Hello and welcome to BD's Second Fiscal Quarter 2016 Earnings Call. At the request of BD, today's call is being recorded. It will be available for replay through May 12, 2016, on the Investors 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 83710101. 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 section 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 our press release and its related financial schedules and in the slides. A copy of the release including the financial schedule is posted on the bd.com website. As a reminder, until we annualize the acquisition of CareFusion in the third quarter of fiscal year 2016, we will speak to our revenue results on a comparable currency-neutral basis, which includes BD and CareFusion in the current and prior year periods. We believe this provides additional visibility into…

Thank you. The floor is now open for questions Thank you. Your first question is coming from David Lewis of Morgan Stanley. David R. Lewis - Morgan Stanley & Co. LLC: Good morning. Vincent A. Forlenza - Becton, Dickinson & Co.: Morning, David. David R. Lewis - Morgan Stanley & Co. LLC: Vince, two questions for you, one for you and one for Chris. I guess, the first one is the theme that you're showing the last several quarters is one that the whole device industry is showing this quarter, which is this polarization between better U.S. performance and slightly softer ex-U.S. performance, specifically emerging markets. Talk to us about how much of this, in your mind, is the quarter or just the trend that BD has been seeing for several quarters. And what's driving that strength in the U.S. in your opinion? Vincent A. Forlenza - Becton, Dickinson & Co.: Well, I think there's a couple of things driving the strength in the U.S. Number one is, I think you have seen a stabilization in the U.S. marketplace in terms of healthcare and I think there's a benefit out there from the people that do have healthcare coverage, especially the expansion of Medicaid. But the other thing that you are seeing is that our businesses are performing quite well. You heard us talk about in the Biosciences business, the launch of those new products. We have a whole series of new products coming out, and I mentioned and specifically the high-parameter work that's going on. So yeah, that showed up in this quarter right now, but that's going to continue as we move through the year. You also saw good performance in Diagnostics, because we're getting some traction, blood culture and Kiestra, that is moving forward, Kiestra moving forward…

Thank you. Your next question is coming from Mike Weinstein of JPMorgan.

Thank you, and congratulations on the quarter. Let me start if we went back a quarter and the Street was concerned about the performance in the fiscal first quarter, revenues grew 1.8% organic and the Street was worried just about the ability to see the acceleration. Now, we're three months later, and you grew 5.3% organic this quarter, so essentially, what you said would happen happened. Can you just talk a little bit as you go into the back half of the year? I just want to make sure I understand the commentary on the cadence of the quarters. I know the comp in some different respects in the fourth quarter is easier than the third quarter. I just want to understand just the commentary relative to third quarter being a bit below the full year guidance and the fourth quarter being materially above. Thanks. Vincent A. Forlenza - Becton, Dickinson & Co.: Yeah, Mike. I'll have Chris walk you through that, because there's some complications here. You got to go back to last year to understand what was happening, but Chris will walk you through.

Yeah. Christopher R. Reidy - Becton, Dickinson & Co.: Yeah, so the best way to – the key to understanding the second half growth trajectory is really to focus on the absolute dollars of revenue that we're achieving this year versus last year. We're actually up against a tough comparison in the third quarter, because in terms of absolute dollars, that was our highest quarter last year. So you got to really look at those absolute dollars. Looking at growth rates is a little misleading, because the growth rate last year was negative in CareFusion in the third quarter, but that was more about the comparative prior year, but the absolute dollars are the grow over. And then, as you model out the year, based on the guidance that we just gave you in terms of growth rates for the third quarter and fourth quarter, you'll see steadily improving sequential revenue dollars for all four quarters this year. So we really feel good about the trajectory, particularly on a sequential basis this year. It's all about the compared to last year revenue dollars. Vincent A. Forlenza - Becton, Dickinson & Co.: Mike, if you think about it, there were two events at CareFusion, two different compensation events that caused the pattern to be highly fluctuate with the first quarter being very high, the third quarter being very high, and then we had the flu. So you got to go back and look at those absolute numbers as Chris was saying. And then, you'll see that our growth this year, actually, as we look at the whole year, is actually quite smooth, but the growth rates jump around because of that. Thanks for your question, Mike.

Thank you. Your next question is from David Roman of Goldman Sachs. David Harrison Roman - Goldman Sachs & Co.: Thank you, and good morning, everybody. Vincent A. Forlenza - Becton, Dickinson & Co.: Good morning, David. David Harrison Roman - Goldman Sachs & Co.: Vincent, I wanted to follow up on your commentary regarding some of the registrations that you're getting outside of the U.S. I guess, firstly, could you maybe give us a little bit more flavor on what those products are, which businesses those fit in, and then, how we should start to evaluate the impact on a go-forward basis? And then, for Chris, can you maybe help us understand why, given the change in currency, there's not a positive impact on the margin profile? Looks like you've just flowed the dollars right down to EPS at the corporate margin guidance that you previously provided, so why wouldn't we see an uplift in profitability associated with the change in rates? Vincent A. Forlenza - Becton, Dickinson & Co.: Sure. So let me ask Tom to comment first. I mean we'll give you more transparency in terms of the sales and sales impact next year, but why don't you talk to the products that are getting registered and which geographies we're talking about? Thomas Polen - Becton, Dickinson & Co.: Sure. Hi, David. This is Tom. So as Vince mentioned before, we registered more than 50 products over 20 countries, got about 25 additional registrations submitted and awaiting approval. Essentially, all of those products fall within either MPS or MMS, the two businesses that came from legacy CareFusion, and the majority of those products are actually within MPS, so think disposables. And this is right in line with what we had talked about over the last several quarters…

Thank you. Your next question comes from Larry Keusch of Raymond James. Lawrence S. Keusch - Raymond James & Associates, Inc.: Hi, good morning. I guess, for Tom, would you mind talking a little bit about infusion pump sort of the growth, the competitive landscape, kind of where you think you're going for the year, and then, also as alluded to in the prepared comments, it sounds like the installation process for MedStation ES is improving. I know there've been a number of software tweaks for that ES system over the past couple of years, and just also want to understand if you're kind of getting to a point where that system is now stable. Thomas Polen - Becton, Dickinson & Co.: Yeah. Sure, Larry. This is Tom. So let me start off with the good Pyxis question, and then, I'll address infusion pumps. So we are actually quite pleased with the progress that we're making on Pyxis. We actually just released another new version of the software, which we think really makes some very significant progress, and actually, addresses – will make a big step forward in terms of installation efficiency. So as we've shared in the past, we were really focused on improving the installation process. We've shared that there was a quite large backlog at the time of the acquisition. And to really address that backlog, we need to improve the installation efficiency process and we've been working on that applying some of our lean expertise, as well as making some adjustments in the software that would automate a lot of that and simplify the workload in the field. So we're seeing a lot of those efforts come to fruition. We did have very strong placements in Q2 that was part of the driver of MMS growth.…

Thank you. Your next question is from Bill Quirk of Piper Jaffray. William R. Quirk - Piper Jaffray & Co: Great. Thanks. Vincent A. Forlenza - Becton, Dickinson & Co.: Good morning, Bill. William R. Quirk - Piper Jaffray & Co: Good morning, everyone. Vincent A. Forlenza - Becton, Dickinson & Co.: Good morning. William R. Quirk - Piper Jaffray & Co: Vince, you and the team have done a really nice job in terms of executing on some of the identified cost synergy opportunities with CareFusion. Can you talk a little bit about the pace of identifying new opportunities, either in terms of additional cost synergies or on the revenue side, and obviously, you alluded to some of the products and registration? And then, secondly, just on China, looks like based on the numbers we're going to need about some sort of teens acceleration, easier comps, but can you just elaborate on that? Thanks. Vincent A. Forlenza - Becton, Dickinson & Co.: Yeah, okay. So I'll ask Chris to talk about the cost synergies. Christopher R. Reidy - Becton, Dickinson & Co.: Sure. So just a reminder that we raise the cost synergies fairly... (38:14-38:50)

Ladies and gentlemen, please standby, the conference will resume momentarily. Vincent A. Forlenza - Becton, Dickinson & Co.: Is anybody able to hear us?

Yes, we can hear you now. Vincent A. Forlenza - Becton, Dickinson & Co.: Okay. Go ahead. Christopher R. Reidy - Becton, Dickinson & Co.: Okay. So let me start again to that question. So in terms of cost synergies, we did, I would remind you, improve cost synergies fairly recently up to the $325 million to $350 million and that was identification of some new synergies from our recent or our original model. I would also remind you that we increased the overall synergies from the standpoint of the tax rate improvements that we saw that we originally didn't contemplate, and that's another 3% accretion that we had mentioned. Really, when you think about the synergies, we get initial synergies of duplicate public company costs, and then, you move into the integration of systems and infrastructure, and we've gotten good traction on that and that led to the last increase and then, towards the end are the more difficult synergies to get, which are the distribution centers and manufacturing plants, and we actually saw some good initial improvements in that area or traction in that area that led to our last increase. So we really feel great about what we're driving. All in, all in, it's significantly higher than our original expectations, particularly when you add the tax synergy. You see this year the EPS quarter-over-quarter was over 44%, I think, is an indication of that. So we really feel good about our ability to drive those synergies and executing on those synergies. Vincent A. Forlenza - Becton, Dickinson & Co.: And then, for China, growth is going to be driven by the Medical side of the company. And there are multiple businesses on the Medical side that are doing well in China. And then, in addition, there were several million dollars of inventory that came out of the chain last year. So there is a favorable comparison in the fourth quarter. But Tom, do you want to comment on any of the product lines? Thomas Polen - Becton, Dickinson & Co.: I think as you said, we see the consumables across the board are holding in strong. And we do have, again, while it may not be overly material for the company, China is one of the lead markets in which we launched some of those new products from CareFusion into them. We're seeing some good traction in some of those items, particularly as we think about connectors and some of the oncology products coming out from CareFusion. Vincent A. Forlenza - Becton, Dickinson & Co.: And we don't talk about it much, but we also have launched flush in China so that's another piece that has been growing quite nicely for us.

And thank you. Your next question is from Rick Wise with Stifel. Rick Wise - Stifel, Nicolaus & Co., Inc.: Good morning, Vince. Hi, Chris. Christopher R. Reidy - Becton, Dickinson & Co.: Hi, Rick. Rick Wise - Stifel, Nicolaus & Co., Inc.: I guess, I'll ask sort of a two-part question. Maybe first big picture, Vince, maybe you can talk a little bit about your latest thoughts, evolving thoughts on capital deployment. You're through the post CareFusion portfolio review, maybe what's next and what you're thinking about? And maybe just one for Chris, on operating margin expansion, you've addressed a little bit, but this acceleration in operating margin expansion can't go on forever. How do we think about the – not for guidance, but how do we think about fiscal 2017 and beyond, what's possible in terms of further operating margin expansion, just directionally? Thanks. Vincent A. Forlenza - Becton, Dickinson & Co.: Okay. That's fine. I'll start out and you guys get really good at your single questions. So the two-part is really fantastic. Let me just say from a capital deployment standpoint, of course, short run, we're still working to get down to the three times leverage and we're making excellent progress there. And so, in the short run, we still have the flexibility to do plug-in acquisitions. And then, as we have been stating, we're going to be really strategy-driven, and we challenge both segments to look at their strategies and as we look at our ability to provide solutions to the marketplace and have a broader impact, that's what's going to drive our strategy. It'll be a mix of both internal development and continued looking on the upside and we'll be very balanced there. But ultimately, it's about strategic impact plus value creation for shareholders…

Thank you. Your next question is coming from Derik De Bruin of Bank of America.

Hi. Good morning. Vincent A. Forlenza - Becton, Dickinson & Co.: Good morning.

Hey, another long single question, but you've done a number of portfolio reviews lately with Respiratory and the Simplist portfolio. Could you sort of talk about – this is a 2017 organic revenue growth question and sort of like what the impact of all these moving parts are on it, and do you still feel good about a 4% to 5% longer term organic revenue growth rate for the company? Vincent A. Forlenza - Becton, Dickinson & Co.: Yeah, when we did the deal and we discussed what our revenue aspirations were, we said legacy BD was growing at around 5% and that CareFusion was about 3.5%, and our goal was to bring the entire company up to about 5%. I think we're making excellent progress. I think you see the performance of the CareFusion businesses is quite strong. I think that the portfolio moves that we have made have been the right ones. So that still is our goal and I think we're making excellent progress.

Thank you. Your next question comes from Jon Groberg of UBS. Vincent A. Forlenza - Becton, Dickinson & Co.: Hi, Jon.

Good morning. Congratulations – can you hear me, (46:23) congratulations on a good quarter. So can I ask you just a timing question on a few items? I guess, one, the infusion set, do you have kind of a specific launch for that, because this is the diabetes infusion set, and then, on the BD Simplist in the Respiratory, I guess, when exactly do you expect all those to close, and if you have any updated views on the EPS and that kind of impact from an EPS (46:51) standpoint for those initiatives? Thanks. Vincent A. Forlenza - Becton, Dickinson & Co.: Yeah, so Tom can talk to those things, but Respiratory, I think we're expecting to close at the end of this fiscal year. And then... Thomas Polen - Becton, Dickinson & Co.: Simplist is closed. Vincent A. Forlenza - Becton, Dickinson & Co.: Simplist is done. Thomas Polen - Becton, Dickinson & Co.: Simplist is closed. And as we shared in the past, on Simplist, we don't expect any impact on sales from that at all. It was small and the other opportunities will make up for that. In terms of the infusion set launch, as Vince mentioned, we expect broad commercialization in early FY 2017. We are tracking towards by the end of this fiscal year, within this fiscal year, we will be doing a limited launch and we talked about this in the past in which Medtronic will start providing the product to a set group of patients so that they can really understand the user insight at another level before they do the full-scale launch. And so, we're moving forward preparing to ship out the first product for that limited scale launch, in the back half of this fiscal year. That will occur. And then, it would open up for a full commercial launch we expect at the start of FY 2017. Christopher R. Reidy - Becton, Dickinson & Co.: And this is Chris. The only other thing I'd add is, as we said with the Respiratory announcement, the impact is 2017. Because it closes at the end of our fiscal year, there's no impact to 2016. But for 2017, it's $0.10 to $0.14. Vincent A. Forlenza - Becton, Dickinson & Co.: Okay. Thanks very much.

Thank you. Your next question comes from Brian Weinstein with William Blair. Brian D. Weinstein - William Blair & Co. LLC: Hey, guys. Good morning. Thanks for taking the question. On R&D, it did step down sequentially. You said that, obviously, you're going to get the benefit of the device tax and reinvest that. But can you talk a little bit more specifically about the priorities within R&D? Is it about accelerating kind of current projects? Is it really putting that money to work at new projects? And any specific areas of focus that you would like to focus on with those dollars? Thanks. Vincent A. Forlenza - Becton, Dickinson & Co.: Yeah, sure, Brian, and thanks for the question. First off, in this quarter, there was some timing in the R&D spending that we knew was going to happen. And of course, that timing, that money is going to get spent. And I'm talking before the medical device tax in the back half of the year. It's timing of things like clinical trials and whatnot. But in addition, the money that is being spent on the medical device tax is being spent in both segments, and it is a combination of some new things that we are doing. But mostly, it's current strategies where we are accelerating those strategies, where we had platforms where we could push them faster, and part of that which is a bit new for us is moving to informatics side of things quicker. So you can think of major platforms going faster, and then, informatics piece on top of that, both sides of the company.

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

Hi. Thanks for taking the question. This is kind of like an innings question. What innings are you in for two parts of your business that we frequently talk about? For Pyxis, do you have – just can you update us on where you are with the kind of the opportunity there to kind of get upgrades for that product cycle? And then the second innings question, just the – in your cytology business, your liquid-based Pap testing, can you just tell us what the trend is there? Are we kind of through the interval expansion impact mostly at this point? And just comment on any pricing or volume trends for that business. Thank you. Vincent A. Forlenza - Becton, Dickinson & Co.: Sure. Let's start with the Pap first, and Linda can talk to you about that. Linda Tharby - Becton, Dickinson & Co.: Yeah. So good morning. So if you look at the liquid cytology business in the U.S., as you mentioned, we're really starting to see a flattening of that business. So the interval testing, we think, we're mostly through. Outside the U.S., we're actually seeing strong double-digit performance. And then the entire platform, both in the U.S. and ex-U.S., is being helped by the total automation we're doing across both our focal point and our Totalys system, so complete control of the sample from collection through the result. So that's driving a lot of growth both in the U.S. and ex-U.S. for us. Vincent A. Forlenza - Becton, Dickinson & Co.: Okay. Thanks, Linda. Okay. Thomas Polen - Becton, Dickinson & Co.: And on Pyxis ES, we're – about 25% of our base business has been converted over to ES. And so, we continue to see strong demand there, and we still do have generally quite a wide runway ahead. Vincent A. Forlenza - Becton, Dickinson & Co.: Yeah. Thomas Polen - Becton, Dickinson & Co.: Yeah. Vincent A. Forlenza - Becton, Dickinson & Co.: Okay. Thanks for the question.

Thank you. Your next question comes from Doug Schenkel of Cowen and Company. Doug Schenkel - Cowen & Co. LLC: Good morning. So I don't have a multi-part question, but I do have two questions, one for Chris and one for Tom. The good news is I think they're quick follow-ups. So for Chris, you reiterated full year revenue guidance. You reduced expectations for emerging market growth. That would seemingly imply there's a positive offset for developed market growth. I believe this change in mix should benefit operating margin. It doesn't seem like your guidance reflects that margin mix dynamic. Am I wrong? And if not, why? And then, the second question is for Tom. Regarding your plans for the 25 or so additional CareFusion product registrations, what's the timeline for those? And can you walk us through why those products take a bit longer to get registered? I'm just trying to get a better handle on the profile of those products versus the first 50 that are close to or have been registered? Thank you. Vincent A. Forlenza - Becton, Dickinson & Co.: Okay. Chris? Christopher R. Reidy - Becton, Dickinson & Co.: Yeah, just you're not wrong, but at this point in the year, the impact that it has is still within the range of guidance that we gave. So we had a fairly broad range and it's still in that range. So arguably, it's the higher end of the range. Vincent A. Forlenza - Becton, Dickinson & Co.: Okay. And Tom? Thomas Polen - Becton, Dickinson & Co.: And Doug, this is Tom. So the 25 is not a kind of a straightforward answer. In fact, it's really a combination of just think about, of course, we couldn't submit all files simultaneously, so it just takes time to work through those. So think about those just being ones that we submitted more recently and didn't work through certain regulatory processes. In other cases, it's a combination of there are even certain countries that have longer registrations. China has longer registration processes than most of Europe, as an example, and then, the other one is that certain product categories. So ChloraPrep, for example, is registered as a drug in many markets, particularly, let's say, Latin America. It's registered as a drug. Those typically sit in the regulatory process longer than medical devices. So it's kind of a combination of those three items, not one thing specific and not unexpected at all. It's right in line with our projections. Vincent A. Forlenza - Becton, Dickinson & Co.: You have to pull together the data for these files, and so, certain product lines that may not have done that kind of clinical trial work for China, so we had to do some pre-work to get them into the file. That's all that is. Okay. Thanks very much.

Thank you. Your next question comes from Vijay Kumar with Evercore ISI.

Hey, guys. Congrats on a nice beat. Vincent A. Forlenza - Becton, Dickinson & Co.: Thanks, Vijay.

Just maybe one housekeeping question on the guidance, Chris. You beat the quarter pretty handily $0.16 and it looks like FX came in better by 150 bps, but the overall guidance sort of up $0.13 by the midpoint. Just want to make sure sort of – is that a little bit of conservatism on the part of management just because FX has been moving all over the place when you think about, I mean, trying to put the Q in context of FX improving in the back half? Thank you. Vincent A. Forlenza - Becton, Dickinson & Co.: Sure, Vijay. So what I'd say is you really have to look at the EPS guidance in two buckets. One is the FXN side and then the FX impact. So what we did is we did flow through everything on the FX impact and that was the $0.13. On an FXN basis, you're right, we were up around $0.14 to $0.16, but we see that as timing and the timing buckets are the medical device tax spending which we know where we want to spend it, but because of the timing, don't forget, it happened in January, and we couldn't ramp that quickly. So that past quarter, we really got a lift from that, but we fully intend to spend that in the back half of the year. Then you had timing on the tax rate, so the tax rate was lower than our 21% to 22% and that's just lumpy throughout the year. We expect that to fall back within the rest of the year. So you had that piece. And then, we had the pull forward of some of the revenues from the third quarter to the second quarter and the impact of that. So all of that accounts for the bulk of that $0.14 to $0.16 on an FXN basis. The other thing I'd point out is we actually raised the FXN EPS guidance last quarter by $0.28. It was lost from the standpoint that, at that point, FX was getting worse across the world and it offset that, but the FXN was raised prior. So you really got to think about it in those two buckets.

Thank you. Our final question is coming from Matt Taylor of Barclays. Vincent A. Forlenza - Becton, Dickinson & Co.: Good morning, Matt.

Thanks for taking the question. Vincent A. Forlenza - Becton, Dickinson & Co.: Sure.

Good morning. I wanted to see if you could touch on a couple of kind of interesting projects that you've talked about in the last couple of quarters. One is the solutions that you're bringing in with the swap of the Simplist business, and then, the other is the diabetes partnership with Medtronic. Could you talk a little bit about those opportunities and maybe help us quantify the upside there? Vincent A. Forlenza - Becton, Dickinson & Co.: Sure. So Tom will address those. Tom, you want to start with diabetes? Thomas Polen - Becton, Dickinson & Co.: Sure. This is Tom. So we haven't specifically sized the opportunity on infusion sets, but I think as we said all year, we're expecting to get the product into some early-stage release in a controlled patient group this fiscal year, and then, really see more of the impact in the Diabetes Care business in FY 2017, that remains unchanged. So we remain very excited about that opportunity, and so, of course, our first venture outside of the pen needles and syringes for the Diabetes Care business moving into a fast-growing market with the market leader, Medtronic, and we're I think equally excited about the product technology and what it can do to help patients and the partnership and what the power of us working together can do to make an impact there. So if you think about solutions, as we, of course, shared before, we have announced the solutions partnership with Fresenius. We are looking at launching that, not necessarily now in Q4 of 2016, but more in early FY 2017, just based on regulatory approval timelines there, but that does continue to move forward. And again, we've not shared a specific number there, but we said it would certainly make up for any reduction in BD Rx sales that we had planned over the coming horizon and that remains right on track. Vincent A. Forlenza - Becton, Dickinson & Co.: Okay.

Thank you. I'll now turn the floor back over to Vince Forlenza for any closing remarks. Vincent A. Forlenza - Becton, Dickinson & Co.: Okay. Thank you very much for your participation on the call today. It was a real pleasure to talk about a very solid quarter and to raise our EPS guidance. It was also a pleasure to talk about the progress we're making on the CareFusion integration and progress with those businesses, the synergies, the teams in place, and then lastly, the strategic partnerships that we're doing including the Parker Institute relationship, the new products that are being launched. We didn't spend a lot of time on the Life Science business today. There weren't that many questions, but with BD MAX, with Kiestra, all of these things happening over there; very, very exciting, and of course, new products on the Medical side. So thank you very much for your time, and we look forward to updating you next quarter.

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