The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and, in the opinion of the management of the Company, include all adjustments which are of a normal recurring nature, necessary for a fair presentation of the financial position and the results of operations and cash flows for the periods presented. However, the financial statements do not include all information and accompanying notes required for a presentation in accordance with U.S. generally accepted accounting principles. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and the notes thereto included in the Company’s 2016 Annual Report on Form 10-K. Within the financial statements and tables presented, certain columns and rows may not add due to the use of rounded numbers for disclosure purposes. Percentages and earnings per share amounts presented are calculated from the underlying amounts. The results of operations for the interim periods are not necessarily indicative of the results of operations to be expected for the full year.

The weighted average common shares used in the computations of basic and diluted earnings per share (shares in thousands) were as follows:

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 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 would 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 2013. 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 recoversrecover $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 thereafter appealed to the Court of Appeals challenging the entirety of the Final Judgment.  On December 2, 2016, the Court of Appeals issued an opinion reversing the judgment as to RTI’s attempted monopolization claim and rendered judgment on that claim in favor of BD.  As a result, the Company reversed $336 million of reserves associated with this judgment. The Court of Appeals affirmed the judgment for Lanham Act liability, and remanded the case to the district court to consider whether and if so how much profit should be disgorged by BD on that claim.  The Court of Appeals vacated and remanded the injunction ordered by the Court. On January 31, 2017, RTI filed a petition for a writ of certiorari with the U.S. Supreme Court. On March 20, 2017, the U.S. Supreme Court denied certiorari, and the matter will now return to the district court for a ruling on RTI’s request for disgorgement.

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, 2016. On September 23, 2016, the court

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 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 or part of cleanup costs.

The Company's organizational structure is based upon two principal business segments: BD Medical (“Medical”) and BD Life Sciences (“Life Sciences”). These segments are strategic businesses that are managed separately because each one develops, manufactures and markets distinct products and services. 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. As more fully discussed in Note 9, the Company sold a 50.1% controlling financial interest in its Respiratory Solutions business, a component of the Medical segment, in October 2016. This transaction did not meet the criteria established for reporting discontinued operations and as such, results for the prior-year periodthree and six months ended March 31, 2016 included $208$213 million and $421 million, respectively, of revenues which did not occur in the current-year period.periods.

Financial information for the Company’s segments was as follows:

Revenues by geographic areas were as follows:

The Company grants share-based awards under the 2004 Employee and Director Equity-Based Compensation Plan (the “2004 Plan”), which provides long-term incentive compensation to employees and directors. The Company believes that such awards align the interests of its employees and directors with those of its shareholders.

The fair values of stock appreciation rights granted during the annual share-based grants in November of 2016 and 2015, respectively, were estimated on the date of grant using a lattice-based binomial valuation model based on the following assumptions:

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.

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.

Life Sciences segment operating income for the first quarter wasthree and six-month periods were as follows:

The Life Sciences segment's operating income is driven by its performance with respect to gross profit margin and operating expenses. Gross profit margin in the firstsecond quarter of fiscal year 2017 was lower compared with the firstsecond quarter of 2016 primarily due to inventory reserves, which were required for damaged research reagents in the Biosciences unit, and unfavorable foreign currency translation and higher unfavorable manufacturing variances,translation. These impacts to gross profit margin in the second quarter were partially offset by lower manufacturing costs resulting from continuous improvement projects which enhanced the efficiency of our operations. Selling and administrative expense as a percentage of revenues in the firstsecond quarter of 2017 was slightly higher compared to the prior-year period reflecting higher shipping costs which were partially offset by the suspension of the medical device excise tax.

BD’s worldwide firstsecond quarter revenues by geography were as follows:

The Medical segment's U.S. revenues in the firstsecond quarter reflected the divestiture of the Respiratory Solutions business, as previously discussed. This impact was partially offset by sales inthe volume of the Medication Management Solutions unit, which benefited from the favorable timing ofunit's dispensing capital placements and in the Diabetes Care unit, which benefited from the favorable timing of customer orders. The Medical segment's U.S. revenues in the first quarter were also aided by revenue growth from the Medication and Procedural Solutions unit's sales of infusion disposabledisposables products. The Medical segment's U.S. revenue growth was unfavorably impacted by the timing of orders in the Diabetes Care unit. U.S. Life Sciences revenue growth in the firstsecond quarter of fiscal year 2017 was driven by the Diagnostic Systems unit's higher influenza-related sales as well as sales for theof its core microbiology platform. U.S. Life Sciences segment's revenue growth also reflected the favorable timing of customer orders relative to the advanced bioprocessing platform andPreanalytical Systems unit's sales of research instruments and reagents in the Biosciences unit. The Life Sciences segment's U.S. revenues were unfavorably impacted by limited availability of a product line in the Preanalytical Systems unit.safety-engineered products.

The Medical segment's international firstsecond quarter revenues also reflected the divestiture of the Respiratory Solutions business, partially offset by the favorable timing of customer orders in the Pharmaceutical Systems unit, as previously discussed. International Medical segment revenue growth was aided byMedication Management Solutions unit's dispensing capital placements and the Medication and Procedural Solutions unit's sales of infusion disposable and infection prevention products anddisposables products. The Medical segment's second quarter international revenue growth was unfavorably impacted by the Medication Management Solutions unit's capital placements.timing of orders in the Diabetes Care unit. The Life Sciences segment's firstsecond quarter international revenue growth was aided by the Diagnostic Systems unit's sales of molecular and microbiology platforms.  International Life Sciences revenue growth in the current-year period also reflected the Preanalytical Systems unit's sales of safety-engineered products in emerging markets. International Life Sciences revenue growthmarkets, partially offset by the previously discussed unfavorable timing of instrument orders in the current-year period was also aided by the Diagnostic Systems unit's sales in Latin America and Asia Pacific as well as higher influenza-related sales, but were offset by an unfavorable comparison of the current period's Biosciences unit's revenues to the prior-year period, as previously discussed.unit.

Emerging market revenues for the firstsecond quarter were $456$452 million, compared with $465$443 million in the prior year’s quarter, which included approximately $30$23 million of revenues associated with divested businesses, primarily the Respiratory Solutions business. Emerging market revenues in the current-year period also included an estimated $14$4 million unfavorable impact due to foreign currency translation. FirstSecond quarter revenue growth in emerging markets was driven by sales in China and Latin America, which were partially offset by declines in the Middle East and Africa.America.

Reflected in the financial results for the first quartersthree and six-month periods of fiscal years 2017 and 2016 were the following specified items:

Gross profit margin for the first quarterthree and six-month periods of fiscal year 2017 compared with the prior-year periodperiods in 2016 reflected the following impacts: