Hello and welcome to BD's Second Fiscal Quarter 2017 Earnings Call. At the request of BD, today's call is being recorded. It will be available for replay through May 9, 2017, on the Investor's page of the bd.com website or by phone at 800-585-8367 for domestic calls and area code 404-537-3406 for international calls using confirmation number 3838563. I would like to inform all parties that your lines have been placed in a listen-only mode until the question-and-answer segment. Beginning today's call is Ms. Monique Dolecki, Vice President of Investor Relations. Ms. Dolecki, you may begin. Monique N. Dolecki - Becton, Dickinson & Co.: Thank you, Christie. Good morning, everyone, and thank you for joining us to review our second fiscal quarter results. As we referenced in our press release, we are presenting a set of slides to accompany our remarks on this call. The presentation is posted on the Investor Relations page of our website at bd.com. During today's call, we will make forward-looking statements and it is possible that actual results could differ from our expectations. Factors that could cause such differences appear in our second fiscal quarter press release and in the MD&A sections of our recent SEC filings. We will also discuss some non-GAAP financial measures with respect to our performance. A reconciliation to GAAP measures can be found in the press release and its related financial schedules and in the slides. A copy of the release, including the financial schedules, is posted on the bd.com website. The second quarter comparable revenue growth rates and fiscal year 2017 comparable revenue guidance provided today excludes the revenues of divestitures, most notably, the Respiratory Solutions business that was divested in October of 2016, just after our 2016 fiscal year-end. The details of the purchase accounting and other smaller…

Thank you. The floor is now open for questions. In order to allow for broad participation, please limit your question to one. Thank you. Your first question is coming from David Lewis with Morgan Stanley. David Ryan Lewis - Morgan Stanley & Co. LLC: Good morning. Vincent A. Forlenza - Becton, Dickinson & Co.: Morning, David. David Ryan Lewis - Morgan Stanley & Co. LLC: Just a couple questions this morning, if I could; just first for Chris then maybe a follow-up for Vince. So, Chris, this accounting change for Pyxis transitioning from capital to operating type leases, we've talked about this for years. Maybe just kind of walk through, we know it's neutral to cash flow, but in terms of why do this now, the advantages it poses to the business, and the magnitude of a revenue or EPS hit for 2018 relative to 2017. And then I have a quick one for Vince. Thank you. Vincent A. Forlenza - Becton, Dickinson & Co.: Sure, Vince will start it out, David. Thanks a lot for the question. As you mentioned, this is something we've been working on for two years. And the first phase was improving the base software, the Pyxis ES, the installation process. And you can see in our results we've made great progress there. We're now moving into a different phase where we're adding new capability to Pyxis. And as we do that, we have to make sure that we're organized in the field to support this new business model. The last thing we want to be doing is putting new capability into a system and not bringing the customer along with us. This is a matter of customer satisfaction. And so, while there's more complexity, there's a tremendous ability to optimize Medication Management. Tom will…

Thank you. Your next question comes from Mike Weinstein of JPMorgan.

Thanks. Kind of clarify a couple financial items related to the accounting change. So, the $50 million to $60 million in revenues tied to the $0.20 to $0.25 in EPS, $50 million to $60 million of lost revenues isn't $0.20 to $0.25. So, is there some additional costs to doing this that we should understand? And then, second, if I just focus on slide 17, which is the fiscal 2017 guidance change. The only item that's changing is the tax rate moving down 100 basis points. Is there an offset that we're missing that EPS doesn't move up for the year with the tax rate moving down 100 bps? Thanks. Christopher R. Reidy - Becton, Dickinson & Co.: Sure. So, just a little bit of color on what creates the revenue drag. It's really, over the next six months, we're going to be recognizing just this year's amount of revenue, whereas in prior years, we would have done a full five years of revenue as you book the contract. The impact of that is about $50 million to $60 million. That goes entirely down to the bottom line. There's no margin impact, or whatever. It flows directly through. So, the $50 million to $60 million is $0.20 to $0.25 on the bottom line that we're covering. Then, as you think about the change in the tax rate, as one of the slides showed, I think it's slide 16, that change down is one of the ways that will offset some of that $0.25. I think that's like an $0.08 to $0.09 benefit by moving down to the 16% to 18% kind of range. So, we're overcoming the remainder of that $0.20 to $0.25 operationally. So, we just want to be clear that we're jumping over the accounting change in 2018 as well, partly because of the six months this year versus the six months next year. So, we set the base and go from there.

And so, what is it you have to go to your customers for existing installed systems and do? So, if you have an installed system, you've already recognized the revenue. What is it you're going to those existing customers and doing? Vincent A. Forlenza - Becton, Dickinson & Co.: Yeah, Tom will tell you. Thomas Polen - Becton, Dickinson & Co.: Yeah, again, (36:38) this is Tom. We literally just communicate via a letter and they have the opportunity to opt out or automatically are opted in. There's nothing specifically that has to happen at the customer's site. And then, of course, as I described before, concurrently we are deploying, as part of our business model transformation, all the other parts of that transformation including additional resources in the field to provide consultative services to help optimize the use of the software with the platform and generate outcomes. And so those things are happening concurrently. But there's nothing hardware change or from a service implementation that has to occur. Christopher R. Reidy - Becton, Dickinson & Co.: And those letters went out earlier this year. Thomas Polen - Becton, Dickinson & Co.: Correct.

And what about, Tom, the compensation for the reps. Reps were getting paid on the installs before. How does their compensation change? Thomas Polen - Becton, Dickinson & Co.: No changes this fiscal year, and obviously, we'll be evaluating how to best continue to align our sales force compensation with creating customer value as we go into FY 2018.

Okay. Perfect. Can I ask one? Yeah, Vince, I want to ask one last, just a Bard question. Vincent A. Forlenza - Becton, Dickinson & Co.: Sure.

One of the kind of questions that came up a lot last week from people was just the difference in the pace of product iteration at Bard versus other companies, include Becton, Dickinson. And as much as it and people asking, how do you maintain that model at Bard with this kind of very accelerated rate of what I would call modest iteration at Bard over the last several years that they've gotten this model down correct and that's been successful for them? How do you keep that – as you pull the company into Becton, Dickinson, how do you maintain that model and that culture? Vincent A. Forlenza - Becton, Dickinson & Co.: Yeah, Mike. Sure. I think that as we traveled around, we got a strong sense of that. And by setting this up as a separate segment, number one, and number two, keeping that system in place, and we've made that very clear. In fact, we're interested in taking that system to other BD businesses where it could apply. We were excited because, as we got together with their teams, as I mentioned in my remarks, they were already talking about things that we could do together. And so, we're going to resource it. We're not going after any synergies in terms of R&D and that – so, we'll maintain that system, is basically what I'm going to tell you

Understood. Thanks, Vince. Vincent A. Forlenza - Becton, Dickinson & Co.: Yeah.

Thank you. Your next question comes from Larry Keusch of Raymond James. Lawrence Keusch - Raymond James & Associates, Inc.: Thanks. Good morning. Vincent A. Forlenza - Becton, Dickinson & Co.: Morning. Lawrence Keusch - Raymond James & Associates, Inc.: So, I just want to circle back and make sure I'm understanding some of the mechanics here on the change here in the dispensing strategy. Vincent A. Forlenza - Becton, Dickinson & Co.: Sure. Lawrence Keusch - Raymond James & Associates, Inc.: So, maybe, Tom, if you could just touch on this. So, if you're an existing customer, as you indicated, you get a letter suggesting that you're moving to this new business model. They've already paid upfront for their installation and they've got some modest back-end stuff that I think comes through. So, it sounds like they don't have to do anything. So, again, is this really in terms of the accounting associated with the new installations? Christopher R. Reidy - Becton, Dickinson & Co.: Larry, this is Chris. Just to be clear, the way the contracts currently work is they have not paid. They pay – let's say, you're doing a five-year contract, 60 months. They're going to pay a little bit every month for 60 months. The accounting was that we recognized revenue upfront for the entire five years under capital lease accounting. Now, what we'll do is we'll just match the revenue growth – the revenue that we book to the actual collection of the cash. So, it matches the cash. It's actually a very positive way of accounting from a recurring revenue standpoint because once you book – once you get the contracts that now you've got 60 months of revenue that's just basically contractual as opposed to the lumpiness of the capital lease model…

Thank you. Your next question is from Derik de Bruin of Bank of America Merrill Lynch.

Hi. Good morning. A couple of questions. So, can you talk a little more about the Bioscience issues with the reagents this quarter? Just a little bit more clarity on that. And also, how do you think about sort of like the implications for the stock-based accounting tax changes for the rest of the year? I mean, is there any good – I know it's going to be variable from quarter-to-quarter, even a full-year basis, but is there any way to sort of help figure that out, (42:48) a little better? Christopher R. Reidy - Becton, Dickinson & Co.: I can take the last part of that first and then we'll move to damaged inventory.

Yeah. Christopher R. Reidy - Becton, Dickinson & Co.: So, in calculating this at the beginning of the year, we got a little more benefit in this quarter than we had anticipated. That really shouldn't affect the rest of the year. Now clearly, stock-based compensation is kind of a mark-to-market kind of thing going forward, depending on the stock price. So, it adds a little volatility for every company, but I think we're very comfortable with the guidance that we have for the rest of the year, and that 16% to 18%, which takes into consideration the favorability that we saw in the second quarter. Okay, and Alberto? Alberto Mas - Becton, Dickinson & Co.: And in terms of the – we did have some damage to inventory. The damage was caused when we relocated Resurge reagents to new a warehouse as part of a network optimization. And we conducted a full investigation and determined that we needed to initiate a field action and write-off the affected inventory. Christopher R. Reidy - Becton, Dickinson & Co.: So, it was exposed to some conditions that were outside of what normally it should be exposed to. Anyway, you'll be back... Alberto Mas - Becton, Dickinson & Co.: And we'll be back – we expect to restore supply – complete supply by... Christopher R. Reidy - Becton, Dickinson & Co.: This quarter. Alberto Mas - Becton, Dickinson & Co.: ...during the quarter; in Q3. Christopher R. Reidy - Becton, Dickinson & Co.: Yeah.

And did I catch that you that that was a $0.06 hit, you said, on the quarter? Alberto Mas - Becton, Dickinson & Co.: $0.06. Christopher R. Reidy - Becton, Dickinson & Co.: Yeah. It's a $0.06 impact to the quarter.

Great. Thank you very much.

Thank you. Your next question comes from Brandon Couillard with Jefferies.

Thanks. Good morning. Just curious if you could quantify the flu impact in the quarter, and as well on the Biosciences side, the impact to revenues from that inventory disruption. Vincent A. Forlenza - Becton, Dickinson & Co.: Okay. Christopher R. Reidy - Becton, Dickinson & Co.: So, the first is about 30 bps of... Vincent A. Forlenza - Becton, Dickinson & Co.: I'm sorry, 30 bps of revenue growth in the quarter from the flu. And do we have a revenue impact or we have to do some work? Do you have that? Alberto Mas - Becton, Dickinson & Co.: Yes. The revenue impact from the reagents is $6 million in revenue for the quarter. Vincent A. Forlenza - Becton, Dickinson & Co.: Thanks, Alberto.

Thanks.

Thank you. Your next question is from Doug Schenkel of Cowen. Doug Schenkel - Cowen & Co. LLC: Good morning and thank you for taking the questions. Actually, just quick follow-ups on that last question. Was that 30 bps for flu across the entire business? And what does that $6 million impact translate into in terms of gross margin impact across the business? Christopher R. Reidy - Becton, Dickinson & Co.: So, the first is right, that's 30 bps across the business in the quarter, so at the BD level. And at the second, it's about 40 bps or so of gross margin headwind from that impact on the damaged inventory. Doug Schenkel - Cowen & Co. LLC: Okay. Christopher R. Reidy - Becton, Dickinson & Co.: And it's more than just the $6 million, it's the write-off as well. Doug Schenkel - Cowen & Co. LLC: Okay. Got it. That's very helpful. And then, I guess, a broader follow-up on Biosciences. Recognizing the impact of the fulfillment delay that we've talked about a bit here, it did still look like Biosciences came up a little bit light of expectations. I'm just wondering if you saw anything that surprised you during the quarter more broadly, either in the pharmaceutical end market or in the academic end market. The latter I mentioned because of NIH funding uncertainty in the U.S. and because some of your peers have commented that European academic was a bit weaker relative to expectations. And, you've also had some tender challenges within Biosciences, I think, related to CD4 in Africa. Was that still an issue in the quarter and any insight on when that will headwind will subside? Thank you. Alberto Mas - Becton, Dickinson & Co.: No, we don't see any underlying change in the market or basic change in the market. It's actually pretty much as we expected and no major changes. We don't see any changing behaviors from our customers because of the NIH budgeting. In fact, obviously, as has happened during the weekend, if anything, the NIH budget was increased by $2 billion. So, that was actually good news. And in terms of the CD4, that has stabilized. We're seeing about half the impact that we saw last year and that's beginning to stabilize. We'll see some erosion of that over time, but at a much more paced approach. The impact on the quarter, if anything, was mostly a timing of instrumentation in Asia and Europe but we expect – we have visibility and we expect that to be regained in the second half. Vincent A. Forlenza - Becton, Dickinson & Co.: Yeah. If you had normalized for that timing issue and a little bit of the impact of the fulfillment delay, it should be in the 4% range of growth. Doug Schenkel - Cowen & Co. LLC: Okay. Super helpful, guys. Thank you.

Thank you. Your next question is from Vijay Kumar of Evercore ISI.

Hey, guys. Thanks for taking my question. And maybe, Chris, a couple of ones for you and I had one follow-up for Vince. So, just maybe on the gross margins, right, so I think you mentioned 40 bps on the reagent impact. It looks like margins missed consensus by about 100 basis points. So, I'm wondering, one, did the accounting rule adoption have any impact in the quarter, or did Alaris pump, I know you had some charges for the center recall, did that have any impact in the Q? Christopher R. Reidy - Becton, Dickinson & Co.: Yeah, no, not at all. There's no impact from the accounting change until next quarter. But what you're seeing is the impact of FX. So, most analysts, I think, modeled the impact of FX to gross margins ratably over the year. Half of the impact of the FX hits you in the second quarter or hits us in the second quarter. And so, that was the difference that flowed through to the gross margin.

That was helpful, Chris. And then, on the EPS side, it's interesting. So, the accounting rule, was a $0.20, $0.25 hit on the EPS, but we maintain the EPS guidance, right. And the math I'm doing here, you get about $0.12 to $0.13 benefit from the lower tax rate, and revenues coming in better as maybe another $0.05 to $0.06. It implies an underlying benefit of $0.05 to $0.06. Where is that coming from? Is that better margin pull-through in the back half? Christopher R. Reidy - Becton, Dickinson & Co.: Yeah. Thanks. So, you did the math pretty correctly. I think the tax impact is probably a little lighter than what you said in terms of coming down. But it really is just the performance of the business in the first half of the year that we see continuing. I think when you look at 5.6% revenue growth year-to-date and the kind of EPS growth that we see year-to-date, as well, up 16% or thereabouts, that is flowing through and will flow through to the second half of the year, enabling us to offset between that and the tax rate coming down that $0.20 to $0.25. So, we feel really good about that.

Got you. And then one quick one for Vince or maybe Tom. A lot of questions here on Bard acquisition and maybe potential revenue synergies. I guess, maybe can you walk us through on the kind of due diligence you guys did on Bard and why you felt so comfortable that that is the right asset? Thank you. Vincent A. Forlenza - Becton, Dickinson & Co.: Yeah, Tom can walk you through that. And, as you know from our previous conversation, we started way back in June on some really deep diligence across the entire product portfolio. But, Tom, why don't you give them some color on that? Thomas Polen - Becton, Dickinson & Co.: Yeah. Hi, Vijay. Good morning, this is Tom. I think as we discussed, obviously, our diligence, like with the CareFusion acquisition, included not only deep dives into each of the markets but also that includes primary research with end users and customers as well as those who are innovating in the space. And so, we performed that diligence across actually several hundred end user customers to understand the opportunity, not only of the base business momentum, but also the opportunity for new innovations and the dynamics of those innovations versus competition and the likelihood of – and the trajectory of those being successful. And obviously, as a result of that analysis, we became very comfortable. Obviously, some of those areas we knew very well already because they're close to home, like the vascular access space, PICCs and midlines, urology also not that distant, and then other areas like DCBs, which are newer to us. You can imagine, we even took additional time and did even more thorough end-user research and evaluations to get comfortable with. And, of course, then we also had exposure to other information during the diligence process. So, yeah, we're excited and see opportunities certainly on revenue synergies as we move forward and I think as we've noted, as Chris and Vince have identified, we think that they'll be sooner than what we saw with CareFusion, just given the very strong momentum of Bard in registering products internationally over the last couple of years. Vincent A. Forlenza - Becton, Dickinson & Co.: Yeah. So, as we did our own due diligence, and we were seeing 500 registrations and a really strong pipeline. So, at the end of the day, we were even more comfortable when we finished up. But thanks for your question.

Thank you. Your next question comes from Bill Quirk with Piper Jaffray. William R. Quirk - Piper Jaffray & Co.: Great. Thanks. Good morning, everybody Vincent A. Forlenza - Becton, Dickinson & Co.: Good morning. Christopher R. Reidy - Becton, Dickinson & Co.: Good morning. William R. Quirk - Piper Jaffray & Co.: So, I guess, last question, a little segue way from there on the CareFusion, product registration o-U.S.... Vincent A. Forlenza - Becton, Dickinson & Co.: Yeah. William R. Quirk - Piper Jaffray & Co.: ...can you give us an update there? Thank you. Vincent A. Forlenza - Becton, Dickinson & Co.: Sure. Happy to do that. Tom will do that. Thomas Polen - Becton, Dickinson & Co.: Hey, Bill. This is Tom. Good morning. So, we're seeing great progress across our product registration efforts and we're continuing to see actually revenue synergies this year. I think you can see that in both our MMS and MPS performance year-to-date. We're on track with about 190 active or in-process product registrations in new markets. And that's towards an ultimate target of a little over 200 registrations. So, we're making really good progress there and we're starting to see the impacts of that come through on the revenue side. Christopher R. Reidy - Becton, Dickinson & Co.: Okay. Thanks very much.

Thank you. Your next question comes from Richard Newitter with Leerink Partners.

Hi, thanks for taking the question. Wanted to follow-up on the capital operating lease situation. I'm just wondering, does this allow you to innovate and then to change the model through which you, kind of, bring additional software updates to Pyxis and to sell that to the customer? Is there any change there, and should we expect any, kind of, more iterative kind of innovation on that front? Vincent A. Forlenza - Becton, Dickinson & Co.: Yeah, the answer to that is yes. This is foundational that allows us to do that over time. Absolutely.

Thank you. Your next question comes from Brian Weinstein with William Blair. Brian David Weinstein - William Blair & Co. LLC: Hey, guys, good morning. Question for you on Microbiology. Can you talk about what was the Core Microbiology growth in the quarter? And also, bioMérieux put up some very strong core micro growth as well. What's going on in the underlying microbiology markets that we're seeing nice acceleration from both companies lately? Thanks. Alberto Mas - Becton, Dickinson & Co.: So, we're carrying a lot of momentum on Core Microbiology, primarily on our vac tech (54:44) business where we think we have a very strong value proposition in terms of recovery rates and time to detection. Kiestra continues to be a growth – a significant growth factor for us, which also allows us to provide complete solutions to customers. And outside the Core Microbiology, we talked about the M50 from an ID/AST perspective. The launch was very successful, very well received, especially in emerging markets where it's the ideal throughput and size for that. And finally, BD MAX is really doing well for us, especially as we see the momentum for enterics gaining ground.

Thank you. Our final question is coming from Matt Taylor with Barclays.

Hi. This is Ian Mahmud on for Matt. Good morning. Can you hear me okay? Christopher R. Reidy - Becton, Dickinson & Co.: Sure. Yes, we can. Good morning.

Okay, great. Great. Good morning. So, on the acquisition of Bard, you haven't – or you didn't include tax synergies in your synergy estimates, but Bard does have a meaningfully higher tax rate. How quickly do you think you could bring that down? Christopher R. Reidy - Becton, Dickinson & Co.: So, we – just to give you kind of a background on that, their tax rate is about 21.5% to 22% and ours is now the 16% to 18%. On a combined basis, we said 18% to 20%. That takes into account both those tax rates as well as some of the shield – the tax shield from the additional debt that we're offering, plus some other puts and takes. So, there's a bunch of things that go in there that kind of net out so that it's their rate plus our rate. Having said that, we did say that we do see the potential for tax synergies going forward beyond that. Obviously, we've got to get the two companies together, but – and really, there's a lot of blocking and tackling that goes on in looking at legal entities in their structure and our structure. But based on the due diligence that we did, we're very comfortable that some of the structures that we have in place for a long time we'll be able to take advantage of, as well as some of the things that they have in place we should be able to leverage as well. So, on a combined basis, we think we will be seeing tax synergies above and beyond what we've put in the model. And we probably need – the rest of this year, we'll start to have some conversations, but really, once we close, which is very similar to what happened on the CareFusion transaction, once we close, we can really get our arms around that and get all of our tax advisors looking at the various puts and takes and then more to come. So, I would say sometime right after we close, which would be the fall of this year, so about a few months after that we'll have a better understanding of that. And you can look to us to start quantifying that at that point.

Thank you. I will now turn the floor back over to Vince Forlenza for any closing remarks. Vincent A. Forlenza - Becton, Dickinson & Co.: Thank you, operator, and thank you, all, for participating on the call this morning. We look forward to updating you on the rest of the year. We feel really good about the momentum as we go into the second half of the year, and we look forward to updating you on the progress with C. R. Bard. And together, as we put this together, we do believe we're uniquely positioned to deliver innovative healthcare solutions that improve both the process of care and the treatment of disease and that's going to be unique in this industry. Thanks very, very much. Christopher R. Reidy - Becton, Dickinson & Co.: Thanks, everyone.

Thank you. This does conclude today's teleconference. Please disconnect your lines at this time and have a wonderful day.