UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, ~~2020~~2021


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 001-4802

Becton, Dickinson and Company

(Exact name of registrant as specified in its charter)

New Jersey

22-0760120

(State or other jurisdiction of
incorporation or organization)

(I.R.S. Employer
Identification No.)

1 Becton Drive,

Franklin Lakes,

New Jersey

07417-1880

(201)

847-6800

(Address of principal executive offices) (Zip Code)

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class

Trading Symbol

Name of Each Exchange on Which Registered

Common stock, par value $1.00

BDX

New York Stock Exchange

Depositary Shares, each representing a 1/20th interest in a share of 6.00% Mandatory Convertible Preferred Stock, Series B

BDXB

New York Stock Exchange

1.000% Notes due December 15, 2022

BDX22A

New York Stock Exchange

1.900% Notes due December 15, 2026

BDX26

New York Stock Exchange

1.401% Notes due May 24, 2023

BDX23A

New York Stock Exchange

3.020% Notes due May 24, 2025

BDX25

New York Stock Exchange

~~0.174% Notes due June 4, 2021~~

~~BDX/21~~

~~New York Stock Exchange~~

0.632% Notes due June 4, 2023

BDX/23A

New York Stock Exchange

1.208% Notes due June 4, 2026

BDX/26A

New York Stock Exchange

1.213% Notes due February 12, 2036

BDX/36

New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically ~~and posted on its corporate Web site, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit ~~and post~~ such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of large accelerated filer, accelerated filer, smaller reporting company, and emerging growth company in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

There were ~~289,868,551~~287,190,180 shares of Common Stock, $1.00 par value, outstanding at June 30, ~~2020.~~2021.

BECTON, DICKINSON AND COMPANY

FORM 10-Q

For the quarterly period ended June 30, ~~2020~~2021

TABLE OF CONTENTS


		Page Number
Part I.	FINANCIAL INFORMATION

Item 1.	Financial Statements (Unaudited)
	Condensed Consolidated Balance Sheets	3
	Condensed Consolidated Statements of Income	4
	Condensed Consolidated Statements of Comprehensive Income	5
	Condensed Consolidated Statements of Cash Flows	6
	Notes to Condensed Consolidated Financial Statements	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2423
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	39
Item 4.	Controls and Procedures	39

Part II.	OTHER INFORMATION

Item 1.	Legal Proceedings	40
Item 1A.	Risk Factors	41
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	41
Item 3.	Defaults Upon Senior Securities	42
Item 4.	Mine Safety Disclosures	42
Item 5.	Other Information	42
Item 6.	Exhibits	42

Signatures		43

ITEM 1. FINANCIAL STATEMENTS

BECTON, DICKINSON AND COMPANY

CONDENSED CONSOLIDATED BALANCE SHEETS

Millions of dollars


		June 30, 2020		September 30, 2019			June 30, 2021		September 30, 2020
Assets	Assets	(Unaudited)				Assets	(Unaudited)
Current Assets:	Current Assets:					Current Assets:
Cash and equivalents	Cash and equivalents	$	2,882	$	536	Cash and equivalents	$	3,153	$	2,825
Restricted cash	Restricted cash	82		54		Restricted cash	128		92
Short-term investments	Short-term investments	22		30		Short-term investments	24		20
Trade receivables, net	Trade receivables, net	1,993		2,345		Trade receivables, net	2,078		2,398
Inventories:	Inventories:					Inventories:
Materials	Materials	627		544		Materials	636		602
Work in process	Work in process	336		318		Work in process	388		335
Finished products	Finished products	1,983		1,717		Finished products	1,922		1,806
		2,945		2,579			2,947		2,743

Prepaid expenses and other	Prepaid expenses and other	903		1,119		Prepaid expenses and other	1,207		891
Total Current Assets	Total Current Assets	8,827		6,664		Total Current Assets	9,538		8,969
Property, Plant and Equipment	Property, Plant and Equipment	11,660		11,128		Property, Plant and Equipment	12,651		11,919
Less allowances for depreciation and amortization	Less allowances for depreciation and amortization	5,819		5,469		Less allowances for depreciation and amortization	6,487		5,996
Property, Plant and Equipment, Net	Property, Plant and Equipment, Net	5,841		5,659		Property, Plant and Equipment, Net	6,164		5,923
Goodwill	Goodwill	23,549		23,376		Goodwill	23,814		23,620
Developed Technology, Net	Developed Technology, Net	10,356		11,054		Developed Technology, Net	9,541		10,146
Customer Relationships, Net	Customer Relationships, Net	3,186		3,424		Customer Relationships, Net	2,899		3,107
Other Intangibles, Net	Other Intangibles, Net	567		500		Other Intangibles, Net	557		560

Other Assets	Other Assets	1,632		1,088		Other Assets	1,821		1,687
Total Assets	Total Assets	$	53,959	$	51,765	Total Assets	$	54,333	$	54,012
Liabilities and Shareholders’ Equity	Liabilities and Shareholders’ Equity					Liabilities and Shareholders’ Equity
Current Liabilities:	Current Liabilities:					Current Liabilities:
Short-term debt	Short-term debt	$	1,630	$	1,309	Short-term debt	$	2,033	$	707
Payables, accrued expenses and other current liabilities	Payables, accrued expenses and other current liabilities	4,437		4,345		Payables, accrued expenses and other current liabilities	5,716		5,129

Total Current Liabilities	Total Current Liabilities	6,067		5,655		Total Current Liabilities	7,749		5,836
Long-Term Debt	Long-Term Debt	17,090		18,081		Long-Term Debt	15,700		17,224
Long-Term Employee Benefit Obligations	Long-Term Employee Benefit Obligations	1,297		1,272		Long-Term Employee Benefit Obligations	1,421		1,435
Deferred Income Taxes and Other Liabilities	Deferred Income Taxes and Other Liabilities	5,483		5,676		Deferred Income Taxes and Other Liabilities	5,329		5,753
Commitments and Contingencies (See Note 5)	Commitments and Contingencies (See Note 5)					Commitments and Contingencies (See Note 5)	0		0
Shareholders’ Equity	Shareholders’ Equity					Shareholders’ Equity
Preferred stock	Preferred stock	2		2		Preferred stock	2		2
Common stock	Common stock	365		347		Common stock	365		365
Capital in excess of par value	Capital in excess of par value	19,228		16,270		Capital in excess of par value	19,282		19,270
Retained earnings	Retained earnings	12,916		12,913		Retained earnings	13,821		12,791
Deferred compensation	Deferred compensation	23		23		Deferred compensation	23		23
Common stock in treasury - at cost	Common stock in treasury - at cost	(6,145)		(6,190)		Common stock in treasury - at cost	(7,027)		(6,138)
Accumulated other comprehensive loss	Accumulated other comprehensive loss	(2,367)		(2,283)		Accumulated other comprehensive loss	(2,330)		(2,548)
Total Shareholders’ Equity	Total Shareholders’ Equity	24,022		21,081		Total Shareholders’ Equity	24,135		23,765
Total Liabilities and Shareholders’ Equity	Total Liabilities and Shareholders’ Equity	$	53,959	$	51,765	Total Liabilities and Shareholders’ Equity	$	54,333	$	54,012

Amounts may not add due to rounding.

See notes to condensed consolidated financial statements

BECTON, DICKINSON AND COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

Millions of dollars, except per share data

(Unaudited)


		Three Months Ended June 30,						Nine Months Ended June 30,							Three Months Ended June 30,				Nine Months Ended June 30,
		2020		2019		2020		2019			2021		2020		2021		2020
Revenues	Revenues	$	3,855	$	4,350	$	12,333	$	12,706	Revenues	$	4,890	$	3,855	$	15,113	$	12,333
Cost of products sold	Cost of products sold	2,195		2,276		6,962		6,684		Cost of products sold	2,729		2,195		7,973		6,962
Selling and administrative expense	Selling and administrative expense	980		1,076		3,126		3,238		Selling and administrative expense	1,237		980		3,535		3,126
Research and development expense	Research and development expense	262		282		797		792		Research and development expense	344		262		952		797
Acquisitions and other restructurings	Acquisitions and other restructurings	74		90		235		281		Acquisitions and other restructurings	24		74		126		235
Other operating (income) expense, net	Other operating (income) expense, net	(15)		—		(15)		61		Other operating (income) expense, net	(72)		(15)		224		(15)
Total Operating Costs and Expenses	Total Operating Costs and Expenses	3,497		3,725		11,104		11,056		Total Operating Costs and Expenses	4,262		3,497		12,809		11,104
Operating Income	Operating Income	358		626		1,229		1,649		Operating Income	628		358		2,304		1,229
Interest expense	Interest expense	(135)		(156)		(405)		(498)		Interest expense	(115)		(135)		(358)		(405)
Interest income	Interest income	2		2		5		8		Interest income	2		2		7		5
Other income (expense), net		23		(11)		12		19
Other (expense) income, net										Other (expense) income, net	(1)		23		23		12
Income Before Income Taxes	Income Before Income Taxes	248		460		842		1,178		Income Before Income Taxes	514		248		1,976		842
Income tax (benefit) provision	Income tax (benefit) provision	(38)		9		96		107		Income tax (benefit) provision	(11)		(38)		149		96
Net Income	Net Income	286		451		746		1,071		Net Income	525		286		1,827		746
Preferred stock dividends	Preferred stock dividends	(9)		(38)		(84)		(114)		Preferred stock dividends	(23)		(9)		(68)		(84)
Net income applicable to common shareholders	Net income applicable to common shareholders	$	277	$	413	$	662	$	957	Net income applicable to common shareholders	$	502	$	277	$	1,760	$	662

Basic Earnings per Share	Basic Earnings per Share	$	0.98	$	1.53	$	2.41	$	3.55	Basic Earnings per Share	$	1.73	$	0.98	$	6.06	$	2.41
Diluted Earnings per Share	Diluted Earnings per Share	$	0.97	$	1.51	$	2.38	$	3.49	Diluted Earnings per Share	$	1.72	$	0.97	$	6.00	$	2.38
Dividends per Common Share	Dividends per Common Share	$	0.79	$	0.77	$	2.37	$	2.31	Dividends per Common Share	$	0.83	$	0.79	$	2.49	$	2.37

Amounts may not add due to rounding.

See notes to condensed consolidated financial statements

BECTON, DICKINSON AND COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

Millions of dollars

(Unaudited)


		Three Months Ended June 30,						Nine Months Ended June 30,							Three Months Ended June 30,				Nine Months Ended June 30,
		2020		2019		2020		2019			2021		2020		2021		2020
Net Income	Net Income	$	286	$	451	$	746	$	1,071	Net Income	$	525	$	286	$	1,827	$	746
Other Comprehensive Income (Loss), Net of Tax	Other Comprehensive Income (Loss), Net of Tax									Other Comprehensive Income (Loss), Net of Tax
Foreign currency translation adjustments	Foreign currency translation adjustments	34		(68)		(66)		(27)		Foreign currency translation adjustments	19		34		68		(66)
Defined benefit pension and postretirement plans	Defined benefit pension and postretirement plans	17		12		50		40		Defined benefit pension and postretirement plans	14		17		72		50
Cash flow hedges	Cash flow hedges	2		(3)		(68)		(2)		Cash flow hedges	(34)		2		78		(68)
Other Comprehensive Income (Loss), Net of Tax		53		(58)		(83)		12
Other Comprehensive (Loss) Income, Net of Tax										Other Comprehensive (Loss) Income, Net of Tax	(1)		53		218		(83)
Comprehensive Income	Comprehensive Income	$	338	$	393	$	663	$	1,082	Comprehensive Income	$	524	$	338	$	2,045	$	663

Amounts may not add due to rounding.

See notes to condensed consolidated financial statements

BECTON, DICKINSON AND COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Millions of dollars

(Unaudited)


		Nine Months Ended June 30,							Nine Months Ended June 30,
		2020		2019			2021		2020
Operating Activities	Operating Activities					Operating Activities
Net income	Net income	$	746	$	1,071	Net income	$	1,827	$	746
Adjustments to net income to derive net cash provided by operating activities:	Adjustments to net income to derive net cash provided by operating activities:					Adjustments to net income to derive net cash provided by operating activities:
Depreciation and amortization	Depreciation and amortization	1,601		1,700		Depreciation and amortization	1,681		1,601
Share-based compensation	Share-based compensation	193		208		Share-based compensation	189		193
Deferred income taxes	Deferred income taxes	(203)		(172)		Deferred income taxes	(95)		(203)
Change in operating assets and liabilities	Change in operating assets and liabilities	(248)		(661)		Change in operating assets and liabilities	158		(248)
Pension obligation	Pension obligation	77		(150)		Pension obligation	52		77

Gain on sale of business		—		(336)

Product liability-related charge	Product liability-related charge	—		331		Product liability-related charge	296		0
Other, net	Other, net	(107)		(32)		Other, net	(411)		(107)
Net Cash Provided by Operating Activities	Net Cash Provided by Operating Activities	2,058		1,959		Net Cash Provided by Operating Activities	3,696		2,058
Investing Activities	Investing Activities					Investing Activities
Capital expenditures	Capital expenditures	(597)		(599)		Capital expenditures	(766)		(597)

Acquisitions of businesses, net of cash acquired		(139)		—
Proceeds from divestitures, net		—		477
Acquisitions, net of cash acquired						Acquisitions, net of cash acquired	(283)		(139)

Other, net	Other, net	(169)		(178)		Other, net	(137)		(169)
Net Cash Used for Investing Activities	Net Cash Used for Investing Activities	(905)		(300)		Net Cash Used for Investing Activities	(1,186)		(905)
Financing Activities	Financing Activities					Financing Activities
Change in credit facility borrowings	Change in credit facility borrowings	(485)		300		Change in credit facility borrowings	0		(485)
Proceeds from long-term debt and term loans	Proceeds from long-term debt and term loans	3,389		2,224		Proceeds from long-term debt and term loans	1,715		3,389
Payments of debt and term loans	Payments of debt and term loans	(3,711)		(3,882)		Payments of debt and term loans	(1,999)		(3,711)
Proceeds from issuance of equity securities	Proceeds from issuance of equity securities	2,917		—		Proceeds from issuance of equity securities	0		2,917

Repurchases of common stock						Repurchases of common stock	(1,000)		0
Dividends paid	Dividends paid	(773)		(737)		Dividends paid	(789)		(773)
Other, net	Other, net	(106)		(204)		Other, net	(91)		(106)
Net Cash Provided by (Used for) Financing Activities		1,230		(2,300)
Net Cash (Used for) Provided by Financing Activities						Net Cash (Used for) Provided by Financing Activities	(2,164)		1,230
Effect of exchange rate changes on cash and equivalents and restricted cash	Effect of exchange rate changes on cash and equivalents and restricted cash	(9)		(1)		Effect of exchange rate changes on cash and equivalents and restricted cash	18		(9)
Net increase (decrease) in cash and equivalents and restricted cash		2,374		(642)
Net increase in cash and equivalents and restricted cash						Net increase in cash and equivalents and restricted cash	365		2,374
Opening Cash and Equivalents and Restricted Cash	Opening Cash and Equivalents and Restricted Cash	590		1,236		Opening Cash and Equivalents and Restricted Cash	2,917		590
Closing Cash and Equivalents and Restricted Cash	Closing Cash and Equivalents and Restricted Cash	$	2,964	$	594	Closing Cash and Equivalents and Restricted Cash	$	3,282	$	2,964

Amounts may not add due to rounding.

See notes to condensed consolidated financial statements

BECTON, DICKINSON AND COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, ~~2020~~2021

Note 1 – Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and, in the opinion of the management of Becton, Dickinson and Company (the "Company" or "BD"), include all adjustments which are of a normal recurring nature, necessary for a fair presentation of the financial position and the results of operations and cash flows for the periods presented. However, the financial statements do not include all information and accompanying notes required for a presentation in accordance with U.S. generally accepted accounting principles ("U.S. GAAP"). These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and the notes thereto included in the Company’s ~~2019~~2020 Annual Report on Form 10-K. Within the financial statements and tables presented, certain columns and rows may not add due to the use of rounded numbers for disclosure purposes. Percentages and earnings per share amounts presented are calculated from the underlying amounts. The results of operations for the interim periods are not necessarily indicative of the results of operations to be expected for the full year.

BD’s Intention to Spin Off Diabetes Care

On May 6, 2021, the Company announced its intention to spin off its Diabetes Care business as a separate publicly traded company to BD’s shareholders. The proposed spin-off is intended to be a tax-free transaction for U.S. federal income tax purposes and is expected to be completed in the first half of calendar year 2022, subject to the satisfaction of customary conditions, including final approval from BD’s Board of Directors and the effectiveness of a registration statement on Form 10.

Note 2 – Accounting Changes

New Accounting ~~Principles~~Principle Adopted

In ~~February~~June 2016, the Financial Accounting Standards Board ("FASB") issued a new lease accounting standard which requires lessees to recognize lease assets and lease liabilities on the balance sheet, as well as requires expanded disclosures regarding leasing arrangements. The Company adopted this standard on October 1, 2019 and elected certain practical expedients permitted under the transition guidance, including a transition method which allows application of the new standard at its adoption date, rather than at the earliest comparative period presented in the financial statements. The Company also elected not to perform any reassessments relative to its expired and existing leases upon its adoption of the new requirements. The Company's adoption of this standard did not materially impact its condensed consolidated financial statements. Additional disclosures regarding the Company’s lease arrangements are provided in Note 15.

In August 2018, the FASB issued a new accounting standard to align the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal use software license). The Company early adopted this standard as of April 1, 2020 on a prospective basis. The adoption of this standard did not materially impact the Company's condensed consolidated financial statements.

~~New Accounting Principle Not Yet Adopted~~

~~In June 2016, the FASB~~ issued a new accounting standard which requires earlier recognition of credit losses on loans and other financial instruments held by entities, including trade receivables. The new standard requires entities to measure all expected credit losses for financial assets held at each reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. The ~~Company is currently evaluating the impact that~~Company’s adoption of this ~~new~~ accounting standard ~~will have on its consolidated financial statements upon its adoption~~ on October 1, ~~2020.~~2020, using the modified retrospective method, did not have a material impact on the Company's condensed consolidated financial statements.

Note 3 – Shareholders' Equity

Changes in certain components of shareholders' equity for the first three quarters of fiscal years ~~2020~~2021 and ~~2019~~2020 were as follows:


		Common Stock Issued at Par Value		Capital in Excess of Par Value		Retained Earnings		Deferred Compensation		Treasury Stock						Common Stock Issued at Par Value		Capital in Excess of Par Value		Retained Earnings		Deferred Compensation	Treasury Stock
(Millions of dollars)	(Millions of dollars)																						Capital in Excess of Par Value		Retained Earnings	Deferred Compensation	Shares (in thousands)	Amount
Balance at September 30, 2019		$	347	$	16,270	$	12,913	$	23	(76,260)	$	(6,190)
Balance at September 30, 2020													Balance at September 30, 2020	$	365	$	19,270	$	12,791	$	23	(74,623)	$	(6,138)
Net income	Net income	—		—		278		—		—	—		Net income	—		—		1,003		—		—	—
Common dividends ($0.79 per share)		—		—		(215)		—		—	—
Common dividends ($0.83 per share)													Common dividends ($0.83 per share)	—		—		(242)		—		—	—
Preferred dividends	Preferred dividends	—		—		(38)		—		—	—		Preferred dividends	—		—		(23)		—		—	—
Common stock issued for share-based compensation and other plans, net	Common stock issued for share-based compensation and other plans, net	—		(32)		—		1		758	(38)		Common stock issued for share-based compensation and other plans, net	—		(53)		—		—		549	2
Share-based compensation	Share-based compensation	—		82		—		—		—	—		Share-based compensation	—		83		—		—		—	—
Common stock held in trusts, net (a)	Common stock held in trusts, net (a)	—		—		—		—		(12)	—		Common stock held in trusts, net (a)	—		—		—		—		(7)	—
Balance at December 31, 2019		$	347	$	16,320	$	12,938	$	24	(75,514)	$	(6,228)
Effect of change in accounting principles (see Note 2)													Effect of change in accounting principles (see Note 2)	—		—		(9)		—		—	—
Balance at December 31, 2020													Balance at December 31, 2020	$	365	$	19,301	$	13,522	$	23	(74,080)	$	(6,136)
Net income	Net income	—		—		183		—		—	—		Net income	—		—		299		—		—	—
Common dividends ($0.79 per share)		—		—		(215)		—		—	—
Common dividends ($0.83 per share)													Common dividends ($0.83 per share)	—		—		(242)		—		—	—
Preferred dividends	Preferred dividends	—		—		(38)		—		—	—		Preferred dividends	—		—		(23)		—		—	—
Common stock issued for share-based compensation and other plans, net	Common stock issued for share-based compensation and other plans, net	—		(91)		—		(1)		573	70		Common stock issued for share-based compensation and other plans, net	—		(15)		—		—		234	4
Share-based compensation	Share-based compensation	—		58		—		—		—	—		Share-based compensation	—		55		—		—		—	—
Common stock held in trusts, net (a)	Common stock held in trusts, net (a)	—		—		—		—		30	—		Common stock held in trusts, net (a)	—		—		—		—		23	—
Balance at March 31, 2020		$	347	$	16,288	$	12,868	$	23	(74,911)	$	(6,158)
Balance at March 31, 2021													Balance at March 31, 2021	$	365	$	19,341	$	13,557	$	23	(73,821)	$	(6,132)
Net income	Net income	—		—		286		—		—	—		Net income	—		—		525��		—		—	—
Common dividends ($0.79 per share)		—		—		(229)		—		—	—
Common dividends ($0.83 per share)													Common dividends ($0.83 per share)	—		—		(239)		—		—	—
Preferred dividends	Preferred dividends	—		—		(9)		—		—	—		Preferred dividends	—		—		(23)		—		—	—
Common stock issued for:
Preferred shares converted to common shares		12		(9)		—		—		—	—
Public equity offerings		6		2,909		—		—		—	—
Share-based compensation and other plans, net		—		(12)		—		—		127	13
Common stock issued for share-based compensation and other plans, net													Common stock issued for share-based compensation and other plans, net	—		(9)		—		—		87	5
Share-based compensation	Share-based compensation	—		52		—		—		—	—		Share-based compensation	—		50		—		—		—	—
Common stock held in trusts, net (a)	Common stock held in trusts, net (a)	—		—		—		—		13	—		Common stock held in trusts, net (a)	—		—		—		—		8	—
Balance at June 30, 2020		$	365	$	19,228	$	12,916	$	23	(74,771)	$	(6,145)
Repurchase of common stock													Repurchase of common stock	—		(100)		—		—		(3,724)	(900)
Balance at June 30, 2021													Balance at June 30, 2021	$	365	$	19,282	$	13,821	$	23	(77,450)	$	(7,027)


		Common Stock Issued at Par Value		Capital in Excess of Par Value		Retained Earnings		Deferred Compensation		Treasury Stock						Common Stock Issued at Par Value		Capital in Excess of Par Value		Retained Earnings		Deferred Compensation	Treasury Stock
(Millions of dollars)	(Millions of dollars)																						Capital in Excess of Par Value		Retained Earnings	Deferred Compensation	Shares (in thousands)	Amount
Balance at September 30, 2018		$	347	$	16,179	$	12,596	$	22	(78,463)	$	(6,243)
Balance at September 30, 2019													Balance at September 30, 2019	$	347	$	16,270	$	12,913	$	23	(76,260)	$	(6,190)
Net income	Net income	—		—		599		—		—	—		Net income	—		—		278		—		—	—
Common dividends ($0.77 per share)		—		—		(207)		—		—	—
Preferred dividends		—		—		(38)		—		—	—
Common stock issued for share-based compensation and other plans, net		—		(97)		—		2		851	9
Share-based compensation		—		92		—		—		—	—
Common stock held in trusts, net (a)		—		—		—		—		(12)	—
Effect of change in accounting principles		—		—		68		—		—	—
Balance at December 31, 2018		$	347	$	16,174	$	13,018	$	24	(77,624)	$	(6,235)
Net income		—		—		20		—		—	—
Common dividends ($0.77 per share)		—		—		(208)		—		—	—
Common dividends ($0.79 per share)													Common dividends ($0.79 per share)	—		—		(215)		—		—	—
Preferred dividends	Preferred dividends	—		—		(38)		—		—	—		Preferred dividends	—		—		(38)		—		—	—
Common stock issued for share-based compensation and other plans, net	Common stock issued for share-based compensation and other plans, net	—		(57)		(1)		(1)		618	42		Common stock issued for share-based compensation and other plans, net	—		(32)		—		1		758	(38)
Share-based compensation	Share-based compensation	—		60		—		—		—	—		Share-based compensation	—		82		—		—		—	—
Common stock held in trusts, net (a)	Common stock held in trusts, net (a)	—		—		—		—		50	—		Common stock held in trusts, net (a)	—		—		—		—		(12)	—

Balance at March 31, 2019		$	347	$	16,177	$	12,792	$	23	(76,955)	$	(6,192)
Balance at December 31, 2019													Balance at December 31, 2019	$	347	$	16,320	$	12,938	$	24	(75,514)	$	(6,228)
Net income	Net income	—		—		451		—		—	—		Net income	—		—		183		—		—	—
Common dividends ($0.77 per share)		—		—		(208)		—		—	—
Common dividends ($0.79 per share)													Common dividends ($0.79 per share)	—		—		(215)		—		—	—
Preferred dividends	Preferred dividends	—		—		(38)		—		—	—		Preferred dividends	—		—		(38)		—		—	—
Common stock issued for share-based compensation and other plans, net	Common stock issued for share-based compensation and other plans, net	—		(6)		—		—		219	(8)		Common stock issued for share-based compensation and other plans, net	—		(91)		—		(1)		573	70
Share-based compensation	Share-based compensation	—		56		—		—		—	—		Share-based compensation	—		58		—		—		—	—
Common stock held in trusts, net (a)	Common stock held in trusts, net (a)	—		—		—		—		4	—		Common stock held in trusts, net (a)	—		—		—		—		30	—
Balance at June 30, 2019		$	347	$	16,227	$	12,997	$	23	(76,733)	$	(6,201)

Balance at March 31, 2020													Balance at March 31, 2020	$	347	$	16,288	$	12,868	$	23	(74,911)	$	(6,158)
Net income													Net income	—		—		286		—		—	—
Common dividends ($0.79 per share)													Common dividends ($0.79 per share)	—		—		(229)		—		—	—
Preferred dividends													Preferred dividends	—		—		(9)		—		—	—
Common stock issued for:													Common stock issued for:
Preferred shares converted to common shares													Preferred shares converted to common shares	12		(9)		—		—		—	—
Public equity offerings													Public equity offerings	6		2,909		—		—		—	—
Share-based compensation and other plans, net													Share-based compensation and other plans, net	—		(12)		—		—		127	13
Share-based compensation													Share-based compensation	—		52		—		—		—	—
Common stock held in trusts, net (a)													Common stock held in trusts, net (a)	—		—		—		—		13	—
Balance at June 30, 2020													Balance at June 30, 2020	$	365	$	19,228	$	12,916	$	23	(74,771)	$	(6,145)

(a)Common stock held in trusts represents rabbi trusts in connection with deferred compensation under the Company’s employee salary and bonus deferral plan and directors’ deferral plan.

Share Repurchases

In the third quarter of fiscal year 2021, the Company executed an accelerated share repurchase agreement to repurchase an aggregate $500 million of its common stock. The Company accounted for this agreement as 2 transactions upon prepayment of the $500 million: (1) the initial delivery of approximately 1.658 million shares was recorded as a $400 million increase toCommon stock in treasury to recognize the acquisition of common stock acquired in a treasury stock transaction, and ~~Preferred Stock Conversions and Offerings~~

~~In accordance with their terms,~~(2) the remaining amount of $100 million was recorded as a decrease to Capital in excess of par value to recognize a net share-settled forward sale contract indexed to the Company's ~~2.475~~own common stock. Upon final settlement of the repurchase agreement and the forward sale contract in July 2021, the Company’s receipt of approximately 403 thousand additional shares was recorded as a $100 million ~~mandatory convertible preferred shares that were issued~~increase to Common stock in ~~May 2017~~treasury and an offsetting increase to Capital in ~~connection with the Company's acquisition~~excess of ~~C.R. Bard, Inc. ("Bard") were converted into 11.703~~par value.

The Company also repurchased approximately 2.066 million shares of BDits common stock during the third quarter of fiscal year 2021 through open market repurchases. The shares repurchased during the third quarter of fiscal year 2021 were recorded as a $500 million increase to Common stock in treasury.

The share repurchases discussed above were made pursuant to the repurchase program authorized by the Board of Directors on ~~the mandatory conversion date of May 1, 2020.~~

~~Also, in May 2020, the Company completed registered public offerings of equity securities including:~~

•~~6.250~~September 24, 2013 for 10 million shares, ~~of the Company's common stock~~ for ~~net proceeds of $1.459 billion (gross proceeds of $1.500 billion).~~

•~~1.500 million shares of the Company's mandatory convertible preferred stock (ownership~~which there is held in the form of depositary shares, each representing a 1/20th interest in a share of preferred stock) for net proceeds of $1.459 billion (gross proceeds of $1.500 billion). If and when declared, dividends on the mandatory convertible preferred stock will be payable on a cumulative basis at an annual rate of 6.00% on the liquidation preference of $1,000 per preferred share ($50 per depositary share). The shares of preferred stock are convertible to a minimum of 5.2 million and up to a maximum of 6.2 million shares of Company common stock at an exchange ratio, based on the market price of the Company’s common stock at the date of conversion, and no ~~later than the mandatory conversion date of June 1, 2023.~~

The Company will use the net proceeds from these offerings for general corporate purposes, which may include funding for the Company's growth strategy through organic investments and acquisitions, working capital, capital expenditures and repayment of outstanding indebtedness.expiration date.

The components and changes of Accumulated other comprehensive income (loss) for the first three quarters of fiscal years ~~2020~~2021 and ~~2019~~2020 were as follows:


(Millions of dollars)	(Millions of dollars)	Total		Foreign Currency Translation		Benefit Plans		Cash Flow Hedges		(Millions of dollars)	Total		Foreign Currency Translation		Benefit Plans		Cash Flow Hedges
Balance at September 30, 2019		$	(2,283)	$	(1,256)	$	(1,005)	$	(23)
Balance at September 30, 2020										Balance at September 30, 2020	$	(2,548)	$	(1,416)	$	(1,040)	$	(91)
Other comprehensive income before reclassifications, net of taxes	Other comprehensive income before reclassifications, net of taxes	63		26		—		37		Other comprehensive income before reclassifications, net of taxes	115		64		24		27
Amounts reclassified into income, net of taxes	Amounts reclassified into income, net of taxes	19		—		17		2		Amounts reclassified into income, net of taxes	19		0		18		2
Balance at December 31, 2019		$	(2,202)	$	(1,230)	$	(988)	$	16
Other comprehensive loss before reclassifications, net of taxes		(237)		(125)		—		(111)
Balance at December 31, 2020										Balance at December 31, 2020	$	(2,414)	$	(1,352)	$	(998)	$	(62)
Other comprehensive income (loss) before reclassifications, net of taxes										Other comprehensive income (loss) before reclassifications, net of taxes	64		(15)		0		78
Amounts reclassified into income, net of taxes	Amounts reclassified into income, net of taxes	19		—		17		2		Amounts reclassified into income, net of taxes	21		0		16		5
Balance at March 31, 2020		$	(2,419)	$	(1,355)	$	(971)	$	(93)
Other comprehensive income before reclassifications, net of taxes		34		34		—		—
Balance at March 31, 2021										Balance at March 31, 2021	$	(2,329)	$	(1,367)	$	(982)	$	21
Other comprehensive (loss) income before reclassifications, net of taxes										Other comprehensive (loss) income before reclassifications, net of taxes	(16)		19		0		(34)
Amounts reclassified into income, net of taxes	Amounts reclassified into income, net of taxes	19		—		17		2		Amounts reclassified into income, net of taxes	15		0		14		1
Balance at June 30, 2020		$	(2,367)	$	(1,321)	$	(955)	$	(91)
Balance at June 30, 2021										Balance at June 30, 2021	$	(2,330)	$	(1,348)	$	(967)	$	(13)

(Millions of dollars) Total Foreign Currency
Translation Benefit Plans
Cash Flow Hedges
Balance at September 30, 2018 $ (1,909) $ (1,162) $ (729) $ (17)
Other comprehensive (loss) income before reclassifications, net of taxes (32) (35) 3 (1)
Amounts reclassified into income, net of taxes 14 — 13 1
Balance at December 31, 2018 $ (1,927) $ (1,197) $ (714) $ (16)
Other comprehensive income (loss) before reclassifications, net of taxes 74 76 — (2)
Amounts reclassified into income, net of taxes 14 — 13 1
Balance at March 31, 2019 $ (1,839) $ (1,121) $ (701) $ (17)
Other comprehensive loss before reclassifications, net of taxes (68) (68) — —
Amounts reclassified into income, net of taxes 10 — 12 (2)
Balance at June 30, 2019 $ (1,897) $ (1,189) $ (689) $ (19)


(Millions of dollars)	Total		Foreign Currency Translation		Benefit Plans		Cash Flow Hedges
Balance at September 30, 2019	$	(2,283)	$	(1,256)	$	(1,005)	$	(23)
Other comprehensive income before reclassifications, net of taxes	63		26		0		37
Amounts reclassified into income, net of taxes	19		0		17		2
Balance at December 31, 2019	$	(2,202)	$	(1,230)	$	(988)	$	16
Other comprehensive loss before reclassifications, net of taxes	(237)		(125)		0		(111)
Amounts reclassified into income, net of taxes	19		0		17		2
Balance at March 31, 2020	$	(2,419)	$	(1,355)	$	(971)	$	(93)
Other comprehensive income before reclassifications, net of taxes	34		34		0		0
Amounts reclassified into income, net of taxes	19		0		17		2
Balance at June 30, 2020	$	(2,367)	$	(1,321)	$	(955)	$	(91)

The amounts of foreign currency translation recognized in other comprehensive income during the three and nine months ended June 30, ~~2020~~2021 and ~~2019~~2020 included net (losses) gains relating to net investment hedges. Other comprehensive income relating to benefit plans during the three months ended December 31, 2020 represented a net gain recognized as a result of the Company’s remeasurement, as of October 31, 2020, of the legacy Bard U.S. defined pension benefit plan upon its merger with the BD defined benefit cash balance pension plan in the first quarter of fiscal year 2021. The amounts recognized in other comprehensive (loss) income relating to cash flow hedges during the three and nine months ended June 30, 2021 and 2020 related to forward starting interest rate swaps. Additional disclosures regarding the Company's derivatives are provided in Note ~~12.~~11.

Note 4 – Earnings per Share

The weighted average common shares used in the computations of basic and diluted earnings per share (shares in thousands) were as follows:


		Three Months Ended June 30,			Nine Months Ended June 30,				Three Months Ended June 30,		Nine Months Ended June 30,
		2020	2019	2020	2019		2021	2020	2021	2020
Average common shares outstanding	Average common shares outstanding	282,385	270,249	275,152	269,719	Average common shares outstanding	289,522	282,385	290,401	275,152
Dilutive share equivalents from share-based plans	Dilutive share equivalents from share-based plans	2,763	4,087	3,411	4,791	Dilutive share equivalents from share-based plans	2,375	2,763	2,693	3,411
Average common and common equivalent shares outstanding – assuming dilution	Average common and common equivalent shares outstanding – assuming dilution	285,148	274,336	278,563	274,510	Average common and common equivalent shares outstanding – assuming dilution	291,897	285,148	293,094	278,563

Share equivalents excluded from the diluted shares outstanding calculation because the result would have been antidilutive:	Share equivalents excluded from the diluted shares outstanding calculation because the result would have been antidilutive:					Share equivalents excluded from the diluted shares outstanding calculation because the result would have been antidilutive:
Mandatory convertible preferred stock	Mandatory convertible preferred stock	6,328	11,685	9,918	11,685	Mandatory convertible preferred stock	6,168	6,328	6,168	9,918

Note 5 – Contingencies

Given the uncertain nature of litigation generally, the Company is not able, in all cases, to estimate the amount or range of loss that could result from an unfavorable outcome of the litigation toin which the Company is a party. In accordance with U.S. GAAP, the Company establishes accruals to the extent probable future losses are estimable ~~(in~~(and in the case of environmental matters, without considering possible third-party recoveries). With respect to putative class action lawsuits in the United States and certain of the Canadian lawsuits described below relating to product liability matters, the Company is unable to estimate a range of reasonably possible losses for the following reasons: (i) all or certain of the proceedings are in early stages; (ii) the Company has not received and reviewed complete information regarding all or certain of the plaintiffs and their medical conditions; and/or (iii) there are significant factual issues to be resolved. In addition, there is uncertainty as to the likelihood of a class being certified or the ultimate size of ~~the~~any class. With respect to the civil investigative demand (“CID”) served by the Department of Justice, as discussed below, the Company is unable to estimate a range of reasonably possible losses for the following reasons: (i) all or certain of the proceedings are in early stages; and/or (ii) there are significant factual and legal issues to be resolved.

In view of the uncertainties discussed below, the Company could incur charges in excess of any currently established accruals and, to the extent available, liability insurance. In the opinion of management, any such future charges, individually or in the aggregate, could have a material adverse effect on the Company’s consolidated results of operations and consolidated cash flows.

Product Liability Matters

The Company believes that certain settlements and judgments, as well as legal defense costs, ~~relating to product liability matters are or~~ may be covered ~~in whole or in part~~ under ~~its product liability insurance policies with a limited number of insurance carriers, or, in some circumstances,~~ indemnification obligations ~~to the Company~~ from other parties, which if disputed, the Company intends to vigorously contest. Amounts recovered under the Company’s product liability ~~insurance policies or~~ indemnification arrangements may be ~~less than the stated coverage limits or~~ less than otherwise expected and may not be adequate to cover damages and/or costs relating to claims. In addition, there is no guarantee that ~~insurers or~~ other parties will pay claims or that ~~coverage or~~ indemnity will be otherwise available.

Hernia Product Claims

As of June 30, ~~2020,~~2021, the Company is defending approximately ~~19,265~~23,590 product liability claims involving the Company’s line of hernia repair devices (collectively, the “Hernia Product Claims”). The majority of those claims are currently pending in a coordinated proceeding in Rhode Island State Court and in a federal multi-district litigation (“MDL”) established in the Southern District of Ohio, but claims are also pending in other state and/or federal court jurisdictions. In addition, those claims include multiple putative class actions in Canada. Generally, the Hernia Product Claims seek damages for personal injury allegedly resulting from use of the products. From time to time, the Company engages in resolution discussions with plaintiffs’ law firms regarding certain of the Hernia Product Claims, but the Company also intends to vigorously defend Hernia Product Claims that do not settle, including through litigation. Trials are scheduled into fiscal year 2022 in various state and/or federal courts, including one currently scheduled for August 2021 in the MDL and another trial currently scheduled for November 2021 in the Rhode Island State Court.The Company expects additional trials of Hernia Product Claims to take place over the next 12 months. In August 2018, a hernia multi-district litigation (“MDL”) was ordered to be established in the Southern District of Ohio. Trials are scheduled throughout fiscal year 2021 in various state and/or federal courts, with the first trial currently scheduled for October 2020 in Rhode Island.~~A second trial is currently scheduled for January 2021 in the MDL.~~ The Company cannot give any assurances that the resolution of the Hernia Product Claims that

have not settled, including asserted and unasserted claims and the putative class action lawsuits, will not have a material adverse effect on the Company’s business, results of operations, financial condition and/or liquidity.

Women’s Health Product Claims

As of June 30, ~~2020,~~2021, the Company is defending approximately ~~575~~405 product liability claims involving the Company’s line of pelvic mesh devices. The majority of those claims are currently pending in various federal court jurisdictions, and a coordinated proceeding in New Jersey State Court, but claims are also pending in other state court jurisdictions. In addition, those claims include putative class actions filed in the United States. Not included in the figures above are approximately ~~990~~835 filed and unfiled claims that have been asserted or threatened against the Company but lack sufficient information to determine whether a pelvic mesh device of the Company is actually at issue.

The claims identified above also include products manufactured by both the Company and two subsidiaries of Medtronic plc (as successor in interest to Covidien plc) (“Medtronic”), each a supplier of the Company. Medtronic has an obligation to defend and indemnify the Company with respect to any product defect liability relating to products its subsidiaries had manufactured. In July 2015, the Company reached an agreement with Medtronic in which Medtronic agreed to take responsibility for pursuing settlement of certain of the Women’s Health Product Claims that relate to products distributed by the Company under supply agreements with Medtronic. In June 2017, the Company amended the agreement with Medtronic to transfer responsibility for settlement of additional Women’s Health Product Claims to Medtronic on terms similar to the July 2015 agreement, including with respect to the obligation to make payments to Medtronic ~~towards~~toward these potential settlements. As of June 30, ~~2020,~~2021, the Company has paid Medtronic ~~$141~~$160 million ~~towards~~toward these potential settlements. The Company also may, in its sole discretion, transfer responsibility for settlement of additional Women’s Health Product Claims to Medtronic on similar terms. The agreements do not resolve the dispute between the Company and Medtronic with respect to Women’s Health Product Claims that do not settle, if any. The foregoing lawsuits, unfiled claims, putative class actions, and other claims, together with claims that have settled or are the subject of agreements or agreements in principle to settle, are referred to collectively as the “Women’s Health Product Claims.” The Women’s Health Product Claims generally seek damages for personal injury allegedly resulting from use of the products.

As of June 30, ~~2020,~~2021, the Company has reached agreements or agreements in principle with various plaintiffs’ law firms to settle their respective inventories of cases totaling approximately ~~15,225~~15,285 of the Women’s Health Product Claims. The Company believes that these Women’s Health Product Claims are not the subject of Medtronic’s indemnification obligation. These settlement agreements and agreements in principle include unfiled and previously unknown claims held by various plaintiffs’ law firms, which are not included in the approximate number of lawsuits set forth in the first paragraph of this section. Each agreement is subject to certain conditions, including requirements for participation in the proposed settlements by a certain minimum number of plaintiffs. The Company continues to engage in discussions with other plaintiffs’ law firms regarding potential resolution of unsettled Women’s Health Product Claims, which may include additional inventory settlements.

Starting in 2014 in the MDL, the court entered certain pre-trial orders requiring trial work up and remand of a significant number of Women’s Health Product Claims, including an order entered in the MDL on January 30, 2018, that requires the work up and remand of all remaining unsettled cases (the “WHP Pre-Trial Orders”). The WHP Pre-Trial Orders may result in material additional costs or trial verdicts in future periods in defending Women’s Health Product Claims. Trials are anticipated throughout 2021 in state and federal courts. A trial in the New Jersey coordinated proceeding began in March 2018, and in April 2018 a jury entered a verdict against the Company in the total amount of $68 million ($33 million compensatory; $35 million punitive). ~~The~~In March 2021, the Appellate Division of the New Jersey Superior Court vacated the verdict and ordered a new trial. Plaintiffs have sought appeal of the reversal to the New Jersey Supreme Court and the Company ~~is in~~has cross-appealed on a separate issue; the ~~process of appealing that verdict. The Company expects additional~~court has not yet advised if it will consider the appeal. Additional trials of Women’s Health Product Claims tomay take place over the next 12 months, which ~~may~~could potentially include consolidated trials.

During the course of engaging in settlement discussions with plaintiffs’ law firms, the Company has learned, and may in future periods learn, additional information regarding these and other unfiled claims, or other lawsuits, which could materially impact the Company’s estimate of the number of claims or lawsuits against the Company.

Filter Product Claims

As of June 30, ~~2020,~~2021, the Company is defending approximately ~~2,165~~360 product liability claims involving the Company’s line of inferior vena cava filters (collectively, the “Filter Product Claims”). The majority of those claims were previously pending in an MDL in the United States District Court for the District of Arizona, but those MDL claims either have been, or are in the process of being, remanded to various federal jurisdictions. Filter Product Claims are also pending in various state court jurisdictions, including a coordinated proceeding in Arizona State Court. In addition, those claims include putative class actions filed in the United States and Canada. The Filter Product Claims generally seek damages for personal injury allegedly resulting from use of the products. The Company has limited information regarding the nature and quantity of certain of the Filter Product Claims. The Company continues to receive claims and lawsuits and may in future periods learn additional information regarding other unfiled or unknown claims, or other lawsuits, which could materially impact the Company’s

estimate of the number of claims or lawsuits against the Company. On May 31, 2019, the MDL Court ceased accepting direct filings or transfers into the Filter Product Claims MDL and, as noted above, remands for non-settled cases have begun and are expected to continue over the next three months. Federal and state court trials are scheduled ~~throughout 2020.~~and expected to take place over the next 12 months. As of June 30, ~~2020,~~2021, the Company entered into settlement agreements and/or settlement agreements in principle for approximately ~~7,495~~9,450 cases. On March 30, 2018, a jury in the first MDL trial found the Company liable for negligent failure to warn and entered a verdict in favor of plaintiffs. The jury found the Company was not liable for (a) strict liability design defect; (b) strict liability failure to warn; and (c) negligent design. The Company has appealed that verdict. On June 1, 2018, a jury in the second MDL trial unanimously found in favor of the Company on all claims. On August 17, 2018, the Court entered summary judgment in favor of the Company on all claims in the third MDL trial. On October 5, 2018, a jury in the fourth MDL trial unanimously found in favor of the Company on all claims. The Company expects additional trials of Filter Product Claims may take place over the next

12 ~~months.~~

In most product liability litigations (like those described above), plaintiffs allege a wide variety of claims, ranging from allegations of serious injury caused by the products to efforts to obtain compensation notwithstanding the absence of any injury. In many of these cases, the Company has not yet received and reviewed complete information regarding the plaintiffs and their medical conditions and, consequently, is unable to fully evaluate the claims. The Company expects that it will receive and review additional information regarding any remaining unsettled product liability matters.

In connection with the settlement of a prior litigation with certain of the Company's insurance carriers, an agreement with the Company's insurance carriers was reached to reimburse the Company for certain future costs incurred in connection with Filter Product Claims up to an agreed amount. For certain product liability claims or lawsuits, the Company does not maintain or has limited remaining insurance coverage.

Other Legal Matters

Since early 2013, the Company has received subpoenas or Civil Investigative Demands from a number of State Attorneys General seeking information related to the sales and marketing of certain of the Company’s products that are the subject of the Hernia Product Claims and the Women’s Health Product Claims. The Company is cooperating with these requests. Although the Company has had, and continues to have, discussions with the State Attorneys General with respect to overall potential resolution of this matter, there can be no assurance that a resolution will be reached or what the terms of any such resolution may be.

In July 2017, a civil investigative demand was served by the Department of Justice seeking documents and information relating to an investigation into possible violations of the False Claims Act in connection with the sales and marketing of FloChec^® ~~and QuantaFlo~~^TM devices. The Company is cooperating with these requests. Since it is not feasible to predict the outcome of these matters, the Company cannot give any assurances that the resolution of these matters will not have a material adverse effect on the Company’s business, results of operations, financial condition and/or liquidity.

The Company is a potentially responsible party to a number of federal administrative proceedings in the United States brought under the Comprehensive Environment Response, Compensation and Liability Act, also known as “Superfund,” and similar state laws. The affected sites are in varying stages of development. In some instances, the remedy has been completed, while in others, environmental studies are underway or commencing. For several sites, there are other potentially responsible parties that may be jointly or severally liable to pay all or part of cleanup costs. While it is not feasible to predict the outcome of these proceedings, based upon the Company’s experience, current information and applicable law, the Company does not expect these proceedings to have a material adverse effect on its financial condition and/or liquidity. ~~However, one or more of the proceedings could be material to the Company’s business and/or results of operations.~~

On February 27, 2020, a putative class action captioned Kabak v. Becton, Dickinson and Company, et al., Civ. No. 2:20-cv-02155 (SRC) (CLW), now captioned Industriens Pensionsforsikring v. Becton, Dickinson and Company, et al., was filed in the U.S. District Court for the District of New Jersey against the Company and certain of its officers. The complaint, which purports to be brought on behalf of all persons (other than defendants) who purchased or otherwise acquired the Company's common stock from November 5, 2019 through February 5, 2020, asserts claims for purported violations of Sections 10 and 20 of the Securities Exchange Act of 1934 and ~~SEC~~Securities and Exchange Commission (“SEC”) Rule 10b-5 promulgated thereunder, and seeks, among other things, damages and costs. The complaint alleges that defendants concealed material information regarding Alaris^TM infusion pumps, including that (1) certain pumps exhibited software errors, (2) the Company was investing in remediation efforts as opposed to other enhancements and (3) the Company was thus reasonably likely to recall certain pumps and/or experience regulatory delays. These alleged omissions, the complaint asserts, rendered certain public statements about the Company’s business, operations and prospects false or misleading, causing investors to purchase stock at an inflated price. The plaintiff filed a second amended complaint to add certain additional factual allegations on February 3, 2021, which the company moved to dismiss on March 19, 2021. Briefing on the Company’s motion to dismiss was concluded in June 2021. The Company believes ~~these~~the claims are without merit and intends to vigorously defend this action.

On November 2, 2020, a civil action captioned Jankowski v. Forlenza, et al., Civ. No. 2:20-cv-15474, was filed in the U.S. District Court for the District of New Jersey by a shareholder, Ronald Jankowski, derivatively on behalf of the Company, against its individual directors and certain of its officers. The complaint seeks recovery for breach of fiduciary duties by directors and various officers; violations of the Securities Exchange Act of 1934; and insider trading. In general, the complaint alleges, among other things, that various directors and/or officers (1) caused the Company to issue purportedly misleading statements and SEC filings regarding AlarisTM infusion pumps, (2) issued a misleading proxy statement, (3) engaged in improper insider trading and (4) caused or contributed to various violations of the Securities Exchange Act of 1934, including sections 10(b), 14(a) and 21D. The complaint seeks damages, including restitution and disgorgement of profits, and an injunction requiring the Company to undertake remedial measures with respect to certain corporate governance and internal procedures. A second derivative action, Schranz v. Polen, et al., Civ. No 2:21-cv-01081, was filed on January 24, 2021 in the U.S. District Court for the District of New Jersey and the two actions were consolidated. In March 2021, the Company received letters from two additional shareholders which, in general, mirrored the allegations in the Jankowski and Schranz consolidated actions, and demanded, among other things, that the Board of Directors pursue civil action against members of management for claimed breaches of fiduciary duties. Consistent with New Jersey law, the Board appointed a special committee to review the allegations and demands in the derivative actions and demand letters. Following an investigation, the special committee determined that no action was warranted, and rejected the shareholders’ demands. The special committee’s determination has been communicated to counsel for the shareholders. Should the shareholders continue to pursue their claims in court, the Company will take appropriate steps to seek dismissal of the complaints.

In February 2021, the Company received a subpoena from the Enforcement Division of the SEC requesting information from the Company relating to, among other things, AlarisTM infusion pumps. The Company is cooperating with the SEC and responding to these requests. The Company cannot anticipate the timing, scope, outcome or possible impact of the investigation, financial or otherwise.

In April 2019, the Department of Justice served the Company and CareFusion with CIDs seeking information regarding certain of CareFusion’s contracts with the Department of Veteran’s Affairs for certain products, including AlarisTM and PyxisTM devices, in connection with a civil investigation of possible violations of the False Claims Act, and the government recently expanded the investigation to include several additional contracts. The government has made several requests for documents and interviews or depositions of Company personnel. The Company is cooperating with the government and responding to these requests.

The Company cannot predict the outcome of these matters, nor can it predict whether any outcome will have a material adverse effect on the Company’s business, results of operations, financial condition and/or liquidity. Accordingly, the Company has made no provisions for these other legal matters in its consolidated results of operations.

In July 2021, the Company became aware of approximately 150 lawsuits that had been filed against it in state court in Gwinnett County, Georgia. The suits were filed by plaintiffs who reside near Company facilities in Covington, GA, where ethylene oxide (EtO) sterilization activities take place. The claims allege a variety of injuries, including but not limited to multiple types of cancer, allegedly attributable to exposure to EtO in the ambient air. The Company has meritorious defenses and intends to defend itself vigorously.

The Company is also involved both as a plaintiff and a defendant in other legal proceedings and claims that arise in the ordinary course of business. The Company believes that it has meritorious defenses to these suits pending against the Company and is engaged in a vigorous defense of each of these matters.

Litigation Accruals

The Company regularly monitors and evaluates the status of product liability and other legal matters, and may, from time-to-time, engage in settlement and mediation discussions taking into consideration developments in the matters and the risks and uncertainties surrounding litigation. These discussions could result in settlements of one or more of these claims at any time.

In the second ~~and fourth quarters~~quarter of fiscal ~~year 2019,~~2021, the Company recorded a pre-tax ~~charges~~charge of approximately $296 million to Other operating (income) expense, net~~, of approximately $331 million and $582 million, respectively,~~ related to certain of the product liability matters discussed above under the heading “Product Liability Matters,” including the related legal defense costs. The Company recorded ~~these charges~~this charge based on additional information obtained during the ~~second~~quarter, including but not limited to: the nature and ~~fourth quarters~~quantity of ~~fiscal year 2019.~~unfiled and filed claims and the continued rate of claims being filed in certain product liability matters; the status of certain settlement discussions with plaintiffs’ counsel; the allegations and documentation supporting or refuting such allegations; and the stage of litigation.

Accruals for the Company's product liability claims which are discussed above, as well as the related legal defense costs, amounted to approximately ~~$2.2~~$2.5 billion at June 30, ~~2020~~2021 and ~~$2.5 billion at~~ September 30, ~~2019.~~2020. These accruals, which are generally long-term in nature, are largely recorded within Deferred Income Taxes and Other Liabilities on the Company's condensed consolidated balance sheets. As of June 30, ~~2020~~2021 and September 30, ~~2019,~~2020, the Company had ~~$81~~$128 million and ~~$53~~$92 million, respectively, in qualified settlement funds (“QSFs”), subject to certain settlement conditions, for certain product liability matters. Payments to QSFs are recorded as a component of Restricted cash. The Company's expected recoveries related to product liability claims and related legal defense costs were approximately ~~$117~~$92 million and ~~$150~~$139 million at June 30, ~~2020~~2021 and September 30, ~~2019,~~2020, respectively. ~~A substantial amount of these~~The expected recoveries at June 30, ~~2020 and~~2021 related entirely to the Company’s agreements with Medtronic related to certain Women’s Health Product Claims. A substantial amount of the expected recoveries at September 30, ~~2019~~2020 related to the Company’s agreements with Medtronic related to certain Women’s Health Product Claims. The expected recoveries at June 30, ~~2020~~2021 related to the indemnification obligation are not in dispute with respect to claims that Medtronic settles pursuant to the agreements.

Note 6 – Revenues

The Company’s policies for recognizing sales have not changed from those described in the Company’s ~~2019~~2020 Annual Report on Form 10-K. The Company sells a broad range of medical supplies, devices, laboratory equipment and diagnostic products which are distributed through independent distribution channels and directly by BD through sales representatives. End-users of the Company's products include healthcare institutions, physicians, life science researchers, clinical laboratories, the pharmaceutical industry and the general public.

Measurement of Revenues

The Company’s allowance for doubtful accounts reflects the current estimate of ~~probable~~ credit losses ~~relating~~expected to be incurred over the life of its trade ~~receivables is~~receivables. Such estimated credit losses are determined based on historical ~~experience~~loss experiences, customer-specific credit risk, and ~~other specific account data. Amounts~~reasonable and supportable forward-looking information, such as country or regional risks that are ~~written off against~~not captured

in the ~~allowances~~historical loss information. The allowance for doubtful accounts ~~when the Company determines that a customer account~~for trade receivables is ~~uncollectable. Such amounts are~~ not material to the Company's consolidated financial results.

The Company's gross revenues are subject to a variety of deductions which are recorded in the same period that the underlying revenues are recognized. Such variable consideration includes rebates, sales discounts and sales returns. The impact of other forms of variable consideration, including sales discounts and sales returns, is not material to the Company's revenues.

Effects of Revenue Arrangements on Consolidated Balance Sheets

Capitalized contract costs associated with the costs to fulfill contracts for certain products in the Medication Management Solutions organizational unit are immaterial to the Company's condensed consolidated balance sheets. Commissions relating to revenues recognized over a period longer than one year are recorded as assets which are amortized over the period over which the revenues underlying the commissions are recognized. Capitalized contract costs related to such commissions are immaterial to the Company's condensed consolidated balance sheets.

Contract liabilities for unearned revenue that is allocable to performance obligations, such as extended warranty and software maintenance contracts, which are performed over time are immaterial to the Company's consolidated financial results. The Company's liability for product warranties provided under its agreements with customers is not material to its condensed consolidated balance sheets.

Remaining Performance Obligations

The Company's obligations relative to service contracts and pending installations of equipment, primarily in the Company's Medication Management Solutions unit, represent unsatisfied performance obligations of the Company. The revenues under

existing contracts with original expected durations of more than one year, which are attributable to products and/or services that have not yet been installed or provided are estimated to be approximately ~~$1.6~~$1.9 billion at June 30, ~~2020.~~2021. The Company expects to recognize the majority of this revenue over the next three years.

Within the Company's Medication Management Solutions, Medication Delivery Solutions, Integrated Diagnostic Solutions, and Biosciences units, some contracts also contain minimum purchase commitments of reagents or other consumables and the future sales of these consumables represent additional unsatisfied performance obligations of the Company. The revenue attributable to the unsatisfied minimum purchase commitment-related performance obligations, for contracts with original expected durations of more than one year, is estimated to be approximately ~~$2.6~~$2.8 billion at June 30, ~~2020.~~2021. This revenue will be recognized over the customer relationship ~~period.~~periods.

Disaggregation of Revenues

A disaggregation of the Company's revenues by segment, organizational unit and geographic region is provided in Note 7.7.

Note 7 – Segment Data

The Company's organizational structure is based upon 3 ~~principal~~worldwide business segments: BD Medical (“Medical”), BD Life Sciences (“Life Sciences”) and BD Interventional ("Interventional"). The Company's segments are strategic businesses that are managed separately because each one develops, manufactures and markets distinct products and services. Segment disclosures are on a performance basis consistent with internal management reporting. The Company evaluates performance of its business segments and allocates resources to them primarily based upon segment operating income, which represents revenues reduced by product costs and operating expenses.

Effective October 1, 2019, Life Sciences joined its former Preanalytical Systems and Diagnostic Systems organizational units to create a new Integrated Diagnostic Solutions organizational unit which focuses on driving growth and innovation around integrated specimen management to diagnostic solutions. The Integrated Diagnostic Solutions organizational unit consists of the following principal product lines:


~~Organizational Unit~~						~~Principal Product Lines~~
~~Integrated Diagnostic Solutions~~						Integrated systems for specimen collection; safety-engineered blood collection products and systems; automated blood culturing and tuberculosis culturing systems; molecular testing systems for infectious diseases and women’s health; microorganism identification and drug susceptibility systems; liquid-based cytology systems for cervical cancer screening; rapid diagnostic assays for testing of respiratory infections; microbiology laboratory automation and plated media for clinical and industrial applications.

Revenues by segment, organizational unit and geographical areas for the three and nine-month periods are detailed below. The Company has no material intersegment revenues.

Three Months Ended June 30,
(Millions of dollars) 2020 2019
United States International Total United States International Total
Medical
Medication Delivery Solutions (a) $ 412 $ 369 $ 781 $ 521 $ 460 $ 981
Medication Management Solutions (a) 500 177 677 532 129 661
Diabetes Care 136 123 260 139 136 275
Pharmaceutical Systems 113 291 403 108 286 394
Total segment revenues $ 1,161 $ 960 $ 2,122 $ 1,299 $ 1,011 $ 2,311
Life Sciences
Integrated Diagnostic Solutions
Preanalytical Systems $ 160 $ 152 $ 312 $ 203 $ 204 $ 407
Diagnostic Systems 184 218 402 155 212 368
Total Integrated Diagnostic Solutions 344 370 714 358 416 774
Biosciences 93 145 237 117 167 284
Total segment revenues $ 436 $ 515 $ 951 $ 475 $ 583 $ 1,058
Interventional
Surgery (b) $ 154 $ 43 $ 197 $ 242 $ 67 $ 309
Peripheral Intervention (b) 174 143 318 228 169 396
Urology and Critical Care (b) 194 74 268 196 80 276
Total segment revenues $ 522 $ 260 $ 782 $ 666 $ 316 $ 981
Total Company revenues $ 2,119 $ 1,735 $ 3,855 $ 2,440 $ 1,910 $ 4,350

~~(a)~~Prior-period amounts reflect the reclassification of U.S. revenues of $3 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.


	Three Months Ended June 30,
(Millions of dollars)	2021						2020
	United States		International		Total		United States		International		Total
Medical
Medication Delivery Solutions	$	560	$	447	$	1,007	$	412	$	369	$	781
Medication Management Solutions	459		139		597		500		177		677
Diabetes Care	152		143		294		136		123		260
Pharmaceutical Systems	112		364		476		113		291		403
Total segment revenues	$	1,283	$	1,092	$	2,375	$	1,161	$	960	$	2,122

Life Sciences
Integrated Diagnostic Solutions	$	435	$	682	$	1,117	$	344	$	370	$	714
Biosciences	124		192		316		93		145		237
Total segment revenues	$	559	$	874	$	1,433	$	436	$	515	$	951

Interventional
Surgery	$	267	$	69	$	336	$	154	$	43	$	197
Peripheral Intervention	238		198		436		174		143		318
Urology and Critical Care	227		83		310		194		74		268
Total segment revenues	$	732	$	350	$	1,082	$	522	$	260	$	782

Total Company revenues	$	2,574	$	2,316	$	4,890	$	2,119	$	1,735	$	3,855

~~(b)~~Prior-period amounts reflect the total reclassifications of $33 million of U.S. revenues and $13 million of international revenues 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.



	Nine Months Ended June 30,
(Millions of dollars)	2021						2020
	United States		International		Total		United States		International		Total
Medical
Medication Delivery Solutions	$	1,659	$	1,355	$	3,014	$	1,450	$	1,183	$	2,634
Medication Management Solutions	1,376		417		1,793		1,412		408		1,820
Diabetes Care	450		414		863		417		389		806
Pharmaceutical Systems	292		985		1,277		287		815		1,102
Total segment revenues	$	3,777	$	3,170	$	6,947	$	3,566	$	2,797	$	6,362

Life Sciences
Integrated Diagnostic Solutions	$	1,904	$	2,141	$	4,045	$	1,143	$	1,204	$	2,347
Biosciences	365		588		953		353		487		840
Total segment revenues	$	2,269	$	2,729	$	4,998	$	1,496	$	1,691	$	3,187

Interventional
Surgery	$	757	$	203	$	960	$	659	$	176	$	835
Peripheral Intervention	692		590		1,282		641		471		1,112
Urology and Critical Care	672		255		926		603		235		837
Total segment revenues	$	2,120	$	1,047	$	3,168	$	1,903	$	881	$	2,784

Total Company revenues	$	8,166	$	6,947	$	15,113	$	6,964	$	5,369	$	12,333

Nine Months Ended June 30,
(Millions of dollars) 2020 2019
United States International Total United States International Total
Medical
Medication Delivery Solutions (a) $ 1,450 $ 1,183 $ 2,634 $ 1,521 $ 1,344 $ 2,865
Medication Management Solutions (a) 1,412 408 1,820 1,538 365 1,903
Diabetes Care 417 389 806 421 397 819
Pharmaceutical Systems 287 815 1,102 269 771 1,040
Total segment revenues $ 3,566 $ 2,797 $ 6,362 $ 3,750 $ 2,877 $ 6,626
Life Sciences
Integrated Diagnostic Solutions
Preanalytical Systems $ 569 $ 541 $ 1,110 $ 574 $ 591 $ 1,165
Diagnostic Systems 574 663 1,238 510 628 1,138
Total Integrated Diagnostic Solutions 1,143 1,204 2,347 1,084 1,219 2,303
Biosciences 353 487 840 345 517 862
Total segment revenues $ 1,496 $ 1,691 $ 3,187 $ 1,430 $ 1,736 $ 3,166
Interventional
Surgery (b) $ 659 $ 176 $ 835 $ 730 $ 197 $ 927
Peripheral Intervention (b) 641 471 1,112 675 490 1,165
Urology and Critical Care (b) 603 235 837 583 238 821
Total segment revenues $ 1,903 $ 881 $ 2,784 $ 1,989 $ 925 $ 2,914
Total Company revenues $ 6,964 $ 5,369 $ 12,333 $ 7,168 $ 5,538 $ 12,706

~~(a)~~Prior-period amounts reflect the reclassification of U.S. revenues of $7 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.

~~(b)~~Prior-period amounts reflect the total reclassifications of $96 million of U.S. revenues and $41 million of international revenues 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.

Segment income for the three and nine-month periods was as follows:


		Three Months Ended June 30,						Nine Months Ended June 30,							Three Months Ended June 30,				Nine Months Ended June 30,
(Millions of dollars)	(Millions of dollars)	2020		2019		2020		2019		(Millions of dollars)	2021		2020		2021		2020
Income Before Income Taxes	Income Before Income Taxes									Income Before Income Taxes
Medical (a) (b)		$	646	$	744	$	1,653	$	2,008
Medical (a)										Medical (a)	$	636	$	646	$	1,936	$	1,653
Life Sciences ~~(c)~~(b)	Life Sciences ~~(c)~~(b)	214		304		860		902		Life Sciences ~~(c)~~(b)	432		214		1,953		860
Interventional ~~(d)~~	Interventional ~~(d)~~	100		183		556		623		Interventional ~~(d)~~	214		100		725		556
Total Segment Operating Income	Total Segment Operating Income	960		1,230		3,069		3,533		Total Segment Operating Income	1,282		960		4,613		3,069
Acquisitions and other restructurings	Acquisitions and other restructurings	(74)		(90)		(235)		(281)		Acquisitions and other restructurings	(24)		(74)		(126)		(235)
Other operating income (expense), net (c)										Other operating income (expense), net (c)	72		15		(224)		15
Net interest expense	Net interest expense	(133)		(154)		(400)		(490)		Net interest expense	(113)		(133)		(351)		(400)
Other unallocated items (e)		(506)		(526)		(1,593)		(1,584)
Other unallocated items (d)										Other unallocated items (d)	(703)		(520)		(1,937)		(1,608)
Total Income Before Income Taxes	Total Income Before Income Taxes	$	248	$	460	$	842	$	1,178	Total Income Before Income Taxes	$	514	$	248	$	1,976	$	842

(a)The amount for the nine months ended June 30, 2021 includes charges of $37 million, and the amounts for the three and nine months ended June 30, 2020 ~~included the probable estimate, including changes in estimate, of future costs within the Medication Management Solutions unit associated with remediation efforts for Alaris~~^TM ~~infusion pumps~~include an adjustment and charges of $(18) million and $240 million, respectively, ~~which were~~ recorded to Cost of products ~~sold.~~sold ~~Based on the course of remediation efforts, it is possible that~~, related to the estimate of ~~future~~ costs ~~could change over time.~~associated with remediation efforts for Alaris

infusion pumps in the Medication Management Solutions unit. Additionally, amounts for the three and nine months ended June 30, 2020 included costs related to another product matter of $8 million which were recorded in Other (expense) income, ~~(expense), net.~~net.

(b)The amount for the nine-month period ~~in 2019~~ended June 30, 2020 included ~~$65 million of estimated remediation costs recorded to~~ ~~Other operating (income) expense, net~~ relating to a recall of a product component, which generally pre-dated the Company's acquisition of CareFusion in fiscal year 2015, within the Medication Management Solutions unit's infusion systems platform.

~~(c)The amount for the nine-month period in 2020 includes~~ a charge of $39 million recorded to Cost of products soldto write down the carrying value of certain intangible assets in the Biosciences unit.

~~(d)~~(c)The amounts for the three and nine-months ended June 30, 2021 include a gain on a sale-leaseback transaction of $88 million, which is further discussed in Note 14, and $16 million of costs incurred for consulting, legal, tax and other advisory services associated with the planned spin-off of BD's Diabetes Care business. The amount for the nine-month ~~periods~~period in ~~2019 included a charge recorded~~2021 also includes pre-tax charges of $296 million related to ~~Research and development expense~~ ~~to write down the carrying value of~~ certain ~~intangible assets~~product liability matters, which is further discussed in ~~the Surgery unit.~~Note 5.

~~(e)~~(d)Primarily comprised of foreign exchange, certain general and administrative expenses and share-based compensation expense. The amount for the nine-month period in 2019 included a pre-tax charge of $331 million related to certain product liability matters, which is further discussed in Note 5, and also included the pre-tax gain recognized on the Company's sale of its Advanced Bioprocessing business of approximately $336 million, which is further discussed in Note 9.

Note 8 – Benefit Plans

The Company has defined benefit pension plans covering certain employees in the United States and certain international locations. The measurement date used for these plans is September 30.

Net pension cost included the following components for the three and ~~nine months ended June 30:~~nine-month periods:


		Three Months Ended June 30,						Nine Months Ended June 30,							Three Months Ended June 30,				Nine Months Ended June 30,
(Millions of dollars)	(Millions of dollars)	2020		2019		2020		2019		(Millions of dollars)	2021		2020		2021		2020
Service cost	Service cost	$	37	$	33	$	116	$	101	Service cost	$	35	$	37	$	113	$	116
Interest cost	Interest cost	21		26		64		80		Interest cost	16		21		53		64
Expected return on plan assets	Expected return on plan assets	(46)		(44)		(143)		(135)		Expected return on plan assets	(40)		(46)		(129)		(143)
Amortization of prior service credit	Amortization of prior service credit	(3)		(3)		(10)		(10)		Amortization of prior service credit	(3)		(3)		(10)		(10)
Amortization of loss	Amortization of loss	24		19		74		58		Amortization of loss	22		24		73		74
Settlements		2		—		2		—
Curtailment loss/settlements										Curtailment loss/settlements	6		2		6		2
Net pension cost	Net pension cost	$	35	$	30	$	103	$	93	Net pension cost	$	36	$	35	$	106	$	103

The amounts provided above for amortization of prior service credit and amortization of loss represent the reclassifications of prior service credits and net actuarial losses that were recognized in Accumulated other comprehensive income (loss) in prior periods. All components of the Company’s net periodic pension cost, aside from service cost, are recorded to Other (expense) income, ~~(expense),~~ net on its condensed consolidated statements of income.

~~Note 9 – Divestiture~~

In October 2018, the Company completed the sale of its Life Sciences segment's Advanced Bioprocessing business. The Company recognized a pre-tax gain on the sale of approximately $336 million which was recorded as a component of ~~Other operating (income) expense, net~~ ~~in the nine months ended June 30, 2019.~~

1817

Note 109 – Business Restructuring Charges

The Company incurred restructuring costs during the nine months ended June 30, ~~2020,~~2021, primarily in connection with the Company's ~~acquisition of Bard~~simplification and ~~portfolio rationalization~~other cost saving initiatives, which were largely recorded within Acquisitions and other restructurings. These simplification and other costs saving initiatives are focused on reducing complexity, enhancing product quality, refining customer experience, and improving cost efficiency across all of the Company’s segments. Restructuring liability activity for the nine months ended June 30, ~~2020~~2021 was as follows:


(Millions of dollars)	(Millions of dollars)	Employee Termination						Other								Total					(Millions of dollars)	Employee Termination				Other		Total
		Bard		Other Initiatives		Bard (a)		Other Initiatives		Bard		Other Initiatives			Bard		Other Initiatives		Bard			Other Initiatives		Bard		Other Initiatives
Balance at September 30, 2019		$	22	$	31	$	1	$	3	$	23	$	34
Balance at September 30, 2020														Balance at September 30, 2020	$	15	$	17	$	1		$	3	$	16	$	20

Charged to expense	Charged to expense	7		(1)		33		30		40		29		Charged to expense	1		11		1			20		2		31
Cash payments	Cash payments	(15)		(18)		(12)		(28)		(27)		(46)		Cash payments	(4)		(22)		(2)			(13)		(6)		(35)
Non-cash settlements	Non-cash settlements	—		—		(21)		(2)		(21)		(2)		Non-cash settlements	0		0		0			(4)		0		(4)

Balance at June 30, 2020		$	14	$	12	1		$	3	$	15	$	15
Other adjustments														Other adjustments	(1)		0		0			0		(1)		0
Balance at June 30, 2021														Balance at June 30, 2021	$	11	$	6	$	0		$	6	$	11	$	12

~~(a)~~Largely represents the cost associated with certain pre-acquisition equity awards of Bard which, to encourage post-acquisition employee retention, were converted to BD equity awards with substantially the same terms and conditions as were applicable under such Bard awards immediately prior to the acquisition date.

Note 1110 – Intangible Assets

Intangible assets consisted of:

June 30, 2020 September 30, 2019
(Millions of dollars) Gross
Carrying
Amount Accumulated
Amortization Gross
Carrying
Amount Accumulated
Amortization
Amortized intangible assets
Developed technology $ 14,059 $ 3,702 $ 13,960 $ 2,906
Customer relationships 4,612 1,427 4,608 1,183
Product rights 115 68 110 60
Trademarks 408 115 407 102
Patents and other 503 322 445 305
Amortized intangible assets $ 19,697 $ 5,634 $ 19,530 $ 4,555
Unamortized intangible assets
Acquired in-process research and development (a) $ 44 $ 1
Trademarks 2 2
Unamortized intangible assets $ 46 $ 3

~~(a)The increase in the carrying value of assets in 2020 was attributable to an immaterial acquisition which occurred during the second quarter of fiscal year 2020.~~


	June 30, 2021				September 30, 2020
(Millions of dollars)	Gross Carrying Amount		Accumulated Amortization		Gross Carrying Amount		Accumulated Amortization
Amortized intangible assets
Developed technology	$	14,273	$	(4,732)	$	14,105	$	(3,959)
Customer relationships	4,656		(1,757)		4,616		(1,509)
Product rights	126		(83)		119		(73)
Trademarks	408		(134)		408		(120)
Patents and other	535		(341)		500		(320)
Amortized intangible assets	$	19,998	$	(7,047)	$	19,748	$	(5,981)
Unamortized intangible assets
Acquired in-process research and development	$	44			$	44
Trademarks	2				2
Unamortized intangible assets	$	46			$	46

Intangible amortization expense for the three months ended June 30, 2021 and 2020 ~~and 2019~~ was ~~$345~~$351 million and ~~$378~~$345 million, respectively. Intangible amortization expense for the nine months ended June 30, 2021 and 2020 ~~and 2019~~ was ~~$1.037~~$1.049 billion and ~~$1.132~~$1.037 billion, respectively.

The following is a reconciliation of goodwill by business segment:


(Millions of dollars)	(Millions of dollars)	Medical		Life Sciences		Interventional		Total		(Millions of dollars)	Medical		Life Sciences		Interventional		Total
Goodwill as of September 30, 2019		$	9,989	$	772	$	12,615	$	23,376
Goodwill as of September 30, 2020										Goodwill as of September 30, 2020	$	10,044	$	837	$	12,739	$	23,620
Acquisitions (a)	Acquisitions (a)	10		58		49		117		Acquisitions (a)	135		0		0		135

Purchase price allocation adjustments	Purchase price allocation adjustments	—		1		—		1		Purchase price allocation adjustments	2		0		1		4
Currency translation	Currency translation	19		3		33		55		Currency translation	31		2		22		55
Goodwill as of June 30, 2020		$	10,019	$	834	$	12,697	$	23,549
Goodwill as of June 30, 2021										Goodwill as of June 30, 2021	$	10,212	$	839	$	12,762	$	23,814

(a)Represents goodwill recognized relative to certain acquisitions which were not material individually or in the aggregate.

1918

Note 1211 – Derivative Instruments and Hedging Activities

The Company uses derivative instruments to mitigate certain exposures. The Company does not enter into derivative financial instruments for trading or speculative purposes. The effects these derivative instruments and hedged items have on the Company’s financial position, financial performance, and cash flows are provided below.

Foreign Currency Risks and Related Strategies

The Company has foreign currency exposures throughout Europe, Greater Asia, Canada and Latin America. Transactional currency exposures that arise from entering into transactions, generally on an intercompany basis, in non-hyperinflationary countries that are denominated in currencies other than the functional currency are mitigated primarily through the use of forward contracts. In order to mitigate foreign currency exposure relating to its investments in certain foreign subsidiaries, the Company has hedged the currency risk associated with those investments with instruments, such as foreign currency-denominated debt, cross-currency swaps and currency exchange contracts, which are designated as net investment hedges.

Hedges of the transactional foreign exchange exposures resulting primarily from intercompany payables and receivables are undesignated hedges. As such, the gains or losses on these instruments are recognized immediately in income. These gains and losses are largely offset by gains and losses on the underlying hedged items, as well as the hedging costs associated with the derivative instruments. The net amounts recognized in Other (expense) income, ~~(expense),~~ net, during the three and nine months ended June 30, ~~2020~~2021 and ~~2019~~2020 were immaterial to the Company's consolidated financial results. The total notional amounts of the Company’s outstanding foreign exchange contracts as of June 30, ~~2020~~2021 and September 30, ~~2019~~2020 were ~~$1.2~~$1.6 billion and ~~$2.3~~$2.5 billion, respectively.

Certain of the Company's foreign currency-denominated long-term notes outstanding, which had a total carrying value of $1.5 billion ~~and $1.4 billion~~ as of June 30, ~~2020~~2021 and September 30, ~~2019, respectively,~~2020, were designated as, and were effective as, economic hedges of net investments in certain of the Company's foreign subsidiaries. The Company has entered into cross-currency swaps, all of which are designated and effective as economic hedges of net investments in certain of the Company's foreign subsidiaries. The notional ~~amounts~~amount of the cross-currency swaps ~~were~~was $3.0 ~~billion and $2.3~~ billion as of June 30, ~~2020~~2021 and September 30, ~~2019, respectively.~~2020.

Net gains or losses relating to the net investment hedges, which are attributable to changes in the foreign currencies to U.S. dollar spot exchange rates, are recorded as accumulated foreign currency translation in Other comprehensive income (loss). Upon the termination of a net investment hedge, any net gain or loss included in Accumulated other comprehensive income (loss) relative to the investment hedge remains until the foreign subsidiary investment is disposed of or is substantially liquidated.

Net (losses) gains recorded to Accumulated other comprehensive income (loss) relating to the Company's net investment hedges for the three and nine-month periods were as follows:

Three Months Ended
June 30, Nine Months Ended
June 30,
(Millions of dollars) 2020 2019 2020 2019
Foreign currency-denominated debt $ (56) $ 39 $ (46) $ 81
Cross-currency swaps $ (122) $ (14) $ 19 $ (14)
Foreign currency forward contract (a) $ — $ (9) $ — $ (9)

~~(a)Represented a loss recognized on a forward contract which was entered into and terminated in the third quarter of fiscal 2019.~~


	Three Months Ended June 30,				Nine Months Ended June 30,
(Millions of dollars)	2021		2020		2021		2020
Foreign currency-denominated debt	$	(4)	$	(56)	$	(25)	$	(46)
Cross-currency swaps	$	(16)	$	(122)	$	(100)	$	19

Interest Rate Risks and Related Strategies

The Company’s policy is to manage interest rate exposure using a mix of fixed and variable rate debt. The Company periodically uses interest rate swaps to manage such exposures. Under these interest rate swaps, the Company exchanges, at specified intervals, the difference between fixed and floating interest amounts calculated by reference to an agreed-upon notional principal amount. These swaps are designated as either fair value or cash flow hedges.

For interest rate swaps designated as fair value hedges (i.e., hedges against the exposure to changes in the fair value of an asset or a liability or an identified portion thereof that is attributable to a particular risk), changes in the fair value of the interest rate swaps offset changes in the fair value of the fixed rate debt due to changes in market interest rates.

The total notional amount of ~~the Company’s~~ outstanding interest rate swaps designated as fair value hedges was $375 million at ~~June 30, 2020 and~~ September 30, ~~2019.~~2020. The ~~outstanding~~ swaps ~~represent~~represented fixed-to-floating interest rate swap agreements the

Company entered into to convert the interest payments on certain long-term notes from the fixed rate to a floating interest rate based on LIBOR. These interest rate swaps designated as fair value hedges were terminated at an immaterial net gain, concurrent with the redemption of the 3.125% notes due November 8, 2021 in the second quarter of fiscal 2021. Additional disclosures regarding the Company's debt transactions are provided in Note 13. There were 0 outstanding interest rate swaps designated as fair value hedges at June 30, 2021. Changes in the fair value of the interest rate swaps offset changes in the fair value of the fixed rate debt. The amounts recorded

during the nine months ended June 30, 2021 and the three and nine months ended ~~June 30,~~ 2020 ~~and 2019~~ for changes in the fair value of these hedges were immaterial to the Company's consolidated financial results.

Changes in the fair value of the interest rate swaps designated as cash flow hedges (i.e., hedging the exposure to variability in expected future cash flows that is attributable to a particular risk) are recorded in Other comprehensive income (loss). If interest rate derivatives designated as cash flow hedges are terminated, the balance in Accumulated other comprehensive income (loss)attributable to those derivatives is reclassified into earnings over the remaining life of the hedged debt. The net realized loss related to terminated interest rate swaps expected to be reclassified and recorded in Interest expense within the next 12 months is $6$2 million, net of tax.

The total notional amount of the Company's outstanding forward starting interest rate swaps was $1.0 billion and $1.5 billion at June 30, ~~2020~~2021 and September 30, ~~2019.~~2020, respectively. The Company entered into these contracts ~~in the fourth quarter of fiscal year 2019~~ to mitigate its exposure to interest rate risk. The ~~amount~~Company recorded net after-tax (losses) gains of $(34) million and $71 million during the three and nine months ended June 30, 2021, respectively, and net after-tax (losses) of $(74) million during the nine months ended June 30, 2020 in Other comprehensive income (loss) relating to these interest rate ~~hedges~~hedges. Net after-tax gains during the three months ended June 30, 2020 ~~was immaterial. The Company recorded an after-tax loss~~were not material to the Company's consolidated financial results. During the second quarter of ~~$74~~fiscal year 2021, the notional amount of $500 million in ~~Other comprehensive income (loss)~~ ~~relating to these~~of the Company's outstanding forward starting interest rate ~~hedges during~~swaps were terminated at an immaterial net loss, concurrent with the ~~nine months ended June 30, 2020.~~issuance of senior unsecured U.S. notes in the second quarter. This net loss will be reclassified into earnings within Interest expense over the remaining life of the U.S. notes issued. Additional disclosures regarding the Company's debt transactions are provided in Note 13.

~~Other Risk Exposures~~

The Company purchases resins, which are oil-based components used in the manufacture of certain products. Significant increases in world oil prices that lead to increases in resin purchase costs could impact future operating results. From time to time, the Company has managed price risks associated with these commodity purchases through commodity derivative forward contracts. The Company had 0 outstanding commodity derivative forward contracts at June 30, 2020 and the amount outstanding as of September 30, 2019 was immaterial to the Company's consolidated financial results.

Financial Statement Effects

The fair values of derivative instruments outstanding at June 30, ~~2020~~2021 and September 30, ~~2019~~2020 were not material to the Company's consolidated balance sheets.

The amounts reclassified from accumulated other comprehensive income relating to cash flow hedges during the ~~three and~~ nine months ended June 30, ~~2020~~2021 and ~~2019~~2020 were not material to the Company's consolidated financial results.

Note 1312 – Financial Instruments and Fair Value Measurements

The following reconciles cash and equivalents and restricted cash reported within the Company's consolidated balance sheets at June 30, ~~2020~~2021 and September 30, ~~2019~~2020 to the total of these amounts shown on the Company's consolidated statements of cash flows:


(Millions of dollars)	(Millions of dollars)	June 30, 2020		September 30, 2019		(Millions of dollars)	June 30, 2021		September 30, 2020
Cash and equivalents	Cash and equivalents	$	2,882	$	536	Cash and equivalents	$	3,153	$	2,825
Restricted cash	Restricted cash	82		54		Restricted cash	128		92
Cash and equivalents and restricted cash	Cash and equivalents and restricted cash	$	2,964	$	590	Cash and equivalents and restricted cash	$	3,282	$	2,917

Cash equivalents consist of all highly liquid investments with a maturity of three months or less at time of purchase. Restricted cash consists of cash restricted from withdrawal and usage except for certain product liability matters.

The Company’s cash and equivalents include institutional money market accounts, which permit daily redemption, and ~~the~~an ultra-short bond fund. The fair values of these investments are based upon the quoted prices in active markets provided by the holding financial institutions, which are considered Level 1 inputs in the fair value hierarchy. The fair values of these accounts were ~~$1.715~~$800 million and $1.549 billion ~~and $39 million~~ at June 30, ~~2020~~2021 and September 30, ~~2019,~~2020, respectively. The Company’s remaining cash and equivalents, excluding restricted cash, were ~~$1.167~~$2.4 billion and ~~$497 million~~$1.3 billion at June 30, ~~2020~~2021 and September 30, ~~2019,~~2020, respectively.

Short-term investments are held to their maturities and are carried at cost, which approximates fair value. The short-term investments consist of instruments with maturities greater than three months and less than one year.

Long-term debt is recorded at amortized cost. The fair value of long-term debt is measured based upon quoted prices in active markets for similar instruments, which are considered Level 2 inputs in the fair value hierarchy. The fair value of long-term debt was ~~$18.7~~$17.3 billion and ~~$19.2~~$19.0 billion at June 30, ~~2020~~2021 and September 30, ~~2019,~~2020, respectively. The fair value of the current portion of long-term debt was ~~$1.6~~$2.073 billion and ~~$1.3 billion~~$702 million at June 30, ~~2020~~2021 and September 30, ~~2019,~~2020, respectively.

All other instruments measured by the Company at fair value, including derivatives and contingent consideration liabilities, are immaterial to the Company's consolidated balance sheets.

Nonrecurring Fair Value Measurements

In the first quarter of fiscal year 2021, the Company recorded charges to Cost of products sold of $34 million to write down the carrying value of certain fixed assets. In the second quarter of fiscal year 2020, the Company recorded a charge to Cost of products sold of $39 million to write down the carrying value of certain intangible assets in the Biosciences unit. ~~In the third quarter of fiscal year 2019, the Company recorded a charge to~~ ~~Research and development expense~~ ~~of $30 million to write down the carrying value of certain intangible assets in the Surgery unit. These charges~~The amounts recognized were recorded to adjust the carrying ~~amounts~~amount of ~~the~~ assets to ~~their~~the assets' fair values, which were estimated, based upon a market participant's perspective, using Level 3 inputs, including values estimated using the income approach.

Transfers of trade receivables

Over the normal course of its business activities, the Company transfers certain trade receivable assets to third parties under factoring agreements. Per the terms of these agreements, the Company surrenders control over its trade receivables upon transfer. Accordingly, the Company accounts for the transfers as sales of trade receivables by recognizing an increase to Cash and equivalents and a decrease to Trade receivables, net when proceeds from the transactions are received. ~~The Company’s balance of~~ ~~Trade receivables, net~~ atDuring the three months ended June 30, 2021 and 2020, ~~excludes~~the Company transferred $317 million and $526 million, respectively, of its trade receivables ~~of $317 million that have been transferred~~ to third parties under factoring arrangements. During the nine months ended June 30, 2021 and 2020, the Company transferred $1.173 billion and $1.842 billion, respectively, of its trade receivables to third parties under factoring arrangements. The portion of these receivables which were yet to be remitted to the third parties at June 30, 2021 and September 30, 2020 were $316 million and $256 million, respectively. The costs incurred by the Company in connection with factoring activities were not material to its consolidated financial results. ~~The Company’s transfers of trade receivables during the nine months ended June 30, 2019 were not material to its consolidated financial results.~~

Note 1413 – Debt

In March 2020, the Company entered into a 364-day senior unsecured term loan facility with borrowing capacity available of $2.0 billion. During the third quarter of fiscal year 2020, the Company repaid $1.9 billion of borrowings outstanding under this term loan with cash on hand and terminated the facility.

In April 2020, the Company entered into a supplement to its existing $2.25 billion senior unsecured revolving credit facility which increased the revolving commitments available to the Company under revolving credit facility by $381 million. As such, the Company's senior unsecured revolving credit facility currently provides borrowings of up to $2.63 billion. Proceeds from this facility are used to fund general corporate needs. There were 0 borrowings outstanding under the revolving credit facility at June 30, 2020.

In ~~May 2020,~~February 2021, the Company issued ~~$750 million~~$1.0 billion of ~~2.823%~~1.957% notes due ~~May 20, 2030 and $750 million of 3.794% notes due May 20, 2050.~~February 11, 2031. The Company used the net proceeds from this long-term debt offering, together with cash on hand, to repay the entire ~~$1.000~~$1.0 billion aggregate principal amount outstanding on the ~~2.404% notes due June 5, 2020, and to redeem $500 million of the aggregate principal outstanding on the 3.250%~~3.125% notes due November ~~12, 2020,~~8, 2021, as well as accrued interest, related premiums, fees and expenses related to ~~these~~this repaid ~~amounts.~~amount. The Company ~~repurchased~~redeemed this long-term debt at an aggregate market price of ~~$506~~$1.019 billion. The carrying value of the long-term notes was $1.005 billion, and the Company recognized a loss on this debt extinguishment of $14 million, which was recorded in the second quarter of fiscal year 2021 within Other (expense) income, net, on the Company’s condensed consolidated statements of income.

Also in February 2021, Becton Dickinson Euro Finance S.à r.l., a private limited liability company (société à responsabilité limitée), which is an indirect, wholly-owned finance subsidiary of the Company, issued Euro-denominated debt consisting of 600 million Euros ($728 million) of 1.213% notes due February 12, 2036. The notes are fully and unconditionally guaranteed on a senior unsecured basis by the Company. No other of the Company's subsidiaries provide any guarantees with respect to these notes. The indenture covenants included a limitation on liens and a restriction on sale and leasebacks, change of control and consolidation, merger and sale of assets covenants. These covenants are subject to a number of exceptions, limitations and qualifications. The indenture does not restrict the Company, Becton Dickinson Euro Finance S.à r.l., or any other of the Company's subsidiaries from incurring additional debt or other liabilities, including additional senior debt. Additionally, the indenture does not restrict Becton Dickinson Euro Finance S.à r.l. and the Company from granting security interests over its assets. The Company used the net proceeds from this long-term debt offering, together with cash on hand, to repay the entire 600 million Euros ($728 million) of aggregate principal amount outstanding on the 0.174% notes due June 4, 2021, as well as accrued interest, related premiums, fees and expenses related to this repaid amount. The Company redeemed this long-term debt at an aggregate market price of $730 million. The carrying value of ~~these~~the long-term notes was ~~$500~~$728 million, and the Company recognized a loss on this debt extinguishment of $6$1 million, which was recorded in ~~June 2020 as~~the second quarter of fiscal year 2021 within Other (expense) income, ~~(expense),~~ net, on the Company’s condensed consolidated statements of income.

~~Note 15 – Leases~~

~~The~~In December 2020, the Company leases real estate, vehicles and other equipment which are used in the Company’s manufacturing, administrative and research and development activities. The Company identifies a contract that contains a lease as one which conveys a right, either explicitly or implicitly, to control the use of an identified asset in exchange for consideration. The Company’s lease arrangements are generally classified as operating leases. These arrangements have remaining terms ranging from less than one year to approximately 25 years and the weighted-average remaining lease termredeemed $265 million of the Company’s leases is approximately 7.4 years. An option to renew or terminate the current term of a lease arrangement is included in the lease term if the Company is reasonably certain to exercise that option.

The Company does not recognize a right-of-use asset and lease liability for short-term leases, which have terms of 12 months or less, on its consolidated balance sheet. For the longer-term lease arrangements that are recognizedaggregate principal amount outstanding on the ~~Company’s consolidated balance sheet, the right-of-use asset~~2.894% notes due June 6, 2022, as well as accrued interest, related premiums, fees and ~~lease liability is initially measured at the commencement date based~~expenses related to this redeemed amount. Based upon the ~~present~~aggregate $265 million carrying value of the ~~lease payments due under~~notes redeemed and the ~~lease. These payments represent~~$275 million the ~~combination~~Company paid to redeem the aggregate principal amount of the ~~fixed lease and fixed non-lease components that are due under~~notes, the ~~arrangement. The costs associated with~~Company recorded a loss on this debt extinguishment transaction in the ~~Company’s short-term leases, as well as variable costs relating to the Company’s lease arrangements, are not material to~~first quarter of fiscal year 2021 of $10 million within Other (expense) income, net, on its condensed consolidated ~~financial results.~~statements of income.

2221

Note 14 – Leases

During the third quarter of fiscal year 2021, the Company completed the sale of one of its properties for gross proceeds of $91 million. Concurrently with the sale, the Company entered into an operating lease arrangement with an initial lease term of two years. The ~~implicit interest rates of~~lease agreement includes the ~~Company’s~~option for the Company to extend the lease ~~arrangements are generally not readily determinable~~for up to 2 additional six-month periods. The sale agreement and corresponding lease agreement met the requirements for sale-leaseback accounting and as such, the Company ~~applies an incremental borrowing rate, which is established based upon~~recognized a gain within Other operating (income) expense, net related to the ~~information available at the lease commencement date, to determine the present value~~sale transaction of ~~lease payments due under an arrangement. The weighted-average incremental borrowing rate that has been applied to measure the Company’s lease liabilities is 2.3%.~~

~~The Company’s lease costs recorded in its consolidated statements of income for the three and nine months ended June 30, 2020 were $31~~$88 million and $98 million, respectively. Cash payments arising from the Company’s lease arrangements are reflected on its condensed consolidated statement of cash flows as outflows used for operating activities. The right-of-use assets and lease liabilities recognized on the Company’s condensed consolidated balance sheet as of June 30, 2020 were as follows:


~~(Millions of dollars)~~	~~June 30, 2020~~
~~Right-of-use assets recorded in~~ ~~Other Assets~~	$	~~419~~
~~Current lease liabilities recorded in~~ ~~Payables, accrued expenses and other current liabilities~~	$	~~104~~
~~Non-current lease liabilities recorded in~~ ~~Deferred Income Taxes and Other Liabilities~~	$	~~339~~

~~The Company’s payments due under its operating leases are as follows:~~

(Millions of dollars)
Remaining for 2020 $ 30
2021 108
2022 89
2023 58
2024 37
Thereafter 168
Total payments due 490
Less: imputed interest 47
Total $ 443

~~The Company’s future minimum rental commitments on non-cancelable leases at September 30, 2019, as disclosed~~ in the ~~Company’s 2019 Annual Report on Form 10-K, were as follows:~~

(Millions of dollars)
2020 $ 122
2021 103
2022 83
2023 57
2024 56
Thereafter 123
Total $ 546
third quarter of fiscal year 2021.

2322

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

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” or the “Company”) 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~~EMEA (which includes ~~the Commonwealth of Independent States,~~Europe, the Middle East and Africa); Greater Asia (which includes countries in ~~East Asia,~~Greater China, Japan, South Asia, Southeast Asia, Korea, and ~~the Oceania region)~~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.

~~Recent Developments~~BD’s Intention to Spin Off Diabetes Care

On May 6, 2021, we announced our intention to spin off our Diabetes Care business as a separate publicly traded company to BD’s shareholders. The proposed spin-off is intended to be a tax-free transaction for U.S. federal income tax purposes and is expected to be completed in the first half of calendar year 2022, subject to the satisfaction of customary conditions, including final approval from BD’s Board of Directors and the effectiveness of a registration statement on Form 10. The Company believes that as an independent, publicly traded entity, the Diabetes Care business will be positioned to more effectively allocate its capital and operational resources with a dedicated growth strategy.

COVID-19 Pandemic Impacts and Response

A novel strain of coronavirus disease (“COVID-19”) was officially declared a pandemic by the World Health Organization ("WHO") in March ~~2020. In efforts~~2020 and governments around the world have been implementing various measures to slow and control the ongoing spread of ~~COVID-19, governments around the world issued stay at home orders, travel restrictions~~COVID-19. These government measures, as well as recommendations or mandates to avoid large gatherings or to self-quarantine. Many governments also instituted restrictions on certain businesses and their activities, particularly those that were deemed non-essential. These various measures led to a ~~sudden and~~shift in healthcare priorities, resulted in a significant decline in ~~economic activity within~~medical procedures in our fiscal year 2020. The pandemic has continued to impact the demand for certain of our products during our fiscal year 2021 and certain areas of non-acute healthcare utilization have still not fully recovered to pre-pandemic levels.

Our third quarter fiscal year 2021 revenue growth reflects a ~~number~~favorable comparison to the prior-year quarter, which was most significantly impacted by COVID-19 pandemic-related declines during our fiscal year 2020. Our revenues for the third quarter also reflected a substantial benefit from sales related to COVID-19 diagnostic testing on the BD VeritorTM Plus and BD MaxTM Systems. As we expected, the magnitude of ~~countries worldwide. While~~this benefit during the ~~United States and other countries~~quarter was impacted by pricing pressures for SARS-CoV-2 diagnostic tests, as competitors have ~~begun to reopen their economies, the negative economic impacts of the pandemic, including decreased healthcare consumption, continue to persist. As further discussed below,~~entered the COVID-19 ~~pandemic has resulted in declines of the following: non-COVID-19 procedures which require general medical devices; elective procedures; instrument placements; routine~~ diagnostic testing market, and ~~specimen collections; and research activity. These~~also by a decline in demand for COVID-19 testing. The factors ~~have unfavorably impacted~~that affected our ~~results of operations in fiscal year 2020, including~~revenue growth for the three months ended June 30, 2020. While certain of our organizational units realized positive benefits to revenues from the pandemic, total consolidated revenues for the three and nine months ended June 30, 2020 were unfavorably impacted by an estimated $600 million and $656 million, respectively.

~~We have been deploying our capabilities, expertise and scale to address critical health needs~~2021, including those related ~~to COVID-19.~~

•We were granted an Emergency Use Authorization by the U.S. Food and Drug Administration ("FDA") for the launch of a COVID-19 antigen detection test that can provide results in 15 minutes using a simple nasal swab and our portable BD Veritor^TM ~~Plus System.~~

•~~In addition to this immunoassay test, BD's portfolio of molecular solutions for COVID-19 testing includes three other tests that have been registered for use with our BD Max~~^TM ~~molecular system.~~

•We are leveraging our category leading position as a manufacturer of needles and syringes as we enter into partnerships with governments around the world to help prepare for a future COVID-19 vaccination campaign.

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 worked 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 also further secured our financial flexibility by increasing the commitments available under our revolving credit facility by $381 million and issuing $3.0 billion of equity securities. Our fiscal year 2020 debt and equity transactions are further discussed in Notes 3 and 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~~are discussed in ~~global economic activity.~~greater detail further below.

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 has experienced weakened demand for our products as a result of a significant decline in medical procedures due to government restrictions and a shift in healthcare priorities. There has been a decline in procedure volumes across acute and non-acute settings which has led to a decline in demand for general medical devices. We have also seen a deferral in elective procedures such as hernia repairs and delays in instrument placements relating to our medication management solutions, including Pyxis™. There has also been a decrease in routine diagnostic testing and specimen collections, which is being partially offset by higher demand for COVID-19 testing. Additionally, there has been a decrease in research activity due to laboratory closures and reduced clinical testing.

~~We noted sequential monthly improvement from May to June 2020 in the demand for certain products, including those products that are driven by the volume of elective procedures. However, due~~Due to the ~~continued,~~ significant uncertainty that exists relative to the duration and overall impact of the COVID-19 pandemic, our future operating performance, particularly in the short-term, ~~will~~may be subject to volatility. In this regard, we continue to see challenges posed by the pandemic to global transportation channels and other aspects of our supply chain, including the cost and availability of raw materials. As noted above, the pandemic continues to impact demand for certain of our products. The ~~ultimate~~U.S. and other governments may enact or use laws and regulations, such as the Defense Production Act or export restrictions, to ensure availability of needed COVID-19 testing and vaccination delivery devices. Any such action may impact our global supply chain network.

The impacts 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,~~certain factors including:

•The ~~preparedness and effectiveness of countries around the world~~extent to which resurgences in ~~preventing~~COVID-19 infections or ~~responding to the ongoing spread of COVID-19, or in countries where the spread has been controlled, any resurgence~~new strains of the ~~virus;~~virus, including the Delta variant, result in deferrals of elective medical procedures and/or the imposition of new governmental lockdowns, quarantine requirements or other restrictions that may weaken demand for certain of our products and/or disrupt our operations;

•The degree to which demand and pricing for our COVID-19 diagnostics testing solutions ~~continue~~continues to be ~~made~~impacted by distribution and utilization of available ~~and are utilized by governments, healthcare providers and institutions, retail pharmacies~~COVID-19 vaccines and the ~~general public;~~

•~~The pace at which hospitals and clinical laboratories fully resume patient care that is not related to the COVID-19 pandemic;~~entry of additional competitive SARS-CoV-2 diagnostic testing products;

•The timing of when ~~research performed by~~hospitals, clinical laboratories, research laboratories and institutions ~~will~~fully resume normal operations that are not related to ~~normal operations;~~the COVID-19 pandemic; and

•The ~~timing and~~continued strength of ~~any~~the global economic recovery and the degree of pressure that ~~the~~a weaker macroeconomic environment ~~will~~would put on future healthcare utilization, the capital budgets of hospitals and other healthcare institutions, and the global demand for our products.

~~Further discussion regarding the impacts of~~We remain focused on partnering with governments, healthcare systems, and healthcare professionals to navigate the COVID-19 ~~pandemic~~pandemic. This focus includes providing access to our SARS-CoV-2 diagnostics tests and injection devices for global vaccination campaigns, as well as supplying products and solutions for ongoing care for patients around the world. We have also remained focused on ~~our results for~~protecting the ~~three months ended June 30, 2020 is provided below.~~health and safety of BD employees while ensuring continued availability of BD’s critical medical devices and technologies during these unprecedented times.

Overview of Financial Results and Financial Condition

For the three months ended June 30, ~~2020,~~2021, worldwide revenues of ~~$3.855~~$4.890 billion ~~decreased 11.4%~~increased 26.9% from the prior-year period, which reflected ~~a decline~~an increase in volume, including increases attributable to our core products, of approximately ~~9.3%, an unfavorable~~22.0%. Revenues for the three months ended June 30, 2021 also reflected a favorable impact from foreign currency translation of approximately ~~2.0%~~4.9% and an ~~unfavorable~~immaterial impact from ~~pricing of approximately 0.1%. We estimate that the COVID-19 pandemic reduced volume growth in the third quarter by approximately 14.1%.~~pricing. Volume in the third quarter of fiscal year ~~2020~~2021 reflected the following:

•Medical segment revenues in the third quarter reflected ~~declines~~growth in the Medication Delivery Solutions, Pharmaceutical Systems and Diabetes Care units, ~~that were~~which was partially offset by ~~growth~~a decline in the Medication Management Solutions ~~and Pharmaceutical Systems units.~~unit.

•Life Sciences segment revenues in the third quarter ~~were unfavorably impacted by the COVID-19 pandemic. The pandemic's unfavorable impact on~~reflected growth in both units. Growth in the Integrated Diagnostic Solutions ~~unit's third quarter~~unit included approximately $300 million of revenues ~~was partially offset by the unit's sales~~ related to COVID-19 diagnostic ~~testing.~~testing on the BD VeritorTM Plus and BD MaxTM Systems.

•Interventional segment revenues in the third quarter ~~were negatively impacted by decreased demand associated with the deferral of elective medical procedures as a result of the COVID-19 pandemic.~~

~~The Medication Management Solutions unit continues to delay U.S. shipments of Alaris~~^TM ~~infusion pumps pending compliance with certain 510(k) filing requirements of the FDA, as previously reported. We have been able to ship Alaris~~^TM ~~infusion pumps~~reflected growth in all three units, particularly in the ~~United States that are ordered with medical necessity certification. We continue to make progress on our regulatory filing related to the Alaris~~^TM ~~infusion pumps~~Surgery and ~~we currently expect the filing to be made with the FDA either at the end of the second quarter or early in the third quarter of BD's fiscal year 2021.~~Peripheral Intervention units.

We continue to invest in research and development, geographic expansion, and new product ~~development~~ programs to drive further revenue and profit growth. We have reinvested a portion of the profits from our sales related to COVID-19 diagnostic testing into our BD 2025 strategy, which is anchored in three pillars: grow, simplify and empower. 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~~As discussed above, current global economic ~~environments for the healthcare industry and healthcare utilization in the United States and Europe have been generally stable, destabilization resulting from~~conditions remain relatively volatile due to 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.pandemic. In addition, pricing pressure exists globally which could adversely impact our businesses. Also, as noted above, the pandemic has posed challenges to global transportation channels and supply chains. These challenges have subjected certain of our costs, specifically raw material and freight costs, to inflationary pressures which have unfavorably impacted our gross profit and operating margins. Additional discussion regarding the impacts of these inflationary pressures on our operating results for the three and nine months ended June 30, 2021 is provided further below.

Cash flows from operating activities were ~~$2.058~~$3.696 billion in the first nine months of fiscal year ~~2020.~~2021. At June 30, ~~2020,~~2021, we had ~~$2.986~~$3.306 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 ~~2020,~~2021, we paid cash dividends of ~~$773~~$789 million, including ~~$659~~$722 million paid to common shareholders and ~~$114~~$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~~weaker U.S. dollar, compared to the prior-year period, resulted in ~~an unfavorable~~a favorable foreign currency translation impact to our revenues and an unfavorable impact to our expenses during the third quarter of fiscal year ~~2020.~~2021. 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 Operations

Medical Segment

The following summarizes third quarter Medical revenues by organizational unit:


		Three months ended June 30,																			Three months ended June 30,
(Millions of dollars)	(Millions of dollars)	2020		2019		Total Change		Estimated FX Impact		FXN Change		(Millions of dollars)	2021		2020		Total Change		Estimated FX Impact		FXN Change
Medication Delivery Solutions ~~(a)~~	Medication Delivery Solutions ~~(a)~~	$	781	$	981	(20.3)	%	(2.5)	%	(17.8)	%	Medication Delivery Solutions ~~(a)~~	$	1,007	$	781	28.9	%	5.0	%	23.9	%
Medication Management Solutions ~~(a)~~	Medication Management Solutions ~~(a)~~	677		661		2.5	%	(1.4)	%	3.9	%	Medication Management Solutions ~~(a)~~	597		677		(11.8)	%	2.2	%	(14.0)	%
Diabetes Care	Diabetes Care	260		275		(5.5)	%	(2.6)	%	(2.9)	%	Diabetes Care	294		260		13.4	%	4.5	%	8.9	%
Pharmaceutical Systems	Pharmaceutical Systems	403		394		2.3	%	(2.1)	%	4.4	%	Pharmaceutical Systems	476		403		17.9	%	6.0	%	11.9	%
Total Medical Revenues	Total Medical Revenues	$	2,122	$	2,311	(8.2)	%	(2.2)	%	(6.0)	%	Total Medical Revenues	$	2,375	$	2,122	11.9	%	4.2	%	7.7	%

~~(a)~~The presentation of prior-period amounts reflects the reclassification of $3 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.

~~Third quarter~~The Medical ~~segment revenues reflected declines in the Medication Delivery Solutions and Diabetes Care units that were partially offset by~~segment’s revenue growth in the ~~Medication Management Solutions and Pharmaceutical Systems units. The Medication Delivery Solutions unit's~~ third quarter ~~revenues reflected an unfavorable impact relating~~of 2021 was aided by a favorable comparison to the prior-year period, which was impacted by COVID-19 ~~pandemic due to~~pandemic-related declines, ~~in non-COVID-19 procedures which require general medical devices,~~ particularly in the United States and China. ~~As expected,~~These prior-period pandemic-related declines impacted our Medication Delivery Solutions and Diabetes Care units. Third quarter revenue growth in the Medication Delivery Solutions unit's third quarter revenues in China were also unfavorably impacted by a new volume-based procurement process which has been adopted by several of China's provinces. Growth driven by pandemic-related infusion pump orders inunit reflected strong demand for our core offerings, including U.S. demand for catheters and vascular care products, as well as strong global demand for syringes resulting from COVID-19 vaccination efforts. In the Medication Management Solutions unit, ~~was partially offset by the delay of other shipments of Alaris~~^TM ~~infusion pumps~~revenue growth in the ~~United States, as previously discussed above. Third~~third quarter ~~revenues~~of 2021 reflected an unfavorable comparison to the prior-year period, which benefited from global pandemic-related infusion pump orders. Growth in the Diabetes Care unit ~~primarily reflected~~benefited from the timing of sales, slightly better than expected market demand and a ~~pandemic-related shift of U.S. orders~~favorable comparison to the ~~second quarter of fiscal year 2020,~~prior-year period, which ~~resulted in a lower level of orders~~was impacted by pandemic-related declines. The Pharmaceutical Systems unit’s revenue growth in the third ~~quarter. The Pharmaceutical Systems unit's~~quarter of 2021 reflected continued ~~strength in~~strong demand for prefillable products.

26As previously disclosed, we submitted our 510(k) premarket notification to the United States Food and Drug Administration (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, implement new features to address the open recall issues and provide other updates, including a new version of BD Alaris™ System software that will provide clinical, operational and cybersecurity updates.

Medical segment total revenues for the nine-month ~~period~~periods were as follows:

Nine months ended June 30,
(Millions of dollars) 2020 2019 Total
Change Estimated
FX
Impact FXN Change
Total Medical Revenues $ 6,362 $ 6,626 (4.0) % (1.5) % (2.5) %


	Nine months ended June 30,
(Millions of dollars)	2021		2020		Total Change		Estimated FX Impact		FXN Change
Total Medical Revenues	$	6,947	$	6,362	9.2	%	2.8	%	6.4	%

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


		Three months ended June 30,									Nine months ended June 30,										Three months ended June 30,						Nine months ended June 30,
(Millions of dollars)	(Millions of dollars)	2020			2019			2020			2019			(Millions of dollars)	2021			2020			2021			2020
Medical segment income	Medical segment income	$	646		$	744		$	1,653		$	2,008		Medical segment income	$	636		$	646		$	1,936		$	1,653

Segment income as % of Medical revenues	Segment income as % of Medical revenues	30.4		%	32.2		%	26.0		%	30.3		%	Segment income as % of Medical revenues	26.8		%	30.4		%	27.9		%	26.0		%

The Medical segment's income in the third 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 third quarter of ~~2020~~2021 as compared with the third quarter of ~~2019 which~~2020, primarily reflected unfavorable product mix and increased levels of manufacturing overhead costs that were recognized in the period, rather than capitalized within inventory, as a result of the COVID-19 pandemic. Gross profit margin in the third quarter of 2020 was also lower compared with the prior-year period due to unfavorable foreign currency translation, higher raw material costs and product ~~mix that was driven by the decline of sales in China due~~quality remediation expenses. These unfavorable impacts to the ~~volume-based procurement process noted above. These unfavorable impacts~~Medical segment’s third quarter gross margin were partially offset by lower manufacturing costs resulting from continuous improvement projects which enhanced the efficiency of our ~~operations.~~operations, as well as a favorable comparison to the prior-year period which was unfavorably impacted by increased levels of manufacturing overhead costs that were recognized in the period as a result of the COVID-19 pandemic, rather than capitalized within inventory.

•Selling and administrative expense as a percentage of revenues was ~~lower~~higher in the third quarter of ~~2020~~2021 compared with the third quarter of ~~2019 primarily due to lower expenses resulting~~2020, which benefited from ~~recently enacted~~ cost containment ~~measures.~~measures enacted in response to the COVID-19 pandemic.

•Research and development expense as a percentage of revenues was higher in the third quarter of ~~2020~~2021 compared with the third quarter of ~~2019~~2020, which ~~reflected~~primarily reflects our ~~continued~~ commitment to ~~drive innovation with new products~~research and ~~platforms.~~development through continued reinvestment into our growth initiatives.

Life Sciences Segment

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

Three months ended June 30,
(Millions of dollars) 2020 2019 Total
Change Estimated
FX
Impact FXN Change
Integrated Diagnostic Solutions (a)
Preanalytical Systems $ 312 $ 407 (23.3) % (2.3) % (21.0) %
Diagnostic Systems 402 368 9.3 % (2.8) % 12.1 %
Total Integrated Diagnostic Solutions 714 774 (7.8) % (2.5) % (5.3) %
Biosciences 237 284 (16.4) % (1.7) % (14.7) %
Total Life Sciences Revenues $ 951 $ 1,058 (10.1) % (2.3) % (7.8) %



	Three months ended June 30,
(Millions of dollars)	2021		2020		Total Change		Estimated FX Impact		FXN Change
Integrated Diagnostic Solutions	$	1,117	$	714	56.4	%	7.7	%	48.7	%
Biosciences	316		237		33.3	%	6.0	%	27.3	%
Total Life Sciences Revenues	$	1,433	$	951	50.7	%	7.3	%	43.4	%

~~(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~~revenue growth in the third quarter ~~were unfavorably~~of 2021 primarily reflected a favorable comparison to the prior-year period, which was significantly impacted by ~~the COVID-19 pandemic. Third quarter revenues~~pandemic-related declines in both units. Revenue growth in the Integrated Diagnostic Solutions unit ~~reflected pandemic-related declines in routine diagnostic testing and specimen collections. The impact of these declines~~ was ~~partially offset~~also driven by ~~the Integrated Diagnostic Solutions unit's~~ sales related to COVID-19 diagnostic testing ~~primarily~~ on the BD VeritorTM Plus and BD Max^TM ~~platform. Third quarter revenues~~Systems. While routine diagnostic testing levels in the Integrated Diagnostic Solutions unit have not yet fully recovered to pre-pandemic levels, demand was higher for our specimen management portfolio, automated blood cultures and ID/AST testing solutions. The Biosciences ~~unit reflected a decline~~unit's revenue growth in the third quarter of 2021 benefited from strong demand for ~~instruments and reagents as~~ research ~~and clinical lab activity slowed due to the COVID-19 pandemic.~~reagents.

Life Sciences segment total revenues for the nine-month ~~period~~periods were as follows:

Nine months ended June 30,
(Millions of dollars) 2020 2019 Total
Change Estimated
FX
Impact FXN Change
Total Life Sciences Revenues $ 3,187 $ 3,166 0.7 % (1.5) % 2.2 %


	Nine months ended June 30,
(Millions of dollars)	2021		2020		Total Change		Estimated FX Impact		FXN Change
Total Life Sciences Revenues	$	4,998	$	3,187	56.8	%	4.6	%	52.2	%

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


		Three months ended June 30,									Nine months ended June 30,										Three months ended June 30,						Nine months ended June 30,
(Millions of dollars)	(Millions of dollars)	2020			2019			2020			2019			(Millions of dollars)	2021			2020			2021			2020
Life Sciences segment income	Life Sciences segment income	$	214		$	304		$	860		$	902		Life Sciences segment income	$	432		$	214		$	1,953		$	860

Segment income as % of Life Sciences revenues	Segment income as % of Life Sciences revenues	22.5		%	28.7		%	27.0		%	28.5		%	Segment income as % of Life Sciences revenues	30.1		%	22.5		%	39.1		%	27.0		%

The Life Sciences segment's income in the third 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 third quarter of ~~2020~~2021 was ~~lower~~higher compared with the third quarter of ~~2019~~2020, primarily due to the recovery of demand for products with higher margins and a favorable comparison to the prior-year period which ~~primarily reflected unfavorable product mix and~~was unfavorably impacted by increased levels of manufacturing overhead costs that were recognized in the period ~~rather than capitalized within inventory,~~ as a result of the COVID-19 ~~pandemic.~~pandemic, rather than capitalized within inventory. The Life Sciences segment’s third quarter

gross margin was unfavorably impacted by foreign currency translation and the recognition of approximately $71 million of excess and obsolete inventory expenses related to COVID-19 testing inventory.

•Selling and administrative expense as a percentage of revenues was higher in the third quarter of 2021 compared with the third quarter of 2020, which benefited from cost containment measures enacted in response to the COVID-19 pandemic. The increase in selling and administrative expense as a percentage of revenues in the third quarter of ~~2020 was lower compared~~2021 also reflected higher shipping costs and selling costs associated 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.COVID-19 testing solutions.

•Research and development expense as a percentage of revenues was ~~higher~~lower in the third quarter of ~~2020~~2021 compared with the third quarter of ~~2019~~2020, primarily due to the increase in revenues in the quarter, partially offset by additional investments in COVID-19 testing solutions.

Interventional Segment

The following summarizes third quarter Interventional revenues by organizational unit:


		Three months ended June 30,																			Three months ended June 30,
(Millions of dollars)	(Millions of dollars)	2020		2019		Total Change		Estimated FX Impact		FXN Change		(Millions of dollars)	2021		2020		Total Change		Estimated FX Impact		FXN Change
Surgery ~~(a)~~	Surgery ~~(a)~~	$	197	$	309	(36.5)	%	(0.7)	%	(35.8)	%	Surgery ~~(a)~~	$	336	$	197	70.9	%	3.2	%	67.7	%
Peripheral Intervention ~~(a)~~	Peripheral Intervention ~~(a)~~	318		396		(19.8)	%	(1.6)	%	(18.2)	%	Peripheral Intervention ~~(a)~~	436		318		37.2	%	5.4	%	31.8	%
Urology and Critical Care ~~(a)~~	Urology and Critical Care ~~(a)~~	268		276		(3.0)	%	(1.0)	%	(2.0)	%	Urology and Critical Care ~~(a)~~	310		268		16.0	%	2.5	%	13.5	%
Total Interventional Revenues	Total Interventional Revenues	$	782	$	981	(20.3)	%	(1.1)	%	(19.2)	%	Total Interventional Revenues	$	1,082	$	782	38.4	%	3.8	%	34.6	%

~~(a)~~The ~~presentation~~Interventional segment’s revenue growth in the third quarter of prior-period amounts reflects the total reclassifications of $46 million associated with the movement, effective on October 1, 2019, of certain products from the Surgery unit and the Urology and Critical Care unit2021 reflected a favorable comparison to the ~~Peripheral Intervention unit.~~

~~Third quarter revenues~~prior-year period, which was significantly impacted by pandemic-related declines in ~~each of the Interventional segment's units, particularly the~~our Surgery and Peripheral Intervention ~~units, were negatively impacted by decreased demand associated with~~units. Third quarter revenue growth in the ~~deferral~~Peripheral Intervention unit reflected sales attributable to the unit’s acquisition of ~~elective medical procedures as a result~~Straub Medical AG, which occurred in the third quarter of ~~the COVID-19 pandemic. Pandemic-related~~fiscal year 2020. Third quarter revenue ~~declines~~growth in the Urology and Critical Care unit ~~were partially offset by sales of~~showed continued strength in demand for acute urology products and the unit's ~~home care and~~ targeted temperature management ~~businesses.~~portfolio.

Interventional segment total revenues for the nine-month ~~period~~periods were as follows:

Nine months ended June 30,
(Millions of dollars) 2020 2019 Total
Change Estimated
FX
Impact FXN Change
Total Interventional Revenues $ 2,784 $ 2,914 (4.4) % (0.7) % (3.7) %


	Nine months ended June 30,
(Millions of dollars)	2021		2020		Total Change		Estimated FX Impact		FXN Change
Total Interventional Revenues	$	3,168	$	2,784	13.8	%	2.3	%	11.5	%

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


		Three months ended June 30,									Nine months ended June 30,										Three months ended June 30,						Nine months ended June 30,
(Millions of dollars)	(Millions of dollars)	2020			2019			2020			2019			(Millions of dollars)	2021			2020			2021			2020
Interventional segment income	Interventional segment income	$	100		$	183		$	556		$	623		Interventional segment income	$	214		$	100		$	725		$	556

Segment income as % of Interventional revenues	Segment income as % of Interventional revenues	12.8		%	18.6		%	20.0		%	21.4		%	Segment income as % of Interventional revenues	19.8		%	12.8		%	22.9		%	20.0		%

The Interventional segment's income in the third 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~~higher in the third quarter of ~~2020~~2021 as compared with the third quarter of ~~2019~~2020, primarily due to ~~unfavorable product mix~~the recovery of demand for products with higher margins and a favorable comparison to the prior-year period which was unfavorably impacted by increased levels of manufacturing overhead costs that were recognized in the period ~~rather than capitalized within inventory,~~ as a result of the COVID-19 ~~pandemic.~~pandemic, rather than capitalized within inventory.

•Selling and administrative expense as a percentage of revenues in the third quarter of ~~2020~~2021 was ~~slightly higher~~lower compared with the prior-year period primarily due to the ~~pandemic-related decline in~~recovery of segment ~~revenues noted above, partially offset by lower expenses resulting from recently enacted cost containment measures.~~revenues.

•Research and development expense as a percentage of revenues was ~~lower~~higher in the third quarter of ~~2020~~2021 compared with the third quarter of ~~2019~~2020 which primarily ~~due to the unfavorable impact of a write-down recorded by the Surgery unit in the prior-year period.~~reflects reinvestment into our growth initiatives.

•
~~The Interventional segment's lower income in the third 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 third quarter revenues by geography were as follows:


		Three months ended June 30,																			Three months ended June 30,
(Millions of dollars)	(Millions of dollars)	2020		2019		Total Change		Estimated FX Impact		FXN Change		(Millions of dollars)	2021		2020		Total Change		Estimated FX Impact		FXN Change
United States	United States	$	2,119	$	2,440	(13.1)	%	—	%	(13.1)	%	United States	$	2,574	$	2,119	21.5	%	—	%	21.5	%
International	International	1,735		1,910		(9.2)	%	(4.5)	%	(4.7)	%	International	2,316		1,735		33.5	%	10.9	%	22.6	%
Total Revenues	Total Revenues	$	3,855	$	4,350	(11.4)	%	(2.0)	%	(9.4)	%	Total Revenues	$	4,890	$	3,855	26.9	%	4.9	%	22.0	%

U.S. ~~revenues~~revenue growth in the third quarter of ~~2020 primarily reflected pandemic-related declines in~~2021 was driven by the Medical ~~segment's~~segment’s Medication Delivery Solutions unit and the Interventional ~~segment's~~segment’s Surgery and Peripheral Intervention units. Third quarter revenue growth in these units reflected favorable comparisons to prior-year period results, which were impacted by COVID pandemic-related declines, as ~~previously discussed above.~~well as growth attributable to core products. Third quarter U.S. ~~revenues~~revenue growth also benefited from sales related to COVID-19 diagnostic testing in the Life Sciences segment's Integrated Diagnostic Solutions unit. U.S. revenue growth in the third quarter of 2021 was ~~also~~ unfavorably impacted by ~~results~~a decline in the Medical ~~segment's~~segment’s Medication Management Solutions unit, as ~~previously discussed.~~further discussed above.

~~Third quarter international revenues in~~International revenue growth for the third quarter of ~~2020~~2021 were ~~unfavorably impacted~~largely driven by revenue declines in China for the Medical segment's Medication Delivery Solutions unit, as previously discussed. International revenues in the third quarter of 2020 also reflected pandemic-related declinesCOVID-19 diagnostic testing-related sales in the Life Sciences segment's Integrated Diagnostic Solutions unit, as discussed further above, and by sales in the Medical segment’s Pharmaceutical Systems unit. Third quarter international revenue growth was also driven by results in the Medical segment’s Medication Delivery Solutions and the Interventional ~~segment's Surgery and~~segment’s Peripheral Intervention ~~units.~~unit due to favorable comparisons to prior-year period results, which were impacted by COVID pandemic-related declines, and growth attributable to core products. Third quarter international ~~revenues were favorably~~revenue growth was unfavorably impacted by a decline in the Medical ~~segment's~~segment’s Medication Management Solutions ~~unit's pandemic-related orders of infusion pumps,~~unit, as further discussed above.

Emerging market revenues for the third quarter were ~~$572~~$727 million, compared with ~~$703~~$572 million in the prior year’s quarter. Third quarter revenue growth benefited from a favorable comparison to the prior-year quarter which was impacted by COVID-19 pandemic-related declines in Greater Asia, including in China. Emerging market revenues in the current-year period included an estimated $40 million ~~unfavorable~~favorable impact due to foreign currency translation. Third quarter revenues in emerging markets were unfavorably impacted by a decline in healthcare utilization as a result of the COVID-19 pandemic. As previously discussed above, revenues in our Medication Delivery Solutions unit were also 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.

Specified Items

Reflected in the financial results for the three and nine-month periods of fiscal years ~~2020~~2021 and ~~2019~~2020 were the following specified items:


		Three months ended June 30,						Nine months ended June 30,							Three months ended June 30,				Nine months ended June 30,
(Millions of dollars)	(Millions of dollars)	2020		2019		2020		2019		(Millions of dollars)	2021		2020		2021		2020
Integration costs (a)	Integration costs (a)	$	46	$	63	$	165	$	206	Integration costs (a)	$	27	$	46	$	94	$	165
Restructuring costs (a)	Restructuring costs (a)	28		27		69		99		Restructuring costs (a)	(3)		28		33		69
Transaction costs		—		—		—		1
Separation and related costs (b)										Separation and related costs (b)	16		—		16		—

Purchase accounting adjustments ~~(b)~~(c)	Purchase accounting adjustments ~~(b)~~(c)	325		378		1,012		1,135		Purchase accounting adjustments ~~(b)~~(c)	355		325		1,056		1,012
Transaction gain/loss and product-related matters (c)		(10)		—		248		61
Transaction gain/loss, product and other litigation-related matters (d)										Transaction gain/loss, product and other litigation-related matters (d)	(70)		(10)		258		248
European regulatory initiative-related costs ~~(d)~~(e)	European regulatory initiative-related costs ~~(d)~~(e)	33		14		77		29		European regulatory initiative-related costs ~~(d)~~(e)	32		33		92		77
Investment gains/losses and asset impairments ~~(e)~~(f)	Investment gains/losses and asset impairments ~~(e)~~(f)	—		30		41		30		Investment gains/losses and asset impairments ~~(e)~~(f)	—		—		—		41
Impacts of debt extinguishment	Impacts of debt extinguishment	6		52		6		53		Impacts of debt extinguishment	—		6		30		6
Hurricane recovery-related impacts		—		(10)		—		(10)

Total specified items	Total specified items	428		553		1,619		1,604		Total specified items	358		428		1,578		1,619
Less: tax impact of specified items and tax reform (f)		72		120		218		263
Less: tax impact of specified items										Less: tax impact of specified items	61		72		265		218
After-tax impact of specified items	After-tax impact of specified items	$	356	$	432	$	1,401	$	1,341	After-tax impact of specified items	$	296	$	356	$	1,313	$	1,401

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

(b)Represents costs recorded to Other operating (income) expense, net which were incurred for consulting, legal, tax and other advisory services associated with the planned spin-off of BD's Diabetes Care business.

(c)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)~~(d)The amounts 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 fiscal year 2021 additionally includes charges of $296 million relating to product liability reserves, including related legal defense costs, as further discussed below. The product liability-related charges and sale-leaseback gain were recorded to Other operating (income) expense, net. The amount in the nine-month period of 2021, as well as amounts in the three and nine-month periods 2020, included charges or credits related to the estimate of probable future product remediation costs, as further discussed below. Such amounts are recorded within Cost of products sold,, or in some cases, within Other (expense) income, ~~(expense), net. The amount in the prior-year nine-month period was recorded within~~ ~~Other operating (income) expense, net~~ and included the following: a charge relating to certain product liability matters; the estimated cost of a product recall; and the pre-tax gain recognized on BD's sale of its Advanced Bioprocessing business.net.

~~(d)~~(e)Represents 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 Research and development expense and Cost of products sold.

~~(e)~~(f)The amount in ~~the nine-month period of fiscal year~~ 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. ~~The amounts in the three and nine-month periods of fiscal year 2019 represented a non-cash charge recorded to write down the carrying value of certain intangible assets in the Surgery unit.~~

~~(f)The amount in the nine-month period of fiscal year 2019 included tax benefit, net, of $54 million relating to new U.S. tax legislation, as further discussed below.~~

Gross Profit Margin

Gross profit margin for the three and nine-month periods of fiscal year ~~2020~~2021 compared with the prior-year periods in fiscal year ~~2019~~2020 reflected the following impacts:


		Three-month period		Nine-month period			Three-month period		Nine-month period
June 30, 2019 gross profit margin %		47.7	%	47.4	%
June 30, 2020 gross profit margin %						June 30, 2020 gross profit margin %	43.1	%	43.6	%
Impact of purchase accounting adjustments and other specified items	Impact of purchase accounting adjustments and other specified items	(0.7)	%	(2.4)	%	Impact of purchase accounting adjustments and other specified items	1.0	%	3.2	%

Operating performance	Operating performance	(3.4)	%	(1.4)	%	Operating performance	1.1	%	1.1	%
Foreign currency translation	Foreign currency translation	(0.5)	%	—	%	Foreign currency translation	(1.0)	%	(0.7)	%
June 30, 2020 gross profit margin %		43.1	%	43.6	%
June 30, 2021 gross profit margin %						June 30, 2021 gross profit margin %	44.2	%	47.2	%

The impacts of ~~purchase accounting adjustments and~~ other specified items ~~include~~on gross profit margin reflected the following:

•The ~~impact~~current-year nine-month period included charges of approximately $37 million, compared with net charges of $240 million in the ~~nine-month~~prior-year period, ~~includes charges in the first and second quarters of fiscal year 2020 of $59 million and $199 million, respectively,~~ to record ~~a probable~~an estimate of future costs within the Medication Management Solutions unit associated with remediation efforts related to Alaris^TM infusion pumps. ~~An $18 million credit adjustment to this estimate was recorded in the third quarter.~~ Based on the course of our remediation efforts, it is possible that ~~this~~our estimate of future costs to remediate the AlarisTM infusion pumps could change 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 ~~impact in the~~prior-year nine-month period also ~~includes~~included a $39 million charge to write down the carrying value of certain intangible assets in the Biosciences unit.

Operating performance ~~for~~in the ~~three-month~~three and nine-month periods of 2021 primarily reflected ~~unfavorable~~the following:

•Favorable product mix ~~and~~was driven by the recovery of demand for products with higher margins.

•The current-year periods benefited from a favorable comparison to the prior-year periods which were unfavorably impacted by increased levels of manufacturing overhead costs that were recognized in the period ~~rather than capitalized within inventory,~~ as a result of the COVID-19 ~~pandemic. The higher levels~~pandemic, rather than capitalized within inventory.

•Approximately $71 million of ~~manufacturing overhead costs incurred~~excess and obsolete inventory expenses related to COVID-19 testing inventory were recognized by the Integrated Diagnostic Solutions unit in the ~~current-year periods were driven,~~third quarter of fiscal year 2021 and we continued to ~~a large extent, by~~re-invest profits from our sales related to COVID-19 diagnostic testing into our BD 2025 strategy focus on growth, simplification and empowerment. For the ~~impact~~nine-month period of ~~lower plant utilization in our highly automated manufacturing sites. These~~2021, these unfavorable impacts to ~~operating performance~~gross profit margin were ~~partially~~ offset by ~~lower~~favorable product mix that was attributable to the Integrated Diagnostic Solutions unit's COVID-19 testing sales.

•Lower manufacturing costs resulting from continuous ~~operations~~ improvement projects and synergy ~~initiatives. For~~initiatives were partially offset by higher raw material costs. Operating performance in the ~~remainder~~nine-month period of ~~fiscal year 2020,~~2021 additionally reflected an

unfavorable impact from charges of $34 million recorded by the ~~COVID-19 pandemic will place pressure on our gross margin due~~Medical and Interventional segments to ~~declines in sales~~write down the carrying value of ~~products with higher gross margins.~~certain fixed assets.

Operating Expenses

A summary of operating expenses for the three and nine-month periods of fiscal years ~~2020~~2021 and ~~2019~~2020 is as follows:


		Three months ended June 30,							Increase (decrease) in basis points				Nine months ended June 30,										Increase (decrease) in basis points		Three months ended June 30,						Increase (decrease) in basis points					Nine months ended June 30,		Increase (decrease) in basis points
		2020			2019							2020				2019				Increase (decrease) in basis points		2021			2020	Increase (decrease) in basis points										2020	Increase (decrease) in basis points
(Millions of dollars)	(Millions of dollars)																	(Millions of dollars)
Selling and administrative expense	Selling and administrative expense	$	980		$	1,076			$	3,126			$	3,238				Selling and administrative expense	$	1,237		$	980						$	3,535				$	3,126
% of revenues	% of revenues	25.4		%	24.7		%	70	25.3		%		25.5		%		(20)	% of revenues	25.3		%	25.4		%	(10)	23.4		%			25.3		%			(190)

Research and development expense	Research and development expense	$	262		$	282			$	797			$	792				Research and development expense	$	344		$	262			$	952				$	797
% of revenues	% of revenues	6.8		%	6.5		%	30	6.5		%		6.2		%		30	% of revenues	7.0		%	6.8		%	20	6.3		%			6.5		%			(20)

Acquisitions and other restructurings	Acquisitions and other restructurings	$	74		$	90			$	235			$	281				Acquisitions and other restructurings	$	24		$	74			$	126				$	235

Other operating (income) expense, net	Other operating (income) expense, net	$	(15)		$	—			$	(15)			$	61				Other operating (income) expense, net	$	(72)		$	(15)			$	224				$	(15)

Selling and administrative expense

~~The increase in selling~~Selling and administrative expense as a percentage of revenues in the ~~third quarter~~three and nine-month periods of ~~2020~~2021 was lower compared with the prior-year ~~period was~~periods primarily ~~driven by~~due to the ~~current-period decline in~~recovery of revenues ~~that resulted from the COVID-19 pandemic, as well as an increase~~ in the ~~deferred compensation plan liability due to market performance. The gains on investment assets result in an unfavorable impact on expense recorded in~~ current-year periods. Selling ~~and administrative expense. These unfavorable impacts to selling~~ and administrative expense as a percentage of revenues ~~were partially offset~~in the three and nine-month periods of 2021 was unfavorably impacted by foreign currency translation and higher shipping costs as a result of expedited shipments relating to COVID-19, as well as by higher selling, travel and other administrative costs compared with the prior-year periods, which benefited from cost containment measures ~~we have~~ enacted in response to ~~mitigate the impact of~~ the COVID-19 ~~pandemic on our results of operations. Selling and administrative expense as a~~

percentage of revenues in the current nine-month period primarily reflected our ongoing focus on disciplined spending and the achievement of cost synergies resulting from our acquisition of Bard, as well as cost containment measures we have enacted to mitigate the impact of the COVID-19 pandemic on our results of operations.pandemic.

Research and development expense

Research and development expense as a percentage of revenues in the ~~three and nine-month periods~~three-month period of ~~2020~~2021 was higher compared with the prior-year ~~periods primarily due to~~period which reflected our reinvestment of COVID-19 testing-related sales profits into our growth initiatives and additional investments in ~~compliance with emerging regulations,~~COVID-19 testing solutions, as further discussed above. Research and development expense as a percentage of revenues in the nine-month period of 2021 was lower compared with the prior-year period as the increase in current-year revenues outpaced the timing of our reinvestment of COVID-19 testing-related profits into our growth initiatives during the year-to-date period. Spending in both the current and prior-year periods reflected our continued commitment to drive innovation with new products and platforms. Research and development expense as a percentage of revenues in the three and nine-month periods of 2019 reflected a charge recorded to write down the carrying value of certain intangible assets in the Surgery unit.

Acquisitions and other restructurings

Costs relating to acquisitions and other restructurings in the three and nine-month periods of 2021 and 2020 ~~and 2019 largely represented~~included integration ~~and restructuring~~ costs incurred due to our acquisition of Bard in the first quarter of fiscal year 2018. Costs in the three and nine-month periods of 2021 additionally included restructuring costs related to simplification and cost saving initiatives. Costs relating to acquisition and other restructurings in the three and nine-month periods of 2020 also included restructuring costs relating to the Bard acquisition. For further disclosures regarding restructuring costs, refer to Note 109 in the Notes to Condensed Consolidated Financial Statements.

Other operating (income) expense, net

Other operating ~~income~~(income) expense, net in the three and nine-month periods of ~~2020 represents an adjustment to a litigation accrual. Other operating expense in the prior-year nine-month period~~2021 included a ~~charge~~gain of ~~approximately $331~~$88 million ~~relating to certain product liability matters~~on a sale-leaseback transaction, as ~~further discussed~~well as consulting, legal, tax and other advisory expenses associated with the planned spin-off of BD's Diabetes Care business. Additional disclosures regarding the sale-leaseback transaction are provided in Note 514 in the Notes to Condensed Consolidated Financial Statements. The amount in the ~~period-year~~ nine-month period also included the estimated costs of $65 million relating to a product recall in Medical segment as well as the pre-tax gain of $336 million recognized on BD's sale of its Advanced Bioprocessing business in the first quarter of fiscal year ~~2019.~~2021 additionally includes charges of $296 million to record product liability reserves, including related legal defense costs. Additional disclosures regarding the product liability matters are provided in Note 5 in the Notes to Condensed Consolidated Financial Statements.

Nonoperating Income

Net interest expense

The components for the three and nine-month periods of fiscal years ~~2020~~2021 and ~~2019~~2020 were as follows:


		Three months ended June 30,						Nine months ended June 30,							Three months ended June 30,				Nine months ended June 30,
(Millions of dollars)	(Millions of dollars)	2020		2019		2020		2019		(Millions of dollars)	2021		2020		2021		2020
Interest expense	Interest expense	$	(135)	$	(156)	$	(405)	$	(498)	Interest expense	$	(115)	$	(135)	$	(358)	$	(405)
Interest income, net		2		2		5		8
Interest income										Interest income	2		2		7		5
Net interest expense	Net interest expense	$	(133)	$	(154)	$	(400)	$	(490)	Net interest expense	$	(113)	$	(133)	$	(351)	$	(400)

Lower interest expense in the ~~current year's three and nine-month periods~~current-year period compared with the prior-year ~~periods~~period primarily reflected debt repayments ~~during fiscal year 2019, as well as~~and lower overall interest rates on debt outstanding during the current-year ~~periods as a result of fiscal year 2019 refinancing activities.~~period.

Income Taxes

The income tax rates for the three and nine-month periods of fiscal years ~~2020~~2021 and ~~2019~~2020 are provided below.


		Three months ended June 30,						Nine months ended June 30,							Three months ended June 30,				Nine months ended June 30,
		2020		2019		2020		2019			2021		2020		2021		2020
Effective income tax rate	Effective income tax rate	(15.4)	%	2.0	%	11.4	%	9.1	%	Effective income tax rate	(2.1)	%	(15.4)	%	7.5	%	11.4	%

Impact, in basis points, from specified items and tax reform		(2,040)		(1,080)		(140)		(420)
Impact, in basis points, from specified items										Impact, in basis points, from specified items	(790)		(2,040)		(410)		(140)

The effective income tax rate for the three-month period of fiscal year ~~2020~~2021 reflected a tax ~~impact~~impacts from specified items, which are discussed further above, that ~~was more~~were less favorable compared with the ~~benefit~~benefits associated with specified items recognized in the prior-year ~~period. The impact from specified~~period, partially offset by the recognition of discrete tax items induring the ~~nine-month period of fiscal year 2020 was less favorable compared with the benefit associated with specified items in the prior-year period.~~quarter. The effective income tax rate for the nine-month period of fiscal year ~~2019~~2021 reflected the ~~recognition~~third quarter impact of ~~$54 million of~~the discrete tax ~~benefit recorded to adjust our consolidated balance sheet for~~items, as well as tax impacts from specified items that were more favorable compared with the ~~impacts of U.S. tax~~

~~legislation that was enacted~~benefits associated with specified items recognized in ~~December 2017. The effective income tax rate for~~ the ~~nine-month period of fiscal year 2019 was favorably impacted by the timing of certain discrete items.~~prior-year period.

Net Income and Diluted Earnings per Share

Net Income and Diluted Earnings per Share for the three and nine-month periods of fiscal years ~~2020~~2021 and ~~2019~~2020 were as follows:


		Three months ended June 30,						Nine months ended June 30,							Three months ended June 30,				Nine months ended June 30,
		2020		2019		2020		2019			2021		2020		2021		2020
Net Income (Millions of dollars)	Net Income (Millions of dollars)	$	286	$	451	$	746	$	1,071	Net Income (Millions of dollars)	$	525	$	286	$	1,827	$	746
Diluted Earnings per Share	Diluted Earnings per Share	$	0.97	$	1.51	$	2.38	$	3.49	Diluted Earnings per Share	$	1.72	$	0.97	$	6.00	$	2.38

Unfavorable impact-specified items	Unfavorable impact-specified items	$	(1.25)	$	(1.58)	$	(5.03)	$	(4.88)	Unfavorable impact-specified items	$	(1.01)	$	(1.25)	$	(4.48)	$	(5.03)
Dilutive impact of BD shares issued		$	0.02	$	—	$	—	$	—
Dilutive impact (a)										Dilutive impact (a)	$	—	$	0.02	$	—	$	—
Unfavorable impact-foreign currency translation	Unfavorable impact-foreign currency translation	$	(0.11)			$	(0.14)			Unfavorable impact-foreign currency translation	$	(0.04)			$	(0.03)

(a)

The dilutive impact ~~from share issuances~~ for the three months ended June 30, 2020 ~~represents~~represented the impact of BD shares issued in May ~~2020 as is further discussed in Note 3 in the Notes to Condensed Consolidated Financial Statements.~~2020.

Liquidity and Capital Resources

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


		Nine months ended June 30,							Nine months ended June 30,
(Millions of dollars)	(Millions of dollars)	2020		2019		(Millions of dollars)	2021		2020
Net cash provided by (used for)	Net cash provided by (used for)					Net cash provided by (used for)
Operating activities	Operating activities	$	2,058	$	1,959	Operating activities	$	3,696	$	2,058
Investing activities	Investing activities	$	(905)	$	(300)	Investing activities	$	(1,186)	$	(905)
Financing activities	Financing activities	$	1,230	$	(2,300)	Financing activities	$	(2,164)	$	1,230

Net Cash Flows from Operating Activities

Cash flows from 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.

Cash flows from operating activities in the first nine 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 nine 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. Net outflows from investing activities in the first nine months of fiscal year ~~2020~~2021 included capital expenditure-related outflows of ~~$597~~$766 million, compared with ~~$599~~$597 million in the prior-year period. Net outflows from investing activities in the ~~current-year period reflected our acquisition of Straub Medical AG in the third quarter. Net cash flows from investing activities in the~~ first nine months of fiscal ~~year 2019~~years 2021 and 2020 also included ~~proceeds $477 million from~~cash payments relating to various strategic acquisitions we have executed as part of our ~~sale of a business during the period, as further discussed above.~~

growth strategy.

Net Cash Flows from Financing Activities

Net cash from financing activities in the first nine months of fiscal years ~~2020~~2021 and ~~2019~~2020 included the following significant cash flows:


		Nine months ended June 30,							Nine months ended June 30,
(Millions of dollars)	(Millions of dollars)	2020		2019		(Millions of dollars)	2021		2020
Cash inflow (outflow)	Cash inflow (outflow)					Cash inflow (outflow)
Change in credit facility borrowings	Change in credit facility borrowings	$	(485)	$	300	Change in credit facility borrowings	$	—	$	(485)
Proceeds from long-term debt and term loans	Proceeds from long-term debt and term loans	$	3,389	$	2,224	Proceeds from long-term debt and term loans	$	1,715	$	3,389
Payments of debt and term loans	Payments of debt and term loans	$	(3,711)	$	(3,882)	Payments of debt and term loans	$	(1,999)	$	(3,711)
Proceeds from issuance of equity securities	Proceeds from issuance of equity securities	$	2,917	$	—	Proceeds from issuance of equity securities	$	—	$	2,917

Repurchases of common stock						Repurchases of common stock	$	(1,000)	$	—
Dividends paid	Dividends paid	$	(773)	$	(737)	Dividends paid	$	(789)	$	(773)

~~Our~~Additional disclosures regarding our fiscal year ~~2020~~2021 share repurchases and debt ~~and equity~~ transactions are ~~further discussed~~provided in Notes 3 and 1413, respectively, in the Notes to Condensed Consolidated Financial Statements. Certain measures relating to our total debt were as follows:

(Millions of dollars) June 30, 2020 September 30, 2019
Total debt $ 18,720 $ 19,390
Short-term debt as a percentage of total debt 8.7 % 6.8 %
Weighted average cost of total debt 2.7 % 2.9 %
Total debt as a percentage of total capital* 42.0 % 45.6 %


(Millions of dollars)	June 30, 2021			September 30, 2020
Total debt	$	17,733		$	17,931

Short-term debt as a percentage of total debt	11.5		%	3.9		%
Weighted average cost of total debt	2.8		%	2.8		%
Total debt as a percentage of total capital*	40.7		%	41.3		%

* 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 June 30, ~~2020~~2021 was ~~largely~~ driven by our reclassification of certain notes from long-term to short-term.

Cash and ~~Short-term~~Short-Term Investments

At June 30, ~~2020,~~2021, total worldwide cash and short-term investments, including restricted cash, were approximately ~~$2.986~~$3.306 billion, which were ~~primarily~~largely held in the United States.

Financing Facilities

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~~currently provides for borrowings of 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. There were no borrowings outstanding under the revolving credit facility at June 30, ~~2020.~~2021.

The ~~agreement~~agreements 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 June 30, ~~2020.~~2021.

•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 senior unsecured term loan facility with borrowing capacity available of $2.0 billion. During the third quarter of fiscal year 2020, we repaid $1.9 billion of borrowings outstanding under this term loan with cash on hand and terminated the facility.

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 activities. We had no commercial paper borrowings outstanding as of June 30, ~~2020.~~2021. 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 1312 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 June 30, 2020 were unchanged compared with our ratings at September 30, 2019.~~ In ~~March 2020,~~January 2021, Standard & Poor's Ratings Services affirmed our September 30, ~~2019~~2020 ratings and revised the agency's outlook ~~regarding the likely direction of these~~on our ratings to Stable from Negative. Also in January 2021, Moody's Investor Service (“Moody's”) upgraded our senior unsecured rating to Baa3 from Ba1, as well as our commercial paper rating to P-3 from NP. Moody’s also affirmed its positive outlook on our ratings. In May 2021, Fitch Ratings affirmed our September 30, 2020 rating and revised its outlook on our ratings from Stable to ~~Negative.~~Positive.

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,~~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. WeIn addition to continually ~~evaluate~~evaluating all governmental receivables for potential ~~collection risks associated with~~credit losses based upon historical loss experiences, we also evaluate such receivables 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 ~~collectability of accounts receivables~~credit losses in general as a result of the COVID-19 pandemic. No assurances can be given that the risk of ~~collectability~~credit losses 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 with respect to our former BD Preanalytical Systems ("PAS") unit, citing certain alleged violations of quality system regulations and of ~~law with respect to our Preanalytical Systems facility in Franklin Lakes, New Jersey.~~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 ~~is working~~has worked closely with the FDA and ~~intends to fully implement~~implemented corrective actions to address the quality management system concerns identified in the ~~Warning Letter. However, BD cannot give any assurances that~~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 ~~be satisfied with its responses~~not take or recommend any administrative or regulatory action as a result of the unit’s response to the ~~Warning Letter or~~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 ~~to the expected date of resolution of matters included in~~remaining commitments associated with 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,~~The FDA review of these remaining commitments is ongoing and no assurances can be given ~~that~~regarding further action by the ~~resolution~~FDA as a result of ~~this matter will~~these commitments, including but not ~~have a material adverse effect on BD’s business, results of operations, financial conditions and/or liquidity.~~limited to action pursuant to the Warning Letter.

InOn October 28, 2019, BD entered into a consent order with the Environmental Protection Division of the Georgia Department of Natural Resources ~~(“EPD”~~(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. BD does not believe that the consent order will have a material impact on its operations. Violation of the consent order, though, 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.~~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, several states have increased the 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 air quality controls, limit the use of ethylene oxide or take other actions, which would 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. Late last year, 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. If any such proceedings or rulemaking result in the suspension of sterilization operations at BD 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. 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.

As previously reported, our BD Alaris^TM 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 Alaris^TM infusion pumps in the United States. We are undertaking remediation of our BD AlarisTM System and cannot fully commercialize the product until a 510(k) filing has been cleared by the FDA. No assurances can be given as to when clearance of the submission will be obtained from the FDA. 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.~~observations, including but not limited to action pursuant to the Consent Decree.

For further discussion of risks relating to the regulations to which we are subject, see Part I, Item 1A, of our 2020 Annual Report on Form 10-K (the “2020 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 ~~Securities and Exchange Commission,~~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”,~~ “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. This report also includes forward-looking statements regarding the proposed spin-off of the Diabetes Care business, including the anticipated benefits of the spin-off and the expected timing of completion of the spin-off. 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~~our 2020 Annual Report and in our ~~2019 Annual~~Quarterly Report on Form ~~10-K.~~10-Q for the period ended March 31, 2021.

•Any ~~negative~~ impact of the COVID-19 pandemic on our business, including, without limitation, ~~continued~~ decreases in the demand for our products or ~~any~~ disruptions to our operations ~~and~~or our supply ~~chain.~~chain, and factors such as vaccine availability and utilization and increased competition that could impact the demand and pricing for our COVID-19 diagnostics testing.

•~~The current weakness~~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 proposed spin-off of our Diabetes Care business, including factors that could delay, prevent or otherwise adversely affect the completion, timing or terms of the spin-off, 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 ~~acquisition~~overall level of ~~Bard,~~indebtedness, including our ability to ~~successfully combine~~service our debt and ~~integrate~~refinance our indebtedness, which is dependent upon the ~~Bard operations in order to obtain the anticipated benefits~~capital markets 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.~~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.

•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 ~~policy~~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.

•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, labor shortages or increased labor costs, the ability to maintain favorable supplier and service arrangements and relationships (particularly with respect to sole-source ~~suppliers)~~suppliers and sterilization services), and the potential adverse effects of any disruption in the availability of such ~~items.~~items and services.

•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, 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 can preclude or delay commercialization of a product. Delays in obtaining necessary approvals or clearances from ~~United States Food and Drug Administration (“FDA”)~~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, or adversely ~~affect~~affecting our manufacturing and distribution capabilities or ~~cause~~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 BDBD)), potential anti-corruption and ~~Bard)),~~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 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 ~~postmarketing~~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, 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.~~business is operating under a Consent Decree with the FDA. The ~~consent decree~~Consent Decree authorizes the FDA, in the event of any violations in the future, to order usour U.S. infusion pump business to cease manufacturing and distributing products, recall products or take other actions, and ~~we may be required to pay~~order the payment of significant monetary damages if ~~we fail~~the business subject to the decree fails to comply with any provision of the ~~consent decree. Also, in 2019,~~Consent Decree. We are undertaking remediation of our BD AlarisTM System and cannot fully commercialize 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 requiredproduct until a 510(k) filing has been cleared by the ~~FDA and continue~~FDA. No assurances can be given as to ~~work with the FDA on patient data, the extent and duration~~when clearance of the ~~impact~~submission will be obtained from the ~~FDA letter, and the likelihood of FDA approval of new drug-coated devices, is difficult to predict.~~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 ~~Financial Accounting Standards Board~~FASB or the ~~Securities and Exchange Commission.~~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.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

There have been no material changes in information reported since the end of the fiscal year ended September 30, ~~2019.~~2020.

Item 4. Controls and Procedures

An evaluation was carried out by BD’s management, with the participation of BD’s Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of BD’s disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934) as of June 30, ~~2020.~~2021. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the design and operation of these disclosure controls and procedures were, as of the end of the period covered by this report, effective and designed to ensure that material information relating to BD and its consolidated subsidiaries would be made known to them by others within these entities.

There were no changes in our internal control over financial reporting during the fiscal quarter ended June 30, ~~2020~~2021 identified in connection with the above-referenced evaluation that have materially affected, or are reasonably likely to materially affect, BD’s internal control over financial reporting.

PART II - OTHER INFORMATION

Item 1. Legal Proceedings

We are involved, both as a plaintiff and a defendant, in various legal proceedings which arise in the ordinary course of business, including product liability and environmental matters as set forth in our ~~2019~~2020 Annual Report, ~~on Form 10-K,~~ and in Note5of the Notes to Condensed Consolidated Financial Statements in this report, which is incorporated herein by reference. ~~Since March 31, 2020, there have been no material developments with respect to the legal proceedings in which we are involved.~~

Item 1A. Risk Factors

There have been no material changes to the risk factors previously disclosed in Part I, Item 1A, of our ~~2019~~2020 Annual Report and in Part II, Item IA, of our Quarterly Report on Form ~~10-K, except as set forth below.~~

~~We are subject to risks associated with public health threats, including the ongoing COVID-19 pandemic, which has~~

~~had, and we expect will continue to have, a material adverse effect on our business. The nature and extent of future impacts are highly uncertain and unpredictable.~~

We are subject to risks associated with public health threats, including the COVID-19 pandemic. The continuing outbreak of COVID-19 and travel restrictions, quarantines and other actions taken by governments and the private sector to slow the spread of the virus have resulted in a global economic slowdown, and have caused healthcare systems to divert resources to manage the pandemic. These measures have led to unprecedented restrictions on and disruptions in businesses and personal activities. Governments may continue those measures or implement other restrictions and requirements in light of the continuing spread of the pandemic and concern over new outbreaks. As a result, we have experienced significant reductions in the demand for certain of our products, particularly due to the decline in elective medical procedures, which negatively impacted our revenues. As the pandemic continues, we expect to continue to experience weakened demand for these products as a result of the reduction in elective and non-essential procedures, lower utilization of routine testing and related specimen collection, reduced capital spend by customers and a decrease in research activity due to laboratory closures and reduced clinical testing. While we have seen increases in demand for certain product lines during the pandemic, this increased demand has not been, and may not be, sufficient to offset the revenue declines in other areas. We also expect continued pressure on our margins due to lost sales of products with gross margins that are higher than the company average. Safety measures taken by governments to slow the spread of the virus or determinations that our or our suppliers’ facilities are not essential businesses could also result in closures or other restrictions that significantly disrupt our operations or those of distributors or suppliers in our supply chain. In addition, while we undertook certain financing activities as a precautionary measure during this economic slowdown, no assurance can be given that we will be able to access capital markets in the future without incurring significant costs and expense. While the United States and other countries have begun to reopen their economies, a resurgence in infections could result in the imposition of new restrictions. The scope and duration of the outbreak, the pace at which government restrictions will be lifted or whether additional actions may be taken to contain the virus, the speed and extent to which global markets and utilization rates for our products recover from the disruptions caused by the pandemic, and the impact of these factors on our business, will depend on future developments that are highly uncertain and cannot be predicted with confidence.

To the extent COVID-19 adversely affects our operations and global economic conditions more generally, it may also have the effect of heightening many of the other risks described in the "Risk Factors" section included in our 2019 Annual Report on Form 10-K10-Q for the ~~year~~period ended ~~September 30, 2019.~~ March 31, 2021.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

The table below sets forth certain information regarding our purchases of common stock of BD during the quarter ended June 30, ~~2020.~~2021.

Issuer Purchases of Equity Securities

For the three months ended June 30, 2020 Total Number of
Shares Purchased (1) Average Price
Paid per
Share Total Number of
Shares Purchased
as Part of
Publicly
Announced Plans
or Programs Maximum Number
of Shares that May
Yet Be Purchased
Under the Plans or
Programs (2)
April 1 – 30, 2020 — $ — — 7,857,742
May 1 – 31, 2020 1,619 239.39 — 7,857,742
June 1 – 30, 2020 — — — 7,857,742
Total 1,619 $ 239.39 — 7,857,742


For the three months ended June 30, 2021	Total Number of Shares Purchased (1)	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (2)	Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs (2)
April 1 – 30, 2021	1,262	$	243.40	—	7,857,742
May 1 – 31, 2021	3,030,158	242.04		3,030,051	4,827,691
June 1 – 30, 2021	694,038	240.26		694,038	4,133,653
Total	3,725,458	$	241.71	3,724,089	4,133,653

(1)~~Consists of 1,619~~Includes 1,369 shares purchased during the quarter in open market transactions by the trust relating to BD’s Deferred Compensation and Retirement Benefit Restoration Plan and 1996 Directors’ Deferral Plan.

(2)Represents shares ~~available under a~~purchased as further discussed in Note 3 of the Notes to Condensed Consolidated Financial Statements in this report. The repurchases were made pursuant to the repurchase program authorized by the Board of Directors on September 24, 2013 for 10 million shares, for which there is no expiration date.

Item 3. Defaults Upon Senior Securities

Not applicable.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

Not applicable.

Item 6. Exhibits


~~3.1~~						Restated Certificate of Incorporation, dated as of January 30, 2019 (incorporated by reference to Exhibit 3 to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended December 31, 2018).

~~3.2~~22						~~Certificate~~Subsidiary Issuer of Amendment to the Company's Restated Certificate of Incorporation, filed with the New Jersey Secretary of State and effective May 21,2020 (incorporated by reference to Exhibit 4.1 to the registration statement on Form 8-A filed by the Company on May 26, 2020).

~~4.1~~						Form of Certificate for the 6.00% Mandatory Convertible Preferred Stock, Series B (incorporated by reference to Exhibit 4.2 of the registrant’s registration statement on Form 8-A filed on May 26, 2020).

~~4.2~~						Deposit Agreement, dated as of May 26, 2020, among Becton, Dickinson and Company and Computershare Inc. and Computershare Trust Company, N.A., acting jointly as depositary and Computershare Trust Company, N.A., acting as Registrar and Transfer Agent, on behalf of the holders from time to time of the depositary receipts described therein (incorporated by reference to Exhibit 4.3 of the registrant’s registration statement on Form 8-A filed on May 26, 2020).

~~4.3~~						~~Form of Depositary Receipt for the Depositary Shares (incorporated by reference to Exhibit 4.4 of the registrant’s registration statement on Form 8-A filed on May 26, 2020).~~

~~4.4~~						Commitment Increase Supplement to Credit Agreement, dated as of April 1, 2020, among Becton, Dickinson and Company, the banks named therein and Citibank, N.A., as administrative agent (incorporated by reference to Exhibit 10.3 of the registrant’s Current Report on Form 8-K filed on April 2, 2020)

~~4.5~~						~~Form of 2.823% Notes due May 20, 2030 (incorporated by reference to Exhibit 4.1 of the registrant’s Current Report on Form 8-K filed on May 20, 2020).~~

~~4.6~~						~~Form of 3.794% Notes due May 20, 2050 (incorporated by reference to Exhibit 4.2 of the registrant’s Current Report on Form 8-K filed on May 20, 2020).~~

~~10.1~~						~~Deferred Compensation and Benefit Restoration Plan, effective as of May 1, 2020.~~

~~10.2~~						~~Aircraft Time Sharing Agreement, dated June 5, 2020, between the registrant and Thomas E. Polen.~~Guaranteed Securities

31						Certifications of Chief Executive Officer and Chief Financial Officer, pursuant to SEC Rule 13a - 14(a).

32						Certifications of Chief Executive Officer and Chief Financial Officer, pursuant to Rule 13a - 14(b) and Section 1350 of Chapter 63 of Title 18 of the U.S. Code.

101						The following materials from this report, formatted in iXBRL (Inline eXtensible Business Reporting Language): (i) the Condensed Consolidated Balance Sheets, (ii) the Condensed Consolidated Statements of Income, (iii) the Condensed Consolidated Statements of Comprehensive Income, (iv) the Condensed Consolidated Statements of Cash Flows, and (v) Notes to Condensed Consolidated Financial Statements.

104						Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


			Becton, Dickinson and Company
			(Registrant)

Dated: August ~~6, 2020~~5, 2021


			/s/ Christopher Reidy
			Christopher Reidy
			Executive Vice President, Chief Financial Officer and Chief Administrative Officer
			(Principal Financial Officer)

			/s/ Thomas J. Spoerel
			Thomas J. Spoerel
			Senior Vice President, Controller and Chief Accounting Officer
			(Principal Accounting Officer)


(Millions of dollars)
Remaining for 2020	$	30
2021	108
2022	89
2023	58
2024	37
Thereafter	168
Total payments due	490
Less: imputed interest	47
Total	$	443