Item 1. FINANCIAL STATEMENTS

BECTON, DICKINSON AND COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

Millions of dollars, except per share data

(Unaudited)

			Three Months Ended June 30,												Nine Months Ended June 30,
			2022						2021						2022						2021
Revenues			$	4,641					$	4,607					$	14,109					$	14,282
Cost of products sold			2,574						2,649						7,709						7,738
Selling and administrative expense			1,149						1,200						3,527						3,434
Research and development expense			315						330						956						911
Acquisition-related integration and restructuring expense			55						24						118						121
Other operating expense (income), net			11						(88)						7						208
Total Operating Costs and Expenses			4,104						4,114						12,316						12,412
Operating Income			537						492						1,793						1,870
Interest expense			(99)						(115)						(294)						(358)
Interest income			5						2						9						7
Other (expense) income, net			(21)						(1)						(45)						22
Income from Continuing Operations Before Income Taxes			421						378						1,463						1,541
Income tax provision (benefit)			31						(28)						115						92
Net Income from Continuing Operations			390						407						1,348						1,450
(Loss) Income from Discontinued Operations, Net of Tax			(30)						118						144						378
Net Income			360						525						1,491						1,827
Preferred stock dividends			(23)						(23)						(68)						(68)
Net income applicable to common shareholders			$	338					$	502					$	1,424					$	1,760
Basic Earnings per Share
Income from Continuing Operations			$	1.29					$	1.33					$	4.49					$	4.76
(Loss) Income from Discontinued Operations			(0.10)						0.41						0.50						1.30
Basic Earnings per Share			$	1.18					$	1.73					$	4.99					$	6.06
Diluted Earnings per Share
Income from Continuing Operations			$	1.28					$	1.32					$	4.45					$	4.72
(Loss) Income from Discontinued Operations			(0.10)						0.40						0.50						1.29
Diluted Earnings per Share			$	1.18					$	1.72					$	4.95					$	6.00
Dividends per Common Share			$	0.87					$	0.83					$	2.61					$	2.49

Amounts may not add due to rounding.

See notes to condensed consolidated financial statements

BECTON, DICKINSON AND COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

Millions of dollars

(Unaudited)

			Three Months Ended June 30,												Nine Months Ended June 30,
			2022						2021						2022						2021
Net Income			$	360					$	525					$	1,491					$	1,827
Other Comprehensive Income (Loss), Net of Tax
Foreign currency translation adjustments			203						19						322						68
Defined benefit pension and postretirement plans			11						14						32						72
Cash flow hedges			37						(34)						74						78
Other Comprehensive Income (Loss), Net of Tax			250						(1)						428						218
Comprehensive Income			$	610					$	524					$	1,919					$	2,045

Amounts may not add due to rounding.

See notes to condensed consolidated financial statements

BECTON, DICKINSON AND COMPANY

CONDENSED CONSOLIDATED BALANCE SHEETS

Millions of dollars

(Unaudited)

			June 30, 2022						September 30, 2021
Assets
Current Assets:
Cash and equivalents			$	2,558					$	2,283
Restricted cash			202						109
Short-term investments			14						12
Trade receivables, net			2,218						2,350
Inventories:
Materials			726						628
Work in process			407						381
Finished products			2,030						1,734
			3,163						2,743
Prepaid expenses and other			1,392						1,048
Current assets of discontinued operations			—						293
Total Current Assets			9,547						8,838
Property, Plant and Equipment			12,405						12,093
Less allowances for depreciation and amortization			6,399						6,090
Property, Plant and Equipment, Net			6,005						6,003
Goodwill			23,968						23,886
Developed Technology, Net			8,764						9,417
Customer Relationships, Net			2,592						2,815
Other Intangibles, Net			531						541
Other Assets			1,793						1,945
Noncurrent Assets of Discontinued Operations			—						423
Total Assets			$	53,199					$	53,866
Liabilities and Shareholders’ Equity
Current Liabilities:
Current debt obligations			$	1,682					$	500
Payables, accrued expenses and other current liabilities			5,398						5,969
Current liabilities of discontinued operations			—						157
Total Current Liabilities			7,080						6,626
Long-Term Debt			14,683						17,110
Long-Term Employee Benefit Obligations			1,009						1,228
Deferred Income Taxes and Other Liabilities			4,934						5,209
Noncurrent Liabilities of Discontinued Operations			—						17
Commitments and Contingencies (See Note 5)
Shareholders’ Equity
Preferred stock			2						2
Common stock			365						365
Capital in excess of par value			19,511						19,272
Retained earnings			15,088						13,826
Deferred compensation			24						23
Treasury stock			(7,836)						(7,723)
Accumulated other comprehensive loss			(1,660)						(2,088)
Total Shareholders’ Equity			25,493						23,677
Total Liabilities and Shareholders’ Equity			$	53,199					$	53,866

Amounts may not add due to rounding.

See notes to condensed consolidated financial statements

BECTON, DICKINSON AND COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Millions of dollars

(Unaudited)

			Nine Months Ended June 30,
			2022						2021
Operating Activities
Net income			$	1,491					$	1,827
Less: Income from discontinued operations, net of tax			144						378
Income from continuing operations, net of tax			1,348						1,450
Adjustments to net income from continuing operations to derive net cash provided by continuing operating activities:
Depreciation and amortization			1,648						1,648
Share-based compensation			184						182
Deferred income taxes			(99)						(95)
Change in operating assets and liabilities			(1,445)						173
Pension obligation			(126)						52
Product liability-related charge			—						296
Other, net			(11)						(421)
Net Cash Provided by Continuing Operating Activities			1,498						3,285
Investing Activities
Capital expenditures			(658)						(742)
Acquisitions, net of cash acquired			(450)						(283)
Other, net			(107)						(137)
Net Cash Used for Continuing Investing Activities			(1,215)						(1,162)
Financing Activities
Proceeds from long-term debt			—						1,715
Distribution from Embecta Corp. (see Note 2)			1,266						—
Net transfer of cash to Embecta upon spin-off			(265)						—
Payments of debt			(305)						(1,999)
Repurchases of common stock			—						(1,000)
Dividends paid			(812)						(789)
Other, net			(70)						(91)
Net Cash Used for Continuing Financing Activities			(187)						(2,164)
Discontinued Operations
Net cash provided by operating activities			163						411
Net cash used for investing activities			(11)						(24)
Net cash provided by financing activities			145						—
Net Cash Provided by Discontinued Operations			298						387
Effect of exchange rate changes on cash and equivalents and restricted cash			(26)						18
Net increase in cash and equivalents and restricted cash			368						365
Opening Cash and Equivalents and Restricted Cash			2,392						2,917
Closing Cash and Equivalents and Restricted Cash			$	2,759					$	3,282

Amounts may not add due to rounding.

See notes to condensed consolidated financial statements

BECTON, DICKINSON AND COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2022

Note 1 – Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and, in the opinion of the management of Becton, Dickinson and Company (the "Company" or "BD"), include all adjustments which are of a normal recurring nature, necessary for a fair presentation of the financial position and the results of operations and cash flows for the periods presented. However, the financial statements do not include all information and accompanying notes required for a presentation in accordance with U.S. generally accepted accounting principles ("U.S. GAAP"). These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and the notes thereto included in the Company’s 2021 Annual Report on Form 10-K.

On April 1, 2022, the Company completed the spin-off of its Diabetes Care business as a separate publicly traded company and the historical results of the Diabetes Care business that was contributed in the spin-off have been reflected as discontinued operations in the Company’s condensed consolidated financial statements for all periods prior to the spin-off date. Additional disclosures regarding the spin-off are provided in Note 2.

Within the financial statements and tables presented, certain columns and rows may not add due to the use of rounded numbers for disclosure purposes. Percentages and earnings per share amounts presented are calculated from the underlying amounts. The results of operations for the interim periods are not necessarily indicative of the results of operations to be expected for the full year.

Note 2 – Spin-Off of Embecta Corp.

On April 1, 2022, the Company completed the spin-off of its Diabetes Care business as a separate publicly traded company named Embecta Corp. (“Embecta”) through a distribution of Embecta’s publicly traded common stock (listed on NASDAQ under the ticker symbol “EMBC”) to BD’s shareholders of record as of the close of business on March 22, 2022 (the “record date”). The Company distributed one share of Embecta common stock for every five common shares of BD outstanding as of the record date and shareholders received cash in lieu of fractional shares of Embecta common stock. BD retained no ownership interest in Embecta subsequent to the spin-off. The distribution is expected to qualify and has been treated as tax-free to the Company and its shareholders for U.S. federal income tax purposes.

Embecta’s distributions on March 31, 2022 to the Company in connection with the spin-off included the issuance of $200 million of senior unsecured notes to the Company and a cash distribution of approximately $1.266 billion. Additional disclosures regarding the various financing transactions entered into by Embecta and related to the spin-off are provided in Note 13.

The Company and Embecta entered into various agreements to effect the spin-off and provide a framework for the relationship between the Company and Embecta after the spin-off. Such agreements include the separation and distribution agreement, as well as the following ongoing agreements: a cannula supply agreement, an intellectual property matters agreement, a transition services agreement, manufacturing and supply agreements, a lease agreement, a distribution agreement to support commercial operations, a logistics services agreement and other agreements including an employee matters agreement and a tax matters agreement. Under these agreements, the Company will continue to provide certain products and services to Embecta following the spin-off. The agreements do not provide the Company with the ability to influence the operating or financial policies of Embecta subsequent to the spin-off date. Amounts included in the Company’s condensed consolidated statements of income during the three months ended June 30, 2022 as a result of these agreements were immaterial.

The historical results of the Diabetes Care business (previously included in BD’s Medical segment) that was contributed to Embecta in the spin-off, as well as interest expense related to indebtedness incurred by Embecta prior to the spin-off date, have been reflected as discontinued operations in the Company’s condensed consolidated financial statements for all periods prior to the spin-off date of April 1, 2022.

Details of Income from Discontinued Operations, Net of Tax are as follows:

						Three Months Ended June 30,									Nine Months Ended June 30,
Millions of dollars									2021						2022						2021
Revenues									$	284					$	538					$	831
Cost of products sold									80						143						235
Selling and administrative expense									37						78						101
Research and development expense									15						32						41
Acquisition-related integration and restructuring expense									—						—						6
Other operating expense, net									16						95						16
Total Operating Costs and Expenses									148						348						398
Operating Income									136						190						434
Interest expense									—						(4)						—
Other income, net									—						—						2
Income from Discontinued Operations Before Income Taxes									136						186						435
Income tax provision									18						42						57
Income from Discontinued Operations, Net of Tax									$	118					$	144					$	378

During the three months ended June 30, 2022, the Company incurred $30 million of expense which included costs to execute the spin-off and other costs for related residual activities. These costs are recorded within (Loss) Income from Discontinued Operations, Net of Tax for the three and nine months ended June 30, 2022. Separation costs incurred by the Company prior to the spin-off date, including those for consulting, legal, tax and other advisory services associated with the spin-off, were previously recorded within Other operating expense (income), net and are now included as a component of (Loss) Income from Discontinued Operations, Net of Tax.

The Company’s Revenues and Cost of products sold from continuing operations were recast to reflect previously eliminated intercompany transactions that occurred between BD and Embecta and that resulted in a third-party sale in the same period. The impacts of these transactions to Embecta are also reflected as a component of (Loss) Income from Discontinued Operations, Net of Tax.

The following amounts associated with the Diabetes Care business are classified as assets and liabilities of discontinued operations in the Company’s condensed consolidated balance sheet at September 30, 2021:

Millions of dollars						September 30, 2021
Assets
Trade receivables, net						$	147
Inventories						123
Prepaid expenses and other						23
Current Assets of Discontinued Operations						293
Property, Plant and Equipment, Net						390
Goodwill and Other Intangibles, Net						27
Other Assets						6
Noncurrent Assets of Discontinued Operations						$	423
Liabilities
Accounts payable						$	54
Accrued expenses						75
Salaries, wages and related items						28
Current Liabilities of Discontinued Operations						157
Deferred Income Taxes and Other Liabilities						16
Noncurrent Liabilities of Discontinued Operations						$	17

The Company recorded its distribution of net liabilities to Embecta as an increase in Retained earnings. The amount recorded reflected the carrying amounts, as of April 1, 2022, of the net liabilities distributed and included $1.650 billion of debt issued by Embecta, as further discussed above and in Note 13, as well as $265 million of cash. The Company also recorded a net decrease to Accumulated other comprehensive loss of $251 million to derecognize foreign currency translation losses which were attributable to Embecta.

In connection with the spin-off of Embecta, all outstanding (vested and unvested) BD share-based awards which had been granted to Embecta employees were converted into Embecta awards. These awards preserved the same intrinsic value, as well as general terms and conditions, of the original BD awards, as required by the terms of the BD awards. The Company also adjusted share-based awards which had been granted to BD employees so that the intrinsic value of these awards after the spin-off equaled the awards’ intrinsic value prior to the spin-off. These conversions and adjustments did not materially impact the number of BD share-based awards outstanding.

Note 3 – Shareholders' Equity

Changes in certain components of shareholders' equity for the first three quarters of fiscal years 2022 and 2021 were as follows:

			Common Stock Issued at Par Value						Capital in Excess of Par Value						Retained Earnings						Deferred Compensation						Treasury Stock
(Millions of dollars)			Shares (in thousands)						Amount
Balance at September 30, 2021			$	365					$	19,272					$	13,826					$	23					(80,164)						$	(7,723)
Net income			—						—						677						—						—						—
Common dividends ($0.87 per share)			—						—						(248)						—						—						—
Preferred dividends			—						—						(23)						—						—						—
Common stock issued for share-based compensation and other plans, net			—						(71)						—						—						762						19
Share-based compensation			—						83						—						—						—						—
Common stock held in trusts, net (a)			—						—						—						—						(5)						—
Repurchase of common stock (b)			—						150						—						—						(462)						(150)
Balance at December 31, 2021			$	365					$	19,435					$	14,233					$	24					(79,869)						$	(7,855)
Net income			—						—						454						—						—						—
Common dividends ($0.87 per share)			—						—						(248)						—						—						—
Preferred dividends			—						—						(23)						—						—						—
Common stock issued for share-based compensation and other plans, net			—						(21)						—						1						284						14
Share-based compensation			—						56						—						—						—						—
Common stock held in trusts, net (a)			—						24						—						—						9						(24)
Balance at March 31, 2022			$	365					$	19,495					$	14,416					$	24					(79,575)						$	(7,866)
Net income			—						—						360						—						—						—
Common dividends ($0.87 per share)			—						—						(248)						—						—						—
Preferred dividends			—						—						(23)						—						—						—
Common stock issued for share-based compensation and other plans, net			—						(9)						—						—						122						5
Share-based compensation			—						50						—						—						—						—
Common stock held in trusts, net (a)			—						(24)						—						—						9						24
Spin-off of Embecta (See Note 2)			—						—						583						—						—						—
Balance at June 30, 2022			$	365					$	19,511					$	15,088					$	24					(79,445)						$	(7,836)

			Common Stock Issued at Par Value						Capital in Excess of Par Value						Retained Earnings						Deferred Compensation						Treasury Stock
(Millions of dollars)			Shares (in thousands)						Amount
Balance at September 30, 2020			$	365					$	19,270					$	12,791					$	23					(74,623)						$	(6,138)
Net income			—						—						1,003						—						—						—
Common dividends ($0.83 per share)			—						—						(242)						—						—						—
Preferred dividends			—						—						(23)						—						—						—
Common stock issued for share-based compensation and other plans, net			—						(53)						—						—						549						2
Share-based compensation			—						83						—						—						—						—
Common stock held in trusts, net (a)			—						—						—						—						(7)						—
Effect of change in accounting principles			—						—						(9)						—						—						—
Balance at December 31, 2020			$	365					$	19,301					$	13,522					$	23					(74,080)						$	(6,136)
Net income			—						—						299						—						—						—
Common dividends ($0.83 per share)			—						—						(242)						—						—						—
Preferred dividends			—						—						(23)						—						—						—
Common stock issued for share-based compensation and other plans, net			—						(15)						—						—						234						4
Share-based compensation			—						55						—						—						—						—
Common stock held in trusts, net (a)			—						—						—						—						23						—
Balance at March 31, 2021			$	365					$	19,341					$	13,557					$	23					(73,821)						$	(6,132)
Net income			—						—						525						—						—						—
Common dividends ($0.83 per share)			—						—						(239)						—						—						—
Preferred dividends			—						—						(23)						—						—						—
Common stock issued for share-based compensation and other plans, net			—						(9)						—						—						87						5
Share-based compensation			—						50						—						—						—						—
Common stock held in trusts, net (a)			—						—						—						—						8						—
Repurchase of common stock			—						(100)						—						—						(3,724)						(900)
Balance at June 30, 2021			$	365					$	19,282					$	13,821					$	23					(77,450)						$	(7,027)

(a)Common stock held in trusts consists of the Company’s shares held in rabbi trusts in connection with deferred compensation under the Company’s employee salary and bonus deferral plan and directors’ deferral plan. During the second quarter of fiscal year 2022, the common stock held in trusts was temporarily replaced with the Company’s Series C preferred shares to adhere to trust requirements until the Company’s spin-off of its Diabetes Care business was completed on April 1, 2022.

(b)Represents shares received upon final settlement of an accelerated share repurchase agreement, and the related forward sale contract, entered into during the fourth quarter of fiscal year 2021. The share repurchases were made pursuant to the repurchase program authorized by the Board of Directors on September 24, 2013 for 10 million shares, for which there is no expiration date. In November 2021, the Board of Directors authorized the Company to repurchase up to an additional 10 million shares of BD common stock, for which there is also no expiration date.

The components and changes of Accumulated other comprehensive income (loss) for the first three quarters of fiscal years 2022 and 2021 were as follows:

(Millions of dollars)			Total						Foreign Currency Translation						Benefit Plans						Cash Flow Hedges
Balance at September 30, 2021			$	(2,088)					$	(1,292)					$	(784)					$	(10)
Other comprehensive income (loss) before reclassifications, net of taxes			34						41						—						(7)
Amounts reclassified into income, net of taxes			11						—						11						—
Balance at December 31, 2021			$	(2,043)					$	(1,251)					$	(774)					$	(17)
Other comprehensive income before reclassifications, net of taxes			122						78						—						44
Amounts reclassified into income, net of taxes			11						—						11						—
Balance at March 31, 2022			$	(1,910)					$	(1,173)					$	(763)					$	28
Other comprehensive (loss) income before reclassifications, net of taxes			(13)						(48)						—						35
Amounts reclassified into income, net of taxes			12						—						11						2
Spin-off of Embecta (see Note 2)			251						251						—						—
Balance at June 30, 2022			$	(1,660)					$	(970)					$	(752)					$	64

(Millions of dollars)			Total						Foreign Currency Translation						Benefit Plans						Cash Flow Hedges
Balance at September 30, 2020			$	(2,548)					$	(1,416)					$	(1,040)					$	(91)
Other comprehensive income before reclassifications, net of taxes			115						64						24						27
Amounts reclassified into income, net of taxes			19						—						18						2
Balance at December 31, 2020			$	(2,414)					$	(1,352)					$	(998)					$	(62)
Other comprehensive income (loss) before reclassifications, net of taxes			64						(15)						—						78
Amounts reclassified into income, net of taxes			21						—						16						5
Balance at March 31, 2021			$	(2,329)					$	(1,367)					$	(982)					$	21
Other comprehensive (loss) income before reclassifications, net of taxes			(16)						19						—						(34)
Amounts reclassified into income, net of taxes			15						—						14						1
Balance at June 30, 2021			$	(2,330)					$	(1,348)					$	(967)					$	(13)

The amounts of foreign currency translation recognized in other comprehensive income during the three and nine months ended June 30, 2022 and 2021 included net gains (losses) relating to net investment hedges. Other comprehensive income relating to benefit plans during the three months ended December 31, 2020 represented a net gain recognized as a result of the Company’s remeasurement, as of October 31, 2020, of the legacy Bard U.S. defined pension benefit plan upon its merger with the BD defined benefit cash balance pension plan in the first quarter of fiscal year 2021. The amounts recognized in other comprehensive income relating to cash flow hedges during the three and nine months ended June 30, 2022 and 2021 are primarily related to forward starting interest rate swaps. Additional disclosures regarding amounts the Company recognized in other comprehensive income relating to cash flow hedges during the three and nine months ended June 30, 2022 and 2021 are provided in Note 11.

The tax impacts for amounts recognized in other comprehensive income (loss) before reclassifications and for reclassifications out of Accumulated other comprehensive income (loss) relating to benefit plans and cash flow hedges during the three and nine months ended June 30, 2022 and 2021 were 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) were as follows:

			Three Months Ended June 30,												Nine Months Ended June 30,
			2022						2021						2022						2021
Average common shares outstanding			285,441						289,522						285,121						290,401
Dilutive share equivalents from share-based plans			1,818						2,375						2,279						2,693
Dilutive share equivalents from Series C preferred shares (a)			38						—						31						—
Average common and common equivalent shares outstanding – assuming dilution			287,297						291,897						287,431						293,094
Share equivalents excluded from the diluted shares outstanding calculation:
Mandatory convertible preferred stock (b)			6,084						6,168						6,084						6,168
Share-based plans (c)			—						763						—						755

(a)Represents dilutive share equivalents from Series C preferred shares that temporarily replaced shares of common stock held in trusts to adhere to trust requirements until the Company’s spin-off of its Diabetes Care business on April 1, 2022 was completed.

(b)Excluded from the diluted shares outstanding calculation because the result would have been antidilutive.

(c)Excluded from the diluted earnings per share calculation as the exercise prices of these awards were greater than the average market price of the Company’s common shares.

Note 5 – Contingencies

The Company is 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 and environmental matters in certain U.S. and international locations. 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 litigation in which the Company is a party. In accordance with U.S. GAAP, the Company establishes accruals to the extent probable future losses are estimable (and in the case of environmental matters, without considering possible third-party recoveries). With respect to putative class action lawsuits in the United States and certain of the Canadian lawsuits described below, 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 any class. With respect to the civil investigative demands (“CIDs”) served by the Department of Justice which are 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.

Product Liability Matters

As of June 30, 2022, the Company is defending approximately 30,290 product liability claims involving the Company’s line of hernia repair devices (collectively, the “Hernia Product Claims”). The majority of those claims are currently pending in a coordinated proceeding in Rhode Island State Court (“RI”) and in a federal multi-district litigation (“MDL”) established in the Southern District of Ohio, but claims are also pending in other state and/or federal court jurisdictions. In addition, those claims include multiple putative class actions in Canada. Generally, the Hernia Product Claims seek damages for personal injury allegedly resulting from use of the products. From time to time, the Company engages in resolution discussions with plaintiffs’ law firms regarding certain of the Hernia Product Claims, but the Company also intends to vigorously defend Hernia Product Claims that do not settle, including through litigation.

• The first bellwether trial in the hernia MDL resulted in a complete defense verdict in favor of the Company in September 2021 after five weeks of trial.

• The second hernia MDL bellwether resulted in a $255 thousand verdict in April 2022 after four weeks of trial.

Trials are currently scheduled in various state and/or federal courts, including one that began in July 2022 in RI. The Company expects additional trials of Hernia Product Claims to take place over the next 12 months.

The Company also continues to be a defendant in certain other mass tort litigation. As of June 30, 2022, the Company is defending product liability claims involving the Company’s line of pelvic mesh products, the majority of which are pending in various federal court jurisdictions and in a coordinated proceeding in New Jersey Superior Court. Also, as of June 30, 2022, the Company is defending product liability claims involving the Company’s line of inferior vena cava (“IVC”) filter products. The majority of those claims are pending in various federal court jurisdictions after having been remanded from the MDL in the United States District Court for the District of Arizona.

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.

Other Legal Matters

On February 27, 2020, a putative class action captioned Kabak v. Becton, Dickinson and Company, et al., Civ. No. 2:20-cv-02155 (SRC) (CLW), now captioned Industriens Pensionsforsikring v. Becton, Dickinson and Company, et al., was filed in the U.S. District Court for the District of New Jersey against the Company and certain of its officers. The complaint, which purports to be brought on behalf of all persons (other than defendants) who purchased or otherwise acquired the Company's common stock from November 5, 2019 through February 5, 2020, asserts claims for purported violations of Sections 10 and 20 of the Securities Exchange Act of 1934 and Securities and Exchange Commission (“SEC”) Rule 10b-5 promulgated thereunder, and seeks, among other things, damages and costs. The complaint alleges that defendants concealed certain material information regarding AlarisTM infusion pumps, allegedly rendering certain public statements about the Company’s business, operations and prospects false or misleading, thereby allegedly causing investors to purchase stock at an inflated price. The plaintiff filed a second amended complaint to add certain additional factual allegations on February 3, 2021. This complaint was dismissed on the Company’s motion on September 15, 2021. The court’s dismissal order, however, gave plaintiff an opportunity to replead, which it did on October 29, 2021. The Company moved to dismiss the newly amended pleading on December 16, 2021. That motion is fully briefed and pending. The Company believes that these allegations are without merit and it intends to defend itself vigorously.

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

In May 2017, the Company was sued by a competitor in the Northern District of New York, alleging antitrust violations related to certain aspects of the Company’s medical delivery solutions business in a case captioned AngioDynamics, Inc. v. C. R. Bard, Inc. et al., Civ. No. 1:17-CV-0598. Pretrial activity in the case is ongoing. The Company believes it has meritorious defenses and is vigorously defending the case, which has been set for trial on September 19, 2022.

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

In April 2019, the Department of Justice served the Company and CareFusion with CIDs seeking information regarding certain of CareFusion’s contracts with the Department of Veteran’s Affairs for certain products, including AlarisTM and PyxisTM

devices, in connection with a civil investigation of possible violations of the False Claims Act, and the government recently expanded the investigation to include several additional contracts. The government has made several requests for documents and interviews or depositions of Company personnel. The Company is cooperating with the government and responding to these requests.

In September 2021, the Company received a CID related to an inquiry initiated by the Northern District of Georgia in 2018. The requests concern sales and marketing practices with respect to certain aspects of the Company’s urology business. The government has made requests for documents and has interviewed employees. The inquiry is ongoing and the Company is cooperating with the government and responding to its requests.

In September 2021, the Company was served with a complaint from the New Mexico Attorney General, alleging violations of the state’s consumer protection laws in connection with the sales and marketing of its IVC filters. The Company’s motion to dismiss certain of the claims was granted on May 10, 2022, and discovery is proceeding. The Company intends to vigorously defend itself in the litigation. As the case is in its early stages, the Company cannot anticipate the timing, scope, outcome or possible impact at present.

In July 2021, the Company became aware of lawsuits that had been filed against it in state and federal courts in Georgia. The suits were filed by plaintiffs who reside near Company facilities in Covington, GA, where ethylene oxide (“EtO”) sterilization activities take place. There are currently approximately 210 of such suits involving approximately 310 plaintiffs. The claims allege a variety of injuries, including but not limited to multiple types of cancer, allegedly attributable to exposure to EtO in the ambient air. The Company has meritorious defenses and intends to defend itself vigorously.

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

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

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. We also are subject to administrative proceedings under environmental laws in jurisdictions outside the U.S. 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 consolidated results of operations and/or consolidated cash flows.

Litigation Accruals

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

Accruals for the Company's product liability claims which are discussed above, as well as the related legal defense costs, amounted to approximately $2.2 billion and $2.5 billion at June 30, 2022 and September 30, 2021, respectively. These accruals are largely recorded within Deferred Income Taxes and Other Liabilities on the Company's condensed consolidated balance sheets.

In view of the uncertainties discussed above, 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/or consolidated cash flows.

Note 6 – Revenues

The Company’s policies for recognizing sales have not changed from those described in the Company’s 2021 Annual Report on Form 10-K. The Company sells a broad range of medical supplies, devices, laboratory equipment and diagnostic products which are distributed through independent distribution channels and directly by BD through sales representatives. End-users of

the Company's products include healthcare institutions, physicians, life science researchers, clinical laboratories, the pharmaceutical industry and the general public.

Measurement of Revenues

The Company’s allowance for doubtful accounts reflects the current estimate of credit losses expected to be incurred over the life of its trade receivables. Such estimated credit losses are determined based on historical loss experiences, customer-specific credit risk, and reasonable and supportable forward-looking information, such as country or regional risks that are not captured in the historical loss information. The allowance for doubtful accounts for trade receivables is not material to the Company's consolidated financial results.

The Company's gross revenues are subject to a variety of deductions which are recorded in the same period that the underlying revenues are recognized. Such variable consideration includes rebates, sales discounts and sales returns. The Company’s rebate liability at June 30, 2022 and September 30, 2021 was $526 million and $500 million, respectively. The impact of other forms of variable consideration, including sales discounts and sales returns, is not material to the Company's revenues.

Effects of Revenue Arrangements on Consolidated Balance Sheets

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

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

Remaining Performance Obligations

The Company's obligations relative to service contracts and pending installations of equipment, primarily in the Company's Medication Management Solutions unit, represent unsatisfied performance obligations of the Company. The revenues under existing contracts with original expected durations of more than one year, which are attributable to products and/or services that have not yet been installed or provided are estimated to be approximately $2.2 billion at June 30, 2022. The Company expects to recognize the majority of this revenue over the next three years.

Within the Company's Medication Management Solutions, Medication Delivery Solutions, Integrated Diagnostic Solutions, and Biosciences units, some contracts also contain minimum purchase commitments of reagents or other consumables and the future sales of these consumables represent additional unsatisfied performance obligations of the Company. The revenue attributable to the unsatisfied minimum purchase commitment-related performance obligations, for contracts with original expected durations of more than one year, is estimated to be approximately $2.1 billion at June 30, 2022. This revenue will be recognized over the customer relationship periods.

Disaggregation of Revenues

A disaggregation of the Company's revenues by segment, organizational unit and geographic region is provided in Note 7.

Note 7 – Segment Data

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

Prior to its spin-off on April 1, 2022, the Company reported the Diabetes Care business as an organizational unit within the Medical segment. As such, historical financial information of the Medical segment has been recast in the tables below to reflect the total segment revenues from continuing operations. Revenues and operating income from the Diabetes Care business prior to its spin-off are included in (Loss) Income from Discontinued Operations, Net of Tax. See Note 2 for further information.

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

			Three Months Ended June 30,
(Millions of dollars)			2022																		2021
			United States						International						Total						United States						International						Total
Medical
Medication Delivery Solutions (a)			$	621					$	439					$	1,061					$	562					$	456					$	1,019
Medication Management Solutions			463						144						607						459						139						597
Pharmaceutical Systems (a)			135						388						523						112						363						475
Total segment revenues			$	1,219					$	971					$	2,191					$	1,133					$	958					$	2,091
Life Sciences
Integrated Diagnostic Solutions			$	499					$	461					$	961					$	435					$	682					$	1,117
Biosciences			147						201						348						124						192						316
Total segment revenues			$	646					$	663					$	1,309					$	559					$	874					$	1,433
Interventional
Surgery			$	274					$	77					$	352					$	267					$	69					$	336
Peripheral Intervention			255						208						463						238						198						436
Urology and Critical Care			248						79						326						227						83						310
Total segment revenues			$	777					$	364					$	1,142					$	732					$	350					$	1,082
Total Company revenues from continuing operations			$	2,643					$	1,998					$	4,641					$	2,424					$	2,182					$	4,607

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

			Nine Months Ended June 30,
(Millions of dollars)			2022																		2021
			United States						International						Total						United States						International						Total
Medical
Medication Delivery Solutions (a)			$	1,831					$	1,375					$	3,207					$	1,665					$	1,382					$	3,046
Medication Management Solutions			1,408						430						1,838						1,376						417						1,793
Pharmaceutical Systems (a)			363						1,057						1,420						292						984						1,276
Total segment revenues			$	3,602					$	2,863					$	6,465					$	3,333					$	2,783					$	6,116
Life Sciences
Integrated Diagnostic Solutions			$	1,732					$	1,524					$	3,255					$	1,904					$	2,141					$	4,045
Biosciences			405						617						1,022						365						588						953
Total segment revenues			$	2,136					$	2,140					$	4,277					$	2,269					$	2,729					$	4,998
Interventional
Surgery			$	824					$	229					$	1,053					$	757					$	203					$	960
Peripheral Intervention			712						615						1,327						692						590						1,282
Urology and Critical Care			740						247						987						672						255						926
Total segment revenues			$	2,276					$	1,091					$	3,367					$	2,120					$	1,047					$	3,168
Total Company revenues from continuing operations			$	8,014					$	6,095					$	14,109					$	7,722					$	6,560					$	14,282

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

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

			Three Months Ended June 30,												Nine Months Ended June 30,
(Millions of dollars)			2022						2021						2022						2021
Income from Continuing Operations Before Income Taxes
Medical (a)			$	573					$	486					$	1,587					$	1,474
Life Sciences			414						432						1,366						1,953
Interventional			293						214						826						725
Total Segment Operating Income			1,280						1,132						3,778						4,152
Unallocated acquisition-related integration and restructuring expense			(36)						(24)						(99)						(121)
Net interest expense			(94)						(113)						(285)						(351)
Other unallocated items (b)			(728)						(618)						(1,932)						(2,141)
Total Income from Continuing Operations Before Income Taxes			$	421					$	378					$	1,463					$	1,541

(a)The amount for the nine months ended June 30, 2022 includes a non-cash asset impairment charge of $54 million recorded to Cost of products sold in the Medical segment.

(b)Primarily comprised of foreign exchange, certain general and administrative expenses and share-based compensation expense. The amount for the nine months ended June 30, 2021 also included pre-tax charges of $296 million recorded to Other operating expense (income), net related to certain product liability matters, including the related legal defense costs, which are further discussed in Note 5.

Note 8 – Benefit Plans

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

Net pension cost included the following components for the three and nine-month periods:

			Three Months Ended June 30,												Nine Months Ended June 30,
(Millions of dollars)			2022						2021						2022						2021
Service cost			$	38					$	35					$	106					$	113
Interest cost			21						16						59						53
Expected return on plan assets			(52)						(40)						(146)						(129)
Amortization of prior service credit			(4)						(3)						(12)						(10)
Amortization of loss			17						22						48						73
Curtailment/Settlement (Gain) Loss			(1)						6						5						6
Net pension cost			$	19					$	36					$	61					$	106

The amounts provided above for amortization of prior service credit and amortization of loss represent the reclassifications of prior service credits and net actuarial losses that were recognized in Accumulated other comprehensive income (loss) in prior periods. All components of the Company’s net periodic pension and postretirement benefit costs, aside from service cost, are recorded to Other (expense) income, net on its consolidated statements of income. Net pension costs related to employees transferred to Embecta and reflected in (Loss) Income from Discontinued Operations, Net of Tax were immaterial. Additionally, the Company’s transfer of employees to Embecta did not materially impact the Company’s benefit obligations.

Note 9 – Business Restructuring Charges

The Company incurred restructuring costs during the nine months ended June 30, 2022, primarily in connection with the Company's simplification and other cost saving initiatives, which were largely recorded within Acquisition-related integration and restructuring expense. These simplification and other costs saving initiatives are focused on reducing complexity, enhancing product quality, refining customer experience, and improving cost efficiency across all of the Company’s segments. Restructuring liability activity for the nine months ended June 30, 2022 was as follows:

(Millions of dollars)			Employee Termination						Other						Total
Balance at September 30, 2021			$	14					$	5					$	19
Charged to expense			7						65						72
Cash payments			(9)						(45)						(54)
Non-cash settlements			—						(20)						(20)
Balance at June 30, 2022			$	12					$	5					$	17

Note 10 – Intangible Assets

At September 30, 2021, goodwill and other intangible assets related to the Diabetes Care business were classified as Noncurrent Assets of Discontinued Operations. For additional information, see Note 2.

Intangible assets consisted of:

			June 30, 2022																		September 30, 2021
(Millions of dollars)			Gross Carrying Amount						Accumulated Amortization						Net Carrying Amount						Gross Carrying Amount						Accumulated Amortization						Net Carrying Amount
Amortized intangible assets
Developed technology			$	14,498					$	(5,733)					$	8,764					$	14,399					$	(4,983)					$	9,417
Customer relationships			4,677						(2,085)						2,592						4,653						(1,838)						2,815
Product rights			107						(78)						29						123						(83)						40
Trademarks			408						(151)						257						409						(137)						271
Patents and other			542						(344)						198						523						(339)						184
Amortized intangible assets			$	20,231					$	(8,391)					$	11,840					$	20,106					$	(7,381)					$	12,726
Unamortized intangible assets
Acquired in-process research and development			$	44																	$	44
Trademarks			2																		2
Unamortized intangible assets			$	46																	$	46

Intangible amortization expense for the three months ended June 30, 2022 and 2021 was $357 million and $351 million, respectively. Intangible amortization expense for the nine months ended June 30, 2022 and 2021 was $1.064 billion and $1.049 billion, respectively.

The following is a reconciliation of goodwill by business segment:

(Millions of dollars)			Medical						Life Sciences						Interventional						Total
Goodwill as of September 30, 2021			$	10,240					$	836					$	12,810					$	23,886
Acquisitions (a)			—						71						205						276
Purchase price allocation adjustments			—						(1)						(2)						(3)
Currency translation			(81)						(11)						(98)						(191)
Goodwill as of June 30, 2022			$	10,158					$	895					$	12,915					$	23,968

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

Note 11 – 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 had on the Company’s balance sheets and the fair values of the derivatives outstanding at June 30, 2022 and September 30, 2021 were not material. The effects on the Company’s financial performance and cash flows are provided below.

Foreign Currency Risks and Related Strategies

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

The notional amounts of the Company’s foreign currency-related derivative instruments as of June 30, 2022 and September 30, 2021 were as follows:

(Millions of dollars)			Hedge Designation						June 30, 2022						September 30, 2021
Foreign exchange contracts (a)			Undesignated						$	1,698					$	2,735
Foreign currency-denominated debt (b)			Net investment hedges						2,309						2,543
Cross-currency swaps (c)			Net investment hedges						910						1,958

(a)Represent hedges of transactional foreign exchange exposures resulting primarily from intercompany payables and receivables. Gains and 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. Net amounts recognized in Other (expense) income, net, during the three and nine months ended June 30, 2022 and 2021 were immaterial to the Company's consolidated financial results.

(b)Represents foreign currency-denominated long-term notes outstanding which were effective as economic hedges of net investments in certain of the Company's foreign subsidiaries.

(c)Represents cross-currency swaps which were effective as economic hedges of net investments in certain of the Company's foreign subsidiaries.

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

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

			Three Months Ended June 30,												Nine Months Ended June 30,
(Millions of dollars)			2022						2021						2022						2021
Foreign currency-denominated debt			$	99					$	(4)					$	193					$	(25)
Cross-currency swaps			84						(16)						$	129					$	(100)

Interest Rate Risks and Related Strategies

The Company uses a mix of fixed and variable rate debt to manage its interest rate exposure, and 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 cash flow or fair value hedges.

Changes in the fair value of the interest rate swaps designated as cash flow hedges (i.e., hedging the exposure to variability in expected future cash flows that is attributable to a particular risk) are recorded in Other comprehensive income (loss). If interest

rate derivatives designated as cash flow hedges are terminated, the balance in Accumulated other comprehensive income (loss) attributable to those derivatives is reclassified into earnings, within Interest expense, over the remaining life of the hedged debt. The amounts reclassified from accumulated other comprehensive income relating to cash flow hedges during the three and nine months ended June 30, 2022 and 2021, as well as the amounts expected to be reclassified within the next 12 months, are not material to the Company's consolidated financial results.

The Company recorded net after-tax gains (losses) of $37 million and $(34) million during the three months ended June 30, 2022 and 2021, respectively, and net after-tax gains of $77 million and $71 million during the nine months ended June 30, 2022 and 2021, respectively, in Other comprehensive income relating to interest rate hedges. The gains recorded during the current three and nine-month periods were driven by a net after-tax gain of $41 million that was realized upon the Company’s termination of $500 million of forward starting interest rate swaps.

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. Amounts recorded during the three and nine months ended June 30, 2022 and 2021 were immaterial to the Company's consolidated financial results.

The notional amounts of the Company’s interest rate-related derivative instruments as of June 30, 2022 and September 30, 2021 were as follows:

(Millions of dollars)			Hedge Designation						June 30, 2022						September 30, 2021
Interest rate swaps (a)			Fair value hedges						$	700					$	700
Forward starting interest rate swaps (b)			Cash flow hedges						500						1,000

(a)Represents 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.

(b)Represents interest rate derivatives entered into to mitigate exposure to interest rate risk related to future debt issuances.

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's outstanding commodity derivative forward contracts at June 30, 2022 were immaterial to the Company's consolidated financial results and the Company had no outstanding commodity derivative forward contracts at September 30, 2021.

Note 12 – Financial Instruments and Fair Value Measurements

The following reconciles cash and equivalents and restricted cash reported within the Company's consolidated balance sheets at June 30, 2022 and September 30, 2021 to the total of these amounts shown on the Company's consolidated statements of cash flows:

(Millions of dollars)			June 30, 2022						September 30, 2021
Cash and equivalents			$	2,558					$	2,283
Restricted cash			202						109
Cash and equivalents and restricted cash			$	2,759					$	2,392

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

The fair values of the Company’s financial instruments are as follows:

(Millions of dollars)			Basis of fair value measurement						June 30, 2022						September 30, 2021
Institutional money market accounts and ultra-short bond fund (a)			Level 1						$	650					$	200
Current portion of long-term debt (b)			Level 2						1,678						503
Long-term debt (b)			Level 2						13,390						18,537

(a)These financial instruments are recorded within Cash and equivalents on the consolidated balance sheets. The institutional money market accounts permit daily redemption. The fair values of these investments are based upon the quoted prices in active markets provided by the holding financial institutions.

(b)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.

Short-term investments are held to their maturities and are carried at cost, which approximates fair value. The short-term investments consist of instruments with maturities greater than three months and less than one year. All other instruments measured by the Company at fair value, including derivatives and contingent consideration liabilities, are immaterial to the Company's consolidated balance sheets.

Nonrecurring Fair Value Measurements

In the third quarter of fiscal year 2022, the Company recorded non-cash asset impairment charges of $11 million to Cost of products sold in the Life Sciences segment and $19 million to Acquisition-related integration and restructuring expense in the Medical segment. In the second quarter of fiscal year 2022, the Company recorded a non-cash asset impairment charge of $54 million to Cost of products sold in the Medical segment. In the first quarter of fiscal year 2021, the Company recorded charges to Cost of products sold of $29 million to write down the carrying value of certain fixed assets. The amounts recognized 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 Level 3 inputs, including values estimated using the income approach.

Transfers of trade receivables

Over the normal course of its business activities, the Company transfers certain trade receivable assets to third parties under factoring agreements. Per the terms of these agreements, the Company surrenders control over its trade receivables upon transfer. Accordingly, the Company accounts for the transfers as sales of trade receivables by recognizing an increase to Cash and equivalents and a decrease to Trade receivables, net when proceeds from the transactions are received. The costs incurred by the Company in connection with factoring activities were not material to its consolidated financial results. The amounts transferred and yet to be remitted under factoring arrangements are provided below.

			Three Months Ended June 30,												Nine Months Ended June 30,
(Millions of dollars)			2022						2021						2022						2021
Trade receivables transferred to third parties under factoring arrangements			$	215					$	284					$	650					$	1,071

			June 30, 2022						September 30, 2021
Amounts yet to be collected and remitted to the third parties			$	215					$	118

Note 13 – Debt

In February 2022, Embecta, as a wholly-owned subsidiary of the Company, issued $500 million of 5.000% senior secured notes due February 15, 2030, in advance of the Company’s spin-off of Embecta, which is further discussed in Note 2.

On March 31, 2022, Embecta entered into an indenture dated April 1, 2022 to issue $200 million of 6.750% senior secured notes due February 15, 2030. These notes were issued to the Company as part of the consideration for assets transferred to Embecta in connection with the spin-off. After the spin-off was effective on April 1, 2022, the Company exchanged these notes for $199 million of the aggregate principal amount outstanding on the Company’s Floating Rate Notes due June 6, 2022, which were purchased through a tender offer. The carrying value of the long-term notes tendered was $199 million, and the Company recognized a loss on this debt extinguishment of $2 million, which was recorded in the third quarter of fiscal year 2022 within Other (expense) income, net, on the Company’s condensed consolidated statements of income.

Also in connection with the spin-off, on March 31, 2022, Embecta issued a senior secured term loan facility with an aggregate principal amount of $950 million and a senior secured revolving credit facility providing borrowings of up to $500 million that was undrawn at March 31, 2022 and at the spin-off date.

The borrowings from the 5.000% senior secured notes due February 15, 2030 and the senior secured term loan facility were included within the Company's condensed consolidated balance sheet at March 31, 2022. The senior secured notes and credit agreement for the term loan and revolving credit facilities were guaranteed on an unsecured, unsubordinated basis solely by the Company prior to the spin-off date. The Company’s guarantees automatically and unconditionally terminated upon the consummation of the spin-off on April 1, 2022.

On March 31, 2022, Embecta used a portion of the proceeds from the financing transactions discussed above to make a cash distribution of approximately $1.266 billion to the Company.

Note 14 – Subsequent Event

Acquisition of Parata Systems

On July 18, 2022, the Company completed the acquisition of Parata Systems, an innovative provider of pharmacy automation solutions, for total cash consideration of $1.525 billion. Due to the recent timing of the acquisition, the Company is in the process of identifying and measuring the assets acquired and liabilities assumed. The preliminary purchase price allocation estimates and other related information will be disclosed in the Company’s Annual Report on Form 10-K for the period ending September 30, 2022.