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 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |||||
(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 | ||
☒ | Accelerated filer | ☐ | ||||
Non-accelerated filer | ☐ | Smaller reporting company | ||||
Emerging growth company | ||||||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. | ☐ | |||||
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. | ||
June 30, 2019 | September 30, 2018 | ||||||
Assets | (Unaudited) | ||||||
Current Assets: | |||||||
Cash and equivalents | $ | $ | |||||
Restricted cash | |||||||
Short-term investments | |||||||
Trade receivables, net | |||||||
Inventories: | |||||||
Materials | |||||||
Work in process | |||||||
Finished products | |||||||
Assets held for sale | |||||||
Prepaid expenses and other | |||||||
Total Current Assets | |||||||
Property, Plant and Equipment | |||||||
Less allowances for depreciation and amortization | |||||||
Property, Plant and Equipment, Net | |||||||
Goodwill | |||||||
Developed Technology, Net | |||||||
Customer Relationships, Net | |||||||
Other Intangibles, Net | |||||||
Other Assets | |||||||
Total Assets | $ | $ | |||||
Liabilities and Shareholders’ Equity | |||||||
Current Liabilities: | |||||||
Short-term debt | $ | $ | |||||
Payables and accrued expenses | |||||||
Total Current Liabilities | |||||||
Long-Term Debt | |||||||
Long-Term Employee Benefit Obligations | |||||||
Deferred Income Taxes and Other | |||||||
Commitments and Contingencies (See Note 5) | |||||||
Shareholders’ Equity | |||||||
Preferred stock | |||||||
Common stock | |||||||
Capital in excess of par value | |||||||
Retained earnings | |||||||
Deferred compensation | |||||||
Common stock in treasury - at cost | ( | ) | ( | ) | |||
Accumulated other comprehensive loss | ( | ) | ( | ) | |||
Total Shareholders’ Equity | |||||||
Total Liabilities and Shareholders’ Equity | $ | $ | |||||
Three Months Ended June 30, | Nine Months Ended June 30, | ||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
Revenues | $ | $ | $ | $ | |||||||||||
Cost of products sold | |||||||||||||||
Selling and administrative expense | |||||||||||||||
Research and development expense | |||||||||||||||
Acquisitions and other restructurings | |||||||||||||||
Other operating expense, net | |||||||||||||||
Total Operating Costs and Expenses | |||||||||||||||
Operating Income | |||||||||||||||
Interest expense | ( | ) | ( | ) | ( | ) | ( | ) | |||||||
Interest income | |||||||||||||||
Other (expense) income, net | ( | ) | |||||||||||||
Income Before Income Taxes | |||||||||||||||
Income tax provision | |||||||||||||||
Net Income | |||||||||||||||
Preferred stock dividends | ( | ) | ( | ) | ( | ) | ( | ) | |||||||
Net income applicable to common shareholders | $ | $ | $ | $ | |||||||||||
Basic Earnings per Share | $ | $ | $ | $ | |||||||||||
Diluted Earnings per Share | $ | $ | $ | $ | |||||||||||
Dividends per Common Share | $ | $ | $ | $ | |||||||||||
Three Months Ended June 30, | Nine Months Ended June 30, | ||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
Net Income | $ | $ | $ | $ | |||||||||||
Other Comprehensive (Loss) Income, Net of Tax | |||||||||||||||
Foreign currency translation adjustments | ( | ) | ( | ) | ( | ) | ( | ) | |||||||
Defined benefit pension and postretirement plans | ( | ) | |||||||||||||
Cash flow hedges | ( | ) | ( | ) | |||||||||||
Other Comprehensive (Loss) Income, Net of Tax | ( | ) | ( | ) | ( | ) | |||||||||
Comprehensive Income | $ | $ | $ | $ | |||||||||||
Nine Months Ended June 30, | |||||||
2019 | 2018 | ||||||
Operating Activities | |||||||
Net income | $ | $ | |||||
Adjustments to net income to derive net cash provided by operating activities: | |||||||
Depreciation and amortization | |||||||
Share-based compensation | |||||||
Deferred income taxes | ( | ) | ( | ) | |||
Change in operating assets and liabilities | ( | ) | |||||
Pension obligation | ( | ) | ( | ) | |||
Excess tax benefits from payments under share-based compensation plans | |||||||
Gain on sale of Vyaire interest | ( | ) | |||||
Gain on sale of business | ( | ) | |||||
Product liability-related charge | |||||||
Other, net | ( | ) | ( | ) | |||
Net Cash Provided by Operating Activities | |||||||
Investing Activities | |||||||
Capital expenditures | ( | ) | ( | ) | |||
Proceeds from sale of investments, net | |||||||
Acquisitions of businesses, net of cash acquired | ( | ) | |||||
Proceeds from divestitures, net | |||||||
Other, net | ( | ) | ( | ) | |||
Net Cash Used for Investing Activities | ( | ) | ( | ) | |||
Financing Activities | |||||||
Change in credit facility borrowings | |||||||
Proceeds from long-term debt and term loans | |||||||
Payments of debt and term loans | ( | ) | ( | ) | |||
Dividends paid | ( | ) | ( | ) | |||
Other, net | ( | ) | ( | ) | |||
Net Cash (Used for) Provided by Financing Activities | ( | ) | |||||
Effect of exchange rate changes on cash and equivalents and restricted cash | ( | ) | ( | ) | |||
Net decrease in cash and equivalents and restricted cash | ( | ) | ( | ) | |||
Opening Cash and Equivalents and Restricted Cash | |||||||
Closing Cash and Equivalents and Restricted Cash | $ | $ | |||||
Non-Cash Investing Activities | |||||||
Fair value of shares issued as acquisition consideration | $ | $ | |||||
Fair value of equity awards issued as acquisition consideration | $ | $ | |||||
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 | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||
Net income | — | — | — | — | — | |||||||||||||||||
Common dividends ($0.77 per share) | — | — | ( | ) | — | — | — | |||||||||||||||
Preferred dividends | — | — | ( | ) | — | — | — | |||||||||||||||
Common stock issued for share-based compensation and other plans, net | — | ( | ) | — | ||||||||||||||||||
Share-based compensation | — | — | — | — | — | |||||||||||||||||
Common stock held in trusts, net (a) | — | — | — | — | ( | ) | — | |||||||||||||||
Effect of changes in accounting principles (see Note 2) | — | — | — | — | — | |||||||||||||||||
Balance at December 31, 2018 | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||
Net income | — | — | — | — | — | |||||||||||||||||
Common dividends ($0.77 per share) | — | — | ( | ) | — | — | — | |||||||||||||||
Preferred dividends | — | — | ( | ) | — | — | — | |||||||||||||||
Common stock issued for share-based compensation and other plans, net | — | ( | ) | ( | ) | ( | ) | |||||||||||||||
Share-based compensation | — | — | — | — | — | |||||||||||||||||
Common stock held in trusts, net (a) | — | — | — | — | — | |||||||||||||||||
Balance at March 31, 2019 | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||
Net income | — | — | — | — | — | |||||||||||||||||
Common dividends ($0.77 per share) | — | — | ( | ) | — | — | — | |||||||||||||||
Preferred dividends | — | — | ( | ) | — | — | — | |||||||||||||||
Common stock issued for share-based compensation and other plans, net | — | ( | ) | — | — | ( | ) | |||||||||||||||
Share-based compensation | — | — | — | — | — | |||||||||||||||||
Common stock held in trusts, net (a) | — | — | — | — | — | |||||||||||||||||
Balance at June 30, 2019 | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||
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 | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||
Net loss | — | — | ( | ) | — | — | — | |||||||||||||||
Common dividends ($0.75 per share) | — | — | ( | ) | — | — | — | |||||||||||||||
Preferred dividends | — | — | ( | ) | — | — | — | |||||||||||||||
Common stock issued for acquisition | — | — | — | |||||||||||||||||||
Common stock issued for share-based compensation and other plans, net | — | ( | ) | — | — | ( | ) | |||||||||||||||
Share-based compensation | — | — | — | — | — | |||||||||||||||||
Common stock held in trusts, net (a) | — | — | — | — | ( | ) | — | |||||||||||||||
Balance at December 31, 2017 | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||
Net loss | — | — | ( | ) | — | — | — | |||||||||||||||
Common dividends ($0.75 per share) | — | — | ( | ) | — | — | — | |||||||||||||||
Preferred dividends | — | — | ( | ) | — | — | — | |||||||||||||||
Common stock issued for acquisition | — | ( | ) | — | — | — | — | |||||||||||||||
Common stock issued for share-based compensation and other plans, net | — | ( | ) | ( | ) | |||||||||||||||||
Share-based compensation | — | — | — | — | — | |||||||||||||||||
Common stock held in trusts, net (a) | — | — | — | — | — | |||||||||||||||||
Effect of changes in accounting principles | — | — | — | — | — | |||||||||||||||||
Balance at March 31, 2018 | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||
Net income | — | — | — | — | — | |||||||||||||||||
Common dividends ($0.75 per share) | — | — | ( | ) | — | — | — | |||||||||||||||
Preferred dividends | — | — | ( | ) | — | — | — | |||||||||||||||
Common stock issued for share-based compensation and other plans, net | — | ( | ) | ( | ) | |||||||||||||||||
Share-based compensation | — | — | — | — | — | |||||||||||||||||
Common stock held in trusts, net (a) | — | — | — | — | ( | ) | — | |||||||||||||||
Balance at June 30, 2018 | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||
(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 | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||
Other comprehensive (loss) income before reclassifications, net of taxes | ( | ) | ( | ) | ( | ) | |||||||||
Amounts reclassified into income, net of taxes | |||||||||||||||
Balance at December 31, 2018 | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||
Other comprehensive income (loss) before reclassifications, net of taxes | ( | ) | |||||||||||||
Amounts reclassified into income, net of taxes | |||||||||||||||
Balance at March 31, 2019 | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||
Other comprehensive loss before reclassifications, net of taxes | ( | ) | ( | ) | |||||||||||
Amounts reclassified into income, net of taxes | ( | ) | |||||||||||||
Balance at June 30, 2019 | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||
(Millions of dollars) | Total | Foreign Currency Translation | Benefit Plans | Cash Flow Hedges | |||||||||||
Balance at September 30, 2017 | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||
Other comprehensive loss before reclassifications, net of taxes | ( | ) | ( | ) | |||||||||||
Amounts reclassified into income, net of taxes | |||||||||||||||
Balance at December 31, 2017 | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||
Other comprehensive income before reclassifications, net of taxes | |||||||||||||||
Amounts reclassified into income, net of taxes | |||||||||||||||
Tax effects reclassified into retained earnings | ( | ) | ( | ) | ( | ) | |||||||||
Balance at March 31, 2018 | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||
Other comprehensive (loss) income before reclassifications, net of taxes | ( | ) | ( | ) | |||||||||||
Amounts reclassified into income, net of taxes | |||||||||||||||
Balance at June 30, 2018 | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||
Three Months Ended June 30, | Nine Months Ended June 30, | ||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||
Average common shares outstanding | |||||||||||
Dilutive share equivalents from share-based plans | |||||||||||
Average common and common equivalent shares outstanding – assuming dilution | |||||||||||
Share equivalents excluded from the diluted shares outstanding calculation because the result would have been antidilutive: | |||||||||||
Mandatory convertible preferred stock | |||||||||||
Three Months Ended June 30, | |||||||||||||||||||||||
(Millions of dollars) | 2019 | 2018 | |||||||||||||||||||||
United States | International | Total | United States | International | Total | ||||||||||||||||||
Medical | |||||||||||||||||||||||
Medication Delivery Solutions | $ | $ | $ | $ | $ | $ | |||||||||||||||||
Medication Management Solutions | |||||||||||||||||||||||
Diabetes Care | |||||||||||||||||||||||
Pharmaceutical Systems | |||||||||||||||||||||||
Total segment revenues | $ | $ | $ | $ | $ | $ | |||||||||||||||||
Life Sciences | |||||||||||||||||||||||
Preanalytical Systems | $ | $ | $ | $ | $ | $ | |||||||||||||||||
Diagnostic Systems | |||||||||||||||||||||||
Biosciences | |||||||||||||||||||||||
Total segment revenues | $ | $ | $ | $ | $ | $ | |||||||||||||||||
Interventional | |||||||||||||||||||||||
Surgery | $ | $ | $ | $ | $ | $ | |||||||||||||||||
Peripheral Intervention | |||||||||||||||||||||||
Urology and Critical Care | |||||||||||||||||||||||
Total segment revenues | $ | $ | $ | $ | $ | $ | |||||||||||||||||
Total Company revenues | $ | $ | $ | $ | $ | $ | |||||||||||||||||
Nine Months Ended June 30, | |||||||||||||||||||||||
(Millions of dollars) | 2019 | 2018 | |||||||||||||||||||||
United States | International | Total | United States | International | Total | ||||||||||||||||||
Medical | |||||||||||||||||||||||
Medication Delivery Solutions | $ | $ | $ | $ | $ | $ | |||||||||||||||||
Medication Management Solutions | |||||||||||||||||||||||
Diabetes Care | |||||||||||||||||||||||
Pharmaceutical Systems | |||||||||||||||||||||||
Total segment revenues | $ | $ | $ | $ | $ | $ | |||||||||||||||||
Life Sciences | |||||||||||||||||||||||
Preanalytical Systems | $ | $ | $ | $ | $ | $ | |||||||||||||||||
Diagnostic Systems | |||||||||||||||||||||||
Biosciences | |||||||||||||||||||||||
Total segment revenues | $ | $ | $ | $ | $ | $ | |||||||||||||||||
Interventional | |||||||||||||||||||||||
Surgery | $ | $ | $ | $ | $ | $ | |||||||||||||||||
Peripheral Intervention | |||||||||||||||||||||||
Urology and Critical Care | |||||||||||||||||||||||
Total segment revenues | $ | $ | $ | $ | $ | $ | |||||||||||||||||
Total Company revenues | $ | $ | $ | $ | $ | $ | |||||||||||||||||
Three Months Ended June 30, | Nine Months Ended June 30, | ||||||||||||||
(Millions of dollars) | 2019 | 2018 | 2019 | 2018 | |||||||||||
Income Before Income Taxes | |||||||||||||||
Medical (a) (b) | $ | $ | $ | $ | |||||||||||
Life Sciences (c) | |||||||||||||||
Interventional (b) (d) | |||||||||||||||
Total Segment Operating Income | |||||||||||||||
Acquisitions and other restructurings | ( | ) | ( | ) | ( | ) | ( | ) | |||||||
Net interest expense | ( | ) | ( | ) | ( | ) | ( | ) | |||||||
Other unallocated items (e) | ( | ) | ( | ) | ( | ) | ( | ) | |||||||
Income Before Income Taxes | $ | $ | $ | $ | |||||||||||
(a) | The amount for the nine months ended June 30, 2019 included $ |
(b) | The amounts in 2018 included expense related to the recognition of a $ |
(c) | The amounts in 2018 included charges recorded to write down the carrying value of certain intangible and other assets in the Biosciences unit. |
(d) | The amounts in 2019 included a charge recorded to write down the carrying value of certain intangible assets in the Surgery unit. |
(e) | Primarily comprised of foreign exchange, certain general and administrative expenses and share-based compensation expense. The amount for the nine months ended June 30, 2019 included a pre-tax charge of $ |
Three Months Ended June 30, | Nine Months Ended June 30, | ||||||||||||||
(Millions of dollars) | 2019 | 2018 | 2019 | 2018 | |||||||||||
Service cost | $ | $ | $ | $ | |||||||||||
Interest cost | |||||||||||||||
Expected return on plan assets | ( | ) | ( | ) | ( | ) | ( | ) | |||||||
Amortization of prior service credit | ( | ) | ( | ) | ( | ) | ( | ) | |||||||
Amortization of loss | |||||||||||||||
Settlements | |||||||||||||||
Net pension cost | $ | $ | $ | $ | |||||||||||
(Millions of dollars) | Employee Termination | Other | Total | ||||||||||||||||||||
Bard | Other Initiatives | Bard (a) | Other Initiatives | Bard | Other Initiatives | ||||||||||||||||||
Balance at September 30, 2018 | $ | $ | $ | $ | $ | $ | |||||||||||||||||
Charged to expense | |||||||||||||||||||||||
Cash payments | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||||
Non-cash settlements | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||||||||
Balance at June 30, 2019 | $ | $ | $ | $ | $ | ||||||||||||||||||
(a) |
June 30, 2019 | September 30, 2018 | ||||||||||||||
(Millions of dollars) | Gross Carrying Amount | Accumulated Amortization | Gross Carrying Amount | Accumulated Amortization | |||||||||||
Amortized intangible assets | |||||||||||||||
Developed technology | $ | $ | $ | $ | |||||||||||
Customer relationships | |||||||||||||||
Product rights | |||||||||||||||
Trademarks | |||||||||||||||
Patents and other | |||||||||||||||
Amortized intangible assets | $ | $ | $ | $ | |||||||||||
Unamortized intangible assets | |||||||||||||||
Acquired in-process research and development (a) | $ | $ | |||||||||||||
Trademarks | |||||||||||||||
Unamortized intangible assets | $ | $ | |||||||||||||
(a) | The decrease in the carrying value of assets at June 30, 2019 primarily reflects a write-down recorded in the third quarter by the Interventional segment's Surgery unit. |
(Millions of dollars) | Medical | Life Sciences | Interventional | Total | |||||||||||
Goodwill as of September 30, 2018 | $ | $ | $ | $ | |||||||||||
Divestiture-related adjustments | |||||||||||||||
Purchase accounting adjustments (a) | ( | ) | ( | ) | ( | ) | |||||||||
Currency translation | ( | ) | ( | ) | ( | ) | |||||||||
Goodwill as of June 30, 2019 | $ | $ | $ | $ | |||||||||||
(a) |
Three Months Ended June 30, | Nine Months Ended June 30, | ||||||||||||||
(Millions of dollars) | 2019 | 2018 | 2019 | 2018 | |||||||||||
Foreign currency-denominated debt | $ | $ | $ | $ | |||||||||||
Cross-currency swaps | $ | ( | ) | $ | $ | ( | ) | $ | |||||||
Foreign currency forward contract | $ | ( | ) | $ | $ | ( | ) | $ | |||||||
(Millions of dollars) | June 30, 2019 | September 30, 2018 | |||||
Cash and equivalents | $ | $ | |||||
Restricted cash | |||||||
Cash and equivalents and restricted cash | $ | $ | |||||
Interest Rate and Maturity | Aggregate Principal Amount (Millions of dollars) | |||
3.700% Notes due June 6, 2027 | $ | |||
5.000% Notes due November 12, 2040 | ||||
4.875% Notes due May 15, 2044 | ||||
4.685% Notes due December 15, 2044 | ||||
Total notes purchased | $ | |||
• | Medical segment growth in the third quarter was driven by the segment's Medication Management Solutions, Medication Delivery Solutions and Pharmaceutical Systems units. |
• | Life Sciences segment growth in the third quarter reflected growth in all of the segment's units. |
• | Interventional segment growth in the third quarter reflected sales growth in all units, particularly in the Urology and Critical Care unit as well as in the Surgery unit. |
Three months ended June 30, | ||||||||||||||||
(Millions of dollars) | 2019 | 2018 | Total Change | Estimated FX Impact | FXN Change | |||||||||||
Medication Delivery Solutions | $ | 984 | $ | 977 | 0.8 | % | (3.3 | )% | 4.1 | % | ||||||
Medication Management Solutions | 658 | 610 | 7.7 | % | (1.5 | )% | 9.2 | % | ||||||||
Diabetes Care | 275 | 276 | (0.4 | )% | (3.3 | )% | 2.9 | % | ||||||||
Pharmaceutical Systems | 394 | 383 | 3.1 | % | (4.7 | )% | 7.8 | % | ||||||||
Total Medical Revenues | $ | 2,311 | $ | 2,246 | 2.9 | % | (3.1 | )% | 6.0 | % | ||||||
Nine months ended June 30, | ||||||||||||||||
(Millions of dollars) | 2019 | 2018 | Total Change | Estimated FX Impact | FXN Change | |||||||||||
Total Medical Revenues | $ | 6,626 | $ | 6,270 | 5.7 | % | (2.6 | )% | 8.3 | % | ||||||
Three months ended June 30, | Nine months ended June 30, | ||||||||||||||
(Millions of dollars) | 2019 | 2018 | 2019 | 2018 | |||||||||||
Medical segment operating income | $ | 744 | $ | 732 | $ | 2,008 | $ | 1,943 | |||||||
Segment operating income as % of Medical revenues | 32.2 | % | 32.6 | % | 30.3 | % | 31.0 | % | |||||||
• | Gross profit margin was lower in the third quarter of 2019 as compared with the third quarter of 2018 primarily due to unfavorable foreign currency translation, unfavorable product mix, pricing pressures and higher raw material costs. These unfavorable impacts to the Medical segment's gross margin were partially offset by lower manufacturing costs resulting from continuous improvement projects which enhanced the efficiency of our operations, as well as 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 was lower in the third quarter of 2019 as compared with the prior-year period primarily due to lower selling expenses. |
• | Research and development expense as a percentage of revenues was lower in the third quarter of 2019 as compared with the third quarter of 2018 due to recent completion of projects and the timing of project spending. |
Three months ended June 30, | ||||||||||||||||
(Millions of dollars) | 2019 | 2018 | Total Change | Estimated FX Impact | FXN Change | |||||||||||
Preanalytical Systems | $ | 407 | $ | 404 | 0.7 | % | (4.0 | )% | 4.7 | % | ||||||
Diagnostic Systems | 368 | 362 | 1.7 | % | (3.9 | )% | 5.6 | % | ||||||||
Biosciences | 284 | 314 | (9.6 | )% | (2.9 | )% | (6.7 | )% | ||||||||
Total Life Sciences Revenues | $ | 1,058 | $ | 1,079 | (2.0 | )% | (3.7 | )% | 1.7 | % | ||||||
Nine months ended June 30, | ||||||||||||||||
(Millions of dollars) | 2019 | 2018 | Total Change | Estimated FX Impact | FXN Change | |||||||||||
Total Life Sciences Revenues | $ | 3,166 | $ | 3,222 | (1.7 | )% | (3.0 | )% | 1.3 | % | ||||||
Three months ended June 30, | Nine months ended June 30, | ||||||||||||||
(Millions of dollars) | 2019 | 2018 | 2019 | 2018 | |||||||||||
Life Sciences segment operating income | $ | 304 | $ | 241 | $ | 902 | $ | 893 | |||||||
Segment operating income as % of Life Sciences revenues | 28.7 | % | 22.4 | % | 28.5 | % | 27.7 | % | |||||||
• | Gross profit margin in the third quarter of fiscal year 2019 was higher compared with the third quarter of 2018 primarily due to the unfavorable prior-year impact of the Biosciences unit's write-down of certain intangible and other assets. Gross margin in the third 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 Life Sciences segment's gross margin were partially offset by unfavorable foreign currency translation and unfavorable product mix. |
• | Selling and administrative expense as a percentage of revenues in the third quarter of 2019 was lower compared with the prior-year period primarily due to the timing of marketing program spending, offset by unfavorable foreign currency translation. |
• | Research and development expense as a percentage of revenues was lower in the third quarter of 2019 as compared with the third quarter of 2018 primarily due to the Biosciences unit's recognition of write-downs in the prior-year period and also due to the timing of project spending. |
Three months ended June 30, | ||||||||||||||||
(Millions of dollars) | 2019 | 2018 | Total Change | Estimated FX Impact | FXN Change | |||||||||||
Surgery | $ | 349 | $ | 336 | 3.9 | % | (1.5 | )% | 5.4 | % | ||||||
Peripheral Intervention | 350 | 353 | (0.8 | )% | (3.1 | )% | 2.3 | % | ||||||||
Urology and Critical Care | 283 | 265 | 6.5 | % | (2.0 | )% | 8.5 | % | ||||||||
Total Interventional Revenues | $ | 981 | $ | 954 | 2.9 | % | (2.3 | )% | 5.2 | % | ||||||
Nine months ended June 30, | ||||||||||||||||
(Millions of dollars) | 2019 | 2018 | Total Change | Estimated FX Impact | FXN Change | |||||||||||
Total Interventional Revenues | $ | 2,914 | $ | 2,089 | 39.5 | % | (2.2 | )% | 41.7 | % | ||||||
Three months ended June 30, | Nine months ended June 30, | ||||||||||||||
(Millions of dollars) | 2019 | 2018 | 2019 | 2018 | |||||||||||
Interventional segment operating income | $ | 183 | $ | 175 | $ | 623 | $ | 102 | |||||||
Segment operating income as % of Interventional revenues | 18.6 | % | 18.3 | % | 21.4 | % | 4.9 | % | |||||||
• | Gross profit margin was higher in the third quarter of 2019 as compared with the third 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 and lower manufacturing costs resulting from continuous improvement projects, which enhanced the efficiency of our operations, and synergy initiatives. These favorable impacts to the Interventional segment's gross margin were partially offset by unfavorable foreign currency translation and unfavorable product mix. |
• | Selling and administrative expense as a percentage of revenues in the third quarter of 2019 was relatively flat compared with the prior-year period. |
• | Research and development expense as a percentage of revenues was higher in the third quarter of 2019 as compared with the third quarter of 2018 primarily due to the Surgery unit's recognition of a write-down in the current-year period, as further discussed below. |
Three months ended June 30, | ||||||||||||||||
(Millions of dollars) | 2019 | 2018 | Total Change | Estimated FX Impact | FXN Change | |||||||||||
United States | $ | 2,440 | $ | 2,338 | 4.4 | % | — | % | 4.4 | % | ||||||
International | 1,910 | 1,941 | (1.6 | )% | (6.7 | )% | 5.1 | % | ||||||||
Total Revenues | $ | 4,350 | $ | 4,278 | 1.7 | % | (3.0 | )% | 4.7 | % | ||||||
Three months ended June 30, | Nine months ended June 30, | ||||||||||||||
(Millions of dollars) | 2019 | 2018 | 2019 | 2018 | |||||||||||
Integration costs (a) | $ | 63 | $ | 103 | $ | 206 | $ | 255 | |||||||
Restructuring costs (a) | 27 | 33 | 99 | 288 | |||||||||||
Transaction costs (a) | — | 11 | 1 | 61 | |||||||||||
Financing impacts (b) | — | — | — | 49 | |||||||||||
Purchase accounting adjustments (c) | 378 | 433 | 1,135 | 1,358 | |||||||||||
Transaction gain/loss and product-related matters (d) | — | — | 61 | — | |||||||||||
European regulatory initiative-related costs (e) | 14 | — | 29 | — | |||||||||||
Impacts of debt extinguishment (f) | 52 | 3 | 53 | 16 | |||||||||||
Net impact of gain on sale of investment and asset impairments (g) | 30 | (214 | ) | 30 | (214 | ) | |||||||||
Hurricane recovery-related impacts | (10 | ) | 3 | (10 | ) | 15 | |||||||||
Total specified items | 553 | 372 | 1,604 | 1,830 | |||||||||||
Less: tax impact of specified items and tax reform (h) | 120 | 130 | 263 | 133 | |||||||||||
After-tax impact of specified items | $ | 432 | $ | 242 | $ | 1,341 | $ | 1,697 | |||||||
(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 three and nine-month amounts in 2018 also included fair value step-up adjustments of $56 million and $478 million, respectively, relating to Bard's inventory on the acquisition date. |
(d) | Represents amounts relating to certain product liability matters and the estimated cost of a product recall, as well as the pre-tax gain recognized on BD's sale of its Advanced Bioprocessing business. Further discussion regarding these amounts recorded to Other operating expense, net is provided 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 the impacts, which were primarily recorded in Other income (expense), net, of our extinguishment of certain long-term senior notes. |
(g) | The amounts in 2019 represented a non-cash charge recorded to write down the carrying value of certain intangible assets in the Surgery unit. The amounts in 2018 included the net amount, recognized in the period and recorded to Other income (expense), net, related to BD's sale of its non-controlling interest in Vyaire Medical, partially offset by $81 million of charges recorded to write down the carrying value of certain intangible and other assets in the Biosciences unit. |
(h) | The amounts in the nine-month periods of fiscal years 2019 and 2018 included tax (benefit) expense, net, of $(54) million and $275 million, respectively, relating to new U.S. tax legislation, as further discussed below. |
Three-month period | Nine-month period | ||||
June 30, 2018 gross profit margin % | 47.1 | % | 44.7 | % | |
Impact of purchase accounting adjustments and other specified items | 3.1 | % | 3.6 | % | |
Operating performance | (1.2 | )% | 0.2 | % | |
Foreign currency translation | (1.3 | )% | (1.1 | )% | |
June 30, 2019 gross profit margin % | 47.7 | % | 47.4 | % | |
Three months ended June 30, | Increase (decrease) in basis points | Nine months ended June 30, | Increase (decrease) in basis points | ||||||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||||||||
(Millions of dollars) | |||||||||||||||||||||
Selling and administrative expense | $ | 1,076 | $ | 1,086 | $ | 3,238 | $ | 2,915 | |||||||||||||
% of revenues | 24.7 | % | 25.4 | % | (70 | ) | 25.5 | % | 25.2 | % | 30 | ||||||||||
Research and development expense | $ | 282 | $ | 277 | $ | 792 | $ | 727 | |||||||||||||
% of revenues | 6.5 | % | 6.5 | % | — | 6.2 | % | 6.3 | % | (10 | ) | ||||||||||
Acquisitions and other restructurings | $ | 90 | $ | 142 | $ | 281 | $ | 600 | |||||||||||||
Other operating expense, net | $ | — | $ | — | $ | 61 | $ | — | |||||||||||||
Three months ended June 30, | Nine months ended June 30, | ||||||||||||||
(Millions of dollars) | 2019 | 2018 | 2019 | 2018 | |||||||||||
Interest expense | $ | (156 | ) | $ | (182 | ) | $ | (498 | ) | $ | (525 | ) | |||
Interest income | 2 | 8 | 8 | 55 | |||||||||||
Net interest expense | $ | (154 | ) | $ | (174 | ) | $ | (490 | ) | $ | (470 | ) | |||
Three months ended June 30, | Nine months ended June 30, | ||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||
Effective income tax rate | 2.0 | % | 8.2 | % | 9.1 | % | 41.2 | % | |||
Impact, in basis points, from specified items and tax reform | (1,080 | ) | (980 | ) | (420 | ) | 2,400 | ||||
Three months ended June 30, | Nine months ended June 30, | ||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
Net Income (Millions of dollars) | $ | 451 | $ | 594 | $ | 1,071 | $ | 446 | |||||||
Diluted Earnings per Share | $ | 1.51 | $ | 2.03 | $ | 3.49 | $ | 1.27 | |||||||
Unfavorable impact-specified items | $ | (1.58 | ) | $ | (0.88 | ) | $ | (4.88 | ) | $ | (6.51 | ) | |||
Dilutive impact of BD shares | $ | — | $ | — | $ | — | $ | (0.31 | ) | ||||||
Unfavorable impact-foreign currency translation | $ | (0.25 | ) | $ | (0.64 | ) | |||||||||
Nine months ended June 30, | |||||||
(Millions of dollars) | 2019 | 2018 | |||||
Net cash provided by (used for) | |||||||
Operating activities | $ | 1,959 | $ | 1,559 | |||
Investing activities | $ | (300 | ) | $ | (15,173 | ) | |
Financing activities | $ | (2,300 | ) | $ | 949 | ||
Nine months ended June 30, | |||||||
(Millions of dollars) | 2019 | 2018 | |||||
Cash inflow (outflow) | |||||||
Change in credit facility borrowings | $ | 300 | $ | 200 | |||
Proceeds from long-term debt and term loans | $ | 2,224 | $ | 4,335 | |||
Payments of debt and term loans | $ | (3,882 | ) | $ | (2,723 | ) | |
Dividends paid | $ | (737 | ) | $ | (687 | ) | |
(Millions of dollars) | June 30, 2019 | September 30, 2018 | |||||
Total debt | $ | 20,184 | $ | 21,496 | |||
Short-term debt as a percentage of total debt | 10.7 | % | 12.1 | % | |||
Weighted average cost of total debt | 2.9 | % | 3.2 | % | |||
Total debt as a percentage of total capital* | 45.9 | % | 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 |
• | 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 weather, regulatory or other 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 claims (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 actions, 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 treatments. 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, and the likelihood of FDA approval of new drug-coated devices, 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 June 30, 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) | |||||||||
April 1 – 30, 2019 | 2,838 | $ | 251.16 | — | 7,857,742 | ||||||||
May 1 – 31, 2019 | 222 | 224.17 | — | 7,857,742 | |||||||||
June 1 – 30, 2019 | — | — | — | 7,857,742 | |||||||||
Total | 3,060 | $ | 249.20 | — | 7,857,742 | ||||||||
(1) | Consists of 3,060 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 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 iXBRL (Inline 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 | |
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 iXBRL (Inline 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 | |
Condensed Consolidated Statements of Income - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
|---|---|---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
Jun. 30, 2019 |
Jun. 30, 2018 |
|
| Income Statement [Abstract] | ||||
| Revenues | $ 4,350 | $ 4,278 | $ 12,706 | $ 11,581 |
| Cost of products sold | 2,276 | 2,262 | 6,684 | 6,405 |
| Selling and administrative expense | 1,076 | 1,086 | 3,238 | 2,915 |
| Research and development expense | 282 | 277 | 792 | 727 |
| Acquisitions and other restructurings | 90 | 142 | 281 | 600 |
| Other operating expense, net | 0 | 0 | 61 | 0 |
| Total Operating Costs and Expenses | 3,725 | 3,767 | 11,056 | 10,647 |
| Operating Income | 626 | 512 | 1,649 | 933 |
| Interest expense | (156) | (182) | (498) | (525) |
| Interest income | 2 | 8 | 8 | 55 |
| Other (expense) income, net | (11) | 310 | 19 | 295 |
| Income Before Income Taxes | 460 | 647 | 1,178 | 759 |
| Income tax provision | 9 | 53 | 107 | 313 |
| Net Income | 451 | 594 | 1,071 | 446 |
| Preferred stock dividends | (38) | (38) | (114) | (114) |
| Net income applicable to common shareholders | $ 413 | $ 556 | $ 957 | $ 332 |
| Basic Earnings per Share (USD per share) | $ 1.53 | $ 2.08 | $ 3.55 | $ 1.30 |
| Diluted Earnings per Share (USD per share) | 1.51 | 2.03 | 3.49 | 1.27 |
| Dividends per Common Share (USD per share) | $ 0.77 | $ 0.75 | $ 2.31 | $ 2.25 |
Condensed Consolidated Statements of Comprehensive Income - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
|---|---|---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
Jun. 30, 2019 |
Jun. 30, 2018 |
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| Statement of Comprehensive Income [Abstract] | ||||
| Net Income | $ 451 | $ 594 | $ 1,071 | $ 446 |
| Other Comprehensive (Loss) Income, Net of Tax | ||||
| Foreign currency translation adjustments | (68) | (214) | (27) | (122) |
| Defined benefit pension and postretirement plans | 12 | 16 | 40 | (57) |
| Cash flow hedges | (3) | 1 | (2) | 0 |
| Other Comprehensive (Loss) Income, Net of Tax | (58) | (197) | 12 | (179) |
| Comprehensive Income | $ 393 | $ 397 | $ 1,082 | $ 267 |
Basis of Presentation |
9 Months Ended |
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Jun. 30, 2019 | |
| Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
| Basis of Presentation | Basis of Presentation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and, in the opinion of the management of Becton, Dickinson and Company (the "Company" or "BD"), include all adjustments which are of a normal recurring nature, necessary for a fair presentation of the financial position and the results of operations and cash flows for the periods presented. However, the financial statements do not include all information and accompanying notes required for a presentation in accordance with U.S. generally accepted accounting principles ("U.S. GAAP"). These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and the notes thereto included in the Company’s 2018 Annual Report on Form 10-K. Within the financial statements and tables presented, certain columns and rows may not add due to the use of rounded numbers for disclosure purposes. Percentages and earnings per share amounts presented are calculated from the underlying amounts. The results of operations for the interim periods are not necessarily indicative of the results of operations to be expected for the full year.
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Accounting Changes |
9 Months Ended |
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Jun. 30, 2019 | |
| Accounting Changes and Error Corrections [Abstract] | |
| Accounting Changes | Accounting Changes New Accounting Principles Adopted On October 1, 2018, the Company adopted Accounting Standards Codification Topic 606, "Revenue from Contracts with Customers" ("ASC 606") using the modified retrospective method. Under ASC 606, revenue is recognized upon the transfer of control of goods or services to customers and reflects the amount of consideration to which a reporting entity expects to be entitled in exchange for those goods or services. The Company assessed the impact of this new standard on its consolidated financial statements based upon a review of contracts that were not completed as of October 1, 2018. Amounts presented in the Company's financial statements for the prior-year periods have not been revised and are reflective of the revenue recognition requirements which were in effect for those periods. This accounting standard adoption, which is further discussed in Note 6, did not materially impact any line items of the Company's consolidated income statements and balance sheet. On October 1, 2018, the Company retrospectively adopted an accounting standard update which requires all components of net periodic pension and postretirement benefit costs to be disaggregated from the service cost component and to be presented on the income statement outside a subtotal of income from operations, if one is presented. Upon the Company's adoption of the accounting standard update, which did not have a material impact on its consolidated financial statements, all components of the Company’s net periodic pension and postretirement benefit costs, aside from service cost, are recorded to Other income (expense), net on its consolidated income statements for all periods presented. Revisions of prior-year period amounts were estimated based upon previously disclosed amounts. On October 1, 2018, the Company adopted an accounting standard update which requires that the income tax effects of intercompany sales or transfers of assets, except those involving inventory, be recognized in the income statement as income tax expense (or benefit) in the period that the sale or transfer occurs. The Company adopted this accounting standard update, which did not have a material impact on its consolidated financial statements, using the modified retrospective method. New Accounting Principle Not Yet Adopted In February 2016, the FASB issued a new lease accounting standard which requires lessees to recognize lease assets and lease liabilities on the balance sheet. The new standard also requires expanded disclosures regarding leasing arrangements. The Company is in the process of evaluating the impact on its consolidated financial statements and anticipates most of its current operating leases will result in the recognition of right-of-use assets and corresponding lease liabilities on its consolidated balance sheet. The new standard is not expected to materially impact the Company's results of operations. The Company will adopt the standard on October 1, 2019 and will elect the transition method that allows application of the new standard at its adoption date, rather than at the earliest comparative period presented in the financial statements.
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Shareholders' Equity |
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| Stockholders' Equity Note [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Shareholders' Equity | Shareholders' Equity Changes in certain components of shareholders' equity for the first three quarters of fiscal years 2019 and 2018 were as follows:
The components and changes of Accumulated other comprehensive income (loss) for the first three quarters of fiscal years 2019 and 2018 were as follows:
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Earnings Per Share |
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| Earnings per Share | Earnings per Share The weighted average common shares used in the computations of basic and diluted earnings per share (shares in thousands) were as follows:
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Contingencies |
9 Months Ended |
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Jun. 30, 2019 | |
| Commitments and Contingencies Disclosure [Abstract] | |
| Contingencies | Contingencies Given the uncertain nature of litigation generally, the Company is not able, in all cases, to estimate the amount or range of loss that could result from an unfavorable outcome of the litigation to which the Company is a party. In accordance with U.S. GAAP, the Company establishes accruals to the extent probable future losses are estimable (in the case of environmental matters, without considering possible third-party recoveries). With respect to putative class action lawsuits in the United States and certain of the Canadian lawsuits described below relating to product liability matters, the Company is unable to estimate a range of reasonably possible losses for the following reasons: (i) all or certain of the proceedings are in early stages; (ii) the Company has not received and reviewed complete information regarding all or certain of the plaintiffs and their medical conditions; and/or (iii) there are significant factual issues to be resolved. In addition, there is uncertainty as to the likelihood of a class being certified or the ultimate size of the class. With respect to the civil investigative demand served by the Department of Justice, as discussed below, the Company is unable to estimate a range of reasonably possible losses for the following reasons: (i) all or certain of the proceedings are in early stages; and/or (ii) there are significant factual and legal issues to be resolved. In view of the uncertainties discussed below, the Company could incur charges in excess of any currently established accruals and, to the extent available, liability insurance. In the opinion of management, any such future charges, individually or in the aggregate, could have a material adverse effect on the Company’s consolidated results of operations and consolidated cash flows. Product Liability Matters The Company believes that certain settlements and judgments, as well as legal defense costs, relating to product liability matters are or may be covered in whole or in part under its product liability insurance policies with a limited number of insurance carriers, or, in some circumstances, indemnification obligations to the Company from other parties, which if disputed, the Company intends to vigorously contest. Amounts recovered under the Company’s product liability insurance policies or indemnification arrangements may be less than the stated coverage limits or less than otherwise expected and may not be adequate to cover damages and/or costs relating to claims. In addition, there is no guarantee that insurers or other parties will pay claims or that coverage or indemnity will be otherwise available. Hernia Product Claims As of June 30, 2019, the Company is defending approximately 8,795 product liability claims involving the Company’s line of hernia repair devices (collectively, the “Hernia Product Claims”). The majority of those claims are currently pending in a coordinated proceeding in Rhode Island State Court, but claims are also pending in other state and/or federal court jurisdictions. In addition, those claims include multiple putative class actions in Canada. Generally, the Hernia Product Claims seek damages for personal injury allegedly resulting from use of the products. From time to time, the Company engages in resolution discussions with plaintiffs’ law firms regarding certain of the Hernia Product Claims, but the Company also intends to vigorously defend Hernia Product Claims that do not settle, including through litigation. Trials are scheduled throughout 2020 in various state and/or federal courts. The Company expects additional trials of Hernia Product Claims to take place over the next 12 months. In August 2018, a new hernia multi-district litigation (“MDL”) was ordered to be established in the Southern District of Ohio. The Company cannot give any assurances that the resolution of the Hernia Product Claims that have not settled, including asserted and unasserted claims and the putative class action lawsuits, will not have a material adverse effect on the Company’s business, results of operations, financial condition and/or liquidity. Women’s Health Product Claims As of June 30, 2019, the Company is defending approximately 985 product liability claims involving the Company’s line of pelvic mesh devices. The majority of those claims are currently pending in either the federal MDL in the United States District Court for the Southern District of West Virginia, or a coordinated proceeding in New Jersey State Court, but claims are also pending in other state and/or federal court jurisdictions. In addition, those claims include putative class actions filed in the United States. Not included in the figures above are approximately 1,010 filed and unfiled claims that have been asserted or threatened against the Company but lack sufficient information to determine whether a pelvic mesh device of the Company is actually at issue. The claims identified above also include products manufactured by both the Company and two subsidiaries of Medtronic plc (as successor in interest to Covidien plc) (“Medtronic”), each a supplier of the Company. Medtronic has an obligation to defend and indemnify the Company with respect to any product defect liability relating to products its subsidiaries had manufactured. As described below, in July 2015 the Company reached an agreement with Medtronic (which was amended in June 2017) regarding certain aspects of Medtronic’s indemnification obligation. The foregoing lawsuits, unfiled claims, putative class actions, and other claims, together with claims that have settled or are the subject of agreements or agreements in principle to settle, are referred to collectively as the “Women’s Health Product Claims.” The Women’s Health Product Claims generally seek damages for personal injury allegedly resulting from use of the products. As of June 30, 2019, the Company has reached agreements or agreements in principle with various plaintiffs’ law firms to settle their respective inventories of cases totaling approximately 15,160 of the Women’s Health Product Claims. The Company believes that these Women’s Health Product Claims are not the subject of Medtronic’s indemnification obligation. These settlement agreements and agreements in principle include unfiled and previously unknown claims held by various plaintiffs’ law firms, which are not included in the approximate number of lawsuits set forth in the first paragraph of this section. Each agreement is subject to certain conditions, including requirements for participation in the proposed settlements by a certain minimum number of plaintiffs. The Company continues to engage in discussions with other plaintiffs’ law firms regarding potential resolution of unsettled Women’s Health Product Claims, which may include additional inventory settlements. Starting in 2014 in the MDL, the court entered certain pre-trial orders requiring trial work up and remand of a significant number of Women’s Health Product Claims, including an order entered in the MDL on January 30, 2018, that requires the work up and remand of all remaining unsettled cases (the “WHP Pre-Trial Orders”). The WHP Pre-Trial Orders may result in material additional costs or trial verdicts in future periods in defending Women’s Health Product Claims. Trials are anticipated throughout 2019 in state courts. A trial in the New Jersey coordinated proceeding began in March 2018, and in April 2018 a jury entered a verdict against the Company in the total amount of $68 million ($33 million compensatory; $35 million punitive). The Company is in the process of appealing that verdict. A consolidated trial involving two plaintiffs is scheduled to begin in September 2019 in the New Jersey coordinated proceeding. The Company expects additional trials of Women’s Health Product Claims to take place over the next 12 months, which may potentially include consolidated trials. In July 2015, as part of the agreement with Medtronic noted above, Medtronic agreed to take responsibility for pursuing settlement of certain of the Women’s Health Product Claims that relate to products distributed by the Company under supply agreements with Medtronic, and the Company has paid Medtronic $121 million towards these potential settlements. In June 2017, the Company amended the agreement with Medtronic to transfer responsibility for settlement of additional Women’s Health Product Claims to Medtronic on terms similar to the July 2015 agreement, including with respect to the obligation to make payments to Medtronic towards these potential settlements. The Company also may, in its sole discretion, transfer responsibility for settlement of additional Women’s Health Product Claims to Medtronic on similar terms. The agreements do not resolve the dispute between the Company and Medtronic with respect to Women’s Health Product Claims that do not settle, if any. During the course of engaging in settlement discussions with plaintiffs’ law firms, the Company has learned, and may in future periods learn, additional information regarding these and other unfiled claims, or other lawsuits, which could materially impact the Company’s estimate of the number of claims or lawsuits against the Company. Filter Product Claims As of June 30, 2019, the Company is defending approximately 4,525 product liability claims involving the Company’s line of inferior vena cava filters (collectively, the “Filter Product Claims”). The majority of those claims are currently pending in an MDL in the United States District Court for the District of Arizona, but claims are also pending in other state and/or federal court jurisdictions, including a coordinated proceeding in Arizona State Court. In addition, those claims include putative class actions filed in the United States and Canada. The Filter Product Claims generally seek damages for personal injury allegedly resulting from use of the products. The Company has limited information regarding the nature and quantity of certain of the Filter Product Claims. The Company continues to receive claims and lawsuits and may in future periods learn additional information regarding other unfiled or unknown claims, or other lawsuits, which could materially impact the Company’s estimate of the number of claims or lawsuits against the Company. On May 31, 2019, the MDL Court ceased accepting direct filings or transfers into the Filter Product Claims MDL and remands for non-settled cases are expected to begin within the next three to six months. The MDL trials are scheduled throughout 2019 and 2020 in certain state and federal courts. As of June 30, 2019, the Company entered into settlement agreements and/or settlement agreements in principle for approximately 4,200 cases. On March 30, 2018, a jury in the first MDL trial found the Company liable for negligent failure to warn and entered a verdict in favor of plaintiffs. The jury found the Company was not liable for (a) strict liability design defect; (b) strict liability failure to warn; and (c) negligent design. The Company has appealed that verdict. On June 1, 2018, a jury in the second MDL trial unanimously found in favor of the Company on all claims. On August 17, 2018, the Court entered summary judgment in favor of the Company on all claims in the third MDL trial. On October 5, 2018, a jury in the fourth MDL trial unanimously found in favor of the Company on all claims. The Company expects additional trials of Filter Product Claims may take place over the next 12 months. In most product liability litigations (like those described above), plaintiffs allege a wide variety of claims, ranging from allegations of serious injury caused by the products to efforts to obtain compensation notwithstanding the absence of any injury. In many of these cases, the Company has not yet received and reviewed complete information regarding the plaintiffs and their medical conditions and, consequently, is unable to fully evaluate the claims. The Company expects that it will receive and review additional information regarding any remaining unsettled product liability matters. In January 2017, the Company reached an agreement to resolve litigation filed in the Southern District of New York by its insurance carriers in connection with Women’s Health Product Claims and Filter Product Claims. The agreement requires the insurance carriers to reimburse the Company for certain future costs incurred in connection with Filter Product Claims up to an agreed amount. For certain product liability claims or lawsuits, the Company does not maintain or has limited remaining insurance coverage. Other Legal Matters Since early 2013, the Company has received subpoenas or Civil Investigative Demands from a number of State Attorneys General seeking information related to the sales and marketing of certain of the Company’s products that are the subject of the Hernia Product Claims and the Women’s Health Product Claims. The Company is cooperating with these requests. Although the Company has had, and continues to have, discussions with the State Attorneys General with respect to overall potential resolution of this matter, there can be no assurance that a resolution will be reached or what the terms of any such resolution may be. In July 2017, a civil investigative demand was served by the Department of Justice seeking documents and information relating to an investigation into possible violations of the False Claims Act in connection with the sales and marketing of FloChec® and QuantaFloTM devices. The Company is cooperating with these requests. Since it is not feasible to predict the outcome of these matters, the Company cannot give any assurances that the resolution of these matters will not have a material adverse effect on the Company’s business, results of operations, financial condition and/or liquidity. The Company is a potentially responsible party to a number of federal administrative proceedings in the United States brought under the Comprehensive Environment Response, Compensation and Liability Act, also known as “Superfund,” and similar state laws. The affected sites are in varying stages of development. In some instances, the remedy has been completed, while in others, environmental studies are underway or commencing. For several sites, there are other potentially responsible parties that may be jointly or severally liable to pay all or part of cleanup costs. While it is not feasible to predict the outcome of these proceedings, based upon the Company’s experience, current information and applicable law, the Company does not expect these proceedings to have a material adverse effect on its financial condition and/or liquidity. However, one or more of the proceedings could be material to the Company’s business and/or results of operations. The Company is also involved both as a plaintiff and a defendant in other legal proceedings and claims that arise in the ordinary course of business. The Company believes that it has meritorious defenses to these suits pending against the Company and is engaged in a vigorous defense of each of these matters. Litigation Reserves The Company regularly monitors and evaluates the status of product liability and other legal matters, and may, from time-to-time, engage in settlement and mediation discussions taking into consideration developments in the matters and the risks and uncertainties surrounding litigation. These discussions could result in settlements of one or more of these claims at any time. In the second quarter of 2019, the Company recorded a pre-tax charge to Other operating expense, net, of approximately $331 million related to certain of the product liability matters discussed above under the heading “Product Liability Matters,” including the related legal defense costs. The Company recorded this charge based on additional information obtained during the quarter, including but not limited to: the allegations and documentation supporting or refuting such allegations; publicly available information regarding similar medical device mass tort settlements; historical information regarding other product liability settlements involving the Company; and the stage of litigation. Accruals for the Company's product liability claims which are specifically discussed above, as well as the related legal defense costs, amounted to approximately $1.9 billion at June 30, 2019 and $2.0 billion at September 30, 2018. As of June 30, 2019 and September 30, 2018, the Company had $70 million and $94 million, respectively, in qualified settlement funds (“QSFs”), subject to certain settlement conditions, for certain product liability matters. Payments to QSFs are recorded as a component of Restricted cash. The Company's expected recoveries related to product liability claims and related legal defense costs were approximately $152 million and $343 million at June 30, 2019 and September 30, 2018, respectively. A substantial amount of these expected recoveries at June 30, 2019 and September 30, 2018 related to the Company’s agreements with Medtronic related to certain Women’s Health Product Claims. During the nine months ended June 30, 2019, Medtronic provided the Company with releases from liability for certain claims that were the subject of the agreement discussed further above. Accordingly, adjustments to reduce accruals for the Company's product liability claims, as well as the balance recorded for expected recoveries related to product liability claims, were recorded during the nine months ended June 30, 2019. The terms of the Company’s agreements with Medtronic are substantially consistent with the assumptions underlying, and the manner in which, the Company has recorded expected recoveries related to the indemnification obligation. The expected recoveries at June 30, 2019 related to the indemnification obligation are not in dispute with respect to claims that Medtronic settles pursuant to the agreements. As described above, the agreements do not resolve the dispute between the Company and Medtronic with respect to Women’s Health Product Claims that do not settle, if any, and the Company also may, in its sole discretion, transfer responsibility for settlement of additional Women’s Health Product Claims to Medtronic on similar terms.
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Revenues Revenues (Notes) |
9 Months Ended |
|---|---|
Jun. 30, 2019 | |
| Revenue from Contract with Customer [Abstract] | |
| Revenue | Revenues As previously discussed in Note 2, the Company adopted ASC 606 using the modified retrospective method. The Company sells a broad range of medical supplies, devices, laboratory equipment and diagnostic products which are distributed through independent distribution channels and directly by BD through sales representatives. End-users of the Company's products include healthcare institutions, physicians, life science researchers, clinical laboratories, the pharmaceutical industry and the general public. Timing of Revenue Recognition The Company's revenues are primarily recognized when the customer obtains control of the product sold, which is generally upon shipment or delivery, depending on the delivery terms specified in the sales agreement. Revenues associated with certain instruments and equipment for which installation is complex, and therefore significantly affects the customer’s ability to use and benefit from the product, are recognized when customer acceptance of these installed products has been confirmed. For certain service arrangements, including extended warranty and software maintenance contracts, revenue is recognized ratably over the contract term. The majority of revenues relating to extended warranty contracts associated with certain instruments and equipment is generally recognized within a few years whereas deferred revenue relating to software maintenance contracts is generally recognized over a longer period. Measurement of Revenues The Company acts as the principal in substantially all of its customer arrangements and as such, generally records revenues on a gross basis. Revenues exclude any taxes that the Company collects from customers and remits to tax authorities. The Company considers its shipping and handling costs to be costs of contract fulfillment and has made the accounting policy election to record these costs within Selling and administrative expense. Payment terms extended to the Company's customers are based upon commercially reasonable terms for the markets in which the Company's products are sold. Because the Company generally expects to receive payment within one year or less from when control of a product is transferred to the customer, the Company does not generally adjust its revenues for the effects of a financing component. The Company’s estimate of probable credit losses relating to trade receivables is determined based on historical experience and other specific account data. Amounts are written off against the allowances for doubtful accounts when the Company determines that a customer account is uncollectible. Such amounts are not material to the Company's consolidated financial results. The Company's gross revenues are subject to a variety of deductions which are recorded in the same period that the underlying revenues are recognized. Such variable consideration include rebates, sales discounts and sales returns. Because these deductions represent estimates of the related obligations, judgment is required when determining the impact of these revenue deductions on gross revenues for a reporting period. Rebates provided by the Company are based upon prices determined under the Company's agreements with its end-user customers. Additional factors considered in the estimate of the Company's rebate liability include the quantification of inventory that is either in stock at or in transit to the Company's distributors, as well as the estimated lag time between the sale of product and the payment of corresponding rebates. The impact of other forms of variable consideration, including sales discounts and sales returns, is not material to the Company's revenues. The Company's agreements with customers within certain organizational units including Medication Management Solutions, Diagnostic Systems and Biosciences, contain multiple performance obligations including both products and certain services noted above. The transaction price for these agreements is allocated to each performance obligation based upon its relative standalone selling price. Standalone selling price is the amount at which the Company would sell a promised good or service separately to a customer. The Company generally estimates standalone selling prices using its list prices and a consideration of typical discounts offered to customers. Effects of Revenue Arrangements on Consolidated Balance Sheet Due to the nature of the majority of the Company's products and services, the Company typically does not incur costs to fulfill a contract in advance of providing the customer with goods or services. Capitalized contract costs associated with the costs to fulfill contracts for certain products in the Medication Management Solutions organizational unit are immaterial to the Company's consolidated balance sheets. The Company's costs to obtain contracts are comprised of sales commissions which are paid to the Company's employees or third party agents. The majority of the sales commissions incurred by the Company relate to revenue that is recognized over a period that is less than one year and as such, the Company has elected a practical expedient provided under ASC 606 to record the majority of its expense associated with sales commissions as it is incurred. Commissions relating to revenues recognized over a period longer than one year are recorded as assets which are amortized over the period over which the revenues underlying the commissions are recognized. Capitalized contract costs related to such commissions are immaterial to the Company's consolidated balance sheets. The Company records contract liabilities for unearned revenue that is allocable to performance obligations, such as extended warranty and software maintenance contracts, which are performed over time as discussed further above. These contract liabilities are immaterial to the Company's consolidated financial results. The Company's liability for product warranties provided under its agreements with customers is not material to its consolidated balance sheets. Remaining Performance Obligations The Company's obligations relative to service contracts, which are further discussed above, and pending installations of equipment, primarily in the Company's Medication Management Solutions unit, represent unsatisfied performance obligations of the Company. The revenues under existing and noncancelable contracts which are attributable to products and/or services that have not yet been installed or provided are estimated to be approximately $1.7 billion at June 30, 2019 and the Company expects to recognize the majority of this revenue over the next three years. Within the Company's Medication Management Solutions, Medication Delivery Solutions, Diagnostic Systems, and Biosciences units, some contracts also contain minimum purchase commitments of reagents or other consumables and the future sales of these consumables represent additional unsatisfied performance obligations of the Company. The revenue attributable to the unsatisfied minimum purchase commitment-related performance obligations will be recognized over the customer relationship period, which usually encompasses the current agreement term and subsequent renewal terms. Disaggregation of Revenues A disaggregation of the Company's revenues by segment, organizational unit and geographic region is provided in Note 7.
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Segment Data |
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| Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Segment Data | Segment Data The Company's organizational structure is based upon three principal business segments: BD Medical (“Medical”), BD Life Sciences (“Life Sciences”) and BD Interventional ("Interventional"). The Company's segments are strategic businesses that are managed separately because each one develops, manufactures and markets distinct products and services. Segment disclosures are on a performance basis consistent with internal management reporting. The Company evaluates performance of its business segments and allocates resources to them primarily based upon segment operating income, which represents revenues reduced by product costs and operating expenses. Revenues by segment, organizational unit and geographical areas for the three and nine-month periods are detailed below. The Company has no material intersegment revenues. On December 29, 2017, the Company completed its acquisition of C.R. Bard, Inc. ("Bard"), which is further discussed in Note 9. Bard's operating results were included in the Company’s consolidated results of operations beginning on January 1, 2018 and as such, are not included in the financial results detailed below for the first quarter of the prior-year nine-month period.
Segment income for the three and nine-month periods was as follows:
(e) Primarily comprised of foreign exchange, certain general and administrative expenses and share-based compensation expense. The amount for the nine months ended June 30, 2019 included a pre-tax charge of $331 million related to certain product liability matters, which is further discussed in Note 5, and also included the pre-tax gain recognized on the Company's sale of its Advanced Bioprocessing business of approximately $336 million, which is further discussed in Note 10. The amounts for the three and nine months ended June 30, 2018 included the pre-tax gain recognized on the Company's sale of its non-controlling interest in Vyaire Medical of approximately $308 million.
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Benefit Plans |
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| Retirement Benefits [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Benefit Plans | Benefit Plans The Company has defined benefit pension plans covering certain employees in the United States and certain international locations. The measurement date used for these plans is September 30. Net pension cost included the following components for the three and nine months ended June 30:
The amounts provided above for amortization of prior service credit and amortization of loss represent the reclassifications of prior service credits and net actuarial losses that were recognized in Accumulated other comprehensive income (loss) in prior periods. As further discussed in Note 2, upon adopting an accounting standard update on October 1, 2018, all components of the Company’s net periodic pension and postretirement benefit costs, aside from service cost, are recorded to Other income (expense), net on its consolidated statements of income, for all periods presented.
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Acquisition |
9 Months Ended |
|---|---|
Jun. 30, 2019 | |
| Business Combinations [Abstract] | |
| Acquisition | Acquisition Bard On December 29, 2017, the Company completed its acquisition of Bard. The operating activities of Bard from the acquisition date through December 31, 2017 were not material to the Company’s consolidated results of operations. As such, Bard's operating results were included in the Company’s consolidated results of operations beginning on January 1, 2018. During the first quarter of fiscal year 2019, the Company finalized its allocation of the fair value of consideration transferred to the individual assets acquired and liabilities assumed in this acquisition, which resulted in no material adjustments to the allocation.
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Divestiture |
9 Months Ended |
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Jun. 30, 2019 | |
| Discontinued Operations and Disposal Groups [Abstract] | |
| Divestiture | DivestitureThe Company completed the sale of its Life Sciences segment's Advanced Bioprocessing business in October 2018 pursuant to a definitive agreement that was signed in September 2018. Assets held for sale on the consolidated balance sheet at September 30, 2018, subject to this agreement, were approximately $137 million. Liabilities held for sale under the agreement were immaterial. The Company recognized a pre-tax gain on the sale of approximately $336 million which was recorded as a component of Other operating expense, net. The historical financial results for the Advanced Bioprocessing business have not been classified as a discontinued operation. |
Business Restructuring Charges |
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| Restructuring and Related Activities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Business Restructuring Charges | Business Restructuring Charges The Company incurred restructuring costs during the nine months ended June 30, 2019, largely in connection with its acquisition of Bard, which were recorded as Acquisitions and other restructurings. Restructuring liability activity for the nine months ended June 30, 2019 was as follows:
(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.
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Intangible Assets |
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| Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Intangible Assets | Intangible Assets Intangible assets consisted of:
Intangible amortization expense for the three months ended June 30, 2019 and 2018 was $378 million and $375 million, respectively. Intangible amortization expense for the nine months ended June 30, 2019 and 2018 was $1,132 million and $879 million, respectively. The increase in intangible amortization expense for the nine months ended June 30, 2019 was attributable to assets acquired in the Bard transaction, which is further discussed in Note 9. The following is a reconciliation of goodwill by business segment:
(a) The purchase accounting adjustments were primarily driven by adjustments to tax-related balances recorded upon the finalization of the Bard acquisition allocation within one year of the transaction's closing.
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Derivative Instruments and Hedging Activities |
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| Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Derivative Instruments and Hedging Activities | Derivative Instruments and Hedging Activities The Company uses derivative instruments to mitigate certain exposures. The Company does not enter into derivative financial instruments for trading or speculative purposes. The effects these derivative instruments and hedged items have on financial position, financial performance, and cash flows are provided below. Foreign Currency Risks and Related Strategies The Company has foreign currency exposures throughout Europe, Greater Asia, Canada and Latin America. Transactional currency exposures that arise from entering into transactions, generally on an intercompany basis, in non-hyperinflationary countries that are denominated in currencies other than the functional currency are mitigated primarily through the use of forward contracts. In order to mitigate foreign currency exposure relating to its investments in certain foreign subsidiaries, the Company has hedged the currency risk associated with those investments with instruments, such as foreign currency-denominated debt, cross-currency swaps and currency exchange contracts, which are designated as net investment hedges. Hedges of the transactional foreign exchange exposures resulting primarily from intercompany payables and receivables are undesignated hedges. As such, the gains or losses on these instruments are recognized immediately in income. These gains and losses are largely offset by gains and losses on the underlying hedged items, as well as the hedging costs associated with the derivative instruments. The net amounts recognized in Other (expense) income, net, during the three and nine months ended June 30, 2019 and 2018 were immaterial to the Company's consolidated financial results. The total notional amounts of the Company’s outstanding foreign exchange contracts as of June 30, 2019 and September 30, 2018 were $933 million and $3.1 billion, respectively. Certain of the Company's foreign currency-denominated long-term notes outstanding, which had a total carrying value of $1.8 billion and $3.0 billion, as of June 30, 2019 and September 30, 2018, respectively, were designated as, and were effective as, economic hedges of net investments in certain of the Company's foreign subsidiaries. In connection with the Company's issuance of Euro-denominated notes during the third quarter of fiscal year 2019, the Company entered into cross-currency swaps, as well as a forward contract, which were designated and effective as economic hedges of net investments in certain of the Company's foreign subsidiaries. The notional amount of the cross-currency swaps was $2.3 billion as of June 30, 2019. The forward contract was terminated in the third quarter, in conjunction with the Company's issuance of the Euro-denominated notes. Additional disclosures regarding the Company's issuance of Euro-denominated notes in the third quarter of fiscal year 2019 are provided in Note 15. Net gains or losses relating to the net investment hedges, which are attributable to changes in the foreign currencies to U.S. dollar spot exchange rates, are recorded as accumulated foreign currency translation in Other comprehensive income (loss). Upon the termination of a net investment hedge, any net gain or loss included in Accumulated other comprehensive income (loss) relative to the investment hedge remains until the foreign subsidiary investment is disposed of or is substantially liquidated. Net gains (losses) recorded to Accumulated other comprehensive income (loss) relating to the Company's net investment hedges for the three and nine-month periods were as follows:
Interest Rate Risks and Related Strategies The Company’s primary interest rate exposure results from changes in U.S. dollar interest rates. The Company’s policy is to manage interest cost using a mix of fixed and variable rate debt. The Company periodically uses interest rate swaps to manage such exposures. Under these interest rate swaps, the Company exchanges, at specified intervals, the difference between fixed and floating interest amounts calculated by reference to an agreed-upon notional principal amount. These swaps are designated as either fair value or cash flow hedges. For interest rate swaps designated as fair value hedges (i.e., hedges against the exposure to changes in the fair value of an asset or a liability or an identified portion thereof that is attributable to a particular risk), changes in the fair value of the interest rate swaps offset changes in the fair value of the fixed rate debt due to changes in market interest rates. Changes in the fair value of the interest rate swaps designated as cash flow hedges (i.e., hedging the exposure to variability in expected future cash flows that is attributable to a particular risk) are offset by amounts recorded in Other comprehensive income (loss). If interest rate derivatives designated as cash flow hedges are terminated, the balance in Accumulated other comprehensive income (loss) attributable to those derivatives is reclassified into earnings over the remaining life of the hedged debt. The net realized loss related to terminated interest rate swaps expected to be reclassified and recorded in Interest expense within the next 12 months is $6 million, net of tax. The total notional amount of the Company’s outstanding interest rate swaps designated as fair value hedges was $1.2 billion at June 30, 2019 and September 30, 2018. The outstanding swaps represent fixed-to-floating interest rate swap agreements the Company entered into to convert the interest payments on certain long-term notes from the fixed rate to a floating interest rate based on LIBOR. Changes in the fair value of the interest rate swaps offset changes in the fair value of the fixed rate debt. The amounts recorded during the three and nine months ended June 30, 2019 and 2018 for changes in the fair value of these hedges were immaterial to the Company's consolidated financial results. Other Risk Exposures The Company purchases resins, which are oil-based components used in the manufacture of certain products. Significant increases in world oil prices that lead to increases in resin purchase costs could impact future operating results. From time to time, the Company has managed price risks associated with these commodity purchases through commodity derivative forward contracts. The Company's outstanding commodity derivative forward contracts at June 30, 2019 were immaterial to the Company's consolidated financial results. The Company had no outstanding commodity derivative forward contracts at September 30, 2018. Financial Statement Effects The fair values of derivative instruments outstanding at June 30, 2019 and September 30, 2018 were not material to the Company's consolidated balance sheets. The amounts reclassified from accumulated other comprehensive income relating to cash flow hedges during the three and nine months ended June 30, 2019 and 2018 were not material to the Company's consolidated financial results.
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Financial Instruments and Fair Value Measurements |
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Jun. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||
| Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||
| Financial Instruments and Fair Value Measurements | Financial Instruments and Fair Value Measurements The following reconciles cash and equivalents and restricted cash reported within the Company's consolidated balance sheets at June 30, 2019 and September 30, 2018 to the total of these amounts shown on the Company's consolidated statements of cash flows:
Cash equivalents consist of all highly liquid investments with a maturity of three months or less at time of purchase. Restricted cash consists of cash restricted from withdrawal and usage except for certain product liability matters. The Company’s cash and equivalents includes institutional money market accounts which permit daily redemption and the fair values of these investments are based upon the quoted prices in active markets provided by the holding financial institutions, which are considered Level 1 inputs in the fair value hierarchy. The fair value of these accounts was immaterial at June 30, 2019 and the fair value of these accounts at September 30, 2018 was $228 million. The Company’s remaining cash and equivalents, excluding restricted cash, were $523 million and $913 million at June 30, 2019 and September 30, 2018, respectively. Short-term investments are held to their maturities and are carried at cost, which approximates fair value. The short-term investments consist of instruments with maturities greater than three months and less than one year. Long-term debt is recorded at amortized cost. The fair value of long-term debt is measured based upon quoted prices in active markets for similar instruments, which are considered Level 2 inputs in the fair value hierarchy. The fair value of long-term debt was $18.9 billion and $18.8 billion at June 30, 2019 and September 30, 2018, respectively. The fair value of the current portion of long-term debt was $2.1 billion and $1.9 billion at June 30, 2019 and September 30, 2018, respectively. All other instruments measured by the Company at fair value, including derivatives and contingent consideration liabilities, are immaterial to the Company's consolidated balance sheets.
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Debt |
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| Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||
| Debt | Debt Second Fiscal Quarter Ended March 31, 2019-Debt Redemption In March 2019, the Company redeemed an aggregate principal amount of $250 million of its outstanding floating rate senior unsecured U.S. notes due December 29, 2020. Based upon the $249 million carrying value of the notes redeemed and the $250 million the Company paid to redeem the aggregate principal amount of the notes, the Company recorded a loss on this debt extinguishment transaction in the second quarter of fiscal year 2019 of $1 million as Other (expense) income, net, on its consolidated statements of income. Third Fiscal Quarter Ended June 30, 2019-Debt-Related Transactions In June 2019, Becton Dickinson Euro Finance S.à r.l., a private limited liability company (société à responsabilité limitée), which is an indirect, wholly-owned finance subsidiary of the Company, issued Euro-denominated debt consisting of 600 million Euros ($672 million) of 0.174% notes due June 4, 2021, 800 million Euros ($896 million) of 0.632% notes due June 4, 2023, and 600 million Euros ($672 million) of 1.208% notes due June 4, 2026. The notes are fully and unconditionally guaranteed on a senior unsecured basis by the Company. No other of the Company's subsidiaries provide any guarantees with respect to these notes. The indenture covenants include a limitation on liens and a restriction on sale and leasebacks, change of control and consolidation, merger and sale of assets covenants. These covenants are subject to a number of exceptions, limitations and qualifications. The indenture does not restrict the Company, Becton Dickinson Euro Finance S.à r.l., or any other of the Company's subsidiaries from incurring additional debt or other liabilities, including additional senior debt. Additionally, the indenture does not restrict Becton Dickinson Euro Finance S.à r.l. and the Company from granting security interests over its assets. The Company used the net proceeds from this long-term debt offering, together with cash on hand, to repay all the 1.000 billion Euros ($1.120 billion) of principal outstanding on 0.368% notes due June 6, 2019, as well as to fund the Company's repurchase of certain of its long-term senior notes outstanding. Under this cash tender offer, the Company repurchased the following aggregate principal amounts of its long-term debt at an aggregate market price of $1.169 billion:
The carrying value of these long-term notes was $1.112 billion, and the Company recognized a loss on this debt extinguishment of $57 million, which was recorded in June 2019 as Other (expense) income, net, on the Company’s condensed consolidated statements of income.
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Income Taxes |
9 Months Ended |
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Jun. 30, 2019 | |
| Income Tax Disclosure [Abstract] | |
| Income Taxes | Income Taxes New U.S. tax legislation, which is commonly referred to as the Tax Cuts and Jobs Act (the "Act"), was enacted on December 22, 2017. The Act subjects a U.S. shareholder to tax on global intangible low-taxed income ("GILTI") earned by certain foreign subsidiaries. The Company has elected to account for its GILTI tax due as a period expense in the year the tax is incurred. Upon completing its accounting for the tax effects of the Act during fiscal year 2019, the Company recognized a net charge of $10 million, which is reflected in the Company's consolidated statement of income within Income tax provision, to adjust its one-time transition tax liability for all of its foreign subsidiaries. Also during fiscal year 2019, the Company recorded a $67 million decrease to Income tax provision to adjust the Company's reevaluation of the permanent reinvestment assertion regarding foreign earnings, as well as an increase to Income tax provision of $2 million relating to the Company's re-measurement of deferred tax balances.
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Accounting Changes (Policies) |
9 Months Ended |
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Jun. 30, 2019 | |
| Accounting Changes and Error Corrections [Abstract] | |
| New Accounting Principles Adopted | New Accounting Principles Adopted On October 1, 2018, the Company adopted Accounting Standards Codification Topic 606, "Revenue from Contracts with Customers" ("ASC 606") using the modified retrospective method. Under ASC 606, revenue is recognized upon the transfer of control of goods or services to customers and reflects the amount of consideration to which a reporting entity expects to be entitled in exchange for those goods or services. The Company assessed the impact of this new standard on its consolidated financial statements based upon a review of contracts that were not completed as of October 1, 2018. Amounts presented in the Company's financial statements for the prior-year periods have not been revised and are reflective of the revenue recognition requirements which were in effect for those periods. This accounting standard adoption, which is further discussed in Note 6, did not materially impact any line items of the Company's consolidated income statements and balance sheet. On October 1, 2018, the Company retrospectively adopted an accounting standard update which requires all components of net periodic pension and postretirement benefit costs to be disaggregated from the service cost component and to be presented on the income statement outside a subtotal of income from operations, if one is presented. Upon the Company's adoption of the accounting standard update, which did not have a material impact on its consolidated financial statements, all components of the Company’s net periodic pension and postretirement benefit costs, aside from service cost, are recorded to Other income (expense), net on its consolidated income statements for all periods presented. Revisions of prior-year period amounts were estimated based upon previously disclosed amounts. On October 1, 2018, the Company adopted an accounting standard update which requires that the income tax effects of intercompany sales or transfers of assets, except those involving inventory, be recognized in the income statement as income tax expense (or benefit) in the period that the sale or transfer occurs. The Company adopted this accounting standard update, which did not have a material impact on its consolidated financial statements, using the modified retrospective method. New Accounting Principle Not Yet Adopted In February 2016, the FASB issued a new lease accounting standard which requires lessees to recognize lease assets and lease liabilities on the balance sheet. The new standard also requires expanded disclosures regarding leasing arrangements. The Company is in the process of evaluating the impact on its consolidated financial statements and anticipates most of its current operating leases will result in the recognition of right-of-use assets and corresponding lease liabilities on its consolidated balance sheet. The new standard is not expected to materially impact the Company's results of operations. The Company will adopt the standard on October 1, 2019 and will elect the transition method that allows application of the new standard at its adoption date, rather than at the earliest comparative period presented in the financial statements.
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| Commitments and Contingencies | Given the uncertain nature of litigation generally, the Company is not able, in all cases, to estimate the amount or range of loss that could result from an unfavorable outcome of the litigation to which the Company is a party. In accordance with U.S. GAAP, the Company establishes accruals to the extent probable future losses are estimable (in the case of environmental matters, without considering possible third-party recoveries). With respect to putative class action lawsuits in the United States and certain of the Canadian lawsuits described below relating to product liability matters, the Company is unable to estimate a range of reasonably possible losses for the following reasons: (i) all or certain of the proceedings are in early stages; (ii) the Company has not received and reviewed complete information regarding all or certain of the plaintiffs and their medical conditions; and/or (iii) there are significant factual issues to be resolved. In addition, there is uncertainty as to the likelihood of a class being certified or the ultimate size of the class. With respect to the civil investigative demand served by the Department of Justice, as discussed below, the Company is unable to estimate a range of reasonably possible losses for the following reasons: (i) all or certain of the proceedings are in early stages; and/or (ii) there are significant factual and legal issues to be resolved. In view of the uncertainties discussed below, the Company could incur charges in excess of any currently established accruals and, to the extent available, liability insurance. In the opinion of management, any such future charges, individually or in the aggregate, could have a material adverse effect on the Company’s consolidated results of operations and consolidated cash flows.
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| Revenue | Timing of Revenue Recognition The Company's revenues are primarily recognized when the customer obtains control of the product sold, which is generally upon shipment or delivery, depending on the delivery terms specified in the sales agreement. Revenues associated with certain instruments and equipment for which installation is complex, and therefore significantly affects the customer’s ability to use and benefit from the product, are recognized when customer acceptance of these installed products has been confirmed. For certain service arrangements, including extended warranty and software maintenance contracts, revenue is recognized ratably over the contract term. The majority of revenues relating to extended warranty contracts associated with certain instruments and equipment is generally recognized within a few years whereas deferred revenue relating to software maintenance contracts is generally recognized over a longer period. Measurement of Revenues The Company acts as the principal in substantially all of its customer arrangements and as such, generally records revenues on a gross basis. Revenues exclude any taxes that the Company collects from customers and remits to tax authorities. The Company considers its shipping and handling costs to be costs of contract fulfillment and has made the accounting policy election to record these costs within Selling and administrative expense. Payment terms extended to the Company's customers are based upon commercially reasonable terms for the markets in which the Company's products are sold. Because the Company generally expects to receive payment within one year or less from when control of a product is transferred to the customer, the Company does not generally adjust its revenues for the effects of a financing component. The Company’s estimate of probable credit losses relating to trade receivables is determined based on historical experience and other specific account data. Amounts are written off against the allowances for doubtful accounts when the Company determines that a customer account is uncollectible. Such amounts are not material to the Company's consolidated financial results. The Company's gross revenues are subject to a variety of deductions which are recorded in the same period that the underlying revenues are recognized. Such variable consideration include rebates, sales discounts and sales returns. Because these deductions represent estimates of the related obligations, judgment is required when determining the impact of these revenue deductions on gross revenues for a reporting period. Rebates provided by the Company are based upon prices determined under the Company's agreements with its end-user customers. Additional factors considered in the estimate of the Company's rebate liability include the quantification of inventory that is either in stock at or in transit to the Company's distributors, as well as the estimated lag time between the sale of product and the payment of corresponding rebates. The impact of other forms of variable consideration, including sales discounts and sales returns, is not material to the Company's revenues. The Company's agreements with customers within certain organizational units including Medication Management Solutions, Diagnostic Systems and Biosciences, contain multiple performance obligations including both products and certain services noted above. The transaction price for these agreements is allocated to each performance obligation based upon its relative standalone selling price. Standalone selling price is the amount at which the Company would sell a promised good or service separately to a customer. The Company generally estimates standalone selling prices using its list prices and a consideration of typical discounts offered to customers.
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| Derivatives | The Company uses derivative instruments to mitigate certain exposures. The Company does not enter into derivative financial instruments for trading or speculative purposes. The effects these derivative instruments and hedged items have on financial position, financial performance, and cash flows are provided below. The Company’s policy is to manage interest cost using a mix of fixed and variable rate debt. The Company periodically uses interest rate swaps to manage such exposures. Under these interest rate swaps, the Company exchanges, at specified intervals, the difference between fixed and floating interest amounts calculated by reference to an agreed-upon notional principal amount. These swaps are designated as either fair value or cash flow hedges.For interest rate swaps designated as fair value hedges (i.e., hedges against the exposure to changes in the fair value of an asset or a liability or an identified portion thereof that is attributable to a particular risk), changes in the fair value of the interest rate swaps offset changes in the fair value of the fixed rate debt due to changes in market interest rates. Changes in the fair value of the interest rate swaps designated as cash flow hedges (i.e., hedging the exposure to variability in expected future cash flows that is attributable to a particular risk) are offset by amounts recorded in Other comprehensive income (loss). If interest rate derivatives designated as cash flow hedges are terminated, the balance in Accumulated other comprehensive income (loss) attributable to those derivatives is reclassified into earnings over the remaining life of the hedged debt.Hedges of the transactional foreign exchange exposures resulting primarily from intercompany payables and receivables are undesignated hedges.
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| Fair Value of Financial Instruments | The Company’s cash and equivalents includes institutional money market accounts which permit daily redemption and the fair values of these investments are based upon the quoted prices in active markets provided by the holding financial institutions, which are considered Level 1 inputs in the fair value hierarchy. The fair value of these accounts was immaterial at June 30, 2019 and the fair value of these accounts at September 30, 2018 was $228 million. The Company’s remaining cash and equivalents, excluding restricted cash, were $523 million and $913 million at June 30, 2019 and September 30, 2018, respectively. Short-term investments are held to their maturities and are carried at cost, which approximates fair value. The short-term investments consist of instruments with maturities greater than three months and less than one year. Long-term debt is recorded at amortized cost. The fair value of long-term debt is measured based upon quoted prices in active markets for similar instruments, which are considered Level 2 inputs in the fair value hierarchy. The fair value of long-term debt was $18.9 billion and $18.8 billion at June 30, 2019 and September 30, 2018, respectively. The fair value of the current portion of long-term debt was $2.1 billion and $1.9 billion at June 30, 2019 and September 30, 2018, respectively. All other instruments measured by the Company at fair value, including derivatives and contingent consideration liabilities, are immaterial to the Company's consolidated balance sheets.
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Shareholders' Equity (Tables) |
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Jun. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Stockholders' Equity Note [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Shareholders Equity | Changes in certain components of shareholders' equity for the first three quarters of fiscal years 2019 and 2018 were as follows:
(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.
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| Schedule of Accumulated Other Comprehensive Income (Loss) | The components and changes of Accumulated other comprehensive income (loss) for the first three quarters of fiscal years 2019 and 2018 were as follows:
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Earnings Per Share (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Weighted Average Common Shares Used in Computations of Basic and Diluted Earnings Per Share | The weighted average common shares used in the computations of basic and diluted earnings per share (shares in thousands) were as follows:
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Segment Data (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Revenue from External Customers by Geographic Area | Revenues by segment, organizational unit and geographical areas for the three and nine-month periods are detailed below. The Company has no material intersegment revenues. On December 29, 2017, the Company completed its acquisition of C.R. Bard, Inc. ("Bard"), which is further discussed in Note 9. Bard's operating results were included in the Company’s consolidated results of operations beginning on January 1, 2018 and as such, are not included in the financial results detailed below for the first quarter of the prior-year nine-month period.
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| Financial Information for Company's Segments | Segment income for the three and nine-month periods was as follows:
(e) Primarily comprised of foreign exchange, certain general and administrative expenses and share-based compensation expense. The amount for the nine months ended June 30, 2019 included a pre-tax charge of $331 million related to certain product liability matters, which is further discussed in Note 5, and also included the pre-tax gain recognized on the Company's sale of its Advanced Bioprocessing business of approximately $336 million, which is further discussed in Note 10. The amounts for the three and nine months ended June 30, 2018 included the pre-tax gain recognized on the Company's sale of its non-controlling interest in Vyaire Medical of approximately $308 million.
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Benefit Plans (Tables) |
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| Retirement Benefits [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net Pension and Postretirement Cost | Net pension cost included the following components for the three and nine months ended June 30:
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Business Restructuring Charges (Tables) |
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Jun. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Restructuring and Related Activities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Summary of Restructuring Accrual Activity | Restructuring liability activity for the nine months ended June 30, 2019 was as follows:
(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.
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Intangible Assets (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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| Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Components of Intangible Assets | Intangible assets consisted of:
(a) The decrease in the carrying value of assets at June 30, 2019 primarily reflects a write-down recorded in the third quarter by the Interventional segment's Surgery unit.
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| Reconciliation of Goodwill by Business Segment | The following is a reconciliation of goodwill by business segment:
(a) The purchase accounting adjustments were primarily driven by adjustments to tax-related balances recorded upon the finalization of the Bard acquisition allocation within one year of the transaction's closing.
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Derivative Instruments and Hedging Activities (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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| Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Net Investment Hedges in Accumulated Other Comprehensive Income (Loss) | Net gains (losses) recorded to Accumulated other comprehensive income (loss) relating to the Company's net investment hedges for the three and nine-month periods were as follows:
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Financial Instruments and Fair Value Measurements (Tables) |
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Jun. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||
| Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Cash and Cash Equivalents | The following reconciles cash and equivalents and restricted cash reported within the Company's consolidated balance sheets at June 30, 2019 and September 30, 2018 to the total of these amounts shown on the Company's consolidated statements of cash flows:
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Debt (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||
| Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||
| Schedule of Extinguishment of Debt | Under this cash tender offer, the Company repurchased the following aggregate principal amounts of its long-term debt at an aggregate market price of $1.169 billion:
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Shareholders' Equity - Changes in Certain Components of Shareholders' Equity (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Millions |
3 Months Ended | 9 Months Ended | ||||||
|---|---|---|---|---|---|---|---|---|
Jun. 30, 2019 |
Mar. 31, 2019 |
Dec. 31, 2018 |
Jun. 30, 2018 |
Mar. 31, 2018 |
Dec. 31, 2017 |
Jun. 30, 2019 |
Jun. 30, 2018 |
|
| Dividends per Common Share (USD per share) | $ 0.77 | $ 0.77 | $ 0.77 | $ 0.75 | $ 0.75 | $ 0.75 | $ 2.31 | $ 2.25 |
| Beginning balance | $ 20,994 | $ 20,994 | ||||||
| Net income | $ 451 | $ 594 | 1,071 | $ 446 | ||||
| Ending balance | 21,497 | 21,497 | ||||||
| Common Stock Issued at Par Value | ||||||||
| Beginning balance | 347 | $ 347 | 347 | 347 | $ 347 | $ 347 | 347 | 347 |
| Ending balance | 347 | 347 | 347 | 347 | 347 | 347 | 347 | 347 |
| Capital in Excess of Par Value | ||||||||
| Beginning balance | 16,177 | 16,174 | 16,179 | 16,170 | 16,197 | 9,619 | 16,179 | 9,619 |
| Common stock issued for acquisition | (9) | 6,487 | ||||||
| Common stock issued for share-based compensation and other plans, net | (6) | (57) | (97) | (25) | (94) | (51) | ||
| Share-based compensation | 56 | 60 | 92 | 48 | 76 | 142 | ||
| Ending balance | 16,227 | 16,177 | 16,174 | 16,193 | 16,170 | 16,197 | 16,227 | 16,193 |
| Retained Earnings | ||||||||
| Beginning balance | 12,792 | 13,018 | 12,596 | 12,616 | 12,765 | 13,111 | 12,596 | 13,111 |
| Net income | 451 | 20 | 599 | 594 | (12) | (136) | ||
| Common dividends | (208) | (208) | (207) | (201) | (201) | (172) | ||
| Preferred dividends | (38) | (38) | (38) | (38) | (38) | (38) | ||
| Common stock issued for share-based compensation and other plans, net | (1) | (1) | (1) | |||||
| Effect of changes in accounting principles (see Note 2) | 68 | 103 | ||||||
| Ending balance | 12,997 | 12,792 | 13,018 | 12,971 | 12,616 | 12,765 | 12,997 | 12,971 |
| Deferred Compensation | ||||||||
| Beginning balance | 23 | 24 | 22 | 21 | 19 | 19 | 22 | 19 |
| Common stock issued for share-based compensation and other plans, net | (1) | 2 | 1 | 2 | ||||
| Ending balance | 23 | 23 | 24 | 22 | 21 | 19 | 23 | 22 |
| Treasury Stock | ||||||||
| Beginning balance | $ (6,192) | $ (6,235) | $ (6,243) | $ (6,300) | $ (6,343) | $ (8,427) | $ (6,243) | $ (8,427) |
| Beginning balance (shares) | (76,955) | (77,624) | (78,463) | (79,485) | (80,445) | (118,745) | (78,463) | (118,745) |
| Common stock issued for acquisition | $ 2,121 | |||||||
| Common stock issued for acquisition (in shares) | 37,306 | |||||||
| Common stock issued for share-based compensation and other plans, net | $ (8) | $ 42 | $ 9 | $ 24 | $ 44 | $ (37) | ||
| Common stock issued for share-based compensation and other plans, net (in shares) | 219 | 618 | 851 | 364 | 943 | 1,021 | ||
| Common stock held in trusts, net | 4 | 50 | (12) | (2) | 17 | (27) | ||
| Ending balance | $ (6,201) | $ (6,192) | $ (6,235) | $ (6,275) | $ (6,300) | $ (6,343) | $ (6,201) | $ (6,275) |
| Ending balance (shares) | (76,733) | (76,955) | (77,624) | (79,124) | (79,485) | (80,445) | (76,733) | (79,124) |
Earnings Per Share - Weighted Average Common Shares Used in Computations of Basic and Diluted Earnings per Share (Detail) - shares shares in Thousands |
3 Months Ended | 9 Months Ended | ||
|---|---|---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
Jun. 30, 2019 |
Jun. 30, 2018 |
|
| Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
| Average common shares outstanding (shares) | 270,249 | 267,836 | 269,719 | 254,934 |
| Dilutive share equivalents from share-based plans (shares) | 4,087 | 6,089 | 4,791 | 5,926 |
| Average common and common equivalent shares outstanding - assuming dilution (shares) | 274,336 | 273,925 | 274,510 | 260,860 |
| Convertible Preferred Stock | ||||
| Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
| Antidilutive securities excluded (in shares) | 11,685 | 11,685 | 11,685 | 11,685 |
Revenues Revenues - Additional Information (Details) - Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2019-07-01 $ in Billions |
Jun. 30, 2019
USD ($)
|
|---|---|
| Disaggregation of Revenue [Line Items] | |
| Revenue, remaining performance obligation, expected timing of satisfaction | 3 years |
| Products and/or Services | |
| Disaggregation of Revenue [Line Items] | |
| Revenue, remaining performance obligation, amount | $ 1.7 |
Benefit Plans - Net Pension and Postretirement Cost (Detail) - Pension Plans - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
|---|---|---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
Jun. 30, 2019 |
Jun. 30, 2018 |
|
| Defined Benefit Plan Disclosure [Line Items] | ||||
| Service cost | $ 33 | $ 43 | $ 101 | $ 107 |
| Interest cost | 26 | 29 | 80 | 70 |
| Expected return on plan assets | (44) | (52) | (135) | (125) |
| Amortization of prior service credit | (3) | (3) | (10) | (10) |
| Amortization of loss | 19 | 20 | 58 | 59 |
| Settlements | 0 | 4 | 0 | 6 |
| Net pension and postretirement cost | $ 30 | $ 39 | $ 93 | $ 107 |
Divestiture - Additional Information (Details) - USD ($) $ in Millions |
9 Months Ended | ||
|---|---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
Sep. 30, 2018 |
|
| Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||
| Assets held for sale | $ 0 | $ 137 | |
| Gain (loss) on disposition of business | 336 | $ 0 | |
| Advanced Bioprocessing | |||
| Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||
| Gain (loss) on disposition of business | $ 336 | ||
| Disposal Group, Held-for-sale, Not Discontinued Operations | Advanced Bioprocessing | |||
| Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||
| Assets held for sale | $ 137 | ||
Intangible Assets - Additional Information (Detail) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
|---|---|---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
Jun. 30, 2019 |
Jun. 30, 2018 |
|
| Goodwill and Intangible Assets Disclosure [Abstract] | ||||
| Intangible amortization expense | $ 378 | $ 375 | $ 1,132 | $ 879 |
Intangible Assets - Reconciliation of Goodwill by Business Segment (Detail) $ in Millions |
9 Months Ended |
|---|---|
|
Jun. 30, 2019
USD ($)
| |
| Goodwill [Roll Forward] | |
| Goodwill as of September 30, 2018 | $ 23,600 |
| Divestiture-related adjustments | 3 |
| Purchase accounting adjustments | (90) |
| Currency translation | (14) |
| Goodwill as of June 30, 2019 | 23,498 |
| Medical | |
| Goodwill [Roll Forward] | |
| Goodwill as of September 30, 2018 | 10,054 |
| Divestiture-related adjustments | 0 |
| Purchase accounting adjustments | (15) |
| Currency translation | (12) |
| Goodwill as of June 30, 2019 | 10,027 |
| Life Sciences | |
| Goodwill [Roll Forward] | |
| Goodwill as of September 30, 2018 | 775 |
| Divestiture-related adjustments | 3 |
| Purchase accounting adjustments | 0 |
| Currency translation | (3) |
| Goodwill as of June 30, 2019 | 775 |
| Interventional | |
| Goodwill [Roll Forward] | |
| Goodwill as of September 30, 2018 | 12,771 |
| Divestiture-related adjustments | 0 |
| Purchase accounting adjustments | (75) |
| Currency translation | 0 |
| Goodwill as of June 30, 2019 | $ 12,696 |
Derivative Instruments and Hedging Activities - Additional Information (Detail) - USD ($) $ in Millions |
Jun. 30, 2019 |
Sep. 30, 2018 |
|---|---|---|
| Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||
| Reclassification of terminated interest rate swaps to interest expense within the next 12 months | $ 6 | |
| Debt | Net Investment Hedging | ||
| Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||
| Notional amount | 1,800 | $ 3,000 |
| Foreign Exchange Contract | ||
| Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||
| Notional amount | 933 | 3,100 |
| Currency Swap | ||
| Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||
| Notional amount | 2,300 | |
| Fixed to Floating | Fair Value Hedging | ||
| Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||
| Notional amount | $ 1,200 | $ 1,200 |
Derivative Instruments and Hedging Activities Derivative Instruments and Hedging Activities Disclosure - Gains (Losses) on Net Investment Hedges (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
|---|---|---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
Jun. 30, 2019 |
Jun. 30, 2018 |
|
| Foreign Exchange Contract | ||||
| Derivative Instruments, Gain (Loss) [Line Items] | ||||
| Foreign currency-denominated debt | $ 39 | $ 158 | $ 81 | $ 53 |
| Currency Swap | ||||
| Derivative Instruments, Gain (Loss) [Line Items] | ||||
| Foreign currency-denominated debt | (14) | 0 | (14) | 0 |
| Foreign Exchange Forward [Member] | ||||
| Derivative Instruments, Gain (Loss) [Line Items] | ||||
| Foreign currency-denominated debt | $ (9) | $ 0 | $ (9) | $ 0 |
Financial Instruments and Fair Value Measurements - Cash and Equivalents and Restricted Cash (Details) - USD ($) $ in Millions |
Jun. 30, 2019 |
Sep. 30, 2018 |
Jun. 30, 2018 |
Sep. 30, 2017 |
|---|---|---|---|---|
| Fair Value Disclosures [Abstract] | ||||
| Cash and equivalents | $ 523 | $ 1,140 | ||
| Restricted cash | 71 | 96 | ||
| Cash and equivalents and restricted cash | $ 594 | $ 1,236 | $ 1,509 | $ 14,179 |
Financial Instruments and Fair Value Measurements - Additional Information (Detail) - USD ($) $ in Millions |
9 Months Ended | |
|---|---|---|
Jun. 30, 2019 |
Sep. 30, 2018 |
|
| Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
| Cash and cash equivalents, fair value | $ 228 | |
| Remaining cash equivalents | $ 523 | 913 |
| Fair value of long-term debt | 18,900 | 18,800 |
| Fair value of debt reclassified from long term to short term | $ 2,100 | $ 1,900 |
| Minimum | ||
| Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
| Maturity period of short-term investments at the time of purchase | 3 months | |
| Maximum | ||
| Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
| Maturity period of short-term investments at the time of purchase | 1 year |
Income Taxes - Additional Information (Details) $ in Millions |
9 Months Ended |
|---|---|
|
Jun. 30, 2019
USD ($)
| |
| Income Tax Disclosure [Abstract] | |
| Other tax expense (benefit) | $ 10 |
| Other tax expense benefit related to historic unremitted foreign earnings | (67) |
| Income Tax Expense (Benefit), Continuing Operations, Adjustment of Deferred Tax (Asset) Liability | $ 2 |
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