy
|
|
Christopher Reidy
|
|
Executive Vice President, Chief Financial Officer and Chief Administrative Officer
|
1.
|
such Report fully complies with the requirements of Section 13(a) of the Exchange Act; and
|
2.
|
the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Becton, Dickinson and Company.
|
|
|
|
/s/ Vincent A. Forlenza
|
|
Name: Vincent A. Forlenza
|
|
Chief Executive Officer
|
1.
|
such Report fully complies with the requirements of Section 13(a) of the Exchange Act; and
|
2.
|
the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Becton, Dickinson and Company.
|
|
|
|
/s/ Christopher Reidy
|
|
Name: Christopher Reidy
|
|
Chief Financial Officer
|