Bard Announces Second Quarter Results

MURRAY HILL, N.J.--(BUSINESS WIRE)--

C. R. Bard, Inc. BCR today reported 2016 second quarter financial results. Second quarter 2016 net sales were $931.5 million, an increase of 8 percent over the prior-year period on an as-reported basis. Excluding the impact of foreign exchange, second quarter 2016 net sales increased 9 percent over the prior-year period.

For the second quarter 2016, net sales in the U.S. were $633.1 million, an increase of 7 percent over the prior-year period. Net sales outside the U.S. were $298.4 million, an increase of 11 percent from the prior-year period on an as-reported basis. Excluding the impact of foreign exchange, second quarter 2016 net sales outside the U.S. increased 14 percent over the prior-year period.

For the second quarter 2016, net income was $159.2 million and diluted earnings per share were $2.11. Adjusting for amortization of intangibles and certain items that affect the comparability of results between periods, as detailed in the tables below, second quarter 2016 net income was $192.2 million and diluted earnings per share were $2.54, an increase of 11 percent and 12 percent, respectively, as compared to second quarter 2015 results.

Timothy M. Ring, chairman and chief executive officer, commented, "We continue to see strong results as we prioritize product leadership across the globe. Our commitment to innovation and product differentiation, along with a focus on delivering economic benefits to the healthcare system, have driven global demand for our products, and our targeted investments in emerging markets continue to expand our presence internationally. We believe this investment approach positions us well to continue to provide attractive returns to our shareholders."

In conjunction with the second quarter results, the company is also increasing 2016 financial guidance. For the full year 2016, net sales are forecasted to increase between 7 percent and 8 percent on an as-reported basis. Excluding the impact of foreign exchange, full year 2016 net sales are forecasted to increase between 8 percent and 9 percent over 2015. Full year 2016 diluted earnings per share, after adjusting for amortization of intangibles and certain items that affect comparability between periods are projected to be between $10.10 and $10.20, representing growth between 11 percent and 12 percent compared to full year 2015 results.

C. R. Bard, Inc. (www.crbard.com), headquartered in Murray Hill, NJ, is a leading multinational developer, manufacturer and marketer of innovative, life-enhancing medical technologies in the fields of vascular, urology, oncology and surgical specialty products.

This press release contains financial measures that are not calculated in accordance with United States generally accepted accounting principles (GAAP). These non-GAAP measures are reconciled to their most directly comparable GAAP measures in the tables below and related notes.

Non-GAAP measures included in our guidance were not reconciled to the appropriate GAAP financial measures because the GAAP measures are not accessible on a forward-looking basis. Items that impact our non-GAAP financial measures may include acquisition-related items, asset impairments, litigation charges, restructuring and productivity initiative costs, tax items and amortization of certain intangible assets, such as in connection with future acquisitions. These items cannot all be reasonably predicted and may directly impact our non-GAAP net income and our non-GAAP diluted earnings per share, although changes with respect to certain of these items may offset other changes. In addition, certain of these items are dependent on various factors. Accordingly, a reconciliation of the non-GAAP financial measure guidance to the corresponding GAAP measures is not available without unreasonable effort.

This press release may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, which are based on management's current expectations, the accuracy of which is necessarily subject to risks and uncertainties. These statements are not historical in nature and use words such as "anticipate", "estimate", "expect", "project", "intend", "forecast", "plan", "believe", and other words of similar meaning in connection with any discussion of future operating or financial performance. Many factors may cause actual results to differ materially from anticipated results including product developments, sales efforts, income tax matters, the outcomes of contingencies such as legal proceedings, and other economic, business, competitive and regulatory factors. The company undertakes no obligation to update its forward-looking statements. Please refer to the Cautionary Statement Regarding Forward-Looking Information in our March 31, 2016 Form 10-Q for more detailed information about these and other factors that may cause actual results to differ materially from those expressed or implied.


C. R. Bard, Inc.
Consolidated Statements of Operations
(dollars and shares in thousands except per share amounts, unaudited)

								Quarter Ended						Six Months Ended
								June 30,						June 30,
									2016			2015			2016			2015

Net sales								$	931,500		$	859,800		$	1,805,000		$	1,679,500
Costs and expenses
Cost of goods sold									351,000			333,700			671,400			644,900
Marketing, selling and administrative expense									278,500			250,000			549,100			485,700
Research and development expense									71,300			64,000			139,600			124,600
Interest expense									13,400			11,200			24,700			22,500
Other (income) expense, net									9,600			141,700			69,600			158,000

Total costs and expenses									723,800			800,600			1,454,400			1,435,700
Income from operations before income taxes									207,700			59,200			350,600			243,800

Income tax provision									48,500			113,900			75,200			158,700

Net income (loss)								$	159,200		$	(54,700	)	$	275,400		$	85,100

Basic earnings (loss) per share available to common shareholders								$	2.14		$	(0.74	)	$	3.70		$	1.13

Diluted earnings (loss) per share available to common shareholders								$	2.11		$	(0.74	)	$	3.64		$	1.11

Wt. avg. common shares outstanding - basic									74,000			74,200			74,000			74,300

Wt. avg. common and common equivalent shares outstanding - diluted									75,200			74,200			75,200			75,700


Product Group Summary of Net Sales
(dollars in thousands, unaudited)


	Quarter Ended June 30,										Six Months Ended June 30,
								Constant												Constant
	2016			2015		Change		Currency				2016			2015		Change			Currency
Vascular	$	255,300	$	248,600		3	%		3	%	$	494,800		$	480,500			3	%	4	%
Urology		240,000		209,200		15	%		16	%		456,700			414,800			10	%	11	%
Oncology		252,400		235,200		7	%		8	%		494,300			459,800			8	%	9	%
Surgical Specialties		159,900		143,800		11	%		12	%		311,300			279,700			11	%	12	%
Other		23,900		23,000		4	%		5	%		47,900			44,700			7	%	9	%

Net sales	$	931,500	$	859,800		8	%				$	1,805,000		$	1,679,500			7	%

Foreign exchange impact				(5,300	)										(19,600	)
Constant Currency	$	931,500	$	854,500					9	%	$	1,805,000		$	1,659,900					9	%


Non-GAAP Reconciliation of Earnings (Loss)
(dollars in millions except per share amounts, unaudited)


	Quarter Ended June 30, 2016
																			Diluted
																			Earnings
				Marketing,															per Share
	Cost of			Selling and			Research &			Other									Available
	Goods			Administrative			Development			(Income)			Income			Net			to Common
	Sold			Expense			Expense			Expense, Net			Taxes			Income			Shareholders⁽¹⁾

GAAP Basis	$	351.0		$	278.5		$	71.3		$	9.6		$	48.5		$	159.2		$	2.11
Amortization of intangible assets		(32.8	)		-			-			-			11.1			21.7
Items that affect comparability of
results between periods:
Acquisition-related items		(1.7	)		(2.0	)		(0.4	)		0.2			1.6			2.3
Asset impairment		(1.2	)		-			-			-			-			1.2
Restructuring and productivity initiative costs		-			-			-			(11.9	)		4.1			7.8
Total		(35.7	)		(2.0	)		(0.4	)		(11.7	)		16.8			33.0			0.44

Adjusted Basis	$	315.3		$	276.5		$	70.9		$	(2.1	)	$	65.3		$	192.2		$	2.54


	Quarter Ended June 30, 2015
																			Diluted (Loss)
																			Earnings
				Marketing,															per Share
	Cost of			Selling and			Research &			Other									Available
	Goods			Administrative			Development			(Income)			Income			Net (Loss)			to Common
	Sold			Expense			Expense			Expense, Net			Taxes			Income			Shareholders⁽²⁾

GAAP Basis	$	333.7		$	250.0		$	64.0		$	141.7		$	113.9		$	(54.7	)	$	(0.74	)
Amortization of intangible assets		(29.3	)		-			-			-			9.9			19.4
Items that affect comparability of
results between periods:
Acquisition-related items		(2.0	)		(1.0	)		(1.5	)		-			0.5			4.0
Litigation charges, net		-			-			-			(343.7	)		12.5			331.2
Gore proceeds		-			-			-			210.5			(78.8	)		(131.7	)
Restructuring and productivity initiative costs		-			-			-			(8.5	)		3.0			5.5
Total		(31.3	)		(1.0	)		(1.5	)		(141.7	)		(52.9	)		228.4			2.98

Adjusted Basis	$	302.4		$	249.0		$	62.5		$	-		$	61.0		$	173.7		$	2.27


	Six Months Ended June 30, 2016
																			Diluted
																			Earnings
				Marketing,															per Share
	Cost of			Selling and			Research &			Other									Available
	Goods			Administrative			Development			(Income)			Income			Net			to Common
	Sold			Expense			Expense			Expense, Net			Taxes			Income			Shareholders

GAAP Basis	$	671.4		$	549.1		$	139.6		$	69.6		$	75.2		$	275.4		$	3.64
Amortization of intangible assets		(65.2	)		-			-			-			22.1			43.1
Items that affect comparability of
results between periods:
Acquisition-related items		2.6			(6.1	)		(1.9	)		(3.0	)		4.1			4.3
Asset impairment		(1.2	)		-			-			-			-			1.2
Litigation charges		-			-			-			(48.9	)		18.1			30.8
Restructuring and productivity initiative costs		-			-			-			(21.7	)		7.3			14.4
Total		(63.8	)		(6.1	)		(1.9	)		(73.6	)		51.6			93.8			1.24

Adjusted Basis	$	607.6		$	543.0		$	137.7		$	(4.0	)	$	126.8		$	369.2		$	4.88


	Six Months Ended June 30, 2015
																			Diluted
																			Earnings
				Marketing,															per Share
	Cost of			Selling and			Research &			Other									Available
	Goods			Administrative			Development			(Income)			Income			Net			to Common
	Sold			Expense			Expense			Expense, Net			Taxes			Income			Shareholders⁽¹⁾

GAAP Basis	$	644.9		$	485.7		$	124.6		$	158.0		$	158.7		$	85.1		$	1.11
Amortization of intangible assets		(58.2	)		-			-			-			19.6			38.6
Items that affect comparability of
results between periods:
Acquisition-related items		7.9			(1.2	)		(1.5	)		(0.5	)		0.7			(5.4	)
Litigation charges, net		-			-			-			(354.0	)		13.4			340.6
Gore proceeds		-			-			-			210.5			(78.8	)		(131.7	)
Restructuring and productivity initiative costs		-			-			-			(12.4	)		4.3			8.1
Total		(50.3	)		(1.2	)		(1.5	)		(156.4	)		(40.8	)		250.2			3.26

Adjusted Basis	$	594.6		$	484.5		$	123.1		$	1.6		$	117.9		$	335.3		$	4.36

(1) Total per share amounts do not add due to rounding.

(2) For the quarter ended June 30, 2015, diluted loss per share on a GAAP basis does not include common share equivalents of approximately 1.3 million. Common share equivalents primarily from share-based compensation plans were not included in this period because their effect would have been antidilutive. As a result, total per share amounts do not add.

Notes to Non-GAAP Reconciliation of Earnings (Loss)

For the second quarter 2016, amortization of intangible assets was $32.8 million pre-tax and the following items affected the comparability of results between periods: (i) net charges of $3.9 million pre-tax from acquisition-related items including transaction costs, purchase accounting adjustments and integration costs; (ii) a charge of $1.2 million pre-tax related to an asset impairment; and (iii) charges of $11.9 million pre-tax for restructuring and productivity initiatives. The net effect of these items decreased net income by $33.0 million, or $0.44 diluted earnings per share available to common shareholders.
For the second quarter 2015, amortization of intangible assets was $29.3 million pre-tax and the following items affected the comparability of results between periods: (i) charges of $4.5 million pre-tax for acquisition-related items including transaction costs, purchase accounting adjustments and integration costs; (ii) charges of $343.7 million pre-tax related to estimated costs for product liability matters, net of recoveries, which includes $6.8 million of litigation-related defense costs in connection with the District Court's pre-trial orders that the company prepare 500 individual cases for trial (the "WHP Pre-Trial Orders"); (iii) a gain of $210.5 million pre-tax related to a patent infringement litigation against W.L. Gore & Associates, Inc. ("Gore"); and (iv) charges of $8.5 million pre-tax for restructuring and productivity initiatives. The net effect of these items increased net loss by $228.4 million, or $2.98 diluted loss per share available to common shareholders.
For the six months ended June 30, 2016, amortization of intangible assets was $65.2 million pre-tax and the following items affected the comparability of results between periods: (i) net charges of $8.4 million pre-tax from acquisition-related items including transaction costs, purchase accounting adjustments and integration costs; (ii) a charge of $1.2 million pre-tax related to an asset impairment; (iii) a charge of $48.9 million pre-tax related to estimated cost for product liability matters; and (iv) charges of $21.7 million pre-tax for restructuring and productivity initiatives. The net effect of these items decreased net income by $93.8 million, or $1.24 diluted earnings per share available to common shareholders.
For the six months ended June 30, 2015, amortization of intangible assets was $58.2 million pre-tax and the following items affected the comparability of results between periods: (i) a net benefit of $4.7 million pre-tax for acquisition-related items including transaction costs, purchase accounting adjustments and integration costs; (ii) charges of $354.0 million pre-tax related to estimated costs for product liability matters, net of recoveries, which includes $15.1 million of litigation-related defense costs in connection with the WHP Pre-Trial Orders and other litigation-related charges; (iii) a gain of $210.5 million pre-tax related to a patent infringement litigation against Gore; and (iv) charges of $12.4 million pre-tax for restructuring and productivity initiatives. The net effect of these items decreased net income by $250.2 million, or $3.26 diluted earnings per share available to common shareholders.

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This press release includes net sales excluding the impact of foreign exchange. The company analyzes net sales on a constant currency basis to better measure the comparability of results between periods. Because changes in foreign currency exchange rates have a non-operating impact on net sales, the company believes that evaluating growth in net sales on a constant currency basis provides an additional and meaningful assessment of net sales to both management and the company's investors.

In addition, this press release includes the following non-GAAP measures: (1) cost of goods sold excluding the amortization of intangible assets, the impact of acquisition-related items and an asset impairment; (2) marketing, selling and administrative expense excluding the impact of acquisition-related items; (3) research and development expense excluding the impact of acquisition-related items; (4) other (income) expense, net, excluding acquisition-related items, litigation charges (which includes litigation-related defense costs in connection with the WHP Pre-Trial Orders) and other litigation-related matters, Gore proceeds, and restructuring and productivity initiative costs; (5) income tax provision excluding the tax effect of the items set forth in (1) through (4) above; and (6) net income excluding the items set forth in (1) through (5) above.

The company excluded the items described above because they may cause certain statements of operations categories not to be indicative of ongoing operating results, and therefore affect the comparability of results between periods. The company therefore believes that these non-GAAP measures provide an additional and meaningful assessment of the company's ongoing operating performance. Because the company has historically reported non-GAAP results to the investment community, management also believes that the inclusion of these non-GAAP measures provides consistency in its financial reporting and facilitates investors' understanding of the company's historic operating trends by providing an additional basis for comparisons to prior periods. Management uses these non-GAAP measures: (1) to establish financial and operational goals; (2) to monitor the company's actual performance in relation to its business plan and operating budgets; (3) to evaluate the company's core operating performance and understand key trends within the business; and (4) as part of several components it considers in determining incentive compensation.

Management recognizes that the use of these non-GAAP measures has limitations, including the fact that they may not be comparable with similar non-GAAP measures used by other companies and that management must exercise judgment in determining which types of charges or other items should be excluded from the non-GAAP information. Management compensates for these limitations by providing full disclosure of each non-GAAP measure and a reconciliation to the most directly comparable GAAP measure. All non-GAAP measures are intended to supplement the applicable GAAP disclosures and should not be considered in isolation from, or as a replacement for, financial information prepared in accordance with GAAP. For a reconciliation of these non-GAAP measures to the most comparable GAAP measures, please see the above tables.


Notes to Non-GAAP Reconciliation of Earnings (Loss) per Share
(dollars and shares in thousands, except per share amounts, unaudited)


	Quarter Ended					Six Months Ended
	June 30,					June 30,
		2016		2015		2016		2015
Earnings (loss) per Share Numerator: GAAP Basis - basic and diluted
Net income (loss)	$	159,200	$	(54,700	)	$	275,400	$	85,100
Less: Income allocated to participating securities⁽¹⁾		800		-			1,400		1,200
Net income (loss) available to common shareholders	$	158,400	$	(54,700	)	$	274,000	$	83,900

Earnings per Share Numerator: Adjusted Earnings
Net income	$	192,200	$	173,700		$	369,200	$	335,300
Less: Income allocated to participating securities⁽¹⁾		1,000		2,600			1,900		5,000
Net income available to common shareholders	$	191,200	$	171,100		$	367,300	$	330,300

Earnings per Share Denominator:
Wt. avg. common shares outstanding - basic		74,000		74,200			74,000		74,300
Wt avg. common and common equivalent shares outstanding⁽²⁾: GAAP Basis - diluted		75,200		74,200			75,200		75,700
Wt. avg. common and common equivalent shares outstanding: Adjusted Basis - diluted		75,200		75,500			75,200		75,700

Earnings (loss) per Share: GAAP Basis
Basic earnings (loss) per share available to common shareholders	$	2.14	$	(0.74	)	$	3.70	$	1.13
Diluted earnings (loss) per share available to common shareholders	$	2.11	$	(0.74	)	$	3.64	$	1.11

Earnings per Share: Adjusted Earnings
Diluted earnings per share available to common shareholders	$	2.54	$	2.27		$	4.88	$	4.36

(1) Basic and diluted earnings per share available to common shareholders is calculated using a numerator, which represents the total of income less income allocated to participating securities.

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C. R. Bard, Inc.
Investor Relations:
Todd W. Garner, 908-277-8065
Vice President, Investor Relations
or
Media Relations:
Scott T. Lowry, 908-277-8365
Vice President and Treasurer

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