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BECTON, DICKINSON AND COMPANY

(BDX)
  Report
Delayed Nyse  -  04:00 2022-09-30 pm EDT
222.83 USD   -1.45%
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BECTON DICKINSON & CO Management's Discussion and Analysis of Financial Condition and Results of Operations (form 10-Q)

08/04/2022 | 01:01pm 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. References to years throughout this discussion relate to our
fiscal years, which end on September 30.

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: EMEA (which
includes Europe, the Middle East and Africa); Greater Asia (which includes
countries in Greater China, Japan, South Asia, Southeast Asia, Korea, Australia
and New Zealand); 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.

BD's Spin-Off of Diabetes Care


On April 1, 2022, BD completed the separation and distribution of Embecta,
formerly BD's Diabetes Care business, into a separate, publicly-traded company.
The historical results of the Diabetes Care business (previously included in
BD's Medical segment), as well as interest expense related to indebtedness
incurred by Embecta prior to the spin-off date, have been reflected as
discontinued operations in our condensed consolidated financial statements for
all periods prior to the spin-off date of April 1, 2022. Additional disclosures
regarding our spin-off of the Diabetes Care business are provided in Note 2 in
the Notes to Condensed Consolidated Financial Statements.

Key Trends Affecting Results of Operations


As noted above, our products are manufactured and sold worldwide, which exposes
our operations, supply chain and suppliers to various global macroeconomic
factors. The factors which are currently most impactful to our operating results
include the following:

•Inflation, which has increased the costs of raw materials, components, labor, energy, and logistical services;

•Availability of skilled labor, global energy sources, raw materials and electronic components; and

•Constrained logistics capacity related to the movement of goods around the globe.


The shortages of certain raw materials and components, delays in global
transportation and the scarcity of labor in our manufacturing facilities may
increase our lead times for some of our product offerings. During our fiscal
year 2022, significant inflationary pressures are impacting our supply chain
costs in certain areas. Our raw material and freight costs have been
particularly impacted and these increased costs are pressuring our operating
expenses and the costs of our investments. We are mitigating these inflationary
pressures through the following:

•Driving strategic procurement initiatives to leverage alternatives sources of raw material and transportation;


•Implementing cost-containment measures, as well as intensifying continuous
improvement and restructuring programs in our manufacturing and distribution
facilities;

•Continuing strategic rationalization programs across multiple product lines as part of our simplification strategy; and

•Optimizing our sales through product allocation and price management.


The COVID-19 pandemic continues to drive volatility in global economic
conditions. Resurgences in COVID-19 infections or new strains of the virus may
affect the prioritization of acute and non-acute healthcare utilization, which
may temporarily weaken future demand for certain of our products and increase
the demand for other of our products. The pandemic has also contributed to the
inflationary pressures and supply chain disruptions discussed above and these
challenges could persist if governments impose lockdowns, quarantine
requirements and other restrictions in order to control rates of COVID-19
infections, such as in China. Additionally, the pandemic has escalated
challenges that existed for global healthcare systems
                                       25
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prior to the pandemic, including budget constraints and staffing shortages, particularly shortages of nursing staff. Healthcare institutions may take actions to mitigate any persistent pressures on their budgets and such actions could impact the future demand for our products and services.


While resurgences of COVID-19 infections have continued to occur in various
countries around the world, demand for our SARS-CoV-2 diagnostics tests and
injection devices used for COVID-19 vaccinations has been volatile and has
declined from the peak testing and vaccination levels reached earlier in the
pandemic. As discussed below, our third quarter fiscal year 2022 revenues in our
Life Sciences segment reflected sales related to COVID-19-only diagnostic
testing on the BD VeritorTM Plus and BD MaxTM Systems of $76 million, compared
with revenues from such testing products in the prior-year period of $300
million. During the third quarter of fiscal year 2022, revenues in our Life
Sciences segment benefited from high demand for our combination
influenza/COVID-19 testing assays.

Geopolitical conditions may also impact our operations. Our operations in Russia
and Ukraine are not material to our financial results, and as such, the conflict
between Russia and Ukraine has not materially impacted our results of operations
to date. However, the continuation of the Russia-Ukraine military conflict
and/or an escalation of the conflict beyond its current scope may weaken the
global economy and could result in additional inflationary pressures and supply
chain constraints, including the unavailability of energy. Due to the
significant uncertainty that exists relative to the duration and overall impact
of the macroeconomic factors discussed above, our future operating performance,
particularly in the short-term, may be subject to volatility. The impacts of
macroeconomic conditions on our business, results of operations, financial
condition and cash flows are dependent on certain factors, including those
discussed in our 2021 Annual Report on Form 10-K (the "2021 Annual Report") and
subsequent Quarterly Reports on Form 10-Q.

Overview of Financial Results and Financial Condition


For the three months ended June 30, 2022, worldwide revenues of $4.641 billion
increased 0.7% from the prior-year period. This increase reflected the following
impacts:

                                                                      

Increase (decrease) in current-period

revenues

Volume                                                                                               6.0  %

Period-over-period decline in revenues related to COVID-19-only testing

                                                                                             (4.8) %
Pricing                                                                                              2.6  %
Foreign currency translation                                                                        (3.1) %

Increase in revenues from the prior-year period                                                      0.7  %


                                       .

Volume growth in the third quarter of fiscal year 2022 was driven by demand for
our core products and reflected strong demand across all of the Medical
segment's units, particularly in the Medication Delivery Solutions and
Pharmaceutical Systems units. Third quarter volume growth was also driven by
strong demand for core products in both of the Life Sciences segment's units and
across all units in the Interventional segment.

As noted above, our third quarter fiscal year 2022 revenues reflected sales related to COVID-19-only diagnostic testing on the BD VeritorTM Plus and BD MaxTM Systems of $76 million, compared with revenues from testing products in the prior-year period of $300 million.


Our BD 2025 strategy for growth is anchored in three pillars: grow, simplify and
empower. As we execute this strategy, we continue to invest in research and
development, strategic tuck-in acquisitions, geographic expansion, and new
product 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. As further discussed above, current global
economic conditions have been relatively volatile due to various macroeconomic
factors. We are mitigating the inflationary pressures on our businesses through
the various strategies discussed above. However, there can be no assurance that
we will be able to effectively mitigate such inflationary pressures in future
periods, and an inability to offset inflationary pressures, at least in part,
through the strategies discussed above could adversely impact our results of
operations.

Cash flows from continuing operating activities were $1.498 billion in the first
nine months of fiscal year 2022. At June 30, 2022, we had $2.773 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 nine months of fiscal year 2022, we paid cash dividends of $812
million, including $745 million paid to common shareholders and $68 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 third quarter of fiscal year 2022.
The flow of foreign currency impacts to our earnings depends on various factors
including our inventory turnover, our
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ability to leverage our global supply chain and the current-period mix of our
sales, from both a product and geographic perspective. These factors resulted in
a favorable foreign currency impact to earnings during the third quarter of
fiscal year 2022. 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-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 Continuing Operations

Medical Segment

The following summarizes third quarter Medical revenues by organizational unit:


                                                                                  Three months ended June 30,
                                                                                                            Estimated
                                                                                       Total                    FX
(Millions of dollars)                          2022                2021               Change                  Impact                  FXN Change

Medication Delivery Solutions (a) $ 1,061 $ 1,019

                4.1  %                  (2.3) %                     6.4  %
Medication Management Solutions                    607               597                   1.6  %                  (2.0) %                     3.6  %
Pharmaceutical Systems (a)                         523               475                  10.0  %                  (6.3) %                    16.3  %
Total Medical Revenues                    $      2,191          $  2,091                   4.7  %                  (3.2) %                     7.9  %

(a)Prior-period amounts were recast to reflect former intercompany transactions with Embecta.


The Medication Delivery Solutions unit's revenue growth in the third quarter of
2022 reflected competitive gains for catheters and vascular care products, as
well as improved healthcare utilization in the current-year period, particularly
within the United States. Third quarter 2022 revenues in the Medication Delivery
Solutions unit were unfavorably impacted by pandemic-related lockdowns imposed
in China. In the Medication Management Solutions unit, revenue growth reflected
momentum in global placements of dispensing systems. The Pharmaceutical Systems
unit's strong revenue growth in the third quarter of 2022 reflected our ability
to meet the high demand for pre-filled devices through strategic capacity
expansion investments.

                                                     Nine months ended June 30,
                                                                                Estimated
                                                                    Total          FX
  (Millions of dollars)             2022                2021        Change       Impact        FXN Change
  Total Medical Revenues   $      6,465               $ 6,116        5.7  %        (1.7) %          7.4  %

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


                                               Three months ended June 30,              Nine months ended June 30,
(Millions of dollars)                             2022                 2021                2022                2021
Medical segment income                      $        573            $   486          $      1,587           $ 1,474

Segment income as % of Medical revenues             26.1    %          23.2  %               24.5   %          24.1  %


The Medical segment's income in the third quarter reflected higher gross profit margin and lower operating expenses as discussed in greater detail below:


•The Medical segment's higher gross profit margin in the third quarter of 2022
compared with the third quarter of 2021 primarily reflected lower manufacturing
costs resulting from continuous improvement projects which enhanced the
efficiency of our operations, as well as favorable impacts from price management
and foreign currency translation.
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These favorable impacts to the Medical segment's third quarter gross margin were partially offset by higher raw material and freight costs.


•Selling and administrative expense as a percentage of revenues was lower in the
third quarter of 2022 compared with the third quarter of 2021, which reflected
efforts to contain certain selling, travel and other administrative activities,
partially offset by higher shipping costs.

•Research and development expense as a percentage of revenues was lower in the
third quarter of 2022 compared with the third quarter of 2021, which reflected
the timing of project spending.

•The Medical segment's operating income in the third quarter of 2022 reflected non-cash asset impairment charges of $19 million, which were recorded to Acquisition-related integration and restructuring expense.

Life Sciences Segment

The following summarizes third quarter Life Sciences revenues by organizational unit:


                                                                                 Three months ended June 30,
                                                                                                           Estimated
                                                                                      Total                   FX
(Millions of dollars)                          2022                2021              Change                 Impact                  FXN Change
Integrated Diagnostic Solutions           $        961          $ 1,117                 (14.0) %                 (3.5) %                   (10.5) %
Biosciences                                        348              316                  10.1  %                 (4.1) %                    14.2  %
Total Life Sciences Revenues              $      1,309          $ 1,433                  (8.7) %                 (3.6) %                    (5.1) %



As previously discussed above, the Integrated Diagnostic Solutions unit's
revenues related to COVID-19-only diagnostic testing on the BD VeritorTM Plus
and BD MaxTM Systems in the third quarter of 2022 were $76 million compared with
revenues of $300 million in the prior-year period. The Integrated Diagnostic
Solutions unit's third quarter revenues were favorably impacted by continued
adoption of our broader respiratory panel and our larger installed base of
instruments. Revenues in the Integrated Diagnostic Solutions unit also reflected
growth in specimen management products which was attributable to price
management and improvements in production throughput. The Biosciences unit's
revenue growth in the third quarter of 2022 was driven by strong demand for our
research reagents and continued adoption of the unit's e-commerce platform.
Third quarter 2022 growth in the Biosciences unit's sales of instruments was
enabled by the unit's recent product launches and the strategic procurement of
critical electronic components to meet the customer demand for our product
offerings.
                                                                            

Nine months ended June 30,

                                                                                                        Estimated
                                                                                   Total                   FX
(Millions of dollars)                       2022                2021              Change                 Impact                 FXN Change
Total Life Sciences Revenues           $      4,277          $ 4,998                 (14.4) %                 (1.8) %                 (12.6) %


Life Sciences segment income for the three and nine-month periods is provided
below.

                                                Three months ended June 30,              Nine months ended June 30,
(Millions of dollars)                              2022                 2021                2022                2021
Life Sciences segment income                 $        414            $   432          $      1,366           $ 1,953

Segment income as % of Life Sciences
revenues                                             31.6    %          30.1  %               31.9   %          39.1  %




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The Life Sciences segment's income in the third quarter primarily reflected higher gross profit margin as discussed in greater detail below:


•The Life Sciences segment's gross profit margin in the third quarter of 2022
compared with the third quarter of 2021 was higher primarily due to
approximately $71 million of excess and obsolete inventory expenses in the
prior-year period related to COVID-19 testing inventory. Higher gross profit
margin in the current-year period also reflected lower manufacturing costs
resulting from continuous improvement projects which enhanced the efficiency of
our operations, as well as favorable impacts from price management, product mix
and foreign currency translation. The Life Sciences segment's gross profit
margin in the third quarter of 2022 was unfavorably impacted by the decline in
COVID-19-only testing revenues compared with the prior-period, as well as higher
raw material and freight costs.

•Selling and administrative expense as a percentage of revenues in the third quarter of 2022 was relatively flat compared with the third quarter of 2021.


•Research and development expense as a percentage of revenues was higher in the
third quarter of 2022 compared with the third quarter of 2021, primarily due to
the current-period decline in revenues.

Interventional Segment

The following summarizes third quarter Interventional revenues by organizational unit:


                                                                                  Three months ended June 30,
                                                                                                            Estimated
                                                                                       Total                    FX
(Millions of dollars)                          2022                2021               Change                  Impact                  FXN Change
Surgery                                   $        352          $    336                   4.7  %                  (1.7) %                     6.4  %
Peripheral Intervention                            463               436                   6.3  %                  (2.8) %                     9.1  %
Urology and Critical Care                          326               310                   5.2  %                  (2.5) %                     7.7  %
Total Interventional Revenues             $      1,142          $  1,082                   5.5  %                  (2.4) %                     7.9  %


The Surgery unit's third quarter 2022 revenues reflected strong global sales of
our advanced repair and reconstruction platforms, as well as a benefit from the
unit's fiscal year 2021 acquisition of Tepha, Inc. Third quarter 2022 revenues
in the Peripheral Intervention unit were driven by global market penetration of
our RotarexTM system, the unit's fiscal year 2022 acquisition of Venclose, Inc.
and the relaunch of our VenovoTM system. The Peripheral Intervention unit's
current-period revenues also reflected its ability to meet end market demand
from prior quarters despite supply chain constraints. The Urology and Critical
Care unit's revenue growth in the third quarter of 2022 was driven by strong
demand for acute urology products, as well as the unit's recovery from supply
chain constraints from earlier in the fiscal year.

                                                                                       Nine months ended June 30,
                                                                                                                 Estimated
                                                                                            Total                    FX
(Millions of dollars)                               2022                2021               Change                  Impact                 FXN Change
Total Interventional Revenues                  $      3,367          $  3,168                   6.3  %                  (1.2) %                    

7.5 %



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

                                                   Three months ended June 30,               Nine months ended June 30,
(Millions of dollars)                                 2022                 2021                2022                 2021
Interventional segment income                   $        293            $   214          $        826            $   725

Segment income as % of Interventional revenues 25.7 % 19.8 %

               24.5    %          22.9  %



The Interventional segment's income in the third quarter reflected higher gross profit margin and lower operating expenses as discussed in greater detail below:

•The Interventional segment's higher gross profit margin in the third quarter of 2022 compared with the third quarter of 2021 primarily reflected price management and favorable foreign currency translation.


•Selling and administrative expense as a percentage of revenues was lower in the
third quarter of 2022 compared with the third quarter of 2021, as the increase
in current-period revenues outpaced spending for selling and other
administrative activities.
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•Research and development expense as a percentage of revenues was lower in the
third quarter of 2022 compared with the third quarter of 2021, as the increase
in current-period revenues outpaced the timing of project spending.

Geographic Revenues

BD's worldwide third quarter revenues by geography were as follows:

                                                  Three months ended June 30,
                                                                              Estimated
                                                                  Total          FX
(Millions of dollars)             2022                2021        Change       Impact        FXN Change
United States           $      2,643                $ 2,424        9.0  %           -  %          9.0  %
International                  1,998                  2,182       (8.4) %        (6.5) %         (1.9) %
Total Revenues          $      4,641                $ 4,607        0.7  %        (3.1) %          3.8  %



U.S. revenue growth in the third quarter of 2022 benefited from high demand for
combination influenza/COVID-19 testing assays in the Life Sciences segment's
Integrated Diagnostic Solutions unit. U.S. revenues in the third quarter of 2022
also reflected strong sales in the Medical segment's Medication Delivery
Solutions and Pharmaceutical Systems units, as well as by strong sales in the
Life Science's segment's Biosciences unit and the Interventional segment's
Urology and Critical Care unit.

The decline in international revenues in the third quarter of 2022 was primarily
driven by an unfavorable comparison to the prior-year quarter, which
substantially benefited from sales in the Life Sciences segment's Integrated
Diagnostic Solutions unit related to COVID-19-only diagnostic testing, as
further discussed above. This third quarter decline in international revenues
was partially offset by strong sales in the Medical segment's Pharmaceutical
Systems unit, the Life Sciences segment's Biosciences unit and the
Interventional segment's Peripheral Intervention unit.

Emerging market revenues were as follows and reflected growth in Latin America
and EMA, as well as growth in China despite an unfavorable impact from
pandemic-related lockdowns:

                                                   Three months ended June 30,
                                                                                Estimated
                                                                    Total          FX
(Millions of dollars)               2022                 2021       Change 
     Impact        FXN Change
Emerging markets        $        703                    $ 679        3.7  %        (2.4) %          6.1  %


Specified Items

Reflected in the financial results for the three and nine-month periods of fiscal years 2022 and 2021 were the following specified items:


                                                            Three months ended June 30,             Nine months ended June 30,
(Millions of dollars)                                         2022                  2021              2022              2021
Integration costs (a)                                   $           18          $      27          $     46          $    94
Restructuring costs (a)                                             38                 (4)               72               27
Separation-related items (b)                                        11                  -                10                -

Purchase accounting adjustments (c)                                354                355             1,074            1,055
European regulatory initiative-related costs (d)                    39                 32               105               91
Investment gains/losses and asset impairments (e)                    4                  -                94                -
Transaction gain/loss, product and other
litigation-related matters (f)                                       6                (70)               47              258
Impacts of debt extinguishment                                       2                  -                 2               30

Total specified items                                              472                341             1,451            1,555
Less: tax impact of specified items                                 76                 59               258              262
After-tax impact of specified items                     $          396      

$ 282 $ 1,193 $ 1,293

(a)Represents amounts associated with acquisition-related integrations and restructuring activities which are primarily recorded in Acquisition-related integration and restructuring expense and are further discussed below.

                                       30
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(b)Represents costs recorded to Other operating expense (income), net and incurred in connection with the separation of BD's former Diabetes Care business.

(c)Includes amortization and other adjustments related to the purchase accounting for acquisitions. BD's amortization expense is primarily recorded in Cost of products sold.


(d)Represents costs incurred to develop processes and systems to establish
initial compliance with the European Union Medical Device Regulation and the
European Union In Vitro Diagnostic Medical Device Regulation, which represent a
significant, unusual change to the existing regulatory framework. We consider
these costs to be duplicative of previously incurred costs and/or one-off costs,
which are limited to a specific period of time. These expenses, which are
recorded in Cost of products sold and Research and development expense, include
the cost of labor, other services and consulting (in particular, research and
development and clinical trials) and supplies, travel and other miscellaneous
costs.

(e)Primarily includes non-cash (gains) losses recorded within Other (expense)
income, net relating to certain investments. The amount in the nine-month period
of fiscal year 2022 also includes a non-cash asset impairment charge recorded in
Cost of products sold of $54 million in the Medical segment.

(f)The amount in the three-month period of fiscal year 2022 represented a charge
recorded to Cost of products sold to adjust the estimate of future product
remediation costs. Total charges recorded to adjust this estimate in the
nine-month periods of fiscal year 2022 and 2021 were $41 million and $37
million, respectively. The amount in the three and nine-month periods of fiscal
year 2021 include a gain of $88 million on a sale-leaseback transaction. The
amount in the nine-month period of 2021 additionally includes charges of $296
million in Other operating expense (income), net to record product liability
reserves, including related legal defense costs.


Gross Profit Margin


Gross profit margin for the three and nine-month periods of fiscal year 2022
compared with the prior-year periods in fiscal year 2021 reflected the following
impacts:

                                                                        Three-month period               Nine-month period
June 30, 2021 gross profit margin %                                                    42.5  %                         45.8  %

Impact of purchase accounting adjustments and other specified items

               -  %                         (0.6) %

Period-over-period decline in COVID-19-only testing profitability

             0.5  %                         (0.9) %
Operating performance                                                                   0.2  %                            -  %
Foreign currency translation                                                            1.3  %                          1.1  %
June 30, 2022 gross profit margin %                                                    44.5  %                         45.4  %


The impact of other specified items on gross profit margin in the nine-month
period of 2022 included a non-cash asset impairment charge of $54 million in the
Medical segment. Operating performance in the three and nine-month periods of
2022 largely reflected our efforts to mitigate higher raw material costs through
leveraging our ongoing continuous improvement projects, optimizing our product
mix and implementing price management. Operating performance in the three and
nine-month periods of 2021 was unfavorably impacted by approximately $71 million
of excess and obsolete inventory expenses related to COVID-19 testing inventory
which were recognized by the Integrated Diagnostic Solutions unit.
                                       31
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Operating Expenses

A summary of operating expenses for the three and nine-month periods of fiscal years 2022 and 2021 is as follows:


                                                                                             Increase                Nine months ended                Increase
                                                    Three months ended June 30,            (decrease) in                  June 30,                  (decrease) in
                                                       2022                 2021           basis points            2022              2021           basis points
(Millions of dollars)
Selling and administrative expense               $       1,149           $ 1,200                                $  3,527          $ 3,434
% of revenues                                             24.8   %          26.1  %            (130)                25.0  %          24.0  %             100

Research and development expense                 $         315           $   330                                $    956          $   911
% of revenues                                              6.8   %           7.2  %             (40)                 6.8  %           6.4  %              40

Acquisition-related integration and
restructuring expense                            $          55           $    24                                $    118          $   121

Other operating expense (income), net            $          11           $   (88)                               $      7          $   208


Selling and administrative expense


Lower selling and administrative expense as a percentage of revenues in the
three-month period of 2022 primarily reflected a decrease in our deferred
compensation plan liability due to market performance and favorable foreign
currency translation, partially offset by higher shipping costs. Higher selling
and administrative expense as a percentage of revenues in the nine-month period
of 2022 compared with the prior-year periods primarily reflected higher shipping
and selling costs in the current-year period, partially offset by a decrease in
our deferred compensation plan liability due to market performance and favorable
foreign currency translation. The investment losses on deferred compensation
plan assets were recorded to Other (expense) income, net.

Research and development expense


Research and development expense as a percentage of revenues in the three and
nine-month periods of 2022 primarily reflected the timing of project spending.
Spending in both the current and prior-year periods reflected our continued
commitment to drive innovation and growth with new products and platforms.

Acquisition-related integration and restructuring expense


Acquisition-related integration and restructuring expense in the three and
nine-month periods of 2022 included restructuring costs related to
simplification and other cost saving initiatives, as well as system integration
costs. Restructuring expenses in the three and nine-month periods of 2022
included non-cash asset impairment charges of $19 million, as noted above and
further discussed in Note 12 in the Notes to Condensed Consolidated Financial
Statements. Costs in the three and nine-month periods of 2021 included
restructuring costs related to simplification and other cost saving initiatives,
as well as integration costs incurred due to our acquisition of C.R. Bard, Inc.
in the first quarter of fiscal year 2018. For further disclosures regarding
restructuring costs, refer to Note 9 in the Notes to Condensed Consolidated
Financial Statements.

Other operating expense (income), net


Other operating expense (income), net in the three and nine-month periods of
2022 included costs associated with the spin-off of BD's former Diabetes Care
business. Other operating expense (income), net in the three and nine-month
periods of 2021 included a gain of $88 million on a sale-leaseback transaction.
The amount in the nine-month period of 2021 also included charges of $296
million to record product liability reserves, including related legal defense
costs.


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Nonoperating Income

Net interest expense

The components for the three and nine-month periods of fiscal years 2022 and 2021 were as follows:


                                              Three months ended June 30,                 Nine months ended June 30,
(Millions of dollars)                           2022                 2021                  2022                  2021
Interest expense                          $         (99)         $     (115)         $         (294)         $    (358)
Interest income                                       5                   2                       9                  7
Net interest expense                      $         (94)         $     

(113) $ (285) $ (351)




Lower interest expense in the current-year periods compared with the prior-year
periods primarily reflected lower overall interest rates on debt outstanding as
a result of prior-year refinancing activities.

Income Taxes

The income tax rates for the three and nine-month periods of fiscal years 2022 and 2021 are provided below.


                                                        Three months ended June 30,                Nine months ended June 30,
                                                        2022                  2021                  2022                 2021
Effective income tax rate                                  7.4  %                (7.5) %               7.9  %               5.9  %

Impact, in basis points, from specified items             (460)                (1,180)                (490)                (550)



The effective income tax rates for the three and nine-month periods of fiscal
year 2022 primarily reflected tax impacts from specified items that were less
favorable compared with the benefits associated with specified items recognized
in the prior-year periods.

Net Income and Diluted Earnings per Share from Continuing Operations

Net income and diluted earnings per share from continuing operations for the three and nine-month periods of fiscal years 2022 and 2021 were as follows:


                                                       Three months ended 

June 30, Nine months ended June 30,

                                                          2022              2021             2022              2021

Net Income from Continuing Operations (Millions of dollars)

                                               $    390          $  

407 $ 1,348 $ 1,450 Diluted Earnings per Share from Continuing Operations $ 1.28 $ 1.32 $ 4.45 $ 4.72


Unfavorable impact-specified items                     $  (1.38)         $ 

(0.97) $ (4.15) $ (4.41)


Favorable impact-foreign currency translation          $   0.10                           $   0.30


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Liquidity and Capital Resources


The following table summarizes our condensed consolidated statements of cash
flows:

                                                                     Nine months ended June 30,
(Millions of dollars)                                                 2022                  2021
Net cash provided by (used for) continuing operations
Operating activities                                            $        1,498          $    3,285
Investing activities                                            $       (1,215)         $   (1,162)
Financing activities                                            $         (187)         $   (2,164)


Net Cash Flows from Continuing Operating Activities


Cash flows from continuing operating activities in the first nine months of
fiscal year 2022 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 lower levels of accounts payable and accrued expenses and higher
levels of inventory and prepaid expenses, partially offset by lower levels of
trade receivables. Cash flows from continuing operating activities in the
current-year period additionally reflected a discretionary cash contribution of
$134 million to fund our pension obligation.

Cash flows from continuing operating activities in the first nine months of
fiscal year 2021 reflected net income, adjusted by a change in operating assets
and liabilities that was a net source of cash. This net source of cash primarily
reflected lower levels of trade receivables and higher levels of accounts
payable and accrued expenses, partially offset by higher levels of inventory and
prepaid expenses.

Net Cash Flows from Continuing Investing Activities


Our investments in capital expenditures are focused on projects that enhance our
cost structure and manufacturing capabilities, as well as support our BD 2025
strategy for growth and simplification. Net outflows from continuing investing
activities in the first nine months of fiscal year 2022 included capital
expenditure-related outflows of $658 million, compared with $742 million in the
prior-year period. Net outflows from continuing investing activities in the
first nine months of fiscal year 2022 also included cash payments of $450
million relating to various strategic acquisitions we have executed as part of
our growth strategy, including our acquisitions of Scanwell Health, Inc,
Tissuemed, Ltd., and Venclose, Inc. Net outflows from continuing investing
activities in the first nine months of fiscal year 2021 included cash payments
related to acquisitions of $283 million.

Net Cash Flows from Continuing Financing Activities

Net cash from continuing financing activities in the first nine months of fiscal years 2022 and 2021 included the following significant cash flows:

                                                        Nine months ended June 30,
 (Millions of dollars)                                      2022                  2021
 Cash inflow (outflow)

 Proceeds from long-term debt                    $           -                 $  1,715
 Distribution from Embecta                       $       1,266                 $      -
 Net transfer of cash to Embecta upon spin-off   $        (265)                $      -
 Payments of debt                                $        (305)                $ (1,999)

 Repurchases of common stock                     $           -                 $ (1,000)
 Dividends paid                                  $        (812)                $   (789)

Additional disclosures regarding the spin-off of Embecta are provided in Notes 2 and 13 in the Notes to Condensed Consolidated Financial Statements.

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Certain measures relating to our total debt were as follows:

 (Millions of dollars)                            June 30, 2022       September 30, 2021
 Total debt                                      $      16,365       $         17,610

 Weighted average cost of total debt                       2.7  %           

2.4 %

 Total debt as a percentage of total capital*             37.6  %           

41.1 %

* Represents shareholders' equity, net non-current deferred income tax liabilities, and debt.

Cash and Short-Term Investments


At June 30, 2022, total worldwide cash and equivalents and short-term
investments, including restricted cash, were approximately $2.773 billion. These
assets were largely held in the United States. We regularly review the amount of
cash and short-term investments held outside of the United States and our
historical foreign earnings are used to fund foreign investments or meet foreign
working capital and property, plant and equipment expenditure needs. To fund
cash needs in the United States, we rely on ongoing cash flow from U.S.
operations, access to capital markets and remittances from foreign subsidiaries
of earnings that are not considered to be permanently reinvested.

Financing Facilities


We have a five-year senior unsecured revolving credit facility in place which
will expire in September 2026. The credit facility provides borrowings of up to
$2.75 billion, with separate sub-limits of $100 million for letters of credit
and swingline loans. The expiration date of the credit facility may be extended
for up to two additional one year periods, subject to certain restrictions
(including the consent of the lenders). The credit facility provides that we
may, subject to additional commitments by lenders, request an additional $500
million of financing, for a maximum aggregate commitment under the credit
facility of up to $3.25 billion. Proceeds from this facility may be used for
general corporate purposes. There were no borrowings outstanding under the
revolving credit facility at June 30, 2022.

The agreement for our revolving credit facility contains the following financial
covenants. We were in compliance with these covenants, as applicable, as of
June 30, 2022.
•We are required to have a leverage coverage ratio of no more than:
•4.25-to-1 as of the last day of each fiscal quarter following the closing of
the credit facility; or
•4.75-to-1 for the four full fiscal quarters following the consummation of a
material acquisition.

We also have informal lines of credit outside the United States. We may, from
time to time, access the commercial paper market as we manage working capital
over the normal course of our business activities. We had no commercial paper
borrowings outstanding as of June 30, 2022. Also, over the normal course of our
business activities, we transfer certain trade receivable assets to third
parties under factoring agreements. Additional disclosures regarding sales of
trade receivable assets are provided in Note 12 in the Notes to Condensed
Consolidated Financial Statements.

Access to Capital and Credit Ratings


In June 2022, Moody's Investors Service ("Moody's") upgraded our senior
unsecured rating to Baa2 from Baa3. Moody's also updated BD's commercial paper
rating to P-2 from P-3 and revised its outlook on our ratings from Positive to
Stable. Also in June 2022, Fitch Ratings ("Fitch") upgraded our senior unsecured
rating to BBB from BBB- and revised its outlook on our ratings from Positive to
Stable. In addition, Fitch assigned us with a commercial paper rating of F2. Our
corporate credit ratings with Standard & Poor's Ratings Services at June 30,
2022 were unchanged compared with our ratings at September 30, 2021.

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 credit losses,
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. In addition to continually evaluating all
governmental receivables for potential credit losses based upon historical loss
experiences, we also evaluate such receivables
                                       35
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based upon 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 credit losses
in general as a result of the COVID-19 pandemic. No assurances can be given that
the risk of credit losses will not increase in the future given the uncertainty
around the duration of the pandemic and its economic impact.

Other Matters

Critical Accounting Policies

There were no changes to our critical accounting policies from those disclosed in our 2021 Annual Report.


Regulatory Matters

FDA Warning Letter

On January 11, 2018, BD received a Warning Letter from the FDA with respect to
our former BD Preanalytical Systems ("PAS") unit, citing certain alleged
violations of quality system regulations and of law. 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 has worked closely with the FDA and
implemented corrective actions to address the quality management system concerns
identified in the warning letter. In March 2020, the FDA conducted a subsequent
inspection of PAS, which it classified as Voluntary Action Indicated, which
means the FDA will not take or recommend any administrative or regulatory action
as a result of the unit's response to the observations associated with the
quality management concerns in the inspection. BD continues to work with the FDA
to generate additional clinical evidence and file 510(k)s as remaining
commitments associated with the Warning Letter. In January 2022, BD received FDA
clearance for its BD Vacutainer® ACD Blood Collection Tubes used in
immunohematology. The FDA review of these remaining commitments is ongoing and
no assurances can be given regarding further action by the FDA as a result of
these commitments, including but not limited to action pursuant to the Warning
Letter.

Ethylene Oxide/Consent Order - Covington, Georgia, USA


On October 28, 2019, BD entered into a consent order with the Environmental
Protection Division of the Georgia Department of Natural Resources (the "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, which has
been amended two times upon mutual agreement of BD and EPD, BD voluntarily
agreed to a number of operational changes at its Covington and Madison, Georgia
facilities, as well as at its distribution center in Covington, designed to
further reduce ethylene oxide emissions, including but not limited to operating
at a reduced capacity until successful implementation of fugitive emission
control technology, ongoing ambient air monitoring and operational controls at
such facilities. Following submission of data relating to the implementation of
these operational changes, BD was permitted to return to normal operations in
December 2021 at its facilities in Georgia in accordance with the operating
conditions set forth in its permit applications, including a condition to
continue ambient air monitoring. However, BD's sterilization operations in
Georgia remain subject to the EPD's final approval of BD's permit applications
and could be subject to additional restrictions. 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, especially considering the reduced
capacity of third-party sterilization service providers and the regulatory
timelines associated with transferring sterilization operations for regulated
products.

At a broader level, there is increased focus on the use of ethylene oxide, and
several states have imposed, or may impose in the future, additional regulatory
requirements associated with the use and emission of ethylene oxide, the most
frequently used sterilant for medical devices and health care products in the
U.S. This increased regulation could require BD or sterilization service
providers, including providers used by BD, to temporarily suspend operations to
install additional fugitive emissions control technology, limit the use of
ethylene oxide or take other actions, which would impact BD's operations and
further reduce the available capacity of third-party providers to sterilize
medical devices and health care products. A few states have filed lawsuits to
require additional air quality controls and expand limitations on the use of
ethylene oxide at sterilization facilities. For example, in December 2020, the
State of New Mexico filed a lawsuit seeking a temporary restraining order and a
preliminary and permanent injunction against a major medical device sterilizer,
which sterilizes certain of our surgery products, to reduce ethylene oxide
emissions associated with their sterilization process. On the federal level, in
late 2019, the U.S. Environmental Protection Agency provided notice that it
would be conducting rulemaking to reconsider federal regulations applicable to
the use and emission of ethylene oxide, and there continues to be increased
focus on the use of ethylene oxide on the federal level. If any such proceedings
or rulemaking result in the suspension or interruption of sterilization
operations at BD
                                       36
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or at medical device sterilizers used by BD, or otherwise limit the availability
of third-party sterilization capacity, this could interrupt or otherwise
adversely impact production of certain of our products or lead to civil
litigation or other claims against BD. BD has business continuity plans in place
to mitigate the impact of any such disruptions, although these plans may not be
able to fully offset such impact, for the reasons noted above.

Consent Decree with FDA

As previously reported, our BD AlarisTM infusion pump organizational unit is operating under an amended consent decree entered into by CareFusion (the "Consent Decree") 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 (the "Form 483 Notice") that contains a number of
observations of non-conformance with quality system regulations. In addition, in
December 2021, the FDA issued to CareFusion 303, Inc. a letter of non-compliance
with respect to the Consent Decree (the "Non-Compliance Letter") stating that,
among other things, it had determined that certain of BD's corrective actions
with respect to the Form 483 Notice appeared to be adequate, some were still in
progress such that adequacy could not be determined yet, and certain others were
not adequate (e.g., complaint handling and corrective and preventive actions
(CAPA), design verification and medical device reporting). Per the terms of the
Non-Compliance Letter, CareFusion 303, Inc. provided the FDA with a proposed
comprehensive corrective action plan and has retained an independent expert to
conduct periodic audits of CareFusion 303, Inc. infusion pump facilities over
the next four years. CareFusion 303, Inc. will update its corrective action plan
to address any observations that may arise during the course of these audits,
and these updates, as well as the audit reports, will be shared with FDA in
accordance with the terms of the Non-Compliance Letter. The FDA's review of the
items raised in the Form 483 Notice and Non-Compliance Letter remains ongoing,
and no assurances can be given regarding further action by the FDA as a result
of the observations, including but not limited to action pursuant to the Consent
Decree, or that the corrective actions proposed by CareFusion 303, Inc. will be
adequate to address these observations. Additionally, we cannot currently
predict the amount of additional monetary investment that will be incurred to
resolve this matter or the matter's ultimate impact on our business.

The Consent Decree authorizes the FDA, in the event of any violations in the
future, to order us to cease manufacturing and distributing infusion pumps,
recall products and take other actions. We may be required to pay damages of
$15,000 per day per violation if we fail to comply with any provision of the
Consent Decree, up to $15 million per year. We may also be subject to future
proceedings and litigation relating to the matters addressed in the Consent
Decree, including, but not limited to, additional fines, penalties, other
monetary remedies, and expansion of the terms of the Consent Decree.

We are undertaking certain remediation of our BD AlarisTM System, and are
currently shipping the product in the United States, only in cases of medical
necessity and to remediate recalled software versions. As previously disclosed,
we submitted our 510(k) premarket notification to the FDA for the BD Alaris™
System in April 2021. The 510(k) submission is intended to bring the regulatory
clearance for the BD Alaris™ System up-to-date, address open recall issues and
provide other updates and features, including a new version of BD Alaris™ System
software that will provide clinical, operational and cybersecurity updates. We
will not be able to fully resume commercial operations for the BD Alaris™ System
in the United States until BD's 510(k) submission relating to the product has
been cleared by the FDA. No assurances can be given as to when or if clearance
will be obtained from the FDA.

For further discussion of risks relating to the regulations to which we are subject, see Part I, Item 1A, of our 2021 Annual Report.

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 SEC, 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,
                                       37
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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. The Russia and
Ukraine conflict may also heighten the impact of certain of these factors
described below and the Risk Factors in our 2021 Annual Report. For further
discussion of certain of these factors, see Item 1A. Risk Factors in our 2021
Annual Report and our subsequent Quarterly Reports on Form 10-Q.

•Any impact the COVID-19 pandemic, including resurgences in COVID-19 infections
or new strains of the virus or additional or extended lockdowns or other
restrictions imposed by government entities, may have on our business, the
global economy's recovery and the global healthcare system. This may include
decreases in the demand for our products, disruptions to our operations or the
operations of our suppliers and customers (including employee absenteeism) or
disruptions to our supply chain.

•Factors such as the rate of vaccination, the effectiveness of vaccines against
different strains, the rate of infections, and competitive factors that could
impact the demand and pricing for our COVID-19 diagnostics testing.

•The impact of inflation and disruptions in our global supply chain on BD and
our suppliers (particularly sole-source suppliers and providers of sterilization
services), including fluctuations in the cost and availability of oil-based
resins and other raw materials, as well as certain components, used in the
production or sterilization of our products, transportation constraints and
delays, product shortages, energy shortages or increased energy costs, labor
shortages in the United States and elsewhere, and increased operating and labor
costs.

•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.

•The risks associated with the spin-off of our former Diabetes Care business,
including factors that could adversely affect our ability to realize the
expected benefits of the spin-off, or the qualification of the spin-off as a
tax-free transaction for U.S. federal income tax purposes.

•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 overall level of indebtedness, including our ability to
service our debt and refinance our indebtedness, which is dependent upon the
capital markets and our overall financial condition at such time.

•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 or implementation of similar
cost-containment efforts.

•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 cost-reduction measures instituted by and the continued
consolidation among healthcare providers.

•The impact of changes in U.S. federal laws and policies 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.
                                       38
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•Security breaches of our information 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, including sensitive
personal data, 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 and maintain regulatory approvals and registrations 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 could preclude or delay commercialization of a
product. Delays in obtaining necessary approvals or clearances from the 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. 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 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 the impacts of climate change, hurricanes,
tornadoes, windstorms, fires, earthquakes and floods and other extreme weather
events, global health 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, or adversely affecting our manufacturing and distribution capabilities
or causing interruptions in our supply chain.

•Pending and potential future litigation or other proceedings asserting, and/or
investigations concerning and/or subpoenas and requests 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)), potential anti-corruption and related internal control
violations under the Foreign Corrupt Practices Act, antitrust claims, securities
law claims, product liability (which may involve lawsuits seeking class action
status or seeking to establish multi-district litigation proceedings, including
pending claims relating to our hernia repair implant products, surgical
continence products for women and vena cava filter products), claims with
respect to environmental matters, data privacy breaches 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 and regulatory requirements for new
products and products in the post-marketing 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,
                                       39
--------------------------------------------------------------------------------

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, our U.S. infusion pump
business is operating under a Consent Decree with the FDA. The Consent Decree
authorizes the FDA, in the event of any violations in the future, to order our
U.S. infusion pump business to cease manufacturing and distributing products,
recall products or take other actions, and order the payment of significant
monetary damages if the business subject to the decree fails to comply with any
provision of the Consent Decree. We are undertaking certain remediation of our
BD AlarisTM System, and are currently shipping the product in the U.S., only in
cases of medical necessity and to remediate recalled software versions. We will
not be able to fully resume commercial operations for the BD Alaris System in
the U.S. until BD's 510(k) submission relating to the product has been cleared
by the FDA. No assurances can be given as to when or if clearance will be
obtained from the FDA.

•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 FASB or the SEC.


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.
                                       40

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