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%;
|
· |
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.
|
(d) |
Provision for Income Taxes
|
(e) |
Preferred Dividend
|