Becton, Dickinson and Company Global Share Investment Program

Transcription

1 Becton, Dickinson and Company 1 Becton Drive Franklin Lakes, New Jersey United States of America Becton, Dickinson and Company Global Share Investment Program Prospectus for the employees of the European Economic Area ("EEA") (direct or indirect) subsidiaries of Becton, Dickinson and Company Pursuant to Article 23 of the Law of June 16, 2006 on the public offerings of securities and the admission to trading of securities on a regulated market, the Belgian Financial Services and Markets Authority has approved this prospectus on April 19, This prospectus was established by the issuer and the issuer is responsible for this prospectus. The prospectus has been approved in connection with the operations proposed to the investors. The visa represents neither an assessment of the transaction's opportunity or quality nor the authentication of the financial and accounting information presented or more generally the issuer's position, by the Belgian Financial Services and Markets Authority. This prospectus was drafted in accordance with Exhibits I and III of the Commission Regulation 809/2004 of April 29, 2004, as amended. This prospectus will be made available to the employees of the EEA subsidiaries of Becton, Dickinson and Company if the offerings under the program listed above are considered public offerings in their respective jurisdictions. At the time of the approval of this prospectus, these jurisdictions are Belgium, France, Germany, Ireland, Italy, The Netherlands, Poland and the United Kingdom. This prospectus will be notified to the competent authorities of these EEA jurisdictions in accordance to Article 18 of Directive 2003/71/EC of November 4, 2003, as amended. This prospectus will be made available online on the HROne portal of Becton, Dickinson and Company in these jurisdictions and free paper copies will be available to the employees upon request by contacting their Human Resources Departments. An investment in the shares as described in this prospectus is subject to risks. An investor faces the risk of losing a part or all of his invested capital. Before participating in the Becton, Dickinson and Company Global Share Investment Program ("GSIP"), prospective investors should carefully read the entire prospectus, containing a description of the offer and the risk factors, with special attention to the risk factors (see Part I (Summary), p. 13 to p. 15 and Part II (Risk Factors), p. 22 to 23). Their decision should solely be based on the information contained in the prospectus.

2 Note to the prospectus This prospectus was established in accordance with the principles laid down in the Law of June 16, 2006 on the public offerings of securities and the admission to trading of securities on a regulated market, in Directive 2003/71/EC of November 4, 2003 and in Commission Regulation 809/2004 of April 29, This prospectus contains, among other things, a summary conveying the essential characteristics of, and risks associated with, the issuer and the offered securities. More detailed information concerning the issuer and the securities to be offered is reflected in the exhibits attached to this prospectus. The documents referred to in the relevant chapters are attached as annexes to this prospectus. Becton, Dickinson and Company Becton, Dickinson and Company Global Share Investment Program EU Prospectus 2 Dated: April 19, 2017

3 Company responsible for the prospectus The responsibility for this prospectus is assumed by Becton, Dickinson and Company ("BD" or the "Company"), a company incorporated and existing under the laws of the State of New Jersey, U.S.A., with its registered office at 1 Becton Drive Franklin Lakes, New Jersey , U.S.A., represented by its Board of Directors. BD ensures, having taken all reasonable care, that the information contained in this prospectus is, to the best of its knowledge, in accordance with the facts and that the prospectus does not contain omissions likely to affect the import of the prospectus. Becton, Dickinson and Company Becton, Dickinson and Company Global Share Investment Program EU Prospectus 3 Dated: April 19, 2017

4 TABLE OF CONTENTS I. SUMMARY...6 Section A Introduction and warnings...6 Section B Issuer...6 Section C Securities...11 Section D Risks...12 Section E Offer...14 II. RISK FACTORS...21 III. INFORMATION ON THE OFFER AND DILUTION RESULTING THEREFROM...23 A. Information concerning the offer...23 B. Information on Maximum Dilution...32 IV. KEY INFORMATION ON THE COMPANY'S FINANCIAL CONDITION, CAPITALIZATION AND INDEBTEDNESS, WORKING CAPITAL AND RISK FACTORS...32 A. Statutory auditors...32 B. Share capital...32 C. Key financial data...33 V. INFORMATION ON THE COMPANY...37 A. Company history and activities...37 B. Research and development; intellectual property and licenses...41 C. Particular provisions of the bylaws...41 D. Board of Directors (as per November 23, 2016)...41 E. Executive Officers (as per November 23, 2016)...41 VI. OPERATING AND FINANCIAL REVIEW AND PROSPECTS...42 VII. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES...43 VIII. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS...43 IX. ADDITIONAL INFORMATION...43 Becton, Dickinson and Company Becton, Dickinson and Company Global Share Investment Program EU Prospectus 4 Dated: April 19, 2017

5 LIST OF EXHIBITS EXHIBIT I EXHIBIT II EXHIBIT III EXHIBIT IV EXHIBIT V EXHIBIT VI BECTON, DICKINSON AND COMPANY GLOBAL SHARE INVESTMENT PROGRAM FRANCE - ACCORD RELATIF A LA MISE EN PLACE D'UN PLAN D'EPARGNE D'ENTREPRISE UNITED KINGDOM - BECTON, DICKINSON AND COMPANY GLOBAL SHARE INVESTMENT PROGRAM (UNITED KINGDOM) IRELAND - BECTON, DICKINSON AND COMPANY GLOBAL SHARE INVESTMENT PROGRAM FOR IRELAND SUPPLEMENT TO BECTON, DICKINSON AND COMPANY GLOBAL SHARE INVESTMENT PROGRAM FOR BELGIUM SUPPLEMENT TO BECTON, DICKINSON AND COMPANY GLOBAL SHARE INVESTMENT PROGRAM FOR ITALY EXHIBIT VII ANNUAL REPORT ON FORM 10-K FOR FISCAL YEAR ENDED SEPTEMBER 30, 2016 FILED BY BECTON, DICKINSON AND COMPANY ON NOVEMBER 23, 2016 EXHIBIT VIII DEFINITIVE PROXY STATEMENT ON FORM DEF 14A FILED BY BECTON, DICKINSON AND COMPANY ON DECEMBER 15, 2016 EXHIBIT IX TAX AND SOCIAL SECURITY CONSEQUENCES OF PARTICIPATION IN THE GSIP Becton, Dickinson and Company Becton, Dickinson and Company Global Share Investment Program EU Prospectus 5 Dated: April 19, 2017

6 I. SUMMARY Preliminary remark Summaries are made up of disclosure requirements known as "Elements". These Elements are numbered in Sections A E (A.1 E.7). This summary contains all the Elements required to be included in a summary for this type of securities and issuer. Because some Elements are not required to be addressed, there may be gaps in the numbering sequence of the Elements. Even though an Element may be required to be inserted in the summary because of the type of securities and issuer, it is possible that no relevant information can be given regarding the Element. In this case a short description of the Element is included in the summary with the mention of "not applicable". Section A Introduction and warnings A.1 Warning to the reader This summary should be read as an introduction to the prospectus. Any decision to invest in the securities should be based on consideration of the prospectus as a whole by the investor. Where a claim relating to the information contained in the prospectus is brought before a court, the plaintiff investor might, under the national legislation of the Member States of the European Union or States party to the European Economic Area Agreement, have to bear the costs of translating the prospectus before the legal proceedings are initiated. Civil liability attaches to those persons who have presented the summary including any translation thereof, and applied for its notification, but only if the summary is misleading, inaccurate or inconsistent when read together with the other parts of the prospectus or it does not provide, when read together with the other parts of the prospectus, key information in order to aid investors when considering whether to invest in such securities. Section B Issuer B.1 Legal and commercial name of the issuer B.2 Domicile and legal form of BD, the legislation under which the issuer operates and its country of incorporation Becton, Dickinson and Company ("BD" or the "Company"). BD is a corporation incorporated under the laws of the State of New Jersey, U.S.A., with headquarters at 1 Becton Drive Franklin Lakes, New Jersey , U.S.A. B.3 Description of the nature of BD's current operations and its principal activities Becton, Dickinson and Company Becton, Dickinson and Company Global Share Investment Program EU Prospectus 6 Dated: April 19, 2017

7 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, life science researchers, clinical laboratories, the pharmaceutical industry and the general public. BD provides 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 anaesthesiology care; enhancing the diagnosis of infectious diseases and cancers; advancing cellular research and applications; and supporting the management of diabetes. 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 positions BD as a global leader in medication management. CareFusion product lines are included in the Company's Medical Segment, which is discussed below. In March 2016, BD signed a definitive agreement to sell 50.1% of its Respiratory Solutions business and form a joint venture with respect to this business. The Respiratory Solutions business was acquired in the CareFusion acquisition in 2015 and was a component of the Medical Segment, which is discussed below. Upon closing of the transaction, which occurred on October 3, 2016, the Company transferred the Respiratory Solutions business to a new standalone entity, retaining a 49.9% non-controlling interest. The buyer controls the operations and governance of the new entity. BD's operations consist of two worldwide business segments: BD Medical and BD Life Sciences. 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 non-profit public health agencies; pharmaceutical companies; and healthcare workers. The following is a summary of Medical revenues by organizational unit: (Millions of dollars) Medication and Procedural Solutions $ 3,413 $ 2,850 $ 2,307 Medication Management Solutions 2,210 1,033 Diabetes Care 1,023 1,012 1,037 Pharmaceutical Systems 1,199 1,167 1,229 Respiratory Solutions Deferred revenue adjustment (B) (14) (20) Total Medical revenues $ 8,654 $ 6,460 $ 4,573 Becton, Dickinson and Company Becton, Dickinson and Company Global Share Investment Program EU Prospectus 7 Dated: April 19, 2017

8 Medical segment safety-engineered products $ 1,924 $ 1,499 $ 1,119 (A) (B) "NM" denotes that the percentage is not meaningful. In accordance with U.S. GAAP business combination accounting rules, CareFusion s deferred revenue balance was written down to reflect a fair value measurement as of the acquisition date. The deferred revenue adjustment represents the amortization of this write-down which primarily relates to software maintenance contracts in the United States. Revenues for these contracts is typically deferred and recognized over the term of the contracts. 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. The following is a summary of Life Sciences revenues by organizational unit: (Millions of dollars) Preanalytical Systems $ 1,409 $ 1,391 $ 1,412 Diagnostic Systems 1,301 1,299 1,301 Biosciences 1,119 1,132 1,159 Total Life Sciences revenues $ 3,829 $ 3,822 $ 3,872 Life Sciences segment safety-engineered products $ 1,113 $ 1,097 $ 1,104 B.4a Recent trends There were no significant recent trends since the end of the last financial year on September 30, B.5 Organizational structure BD is the parent company of the BD group. BD holds, directly or indirectly, 100% of the capital and voting rights of substantially all of its subsidiaries. Becton, Dickinson and Company Becton, Dickinson and Company Global Share Investment Program EU Prospectus 8 Dated: April 19, 2017

9 B.6 Interests in BD's capital Not applicable. Pursuant to its Q&A, ESMA considers that Item 18 of Annex I of the Commission Regulation 809/2004 of April 29, 2004 (the "Prospectus Regulation") is generally not pertinent for offers of shares to employees and can thus be omitted from the prospectus in accordance with Article 23.4 of the Prospectus Regulation. B.7 Financial information concerning BD for the fiscal years ended September 30, 2016, September 30, 2015, September 30, 2014, September 30, 2013 and September 30, 2012 Operations Years Ended September Dollars in millions, except share and per share amounts Revenues $ 12,483 $ 10,282 $ 8,446 $ 8,054 $ 7,708 Gross Margin 5,991 4,695 4,301 4,171 3,953 Research and Development Expense Operating Income 1,430 1,074 1,606 1,254 1,558 Interest Expense, Net Income From Continuing Operations Before Income Taxes 1,074 (A) 739 (B) 1,522 (C) 1,165 (D) 1,472 (E) Income Tax Provision Income from Continuing Operations 976 (A) 695 (B) 1,185 (C) 929 (D) 1,110 (E) Net Income ,185 1,293 1,170 Basic Earnings Per Share from Continuing Operations Diluted Earnings Per Share from Continuing Operations 4.49 (A) 3.35 (B) 5.99 (C) 4.67 (D) 5.30 (E) Dividends Per Common Share Financial Position Total Current Assets Total Current Liabilities Total PPE, Net Total Assets $ 6,367 $ 5,659 $ 5,775 $ 5,530 $ 5,144 4,400 4,381 2,225 2,122 1,974 3,901 4,060 3,605 3,476 3,304 25,586 26,478 12,384 12,029 11,376 Becton, Dickinson and Company Becton, Dickinson and Company Global Share Investment Program EU Prospectus 9 Dated: April 19, 2017

10 Total Long-Term Debt Total Shareholders Equity Book Value Per Common Share Financial Relationships 10,550 11,370 3,768 3,763 3,761 7,633 7,164 5,053 5,043 4, Gross Profit Margin 48.0% 45.7 % 50.9% 51.8% 51.3% Return on Revenues 7.8% 6.8 % 14.0% 11.5% (F) 14.4% (F) Return on Total Assets(G) 5.6% 5.7 % 13.6% 11.1% (F) 14.7% (F) Return on Equity 13.2% 11.4 % 23.5% 20.2% (F) 24.8% (F) Debt to Capitalization(H) 57.2% 59.4 % 43.6% 43.6% (F) 49.6% (F) Additional Data Number of Employees Number of Shareholders 50,900 49,500 30,600 30,000 29,600 13,788 14,547 8,210 8,412 8,696 Average Common and Common Equivalent Shares Outstanding Assuming Dilution (millions) Depreciation and Amortization $ 1,114 $ 891 $ 562 $ 546 $ 511 Capital Expenditures (A) Includes the impact of specified items totaling $1.261 billion ($892 million after-tax), or $4.10 diluted earnings per share from continuing operations, which affects comparisons of results across periods presented. (B) Includes the impact of specified items totaling $1.186 billion ($786 million after-tax), or $3.79 diluted earnings per share from continuing operations, which affects comparisons of results across periods presented. (C) Includes the impact of specified items totaling $153 million ($101 million after-tax), or $0.51 diluted earnings per share from continuing operations, which affects comparisons of results across periods presented. (D) Includes the impact of specified items totaling $442 million ($279 million after-tax), or $1.40 diluted earnings per share from continuing operations, which affects comparisons of results across periods presented. (E) (F) There were no amounts reflected in the results of operations for the period which would significantly affect the comparisons of results across periods presented. Excludes discontinued operations. (G) Earnings before interest expense and taxes as a percent of average total assets. (H) Total debt as a percent of the sum of total debt, shareholders equity and non-current deferred income tax liabilities. B.8 Pro forma financial information Not applicable. There are no significant gross changes as defined in Item 20.2 of Annex I of the Prospectus Becton, Dickinson and Company Becton, Dickinson and Company Global Share Investment Program EU Prospectus 10 Dated: April 19, 2017

11 Regulation. B.9 Profit forecast Not applicable. This prospectus does not contain any profit forecast. B.10 Qualifications in the audit report on the historical financial information Not applicable. There are no qualifications in the auditors' report. B.11 Working capital statement Not applicable. BD management believes BD's working capital is sufficient for its present requirements. Section C Securities C.1 Type and class of the securities being offered, including the security identification code C.2 Currency of the securities issue C.3 Number of shares issued C.4 Rights attached to the securities C.5 Transferability restrictions C.6 Admission to trading on a The shares of BD having a par value of $1.00 per share (the "Shares") offered pursuant to this prospectus are common shares of the Company listed on the New York Stock Exchange (the "NYSE"). The ticker symbol for the Company's Shares is "BDX." The ISIN Code of the Company's Shares is US The United States Dollar is the currency of the securities issue. BD had 212,319,588 shares of common stock, par value $1.00, outstanding as of October 31, All Shares held under the GSIP will be held through a fiduciary or custodial arrangement between BD and RBC Dexia (the "Fiduciary"), unless for certain countries where the Shares are held through a fiduciary, custodial or trust arrangement with another entity, as further described in this prospectus. The Shares will be voted by the Fiduciary at the direction of the members in the GSIP. Any dividends paid on the Shares held under the GSIP may be used to acquire additional Shares. The Shares held under the GSIP can only be disposed of under certain restrictions, as set forth in the GSIP. As noted in Element C.1 above, the Shares are listed on the NYSE. Becton, Dickinson and Company Becton, Dickinson and Company Global Share Investment Program EU Prospectus 11 Dated: April 19, 2017

12 regulated market C.7 Dividend policy The Company paid quarterly dividends of $0.60 per Share in each quarter of 2015, resulting in a total dividend payment of (rounded) $485 million or $2.40 per Share. The Company paid quarterly dividends of $0.66 per share in each quarter of 2016, resulting in a total dividend payment of (rounded) $562 million or $2.64 per Share. Section D Risks D.1 Key risks related to the Company or its industry The risks related to the Company's business can be summarized as follows: Global economic conditions could adversely affect the Company's operations. The medical technology industry is very competitive. The Company is subject to foreign currency exchange risk. Changes in reimbursement practices of third-party payers could affect the demand for the Company's products and the prices at which they are sold. Federal healthcare reform may adversely affect the Company's results of operations. Consolidation in the healthcare industry could adversely affect the Company's future revenues and operating income. Cost volatility could adversely affect the Company's operations. Breaches of the Company's information technology systems could have a material adverse effect on the Company's operations. The Company's future growth is dependent in part upon the development of new products, and there can be no assurance that such products will be developed. The Company cannot guarantee that any of its strategic acquisitions, investments or alliances will be successful. The international operations of the Company's business may Becton, Dickinson and Company Becton, Dickinson and Company Global Share Investment Program EU Prospectus 12 Dated: April 19, 2017

13 subject the Company to certain business risks. Reductions in customers' research budgets or government funding may adversely affect the Company's business. A reduction or interruption in the supply of certain raw materials and components would adversely affect the Company's manufacturing operations and related product sales. Interruption of the Company's manufacturing operations could adversely affect the Company's future revenues and operating income. The Company is subject to lawsuits. The Company is subject to extensive regulation. Product defects could adversely affect the results of the Company's operations. The Company's operations are dependent in part on patents and other intellectual property assets. Natural disasters, war and other events could adversely affect the Company's future revenues and operating income. The Company needs to attract and retain key employees to be competitive. The risks related to the Company's acquisition of CareFusion can be summarized as follows: The integration process with CareFusion may be more difficult, costly or time consuming than expected and the anticipated benefits and cost savings of the merger may not be realized. In connection with the CareFusion transactions, the Company incurred and assumed significant additional indebtedness, which could adversely affect it, including by decreasing the Company's business flexibility. The agreements that govern the indebtedness incurred or assumed in connection with the acquisition contain various covenants that impose restrictions on the Company and certain of the Company's subsidiaries that may affect the Company's ability to operate its businesses. Becton, Dickinson and Company Becton, Dickinson and Company Global Share Investment Program EU Prospectus 13 Dated: April 19, 2017

14 D.3 Key risks related to the Shares The risks related to the participation itself in the GSIP, and the acquisition of Shares thereunder, can be summarized as follows: Participation in the GSIP is subject to the same risks as inherent to any investment in shares (such as a change of the stock exchange price of the Shares) and a participant in the GSIP therefore potentially faces the risk of losing a part or all of his invested capital. Participation in the GSIP is subject to a currency risk (e.g., USD/EUR or USD/Sterling pound) that could adversely affect the foreseen profit resulting from the participation in the GSIP. The possible tax and / or social security consequences of the participation in the GSIP could adversely affect the foreseen profit resulting from the participation in the GSIP. Under the GSIP, there are certain restrictions with respect to the withdrawal of Shares which may limit the liquidity thereof. Section E Offer E.1 Net proceeds and expenses Assuming that all 250,000 Shares offered under the GSIP pursuant to this prospectus would be purchased by the employees participating in the GSIP, then the proceeds would, taking into account a Share price per January 24, 2017 of US$ , amount to US$ 42,590,000. The Company has incurred legal costs of approximately EUR 70,000 to implement this prospectus in order to offer securities under the GSIP to eligible employees of its subsidiaries in the European Economic Area. E.2a Reasons for the offer and use of proceeds The purpose of the GSIP is to provide certain eligible employees of participating subsidiaries and affiliates of BD with a convenient way (1) to obtain a beneficial interest in BD and (2) to save on a regular and long-term basis. The proceeds, if any, of the offers under the Plans will be used by the Company for general corporate purposes. E.3 Description of the terms and conditions of the offer The below description of the terms and conditions of the offer is only intended to be a very high level summary of those terms and conditions in a highly simplified manner. The reader is strongly encouraged to read the GSIP as attached under Exhibit I to this prospectus. On and after the first date a BD group company adopts the GSIP and makes the GSIP available for participation by eligible employees and Becton, Dickinson and Company Becton, Dickinson and Company Global Share Investment Program EU Prospectus 14 Dated: April 19, 2017

15 subject to the provisions of the GSIP, each eligible employee of such group company shall become eligible for participation in the GSIP coincident with or next following the date on which he or she completes certain requirements for regular employment, as determined in accordance with that group company's policies and procedures. An eligible employee's election to make deposits to the GSIP shall be wholly voluntary. An eligible employee may elect to participate in the GSIP and become a member by duly filing the prescribed forms with the group company in accordance with the policies and procedures established by such company. Except as otherwise provided in the GSIP, a member may make deposits under the GSIP only through payroll deductions authorized by him or her. A member may elect payroll deduction deposits under the GSIP of up to 14% (unless another percentage is provided for in the respective jurisdiction) of his or her base pay for a pay period in multiples of 1/2 %. Up to the first 2% of his or her base pay so elected shall be basic deposits during the first twelve months of participation. Thereafter, up to the first 4% so elected shall be basic deposits. Any excess deposits form additional deposits. In addition to any payroll deduction deposits a member may make during a calendar year, the member may make one lump sum payment of any amount (unless a minimum amount is set by the group company) of special deposits to the plan fund each calendar year. In all other respects, these special deposits shall be treated as additional deposits under the GSIP. The group company shall establish and maintain an account for each member showing the member's interest under the GSIP, designated in Shares and cash, including certain separate accounts, as determined under the GSIP. Except as otherwise provided under the GSIP, the group company shall contribute to the plan fund on behalf of each member in service who makes basic deposits for a pay period a matching contribution or "match" equal to (1) 100% of the member's basic deposits that equal up to 2% of the member's base pay for that pay period, and in addition (2) after the twelve month period following the date that the member's participating group company first makes the GSIP available to the group of its eligible employees that includes (or would have included) the member, 100% of the member's basic deposits that equal up to the next 1% of the member's base pay for that pay period. These percentages may change in the future for certain jurisdictions. In addition to the match, the group company employing a member may, in its discretion, make, with the consent of BD, discretionary Becton, Dickinson and Company Becton, Dickinson and Company Global Share Investment Program EU Prospectus 15 Dated: April 19, 2017

16 performance contributions on the basis of certain non-individual financial or other performance criteria Except as otherwise provided for under the GSIP, all amounts of money, securities or other property received under the GSIP shall be delivered to the Fiduciary to be invested and reinvested in Shares. The respective Shares are purchased at their fair market value. For purposes of the GSIP, the fair market value shall mean the average price per Share purchased by the Fiduciary on the twentieth calendar day of each month or, if such date is not a business day on either the NYSE or in the jurisdiction of the Fiduciary, on the next following day that is a business day both on the NYSE and in the jurisdiction of the Fiduciary. Any brokerage commissions and any other costs of purchase or sale of Shares purchased or sold for a Member under the GSIP will be reflected in the price of such Shares and borne by the Member, as well as the cost of issuing a share certificate to the Member. Members currently pay $ 0.07 per share when acquiring Shares under the GSIP. Members currently also pay $ 0.07 per share to have their Shares sold via the GSIP. If Members withdraw their Shares and sell them on their own, Members will pay whatever costs and fees that the particular brokerage firm charges. Each member shall always have a vested interest in all amounts attributable to his or her basic, additional or special additional deposits, including dividends earned thereon. In addition, a member will always have a vested interest in amounts attributable to the contributions made by the group company on his or her behalf upon the earliest to occur of (i) five years after the investment date thereof, (ii) age 65, or (iii) termination of service for any reason other than gross misconduct. A member whose employment is terminated by reason of gross misconduct shall forfeit such company contributions related to Shares purchased less than five years before such termination. It should be noted that additional restrictions to the withdrawal and disposal of Shares exist in certain countries where the GSIP is offered. In Belgium, any Share acquired with basic deposits and the match can in no event be withdrawn or sold prior to the end of the 24 month period commencing on the date the Share was purchased. In Italy, a disposal of Shares within three years following the acquisition may trigger negative tax consequences. Please refer to Element E.3a, and E.3c for specific rules in this respect for France and Ireland, respectively. Generally, amounts held in the member s account are not distributed to the member until the member terminates employment. However, while employed, a member may make withdrawals from amounts held in his Becton, Dickinson and Company Becton, Dickinson and Company Global Share Investment Program EU Prospectus 16 Dated: April 19, 2017

17 E.3a Description of the terms and conditions of the offer - France or her member s account. An eligible member may make, under certain restrictions and limitations, a withdrawal no more frequently than twice during each calendar year. Upon termination from service during a pay period, a member (or upon his or her death, the person designated by the member to receive any amount payable under the GSIP upon the death of the member) shall be paid his or her vested interest as soon as practicable, and as further determined in the GSIP, after the termination. For members in France, the GSIP has been established in the form of company savings plan commonly referenced as a Plan d'epargne d'entreprise ("PEE") to provide tax-preferential treatment. The following description of the terms and conditions of the offer of participation in the PEE is only intended to be a very high level summary of those terms and conditions in a highly simplified manner. The reader is strongly encouraged to read the PEE as attached under Exhibit II to this prospectus. A PEE allows eligible employees to voluntarily make contributions via payroll deductions (among others means to put savings on the PEE) to invest into selected funds. All employees of BD France SA, subject to a three-month seniority requirement, are eligible to participate in the PEE. Retired employees and employees in pre-retirement may continue to contribute to the PEE, subject to certain conditions. Eligible employees may enroll in the PEE and become members by executing an enrollment form. The member's participation in the PEE will be effective the first day of the month following the remittance of the member's enrollment form. The member will be charged a subscription fee. BD France SA will bear the costs relating to the maintenance of the PEE. A member may elect, at any time, to contribute up to 3% of the member's monthly base compensation in multiples of 1/2 % ("basic contributions") to the PEE. Assuming that the member contributes basic contributions, the member can elect, at any time, to make additional contributions of up to 14% (including the member's basic contributions) of the member's monthly base compensation. Finally, the members may also elect to make special contributions," such as bonuses or payments received under a profit sharing scheme (i.e., intéressement), subject to certain limits. BD France SA will make cash contributions on behalf of the members in relation to the basic contributions and the special contributions made by the members under the PEE. The cash contributions cannot exceed the lesser of 8% of the amount of the social security contributions Becton, Dickinson and Company Becton, Dickinson and Company Global Share Investment Program EU Prospectus 17 Dated: April 19, 2017

18 E.3b Description of the terms and conditions of the offer - United Kingdom ceiling per member and per calendar year or three times the amount invested by such member per year. The sums contributed by each employee, plus any contributions made by the employer, will be invested in the purchase of the securities issued by a Fonds Commun de Placement d'entreprise ("FCPE") or compartments of such FCPE. The members will be able to dispose of the securities purchased on their behalf after the expiration of a lock-up period of 5 years starting from the payment date under the PEE. For members in the United Kingdom, the GSIP has been established in the form of a share incentive plan ("SIP") to provide tax preferential treatment. The following description of the terms and conditions of the offer of participation in the SIP is only intended to be a very high level summary of those terms and conditions in a highly simplified manner. The reader is strongly encouraged to read the SIP as attached under Exhibit III to this prospectus. In brief, the SIP generally contains the same terms and conditions as the GSIP. All full-time, regular employees of Becton, Dickinson UK Limited ("BD UK Limited") who have worked for BD UK Limited for at least six months are eligible to participate in the SIP and become members (excluding certain employees as reflected in the SIP). Members can make basic contributions and additional contributions from their payroll deductions. In total, members may designate payroll deduction deposits for each payroll period up to 14% of base pay in 1/2% multiples. Under the SIP, amounts up to such percentage of base pay each payroll period constitute basic contributions. Currently, basic contributions consist of member contributions of up to 3% of base pay in multiples of 1/2%, up to a limit of 150 a month. Any contributions above the applicable threshold will be considered additional contributions. Under the SIP, the basic contributions are entitled to certain tax benefits that the additional contributions are not. Also, members are not entitled to make a lump sump contribution beyond their basic contributions and additional contributions. BD UK Limited will make a matching payment on behalf of each member equal to 100% of the member s basic contributions for each payroll period. In the event of death of a member and upon request of the employee's personal representative, the SIP account will be paid to the member's estate. Becton, Dickinson and Company Becton, Dickinson and Company Global Share Investment Program EU Prospectus 18 Dated: April 19, 2017

19 E.3c Description of the terms and conditions of the offer - Ireland For certain members in Ireland, the GSIP has been adopted through a number of trust deeds forming together the Becton, Dickinson and Company Global Share Investment Program for Ireland ("Ireland GSIP I"), which covers all full-time regular employees of Becton, Dickinson Insulin Syringe Limited, Becton Dickinson and Company Limited and BENEX Limited. The following description of the terms and conditions of the offer of participation in the Ireland GSIP I is only intended to be a very high level summary of those terms and conditions in a highly simplified manner. The reader is strongly encouraged to read the Ireland GSIP I as attached under Exhibit IV to this prospectus. In brief, the Ireland GSIP I generally contains the same terms and conditions as the GSIP. All full-time, regular employees of Becton, Dickinson Insulin Syringe Limited, Becton Dickinson and Company Limited and BENEX Limited (together "BD Ireland I") who have worked for BD Ireland I for at least six months are eligible to participate in the Ireland GSIP I and become members (excluding certain employees as reflected in the Ireland GSIP I). However, only contributions made from the annual bonus of a member, and such up to 3% of eligible pay, will be basic deposits. Any contributions made from the annual bonus in excess thereof, or any contributions made through payroll deductions, will be additional deposits. BD Ireland I will make a matching payment on behalf of each member equal to 100% of the member s basic contributions. Furthermore, in addition to the restrictions of the GSIP, a financial hardship withdrawal, as defined under the Ireland GSIP I, is not possible for Shares acquired under the Ireland GSIP I with basic deposits or the corresponding match within the first two years following the acquisition of such Shares. In addition, a financial hardship withdrawal before the end of the third year following the acquisition of such Shares may trigger negative tax consequences. E.4 Description of material interest to the offer including conflict of interests E.5 Name of the entity offering to sell the security Not applicable. There are no such interests. Becton, Dickinson and Company Becton, Dickinson and Company Becton, Dickinson and Company Global Share Investment Program EU Prospectus 19 Dated: April 19, 2017

20 E.6 Maximum dilution Taking into account that all Shares acquired under the GSIP will be existing Shares, this offer should not lead to any dilution of the holdings of a shareholder of BD who does not participate in this offer. E.7 Estimated expenses charged to the investor by the issuer or offeror Not applicable. There are no such expenses. Becton, Dickinson and Company Becton, Dickinson and Company Global Share Investment Program EU Prospectus 20 Dated: April 19, 2017

21 II. RISK FACTORS The risk factors to be taken into consideration when participating in the GSIP consist, on the one hand, of risks related to the participation of the GSIP itself, and, on the other hand, risks related to the Company's business. The risks related to the participation itself in the GSIP can be summarized as follows: Participation in the GSIP is subject to the same risks as inherent to any investment in shares (such as a change of the stock exchange price of the Shares) and a participant in the GSIP therefore potentially faces the risk of losing a part or all of his invested capital. Participation in the GSIP is subject to a currency risk (e.g. USD/EUR or USD/Sterling pound) that could adversely affect the foreseen profit resulting from the participation in the GSIP. The possible tax and / or social security consequences of the participation in the GSIP could adversely affect the foreseen profit resulting from the participation in the GSIP. Under the GSIP, there are certain restrictions with respect to the withdrawal of Shares which may limit the liquidity thereof. The risks related to the Company's business can be summarized as follows: Global economic conditions could adversely affect the Company's operations. The medical technology industry is very competitive. The Company is subject to foreign currency exchange risk. Changes in reimbursement practices of third-party payers could affect the demand for the Company's products and the prices at which they are sold. Federal healthcare reform may adversely affect the Company's results of operations. Consolidation in the healthcare industry could adversely affect the Company's future revenues and operating income. Cost volatility could adversely affect the Company's operations. Breaches of the Company's information technology systems could have a material adverse effect on the Company's operations. The Company's future growth is dependent in part upon the development of new products, and there can be no assurance that such products will be developed. The Company cannot guarantee that any of its strategic acquisitions, investments or alliances will be successful. Becton, Dickinson and Company Becton, Dickinson and Company Global Share Investment Program EU Prospectus 21 Dated: April 19, 2017

22 The international operations of the Company's business may subject the Company to certain business risks. Reductions in customers' research budgets or government funding may adversely affect the Company's business. A reduction or interruption in the supply of certain raw materials and components would adversely affect the Company's manufacturing operations and related product sales. Interruption of the Company's manufacturing operations could adversely affect the Company's future revenues and operating income. The Company is subject to lawsuits. The Company is subject to extensive regulation. Product defects could adversely affect the results of the Company's operations. The Company's operations are dependent in part on patents and other intellectual property assets. Natural disasters, war and other events could adversely affect the Company's future revenues and operating income. The Company needs to attract and retain key employees to be competitive. The risks related to the Company's acquisition of CareFusion can be summarized as follows: The integration process with CareFusion may be more difficult, costly or time consuming than expected and the anticipated benefits and cost savings of the merger may not be realized. In connection with the CareFusion transactions, the Company incurred and assumed significant additional indebtedness, which could adversely affect it, including by decreasing the Company's business flexibility. The agreements that govern the indebtedness incurred or assumed in connection with the acquisition contain various covenants that impose restrictions on the Company and certain of the Company's subsidiaries that may affect the Company's ability to operate its businesses. Becton, Dickinson and Company Becton, Dickinson and Company Global Share Investment Program EU Prospectus 22 Dated: April 19, 2017

23 III. INFORMATION ON THE OFFER AND DILUTION RESULTING THEREFROM A. Information concerning the offer A.1. Description of the offer General information The Shares of BD having a par value of $1.00 per share offered pursuant to this prospectus are common shares of the Company listed on the NYSE. The ticker symbol for the Company's Shares is "BDX." The ISIN Code of the Company's Shares is US The currency applicable to the securities is the USD. The Shares are issued according to the laws of the US and the State of New Jersey. They are subject to the rules of the US and the State of New Jersey regarding mandatory takeover bids, squeeze-outs and sellouts. Purpose The purpose of the GSIP is to provide certain eligible employees of participating subsidiaries and affiliates of BD with a convenient way (1) to obtain a beneficial interest in BD and (2) to save on a regular and long-term basis. However, the benefits provided under the GSIP will depend upon the amount of the contributions made by the employee, any corresponding contributions made by participating employers, the investment results achieved and currency exchange fluctuations, and, accordingly, may vary with respect to each employee. All Shares held under the GSIP will be held through a fiduciary or custodial arrangement between BD and RBC Dexia (the "Fiduciary"), unless for certain countries where the Shares are held through a Fiduciary, custodial or trust arrangement with another entity. The Shares will be voted by the Fiduciary at the direction of the members in the GSIP. Membership Except as otherwise provided for under the GSIP, on and after the first date a BD group company (the "Group Company") makes the GSIP available to a group of its employees (the "Effective Date") and subject to the provisions of the GSIP, each Employee (i.e. any individual who is treated as an active employee by the Group Company, and who is on the payroll of that company, but excluding certain employees, as provided for in the GSIP and as determined by the respective Group Company in Service (i.e., as determined by the Group Company and unless specific local rules apply, continuous regular fulltime active employment by an individual with any Group Company)) with a Group Company that has adopted the GSIP shall become eligible for membership in the GSIP coincident with or next following the date on which he or she completes the Group Company's minimum probationary requirement for regular employment, as determined in accordance with that Group Company's policies and procedures. An eligible Employee's election to make Deposits (which means Basic Deposits or Additional Deposits, including Special Deposits, or both, as the context may require, and all as defined below) to the GSIP shall be wholly voluntary. An Employee may, at his or her election, become a Member (i.e. an Employee, and any former Employee who had a Termination from Service (as defined below) by reason of retirement, who participates in the Becton, Dickinson and Company Becton, Dickinson and Company Global Share Investment Program EU Prospectus 23 Dated: April 19, 2017

24 GSIP) as of the first Entry Date (i.e. the first date a Group Company makes the GSIP available to (a group of) its eligible employees, or the first day of each calendar month following such date for an eligible Employee) on which he or she becomes eligible for membership in the GSIP, or as of any Entry Date thereafter, by duly filing the prescribed forms with the Group Company in accordance with the policies and procedures established by the Group Company. If an Employee has duly filed in accordance with the GSIP, he or she shall be eligible to make payroll deduction Deposits from his or her Base Pay (i.e. the portion of a Member's compensation paid or payable for each pay period by a Group Company for his or her service to the Group Company, consisting of gross salary or wages at the base rate for the pay period, but excluding other forms of remuneration) commencing on the first day of the pay period coincident with or next following such date. The GSIP membership of an Employee in a certain jurisdiction shall cease for purposes of making Deposits when he or she is no longer an eligible Employee of the Group Company in that jurisdiction. The GSIP membership of an Employee shall cease for all purposes upon payment to the Member of his or her entire Vested Interest (i.e. the portion of the amounts under the GSIP which has become nonforfeitable), or upon the Member's death prior to such payment. The Group Company shall establish and maintain or cause to be established and maintained in respect of each of its eligible Employees who are Members an account (the "Account") showing the Employee's interest under the GSIP, designated in Shares and cash, including certain separate accounts, as determined under the GSIP, showing amongst others the portion of his or her Account attributable to Basic Deposits and Additional Deposits, including any Special Deposits, (all together, his or her "Employee Account") and the portion of his or her Account attributable to the Company Contributions made by the Company on his or her behalf (his or her "Company Account"). Member Deposits Except as otherwise provided for under the GSIP, a Member may make Deposits under the GSIP only through payroll deductions authorized by him or her. A Member may elect payroll deduction Deposits under the GSIP of up to 14% of his or her Base Pay for a pay period in multiples of 1/2 % of Base Pay. Up to the first 2% of his or her Base Pay so elected shall be Basic Deposits during the first twelve months following the date that the Member's employer first makes the GSIP available to the group of its eligible Employees that includes (or would have included) the Member and 4% thereafter, with any excess being Additional Deposits. The Member's election to make Deposits shall, in accordance with procedures established by the Group Company, be applied to reduce, in multiples of 1/2%, the portion of the Member's Base Pay which would otherwise be paid to him or her for any pay period during which such election is in effect, and the Group Company shall pay to the Plan Fund (i.e. the fund established by BD and the Fiduciary for the GSIP), an amount of Deposits for such pay period equal to such reduction in the Member's Base Pay in the manner provided in the GSIP. The Member may change his or her election as to the rate of payroll deduction Deposits, upward or downward, or resume making Deposits, within the limitations of the GSIP, as of the first day of any pay period coincident with or next following an Entry Date by duly filing the prescribed election form with the Group Company. Becton, Dickinson and Company Becton, Dickinson and Company Global Share Investment Program EU Prospectus 24 Dated: April 19, 2017

25 A Member may temporarily suspend all Deposits as of the first day of any pay period, without terminating his or her membership in the GSIP, by duly filing, the prescribed election form with the Group Company. A Member's Deposits for a jurisdiction shall be automatically suspended during the period of time that the Member (1) is no longer an eligible Employee, even if still employed by a Group Company, (2) is on unpaid leave of absence, (3) ceases to receive Base Pay, or (4) remains in Service after the termination of the GSIP. In addition to any payroll deduction Deposits a Member may make during a calendar year, the Member may make one lump sum payment of any amount (unless a minimum amount is set by the Group Company) of Special Deposits to the Plan Fund each calendar year in accordance with procedures established by the Group Company. In all other respects, Special Additional Deposits shall be treated as payroll deduction Additional Deposits under the GSIP. Company contributions Except as otherwise provided for under the GSIP, the Group Company shall contribute to the Plan Fund on behalf of each Member in Service who makes Basic Deposits for a pay period a Match (i.e. matching contributions made by the Group Company for a Member's corresponding Basic Deposits) equal to (1) 100% of the Member's Basic Deposits that equal up to 2% of the Member's Base Pay for that pay period, and (2) after the twelve month period following the Effective Date that the Member's participating Group Company first makes the GSIP available to the group of its eligible Employees that includes (or would have included) the Member, 50% of the Member's Basic Deposits that equal up to the next 2% of the Member's Base Pay for that pay period. In addition to the Match, the Group Company employing a Member may, in its discretion, make, with the consent of BD, discretionary performance contributions ("Performance Contributions") on the basis of the financial or other performance of BD, all the Group Companies, a specified group of Group Companies, the Group Company employing the Member, or an identifiable group of employees thereof that includes the Member, or the individual Member for a fiscal year. In the discretion of the Group Company, Performance Contributions may, but need not, be allocated on such uniform terms and conditions as the Group Company may establish, including, but not limited to, an allocation that results in an additional Match for the year. Notwithstanding Sections 5.1 and 5.2 of the GSIP and unless the Member elects otherwise under the GSIP, the amount of Company Contributions (i.e. the Group Company' Match or Performance Contributions) that otherwise would be paid to the Plan Fund by the Group Company on a Member's behalf shall be reduced by an amount equal to or approximating the current tax or social charges withholding liability the Member would incur in a jurisdiction as a result of the payment of the Company Contributions, as determined under such uniform terms, conditions, and procedures as the Group Company may establish with the consent of BD ("Net Election"). Provided, however, that such shall only apply to a Member working in a jurisdiction where (1) the Member incurs current tax or social charges liability on the Company Contributions, and (2) the jurisdiction readily permits the Group Company to withhold such liability from the Member's current pay, as determined by the Group Company. For each eligible Member, whether the Company Contributions contributed to the Plan Fund that are made on his or her behalf will be reduced on a Net Election basis, as described in the GSIP, or whether the full amount Becton, Dickinson and Company Becton, Dickinson and Company Global Share Investment Program EU Prospectus 25 Dated: April 19, 2017

26 of the Company Contributions will be on a Gross Election basis, shall be at the election of the Member, in the event the Company makes this election available to the Member. Any eligible Member who fails to make an election shall be treated as if he or she has made a Net Election, and consequently, any tax or social charges withholding liability shall be currently withheld from the Member's pay. Investment of funds Except as otherwise provided for under the GSIP, all amounts of money, securities or other property received under the GSIP shall be delivered to the Fiduciary to be invested and reinvested in Shares. The respective Shares are purchased at their fair market value. For purposes of the GSIP, the fair market value shall mean the average price per Share purchased by the Fiduciary on the twentieth calendar day of each month or, if such date is not a business day on either the NYSE or in the jurisdiction of the Fiduciary, on the next following day that is a business day both on the NYSE and in the jurisdiction of the Fiduciary. Valuation and maintenance of accounts As of each Share Transaction Date (i.e. the Investment Date and/or Sales Date, as defined below) and as of the last business day of each calendar month on the New York Stock Exchange (the "NYSE"), the Plan Fund, each constituent account for a jurisdiction, each Member's Account, and each constituent Account in each Member's Account shall be valued to equitably reflect the effect of the contribution of Deposits and Company Contributions, dividends realized, unrealized profits and losses, and all other similar transactions occurring during the corresponding calendar month. All Deposits, any Company Contributions and cash dividends on Shares received by the Fiduciary with respect to a Member shall be held in a separate account until the date coincident with or next following receipt of such amounts when Shares shall be acquired on behalf of the Member by the Fiduciary with the amount of such Deposits, Company Contributions, or cash dividends received by the Fiduciary. Vested interests Each Member shall always have a Vested Interest (whereby the Vested Interest means the portion of a Member's Account which has become non-forfeitable pursuant to the GSIP) in all amounts attributable to his or her Basic, Additional or Special Additional Deposits, including dividends earned thereon. In addition, a Member will always have a Vested Interest in amounts attributable to his or her Company Contributions upon the earliest to occur of (i) five years after the Investment Date (i.e. the 20th day occurring in each calendar month for the jurisdiction of the Fiduciary; if this is not a business day both in the jurisdiction and for the NYSE, the first following day which is), (ii) age 65, or (iii) termination of service for any reason other than gross misconduct. A Member whose employment is terminated by reason of gross misconduct shall forfeit Company Contributions related to Shares purchased less than five years before such termination. The vesting will be accelerated in case of Financial Hardship, which means that a Member in Service has experienced a situation that causes the Member to have an immediate, heavy, and unanticipated financial need, as determined by the Company in accordance with the guidelines, if any, established by the Committee for this purpose. Becton, Dickinson and Company Becton, Dickinson and Company Global Share Investment Program EU Prospectus 26 Dated: April 19, 2017

27 Withdrawals Generally, amounts held in the Member s Account are not distributed to the Member until the Member terminates employment. However, while employed, a Member may make withdrawals from amounts held in his or her Member s Account. An eligible Member may make a withdrawal no more frequently than twice during each calendar year; provided however, that there shall be no such limitation on the number or frequency of a Member's withdrawals by reason of financial hardship. The amount of any payment to be made to a Member who has made a withdrawal shall be made in a single sum cash payment as soon as practicable after the relevant Sales Date (i.e. the last business day of each calendar month, both on the NYSE, and in the jurisdiction of the Fiduciary). In no event may a Member receive any portion of a withdrawal payment in Shares. Such withdrawals are subject to frequency and priority limitations which apply notwithstanding the fact that the amounts in the Member s Account may be vested. Member s may make in-service withdrawals from their Member s Account in accordance with the chart below, which summarizes the Vested Interest and withdrawal provisions. Basic Deposits plus dividends earned thereon Vesting Fully vested at all times (cannot lose for any reason) Withdrawal Allowed After five years Age 65 Financial Hardship Termination from service Additional and Special Additional Deposits plus dividends earned thereon Vesting Fully vested at all times (cannot lose for any reason) Withdrawal Allowed Month following deposit Age 65 Financial Hardship Termination from service Company Contributions (Matching and Performance) plus dividends earned thereon Vesting Involuntary termination for gross misconduct vests after five years or age 65 All others vest on termination from service Withdrawal Allowed After five years Age 65 Financial Hardship (accelerates vesting) Termination from service for all except in case of a termination for gross misconduct Becton, Dickinson and Company Becton, Dickinson and Company Global Share Investment Program EU Prospectus 27 Dated: April 19, 2017

28 Distributions due to Termination from Service Upon Termination from Service during a Pay Period, a Member (or upon his or her death, his or her Beneficiary, i.e. the person designated by the Member to receive any amount payable under the GSIP upon the death of the Member) shall be paid his or her Vested Interest as soon as practicable after the Sales Date for the calendar month next following the calendar month during which such Pay Period ends. Any Employee who has a Termination from Service by reason of retirement may defer payment to the Sales Date occurring during the calendar month during which the fifth anniversary of the date of such Member's retirement occurs. Upon Termination from Service during a pay period, a Member (but not his or her Beneficiary, in the case of the Member's death) may elect a Share distribution by duly filing the prescribed election form with the Company no later than the Sales Date for the calendar month during which such pay period ends. Unless the Member elects a Share distribution, as soon as practicable after the Sales Date, the Member shall receive a lump sum payment in an amount equal to the sum of (1) the cash value of the cash reserves in which he or she had a Vested Interest that is credited to his or her Account, determined as of such Sales Date, plus (2) the aggregate share value obtained by liquidating the Shares in which he or she had a Vested Interest on such Sales Date. Rights and restrictions applicable to Shares Notwithstanding any other provisions of the GSIP to the contrary, all Shares (including any fractional Shares) held in the Plan Fund shall be voted by the Fiduciary at the direction of Members. In the event any transaction which is evidenced by the filing of a Statement on Schedule 14D-1 with the Securities and Exchange Commission under the United States Securities Exchange Act of 1934, or in the event of any other similar transaction, including, but not limited to, a "self-tender", then, notwithstanding any other provision of the GSIP to the contrary, all, any part or none of the Shares (including any fractional Shares) held in the Plan Fund shall be tendered and sold or exchanged pursuant to such Tender Offer by the Fiduciary at the direction of Members. Shares held or distributed by the Fiduciary may include such legends or may be subject to such terms, conditions, stop-transfer orders, or other restrictions on transferability as BD may reasonably require in order to assure compliance with the applicable (1) securities or other laws of any jurisdiction, (2) agency rules thereunder, or (3) the terms of the GSIP or the Fund Agreement. Designation of Beneficiaries Each Member shall duly file with the Group Company on the prescribed Beneficiary designation form, a designation of one or more persons as the Beneficiary who shall be entitled to receive the amount, if any, payable under the GSIP upon his or her death. If no Beneficiary designation meeting the requirements of the GSIP is in effect at the time of a Member's death, or if no Beneficiary survives the Member, the amount, if any, payable under the GSIP upon the Becton, Dickinson and Company Becton, Dickinson and Company Global Share Investment Program EU Prospectus 28 Dated: April 19, 2017

29 Member's death shall be paid to the Member's spouse, if any, or if the Member has no spouse, then to his or her estate. Administration of the GSIP Except as otherwise provided in the GSIP, the Group Company in each jurisdiction shall have general responsibility for the administration and interpretation of the GSIP with respect to its employees and BD shall have overall responsibility for the administration, interpretation, and operation of the GSIP in all jurisdictions. All decisions, determinations, constructions, or interpretations the Group Company or BD may make under the GSIP or the Fund Agreement shall be made in the sole discretion of the Group Company or BD, as the case may be, and shall be final, binding, and conclusive on all interested persons and both the Group Company and BD shall be afforded the maximum deference permitted in a jurisdiction; provided however, that, in the case of any inconsistency or conflict between a decision, determination, construction or interpretation by BD and the Company, the decision, determination, construction, or interpretation by BD shall control unless BD elects otherwise. The Committee (i.e. the GSIP committee, consisting of no less than 3 Group Company employees designated by the Board of Directors of BD) shall administer and interpret the GSIP on behalf of BD. The Committee shall have the paramount right to interpret the GSIP and the decisions, actions and records of the Committee shall be conclusive and binding upon each Group Company, BD, and all persons having or claiming to have any right or interest in or under the GSIP. The Committee may delegate to such officers, employees or departments of BD or a Group Company such authority, duties, and responsibilities of the Committee as it, in its sole discretion, considers necessary or appropriate for the proper and efficient operation of the GSIP, including, without limitation, (i) interpretation of the GSIP, (ii) approval of any GSIP limits or other GSIP provisions as may be necessary, and (iii) establishment of procedures for administration of the GSIP. Amendment or termination of the GSIP and Plan Fund The Board of Directors of BD reserves the right at any time, either prospectively or retroactively, to amend, suspend, or terminate the GSIP, any contributions thereunder or the Plan Fund, in whole or in part, and for any reason and without the consent of any Member, Beneficiary, or Group Company. The Group Company reserves the right, with the consent of the Board of Directors of BD, at any time either prospectively or retroactively, to amend or suspend the GSIP with respect to all or any group of its employees in a jurisdiction, or any contributions thereunder, in whole or in part, and for any reason without the consent of any Member or Beneficiary. Notwithstanding the foregoing, and except as provided in the GSIP, no action contemplated hereunder shall reduce either a Member's Account balance or the number of Shares credited to the Member's Account as of the Sales Date coincident with or next preceding such action, nor shall such action materially and substantially diminish any Member's rights with respect to such Account balance under the GSIP prior to such action, as determined by BD or the Group Company with BD's consent, as the case may be. Becton, Dickinson and Company Becton, Dickinson and Company Global Share Investment Program EU Prospectus 29 Dated: April 19, 2017

30 Certain country specific rules Certain specific rules apply to the offer of the GSIP in France, the UK, Ireland, Belgium and Italy. The below is a very high level description of some of these specific rules, and the reader is strongly encouraged to read these rules in Exhibits II to VI, respectively. 1. France For Members in France, the GSIP has been established in the form of company savings plan common referenced as a Plan d'epargne d'entreprise ("PEE") to provide tax-preferential treatment. A PEE allows eligible employees to voluntarily make contributions via payroll deductions (among others means to put savings on the PEE) to invest into selected funds. All employees of BD France SA, subject to a three-month seniority requirement, are eligible to participate in the PEE. Retired employees and employees in pre-retirement may continue to contribute to the PEE, subject to certain conditions. Eligible employees may enroll in the PEE and become Members by executing an enrollment form. The Member's participation in the PEE will be effective the first day of the month following the remittance of the Member's enrollment form. The Member will be charged a subscription fee. BD France SA will bear the costs relating to the maintenance of the PEE. A Member may elect, at any time, to contribute up to 3% of the Member's monthly base compensation (as defined in the PEE) in multiples of 1/2 % ("Basic Contributions") to the PEE. Assuming that the Member contributes Basic Contributions, the Member can elect, at any time, to make "Additional Contributions" of up to 14% (including the Member's Basic Contributions) of the Member's monthly base compensation. Finally, the Members may also elect to make "Special Contributions," such as bonuses or payments received under a profit sharing scheme (i.e., intéressement), subject to certain limits. BD France SA will make cash contributions on behalf of the Members in relation to the Basic Contributions and the Special Contributions made by the Members under the PEE. The cash contributions cannot exceed the lesser of 8% of the amount of the social security contributions ceiling per Member and per calendar year or three times the amount invested by such Member per year. The sums contributed by each employee, plus any contributions made by the employer, will be invested in the purchase of the securities issued by a Fonds Commun de Placement d'entreprise ("FCPE") or compartments of such FCPE. The Members will be able to dispose of the securities purchased on their behalf after the expiration of a lock-up period of 5 years starting from the payment date under the PEE. 2. United Kingdom For Members in the United Kingdom, the GSIP has been established in the form of a share incentive plan ("SIP") to provide tax preferential treatment. In brief, the SIP generally contains the same terms and conditions as the GSIP. All full-time, regular employees of Becton, Dickinson UK Limited ("BD UK Limited") who have worked for BD UK Limited for at least six months are eligible to participate in the SIP and become Members (excluding certain employees as reflected in the SIP). Becton, Dickinson and Company Becton, Dickinson and Company Global Share Investment Program EU Prospectus 30 Dated: April 19, 2017

31 Members can make basic contributions and additional contributions from their payroll deductions. In total, Members may designate payroll deduction deposits for each payroll period up to 14% of base pay in 1/2% multiples. Under the SIP, amounts up to such percentage of base pay each payroll period constitute basic contributions ("Basic Contributions"). Currently, Basic Contributions consist of Member contributions of up to 3% of base pay in multiples of 1/2%, up to a limit of 150 a month. Any contributions above the applicable threshold will be considered additional contributions ("Additional Contributions"). Under the SIP, the Basic Contributions are entitled to certain tax benefits that the Additional Contributions are not. Also, Members are not entitled to make a lump sump contribution beyond their Basic Contributions and Additional Contributions. BD UK Limited will make a matching payment on behalf of each Member equal to 100% of the Member s Basic Contributions for each payroll period. In the event of death of a Member and upon request of the employee's personal representative, the SIP account will be paid to the Member's estate. 3. Ireland For certain Members in Ireland, the GSIP has been adopted through a number of trust deeds forming together the Becton, Dickinson and Company Global Share Investment Program for Ireland ("Ireland GSIP I"). In brief, the Ireland GSIP I generally contains the same terms and conditions as the GSIP. All full-time, regular employees of Becton, Dickinson Insulin Syringe Limited, Becton Dickinson and Company Limited and BENEX Limited (together "BD Ireland I") who have worked for BD Ireland I for at least six months are eligible to participate in the Ireland GSIP I and become Members (excluding certain employees as reflected in the Ireland GSIP I). However, only contributions made from the annual bonus of a Member, and such up to 3% of eligible pay, will be Basic Deposits. Any contributions made from the annual bonus in excess thereof, or any contributions made through payroll deductions, will be Additional Deposits. BD Ireland I will make a matching payment on behalf of each Member equal to 100% of the Member s Basic Contributions. Furthermore, in addition to the restrictions of the GSIP, a Financial Hardship withdrawal is not possible for Shares acquired under the Ireland GSIP I with Basic Deposits or the corresponding Match within the first two years following the acquisition of such Shares. In addition, a Financial Hardship withdrawal before the end of the third year following the acquisition of such Shares may trigger negative tax consequences. 4. Belgium In Belgium, any Share acquired with Basic Deposits and the Match can in no event be withdrawn or sold prior to the end of the 24 month period commencing on the date the Share was purchased. Becton, Dickinson and Company Becton, Dickinson and Company Global Share Investment Program EU Prospectus 31 Dated: April 19, 2017

32 5. Italy In Italy, a disposal of Shares within three years following the acquisition may trigger negative tax consequences. A.2 Application of Funds All funds received by the Fiduciary under the GSIP may solely be used for purposes of the GSIP, as provided for by the GSIP. A.3 Costs related to the sale of Shares Any brokerage commissions and any other costs of purchase or sale of Shares purchased or sold for a Member under the GSIP will be reflected in the price of such Shares and borne by the Member, as well as the cost of issuing a share certificate to the Member. Members currently pay $0.07 per share when acquiring Shares under the GSIP. Members currently also pay $ 0.07 per share to have their Shares sold via the GSIP. If Members withdraw their Shares and sell them on their own, Members will pay whatever costs and fees that the particular brokerage firm charges. B. Information on Maximum Dilution Taking into account that all Shares acquired under the GSIP will be existing Shares, this offer should not lead to any dilution of the holdings of a shareholder of BD who does not participate in this offer. IV. KEY INFORMATION ON THE COMPANY'S FINANCIAL CONDITION, CAPITALIZATION AND INDEBTEDNESS, WORKING CAPITAL AND RISK FACTORS A. Statutory auditors The statutory auditors of BD over the fiscal years ended on September 30, 2016, September 30, 2015 and September 30, 2014 were Ernst & Young LLP, c/o National Registered Agents Inc., 160 Greentree Drive, Suite 101, Dover DE 19904, United States of America. The accounts for those years, prepared in accordance with the U.S. GAAP, were audited, and the audit reports contained no qualification. B. Share capital As of October 31, 2016, BD had 212,319,588 common shares outstanding, with a par value of $1.00 per Share. As of March 31, 2016, the aggregate market value of the Company's outstanding common stock held by non-affiliates of the Company was approximately $32,175,610,976. The current stock exchange price of the Shares can be found on the Company's website ( under the "Investors Stock Information Stock Quote" captions). Becton, Dickinson and Company Becton, Dickinson and Company Global Share Investment Program EU Prospectus 32 Dated: April 19, 2017

33 There are no shareholders in the Company that, directly or indirectly, singly or jointly, exercise or are capable of exercising control over the Company. As of September 30, 2016, to the Company's knowledge, the following shareholders of the Company beneficially owned 5% or more of its Shares: (i). BlackRock, Inc., 40 East 52 nd Street, New York, NY 10022, holding 16,906,396 Shares, representing 7.9% of the Company's common stock; (ii). T. Rowe Price Associates, Inc., 100 E. Pratt Street, Baltimore, MD 21202, holding 16,848,347 Shares, representing 7.9% of the Company's common stock; and (iii). The Vanguard Group, Inc., 100 Vanguard Boulevard, Malvern, PA 19355, holding 14,846,011 Shares, representing 7.0% of the Company's common stock. For the fiscal years ended on September 30, 2016, September 30, 2015 and September 30, 2014 no third parties have attempted a public takeover bid on the Company, by purchase or exchange of Shares of the Company. C. Key financial data The key financial data (in U.S. GAAP) as per the fiscal years ended on September 30, 2016 and September 30, 2015 are set forth hereafter: Consolidated Balance Sheets Becton, Dickinson and Company September 30 Millions of dollars, except per share amounts and numbers of shares Assets Current Assets Cash and equivalents Short-term investments Trade receivables, net Current portion of net investment in sales-type leases Inventories Assets held for sale Prepaid expenses and other $ 1,541 $ 1, ,618 1, ,719 1, Total Current Assets 6,367 5,659 Becton, Dickinson and Company Becton, Dickinson and Company Global Share Investment Program EU Prospectus 33 Dated: April 19, 2017

34 Property, Plant and Equipment, Net Goodwill Customer Relationships, Net Developed Technology, Net Other Intangibles, Net Capitalized Software, Net Net Investment in Sales-Type Leases, Less Current Portion Other Assets Total Assets Liabilities and Shareholders Equity Current Liabilities Short-term debt Accounts payable Accrued expenses Salaries, wages and related items Income taxes Liabilities held for sale Total Current Liabilities Long-Term Debt Long-Term Employee Benefit Obligations Deferred Income Taxes and Other Commitments and Contingencies (See Note 5) 3,901 4,060 7,419 7,537 3,022 3,250 2,655 2, , $ 25,586 $ 26,478 $ 1,001 $ 1, ,575 1, ,400 4,381 10,550 11,370 1,319 1,133 1,684 2,430 Shareholders Equity Common stock $1 par value: authorized 640,000,000 shares; issued 332,662,160 shares in 2016 and Becton, Dickinson and Company Becton, Dickinson and Company Global Share Investment Program EU Prospectus 34 Dated: April 19, 2017

35 Capital in excess of par value 4,693 4,475 Retained earnings 12,727 12,314 Deferred compensation Common stock in treasury at cost 119,370,934 shares in 2016 and 121,966,516 shares in (8,212) (8,239) Accumulated other comprehensive loss (1,929) (1,738) Total Shareholders Equity Total Liabilities and Shareholders Equity Amounts may not add due to rounding. See notes to consolidated financial statements. 7,633 7,164 $ 25,586 $ 26,478 Consolidated Statements of Income Becton, Dickinson and Company Years Ended September 30 Millions of dollars, except per share amounts Revenues $ 12,483 $ 10,282 Cost of products sold Selling and administrative expense Research and development expense Acquisitions and other restructurings Total Operating Costs and Expenses 6,492 5,587 3,005 2, ,053 9,207 Operating Income 1,430 1,074 Interest expense (388) (371) Interest income Other income, net Income Before Income Taxes 1, Income tax provision Becton, Dickinson and Company Becton, Dickinson and Company Global Share Investment Program EU Prospectus 35 Dated: April 19, 2017

36 Net Income $ 976 $ 695 Basic Earnings per Share $ 4.59 $ 3.43 Diluted Earnings per Share $ 4.49 $ 3.35 Amounts may not add due to rounding. See notes to consolidated financial statements. Quarterly results will be published on the Company's Quarterly Reports on Form 10-Q, which are available on the Company's website ( under the "Investors SEC Filings / Section 16 Reports" captions). The Company's dividend history can be found in the Company's Annual Report on Form 10-K for the fiscal year ended September 30, 2016 (Exhibit VII) and on the Company's website ( under the "Investors Stock Information" captions). The cost of the stock-based compensation for U.S. GAAP accounting purposes is elaborated upon in the Company's Annual Report on Form 10-K for fiscal year ended September 30, 2016 (Exhibit VII). In addition, the Company has incurred legal costs of approximately EUR 50,000 to implement this prospectus in order to offer securities under the GSIP to eligible employees of its subsidiaries in the EEA. Information concerning the Company's financial condition, including selected financial data, information on capitalization and indebtedness, a description of the risk factors and other information regarding BD is set forth in the Company's Annual Report on Form 10-K for the fiscal year ended September 30, 2016 (Exhibit VIII) and the Definitive Proxy Statement on Form DEF 14A (Exhibit VIII). There were no significant recent trends since the end of the last financial year on September 30, The reasons for the offer and the use of proceeds are described in III.A above. Information on the Company's indebtedness is set forth under "Note 15 Debt" on pages 71 and following of the Notes to Consolidated Financial Statements of the Annual Report on Form 10-K for the fiscal year ended September 30, 2016 (Exhibit VII). Information on the shareholders' equity is set forth under "Note 3 Shareholders' Equity" on pages 44 and following of the Notes to Consolidated Financial Statements of the Annual Report on Form 10-K for the fiscal year ended September 30, 2016 (Exhibit VII). The Company paid quarterly dividends of $0.60 per Share in each quarter of 2015, resulting in a total dividend payment of (rounded) $485 million or $2.40 per Share. The Company paid quarterly dividends Becton, Dickinson and Company Becton, Dickinson and Company Global Share Investment Program EU Prospectus 36 Dated: April 19, 2017

37 of $0.66 per share in each quarter of 2016, resulting in a total dividend payment of (rounded) $562 million or $2.64 per Share. BD management believes BD's working capital is sufficient for its present requirements. Further information on the Company's working capital is set forth under the section "Liquidity and Capital Resources" on pages 24 and following of the Management's Discussion and Analysis of Financial Condition and Results of Operations of the Annual Report on Form 10-K for the fiscal year ended September 30, 2016 (Exhibit VII). V. INFORMATION ON THE COMPANY A. Company history and activities 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 BD's executive offices are located at 1 Becton Drive, Franklin Lakes, New Jersey , and its telephone number is (201) All references to "BD" in this section V 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 principally in the development, manufacture and sale of medical devices, instrument systems and reagents used by healthcare institutions, 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 and respiratory care; enhancing the diagnosis of infectious diseases and cancers; advancing cellular research and applications; and supporting the management of diabetes. 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 positions BD as a global leader in medication management. In March 2016, BD signed a definitive agreement to sell 50.1% of its Respiratory Solutions business and form a joint venture with respect to this business. The Respiratory Solutions business was acquired in the CareFusion acquisition in 2015 and was a component of the Medical Segment, which is discussed below. Upon closing of the transaction, which occurred on October 3, 2016, the Company transferred the Respiratory Solutions business to a new standalone entity, retaining a 49.9% non-controlling interest. The buyer controls the operations and governance of the new entity. Business Segments BD's operations consist of two worldwide business segments: BD Medical and BD Life Sciences. Information with respect to BD's business segments is set forth under Note 6 Segment Data on pages Becton, Dickinson and Company Becton, Dickinson and Company Global Share Investment Program EU Prospectus 37 Dated: April 19, 2017

38 47 and following of the Notes to Consolidated Financial Statements of the Annual Report on Form 10-K for the fiscal year ended September 30, 2016 (Exhibit VII). BD Medical BD Medical produces a broad array of medical technologies 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 business units: Business Unit Diabetes Care Medication and Procedural Solutions Medication Management Solutions Pharmaceutical Systems Principal Product Lines Syringes and pen needles for the injection of insulin and other drugs used in the treatment of diabetes. Needles, syringes and intravenous catheters for medication delivery (including safety-engineered and auto-disable devices); prefilled IV flush syringes; regional anesthesia needles and trays; sharps disposal containers; closed-system transfer devices; skin antiseptic products; and surgical and laproscopic instrumentation. Intravenous medication safety and infusion therapy delivery systems, including infusion pumps and dedicated disposables; medication compounding workflow systems; and automated medication dispensing and supply management systems. Prefillable drug delivery systems provided to pharmaceutical companies and sold to end-users as drug/device combinations. 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 business units: Business Unit Preanalytical Systems Principal Product Lines Integrated systems for specimen collection; safety-engineered blood collection products and systems. Becton, Dickinson and Company Becton, Dickinson and Company Global Share Investment Program EU Prospectus 38 Dated: April 19, 2017

39 Diagnostic Systems Biosciences Automated blood culturing and tuberculosis culturing systems; molecular testing systems for infectious diseases and women's health; microorganism identification and drug susceptibility systems; liquid-based cytology systems for cervical cancer screening; rapid diagnostic assays; microbiology laboratory automation; and plated media. Fluorescence-activated cell sorters and analyzers; monoclonal antibodies and kits for performing cell analysis; reagent systems for life science research; molecular indexing and next-generation sequencing sample preparation for genomics research; clinical oncology, immunological (HIV) and transplantation diagnostic/monitoring reagents and analyzers; and cell culture media supplements for biopharmaceutical manufacturing. Acquisitions and Divestitures CareFusion Corporation. As previously mentioned, on March 17, 2015, pursuant to a definitive agreement entered into on October 5, 2014, BD acquired a 100% interest in 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 fair value of consideration transferred was $ billion in the form of cash and BD common stock. Divestment of Respiratory Solutions business. In March 2016, BD signed a definitive agreement to sell 50.1% of its Respiratory Solutions business and form a joint venture with respect to this business. The Respiratory Solutions business was acquired in the CareFusion acquisition in 2015 and was a component of the Medical segment. Upon closing of the transaction, which occurred on October 3, 2016, the Company transferred the Respiratory Solutions business to a new standalone entity, retaining a 49.9% non-controlling interest. The buyer controls the operations and governance of the new entity. Other Transactions. During the first quarter of fiscal year 2015, BD acquired GenCell Biosystems, a privately-held Irish biotechnology company that has developed proprietary technologies that address key biological analysis protocols including library preparation of Next Generation Sequencing and genotyping applications. During the second quarter of fiscal year 2015, BD acquired CRISI Medical Systems, Inc., a San Diego-based medical technology company dedicated to improving the safety and delivery of IV injectable medications. During the third quarter of fiscal year 2015, BD acquired the ARX group of companies, a leading pharmacy automation distributor in Western Europe. During the fourth quarter of fiscal year 2015, BD acquired Cellular Research, Inc., a biotechnology research and development company that has developed advanced tools for massively parallel single cell genetic analysis based on their proprietary Molecular Indexing technology to enable gene expression profiles from single cells. During the second quarter of fiscal year 2014, the Company acquired Alverix, Inc. ( Alverix ), a privately-held diagnostic instrument company known for its optoelectronics expertise. International Operations BD's products are manufactured and sold worldwide. For reporting purposes, the Company organizes its operations outside the United States as follows: Europe, EMA (which includes the Commonwealth of Becton, Dickinson and Company Becton, Dickinson and Company Global Share Investment Program EU Prospectus 39 Dated: April 19, 2017

40 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; 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, Italy, Japan, Mexico, the Netherlands, Singapore, Spain, and the United Kingdom. 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. Distribution BD's products are marketed in the United States and internationally through independent distribution channels and directly to end-users by BD and independent sales representatives. 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 and Procedural Solutions and Respiratory Solutions Business Units, and respiratory and flu diagnostic products in the Diagnostic Systems Business Unit, which relate to seasonal diseases such as influenza. Raw Materials BD purchases many different types of raw materials, 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 raw material supply by securing multiple options for sourcing. However, there are situations where raw materials are only available from one supplier, which are referred to as sole sourced. The use of sole sourced materials 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 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 of raw materials, 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 maintains business continuity plans with our 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, Becton, Dickinson and Company Becton, Dickinson and Company Global Share Investment Program EU Prospectus 40 Dated: April 19, 2017

41 there may nonetheless be events that cause supply interruption, reduction or termination that adversely impacts BD's ability to manufacture and sell certain products. B. Research and development; intellectual property and licenses 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 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 to support its efforts in specialized fields. BD spent approximately $828 million, $632 million and $550 million on research and development during the fiscal years ended September 30, 2016, 2015 and 2014, respectively. 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. C. Particular provisions of the bylaws The Company's annual meeting of shareholders is held for the purpose of electing directors and conducting other business as may properly come before the meeting and shall be held each year. D. Board of Directors (as per November 23, 2016) Basil L. Anderson Catherine M. Burzik Vincent A. Forlenza Claire M. Fraser Christopher Jones Marshall O. Larsen R. Andrew Eckert Gary A. Mecklenburg James F. Orr Willard J. Overlock, Jr. Claire Pomeroy Rebecca W. Rimel Bertram L. Scott E. Executive Officers (as per November 23, 2016) Name Vincent A. Forlenza Gary M. Cohen Alexandre Conroy Function Chairman of the Board, Chief Executive Officer and President Executive Vice President and President, Global Health Executive Vice President and President, Europe, EMA and the Americas Becton, Dickinson and Company Becton, Dickinson and Company Global Share Investment Program EU Prospectus 41 Dated: April 19, 2017

42 James Lim Alberto Mas Thomas E. Polen Christopher R. Reidy Nabil Shabshab Jeffrey S. Sherman Stephen Sichak Ellen R. Strahlman, M.D. Linda M. Tharby Executive Vice President and President, Greater Asia Executive Vice President and President Life Sciences Segment Executive Vice President and President Medical Segment Executive Vice President, Chief Financial Officer and Chief Administrative Officer Executive Vice President, Strategic Planning and Chief Marketing Officer Executive Vice President and General Counsel Executive Vice President, Integrated Supply Chain Executive Vice President, Research and Development and Chief Medical Officer Executive Vice President and Chief Human Resource Officer To the extent that such fact is required to be disclosed in Exhibits VII or VIII, for at least the previous five years, none of the directors or executive officers of the Company has: (a) (b) (c) been convicted in relation to fraudulent offences; been associated with any bankruptcies, receiverships or liquidations when acting in their capacity of directors or executive officers of the Company; or been subject to any official public incrimination and/or sanctions by statutory or regulatory authorities (including designated professional bodies) or ever been disqualified by a court from acting as a member of the administrative, management or supervisory bodies of an issuer or from acting in the management or conduct of the affairs of any issuer. There are no family relationships between any of the directors and the executive officers listed above. As indicated in the Company's Annual Report on Form 10-K (Exhibit VII), the Company has adopted guidelines regarding corporate governance, amongst which a "Code of Conduct", the full text of which is available on the Company's website, at under the "Investors Corporate Governance" captions. Further information on the Company, including its history and development, a business overview, its organizational structure and information concerning its property, plants and equipment is set forth in the Company's Annual Report on Form 10-K for the fiscal year ended September 30, 2016 (Exhibit VII). VI. OPERATING AND FINANCIAL REVIEW AND PROSPECTS Information concerning the Company's operating results, its liquidity and capital resources, research and development, patents and licenses, trends, etc. is set forth in the Company's Annual Report on Form 10-K for the fiscal year ended September 30, 2016 (Exhibit VII). Becton, Dickinson and Company Becton, Dickinson and Company Global Share Investment Program EU Prospectus 42 Dated: April 19, 2017

43 VII. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES Information concerning the Company's directors and senior management, their remuneration, Board practices, the Company's employees and concerning share ownership is set forth in the Company's Annual Report on Form 10-K for the fiscal year ended September 30, 2016 (Exhibit VII) and in the Company's Definitive Proxy Statement (Exhibit VIII). VIII. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS Information concerning major shareholders of the Company, related party transactions and information concerning interests of experts and advisers is set forth in the Company's Annual Report on Form 10-K for the fiscal year ended September 30, 2016 (Exhibit VII) and in the Company's Definitive Proxy Statement (Exhibit VIII). IX. ADDITIONAL INFORMATION More detailed information about the Company's businesses, as well as the contact information for the different subsidiaries is available on the Company's website ( The Annual Report on Form 10-K for fiscal years ending September 30, 2016, September 30, 2015 and September 30, 2014, as well as Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, are also made available on the Company's website ( under the "Investors SEC Filings / Section 16 Reports" captions) after the Company electronically files such materials with, or furnishes them to, the SEC. Required filings by the Company's officers and directors and certain third parties with respect to transactions or holdings in Company shares are also made available on the Company's website, as are proxy statements for the Company's shareholder meetings. These filings may also be read and copied at the SEC's Public Reference Room at 100 F Street, NE, Room 1580 Washington, D.C The SEC also maintains an internet site ( that contains reports, proxy and information statements and other information regarding issuers that file electronically with the SEC. Information about the Company's Board and Board Committees, including Committee charters, is available on the Company's website ( under the "Investors Corporate Governance" captions). Becton, Dickinson and Company Becton, Dickinson and Company Global Share Investment Program EU Prospectus 43 Dated: April 19, 2017

44 EXHIBITS Becton, Dickinson and Company Becton, Dickinson and Company Global Share Investment Program EU Prospectus Dated: April 19, 2017

45 EXHIBIT I BECTON, DICKINSON AND COMPANY GLOBAL SHARE INVESTMENT PROGRAM Becton, Dickinson and Company Becton, Dickinson and Company Global Share Investment Program EU Prospectus Dated: April 19, 2017

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146 EXHIBIT III UNITED KINGDOM - BECTON, DICKINSON AND COMPANY GLOBAL SHARE INVESTMENT PROGRAM (UNITED KINGDOM) Becton, Dickinson and Company Becton, Dickinson and Company Global Share Investment Program EU Prospectus Dated: April 19, 2017

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187 EXHIBIT IV IRELAND - BECTON, DICKINSON AND COMPANY GLOBAL SHARE INVESTMENT PROGRAM FOR IRELAND Becton, Dickinson and Company Becton, Dickinson and Company Global Share Investment Program EU Prospectus Dated: April 19, 2017

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252 EXHIBIT V SUPPLEMENT TO BECTON, DICKINSON AND COMPANY GLOBAL SHARE INVESTMENT PROGRAM FOR BELGIUM Becton, Dickinson and Company Becton, Dickinson and Company Global Share Investment Program EU Prospectus Dated: April 19, 2017

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256 EXHIBIT VI SUPPLEMENT TO BECTON, DICKINSON AND COMPANY GLOBAL SHARE INVESTMENT PROGRAM FOR ITALY Becton, Dickinson and Company Becton, Dickinson and Company Global Share Investment Program EU Prospectus Dated: April 19, 2017

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261 EXHIBIT VII - ANNUAL REPORT ON FORM 10-K FOR FISCAL YEAR ENDED SEPTEMBER 30, 2016 FILED BY BECTON, DICKINSON AND COMPANY ON NOVEMBER 23, 2016 Becton, Dickinson and Company Becton, Dickinson and Company Global Share Investment Program EU Prospectus Dated: April 19, 2017

262 Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C Form 10-K ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2016 COMMISSION FILE NUMBER BECTON, DICKINSON AND COMPANY (Exact name of registrant as specified in its charter) New Jersey (State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.) 1 Becton Drive Franklin Lakes, New Jersey (Address of principal executive offices) (201) (Registrant s telephone number, including area code) Securities registered pursuant to Section 12(b) of the Act: (Zip code) Title of Each Class Name of Each Exchange on Which Registered Common Stock, par value $1.00 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 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 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 and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted 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 and post 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, or a smaller reporting company. See the definitions of large accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act. Large accelerated filer þ Accelerated filer Non-accelerated filer Smaller reporting company (Do not check if a smaller reporting company) Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes As of March 31, 2016, the aggregate market value of the registrant s outstanding common stock held by non-affiliates of the registrant was approximately $32,175,610,976. No þ No No þ

263 Table of Contents As of October 31, 2016, 212,319,588 shares of the registrant s common stock were outstanding. Documents Incorporated by Reference Portions of the registrant s Proxy Statement for the Annual Meeting of Shareholders to be held January 24, 2017 are incorporated by reference into Part III hereof.

264 Table of Contents TABLE OF CONTENTS PART I 1 Item 1. Business 1 Item 1A. Risk Factors 5 Item 1B. Unresolved Staff Comments 11 Item 2. Properties 11 Item 3. Legal Proceedings 11 Item 4. Mine Safety Disclosures 11 Executive Officers of the Registrant 12 PART II 13 Item 5. Market for Registrant s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 13 Item 6. Selected Financial Data 14 Item 7. Management s Discussion and Analysis of Financial Condition and Results of Operations 15 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 32 Item 8. Financial Statements and Supplementary Data 33 Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure 77 Item 9A. Controls and Procedures 77 Item 9B. Other Information 77 PART III 77 Item 10. Directors, Executive Officers and Corporate Governance 77 Item 11. Executive Compensation 78 Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 78 Item 13. Certain Relationships and Related Transactions, and Director Independence 78 Item 14. Principal Accounting Fees and Services 78 PART IV 78 Item 15. Exhibits, Financial Statement Schedules 78 SIGNATURES 79 EXHIBIT INDEX 81

265 Table of Contents Item 1. Business. General PART I 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 BD s executive offices are located at 1 Becton Drive, Franklin Lakes, New Jersey , and its telephone number is (201) All references in this Form 10-K to BD 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, 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 two worldwide business segments: BD Medical and BD Life Sciences. Information with respect to BD s business segments is included in Note 6 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 business units: Business Unit Diabetes Care Medication and Procedural Solutions Medication Management Solutions Pharmaceutical Systems Principal Product Lines Syringes, pen needles and IV sets for the injection or infusion of insulin and other drugs used in the treatment of diabetes. Needles, syringes and intravenous catheters for medication delivery (including safetyengineered and auto-disable devices); prefilled IV flush syringes; regional anesthesia needles and trays; sharps disposal containers; closed-system transfer devices; skin antiseptic products; and surgical and laproscopic instrumentation. Intravenous medication safety and infusion therapy delivery systems, including infusion pumps and dedicated disposables; medication compounding workflow systems; and automated medication dispensing and supply management systems. Prefillable drug delivery systems provided to pharmaceutical companies and sold to endusers as drug/device combinations. 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 business units: 1

266 Table of Contents Business Unit Preanalytical Systems Diagnostic Systems Biosciences Principal Product Lines Integrated systems for specimen collection; safety-engineered blood collection products and systems. Automated blood culturing and tuberculosis culturing systems; molecular testing systems for infectious diseases and women s health; microorganism identification and drug susceptibility systems; liquid-based cytology systems for cervical cancer screening; rapid diagnostic assays; microbiology laboratory automation; and plated media. Fluorescence-activated cell sorters and analyzers; monoclonal antibodies and kits for performing cell analysis; reagent systems for life science research; molecular indexing and next-generation sequencing sample preparation for genomics research; clinical oncology, immunological (HIV) and transplantation diagnostic/monitoring reagents and analyzers; and cell culture media supplements for biopharmaceutical manufacturing. Acquisitions and Divestitures 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 positions BD as a global leader in medication management. CareFusion product lines are included in our Medical Segment, which is discussed below. In March 2016, BD signed a definitive agreement to sell 50.1% of its Respiratory Solutions business and form a joint venture with respect to this business. The Respiratory Solutions business was acquired in the CareFusion acquisition in 2015 and was a component of the Medical segment. Upon closing of the transaction, which occurred on October 3, 2016, the Company transferred the Respiratory Solutions business to a new standalone entity, retaining a 49.9% non-controlling interest. The buyer controls the operations and governance of the new entity. Additional information regarding this Respiratory Solutions transaction 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; 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, Italy, Japan, 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 in the United States and internationally through independent distribution channels and directly to end-users by BD and independent sales representatives. 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 and Procedural Solutions Business Unit, and respiratory and flu diagnostic products in the Diagnostic Systems Business Unit, which relate to seasonal diseases such as influenza. Raw Materials 2

267 Table of Contents BD purchases many different types of raw materials, 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 raw material supply by securing multiple options for sourcing. However, there are situations where raw materials are only available from one supplier, which are referred to as sole sourced. The use of sole sourced materials 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 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 of raw materials, 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 maintains business continuity plans with our 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, there may nonetheless 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 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 $828 million, $632 million and $550 million on research and development during the fiscal years ended September 30, 2016, 2015, and 2014, 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 manufacturers located in China and other low-cost manufacturing locations are creating increased pricing pressures, particularly in developing markets. 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 strategy - to increase revenue growth by focusing on products that deliver greater benefits to patients, healthcare workers and researchers. Third-Party Reimbursement 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. Our technologies are subject to worldwide regulations regarding reimbursement developed by government agencies, including the Centers for Medicare and Medicaid Services (CMS) in the United States; the National Health Service in the United Kingdom; the Joint Federal Committee in Germany; the Commission d Evaluation des Produits et prestations in France; the Ministry for Health, Labor and 3

268 Table of Contents Welfare in Japan; the Ministry of Health and the National Development and Reform Commission in China; among many others. In addition, our technologies are also subject to reimbursement policies issued by private insurance companies and managed care organizations. 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 positively impact coverage, coding and payment pathways. However, BD has no direct control over payer decisionmaking 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 have created an increased emphasis on the delivery of more cost-effective and quality-driven healthcare. In addition, as a result of the Patient Protection and Affordable Care Act ( PPACA ), the U.S. is now moving beyond 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. See Item 1A. Risk Factors for a further discussion. 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. Many of these provisions are new and uncertain, and failure to comply could result in a range of fines, penalties and/or other sanctions. Our infusion pump business unit is operating under an amended consent decree entered into by CareFusion with the FDA in 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 business unit that manufactures and sells infusion pumps in the United States. The amended consent decree does not apply to intravenous administration sets and accessories. 4

269 Table of Contents While this BD business 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, 2016, 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. Employees See also Item 3. Legal Proceedings. As of September 30, 2016, BD had 50,928 employees, of which 18,480 were employed in the U.S. (including Puerto Rico). BD believes that its employee relations are satisfactory. Available Information BD maintains a website at 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 In addition, the written charters of the Audit Committee, the Compensation and Management Development Committee, the Corporate Governance and Nominating Committee, the Executive 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 at BD s website at Printed copies of these materials, this 2016 Annual Report on Form 10-K, and BD s reports and statements filed with, or furnished to, the SEC, may be obtained, without charge, by contacting the Corporate Secretary, BD, 1 Becton Drive, Franklin Lakes, New Jersey , telephone 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 BD also routinely posts important information for investors on its website at 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. Item 1A. Risk Factors. 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 the Company 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 also 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. 5

270 Table of Contents 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. 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 outcomes, product quality, price, services and other factors. In addition, we face changing customer preferences and requirements, including increased customer demand for more environmentally-friendly products. The medical technology industry is also subject to rapid technological change and discovery. The development of new or improved products, processes or technologies by other companies (such as needle-free injection technology) 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. 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. 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 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. Federal healthcare reform 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 2017, it may be reinstated in 2018 or beyond. In addition, the PPACA, among other things, reduces Medicare and Medicaid payments to hospitals, clinical laboratories and pharmaceutical companies, and could otherwise reduce the volume of medical procedures. These factors, in turn, could result in reduced demand for our products and increased downward pricing pressure. It is also possible that the PPACA will result in lower reimbursement rates for our products. Other provisions in the law may significantly change the practice of health care and could adversely affect aspects of our business. Consolidation in the healthcare industry could adversely affect our future revenues and operating income. The medical technology industry has 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. 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 6

271 Table of Contents 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, 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. Our lack of success in preventing unauthorized access to our systems and products could also result in actions by regulatory bodies or civil litigation. While we will continue to dedicate significant resources to protect the company against unauthorized access to our systems and work with government authorities to detect and reduce the risk of future cyber incidents, cyberattacks 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 product offerings that deliver greater benefits to patients, healthcare workers and researchers. The development of these products 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 the effects of fluctuations in foreign currency exchange (discussed above), the effects of local economic and political conditions, foreign regulatory requirements or changes in such requirements, local product preferences and product requirements, difficulty in establishing, staffing and managing foreign operations, differing labor regulations, changes in tax laws, potential political instability, weakening or loss of the protection of intellectual property rights in some countries, import or export licensing requirements, trade protection measures and restrictions on the transfer of capital across borders. The success of our operations outside the United States depends, in part, on our ability to acquire or form and maintain alliances with local companies and make necessary infrastructure enhancements to, among other things, our production facilities and sales and distribution networks. The June 2016 referendum by British voters to exit the European Union ( EU ) (commonly known as Brexit ) has created uncertainties affecting business operations in the United Kingdom ( UK ) and the EU. Following the vote, there was a significant decline in the value of the British pound compared to the U.S. dollar, and there may be continued volatility in exchange rates and economic conditions as the UK negotiates its exit from the EU. Until the terms and timing of the UK s exit 7

272 Table of Contents from the EU are determined, it is difficult to predict its impact. It is possible that the referendum and proposed withdrawal could, among other things, affect the legal and regulatory schemes to which our businesses are subject, impact trade between the UK and the EU and other parties and create economic uncertainty in the region. 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. Under the U.S. tax code, we may also be subject to additional taxation to the extent we repatriate earnings from our foreign operations to the U.S. In the event we require more capital in the United States than is generated by our U.S. operations to fund acquisitions or other activities and elect to repatriate earnings from foreign jurisdictions, our effective tax rate may be higher as a result. 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, we elect to purchase certain raw materials and components from sole suppliers. The supply of these materials can be disrupted for a number of reasons, including economic conditions as described above. 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 sole-sourced 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 and suits alleging patent infringement, and could be subject to additional lawsuits in the future. A more detailed description of these lawsuits is contained in note 5 to the consolidated financial statements included in Item 8., Financial Statements and Supplementary Data. 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, excess liability insurance. Any such future charges, individually or in the aggregate, could have a material adverse effect on our results of operations and cash flows. 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, fraud and abuse (including anti-kickback and false claims laws), export control, employment and other areas. Violations of these laws can result in criminal or civil sanctions, including substantial 8

273 Table of Contents 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 if we violate such laws. 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. For more information regarding the consent decree, see Regulation under Item 1, Business. Product defects could adversely affect the results of our operations. The design, manufacture and marketing of medical devices involve certain inherent risks. Manufacturing or design defects, unapproved 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 adverse events. These events could lead to recalls or safety alerts relating to our products (either voluntary or 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, 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. 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 9

274 Table of Contents 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 CareFusion The integration process with CareFusion may be more difficult, costly or time consuming than expected and the anticipated benefits and cost savings of the merger may not be realized. The success of our acquisition of CareFusion, including anticipated benefits and cost savings, will depend, in part, on our ability to successfully combine and integrate our business with the business of CareFusion. It is possible that the integration process could result in 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 that adversely affect the combined company s ability to maintain relationships with customers, vendors and employees or to achieve the anticipated benefits and cost savings of the merger. As part of the integration process, we intend to move assets within our combined company to create efficiencies and may seek to opportunistically divest certain assets of the combined company, which may change the profile of the combined company, and which may not be possible on favorable terms, or at all. If we experience difficulties with the integration process, the anticipated benefits of the merger 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 the combined company for an undetermined period going forward. In addition, the actual cost savings of the merger could be less than anticipated. In connection with the CareFusion transactions, we incurred and assumed significant additional indebtedness, which could adversely affect us, including by decreasing our business flexibility. We have substantially increased indebtedness following completion of the CareFusion acquisition in comparison to that of BD on a recent historical basis, which has increased our interest expense and could have the effect, among other things, of reducing our flexibility to respond to changing business and economic conditions. The amount of cash required to pay interest on our increased indebtedness following the merger, and thus the demands on our cash resources, is greater than the amount of cash flows required to service our indebtedness prior to the acquisition. Our increased levels of indebtedness could also reduce funds available for working capital, capital expenditures, acquisitions, funding research and development or future expansion of our business, and other general corporate purposes and may create competitive disadvantages for BD relative to other companies with lower debt levels. If we do not achieve the expected benefits and cost savings from the transaction, or if the financial performance of the combined company does not meet current expectations, then our ability to service this indebtedness may be adversely impacted. Certain of the indebtedness incurred in connection with the acquisition bears interest at variable interest rates. If interest rates increase, variable rate debt will create higher debt service requirements, which could adversely affect our cash flows. 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. Our ratings were downgraded in connection with the indebtedness incurred and assumed in the acquisition of CareFusion, and there can be no assurance that we will achieve a particular rating or maintain a particular rating in the future. Moreover, we may be required to raise substantial additional financing to fund working capital, capital expenditures, 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. There can be no assurance that we will be able to obtain additional financing or refinancing on terms acceptable to us or at all. The agreements that govern the indebtedness incurred or assumed in connection with the acquisition contain various covenants that impose restrictions on us and certain of our subsidiaries that may affect our ability to operate our businesses. The agreements that govern the indebtedness incurred or assumed in connection with the CareFusion transaction contain various affirmative and negative covenants that may, subject to certain significant exceptions, restrict our ability and the ability of certain of our subsidiaries (including CareFusion) to, among other things, have liens on their property, transact business with affiliates and/or merge or consolidate with any other person or sell or convey certain of our assets to any one person. In addition, some of the agreements that govern our indebtedness contain financial covenants that will require us to maintain certain 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. 10

275 Table of Contents Item 1B. Unresolved Staff Comments. None. Item 2. Properties. BD s executive offices are located in Franklin Lakes, New Jersey. As of October 31, 2016, BD owned or leased 255 facilities throughout the world, comprising approximately 19,796,011 square feet of manufacturing, warehousing, administrative and research facilities. The U.S. facilities, including those in Puerto Rico, comprise approximately 7,459,856 square feet of owned and 2,923,257 square feet of leased space. The international facilities comprise approximately 7,189,652 square feet of owned and 2,223,245 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. (A) Sites Corporate BD Life Sciences BD Medical Mixed(A) Total Leased Owned Total Square feet 1,425,720 4,337,963 9,891,908 4,140,420 19,796,011 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, Nebraska, New Jersey, North Carolina, Ohio, Oklahoma, South Carolina, 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, Hungary, Ireland, Italy, Kenya, Luxembourg, Netherlands, Norway, 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. 11

276 Table of Contents 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. Name Age Position Vincent A. Forlenza 63 Chairman since July 2012; Chief Executive Officer since October 2011; President since January 2009; and Chief Operating Officer from July 2010 to October Gary M. Cohen 57 Executive Vice President and President, Global Health. Alexandre Conroy 53 Executive Vice President and President, Europe, EMA and the Americas since June 2012; and prior thereto, President, Western Europe. James Lim 52 Executive Vice President and President, Greater Asia since June 2012; and prior thereto, Vice President/General Manager, Central Asia Pacific and Operations. Alberto Mas 55 Executive Vice President and President - Life Sciences Segment since October 2016; Worldwide President - Life Sciences, Diagnostic Systems from October 2013 to October 2016; and Worldwide President - BD Biosciences from October 2011 to October Thomas E. Polen 43 Executive Vice President and President - Medical Segment since October 2014; Group President from October 2013 to October 2014; and Worldwide President - BD Diagnostic Systems from October 2010 to October Christopher R. Reidy 59 Executive Vice President, Chief Financial Officer and Chief Administrative Officer since July 2013; and prior thereto, Vice President and Chief Financial Officer of ADP Corporation. Nabil Shabshab 51 Executive Vice President, Strategic Planning and Chief Marketing Officer. Jeffrey S. Sherman 61 Executive Vice President and General Counsel. Stephen Sichak 59 Executive Vice President, Integrated Supply Chain. Ellen R. Strahlman, M.D. 59 Executive Vice President, Research and Development and Chief Medical Officer since April 2013; Senior Vice President, Office of the CEO and Global Head, Neglected Tropical Diseases of GlaxoSmithKline from March 2012 to May 2012, and prior thereto, Chief Medical Officer of GlaxoSmithKline plc. Linda M. Tharby 48 Executive Vice President since October 2014 and Chief Human Resource Officer since October 2016; President - Life Sciences Segment from October 2014 to October 2016; Group President from October 2013 to October 2014; and prior thereto, Worldwide President - BD Medical, Diabetes Care. 12

277 Table of Contents 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. As of October 31, 2016, there were approximately 13,734 shareholders of record. Market and Market Prices of Common Stock (per common share) Dividends (per common share) Issuer Purchases of Equity Securities Period By Quarter High Low High Low First $ $ $ $ Second $ $ $ $ Third $ $ $ $ Fourth $ $ $ $ By Quarter First $ $ Second Third Fourth The table below sets forth certain information regarding BD s purchases of its common stock during the fiscal quarter ended September 30, Total Number of Shares Purchased(1) Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs(2) Maximum Number of Shares that May Yet be Purchased Under the Plans or Programs(2) July 1-31, ,147,060 August 1-31, ,364 $ ,147,060 September 1-30, ,147,060 Total 2,364 $ ,147,060 (1) Represents 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) Any repurchases would be 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. 13

278 Table of Contents Item 6. Selected Financial Data. Becton, Dickinson and Company FIVE-YEAR SUMMARY OF SELECTED FINANCIAL DATA Operations Years Ended September Dollars in millions, except share and per share amounts Revenues $ 12,483 $ 10,282 $ 8,446 $ 8,054 $ 7,708 Gross Margin 5,991 4,695 4,301 4,171 3,953 Research and Development Expense Operating Income 1,430 1,074 1,606 1,254 1,558 Interest Expense, Net Income From Continuing Operations Before Income Taxes 1,074 (A) 739 (B) 1,522 (C) 1,165 (D) 1,472 (E) Income Tax Provision Income from Continuing Operations 976 (A) 695 (B) 1,185 (C) 929 (D) 1,110 (E) Net Income ,185 1,293 1,170 Basic Earnings Per Share from Continuing Operations Diluted Earnings Per Share from Continuing Operations 4.49 (A) 3.35 (B) 5.99 (C) 4.67 (D) 5.30 (E) Dividends Per Common Share Financial Position Total Current Assets $ 6,367 $ 5,659 $ 5,775 $ 5,530 $ 5,144 Total Current Liabilities 4,400 4,381 2,225 2,122 1,974 Total PPE, Net 3,901 4,060 3,605 3,476 3,304 Total Assets 25,586 26,478 12,384 12,029 11,376 Total Long-Term Debt 10,550 11,370 3,768 3,763 3,761 Total Shareholders Equity 7,633 7,164 5,053 5,043 4,136 Book Value Per Common Share Financial Relationships Gross Profit Margin 48.0% 45.7% 50.9% 51.8% 51.3% Return on Revenues 7.8% 6.8% 14.0% 11.5% (F) 14.4% (F) Return on Total Assets(G) 5.6% 5.7% 13.6% 11.1% (F) 14.7% (F) Return on Equity 13.2% 11.4% 23.5% 20.2% (F) 24.8% (F) Debt to Capitalization(H) 57.2% 59.4% 43.6% 43.6% (F) 49.6% (F) Additional Data Number of Employees 50,900 49,500 30,600 30,000 29,600 Number of Shareholders 13,788 14,547 8,210 8,412 8,696 Average Common and Common Equivalent Shares Outstanding Assuming Dilution (millions) Depreciation and Amortization $ 1,114 $ 891 $ 562 $ 546 $ 511 Capital Expenditures Refer to Item 7. Management s Discussion and Analysis of Financial Condition and Results of Operations for additional discussion regarding the specified items referenced in notes (A) through (D) below. (A) Includes the impact of specified items totaling $1.261 billion ($892 million after-tax), or $4.10 diluted earnings per share from continuing operations, which affects comparisons of results across periods presented. 14

279 Table of Contents (B) (C) (D) (E) (F) (G) (H) Includes the impact of specified items totaling $1.186 billion ($786 million after-tax), or $3.79 diluted earnings per share from continuing operations, which affects comparisons of results across periods presented. Includes the impact of specified items totaling $153 million ($101 million after-tax), or $0.51 diluted earnings per share from continuing operations, which affects comparisons of results across periods presented. Includes the impact of specified items totaling $442 million ($279 million after-tax), or $1.40 diluted earnings per share from continuing operations, which affects comparisons of results across periods presented. There were no amounts reflected in the results of operations for the period which would significantly affect the comparisons of results across periods presented. Excludes discontinued operations. Earnings before interest expense and taxes as a percent of average total assets. Total debt as a percent of the sum of total debt, shareholders equity and non-current deferred income tax liabilities. 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, life science researchers, clinical laboratories, the pharmaceutical industry and the general public. The Company's organizational structure is based upon two principal business segments, BD Medical ( Medical ) and BD Life Sciences ( Life Sciences ). 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, in particular, China and India. 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 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 and cell therapy; Enhancing disease management in diabetes, women s health and cancer, and infection control. 15

280 Table of Contents We continue to strive to improve the efficiency of our capital structure and follow these guiding principles: To maintain an investment grade rating; To ensure access to the debt market for strategic opportunities; To optimize the cost of capital based on market conditions. 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 CareFusion On March 17, 2015, BD acquired a 100% interest in CareFusion Corporation ("CareFusion"). CareFusion s operating results were included in BD s consolidated results of operations beginning on April 1, 2015 and as such, the consolidated results of operations for the first six months of fiscal year 2015 referenced in the commentary provided further below did not include CareFusion's results. CareFusion operates as part of our Medical segment. Summary of Financial Results Worldwide revenues in 2016 of $ billion increased 21.4% from the prior year, compared with an increase of 21.7% in Revenue growth in 2016 largely reflected the impact from the inclusion of CareFusion s sales in the Company's results for a full fiscal year in 2016 as compared with only half the fiscal year in 2015, as discussed above. Revenues in 2016 also reflected volume growth of approximately 4.2%, which included an unfavorable impact from the termination of a distribution agreement in the Respiratory Solutions unit. Revenue growth in 2016 additionally reflected an unfavorable foreign currency translation impact of approximately 3.1% and a relatively immaterial favorable impact from price. Revenue growth in 2015 reflected a 24.1% impact from the inclusion of CareFusion's sales in the Company's results from April 1, 2015, as discussed above, as well as volume growth of 5.1% and unfavorable foreign currency translation of 7.5%. Volume growth in 2016 reflected the following: Medical segment volume growth was driven by the Medication and Procedural Solutions unit's international sales of safety-engineered products, the Diabetes Care unit s sales of pen needles and the Pharmaceutical Systems unit's sales of self-injection systems. Fiscal year 2016 revenues in the Respiratory Solutions unit were unfavorably impacted by the termination of a distribution contract, as noted above. Life Sciences segment volume growth was driven by the Preanalytical Systems unit's global sales of safety-engineered products, the Diagnostic Systems unit's sales of automated platforms and the Biosciences unit s U.S. sales of research instrument and reagent sales. The Biosciences unit's international fiscal year 2016 revenues were unfavorably impacted by pressure on sales of HIV-related clinical products in Africa. U.S. Medical segment volume growth in 2016 primarily reflected the sales of infusion disposables and self-injection systems. U.S. Life Sciences segment volume growth in 2016 was driven by sales of safety-engineered products, microbiology platforms, molecular diagnostic platforms, and research reagents, as well as by research instrument placements. The Medical segment's international volume growth in 2016 was driven by sales of safety-engineered and flush products. The Life Sciences segment's international volume growth in 2016 was driven by sales of safety-engineered products, microbiology and Women's Health and Cancer platforms, but was negatively impacted by pressure on HIV-related clinical products in Africa, as noted above. Worldwide sales of safety-engineered products reflected volume growth that was attributable to both segments. Fiscal year 2016 sales in the United States of safety-engineered devices of $1.805 billion increased 22.8% and fiscal year 2016 international sales of safety-engineered devices of $1.231 billion grew 9.3% over the prior year s period, inclusive of an estimated 7.5% unfavorable impact due to foreign currency translation. We continue to invest in research and development, geographic expansion, and new product promotions 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 has stabilized, pricing pressures continue for some of our products. Healthcare utilization has stabilized and slightly improved in the United States; however, any destabilization in the future could adversely impact our U.S. 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. 16

281 Table of Contents Our financial position remains strong, with cash flows from operating activities totaling $2.559 billion in At September 30, 2016, we had $1.6 billion in cash and equivalents and short-term investments. We continued to return value to our shareholders in the form of dividends. During fiscal year 2016, we paid cash dividends of $562 million. No shares were repurchased during fiscal year 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. The ongoing relative strength of the U.S. dollar resulted in an unfavorable foreign currency translation impact to our revenue growth during the fiscal year. 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 is a summary of Medical revenues by organizational unit: (Millions of dollars) Total Change 2016 vs (A) 2015 vs (A) Estimated FX Impact FXN Change Total Change Estimated FX Impact FXN Change Medication and Procedural Solutions $ 3,413 $ 2,850 $ 2, % (3.6)% 23.4 % 23.5 % (6.4)% 29.9% Medication Management Solutions 2,210 1,033 NM NM NM NM NM NM Diabetes Care 1,023 1,012 1, % (3.3)% 4.4 % (2.4)% (6.7)% 4.3% Pharmaceutical Systems 1,199 1,167 1, % (2.4)% 5.1 % (5.0)% (10.1)% 5.1% Respiratory Solutions % (2.3)% 99.1 % NM NM NM Deferred revenue adjustment (B) (14) (20) (29.3)% % (29.3)% NM NM NM Total Medical revenues $ 8,654 $ 6,460 $ 4, % (3.0)% 37.0 % 41.3 % (8.5)% 49.8% Medical segment safetyengineered products $ 1,924 $ 1,499 $ 1, % (2.9)% 31.2 % 34.0 % (6.6)% 40.6% (A) "NM" denotes that the percentage is not meaningful. (B) In accordance with U.S. GAAP business combination accounting rules, CareFusion s deferred revenue balance was written down to reflect a fair value measurement as of the acquisition date. The deferred revenue adjustment represents the amortization of this write-down which primarily relates to software maintenance contracts in the United States. Revenues for these contracts is typically deferred and recognized over the term of the contracts. Overall Medical segment revenue growth in 2016 largely reflected the inclusion of CareFusion s sales for a full fiscal year in 2016 compared with half the fiscal year in 2015, as previously discussed. Medical segment revenue growth in 2016 additionally reflected the Medication and Procedural Solutions unit's international sales of safety-engineered products, the Diabetes Care unit s sales of pen needles and the Pharmaceutical Systems unit s sales of selfinjection systems. Fiscal year 2016 Medical segment revenue growth was unfavorably impacted by the termination of a distribution contract, as previously discussed, in the Respiratory Solutions unit. Overall Medical segment growth in 2015 reflected the inclusion of CareFusion's sales for the second half of the fiscal year. Medical segment growth in 2015 additionally reflected the Medication and Procedural Solutions unit's international sales of 17

282 Table of Contents safety-engineered products, the Diabetes Care unit s sales of pen needles as well as international sales of safety-engineered products and favorable timing of ordering patterns in the Pharmaceutical Systems unit. Medical segment operating income was as follows: (Millions of dollars) Medical segment operating income $ 2,052 $ 1,530 $ 1,291 Segment operating income as % of Medical revenues 23.7% 23.7% 28.2% The Medical segment's operating income is driven by its performance with respect to gross profit margin and operating expenses. The Medical segment's gross profit margin in 2016 was slightly higher as compared with 2015 primarily due to lower manufacturing costs resulting from continuous operations improvement projects which improved the efficiency of our operations, partially offset by the recognition of a full year of amortization relating to intangible assets acquired in the CareFusion transaction and by unfavorable foreign currency translation. The Medical segment's gross profit margin as a percentage of revenues was lower in 2015 as compared with 2014 primarily due to the amortization of intangible assets acquired in the CareFusion transaction and the amortization of the acquisition-date write-down of CareFusion s deferred revenue balance, as previously discussed. These unfavorable impacts on gross margin in 2015 were partially offset primarily by lower manufacturing costs resulting from continuous improvement projects. Selling and administrative expense in 2016 as a percentage of Medical revenues primarily reflected the suspension of the medical device excise tax imposed under the U.S. Patient Protection Affordable Care Act. Selling and administrative expense as a percentage of revenues in 2015 primarily reflected the inclusion of CareFusion s spending, as well as depreciation of fixed assets acquired in the CareFusion acquisition, in the second half of 2015 results. Research and development expenses in 2016 increased $172 million, or 63% from 2015, which reflected the inclusion of CareFusion spending for a full fiscal year, as well as increased investment in new products and platforms. Research and development expenses in 2015 increased $85 million, or 46% from 2014, primarily due to the inclusion of CareFusion's costs in the second half of 2015 results. Life Sciences Segment The following is a summary of Life Sciences revenues by organizational unit: (Millions of dollars) Total Change 2016 vs vs Estimated FX Impact FXN Change Total Change Estimated FX Impact FXN Change Preanalytical Systems $ 1,409 $ 1,391 $ 1, % (3.9)% 5.2% (1.5)% (6.4)% 4.9% Diagnostic Systems 1,301 1,299 1, % (3.2)% 3.3% (0.2)% (6.5)% 6.3% Biosciences 1,119 1,132 1,159 (1.2)% (2.7)% 1.5% (2.4)% (6.0)% 3.6% Total Life Sciences revenues $ 3,829 $ 3,822 $ 3, % (3.2)% 3.4% (1.3)% (6.3)% 5.0% Life Sciences segment safety-engineered products $ 1,113 $ 1,097 $ 1, % (3.7)% 5.1% (0.7)% (6.3)% 5.6% The Life Sciences segment's 2016 revenue growth was driven by the Preanalytical Systems unit's U.S. and international sales of safety-engineered products. Segment revenue growth in 2016 also reflected the Diagnostic Systems unit's sales of automated platforms, including BD Kiestra, BD MAX TM, and BD BACTEC TM blood culture systems as well as SurePath TM reagents. Fiscal year 2016 revenues in the Life Sciences segment additionally reflected the Biosciences unit s research instrument and reagent sales, primarily in the United States, which were partially offset by pressure on sales of the Biosciences unit's HIV-related clinical products in Africa, as previously discussed. The Life Sciences segment's 2015 revenue growth was driven by the Preanalytical Systems unit's international sales of safety-engineered products as well as by the Diagnostic Systems unit's worldwide sales of its BD Veritor platform, due to a stronger than normal influenza season, and its automated platforms, including BD Kiestra, BD MAX TM, and BD BACTEC TM blood culture systems. This growth was partially offset by share losses related to the Diagnostic Systems unit's BD ProbeTec and BD Viper systems. The Life Sciences segment's revenue growth in 2015 also reflected the Biosciences unit s research instrument and reagent sales in the United States, partially offset by weaker international sales due to lower levels of research funding in Japan. 18

283 Table of Contents Life Sciences segment operating income was as follows: (Millions of dollars) Life Sciences segment operating income $ 793 $ 839 $ 861 Segment operating income as % of Life Sciences revenues 20.7% 21.9% 22.2% The Life Sciences segment's operating income is driven by its performance with respect to gross profit margin and operating expenses. The Life Sciences segment's gross profit margin as a percentage of revenues was lower in fiscal year 2016 primarily due to unfavorable foreign currency translation, partially offset by lower manufacturing costs resulting from operations improvement projects which improved the efficiency of our operations. The Life Sciences segment's gross profit margin as a percentage of revenues was lower in fiscal year 2015 compared with 2014 primarily due to unfavorable foreign currency translation, as well as various immaterial items. Selling and administrative expense as a percentage of Life Sciences revenues in 2016 was also lower compared to 2015 primarily due to the suspension of the medical device excise tax. Selling and administrative expense as a percentage of Life Sciences revenues decreased in 2015 compared with 2014, which reflected a charge to terminate a distributor arrangement. Research and development expense in 2016 increased by $14 million, or 5% above spending in 2015, which reflected increased investment in new products and platforms. Research and development expense in 2015 was flat compared with research and development expense in Research and development expense in 2015 reflected increased investment in new products and platforms, including the BD Viper TM and BD Max TM platforms, and increased spending relating to acquisitions completed in 2015, which was offset by the prior-year impact of a $20 million asset write-off and costs associated with workforce reduction actions. Geographic Revenues BD s worldwide revenues by geography are provided below. (Millions of dollars) Total Change 2016 vs vs Estimated FX Impact FXN Change Total Change Estimated FX Impact FXN Change United States $ 6,893 $ 5,069 $ 3, % 36.0% 48.4% 48.4% International 5,590 5,213 5, % (6.2)% 13.4% 3.6% (12.6)% 16.2% Total revenues $ 12,483 $ 10,282 $ 8, % (3.1)% 24.5% 21.7% (7.5)% 29.2% The Medical segment's U.S. revenue growth in 2016 primarily reflected the inclusion of CareFusion's U.S. sales for the full fiscal year. U.S. Medical segment revenues also reflected growth in sales of the segment's legacy products, particularly the Medication and Procedural Solutions unit's infusion disposables and the Pharmaceutical Systems unit's self-injection systems. U.S. Life Sciences revenue growth in 2016 was driven by sales of the Preanalytical Systems unit's safety-engineered products and the Diagnostic Systems unit's microbiology and molecular diagnostic platforms, as well as by research instrument placements and research reagent sales in the Biosciences unit. U.S. Life Sciences growth in 2016 was partially offset by a milder influenza season in 2016 as compared to The Medical segment's U.S. revenue growth in 2015 reflected the inclusion of CareFusion s U.S. sales of approximately $1.5 billion in results for the second half of 2015, as well as overall strength in the segment's legacy product portfolio, which was particularly driven by sales of infusion disposables and safety-engineered products. U.S. Life Sciences revenue growth in 2015 benefited from a stronger than normal influenza season, as discussed previously, and growth in the Biosciences unit s research reagents and instrument placements, reflecting a favorable funding environment in the U.S. market. U.S. Life Sciences growth in 2015 was unfavorably impacted by share losses related to the BD ProbeTec and BD Viper systems. The Medical segment's international revenue growth in 2016 was driven by the inclusion of CareFusion's sales for the full fiscal year, as well as by sales of the Medication and Procedural Solutions unit's safety-engineered products and flush products. The Life Sciences segment's fiscal year 2016 revenue growth was driven by the Preanalytical Systems unit's sales of safety-engineered products primarily in Western Europe and Asia Pacific, as well as by the Diagnostic Systems unit's sales of microbiology and Women's Health and Cancer platforms in Western Europe and Latin America. The Biosciences unit 2016 international revenue growth was negatively impacted by the pressure on sales of HIV-related clinical products in Africa. International Medical segment revenue growth in 2015 reflected the inclusion of CareFusion s sales in results for the second half of 2015, as well as growth of sales in emerging markets and sales of safety-engineered products in the Medication and Procedural Solutions and Pharmaceutical Systems units. The Medical segment's international revenue growth in 2015 additionally reflected sales of flush products as well as sales of pen needles in the Diabetes Care unit. International Life Sciences revenue growth in 2015 was largely driven by growth in emerging markets as well as by sales of safety-engineered 19

284 Table of Contents products. International Life Sciences revenue growth in 2015 also benefited from growth in sales of microbiology products, including lab automation products, but was partially offset by weaker Biosciences unit sales primarily due to lower levels of research funding in Japan. Effective October 1, 2015, we changed the composition of countries that we define as emerging markets within the Asia Pacific region. On this redefined basis, emerging market revenues were $1.9 billion, $1.8 billion and $1.7 billion in 2016, 2015 and 2014, respectively. Unfavorable foreign currency translation impacted emerging market revenues in 2016 and 2015 by an estimated $156 million and $142 million, respectively. Emerging market revenue growth in 2016 reflected the inclusion of CareFusion's sales for the full fiscal year, as well as growth in China and Latin America, partially offset by declines in the Middle East and Africa. Emerging market revenues in 2015 primarily reflected the inclusion of CareFusion's revenues in the second half of Specified Items Reflected in the financial results for 2016, 2015 and 2014 were the following specified items: (Millions of dollars) Financing costs (A) $ $ 107 $ Transaction costs (A) Integration costs (A) Restructuring costs (A) Purchase accounting (B) Research and development charges (C) 26 Pension settlement charges 6 3 Other, net (D) 7 44 Total specified items 1,261 1, Tax impact of specified items After-tax impact of specified items $ 892 $ 786 $ 101 (A) (B) (C) (D) Represents financing, transaction, integration and restructuring costs substantially associated with the CareFusion acquisition and portfolio rationalization. The financing costs were recorded in Interest expense. The transaction, integration and restructuring costs were recorded in Acquisitions and other restructurings. For further discussion of these charges, refer to Notes 1, 7, 8, 9, 10 and 11 to the consolidated financial statements contained in Item 8. Financial Statements and Supplementary Data. 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. Amortization and depreciation expense relating to assets acquired in the CareFusion transaction was $492 million in 2016 compared with $284 million in The adjustments in 2016 also included a net decrease in the fair value of certain contingent consideration liabilities of $25 million. The adjustments in 2015 included a fair value step-up adjustment of $293 million recorded relative to CareFusion s inventory on the acquisition date and a pre-tax acquisition-date accounting gain of $9 million on a previously held investment. Represents charges incurred in 2014 by the Medical and Life Sciences segments of $6 million and $20 million, respectively, in connection with the segments' terminations of certain development programs. The amount in 2015 represents a charge for plaintiff attorneys fees, recorded in Selling and administrative expense associated with the antitrust and false advertising lawsuit Retractable Technologies, Inc. filed against BD, partially offset by an adjustment to reduce a liability for employee termination costs recorded relative to workforce reduction actions taken in the fourth quarter of fiscal year The amount in 2014 primarily represented the $36 million charge recorded relative to workforce reduction actions. For further discussion of these charges, refer to Notes 5 and 8 to the consolidated financial statements contained in Item 8. Financial Statements and Supplementary Data. 20

285 Table of Contents Gross Profit Margin The comparison of gross profit margins in 2016 and 2015 and the comparison of gross profit margins in 2015 and 2014 reflected the following impacts: Gross profit margin % prior-year period 45.7 % 50.9 % CareFusion acquisition-related asset depreciation and amortization 0.6 % (5.5)% Operating performance 2.5 % 0.8 % Foreign currency translation (0.8)% (0.5)% Gross profit margin % current-year period 48.0 % 45.7 % Gross profit margin in 2016 benefited from a favorable comparison to 2015, which reflected the fair value step-up adjustment recorded relative to CareFusion s inventory on the acquisition date, as previously discussed, partially offset by the recognition in 2016 of a full year of amortization relating to CareFusion's intangible assets. The operating performance impacts in 2016 and 2015 primarily reflected lower manufacturing costs resulting from continuous operations improvement projects which improved the efficiency of our operations. Operating Expenses Operating expenses in 2016, 2015 and 2014 were as follows: Increase (decrease) in basis points (Millions of dollars) vs vs Selling and administrative expense $ 3,005 $ 2,563 $ 2,145 % of revenues 24.1% 24.9% 25.4% (80) (50) Research and development expense $ 828 $ 632 $ 550 % of revenues 6.6% 6.1% 6.5% 50 (40) Acquisitions and other restructurings $ 728 $ 426 $ Selling and administrative Selling and administrative expense as a percentage of revenues in 2016 reflected synergies resulting from the CareFusion acquisition, as well as favorable foreign currency translation and a suspension of the medical device excise tax, as previously discussed. Selling and administrative expense as a percentage of revenues in 2016 was unfavorably impacted by higher selling expenses relating to product launches and higher shipping expenses. Selling and administrative expense as a percentage of revenues in 2015 reflected favorable foreign currency translation, partially offset by the impacts of increased spending relating to the expansion of our business in emerging markets, a charge relating to the RTI litigation matter, as previously discussed, as well as depreciation of fixed assets acquired in the CareFusion acquisition. Research and development Research and development expense in 2016 reflected the inclusion of CareFusion s research and development expenses in the Company's results for the full fiscal year 2016 and increased investment in high growth opportunities. Research and development expense in 2015 reflected the inclusion of CareFusion s research and development expenses in the results for the second half of fiscal year Research and development expense as a percentage of revenues in 2015 was lower in comparison to 2014, which included a workforce reduction charge, asset write-offs and program termination charges as well as ongoing investment in new products and platforms within the Medical segment. Acquisitions and other restructurings Costs relating to acquisitions and other restructurings represented transaction, integration and restructuring costs substantially associated with the CareFusion acquisition and portfolio rationalization. The transaction and integration costs specifically included advisory, legal, and other costs substantially incurred in connection with the CareFusion acquisition. Restructuring costs in 2016 included a $214 million charge recorded to impair capitalized internaluse software assets held for sale as a result of the information technology function transformation efforts. For further disclosures regarding the costs relating 21

286 Table of Contents to acquisitions and other restructurings, refer to Notes 1, 7, 8, 9, 10 and 11 to the consolidated financial statements contained in Item 8. Financial Statements and Supplementary Data. Net Interest Expense (Millions of dollars) Interest expense $ (388) $ (371) $ (135) Interest income Net interest expense $ (367) $ (356) $ (89) The increase in interest expense in 2016 reflected a full year of increased financing costs associated with the CareFusion acquisition, including interest on $6.2 billion of senior unsecured notes issued in December 2014, in anticipation of closing the CareFusion acquisition. This increase in financing costs was partially offset by the full year impact of favorable amortization of the acquisition-date fair value step-up on CareFusion s long-term debt as well as by the prior-year impact of commitment fees incurred for a bridge loan facility that was terminated in March The increase in interest expense in 2015 compared with 2014 primarily reflected interest associated with the $6.2 billion of senior unsecured notes and the commitment fees for the bridge loan facility, as discussed above. These increases in interest expense in fiscal year 2015 were partially offset by favorable amortization of the fair value step-up recorded on CareFusion s long-term debt beginning on April 1, Additional disclosures regarding these financing arrangements and our debt instruments are provided in Note 15 to the consolidated financial statements contained in Item 8. Financial Statements and Supplementary Data. The increase in interest income in 2016 reflected the realization of investment gains on assets related to our deferred compensation plans, compared with the realization of losses in 2015, partially offset by lower cash levels outside of the United States. The offsetting movements in the deferred compensation plan liability were recorded in Selling and administrative expense. The decrease in interest income in 2015 compared with 2014 reflected lower cash levels outside of the United States as well as investment losses on assets related to our deferred compensation plan. Income Taxes The income tax rates in 2016, 2015 and 2014 were as follows: Effective income tax rate 9.1% 5.9% 22.1% The increase in the effective income tax rate from 2015 to 2016 is primarily due to the decrease in tax benefits on specified items. The tax benefits of the specified items shown earlier reduced the income tax rates in 2016 and 2015 by 1,090 and 1,720 basis points, respectively, as the tax benefits on these specified items were primarily incurred in higher tax jurisdictions. The income tax rates in fiscal years 2016 and 2015 also reflected the extension of the U.S. research and development income tax credit, which was partially offset by the unfavorable impact of one-time discrete items. The effective income tax rate in 2014 reflected our decision to change our position of permanent reinvestment with respect to the unremitted earnings of Brazil and certain other Latin American jurisdictions, the impact of which was more than offset by the benefits resulting from discrete one-time items and geographic mix. Net Income and Diluted Earnings per Share Net Income and Diluted Earnings per Share in 2016, 2015 and 2014 were as follows: Net income (Millions of dollars) $ 976 $ 695 $ 1,185 Diluted Earnings per Share $ 4.49 $ 3.35 $ 5.99 Unfavorable impact-specified items $ (4.10) $ (3.79) $ (0.51) Unfavorable impact-foreign currency translation $ (0.64) $ (0.69) $ (0.22) Dilutive impact from shares issued as consideration for the CareFusion acquisition (prior to the inclusion of CareFusion in consolidated results of operations) $ $ (0.02) $ 22

287 Table of Contents 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 2016 or 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, 2016 and 2015, the impact changes in the U.S. dollar would have on pre-tax earnings was estimated as follows: Increase (decrease) (Millions of dollars) % appreciation in U.S. dollar $ (67) $ (28) 10% depreciation in U.S. dollar $ 67 $ 28 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. With respect to the interest rate derivatives outstanding at September 30, 2016 and 2015, the impact changes in the interest rate would have on the fair value of these derivatives was estimated as follows: Increase (decrease) (Millions of dollars) % increase in interest rates $ 5 $ (3) 10% decrease in interest rates $ (5) $ 3 Based on our overall interest rate exposure at September 30, 2016 and 2015, a 10% change in interest rates would not have a material effect on our earnings or cash flows over a one-year period. 23

288 Table of Contents Liquidity and Capital Resources The following table summarizes our consolidated statement of cash flows in 2016, 2015 and 2014: (Millions of dollars) Net cash provided by (used for) Operating activities $ 2,559 $ 1,730 $ 1,746 Investing activities $ (669) $ (8,318) $ (948) Financing activities $ (1,761) $ 6,190 $ (807) Net Cash Flows from Operating Activities The fiscal year 2016, 2015 and 2014 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 2016 change in operating assets and liabilities was a net source of cash and primarily reflected higher levels of accounts payable and accrued expenses as well as lower levels of inventory, prepayments and financing receivables, partially offset by higher levels of accounts receivables. The fiscal year 2015 change in operating assets and liabilities was a net source of cash and primarily reflected lower levels of inventory and higher levels of accounts payable and accrued expenses, partially offset by higher levels of prepayments. The lower levels of inventory reflected the impact, primarily recognized in the third quarter of fiscal year 2015, of the acquisition fair value step-up adjustment recorded relative to CareFusion s inventory on the acquisition date. 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 provided by operating activities in 2015 increased by changes in the pension obligation as current-year expense was partially offset by discretionary contributions of $40 million. The previously discussed non-cash charge recorded to impair capitalized internal-use software assets held for sale is included as other operating activities. 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 $693 million, $596 million, $592 million in 2016, 2015 and 2014, respectively, primarily related to manufacturing capacity expansions and details of spending by segment are contained in Note 6 to the consolidated financial statements contained in Item 8. Financial Statements and Supplementary Data. Investments Cash inflows from the sales of investments of $840 million in 2015 were attributable to the maturities of time deposits in Europe, Latin America and Asia Pacific. Acquisitions of Businesses Cash outflows relating to acquisitions in 2015 and 2014 were $8.4 billion and $40 million, respectively. Cash outflows relating to acquisitions in 2015 were primarily attributable to the completion of the CareFusion acquisition in the second quarter of fiscal year Cash outflows relating to acquisitions in 2014 represented cash paid to acquire Alverix, Inc. in the second quarter of fiscal year For further discussion, refer to Note 9 to the consolidated financial statements contained in Item 8. Financial Statements and Supplementary Data. Net Cash Flows from Financing Activities Net cash used for financing activities in 2016 included a net $500 million reduction of our commercial paper program balance and the third quarter repayment of $750 million of floating rate notes due on June 15, Net cash provided by financing activities in 2015 included the proceeds, which were used to finance our acquisition of CareFusion, from $6.2 billion of notes issued in December 2014 and $500 million total proceeds from net borrowings under commercial paper programs. For additional information regarding these financing arrangements, refer to Note 15 to the consolidated financial statements contained in Item 8. Financial Statements and Supplementary Data and for additional information regarding the CareFusion acquisition, refer to Note 9 to the consolidated financial statements contained in Item 8. Financial Statements and Supplementary Data. 24

289 Table of Contents Debt-Related Activities Certain measures relating to our total debt were as follows: Total debt $ 11,551 $ 12,822 $ 3,971 Short-term debt as a percentage of total debt 8.7% 11.3% 5.1% Weighted average cost of total debt 3.6% 3.3% 3.7% Total debt as a percentage of total capital (A) 57.2% 59.4% 43.6% (A) Represents shareholders equity, net non-current deferred income tax liabilities, and debt. The ratio of short-term debt as a percentage of total debt at September 30, 2016 primarily reflected the reclassifications, from long-term debt to shortterm debt, of $500 million of 1.75% notes due on November 8, 2016 and $300 million of 1.450% notes due May 15, 2017, offset by the repayment of $750 million of floating rate notes, as previously discussed. The ratio of short-term debt as a percentage of total debt at September 30, 2015 reflected the reclassification, from long-term debt to short-term debt, of $750 million of floating rate notes due on June 15, The ratios of debt as a percentage of total capital at September 30, 2015 and 2014 also reflect adjustments to the consolidated balance sheet resulting from our adoption of revised presentation requirements relating to deferred taxes. Additional information regarding this adoption is provided in Note 2 to the consolidated financial statements contained in Item 8. Financial Statements and Supplementary Data. Cash and Short-term Investments At September 30, 2016, total worldwide cash and short-term investments were $1.568 billion, of which $966 million was held in jurisdictions outside of the United States. We regularly review the amount of cash and short-term investments held outside the United States and currently intend to use such amounts to fund our international operations and their growth initiatives. In addition, if these amounts were repatriated from foreign jurisdictions to the United States, there could be adverse tax consequences. Credit Facilities We have in place a commercial paper borrowing program which is available to meet our short-term financing needs, including working capital requirements. In February 2016, we increased the size of this program by $500 million so that it allows us to issue a maximum of $1.5 billion in notes. Borrowings outstanding under this program were $200 million at September 30, 2016, which reflected a net reduction of $500 million from our outstanding balance of commercial paper borrowings at September 30, 2015, as previously discussed. In January 2016, we replaced an existing $1 billion syndicated credit facility with a $1.5 billion syndicated credit facility that has an expiration date of January There were no borrowings outstanding under this credit facility at September 30, The credit facility, under which we may issue up to $100 million in letters of credit, provides backup support for our commercial paper program and can also be used for other general corporate purposes. It 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 billion. The credit facility includes a single financial covenant that requires BD to maintain an interest expense coverage ratio of not less than 5-to-1 for the most recent four consecutive fiscal quarters. We were in compliance with this covenant as of September 30, We also have informal lines of credit outside the United States. In November 2016, we announced that we commenced tender offers for certain of our senior unsecured notes. We expect to finance the tender offer through an issuance of senior notes, cash on hand and other sources of liquidity. Access to Capital and Credit Ratings Our ability to generate cash flow from operations, issue debt, enter into other financing arrangements and attract long-term capital on acceptable terms could be adversely affected in the event there was a material decline in the demand for our products, deterioration in our key financial ratios or credit ratings, or other significantly unfavorable changes in conditions. 25

290 Table of Contents BD s credit ratings at September 30, 2016 were as follows: Ratings: Standard & Poor s Moody s Senior Unsecured Debt BBB+ Baa2 Commercial Paper A-2 P-2 Outlook Stable Stable Subsequent to BD s completion of the CareFusion acquisition in 2015, Standard & Poor s Ratings Services, one of the major corporate debt rating organizations, downgraded BD s long-term debt and commercial paper ratings from A to BBB+ and from A-1 to A-2, respectively. Another major corporate debt rating organization, Moody s Investors Service, downgraded BD s long-term debt rating, from A3 to Baa2. There were no changes to BD's long-term debt and commercial paper ratings with either rating organization during BD s credit ratings remained investment grade after these downgrades and while such downgrades in our credit ratings may increase the costs associated with maintaining and borrowing under our existing credit arrangements, the downgrades do not affect our ability to draw on these credit facilities, nor do they result in an acceleration of the scheduled maturities of any outstanding debt. 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, 2016: Total to 2019 (Millions of dollars) 2020 to and Thereafter Short-term debt $ 801 $ 801 $ $ $ Long-term debt(a) 14, ,381 2,468 8,432 Operating leases Purchase obligations(b) 1, Unrecognized tax benefits(c) Total(D) $ 17,172 $ 2,125 $ 3,951 $ 2,622 $ 8,475 (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, 2016 of $457 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 2016 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 26

291 Table of Contents 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 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; thirdparty 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. For software and software-related products, we use the relative fair value method to allocate transaction consideration to each unit of accounting; whereby the evidence used in the determination of fair value estimates are based solely on vendor-specific objective evidence. To the extent that vendor specific objective evidence does not exist for delivered elements of the transaction, we apply the residual method. 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 Our accounting for sales-type leases is based upon certain assumptions including the economic life of our leased products and the fair value of our leased products, which is used to determine the interest rate implicit to the lease. These assumptions affect that amount of gross investment in the lease, unearned income, and the sales price that is recognized relative to each sales-type lease transaction. Based upon our anticipation of future technological advances of our products or that of our competitors, the economic life of our leased products is five years as this is the estimated period during which the leased product is expected to be economically usable, without limitation by the lease term. Additionally, five years represents the most frequent contractual lease term for our leased products. Our product configurations are customized for each customer s specifications, and as such, there is no significant aftermarket for our used equipment. Residual values, if any, are established at lease inception using estimates of the fair value of reclaimable component parts of the products at the end of the lease term. The fair value of our leased products is estimated on a quarterly basis, based upon transacted cash sales prices during the preceding 12-month period, and represents normal selling price, reflecting any volume or trade discounts that may apply. Because our products are sold as part of customized systems to a diverse range of customers, many of which are affiliated with a group purchasing organization or integrated delivery network, there is a wide range of negotiated cash selling prices for our products. Accordingly, we stratify our cash selling transactions based on product configuration and customer class to determine a best estimate of fair value for each product specific, within determined customer classes. Based upon this stratification, we calculate the weighted average selling price of each configured product using the interquartile range methodology and remove outliers from the population of normal cash selling prices, which narrows the range of selling prices within each stratified customer class. The resulting weighted average selling price is the single point estimate of fair value that we use as the normal selling price and this fair value estimate is used to determine the implicit interest rate for each product subject to a sales-type lease arrangement. In certain instances, we do not have sufficient corresponding historical cash selling transactions to support fair values of specific combinations of product configurations and customer classes. In these instances, fair value is estimated by applying the average discount percentage given to the respective customer class, over the trailing 12 months, to the list price of the products whose fair value was not determined using the interquartile range methodology described above. The resulting fair value(s) is then used to derive the implicit rate of the lease. The interest rate implicit to the lease is then used to determine the amount of revenue recognized at the inception of the lease and the revenue recognized over the life of the lease. Our net investment in sales-type leases primarily arises from the leasing of dispensing equipment and as such, the methodology for determining the relating allowance for credit losses is based on the collective population and is not stratified 27

292 Table of Contents by class or portfolio segment. The allowance for credit losses is based on historical experience loss rates as well as on management s judgments regarding the potential impact of anticipated changes in business practices, market dynamics, and economic conditions. These assumptions are inherently subjective and it is possible that we will experience actual credit losses that are different from our current estimates. 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 nonsoftware 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 unit. Our standalone software application sales and any related post-contract support related to these sales are accounted for under the software industryspecific 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 and we aggregate components within an operating segment that have similar economic characteristics. Potential impairment of goodwill is identified by comparing the fair value of a reporting unit with its carrying value. Our annual goodwill impairment test performed on July 1, 2016 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. Income Taxes 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. 28

293 Table of Contents BD has reviewed its needs in the U.S. for possible repatriation of undistributed earnings of its foreign subsidiaries and, with exception for certain countries, continues to invest foreign subsidiaries earnings outside of the U.S. to fund foreign investments or meet foreign working capital and property, plant and equipment expenditure needs. Deferred taxes are not provided on undistributed earnings of foreign subsidiaries that are indefinitely reinvested. At September 30, 2016, the cumulative amount of such undistributed earnings indefinitely reinvested outside the United States was $8.7 billion. The determination of the amount of the unrecognized deferred tax liability related to the undistributed earnings is not practicable because of the complexities associated with its hypothetical calculation. 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. 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, excess 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 3.43% for 2017, 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 2017, 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 2017 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 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 $4 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 $3 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 29

294 Table of Contents 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. 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 (for example, new forms of drug delivery) by our current or future competitors, increased pricing pressure due to the impact of low-cost manufacturers as certain competitors have established manufacturing sites or have contracted with suppliers in low-cost manufacturing locations as a means to lower their costs, patents attained by competitors (particularly as patents on our products expire), and new entrants into our markets. 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 the 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 Patient Protection and Affordable Care Act in the United States, which implemented an excise tax on U.S. sales of certain medical devices (which has been suspended until January 1, 2018), and which could result in reduced demand for our products, increased pricing pressures or otherwise adversely affect our business. Future healthcare reform in the United States and other countries in which we do business that may involve changes in government pricing and reimbursement policies or other cost containment reforms. Changes in domestic and foreign healthcare industry 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. 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 30

295 Table of Contents 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. 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 the FDA or other regulatory agencies or changes in the regulatory process may also delay product launches and increase development costs. The impact of business combinations, 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 acquire or form strategic business alliances with local companies and 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. Political conditions in international markets, including civil unrest, terrorist activity, governmental changes, trade barriers, restrictions on the ability to transfer capital across borders and governmental expropriation of assets. This includes the possible impact of the June 2016 advisory referendum by British voters to exit the European Union, which has created uncertainties affecting 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 adverse to BD, including antitrust, product liability, environmental 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 reregister 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 recalls, regulatory action on the part of the U.S. Food and Drug Administration (FDA) or foreign counterparts, declining sales and product liability claims, particularly in light of the current regulatory environment, in which there has been increased enforcement activity by the FDA. 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. Risks relating to our acquisition of CareFusion, including our ability to successfully combine and integrate the CareFusion 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. 31

296 Table of Contents 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. 32

297 Table of Contents Item 8. Financial Statements and Supplementary Data. Management s Responsibilities Reports of Management 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 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). Based on this assessment and those criteria, management concluded that internal control over financial reporting was effective as of September 30, 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 /s/ Christopher Reidy /s/ John Gallagher Vincent A. Forlenza Christopher Reidy John Gallagher Chairman, Chief Executive Officer and President Executive Vice President, Chief Financial Officer and Chief Administrative Officer Senior Vice President, Corporate Finance, Controller and Treasurer 33

298 Table of Contents To the Shareholders and Board of Directors of Becton, Dickinson and Company Report of Independent Registered Public Accounting Firm We have audited the accompanying consolidated balance sheets of Becton, Dickinson and Company as of September 30, 2016 and 2015, and the related consolidated statements of income, comprehensive income and cash flows for each of the three years in the period ended September 30, These financial statements are the responsibility of the Company s management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Becton, Dickinson and Company at September 30, 2016 and 2015, and the consolidated results of its operations and its cash flows for each of the three years in the period ended September 30, 2016, 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), Becton, Dickinson and Company s internal control over financial reporting as of September 30, 2016, 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 23, 2016 expressed an unqualified opinion thereon. New York, New York November 23, 2016 /s/ ERNST & YOUNG LLP

299 Table of Contents To the Shareholders and Board of Directors of Becton, Dickinson and Company Report of Independent Registered Public Accounting Firm We have audited Becton, Dickinson and Company s internal control over financial reporting as of September 30, 2016, 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). Becton, Dickinson and 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 conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). 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. 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. In our opinion, Becton, Dickinson and Company maintained, in all material respects, effective internal control over financial reporting as of September 30, 2016, based on the COSO criteria. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of Becton, Dickinson and Company as of September 30, 2016 and 2015, and the related consolidated statements of income, comprehensive income and cash flows for each of the three years in the period ended September 30, 2016 of Becton, Dickinson and Company, and our report dated November 23, 2016 expressed an unqualified opinion thereon. New York, New York November 23, 2016 /s/ ERNST & YOUNG LLP

300 Table of Contents Consolidated Statements of Income Becton, Dickinson and Company Years Ended September 30 Millions of dollars, except per share amounts Revenues $ 12,483 $ 10,282 $ 8,446 Cost of products sold 6,492 5,587 4,145 Selling and administrative expense 3,005 2,563 2,145 Research and development expense Acquisitions and other restructurings Total Operating Costs and Expenses 11,053 9,207 6,840 Operating Income 1,430 1,074 1,606 Interest expense (388) (371) (135) Interest income Other income, net Income Before Income Taxes 1, ,522 Income tax provision Net Income $ 976 $ 695 $ 1,185 Basic Earnings per Share $ 4.59 $ 3.43 $ 6.13 Diluted Earnings per Share $ 4.49 $ 3.35 $ 5.99 Amounts may not add due to rounding. See notes to consolidated financial statements. 36

301 Table of Contents Consolidated Statements of Comprehensive Income Becton, Dickinson and Company Years Ended September 30 Millions of dollars Net Income $ 976 $ 695 $ 1,185 Other Comprehensive Income (Loss), Net of Tax Foreign currency translation adjustments (50) (692) (344) Defined benefit pension and postretirement plans (141) (36) (147) Net unrealized gains (losses) on cash flow hedges, net of reclassifications 1 (9) 5 Other Comprehensive (Loss) Income, Net of Tax (191) (737) (486) Comprehensive Income (Loss) $ 786 $ (42) $ 699 Amounts may not add due to rounding. See notes to consolidated financial statements. 37

302 Table of Contents Consolidated Balance Sheets Becton, Dickinson and Company September 30 Millions of dollars, except per share amounts and numbers of shares Assets Current Assets Cash and equivalents $ 1,541 $ 1,424 Short-term investments Trade receivables, net 1,618 1,618 Current portion of net investment in sales-type leases Inventories 1,719 1,959 Assets held for sale 642 Prepaid expenses and other Total Current Assets 6,367 5,659 Property, Plant and Equipment, Net 3,901 4,060 Goodwill 7,419 7,537 Customer Relationships, Net 3,022 3,250 Developed Technology, Net 2,655 2,977 Other Intangibles, Net Capitalized Software, Net Net Investment in Sales-Type Leases, Less Current Portion 796 1,118 Other Assets Total Assets $ 25,586 $ 26,478 Liabilities and Shareholders Equity Current Liabilities Short-term debt $ 1,001 $ 1,452 Accounts payable Accrued expenses 1,575 1,624 Salaries, wages and related items Income taxes Liabilities held for sale 189 Total Current Liabilities 4,400 4,381 Long-Term Debt 10,550 11,370 Long-Term Employee Benefit Obligations 1,319 1,133 Deferred Income Taxes and Other 1,684 2,430 Commitments and Contingencies (See Note 5) Shareholders Equity Common stock $1 par value: authorized 640,000,000 shares; issued 332,662,160 shares in 2016 and Capital in excess of par value 4,693 4,475 Retained earnings 12,727 12,314 Deferred compensation Common stock in treasury at cost 119,370,934 shares in 2016 and 121,966,516 shares in (8,212) (8,239) Accumulated other comprehensive loss (1,929) (1,738) Total Shareholders Equity 7,633 7,164 Total Liabilities and Shareholders Equity $ 25,586 $ 26,478

303 Amounts may not add due to rounding. See notes to consolidated financial statements. 38

304 Table of Contents Consolidated Statements of Cash Flows Becton, Dickinson and Company Years Ended September 30 Millions of dollars Operating Activities Net income $ 976 $ 695 $ 1,185 Adjustments to net income to derive net cash provided by operating activities: Depreciation and amortization 1, Share-based compensation Deferred income taxes (426) (336) (32) Change in operating assets and liabilities: Trade receivables, net (128) (2) (7) Net investment in sales-type leases Inventories (189) Prepaid expenses and other 39 (97) (120) Accounts payable, income taxes and other liabilities Pension obligation (32) 28 (29) Other, net Net Cash Provided by Operating Activities 2,559 1,730 1,746 Investing Activities Capital expenditures (693) (596) (592) Capitalized software (25) (37) (61) (Purchases of) proceeds from investments, net (1) 840 (171) Acquisitions of businesses, net of cash acquired (8,414) (40) Divestitures of businesses 158 Other, net (108) (110) (84) Net Cash Used for Investing Activities (669) (8,318) (948) Financing Activities Change in short-term debt (500) 497 (4) Proceeds from long-term debt 6,164 Payments of debt (752) (6) Repurchase of common stock (400) Issuance of common stock and other, net (32) (27) (9) Excess tax benefit from payments under share-based compensation plans Dividends paid (562) (485) (421) Net Cash (Used for) Provided by Financing Activities (1,761) 6,190 (807) Effect of exchange rate changes on cash and equivalents (12) (38) (20) Net Increase (Decrease) in Cash and Equivalents 117 (436) (29) Opening Cash and Equivalents 1,424 1,861 1,890 Closing Cash and Equivalents $ 1,541 $ 1,424 $ 1,861

305 Amounts may not add due to rounding. See notes to consolidated financial statements. 39

306 Table of Contents Notes to Consolidated Financial Statements Becton, Dickinson and Company Millions of dollars, except per share amounts and numbers of shares 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. Short-Term Investments Short-term investments consist of time deposits with maturities greater than three months and less than one year when purchased. Trade and Financing 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 Company's portfolio of financing receivables arises from the leasing of dispensing equipment. 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. Allowances for credit losses relating to financing receivables are also based on historical experience loss rates and the potential impact of anticipated changes in business practices, market dynamics, and economic conditions. Amounts are written off against the allowances for doubtful accounts or credit losses 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 12 years for leasehold improvements. Depreciation and amortization expense was $452 million, $417 million and $369 million in fiscal years 2016, 2015 and 2014, respectively. 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 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, and components within an operating segment that have similar economic characteristics are aggregated. Potential impairment of goodwill is 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, 2016 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. Certain trademarks that are considered to generate cash flows indefinitely are also considered to be indefinite-lived intangible assets and these assets are also reviewed at least annually for impairment. 40

307 Table of Contents Notes to Consolidated Financial Statements (Continued) Becton, Dickinson and Company 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. 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. Finitelived 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. Capitalized Software Capitalized software, including costs for software developed or obtained for internal use, is stated at cost, less accumulated amortization. Amortization expense is principally provided on the straight-line basis over estimated useful lives, which do not exceed 10 years. Amortization expense related to capitalized software was $46 million, $65 million and $41 million for 2016, 2015 and 2014, respectively. In the fourth quarter of fiscal year 2015, the Company initiated a plan to transition certain elements of its global information technology function from Company-owned assets to an outsourced, cloud-based model. The Company recorded impairment charges in the fourth quarter of fiscal year 2015 for assets held for sale as a result of this plan. In the fourth quarter of fiscal year 2016, the Company expanded the scope of this plan to include the transition of certain business information systems assets to a third-party and as a result, the Company recorded a $214 million charge to impair these capitalized internaluse software assets held for sale. Additional disclosures regarding fair value measurement in connection with these charges are provided in Note 14. 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 Recognition 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 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 training 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 installation and training are recognized. For equipment lease revenue, transactions are evaluated and classified as either operating leases or sales-type leases. Lease income for products sold under sales-type leases is recognized as revenue upon the completion of installation activities in the amount of the present value of the minimum lease payments. The financing component of sales-type leases is recorded as revenue over the lease term. For products sold under operating leases, 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 41

308 Table of Contents Notes to Consolidated Financial Statements (Continued) Becton, Dickinson and Company 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 $401 million, $351 million and $299 million in 2016, 2015 and 2014, 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. From time to time, derivative financial instruments are utilized by the Company in the management of its foreign currency, interest rate and commodity price exposures. The Company periodically purchases 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. The Company also periodically utilizes interest rate swaps to maintain a balance between fixed and floating rate instruments. Additionally, the Company periodically manages price risks associated with resin purchase costs through commodity derivative forward contracts. The Company does not enter into derivative financial instruments for trading or speculative purposes. Any deferred gains or losses associated with derivative instruments are recognized in income in the period in which the underlying hedged transaction is recognized. In the event a designated hedged item is sold, extinguished or matures prior to the termination of the related derivative instrument, such instrument would be closed and the resultant gain or loss would be recognized in income. Income Taxes United States income taxes are not provided on undistributed earnings of foreign subsidiaries where such undistributed earnings are indefinitely reinvested outside the United States. Deferred taxes are provided for earnings of foreign subsidiaries when those earnings are not considered indefinitely reinvested. Income taxes are provided and tax credits are recognized based on tax laws enacted at the dates of the financial statements. 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. Earnings per Share Basic earnings per share are computed based on 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. 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. 42

309 Table of Contents Share-Based Compensation Notes to Consolidated Financial Statements (Continued) Becton, Dickinson and Company The Company recognizes the fair value of share-based compensation in net income. Compensation expense is recognized on a straight-line basis over the requisite service period, which is generally the vesting period. Note 2 Accounting Changes New Accounting Principle Adopted In November 2015, the Financial Accounting Standards Board ("FASB") issued amended guidance that requires entities to present deferred tax assets and liabilities as noncurrent on the balance sheet instead of separating deferred taxes into current and noncurrent amounts. Early adoption is permitted under the amendments. The Company has retrospectively adopted the guidance effective October 1, 2015 and as such, the consolidated balance sheets as of September 30, 2015 and 2014 reflect the reclassifications of current deferred tax assets of $387 million and $355 million, respectively, as noncurrent amounts, after giving effect to jurisdictional netting requirements. New Accounting Principles Not Yet Adopted In March 2016, the FASB issued guidance which amends certain aspects of the accounting for share-based compensation awards to employees. The Company elected to early adopt the amended guidance on October 1, Upon settlement of awards over the course of fiscal year 2017 and in accordance with the amended requirements relating to the timing of recognition and classification of award-related income tax effects, the Company expects to record a tax benefit of $55 million to $65 million, depending upon the Company's stock price, to Income tax provision within its consolidated statement of income. Such benefits were previously recorded within Capital in excess of par value on the Company's consolidated balance sheet. Because these excess tax benefits will no longer be recorded in Capital in excess of par value, the benefits will be excluded from the Company's computation of diluted earnings per share for the first quarter of fiscal year 2017, which will increase weighted-average common shares outstanding by approximately 1 million shares. Also per the amended guidance, the Company's prospective classification of this excess tax benefit on its consolidated statement of cash flows will be within Net Cash Provided by Operating Activities, rather than Net Cash (Used for) Provided by Financing Activities. The amended guidance allow entities to account for award forfeitures as they occur; however, the Company has elected to continue its determination of compensation cost recognized in each period based upon an estimate of expected forfeitures. 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 is currently evaluating the impact that this new lease accounting standard will have on its consolidated financial statements upon its adoption of the standard on October 1, In May 2014, the FASB issued a new revenue recognition standard. Under this standard, revenue will be recognized upon the transfer of goods or services to customers and the amount of revenue recognized will reflect the consideration to which a reporting entity expects to be entitled in exchange for those goods or services. The Company is currently evaluating the impact that this new revenue recognition standard will have on its consolidated financial statements and the Company currently intends to adopt the standard on October 1, 2018, as is allowed under the FASB's July 2015 amendment which deferred the effective date for this standard. In April 2014, the FASB issued amended requirements that require debt issuance costs, related to a recognized debt liability, to be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability. The Company will apply the amended presentation requirements on October 1,

310 Table of Contents Notes to Consolidated Financial Statements (Continued) Becton, Dickinson and Company Note 3 Shareholders Equity Changes in certain components of shareholders equity were as follows: (Millions of dollars) Common Stock Issued at Par Value Capital in Excess of Par Value Retained Earnings Deferred Compensation Treasury Stock Shares (in thousands) Amount Balance at September 30, 2013 $ 333 $ 2,068 $ 11,342 $ 19 (138,663) $ (8,204) Net income 1,185 Cash dividends: Common ($2.18 per share) (421) Common stock issued for: Share-based compensation and other plans, net 19 1,431 3 Share-based compensation 111 Common stock held in trusts, net 36 Repurchase of common stock (3,574) (400) Balance at September 30, 2014 $ 333 $ 2,198 $ 12,105 $ 19 (140,770) $ (8,601) Net income 695 Cash dividends: Common ($2.40 per share) (485) Common stock issued for: Share-based compensation and other plans, net 30 (2) 1 2,839 (6) Acquisitions 2,083 15, Share-based compensation 164 Common stock held in trusts, net 5 Balance at September 30, 2015 $ 333 $ 4,475 $ 12,314 $ 20 (121,967) $ (8,239) Net income 976 Cash dividends: Common ($2.64 per share) (562) Common stock issued for: Share-based compensation and other plans, net 27 (1) 2 2, Share-based compensation 191 Common stock held in trusts, net (11) Balance at September 30, 2016 $ 333 $ 4,693 $ 12,727 $ 22 (119,371) $ (8,212) 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. 44

311 Table of Contents Notes to Consolidated Financial Statements (Continued) Becton, Dickinson and Company The components and changes of Accumulated other comprehensive income (loss) were as follows: (Millions of dollars) Total Foreign Currency Translation Benefit Plans Cash Flow Hedges Balance at September 30, 2013 $ (516) $ 74 $ (558) $ (31) Other comprehensive loss before reclassifications, net of taxes (524) (344) (180) Amounts reclassified into income, net of taxes Balance at September 30, 2014 $ (1,001) $ (270) $ (705) $ (26) Other comprehensive loss before reclassifications, net of taxes (787) (692) (80) (16) Amounts reclassified into income, net of taxes Balance at September 30, 2015 $ (1,738) $ (961) $ (741) $ (36) Other comprehensive loss before reclassifications, net of taxes (251) (50) (190) (11) Amounts reclassified into income, net of taxes Balance at September 30, 2016 $ (1,929) $ (1,011) $ (883) $ (35) The tax impacts for amounts recognized in other comprehensive income before reclassifications were as follows: (Millions of dollars) Benefit Plans Income tax benefit for net losses recorded in other comprehensive income $ 79 $ 47 $ 86 Cash Flow Hedges Income tax benefit for net losses recorded in other comprehensive income $ 7 $ 10 $ Reclassifications out of Accumulated other comprehensive income (loss) were as follows: (Millions of dollars) Benefit Plans Reclassification of credits and losses into income $ 73 $ 67 $ 51 Associated income tax benefits (25) (23) (17) Amounts reclassified into income, net of taxes (A) $ 48 $ 44 $ 33 Cash Flow Hedges Reclassification of losses into income $ 19 $ 10 $ 8 Associated income tax benefits (7) (4) (3) Amounts reclassified into income, net of taxes (B) $ 12 $ 6 $ 5 (A) (B) These reclassifications were not recorded into income in their entirety and were included in the computation of net periodic benefit plan costs. Additional details regarding the Company's benefit plans are provided in Note 8. These reclassifications were recorded to Interest expense and Cost of products sold. Additional details regarding the Company's cash flow hedges are provided in Note

312 Table of Contents Notes to Consolidated Financial Statements (Continued) Becton, Dickinson and Company On August 25, 2016, in anticipation of proceeds to be received from the divestiture of the Respiratory Solutions business in the first quarter of fiscal year 2017, the Company entered into an accelerated share repurchase ("ASR") agreement. Subsequent to the end of the Company's fiscal year 2016 and as per the terms of the ASR agreement, the Company received approximately 1.3 million shares of its common stock, which was recorded as a $220 million increase to Common stock in treasury. 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: Average common shares outstanding 212, , ,299 Dilutive share equivalents from share-based plans 4,834 4,972 4,410 Average common and common equivalent shares outstanding assuming dilution 217, , ,709 Upon closing the acquisition of CareFusion Corporation ( CareFusion ) on March 17, 2015, the Company issued approximately 15.9 million of its common shares as part of the purchase consideration. Additional disclosures regarding this acquisition are provided in Note 9. Options to purchase shares of common stock are excluded from the calculation of diluted earnings per share when their inclusion would have an antidilutive effect on the calculation. For the years ended September 30, 2016, 2015 and 2014 there were no options to purchase shares of common stock which were excluded from the diluted earnings per share calculation. Note 5 Commitments and Contingencies Commitments Rental expense for all operating leases amounted to $112 million in 2016, $89 million in 2015 and $71 million in Future minimum rental commitments on non-cancelable leases are as follows: 2017 $74 million; 2018 $55 million; 2019 $48 million; 2020 $38 million; 2021 $30 million and an aggregate of $33 million thereafter. As of September 30, 2016, the Company has certain future purchase commitments aggregating to approximately $1.413 billion, which will be expended over the next several years. Contingencies Given the uncertain nature of litigation generally, the Company is not able in all cases to estimate the amount or range of loss that could result from an unfavorable outcome of the litigation 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). 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. 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. 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, and stayed the non-patent claims during the pendency of the patent claims at the trial court level. On April 1, 2008, RTI filed a complaint against BD under the caption Retractable Technologies, Inc. and Thomas J. Shaw v. Becton Dickinson and Company (Civil Action No. 2:08-cv-141, U.S. District Court, Eastern District of Texas) alleging that the BD Integra syringes infringe another patent licensed exclusively to 46

313 Table of Contents Notes to Consolidated Financial Statements (Continued) Becton, Dickinson and Company RTI. On August 29, 2008, the court ordered the consolidation of the patent cases. RTI was subsequently awarded $5 million in damages at a jury trial with respect to the patent claims, which has been paid, and the patent cases are now concluded. 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 will be trebled under the antitrust statute). The jury s verdict rejected RTI s monopolization claims in the markets for safety syringes, conventional syringes and safety IV catheters; its attempted monopolization claims in the markets for conventional syringes and safety IV catheters; and its claims for contractual restraint of trade and exclusive dealing in the markets for safety syringes, conventional syringes and safety IV catheters. In connection with the verdict, the Company recorded a pre-tax charge of approximately $341 million in the fourth quarter of fiscal year With respect to RTI's requested injunction relief, in November 2014, the Court granted RTI s request that BD be ordered to issue certain corrective statements regarding its advertising and enjoined from making certain advertising claims. The Court denied RTI s request for injunctive relief relating to BD s contracting practices and BD s safety syringe advertising, finding that RTI failed to prove that BD s contracting practices violated the antitrust laws or that BD s safety syringe advertising is false. On January 14, 2015, the Court granted in part and denied in part BD s motion for a stay of the injunction. The Court held that, pending appeal, BD would not be required to send the corrective advertising notices to end-user customers, but only to employees, distributors and Group Purchasing Organizations. On January 15, 2015, the Court entered its Final Judgment in the case ordering that RTI recovers $341 million for its attempted monopolization claim and $12 million for attorneys fees, and awarded pre and post-judgment interest and costs. On February 3, 2015, the Court of Appeals for the Fifth Circuit denied BD s motion for a stay of the injunction pending the final appeal, and BD thereafter complied with the Court s order. On April 23, 2015, the Court granted BD s motion to eliminate the award of pre-judgment interest, and entered a new Final Judgment. BD has filed its appeal to the Court of Appeals challenging the entirety of the Final Judgment. On July 17, 2015, a class action complaint was filed against the Company in the U.S. District Court for the Southern District of Georgia. The plaintiffs, Glynn-Brunswick Hospital Authority, trading as Southeast Georgia Health System, and Southeast Georgia Health System, Inc., seek to represent a class of acute care purchasers of BD syringes and IV catheters. The complaint alleges that BD monopolized the markets for syringes and IV catheters through contracts, theft of technology, false advertising, acquisitions, and other conduct. The complaint seeks treble damages but does not specify the amount of alleged damages. The Company filed a motion to dismiss the complaint which was granted on January 29, On September 23, 2016, the court denied plaintiffs motion to alter or amend the judgment to allow plaintiffs to file an amended complaint, and plaintiffs have appealed that decision to the Eleventh Circuit Court of Appeals. The Company believes that it has meritorious defenses to each of the above-mentioned suits pending against the Company and is engaged in a vigorous defense of each of these matters. 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 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 cleanup costs. Note 6 Segment Data The Company s organizational structure is based upon two principal business segments: BD Medical ( Medical ) and BD Life Sciences ( Life Sciences ). The Company s two principal business segments are strategic businesses that are managed separately because each one develops, manufactures and markets distinct products and services. The Medical segment produces a broad array of medical technologies and devices that are used to help improve healthcare delivery in a wide range of settings. The principal product lines in the Medical segment include syringes, pen needles and IV sets for the injection or infusion of insulin and other drugs used in the treatment of diabetes; needles, syringes and intravenous catheters for medication delivery (including safety-engineered and auto-disable devices); prefilled IV flush syringes; regional anesthesia needles and trays; sharps disposal containers; closed-system transfer devices; skin antiseptic products; surgical and laproscopic instrumentation; intravenous medication safety and infusion therapy delivery systems, including infusion pumps and dedicated disposables; medication compounding workflow systems; automated medication 47

314 Table of Contents Notes to Consolidated Financial Statements (Continued) Becton, Dickinson and Company dispensing and supply management systems; prefillable drug delivery systems provided to pharmaceutical companies and sold to end-users as drug/device combinations. The Life Sciences segment produces products for the safe collection and transport of diagnostics specimens, as well as instruments and reagent systems to detect a broad range of infectious diseases, healthcare-associated infections ( HAIs ) and cancers. The segment also 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. The principal products and services in the Life Sciences segment include integrated systems for specimen collection; safety-engineered blood collection products and systems; automated blood culturing and tuberculosis culturing systems; molecular testing systems for infectious diseases and women s health; microorganism identification and drug susceptibility systems; liquid-based cytology systems for cervical cancer screening; rapid diagnostic assays; microbiology laboratory automation; plated media; fluorescence-activated cell sorters and analyzers; monoclonal antibodies and kits for performing cell analysis; reagent systems for life science research; molecular indexing and next-generation sequencing sample preparation for genomics research; clinical oncology, immunological (HIV) and transplantation diagnostic/monitoring reagents and analyzers; and cell culture media supplements for biopharmaceutical manufacturing. The Company evaluates performance of its business segments and allocates resources to them primarily based upon operating income. Segment operating income represents revenues reduced by product costs and operating expenses. 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. (Millions of dollars) Revenues (A) Medical $ 8,654 $ 6,460 $ 4,573 Life Sciences 3,829 3,822 3,872 Total Revenues $ 12,483 $ 10,282 $ 8,446 Income Before Income Taxes Medical (B) $ 2,052 $ 1,530 $ 1,291 Life Sciences Total Segment Operating Income 2,845 2,368 2,152 Acquisitions and other restructurings (728) (426) Net interest expense (367) (356) (89) Other unallocated items (C) (676) (847) (541) Income Before Income Taxes $ 1,074 $ 739 $ 1,522 Segment Assets Medical $ 19,154 $ 20,055 $ 4,668 Life Sciences 3,848 3,932 3,783 Total Segment Assets 23,002 23,987 8,451 Corporate and All Other (D) 2,584 2,491 3,933 Total Assets $ 25,586 $ 26,478 $ 12,384 Capital Expenditures Medical $ 482 $ 414 $ 420 Life Sciences Corporate and All Other Total Capital Expenditures $ 693 $ 596 $ 592 Depreciation and Amortization Medical $ 857 $ 619 $ 293 Life Sciences Corporate and All Other Total Depreciation and Amortization $ 1,114 $ 891 $

315 Table of Contents (A) Intersegment revenues are not material. Notes to Consolidated Financial Statements (Continued) Becton, Dickinson and Company (B) Reflected non-cash amortization expense and depreciation expense relating to the identifiable intangible assets and fixed assets acquired in the CareFusion transaction of $492 million and $284 million in 2016 and 2015, respectively. Additional disclosures regarding this acquisition are provided in Note 9. (C) Primarily comprised of foreign exchange, corporate expenses, and share-based compensation expense. Results in 2015 reflected $293 million in recognition of the fair value step-up adjustment recorded relative to CareFusion s inventory on the acquisition date. (D) 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 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) Revenues United States $ 6,893 $ 5,069 $ 3,417 Europe 3,049 2,434 2,383 Greater Asia 1,692 1,545 1,437 Other 849 1,234 1,210 Long-Lived Assets $ 12,483 $ 10,282 $ 8,446 United States $ 14,075 $ 15,513 $ 3,126 Europe 3,747 3,908 1,995 Greater Asia Other Corporate Note 7 Share-Based Compensation $ 19,220 $ 20,819 $ 6,609 The Company grants share-based awards under the 2004 Employee and Director Equity-Based Compensation Plan ( 2004 Plan ), which provides longterm incentive compensation to employees and directors consisting of: stock appreciation rights ( SARs ), stock options, 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) Cost of products sold $ 29 $ 23 $ 23 Selling and administrative expense Research and development expense Acquisitions and other restructurings $ 196 $ 166 $ 113 The associated income tax benefit recognized was $69 million, $59 million and $40 million in fiscal years 2016, 2015 and 2014, respectively. In 2015, certain pre-acquisition equity awards of CareFusion were converted into BD restricted stock awards or BD stock options with accelerated vesting terms at the acquisition date. In addition, as an incentive to encourage post-acquisition 49

316 Table of Contents Notes to Consolidated Financial Statements (Continued) Becton, Dickinson and Company employee retention, certain pre-acquisition equity awards of CareFusion were converted into either BD restricted stock awards or BD stock options, as applicable, as of the acquisition date, with substantially the same terms and conditions as were applicable under such CareFusion awards immediately prior to the acquisition date. The compensation expense 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: Risk-free interest rate 2.17% 2.20% 2.31% Expected volatility 19.0% 19.0% 19.0% Expected dividend yield 1.76% 1.78% 2.00% Expected life 7.6 years 7.6 years 7.8 years Fair value derived $27.69 $24.82 $19.90 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 total intrinsic value of SARs exercised during 2016, 2015 and 2014 was $148 million, $96 million and $69 million, respectively. The Company issued 919 thousand shares during 2016 to satisfy the SARs exercised. The actual tax benefit realized during 2016, 2015 and 2014 for tax deductions from SAR exercises totaled $52 million, $34 million and $26 million, respectively. The total fair value of SARs vested during 2016, 2015 and 2014 was $24 million, $22 million and $25 million, respectively. A summary of SARs outstanding as of September 30, 2016 and changes during the year then ended is as follows: SARs (in thousands) Weighted Average Exercise Price Balance at October 1 7,264 $ Granted 1, Exercised (1,740) Forfeited, canceled or expired (158) Weighted Average Remaining Contractual Term (Years) Aggregate Intrinsic Value (Millions of dollars) Balance at September 30 7,027 $ $ 533 Vested and expected to vest at September 30 6,743 $ $ 520 Exercisable at September 30 4,192 $ $ 403 Stock Options The Company has not granted stock options since As previously discussed, certain pre-acquisition equity awards of CareFusion were converted on March 17, 2015 into BD stock options with accelerated vesting terms. A summary of stock options outstanding as of September 30, 2016 and changes during the year then ended is as follows: 50

317 Table of Contents Notes to Consolidated Financial Statements (Continued) Becton, Dickinson and Company Stock Options (in thousands) Weighted Average Exercise Price Balance at October 1 (A) 1,139 $ Exercised (632) Forfeited, canceled or expired (12) Weighted Average Remaining Contractual Term (Years) Aggregate Intrinsic Value (Millions of dollars) Balance at September $ $ 49 Vested at September $ $ 49 Exercisable at September $ $ 46 (A) Represents options granted upon the conversion of pre-acquisition equity awards of CareFusion, as previously discussed. Cash received from the exercising of stock options in 2016, 2015 and 2014 was $50 million, $75 million and $17 million, respectively. The actual tax benefit realized for tax deductions from stock option exercises totaled $17 million, $20 million and $7 million, respectively. The total intrinsic value of stock options exercised during the years 2016, 2015 and 2014 was $51 million, $52 million and $21 million, respectively. The total fair value of stock options vested during 2016 and 2015 was $11 million and $59 million, respectively. No stock options vested during Performance-Based 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 preestablished targets over a three-year performance period. The performance measures for fiscal years 2016, 2015 and 2014 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. A summary of performance-based restricted stock units outstanding as of September 30, 2016 and changes during the year then ended is as follows: Stock Units (in thousands) Weighted Average Grant Date Fair Value (A) Balance at October 1 1,139 $ Granted Distributed (193) Forfeited or canceled (340) Balance at September 30(B) 1,112 $ Expected to vest at September 30(C) 705 $ (A) Reflects an increase in fair value which resulted from a modification of performance conditions approved during the first quarter of (B) Based on 200% of target payout. (C) Net of expected forfeited units and units in excess of the expected performance payout of 77 thousand and 329 thousand shares, respectively. The weighted average grant date fair value of performance-based restricted stock units granted during the years 2015 and 2014, based upon the modification of performance conditions noted above, was $ and $133.09, respectively. The total fair value of performance-based restricted stock units vested during 2016, 2015 and 2014 was $22 million, $16 million and $10 51

318 Table of Contents Notes to Consolidated Financial Statements (Continued) Becton, Dickinson and Company million, respectively. At September 30, 2016, the weighted average remaining vesting term of performance-based restricted stock units is 1.27 years. Time-Vested Restricted Stock Units 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 in the case of certain key executives 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 time-vested restricted stock units outstanding as of September 30, 2016 and changes during the year then ended is as follows: Stock Units (in thousands) Weighted Average Grant Date Fair Value Balance at October 1 3,067 $ Granted Distributed (879) Forfeited or canceled (549) Balance at September 30 2,584 $ Expected to vest at September 30 2,414 $ The weighted average grant date fair value of time-vested restricted stock units granted during the years 2015 and 2014 was $ and $102.74, respectively. The total fair value of time-vested restricted stock units vested during 2016, 2015 and 2014 was $114 million, $181 million and $45 million, respectively. At September 30, 2016, the weighted average remaining vesting term of the time-vested restricted stock units is 1 year. The amount of unrecognized compensation expense for all non-vested share-based awards as of September 30, 2016, is approximately $182 million, which is expected to be recognized over a weighted-average remaining life of approximately 1.93 years. Included in the unrecognized compensation expense is $9 million associated with the CareFusion replacement awards previously described. As of September 30, 2016, there were approximately 597 thousand of such replacement awards outstanding. At September 30, 2016, 10.6 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, 2016, the Company has sufficient shares held in treasury to satisfy these payments. Other Stock Plans The Company has a Stock Award Plan, which allows for grants of common shares to certain key employees. Distribution of 25% or more of each award is deferred until after retirement or involuntary termination, upon which the deferred portion of the award is distributable in five equal annual installments. The balance of the award is distributable over five years from the grant date, subject to certain conditions. In February 2004, this plan was terminated with respect to future grants upon the adoption of the 2004 Plan. At September 30, 2016 and 2015, awards for 43 thousand and 50 thousand shares, respectively, were outstanding. The Company has a Directors Deferral Plan, which provides a means to defer director compensation, from time to time, on a deferred stock or cash basis. As of September 30, 2016, 121 thousand shares were held in trust, of which three thousand shares represented Directors compensation in 2016, in accordance with the provisions of the plan. Under this plan, which is unfunded, directors have an unsecured contractual commitment from the Company. The Company also has a Deferred Compensation Plan that allows certain highly-compensated employees, including executive officers, to defer salary, annual incentive awards and certain equity-based compensation. As of September 30, 2016, 354 thousand shares were issuable under this plan. 52

319 Table of Contents Notes to Consolidated Financial Statements (Continued) Becton, Dickinson and Company Note 8 Benefit Plans The Company has defined benefit pension plans covering certain employees in the United States and certain foreign locations. The Company also provides certain postretirement healthcare and life insurance benefits to qualifying domestic retirees. Other postretirement benefit plans in foreign countries are not material. The measurement date used for the Company s employee benefit plans is September 30. Effective April 1, 2014, the Company replaced its current post-65 group medical coverage with a new approach for retirees age 65 and older and their eligible dependents to access post-65 retiree medical and prescription drug coverage in the U.S. Such changes were communicated to active employees and retirees in early January 2014 and as such, the Company remeasured its U.S. postretirement healthcare benefit plan as of January 1, The impact of this plan change and remeasurement was immaterial to the Company s consolidated financial results. The plan design changes included, among other modifications, a replacement of the Company-sponsored healthcare coverage program for post-65 retirees with contributions to a health reimbursement account that can be used to purchase coverage through a Medicare insurance exchange. Net pension and other postretirement cost for the years ended September 30 included the following components: Pension Plans Other Postretirement Benefits (Millions of dollars) Service cost $ 81 $ 77 $ 71 $ 3 $ 3 $ 3 Interest cost Expected return on plan assets (109) (123) (126) Amortization of prior service credit (15) (15) (15) (5) (5) (4) Amortization of loss Settlements 7 3 Net pension and postretirement cost $ 113 $ 93 $ 74 $ 5 $ 9 $ 10 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. Net pension cost attributable to foreign plans included in the preceding table was $35 million, $32 million and $25 million in 2016, 2015 and 2014, respectively. The settlement losses recorded in 2016 and 2014 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. 53

320 Table of Contents Notes to Consolidated Financial Statements (Continued) Becton, Dickinson and Company The change in benefit obligation, change in fair value of plan assets, funded status and amounts recognized in the Consolidated Balance Sheets for these plans were as follows: Pension Plans Other Postretirement Benefits (Millions of dollars) Change in benefit obligation: Beginning obligation $ 2,426 $ 2,366 $ 186 $ 201 Service cost Interest cost Plan amendments (2) (1) Benefits paid (116) (138) (17) (18) Benefit obligations assumed in acquisition 67 Actuarial loss (gain) (11) Settlements (15) Other, includes translation (30) (81) 4 3 Benefit obligation at September 30 $ 2,719 $ 2,426 $ 184 $ 186 Change in fair value of plan assets: Beginning fair value $ 1,732 $ 1,829 $ $ Actual return on plan assets 131 (21) Employer contribution Benefits paid (116) (138) Plan assets acquired in acquisition 54 Settlements (15) Other, includes translation (21) (58) Plan assets at September 30 $ 1,855 $ 1,732 $ $ Funded Status at September 30: Unfunded benefit obligation $ (864) $ (694) $ (184) $ (186) Amounts recognized in the Consolidated Balance Sheets at September 30: Other $ 5 $ 7 $ $ Salaries, wages and related items (12) (10) (15) (15) Long-term Employee Benefit Obligations (857) (691) (169) (171) Net amount recognized $ (864) $ (694) $ (184) $ (186) Amounts recognized in Accumulated other comprehensive income (loss) before income taxes at September 30: Prior service credit Net actuarial loss (1,307) (1,124) (32) (30) Net amount recognized $ (1,221) $ (1,021) $ 1 $ 7 Foreign pension plan assets at fair value included in the preceding table were $624 million and $575 million at September 30, 2016 and 2015, respectively. The foreign pension plan projected benefit obligations were $951 million and $780 million at September 30, 2016 and 2015, respectively. The benefit obligations assumed and plan assets acquired during the year ended September 30, 2015 relate to the Company's acquisition of CareFusion. Additional disclosures regarding this acquisition are provided in Note 9. 54

321 Table of Contents Notes to Consolidated Financial Statements (Continued) Becton, Dickinson and Company 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 Obligation Exceeds the Fair Value of Plan Assets Projected Benefit Obligation Exceeds the Fair Value of Plan Assets (Millions of dollars) Projected benefit obligation $ 2,616 $ 2,339 $ 2,682 $ 2,394 Accumulated benefit obligation $ 2,529 $ 2,265 Fair value of plan assets $ 1,757 $ 1,650 $ 1,813 $ 1,693 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 $(93) million and $14 million, respectively. The estimated net actuarial loss and prior service credit for other postretirement benefits that will be amortized from Accumulated other comprehensive income (loss) into net other postretirement costs over the next fiscal year are expected to be $(2) million and $5 million, respectively. The weighted average assumptions used in determining pension plan information were as follows: Net Cost Discount rate: U.S. plans (A) (B) 4.15% 4.15% 4.95% Foreign plans Expected return on plan assets: U.S. plans Foreign plans Rate of compensation increase: U.S. plans (A) Foreign plans Benefit Obligation Discount rate: U.S. plans (C) Foreign plans Rate of compensation increase: U.S. plans (A) Foreign plans (A) The same rates were also used to determine other postretirement and postemployment benefit information. (B) In 2015 and 2014 the Company calculated the service and interest components utilizing a single weighted-average discount rate derived from the yield curve used to measure the benefit obligation at the beginning of the period. Effective September 30, 2015, the Company elected to utilize 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. The Company accounted for this change as a change in accounting estimate that is inseparable from a change in accounting principle and as such, the change was accounted for prospectively. (C) The discount rates used to determine other postretirement benefit plan information in fiscal years 2016, 2015 and 2014 were 3.14%, 3.95% and 3.85%, respectively. The discount rates used to determine postemployment benefit plan information in fiscal years 2016, 2015 and 2014 were 3.10%, 3.75% and 3.75%, respectively. At September 30, 2016 the assumed healthcare trend rates were 6.6%, gradually decreasing to an ultimate rate of 5.0% beginning in At September 30, 2015 the assumed healthcare trend rates were 6.8% pre and post age 65, gradually decreasing to an ultimate rate of 5.0% beginning in A one percentage point increase or decrease in assumed healthcare 55

322 Table of Contents Notes to Consolidated Financial Statements (Continued) Becton, Dickinson and Company cost trend rates in each year would not materially impact the accumulated postretirement benefit obligation as of September 30, 2016 or the aggregate of the service cost and interest cost components of 2016 annual expense. 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 a discretionary contribution of $100 million to its U.S. pension plan in September The Company does not anticipate any significant required contributions to its pension plans in Expected benefit payments are as follows: (Millions of dollars) Pension Plans Other Postretirement Benefits 2017 $ 169 $ As previously discussed, the Company replaced its Company-sponsored healthcare coverage program for post-65 retirees with a health reimbursement plan on April 1, As such, the Company no longer receives subsidies under the Medicare Prescription Drug Improvement and Modernization Act of 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 66% of total benefit plan investments, based on September 30, 2016 market values and have a target asset mix of 35% fixed income, 34% diversifying investments and 31% 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. 56

323 Table of Contents Notes to Consolidated Financial Statements (Continued) Becton, Dickinson and Company 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, 2016 and The categorization of fund investments is based upon the categorization of these funds underlying assets. (Millions of dollars) Fixed Income: Total U.S. Plan Asset Balances at September 30, 2016 Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Mortgage and asset-backed securities $ 169 $ $ 169 $ Corporate bonds Government and agency-u.s Government and agency-foreign Equity securities Cash and cash equivalents Other Fair value of plan assets $ 1,231 $ 371 $ 859 $ 1 (Millions of dollars) Fixed Income: Total U.S. Plan Asset Balances at September 30, 2015 Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Mortgage and asset-backed securities $ 192 $ $ 192 $ Corporate bonds Government and agency-u.s Government and agency-foreign Equity securities Cash and cash equivalents Other Fair value of plan assets $ 1,157 $ 401 $ 755 $ 2 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. Values of other instruments classified within Level 2 are based on the corroborated net asset value provided by the fund administrator, which is based on the value of the underlying assets owned by the fund, less its liabilities and then divided by the number of fund units outstanding. 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. The values of equity security investments classified within Level 2 are based on the corroborated net asset value provided by the fund administrator. 57

324 Table of Contents Notes to Consolidated Financial Statements (Continued) Becton, Dickinson and Company 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. Investments classified within Level 2 are valued based on the net asset value provided by the fund administrator when such net asset value represents the price at which the pension plan assets could be redeemed at period end. Investments classified within Level 3 are valued based on the net asset value provided by the fund administrator when the pension plan assets could not be redeemed at period end (for example, if the assets are subject to a lock-up period). The activity related to such assets was immaterial for the years ended September 30, 2016 and Foreign Plans Foreign plan assets comprise 34% of the Company s total benefit plan assets, based on market value at September 30, 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 foreign plan assets, as well as the measurement techniques and inputs utilized to measure fair value of these assets, at September 30, 2016 and (Millions of dollars) Fixed Income: Total Foreign Plan Asset Balances at September 30, 2016 Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Corporate bonds $ 34 $ $ 34 $ Government and agency-u.s Government and agency-foreign Other fixed income Equity securities Cash and cash equivalents Real estate Insurance contracts Other Fair value of plan assets $ 624 $ 391 $ 132 $

325 Table of Contents Notes to Consolidated Financial Statements (Continued) Becton, Dickinson and Company (Millions of dollars) Fixed Income: Total Foreign Plan Asset Balances at September 30, 2015 Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Corporate bonds $ 33 $ 3 $ 30 $ Government and agency-u.s. 1 1 Government and agency-foreign Other fixed income Equity securities Cash and cash equivalents 8 8 Real estate Insurance contracts Other Fair value of plan assets $ 575 $ 364 $ 121 $ 90 Fixed Income Securities Fixed income investments held by foreign 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 Equity securities included in the foreign 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 values of equity security investments classified within Level 2 are based on the corroborated net asset value provided by the fund administrator. Other Securities The foreign 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. 59

326 Table of Contents Notes to Consolidated Financial Statements (Continued) Becton, Dickinson and Company The following table summarizes the changes, for the years ended September 30, 2016 and 2015, in the fair value of foreign pension assets measured using Level 3 inputs: (Millions of dollars) Insurance Contracts Balance at September 30, 2014 $ 78 Actual return on plan assets: Relating to assets held at September 30, Purchases, sales and settlements, net 16 Transfers in from other categories 1 Exchange rate changes (9) Balance at September 30, 2015 $ 90 Actual return on plan assets: Relating to assets held at September 30, Purchases, sales and settlements, net 2 Exchange rate changes 1 Balance at September 30, 2016 $ 102 Postemployment Benefits The Company utilizes a service-based approach in accounting for most of its postemployment benefits. Under this approach, the costs of benefits are recognized over the eligible employees service period. The Company has elected to delay recognition of actuarial gains and losses that result from changes in assumptions. Postemployment benefit costs for the years ended September 30 included the following components: (Millions of dollars) Service cost $ 23 $ 18 $ 20 Interest cost Amortization of prior service credit (2) (2) Amortization of loss Net postemployment benefit cost $ 40 $ 42 $ 47 The changes in benefit obligation for these postemployment benefits were as follows: Postemployment benefits (Millions of dollars) Change in benefit obligation: Beginning obligation $ 163 $ 184 Service cost Interest cost 4 6 Benefits paid (21) (25) Actuarial (gain) loss (22) Benefit obligation at September 30 $ 168 $ 163 The postemployment benefit plan obligations as of September 30, 2016 and 2015 were unfunded. The amounts recognized in Accumulated other comprehensive income (loss) before income taxes for the net actuarial loss were $94 million and $107 million at September 30, 2016 and 2015, respectively. The estimated net actuarial loss that will be amortized from the Accumulated other comprehensive income (loss) into postemployment benefit cost over the next fiscal year is $11 million. During fiscal years 2016 and 2015, the Company recognized charges of $40 million and $126 million, respectively, for employee termination costs in connection with its acquisition of CareFusion. Additional disclosures regarding the CareFusion acquisition are provided in Note 9 and additional disclosures regarding the Company s restructuring activities that relate to this acquisition are provided in Note 11. During the fourth quarter of fiscal year 2014, the Company recognized a $36 million charge associated with unusually broad and significant workforce reduction actions that were not contemplated when the postemployment benefit plan obligation was measured on September 30,

327 Table of Contents Notes to Consolidated Financial Statements (Continued) Becton, Dickinson and Company Savings Incentive Plan The Company has voluntary defined contribution plans covering eligible employees in the United States which provide for a Company match. The cost of these plans was $61 million in 2016, $54 million in 2015 and $39 million in The fiscal year 2015 increase in the cost associated with these plans is attributable to the Company's acquisition of CareFusion. The Company guarantees employees' contributions to the fixed income fund of one of these plans, which typically consists of high quality bonds, including U.S. government securities, corporate bonds, mortgage-backed and asset-backed securities and cash equivalents. The amount guaranteed was $256 million at September 30, Note 9 Acquisitions CareFusion Corporation Overview of Transaction and Consideration Transferred On March 17, 2015, pursuant to a definitive agreement announced on October 5, 2014, the Company acquired a 100% interest in 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, to create a global leader in medication management and patient safety solutions. Under the terms of the transaction, CareFusion shareholders received $49.00 in cash and of a share of the Company for each share of CareFusion. The value of the total consideration transferred for accounting purposes was based on the closing share price of the Company s stock on the last trading day prior to the closing date of the transaction. The fair value of consideration transferred was $ billion and consisted of the components below. (Millions of dollars) Cash consideration $ 10,085 Noncash consideration-fair value of shares issued 2,269 Noncash consideration-fair value of stock options and other equity awards 184 Total consideration transferred $ 12,538 The acquisition date fair value of the Company s ordinary shares issued to CareFusion shareholders was calculated per the following (shares in millions): (Millions of dollars) Total CareFusion shares outstanding Conversion factor Number of the Company s shares issued 15.9 Closing price of the Company s stock on March 16, 2015 $ Fair value of the Company s issued shares $ 2,269 Additional disclosures regarding the financing arrangements the Company entered into to fund the cash portion of the consideration transferred relative to this acquisition are provided in Note

328 Table of Contents Notes to Consolidated Financial Statements (Continued) Becton, Dickinson and Company Allocation of Consideration Transferred to Net Assets Acquired The acquisition was accounted for under the acquisition method of accounting for business combinations. The allocations of the purchase price below represent the estimated fair values of assets acquired and liabilities assumed. All of the assets acquired and liabilities assumed in this acquisition have been allocated to the Company s Medical segment. (Millions of dollars) Cash and equivalents $ 1,903 Trade receivables, net 526 Inventories 818 Net investment in sales-type leases 1,206 Property, plant and equipment 497 Customer relationships 3,360 Developed technology 2,510 Trademarks 380 Other intangible assets 185 Other assets 278 Total identifiable assets acquired 11,663 Long-term debt (2,181) Deferred tax liabilities (1,888) Other liabilities (1,306) Total liabilities assumed (5,374) Net identifiable assets acquired 6,289 Goodwill 6,249 Net assets acquired $ 12,538 Net Investment in Sales-Type Leases Acquired The fair value of the net investment in sales-type leases acquired was based upon a determination that the interest rate implicit in the lease contract portfolio represented a market interest rate as well as a determination that the residual value of the overall lease contract portfolio represents fair market value. Identifiable Intangible Assets Acquired The customer relationships asset acquired represented CareFusion s contractual 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 11%. The amortization period of the customer relationships was determined to be 15 years and this period corresponds with the weighted average of lives determined for the product technology which underlies the customer contracts. The developed technology assets acquired represented CareFusion s developed technologies in the areas of medication management, infection prevention, operating room and procedural effectiveness, and respiratory care. 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 11%. The technologies will be amortized over a weighted-average amortization period of 12 years, which is the weighted average period over which the technologies are expected to generate substantial cash flows. Assets of approximately $117 million have been reclassified as held for sale on the consolidated balance sheet in connection with the Company's agreement to sell the Respiratory Solutions business. Additional disclosures regarding this transaction are provided in Note

329 Table of Contents Notes to Consolidated Financial Statements (Continued) Becton, Dickinson and Company The trademark assets acquired represented the value of registered trademarks protecting the intellectual property underlying CareFusion s product technologies. The fair value of the trademarks represents the present value of projected cash flows, specifically the estimated cost savings from not being required to pay royalties for use of these intellectual properties, utilizing an income approach with a risk-adjusted discount rate of 11%. The trademarks will be amortized over a weighted-average amortization period of 22 years, which is the weighted average period over which the trademarks are expected to generate substantial cash flows. Other intangible assets acquired included $110 million relating to acquired in-process research and development assets representing development projects relating to various product technologies. Assets of approximately $80 million have been reclassified as held for sale on the consolidated balance sheet in connection with the Company's agreement to sell the Respiratory Solutions business, as discussed above. The probability of success associated with the remaining projects, based upon the applicable technological and commercial risk, was assumed to be 80% to 85%, depending upon the project. The projects fair values were determined based on the present value of projected cash flows utilizing an income approach with a risk-adjusted discount rate of 12%. The launches of the various projects are expected to occur from 2018 to Other Liabilities Assumed The balance of other liabilities assumed included a $36 million liability recorded due to a recall relating to AVEA ventilators, which is one of CareFusion s respiratory solutions products. The liability represented the costs associated with voluntary field corrections for a portion of the installed base of ventilators. Goodwill Goodwill typically results through expected synergies from combining operations of an acquiree and an 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 complementary product portfolios of the Company and CareFusion to offer integrated medication management solutions and smart devices. Synergies are expected from combining the two companies products to meet unmet needs in hospitals, hospital pharmacies and alternate sites of care to increase efficiencies, reduce medication administration errors and improve patient and healthcare worker safety. Synergies are also expected to result from solid positions in patient safety to maximize outcomes in infection prevention, respiratory care, and acute care procedural effectiveness. No portion of goodwill from this acquisition was deductible for tax purposes. Financing, Transaction, Integration and Restructuring Costs The Company incurred financing, transaction, integration and restructuring costs in 2016 and 2015 which related to the CareFusion acquisition. Discussion regarding the financing costs relating to the CareFusion acquisition are provided in Note 15. Transaction costs of $59 million for the year ended September 30, 2015 were recorded as Acquisitions and other restructurings, and consisted of legal, advisory and other costs. Acquisitions and other restructurings also included $192 million and $95 million of integration costs in 2016 and 2015, respectively, which were substantially associated with the CareFusion acquisition as the Company has been executing its integration plans to combine businesses, sales organizations, systems and locations. The Company additionally incurred restructuring costs in 2016 and 2015 relating to CareFusion and portfolio rationalization. See Note 11 for further discussion of these restructuring activities. Unaudited Pro Forma Information The acquisition was accounted for under the acquisition method of accounting for business combinations. The operating activities from the acquisition date through March 31, 2015 were not material to the Company s consolidated results of operations. As such, CareFusion s operating results were included in the Company s consolidated results of operations beginning on April 1, Revenues and Operating Income for the year ended September 30, 2016 are no longer specifically identifiable due to the progression of the Company's integration activities. Revenues and Operating Income for the year ended September 30, 2015 include revenues and operating loss attributable to CareFusion of $2 billion and $242 million, respectively. 63

330 Table of Contents Notes to Consolidated Financial Statements (Continued) Becton, Dickinson and Company The following table provides the pro forma results for the years ended September 30, 2016, 2015 and 2014 as if CareFusion had been acquired as of October 1, (Millions of dollars, except per share data) Revenues $ 12,497 $ 12,368 $ 12,288 Net Income $ 1,453 $ 1,276 $ 1,191 Diluted Earnings per Share $ 6.68 $ 5.92 $ 5.55 The pro forma results above reflect the following adjustments, which were adjusted for the applicable tax impact to derive the net income amounts above: Additional amortization expense related to the fair value of intangible assets acquired; Additional depreciation expense related to the fair value of property, plant and equipment acquired; Additional interest expense and financing costs associated with the Company s financing arrangements relating to this acquisition, as well as the adjustment to interest expense relating to the fair value of long-term debt assumed; Elimination of one-time financing fees, transaction, integration and restructuring costs incurred relative to this acquisition; Exclusion of the income statement effects of the fair value adjustments to inventory and deferred revenue obligations acquired as such adjustments are not recurring in nature. The pro forma results do not include any anticipated cost savings or other effects of the planned integration of CareFusion. 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 first quarter of fiscal year 2015, the Company acquired GenCell Biosystems ( GenCell ), a privately-held Irish biotechnology company that has developed proprietary technologies that address key biological analysis protocols including library preparation of Next Generation Sequencing and genotyping applications. During the second quarter of fiscal year 2015, the Company acquired CRISI, a San Diego-based medical technology company dedicated to improving the safety and delivery of IV injectable medications. During the third quarter of fiscal year 2015, the Company acquired the ARX group of companies ( ARX ), a leading pharmacy automation distributor in Western Europe. During the fourth quarter of fiscal year 2015, the Company acquired Cellular Research, Inc. ( Cellular Research ), a biotechnology research and development company that has developed advanced tools for massively parallel single cell genetic analysis based on their proprietary Molecular Indexing TM technology to enable gene expression profiles from single cells. During the second quarter of fiscal year 2014, the Company acquired Alverix, Inc. ( Alverix ), a privately-held diagnostic instrument company known for its optoelectronics expertise. Note 10 Divestiture Respiratory Solutions In March 2016, the Company signed a definitive agreement to sell 50.1% of its Respiratory Solutions business and form a joint venture with respect to this business. Assets and liabilities held for sale on the consolidated balance sheet at September 30, 2016 include assets and liabilities subject to this agreement of approximately $578 million and $189 million, respectively. The Respiratory Solutions business was acquired in the CareFusion acquisition in 2015 and was a component of the Medical segment. The historical financial results for the Respiratory Solutions business have not been classified as a discontinued operation. Upon closing of the transaction, which occurred on October 3, 2016, the Company transferred the Respiratory Solutions business to a new standalone entity and retains a 49.9% non-controlling interest. The buyer will control the operations and 64

331 Table of Contents Notes to Consolidated Financial Statements (Continued) Becton, Dickinson and Company governance of the new entity. The Company will account for its remaining interest in the new standalone entity as an equity method investment and will record, on a one-quarter lag, its share of the new entity's earnings or losses to Other income (expense), net. The Company has 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. Note 11 Business Restructuring Charges In connection with the CareFusion acquisition and 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, 8, 9 and 10. Restructuring liability activity in 2016 and 2015 was as follows: (Millions of dollars) Employee Termination (A) Share-Based Compensation (B) Other (C) Total Balance at September 30, 2014 $ $ $ $ Assumed liability Charged to expense Cash payments (74) (20) (94) Non-cash settlements (44) (44) Other adjustments (9) (81) (91) Balance at September 30, 2015 $ 62 $ $ $ 62 Charged to expense Cash payments (76) (72) (148) Non-cash settlements (39) (39) Other adjustments (332) (332) Balance at September 30, 2016 $ 67 $ $ 2 $ 69 (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 in Note 1. Expenses in fiscal year 2015 were primarily related to the CareFusion acquisition. (B) Additional disclosures are provided in Note 7. (C) The expenses in fiscal year 2016 primarily reflected a $214 million non-cash charge recorded to impair capitalized internal-use software assets held for sale as a result of the information technology function transformation efforts discussed above. 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. Expenses recorded in 2015 included non-cash asset impairment charges resulting from the information technology function transformation discussed above. 65

332 Table of Contents Notes to Consolidated Financial Statements (Continued) Becton, Dickinson and Company Note 12 Intangible Assets Intangible assets at September 30 consisted of: (Millions of dollars) Amortized intangible assets Gross Carrying Amount Accumulated Amortization Gross Carrying Amount Accumulated Amortization Customer relationships $ 3,360 $ 339 $ 3,370 $ 120 Developed technology 3, , Product rights Trademarks Patents and other Amortized intangible assets $ 7,648 $ 1,435 $ 7,723 $ 903 Unamortized intangible assets Acquired in-process research and development $ 66 $ 203 Trademarks 2 2 Unamortized intangible assets $ 68 $ 205 The net decrease in developed technology included approximately $117 million of assets reclassified as held for sale on the consolidated balance sheet in connection with the Respiratory Solutions transaction. This decrease was partly offset by the reclassification to Developed Technology, Net of $57 million, in the fourth quarter of fiscal year 2016, due to the Company's completion of project assets recognized upon its acquisition of GenCell Biosystems. The decrease in acquired in-process research and development assets included this reclassification of completed project assets, as well as approximately $80 million of assets reclassified as held for sale on the consolidated balance sheet in connection with the Respiratory Solutions transaction. Additional disclosures regarding this divestiture are provided in Note 10. Intangible amortization expense was $552 million, $346 million and $84 million in 2016, 2015 and 2014, respectively. The estimated aggregate amortization expense for the fiscal years ending September 30, 2017 to 2021 are as follows: 2017 $525 million; 2018 $515 million; 2019 $510 million; 2020 $509 million; 2021 $504 million. The following is a reconciliation of goodwill by business segment: (Millions of dollars) Medical Life Sciences Total Goodwill as of September 30, 2014 $ 482 $ 608 $ 1,090 Acquisitions 6,585 (A) 130 (B) 6,716 Purchase accounting adjustments/currency translation (261) (C) (8) (269) Goodwill as of September 30, 2015 $ 6,807 $ 730 $ 7,537 Divestiture (32) (32) Purchase accounting adjustments/currency translation (87) (C) 1 (86) Goodwill as of September 30, 2016 $ 6,688 $ 731 $ 7,419 (A) Primarily represents goodwill recognized upon the Company s acquisition of CareFusion in the second quarter of fiscal year Also includes $22 million of goodwill associated with acquisitions that were immaterial on an individual and aggregate basis. Additional disclosures regarding the Company's acquisitions are provided in Note 9. (B) Represents goodwill recognized upon the Company s acquisitions of GenCell and Cellular Research. (C) Primarily represents acquisition accounting adjustments relating to the CareFusion acquisition. Adjustments in 2016 and 2015 of $94 million and $219 million, respectively, primarily resulted from adjustment to the deferred tax liability accounts. 66

333 Table of Contents Notes to Consolidated Financial Statements (Continued) Becton, Dickinson and Company Note 13 Derivative Instruments and Hedging Activities The Company uses derivative instruments to mitigate certain exposures. 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. The offset of these gains or losses against the gains and losses on the underlying hedged items, as well as the hedging costs associated with the derivative instruments, is recognized in Other income (expense), net. The total notional amounts of the Company s outstanding foreign exchange contracts as of September 30, 2016 and 2015 were $2.3 billion and $2.2 billion, respectively. 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 $5 million, net of tax. The total notional value of the Company's outstanding forward starting interest rate swaps designated as cash flow hedges was $500 million at September 30, The Company entered into these contracts in March and April 2016 to mitigate its exposure to interest rate risk. The Company had no outstanding interest rate swaps designated as cash flow hedges as of September 30, The total notional amount of the Company s outstanding interest rate swaps designated as fair value hedges was $375 million at September 30, 2016 and The outstanding swaps represent fixed-to-floating interest rate swap agreements the Company entered into, in March and September 2014, to convert the interest payments on $375 million of the Company s 3.125% notes, due November 8, 2021, 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 gains recorded on these fair value hedges, which were offset by losses recorded to the underlying debt instrument, are provided below. (Millions of dollars) Gains on fair value hedges $ 4 $ 19 $ 3 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, The total notional amount of cash-settled forward contracts entered into in April 2015 to hedge global resin purchase volume throughout 2015 and 2016 was 49 million pounds ($25 million) at September 30,

334 Table of Contents Notes to Consolidated Financial Statements (Continued) Becton, Dickinson and Company Effects on Consolidated Balance Sheets The location and amounts of derivative instrument fair values in the consolidated balance sheet are segregated below between designated, qualifying hedging instruments and ones that are not designated for hedge accounting. (Millions of dollars) Asset derivatives-designated for hedge accounting September 30, 2016 September 30, 2015 Interest rate swaps $ 23 $ 19 Asset derivatives-undesignated for hedge accounting Forward exchange contracts 3 13 Total asset derivatives (A) $ 25 $ 32 Liability derivatives-designated for hedge accounting Commodity forward contracts $ $ 10 Interest rate swaps 18 Liability derivatives-undesignated for hedge accounting Forward exchange contracts Total liability derivatives (B) $ 31 $ 30 (A) All asset derivatives are included in Prepaid expenses and other. (B) All liability derivatives are included in Accrued expenses. Effects on Consolidated Statements of Income Cash flow hedges All derivative instrument-related amounts recognized in other comprehensive income and earnings during 2016 and 2015 relate to interest rate swaps and commodity forward contracts. (Millions of dollars) After-tax losses relating to cash flow hedges recognized in other comprehensive income (loss) $ 11 $ 16 $ The losses recognized in 2016 primarily related to the previously discussed forward starting interest rate swaps entered into in fiscal year The losses recognized in 2015 included $7 million of losses relating to commodity forward contracts as well as $8 million attributable to interest rate swaps with a total notional amount of $2.3 billion that were entered into during the first quarter of fiscal year 2015 to partially hedge interest rate risk associated with the anticipated issuance of senior unsecured notes in connection with the Company s acquisition of CareFusion. These swaps were designated as hedges of the variability in interest payments attributable to changes in the benchmark interest rate during the period preceding the Company s issuance of the notes. The swaps were terminated at losses, concurrent with the pricing of notes issued in December 2014, and the realized losses will be amortized over the lives of the notes with an offset to Interest expense. Additional disclosures regarding amounts recognized in the consolidated statements of income in fiscal years 2016, 2015 and 2014 relating to cash flow hedges are provided in Note 3. Additional disclosures regarding the acquisition of CareFusion are provided in Note 9 and additional disclosures regarding the Company s debt issuance during the first quarter of fiscal year 2015 are provided in Note 15. The Company s designated derivative instruments are highly effective. As such, there were no gains or losses, related to hedge ineffectiveness or amounts excluded from hedge effectiveness testing, recognized immediately in income relative to derivative contracts outstanding in the periods presented. 68

335 Table of Contents Notes to Consolidated Financial Statements (Continued) Becton, Dickinson and Company Undesignated hedges The location and amount of gains and losses recognized in income on derivatives not designated for hedge accounting for the years ended September 30 were as follows: Derivatives Not Designated as For Hedge Accounting Location of (Loss) Gain Recognized in Income on Derivatives Amount of (Loss) Gain Recognized in Income on Derivative (Millions of dollars) Forward exchange contracts (A) Other income (expense), net $ (3) $ (49) $ (3) (A) The gains and losses on forward contracts and currency options utilized to hedge the intercompany transactional foreign exchange exposures are largely offset by gains and losses on the underlying hedged items in Other income (expense), net. Note 14 Financial Instruments and Fair Value Measurements Recurring Fair Value Measurements The fair values of financial instruments, including those not recognized on the statement of financial position at fair value, carried at September 30, 2016 and 2015 are classified in accordance with the fair value hierarchy in the following tables: (Millions of dollars) Assets September 30, 2016 Total Quoted Prices in Active Markets for Identical Assets (Level 1) Basis of Fair Value Measurement Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Institutional money market investments $ 224 $ 224 $ $ Interest rate swaps Forward exchange contracts 3 3 Total Assets $ 249 $ 224 $ 25 $ Liabilities Forward exchange contracts $ 13 $ $ 13 $ Commodity forward contracts Interest rate swaps Contingent consideration liabilities Total Liabilities $ 86 $ $ 31 $ 54 69

336 Table of Contents Notes to Consolidated Financial Statements (Continued) Becton, Dickinson and Company (Millions of dollars) Assets September 30, 2015 Total Quoted Prices in Active Markets for Identical Assets (Level 1) Basis of Fair Value Measurement Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Institutional money market investments $ 147 $ 147 $ $ Interest rate swaps Forward exchange contracts Total Assets $ 179 $ 147 $ 32 $ Liabilities Forward exchange contracts $ 21 $ $ 21 $ Commodity forward contracts Contingent consideration liabilities Total Liabilities $ 108 $ $ 30 $ 77 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. The Company s remaining cash equivalents were $1.317 billion and $1.277 billion at September 30, 2016 and 2015, 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. The Company measures the fair value of forward exchange contracts and interest rate swaps based upon the present value of expected future cash flows using market-based observable inputs including credit risk, interest rate yield curves, foreign currency spot prices and forward prices. 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 $11.3 billion and $11.6 billion at September 30, 2016 and 2015, respectively. During the first and third quarters of fiscal year 2016, the Company reclassified $500 million of 1.750% notes due on November 8, 2016 and $300 million of 1.450% notes due on May 15, 2017, respectively, from Long-Term Debt to Short-term debt. The fair value of reclassified notes was $798 million and $750 million at September 30, 2016 and 2015, respectively. The balance of reclassified notes at September 30, 2015, which has been repaid, represented $750 million of floating rate notes due on June 15, The contingent consideration liabilities were recognized as part of the consideration transferred by the Company for certain acquisitions. The fair values of the contingent consideration liabilities were estimated using probability-weighted discounted cash flow models that were based upon the probabilities assigned to the contingent events. The estimated fair values of the contingent consideration liabilities are remeasured at each reporting period based upon increases or decreases in the probability of the contingent payments. The change to the contingent consideration liability in fiscal year 2016 primarily reflected a net decrease of $25 million, which was recorded in Selling and administrative expense, in the fair value of contingent consideration liabilities associated with certain product development milestones. The Company s policy is to recognize any transfers into fair value measurement hierarchy levels and transfers out of levels at the beginning of each reporting period. There were no transfers in and out of Level 1, Level 2 or Level 3 measurements for the years ending September 30, 2016 and Nonrecurring Fair Value Measurements In fiscal year 2016, the Company recorded a charge 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. Impairment charges recorded in 2015 of $72 million primarily related to information technology assets held for sale as a result of these same transition efforts. Additional disclosures regarding these transition efforts are provided in Note 1. 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 2016 and 2015 were recorded to Acquisitions and other restructurings to adjust the carrying amount of assets held for sale to an estimate of the assets' fair values, less the estimated costs to sell these assets. The fair values of the assets adjusted in 2016 and 2015 were estimated, based upon a market participant's perspective, using a market approach and 70

337 Table of Contents Notes to Consolidated Financial Statements (Continued) Becton, Dickinson and Company Level 2 inputs, including quoted prices for similar assets. The remaining carrying amounts of the assets held for sale at September 30, 2015 were immaterial to the Company's consolidated balance sheet. 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. Note 15 Debt Short-term debt at September 30 consisted of: (Millions of dollars) Domestic loans payable $ 200 $ 700 Current portion of long-term debt 1.750% Notes due November 8, % Notes due May 15, Floating rate notes due June 15, Other 1 2 Total short-term debt $ 1,001 $ 1,452 The weighted average interest rates for short-term debt were 1.49% and 0.64% at September 30, 2016 and 2015, respectively. Domestic loans payable consist of a commercial paper program the Company entered into in January 2015, in anticipation of the closing of the CareFusion acquisition, which is further discussed in Note 9. In February 2016, the size of the commercial paper program was increased from $1 billion to $1.5 billion in short-term, unsecured commercial paper notes. Borrowings outstanding at September 30, 2015 included $500 million that was used to finance the Company s acquisition of CareFusion and to pay related fees and expenses. The outstanding September 30, 2016 balance reflected net repayments in 2016 of $500 million. In January 2016, the Company replaced an existing $1 billion syndicated credit facility with a $1.5 billion syndicated credit facility that has an expiration date of January There were no borrowings outstanding under this credit facility at September 30, The credit facility, under which the Company may issue up to $100 million in letters of credit, provides backup support for the Company's commercial paper program and can also be used for other general corporate purposes. It 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 billion. The credit facility includes a single financial covenant that requires BD to maintain an interest expense coverage ratio of not less than 5-to-1 for the most recent four consecutive fiscal quarters. The Company was in compliance with this covenant as of September 30, In addition, the Company has informal lines of credit outside of the United States. Concurrent with the execution of the agreement to acquire CareFusion, the Company secured $9.1 billion of fully committed bridge financing to ensure its ability to fund the cash portion of consideration due under the agreement, as well as to pay fees and expenses related to the acquisition. This bridge credit agreement was terminated upon the closing of the CareFusion acquisition in March The Company also entered into a 364-day term loan agreement in December 2014 that provided for a $1 billion term loan facility, the proceeds under which could only be used to pay the cash consideration due pursuant to the CareFusion acquisition agreement, as well as to pay financing fees, other related fees and other expenses 71

338 Table of Contents Notes to Consolidated Financial Statements (Continued) Becton, Dickinson and Company associated with the CareFusion acquisition. The term loan was fully repaid in 2015, reflecting principal payments of $650 million, $250 million and $100 million made in April, July and September 2015, respectively. In December 2014, the Company issued $6.2 billion of senior unsecured notes as part of its plan for financing the cash requirements relating to the CareFusion acquisition. The Company repaid $750 million of these notes in June Upon the closing of the CareFusion acquisition in March 2015, the Company assumed the indebtedness of CareFusion, including senior unsecured notes with an aggregate principal amount of $2 billion, which was recorded on the acquisition date at a fair value of $2.174 billion. Subsequent to closing the acquisition of CareFusion, the Company validly tendered and exchanged the aggregate principal amounts of each series of the CareFusion notes for notes issued by the Company. This exchange transaction was accounted for as a modification of the original debt instruments. As such, no gain or loss was recognized in the Company s consolidated results of operations as a result of this exchange transaction. Long-Term Debt at September 30 consisted of: (Millions of dollars) % Notes due November 8, 2016 $ $ % Notes due May 15, 2017 (A) % Notes due December 15, 2017 (B) 1,248 1, % Notes due April 15, % Notes due May 15, % Notes due August 1, 2019 (A) % Notes due December 15, 2019 (B) 1,245 1, % Notes due November 12, % Notes due November 8, ,018 1, % Notes due March 1, 2023 (A) % Notes due May 15, 2024 (A) % Notes due December 15, 2024 (B) 1,740 1, % Debentures due August 1, % Debentures due August 1, % Notes due May 15, % Notes due November 12, % Notes due May 15, 2044 (A) % Notes due December 15, 2044 (B) 1,190 1,190 Other long-term debt 4 5 Total Long-Term Debt $ 10,550 $ 11,370 (A) Represents senior unsecured notes issued in the April 2015 exchange of all validly tendered and accepted CareFusion notes for notes issued by the Company, as further discussed above. (B) Represents senior unsecured notes issued in December 2014 in connection with the CareFusion acquisition. The aggregate annual maturities of long-term debt during the fiscal years ending September 30, 2017 to 2021 are as follows: 2017 $801 million; 2018 $1.45 billion; 2019 $1.2 billion; 2020 $1.25 billion; 2021 $700 million. 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) Charged to operations $ 388 $ 371 $ 135 Capitalized Total interest costs $ 418 $ 401 $ 167 Interest paid, net of amounts capitalized $ 392 $ 313 $

339 Table of Contents Notes to Consolidated Financial Statements (Continued) Becton, Dickinson and Company The amounts of interest charged to operations and interest paid during 2016 included $183 million of interest on the senior unsecured notes issued in December The amounts of interest charged to operations and interest paid during 2015 included $107 million of interest on the senior unsecured notes issued in December 2014 and commitment fees for the bridge loan facility entered into concurrently with the execution of the agreement to acquire CareFusion. Additional information regarding these costs is provided in Note 9. Note 16 Income Taxes The provision for income taxes the years ended September 30 consisted of: (Millions of dollars) Current: Federal $ 312 $ 50 $ 225 State and local, including Puerto Rico (11) Foreign Deferred: $ 616 $ 318 $ 431 Domestic $ (441) $ (238) $ (59) Foreign (78) (37) (35) (519) (274) (94) Income tax provision $ 97 $ 44 $ 337 The components of Income Before Income Taxes for the years ended September 30 consisted of: (Millions of dollars) Domestic, including Puerto Rico $ (232) $ (408) $ 532 Foreign 1,306 1, Income Before Income Taxes $ 1,074 $ 739 $ 1,522 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) Balance at October 1 $ 575 $ 197 $ 146 Increase due to acquisitions 314 Increase due to current year tax positions Increase due to prior year tax positions Decreases due to prior year tax positions (28) Decrease due to settlements and lapse of statute of limitations (191) (11) (9) Balance at September 30 $ 457 $ 575 $ 197 With the acquisition of CareFusion on March 17, 2015, the Company is now a party to a tax matters agreement with Cardinal Health resulting from Cardinal Health's spin-off of CareFusion in fiscal year 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 $126 million at September 30, 2016 and is included in Deferred Income Taxes and Other on the consolidated balance sheet. The total amount of unrecognized tax benefits, if recognized, would favorably impact the effective tax rate. Accrued interest and penalties of $51 million, $84 million and $10 million at September 30, 2016, 2015 and 2014, respectively, are not included in the table above. During the fiscal years ended September 30, 2016, 2015 and 2014, the Company reported interest and penalties associated with unrecognized tax benefits of $3 million, $8 million and $2 million on the consolidated statements of income as a component of Income tax provision. 73

340 Table of Contents Notes to Consolidated Financial Statements (Continued) Becton, Dickinson and Company 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 tax years through For the Company s other major tax jurisdictions where it conducts business, the Company s tax years are generally open after Deferred income taxes at September 30 consisted of: (Millions of dollars) Assets Liabilities Assets Liabilities Compensation and benefits $ 720 $ $ 647 $ Property and equipment Intangibles 1,493 2,033 Loss and credit carryforwards 1, Other ,541 2,336 1,819 2,795 Valuation allowance (997) (452) Net (A) $ 1,544 $ 2,336 $ 1,367 $ 2,795 (A) Net deferred tax assets are included in Other Assets and net deferred tax liabilities are included in Deferred Income Taxes and Other. Deferred tax assets and liabilities are netted on the balance sheet by separate tax jurisdictions. As disclosed on Note 2, the Company retrospectively adopted amended guidance on October 1, 2015 that requires entities to present deferred tax assets and liabilities as noncurrent on the balance sheet. As such, the consolidated balance sheet as of September 30, 2015 reflects the reclassification of current deferred tax assets of $387 million as noncurrent amounts, after giving effect to jurisdictional netting requirements. Deferred taxes are not provided on undistributed earnings of foreign subsidiaries that are indefinitely reinvested. At September 30, 2016, the cumulative amount of such undistributed earnings indefinitely reinvested outside the United States was $8.7 billion. Determining the tax liability that would arise if these earnings were remitted is not practicable. Deferred taxes are provided for earnings outside the United States when those earnings are not considered indefinitely reinvested. Generally, deferred tax assets have been established as a result of net operating losses and credit carryforwards with expiration dates from 2017 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 2016 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 between 2016 and A reconciliation of the federal statutory tax rate to the Company s effective income tax rate was as follows: Federal statutory tax rate 35.0 % 35.0 % 35.0 % State and local income taxes, net of federal tax benefit 1.5 (3.6) (0.5) Effect of foreign and Puerto Rico earnings and foreign tax credits (23.7) (24.5) (11.2) Effect of Research Credits and Domestic Production Activities (4.4) (1.6) (1.1) Other, net (0.1) Effective income tax rate 9.1 % 5.9 % 22.1 % The approximate amounts of tax reductions related to tax holidays in various countries in which the Company does business were $122 million, $102 million and $108 million, in 2016, 2015 and 2014, respectively. The tax holidays expire at various dates through The Company made income tax payments, net of refunds, of $218 million in 2016, $240 million in 2015 and $330 million in

341 Table of Contents Notes to Consolidated Financial Statements (Continued) Becton, Dickinson and Company Note 17 Sales-Type Leases and Financing Receivables As disclosed in Note 9, the net assets acquired in the Company s acquisition of CareFusion included a $1.206 billion net investment in sales-type leases which primarily arose from the leasing of dispensing equipment. The components of the net investment in sales-type leases, which predominantly have five-year terms and are generally collateralized by the underlying equipment, were as follows: (Millions of dollars) Future minimum lease payments receivable $ 1,239 $ 1,311 Unguaranteed residual values Unearned income (132) (142) Allowance for uncollectible minimum lease payments receivable (5) (5) Net Investment in Sales-Type Leases 1,135 1,193 Less: Current portion of net investment in sales-type leases Net Investment in Sales-Type Leases, Less Current Portion $ 796 $ 1,118 Future minimum lease payments to be received pursuant to sales-type leases are as follows: 2017 $395 million; 2018 $329 million; 2019 $259 million; 2020 $170 million; 2021 $81 million and an aggregate of $5 million thereafter. The methodology for determining the allowance for credit losses for these financing receivables is based on the collective population and is not stratified by class or portfolio segment. Allowances for credit losses on the entire portfolio are recorded based on historical experience loss rates and the potential impact of anticipated changes in business practices, market dynamics, and economic conditions. The net investment in sales-type leases is predominantly evaluated for impairment on a collective basis; however, some immaterial allowances for individual balances are recorded based on the evaluation of customers specific circumstances. No interest is accrued on past due financing receivables, which are generally considered past due 30 days after the billing date. Amounts are written off against the allowance for credit losses when determined to be uncollectible. The allowance for credit losses on these financing receivables was immaterial at September 30, 2016 Note 18 Supplemental Financial Information Other Income (Expense), Net Other income (expense), net in 2016 was $11 million, which primarily included equity investment net income of $8 million and income from license and other agreements of $2 million. These amounts were partially offset by foreign exchange losses (inclusive of hedging costs) of $3 million. Other income (expense), net in 2015 was $21 million, which primarily included equity investment net income and proceeds from the sales of investments of $9 million, an acquisition-date accounting gain of $9 million on the previously held investment in CRISI and income from license and other agreements of $2 million. Other income (expense), net in 2014 was $5 million, which primarily included equity investment net income and proceeds from the sales of investments of $13 million and income from license and other agreements of $3 million. Other income (expense), net in 2014 also included income of $3 million from contract manufacturing and other transition services relating to the Company s sale of Discovery Labware in the first quarter of fiscal year These amounts were partially offset by foreign exchange losses (inclusive of hedging costs) of $13 million. 75

342 Table of Contents Notes to Consolidated Financial Statements (Continued) Becton, Dickinson and Company Trade Receivables, Net The amounts recognized in 2016, 2015 and 2014 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 Doubtful Accounts Allowance for Cash Discounts Total Balance at September 30, 2013 $ 41 $ 9 $ 50 Additions charged to costs and expenses Deductions and other (16) (A) (38) (54) Balance at September 30, 2014 $ 30 $ 12 $ 42 Additions charged to costs and expenses Deductions and other (11) (A) (50) (61) Balance at September 30, 2015 $ 53 $ 9 $ 62 Additions charged to costs and expenses Deductions and other (14) (A) (40) (55) Balance at September 30, 2016 $ 61 $ 6 $ 67 (A) Accounts written off. Inventories Inventories at September 30 consisted of: (Millions of dollars) Materials $ 316 $ 384 Work in process Finished products 1,129 1,295 Property, Plant and Equipment, Net Property, Plant and Equipment, Net at September 30 consisted of: $ 1,719 $ 1,959 (Millions of dollars) Land $ 151 $ 146 Buildings 2,397 2,414 Machinery, equipment and fixtures 5,749 5,602 Leasehold improvements ,419 8,277 Less accumulated depreciation and amortization 4,518 4,217 $ 3,901 $ 4,060 76

343 Becton, Dickinson and Company SUPPLEMENTARY DATA (UNAUDITED) Millions of dollars, except per share amounts st 2nd 3rd 4th Year Revenues $ 2,986 $ 3,067 $ 3,198 $ 3,231 $ 12,483 Gross Profit 1,408 1,484 1,547 1,552 5,991 Net Income Earnings per Share: Basic Diluted st 2nd 3rd 4th Year Revenues $ 2,051 $ 2,051 $ 3,120 $ 3,059 $ 10,282 Gross Profit 1,045 1,046 1,174 1,430 4,695 Net Income Earnings per Share: Basic Diluted Certain quarterly amounts may not add to the year-to-date totals due to rounding. The third quarter fiscal year 2015 gross profit amount reflects an acquisition-related reclassification. Earnings per share amounts are calculated from the underlying whole-dollar amounts. As of March 17, 2015, the weighted average common shares used in the computations of basic and diluted earnings per share reflect shares issued in connection with the CareFusion acquisition. Additional disclosures regarding this issuance of shares and the acquisition are provided in Notes 4 and 9. Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure. None. 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, Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the design and operation of these disclosure controls and procedures were, as of the end of the period covered by this report, effective and designed to ensure that material information relating to BD and its consolidated subsidiaries would be made known to them by others within these entities. There were no changes in our internal control over financial reporting during the fiscal quarter ended September 30, 2016 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. None. Item 10. Directors, Executive Officers and Corporate Governance. PART III 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 77

344 Table of Contents 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, 2016 (the 2017 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 2017 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 Board of Directors - Non Management Directors Compensation, Compensation Discussion and Analysis, Report of the Compensation and Management Development Committee, Compensation of Named Executive Officers and Board of Directors - Committee membership and function - Compensation and Management Development Committee in BD s 2017 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 2017 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 2017 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 2017 Proxy Statement, and such information is incorporated herein by reference. Item 15. Exhibits, Financial Statement Schedules. (a)(1) Financial Statements PART IV 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 Income Years ended September 30, 2016, 2015 and 2014 Consolidated Statements of Comprehensive Income Years ended September 30, 2016, 2015 and 2014 Consolidated Balance Sheets September 30, 2016 and 2015 Consolidated Statements of Cash Flows Years ended September 30, 2016, 2015 and 2014 Notes to Consolidated Financial Statements (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 82 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. 78

345 Table of Contents 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. BECTON, DICKINSON AND COMPANY Dated: November 23, 2016 By: /s/ GARY DEFAZIO 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 23 rd day of November, 2016 by the following persons on behalf of the registrant and in the capacities indicated. Name Capacity /S/ VINCENT A. FORLENZA Chairman, Chief Executive Officer and President Vincent A. Forlenza (Principal Executive Officer) /S/ CHRISTOPHER R. REIDY Executive Vice President, Chief Financial Officer and Christopher R. Reidy Chief Administrative Officer (Principal Financial Officer) /S/ JOHN GALLAGHER Senior Vice President, Corporate Finance, John Gallagher Controller and Treasurer (Principal Accounting Officer) Basil L. Anderson* Director Catherine M. Burzik* Director R. Andrew Eckert* Director Claire M. Fraser* Director Christopher Jones* Director Marshall O. Larsen* Director Gary A. Mecklenburg* Director 79

346 Table of Contents Name Capacity James F. Orr* Director Willard J. Overlock, Jr.* Director Claire Pomeroy* Director Rebecca W. Rimel* Director Bertram L. Scott* Director *By: /s/ GARY DEFAZIO Gary DeFazio Attorney-in-fact 80

347 Table of Contents EXHIBIT INDEX Exhibit Number Description Method of Filing 2.1 Agreement and Plan of Merger, dated as of October 5, 2014, among CareFusion Corporation, Becton, Dickinson and Company and Griffin Sub, Inc. 3(a)(i) Restated Certificate of Incorporation, dated as of January 29, Incorporated by reference to Exhibit 2.1 to the registrant s Current Report on Form 8-K dated October 6, Incorporated by reference to Exhibit 3(a) to the registrant s Quarterly Report on Form 10-Q for the period ended March 31, (b) By-Laws, as amended and restated as of September 27, Incorporated by reference to Exhibit 3.1 to the registrant s Current Report on Form 8-K dated September 28, (a) 4(b) 4(c) 4(d) 4(e) Indenture, dated as of March 1, 1997, between the registrant and The Bank of New York Mellon Trust Company, N.A. (as successor to JPMorgan Chase Bank) Indenture, dated July 21, 2009, between CareFusion Corporation and Deutsche Bank Trust Company Americas, as trustee. Supplemental Indenture, dated July 21, 2009, between CareFusion Corporation and Deutsche Bank Trust Company Americas, as trustee. Second Supplemental Indenture, dated March 11, 2013, between CareFusion Corporation and Deutsche Bank Trust Company Americas, as trustee. Third Supplemental Indenture, dated May 22, 2014, between CareFusion Corporation and Deutsche Bank Trust Company Americas, as trustee. 4(f) Fourth Supplemental Indenture, dated as of April 24, 2015, between CareFusion Corporation and Deutsche Bank Trust Company Americas, as Trustee. Incorporated by reference to Exhibit 4(a) to Form 8-K filed by the registrant on July 31, 1997 Incorporated by reference to Exhibit 4.2 to Cardinal Health, Inc. s Current Report on Form 8-K filed on July 22, Incorporated by reference to Exhibit 4.3 to Cardinal Health, Inc. s Current Report on Form 8-K filed on July 22, Incorporated by reference to Exhibit 4.1 of the CareFusion Corporation Current Report on Form 8-K filed on March 11, Incorporated by reference to Exhibit 4.2 of the CareFusion Corporation Current Report on Form 8-K filed on May 22, Incorporated by reference to Exhibit 4.1 of CareFusion s Current Report on Form 8-K filed on April 29, (g) Form of 7% Debentures due August 1, Incorporated by reference to Exhibit 4(d) of the registrant s Current Report on Form 8-K filed on July 31, (h) Form of 6.70% Debentures due August 1, Incorporated by reference to Exhibit 4(d) of the registrant s Current Report on Form 8-K filed on July 29, (i) Form of 4.90% Notes due April 15, Incorporated by reference to Exhibit 4(i) of the registrant's Annual Report on form 10-K for the fiscal year ended September 30, (j) Form of 5.00% Notes due May 15, Incorporated by reference to Exhibit 4.1 of the registrant s Current Report on Form 8-K filed on May 13, (k) Form of 6.00% Notes due May 15, Incorporated by reference to Exhibit 4.2 of the registrant s Current Report on Form 8-K filed on May 13, (l) Form of 3.25% Notes due November 12, Incorporated by reference to Exhibit 4.1 of the registrant s Current Report on Form 8-K filed on November 12, (m) Form of 5.00% Notes due November 12, Incorporated by reference to Exhibit 4.2 of the registrant s Current Report on Form 8-K filed on November 12,

348 Table of Contents 4(n) Form of 1.750% Notes due November 8, Incorporated by reference to Exhibit 4.1 of the registrant s Current Report on Form 8-K filed on November 8, (o) Form of 3.125% Notes due November 8, Incorporated by reference to Exhibit 4.2 of the registrant s Current Report on Form 8-K filed on November 8, (p) Form of 1.450% Senior Notes due May 15, Incorporated by reference to Exhibit 4.2 of the registrant s Current Report on Form 8-K filed on April 29, (q) Form of 6.375% Senior Notes due August 1, Incorporated by reference to Exhibit 4.3 of the registrant s Current Report on Form 8-K filed on April 29, (r) Form of 3.300% Senior Notes due March 1, Incorporated by reference to Exhibit 4.4 of the registrant s Current Report on Form 8-K filed on April 29, (s) Form of 3.875% Senior Notes due May 15, Incorporated by reference to Exhibit 4.5 of the registrant s Current Report on Form 8-K filed on April 29, (t) Form of 4.875% Senior Notes due May 15, Incorporated by reference to Exhibit 4.6 of the registrant s Current Report on Form 8-K filed on April 29, (a)(i) 10(a)(ii) Form of Employment Agreement with executive officers relating to employment following a change of control of the registrant (with tax reimbursement provisions).* Form of Employment Agreement with executive officers relating to employment following a change of control of the registrant (without tax reimbursement provisions).* 10(b) Stock Award Plan, as amended and restated as of January 31, 2006.* 10(c) 10(d) 10(e) 10(f) 10(g)(i) 10(g)(ii) Performance Incentive Plan, as amended and restated September 23, 2008.* Deferred Compensation and Retirement Benefit Restoration Plan, as amended and restated as of September 27, 2016.* 1996 Directors Deferral Plan, as amended and restated as of November 25, 2014.* Amended and Restated Aircraft Time Sharing Agreement between Becton, Dickinson and Company and Vincent A. Forlenza dated as of March 21, 2012.* 2004 Employee and Director Equity-Based Compensation Plan, as amended and restated as of January 26, 2016.* Terms of Awards under 2004 Employee and Director Equity- Based Compensation Plan and Stock Award Plan.* 82 Incorporated by reference to Exhibit 10(a) to the registrant s Quarterly Report on Form 10-Q for the period ended December 31, Incorporated by reference to Exhibit 10(a)(ii) to the registrant s Annual Report on Form 10-K for the fiscal year ended September 30, Incorporated by reference to Exhibit 10(a) to the registrant s Quarterly Report on Form 10-Q for the period ended December 31, Incorporated by reference to Exhibit 10(c) to the registrant s Current Report on Form 8-K dated September 26, Filed with this report. Incorporated by reference to Exhibit 10.2 to the registrant s Current Report on Form 8-K dated December 2, Incorporated by reference to Exhibit 10.1 to the registrant s Current Report on Form 8-K dated March 27, Incorporated by reference to Exhibit 10 to the registrant s Current Report on Form 8-K dated January 29, Filed with this report.

349 Table of Contents 10(h) 10(i) 10(j) Exhibit Number Description Method of Filing Retiree medical agreement between Becton, Dickinson and Company and Jeffrey S. Sherman.* Five-Year Credit Agreement, dated January 29, 2016 among the registrant and the banks named therein. 364-Day Term Loan Agreement, dated December 19, 2014, by and among Becton, Dickinson and Company, as borrower, Goldman Sachs Bank USA, as administrative agent, and the lenders party thereto. Incorporated by reference to Exhibit 10(n) to the registrant s Annual Report on Form 10-K for the fiscal year ended September 30, Incorporated by reference to Exhibit 10 to the registrant s Current Report on Form 8-K dated February 4, Incorporated by reference to Exhibit 10.1 to the registrant s Current Report on Form 8-K filed December 14, (k) Form of Commercial Paper Dealer Agreement. Incorporated by reference to Exhibit 10.1 to the registrant s Current Report on Form 8-K filed on January 6, (l) Tax Matters Agreement, dated August 31, 2009, by and between Cardinal Health, Inc. and CareFusion Corporation. 21 Subsidiaries of the registrant. Filed with this report 23 Consent of independent registered public accounting firm. Filed with this report 24 Power of Attorney. Filed with this report 31 Certifications of Chief Executive Officer and Chief Financial Officer, pursuant to SEC Rule 13(a)-14(a). 32 Certifications of Chief Executive Officer and Chief Financial Officer, pursuant to Section 1350 of Chapter 63 of Title 18 of the U.S. Code. 101 The following materials from this report, formatted in XBRL (Extensible Business Reporting Language): (i) the Consolidated Statements of Income, (ii) the Consolidated Statements of Comprehensive Income, (iii) the Consolidated Balance Sheets, (iv) the Consolidated Statements of Cash Flows, and (v) Notes to Consolidated Financial Statements. * Denotes a management contract or compensatory plan or arrangement. Incorporated by reference to Exhibit 10.3 to Cardinal Health, Inc. s Current Report on Form 8-K filed on September 4, Filed with this report Filed with this report Filed with this report 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 , Phone:

350 EXHIBIT 10(d) DEFERRED COMPENSATION AND RETIREMENT BENEFIT RESTORATION PLAN Effective January 1, 2017 Table of Contents Page FOREWORD 1 ARTICLE I Definitions 2 Section (k) Plan 2 Section 1.2 Account or Accounts 2 Section 1.3 Agreement 2 Section 1.4 Annual Open Enrollment Period 2 Section 1.5 Base Salary 2 Section 1.6 Beneficiary or Beneficiaries 2 Section 1.7 Board of Directors 2 Section 1.8 Bonus 2 Section 1.9 Change in Control 2 Section 1.10 Code 3 Section 1.11 Committee 4 Section 1.12 Common Stock 4 Section 1.13 Company 4 Section 1.14 Company Discretionary Credits 4 Section 1.15 Company Discretionary Credit Account 4 Section 1.16 Company Matching Credits 4 Section 1.17 Company Matching Credit Account 4 Section 1.18 Deferral Election 4 Section 1.19 Deferred Bonus 4 Section 1.20 Deferred Bonus Account 4 Section 1.21 Deferred Bonus Election 4 Section 1.22 Deferred Equity-Based Compensation 4 Section 1.23 Deferred Equity-Based Compensation Account 4 Section 1.24 Deferred Equity-Based Compensation Election 4 Section 1.25 Deferred Restoration Distribution 4 Section 1.26 Deferred Restoration Distribution Account 4 Section 1.27 Deferred Restoration Distribution Election 5 Section 1.28 Deferred Salary 5 Section 1.29 Deferred Salary Account 5 Section 1.30 Deferred Salary Election 5 Section 1.31 Deferred Stock Account 5 Section 1.32 Deferred Stock Election 5 Section 1.33 Disability 5 Section 1.34 Disabled 5 Section 1.35 Dividend Reinvestment Return 5 Section 1.36 Equity-Based Compensation 5 Section 1.37 Equity-Based Compensation Plan 5

351 Section 1.38 ERISA 5 Section 1.39 Fiscal Year 5 Section 1.40 Grandfathered Deferred Compensation Plan Deferrals 6 Section 1.41 Grandfathered Restoration Plan Benefit 6 Section 1.42 Investment Election 6 Section 1.43 Investment Options 6 Section 1.44 Other Stock-Based Awards 6 Section 1.45 Participant 6 Section 1.46 Performance Units 6 Section 1.47 Plan 6 Section 1.48 Plan Year 6 Section 1.49 Restricted Stock Units 6 Section 1.50 Restoration Plan 6 Section 1.51 Restoration Plan Benefit 6 Section 1.52 Retirement Plan 6 Section 1.53 Separation from Service 7 Section 1.54 Specified Employee 7 Section 1.55 Spouse 7 Section 1.56 Stock Award Plan 7 Section 1.57 Stock Trust 7 Section 1.58 Total Eligible Compensation 7 ARTICLE II Eligibility and Participation 7 Section 2.1 Eligibility. 7 Section 2.2 Participation. 8 ARTICLE III Deferral Elections and Deferral Periods 9 Section 3.1 Deferred Salary Election. 9 Section 3.2 Deferred Bonus Election. 10 Section 3.3 Deferred Equity-Based Compensation Election. 10 Section 3.4 Company Matching Credits. 11 Section 3.5 Company Discretionary Credits. 12 Section 3.6 Deferred Restoration Distribution Election. 13 Section 3.7 Deferral Period. 13 Section 3.8 Modification of Deferral Period. 14 ARTICLE IV Restoration Benefits 15 Section 4.1 Amount of Restoration Plan Benefit. 15 Section 4.2 Pre-Retirement Restoration Death Benefit. 16 Section 4.3 Early Retirement Adjustments. 16 Section 4.4 Payment of Restoration Plan Benefits. 16 Section 4.5 Payment of Restoration Plan Benefit Following Change in Control. 18 Section 4.6 Restoration Plan Benefit on Account of Disability Retirement. 19 ARTICLE V Participants Accounts 20 Section 5.1 Crediting of Employee Deferrals and Company Matching and Discretionary Credits. 20

352 Section 5.2 Investment Election. 20 Section 5.3 Hypothetical Earnings. 20 Section 5.4 Vesting. 24 Section 5.5 Account Statements. 24 ARTICLE VI Distributions and Withdrawals 24 Section 6.1 Timing of Distributions. 24 Section 6.2 Form of Distribution. 28 ARTICLE VII General Provisions 32 Section 7.1 Unsecured Promise to Pay. 32 Section 7.2 Plan Unfunded. 32 Section 7.3 Designation of Beneficiary. 32 Section 7.4 Expenses. 32 Section 7.5 Voting Common Stock. 32 Section 7.6 Non-Assignability. 33 Section 7.7 Mandatory Deferral. 33 Section 7.8 Employment/Participation Rights. 33 Section 7.9 Severability. 33 Section 7.10 No Individual Liability. 33 Section 7.11 Tax and Other Withholding. 33 Section 7.12 Applicable Law. 34 Section 7.13 Incompetency. 34 Section 7.14 Notice of Address. 34 ARTICLE VIII Administration 34 Section 8.1 Committee. 34 Section 8.2 Claims Procedure. 35 Section 8.3 Plan to Comply With Code Section 409A. 35 ARTICLE IX Amendment, Termination and Effective Date 35 Section 9.1 Amendment of the Plan. 35 Section 9.2 Termination of the Plan. 35 Section 9.3 No Impairment of Benefits. 35 Section 9.4 Effective Date. 35 ATTACHMENT A 36 ATTACHMENT B 36

353 BD DEFERRED COMPENSATION AND RETIREMENT BENEFIT RESTORATION PLAN Amended and Restated as of January 1, 2017 FOREWORD Effective as of August 1, 1994 (the Effective Date ), Becton, Dickinson and Company (the Company ) adopted the Becton, Dickinson and Company Salary and Bonus Deferral Plan (the Plan ) for the benefit of certain of its employees. The Plan is intended to be an unfunded plan of deferred compensation primarily for the benefit of a select group of management and highly compensated employees. To the extent that the Plan permits the voluntary deferral of bonuses, the Plan is intended to amend and replace the Bonus Deferral Option of the Becton, Dickinson and Company Executive Bonus Plan. The purpose of the Plan is to permit those employees of the Company who are part of a select group of management or highly compensated employees to defer, pursuant to the provisions of the Plan, a portion of the salaries, bonuses and other remuneration (including certain equity-based compensation) otherwise payable to them. Effective as of August 15, 1996, the Board of Directors of the Company amended the Plan to permit Participants to have their deferred salaries or deferred bonuses considered to be invested in Common Stock of the Company, to permit those Participants to vote a number of shares of Common Stock equal to the number considered to be held for their benefit under the Plan, and for certain other purposes. Effective as of November 1, 2001, the Plan was amended and restated to rename the Plan as the Becton, Dickinson and Company Deferred Compensation Plan, and to modify the deferral opportunities and the distribution and withdrawal options under the Plan, and to make certain other modifications deemed desirable. Effective as of March 22, 2004, the Plan was amended and restated to permit Participants to defer certain equity-based compensation awarded under the Becton, Dickinson and Company Stock Award Plan (the Stock Award Plan ) and the Becton, Dickinson and Company 2004 Employee and Director Equity-Based Compensation Plan (the Equity-Based Compensation Plan ). Effective as of January 1, 2005, the Plan was amended (in operation and through various separate amendments and related documents) in several respects to comply with the requirements of Code Section 409A. In addition, effective as of December 31, 2008, the Plan was further amended to: (1) consolidate the provisions of the Becton, Dickinson and Company Retirement Benefit Restoration Plan with this Plan (reflecting the consolidated administration of the two plans); and (2) bring the consolidated Plan into compliance with the written plan requirements of Code Section 409A. Notwithstanding any provision to the contrary in this Plan, each provision in this Plan shall be interpreted to permit the deferral of compensation in accordance with Code Section 409A, and any provision that would conflict with such requirements shall not be valid or enforceable. Effective as of October 1, 2009, the Plan was amended to allow Participants to change their Investment Elections on a daily basis. Effective as of January 1, 2010, the Plan was amended to limit future hypothetical investment in Common Stock. Effective as of January 1, 2013, the Plan was amended to reflect the conversion of certain Participants Retirement Plan benefits from being calculated using the final average pay formula under the Retirement

354 Plan to being calculated using the cash balance formula under the Retirement Plan and to reflect certain administrative practices. Effective as of January 1, 2014, the Plan was amended to reflect certain design changes related to Plan eligibility. In addition, effective for deferrals made on and after January 1, 2014, the Plan was amended to reflect certain changes related to deferral elections and Company Matching Credits. Effective as of January 1, 2017, the Plan was amended and restated to rename the Plan as the BD Deferred Compensation and Retirement Benefit Restoration Plan, to eliminate the 15-year annual installment distribution option with respect to amounts deferred on or after January 1, 2017, and to clarify the eligibility to receive certain in-kind distributions of Common Stock of the Company. In addition, effective as of January 1, 2017, the CareFusion Corporation Deferred Compensation Plan was merged into the Plan. ARTICLE I Definitions Section 1.1 Section 1.2 Section 1.3 Section 1.4 Section 1.5 Section 1.6 Section 1.7 Section 1.8 Section (k) Plan means the BD 401(k) Plan. Account or Accounts means the bookkeeping account or accounts established under the Plan, if any, on behalf of a Participant and includes earnings credited thereon or losses charged thereto. Agreement means an agreement entered into between an Eligible Employee and the Company, as agreed to by the Compensation and Benefits Committee of the Board of Directors of the Company (or any committee successor thereto), to participate in the provisions of this Plan related to Restoration Plan benefits and delineating certain terms and conditions with respect to such participation including (but not limited to) the benefits (if any) that are to be provided to the Eligible Employee in lieu of or in addition to the benefits described under the terms of this Plan. Annual Open Enrollment Period means the annual period designated by the Committee, which ends not later than the December 31 of a Plan Year, during which a Participant may make or change deferral and/or distribution elections under this Plan. Base Salary means the base salary or wages otherwise taken into account under the 401(k) Plan, determined in accordance with the provisions of such plan, but without regard to the limitation on compensation otherwise required under Code Section 401(a)(17), and without regard to any deferrals of the foregoing of compensation under this or any other plan of deferred compensation maintained by the Company. Beneficiary or Beneficiaries means the beneficiary or beneficiaries who, pursuant to the provisions of this Plan, is or are to receive the amount, if any, payable under this Plan upon the death of a Participant. Board of Directors means the Board of Directors of the Company. Bonus means the annual bonus payable under the Company s Performance Incentive Plan, or any successor thereto. Change in Control of the Company means any of the following events: (1) the acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the Exchange Act )) (a Person ) of beneficial ownership (within the meaning of Rule 13(d)(3) promulgated under the Exchange Act) of 25% or more of either (A) the then-outstanding shares of common stock of the Company (the Outstanding Company Common Stock ) or (B) the combined voting power of the then-outstanding voting securities of the Company entitled to vote generally in the election of directors (the Outstanding Company Voting Securities );

355 provided, however, that, for purposes of this Section 1.9, the following acquisitions shall not constitute a Change in Control: (i) any acquisition directly from the Company, (ii) any acquisition by the Company, (iii) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any affiliated company, (iv) any acquisition by any corporation pursuant to a transaction that complies with Sections 1.9(3)(A), 1.9(3)(B) and 1.9(3)(C), or (v) any acquisition that the Board determines, in good faith, was inadvertent, if the acquiring Person divests as promptly as practicable a sufficient amount of the Outstanding Company Common Stock and/or the Outstanding Company Voting Securities, as applicable, to reverse such acquisition of 25% or more thereof. (2) Individuals who, as of April 24, 2000, constitute the Board (the Incumbent Board ) cease for any reason to constitute at least a majority of the Board; provided, however, that any individual becoming a director subsequent to April 24, 2000 whose election, or nomination for election as a director by the Company s shareholders, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board. (3) Consummation of a reorganization, merger, consolidation or sale or other disposition of all or substantially all of the assets of the Company (a Business Combination ), in each case, unless, following such Business Combination, (A) all or substantially all of the individuals and entities that were the beneficial owners of the Outstanding Company Common Stock and the Outstanding Company Voting Securities immediately prior to such Business Combination beneficially own, directly or indirectly, more than 60% of the then-outstanding shares of common stock and the combined voting power of the then-outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the corporation resulting from such Business Combination (including, without limitation, a corporation that, as a result of such transaction, owns the Company or all or substantially all of the Company s assets either directly or through one or more subsidiaries) in substantially the same proportions as their ownership immediately prior to such Business Combination of the Outstanding Company Common Stock and the Outstanding Company Voting Securities, as the case may be, (B) no Person (excluding any corporation resulting from such Business Combination or any employee benefit plan (or related trust) of the Company or such corporation resulting from such Business Combination) beneficially owns, directly or indirectly, 25% or more of, respectively, the then-outstanding shares of common stock of the corporation resulting from such Business Combination or the combined voting power of the then-outstanding voting securities of such corporation, except to the extent that such ownership existed prior to the Business Combination, and (C) at least a majority of the members of the board of directors of the corporation resulting from such Business Combination were members of the Incumbent Board at the time of the execution of the initial agreement or of the action of the Board providing for such Business Combination; or (4) Approval by the shareholders of the Company of a complete liquidation or dissolution of the Company. Section 1.10 Code means the Internal Revenue Code of 1986, as amended, or any successor statute.

356 Section 1.11 Section 1.12 Section 1.13 Section 1.14 Section 1.15 Section 1.16 Section 1.17 Section 1.18 Section 1.19 Section 1.20 Section 1.21 Section 1.22 Section 1.23 Section 1.24 Section 1.25 Section 1.26 Committee means the Plan Administrative Committee, which is responsible for administering the Plan. The Committee shall consist of three or more employees of the Company as determined by, and appointed by, the Board of Directors. The Committee may delegate pursuant to a written authorization (including, by way of illustration, through a contract, memorandum, or other written delegation document) any or all of its responsibilities involving ongoing day-today administration or ministerial acts, as set forth in this Plan to one or more individuals or service-providers. In any case where this Plan refers to the Committee, such reference is deemed to be a reference to any delegate of the Committee appointed for such purpose. Common Stock means the common stock ($1.00 par value) of the Company, including any shares into which it may be split, subdivided or combined. Company means Becton, Dickinson and Company and any successor to such corporation by merger, purchase or otherwise. Company Discretionary Credits means the amounts credited to a Participant s Company Discretionary Credit Account, if any, pursuant to Section 3.5. Company Discretionary Credit Account means the bookkeeping account established under Section 3.5, if any, on behalf of a Participant and includes any earnings credited thereon or losses charged thereto pursuant to Article IV. Company Matching Credits means the a/mounts credited to a Participant s Company Matching Credit Account, if any, pursuant to Section 3.4. Company Matching Credit Account means the bookkeeping account established under Section 3.4, if any, on behalf of a Participant and includes any earnings credited thereon or losses charged thereto pursuant to Article IV. Deferral Election means the Participant s election to participate in this Plan and defer amounts eligible for deferral in accordance with the Plan terms. Except as the context otherwise requires, references herein to Deferral Elections include any subsequent modifications of a prior Deferral Election. Deferred Bonus means the amount of a Participant s Bonus that such Participant has elected to defer until a later year pursuant to an election under Section 3.2. Deferred Bonus Account means the bookkeeping account established under Section 3.2 on behalf of a Participant, and includes any earnings credited thereon or losses charged thereto pursuant to Article IV. Deferred Bonus Election means the election by a Participant under Section 3.2 to defer a portion of the Participant s Bonus until a later year. Deferred Equity-Based Compensation means the amount of a Participant s Equity-Based Compensation that such Participant has elected to defer until a later year pursuant to an election under Section 3.3. Deferred Equity-Based Compensation Account means the bookkeeping account established under Section 3.3 on behalf of a Participant, and includes any earnings credited thereon or losses charged thereto pursuant to Section 5.3(b). Deferred Equity-Based Compensation Election means the election by a Participant under Section 3.3 to defer a portion of the Participant s Equity-Based Compensation. Deferred Restoration Distribution means the amount of a Participant s distributable Restoration Plan Benefit that such Participant has elected to defer under this Plan pursuant to an election under Section 3.6. Deferred Restoration Distribution Account means the bookkeeping account established under Section 3.6 on behalf of a Participant, and includes any earnings credited thereon or losses charged thereto pursuant to Article IV.

357 Section 1.27 Section 1.28 Section 1.29 Section 1.30 Section 1.31 Section 1.32 Section 1.33 Deferred Restoration Distribution Election means the election by a Participant under Section 3.6 to defer all or a portion of the Participant s distributable Restoration Plan Benefit. Deferred Salary means the amount of a Participant s Base Salary that such Participant has elected to defer until a later year pursuant to an election under Section 3.1. Deferred Salary Account means the bookkeeping account established under Section 3.1 on behalf of a Participant, and includes any earnings credited thereon or losses charged thereto pursuant to Article V. Deferred Salary Election means the election by a Participant under Section 3.1 to defer until a later year a portion of his or her Base Salary. Deferred Stock Account means the bookkeeping account established under Section 5.3(b) on behalf of a Participant and includes, in addition to amounts stated in that Section, any Dividend Reinvestment Return credited thereon. Deferred Stock Election means the election by a Participant under Section 5.3(b) to have applicable deferred amounts credited in the form of Common Stock to the Participant s Deferred Stock Account. Disability means a Participant s total disability as defined below and determined in a manner consistent with Code Section 409A and the regulations thereunder: (i) The Participant is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than 12 months; or (ii) The Participant is, by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, receiving income replacement benefits for a period of not less than three months under an accident and health plan covering employees of the Company. A Participant will be deemed to have suffered a Disability if determined to be totally disabled by the Social Security Administration. Section 1.34 Section 1.35 Section 1.36 Section 1.37 Section 1.38 Section 1.39 Disabled means that a Participant is totally and permanently disabled as defined in the Company s Long-Term Disability Plan. With respect to payments of amounts in excess of a Participant s Grandfathered Deferred Compensation Plan Deferrals or Grandfathered Restoration Plan Benefit on account of disability, the term Disabled means a disability that meets the standard for disability under Code Section 409A and the guidance issued thereunder. Dividend Reinvestment Return means the amounts which are credited to each Participant s Deferred Stock Account pursuant to Section 5.3(b) to reflect dividends declared by the Company on its Common Stock. Equity-Based Compensation means (i) November 24, 2003, awards granted under the Stock Award Plan and (ii) Restricted Stock Units, Performance Units, and Other Stock-Based Awards granted under Sections 7, 8, and 9 of the Equity-Based Compensation Plan, and does not include any such awards that qualify as vested stock, restricted stock, stock option awards, or stock appreciation rights. Equity-Based Compensation Plan means the Becton, Dickinson and Company 2004 Employee and Director Equity- Based Compensation Plan. ERISA means the Employee Retirement Income Security Act of 1974, as amended, or any successor statute. Fiscal Year means the fiscal year of the Company, which currently is the twelve-month period commencing on the first day of October and ending on the last day of September of the following calendar year.

358 Section 1.40 Section 1.41 Section 1.42 Section 1.43 Section 1.44 Section 1.45 Section 1.46 Section 1.47 Section 1.48 Section 1.49 Section 1.50 Section 1.51 Section 1.52 Grandfathered Deferred Compensation Plan Deferrals means amounts deferred under the terms of this Plan as in effect as of December 31, 2004 (and the earnings credited thereon before, on or after January 1, 2005) for which (i) the Participant had a legally binding right as of December 31, 2004, to be paid the amount, and (ii) such right to the amount was earned and vested as of December 31, 2004 and was credited to the Participant s Account. Grandfathered Restoration Plan Benefit means amounts deferred under the terms of the Restoration Plan as in effect as of December 31, 2004 for which the Participant had a legally binding right as of December 31, 2004 and which amount was earned and vested as of December 31, The calculation of a Participant s Grandfathered Restoration Plan Benefit shall equal the present value of the amount to which the Participant would have been entitled under the Restoration Plan if the Participant voluntarily terminated employment on December 31, 2004, and received a payment of the benefits available from the Restoration Plan on the earliest possible date allowed under the Restoration Plan to receive a payment of benefits following the termination of employment, and received the benefits in the form with the maximum value. Notwithstanding the foregoing, for any subsequent taxable year of the Participant, the Grandfathered Restoration Plan Benefit may increase to equal the present value of the benefit the Participant actually becomes entitled to, in the form and at the time actually paid, determined under the terms of the Restoration Plan, as in effect on October 3, 2004, without regard to any further services rendered by the Participant after December 31, 2004, or any other events affecting the amount of or the entitlement to benefits (other than the Participant s election with respect to the time or form of an available benefit). For purposes of calculating the present value of a benefit under this Section, actuarial assumptions and methods to be used will be the same as those used to value benefits under the BD Retirement Plan and shall otherwise be made in accordance with Reg A-6(a)(3)(i). Investment Election means the Participant s election to have deferred amounts credited with hypothetical earnings credits (or losses) that track the investment performance of the Investment Options and/or Common Stock in accordance with Article V. Investment Options means those hypothetical targeted investment options designated by the Committee as measurements of the rate of return to be credited to (or charged against) amounts deferred to Participants Accounts. Other Stock-Based Awards means awards granted under Section 9 of the Equity-Based Compensation Plan. Participant means a common law employee of the Company who meets the eligibility and participation requirements set forth in Article II. Performance Units means awards granted under Section 8 of the Equity-Based Compensation Plan. Plan means the BD Deferred Compensation and Retirement Benefit Restoration Plan as from time to time in effect. Previously, the terms of this Plan were determined under the terms of the Restoration Plan and the Becton, Dickinson and Company Deferred Compensation Plan (previously the Becton, Dickinson and Company Salary and Bonus Deferral Plan), which are hereby consolidated into a single document. Plan Year means the calendar year. Restricted Stock Units means Restricted Stock Units granted under Section 7 of the Equity-Based Compensation Plan. Restoration Plan means the Becton, Dickinson and Company Retirement Benefit Restoration Plan, as amended and restated from time to time. Restoration Plan Benefit means the Participant s benefit described in Article IV of this Plan. Retirement Plan means the BD Retirement Plan, as it may be amended and restated from time to time.

359 Section 1.53 Section 1.54 Section 1.55 Section 1.56 Section 1.57 Section 1.58 Separation from Service means a termination of employment or other separation from service from the Company as described in Code Section 409A and the regulations thereunder. Specified Employee means a person identified in accordance with procedures adopted by the Committee that reflect the requirements of Code Section 409A(a)(2)(B)(i) and applicable guidance thereunder. Spouse means the individual to whom the Participant is legally married on the date of death or other benefit commencement. Stock Award Plan means the Becton, Dickinson and Company Stock Award Plan as the same may be amended from time to time. Stock Trust means the Becton, Dickinson and Company Deferred Salary and Bonus Trust established as of August 15, 1996 between the Company and Wachovia Bank of North Carolina, N.A., as amended from time to time thereafter. Total Eligible Compensation means the base salary or wages and bonus otherwise taken into account under the 401(k) Plan, determined in accordance with the provisions of such plan, but without regard to the limitation on compensation otherwise required under Code Section 401(a)(17), and without regard to any deferrals of the foregoing of compensation under this or any other plan of deferred compensation maintained by the Company; provided, however, that Total Eligible Compensation for a Plan Year shall not exceed three (3) times the dollar limit otherwise in effect for such Plan Year under Code Section 401(a)(17). Section 2.1 ARTICLE II Eligibility and Participation Eligibility. (a) Only Eligible Employees who meet the conditions of this Article II shall be eligible to become a Participant in this Plan. Unless the Committee determines otherwise, any employee of the Company (or any subsidiary or affiliate of the Company) who participates in the Retirement Plan and whose benefits under the Retirement Plan are limited pursuant to the provisions included in the Retirement Plan in order to comply with Code Sections 401(a)(17) or 415, shall be an Eligible Employee with respect to benefits payable under Article IV and Section 3.6 (i.e., eligibility for the restoration portion of the Plan). An Eligible Employee for purposes of Sections 3.1, 3.2, 3.3, 3.4, and 3.5 (i.e., eligibility for the deferred compensation portion of the Plan) is an individual who (b) meets the following requirements: (i) the individual is a common law employee of a unit of the Company (or of one of its subsidiaries) to which the Plan has been adopted pursuant to a decision by, or with the approval of, the Board of Directors; (ii) (iii) the individual is not a nonresident alien of the United States receiving no United States source income within the meaning of Sections 861(a)(3) or 911(d)(2) of the Code; and the employee has annualized Base Salary of $205,000 or more (indexed annually by the same amount as the compensation limit under Code Section 401(a)(17)) for the calendar year in which the Deferral Election is required to be made. The Committee shall have the ability to adjust, prospectively for any Plan Year, the dollar limitation in Section 2.1(a)(iii). The Committee may also: (i) designate as ineligible particular individuals, groups of individuals or employees of business units who otherwise would be eligible under Section 2.1(a); or

360 (ii) designate as eligible particular individuals, groups of individuals or employees of business units who otherwise would be ineligible under Section 2.1(a); provided, however, that any such designations shall be made in a manner consistent with the requirements of Code Section 409A and the regulations and other guidance thereunder to avoid adverse tax consequences to affected Participants. Section 2.2 (c) Participation. (a) (b) (c) An employee who, at any time, ceases to meet the foregoing eligibility requirements, as determined in the sole discretion of the Committee, shall thereafter cease to be a Participant eligible to continue making deferrals under the Plan, effective as of the first day of the Plan Year coincident with or next following the date of such cessation of eligibility in a manner consistent with the requirements of Code Section 409A and the regulations and other guidance issued thereunder to avoid adverse tax consequences to affected Participants, and any deferral elections then in effect shall cease to be effective as of the first day of such Plan Year. In such case, the individual may remain a Participant in the Plan with respect to amounts already deferred prior to the date such individual ceased to be an active Participant. General Rule. An Eligible Employee shall become an active Participant in the Plan at such time as the Eligible Employee either: (i) makes a timely Deferral Election pursuant to Subsections (b) and (c) herein; and/or (ii) meets the requirements under Subsection (d) with respect to eligibility for a Restoration Plan Benefit. Deferral Election. As soon as practicable after the Committee determines that an individual is an Eligible Employee, the Committee shall provide the Eligible Employee with the appropriate election forms with which to make a Deferral Election. The Eligible Employee shall make the Deferral Election in the manner set forth in Subsection (c) herein and within the time periods set forth in Article III. In the case of an employee who first becomes an Eligible Employee under this Plan (and is not eligible for any other plan with which this Plan is aggregated for purposes of Code Section 409A) during a Plan Year, such Deferral Election may be made within the first thirty (30) days of eligibility with respect to any Base Salary to be earned thereafter for the remainder of the Plan Year. In the case of an employee who first becomes an Eligible Employee under this Plan (and is not eligible for any other plan with which this Plan is aggregated for purposes of Code Section 409A) during a Plan Year, such Deferral Election within the first thirty (30) days of eligibility may also be made with respect to any Equity-Based Compensation awarded or granted at the time of hire and to be earned after the date of the Deferral Election. If the Participant does not return the completed forms to the Committee at such time as required by the Committee, the Participant will not be allowed to participate in the Plan until the next Annual Open Enrollment Period. All Deferral Elections hereunder (including any modifications of prior Deferral Elections otherwise permitted under the Plan) may be made in accordance with written, electronic or telephonic procedures prescribed by the Committee. Contents of Deferral Election. A Participant s Deferral Election must be made in the manner designated by the Committee and must be accompanied by: (i) (ii) any election to defer Base Salary and/or Bonus; any election to defer Equity-Based Compensation and a deferral period election with respect to Equity- Based Compensation, as determined by the Committee;

361 (d) (e) (iii) any election to defer payment of Restoration Plan Benefits (if applicable) and any Company Discretionary Credits and a separate deferral period election with respect to each such separate category of deferral; (iv) an Investment Election (except with respect to an Equity-Based Compensation Election, which shall automatically be credited to a Deferred Stock Account for investment return purposes), in accordance with the provisions of Article V; (v) a designation of a Beneficiary or Beneficiaries to receive any deferred amounts owed upon the Participant s death; (vi) subject to Section 2.2(c)(i), a designation as to the form of distribution for each separate year s deferral and each separate category of deferral (Company Matching Credit deferrals will be subject to the Participant s distribution option elections with respect to Base Salary provided, however, that if the Participant does not make a Base Salary election but does make a Bonus deferral election, then the Participant s Company Matching Credit deferrals will be subject to the Participant s distribution option elections with respect to Bonus); provided, however, that if no specific election is made with respect to any deferred amount, the Participant will be deemed to have elected to receive such amounts in the form of a lump sum distribution (in cash and, solely to the extent distributable amounts are credited to the Participant s Deferred Stock Account at the time of the distribution, shares of Common Stock); (vii) an application for a policy of life insurance under which the Participant is the insured and the Company is the sole owner of and beneficiary under such policy; and (viii) such additional information as the Committee deems necessary or appropriate. Unless the Committee determines otherwise or unless otherwise provided in an Agreement, if any, an Eligible Employee who participates in the Retirement Plan and whose benefits under the Retirement Plan are limited pursuant to the provisions included in the Retirement Plan in order to comply with Code Sections 401(a)(17) or 415, shall automatically become a Participant in this Plan with respect to benefits payable under Article IV. The participation of any Participant may be suspended or terminated by the Committee at any time, but no such suspension or termination shall operate to reduce any benefits accrued by the Participant under the Plan prior to the date of suspension or termination and, further, any such suspension or termination may only be done in a manner consistent with the requirements of Code Section 409A and the regulations and other guidance issued thereunder to avoid adverse tax consequences to affected Participants. ARTICLE III Deferral Elections and Deferral Periods Section 3.1 Deferred Salary Election. (a) Each Participant who has elected to defer the maximum pre-tax elective deferral that is permitted for a calendar year under the 401(k) Plan and Code Section 402(g) may make a Deferred Salary Election with respect to Base Salary otherwise to be paid in such calendar year. A Participant may elect to defer from 1% to 75% of the Participant s Base Salary (in increments of 1%). Notwithstanding the foregoing, any Deferred Salary Election must be made in a manner that will ensure that the Participant is paid a sufficient amount of Base Salary that will allow adequate amounts available for (i)

362 Section 3.2 Section 3.3. any pre-tax elective deferrals under the 401(k) Plan, and (ii) any amounts to be deferred by the Participant in order to participate in any other benefit programs maintained by the Company. (b) Except with respect to Deferred Salary Elections made by Participants who first become eligible to participate during a Plan Year (which elections must be made as specified in Section 2.2(b)), a Deferred Salary Election with respect to Base Salary for a particular calendar year must be made during the time period specified by the Committee, but in no event later than the December 31 preceding the commencement of that calendar year or at such earlier time as determined by the Committee. Once a Deferred Salary Election is made, it shall be irrevocable after the final deadline established by the Committee for making the election. Such Deferred Salary shall be credited to the Participant s Deferred Salary Account as of the first business day after the last day of each payroll period. Deferred Bonus Election. (a) Each Participant who agrees to defer the maximum pre-tax elective deferral that is permitted for a calendar year under the 401(k) Plan and under Code Section 402(g) may elect to make a Deferred Bonus Election with respect to a Bonus otherwise to be paid in the calendar year immediately following (or, in the discretion of the Committee, in a later year following) the year of the Participant s Deferred Bonus Election. A Participant may elect to defer from 1% to 100% of the Participant s Bonus (in increments of 1%); provided, however, that the Participant s Deferred Bonus Election must result in a deferral of at least $5,000. In the event that Participant s Deferred Bonus Election does not result in a deferral of at least $5,000 but the Participant s Bonus is at least $5,000, such Participant s Deferred Bonus Election shall be automatically increased to the percentage that results in a deferral of $5,000. In the event that the Participant s Bonus is less than $5,000, such Participant s Deferred Bonus Election shall be void. (b) A Deferred Bonus Election with respect to any Bonus to be earned during a Fiscal Year must be made no later than the date that is six months before the end of the performance period (which performance period shall not be less than twelve months) or such other earlier date designated by the Committee. Once made, a Deferred Bonus Election cannot be changed or revoked after the final deadline established by the Committee for making the election, except as provided herein. Such Deferred Bonus shall be credited to the Participant s Deferred Bonus Account as of the first business day in January of the year that the Bonus otherwise would have been paid to the Participant in the absence of any deferral hereunder. Deferred Equity-Based Compensation Election. (a) To the extent permitted by law on a tax deferred basis, each Participant may elect to make a Deferred Equity- Based Compensation Election with respect to Equity-Based Compensation otherwise to be granted in the calendar year immediately following (or, in the discretion of the Committee, in a later year following) the year of the Participant s Deferred Equity-Based Compensation Election. A Participant may elect to defer his or her Equity-Based Compensation, and may make separate elections with respect to each of the Participant s Restricted Stock Units, Performance Units, Other Stock-Based Awards, and awards under the Stock Award Plan, provided, however, that, the Participant s Equity-Based Compensation for each type of Equity-Based Compensation must result in a deferral of at least 25% of such type of Equity-Based Compensation.

363 Section 3.4 (b) Except with respect to Deferred Equity-Based Compensation Elections made by Participants who first become eligible to participate during a Plan Year (which elections must be made as specified in Section 2.2(b)), a Deferred Equity-Based Compensation Election with respect to any Equity-Based Compensation to be granted in a particular calendar year must be made during the time period specified by the Committee, but in no event later than the December 31 preceding the commencement of that calendar year or at such earlier time as determined by the Committee. Notwithstanding the foregoing, with respect to a Deferred Equity-Based Compensation Election governing Restricted Stock Units that are designated as performance-based compensation by the Company and that qualify as performance-based compensation under Code Section 409A and any guidance thereunder, such Deferred Equity-Based Compensation Election must be made no later than the date that is six months before the end of the performance period (which performance period shall not be less than twelve months) or such other earlier date designated by the Company, provided, however, that to be eligible to make any such Deferred Equity-Based Compensation Election the Participant must have provided services to the Company (or one of its subsidiaries) from the later of the date the performance period starts or the date the performance criteria are established through the date the Deferred Equity-Based Compensation Election is made. Once made, a Deferred Equity-Based Compensation Election cannot be changed or revoked after the final deadline established by the Committee for making the election, except as provided herein. Such Deferred Equity-Based Compensation shall be credited to the Participant s Deferred Equity-Based Compensation Account as soon as practicable after the Equity-Based Compensation otherwise would vest and be paid, and will be credited for investment tracking purposes to the Participant s Deferred Stock Account under Section 5.3(b). Company Matching Credits. (a) (b) Effective for deferrals made on or after January 1, 2016, if a Participant has made a Deferred Salary Election in accordance with Section 3.1 or a Deferred Bonus Election in accordance with Section 3.2, then the Participant shall be eligible to have Company Matching Credits credited to the Participant s Company Matching Credit Account in accordance with Section 3.4(b). The maximum potential Company Matching Credits for a Participant under this Plan for a Plan Year shall equal the difference between 4.5% of Total Eligible Compensation minus the maximum Company matching contribution available to the Participant under the BD 401(k) Plan (other than catch-up contributions). If a Participant has deferred less than 6% of Total Eligible Compensation, taking into account deferrals under this Plan and pre-tax elective deferrals under the BD 401(k) Plan (other than catch-up contributions), then the actual Company Matching Credits to be credited to a Participant s Company Matching Credit Account shall equal 75% of the total of the Participant s Deferred Salary and Deferred Bonus under this Plan plus the Participant s pre-tax elective deferrals under the BD 401(k) Plan (other than catch-up contributions), less the matching contribution to which the Participant is entitled under the BD 401(k) Plan. Company Matching Credits under Section 3.4(a) shall be credited to the Participant s Company Matching Credit Account as soon as practicable as determined by the Committee after such deferral is credited to the Participant s Deferred Salary Account and/or Deferred Bonus Account, but in no event less frequently than on a annual basis, and shall be subject to the overall Plan Year limit on such amounts described in Section 3.4(a) and the vesting schedule described in Article V.

364 Section 3.5 Section 3.6 Company Discretionary Credits. The Company may, in its sole discretion, provide for additional credits to all or some Participants Accounts at any time. Such amounts shall be credited to the Participant s Company Discretionary Credit Account and shall be subject to the vesting schedule established by the Company at the time such amounts are credited. Deferred Restoration Distribution Election. (a) (b) General Rule. Each Participant who is eligible to receive a Restoration Plan Benefit under the Plan may elect, in accordance with this Section 3.6, to make a Deferred Restoration Distribution Election with respect to a Restoration Plan Benefit that is otherwise to be paid to the Participant. If a Participant makes such an election, the Participant must elect to defer 100% of the value of the Participant s applicable Restoration Plan Benefit. To the extent a Participant s Restoration Plan Benefit is attributable to the final average pay benefit formula under the Retirement Plan and not described in Section 4.4(b)(i)(D), the value of such Restoration Plan Benefit shall equal the actuarial present value (at the time payment becomes due) of the portion of the Participant s (or Beneficiary s) Restoration Plan Benefit based on the final average pay formula, determined as of normal retirement age under the Retirement Plan, based on the Applicable Interest Rate and the Applicable Mortality Table (as such terms are defined in the Retirement Plan) used under the Retirement Plan for calculating present value. To the extent a Participant s Restoration Plan Benefit is attributable to the cash balance benefit formula under the Retirement Plan or is otherwise described in Section 4.4(b)(i)(D) below, the value of such Restoration Plan Benefit shall equal the Participant s Restoration Plan Benefit hypothetical account balance at such time. Once deferred, such amounts shall be credited to the Participant s Deferred Restoration Distribution Account as provided for in Article V. Amounts held in a Deferred Restoration Distribution Account may not be paid in the form of an annuity and may only be paid in a form otherwise available to amounts credited to a Deferred Salary Account, as provided for in Article VI. Grandfathered Restoration Plan Benefit. With respect to amounts equal to a Participant s Grandfathered Restoration Plan Benefit, a Deferred Restoration Distribution Election with respect to any amounts payable during a particular calendar year must be made at least one year before the date that the Grandfathered Restoration Plan Benefit is otherwise payable to the Participant pursuant to Section 4.4. Once made, such a Deferred Restoration Distribution Election cannot be changed or revoked except as provided herein. If the Participant otherwise becomes entitled to a distribution of a Restoration Plan Benefit after having made such an election and before the end of such one-year period, such election shall be ineffective and the applicable Restoration Plan Benefit payment shall not be deferred hereunder. Any such Deferred Restoration Distribution shall be credited to the Participant s Deferred Restoration Distribution Account as soon as practicable after such amount would otherwise have been payable to the Participant. The amount in the Participant s Deferred Restoration Distribution Account attributable to the Participant s Grandfathered Restoration Plan Benefit shall be payable under this Plan as follows: (i) If the Participant has otherwise made a Deferred Salary Election under Section 3.1 for the year that the Participant made a Deferred Restoration Distribution Election, the amount credited to the Participant s Deferred Restoration Distribution Account shall be payable at the same time and in the same form of distribution as any such Deferred Salary.

365 Section 3.7 (c) (ii) If the Participant has not made a Deferred Salary Election but has otherwise made a Deferred Bonus Election under Section 3.2 for the year that the Participant made a Deferred Restoration Distribution Election, the amount credited to the Participant s Deferred Restoration Distribution Account shall be payable at the same time and in the same form of distribution as any such Deferred Bonus. (iii) If the Participant has not made a Deferred Salary Election under Section 3.1 nor a Deferred Bonus Election under Section 3.2 for the year that the Participant made a Deferred Restoration Distribution Election, the amount credited to the Participant s Deferred Restoration Distribution Account equal to a Participant s Grandfathered Restoration Plan Benefit shall be payable in the form of a single lump sum payment at the Participant s termination of employment unless the Participant makes an election to change the time and form of payment of such amount in accordance with the terms of this Plan. Non-Grandfathered Restoration Plan Benefit. A Participant s Deferred Restoration Distribution Election with respect to amounts in excess of a Participant s Grandfathered Restoration Plan Benefit payable during a particular calendar year must specify the time and form of payment otherwise the Participant s Deferred Restoration Plan Benefit shall be payable in the form of a single lump sum payment at the Participant s termination of employment. In addition, such Deferred Restoration Distribution Election shall not be effective unless the following requirements are met: (i) the election will not take effect until at least twelve months after the date on which the election is made and will not be recognized with respect to payments that would otherwise have commenced during such twelve-month period; (ii) except for payments made on account of a Participant s death, the first payment with respect to which such election is made shall be deferred for a period of not less than five years from the date such payment would otherwise have been made; (iii) any election related to payments that would otherwise have commenced as of a specified time, as opposed to the Participant s Separation from Service, may not be made less than twelve months prior to the date on which such payments would otherwise have commenced; and (iv) any such additional deferral election shall not be effective if it would otherwise result in deferring amounts later than the mandatory distribution provisions of Article VI. Deferral Period. (a) In accordance with Section 2.2(b), and subject to the limitation of Section 3.7(b), each Participant must elect the deferral period for each separate category of deferral (including, effective for deferral elections made on or after January 1, 2005, any Restoration Plan Benefit or part thereof credited to a Participant s Deferred Restoration Distribution Account). Subject to the additional deferral provisions of Section 3.8 and the acceleration provisions of Article VI, a Participant s deferral period with respect to amounts deferred other than those described in Section 3.7(b) may be for a specified number of years or until a specified date, subject to any limitations that the Committee in its discretion may choose to apply (which limitations shall comply with the requirements for tax deferral under Code Section 409A), provided that, in all events, a deferral period must be for at least two (2) years from the first day of the Plan Year in which the deferred amounts would otherwise be payable (or, in the case of amounts described in Section 3.4, credited to the Participant s Account). However,

366 Section 3.8 (b) notwithstanding the deferral period otherwise specified, payments shall be paid or begin to be paid under the Plan in accordance with the mandatory distribution provisions in Article VI and any election which would otherwise result in a deferral beyond any applicable mandatory distribution age is invalid. Notwithstanding the provisions of Section 3.7(a) and Section 2.2(b), and subject to Section 6.1(f), all Company Matching Credits credited to a Participant s Company Matching Credit Account pursuant to Section 3.4 shall be deferred until the Participant s Separation from Service and may not be deferred to a specified date prior to such Participant s Separation from Service. The foregoing notwithstanding, in any case where the Participant is a Specified Employee, payment of the amounts under this Section 3.7(b) on account of the Participant s Separation from Service shall be deferred until as soon as practicable after the earlier of (i) the first day of the seventh month following the Participant s Separation from Service (without regard to whether the Participant is reemployed on that date), or (ii) the date of the Participant s death, subject to any permitted further deferral election on account of a change in form of payment. Modification of Deferral Period. (a) (b) Additional Deferral - Grandfathered Deferrals. With respect to any previously deferred Grandfathered Deferred Compensation Plan Deferrals or Grandfathered Restoration Plan Benefit credited to a Participant s Accounts, a Participant may request that the Committee approve an additional deferral period of at least two (2) years from the date the previously deferred amounts were otherwise payable. Any such request must be made by written notice to the Committee at least twelve (12) months before the expiration of the deferral period for any previously deferred amount with respect to which an additional deferral election is requested. A separate additional deferral election is required to be made for each separate category of previously deferred amounts that is treated as subject to a single deferral period election under Section 2.2(b) above. Each such additional deferral election request shall include a newly designated manner of payment election in accordance with the provisions of Section 6.2 below. No more than two such extensions may be elected by a Participant with respect to any specific deferred amount and no such additional deferral may result in amounts deferred beyond the mandatory distribution provisions of Article VI. Additional Deferral - Non-Grandfathered Deferrals. With respect to any deferred amounts credited to a Participant s Accounts in excess of a Participant s Grandfathered Deferred Compensation Plan Deferrals or Grandfathered Restoration Plan Benefit an additional deferral election otherwise described in Section 3.8(a) may be made, provided that such election shall not be effective unless the following requirements are met: (i) (ii) (iii) the election will not take effect until at least twelve months after the date on which the election is made and will not be recognized with respect to payments that would otherwise have commenced during such twelve-month period; except for payments made on account of a Participant s death or financial hardship under Section 6.1(f), the first payment with respect to which such election is made shall be deferred for a period of not less than five years from the date such payment would otherwise have been made; any election related to payments that would otherwise have commenced as of a specified time, as opposed to the Participant s Separation from Service, may not be made less than twelve months prior to the date on which such payments would otherwise have commenced; and

367 (c) (iv) any such additional deferral election shall not be effective if it would otherwise result in deferring amounts later than the mandatory distribution age provisions of Article VI. Accelerated Distribution For Grandfathered Deferrals. With respect to any Grandfathered Deferred Compensation Plan Deferrals or Grandfathered Restoration Plan Benefit credited to a Participant s Accounts, a Participant may request that the Committee approve an accelerated deferral date with respect to amounts that are not otherwise payable for at least three (3) years from the date of such request, provided that the resulting accelerated deferral date may not be any earlier than two (2) years from the date of such Participant election. A separate deferral modification election is required to be made for each separate category of previously deferred amount that is treated as subject to a single deferral period election under Section 2.2(b) above. Each such modified deferral period request shall include a newly designated manner of payment election in accordance with the provisions of Section 6.2 below. No more than two such modifications may be elected by a Participant with respect to any specific deferred amount. No such election may be made with respect to any amounts deferred under this Plan in excess of any Grandfathered Deferred Compensation Plan Deferrals or Grandfathered Restoration Plan Benefit credited to a Participant s Accounts. ARTICLE IV Restoration Benefits Section 4.1 Amount of Restoration Plan Benefit. (a) A Participant s Restoration Plan Benefit hereunder shall equal the excess (if any) of (i) the benefit that would have been payable under the Retirement Plan in respect of the Participant in the absence of the provisions included in the Retirement Plan in order to comply with Sections 401(a)(17) and 415 of the Code, over (ii) the benefit actually payable in respect of the Participant under the Retirement Plan. (b) Effective as of January 1, 2005, for purposes of calculating a Participant s Restoration Plan Benefit under Section 4.1(a), if, as determined by the Committee in its sole discretion, a Participant (i) permanently directly transferred employment from a foreign affiliate of the Company that has not adopted the Retirement Plan and this Plan to a member of the Group (as defined in the Retirement Plan) that has adopted the Retirement Plan and this Plan or to a Unit (as defined in the Retirement Plan) to which participation in the Retirement Plan and this Plan has been extended, and (ii) while employed by the foreign affiliate, had what the Committee determines (in its sole discretion) to be an agreement with such foreign affiliate to provide for deferred compensation that recognized the Participant s period of employment by the foreign affiliate and compensation paid to the Participant by the foreign affiliate, then the Participant s period of employment by the foreign affiliate and compensation paid to the Participant by the foreign affiliate during the Participant s period of employment with the foreign affiliate shall be taken into account solely under this Plan to the same extent that such period of employment and compensation would have otherwise been taken into account had it been employment with and compensation paid by the Company, a member of the Group that has adopted the Retirement Plan and this Plan, or a Unit to which participation in the Retirement Plan and this Plan has been extended. In addition, any such Participant s Restoration Plan Benefit shall be offset, solely to the extent permitted under Code Section 409A, for (i) any Social Security or other governmental pension or retirement benefit earned during the Participant s period of

368 Section 4.2 Section 4.3 Section 4.4 employment with the foreign affiliate; and (ii) any retirement benefit the Participant is entitled to under a foreign based retirement plan sponsored by the Company or member of the Group. Pre-Retirement Restoration Death Benefit. In the event of the death of a Participant before Restoration Plan Benefits have commenced to be paid hereunder (a preretirement death), the Participant s Beneficiary shall be entitled to a benefit equal to the excess (if any) of (i) the benefit that would have been payable under the Retirement Plan to the Beneficiary on account of the Participant s death in the absence of the provisions included in the Retirement Plan in order to comply with Sections 401(a)(17) and 415 of the Code (and taking into account service and compensation described in Section 4.1(b)), over (ii) the benefit actually payable to the Beneficiary on account of the Participant s death under the Retirement Plan. Such benefit is hereinafter referred to as a Restoration Plan Death Benefit. Subject to Section 4.5, and notwithstanding the provisions of Section 4.4 (and any procedures adopted thereunder), and unless provided otherwise in a Participant s Agreement, if any, the Restoration Plan Death Benefit payable to a Beneficiary on account of a Participant s death before Restoration Plan Benefits have been paid or commenced to be paid hereunder (a pre-retirement death) shall be paid to the Participant s Beneficiary in a cash lump sum as soon as practicable following the earliest date that any such pre-retirement death benefit would otherwise be payable to such Beneficiary under the Retirement Plan (whether or not such Retirement Plan benefit is actually paid or commenced at such date). Early Retirement Adjustments. The calculations made in Sections 4.1 and 4.2 shall reflect any applicable adjustments under the Retirement Plan for early commencement and the form of benefit elected. Payment of Restoration Plan Benefits. (a) Grandfathered Restoration Plan Benefit. Subject to Section 4.5, the further provisions of this Article IV, and a Participant s Agreement, if any, and unless deferred under Section 3.6, a Participant s Grandfathered Restoration Plan Benefit shall be paid to a Participant at such time and in such form as determined in accordance with procedures adopted and approved by the Compensation and Benefits Committee of the Board of Directors of the Company (or any committee successor thereto), which procedures were in effect as of October 3, A copy of such procedures is attached hereto as Attachment A. (b) Non-Grandfathered Restoration Plan Benefit. (NOTE: By way of reference, the Retirement Plan was amended effective April 1, 2007 to add a cash balance formula for determining the benefits available under the Retirement Plan. Pursuant to the terms of the Retirement Plan, the cash balance formula is used to determine the benefits of participants who were hired by the Company on or after April 1, 2007 as well as those participants who were actively participating in the Retirement Plan on that date and who affirmatively elected to be covered under the cash balance provisions of the Plan. The benefits of participants who were active prior to April 1, 2007 and who did not elect cash balance coverage are determined under the Retirement Plan s final average pay formula. If any such participant terminates and is subsequently reemployed, that participant s benefit for service performed after reemployment will be determined under the cash balance provisions of the Retirement Plan, whereas his benefit attributable to his prior employment will be determined under the final average pay provisions of the Retirement Plan. Consistent with Section 409A and the guidance issued thereunder, and as confirmed in Q&A 39 of the ABA Section of Taxation s 2008 IRS Q&A Report, this Plan provides different time and form of payment with respect to separately identifiable amounts attributable to Restoration Plan Benefits calculated

369 using the cash balance formula versus those calculated using the final average pay formula.) Except as otherwise provided herein, or otherwise provided in a Participant s Agreement, if any, and unless deferred under Section 3.6, Restoration Plan Benefit amounts in excess of the Grandfathered Restoration Plan Benefit shall be payable to a Participant as follows: (i) Normal Form of Payment. A Participant s vested Restoration Plan Benefit shall be paid in the Normal Form of Payment, which is a single lump sum payment determined as follows: (A) FAP Participant. With respect to a Participant whose Restoration Plan Benefit is determined using the final average pay formula under the Retirement Plan, the Normal Form of Payment shall be a single lump sum payment that shall equal the actuarial present value (at the time payment becomes due) of the Participant s Restoration Plan Benefit based on the final average pay formula, determined as of normal retirement age under the Retirement Plan, based on the Applicable Interest Rate and the Applicable Mortality Table (as such terms are defined in the Retirement Plan) used under the Retirement Plan for calculating present values. (B) Cash Balance Participant. With respect to a Participant whose Restoration Plan Benefit is determined using the cash balance formula under the Retirement Plan, the Normal Form of Payment shall be a single lump sum payment equal to the Participant s Restoration Plan Benefit (at the time payment becomes due) determined in accordance with Section 4.1, expressed as an account balance benefit. (C) FAP and Cash Balance Participant. For a Participant whose Restoration Plan Benefit is determined using both the final average pay formula and the cash balance formula under the Retirement Plan, the Normal Form of Payment with respect to the portion of the Participant s Restoration Plan Benefit calculated using the final average pay formula under the Retirement Plan shall be as described in subparagraph (A) and the Normal Form of Payment with respect to the portion of the Participant s Restoration Plan Benefit calculated using the cash balance formula under the Retirement Plan shall be as described in subparagraph (B) above. (D) Cash Balance Conversion Participant. For a Participant whose benefit under the Retirement Plan is converted on or after January 1, 2013 from being calculated using the final average pay formula under the Retirement Plan to being calculated using the cash balance formula under the Retirement Plan, the Normal Form of Payment for the Participant s entire Restoration Plan Benefit shall be as described in subparagraph (B) above. (ii) Timing of Payment. A Participant s vested Restoration Plan Benefit shall be paid or commence to be paid in the Normal Form of Payment as follows: (A) FAP Participant. Subject to subparagraph (E) below, to the extent that a Participant s Restoration Plan Benefit is determined using the final average pay formula under the Retirement Plan, amounts shall commence to be paid as soon as practicable after the later of (I) the Participant s Separation from Service or (II) the earliest date on which

370 Section 4.5 the Participant first becomes eligible to receive or commence receiving benefits under the Retirement Plan after Separation from Service (i.e., the earlier of attainment of age 55 with 10 years of service as determined under the Retirement Plan or age 65) regardless of the time benefits are actually paid or commence to be paid under the Retirement Plan. (B) Cash Balance Participant. Subject to subparagraph (E) below, if a Participant s Restoration Plan Benefit is determined using the cash balance formula under the Retirement Plan, amounts shall be paid as soon as practicable after the Participant s Separation from Service. (C) FAP and Cash Balance Participant. Subject to subparagraph (E) below, to the extent that a Participant s Restoration Plan Benefit is determined using both the final average pay formula and the cash balance formula under the Retirement Plan, payment shall commence with respect to the portion of the Participant s Restoration Plan Benefit calculated using the final average pay formula under the Retirement Plan on the date described in subparagraph (A) above and payment shall commence with respect to the portion of the Participant s Restoration Plan Benefit calculated using the cash balance formula under the Retirement Plan on the date described in subparagraph (B) above. (D) Cash Balance Conversion Participant. Subject to subparagraph (E) below, in the case of a Participant whose benefit under the Retirement Plan is converted on or after January 1, 2013 from being calculated using the final average pay formula under the Retirement Plan to being calculated using the cash balance formula under the Retirement Plan, payment of such Participant s entire Restoration Plan Benefit shall commence on the date described in subparagraph (A) above. (E) Specified Employee. In any case where the Participant is a Specified Employee and the Participant s Restoration Plan Benefit in excess of the Participant s Grandfathered Restoration Plan Benefit is payable on account of the Specified Employee s Separation from Service, the Participant s Restoration Plan Benefit under this Section shall be paid or commence to be paid as soon as practicable following the earlier of (I) or (II) where: (I) is the later of (A) the date otherwise provided under the Plan or (B) the first day of the seventh month following the Participant s Separation from Service (without regard to whether the Participant is reemployed on that date); and (II) is the date of the Participant s death. (iii) The Participant s ability to elect an alternate form of distribution other than the Normal Form of Payment is described in Section 6.2. The death benefits attributable to a Participant s Restoration Plan Benefit under the Plan in the event of the Participant s death after Restoration Plan Benefit payments have commenced, if any, will be determined pursuant to the terms of the form of payment elected by the Participant. Payment of Restoration Plan Benefit Following Change in Control. (a) Grandfathered Restoration Plan Benefit. Notwithstanding the provisions of Section 4.4 (and any procedures adopted thereunder), and unless provided otherwise in a Participant s Agreement, if any, each Participant s Grandfathered Restoration Plan Benefit shall (to the extent not previously paid or commenced to be paid) be paid to

371 Section 4.6 the Participant in a cash lump sum as soon as practicable, but not later than 45 business days, after a Participant s termination of employment following a Change in Control. (b) Non-Grandfathered Restoration Plan Benefit - FAP Participant and Cash Balance Conversion Participant. Notwithstanding the provisions of Sections 4.4(b)(ii)(A), 4.4(b)(ii)(C) and 4.4(b)(ii)(D) (and any procedures adopted thereunder), and unless provided otherwise in a Participant s Agreement, if any, to the extent that a Participant s Restoration Plan Benefit that is determined using the final average pay formula under the Retirement Plan or is otherwise described in Section 4.4(b)(i)(D) and that is in excess of his Grandfathered Restoration Plan Benefit, if any, shall (to the extent not previously paid or commenced to be paid) be paid to the Participant in a cash lump sum as soon as practicable, but not later than 45 business days, after the Participant s Separation from Service following a Change in Control; provided, however, that such a distribution shall only be made if: (i) the Change in Control satisfies the requirements of Code Section 409A(a)(2)(A)(v) (and the guidance issued thereunder) and such Separation from Service occurs within 2 years of the Change in Control; or (ii) distribution may otherwise be made under this Plan on account of Separation from Service. (c) Specified Employee. In any case where the Participant is a Specified Employee and the Participant s Restoration Plan Benefit in excess of the Participant s Grandfathered Restoration Plan Benefit is payable pursuant to Section 4.5(b) on account of the Specified Employee s Separation from Service within 2 years of a qualified Change in Control, payment of the Participant s Restoration Plan Benefit under this Section shall be deferred until the earlier of (i) first day of the seventh month following the Participant s Separation from Service (without regard to whether the Participant is reemployed on that date), or (ii) the date of the Participant s death. Restoration Plan Benefit on Account of Disability Retirement. (a) Grandfathered Restoration Plan Benefit. Notwithstanding the provisions of Section 4.4 (and in accordance with any procedures adopted thereunder), and unless provided otherwise in a Participant s Agreement, if any, a Participant who terminates employment on account of a Disability Retirement (as determined under the Retirement Plan) may make a written request to the Committee to receive payment of his Grandfathered Restoration Plan Benefit in a single lump sum as soon as practicable thereafter; provided however, that payment to a Participant under this Section 4.6 shall only be made if the Committee, in its sole and absolute discretion, determines to make such payment. Any decision by the Committee hereunder shall be final and binding. If a Participant s request is denied, payment of the Participant s Plan benefits shall be made in accordance with the otherwise applicable provisions of the Plan (and any procedures then in effect). (b) Non-Grandfathered Restoration Plan Benefit. Notwithstanding anything in the Plan to the contrary, if a Participant suffers a Disability and becomes Disabled, that portion of the Participant s Restoration Plan Benefit in excess of the Grandfathered Restoration Plan Benefit shall be paid on account of Disability in the form of a single lump sum cash payment as soon as practicable following the later of (i) the date the Participant attains age 65; or (ii) the date of the Participant s Disability. The amount of any such lump sum payment in respect of a Disabled Participant hereunder whose Restoration Plan Benefit is determined using the final average pay formula under the Retirement Plan shall equal the actuarial present value of the Participant s vested Restoration Plan Benefit determined as of the date such benefit payment becomes due hereunder, based on the Applicable Interest Rate and the Applicable Mortality Table (as such terms are

372 defined in the Retirement Plan) used under the Retirement Plan for calculating the present value of optional forms of payment at the time payment is due under the Plan. The amount of any such lump sum payment in respect of a Disabled Participant hereunder whose Restoration Plan Benefit is determined using the cash balance formula under the Retirement Plan or that is otherwise described in Section 4.4(b)(i)(D) shall be the Participant s Restoration Plan Benefit as of the date such benefit payment becomes due hereunder, determined in accordance with Section 4.1. If such a Participant dies or incurs a Separation from Service prior to the date of payment under this Section 4.6(b), payment shall be made in accordance with the otherwise applicable provisions of this Plan. ARTICLE V Participants Accounts Section 5.1 Section 5.2 Section 5.3 Crediting of Employee Deferrals and Company Matching and Discretionary Credits. Deferrals to this Plan that are made under Article III shall be credited to the Participant s Accounts in accordance with such rules established by the Committee from time to time. Each Participant s Accounts shall be administered in a way to permit separate Deferral Elections, deferral periods, and Investment Elections with respect to various Plan Year deferrals and compensation types as the Committee determines, in its sole discretion, are necessary or appropriate. Investment Election. Participants Investment Elections with respect to deferred amounts hereunder shall be made pursuant to the written, telephonic or electronic methods prescribed by the Committee and subject to such rules on Investment Elections and Investment Options as established by the Committee from time to time. Upon receipt by the Committee, and in accordance with rules established by the Committee, an Investment Election shall be effective as soon as practicable after receipt and processing of the election by the Committee. Investment Elections will continue in effect until changed by the Participant. Subject to Section 5.3(b), an eligible Participant may change a prior Investment Election (or default Investment Election) with respect to deferred amounts on a daily basis, by notifying the Committee, at such time and in such manner as approved by the Committee. Any such changed Investment Election may result in amending Investment Elections for prior deferrals or for future deferrals or both. Hypothetical Earnings. (a) (b) General. Subject to Section 5.2, except as otherwise provided herein, additional hypothetical bookkeeping amounts shall be credited to (or deducted from) a Participant s Accounts to reflect the earnings (or losses) that would have been experienced had the deferred amounts been invested in the Investment Options selected by the Participant as targeted rates of return, net of all fees and expenses otherwise associated with the Investment Options. The Committee may add or delete Investment Options, on a prospective basis, by notifying all Participants whose Accounts are hypothetically invested in such Investment Options, in advance, and soliciting elections to transfer deferred amounts so that they track investments in other Investment Options then available. Company Stock Investment Option. (i) A Participant s Deferred Equity Compensation is automatically credited in the form of Common Stock to the Participant s Deferred Stock Account. With respect to other deferred amounts hereunder, instead of having deferred amounts credited with hypothetical earnings (or losses) in accordance with

373 (ii) Section 5.3(a), and subject to Section 5.2, a Participant may elect to have part of the Participant s deferred amounts (in whole percentage increments) credited in the form of Common Stock to a Deferred Stock Account; provided, however, that a Participant may not make an election to have any future deferred amounts credited to a Deferred Stock Account if, at the time of the election, more than 10% of the balance of the Participant s deferred amounts are credited to a Deferred Stock Account (disregarding amounts in the Participant s Deferred Equity Compensation Account, if any). For purposes of administering this rule and subject to the Committee s right to adopt administrative procedures pursuant to Section 5.3(b)(viii) below, the following additional rules apply: (A) Any Investment Election that is in effect on January 1, 2010, that would require future deferred amounts to be credited to the Participant s Deferred Stock Account and that would otherwise violate the 10% limitation set forth above shall be void and of no effect. In the absence of a Participant s amending such Investment Election on or before January 1, 2010, pursuant to procedures implemented by the Committee, the Participant s future deferred amounts that would otherwise have been credited to the Deferred Stock Account will be hypothetically invested in another Investment Option selected by the Committee for this purpose. (B) Any Investment Election made after January 1, 2010, that would otherwise violate the 10% limitation set forth above shall be void and of no effect. In the absence of a Participant amending such Investment Election or otherwise making a new Investment Election that complies with this Section 5.3(b)(i), the Participant s future deferred amounts that would otherwise have been credited to the Deferred Stock Account will be hypothetically invested in another Investment Option selected by the Committee for this purpose. If the restrictions of Section 5.3(b)(i) do not apply (such that the Participant may otherwise elect to have deferred amounts credited to the Deferred Stock Account), in no event may a Participant make an Investment Election to have more than 10% of any future deferred amounts (disregarding Deferred Equity Compensation) credited to the Deferred Stock Account. Any Investment Election that would otherwise violate the provisions of this Section 5.3(b)(ii) shall be void and of no effect. In the absence of a Participant amending such Investment Election or otherwise making a new Investment Election that complies with this Section 5.3(b)(ii), the Participant s future deferred amounts that would otherwise have been credited to the Deferred Stock Account will be hypothetically invested in another Investment Option selected by the Committee for this purpose. Notwithstanding the foregoing, if any Investment Election otherwise in effect on January 1, 2010 would violate the limitations of this Section 5.3(b)(ii), then, in the absence of a Participant s amending that Investment Election on or before January 1, 2010, pursuant to procedures implemented by the Committee, the Participant s Investment Election will be modified so that the Investment Election is reduced so that 10% of future deferred amounts are credited to the Deferred Stock Account with the remaining deferred amounts hypothetically invested in another Investment Option selected by the Committee for this purpose.

374 (iii) (iv) Elections under this Section 5.3(b) may be made as a part of the Participant s Deferral Election and thereafter on the same basis as Participants are permitted to make other Investment Elections and using the same or similar procedures as Participants use to make other Investment Elections under Section 5.2. In addition, any amounts credited to a Participant s Accounts other than the Participant s Deferred Stock Account may be transferred for hypothetical investment tracking purposes to the Participant s Deferred Stock Account; provided, however, that a Participant may not elect any such transfer that would increase the Participant s hypothetical investment in Common Stock credited to the Deferred Stock Account if, at the time of the election or as a result thereof, more than 10% of the Participant s Deferred Stock Account (excluding any Deferred Equity-Based Compensation) is or would be credited to the Participant s Deferred Stock Account. Any transfer election that violates the provisions of this Section 5.3(b)(iii) shall be void and of no effect. In all events, once amounts are credited to a Participant s Deferred Stock Account, no Investment Election may cause amounts credited to a Participant s Deferred Stock Account to be transferred for hypothetical investment tracking purposes to a Participant s Accounts other than the Participant s Deferred Stock Account. All distributions of amounts credited to a Participant s Deferred Stock Account may only be distributed in whole shares of Common Stock (with cash for fractional shares). A Participant s Deferred Stock Account will be credited: (A) as of the first business day after the last day of each bi-weekly payroll period, with the number of shares of Common Stock (in whole shares and fractional shares, as determined by the Committee) determined by dividing the Participant s deferred amounts attributable to Deferred Salary for such bi-weekly payroll period subject to the Deferred Stock Election by the price for shares of Common Stock, determined by the Committee, as of the day such deferred amounts are credited to the Participant s Account; and (B) annually, as of the first business day in January of each calendar year, with the number of shares of Common Stock (in whole shares and fractional shares, as determined by the Committee) determined by dividing the portion of the Participant s Deferred Bonus and Company Matching Credits subject to the Deferred Stock Election by the price for shares of Common Stock, determined by the Committee, as of the day such deferred amounts are credited to the Participant s Accounts; and (C) at such other times as the Committee determines with respect to all other deferred amounts under the Plan, with the number of shares of Common Stock (in whole shares and fractional shares, as determined by the Committee) determined by dividing the portion of the Participant s deferred amounts to be credited in the Deferred Stock Account by the price for shares of Common Stock, determined by the Committee, as of the day such deferred amounts are credited to the Participant s Account, or, in the case of deferred amounts measured in stock units, by crediting the account with the same number of shares of Common Stock.

375 (c) (v) If the Company enters into transactions involving stock splits, stock dividends, reverse splits or any other recapitalization transactions, the number of shares of Common Stock credited to a Participant s Deferred Stock Account will be adjusted (in whole shares and fractional shares, as determined by the Committee) so that the Participant s Deferred Stock Account reflects the same equity percentage interest in the Company after the recapitalization as was the case before such transaction. (vi) If at least a majority of the Company s stock is sold or exchanged by its shareholders pursuant to an integrated plan for cash or property (including stock of another corporation) or if substantially all of the assets of the Company are disposed of and, as a consequence thereof, cash or property is distributed to the Company s shareholders, each Participant s Deferred Stock Account will, to the extent not already so credited under this Section 5.3(b), be (i) credited with the amount of cash or property receivable by a Company shareholder directly holding the same number of shares of Common Stock as is credited to such Participant s Deferred Stock Account and (ii) debited by that number of shares of Common Stock surrendered by such equivalent Company shareholder. (vii) Each time the Company declares a dividend on its Common Stock, each Participant s Deferred Stock Account will be credited with a Dividend Reinvestment Return equal to that number of shares of Common Stock (in whole shares and fractional shares, as determined by the Committee) determined by dividing (i) the amount that would have been paid (or the fair market value thereof, if the dividend is not paid in cash) to the Participant on the total number of shares of Common Stock credited to the Participant s Deferred Stock Account had that number of shares of Common Stock been held by such Participant by (ii) the price for shares of Common Stock, determined by the Committee, as of the dividend payment date. (viii) The Committee may adopt administrative procedures to implement the provisions of this Section 5.3(b). Limitations on Allocations and Reallocations to and From Deferred Stock Account. In addition to the limitations of Section 5.3(b), pursuant to the Policy Statement on Insider Trading and Compliance, as the same may be amended (the Policy ), there are time periods (each, a blackout period ) during which time Participants may not effect transactions, directly or indirectly, in Company equity securities. Under the Policy, the Company s Corporate Secretary may also impose additional blackout periods with respect to some or all Participants. Participants whose ability to effect transactions is prohibited during such blackout periods also will be prohibited during such periods from making any Investment Election or Deferred Stock Election that affects the amount credited to the Participant s Deferred Stock Account. The Committee, at the direction of the Company s Corporate Secretary, shall adopt and implement procedures to ensure that the provisions of this Paragraph are carried out. In all events, with respect to amounts in excess of a Participant s Grandfathered Deferred Compensation Plan Deferrals and Grandfathered Restoration Plan Benefit, to the extent that the blackout period results in a deferral of payment under the Plan, payment must be made at the earliest date at which the Company reasonably anticipates that the making of the payment will not cause a violation of federal securities laws or other applicable law.

376 Section 5.4 Section 5.5 Vesting. (a) Deferred Amounts. At all times a Participant shall be fully vested in his Deferred Salary, Deferred Bonus, Deferred Equity-Based Compensation, and Deferred Restoration Distribution Accounts hereunder (including any earnings or losses and Dividend Reinvestment Return thereon). A Participant shall become vested in any Company Matching Credits in the same manner and to the same extent as the Participant is vested in matching contributions otherwise credited to the Participant under the SIP. A Participant shall become vested in any Company Discretionary Credits pursuant to the vesting schedule established by the Company at the time such Credits, if any, are made. Except as otherwise provided in Section 6.1(b) (death) or Section 6.1(c) (disability), if a Participant incurs a Separation from Service at any time prior to becoming fully vested in amounts credited to the Participant s Accounts hereunder, the nonvested amounts credited to the Participant s Accounts shall be immediately forfeited and the Participant shall have no right or interest in such nonvested deferred amounts. (b) Restoration Plan Benefit. A Participant shall be vested in his Restoration Plan Benefit, if any, to the extent he is vested in his benefit under the Retirement Plan as determined pursuant to the provisions of the Retirement Plan. Account Statements. Within 60 days following the end of each Plan Year (or at such more frequent times determined by the Committee), the Committee shall furnish each Participant with a statement of Account which shall set forth the balances of the individual s Accounts as of the end of such Plan Year (or as of such time determined by the Committee), inclusive of tracked earnings (or losses) and any Dividend Reinvestment Return. In addition, the Committee shall maintain records reflecting each year s deferrals separately by type of compensation. ARTICLE VI Distributions and Withdrawals Section 6.1 Timing of Distributions. (a) Timing of Distribution - Distributions of Vested Accounts Other than Death, Disability, or Scheduled Distributions. The time and form of payment of Restoration Plan Benefits that are not otherwise deferred under Section 3.6 of the Plan are governed by the provisions of Article IV and those provisions of this Article VI specifically referring to Restoration Plan Benefit payment options. Except as otherwise provided herein, in the case of a Participant who incurs a Separation from Service before retirement from active employment (as defined below), a Participant s vested Accounts shall be paid or commence to be paid, in the form of distribution elected in a particular Deferral Election (subject to Section 6.2), as soon as practicable (as determined by the Committee) after the Participant s Separation from Service. In the case of a Participant who retires from active employment hereunder (as defined below), and subject to Section 6.1(e) and Section 6.1(f), a Participant s vested Accounts shall be paid or commence to be paid, in the form of distribution elected in a particular Deferral Election (subject to Section 6.2), as soon as practicable (as determined by the Committee) following the later of: (I) the date the Participant retires from active employment (or, in the case of certain Equity-Based Compensation that vests one year after retirement, one year after retirement), or (II) the date otherwise specified in the Participant s Deferral Election; provided however that, in all events distributions under this subparagraph (II) of deferred amounts in excess of the Participant s Grandfathered

377 Restoration Plan Benefits must be made (or commence to be paid) as of the earlier of the Participant s attainment of age 70 or death. For purposes of this Section 6.1(a), a Participant retires from active employment if: (i) the Participant Separates from Service or an affiliate after having attained age 65; (ii) the Participant Separates from Service after having attained age 55 with ten years of service (as (iii) determined under the Retirement Plan) or an affiliate; or with respect to Grandfathered Deferred Compensation Plan Deferrals and Grandfathered Restoration Plan Benefits, the Committee, in its sole discretion, otherwise determines that the Participant has retired for this purpose. The foregoing notwithstanding, in any case where the Participant is a Specified Employee, payment of amounts in the Participant s vested Accounts in excess of Grandfathered Deferred Compensation Plan Deferrals under this Section 6.1(a) on account of the Specified Employee s Separation from Service shall be deferred until the earlier of (x) first day of the seventh month following the Participant s Separation from Service (without regard to whether the Participant is reemployed on that date), or (y) the date of the Participant s death, subject to any additional deferral of such payments as provided for in the Plan. (b) Timing of Distributions - Participant s Death. If a Participant dies before the full distribution of the Participant s Accounts under this Article VI, any deferred amounts that are not vested and have not previously been forfeited shall become 100% vested. Unless the Participant had commenced receiving installment payments, as soon as practicable after the Participant s death, all remaining amounts credited to the Participant s Accounts shall be paid in a single lump sum payment to the Participant s named Beneficiary (or Beneficiaries). In the absence of any Beneficiary designation, payment shall be made to the personal representative, executor or administrator of the Participant s estate. Beneficiary designations may be changed by a Participant at any time without the consent of the Participant s Spouse or any prior Beneficiary. If the Participant dies after having commenced to receive installment payments, the Participant s Beneficiary may accelerate the payment of any remaining installment payments attributable to Grandfathered Deferred Compensation Plan Deferrals or a Grandfathered Restoration Plan Benefit as follows: (i) (ii) The Beneficiary may request (within a reasonable time after the Participant s death, as specified by the Committee) that all remaining installment payments that are otherwise to be paid to the Beneficiary at least twelve (12) months after the date of the request be accelerated and paid in a single lump sum payment as of a date specified by the Committee that is at least twelve (12) months after the date of the request; or The Beneficiary may request (within a reasonable time after the Participant s death, as specified by the Committee) that all remaining installment payments that are otherwise to be paid to the Beneficiary be accelerated and paid in the form of an immediate lump sum payment, subject to the requirement that ten percent (10%) of the remaining amounts be permanently forfeited. With respect to amounts in excess of amounts attributable to a Participant s Grandfathered Deferred Compensation Plan Deferrals or Grandfathered Restoration Plan Benefits, if a Participant dies after having commenced to receive installment payments pursuant to a scheduled distribution election, the Participant s Beneficiary

378 shall receive the remaining installment payments as said payments become due under the scheduled distribution option elected by the Participant. (c) (d) (e) Timing of Distributions - Participant s Disability. Notwithstanding anything in the Plan to the contrary, if a Participant becomes Disabled, any deferred amounts that are not vested and have not previously been forfeited shall become 100% vested. Notwithstanding anything in a Participant s Deferral Election to the contrary with respect to payment commencement, as soon as practicable after the Participant becomes Disabled, all remaining amounts credited to the Participant s Accounts (other than amounts attributable to Restoration Plan Benefits) shall be paid or commence to be paid to the Participant in the form of distribution elected by the Participant in the Participant s Deferral Election. In addition, as soon as practicable after the Participant becomes Disabled and with respect to Grandfathered Deferred Compensation Plan Deferrals or deferred Grandfathered Restoration Plan Benefits, the Participant may request that the Committee change any installment distribution election so that amounts subject to the election are accelerated and paid in the form of a single lump sum distribution. Such distribution shall be made only if the Committee, taking into account the type of factors taken into account in the event of a hardship under Section 6.1(f), in its sole discretion, approves such request. Scheduled Distribution. As a part of the Participant s Deferral Election with respect to scheduled distributions, a Participant may elect to receive a lump sum distribution or annual installments (over 2, 3, 4 or 5 years, as elected by the Participant) equal to all or any part of the vested balance of the Participant s Accounts to be paid (or commence to be paid) at a scheduled distribution date, subject to the timing requirements in Section 6.1(a) and the limitations of Section 3.7(b). For these purposes, the amount of each installment payment shall be determined by multiplying the value of the Participant s remaining vested Accounts subject to the scheduled distribution election by a fraction, the numerator of which is one (1) and the denominator of which is the number of calendar years remaining in the installment period. These scheduled distributions are generally available only for distributions that are scheduled to commence to be paid while a Participant is employed by the Company. If a Participant incurs a Separation from Service before commencing receipt of scheduled distributions, the timing requirements of Section 6.1(a) shall apply (which requirements provide for payment upon Separation from Service, unless the Participant has attained retirement age, in which case a later distribution date may apply). If a Participant Separates from Service while receiving scheduled installment payments, such installment payments shall continue to be paid in the same form of distribution, subject to the Participant s right to accelerate the remaining payments in accordance with Section 6.1(e) or Section 6.1(f). Notwithstanding the foregoing, if a Participant s employment is terminated for cause, as determined by the Company, full payment of all remaining amounts attributable to Grandfathered Deferred Compensation Plan Deferrals and deferred Grandfathered Restoration Plan Benefits in such Participant s Account shall be paid in the form of a single lump sum payment as soon as practicable after such termination. Early Distribution - Grandfathered Deferrals. Notwithstanding any other provision of the Plan, a Participant or Beneficiary may, at any time prior to or subsequent to commencement of payments, request in writing to the Committee to have any or all

379 vested amounts in his or her Accounts that constitute Grandfathered Deferred Compensation Plan Deferrals or deferred Grandfathered Restoration Plan Benefits paid in an immediate lump sum distribution, provided that an amount equal to ten percent (10%) of the requested distribution shall be permanently forfeited from the Participant s Accounts prior to such distribution. Any such lump sum distribution shall be paid as soon as practicable after the Committee s receipt of the Participant s (or Beneficiary s) request. The minimum permitted early distribution under this Section 6.1(e) shall be $3,000. (f) Hardship Distribution. At any time prior to the time an amount is otherwise payable hereunder, an active Participant may request a distribution of all or a portion of any vested amounts credited to the Participant s Accounts on account of the Participant s financial hardship, subject to the following requirements: (i) Such distribution shall be made, in the sole discretion of the Committee, if the Participant has incurred an unforeseeable emergency. The Committee shall consider any requests for payment under this Section 6.1(f) in accordance with the standards of interpretation described in Code Section 409A and the regulations and other guidance thereunder. (ii) For purposes of this Plan, an unforeseeable emergency shall be limited to a severe financial hardship to the Participant resulting from an illness or accident of the Participant, the Participant s Spouse, the Participant s Beneficiary, or of a Participant s dependent (as defined in Code Section 152, without regard to Code Sections 152(b)(1), (b)(2), and (d)(1)(b)); loss of the Participant s property due to casualty (including the need to rebuild a home following damage to a home not otherwise covered by insurance, for example, not as a result of a natural disaster); the need to pay for the funeral expenses of the Participant s Spouse, the Participant s Beneficiary, or the Participant s dependent (as defined in Code Section 152, without regard to Code Sections 152(b)(1), (b)(2), and (d)(1)(b)); or other similar extraordinary and unforeseeable circumstances arising as a result of events beyond the control of the Participant. Whether a Participant is faced with an unforeseeable emergency will be determined based on the relevant facts and circumstances of each case and be based on the information supplied by the Participant, in writing, pursuant to the procedure prescribed by the Committee. In addition to the foregoing, distributions under this subsection shall not be allowed for purposes of sending a child to college or the Participant s desire to purchase a home or other residence. In all events, distributions made on account of an unforeseeable emergency are limited to the extent reasonably needed to satisfy the emergency need (which may include amounts necessary to pay any federal, state, local, or foreign income taxes or penalties reasonably anticipated to result from the distribution). (iii) Notwithstanding the foregoing, distribution on account of an unforeseeable emergency under this subsection may not be made to the extent that such emergency is or may be relieved: (A) through reimbursement or compensation by insurance or otherwise, (B) by liquidation of the Participant s assets, to the extent the liquidation of such assets would not itself cause severe financial hardship, or (C) by cessation of deferrals under the Plan.

380 Section 6.2 (iv) All distributions under this subsection shall be made in cash as soon as practicable after the Committee has approved the distribution and that the requirements of this subsection have been met. (v) The minimum permitted hardship distribution shall be $3,000. Form of Distribution. (a) (b) (c) (d) (e) General. Except as otherwise provided in this Article VI, all amounts payable from a Participant s Accounts shall be paid in one of the forms of distribution described in this Section 6.2, as elected by the Participant in a Deferral Election or as modified by the Participant in accordance with Section 6.2(e) below. Any Participant who fails to elect a form of distribution with respect to any deferral amount (or any compensation type) shall be deemed to have elected to receive such amounts in the form of a lump sum distribution in cash and, to the extent distributable amounts are credited to the Participant s Deferred Stock Account or Deferred Equity-Based Compensation Account, in shares of Common Stock (with any fractional share interest therein paid in cash to the extent of the then fair market value thereof). Distribution Alternatives for Restoration Plan Benefits. A Participant who is eligible to receive a Restoration Plan Benefit hereunder shall receive payment of such benefit in the Normal Form of Payment unless the Participant, subject to Section 6.2(e) below, elects an optional form of distribution as described in Section 6.2(d) below or an annuity form of benefit otherwise available under the Retirement Plan. Lump Sum Distribution. A Participant may elect, in accordance with such procedures established by the Committee, to have any vested deferral amounts credited to his Accounts paid in the form of a single lump sum distribution at the time otherwise required or permitted under the Plan. Annual Installment Distributions. A Participant may elect, in accordance with such procedures established by the Committee, to have any vested deferral amounts credited to his Accounts paid at the time otherwise required or permitted in the form of annual installments over a 5 or 10-year period commencing at the time otherwise required or permitted under the Plan and paid annually thereafter for the remainder of the installment period (subject to Section 6.1(b)). Notwithstanding the foregoing, in the case of any deferral amounts that were credited to a Participant s Accounts prior to January 1, 2017 and that are vested, the Participant may elect, in accordance with such procedures established by the Committee, to have such amounts paid at the time otherwise required or permitted in the form of annual installments over a 15-year period commencing at the time otherwise required or permitted under the Plan and paid annually thereafter for the remainder of the installment period (subject to Section 6.1(b)). For these purposes, the amount of each installment payment shall be determined by multiplying the value of the Participant s remaining vested Accounts by a fraction, the numerator of which is one (1) and the denominator of which is the number of calendar years remaining in the installment period. Notwithstanding the foregoing, if a Participant s employment is terminated for cause, as determined by the Company, full payment of all remaining amounts attributable to Grandfathered Deferred Compensation Plan Deferrals and deferred Grandfathered Restoration Plan Benefits in such Participant s Account shall be paid in the form of a single lump sum payment as soon as practicable after such termination. Change in Form (i) Grandfathered Amounts. The following provisions shall apply solely with respect to Grandfathered Deferred Compensation Plan Deferrals and deferred Grandfathered Restoration Plan Benefits:

381 (A) (B) Notwithstanding the foregoing, in accordance with the written, telephonic or electronic procedures prescribed by the Committee, a Participant may elect to change the form applicable to a particular category of deferral attributable to Grandfathered Deferred Compensation Plan Deferrals or deferred Grandfathered Restoration Plan Benefits at any time, provided that such election must be made at least twelve (12) consecutive months before the date on which such distribution otherwise would have been made or commenced. Any such change that is not in effect for at least the applicable twelve-month period shall be disregarded and the last valid election shall be substituted in its place. In the absence of such a valid election, distribution shall be made in the form of a single lump sum distribution in cash and, to the extent distributable amounts are credited to the Participant s Deferred Stock Account, in shares of Common Stock (with any fractional share interest therein paid in cash to the extent of the then fair market value thereof). In addition, with respect to a Participant who has commenced receiving his Grandfathered Deferred Compensation Plan Deferrals or deferred Grandfathered Restoration Plan Benefit paid in installment payments, such Participant may elect, pursuant to the written, telephonic or electronic method prescribed by the Committee (or its delegate), to have all remaining installment payments attributable to such grandfathered amounts that are otherwise to be paid to the Participant at least twelve (12) months after the date of the election be accelerated and paid in a single lump sum payment as of a date specified by the Committee that is at least twelve (12) months after the date of the election. (ii) Non-Grandfathered Amounts. In any case where a Participant wishes to change a form of distribution from what was previously in effect with respect to any deferred amounts credited to a Participant s Accounts in excess of a Participant s Grandfathered Deferred Compensation Plan Deferrals or Grandfathered Restoration Plan Benefit, in addition to the limitations under Section 3.7(b), the following requirements must be met: (A) (B) (C) The election will not take effect until at least twelve months after the date on which the election is made and will not be recognized with respect to payments that would otherwise have commenced during such twelve-month period; Except for payments made on account of a Participant s death or financial hardship under Section 6.1(f), the payment with respect to which such election is made (or the first payment, in the case of installment payments) shall be deferred for a period of not less than five years from the date such payment would otherwise have been made; Any election related to payments that would otherwise have commenced as of a specified time, as opposed to the Participant s Separation from Service, may not be made less than twelve months

382 (iii) prior to the date on which such payments would otherwise have commenced; and (D) The election will not take effect if the payment (or the first payment, in the case of installment payments) would be scheduled to commence after the later of the date the Participant reaches age 70 or the date the Participant retires from active employment under the minimum deferral period required pursuant to (B) above. Restoration Plan Benefit (Non-deferred). (A) General Rule. Where, pursuant to Section 4.4(b)(iii) and this Section 6.2, a Participant wishes to waive the Normal Form of Payment with respect his Restoration Plan Benefit and elect an optional form of payment, the following requirements must be met: (1) The election will not take effect until at least twelve months after the date on which the election is made and will not be recognized with respect to payments that would otherwise have commenced during such twelve-month period; (2) Except for payments made on account of a Participant s death, the first payment with respect to which such election is made shall be delayed for a period of not less than five years from the date such payment would otherwise have been made; and (3) Any election related to payments that would otherwise have commenced as of a specified time, as opposed to the Participant s Separation from Service, may not be made less than twelve months prior to the date on which such payments would otherwise have commenced. In the event of any delay in payment of a Restoration Plan Benefit in excess of a Grandfathered Restoration Plan Benefit that is determined using the cash balance formula under the Retirement Plan or that is otherwise described in Section 4.4(b)(i)(D), the Participant s Restoration Plan Benefit shall be initially calculated at Separation from Service and then increased through the payment date by the interest credit factor otherwise provided for under the Retirement Plan. In the event of any delay in payment of a Restoration Plan Benefit in excess of a Grandfathered Restoration Plan Benefit that is determined using the final average pay formula under the Retirement Plan, the Participant s Restoration Plan Benefit shall be initially calculated at Separation from Service and then that amount shall be adjusted at the payment date to take into account the Participant s then-attained age. (B) Annuity Election. If a Participant elects to change the form of distribution with respect to a Restoration Plan Benefit to an annuity form of payment in accordance with subparagraph (A), the Participant may select the specific annuity form of payment at any time prior to commencement of annuity payments from among the following actuarially equivalent annuity options: (1) With respect to the portion of the Participant s Restoration Plan Benefit that is determined using the final average pay formula under the Retirement Plan or that is otherwise described in Section 4.4(b)(i)(D): (i) a single life annuity payable for the

383 (c) Participant s lifetime; (ii) a joint and survivor annuity payable for the lives of the Participant and the Participant s Spouse under which if the Spouse shall survive the Participant, benefit payments shall continue after the Participant s death for the remaining lifetime of the Spouse in an amount equal to 50%, 75% or 100% (as elected by the Participant prior to benefit commencement) of the benefits payable during the Participant s life; or (iii) a guaranteed payments annuity option payable in either 60 or 120 monthly installments for the life of the Participant under which if the Participant dies before receiving the designated number of payments, the remaining benefit payments shall continue to the Participant s Beneficiary after the Participant s death; and (2) With respect to the portion of the Participant s Restoration Plan Benefit that is determined using the cash balance formula under the Retirement Plan: (i) a single life annuity payable for the Participant s lifetime; (ii) a joint and survivor annuity payable for the lives of the Participant and the Participant s Spouse under which if the Spouse shall survive the Participant, benefit payments shall continue after the Participant s death for the remaining lifetime of the Spouse in an amount equal to 50% or 75% or, if the Participant is age 55 or older on the date of benefit commencement, 100% (as elected by the Participant prior to benefit commencement) of the benefits payable during the Participant s life; or (iii) if the Participant is age 55 or older on the date of benefit commencement, a guaranteed payments annuity option payable in either 60 or 120 monthly installments for the life of the Participant under which if the Participant dies before receiving the designated number of payments, the remaining benefit payments shall continue to the Participant s Beneficiary after the Participant s death. Actuarial Factors for Determining Optional Annuity Payments. Unless provided otherwise in a Participant s Agreement, if any, if an annuity form of payment of a Restoration Plan Benefit is to be made to a Participant (or Beneficiary) whose Restoration Plan Benefit is determined in whole or in part using the cash balance formula under the Retirement Plan or that is otherwise described in Section 4.4(b)(i)(D), the annuity attributable to such portion of the Restoration Plan Benefit shall be calculated by first converting the Participant s Restoration Plan Benefit expressed as an account balance benefit into a single life annuity at benefit commencement determined using the Applicable Interest Rate and the Applicable Mortality Table (as such terms are defined in the Retirement Plan) used under the Retirement Plan for converting a cash balance account to a single life annuity. If the Participant elects an optional form of annuity other than the single life annuity, the single life annuity determined pursuant to the immediately preceding sentence (or the single life annuity calculated with respect to the portion of the Participant s Restoration Plan Benefit

384 determined using the final average pay formula under the Retirement Plan) shall be converted to such other annuity form of payment using the actuarial factors under the Retirement Plan for converting a single life annuity to other annuity forms of payment. Section 7.1 Section 7.2 Section 7.3 Section 7.4 Section 7.5 ARTICLE VII General Provisions Unsecured Promise to Pay. The Company shall make no provision for the funding of any amounts payable hereunder that (i) would cause the Plan to be a funded plan for purposes of Section 404(a)(5) of the Code, or Title I of ERISA, or (ii) would cause the Plan to be other than an unfunded and unsecured promise to pay money or other property in the future under Treasury Regulations (e); and, except to the extent specified in the Stock Trust following a change of control (as defined in the Stock Trust) of the Company, the Company shall have no obligation to make any arrangement for the accumulation of funds to pay any amounts under this Plan. Subject to the restrictions of the preceding sentence and in Section 5.3, the Company, in its sole discretion, may establish one or more grantor trusts described in Treasury Regulations 1.677(a)-1(d) to accumulate funds and/or shares of Common Stock to pay amounts under this Plan, provided that the assets of such trust(s) shall be required to be used to satisfy the claims of the Company s general creditors in the event of the Company s bankruptcy or insolvency. Plan Unfunded. In the event that the Company (or one of its subsidiaries) shall decide to establish an advance accrual reserve on its books against the future expense of payments hereunder, such reserve shall not under any circumstances be deemed to be an asset of this Plan but, at all times, shall remain a part of the general assets of the Company (or such subsidiary), subject to claims of the Company s (or such subsidiary s) creditors. A person entitled to any amount under this Plan shall be a general unsecured creditor of the Company (or the Participant s employer subsidiary) with respect to such amount. Furthermore, a person entitled to a payment or distribution with respect to any amounts credited to Participant Accounts shall have a claim upon the Company (or the Participant s employer subsidiary) only to the extent of the vested balance(s) credited to such Accounts. Designation of Beneficiary. The Participant s Beneficiary under this Plan with respect to amounts credited to the Participant s Accounts hereunder shall be the person designated to receive benefits on account of the Participant s death on a form provided by the Committee. Expenses. All commissions, fees and expenses that may be incurred in operating the Plan and any related trust(s) established in accordance with the Plan (including the Stock Trust) will be paid by the Company. Voting Common Stock. Each Participant who has a Deferred Stock Account shall be entitled to provide directions to the Committee to cause the Committee to similarly direct the Trustee of the Stock Trust to vote, on any matter presented for a vote to the shareholders of the Company, that number of shares of Common Stock held by the Stock Trust equivalent to the number of shares of Common Stock credited to the Participant s Deferred Stock Account. The Committee shall arrange for distribution to all such Participants in a timely manner all communications directed generally to the shareholders of the Company as to which their votes are solicited. If the Stock Trust ever holds fewer shares of Common Stock than there are shares allocated to Deferred Stock Accounts under the Plan as to which timely and proper directions have been received from

385 Section 7.6 Section 7.7 Section 7.8 Section 7.9 Section 7.10 Section 7.11 the applicable Plan Participants, the Committee will direct the Trustee to vote all shares held in the Stock Trust in the same proportion as the total shares covered by timely and proper directions that have been directed to be voted. Non-Assignability. Participants, their legal representatives and their Beneficiaries shall have no right to anticipate, alienate, sell, assign, transfer, pledge or encumber their interests in the Plan, nor shall such interests be subject to attachment, garnishment, levy or execution by or on behalf of creditors of the Participants or of their Beneficiaries. Mandatory Deferral. Notwithstanding any other provision of this Plan, the Committee shall defer the distribution of any Plan benefits to a Participant if the Committee anticipates that the amount of such Plan benefits, or any portion thereof, would be nondeductible for corporate income tax purposes to the Company pursuant to Section 162(m) of the Code; provided, however, that payment of such amounts in excess of Grandfathered Deferred Compensation Plan Deferrals and Grandfathered Restoration Plan Benefit shall be paid thereafter at the earliest time permitted under Code Section 409A and the regulations and other guidance issued thereunder, including, in the case of Specified Employees, subject to the six-month delay for such amounts on account of a Specified Employee s Separation from Service. Employment/Participation Rights. (a) Nothing in the Plan shall interfere with or limit in any way the right of the Company to terminate any Participant s employment at any time, nor confer upon any Participant any right to continue in the employ of the Company. (b) Nothing in the Plan shall be construed to be evidence of any agreement or understanding, express or implied, that the Company will continue to employ a Participant in any particular position or at any particular rate of remuneration. (c) No employee shall have a right to be selected as a Participant, or, having been so selected, to be continued as a Participant. (d) Nothing in this Plan shall affect the right of a recipient to participate in and receive benefits under and in accordance with any pension, profit-sharing, deferred compensation or other benefit plan or program of the Company. Severability. If any particular provision of the Plan shall be found to be illegal or unenforceable for any reason, the illegality or lack of enforceability of such provision shall not affect the remaining provisions of the Plan, and the Plan shall be construed and enforced as if the illegal or unenforceable provision had not been included. No Individual Liability. It is declared to be the express purpose and intention of the Plan that no liability whatsoever shall attach to or be incurred by the shareholders, officers, or directors of the Company (or any affiliate) or any representative appointed hereunder by the Company (or any affiliate), under or by reason of any of the terms or conditions of the Plan. Tax and Other Withholding. The Company shall have the right to deduct from any payment made under the Plan any amount required by federal, state, local, or foreign law to be withheld with respect to such payment. The Company shall also have the right to withhold from other current salary or wages any amount required by federal, state, local, or foreign law to be withheld with respect to compensation deferred under the Plan at any time prior to payment of such deferred compensation, or if such other current salary or wages are insufficient to satisfy such withholding requirement, to require the Participant to pay the Company such amount required to be withheld to the extent such requirement cannot be satisfied through withholding on other

386 Section 7.12 Section 7.13 Section 7.14 Section 8.1 current salary or wages. Additionally, should deferrals under this Plan cause there to be insufficient current salary or wages for purposes of withholding taxes or other amounts required by federal, state, local, or foreign law to be withheld from current salary or wages, the Company shall require the Participant to pay the Company such amount required to be withheld to the extent such requirement cannot be satisfied through withholding on other current salary or wages. Amounts deferred under the Plan will be taken into account for purposes of any withholding obligation under the Federal Insurance Contributions Act and Federal Unemployment Tax Act at the later of the Plan Year during which the services are performed or the Plan Year during which the rights to the amounts are no longer subject to a substantial risk of forfeiture, as required by Section 3121(v) and 3306(r) of the Code and the regulations promulgated thereunder. Applicable Law. This Plan shall be governed by and construed in accordance with the laws of the State of New Jersey except to the extent governed by applicable federal law. Incompetency. Any person receiving or claiming benefits under the Plan shall be conclusively presumed to be mentally competent and of age until the Committee receives written notice, in a form and manner acceptable to it, that such person is incompetent or a minor, and that a guardian, conservator, or other person legally vested with the care of his estate has been appointed. If the Committee finds that any person to whom a benefit is payable under the Plan is unable to properly care for his or her affairs, or is a minor, then any payment due (unless a prior claim therefor shall have been made by a duly appointed legal representative) may be paid to the Spouse, a child, a parent, or a brother or sister, or to any person deemed by the Committee to have incurred expense for the care of such person otherwise entitled to payment. If a guardian or conservator of the estate of any person receiving or claiming benefits under the Plan shall be appointed by a court of competent jurisdiction, payments shall be made to such guardian or conservator provided that proper proof of appointment is furnished in a form and manner suitable to the Committee. Any payment made under the provisions of this Section shall be a complete discharge of liability therefor under the Plan. Notice of Address. Any payment made to a Participant or a designated Beneficiary at the last known post office address of the distributee on file with the Committee, shall constitute a complete acquittance and discharge of any obligations of the Company under this Plan, unless the Committee shall have received prior written notice of any change in the condition or status of the distributee. Neither the Committee, the Company nor any director, officer, or employee of the Company shall have any duty or obligation to search for or ascertain the whereabouts of a Participant or a designated Beneficiary. ARTICLE VIII Administration Committee. Prior to a Change in Control, the Plan shall be administered by the Committee. The Committee shall have the exclusive right to interpret the Plan (including questions of construction and interpretation) and the decisions, actions and records of the Committee shall be conclusive and binding upon the Company and all persons having or claiming to have any right or interest in or under the Plan. The Committee may delegate to such officers, employees or departments of the Company, or to service-providers or other persons, such authority, duties, and responsibilities of the Committee as it, in its sole discretion, considers necessary or appropriate for the proper and efficient operation of the Plan, including, without limitation, (i)

387 Section 8.2 interpretation of the Plan, (ii) approval and payment of claims, and (iii) establishment of procedures for administration of the Plan. Notwithstanding the foregoing, after a Change in Control, the trustee of any grantor trust established for the purpose of accumulating funds to satisfy the obligations incurred by the Company under this Plan shall administer the Plan and shall have the same privileges and rights as given to the Committee prior to a Change in Control. Claims Procedure. Any person dissatisfied with the Committee s determination of a claim for benefits (or claim for eligibility for participation) hereunder must file a written request for reconsideration with the Committee. This request must include a written explanation setting forth the specific reasons for such reconsideration. The Committee shall review its determination promptly and render a written decision with respect to the claim, setting forth the specific reasons for such denial written in a manner calculated to be understood by the claimant. Such claimant shall be given a reasonable time within which to comment, in writing, to the Committee with respect to such explanation. The Committee shall review its determination promptly and render a written decision with respect to the claim. Such decision of the Committee shall be conclusive, binding, and final upon all claimants under this Plan. Section 8.3 Plan to Comply With Code Section 409A. Notwithstanding any provision to the contrary in this Plan, each provision in this Plan shall be interpreted to permit the deferral of compensation in accordance with Code Section 409A and any provision that would conflict with such requirements shall not be valid or enforceable. Section 9.1 Section 9.2 Section 9.3 Section 9.4 ARTICLE IX Amendment, Termination and Effective Date Amendment of the Plan. Subject to Section 9.3, the Plan may be wholly or partially amended or otherwise modified at any time by written action of the Board of Directors. Notwithstanding the foregoing, the Board of Directors hereby grants to the Committee the authority to approve and adopt amendments to the Plan, provided that such amendments will not materially increase the Company s costs related to providing benefits under the Plan or materially affect the benefits of participants in the Plan. Termination of the Plan. Subject to the provisions of Section 9.3, the Plan may be terminated at any time by written action of the Board of Directors. No Impairment of Benefits. Notwithstanding the provisions of Sections 9.1 and 9.2, no amendment to or termination of the Plan shall reduce the amount credited to any Participant s Accounts hereunder. Effective Date. The Plan, as previously amended and restated, was effective as of March 22, The Plan as set forth herein is amended and restated effective as of January 1, * * * Becton, Dickinson and Company hereby adopts this amended and restated BD Deferred Compensation and Retirement Benefit Restoration Plan, effective as of January 1, IN WITNESS WHEREOF, this Plan has been executed this day of, By Nadia Owens Its SVP - HR & Worldwide Total Rewards

388 ATTACHMENT A Procedures of the Retirement Benefit Restoration Plan Committee re: Payment of Grandfathered Restoration Plan Benefits The following are distribution procedures and requirements established by the Compensation and Benefits Committee of the Board of Directors of the Company (the Board Committee ) with respect to the determination of the appropriate timing and form of benefit payments of Grandfathered Restoration Plan Benefits in accordance the terms of the Restoration Plan (as in effect on October 3, 2004). Notwithstanding anything to the contrary, any Participant who is not an Employee on or after October 1, 2000 shall be entitled to Grandfathered Restoration Plan Benefits solely in the form of a single lump sum cash payment made as soon as practicable following the date on which the Participant first becomes eligible to receive or commence receiving benefits under the Retirement Plan, regardless of the time benefits are actually paid or commence to be paid under the Retirement Plan and regardless of the form of benefit payments to be made under the Retirement Plan. With respect to Restoration Plan Participants who are Employees on or after October 1, 2000, the following provisions shall apply with respect to Grandfathered Restoration Plan Benefits: I. General Rule for Timing and Form of Payment: Except as provided below, all Grandfathered Restoration Plan Benefits shall be paid in the form of a single lump sum cash payment made as soon as practicable following the date on which the Participant first becomes eligible to receive or commence receiving benefits under the Retirement Plan, regardless of the time benefits are actually paid or commence to be paid under the Retirement Plan and regardless of the form of benefit payments to be made under the Retirement Plan. II. Timing of Payment - Disability Retirements: Notwithstanding Paragraph I above and except as provided below, Grandfathered Restoration Plan Benefits on account of a Participant s Disability Retirement shall be paid in the form of a single lump sum cash payment as soon as practicable following the later of (i) the date the Participant ceases accruing additional benefits on account of his disability leave under the Retirement Plan, or (ii) the date on which the Participant first becomes eligible to receive or commence receiving benefits under the Retirement Plan, regardless of the time benefits are actually paid or commence to be paid under the Retirement Plan and regardless of the form of benefit payments to be made under the Retirement Plan. III. Optional Forms of Payment: In lieu of the normal form of payment under Paragraph I or Paragraph II above, a Participant may elect (on such forms and in such manner prescribed by the Becton, Dickinson and Company Retirement Benefit Restoration Plan Committee (the Restoration Plan Committee ), including through telephonic or electronic means) to have Grandfathered Restoration Plan Benefits paid in any form of payment otherwise permitted under the Retirement Plan as the Participant may elect. A Participant s election to receive Grandfathered Restoration Plan Benefits in a form other than a lump sum shall not be effective (regardless of whether the Restoration Plan Committee otherwise approves the Participant s request) unless the request is made and received by the Restoration Plan Committee at least 6 months prior to the date Grandfathered Restoration Plan Benefits would otherwise be paid or commence to be paid under the Restoration Plan; provided, however, that such 6-month restriction shall be waived if the Participant terminates employment on account of a Disability Retirement as determined by the Retirement Plan administrator under the terms of the Retirement Plan in effect on October 3, (Eligibility for a Disability Retirement under the Retirement Plan requires a finding that

389 the Participant has not attained age 65, has at least 10 years of vesting service, and becomes entitled to disability benefits under the Federal Social Security Act. The Participant should provide the Restoration Plan Committee with a copy of the written governmental notification of his eligibility for disability benefits under the Social Security Act.) In the absence of an effective election made at least 6 months before the date Grandfathered Restoration Plan Benefits would otherwise have been paid under the Restoration Plan, the Restoration Plan Committee shall pay the Participant s Grandfathered Restoration Plan Benefit in accordance with the last effective election on file with the Restoration Plan Committee or, in the absence of such a valid election, in accordance with Paragraph I or Paragraph II. (By way of illustration, assume that, within 4 months of his termination, a 60-year old Participant had elected to have his Grandfathered Restoration Plan Benefit paid as a life annuity. In that case, the Participant s election will not be effective because the Restoration Plan would otherwise require a lump sum payment as soon as practicable after such termination and the 6-month requirement would not have been met. In the absence of a valid election, the Participant s Grandfathered Restoration Plan Benefit would be paid in a single lump sum as soon as practicable after termination of employment.) IV. Optional Acceleration of Payment Due to Disability: If a Participant terminates employment on account of a Disability Retirement (determined under the Retirement Plan as described in Paragraph III above) and such Participant has elected a form of payment other than an immediate lump sum distribution, such Participant may request in writing to receive an accelerated lump sum distribution of his Grandfathered Restoration Plan Benefits as a result of his disability. In such case, the Restoration Plan Committee may, in its sole and absolute discretion, determine to grant or deny such request for payment. Because each request is unique, each Participant s request will be decided on a case-by-case basis. Therefore, there shall be no uniform standards for the Restoration Plan Committee to apply in determining whether to grant a request. If the Restoration Plan Committee, in its discretion, grants a Participant s request, it shall notify the Participant in writing and it shall direct that payment of the Participant s entire Grandfathered Restoration Plan Benefit be made to the Participant in a single lump sum as soon as practicable thereafter. If the Restoration Plan Committee, in its discretion, denies such request, it shall notify the Participant in writing as soon as practicable thereafter. The Restoration Plan Committee s decision concerning a Participant s entitlement to an accelerated payment due to a Disability Retirement shall be final and binding. V. Calculation of Benefits: The amount of a Participant s lump sum payment shall be determined as provided under the terms of the Restoration Plan in effect on October 3, If a Participant s Grandfathered Restoration Plan Benefit is to be paid in accordance with any of the Retirement Plan s optional forms of payment, the amount of the Participant s Grandfathered Restoration Plan Benefit shall be determined by the Restoration Plan Committee (or its delegate) based on the Participant s age and the actuarial factors otherwise provided for in the Retirement Plan with respect to the optional form of payment elected.

390 ATTACHMENT B Provisions Related to Merger with CareFusion Corporation Deferred Compensation Plan The CareFusion Corporation Deferred Compensation Plan (the CFN Plan ) was merged into the Plan effective as of January 1, Notwithstanding anything in the Plan to the contrary, all amounts credited under the CFN Plan as of December 31, 2016 remain subject to, and are exclusively controlled by, all of the terms and conditions of the CFN Plan as in effect on December 31, 2016, provided, however, that the Board of Directors and the Committee may amend the applicable provisions under the CFN Plan in accordance with Article IX of the Plan.

391 EXHIBIT 10(g)(ii) Terms of Awards Under 2004 Employee and Director Equity-Based Compensation Plan (the Plan ) and Stock Award Plan Capitalized terms used herein that are not defined shall have the same meaning as set forth in the Plan and Stock Aware Plan, as applicable. 1. Stock Options (a) Vesting Period: Ratably over four (4) years, with twenty-five percent (25%) becoming exercisable on each of the first, second, third and fourth anniversary of the grant date, except as provided in the Plan. (b) Term: Ten (10) years from grant date. (c) Exercise Price: Fair market value of BD common stock on grant date. (d) Form: Non-qualified stock options. (e) Forfeiture: Subject to forfeiture if (a) the grantee violates any agreement of non-competition with BD, or any agreement of non-disclosure of confidential information of BD, or (b) if grantee commits acts or omissions that would have been the basis for termination for Cause during the grantee s employment. (f) Termination of Employment: Upon death, Disability or Retirement, all unvested stock options become fully exercisable for their remaining term. Upon termination due to involuntary termination without cause, holder may exercise stock options for three months following termination, but only to the extent they were vested at the time of termination. Upon voluntary termination or termination with cause, unexercised stock options are forfeited. 2. Stock Appreciation Rights (SARs) (a) Vesting Period: Ratably over four (4) years, with twenty-five percent (25%) becoming exercisable on each of the first, second, third and fourth anniversary of the grant date, except as provided in the Plan. (b) Term: Ten (10) years from grant date. (c) Exercise Price: Fair market value of BD common stock on grant date. (d) Settlement: Upon exercise, the holder receives shares of BD common stock equal in value to the amount by which the market price of the BD common stock at the time of exercise exceeds the exercise price. (e) Forfeiture: Subject to forfeiture if (a) the grantee violates any agreement of non-competition with BD, or any agreement of non-disclosure of confidential information of BD, or (b) if grantee commits acts or omissions that would have been the basis for termination for Cause during the grantee s employment. (f) Termination of Employment: Upon death, Disability or Retirement, all unvested SARs become fully exercisable for their remaining term. Upon termination due to involuntary termination without cause, holder may exercise SARs for three months following termination, but only to the extent they were vested at the time of termination. Upon voluntary termination or termination with cause, unexercised SARCs are forfeited. 3. Performance Units (a) Vesting Period: Third anniversary of grant date. (b) Settlement: Performance Units are settled in shares of BD common stock. Performance Unit awards are given a share target. A formula determines the actual number of shares that will be issued upon vesting, which is based on BD s performance against pre-established performance measures over the applicable performance period.

392 (c) Performance Period: Three consecutive fiscal years, beginning with the fiscal year in which the award is granted. (d) Performance Measures: Consist primarily of BD s (1) average return on invested capital and (2) relative total shareholder return compared to that of a select group of peer companies, over the performance period. Each measure is weighted 50%. Payouts may range from zero to 200% of the award s share target. (e) Dividend Equivalent Rights: Dividends do not accrue on Performance Unit awards. (f) Termination of Employment: Upon death or 409A Disability, grantee vests in a pro rata amount of the award s share target. Upon Disability (other than a 409A Disability), Retirement or involuntary termination without Cause, grantee vests in a pro rata amount of the shares that would have been distributable under the award based on the payout formula had the grantee remained employed with BD through the vesting period, with shares being distributed after the end of the applicable vesting period. Upon voluntary termination or termination with cause, unvested awards are forfeited. 4. Time-Vested Units (a) Vesting Period: For awards granted prior to January 1, 2015, third anniversary of grant date. For awards made on or after January 1, 2015, awards vest ratably over three (3) years, with one-third becoming exercisable on each of the first, second, and third anniversary of the grant date. (b) Settlement: Each Time-Vested Unit entitles the grantee to one share of BD common stock upon vesting. (c) Dividend Equivalent Rights: Dividends do not accrue on Time-Vested Unit awards. (d) Termination of Employment: Upon Retirement, death or Disability, the award vests in full. Upon involuntary termination without Cause, the grantee vests in a pro rata amount of the award. Upon voluntary termination or involuntary termination with cause, unvested awards are forfeited. 5. Career Shares (a) Vesting Period: First anniversary of the grantee s Retirement from BD: (b) Settlement: Each Career Share entitles the grantee to one share of BD common stock upon vesting: (c) Dividend Equivalent Rights: Awards made in November 2004 and after were issued in tandem with dividend equivalent rights. (d) Termination of Employment: Upon death, Disability or involuntary termination other than for Cause, Career Shares become fully vested. (e) Forfeiture: Subject to forfeiture in the event, at any time prior to the first anniversary of the grantee s Retirement, the grantee violates non-compete covenant with BD. 6. Change in Control Provisions Awards made on or after January 1, 2015 automatically vest upon a Change in Control unless the awards are either continued or replaced with similar awards. In those instances where awards are continued or replaced, the awards will then automatically vest if the holder is terminated without Cause or the holder terminates employment for Good Reason within two years of the Change in Control. Awards made prior to January 1, 2015 automatically vest (with Performance Units being payable at their target amount) upon a Change in Control.

393 EXHIBIT 21 SUBSIDIARIES OF BECTON, DICKINSON AND COMPANY Exhibit 21 to Form 10-K State of Jurisdiction of Incorporation Percentage of Voting Securities Owned Accuri Cytometers, Inc. Delaware 100% Atto BioScience, Inc. Delaware 100% Alverix, Inc. Delaware 100% ARX SA Switzerland 100% (1) Becton Dickinson Dispensing Belgium BVBA Belgium 100% (1) Becton Dickinson Dispensing Spain S.L.U. Spain 100% (1) Becton Dickinson Dispensing UK Ltd. United Kingdom 100% (1) Becton Dickinson Dispensing France SAS France 100% (1) Becton Dickinson Dispensing Ireland Limited Ireland 100% (1) Becton Dickinson Dispensing Norge AS Norway 100% (1) Becton Dickinson Biosciences, Systems and Reagents Inc. California 100% BD Holding S. de R.L. de C.V. Mexico 100% (1) Becton Dickinson Matrex Holdings, Inc. Delaware 100% BD Norge AS Norway 100% (1) BD Rapid Diagnostic (Suzhou) Co., Ltd. China 100% (1) BDIT Singapore Pte. Ltd. Singapore 100% (1) BD (West Africa) Limited Ghana 100% (1) BDX INO LLC Delaware 100% Becton Dickinson AcuteCare Holdings, Inc. Delaware 100% Becton Dickinson Advanced Pen Injection Systems GmbH Switzerland 100% (1) Becton Dickinson Argentina S.R.L. Argentina 100% (1) Becton Dickinson Asia Limited Hong Kong 100% (1) Becton Dickinson Asia Pacific Limited British Virgin Islands 100% Becton Dickinson Austria Holdings GmbH Austria 100% (1) Becton Dickinson Austria GmbH Austria 100% (1) Becton Dickinson Benelux N.V. Belgium 100% (1) Becton Dickinson Canada Inc. Canada 100% (1) Becton Dickinson Caribe Ltd. Cayman Islands 100% (1) Becton Dickinson Croatia d.o.o. Croatia 100% (1) Becton Dickinson de Colombia Ltda. Colombia 100% (1) Becton Dickinson Czechia s.r.o. Czech Republic 100% (1) Becton Dickinson del Uruguay S.A. Uruguay 100% (1) Becton Dickinson Distribution Center N.V. Belgium 100% (1) Becton Dickinson East Africa Ltd. Kenya 100% (1) Becton Dickinson Guatemala S.A. Guatemala 100% (1)

394 SUBSIDIARIES OF BECTON, DICKINSON AND COMPANY Becton Dickinson Hellas S.A. Greece 100% (1) Becton Dickinson Hungary Kft. Hungary 100% (1) Becton Dickinson India Private Limited India 100% (1) Becton Dickinson Infusion Therapy AB Sweden 100% (1) Becton Dickinson A/S Denmark 100% (1) Becton Dickinson Infusion Therapy B.V. Netherlands 100% (1) Becton Dickinson Infusion Therapy Holdings AB Sweden 100% (1) Becton Dickinson Infusion Therapy Systems Inc., S.A. de C.V. Mexico 100% (1) Becton Dickinson Infusion Therapy UK United Kingdom 100% (1) Becton Dickinson Infusion Therapy Systems Inc. Delaware 100% Becton Dickinson Infusion Therapy Holdings UK Limited United Kingdom 100% (1) Becton Dickinson Insulin Syringe, Ltd. Cayman Islands 100% (1) Becton Dickinson Ithalat Ihracat Limited Sirketi Turkey 100% (1) Becton Dickinson Korea Holding, Inc. Delaware 100% Becton Dickinson Korea Ltd. Korea 100% (1) Becton Dickinson Malaysia, Inc. Oregon 100% Becton Dickinson (Mauritius) Limited Mauritius 100% Becton Dickinson Medical (S) Pte Ltd. Singapore 100% (1) Becton Dickinson Medical Devices (Shanghai) Co., Ltd. P.R.C. 100% (1) Becton Dickinson Medical Devices (Suzhou) Co., Ltd. P.R.C. 100% (1) Becton Dickinson Medical Products Pte. Ltd. Singapore 100% Becton Dickinson Ltd. New Zealand 100% (1) Becton Dickinson O.Y. Finland 100% (1) Becton Dickinson Overseas Services Ltd. Nevada 100% Becton Dickinson Pen Limited Ireland 100% (1) Becton Dickinson Penel Limited Cayman Islands 100% (1) Becton Dickinson Philippines, Inc. Philippines 100% (1) Becton Dickinson Polska Sp.z.o.o. Poland 100% (1) Becton Dickinson Pty. Ltd. Australia 100% (1) Becton Dickinson (Pty) Ltd. South Africa 100% (1) Becton Dickinson Sdn. Bhd. Malaysia 100% (1) Becton Dickinson Sample Collection GmbH Switzerland 100% (1) Becton Dickinson Slovakia s.r.o. Slovakia 100% (1) Becton Dickinson (Thailand) Limited Thailand 100% (1) Becton Dickinson Venezuela, C.A. Venezuela 100% (1) Becton Dickinson Venture LLC Delaware 100% BD Ventures LLC New Jersey 100% Becton Dickinson Vostok LLC Russia 100% (1) Becton Dickinson, S.A. Spain 100% (1) Becton, Dickinson A.G. Switzerland 100% (1)

395 SUBSIDIARIES OF BECTON, DICKINSON AND COMPANY Becton, Dickinson Aktiebolag Sweden 100% (1) Becton, Dickinson and Company, Ltd. Ireland 100% (1) Becton, Dickinson B.V. Netherlands 100% (1) Becton, Dickinson de Mexico, S.A. de C.V. Mexico 100% (1) Becton Dickinson France S.A.S. France 100% (1) Becton Dickinson GmbH Germany 100% (1) Becton, Dickinson Industrias Cirurgicas, Ltda. Brazil 100% (1) Becton, Dickinson Italia S.p.A. Italy 100% (1) B-D U.K. Holdings Limited United Kingdom 100% (1) Becton Dickinson U.K. Limited United Kingdom 100% (1) Benex Ltd. Ireland 100% (1) BioVenture Centre Pte. Ltd. Singapore 100% CareFusion Corporation Delaware 100% CareFusion Australia 316 Pty Limited Australia 100% (1) CareFusion Austria 322 GmbH Austria 100% (1) CareFusion D.R. 203 Ltd. Bermuda 100% (1) CareFusion BH 335 d.o.o. Bosnia 100% (1) Intermed Equipamento Médico Hospitalar Ltda. Brazil 100% (1) STAR - Servicos de Assistencia Tecnica A Equipamento Medico Hospitalar Ltda. Brazil 100% (1) CareFusion Canada 307 ULC Canada 100% (1) Cardinal Health Trading (Shanghai) Co. Ltd. China 100% (1) CareFusion Asia (HK) Limited Hong Kong 100% (1) CareFusion (Shanghai) Commercial and Trading Co. Limited China 100% (1) CareFusion Hong Kong Limited Hong Kong 100% (1) Shenzhen Vital Signs - KTL Medical Instrument Co., Ltd. China 100% (1) Vital Signs Hong Kong Limited Hong Kong 100% (1) CareFusion Denmark 329 A/S Denmark 100% (1) CareFusion 323 DMCC Dubai 100% (1) CareFusion Finland 320 Oy Finland 100% (1) CareFusion France 309 S.A.S. France 100% (1) CareFusion Germany 234 GmbH Germany 100% (1) CareFusion Germany 277 GmbH Germany 100% (1) CareFusion Germany 318 GmbH Germany 100% (1) Becton Dickinson Rowa Germany GmbH Germany 100% (1) CareFusion Germany 506 GmbH Germany 100% (1) Cardinal Health India Private Limited India 100% (1) Care Fusion Development Private Limited India 100% (1) CareFusion Israel 330 Ltd. Israel 100% (1) Becton Dickinson Rowa Italy Srl Italy 100% (1)

396 SUBSIDIARIES OF BECTON, DICKINSON AND COMPANY CareFusion Italy 311 S.r.l. Italy 100% (1) CareFusion Italy 312 S.p.A. Italy 100% (1) CareFusion Italy 327 S.r.l. Italy 100% (1) CareFusion Japan 324 GK Japan 100% (1) CareFusion Korea 334 Limited Korea 100% (1) CareFusion Malaysia 325 Sdn Bhd Malaysia 100% (1) CareFusion Mexico 215 SA de CV Mexico 100% (1) Enturia de México S. de R.L. de C.V. Mexico 100% (1) Productos Urologos de México SA de C.V. Mexico 100% (1) Sistemas Médicos ALARIS, S.A. de C.V. Mexico 100% (1) CareFusion Netherlands 238 B.V. Netherlands 100% (1) CareFusion Netherlands 310 B.V. Netherlands 100% (1) CareFusion Netherlands 328 B.V. Netherlands 100% (1) CareFusion Netherlands 503 B.V. Netherlands 100% (1) CareFusion Netherlands 504 B.V. Netherlands 100% (1) CareFusion Netherlands Financing 283 C.V. Netherlands 100% (1) Dutch American Manufacturers (D.A.M.) B.V. Netherlands 100% (1) CareFusion New Zealand 313 Limited New Zealand 100% (1) CareFusion Norway 315 A/S Norway 100% (1) CareFusion Portugal Produtos Médicos, LDA Portugal 100% (1) CareFusion RUS 333 Limited Liability Company Russia 100% (1) CareFusion Singapore 243 Pte. Ltd. Singapore 100% (1) CareFusion S.A. 319 (Proprietary) Limited South Africa 100% (1) CareFusion Iberia 308 S.L. Spain 100% (1) Sendal, S.L.U. Spain 100% (1) CareFusion Sweden 314 AB Sweden 100% (1) BD Switzerland Sarl Switzerland 100% (1) CareFusion Turkey Tibbi Cihazlar Ticaret Anonim Sirketi Turkey 100% (1) CareFusion U.K. 232 Limited United Kingdom 100% (1) CareFusion U.K. 235 Limited United Kingdom 100% (1) CareFusion U.K. 236 Limited United Kingdom 100% (1) CareFusion U.K. 244 Limited United Kingdom 100% (1) CareFusion U.K. 305 Limited United Kingdom 100% (1) CareFusion U.K. 306 Limited United Kingdom 100% (1) Sendal U.K. United Kingdom 100% (1) U.K. Medical, Ltd. United Kingdom 100% (1) U.K. Medical Holdings Ltd. United Kingdom 100% (1) Bird Products Corporation California 100% (1) Medegen, LLC California 100% (1) SensorMedics Corporation California 100% (1)

397 SUBSIDIARIES OF BECTON, DICKINSON AND COMPANY Cardal II, LLC Delaware 100% (1) CareFusion 202, Inc. Delaware 100% (1) CareFusion 203, Inc. Delaware 100% (1) CareFusion 206, Inc. Delaware 100% (1) CareFusion 207, Inc. Delaware 100% (1) CareFusion 211, Inc. Delaware 100% (1) CareFusion 213, LLC Delaware 100% (1) CareFusion 2200, Inc. Delaware 100% (1) CareFusion 2201, Inc. Delaware 100% (1) CareFusion 302, LLC Delaware 100% (1) CareFusion 303, Inc. Delaware 100% (1) CareFusion 304, LLC Delaware 100% (1) CareFusion Manufacturing, LLC Delaware 100% (1) CareFusion Resources, LLC Delaware 100% (1) CareFusion Solutions, LLC Delaware 100% (1) EME Medical, Inc. Delaware 100% (1) IVAC Overseas Holding L.P. Delaware 100% (1) VIASYS Holdings Inc. Delaware 100% (1) Vital Signs, Inc. Delaware 100% (1) CareFusion 205, Inc. Illinois 100% (1) Enturican, Inc. Kansas 100% (1) Vital Signs Sales Corporation New Jersey 100% (1) Surgical Site Solutions, Inc. Wisconsin 100% (1) Cell Analysis Systems, Inc. Illinois 100% (1) Corporativo BD de Mexico, S. de R.L. de C.V. Mexico 100% (1) Cytopeia Washington 100% D.L.D., Ltd. Bermuda 100% (1) Dantor S.A. Uruguay 100% (1) Difco Laboratories Incorporated Michigan 100% Distribuidora BD Mexico, S.A. de C.V. Mexico 100% (1) Procesos para Esterilizacion, S.A. de C.V. Mexico 100% (1) Franklin Lakes Enterprises, L.L.C. New Jersey 100% GenCell USA, LLC Wisconsin 100% GenCell DX Limited Ireland 100% GenCell Biosystems Ltd. Ireland 100% GeneOhm Sciences Canada Inc. Canada 100% (1) Healthcare Holdings in Sweden AB Sweden 100% (1) HandyLab, Inc. Delaware 100% IBD Holdings LLC Delaware 50%(1) Staged Diabetes Management LLC New Jersey 50% (1)

398 SUBSIDIARIES OF BECTON, DICKINSON AND COMPANY Matrex Salud, de R.L. de C.V. Mexico 50% (1) Med-Safe Systems, Inc. California 100% Nippon Becton Dickinson Company, Ltd. Japan 100% (1) PharMingen California 100% Phase Medical, Inc. California 100% (1) PreAnalytiX GmbH Switzerland 50% (1) Abastecedora de Dispositivos Medicos JL S.A. de C.V. Mexico 100% (1) TriPath Imaging, Inc. Delaware 100% Becton Dickinson Europe Holdings S.A.S. France 100% (1) Becton Dickinson Management GmbH & Co. KG Germany 100% (1) Becton Dickinson Verwaltungs GmbH Germany 100% (1) Becton Dickinson Ireland Holding Limited Ireland 100% (1) Becton Dickinson Luxembourg S.a.r.L. Luxembourg 100% (1) Becton Dickinson Holdings Pte Ltd. Singapore 100% (1) Becton Dickinson Luxembourg LLC Delaware 100% (1) Becton Dickinson Luxembourg II LLC Delaware 100% Becton Dickinson Luxembourg II S.C.S. Luxembourg 95%/5% (1) Becton Dickinson Luxembourg III LLC Luxembourg 100% (1) Becton Dickinson Luxembourg III LLC S.C.S. Luxembourg 100% (1) Becton Dickinson Luxembourg Holdings S.a.r.L Luxembourg 100% (1) Becton Dickinson Luxembourg Holdings II S.a.r.L Luxembourg 100% (1) Becton Dickinson Sweden Holdings AB Sweden 100% (1) Carmel Pharma AB Sweden 100% (1) Carmel Pharma GmbH Germany 100% (1) Becton Dickinson (Gibraltar) Management Limited Gibraltar 100% (1) Becton Dickinson Asia Holdings Ltd. Gibraltar 100% (1) Becton Dickinson Luxembourg LLC S.C.S. Luxembourg 100% (1) Becton Dickinson Worldwide Investments Sa.r.L. Luxembourg 100% (1) Becton Dickinson (Gibraltar) Holdings Ltd. Gibraltar 100% (1) Becton Dickinson Management S.a.r.L Luxembourg 100% (1) Becton Dickinson Bermuda L.P. Bermuda 100% (1) Becton Dickinson Luxembourg Finance S.a.r.L. Luxembourg 100% (1) Becton Dickinson (Gibraltar) Limited Gibraltar 100% (1) Becton Dickinson Netherlands Holdings B.V. Netherlands 100% (1) Becton Dickinson Netherlands Holdings II B.V. Netherlands 100% (1) Sirigen, Inc. California 100% Sirigen Limited United Kingdom 100% (1) Sirigen Group Limited United Kingdom 100% (1) Sirigen II Limited United Kingdom 100% (1) Safety Syringes, Inc. California 100%

399 SUBSIDIARIES OF BECTON, DICKINSON AND COMPANY BD Kiestra BV Netherlands 100% (1) Kiestra Lab Automation U.K. Ltd United Kingdom 100%(1) Chemocato LLC Delaware 100% (1) Cato Software Solutions Polska sp.z.o.o. Poland 100% (1) Becton Dickinson GSA Beteilgungs GmbH Germany 100% (1) Becton Dickinson Zambia Zambia 100% (1) PT Becton Dickinson Indonesia Indonesia 100% (1) Alverix (M) Sdn. Bhd. Malaysia 100% (1) CRISI Medical Systems, Inc. Delaware 100% Cellular Research, Inc. Delaware 100% (1) owned by a wholly-owned subsidiary of Becton, Dickinson and Company As of 9/30/2016

400 EXHIBIT 23 CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM We consent to the incorporation by reference in the following Registration Statements: (1) Registration Statements on Form S-8 Nos , , , , , , , , , and of Becton, Dickinson and Company; (2) Registration Statements on Form S-3 Nos , , , , , , , and of Becton, Dickinson and Company; and (3) Registration Statement on Form S-4 No of Becton, Dickinson and Company; of our reports dated November 23, 2016, with respect to the consolidated financial statements of Becton, Dickinson and Company and the effectiveness of internal control over financial reporting of Becton, Dickinson and Company included in this Annual Report (Form 10-K) of Becton, Dickinson and Company for the year ended September 30, New York, New York November 23, 2016 /s/ ERNST & YOUNG LLP

401 EXHIBIT 24 POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that each of the undersigned, being a director of Becton, Dickinson and Company, a New Jersey corporation (the Company ), hereby constitutes and appoints Vincent A. Forlenza, Christopher R. Reidy, Jeffrey S. Sherman and Gary DeFazio, and each of them, his or her true and lawful attorney-in-fact and agent, with full power of substitution and resubstitution, for him or her and in his or her name, place and stead, in any and all capacities, to sign the Company s Annual Report on Form 10-K for the Company s fiscal year ended September 30, 2016, and any amendments thereto, each in such form as they or any one of them may approve, and to file the same with all exhibits thereto and other documents in connection therewith with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done so that such Annual Report shall comply with the Securities Exchange Act of 1934, as amended, and the applicable Rules and Regulations adopted or issued pursuant thereto, as fully and to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them or their substitute or resubstitute, may lawfully do or cause to be done by virtue hereof. This Power of Attorney shall not revoke any powers of attorney previously executed by the undersigned. This Power of Attorney shall not be revoked by any subsequent power of attorney that the undersigned may execute, unless such subsequent power of attorney specifically provides that it revokes this Power of Attorney by referring to the date of the undersigned s execution of this Power of Attorney. For the avoidance of doubt, whenever two or more powers of attorney granting the powers specified herein are valid, the agents appointed on each shall act separately unless otherwise specified. IN WITNESS WHEREOF, each of the undersigned has hereunto set his or her hand on this 23rd day of November, /s/ Basil L. Anderson /s/ Gary A. Mecklenburg Basil L. Anderson Gary A. Mecklenburg /s/ Catherine M. Burzik /s/ James F. Orr Catherine M. Burzik James F. Orr /s/ R. Andrew Eckert /s/ Willard J. Overlock, Jr. R. Andrew Eckert Willard J. Overlock, Jr. /s/ Vincent A. Forlenza /s/ Claire Pomeroy Vincent A. Forlenza Claire Pomeroy /s/ Claire M. Fraser /s/ Rebecca W. Rimel Claire M. Fraser Rebecca W. Rimel /s/ Christopher Jones /s/ Bertram L. Scott Christopher Jones Bertram L. Scott /s/ Marshall O. Larsen Marshall O. Larsen

402 EXHIBIT 31 CERTIFICATION I, Vincent A. Forlenza, certify that: 1. I have reviewed this Annual Report on Form 10-K of Becton, Dickinson and Company; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, 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; (c) Evaluated the effectiveness of the registrant s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and (d) Disclosed in this report any change in the registrant s internal control over financial reporting that occurred during the registrant s most recent fiscal quarter (the registrant s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant s internal control over financial reporting, and 5. The registrant s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant s auditors and the audit committee of the registrant s board of directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant s ability to record, process, summarize and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant s internal control over financial reporting. Date: November 23, 2016 /s/ Vincent A. Forlenza Vincent A. Forlenza Chairman, Chief Executive Officer and President

403 CERTIFICATION I, Christopher R. Reidy, certify that: 1. I have reviewed this Annual Report on Form 10-K of Becton, Dickinson and Company; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, 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; (c) Evaluated the effectiveness of the registrant s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and (d) Disclosed in this report any change in the registrant s internal control over financial reporting that occurred during the registrant s most recent fiscal quarter (the registrant s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant s internal control over financial reporting; and 5. The registrant s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant s auditors and the audit committee of the registrant s board of directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant s ability to record, process, summarize and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant s internal control over financial reporting. Date: November 23, 2016 /s/ Christopher R. Reidy Christopher R. Reidy Executive Vice President, Chief Financial Officer and Chief Administrative Officer

404 EXHIBIT 32 CERTIFICATION The certification set forth below is being submitted in connection with the Annual Report on Form 10-K of Becton, Dickinson and Company for the fiscal year ended September 30, 2016 as filed with the Securities and Exchange Commission on the date hereof (the Report ) for the purpose of complying with Rule 13a-14(b) of the Securities Exchange Act of 1934 (the Exchange Act ) and Section 1350 of Chapter 63 of Title 18 of the United States Code. I, Vincent A. Forlenza, the Chief Executive Officer of Becton, Dickinson and Company, certify that: 1. such Report fully complies with the requirements of Section 13(a) of the Exchange Act; and 2. the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Becton, Dickinson and Company. Date: November 23, 2016 /s/ Vincent A. Forlenza Vincent A. Forlenza Chief Executive Officer

405 CERTIFICATION The certification set forth below is being submitted in connection with the Annual Report on Form 10-K of Becton, Dickinson and Company for the fiscal year ended September 30, 2016 as filed with the Securities and Exchange Commission on the date hereof (the Report ) for the purpose of complying with Rule 13a-14(b) of the Securities Exchange Act of 1934 (the Exchange Act ) and Section 1350 of Chapter 63 of Title 18 of the United States Code. I, Christopher R. Reidy, the Chief Financial Officer of Becton, Dickinson and Company, certify that: 1. such Report fully complies with the requirements of Section 13(a) of the Exchange Act; and 2. the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Becton, Dickinson and Company. Date: November 23, 2016 /s/ Christopher R. Reidy Christopher R. Reidy Chief Financial Officer

406 EXHIBIT VIII DEFINITIVE PROXY STATEMENT ON FORM DEF 14A FILED BY BECTON, DICKINSON AND COMPANY ON DECEMBER 15, 2016 Becton, Dickinson and Company Becton, Dickinson and Company Global Share Investment Program EU Prospectus Dated: April 19, 2017

407 Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C SCHEDULE 14A Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934 (Amendment No. ) Filed by the Registrant Filed by a Party other than the Registrant Check the appropriate box: Preliminary Proxy Statement Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) Definitive Proxy Statement Definitive Additional Materials Soliciting Material Pursuant to a-12 Becton, Dickinson and Company (Name of Registrant as Specified In Its Charter) (Name of Person(s) Filing Proxy Statement, if other than the Registrant) Payment of Filing Fee (Check the appropriate box): No fee required. Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and (1) Title of each class of securities to which transaction applies: (2) Aggregate number of securities to which transaction applies: (3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined): (4) Proposed maximum aggregate value of transaction: (5) Total fee paid: Fee paid previously with preliminary materials. Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. (1) Amount Previously Paid: (2) Form, Schedule or Registration Statement No.: (3) Filing Party: (4) Date Filed:

408 Table of Contents Becton, Dickinson and Company 1 Becton Drive Franklin Lakes, New Jersey December 15, 2016 Dear Fellow Shareholders: You are cordially invited to attend the 2017 Annual Meeting of Shareholders of Becton, Dickinson and Company ( BD ) to be held at 1:00 p.m. EST on Tuesday, January 24, 2017 at the Four Seasons Hotel New York, 57 East 57 th Street, New York, New York. The accompanying notice of meeting and proxy statement describe the matters to be acted upon at the meeting. We also will report on matters of interest to BD shareholders. Your vote is important. Whether or not you plan to attend the Annual Meeting in person, we encourage you to vote so that your shares will be represented and voted at the meeting. You may vote by proxy on the Internet or by telephone, or by completing and mailing the enclosed proxy card in the return envelope provided. You may also vote in person at the Annual Meeting. Thank you for your continued support of BD. Sincerely, Vincent A. Forlenza Chairman, Chief Executive Officer and President

409 Table of Contents NOTICE OF ANNUAL MEETING OF SHAREHOLDERS Becton, Dickinson and Company 1 Becton Drive Franklin Lakes, New Jersey December 15, 2016 The 2017 Annual Meeting of Shareholders of Becton, Dickinson and Company ( BD ) will be held as follows: DATE: Tuesday, January 24, 2017 TIME: 1:00 p.m. EST LOCATION: Four Seasons Hotel New York 57 East 57 th Street New York, New York PURPOSE: To consider and act upon the following proposals: 1. The election as directors of the 13 nominees named in the attached proxy statement for a one-year term; 2. The ratification of the selection of the independent registered public accounting firm; 3. An advisory vote to approve named executive officer compensation; 4. An advisory vote to approve the frequency of named executive officer compensation advisory votes; 5. A shareholder proposal regarding an independent Board Chair, if properly presented at the meeting; and 6. Such other business as may properly come before the meeting or any adjournment or postponement thereof. Shares represented by properly executed proxies will be voted in accordance with the instructions specified therein. Shares represented by properly executed proxies that do not provide specific voting instructions will be voted in accordance with the recommendations of BD s Board of Directors set forth in the accompanying proxy statement. Important Notice Regarding the Availability of Proxy Materials for the 2017 Annual Meeting of Shareholders to be held on January 24, BD s proxy statement and 2016 Annual Report, which includes BD s consolidated financial statements, are available at Shareholders of record at the close of business on December 2, 2016 will be entitled to attend and vote at the meeting. By order of the Board of Directors, Gary DeFazio Senior Vice President and Corporate Secretary 1. VIA THE INTERNET: Visit the website noted on your proxy/voting instruction card. YOU CAN VOTE BY PROXY OR SUBMIT VOTING INSTRUCTIONS IN ONE OF THREE WAYS: 2. BY TELEPHONE: Use the telephone number noted on your proxy/voting instruction card. 3. BY MAIL: Promptly return your signed and dated proxy/voting instruction card in the enclosed envelope.

410 Table of Contents Table of Contents GENERAL INFORMATION 1 Proxy solicitation 1 Shareholders entitled to vote; Attendance at the 2017 Annual Meeting 1 Quorum; Required vote 1 How to vote 2 Revocation of proxies or change of instructions 3 Other matters 3 OWNERSHIP OF BD COMMON STOCK 3 Securities owned by certain beneficial owners 3 Securities owned by directors and management 4 Equity Compensation Plan Information 5 Section 16(a) beneficial ownership reporting compliance 6 PROPOSAL 1. ELECTION OF DIRECTORS 6 Nominees for director 7 BOARD OF DIRECTORS 12 The Board and Committees of the Board 12 Committee membership and function 12 Board, Committee and annual meeting attendance 15 Non-management directors compensation 16 Communication with directors 18 CORPORATE GOVERNANCE 19 Corporate Governance Principles 19 Board leadership structure 19 Board s oversight of risk 20 Director nomination process 21 Other significant governance practices 22 Director independence; Policy regarding related person transactions 24 Code of Conduct 25 REPORT OF THE COMPENSATION AND MANAGEMENT DEVELOPMENT COMMITTEE 26 COMPENSATION DISCUSSION AND ANALYSIS 28 COMPENSATION OF NAMED EXECUTIVE OFFICERS 42 Fiscal Year 2016 Summary Compensation Table 42 Information Regarding Plan Awards in Fiscal Year Outstanding Equity Awards 47 SAR Exercises and Vesting of Stock Units 49 Other Compensation 50 Payments Upon Termination of Employment or Change in Control 54 PROPOSAL 2. RATIFICATION OF SELECTION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM 58 Report of the Audit Committee 59 PROPOSAL 3. ADVISORY VOTE TO APPROVE NAMED EXECUTIVE OFFICER COMPENSATION 60 PROPOSAL 4. ADVISORY VOTE TO APPROVE THE FREQUENCY OF EXECUTIVE OFFICER COMPENSATION ADVISORY VOTES 60 PROPOSAL 5. A SHAREHOLDER PROPOSAL REGARDING AN INDEPENDENT BOARD CHAIR 60 SHAREHOLDER PROPOSALS OR DIRECTOR NOMINATIONS FOR 2018 ANNUAL MEETING 62 RECONCILIATION OF NON-GAAP FINANCIAL MEASURES APPENDIX A

411 Table of Contents PROXY STATEMENT 2017 ANNUAL MEETING OF SHAREHOLDERS Tuesday, January 24, 2017 BECTON, DICKINSON AND COMPANY 1 Becton Drive Franklin Lakes, New Jersey Proxy solicitation GENERAL INFORMATION These proxy materials are being mailed or otherwise sent to shareholders of Becton, Dickinson and Company ( BD ) on or about December 15, 2016 in connection with the solicitation of proxies by the BD Board of Directors for BD s 2017 Annual Meeting of Shareholders (the 2017 Annual Meeting ) to be held at 1:00 p.m. EST on Tuesday, January 24, 2017 at the Four Seasons Hotel New York, 57 East 57 th Street, New York, New York. BD s directors and its officers and other BD associates also may solicit proxies by telephone or otherwise. Brokers and other nominees will be requested to solicit proxies or authorizations from beneficial owners and will be reimbursed for their reasonable expenses. BD has retained MacKenzie Partners, Inc. to assist in soliciting proxies for a fee not to exceed $25,000 plus expenses. The cost of soliciting proxies will be borne by BD. Important Notice Regarding the Availability of Proxy Materials for the 2017 Annual Meeting of Shareholders to be held on January 24, This proxy statement and BD s 2016 Annual Report to Shareholders are also available at Shareholders entitled to vote; Attendance at the 2017 Annual Meeting Shareholders of record at the close of business on December 2, 2016 are entitled to notice of, and to vote at, the meeting. As of such date, there were 213,232,041 shares of BD common stock outstanding, each entitled to one vote. If your shares are held in the name of a bank, broker or other nominee (also known as shares held in street name ) and you wish to attend the meeting, you must present proof of ownership as of the record date, such as a bank or brokerage account statement, to be admitted. BD may request appropriate identification for any person seeking to attend the meeting as a condition of admission. Quorum; Required vote The holders of a majority of the shares entitled to vote at the meeting must be present in person or represented by proxy to constitute a quorum. Directors are elected by a majority of the votes cast at the meeting (Proposal 1). If an incumbent director does not receive the requisite vote, he or she must offer to submit his or her resignation, and the Board will decide whether to accept the resignation in accordance with the process described on page 22 of this proxy statement. Approval of each of Proposal 2 (ratification of independent registered public accounting firm), Proposal 3 (advisory vote to approve executive compensation), Proposal 4 (advisory vote on the frequency of executive compensation advisory votes) and Proposal 5 (shareholder proposal) requires the affirmative vote of a majority of the votes cast at the meeting. For Proposal 4, if none of the three frequency choices receives a majority, the Board intends to adopt the choice that receives the plurality of votes cast. Under New Jersey law, abstentions and shares that brokers do not have the authority to vote in the absence of timely instructions from the beneficial owners will not be counted as votes cast, and, accordingly, will have no effect on the outcome of the vote for any of the proposals.

412 Table of Contents How to vote Shareholders of record may cast their votes at the meeting. In addition, shareholders of record may cast their votes by proxy, and participants in the BD plans described below may submit their voting instructions, by: using the Internet and voting at the website listed on the enclosed proxy/voting instruction card (the proxy card ); using the telephone number listed on the proxy card; or signing, completing and returning the proxy card in the enclosed postage-paid envelope. Votes and voting instructions provided through the Internet and by telephone are authenticated by use of a personal identification number. This procedure allows shareholders to appoint a proxy, and the various plan participants to provide voting instructions, and to confirm that their actions have been properly recorded. Specific instructions to be followed are set forth on the proxy card. If you vote through the Internet or by telephone, you do not need to return your proxy card. In order to be timely processed, voting instructions submitted by participants in BD s Global Share Investment Program (the GSIP ) must be received by 12:00 p.m. EST on January 18, 2017, and voting instructions submitted by participants in all other BD plans must be received by 12:00 p.m. EST on January 20, All proxies submitted by record holders through the Internet or by telephone must be received by 11:00 a.m. EST on January 24, If you are the beneficial owner of shares held in street name, you have the right to direct your bank, broker or other nominee on how to vote your shares by using the voting instruction form provided to you by your nominee, or by following their instructions for voting through the Internet or by telephone. In the alternative, you may vote in person at the meeting if you obtain a valid proxy from your bank, broker or other nominee and present it at the meeting. Shares represented by properly executed proxies will be voted in accordance with the instructions specified therein. Shares represented by properly executed proxies that do not specify voting instructions will be voted in accordance with the recommendations of the Board of Directors set forth in this proxy statement. If you hold your shares in street name, and you do not provide voting instructions to your bank, broker or other nominee, your nominee will not be permitted to vote your shares in its discretion on Proposals 1, 3, 4 or 5, but may still be permitted to vote your shares in its discretion on Proposal 2. Participants in BD plans Participants in the BD 401(k) Plan may instruct the BD 401(k) Plan trustee how to vote the shares of BD common stock allocated to their 401(k) accounts. Shares for which no voting instructions have been received by the 401(k) Plan trustee will be voted in the same proportion as those shares for which timely instructions are received. Participants in BD s Deferred Compensation and Retirement Benefit Restoration Plan (the Restoration Plan ), the 1996 Directors Deferral Plan (the Directors Deferral Plan ), and the GSIP (if so provided under the terms of the local country GSIP plan) may provide voting instructions for all shares of BD common stock allocated to their plan accounts. The trustees of these plans will vote the plan shares for which they do not receive instructions from participants in the same proportion as the plan shares for which they do receive instructions. Proxies representing shares of BD common stock held of record also will serve as proxies for shares held under the Direct Stock Purchase Plan sponsored and administered by Computershare Trust Company, N.A. and any shares of BD common stock allocated to participants accounts under the plans mentioned above, if the registrations are the same. Separate mailings will be made for shares not held under the same registrations. 2

413 Table of Contents Revocation of proxies or change of instructions A proxy given by a shareholder of record may be revoked or changed at any time before it is voted by: sending written notice of revocation to the Corporate Secretary of BD at the address set forth above or delivering such notice at the meeting prior to the voting of the proxy, delivering a proxy (by one of the methods described above under the heading How to vote ) bearing a later date, or voting in person by written ballot at the meeting. Participants in the plans described above may change their voting instructions by delivering new voting instructions by one of the methods described above under the heading How to vote. If you are the beneficial owner of shares held in street name, you may revoke or change your voting instructions in the manner provided by your bank, broker or other nominee, or you may vote in person at the meeting in the manner described above under the heading How to vote. Other matters The Board of Directors is not aware of any matters to be presented at the meeting other than those set forth in the accompanying notice. If any other matters properly come before the meeting, the persons named in the proxy card will vote on such matters in accordance with their best judgment. Securities owned by certain beneficial owners OWNERSHIP OF BD COMMON STOCK The following table sets forth as of September 30, 2016, information concerning those persons known to BD to be the beneficial owner of more than 5% of BD s outstanding common stock. This information is based on filings made by such persons with the Securities and Exchange Commission ( SEC ). Name and address of beneficial owner Amount and nature of beneficial ownership Percent of class BlackRock, Inc. 40 East 52 nd Street New York, NY ,906,396(1) 7.9% T. Rowe Price Associates, Inc. 100 E. Pratt Street Baltimore, MD ,848,347(2) 7.9% The Vanguard Group, Inc. 100 Vanguard Boulevard Malvern, PA ,846,011(3) 7.0% (1) The beneficial owner has sole dispositive power with respect to these shares and sole voting power with respect to 14,840,387 shares. (2) The beneficial owner has sole dispositive power with respect to these shares, and sole voting power with respect to 4,152,468 shares. (3) The beneficial owner has sole dispositive power with respect to 14,417,851 shares and shared dispositive power with respect to 428,160 shares, and sole voting power with respect to 382,444 shares and shared voting power with respect to 52,183 shares. 3

414 Table of Contents Securities owned by directors and management The following table sets forth as of December 2, 2016 information concerning the beneficial ownership of BD common stock by (i) each director, (ii) the executive officers named in the Summary Compensation Table on page 42, and (iii) all nominees for director and executive officers as a group. In general, beneficial ownership includes those shares that a director or executive officer has the sole or shared power to vote or dispose of, including shares that may be acquired under outstanding equity compensation awards or otherwise within 60 days. Except as indicated in the footnotes to the table, each person has the sole power to vote and dispose of the shares he or she beneficially owns. BD has a policy that prohibits directors, officers and employees from pledging BD shares or engaging in transactions that are intended to hedge against the economic risk of owning BD shares. None of BD s directors or executive officers has pledged or hedged against any of the shares listed. BD COMMON STOCK Amount and nature of beneficial ownership(1) Percentage of class Name Basil L. Anderson 29,453 * Catherine M. Burzik 4,967 * Alexandre Conroy 116,221 * R. Andrew Eckert 368 * Vincent A. Forlenza 1,291,510 * Claire M. Fraser 18,599 * Christopher Jones 16,939 * William A. Kozy 443,905 * Marshall O. Larsen 20,450 * Gary A. Mecklenburg 28,556 * James F. Orr 35,014 * Willard J. Overlock, Jr. 57,916 * Thomas Polen 29,926 * Claire Pomeroy 3,928 * Christopher R. Reidy 60,937 * Rebecca W. Rimel 7,470 * Bertram L. Scott 36,501 * Ellen Strahlman 45,317 * Directors and executive officers as a group (24 persons) 3,045, % * Represents less than 1% of the outstanding BD common stock. (1) Includes shares held directly, and, with respect to executive officers, indirect interests in BD common stock held under the BD 401(k) Plan, GSIP and the Restoration Plan, and, with respect to the non-management directors, indirect interests in BD common stock held under the Directors Deferral Plan. Additional information on certain of these plans appears on pages 5-6. Includes shares under outstanding stock appreciation rights and restricted stock units that executive officers may acquire within 60 days, as follows: Mr. Forlenza, 1,137,515 shares; Mr. Conroy, 87,404 shares; Mr. Kozy, 365,274 shares; Mr. Polen, 26,663 shares; Mr. Reidy, 60,937 shares; and Dr. Strahlman, 40,501 shares. Also includes, with respect to each non-management director, shares issuable under restricted stock units as follows: Mr. Anderson, 22,866 shares; Ms. Burzik, 4,967 shares; Mr. Eckert, 357 shares; Dr. Fraser, 18,599 shares; Mr. Jones, 11,800 shares; Mr. Larsen, 16,784 shares; Mr. Mecklenburg, 22,232 shares; Mr. Orr, 22,045 shares; Mr. Overlock, 24,359 shares; Dr. Pomeroy, 3,928 shares; Ms. Rimel, 6,835 shares; and Mr. Scott, 22,683 shares. 4

415 Table of Contents Equity Compensation Plan Information The following table provides certain information as of September 30, 2016 regarding BD s equity compensation plans. (a) Number of securities to be issued upon exercise of outstanding options, warrants and rights (b) Weighted-average exercise price of outstanding options, warrants and rights(1) (c) Number of securities remaining available for future issuance under equity compensation plan (excluding securities reflected in column(a)) Plan Category Equity compensation plans approved by security holders 11,259,074(2) $ ,067,707(3) Equity compensation plans not approved by security holders 1,706,551(4) N/A 0(5) Total 12,965,625 $ ,067,707 (1) Shares issuable pursuant to outstanding awards of Performance Units and time-vested restricted stock units under the 2004 Plan and BD s Stock Award Plan, as well as shares issuable under the Directors Deferral Plan, the Restoration Plan and the GSIP, are not included in the calculation of weightedaverage exercise price, as there is no exercise price for these shares. (2) Shares issuable includes (i) 494,649 pre-acquisition CareFusion stock options that were converted to BD awards under the 2004 Plan and 7,026,670 SARs granted under the 2004 Plan, (ii) 1,111,550 Performance Unit awards (assuming maximum payout) and 2,481,300 time-vested units awards granted under the 2004 Plan, and 102,282 pre-acquisition CareFusion time-vested restricted stock unit awards that were converted to BD awards under the 2004 Plan, and (iii) 42,623 shares issuable under restricted stock unit awards granted under the Stock Award Plan. The weighted average remaining term of the outstanding options and SARs is 6.15 years. (3) Represents shares available for issuance under the 2004 Plan and includes 4,004,318 shares available for full-value awards, assuming maximum payout of outstanding Performance Units. (4) Includes 120,914 shares issuable under the Directors Deferral Plan, 353,800 shares issuable under the Restoration Plan, and 1,231,837 shares issuable under the GSIP. (5) Not shown are shares issuable under the Directors Deferral Plan, the Restoration Plan or the GSIP. There are no limits on the number of shares issuable under these plans, and the number of shares that may become issuable will depend on future elections made by plan participants. Directors Deferral Plan. The Directors Deferral Plan allows non-management directors to defer receipt, in an unfunded cash account or a BD common stock account, of all or part of their annual retainer and other cash fees. Directors may also defer receipt of the shares underlying their restricted stock unit awards. The number of shares credited to the BD common stock accounts of participants is adjusted periodically to reflect the payment and reinvestment of dividends on the BD common stock. Participants may elect to have amounts held in a cash account converted into a BD common stock account. The Directors Deferral Plan is not qualified, and participants have an unsecured contractual commitment of BD to pay the amounts due under the Directors Deferral Plan. Restoration Plan. Information regarding the deferral features of the Restoration Plan can be found beginning on page 53 of this proxy statement. In the event a participant elects to have cash compensation 5

416 Table of Contents deferred in a BD common stock account, the participant s account is credited with a number of shares based on the prevailing market price of the BD common stock. The cash deferred by the participant is used to purchase the shares of BD common stock on the open market, which are then held in a trust. The number of shares credited to the BD common stock accounts of participants is adjusted periodically to reflect the payment and reinvestment of dividends on the BD common stock. GSIP. BD maintains the GSIP for its non-u.s. associates in certain jurisdictions outside of the United States. The purpose of the GSIP is to provide non- U.S. associates with a means of saving on a regular and long-term basis and acquiring a beneficial interest in BD common stock. Participants may contribute a portion of their base pay, through payroll deductions, to the GSIP for their account. BD provides matching funds of up to 3% of a participant s base pay through contributions to the participant s plan account. Contributions to the GSIP are used to purchase shares of BD common stock on the open market, which are then held in a trust. A participant may withdraw the vested portion of the participant s account, although such withdrawals must be in the form of a cash payment if the participant is employed by BD at the time of withdrawal. Following termination of service, withdrawals will be paid in either cash or shares, at the election of the participant. Section 16(a) beneficial ownership reporting compliance Section 16(a) of the Securities Exchange Act of 1934 requires BD s directors and executive officers to file initial reports of their ownership of BD s equity securities and reports of changes in such ownership with the SEC and the NYSE. Directors and executive officers are required by SEC regulations to furnish BD with copies of all Section 16(a) forms they file with respect to BD securities. Based solely on a review of copies of such forms and written representations from BD s directors and executive officers, BD believes that, for the period from October 1, 2015 through September 30, 2016, all of its directors and executive officers were in compliance with the reporting requirements of Section 16(a), except that the reports required for the annual grant of restricted stock units to our non-management directors were reported one day late. Proposal 1. ELECTION OF DIRECTORS Members of our Board are elected to serve a term of one year and until their successors have been elected and qualified. All of the nominees for director have consented to being named in this proxy statement and to serve if elected. Each of the nominees is a current member of BD s Board. BD does not know of any reason why any nominee would be unable to serve as director. If any nominee is unable to serve, the shares represented by valid proxies will be voted for the election of such other person as the Board may nominate, or the size of the Board may be reduced. BD directors have a variety of backgrounds, which reflects the Board s continuing efforts to achieve a diversity of viewpoint, experience, knowledge, ethnicity and gender. As more fully discussed below, director nominees are considered on the basis of a range of criteria, including their business knowledge and background, prominence and reputation in their fields, global business perspective and commitment to strong corporate governance and citizenship. They must also have experience and ability that is relevant to the Board s oversight role with respect to BD s business and affairs. Each nominee s biography includes the particular experience and qualifications that led the Board to conclude that the nominee should serve on the Board. 6

417 Table of Contents NOMINEES FOR DIRECTOR Basil L. Anderson, 71, has been a director since From 2001 until his retirement in 2006, he served as Vice Chairman of Staples, Inc., a supplier of office products. Prior thereto, he was Executive Vice President Finance and Chief Financial Officer of Campbell Soup Company. Mr. Anderson also is a director of Hasbro, Inc. and Moody s Corporation. Mr. Anderson has an extensive business and financial background as both an operating executive and as a chief financial officer of a major multinational public company. His experience includes strategic, business and financial planning and operations; international operations; and service as a director for public companies in different industries. Catherine M. Burzik, 66, has been a director since From 2006 until the sale of the company in 2012, she served as President and Chief Executive Officer of Kinetic Concepts, Inc., a medical device company specializing in the fields of woundcare and regenerative medicine. Prior thereto, she was President of Applied Biosystems and President of Ortho-Clinical Diagnostics, Inc., a Johnson & Johnson company. Ms. Burzik also is a director of Haemonetics Corporation and General Partner of Targeted Technology Fund II, LP. She was formerly a director of Allscripts Healthcare Solutions, Inc. Ms. Burzik is a seasoned executive in the healthcare industry, having led major medical device, diagnostic, diagnostic imaging and life sciences businesses. She contributes strong strategic and leadership expertise, and extensive knowledge of the global healthcare field. R. Andrew Eckert, 55, was appointed to the Board in September He served as the Chief Executive Officer of Valence Health, Inc., a health care information technology and services company, from August 2015 until the sale of the company in October Prior thereto, Mr. Eckert served as Chief Executive Officer of TriZetto Corporation, a healthcare IT solutions firm, and Chief Executive Officer of CRC Health Group, a provider of specialized behavioral healthcare services. Mr. Eckert also is the Chairman of Varian Medical Systems. Mr. Eckert is a leader in the growing field of health care information technology, with extensive experience as an executive officer of several healthcare companies. He has a deep knowledge of operations, strategic planning, product development and marketing, and has valuable corporate governance insight gained from having served as a director of several public companies. 7

418 Table of Contents Vincent A. Forlenza, 63, has been a director since 2011, and became BD s Chairman in He was elected BD s Chief Executive Officer in 2011 and has served as its President since He also served as BD s Chief Operating Officer from July 2010 to October Mr. Forlenza is Chairman of the Advanced Medical Technology Association (AdvaMed), an international medical technology trade organization. He is a member of the Board of Trustees of The Valley Health System, a member of the Board of Directors of the Quest Autism Foundation, and a member of the Board of Trustees of Lehigh University. Mr. Forlenza has been with BD for over 35 years in a number of different capacities, including strategic planning, business development, research and development leadership and general management in each of BD s segments and in overseas roles. Mr. Forlenza brings to the Board extensive business and industry experience, and provides the Board with a unique perspective on BD s strategy and operations, particularly in the area of new product development. Claire M. Fraser, Ph.D, 61, has been a director since Since 2007, she has been Director of the Institute for Genome Sciences and a Professor of Medicine at the University of Maryland School of Medicine in Baltimore, Maryland. From 1998 to 2007, she served as President and Director of The Institute for Genomic Research, a not-for-profit center dedicated to deciphering and analyzing genomes. Dr. Fraser also serves on the Board of the American Association for the Advancement of Science and the Maryland Technology Development Corporation (TEDCO). Dr. Fraser is a prominent scientist with a strong background in infectious diseases and molecular diagnostics, including the development of novel diagnostics and vaccines. She also brings considerable managerial experience in her field. Christopher Jones, 61, has been a director since Mr. Jones retired in 2001 as Chief Executive Officer of JWT Worldwide (previously known as J. Walter Thompson), an international marketing firm. Since 2002, Mr. Jones has been Operating Partner and director at Motion Equity Partners, a pan-european private equity firm. He is a member of the Board of Trustees of The Pew Charitable Trusts, and a member of the Board of Directors of the Albert and Mary Lasker Foundation. He also is a director of the Cello Group, Chairman of Palmer Hargreaves, and a member of the Health Advisory Board of The Johns Hopkins University Bloomberg School of Public Health. Mr. Jones contributes an important international perspective based on his distinguished career as a marketing leader and head of a global marketing firm. He offers substantial marketing, strategic and managerial expertise derived from his broad range of activities in the field. 8

419 Table of Contents Marshall O. Larsen, 68, has been a director since Mr. Larsen retired in 2012 as Chairman, President and Chief Executive Officer of Goodrich Corporation, a supplier of systems and services to the aerospace and defense industry. Mr. Larsen also is a director of Air Lease Corporation, Lowe s Companies, Inc. and United Technologies Corporation. As a veteran chief executive officer of a public company, Mr. Larsen offers the valuable perspective of an individual with highly-developed executive leadership and financial and strategic management skills in a global manufacturing company. These qualities reflect considerable domestic and international business and financial experience. Gary A. Mecklenburg, 70, has been a director since In 2006, he retired as President and Chief Executive Officer of Northwestern Memorial HealthCare, a position he had held since 1986, and he also served as President of Northwestern Memorial Hospital from 1985 to He is currently an Executive Partner of Waud Capital Partners, L.L.C., a private equity investment firm. Mr. Mecklenburg is also a director of LHP Hospital Group, Inc. and Froedtert Health, Inc. Mr. Mecklenburg s long tenure in hospital administration affords him a broad perspective on the many facets of the delivery of healthcare and a deep knowledge of healthcare financing and administration. As the former leader of a major teaching hospital, Mr. Mecklenburg possesses strong executive management, financial, strategic and operational knowledge as applied in a healthcare setting. James F. Orr, 71, has been a director since From 2000 until his retirement in 2007, he served as Chairman of the Board of Convergys Corporation, a provider of customer management services, and which formerly also provided employee care and outsourced billing services. He also served as Convergys Chief Executive Officer from 1998 until his retirement in Mr. Orr is a director of Ohio National Financial Services, Inc. and Ohio National Life Insurance Company. Mr. Orr contributes the important insights of a former chief executive officer of a public company. His background reflects extensive managerial, strategic, operational and financial experience from the perspective of a service industry. He also possesses a depth of understanding of corporate governance and enterprise risk management. 9

420 Table of Contents Willard J. Overlock, Jr., 70, has been a director since He retired in 1996 as a partner in Goldman, Sachs & Co., where he served as a member of its Management Committee, and retains the title of Senior Director to The Goldman Sachs Group, Inc. Mr. Overlock is a member of the Board of Directors of Evercore Partners, Inc., a trustee of Rockefeller University, and Chairman of the Board of Directors of the Albert and Mary Lasker Foundation. Mr. Overlock also is a member of the Board of The Cue Ball Group, LLC. Mr. Overlock has broad financial and investment banking experience based on his senior leadership roles in these areas. He contributes financial and transactional expertise and acumen in mergers and acquisitions and complex financial transactions. Claire Pomeroy, 61, has been a director since Since 2013, she has served as the President of the Albert and Mary Lasker Foundation, a private foundation that seeks to improve health by accelerating support for medical research through recognition of research excellence, public education and advocacy. Prior thereto, Dr. Pomeroy served as Dean of the University of California, Davis ( UC Davis ) School of Medicine, and CEO of the UC Davis Health System. Dr. Pomeroy also is a member of the Board of Directors of Expanesthetics, Inc., and of the Sierra Health Foundation. She is a member of the Board of Trustees of the Morehouse School of Medicine and the Board of Directors of the Foundation for Biomedical Research. Dr. Pomeroy is an expert in infectious diseases, with broad experience in the area of healthcare delivery, health system administration, higher education, medical research and public health. She brings to the Board important perspectives in the areas of patient care services, global health and health policy. Rebecca W. Rimel, 65, has been a director since Since 1994, she has served as President and Chief Executive Officer of The Pew Charitable Trusts, a public charity that works to improve public policy and inform the public. Ms. Rimel previously served as Assistant Professor in the Department of Neurosurgery at the University of Virginia Hospital and also as Head Nurse of its medical center emergency department. Ms. Rimel also is a director of BioTelemetry, Inc. and a director/trustee of various Deutsche mutual funds. Ms. Rimel brings executive leadership and extensive experience in public policy and advocacy, particularly in the area of healthcare. She also offers the perspective of someone with a strong background in the healthcare field. 10

421 Table of Contents Bertram L. Scott, 65, has been a director since Mr. Scott is Senior Vice President of Population Health of Novant Health, an integrated network of physician practices, outpatient centers and hospitals. He previously served as President and Chief Executive Officer of Affinity Health Plan, and as President, U.S. Commercial of CIGNA Corporation. Prior thereto, Mr. Scott served as Executive Vice President of TIAA-CREF and as President and Chief Executive Officer of TIAA-CREF Life Insurance Company. Mr. Scott is a director of AXA Financial, Inc., Lowe s Companies, Inc. and Tufts Health Plan. Mr. Scott possesses strong strategic, operational and financial experience from the variety of executive roles in which he has served during his career. He brings experience in corporate governance and business expertise in the insurance and healthcare fields. THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR EACH OF THE NOMINEES FOR DIRECTOR. 11

422 Table of Contents The Board and Committees of the Board BOARD OF DIRECTORS BD is governed by a Board of Directors that currently consists of 13 members, 12 of whom have been determined by the Board to be independent. The Board has established four operating committees (the Committees ): the Audit Committee; the Compensation and Management Development Committee (the Compensation Committee ); the Corporate Governance and Nominating Committee (the Governance Committee ); and the Science, Marketing, Innovation and Technology Committee (the SMIT Committee ). These Committees meet regularly. The Board has also established an Executive Committee that meets only as needed. The Board has adopted written charters for each of the Committees that are posted on BD s website at Printed copies of these charters, BD s 2016 Annual Report on Form 10-K, and BD s reports and statements filed with or furnished to the SEC may be obtained, without charge, by contacting the Corporate Secretary, Becton, Dickinson and Company, 1 Becton Drive, Franklin Lakes, New Jersey , telephone Committee membership and function Set forth below is a summary description of each of the Committees. AUDIT COMMITTEE Function Retains and reviews the qualifications, independence and performance of BD s registered public accounting firm (the independent auditors ). Reviews BD s public financial disclosures and financial statements, and its accounting principles, policies and practices; the scope and results of the annual audit by the independent auditors; BD s internal audit process; and the effectiveness of BD s internal control over financial reporting. Reviews BD s guidelines and policies relating to enterprise risk assessment and risk management, and management s plan for risk mitigation or remediation. Oversees BD s ethics and enterprise compliance programs. Reviews financial strategies regarding currency, interest rates and use of derivatives, and reviews BD s insurance program. Functions as a qualified legal compliance committee, if necessary. Members Bertram L. Scott Chair Basil L. Anderson Catherine M. Burzik Christopher Jones Willard J. Overlock, Jr. Rebecca W. Rimel The Board has determined that the members of the Audit Committee meet the independence and financial literacy requirements of the New York Stock Exchange ( NYSE ) for audit committee members. The Board also has determined that each of Messrs. Anderson and Scott and Ms. Burzik qualifies as an audit committee financial expert under the rules of the SEC. 12

423 Table of Contents COMPENSATION AND MANAGEMENT DEVELOPMENT COMMITTEE Function Reviews BD s compensation and benefits programs, recommends the compensation of BD s Chief Executive Officer ( CEO ) to the independent members of the Board, and approves the compensation of BD s other executive officers. Approves all employment, severance and change in control agreements with our executive officers. Serves as the granting and administrative committee for BD s equity compensation plans. Oversees certain other BD benefit plans. Reviews leadership development initiatives. Members Marshall O. Larsen Chair Basil L. Anderson Gary A. Mecklenburg James F. Orr Bertram L. Scott The Board has determined that each member of the Compensation Committee meets the independence requirements of the NYSE for compensation committee members. Each member also qualifies as an outside director under Section 162(m) of the Internal Revenue Code, and as a non-employee director under Section 16 of the Securities Exchange Act of Procedure for determining executive compensation The Compensation Committee oversees the compensation program for the executive officers named in the Summary Compensation Table on page 42 and for BD s other executive officers. The Compensation Committee recommends compensation actions regarding the CEO to the other independent directors and has the authority to take compensation actions with respect to BD s other executive officers. The Compensation Committee may not delegate these responsibilities to another Committee, an individual director or members of management. Role of management The Compensation Committee s meetings are typically attended by BD s CEO and Chief Human Resources Officer and others who support the Compensation Committee in fulfilling its responsibilities. The Compensation Committee considers management s views relating to compensation matters, including the performance metrics and targets for BD s performance-based compensation. Management also provides information (which is reviewed by our Internal Audit department) to assist the Compensation Committee in determining the extent to which performance targets have been achieved. This includes any recommended adjustments to BD s operating results when assessing BD s performance. The CEO and Chief Human Resources Officer also work with the Compensation Committee chair in establishing meeting agendas. The Compensation Committee meets in executive session with no members of management present for part of each of its regular meetings. The Compensation Committee also meets in executive session when considering compensation decisions regarding our executive officers. Role of the independent consultant The Compensation Committee is also assisted in fulfilling its responsibilities by its independent consultant, Pay Governance LLC ( Pay Governance ). Pay Governance is engaged by, and reports directly to, the 13

424 Table of Contents Compensation Committee. The Compensation Committee is not aware of any conflict of interest on the part of Pay Governance or any factor that would otherwise impair the independence of Pay Governance relating to the services performed by Pay Governance for the Compensation Committee. During fiscal year 2016, Pay Governance was not engaged to perform any services for BD or BD s management. The Compensation Committee has adopted a policy prohibiting Pay Governance from providing any services to BD or BD s management without the Compensation Committee s prior approval, and has expressed its intention that such approval will be given only in exceptional cases. No other consultant was used by the Compensation Committee with respect to the fiscal year 2016 compensation of BD s executive officers. Pay Governance reviews all materials prepared for the Compensation Committee by management, prepares additional materials as may be requested by the Compensation Committee, and attends Compensation Committee meetings. In its advisory role, Pay Governance assists the Compensation Committee in the design and implementation of BD s compensation program. This includes assisting the Compensation Committee in selecting the key elements to include in the program, the targeted payments for each element, and the establishment of performance targets. Pay Governance also provides market comparison data, which is one of the factors considered by the Compensation Committee in making compensation decisions, and makes recommendations to the Compensation Committee regarding the compensation of BD s CEO. Pay Governance also conducts an annual review of the compensation practices of select peer companies. Based on this review, Pay Governance advises the Compensation Committee with respect to the competitiveness of BD s compensation program in comparison to industry practices, and identifies any trends in executive compensation. Setting compensation At the end of each fiscal year, the independent directors conduct a review of the CEO s performance. At the following Board meeting, the independent directors meet in executive session to set the compensation of the CEO after considering the results of its review, market comparison data and the recommendations of the Compensation Committee. The CEO does not play a role in determining or recommending his own compensation. The Compensation Committee is responsible for determining the compensation of BD s other executive officers. The CEO, in consultation with the Chief Human Resources Officer, reviews the performance of the other executive officers with the Compensation Committee and makes compensation recommendations for its consideration. The Compensation Committee determines the compensation for these executives, in consultation with Pay Governance, after considering the CEO s recommendations and market comparison data regarding compensation levels for comparable positions at peer companies. All decisions regarding the compensation of BD s other executive officers are made in executive session. The Board has delegated responsibility for formulating recommendations regarding non-management director compensation to the Governance Committee, which is discussed below. SCIENCE, MARKETING, INNOVATION AND TECHNOLOGY COMMITTEE Function Oversees BD s major innovation activities and new product development programs. Reviews the alignment of BD s research and development, medical and regulatory affairs, and strategic marketing activities to BD s corporate strategy. Reviews potentially disruptive trends in technology, medical practice or the external environment. 14

425 Table of Contents Members Claire M. Fraser Chair Catherine M. Burzik R. Andrew Eckert Christopher Jones Willard J. Overlock, Jr. Claire Pomeroy Rebecca W. Rimel CORPORATE GOVERNANCE AND NOMINATING COMMITTEE Function Identifies and recommends candidates for election to the Board. Reviews the composition, structure and function of the Board and its Committees, as well as the performance and compensation of nonmanagement directors. Monitors BD s corporate governance and Board practices, and oversees the Board s self-evaluation process. Oversees BD s policies, practices and procedures impacting BD s image, reputation and corporate responsibility, including, without limitation, communications with BD s key stakeholders, community relations, and public policy and government relations activities. Members Gary A. Mecklenburg Chair R. Andrew Eckert Claire M. Fraser Marshall O. Larsen James F. Orr Claire Pomeroy The Board has determined that each member of the Governance Committee meets the independence requirements of the NYSE. As stated above, the Governance Committee reviews the compensation program for the non-management directors and makes recommendations to the Board regarding director compensation. The Governance Committee may not delegate these responsibilities to another Committee, an individual director or members of management. The Governance Committee has retained Pay Governance as an independent consultant for this purpose. Pay Governance s responsibilities include providing market comparison data on non-management director compensation at peer companies, tracking trends in nonmanagement director compensation practices, and advising the Governance Committee regarding the components and levels of non-management director compensation. The Governance Committee is not aware of any conflict of interest on the part of Pay Governance or any other factor that would impair Pay Governance s independence. Executive officers do not play any role in either recommending or determining non-management director compensation. Board, Committee and annual meeting attendance The Board and its Committees held the following number of meetings during fiscal year 2016: Board 8 Audit Committee 9 Compensation Committee 5 Governance Committee 8 SMIT Committee 5 15

426 Table of Contents The Executive Committee did not meet during fiscal year BD s non-management directors met in executive session at each of the Board meetings held during fiscal year During fiscal year 2016, all directors attended at least 75% of the total number of meetings of the Board of Directors and Committees on which he or she served. The Board has adopted a policy pursuant to which directors are expected to attend the Annual Meeting of Shareholders in the absence of a scheduling conflict or other valid reason. All of the then-serving directors attended BD s 2016 Annual Meeting of Shareholders. Non-management directors compensation The Board believes that providing competitive compensation is necessary to attract and retain qualified non-management directors. The key elements of BD s non-management director compensation are a cash retainer, equity compensation, Committee chair fees and Lead Director fees. Of the base compensation paid to the non-management directors (cash retainer and equity), approximately two-thirds is equity-based compensation. See Corporate Governance Other significant governance practices Equity ownership by directors on page 22. Mr. Forlenza does not receive compensation related to his service as a director. Cash retainer Each non-management director currently receives an annual cash retainer of $92,000 for services as a director. Directors do not receive meeting attendance fees. Equity award Each non-management director elected at an Annual Meeting of Shareholders is granted restricted stock units then valued at $189,000 (using the same methodology used to value awards made to executive officers). Directors newly elected to the Board receive a restricted stock unit grant that is prorated from the effective date of their election to the next Annual Meeting of Shareholders. The restricted stock units vest and are distributable one year from grant, unless deferred at the election of a director. Committee chair/lead Director fees An annual fee of $15,000 is paid to each Committee chair, except that the fee for the Audit Committee chair is $20,000 in recognition of the Audit Committee s responsibilities. An annual fee of $30,000 is paid to the Lead Director. No fee is paid to the chair of the Executive Committee. Other arrangements BD reimburses non-management directors for travel and other business expenses incurred in the performance of their services for BD. Directors may travel on BD aircraft in connection with such activities, and, on limited occasions, spouses of directors have joined them on such flights. Per SEC rules, no compensation is attributed to the directors for these flights in the table below, since the aggregate incremental costs of spousal travel were minimal. Directors are also reimbursed for attending director education courses. BD occasionally invites spouses of directors to Board-related business events, for which they are reimbursed their travel expenses. Directors are eligible, on the same basis as BD associates, to participate in BD s Matching Gift Program, pursuant to which BD matches contributions made to qualifying nonprofit organizations. The aggregate limit per participant is $5,000 per calendar year. 16

427 Table of Contents The following table sets forth the compensation earned or received by BD s non-management directors during fiscal year Fiscal Year 2016 Non-Management Directors Compensation Fees earned or paid in cash($)(1) Stock awards($)(2) All other ($)(3) Total($) Name Basil L. Anderson 92, , ,361 Henry P. Becton, Jr.(4) 30,667 30,667 Catherine M. Burzik 92, ,361 5, ,361 Edward F. DeGraan(4) 30,667 30,667 R. Andrew Eckert(5) 1,250 63,193 64,443 Claire M. Fraser 105, , ,694 Christopher Jones 92, ,361 10, ,361 Marshall O. Larsen 133, , ,028 Gary A. Mecklenburg 105, ,361 5, ,694 James F. Orr 92, , ,361 Willard J. Overlock, Jr. 92, , ,361 Claire Pomeroy 92, ,361 5, ,361 Rebecca W. Rimel 92, , ,361 Bertram L. Scott 110, ,361 5, ,694 (1) Reflects (i) the annual cash retainer; (ii) annual Committee chair fees for Dr. Fraser and Messrs. Larsen, Mecklenburg and Scott; and (iii) Lead Director fee for Mr. Larsen. (2) The amounts shown in the Stock awards column reflect the grant date fair value under FASB ASC Topic 718 of restricted stock units awarded to nonmanagement directors during the fiscal year. Since the average BD closing stock price for the 30 trading days prior to grant is used to determine the number of units granted rather than the grant date stock price, the amounts shown for the annual grant are slightly lower than the $189,000 target award value. For a discussion of the assumptions made by us in arriving at the grant date fair value of these awards, see Note 7 to the consolidated financial statements that are included in our Annual Report on Form 10-K for the fiscal year ended September 30, Listed below are the aggregate outstanding restricted stock unit awards held by each non-management director at the end of fiscal year Stock Awards Outstanding at September 30, Name 2016 (#) Basil L. Anderson 22,866 Henry P. Becton, Jr.(4) 0 Catherine M. Burzik 4,967 Edward F. DeGraan(4) 0 R. Andrew Eckert(5) 357 Claire M. Fraser 18,599 Christopher Jones 11,800 Marshall O. Larsen 16,784 Gary A. Mecklenburg 22,232 James F. Orr 22,045 Willard J. Overlock, Jr. 24,359 Claire Pomeroy 3,928 Rebecca W. Rimel 6,835 Bertram L. Scott 23,683 17

428 Table of Contents (3) Amounts shown represent matching gifts under BD s Matching Gift Program. Amount shown for Mr. Jones includes matching gifts of $5,000 in each of calendar year 2015 and calendar year (4) Messrs. Becton and DeGraan retired from the Board on January 26, (5) Mr. Eckert joined the Board on September 26, Changes to non-management directors compensation During fiscal year 2016, the Board undertook a review of director compensation, with the assistance of Pay Governance. This review included an analysis of the director compensation practices of certain peer companies, including the forms of equity compensation used, the mix of cash and equity compensation, and total compensation. The peer group used in this analysis was the same as the peer group used for BD s executive compensation analysis and included the following companies: Agilent Technologies, Inc.; Allergan plc.; C.R. Bard, Inc.; Baxter International Inc.; Boston Scientific Corporation; Medtronic plc; PerkinElmer, Inc.; St. Jude Medical, Inc.; Stryker Corporation; Thermo Fisher Scientific Inc.; and Zimmer Biomet Holdings, Inc. Following this review, the Board approved the following changes to the annual retainer and annual equity award, effective at the conclusion of the 2017 Annual Meeting, so as to better align the Board s compensation practices with those of the peer group companies: The annual cash retainer will be increased to $97,000 from $92,000. The value of the annual restricted stock unit awards will be increased to $199,000 from $189,000. No change was made to the Committee chair or Lead Director fees. Directors Deferral Plan Directors may defer receipt of all or part of their annual cash retainer and other cash fees pursuant to the provisions of the Directors Deferral Plan. Directors may also defer receipt of shares issuable to them under their restricted stock unit awards. A general description of the Directors Deferral Plan appears on page 5. Communication with directors Shareholders or other interested parties wishing to communicate with the Board, the non-management directors or any individual director (including complaints or concerns regarding accounting, internal accounting controls or audit matters) may do so by contacting the Lead Director either: by mail, addressed to BD Lead Director, P.O. Box 264, Franklin Lakes, New Jersey ; by calling the BD Ethics Help Line, an independent toll-free service, at (callers from outside North America should use AT&T Direct to reach AT&T in the U.S. and then dial the above toll-free number); or by to ethics_office@bd.com. All communications will be kept confidential and promptly forwarded to the Lead Director, who shall, in turn, forward them promptly to the appropriate director(s). Such items that are unrelated to a director s duties and responsibilities as a Board member may be excluded by our corporate security department, including, without limitation, solicitations and advertisements, junk mail, product-related communications, job referral materials and resumes, surveys, and material that is determined to be illegal or otherwise inappropriate. 18

429 Table of Contents Corporate Governance Principles CORPORATE GOVERNANCE BD s commitment to good corporate governance is embodied in our Corporate Governance Principles (the Principles ). The Principles set forth the Board s views and practices regarding a number of governance topics, and the Governance Committee assesses the Principles on an ongoing basis in light of current practices. The Principles are available on BD s website at Printed copies of the Principles may be obtained, without charge, by contacting the Corporate Secretary, Becton, Dickinson and Company, 1 Becton Drive, Franklin Lakes, New Jersey , phone Board leadership structure The Board s goal is to achieve the best board leadership structure for effective oversight and management of BD s affairs. The Board believes that there is no single, generally accepted approach to providing board leadership, and that each possible leadership structure must be considered in the context of the individuals involved and the specific circumstances facing a company. Accordingly, what the Board believes is the right board leadership structure may vary as circumstances warrant. At the present time, the Board believes that the most effective leadership structure for BD is for our CEO to also serve as Chairman. The Board believes this combined role allows one person to speak for and lead the company and the Board, creates clear lines of authority and accountability, and provides the necessary leadership to execute BD s strategy. Mr. Forlenza s over 35 years of experience at BD and knowledge of our complex businesses, along with his extensive industry expertise, also make him uniquely qualified to lead the Board on the most important issues facing the company. At the same time, the Principles provide for the appointment of a Lead Director from among the independent directors whenever the Chairman is not independent. The establishment of the Lead Director role allows the non-management directors to provide effective, independent Board leadership and oversight of management. Marshall O. Larsen has served as Lead Director since January Under the Principles, the Lead Director: presides over all meetings of the Board at which the Chairman is not present, including executive sessions of the independent directors, and at such other times as the Board deems appropriate, has the authority to call meetings of the independent directors, approves Board meeting agendas, approves Board meeting schedules to ensure that there is sufficient time for discussion of all agenda items, coordinates the evaluation of the performance of the CEO by the non-management directors, serves as a liaison between the non-management members of the Board and the Chairman, and as a contact person to facilitate communications by BD s employees, shareholders and others with the non-management members of the Board, approves information provided to the Board, and if requested by major shareholders, ensures that he or she is available for consultation and direct communication. The Board believes that having an independent Lead Director provides independent oversight of management, including risk oversight, while avoiding the risk of confusion regarding the Board s oversight responsibilities and the day-to-day management of the business. As such, this structure provides independent Board leadership and engagement, while deriving the benefit of having the CEO also serve as Chairman. 19

430 Table of Contents Board s oversight of risk BD s management engages in a process referred to as enterprise risk management ( ERM ) to identify, assess, manage and mitigate a broad range of risks across BD s businesses, regions and functions, and to ensure alignment of our risk assessment and mitigation efforts with BD s corporate strategy. The Audit Committee, through the authority delegated to it by the Board of Directors, is primarily responsible for overseeing BD s ERM activities to determine whether the process is functioning effectively and is consistent with BD s business strategy. At least twice a year, senior management reviews the results of its ERM activities with the Audit Committee, including the process used within the organization to identify risks, management s assessment of the significant categories of risk faced by BD (including any changes in such assessment since the last review), and management s plans to mitigate the potential exposures. On at least an annual basis, the significant risks identified through BD s ERM activities and the related mitigation plans are reviewed with the full Board. Particular risks are then often reviewed in-depth with the Audit Committee or the full Board at subsequent meetings. In addition, the full Board reviews the risks associated with BD s strategic plan and discusses the appropriate levels of risk in light of BD s business objectives. This is done through an annual strategy review process, and from time to time throughout the year as part of the Board s ongoing review of corporate strategy. The full Board also regularly oversees other areas of potential risk, including BD s capital structure, acquisitions and divestitures, and succession planning for BD s CEO and other members of senior management. The various Committees of the Board are also responsible for monitoring and reporting to the full Board on risks associated with their respective areas of oversight. The Audit Committee, among other things, oversees BD s accounting and financial reporting processes and the integrity of BD s financial statements, BD s processes regarding compliance with laws, and its hedging activities and insurance coverages. The Compensation Committee oversees risks associated with BD s compensation practices and programs, the SMIT Committee reviews risks relating to our innovation and product development activities, and the Governance Committee oversees risks relating to BD s corporate governance practices, including director independence, related person transactions and conflicts of interest. In connection with its oversight responsibilities, each Committee often meets with members of management who are primarily responsible for the management of risk in their respective areas, including, among others, BD s Chief Financial Officer, Chief Human Resources Officer, Chief Medical Officer, General Counsel, and senior regulatory, IT, R&D and compliance officers. Risk assessment of compensation programs With respect to our compensation policies and practices, BD s management has reviewed our policies and practices to determine whether they create risks that are reasonably likely to have a material adverse effect on BD. In connection with this risk assessment, management reviewed the design of BD s compensation and benefits programs (in particular, our performance-based compensation programs) and related policies, potential risks that could be created by the programs, and features of our programs and corporate governance generally that help to mitigate risk. Among the factors considered were the mix of cash and equity compensation, and of fixed and variable compensation, paid to our associates; the balance between short- and long-term objectives in our incentive compensation; the performance targets, mix of performance metrics, vesting periods, threshold performance requirements and funding formulas related to our incentive compensation; the degree to which programs are formulaic or provide discretion to determine payout amounts; caps on payouts; our clawback and share ownership policies; and our general governance structure. Based on this review, we believe that our compensation policies and practices do not create risks that are reasonably likely to have a material adverse effect on BD. 20

431 Table of Contents Director nomination process Role of the Governance Committee The Governance Committee reviews potential director candidates and recommends nominees for director to the full Board for approval. In making its recommendations, the Governance Committee assesses the overall composition of the Board, including diversity, skills, background, experience and prominence in areas of importance to BD. The Board seeks to achieve among its directors a diversity of viewpoint, experience, knowledge, ethnicity and gender that fits the needs of the Board at that particular time. When considering potential director candidates, the Governance Committee will seek individuals with backgrounds and qualities that, when combined with those of BD s other directors, provide a blend of skills and experience that will further enhance the Board s effectiveness. From time-to-time, the Governance Committee has retained an executive search firm to assist it in its efforts to identify and evaluate potential director candidates. The Governance Committee believes that any nominee for director must meet the following minimum qualifications: Candidates should be persons of high integrity who possess independence, forthrightness, inquisitiveness, good judgment and strong analytical skills. Candidates should demonstrate a commitment to devote the time required for Board duties, including, but not limited to, attendance at meetings. Candidates should be team-oriented and committed to the interests of all shareholders as opposed to those of any particular constituency. The Governance Committee assesses the characteristics and performance of incumbent director nominees against the above criteria as well, and, to the extent applicable, considers the impact of any change in the principal occupations of such directors during the last year. To aid in this process, the Governance Committee solicits feedback from all the other directors on the Board. Upon completion of its assessment, the Governance Committee reports its recommendations for nominations to the full Board. In September 2016, the Board elected R. Andrew Eckert to the Board. Mr. Eckert was identified by a third-party search firm. The role of the search firm is to assist the Governance Committee by identifying a pool of potential director candidates based on the specifications provided by the Governance Committee, and evaluating candidates recommended by other members of the Board or management. The firm reviews the potential candidates with the Governance Committee, performs outreach to candidates selected from the pool to assess interest and availability, conducts reference checks and arranges candidate interviews with members of the Governance Committee and our CEO. Prior to a candidate s election, the candidate will also meet with other members of the Board. The search firm also provides a background check on the candidate before a final recommendation is made to the Board. Shareholder recommendations It is the Governance Committee s policy to consider referrals of prospective nominees for the Board from other Board members and management, as well as shareholders and other external sources, such as retained executive search firms. The Governance Committee seeks to identify a diverse range of qualified candidates, including, without limitation, women and minority candidates. The Governance Committee utilizes the same criteria for evaluating candidates, irrespective of their source. To recommend a candidate for consideration, a shareholder should submit a written statement of the qualifications of the proposed nominee, including full name and address, to the Corporate Secretary, Becton Dickinson and Company, 1 Becton Drive, Franklin Lakes, New Jersey

432 Table of Contents Proxy access nominations In September 2016, the Board adopted a proxy access by-law, which permits eligible shareholders to nominate candidates for the BD Board for inclusion in BD s proxy statement and proxy card. Our proxy access by-law provides that a shareholder, or a group of up to 20 shareholders, owning 3% or more of the Company s outstanding capital stock for at least three years, can nominate up to two individuals or 20 percent of the Board, whichever is greater, for election at an annual shareholders meeting, if the shareholder(s) and the nominee(s) meet the relevant requirements in our By-laws. Other significant governance practices Described below are some of the other significant corporate governance practices that have been instituted by the BD Board. Annual election of directors BD s directors are elected annually. The Board believes that annual elections of directors reflect a corporate governance best practice, as it provides shareholders the opportunity to express their views on the performance of the entire Board each year. Voting for directors Under our By-Laws, in uncontested elections (where the number of nominees does not exceed the number of directors to be elected), nominees for director must receive the affirmative vote of a majority of the votes cast in order to be elected to the Board of Directors. Any incumbent director who fails to receive the requisite affirmative vote is required to offer to submit his or her resignation to the Board following the shareholder vote. The Governance Committee will consider and recommend to the Board whether to accept the resignation offer. The Board will act on such recommendation and publicly disclose its decision within 90 days following the shareholder vote. This structure allows the Board the opportunity to identify and assess the reasons for the vote, including whether the vote is attributable to dissatisfaction with a director s overall performance or is the result of shareholder views on a particular issue, and enables the Board to avoid undesirable and disruptive governance consequences. Board self-evaluation Each year the Board conducts a self-evaluation of its performance and effectiveness. As part of this process, each director completes an evaluation form on specific aspects of the Board s role, organization and meetings. The collective comments are then presented by the chair of the Governance Committee to the full Board. As part of the evaluation, the Board assesses the progress in the areas targeted for improvement a year earlier, and develops actions to be taken to enhance the Board s effectiveness over the next year. A complete list of the areas covered by the Board evaluation is available on BD s website at Additionally, each Committee conducts an annual self-evaluation of its performance through a similar process. Equity ownership by directors The Board believes that directors should hold meaningful equity ownership positions in BD. To that end, a significant portion of non-management director compensation is in the form of restricted stock units. The Board believes that these equity interests help to better align the interests of the nonmanagement directors with our shareholders. Under the Board s share ownership guidelines, each non-management director is required to own shares of common stock (which includes restricted stock units) valued at five times the annual cash retainer and must comply with the guidelines within three years of joining the Board. All of our non-management directors have achieved the required share ownership or are within the three-year grace period. 22

433 Table of Contents Shareholder engagement Our relationship with our shareholders and their views about BD are important to us, and the Board recognizes the value of director engagement with BD s major shareholders. To that end, the Board has established a process by which shareholders can request direct engagement with our non-management directors regarding executive compensation, corporate governance, board and CEO succession, risk management oversight and other matters within the purview of the Board. This process can be found on our website at The Board may also initiate direct communications with BD shareholders at any time, in its discretion. Annual Report of Charitable Contributions In furtherance of BD s commitment to good governance and disclosure practices, the Principles require that BD s charitable contributions or pledges in an aggregate amount of $50,000 or more (not including contributions under BD s Matching Gift Program) to entities with which BD s directors and executive officers, or their families, are affiliated must be approved by the Governance Committee. In addition, BD posts on its website, at an Annual Report of Charitable Contributions (the Contributions Report ) listing all contributions and pledges made by BD during the preceding fiscal year in an amount of $10,000 or more to organizations affiliated with any director or executive officer. The Contributions Report includes a discussion of BD s contributions philosophy and the alignment of BD s philanthropic activities with this philosophy. Enterprise compliance Under the oversight of the Audit Committee, BD s enterprise compliance function seeks to ensure that BD has policies and procedures designed to prevent and detect violations of the many laws, regulations and policies affecting its business, and that BD continuously encourages lawful and ethical conduct. BD s enterprise compliance function supplements the various compliance and ethics functions that are also in place at BD, and seeks to ensure better coordination and effectiveness through program design, prevention, and promotion of an organizational culture of compliance. A committee comprised of members of senior management oversees these activities. Another key element of this program is training. This includes a global on-line compliance training program focused on BD s Code of Conduct, as well as other courses covering various compliance topics such as antitrust, anti-bribery, conflicts of interest, financial integrity, industry marketing codes and information security. Political contributions We prohibit the use of BD corporate funds and assets to support any candidate, political party, ballot measure or referendum campaign, unless an exception is approved by the CEO and the General Counsel. To date, no exceptions have been sought or approved. If an exception is approved, it may only be granted without regard to the personal political affiliations or views of any individual BD associate at any level across the organization. As permitted under U.S. law, BD operates a political action committee. The BD PAC is a mechanism to enable eligible U.S. associates to voluntarily support candidates for elected office who share BD s perspectives and approaches to public policy issues. BD provides administrative support to the PAC, as permitted under federal law. In all cases, BD policy prohibits directors and employees from using company resources to promote their personal political views, causes or candidates, and specifies that the company will not directly or indirectly reimburse any personal political contributions or expenses. BD is a member of numerous trade associations that provide a venue for the medical technology sector to work together to advocate its position on issues that impact our industry. In the U.S., the major associations of 23

434 Table of Contents which BD is a member include AdvaMed and AdvaMedDx, the Healthcare Institute of New Jersey and the California Life Sciences Association. We have informed our major U.S. trade associations that they are not permitted to use any BD fees to support any candidate, political party, ballot measure or referendum campaign, unless approved by BD s CEO and General Counsel. Director independence; Policy regarding related person transactions Director independence Under the NYSE rules and our Principles, a director is deemed not to be independent if the director has a direct or indirect material relationship with BD (other than his or her relationship as a director). The Governance Committee annually reviews the independence of all directors and nominees for director and reports its findings to the full Board. To assist in this review, the Board has adopted director independence guidelines ( Independence Guidelines ) that are contained in the Principles. The Independence Guidelines set forth certain categories of relationships (and related dollar thresholds) between BD and directors and their immediate family members, or entities with which they have a relationship, which the Board, in its judgment, has deemed to be either material or immaterial for purposes of assessing a director s independence. In the event that a director has any relationship with BD that is not addressed in the Independence Guidelines, the independent members of the Board review the facts and circumstances to determine whether such relationship is material. The Principles are available on BD s website at The Independence Guidelines are contained in Principle No. 7. The Board has determined that the following directors are independent under the NYSE rules and our Independence Guidelines: Basil L. Anderson, Catherine M. Burzik, R. Andrew Eckert, Claire M. Fraser, Christopher Jones, Marshall O. Larsen, Gary A. Mecklenburg, James F. Orr, Willard J. Overlock, Jr., Claire Pomeroy, Rebecca W. Rimel, and Bertram L. Scott. The Board also determined that Henry P. Becton, Jr. and Edward F. DeGraan, each of whom served on the Board until January 2016, were independent under the NYSE rules and the Principles, and that Mr. DeGraan, who served on the Compensation Committee, also met the NYSE independence requirements for compensation committee members. Vincent A. Forlenza is an employee of BD and, therefore, is not independent under the NYSE rules and the Principles. In determining that each of these directors is independent, the Board reviewed BD s transactions or other dealings with organizations with which a director may have a relationship, such as service by the director as an employee of the organization or as a member of a governing or advisory board of the organization. Based on its review, the Board determined that, in each instance, the nature of the relationship, the degree of the director s involvement with the organization and the amount involved was such that it would not constitute a material relationship or otherwise impair the director s independence. The types of transactions with director-affiliated organizations considered by the Board consisted of the purchase or sale of products and/or services (in the cases of Anderson, Burzik, Fraser, Jones, Larsen, Mecklenburg, Overlock, Pomeroy and Scott), the licensing of intellectual property rights (in the cases of Fraser and Jones) and charitable contributions (in the case of Jones). Related person transactions The Board has also established a written policy (the Policy ) requiring Board approval or ratification of transactions involving more than $120,000 per year in which a director, executive officer or shareholder owning more than 5% of BD s stock (excluding certain passive investors) or their immediate family members has, or will have, a material interest. The Policy is available on BD s website at The Policy excludes certain specified transactions, including certain charitable contributions and transactions available to BD associates generally. The Governance Committee is responsible for the review and approval or ratification of transactions subject to the Policy. The Governance Committee will approve or ratify only those 24

435 Table of Contents transactions that it determines in its business judgment are fair and reasonable to BD and in (or not inconsistent with) the best interests of BD and its shareholders, and that do not impact the director s independence. There were no transactions involving BD s executive officers or directors, shareholders, or their immediate families, in 2016 that were subject to the Policy. Code of Conduct BD maintains a Code of Conduct that is applicable to all directors, officers and associates of BD, including its CEO, Chief Financial Officer, principal accounting officer and other senior financial officers. It sets forth BD s policies and expectations on a number of topics, including conflicts of interest, confidentiality, compliance with laws (including insider trading laws), preservation and use of BD s assets, and business ethics. The Code of Conduct also sets forth procedures for the communicating and handling of any potential conflict of interest (or the appearance of any conflict of interest) involving directors or executive officers, and for the confidential communication and handling of issues regarding accounting, internal control and auditing matters. BD also maintains an Ethics Help Line telephone number (the Help Line ) for BD associates as a means of raising concerns or seeking advice. The Help Line is serviced by an independent contractor and is available to all associates worldwide. Associates using the Help Line may choose to remain anonymous and all inquiries are kept confidential to the extent practicable in connection with the investigation of an inquiry. All Help Line inquiries are forwarded to BD s Chief Ethics and Compliance Officer for investigation. The Audit Committee is informed of any matters reported to the Chief Ethics and Compliance Officer, whether through the Help Line or otherwise, involving accounting, internal control or auditing matters, or any fraud involving management or persons who have a significant role in BD s internal controls. The Chief Ethics and Compliance Officer leads the BD Ethics Office, which administers BD s ethics program. In addition to the Help Line, the ethics program provides for broad communication of BD s Core Values, associate education regarding the Code of Conduct and its requirements, and ethics training sessions. Any waivers from any provisions of the Code of Conduct for executive officers and directors will be promptly disclosed to shareholders. In addition, certain amendments to the Code of Conduct, as well as any waivers from certain provisions of the Code of Conduct given to BD s CEO, Chief Financial Officer or principal accounting officer, will be posted at the website address set forth below. The Code of Conduct is available on BD s website at Printed copies of the Code of Conduct may be obtained, without charge, by contacting the Corporate Secretary, Becton, Dickinson and Company, 1 Becton Drive, Franklin Lakes, New Jersey , phone

436 Table of Contents REPORT OF THE COMPENSATION AND MANAGEMENT DEVELOPMENT COMMITTEE The primary objective of the BD compensation program is to fully support the strategic business goal of delivering superior long-term shareholder returns through sustained revenue growth, earnings per share growth, return on capital and other metrics. As such, we intend to ensure a high degree of alignment between pay and the long-term value and financial soundness of BD. The Compensation Committee has established the following compensation principles to meet this objective: Aligning the interests of executives and shareholders Through equity compensation and equity ownership guidelines for executives, we seek to align the interests of executives with those of BD s shareholders. This represents the largest portion of our compensation structure in terms of target value. Linking rewards to performance We maintain a pay-for-performance philosophy based on actual performance as against clear, measurable company performance targets, particularly those metrics that support the creation of long-term shareholder value. Delivering superior business and financial results Performance targets are set to reward executives for achieving short- and long-term results in line with our objective of enhancing long-term shareholder value. In setting short-term goals and in rewarding performance, we will take care to ensure that we do not create incentives to take inappropriate risks. Offering a competitive compensation structure We have established and intend to maintain a competitive structure that supports the recruitment and retention of high-performance executives essential to driving the business results required to execute our strategy and create long-term value for shareholders. This structure is determined, in part, by evaluating peer group data which is provided and analyzed by the Compensation Committee s independent consultant, Pay Governance. Maintaining a transparent compensation structure The Compensation Committee strives to provide absolute transparency to executives, employees and shareholders of all aspects of BD s compensation and benefits structure. This includes disclosure of performance targets, payout formulas, details of other earned benefits and the Compensation Committee s use of discretion in determining award payouts. Maintaining Compensation Committee independence The Compensation Committee is made up exclusively of independent directors and utilizes an independent compensation consultant, Pay Governance, which, by Compensation Committee policy, is prohibited from performing any services for BD or its management without the Compensation Committee s prior approval. Retaining prerogative to adjust programs The Compensation Committee retains the prerogative to change or modify BD s compensation and benefit programs to reflect prevailing economic, market or company financial conditions. 26

437 Table of Contents The Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis with management and, based on such review and discussions, has recommended to the Board of Directors that the Compensation Discussion and Analysis be included in BD s Annual Report on Form 10- K for the fiscal year ended September 30, 2016 and in this proxy statement. COMPENSATION AND MANAGEMENT DEVELOPMENT COMMITTEE Marshall O. Larsen Chair Basil L. Anderson Gary A. Mecklenburg James F. Orr Bertram L. Scott 27

438 Table of Contents COMPENSATION DISCUSSION AND ANALYSIS This section discusses our executive compensation program and the compensation actions taken with respect to the persons named in the Summary Compensation Table (who we refer to as the named executive officers ) on page 42. All references in this section to years are references to our fiscal year, which ends on September 30, unless otherwise noted. Information is included below for William A. Kozy, who retired as BD s Executive Vice President and Chief Operating Officer in March Information for Mr. Kozy is required under the rules of the SEC, even though he was not serving as an executive officer of BD at the end of In this section, while discussing awards under our Performance Incentive Plan (the PIP ), we refer to certain financial measures that do not conform to generally accepted accounting principles ( GAAP ). Appendix A to this proxy statement contains reconciliations of these non-gaap measures to the comparable GAAP financial measures. Compensation objectives Executive Summary Our goal is to provide an executive compensation program that best serves the long-term interests of our shareholders. We believe that attracting and retaining superior talent and rewarding performance is key to delivering long-term shareholder returns, and that a competitive compensation program is critical to that end. Therefore, we strive to provide a competitive compensation package to our executives that ties a significant portion of pay to performance and uses components that align the interests of our executives with those of BD s shareholders. Our compensation practices The following is a summary of important aspects of our executive compensation program discussed later in this section. Balanced mix of pay components and incentives. Our compensation program targets a balanced mix of cash and equity compensation, and of annual and long-term incentives. The key elements of our program are salary, annual cash incentives under the PIP and long-term equity compensation consisting of stock appreciation rights ( SARs ), stock-settled performance-based units ( Performance Units ), and time-vested units ( TVUs ). Significant performance-based compensation tied to business strategy. We emphasize pay-for-performance to align executive compensation with the execution of our business strategy and the creation of long-term shareholder value. Approximately three-quarters of the total target compensation of our CEO in 2016 was performance-based. We use performance metrics that are aligned with and support BD s business strategy. While we emphasize at risk pay tied to performance, we believe our program does not encourage excessive risk taking by management. Share retention guidelines and policy against pledging/hedging. Our executives are subject to robust share retention and ownership guidelines and are prohibited from pledging BD shares or hedging against the economic risk of their ownership. Limited perquisites and no employment agreements. We offer our named executive officers very limited perquisites, and none of them have employment agreements. 28

439 Table of Contents Clawback policy. We have a compensation recovery policy that gives the Board the authority to recover incentive compensation paid to senior management in the event of a restatement of our financial statements resulting from misconduct. Change in control agreements. We have double-trigger change in control agreements with our executives to provide continuity of management in the event of an actual or potential change in control of BD. We have adopted a policy of eliminating excise tax gross-ups from future change in control agreements. Equity compensation awards made after January 1, 2015 also have a double trigger accelerated vesting provision. Use of independent consultant. The Compensation Committee uses an independent consultant to assist it in designing our compensation program and making compensation decisions. The independent consultant did not provide any services to BD or BD management in Last year s say-on-pay vote Approximately 95% of the shares voted at last year s annual meeting were cast in support of BD s advisory vote on named executive officer compensation. The Compensation Committee views the results of this vote as broad general shareholder support for our executive compensation program. Based on our say-on-pay vote and the Compensation Committee s ongoing benchmarking of our compensation policies and practices, the Compensation Committee believes that our compensation program effectively aligns the interests of our named executive officers with those of our shareholders and the long-term goals of BD. Accordingly, the Compensation Committee did not make any significant changes in 2016 as a result of our say-on-pay vote operating performance and executive compensation decisions Operating Performance 2016 was a significant year in the transformation of BD, as we completed our first full fiscal year with CareFusion Corporation ( CareFusion ) as part of the BD organization. For the year, BD delivered strong financial and operational performance, the highlights of which include: Our total revenues for the year were solid, and our strong margin expansion and expense controls helped us exceed our internal earnings growth expectations for the year. Management continued to make substantial progress on the integration of the CareFusion acquisition, and BD achieved over $170 million in total cost synergies from the acquisition by the end of We took steps to optimize our portfolio, including the divestiture of our BD Rx and spine businesses and the establishment of a joint venture for the Respiratory Solutions business, which we completed just after the close of the fiscal year. These actions further enable us to invest in our most important opportunities for future growth. We continued to execute on our continuous improvement efforts, including our IT and manufacturing strategies, to drive further efficiency throughout the organization. With regard to innovation, we made significant progress on our product pipeline, with a number of new product launches and significant investment in targeted high growth opportunities. We maintained our investment in emerging markets, which will continue to be a key driver of BD s growth, and continued progress in introducing CareFusion products into new markets. Cash flows remained strong, and we continued to reduce the debt associated with the CareFusion acquisition and remain on track to meet the leverage target we set following the acquisition. We also returned $562 million to our shareholders through dividends, as we increased our dividend for the 44th consecutive year. 29

440 Table of Contents Compensation decisions Salary. Mr. Forlenza, our CEO, received a salary increase during the year from $1,060,000 to $1,120,000 in order to keep his salary competitive with the median of peer companies. The other named executive officers received salary increases that were in line with increases at BD generally, except for Mr. Polen, whose salary was adjusted to reflect his expanded role at BD. PIP awards. For 2016, our strong earnings and cash flow performance, along with revenue results that substantially met the PIP target, resulted in available funding for PIP awards at 115% of target. The PIP award made to Mr. Forlenza was 128% of his target award, and awards ranged from 115% to 146% of target for our other named executive officers, as discussed below. We believe that the 2016 PIP awards appropriately reflect the individual contributions of our executive officers to BD s strong financial performance during the year, the successful integration to date of CareFusion, and the progress made on other important initiatives at BD. Equity compensation. Consistent with our past practice, equity compensation represented a significant component of total compensation in Among the changes in equity compensation awards in 2016 was an increase in Mr. Forlenza s award value to recognize his performance. The objectives of our executive compensation program include: Objectives of Our Executive Compensation Program Aligning the interests of our executives with our shareholders through equity compensation and share retention guidelines. Driving superior business and financial results by setting clear, measurable short- and long-term performance targets that support our strategy and the creation of long-term shareholder value, while at the same time taking care to ensure that our executives are not incentivized to take inappropriate risks. Maintaining a pay-for-performance philosophy by tying a significant portion of pay to performance against our performance targets. Offering competitive compensation that helps attract and retain high-performing executives who are essential to executing our strategy and creating long-term value for our shareholders. In administering the program, the Compensation Committee seeks to provide transparency to BD executives and associates and to our shareholders of all aspects of BD s compensation and benefits structure. This includes disclosure of performance targets and payout formulas, the benefits provided under the program, and the Compensation Committee s use of discretion in determining award payouts. The role of the Compensation Committee, its consultant and management The Process for Setting Executive Compensation The Compensation Committee oversees the compensation program for our executive officers. The Compensation Committee recommends compensation actions regarding the CEO for approval by the independent members of the Board, and sets the compensation of the other named executive officers. The Compensation Committee is assisted in fulfilling its responsibilities by its independent consultant, Pay Governance, and BD s senior management. Additional information about our process for setting executive compensation, including the roles of Pay Governance and management, is found on pages In order to maintain the independence of its outside consultant, the Compensation Committee has established a policy that prohibits its consultant from performing any services for BD or BD s management without the Compensation Committee s prior approval. In accordance with this policy, Pay Governance did not perform services for BD or BD management in

441 Table of Contents The use of market comparison data The Compensation Committee considers a number of factors in structuring our program, determining pay components and making compensation decisions. This includes the compensation practices of select peer companies in the healthcare industry, which we refer to as the Comparison Group. These companies were chosen by the Compensation Committee after considering the recommendations of Pay Governance and management, and were selected because they have significant lines of business that are similar to BD s and are companies that we believe we compete with for executive talent. The Compensation Committee reviews the composition of the Comparison Group at least annually. The companies in the Comparison Group for 2016 are below. Comparison Group Agilent Technologies, Inc. Allergan plc C.R. Bard, Inc. Baxter International Inc. Boston Scientific Corporation Medtronic plc PerkinElmer, Inc. St. Jude Medical, Inc. Stryker Corporation Thermo Fisher Scientific Inc. Zimmer Biomet Holdings, Inc. If the sample size from the Comparison Group is not large enough, data from a secondary peer group may be used. Companies in the secondary peer group vary each year, depending on survey participation, and are selected based on similarities of industry and company size. The Comparison Group data was used for each named executive officer for each component of our compensation program in 2016, and secondary peer group data was also used in setting pay levels for Mr. Conroy, Mr. Polen, and Dr. Strahlman. Due to Mr. Kozy s pending retirement at the time, market data was not considered by the Committee for his position. Comparison Group Data Revenue for the twelve months ended September 30, 2016 (in millions) Market capitalization on September 30, 2016 (in millions) 25 th Percentile $ 4,961 $ 19,626 Median $ 7,878 $ 26, th Percentile $ 13,507 $ 53,142 BD $ 12,312 $ 38,269 BD Percentile Rank 73% 65% We attempt to set the compensation of the named executive officers at levels that are competitive with the compensation (salary, annual cash incentive and equity compensation) paid to persons holding the same or similar positions at the companies listed above, using available market comparison data regarding these companies as a guide. The Compensation Committee (and the independent directors in the case of our CEO) generally seeks to set the compensation of our executive officers for each of these elements within a competitive range of the median of this group, assuming payout of performancebased compensation at target. The use of market comparison data, however, is just one of the tools used to determine executive compensation, and the Compensation Committee and the independent directors retain the flexibility to set target compensation at levels deemed appropriate for an individual or for a specific element of compensation. Based on the market data provided by Pay Governance, the Compensation Committee believes that the total target compensation set for the named executive officers in 2016 is at or below median competitive levels. Because each compensation element is reviewed individually, compensation decisions made with respect to one element of compensation generally do not affect decisions made with respect to other elements. It is also for 31

442 Table of Contents this reason that no specific formula is used to determine the allocation between cash and equity compensation, although it is the Compensation Committee s intent that equity compensation represent the largest portion of total target compensation. In addition, because an executive s compensation target is set by reference to persons with similar duties at peer companies, we do not establish any fixed relationship between the amount of compensation paid to our CEO and that paid to the other named executive officers. The use of tally sheets The Compensation Committee is from time-to-time provided a tally sheet report prepared by management for each named executive officer. The tally sheet includes, among other things, total annual compensation, the value of unexercised or unvested equity compensation awards, and amounts payable upon termination of employment under various scenarios, including retirement or following a change in control. The Compensation Committee uses tally sheets to provide additional perspective on the value the executives have accumulated from prior equity awards and plan accruals and their retentive value. The Key Elements of Our Compensation Program The key elements of our executive compensation program are summarized in the table below. Component Description Purpose Base salary PIP Long-term equity compensation: SARs Performance Units TVUs Fixed cash compensation based on performance, scope of responsibilities, experience and competitive pay practices. Annual variable cash payment tied to performance during the fiscal year. Exercisable for shares based on difference between exercise price and BD stock price. SARs vest over four years and have a 10-year term. Performance-based restricted stock units, with payout tied to BD s performance over three-year performance period. Restricted stock units that vest in three annual installments following grant. 32 Provide a fixed, baseline level of compensation. Drive business performance on an annual basis. Reward individual contributions to BD s performance. Increase executive ownership to align interests with shareholders. Promote executive retention. Drive long-term, sustained business performance. Reward creation of shareholder value.

443 Table of Contents Performance-based compensation Our Emphasis on Pay-for-Performance The compensation of our named executive officers is weighted towards performance-based compensation, where the actual amount received varies based on company and individual performance. The charts below show the performance-based portion of 2016 target compensation paid to Mr. Forlenza and the other named executive officers Total Target Compensation Performance-based compensation includes PIP awards, Performance Units and SARs, while Fixed compensation includes salary and TVUs. We consider SARs performance-based compensation because they require stock price appreciation to deliver value to an executive. Actual amounts received (and the percentage of total compensation coming from performance-based compensation) may differ from target amounts based on performance and BD s stock price. How our performance metrics support BD s business strategy 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: Increasing revenue growth by focusing on our core products, services and solutions that deliver greater benefits to patients, healthcare workers and researchers; Investing in research and development for platform extensions and innovative new products; Growing our operations in emerging markets; Improving operating effectiveness and balance sheet productivity; and Driving an efficient capital structure and strong shareholder returns. The Compensation Committee believes it is important that our compensation program reinforce and reward behaviors that support these business objectives. In addition, the Compensation Committee believes executive compensation should be based in part on how BD s performance compares to peer companies facing the same market conditions as BD. These considerations inform the Compensation Committee s selection of the performance measures for BD s performance-based compensation. Performance Period and Metrics for Performance-based Compensation 1 Year 3 years 10 years PIP Awards Performance Units SARS Adjusted EPS* Revenues* Free cash flow as a percentage of sales* Average ROIC Relative TSR Stock price appreciation * Adjusted for unbudgeted currency fluctuations. 33

444 Table of Contents PIP. We evaluate corporate performance under the PIP using the following metrics: Adjusted EPS. Adjusted EPS is our GAAP EPS less acquisition-related purchase accounting adjustments and finance, integration, restructuring and transaction costs, primarily relating to our CareFusion acquisition in We use Adjusted EPS because it is the primary basis on which BD sets performance expectations for the year and earnings is a widely-used measure of overall company performance. The use of Adjusted EPS is consistent with how we report our operating results to the financial community. Revenues. Revenue measures BD s ability to innovate and compete in the global marketplace. This measure focuses management on achieving strong top-line growth, consistent with our business strategy. Free cash flow as a percentage of sales. This metric recognizes the importance of the efficient use of cash to our ability to fund ongoing investments in our business, including product development, innovation and geographic expansion. Free cash flow means cash flow from our operating activities, less capital expenditures and capitalized software. Together, these three measures provide a balanced set of performance targets that focus on growth, profitability and operating efficiency. Adjusted EPS performance is weighted 50%, and the revenue and free cash flow metrics are each weighted 25%. Because Adjusted EPS is the primary basis on which we set our performance expectations for the year, it is more heavily weighted than the other measures. When measuring actual performance against the targets, adjustments are made to account for the impact of foreign currency exchange rates in effect during the year, whether favorable or unfavorable to BD, compared to the rates we budgeted when the targets were set. We eliminate this impact of foreign currency translation so that only BD s underlying performance is considered in determining PIP awards. Equity compensation. Equity compensation links executive compensation to BD s performance against three-year performance goals and stock price appreciation. Two metrics are used to measure performance under the Performance Units, each weighted 50%: Average return on invested capital ( ROIC ). This metric measures profitability and how effectively company assets are being used. This metric requires our executives to effectively manage a number of different aspects of the business, including new product introductions, productivity improvements and geographic expansion. Relative total shareholder return ( TSR ). This metric measures BD s stock performance (assuming reinvestment of dividends) during the performance period against that of a group of 14 companies in the healthcare industry (the TSR Group ). This measure compares BD s performance, as reflected in our stock price over time, to peer companies facing similar business conditions and is directly tied to shareholder returns. The TSR Group is broader than the Comparison Group used for compensation market data in order to reduce the volatility in relative performance that can come from using a relatively smaller number of companies. How performance goals are set When setting performance targets for the PIP and Performance Units, the Compensation Committee considers BD s business plan and the environment in which BD is operating. The healthcare industry continues to face challenges, and the Compensation Committee seeks to reward what it deems to be superior performance by management in light of current industry conditions and growth trends. The Compensation Committee sets what it believes are reasonably achievable performance targets for BD at the time, in light of the BD operating plans reviewed by the Board, and structures payouts so that they are aligned with BD s performance against those targets. 34

445 Table of Contents Our risk analysis of performance-based compensation While a significant portion of our executive compensation is performance-based, we do not believe that our program encourages excessive or unnecessary risk-taking. While risk-taking is a necessary part of operating and growing a business, the Compensation Committee focuses on aligning BD s compensation practices with BD s long-term strategy and attempts to avoid short-term rewards for management decisions that could pose long-term risks to BD. This includes: Limits on PIP awards. We do not overweight short-term incentives as a proportion of total pay. PIP awards are also capped at 200% of an executive s target award to protect against disproportionately large short-term incentives, and the Compensation Committee has the discretion to set PIP awards based on any factors it deems appropriate, including whether management has taken unnecessary or excessive risk. Share retention and ownership guidelines. Our share retention and ownership guidelines ensure that our executives have a significant amount of their personal assets tied to the long-term success of BD, and we have a policy prohibiting pledging BD shares or hedging against the economic risk of their ownership. Use of long-term equity compensation. The largest portion of the compensation paid to our named executive officers is long-term equity compensation that vests over a period of years, which encourages our executives to focus on sustaining BD s long-term performance. Use of Performance Units. A significant portion of executive equity compensation consists of Performance Units that have a three-year performance cycle. This focuses management on sustainable long-term performance. We also cap the payout of these awards at 200% of target. Use of multiple performance metrics. We use a number of different performance metrics in our performance-based compensation, with no overlapping metrics among our different compensation components, so that undue weight is not given to any one metric. PIP Awards The PIP provides our executives an opportunity to receive a cash award for BD s performance for the fiscal year and their contribution to that performance, as part of our pay-for-performance philosophy. Award targets Target PIP awards for the named executive officers are expressed as a percentage of base salary earned during the year. The Grants of Plan-Based Awards in Fiscal Year 2016 table on page 45 shows the range of possible awards under the PIP for 2016, based on certain assumptions. The factors considered when setting actual PIP awards include BD s overall performance against the pre-set performance targets and the resulting available funding (discussed below), the executive s target award and the executive s individual performance. Our CEO s performance is measured against the individual goals for the year established by the independent directors. For our other executive officers, performance is measured against the performance objectives set for the businesses, regions or functions they oversee. In each case, the performance objectives for a named executive officer involve a combination of quantitative and qualitative goals. However, no specific formula or weighting of individual performance objectives is used to determine a named executive officer s PIP award, nor is the achievement of any particular individual performance objective a condition to receiving an award. Instead, the Compensation Committee and the independent directors use their business judgment to determine what it believes is an appropriate PIP award to recognize BD s performance and the executive s contribution to that performance. 35

446 Table of Contents Funding for awards Available funding for PIP awards is determined by a formula. For each measure, the Compensation Committee reviews how BD performed against the target goal set by the Compensation Committee in order to arrive at a performance factor for that measure. For every 1% of performance above target, funding with respect to that measure is increased 5% above target funding (up to a maximum of 150%), and for every 1% below target, funding decreases 2.5% below target funding. Performance below 90% of target for revenues or Adjusted EPS results in no funding for that particular measure, while performance below 80% of the free cash flow target results in no funding for that measure. The performance factors for the three measures are then weighted to arrive at an overall funding factor. Actual awards, as a percentage of a named executive officer s target, may be more or less than the overall funding factor. When comparing BD s operating results to the performance targets, the Compensation Committee has the discretion to adjust BD s results to account for unbudgeted acquisitions and divestitures during the year, and for other unbudgeted items that are not considered part of our ordinary operations. This ensures that business decisions are made based on what management believes is in the best interests of BD, rather than the possible effects on compensation. It also ensures that our executives are not unfairly penalized by or rewarded for these types of events. Equity Compensation Awards We use a mix of equity compensation vehicles to promote the objectives of our program. SARs reward executives for the creation of shareholder value over the term of the award. Performance Units measure BD s performance over a three-year period and are intended to reward sustained long-term financial performance. TVUs, the smallest portion of equity compensation, are used to reduce the volatility in amounts realized from equity compensation that can arise when purely performance-based equity compensation is used. Because they are equity-based and subject to vesting, each award also serves to align the interests of our executives with those of our shareholders and to promote executive retention. Award values The Compensation Committee determines the total grant date dollar value of the equity compensation to be paid to a named executive officer. SAR, Performance Unit and TVU awards are then made to the executive based on their estimated grant date values, with SARs and Performance Units each making up approximately 40% of the total award value, and TVUs the remaining 20%. The values given to equity compensation awards are only estimates and actual amounts realized from these awards may differ from these estimated values. Performance Unit payout formula The performance measures used for the Performance Units are average annual ROIC and relative TSR, each weighted 50%. A payout factor for each measure is calculated to determine a final share payout, which can range anywhere from zero to 200% of target. 36

447 Table of Contents ROIC. The payout factor for ROIC performance is determined by a scale, with threshold performance set at 5% below the ROIC target (resulting in a 50% payout factor), and maximum performance set at 5% above target (resulting in a 200% payout factor). Performance below the threshold level results in a zero payout factor for the ROIC measure. Relative TSR. The payout factor for relative TSR performance is determined by the following table: BD s Percentile Rank TSR Factor 85 th 200% 75 th 165% 50 th 100% 25 th 35% Less than 25 th 0 In the event BD has a negative absolute TSR for the performance period, the factor assigned to relative TSR is capped at 100%, regardless of where BD s TSR ranks within the TSR Group. The Compensation Committee believes that in instances where BD has a negative absolute TSR, BD s executives should still be rewarded for superior relative TSR performance, but that it is appropriate that the payout be limited. Similar to the PIP, the Compensation Committee has the discretion to adjust BD s average ROIC performance for acquisitions and divestitures and other unbudgeted items not considered part of our ordinary operations, and to remove companies from the TSR Group, or adjust the TSR of companies within the TSR Group or of BD, to account for acquisitions or mergers or other significant events, such as a changes in capital structure Compensation Actions Below is a discussion of compensation actions taken in 2016 with respect to the named executive officers. Salary adjustments The base salaries of the named executive officers are reviewed each November, and any adjustments go into effect on January 1 of the following calendar year. Effective January 1, 2016, Mr. Forlenza s salary was increased from $1,060,000 to $1,120,000 in order to keep his salary competitive with the median of the Comparison Group. The other named executive officers received salary increases that were in line with increases at BD generally, except that Mr. Polen received an increase of 38% to align his salary more closely to the market given his expanded role in the company, reporting directly to our CEO. PIP awards The threshold performance, target performance and maximum performance for each metric under the PIP for 2016, along with BD s adjusted performance during the year, are set forth below. Range of Performance Adjusted Performance Percentage of Target Achieved Weighted Performance Factor (rounded) Minimum Target Maximum Adjusted EPS (50%) $ 7.56 $ 8.40 $ 9.24 $ % 57% Revenues (25%) (in millions) $ 11,432 $12,702 $ 13,972 $ 12, % 25% Free cash flow as % of sales (25%) 11.92% 14.9% 16.39% 15.8% 106.0% 33% Total 115% 37

448 Table of Contents The Adjusted EPS target represents an increase of 17.3% over 2015 EPS, as adjusted, while the revenue target represent an increase of 23.5% over 2015 revenues. The increase in these targets over our 2015 results is attributable, in part, to the inclusion of CareFusion for the full 2016 fiscal year, compared to only part of The free cash flow as a percentage sales target represents a 10% increase over the 2015 target. Our reported EPS for 2016 was $4.49, our reported revenues were $12,483, and our reported free cash flow as a percentage of revenues was 14.7%. In reviewing BD s 2016 performance, the Compensation Committee made adjustments for unbudgeted items, including divestitures, non-cash pension settlement charges and other matters, that occurred during The Compensation Committee made these adjustments to eliminate items that are not considered part of BD s ordinary operations, so that the PIP funding factor appropriately reflected BD s underlying operating results. These adjustments are consistent with how we reported our operating results to the financial community. Adjustments were also made for the impact of foreign currency fluctuations in excess of what was budgeted when the targets were set, again so that only BD s underlying performance is considered in determining PIP awards. The reconciliations on Appendix A provide additional detail on the adjustments made by the Compensation Committee. The following table shows the PIP awards granted for These awards are also set forth in the Summary Compensation Table on page 42 under the heading Non-Equity Incentive Plan Compensation. Target Incentive Award Actual Incentive Award Name Vincent A. Forlenza $ 1,568,000 $ 2,000,000 Christopher R. Reidy 642, ,300 Alexandre Conroy 423, ,886 Thomas Polen 560, ,600 Ellen R. Strahlman, M.D. 537, ,900 William A. Kozy 356, ,700 Based on BD s results, the funding factor under the PIP was 115%. Certain named executive officers received awards that, as a percentage of their award target, exceeded the payout factor, as discussed below. Mr. Forlenza s award reflects his overall leadership in the transformation of the new BD during The award recognizes Mr. Forlenza for his role in BD s continued strong financial performance, the significant progress made integrating CareFusion into BD, the strengthening of our business portfolio during the year through strategic divestitures, the refining of our business strategy in life sciences, the organizational changes made during the year to enhance innovation and operating effectiveness, and improvements in critical organizational capabilities, such as marketing, R&D and leadership development. Mr. Reidy s award recognizes his role in the cost synergies realized from the CareFusion integration, which will exceed our original estimates, as well as important leadership provided on other organizational aspects of the integration, including site integration and associate benefits. The award also recognizes Mr. Reidy s leadership in a number of significant efficiency initiatives, including functional transformations in the areas of finance, IT and shared service centers. Mr. Polen s award reflects his leadership of the Medical segment, which exceeded our performance expectations for the year despite certain adverse macroeconomic factors. The award also recognizes Mr. Polen s efforts in integrating CareFusion s operations into the Medical segment, and his role in driving significant progress during the year on a number of important growth initiatives. Mr. Kozy s award reflects the critical role he played during the year with respect to the CareFusion integration, particularly in the areas of corporate culture and organizational structure, and ensuring a successful transition of his role following his departure from BD. 38

449 Table of Contents Equity compensation awards The Compensation Committee made the equity compensation awards to the named executive officers shown in the Summary Compensation Table on page 42 in November Mr. Forlenza s target award value was increased compared to the prior year to recognize Mr. Forlenza s performance. The Performance Units included in the awards to our named executive officers cover the performance period, have a target average ROIC of 15.5% (with threshold performance at 10.5% and maximum performance of 20.5%), and use the formula discussed earlier on page 37 for calculating the relative TSR payout factor. Deferred compensation Other Benefits Under Our Executive Compensation Program Our Deferred Compensation and Retirement Benefit Restoration Plan (the Restoration Plan ) is an unfunded, nonqualified plan that allows eligible associates to defer receipt of cash compensation and shares issuable under certain equity compensation awards on a pre-tax basis in addition to what is allowed under our tax-qualified 401(k) Plan. The plan is offered as part of a competitive compensation program. We do not provide any guaranteed earnings on amounts deferred by the named executive officers, and earnings on these accounts are based on their individual investment elections. BD provides matching contributions on cash amounts deferred under the plan, subject to certain limits. Mr. Conroy is not eligible to participate in the Restoration Plan. A more complete description of the deferred compensation provisions of the Restoration Plan begins on page 53. Pension benefits We offer retirement benefits for all of our U.S. BD associates. Because the Internal Revenue Code limits the maximum annual benefit that may be paid to an individual under our qualified Retirement Plan, we provide additional retirement benefits through our Restoration Plan. Together, the Retirement Plan and Restoration Plan are designed to provide a market-competitive level of income replacement for our retirement-eligible associates and reduce associate turnover. The named executive officers (other than Mr. Conroy) participate in these plans on the same basis as all eligible associates. We do not include the value of equity compensation in calculating pension benefits. A more complete description of these pension benefits, and the French indemnity plan in which Mr. Conroy participates, begins on page 50. Change in control agreements We have entered into agreements with the named executive officers relating to their employment following a change in control. These agreements provide the executives with continued employment for a period of two years following a change in control of BD, and provide certain benefits to the executives in the event their employment is terminated without cause or they leave their employment for good reason (also known as a constructive termination) during such period. Generally, these benefits include a severance payment equal to a multiple of the executive s salary and PIP award, and certain other benefits. A more complete description of the terms and potential payouts of our change in control agreements begins on page 55. General purpose. Our change in control agreements are intended to retain the executives and provide continuity of management in the event of an actual or potential change in control of BD. These change in control benefits are reviewed from time-to-time by the Compensation Committee to ensure that they are consistent with our compensation objectives and market practices. Based on information provided by Pay Governance, change in control arrangements are used by a substantial majority of the companies in the Comparison Group, and the terms of our agreements, including the severance multiple, are consistent with the prevailing practices at those companies. The Compensation Committee believes the benefits provided under these agreements are appropriate and consistent with our objective of attracting and retaining highly qualified executives. 39

450 Table of Contents Triggering events. Our agreements contain a double trigger that is, there must be a change in control of BD and a termination of the executive s employment (either without cause by BD or for good reason by the executive) in order for any payments to be made. We opted for a double trigger, rather than a single trigger that provides for severance payments solely on the basis of a change in control, since a double trigger is consistent with the purpose of encouraging the continued employment of the executive following a change in control. Tax reimbursement payments. In certain instances, payments made to an executive upon termination may be subject to a 20% excise tax. Under the agreement with Mr. Forlenza, to offset the effect of this tax, we will reimburse him for any resulting excise tax. We provide for this payment because it allows him to recognize the full intended economic benefit of the agreement and eliminates unintended disparities between executives that the excise tax can arbitrarily impose, owing to the particular structure of this tax provision. However, while we believe tax reimbursement provisions serve a valid purpose, in light of trends in executive compensation practices, it has been our policy since 2011 that any new change in control agreements that we enter into with executive officers will not contain these provisions. Company transportation Mr. Forlenza is encouraged to use BD aircraft for both personal and business travel in order to make more efficient use of his travel time, for personal security and to reduce business continuity risk. Mr. Forlenza has entered into a time-sharing arrangement under which he makes payments to BD for his personal use of BD aircraft. For 2016, Mr. Forlenza s time-share payments exceeded BD s incremental costs relating to his personal flights. Additional information on the time-sharing arrangement is set forth in the notes to the Summary Compensation Table on page 43. Other change in control provisions The equity grants awarded in 2016 include a double-trigger vesting provision upon a change in control. Under this provision, the awards will not automatically vest upon a change in control if the awards are either continued or replaced with similar awards. In those instances, the awards will automatically vest only if the executive is terminated without cause or terminates employment for good reason (as such terms are defined in the plan) within two years of the change in control. Awards granted to the named executive officers prior to January 1, 2015 immediately vest upon a change in control. Unlike the double trigger discussed above, no termination of employment is required for the accelerated vesting of the awards. We originally provided for single-trigger vesting for awards because we believed it provided our associates with the same opportunity as our shareholders to realize the value created by the transaction, but moved to a double-trigger to align BD s plan with what the Compensation Committee believes are best practices in this area. Clawback policy Significant Policies and Other Information Regarding Executive Compensation We have a policy that gives the Board the discretion to require a member of the BD Leadership Team (which includes the top senior leaders at BD, including the named executive officers) to reimburse BD for any PIP award or Performance Unit payout that was based on financial results that were subsequently restated as a result of that person s misconduct. The Board also has the discretion to cancel any equity compensation awards (or recover payouts under such awards) that were granted to such person with respect to the restated period, and to require the person to reimburse BD for any profits realized on any sale of BD stock occurring after the public issuance of the financial statements that were subsequently restated. 40

451 Table of Contents The policy also gives the Board the authority to require members of the BD Leadership Team who were not involved in the misconduct to reimburse BD for the amount by which their PIP award or Performance Unit payouts exceeded the amount they would have received based on the restated results. Share retention and ownership guidelines To increase executive share ownership and promote a long-term perspective when managing our business, our executive officers and other members of the BD Leadership Team are required to retain, in shares of BD stock, 75% of the net after-tax proceeds from any equity compensation awards granted to them after they become a member of the BD Leadership Team. They are subject to these requirements until they achieve and maintain the required ownership level. The required ownership levels are: Chief Executive Officer 5 times salary Other Executive Officers 3 times salary Other BD Leadership Team Members 1 times salary What counts as ownership What does not count as ownership Shares held directly Unvested SARs Shares held through 401(k) and Restoration Plan Unvested Performance Units TVUs Messrs. Forlenza, Reidy and Conroy have holdings in excess of their ownership requirement. Dr. Strahlman and Mr. Polen have not yet attained their required ownership levels. Hedging Policy We have a policy that prohibits our directors and associates from pledging BD shares, or engaging in options, puts, calls or other transactions that are intended to hedge against the economic risk of owning BD shares. Equity award policy The Compensation Committee has adopted a policy that prohibits the backdating of any equity compensation award and requires our annual equity compensation awards and any off-cycle awards approved by our CEO to be made on fixed dates. The policy also prohibits manipulating the timing of either the public release of information or the grant of an award in order to increase the value of an award. Under the policy, the exercise price of any stock option or SAR award will be the closing price of BD stock on the grant date. Tax considerations Section 162(m) of the Internal Revenue Code precludes BD from taking a federal income tax deduction for compensation paid in excess of $1 million to its CEO and its three other most highly-compensated executive officers (other than the CFO). This limitation does not apply, however, to performancebased compensation. While the Compensation Committee generally attempts to maximize the tax deductibility of executive compensation, the Compensation Committee believes that the primary purpose of our compensation program is to support BD s business strategy and the long-term interests of our shareholders. Therefore, the Compensation Committee maintains the flexibility to award compensation that may not be tax-deductible if doing so furthers the objectives of our executive compensation program. This section includes a discussion of performance targets in the limited context of our executive compensation program. These targets are not statements of management s expectations of our future results or other guidance. Investors should not use or evaluate these targets in any other context or for any other purpose. 41

452 Table of Contents COMPENSATION OF NAMED EXECUTIVE OFFICERS The following table shows the compensation provided by BD to each of the named executive officers in fiscal year Name and Principal Position Year Salary($) Fiscal Year 2016 Summary Compensation Table Stock Awards ($)(1) SAR Awards ($)(1) Non-Equity Incentive Plan Compensation ($)(2) Change in Pension Value and Nonqualified Deferred Compensation Earnings ($)(3) All Other Compensation ($)(4) Total ($) Vincent A. Forlenza ,105,000 5,722,028 4,572,671 2,000, ,787 44,975 13,930,461 Chairman, Chief Executive ,045,000 5,381,613 3,576,512 1,662, ,827 11,710,032 Officer and President ,000 4,653,236 3,153,732 1,400, ,859 35,691 10,983,518 Christopher R. Reidy ,568 1,526,731 1,219, ,300 96,148 48,725 4,524,466 Executive Vice President, ,501 1,361, , ,788 77,550 48,725 3,819,127 Chief Financial Officer and ,188 1,240, , ,946 42,116 21,500 3,499,619 Chief Administrative Officer Alexandre Conroy(5) , , , ,886 17, ,061 2,755,236 Executive Vice President and President, Europe, EMA and Americas Thomas E. Polen(6) , , , , ,723 43,725 3,260,857 Executive Vice President and President, Medical Segment Ellen R. Strahlman, M.D , , , ,900 82,929 43,725 3,124,790 Executive Vice President, , , , ,508 66,642 43,725 2,952,198 Research and Development and , , , , ,456 39,750 2,447,123 Chief Medical Officer William A. Kozy(7) ,131 1,716,687 1,371, , ,095 49,125 4,430,556 Former Executive Vice President ,840 1,750,770 1,163,438 1,000, ,932 49,517 5,173,497 and Chief Operating Officer ,000 1,861,313 1,261, , ,118 40,412 5,070,461 (1) Stock Awards and SAR Awards. The amounts shown in the Stock Awards column (which includes Performance Units and TVUs) and SAR Awards column reflect the grant date fair value of the awards under FASB ASC Topic 718 (disregarding estimated forfeitures). For a description of the methodology and assumptions used to determine the amounts reflected in these columns, see Note 7 to the consolidated financial statements contained in our Annual Report on Form 10-K for the fiscal year ended September 30, The amounts included in the Stock Awards column for the Performance Units awarded in 2016 reflect the grant date fair values of these awards at target payout, which we believe is the most probable outcome based on the applicable performance conditions. Below are the grant date fair values of these awards, assuming a maximum payout of 200% of target: Grant date fair value at target payout Grant date fair value at maximum payout Name Vincent A. Forlenza $ 3,871,075 $ 7,742,150 Christopher R. Reidy 1,032,912 2,065,824 Alexandre Conroy 564,650 1,129,301 Thomas E. Polen 645,205 1,290,410 Ellen R. Strahlman 645,205 1,290,410 William A. Kozy 1,161,430 2,322,860 42

453 Table of Contents (2) Non-Equity Incentive Plan Compensation. Includes amounts earned under BD s PIP. These amounts are paid in January following the fiscal year in which they are earned, unless deferred at the election of the named executive officer. (3) Change in Pension Value and Nonqualified Deferred Compensation Earnings. Pension Amounts shown are the aggregate changes in the actuarial present value of accumulated benefits under our defined benefit pension plans (including our nonqualified Restoration Plan). These amounts represent the difference between the present value of accumulated pension benefits (determined as of the first date on which the executives are eligible to retire and commence unreduced benefit payments) at the beginning and end of the fiscal years shown. A decrease in present value is shown as 0. Information regarding our retirement plans begins on page 50. Deferred Compensation Earnings on nonqualified deferred compensation are not included in this column, because no named executive officer earned above-market or preferential earnings (as defined in the rules of the SEC) on nonqualified deferred compensation during the fiscal years shown. Information on the named executive officers nonqualified deferred compensation accounts is on page 53. (4) All Other Compensation. Amounts shown for fiscal year 2016 include the following: Vincent A. Forlenza Christopher R. Reidy Alexandre Conroy William A. Kozy Thomas E. Polen Ellen R. Strahlman Matching contributions under plans $43,725 $ 43,725 $ 6,210 $ 43,725 $ 43,725 $43,725 Matching charitable gifts 5,000 5,000 Term life insurance 1, Relocation assistance 212,851 Total $44,975 $ 48,725 $219,061 $ 49,125 $ 43,725 $43,725 The following is a description of these benefits: Matching contributions under plans The amounts shown reflect matching contributions made by BD pursuant to our 401(k) Plan, the GSIP and the Restoration Plan, as applicable. Matching charitable gifts The amounts shown are matching contributions made (or committed to be made) by BD through our Matching Gift Program, under which BD matches up to $5,000 of contributions per calendar year made to qualifying non-profit organizations. Term life insurance BD provides incremental term life insurance benefits to certain named executive officers beyond those provided to BD associates generally. The amounts shown reflect the dollar value of the insurance premiums paid by BD for this incremental insurance. Relocation assistance Mr. Conroy relocated to New Jersey from France during In connection with his relocation, BD provided the following benefits to Mr. Conroy: Cost of living allowance $ 22,505 Housing allowance 57,600 Utilities allowance 254 Mobility allowance 80,919 Home leave allowance 8,853 Automobile allowance 6,720 State tax reimbursement 36,000 Total $212,851 Corporate Aircraft. Pursuant to a policy adopted by the Board of Directors, Mr. Forlenza is encouraged to use BD aircraft for personal and business travel. The value of his personal use of BD aircraft is measured by the incremental variable costs incurred by BD in connection with his personal flights that are not reimbursed by him. These variable costs include fuel, trip-related maintenance, crew travel expenses, on-board catering, 43

454 Table of Contents and landing and parking fees. If the aircraft flies empty before picking up or after dropping off Mr. Forlenza at a destination on a personal flight, the cost of the empty flight is included in the incremental cost. Since BD aircraft are used predominantly for business purposes, we do not include fixed costs that do not change in amount based on usage, such as depreciation and pilot salaries. Mr. Forlenza has entered into a time-sharing arrangement under which he makes time-share payments to BD for the personal use of BD aircraft. The payments are for the maximum amount permitted by Federal Aviation Administration regulations without subjecting BD to regulation as a charter carrier. Mr. Forlenza is responsible for the payment of any tax on any income imputed to him as a result of his personal use of corporate aircraft. For 2016, Mr. Forlenza s time-share payments exceeded BD s incremental costs relating to his personal flights. Accordingly, no value is shown for his personal flights in the Summary Compensation Table. (5) For Mr. Conroy, compensation for only fiscal year 2016 is shown because he was not a named executive officer in fiscal years 2015 or Mr. Conroy is a French citizen and relocated from France to BD headquarters in New Jersey, effective April 1, The Euro-denominated compensation paid to Mr. Conroy during the fiscal year has been converted to U.S. Dollars for purposes of this and the other tables in this proxy statement using the exchange rate in effect on September 30, (6) For Mr. Polen, compensation for only fiscal year 2016 is shown because he was not a named executive officer in fiscal years 2015 or (7) Mr. Kozy retired from BD on March 31,

455 Table of Contents Information Regarding Plan Awards in Fiscal Year 2016 Set forth below is information regarding awards granted to the named executive officers in fiscal year The non-equity incentive plan awards were made under the PIP. The equity compensation awards were made under BD s 2004 Employee and Director Equity-Based Compensation Plan. Grants of Plan-Based Awards in Fiscal Year 2016 Estimated Possible Payouts Under Non-Equity Incentive Plan Awards(2) Estimated Future Payouts Under Equity Incentive Plan Awards(3) All Other Stock Awards: Number of Shares of Stock or Units (#) All Other SAR Awards: Number of Securities Underlying SARs (#) Exercise or Base Price of SAR Awards ($/Sh)(4) Grant Date Fair Value of Stock and SAR Awards($) (5) Name Award Type(1) Grant Date Threshold ($) Target ($) Maximum ($) Threshold (#) Target (#) Maximum (#) Vincent A. Forlenza PIP N/A 1,081,920 1,568,000 3,136,000 PU 11/26/15 10,702 25,181 50,362 3,871,075 TVU 11/26/15 12,774 1,850,953 SAR 11/26/15 165, ,572,671 Christopher R. Reidy PIP N/A 443, ,229 1,284,458 PU 11/26/15 2,856 6,719 13,438 1,032,912 TVU 11/26/15 3, ,819 SAR 11/26/15 44, ,219,994 Alexandre Conroy PIP N/A 294, , ,740 PU 11/26/15 1,561 3,673 7, ,650 TVU 11/26/15 1, ,949 SAR 11/26/15 24, ,858 Thomas E. Polen PIP N/A 386, ,000 1,120,000 PU 11/26/15 1,784 4,197 8, ,205 TVU 11/26/15 2, ,492 SAR 11/26/15 27, ,112 Ellen R. Strahlman PIP N/A 370, ,326 1,074,652 PU 11/26/15 1,784 4,197 8, ,205 TVU 11/26/15 2, ,492 SAR 11/26/15 27, ,112 William A. Kozy PIP N/A 244, , ,664 PU 11/26/15 3,211 7,555 15,110 1,161,430 TVU 11/26/15 3, ,257 SAR 11/26/15 49, ,371,818 (1) Award Type: PIP = Performance Incentive Plan PU = Performance Unit TVU = Time-Vested Unit SAR = Stock Appreciation Right (2) The amounts shown represent the range of possible dollar payouts that a named executive officer could earn under the PIP for fiscal year 2016, based on certain assumptions. Actual payments to the named executive officers under the PIP are reflected in the Non-Equity Incentive Plan Compensation column of the Summary Compensation Table on page 42. The amount in the Threshold column assumes BD achieved the minimum performance levels for each performance measure, resulting in available funding for awards at 69% of target, and that the named executive officer received a payment equal to 69% of his or her award target. The Maximum column reflects an award at 200% of target, the maximum award an individual may receive under the PIP. (3) The amounts shown represent the range of potential share payouts under Performance Unit awards. The amount in the Threshold column shows the number of shares that will be paid out assuming BD achieves the minimum performance level for each performance measure under the award. (4) The exercise price is the closing price of BD common stock on the date of grant, as reported on the NYSE. (5) The amounts shown in this column reflect the grant date fair value of the awards under FASB ASC Topic 718 used by BD for financial statement reporting purposes (disregarding estimated forfeitures). For a discussion of the 45

456 Table of Contents assumptions made to determine the grant date fair value of these awards, see Note 7 to the consolidated financial statements that are included in our Annual Report on Form 10-K for the fiscal year ended September 30, Description of awards PIP The PIP provides an opportunity for annual cash incentive payments to eligible associates. A more detailed discussion of the PIP and the performance targets established under the PIP for fiscal year 2016 appears in the Compensation Discussion and Analysis section of this proxy statement. Total awards to BD s executive officers may not, in the absence of special circumstances, exceed 3% of our reported after-tax net income for the fiscal year. Equity compensation awards Performance Units. Performance Units are performance-based restricted stock units that vest three years after grant. The potential payouts under these awards range from zero to 200% of target. The actual payout will be based on BD s performance against the performance targets for these awards over the three-year performance period covering fiscal years A more detailed discussion of these performance targets appears in the Compensation Discussion and Analysis section of this proxy statement. Performance Units are not transferable, and holders may not vote any shares underlying the award until the shares have been distributed. Dividends do not accrue on these awards. TVUs. TVUs are restricted stock units that represent the right to receive one share of BD common stock upon vesting. TVUs vest in three annual installments, beginning one year from the grant date. TVUs are not transferable, and holders may not vote any shares underlying the award until the shares have been distributed. Dividends do not accrue on these awards. SARs. A SAR represents the right to receive, upon exercise, shares of BD common stock equal in value to the difference between the BD common stock price at the time of exercise and the exercise price. SARs have a ten-year term, and become exercisable in four equal annual installments, beginning one year from the grant date. Change in control. Performance Units, TVUs and SARs listed in the above table fully vest in the event of a change in control under certain circumstances. See Accelerated vesting of equity compensation awards upon a change in control on page

457 Table of Contents Outstanding Equity Awards The following table sets forth the outstanding equity awards held by the named executive officers at the end of fiscal year Outstanding Equity Awards at 2016 Fiscal Year-End Number of Securities Underlying Unexercised SARs (#) Exercisable (1) SAR Awards Stock Awards Number of Securities Underlying Unexercised SARs (#) Unexercisable (1) SAR Exercise Price ($/Sh) SAR Expiration Date Number of Shares or Units of Stock That Have Not Vested (#)(2) Market Value of Shares or Units of Stock That Have Not Vested ($)(3) Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) (4) Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)(3) Grant Name Date Vincent A. Forlenza 11/24/ ,742 0 $ /24/ /23/ ,372 0 $ /23/ /22/ ,794 0 $ /22/ /20/ ,067 50,691 $ /20/ /26/ ,238 79,241 $ /26/ /25/ , ,074 $ /25/ /26/ ,138 $ /26/2025 Various 109,335 19,650,779 99,244 17,837,124 Christopher R. Reidy 11/26/ ,130 21,131 $ /26/ /25/2014 9,114 27,345 $ /25/ /26/ ,059 $ /26/2025 Various 21,202 3,810,635 25,806 4,638,112 Alexandre Conroy 11/23/2010 9,147 0 $ /23/ /22/ ,763 0 $ /22/ /20/ ,330 8,111 $ /20/ /26/ ,094 11,094 $ /26/ /25/2014 5,696 17,091 $ /25/ /26/ ,083 $ /26/2025 Various 11,557 2,077,139 15,076 2,709,609 Thomas E. Polen 11/20/ ,652 $ /20/ /26/2013 5,546 5,548 $ /26/ /25/2014 3,906 11,719 $ /25/ /26/ ,523 $ /26/2025 Various 7,382 1,326,767 13,696 2,461,582 Ellen R. Strahlman 11/26/ ,734 13,736 $ /26/ /25/2014 6,510 19,532 $ /25/ /26/ ,523 $ /26/2025 Various 13,921 2,502,021 17,228 3,096,388 William A. Kozy 11/22/ ,351 0 $ /22/ /20/ ,530 0 $ /20/ /26/ ,392 0 $ /26/ /25/ ,875 0 $ /25/ /26/ ,542 0 $ /26/2025 Various 36,254 6,515,931 8,748 1,572,278 (1) SARs become exercisable in four equal annual installments, beginning one year following the date of grant. Mr. Kozy s SAR awards fully vested upon his retirement from BD. 47

458 Table of Contents Set forth below is the value of the exercisable SARs held by named executive officers at the end of fiscal year The value represents the difference between $179.73, the closing price of BD common stock on September 30, 2016, and the exercise price of each exercisable SAR held by the named executive officer. These values may not reflect the value actually realized by the named executive officers upon exercise. Value of Name Vested SARs Vincent A. Forlenza $ 53,920,332 Christopher R. Reidy 1,906,979 Alexandre Conroy 5,770,371 Thomas E. Polen 568,649 Ellen R. Strahlman 1,265,867 William A. Kozy 26,249,025 (2) The amounts shown in this column include grants of restricted stock unit awards that are not performance-based. These include, for Messrs. Forlenza, Reidy, Conroy and Polen and Dr. Strahlman, TVUs granted on November 26, 2013, and November 25, 2014, which vest three years after grant, and November 26, 2015, which vest in three annual installments beginning one year after grant. The amounts shown for Messrs. Forlenza and Kozy include awards that vest at, or one year following, the retirement of the named executive officer. Also included in this column are shares payable under Performance Units granted on November 26, 2013, which cover the fiscal year performance period and vested on November 26, (3) Market value has been calculated by multiplying the number of unvested units by $179.73, the closing price of BD common stock on September 30, These values may not reflect the value ultimately realized by the named executive officers. (4) The amounts in this column represent the Performance Unit awards shown below at maximum payout. The actual number of shares issued under these awards will be based on BD s performance over the applicable performance period. Mr. Kozy s awards are prorated based on the portion of the vesting period that he was employed at BD. For Mr. Forlenza: Grant Date Number of Shares Issuable Performance Period Vesting Date 11/25/ ,882 Fiscal years /25/ /26/ ,362 Fiscal years /26/2018 For Mr. Reidy: Grant Date Number of Shares Issuable Performance Period Vesting Date 11/25/ ,368 Fiscal years /25/ /26/ ,438 Fiscal years /26/2018 For Mr. Conroy: Grant Date Number of Shares Issuable Performance Period Vesting Date 11/25/2014 7,730 Fiscal years /25/ /26/2015 7,346 Fiscal years /26/2018 For Mr. Polen: Grant Date Number of Shares Issuable Performance Period Vesting Date 11/25/2014 5,302 Fiscal years /25/ /26/2015 8,394 Fiscal years /26/

459 Table of Contents For Dr. Strahlman: Grant Date Number of Shares Issuable Performance Period Vesting Date 11/25/2014 8,834 Fiscal years /25/ /26/2015 8,394 Fiscal years /26/2018 For Mr. Kozy: Grant Date Number of Shares Issuable Performance Period Vesting Date 11/25/2014 7,068 Fiscal years /25/ /26/2015 1,680 Fiscal years /26/2018 SAR Exercises and Vesting of Stock Units The following table contains information relating to the exercise of SARs, and the vesting of TVUs and Performance Units, during fiscal year SAR Exercises and Stock Vested in Fiscal Year 2016 Number of Shares Acquired on Exercise (#) SAR Awards Stock Awards Value Number of Realized on Shares Acquired Exercise ($)(1) on Vesting (#)(2) Value Realized on Vesting ($)(3) Name Vincent A. Forlenza 100,774 9,031,472 64,693 9,782,875 Christopher R. Reidy Alexandre Conroy 19,811 1,864,721 10,352 1,565,429 Thomas E. Polen 13,256 1,187,109 4, ,534 Ellen R. Strahlman 0 0 5, ,035 William A. Kozy 92,068 8,472,064 46,065 6,974,534 (1) Represents the difference between the exercise price and the BD common stock price at exercise. Mr. Forlenza s exercise of 100,774 SARs resulted in the acquisition of 55,695 shares. Mr. Conroy s exercise of 19,811 SARs resulted in the acquisition of 11,238 shares. Mr. Kozy s exercise of 92,068 SARs resulted in the acquisition of 50,363 shares. Mr. Polen s exercise of 13,256 SARs resulted in the acquisition of 7,242 shares. (2) Shows the shares acquired under TVUs, and under Performance Units covering the fiscal year performance period, that vested in fiscal year For Mr. Kozy, this includes TVUs for which vesting was accelerated following his retirement from BD. (3) Based on the closing price of BD stock on the vesting date. 49

460 Table of Contents Retirement Benefits General Other Compensation BD s Retirement Plan is a non-contributory defined benefit plan. The Retirement Plan is generally available to all active full-time and part-time U.S. BD associates. The Internal Revenue Code limits the maximum annual benefit that may be paid to an individual under the Retirement Plan and the amount of compensation that may be recognized in calculating these benefits. BD makes supplemental payments to its nonqualified Restoration Plan to offset any reductions in benefits that result from these limitations. The Retirement Plan and the Restoration Plan generally provide retirement benefits on a cash balance basis. Under the cash balance provisions, an associate has an account that is increased by pay credits based on compensation, age and service, and by interest credits based on the rate prescribed by the plans. Prior to January 1, 2013, benefits were based on a final average pay formula for associates who were hired before April 1, 2007 and who did not elect to be covered under the cash balance formula. Effective January 1, 2013, all final average pay participants were converted to the cash balance formula, with an opening cash balance equal to the actuarial present value of the accrued final average pay benefit accrued, based on service and pay through December 31, Upon retirement, the value of this opening cash balance (with interest credits) is compared to the value of the December 31, 2012 benefit accrued under the final average pay formula and the greater of the two is payable to the participant. Benefits accrued after December 31, 2012 are determined under the cash balance formula only. Messrs. Forlenza, Reidy, Polen and Kozy and Dr. Strahlman participate in the Retirement Plan and the Restoration Plan. Mr. Conroy participates in a French retirement indemnity plan under which he will receive a retirement benefit in a lump sum if he works at BD to age 62. This benefit will be calculated based on a formula using his years of service and salary at the time of his retirement. 50

461 Table of Contents Estimated benefits The following table shows the actuarial present value on September 30, 2016 (assuming payment as a lump sum) of accumulated retirement benefits payable under our plans as of the first date on which the named executive officer is eligible to retire and commence unreduced benefit payments. For a description of the other assumptions used in calculating the present value of these benefits, see Note 8 to the consolidated financial statements contained in our Annual Report on Form 10-K for the year ended September 30, PENSION BENEFITS AT 2016 FISCAL YEAR-END Number of years credited service (#) Present value of accumulated benefit ($) Payments during last fiscal year ($) Name Plan name Vincent A. Forlenza Retirement Plan 36 1,684,812 0 Restoration Plan 36 9,090,843 0 Christopher R. Reidy Retirement Plan 4 61,539 0 Restoration Plan 4 160,621 0 Alexandre Conroy French Retirement Indemnity Plan ,470 0 Thomas E. Polen Retirement Plan ,422 0 Restoration Plan ,609 0 Ellen R. Strahlman Retirement Plan 4 61,617 0 Restoration Plan 4 144,113 0 William A. Kozy Retirement Plan ,064,955 Restoration Plan ,112,032 Amounts shown are not subject to any further deduction for social security benefits or other offsets. Calculation of U.S. Benefits Final average pay provisions used to determine benefits accrued prior to January 1, The monthly pension benefit payable in cases of retirement at normal retirement age under the final average pay provisions is calculated using the following formula: (1% of average final covered compensation, plus 1.5% of average final excess compensation) multiplied by years and months of credited service For purposes of the formula, average final covered compensation was generally the portion of an associate s covered compensation subject to Social Security tax, and average final excess compensation is the portion that is not subject to such tax. Covered compensation included salary and other forms of regular compensation, including commissions and PIP awards. As noted above, effective January 1, 2013, all final average pay participants were converted to the cash balance formula, with an opening cash balance equal to the actuarial present value of the accrued final average pay benefit accrued, based on service and pay through December 31,

462 Table of Contents Cash Balance Provisions. Each month, an associate s cash balance account is credited with an amount equal to a percentage of the associate s total compensation for the month (generally, salary and other forms of regular compensation, including commissions and PIP awards). Such percentage is calculated as follows: Age plus years of credited service as of the upcoming December 31 Credit percentage Less than 40 3% % % % 70 or more 7% In addition, each month the associate s account is credited with interest. The rate used during the calendar year is determined based on the 30-year U.S. Treasury rates in effect during the prior September, subject to a minimum rate. Early retirement under U.S. plans. An associate is eligible to retire early and commence benefit payments if the associate is at least age 55 and has at least 10 years of credited service. Mr. Forlenza is currently eligible for early retirement under the plans. Participants may commence payment of benefits under the cash balance formula prior to early retirement eligibility at any age if the participant terminates with at least three years of service. Under the cash balance provisions, the amount of the associate s benefit will be the associate s vested account balance on the early retirement date. The associate may elect to begin payment of the account balance on the early retirement date or delay payment until the normal retirement date (age 65). For participants who formerly participated in the final average pay formula and were converted to cash balance, the portion of the cash balance account attributable to the converted final average pay benefit is compared to the final average pay benefit accrued through the date of conversion under the final average formula. The result that produces the higher benefit is payable. Form of benefit under U.S. plans. Participants may elect to receive their benefits in various forms. Participants may select a single life annuity, in which pension payments will be payable only during the associate s lifetime, or, if married, a joint and survivor annuity. Associates may also elect to receive their benefits in a single lump sum payment. Under the final average pay provisions, this lump sum is actuarially equivalent to the benefit payable under the single life annuity option. Under the cash balance provisions, the lump sum is equal to the associate s account balance. French indemnity plan The French retirement indemnity plan pays a specified number of months of salary as a lump sum for termination on or after age 62, based on years of service as summarized in the following schedule. Years of service Benefit (months of pay) or more 6 Eligibility for this retirement indemnity begins when the participant becomes eligible for French Social Security benefits upon attaining age 62. If the participant is terminated before age 62, the participant forfeits the retirement indemnity. 52

463 Table of Contents Deferred compensation Cash deferrals. The Restoration Plan also allows an eligible BD associate to defer receipt of up to 75% of salary and/or up to 100% of a PIP award until the date or dates elected by the associate. The amounts deferred are invested in a BD common stock account or in cash accounts that mirror the gains and/or losses of several different publicly available investment funds, based on the investment selections of the participants. The investment risk is borne solely by the participant. Participants are entitled to change their investment elections at any time with respect to prior deferrals, future deferrals or both. The investment options available to participants may be changed by BD at any time. Deferral of equity awards. The plan also allows associates to defer receipt of up to 100% of the shares issuable under their Performance Units and TVUs. These deferred shares are allocated to the participant s BD stock account and must stay in such account until they are distributed. Withdrawals and distributions. Participants may elect to receive deferred amounts either during their employment or following termination of employment. Participants may elect to receive distributions in installments or in a lump sum. Except in an unforeseen emergency, participants may not withdraw deferred amounts prior to their scheduled distribution date. Matching contributions. BD provides matching contributions on cash amounts deferred under the plan. These contributions are made in the first calendar quarter following the calendar year in which the compensation was deferred. BD matches 75% of the first 6% of salary and PIP award deferred by a participant under the plan, subject to certain limits. Unfunded liability. BD is not required to make any contributions to the plan with respect to its obligations to pay deferred compensation. BD has unrestricted use of any cash amounts deferred by participants. Participants have an unsecured contractual commitment from BD to pay the amounts due under the plan. When such payments are due, the cash and/or stock will be distributed from BD s general assets. BD has purchased corporate-owned life insurance that mirrors the returns on cash amounts deferred under the plan to substantially offset this liability. Account information. The following table sets forth information regarding activity during fiscal year 2016 in the plan accounts maintained by the named executive officers. Mr. Conroy is not eligible to participate in the Restoration Plan. NONQUALIFIED DEFERRED COMPENSATION IN FISCAL YEAR 2016 Executive contributions in last fiscal year ($)(1) Registrant contributions in last fiscal year ($)(2) Aggregate earnings in last fiscal year ($) Withdrawals and Distributions ($) Aggregate balance at last fiscal yearend ($)(3) Name Vincent A. Forlenza 276,592 31, , ,518,520 Christopher R. Reidy 33,128 31,800 25, ,015 Thomas E. Polen 79,406 31,800 6, ,982 Ellen R. Strahlman 124,937 31,800 17, ,318 William A. Kozy 141,583 31, , ,800 1,832,464 (1) The following amounts are reported as compensation in the fiscal year 2016 Salary column of the Summary Compensation Table appearing on page 42: Mr. Forlenza $110,384; Mr. Reidy $33,128; Mr. Kozy $41,583; Mr. Polen $33,406; and Dr. Strahlman $66,387. The remaining executive contributions relate to the deferral of fiscal year 2015 PIP awards that were payable in

464 Table of Contents (2) Amounts in this column are included in the All Other Compensation column of the Summary Compensation Table and reflect matching credits that were earned by participants in These amounts are not credited to participant accounts until (3) Reflects amounts in which the named executive officer is vested. BD matching contributions fully vest after a participant has been at BD for four years. Payments upon termination of employment Payments Upon Termination of Employment or Change In Control The following table shows the estimated payments and benefits that would be paid by BD to each of the named executive officers (other than Mr. Kozy, who retired in March 2016) as a result of a termination of employment under various scenarios. The amounts shown assume termination of employment on September 30, However, the actual amounts that would be paid to these named executive officers under each scenario can only be determined at the time of an actual termination. Termination without cause or for good reason following a change in control($) (1) Termination due to retirement($)(2) Termination without cause($) (3) Termination due to disability($)(4) Termination due to death($) (5) Name Vincent A. Forlenza 68,420,607 54,501,968 55,150,920 52,825,267 55,065,267 Christopher R. Reidy 13,615,582 4,307,410 8,281,927 9,037,490 Alexandre Conroy 8,732,576 2,821,459 5,490,846 6,020,071 Thomas E. Polen 8,172,295 1,941,690 3,790,017 4,490,017 Ellen R. Strahlman 9,824,781 2,947,457 5,489,614 6,161,272 (1) Includes amounts payable under change in control employment agreements (which are described below), and, for Mr. Forlenza, amounts distributable under BD s retirement plans, assuming payout as a lump sum. Also includes for Mr. Reidy and Dr. Strahlman the accelerated vesting of company matching contributions under the 401(k) Plan and the Restoration Plan. Also includes the accelerated vesting of equity compensation awards, which is discussed below. (2) Includes amounts distributable under BD s retirement plans, assuming payout as a lump sum, and the accelerated vesting of equity compensation awards upon retirement. Messrs. Reidy, Conroy and Polen and Dr. Strahlman were not eligible for retirement as of September 30, (3) Includes amounts distributable under BD s retirement plans, assuming payout as a lump sum, the accelerated vesting of equity compensation awards, outplacement services (with an assumed maximum cost of $100,000), health and welfare benefits and severance benefits. BD s severance policy for U.S. associates provides for severance payments equal to two weeks salary for each year of service (assuming the associate grants a general release to BD), up to a maximum of $530,000. Mr. Conroy receives severance determined by a formula based on salary, years of service and age. (4) Includes amounts distributable under BD s retirement plans, assuming payout as a lump sum, and the accelerated vesting of equity compensation awards. (5) Includes amounts distributable under BD s retirement plans, assuming payout as a lump sum, the accelerated vesting of equity compensation awards and life insurance benefits. The amounts shown in the above table do not include vested deferred compensation distributable upon termination, which is shown on page 53, or the value of vested SARs held by the named executive officers as of September 30, 2016, which appears on page

465 Table of Contents Payments received by Mr. William Kozy upon retirement The table below shows amounts received by Mr. Kozy upon his retirement from BD on March 31, Payments Accelerated vesting of equity awards $ 2,571,577 Restoration Plan (paid as a lump sum) 8,112,032 Retirement Plan (paid as a lump sum) 2,064,955 Total $12,748,564 Payments upon termination under change in control agreements BD has entered into agreements with Messrs. Forlenza, Reidy, Kozy and Polen and Dr. Strahlman that provide for the continued employment of the executive for a period of two years following a change in control of BD. These agreements are designed to retain the executives and provide continuity of management in the event of an actual or potential change in control of BD. The following is a summary of the key terms of the agreements. The agreement provides that BD will continue to employ the executive for two years following a change in control, and that, during this period, the executive s position and responsibilities at BD will be materially the same as those prior to the change in control. The agreement also provides for minimum salary, PIP award and other benefits during this two-year period. Change in control is defined under the agreement generally as: the acquisition by any person or group of 25% or more of the outstanding BD common stock; the incumbent members of the Board ceasing to constitute at least a majority of the Board; certain business combinations; and shareholder approval of the liquidation or dissolution of BD. The agreement also provides that, in the event the executive is terminated without cause or the executive terminates his employment for good reason during the two years following a change in control, the executive would receive: a pro rata PIP award for the year of termination based on the greater of (i) the executive s average PIP award for the last three fiscal years prior to termination, and (ii) the executive s target PIP award for the year in which the termination occurs (the greater of the two being referred to herein as the Incentive Payment ); a lump sum severance payment equal to three times (in the case of Mr. Forlenza) or two times (in the case of Messrs. Reidy, Conroy and Polen and Dr. Strahlman) the sum of the executive s annual salary and his or her Incentive Payment; a lump sum payment equal to the present value of the increased pension benefits the executive would have received had the executive remained employed for an additional three years (in the case of Mr. Forlenza) or two years (in the case of Messrs. Reidy, Conroy and Polen and Dr. Strahlman) following termination; continuation of the executive s health and welfare benefits (reduced to the extent provided by any subsequent employer) for a period of three years (in the case of Mr. Forlenza) or two years (in the case of Messrs. Reidy, Conroy and Polen and Dr. Strahlman); and outplacement services, subject to a limit on the cost to BD of $100,000. Cause is generally defined as the willful and continued failure of the executive to substantially perform his or her duties, or illegal conduct or gross misconduct that is materially injurious to BD. Good reason is generally defined to include (i) any significant change in the executive s position or responsibilities, (ii) the failure of BD to pay any compensation called for by the agreement, or (iii) certain relocations of the executive. 55

466 Table of Contents Under the agreement with Mr. Forlenza, if any payments or distributions made by BD to Mr. Forlenza as a result of a change in control would be subject to an excise tax imposed by the Internal Revenue Code, BD will make a tax reimbursement payment to him. As a result of this payment, Mr. Forlenza would retain the same amount, net of all taxes, that he would have retained had the excise tax not been triggered. This provision applies to any payments or distributions resulting from the change in control, including the accelerated vesting of equity awards. However, if such payments and distributions do not exceed 110% of the level that triggers the excise tax, the payments will be reduced to the extent necessary to avoid the excise tax. The following table sets forth the estimated benefits the executive officers named below would receive under his or her agreement in the event the executive was terminated without cause or terminated his or her employment for good reason following a change in control. The table assumes a termination date of September 30, These estimates are based on salary rates in effect as of September 30, 2016, and use the 2016 target PIP awards of the named executive officers as the Incentive Payment. Incentive Payment($) Severance Payment($) Additional Retirement Benefits($) Health and Welfare Benefits($) Outplacement Services($) Total($) Name Vincent A. Forlenza 1,568,000 8,064, ,480 40, ,000 10,336,980 Christopher R. Reidy 642,229 2,795, ,735 27, ,000 3,732,547 Alexandre Conroy 423,379 1,914, , ,000 2,464,962 Thomas E. Polen 560,000 2,520, ,050 27, ,000 3,355,050 Ellen R. Strahlman 537,326 2,417, ,078 27, ,000 3,227,373 Accelerated vesting of equity compensation awards upon a change in control For awards granted prior to January , upon a change in control (as defined in our equity compensation plans), all unvested SARs become fully vested and exercisable, and all time-vested restricted stock units and Performance Units become fully vested and payable (with Performance Units being payable at their target amount). This accelerated vesting occurs with respect to all equity compensation awards granted by BD, not just those granted to executive officers. No termination of employment is required to trigger this acceleration. Awards made after January 1, 2015 will not automatically vest upon a change in control if the awards are either continued or replaced with similar awards. In those instances, the awards will automatically vest only if the associate is terminated without cause or the associate terminates employment for good reason (as such terms are defined in the plan) within two years of the change in control. Equity compensation upon termination of employment Upon a named executive officer s termination due to retirement: all unvested SARs held by the named executive officer become fully exercisable for their remaining term; all time-vested restricted stock units held by the named executive officer vest at, or on the first anniversary of, retirement; and all Performance Units held by the named executive officer vest pro rata based on the amount of the vesting period that had elapsed. The payments would be made after the end of the applicable vesting periods and would be based on BD s actual performance for the applicable performance periods, rather than award targets. Upon a named executive officer s termination due to involuntary termination without cause: the named executive officer is entitled to exercise his SARs for three months following termination, but only to the extent they were vested at the time of termination; 56

467 Table of Contents all TVUs held by the named executive officer vest pro rata based on the amount of the vesting period that had elapsed and all other timevested restricted stock units fully vest; and all Performance Units held by the named executive officer vest pro rata based on the amount of the vesting period that had elapsed. The payments would be made after the end of the applicable vesting periods and would be based on BD s actual performance for the applicable performance periods, rather than award targets. Upon a named executive officer s termination due to death or disability: all unvested SARs held by the named executive officer become fully exercisable for their remaining term; all time-vested restricted stock units held by the named executive officer fully vest; and all Performance Units held by the named executive officer vest pro rata based on the amount of the vesting period that had elapsed. The payment would be based on award targets. 57

468 Table of Contents Proposal 2. RATIFICATION OF SELECTION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM Ernst & Young LLP ( E&Y ) has been selected by the Audit Committee to audit the accounts of BD and its subsidiaries for the fiscal year ending September 30, The Audit Committee is solely responsible for the appointment, compensation, retention and oversight of BD s independent registered public accounting firm (referred to herein as the independent auditors ). Shareholders are being asked to ratify the Audit Committee s selection of E&Y. If ratification is withheld, the Audit Committee will reconsider its selection. A representative of E&Y is expected to attend the 2017 Annual Meeting to respond to appropriate questions and will have the opportunity to make a statement. Listed below are the fees billed to BD by E&Y for services rendered during fiscal years 2016 and Audit Fees $ 11,678,000 $ 13,681,000 Audit Fees include fees associated with the annual audit of BD s consolidated financial statements, reviews of BD s quarterly reports on Form 10-Q, registration statements filed with the SEC and statutory audits required internationally. Audit Related Fees $ 204,000 $ 148,000 Audit Related Fees consist of assurance and related services that are reasonably related to the performance of the audit or interim financial statement review and are not reported under Audit Fees. These services include benefit plan audits and other audit services requested by management, which are in addition to the scope of the financial statement audit. Tax Fees $ 1,000,000 $ 932,000 Tax Fees includes tax compliance, assistance with tax audits, tax advice and tax planning. All Other Fees $ 27,000 $ 466,000 All Other Fees includes various miscellaneous services. Total $ 12,909,000 $ 15,227,000 Pre-Approval of Audit and Non-Audit Services The Audit Committee is responsible for appointing BD s independent auditors and approving the terms of the independent auditors services. The Audit Committee has established a policy for the pre-approval of all audit and permissible non-audit services to be provided by the independent auditors, as described below. All of the services listed in the above table were approved pursuant to this policy. Audit Services. Under the policy, the Audit Committee will appoint BD s independent auditors each fiscal year and pre-approve the engagement of the independent auditors for the audit services to be provided. Non-Audit Services. In accordance with the policy, the Audit Committee has established detailed pre-approved categories of non-audit services that may be performed by the independent auditors during the fiscal year, subject to the dollar limitations set by the Audit Committee. The Audit Committee has also delegated to the Chair of the Audit Committee the authority to approve additional non-audit services to be performed by the independent auditors, subject to certain dollar limitations, and provided that the full Audit Committee is informed of each service. All other non-audit services are required to be pre-approved by the entire Audit Committee. The Audit Committee believes that the provision of the non-audit services described above by E&Y is consistent with maintaining the independence of E&Y. The Audit Committee periodically considers the rotation of the independent auditors. The Audit Committee believes that the continued retention of E&Y to serve as BD s independent auditors is in the best interests of BD and its shareholders. ACCORDINGLY, THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSAL 2. 58

469 Table of Contents REPORT OF THE AUDIT COMMITTEE The Audit Committee reviews BD s financial reporting process on behalf of the Board of Directors. Management has the primary responsibility for the financial statements and the reporting process, including the system of internal controls. The independent auditors are responsible for performing an independent audit of BD s consolidated financial statements in accordance with generally accepted auditing standards and to issue a report thereon. The Committee monitors these processes. In this context, the Committee met and held discussions with management and the independent auditors. Management represented to the Committee that BD s consolidated financial statements were prepared in accordance with accounting principles generally accepted in the United States, and the Committee reviewed and discussed the consolidated financial statements with management and the independent auditors. The Committee also discussed with the independent auditors the matters required to be discussed by the applicable auditing standards. In addition, the Committee discussed with the independent auditors the auditors independence from BD and its management, and the independent auditors provided to the Committee the written disclosures and the letter pursuant to the applicable requirements of the Public Company Accounting Oversight Board regarding the independent auditor s communications with the Committee concerning independence. The Committee discussed with BD s internal and independent auditors the overall scope and plans for their respective audits. The Committee met with the internal and independent auditors, with and without management present, to discuss the results of their examinations, their evaluations of BD s internal controls, and the overall quality of BD s financial reporting. Management has also reviewed with the Audit Committee its report on the effectiveness of BD s internal control over financial reporting. The Audit Committee also received the report from the independent auditors on BD s internal control over financial reporting. Based on the reviews and discussions referred to above, the Committee recommended to the Board of Directors, and the Board has approved, that the audited financial statements be included in BD s Annual Report on Form 10-K for the fiscal year ended September 30, 2016, for filing with the Securities and Exchange Commission. AUDIT COMMITTEE Bertram L. Scott, Chair Basil L. Anderson Catherine M. Burzik Christopher Jones Willard J. Overlock, Jr. Rebecca W. Rimel 59

470 Table of Contents Proposal 3. ADVISORY VOTE TO APPROVE NAMED EXECUTIVE OFFICER COMPENSATION The Compensation Discussion and Analysis beginning on page 28 of this proxy statement describes BD s executive compensation program and the compensation decisions made with respect to our CEO and the other individuals named in the Summary Compensation Table on page 42 (who we refer to as the named executive officers ). Pursuant to Section 14A of the Securities Exchange Act of 1934, the Board of Directors is asking shareholders to cast a nonbinding advisory vote on the following resolution: RESOLVED, that the shareholders of Becton, Dickinson and Company ( BD ) approve the compensation of the BD executive officers named in the Summary Compensation Table, as disclosed in this proxy statement pursuant to the compensation disclosure rules of the Securities and Exchange Commission (which disclosure includes the Compensation Discussion and Analysis, the executive compensation tables and the related footnotes and narrative accompanying the tables). As we describe in the Compensation Discussion and Analysis, our executive compensation program embodies a pay-for-performance philosophy that supports BD s business strategy and aligns the interests of our executives with those of our shareholders. At the same time, we believe our program does not encourage excessive risk-taking by management. We believe that the compensation actions discussed in the Compensation Discussion and Analysis appropriately reflected the performance of our named executive officers and BD during the year. For these reasons, the Board is asking shareholders to support this proposal. While the advisory vote we are asking you to cast is non-binding, the Compensation Committee and the Board value the views of our shareholders and will take into account the outcome of the vote when considering our compensation program and future compensation decisions for our executive officers. THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSAL 3. Proposal 4. ADVISORY VOTE TO APPROVE THE FREQUENCY OF EXECUTIVE OFFICER COMPENSATION ADVISORY VOTES In Proposal 3, shareholders are being asked to cast a non-binding advisory vote with respect to the compensation of the BD executive officers named in the Summary Compensation Table. This advisory vote is typically referred to as a say-on-pay vote. In this Proposal 4, pursuant to Section 14A of the Securities Exchange Act of 1934, the Board of Directors is also asking shareholders to cast a non-binding advisory vote on how frequently say-on-pay votes should be held in the future. Shareholders will be able to cast their votes on whether to hold say-on-pay votes every one, two or three years. Alternatively, you may abstain from casting a vote. BD currently holds an advisory vote to approve named executive officer compensation on an annual basis. This advisory vote is not binding on the Board. The Board acknowledges that there are a number of points of view regarding the relative benefits of annual and less frequent say-on-pay votes. Accordingly, the Board intends to hold say-on-pay votes in the future in accordance with the alternative that receives the most shareholder support Proposal 5. SHAREHOLDER PROPOSAL REGARDING AN INDEPENDENT BOARD CHAIR Kenneth Steiner, 14 Stoner Avenue, 2M, Great Neck, NY, owner of not less than 500 shares of BD common stock, has given notice that he intends to present for action at the annual meeting the following stockholder proposal: 60

471 Table of Contents Proposal 5 Independent Board Chairman Shareholders request our Board of Directors to adopt as policy, and amend our governing documents as necessary, to require the Chair of the Board of Directors, whenever possible, to be an independent member of the Board. The Board would have the discretion to phase in this policy for the next CEO transition, implemented so it does not violate any existing agreement. If the Board determines that a Chair who was independent when selected is no longer independent, the Board shall select a new chair who satisfies the requirements of the policy within a reasonable amount of time. Compliance with this policy is waived if no independent director is available and willing to serve as Chair. This proposal requests that all the necessary steps be taken to accomplish the above. According to Institutional Shareholder Services 53% of the Standard & Poors 1,500 firms separate these 2 positions 2015 Board Practices, April 12, This proposal topic won 50%-plus support at 5 major U.S. companies in 2013 including 73%-support at Netflix. It is the responsibility of the Board of Directors to protect shareholders long-term interests by providing independent oversight of management. By setting agendas, priorities and procedures, the Chairman is critical in shaping the work of the Board. A board of directors is less likely to provide rigorous independent oversight of management if the Chairman is also the CEO, as is the case with our Company. Having a board chairman who is independent of management is a practice that will promote greater management accountability to shareholders and lead to a more objective evaluation of management. According to the Millstein Center for Corporate Governance and Performance (Yale School of Management), The independent chair curbs conflicts of interest, promotes oversight of risk, manages the relationship between the board and CEO, serves as a conduit for regular communication with shareowners, and is a logical next step in the development of an independent board. A number of institutional investors said that a strong, objective board leader can best provide the necessary oversight of management. Thus, the California Public Employees Retirement System s Global Principles of Accountable Corporate Governance recommends that a company s board should be chaired by an independent director, as does the Council of Institutional Investors. An additional reason to support an independent board chairman is that our company has not adopted proxy access that would allow a reasonable number of shareholders (for instance 50 shareholders) holding 3% of company stock to merely nominate a well-qualified director. An independent director serving as chairman can help ensure the functioning of an effective board. Please vote to enhance shareholder value: Please vote to enhance shareholder value: Independent Board Chairman Proposal 5 * * * BOARD OF DIRECTORS RESPONSE The Board of Directors recommends a vote AGAINST Proposal 5 for the following reasons. The Board has in-depth knowledge of BD s strategic goals, the opportunities and challenges facing the company, its culture, and the capabilities of senior management. As such, the Board is uniquely positioned to determine what the most effective Board leadership structure for BD is at any given time. Accordingly, rather 61

472 Table of Contents than adopting a strict policy with respect to this aspect of corporate governance, the Board believes it is important that it have the flexibility to determine who should serve in the roles of Chairman and CEO, and whether these roles should be combined. Our Corporate Governance Principles leave it to the Board to decide what Board leadership structure best serves BD and its shareholders. At the present time, the Board believes that the most effective leadership structure for BD is for our CEO to also serve as Chairman. This combined role allows one person to speak for and lead the company and Board, creates clear lines of authority and accountability, and provides the necessary leadership to execute BD s strategy. Mr. Forlenza s over 35 years of experience at BD and knowledge of its complex businesses, along with his extensive industry expertise, also make him uniquely qualified to lead the Board on the most important issues facing the company. At the same time, the Board recognizes the need to have effective, independent Board oversight of management. To that end, the independent directors appoint a Lead Director from among the independent directors whenever the Chairman is not independent. The Lead Director, among other things, chairs meetings of the non-management directors, has the authority to call meetings of the independent directors, serves as a liaison between the Chairman and the non-management directors, and approves meeting agendas and schedules and information sent to the Board. We believe this Lead Director role provides effective independent Board oversight of management and coordination between the Chairman and the rest of the Board. A full list of the Lead Director s authority and responsibilities can be found on page 19 of this proxy statement. Other aspects of BD s governance practices also enable effective independent oversight of management. The Board is composed of 13 members, all of whom, other than Mr. Forlenza, are independent. In addition, all members of the Board s operating committees are independent, which allows for independent oversight of such important matters as the integrity of BD s financial statements, legal compliance, risk management and executive compensation. In addition, the CEO s performance is evaluated on an annual basis by the independent directors. The independent members of the Board and each of its operating committees also meet regularly in executive session without management present, have unlimited access to other members of management and have the authority to retain independent outside advisors to the extent they deem appropriate. BD has also adopted proxy access, which allows long-term shareholders the opportunity to nominate directors to the Board. Based on the foregoing, we believe there are clear advantages to maintaining a flexible, tailored approach to determining BD s Board leadership structure, and that adopting a policy that requires an independent Chairman is not in the best interests of BD and its shareholders. ACCORDINGLY, THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST PROPOSAL 5. SHAREHOLDER PROPOSALS OR DIRECTOR NOMINATIONS FOR 2018 ANNUAL MEETING Any proposal that a shareholder wishes to submit for inclusion in BD s proxy materials for BD s 2018 Annual Meeting of Shareholders (the 2018 Annual Meeting ) pursuant to SEC Rule 14a-8 must be received by BD not later than August 17, A shareholder s notice of nomination of one or more director candidates to be included in BD s proxy statement and ballot pursuant to Article II. E of our Bylaws (a proxy access director nomination ) must be received by BD no earlier than July 18, 2017 and not later than August 17, Notice of any other business or director nomination (that is, other than a matter brought pursuant to SEC Rule 14a-8 or a proxy access director nomination) that a shareholder wishes to present for consideration at the 2018 Annual Meeting pursuant to Article II. D. of our By-Laws must be received by BD not earlier than September 26, 2017 and not later than October 26,

473 Table of Contents Any proposal or director nomination submitted by a shareholder in connection with the 2018 Annual Meeting must satisfy the applicable information and other requirements specified in BD s By-Laws, which are available on BD s website at corporate_governance/. All proposals and nominations, and all supporting materials required by our By-Laws, must be addressed to: Corporate Secretary, Becton, Dickinson and Company, 1 Becton Drive, Franklin Lakes, New Jersey BD will not consider any proposal or nomination that is not timely delivered or otherwise does not meet the By-law and SEC requirements for submitting the proposal or nomination.. 63

474 Table of Contents RECONCILIATION OF NON-GAAP FINANCIAL MEASURES Appendix A Presented below are reconciliations of non-gaap financial measures discussed in the Compensation Discussion and Analysis section of this proxy statement to the comparable GAAP financial measure. All figures below are rounded, and totals may not add due to rounding. PIP 2016 Revenues (amounts in millions of dollars) Reported revenues $ $12,483 Purchase accounting adjustments 14 Adjustment for favorable impact of acquisitions 11 Adjusted revenues $ $12,508 Adjustment for unbudgeted unfavorable foreign currency translation 151 Adjusted currency-neutral revenues $ $12, Adjusted EPS Reported EPS $ $ 4.49 Adjustment for transaction costs (pre-tax) 0.04 Adjustment for integration costs (pre-tax) 0.88 Adjustment for restructuring costs (pre-tax) 2.42 Purchase accounting adjustments (pre-tax) 2.42 Pension settlement charges (pre-tax)(1) 0.03 Income tax benefit of adjustments (1.70) $ $ 8.59 Adjustment for divestitures (adjustment assumes divested businesses had remained part of BD for the entire fiscal year) (0.20) Adjustment for unbudgeted unfavorable foreign currency translation 0.26 Adjusted currency-neutral EPS $ $ 8.65 (1) Represents pension settlement charges associated with lump sum benefit payments made from BD s U.S. supplemental pension plan, as such payments exceeded the service and interest components of the plan s pension cost. A-1

475 Table of Contents 2016 Free Cash Flow as Percentage of Sales (amounts in millions of dollars) Reported Net Cash Provided by Operating Activities $ $2,559 Capital expenditures (693) Capitalized software (25) Free Cash Flow $ $1,841 Transaction costs (pre-tax) 10 Integration costs charges (pre-tax) 192 Restructuring costs (pre-tax) 155 Income tax benefit of adjustments (105) Adjustment for impact of divestitures (6) Additional cash flow adjustments(1) (102) Adjustment for unbudgeted foreign currency translation 16 Adjusted Free Cash Flow $ $2,001 (1) Includes adjustments to eliminate favorable impact of certain working capital items and capital expenditures. Free cash flow as a % of sales (reported) ($1,841/$12,483) 14.7% Adjusted currency neutral Free Cash Flow as a % of Sales ($2,001/$12,659) 15.8% 2015 EPS Reported EPS $ $ 3.35 Adjustment for transaction costs (pre-tax) 0.29 Adjustment for integration costs (pre-tax) 0.46 Adjustment for restructuring costs (pre-tax) 1.31 Purchase accounting adjustments (pre-tax) 3.11 Financing costs (pre-tax) 0.52 Employee termination cost-related amounts (pre-tax)(1) (0.02) Litigation-related charge (pre-tax)(2) 0.06 Income tax benefit of special items (1.93) Dilutive share impact 0.02 EPS, as adjusted $ $ 7.16 (1) Represents an adjustment to the liability for employee termination costs recorded relative to workforce reduction actions taken in the fourth quarter of fiscal year (2) Represents a charge for plaintiff s attorneys fees associated with the unfavorable verdict in the antitrust and false advertising lawsuit filed against BD. A-2

476 Table of Contents Electronic Voting Instructions Available 24 hours a day, 7 days a week! Instead of mailing your proxy, you may choose one of the voting methods outlined below to vote your proxy. Vote by Internet Go to Or scan the QR code with your smartphone. Follow the steps outlined on the secure website. Vote by telephone Within the USA, US territories and Canada, call toll free VOTE (8683) on a touch tone telephone. There is No CHARGE to you for the call. Outside the USA, US territories and Canada, call on a touch tone telephone. Standard rates will apply. Using a black ink pen, mark your votes with an X as shown in this example. Please do not write outside the designated areas. VALIDATION DETAILS ARE LOCATED BELOW IN THE TITLE BAR. Voting instructions submitted by GSIP participants must be received by 12:00 p.m., EST, on January 18, Voting instructions submitted by all other BD plan participants must be received by 12:00 p.m., EST, on January 20, All proxies submitted by record holders through the Internet or telephone must be received by 11:00 a.m., EST, on January 24, q IF YOU DO NOT VOTE VIA THE INTERNET OR TELEPHONE, FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. q A Proposals The Board of Directors recommends a vote FOR all the nominees listed; FOR Proposals 2 and 3; and AGAINST Proposal 5. No recommendation is being made by the Board on Proposal Election of Directors: For Against Abstain For Against Abstain For Against Abstain 01 - Basil L. Anderson 06 - Christopher Jones 11 - Claire Pomeroy 02 - Catherine M. Burzik 07 - Marshall O. Larsen 12 - Rebecca W. Rimel 03 - R. Andrew Eckert 08 - Gary A. Mecklenburg 13 - Bertram L. Scott 04 - Vincent A. Forlenza 09 - James F. Orr 05 - Claire M. Fraser 10 - Willard J. Overlock, Jr Ratification of selection of independent registered public accounting firm. 3. Advisory vote to approve named executive officer compensation. For Against Abstain For Against Abstain 4. Advisory vote to approve the frequency of named executive officer compensation advisory votes. 5. Shareholder proposal regarding an independent Board Chair. 1 Year 2 Years 3 Years Abstain For Against Abstain