The following commentary should be read in conjunction with the condensed
consolidated financial statements and accompanying notes presented in this
report. Within the tables presented throughout this discussion, certain columns
may not add due to the use of rounded numbers for disclosure purposes.
Percentages and earnings per share amounts presented are calculated from the
underlying amounts. References to years throughout this discussion relate to our
fiscal years, which end on September 30.
Company Overview
Becton, Dickinson and Company ("BD") is a global medical technology company
engaged in the development, manufacture and sale of a broad range of medical
supplies, devices, laboratory equipment and diagnostic products used by
healthcare institutions, physicians, life science researchers, clinical
laboratories, the pharmaceutical industry and the general public. The Company's
organizational structure is based upon three principal business segments, BD
Medical ("Medical"), BD Life Sciences ("Life Sciences") and BD Interventional
("Interventional").

BD's products are manufactured and sold worldwide. Our products are marketed in
the United States and internationally through independent distribution channels
and directly to end-users by BD and independent sales representatives. We
organize our operations outside the United States as follows: EMEA (which
includes Europe, the Middle East and Africa); Greater Asia (which includes
countries in Greater China, Japan, South Asia, Southeast Asia, Korea, Australia
and New Zealand); Latin America (which includes Mexico, Central America, the
Caribbean and South America); and Canada. We continue to pursue growth
opportunities in emerging markets, which include the following geographic
regions: Eastern Europe, the Middle East, Africa, Latin America and certain
countries within Greater Asia. We are primarily focused on certain countries
whose healthcare systems are expanding.
BD's 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, Embecta, to BD's shareholders.
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. Additional
disclosures regarding our planned spin-off of the Diabetes Care business are
provided in Note 1 in the Notes to Condensed Consolidated Financial Statements.
COVID-19 Pandemic Impacts and Response
A novel strain of coronavirus disease ("COVID-19") was officially declared a
pandemic by the World Health Organization in March 2020 and governments around
the world have implemented various measures to slow and control the ongoing
spread of COVID-19. Over the course of the pandemic, these government measures,
as well as ongoing shifts in healthcare priorities, have unfavorably impacted
demand for certain of our products. Our first quarter fiscal year 2022 revenues
reflected an unfavorable comparison to the prior-year quarter, which
substantially benefited from sales related to COVID-19 diagnostic testing on the
BD VeritorTM Plus and BD MaxTM Systems. The factors that affected our revenue
growth in the first quarter of our fiscal year 2022, including those related to
the COVID-19 pandemic, are discussed in greater detail further below.

Due to the 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, may be subject to volatility. While non-acute
utilization rates for most of our products have largely recovered compared to
pre-pandemic levels, resurgences in COVID-19 infections or new strains of the
virus may weaken future demand for certain of our products and/or disrupt our
operations. We also continue to see challenges posed by the pandemic to multiple
aspects of our supply chain, including the cost and availability of raw
materials, as well as cost impacts and logistical challenges affecting freight
around the globe. We have also experienced staffing challenges due to higher
rates of absenteeism which have been driven by the spread of the Omicron
variant. Our suppliers are also experiencing higher rates of absenteeism,
impacting the availability of certain raw materials and components.
Additionally, the prevalence of the Omicron variant has resulted in hospital
staffing shortages which has affected, and may continue to affect, the
prioritization of acute and non-acute healthcare utilization. The United States
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 certain factors including:
•The extent to which resurgences in COVID-19 infections or new strains of the
virus, including the Delta and Omicron variants, result in future deferrals of
elective medical procedures and/or the extent to which the imposition of new
                                       19
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governmental lockdowns, quarantine requirements or other restrictions may weaken
demand for certain of our products and/or disrupt our operations;
•The degree to which the pandemic has escalated challenges that existed for
global healthcare systems prior to the pandemic, such as staffing shortages,
including nursing shortages, and budget constraints;
•The continued momentum of the global economy's recovery from the pandemic and
the degree of pressure that a weakened macroeconomic environment would put on
future healthcare utilization and the global demand for our products.
We remain focused on partnering with governments, healthcare systems, and
healthcare professionals to navigate the COVID-19 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
protecting the 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 December 31, 2021, worldwide revenues of $4.995
billion decreased 6.0% from the prior-year period. This decrease reflected the
following impacts:
                                                                      

Increase (decrease) in the current period

income

Volume                                                                                               5.8  %

Lower period-over-period revenue related to COVID-19 testing

                        (12.8) %
Pricing                                                                                              1.1  %
Foreign currency translation                                                                        (0.1) %

Decrease in revenues from the prior-year period                                                     (6.0) %


                                       .
The period-over-period decline in the Life Sciences segment's Integrated
Diagnostic Solutions unit's sales related to COVID-19 diagnostic testing on the
BD VeritorTM Plus and BD MaxTM Systems reflected current-period testing revenues
of $185 million, compared with sales of testing products in the prior-year
period of $866 million.
Volume growth in the first quarter of fiscal year 2022 was driven by demand for
our core products as follows:
•Medical segment revenues were primarily driven by strong demand in the
Medication Delivery Solutions and Pharmaceutical Systems units.
•The Life Sciences segment revenues reflected strong demand for core products in
the Integrated Diagnostic Solutions and Biosciences units.
•Interventional segment revenues reflected strong demand in the Surgery and
Urology and Critical Care units, which was partially offset by a decline in the
Peripheral Intervention unit.
Our BD 2025 strategy for growth is anchored in three pillars: grow, simplify and
empower. As we execute this strategy, we continue to invest in research and
development, strategic tuck-in acquisitions, geographic expansion, and new
product programs to drive further revenue and profit growth. Our ability to
sustain our long-term growth will depend on a number of factors, including our
ability to expand our core business (including geographical expansion), develop
innovative new products, and continue to improve operating efficiency and
organizational effectiveness. As discussed above, current global economic
conditions remain relatively volatile due to the COVID-19 pandemic. In addition,
an inability to increase or maintain selling prices globally could adversely
impact our businesses. Also, we are experiencing challenges related 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 months ended
December 31, 2021 is provided further below.
Cash flows from operating activities were $674 million in the first three months
of fiscal year 2022. At December 31, 2021, we had $2.054 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
three months of fiscal year 2022, we paid cash dividends of $271 million,
including $248 million paid to common shareholders and $23 million paid to
preferred shareholders.
Each reporting period, we face currency exposure that arises from translating
the results of our worldwide operations to the U.S. dollar at exchange rates
that fluctuate from the beginning of such period. A stronger U.S. dollar,
compared to the prior-year period, resulted in an unfavorable foreign currency
translation impact to our revenues during the first quarter of fiscal year 2022.
A favorable foreign currency impact to our earnings during the first quarter of
fiscal year 2022 resulted from current-
                                       20
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period sales of inventory recorded on our consolidated balance sheet in fiscal
year 2021, when the U.S. dollar was weaker. 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 first quarter Medical revenues by organizational unit:
                                                                                Three months ended December 31,
                                                                                                             Estimated
                                                                                        Total                    FX
(Millions of dollars)                           2021                2020               Change                  Impact                  FXN Change
Medication Delivery Solutions             $       1,084          $  1,008                   7.6  %                   0.3  %                     7.3  %
Medication Management Solutions                     627               630                  (0.4) %                   0.1  %                    (0.5) %
Diabetes Care                                       289               285                   1.3  %                  (0.3) %                     1.6  %
Pharmaceutical Systems                              397               339                  16.9  %                  (1.0) %                    17.9  %
Total Medical Revenues                    $       2,397          $  2,261                   6.0  %                     -  %                     6.0  %



The Medication Delivery Solutions unit's revenue growth in the first quarter of
2022 reflected strong demand for core offerings driven by competitive gains
within the U.S. market for catheters and vascular care products. In the
Medication Management Solutions unit, an unfavorable comparison of revenues in
the first quarter of 2022 to prior-period revenues, which benefited from global
pandemic-related infusion pump orders, was partially offset by strong growth in
global placements of dispensing systems. Revenues in the Diabetes Care unit
benefited from the timing of U.S. orders. The Pharmaceutical Systems unit's
revenue growth in the first quarter of 2022 was driven by demand for our
pre-filled devices and is enabled by capacity expansion investments.


Medical segment revenues for the three-month period are shown below.

                                                                Three months ended December 31,
(Millions of dollars)                                              2021                    2020
Medical segment income                                     $           716            $       666

Segment income as % of Medical revenues                               29.9    %              29.4  %



The Medical segment's income in the first quarter was primarily driven by higher
gross profit margin as discussed in greater detail below:
•The Medical segment's higher gross profit margin in the first quarter of 2022
compared with the first quarter of 2021 primarily reflected the following:
•Lower manufacturing costs resulting from continuous improvement projects which
enhanced the efficiency of our operations, as well as favorable impacts from
foreign currency translation, product mix and price initiatives;
•Partially offset by the unfavorable impacts of higher raw material costs and
product quality remediation expenses.
                                       21
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•Selling and administrative expense as a percentage of revenues was higher in
the first quarter of 2022 compared with the first quarter of 2021, which
benefited from the curtailment of certain selling, travel and other
administrative activities due to the COVID-19 pandemic in the prior year.
•Research and development expense as a percentage of revenues was higher in the
first quarter of 2022 compared with the first quarter of 2021, which reflected
the timing of project spending and our continued reinvestment into the segment's
growth initiatives.
Life Sciences Segment
The following summarizes first quarter Life Sciences revenues by organizational
unit:
                                                                               Three months ended December 31,
                                                                                                            Estimated
                                                                                       Total                   FX
(Millions of dollars)                           2021                2020              Change                 Impact                  FXN Change
Integrated Diagnostic Solutions           $       1,145          $ 1,667                 (31.3) %                 (0.2) %                   (31.1) %
Biosciences                                         338              312                   8.6  %                 (0.4) %                     9.0  %
Total Life Sciences Revenues              $       1,483          $ 1,979                 (25.0) %                 (0.2) %                   (24.8) %



As previously discussed above, the Integrated Diagnostic Solutions unit's
revenues related to COVID-19 diagnostic testing on the BD VeritorTM Plus and BD
MaxTM Systems in the first quarter of 2022 were $185 million, compared with
revenues from testing products in the prior-year period of $866 million. The
Integrated Diagnostic Solutions unit's first quarter revenues were favorably
impacted by a recovery of routine lab testing to pre-pandemic levels, as well as
high demand for the unit's combination influenza/COVID-19 testing assays. First
quarter revenues in the Integrated Diagnostic Solutions unit also benefited from
licensing revenues. The Biosciences unit's revenue growth in the first quarter
of 2022 reflected strong demand for research reagents and instruments, including
two recently launched BD FACSymphony™ instruments, which was driven by a return
of lab utilization to normal levels and research efforts relating to COVID-19.


Life Sciences segment revenues for the three-month period are as follows:

                                                                Three months ended December 31,
(Millions of dollars)                                              2021                    2020
Life Sciences segment income                               $           534            $       972

Segment income as % of Life Sciences revenues                         36.0    %              49.1  %



The Life Sciences segment's income in the first quarter was driven by lower
gross profit margin and higher operating expenses as discussed in greater detail
below:
•The Life Sciences segment's lower gross profit margin in the first quarter of
2022 compared with the first quarter of 2021 primarily reflected the following:
•The decline in COVID-19 testing revenues compared with the prior-year period,
which benefited from substantially higher pricing of COVID-19 diagnostic tests;
•Partially offset by favorable impacts from price initiatives relating to core
products and licensing revenues in the current-year quarter.
•Selling and administrative expense as a percentage of revenues was higher in
the first quarter of 2022 compared with the first quarter of 2021, primarily due
to the current-period decline in revenues. Higher selling and administrative
expense as a percentage of revenues in the current-year period also reflected
the curtailment of certain selling, travel and other administrative activities
in the prior-year period due to the COVID-19 pandemic.
•Research and development expense as a percentage of revenues was higher in the
first quarter of 2022 compared with the first quarter of 2021, primarily due to
the current-period decline in revenues and our continued reinvestment into the
segment's growth initiatives.
                                       22
--------------------------------------------------------------------------------

Interventional Segment
The following summarizes first quarter Interventional revenues by organizational
unit:
                                                                                Three months ended December 31,
                                                                                                             Estimated
                                                                                        Total                    FX
(Millions of dollars)                           2021                2020               Change                  Impact                  FXN Change
Surgery                                   $         361          $    332                   8.8  %                  (0.1) %                     8.9  %
Peripheral Intervention                             413               426                  (2.9) %                   0.2  %                    (3.1) %
Urology and Critical Care                           340               317                   7.2  %                  (0.5) %                     7.7  %
Total Interventional Revenues             $       1,115          $  1,075                   3.7  %                  (0.1) %                     3.8  %


First quarter 2022 revenue growth in the Surgery unit reflected strong sales of
hernia, biosurgery and infection prevention platforms. The Surgery unit's
current-period revenues reflected a recovery of elective procedure volumes and
the unit's acquisition of Tepha, Inc., which occurred in the fourth quarter of
fiscal year 2021. First quarter revenues in the Peripheral Intervention unit
were unfavorably impacted by a fiscal year 2021 product recall, temporary supply
chain disruptions, and strategically planned discontinuations of lower-margin
products. These unfavorable impacts to the Peripheral Intervention unit's first
quarter 2022 revenues were partially offset by demand for the unit's atherectomy
platform in China and by sales attributable to the acquisition of Venclose,
Inc., which occurred in the first quarter of 2022. The Urology and Critical Care
unit's revenue growth in the first quarter of 2022 showed strong demand for
acute urology products, which was partially offset by strategically planned
discontinuations of lower-margin products.


The interventional segment revenue for the three-month period is provided below.

                                                                    Three months ended December 31,
(Millions of dollars)                                                  2021                    2020
Interventional segment income                                  $           265            $       302

Segment income as % of Interventional revenues                            23.7    %              28.1  %



The Interventional segment's income in the first quarter was driven by lower
gross profit margin and higher operating expenses as discussed in greater detail
below:
•The Interventional segment's lower gross profit margin in the first quarter of
2022 compared with the first quarter of 2021 primarily reflected the
amortization of recently acquired intangible assets.
•Selling and administrative expense as a percentage of revenues was higher in
the first quarter of 2022 compared with the first quarter of 2021, which
benefited from the curtailment of certain selling, travel and other
administrative activities due to the COVID-19 pandemic in the prior year.
•Research and development expense as a percentage of revenues was higher in the
first quarter of 2022 compared with the first quarter of 2021, which reflected
the timing of project spending and our continued reinvestment into the segment's
growth initiatives.
Geographic Revenues
BD's worldwide first quarter revenues by geography were as follows:
                                                                           

Three months completed the 31st of December,

                                                                                                         Estimated
                                                                                  Total                      FX
(Millions of dollars)                  2021                 2020                 Change                    Impact                   FXN Change
United States                    $       2,853          $    3,130                    (8.9) %                       -  %                     (8.9) %
International                            2,143               2,186                    (2.0) %                    (0.3) %                     (1.7) %
Total Revenues                   $       4,995          $    5,315                    (6.0) %                    (0.1) %                     (5.9) %


The drop in we Q1 2022 revenues were primarily driven by an unfavorable comparison to the prior year quarter, which significantly benefited from sales of the Life Sciences segment’s Integrated Diagnostic Solutions unit related to diagnostic testing COVID-19, as discussed in more detail above. This drop of we revenue for the first quarter of 2022 was partially

                                       23
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offset by strong sales in the Medical segment's Medication Delivery Solutions
and Pharmaceutical Systems units, as well as by strong sales in the
Interventional segment's Surgery and Urology and Critical Care units.
The decline in International revenues in the first quarter of 2022 was primarily
driven by an unfavorable comparison to the prior-year quarter, which
substantially benefited from sales in the Life Sciences segment's Integrated
Diagnostic Solutions unit related to COVID-19 diagnostic testing, as further
discussed above. This decline in International revenues in the first quarter of
2022 was partially offset by strong sales in the Medical segment's Medication
Delivery Solutions and Pharmaceutical Systems units, as well as by strong sales
in the Life Sciences segment's Biosciences unit.
Emerging market revenues were as follows and reflected strong sales in China and
Latin America:
                                                                               Three months ended December 31,
                                                                                                            Estimated
                                                                                       Total                    FX
(Millions of dollars)                          2021                2020               Change                  Impact                 FXN Change
Emerging markets                         $         766          $    650                  17.8  %                   1.3  %                   16.5  %


Specified Items
Reflected in the financial results for the three-month periods of fiscal years
2022 and 2021 were the following specified items:
                                                                          Three months ended December 31,
(Millions of dollars)                                                       2021                     2020
Integration costs (a)                                               $              17          $           33
Restructuring costs (a)                                                            17                      17
Separation and related costs (b)                                                   25                       -

Purchase accounting adjustments (c)                                               364                     353
European regulatory initiative-related costs (d)                                   31                      26
Investment gains/losses and asset impairments (e)                                  17                       -

Transaction Gain/Loss, Proceeds and Other Litigation Matters

         5                      (5)
Impacts of debt extinguishment                                                      -                      11

Total specified items                                                             477                     435
Less: tax impact of specified items                                                88                      79
After-tax impact of specified items                                 $       

$389,357


(a)Represents amounts associated with integration and restructuring activities
which are primarily recorded in Acquisitions and other restructurings and are
further discussed below.
(b)Represents costs recorded to Other operating 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.
(d)Represents costs required to develop processes and systems to comply with
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)Represents unrealized losses recorded within Other income, net relating to
certain investments.


                                       24
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Gross Profit Margin
Gross profit margin for the three-month period of fiscal year 2022 compared with
the prior-year period in fiscal year 2021 reflected the following impacts:
                                                                                       Three-month period
December 31, 2020 gross profit margin %                                                                 51.4  %

Impact of accounting adjustments on purchases and other specified items

                             (0.6) %
Period-over-period decline in COVID-19 testing profitability                                            (2.2) %
Operating performance                                                                                   (0.6) %
Foreign currency translation                                                                             0.5  %
December 31, 2021 gross profit margin %                                                                 48.5  %


Operating performance in the three-month period of 2022 primarily reflected
higher raw material costs, partially offset by the favorable impact of price
initiatives.
Operating Expenses
A summary of operating expenses for the three-month periods of fiscal years 2022
and 2021 is as follows:
                                                             Three months ended December 31,           Increase (decrease) in
                                                                 2021                  2020                 basis points
(Millions of dollars)
Selling and administrative expense                        $        1,223           $    1,149
% of revenues                                                       24.5   %             21.6  %                    290

Research and development expense                          $          329           $      291
% of revenues                                                        6.6   %              5.5  %                    110

Acquisitions and other restructurings                     $           34           $       50

Other operating expense, net                              $           21           $        -


Selling and administrative expense
Higher selling and administrative expense as a percentage of revenues in the
three-month period of 2022 compared with the prior-year period reflected the
current-period decline in revenues, higher shipping costs in the current-year
period, as well as the curtailment of certain selling, travel and other
administrative activities in the prior-year period due to the COVID-19 pandemic.
Research and development expense
Research and development expense as a percentage of revenues in the three-month
period of 2022 was higher compared with the prior-year period, which primarily
reflected the current-period decline in revenues and the timing of project
spending. Spending in both the current and prior-year periods reflected our
continued commitment to drive innovation and growth with new products and
platforms.
Acquisitions and other restructurings
Costs relating to acquisitions and other restructurings in the three-month
periods of 2022 and 2021 included restructuring costs related to simplification
and other cost saving initiatives, as well as system integration costs. For
further disclosures regarding restructuring costs, refer to Note 8 in the Notes
to Condensed Consolidated Financial Statements.
Other operating expense, net
Other operating expense in the three-month period of 2022 included consulting,
legal, tax and other advisory expenses associated with the planned spin-off of
BD's Diabetes Care business.
                                       25
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Nonoperating Income
Net interest expense
The components for the three-month periods of fiscal years 2022 and 2021 were as
follows:
                                          Three months ended December 31,
         (Millions of dollars)                   2021                       2020
         Interest expense        $           (98)                         $ (118)
         Interest income                       2                               2
         Net interest expense    $           (96)                         $ (116)



Lower interest expense in the current-year period compared with the prior-year
period primarily reflected debt repayments and lower overall interest rates on
debt outstanding during the current-year period.
Income Taxes
The income tax rates for the three-month periods of fiscal years 2022 and 2021
are provided below.
                                                                       

Three months completed the 31st of December,

                                                                       2021                       2020
Effective income tax rate                                                    6.3  %                   13.3  %

Impact, in basis points, from specified items                               (480)                     (130)



The effective income tax rate for the three-month period of fiscal year 2022
reflected a tax impact from specified items that was more favorable compared
with the benefit associated with specified items recognized in the prior-year
period, as well as a favorable impact relating to the timing of certain discrete
items.

Net Income and Diluted Earnings per Share
Net Income and Diluted Earnings per Share for the three-month periods of fiscal
years 2022 and 2021 were as follows:
                                                                       

Three months completed the 31st of December,

                                                                          2021                    2020
Net Income (Millions of dollars)                                  $             677          $     1,003
Diluted Earnings per Share                                        $         

2.28 $3.35

Unfavorable impact-specified items                                $           (1.36)         $     (1.22)
Favorable impact-foreign currency translation                     $            0.07
Dilutive impact (a)                                                                          $      0.02


(a)Represents the dilutive impact of convertible preferred shares outstanding
which were excluded from the reported diluted earnings per share calculation
because these share equivalents would have been antidilutive. Additional details
regarding the computation of diluted earnings per share are provided in Note 3
in the Notes to Condensed Consolidated Financial Statements.
                                       26
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Liquidity and Capital Resources
The following table summarizes our condensed consolidated statements of cash
flows:
                                               Three months ended December 31,
   (Millions of dollars)                              2021                      2020
   Net cash provided by (used for)
   Operating activities                $           674                        $ 1,533
   Investing activities                $          (686)                       $  (430)
   Financing activities                $          (327)                       $  (592)



Net Cash Flows from Operating Activities
Cash flows from operating activities in the first three months of fiscal year
2022 reflected net income, adjusted by a change in operating assets and
liabilities that was a net use of cash. This net use of cash primarily reflected
lower levels of accounts payable and accrued expenses and higher levels of
inventory, partially offset by lower levels of trade receivables and prepaid
expenses.
Cash flows from operating activities in the first three 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, partially offset by lower levels of
accounts payable and accrued expenses and higher levels of inventory.
Net Cash Flows from Investing Activities
Our investments in capital expenditures are focused on projects that enhance our
cost structure and manufacturing capabilities, as well as support our BD 2025
strategy for growth. Net outflows from investing activities in the first three
months of fiscal year 2022 included capital expenditure-related outflows of $188
million, compared with $246 million in the prior-year period. Net outflows from
investing activities in the first three months of fiscal years 2022 and 2021
also included cash payments of $415 million relating to various strategic
acquisitions we have executed as part of our growth strategy, including our
acquisitions of Scanwell Health, Inc, Tissuemed, Ltd., and Venclose, Inc. in the
first three months of fiscal year 2022.
Net Cash Flows from Financing Activities
Net cash from financing activities in the first three months of fiscal years
2022 and 2021 included the following significant cash flows:
                                          Three months ended December 31,
         (Millions of dollars)                   2021                       2020
         Cash inflow (outflow)

         Payments of debt        $              -                         $ (267)

         Dividends paid          $           (271)                        $ (264)



Certain measures relating to our total debt were as follows:
(Millions of dollars)                                     December 31, 2021         September 30, 2021
Total debt                                               $         17,424          $         17,610

Weighted average cost of total debt                                   2.5  %                    2.4   %
Total debt as a percentage of total capital*                         40.4  %                   41.0   %


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

                                       27
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Cash and Short-Term Investments
At December 31, 2021, total worldwide cash and equivalents and short-term
investments, including restricted cash, were approximately $2.054 billion. These
assets were largely held in jurisdictions outside of the United States. We
regularly review the amount of cash and short-term investments held outside of
the United States and our historical foreign earnings are used to fund foreign
investments or meet foreign working capital and property, plant and equipment
expenditure needs. To fund cash needs in the United States, we rely on ongoing
cash flow from U.S. operations, access to capital markets and remittances from
foreign subsidiaries of earnings that are not considered to be permanently
reinvested.
Financing Facilities
We have a five-year senior unsecured revolving credit facility in place which
will expire in September 2026. The credit facility provides borrowings of up to
$2.75 billion, with separate sub-limits of $100 million for letters of credit
and swingline loans. The expiration date of the credit facility may be extended
for up to two additional one year periods, subject to certain restrictions
(including the consent of the lenders). The credit facility provides that we
may, subject to additional commitments by lenders, request an additional $500
million of financing, for a maximum aggregate commitment under the credit
facility of up to $3.25 billion. Proceeds from this facility may be used for
general corporate purposes. There were no borrowings outstanding under the
revolving credit facility at December 31, 2021.
The agreement for our revolving credit facility contains the following financial
covenants. We were in compliance with these covenants, as applicable, as of
December 31, 2021.
•We are required to have a leverage coverage ratio of no more than:
•4.25-to-1 as of the last day of each fiscal quarter following the closing of
the credit facility; or
•4.75-to-1 for the four full fiscal quarters following the consummation of a
material acquisition.
We also have informal lines of credit outside the United States. We may, from
time to time, access the commercial paper market as we manage working capital
over the normal course of our business activities. We had no commercial paper
borrowings outstanding as of December 31, 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 11 in the Notes to Condensed
Consolidated Financial Statements.

Access to Capital and Credit Ratings
Our corporate credit ratings with the rating agencies Standard & Poor's Ratings
Services, Moody's Investor Service and Fitch Ratings at December 31, 2021 were
unchanged compared with our ratings at September 30, 2021.
Lower corporate debt ratings and downgrades of our corporate credit ratings or
other credit ratings may increase our cost of borrowing. We believe that given
our debt ratings, our financial management policies, our ability to generate
cash flow and the non-cyclical, geographically diversified nature of our
businesses, we would have access to additional short-term and long-term capital
should the need arise. A rating reflects only the view of a rating agency and is
not a recommendation to buy, sell or hold securities. Ratings can be revised
upward or downward at any time by a rating agency if such rating agency decides
that circumstances warrant such a change.
Concentrations of Credit Risk
We continually evaluate our accounts receivables for potential credit losses,
particularly those resulting from sales to government-owned or
government-supported healthcare facilities in certain countries, as payment may
be dependent upon the financial stability and creditworthiness of those
countries' national economies. In addition to continually evaluating all
governmental receivables for potential credit losses based upon historical loss
experiences, we also evaluate such receivables based upon the availability of
government funding and reimbursement practices. We believe the current reserves
related to all governmental receivables are adequate and that these receivables
will not have a material adverse impact on our financial position or liquidity.
To date, we have not experienced a significant increased risk of credit losses
in general as a result of the COVID-19 pandemic. No assurances can be given that
the risk of credit losses will not increase in the future given the uncertainty
around the duration of the pandemic and its economic impact.
Regulatory Matters
FDA Warning Letter
On January 11, 2018, BD received a Warning Letter from the FDA with respect to
our former BD Preanalytical Systems ("PAS") unit, citing certain alleged
violations of quality system regulations and of law. The Warning Letter states
that, until BD resolves the outstanding issues covered by the Warning Letter,
the FDA will not clear or approve any premarket submissions
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for Class III devices to which the non-conformances are reasonably related or
grant requests for certificates to foreign governments. BD has worked closely
with the FDA and implemented corrective actions to address the quality
management system concerns identified in the warning letter. In March 2020, the
FDA conducted a subsequent inspection of PAS, which it classified as Voluntary
Action Indicated, which means the FDA will not take or recommend any
administrative or regulatory action as a result of the unit's response to the
observations associated with the quality management concerns in the inspection.
BD continues to work with the FDA to generate additional clinical evidence and
file 510(k)s as remaining commitments associated with the Warning Letter. In
January 2022, BD received FDA clearance for its BD Vacutainer® ACD Blood
Collection Tubes used in immunohematology. The FDA review of these remaining
commitments is ongoing and no assurances can be given regarding further action
by the FDA as a result of these commitments, including but not limited to action
pursuant to the Warning Letter.
Consent Order - Covington, Georgia, USA
On October 28, 2019, BD entered into a consent order with the Environmental
Protection Division of the Georgia Department of Natural Resources (the "EPD"),
following the filing of a complaint and motion for temporary restraining order
by the EPD seeking to enjoin BD from continuing sterilization operations at its
Covington, Georgia facility. Under the terms of the consent order, which has
been amended two times upon mutual agreement of BD and EPD, BD voluntarily
agreed to a number of operational changes at its Covington and Madison, Georgia
facilities, as well as at its distribution center in Covington, designed to
further reduce ethylene oxide emissions, including but not limited to operating
at a reduced capacity until successful implementation of fugitive emission
control technology, ongoing ambient air monitoring and operational controls at
such facilities. Following submission of data relating to the implementation of
these operational changes, BD was permitted to return to normal operations in
December 2021 at its facilities in Georgia in accordance with the operating
conditions set forth in its permit applications, including a condition to
continue ambient air monitoring. However, BD's sterilization operations in
Georgia remain subject to the EPD's final approval of BD's permit applications
and could be subject to additional restrictions. BD has business continuity
plans in place to mitigate the impact of any additional restrictions on our
operations at these facilities, although it is possible that these plans will
not be able to fully offset such impact, especially considering the reduced
capacity of third-party sterilization service providers and the regulatory
timelines associated with transferring sterilization operations for regulated
products.
At a broader level, 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 fugitive emissions control technology, 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. For
example, in December 2020, the State of New Mexico filed a lawsuit seeking a
temporary restraining order and a preliminary and permanent injunction against a
major medical device sterilizer, which sterilizes certain of our surgery
products, to reduce ethylene oxide emissions associated with their sterilization
process. On the federal level, in late 2019, the U.S. Environmental Protection
Agency provided notice that it would be conducting rulemaking to reconsider
federal regulations applicable to the use and emission of ethylene oxide. 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.
Consent Decree with FDA
As previously reported, our BD AlarisTM infusion pump organizational unit is
operating under an amended consent decree entered into by CareFusion (the
"Consent Decree") that includes all infusion pumps manufactured by or for
CareFusion 303, Inc., the organizational unit that manufactures and sells
AlarisTM infusion pumps in the United States.
Following an inspection that began in March 2020 of our Medication Management
Systems facility (CareFusion 303, Inc.) in San Diego, California, the FDA issued
to BD a Form 483 Notice (the "Form 483 Notice") that contains a number of
observations of non-conformance with quality system regulations. In addition, in
December 2021, the FDA issued to CareFusion 303, Inc. a letter of non-compliance
with respect to the Consent Decree (the "Non-Compliance Letter") stating that,
among other things, it had determined that certain of BD's corrective actions
with respect to the Form 483 Notice appeared to be adequate, some were still in
progress such that adequacy could not be determined yet, and certain others were
not adequate (e.g., complaint handling and corrective and preventive actions
(CAPA), design verification and medical device reporting). Per the terms of the
Non-Compliance Letter, CareFusion 303, Inc. provided the FDA with a proposed
comprehensive corrective action plan and has retained an independent expert to
conduct periodic audits of CareFusion 303, Inc. infusion pump facilities over
the next four years. CareFusion 303, Inc. will update its corrective action plan
to address any observations that may arise
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during the course of these audits, and these updates, as well as the audit
reports, will be shared with FDA in accordance with the terms of the
Non-Compliance Letter. The FDA's review of the items raised in the Form 483
Notice and Non-Compliance Letter remains ongoing, and no assurances can be given
regarding further action by the FDA as a result of the observations, including
but not limited to action pursuant to the Consent Decree, or that the corrective
actions proposed by CareFusion 303, Inc. will be adequate to address these
observations. Additionally, we cannot currently predict the amount of additional
monetary investment that will be incurred to resolve this matter or the matter's
ultimate impact on our business.
The Consent Decree authorizes the FDA, in the event of any violations in the
future, to order us to cease manufacturing and distributing infusion pumps,
recall products and take other actions. We may be required to pay damages of
$15,000 per day per violation if we fail to comply with any provision of the
Consent Decree, up to $15 million per year. We may also be subject to future
proceedings and litigation relating to the matters addressed in the Consent
Decree, including, but not limited to, additional fines, penalties, other
monetary remedies, and expansion of the terms of the Consent Decree.
We are undertaking certain remediation of our BD AlarisTM System, and are
currently shipping the product in the United States, only in cases of medical
necessity and to remediate recalled software versions. As previously disclosed,
we submitted our 510(k) premarket notification to the FDA for the BD Alaris™
System in April 2021. The 510(k) submission is intended to bring the regulatory
clearance for the BD Alaris™ System up-to-date, address open recall issues and
provide other updates and features, including a new version of BD Alaris™ System
software that will provide clinical, operational and cybersecurity updates. We
will not be able to fully resume commercial operations for the BD Alaris™ System
in the United States until BD's 510(k) submission relating to the product has
been cleared by the FDA. No assurances can be given as to when or if clearance
will be obtained from the FDA.
For further discussion of risks relating to the regulations to which we are
subject, see Part I, Item 1A, of our 2021 Annual Report on Form 10-K (the "2021
Annual Report").

Cautionary Statement Regarding Forward-Looking Statements
This report includes forward-looking statements within the meaning of the
federal securities laws. BD and its representatives may also, from time to time,
make certain forward-looking statements in publicly released materials, both
written and oral, including statements contained in filings with the SEC, press
releases, and our reports to shareholders. Forward-looking statements may be
identified by the use of words such as "plan," "expect," "believe," "intend,"
"will," "may," "anticipate," "estimate" and other words of similar meaning in
conjunction with, among other things, discussions of future operations and
financial performance (including volume growth, pricing, sales and earnings per
share growth, and cash flows) and statements regarding our strategy for growth,
future product development, regulatory approvals, competitive position and
expenditures. 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 our 2021
Annual Report.
•Any impact of the COVID-19 pandemic, including resurgences in COVID-19
infections or new strains of the virus, may have on our business, the global
economy's recovery and the global healthcare system, which may include decreases
in the demand for our products, disruptions to our operations (including
employee absenteeism) or disruptions to our supply chain.
•Factors such as the rate of vaccination, the effectiveness of vaccines against
different strains, the rate of infections, and competitive factors that could
impact the demand and pricing for our COVID-19 diagnostics testing.
•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.
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•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 overall level of indebtedness, including our ability to
service our debt and refinance our indebtedness, which is dependent upon the
capital markets and our overall financial condition at such time.
•The adverse financial impact resulting from unfavorable changes in foreign
currency exchange rates.
•Regional, national and foreign economic factors, including inflation, deflation
and fluctuations in interest rates, and their potential effect on our operating
performance.
•Our ability to achieve our projected level or mix of product sales, as our
earnings forecasts are based on projected sales volumes and pricing of many
product types, some of which are more profitable than others.
•Changes in reimbursement practices of governments or third-party payers, or
adverse decisions relating to our products by such payers, which could reduce
demand for our products or the price we can charge for such products.
•Cost containment efforts in the U.S. or in other countries in which we do
business, such as alternative payment reform and increased use of competitive
bidding and tenders, including, without limitation, any expansion of the
volume-based procurement process in China.
•Changes in the domestic and foreign healthcare industry or in medical practices
that result in a reduction in procedures using our products or increased pricing
pressures, including cost reduction measures instituted by and the continued
consolidation among healthcare providers.
•The impact of changes in U.S. federal laws and policies that could affect
fiscal and tax policies, healthcare and international trade, including import
and export regulation and international trade agreements. In particular, tariffs
or other trade barriers imposed by the U.S. or other countries could adversely
impact our supply chain costs or otherwise adversely impact our results of
operations.
•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, including increases resulting from any
transportation issues, product shortages or other disruptions in the global
supply chain, inflationary pricing pressure, labor shortages, primarily in the
United States, and increased labor costs, the ability to maintain favorable
supplier and service arrangements and relationships (particularly with respect
to sole-source suppliers and sterilization services), and the potential adverse
effects of any disruption in the availability of such items and services.
•Security breaches of our information systems or our products, which could
impair our ability to conduct business, result in the loss of BD trade secrets
or otherwise compromise sensitive information of BD or its customers, suppliers
and other business partners, or of customers' patients, including sensitive
personal data, or result in product efficacy or safety concerns for certain of
our products, and result in actions by regulatory bodies or civil litigation.
•Difficulties inherent in product development, including the potential inability
to successfully continue technological innovation, successfully complete
clinical trials, obtain and maintain regulatory approvals and registrations in
the United States and abroad, obtain intellectual property protection for our
products, obtain coverage and adequate reimbursement for new products, or gain
and maintain market approval of products, as well as the possibility of
infringement claims by competitors with respect to patents or other intellectual
property rights, all of which could preclude or delay commercialization of a
product. Delays in obtaining necessary approvals or clearances from the FDA or
other regulatory agencies or changes in the regulatory process may also delay
product launches and increase development costs.
•The impact of business combinations or divestitures, including any volatility
in earnings relating to acquisition-related costs, and our ability to
successfully integrate any business we may acquire.
•Our ability to penetrate or expand our operations in emerging markets, which
depends on local economic and political conditions, and how well we are able to
make necessary infrastructure enhancements to production facilities and
distribution networks.
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•Conditions in international markets, including social and political conditions,
civil unrest, terrorist activity, governmental changes, restrictions on the
ability to transfer capital across borders, tariffs and other protectionist
measures, difficulties in protecting and enforcing our intellectual property
rights and governmental expropriation of assets. Our international operations
also increase our compliance risks, including risks under the Foreign Corrupt
Practices Act and other anti-corruption laws, as well as regulatory and privacy
laws.
•Deficit reduction efforts or other actions that reduce the availability of
government funding for healthcare and research, which could weaken demand for
our products and result in additional pricing pressures, as well as create
potential collection risks associated with such sales.
•Fluctuations in university or U.S. and international governmental funding and
policies for life sciences research.
•Fluctuations in the demand for products we sell to pharmaceutical companies
that are used to manufacture, or are sold with, the products of such companies,
as a result of funding constraints, consolidation or otherwise.
•The effects of climate change, 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 the impacts of climate change, hurricanes,
tornadoes, windstorms, fires, earthquakes and floods and other extreme weather
events, global health pandemics, war, terrorism, labor disruptions and
international conflicts that could cause significant economic disruption and
political and social instability, resulting in decreased demand for our
products, or adversely affecting our manufacturing and distribution capabilities
or causing interruptions in our supply chain.
•Pending and potential future litigation or other proceedings asserting, and/or
investigations concerning and/or subpoenas and requests seeking information with
respect to, alleged violations of law (including in connection with federal
and/or state healthcare programs (such as Medicare or Medicaid) and/or sales and
marketing practices (such as investigative subpoenas and the civil investigative
demands received by BD)), potential anti-corruption and related internal control
violations under the Foreign Corrupt Practices Act, antitrust claims, securities
law claims, product liability (which may involve lawsuits seeking class action
status or seeking to establish multi-district litigation proceedings, including
pending claims relating to our hernia repair implant products, surgical
continence products for women and vena cava filter products), claims with
respect to environmental matters, data privacy breaches and patent infringement,
and the availability or collectability of insurance relating to any such claims.
•New or changing laws and regulations affecting our domestic and foreign
operations, or changes in enforcement practices, including laws relating to
trade, monetary and fiscal policies, taxation (including tax reforms that could
adversely impact multinational corporations), sales practices, environmental
protection, price controls, and licensing and regulatory requirements for new
products and products in the post-marketing phase. In particular, the U.S. and
other countries may impose new requirements regarding registration, labeling or
prohibited materials that may require us to re-register products already on the
market or otherwise impact our ability to market our products. Environmental
laws, particularly with respect to the emission of greenhouse gases, are also
becoming more stringent throughout the world, which may increase our costs of
operations or necessitate changes in our manufacturing plants or processes or
those of our suppliers, or result in liability to BD.
•Product efficacy or safety concerns regarding our products resulting in product
holds or recalls, regulatory action on the part of the FDA or foreign
counterparts (including restrictions on future product clearances and civil
penalties), declining sales and product liability claims, and damage to our
reputation. As a result of the CareFusion acquisition, our U.S. infusion pump
business is operating under a Consent Decree with the FDA. The Consent Decree
authorizes the FDA, in the event of any violations in the future, to order our
U.S. infusion pump business to cease manufacturing and distributing products,
recall products or take other actions, and order the payment of significant
monetary damages if the business subject to the decree fails to comply with any
provision of the Consent Decree. We are undertaking certain remediation of our
BD AlarisTM System, and are currently shipping the product in the U.S., only in
cases of medical necessity and to remediate recalled software versions. We will
not be able to fully resume commercial operations for the BD Alaris System in
the U.S. until BD's 510(k) submission relating to the product has been cleared
by the FDA. No assurances can be given as to when or if clearance will be
obtained from the FDA.
•The effect of adverse media exposure or other publicity regarding BD's business
or operations, including the effect on BD's reputation or demand for its
products.
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•The effect of market fluctuations on the value of assets in BD's pension plans
and on actuarial interest rate and asset return assumptions, which could require
BD to make additional contributions to the plans or increase our pension plan
expense.
•Our ability to obtain the anticipated benefits of restructuring programs, if
any, that we may undertake.
•Issuance of new or revised accounting standards by the FASB or the SEC.
The foregoing list sets forth many, but not all, of the factors that could
impact our ability to achieve results described in any forward-looking
statements. Investors should understand that it is not possible to predict or
identify all such factors and should not consider this list to be a complete
statement of all potential risks and uncertainties.
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