Table	of	Contents

# UNITED	STATES

# SECURITIES	AND	EXCHANGE	COMMISSION

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

# FOR	THE	FISCAL	YEAR	ENDED	SEPTEMBER	30,	2018

COMMISSION	FILE	NUMBER	1-4802

# BECTON,	DICKINSON	AND	COMPANY

(Exact	name	of	registrant	as	specified	in	its	charter)

New	Jersey

(State	or	other	jurisdiction	of	incorporation	or	organization)

1	Becton	Drive

Franklin	Lakes,	New	Jersey

(Address	of	principal	executive	offices)

Registrant's	telephone	number,	including	area	code	(201)	847-6800

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

# Title	of	Each	Class

Common	Stock,	par	value	$1.00

Depositary	Shares,	each	representing	a	1/20th	interest	in	a	share	of	6.125%	Cumulative	Preferred	Stock	Series	A

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

(Zip	code)

# Name	of	Each	Exchange	on	Which	Registered

New	York	Stock	Exchange

# Securities	registered	pursuant	to	Section	12(g)	of	the	Act:	None

Indicate	by	check	mark	if	the	registrant	is	a	well-known	seasoned	issuer,	as	defined	in	Rule	405	of	the	Securities	Act.				Yes		 þ								No		¨

Indicate	by	check	mark	if	the	registrant	is	not	required	to	file	reports	pursuant	to	Section	13	or	Section	15(d)	of	the	Act.				Yes ¨								No		þ

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		þ								No		¨

Indicate	by	check	mark	whether	the	registrant	has	submitted	electronically	every	Interactive	Data	File	required	to	be	submitted	pursuant	to	Rule	405	of	Regulation	S-T	during	the	preceding	12	months (or	for	such	shorter	period	that	the	registrant	was	required	to	submit	such	files).				Yes		þ								No		¨

Indicate	by	check	mark	if	disclosure	of	delinquent	filers	pursuant	to	Item	405	of	Regulation	S-K	is	not	contained	herein,	and	will	not	be	contained,	to	the	best	of	registrant's	knowledge,	in	definitive proxy	or	information	statements	incorporated	by	reference	in	Part	III	of	this	Form	10-K	or	any	amendment	to	this	Form	10-K.				¨

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.

Smaller	reporting	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	Act).				Yes		¨								No		þ

As	of	March	31,	2018,	the	aggregate	market	value	of	the	registrant's	outstanding	common	stock	held	by	non-affiliates	of	the	registrant	was	approximately	$56,903,426,170.

Documents	Incorporated	by	Reference	Portions	of	the	registrant's	Proxy	Statement	for	the	Annual	Meeting	of	Shareholders	to	be	held	January	22,	2019	are	incorporated	by reference	into	Part	III	hereof.

| PART	I | 1 |
| :--- | :--- |
| Item\t1.\tBusiness | 1 |
| Item\t1A.\tRisk\tFactors | 10 |
| Item\t1B.\tUnresolved\tStaff\tComments | 18 |
| Item\t2.\tProperties | 18 |
| Item\t3.\tLegal\tProceedings | 19 |
| Item\t4.\tMine\tSafety\tDisclosures | 19 |
| Executive\tOfficers\tof\tthe\tRegistrant | 20 |
| PART\tII | 21 |
| Item\t5.\tMarket\tfor\tRegistrant's\tCommon\tEquity,\tRelated\tStockholder\tMatters\tand\tIssuer\tPurchases\tof\tEquity\tSecurities | 21 |
| Item\t6.\tSelected\tFinancial\tData | 22 |
| Item\t7.\tManagement's\tDiscussion\tand\tAnalysis\tof\tFinancial\tCondition\tand\tResults\tof\tOperations | 22 |
| Item\t7A.\tQuantitative\tand\tQualitative\tDisclosures\tAbout\tMarket\tRisk | 43 |
| Item\t8.\tFinancial\tStatements\tand\tSupplementary\tData | 44 |
| Item\t9.\tChanges\tin\tand\tDisagreements\tWith\tAccountants\ton\tAccounting\tand\tFinancial\tDisclosure | 99 |
| Item\t9A.\tControls\tand\tProcedures | 99 |
| Item\t9B.\tOther\tInformation | 100 |
| PART\tIII | 100 |
| Item\t10.\tDirectors,\tExecutive\tOfficers\tand\tCorporate\tGovernance | 100 |
| Item\t11.\tExecutive\tCompensation | 100 |
| Item\t12.\tSecurity\tOwnership\tof\tCertain\tBeneficial\tOwners\tand\tManagement\tand\tRelated\tStockholder\tMatters | 100 |
| Item\t13.\tCertain\tRelationships\tand\tRelated\tTransactions,\tand\tDirector\tIndependence | 100 |
| Item\t14.\tPrincipal\tAccounting\tFees\tand\tServices | 100 |
| PART\tIV | 100 |
| Item\t15.\tExhibits,\tFinancial\tStatement\tSchedules | 101 |
| SIGNATURES | 102 |
| EXHIBIT\tINDEX | 104 |

# PART	I

# General

Becton,	Dickinson	and	Company	(also	known	as	"BD")	was	incorporated	under	the	laws	of	the	State	of	New	Jersey	in	November	1906,	as	successor	to	a	New York	business	started	in	1897.	BD's	executive	offices	are	located	at	1	Becton	Drive,	Franklin	Lakes,	New	Jersey	07417-1880,	and	its	telephone	number	is	(201)	847- 6800.	All	references	in	this	Form	10-K	to	"BD",	"the	Company",	"we",	"our"	or	"us"	refer	to	Becton,	Dickinson	and	Company	and	its	domestic	and	foreign	subsidiaries, unless	otherwise	indicated	by	the	context.

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.	We	provide	customer	solutions	that	are	focused	on	improving	medication	management	and	patient	safety;	supporting	infection	prevention	practices;	equipping surgical	and	interventional	procedures;	improving	drug	delivery;	aiding	anesthesiology	care;	enhancing	the	diagnosis	of	infectious	diseases	and	cancers;	advancing cellular	research	and	applications;	and	supporting	the	management	of	diabetes.

# Business	Segments

BD's	operations	consist	of	three	worldwide	business	segments:	BD	Medical,	BD	Life	Sciences	and	BD	Interventional.	As	is	further	described	below,	BD completed	its	acquisition	of	C.R.	Bard,	Inc.	("Bard")	on	December	29,	2017,	and	BD	Interventional	includes	the	majority	of	Bard's	product	offerings,	along	with	certain product	offerings	formerly	within	BD	Medical.	Additionally,	certain	of	Bard's	product	offerings	are	included	within	BD	Medical	as	part	of	the	Medication	Delivery Solutions	unit	(formerly	Medication	and	Procedural	Solutions).	Information	with	respect	to	BD's	business	segments	and	the	Bard	acquisition	is	included	in	Note	6	and Note	9,	respectively,	to	the	consolidated	financial	statements	contained	in	Item	8,	Financial	Statements	and	Supplementary	Data,	and	is	incorporated	herein	by	reference.

# BD	Medical

BD	Medical	produces	a	broad	array	of	medical	technologies	and	devices	that	are	used	to	help	improve	healthcare	delivery	in	a	wide	range	of	settings.	The	primary customers	served	by	BD	Medical	are	hospitals	and	clinics;	physicians'	office	practices;	consumers	and	retail	pharmacies;	governmental	and	nonprofit	public	health agencies;	pharmaceutical	companies;	and	healthcare	workers.	BD	Medical	consists	of	the	following

# organizational	units:

# BD	Life	Sciences

BD	Life	Sciences	provides	products	for	the	safe	collection	and	transport	of	diagnostics	specimens,	and	instruments	and	reagent	systems	to	detect	a	broad	range	of infectious	diseases,	healthcare-associated	infections	("HAIs")	and	cancers.	In	addition,	BD	Life	Sciences	produces	research	and	clinical	tools	that	facilitate	the	study	of cells,	and	the	components	of	cells,	to	gain	a	better	understanding	of	normal	and	disease	processes.	That	information	is	used	to	aid	the	discovery	and	development	of	new drugs	and	vaccines,	and	to	improve	the	diagnosis	and	management	of	diseases.	The	primary	customers	served	by	BD	Life	Sciences	are	hospitals,	laboratories	and clinics;	blood	banks;	healthcare	workers;	public	health	agencies;	physicians'	office	practices;	academic	and	government	institutions;	and	pharmaceutical	and biotechnology	companies.	BD	Life	Sciences	consists	of	the	following	organizational	units:

# Organizational	Unit

# Preanalytical	Systems

# Diagnostic	Systems

# Biosciences

# Principal	Product	Lines

Integrated	systems	for	specimen	collection;	and	safety-engineered	blood	collection	products	and	systems.

Fluorescence-activated	cell	sorters	and	analyzers;	monoclonal	antibodies	and	kits	for	performing	cell	analysis; reagent	systems	for	life	science	research;	bench-side	solutions	for	high-throughput	targeted	single-cell	gene expression	and	RNA-Seq	analysis;	molecular	indexing	and	next-generation	sequencing	sample	preparation	for genomics	research;	and	clinical	oncology,	immunological	(HIV)	and	transplantation	diagnostic/monitoring reagents	and	analyzers.

# BD	Interventional

BD	Interventional	provides	vascular,	urology,	oncology	and	surgical	specialty	products	that	are	intended,	with	the	exception	of	the	V.	Muller™	surgical	and laparoscopic	instrumentation	products,	to	be	used	once	and	then	discarded	or	are	either	temporarily	or	permanently	implanted.	The	primary	customers	served	by	BD Interventional	are	hospitals,	individual	healthcare	professionals,	extended	care	facilities,	alternate	site	facilities	and	directly	to	patients	via	our	Homecare	business.	BD Interventional	consists	of	the	following	organizational	units:

# Acquisitions

# TVA	Medical,	Inc.

In	July	2018,	BD	acquired	TVA	Medical,	Inc.,	a	company	that	develops	minimally	invasive	vascular	access	solutions	for	patients	with	chronic	kidney	disease requiring	hemodialysis.

On	December	29,	2017,	BD	completed	the	acquisition	of	Bard	to	create	a	medical	technology	company	that	is	uniquely	positioned	to	improve	both	the	treatment of	disease	for	patients	and	the	process	of	care	for	health	care	providers.		Under	the	terms	of	the	transaction,	Bard	common	shareholders	received approximately	$222.93	in	cash	and	0.5077	shares	of	BD	stock	per	Bard	share.	BD	financed	the	cash	portion	of	total	consideration	transferred	with	available	cash,	which included	net	proceeds	raised	in	the	third	quarter	of	fiscal	year	2017	through	registered	public	offerings	of	equity	securities	and	debt	transactions.	Additional	information regarding	the	Bard	acquisition	is	contained	in	Note	9	to	the	consolidated	financial	statements	contained	in	Item	8,	Financial	Statements	and	Supplementary	Data,	which is	incorporated	herein	by	reference.

# CareFusion	Corporation

On	March	17,	2015,	BD	completed	the	acquisition	of	CareFusion	Corporation	("CareFusion"),	a	global	medical	technology	company	with	a	comprehensive portfolio	of	products	in	the	areas	of	medication	management,	infection	prevention,	operating	room	and	procedural	effectiveness,	and	respiratory	care.	The	CareFusion acquisition	positioned	BD	as	a	global	leader	in	medication	management.

# Remaining	interest	in	Caesarea	Medical	Electronics

Upon	its	acquisition	of	CareFusion,	BD	acquired	a	40%	ownership	interest	in	Caesarea	Medical	Electronics	("CME"),	an	Israeli-based	global	infusion	pump systems	manufacturer.	On	April	3,	2017,	BD	acquired	the	remaining	60%	ownership	interest	in	CME.

Additional	information	regarding	these	acquisitions	is	contained	in	Note	9	to	the	consolidated	financial	statements	contained	in	Item	8.,	Financial	Statements	and Supplementary	Data,	which	is	incorporated	herein	by	reference.

# Divestitures

# Advanced	Bioprocessing

In	October	2018,	BD	completed	the	sale	of	its	Advanced	Bioprocessing	business	pursuant	to	a	definitive	agreement	that	was	signed	in	September	2018.

# Respiratory	Solutions	and	Vyaire	Medical

On	October	3,	2016,	BD	sold	a	50.1%	controlling	financial	interest	in	its	Respiratory	Solutions	business,	a	component	of	the	Medical	segment,	to	form	a	venture, Vyaire	Medical.	BD	retained	a	49.9%	non-controlling	interest	in	the	new	standalone	entity.	BD	agreed	to	various	contract	manufacturing	and	certain	logistical	and transition	services	agreements	with	the	new	entity	for	a	period	of	up	to	two	years	after	the	sale.	In	April	2018,	BD	completed	the	sale	of	its	remaining	interest	in	Vyaire Medical.	BD	received	gross	cash	proceeds	of	approximately	$435	million	and	recognized	a	pre-tax	gain	on	the	sale	of	approximately	$303	million.

Additional	information	regarding	these	divestitures	is	contained	in	Note	10	to	the	consolidated	financial	statements	contained	in	Item	8,	Financial	Statements	and Supplementary	Data,	which	is	incorporated	herein	by	reference.

# International	Operations

BD's	products	are	manufactured	and	sold	worldwide.	For	reporting	purposes,	we	organize	our	operations	outside	the	United	States	as	follows:	Europe,	EMA (which	includes	the	Commonwealth	of	Independent	States,	the	Middle	East	and	Africa);	Greater	Asia	(which	includes	Japan	and	Asia	Pacific);	Latin	America	(which includes	Mexico,	Central	America,	the	Caribbean	and	South	America);	and	Canada.	The	principal	products	sold	by	BD	outside	the	United	States	are	hypodermic	needles and	syringes;	insulin	syringes	and	pen	needles;	BD	Hypak™	brand	prefillable	syringe	systems;	infusion	therapy	products	including	Alaris™	infusion	pumps;	pharmacy automation	equipment	including	Pyxis™	systems;	devices	and	services	for	the	treatment	of	peripheral	arterial	and	venous	disease,	cancer	detection,	and	end-stage	renal disease	and	maintenance;	synthetic	and	resorbable	mesh,	biologic	implants	and	fixation	systems	to	complement	innovative	techniques	for	inguinal,	ventral	and	other hernia	repair	procedures;	medical	devices	for	urine	drainage	in	the	acute	care	hospital	and	home	care	settings;	BD	Vacutainer™	brand	blood	collection	products; diagnostic	systems	and	laboratory	equipment	and	products;	flow	cytometry	instruments	and	reagents.	BD	has	manufacturing	operations	outside	the	United	States	in Bosnia	and	Herzegovina,	Brazil,	Canada,	China,	Dominican	Republic,	France,	Germany,	Hungary,	India,	Ireland,	Israel,	Italy,	Japan,	Malaysia,	Mexico,	the	Netherlands, Singapore,	Spain,	and	the	United	Kingdom.	Geographic	information	with	respect	to	BD's	operations	is	included	under	the	heading	"Geographic	Information"	in	Note	6 to	the	consolidated	financial	statements	included	in	Item	8,	Financial	Statements	and	Supplementary	Data,	and	is	incorporated	herein	by	reference.

Foreign	economic	conditions	and	exchange	rate	fluctuations	have	caused	the	profitability	related	to	foreign	revenues	to	fluctuate	more	than	the	profitability	related to	domestic	revenues.	BD	believes	its	activities	in	some	countries	outside	the	United	States	involve	greater	risk	than	its	domestic	business	due	to	the	factors	cited	herein, as	well	as	the	economic	environment,	local	commercial	and	economic	policies	and	political	uncertainties.	See	further	discussion	of	this	risk	in	Item	1A.	Risk	Factors.

# Distribution

BD's	products	are	marketed	and	distributed	in	the	United	States	and	internationally	through	independent	distribution	channels,	and	directly	to	hospitals	and	other healthcare	institutions	by	BD	and	independent	sales	representatives.	BD	uses	acute	care,	non-acute	care,	laboratory	and	drug	wholesaler	distributors	to	broadly	support our	overall	disposable	product	demand	from	our	end	user	customers	in	the	United	States.	In	international	markets,	products	are	distributed	either	directly	or	through distributors,	with	the	practice	varying	by	country.	Order	backlog	is	not	material	to	BD's	business	inasmuch	as	orders	for	BD	products	generally	are	received	and	filled	on a	current	basis,	except	for	items	temporarily	out	of	stock.	BD's	worldwide	sales	are	not	generally	seasonal,	with	the	exception	of	certain	medical	devices	in	the Medication	Delivery	Solutions	business	unit,	and	flu	diagnostic	products	in	the	Diagnostic	Systems	business	unit,	which	relate	to	seasonal	diseases	such

as	influenza.	In	order	to	service	its	customers,	optimize	logistics,	lower	facilities	costs	and	reduce	finished	goods	inventory	levels,	BD	operates	consolidated	distribution facilities	in	both	the	United	States	and	Europe.	Orders	are	normally	shipped	within	a	matter	of	days	after	receipt.

# Raw	Materials	and	Components

BD	purchases	many	different	types	of	raw	materials	and	components,	including	plastics,	glass,	metals,	textiles,	paper	products,	agricultural	products,	electronic	and mechanical	sub-assemblies	and	various	biological,	chemical	and	petrochemical	products.	BD	seeks	to	ensure	continuity	of	supply	by	securing	multiple	options	for sourcing.	However,	there	are	situations	where	raw	materials	and	components	are	only	available	from	one	supplier,	which	are	referred	to	as	sole	sourced.	The	use	of	sole sourced	materials	and	components	may	be	due	to	sourcing	of	proprietary	and/or	patented	technology	and	processes	that	are	intended	to	provide	a	unique	market differentiation	to	our	product.	In	other	cases,	while	a	raw	material	or	component	can	be	sourced	from	multiple	manufacturers,	only	one	supplier	is	qualified	due	to quality	assurance,	cost	or	other	considerations.	In	order	to	provide	alternate	sources,	BD	must	complete	a	rigorous	qualification	process,	which	most	often	includes completion	of	regulatory	registration	and	approval.	If	clinical	trials	are	not	required,	this	qualification	process	can	take	3-18	months	depending	on	the	criticality	of	the change.	When	clinical	trials	are	required,	this	process	may	lengthen	the	qualification	phase	from	one	to	three	years.	BD	continuously	assesses	its	sole	sourced	raw materials	and	components,	and	maintains	business	continuity	plans	with	its	suppliers.	BD's	continuity	plans	may	include	securing	secondary	supply	with	alternate suppliers,	qualification	of	alternate	manufacturing	facilities,	maintaining	contingency	stock,	internal	development	of	supply	and	establishment	of	technology	escrow accounts.	While	BD	works	closely	with	its	suppliers,	no	assurance	can	be	given	that	these	efforts	will	be	successful,	and	there	may	be	events	that	cause	supply interruption,	reduction	or	termination	that	adversely	impacts	BD's	ability	to	manufacture	and	sell	certain	products.

# Research	and	Development

BD	conducts	its	research	and	development	("R&D")	activities	at	its	operating	units	and	at	BD	Technologies	in	Research	Triangle	Park,	North	Carolina.	The majority	of	BD's	R&D	activities	are	conducted	in	North	America.	Outside	North	America,	BD	primarily	conducts	R&D	activities	in	China,	France,	India,	Ireland	and Singapore.	BD	also	collaborates	with	certain	universities,	medical	centers	and	other	entities	on	R&D	programs	and	retains	individual	consultants	and	partners	to	support its	efforts	in	specialized	fields.	BD	spent	approximately	$1,006	million,	$774	million	and	$828	million	on	research	and	development	during	the	fiscal	years	ended September	30,	2018,	2017,	and	2016,	respectively.

# Intellectual	Property	and	Licenses

BD	owns	significant	intellectual	property,	including	patents,	patent	applications,	technology,	trade	secrets,	know-how,	copyrights	and	trademarks	in	the	United States	and	other	countries.	BD	is	also	licensed	under	domestic	and	foreign	patents,	patent	applications,	technology,	trade	secrets,	know-how,	copyrights	and	trademarks owned	by	others.	In	the	aggregate,	these	intellectual	property	assets	and	licenses	are	of	material	importance	to	BD's	business.	BD	believes,	however,	that	no	single patent,	technology,	trademark,	intellectual	property	asset	or	license	is	material	in	relation	to	BD's	business	as	a	whole,	or	to	any	business	segment.

# Competition

BD	operates	in	the	increasingly	complex	and	challenging	medical	technology	marketplace.	Technological	advances	and	scientific	discoveries	have	accelerated	the pace	of	change	in	medical	technology,	the	regulatory	environment	of	medical	products	is	becoming	more	complex	and	vigorous,	and	economic	conditions	have	resulted in	a	challenging	market.	Companies	of	varying	sizes	compete	in	the	global	medical	technology	field.	Some	are	more	specialized	than	BD	with	respect	to	particular markets,	and	some	have	greater	financial	resources	than	BD.	New	companies	have	entered	the	field,	particularly	in	the	areas	of	molecular	diagnostics,	safety-engineered devices	and	in	the	life	sciences,	and	established	companies	have	diversified	their	business	activities	into	the	medical	technology	area.	Other	firms	engaged	in	the distribution	of	medical	technology	products	have	become	manufacturers	of	medical	devices	and	instruments	as	well.	Acquisitions	and	collaborations	by	and	among companies	seeking	a	competitive	advantage	also	affect	the	competitive

environment.	In	addition,	the	entry	into	the	market	of	low-cost	manufacturers	are	creating	increased	pricing	pressures.	Some	competitors	have	also	established manufacturing	sites	or	have	contracted	with	suppliers	located	in	these	countries	as	a	means	to	lower	their	costs.

BD	competes	in	this	evolving	marketplace	on	the	basis	of	many	factors,	including	price,	quality,	innovation,	service,	reputation,	distribution	and	promotion.	The impact	of	these	factors	on	BD's	competitive	position	varies	among	BD's	various	product	offerings.	In	order	to	remain	competitive	in	the	industries	in	which	it	operates, BD	continues	to	make	investments	in	research	and	development,	quality	management,	quality	improvement,	product	innovation	and	productivity	improvement	in support	of	its	core	strategies.

# Third-Party	Reimbursement

Reimbursement	remains	an	important	strategic	consideration	in	the	development	and	marketing	of	medical	devices	and	procedures.	Difficulty	in	obtaining coverage,	coding	and	payment	can	be	a	significant	barrier	to	the	commercial	success	of	a	new	product	or	procedure.	The	consequences	can	include	slow	adoption	in	the marketplace	and	inadequate	payment	levels	that	can	continue	for	months	or	even	years.

A	majority	of	BD's	customers	rely	on	third-party	payers,	including	government	programs	and	private	health	insurance	plans,	to	reimburse	some	or	all	of	the	cost	of the	procedures,	products	and	services	they	provide.	These	payers	in	the	United	States	and	abroad	are	increasingly	focused	on	strategies	to	control	spending	on	healthcare and	reward	improvements	in	quality	and	patient	outcomes.

BD	is	actively	engaged	in	identifying	and	communicating	value	propositions	of	its	products	for	payer,	provider,	and	patient	stakeholders,	and	it	employs	various efforts	and	resources	to	attempt	to	positively	impact	coverage,	coding	and	payment	pathways.	However,	BD	has	no	direct	control	over	payer	decision-making	with respect	to	coverage	and	payment	levels	for	BD	products.	The	manner	and	level	of	reimbursement	in	any	given	case	may	depend	on	the	site	of	care,	the	procedure(s) performed,	the	final	patient	diagnosis,	the	device(s)	and/or	drug(s)	utilized,	the	available	budget,	or	a	combination	of	these	factors,	and	coverage	and	payment	levels	are determined	at	each	payer's	discretion.	As	BD's	product	offerings	are	diverse	across	a	variety	of	healthcare	settings,	they	are	affected	to	varying	degrees	by	the	many payment	pathways	that	impact	the	decisions	of	healthcare	providers	regarding	which	medical	products	they	purchase	and	the	prices	they	are	willing	to	pay	for	those products.	Therefore,	changes	in	reimbursement	levels	or	methods	may	either	positively	or	negatively	impact	sales	of	BD	products	in	any	given	country	for	any	given product.

As	government	programs	seek	to	expand	healthcare	coverage	for	their	citizens,	they	have	at	the	same	time	sought	to	control	costs	by	limiting	the	amount	of reimbursement	they	will	pay	for	particular	procedures,	products	or	services.	Many	third-party	payers	have	developed	specific	payment	and	delivery	mechanisms	to support	these	cost	control	efforts	and	to	focus	on	paying	for	value.	These	mechanisms	include	payment	reductions,	pay	for	performance	measures,	quality-based performance	payments,	restrictive	coverage	policies,	bidding	and	tender	mechanics,	studies	to	compare	the	effectiveness	of	therapies	and	use	of	technology	assessments. These	changes,	whether	the	result	of	legislation,	new	strategic	alliances	or	market	consolidations,	have	created	an	increased	emphasis	on	the	delivery	of	more	cost- effective	and	quality-driven	healthcare.

		For	example,	as	a	result	of	the	Patient	Protection	and	Affordable	Care	Act	("PPACA"),	the	U.S.	is	implementing	value	based	payment	methodologies	and seeking	to	create	alternative	payment	models	such	as	bundled	payments	to	continue	to	drive	improved	value.	We	see	other	governments	around	the	world	considering similar	bundling	reform	measures,	including	the	development	of	the	Diagnosis	Related	Group	("DRG")	as	a	payment	mechanism	to	drive	toward	quality	and	resource based	reimbursement.

# Regulation

BD's	medical	technology	products	and	operations	are	subject	to	regulation	by	the	U.S.	Food	and	Drug	Administration	("FDA")	and	various	other	federal	and	state agencies,	as	well	as	by	foreign	governmental	agencies.	These	agencies	enforce	laws	and	regulations	that	govern	the	development,	testing,	manufacturing,	labeling, advertising,	marketing	and	distribution,	and	market	surveillance	of	BD's	medical	products.	The	scope	of	the	activities	of	these	agencies,	particularly	in	the	Europe, Japan,	and	Asia	Pacific	regions	in	which	BD	operates,	has	been	increasing.

BD	actively	maintains	FDA/ISO	Quality	Systems	that	establish	standards	for	its	product	design,	manufacturing,	and	distribution	processes.	Prior	to	marketing	or	selling most	of	its	products,	BD	must	secure	approval	from	the	FDA	and	counterpart	non-U.S.	regulatory	agencies.	Following	the	introduction	of	a	product,	these	agencies engage	in	periodic	reviews	and	inspections	of	BD's	quality	systems,	as	well	as	product	performance	and	advertising	and	promotional	materials.	These	regulatory controls,	as	well	as	any	changes	in	FDA	policies,	can	affect	the	time	and	cost	associated	with	the	development,	introduction	and	continued	availability	of	new	products. Where	possible,	BD	anticipates	these	factors	in	its	product	development	and	planning	processes.	These	agencies	possess	the	authority	to	take	various	administrative	and legal	actions	against	BD,	such	as	product	recalls,	product	seizures	and	other	civil	and	criminal	sanctions.	BD	also	undertakes	voluntary	compliance	actions,	such	as voluntary	recalls.

BD	also	is	subject	to	various	federal	and	state	laws,	and	laws	outside	the	United	States,	concerning	healthcare	fraud	and	abuse	(including	false	claims	laws	and	anti- kickback	laws),	global	anti-corruption,	transportation,	safety	and	health,	and	customs	and	exports.	Many	of	the	agencies	enforcing	these	laws	have	increased	their enforcement	activities	with	respect	to	medical	device	manufacturers	in	recent	years.	This	appears	to	be	part	of	a	general	trend	toward	increased	regulation	and enforcement	activity	within	and	outside	the	United	States.

In	addition,	as	part	of	PPACA,	the	federal	government	has	enacted	the	Sunshine	Act	provisions	requiring	BD	to	publicly	report	gifts	and	payments	made	to	physicians and	teaching	hospitals.	Failure	to	comply	with	these	provisions	could	result	in	a	range	of	fines,	penalties	and/or	other	sanctions.

# Consent	Decree

Our	infusion	pump	organizational	unit	is	operating	under	an	amended	consent	decree	entered	into	by	CareFusion	with	the	FDA	in	2007.	CareFusion's	consent	decree with	the	FDA	related	to	its	Alaris™	SE	infusion	pumps.	In	February	2009,	CareFusion	and	the	FDA	amended	the	consent	decree	to	include	all	infusion	pumps manufactured	by	or	for	CareFusion	303,	Inc.,	the	organizational	unit	that	manufactures	and	sells	infusion	pumps	in	the	United	States.	The	amended	consent	decree	does not	apply	to	intravenous	administration	sets	and	accessories.

While	this	BD	organizational	unit	remains	subject	to	the	amended	consent	decree,	which	includes	the	requirements	of	the	original	consent	decree,	it	has	made	substantial progress	in	its	compliance	efforts.	However,	we	cannot	predict	the	outcome	of	this	matter,	and	the	amended	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	amended	consent	decree,	up	to	$15	million	per	year.

We	also	cannot	currently	predict	whether	additional	monetary	investment	will	be	incurred	to	resolve	this	matter	or	the	matter's	ultimate	impact	on	our	business.	We	may be	obligated	to	pay	more	costs	in	the	future	because,	among	other	things,	the	FDA	may	determine	that	we	are	not	fully	compliant	with	the	amended	consent	decree	and therefore	impose	penalties	under	the	amended	consent	decree,	and/or	we	may	be	subject	to	future	proceedings	and	litigation	relating	to	the	matters	addressed	in	the amended	consent	decree.	As	of	September	30,	2018,	we	do	not	believe	that	a	loss	is	probable	in	connection	with	the	amended	consent	decree,	and	accordingly,	we	have no	accruals	associated	with	compliance	with	the	amended	consent	decree.

# FDA	Warning	Letters

In	May	2017,	the	FDA	conducted	inspections	at	BD's	Preanalytical	Systems	("PAS")	facility	in	Franklin	Lakes,	New	Jersey.	In	July	2017,	the	FDA	issued	a	Form	483 to	BD	PAS	in	connection	with	these	inspections	that	contained	observations	of	non-conformance	relating	to	quality	system	regulations	and	medical	device	reporting relating	to	certain	of	our	BD	Vacutainer™	EDTA	blood	collection	tubes.	On	January	11,	2018,	BD	received	a	Warning	Letter	from	the	FDA,	citing	certain	alleged violations	of	quality	system	regulations	and	of	law.	The	Warning	Letter	states	that,	until	BD	resolves	the	outstanding	issues	covered	by	the	Warning	Letter,	the	FDA	will not	clear	or	approve	any	premarket	submissions	for	Class	III	devices	to	which	the	non-conformances	are	reasonably	related	or	grant	requests	for	certificates	to	foreign governments.	We	submitted	our	response	to	the	Warning	Letter	on	January	31,	2018.

The	FDA	conducted	an	inspection	of	BD's	facility	located	in	Franklin,	Wisconsin	("BD	Franklin	site")	from	May	16,	2018	through	August	1,	2018.		On	August	1, 2018,	the	FDA	issued	a	Form	483	to	the	BD	Franklin	site	in	connection	with	these	inspections	that	contained	observations	of	non-conformance	relating	to	quality	system regulations	relating	to	certain	pre-filled	Heparin	lock	flush	syringes	and	pre-filled	0.9%	sodium	chloride	lock	flush	syringes.		On	September	14,	2018,	BD	received	a Warning	Letter	from	the	FDA,	citing	certain	alleged	violations	of	quality	system	regulations	and	of	law.	In	the	Warning	Letter,	FDA	stated	that	BD's	response	appears to	be	adequate,	but	that	several	of	the	actions	are	still	in	progress	and	a	follow-up	inspection	by	FDA	of	the	site	will	be	necessary	to	verify	compliance.	We	submitted our	response	to	the	Warning	Letter	on	October	1,	2018.

BD	is	working	closely	with	the	FDA	and	intends	to	fully	implement	corrective	actions	to	address	the	concerns	identified	in	the	Warning	Letters.	However,	BD	cannot give	any	assurances	that	the	FDA	will	be	satisfied	with	its	responses	to	the	Warning	Letters	or	as	to	the	expected	date	of	resolution	of	matters	included	in	the	Warning Letters.	While	BD	does	not	believe	that	the	issues	identified	in	the	Warning	Letters	will	have	a	material	impact	on	BD's	operation,	no	assurances	can	be	given	that	the resolution	of	these	matters	will	not	have	a	material	adverse	effect	on	BD's	business,	results	of	operations,	financial	conditions	and/or	liquidity.

For	further	discussion	of	risks	relating	to	the	regulations	to	which	we	are	subject,	see	Item	1A.	Risk	Factors.

# Employees

As	of	September	30,	2018,	BD	had	76,032	employees,	of	which	28,734	were	employed	in	the	U.S.	(including	Puerto	Rico).	BD	believes	that	its	employee	relations	are satisfactory.

# Available	Information

BD	maintains	a	website	at	www.bd.com.	BD	also	makes	available	its	Annual	Reports	on	Form	10-K,	its	Quarterly	Reports	on	Form	10-Q,	and	its	Current	Reports	on Form	8-K	(and	amendments	to	those	reports)	as	soon	as	reasonably	practicable	after	those	reports	are	electronically	filed	with,	or	furnished	to,	the	Securities	and Exchange	Commission	("SEC").	These	filings	may	be	obtained	and	printed	free	of	charge	at	www.bd.com/investors.	In	addition,	the	written	charters	of	the	Audit Committee;	the	Compensation	and	Management	Development	Committee;	the	Corporate	Governance	and	Nominating	Committee;	the	Executive	Committee;	the Quality	and	Regulatory	Committee;	and	the	Science,	Marketing,	Innovation	and	Technology	Committee	of	the	Board	of	Directors,	BD's	Corporate	Governance Principles	and	its	Code	of	Conduct,	are	available	and	may	be	printed	free	of	charge	at	BD's	website	at	www.bd.com/investors/corporate_governance/.	Printed	copies	of these	materials,	this	2018	Annual	Report	on	Form	10-K,	and	BD's	reports	and	statements	filed	with,	or	furnished	to,	the	SEC,	may	also	be	obtained,	without	charge,	by contacting	the	Corporate	Secretary,	BD,	1	Becton	Drive,	Franklin	Lakes,	New	Jersey	07417-1880,	telephone	201-847-6800.	In	addition,	the	SEC	maintains	an	internet site	that	contains	reports,	proxy	and	information	statements,	and	other	information	regarding	issuers	that	file	electronically	with	the	SEC	at	www.sec.gov.

BD	also	routinely	posts	important	information	for	investors	on	its	website	at	www.bd.com/investors.	BD	may	use	this	website	as	a	means	of	disclosing	material,	non- public	information	and	for	complying	with	its	disclosure	obligations	under	Regulation	FD	adopted	by	the	SEC.	Accordingly,	investors	should	monitor	the	Investor Relations	portion	of	BD's	website	noted	above,	in	addition	to	following	BD's	press	releases,	SEC	filings,	and

public	conference	calls	and	webcasts.	Our	website	and	the	information	contained	therein	or	connected	thereto	shall	not	be	deemed	to	be	incorporated	into	this	Annual Report.

# Forward-Looking	Statements

BD	and	its	representatives	may	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	and	in	its	reports	to	shareholders.	Additional	information	regarding	BD's	forward-looking	statements	is	contained	in	Item	7,

Management's	Discussion	and	Analysis	of	Financial	Condition	and	Results	of	Operations.

An	investment	in	BD	involves	a	variety	of	risks	and	uncertainties.	The	following	describes	some	of	the	significant	risks	that	could	adversely	affect	BD's	business, financial	condition,	operating	results	or	cash	flows.

# Risks	Relating	to	BD

# A	downturn	in	global	economic	conditions	could	adversely	affect	our	operations.

Deterioration	in	the	global	economic	environment,	particularly	in	emerging	markets	and	countries	with	government-sponsored	healthcare	systems,	may	cause	decreased demand	for	our	products	and	services	and	increased	competition,	which	could	result	in	lower	sales	volume	and	downward	pressure	on	the	prices	for	our	products,	longer sales	cycles,	and	slower	adoption	of	new	technologies.	A	weakening	of	macroeconomic	conditions	may	also	adversely	affect	our	suppliers,	which	could	result	in interruptions	in	supply.	We	have	previously	experienced	delays	in	collecting	government	receivables	in	certain	countries	in	Western	Europe	due	to	economic	conditions, and	we	may	experience	similar	delays	in	the	future	in	these	and	other	countries	or	regions	experiencing	financial	problems.

# The	medical	technology	industry	is	very	competitive.

We	are	a	global	company	that	faces	significant	competition	from	a	wide	range	of	companies.	These	include	large	medical	device	companies	with	multiple	product	lines, some	of	which	may	have	greater	financial	and	marketing	resources	than	we	do,	and	firms	that	are	more	specialized	than	we	are	with	respect	to	particular	markets	or product	lines.	Non-traditional	entrants,	such	as	technology	companies,	are	also	entering	into	the	healthcare	industry,	some	of	which	may	have	greater	financial	and marketing	resources	than	we	do.	We	face	competition	across	all	our	product	lines	and	in	each	market	in	which	our	products	are	sold	on	the	basis	of	product	features, clinical	or	economic	outcomes,	product	quality,	availability,	price,	services	and	other	factors.	In	addition,	we	face	changing	customer	preferences	and	requirements, including	increased	customer	demand	for	more	environmentally-friendly	products,	as	well	as	changes	in	the	ways	health	care	services	are	delivered	(including	the transition	of	more	care	to	non-acute	settings).

The	medical	technology	industry	is	also	subject	to	rapid	technological	change	and	discovery	and	frequent	product	introductions.	The	development	of	new	or	improved products,	processes	or	technologies	by	other	companies	(such	as	needle-free	injection	technology)	that	provide	better	features,	pricing	or	clinical	outcomes	or	economic value	may	render	our	products	or	proposed	products	obsolete	or	less	competitive.	In	some	instances,	competitors,	including	pharmaceutical	companies,	also	offer,	or	are attempting	to	develop,	alternative	therapies	for	disease	states	that	may	be	delivered	without	a	medical	device.	The	entry	into	the	market	of	manufacturers	located	in China	and	other	low-cost	manufacturing	locations	has	also	created	pricing	pressure,	particularly	in	developing	markets.

The	medical	technology	industry	has	also	experienced	a	significant	amount	of	consolidation,	resulting	in	companies	with	greater	market	presence.	Health	care	systems and	other	health	care	companies	are	also	consolidating,	resulting	in	greater	purchasing	power	for	these	companies.	As	a	result,	competition	among	medical	device suppliers	to	provide	goods	and	services	has	increased.	Group	purchasing	organizations	and	integrated	health	delivery	networks	have	also	served	to	concentrate purchasing	decisions	for	some	customers,	which	has	led	to	downward	pricing	pressure	for	medical	device	suppliers.	Further	consolidation	in	the	industry

could	intensify	competition	among	medical	device	suppliers	and	exert	additional	pressure	on	the	prices	of	our	products.

# We	are	subject	to	foreign	currency	exchange	risk.

A	substantial	amount	of	our	revenues	are	derived	from	international	operations,	and	we	anticipate	that	a	significant	portion	of	our	sales	will	continue	to	come	from outside	the	U.S.	in	the	future.	The	revenues	we	report	with	respect	to	our	operations	outside	the	United	States	may	be	adversely	affected	by	fluctuations	in	foreign currency	exchange	rates.	A	discussion	of	the	financial	impact	of	exchange	rate	fluctuations	and	the	ways	and	extent	to	which	we	may	attempt	to	address	any	impact	is contained	in	Item	7.,	Management's	Discussion	of	Financial	Condition	and	Results	of	Operations.	Any	hedging	activities	we	engage	in	may	only	offset	a	portion	of	the adverse	financial	impact	resulting	from	unfavorable	changes	in	foreign	currency	exchange	rates.	We	cannot	predict	with	any	certainty	changes	in	foreign	currency exchange	rates	or	the	degree	to	which	we	can	mitigate	these	risks.

# Changes	in	reimbursement	practices	of	third-party	payers	could	affect	the	demand	for	our	products	and	the	prices	at	which	they	are	sold.

Our	sales	depend,	in	part,	on	the	extent	to	which	healthcare	providers	and	facilities	are	reimbursed	by	government	authorities,	private	insurers	and	other	third-party payers	for	the	costs	of	our	products	(including	Medicare,	Medicaid	and	comparable	foreign	programs,	as	well	as	private	payors).	The	coverage	policies	and reimbursement	levels	of	third-party	payers,	which	can	vary	among	public	and	private	sources	and	by	country,	may	affect	which	products	customers	purchase	and	the prices	they	are	willing	to	pay	for	those	products	in	a	particular	jurisdiction.	Reimbursement	rates	can	also	affect	the	acceptance	rate	of	new	technologies	and	products. Legislative	or	administrative	reforms	to	reimbursement	systems	in	the	United	States	or	abroad,	changes	in	coverage	or	reimbursement	rates	by	private	payers,	or	adverse decisions	relating	to	our	products	by	administrators	of	these	systems	could	significantly	reduce	reimbursement	for	procedures	using	our	products	or	result	in	denial	of reimbursement	for	those	products,	which	would	adversely	affect	customer	demand	or	the	price	customers	are	willing	to	pay	for	such	products.	See	"Third-Party Reimbursement"	under	Item	1.	Business.

# The	reinstatement	of	the	PPACA's	medical	device	tax	may	adversely	affect	our	results	of	operations.

The	PPACA	imposes	on	medical	device	manufacturers,	such	as	BD,	a	2.3%	excise	tax	on	U.S.	sales	of	certain	medical	devices.	While	the	excise	tax	has	been	suspended until	the	end	of	2019,	absent	further	legislative	action,	it	will	be	reinstated	in	2020,	which	would	adversely	affect	our	results	of	operation.

# Cost	volatility	could	adversely	affect	our	operations.

Our	results	of	operations	could	be	negatively	impacted	by	volatility	in	the	cost	of	raw	materials,	components,	freight	and	energy	that	increases	the	costs	of	producing	and distributing	our	products.	New	laws	or	regulations	adopted	in	response	to	climate	change	could	also	increase	energy	costs	as	well	as	the	costs	of	certain	raw	materials and	components.	In	particular,	we	purchase	supplies	of	resins,	which	are	oil-based	components	used	in	the	manufacture	of	certain	products,	and	any	significant	increases in	resin	costs	could	adversely	impact	future	operating	results.	Increases	in	oil	prices	can	also	increase	our	packaging	and	transportation	costs.	We	may	not	be	able	to offset	any	increases	in	these	operational	costs.

# Breaches	of	our	information	technology	systems	could	have	a	material	adverse	effect	on	our	operations.

We	rely	on	information	technology	systems	to	process,	transmit,	and	store	electronic	information	in	our	day-to-day	operations,	including	sensitive	personal	information and	proprietary	or	confidential	information.	In	addition,	some	of	our	products	include	information	technology	that	collects	data	regarding	patients	and	patient	therapy	on behalf	of	our	customers	and	some	connect	to	our	systems	for	maintenance	purposes.		Our	information	technology	systems	have	been	subjected	to	attack	via	malicious code	execution,	and	cyber-	or	phishing-	attacks,	and	we	have	experienced	instances	of	unauthorized	access	to	our	systems	in	the	past	and	expect	to	be	subject	to	similar attacks	in	the	future.	In	addition	to	our	own	information,	in	the	course	of	doing	business,	we	sometimes	store	information	with	third	parties	that	could	be	subject	to	these types	of	attacks.

Cyber-attacks	could	result	in	our	intellectual	property	and	other	confidential	information	being	accessed	or	stolen.		Likewise,	we	could	suffer	disruption	of	our operations	and	other	significant	negative	consequences,	including	increased	costs	for	security	measures	or	remediation,	diversion	of	management	attention,	and	adverse impact	on	our	relationships	with	vendors,	business	partners	and	customers.		Unauthorized	tampering,	adulteration	or	interference	with	our	products	may	also	create issues	with	product	functionality	that	could	result	in	a	loss	of	data,	risk	to	patient	safety,	and	product	recalls	or	field	actions.		Cyber-attacks	could	result	in	unauthorized access	to	our	systems	and	products	which	could	also	result	in	actions	by	regulatory	bodies	or	civil	litigation.		While	we	will	continue	to	dedicate	significant	resources	to protect	against	unauthorized	access	to	our	systems	and	work	with	government	authorities	to	detect	and	reduce	the	risk	of	future	cyber	incidents,	cyber-attacks	are becoming	more	sophisticated,	frequent	and	adaptive.	There	can	be	no	assurances	that	our	protective	measures	will	prevent	future	attacks	that	could	have	a	material adverse	impact	on	our	business.

# Our	future	growth	is	dependent	in	part	upon	the	development	of	new	products,	and	there	can	be	no	assurance	that	such	products	will	be	developed.

A	significant	element	of	our	strategy	is	to	increase	revenue	growth	by	focusing	on	innovation	and	new	product	development.	New	product	development	requires significant	investment	in	research	and	development,	clinical	trials	and	regulatory	approvals.	The	results	of	our	product	development	efforts	may	be	affected	by	a	number of	factors,	including	our	ability	to	anticipate	customer	needs,	innovate	and	develop	new	products	and	technologies,	successfully	complete	clinical	trials,	obtain regulatory	approvals	and	reimbursement	in	the	United	States	and	abroad,	manufacture	products	in	a	cost-effective	manner,	obtain	appropriate	intellectual	property protection	for	our	products,	and	gain	and	maintain	market	acceptance	of	our	products.	In	addition,	patents	attained	by	others	can	preclude	or	delay	our	commercialization of	a	product.	There	can	be	no	assurance	that	any	products	now	in	development	or	that	we	may	seek	to	develop	in	the	future	will	achieve	technological	feasibility,	obtain regulatory	approval	or	gain	market	acceptance.

# We	cannot	guarantee	that	any	of	our	strategic	acquisitions,	investments	or	alliances	will	be	successful.

We	may	seek	to	supplement	our	internal	growth	through	strategic	acquisitions,	investments	and	alliances.	Such	transactions	are	inherently	risky,	and	the	integration	of any	newly-acquired	business	requires	significant	effort	and	management	attention.	The	success	of	any	acquisition,	investment	or	alliance	may	be	affected	by	a	number of	factors,	including	our	ability	to	properly	assess	and	value	the	potential	business	opportunity	or	to	successfully	integrate	any	business	we	may	acquire	into	our	existing business.	There	can	be	no	assurance	that	any	past	or	future	transaction	will	be	successful.

# The	international	operations	of	our	business	may	subject	us	to	certain	business	risks.

A	substantial	amount	of	our	sales	come	from	our	operations	outside	the	United	States,	and	we	intend	to	continue	to	pursue	growth	opportunities	in	foreign	markets, especially	in	emerging	markets.	Our	foreign	operations	subject	us	to	certain	risks,	including,	among	others,	the	effects	of	fluctuations	in	foreign	currency	exchange (discussed	above),	the	effects	of	local	economic	and	political	conditions,	competition	from	local	companies,	trade	protectionism	and	restrictions	on	the	transfer	of capital	across	borders,	U.S.	relations	with	the	governments	of	the	foreign	countries	in	which	we	operate,	foreign	regulatory	requirements	or	changes	in	such requirements,	local	product	preferences	and	product	requirements,	longer	payment	terms	for	account	receivables	than	we	experience	in	the	U.S.,	difficulty	in establishing,	staffing	and	managing	foreign	operations,	changes	to	international	trade	agreements	and	treaties,	changes	in	tax	laws,	weakening	or	loss	of	the	protection	of intellectual	property	rights	in	some	countries,	and	import	or	export	licensing	requirements.	The	success	of	our	operations	outside	the	United	States	also	depends,	in	part, on	our	ability	to	make	necessary	infrastructure	enhancements	to,	among	other	things,	our	production	facilities	and	sales	and	distribution	networks.

In	addition,	our	international	operations	are	governed	by	the	U.S.	Foreign	Corrupt	Practices	Act	and	similar	anti-corruption	laws	outside	the	U.S.	Global	enforcement	of anti-corruption	laws	has	increased	substantially	in	recent	years,	with	more	enforcement	proceedings	by	U.S.	and	foreign	governmental	agencies	and	the	imposition	of significant	fines	and	penalties.	While	we	have	implemented	policies	and	procedures	to	enhance	compliance	with	these	laws,	our	international	operations,	which	often involve	customer	relationships	with	foreign

governments,	create	the	risk	that	there	may	be	unauthorized	payments	or	offers	of	payments	made	by	employees,	consultants,	sales	agents	or	distributors.	Any	alleged	or actual	violations	of	these	laws	may	subject	us	to	government	investigations,	significant	criminal	or	civil	sanctions	and	other	liabilities,	and	negatively	affect	our reputation.

Changes	in	U.S.	policy	regarding	international	trade,	including	import	and	export	regulation	and	international	trade	agreements,	could	also	negatively	impact	our business.	In	2018,	the	U.S.	imposed	tariffs	on	steel	and	aluminum	as	well	as	on	goods	imported	from	China	and	certain	other	countries,	which	has	resulted	in	retaliatory tariffs	by	China	and	other	countries.	Additional	tariffs	imposed	by	the	U.S.	on	a	broader	range	of	imports,	or	further	retaliatory	trade	measures	taken	by	China	or	other countries	in	response,	could	result	in	an	increase	in	supply	chain	costs	that	we	may	not	be	able	to	offset	or	otherwise	adversely	impact	our	results	of	operations.

The	June	2016	referendum	result	in	the	United	Kingdom	("UK")	to	exit	the	European	Union	("EU")	(commonly	known	as	"Brexit"),	and	the	subsequent	commencement of	the	official	withdrawal	process	by	the	UK	government	in	March	2017,	has	created	uncertainties	affecting	business	operations	in	the	UK	and	the	EU.	Until	the	terms	of the	UK's	exit	from	the	EU	in	March	2019	are	determined,	including	any	transition	period,	it	is	difficult	to	predict	its	impact.	It	is	possible	that	the	withdrawal	could, among	other	things,	affect	the	legal	and	regulatory	environments	to	which	our	businesses	are	subject,	impact	trade	between	the	UK	and	the	EU	and	other	parties	and create	economic	and	political	uncertainty	in	the	region.

# Reductions	in	customers'	research	budgets	or	government	funding	may	adversely	affect	our	business.

We	sell	products	to	researchers	at	pharmaceutical	and	biotechnology	companies,	academic	institutions,	government	laboratories	and	private	foundations.	Research	and development	spending	of	our	customers	can	fluctuate	based	on	spending	priorities	and	general	economic	conditions.	A	number	of	these	customers	are	also	dependent	for their	funding	upon	grants	from	U.S.	government	agencies,	such	as	the	U.S.	National	Institutes	of	Health	("NIH")	and	agencies	in	other	countries.	The	level	of government	funding	of	research	and	development	is	unpredictable.	For	instance,	there	have	been	instances	where	NIH	grants	have	been	frozen	or	otherwise	unavailable for	extended	periods.	The	availability	of	governmental	research	funding	may	be	adversely	affected	by	economic	conditions	and	governmental	spending	reductions.	Any reduction	or	delay	in	governmental	funding	could	cause	our	customers	to	delay	or	forego	purchases	of	our	products.

# A	reduction	or	interruption	in	the	supply	of	certain	raw	materials	and	components	would	adversely	affect	our	manufacturing	operations	and	related	product sales.

We	purchase	many	different	types	of	raw	materials	and	components	used	in	our	products.	Certain	raw	materials	and	components	are	not	available	from	multiple	sources. In	addition,	for	quality	assurance,	cost-effectiveness	and	other	reasons,	certain	raw	materials	and	components	are	purchased	from	sole	suppliers.	The	price	and	supply	of these	materials	and	components	may	be	impacted	or	disrupted	for	reasons	beyond	our	control.	While	we	work	with	suppliers	to	ensure	continuity	of	supply,	no assurance	can	be	given	that	these	efforts	will	be	successful.	In	addition,	due	to	regulatory	requirements	relating	to	the	qualification	of	suppliers,	we	may	not	be	able	to establish	additional	or	replacement	sources	on	a	timely	basis	or	without	excessive	cost.	The	termination,	reduction	or	interruption	in	supply	of	these	raw	materials	and components	could	adversely	impact	our	ability	to	manufacture	and	sell	certain	of	our	products.

# Interruption	of	our	manufacturing	operations	could	adversely	affect	our	future	revenues	and	operating	income.

We	have	manufacturing	sites	all	over	the	world.	In	some	instances,	however,	the	manufacturing	of	certain	of	our	product	lines	is	concentrated	in	one	or	more	of	our plants.	Damage	to	one	or	more	of	these	facilities	from	weather	or	natural	disasters,	or	issues	in	our	manufacturing	process,	equipment	failure	or	other	factors,	could adversely	affect	our	ability	to	manufacture	these	products,	resulting	in	lost	revenues	and	damage	to	our	relationships	with	customers.

# We	are	subject	to	lawsuits.

We	are	or	have	been	a	defendant	in	a	number	of	lawsuits,	including	purported	class	action	lawsuits	for	alleged	antitrust	violations,	product	liability	claims	(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	and	pelvic	organ	prolapse	products	for	women	and	vena	cava	filter	products),	and	suits	alleging	patent	infringement.	We	have	also	been	subject	to government	subpoenas	seeking	information	with	respect	to	alleged	violations	of	law,	including	in	connection	with	federal	and/or	state	healthcare	programs	(such	as Medicare	or	Medicaid)	and/or	sales	and	marketing	practices	(such	as	the	civil	investigative	demands	received	by	BD	and	Bard).	A	more	detailed	description	of	the foregoing	is	contained	in	Note	5	to	the	consolidated	financial	statements	included	in	Item	8.	Financial	Statements	and	Supplementary	Data.	We	could	be	subject	to additional	lawsuits	or	governmental	investigations	in	the	future.	Reserves	established	for	estimated	losses	with	respect	to	legal	proceedings	do	not	represent	an	exact calculation	of	our	actual	liability,	but	instead	represent	our	estimate	of	the	probable	loss	at	the	time	the	reserve	is	established.	Due	to	the	inherent	uncertainty	of	litigation and	our	underlying	loss	reserve	estimates,	additional	reserves	may	be	established	from	time-to-time.	Also,	in	some	instances,	we	are	not	able	to	estimate	the	amount	or range	of	loss	that	could	result	from	an	unfavorable	outcome	of	the	litigation	to	which	we	are	a	party.	In	view	of	these	uncertainties,	we	could	incur	charges	materially	in excess	of	any	currently	established	accruals	and,	to	the	extent	available,	excess	liability	insurance.	Any	such	future	charges,	individually	or	in	the	aggregate,	could	have	a material	adverse	effect	on	our	results	of	operations,	financial	condition	and/or	liquidity.

With	respect	to	our	existing	product	liability	litigation,	we	believe	that	some	settlements	and	judgments,	as	well	as	legal	defense	costs,	may	be	covered	in	whole	or	in part	under	our	product	liability	insurance	policies	with	a	limited	number	of	insurance	companies,	or,	in	some	circumstances,	indemnification	obligations	to	us	from	other parties.	However,	amounts	recovered	under	these	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.	In	addition,	there	is	no	guarantee	that	insurers	or	other	parties	will	pay	claims	or	that	coverage	or	indemnity	will	be	otherwise	available.	For certain	product	liability	claims	or	lawsuits,	the	Company	does	not	maintain	or	has	limited	remaining	insurance	coverage,	and	we	may	not	be	able	to	obtain	additional insurance	on	acceptable	terms	or	at	all	that	will	provide	adequate	protection	against	potential	liabilities.

# We	are	subject	to	extensive	regulation.

Our	operations	are	global	and	are	affected	by	complex	state,	federal	and	international	laws	relating	to	healthcare,	environmental	protection,	antitrust,	anti-corruption, marketing,	fraud	and	abuse	(including	anti-kickback	and	false	claims	laws),	export	control,	employment,	privacy	and	other	areas.	Violations	of	these	laws	can	result	in criminal	or	civil	sanctions,	including	substantial	fines	and,	in	some	cases,	exclusion	from	participation	in	health	care	programs	such	as	Medicare	and	Medicaid. 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.	The	enactment	of	additional	laws	in the	future	may	increase	our	compliance	costs	or	otherwise	adversely	impact	our	operations.

We	are	also	subject	to	extensive	regulation	by	the	FDA	pursuant	to	the	Federal	Food,	Drug	and	Cosmetic	Act,	by	comparable	agencies	in	foreign	countries,	and	by	other regulatory	agencies	and	governing	bodies.	Most	of	our	products	must	receive	clearance	or	approval	from	the	FDA	or	counterpart	regulatory	agencies	in	other	countries before	they	can	be	marketed	or	sold.	The	process	for	obtaining	marketing	approval	or	clearance	may	take	a	significant	period	of	time	and	require	the	expenditure	of substantial	resources,	and	these	have	been	increasing	due	to	increased	requirements	from	the	FDA	for	supporting	data	for	submissions.	The	process	may	also	require changes	to	our	products	or	result	in	limitations	on	the	indicated	uses	of	the	products.	Governmental	agencies	may	also	impose	new	requirements	regarding	registration, labeling	or	prohibited	materials	that	may	require	us	to	modify	or	re-register	products	already	on	the	market	or	otherwise	impact	our	ability	to	market	our	products	in those	countries.	Once	clearance	or	approval	has	been	obtained	for	a	product,	there	is	an	obligation	to	ensure	that	all	applicable	FDA	and	other	regulatory	requirements continue	to	be	met.	Following	the	introduction	of	a	product,	these	agencies	also	periodically	review	our	manufacturing	processes	and	product	performance.	Our	failure to	comply	with	the	applicable	good	manufacturing	practices,	adverse	event	reporting,	clinical	trial	and	other	requirements	of	these	agencies	could	delay	or	prevent	the production,	marketing	or	sale	of	our

products	and	result	in	fines,	delays	or	suspensions	of	regulatory	clearances,	closure	of	manufacturing	sites,	seizures	or	recalls	of	products	and	damage	to	our	reputation. More	stringent	oversight	by	the	FDA	and	other	agencies	in	recent	years	has	resulted	in	increased	enforcement	activity,	which	increases	the	compliance	risk	for	us	and other	companies	in	our	industry.

As	a	result	of	the	CareFusion	acquisition,	we	are	operating	under	a	consent	decree	with	the	FDA	that	was	entered	into	by	CareFusion	in	2009,	that	affects	our	infusion pump	business	in	the	United	States.	We	are	also	currently	operating	under	two	warning	letters	issued	by	the	FDA.	For	more	information	regarding	the	consent	decree and	warning	letters,	see	"Regulation"	under	Item	1.	Business.

In	addition,	the	European	Union	("EU")	has	adopted	the	EU	Medical	Device	Regulation	(the	"EU	MDR")	and	the	In	Vitro	Diagnostic	Regulation	(the	"EU	IVDR"), each	of	which	impose	stricter	requirements	for	the	marketing	and	sale	of	medical	devices,	including	in	the	area	of	clinical	evaluation	requirements,	quality	systems	and post-market	surveillance.	Manufacturers	of	currently	approved	medical	devices	will	have	until	May	2020	to	meet	the	requirements	of	the	EU	MDR	and	until	May	2022 to	meet	the	EU	IVDR.	Complying	with	the	requirements	of	these	regulations	will	require	us	to	incur	significant	expenditures.	Failure	to	meet	these	requirements	could adversely	impact	our	business	in	the	EU	and	other	regions	that	tie	their	product	registrations	to	the	EU	requirements.

We	are	also	subject	to	laws	in	the	U.S.	and	elsewhere	regarding	privacy	and	the	protection	of	personal	information.	For	instance,	the	EU	has	also	adopted	the	General Data	Protection	Regulation	("GDPR"),	which	will	apply	to	personal	data	involved	in	our	operations	in	the	EU	or	products	and	services	that	we	offer	to	EU	users involving	personal	data.	The	GDPR	creates	a	range	of	new	compliance	obligations	that	could	require	us	to	change	our	existing	business	practices	policies,	and significantly	increases	financial	penalties	for	noncompliance.

# Defects	or	quality	issues	associated	with	our	products	could	adversely	affect	the	results	of	our	operations.

The	design,	manufacture	and	marketing	of	medical	devices	involve	certain	inherent	risks.	Manufacturing	or	design	defects,	component	failures,	unapproved	or	improper use	of	our	products,	or	inadequate	disclosure	of	risks	or	other	information	relating	to	the	use	of	our	products	can	lead	to	injury	or	other	serious	adverse	events.	These events	could	lead	to	recalls	or	safety	alerts	relating	to	our	products	(either	voluntary	or	as	required	by	the	FDA	or	similar	governmental	authorities	in	other	countries), and	could	result,	in	certain	cases,	in	the	removal	of	a	product	from	the	market.	A	recall	could	result	in	significant	costs	and	lost	sales	and	customers,	enforcement	actions and/or	investigations	by	state	and	federal	governments	or	other	enforcement	bodies,	as	well	as	negative	publicity	and	damage	to	our	reputation	that	could	reduce	future demand	for	our	products.	Personal	injuries	relating	to	the	use	of	our	products	can	also	result	in	significant	product	liability	claims	being	brought	against	us.	In	some circumstances,	such	adverse	events	could	also	cause	delays	in	regulatory	approval	of	new	products	or	the	imposition	of	post-market	approval	requirements.

# Our	operations	are	dependent	in	part	on	patents	and	other	intellectual	property	assets.

Many	of	our	businesses	rely	on	patent,	trademark	and	other	intellectual	property	assets.	These	intellectual	property	assets,	in	the	aggregate,	are	of	material	importance	to our	business.	We	can	lose	the	protection	afforded	by	these	intellectual	property	assets	through	patent	expirations,	legal	challenges	or	governmental	action.	Patents attained	by	competitors,	particularly	as	patents	on	our	products	expire,	may	also	adversely	affect	our	competitive	position.	In	addition,	competitors	may	seek	to invalidate	patents	on	our	products	or	claim	that	our	products	infringe	upon	their	intellectual	property,	which	could	result	in	a	loss	of	competitive	advantage	or	the payment	of	significant	legal	fees,	damage	awards	and	past	or	future	royalties,	as	well	as	injunctions	against	future	sales	of	our	products.	We	also	operate	in	countries	that do	not	protect	intellectual	property	rights	to	the	same	extent	as	in	the	U.S.,	which	could	make	it	easier	for	competitors	to	compete	with	us	in	those	countries.	The	loss	of	a significant	portion	of	our	portfolio	of	intellectual	property	assets	may	have	an	adverse	effect	on	our	earnings,	financial	condition	or	cash	flows.

# Natural	disasters,	war	and	other	events	could	adversely	affect	our	future	revenues	and	operating	income.

Natural	disasters	(including	pandemics),	war,	terrorism,	labor	disruptions	and	international	conflicts,	and	actions	taken	by	the	United	States	and	other	governments	or	by our	customers	or	suppliers	in	response	to	such	events,	could	cause	significant	economic	disruption	and	political	and	social	instability	in	the	United	States	and	areas outside	of	the	United	States	in	which	we	operate.	These	events	could	result	in	decreased	demand	for	our	products,	adversely	affect	our	manufacturing	and	distribution capabilities,	or	increase	the	costs	for	or	cause	interruptions	in	the	supply	of	materials	from	our	suppliers.

# We	need	to	attract	and	retain	key	employees	to	be	competitive.

Our	ability	to	compete	effectively	depends	upon	our	ability	to	attract	and	retain	executives	and	other	key	employees,	including	people	in	technical,	marketing,	sales	and research	positions.	Competition	for	experienced	employees,	particularly	for	persons	with	specialized	skills,	can	be	intense.	Our	ability	to	recruit	such	talent	will	depend on	a	number	of	factors,	including	compensation	and	benefits,	work	location	and	work	environment.	If	we	cannot	effectively	recruit	and	retain	qualified	executives	and employees,	our	business	could	be	adversely	affected.

# Risks	Relating	To	Our	Acquisition	of	Bard

# The	integration	of	the	Bard	business	may	be	more	difficult,	costly	or	time	consuming	than	expected	and	the	anticipated	benefits	and	cost	savings	of	the	Bard acquisition	may	not	be	realized.

The	success	of	the	Bard	acquisition,	including	anticipated	benefits	and	cost	savings,	will	depend,	in	part,	on	our	ability	to	successfully	combine	and	integrate	our	legacy business	with	the	business	of	Bard.	The	integration	of	Bard's	business	with	our	existing	business	is	a	complex,	costly	and	time-consuming	process.	It	is	possible	that	a number	of	factors,	including,	without	limitation,	the	loss	of	key	employees,	higher	than	expected	costs,	diversion	of	management	attention	and	resources,	the	disruption of	ongoing	businesses	or	inconsistencies	in	standards,	controls,	procedures	and	policies,	could	adversely	affect	our	ability	to	maintain	relationships	with	customers, vendors	and	employees	or	to	achieve	the	anticipated	benefits	and	cost	savings	of	the	acquisition.	If	we	experience	difficulties	with	the	integration	process,	the	anticipated benefits	of	the	Bard	acquisition	may	not	be	realized	fully	or	at	all,	or	may	take	longer	to	realize	than	expected.	These	integration	matters	could	have	an	adverse	effect	on us	for	an	undetermined	period	following	the	acquisition.	In	addition,	the	actual	cost	savings	of	the	Bard	acquisition	could	be	less	than	anticipated.

# The	future	results	of	the	combined	company	may	be	adversely	impacted	if	we	do	not	effectively	manage	our	expanded	operations.

Following	the	completion	of	the	Bard	acquisition,	the	size	of	our	business	has	increased	significantly.	Our	ability	to	successfully	manage	this	expanded	business	will depend,	in	part,	upon	management's	ability	to	design	and	implement	strategic	initiatives	that	address	not	only	the	integration	of	the	two	companies,	but	also	the	increased scale	and	scope	of	the	combined	business	with	its	associated	increased	costs	and	complexity.	There	can	be	no	assurances	that	we	will	be	successful	or	that	we	will realize	the	expected	operating	efficiencies,	cost	savings	and	other	benefits	currently	anticipated	from	the	Bard	acquisition.

# We	will	incur	substantial	expenses	related	to	the	integration	of	Bard.

We	incurred,	and	expect	to	continue	to	incur,	a	number	of	non-recurring	costs	associated	with	the	Bard	integration	related	to	formulating	and	implementing	integration plans,	including	facilities	and	systems	consolidation	costs	and	employment-related	costs.	We	continue	to	assess	the	magnitude	of	these	costs,	and	additional unanticipated	costs	may	be	incurred	in	the	Bard	integration.	Although	we	expect	that	the	elimination	of	duplicative	costs,	as	well	as	the	realization	of	other	efficiencies related	to	the	integration	of	the	businesses,	should	allow	us	to	offset	integration-related	costs	over	time,	this	net	benefit	may	not	be	achieved	in	the	near	term,	or	at	all.

# In	connection	with	the	Bard	acquisition,	we	incurred	significant	additional	indebtedness,	which	could	adversely	affect	us,	including	by	decreasing	our	business flexibility,	and	will	increase	our	interest	expense.

We	have	substantially	increased	our	indebtedness	in	connection	with	the	Bard	acquisition	through	the	incurrence	of	new	indebtedness	to	finance	the	acquisition	and	the assumption	of	Bard's	existing	indebtedness,	in	comparison	to	our	indebtedness	on	a	recent	historical	basis.	This	could	have	the	effect	of,	among	other	things,	reducing our	flexibility	to	respond	to	business	challenges	and	opportunities,	and	increasing	our	interest	expense.

The	amount	of	cash	required	to	pay	interest	on	our	increased	indebtedness	levels	following	completion	of	the	Bard	acquisition,	and	thus	the	demands	on	our	cash resources,	are	greater	than	the	amount	of	cash	flows	required	to	service	our	indebtedness	prior	to	the	Bard	acquisition.	The	increased	levels	of	indebtedness	following completion	of	the	Bard	acquisition	may	also	reduce	funds	available	for	working	capital,	capital	expenditures,	acquisitions,	the	repayment	or	refinancing	of	our indebtedness	as	it	becomes	due	and	other	general	corporate	purposes,	and	may	create	competitive	disadvantages	for	us	relative	to	other	companies	with	lower	debt levels.	In	addition,	certain	of	the	indebtedness	incurred	in	connection	with	the	Bard	acquisition	bears	interest	at	variable	interest	rates.	If	interest	rates	increase,	variable rate	debt	will	create	higher	debt	service	requirements,	which	could	further	adversely	affect	our	cash	flows.	If	we	do	not	achieve	the	expected	benefits	and	cost	savings from	the	Bard	acquisition,	or	if	the	financial	performance	as	a	combined	company	does	not	meet	current	expectations,	then	our	ability	to	service	our	indebtedness	may be	adversely	impacted.

In	addition,	our	credit	ratings	affect	the	cost	and	availability	of	future	borrowings	and,	accordingly,	our	cost	of	capital.	Our	ratings	reflect	each	rating	organization's opinion	of	our	financial	strength,	operating	performance	and	ability	to	meet	our	debt	obligations.	There	can	be	no	assurance	that	we	will	achieve	a	particular	rating	or maintain	a	particular	rating	in	the	future	or	that	we	will	be	able	to	maintain	our	current	rating.	Furthermore,	our	combined	company's	credit	ratings	were	lowered following	the	Bard	acquisition,	including	below	"investment	grade"	by	Moody's	Investors	Service,	Inc.,	which	may	further	increase	our	future	borrowing	costs	and reduce	our	access	to	capital.

Moreover,	in	the	future	we	may	be	required	to	raise	substantial	additional	financing	to	fund	working	capital,	capital	expenditures,	the	repayment	or	refinancing	of	our indebtedness,	acquisitions	or	other	general	corporate	requirements.	Our	ability	to	arrange	additional	financing	or	refinancing	will	depend	on,	among	other	factors,	our financial	position	and	performance,	as	well	as	prevailing	market	conditions	and	other	factors	beyond	our	control.	No	assurance	can	be	provided	that	we	will	be	able	to obtain	additional	financing	or	refinancing	on	terms	acceptable	to	us	or	at	all.

# We	may	not	be	able	to	service	all	of	our	indebtedness.

We	depend	on	cash	on	hand	and	cash	flows	from	operations	to	make	scheduled	debt	payments.	However,	our	ability	to	generate	sufficient	cash	flow	from	operations	of the	combined	company	and	to	utilize	other	methods	to	make	scheduled	payments	will	depend	on	a	range	of	economic,	competitive	and	business	factors,	many	of	which are	outside	of	our	control.	There	can	be	no	assurance	that	these	sources	will	be	adequate.	If	we	are	unable	to	service	our	indebtedness	and	fund	our	operations,	we	will be	forced	to	reduce	or	delay	capital	expenditures,	seek	additional	capital,	sell	assets	or	refinance	our	indebtedness.	Any	such	action	may	not	be	successful	and	we	may be	unable	to	service	our	indebtedness	and	fund	our	operations,	which	could	have	a	material	adverse	effect	on	our	business,	financial	condition	or	results	of	operations.

# The	agreements	that	govern	the	indebtedness	incurred	in	connection	with	the	Bard	acquisition	impose	restrictions	that	may	affect	our	ability	to	operate	our businesses.

The	agreements	that	govern	the	indebtedness	incurred	in	connection	with	the	Bard	acquisition	contain	various	affirmative	and	negative	covenants	that	may,	subject	to certain	significant	exceptions,	restrict	the	ability	of	certain	of	our	subsidiaries	to	incur	debt	and	the	ability	of	us	and	certain	of	our	subsidiaries	to,	among	other	things, have	liens	on	our	property,	and/or	merge	or	consolidate	with	any	other	person	or	sell	or	convey	certain	of	our	assets	to	any	one	person,	engage	in	certain	transactions with	affiliates	and	change	the	nature	of	our	business.	In	addition,	the	agreements	also	require	us	to	comply	with	certain	financial	covenants,	including	financial	ratios. Our	ability	and	the	ability	of	our	subsidiaries	to	comply	with	these	provisions	may	be	affected	by	events	beyond	our	control.	Failure	to	comply	with	these	covenants could	result	in	an	event	of	default,	which,	if	not	cured	or	waived,	could	accelerate	our	repayment	obligations	and	could	result	in	a	default	and	acceleration	under	other

agreements	containing	cross-default	provisions.	Under	these	circumstances,	we	might	not	have	sufficient	funds	or	other	resources	to	satisfy	all	of	our	obligations.

# The	mandatory	convertible	preferred	stock	underlying	the	depositary	shares	issued	in	connection	with	the	financing	of	the	Bard	transaction	may	adversely affect	the	market	price	of	BD	common	stock.

The	market	price	of	BD	common	stock	is	likely	to	be	influenced	by	the	mandatory	convertible	preferred	stock	underlying	the	depositary	shares	issued	in	connection	with the	financing	for	the	Bard	transaction.	The	market	price	of	BD	common	stock	could	become	more	volatile	and	could	be	depressed	by:

•investors'	anticipation	of	the	potential	resale	in	the	market	of	a	substantial	number	of	additional	shares	of	BD	common	stock	received	upon	conversion	of	the mandatory	convertible	preferred	stock;

•possible	sales	of	BD	common	stock	by	investors	who	view	the	mandatory	convertible	preferred	stock	as	a	more	attractive	means	of	equity	participation	in	BD than	owning	shares	of	BD	common	stock;	and

•hedging	or	arbitrage	trading	activity	that	may	develop	involving	the	mandatory	convertible	preferred	stock	and	BD	common

stock.

# Item		1B.				Unresolved	Staff	Comments.

# None.

BD's	executive	offices	are	located	in	Franklin	Lakes,	New	Jersey.	As	of	October	31,	2018,	BD	owned	or	leased	380	facilities	throughout	the	world,	comprising approximately	24,658,363	square	feet	of	manufacturing,	warehousing,	administrative	and	research	facilities.	The	U.S.	facilities,	including	those	in	Puerto	Rico,	comprise approximately	8,619,099	square	feet	of	owned	and	4,407,539	square	feet	of	leased	space.	The	international	facilities	comprise	approximately	8,484,223	square	feet	of owned	and	3,147,502	square	feet	of	leased	space.	Sales	offices	and	distribution	centers	included	in	the	total	square	footage	are	also	located	throughout	the	world.

Operations	in	each	of	BD's	business	segments	are	conducted	at	both	U.S.	and	international	locations.	Particularly	in	the	international	marketplace,	facilities	often serve	more	than	one	business	segment	and	are	used	for	multiple	purposes,	such	as	administrative/sales,	manufacturing	and/or	warehousing/distribution.	BD	generally seeks	to	own	its	manufacturing	facilities,	although	some	are	leased.	The	following	table	summarizes	property	information	by	business	segment.

| Sites | Corporate | BD	Life	Sciences | BD	Medical | BD	Interventional | Mixed(a) | Total |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| Leased | 20 | 21 | 81 | 86 | 83 | 291 |
| Owned | 6 | 23 | 31 | 23 | 6 | 89 |
| Total | 26 | 44 | 112 | 109 | 89 | 380 |
| Square\tfeet | 2,281,986 | 3,958,668 | 10,946,766 | 4,651,903 | 2,819,040 | 24,658,363 |

(a) Facilities	used	by	more	than	one	business

segment.

BD	believes	that	its	facilities	are	of	good	construction	and	in	good	physical	condition,	are	suitable	and	adequate	for	the	operations	conducted	at	those	facilities, and	are,	with	minor	exceptions,	fully	utilized	and	operating	at	normal	capacity.

The	U.S.	facilities	are	located	in	Alabama,	Arizona,	California,	Connecticut,	Florida,	Georgia,	Illinois,	Indiana,	Maryland,	Massachusetts,	Michigan,	Minnesota, Missouri,	Montana,	Nebraska,	New	Jersey,	New	York,	North	Carolina,	Ohio,	Oklahoma,	Oregon,	Pennsylvania,	Rhode	Island,	South	Carolina,	Tennessee,	Texas,	Utah, Virginia,	Washington,	D.C.,	Washington,	Wisconsin	and	Puerto	Rico.

The	international	facilities	are	as	follows:

-	Europe,	Middle	East,	Africa,	which	includes	facilities	in	Austria,	Belgium,	Bosnia	and	Herzegovina,	the	Czech	Republic,	Denmark,	England,	Finland,	France, Germany,	Ghana,	Greece,	Hungary,	Ireland,	Israel,	Italy,	Kenya,	Luxembourg,	Netherlands,	Norway,	Pakistan,	Poland,	Portugal,	Russia,	Saudi	Arabia,	South	Africa, Spain,	Sweden,	Switzerland,	Turkey,	the	United	Arab	Emirates	and	Zambia.

-	Greater	Asia,	which	includes	facilities	in	Australia,	Bangladesh,	China,	India,	Indonesia,	Japan,	Malaysia,	New	Zealand,	the	Philippines,	Singapore,	South Korea,	Taiwan,	Thailand	and	Vietnam.

-	Latin	America,	which	includes	facilities	in	Argentina,	Brazil,	Chile,	Colombia,	Mexico,	Peru	and	the	Dominican	Republic.

# -	Canada.

# Item	3.				Legal	Proceedings.

Information	with	respect	to	certain	legal	proceedings	is	included	in	Note	5	to	the	consolidated	financial	statements	contained	in	Item	8.	Financial	Statements	and Supplementary	Data,	and	is	incorporated	herein	by	reference.

# Item	4.				Mine	Safety	Disclosures.

Not	applicable.

# Executive	Officers	of	the	Registrant

The	following	is	a	list	of	the	executive	officers	of	BD,	their	ages	and	all	positions	and	offices	held	by	each	of	them	during	the	past	five	years.	There	is	no	family relationship	between	any	executive	officer	or	director	of	BD.

# PART	II

# Item	5.				Market	for	Registrant's	Common	Equity,	Related	Stockholder	Matters	and	Issuer	Purchases	of	Equity	Securities.

BD's	common	stock	is	listed	on	the	New	York	Stock	Exchange	under	the	symbol	"BDX".	As	of	October	31,	2018,	there	were	approximately	14,130	shareholders of	record.

# Issuer	Purchases	of	Equity	Securities

The	table	below	sets	forth	certain	information	regarding	BD's	purchases	of	its	common	stock	during	the	fiscal	quarter	ended	September	30,	2018.

| Period | Total	Number	of<br>Shares<br>Purchased(1) | Average<br>Price<br>Paid<br>per	Share | Total	Number	of	Shares<br>Purchased	as	Part	of<br>Publicly	Announced<br>Plans	or	Programs |  | Maximum	Number<br>of	Shares	that<br>May	Yet	be<br>Purchased	Under	the<br>Plans	or	Programs(2) |
| :--- | :--- | :--- | :--- | :--- | :--- |
| July\t1-31,\t2018 | 1,499 | $244.50 |  | — | 7,857,742 |
| August\t1-31,\t2018 | 535 | $247.67 |  | — | 7,857,742 |
| September\t1-30,\t2018 | — | — |  | — | 7,857,742 |
| Total | 2,034 | $245.33 |  | — | 7,857,742 |

(1) Includes	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	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	6.				Selected	Financial	Data.

# FIVE-YEAR	SUMMARY	OF	SELECTED	FINANCIAL	DATA

|  |  |  | Years	Ended	September	30 |  |  |
| :--- | :--- | :--- | :--- | :--- | :--- |
|  | 2018 | 2017 | 2016 | 2015 | 2014 |
|  |  | Dollars\tin\tmillions,\texcept\tshare\tand\tper\tshare\tamounts | Dollars\tin\tmillions,\texcept\tshare\tand\tper\tshare\tamounts | Dollars\tin\tmillions,\texcept\tshare\tand\tper\tshare\tamounts |  |
| Operations |  |  |  |  |  |
| Revenues | $15,983 | $12,093 | $12,483 | $10,282 | $8,446 |
| Gross\tProfit | 7,262 | 5,942 | 5,991 | 4,695 | 4,301 |
| Operating\tIncome | 1,497 | 1,478 | 1,430 | 1,074 | 1,606 |
| Income\tBefore\tIncome\tTaxes | 1,173 | 976 | 1,074 | 739 | 1,522 |
| Income\tTax\tProvision\t(Benefit) | 862 | (124) | 97 | 44 | 337 |
| Net\tIncome | 311 | 1,100 | 976 | 695 | 1,185 |
| Basic\tEarnings\tPer\tShare | 0.62 | 4.70 | 4.59 | 3.43 | 6.13 |
| Diluted\tEarnings\tPer\tShare | 0.60 | 4.60 | 4.49 | 3.35 | 5.99 |
| Dividends\tPer\tCommon\tShare | 3.00 | 2.92 | 2.64 | 2.40 | 2.18 |
| Financial\tPosition |  |  |  |  |  |
| Total\tAssets | 53,904 | 37,734 | 25,586 | 26,478 | 12,384 |
| Total\tLong-Term\tDebt | 18,894 | 18,667 | 10,550 | 11,370 | 3,768 |
| Total\tShareholders'\tEquity | 20,994 | 12,948 | 7,633 | 7,164 | 5,053 |
| Additional\tData |  |  |  |  |  |
| Average\tCommon\tand\tCommon\tEquivalent\tShares\nOutstanding\t—\tAssuming\tDilution\t(millions) | 264.6 | 223.6 | 217.5 | 207.5 | 197.7 |

The	results	above	include	the	net	expense	associated	with	specified	items	as	detailed	below.	Additional	discussion	regarding	the	specified	items	in	fiscal	years	2018, 2017	and	2016	are	provided	in	Item	7.	Management's	Discussion	and	Analysis	of	Financial	Condition	and	Results	of	Operations.

| Millions	of	dollars,	except	per	share	amounts | 2018 | 2017 | 2016 | 2015 | 2014 |
| :--- | :--- | :--- | :--- | :--- | :--- |
| Total\tspecified\titems | $2,409 | $1,466 | $1,261 | $1,186 | $153 |
| After-tax\timpact\tof\tspecified\titems | $2,674 | $971 | $892 | $786 | $101 |
| Impact\tof\tspecified\titems\ton\tdiluted\tearnings\tper\tshare | $(10.11) | $(4.34) | $(4.10) | $(3.79) | $(0.51) |
| Impact\tof\tdilution\tfrom\tshare\tissuances | $(0.30) | $(0.54) | $— | $(0.02) | $— |

# Item	7.					Management's	Discussion	and	Analysis	of	Financial	Condition	and	Results	of	Operations

The	following	commentary	should	be	read	in	conjunction	with	the	consolidated	financial	statements	and	accompanying	notes.	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

# Description	of	the	Company	and	Business	Segments

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"),	as	further	discussed	below.

BD's	products	are	manufactured	and	sold	worldwide.	Our	products	are	marketed	in	the	United	States	and	internationally	through	independent	distribution	channels and	directly	to	end-users	by	BD	and	independent	sales	representatives.	We	organize	our	operations	outside	the	United	States	as	follows:	Europe;	EMA	(which	includes the	Commonwealth	of	Independent	States,	the	Middle	East	and	Africa);	Greater	Asia	(which	includes	Japan	and	Asia	Pacific);	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	Asia	Pacific.	We	are	primarily	focused	on	certain	countries whose	healthcare	systems	are	expanding.

# Strategic	Objectives

BD	remains	focused	on	delivering	sustainable	growth	and	shareholder	value,	while	making	appropriate	investments	for	the	future.	BD	management	operates	the business	consistent	with	the	following	core	strategies:

•To	increase	revenue	growth	by	focusing	on	our	core	products,	services	and	solutions	that	deliver	greater	benefits	to	patients,	healthcare	workers	and researchers;

•To	supplement	our	internal	growth	through	strategic acquisitions;

•To	continue	investment	in	research	and	development	for	platform	extensions	and	innovative	new products;

•To	make	investments	in	growing	our	operations	in	emerging markets;

•To	improve	operating	effectiveness	and	balance	sheet productivity;

•To	drive	an	efficient	capital	structure	and	strong	shareholder returns.

Our	strategy	focuses	on	four	specific	areas	within	healthcare	and	life	sciences:

•Enabling	safer,	simpler	and	more	effective	parenteral	drug delivery;

•Improving	clinical	outcomes	through	new,	more	accurate	and	faster diagnostics;

•Providing	tools	and	technologies	to	the	research	community	that	facilitate	the	understanding	of	the	cell,	cellular	diagnostics,	cell	therapy	and immunology;

•Enhancing	disease	management	in	diabetes,	women's	health	and	cancer,	infectious	disease	and	other	targeted

conditions.

We	continue	to	strive	to	improve	the	efficiency	of	our	capital	structure	and	follow	these	guiding	principles:

•To	operate	the	Company	consistent	with	an	investment	grade	credit profile;

•To	ensure	access	to	the	debt	market	for	strategic opportunities;

•To	optimize	the	cost	of	capital	based	on	market

In	assessing	the	outcomes	of	these	strategies	as	well	as	BD's	financial	condition	and	operating	performance,	management	generally	reviews	quarterly	forecast data,	monthly	actual	results,	segment	sales	and	other	similar	information.	We	also	consider	trends	related	to	certain	key	financial	data,	including	gross	profit

margin,	selling	and	administrative	expense,	investment	in	research	and	development,	return	on	invested	capital,	and	cash	flows.

# Acquisition	of	C.R.	Bard,	Inc.

On	December	29,	2017,	BD	completed	its	acquisition	of	C.	R.	Bard,	Inc.	("Bard")	for	total	consideration	transferred,	including	cash	and	stock, of	approximately	$25	billion.	The	combination	created	a	medical	technology	company	that	is	uniquely	positioned	to	improve	both	the	treatment	of	disease	for	patients and	the	process	of	care	for	health	care	providers.	The	operating	activities	of	the	acquired	businesses	were	included	in	our	consolidated	results	of	operations	beginning	on January	1,	2018.	BD	reports	the	results	associated	with	the	majority	of	Bard's	product	offerings	within	the	Interventional	segment.	Bard's	remaining	product	offerings	are reported	under	the	Medical	segment.	For	further	discussions	regarding	the	reporting	of	Bard	products	within	BD's	segments	and	the	Bard	acquisition,	refer	to	Notes	6 and	9,	respectively,	to	the	consolidated	financial	statements	contained	in	Item	8.	Financial	Statements	and	Supplementary	Data.

# Impact	of	Tax	Reform	Act

On	December	22,	2017,	new	U.S.	tax	legislation	commonly	referred	to	as	the	Tax	Cuts	and	Jobs	Act	(the	"Act")	was	enacted.	The	new	tax	legislation,	which became	effective	January	1,	2018,	reduces	the	U.S.	federal	corporate	tax	rate	from	35%	to	21%,	requires	companies	to	pay	a	one-time	transition	tax	on	earnings	of certain	foreign	subsidiaries	that	were	previously	tax	deferred,	and	creates	new	taxes	on	certain	foreign-sourced	earnings.	Based	upon	our	determinations	regarding	the tax	effects	of	the	Act,	we	recognized	additional	tax	expense	in	2018	of	$640	million,	which	is	reflected	in	our	consolidated	statement	of	income	within	Income	tax provision	(benefit).	Additional	disclosures	regarding	our	accounting	for	the	Act	are	provided	in	Note	16	to	the	consolidated	financial	statements	contained	in	Item	8. Financial	Statements	and	Supplementary	Data.

# Summary	of	Financial	Results

Worldwide	revenues	in	2018	of	$15.983	billion	increased	32.2%	from	the	prior-year	period.	The	increase	reflected	an	impact	of	almost	24.5%	resulting	from	the acquisition	of	Bard.	Revenue	growth	in	2018	also	reflected	volume	growth	of	over	5.5%,	a	favorable	impact	from	foreign	currency	translation	of	approximately	2.3% and	an	unfavorable	impact	of	price	of	approximately	0.3%.	Volume	growth	in	2018	attributable	to	the	Medical	and	Life	Sciences	segments	was	as	follows:

•Medical	segment	volume	growth	in	2018	was	driven	by	sales	growth	in	all	of	the	segment's	units,	particularly	by	growth	in	the	Medication	Delivery	Solutions and	Medication	Management	Solutions	units.

•Life	Sciences	segment	volume	growth	in	2018	was	driven	by	sales	growth	in	all	three	of	its	organizational	units,	particularly	in	its	Diagnostic	Systems unit.

We	continue	to	invest	in	research	and	development,	geographic	expansion,	and	new	product	market	programs	to	drive	further	revenue	and	profit	growth.	Our ability	to	sustain	our	long-term	growth	will	depend	on	a	number	of	factors,	including	our	ability	to	expand	our	core	business	(including	geographical	expansion), develop	innovative	new	products,	and	continue	to	improve	operating	efficiency	and	organizational	effectiveness.	While	the	economic	environment	for	the	healthcare industry	and	healthcare	utilization	in	the	United	States	is	generally	stable,	destabilization	in	the	future	could	adversely	impact	our	businesses.	Additionally, macroeconomic	challenges	in	Europe	continue	to	constrain	healthcare	utilization,	although	we	currently	view	the	environment	as	stable.	In	emerging	markets,	the Company's	growth	is	dependent	primarily	on	government	funding	for	healthcare	systems.	In	addition,	pricing	pressure	exists	globally	which	could	adversely	impact	our businesses.

Our	financial	position	remains	strong,	with	cash	flows	from	operating	activities	totaling	$2.865	billion	in	2018.	At	September	30,	2018,	we	had	$1.3	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	fiscal	year 2018,	we	paid	cash	dividends	of	$927	million.

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	weaker	U.S.	dollar	in	2018,	compared	with	2017,	resulted	in	a	favorable	foreign	currency	translation	impact	to	our revenue	and	earnings	during	2018.		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	Medical	revenues	by	organizational	unit:

|  |  |  |  |  | 2018	vs.	2017 |  |  | 2017	vs.	2016 |  |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| (Millions\tof\tdollars) | 2018 | 2017 | 2016 | Total\nChange | Estimated\nFX\nImpact | FXN\tChange | Total\nChange | Estimated\nFX\nImpact | FXN\tChange |
| Medication\tDelivery\nSolutions\t(a) | $3,644 | $2,812 | $2,724 | 29.6% | 1.9% | 27.7% | 3.2\t% | (0.8)% | 4.0\t% |
| Medication\tManagement |  |  |  |  |  |  |  |  |  |
| Solutions | 2,470 | 2,295 | 2,197 | 7.7% | 1.1% | 6.6% | 4.4\t% | (0.5)% | 4.9\t% |
| Diabetes\tCare | 1,105 | 1,056 | 1,023 | 4.6% | 1.7% | 2.9% | 3.3\t% | (0.3)% | 3.6\t% |
| Pharmaceutical\tSystems | 1,397 | 1,256 | 1,199 | 11.2% | 4.8% | 6.4% | 4.8\t% | (0.5)% | 5.3\t% |
| Respiratory\tSolutions | — | — | 822 | NM | NM | NM | NM | NM | NM |
| Total\tMedical\trevenues | $8,616 | $7,419 | $7,965 | 16.1% | 2.1% | 14.0% | (6.8)% | (0.5)% | (6.3)% |

"NM"	denotes	that	the	percentage	is	not	meaningful.

(a) The	presentation	of	prior-period	amounts	reflects	a	reclassification	of	$685	million	and	$689	million	in	2017	and	2016,	respectively,	of	certain	product revenues	from	the	Medical	segment	to	the	Interventional	segment	as	further	discussed	in	discussed	in	Note	6	to	the	consolidated	financial	statements contained	in	Item	8.	Financial	Statements	and	Supplementary	Data.

Medical	segment	growth	in	2018	was	favorably	impacted	by	the	inclusion	of	revenues	associated	with	certain	Bard	products	within	the	Medication	Delivery Solutions	unit,	beginning	on	January	1,	2018.	The	Medical	segment's	underlying	revenue	growth	was	largely	driven	by	sales	of	the	Medication	Delivery	Solutions	unit's vascular	access	and	vascular	care	products	as	well	as	by	the	Medication	Management	Solutions	unit's	installations	of	dispensing	and	infusion	systems.		Revenue	growth in	the	Medication	Management	Solutions	unit	was	partially	offset	by	the	unfavorable	impact,	in	the	first	half	of	2018,	of	a	modification	to	dispensing	equipment	lease contracts	with	customers,	which	took	place	in	April	2017.	As	a	result	of	the	lease	modification,	substantially	all	new	lease	contracts	are	accounted	for	as	operating	leases with	revenue	recognized	over	the	agreement	term,	rather	than	upon	the	placement	of	capital.		The	Medical	segment's	underlying	growth	also	reflected	sales	of	the Pharmaceutical	Systems	unit's	prefillable	products	and	the	Diabetes	Care	unit's	pen	needles.

Medical	segment	revenue	growth	in	2017	was	driven	by	the	Medication	Delivery	Solutions	unit's	sales	of	infusion	disposables	products,	particularly	in	international markets,	and	the	Pharmaceutical	Systems	unit's	sales	of	self-injection	systems.	Revenue	growth	in	2017	also	reflected	the	Diabetes	Care	unit's	increased	sales	of	pen needles	in	the	United	States	and	emerging	markets.	International	growth	in	the	Diabetes	Care	unit	was	impacted	by	weaker	revenues	in	Europe,	primarily	in	the	United Kingdom,	due	to	increasing	pressure	from	government

payers	as	part	of	austerity	measures.	Medical	segment	revenues	in	2017	were	unfavorably	impacted	by	the	divestiture	of	the	Respiratory	Solutions	business	and	the modification	to	dispensing	equipment	lease	contracts	in	the	Medication	Management	Solutions	unit,	as	discussed	above.	In	2017,	revenues	in	the	Medication Management	Solutions	unit	included	$151	million	of	revenues	relating	to	amended	preexisting	lease	contracts.

Medical	segment	operating	income	was	as	follows:

| (Millions	of	dollars) | 2018 | 2017 | 2016 |
| :--- | :--- | :--- | :--- |
| Medical\tsegment\toperating\tincome\t(a)\t(b) | $2,624 | $1,907 | $1,807 |
| Segment\toperating\tincome\tas\t%\tof\tMedical\trevenues | 30.5% | 25.7% | 22.7% |

(a) Operating	income	in	2018	excluded	certain	general	and	administrative	costs,	which	were	allocated	to	the	segment	in	2017	and	2016,	due	to	a	change	in our	management	reporting	approach,	as	is	further	discussed	in	Note	6	to	the	consolidated	financial	statements	contained	in	Item	8.	Financial	Statements and	Supplementary	Data.

(b) The	presentation	of	prior-period	amounts	reflects	reclassifications	of	$248	million	and	$245	million	in	2017	and	2016,	respectively,	relating	to	the movement	of	certain	product	offerings	from	the	Medical	segment	to	the	Interventional	segment	as	noted	above.

The	Medical	segment's	operating	income	was	driven	by	its	performance	with	respect	to	gross	profit	margin	and	operating	expenses	as	discussed	in	greater	detail below:

•The	Medical	segment's	gross	profit	margin	in	2018	was	lower	as	compared	with	2017	primarily	due	to	the	expense	related	to	amortization	of	intangible	assets acquired	in	the	Bard	transaction	and	the	expense	related	to	the	recognition	of	a	fair	value	step-up	adjustment	relating	to	Bard's	inventory	on	the	acquisition	date.	The Medical	segment's	gross	profit	margin	in	2018	was	also	unfavorably	impacted	by	charges	to	write	down	the	value	of	fixed	assets,	primarily	in	the	Diabetes	Care unit,	higher	raw	material	costs	and	pricing	pressures.	These	unfavorable	impacts	to	the	Medical	segment's	gross	margin	were	partially	offset	by	lower	manufacturing costs	resulting	from	continuous	improvement	projects	which	enhanced	the	efficiency	of	our	operations	and	favorable	product	mix	impact	relating	to	the	Bard products	reported	within	the	segment.	The	Medical	segment's	gross	profit	margin	in	2017	was	higher	as	compared	with	2016	primarily	due	to	the	divestiture	of	the Respiratory	Solutions	business,	which	had	products	with	relatively	lower	gross	profit	margins.	Gross	profit	margin	in	2017	also	reflected	lower	manufacturing	costs resulting	from	continuous	improvement	projects.

•Selling	and	administrative	expense	as	a	percentage	of	revenues	in	2018	was	lower	compared	with	2017	which	primarily	reflected	a	reduction	in	the	general	and administrative	costs	allocated	to	the	segment,	as	noted	above.	Selling	and	administrative	expense	as	a	percentage	of	revenues	in	2017	was	lower	compared	with 2016,	primarily	due	to	the	divestiture	of	the	Respiratory	Solutions	business,	as	this	business	generally	had	a	lower	operating	margin.

•Research	and	development	expense	as	a	percentage	of	revenues	was	higher	in	2018	which	reflected	increased	investment	in	new	products	and	platforms. Research	and	development	expense	as	a	percentage	of	revenues	in	2017	reflected	ongoing	investment	in	new	products	and	platforms,	but	was	lower	compared	with 2016	as	expense	in	2016	included	a	one-time	payment	relating	to	one	of	the	segment's	ongoing	projects.

# Life	Sciences	Segment

The	following	summarizes	Life	Sciences	revenues	by	organizational	unit:

|  |  |  |  |  | 2018	vs.	2017 |  |  | 2017	vs.	2016 |  |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| \t(Millions\tof\tdollars) | 2018 | 2017 | 2016 | Total\nChange | Estimated\nFX\nImpact | FXN\tChange | Total\nChange | Estimated\nFX\nImpact | FXN\tChange |
| Preanalytical\tSystems | $1,553 | $1,471 | $1,409 | 5.5% | 1.4% | 4.1% | 4.4% | (0.8)% | 5.2% |
| Diagnostic\tSystems | 1,536 | 1,378 | 1,301 | 11.5% | 1.9% | 9.6% | 5.9% | (0.5)% | 6.4% |
| Biosciences | 1,241 | 1,139 | 1,119 | 9.0% | 2.2% | 6.8% | 1.8% | (0.6)% | 2.4% |
| Total\tLife\tSciences\trevenues | $4,330 | $3,988 | $3,829 | 8.6% | 1.8% | 6.8% | 4.2% | (0.6)% | 4.8% |

The	Life	Sciences	segment's	revenue	growth	in	2018	was	driven	by	growth	across	all	three	of	its	organizational	units.	The	Diagnostic	Systems	unit's	revenues	were primarily	driven	by	sales	of	core	microbiology	products	as	well	as	continued	strength	in	sales	of	the	unit's	BD	MAXTM	molecular	platform.	Revenue	growth	in	the Diagnostic	Systems	unit	also	reflected	a	more	severe	influenza	season	in	2018	compared	with	2017.	The	Life	Sciences	segment's	2018	revenue	growth	was	also	driven by	the	Biosciences	unit's	sales	of	research	reagents	and	recently	launched	instruments.	Growth	in	the	Preanalytical	Systems	unit	reflected	global	sales	of	core	products.

The	Life	Sciences	segment's	2017	revenues	reflected	growth	in	global	sales	of	the	Preanalytical	Systems	unit's	core	products	and	growth	in	sales	of	the	Diagnostics Systems	unit's	microbiology	and	molecular	platforms,	particularly	in	emerging	markets.	The	segment's	2017	revenue	growth	was	also	driven	by	increased	Biosciences unit	sales,	particularly	in	developed	markets.

Life	Sciences	segment	operating	income	was	as	follows:

| (Millions	of	dollars) | 2018 | 2017 | 2016 |
| :--- | :--- | :--- | :--- |
| Life\tSciences\tsegment\toperating\tincome\t(a) | $1,207 | $772 | $793 |
| Segment\toperating\tincome\tas\t%\tof\tLife\tSciences\trevenues | 27.9% | 19.4% | 20.7% |

(a) Operating	income	in	2018	excluded	certain	general	and	administrative	costs,	which	were	allocated	to	the	segment	in	2017	and	2016,	due	to	a	change	in our	management	reporting	approach,	as	noted	above.

The	Life	Sciences	segment's	operating	income	was	driven	by	its	performance	with	respect	to	gross	profit	margin	and	operating	expenses	as	discussed	in	greater detail	below:

•The	Life	Sciences	segment's	gross	profit	margin	as	a	percentage	of	revenues	was	higher	in	fiscal	year	2018	primarily	due	to	lower	manufacturing	costs	resulting from	continuous	improvement	projects,	which	enhanced	the	efficiency	of	our	operations,	and	favorable	foreign	currency	translation.	These	favorable	impacts	to the	Life	Sciences	segment's	gross	margin	were	partially	offset	by	expense	related	to	the	Biosciences	unit's	write-down	of	certain	intangible	and	other	assets,	as well	as	higher	raw	material	costs.	The	Life	Sciences	segment's	gross	profit	margin	as	a	percentage	of	revenues	was	lower	in	fiscal	year	2017	primarily	due	to unfavorable	foreign	currency	translation,	higher	raw	material	costs	and	unfavorable	product	mix,	partially	offset	by	lower	manufacturing	costs	resulting	from operations	improvement	projects.

•Selling	and	administrative	expense	as	a	percentage	of	Life	Sciences	revenues	in	2018	was	lower	compared	to	2017	primarily	due	to	a	reduction	in	the	general and	administrative	costs	allocated	to	the	segment,	as	noted	above.	Selling	and	administrative	expense	as	a	percentage	of	Life	Sciences	revenues	in	2017	was higher	compared	to	2016	primarily	due	to	slightly	higher	administrative	costs.

•Research	and	development	expense	as	a	percentage	of	revenues	in	2018	was	higher	compared	with	2017	primarily	due	to	write-downs	in	the	Biosciences	unit, as	noted	above.	Research	and	development	expense	as	a	percentage	of	revenues	in	2017	was	relatively	flat	compared	with	2016.

# Interventional	Segment

The	following	summarizes	Interventional	revenues	by	organizational	unit:

|  |  |  |  | 2018	vs.	2017 | 2017	vs.	2016 |
| :--- | :--- | :--- | :--- | :--- | :--- |
| \t(Millions\tof\tdollars) | 2018 | 2017 | 2016 | Total\nChange | Total\nChange |
| Surgery\t(a) | $1,192 | \t $666 | \t $670 | NM | NM |
| Peripheral\tIntervention\t(a) | 1,045 | 19 | 20 | NM | NM |
| Urology\tand\tCritical\tCare | 800 | — | — | NM | NM |
| Total\tInterventional\trevenues | $3,037 | \t $685 | \t $689 | NM | NM |

(a) The	presentation	of	prior-period	amounts	reflects	reclassifications	of	$685	million	and	$689	million	in	2017	and	2016,	respectively,	of	certain	product revenues	from	the	Medical	segment	to	the	Interventional	segment	as	noted	above.

Interventional	segment	operating	income	was	as	follows:

| (Millions	of	dollars) | 2018 | 2017 | 2016 |
| :--- | :--- | :--- | :--- |
| Interventional\tsegment\toperating\tincome\t(a) | $306 | $248 | $245 |
| Segment\toperating\tincome\tas\t%\tof\tInterventional\trevenues | 10.1% | NM | NM |

(a) The	presentation	of	prior-period	amounts	reflects	reclassifications	of	$248	million	and	$245	million	in	2017	and	2016,	respectively,	relating	to	the movement	of	certain	product	offerings	from	the	Medical	segment	to	the	Interventional	segment	as	noted	above.

The	Interventional	segment's	operating	income	was	driven	by	its	performance	with	respect	to	gross	profit	margin	and	operating	expenses.	The	Interventional segment's	operating	income	in	2018	reflected	expense	related	to	the	recognition	of	a	fair	value	step-up	adjustment	relating	to	Bard's	inventory	on	the	acquisition	date. The	fair	value	adjustment	was	a	required	non-cash	adjustment	to	the	value	of	acquired	inventory	and	was	expensed	over	a	four-month	period,	consistent	with	an	estimate of	the	period	of	time	to	sell	the	acquired	inventory.

# Geographic	Revenues

BD's	worldwide	revenues	by	geography	were	as	follows:

|  |  |  |  |  | 2018	vs.	2017 |  |  | 2017	vs.	2016 |  |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| (Millions\tof\tdollars) | 2018 | 2017 | 2016 | Total\nChange | Estimated\nFX\nImpact | FXN\tChange | Total\nChange | Estimated\nFX\nImpact | FXN\tChange |
| United\tStates | $8,768 | $6,504 | $6,893 | 34.8% | — | 34.8% | (5.6)% | — | (5.6)% |
| International | 7,215 | 5,589 | 5,590 | 29.1% | 4.8% | 24.3% | —\t% | (1.2)% | 1.2\t% |
| Total\trevenues | $15,983 | $12,093 | $12,483 | 32.2% | 2.3% | 29.9% | (3.1)% | (0.5)% | (2.6)% |

U.S.	revenues	in	2018	benefited	from	the	inclusion	of	revenues	associated	with	Bard	products	in	our	financial	results	beginning	on	January	1,	2018.

Underlying	2018	revenue	growth	in	the	United	States	was	driven	by	revenues	in	the	Medical	segment's	Medication	Delivery	Solutions	and	Medication	Management Solutions	units,	as	well	as	by	revenues	in	the	Life	Sciences	segment's	Diagnostic	Systems	unit.

U.S.	revenues	in	2017	were	unfavorably	impacted	by	the	Medical	segment's	divestiture	of	the	Respiratory	Solutions	business	and	the	modification	to	dispensing equipment	lease	contracts	with	customers	in	the	Medical	segment's	Medication	Management	Solutions	unit,	as	previously	discussed.	These	impacts	to	U.S.	revenues	in 2017	were	partially	offset	by	growth	in	sales	in	the	Medical	segment's	Medication	Management	Solutions	and	Diabetes	Care	units,	as	well	as	in	all	of	the	Life	Sciences segment's	units.

International	revenues	in	2018	benefited	from	the	inclusion	of	revenues	associated	with	Bard	products	in	our	financial	results.	International	2018	revenues	also reflected	increased	sales	in	the	Medical	segment's	Medication	Delivery	Solutions,	Medication	Management	Solutions	and	Pharmaceutical	Systems	units,	as	well	as growth	attributable	to	sales	in	all	three	of	the	Life	Sciences	segment's	organizational	units.

International	revenue	growth	in	2017	were	driven	by	sales	in	the	Medical	segment's	Medication	Delivery	Solutions,	Medication	Management	Solutions	and Pharmaceutical	Systems	units,	as	well	as	by	sales	in	the	Life	Sciences	segment's	Preanalytical	Systems	and	Diagnostic	Systems	units.	International	revenue	growth	in 2017	was	partially	offset	by	the	impact	of	the	Medical	segment's	divestiture	of	the	Respiratory	Solutions	business.

Emerging	market	revenues	were	$2.53	billion,	$1.95	billion	and	$1.9	billion	in	2018,	2017	and	2016,	respectively.	Foreign	currency	translation	favorably	impacted emerging	market	revenues	in	2018	by	an	estimated	$19	million	and	unfavorably	impacted	emerging	market	revenues	in	2017	by	an	estimated	$29	million.	Emerging market	revenue	growth	in	2018	benefited	from	the	inclusion	of	revenues	associated	with	Bard	products	in	our	financial	results.	Underlying	growth	was	particularly driven	by	sales	in	China	and	EMA.	Emerging	market	revenue	growth	in	2017	was	driven	by	sales	in	Greater	Asia,	including	China,	and	Latin	America.	Emerging	market revenues	in	2016	related	to	divested	businesses,	primarily	the	Respiratory	Solutions	business,	were	approximately	$105	million.

# Specified	Items

Reflected	in	the	financial	results	for	2018,	2017	and	2016	were	the	following	specified	items:

| (Millions	of	dollars) | 2018 | 2017 | 2016 |
| :--- | :--- | :--- | :--- |
| Integration\tcosts\t(a) | $344 | $237 | $192 |
| Restructuring\tcosts\t(a) | 344 | 85 | 526 |
| Transaction\tcosts\t(a) | 56 | 39 | 10 |
| Financing\tcosts\t(b) | 49 | 131 | — |
| Purchase\taccounting\tadjustments\t(c) | 1,733 | 491 | 527 |
| Losses\ton\tdebt\textinguishment\t(d) | 16 | 73 | — |
| Net\timpact\tof\tgain\ton\tsale\tof\tinvestment\tand\tasset\timpairments\t(e) | (151) | — | — |
| Hurricane\trecovery\tcosts | 17 | — | — |
| Lease\tcontract\tmodification-related\tcharge\t(f) | — | 748 | — |
| Litigation-related\titems\t(g) | — | (337) | — |
| Pension\tsettlement\tcharges | — | — | 6 |
| Total\tspecified\titems | 2,409 | 1,466 | 1,261 |
| Less:\tImpact\tof\ttax\treform\tand\ttax\timpact\tof\tspecified\titems\t(h) | (265) | 495 | 369 |
| After-tax\timpact\tof\tspecified\titems | $2,674 | $971 | $892 |

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

(b) Represents	financing	impacts	associated	with	the	Bard	acquisition,	which	were	recorded	in	Interest	income	and	Interest expense.

(c) Primarily	represents	non-cash	amortization	expense	associated	with	acquisition-related	identifiable	intangible	assets.	BD's	amortization	expense	is	primarily recorded	in	Cost	of	products	sold.	The	amount	2018	also	included	a	fair	value	step-up	adjustments	of	$478	million	relating	to	Bard's	inventory	on	the	acquisition date.

(d) Represents	losses	recognized	in	Other	income	(expense),	net	upon	our	extinguishment	of	certain	long-term	senior notes.

(e) Represents	the	net	amount	recognized	in	Other	income	(expense),	net	related	to	BD's	sale	of	its	non-controlling	interest	in	Vyaire	Medical,	including	a	gain	of $303	million	recognized	on	the	sale	as	further	discussed	below,	partially	offset	by	$81	million	of	charges	recorded	to	write	down	the	carrying	value	of	certain intangible	and	other	assets	in	the	Biosciences	unit	as	well	as	$58	million	of	charges	to	write	down	the	value	of	fixed	assets	primarily	in	the	Diabetes	Care	unit.

(f) Represents	a	non-cash	charge	in	2017,	which	was	recorded	in	Other	operating	expense,	net	resulting	from	a	modification	to	our	dispensing	equipment	lease contracts	with	customers,	as	previously	discussed.

(g) The	amount	in	2017	largely	represents	the	reversal	of	certain	reserves	related	to	an	appellate	court	decision	recorded	related	to	RTI	in	Other	operating expense,	net.

(h) The	amount	in	2018	includes	additional	tax	expense,	net,	of	$640	million	relating	to	new	U.S.	tax	legislation,	as	discussed above.

# Gross	Profit	Margin

The	comparison	of	gross	profit	margins	in	2018	and	2017	and	the	comparison	of	gross	profit	margins	in	2017	and	2016	reflected	the	following	impacts:

|  | 2018 | 2017 |
| :--- | :--- | :--- |
| Gross\tprofit\tmargin\t%\tprior-year\tperiod | 49.1\t% | 48.0\t% |
| Impact\tof\tpurchase\taccounting\tadjustments,\tasset\twrite-downs\tand\tother\tspecified\titems | (6.9)% | —\t% |
| Impact\tof\tdivestitures | —\t% | 0.8\t% |
| Operating\tperformance | 2.8\t% | 0.7\t% |
| Foreign\tcurrency\ttranslation | 0.4\t% | (0.4)% |
| Gross\tprofit\tmargin\t%\tcurrent-year\tperiod | 45.4\t% | 49.1\t% |

Further	discussion	regarding	write-downs	of	certain	intangible	and	other	assets	in	the	Biosciences	unit	and	write-downs	of	fixed	assets	in	the	Diabetes	Care	unit	is provided	above.	The	operating	performance	impacts	in	2018	and	2017	reflected	lower	manufacturing	costs	resulting	from	the	continuous	operations	improvement projects	discussed	above.	Operating	performance	in	2018	also	reflected	the	favorable	impact	of	Bard	on	product	mix	and	the	unfavorable	impacts	of	higher	raw	material costs	and	pricing	pressures.	Gross	profit	margin	in	2017	was	favorably	impacted	by	businesses	divestitures,	primarily	the	divestiture	of	the	Respiratory	Solutions business	which	had	products	with	relatively	lower	gross	profit	margins.

# Operating	Expenses

| (Millions	of	dollars) | 2018 | 2017 | 2016 | 2018	vs.	2017 | 2017	vs.	2016 |
| :--- | :--- | :--- | :--- | :--- | :--- |
| Selling\tand\tadministrative\texpense | $4,015 | \t $2,925 | \t $3,005 |  |  |
| %\tof\trevenues | 25.1% | 24.2% | 24.1% | 90 | 10 |
| Research\tand\tdevelopment\texpense | $1,006 | \t $774 | \t $828 |  |  |
| %\tof\trevenues | 6.3% | 6.4% | 6.6% | (10) | (20) |
| Acquisitions\tand\tother\trestructurings | $744 | \t $354 | \t $728 |  |  |
| Other\toperating\texpense,\tnet | $— | \t $410 | \t $— |  |  |

# Selling	and	administrative

The	increase	in	selling	and	administrative	expense	as	a	percentage	of	revenues	in	2018	compared	with	2017	was	primarily	attributable	to	the	inclusion	of	Bard, which	had	a	higher	selling	and	administrative	spending	profile,	in	2018	results.	Selling	and	administrative	expense	as	a	percentage	of	revenues	in	2017	was	relatively	flat compared	with	2016.

Research	and	development	expense	as	a	percentage	of	revenues	in	2018	was	relatively	flat	compared	with	2017.	Spending	in	2018,	2017	and	2016	reflected	our continued	commitment	to	invest	in	new	products	and	platforms.	Spending	in	2018	also	included	certain	write-down	charges	in	the	Biosciences	unit,	as	further	discussed above.	Research	and	development	expense	as	a	percentage	of	revenues	was	slightly	lower	in	2017	compared	to	expense	in	2016,	which	reflected	increased	investment	in 2016	in	high	growth	opportunities.

# Acquisitions	and	other	restructurings

Costs	relating	to	acquisitions	and	other	restructurings	in	2018	included	restructuring	costs	incurred	due	to	our	acquisition	of	Bard,	and	to	a	lesser	extent, restructuring	costs	related	to	our	fiscal	year	2015	acquisition	of	CareFusion	and	other	portfolio	rationalization	initiatives.	Integration	costs	incurred	in	2018	were attributable	to	both	the	Bard	and	CareFusion	acquisitions.	Transaction	costs	were	incurred	in	2018	and	2017	primarily	due	to	our	acquisition	of	Bard.	Substantially	all	of the	integration	and	restructuring	costs	in	2017	and	2016	were	attributable	to	the	CareFusion	acquisition	and	other	portfolio	rationalization	initiatives.		Restructuring	costs in	2016	included	a	$214	million	charge	recorded	to	impair	capitalized	internal-use	software	assets	held	for	sale	as	a	result	of	information	technology	function transformation	efforts.	For	further	disclosures	regarding	the	costs	relating	to	acquisitions	and	other	restructurings,	refer	to	Notes	7,	9,	10	and	11	to	the	consolidated financial	statements	contained	in	Item	8.	Financial	Statements	and	Supplementary	Data.

# Other	operating	(income)	expense,	net

Other	operating	expense	in	2017	included	the	$748	million	non-cash	charge	resulting	from	the	modification	to	our	dispensing	equipment	lease	contracts	with customers.	Additional	disclosures	regarding	this	lease	contract	modification	are	provided	in	Note	17	to	the	consolidated	financial	statements	contained	in	Item	8. Financial	Statements	and	Supplementary	Data.	Other	operating	income	in	2017	included	a	$337	million	reversal	of	certain	reserves	related	to	an	appellate	court	decision which,	among	other	things,	reversed	an	unfavorable	antitrust	judgment	in	the	RTI	case.	Additional	disclosures	regarding	this	legal	matter	are	provided	in	Note	5	to	the consolidated	financial	statements	contained	in	Item	8.	Financial	Statements	and	Supplementary	Data.

# Net	Interest	Expense

| (Millions	of	dollars) | 2018 | 2017 | 2016 |
| :--- | :--- | :--- | :--- |
| Interest\texpense | $(706) | \t $(521) | \t $(388) |
| Interest\tincome | 65 | 76 | 21 |
| Net\tinterest\texpense | $(641) | \t $(445) | \t $(367) |

The	increase	in	interest	expense	in	2018	compared	with	2017	reflected	higher	levels	of	debt	for	the	full-year	period	due	to	our	issuances	of	senior	unsecured	U.S. notes	during	the	third	quarter	of	2017.	The	increase	in	interest	expense	in	2017	also	reflected	interest	costs	related	to	these	issuances	of	senior	unsecured	U.S.	notes,	as well	as	bridge	financing	commitment	fees	of	$79	million.	Additional	disclosures	regarding	our	financing	arrangements	and	debt	instruments	are	provided	in	Note	15	to the	consolidated	financial	statements	contained	in	Item	8.	Financial	Statements	and	Supplementary	Data.

The	decrease	in	interest	income	in	2018	reflected	lower	cash	levels	subsequent	to	the	closing	of	the	Bard	acquisition	in	the	first	quarter	of	2018.	The	increase	in interest	income	in	2017	compared	with	2016	primarily	reflected	higher	levels	of	cash	on	hand	as	a	result	of	our	third	quarter	issuances	of	debt	and	equity	securities	in advance	of	closing	our	acquisition	of	Bard.

# Income	Taxes

|  | 2018 | 2017 | 2016 |
| :--- | :--- | :--- | :--- |
| Effective\tincome\ttax\trate | 73.5% | (12.7)% | 9.1% |
| Impact,\tin\tbasis\tpoints,\tfrom\tspecified\titems | 5,680 | (2,790) | (1,090) |

The	increase	in	the	effective	income	tax	rate	in	2018	reflected	certain	effects	of	new	U.S.	tax	legislation	that	was	enacted	in	December	2017.	As	previously discussed	above,	we	recognized	additional	tax	expense	in	2018	of	$640	million	based	upon	our	determinations	regarding	the	effects	of	the	new	legislation.	The	effective income	tax	rate	in	2018	also	reflected	a	less	favorable	benefit	from	specified	items	in	the	current-year	period.	The	decrease	in	the	effective	income	tax	rate	in 2017	largely	reflected	the	more	favorable	tax	impact	from	specified	items	recognized	in	2017	compared	with	2016,	as	well	as	the	tax	benefits	recorded	upon	the settlement	of	share-based	compensation	awards	in	2017.	The	share-based	compensation-related	tax	benefits	were	recognized	in	connection	with	BD's	adoption	of	new accounting	requirements	relating	to	the	income	tax	effects	of	share-based	compensation	awards.	Additional	disclosures	regarding	this	adoption	are	provided	in	Note	2	to the	consolidated	financial	statements	contained	in	Item	8.	Financial	Statements	and	Supplementary	Data.

# Net	Income	and	Diluted	Earnings	per	Share

Net	Income	and	Diluted	Earnings	per	Share	in	2018,	2017	and	2016	were	as	follows:

|  | 2018 | 2017 | 2016 |
| :--- | :--- | :--- | :--- |
| Net\tincome\t(Millions\tof\tdollars) | $311 | $1,100 | $976 |
| Diluted\tEarnings\tper\tShare | $0.60 | $4.60 | $4.49 |
| Unfavorable\timpact-specified\titems | $(10.11) | $(4.34) | $(4.10) |
| Favorable\t(unfavorable)\timpact-foreign\tcurrency\ttranslation | $0.32 | $(0.23) | $(0.64) |
| Dilutive\timpact\tfrom\tshare\tissuances | $(0.30) | $(0.54) | $— |

The	dilutive	impacts	in	2018	and	2017	include	the	unfavorable	impact	of	BD	shares	issued	through	public	offerings	of	equity	securities	in	the	third	quarter	of	fiscal year	2017,	in	anticipation	of	the	Bard	acquisition.	The	dilutive	impact	in	2018	additionally	includes	the	unfavorable	impact	of	BD	shares	issued	as	consideration transferred	in	the	first	quarter	of	fiscal	year	2018	for	the	Bard	acquisition	as	is	further	discussed	in	Note	9	to	the	consolidated	financial	statements	contained	in	Item	8. Financial	Statements	and	Supplementary	Data.

# Financial	Instrument	Market	Risk

We	selectively	use	financial	instruments	to	manage	market	risk,	primarily	foreign	currency	exchange	risk	and	interest	rate	risk	relating	to	our	ongoing	business operations.	The	counterparties	to	these	contracts	are	highly	rated	financial	institutions.	We	do	not	enter	into	financial	instruments	for	trading	or	speculative	purposes.

# Foreign	Exchange	Risk

BD	and	its	subsidiaries	transact	business	in	various	foreign	currencies	throughout	Europe,	Greater	Asia,	Canada	and	Latin	America.	We	face	foreign	currency exposure	from	the	effect	of	fluctuating	exchange	rates	on	payables	and	receivables	relating	to	transactions	that	are	denominated	in	currencies	other	than	our	functional currency.	These	payables	and	receivables	primarily	arise	from	intercompany	transactions.	We	hedge	substantially	all	such	exposures,	primarily	through	the	use	of forward	contracts.	We	also	face	currency	exposure	that	arises	from	translating	the	results	of	our	worldwide	operations,	including	sales,	to	the	U.S.	dollar	at	exchange rates	that	have	fluctuated	from	the	beginning	of	a	reporting	period.	From	time	to	time,	we	may	purchase	forward	contracts	and	options	to	hedge	certain	forecasted transactions	that	are	denominated	in	foreign	currencies	in	order	to	partially	protect	against	a	reduction	in	the	value	of	future	earnings	resulting	from	adverse

foreign	exchange	rate	movements.	Gains	or	losses	on	derivative	instruments	are	largely	offset	by	the	gains	or	losses	on	the	underlying	hedged	transactions.	We	did	not enter	into	contracts	to	hedge	cash	flows	against	foreign	currency	fluctuations	in	fiscal	year	2018	or	2017.

Derivative	financial	instruments	are	recorded	on	our	balance	sheet	at	fair	value.	For	foreign	currency	derivatives,	market	risk	is	determined	by	calculating	the impact	on	fair	value	of	an	assumed	change	in	foreign	exchange	rates	relative	to	the	U.S.	dollar.	Fair	values	were	estimated	based	upon	observable	inputs,	specifically spot	currency	rates	and	foreign	currency	prices	for	similar	assets	and	liabilities.

With	respect	to	the	foreign	currency	derivative	instruments	outstanding	at	September	30,	2018	and	2017,	the	impact	that	changes	in	the	U.S.	dollar	would	have	on pre-tax	earnings	was	estimated	as	follows:

| (Millions	of	dollars) | 2018 | 2017 |
| :--- | :--- | :--- |
| 10%\tappreciation\tin\tU.S.\tdollar | $(59) | $(38) |
| 10%\tdepreciation\tin\tU.S.\tdollar | $59 | $38 |

These	calculations	do	not	reflect	the	impact	of	exchange	gains	or	losses	on	the	underlying	transactions	that	would	substantially	offset	the	results	of	the	derivative instruments.

# Interest	Rate	Risk

Our	primary	interest	rate	risk	relates	to	U.S.	dollar	borrowings	which	are	partially	offset	by	U.S.	dollar	cash	investments.	When	managing	interest	rate	exposures, we	strive	to	achieve	an	appropriate	balance	between	fixed	and	floating	rate	instruments.	We	may	enter	into	interest	rate	swaps	to	help	maintain	this	balance	and	manage debt	and	interest-bearing	investments	in	tandem,	since	these	items	have	an	offsetting	impact	on	interest	rate	exposure.	For	interest	rate	derivative	instruments,	fair	values are	measured	based	upon	the	present	value	of	expected	future	cash	flows	using	market-based	observable	inputs	including	credit	risk	and	interest	rate	yield curves.	Market	risk	for	these	instruments	is	determined	by	calculating	the	impact	to	fair	value	of	an	assumed	change	in	interest	rates	across	all	maturities.

The	impact	that	changes	in	interest	rates	would	have	on	interest	rate	derivatives	outstanding	at	September	30,	2018	and	2017,	as	well	as	the	effect	that	changes	in interest	rates	would	have	on	our	earnings	or	cash	flows	over	a	one-year	period,	based	upon	our	overall	interest	rate	exposure,	were	estimated	as	follows:

# Net	Cash	Flows	from	Operating	Activities

The	fiscal	year	2018,	2017	and	2016	changes	in	net	cash	provided	by	operating	activities	was	primarily	attributable	to	net	income,	as	adjusted	for	depreciation	and amortization	and	other	non-cash	items.	The	fiscal	year	2018	change	in	operating	assets	and	liabilities	was	a	net	source	of	cash	and	primarily	reflected	higher	levels	of accounts	payable	and	accrued	expenses,	primarily	due	to	higher	income	taxes	payable	as	a	result	of	the

new	U.S.	tax	legislation	discussed	above,	as	well	as	lower	levels	of	inventory,	partially	offset	by	higher	levels	of	trade	receivables.	The	change	in	cash	flows	from operating	activities	in	2018	also	reflected	a	change	to	deferred	tax	asset	and	liability	balances	which	were	remeasured	under	the	recently	enacted	tax	legislation,	which	is further	discussed	in	Note	16	to	the	consolidated	financial	statements	contained	in	Item	8.	Financial	Statements	and	Supplementary	Data.	The	change	in	cash	flows	from operating	activities	in	2018	additionally	reflected	a	$303	million	gain	on	the	sale	of	our	remaining	interest	in	the	Vyaire	Medical	venture,	as	well	as	discretionary	cash contributions	of	$287	million	to	fund	our	pension	obligation.	The	fiscal	year	2017	change	in	operating	assets	and	liabilities	was	a	net	use	of	cash	and	primarily	reflected higher	levels	of	prepaid	expenses,	trade	receivables	and	inventory,	partially	offset	by	higher	levels	of	accounts	payable	and	accrued	expenses.	Net	cash	provided	by operating	activities	in	2017	reflected	an	adjustment	for	the	non-cash	charge	resulting	from	the	modification	to	our	dispensing	equipment	lease	contracts	with	customers, as	previously	discussed.	As	noted	above,	both	2018	and	2017	reflected	losses	recorded	upon	our	extinguishment	of	certain	long-term	notes	which	are	included within	Other,	net.	The	previously	discussed	non-cash	charge	recorded	to	impair	capitalized	internal-use	software	assets	held	for	sale	is	included	within	Other,	net	in 2016.	Net	cash	provided	by	operating	activities	in	2016	was	reduced	by	changes	in	the	pension	obligation	resulting	primarily	from	a	discretionary	cash	contribution	of $100	million.

# Net	Cash	Flows	from	Investing	Activities

# Capital	expenditures

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.	Capital	expenditures	of	$895	million,	$727	million,	$693	million	in	2018,	2017	and	2016, respectively,	primarily	related	to	manufacturing	capacity	expansions.	Details	of	spending	by	segment	are	contained	in	Note	6	to	the	consolidated	financial	statements contained	in	Item	8.	Financial	Statements	and	Supplementary	Data.

# Acquisitions	of	Businesses

Cash	outflows	for	acquisitions	in	2018	primarily	related	to	our	acquisition	of	Bard.	Cash	outflows	for	acquisitions	in	2017	included	payments	for	acquisitions which	were	immaterial	both	individually	and	in	the	aggregate.	For	further	discussion,	refer	to	Note	9	to	the	consolidated	financial	statements	contained	in	Item	8. Financial	Statements	and	Supplementary	Data.

# Divestitures	of	Businesses

Cash	inflows	relating	to	business	divestitures	in	2018	and	2017	were	$534	million	and	$165	million,	respectively.	For	further	discussion,	refer	to	Note	10	to	the consolidated	financial	statements	contained	in	Item	8.	Financial	Statements	and	Supplementary	Data.	Net	cash	flows	from	investing	activities	in	2016	included	$158 million	of	proceeds	from	the	sales	of	non-core	assets.

# Net	Cash	Flows	from	Financing	Activities

Net	cash	from	financing	activities	in	2018,	2017	and	2016	included	the	following	significant	cash	flows:

| (Millions	of	dollars) | 2018 | 2017 | 2016 |
| :--- | :--- | :--- | :--- |
| Cash\tinflow\t(outflow) |  |  |  |
| Change\tin\tcredit\tfacility\tborrowings | $— | $(200) | $(500) |
| Proceeds\tfrom\tdebt\tand\tterm\tloans | $5,086 | $11,462 | $— |
| Payments\tof\tdebt\tand\tterm\tloans | $(3,996) | $(3,980) | $(752) |
| Proceeds\tfrom\tissuances\tof\tequity\tsecurities | $— | $4,827 | $— |
| Share\trepurchases\tunder\taccelerated\tshare\trepurchase\tagreement | $— | $(220) | $— |
| Dividends\tpaid | $(927) | $(677) | $(562) |

Additional	disclosures	regarding	the	equity	and	debt-related	financing	activities	detailed	above	are	provided	in	Notes	3	and	15	to	the	consolidated	financial statements	contained	in	Item	8.	Financial	Statements	and	Supplementary	Data.

# Debt-Related	Activities

Certain	measures	relating	to	our	total	debt	were	as	follows:

|  | 2018 | 2017 | 2016 |
| :--- | :--- | :--- | :--- |
| Total\tdebt\t(Millions\tof\tdollars) | $21,496 | $18,870 | $11,551 |
| Short-term\tdebt\tas\ta\tpercentage\tof\ttotal\tdebt | 12.1% | 1.1% | 8.7% |
| Weighted\taverage\tcost\tof\ttotal\tdebt | 3.2% | 3.3% | 3.6% |
| Total\tdebt\tas\ta\tpercentage\tof\ttotal\tcapital\t(a) | 47.8% | 57.5% | 57.2% |

(a) 	Represents	shareholders'	equity,	net	non-current	deferred	income	tax	liabilities,	and

debt.

The	increase	in	short-term	debt	as	a	percentage	of	total	debt	at	September	30,	2018	was	primarily	driven	by	the	reclassification	of	certain	notes	from	long-term	to short-term.	The	decrease	in	short-term	debt	as	a	percentage	of	total	debt	at	September	30,	2017	was	largely	driven	by	our	issuance	of	$9.675	billion	of	senior	unsecured U.S.	notes	during	the	third	quarter	of	fiscal	year	2017.	Additional	disclosures	regarding	our	debt	instruments	are	provided	in	Note	15	to	the	consolidated	financial statements	contained	in	Item	8.	Financial	Statements	and	Supplementary	Data.

# Cash	and	Short-term	Investments

At	September	30,	2018,	total	worldwide	cash	and	short-term	investments	were	$1.253	billion,	including	restricted	cash,	which	was	primarily	held	in	jurisdictions outside	of	the	United	States.

# Financing	Facilities

In	May	2017,	we	entered	into	a	three-year	$2.25	billion	senior	unsecured	term	loan	facility.	We	used	the	$2.25	billion	of	proceeds	drawn	from	this	facility	in December	2017	to	fund	a	portion	of	the	cash	consideration	for	the	Bard	acquisition,	as	well	as	the	fees	and	expenses	incurred	in	connection	with	the	acquisition.	In September	2018,	we	entered	into	a	364-day	$750	million	senior	unsecured	term	loan	facility.	We	used	$230	million	of	proceeds	drawn	from	this	facility	in	September 2018	to	repay	all	borrowings	outstanding	under	the	three-year	term	loan	facility	discussed	above.	Borrowings	outstanding	under	the	new,	364-day	term	loan	facility were	$710	million	at	September	30,	2018.

Also	in	May	2017,	we	entered	into	a	five-year	senior	unsecured	revolving	credit	facility	which	became	effective	upon	the	closing	of	the	Bard	acquisition	and which	provides	borrowing	of	up	to	$2.25	billion.	This	facility	will	expire	in	December	2022	and	replaced	the	$1.5	billion	syndicated	credit	facility	we	previously	had	in place	with	an	expiration	date	of	January	2022.	We	will	be	able	to	issue	up	to	$100	million	in	letters	of	credit	under	this	new	revolving	credit	facility	and	it	also	includes	a provision	that	enables	BD,	subject	to	additional	commitments	made	by	the	lenders,	to	access	up	to	an	additional	$500	million	in	financing	through	the	facility	for	a maximum	aggregate	commitment	of	$2.75	billion.	We	used	proceeds	from	this	facility	to	redeem	or	repurchase	certain	of	Bard's	outstanding	senior	unsecured	notes	that were	assumed	upon	the	closing	of	the	acquisition	and	we	will	also	use	proceeds	from	this	facility	to	fund	general	corporate	needs.	There	were	no	borrowings	outstanding under	the	revolving	credit	facility	at	September	30,	2018.

The	agreements	for	both	the	new	364-day	term	loan	and	revolving	credit	facility	contained	the	following	financial	covenants.	We	were	in	compliance	with	these covenants	as	of	September	30,	2018.

•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,	as	applicable	depending	upon	commencement	and	maturity	of	the	facility,	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;

We	also	have	informal	lines	of	credit	outside	the	United	States.	The	Company	had	no	commercial	paper	borrowings	outstanding	as	of	September	30,	2018.	We may,	from	time	to	time,	sell	certain	trade	receivable	assets	to	third	parties	as	we	manage	working	capital	over	the	normal	course	of	our	business	activities.

# Access	to	Capital	and	Credit	Ratings

Our	corporate	credit	ratings	with	the	rating	agencies	Standard	&	Poor's	Ratings	Services	("S&P"),	Moody's	Investor	Service	(Moody's)	and	Fitch	Ratings	("Fitch") were	as	follows	at	September	30,	2018:

Upon	our	closing	the	Bard	acquisition	in	the	first	quarter	of	fiscal	year	2018,	S&P	lowered	our	corporate	credit	rating	from	the	previous	rating	of	BBB+.	Also upon	the	acquisition's	closing,	Moody's	downgraded	our	corporate	credit	and	commercial	paper	ratings	from	the	previous	ratings	of	Baa2	and	P-2,	respectively.	The rating	assigned	to	our	corporate	debt	by	Fitch	was	unchanged	by	the	closing	of	the	acquisition.

Lower	corporate	debt	ratings	and	further	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.

# Contractual	Obligations

In	the	normal	course	of	business,	we	enter	into	contracts	and	commitments	that	obligate	us	to	make	payments	in	the	future.	The	table	below	sets	forth	BD's significant	contractual	obligations	and	related	scheduled	payments	as	of	September	30,	2018:

|  | Total | 2019 | 2020	to<br>2021 | 2022	to<br>2023 | 2024	and<br>Thereafter |
| :--- | :--- | :--- | :--- | :--- | :--- |
|  |  |  | (Millions\tof\tdollars) |  |  |
| Short-term\tdebt | $2,644 | $2,644 | $— | $— | $— |
| Long-term\tdebt\t(a) | 26,163 | 677 | 5,075 | 5,478 | 14,933 |
| Operating\tleases | 511 | 107 | 171 | 110 | 124 |
| Purchase\tobligations\t(b) | 1,046 | 863 | 155 | 28 | — |
| Unrecognized\ttax\tbenefits\t(c) | — | — | — | — | — |
| Total\t(d) | $30,365 | $4,291 | $5,401 | $5,617 | $15,057 |

(a) Long-term	debt	obligations	include	expected	principal	and	interest obligations.

(b) Purchase	obligations	are	for	purchases	made	in	the	normal	course	of	business	to	meet	operational	and	capital requirements.

(c) Unrecognized	tax	benefits	at	September	30,	2018	of	$543	million	were	all	long-term	in	nature.	Due	to	the	uncertainty	related	to	the	timing	of	the	reversal	of these	tax	positions,	the	related	liability	has	been	excluded	from	the	table.

(d) Required	funding	obligations	for	2019	relating	to	pension	and	other	postretirement	benefit	plans	are	not	expected	to	be material.

# Critical	Accounting	Policies

The	following	discussion	supplements	the	descriptions	of	our	accounting	policies	contained	in	Note	1	to	the	consolidated	financial	statements	contained	in	Item	8. Financial	Statements	and	Supplementary	Data.	The	preparation	of	the	consolidated	financial	statements	requires	management	to	use	estimates	and	assumptions	that affect	the	reported	amounts	of	assets,	liabilities,	revenues	and	expenses,	as	well	as	the	disclosure	of	contingent	assets	and	liabilities	at	the	date	of	the	consolidated financial	statements.	Some	of	those	judgments	can	be	subjective	and	complex	and,	consequently,	actual	results	could	differ	from	those	estimates.	Management	bases	its estimates	and	judgments	on	historical	experience	and	on	various	other	factors	that	are	believed	to	be	reasonable	under	the	circumstances,	the	results	of	which	form	the basis	for	making	judgments	about	the	carrying	values	of	assets	and	liabilities	that	are	not	readily	apparent	from	other	sources.	For	any	given	estimate	or	assumption made	by	management,	it	is	possible	that	other	people	applying	reasonable	judgment	to	the	same	facts	and	circumstances	could	develop	different	estimates.	Actual	results that	differ	from	management's	estimates	could	have	an	unfavorable	effect	on	our	consolidated	financial	statements.	Management	believes	the	following	critical accounting	policies	reflect	the	more	significant	judgments	and	estimates	used	in	the	preparation	of	the	consolidated	financial	statements:

# Revenue	Recognition

While	our	revenue	is	generally	the	result	of	product	sales,	some	of	our	sales	transactions	qualify	as	multiple-element	arrangements	which	require	us	to	identify separate	units	of	accounting	within	the	arrangement	and	allocate	the	transaction	consideration	across	these	separate	accounting	units.	For	arrangements	that	include software	and	non-software	elements,	the	transaction	consideration	is	allocated	to	the	software	elements	as	a	group	as	well	as	to	the	individual	non-software	elements	that have	been	separately	identified.	The	identification	of	accounting	units	and	the	allocation	of	total	transaction	consideration	for	multiple-element	arrangements	may	be subjective	and	requires	a	degree	of	management	judgment.	Management's	judgments	relative	to	multiple-element	arrangements	may	affect	the	timing	of	revenue recognition.

Transaction	consideration	for	separately	identified	non-software	units	of	accounting	within	an	arrangement	is	recognized	upon	the	completion	of	each	deliverable based	on	its	relative	selling	price.	When	applying	the	relative	selling	price	method,	the	selling	price	of	each	deliverable	is	determined	based	upon	the	following	hierarchy of	evidence:	vendor-specific	objective	evidence,	which	is	generally	based	upon	historical	prices	in	stand-alone	transactions;	third-party	evidence,	which	is	generally based	on	market	data	on	sales	of	similar	products	and	services,	if	available;	and	management's	best	estimate	of	selling	price.	Management's	best	estimate	of	selling	price is	generally	based	upon	the	following	considerations:	stand-alone	sales	prices,	established	price	lists,	costs	to	produce,	profit	margins	for	similar	products,	market conditions,	and	customer	stratification.

The	revenue	allocated	to	equipment	or	instruments	in	multiple-element	arrangements	is	recognized	upon	transfer	of	title	and	risk	of	loss	to	the	customer.	The revenue	allocated	to	extended	warranty	contracts	and	software	maintenance	contracts	is	deferred	and	recognized	as	these	deliverables	are	performed	under	the arrangement.	The	majority	of	deferred	revenue	relating	to	extended	warranty	contracts	is	generally	recognized	within	a	few	years	whereas	deferred	revenue	relating	to software	maintenance	contracts	is	generally	recognized	over	a	longer	period.

# Accounting	for	Sales-Type	Leases

In	April	2017,	in	conjunction	with	the	implementation	of	a	new	go-to-market	business	model	for	our	dispensing	business	within	our	Medication	Management Solutions	unit,	we	amended	new	and	existing	leases	to	provide	a	limited	return	option.	Prior	to	the	amendment	these	leases	were	accounted	for	as	sales-type	leases	in accordance	with	Accounting	Standards	Codification	840,	Leases,	as	the	typical	non-cancellable	lease	term	of	5	years	exceeded	75%	of	the	equipment's	estimated	useful life	and	the	present	value	of	the	minimum	lease	payments	exceeded	90%	of	the	equipment's	fair	value.	As	sales-type	leases,	we	recognized	revenue	upon	installation	of equipment	at	a	customer	site	based	on	the	present	value	of	the	minimum	lease	payments.	As	a	result	of	the	contract	amendment,	the	amended	lease	term	was	shortened and	as	a	result,	the	majority	of	leases	no	longer	met	the	criteria	for	recognition	as	sales-type	leases.	Accordingly,	the	leases	were	classified	as	operating	leases	as	of	the modification	date	and	revenue	is	generally	recognized	ratably	over	the	lease	term.

# Accounting	for	Software	Products

We	sell	and	lease	products	with	embedded	software	and	as	such,	we	must	evaluate	these	products	to	determine	if	industry-specific	revenue	recognition requirements	apply	to	these	sales	transactions.	This	evaluation	process	is	often	complex	and	subject	to	significant	judgment.	If	software	is	considered	not	essential	to	the non-software	elements	of	a	product	but	is	considered	more	than	incidental	to	a	product	as	a	whole,	the	product's	software	elements	must	be	separated	from	its	non- software	elements	under	the	requirements	relating	to	multiple-element	arrangements.	The	product's	software	elements	must	be	accounted	for	under	software	industry- specific	revenue	recognition	requirements	and	the	application	of	these	requirements	may	significantly	affect	the	timing	and	amount	of	revenue	recognized.

While	we	have	determined	that	the	software	embedded	in	the	following	product	groupings	is	more	than	incidental	to	the	products	as	a	whole,	the	non-software elements	(i.e.,	hardware)	and	software	elements	work	together	to	deliver	the	essential	functionality	of	these	products	as	a	whole.	As	such,	the	accounting	for	these product	offerings	does	not	fall	within	the	scope	of	software	industry-specific	accounting	requirements:

•Infusion	products	(when	sold	with	safety	software,	patient	identification	products	and	certain	diagnostic	equipment)	within	our	Medication	Management Solutions	unit;

•Dispensing	products	within	our	Medication	Management	Solutions

unit;

•Research	and	clinical	instruments	within	our	Biosciences

Our	standalone	software	application	sales	and	any	related	post-contract	support	related	to	these	sales	are	accounted	for	under	the	software	industry-specific	revenue recognition	requirements.

# Impairment	of	Assets

Goodwill	and	in-process	research	and	development	assets	are	subject	to	impairment	reviews	at	least	annually,	or	whenever	indicators	of	impairment	arise.

Intangible	assets	with	finite	lives,	including	developed	technology,	and	other	long-lived	assets,	are	periodically	reviewed	for	impairment	when	impairment	indicators	are present.

We	assess	goodwill	for	impairment	at	the	reporting	unit	level,	which	is	defined	as	an	operating	segment	or

one	level	below	an	operating	segment,	referred	to	as	a	component.	Our	reporting	units	generally	represent	one

level	below	reporting	segments.	Potential	impairment	of	goodwill	is	generally	identified	by	comparing	the	fair	value	of	a	reporting	unit	with	its	carrying	value.	Our annual	goodwill	impairment	test	performed	on	July	1,	2018	did	not	result	in	any	impairment	charges,	as	the	fair	value	of	each	reporting	unit	exceeded	its	carrying	value.

We	generally	use	the	income	approach	to	derive	the	fair	value	for	impairment	assessments.	This	approach	calculates	fair	value	by	estimating	future	cash	flows attributable	to	the	assets	and	then	discounting	these	cash	flows	to	a	present	value	using	a	risk-adjusted	discount	rate.	We	selected	this	method	because	we	believe	the income	approach	most	appropriately	measures	our	income	producing	assets.	This	approach	requires	significant	management	judgment	with	respect	to	future	volume, revenue	and	expense	growth	rates,	changes	in	working	capital	use,	appropriate	discount	rates	and	other	assumptions	and	estimates.	The	estimates	and	assumptions	used are	consistent	with	BD's	business	plans.	The	use	of	alternative	estimates	and	assumptions	could	increase	or	decrease	the	estimated	fair	value	of	the	asset,	and	potentially result	in	different	impacts	to	BD's	results	of	operations.	Actual	results	may	differ	from	management's	estimates.

BD	maintains	valuation	allowances	where	it	is	more	likely	than	not	that	all	or	a	portion	of	a	deferred	tax	asset	will	not	be	realized.	Changes	in	valuation allowances	are	included	in	our	tax	provision	in	the	period	of	change.	In	determining	whether	a	valuation	allowance	is	warranted,	management	evaluates	factors	such	as prior	earnings	history,	expected	future	earnings,	carry	back	and	carry	forward	periods,	and	tax	strategies	that	could	potentially	enhance	the	likelihood	of	realization	of	a deferred	tax	asset.

BD	conducts	business	and	files	tax	returns	in	numerous	countries	and	currently	has	tax	audits	in	progress	in	a	number	of	tax	jurisdictions.	In	evaluating	the exposure	associated	with	various	tax	filing	positions,	we	record	accruals	for	uncertain	tax	positions	based	on	the	technical	support	for	the	positions,	our	past	audit experience	with	similar	situations,	and	the	potential	interest	and	penalties	related	to	the	matters.	BD's	effective	tax	rate	in	any	given	period	could	be	impacted	if,	upon resolution	with	taxing	authorities,	we	prevailed	in	positions	for	which	reserves	have	been	established,	or	we	were	required	to	pay	amounts	in	excess	of	established reserves.

The	U.S.	Tax	Cuts	and	Job	Act	(the	"Act")	was	enacted	into	law	on	December	22,	2017.	This	law	reduces	the	U.S.	statutory	corporate	tax	rate	from	35%	to	21%; requires	companies	to	pay	a	one-time	transition	tax	on	earnings	of	certain	foreign	subsidiaries	that	were	previously	tax	deferred;	and	creates	new	taxes	on	certain foreign-sourced	earnings.	BD	has	a	measurement	period	of	up	to	one	year	after	the	enactment	date	of	the	Act	to	finalize	the	recognition	of	the	related	tax	impacts.	The final	impact	of	the	Act	may	differ	from	the	provisional	amounts	recognized	in	fiscal	year	2018,	possibly	materially,	due	to,	among	other	things,	developing interpretations	of	the	Act	or	any	updates	or	changes	to	estimates	we	have	utilized	to	calculate	the	impacts.

We	have	historically	asserted	indefinite	reinvestment	of	the	earnings	of	certain	non-U.S.	subsidiaries	outside	the	United	States.	The	Act	eliminated	certain material	tax	effects	on	the	repatriation	of	cash	to	the	United	States.	Future	repatriation	of	cash	and	other	property	held	by	our	foreign	subsidiaries	will	generally	not	be subject	to	U.S.	federal	income	tax.	As	a	result,	after	reevaluation	of	the	permanent	reinvestment	assertion,	we	are	no	longer	permanently	reinvested	with	respect	to	its historic	unremitted	foreign	earnings	as	of	September	30,	2018.	Additional	disclosures	regarding	our	accounting	for	income	taxes	are	provided	in	Note	16	to	the consolidated	financial	statements	contained	in	Item	8.	Financial	Statements	and	Supplementary	Data.

# Contingencies

We	are	involved,	both	as	a	plaintiff	and	a	defendant,	in	various	legal	proceedings	that	arise	in	the	ordinary	course	of	business,	including,	without	limitation, product	liability,	antitrust	and	environmental	matters,	as	further	discussed	in	Note	5	to	the	consolidated	financial	statements	contained	in	Item	8.	Financial	Statements and	Supplementary	Data.	We	assess	the	likelihood	of	any	adverse	judgments	or	outcomes	to	these	matters	as	well	as	potential	ranges	of	probable	losses.	We	establish accruals	to	the	extent	probable	future	losses	are	estimable	(in	the	case	of	environmental	matters,	without	considering	possible	third-party	recoveries).	A	determination	of the	amount	of	accruals,	if	any,	for	these	contingencies	is	made	after	careful	analysis	of	each	individual	issue	and,	when	appropriate,	is	developed	after	consultation	with outside	counsel.	The	accruals	may	change	in	the	future	due	to	new	developments	in	each	matter	or	changes	in	our	strategy	in	dealing	with	these	matters.	We	record expected	recoveries	from	product	liability	insurance	carriers	or	other	parties	when	those	recoveries	are	probable	and	collectible.

Given	the	uncertain	nature	of	litigation	generally,	we	are	not	able	in	all	cases	to	estimate	the	amount	or	range	of	loss	that	could	result	from	an	unfavorable outcome	of	the	litigation	to	which	we	are	a	party.	In	view	of	these	uncertainties,	we	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	BD's consolidated	results	of	operations	and	consolidated	net	cash	flows.

# Benefit	Plans

We	have	significant	net	pension	and	other	postretirement	and	postemployment	benefit	costs	that	are	measured	using	actuarial	valuations.	These	benefit	costs include	assumptions	for	the	discount	rate.	Pension	benefit	costs	also	include	an	assumption	for	the	expected	return	on	plan	assets.	These	assumptions	have	a	significant effect	on	the	amounts	reported.	In	addition	to	the	analysis	below,	see	Note	8	to	the	consolidated	financial	statements	contained	in	Item	8.	Financial	Statements	and Supplementary	Data	for	additional	discussion.

The	discount	rate	is	selected	each	year	based	on	investment	grade	bonds	and	other	factors	as	of	the	measurement	date	(September	30).	Specifically	for	the	U.S. pension	plan,	we	will	use	a	discount	rate	of	4.26%	for	2019,	which	was	based	on	an	actuarially-determined,	company-specific	yield	curve	to	measure	liabilities	as	of	the measurement	date.	To	calculate	the	pension	expense	in	2019,	we	will	apply	the	individual	spot	rates	along	the	yield	curve	that	correspond	with	the	timing	of	each	future cash	outflow	for	benefit	payments	in	order	to	calculate	interest	cost	and	service	cost.	Additional	disclosures	regarding	the	method	to	be	used	in	calculating	the	interest cost	and	service	cost	components	of	pension	expense	for	2019	are	provided	in	Note	8	to	the	consolidated	financial	statements	contained	in	Item	8.	Financial	Statements and	Supplementary	Data.	The	expected	long-term	rate	of	return	on	plan	assets	assumption,	although	reviewed	each	year,	changes	less	frequently	due	to	the	long-term nature	of	the	assumption.	This	assumption	does	not	impact	the	measurement	of	assets	or	liabilities	as	of	the	measurement	date;	rather,	it	is	used	only	in	the	calculation	of pension	expense.	To	determine	the	expected	long-term	rate	of	return	on	pension	plan	assets,	we	consider	many	factors,	including	our	historical	assumptions	compared with	actual	results;	benchmark	data;	expected	returns	on	various	plan	asset	classes,	as	well	as	current	and	expected	asset	allocations.	We	will	use	a	long-term	expected rate	of	return	on

plan	assets	assumption	of	7.25%	for	the	U.S.	pension	plan	in	2019.	We	believe	our	discount	rate	and	expected	long-term	rate	of	return	on	plan	assets	assumptions	are appropriate	based	upon	the	above	factors.

Sensitivity	to	changes	in	key	assumptions	for	our	U.S.	pension	and	other	postretirement	and	postemployment	plans	are	as	follows:

•Discount	rate	—	A	change	of	plus	(minus)	25	basis	points,	with	other	assumptions	held	constant,	would	have	an	estimated	$6	million	favorable	(unfavorable) impact	on	the	total	U.S.	net	pension	and	other	postretirement	and	postemployment	benefit	plan	costs.	This	estimate	assumes	no	change	in	the	shape	or	steepness of	the	company-specific	yield	curve	used	to	plot	the	individual	spot	rates	that	will	be	applied	to	the	future	cash	outflows	for	future	benefit	payments	in	order	to calculate	interest	and	service	cost.

•Expected	return	on	plan	assets	—	A	change	of	plus	(minus)	25	basis	points,	with	other	assumptions	held	constant,	would	have	an	estimated	$5	million	favorable (unfavorable)	impact	on	U.S.	pension	plan	costs.

# Share-Based	Compensation

Compensation	cost	relating	to	share-based	payment	transactions	is	recognized	in	net	income	using	a	fair	value	measurement	method.	All	share-based	payments	to employees,	including	grants	of	employee	stock	options,	are	recognized	in	the	statement	of	operations	as	compensation	expense	(based	on	their	fair	values)	over	the vesting	period	of	the	awards.	We	determine	the	fair	value	of	certain	share-based	awards	using	a	lattice-based	binomial	option	valuation	model	that	incorporates	certain assumptions,	such	as	the	risk-free	interest	rate,	expected	volatility,	expected	dividend	yield	and	expected	life	of	the	options.	See	Note	7	to	the	consolidated	financial statements	contained	in	Item	8.	Financial	Statements	and	Supplementary	Data	for	additional	discussion.

# Cautionary	Statement	Regarding	Forward-Looking	Statements

BD	and	its	representatives	may	from	time	to	time	make	certain	forward-looking	statements	in	publicly	released	materials,	both	written	and	oral,	including statements	contained	in	filings	with	the	Securities	and	Exchange	Commission,	press	releases,	and	our	reports	to	shareholders.	Forward-looking	statements	may	be identified	by	the	use	of	words	such	as	"plan,"	"expect,"	"believe,"	"intend,"	"will,",	"may",	"anticipate,"	"estimate"	and	other	words	of	similar	meaning	in	conjunction with,	among	other	things,	discussions	of	future	operations	and	financial	performance	(including	volume	growth,	sales	and	earnings	per	share	growth,	and	cash	flows)	and statements	regarding	our	strategy	for	growth,	future	product	development,	regulatory	approvals,	competitive	position	and	expenditures.	All	statements	that	address	our future	operating	performance	or	events	or	developments	that	we	expect	or	anticipate	will	occur	in	the	future	are	forward-looking	statements.

Forward-looking	statements	are,	and	will	be,	based	on	management's	then-current	views	and	assumptions	regarding	future	events,	developments	and	operating performance,	and	speak	only	as	of	their	dates.	Investors	should	realize	that	if	underlying	assumptions	prove	inaccurate,	or	risks	or	uncertainties	materialize,	actual	results could	vary	materially	from	our	expectations	and	projections.	Investors	are	therefore	cautioned	not	to	place	undue	reliance	on	any	forward-looking	statements. Furthermore,	we	undertake	no	obligation	to	update	or	revise	any	forward-looking	statements	after	the	date	they	are	made,	whether	as	a	result	of	new	information,	future events	and	developments	or	otherwise,	except	as	required	by	applicable	law	or	regulations.

The	following	are	some	important	factors	that	could	cause	our	actual	results	to	differ	from	our	expectations	in	any	forward-looking	statements.	For	further discussion	of	certain	of	these	factors,	see	Item	1A.	Risk	Factors	in	this	report.

•Weakness	in	the	global	economy	and	financial	markets,	which	could	increase	the	cost	of	operating	our	business,	weaken	demand	for	our	products	and	services, negatively	impact	the	prices	we	can	charge	for	our	products	and	services,	or	impair	our	ability	to	produce	our	products.

•Competitive	factors	that	could	adversely	affect	our	operations,	including	new	product	introductions	and	technologies	(for	example,	new	forms	of	drug	delivery) by	our	current	or	future	competitors,	consolidation	or	strategic	alliances	among	healthcare	companies,	distributors	and/or	payers	of	healthcare	to	improve	their competitive	position	or	develop	new	models	for	the	delivery	of	healthcare,	increased	pricing	pressure	due	to	the	impact	of	low-cost	manufacturers,	patents attained	by	competitors	(particularly	as	patents	on	our	products	expire),	and	new	entrants	into	our	markets.

•Risks	relating	to	our	acquisition	of	Bard,	including	our	ability	to	successfully	combine	and	integrate	the	Bard	operations	in	order	to	obtain	the	anticipated benefits	and	costs	savings	from	the	transaction,	and	the	significant	additional	indebtedness	we	incurred	in	connection	with	the	financing	of	the	acquisition	and	the impact	this	increased	indebtedness	may	have	on	our	ability	to	operate	the	combined	company.

•The	impact	resulting	from	the	recent	U.S.	tax	reform,	commonly	referred	to	as	the	Tax	Cuts	and	Job	Act	(the	"Act"),	which,	among	other	things,	reduces	the	U.S. federal	corporate	tax	rate,	imposes	a	one-time	tax	on	earnings	of	certain	foreign	subsidiaries	that	were	previously	tax	deferred,	and	imposes	a	new	minimum	tax on	foreign	earnings.	While	BD	has	previously	recognized	a	provisional	expense	based	on	what	it	believes	is	a	reasonable	estimate	of	the	income	tax	effects	of the	Act,	this	expense	could	change	as	BD	refines	its	analysis.

•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	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.

•The	impact	of	the	medical	device	excise	tax	under	the	Patient	Protection	and	Affordable	Care	Act	in	the	United	States.	While	this	tax	has	been	suspended through	December	31,	2019,	it	is	uncertain	whether	the	suspension	will	be	extended	beyond	that	date.

•Healthcare	reform	in	the	U.S.	or	in	other	countries	in	which	we	do	business	that	may	involve	changes	in	government	pricing	and	reimbursement	policies	or	other cost	containment	reforms.

•Changes	in	the	domestic	and	foreign	healthcare	industry	or	in	medical	practices	that	result	in	a	reduction	in	procedures	using	our	products	or	increased	pricing pressures,	including	the	continued	consolidation	among	healthcare	providers	and	trends	toward	managed	care	and	healthcare	cost	containment.

•The	impact	of	changes	in	U.S.	federal	laws	and	policy	that	could	affect	fiscal	and	tax	policies,	healthcare,	and	international	trade,	including	import	and	export regulation	and	international	trade	agreements.	Recently,	the	U.S.,	China	and	other	countries	have	imposed	tariffs	on	certain	products	imported	into	their respective	countries.	Additional	tariffs	or	other	trade	barriers	imposed	by	the	U.S.,	China	or	other	countries	could	adversely	impact	our	supply	chain	costs	or otherwise	adversely	impact	our	results	of	operations.

•Fluctuations	in	the	cost	and	availability	of	oil-based	resins	and	other	raw	materials,	as	well	as	certain	components,	used	in	our	products,	the	ability	to	maintain favorable	supplier	arrangements	and	relationships	(particularly	with	respect	to	sole-source	suppliers),	and	the	potential	adverse	effects	of	any	disruption	in	the availability	of	such	items.

•Security	breaches	of	our	information	technology	systems	or	our	products,	which	could	impair	our	ability	to	conduct	business,	result	in	the	loss	of	BD	trade secrets	or	otherwise	compromise	sensitive	information	of	BD	or	its	customers,	suppliers	and	other	business	partners,	or	of	customers'	patients,	or	result	in product	efficacy	or	safety	concerns	for	certain	of	our	products,	and	result	in	actions	by	regulatory	bodies	or	civil	litigation.

•Difficulties	inherent	in	product	development,	including	the	potential	inability	to	successfully	continue	technological	innovation,	successfully	complete	clinical trials,	obtain	regulatory	approvals	in	the	United	States	and	abroad,	obtain	intellectual	property	protection	for	our	products,	obtain	coverage	and	adequate reimbursement	for	new	products,	or	gain	and	maintain	market	approval	of	products,	as	well	as	the	possibility	of	infringement	claims	by	competitors	with	respect to	patents	or	other	intellectual	property	rights,	all	of	which	can	preclude	or	delay	commercialization	of	a	product.	Delays	in	obtaining	necessary	approvals	or clearances	from	United	States	Food	and	Drug	Administration	("FDA")	or	other	regulatory	agencies	or	changes	in	the	regulatory	process	may	also	delay	product launches	and	increase	development	costs.

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

•Our	ability	to	penetrate	or	expand	our	operations	in	emerging	markets,	which	depends	on	local	economic	and	political	conditions,	and	how	well	we	are	able	to make	necessary	infrastructure	enhancements	to	production	facilities	and	distribution	networks.	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.

•Conditions	in	international	markets,	including	social	and	political	conditions,	civil	unrest,	terrorist	activity,	governmental	changes,	trade	barriers,	restrictions	on the	ability	to	transfer	capital	across	borders,	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,	which	has	created	uncertainties	affecting	our	business	operations	in the	United	Kingdom	and	the	EU.

•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	events	that	adversely	impact	our	ability	to	manufacture	our	products	(particularly	where	production	of	a	product	line	is	concentrated	in	one	or more	plants)	or	our	ability	to	source	materials	or	components	from	suppliers	(including	sole-source	suppliers)	that	are	needed	for	such	manufacturing.

•Pending	and	potential	future	litigation	or	other	proceedings	asserting,	and/or	subpoenas	seeking	information	with	respect	to,	alleged	violations	of	law	(including in	connection	with	federal	and/or	state	healthcare	programs	(such	as	Medicare	or	Medicaid)	and/or	sales	and	marketing	practices	(such	as	investigative	subpoenas and	the	civil	investigative	demands	received	by	BD	and	Bard)),	antitrust	claims,	product	liability	(which	may	involve	lawsuits	seeking	class	action	status	or seeking	to	establish	multi-district	litigation	proceedings,	including	claims	relating	to	our	hernia	repair	implant	products,	surgical	continence	products	for	women and	vena	cava	filter	products),	claims	with	respect	to	environmental	matters,	and	patent	infringement,	and	the	availability	or	collectability	of	insurance	relating to	any	such	claims.

•New	or	changing	laws	and	regulations	affecting	our	domestic	and	foreign	operations,	or	changes	in	enforcement	practices,	including	laws	relating	to	trade, monetary	and	fiscal	policies,	taxation	(including	tax	reforms	that	could	adversely	impact	multinational	corporations),	sales	practices,	environmental	protection, price	controls,	and	licensing	and	regulatory	requirements	for	new	products	and	products	in	the	postmarketing	phase.	In	particular,	the	U.S.	and	other	countries may	impose	new	requirements	regarding	registration,	labeling	or	prohibited	materials	that	may	require	us	to	re-register	products	already	on	the	market	or otherwise	impact	our	ability	to	market	our	products.	Environmental	laws,	particularly	with	respect	to	the	emission	of	greenhouse	gases,	are	also	becoming	more stringent	throughout	the	world,	which	may	increase	our	costs	of	operations	or	necessitate	changes	in	our	manufacturing	plants	or	processes	or	those	of	our suppliers,	or	result	in	liability	to	BD.

•Product	efficacy	or	safety	concerns	regarding	our	products	resulting	in	product	holds	or	recalls,	regulatory	action	on	the	part	of	the	FDA	or	foreign	counterparts (including	restrictions	on	future	product	clearances	and	civil	penalties),	declining	sales	and	product	liability	claims,	and	damage	to	our	reputation.	As	a	result	of the	CareFusion	acquisition,	we	are	operating	under	a	consent	decree	with	the	FDA	relating	to	our	U.S.	infusion	pump	business.	The	consent	decree	authorizes the	FDA,	in	the	event	of	any	violations	in	the	future,	to	order	us	to	cease	manufacturing	and	distributing	products,	recall	products	or	take	other	actions,	and	we may	be	required	to	pay	significant	monetary	damages	if	we	fail	to	comply	with	any	provision	of	the	consent	decree.

•The	effect	of	adverse	media	exposure	or	other	publicity	regarding	BD's	business	or	operations,	including	the	effect	on	BD's	reputation	or	demand	for	its products.

•The	effect	of	market	fluctuations	on	the	value	of	assets	in	BD's	pension	plans	and	on	actuarial	interest	rate	and	asset	return	assumptions,	which	could	require	BD to	make	additional	contributions	to	the	plans	or	increase	our	pension	plan	expense.

•Our	ability	to	obtain	the	anticipated	benefits	of	restructuring	programs,	if	any,	that	we	may undertake.

•Issuance	of	new	or	revised	accounting	standards	by	the	Financial	Accounting	Standards	Board	or	the	Securities	and	Exchange Commission.

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

# Item	7A.				Quantitative	and	Qualitative	Disclosures	About	Market	Risk.

The	information	required	by	this	item	is	included	in	Item	7.	Management's	Discussion	and	Analysis	of	Financial	Condition	and	Results	of	Operations,	and	in Notes	1,	13	and	14	to	the	consolidated	financial	statements	contained	in	Item	8,	Financial	Statements	and	Supplementary	Data,	and	is	incorporated	herein	by	reference.

# Item	8.				Financial	Statements	and	Supplementary	Data.

# Reports	of	Management

# Management's	Responsibilities

The	following	financial	statements	have	been	prepared	by	management	in	conformity	with	U.S.	generally	accepted	accounting	principles	and	include,	where required,	amounts	based	on	the	best	estimates	and	judgments	of	management.	The	integrity	and	objectivity	of	data	in	the	financial	statements	and	elsewhere	in	this Annual	Report	are	the	responsibility	of	management.

In	fulfilling	its	responsibilities	for	the	integrity	of	the	data	presented	and	to	safeguard	the	Company's	assets,	management	employs	a	system	of	internal	accounting controls	designed	to	provide	reasonable	assurance,	at	appropriate	cost,	that	the	Company's	assets	are	protected	and	that	transactions	are	appropriately	authorized, recorded	and	summarized.	This	system	of	control	is	supported	by	the	selection	of	qualified	personnel,	by	organizational	assignments	that	provide	appropriate	delegation of	authority	and	division	of	responsibilities,	and	by	the	dissemination	of	written	policies	and	procedures.	This	control	structure	is	further	reinforced	by	a	program	of internal	audits,	including	a	policy	that	requires	responsive	action	by	management.

The	Board	of	Directors	monitors	the	internal	control	system,	including	internal	accounting	and	financial	reporting	controls,	through	its	Audit	Committee,	which consists	of	eight	independent	Directors.	The	Audit	Committee	meets	periodically	with	the	independent	registered	public	accounting	firm,	the	internal	auditors	and management	to	review	the	work	of	each	and	to	satisfy	itself	that	they	are	properly	discharging	their	responsibilities.	The	independent	registered	public	accounting	firm and	the	internal	auditors	have	full	and	free	access	to	the	Audit	Committee	and	meet	with	its	members,	with	and	without	management	present,	to	discuss	the	scope	and results	of	their	audits	including	internal	control,	auditing	and	financial	reporting	matters.

# Management's	Report	on	Internal	Control	Over	Financial	Reporting

Management	is	responsible	for	establishing	and	maintaining	adequate	internal	control	over	financial	reporting,	as	defined	in	Rule	13a-15(f)	under	the	Securities Act	of	1934.	Management	conducted	an	assessment	of	the	effectiveness	of	internal	control	over	financial	reporting	based	on	the	criteria	established	in	Internal	Control- Integrated	Framework	issued	by	the	Committee	of	Sponsoring	Organizations	of	the	Treadway	Commission	(2013	framework).

On	December	29,	2017,	the	Company	completed	the	acquisition	of	C.R.	Bard,	Inc.	("Bard").	While	the	Company	has	extended	its	oversight	and	monitoring processes	that	support	its	internal	control	over	financial	reporting,	as	well	as	its	disclosure	controls	and	procedures,	the	Company	continues	to	integrate	the	acquired operations	of	Bard.	As	such,	the	Company	has	excluded	Bard	from	its	evaluation	of	internal	control	over	financial	reporting.	This	exclusion	is	in	accordance	with	the U.S.	Securities	and	Exchange	Commission's	general	guidance	that	a	recently	acquired	business	may	be	omitted	from	the	assessment	scope	for	up	to	one	year	from	the date	of	acquisition.	Bard	is	a	wholly-owned	subsidiary	with	total	assets	that	represented	approximately	5%	of	the	Company's	consolidated	total	assets	at	September	30, 2018	and	total	revenues	that	represented	approximately	19%	of	the	Company's	consolidated	revenues	for	fiscal	year	2018.

Based	on	the	Company's	assessment	of	the	effectiveness	of	internal	control	over	financial	reporting	and	the	criteria	noted	above,	management	concluded	that internal	control	over	financial	reporting	was	effective	as	of	September	30,	2018.

The	financial	statements	and	internal	control	over	financial	reporting	have	been	audited	by	Ernst	&	Young	LLP,	an	independent	registered	public	accounting	firm. Ernst	&	Young's	reports	with	respect	to	fairness	of	the	presentation	of	the	financial	statements,	and	the	effectiveness	of	internal	control	over	financial	reporting,	are included	herein.

/s/	Vincent	A.	Forlenza

Vincent	A.	Forlenza

Chairman	and	Chief	Executive	Officer

/s/	Christopher	Reidy

Christopher	Reidy

/s/	Charles	Bodner

Charles	Bodner

# Report	of	Independent	Registered	Public	Accounting	Firm

# To	the	Shareholders	and	the	Board	of	Directors	of

# Opinion	on	the	Financial	Statements

We	have	audited	the	accompanying	consolidated	balance	sheets	of	Becton,	Dickinson	and	Company	(the	Company)	as	of	September	30,	2018	and	2017,	the related	consolidated	statements	of	income,	comprehensive	income	and	cash	flows	for	each	of	the	three	years	in	the	period	ended	September	30,	2018,	and	the	related notes	(collectively	referred	to	as	the	"consolidated	financial	statements").	In	our	opinion,	the	consolidated	financial	statements	present	fairly,	in	all	material	respects,	the financial	position	of	the	Company	at	September	30,	2018	and	2017,	and	the	results	of	its	operations	and	its	cash	flows	for	each	of	the	three	years	in	the	period	ended September	30,	2018,	in	conformity	with	U.S.	generally	accepted	accounting	principles.

We	also	have	audited,	in	accordance	with	the	standards	of	the	Public	Company	Accounting	Oversight	Board	(United	States)	(PCAOB),	the	Company's	internal control	 over	 financial	 reporting	 as	 of	 September	 30,	 2018,	 based	 on	 criteria	 established	 in	 Internal	 Control-Integrated	 Framework	 issued	 by	 the	 Committee	 of Sponsoring	Organizations	of	the	Treadway	Commission	(2013	framework)	and	our	report	dated	November	21,	2018	expressed	an	unqualified	opinion	thereon.

# Basis	for	Opinion

These	financial	statements	are	the	responsibility	of	the	Company's	management.	Our	responsibility	is	to	express	an	opinion	on	the	Company's	financial	statements based	on	our	audits.	We	are	a	public	accounting	firm	registered	with	the	PCAOB	and	are	required	to	be	independent	with	respect	to	the	Company	in	accordance	with	the U.S.	federal	securities	laws	and	the	applicable	rules	and	regulations	of	the	Securities	and	Exchange	Commission	and	the	PCAOB.

We	conducted	our	audits	in	accordance	with	the	standards	of	the	PCAOB.	Those	standards	require	that	we	plan	and	perform	the	audit	to	obtain	reasonable assurance	about	whether	the	financial	statements	are	free	of	material	misstatement,	whether	due	to	error	or	fraud.	Our	audits	included	performing	procedures	to	assess the	risks	of	material	misstatement	of	the	financial	statements,	whether	due	to	error	or	fraud,	and	performing	procedures	that	respond	to	those	risks.	Such	procedures included	examining,	on	a	test	basis,	evidence	regarding	the	amounts	and	disclosures	in	the	financial	statements.	Our	audits	also	included	evaluating	the	accounting principles	used	and	significant	estimates	made	by	management,	as	well	as	evaluating	the	overall	presentation	of	the	financial	statements.	We	believe	that	our	audits provide	a	reasonable	basis	for	our	opinion.

# /s/	ERNST	&	YOUNG	LLP

We	have	served	as	the	Company's	auditor	since	1959.

New	York,	New	York

# Opinion	on	Internal	Control	over	Financial	Reporting

We	have	audited	Becton,	Dickinson	and	Company's	internal	control	over	financial	reporting	as	of	September	30,	2018,	based	on	criteria	established	in	Internal Control-Integrated	Framework	issued	by	the	Committee	of	Sponsoring	Organizations	of	the	Treadway	Commission	(2013	framework)	(the	COSO	criteria).	In	our opinion,	Becton,	Dickinson	and	Company	(the	Company)	maintained,	in	all	material	respects,	effective	internal	control	over	financial	reporting	as	of	September	30, 2018,	based	on	the	COSO	criteria.

As	 indicated	 in	 the	accompanying	Management's	Report	on	Internal	Control	over	Financial	Reporting,	management's	assessment	of	and	conclusion	on	 the effectiveness	of	internal	control	over	financial	reporting	did	not	include	the	internal	controls	of	C.R.	Bard,	Inc.,	which	is	included	in	the	2018	consolidated	financial statements	of	the	Company	and	constituted	5%	of	total	assets	as	of	September	30,	2018	and	19%	of	net	sales	for	the	year	then	ended.	Our	audit	of	internal	control	over financial	reporting	of	the	Company	also	did	not	include	an	evaluation	of	the	internal	control	over	financial	reporting	of	C.R.	Bard,	Inc.

We	also	have	audited,	in	accordance	with	the	standards	of	the	Public	Company	Accounting	Oversight	Board	(United	States)	(PCAOB),	the	2018	consolidated balance	sheets	of	the	Company	as	of	September	30,	2018	and	2017,	the	related	consolidated	statements	of	comprehensive	income	and	cash	flows	for	each	of	the	three years	in	the	period	ended	September	30,	2018,	and	the	related	notes	and	our	report	dated	November	21,	2018	expressed	an	unqualified	opinion	thereon.

The	Company's	management	is	responsible	for	maintaining	effective	internal	control	over	financial	reporting	and	for	its	assessment	of	the	effectiveness	of	internal control	over	financial	reporting	included	in	the	accompanying	Management's	Report	on	Internal	Control	over	Financial	Reporting.	Our	responsibility	is	to	express	an opinion	on	the	Company's	internal	control	over	financial	reporting	based	on	our	audit.	We	are	a	public	accounting	firm	registered	with	the	PCAOB	and	are	required	to be	independent	with	respect	to	the	Company	in	accordance	with	the	U.S.	federal	securities	laws	and	the	applicable	rules	and	regulations	of	the	Securities	and	Exchange Commission	and	the	PCAOB.

We	conducted	our	audit	in	accordance	with	the	standards	of	the	PCAOB.	Those	standards	require	that	we	plan	and	perform	the	audit	to	obtain	reasonable assurance	about	whether	effective	internal	control	over	financial	reporting	was	maintained	in	all	material	respects.

Our	audit	included	obtaining	an	understanding	of	internal	control	over	financial	reporting,	assessing	the	risk	that	a	material	weakness	exists,	testing	and	evaluating the	 design	 and	 operating	 effectiveness	 of	 internal	 control	 based	 on	 the	 assessed	 risk,	 and	 performing	 such	 other	 procedures	 as	 we	 considered	 necessary	 in	 the circumstances.	We	believe	that	our	audit	provides	a	reasonable	basis	for	our	opinion.

# Definition	and	Limitations	of	Internal	Control	Over	Financial	Reporting

A	company's	internal	control	over	financial	reporting	is	a	process	designed	to	provide	reasonable	assurance	regarding	the	reliability	of	financial	reporting	and	the preparation	of	financial	statements	for	external	purposes	in	accordance	with	generally	accepted	accounting	principles.	A	company's	internal	control	over	financial reporting	includes	those	policies	and	procedures	that	(1)	pertain	to	the	maintenance	of	records	that,	in	reasonable	detail,	accurately	and	fairly	reflect	the	transactions	and dispositions	of	the	assets	of	the	company;	(2)	provide	reasonable	assurance	that	transactions	are	recorded	as	necessary	to	permit	preparation	of	financial	statements	in accordance	with	generally	accepted	accounting	principles,	and	that	receipts	and	expenditures	of	the	company	are	being	made	only	in	accordance	with	authorizations	of management	 and	 directors	 of	 the	 company;	 and	 (3)	 provide	 reasonable	 assurance	 regarding	 prevention	 or	 timely	 detection	 of	 unauthorized	 acquisition,	 use,	 or disposition	of	the	company's	assets	that	could	have	a	material	effect	on	the	financial	statements.

Because	of	its	inherent	limitations,	internal	control	over	financial	reporting	may	not	prevent	or	detect	misstatements.	Also,	projections	of	any	evaluation	of effectiveness	to	future	periods	are	subject	to	the	risk	that	controls	may	become	inadequate	because	of	changes	in	conditions,	or	that	the	degree	of	compliance	with	the policies	or	procedures	may	deteriorate.

# Consolidated	Statements	of	Income

# Years	Ended	September	30

| Millions	of	dollars,	except	per	share	amounts | 2018 | 2017 | 2016 |
| :--- | :--- | :--- | :--- |
| Revenues | $15,983 | $12,093 | $12,483 |
| Cost\tof\tproducts\tsold | 8,721 | 6,151 | 6,492 |
| Selling\tand\tadministrative\texpense | 4,015 | 2,925 | 3,005 |
| Research\tand\tdevelopment\texpense | 1,006 | 774 | 828 |
| Acquisitions\tand\tother\trestructurings | 744 | 354 | 728 |
| Other\toperating\texpense,\tnet | — | 410 | — |
| Total\tOperating\tCosts\tand\tExpenses | 14,487 | 10,615 | 11,053 |
| Operating\tIncome | 1,497 | 1,478 | 1,430 |
| Interest\texpense | (706) | (521) | (388) |
| Interest\tincome | 65 | 76 | 21 |
| Other\tincome\t(expense),\tnet | 318 | (57) | 11 |
| Income\tBefore\tIncome\tTaxes | 1,173 | 976 | 1,074 |
| Income\ttax\tprovision\t(benefit) | 862 | (124) | 97 |
| Net\tIncome | 311 | 1,100 | 976 |
| Preferred\tstock\tdividends | (152) | (70) | — |
| Net\tincome\tapplicable\tto\tcommon\tshareholders | $159 | $1,030 | $976 |
| Basic\tEarnings\tper\tShare | $0.62 | $4.70 | $4.59 |
| Diluted\tEarnings\tper\tShare | $0.60 | $4.60 | $4.49 |

See	notes	to	consolidated	financial	statements.

# Consolidated	Statements	of	Comprehensive	Income

| Millions	of	dollars | 2018 | 2017 | 2016 |
| :--- | :--- | :--- | :--- |
| Net\tIncome | $311 | $1,100 | $976 |
| Other\tComprehensive\t(Loss)\tIncome,\tNet\tof\tTax |  |  |  |
| Foreign\tcurrency\ttranslation\tadjustments | (161) | 11 | (50) |
| Defined\tbenefit\tpension\tand\tpostretirement\tplans | (26) | 179 | (141) |
| Cash\tflow\thedges | 1 | 17 | 1 |
| Other\tComprehensive\t(Loss)\tIncome,\tNet\tof\tTax | (186) | 206 | (191) |
| Comprehensive\tIncome | $125 | $1,306 | $786 |

Amounts	may	not	add	due	to	rounding.

# Consolidated	Balance	Sheets

# September	30

| Millions	of	dollars,	except	per	share	amounts	and	numbers	of	shares | 2018 | 2017 |
| :--- | :--- | :--- |
| Assets |  |  |
| Current\tAssets |  |  |
| Cash\tand\tequivalents | $1,140 | $14,179 |
| Restricted\tcash | 96 | — |
| Short-term\tinvestments | 17 | 21 |
| Trade\treceivables,\tnet | 2,319 | 1,744 |
| Inventories | 2,451 | 1,818 |
| Assets\theld\tfor\tsale | 137 | — |
| Prepaid\texpenses\tand\tother | 1,251 | 871 |
| Total\tCurrent\tAssets | 7,411 | 18,633 |
| Property,\tPlant\tand\tEquipment,\tNet | 5,375 | 4,638 |
| Goodwill | 23,600 | 7,563 |
| Developed\tTechnology,\tNet | 12,184 | 2,478 |
| Customer\tRelationships,\tNet | 3,723 | 2,830 |
| Other\tIntangibles,\tNet | 534 | 585 |
| Other\tAssets | 1,078 | 1,007 |
| Total\tAssets | $53,904 | $37,734 |
| Liabilities\tand\tShareholders'\tEquity |  |  |
| Current\tLiabilities |  |  |
| Short-term\tdebt | $2,601 | $203 |
| Accounts\tpayable | 1,106 | 797 |
| Accrued\texpenses | 2,255 | 1,393 |
| Salaries,\twages\tand\trelated\titems | 910 | 773 |
| Income\ttaxes | 343 | 176 |
| Total\tCurrent\tLiabilities | 7,216 | 3,342 |
| Long-Term\tDebt | 18,894 | 18,667 |
| Long-Term\tEmployee\tBenefit\tObligations | 1,056 | 1,168 |
| Deferred\tIncome\tTaxes\tand\tOther | 5,743 | 1,609 |
| Commitments\tand\tContingencies\t(See\tNote\t5) |  |  |
| Shareholders'\tEquity |  |  |
| Preferred\tstock | 2 | 2 |
| Common\tstock\t—\t$1\tpar\tvalue:\tauthorized\t—\t640,000,000\tshares;\tissued\t—\t346,687,160\tshares\tin\t2018\nand\t2017. | 347 | 347 |
| Capital\tin\texcess\tof\tpar\tvalue | 16,179 | 9,619 |
| Retained\tearnings | 12,596 | 13,111 |
| Deferred\tcompensation | 22 | 19 |
|  | (6,243) | (8,427) |
| Accumulated\tother\tcomprehensive\tloss | (1,909) | (1,723) |
| Total\tShareholders'\tEquity | 20,994 | 12,948 |
| Total\tLiabilities\tand\tShareholders'\tEquity | $53,904 | $37,734 |

# Consolidated	Statements	of	Cash	Flows

| Millions	of	dollars | 2018 | 2017 | 2016 |
| :--- | :--- | :--- | :--- |
| Operating\tActivities |  |  |  |
| Net\tincome | $311 | $1,100 | $976 |
| Adjustments\tto\tnet\tincome\tto\tderive\tnet\tcash\tprovided\tby\toperating\tactivities: |  |  |  |
| Depreciation\tand\tamortization | 1,978 | 1,088 | 1,114 |
| Share-based\tcompensation | 322 | 174 | 196 |
| Deferred\tincome\ttaxes | (240) | (236) | (426) |
| Change\tin\toperating\tassets\tand\tliabilities: |  |  |  |
| Trade\treceivables,\tnet | (170) | (93) | (128) |
| Inventories | 246 | (46) | 69 |
| Prepaid\texpenses\tand\tother | (46) | (366) | 90 |
| Accounts\tpayable,\tincome\ttaxes\tand\tother\tliabilities | 867 | 134 | 368 |
| Pension\tobligation | (263) | 84 | (32) |
| Excess\ttax\tbenefits\tfrom\tpayments\tunder\tshare-based\tcompensation\tplans | 78 | 77 | — |
| Lease\tcontract\tmodification-related\tcharge | — | 748 | — |
| Gain\ton\tsale\tof\tVyaire\tinterest | (303) | — | — |
| Other,\tnet | 85 | (114) | 332 |
| Net\tCash\tProvided\tby\tOperating\tActivities | 2,865 | 2,550 | 2,559 |
| Investing\tActivities |  |  |  |
| Capital\texpenditures | (895) | (727) | (693) |
| Proceeds\tfrom\t(purchases\tof)\tinvestments,\tnet | 11 | 13 | (1) |
| Acquisitions\tof\tbusinesses,\tnet\tof\tcash\tacquired | (15,281) | (174) | — |
| Proceeds\tfrom\tdivestitures,\tnet | 534 | 165 | 158 |
| Other,\tnet | (198) | (161) | (133) |
| Net\tCash\tUsed\tfor\tInvesting\tActivities | (15,829) | (883) | (669) |
| Financing\tActivities |  |  |  |
| Change\tin\tcredit\tfacility\tborrowings | — | (200) | (500) |
| Proceeds\tfrom\tlong-term\tdebt\tand\tterm\tloans | 5,086 | 11,462 | — |
| Payments\tof\tdebt\tand\tterm\tloans | (3,996) | (3,980) | (752) |
| Proceeds\tfrom\tissuance\tof\tequity\tsecurities | — | 4,827 | — |
| Repurchase\tof\tcommon\tstock | — | (220) | — |
| Excess\ttax\tbenefit\tfrom\tpayments\tunder\tshare-based\tcompensation\tplans | — | — | 86 |
| Dividends\tpaid | (927) | (677) | (562) |
| Other,\tnet | (220) | (234) | (32) |
| Net\tCash\t(Used\tfor)\tProvided\tby\tFinancing\tActivities | (58) | 10,977 | (1,761) |
| Effect\tof\texchange\trate\tchanges\ton\tcash\tand\tequivalents | (17) | (6) | (12) |
| Net\t(Decrease)\tIncrease\tin\tCash\tand\tEquivalents | (13,039) | 12,638 | 117 |
| Opening\tCash\tand\tEquivalents | 14,179 | 1,541 | 1,424 |
| Closing\tCash\tand\tEquivalents | $1,140 | $14,179 | $1,541 |
| Non-Cash\tInvesting\tActivities |  |  |  |
| Fair\tvalue\tof\tshares\tissued\tas\tacquisition\tconsideration\t(See\tNote\t9) | $8,004 | $— | $— |
| Fair\tvalue\tof\tequity\tawards\tissued\tas\tacquisition\tconsideration\t(See\tNote\t9) | $613 | $— | $— |

# Notes	to	Consolidated	Financial	Statements

# Millions	of	dollars,	except	per	share	amounts	or	as	otherwise	specified

# Note	1	—	Summary	of	Significant	Accounting	Policies

# Basis	of	Presentation

The	accompanying	Consolidated	Financial	Statements	and	Notes	to	Consolidated	Financial	Statements	of	Becton,	Dickinson	and	Company	(the	"Company")	have been	prepared	in	accordance	with	U.S.	generally	accepted	accounting	principles.	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.	Our fiscal	year	ends	on	September	30.

# Principles	of	Consolidation

The	consolidated	financial	statements	include	the	Company's	accounts	and	those	of	its	majority-owned	subsidiaries	after	the	elimination	of	intercompany transactions.	The	Company	has	no	material	interests	in	variable	interest	entities.

# Cash	Equivalents

Cash	equivalents	consist	of	all	highly	liquid	investments	with	a	maturity	of	three	months	or	less	at	time	of	purchase.

# Restricted	Cash

Restricted	cash	consists	of	cash	restricted	from	withdrawal	and	usage	and	largely	represents	funds	that	are	restricted	for	certain	product	liability	matters	assumed in	the	acquisition	of	C.R.	Bard,	Inc.	("Bard")	which	is	further	discussed	in	Note	9.

# Short-Term	Investments

Short-term	investments	consist	of	time	deposits	with	maturities	greater	than	three	months	and	less	than	one	year	when	purchased.

# Trade	Receivables

The	Company	grants	credit	to	customers	in	the	normal	course	of	business	and	the	resulting	trade	receivables	are	stated	at	their	net	realizable	value.	The	allowance for	doubtful	accounts	represents	the	Company's	estimate	of	probable	credit	losses	relating	to	trade	receivables	and	is	determined	based	on	historical	experience	and other	specific	account	data.	Amounts	are	written	off	against	the	allowances	for	doubtful	accounts	when	the	Company	determines	that	a	customer	account	is uncollectible.

# Inventories

Inventories	are	stated	at	the	lower	of	first-in,	first-out	cost	or	market.

# Property,	Plant	and	Equipment

Property,	plant	and	equipment	are	stated	at	cost,	less	accumulated	depreciation	and	amortization.	Depreciation	and	amortization	are	principally	provided	on	the straight-line	basis	over	estimated	useful	lives,	which	range	from	20	to	45	years	for	buildings,	four	to	13	years	for	machinery	and	equipment	and	one	to	20	years	for leasehold	improvements.	Depreciation	and	amortization	expense	was	$600	million,	$406	million	and	$452	million	in	fiscal	years	2018,	2017	and	2016,	respectively.

# Notes	to	Consolidated	Financial	Statements	—	(Continued)

# Goodwill	and	Other	Intangible	Assets

The	Company's	unamortized	intangible	assets	include	goodwill	and	in-process	research	and	development	assets	which	arise	from	acquisitions.	The	Company currently	reviews	all	indefinite-lived	assets,	including	goodwill,	for	impairment	generally	using	quantitative	models.	Goodwill	is	reviewed	at	least	annually	for impairment	at	the	reporting	unit	level,	which	is	defined	as	an	operating	segment	or	one	level	below	an	operating	segment,	referred	to	as	a	component.	The	Company's reporting	units	generally	represent	one	level	below	reporting	segments.	Potential	impairment	of	goodwill	is	generally	identified	by	comparing	the	fair	value	of	a reporting	unit,	estimated	using	an	income	approach,	with	its	carrying	value.	The	annual	impairment	review	performed	on	July	1,	2018	indicated	that	all	identified reporting	units'	fair	values	exceeded	their	respective	carrying	values.	The	review	for	impairment	of	in-process	research	and	development	assets	is	performed	by comparing	the	fair	value	of	the	technology	or	project	assets,	estimated	using	an	income	approach,	with	their	carrying	value.	In-process	research	and	development	assets are	considered	indefinite-lived	assets	and	are	reviewed	at	least	annually	for	impairment	until	projects	are	completed	or	abandoned.

Amortized	intangible	assets	include	developed	technology	assets	which	arise	from	acquisitions.	These	assets	represent	acquired	intellectual	property	that	is already	technologically	feasible	upon	the	acquisition	date	or	acquired	in-process	research	and	development	assets	that	are	completed	subsequent	to	acquisition. Developed	technology	assets	are	generally	amortized	over	periods	ranging	from	15	to	20	years,	using	the	straight-line	method.	Customer	relationship	assets	are generally	amortized	over	periods	ranging	from	10	to	15	years,	using	the	straight-line	method.	Other	intangibles	with	finite	useful	lives,	which	include	patents,	are amortized	over	periods	principally	ranging	from	one	to	40	years,	using	the	straight-line	method.	Finite-lived	intangible	assets,	including	developed	technology	assets,	are periodically	reviewed	when	impairment	indicators	are	present	to	assess	recoverability	from	future	operations	using	undiscounted	cash	flows.	The	carrying	values	of	these finite-lived	assets	are	compared	to	the	undiscounted	cash	flows	they	are	expected	to	generate	and	an	impairment	loss	is	recognized	in	operating	results	to	the	extent	any finite-lived	intangible	asset's	carrying	value	exceeds	its	calculated	fair	value.

# Foreign	Currency	Translation

Generally,	foreign	subsidiaries'	functional	currency	is	the	local	currency	of	operations	and	the	net	assets	of	foreign	operations	are	translated	into	U.S.	dollars	using current	exchange	rates.	The	U.S.	dollar	results	that	arise	from	such	translation,	as	well	as	exchange	gains	and	losses	on	intercompany	balances	of	a	long-term	investment nature,	are	included	in	the	foreign	currency	translation	adjustments	in	Accumulated	other	comprehensive	income	(loss).

Revenue	from	product	sales	is	typically	recognized	when	all	of	the	following	criteria	have	been	met:	persuasive	evidence	of	an	arrangement	exists;	delivery	has occurred	or	services	have	been	rendered;	product	price	is	fixed	or	determinable;	collection	of	the	resulting	receivable	is	reasonably	assured.	Certain	sales	arrangements contain	multiple	deliverables,	including	equipment	and	service	deliverables,	which	requires	the	Company	to	determine	the	separate	units	of	account.	If	the	deliverable meets	the	criteria	of	a	separate	unit	of	accounting,	the	arrangement	consideration	is	allocated	to	each	element	based	upon	its	relative	selling	price.	In	determining	the	best evidence	of	selling	price	of	a	unit	of	account	the	Company	utilizes	vendor-specific	objective	evidence	("VSOE"),	which	is	the	price	the	Company	charges	when	the deliverable	is	sold	separately.	When	VSOE	is	not	available,	management	uses	relevant	third-party	evidence	("TPE")	of	selling	price,	if	available.	When	neither	VSOE nor	TPE	of	selling	price	exists,	management	uses	its	best	estimate	of	selling	price.

Revenue	allocated	to	certain	equipment	deliverables	is	recognized	upon	customer	acceptance,	which	occurs	after	the	transfer	of	title	and	risk	of	loss	to	the	customer and	the	completion	of	installation	or	training	services.	When	related	services	are	considered	inconsequential,	delivery	is	deemed	to	occur	upon	the	transfer	of	title	and risk	of	loss,	at	which	time	revenue	and	the	costs	associated	with	services	are	recognized.

For	equipment	lease	revenue,	transactions	are	evaluated	and	classified	as	either	operating	leases	or	sales-type	leases.	Generally,	the	Company's	lease	arrangements with	customers	are	accounted	for	as	operating	leases	and	therefore,	revenue	is	recognized	at	the	contracted	rate	over	the	rental	period,	as	defined	within	the	customer agreement.

For	products	sold	and	leased	with	embedded	software,	if	software	is	considered	not	essential	to	the	non-software	elements	of	a	product	but	is	considered	more	than incidental	to	a	product	as	a	whole,	the	product's	software	elements	must	be	separated	from	its	non-software	elements	under	the	requirements	relating	to	multiple-element arrangements	and	accounted	for	under	software	industry-specific	revenue	recognition	requirements.	However,	if	it	is	determined	that	the	embedded	software	is	more than	incidental	to	the	product	as	a	whole	but	the	non-software	elements	and	software	elements	work	together	to	deliver	the	essential	functionality	of	the	products	as	a whole,	then	the	accounting	for	such	product	does	not	fall	within	the	scope	of	software	industry-specific	accounting	requirements.

The	Company's	domestic	businesses	sell	products	primarily	to	distributors	that	resell	the	products	to	end-user	customers.	Rebates	are	provided	to	distributors	that sell	to	end-user	customers	at	prices	determined	under	a	contract	between	the	Company	and	the	end-user	customer.	Provisions	for	rebates,	as	well	as	sales	discounts	and returns,	are	based	upon	estimates	and	are	accounted	for	as	a	reduction	of	revenues	when	revenue	is	recognized.

# Shipping	and	Handling	Costs

Shipping	and	handling	costs	are	included	in	Selling	and	administrative	expense.	Shipping	expense	was	$479	million,	$365	million	and	$401	million	in	2018,	2017 and	2016,	respectively.

# Derivative	Financial	Instruments

All	derivatives	are	recorded	in	the	balance	sheet	at	fair	value	and	changes	in	fair	value	are	recognized	currently	in	earnings	unless	specific	hedge	accounting criteria	are	met.	Any	deferred	gains	or	losses	associated	with	derivative	instruments	are	recognized	in	income	in	the	period	in	which	the	underlying	hedged	transaction	is recognized.	Additional	disclosures	regarding	the	Company's	accounting	for	derivative	instruments	are	provided	in	Note	13.

The	Company	has	historically	asserted	indefinite	reinvestment	of	the	earnings	of	certain	non-U.S.	subsidiaries	outside	the	United	States.	New	U.S.	tax	legislation, which	is	further	discussed	in	Note	16,	eliminated	certain	material	tax	effects	on	the	repatriation	of	cash	to	the	United	States.	Future	repatriation	of	cash	and	other property	held	by	the	Company's	foreign	subsidiaries	will	generally	not	be	subject	to	U.S.	federal	income	tax.	As	a	result,	after	reevaluation	of	the	permanent reinvestment	assertion,	the	Company	is	no	longer	permanently	reinvested	with	respect	to	its	historic	unremitted	foreign	earnings	as	of	September	30,	2018.

The	Company	conducts	business	and	files	tax	returns	in	numerous	countries	and	currently	has	tax	audits	in	progress	in	a	number	of	tax	jurisdictions.	In	evaluating the	exposure	associated	with	various	tax	filing	positions,	the	Company	records	accruals	for	uncertain	tax	positions,	based	on	the	technical	support	for	the	positions,	past audit	experience	with	similar	situations,	and	the	potential	interest	and	penalties	related	to	the	matters.

The	Company	maintains	valuation	allowances	where	it	is	more	likely	than	not	that	all	or	a	portion	of	a	deferred	tax	asset	will	not	be	realized.	Changes	in	valuation allowances	are	included	in	the	tax	provision	in	the	period	of	change.	In	determining	whether	a	valuation	allowance	is	warranted,	management	evaluates	factors	such	as prior	earnings	history,	expected	future	earnings,	carryback	and	carryforward	periods	and	tax	strategies	that	could	potentially	enhance	the	likelihood	of	the	realization	of	a deferred	tax	asset.	Additional	disclosures	regarding	the	Company's	accounting	for	income	taxes	are	provided	in	Note	16.

# Earnings	per	Share

Basic	earnings	per	share	are	computed	by	dividing	income	available	to	common	stockholders	by	the	weighted	average	number	of	common	shares	outstanding. Diluted	earnings	per	share	reflect	the	potential

dilution	that	could	occur	if	securities	or	other	contracts	to	issue	common	stock	were	exercised	or	converted	into	common	stock.	In	computing	diluted	earnings	per	share, only	potential	common	shares	that	are	dilutive	(i.e.,	those	that	reduce	earnings	per	share	or	increase	loss	per	share)	are	included	in	the	calculation.

# Use	of	Estimates

The	preparation	of	financial	statements	in	conformity	with	U.S.	generally	accepted	accounting	principles	requires	management	to	make	estimates	and	assumptions. These	estimates	or	assumptions	affect	reported	assets,	liabilities,	revenues	and	expenses	as	reflected	in	the	consolidated	financial	statements.	Actual	results	could	differ from	these	estimates.

# Note	2	—	Accounting	Changes

# New	Accounting	Principle	Adopted

In	the	second	quarter	of	its	fiscal	year	2018,	the	Company	prospectively	adopted	an	accounting	standard	update	issued	by	the	Financial	Accounting	Standards Board	("FASB")	relating	to	the	stranded	income	tax	effects	on	items	within	Accumulated	other	comprehensive	income	(loss)	resulting	from	the	enactment	of	new	U.S. tax	legislation,	which	legislation	is	further	discussed	in	Note	16.	Additional	disclosures	regarding	this	accounting	standard	adoption	are	provided	in	Note	3.

On	October	1,	2016,	the	Company	prospectively	adopted	amended	requirements	issued	by	the	FASB	relating	to	the	timing	of	recognition	and	classification	of share-based	compensation	award-related	income	tax	effects.	Upon	adoption	of	the	requirements	in	2017,	the	Company	has	recorded	tax	benefits	relating	to	share-based compensation	awards	within	Income	tax	(benefit)	provision	on	its	consolidated	statement	of	income.	These	tax	benefits	had	been	previously	recorded	within	Capital	in excess	of	par	value	on	the	Company's	consolidated	balance	sheet.	Also	upon	adoption	of	the	amended	guidance	in	2017,	the	Company	has	classified	excess	tax	benefits on	its	consolidated	statement	of	cash	flows	within	Net	Cash	Provided	by	Operating	Activities,	rather	than	Net	Cash	Provided	by	(Used	for)	Financing	Activities.

# New	Accounting	Principles	Not	Yet	Adopted

In	March	2017,	the	FASB	issued	an	accounting	standard	update	which	requires	all	components	of	net	periodic	pension	and	postretirement	benefit	costs	to	be disaggregated	from	the	service	cost	component	and	to	be	presented	on	the	income	statement	outside	a	subtotal	of	income	from	operations,	if	one	is	presented.	The Company's	adoption	of	the	new	requirements	on	October	1,	2018	is	not	expected	to	have	a	material	impact	on	its	consolidated	financial	statements.

In	February	2016,	the	FASB	issued	a	new	lease	accounting	standard	which	requires	lessees	to	recognize	lease	assets	and	lease	liabilities	on	the	balance	sheet.	The new	standard	also	requires	expanded	disclosures	regarding	leasing	arrangements.	The	Company	will	adopt	the	standard	on	October	1,	2019	and	has	commenced	its initial	assessment	of	the	impact	on	its	consolidated	financial	statements.

In	May	2014,	the	FASB	issued	a	new	revenue	recognition	standard.	Under	this	standard,	revenue	is	recognized	upon	the	transfer	of	goods	or	services	to	customers and	the	amount	of	revenue	recognized	reflects	the	consideration	to	which	a	reporting	entity	expects	to	be	entitled	in	exchange	for	those	goods	or	services.	The	Company adopted	the	standard	on	October	1,	2018	using	the	modified	retrospective	method.	The	Company	assessed	the	impact	that	this	new	revenue	recognition	standard	will have	on	its	consolidated	financial	statements	based	upon	a	review	of	contracts	that	were	not	completed	as	of	October	1,	2018.	The	Company	is	currently	finalizing	the changes	to	its	processes,	systems	and	controls	which	are	necessary	to	support	recognition	and	disclosure	under	the	new	revenue	recognition	standard.	The	Company	does not	expect	its	adoption	of	the	new	standard	to	have	a	material	impact	on	its	consolidated	financial	statements.

# Note	3	—	Shareholders'	Equity

Changes	in	certain	components	of	shareholders'	equity	were	as	follows:

|  | Common | Capital	in |  |  | Treasury	Stock |  |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| (Millions\tof\tdollars) | Stock\t\tIssued\nat\tPar\tValue | Excess\tof\nPar\tValue | Retained\nEarnings | Deferred\nCompensation | Shares\t(in\nthousands) | Amount |
| Balance\tat\tSeptember\t30,\t2015 | $333 | $4,475 | $12,314 | $20 | (121,967) | $(8,239) |
| Net\tincome | — | — | 976 | — | — | — |
| Cash\tdividends: |  |  |  |  |  |  |
| Common\t($2.64\tper\tshare) | — | — | (562) | — | — | — |
| Common\tstock\tissued\tfor: |  |  |  |  |  |  |
| Share-based\tcompensation\tand\tother\tplans,\tnet | — | 27 | (1) | 2 | 2,607 | 26 |
| Share-based\tcompensation | — | 191 | — | — | — | — |
| Common\tstock\theld\tin\ttrusts,\tnet\t(a) | — | — | — | — | (11) | — |
| Balance\tat\tSeptember\t30,\t2016 | $333 | $4,693 | $12,727 | $22 | (119,371) | $(8,212) |
| Net\tincome | — | — | 1,100 | — | — | — |
| Cash\tdividends: |  |  |  |  |  |  |
| Common\t($2.92\tper\tshare) | — | — | (645) | — | — | — |
| \t\tPreferred | — | — | (70) | — | — | — |
| Common\tstock\tissued\tfor: |  |  |  |  |  |  |
| Public\tequity\tofferings\t(b) | 14 | 4,810 | — | — | — | — |
| Share-based\tcompensation\tand\tother\tplans,\tnet | — | (65) | (1) | (3) | 1,908 | 6 |
| Share-based\tcompensation | — | 180 | — | — | — | — |
| Common\tstock\theld\tin\ttrusts,\tnet\t(a) | — | — | — | — | 7 | — |
| Repurchase\tof\tcommon\tstock\t(c) | — | — | — | — | (1,289) | (220) |
| Balance\tat\tSeptember\t30,\t2017 | $347 | $9,619 | $13,111 | $19 | (118,745) | $(8,427) |
| Net\tincome | — | — | 311 | — | — | — |
| Cash\tdividends: |  |  |  |  |  |  |
| Common\t($3.00\tper\tshare) | — | — | (775) | — | — | — |
| \t\tPreferred | — | — | (152) | — | — | — |
| Common\tstock\tissued\tfor: |  |  |  |  |  |  |
| Acquisition\t(see\tNote\t9) | — | 6,478 | — | — | 37,306 | 2,121 |
| Share-based\tcompensation\tand\tother\tplans,\tnet | — | (246) | (2) | 3 | 2,982 | 62 |
| Share-based\tcompensation | — | 328 | — | — | — | — |
| Common\tstock\theld\tin\ttrusts,\tnet\t(a) | — | — | — | — | (6) | — |
| Effect\tof\tchange\tin\taccounting\tprinciple\t(see\tNote\t2\nand\tfurther\tdiscussion\tbelow) | — | — | 103 | — | — | — |
| Balance\tat\tSeptember\t30,\t2018 | $347 | $16,179 | $12,596 | $22 | (78,463) | $(6,243) |

(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.

(b) In	May	2017	and	in	connection	with	the	Company's	acquisition	of	Bard,	which	is	further	discussed	in	Note	9,	the	Company	completed	registered	public offerings	of	equity	securities	including	14.025	million	shares	of	the	Company's	common	stock	and	2.475	million	shares	of	the	Company's	mandatory convertible	preferred	stock	(ownership	is	held	in	the	form	of	depositary	shares,	each	representing	a	1/20th	interest	in	a	share	of	preferred	stock)	for	total	net proceeds	of	$4.8	billion.	If	and	when	declared,	dividends	on	the	mandatory	convertible	preferred	stock	are	payable	on	a	cumulative	basis	at	an	annual	rate	of 6.125%	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 11.7	million	and	up	to	a	maximum	of	14.0	million	shares	of	Company	common	stock	at	an	exchange	ratio	that	is	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	May	1,	2020.

(c) Using	proceeds	received	from	the	divestiture	of	the	Respiratory	Solutions	business	in	the	first	quarter	of	fiscal	year	2017,	the	Company	repurchased	shares	of its	common	stock	under	an	accelerated	share	repurchase	agreement.

The	components	and	changes	of	Accumulated	other	comprehensive	income	(loss)	were	as	follows:

| (Millions	of	dollars) | Total | Foreign<br>Currency<br>Translation | Benefit	Plans | Cash	Flow<br>Hedges |
| :--- | :--- | :--- | :--- | :--- |
| Balance\tat\tSeptember\t30,\t2015 | $(1,738) | $(961) | $(741) | $(36) |
| Other\tcomprehensive\tloss\tbefore\treclassifications,\tnet\tof\ttaxes | (251) | (50) | (190) | (11) |
| Amounts\treclassified\tinto\tincome,\tnet\tof\ntaxes | 60 | — | 48 | 12 |
| Balance\tat\tSeptember\t30,\t2016 | $(1,929) | $(1,011) | $(883) | $(35) |
| Other\tcomprehensive\tincome\tbefore\treclassifications,\tnet\tof\ttaxes | 140 | 11 | 121 | 8 |
| Amounts\treclassified\tinto\tincome,\tnet\tof\ntaxes | 66 | — | 58 | 8 |
| Balance\tat\tSeptember\t30,\t2017 | $(1,723) | $(1,001) | $(703) | $(18) |
| Other\tcomprehensive\t(loss)\tincome\tbefore\treclassifications,\tnet\tof\ttaxes | (142) | (161) | 19 | — |
| Amounts\treclassified\tinto\tincome,\tnet\tof\ntaxes | 57 | — | 52 | 5 |
| Tax\teffects\treclassified\tto\tretained\tearnings | (103) | — | (99) | (4) |
| Balance\tat\tSeptember\t30,\t2018 | $(1,909) | $(1,162) | $(729) | $(17) |

The	amount	of	foreign	currency	translation	recognized	in	other	comprehensive	income	during	the	years	ended	September	30,	2018	and	2017	included	net	gains (losses)	relating	to	net	investment	hedges,	as	further	discussed	in	Note	13.	The	amount	recognized	in	other	comprehensive	income	during	the	year	ended	September	30, 2017	relating	to	cash	flow	hedges	represented	a	net	gain	on	forward	starting	interest	rate	swaps,	which	is	further	discussed	in	Note	13.

During	the	second	quarter	of	2018,	as	permitted	under	U.S.	GAAP	guidance,	the	Company	reclassified	stranded	income	tax	effects	on	items	within	Accumulated other	comprehensive	income	(loss)	resulting	from	the	enactment	of	new	U.S.	tax	legislation,	which	legislation	is	further	discussed	in	Note	16,	to	Retained	earnings.	The reclassified	tax	effects	related	to	prior	service	credits	and	net	actuarial	losses	relating	to	benefit	plans,	as	well	as	to	terminated	cash	flow	hedges.	The	tax	effects	relating to	these	items	are	generally	recognized	as	such	amounts	are	amortized	into	earnings.

The	tax	impacts	for	amounts	recognized	in	other	comprehensive	income	before	reclassifications	were	as	follows:

| (Millions	of	dollars) | 2018 | 2017 | 2016 |
| :--- | :--- | :--- | :--- |
| Benefit\tPlans |  |  |  |
| Income\ttax\t(provision)\tbenefit\tfor\tnet\tgains\t(losses)\trecorded\tin\tother\ncomprehensive\tincome | $(19) | \t $(60) | \t $79 |

The	tax	impacts	for	cash	flow	hedges	recognized	in	other	comprehensive	income	before	reclassifications	in	2017	and	2016	were	immaterial	to	the	Company's consolidated	financial	results.	Reclassifications	out	of	Accumulated	other	comprehensive	income	(loss)	and	the	related	tax	impacts	relating	to	benefit	plans	and	cash	flow hedges	in	2018,	2017	and	2016	were	also	immaterial	to	the	Company's	consolidated	financial	results.

# Note	4	—	Earnings	per	Share

The	weighted	average	common	shares	used	in	the	computations	of	basic	and	diluted	earnings	per	share	(shares	in	thousands)	for	the	years	ended	September	30 were	as	follows:

|  | 2018 | 2017 | 2016 |
| :--- | :--- | :--- | :--- |
| Average\tcommon\tshares\toutstanding | 258,354 | 218,943 | 212,702 |
| Dilutive\tshare\tequivalents\tfrom\tshare-based\tplans\t(a)\t(b) | 6,267 | 4,645 | 4,834 |
| Average\tcommon\tand\tcommon\tequivalent\tshares\toutstanding\t—\tassuming\tdilution | 264,621 | 223,588 | 217,536 |

(a) For	the	years	ended	September	30,	2018	and	2017,	dilutive	share	equivalents	associated	with	mandatory	convertible	preferred	stock	of	12	million	and	5	million, respectively,	were	excluded	from	the	diluted	shares	outstanding	calculation	because	the	result	would	have	been	antidilutive.	The	issuance	of	the	convertible preferred	stock	is	further	discussed	in	Note	3.	For	the	years	ended	September	30,	2018,	2017	and	2016,	there	were	no	options	to	purchase	shares	of	common stock	which	were	excluded	from	the	diluted	earnings	per	share	calculation.

(b) The	adjustment	to	calculate	diluted	share	equivalents	from	share-based	plans	in	2016	included	excess	tax	benefits	relating	to	share-based	compensation	awards. Upon	the	Company's	adoption,	as	discussed	in	Note	2,	of	new	accounting	requirements	relating	to	share-based	compensation	award-related	income	tax	effects, the	adjustments	in	2018	and	2017	excluded	these	excess	tax	benefits.

# Note	5	—	Commitments	and	Contingencies

# Commitments

As	of	September	30,	2018,	the	Company	has	certain	future	purchase	commitments	aggregating	to	approximately	$1.046	billion,	which	will	be	expended	over	the next	several	years.

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	to	which	the	Company	is	a	party.	In	accordance	with	U.S.	generally	accepted	accounting	principles,	the	Company	establishes accruals	to	the	extent	probable	future	losses	are	estimable	(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	class.	With	respect	to	the	investigative	subpoena	issued	by	the Department	of	Defense	Inspector	General	and	the	Department	of	Health	and	Human	Services	and	the	civil	investigative	demand	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

As	is	further	discussed	in	Note	9,	the	Company	completed	its	acquisition	of	Bard	on	December	29,	2017	and	the	following	matters	include	Bard-related	legal proceedings	and	claims	that	the	Company	assumed	on	the	acquisition	date	("Bard-related	Product	Liability	Matters").	The	Company	believes	that	certain	settlements and	judgments,	as	well	as	some	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	September	30,	2018,	the	Company	is	defending	approximately	3,154	product	liability	claims	involving	Bard'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,	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	throughout	2019	in	various	state	and/or	federal	courts.	The	Company	expects	additional	trials	of	Hernia	Product	Claims	to	take	place	over the	next	12	months.	In	August	2018,	a	new	hernia	multi-district	litigation	("MDL")	was	ordered	to	be	established	in	the	Southern	District	of	Ohio.	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	September	30,	2018,	the	Company	is	defending	approximately	1,322	product	liability	claims	involving	Bard's	line	of	pelvic	mesh	devices.	The	majority	of those	claims	are	currently	pending	in	a	federal	MDL	in	the	United	States	District	Court	for	the	Southern	District	of	West	Virginia,	but	claims	are	also	pending	in	other state	and/or	federal	court	jurisdictions,	including	a	coordinated	proceeding	in	New	Jersey	State	Court.	In	addition,	those	claims	include	putative	class	actions	filed	in	the United	States.	Not	included	in	the	figures	above	are	approximately	1,037	filed	and	unfiled	claims	that	have	been	asserted	or	threatened	against	Bard	but	lack	sufficient information	to	determine	whether	a	Bard	pelvic	mesh	device	is	actually	at	issue.	The	claims	identified	above	also	include	products	manufactured	by	both	Bard	and	two subsidiaries	of	Medtronic	plc	(as	successor	in	interest	to	Covidien	plc)	("Medtronic"),	each	a	supplier	of	Bard.	Medtronic	has	an	obligation	to	defend	and	indemnify Bard	with	respect	to	any	product	defect	liability	relating	to	products	its	subsidiaries	had	manufactured.	As	described	below,	in	July	2015	the	Company	reached	an agreement	with	Medtronic	(which	was	amended	in	June	2017)	regarding	certain	aspects	of	Medtronic's	indemnification	obligation.	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	September	30,	2018,	the	Company	has	reached	agreements	or	agreements	in	principle	with	various	plaintiffs'	law	firms	to	settle	their	respective	inventories of	cases	totaling	approximately	15,021	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	in	2018	and	throughout	2019	in	state	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	Company	is	in	the	process	of	challenging	that	verdict. The	Company	expects	additional	trials	of	Women's	Health	Product	Claims	to	take	place	over	the	next	12	months.

In	July	2015,	as	part	of	the	agreement	with	Medtronic	noted	above,	Medtronic	agreed	to	take	responsibility	for	pursuing	settlement	of	certain	of	the	Women's Health	Product	Claims	that	relate	to	products	distributed	by	Bard	under	supply	agreements	with	Medtronic,	and	Bard	has	paid	Medtronic	$121	million	towards	these potential	settlements.	In	June	2017,	Bard	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	these	potential	settlements. Bard	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	Bard	and	Medtronic	with	respect	to	Women's	Health	Product	Claims	that	do	not	settle,	if	any.

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	September	30,	2018,	the	Company	is	defending	approximately	4,515	product	liability	claims	involving	Bard's	line	of	inferior	vena	cava	filters	(collectively, the	"Filter	Product	Claims").	The	majority	of	those	claims	are	currently	pending	in	an	MDL	in	the	United	States	District	Court	for	the	District	of	Arizona,	but	claims	are also	pending	in	other	state	and/or	federal	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.	Trials	are	scheduled	throughout	2018	in	the	MDL	and	state	courts.	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	January	2017,	the	Company	reached	an	agreement	to	resolve	litigation	filed	in	the	Southern	District	of	New	York	by	its	insurance	carriers	in	connection	with Women's	Health	Product	Claims	and	Filter	Product	Claims.	The	agreement	requires	the	insurance	carriers	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

In	June	2007,	Retractable	Technologies,	Inc.	("RTI")	filed	a	complaint	against	the	Company	under	the	caption	Retractable	Technologies,	Inc.	vs.	Becton Dickinson	and	Company	(Civil	Action	No.	2:07-cv-250,	U.S.	District	Court,	Eastern	District	of	Texas)	alleging	that	the	BD	Integra™	syringes	infringe	patents	licensed exclusively	to	RTI.	Included	in	its	complaint,	RTI	also	alleged	that	the	Company	engaged	in	false	advertising	with	respect	to	certain	of	the	Company's	safety-engineered products	in	violation	of	the	Lanham	Act;	acted	to	exclude	RTI	from	various	product	markets	and	to	maintain	its	market	share	through,	among	other	things,	exclusionary contracts	in	violation	of	state	and	federal	antitrust	laws;	and	engaged	in	unfair	competition.	In	January	2008,	the	Court	severed	the	patent	and	non-patent	claims	into separate	cases.	BD	paid	a	$5	million	award	following	an	adverse	infringement	verdict	at	the	district	court	and	the	Company's	unsuccessful	appeal.

On	September	19,	2013,	a	jury	returned	a	verdict	against	BD	with	respect	to	RTI's	Lanham	Act	claim	and	claim	for	attempted	monopolization	based	on	deception in	the	safety	syringe	market.	The	jury	awarded	RTI	$113.5	million	for	its	attempted	monopolization	claim	(which	would	be	trebled	under	the	antitrust	statute).	Upon issuance	of	a	Court	of	Appeals	decision	reversing	the	attempted	monopolization	claim,	the	Company	recorded	a	$337	million	reversal	of	reserves	associated	with	the initial	judgment,	in	Other	operating	(income)	expense,	net,	in	the	first	quarter	of	fiscal	year	2017.	The	Court	of	Appeals	affirmed	the	judgment	for	Lanham	Act	liability, and	remanded	the	case	to	the	district	court	to	consider	whether	and	if	so	how	much	profit	should	be	disgorged	by	BD	on	that	claim.		The	Court	of	Appeals	also	vacated and	remanded	the	injunction	ordered	by	the	district	court.	On	January	31,	2017,	RTI	filed	a	petition	for	a	writ	of	certiorari	with	the	U.S.	Supreme	Court.

On	March	20,	2017,	the	U.S.	Supreme	Court	denied	certiorari,	and	the	district	court	thereafter	heard	RTI's	request	for	disgorgement.	On	August	17,	2017,	the	district court	entered	judgment	in	favor	of	BD	and	ruled	that	RTI	is	not	entitled	to	any	award	of	money	damages.		RTI	has	appealed	this	ruling	to	the	Fifth	Circuit	Court	of Appeals.	Oral	argument	on	the	appeal	occurred	on	October	3,	2018.

Since	early	2013,	Bard	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	November	2015,	the	Department	of	Defense	Inspector	General	issued	an	investigative	subpoena	to	Bard.	The	Department	of	Health	and	Human	Services	is	also participating	in	this	investigation.	The	subpoena	seeks	documents	related	to	the	Company's	sales	and	marketing	of	certain	filter	products,	drug	coated	balloon	catheters, and	peripheral	arterial	disease	detection	products.	In	July	2017,	a	separate	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	QuantaFloTM 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.

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	Reserves

Accruals	for	the	Bard	product	liability	claims	which	are	specifically	discussed	above,	as	well	as	the	related	legal	defense	costs,	amounted	to	approximately	$2.0 billion	at	September	30,	2018.	Such	amounts	include	provisional	estimates	which	have	been	recorded	with	respect	to	the	acquired	liabilities.	These	amounts	may	be adjusted	upon	the	availability	of	new	or	additional	information	regarding	facts	or	circumstances	which	existed	at	the	acquisition	date.	As	of	September	30,	2018,	the Company	has	$94	million	in	Bard-related	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	Bard-related	product	liability	claims	and	related	legal	defense	costs	were	approximately	$343	million	at September	30,	2018.	A	substantial	amount	of	these	expected	recoveries	at	September	30,	2018	relate	to	the	Company's	agreements	with	Medtronic	related	to	certain Women's	Health	Product	Claims.	The	terms	of	the	Company's	agreements	with	Medtronic	are	substantially	consistent	with	the	assumptions	underlying,	and	the	manner in	which,	the	Company	has	recorded	expected	recoveries	related	to	the	indemnification	obligation.	The	expected	recoveries	at	September	30,	2018	related	to	the indemnification	obligation	are	not	in	dispute	with	respect	to	claims	that	Medtronic	settles	pursuant	to	the	agreements.	As	described	above,	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,	and	the	Company	also	may,	in	its	sole discretion,	transfer	responsibility	for	settlement	of	additional	Women's	Health	Product	Claims	to	Medtronic	on	similar	terms.

# Note	6	—	Segment	Data

Beginning	in	the	second	quarter	of	fiscal	year	2018,	the	Company's	organizational	structure	was	based	upon	three	principal	business	segments:	BD	Medical ("Medical"),	BD	Life	Sciences	("Life	Sciences")	and	BD	Interventional	("Interventional").	As	is	further	discussed	in	Note	9,	the	Company	completed	its	acquisition	of Bard	on	December	29,	2017.	Beginning	in	the	second	quarter	of	fiscal	year	2018,	the	Interventional	segment	included	the	majority	of	Bard's	product	offerings	and certain	product	offerings,	as	further	detailed	below,	which	were	previously	reported	in	the	Medical	segment.	Certain	of	Bard's	product	offerings	were	included	under	the Company's	Medical	segment,	specifically	within	the	new	Medication	Delivery	Solutions	unit,	which	was	formerly	the	Medical	segment's	Medication	and	Procedural Solutions	unit.	The	Company's	three	principal	business	segments	are	strategic	businesses	that	are	managed	separately	because	each	one	develops,	manufactures	and markets	distinct	products	and	services.

BD	Medical	produces	a	broad	array	of	medical	technologies	and	devices	that	are	used	to	help	improve	healthcare	delivery	in	a	wide	range	of	settings.	The	primary customers	served	by	BD	Medical	are	hospitals	and	clinics;	physicians'	office	practices;	consumers	and	retail	pharmacies;	governmental	and	nonprofit	public	health agencies;	pharmaceutical	companies;	and	healthcare	workers.	BD	Medical	consists	of	the	following	organizational	units:

BD	Interventional	provides	vascular,	urology,	oncology	and	surgical	specialty	products	that	are,	with	the	exception	of	the	V.	Muller	surgical	and	laparoscopic instrumentation	products,	intended	to	be	used	once	and	then	discarded	or	are	either	temporarily	or	permanently	implanted.	The	primary	customers	served	by	BD Interventional	are	hospitals,	individual	healthcare	professionals,	extended	care	facilities,	alternate	site	facilities	and	directly	to	patients	via	the	segment's	Homecare business.	The	Interventional	segment	consists	of	the	following	organizational	units:

# Additional	Segment	Information

Distribution	of	products	is	primarily	through	independent	distribution	channels,	and	directly	to	end-users	by	BD	and	independent	sales	representatives.	No customer	accounted	for	10%	or	more	of	revenues	in	any	of	the	three	years	presented.

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	operating	income,	which	represents	revenues	reduced	by	product	costs	and	operating	expenses.	Segment	operating income	represents	revenues	reduced	by	product	costs	and	operating	expenses.	Beginning	with	its	first	quarter	fiscal	year	2018,	the	Company	changed	its	management reporting	approach	so	that	certain	general	and	administrative	costs,	which	were	previously	allocated	to	the	segments,	are	now	excluded	from	the	segments'	operating expenses.	The	Medical	and	Life	Sciences	segments'	operating	income	for	the	year	ended	September	30,	2017	included	allocated	general	corporate	costs	of	$166	million and	$113	million,	respectively.	The	Medical	and	Life	Sciences	segments'	operating	income	for	the	year	ended	September	30,	2016	included	allocated	general	corporate costs	of	$175	million	and	$95	million,	respectively.	No	such	allocations	were	made	in	the	year	ended	September	30,	2018.

As	more	fully	discussed	in	Note	10,	the	Company	sold	a	50.1%	controlling	financial	interest	in	its	Respiratory	Solutions	business,	a	component	of	the	Medical	segment, in	October	2016.	This	transaction	did	not	meet	the	criteria	established	for	reporting	discontinued	operations	and	as	such,	results	for	the	year	ended	September	30,	2016 included	$822	million	of	revenues	which	did	not	occur	in	2018	and	2017.

| (Millions	of	dollars) | 2018 | 2017 | 2016 |
| :--- | :--- | :--- | :--- |
| Revenues\t(a) |  |  |  |
| Medical\t(b) | $8,616 | $7,419 | $7,965 |
| Life\tSciences | 4,330 | 3,988 | 3,829 |
| Interventional\t(b) | 3,037 | 685 | 689 |
| Total\tRevenues | $15,983 | $12,093 | $12,483 |
| Income\tBefore\tIncome\tTaxes |  |  |  |
| Medical\t(b)\t(c)\t(d) | $2,624 | $1,907 | $1,807 |
| Life\tSciences\t(e) | 1,207 | 772 | 793 |
| Interventional\t(b)\t(c) | 306 | 248 | 245 |
| Total\tSegment\tOperating\tIncome | 4,137 | 2,927 | 2,845 |
| Acquisitions\tand\tother\trestructurings | (744) | (354) | (728) |
| Net\tinterest\texpense | (641) | (445) | (367) |
| Other\tunallocated\titems\t(f) | (1,578) | (1,152) | (676) |
| Total\tIncome\tBefore\tIncome\tTaxes | $1,173 | $976 | $1,074 |
| Assets |  |  |  |
| Medical\t(b) | $23,493 | $15,552 | $16,370 |
| Life\tSciences | 4,225 | 4,056 | 3,848 |
| Interventional\t(b) | 23,219 | 2,780 | 2,784 |
| Total\tSegment\tAssets | 50,938 | 22,388 | 23,002 |
| Corporate\tand\tAll\tOther\t(g) | 2,966 | 15,347 | 2,584 |
| Total\tAssets | $53,904 | $37,734 | $25,586 |
| Capital\tExpenditures |  |  |  |
| Medical\t(b) | $560 | $486 | $464 |
| Life\tSciences | 255 | 212 | 200 |
| Interventional\t(b) | 65 | 16 | 18 |
| Corporate\tand\tAll\tOther | 14 | 13 | 12 |
| Total\tCapital\tExpenditures | $895 | $727 | $693 |
| Depreciation\tand\tAmortization |  |  |  |
| Medical\t(b) | $1,028 | $773 | $801 |
| Life\tSciences | 275 | 254 | 254 |
| Interventional\t(b) | 658 | 52 | 56 |
| Corporate\tand\tAll\tOther | 17 | 10 | 3 |
| Total\tDepreciation\tand\tAmortization | $1,978 | $1,088 | $1,114 |

(a) The	Company	has	no	material	intersegment	revenues.

(b) Prior-year	amounts	have	been	reclassified	to	reflect	the	movement	of	certain	product	offerings	previously	reported	in	the	Medical	segment	and	which	are now	reported	in	the	Interventional	segment,	as	further	discussed	above.	Accordingly,	all	amounts	presented	in	2017	and	2016	for	the	Interventional	segment	are associated	with	these	products.

(c) The	amounts	in	2018	included	expense	related	to	the	recognition	of	a	$478	million	fair	value	step-up	adjustment	related	to	Bard's	inventory	on	the acquisition	date.	The	step-up	adjustments	recognized	by	the	Medical	and	Interventional	segments	in	2018	were	$60	million	and	$418	million,	respectively.

(d) The	amount	in	2018	included	$58	million	of	charges	to	write	down	the	value	of	fixed	assets	primarily	in	the	Diabetes	Care	unit.

(e) The	amount	in	2018	included	$81	million	of	charges	recorded	to	write	down	the	carrying	value	of	certain	intangible	and	other	assets	in	the	Biosciences unit.

(f) The	amounts	in	2018,	2017	and	2016	comprised	of	foreign	exchange,	corporate	expenses,	and	share-based	compensation	expense.	Results	in	2018	were impacted	by	the	Company's	change	in	its	management	reporting	approach,	as	further	discussed	above.	Results	in	2017	included	a	$748	million	non-cash	charge resulting	from	a	modification	to	the	Company's	dispensing	equipment	lease	contracts	with	customers,	as	well	as	the	reversal	of	certain	litigation	reserves	as further	discussed	in	Note	5.

(g) Includes	cash	and	investments	and	corporate	assets.

# Geographic	Information

The	countries	in	which	the	Company	has	local	revenue-generating	operations	have	been	combined	into	the	following	geographic	areas:	the	United	States (including	Puerto	Rico);	Europe;	Greater	Asia	(which	includes	Japan	and	Asia	Pacific);	and	Other,	which	is	comprised	of	Latin	America,	Canada,	and	EMA	(which includes	the	Commonwealth	of	Independent	States,	Middle	East	and	Africa).

Revenues	to	unaffiliated	customers	are	generally	based	upon	the	source	of	the	product	shipment.	Long-lived	assets,	which	include	net	property,	plant	and equipment,	are	based	upon	physical	location.

| (Millions	of	dollars) | 2018 | 2017 | 2016 |
| :--- | :--- | :--- | :--- |
| Revenues |  |  |  |
| United\tStates | $8,768 | $6,504 | $6,893 |
| Europe | 3,298 | 2,588 | 2,674 |
| Greater\tAsia | 2,460 | 1,744 | 1,692 |
| Other | 1,457 | 1,257 | 1,225 |
|  | $15,983 | $12,093 | $12,483 |
| Long-Lived\tAssets |  |  |  |
| United\tStates | $38,982 | $13,151 | $14,075 |
| Europe | 5,640 | 4,421 | 3,747 |
| Greater\tAsia | 851 | 578 | 586 |
| Other | 645 | 584 | 483 |
| Corporate | 375 | 366 | 329 |
|  | $46,494 | $19,101 | $19,220 |

# Note	7	—	Share-Based	Compensation

The	Company	grants	share-based	awards	under	the	2004	Employee	and	Director	Equity-Based	Compensation	Plan	("2004	Plan"),	which	provides	long-term incentive	compensation	to	employees	and	directors	consisting	of:	stock	appreciation	rights	("SARs"),	performance-based	restricted	stock	units,	time-vested	restricted stock	units	and	other	stock	awards.

The	fair	value	of	share-based	payments	is	recognized	as	compensation	expense	in	net	income.	The	amounts	and	location	of	compensation	cost	relating	to	share- based	payments	included	in	the	consolidated	statements	of	income	is	as	follows:

| (Millions	of	dollars) | 2018 | 2017 | 2016 |
| :--- | :--- | :--- | :--- |
| Cost\tof\tproducts\tsold | $36 | $30 | $29 |
| Selling\tand\tadministrative\texpense | 136 | 113 | 106 |
| Research\tand\tdevelopment\texpense | 29 | 24 | 22 |
| Acquisitions\tand\tother\trestructurings | 130 | 10 | 39 |
|  | $332 | $177 | $196 |
| Tax\tbenefit\tassociated\twith\tshare-based\tcompensation\tcosts\trecognized | $79 | $61 | $69 |

Upon	the	Company's	acquisition	of	Bard	in	2018,	certain	pre-acquisition	equity	awards	of	Bard	were	converted	into	either	BD	SARs	or	BD	restricted	stock awards,	as	applicable.	These	awards	have	substantially	the	same	terms	and	conditions	as	the	converted	Bard	awards	immediately	prior	to	the	acquisition	date.	The compensation	expense	of	$126	million	associated	with	these	replacement	awards	was	recorded	in	Acquisitions	and	other	restructurings.

# Stock	Appreciation	Rights

SARs	represent	the	right	to	receive,	upon	exercise,	shares	of	common	stock	having	a	value	equal	to	the	difference	between	the	market	price	of	common	stock	on the	date	of	exercise	and	the	exercise	price	on	the	date	of	grant.	SARs	vest	over	a	four-year	period	and	have	a	ten-year	term.	The	fair	value	was	estimated	on	the	date	of grant	using	a	lattice-based	binomial	option	valuation	model	that	uses	the	following	weighted-average	assumptions:

|  | 2018 | 2017 | 2016 |
| :--- | :--- | :--- | :--- |
| Risk-free\tinterest\trate | 2.32% | 2.33% | 2.17% |
| Expected\tvolatility | 19.0% | 20.0% | 19.0% |
| Expected\tdividend\tyield | 1.33% | 1.71% | 1.76% |
| Expected\tlife | 7.4\tyears | 7.5\tyears | 7.6\tyears |
| Fair\tvalue\tderived | $46.10 | $33.81 | $27.69 |

Expected	volatility	is	based	upon	historical	volatility	for	the	Company's	common	stock	and	other	factors.	The	expected	life	of	SARs	granted	is	derived	from	the output	of	the	lattice-based	model,	using	assumed	exercise	rates	based	on	historical	exercise	and	termination	patterns,	and	represents	the	period	of	time	that	SARs	granted are	expected	to	be	outstanding.	The	risk-free	interest	rate	used	is	based	upon	the	published	U.S.	Treasury	yield	curve	in	effect	at	the	time	of	grant	for	instruments	with	a similar	life.	The	dividend	yield	is	based	upon	the	most	recently	declared	quarterly	dividend	as	of	the	grant	date.	The	Company	issued	1.4	million	shares	during	2018	to satisfy	the	SARs	exercised.

A	summary	of	SARs	outstanding	as	of	September	30,	2018	and	changes	during	the	year	then	ended	is	as	follows:

# Stock	Options

The	Company	has	not	granted	stock	options	since	2005.	Certain	pre-acquisition	equity	awards	of	CareFusion	were	converted	on	March	17,	2015	into	BD	stock options	with	accelerated	vesting	terms	and	there	were	166	thousand	of	these	awards	outstanding	at	September	30,	2018.	Amounts	recognized	or	realized	in	2018,	2017 and	2016	relative	to	stock	option	exercises,	including	cash	received,	the	tax	benefit	realized	and	the	total	intrinsic	value,	were	immaterial	to	the	Company's	consolidated financial	results.

# Performance-Based	and	Time-Vested	Restricted	Stock	Units

Performance-based	restricted	stock	units	cliff	vest	three	years	after	the	date	of	grant.	These	units	are	tied	to	the	Company's	performance	against	pre-established targets	over	a	three-year	performance	period.	The	performance	measures	for	fiscal	years	2018,	2017	and	2016	were	relative	total	shareholder	return	(measures	the Company's	stock	performance	during	the	performance	period	against	that	of	peer	companies)	and	average	annual	return	on	invested	capital.	Under	the	Company's	long- term	incentive	program,	the	actual	payout	under	these	awards	may	vary	from	zero	to	200%	of	an	employee's	target	payout,	based	on	the	Company's	actual	performance over	the	three-year	performance	period.	The	fair	value	is	based	on	the	market	price	of	the	Company's	stock	on	the	date	of	grant.	Compensation	cost	initially	recognized assumes	that	the	target	payout	level	will	be	achieved	and	is	adjusted	for	subsequent	changes	in	the	expected	outcome	of	performance-related	conditions.	For	units	for which	the	performance	conditions	are	modified	after	the	date	of	grant,	any	incremental	increase	in	the	fair	value	of	the	modified	units,	over	the	original	units,	is	recorded as	compensation	expense	on	the	date	of	the	modification	for	vested	units,	or	over	the	remaining	performance	period	for	units	not	yet	vested.

Time-vested	restricted	stock	unit	awards	granted	after	January	2015	vest	on	a	graded	basis	over	a	three-year	period.	Time-vested	restricted	stock	units	granted before	January	2015	cliff	vest	three	years	after	the	date	of	grant,	except	for	certain	key	executives	of	the	Company,	including	the	executive	officers,	for	which	such	units generally	vest	one	year	following	the	employee's	retirement.	The	related	share-based	compensation	expense	is	recorded	over	the	requisite	service	period,	which	is	the vesting	period	or	is	based	on	retirement	eligibility.	The	fair	value	of	all	time-vested	restricted	stock	units	is	based	on	the	market	value	of	the	Company's	stock	on	the date	of	grant.

A	summary	of	restricted	stock	units	outstanding	as	of	September	30,	2018	and	changes	during	the	year	then	ended	is	as	follows:

|  |  | Performance-Based |  | Time-Vested |  |
| :--- | :--- | :--- | :--- | :--- | :--- |
|  | Stock\tUnits\t(in\nthousands) |  | Weighted\nAverage\tGrant\nDate\tFair\tValue | Stock\tUnits\t(in\nthousands) | Weighted\nAverage\tGrant\nDate\tFair\tValue |
| Balance\tat\tOctober\t1 | 1,080 |  | \t $161.64 | 2,136 | $142.06 |
| Granted | 338 |  | 251.75 | 2,903 | 216.06 |
| Distributed | (119) |  | 156.65 | (1,368) | 167.86 |
| Forfeited\tor\tcanceled | (267) |  | 173.67 | (906) | 178.87 |
| Balance\tat\tSeptember\t30 | 1,032 | (a) | \t $190.57 | 2,765 | $194.92 |
| Expected\tto\tvest\tat\tSeptember\t30 | 548 | (b) | \t $192.35 | 2,585 | $193.90 |

(b) Net	of	expected	forfeited	units	and	units	in	excess	of	the	expected	performance	payout	of	64	thousand	and	420	thousand	shares, respectively.

The	weighted	average	grant	date	fair	value	of	restricted	stock	units	granted	during	the	years	2018,	2017	and	2016	are	as	follows:

At	September	30,	2018,	the	weighted	average	remaining	vesting	term	of	performance-based	and	time	vested	restricted	stock	units	is	0.79	and	1.05	year, respectively.

# Unrecognized	Compensation	Expense	and	Other	Stock	Plans

The	amount	of	unrecognized	compensation	expense	for	all	non-vested	share-based	awards	as	of	September	30,	2018,	is	approximately	$307	million,	which	is expected	to	be	recognized	over	a	weighted-average	remaining	life	of	approximately	2.04	years.	At	September	30,	2018,	7.1	million	shares	were	authorized	for	future grants	under	the	2004	Plan.	The	Company	has	a	policy	of	satisfying	share-based	payments	through	either	open	market	purchases	or	shares	held	in	treasury.	At September	30,	2018,	the	Company	has	sufficient	shares	held	in	treasury	to	satisfy	these	payments.

As	of	September	30,	2018,	135	thousand	shares	were	held	in	trust	relative	to	a	Director's	Deferral	plan,	which	provides	a	means	to	defer	director	compensation, from	time	to	time,	on	a	deferred	stock	or	cash	basis.	Also	as	of	September	30,	2018,	338	thousand	shares	were	issuable	under	a	Deferred	Compensation	Plan	that	allows certain	highly-compensated	employees,	including	executive	officers,	to	defer	salary,	annual	incentive	awards	and	certain	equity-based	compensation.

# Note	8	—	Benefit	Plans

The	Company	has	defined	benefit	pension	plans	covering	certain	employees	in	the	United	States	and	certain	international	locations.	Postretirement	healthcare	and life	insurance	benefits	provided	to	qualifying	domestic	retirees	as	well	as	other	postretirement	benefit	plans	in	international	countries	are	not	material.	The	measurement date	used	for	the	Company's	employee	benefit	plans	is	September	30.

Effective	January	1,	2018,	the	legacy	U.S.	pension	plan	was	frozen	to	limit	the	participation	of	employees	who	are	hired	or	re-hired	by	the	Company,	or	who transfer	employment	to	the	Company,	on	or	after	January	1,	2018.

Net	pension	cost	for	the	years	ended	September	30	included	the	following	components:

| (Millions	of	dollars) | 2018 | 2017 | 2016 |
| :--- | :--- | :--- | :--- |
| Service\tcost | $136 | \t $110 | \t $81 |
| Interest\tcost | 90 | 61 | 72 |
| Expected\treturn\ton\tplan\tassets | (154) | (112) | (109) |
| Amortization\tof\tprior\tservice\tcredit | (13) | (14) | (15) |
| Amortization\tof\tloss | 78 | 92 | 77 |
| Settlements | 2 | — | 7 |
| Net\tpension\tcost | $137 | \t $138 | \t $113 |
| Net\tpension\tcost\tincluded\tin\tthe\tpreceding\ttable\tthat\tis\tattributable\tto\tinternational\nplans | $34 | \t $43 | \t $35 |

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.	The	settlement	losses	recorded	in	2018	and	2016	primarily	included lump	sum	benefit	payments	associated	with	the	Company's	U.S.	supplemental	pension	plan.	The	Company	recognizes	pension	settlements	when	payments	from	the supplemental	plan	exceed	the	sum	of	service	and	interest	cost	components	of	net	periodic	pension	cost	associated	with	this	plan	for	the	fiscal	year.

The	change	in	benefit	obligation,	change	in	fair	value	of	pension	plan	assets,	funded	status	and	amounts	recognized	in	the	Consolidated	Balance	Sheets	for	these plans	were	as	follows:

| (Millions	of	dollars) | 2018 | 2017 |
| :--- | :--- | :--- |
| Change\tin\tbenefit\tobligation: |  |  |
| Beginning\tobligation | $2,647 | \t $2,719 |
| Service\tcost | 136 | 110 |
| Interest\tcost | 90 | 61 |
| Plan\tamendments | — | (1) |
| Benefits\tpaid | (162) | (123) |
| Impact\tof\tacquisitions\t(divestitures) | 758 | (19) |
| Actuarial\tgain | (82) | (134) |
| Settlements | (122) | (1) |
| Other,\tincludes\ttranslation | (19) | 36 |
| Benefit\tobligation\tat\tSeptember\t30 | $3,246 | \t $2,647 |
| Change\tin\tfair\tvalue\tof\tplan\tassets: |  |  |
| Beginning\tfair\tvalue | $1,932 | \t $1,855 |
| Actual\treturn\ton\tplan\tassets | 70 | 134 |
| Employer\tcontribution | 400 | 54 |
| Benefits\tpaid | (162) | (123) |
| Impact\tof\tacquisitions\t(divestitures) | 539 | (13) |
| Settlements | (122) | (1) |
| Other,\tincludes\ttranslation | (15) | 26 |
| Plan\tassets\tat\tSeptember\t30 | $2,642 | \t $1,932 |
| Funded\tStatus\tat\tSeptember\t30: |  |  |
| Unfunded\tbenefit\tobligation | $(604) | \t $(715) |
| Amounts\trecognized\tin\tthe\tConsolidated\tBalance\nSheets\tat\tSeptember\t30: |  |  |
| Other | $15 | \t $9 |
| Salaries,\twages\tand\trelated\titems | (15) | (17) |
| Long-term\tEmployee\tBenefit\tObligations | (604) | (707) |
| Net\tamount\trecognized | $(604) | \t $(715) |
| Amounts\trecognized\tin\tAccumulated\tother\ncomprehensive\tincome\t(loss)\tbefore\tincome\ttaxes\tat\tSeptember\t30: |  |  |
| Prior\tservice\tcredit | $60 | \t $74 |
| Net\tactuarial\tloss | (982) | (1,065) |
| Net\tamount\trecognized | $(921) | \t $(991) |

International	pension	plan	assets	at	fair	value	included	in	the	preceding	table	were	$821	million	and	$678	million	at	September	30,	2018	and	2017,	respectively. The	international	pension	plan	projected	benefit	obligations	were	$1.064	billion	and	$917	million	at	September	30,	2018	and	2017,	respectively.

The	benefit	obligation	associated	with	postretirement	healthcare	and	life	insurance	plans	provided	to	qualifying	domestic	retirees,	which	was	largely	recorded	to Long-Term	Employee	Benefit	Obligations,	was	$148	million	and	$165	million	at	September	30,	2018	and	2017,	respectively.

Pension	plans	with	accumulated	benefit	obligations	in	excess	of	plan	assets	and	plans	with	projected	benefit	obligations	in	excess	of	plan	assets	consist	of	the following	at	September	30:

|  | Accumulated	Benefit<br>Obligation	Exceeds	the<br>Fair	Value	of	Plan	Assets | Accumulated	Benefit<br>Obligation	Exceeds	the<br>Fair	Value	of	Plan	Assets | Projected	Benefit<br>Obligation	Exceeds	the<br>Fair	Value	of	Plan	Assets | Projected	Benefit<br>Obligation	Exceeds	the<br>Fair	Value	of	Plan	Assets |
| :--- | :--- | :--- | :--- | :--- |
| (Millions\tof\tdollars) | 2018 | 2017 | 2018 | 2017 |
| Projected\tbenefit\tobligation | $2,618 | $2,551 | \t $3,121 | $2,613 |
| Accumulated\tbenefit\tobligation | $2,533 | $2,470 |  |  |
| Fair\tvalue\tof\tplan\tassets | $2,012 | $1,833 | \t $2,502 | $1,889 |

The	estimated	net	actuarial	loss	and	prior	service	credit	for	pension	benefits	that	will	be	amortized	from	Accumulated	other	comprehensive	income	(loss)	into	net pension	costs	over	the	next	fiscal	year	are	expected	to	be	$79	million	and	$14	million,	respectively.	The	net	actuarial	loss	for	other	postretirement	benefits	that	will	be amortized	from	Accumulated	other	comprehensive	income	(loss)	into	net	other	postretirement	costs	over	the	next	fiscal	year	is	immaterial.	The	estimated	prior	service credit	that	will	be	amortized	from	Accumulated	other	comprehensive	income	(loss)	into	net	other	postretirement	costs	over	the	next	fiscal	year	is	expected	to	be	$5 million.

The	weighted	average	assumptions	used	in	determining	pension	plan	information	were	as	follows:

|  | 2018 | 2017 | 2016 |
| :--- | :--- | :--- | :--- |
| Net\tCost |  |  |  |
| Discount\trate: |  |  |  |
| U.S.\tplans\t(a) | 3.71% | 3.42% | 4.15% |
| International\tplans | 2.30 | 1.70 | 2.84 |
| Expected\treturn\ton\tplan\tassets: |  |  |  |
| U.S.\tplans | 7.20 | 7.25 | 7.50 |
| International\tplans | 4.95 | 4.65 | 5.02 |
| Rate\tof\tcompensation\tincrease: |  |  |  |
| U.S.\tplans | 4.51 | 4.25 | 4.25 |
| International\tplans | 2.31 | 2.33 | 2.33 |
| Benefit\tObligation |  |  |  |
| Discount\trate: |  |  |  |
| U.S.\tplans | 4.26 | 3.72 | 3.42 |
| International\tplans | 2.30 | 2.25 | 1.70 |
| Rate\tof\tcompensation\tincrease: |  |  |  |
| U.S.\tplans | 4.29 | 4.51 | 4.25 |
| International\tplans | 2.36 | 2.30 | 2.33 |

(a) The	Company	calculated	the	service	and	interest	components	utilizing	an	approach	that	discounts	the	individual	expected	cash	flows	using	the	applicable	spot rates	derived	from	the	yield	curve	over	the	projected	cash	flow	period.

# Expected	Rate	of	Return	on	Plan	Assets

The	expected	rate	of	return	on	plan	assets	is	based	upon	expectations	of	long-term	average	rates	of	return	to	be	achieved	by	the	underlying	investment	portfolios. In	establishing	this	assumption,	the	Company	considers	many	factors,	including	historical	assumptions	compared	with	actual	results;	benchmark	data;	expected	returns on	various	plan	asset	classes,	as	well	as	current	and	expected	asset	allocations.

# Expected	Funding

The	Company's	funding	policy	for	its	defined	benefit	pension	plans	is	to	contribute	amounts	sufficient	to	meet	legal	funding	requirements,	plus	any	additional amounts	that	may	be	appropriate	considering	the	funded	status	of	the	plans,	tax	consequences,	the	cash	flow	generated	by	the	Company	and	other	factors.	The	Company made	discretionary	contributions	of	$287	million	to	its	U.S.	pension	plans	in	2018.	The	Company	also	made	a	discretionary	contribution	of	$200	million	to	its	BD	U.S. pension	in	October	2018.	The	Company	does	not	anticipate	any	significant	required	contributions	to	its	pension	plans	in	2019.

Expected	benefit	payments	are	as	follows:

| (Millions	of	dollars) | Pension<br>Plans | Other<br>Postretirement<br>Benefits |
| :--- | :--- | :--- |
| 2019 | $213 | $14 |
| 2020 | 202 | 14 |
| 2021 | 208 | 13 |
| 2022 | 209 | 13 |
| 2023 | 214 | 12 |
| 2024-2028 | 1,096 | 54 |

# Investments

The	Company's	primary	objective	is	to	achieve	returns	sufficient	to	meet	future	benefit	obligations.	It	seeks	to	generate	above	market	returns	by	investing	in	more volatile	asset	classes	such	as	equities	while	at	the	same	time	controlling	risk	through	diversification	in	non-correlated	asset	classes	and	through	allocations	to	more	stable asset	classes	like	fixed	income.

# U.S.	Plans

The	Company's	U.S.	pension	plans	comprise	69%	of	total	benefit	plan	investments,	based	on	September	30,	2018	market	values	and	have	a	target	asset	mix	of 40%	fixed	income,	28%	diversifying	investments	and	32%	equities.	This	mix	was	established	based	on	an	analysis	of	projected	benefit	payments	and	estimates	of	long- term	returns,	volatilities	and	correlations	for	various	asset	classes.	The	asset	allocations	to	diversifying	investments	include	high-yield	bonds,	hedge	funds,	real	estate, infrastructure,	commodities,	leveraged	loans	and	emerging	markets	bonds.

	The	actual	portfolio	investment	mix	may,	from	time	to	time,	deviate	from	the	established	target	mix	due	to	various	factors	such	as	normal	market	fluctuations,	the reliance	on	estimates	in	connection	with	the	determination	of	allocations	and	normal	portfolio	activity	such	as	additions	and	withdrawals.	Rebalancing	of	the	asset portfolio	on	a	quarterly	basis	is	required	to	address	any	allocations	that	deviate	from	the	established	target	allocations	in	excess	of	defined	allowable	ranges.	The	target allocations	are	subject	to	periodic	review,	including	a	review	of	the	asset	portfolio's	performance,	by	the	named	fiduciary	of	the	plans.	Any	tactical	deviations	from	the established	asset	mix	require	the	approval	of	the	named	fiduciary.

The	U.S.	plans	may	enter	into	both	exchange	traded	and	non-exchange	traded	derivative	transactions	in	order	to	manage	interest	rate	exposure,	volatility,	term structure	of	interest	rates,	and	sector	and	currency	exposures	within	the	fixed	income	portfolios.	The	Company	has	established	minimum	credit	quality	standards	for counterparties	in	such	transactions.

The	following	table	provides	the	fair	value	measurements	of	U.S.	plan	assets,	as	well	as	the	measurement	techniques	and	inputs	utilized	to	measure	fair	value	of these	assets,	at	September	30,	2018	and	2017.	The	categorization	of	fund	investments	is	based	upon	the	categorization	of	these	funds'	underlying	assets.

|  |  |  |  |  | Quoted	Prices	in |  | Significant |  |  |  |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- |
|  | Total\tU.S. | Total\tU.S. |  |  | Active\tMarkets |  | Other |  | Significant |  |
| (Millions\tof\tdollars) | Plan\tAsset\nBalances\n2018 | 2017 | Investments\tMeasured\tat\tNet\nAsset\tValue\t(a)\n2018 | 2017 | for\tIdentical\nAssets\t(Level\t1)\n2018 | 2017 | Observable\nInputs\t(Level\t2)\n2018 | 2017 | Unobservable\nInputs\t(Level\t3)\n2018 | 2017 |
| Fixed\tIncome: |  |  |  |  |  |  |  |  |  |  |
| Mortgage\tand |  |  |  |  |  |  |  |  |  |  |
| asset-backed |  |  |  |  |  |  |  |  |  |  |
| securities | $28 | $155 | $— | $— | $— | $— | $28 | $155 | $— | $— |
| Corporate\nbonds | 484 | 232 | — | — | 101 | 89 | 383 | 144 | — | — |
| Government |  |  |  |  |  |  |  |  |  |  |
| and\tagency- |  |  |  |  |  |  |  |  |  |  |
| U.S. | 257 | 107 | — | — | 199 | 83 | 57 | 25 | — | — |
| Government |  |  |  |  |  |  |  |  |  |  |
| and\tagency- |  |  |  |  |  |  |  |  |  |  |
| Foreign | 122 | 98 | 8 | 12 | 85 | 63 | 28 | 22 | — | — |
| Equity\tsecurities | 536 | 369 | 360 | 307 | 176 | 62 | — | — | — | — |
| Cash\tand\tcash\nequivalents | 39 | 40 | — | — | 39 | 40 | — | — | — | — |
| Other | 356 | 252 | 356 | 217 | — | 34 | — | — | — | — |
| Fair\tvalue\tof\tplan\nassets | $1,821 | $1,254 | $724 | $537 | $600 | $371 | $497 | $346 | $— | $— |

(a) As	per	applicable	disclosure	requirements,	certain	investments	that	were	measured	at	net	asset	value	per	share	or	its	equivalent	have	not	been	categorized within	the	fair	value	hierarchy.	Values	of	such	assets	are	based	on	the	corroborated	net	asset	value	provided	by	the	fund	administrator.

# Fixed	Income	Securities

U.S.	pension	plan	assets	categorized	above	as	fixed	income	securities	include	fund	investments	comprised	of	mortgage-backed,	corporate,	government	and	agency and	asset-backed	instruments.	Mortgage-backed	securities	consist	of	residential	mortgage	pass-through	certificates.	Investments	in	corporate	bonds	are	diversified	across industry	and	sector	and	consist	of	investment-grade,	as	well	as	high-yield	debt	instruments.	U.S.	government	investments	consist	of	obligations	of	the	U.S.	Treasury, other	U.S.	government	agencies,	state	governments	and	local	municipalities.	Assets	categorized	as	foreign	government	and	agency	debt	securities	included	investments in	developed	and	emerging	markets.

The	values	of	fixed	income	investments	classified	within	Level	1	are	based	on	the	closing	price	reported	on	the	major	market	on	which	the	investments	are	traded. A	portion	of	the	fixed	income	instruments	classified	within	Level	2	are	valued	based	upon	estimated	prices	from	independent	vendors'	pricing	models	and	these	prices are	derived	from	market	observable	sources	including:	benchmark	yields,	reported	trades,	broker/dealer	quotes,	issuer	spreads,	benchmark	securities,	bids,	offers	and other	market-related	data.

# Equity	Securities

U.S.	pension	plan	assets	categorized	as	equity	securities	consist	of	fund	investments	in	publicly-traded	U.S.	and	non-U.S.	equity	securities.	In	order	to	achieve appropriate	diversification,	these	portfolios	are	invested	across	market	sectors,	investment	styles,	capitalization	weights	and	geographic	regions.	The	values	of	equity securities	classified	within	Level	1	are	based	on	the	closing	price	reported	on	the	major	market	on	which	the	investments	are	traded.

# Cash	and	Cash	Equivalents

A	portion	of	the	U.S.	plans'	assets	consists	of	investments	in	cash	and	cash	equivalents,	primarily	to	accommodate	liquidity	requirements	relating	to	trade settlement	and	benefit	payment	activity,	and	the	values	of	these	assets	are	based	upon	quoted	market	prices.

# Other	Securities

Other	U.S.	pension	plan	assets	include	fund	investments	comprised	of	underlying	assets	of	real	estate,	infrastructure,	commodities	and	hedge	funds.	The	values	of such	instruments	classified	within	Level	1	are	based	on	the	closing	price	reported	on	the	major	market	on	which	the	investments	are	traded.

# International	Plans

International	plan	assets	comprise	31%	of	the	Company's	total	benefit	plan	assets,	based	on	market	value	at	September	30,	2018.	Such	plans	have	local independent	fiduciary	committees,	with	responsibility	for	development	and	oversight	of	investment	policy,	including	asset	allocation	decisions.	In	making	such decisions,	consideration	is	given	to	local	regulations,	investment	practices	and	funding	rules.

The	following	table	provides	the	fair	value	measurements	of	international	plan	assets,	as	well	as	the	measurement	techniques	and	inputs	utilized	to	measure	fair value	of	these	assets,	at	September	30,	2018	and	2017.

|  |  |  |  |  | Quoted	Prices	in | Quoted	Prices	in | Significant |  |  |  |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- |
|  | Total\tInternational | Total\tInternational |  |  | Active\tMarkets | Active\tMarkets | Other |  | Significant |  |
| (Millions\tof\tdollars) | Plan\tAsset\nBalances\n2018 | 2017 | Investments\tMeasured\tat\tNet\nAsset\tValue\t(a)\n2018 | 2017 | for\tIdentical\nAssets\t(Level\t1)\n2018 | 2017 | Observable\nInputs\t(Level\t2)\n2018 | 2017 | Unobservable\nInputs\t(Level\t3)\n2018 | 2017 |
| Fixed\tIncome: |  |  |  |  |  |  |  |  |  |  |
| Corporate\nbonds | $28 | $14 | $— | $— | $14 | $— | $14 | $13 | $— | $— |
| Government |  |  |  |  |  |  |  |  |  |  |
| and\tagency- |  |  |  |  |  |  |  |  |  |  |
| U.S. | 6 | 5 | — | — | 3 | 1 | 3 | 3 | — | — |
| Government |  |  |  |  |  |  |  |  |  |  |
| and\tagency- |  |  |  |  |  |  |  |  |  |  |
| Foreign | 150 | 127 | — | — | 104 | 83 | 46 | 45 | — | — |
| Other\tfixed\nincome | 96 | 64 | — | — | 63 | 57 | 33 | 7 | — | — |
| Equity\tsecurities | 314 | 256 | 15 | 13 | 299 | 242 | — | — | — | — |
| Cash\tand\tcash\nequivalents | 9 | 28 | — | — | 9 | 28 | — | — | — | — |
| Real\testate | 30 | 26 | — | — | — | — | 30 | 26 | — | — |
| Insurance\ncontracts | 114 | 98 | — | — | — | — | — | — | 114 | 98 |
| Other | 74 | 62 | — | — | 55 | 47 | 20 | 15 | — | — |
| Fair\tvalue\tof\tplan\nassets | $821 | $678 | $15 | $13 | $546 | $459 | $146 | $108 | $114 | $98 |

Fixed	income	investments	held	by	international	pension	plans	include	corporate,	U.S.	government	and	non-U.S.	government	securities.	The	values	of	fixed income	securities	classified	within	Level	1	are	based	on	the	closing	price	reported	on	the	major	market	on	which	the	investments	are	traded.	Values	of	investments classified	within	Level	2	are	based	upon	estimated	prices	from	independent	vendors'	pricing	models	and	these	prices	are	derived	from	market	observable	sources.

Equity	securities	included	in	the	international	plan	assets	consist	of	publicly-traded	U.S.	and	non-U.S.	equity	securities.	The	values	of	equity	securities	classified within	Level	1	are	based	on	the	closing	price	reported	on	the	major	market	on	which	the	investments	are	traded.

The	international	plans	hold	a	portion	of	assets	in	cash	and	cash	equivalents,	in	order	to	accommodate	liquidity	requirements	and	the	values	are	based	upon	quoted market	prices.	Real	estate	investments	consist	of	investments	in	funds	holding	an	interest	in	real	properties	and	the	corresponding	values	represent	the	estimated	fair value	based	on	the	fair	value	of	the	underlying	investment	value	or	cost,	adjusted	for	any	accumulated	earnings	or	losses.	The	values	of	insurance	contracts approximately	represent	cash	surrender	value.	Other	investments	include	fund	investments	for	which	values	are	based	upon	either	quoted	market	prices	or	market observable	sources.

The	following	table	summarizes	the	changes,	for	the	years	ended	September	30,	2018	and	2017,	in	the	fair	value	of	international	pension	assets	measured	using Level	3	inputs:

| (Millions	of	dollars) | Insurance<br>Contracts |
| :--- | :--- |
| Balance\tat\tSeptember\t30,\t2016 | $102 |
| Actual\treturn\ton\tplan\tassets: |  |
| Relating\tto\tassets\theld\tat\tSeptember\t30,\t2016 | 1 |
| Purchases,\tsales\tand\tsettlements,\tnet | (11) |
| Transfers\tin\tfrom\tother\tcategories | 1 |
| Exchange\trate\tchanges | 4 |
| Balance\tat\tSeptember\t30,\t2017 | $98 |
| Actual\treturn\ton\tplan\tassets: |  |
| Relating\tto\tassets\theld\tat\tSeptember\t30,\t2017 | 2 |
| Purchases,\tsales\tand\tsettlements,\tnet | 15 |
| Transfers\tin\tfrom\tother\tcategories | 1 |
| Exchange\trate\tchanges | (2) |
| Balance\tat\tSeptember\t30,\t2018 | $114 |

# Defined	Contribution	Plans

The	Company	has	voluntary	defined	contribution	plans	covering	eligible	employees	in	the	United	States	which	provide	for	a	Company	match	as	well	as	a Company	contribution	for	Bard	associates	and	for	associates	hired	or	rehired	after	December	31,	2017.	The	cost	of	these	plans	was	$89	million	in	2018,	$67	million	in 2017	and	$61	million	in	2016.	The	2018	increase	in	the	cost	associated	with	these	plans	is	attributable	to	the	Company's	acquisition	of	Bard.

# Note	9	–	Acquisitions

On	December	29,	2017,	the	Company	completed	its	acquisition	of	Bard,	to	create	a	medical	technology	company	which	is	uniquely	positioned	to	improve	both	the treatment	of	disease	for	patients	and	the	process	of	care	for	health	care	providers.		Under	the	terms	of	the	transaction,	Bard	common	shareholders	received approximately	$222.93	in	cash	and	0.5077	shares	of	BD	stock	per	Bard	share.	The	Company	financed	the	cash	portion	of	total	consideration	transferred	with	available cash,	which	included	net	proceeds	raised	in	the	third	quarter	of	fiscal	year	2017	through	registered	public	offerings	of	equity	securities	and	debt	transactions	of approximately	$4.8	billion	and	$9.6	billion,	respectively.	The	operating	activities	of	Bard	from	the	acquisition	date	through	December	31,	2017	were	not	material	to	the Company's	consolidated	results	of	operations.	As	such,	Bard's	operating	results	were	included	in	the	Company's	consolidated	results	of	operations	beginning	on	January 1,	2018.

The	acquisition-date	fair	value	of	consideration	transferred	consisted	of	the	components	below.	The	fair	value	of	the	shares	and	equity	awards	issued	as consideration	was	recognized	as	a	$6.5	billion	increase	to	Capital	in	excess	of	par	value	and	a	$2.1	billion	decrease	to	Common	stock	in	treasury.

| (Millions	of	dollars) |  |
| :--- | :--- |
| Cash\tconsideration | $16,400 |
| Non-cash\tconsideration-fair\tvalue\tof\tshares\tissued | 8,004 |
| Non-cash\tconsideration-fair\tvalue\tof\tequity\tawards\tissued | 613 |
| Total\tconsideration\ttransferred | $25,017 |

The	acquisition-date	fair	value	of	the	Company's	ordinary	shares	issued	to	Bard	shareholders	was	calculated	per	the	following	(shares	in	millions):

| (Millions	of	dollars,	except	per	share	data) |  |
| :--- | :--- |
| Total\tBard\tshares\toutstanding | 73.359 |
| Conversion\tfactor | 0.5077 |
| Conversion\tof\tBard\tshares\toutstanding | 37.243 |
| Conversion\tof\tpre-acquisition\tequity\tawards | 0.104 |
| Total\tnumber\tof\tthe\tCompany's\tshare\tissued | 37.347 |
| Closing\tprice\tof\tthe\tCompany's\tstock | $214.32 |
| Fair\tvalue\tof\tthe\tCompany's\tissued\tshares | $8,004 |

# Allocation	of	Consideration	Transferred	to	Net	Assets	Acquired

As	discussed	in	Note	6,	the	majority	of	Bard's	product	offerings	are	reported,	beginning	with	the	second	quarter	of	fiscal	year	2018,	under	the	Interventional segment	and	Bard's	remaining	product	offerings	are	reported	under	the	Company's	Medical	segment.	The	acquisition	was	accounted	for	under	the	acquisition	method	of accounting	for	business	combinations.	The	Company	is	in	the	process	of	finalizing	the	allocation	of	the	purchase	price	to	the	individual	assets	acquired	and	liabilities assumed.

The	preliminary	allocations	of	the	purchase	price	below	provide	a	reasonable	basis	for	estimating	the	fair	values	of	assets	acquired	and	liabilities	assumed.	These provisional	estimates	will	be	adjusted	upon	the	availability	of	further	information	regarding	events	or	circumstances	which	existed	at	the	acquisition	date	and	such adjustments	may	be	significant.	The	assets	acquired	and	liabilities	assumed	in	this	acquisition,	as	recorded	in	the	Company's	consolidated	balance	sheet	at	September	30, 2018,	were	largely	allocated	to	the	Company's	new	Interventional	segment.

| (Millions	of	dollars) |  |
| :--- | :--- |
| Cash\tand\tequivalents | $1,480 |
| Trade\treceivables | 472 |
| Inventories | 974 |
| Property,\tplant\tand\tequipment | 553 |
| Developed\ttechnology | 10,469 |
| Customer\trelationships | 1,146 |
| Other\tassets | 624 |
| Total\tidentifiable\tassets\tacquired | 15,718 |
| Payables,\taccrued\texpenses\tand\tother\tliabilities | 1,276 |
| Short\tterm\tand\tlong-term\tdebt | 1,692 |
| Product\tliability\tand\tother\tlegal\treserves | 2,029 |
| Deferred\ttax\tliabilities | 1,713 |
| Total\tliabilities\tassumed | 6,711 |
| Net\tidentifiable\tassets\tacquired | 9,007 |
| Goodwill | 16,009 |
| Net\tassets\tacquired | $25,017 |

# Identifiable	Intangible	Assets	Acquired

The	developed	technology	assets	acquired	represented	Bard's	developed	technologies	in	the	fields	of	vascular,	urology,	oncology,	and	surgical	specialties.	The technologies'	fair	values	were	determined	based	on	the	present	value	of	projected	cash	flows	utilizing	an	income	approach	with	a	risk-adjusted	discount	rate	of	8%.	The technologies	will	be	amortized	over	an	estimated	weighted-average	amortization	period	of	14	years,	which	is	the	weighted	average	period	over	which	the	technologies are	expected	to	generate	substantial	cash	flows.

The	customer	relationships	assets	acquired	represented	Bard's	relationships	with	its	customers.	The	fair	value	of	these	customer	relationships	was	determined based	on	the	present	value	of	projected	cash	flows	utilizing	an	income	approach	with	a	risk-adjusted	discount	rate	of	8%.	The	estimated	weighted-average	amortization period	of	the	customer	relationships	was	determined	to	be	13	years	and	this	period	corresponds	with	the	weighted	average	of	lives	determined	for	the	product	technology which	underlies	the	customer	contracts.

# Goodwill

Goodwill	typically	results	through	expected	synergies	from	combining	operations	of	the	acquiree	and	the	acquirer,	as	well	as	from	intangible	assets	that	do	not qualify	for	separate	recognition.	The	goodwill	recognized	as	a	result	of	this	acquisition	includes,	among	other	things,	the	value	of	combining	the	Company's	leadership	in

medication	management	and	infection	prevention	with	an	expanded	offering	of	solutions	across	the	care	continuum.	Additionally,	Bard's	strong	product	portfolio	and innovation	pipeline	are	expected	to	increase	the	Company's	opportunities	in	fast-growing	clinical	areas.	Revenue	synergies	are	also	expected	to	result	from	enhanced growth	opportunities	for	the	combined	company	in	non-U.S.	markets.	No	portion	of	goodwill	from	this	acquisition	was	deductible	for	tax	purposes.

# Amounts	Related	to	Bard's	Legal	Proceedings	and	Claims

Accruals	for	Bard-related	product	liability	and	other	legal	matters	represented	approximately	$2.0	billion	of	the	liabilities	assumed.	Cash	and	equivalents	include	a restricted	cash	balance	acquired	which	largely	represents	funds	that	are	restricted	for	certain	product	liability	matters	assumed.	Additional	disclosures	regarding	Bard's legal	proceedings	and	claims	are	provided	in	Note	5.

# The	Tax	Cuts	and	Job	Act	Transition	Tax

The	net	assets	acquired	included	approximately	$175	million	of	transition	tax	payable	based	on	the	Company's	best	estimate	of	its	transition	tax	liability	under new	U.S.	tax	legislation	which	is	further	discussed	in	Note	16.

# Transaction	Costs

Transaction	costs	related	to	this	acquisition	incurred	during	the	years	ended	September	30,	2018	and	2017	were	approximately	$56	million	and	$25	million, respectively.	These	transaction	costs	were	recorded	as	Acquisitions	and	other	restructurings	and	consisted	of	legal,	advisory	and	other	costs.	See	Note	11	for	discussion regarding	restructuring	costs	incurred	relative	to	the	Bard	acquisition	in	2018.

# Unaudited	Pro	Forma	Information

As	noted	above,	Bard's	operating	activities	from	the	acquisition	date	through	December	31,	2017	were	not	material	and	the	Company	included	Bard	in	its consolidated	results	of	operations	beginning	on	January	1,	2018.	Revenues	in	2018	were	$3	billion.	Net	Income	in	2018	included	loss	attributable	to	Bard	of	$(107) million.	The	following	table	provides	the	pro	forma	results	for	the	fiscal	years	2018	and	2017	as	if	Bard	had	been	acquired	as	of	October	1,	2016.

# (Millions	of	dollars,	except	per	share	data)

|  | 2018 | 2017 |
| :--- | :--- | :--- |
| Revenues | $16,947 | $15,781 |
| Net\tIncome | $390 | $1,145 |
| Diluted\tEarnings\tper\tShare | $0.90 | $3.60 |

The	pro	forma	results	above	include	the	impact	of	the	following	adjustments,	as	necessary:	additional	amortization	and	depreciation	expense	relating	to	assets acquired;	interest	and	other	financing	costs	relating	to	the	acquisition	transaction;	and	the	elimination	of	one-time	or	nonrecurring	items.	The	one-time	or	nonrecurring items	eliminated	for	the	year	ended	September	30,	2018	were	primarily	comprised	of	fair	value	step-up	adjustments	of	$478	million	recorded	relative	to	Bard's	inventory on	the	acquisition	date,	the	transaction	costs	discussed	above,	as	well	as	certain	Bard-related	restructuring	costs	disclosed	in	Note	11.	In	addition,	amounts	previously reported	by	Bard	as	revenues	related	to	a	royalty	income	stream	have	been	reclassified	to	Other	income	(expense),	net	to	conform	to	the	Company's	reporting classification.

The	pro	forma	results	do	not	include	any	anticipated	cost	savings	or	other	effects	of	the	planned	integration	of	Bard.	Accordingly,	the	pro	forma	results	above	are not	necessarily	indicative	of	the	results	that	would	have	been	if	the	acquisition	had	occurred	on	the	dates	indicated,	nor	are	the	pro	forma	results	indicative	of	results which	may	occur	in	the	future.

# Other	Transactions

During	the	fourth	quarter	of	fiscal	year	2018,	the	Company	acquired	TVA	Medical,	Inc.,	a	company	that	develops	minimally	invasive	vascular	access	solutions	for patients	with	chronic	kidney	disease	requiring	hemodialysis.	This	acquisition	did	not	materially	impact	the	Company's	consolidated	financial	results.

The	Company	has	completed	various	other	acquisitions	during	fiscal	year	2018	which	were	not	material	individually	or	in	the	aggregate.

Upon	the	Company's	acquisition	of	CareFusion,	it	acquired	a	40%	ownership	interest	in	Caesarea	Medical	Electronics	("CME"),	an	Israeli-based	global	infusion pump	systems	manufacturer.	The	Company	previously	accounted	for	this	interest	as	an	equity	investment.	On	April	3,	2017,	the	Company	acquired	the	remaining	60% ownership	interest	in	CME.	This	acquisition	did	not	materially	impact	the	Company's	consolidated	financial	results.

# Note	10	—	Divestiture

The	Company	completed	the	sale	of	its	Advanced	Bioprocessing	business	in	October	2018	per	a	definitive	agreement	that	was	signed	in	September	2018.	Assets held	for	sale	on	the	consolidated	balance	sheet	at	September	30,	2018,	subject	to	this	agreement,	were	approximately	$137	million.	Liabilities	held	for	sale	under	the agreement	were	immaterial.	The	Company	estimates	that	its	gross	cash	proceeds	received	will	be	approximately	$475	million,	subject	to	post-closing	adjustments.	The historical	financial	results	for	the	Advanced	Bioprocessing	business,	which	included	approximately	$106	million,	$103	million	and	$95	million	of	revenues	for	the	years ended	September	30,	2018,	2017	and	2016,	respectively,	have	not	been	classified	as	a	discontinued	operation.

On	October	3,	2016,	the	Company	sold	a	50.1%	controlling	financial	interest	in	its	Respiratory	Solutions	business,	a	component	of	the	Medical	segment,	to	form	a venture,	Vyaire	Medical.	The	Company	retained	a	49.9%	non-controlling	interest	in	the	new	standalone	entity.	The	Company	agreed	to	various	contract	manufacturing and	certain	logistical	and	transition	services	agreements	with	the	new	entity	for	a	period	of	up	to	two	years	after	the	sale.	The	Company	accounted	for	its	remaining interest	in	the	new	entity	as	an	equity	method	investment	and	recorded	its	share	of	the	new	entity's	earnings	or	losses	on	a	one-quarter	lag	to	Other	income	(expense), net.

In	April	2018,	the	Company	completed	the	sale	of	its	remaining	interest	in	Vyaire	Medical.	The	Company	received	gross	cash	proceeds	of	approximately	$435 million	and	recognized	a	pre-tax	gain	on	the	sale	of	approximately	$303	million,	which	was	recognized	in	Other	income	(expense),	net.

# Note	11	—	Business	Restructuring	Charges

In	connection	with	the	Company's	acquisition	of	Bard,	the	2015	acquisition	of	CareFusion	and	other	portfolio	rationalization	initiatives,	the	Company	incurred restructuring	costs	which	were	recorded	as	Acquisitions	and	other	restructurings.	Additional	disclosures	regarding	these	restructuring	activities	and	the	related	costs	are provided	in	Notes	7,	9	and	10.	Restructuring	liability	activity	in	2018,	2017	and	2016	was	as	follows:

|  | Employee	Termination | Employee	Termination |  | Other |  | Total |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| (Millions\tof\tdollars) | Bard | CareFusion/Other\nInitiatives\t(a) | Bard\n(b) | CareFusion/Other\nInitiatives\t(c) | Bard | CareFusion/Other\nInitiatives |
| Balance\tat\tSeptember\n30,\t2015 | $— \t $ | 62 | \t $— \t $ | — | \t $— \t $ | 62 |
| Charged\tto\texpense | — | 81 | — | 445 | — | 526 |
| Cash\tpayments | — | (76) | — | (72) | — | (148) |
| Non-cash\tsettlements | — | — | — | (39) | — | (39) |
| Other\tadjustments | — | — | — | (332) | — | (332) |
| Balance\tat\tSeptember\n30,\t2016 | $— \t $ | 67 | \t $— \t $ | 2 | \t $— \t $ | 69 |
| Charged\tto\texpense | — | 27 | — | 58 | — | 85 |
| Cash\tpayments | — | (45) | — | (12) | — | (57) |
| Non-cash\tsettlements | — | — | — | (9) | — | (9) |
| Other\tadjustments | — | — | — | (33) | — | (33) |
| Balance\tat\tSeptember\n30,\t2017 | $— \t $ | 49 | \t $— \t $ | 6 | \t $— \t $ | 55 |
| Charged\tto\texpense | 136 | 30 | 156 | 22 | 292 | 52 |
| Cash\tpayments | (103) | (56) | (3) | (23) | (106) | (79) |
| Non-cash\tsettlements | — | — | (153) | (1) | (153) | (1) |
| Other\tadjustments | — | — | — | — | — | — |
| Balance\tat\tSeptember\n30,\t2018 | $33 | \t $23 | \t $— \t $ | 4 | \t $33 | \t $27 |

(a) Expenses	in	fiscal	year	2016	included	$40	million	relating	to	the	CareFusion	acquisition	as	well	as	$13	million	for	employee	termination	costs	resulting	from	the Company's	transition	of	certain	elements	of	its	information	technology	function	to	an	outsourced	model	as	further	disclosed	below.

(b) Expenses	in	2018	represented	the	cost	associated	with	the	conversion	of	certain	pre-acquisition	equity	awards	of	Bard	to	BD	equity	awards	as	well	as	costs relating	to	Bard's	pension	plan,	partially	offset	by	a	gain	on	the	sale	of	the	Company's	soft	tissue	core	needle	biopsy	product	line	which	was	recorded	in	the second	quarter	of	fiscal	year	2018.

(c) Expenses	in	2016	included	$214	million	non-cash	charge	to	recognize	the	impairment	of	capitalized	internal-use	software	assets	held	for	sale	upon	the Company's	decision	to	transition	certain	business	information	systems	assets	to	a	third	party.	Expenses	in	2016	also	included	non-cash	impairment	charges	of $81	million,	after-tax,	relating	to	the	Company's	disposition	of	certain	non-core	businesses,	including	the	Company's	sale	of	a	majority	interest	in	its	Respiratory Solutions	business	during	the	first	quarter	of	fiscal	year	2017,	which	is	further	discussed	in	Note	10.

# Note	12	—	Intangible	Assets

Intangible	assets	at	September	30	consisted	of:

| (Millions	of	dollars) | Gross<br>Carrying<br>Amount | Accumulated<br>Amortization | Gross<br>Carrying<br>Amount | Accumulated<br>Amortization |
| :--- | :--- | :--- | :--- | :--- |
| Amortized\tintangible\tassets |  |  |  |  |
| Developed\ttechnology | $13,966 | $1,782 | $3,508 | $1,029 |
| Customer\trelationships | 4,584 | 861 | 3,393 | 564 |
| Product\trights | 121 | 58 | 131 | 54 |
| Trademarks | 407 | 84 | 408 | 65 |
| Patents\tand\tother | 397 | 288 | 370 | 274 |
| Amortized\tintangible\tassets | $19,475 | $3,073 | $7,811 | $1,986 |
| Unamortized\tintangible\tassets |  |  |  |  |
| Acquired\tin-process\tresearch\tand\tdevelopment | $37 |  | $67 |  |
| Trademarks | 2 |  | 2 |  |
| Unamortized\tintangible\tassets | $39 |  | $69 |  |

The	following	is	a	reconciliation	of	goodwill	by	business	segment:

| (Millions	of	dollars) | Medical | Life	Sciences | Interventional | Total |
| :--- | :--- | :--- | :--- | :--- |
| Goodwill\tas\tof\tSeptember\t30,\t2016 | $6,688 | $731 | $— | $7,419 |
| Acquisitions\t(a) | 119 | 24 | — | 143 |
| Divestiture\t(b) | (25) | — | — | (25) |
| Purchase\taccounting\tadjustments | 4 | — | — | 4 |
| Currency\ttranslation | 16 | 6 | — | 22 |
| Goodwill\tas\tof\tSeptember\t30,\t2017 | $6,802 | $761 | $— | $7,563 |
| Acquisitions\t(c) | 3,923 | 76 | 11,218 | 15,217 |
| Divestiture\t(b) | — | (59) | (57) | (116) |
| Reallocation\tof\tgoodwill\tfor\tchange\tin\tsegment\tand\treporting\tunit\ncomposition\t(d) | (877) | — | 877 | — |
| Purchase\taccounting\tadjustments\t(e) | 228 | (2) | 732 | 959 |
| Currency\ttranslation | (22) | (2) | — | (24) |
| Goodwill\tas\tof\tSeptember\t30,\t2018 | $10,054 | $775 | $12,771 | $23,600 |

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

(b) Represents	goodwill	derecognized	upon	the	Company's	sale	of	certain	businesses,	as	further	discussed	in Note	10.

(c) Represents	goodwill	primarily	recognized	upon	the	Company's	acquisition	of	Bard	in	fiscal	year	2018,	which	is	further	discussed	in	Note	9.	Also	includes goodwill	recognized	relative	to	certain	acquisitions	which	were	not	material	individually	or	in	the	aggregate.

(d) Represents	the	reassignment	of	goodwill,	determined	based	upon	a	relative	fair	value	allocation	approach,	associated	with	the	movement	of	certain	product offerings	which	were	previously	reported	in	the	Medical	segment	and	which	are	now	reported	in	the	Interventional	segment	as	further	discussed	in	Note	6.

(e) The	purchase	accounting	adjustments	increasing	goodwill	were	primarily	driven	by	the	valuation	of	Bard	developed	technology	assets,	the	associated	deferred tax	liability	changes,	increases	to	legal	reserves	and	the	alignment	of	the	combined	organization's	accounting	policies	with	respect	to	accrued	liabilities	and	other accounts.

# Note	13	—	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	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	and	currency	options.	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	income	(expense),	net,	during	the	years	ending	September	30,	2018,	2017	and	2016	were	immaterial	to	the	Company's	consolidated	financial	results.

The	total	notional	amounts	of	the	Company's	outstanding	foreign	exchange	contracts	as	of	September	30,	2018	and	2017	were	$3.1	billion	and	$2.5	billion, respectively.

In	order	to	mitigate	foreign	currency	exposure	relating	to	its	investments	in	certain	foreign	subsidiaries,	the	Company	has	designated	$2.7	billion	of	Euro- denominated	debt	and	$324	million	of	British	Pound-denominated	debt	as	net	investment	hedges.	Accordingly,	net	gains	or	losses	relating	to	this	debt,	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).	The	Company	has	recorded	net	gains	(losses)	relating	to	these	net	investment	hedges	of	$81	million	and	$(159)	million	to	Accumulated	other comprehensive	income	(loss)	as	of	September	30,	2018	and	2017,	respectively.	Additional	disclosures	regarding	the	Company's	issuances	of	the	Euro-denominated	debt and	British	Pound-denominated	in	fiscal	year	2018	are	provided	in	Note	15.

# Interest	Rate	Risks	and	Related	Strategies

The	Company's	primary	interest	rate	exposure	results	from	changes	in	U.S.	dollar	interest	rates.	The	Company's	policy	is	to	manage	interest	cost	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.

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	offset	by	amounts	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 million,	net	of	tax.

The	total	notional	amount	of	the	Company's	outstanding	interest	rate	swaps	designated	as	fair	value	hedges	was	$1.2	billion	and	$375	million	at	September	30, 2018	and	2017,	respectively.	The	outstanding	swaps	represent	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.	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	years	ended	September	30,	2018	and	2017	for	changes	in	the	fair	value	of	these	hedges	were	immaterial	to the	Company's	consolidated	financial	results.

# 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	no	outstanding	commodity	derivative	forward	contracts	at	September	30,	2018	and	2017.

# Financial	Statement	Effects

# Effects	on	Consolidated	Balance	Sheets

The	fair	values	of	derivative	instruments	outstanding	at	September	30,	2018	and	2017	were	not	material	to	the	Company's	consolidated	balance	sheets.

# Effects	on	Consolidated	Statements	of	Income

The	amounts	recognized	from	other	comprehensive	income	relating	to	cash	flow	hedges	during	2018,	2017	and	2016	were	not	material	to	the	Company's consolidated	financial	results.

# Note	14	—	Financial	Instruments	and	Fair	Value	Measurements

The	Company's	institutional	money	market	accounts	permit	daily	redemption	and	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	$228 million	and	$2.026	billion	at	September	30,	2018	and	2017,	respectively.	The	Company's	remaining	cash	and	equivalents,	excluding	restricted	cash,	were	$913	million and	$12.153	billion	at	September	30,	2018	and	2017,	respectively.	Short-term	investments	are	held	to	their	maturities	and	are	carried	at	cost,	which	approximates	fair value.	The	cash	equivalents	consist	of	liquid	investments	with	a	maturity	of	three	months	or	less	and	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	$18.8	billion	and	$19.2	billion	at	September	30,	2018	and	2017, respectively.	The	fair	value	of	the	current	portion	of	long-term	debt	was	$1.893	billion	and	$206	million	at	September	30,	2018	and	2017,	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	fiscal	year	2018,	the	Company	recorded	charges	of	$58	million	to	write	down	the	value	of	fixed	assets,	primarily	in	the	Diabetes	Care	unit,	as	well	as	charges	of $81	million	to	write	down	the	carrying	value	of	certain	intangible	and	other	assets	in	the	Biosciences	unit.	In	fiscal	year	2016,	the	Company	recorded	a	charge to	Acquisitions	and	other	restructurings	of	$214	million	to	impair	capitalized	internal-use	software	assets	held	for	sale	as	a	result	of	the	Company's	transition	of	certain elements	of	its	information	technology	infrastructure	to	an	outsourced	model.	Also	in	fiscal	year	2016,	the	Company	recorded	losses	of	$81	million	on	the	held	for	sale assets	of	certain	non-core	businesses.	The	amounts	recognized	in	2018	and	2016	were	recorded	to	adjust	the	carrying	amount	of	assets	to	the	assets'	fair	values,	which were	estimated,	based	upon	a	market	participant's	perspective,	using	either	Level	2	inputs,	including	quoted	prices	for	similar	assets,	or	Level	3	inputs,	including	values estimated	using	the	income	approach.

# Concentration	of	Credit	Risk

The	Company	maintains	cash	deposits	in	excess	of	government-provided	insurance	limits.	Such	cash	deposits	are	exposed	to	loss	in	the	event	of	nonperformance by	financial	institutions.	Substantially	all	of	the	Company's	trade	receivables	are	due	from	public	and	private	entities	involved	in	the	healthcare	industry.	Due	to	the large	size	and	diversity	of	the	Company's	customer	base,	concentrations	of	credit	risk	with	respect	to	trade	receivables	are	limited.	The	Company	does	not	normally require	collateral.	The	Company	is	exposed	to	credit	loss	in	the	event	of	nonperformance	by	financial	institutions	with	which	it	conducts	business.	However,	this	loss	is limited	to	the	amounts,	if	any,	by	which	the	obligations	of	the	counterparty	to	the	financial	instrument	contract	exceed	the	obligations	of	the	Company.	The	Company also	minimizes	exposure	to	credit	risk	by	dealing	with	a	diversified	group	of	major	financial	institutions.

The	Company	continually	evaluates	its	accounts	receivables	for	potential	collection	risks	particularly	those	resulting	from	sales	to	government-owned	or government-supported	healthcare	facilities	in	certain	countries	as	payment	may	be	dependent	upon	the	financial	stability	and	creditworthiness	of	those	countries' national	economies.	The	Company	continually	evaluates	all	governmental	receivables	for	potential	collection	risks	associated	with	the	availability	of	government funding	and	reimbursement	practices.	The	Company	believes	the	current	reserves	related	to	all	governmental	receivables	are	adequate	and	that	this	concentration	of credit	risk	will	not	have	a	material	adverse	impact	on	its	financial	position	or	liquidity.

# Short-term	debt

Short-term	debt	at	September	30	consisted	of:

| (Millions	of	dollars) |  | 2018 | 2017 |
| :--- | :--- | :--- | :--- |
| Current\tportion\tof\tlong-term\tdebt |  |  |  |
| 2.133%\tNotes\tdue\tJune\t6,\t2019 |  | 724 | — |
| 0.368%\tNotes\tdue\tJune\t6,\t2019 | (a) | 1,157 | — |
| 4.900%\tNotes\tdue\tApril\t15,\t2018 |  | — | 200 |
| Term\tLoan\tFacility\tdue\tSeptember\t5,\t2019 | (b) | 710 | — |
| Other |  | 10 | 3 |
| Total\tshort-term\tdebt |  | $2,601 | \t $203 |

(a) Includes	notes	issued	during	fiscal	year	2018,	as	further	discussed

below.

(b) Term	loan	facility	entered	into	during	the	fourth	quarter	of	fiscal	year	2018,	as	further	discussed below.

The	weighted	average	interest	rates	for	short-term	debt	were	1.58%	and	4.90%	at	September	30,	2018	and	2017,	respectively.

# Long-term	debt

Long-Term	Debt	at	September	30	consisted	of:

| (Millions	of	dollars) |  | 2018 | 2017 |
| :--- | :--- | :--- | :--- |
| 2.133%\tNotes\tdue\tJune\t6,\t2019 |  | $— | $723 |
| 0.368%\tNotes\tdue\tJune\t6,\t2019 |  | — | 823 |
| 2.675%\tNotes\tdue\tDecember\t15,\t2019 |  | 1,123 | 1,121 |
| 2.404%\tNotes\tdue\tJune\t5,\t2020 |  | 998 | 996 |
| 3.250%\tNotes\tdue\tNovember\t12,\t2020 |  | 699 | 698 |
| Floating\tRate\tNotes\tdue\tDecember\t29,\t2020 | (a) | 996 | — |
| 3.125%\tNotes\tdue\tNovember\t8,\t2021 |  | 990 | 1,003 |
| 2.894%\tNotes\tdue\tJune\t6,\t2022 |  | 1,793 | 1,791 |
| Floating\tRate\tNotes\tdue\tJune\t6,\t2022 |  | 498 | 497 |
| 1.000%\tNotes\tdue\tDecember\t15,\t2022 |  | 576 | 586 |
| 3.300%\tNotes\tdue\tMarch\t1,\t2023 |  | 296 | 296 |
| 1.401%\tNotes\tdue\tMay\t24,\t2023 | (a) | 346 | — |
| 3.875%\tNotes\tdue\tMay\t15,\t2024 |  | 182 | 182 |
| 3.363%\tNotes\tdue\tJune\t6,\t2024 |  | 1,738 | 1,736 |
| 3.734%\tNotes\tdue\tDecember\t15,\t2024 |  | 1,368 | 1,367 |
| 3.020%\tNotes\tdue\tMay\t24,\t2025 | (a) | 324 | — |
| 6.700%\tNotes\tdue\tDecember\t1,\t2026 | (b) | 177 | — |
| 1.900%\tNotes\tdue\tDecember\t15,\t2026 |  | 575 | 585 |
| 3.700%\tNotes\tdue\tJune\t6,\t2027 |  | 2,383 | 2,381 |
| 7.000%\tDebentures\tdue\tAugust\t1,\t2027 |  | 156 | 166 |
| 6.700%\tDebentures\tdue\tAugust\t1,\t2028 |  | 154 | 164 |
| 6.000%\tNotes\tdue\tMay\t15,\t2039 |  | 246 | 246 |
| 5.000%\tNotes\tdue\tNovember\t12,\t2040 |  | 296 | 296 |
| 4.875%\tNotes\tdue\tMay\t15,\t2044 |  | 331 | 331 |
| 4.685%\tNotes\tdue\tDecember\t15,\t2044 |  | 1,159 | 1,189 |
| 4.669%\tNotes\tdue\tJune\t6,\t2047 |  | 1,484 | 1,484 |
| Other\tlong-term\tdebt |  | 8 | 3 |
| Total\tLong-Term\tDebt |  | $18,894 | $18,667 |

(b) Includes	notes	assumed	in	connection	with	the	Company's	acquisition	of	Bard,	as	further	discussed below.

# Other	current	credit	facilities

In	connection	with	the	Company's	agreement	to	acquire	Bard,	the	Company	entered	into	a	three-year	senior	unsecured	term	loan	facility	of	$2.25	billion	during	the third	quarter	of	fiscal	year	2017.	During	the	first	quarter	of	fiscal	year	2018,	the	proceeds	from	this	facility	were	used	to	fund	a	portion	of	the	cash	consideration	for	the Bard	acquisition,	as	well	as	the	fees	and	expenses	incurred	in	connection	with	the	acquisition.	In	September	2018,	the	Company	entered	into	a	364-day	$750	million senior	unsecured	term	loan	facility.	The	Company	used	$230	million	of	proceeds	drawn	from	this	facility	in	September	2018	to	repay	all	borrowings

outstanding	under	the	three-year	term	loan	facility	discussed	above.		Borrowings	outstanding	under	the	new,	364-day	term	loan	facility	were	$710 million	at	September	30,	2018.		The	Company	also	entered	into	a	five-year	senior	unsecured	revolving	credit	facility	in	the	third	quarter	of	fiscal	year	2017	which became	effective	upon	the	closing	of	the	Bard	acquisition	and	which	provides	borrowing	of	up	to	$2.25	billion.	This	facility	will	expire	in	December	2022	and	replaced the	$1.5	billion	syndicated	credit	facility	the	Company	previously	had	in	place	for	general	corporate	purposes.	Under	the	new	revolving	facility,	the	Company	will	be able	to	issue	up	to	$100	million	in	letters	of	credit	under	this	new	revolving	credit	facility	and	it	also	includes	a	provision	that	enables	the	Company,	subject	to	additional commitments	made	by	the	lenders,	to	access	up	to	an	additional	$500	million	in	financing	through	the	facility	for	a	maximum	aggregate	commitment	of	$2.75	billion. There	were	no	borrowings	outstanding	under	the	revolving	credit	facility	at	September	30,	2018.		In	addition,	the	Company	has	informal	lines	of	credit	outside	of	the United	States.

# Exchange	of	Bard	Notes

Also	in	connection	with	the	Company's	acquisition	of	Bard,	the	Company	exchanged	certain	outstanding	notes	issued	by	Bard	for	a	like-amount	of	new	notes issued	by	the	Company.	The	exchange	offers,	which	were	conditioned	upon	the	closing	of	the	Bard	acquisition,	expired	on	December	29,	2017.	The	aggregate	principal amounts	of	Bard	notes	which	were	validly	tendered	for	notes	issued	by	the	Company	are	provided	below.

# (Millions	of	dollars)

| Interest	Rate	and	Maturity | Aggregate<br>Principal	Amount | Principal	Amount<br>Accepted	for<br>Exchange |
| :--- | :--- | :--- |
| 4.400%\tNotes\tdue\tJanuary\t15,\t2021 | $500 | $432 |
| 3.000%\tNotes\tdue\tMay\t15,\t2026 | 500 | 470 |
| 6.700%\tNotes\tdue\tDecember\t1,\t2026 | 150 | 137 |
| Total | $1,150 | $1,039 |

This	exchange	transaction	was	accounted	for	as	a	modification	of	the	assumed	debt	instruments.	Following	the	exchange	of	the	notes,	the	aggregate	principal amount	of	Bard	notes	that	remained	outstanding	after	settlement	of	the	exchange	transaction	was	$111	million.

# 2018	Debt-Related	Transactions

In	January	2018,	the	Company	commenced	an	offer	to	repurchase	any	and	all	of	the	outstanding	3.000%	Notes	due	May	15,	2026	that	were	issued	as	a	result	of the	exchange	transaction	discussed	above.	Under	the	terms	of	the	repurchase	offer,	holders	were	entitled	to	receive	cash	equal	to	101%	of	the	principal	amount	of	notes validly	tendered,	plus	accrued	and	unpaid	interest,	if	any,	to	the	date	of	purchase.	The	offer	to	repurchase	the	3.000%	Notes	expired	on	March	1,	2018	and	a	total	of	$461 million	aggregate	principal	amount	of	notes	were	validly	tendered	at	a	market	price	of	$465	million.	Based	upon	the	carrying	value	of	$452	million,	the	Company recorded	a	loss	relating	to	this	debt	extinguishment	in	the	second	quarter	of	fiscal	year	2018	of	$13	million	as	Other	income	(expense),	net,	on	its	consolidated	statements of	income.

During	the	second	quarter	of	fiscal	year	2018,	the	Company	issued	Euro-denominated	debt	consisting	of	300	million	Euros	($370	million)	of	0.368%	notes	due June	6,	2019	under	an	indenture	pursuant	to	which	the	Company	previously	issued,	in	the	third	quarter	of	fiscal	year	2017,	0.368%	notes	due	June	6,	2019.	Also	in	the second	quarter	of	fiscal	year	2018,	the	Company	issued	$1	billion	of	floating	rate	senior	unsecured	U.S.	notes	due	December	29,	2020.	The	Company	used	the	net proceeds	from	these	long-term	debt	offerings	to	repay	portions	of	the	balances	outstanding	on	its	term	loan	and	revolving	credit	facilities,	which	are	discussed	above,	as well	as	accrued	interest,	related	premiums,	fees	and	expenses	related	to	these	repaid	amounts.

In	June	2018,	the	Company	redeemed	all	of	the	4.400%	Notes	due	January	15,	2021	and	3.000%	Notes	due	May	15,	2026	which	were	issued	by	Bard	and	that remained	outstanding	after	the	exchange	offer	discussed	further	above.	Also	in	June	2018,	the	Company	redeemed	all	of	the	4.400%	Notes	due	January	15,	2021	which were	issued	by	the	Company	upon	the	exchange	offer,	as	well	as	all	of	the	3.000%	Notes	due	May	15,	2026

issued	by	the	Company	which	remained	outstanding	after	the	repurchase	offer	also	discussed	above.	The	total	aggregate	principal	amount	of	notes	redeemed	was	$539 million.	Based	upon	the	$556	million	carrying	value	of	these	notes	and	the	$559	million	the	Company	paid	to	redeem	the	aggregate	principal	amount	of	the	notes,	the Company	recorded	a	loss	on	these	debt	extinguishment	transactions	in	the	third	quarter	of	fiscal	year	2018	of	$3	million	as	Other	income	(expense),	net,	on	its consolidated	statements	of	income.

During	the	third	quarter	of	fiscal	year	2018,	the	Company	issued	Euro-denominated	debt	consisting	of	300	million	Euros	($354	million)	of	1.401%	notes	due	May 24,	2023.	Also	in	the	third	quarter	of	fiscal	year	2018,	the	Company	issued	British	Pound-denominated	debt	of	250	million	British	Pounds	($337.5	million)	of	3.02% notes	due	May	24,	2025.	The	Company	used	the	net	proceeds	from	these	long-term	debt	offerings	to	redeem	certain	notes	in	the	third	quarter,	as	further	discussed above,	and	to	repay	a	portion	of	the	balance	outstanding	on	its	term	loan,	as	well	as	accrued	interest,	related	premiums,	fees	and	expenses	related	to	this	repaid	amount.

In	December	2016,	the	Company	issued	euro-denominated	debt	consisting	of	500	million	Euros	of	1.000%	notes	and	500	million	Euros	of	1.900%	notes.	The Company	used	the	net	proceeds	from	this	long-term	debt	offering,	together	with	other	sources	of	liquidity,	to	fund	the	Company's	repurchase	of	certain	of	its	senior notes	outstanding.	Under	this	cash	tender	offer,	the	Company	repurchased	all	or	a	portion	of	the	aggregate	principal	amounts	of	certain	of	its	long-term	notes outstanding,	totaling	$1.689	billion,	at	an	aggregate	market	price	of	$1.764	billion.	The	carrying	value	of	these	long-term	notes	was	$1.727	billion,	and	the	Company recognized	a	loss	on	this	debt	extinguishment	of	$42	million,	which	was	recorded	in	December	2016	as	Other	income	(expense),	net,	on	the	Company's	consolidated statements	of	income.

During	the	third	quarter	of	2017	and	in	connection	with	the	Company's	acquisition	of	Bard,	as	previously	discussed	in	Note	9,	the	Company	issued	senior unsecured	U.S.	notes	with	an	aggregate	principal	amount	of	$9.675	billion.	Also	during	the	third	quarter	of	2017,	the	Company	issued	Euro-denominated	debt	consisting of	700	million	Euros	of	0.368%	Notes	due	June	6,	2019.

Also	in	2017,	the	Company	redeemed	all	or	a	portion	of	the	aggregate	principal	amounts	of	certain	of	its	long-term	senior	notes	outstanding,	totaling	$1.717 billion,	at	an	aggregate	market	price	of	$1.776	billion.	The	carrying	value	of	these	long-term	notes	was	$1.745	billion	and	the	Company	recognized	a	loss	on	this	debt extinguishment	of	$31	million,	which	was	recorded	in	June	2017	as	Other	income	(expense),	net,	on	the	Company's	consolidated	statements	of	income.

# Capitalized	interest

The	Company	capitalizes	interest	costs	as	a	component	of	the	cost	of	construction	in	progress.	A	summary	of	interest	costs	and	payments	for	the	years	ended September	30	is	as	follows:

| (Millions	of	dollars) | 2018 | 2017 | 2016 |
| :--- | :--- | :--- | :--- |
| Charged\tto\toperations | $706 | $521 | $388 |
| Capitalized | 42 | 32 | 30 |
| Total\tinterest\tcosts | $748 | $553 | $418 |
| Interest\tpaid,\tnet\tof\tamounts\tcapitalized | $674 | $435 | $392 |

# Note	16	—	Income	Taxes

# New	U.S.	Tax	Legislation

New	U.S.	tax	legislation,	which	is	commonly	referred	to	as	the	Tax	Cuts	and	Job	Act	(the	"Act")	and	which	was	enacted	on	December	22,	2017,	reduces	the	U.S. federal	corporate	tax	rate	from	35%	to	21%,	requires	companies	to	pay	a	one-time	transition	tax	on	earnings	of	certain	foreign	subsidiaries	that	were	previously	tax deferred,	and	creates	new	taxes	on	certain	foreign-sourced	earnings.	Under	U.S.	generally	accepted	accounting	principles,	companies	must	account	for	the	effects	of changes	in	income	tax	rates	and	laws

in	the	period	in	which	the	legislation	is	enacted.	However,	the	U.S.	Securities	and	Exchange	Commission	(the	"SEC")	has	provided	guidance	which	allows	companies	to report	financial	results	including	provisional	amounts	that	have	been	recorded	for	the	income	tax	effects	of	the	Act	based	upon	a	reasonable	estimate	of	those	effects. The	SEC	expects	that	accounting	for	the	Act	should	be	completed	by	companies	by	no	later	than	one	year	from	the	enactment	date	of	the	Act.

As	of	September	30,	2018,	the	Company	has	not	completed	its	accounting	for	the	tax	effects	of	enactment	of	the	Act;	however,	the	Company	has	made	what	it believes	is	a	reasonable	estimate	of	the	effects	on	the	remeasurement	of	U.S.	deferred	tax	balances,	the	one-time	transition	tax,	and	the	taxes	accrued	relating	to	the change	in	permanent	reinvestment	assertion	for	unremitted	earnings	of	its	foreign	subsidiaries.	As	a	result	of	these	estimates,	the	Company	recognized	a	provisional expense	in	the	amount	of	$640	million,	which	is	reflected	in	the	Company's	consolidated	statement	of	income	within	Income	tax	provision.	The	Company	also	recorded	a charge,	which	is	further	discussed	below,	relating	to	historic	unremitted	foreign	earnings	as	of	September	30,	2018.

The	Company	will	continue	to	gather	information	and	perform	additional	analysis	on	these	estimates,	including,	but	not	limited	to,	the	amount	of	earnings	and profits	subject	to	the	transition	tax,	the	calculation	of	foreign	tax	credits,	the	local	tax	treatment	of	future	distributions	of	unremitted	earnings	and	the	remeasurement	of U.S.	deferred	taxes.	Any	measurement	period	adjustments	will	be	reported	as	a	component	of	Income	tax	provision	in	the	reporting	period	the	amounts	are	determined. The	final	accounting	will	be	completed	no	later	than	one	year	from	the	enactment	of	the	Act.

The	Company	is	currently	in	the	process	of	evaluating	the	new	Global	Intangible	Low-Taxed	Income's	("GILTI")	provisions	and	has	not	yet	elected	an	accounting policy	regarding	whether	to	record	deferred	taxes	related	to	GILTI.	Therefore,	the	Company	has	not	made	any	adjustments	related	to	the	GILTI	tax	in	its	financial statements.		Under	the	SEC	guidance	noted	above,	the	Company	will	continue	to	analyze	and	assess	the	effects	of	the	GILTI	provisions	of	the	Act.

# Provisional	Amounts

The	Company	believes	that	all	provisional	amounts	reflected	in	its	financial	statements	are	based	on	the	best	estimates	that	can	be	made	at	this	time.	The Company	will	continue	to	analyze	all	impacts	of	the	Act	and	will	update	provisional	amounts	as	required.

# Deferred	tax	assets	and	liabilities

The	Company	remeasured	certain	deferred	tax	assets	and	liabilities	based	on	the	rates	at	which	they	are	expected	to	reverse	in	the	future,	which	is	generally	21%. However,	the	Company	is	still	analyzing	certain	aspects	of	the	Act	and	refining	its	calculations,	which	could	potentially	affect	the	measurement	of	these	balances	or potentially	give	rise	to	new	deferred	tax	amounts.	The	Company	recorded	a	provisional	tax	benefit	of	$182	million	related	to	the	re-measurement	of	the	Company's deferred	tax	balances.

# Foreign	tax	effects

The	one-time	transition	tax	is	based	on	the	Company's	total	post-1986	earnings	and	profits	("E&P")	that	the	Company	previously	deferred	from	U.S.	income	taxes. The	Company	recorded	a	provisional	amount	for	its	one-time	transition	tax	liability	for	all	of	its	foreign	subsidiaries,	resulting	in	an	increase	in	income	tax	expense	of $822	million.	However,	the	Company	has	not	yet	completed	its	calculation	of	the	total	post-1986	E&P	for	these	foreign	subsidiaries.	Further,	the	transition	tax	is	based in	part	on	the	amount	of	those	earnings	held	in	cash	and	other	specified	assets.	This	amount	may	change	when	the	Company	finalizes	the	calculation	of	post-1986	foreign E&P	previously	deferred	from	U.S.	federal	taxation	and	finalizes	the	amounts	held	in	cash	or	other	specified	assets.	As	discussed	in	Note	9,	the	Company	completed	its acquisition	of	Bard	on	December	29,	2017.	The	net	assets	acquired	included	approximately	$175	million	of	transition	tax	payable	based	on	the	Company's	best	estimate of	its	transition	tax	liability.	The	combined	company's	transition	tax	liability,	8%	of	which	is	payable	per	year	over	the	next	five	years	with	the	balance	payable	over	the following	three	years,	is	approximately	$1	billion.	The	anticipated	payment	of	this	tax	is	expected	to	begin	on	January	15,	2019.

The	Company	has	historically	asserted	indefinite	reinvestment	of	the	earnings	of	certain	non-U.S.	subsidiaries	outside	the	United	States.	The	Act	eliminated certain	material	tax	effects	on	the	repatriation	of	cash	to	the	United	States.	Future	repatriation	of	cash	and	other	property	held	by	our	foreign	subsidiaries	will	generally not	be	subject	to	U.S.	federal	income	tax.	As	a	result,	after	reevaluation	of	the	permanent	reinvestment	assertion,	the	Company	is	no	longer	permanently	reinvested	with respect	to	its	historic	unremitted	foreign	earnings	as	of	September	30,	2018.	As	a	result	of	the	change	in	the	assertion,	during	fiscal	2018,	the	Company	recorded	a charge	of	$134	million	to	Income	tax	provision	related	to	historic	unremitted	foreign	earnings	as	of	September	30,	2018.

# Provision	for	Income	Taxes

The	provision	for	income	taxes	the	years	ended	September	30	consisted	of:

| (Millions	of	dollars) | 2018 | 2017 | 2016 |
| :--- | :--- | :--- | :--- |
| Current: |  |  |  |
| Federal | $665 | $(230) | $312 |
| State\tand\tlocal,\tincluding\tPuerto\tRico | 73 | (20) | 17 |
| Foreign | 387 | 200 | 286 |
|  | $1,124 | $(50) | $616 |
| Deferred: |  |  |  |
| Domestic | $(201) | $(64) | $(441) |
| Foreign | (61) | (10) | (78) |
|  | (262) | (74) | (519) |
| Income\ttax\tprovision\t(benefit) | $862 | $(124) | $97 |

The	components	of	Income	Before	Income	Taxes	for	the	years	ended	September	30	consisted	of:

| (Millions	of	dollars) | 2018 | 2017 | 2016 |
| :--- | :--- | :--- | :--- |
| Domestic,\tincluding\tPuerto\tRico | $(135) | $(386) | $(232) |
| Foreign | 1,308 | 1,362 | 1,306 |
| Income\tBefore\tIncome\tTaxes | $1,173 | $976 | $1,074 |

# Unrecognized	Tax	Benefits

The	table	below	summarizes	the	gross	amounts	of	unrecognized	tax	benefits	without	regard	to	reduction	in	tax	liabilities	or	additions	to	deferred	tax	assets	and liabilities	if	such	unrecognized	tax	benefits	were	settled.	The	Company	believes	it	is	reasonably	possible	that	certain	audits	will	close	within	the	next	twelve	months	but no	significant	increases	or	decreases	in	the	amount	of	the	unrecognized	tax	benefits	are	expected	to	result.

| (Millions	of	dollars) | 2018 | 2017 | 2016 |
| :--- | :--- | :--- | :--- |
| Balance\tat\tOctober\t1 | $349 | $469 | $593 |
| Increase\tdue\tto\tacquisitions | 140 | — | — |
| Increase\tdue\tto\tcurrent\tyear\ttax\tpositions | 43 | 41 | 81 |
| Increase\tdue\tto\tprior\tyear\ttax\tpositions | 43 | 19 | 10 |
| Decreases\tdue\tto\tprior\tyear\ttax\tpositions | — | (30) | (3) |
| Decrease\tdue\tto\tsettlements\twith\ttax\tauthorities | (29) | (145) | (147) |
| Decrease\tdue\tto\tlapse\tof\tstatute\tof\tlimitations | (3) | (5) | (65) |
| Balance\tat\tSeptember\t30 | $543 | $349 | $469 |

Upon	the	Company's	acquisition	of	CareFusion	in	2015,	the	Company	became	a	party	to	a	tax	matters	agreement	with	Cardinal	Health	resulting	from	Cardinal Health's	spin-off	of	CareFusion	in	fiscal	year	2010.	Under	the	tax	matters	agreement,	the	Company	is	obligated	to	indemnify	Cardinal	Health	for	certain	tax

exposures	and	transaction	taxes	prior	to	CareFusion's	spin-off	from	Cardinal	Health.	The	indemnification	payable	is	approximately	$140	million	at	September	30,	2018 and	is	included	in	Deferred	Income	Taxes	and	Other	on	the	consolidated	balance	sheet.

At	September	30,	2018,	2017	and	2016,	there	are	$632	million,	$415	million	and	$478	million	of	unrecognized	tax	benefits	that	if	recognized,	would	affect	the effective	tax	rate.	During	the	fiscal	years	ended	September	30,	2018,	2017	and	2016,	the	Company	reported	interest	and	penalties	associated	with	unrecognized	tax benefits	of	$20	million,	$57	million	and	$(38)	million	on	the	consolidated	statements	of	income	as	a	component	of	Income	tax	provision.	The	Company	conducts business	and	files	tax	returns	in	numerous	countries	and	currently	has	tax	audits	in	progress	in	a	number	of	tax	jurisdictions.	The	IRS	has	completed	its	audit	for	the	BD Legacy	fiscal	year	2014	and	combined	company	fiscal	years	2016	and	2017.	For	the	BD	legacy	business,	all	years	are	effectively	settled	with	the	exception	of	2015	for which	the	Company	believes	it	is	adequately	reserved	for	any	potential	exposures.	The	IRS	is	currently	examining	the	CareFusion	legacy	fiscal	year	2014	and	short period	2015.	With	the	exception	of	the	CareFusion	legacy	fiscal	year	2010	audit,	all	other	periods	are	at	various	stages	of	appeals	or	protests.	With	regard	to	Bard,	all examinations	have	been	completed	through	calendar	year	2014.	The	IRS	has	commenced	the	examination	of	calendar	years	2015	and	2016.	For	the	other	major	tax jurisdictions	where	the	Company	conducts	business,	tax	years	are	generally	open	after	2012.

# Deferred	Income	Taxes

Deferred	income	taxes	at	September	30	consisted	of:

|  |  | 2018 |  | 2017 |
| :--- | :--- | :--- | :--- | :--- |
| (Millions\tof\tdollars) | Assets | Liabilities | Assets | Liabilities |
| Compensation\tand\tbenefits | $458 | $— | $618 | $— |
| Property\tand\tequipment | — | 253 | — | 244 |
| Intangibles | — | 2,948 | — | 1,584 |
| Loss\tand\tcredit\tcarryforwards | 1,290 | — | 1,098 | — |
| Other | 707 | 384 | 531 | 164 |
|  | 2,455 | 3,585 | 2,247 | 1,992 |
| Valuation\tallowance | (1,181) | — | (1,032) | — |
| Net\t(a) | $1,275 | $3,585 | $1,216 | $1,992 |

(a) Net	deferred	tax	assets	are	included	in	Other	Assets	and	net	deferred	tax	liabilities	are	included	in	Deferred	Income	Taxes	and	Other	on	the	consolidated balance	sheets.

Deferred	tax	assets	and	liabilities	are	netted	on	the	balance	sheet	by	separate	tax	jurisdictions.	Deferred	taxes	have	been	provided	on	undistributed	earnings	of foreign	subsidiaries	as	of	September	30,	2018.

Generally,	deferred	tax	assets	have	been	established	as	a	result	of	net	operating	losses	and	credit	carryforwards	with	expiration	dates	from	2019	to	an	unlimited expiration	date.	Valuation	allowances	have	been	established	as	a	result	of	an	evaluation	of	the	uncertainty	associated	with	the	realization	of	certain	deferred	tax	assets	on these	losses	and	credit	carryforwards.	The	valuation	allowance	for	2018	is	primarily	the	result	of	foreign	losses	due	to	the	Company's	global	re-organization	of	its foreign	entities	and	these	generally	have	no	expiration	date.	Valuation	allowances	are	also	maintained	with	respect	to	deferred	tax	assets	for	certain	federal	and	state carryforwards	that	may	not	be	realized	and	that	principally	expire	in	2038.

# Tax	Rate	Reconciliation

A	reconciliation	of	the	federal	statutory	tax	rate	to	the	Company's	effective	income	tax	rate	was	as	follows:

|  | 2018 | 2017 | 2016 |
| :--- | :--- | :--- | :--- |
| Federal\tstatutory\ttax\trate | 24.5\t% | 35.0\t% | 35.0\t% |
| New\tU.S.\ttax\tlegislation\t(see\tdiscussion\tabove) | 54.6 | — | — |
| State\tand\tlocal\tincome\ttaxes,\tnet\tof\tfederal\ttax\tbenefit | 0.8 | (2.6) | 1.5 |
| Effect\tof\tforeign\tand\tPuerto\tRico\tearnings\tand\tforeign\ttax\tcredits | 7.3 | (40.8) | (23.7) |
| Effect\tof\tResearch\tCredits\tand\tDomestic\tProduction\tActivities | (2.8) | (2.7) | (4.4) |
| Effect\tof\tchange\tin\taccounting\tfor\texcess\ttax\tbenefit\trelating\tto\tshare-based\tcompensation\t(see\tNote |  |  |  |
| 2) | (6.7) | (7.9) | — |
| Effect\tof\tgain\ton\tdivestitures | 1.3 | — | — |
| Effect\tof\tuncertain\ttax\tposition | 3.3 | — | — |
| Effect\tof\tvaluation\tallowance\trelease | (4.8) | — | — |
| Effect\tof\tapplication\tfor\tchange\tin\taccounting\tmethod | (4.5) | — | — |
| Effect\tof\tnondeductible\tcompensation | 1.6 | — | — |
| Other,\tnet | (1.1) | 6.3 | 0.7 |
| Effective\tincome\ttax\trate | 73.5\t% | (12.7)% | 9.1\t% |

# Tax	Holidays	and	Payments

The	approximate	amounts	of	tax	reductions	related	to	tax	holidays	in	various	countries	in	which	the	Company	does	business	were	$101	million,	$144	million	and $121	million,	in	2018,	2017	and	2016,	respectively.	The	benefit	of	the	tax	holiday	on	diluted	earnings	per	share	was	approximately	$0.38,	$0.64	and	$0.56	for	fiscal	years 2018,	2017	and	2016,	respectively.	The	tax	holidays	expire	at	various	dates	through	2028.

# Note	17	—	Sales-Type	Leases	and	Financing	Receivables

In	April	2017,	in	conjunction	with	the	implementation	of	a	new	"go-to-market"	business	model	for	the	Company's	U.S.	dispensing	business	within	the	Medication Management	Solutions	("MMS")	unit	of	the	Medical	segment,	the	Company	amended	the	terms	of	certain	customer	leases	for	dispensing	equipment	within	the	MMS unit.	The	modification	provided	customers	the	ability	to	reduce	its	dispensing	asset	base	via	a	return	provision,	resulting	in	a	more	flexible	lease	term.	Prior	to	the modification,	these	leases	were	accounted	for	as	sales-type	leases	in	accordance	with	Accounting	Standards	Codification	Topic	840,	"Leases",	as	the	non-cancellable lease	term	of	5	years	exceeded	75%	of	the	equipment's	estimated	useful	life	and	the	present	value	of	the	minimum	lease	payments	exceeded	90%	of	the	equipment's	fair value.	As	a	result	of	the	lease	modification,	the	Company	was	required	to	reassess	the	classification	of	the	leases	due	to	the	amended	lease	term.	Accordingly,	most amended	lease	contracts	were	classified	as	operating	leases	beginning	in	April	2017.	The	change	in	lease	classification	resulted	in	a	pre-tax	charge	to	earnings	in	fiscal year	2017	of	$748	million,	which	was	recorded	in	Other	operating	expense,	net.	Beginning	April	1,	2017,	revenue	associated	with	these	modified	contracts	has	been recognized	on	a	straight-line	basis	over	the	remaining	lease	term,	along	with	depreciation	on	the	reinstated	leased	assets.

The	Company's	consolidated	financial	results	in	2018	and	2017	were	not	materially	impacted	by	the	financing	receivables	remaining	subsequent	to	the	lease modification	discussed	above.

# Note	18	—	Supplemental	Financial	Information

# Other	Income	(Expense),	Net

| (Millions	of	dollars) | 2018 | 2017 | 2016 |
| :--- | :--- | :--- | :--- |
| Losses\ton\tdebt\textinguishment\t(a) | $(16) | $(73) | $— |
| Vyaire\tMedical-related\tamounts\t(b) | 288 | (3) | — |
| Other\tequity\tinvestment\tincome | 8 | 3 | 8 |
| Losses\ton\tundesignated\tforeign\texchange\tderivatives,\tnet | (14) | (11) | (3) |
| Royalty\tincome\t(c) | 51 | — | — |
| Gains\ton\tpreviously\theld\tinvestments\t(d) | — | 24 | — |
| Other | — | 3 | 7 |
| Other\tincome\t(expense),\tnet | $318 | $(57) | $11 |

(a) Represents	losses	recognized	upon	our	repurchase	and	extinguishment	of	certain	senior	notes,	as	further	discussed	in	Note 15.

(b) Represents	amounts	related	to	the	Company's	2017	divestiture	of	a	controlling	interest	in	its	former	Respiratory	Solutions	business	and	the	subsequent	sale	in 2018	of	the	remaining	ownership	interest.	The	amount	in	2018	includes	the	gain	on	the	sale	of	the	remaining	non-controlling	interest	and	transition	services agreement	income,	net	of	the	Company's	share	of	equity	investee	results.	The	amount	in	2017	represents	the	Company's	share	of	equity	investee	results,	net	of transition	services	agreement	income.	Additional	disclosures	regarding	these	divestiture	transactions	are	provided	in	Note	10	in	the	Notes	to	Consolidated Financial	Statements.

(c) Represents	the	royalty	income	stream	acquired	in	the	Bard	transaction,	net	of	non-cash	purchase	accounting	amortization.	The	royalty	income	stream	was previously	reported	by	Bard	as	revenues.

(d) Represents	an	acquisition-date	accounting	gain	related	to	a	previously-held	equity	method	investment	in	an	entity	the	Company acquired.

# Trade	Receivables,	Net

The	amounts	recognized	in	2018,	2017	and	2016	relating	to	allowances	for	doubtful	accounts	and	cash	discounts,	which	are	netted	against	trade	receivables,	are provided	in	the	following	table:

| (Millions	of	dollars) | Allowance	for<br>Doubtful<br>Accounts |  | Allowance	for<br>Cash<br>Discounts | Total |
| :--- | :--- | :--- | :--- | :--- |
| Balance\tat\tSeptember\t30,\t2015 | $53 |  | $9 | $62 |
| Additions\tcharged\tto\tcosts\tand\texpenses | 23 |  | 37 | 60 |
| Deductions\tand\tother | (14) | (a) | (40) | (55) |
| Balance\tat\tSeptember\t30,\t2016 | $61 |  | $6 | $67 |
| Additions\tcharged\tto\tcosts\tand\texpenses | 25 |  | 43 | 68 |
| Deductions\tand\tother | (32) | (a) | (45) | (76) |
| Balance\tat\tSeptember\t30,\t2017 | $54 |  | $4 | $58 |
| Additions\tcharged\tto\tcosts\tand\texpenses | 31 |  | 58 | 89 |
| Deductions\tand\tother | (11) | (a) | (50) | (61) |
| Balance\tat\tSeptember\t30,\t2018 | $75 |  | $12 | $86 |

Inventories	at	September	30	consisted	of:

| (Millions	of	dollars) | 2018 | 2017 |
| :--- | :--- | :--- |
| Materials | $510 | $313 |
| Work\tin\tprocess | 297 | 271 |
| Finished\tproducts | 1,644 | 1,234 |
|  | $2,451 | $1,818 |

The	Company	acquired	$974	million	of	inventories	in	the	Bard	transaction	which	is	further	discussed	in	Note	9.

# Property,	Plant	and	Equipment,	Net

Property,	Plant	and	Equipment,	Net	at	September	30	consisted	of:

| (Millions	of	dollars) | 2018 | 2017 |
| :--- | :--- | :--- |
| Land | $173 | $146 |
| Buildings | 2,724 | 2,496 |
| Machinery,\tequipment\tand\tfixtures | 7,405 | 6,584 |
| Leasehold\timprovements | 182 | 163 |
|  | 10,485 | 9,389 |
| Less\taccumulated\tdepreciation\tand\tamortization | 5,111 | 4,752 |
|  | $5,375 | $4,638 |

The	Company	acquired	$553	million	of	property,	plant	and	equipment	assets,	which	largely	consisted	of	machinery,	equipment	and	fixtures,	in	the	Bard transaction.

# SUPPLEMENTARY	QUARTERLY	DATA	(UNAUDITED)

| Millions	of	dollars,	except	per	share	amounts |  |  | 2018 |  |  |
| :--- | :--- | :--- | :--- | :--- | :--- |
|  | 1st | 2nd | 3rd | 4th | Year |
| Revenues | $3,080 | $4,222 | $4,278 | $4,402 | $15,983 |
| Gross\tProfit | 1,550 | 1,604 | 2,017 | 2,091 | 7,262 |
| Net\t(Loss)\tIncome | (136) | (12) | 594 | (135) | 311 |
| (Loss)\tearnings\tper\tShare:\t(a) |  |  |  |  |  |
| Basic | (0.76) | (0.19) | 2.08 | (0.64) | 0.62 |
| Diluted | (0.76) | (0.19) | 2.03 | (0.64) | 0.60 |
|  |  |  | 2017 |  |  |
|  | 1st | 2nd | 3rd | 4th | Year |
| Revenues | $2,922 | $2,969 | $3,035 | $3,166 | $12,093 |
| Gross\tProfit | 1,452 | 1,432 | 1,504 | 1,554 | 5,942 |
| Net\tIncome\t(Loss) | 562 | 344 | (132) | 327 | 1,100 |
| Earnings\t(loss)\tper\tShare:\t(a) |  |  |  |  |  |
| Basic | 2.64 | 1.61 | (0.75) | 1.27 | 4.70 |
| Diluted | 2.58 | 1.58 | (0.75) | 1.24 | 4.60 |

(a) Earnings	per	share	amounts	are	calculated	from	the	underlying	whole-dollar	amounts.	The	sums	of	basic	and	diluted	earnings	per	share	for	the	quarters	of	2018 and	2017	do	not	equal	year-to-date	amounts	due	to	the	impacts	of	shares	issued	during	these	fiscal	years,	in	connection	with	the	Bard	acquisition,	on	the weighted	average	common	shares	included	in	the	calculations	of	basic	and	diluted	earnings	per	share.	Additional	disclosures	regarding	shares	issued	related	to the	Bard	acquisition	are	provided	in	Notes	3	and	9.

# Item	9.				Changes	in	and	Disagreements	With	Accountants	on	Accounting	and	Financial	Disclosure.

# Item	9A.				Controls	and	Procedures.

An	evaluation	was	conducted	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	September	30,	2018. 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.

On	December	29,	2017,	BD	completed	the	acquisition	of	Bard.	While	BD	has	extended	its	oversight	and	monitoring	processes	that	support	our	internal	control over	financial	reporting,	as	well	as	its	disclosure	controls	and	procedures,	we	continue	to	integrate	the	acquired	operations	of	Bard.	As	such,	we	have	excluded	Bard from	our	evaluation	of	internal	control	over	financial	reporting.	This	exclusion	is	in	accordance	with	the	U.S.	Securities	and	Exchange	Commission's	general	guidance that	a	recently	acquired	business	may	be	omitted	from	the	assessment	scope	for	up	to	one	year	from	the	date	of	acquisition.	Bard	is	a	wholly-owned	subsidiary	with	total assets	that	represented	approximately	5%	of	BD's	consolidated	total	assets	at	September	30,	2018	and	total	revenues	that	represented	approximately	19%	of	BD's consolidated	revenues	for	fiscal	year	2018.

There	were	no	changes	in	our	internal	control	over	financial	reporting	during	the	fiscal	quarter	ended	September	30,	2018	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.

Management's	Report	on	Internal	Control	Over	Financial	Reporting	and	the	Report	of	Independent	Registered	Public	Accounting	Firm	are	contained	in	Item	8,

Financial	Statements	and	Supplementary	Data,	and	are	incorporated	herein	by	reference.

# Item	9B.				Other	Information.

# PART	III

# Item	10.				Directors,	Executive	Officers	and	Corporate	Governance.

The	information	relating	to	directors	and	the	Audit	Committee	of	the	BD	Board	of	Directors	required	by	this	item	will	be	contained	under	the	captions	"Proposal 1.	Election	of	Directors"	and	"Board	of	Directors	-	Committee	membership	and	function	-	Audit	Committee"	in	a	definitive	proxy	statement	involving	the	election	of directors,	which	the	registrant	will	file	with	the	SEC	not	later	than	120	days	after	September	30,	2018	(the	"2018	Proxy	Statement"),	and	such	information	is incorporated	herein	by	reference.

The	information	relating	to	executive	officers	required	by	this	item	is	included	herein	in	Part	I	under	the	caption	"Executive	Officers	of	the	Registrant."

Certain	other	information	required	by	this	item	will	be	contained	under	the	captions	"Ownership	of	BD	Common	Stock	-	Section	16(a)	beneficial	ownership reporting	compliance",	"Corporate	Governance	-	Director	nomination	process"	and	Corporate	Governance	-	Code	of	Conduct"	in	BD's	2018	Proxy	Statement,	and	such information	is	incorporated	herein	by	reference.

# Item	11.				Executive	Compensation.

The	information	required	by	this	item	will	be	contained	under	the	captions	"Compensation	Discussion	and	Analysis,"	"Report	of	the	Compensation	and Management	Development	Committee,"	"Compensation	of	Named	Executive	Officers",	"Board	of	Directors	-	Non-management	directors'	compensation,"	and	"CEO Pay	Ratio"	in	BD's	2018	Proxy	Statement,	and	such	information	is	incorporated	herein	by	reference.

# Item	12.					Security	Ownership	of	Certain	Beneficial	Owners	and	Management	and	Related	Stockholder	Matters.

The	information	required	by	this	item	will	be	contained	under	the	caption	"Ownership	of	BD	Common	Stock"	in	BD's	2018	Proxy	Statement,	and	such information	is	incorporated	herein	by	reference.

# Item	13.				Certain	Relationships	and	Related	Transactions,	and	Director	Independence.

The	information	required	by	this	item	will	be	contained	under	the	caption	"Corporate	Governance	-	Director	independence;	Policy	regarding	related	person transactions"	in	BD's	2018	Proxy	Statement,	and	such	information	is	incorporated	herein	by	reference.

# Item	14.				Principal	Accounting	Fees	and	Services.

The	information	required	by	this	item	will	be	contained	under	the	caption	"Proposal	2.	Ratification	of	Selection	of	Independent	Registered	Public	Accounting Firm"	in	BD's	2018	Proxy	Statement,	and	such	information	is	incorporated	herein	by	reference.

# PART	IV

# Item	15.				Exhibits,	Financial	Statement	Schedules.

# Statements

The	following	consolidated	financial	statements	of	BD	are	included	in	Item	8	of	this	report:

•Reports	of	Independent	Registered	Public	Accounting Firm

•Consolidated	Statements	of	Comprehensive	Income	—	Years	ended	September	30,	2018,	2017	and 2016

•Notes	to	Consolidated	Financial

(2) Financial	Statement	Schedules

See	Note	18	to	the	Consolidated	Financial	Statements	included	in	Item	8,	Financial	Statements	and	Supplementary	Data.

# (3) Exhibits

See	the	Exhibit	Index	beginning	on	page	104	hereof	for	a	list	of	all	management	contracts,	compensatory	plans	and	arrangements	required	by	this	item,	and	all other	Exhibits	filed	or	incorporated	by	reference	as	a	part	of	this	report.

# SIGNATURES

Pursuant	to	the	requirements	of	Section	13	or	15(d)	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.

Gary	DeFazio

Senior	Vice	President	and	Corporate	Secretary

Pursuant	to	the	requirements	of	the	Securities	Exchange	Act	of	1934,	this	report	has	been	signed	below	on	the	21st	day	of	November,	2018	by	the	following persons	on	behalf	of	the	registrant	and	in	the	capacities	indicated.

/S/				CHARLES	R.	BODNER Charles	R.	Bodner

Jeffrey	W.	Henderson*

Christopher	Jones*

Marshall	O.	Larsen*

Senior	Vice	President,	Corporate	Finance, and	Chief	Accounting	Officer (Principal	Accounting	Officer)

Director

Gary	A.	Mecklenburg*

# EXHIBIT	INDEX

+ Pursuant	to	Item	601(b)(2)	of	Regulation	S-K,	the	schedules	to	the	Agreement	and	Plan	of	Merger	have	been	omitted	from	this	Report	and	will	be	furnished supplementally	to	the	SEC	upon	request.

* Denotes	a	management	contract	or	compensatory	plan	or arrangement.

Copies	of	any	Exhibits	not	accompanying	this	Form	10-K	are	available	at	a	charge	of	10	cents	per	page	by	contacting:	Investor	Relations,	Becton,	Dickinson	and Company,	1	Becton	Drive,	Franklin	Lakes,	New	Jersey	07417-1880,	Phone:	1-800-284-6845.



Question: what was the percentage change in the losses on debt extinguishment from 2017 to 2018
Answer: 78.1%