The Company’s condensed combined financial statements include general corporate expenses of BD and shared segment expenses which were not historically allocated to the Company for certain support functions that are provided on a centralized basis by Parent and not recorded at the business unit level, such as expenses related to finance, human resources, information technology, facilities, and legal, among others (collectively, “General Corporate Expenses”). For purposes of these condensed combined financial statements, the General Corporate Expenses have been allocated to the Company. The General Corporate Expenses are included in the condensed combined statements of income in Cost of products sold, Selling and administrative expense, Research and development expense, and Other income (expense), net and, accordingly, as a component of Net parent investment on the condensed combined balance sheets. These expenses

have been allocated to the Company on a pro rata basis of global and regional revenues, headcount, research and development spend and other drivers. Management believes the assumptions underlying the condensed combined financial statements, including the assumptions regarding allocating General Corporate Expenses from BD, are reasonable. Nevertheless, the condensed combined financial statements may not include all of the actual expenses that would have been incurred and may not reflect the Company’s condensed combined results of operations, financial position and cash flows had it been a standalone public company during the periods presented. Actual costs that would have been incurred if the Company had been a standalone public company would depend on multiple factors, including organizational structure and strategic decisions made in various areas, including information technology and infrastructure.


	Three months ended March 31,				Six months ended March 31,
	2022		2021		2022		2021
Cost of products sold	$	0.7	$	3.2	$	2.3	$	7.9
Selling and administrative expense	23.5		23.7		47.9		48.1
Research and development expense	1.8		1.3		3.5		2.5
Other (income) expense, net	0.4		(0.5)		(0.6)		(2.1)
Total General Corporate Expenses	$	26.4	$	27.7	$	53.1	$	56.4

In the ordinary course of business, the Company purchases from BD certain materials for use in production of certain medical products, the terms of which prior to separation from BD were not at arm’s length. The following table summarizes related party purchases for the three and six month periods ended March 31, 2022 and 2021:

All significant intercompany transactions between the Company and BD have been included in the condensed combined financial statements and are considered to be effectively settled for cash at the time the transaction is recorded. The total net effect of the settlement of these intercompany transactions is reflected in the condensed combined statements of cash flows as a financing activity and in the condensed combined balance sheets as Net parent investment.


	Three months ended March 31,
	2022		2021
Cash pooling and general financing activities(1)	$	78.5	$	146.7
Corporate and segment allocations	(30.6)		(32.0)
Taxes deemed settled with Parent	1.6		(6.7)
Net Consideration paid to Parent in connection with the spin off	1,266.0		—
Related party senior secured notes	197.0		—
Other transfers to Parent, net	78.0		1.2
Net transfers to Parent (Note 2)	$	1,590.5	$	109.2

(1)The nature of activities includes financing activities for capital transfers, cash sweeps and other treasury services. As part of this activity, cash balances are swept to BD on a daily basis under the BD Treasury function and the Company receives capital from BD for its cash needs.


	Six months ended March 31,
	2022		2021
Cash pooling and general financing activities(1)	$	255.9	$	303.1
Corporate and segment allocations, excluding non-cash share-based compensation	(50.4)		(53.7)
Taxes deemed settled with Parent	(16.2)		(26.5)
Net transfers to Parent as reflected in the condensed combined statements of cash flows	189.3		222.9
Share-based compensation expense	(8.5)		(6.7)
Pension expense	(3.6)		(4.9)
Net Consideration paid to Parent in connection with the spin off	1,266.0		—
Related party senior secured notes	197.0		—
Other transfers to (from) Parent, net	84.1		(10.3)
Net transfers to Parent (Note 2)	$	1,724.3	$	201.0

On March 31, 2022, embecta issued $200.0 million of senior secured notes to BD (the "Related Party Notes") at a discount of $3.0 million. The Related Party Notes carry an interest rate of 6.75% and are due February 2030. Interest payments on the Related Party Notes are due semi-annually in February and August until maturity, with the first interest payment due in August 2022. The discount on the Related Party Notes is reported in the condensed combined balance sheet as a reduction of debt that is amortized as a component of interest expense over the term of the debt using the effective interest method.

The Related Party Notes issued to BD were not issued for cash and instead were subject to a debt-for-debt exchange which occurred on April 1, 2022. As such, the issuance of the Related Party Notes is a non-cash financing activity and is not presented on the condensed combined statements of cash flows for the six months ended March 31, 2022. Refer to Note 14 for further information.

The estimated fair value of the Related Party Notes at March 31, 2022 was $200.0 million. Fair value was estimated using inputs other than quoted prices in active markets for identical assets and liabilities that are observable either directly or indirectly for substantially the full term of the asset or liability and would be considered Level 2 in the fair value hierarchy.

As part of the spin off, embecta entered into a trade receivables factoring agreement with BD (the "Factoring Agreement"), under which embecta transfers certain trade receivable assets to BD, and pays a service fee calculated as 0.1% of annual revenues related to countries subject to the Factoring Agreement in exchange for the services provided by BD. Per the terms of the Factoring Agreement, the Company surrenders control of such trade receivables upon transfer. Accordingly, embecta accounts for the transfer as sales of trade receivables by recognizing an increase to Cash and cash equivalents and a decrease to Trade Receivables, net on the condensed combined balance sheets when proceeds from the transactions are received. The transfers are presented on the condensed combined statements of cash flows as operating activities and the related service fee is presented as a component of Other income (expense), net in the condensed combined statements of income.