New Jersey
|
001-4802
|
22-0760120
|
(State or other jurisdiction of incorporation)
|
(Commission File Number)
|
(IRS Employer Identification No.)
|
1 Becton Drive
Franklin Lakes, New Jersey
|
07417-1880
|
(Address of principal executive offices)
|
(Zip Code)
|
☐ |
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
|
☐ |
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
|
☐ |
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
|
☐ |
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
|
Item 2.01. |
Completion of Acquisition or Disposition of Assets.
|
Item 9.01. |
Financial Statements and Exhibits.
|
Exhibit No.
|
Description of Exhibit
|
|
99.1
|
Unaudited pro forma condensed combined financial information (and notes thereto) of BD, after giving effect to the Merger and related financing transactions, as of and for the fiscal year ended September 30, 2017.
|
|
99.2 | Unaudited pro forma condensed combined financial information (and notes thereto) of BD, after giving effect to the Merger and related financing transactions, for the three month period ended December 31, 2017 and for the fiscal year ended September 30, 2017. |
Exhibit No.
|
Description of Exhibit
|
|
Unaudited pro forma condensed combined financial information (and notes thereto) of BD, after giving effect to the Merger and related financing transactions, as of and for the fiscal year ended September 30, 2017.
|
||
99.2 | Unaudited pro forma condensed combined financial information (and notes thereto) of BD, after giving effect to the Merger and related financing transactions, for the three month period ended December 31, 2017 and for the fiscal year ended September 30, 2017. |
BECTON, DICKINSON AND COMPANY
|
||
(Registrant)
|
||
By:
|
/s/ Gary DeFazio
|
|
Name:
|
Gary DeFazio
|
|
Title:
|
Vice President and Corporate Secretary
|
(in millions)
|
Historical
Company
|
Historical
Bard
|
Reclassifications
|
Term Loan
Financing
|
The
Merger
|
Note
References
|
Pro Forma
Combined
|
||||||||||||||||||||
ASSETS
|
|||||||||||||||||||||||||||
Current Assets:
|
|||||||||||||||||||||||||||
Cash and Cash equivalents
|
$
|
14,179
|
$
|
1,158
|
-
|
$
|
2,246
|
$
|
(16,521
|
)
|
4a, 4c
|
$
|
1,062
|
||||||||||||||
Restricted Cash
|
-
|
142
|
-
|
-
|
-
|
142
|
|||||||||||||||||||||
Short-term investments
|
21
|
-
|
-
|
-
|
-
|
21
|
|||||||||||||||||||||
Trade receivables, net
|
1,744
|
503
|
-
|
-
|
-
|
2,247
|
|||||||||||||||||||||
Current portion of net investment in sales-type leases
|
16
|
-
|
-
|
-
|
-
|
16
|
|||||||||||||||||||||
Inventories
|
1,818
|
529
|
-
|
-
|
504
|
4d
|
2,851
|
||||||||||||||||||||
Prepaid expenses and other
|
855
|
254
|
-
|
-
|
-
|
1,109
|
|||||||||||||||||||||
Total Current Assets
|
18,633
|
2,586
|
-
|
2,246
|
(16,017
|
)
|
7,448
|
||||||||||||||||||||
Property, plant and equipment, net
|
4,638
|
506
|
(55
|
)
|
-
|
90
|
3a, 4e
|
5,179
|
|||||||||||||||||||
Goodwill
|
7,563
|
1,271
|
-
|
15,649
|
4f
|
24,483
|
|||||||||||||||||||||
Other intangibles, net
|
5,893
|
942
|
-
|
11,918
|
4g
|
18,753
|
|||||||||||||||||||||
Net investment in sales-type leases, less current portion
|
38
|
-
|
-
|
-
|
38
|
||||||||||||||||||||||
Deferred tax assets
|
-
|
106
|
(106
|
)
|
-
|
-
|
3a
|
-
|
|||||||||||||||||||
Other assets
|
969
|
162
|
161
|
-
|
-
|
3a
|
1,292
|
||||||||||||||||||||
Total Assets
|
$
|
37,734
|
$
|
5,573
|
-
|
$
|
2,246
|
$
|
11,640
|
$
|
57,193
|
||||||||||||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY
|
|||||||||||||||||||||||||||
Current Liabilities:
|
|||||||||||||||||||||||||||
Short-term debt and current maturities of long-term debt
|
$
|
203
|
$
|
500
|
$ |
-
|
$ |
-
|
$ |
-
|
$
|
703
|
|||||||||||||||
Payables and accrued expenses
|
3,139
|
1,000
|
-
|
-
|
(23
|
)
|
4h
|
4,116
|
|||||||||||||||||||
Total Current Liabilities
|
3,342
|
1,500
|
-
|
-
|
(23
|
)
|
4,819
|
||||||||||||||||||||
Long-term debt
|
18,667
|
1,143
|
-
|
2,246
|
48
|
4b, 4i
|
22,104
|
||||||||||||||||||||
Long-Term Employee Benefit Obligations
|
1,168
|
-
|
-
|
-
|
-
|
1,168
|
|||||||||||||||||||||
Deferred income taxes and other
|
1,609
|
912
|
-
|
-
|
5,094
|
4j
|
7,615
|
||||||||||||||||||||
Shareholders’ Equity:
|
|||||||||||||||||||||||||||
Preferred stock
|
2
|
-
|
-
|
-
|
-
|
|
2
|
||||||||||||||||||||
Common stock
|
347
|
18
|
-
|
-
|
19
|
4k
|
384
|
||||||||||||||||||||
Capital in excess of par value
|
9,619
|
2,480
|
-
|
-
|
6,173
|
4k
|
18,272
|
||||||||||||||||||||
Retained earnings
|
13,111
|
(318
|
)
|
-
|
-
|
167
|
4k |
12,960
|
|||||||||||||||||||
Deferred compensation
|
19
|
-
|
-
|
-
|
-
|
19
|
|||||||||||||||||||||
Common stock in treasury - at cost
|
(8,427
|
)
|
-
|
-
|
-
|
-
|
(8,427
|
)
|
|||||||||||||||||||
Accumulated other comprehensive loss
|
(1,723
|
)
|
(162
|
)
|
-
|
-
|
162
|
4k
|
(1,723
|
)
|
|||||||||||||||||
Total Shareholders’ Equity
|
12,948
|
2,018
|
-
|
-
|
6,521
|
21,487
|
|||||||||||||||||||||
Total Liabilities and Shareholders’ Equity
|
$
|
37,734
|
$
|
5,573
|
$ |
-
|
$
|
2,246
|
$
|
11,640
|
$
|
57,193
|
(in millions, except per share data)
|
Historical
Company
|
Historical
Bard
|
Reclassifications
|
Equity
Financing and Debt Financing |
The
Merger
|
Note
References
|
Total
Pro Forma |
||||||||||||||||||||
Revenues
|
$
|
12,093
|
$
|
3,875
|
$
|
(187
|
)
|
$ |
-
|
$ |
-
|
3b
|
$
|
15,781
|
|||||||||||||
Cost of products sold (a)
|
6,151
|
1,443
|
(107
|
)
|
-
|
747
|
3b, 5a
|
8,234
|
|||||||||||||||||||
Selling and administrative expense (a)
|
2,925
|
1,134
|
93
|
-
|
-
|
3b
|
4,152
|
||||||||||||||||||||
Research and developement expense (a)
|
774
|
295
|
-
|
-
|
-
|
1,069
|
|||||||||||||||||||||
Acquisitions and other restructurings
|
354
|
-
|
23
|
-
|
(43
|
)
|
3b, 5b
|
334
|
|||||||||||||||||||
Other operating expense, net
|
411
|
-
|
239
|
-
|
-
|
3b
|
650
|
||||||||||||||||||||
Total operating costs and expenses
|
10,615
|
2,872
|
248
|
-
|
704
|
14,439
|
|||||||||||||||||||||
Operating income
|
1,478
|
1,003
|
(435
|
)
|
-
|
(704
|
)
|
1,342
|
|||||||||||||||||||
Interest expense
|
(521
|
)
|
(60
|
)
|
-
|
(198
|
)
|
7
|
5c
|
(772
|
)
|
||||||||||||||||
Interest income
|
76
|
-
|
-
|
-
|
-
|
76
|
|||||||||||||||||||||
Other (expense) income, net
|
(57
|
)
|
(256
|
)
|
435
|
-
|
-
|
3b
|
122
|
||||||||||||||||||
Income before income taxes
|
976
|
687
|
-
|
(198
|
)
|
(697
|
)
|
768
|
|||||||||||||||||||
Income tax (benefit) provision
|
(124
|
)
|
116
|
-
|
(75
|
)
|
(273
|
)
|
5d
|
(356
|
)
|
||||||||||||||||
Net income
|
1,100
|
571
|
-
|
(123
|
)
|
(424
|
)
|
1,124
|
|||||||||||||||||||
Less: preferred dividends
|
(70
|
)
|
-
|
-
|
(82
|
)
|
-
|
5e
|
(152
|
)
|
|||||||||||||||||
Net income attributable to common shareholders
|
$
|
1,030
|
$
|
571
|
$ |
-
|
$
|
(205
|
)
|
$
|
(424
|
)
|
$
|
972
|
|||||||||||||
Earnings per common share:
|
|||||||||||||||||||||||||||
Basic
|
$
|
4.70
|
$
|
3.66
|
|||||||||||||||||||||||
Diluted
|
$
|
4.60
|
$
|
3.52
|
|||||||||||||||||||||||
Weighted average common shares:
|
|||||||||||||||||||||||||||
Basic
|
218.9
|
9.4
|
37.4
|
265.7
|
|||||||||||||||||||||||
Diluted
|
223.6
|
9.4
|
42.8
|
275.8
|
|||||||||||||||||||||||
(a) Includes depreciation and amortization expenses of:
|
$
|
1,088
|
$
|
208
|
$ |
-
|
$ |
-
|
$
|
747
|
$
|
2,043
|
·
|
14.025 million shares of BD’s common stock for net proceeds of $2.4 billion (gross proceeds of $2.5 billion).
|
·
|
2.475 million shares of BD’s mandatory convertible preferred stock (ownership is held in the form of depositary shares, each representing a 1/20th interest in a share of preferred stock) for net proceeds of $2.4 billion (gross proceeds of $2.5 billion). If and when declared, dividends on the mandatory convertible preferred stock are payable on a cumulative basis at an annual rate of 6.125% on the liquidation preference of $1,000 per preferred share ($50 per depositary share). The shares of preferred stock are convertible to a minimum of 11.7 million and up to a maximum of 14.0 million shares of BD common stock at an exchange ratio that is based on the market price of BD’s common stock at the date of conversion, and no later than the mandatory conversion date of May 1, 2020.
|
Less:
|
Add:
|
Twelve
|
||||||||||||||
Annual
|
Nine Months
|
Nine Months
|
Months
|
|||||||||||||
12/31/2016
|
9/30/2016
|
9/30/2017
|
9/30/2017
|
|||||||||||||
(In millions)
|
||||||||||||||||
Net Sales
|
$
|
3,714
|
$
|
2,747
|
$
|
2,908
|
$
|
3,875
|
||||||||
Costs and expenses:
|
||||||||||||||||
Cost of goods sold (a)
|
1,372
|
1,024
|
1,095
|
1,443
|
||||||||||||
Marketing, selling and administrative expense (a)
|
1,102
|
822
|
854
|
1,134
|
||||||||||||
Research and development expense (a)
|
293
|
214
|
216
|
295
|
||||||||||||
Acquisitions and other restructurings
|
-
|
-
|
-
|
-
|
||||||||||||
Other operating income
|
-
|
-
|
-
|
-
|
||||||||||||
Interest expense
|
54
|
39
|
45
|
60
|
||||||||||||
Other (income) expense, net
|
229
|
185
|
212
|
256
|
||||||||||||
Total costs and expenses
|
3,050
|
2,284
|
2,422
|
3,188
|
||||||||||||
Income from operations before income taxes
|
664
|
463
|
486
|
687
|
||||||||||||
Income tax provision
|
133
|
91
|
74
|
116
|
||||||||||||
Net income
|
$
|
531
|
$
|
372
|
$
|
412
|
$
|
571
|
||||||||
(a) Includes depreciation and amortization expense of:
|
$
|
213
|
$
|
161
|
$
|
156
|
$
|
208
|
i.
|
reclassification of $106 million of deferred tax assets to other non-current assets, and
|
ii.
|
reclassification of $55 million of capitalized software costs from property, plant and equipment to other non-current assets.
|
Description
|
September 30, 2017
Increase / (Decrease)
|
|||
Deferred tax assets
|
$
|
(106
|
)
|
|
Other assets
|
106
|
|||
Property, plant and equipment, net
|
(55
|
)
|
||
Other assets
|
55
|
i.
|
reclassification of amounts previously reported by Bard as revenue related to a royalty income stream to other income (expense), net, below operating income in the amount of $173 million;
|
ii.
|
reclassification of legal costs from other income (expense), net, below operating income to the caption “Other operating expense” as a component within operating income in the amount of $239 million;
|
iii.
|
reclassification of restructuring costs from other income (expense), net, below operating income to a separate classification as a component within operating income in the amount of $10 million;
|
iv.
|
reclassification of acquisition-related transaction costs from other income (expense), net, below operating income to a separate classification as a component within operating income in the amount of $13 million;
|
v.
|
reclassification of shipping and handling costs from cost of goods sold to a component within selling, general and administrative expenses in the amount of $93 million; and
|
vi.
|
the elimination of intercompany sales and related cost of goods sold between BD and Bard in the amount of $14 million.
|
Description
|
For Twelve Months Ended
September 30, 2017
Increase / (Decrease)
|
|||
Revenue
|
(187
|
)
|
||
Cost of products sold
|
(107
|
)
|
||
Selling and administrative expense
|
93
|
|||
Acquisitions and other restructurings
|
23
|
|||
Other operating expense
|
239
|
|||
Other income (expense), net
|
435
|
Consideration
|
||||||||||||
Cash
|
Equity(a)
|
Total
|
||||||||||
Consideration issued upon closing of the Merger
|
$
|
16,400
|
$
|
8,004
|
$
|
24,404
|
||||||
Consideration issued to settle outstanding stock compensation award
|
—
|
823
|
823
|
|||||||||
Total consideration issued
|
16,400
|
8,827
|
25,227
|
|||||||||
Less: Portion of settlement of outstanding stock compensation awards to be recognized as an expense, primarily through 2023
|
$
|
—
|
$
|
210
|
$
|
210
|
||||||
Total purchase price consideration
|
$
|
16,400
|
$
|
8,617
|
$
|
25,017
|
(a) |
Based on the issuance of 37.347 million shares of BD common stock and the $214.32 closing market price of BD’s common stock in effect as of the day immediately preceding the closing of the Merger.
|
Purchase Price Allocation
|
||||||||
Total Consideration transferred
|
$
|
25,017
|
||||||
Recognized amounts of identifiable assets acquired and liabilities assumed
|
||||||||
Net book value of assets acquired
|
$
|
2,018
|
||||||
Less after-tax transaction costs to be incurred by Bard
|
(20
|
)
|
||||||
Less write-off of pre-existing Bard goodwill and intangible assets
|
(2,213
|
)
|
||||||
Adjusted net book value of assets acquired
|
(215
|
)
|
||||||
Excess book value of net assets to be allocated
|
25,232
|
|||||||
Identifiable intangible assets at fair value
|
12,860
|
|||||||
Increase in property, plant and equipment to fair value
|
90
|
|||||||
Increase in long-term debt to fair value
|
(48
|
)
|
||||||
Increase in inventory to fair value
|
504
|
|||||||
Deferred tax impact of fair value adjustments
|
(5,094
|
)
|
||||||
Total Goodwill
|
$
|
16,920
|
(a)
|
A net cash increase to the unaudited pro forma condensed combined balance sheet in the amount of $2.246 billion as of September 30, 2017 relating to the net proceeds borrowed under the Term Loan Financing.
|
(b)
|
A net increase in long-term debt of $2.246 billion representing $2.250 billion of borrowings under the Term Loan Facility used to fund a portion of the cash consideration, net of $4 million of debt issuance costs.
|
(c)
|
A decrease in cash and cash equivalents of $16.521 billion, representing the payment of $16.400 billion by BD of the cash consideration, and the payment of $121 million of acquisition-related transaction costs.
|
(d)
|
An increase in inventories of $504 million, reflecting the adjustment to increase inventories to their fair value as part of the allocation of the purchase price to the underlying net assets of Bard.
|
(e)
|
An increase in property, plant and equipment of $90 million, reflecting the adjustment to increase property, plant and equipment to its fair value as part of the allocation of the purchase price to the underlying net assets of Bard.
|
(f)
|
A net increase in goodwill of $15.649 billion consisting of:
|
·
|
a decrease relating to the write off of Bard’s historical goodwill of approximately $1.271 billion; and
|
·
|
an increase representing the excess of the purchase price over the fair value of Bard’s net assets of $16.920 billion.
|
(g)
|
A net increase in other intangible assets of $11.918 billion consisting of:
|
·
|
a decrease relating to the write off of Bard’s historical identifiable intangible assets of $942 million; and
|
·
|
an aggregate increase of $12.860 billion to recognize the fair value of acquired identifiable intangible assets.
|
(h)
|
A net decrease in current payables and accrued expenses of $23 million related to a decrease in income taxes payable associated with the deductibility of a portion of the acquisition-related transaction costs still to be incurred.
|
(i)
|
An increase in long-term debt of $48 million, reflecting the adjustment to increase long-term debt to its fair value as part of the allocation of the purchase price to the underlying net assets of Bard.
|
(j)
|
An increase in non-current deferred tax liabilities of $5.094 billion related to the incremental book-tax basis differences arising from the revaluation of the net assets acquired in the Merger for book purposes.
|
(k)
|
A net increase in shareholders’ equity of $6.521 billion consisting of:
|
·
|
a net increase of $19 million in common stock related to (i) a $37 million increase due to the issuance of approximately 37.3 million shares of common stock as part of the equity consideration, offset in part by (ii) an $18 million decrease to eliminate the historical equity accounts of Bard.
|
·
|
a net increase of $6.173 billion in capital in excess of par value related to (i) a $8.827 billion increase due to the issuance of approximately 37.3 million shares of common stock and an additional 5.4 million shares on a fully diluted basis in settlement of Bard’s outstanding stock compensation awards as part of the equity consideration and (ii) a $73 million increase due to the recognition of a portion of the Bard stock compensation settlement charge on the first day of the post-combination period due to an acceleration of the underlying vesting rights of such awards, offset in part by the sum of (iii) a $210 million decrease relating to a portion of the equity consideration being re-characterized for financial reporting purposes as a deferred stock compensation charge to be recognized in the post-combination period due to the settlement of outstanding Bard stock compensation awards and (iv) a $2.480 billion decrease to eliminate the historical equity accounts of Bard.
|
·
|
a net increase of $167 million in retained earnings related to (i) a $318 million increase to eliminate the historical deficit of Bard, (ii) a $78 million decrease to reflect the after-tax effect of BD expensing $96 million of acquisition-related transaction costs using an effective statutory tax rate of approximately 38% as adjusted for an estimate of a limitation on tax deductibility of transaction costs, and (iii) a $73 million decrease due to the recognition of a portion of the Bard stock compensation settlement charge on the first day of the post-combination period due to an acceleration of the underlying vesting rights of such awards. As the recognition of this stock compensation charge has no continuing impact on the combined entity, the cost and associated tax benefit have not been reflected in the accompanying unaudited pro forma condensed combined statement of income; and
|
·
|
a net increase of $162 million in accumulated other comprehensive loss to eliminate the historical equity accounts of Bard.
|
Description
|
Weighted Average
Useful Life |
Fair Value
|
For the Year Ended
September 30, 2017 Increase / (Decrease)
|
|||||||||
Property, plant and equipment, net
|
12.0
|
$
|
90
|
$
|
8
|
|||||||
Net pro forma adjustment - depreciation
|
$
|
8
|
||||||||||
Other intangible assets, net
|
14.8
|
$
|
12,860
|
$
|
869
|
|||||||
Less historical intangible assets amortization expense
|
|
(130
|
)
|
|||||||||
Net pro forma adjustment - amortization
|
$
|
739
|
||||||||||
Net pro forma adjustment depreciation and amortization
|
$
|
747
|
·
|
an increase in depreciation expense of $8 million relating to the $90 million fair value step-up of fixed assets, over a weighted-average useful life of an estimated 12 years on a straight-line basis.
|
·
|
the elimination of $130 million of historical amortization expense to write off Bard’s historical net book value of identifiable intangible assets, which will be reestablished in the purchase accounting to reflect such identifiable intangible assets at their respective fair values; and
|
·
|
an increase in amortization expense of $869 million relating to the $12.860 billion aggregate fair value of finite-lived intangible assets, over a weighted-average useful life of an estimated 14.8 years on a straight-line basis.
|
Description
|
For the Year Ended
September 30, 2017
Increase / (Decrease)
|
|||
Cash interest:
|
||||
Net increase in cash interest on additional borrowings
|
$
|
272
|
||
Increase in cash interest on commitment fees
|
2
|
|||
Total cash interest before acquisition accounting
|
$
|
274
|
||
Non-cash interest and other adjustments
|
||||
Increase in non-cash amortization of debt issuance costs
|
$
|
3
|
||
Elimination of non-recurring bridge facility fees recognized in historical income statement
|
(79
|
)
|
||
Total non-cash interest and other adjustments before acquisition accounting
|
$
|
(76
|
)
|
|
Net pro forma adjustment before acquisition accounting
|
$
|
198
|
||
Non-cash amortization of fair value step-up of assumed Bard debt
|
(7
|
)
|
||
Net pro forma adjustment to interest expense
|
$
|
191
|
·
|
an increase in cash interest expense of $219 million relating to aggregate gross proceeds raised from the notes issued in the USD Debt Financing of $9.675 billion at a weighted-average interest rate of 3.3% for the approximate eight-month period of time that they were not issued during that period;
|
·
|
an increase in cash interest expense of $63 million relating to borrowings of $2.250 billion under the Term Loan Facility at an assumed interest rate of 2.8%;
|
·
|
a decrease in cash interest expense of $10 million relating to the redemption of $1 billion aggregate principal amount of the BD Redeemed 2017 Notes at an effective interest rate of approximately 1.8% for the approximate seven-month period of time they were outstanding during that period;
|
·
|
an increase in cash interest expense of $2 million relating to the annual commitment fees payable on the $2.250 billion of undrawn availability under the new credit facilities at a 0.20% rate;
|
·
|
an increase in interest expense of $3 million related to the amortization of an aggregate $78 million of debt issuance costs incurred in connection with the notes offered in the USD Debt Financing and the New Credit Facilities for the approximate eight-month period of time such debt was not outstanding and the related fees not incurred during the period;
|
·
|
a decrease in interest expense of $79 million relating to the elimination of the expensing of the upfront bridge facility fees in BD’s historical statement of income. Such fees are one-time in nature and do not have any continuing impact on the combined entity for pro forma purposes; and
|
·
|
a decrease in interest expense of $7 million relating to the amortization of the $48 million increase of long-term debt to its fair value.
|
Historical
Company |
Historical
Bard |
Reclassifications
|
Equity
Financing and Debt Financing |
The
Merger |
Note
References |
Total
Pro Forma |
||||||||||||||||||||||
(In millions, except per share data)
|
||||||||||||||||||||||||||||
Revenues
|
$
|
3,080
|
$
|
1,014
|
$
|
(46
|
)
|
$
|
-
|
$
|
(3
|
)
|
3a, 4b
|
|
$
|
4,044
|
||||||||||||
Cost of products sold (a)
|
1 ,530
|
384
|
(24
|
)
|
-
|
187
|
3a, 4a
|
|
2,077
|
|||||||||||||||||||
Selling and administrative expense (a)
|
774
|
288
|
24
|
-
|
-
|
3a
|
|
1,086
|
||||||||||||||||||||
Research and development expense (a)
|
192
|
81
|
-
|
-
|
-
|
273
|
||||||||||||||||||||||
Acquisitions and other restructurings
|
354
|
-
|
20
|
-
|
(299
|
)
|
3a, 4b
|
|
75
|
|||||||||||||||||||
Other operating expense, net
|
-
|
-
|
439
|
-
|
-
|
3a
|
|
439
|
||||||||||||||||||||
Total operating costs and expenses
|
2 ,850
|
753
|
459
|
-
|
(112
|
)
|
3,950
|
|||||||||||||||||||||
Operating income
|
230
|
261
|
(505
|
)
|
-
|
109
|
94
|
|||||||||||||||||||||
Interest expense
|
(158
|
)
|
(15
|
)
|
-
|
(16
|
)
|
2
|
4c
|
|
(187
|
)
|
||||||||||||||||
Interest income
|
44
|
-
|
-
|
-
|
-
|
44
|
||||||||||||||||||||||
Other (expense) income, net
|
(11
|
)
|
(456
|
)
|
505
|
-
|
-
|
3a
|
|
38
|
||||||||||||||||||
Income before income taxes
|
105
|
(210
|
)
|
-
|
(16
|
)
|
111
|
(11
|
)
|
|||||||||||||||||||
Income tax (benefit) provision
|
241
|
182
|
-
|
(4
|
)
|
3
|
4d
|
|
422
|
|||||||||||||||||||
Net income
|
(136
|
)
|
(392
|
)
|
-
|
(12
|
)
|
108
|
(433
|
)
|
||||||||||||||||||
Less: preferred dividends
|
(38
|
)
|
-
|
-
|
-
|
-
|
4e
|
|
(38
|
)
|
||||||||||||||||||
Net income attributable to common shareholders
|
$
|
(174
|
)
|
$
|
(392
|
)
|
$
|
-
|
$
|
(12
|
)
|
$
|
108
|
$
|
(471
|
)
|
||||||||||||
Earnings per common share:
|
|
|
|
|
|
|
||||||||||||||||||||||
Basic
|
$
|
(0.76
|
)
|
$
|
(1.76
|
)
|
||||||||||||||||||||||
Diluted
|
$
|
(0.76 |
)
|
$
|
(1.76
|
) | ||||||||||||||||||||||
Weighted average common shares:
|
||||||||||||||||||||||||||||
Basic
|
230.0
|
-
|
37.4
|
267.4
|
||||||||||||||||||||||||
Diluted
|
230.0
|
-
|
37.4
|
267.4
|
||||||||||||||||||||||||
(a)Includes depreciation and amortization expense of:
|
$
|
291
|
$
|
54
|
$
|
-
|
$
|
-
|
$
|
187
|
$
|
532
|
Historical
Company |
Historical
Bard |
Reclassifications
|
Equity
Financing and Debt Financing |
The
Merger |
Note
References |
Total
Pro Forma |
||||||||||||||||||||||
(In millions, except per share data)
|
||||||||||||||||||||||||||||
Revenues
|
$
|
12,093
|
$
|
3,875
|
$
|
(187
|
)
|
$
|
-
|
$
|
-
|
|
3a
|
|
$
|
15,781
|
||||||||||||
Cost of products sold (a)
|
6,151
|
1,443
|
(107
|
)
|
-
|
747
|
3a, 4a
|
|
8,234
|
|||||||||||||||||||
Selling and administrative expense (a)
|
2,925
|
1,134
|
93
|
-
|
-
|
3a
|
|
4,152
|
||||||||||||||||||||
Research and development expense (a)
|
774
|
295
|
-
|
-
|
-
|
1,069
|
||||||||||||||||||||||
Acquisitions and other restructurings
|
354
|
-
|
23
|
-
|
(43
|
)
|
3a, 4b
|
|
334
|
|||||||||||||||||||
Other operating expense, net
|
411
|
-
|
239
|
-
|
-
|
3a
|
|
650
|
||||||||||||||||||||
Total operating costs and expenses
|
10,615
|
2,872
|
248
|
-
|
704
|
|
14,439
|
|||||||||||||||||||||
Operating income
|
1,478
|
1,003
|
(435
|
)
|
-
|
(704
|
) |
1,342
|
||||||||||||||||||||
Interest expense
|
(521
|
)
|
(60
|
)
|
-
|
(198
|
)
|
7
|
4c
|
|
(772
|
)
|
||||||||||||||||
Interest income
|
76
|
-
|
-
|
-
|
-
|
76
|
||||||||||||||||||||||
Other (expense) income, net
|
(57
|
)
|
(256
|
)
|
435
|
-
|
-
|
3a
|
|
122
|
||||||||||||||||||
Income before income taxes
|
976
|
687
|
|
-
|
(198
|
)
|
(697
|
) |
768
|
|
||||||||||||||||||
Income tax (benefit) provision
|
(124
|
) |
116
|
-
|
(75
|
)
|
(273
|
) |
4d
|
|
(356
|
) | ||||||||||||||||
Net income
|
1,100
|
|
571
|
|
-
|
(123
|
)
|
(424
|
) |
1,124
|
|
|||||||||||||||||
Less: preferred dividends
|
(70
|
)
|
-
|
-
|
(82
|
) |
-
|
4e
|
|
(152
|
)
|
|||||||||||||||||
Net income attributable to common shareholders
|
$
|
1,030
|
|
$
|
571
|
|
$
|
-
|
$
|
(205
|
)
|
$
|
(424
|
) |
$
|
972
|
|
|||||||||||
Earnings per common share:
|
|
|
|
|
|
|
||||||||||||||||||||||
Basic
|
$
|
4.70
|
|
$
|
3.66
|
|
||||||||||||||||||||||
Diluted
|
$ |
4.60
|
$ |
3.52
|
||||||||||||||||||||||||
Weighted average common shares:
|
||||||||||||||||||||||||||||
Basic
|
218.9
|
9.4
|
37.4
|
265.7
|
||||||||||||||||||||||||
Diluted
|
223.6
|
9.4
|
42.8
|
275.8
|
||||||||||||||||||||||||
(a)Includes depreciation and amortization expense of:
|
$
|
1,088
|
$
|
208
|
$
|
-
|
$
|
-
|
$
|
747
|
$
|
2,043
|
· |
14.025 million shares of BD’s common stock for net proceeds of $2.4 billion (gross proceeds of $2.5 billion).
|
· |
2.475 million shares of BD’s mandatory convertible preferred stock (ownership is held in the form of depositary shares, each representing a 1/20th interest in a share of preferred stock) for net proceeds of $2.4 billion (gross proceeds of $2.5 billion). If and when declared, dividends on the mandatory convertible preferred stock are payable on a cumulative basis at an annual rate of 6.125% on the liquidation preference of $1,000 per preferred share ($50 per depositary share). The shares of preferred stock are convertible to a minimum of 11.7 million and up to a maximum of 14.0 million shares of BD common stock at an exchange ratio that is based on the market price of BD’s common stock at the date of conversion, and no later than the mandatory conversion date of May 1, 2020.
|
Annual
12/31/2016 |
Less:
Nine Months 9/30/2016 |
Add:
Nine Months 9/30/2017 |
Twelve
Months 9/30/2017 |
|||||||||||||
(In millions)
|
||||||||||||||||
Net Sales
|
$
|
3,714
|
$
|
2,747
|
$
|
2,908
|
$
|
3,875
|
||||||||
Costs and expenses:
|
||||||||||||||||
Cost of goods sold (a)
|
1,372
|
1,024
|
1,095
|
1,443
|
||||||||||||
Marketing, selling and administrative expense (a)
|
1,102
|
822
|
854
|
1,134
|
||||||||||||
Research and development expense (a)
|
293
|
214
|
216
|
295
|
||||||||||||
Acquisitions and other restructurings
|
-
|
-
|
-
|
-
|
||||||||||||
Other operating income
|
-
|
-
|
-
|
-
|
||||||||||||
Interest expense
|
54
|
39
|
45
|
60
|
||||||||||||
Other (income) expense, net
|
229
|
185
|
212
|
256
|
||||||||||||
Total costs and expenses
|
3,050
|
2,284
|
2,422
|
3,188
|
||||||||||||
Income from operations before income taxes
|
664
|
463
|
486
|
687
|
||||||||||||
Income tax provision
|
133
|
91
|
74
|
116
|
||||||||||||
Net income
|
$
|
531
|
$
|
372
|
$
|
412
|
$
|
571
|
||||||||
(a) Includes depreciation and amortization expense of:
|
$
|
213
|
$
|
161
|
$
|
156
|
$
|
208
|
Description
|
Three months ended
December 31, 2017 Increase / (Decrease) |
For the Year Ended
September 30, 2017 Increase / (Decrease) |
||||||
Revenue
|
$
|
(46
|
)
|
$
|
(187
|
)
|
||
Costs of products sold
|
(24
|
)
|
(107
|
)
|
||||
Selling and administrative expense
|
24
|
93
|
||||||
Acquisitions and other restructurings
|
20
|
23
|
||||||
Other operating expense
|
439
|
239
|
||||||
Other income (expense), net
|
505
|
435
|
i. |
reclassification of amounts previously reported by Bard as revenue related to a royalty income stream to other income (expense), net, below operating income in the amounts of $46 million for the three months ended December 31, 2017 and $173 million for the year ended September 30, 2017;
|
ii. |
reclassification of legal costs from other income (expense), net, below operating income to the caption “Other operating expense” as a component within operating income in the amounts of $439 million for the three months ended December 31, 2017 and $239 million for the year ended September 30, 2017;
|
iii. |
reclassification of restructuring costs from other income (expense), net, below operating income to a separate classification as a component within operating income in the amounts of ($1) million for the three months ended December 31, 2017 and $10 million for the year ended September 30, 2017;
|
iv. |
reclassification of acquisition-related transaction costs from other income (expense), net, below operating income to a separate classification as a component within operating income in the amounts of $21 million for the three months ended December 31, 2017 and $13 million for the year ended September 30, 2017;
|
v. |
reclassification of shipping and handling costs from cost of goods sold to a component within selling, general and administrative expenses in the amounts of $24 million for the three months ended December 31, 2017 and $93 million for the year ended September 30, 2017; and
|
vi. |
the elimination of inter-company sales and related cost of goods sold between BD and Bard in the amount of $14 million for the year ended September 30, 2017.
|
(a) |
Depreciation and Amortization
|
Description
|
Weighted Average
Useful Life |
Fair Value
|
Three Months Ended
December 31, 2017 Increase / (Decrease) |
For the Year Ended
September 30, 2017 Increase / (Decrease) |
||||||||||||
Property, plant and equipment, net
|
12.0
|
$
|
90
|
$
|
2
|
$
|
8
|
|||||||||
Net pro forma adjustment - depreciation
|
$
|
2
|
$
|
8
|
||||||||||||
Other intangible assets, net
|
14.8
|
$
|
12,860
|
$
|
218
|
$
|
869
|
|||||||||
Less historical intangible assets amortization expense
|
(33
|
)
|
(130
|
)
|
||||||||||||
Net pro forma adjustment - amortization
|
$
|
185
|
$
|
739
|
||||||||||||
Net pro forma adjustment depreciation and amortization
|
$
|
187
|
$
|
747
|
· |
an increase in depreciation expense of $2 million relating to the $90 million fair value step-up of fixed assets, over a weighted-average useful life of an estimated 12 years on a straight-line basis;
|
· |
the elimination of $33 million of historical amortization expense to write off Bard’s historical net book value of identifiable intangible assets, which will be reestablished in the purchase accounting to reflect such identifiable intangible assets at their respective fair values; and
|
· |
an increase in amortization expense of $218 million relating to the $12.860 billion aggregate fair value of finite-lived intangible assets, over a weighted-average useful life of an estimated 14.8 years on a straight-line basis.
|
· |
an increase in depreciation expense of $8 million relating to the $90 million fair value step-up of fixed assets, over a weighted-average useful life of an estimated 12 years on a straight-line basis;
|
· |
the elimination of $130 million of historical amortization expense to write off Bard’s historical net book value of identifiable intangible assets, which will be reestablished in the purchase accounting to reflect such identifiable intangible assets at their respective fair values; and
|
· |
an increase in amortization expense of $869 million relating to the $12.860 billion aggregate fair value of finite-lived intangible assets, over a weighted-average useful life of an estimated 14.8 years on a straight-line basis;
|
(b) |
Other Merger-Related Effects
|
i. |
Transaction-related costs - the adjustment represents the elimination of the Merger transaction-related costs that were expensed in BD’s historical statements of income in the amounts of $299 million for the three months ended December 31, 2017 and $43 million for the year ended September 30, 2017. Such costs are one-time in nature and do not have any continuing impact on the combined entity for pro forma purposes.
|
ii. |
Intercompany sales – the adjustment represents the elimination of $3 million of intercompany sales between BD and Bard for the three months ended December 31, 2017.
|
(c) |
Interest Expense
|
Description
|
Three Months Ended
December 31, 2017 Increase / (Decrease) |
For the Year Ended
September 30, 2017 Increase / (Decrease) |
||||||
Cash interest:
|
||||||||
Net increase in cash interest in additional borrowings
|
$
|
16
|
$
|
272
|
||||
Increase in cash interest on commitment fees
|
-
|
2
|
||||||
Total cash interest before acquisition accounting
|
$
|
16
|
$ |
274
|
||||
Non-cash interest and other adjustments
|
||||||||
Increase in non-cash amortization of debt issuance costs
|
$
|
-
|
$
|
3
|
||||
Elimination of non-recurring bridge facility fees recognized in historical income statement
|
-
|
(79
|
)
|
|||||
Total non-cash interest and other adjustments before acquisition accounting
|
$
|
-
|
$ |
(76
|
)
|
|||
Net pro forma adjustment before acquisition accounting
|
$
|
16
|
$
|
198
|
||||
Non-cash amortization of fair value step-up of assumed Bard debt
|
(2
|
)
|
(7
|
)
|
||||
Net pro forma adjustment to interest expense
|
$
|
14
|
$
|
191
|
· |
an increase in cash interest expense of $16 million relating to borrowings of $2.250 billion under the Term Loan Facility at an assumed interest rate of 2.8%; and
|
· |
a decrease in interest expense of $2 million relating to the amortization of the $48 million increase of long-term debt to its fair value.
|
· |
an increase in cash interest expense of $219 million relating to aggregate gross proceeds raised from the notes issued in the USD Debt Financing of $9.675 billion at a weighted-average interest rate of 3.3% for the approximate eight-month period of time that they were not issued during that period;
|
· |
an increase in cash interest expense of $63 million relating to borrowings of $2.250 billion under the Term Loan Facility at an assumed interest rate of 2.8%;
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a decrease in cash interest expense of $10 million relating to the redemption of $1 billion aggregate principal amount of the BD Redeemed 2017 Notes at an effective interest rate of approximately 1.8% for the approximate seven-month period of time they were outstanding during that period;
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an increase in cash interest expense of $2 million relating to the annual commitment fees payable on the $2.250 billion of undrawn availability under the new credit facilities at a 0.20% rate;
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an increase in interest expense of $3 million related to the amortization of an aggregate $78 million of debt issuance costs incurred in connection with the notes offered in the USD Debt Financing and the New Credit Facilities for the approximate eight-month period of time such debt was not outstanding and the related fees not incurred during the period;
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a decrease in interest expense of $79 million relating to the elimination of the expensing of the upfront bridge facility fees in BD’s historical statement of income. Such fees are one-time in nature and do not have any continuing impact on the combined entity for pro forma purposes; and
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a decrease in interest expense of $7 million relating to the amortization of the $48 million increase of long-term debt to its fair value.
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(d) |
Provision for Income Taxes
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(e) |
Preferred Dividend
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