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MarketScreener Homepage  >  Equities  >  Nyse  >  Becton, Dickinson and Company    BDX

BECTON, DICKINSON AND COMPANY

(BDX)
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Becton Dickinson and : & CO Management's Discussion and Analysis of Financial Condition and Results of Operations (form 10-Q)

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05/07/2020 | 01:27pm EDT
The following commentary should be read in conjunction with the condensed
consolidated financial statements and accompanying notes presented in this
report. Within the tables presented throughout this discussion, certain columns
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.
Company Overview
Becton, Dickinson and Company ("BD") is a global medical technology company
engaged in the development, manufacture and sale of a broad range of medical
supplies, devices, laboratory equipment and diagnostic products used by
healthcare institutions, physicians, life science researchers, clinical
laboratories, the pharmaceutical industry and the general public. The Company's
organizational structure is based upon three principal business segments, BD
Medical ("Medical"), BD Life Sciences ("Life Sciences") and BD Interventional
("Interventional").

BD's products are manufactured and sold worldwide. Our products are marketed in
the United States and internationally through independent distribution channels
and directly to end-users by BD and independent sales representatives. We
organize our operations outside the United States as follows: Europe; EMA (which
includes the Commonwealth of Independent States, the Middle East and Africa);
Greater Asia (which includes countries in East Asia, South Asia, Southeast Asia
and the Oceania region); Latin America (which includes Mexico, Central America,
the Caribbean, and South America); and Canada. We continue to pursue growth
opportunities in emerging markets, which include the following geographic
regions: Eastern Europe, the Middle East, Africa, Latin America and certain
countries within Greater Asia. We are primarily focused on certain countries
whose healthcare systems are expanding.
Recent Developments
A novel strain of coronavirus ("COVID-19") was officially declared a pandemic by
the World Health Organization ("WHO") in March 2020. In efforts to slow the
spread of COVID-19, governments around the world have issued travel restrictions
as well as recommendations or mandates to avoid large gatherings or to
self-quarantine.  Such measures have led to a sudden and significant decline in
economic activity within a number of countries worldwide.  The COVID-19 pandemic
has resulted in a decline in elective procedures which has unfavorably impacted
our results of operations for the three months ended March 31, 2020. While
certain of our organizational units realized positive benefits to revenues from
the pandemic for the second quarter, the estimated net impact on total
consolidated revenues was an unfavorable impact of $56 million.
We are deploying our capabilities, expertise and scale to address critical
health needs related to COVID-19. A molecular test for the detection of COVID-19
for clinical laboratories is currently available and we are also currently
developing a new point-of-care test that can detect antibodies in blood to
confirm current or past exposure to COVID-19.  We have been adhering to guidance
provided by the WHO, as well as by health officials in various countries
affected by the COVID-19 pandemic, to protect the health and safety of BD
employees while ensuring continued availability of BD's critical medical devices
and technologies at this unprecedented time. We have enacted business continuity
plans in order to minimize the risk of disruption to our operations and supply
chain, and to date, we have not experienced any significant disruption. We have
been working closely with governmental officials in an effort to keep our
manufacturing facilities (and those of our suppliers) open due to the essential
nature of our products.
We continue to generate operating cash flows that are sufficient to meet our
short-term liquidity needs.  We have taken steps, as a precautionary measure, to
preserve our financial flexibility in light of uncertainty in the global markets
resulting from the COVID-19 pandemic. Such measures included entering into a
$2.0 billion term loan agreement and increasing the commitments available under
our revolving credit facility by $381 million, as is further discussed in Note
14 in the Notes to Condensed Consolidated Financial Statements. We believe that
given our debt ratings and our capital allocation strategy, we would have access
to additional short-term and long-term capital should the need arise.  We have
not observed any impairments of our assets due to the COVID-19 pandemic and the
decline in global economic activity.
We have enacted certain cost containment measures to mitigate the unfavorable
impact of the COVID-19 pandemic to our future results of operations. Such
actions have included travel restrictions, temporary reductions in executive
compensation, a temporary suspension of matching contributions to certain
voluntary defined contribution and other benefit plans, as well as temporary
work reductions for certain manufacturing teams.
Our business is experiencing weakened demand for our products as a result of a
significant decline in medical procedures due to government restrictions and
healthcare priorities, particularly with respect to hernia and other elective
procedures. We are also seeing delays in instrument placements relating to our
medical management solutions, including Pyxis™, as well as decreased
non-COVID-19 diagnostic testing and specimen collections, which is being
partially offset by higher demand for COVID-19 testing.  There has also been a
decrease in research activity due to laboratory closures and reduced clinical
testing.

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Accordingly, our future operating performance, particularly in the short-term,
will be subject to volatility. The ultimate impact of the COVID-19 pandemic on
our business, results of operations, financial condition and cash flows is
dependent on future developments, which are uncertain at this time, including:
•      The timing and extent of recovery in the global demand for our products,
       particularly those sold by our Surgery and Peripheral Interventional units
       which are used in elective medical procedures;

• The pace at which hospitals resume patient care that is not related to the

       COVID-19 pandemic;


•      The progress of development for our point-of-care test, which was
       previously discussed above, and the degree to which COVID-19 testing
       solutions are made available and utilized by governments;


•      The timing of when research performed by research laboratories and
       institutions will resume to normal operations; and

• The degree of pressure that the weaker macroeconomic environment will put

on future healthcare utilization.



Further discussion regarding the impacts of the COVID-19 pandemic on our results
for the three months ended March 31, 2020 is provided below.
Overview of Financial Results and Financial Condition
For the three months ended March 31, 2020, worldwide revenues of $4.253 billion
increased 1.4% from the prior-year period which reflected volume growth of
approximately 2.3%, an unfavorable impact from foreign currency translation of
approximately 1.0% and a favorable impact from pricing of approximately 0.1%. We
estimate that the COVID-19 pandemic reduced volume growth in the second quarter
by approximately 1.4%. Volume growth in the second quarter of fiscal year 2020
reflected the following:
•      Medical segment revenues in the second quarter reflected strong growth in

the Pharmaceutical Systems. Revenues in the Diabetes Care unit benefited

from COVID-19 due to increased orders from retailers and distributors in

the United States. Medical segment revenues in the second quarter were

unfavorably impacted by declines in the Medication Management Solutions

and Medication Delivery Solutions units, as is further discussed below.

• Life Sciences segment revenues in the second quarter reflected growth in

       the Integrated Diagnostic Solutions unit that was partially offset by
       declines in the Biosciences unit due to the COVID-19 pandemic and an
       unfavorable comparison to the prior-year period due to the timing of
       licensing revenues.

• Interventional segment revenues in the second quarter reflected sales

growth in all units. Revenues in the Surgery and Peripheral Intervention

units were negatively impacted by the deferral of elective medical

procedures as a result of the COVID-19 pandemic.



Second quarter Medical segment revenues were unfavorably impacted by the
Medication Management Solutions unit's delay of shipments of AlarisTM infusion
pumps pending compliance with certain 510(k) filing requirements of the U.S.
Food and Drug Administration ("FDA"), as previously reported.  While we continue
to make progress on our regulatory filing related to the AlarisTM infusion
pumps, due to the COVID-19 pandemic and other factors, we no longer expect to
submit the 510(k) to the FDA in the fourth quarter of fiscal year 2020.
We continue to invest in research and development, geographic expansion, and new
product development programs to drive further revenue and profit growth. Our
ability to sustain our long-term growth will depend on a number of factors,
including our ability to expand our core business (including geographical
expansion), develop innovative new products, and continue to improve operating
efficiency and organizational effectiveness. While the economic environments for
the healthcare industry and healthcare utilization in the United States and
Europe have been generally stable, destabilization resulting from the COVID-19
pandemic or other factors has adversely impacted our businesses. Our businesses
will continue to be impacted by the COVID-19 pandemic throughout its duration
and while government measures implemented in response to the pandemic continue
to be in place. In emerging markets, the Company's growth is dependent primarily
on government funding for healthcare systems. In addition, pricing pressure
exists globally which could adversely impact our businesses.
Cash flows from operating activities were $1.196 billion in the first six months
of fiscal year 2020. At March 31, 2020, we had $2.445 billion in cash and
equivalents and short-term investments, including restricted cash. We continued
to return value to our shareholders in the form of dividends. During the first
six months of fiscal year 2020, we paid cash dividends of $505 million,
including $430 million paid to common shareholders and $76 million paid to
preferred shareholders.
Each reporting period, we face currency exposure that arises from translating
the results of our worldwide operations to the U.S. dollar at exchange rates
that fluctuate from the beginning of such period. A stronger U.S. dollar,
compared to the prior-year period, resulted in an unfavorable foreign currency
translation impact to our revenues during the second quarter of fiscal year
2020.  We evaluate our results of operations on both a reported and a foreign
currency-neutral basis, which excludes the impact of fluctuations in foreign
currency exchange rates. As exchange rates are an important factor in
understanding period-to-

                                       23
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period comparisons, we believe the presentation of results on a foreign
currency-neutral basis in addition to reported results helps improve investors'
ability to understand our operating results and evaluate our performance in
comparison to prior periods. Foreign currency-neutral ("FXN") information
compares results between periods as if exchange rates had remained constant
period-over-period. We use results on a foreign currency-neutral basis as one
measure to evaluate our performance. We calculate foreign currency-neutral
percentages by converting our current-period local currency financial results
using the prior-period foreign currency exchange rates and comparing these
adjusted amounts to our current-period results. These results should be
considered in addition to, not as a substitute for, results reported in
accordance with U.S. generally accepted accounting principles ("GAAP"). Results
on a foreign currency-neutral basis, as we present them, may not be comparable
to similarly titled measures used by other companies and are not measures of
performance presented in accordance with U.S. GAAP.
Results of Operations
Medical Segment
The following summarizes second quarter Medical revenues by organizational unit:
                                                  Three months ended March 31,
                                                                    Estimated
                                                           Total        FX
(Millions of dollars)                 2020       2019     Change      Impact      FXN Change
Medication Delivery Solutions (a)   $   904$   928    (2.5 )%     (1.2 )%       (1.3 )%
Medication Management Solutions (a)     568        617    (7.9 )%     (0.4 )%       (7.5 )%
Diabetes Care                           278        270     2.9  %     (1.3 )%        4.2  %
Pharmaceutical Systems                  400        366     9.4  %     (2.0 )%       11.4  %
Total Medical Revenues              $ 2,151$ 2,180    (1.4 )%     (1.1 )%       (0.3 )%

(a) The presentation of prior-period amounts reflects the reclassification of

$2 million associated with the movement, effective on October 1, 2019, of

certain products from the Medication Delivery Solutions unit to the

Medication Management Solutions unit.



Second quarter Medical segment revenues reflected strong growth in the
Pharmaceutical Systems and Diabetes Care units that was offset by declines in
the Medication Management Solutions and Medication Delivery Solutions units. As
anticipated, the Medication Management Solutions unit's revenues were
unfavorably impacted by the delay of shipments of AlarisTM infusion pumps, as
previously discussed above. Also as expected, the Medication Delivery Solutions
unit's second quarter revenues in China were unfavorably impacted by a new
volume-based procurement process which has been adopted by several of China's
provinces. The Medication Delivery Solutions unit's second quarter revenues also
reflected an unfavorable impact relating to the COVID-19 pandemic, most notably
in China, where healthcare utilization declined significantly. The Diabetes Care
unit realized a benefit to second quarter revenues from COVID-19 due to
increased orders from retailers and distributors in the United States.
Medical segment total revenues for the six-month period were as follows:
                                      Six months ended March 31,
                                                       Estimated
                                              Total        FX

(Millions of dollars) 2020 2019 Change Impact FXN Change Total Medical Revenues $ 4,241$ 4,316 (1.7 )% (1.1 )% (0.6 )%

Medical segment income for the three and six-month periods is provided below.

                                           Three months ended March 31,          Six months ended March 31,
(Millions of dollars)                         2020                2019             2020               2019
Medical segment income                  $        443$        599$      1,007$      1,265

Segment income as % of Medical revenues         20.6 %               27.5 %           23.8 %             29.3 %




                                       24
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The Medical segment's income in the second quarter was driven by its performance
with respect to gross profit margin and operating expenses as discussed in
greater detail below:
•      Gross profit margin was lower in the second quarter of 2020 as compared

with the second quarter of 2019 which primarily reflected a charge to

record a probable estimate of future costs associated with incremental

remediation efforts relating to AlarisTM infusion pumps, as further

discussed below. This unfavorable impact to the Medical segment's gross

margin was partially offset by lower manufacturing costs resulting from

continuous improvement projects which enhanced the efficiency of our

operations and favorable foreign currency translation.

• Selling and administrative expense as a percentage of revenues was

slightly lower in the second quarter of 2020 compared with the second

quarter of 2019 primarily due to lower expenses resulting from recently

enacted cost containment measures.

• Research and development expense as a percentage of revenues was higher in

       the second quarter of 2020 compared with the second quarter of 2019
       primarily due to the timing of project spending.

• The Medical segment's income in the second quarter of 2019 additionally

reflected the estimated cumulative costs of a product recall of $65

million recorded within Other operating expense, net. The recall related

to a product component, which generally pre-dated our acquisition of

CareFusion in fiscal year 2015, within the Medication Management Solutions

unit's infusion systems platform.



Life Sciences Segment
The following summarizes second quarter Life Sciences revenues by organizational
unit:
                                                    Three months ended March 31,
                                                                      Estimated
                                                             Total        FX
(Millions of dollars)                   2020       2019     Change      Impact      FXN Change
Integrated Diagnostic Solutions (a)
Preanalytical Systems                 $   400$   366     9.3  %     (1.5 )%       10.8  %
Diagnostic Systems                        434        389    11.5  %     (1.4 )%       12.9  %
Total Integrated Diagnostic Solutions     833        755    10.4  %     (1.5 )%       11.9  %
Biosciences                               280        297    (5.9 )%     (0.9 )%       (5.0 )%
Total Life Sciences Revenues          $ 1,113$ 1,052     5.8  %     (1.3 )%        7.1  %

(a) Effective October 1, 2019, the Preanalytical Systems and Diagnostic

Systems units were joined to create the new Integrated Diagnostic

Solutions unit. Additional disclosures regarding this change are provided

in Note 7 in the Notes to Condensed Consolidated Financial Statements.



The Life Sciences segment's revenues in the second quarter reflected strong
sales in the Integrated Diagnostic Solutions unit which were driven by a more
severe influenza season in the current year as compared with the prior year's
season. Second quarter revenues in the Biosciences unit primarily reflected a
decline in instrument installations and reagent sales as a result of the
COVID-19 pandemic, as well as an unfavorable comparison to the prior-year period
due to the timing of licensing revenues and tenders in emerging markets.
Life Sciences segment total revenues for the six-month period were as follows:
                                            Six months ended March 31,
                                                             Estimated
                                                    Total        FX

(Millions of dollars) 2020 2019 Change Impact FXN Change Total Life Sciences Revenues $ 2,236$ 2,108 6.1 % (1.2 )%

7.3 %

Life Sciences segment income for the three and six-month periods was as follows:

                                           Three months ended March 31,           Six months ended March 31,
(Millions of dollars)                         2020                2019              2020                2019
Life Sciences segment income            $        285$        293

$ 646$ 598


Segment income as % of Life Sciences
revenues                                        25.6 %               27.8 %           28.9 %               28.4 %



                                       25
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The Life Sciences segment's income in the second quarter was driven by its performance with respect to gross profit margin and operating expenses as discussed in greater detail below: • Gross margin in the second quarter of 2020 was lower compared with the

second quarter of 2019 which primarily reflected a $39 million charge to

write down the carrying value of certain intangible assets in the

Biosciences unit, as well as unfavorable product mix and increased

tariffs. These unfavorable impacts to the Life Sciences segment's gross

margin were partially offset by favorable impacts from pricing and lower

manufacturing costs resulting from continuous improvement projects which

       enhanced the efficiency of our operations.


•      Selling and administrative expense as a percentage of revenues in the
       second quarter of 2020 was lower compared with the prior-year period
       primarily due to expense synergies realized from the combination of the
       Preanalytical Systems and Diagnostic Systems units, as noted above, and

lower expenses resulting from recently enacted cost containment measures.

• Research and development expense as a percentage of revenues was lower in

the second quarter of 2020 compared with the second quarter of 2019

primarily due to the timing of project spending.



Interventional Segment
The following summarizes second quarter Interventional revenues by
organizational unit:
                                           Three months ended March 31,
                                                            Estimated
                                                   Total        FX
(Millions of dollars)           2020      2019    Change      Impact      FXN Change
Surgery (a)                   $   312$ 308      1.4 %     (0.3 )%         1.7 %
Peripheral Intervention (a)       399      387      3.1 %     (0.9 )%         4.0 %
Urology and Critical Care (a)     279      268      4.1 %     (0.1 )%         4.2 %
Total Interventional Revenues $   990$ 963      2.8 %     (0.5 )%       

3.3 %

(a) The presentation of prior-period amounts reflects the total

reclassifications of $45 million associated with the movement, effective

       on October 1, 2019, of certain products from the Surgery unit and the
       Urology and Critical Care unit to the Peripheral Intervention unit.


Second quarter revenues in the Interventional segment reflected strong sales of
products in the Peripheral Intervention and Urology and Critical Care units.
Revenue growth in the Peripheral Intervention unit was partially offset by lower
sales of our drug-coated balloon products as compared to the prior-year period
following the previously reported FDA'sMarch 2019 letter to healthcare
professionals regarding the use of paclitaxel-coated devices. The extent and
duration of the impact from the FDA letter on the Peripheral Intervention unit's
future revenues is difficult to predict. Second quarter revenues within the
Surgery and Peripheral Intervention units were negatively impacted by decreased
demand associated with the deferral of elective medical procedures as a result
of the COVID-19 pandemic.
Interventional segment total revenues for the six-month period were as follows:
                                             Six months ended March 31,
                                                              Estimated
                                                     Total        FX
(Millions of dollars)           2020       2019     Change      Impact      FXN Change
Total Interventional Revenues $ 2,002$ 1,932      3.6 %     (0.5 )%     

4.1 %

Interventional segment income for the three and six-month periods is provided below.

                                           Three months ended March 31,           Six months ended March 31,
(Millions of dollars)                         2020                2019              2020                2019
Interventional segment income           $        213$        231

$ 455$ 441


Segment income as % of Interventional
revenues                                        21.5 %               24.0 %           22.7 %               22.8 %



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The Interventional segment's income in the second quarter was driven by its performance with respect to gross profit margin and operating expenses as discussed in greater detail below: • Gross profit margin was lower in the second quarter of 2020 as compared

       with the second quarter of 2019 primarily due to the amortization of
       recently acquired intangible assets, which was partially offset by
       favorable product mix and favorable foreign currency translation.


•      Selling and administrative expense as a percentage of revenues in the
       second quarter of 2020 was lower compared with the prior-year period
       primarily due to lower expenses resulting from recently enacted cost
       containment measures.

• Research and development expense as a percentage of revenues was lower in

the second quarter of 2020 compared with the second quarter of 2019

primarily due to the timing of project spending.

• The Interventional segment's lower income in the second quarter of 2020

additionally reflected the expiration in 2019 of a royalty income stream

acquired in the C.R. Bard, Inc. ("Bard") transaction.



Geographic Revenues
BD's worldwide second quarter revenues by geography were as follows:
                                    Three months ended March 31,
                                                      Estimated
                                             Total        FX
(Millions of dollars)   2020       2019     Change      Impact      FXN Change
United States         $ 2,415$ 2,341     3.2  %        -  %         3.2 %
International           1,839      1,854    (0.8 )%     (2.3 )%         1.5 %
Total Revenues        $ 4,253$ 4,195     1.4  %     (1.0 )%         2.4 %


U.S. revenue growth in the second quarter of 2020 was largely attributable to
sales in the Life Sciences segment's Integrated Diagnostic Solutions unit and
sales in the Medical segment's Medication Delivery Solutions unit. Second
quarter U.S. revenue growth was unfavorably impacted by results in the Medical
segment's Medication Management Solutions unit, as further discussed above.
Second quarter international revenue growth was particularly driven by sales in
the Medical segment's Pharmaceutical Systems unit and sales in the Life Sciences
segment's Integrated Diagnostic Solutions unit. International revenue growth in
the second quarter of 2020 was unfavorably impacted by revenue declines in China
for the Medical segment's Medication Delivery Solutions unit, as further
discussed above.
Emerging market revenues for the second quarter were $568 million, compared with
$637 million in the prior year's quarter. Emerging market revenues in the
current-year period included an estimated $19 million unfavorable impact due to
foreign currency translation. Second quarter revenues in emerging markets were
unfavorably impacted by a decline in healthcare utilization in China as a result
of the COVID-19 pandemic. As previously discussed above, revenues in our
Medication Delivery Solutions unit were unfavorably impacted by a new
volume-based procurement process which has been adopted by several of China's
provinces. To date, the impact of these procurement initiatives to our revenues
in China has been limited to our Medication Delivery Solutions unit.

                                       27
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Specified Items
Reflected in the financial results for the three and six-month periods of fiscal
years 2020 and 2019 were the following specified items:
                                                                               Six months ended March
                                              Three months ended March 31,               31,
(Millions of dollars)                              2020             2019         2020           2019
Integration costs (a)                        $            57      $    70$     119$    143
Restructuring costs (a)                                   18           31            41            72
Transaction costs                                          -            1             -             2
Purchase accounting adjustments (b)                      340          379           688           757
Transaction gain/loss and product-related
matters (c)                                              199          396           258            61
European regulatory initiative-related costs
(d)                                                       27           10            44            15
Investment gains/losses and asset
impairments (e)                                           40            -            41             -
Impacts of debt extinguishment                             -            1             -             1
Total specified items                                    680          888         1,191         1,051
Less: tax impact of specified items and tax
reform (f)                                               124          160           146           143
After-tax impact of specified items          $           557      $   729$   1,045$    908


(a)    Represents integration and restructuring costs which are primarily
       recorded in Acquisitions and other restructurings and are further
       discussed below.


(b)    Includes amortization and other adjustments related to the purchase
       accounting for acquisitions impacting identified intangible assets and

valuation of fixed assets and debt. BD's amortization expense is primarily

       recorded in Cost of products sold.


(c)    The amounts in the three and six-month periods of fiscal year 2020
       included a $199 million charge recognized by the Medical segment in Cost

of products sold to record a probable estimate of future costs associated

with incremental remediation efforts, as further discussed below. The

amount in the six-month period of fiscal year 2020 additionally included a

$59 million charge recognized in the first quarter by the Medical segment

in Cost of products sold to record estimated remediation costs. The

amounts in the prior-year periods included a charge relating to certain

product liability matters and the estimated cost of a product recall, as

noted above in the discussion regarding the Medical segment's income.

These amounts were recorded to Other operating expense, net. The amount in

the prior-year six-month period also included the pre-tax gain recognized

in Other operating expense, net on BD's sale of its Advanced Bioprocessing

       business.


(d)    Represents initial costs required to develop processes and systems to

comply with emerging regulations such as the European Union Medical Device

Regulation ("EUMDR") and General Data Protection Regulation ("GDPR").

       These costs were recorded in Cost of products sold and Research and
       development expense.

(e) The amounts in 2020 primarily represented a charge of $39 million recorded

       in Cost of products sold to write down the carrying value of certain
       intangible assets in the Biosciences unit.

(f) The amount in the six-month period of fiscal year 2019 included additional

tax expense, net, of $20 million relating to new U.S. tax legislation, as

further discussed below.



Gross Profit Margin
Gross profit margin for the three and six-month periods of fiscal year 2020
compared with the prior-year periods in fiscal year 2019 reflected the following
impacts:
                                                  Three-month period       Six-month period
March 31, 2019 gross profit margin %                      47.1  %                 47.2  %
Impact of purchase accounting adjustments and
other specified items                                     (5.7 )%                 (3.3 )%
Operating performance                                     (1.1 )%                 (0.3 )%
Foreign currency translation                               0.5  %                  0.2  %
March 31, 2020 gross profit margin %                      40.8  %                 43.8  %




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The impacts of purchase accounting adjustments and other specified items include
the following:
•      The impacts in the three and six-month periods include a charge of $199

million to record a probable estimate of future costs within the

Medication Management Solutions unit associated with incremental

remediation efforts related to AlarisTM infusion pumps. Based on the

course of our remediation efforts, it is possible that this estimate could

increase over time. Any remediation actions will continue to be guided by

       our proactive commitment to patient safety and we will work closely with
       our customers to minimize the disruption of patient care.

• The impacts in the three and six-month periods also include a $39 million

       charge to write down the carrying value of certain intangible assets in
       the Biosciences unit.

• The impact in the six-month period additionally includes a $59 million

charge recognized in the first quarter by the Medical segment to record

estimated product remediation costs related to the AlarisTM infusion

pumps.



Operating performance for the three-month and six-month periods primarily
reflected unfavorable product mix, some of which was attributable to the
COVID-19 pandemic, and increased tariffs, partially offset by lower
manufacturing costs resulting from continuous operations improvement projects
and synergy initiatives. For the remainder of fiscal year 2020, the COVID-19
pandemic will place pressure on our gross margin due to declines in sales of
products with higher gross margins.
Operating Expenses
A summary of operating expenses for the three and six-month periods of fiscal
years 2020 and 2019 is as follows:
                                                                                                                    Increase
                                                                        Increase           Six months ended        (decrease)
                                 Three months ended March 31,        (decrease) in            March 31,             in basis
                                    2020               2019           basis points        2020          2019         points
(Millions of dollars)
Selling and administrative
expense                       $       1,025$       1,089$   2,146$  2,161
% of revenues                          24.1 %              25.9 %       (180 )              25.3 %       25.9 %        (60 )

Research and development
expense                       $         264       $         252                        $     535$    510
% of revenues                           6.2 %               6.0 %         20                 6.3 %        6.1 %         20

Acquisitions and other
restructurings                $          75       $         101                        $     161$    191

Other operating expense, net  $           -       $         396                        $       -     $     61


Selling and administrative expense
The decreases in selling and administrative expense as a percentage of revenues
in the current three and six-month periods compared with the prior-year periods
primarily reflected a decrease in the deferred compensation plan liability due
to market performance. The losses on investment assets result in a favorable
impact on expense recorded in Selling and administrative expense. Selling and
administrative expense as a percentage of revenues in the current-year periods
was unfavorably impacted by higher shipping costs. Selling and administrative
expense as a percentage of revenues in the current-year periods also reflected
our ongoing focus on disciplined spending and the achievement of cost synergies
resulting from our acquisition of Bard, as well as a favorable impact from the
cost containment measures we have enacted to mitigate the impact of the COVID-19
pandemic on our results of operations.
Research and development expense
Research and development expense as a percentage of revenues in the three and
six-month periods was higher compared with the prior-year periods primarily due
to higher costs incurred to achieve compliance with emerging regulations, as
further discussed above. Spending in both the current and prior-year periods
reflected our continued commitment to drive innovation with new products and
platforms.
Acquisitions and other restructurings
Costs relating to acquisitions and other restructurings in the three and
six-month periods of 2020 and 2019 largely represented integration and
restructuring costs incurred due to our acquisition of Bard in the first quarter
of fiscal year 2018. For further disclosures regarding restructuring costs,
refer to Note 10 in the Notes to Condensed Consolidated Financial Statements.

                                       29
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Other operating expense, net
Other operating expense in the prior-year periods included a charge of
approximately $331 million relating to certain product liability matters as
further discussed in Note 5 in the Notes to Condensed Consolidated Financial
Statements. The amounts in the period-year periods also included the estimated
costs of $65 million relating to a product recall, as noted above in the
discussion regarding the Medical segment's income. The amount in the prior-year
six-month period additionally included the pre-tax gain of $335 million
recognized on BD's sale of its Advanced Bioprocessing business in the first
quarter of fiscal year 2019.
Nonoperating Income
Net interest expense
The components for the three and six-month periods of fiscal years 2020 and 2019
were as follows:
                          Three months ended March 31,           Six months ended March 31,
(Millions of dollars)       2020                 2019              2020              2019
Interest expense      $        (134 )$        (171 )$      (270 )$      (342 )
Interest income, net              2                    18               3                 6
Net interest expense  $        (132 )$        (153 )$      (267 )$      (336 )


Lower interest expense in the current year's three and six-month periods
compared with the prior-year periods primarily reflected debt repayments during
fiscal year 2019, as well as lower overall interest rates on debt outstanding
during the current-year periods as a result of fiscal year 2019 refinancing
activities.
Income Taxes
The income tax rates for the three and six-month periods of fiscal years 2020
and 2019 are provided below.
                                         Three months ended March
                                                    31,                Six months ended March 31,
                                            2020           2019           2020              2019
Effective income tax rate                     8.5 %      (540.4 )%         22.5 %             13.7 %

Impact, in basis points, from specified
items and tax reform                         (750 )     (55,640 )           680                 10


The effective income tax rates for the three and six-month periods of fiscal
year 2020 reflected tax impacts from specified items that were less favorable
compared with the benefits associated with specified items recognized in the
prior-year periods. The effective income tax rate for the six-month period of
fiscal year 2019 reflected the recognition of additional tax expense of $20
million as a result of U.S. tax legislation that was enacted in December 2017.
The effective income tax rate for the six-month period of fiscal year 2019 was
favorably impacted by the timing of certain discrete items.
Net Income and Diluted Earnings per Share
Net Income and Diluted Earnings per Share for the three and six-month periods of
fiscal years 2020 and 2019 were as follows:
                                                  Three months ended March 

31, Six months ended March 31,

                                                     2020               2019              2020               2019
Net Income (Millions of dollars)               $         183       $          20     $        461$        619
Diluted Earnings (Loss) per Share              $        0.53       $       

(0.07 ) $ 1.40$ 1.98


Unfavorable impact-specified items             $       (2.02 )$       (2.70 )$      (3.80 )$      (3.31 )
Dilutive impact of BD shares                   $           -       $        0.04     $          -       $          -
Favorable (unfavorable) impact-foreign
currency translation                           $        0.01$      (0.03 )



The dilutive impact for the three-month period of fiscal year 2019 represented
the impact of share equivalents associated with share-based plans that were
excluded from the reported diluted shares outstanding calculation because the
result would have been antidilutive.

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Liquidity and Capital Resources
The following table summarizes our condensed consolidated statements of cash
flows:
                                    Six months ended March 31,
(Millions of dollars)                2020               2019
Net cash provided by (used for)
Operating activities            $      1,196$       1,027
Investing activities            $       (542 )     $          30
Financing activities            $      1,210$      (1,532 )


Net Cash Flows from Operating Activities
Cash flows from operating activities in the first six months of fiscal year 2020
reflected net income, adjusted by a change in operating assets and liabilities
that was a net use of cash. This net use of cash primarily reflected higher
levels of inventory and lower levels of accounts payable and accrued expenses,
partially offset by lower levels of trade receivables and prepaid expenses.

Cash flows from operating activities in the first six months of fiscal year 2019
reflected net income, adjusted by a change in operating assets and liabilities
that was a net use of cash. Cash flows from operating activities in the
prior-year period additionally reflected $200 million of discretionary cash
contributions to fund our pension obligation.
Net Cash Flows from Investing Activities
Our investments in capital expenditures are focused on projects that enhance our
cost structure and manufacturing capabilities, and support our strategy of
geographic expansion with select investments in growing markets.  As part of the
cost containment measures we have enacted in response to the COVID-19 pandemic,
we are currently prioritizing spending for only our most critical capital
projects. Net outflows from investing activities in the first six months of
fiscal year 2020 included capital expenditure-related outflows of $395 million,
compared with $362 million in the prior-year period. Net cash flows from
investing activities in the first six months of fiscal year 2019 also included
proceeds $477 million from our sale of a business during the period, as further
discussed above.
Net Cash Flows from Financing Activities
Net cash from financing activities in the first six months of fiscal years 2020
and 2019 included the following significant cash flows:
                                               Six months ended March 31,
(Millions of dollars)                             2020              2019

Cash inflow (outflow) Change in credit facility borrowings $ 210 $ - Proceeds from long-term debt and term loans $ 1,900 $ - Payments of debt and term loans

             $        (305 )$      (905 )
Dividends paid                              $        (505 )$      (491 )



                                       31
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Certain measures relating to our total debt were as follows:
(Millions of dollars)                          March 31, 2020     September 30, 2019
Total debt                                    $       21,167     $           19,390

Short-term debt as a percentage of total debt           20.6 %                  6.8 %
Weighted average cost of total debt                      2.7 %                  2.9 %
Total debt as a percentage of total capital*            48.1 %              

45.6 %



*  Represents shareholders' equity, net non-current deferred income tax
liabilities, and debt.
The increase in the ratio of short-term debt as a percentage of total debt at
March 31, 2020 was primarily driven by our reclassification of certain notes
from long-term to short-term and by borrowings under a term loan agreement which
is further discussed below.
Cash and Short-term Investments
At March 31, 2020, total worldwide cash and short-term investments, including
restricted cash, were approximately $2.445 billion, which were primarily held in
the United States.
Financing Facilities
While we deemed our liquidity sufficient to fund our operations and meet our
obligations prior to taking these actions, BD has taken steps as a precautionary
measure to preserve our financial flexibility in light of the uncertainty in the
global markets resulting from the COVID-19 pandemic. We have a five-year senior
unsecured revolving credit facility in place which will expire in December 2022.
The facility agreement includes a provision that enabled BD, subject to
additional commitments made by the lenders, to access up to an additional $500
million in financing through the facility for a maximum aggregate commitment of
$2.75 billion. In April 2020, we entered into a supplement to the facility
agreement which increased the revolving commitments available under the facility
by $381 million. As such, borrowings provided for under the agreement increased
from $2.25 billion to $2.63 billion. We are also able to issue up to $100
million in letters of credit under this revolving credit facility. We use
proceeds from this facility to fund general corporate needs. Borrowings
outstanding under the revolving credit facility at March 31, 2020 were $695
million.
The agreement for our revolving credit facility and the supplement entered into
in April 2020 contained the following financial covenants. We were in compliance
with these covenants as of March 31, 2020.
•      We are required to maintain an interest expense coverage ratio of not less

than 4-to-1 as of the last day of each fiscal quarter.

• We are required to have a leverage coverage ratio of no more than:


•            6-to-1 from the closing date of the Bard acquisition until and
             including the first fiscal quarter-end thereafter;

• 5.75-to-1 for the subsequent four fiscal quarters thereafter;

• 5.25-to-1 for the subsequent four fiscal quarters thereafter;

• 4.5-to-1 for the subsequent four fiscal quarters thereafter;

• 4-to-1 for the subsequent four fiscal quarters thereafter;

• 3.75-to-1 thereafter.



In March 2020, we entered into a 364-day $1.4 billion senior unsecured term loan
facility and later in March 2020, we amended this agreement to increase the
borrowing capacity available under the facility to $2.0 billion. Borrowings
under the term loan facility will primarily be used to supplement our cash
position.  Borrowings outstanding under the 364-day term loan facility were $1.9
billion at March 31, 2020. The agreement for our term loan facility and the
amendment to the facility contained the following financial covenants. We were
in compliance with these covenants as of March 31, 2020.
•      We are required to maintain an interest expense coverage ratio of not less

than 4-to-1 as of the last day of any fiscal quarter.

• We are required to have a leverage ratio of not greater than:


•            5.25-to-1 from the effectiveness of the Term Loan Agreement until
             and including the last day of the fiscal quarter ending March 31,
             2020;

• 4.5-to-1 as of the last day of any fiscal quarter thereafter.



We also have informal lines of credit outside the United States. We may, from
time to time, access the commercial paper market and/or sell certain trade
receivable assets to third parties as we manage working capital over the normal
course of our business

                                       32
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activities. We had no commercial paper borrowings outstanding as of March 31,
2020. Additional disclosures regarding sales of trade receivable assets are
provided in Note 13 in the Notes to Condensed Consolidated Financial Statements.
Access to Capital and Credit Ratings

Our corporate credit ratings with the rating agencies Moody's Investor Service
and Fitch Ratings at March 31, 2020 were unchanged compared with our ratings
at September 30, 2019. In March 2020, Standard & Poor's Ratings Services
affirmed our September 30, 2019 ratings and revised the agency's outlook
regarding the likely direction of these ratings from Stable to Negative.
Lower corporate debt ratings and downgrades of our corporate credit ratings or
other credit ratings may increase our cost of borrowing. We believe that given
our debt ratings, our financial management policies, our ability to generate
cash flow and the non-cyclical, geographically diversified nature of our
businesses, we would have access to additional short-term and long-term capital
should the need arise. A rating reflects only the view of a rating agency and is
not a recommendation to buy, sell or hold securities. Ratings can be revised
upward or downward at any time by a rating agency if such rating agency decides
that circumstances warrant such a change.
Concentrations of Credit Risk
We continually evaluate our accounts receivables for potential collection risks,
particularly those resulting from sales to government-owned or
government-supported healthcare facilities in certain countries, as payment may
be dependent upon the financial stability and creditworthiness of those
countries' national economies. We continually evaluate all governmental
receivables for potential collection risks associated with the availability of
government funding and reimbursement practices. We believe the current reserves
related to all governmental receivables are adequate and that these receivables
will not have a material adverse impact on our financial position or liquidity.
To date, we have not experienced a significant increased risk of collectability
of accounts receivables in general as a result of the COVID-19 pandemic. No
assurances can be given that the risk of collectability will not increase in the
future given the uncertainty around the duration of the pandemic and its
economic impact.
Regulatory Matters

In January 2018, BD received a Warning Letter from the U.S. FDA, citing certain
alleged violations of quality system regulations and of law with respect to our
Preanalytical Systems facility in Franklin Lakes, New Jersey. The Warning Letter
states that, until BD resolves the outstanding issues covered by the Warning
Letter, the FDA will not clear or approve any premarket submissions for Class
III devices to which the non-conformances are reasonably related or grant
requests for certificates to foreign governments. BD is working closely with the
FDA and intends to fully implement corrective actions to address the concerns
identified in the Warning Letter. However, BD cannot give any assurances that
the FDA will be satisfied with its responses to the Warning Letter or as to the
expected date of resolution of matters included in the Warning Letter. While BD
does not believe that the issues identified in the Warning Letter will have a
material impact on BD's operation, no assurances can be given that the
resolution of this matter will not have a material adverse effect on BD's
business, results of operations, financial conditions and/or liquidity.

In October 2019, BD entered into a consent order with the Environmental
Protection Division of the Georgia Department of Natural Resources ("EPD"),
following the filing of a complaint and motion for temporary restraining order
by the EPD seeking to enjoin BD from continuing sterilization operations at its
Covington, Georgia facility. Under the terms of the consent order, BD
voluntarily agreed to a number of operational changes at its Covington and
Madison, Georgia facilities designed to further reduce ethylene oxide emissions,
including but not limited to operating at a reduced capacity. BD does not
believe that the consent order will have a material impact on its operations.
Violation of the consent order could subject us to additional restrictions on
the sterilization operations at our Covington and Madison facilities. BD has
business continuity plans in place to mitigate the impact of any additional
restrictions on our operations at these facilities, although it is possible that
these plans will not be able to fully offset such impact.
As previously reported, our AlarisTM infusion pump organizational unit is
operating under an amended consent decree entered into by CareFusion that
includes all infusion pumps manufactured by or for CareFusion 303, Inc., the
organizational unit that manufactures and sells AlarisTM infusion pumps in the
United States.  Following an inspection that began in March 2020 of our
Medication Management Systems facility (CareFusion 303, Inc.) in San Diego,
California, the FDA issued to BD a Form 483 Notice that contains a number of
observations of non-conformance.  BD has provided the FDA with its response to
the Form 483 and has begun to implement certain corrective actions to address
the observations. However, the FDA's review of the items raised in the Form 483
remains ongoing and no assurances can be given regarding further action by the
FDA as a result of the observations.

                                       33
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Cautionary Statement Regarding Forward-Looking Statements
This report includes forward-looking statements within the meaning of the
federal securities laws. BD and its representatives may also, from time to time,
make certain forward-looking statements in publicly released materials, both
written and oral, including statements contained in filings with the Securities
and Exchange Commission, press releases, and our reports to shareholders.
Forward-looking statements may be identified by the use of words such as "plan,"
"expect," "believe," "intend," "will,", "may", "anticipate," "estimate" and
other words of similar meaning in conjunction with, among other things,
discussions of future operations and financial performance (including volume
growth, pricing, sales and earnings per share growth, and cash flows) and
statements regarding our strategy for growth, future product development,
regulatory approvals, competitive position and expenditures. All statements that
address our future operating performance or events or developments that we
expect or anticipate will occur in the future are forward-looking statements.
Forward-looking statements are, and will be, based on management's then-current
views and assumptions regarding future events, developments and operating
performance, and speak only as of their dates. Investors should realize that if
underlying assumptions prove inaccurate, or risks or uncertainties materialize,
actual results could vary materially from our expectations and projections.
Investors are therefore cautioned not to place undue reliance on any
forward-looking statements. Furthermore, we undertake no obligation to update or
revise any forward-looking statements after the date they are made, whether as a
result of new information, future events and developments or otherwise, except
as required by applicable law or regulations.
The following are some important factors that could cause our actual results to
differ from our expectations in any forward-looking statements. For further
discussion of certain of these factors, see Item 1A. Risk Factors in this report
and in our 2019 Annual Report on Form 10-K.
•     Any negative impact of the COVID-19 pandemic on our business, including,

without limitation, decreases in the demand for our products or disruptions

to our operations and our supply chain.

• The current weakness in the global economy and financial markets, which

      could increase the cost of operating our business, weaken demand for our
      products and services, negatively impact the prices we can charge for our
      products and services, or impair our ability to produce our products.

• Competitive factors that could adversely affect our operations, including

new product introductions and technologies (for example, new forms of drug

delivery) by our current or future competitors, consolidation or strategic

alliances among healthcare companies, distributors and/or payers of

healthcare to improve their competitive position or develop new models for

the delivery of healthcare, increased pricing pressure due to the impact of

low-cost manufacturers, patents attained by competitors (particularly as

patents on our products expire), new entrants into our markets and changes

      in the practice of medicine.


•     Risks relating to our acquisition of Bard, including our ability to

successfully combine and integrate the Bard operations in order to obtain

      the anticipated benefits and costs savings from the transaction, and the
      significant additional indebtedness we incurred in connection with the

financing of the acquisition and the impact it may have on our ability to

operate the combined company.

• The adverse financial impact resulting from unfavorable changes in foreign

currency exchange rates.

• Regional, national and foreign economic factors, including inflation,

deflation, and fluctuations in interest rates, and their potential effect

on our operating performance.

• Our ability to achieve our projected level or mix of product sales, as our

earnings forecasts are based on projected sales volumes and pricing of many

product types, some of which are more profitable than others.

• Changes in reimbursement practices of governments or third-party payers, or

adverse decisions relating to our products by such payers, which could

      reduce demand for our products or the price we can charge for such
      products.

• Cost containment efforts in the U.S. or in other countries in which we do

      business, such as alternative payment reform and increased use of
      competitive bidding and tenders, including, without limitation, any
      expansion of the volume-based procurement process in China.

• Changes in the domestic and foreign healthcare industry or in medical

practices that result in a reduction in procedures using our products or

increased pricing pressures, including the continued consolidation among

healthcare providers.

• The impact of changes in U.S. federal laws and policy that could affect

fiscal and tax policies, healthcare, and international trade, including

import and export regulation and international trade agreements. In

particular, tariffs or other trade barriers imposed by the U.S. or other

      countries could adversely impact our supply chain costs or otherwise
      adversely impact our results of operations.



                                       34
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•     Increases in operating costs, including fluctuations in the cost and
      availability of oil-based resins and other raw materials, as well as

certain components, used in our products, the ability to maintain favorable

supplier arrangements and relationships (particularly with respect to

sole-source suppliers), and the potential adverse effects of any disruption

in the availability of such items.

• Security breaches of our information technology systems or our products,

which could impair our ability to conduct business, result in the loss of

BD trade secrets or otherwise compromise sensitive information of BD or its

customers, suppliers and other business partners, or of customers'

patients, or result in product efficacy or safety concerns for certain of

      our products, and result in actions by regulatory bodies or civil
      litigation.

• Difficulties inherent in product development, including the potential

inability to successfully continue technological innovation, successfully

complete clinical trials, obtain regulatory approvals in the United States

      and abroad, obtain intellectual property protection for our products,
      obtain coverage and adequate reimbursement for new products, or gain and
      maintain market approval of products, as well as the possibility of
      infringement claims by competitors with respect to patents or other
      intellectual property rights, all of which can preclude or delay

commercialization of a product. Delays in obtaining necessary approvals or

clearances from United States Food and Drug Administration ("FDA") or other

regulatory agencies or changes in the regulatory process may also delay

      product launches and increase development costs.


•     The impact of business combinations or divestitures, including any
      volatility in earnings relating to acquisition-related costs, and our
      ability to successfully integrate any business we may acquire.

• Our ability to penetrate or expand our operations in emerging markets,

which depends on local economic and political conditions, and how well we

are able to make necessary infrastructure enhancements to production

facilities and distribution networks.

• Conditions in international markets, including social and political

conditions, civil unrest, terrorist activity, governmental changes,

restrictions on the ability to transfer capital across borders, tariffs and

other protectionist measures, difficulties in protecting and enforcing our

intellectual property rights and governmental expropriation of assets. This

includes the possible impact of the United Kingdom's exit from the European

Union ("EU"), which has created uncertainties affecting our business

operations in the United Kingdom and the EU, and possibly other

countries. Our international operations also increase our compliance risks,

      including risks under the Foreign Corrupt Practices Act and other
      anti-corruption laws, as well as regulatory and privacy laws.

• Deficit reduction efforts or other actions that reduce the availability of

government funding for healthcare and research, which could weaken demand

      for our products and result in additional pricing pressures, as well as
      create potential collection risks associated with such sales.

• Fluctuations in university or U.S. and international governmental funding

and policies for life sciences research.

• Fluctuations in the demand for products we sell to pharmaceutical companies

that are used to manufacture, or are sold with, the products of such

companies, as a result of funding constraints, consolidation or otherwise.

• The effects of weather, regulatory or other events that adversely impact

      our supply chain, including our ability to manufacture our products
      (particularly where production of a product line or sterilization
      operations are concentrated in one or more plants), source materials or

components or services from suppliers (including sole-source suppliers)

      that are needed for such manufacturing (including sterilization), or
      provide products to our customers, including events that impact key
      distributors.

• Natural disasters (including pandemics), war, terrorism, labor disruptions

and international conflicts that could cause significant economic

disruption and political and social instability, resulting in decreased

demand for our products, adversely affect our manufacturing and

distribution capabilities, or cause interruptions in our supply chain.

• Pending and potential future litigation or other proceedings asserting,

and/or subpoenas seeking information with respect to, alleged violations of

law (including in connection with federal and/or state healthcare programs

(such as Medicare or Medicaid) and/or sales and marketing practices (such

as investigative subpoenas and the civil investigative demands received by

BD and Bard)), antitrust claims, product liability (which may involve

lawsuits seeking class action status or seeking to establish multi-district

litigation proceedings, including claims relating to our hernia repair

implant products, surgical continence products for women and vena cava

filter products), claims with respect to environmental matters, and patent

infringement, and the availability or collectability of insurance relating

to any such claims.

• New or changing laws and regulations affecting our domestic and foreign

operations, or changes in enforcement practices, including laws relating to

      trade, monetary and fiscal policies, taxation (including tax reforms that
      could adversely impact multinational corporations), sales practices,
      environmental protection, price controls, and licensing



                                       35
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and regulatory requirements for new products and products in the postmarketing
phase. In particular, the U.S. and other countries may impose new requirements
regarding registration, labeling or prohibited materials that may require us to
re-register products already on the market or otherwise impact our ability to
market our products. Environmental laws, particularly with respect to the
emission of greenhouse gases, are also becoming more stringent throughout the
world, which may increase our costs of operations or necessitate changes in our
manufacturing plants or processes or those of our suppliers, or result in
liability to BD.
•     Product efficacy or safety concerns regarding our products resulting in

product holds or recalls, regulatory action on the part of the FDA or

foreign counterparts (including restrictions on future product clearances

and civil penalties), declining sales and product liability claims, and

damage to our reputation. As a result of the CareFusion acquisition, we are

operating under a consent decree with the FDA relating to our U.S. infusion

pump business. The consent decree authorizes the FDA, in the event of any

violations in the future, to order us to cease manufacturing and

distributing products, recall products or take other actions, and we may be

required to pay significant monetary damages if we fail to comply with any

provision of the consent decree. Also, in 2019, the FDA letter to

healthcare professionals regarding the use of paclitaxel-coated devices in

the treatment of peripheral artery disease resulted in decreased sales of

BD's drug-coated balloons. While we have changed the labeling on our

products as required by the FDA and continue to work with the FDA on

patient data, the extent and duration of the impact from the FDA letter,

and the likelihood of FDA approval of new drug-coated devices, is difficult

      to predict.


•     The effect of adverse media exposure or other publicity regarding BD's

business or operations, including the effect on BD's reputation or demand

for its products.

• The effect of market fluctuations on the value of assets in BD's pension

plans and on actuarial interest rate and asset return assumptions, which

could require BD to make additional contributions to the plans or increase

our pension plan expense.

• Our ability to obtain the anticipated benefits of restructuring programs,

if any, that we may undertake.

• Issuance of new or revised accounting standards by the Financial Accounting

Standards Board or the Securities and Exchange Commission.



The foregoing list sets forth many, but not all, of the factors that could
impact our ability to achieve results described in any forward-looking
statements. Investors should understand that it is not possible to predict or
identify all such factors and should not consider this list to be a complete
statement of all potential risks and uncertainties.

                                       36

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