Document and Entity Information
Document and Entity Information - Jun. 30, 2015 - shares | Total |
Document And Entity Information [Abstract] | |
Document Type | 10-Q |
Amendment Flag | false |
Document Period End Date | Jun. 30, 2015 |
Document Fiscal Year Focus | 2,015 |
Document Fiscal Period Focus | Q3 |
Trading Symbol | BDX |
Entity Registrant Name | BECTON DICKINSON & CO |
Entity Central Index Key | 10,795 |
Current Fiscal Year End Date | --09-30 |
Entity Filer Category | Large Accelerated Filer |
Entity Common Stock, Shares Outstanding | 210,254,373 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Millions | Jun. 30, 2015 | Sep. 30, 2014 |
Current Assets: | ||
Cash and equivalents | $ 1,559 | $ 1,861 |
Short-term investments | 29 | 884 |
Trade receivables, net | 1,645 | 1,187 |
Current portion of net investment in sales-type leases | 130 | 5 |
Inventories: | ||
Materials | 393 | 248 |
Work in process | 300 | 260 |
Finished products | 1,326 | 987 |
Inventories | 2,020 | 1,495 |
Prepaid expenses, deferred taxes and other | 921 | 698 |
Total Current Assets | 6,303 | 6,131 |
Property, Plant and Equipment | 8,283 | 7,765 |
Less allowances for depreciation and amortization | 4,236 | 4,160 |
Property, Plant and Equipment, Net | 4,047 | 3,605 |
Goodwill | 7,464 | 1,090 |
Customer Relationships, Net | 3,313 | 8 |
Developed Technology, Net | 2,962 | 513 |
Other Intangibles, Net | 849 | 239 |
Capitalized Software, Net | 385 | 365 |
Net Investment in Sales-Type Leases, Less Current Portion | 1,082 | 9 |
Other Assets | 674 | 488 |
Total Assets | 27,079 | 12,447 |
Current Liabilities: | ||
Short-term debt | 1,804 | 203 |
Payables and accrued expenses | 2,713 | 2,031 |
Total Current Liabilities | 4,517 | 2,235 |
Long-Term Debt | 11,367 | 3,768 |
Long-Term Employee Benefit Obligations | 1,007 | 1,009 |
Deferred Income Taxes and Other | $ 2,936 | $ 383 |
Commitments and Contingencies | ||
Shareholders' Equity | ||
Common stock | $ 333 | $ 333 |
Capital in excess of par value | 4,418 | 2,198 |
Retained earnings | 12,260 | 12,105 |
Deferred compensation | 19 | 19 |
Common stock in treasury - at cost | (8,242) | (8,601) |
Accumulated other comprehensive (loss) income | (1,535) | (1,001) |
Total Shareholders' Equity | 7,253 | 5,053 |
Total Liabilities and Shareholders' Equity | $ 27,079 | $ 12,447 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Income - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
Income Statement [Abstract] | ||||
Revenues | $ 3,120 | $ 2,157 | $ 7,222 | $ 6,244 |
Cost of products sold | 1,932 | 1,046 | 3,943 | 3,045 |
Selling and administrative expense | 764 | 528 | 1,820 | 1,584 |
Research and development expense | 178 | 137 | 437 | 410 |
Acquisition-related costs | 108 | 244 | ||
Total Operating Costs and Expenses | 2,983 | 1,712 | 6,444 | 5,039 |
Operating Income | 137 | 445 | 779 | 1,204 |
Interest expense | (105) | (33) | (272) | (99) |
Interest income | 2 | 12 | 20 | 36 |
Other income (expense), net | 5 | (2) | 23 | 4 |
Income Before Income Taxes | 39 | 423 | 549 | 1,145 |
Income tax (benefit) provision | (23) | 97 | 35 | 261 |
Net Income | $ 62 | $ 326 | $ 514 | $ 884 |
Basic Earnings per Share | $ 0.30 | $ 1.69 | $ 2.58 | $ 4.57 |
Diluted Earnings per Share | 0.29 | 1.65 | 2.52 | 4.47 |
Dividends per Common Share | $ 0.600 | $ 0.545 | $ 1.800 | $ 1.635 |
Condensed Consolidated Stateme4
Condensed Consolidated Statements of Comprehensive Income - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
Statement of Comprehensive Income [Abstract] | ||||
Net Income | $ 62 | $ 326 | $ 514 | $ 884 |
Other Comprehensive Income (Loss), Net of Tax | ||||
Foreign currency translation adjustments | 80 | (11) | (558) | 3 |
Defined benefit pension and postretirement plans | 11 | 8 | 33 | 51 |
Net unrealized (losses) gains on cash flow hedges, net of reclassifications | (2) | 1 | (8) | 4 |
Other Comprehensive Income (Loss), Net of Tax | 88 | (2) | (533) | 58 |
Comprehensive Income | $ 150 | $ 324 | $ (19) | $ 943 |
Condensed Consolidated Stateme5
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Millions | 9 Months Ended | |
Jun. 30, 2015 | Jun. 30, 2014 | |
Operating Activities | ||
Net Income | $ 514 | $ 884 |
Adjustments to net income to derive net cash provided by operating activities, net of amounts acquired: | ||
Depreciation and amortization | 576 | 413 |
Share-based compensation | 138 | 91 |
Deferred income taxes | (137) | (53) |
Change in operating assets and liabilities | (42) | (114) |
Pension obligation | 17 | (41) |
Other, net | (14) | 27 |
Net Cash Provided by Operating Activities | 1,052 | 1,207 |
Investing Activities | ||
Capital expenditures | (387) | (339) |
Capitalized software | (26) | (41) |
Proceeds from (purchases of) investments, net | 837 | (244) |
Acquisitions of businesses, net of cash acquired | (8,334) | (40) |
Other, net | (92) | (66) |
Net Cash Used for Investing Activities | (8,003) | (730) |
Financing Activities | ||
Change in short-term debt | 846 | (3) |
Proceeds from long-term debt | 6,164 | |
Payments of debt | (3) | |
Repurchase of common stock | (400) | |
Excess tax benefits from payments under share-based compensation plans | 48 | 26 |
Dividends paid | (358) | (316) |
Issuance of common stock and other, net | (30) | (7) |
Net Cash Provided by (Used for) Financing Activities | 6,667 | (701) |
Effect of exchange rate changes on cash and equivalents | (17) | (5) |
Net decrease in cash and equivalents | (302) | (229) |
Opening Cash and Equivalents | 1,861 | 1,890 |
Closing Cash and Equivalents | $ 1,559 | $ 1,661 |
Basis of Presentation
Basis of Presentation | 9 Months Ended |
Jun. 30, 2015 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | Note 1 – 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 the Company, 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. These condensed consolidated financial statements should be read in conjunction with the updated financial statements included in the Company’s Current Report on Form 8-K dated March 13, 2015. 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. |
Accounting Changes
Accounting Changes | 9 Months Ended |
Jun. 30, 2015 | |
Accounting Changes and Error Corrections [Abstract] | |
Accounting Changes | Note 2 – Accounting Changes New Accounting Principles Adopted In June 2013, the Financial Accounting Standards Board (“FASB”) issued guidance that requires the netting of unrecognized tax benefits against a deferred tax asset for a loss or other carryforward that would apply in settlement of the uncertain tax positions. In March 2013, the FASB issued amendments to resolve diversity in practice relating to the release of cumulative translation adjustments into earnings upon the occurrence of certain derecognition events involving a foreign entity. The Company prospectively adopted both accounting standard updates, which did not impact its consolidated financial statements, on October 1, 2014. New Accounting Principle Not Yet Adopted In May 2014, the FASB issued a new revenue recognition standard. Under this standard, revenue will be recognized upon the transfer of goods or services to customers and the amount of revenue recognized will reflect the consideration to which a reporting entity expects to be entitled in exchange for those goods or services. The Company is currently evaluating the impact that this new revenue recognition standard will have on its consolidated financial statements and the Company currently intends to adopt the standard on October 1, 2018, as is allowed under the FASB’s July 2015 amendment which deferred the effective date for this standard. |
Accumulated Other Comprehensive
Accumulated Other Comprehensive (Loss) Income | 9 Months Ended |
Jun. 30, 2015 | |
Equity [Abstract] | |
Accumulated Other Comprehensive (Loss) Income | Note 3 – Accumulated Other Comprehensive (Loss) Income The components and changes of Accumulated other comprehensive (loss) income (Millions of dollars) Total Foreign Currency Benefit Plans Unrealized Losses on Balance at September 30, 2014 $ (1,001 ) $ (270 ) $ (705 ) $ (26 ) Other comprehensive income before reclassifications, net of taxes (571 ) (558 ) — (12 ) Amounts reclassified into income, net of taxes (A) 38 — 33 4 Balance at June 30, 2015 $ (1,535 ) $ (828 ) $ (672 ) $ (34 ) (A) The reclassification amount related to benefit plans for the three months ended June 30, 2015 was $11 million. The reclassification amounts for the three and nine months ended June 30, 2014 were $8 million and $25 million, respectively. The benefit plan-related amounts were not reclassified into income in their entirety and these reclassifications were included in the computation of net periodic benefit plan costs. Additional details are provided in Note 8. The reclassification amount related to cash flow hedges for the three months ended June 30, 2015 was $2 million. The reclassification amounts for the three and nine months ended June 30, 2014 were $1 million and $4 million, respectively. The cash flow hedge-related reclassification amounts for the three and nine months ended June 30, 2015 and 2014 were primarily recorded in Interest expense The loss in foreign currency translation adjustments for the nine months ended June 30, 2015 was primarily attributable to the weakening of the Euro, and of currencies in Latin America and Asia Pacific, against the U.S. dollar during the period. The income tax benefits associated with the benefit plan-related reclassification adjustments for amortization of prior service credit and amortization of net actuarial losses for the three months ended June 30, 2015 and 2014 were $6 million and $4 million, respectively. The income tax benefits associated with the benefit plan-related reclassification adjustments for amortization of prior service credit and amortization of net actuarial losses for the nine months ended June 30, 2015 and 2014 were $17 million and $13 million, respectively. The income tax benefits recorded for losses recognized in other comprehensive income relating to cash flow hedges for the three and nine months ended June 30, 2015 were $2 million and $8 million, respectively. Additional disclosures regarding these losses are provided in Note 12. There were no amounts recognized in other comprehensive income relating to cash flow hedges for the three months or nine months ended June 30, 2014. The income taxes recorded for reclassification adjustments for realized amounts relating to cash flow hedges were immaterial for the three and nine months ended June 30, 2015 and 2014. |
Earnings per Share
Earnings per Share | 9 Months Ended |
Jun. 30, 2015 | |
Earnings Per Share [Abstract] | |
Earnings per Share | Note 4 – 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: Three Months Ended Nine Months Ended 2015 2014 2015 2014 Average common shares outstanding 210,175 193,054 199,690 193,624 Dilutive share equivalents from share-based plans 4,753 3,951 4,546 4,189 Average common and common equivalent shares outstanding – assuming dilution 214,928 197,005 204,236 197,813 Upon closing the acquisition of CareFusion Corporation (“CareFusion”) on March 17, 2015, the Company issued approximately 15.9 million of its common shares as part of the purchase consideration. Additional disclosures regarding this acquisition are provided in Note 9. |
Contingencies
Contingencies | 9 Months Ended |
Jun. 30, 2015 | |
Commitments and Contingencies Disclosure [Abstract] | |
Contingencies | Note 5 – 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. generally accepted accounting principles, the Company establishes accruals to the extent probable future losses are estimable (in the case of environmental matters, without considering possible third-party recoveries). 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. In June 2007, Retractable Technologies, Inc. (“RTI”) filed a complaint against the Company under the caption Retractable Technologies, Inc. vs. Becton Dickinson and Company (Civil Action No. 2:07-cv-250, U.S. District Court, Eastern District of Texas). RTI alleges that the BD Integra™ syringes infringe patents licensed exclusively to RTI. In its complaint, RTI also alleges that the Company engaged in false advertising with respect to certain of the Company’s safety-engineered products in violation of the Lanham Act; acted to exclude RTI from various product markets and to maintain its market share through, among other things, exclusionary contracts in violation of state and federal antitrust laws; and engaged in unfair competition. In January 2008, the court severed the patent and non-patent claims into separate cases, and stayed the non-patent claims during the pendency of the patent claims at the trial court level. RTI seeks money damages and injunctive relief. On April 1, 2008, RTI filed a complaint against BD under the caption Retractable Technologies, Inc. and Thomas J. Shaw v. Becton Dickinson and Company (Civil Action No.2:08-cv-141, U.S. District Court, Eastern District of Texas). RTI alleges that the BD Integra™ syringes infringe another patent licensed exclusively to RTI. RTI seeks money damages and injunctive relief. On August 29, 2008, the court ordered the consolidation of the patent cases. On November 9, 2009, at a trial of these consolidated cases, the jury rendered a verdict in favor of RTI on all but one of its infringement claims, but did not find any willful infringement, and awarded RTI $5 million in damages, which has been paid. On May 19, 2010, the court granted RTI’s motion for a permanent injunction against the continued sale by the Company of its BD Integra™ products in their current form, but stayed the injunction for the duration of the Company’s appeal. At the same time, the court lifted a stay of RTI’s non-patent claims. On July 8, 2011, the Court of Appeals for the Federal Circuit reversed the District Court judgment that the Company’s 3ml BD Integra™ products infringed the asserted RTI patents and affirmed the District Court judgment of infringement against the Company’s discontinued 1ml BD Integra™ products. On October 31, 2011, the Federal Circuit Court of Appeals denied RTI’s request for an en banc rehearing. In January 2013, RTI’s petition for review with the U.S. Supreme Court was denied. BD’s motion for further proceedings on damages was denied by the District Court on the grounds that the District Court did not have authority to modify the $5 million damage award. BD appealed this ruling to the Federal Circuit Court of Appeals, and on July 7, 2014, the Court affirmed the District Court ruling leaving the damages award intact. On September 19, 2014, the Federal Circuit Court of Appeals denied BD’s request for an en banc rehearing. On January 16, 2015, BD filed a petition for U.S. Supreme Court review of the Federal Circuit Court of Appeals decision leaving the damages award intact. On April 20, 2015, the U.S. Supreme Court denied BD’s petition. On September 19, 2013, a jury returned a verdict against BD with respect to certain of RTI’s non-patent claims. The verdict was unfavorable to BD with respect to RTI’s Lanham Act claim and claim for attempted monopolization based on deception in the safety syringe market. The jury awarded RTI $113.5 million for its attempted monopolization claim (which will be trebled under the antitrust statute). The jury’s verdict rejected RTI’s monopolization claims in the markets for safety syringes, conventional syringes and safety IV catheters; its attempted monopolization claims in the markets for conventional syringes and safety IV catheters; and its claims for contractual restraint of trade and exclusive dealing in the markets for safety syringes, conventional syringes and safety IV catheters. In connection with the verdict, the Company recorded a pre-tax charge of approximately $341 million in the fourth quarter of fiscal year 2013. On September 30, 2014, the Court issued a ruling denying BD’s post-trial motion for judgment as a matter of law. On November 10, 2014, the Court issued a ruling denying RTI’s request for disgorgement of BD profits for false advertising on the ground that any profit to which RTI is entitled is included within the amount of the antitrust damage award. The Court granted RTI’s request that BD be ordered to issue certain corrective statements regarding its advertising and enjoined from making certain advertising claims. The Court denied RTI’s request for injunctive relief relating to BD’s contracting practices and BD’s safety syringe advertising, finding that RTI failed to prove that BD’s contracting practices violated the antitrust laws or that BD’s safety syringe advertising is false. The Court concluded that RTI is entitled to certain categories of attorneys’ fees that it requested, but that its total fee recovery should be reduced by 50%. On January 14, 2015, the Court granted in part and denied in part BD’s motion for a stay of the injunction. The Court held that, pending appeal, BD would not be required to send the corrective advertising notices to end-user customers, but only to employees, distributors and Group Purchasing Organizations. The Court otherwise upheld its November 10, 2014 Order regarding the injunction. On January 15, 2015, the Court entered its Final Judgment in the case. In the Final Judgment, the Court ordered that RTI recovers $341 million for its attempted monopolization claim and $12 million for attorneys’ fees, and awarded pre and post-judgment interest and costs. On February 3, 2015, the Court of Appeals for the Fifth Circuit denied BD’s motion for a stay of the injunction pending the final appeal. On April 23, 2015, the Court granted BD’s motion to eliminate the award of pre-judgment interest, and entered a new Final Judgment. BD has filed its appeal to the Court of Appeals challenging the entirety of the Final Judgment. On November 4, 2013, the Secretariat of Foreign Trade of the Federal Republic of Brazil initiated an administrative anti-dumping investigation of imports of vacuum plastic tubes for blood collection into Brazil from the United States, the United Kingdom of Great Britain and Northern Ireland, the Federal Republic of Germany and the People’s Republic of China during the period from January 2012 through December 2012. BD, through its United States and international subsidiaries, exports vacuum plastic tubes for blood collection into Brazil from the United States and the United Kingdom of Great Britain and Northern Ireland and cooperated with the investigation. On April 30, 2015, Brazilian Foreign Trade Board (“CAMEX”) issued a decision determining the application of anti-dumping measures including, without limitation, the imposition of duties on such vacuum plastic tubes imported into Brazil of 45.3% for products from the United States of America and 71.5% for products from the United Kingdom of Great Britain and Northern Ireland. These anti-dumping measures, effective from April 30, 2015, will last for a minimum period of five years. Subsequent to the decision, CAMEX announced that it would initiate a proceeding to assess the duties from a public interest perspective. This proceeding could result in a suspension or modification of the CAMEX decision, although no assurance can be given in that regard. BD has also filed an administrative appeal. In any event, the Company does not believe that the CAMEX decision will materially affect its results of operations. On October 5, 2014, CareFusion and the Company entered into an Agreement and Plan of Merger (which we refer to as the merger agreement) that provides for the acquisition of CareFusion by the Company. Under the terms of the merger agreement, a subsidiary of the Company (“the merger subsidiary”) merged with and into CareFusion on March 17, 2015, with CareFusion surviving the merger as a wholly owned subsidiary of the Company. Several putative class action lawsuits have been filed against CareFusion, its directors, the Company and the merger subsidiary in the Delaware Court of Chancery and in the Superior Court of California, San Diego County. These lawsuits generally allege that the members of the board of directors of CareFusion breached their fiduciary duties in connection with the merger by, among other things, carrying out a process that plaintiffs allege did not ensure adequate and fair consideration to CareFusion stockholders. The plaintiffs in these actions further allege that CareFusion and the Company aided and abetted the individual defendants’ breaches of their fiduciary duties. The plaintiffs seek, among other things, equitable relief to enjoin consummation of the merger, rescission of the merger and/or rescissory damages, and attorneys’ fees and costs. On December 30, 2014, the parties to the actions filed in the Delaware Court of Chancery (the “Delaware Actions”) entered into an agreement in principle to settle the Delaware Actions on the basis of additional disclosures made in a CareFusion Schedule 14A, filed with the SEC on January 5, 2015. The settlement terms are reflected in a Memorandum of Understanding (“MOU”). On December 31, 2014, plaintiffs’ counsel notified the Delaware Court of Chancery of the settlement and MOU. The parties to the Delaware Actions have entered into a stipulation and agreement of compromise, settlement and release and presented the matter to the Delaware Court of Chancery for approval. The Delaware Court of Chancery has scheduled a hearing for September 17, 2015 to consider the matter. The actions filed in the Superior Court of California are not part of the proposed settlement and are still pending. On July 17, 2015, a class action complaint was filed against the Company in the U.S. District Court for the Southern District of Georgia. The plaintiffs, Glynn-Brunswick Hospital Authority, trading as Southeast Georgia Health System, and Southeast Georgia Health System, Inc., seek to represent a class of acute care purchasers of BD syringes and IV catheters. The complaint alleges that BD monopolized the markets for syringes and IV catheters through contracts, theft of technology, false advertising, acquisitions, and other conduct. The complaint seeks treble damages but does not specify the amount of alleged damages. The Company believes that it has meritorious defenses to each of the above-mentioned suits pending against the Company and is engaged in a vigorous defense of each of these matters. 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 is a party to a number of federal 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 commencing. For all sites, there are other potentially responsible parties that may be jointly or severally liable to pay all cleanup costs. |
Segment Data
Segment Data | 9 Months Ended |
Jun. 30, 2015 | |
Segment Reporting [Abstract] | |
Segment Data | Note 6 – Segment Data Effective October 1, 2014, the Company’s organizational structure was realigned to better complement its customer-focused solutions strategy and is based upon two principal business segments: BD Medical (“Medical”) and BD Life Sciences (“Life Sciences”). The composition of the Medical segment did not change from its historical composition as a result of this realignment. The Life Sciences segment consists of the former BD Diagnostics and BD Biosciences segments. Beginning on October 1, 2014, decisions about resource allocation and performance assessment are made separately for the Medical and Life Sciences segments. Prior-period information presented for comparative purposes has been revised to reflect the new two-segment organizational structure. CareFusion, which was acquired on March 17, 2015, operates as part of the Company’s Medical segment. The Company’s two principal business segments are strategic businesses that are managed separately because each one develops, manufactures and markets distinct products and services. The Company evaluates performance of its business segments and allocates resources to them primarily based upon operating income. Segment operating income represents revenues reduced by product costs and operating expenses. Financial information for the Company’s segments was as follows: Three Months Ended Nine Months Ended (Millions of dollars) 2015 2014 2015 2014 Revenues Medical $ 2,199 (B) $ 1,201 $ 4,377 (B) $ 3,381 Life Sciences 921 956 2,845 2,863 Total Revenues $ 3,120 $ 2,157 $ 7,222 $ 6,244 Segment Operating Income Medical $ 483 (C) $ 356 (D) $ 1,115 (C) $ 968 (D) Life Sciences 197 221 610 653 (E) Total Segment Operating Income 680 578 1,725 1,621 Unallocated Items (F) (641 ) (G) (155 ) (1,176 ) (H) (476 ) (I) Income Before Income Taxes $ 39 $ 423 $ 549 $ 1,145 (A) Intersegment revenues are not material. (B) Includes $13 million in amortization of the acquisition-date write-down of CareFusion’s deferred revenue balance that was recorded to reflect a fair value measurement as of the acquisition date. (C) Includes an increase of $130 million in non-cash amortization expense relating to the identifiable intangible assets acquired in the CareFusion transaction as well as depreciation expense relating to the fixed assets acquired in the transaction. Additional disclosures regarding the assets acquired in this acquisition are provided in Note 9. Also includes a $5 million adjustment to decrease the liability for employee termination costs recorded relative to certain workforce reduction actions taken in the fourth quarter of fiscal year 2014. (D) Includes a $9 million charge associated with the decision to terminate a research and development program; the charge relates to program asset write-offs and obligations. (E) Includes an $11 million charge that resulted from the early termination of a European distributor agreement as well as a $20 million charge primarily resulting from the discontinuance of an instrument product development program. The development-related charge is largely attributable to capitalized product software, but also includes a lesser amount attributable to fixed assets. (F) Includes primarily interest, net; foreign exchange; corporate expenses; share-based compensation expense; and acquisition-related costs. (G) Includes financing, transaction, integration and restructuring costs associated with the CareFusion. Also includes $281 million in recognition of the fair value step-up adjustment recorded relative to CareFusion’s inventory on the acquisition date. Additional disclosures regarding this acquisition are provided in Note 9. (H) Includes financing, transaction, integration and restructuring costs associated with the CareFusion acquisition, as well as the recognition of the inventory step-up adjustment, as noted above. Also includes a $12 million charge for RTI’s attorneys’ fees associated with the unfavorable verdict returned in the antitrust and false advertising lawsuit RTI filed against BD. For further discussion, refer to Note 5 in the notes to the financial statements. Additionally includes an acquisition-date accounting gain of $9 million on the previously held investment in CRISI Medical Systems, Inc. (“CRISI”), which the Company fully acquired during the second quarter of 2015. (I) Includes an $8 million gain resulting from the Company’s receipt of cash proceeds from the sale of a company in which it held a small equity ownership interest. Revenues by geographic areas were as follows: Three Months Ended Nine Months Ended (Millions of dollars) 2015 2014 2015 2014 Revenues United States $ 1,693 $ 871 $ 3,437 $ 2,546 International 1,427 1,286 3,785 3,698 Total Revenues $ 3,120 $ 2,157 $ 7,222 $ 6,244 |
Share-Based Compensation
Share-Based Compensation | 9 Months Ended |
Jun. 30, 2015 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Share-Based Compensation | Note 7 – Share-Based Compensation The Company grants share-based awards under the 2004 Employee and Director Equity-Based Compensation Plan (the “2004 Plan”), which provides long-term incentive compensation to employees and directors. The Company believes that such awards align the interests of its employees and directors with those of its shareholders. The fair values of stock appreciation rights granted during the annual share-based grants in November of 2014 and 2013, respectively, were estimated on the date of grant using a lattice-based binomial valuation model based on the following assumptions: 2015 2014 Risk-free interest rate 2.20 % 2.31 % Expected volatility 19.00 % 19.00 % Expected dividend yield 1.78 % 2.00 % Expected life 7.6 years 7.8 years Fair value derived $ 24.82 $ 19.90 The fair value of share-based payments is recognized as compensation expense in net income. For the three months ended June 30, 2015 and 2014, compensation expense charged to income was $46 million and $24 million, respectively. For the nine months ended June 30, 2015 and 2014, compensation expense charged to income was $138 million and $91 million, respectively. Certain pre-acquisition equity awards of CareFusion were converted into BD restricted stock awards or BD stock options with accelerated vesting terms at the acquisition date. In addition, as an incentive to encourage post-acquisition employee retention, certain pre-acquisition equity awards of CareFusion were converted into either BD restricted stock awards or BD stock options, as applicable, as of the acquisition date, with substantially the same terms and conditions as were applicable under such CareFusion awards immediately prior to the acquisition date. Compensation expense for the three and nine months ended June 30, 2015 included $20 million and $37 million, respectively, associated with these replacement awards and was recorded in Acquisition-related costs The amount of unrecognized compensation expense for all non-vested share-based awards as of June 30, 2015 was approximately $205 million, which is expected to be recognized over a weighted-average remaining life of approximately 2.0 years. Included in the unrecognized compensation expense is $52 million associated with the CareFusion replacement awards described above. As of June 30, 2015, there were approximately 2 million of such replacement awards outstanding. |
Benefit Plans
Benefit Plans | 9 Months Ended |
Jun. 30, 2015 | |
Compensation and Retirement Disclosure [Abstract] | |
Benefit Plans | Note 8 – Benefit Plans The Company has defined benefit pension plans covering certain employees in the United States and certain foreign locations. The Company also provides certain postretirement healthcare and life insurance benefits to qualifying domestic retirees. Other postretirement benefit plans in foreign countries are not material. The measurement date used for the Company’s employee benefit plans is September 30. Net pension and postretirement cost included the following components for the three months ended June 30: Pension Plans Other Postretirement Benefits (Millions of dollars) 2015 2014 2015 2014 Service cost $ 20 $ 18 $ 1 $ 1 Interest cost 22 23 2 2 Expected return on plan assets (32 ) (32 ) — — Amortization of prior service credit (4 ) (4 ) (1 ) (1 ) Amortization of loss 18 12 1 — Net pension and postretirement cost $ 24 $ 18 $ 2 $ 2 Net pension and postretirement cost included the following components for the nine months ended June 30: Pension Plans Other Postretirement Benefits (Millions of dollars) 2015 2014 2015 2014 Service cost $ 58 $ 53 $ 2 $ 3 Interest cost 66 69 6 7 Expected return on plan assets (93 ) (94 ) — — Amortization of prior service credit (12 ) (11 ) (4 ) (3 ) Amortization of loss 52 36 2 2 Net pension and postretirement cost $ 70 $ 53 $ 7 $ 8 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 (loss) income Postemployment benefit costs were $10 million and $12 million for the three-month periods ended June 30, 2015 and 2014, respectively. Postemployment benefit costs were $31 million and $35 million for the nine-month periods ended June 30, 2015 and 2014, respectively. During the fourth quarter of fiscal year 2014, the Company recognized a $36 million charge associated with unusually broad and significant workforce reduction actions that were not contemplated when the postemployment benefit plan obligation was measured on September 30, 2013. As of June 30, 2015, the Company’s remaining liability relating to these workforce reductions, reflecting payments and a change in estimate which decreased the liability by $5 million, was $9 million. During the three and nine months ended June 30, 2015, the Company recognized charges of $53 million and $87 million, respectively, for employee termination costs in connection with its acquisition of CareFusion. Additional disclosures regarding the CareFusion acquisition are provided in Note 9 and additional disclosures regarding the Company’s restructuring activities that relate to this acquisition are provided in Note 10. |
Acquisitions
Acquisitions | 9 Months Ended |
Jun. 30, 2015 | |
Business Combinations [Abstract] | |
Acquisitions | Note 9 – Acquisitions CareFusion Corporation Overview of Transaction and Consideration Transferred On March 17, 2015, pursuant to a definitive agreement announced on October 5, 2014, the Company acquired a 100% interest in CareFusion, a global medical technology company with a comprehensive portfolio of products in the areas of medication management, infection prevention, operating room and procedural effectiveness, and respiratory care, to create a global leader in medication management and patient safety solutions. Under the terms of the transaction, CareFusion shareholders received $49.00 in cash and 0.0777 of a share of the Company for each share of CareFusion. The value of the total consideration transferred for accounting purposes was based on the closing share price of the Company’s stock on the last trading day prior to the closing date of the transaction. The fair value of consideration transferred was $12.538 billion and consisted of the components below. (Millions of dollars) Cash consideration $ 10,085 Noncash consideration-fair value of shares issued 2,269 Noncash consideration-fair value of stock options and other equity awards 184 Total consideration transferred $ 12,538 The acquisition date fair value of the Company’s ordinary shares issued to CareFusion shareholders was calculated per the following (shares in millions): (Millions of dollars, except per share data) Total CareFusion shares outstanding 205.3 Conversion factor 0.0777 Number of the Company’s shares issued 15.9 Closing price of the Company’s stock on March 16, 2015 $ 142.29 Fair value of the Company’s issued shares $ 2,269 Additional disclosures regarding the financing arrangements the Company entered into to fund the cash portion of the consideration transferred relative to this acquisition are provided in Note 14. Allocation of Consideration Transferred to Net Assets Acquired The Company is in the process of finalizing the allocation of the purchase price to the individual assets acquired and liabilities assumed as of the acquisition date. The preliminary allocations of the purchase price below as of June 30, 2015 provide a reasonable basis for estimating the fair values of assets acquired and liabilities assumed. These estimates will be adjusted upon the availability of further information regarding events or circumstances which existed at the acquisition date and such adjustments may be significant. All of the assets acquired and liabilities assumed in this acquisition have been allocated to the Company’s Medical segment. (Millions of dollars) Cash and equivalents $ 1,903 Trade receivables, net 486 Inventories 828 Net investment in sales-type leases 1,208 Property, plant and equipment 503 Customer relationships 3,360 Developed technology 2,510 Trademarks 380 Other intangible assets 185 Other assets 435 Total identifiable assets acquired 11,798 Long-term debt (2,181 ) Deferred tax liabilities (2,648 ) Other liabilities (764 ) Total liabilities assumed (5,592 ) Net identifiable assets acquired 6,205 Goodwill 6,333 Net assets acquired $ 12,538 Net Investment in Sales-Type Leases Acquired The fair value of the net investment in sales-type leases acquired was based upon a determination that the interest rate implicit in the lease contract portfolio represented a market interest rate as well as a determination that the residual value of the overall lease contract portfolio represents fair market value. Identifiable Intangible Assets Acquired The customer relationships asset acquired represented CareFusion’s contractual relationships with its customers. The fair value of these customer relationships was determined based on the present value of projected cash flows utilizing an income approach with a risk-adjusted discount rate of 11%. The amortization period of the customer relationships was determined to be 15 years and this period corresponds with the weighted average of lives determined for the product technology which underlies the customer contracts. The developed technology assets acquired represented CareFusion’s developed technologies in the areas of medication management, infection prevention, operating room and procedural effectiveness, and respiratory care. The technologies’ fair values were determined based on the present value of projected cash flows utilizing an income approach with a risk-adjusted discount rate of 11%. The technologies will be amortized over a weighted-average amortization period of 12 years, which is the weighted average period over which the technologies are expected to generate substantial cash flows. The trademark assets acquired represented the value of registered trademarks protecting the intellectual property underlying CareFusion’s product technologies. The fair value of the trademarks represents the present value of projected cash flows, specifically the estimated cost savings from not being required to pay royalties for use of these intellectual properties, utilizing an income approach with a risk-adjusted discount rate of 11%. The trademarks will be amortized over a weighted-average amortization period of 22 years, which is the weighted average period over which the trademarks are expected to generate substantial cash flows. Other intangible assets acquired included $110 million relating to acquired in-process research and development assets representing development projects relating to various product technologies. The probability of success associated with the projects, based upon the applicable technological and commercial risk, was assumed to be 80% to 85%, depending upon the project. The projects’ fair values were determined based on the present value of projected cash flows utilizing an income approach with a risk-adjusted discount rate of 12%. The launches of the various projects are expected to occur from 2016 to 2022. Other Liabilities Assumed The balance of other liabilities assumed included a $36 million liability recorded due to a recall relating to AVEA ® Goodwill Goodwill typically results through expected synergies from combining operations of an acquiree and an acquirer, as well as from intangible assets that do not qualify for separate recognition. The goodwill recognized as a result of this acquisition includes, among other things, the value of combining the complementary product portfolios of the Company and CareFusion to offer integrated medication management solutions and smart devices. Synergies are expected from combining the two companies’ products to meet unmet needs in hospitals, hospital pharmacies and alternate sites of care to increase efficiencies, reduce medication administration errors and improve patient and healthcare worker safety. Synergies are also expected to result from solid positions in patient safety to maximize outcomes in infection prevention, respiratory care, and acute care procedural effectiveness. No portion of goodwill from this acquisition is currently expected to be deductible for tax purposes. Financing, Transaction, Integration and Restructuring Costs In connection with the acquisition, the Company incurred financing, transaction, integration and restructuring costs throughout the first nine months of fiscal year 2015. The financing costs totaled $5 million and $107 million for the three and nine months ended June 30, 2015, respectively, and were recorded as Interest expense Acquisition-related costs Acquisition-related costs Unaudited Pro Forma Information The acquisition was accounted for under the acquisition method of accounting for business combinations. The operating activities from the acquisition date through March 31, 2015 were not material to the Company’s consolidated results of operations. As such, CareFusion’s operating results were included in the Company’s consolidated results of operations beginning on April 1, 2015. Revenues Operating Income The following table provides the pro forma results for the three and nine-month periods ended June 30, 2015 and 2014 as if CareFusion had been acquired as of October 1, 2013. Three Months Ended Nine Months Ended (Millions of dollars, except per share data) 2015 2014 2015 2014 Revenues $ 3,133 $ 3,279 $ 9,301 $ 9,256 Net Income $ 326 $ 361 $ 966 $ 919 Diluted Earnings per Share $ 1.52 $ 1.69 $ 4.49 $ 4.28 The pro forma results above reflect the following adjustments, which were adjusted for the applicable tax impact to derive the net income amounts above: • Additional amortization expense related to the fair value of intangible assets acquired; • Additional depreciation expense related to the fair value of property, plant and equipment acquired; • Additional interest expense and financing costs associated with the Company’s financing arrangements relating to this acquisition, as well as the adjustment to interest expense relating to the fair value of long-term debt assumed; • Elimination of one-time financing fees, transaction, integration and restructuring costs incurred relative to this acquisition; • Exclusion of the income statement effects of the fair value adjustments to inventory and deferred revenue obligations acquired as such adjustments are not recurring in nature. The pro forma results do not include any anticipated cost savings or other effects of the planned integration of CareFusion. Accordingly, the pro forma results above are not necessarily indicative of the results that would have been if the acquisition had occurred on the dates indicated, nor are the pro forma results indicative of results which may occur in the future. Other Transactions During the first quarter of fiscal year 2015, the Company acquired GenCell Biosystems (“GenCell”), a privately-held Irish biotech company that has developed proprietary technologies that address key biological analysis protocols including library preparation of Next Generation Sequencing and genotyping applications. During the second quarter of fiscal year 2015, the Company acquired CRISI, a San Diego-based medical technology company dedicated to improving the safety and delivery of IV injectable medications. During the third quarter of fiscal year 2015, the Company acquired the ARX group of companies, a leading pharmacy automation distributor in Western Europe. |
Business Restructuring Charges
Business Restructuring Charges | 9 Months Ended |
Jun. 30, 2015 | |
Restructuring and Related Activities [Abstract] | |
Business Restructuring Charges | Note 10 – Business Restructuring Charges In connection with the CareFusion acquisition, the Company incurred restructuring costs throughout fiscal year 2015, which were recorded as Acquisition-related costs (Millions of dollars) Total Employee Share-based Other Balance at September 30, 2014 $ — $ — $ — $ — Assumed liability 19 19 — — Charged to expense 136 87 37 12 Cash payments (51 ) (48 ) — (3 ) Non-cash settlements (37 ) — (37 ) — Other adjustments (18 ) (9 ) — (9 ) Balance at June 30, 2015 $ 49 $ 49 $ — $ — Additional disclosures regarding these restructuring activities and the related costs are provided in Notes 7, 8 and 9. |
Intangible Assets
Intangible Assets | 9 Months Ended |
Jun. 30, 2015 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Intangible Assets | Note 11 – Intangible Assets Intangible assets consisted of: June 30, 2015 September 30, 2014 (Millions of dollars) Gross Accumulated Gross Accumulated Amortized intangible assets Customer relationships $ 3,375 $ 62 $ 10 2 Developed technology 3,412 449 893 379 Product rights 130 34 148 31 Trademarks 405 22 27 19 Patents and other 331 189 232 163 Amortized intangible assets $ 7,653 $ 756 $ 1,308 $ 594 Unamortized intangible assets Acquired in-process research and development $ 226 $ 44 Trademarks 2 2 Unamortized intangible assets $ 228 $ 46 Additional information regarding the increases to the intangible asset classes detailed above as a result of the CareFusion acquisition is provided in Note 9. The increase to developed technology assets additionally included $49 million of assets recognized upon the Company’s acquisition of CRISI in the second quarter of fiscal year 2015. The increase in acquired in-process research and development project assets additionally included $81 million of assets recognized upon the Company’s acquisition of GenCell in the first quarter of fiscal year 2015. Intangible amortization expense for the three months ended June 30, 2015 and 2014 was $151 million and $21 million, respectively. Intangible amortization expense for the nine months ended June 30, 2015 and 2014 was $192 million and $63 million, respectively. The following is a reconciliation of goodwill by business segment: (Millions of dollars) Medical Life Sciences Total Goodwill as of September 30, 2014 $ 482 $ 608 $ 1,090 Acquisitions 6,585 (A) 64 (B) 6,649 Currency translation/other (C) (263 ) (12 ) (275 ) Goodwill as of June 30, 2015 $ 6,804 $ 659 $ 7,464 (A) Primarily represents goodwill recognized upon the Company’s acquisition of CareFusion in the second quarter of fiscal year 2015. Additional disclosures regarding the CareFusion acquisition are provided in Note 9. Also includes $22 million of goodwill associated with individually immaterial acquisitions, including the CRISI acquisition in the second quarter of fiscal year 2015. (B) Represents goodwill recognized upon the Company’s acquisition of GenCell in the first quarter of fiscal year 2015. (C) Includes amounts resulting from foreign currency translation as well as acquisition accounting adjustments. |
Derivative Instruments and Hedg
Derivative Instruments and Hedging Activities | 9 Months Ended |
Jun. 30, 2015 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivative Instruments and Hedging Activities | Note 12 – Derivative Instruments and Hedging Activities The Company uses derivative instruments to mitigate certain exposures. 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, Asia Pacific, Canada, Japan 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 and currency options. 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. The offset of these gains or losses against the gains and losses on the underlying hedged items, as well as the hedging costs associated with the derivative instruments, is recognized in Other income (expense), net The total notional amounts of the Company’s outstanding foreign exchange contracts as of June 30, 2015 and September 30, 2014 were $1.5 billion and $1.8 billion, respectively. 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) Accumulated other comprehensive income (loss) Interest expense The total notional amount of the Company’s outstanding interest rate swaps designated as fair value hedges was $375 million at June 30, 2015 and September 30, 2014. The outstanding swaps represent fixed-to-floating interest rate swap agreements the Company entered into, in March and September 2014, to convert the interest payments on $375 million of the Company’s 3.125% notes, due November 8, 2021, 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 (loss) gain recorded on these fair value hedges, and the offsetting (gain) loss recorded on the underlying debt instruments, was $(7) million and $9 million for the three and nine months ended June 30, 2015, respectively. 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. In April 2015, the Company entered into cash-settled forward contracts to hedge approximately 13% of its expected global resin purchase volumes throughout fiscal years 2015 and 2016. These contracts were designated as cash flow hedges and the total notional amount of these contracts at June 30, 2015 was 61 million pounds ($31 million). The Company had no outstanding commodity derivative contracts designated as cash flow hedges as of September 30, 2014. Effects on Consolidated Balance Sheets The location and amounts of derivative instrument fair values in the consolidated balance sheet are segregated below between designated, qualifying hedging instruments and ones that are not designated for hedge accounting. (Millions of dollars) June 30, 2015 September 30, 2014 Asset derivatives-designated for hedge accounting Interest rate swaps $ 9 $ 3 Asset derivatives-undesignated for hedge accounting Forward exchange contracts 8 20 Total asset derivatives (A) $ 17 $ 23 Liability derivatives-designated for hedge accounting Commodity forward contracts 6 — Liability derivatives-undesignated for hedge accounting Forward exchange contracts 13 14 Total liability derivatives (B) $ 19 $ 14 (A) All asset derivatives are included in Prepaid expenses, deferred taxes and other (B) All liability derivatives are included in Payables and accrued expenses Effects on Consolidated Statements of Income Cash flow hedges After-tax losses of $4 million recognized in Other comprehensive income (loss) Other comprehensive income (loss) Interest expense The Company’s designated derivative instruments are highly effective. As such, there are no gains or losses, related to hedge ineffectiveness or amounts excluded from hedge effectiveness testing, recognized immediately in income relative to derivative contracts outstanding in the periods presented. Undesignated hedges The location and amount of gains and losses recognized in income on derivatives not designated for hedge accounting were as follows: Location of Gain Amount of Gain (Loss) Recognized in Income on Derivatives Derivatives Not Designated as Hedging Instruments Three Months Ended Nine Months Ended (Millions of dollars) 2015 2014 2015 2014 Forward exchange contracts (A) Other income (expense), net $ 50 $ (10 ) $ (46 ) $ (5 ) (A) The gains and losses on forward contracts and currency options utilized to hedge the intercompany transactional foreign exchange exposures are largely offset by gains and losses on the underlying hedged items in Other income (expense), net |
Financial Instruments and Fair
Financial Instruments and Fair Value Measurements | 9 Months Ended |
Jun. 30, 2015 | |
Fair Value Disclosures [Abstract] | |
Financial Instruments and Fair Value Measurements | Note 13 – Financial Instruments and Fair Value Measurements The fair values of financial instruments, including those not recognized on the statement of financial position at fair value, carried at June 30, 2015 and September 30, 2014 are classified in accordance with the fair value hierarchy in the following tables: Basis of Fair Value Measurement (Millions of dollars) June 30, 2015 Quoted Prices in Significant Other Significant Assets Institutional money market investments $ 217 $ 217 $ — $ — Interest rate swaps 9 — 9 — Forward exchange contracts 8 — 8 — Total Assets $ 234 $ 217 $ 17 $ — Liabilities Forward exchange contracts $ 13 $ — $ 13 $ — Commodity forward contracts 6 — 6 — Contingent consideration liabilities 50 — — 50 Total Liabilities $ 69 $ — $ 19 $ 50 Basis of Fair Value Measurement (Millions of dollars) September 30, Total Quoted Prices in Significant Other Significant Assets Institutional money market investments $ 1,040 $ 1,040 $ — $ — Interest rate swaps 3 — 3 — Forward exchange contracts 20 — 20 — Total Assets $ 1,063 $ 1,040 $ 23 $ — Liabilities Forward exchange contracts $ 14 $ — $ 14 $ — Contingent consideration liabilities 14 — — 14 Total Liabilities $ 29 $ — $ 14 $ 14 The Company’s institutional money market accounts 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. The Company’s remaining cash equivalents were $1.342 billion and $821 million at June 30, 2015 and September 30, 2014, respectively. Short-term investments are held to their maturities and are carried at cost, which approximates fair value. The cash equivalents consist of liquid investments with a maturity of three months or less and the short-term investments consist of instruments with maturities greater than three months and less than one year. The Company measures the fair value of forward exchange contracts and interest rate swaps based upon the present value of expected future cash flows using market-based observable inputs including credit risk, interest rate yield curves, foreign currency spot prices and forward prices. 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 $11.509 billion and $4.1 billion at June 30, 2015 and September 30, 2014, respectively. The fair value of $750 million of floating rates due on June 15, 2016, that were reclassified from long-term debt to short-term debt during the third quarter of fiscal year 2015, was $749 million at June 30, 2015. The contingent consideration liabilities were recognized as part of the consideration transferred by the Company for certain acquisitions. The fair values of the contingent consideration liabilities were estimated using probability-weighted discounted cash flow models that were based upon the probabilities assigned to the contingent events. The estimated fair values of the contingent consideration liabilities are remeasured at each reporting period based upon increases or decreases in the probability of the contingent payments. The increase to the total contingent consideration liability in the nine months ended June 30, 2015 was mostly attributable to a contingent consideration liability of $36 million recognized in connection with the Company’s acquisition of GenCell in the first quarter of fiscal year 2015. The Company’s policy is to recognize any transfers into fair value measurement hierarchy levels and transfers out of levels at the beginning of each reporting period. There were no transfers in and out of Level 1, Level 2 or Level 3 measurements for the three and nine months ended June 30, 2015 and 2014. |
Debt
Debt | 9 Months Ended |
Jun. 30, 2015 | |
Debt Disclosure [Abstract] | |
Debt | Note 14 – Debt As disclosed in Note 9, the Company acquired CareFusion on March 17, 2015. As part of its plan for financing the cash requirements relative to this acquisition, the Company issued senior unsecured notes in December 2014 with a total aggregate principal amount of $6.2 billion. Details regarding this debt issuance were as follows: Interest Rate and Maturity Aggregate Amount Floating Rate Notes due June 15, 2016 $ 750 1.800% Notes due December 15, 2017 1,250 2.675% Notes due December 15, 2019 1,250 3.734% Notes due December 15, 2024 1,750 4.685% Notes due December 15, 2044 1,200 Total long-term debt issued in connection with CareFusion acquisition $ 6,200 Also in December 2014, the Company entered into a 364-day term loan agreement that provides for a $1 billion term loan facility, the proceeds under which could only be used to pay the cash consideration due pursuant to the CareFusion acquisition agreement, as well as to pay financing fees, other related fees and other expenses associated with the CareFusion acquisition. In April 2015, the Company made a $650 million principal payment to reduce the outstanding balance of this term loan facility. Borrowings of $350 million were outstanding under this term loan facility at June 30, 2015. In July 2015, the Company made a $250 million payment to further reduce the outstanding balance of this term loan facility. Concurrent with the execution of the agreement to acquire CareFusion, the Company secured $9.1 billion of fully committed bridge financing to ensure its ability to fund the cash portion of consideration due under the agreement, as well as to pay fees and expenses related to the acquisition. This bridge credit agreement was terminated upon the closing of the CareFusion acquisition in March 2015. In January 2015, in anticipation of the closing of the CareFusion acquisition, the Company entered into a commercial paper program under which it may issue up to $1 billion in short-term, unsecured commercial paper notes. A former commercial paper program which had been in place to meet short-term financing needs was terminated in February 2015 and the outstanding borrowings of $200 million under the former program were rolled into the new commercial paper program. Borrowings of $700 million were outstanding under the current commercial paper program at June 30, 2015, of which $500 million was used to finance the Company’s acquisition of CareFusion and to pay related fees and expenses. Upon the closing of the CareFusion acquisition in March 2015, the Company assumed the indebtedness of CareFusion, including senior unsecured notes with an aggregate principal amount of $2 billion, which was recorded on the acquisition date at a fair value of $2.174 billion. In March 2015, subsequent to closing the acquisition of CareFusion, the Company commenced offers to exchange all validly tendered and accepted notes issued by CareFusion for notes to be issued by the Company. This offer expired in April 2015 and the aggregate principal amounts below of each series of the CareFusion notes were validly tendered and exchanged for notes issued by the Company. Interest Rate and Maturity Aggregate Percentage of Outstanding Amount of such 1.450% senior notes due May 15, 2017 $ 293 97.64 % 6.375% senior notes due August 1, 2019 665 95.00 % 3.300% senior notes due March 1, 2023 294 97.95 % 3.875% senior notes due May 15, 2024 397 99.37 % 4.875% senior notes due May 15, 2044 300 99.96 % Total senior notes issued under exchange transaction $ 1,949 This exchange transaction was accounted for as a modification of the original debt instruments. As such, no gain or loss was recognized in the Company’s consolidated results of operations as a result of this exchange transaction. Following the exchange of the notes, the aggregate principal amount of CareFusion notes that remain outstanding across the five series is $51 million. |
Financing Receivables
Financing Receivables | 9 Months Ended |
Jun. 30, 2015 | |
Receivables [Abstract] | |
Financing Receivables | Note 15 – Financing Receivables As disclosed in Note 9, the net assets acquired in the Company’s acquisition of CareFusion included a $1.208 billion net investment in sales-type leases which primarily arose from the leasing of dispensing equipment. The methodology for determining the allowance for credit losses for these financing receivables is based on the collective population and is not stratified by class or portfolio segment. Allowances for credit losses on the entire portfolio are recorded based on historical experience loss rates and the potential impact of anticipated changes in business practices, market dynamics, and economic conditions. The net investment in sales-type leases is predominantly evaluated for impairment on a collective basis; however, some immaterial allowances for individual balances are recorded based on the evaluation of customers’ specific circumstances. No interest is accrued on past due financing receivables, which are generally considered past due 30 days after the billing date. Amounts are written off against the allowance for credit losses when determined to be uncollectible. The allowance for credit losses on these financing receivables was immaterial at June 30, 2015. |
Accounting Changes (Policies)
Accounting Changes (Policies) | 9 Months Ended |
Jun. 30, 2015 | |
Commitments and Contingencies Disclosure [Abstract] | |
New Accounting Principles Adopted and Not Yet Adopted | New Accounting Principles Adopted In June 2013, the Financial Accounting Standards Board (“FASB”) issued guidance that requires the netting of unrecognized tax benefits against a deferred tax asset for a loss or other carryforward that would apply in settlement of the uncertain tax positions. In March 2013, the FASB issued amendments to resolve diversity in practice relating to the release of cumulative translation adjustments into earnings upon the occurrence of certain derecognition events involving a foreign entity. The Company prospectively adopted both accounting standard updates, which did not impact its consolidated financial statements, on October 1, 2014. New Accounting Principle Not Yet Adopted In May 2014, the FASB issued a new revenue recognition standard. Under this standard, revenue will be recognized upon the transfer of goods or services to customers and the amount of revenue recognized will reflect the consideration to which a reporting entity expects to be entitled in exchange for those goods or services. The Company is currently evaluating the impact that this new revenue recognition standard will have on its consolidated financial statements and the Company currently intends to adopt the standard on October 1, 2018, as is allowed under the FASB’s July 2015 amendment which deferred the effective date for this standard. |
ASC 450-20 Recognition Guidelines | 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. generally accepted accounting principles, the Company establishes accruals to the extent probable future losses are estimable (in the case of environmental matters, without considering possible third-party recoveries). 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. |
Derivative Instruments and Hedging Activities | Foreign Currency Risks and Related Strategies The Company has foreign currency exposures throughout Europe, Asia Pacific, Canada, Japan 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 and currency options. 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. The offset of these gains or losses against the gains and losses on the underlying hedged items, as well as the hedging costs associated with the derivative instruments, is recognized in Other income (expense), net The total notional amounts of the Company’s outstanding foreign exchange contracts as of June 30, 2015 and September 30, 2014 were $1.5 billion and $1.8 billion, respectively. 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) Accumulated other comprehensive income (loss) Interest expense The total notional amount of the Company’s outstanding interest rate swaps designated as fair value hedges was $375 million at June 30, 2015 and September 30, 2014. The outstanding swaps represent fixed-to-floating interest rate swap agreements the Company entered into, in March and September 2014, to convert the interest payments on $375 million of the Company’s 3.125% notes, due November 8, 2021, 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 (loss) gain recorded on these fair value hedges, and the offsetting (gain) loss recorded on the underlying debt instruments, was $(7) million and $9 million for the three and nine months ended June 30, 2015, respectively. 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. In April 2015, the Company entered into cash-settled forward contracts to hedge approximately 13% of its expected global resin purchase volumes throughout fiscal years 2015 and 2016. These contracts were designated as cash flow hedges and the total notional amount of these contracts at June 30, 2015 was 61 million pounds ($31 million). The Company had no outstanding commodity derivative contracts designated as cash flow hedges as of September 30, 2014. |
ASC 820 Fair Value Disclosures | The Company measures the fair value of forward exchange contracts and interest rate swaps based upon the present value of expected future cash flows using market-based observable inputs including credit risk, interest rate yield curves, foreign currency spot prices and forward prices. 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 $11.509 billion and $4.1 billion at June 30, 2015 and September 30, 2014, respectively. The fair value of $750 million of floating rates due on June 15, 2016, that were reclassified from long-term debt to short-term debt during the third quarter of fiscal year 2015, was $749 million at June 30, 2015. The contingent consideration liabilities were recognized as part of the consideration transferred by the Company for certain acquisitions. The fair values of the contingent consideration liabilities were estimated using probability-weighted discounted cash flow models that were based upon the probabilities assigned to the contingent events. The estimated fair values of the contingent consideration liabilities are remeasured at each reporting period based upon increases or decreases in the probability of the contingent payments. The increase to the total contingent consideration liability in the nine months ended June 30, 2015 was mostly attributable to a contingent consideration liability of $36 million recognized in connection with the Company’s acquisition of GenCell in the first quarter of fiscal year 2015. The Company’s policy is to recognize any transfers into fair value measurement hierarchy levels and transfers out of levels at the beginning of each reporting period. There were no transfers in and out of Level 1, Level 2 or Level 3 measurements for the three and nine months ended June 30, 2015 and 2014. |
Methodology for determining the allowance for credit losses | As disclosed in Note 9, the net assets acquired in the Company’s acquisition of CareFusion included a $1.208 billion net investment in sales-type leases which primarily arose from the leasing of dispensing equipment. The methodology for determining the allowance for credit losses for these financing receivables is based on the collective population and is not stratified by class or portfolio segment. Allowances for credit losses on the entire portfolio are recorded based on historical experience loss rates and the potential impact of anticipated changes in business practices, market dynamics, and economic conditions. The net investment in sales-type leases is predominantly evaluated for impairment on a collective basis; however, some immaterial allowances for individual balances are recorded based on the evaluation of customers’ specific circumstances. No interest is accrued on past due financing receivables, which are generally considered past due 30 days after the billing date. Amounts are written off against the allowance for credit losses when determined to be uncollectible. The allowance for credit losses on these financing receivables was immaterial at June 30, 2015. |
Accumulated Other Comprehensi22
Accumulated Other Comprehensive (Loss) Income (Tables) | 9 Months Ended |
Jun. 30, 2015 | |
Equity [Abstract] | |
Accumulated Other Comprehensive (Loss) Income | The components and changes of Accumulated other comprehensive (loss) income (Millions of dollars) Total Foreign Currency Benefit Plans Unrealized Losses on Balance at September 30, 2014 $ (1,001 ) $ (270 ) $ (705 ) $ (26 ) Other comprehensive income before reclassifications, net of taxes (571 ) (558 ) — (12 ) Amounts reclassified into income, net of taxes (A) 38 — 33 4 Balance at June 30, 2015 $ (1,535 ) $ (828 ) $ (672 ) $ (34 ) (A) The reclassification amount related to benefit plans for the three months ended June 30, 2015 was $11 million. The reclassification amounts for the three and nine months ended June 30, 2014 were $8 million and $25 million, respectively. The benefit plan-related amounts were not reclassified into income in their entirety and these reclassifications were included in the computation of net periodic benefit plan costs. Additional details are provided in Note 8. The reclassification amount related to cash flow hedges for the three months ended June 30, 2015 was $2 million. The reclassification amounts for the three and nine months ended June 30, 2014 were $1 million and $4 million, respectively. The cash flow hedge-related reclassification amounts for the three and nine months ended June 30, 2015 and 2014 were primarily recorded in Interest expense |
Earnings per Share (Tables)
Earnings per Share (Tables) | 9 Months Ended |
Jun. 30, 2015 | |
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: Three Months Ended Nine Months Ended 2015 2014 2015 2014 Average common shares outstanding 210,175 193,054 199,690 193,624 Dilutive share equivalents from share-based plans 4,753 3,951 4,546 4,189 Average common and common equivalent shares outstanding – assuming dilution 214,928 197,005 204,236 197,813 |
Segment Data (Tables)
Segment Data (Tables) | 9 Months Ended |
Jun. 30, 2015 | |
Segment Reporting [Abstract] | |
Financial Information for Company's Segments | Financial information for the Company’s segments was as follows: Three Months Ended Nine Months Ended (Millions of dollars) 2015 2014 2015 2014 Revenues Medical $ 2,199 (B) $ 1,201 $ 4,377 (B) $ 3,381 Life Sciences 921 956 2,845 2,863 Total Revenues $ 3,120 $ 2,157 $ 7,222 $ 6,244 Segment Operating Income Medical $ 483 (C) $ 356 (D) $ 1,115 (C) $ 968 (D) Life Sciences 197 221 610 653 (E) Total Segment Operating Income 680 578 1,725 1,621 Unallocated Items (F) (641 ) (G) (155 ) (1,176 ) (H) (476 ) (I) Income Before Income Taxes $ 39 $ 423 $ 549 $ 1,145 (A) Intersegment revenues are not material. (B) Includes $13 million in amortization of the acquisition-date write-down of CareFusion’s deferred revenue balance that was recorded to reflect a fair value measurement as of the acquisition date. (C) Includes an increase of $130 million in non-cash amortization expense relating to the identifiable intangible assets acquired in the CareFusion transaction as well as depreciation expense relating to the fixed assets acquired in the transaction. Additional disclosures regarding the assets acquired in this acquisition are provided in Note 9. Also includes a $5 million adjustment to decrease the liability for employee termination costs recorded relative to certain workforce reduction actions taken in the fourth quarter of fiscal year 2014. (D) Includes a $9 million charge associated with the decision to terminate a research and development program; the charge relates to program asset write-offs and obligations. (E) Includes an $11 million charge that resulted from the early termination of a European distributor agreement as well as a $20 million charge primarily resulting from the discontinuance of an instrument product development program. The development-related charge is largely attributable to capitalized product software, but also includes a lesser amount attributable to fixed assets. (F) Includes primarily interest, net; foreign exchange; corporate expenses; share-based compensation expense; and acquisition-related costs. (G) Includes financing, transaction, integration and restructuring costs associated with the CareFusion. Also includes $281 million in recognition of the fair value step-up adjustment recorded relative to CareFusion’s inventory on the acquisition date. Additional disclosures regarding this acquisition are provided in Note 9. (H) Includes financing, transaction, integration and restructuring costs associated with the CareFusion acquisition, as well as the recognition of the inventory step-up adjustment, as noted above. Also includes a $12 million charge for RTI’s attorneys’ fees associated with the unfavorable verdict returned in the antitrust and false advertising lawsuit RTI filed against BD. For further discussion, refer to Note 5 in the notes to the financial statements. Additionally includes an acquisition-date accounting gain of $9 million on the previously held investment in CRISI Medical Systems, Inc. (“CRISI”), which the Company fully acquired during the second quarter of 2015. (I) Includes an $8 million gain resulting from the Company’s receipt of cash proceeds from the sale of a company in which it held a small equity ownership interest. |
Revenues by Geographic Areas | Revenues by geographic areas were as follows: Three Months Ended Nine Months Ended (Millions of dollars) 2015 2014 2015 2014 Revenues United States $ 1,693 $ 871 $ 3,437 $ 2,546 International 1,427 1,286 3,785 3,698 Total Revenues $ 3,120 $ 2,157 $ 7,222 $ 6,244 |
Share-Based Compensation (Table
Share-Based Compensation (Tables) | 9 Months Ended |
Jun. 30, 2015 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Assumptions for Estimation of Fair Values of Stock Appreciation Rights Granted During Reporting Periods | The fair values of stock appreciation rights granted during the annual share-based grants in November of 2014 and 2013, respectively, were estimated on the date of grant using a lattice-based binomial valuation model based on the following assumptions: 2015 2014 Risk-free interest rate 2.20 % 2.31 % Expected volatility 19.00 % 19.00 % Expected dividend yield 1.78 % 2.00 % Expected life 7.6 years 7.8 years Fair value derived $ 24.82 $ 19.90 |
Benefit Plans (Tables)
Benefit Plans (Tables) | 9 Months Ended |
Jun. 30, 2015 | |
Compensation and Retirement Disclosure [Abstract] | |
Net Pension and Postretirement Cost | Net pension and postretirement cost included the following components for the three months ended June 30: Pension Plans Other Postretirement Benefits (Millions of dollars) 2015 2014 2015 2014 Service cost $ 20 $ 18 $ 1 $ 1 Interest cost 22 23 2 2 Expected return on plan assets (32 ) (32 ) — — Amortization of prior service credit (4 ) (4 ) (1 ) (1 ) Amortization of loss 18 12 1 — Net pension and postretirement cost $ 24 $ 18 $ 2 $ 2 Net pension and postretirement cost included the following components for the nine months ended June 30: Pension Plans Other Postretirement Benefits (Millions of dollars) 2015 2014 2015 2014 Service cost $ 58 $ 53 $ 2 $ 3 Interest cost 66 69 6 7 Expected return on plan assets (93 ) (94 ) — — Amortization of prior service credit (12 ) (11 ) (4 ) (3 ) Amortization of loss 52 36 2 2 Net pension and postretirement cost $ 70 $ 53 $ 7 $ 8 |
Acquisitions (Tables)
Acquisitions (Tables) - CareFusion [Member] | 9 Months Ended |
Jun. 30, 2015 | |
Fair Value of Consideration Transferred | The fair value of consideration transferred was $12.538 billion and consisted of the components below. (Millions of dollars) Cash consideration $ 10,085 Noncash consideration-fair value of shares issued 2,269 Noncash consideration-fair value of stock options and other equity awards 184 Total consideration transferred $ 12,538 |
Fair Value of Company's Ordinary Shares Issued | The acquisition date fair value of the Company’s ordinary shares issued to CareFusion shareholders was calculated per the following (shares in millions): (Millions of dollars, except per share data) Total CareFusion shares outstanding 205.3 Conversion factor 0.0777 Number of the Company’s shares issued 15.9 Closing price of the Company’s stock on March 16, 2015 $ 142.29 Fair value of the Company’s issued shares $ 2,269 |
Summary of Assets Acquired and Liabilities Assumed | All of the assets acquired and liabilities assumed in this acquisition have been allocated to the Company’s Medical segment. (Millions of dollars) Cash and equivalents $ 1,903 Trade receivables, net 486 Inventories 828 Net investment in sales-type leases 1,208 Property, plant and equipment 503 Customer relationships 3,360 Developed technology 2,510 Trademarks 380 Other intangible assets 185 Other assets 435 Total identifiable assets acquired 11,798 Long-term debt (2,181 ) Deferred tax liabilities (2,648 ) Other liabilities (764 ) Total liabilities assumed (5,592 ) Net identifiable assets acquired 6,205 Goodwill 6,333 Net assets acquired $ 12,538 |
Summary of Pro Forma Results | The following table provides the pro forma results for the three and nine-month periods ended June 30, 2015 and 2014 as if CareFusion had been acquired as of October 1, 2013. Three Months Ended Nine Months Ended (Millions of dollars, except per share data) 2015 2014 2015 2014 Revenues $ 3,133 $ 3,279 $ 9,301 $ 9,256 Net Income $ 326 $ 361 $ 966 $ 919 Diluted Earnings per Share $ 1.52 $ 1.69 $ 4.49 $ 4.28 |
Business Restructuring Charges
Business Restructuring Charges (Tables) | 9 Months Ended |
Jun. 30, 2015 | |
Restructuring and Related Activities [Abstract] | |
Summary of Restructuring Accrual Activity | Restructuring accrual activity for the nine months ended June 30, 2015 was as follows: (Millions of dollars) Total Employee Share-based Other Balance at September 30, 2014 $ — $ — $ — $ — Assumed liability 19 19 — — Charged to expense 136 87 37 12 Cash payments (51 ) (48 ) — (3 ) Non-cash settlements (37 ) — (37 ) — Other adjustments (18 ) (9 ) — (9 ) Balance at June 30, 2015 $ 49 $ 49 $ — $ — |
Intangible Assets (Tables)
Intangible Assets (Tables) | 9 Months Ended |
Jun. 30, 2015 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Components of Intangible Assets | Intangible assets consisted of: June 30, 2015 September 30, 2014 (Millions of dollars) Gross Accumulated Gross Accumulated Amortized intangible assets Customer relationships $ 3,375 $ 62 $ 10 2 Developed technology 3,412 449 893 379 Product rights 130 34 148 31 Trademarks 405 22 27 19 Patents and other 331 189 232 163 Amortized intangible assets $ 7,653 $ 756 $ 1,308 $ 594 Unamortized intangible assets Acquired in-process research and development $ 226 $ 44 Trademarks 2 2 Unamortized intangible assets $ 228 $ 46 |
Reconciliation of Goodwill by Business Segment | The following is a reconciliation of goodwill by business segment: (Millions of dollars) Medical Life Sciences Total Goodwill as of September 30, 2014 $ 482 $ 608 $ 1,090 Acquisitions 6,585 (A) 64 (B) 6,649 Currency translation/other (C) (263 ) (12 ) (275 ) Goodwill as of June 30, 2015 $ 6,804 $ 659 $ 7,464 (A) Primarily represents goodwill recognized upon the Company’s acquisition of CareFusion in the second quarter of fiscal year 2015. Additional disclosures regarding the CareFusion acquisition are provided in Note 9. Also includes $22 million of goodwill associated with individually immaterial acquisitions, including the CRISI acquisition in the second quarter of fiscal year 2015. (B) Represents goodwill recognized upon the Company’s acquisition of GenCell in the first quarter of fiscal year 2015. (C) Includes amounts resulting from foreign currency translation as well as acquisition accounting adjustments. |
Derivative Instruments and He30
Derivative Instruments and Hedging Activities (Tables) | 9 Months Ended |
Jun. 30, 2015 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Effects on Consolidated Balance Sheets | Effects on Consolidated Balance Sheets The location and amounts of derivative instrument fair values in the consolidated balance sheet are segregated below between designated, qualifying hedging instruments and ones that are not designated for hedge accounting. (Millions of dollars) June 30, 2015 September 30, 2014 Asset derivatives-designated for hedge accounting Interest rate swaps $ 9 $ 3 Asset derivatives-undesignated for hedge accounting Forward exchange contracts 8 20 Total asset derivatives (A) $ 17 $ 23 Liability derivatives-designated for hedge accounting Commodity forward contracts 6 — Liability derivatives-undesignated for hedge accounting Forward exchange contracts 13 14 Total liability derivatives (B) $ 19 $ 14 (A) All asset derivatives are included in Prepaid expenses, deferred taxes and other (B) All liability derivatives are included in Payables and accrued expenses |
Undesignated Hedges | Undesignated hedges The location and amount of gains and losses recognized in income on derivatives not designated for hedge accounting were as follows: Location of Gain Amount of Gain (Loss) Recognized in Income on Derivatives Derivatives Not Designated as Hedging Instruments Three Months Ended Nine Months Ended (Millions of dollars) 2015 2014 2015 2014 Forward exchange contracts (A) Other income (expense), net $ 50 $ (10 ) $ (46 ) $ (5 ) (A) The gains and losses on forward contracts and currency options utilized to hedge the intercompany transactional foreign exchange exposures are largely offset by gains and losses on the underlying hedged items in Other income (expense), net |
Financial Instruments and Fai31
Financial Instruments and Fair Value Measurements (Tables) | 9 Months Ended |
Jun. 30, 2015 | |
Fair Value Disclosures [Abstract] | |
Fair Values of Financial Instruments | The fair values of financial instruments, including those not recognized on the statement of financial position at fair value, carried at June 30, 2015 and September 30, 2014 are classified in accordance with the fair value hierarchy in the following tables: Basis of Fair Value Measurement (Millions of dollars) June 30, 2015 Quoted Prices in Significant Other Significant Assets Institutional money market investments $ 217 $ 217 $ — $ — Interest rate swaps 9 — 9 — Forward exchange contracts 8 — 8 — Total Assets $ 234 $ 217 $ 17 $ — Liabilities Forward exchange contracts $ 13 $ — $ 13 $ — Commodity forward contracts 6 — 6 — Contingent consideration liabilities 50 — — 50 Total Liabilities $ 69 $ — $ 19 $ 50 Basis of Fair Value Measurement (Millions of dollars) September 30, Total Quoted Prices in Significant Other Significant Assets Institutional money market investments $ 1,040 $ 1,040 $ — $ — Interest rate swaps 3 — 3 — Forward exchange contracts 20 — 20 — Total Assets $ 1,063 $ 1,040 $ 23 $ — Liabilities Forward exchange contracts $ 14 $ — $ 14 $ — Contingent consideration liabilities 14 — — 14 Total Liabilities $ 29 $ — $ 14 $ 14 |
Debt (Tables)
Debt (Tables) | 9 Months Ended |
Jun. 30, 2015 | |
Debt Disclosure [Abstract] | |
Schedule of Senior Unsecured Note Issued | Details regarding this debt issuance were as follows: Interest Rate and Maturity Aggregate Amount Floating Rate Notes due June 15, 2016 $ 750 1.800% Notes due December 15, 2017 1,250 2.675% Notes due December 15, 2019 1,250 3.734% Notes due December 15, 2024 1,750 4.685% Notes due December 15, 2044 1,200 Total long-term debt issued in connection with CareFusion acquisition $ 6,200 Interest Rate and Maturity Aggregate Percentage of Outstanding Amount of such 1.450% senior notes due May 15, 2017 $ 293 97.64 % 6.375% senior notes due August 1, 2019 665 95.00 % 3.300% senior notes due March 1, 2023 294 97.95 % 3.875% senior notes due May 15, 2024 397 99.37 % 4.875% senior notes due May 15, 2044 300 99.96 % Total senior notes issued under exchange transaction $ 1,949 |
Accumulated Other Comprehensi33
Accumulated Other Comprehensive (Loss) Income - Accumulated Other Comprehensive (Loss) Income (Detail) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Accumulated other comprehensive (loss) income, beginning balance | $ (1,001) | |||
Other comprehensive income before reclassifications, net of taxes | (571) | |||
Amounts reclassified into income, net of taxes | 38 | |||
Accumulated other comprehensive (loss) income, ending balance | $ (1,535) | (1,535) | ||
Foreign Currency Translation Adjustments [Member] | ||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Accumulated other comprehensive (loss) income, beginning balance | (270) | |||
Other comprehensive income before reclassifications, net of taxes | (558) | |||
Accumulated other comprehensive (loss) income, ending balance | (828) | (828) | ||
Benefit Plans Adjustments [Member] | ||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Accumulated other comprehensive (loss) income, beginning balance | (705) | |||
Amounts reclassified into income, net of taxes | 11 | $ 8 | 33 | $ 25 |
Accumulated other comprehensive (loss) income, ending balance | (672) | (672) | ||
Unrealized Losses on Cash Flow Hedges [Member] | ||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Accumulated other comprehensive (loss) income, beginning balance | (26) | |||
Other comprehensive income before reclassifications, net of taxes | (12) | |||
Amounts reclassified into income, net of taxes | 2 | $ 1 | 4 | $ 4 |
Accumulated other comprehensive (loss) income, ending balance | $ (34) | $ (34) |
Accumulated Other Comprehensi34
Accumulated Other Comprehensive (Loss) Income - Accumulated Other Comprehensive (Loss) Income (Parenthetical) (Detail) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Amounts reclassified into income | $ 38 | |||
Benefit Plans Adjustments [Member] | ||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Amounts reclassified into income | $ 11 | $ 8 | 33 | $ 25 |
Unrealized Losses on Cash Flow Hedges [Member] | ||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Amounts reclassified into income | $ 2 | $ 1 | $ 4 | $ 4 |
Accumulated Other Comprehensi35
Accumulated Other Comprehensive (Loss) Income - Additional Information (Detail) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Tax expense (benefits) associated with reclassification adjustments | $ (23,000,000) | $ 97,000,000 | $ 35,000,000 | $ 261,000,000 |
Income tax benefits recorded for losses recognized in other comprehensive income relating to cash flow hedges | (2,000,000) | 0 | (8,000,000) | 0 |
Benefit Plans Adjustments [Member] | Reclassification out of Accumulated Other Comprehensive Income [Member] | ||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Tax expense (benefits) associated with reclassification adjustments | $ (6,000,000) | $ (4,000,000) | $ (17,000,000) | $ (13,000,000) |
Earnings per Share - Weighted A
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, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
Earnings Per Share [Abstract] | ||||
Average common shares outstanding | 210,175 | 193,054 | 199,690 | 193,624 |
Dilutive share equivalents from share-based plans | 4,753 | 3,951 | 4,546 | 4,189 |
Average common and common equivalent shares outstanding - assuming dilution | 214,928 | 197,005 | 204,236 | 197,813 |
Earnings per Share - Additional
Earnings per Share - Additional Information (Detail) shares in Millions | Mar. 17, 2015shares |
CareFusion [Member] | |
Schedule Of Earnings Per Share Basic And Diluted [Line Items] | |
Common shares issued | 15.9 |
Contingencies - Additional Info
Contingencies - Additional Information (Detail) - USD ($) $ in Millions | Jan. 15, 2015 | Nov. 10, 2014 | Sep. 19, 2013 | Nov. 09, 2009 | Sep. 30, 2013 | Jun. 30, 2015 | Apr. 30, 2015 |
United States of America [Member] | |||||||
Loss Contingencies [Line Items] | |||||||
Duty percentage rate | 45.30% | ||||||
United Kingdom of Great Britain and Northern Ireland [Member] | |||||||
Loss Contingencies [Line Items] | |||||||
Duty percentage rate | 71.50% | ||||||
RTI Technologies [Member] | |||||||
Loss Contingencies [Line Items] | |||||||
Damages awarded | $ 12 | $ 113.5 | $ 5 | ||||
Pre-tax charge relating to an unfavorable litigation verdict | $ 341 | ||||||
Percentage of reduction in total fee recovery | 50.00% | ||||||
CareFusion [Member] | |||||||
Loss Contingencies [Line Items] | |||||||
Acquisition agreement date | Oct. 5, 2014 |
Segment Data - Additional Infor
Segment Data - Additional Information (Detail) - 9 months ended Jun. 30, 2015 - Segment | Total |
Segment Reporting Information [Line Items] | |
Number of principal business segments | 2 |
Medical [Member] | CareFusion [Member] | |
Segment Reporting Information [Line Items] | |
Acquisition date | Mar. 17, 2015 |
Segment Data - Financial Inform
Segment Data - Financial Information for Company's Segments (Detail) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
Segment Reporting Information [Line Items] | ||||
Revenues | $ 3,120 | $ 2,157 | $ 7,222 | $ 6,244 |
Income Before Income Taxes | 39 | 423 | 549 | 1,145 |
Operating Segments [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Income Before Income Taxes | 680 | 578 | 1,725 | 1,621 |
Corporate and All Other [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Income Before Income Taxes | (641) | (155) | (1,176) | (476) |
Medical [Member] | Operating Segments [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Revenues | 2,199 | 1,201 | 4,377 | 3,381 |
Income Before Income Taxes | 483 | 356 | 1,115 | 968 |
Life Sciences [Member] | Operating Segments [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Revenues | 921 | 956 | 2,845 | 2,863 |
Income Before Income Taxes | $ 197 | $ 221 | $ 610 | $ 653 |
Segment Data - Financial Info41
Segment Data - Financial Information for Company's Segments (Parenthetical) (Detail) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
Segment Reporting Information [Line Items] | ||||
Intangible amortization expense | $ 151 | $ 21 | $ 192 | $ 63 |
Change in estimate | 5 | 5 | ||
Corporate and All Other [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Gain on sale of small equity ownership interest | 8 | |||
Corporate and All Other [Member] | CareFusion [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Recognition of fair value step-up adjustment | 281 | 281 | ||
Corporate and All Other [Member] | CRISI Medical Systems Inc [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Acquisition-date accounting gain | 9 | |||
Corporate and All Other [Member] | RTI Technologies [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Increase in loss contingency accrual, relative to RTI matter | 12 | |||
Medical [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Change in estimate | 5 | 5 | ||
Charge associated with the decision to terminate a research and development program | $ 9 | 9 | ||
Medical [Member] | CareFusion [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Amortization of acquisition-date write-down of deferred revenue | 13 | 13 | ||
Intangible amortization expense | $ 130 | $ 130 | ||
Life Sciences [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Charge resulted from termination | 11 | |||
Charge from discontinuance | $ 20 |
Segment Data - Revenues by Geog
Segment Data - Revenues by Geographic Areas (Detail) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||
Total Revenues | $ 3,120 | $ 2,157 | $ 7,222 | $ 6,244 |
United States of America [Member] | ||||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||
Total Revenues | 1,693 | 871 | 3,437 | 2,546 |
International [Member] | ||||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||
Total Revenues | $ 1,427 | $ 1,286 | $ 3,785 | $ 3,698 |
Share-Based Compensation - Assu
Share-Based Compensation - Assumptions for Estimation of Fair Values of Stock Appreciation Rights Granted During Reporting Periods (Detail) - Stock Appreciation Rights (SARs) [Member] - $ / shares | 9 Months Ended | |
Jun. 30, 2015 | Jun. 30, 2014 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Risk-free interest rate | 2.20% | 2.31% |
Expected volatility | 19.00% | 19.00% |
Expected dividend yield | 1.78% | 2.00% |
Expected life | 7 years 7 months 6 days | 7 years 9 months 18 days |
Fair value derived | $ 24.82 | $ 19.90 |
Share-Based Compensation - Addi
Share-Based Compensation - Additional Information (Detail) - USD ($) shares in Millions, $ in Millions | 3 Months Ended | 9 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Allocated share-based compensation expense | $ 46 | $ 24 | $ 138 | $ 91 |
Unrecognized compensation expense for all non-vested share-based awards | 205 | $ 205 | ||
Weighted-average remaining life non-vested share-based awards | 2 years | |||
CareFusion [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Allocated share-based compensation expense | 20 | $ 37 | ||
Unrecognized compensation expense for all non-vested share-based awards | $ 52 | $ 52 | ||
Non-vested CareFusion replacement awards outstanding | 2 | 2 |
Benefit Plans - Net Pension and
Benefit Plans - Net Pension and Postretirement Cost (Detail) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
Pension Plans [Member] | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Service cost | $ 20 | $ 18 | $ 58 | $ 53 |
Interest cost | 22 | 23 | 66 | 69 |
Expected return on plan assets | (32) | (32) | (93) | (94) |
Amortization of prior service credit | (4) | (4) | (12) | (11) |
Amortization of loss | 18 | 12 | 52 | 36 |
Net pension and postretirement cost | 24 | 18 | 70 | 53 |
Other Postretirement Benefits [Member] | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Service cost | 1 | 1 | 2 | 3 |
Interest cost | 2 | 2 | 6 | 7 |
Amortization of prior service credit | (1) | (1) | (4) | (3) |
Amortization of loss | 1 | 2 | 2 | |
Net pension and postretirement cost | $ 2 | $ 2 | $ 7 | $ 8 |
Benefit Plans - Additional Info
Benefit Plans - Additional Information (Detail) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | |||
Jun. 30, 2015 | Sep. 30, 2014 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
Defined Benefit Plan Disclosure [Line Items] | |||||
Postemployment benefit costs | $ 10 | $ 12 | $ 31 | $ 35 | |
Charge associated with workforce reduction actions | $ 36 | ||||
Workforce reduction costs remaining liability | 9 | 9 | |||
Change in estimate | 5 | 5 | |||
CareFusion [Member] | |||||
Defined Benefit Plan Disclosure [Line Items] | |||||
Employee termination costs | 75 | 136 | |||
CareFusion [Member] | Employee Severance [Member] | |||||
Defined Benefit Plan Disclosure [Line Items] | |||||
Employee termination costs | $ 53 | $ 87 |
Acquisitions - Additional Infor
Acquisitions - Additional Information (Detail) - CareFusion [Member] - USD ($) | Mar. 17, 2015 | Jun. 30, 2015 | Jun. 30, 2015 |
Business Acquisition [Line Items] | |||
Percentage of equity interest acquired | 100.00% | ||
Cash value of stock received under the agreement | $ 49 | ||
Conversion factor | 0.0777 | ||
Acquisition agreement date | Oct. 5, 2014 | ||
Total consideration transferred | $ 12,538,000,000 | ||
Liability for product recalls | $ 36,000,000 | $ 36,000,000 | |
Portion of goodwill from acquisition expected to be deductible for tax purposes | 0 | 0 | |
Financing costs | 5,000,000 | 107,000,000 | |
Transaction costs | 9,000,000 | 52,000,000 | |
Integration costs | 24,000,000 | 55,000,000 | |
Restructuring costs | 75,000,000 | 136,000,000 | |
Revenues | 1,000,000,000 | 1,000,000,000 | |
Operating loss | 261,000,000 | $ 261,000,000 | |
Pro forma date of acquisition | Oct. 1, 2013 | ||
Customer Relationships [Member] | |||
Business Acquisition [Line Items] | |||
Risk-adjusted discount rate | 11.00% | ||
Weighted average amortization period, expected useful life | 15 years | ||
Developed Technology [Member] | |||
Business Acquisition [Line Items] | |||
Risk-adjusted discount rate | 11.00% | ||
Weighted average amortization period, expected useful life | 12 years | ||
In-Process Research and Development [Member] | |||
Business Acquisition [Line Items] | |||
Risk-adjusted discount rate | 12.00% | ||
Acquired in-process research and development assets | $ 110,000,000 | $ 110,000,000 | |
In-Process Research and Development [Member] | Minimum [Member] | |||
Business Acquisition [Line Items] | |||
Technological and commercial risk | 80.00% | ||
Expected fiscal year of project launch | 2,016 | ||
In-Process Research and Development [Member] | Maximum [Member] | |||
Business Acquisition [Line Items] | |||
Technological and commercial risk | 85.00% | ||
Expected fiscal year of project launch | 2,022 | ||
Trademarks [Member] | |||
Business Acquisition [Line Items] | |||
Risk-adjusted discount rate | 11.00% | ||
Weighted average amortization period, expected useful life | 22 years |
Acquisitions - Fair Value of Co
Acquisitions - Fair Value of Consideration Transferred (Detail) - CareFusion [Member] $ in Millions | Mar. 17, 2015USD ($) |
Business Acquisition [Line Items] | |
Cash consideration | $ 10,085 |
Noncash consideration-fair value of shares issued | 2,269 |
Noncash consideration-fair value of stock options and other equity awards | 184 |
Total consideration transferred | $ 12,538 |
Acquisitions - Fair Value of 49
Acquisitions - Fair Value of Company's Ordinary Shares Issued (Detail) - CareFusion [Member] - USD ($) $ / shares in Units, $ in Millions | Mar. 17, 2015 | Mar. 16, 2015 |
Business Acquisition, Equity Interests Issued or Issuable [Line Items] | ||
Total CareFusion shares outstanding | 205,300,000 | |
Conversion factor | 0.0777 | |
Number of the Company's shares issued | 15,900,000 | |
Closing price of the Company's stock on March 16, 2015 | $ 142.29 | |
Fair value of the Company's issued shares | $ 2,269 |
Acquisitions - Summary of Asset
Acquisitions - Summary of Assets Acquired and Liabilities Assumed (Detail) - USD ($) $ in Millions | Mar. 17, 2015 | Mar. 31, 2015 | Jun. 30, 2015 |
Business Acquisition [Line Items] | |||
Goodwill | $ 22 | ||
CareFusion [Member] | |||
Business Acquisition [Line Items] | |||
Net investment in sales-type leases | $ 1,208 | ||
Net assets acquired | $ 12,538 | ||
CareFusion [Member] | Medical [Member] | |||
Business Acquisition [Line Items] | |||
Cash and equivalents | 1,903 | ||
Trade receivables, net | 486 | ||
Inventories | 828 | ||
Net investment in sales-type leases | 1,208 | ||
Property, plant and equipment | 503 | ||
Customer relationships | 3,360 | ||
Developed technology | 2,510 | ||
Trademarks | 380 | ||
Other intangible assets | 185 | ||
Other assets | 435 | ||
Total identifiable assets acquired | 11,798 | ||
Long-term debt | (2,181) | ||
Deferred tax liabilities | (2,648) | ||
Other liabilities | (764) | ||
Total liabilities assumed | (5,592) | ||
Net identifiable assets acquired | 6,205 | ||
Goodwill | 6,333 | ||
Net assets acquired | $ 12,538 |
Acquisitions - Summary of Pro F
Acquisitions - Summary of Pro Forma Results (Detail) - CareFusion [Member] - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | 9 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
Business Acquisition Pro Forma Information [Line Items] | ||||
Revenues | $ 3,133 | $ 3,279 | $ 9,301 | $ 9,256 |
Net Income | $ 326 | $ 361 | $ 966 | $ 919 |
Diluted Earnings per Share | $ 1.52 | $ 1.69 | $ 4.49 | $ 4.28 |
Business Restructuring Charge52
Business Restructuring Charges - Summary of Restructuring Accrual Activity (Detail) - Jun. 30, 2015 - CareFusion [Member] - USD ($) $ in Millions | Total | Total |
Restructuring Cost and Reserve [Line Items] | ||
Assumed liability | $ 19 | |
Charged to expense | $ 75 | 136 |
Cash payments | (51) | |
Non-cash settlements | (37) | |
Other adjustments | (18) | |
Ending balance | 49 | 49 |
Employee Severance [Member] | ||
Restructuring Cost and Reserve [Line Items] | ||
Assumed liability | 19 | |
Charged to expense | 53 | 87 |
Cash payments | (48) | |
Other adjustments | (9) | |
Ending balance | $ 49 | 49 |
Share-based Compensation [Member] | ||
Restructuring Cost and Reserve [Line Items] | ||
Charged to expense | 37 | |
Non-cash settlements | (37) | |
Other [Member] | ||
Restructuring Cost and Reserve [Line Items] | ||
Charged to expense | 12 | |
Cash payments | (3) | |
Other adjustments | $ (9) |
Intangible Assets - Components
Intangible Assets - Components of Intangible Assets (Detail) - USD ($) $ in Millions | Jun. 30, 2015 | Sep. 30, 2014 |
Finite And Indefinite Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | $ 7,653 | $ 1,308 |
Accumulated Amortization | 756 | 594 |
Unamortized intangible assets, Total | 228 | 46 |
Acquired In-Process Research and Development [Member] | ||
Finite And Indefinite Lived Intangible Assets [Line Items] | ||
Unamortized intangible assets, Total | 226 | 44 |
Trademarks [Member] | ||
Finite And Indefinite Lived Intangible Assets [Line Items] | ||
Unamortized intangible assets, Total | 2 | 2 |
Customer Relationships [Member] | ||
Finite And Indefinite Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 3,375 | 10 |
Accumulated Amortization | 62 | 2 |
Developed Technology [Member] | ||
Finite And Indefinite Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 3,412 | 893 |
Accumulated Amortization | 449 | 379 |
Product Rights [Member] | ||
Finite And Indefinite Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 130 | 148 |
Accumulated Amortization | 34 | 31 |
Trademarks [Member] | ||
Finite And Indefinite Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 405 | 27 |
Accumulated Amortization | 22 | 19 |
Patents and Other [Member] | ||
Finite And Indefinite Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 331 | 232 |
Accumulated Amortization | $ 189 | $ 163 |
Intangible Assets - Additional
Intangible Assets - Additional Information (Detail) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | Mar. 31, 2015 | Dec. 31, 2014 | |
Goodwill And Intangible Assets [Line Items] | ||||||
Intangible amortization expense | $ 151 | $ 21 | $ 192 | $ 63 | ||
GenCell Biosystems [Member] | ||||||
Goodwill And Intangible Assets [Line Items] | ||||||
Acquired in-process research and development assets | $ 81 | |||||
CRISI Medical Systems Inc [Member] | ||||||
Goodwill And Intangible Assets [Line Items] | ||||||
Increase to developed technology assets | $ 49 |
Intangible Assets - Reconciliat
Intangible Assets - Reconciliation of Goodwill by Business Segment (Detail) $ in Millions | 9 Months Ended |
Jun. 30, 2015USD ($) | |
Goodwill [Roll Forward] | |
Goodwill, beginning balance | $ 1,090 |
Acquisitions | 6,649 |
Currency translation/other | (275) |
Goodwill, ending balance | 7,464 |
Medical [Member] | |
Goodwill [Roll Forward] | |
Goodwill, beginning balance | 482 |
Acquisitions | 6,585 |
Currency translation/other | (263) |
Goodwill, ending balance | 6,804 |
Life Sciences [Member] | |
Goodwill [Roll Forward] | |
Goodwill, beginning balance | 608 |
Acquisitions | 64 |
Currency translation/other | (12) |
Goodwill, ending balance | $ 659 |
Intangible Assets - Reconcili56
Intangible Assets - Reconciliation of Goodwill by Business Segment (Parenthetical) (Detail) $ in Millions | 3 Months Ended |
Mar. 31, 2015USD ($) | |
Goodwill [Roll Forward] | |
Goodwill acquisition | $ 22 |
Derivative Instruments and He57
Derivative Instruments and Hedging Activities - Additional Information (Detail) lb in Millions | 1 Months Ended | 3 Months Ended | 9 Months Ended | ||||
Apr. 30, 2015 | Jun. 30, 2015USD ($) | Jun. 30, 2014USD ($) | Jun. 30, 2015USD ($)lb | Jun. 30, 2014USD ($) | Dec. 14, 2014USD ($) | Sep. 30, 2014USD ($) | |
Derivative Instruments and Hedging Activities Disclosures [Line Items] | |||||||
Reclassification of terminated interest rate swaps to interest expense within the next 12 months | $ 6,000,000 | $ 6,000,000 | |||||
Cash Flow Hedges [Member] | |||||||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | |||||||
After-tax loss recognized in other comprehensive income (loss) | 12,000,000 | ||||||
Fixed to Floating Interest Rate Swaps Agreements [Member] | |||||||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | |||||||
Notional amount | $ 375,000,000 | $ 375,000,000 | $ 375,000,000 | ||||
Debt Instrument, Interest Rate | 3.125% | 3.125% | |||||
Interest rate swap agreement conversion description | The outstanding swaps represent fixed-to-floating interest rate swap agreements the Company entered into, in March and September 2014, to convert the interest payments on $375 million of the Company's 3.125% notes, due November 8, 2021, from the fixed rate to a floating interest rate based on LIBOR. | ||||||
Debt Instrument, Maturity Date | Nov. 8, 2021 | ||||||
(Loss) gain recorded on fair value hedges | $ (7,000,000) | $ 9,000,000 | |||||
Offsetting (gain) loss recorded on underlying debt | (7,000,000) | 9,000,000 | |||||
Commodity Forward Contracts [Member] | |||||||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | |||||||
Notional amount | 31,000,000 | $ 31,000,000 | 0 | ||||
Percentage of resin spend covered by hedge program | 13.00% | ||||||
Total notional volume | lb | 61 | ||||||
Commodity Forward Contracts [Member] | Cash Flow Hedges [Member] | |||||||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | |||||||
After-tax loss recognized in other comprehensive income (loss) | 4,000,000 | $ 4,000,000 | |||||
Forward Exchange Contracts [Member] | |||||||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | |||||||
Notional amount | 1,500,000,000 | 1,500,000,000 | 1,800,000,000 | ||||
Interest Rate Swaps [Member] | CareFusion [Member] | |||||||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | |||||||
Notional amount | $ 2,300,000,000 | ||||||
Interest Rate Swaps [Member] | Cash Flow Hedges [Member] | |||||||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | |||||||
Notional amount | $ 0 | 0 | $ 0 | ||||
Interest Rate Swaps [Member] | Cash Flow Hedges [Member] | CareFusion [Member] | |||||||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | |||||||
After-tax loss recognized in other comprehensive income (loss) | $ 0 | $ 8,000,000 | $ 0 |
Derivative Instruments and He58
Derivative Instruments and Hedging Activities - Effects on Consolidated Balance Sheets (Detail) - USD ($) $ in Millions | Jun. 30, 2015 | Sep. 30, 2014 |
Derivatives, Fair Value [Line Items] | ||
Asset derivatives | $ 17 | $ 23 |
Liability derivatives | 19 | 14 |
Derivatives Designated as Hedging Instruments [Member] | Interest Rate Swaps [Member] | ||
Derivatives, Fair Value [Line Items] | ||
Asset derivatives | 9 | 3 |
Derivatives Designated as Hedging Instruments [Member] | Commodity Forward Contracts [Member] | ||
Derivatives, Fair Value [Line Items] | ||
Liability derivatives | 6 | |
Derivatives Not Designated as Hedging Instruments [Member] | Forward Exchange Contracts [Member] | ||
Derivatives, Fair Value [Line Items] | ||
Asset derivatives | 8 | 20 |
Liability derivatives | $ 13 | $ 14 |
Derivative Instruments and He59
Derivative Instruments and Hedging Activities - Undesignated Hedges (Detail) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
Derivatives Not Designated as Hedging Instruments [Member] | Forward Exchange Contracts [Member] | Other Income (Expense), Net [Member] | ||||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||||
Amount of Gain (Loss) Recognized in Income on Derivatives | $ 50 | $ (10) | $ (46) | $ (5) |
Financial Instruments and Fai60
Financial Instruments and Fair Value Measurements - Fair Values of Financial Instruments (Detail) - USD ($) $ in Millions | Jun. 30, 2015 | Sep. 30, 2014 |
Assets | ||
Institutional money market investments | $ 217 | $ 1,040 |
Interest rate swaps | 9 | 3 |
Forward exchange contracts | 8 | 20 |
Total Assets | 234 | 1,063 |
Liabilities | ||
Forward exchange contracts | 13 | 14 |
Commodity forward contracts | 6 | |
Contingent consideration liabilities | 50 | 14 |
Total Liabilities | 69 | 29 |
Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | ||
Assets | ||
Institutional money market investments | 217 | 1,040 |
Total Assets | 217 | 1,040 |
Significant Other Observable Inputs (Level 2) [Member] | ||
Assets | ||
Interest rate swaps | 9 | 3 |
Forward exchange contracts | 8 | 20 |
Total Assets | 17 | 23 |
Liabilities | ||
Forward exchange contracts | 13 | 14 |
Commodity forward contracts | 6 | |
Total Liabilities | 19 | 14 |
Significant Unobservable Inputs (Level 3) [Member] | ||
Liabilities | ||
Contingent consideration liabilities | 50 | 14 |
Total Liabilities | $ 50 | $ 14 |
Financial Instruments and Fai61
Financial Instruments and Fair Value Measurements - Additional Information (Detail) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | Sep. 30, 2014 | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||
Remaining cash equivalents | $ 1,342,000,000 | $ 1,342,000,000 | $ 821,000,000 | ||
Maturity period of cash equivalents at the time of purchase | |||||
Fair value of long-term debt | 11,509,000,000 | $ 11,509,000,000 | $ 4,100,000,000 | ||
Transfer of assets in and out of level 1, 2 and 3 measurements during the period | 0 | $ 0 | 0 | $ 0 | |
Transfer of liabilities in and out of level 1, 2 and 3 measurements during the period | 0 | $ 0 | 0 | $ 0 | |
Floating Rate Notes due June 15, 2016 [Member] | |||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||
Fair value of debt | 750,000,000 | 750,000,000 | |||
Fair value of debt reclassified from long term to short term | 749,000,000 | $ 749,000,000 | |||
Debt Instrument, Maturity Date | Jun. 15, 2016 | ||||
GenCell Biosystems [Member] | |||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||
Contingent consideration liability recognized in connection with acquisition | $ 36,000,000 | $ 36,000,000 | |||
Minimum [Member] | |||||
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 [Member] | |||||
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 |
Debt - Additional Information (
Debt - Additional Information (Detail) - USD ($) | 1 Months Ended | 9 Months Ended | ||||
Jul. 31, 2015 | Apr. 30, 2015 | Jun. 30, 2015 | Mar. 17, 2015 | Dec. 31, 2014 | Oct. 05, 2014 | |
Commercial Paper Program [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Maximum borrowing capacity | $ 1,000,000,000 | |||||
Short term borrowings | 700,000,000 | |||||
Commercial Paper Program [Member] | CareFusion [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Commercial paper proceeds used to finance acquisition | 500,000,000 | |||||
Former Commercial Paper Program [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Short term borrowings | 0 | $ 200,000,000 | ||||
Term Loan Facility [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Maximum borrowing capacity | $ 1,000,000,000 | |||||
Short term debt description | Also in December 2014, the Company entered into a 364-day term loan agreement that provides for a $1 billion term loan facility, the proceeds under which could only be used to pay the cash consideration due pursuant to the CareFusion acquisition agreement, as well as to pay financing fees, other related fees and other expenses associated with the CareFusion acquisition. | |||||
Principal payment | $ 650,000,000 | |||||
Short term borrowings | $ 350,000,000 | |||||
Term Loan Facility [Member] | Subsequent Event [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Principal payment | $ 250,000,000 | |||||
Bridge Loan [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Bridge loan financing,to fund cash portion of payment to acquire business | 0 | $ 9,100,000,000 | ||||
Senior Unsecured Notes [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Debt instrument, face value | 6,200,000,000 | |||||
Senior Unsecured Notes [Member] | CareFusion [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Debt instrument, face value | 2,000,000,000 | |||||
Acquired long term debt, fair value | $ 2,174,000,000 | |||||
Aggregate principal amount of notes outstanding | $ 51,000,000 |
Debt - Schedule of Senior Unsec
Debt - Schedule of Senior Unsecured Note Issued (Detail) - USD ($) | Jun. 30, 2015 | Sep. 30, 2014 |
Debt Instrument [Line Items] | ||
Aggregate Principal Amount | $ 11,367,000,000 | $ 3,768,000,000 |
CareFusion [Member] | ||
Debt Instrument [Line Items] | ||
Aggregate Principal Amount | 6,200,000,000 | |
CareFusion Corporation Debt Exchange [Member] | ||
Debt Instrument [Line Items] | ||
Aggregate Principal Amount | 1,949,000,000 | |
Floating Rate Notes due June 15, 2016 [Member] | CareFusion [Member] | ||
Debt Instrument [Line Items] | ||
Aggregate Principal Amount | 750,000,000 | |
1.800% Notes due December 15, 2017 [Member] | CareFusion [Member] | ||
Debt Instrument [Line Items] | ||
Aggregate Principal Amount | 1,250,000,000 | |
2.675% Notes due December 15, 2019 [Member] | CareFusion [Member] | ||
Debt Instrument [Line Items] | ||
Aggregate Principal Amount | 1,250,000,000 | |
3.734% Notes due December 15, 2024 [Member] | CareFusion [Member] | ||
Debt Instrument [Line Items] | ||
Aggregate Principal Amount | 1,750,000,000 | |
4.685% Notes due December 15, 2044 [Member] | CareFusion [Member] | ||
Debt Instrument [Line Items] | ||
Aggregate Principal Amount | 1,200,000,000 | |
1.450% Senior Notes due May 15, 2017 [Member] | CareFusion Corporation Debt Exchange [Member] | ||
Debt Instrument [Line Items] | ||
Aggregate Principal Amount | $ 293,000,000 | |
Percentage of Total Outstanding Principal Amount of such Series of Existing Notes | 97.64% | |
6.375% Senior Notes due August 1, 2019 [Member] | CareFusion Corporation Debt Exchange [Member] | ||
Debt Instrument [Line Items] | ||
Aggregate Principal Amount | $ 665,000,000 | |
Percentage of Total Outstanding Principal Amount of such Series of Existing Notes | 95.00% | |
3.300% Senior Notes due March 1, 2023 [Member] | CareFusion Corporation Debt Exchange [Member] | ||
Debt Instrument [Line Items] | ||
Aggregate Principal Amount | $ 294,000,000 | |
Percentage of Total Outstanding Principal Amount of such Series of Existing Notes | 97.95% | |
3.875% Senior Notes due May 15, 2024 [Member] | CareFusion Corporation Debt Exchange [Member] | ||
Debt Instrument [Line Items] | ||
Aggregate Principal Amount | $ 397,000,000 | |
Percentage of Total Outstanding Principal Amount of such Series of Existing Notes | 99.37% | |
4.875% Senior Notes due May 15, 2044 [Member] | CareFusion Corporation Debt Exchange [Member] | ||
Debt Instrument [Line Items] | ||
Aggregate Principal Amount | $ 300,000,000 | |
Percentage of Total Outstanding Principal Amount of such Series of Existing Notes | 99.96% |
Debt - Schedule of Senior Uns64
Debt - Schedule of Senior Unsecured Note Issued (Parenthetical) (Detail) - Jun. 30, 2015 | Total |
Floating Rate Notes due June 15, 2016 [Member] | |
Debt Instrument [Line Items] | |
Debt Instrument, Maturity Date | Jun. 15, 2016 |
1.800% Notes due December 15, 2017 [Member] | |
Debt Instrument [Line Items] | |
Debt Instrument, Interest Rate | 1.80% |
Debt Instrument, Maturity Date | Dec. 15, 2017 |
2.675% Notes due December 15, 2019 [Member] | |
Debt Instrument [Line Items] | |
Debt Instrument, Interest Rate | 2.675% |
Debt Instrument, Maturity Date | Dec. 15, 2019 |
3.734% Notes due December 15, 2024 [Member] | |
Debt Instrument [Line Items] | |
Debt Instrument, Interest Rate | 3.734% |
Debt Instrument, Maturity Date | Dec. 15, 2024 |
4.685% Notes due December 15, 2044 [Member] | |
Debt Instrument [Line Items] | |
Debt Instrument, Interest Rate | 4.685% |
Debt Instrument, Maturity Date | Dec. 15, 2044 |
1.450% Senior Notes due May 15, 2017 [Member] | |
Debt Instrument [Line Items] | |
Debt Instrument, Interest Rate | 1.45% |
Debt Instrument, Maturity Date | May 15, 2017 |
6.375% Senior Notes due August 1, 2019 [Member] | |
Debt Instrument [Line Items] | |
Debt Instrument, Interest Rate | 6.375% |
Debt Instrument, Maturity Date | Aug. 1, 2019 |
3.300% Senior Notes due March 1, 2023 [Member] | |
Debt Instrument [Line Items] | |
Debt Instrument, Interest Rate | 3.30% |
Debt Instrument, Maturity Date | Mar. 1, 2023 |
3.875% Senior Notes due May 15, 2024 [Member] | |
Debt Instrument [Line Items] | |
Debt Instrument, Interest Rate | 3.875% |
Debt Instrument, Maturity Date | May 15, 2024 |
4.875% Senior Notes due May 15, 2044 [Member] | |
Debt Instrument [Line Items] | |
Debt Instrument, Interest Rate | 4.875% |
Debt Instrument, Maturity Date | May 15, 2044 |
Financing Receivables - Additio
Financing Receivables - Additional Information (Detail) $ in Millions | Jun. 30, 2015USD ($) |
CareFusion [Member] | |
Business Acquisition [Line Items] | |
Net investment in sales-type leases | $ 1,208 |