QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||||||||
☑ | Accelerated filer | ☐ | |||||||||
Non-accelerated filer | ☐ | Smaller reporting company | |||||||||
Emerging growth company |
Page No. | ||||||||
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
(in millions, except per share data) | 2021 | 2020 | 2021 | 2020 | |||||||||||||||||||
Net sales | $ | $ | $ | $ | |||||||||||||||||||
Cost of products sold | |||||||||||||||||||||||
Gross profit | |||||||||||||||||||||||
Operating expenses: | |||||||||||||||||||||||
Selling, general and administrative expenses | |||||||||||||||||||||||
Research and development expenses | |||||||||||||||||||||||
Royalty expense | |||||||||||||||||||||||
Amortization expense | |||||||||||||||||||||||
Intangible asset impairment charges | |||||||||||||||||||||||
Contingent consideration net expense (benefit) | ( | ( | ( | ||||||||||||||||||||
Restructuring net charges (credits) | |||||||||||||||||||||||
Litigation-related net charges (credits) | |||||||||||||||||||||||
Gain on disposal of business | ( | ( | |||||||||||||||||||||
Operating income (loss) | ( | ||||||||||||||||||||||
Other income (expense): | |||||||||||||||||||||||
Interest expense | ( | ( | ( | ( | |||||||||||||||||||
Other, net | ( | ( | ( | ||||||||||||||||||||
Income (loss) before income taxes | ( | ( | |||||||||||||||||||||
Income tax expense (benefit) | ( | ( | ( | ( | |||||||||||||||||||
Net income (loss) | ( | ( | |||||||||||||||||||||
Preferred stock dividends | ( | ( | ( | ( | |||||||||||||||||||
Net income (loss) available to common stockholders | $ | $ | ( | $ | $ | ( | |||||||||||||||||
Net income (loss) per common share — basic | $ | $ | ( | $ | $ | ( | |||||||||||||||||
Net income (loss) per common share — assuming dilution | $ | $ | ( | $ | $ | ( | |||||||||||||||||
Weighted-average shares outstanding | |||||||||||||||||||||||
Basic | |||||||||||||||||||||||
Assuming dilution |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
(in millions) | 2021 | 2020 | 2021 | 2020 | |||||||||||||||||||
Net income (loss) | $ | $ | ( | $ | $ | ( | |||||||||||||||||
Other comprehensive income (loss), net of tax: | |||||||||||||||||||||||
Foreign currency translation adjustment | ( | ( | ( | ||||||||||||||||||||
Net change in derivative financial instruments | ( | ( | |||||||||||||||||||||
Net change in defined benefit pensions and other items | |||||||||||||||||||||||
Total other comprehensive income (loss) | ( | ( | ( | ||||||||||||||||||||
Total comprehensive income (loss) | $ | $ | ( | $ | $ | ( |
As of | |||||||||||
(in millions, except share and per share data) | June 30, 2021 | December 31, 2020 | |||||||||
(unaudited) | |||||||||||
ASSETS | |||||||||||
Current assets: | |||||||||||
Cash and cash equivalents | $ | $ | |||||||||
Trade accounts receivable, net | |||||||||||
Inventories | |||||||||||
Prepaid income taxes | |||||||||||
Assets held for sale | |||||||||||
Other current assets | |||||||||||
Total current assets | |||||||||||
Property, plant and equipment, net | |||||||||||
Goodwill | |||||||||||
Other intangible assets, net | |||||||||||
Deferred tax assets | |||||||||||
Other long-term assets | |||||||||||
TOTAL ASSETS | $ | $ | |||||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||||||
Current liabilities: | |||||||||||
Current debt obligations | $ | $ | |||||||||
Accounts payable | |||||||||||
Accrued expenses | |||||||||||
Other current liabilities | |||||||||||
Total current liabilities | |||||||||||
Long-term debt | |||||||||||
Deferred income taxes | |||||||||||
Other long-term liabilities | |||||||||||
Commitments and contingencies | |||||||||||
Stockholders’ equity | |||||||||||
Preferred stock, $ | |||||||||||
Common stock, $ | |||||||||||
Treasury stock, at cost - | ( | ( | |||||||||
Additional paid-in capital | |||||||||||
Accumulated deficit | ( | ( | |||||||||
Accumulated other comprehensive income (loss), net of tax | |||||||||||
Total stockholders’ equity | |||||||||||
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ | $ |
Preferred Stock | Common Stock | Treasury Stock | Additional Paid-In Capital | Accumulated Deficit | Accumulated Other Comprehensive Income (Loss), Net of Tax | ||||||||||||||||||||||||||||||||||||||||||
(in millions, except share data) | Shares Issued | Par Value | Shares Issued | Par Value | |||||||||||||||||||||||||||||||||||||||||||
As of December 31, 2019 | $ | $ | $ | ( | $ | $ | ( | $ | |||||||||||||||||||||||||||||||||||||||
Net income (loss) | |||||||||||||||||||||||||||||||||||||||||||||||
Cumulative effect adjustment for adoption of ASU 2016-13 | ( | ||||||||||||||||||||||||||||||||||||||||||||||
Total other comprehensive income (loss) | ( | ||||||||||||||||||||||||||||||||||||||||||||||
Stock-based compensation | |||||||||||||||||||||||||||||||||||||||||||||||
As of March 31, 2020 | $ | $ | $ | ( | $ | $ | ( | $ | |||||||||||||||||||||||||||||||||||||||
Net income (loss) | ( | ||||||||||||||||||||||||||||||||||||||||||||||
Total other comprehensive income (loss) | ( | ||||||||||||||||||||||||||||||||||||||||||||||
Preferred stock issuance | |||||||||||||||||||||||||||||||||||||||||||||||
Common stock issuance | |||||||||||||||||||||||||||||||||||||||||||||||
Preferred stock dividends | ( | ||||||||||||||||||||||||||||||||||||||||||||||
Stock-based compensation | |||||||||||||||||||||||||||||||||||||||||||||||
As of June 30, 2020 | $ | $ | $ | ( | $ | $ | ( | $ | |||||||||||||||||||||||||||||||||||||||
Net income (loss) | ( | ||||||||||||||||||||||||||||||||||||||||||||||
Total other comprehensive income (loss) | |||||||||||||||||||||||||||||||||||||||||||||||
Preferred stock dividends | ( | ||||||||||||||||||||||||||||||||||||||||||||||
Stock-based compensation | |||||||||||||||||||||||||||||||||||||||||||||||
As of September 30, 2020 | $ | $ | $ | ( | $ | $ | ( | $ | |||||||||||||||||||||||||||||||||||||||
Net income (loss) | |||||||||||||||||||||||||||||||||||||||||||||||
Total other comprehensive income (loss) | |||||||||||||||||||||||||||||||||||||||||||||||
Preferred stock dividends | ( | ||||||||||||||||||||||||||||||||||||||||||||||
Repurchase of common stock | ( | ||||||||||||||||||||||||||||||||||||||||||||||
Stock-based compensation | |||||||||||||||||||||||||||||||||||||||||||||||
As of December 31, 2020 | $ | $ | $ | ( | $ | $ | ( | $ | |||||||||||||||||||||||||||||||||||||||
Net income (loss) | |||||||||||||||||||||||||||||||||||||||||||||||
Total other comprehensive income (loss) | |||||||||||||||||||||||||||||||||||||||||||||||
Preferred stock dividends | ( | ||||||||||||||||||||||||||||||||||||||||||||||
Stock-based compensation | |||||||||||||||||||||||||||||||||||||||||||||||
As of March 31, 2021 | $ | $ | $ | ( | $ | $ | ( | $ | |||||||||||||||||||||||||||||||||||||||
Net income (loss) | |||||||||||||||||||||||||||||||||||||||||||||||
Total other comprehensive income (loss) | ( | ||||||||||||||||||||||||||||||||||||||||||||||
Preferred stock dividends | ( | ||||||||||||||||||||||||||||||||||||||||||||||
Stock-based compensation | |||||||||||||||||||||||||||||||||||||||||||||||
As of June 30, 2021 | $ | $ | ( | $ | $ | ( | $ |
Six Months Ended June 30, | |||||||||||
(in millions) | 2021 | 2020 | |||||||||
Net income (loss) | $ | $ | ( | ||||||||
Adjustments to reconcile net income (loss) to cash provided by (used for) operating activities | |||||||||||
Gain on disposal of businesses | ( | ||||||||||
Depreciation and amortization | |||||||||||
Deferred and prepaid income taxes | ( | ||||||||||
Stock-based compensation expense | |||||||||||
Intangible asset impairment charges | |||||||||||
Net loss (gain) on investments and notes receivable | ( | ||||||||||
Contingent consideration net expense (benefit) | ( | ( | |||||||||
Inventory step-up amortization | |||||||||||
Foreign exchange (gain) loss | |||||||||||
Other, net | |||||||||||
Increase (decrease) in operating assets and liabilities, excluding purchase accounting: | |||||||||||
Trade accounts receivable | ( | ||||||||||
Inventories | ( | ( | |||||||||
Other assets | ( | ( | |||||||||
Accounts payable and accrued expenses | ( | ||||||||||
Other liabilities | ( | ||||||||||
Cash provided by (used for) operating activities | |||||||||||
Purchases of property, plant and equipment | ( | ( | |||||||||
Proceeds from sale of property, plant and equipment | |||||||||||
Payments for acquisitions of businesses, net of cash acquired | ( | ( | |||||||||
Proceeds from royalty rights | |||||||||||
Payments for investments and acquisitions of certain technologies | ( | ( | |||||||||
Proceeds from sale of investments | |||||||||||
Proceeds from disposal of businesses | |||||||||||
Proceeds from settlements of hedge contracts | |||||||||||
Cash provided by (used for) investing activities | ( | ||||||||||
Payment of contingent consideration previously established in purchase accounting | ( | ( | |||||||||
Payments for royalty rights | ( | ( | |||||||||
Payments on short-term borrowings | ( | ||||||||||
Proceeds from short-term borrowings, net of debt issuance costs | |||||||||||
Net increase (decrease) in commercial paper | ( | ||||||||||
Payments on borrowings from credit facilities | ( | ||||||||||
Proceeds from borrowings on credit facilities | |||||||||||
Payments on long-term borrowings and debt extinguishment costs | ( | ||||||||||
Proceeds from long-term borrowings, net of debt issuance costs | |||||||||||
Cash dividends paid on preferred stock | ( | ||||||||||
Net proceeds from issuance of preferred stock in connection with public offering | |||||||||||
Net proceeds from issuance of common stock in connection with public offering | |||||||||||
Cash used to net share settle employee equity awards | ( | ( | |||||||||
Proceeds from issuances of common stock pursuant to employee stock compensation and purchase plans | |||||||||||
Cash provided by (used for) financing activities | ( | ||||||||||
Effect of foreign exchange rates on cash | ( | ( | |||||||||
Net increase (decrease) in cash, cash equivalents, restricted cash and restricted cash equivalents | |||||||||||
Cash, cash equivalents, restricted cash and restricted cash equivalents at beginning of period | |||||||||||
Cash, cash equivalents, restricted cash and restricted cash equivalents at end of period | $ | $ | |||||||||
Six Months Ended June 30, | |||||||||||
(in millions) | 2021 | 2020 | |||||||||
Supplemental Information | |||||||||||
Stock-based compensation expense | $ | $ | |||||||||
Fair value of contingent consideration recorded in purchase accounting | |||||||||||
Non-cash impact of transferred royalty rights | ( | ( |
As of June 30, | |||||||||||
Reconciliation to amounts in the unaudited consolidated balance sheets: | 2021 | 2020 | |||||||||
Cash and cash equivalents | $ | $ | |||||||||
Restricted cash and restricted cash equivalents included in Other current assets | |||||||||||
Restricted cash equivalents included in Other long-term assets | |||||||||||
Cash, cash equivalents, restricted cash and restricted cash equivalents at end of period | $ | $ |
(in millions) | |||||
Payment for acquisition, net of cash acquired | $ | ||||
Fair value of contingent consideration | |||||
Fair value of prior interest | |||||
$ |
(in millions) | |||||
Goodwill | $ | ||||
Amortizable intangible assets | |||||
Other assets acquired | |||||
Liabilities assumed | ( | ||||
$ |
Amount Assigned (in millions) | Weighted Average Amortization Period (in years) | Risk-Adjusted Discount Rates used in Purchase Price Allocation | |||||||||||||||
Amortizable intangible assets: | |||||||||||||||||
Technology-related | $ | ||||||||||||||||
Other intangible assets | |||||||||||||||||
$ |
(in millions) | |||||
Balance as of December 31, 2020 | $ | ||||
Amount recorded related to current year acquisitions | |||||
Contingent consideration net expense (benefit) | ( | ||||
Contingent consideration payments | ( | ||||
Balance as of June 30, 2021 | $ |
Contingent Consideration Liability | Fair Value as of June 30, 2021 | Valuation Technique | Unobservable Input | Range | Weighted Average(1) | ||||||||||||||||||
R&D, Regulatory and Commercialization-based Milestones | $ | Discounted Cash Flow | Discount Rate | ||||||||||||||||||||
Probability of Payment | |||||||||||||||||||||||
Projected Year of Payment | 2027 | 2027 | |||||||||||||||||||||
Revenue-based Payments | $ | Discounted Cash Flow | Discount Rate | % | - | ||||||||||||||||||
Probability of Payment | % | - | |||||||||||||||||||||
Projected Year of Payment | 2021 | - | 2024 | 2022 | |||||||||||||||||||
As of | |||||||||||
(in millions) | June 30, 2021 | December 31, 2020 | |||||||||
Equity method investments | $ | $ | |||||||||
Measurement alternative investments(1) | |||||||||||
Publicly-held equity securities(2) | |||||||||||
Notes receivable | |||||||||||
$ | $ |
As of June 30, 2021 | As of December 31, 2020 | ||||||||||||||||||||||
(in millions) | Gross Carrying Amount | Accumulated Amortization/ Write-offs(1) | Gross Carrying Amount | Accumulated Amortization/ Write-offs | |||||||||||||||||||
Technology-related | $ | $ | ( | $ | $ | ( | |||||||||||||||||
Patents | ( | ( | |||||||||||||||||||||
Other intangible assets | ( | ( | |||||||||||||||||||||
Amortizable intangible assets | $ | $ | ( | $ | $ | ( | |||||||||||||||||
Goodwill | $ | $ | ( | $ | $ | ( | |||||||||||||||||
IPR&D | $ | $ | |||||||||||||||||||||
Technology-related | |||||||||||||||||||||||
Indefinite-lived intangible assets | $ | $ |
(in millions) | MedSurg | Rhythm and Neuro | Cardiovascular | Total | |||||||||||||||||||
As of December 31, 2020 | $ | $ | $ | $ | |||||||||||||||||||
Impact of foreign currency fluctuations and other changes in carrying amount | ( | ( | |||||||||||||||||||||
Goodwill acquired | |||||||||||||||||||||||
As of June 30, 2021 | $ | $ | $ | $ |
(in millions) | FASB ASC Topic 815 Designation | As of | ||||||||||||||||||
June 30, 2021 | December 31, 2020 | |||||||||||||||||||
Forward currency contracts | Cash flow hedge | $ | $ | |||||||||||||||||
Forward currency contracts | Net investment hedge | |||||||||||||||||||
Foreign currency-denominated debt(1) | Net investment hedge | |||||||||||||||||||
Forward currency contracts | Non-designated | |||||||||||||||||||
Total Notional Outstanding | $ | $ |
Effect of Hedging Relationships on Accumulated Other Comprehensive Income | ||||||||||||||||||||||||||||||||
Amount Recognized in OCI on Hedges | Unaudited Consolidated Statements of Operations(1) | Amount Reclassified from AOCI into Earnings | ||||||||||||||||||||||||||||||
(in millions) | Pre-Tax Gain (Loss) | Tax Benefit (Expense) | Gain (Loss) Net of Tax | Location of Amount Reclassified and Total Amount of Line Item | Pre-Tax (Gain) Loss | Tax (Benefit) Expense | (Gain) Loss Net of Tax | |||||||||||||||||||||||||
Three Months Ended June 30, 2021 | ||||||||||||||||||||||||||||||||
Forward currency contracts | ||||||||||||||||||||||||||||||||
Cash flow hedges | $ | ( | $ | $ | ( | Cost of products sold | $ | $ | ( | $ | $ | ( | ||||||||||||||||||||
Net investment hedges(2) | ( | ( | Interest expense | ( | ( | |||||||||||||||||||||||||||
Foreign currency-denominated debt | ||||||||||||||||||||||||||||||||
Net investment hedges(3) | ( | ( | Other, net | |||||||||||||||||||||||||||||
Interest rate derivative contracts | ||||||||||||||||||||||||||||||||
Cash flow hedges | Interest expense | |||||||||||||||||||||||||||||||
Three Months Ended June 30, 2020 | ||||||||||||||||||||||||||||||||
Forward currency contracts | ||||||||||||||||||||||||||||||||
Cash flow hedges | $ | ( | $ | $ | ( | Cost of products sold | $ | $ | ( | $ | $ | ( | ||||||||||||||||||||
Net investment hedges(2) | ( | ( | Interest expense | ( | ( | |||||||||||||||||||||||||||
Foreign currency-denominated debt | ||||||||||||||||||||||||||||||||
Net investment hedges(3) | ( | ( | Other, net | |||||||||||||||||||||||||||||
Interest rate derivative contracts | ||||||||||||||||||||||||||||||||
Cash flow hedges | Interest Expense | |||||||||||||||||||||||||||||||
Six Months Ended June 30, 2021 | ||||||||||||||||||||||||||||||||
Forward currency contracts | ||||||||||||||||||||||||||||||||
Cash flow hedges | $ | $ | ( | $ | Cost of products sold | $ | $ | ( | $ | $ | ( | |||||||||||||||||||||
Net investment hedges (2) | ( | Interest expense | ( | ( | ||||||||||||||||||||||||||||
Foreign currency-denominated debt | ||||||||||||||||||||||||||||||||
Net investment hedges (3) | ( | Other, net | ( | |||||||||||||||||||||||||||||
Interest rate derivative contracts | ||||||||||||||||||||||||||||||||
Cash flow hedges | Interest expense | ( | ||||||||||||||||||||||||||||||
Six Months Ended June 30, 2020 | ||||||||||||||||||||||||||||||||
Forward currency contracts | ||||||||||||||||||||||||||||||||
Cash flow hedges | $ | $ | ( | $ | Cost of products sold | $ | $ | ( | $ | $ | ( | |||||||||||||||||||||
Net investment hedges (2) | ( | ( | Interest expense | ( | ( | |||||||||||||||||||||||||||
Foreign currency-denominated debt | ||||||||||||||||||||||||||||||||
Net investment hedges (3) | Other, net | |||||||||||||||||||||||||||||||
Interest rate derivative contracts | ||||||||||||||||||||||||||||||||
Cash flow hedges | Interest expense | ( |
Designated Hedging Instrument | FASB ASC Topic 815 Designation | Location on Unaudited Consolidated Statements of Operations | Amount of Pre-Tax Gain (Loss) that may be Reclassified to Earnings | |||||||||||||||||
Forward currency contracts | Cash flow hedge | Cost of products sold | $ | |||||||||||||||||
Forward currency contracts | Net investment hedge | Interest expense | ||||||||||||||||||
Interest rate derivative contracts | Cash flow hedge | Interest expense | ( |
Location on Unaudited Consolidated Statements of Operations | Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||||||||||
(in millions) | 2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||||||||||
Net gain (loss) on currency hedge contracts | Other, net | $ | ( | $ | $ | ( | $ | ( | ||||||||||||||||||||||||
Net gain (loss) on currency transaction exposures | Other, net | ( | ( | ( | ( | |||||||||||||||||||||||||||
Net currency exchange gain (loss) | $ | ( | $ | ( | $ | ( | $ | ( |
Location on Unaudited Consolidated Balance Sheets(1) | As of | |||||||||||||||||||
(in millions) | June 30, 2021 | December 31, 2020 | ||||||||||||||||||
Derivative and Nonderivative Assets: | ||||||||||||||||||||
Designated Hedging Instruments | ||||||||||||||||||||
Forward currency contracts | Other current assets | $ | $ | |||||||||||||||||
Forward currency contracts | Other long-term assets | |||||||||||||||||||
Non-Designated Hedging Instruments | ||||||||||||||||||||
Forward currency contracts | Other current assets | |||||||||||||||||||
Total Derivative and Nonderivative Assets | $ | $ | ||||||||||||||||||
Derivative and Nonderivative Liabilities: | ||||||||||||||||||||
Designated Hedging Instruments | ||||||||||||||||||||
Forward currency contracts | Other current liabilities | $ | $ | |||||||||||||||||
Forward currency contracts | Other long-term liabilities | |||||||||||||||||||
Foreign currency-denominated debt(2) | Other long-term liabilities | |||||||||||||||||||
Non-Designated Hedging Instruments | ||||||||||||||||||||
Forward currency contracts | Other current liabilities | |||||||||||||||||||
Total Derivative and Nonderivative Liabilities | $ | $ |
As of | |||||||||||||||||||||||||||||||||||||||||||||||
June 30, 2021 | December 31, 2020 | ||||||||||||||||||||||||||||||||||||||||||||||
(in millions) | Level 1 | Level 2 | Level 3 | Total | Level 1 | Level 2 | Level 3 | Total | |||||||||||||||||||||||||||||||||||||||
Assets | |||||||||||||||||||||||||||||||||||||||||||||||
Money market funds and time deposits | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
Publicly-held equity securities | |||||||||||||||||||||||||||||||||||||||||||||||
Hedging instruments | |||||||||||||||||||||||||||||||||||||||||||||||
Licensing arrangements | |||||||||||||||||||||||||||||||||||||||||||||||
$ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||
Liabilities | |||||||||||||||||||||||||||||||||||||||||||||||
Hedging instruments | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
Contingent consideration liability | |||||||||||||||||||||||||||||||||||||||||||||||
Licensing arrangements | |||||||||||||||||||||||||||||||||||||||||||||||
$ | $ | $ | $ | $ | $ | $ | $ |
Licensing Arrangements | Fair Value as of June 30, 2021 | Valuation Technique | Unobservable Input | Range | Weighted Average (1) | ||||||||||||||||||
Financial Asset | $ | Discounted Cash Flow | Discount Rate | ||||||||||||||||||||
Projected Year of Payment | 2021 | - | 2025 | 2023 | |||||||||||||||||||
Financial Liability | $ | Discounted Cash Flow | Discount Rate | % | - | ||||||||||||||||||
Projected Year of Payment | 2021 | - | 2026 | 2023 |
(in millions) | |||||
Balance as of December 31, 2020 | $ | ||||
Proceeds from royalty rights | ( | ||||
Non-cash impact of transferred royalty rights | ( | ||||
Fair value adjustment (expense) benefit | |||||
Balance as of June 30, 2021 | $ |
(in millions) | |||||
Balance as of December 31, 2020 | $ | ||||
Payments for royalty rights | ( | ||||
Non-cash impact of transferred royalty rights | ( | ||||
Fair value adjustment expense (benefit) | |||||
Balance as of June 30, 2021 | $ |
(in millions, except interest rates) | Issuance Date | Maturity Date | As of | Coupon Rate(1) | ||||||||||||||||||||||||||||
June 30, 2021 | December 31, 2020 | |||||||||||||||||||||||||||||||
May 2022 Notes(3) | May 2015 | May 2022 | $ | $ | ||||||||||||||||||||||||||||
October 2023 Notes | August 2013 | October 2023 | ||||||||||||||||||||||||||||||
March 2024 Notes | February 2019 | March 2024 | ||||||||||||||||||||||||||||||
May 2025 Notes | May 2015 | May 2025 | ||||||||||||||||||||||||||||||
June 2025 Notes | May 2020 | June 2025 | ||||||||||||||||||||||||||||||
March 2026 Notes | February 2019 | March 2026 | ||||||||||||||||||||||||||||||
December 2027 Notes | November 2019 | December 2027 | ||||||||||||||||||||||||||||||
March 2028 Notes | February 2018 | March 2028 | ||||||||||||||||||||||||||||||
March 2029 Notes | February 2019 | March 2029 | ||||||||||||||||||||||||||||||
June 2030 Notes | May 2020 | June 2030 | ||||||||||||||||||||||||||||||
November 2035 Notes(2) | November 2005 | November 2035 | ||||||||||||||||||||||||||||||
March 2039 Notes | February 2019 | March 2039 | ||||||||||||||||||||||||||||||
January 2040 Notes | December 2009 | January 2040 | ||||||||||||||||||||||||||||||
March 2049 Notes | February 2019 | March 2049 | ||||||||||||||||||||||||||||||
Unamortized Debt Issuance Discount and Deferred Financing Costs | 2022 - 2049 | ( | ( | |||||||||||||||||||||||||||||
Unamortized Gain on Fair Value Hedges | 2023 | |||||||||||||||||||||||||||||||
Finance Lease Obligation | Various | |||||||||||||||||||||||||||||||
Long-term debt | $ | $ |
Covenant Requirement | Actual | |||||||||||||
as of June 30, 2021 | as of June 30, 2021 | |||||||||||||
Maximum permitted leverage ratio(1) | ||||||||||||||
Factoring Arrangements | As of June 30, 2021 | As of December 31, 2020 | |||||||||||||||||||||
Amount De-recognized | Weighted Average Interest Rate | Amount De-recognized | Weighted Average Interest Rate | ||||||||||||||||||||
Euro denominated | $ | % | $ | % | |||||||||||||||||||
Yen denominated | % | % | |||||||||||||||||||||
Renminbi denominated | % | % |
As of | |||||||||||
(in millions) | June 30, 2021 | December 31, 2020 | |||||||||
Trade accounts receivable | $ | $ | |||||||||
Allowance for credit losses | ( | ( | |||||||||
$ | $ |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
(in millions) | 2021 | 2020 | 2021 | 2020 | |||||||||||||||||||
Beginning balance | $ | $ | $ | $ | |||||||||||||||||||
Cumulative effect adjustment(1) | n/a | n/a | n/a | ||||||||||||||||||||
Credit loss expense | |||||||||||||||||||||||
Write-offs | ( | ( | ( | ( | |||||||||||||||||||
Ending balance | $ | $ | $ | $ |
As of | |||||||||||
(in millions) | June 30, 2021 | December 31, 2020 | |||||||||
Finished goods | $ | $ | |||||||||
Work-in-process | |||||||||||
Raw materials | |||||||||||
$ | $ |
As of | |||||||||||
(in millions) | June 30, 2021 | December 31, 2020 | |||||||||
Restricted cash and restricted cash equivalents | $ | $ | |||||||||
Derivative assets | |||||||||||
Licensing arrangements | |||||||||||
Other | |||||||||||
$ | $ |
As of | |||||||||||
(in millions) | June 30, 2021 | December 31, 2020 | |||||||||
Land | $ | $ | |||||||||
Buildings and improvements | |||||||||||
Equipment, furniture and fixtures | |||||||||||
Capital in progress | |||||||||||
Less: accumulated depreciation | |||||||||||
$ | $ |
As of | |||||||||||
(in millions) | June 30, 2021 | December 31, 2020 | |||||||||
Restricted cash equivalents | $ | $ | |||||||||
Operating lease right-of-use assets | |||||||||||
Derivative assets | |||||||||||
Investments | |||||||||||
Licensing arrangements | |||||||||||
Other | |||||||||||
$ | $ |
As of | |||||||||||
(in millions) | June 30, 2021 | December 31, 2020 | |||||||||
Legal reserves | $ | $ | |||||||||
Payroll and related liabilities | |||||||||||
Rebates | |||||||||||
Contingent consideration liability | |||||||||||
Other | |||||||||||
$ | $ |
As of | |||||||||||
(in millions) | June 30, 2021 | December 31, 2020 | |||||||||
Deferred revenue | $ | $ | |||||||||
Licensing arrangements | |||||||||||
Taxes payable | |||||||||||
Liabilities held for sale | |||||||||||
Other | |||||||||||
$ | $ |
As of | |||||||||||
(in millions) | June 30, 2021 | December 31, 2020 | |||||||||
Accrued income taxes | $ | $ | |||||||||
Legal reserves | |||||||||||
Contingent consideration liability | |||||||||||
Licensing arrangements | |||||||||||
Operating lease liabilities | |||||||||||
Deferred revenue | |||||||||||
Other | |||||||||||
$ | $ |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||
Effective tax rate from continuing operations | ( | % | % | ( | % | % |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
(in millions) | 2021 | 2020 | 2021 | 2020 | |||||||||||||||||||
Weighted average shares outstanding - basic | |||||||||||||||||||||||
Net effect of common stock equivalents | |||||||||||||||||||||||
Weighted average shares outstanding - assuming dilution |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
(in millions) | 2021 | 2020 | 2021 | 2020 | |||||||||||||||||||
Common stock equivalents(1) | |||||||||||||||||||||||
Stock options outstanding(2) | |||||||||||||||||||||||
MCPS(3) |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||
MedSurg | $ | $ | $ | $ | |||||||||||||||||||
Rhythm and Neuro | |||||||||||||||||||||||
Cardiovascular | |||||||||||||||||||||||
Total net sales of reportable segments | |||||||||||||||||||||||
All other (Specialty Pharmaceuticals)(1) | |||||||||||||||||||||||
Net sales | $ | $ | $ | $ | |||||||||||||||||||
MedSurg | $ | $ | $ | $ | |||||||||||||||||||
Rhythm and Neuro | |||||||||||||||||||||||
Cardiovascular | |||||||||||||||||||||||
Total operating income of reportable segments | |||||||||||||||||||||||
All other (Specialty Pharmaceuticals)(1) | |||||||||||||||||||||||
Unallocated amounts: | |||||||||||||||||||||||
Corporate expenses, including hedging activities | ( | ( | ( | ( | |||||||||||||||||||
Intangible asset impairment charges, acquisition/divestiture-related net charges (credits), restructuring and restructuring-related net charges (credits), and certain litigation-related net charges (credits) and EU MDR implementation costs | ( | ( | ( | ( | |||||||||||||||||||
Amortization expense | ( | ( | ( | ( | |||||||||||||||||||
Operating income (loss) | ( | ||||||||||||||||||||||
Other expense, net | ( | ( | ( | ( | |||||||||||||||||||
Income (loss) before income taxes | $ | $ | ( | $ | $ | ( | |||||||||||||||||
(1) On March 1, 2021, we completed the divestiture of the Specialty Pharmaceuticals business. Our consolidated net sales and income (loss) before income taxes for the first six months of 2021 include Specialty Pharmaceuticals up to the date of the closing of the transaction. | |||||||||||||||||||||||
Operating income margin of reportable segments | Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||
2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||
MedSurg | % | % | % | % | |||||||||||||||||||
Rhythm and Neuro | % | % | % | % | |||||||||||||||||||
Cardiovascular | % | % | % | % |
Three Months Ended June 30, | |||||||||||||||||||||||||||||||||||
2021 | 2020 | ||||||||||||||||||||||||||||||||||
Businesses | U.S. | Int'l | Total | U.S. | Int'l | Total | |||||||||||||||||||||||||||||
Endoscopy | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
Urology and Pelvic Health | |||||||||||||||||||||||||||||||||||
Cardiac Rhythm Management | |||||||||||||||||||||||||||||||||||
Electrophysiology | |||||||||||||||||||||||||||||||||||
Neuromodulation | |||||||||||||||||||||||||||||||||||
Interventional Cardiology | |||||||||||||||||||||||||||||||||||
Peripheral Interventions | |||||||||||||||||||||||||||||||||||
Specialty Pharmaceuticals | |||||||||||||||||||||||||||||||||||
Net Sales | $ | $ | $ | $ | $ | $ |
Six Months Ended June 30, | |||||||||||||||||||||||||||||||||||
2021 | 2020 | ||||||||||||||||||||||||||||||||||
Businesses | U.S. | Int'l | Total | U.S. | Int'l | Total | |||||||||||||||||||||||||||||
Endoscopy | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
Urology and Pelvic Health | |||||||||||||||||||||||||||||||||||
Cardiac Rhythm Management | |||||||||||||||||||||||||||||||||||
Electrophysiology | |||||||||||||||||||||||||||||||||||
Neuromodulation | |||||||||||||||||||||||||||||||||||
Interventional Cardiology | |||||||||||||||||||||||||||||||||||
Peripheral Interventions | |||||||||||||||||||||||||||||||||||
Specialty Pharmaceuticals | |||||||||||||||||||||||||||||||||||
Net Sales | $ | $ | $ | $ | $ | $ |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
Geographic Regions | 2021 | 2020 | 2021 | 2020 | |||||||||||||||||||
U.S. | $ | $ | $ | $ | |||||||||||||||||||
EMEA (Europe, Middle East and Africa) | |||||||||||||||||||||||
APAC (Asia-Pacific) | |||||||||||||||||||||||
LACA (Latin America and Canada) | |||||||||||||||||||||||
Medical Devices | |||||||||||||||||||||||
U.S. | |||||||||||||||||||||||
International | |||||||||||||||||||||||
Specialty Pharmaceuticals | |||||||||||||||||||||||
Net Sales | $ | $ | $ | $ | |||||||||||||||||||
Emerging Markets(1) | $ | $ | $ | $ |
(in millions) | Foreign Currency Translation Adjustments | Net Change in Derivative Financial Instruments | Net Change in Defined Benefit Pensions and Other Items | Total | |||||||||||||||||||
Balance as of March 31, 2021 | $ | $ | $ | ( | $ | ||||||||||||||||||
Other comprehensive income (loss) before reclassifications | ( | ( | ( | ||||||||||||||||||||
(Income) loss amounts reclassified from accumulated other comprehensive income | ( | ( | ( | ||||||||||||||||||||
Total other comprehensive income (loss) | ( | ( | |||||||||||||||||||||
Balance as of June 30, 2021 | $ | $ | $ | ( | $ |
(in millions) | Foreign Currency Translation Adjustments | Net Change in Derivative Financial Instruments | Net Change in Defined Benefit Pensions and Other Items | Total | |||||||||||||||||||
Balance as of March 31, 2020 | $ | ( | $ | $ | ( | $ | |||||||||||||||||
Other comprehensive income (loss) before reclassifications | ( | ( | ( | ||||||||||||||||||||
(Income) loss amounts reclassified from accumulated other comprehensive income | ( | ( | ( | ||||||||||||||||||||
Total other comprehensive income (loss) | ( | ( | ( | ||||||||||||||||||||
Balance as of June 30, 2020 | $ | ( | $ | $ | ( | $ |
(in millions) | Foreign Currency Translation Adjustments | Net Change in Derivative Financial Instruments | Net Change in Defined Benefit Pensions and Other Items | Total | |||||||||||||||||||
Balance as of December 31, 2020 | $ | $ | $ | ( | $ | ||||||||||||||||||
Other comprehensive income (loss) before reclassifications | |||||||||||||||||||||||
(Income) loss amounts reclassified from accumulated other comprehensive income(1) | ( | ( | ( | ||||||||||||||||||||
Total other comprehensive income (loss) | ( | ||||||||||||||||||||||
Balance as of June 30, 2021 | $ | $ | $ | ( | $ |
(in millions) | Foreign Currency Translation Adjustments | Net Change in Derivative Financial Instruments | Net Change in Defined Benefit Pensions and Other Items | Total | |||||||||||||||||||
Balance as of December 31, 2019 | $ | $ | $ | ( | $ | ||||||||||||||||||
Other comprehensive income (loss) before reclassifications | ( | ( | |||||||||||||||||||||
(Income) loss amounts reclassified from accumulated other comprehensive income | ( | ( | ( | ||||||||||||||||||||
Total other comprehensive income (loss) | ( | ( | |||||||||||||||||||||
Balance as of June 30, 2020 | $ | ( | $ | $ | ( | $ |
Three Months Ended June 30, 2021 | ||||||||||||||
(in millions, except per share data) | Earnings | Impact per Share(3) | ||||||||||||
Reported Net income (loss) | $ | 186 | ||||||||||||
Reported Preferred stock dividends | (14) | |||||||||||||
Reported Net income (loss) available to common stockholders | $ | 172 | $ | 0.12 | ||||||||||
Non-GAAP adjustments: | ||||||||||||||
Amortization expense | 161 | 0.11 | ||||||||||||
Intangible asset impairment charges | 39 | 0.03 | ||||||||||||
Acquisition/divestiture-related net charges (credits) | (65) | (0.05) | ||||||||||||
Restructuring and restructuring-related net charges (credits) | 35 | 0.02 | ||||||||||||
Litigation-related net charges (credits) | 229 | 0.16 | ||||||||||||
Investment portfolio net losses (gains) | 5 | 0.00 | ||||||||||||
European Union (EU) Medical device regulation (MDR) implementation costs | 11 | 0.01 | ||||||||||||
Deferred tax expenses (benefits) | 25 | 0.02 | ||||||||||||
Discrete tax items | (35) | (0.02) | ||||||||||||
Adjusted net income (loss) available to common stockholders | $ | 577 | $ | 0.40 |
Three Months Ended June 30, 2020 | |||||||||||
(in millions, except per share data) | Earnings | Impact per Share(4) | |||||||||
Reported Net income (loss) | $ | (147) | |||||||||
Reported Preferred stock dividends | (5) | ||||||||||
Reported Net income (loss) available to common stockholders | $ | (153) | $ | (0.11) | |||||||
Non-GAAP adjustments: | |||||||||||
Amortization expense | 177 | 0.12 | |||||||||
Intangible asset impairment charges | 27 | 0.02 | |||||||||
Acquisition/divestiture-related net charges (credits) | 50 | 0.04 | |||||||||
Restructuring and restructuring-related net charges (credits) | 20 | 0.01 | |||||||||
European Union (EU) Medical device regulation (MDR) implementation costs | 6 | 0.00 | |||||||||
Deferred tax expenses (benefits) | (18) | (0.01) | |||||||||
Discrete tax items | 11 | 0.01 | |||||||||
Adjusted net income (loss) available to common stockholders | $ | 120 | $ | 0.08 |
Six Months Ended June 30, 2021 | |||||||||||
(in millions, except per share data) | Earnings | Impact per Share(5) | |||||||||
Reported Net income (loss) | $ | 527 | |||||||||
Reported Preferred stock dividends | (28) | ||||||||||
Reported Net income (loss) available to common stockholders | $ | 500 | $ | 0.35 | |||||||
Non-GAAP adjustments: | |||||||||||
Amortization expense | 328 | 0.23 | |||||||||
Intangible asset impairment charges | 39 | 0.03 | |||||||||
Acquisition/divestitures-related net charges (credits) | (219) | (0.15) | |||||||||
Restructuring and restructuring-related net charges (credits) | 79 | 0.05 | |||||||||
Litigation-related net charges (credits) | 233 | 0.16 | |||||||||
Investment portfolio net losses (gains) | 117 | 0.08 | |||||||||
European Union (EU) Medical device regulation (MDR) implementation costs | 20 | 0.01 | |||||||||
Deferred tax expenses (benefits) | 43 | 0.03 | |||||||||
Discrete tax items | (38) | (0.03) | |||||||||
Adjusted net income (loss) available to common stockholders | $ | 1,102 | $ | 0.77 |
Six Months Ended June 30, 2020 | |||||||||||
(in millions, except per share data) | Earnings | Impact per Share(6) | |||||||||
Reported Net income (loss) | $ | (137) | |||||||||
Reported Preferred stock dividends | (5) | ||||||||||
Reported Net income (loss) available to common stockholders | $ | (142) | $ | (0.10) | |||||||
Non-GAAP adjustments: | |||||||||||
Amortization expense | 356 | 0.25 | |||||||||
Intangible asset impairment charges | 195 | 0.14 | |||||||||
Acquisition-related net charges (credits) | 13 | 0.01 | |||||||||
Restructuring and restructuring-related net charges (credits) | 45 | 0.03 | |||||||||
European Union (EU) Medical device regulation (MDR) implementation costs | 11 | 0.01 | |||||||||
Deferred tax expenses (benefits) | 8 | 0.01 | |||||||||
Discrete tax items | 24 | 0.02 | |||||||||
Adjusted net income (loss) available to common stockholders | $ | 511 | $ | 0.36 |
Three Months Ended June 30, | |||||||||||||||||
(in millions) | 2021 | 2020 | Change | ||||||||||||||
Endoscopy | $ | 551 | $ | 348 | 58.5% | ||||||||||||
Urology and Pelvic Health | 397 | 228 | 73.9% | ||||||||||||||
MedSurg | 948 | 576 | 64.6% | ||||||||||||||
Cardiac Rhythm Management | 524 | 351 | 49.2% | ||||||||||||||
Electrophysiology | 95 | 51 | 85.8% | ||||||||||||||
Neuromodulation | 247 | 122 | 101.5% | ||||||||||||||
Rhythm and Neuro | 866 | 525 | 65.0% | ||||||||||||||
Interventional Cardiology | 790 | 495 | 59.8% | ||||||||||||||
Peripheral Interventions | 473 | 340 | 39.1% | ||||||||||||||
Cardiovascular | 1,263 | 834 | 51.4% | ||||||||||||||
Medical Devices | 3,077 | 1,935 | 59.0% | ||||||||||||||
Specialty Pharmaceuticals(7) | — | 68 | (100.0)% | ||||||||||||||
Net Sales | $ | 3,077 | $ | 2,003 | 53.6% |
Six Months Ended June 30, | |||||||||||||||||
(in millions) | 2021 | 2020 | Change | ||||||||||||||
Endoscopy | $ | 1,050 | $ | 790 | 33.0% | ||||||||||||
Urology and Pelvic Health | 758 | 560 | 35.2% | ||||||||||||||
MedSurg | 1,808 | 1,350 | 33.9% | ||||||||||||||
Cardiac Rhythm Management | 993 | 788 | 26.0% | ||||||||||||||
Electrophysiology | 179 | 126 | 42.0% | ||||||||||||||
Neuromodulation | 444 | 313 | 41.8% | ||||||||||||||
Rhythm and Neuro | 1,617 | 1,228 | 31.7% | ||||||||||||||
Interventional Cardiology | 1,486 | 1,128 | 31.7% | ||||||||||||||
Peripheral Interventions | 906 | 732 | 23.7% | ||||||||||||||
Cardiovascular | 2,392 | 1,860 | 28.6% | ||||||||||||||
Medical Devices | 5,816 | 4,437 | 31.1% | ||||||||||||||
Specialty Pharmaceuticals(7) | 13 | 109 | (87.8)% | ||||||||||||||
Net Sales | $ | 5,829 | $ | 4,546 | 28.2% |
Percentage of Net Sales | |||||||||||
Three Months | Six Months | ||||||||||
Gross profit margin - period ended June 30, 2020 | 60.5% | 64.9% | |||||||||
Abnormal production variances | 3.9 | 1.9 | |||||||||
Sales pricing, volume and mix | 5.0 | 1.7 | |||||||||
Net impact of foreign currency fluctuations | (1.0) | (0.8) | |||||||||
All other, including other expenses | 0.9 | 0.8 | |||||||||
Gross profit margin - period ended June 30, 2021 | 69.3% | 68.4% |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||||||||||||||
2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||||||||||||||
(in millions) | $ | % of Net Sales | $ | % of Net Sales | $ | % of Net Sales | $ | % of Net Sales | |||||||||||||||||||||||||||
Selling, general and administrative (SG&A) expenses | $ | 1,121 | 36.4 | % | $ | 798 | 39.9 | % | $ | 2,139 | 36.7 | % | $ | 1,776 | 39.1 | % | |||||||||||||||||||
Research and development (R&D) expenses | 298 | 9.7 | % | 242 | 12.1 | % | 574 | 9.9 | % | 542 | 11.9 | % | |||||||||||||||||||||||
Royalty expense | 12 | 0.4 | % | 8 | 0.4 | % | 24 | 0.4 | % | 20 | 0.4 | % |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
(in millions) | 2021 | 2020 | 2021 | 2020 | |||||||||||||||||||
Amortization expense | $ | 180 | $ | 197 | $ | 365 | $ | 398 | |||||||||||||||
Intangible asset impairment charges | 45 | 34 | 45 | 233 | |||||||||||||||||||
Contingent consideration net expense (benefit) | (85) | — | (91) | (108) | |||||||||||||||||||
Restructuring charges (credits) | 3 | 3 | 8 | 13 | |||||||||||||||||||
Litigation-related net charges (credits) | 298 | — | 302 | — |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||
Interest expense (in millions) | $ | (86) | $ | (91) | $ | (168) | $ | (179) | |||||||||||||||
Average borrowing rate | 3.6 | % | 3.5 | % | 3.6 | % | 3.5 | % |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
(in millions) | 2021 | 2020 | 2021 | 2020 | |||||||||||||||||||
Interest income | $ | 1 | $ | — | $ | 3 | $ | 1 | |||||||||||||||
Net foreign currency gain (loss) | (7) | (5) | (9) | (12) | |||||||||||||||||||
Net gains (losses) on investments | (14) | (12) | 22 | (34) | |||||||||||||||||||
Other income (expense), net | (7) | (2) | (5) | (10) | |||||||||||||||||||
$ | (26) | $ | (18) | $ | 11 | $ | (54) |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||
Effective tax rate from continuing operations | (24.9) | % | 18.4 | % | (11.2) | % | 13.7 | % |
Six Months Ended June 30, | |||||||||||
(in millions) | 2021 | 2020 | |||||||||
Cash provided by (used for) operating activities | $ | 927 | $ | 192 | |||||||
Cash provided by (used for) investing activities | 71 | (135) | |||||||||
Cash provided by (used for) financing activities | (93) | 1,361 |
10.1 | ||||||||
31.1* | ||||||||
31.2* | ||||||||
32.1* | ||||||||
32.2* | ||||||||
101.SCH* | XBRL Taxonomy Extension Schema Document. | |||||||
101.CAL* | XBRL Taxonomy Extension Calculation Linkbase Document. | |||||||
101.DEF* | XBRL Taxonomy Extension Definition Linkbase Document. | |||||||
101.LAB* | XBRL Taxonomy Extension Label Linkbase Document. | |||||||
101.PRE* | XBRL Taxonomy Extension Presentation Linkbase Document. | |||||||
104 | Cover Page Interactive Data File (embedded within the Inline XBRL document and contained in Exhibit 101). |
BOSTON SCIENTIFIC CORPORATION | |||||||||||
By: | /s/ Daniel J. Brennan | ||||||||||
Name: | Daniel J. Brennan | ||||||||||
Title: | Executive Vice President and Chief Financial Officer |
1 | I have reviewed this Quarterly Report on Form 10-Q of Boston Scientific Corporation; | |||||||
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 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 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: | August 6, 2021 | /s/ Michael F. Mahoney | ||||||||||||
Michael F. Mahoney | ||||||||||||||
Chief Executive Officer |
1 | I have reviewed this Quarterly Report on Form 10-Q of Boston Scientific Corporation; | |||||||
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 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 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: | August 6, 2021 | /s/ Daniel J. Brennan | ||||||||||||
Daniel J. Brennan | ||||||||||||||
Executive Vice President and Chief Financial Officer |
(1) | the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and | |||||||
(2) | the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Boston Scientific Corporation. |
By: | /s/ Michael F. Mahoney | |||||||
Michael F. Mahoney | ||||||||
Chief Executive Officer | ||||||||
August 6, 2021 |
(1) | the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and | |||||||
(2) | the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Boston Scientific Corporation. |
By: | /s/ Daniel J. Brennan | |||||||
Daniel J. Brennan | ||||||||
Executive Vice President and Chief Financial Officer | ||||||||
August 6, 2021 |
Consolidated Statements of Comprehensive Income (Loss) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
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Jun. 30, 2021 |
Jun. 30, 2020 |
Jun. 30, 2021 |
Jun. 30, 2020 |
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Net income (loss) | $ 186 | $ (147) | $ 527 | $ (137) |
Other comprehensive income (loss), net of tax: | ||||
Foreign currency translation adjustment | 2 | (11) | (81) | (187) |
Net change in derivative financial instruments | (18) | (26) | 111 | 48 |
Net change in defined benefit pensions and other items | 0 | 0 | (1) | 0 |
Total other comprehensive income (loss) | (16) | (37) | 30 | (139) |
Total comprehensive income (loss) | $ 170 | $ (185) | $ 558 | $ (276) |
Consolidated Balance Sheets (Parenthetical) - $ / shares |
Jun. 30, 2021 |
Dec. 31, 2020 |
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Condensed Consolidated Balance Sheet (Parenthetical) [Abstract] | ||
Preferred Stock, Par or Stated Value Per Share | $ 0.01 | $ 0.01 |
Preferred Stock, Shares Authorized | 50,000,000 | 50,000,000 |
Preferred Stock, Shares Issued | 10,062,500 | 10,062,500 |
Common Stock, Par or Stated Value Per Share | $ 0.01 | $ 0.01 |
Common Stock, Shares Authorized | 2,000,000,000 | 2,000,000,000 |
Common Stock, Shares, Issued | 1,685,006,608 | 1,679,911,918 |
Treasury Stock, Shares | 263,289,848 | 263,289,848 |
Consolidated Statements of Cash Flows (Supplemental Disclosure) - USD ($) $ in Millions |
Jun. 30, 2021 |
Dec. 31, 2020 |
Jun. 30, 2020 |
Dec. 31, 2019 |
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Cash and cash equivalents | $ 2,675 | $ 1,734 | $ 1,724 | |
Restricted cash and restricted cash equivalents included in Other current assets | 167 | 208 | 245 | |
Restricted cash equivalents included in Other long-term assets | 57 | 52 | 46 | |
Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents | $ 2,898 | $ 1,995 | $ 2,016 | $ 607 |
Basis of Presentation |
6 Months Ended |
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Jun. 30, 2021 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
BASIS OF PRESENTATION | NOTE A – BASIS OF PRESENTATION The accompanying unaudited consolidated financial statements of Boston Scientific Corporation have been prepared in accordance with accounting principles generally accepted in the United States (U.S. GAAP) and with the instructions to Form 10-Q and Article 10 of Regulation S-X, and they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. When used in this report, the terms, "we," "us," "our," and "the Company" mean Boston Scientific Corporation and its divisions and subsidiaries. In the opinion of management, all adjustments (consisting only of normal recurring adjustments) considered necessary for fair presentation have been included. Operating results for the three and six months ended June 30, 2021 are not necessarily indicative of the results that may be expected for the year ending December 31, 2021. Accordingly, our unaudited consolidated financial statements and footnotes thereto should be read in conjunction with our audited consolidated financial statements and footnotes thereto included in Item 8 of our most recent Annual Report on Form 10-K. Amounts reported in millions within this Quarterly Report on Form 10-Q are computed based on the amounts in thousands. As a result, the sum of the components may not equal the total amount reported in millions due to rounding. Certain columns and rows within tables may not add due to the use of rounded numbers. Percentages presented are calculated from the underlying unrounded amounts. Subsequent Events We evaluate events occurring after the date of our accompanying unaudited consolidated balance sheet for potential recognition or disclosure in our financial statements. Those items requiring recognition in the financial statements have been recorded and disclosed accordingly. Those items requiring disclosure (non-recognized subsequent events) in the financial statements have been disclosed accordingly. Refer to Note B – Acquisitions, Divestitures and Strategic Investments, Note H – Commitments and Contingencies and Note I – Stockholders' Equity for further details.
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Acquisitions and Strategic Investments |
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Business Combinations [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
ACQUISITIONS AND STRATEGIC INVESTMENTS | NOTE B – ACQUISITIONS, DIVESTITURES AND STRATEGIC INVESTMENTS Our accompanying unaudited consolidated financial statements include the operating results for acquired entities from the respective dates of acquisition. We completed one acquisition and one divestiture in the first six months of 2021 and did not complete any significant acquisitions or divestitures during the first six months of 2020. We have not presented supplemental pro forma financial information for completed acquisitions or divestitures given their results are not material to our accompanying unaudited consolidated financial statements. Further, transaction costs were immaterial to our accompanying unaudited consolidated financial statements and were expensed as incurred. On March 3, 2021, we announced our entry into a definitive agreement to acquire the global surgical business of Lumenis LTD. (Lumenis), a privately-held company that develops and commercializes energy-based medical solutions, for an upfront cash payment of approximately $1.070 billion subject to closing adjustments. The global surgical business of Lumenis includes innovative laser systems, fibers, and accessories used for urology and otolaryngology procedures. The acquisition is expected to close during the second half of 2021, subject to customary closing conditions. Following the closing of the acquisition, we plan to integrate the Lumenis business into our Urology and Pelvic Health division. 2021 Acquisitions On March 1, 2021, we completed the acquisition of Preventice Solutions, Inc. (Preventice), a privately-held company which offers a full portfolio of mobile cardiac health solutions and services, ranging from ambulatory cardiac monitors, to cardiac event monitors and mobile cardiac telemetry. The transaction consisted of an upfront cash payment of $925 million and up to an additional $300 million in a potential commercial milestone payment. We have been an investor in Preventice since 2015 and held an equity stake of approximately 22 percent immediately prior to the acquisition date. We remeasured the fair value of our previously-held investment based on the allocation of the purchase price according to priority of equity interests, which resulted in a $195 million gain recognized within Other, net in the first quarter of 2021. The transaction price for the remaining stake consisted of an upfront cash payment of $706 million, net of cash acquired, and up to approximately $230 million in an additional future revenue-based payment. The Preventice business is being managed by our Cardiac Rhythm Management division. On August 6, 2021, we completed our acquisition of the remaining shares of Farapulse, Inc. (Farapulse), a privately-held company that has developed a non-thermal ablation system for the treatment of atrial fibrillation (AF) and other cardiac arrhythmias in which we previously held an equity stake of approximately 27 percent. The transaction price consists of $450 million upfront, or approximately $295 million after adjustments for our prior equity stake, debt and other closing adjustments; up to $125 million upon achievement of certain clinical and regulatory milestones, or $92 million for the portion not previously owned; and additional revenue-based payments over the next three years. The valuation studies necessary to determine the fair value of the various purchase price components are currently in process. Once completed, we will remeasure the fair value of our previously held equity interest and recognize a gain of at least $150 million within Other income (expense) during the third quarter of 2021. The Farapulse business will be integrated into our Electrophysiology division. Purchase Price Allocation The preliminary purchase price for acquisitions completed during the first six months of 2021 was comprised of the amounts presented below, which represent the preliminary determination of the fair value of identifiable assets acquired and liabilities assumed. The final determination of the fair value of certain assets and liabilities will be completed within the measurement period in accordance with Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic 805, Business Combinations.
The preliminary purchase price allocation for acquisitions completed during the first six months of 2021 was comprised of the following components:
We allocated a portion of the preliminary purchase price for acquisitions completed during the first six months of 2021 to the specific intangible asset categories as follows:
Goodwill was primarily established due to synergies expected to be gained from leveraging our existing operations, as well as revenue and cash flow projections associated with future technologies and is not deductible for tax purposes. 2021 Divestiture On March 1, 2021, we completed the divestiture of the Specialty Pharmaceuticals business to Stark International Lux S.A.R.L., and SERB SAS, affiliates of SERB, a European specialty pharmaceutical group, for a purchase price of approximately $800 million, subject to certain adjustments including cash on hand at the closing of the transaction. The agreement included the transfer of five facilities and approximately 280 employees globally. We classified the assets and liabilities of the Specialty Pharmaceuticals business (disposal group) as held for sale within our consolidated balance sheet as of December 31, 2020 at their respective carrying values, which approximated fair value, less costs to sell. Assets within the disposal group are presented within Assets held for sale and liabilities are presented within Other current liabilities within our consolidated balance sheet as of December 31, 2020. Refer to Note C – Assets and Liabilities Held for Sale to our audited financial statements contained in Item 8 of our most recent Annual Report on Form 10-K for additional information. In the second quarter and first six months of 2021, we recognized a Gain on disposal of business associated with the transaction of $2 million and $9 million respectively, within our accompanying unaudited consolidated statements of operations. Contingent Consideration Changes in the fair value of our contingent consideration liability during the first six months of 2021 were as follows:
As of June 30, 2021, the maximum amount of future contingent consideration (undiscounted) that we could be required to pay associated with our completed acquisitions was $751 million, which includes amounts related to our recent acquisition of Preventice. Refer to Note B – Acquisitions and Strategic Investments to our audited financial statements contained in Item 8 of our most recent Annual Report on Form 10-K for additional information. In the second quarter of 2021 we recorded a contingent consideration net benefit of $85 million. The benefit related to certain prior acquisitions for which we reduced the probability of achievement of associated revenue and/or regulatory milestones upon which payment is conditioned. The recurring Level 3 fair value measurements of our contingent consideration liability that we expect to be required to settle include the following significant unobservable inputs:
(1) Unobservable inputs were weighted by the relative fair value of the contingent consideration liability. For projected year of payment, the amount represents the median of the inputs and is not a weighted average. Projected contingent payment amounts related to research and development (R&D), commercialization-based and revenue-based milestones are discounted back to the current period, primarily using a discounted cash flow model. Significant increases or decreases in projected revenues, probabilities of payment, discount rates or the time until payment is made would have resulted in a significantly lower or higher fair value measurement as of June 30, 2021. Strategic Investments The aggregate carrying amount of our strategic investments was comprised of the following:
(1) Measurement alternative investments are privately-held equity securities without readily determinable fair values that are measured at cost less impairment, if any, adjusted to fair value for any observable price changes in orderly transactions for the identical or a similar investment of the same issuer, recognized in Other, net within our accompanying unaudited consolidated statements of operations. (2) Publicly-held equity securities are measured at fair value with changes in fair value recognized in Other, net within our accompanying unaudited consolidated statements of operations. These investments are classified as Other long-term assets within our accompanying unaudited consolidated balance sheets, in accordance with U.S. GAAP and our accounting policies. In the second quarter and first six months of 2021, we recorded losses of $8 million and $154 million, respectively, on our investment in Pulmonx Corporation presented in Other, net associated with the partial disposition of our ownership and remeasurement of our remaining investment to fair value based on observable market prices. On March 1, 2021, we completed our acquisition of Preventice, in which we previously held an equity interest of approximately 22 percent. In addition, on August 6, 2021, we completed the acquisition of the remaining shares of Farapulse, in which we previously held an equity stake of approximately 27 percent. As of June 30, 2021, the cost of our aggregated equity method investments exceeded our share of the underlying equity in net assets by $314 million, which represents amortizable intangible assets, in-process research and development (IPR&D), goodwill and deferred tax liabilities.
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Goodwill and Other Intangible Assets |
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
GOODWILL AND OTHER INTANGIBLE ASSETS | NOTE C – GOODWILL AND OTHER INTANGIBLE ASSETS The gross carrying amount of goodwill and other intangible assets and the related accumulated amortization for intangible assets subject to amortization and accumulated write-offs of goodwill are as follows:
(1) In the fourth quarter of 2020, we recorded goodwill impairment charges of $73 million related to the Specialty Pharmaceuticals business and classified the remaining assets and liabilities as held for sale as of December 31, 2020. On March 1, 2021, we completed the divestiture of the Specialty Pharmaceuticals business. The goodwill impairment charges of $73 million related to the Specialty Pharmaceuticals business are no longer presented within accumulated write-offs above as of June 30, 2021. The increase in our balance of goodwill and intangible assets is primarily related to our acquisition of Preventice in the first quarter of 2021. Our technology-related intangible assets consist of technical processes, intellectual property and institutional understanding with respect to products and processes that we intend to leverage in future products or processes and will carry forward from one product generation to the next. We used the multi-period excess earnings method, a form of the income approach, to derive the fair value of the technology-related intangible assets and are amortizing them on a straight-line basis over their assigned estimated useful lives. Our IPR&D represents intangible assets that are used in research and development activities but have not yet reached technological feasibility, regardless of whether they have alternative future use. The primary basis for determining the technological feasibility or completion of these projects is obtaining regulatory approval to market the underlying products in an applicable geographic region. The following represents our goodwill balance by global reportable segment:
Prior to the divestiture on March 1, 2021, we presented the Specialty Pharmaceuticals business as a standalone operating segment alongside our reportable segments. Goodwill and Intangible Asset Impairments We did not record any goodwill impairment charges in the second quarter or first six months of 2021 or 2020. We test our goodwill balances in the second quarter of each year as of April 1 for impairment, or more frequently if impairment indicators are present or changes in circumstances suggest an impairment may exist. 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. In the second quarter of 2021, we performed our annual goodwill impairment test for all of our reporting units using the quantitative approach described in FASB ASC Topic 350, Intangibles - Goodwill and Other (FASB ASC Topic 350). We identified the following reporting units in our 2021 annual goodwill impairment test: Interventional Cardiology, Peripheral Interventions, Cardiac Rhythm Management, Electrophysiology, Endoscopy, Urology and Pelvic Health and Neuromodulation. We aggregated the Cardiac Rhythm Management and Electrophysiology reporting units, components of the Rhythm Management operating segment, based on the criteria prescribed in FASB ASC Topic 350. We determined that the fair value of each reporting unit exceeded its carrying value and concluded that goodwill was not impaired or at risk of impairment. We recorded Intangible asset impairment charges of $45 million in the second quarter and first six months of 2021, $34 million in the second quarter of 2020 and $233 million in the first six months of 2020. We review intangible assets subject to amortization quarterly to determine if any adverse conditions exist or a change in circumstances has occurred that would indicate impairment or a change in the remaining useful life. We test our indefinite-lived intangible assets at least annually during the third quarter for impairment and reassess their classification as indefinite-lived assets. In addition, we review our indefinite-lived intangible assets for classification and impairment more frequently if impairment indicators exist. During the second quarter of 2021, we determined it was more likely than not that one of our indefinite-lived intangible assets was impaired based on our qualitative assessment of impairment indicators. We tested the intangible asset for recoverability and recorded an impairment charge associated with incremental time and cost to complete the associated in-process research and development (IPR&D) project. The impairment charges recorded in the first six months of 2020 were primarily associated with amortizable technology-related intangible assets that were initially established following our acquisition of nVision. These charges were recorded as a result of management’s decision to change commercial launch plans or discontinue certain R&D programs based on cost to complete, time to market, overall economic viability or, specific to nVision, our understanding of the clinical evidence necessary to commercialize the technology. Refer to Note A – Significant Accounting Policies to our audited financial statements contained in Item 8 of our most recent Annual Report on Form 10-K for further discussion of our annual goodwill and intangible asset impairment testing.
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Hedging Activities and Fair Value Measurements |
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HEDGING ACTIVITIES AND FAIR VALUE MEASUREMENTS | NOTE D – HEDGING ACTIVITIES AND FAIR VALUE MEASUREMENTS Derivative Instruments and Hedging Activities We address market risk from changes in foreign currency exchange rates and interest rates through risk management programs which include the use of derivative and nonderivative financial instruments. We operate these programs pursuant to documented corporate risk management policies and do not enter into derivative transactions for speculative purposes. Our derivative instruments do not subject our earnings to material risk, as the gains or losses on these derivatives generally offset losses or gains recognized on the hedged item. We manage concentration of counterparty credit risk by limiting acceptable counterparties to major financial institutions with investment grade credit ratings, limiting the amount of credit exposure to individual counterparties and by actively monitoring counterparty credit ratings and the amount of individual credit exposure. We also employ master netting arrangements that limit the risk of counterparty non-payment on a particular settlement date to the net gain that would have otherwise been received from the counterparty. Although not completely eliminated, we do not consider the risk of counterparty default to be significant as a result of these protections. Further, none of our derivative instruments are subject to collateral or other security arrangements, nor do they contain provisions that are dependent on our credit ratings from any credit rating agency. Currency Hedging Instruments Risk Management Strategy Our risk from changes in currency exchange rates consists primarily of monetary assets and liabilities, forecasted intercompany and third-party transactions, and net investments in certain subsidiaries. We manage currency exchange rate risk at a consolidated level to reduce the cost of hedging by taking advantage of offsetting transactions. We employ derivative and nonderivative instruments, primarily forward currency contracts, to reduce the risk to our earnings and cash flows associated with changes in currency exchange rates. The success of our currency risk management program depends, in part, on forecast transactions denominated primarily in Euro, Japanese yen, Chinese renminbi and Australian dollar. We may experience unanticipated currency exchange gains or losses to the extent the actual activity is different than forecast. In addition, changes in currency exchange rates related to any unhedged transactions may impact our earnings and cash flows. Hedge Designations and Relationships Certain of our currency derivative instruments are designated as cash flow hedges under FASB ASC Topic 815, Derivatives and Hedging (FASB ASC Topic 815), and are intended to protect the U.S. dollar value of forecasted transactions. The gain or loss on a derivative instrument designated as a cash flow hedge is recorded in the Net change in derivative financial instruments component of Other comprehensive income (loss), net of tax (OCI) within our accompanying unaudited consolidated statements of comprehensive income (loss) until the underlying third-party transaction occurs. When the underlying third-party transaction occurs, we recognize the gain or loss in earnings within Cost of products sold in our accompanying unaudited consolidated statements of operations. In the event the hedging relationship is no longer effective, or if the occurrence of the hedged forecast transaction becomes no longer probable, we reclassify the gains or losses within Accumulated other comprehensive income (loss), net of tax (AOCI) to earnings at that time. We also designate certain forward currency contracts as net investment hedges to hedge a portion of our net investments in certain of our entities with functional currencies denominated in the Swiss franc, Japanese yen, British pound sterling, South Korean won and Taiwan dollar. For these derivative instruments, we elected to use the spot method to assess hedge effectiveness. We also elected to exclude the spot-forward difference, referred to as the excluded component, from the assessment of hedge effectiveness and are amortizing this amount separately, as calculated at the date of designation, on a straight-line basis over the term of the currency forward contracts. As such, we defer recognition of foreign currency gains and losses within the Foreign currency translation adjustment (CTA) component of OCI, and we reclassify amortization of the excluded component from AOCI to current period earnings within Interest expense in our accompanying unaudited consolidated statements of operations. We designate certain euro-denominated debt as net investment hedges to hedge a portion of our net investments in certain of our entities with functional currencies denominated in the Euro. As of June 30, 2021 and December 31, 2020, we designated as a net investment hedge a portion of our €900 million in aggregate principal amount of 0.625% senior notes issued in November 2019 and due in 2027. For these nonderivative instruments, we defer recognition of the foreign currency remeasurement gains and losses within the CTA component of OCI. We reclassify these gains and losses to current period earnings within Other, net in our accompanying unaudited consolidated statements of operations only when the hedged item affects earnings, which would occur upon disposal or substantial liquidation of the underlying foreign subsidiary. We also use forward currency contracts that are not part of designated hedging relationships under FASB ASC Topic 815 as a part of our strategy to manage our exposure to currency exchange rate risk related to monetary assets and liabilities and related forecast transactions. These non-designated currency forward contracts have an original time to maturity consistent with the hedged currency transaction exposures, generally less than one year, and are marked-to-market with changes in fair value recorded to earnings within Other, net in our accompanying unaudited consolidated statements of operations. Interest Rate Hedging Instruments Risk Management Strategy Our interest rate risk relates primarily to U.S. dollar borrowings partially offset by U.S. dollar cash investments. We use interest rate derivative instruments to mitigate the risk to our earnings and cash flows associated with exposure to changes in interest rates. Under these agreements, we and the counterparty, at specified intervals, exchange the difference between fixed and floating interest amounts calculated by reference to an agreed-upon notional principal amount. We designate these derivative instruments either as fair value or cash flow hedges in accordance with FASB ASC Topic 815. Hedge Designations and Relationships We had no interest rate derivative instruments designated as cash flow hedges outstanding as of June 30, 2021 and December 31, 2020. Prior to 2020, we terminated interest rate derivative instruments that were designated as cash flow hedges and are continuing to recognize the amortization of the gains or losses originally recorded within AOCI to earnings as a component of Interest expense over the same period that the hedged item affects earnings, provided the hedge relationship remains effective. If we determine the hedge relationship is no longer effective, or if the occurrence of the hedged forecast transaction becomes no longer probable, we reclassify the amount of gains or losses from AOCI to earnings at that time. In the event that we designate outstanding interest rate derivative instruments as cash flow hedges, we record the changes in the fair value of the derivatives within OCI until the underlying hedged transaction occurs. The balance of the deferred amounts on our terminated cash flow hedges within AOCI was a $27 million loss as of June 30, 2021 and a $29 million loss as of December 31, 2020. We recognized immaterial gains and losses in Interest expense relating to the amortization of our terminated cash flow hedges in the current and prior periods. We had no interest rate derivative instruments designated as fair value hedges outstanding as of June 30, 2021 and December 31, 2020. Prior to 2018, we terminated interest rate derivative instruments that were designated as fair value hedges and are continuing to recognize the amortization of the gains or losses originally recorded within Long-term debt in our accompanying unaudited consolidated balance sheets into earnings as a component of Interest expense over the same period that the discount or premium associated with the hedged items affects earnings. In the event that we designate outstanding interest rate derivative instruments as fair value hedges, we record the changes in the fair values of interest rate derivatives designated as fair value hedges and of the underlying hedged debt instruments in Interest expense, which generally offset. The balance of the deferred gains on our terminated fair value hedges within Long-term debt was immaterial as of June 30, 2021 and December 31, 2020. We recognized immaterial gains in Interest expense relating to the amortization of the terminated fair value hedges in the current and prior periods. The following table presents the contractual amounts of our hedging instruments outstanding:
(1) Foreign currency-denominated debt is the portion of the €900 million debt principal designated as a net investment hedge. The remaining time to maturity as of June 30, 2021 is within 60 months for all forward currency contracts designated as cash flow hedges and generally less than one year for all non-designated forward currency contracts. The forward currency contracts designated as net investment hedges generally mature within the next year. The euro-denominated debt principal designated as a net investment hedge has a contractual maturity of December 1, 2027. The following presents the effect of our derivative and nonderivative instruments designated as cash flow and net investment hedges under FASB ASC Topic 815 in our accompanying unaudited consolidated statements of operations. Refer to Note M – Changes in Other Comprehensive Income for the total amounts relating to derivative and nonderivative instruments presented within our accompanying unaudited consolidated statements of comprehensive income (loss).
(1) In all periods presented in the table above, the pre-tax (gain) loss amounts reclassified from AOCI to earnings represent the effect of the hedging relationships on earnings. All other amounts included in earnings related to hedging relationships were immaterial. (2) For our outstanding forward currency contracts designated as net investment hedges, the net gain or loss reclassified from AOCI to earnings as a reduction of Interest expense represents the straight-line amortization of the excluded component as calculated at the date of designation. This initial value of the excluded component has been excluded from the assessment of effectiveness in accordance with FASB ASC Topic 815. In the current and prior period, we did not recognize any gains or losses on the components included in the assessment of hedge effectiveness in earnings. (3) For our outstanding euro-denominated debt principal designated as a net investment hedge, the change in fair value attributable to changes in the spot rate is recorded in the CTA component of OCI. No amounts were reclassified from AOCI to current period earnings. As of June 30, 2021, pre-tax net gains or losses for our derivative instruments designated, or previously designated, as cash flow and net investment hedges under FASB ASC Topic 815 that may be reclassified from AOCI to earnings within the next twelve months are presented below (in millions):
Net gains and losses on currency hedge contracts not designated as hedging instruments offset by net gains and losses from currency transaction exposures are presented below:
Fair Value Measurements FASB ASC Topic 815 requires all derivative and nonderivative instruments to be recognized at their fair values as either assets or liabilities on the balance sheet. We determine the fair value of our derivative and nonderivative instruments using the framework prescribed by FASB ASC Topic 820, Fair Value Measurements and Disclosures (FASB ASC Topic 820) and considering the estimated amount we would receive or pay to transfer these instruments at the reporting date with respect to current currency exchange rates, interest rates, the creditworthiness of the counterparty for unrealized gain positions and our own creditworthiness for unrealized loss positions. In certain instances, we may utilize financial models to measure fair value of our derivative and nonderivative instruments. In doing so, we use inputs that include quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, other observable inputs for the asset or liability and inputs derived principally from, or corroborated by, observable market data by correlation or other means. The following are the balances of our derivative and nonderivative assets and liabilities:
(1) We classify derivative and nonderivative assets and liabilities as current when the settlement date of the contract is one year or less. (2) Foreign currency-denominated debt is the portion of the €900 million debt principal designated as a net investment hedge. A portion of this notional is subject to de-designation and re-designation based on changes in the underlying hedged item. Recurring Fair Value Measurements On a recurring basis, we measure certain financial assets and financial liabilities at fair value based upon quoted market prices. Where quoted market prices or other observable inputs are not available, we apply valuation techniques to estimate fair value. FASB ASC Topic 820 establishes a three-level valuation hierarchy for disclosure of fair value measurements. The category of a financial asset or a financial liability within the valuation hierarchy is based upon the lowest level of input that is significant to the measurement of fair value. The three levels of the hierarchy are defined as follows: •Level 1 – Inputs to the valuation methodology are quoted market prices for identical assets or liabilities. •Level 2 – Inputs to the valuation methodology are other observable inputs, including quoted market prices for similar assets or liabilities and market-corroborated inputs. •Level 3 – Inputs to the valuation methodology are unobservable inputs based on management’s best estimate of inputs market participants would use in pricing the asset or liability at the measurement date, including assumptions about risk. Assets and liabilities measured at fair value on a recurring basis consist of the following:
Our investments in money market funds and time deposits are classified within Level 1 of the fair value hierarchy because they are valued using quoted market prices. These investments are classified as Cash and cash equivalents within our accompanying unaudited consolidated balance sheets, in accordance with U.S. GAAP and our accounting policies. In addition to $2.379 billion invested in money market funds and time deposits as of June 30, 2021 and $1.584 billion as of December 31, 2020, we held $296 million in interest-bearing and non-interest-bearing bank accounts as of June 30, 2021 and $150 million as of December 31, 2020. Our recurring fair value measurements using Level 3 inputs include those related to our contingent consideration liability. Refer to Note B – Acquisitions, Divestitures and Strategic Investments for a discussion of the changes in the fair value of our contingent consideration liability. In addition, our recurring fair value measurements using Level 3 inputs related to our licensing arrangements, including the contractual right to receive future royalty payments related to the Zytiga™ Drug. We recognized a financial asset and associated liability for our licensing arrangements at fair value in our accompanying unaudited consolidated balance sheets using the fair value option in accordance with FASB ASC Topic 825, Financial Instruments. We own the contractual right to receive 50 percent of the future royalty payments from the licensee and remit such payments to the inventors associated with the intellectual property. Royalty payments we receive reduce the fair value of the financial asset and are presented within Proceeds from royalty rights, and payments we remit to inventors reduce the fair value of the financial liability and are presented within Payments for royalty rights within our unaudited consolidated statements of cash flows. We sold our right to receive and retain the other 50 percent of the future royalty payments in 2019 for an upfront cash payment, which we accounted for as a secured borrowing in accordance with FASB ASC Topic 860, Transfers and Servicing. Although we sold these rights, we continue to recognize at fair value the future royalty payments as a financial asset and associated liability. Royalty payments associated with the rights we sold no longer impact our cash flows, and we present this activity as Non-cash impact of transferred royalty rights in the supplemental information to our unaudited consolidated statements of cash flows. We reduce the fair value of the financial asset and associated liability when such non-cash activity occurs. We have recorded the fair value of the financial asset and associated liability using a discounted cash flow approach considering the probability-weighted expected future cash flows to be generated by the royalty stream. The fair value of the financial liability also considers the related contractual provisions that govern our payment obligations. Significant increases or decreases in projected cash flows of the royalty stream and the related contractual provisions that govern our payment obligations, discount rates or the time until payment is made would have resulted in a significantly lower or higher fair value measurement of the licensing arrangements' financial asset and liability as of June 30, 2021. However, increases or decreases in the financial asset would be offset by increases or decreases in the financial liability, other than for timing of receipt and remittance; as such our earnings are not subject to material gains and losses from the licensing arrangement. The recurring Level 3 fair value measurements of our licensing arrangements recognized in our accompanying unaudited consolidated balance sheets as of June 30, 2021 include the following significant unobservable inputs:
(1) Unobservable inputs relate to a single financial asset and liability. As such, unobservable inputs were not weighted by the relative fair value of the instruments. For projected year of payment, the amount represents the median of the inputs and is not a weighted average. Changes in the fair value of our licensing arrangements' financial asset were as follows:
Changes in the fair value of our licensing arrangements' financial liability were as follows:
Non-Recurring Fair Value Measurements We hold certain assets and liabilities that are measured at fair value on a non-recurring basis in periods after initial recognition. The fair value of a measurement alternative investment is not estimated if there are no identified events or changes in circumstances that may have a significant adverse effect on the fair value of the investment. Refer to Note B – Acquisitions, Divestitures and Strategic Investments for a discussion of our strategic investments and Note C – Goodwill and Other Intangible Assets for a discussion of the fair values of our intangible assets including goodwill. The fair value of our outstanding debt obligations was $10.431 billion as of June 30, 2021, including $1.085 billion relating to our euro-denominated December 2027 Notes, and $10.774 billion as of December 31, 2020, including $1.118 billion relating to our euro-denominated December 2027 Notes. We determined fair value by using quoted market prices for our publicly registered senior notes, classified as Level 1 within the fair value hierarchy, and face value for commercial paper, term loans and credit facility borrowings outstanding. Refer to Note E – Contractual Obligations and Commitments for a discussion of our debt obligations.
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
CONTRACTUAL OBLIGATIONS AND COMMITMENTS | NOTE E – CONTRACTUAL OBLIGATIONS AND COMMITMENTS Borrowings and Credit Arrangements We had total debt outstanding of $9.109 billion as of June 30, 2021 and $9.143 billion as of December 31, 2020, with current maturities of $262 million as of June 30, 2021 and $13 million as of December 31, 2020. The debt maturity schedule for our long-term debt obligations is presented below:
Note: The table above does not include unamortized amounts related to interest rate contracts designated as cash flow hedges. (1) Coupon rates are semi-annual, except for the euro-denominated December 2027 Notes, which bear an annual coupon. (2) Corporate credit rating improvements may result in a decrease in the adjusted interest rate on our November 2035 Notes to the extent that our lowest credit rating is above BBB- or Baa3. The interest rates on our November 2035 Notes will be permanently reinstated to the issuance rate if the lowest credit ratings assigned to these senior notes is either A- or A3 or higher. (3) As of June 30, 2021 the outstanding balance is presented within Current Debt Obligations within our unaudited consolidated balance sheet. Revolving Credit Facility On May 10, 2021 we entered into a new $2.750 billion revolving credit facility (2021 Revolving Credit Facility) with a global syndicate of commercial banks and terminated our previous facility (2018 Revolving Credit Facility). The 2021 Revolving Credit Facility will mature on May 10, 2026, with one-year extension options, subject to certain conditions. This facility provides backing for our commercial paper program, and outstanding commercial paper directly reduces borrowing capacity under the 2021 Revolving Credit Facility. There were no amounts outstanding under the 2021 Revolving Credit Facility as of June 30, 2021 or under the 2018 Revolving Credit Facility as of December 31, 2020. Financial Covenant As of and through June 30, 2021, we were in compliance with the financial covenant required by the credit facilities described above:
(1)Ratio of total debt to consolidated EBITDA, as defined by the credit agreements, as amended. The 2021 Revolving Credit Facility includes the following financial covenant requirement for all of our credit arrangements (i) maintain the maximum permitted leverage ratio of 4.25 times for the second quarter of 2021, with a step-down for each succeeding fiscal quarter end, beginning with the third quarter of 2021, to 4.00 times and 3.75 times for the fourth quarter of 2021 and through the remaining term of the 2021 Revolving Credit Facility. The agreement provides for higher leverage ratios for the period following a qualified acquisition, at our election, for which consideration exceeds $1.000 billion. In the event of such an acquisition, for the four succeeding quarters immediately following, including the quarter in which the acquisition occurs, the maximum permitted leverage ratio is 4.75 times. It steps down for the fifth, sixth and seventh succeeding quarters to 4.50 times, 4.25 times and 4.00 times, respectively. Thereafter, a maximum leverage ratio of 3.75 times is required through the remaining term of the 2021 Revolving Credit Facility. The financial covenant requirement provides for an exclusion from the calculation of consolidated EBITDA, as defined by the agreements, through maturity, of any non-cash charges and up to $500 million in restructuring charges and restructuring-related expenses related to our current or future restructuring plans. As of June 30, 2021, we had $467 million of the restructuring charge exclusion remaining. In addition, any cash litigation payments (net of any cash litigation receipts), as defined by the agreements, are excluded from the calculation of consolidated EBITDA, as defined by the agreements, provided that the sum of any excluded net cash litigation payments do not exceed $1.455 billion in the aggregate. As of June 30, 2021, we had $1.303 billion of the litigation exclusion remaining. Any inability to maintain compliance with this covenant could require us to seek to further renegotiate the terms of our credit arrangements or seek waivers from compliance with this covenant, both of which could result in additional borrowing costs. Further, there can be no assurance that our lenders would agree to such new terms or grant such waivers on terms acceptable to us. In this case, all 2021 Revolving Credit Facility commitments would terminate, and any amounts borrowed under the facility would become immediately due and payable. Furthermore, any termination of our 2021 Revolving Credit Facility may negatively impact the credit ratings assigned to our commercial paper program, which may impact our ability to refinance any then outstanding commercial paper as it becomes due and payable. Commercial Paper Our commercial paper program is backed by the 2021 Revolving Credit Facility, as discussed above, and outstanding commercial paper directly reduces borrowing capacity under the 2021 Revolving Credit Facility. We did not have any commercial paper outstanding as of June 30, 2021 or December 31, 2020. Senior Notes We had senior notes outstanding of $9.168 billion as of June 30, 2021 and $9.205 billion as of December 31, 2020. Our senior notes were issued in public offerings, are redeemable prior to maturity and are not subject to sinking fund requirements. Our senior notes are unsecured, unsubordinated obligations and rank on parity with each other. These notes are effectively junior to liabilities of our subsidiaries (see Other Arrangements below). Other Arrangements We have accounts receivable factoring programs in certain European countries and with commercial banks in China and Japan which include promissory notes discounting programs. We account for our factoring programs as sales under FASB ASC Topic 860, Transfers and Servicing. We have no retained interest in the transferred receivables, other than collection and administration, and once sold, the accounts receivable are no longer available to satisfy creditors in the event of bankruptcy. Amounts de-recognized for accounts and notes receivable, which are excluded from Trade accounts receivable, net in our accompanying unaudited consolidated balance sheets, are aggregated by contract denominated currency below (in millions):
Other Contractual Obligations and Commitments We had outstanding letters of credit of $135 million as of June 30, 2021 and $124 million as of December 31, 2020, which consisted primarily of bank guarantees and collateral for workers' compensation insurance arrangements. As of June 30, 2021 and December 31, 2020, none of the beneficiaries had drawn upon the letters of credit or guarantees, and accordingly, we have not recognized a related liability for our outstanding letters of credit in our accompanying unaudited consolidated balance sheets as of June 30, 2021 and December 31, 2020. Refer to Note F – Contractual Obligations and Commitments to our audited financial statements contained in Item 8 of our most recent Annual Report on Form 10-K for additional information on our borrowings and credit agreements.
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Supplemental Balance Sheet Information |
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Supplemental Balance Sheet Information [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
SUPPLEMENTAL BALANCE SHEET INFORMATION | NOTE F – SUPPLEMENTAL BALANCE SHEET INFORMATION Components of selected captions in our accompanying unaudited consolidated balance sheets are as follows: Trade accounts receivable, net
The following is a rollforward of our Allowance for credit losses:
(1) Effective January 1, 2020, we adopted FASB ASC Topic 326, Financial Instruments - Credit Losses using the modified retrospective method, which requires that we recognize credit loss reserves when financial assets are established if credit losses are expected over the asset’s contractual life. Refer to Note R – New Accounting Pronouncements to our audited financial statements contained in Item 8 of our most recent Annual Report on Form 10-K for additional information. In accordance with FASB ASC Topic 326, we record credit loss reserves to Allowance for credit losses when we establish Trade accounts receivable if credit losses are expected over the asset's contractual life. We base our estimates of credit loss reserves on historical experience and adjust, as necessary, to reflect current conditions using reasonable and supportable forecasts not already reflected in the historical loss information. We utilize an accounts receivable aging approach to determine the reserve to record at accounts receivable commencement for certain customers, applying country or region-specific factors. In performing the assessment of outstanding accounts receivable, regardless of country or region, we may consider significant factors relevant to collectability, including those specific to a customer such as bankruptcy, lengthy average payment cycles and type of account. We closely monitor outstanding receivables for potential collection risks, including those that may arise from economic conditions. Our sales to government-owned or supported customers, particularly in southern Europe, are subject to an increased number of days outstanding prior to payment relative to other countries. More recently, we have seen an increase in the volume of our U.S. business conducted in ambulatory surgery centers and office-based laboratories. Many of these customers are smaller than those we have historically done business with and may have limited liquidity. We have adjusted our estimates of credit loss reserves for these customers, regions and conditions based on collection trends. Inventories
Other current assets
Property, plant and equipment, net
Depreciation expense was $83 million for the second quarter of 2021, $78 million for the second quarter of 2020, $166 million for the first six months of 2021 and $154 million for the first six months of 2020. Other long-term assets
Accrued expenses
Other current liabilities
Other long-term liabilities
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Income Taxes |
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Income Tax Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
INCOME TAXES | NOTE G – INCOME TAXES Our effective tax rate from continuing operations is presented below:
The change in our reported tax rates for the second quarter and first six months of 2021, as compared to the same periods in 2020, relates primarily to the impact of certain receipts and charges that are taxed at different rates than our effective tax rate. These receipts and charges include acquisition/divestiture-related net charges (credits), restructuring and restructuring-related net charges (credit), litigation charges, investment portfolio net losses (gains), as well as certain discrete tax items primarily related to changes in foreign tax rates, and changes in tax laws adopted in the second quarter of 2021, as well as the impacts of the Coronavirus Aid, Relief and Economic Security (CARES) Act in the second quarter of 2020. As of June 30, 2021, we had $280 million of gross unrecognized tax benefits, of which a net $195 million, if recognized, would affect our effective tax rate. As of December 31, 2020, we had $261 million of gross unrecognized tax benefits, of which a net $183 million, if recognized, would affect our effective tax rate. The change in our gross unrecognized tax benefit is primarily related to positions on new entities we acquired through recent acquisitions and restructuring activities. It is reasonably possible that within the next 12 months, we will resolve multiple issues with foreign, federal and state taxing authorities, resulting in a reduction in our balance of unrecognized tax benefits of up to $24 million. Economic stimulus legislation has been enacted in many countries in response to the COVID-19 pandemic. In the U.S., the CARES Act, enacted on March 27, 2020, provided an estimated $2.2 trillion in COVID-19 pandemic-related relief, and included tax relief and government loans, subsidies and other relief for entities in affected industries. While we have not applied for government loans, we have taken advantage of the benefits offered in multiple jurisdictions, including the U.S. provision allowing taxpayers to defer payment of the employer portion of certain payroll taxes incurred in 2020. This allowed us to preserve cash generated from operations to service our debt obligations and other near-term commitments and is expected to be paid in full by the end of 2022 as permitted by the legislation.
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Commitments and Contingencies |
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Jun. 30, 2021 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | NOTE H – COMMITMENTS AND CONTINGENCIES The medical device market in which we participate is largely technology driven. As a result, intellectual property rights, particularly patents and trade secrets, play a significant role in product development and differentiation. Over the years, there has been litigation initiated against us by others, including our competitors, claiming that our current or former product offerings infringe patents owned or licensed by them. Intellectual property litigation is inherently complex and unpredictable. In addition, competing parties frequently file multiple suits to leverage patent portfolios across product lines, technologies and geographies and to balance risk and exposure between the parties. In some cases, several competitors are parties in the same proceeding, or in a series of related proceedings, or litigate multiple features of a single class of devices. These dynamics frequently drive settlement not only for individual cases, but also for a series of pending and potentially related and unrelated cases. Although monetary and injunctive relief is typically sought, remedies and restitution are generally not determined until the conclusion of the trial court proceedings and can be modified on appeal. Accordingly, the outcomes of individual cases are difficult to time, predict or quantify and are often dependent upon the outcomes of other cases in other geographies. During recent years, we successfully negotiated closure of several long-standing legal matters and have received favorable rulings in several other matters; however, there continues to be outstanding intellectual property litigation. Adverse outcomes in one or more of these matters could have a material adverse effect on our ability to sell certain products and on our operating margins, financial position, results of operations and/or liquidity. In the normal course of business, product liability, securities and commercial claims are asserted against us. Similar claims may be asserted against us in the future related to events not known to management at the present time. We maintain an insurance policy providing limited coverage against securities claims and we are substantially self-insured with respect to product liability claims and fully self-insured with respect to intellectual property infringement claims. The absence of significant third-party insurance coverage increases our potential exposure to unanticipated claims or adverse decisions. Product liability claims, securities and commercial litigation and other legal proceedings in the future, regardless of their outcome, could have a material adverse effect on our ability to sell certain products and on our operating margins, financial position, results of operations and/or liquidity. In addition, like other companies in the medical device industry, we are subject to extensive regulation by national, state and local government agencies in the U.S. and other countries in which we operate. From time to time we are the subject of qui tam actions and governmental investigations often involving regulatory, marketing and other business practices. These qui tam actions and governmental investigations could result in the commencement of civil and criminal proceedings, substantial fines, penalties and administrative remedies and have a material adverse effect on our financial position, results of operations and/or liquidity. In accordance with FASB ASC Topic 450, Contingencies, we accrue anticipated costs of settlement, damages, losses for product liability claims and, under certain conditions, costs of defense, based on historical experience or to the extent specific losses are probable and estimable. Otherwise, we expense these costs as incurred. If the estimate of a probable loss is a range and no amount within the range is more likely, we accrue the minimum amount of the range. Our accrual for legal matters that are probable and estimable was $617 million as of June 30, 2021 and $569 million as of December 31, 2020 and includes certain estimated costs of settlement, damages and defense. The increase in our legal accrual was mainly due to product liability cases or claims related to transvaginal surgical mesh products. A portion of our legal accrual is already funded through our qualified settlement fund (QSF), which is included in restricted cash and restricted cash equivalents in Other current assets of $167 million as of June 30, 2021 and $208 million as of December 31, 2020. Refer to Note F – Supplemental Balance Sheet Information for additional information. We recorded litigation-related net charges of $298 million during the second quarter of 2021 and $302 million during the first six months of 2021, related primarily to transvaginal surgical mesh products. We did not record any litigation-related net charges during the first six months of 2020. We record certain legal and product liability charges, credits and costs of defense, which we consider to be unusual or infrequent and significant as Litigation-related net charges (credits) in our accompanying unaudited consolidated financial statements. All other legal and product liability charges, credits and costs are recorded within Selling, general and administrative expenses in our accompanying unaudited consolidated statements of operations. We continue to assess certain litigation and claims to determine the amounts, if any, that management believes will be paid as a result of such claims and litigation and, therefore, additional losses may be accrued and paid in the future, which could materially adversely impact our operating results, cash flows and/or our ability to comply with our financial covenant. In management's opinion, we are not currently involved in any legal proceedings other than those disclosed in our most recent Annual Report on Form 10-K and those specifically identified below, which, individually or in the aggregate, could have a material adverse effect on our financial condition, operations and/or cash flows. Unless included in our legal accrual or otherwise indicated below, a range of loss associated with any individual material legal proceeding cannot be reasonably estimated. Patent Litigation On October 28, 2015, the Company filed suit against Cook Group Limited and Cook Medical LLC (collectively, “Cook”) in the United States District Court for the District of Delaware (1:15-cv-00980) alleging infringement of certain Company patents regarding Cook’s Instinct™ Endoscopic Hemoclip. The case was transferred to the District Court for the Southern District of Indiana. Cook filed seven Inter Partes Review (“IPR”) requests with the U.S. Patent and Trademark Office (USPTO) against the four asserted patents. All IPRs have concluded and Cook and the Company both appealed the Patent Office’s IPR decisions to the Federal Circuit Court of Appeals. On April 30, 2020, the U.S. Court of Appeals ruled that claims from two of the Company's patents remain valid, remanding two of the patents for further review by the USPTO’s Patent Trial and Appeal Board. In November 2020, the Patent Office issued remand rulings invalidating several additional claims. The district court stayed the case pending the appeals court decision on the IPRs, which is now complete. The case is proceeding before the United States District Court for the Southern District of Indiana, with the Company asserting three patents against Cook. Trial is anticipated in October 2022. On February 23, 2021, Nevro Corp. (“Nevro”) filed a complaint against the Company in the United States District Court for the District of Delaware (21-cv-258). The complaint alleges infringement of five Nevro patents by certain of the Company’s spinal cord stimulation systems. Product Liability Litigation As of July 20, 2021, approximately 54,500 product liability cases or claims related to transvaginal surgical mesh products designed to treat stress urinary incontinence and pelvic organ prolapse have been asserted against us. As of July 20, 2021, we have entered into master settlement agreements in principle or are in the final stages of entering one with certain plaintiffs' counsel to resolve an aggregate of approximately 52,500 cases and claims, adjusted to reflect the Company’s analysis of expected non-participation and duplicate claims. These master settlement agreements provide that the settlement and distribution of settlement funds to participating claimants are conditional upon, among other things, achieving minimum required claimant participation thresholds. Of the approximately 52,500 cases and claims, approximately 49,000 have met the conditions of the settlement and are final. All settlement agreements were entered into solely by way of compromise and without any admission or concession by us of any liability or wrongdoing. The pending cases are in various federal and state courts in the U.S. Generally, the plaintiffs allege personal injury associated with use of our transvaginal surgical mesh products. The plaintiffs assert design and manufacturing claims, failure to warn, breach of warranty, fraud, violations of state consumer protection laws and loss of consortium claims. Over 3,100 of the cases were specially assigned to one judge in state court in Massachusetts. On February 7, 2012, the Judicial Panel on Multi-District Litigation (MDL) established MDL-2326 in the U.S. District Court for the Southern District of West Virginia and transferred the federal court transvaginal surgical mesh cases to MDL-2326 for coordinated pretrial proceedings. The Court issued an Order closing the MDL on February 11, 2021, as all cases that had been pending were dismissed or remanded to courts of primary jurisdiction. Outside the United States, there are fewer than 75 claims in the United Kingdom and Ireland. In the first quarter of 2021, two class actions were filed against the Company in Australia. In the second quarter of 2021, one of these class actions was permanently stayed, while the other is proceeding. At this time, the Company is aware of fewer than 125 claims in Australia. There are also fewer than 10 cases in Canada, inclusive of one certified class action, which has settled and received Court approval. On April 16, 2019, the U.S. Food and Drug Administration (FDA) ordered that all manufacturers of surgical mesh products indicated for the transvaginal repair of pelvic organ prolapse stop selling and distributing their products in the United States immediately, stemming from the FDA’s 2016 reclassification of these devices to class III (high risk) devices, and as a result, the Company ceased global sales and distribution of surgical mesh products indicated for transvaginal pelvic organ prolapse. In April 2021 the Company's Board of Directors received a shareholder demand under section 220 of the Delaware General Corporation Law, for inspection of books and records. The Company has notified our insurer and retained counsel to respond to the demand. We have established a product liability accrual for known and estimated future cases and claims asserted against us as well as with respect to the actions that have resulted in verdicts against us and the costs of defense thereof associated with our transvaginal surgical mesh products. In the second quarter of 2021, we increased the accrual associated with this matter by $298 million to account for increased, post-COVID-19 settlement and litigation activity related to the remaining cases and claims the Company faces, our revision of the per-case settlement amount for these cases based on recent settlement and litigation activity, and changes to our expectations regarding the rate of incoming cases and claims. We continue to engage in discussions with plaintiffs’ counsel regarding potential resolution of pending cases and claims. We continue to vigorously contest the cases and claims asserted against us that do not settle and expect that more cases will go to trial through 2023. The final resolution of the cases and claims is uncertain and could have a further material impact on our results of operations, financial condition and/or liquidity. Trials involving our transvaginal surgical mesh products have resulted in both favorable and unfavorable judgments for us. We do not believe that the judgment in any one trial is representative of potential outcomes of all cases or claims related to our transvaginal surgical mesh products. We are currently named as a defendant in 147 filed product liability cases involving our Greenfield Vena Cava Filter, which we discontinued marketing and active selling in the fourth quarter of 2018, alleging various injuries, including perforation of the vena cava, post-implant deep vein thrombosis, fracture, and other injuries. Most of the filed cases are part of a consolidated matter in Middlesex County, Massachusetts. We have received notice of an additional 521 claims, none of which have been filed. As of June 24, 2021, we have entered into master settlement agreements in principle or are in the final stages of entering with certain plaintiffs’ counsel to resolve approximately 200 cases. Governmental Investigations and Qui Tam Matters On May 5, 2014, we were served with a subpoena from the U.S. Department of Health and Human Services, Office of the Inspector General. The subpoena seeks information relating to the launch of the Cognis™ CRT-D and Teligen™ ICD line of devices in 2008, the performance of those devices from 2007 to 2009 and the operation of our Physician Guided Learning Program. We are cooperating with this request. On May 6, 2016, a qui tam lawsuit in this matter was unsealed in the United States District Court for the District of Minnesota. At the same time, we learned that the U.S. federal government and the State of California had earlier declined to intervene in that lawsuit on April 15, 2016. The complaint was served on us on July 21, 2016. On October 7, 2016, the plaintiff/relator served an amended complaint that dropped the allegations relating to our Physician Guided Learning Program. We filed a motion to dismiss the amended complaint on December 7, 2016 and the court heard our motion to dismiss on April 5, 2017. On August 29, 2017, the Court granted the motion to dismiss, without prejudice and on September 19, 2017, the relator filed a Second Amended Complaint. We filed a motion to dismiss the Second Amended Complaint on October 10, 2017 and the Court denied that motion on December 13, 2017. On July 31, 2018, the relator filed a motion seeking leave to file a Third Amended Complaint. The Court denied the motion on October 30, 2018. In February 2021, we filed a motion for summary judgment, which the relator opposed, and on April 29, 2021, the Court held a hearing on that motion. The motion remains pending. Other Proceedings On December 4, 2020 Enrique Jevons, individually and on behalf of all others similarly situated, filed a class action complaint against the Company, Michael F. Mahoney and Daniel J. Brennan, stemming from the recall and retirement of the LOTUS Edge™ Aortic Valve System (LOTUS System) in United States District Court for the Eastern District of New York. On December 14, 2020, the parties agreed to transfer the case to the United States District Court for the District of Massachusetts. On December 16, 2020, Mariano Errichiello, individually and on behalf of all other similarly situated, filed a second, materially similar class action complaint against the Company, Michael F. Mahoney, Joseph M. Fitzgerald, and Daniel J. Brennan in the United States District Court for the District of Massachusetts. Subsequently, on March 30, 2021, the Court consolidated the two actions, and appointed Mariano Errichiello as the lead plaintiff. Under the terms of the Court-approved Scheduling Order, Counsel for Mr. Errichiello was required to file an Amended Complaint on or before June 4, 2021, which it did, and, in response the Company brought a Motion to Dismiss the Amended Complaint by July 19, 2021. On December 15, 2020, the Securities and Exchange Commission’s Boston Regional Office (Boston SEC) notified the Company that it was conducting an investigation related to the Company’s decision to retire the LOTUS System, and issued a voluntary request for documents and information related to that decision. On February 10, 2021, the Boston SEC issued a second voluntary request for additional documents and information. The Company is cooperating fully with the investigation. On February 8, 2021, the Company received a letter from The Vladimir Gusinsky Revocable Trust, a shareholder, demanding that the Company’s Board of Directors conduct an investigation into actions by the Company’s directors and executive officers regarding statements made about the effectiveness and commercial viability of the LOTUS System. The Trust subsequently agreed to stay its demand, pending the outcome of any dispositive motion against the Amended Complaint in the class action complaint described above. The Company received letters on behalf of the Union Excavators Local 731 Pension Fund and Diane Nachbaur, two stockholders of the Company, on July 26, 2021 and July 29, 2021, respectively, each demanding access to certain books and records of the Company, pursuant to 8 Delaware Section 220, regarding the business, operations, effectiveness and commercial viability of the LOTUS system, and related items. Matters Concluded Since December 31, 2020 On February 23, 2015, a judge for the Court of Modena (Italy) ordered a trial for the Company and three of its employees, as well as numerous other defendants charged in criminal proceedings. The charges arose from allegations that the defendants made improper donations to certain healthcare providers and other employees of the Hospital of Modena in order to induce them to conduct unauthorized clinical trials, as well as related government fraud in relation to the financing of such clinical trials. A trial began on February 24, 2016. On November 10, 2017, the Court issued a ruling that convicted one Company employee but acquitted two others and levied a fine of €245 thousand against us and imposed joint and several civil damages of €620 thousand on all defendants. We continue to deny these allegations, and timely appealed the decision on May 10, 2018. On November 9, 2020, the Court of Appeal in Bologna reversed the judgements against the Company and its employee and acquitted them of all charges. This judgment of acquittal became final as to the Company and its employee on April 15, 2021 when the prosecution chose not to appeal. During the fourth quarter of 2013, we received written discovery requests from certain state attorneys general regarding our transvaginal surgical mesh products and related alleged violations of states’ consumer protection statutes. On December 12, 2019, the Mississippi Attorney General filed suit against us in a Mississippi state court alleging violations of the Mississippi Consumer Protection Act. In the fourth quarter of 2020 and the first quarter of 2021, we reached settlements with 48 states, including Mississippi, and the District of Columbia. These settlements were finalized in March of 2021. On September 6, 2019, Boston Scientific Corporation, Boston Scientific Scimed, Inc., and Fortis Advisors, LLC, as a Securityholder Representative for the former Securityholders of nVision Medical Corp. filed a declaratory judgment action against BioCardia, Inc. in the United States District Court for the Northern District of California to address threats and allegations by BioCardia challenging inventorship and ownership of various patents that Boston Scientific Corporation acquired through an April 13, 2018 merger with nVision as well as related threats and allegations by BioCardia of trade secret misappropriation and unjust enrichment. On December 11, 2019, BioCardia filed an amended answer and counterclaims. On April 23, 2020, BioCardia filed a complaint against nVision, which had not been named as a defendant in the original case. On May 22, 2020, BioCardia amended its complaint against nVision to add twenty former nVision shareholders as defendants. On August 20, 2020, BioCardia again amended its complaint against Boston Scientific Corporation/Boston Scientific Scimed, Inc./Fortis Advisors, LLC and its complaint against nVision/nVision shareholders. On April 8, 2021, the parties settled the dispute, and, on April 12, 2021, the parties filed stipulations with the court to dismiss the remaining legal proceedings. The settlement did not result in any material benefit or liability to the Company.
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Stockholders' Equity |
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Jun. 30, 2021 | |
Stockholders' Equity Note [Abstract] | |
STOCKHOLDERS' EQUITY | NOTE I – STOCKHOLDERS' EQUITY Preferred Stock We are authorized to issue 50 million shares of preferred stock in one or more series and to fix the powers, designations, preferences and relative participating, option or other rights thereof, including dividend rights, conversion rights, voting rights, redemption terms, liquidation preferences and the number of shares constituting any series, without any further vote or action by our stockholders. On May 27, 2020, we completed an offering of 10,062,500 shares of 5.50% Mandatory Convertible Preferred Stock (MCPS), Series A at a price to the public and liquidation preference of $100 per share. The net proceeds from the MCPS offering were approximately $975 million after deducting underwriting discounts and commissions and offering expenses. As of June 30, 2021, our MCPS had an aggregate liquidation preference of $1.006 billion. Holders of MCPS will be entitled to receive, when, as and if declared by our Board of Directors, or an authorized committee thereof, out of funds legally available for payment, cumulative dividends at the annual rate of 5.50% of the liquidation preference of $100 per share, payable in cash or, subject to certain limitations, by delivery of shares of common stock or any combination of cash and shares of common stock, at our election; provided, however, that any unpaid dividends on the MCPS will continue to accumulate as described in the Certificate of Designations. Subject to certain exceptions, no dividend or distribution will be declared or paid on shares of our common stock, and no common stock will be purchased, redeemed or otherwise acquired for consideration by us or any of our subsidiaries unless, in each case, all accumulated and unpaid dividends for all preceding dividend periods have been declared and paid, or a sufficient amount of cash or number of shares of common stock has been set apart for the payment of such dividends, on all outstanding shares of MCPS. In the event of our voluntary or involuntary liquidation, winding-up or dissolution, no distribution of our assets may be made to holders of our common stock until we have paid holders of our MCPS, each of which will be entitled to receive a liquidation preference in the amount of $100 per share plus accumulated and unpaid dividends. Unless earlier converted, each share of MCPS will automatically convert on June 1, 2023, subject to postponement for certain market disruption events, into between 2.3834 and 2.9197 shares of common stock, subject to customary anti-dilution adjustments. The number of shares of common stock issuable upon conversion will be determined based on the average volume-weighted average price per share of common stock over the 20 consecutive trading day period beginning on, and including, the 21st scheduled trading day immediately preceding June 1, 2023. The MCPS is not subject to any redemption, sinking fund or other similar provisions. However, at our option, we may purchase or exchange the MCPS from time to time in the open market, by tender or exchange offer or otherwise, without the consent of, or notice to, holders of MCPS. The holders of the MCPS will not have any voting rights, with limited exceptions. In the second quarter of 2021, the Audit Committee of our Board of Directors (the Committee), pursuant to authority delegated to such committee by our Board of Directors, declared and we paid a cash dividend of $1.375 per MCPS share to holders of our MCPS as of May 15, 2021, representing a dividend period from March through May 2021. On July 23, 2021, the Committee declared a cash dividend of $1.375 per MCPS share to holders of our MCPS as of August 15, 2021, representing a dividend period from June through August 2021. We have presented cumulative, unpaid dividends within Accrued expenses within our unaudited consolidated balance sheet as of June 30, 2021. Refer to Note L – Stockholders' Equity to our audited financial statements contained in Item 8 of our most recent Annual Report on Form 10-K for information on the pertinent rights and privileges of our outstanding common stock.
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Weighted Average Number Of Shares Outstanding [Text Block] | NOTE J – WEIGHTED AVERAGE SHARES OUTSTANDING
The following securities were excluded from the calculation of weighted average shares outstanding - assuming dilution because their effect in the periods presented below would have been anti-dilutive:
(1) Represents common stock equivalents pursuant to our employee stock-based compensation plans, which are anti-dilutive in the second quarter and first six months of 2020 due to our Net loss position in those periods. (2) Represents stock options outstanding pursuant to our employee stock-based compensation plans with exercise prices that were greater than the average fair market value of our common stock for the related periods. (3) Represents common stock issuable upon the conversion of MCPS. Refer to Note I – Stockholders' Equity for additional information. We base Net income (loss) per common share - assuming dilution upon the weighted-average number of common shares and common stock equivalents outstanding during each year. Potential common stock equivalents are determined using the treasury stock method. We exclude stock options, stock awards and MCPS from the calculation if the effect would be anti-dilutive. The dilutive effect of MCPS is calculated using the if-converted method. The if-converted method assumes that these securities were converted to shares of common stock at the beginning of the reporting period to the extent that the effect is dilutive. For the second quarter and first six months of 2021, the effect of assuming the conversion of MCPS into shares of common stock was anti-dilutive, and therefore excluded from the calculation of earnings per share (EPS). Accordingly, Net income was reduced by cumulative Preferred stock dividends, as presented in our accompanying unaudited consolidated statements of operations, for purposes of calculating Net income available to common stockholders. We issued approximately one million shares of our common stock in the second quarter of 2021 and 2020, and five million shares in the first six months of 2021 and 2020, following the exercise of stock options, vesting of deferred stock units or purchases under our employee stock purchase plan. We did not repurchase any shares of our common stock in the first six months of 2021 or 2020. On December 14, 2020, our Board of Directors approved a new stock repurchase program authorizing the repurchase of up to $1.000 billion of our common stock. As of June 30, 2021, we had the full amount remaining available under the authorization.
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Segment Reporting |
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SEGMENT REPORTING | NOTE K – SEGMENT REPORTING Our seven core businesses are organized into three reportable segments: MedSurg, Rhythm and Neuro, and Cardiovascular, which represent an aggregation of our operating segments that generate revenues from the sale of medical devices. We measure and evaluate our reportable segments based on net sales of reportable segments, operating income of reportable segments, excluding intersegment profits, and operating income of reportable segments as a percentage of net sales of reportable segments. Operating income of reportable segments as a percentage of net sales of reportable segments is defined as operating income of reportable segments divided by net sales of reportable segments. We exclude from operating income of reportable segments certain corporate-related expenses and certain transactions or adjustments that our chief operating decision maker (CODM) considers to be non-operational, such as amounts related to amortization expense, goodwill and other intangible asset impairment charges, acquisition/divestiture-related net charges (credits), restructuring and restructuring-related net charges (credits); and certain litigation-related net charges (credits) and European Union (EU) Medical Device Regulation (MDR) implementation costs. Although we exclude these amounts from operating income of reportable segments, they are included in reported Income (loss) before income taxes in our accompanying unaudited consolidated statements of operations and are included in the reconciliation below. A reconciliation of the totals reported for the reportable segments to the applicable line items within our accompanying unaudited consolidated statements of operations is as follows (in millions, except percentages):
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Revenue |
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Revenue from Contract with Customer [Text Block] | NOTE L – REVENUE We generate revenue primarily from the sale of single-use medical devices and present revenue net of sales taxes in our accompanying unaudited consolidated statements of operations. The following tables disaggregate our revenue from contracts with customers by business and geographic region (in millions):
On March 1, 2021, we completed the divestiture of the Specialty Pharmaceuticals business. Our consolidated net sales for the first six months of 2021 include Specialty Pharmaceuticals up to the date of the closing of the transaction.
(1) We define Emerging Markets as the 20 countries that we believe have strong growth potential based on their economic conditions, healthcare sectors and our global capabilities. Periodically, we assess our list of Emerging Markets countries, and effective January 1, 2021, modified our list to include the following countries: Brazil, Chile, China, Colombia, Czech Republic, India, Indonesia, Malaysia, Mexico, Philippines, Poland, Russia, Saudi Arabia, Slovakia, South Africa, South Korea, Taiwan, Thailand, Turkey and Vietnam. We have revised prior period amounts to conform to the current year's presentation which had an immaterial impact on previously reported Emerging Markets net sales. Deferred Revenue Contract liabilities are classified within Other current liabilities and Other long-term liabilities in our accompanying unaudited consolidated balance sheets. Our deferred revenue balance was $424 million as of June 30, 2021 and $395 million as of December 31, 2020. Our contractual liabilities are primarily composed of deferred revenue related to the LATITUDE™ Patient Management System within our Cardiac Rhythm Management (CRM) business, for which revenue is recognized over the average service period based on device and patient longevity. Our contractual liabilities also include deferred revenue related to the LUX-Dx™ Insertable Cardiac Monitor (ICM) system, also within our CRM business, for which revenue is recognized over the average service period based on device longevity and usage. We recognized revenue of $38 million in the second quarter and $74 million in the first six months of 2021 that was included in the above contract liability balance as of December 31, 2020. We have elected not to disclose the transaction price allocated to unsatisfied performance obligations when the original expected contract duration is one year or less. In addition, we have not identified material unfulfilled performance obligations for which revenue is not currently deferred. Variable Consideration We generally allow our customers to return defective, damaged and, in certain cases, expired products for credit. We base our estimate for sales returns upon historical trends and record the amount as a reduction to revenue when we sell the initial product. In addition, we may allow customers to return previously purchased products for next-generation product offerings. For these transactions, we defer recognition of revenue on the sale of the earlier generation product based upon an estimate of the amount of product to be returned when the next-generation products are shipped to the customer. Uncertain timing of next-generation product approvals, variability in product launch strategies, product recalls and variation in product utilization all affect our estimates related to sales returns and could cause actual returns to differ from these estimates. We also offer sales rebates and discounts to certain customers. We treat sales rebates and discounts as a reduction of revenue and classify the corresponding liability as current. We estimate rebates for products where there is sufficient historical information available to predict the volume of expected future rebates. If we are unable to reasonably estimate the expected rebates, we record a liability for the maximum rebate percentage offered. We have entered certain agreements with group purchasing organizations to sell our products to participating hospitals at negotiated prices. We recognize revenue from these agreements following the same revenue recognition criteria discussed above.
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Changes in Other Comprehensive Income |
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Other Comprehensive Income (Loss) Net of Tax, Period Change [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Comprehensive Income (Loss) Note [Text Block] | NOTE M – CHANGES IN OTHER COMPREHENSIVE INCOME The following tables provide the reclassifications out of Other comprehensive income (loss), net of tax:
(1) In connection with the completion of the divestiture of the Specialty Pharmaceuticals business in the first quarter of 2021, we released $127 million of cumulative translation adjustments associated with the disposed business from Accumulated other comprehensive income (loss), net of tax.
Refer to Note D – Hedging Activities and Fair Value Measurements for further detail on our net investment hedges recorded in Foreign currency translation adjustments and our cash flow hedges recorded in Net change in derivative financial instruments. The gains and losses on defined benefit and pension items before reclassifications and gains and losses on defined benefit and pension items reclassified from Accumulated other comprehensive income (loss), net of tax were reduced by immaterial income tax impacts in the second quarter and first six months of 2021 and 2020.
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New Accounting Pronouncements |
6 Months Ended |
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Jun. 30, 2021 | |
Accounting Standards Update and Change in Accounting Principle [Abstract] | |
New Accounting Pronouncements, Policy | NOTE N – NEW ACCOUNTING PRONOUNCEMENTS Periodically, new accounting pronouncements are issued by the FASB or other standard setting bodies. Recently issued standards typically do not require adoption until a future effective date. Prior to their effective date, we evaluate the pronouncements to determine the potential effects of adoption on our accompanying unaudited consolidated financial statements. During the first quarter of 2021, we implemented the following standards, which did not have a material impact on our financial position and results of operations. ASC Update No. 2020-10 In October 2020, the FASB issued ASC Update No. 2020-10, Codification Improvements. Update No. 2020-10 amends a wide variety of Topics in the Codification in order to improve the consistency of the Codification and the application thereof, while leaving Generally Accepted Accounting Principles unchanged. ASC Update No. 2020-06 In August 2020, the FASB issued ASC Update No. 2020-06, Debt - Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity. The amendments in Update No. 2020-06 simplify the complexity associated with applying U.S. GAAP for certain financial instruments with characteristics of liabilities and equity. More specifically, the amendments focus on the guidance for convertible instruments and derivative scope exception for contracts in an entity’s own equity. ASC Update No. 2019-12 In December 2019, the FASB issued ASC Update No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. The purpose of Update No. 2019-12 is to continue the FASB’s Simplification Initiative to reduce complexity in accounting standards. The amendments in Update No. 2019-12 simplify the accounting for income taxes by removing certain exceptions related to the incremental approach for intraperiod tax allocation, the requirement to recognize or derecognize deferred tax liabilities related to equity method investments that are also foreign subsidiaries, and the methodology for calculating income taxes in an interim period. In addition to removing these exceptions, Update No. 2019-12 also clarifies and simplifies other aspects of the accounting for income taxes. Standards to be Implemented ASC Update No. 2021-05 In July 2021, the FASB issued ASC Update No. 2021-05, Leases (Topic 842): Lessors—Certain Leases with Variable Lease Payments. The amendments in Update No. 2021-05 revise lessor lease classification guidance and require accounting for certain leases with variable lease payments that do not depend on a reference index or rate as operating leases. Such classification is required if the lease would have been classified as a sales-type or direct financing lease in accordance with guidance in FASB ASC Topic 842 and the lessor would have otherwise recognized a day-one loss. Update No. 2021-05 is effective for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. We have the option to apply the amendments retrospectively to leases that commenced or were modified on or after the adoption of FASB ASC Topic 842, or prospectively. We are currently in the process of determining the effect that the adoption will have on our financial position and results of operations. No other new accounting pronouncements issued or effective in the period had or are expected to have a material impact on our accompanying unaudited consolidated financial statements.
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Basis of Presentation Basis of Presentation (Policies) |
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Jun. 30, 2021 | |
Accounting Policies [Abstract] | |
Subsequent Events, Policy [Policy Text Block] | Subsequent Events We evaluate events occurring after the date of our accompanying unaudited consolidated balance sheet for potential recognition or disclosure in our financial statements. Those items requiring recognition in the financial statements have been recorded and disclosed accordingly. Those items requiring disclosure (non-recognized subsequent events) in the financial statements have been disclosed accordingly. Refer to Note B – Acquisitions, Divestitures and Strategic Investments, Note H – Commitments and Contingencies and Note I – Stockholders' Equity for further details.
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Fair Value Measurements Hedging Activities and Fair Value Measurements (Policies) |
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Jun. 30, 2021 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurement, Policy [Policy Text Block] | FASB ASC Topic 815 requires all derivative and nonderivative instruments to be recognized at their fair values as either assets or liabilities on the balance sheet. We determine the fair value of our derivative and nonderivative instruments using the framework prescribed by FASB ASC Topic 820, Fair Value Measurements and Disclosures |
Derivatives, Policy [Policy Text Block] | Our derivative instruments do not subject our earnings to material risk, as the gains or losses on these derivatives generally offset losses or gains recognized on the hedged item.We manage concentration of counterparty credit risk by limiting acceptable counterparties to major financial institutions with investment grade credit ratings, limiting the amount of credit exposure to individual counterparties and by actively monitoring counterparty credit ratings and the amount of individual credit exposure. We also employ master netting arrangements that limit the risk of counterparty non-payment on a particular settlement date to the net gain that would have otherwise been received from the counterparty. Although not completely eliminated, we do not consider the risk of counterparty default to be significant as a result of these protections. Further, none of our derivative instruments are subject to collateral or other security arrangements, nor do they contain provisions that are dependent on our credit ratings from any credit rating agency. |
Commitments and Contingencies Commitments and Contingencies (Policies) |
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Jun. 30, 2021 | |
Commitments and Contingencies Disclosure [Abstract] | |
Legal Costs, Policy [Policy Text Block] | In accordance with FASB ASC Topic 450, Contingencies, we accrue anticipated costs of settlement, damages, losses for product liability claims and, under certain conditions, costs of defense, based on historical experience or to the extent specific losses are probable and estimable. Otherwise, we expense these costs as incurred. If the estimate of a probable loss is a range and no amount within the range is more likely, we accrue the minimum amount of the range. |
New Accounting Pronouncements (Policies) |
6 Months Ended |
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Jun. 30, 2021 | |
Accounting Standards Update and Change in Accounting Principle [Abstract] | |
ASC Update No. 2020-10 Codification Improvements | ASC Update No. 2020-10 In October 2020, the FASB issued ASC Update No. 2020-10, Codification Improvements. Update No. 2020-10 amends a wide variety of Topics in the Codification in order to improve the consistency of the Codification and the application thereof, while leaving Generally Accepted Accounting Principles unchanged.
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ASC Update No. 2020-06, Debt - Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity’s Own Equity (Subtopic 815-40) | ASC Update No. 2020-06 In August 2020, the FASB issued ASC Update No. 2020-06, Debt - Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity. The amendments in Update No. 2020-06 simplify the complexity associated with applying U.S. GAAP for certain financial instruments with characteristics of liabilities and equity. More specifically, the amendments focus on the guidance for convertible instruments and derivative scope exception for contracts in an entity’s own equity.
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ASC Update No. 2019-12, Income Taxes (Topic 740) [Policy Text Block] | ASC Update No. 2019-12 In December 2019, the FASB issued ASC Update No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. The purpose of Update No. 2019-12 is to continue the FASB’s Simplification Initiative to reduce complexity in accounting standards. The amendments in Update No. 2019-12 simplify the accounting for income taxes by removing certain exceptions related to the incremental approach for intraperiod tax allocation, the requirement to recognize or derecognize deferred tax liabilities related to equity method investments that are also foreign subsidiaries, and the methodology for calculating income taxes in an interim period. In addition to removing these exceptions, Update No. 2019-12 also clarifies and simplifies other aspects of the accounting for income taxes.
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ASC Update No. 2020-05, Leases (Topic 842): Lessors - Certain Leases with Variable Lease Payments | ASC Update No. 2021-05 In July 2021, the FASB issued ASC Update No. 2021-05, Leases (Topic 842): Lessors—Certain Leases with Variable Lease Payments. The amendments in Update No. 2021-05 revise lessor lease classification guidance and require accounting for certain leases with variable lease payments that do not depend on a reference index or rate as operating leases. Such classification is required if the lease would have been classified as a sales-type or direct financing lease in accordance with guidance in FASB ASC Topic 842 and the lessor would have otherwise recognized a day-one loss. Update No. 2021-05 is effective for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. We have the option to apply the amendments retrospectively to leases that commenced or were modified on or after the adoption of FASB ASC Topic 842, or prospectively. We are currently in the process of determining the effect that the adoption will have on our financial position and results of operations.
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Acquisitions and Strategic Investments (Tables) |
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Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Table Text Block] | Changes in the fair value of our contingent consideration liability during the first six months of 2021 were as follows:
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Fair Value Measurement Inputs and Valuation Techniques [Table Text Block] | The recurring Level 3 fair value measurements of our contingent consideration liability that we expect to be required to settle include the following significant unobservable inputs:
(1) Unobservable inputs were weighted by the relative fair value of the contingent consideration liability. For projected year of payment, the amount represents the median of the inputs and is not a weighted average.
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Investment [Table Text Block] | The aggregate carrying amount of our strategic investments was comprised of the following:
(1) Measurement alternative investments are privately-held equity securities without readily determinable fair values that are measured at cost less impairment, if any, adjusted to fair value for any observable price changes in orderly transactions for the identical or a similar investment of the same issuer, recognized in Other, net within our accompanying unaudited consolidated statements of operations. (2) Publicly-held equity securities are measured at fair value with changes in fair value recognized in Other, net within our accompanying unaudited consolidated statements of operations.
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Business Acquisition [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Business Acquisitions, by Acquisition [Table Text Block] |
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Schedule of Recognized Identified Assets Acquired and Liabilities Assumed [Table Text Block] |
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Finite-Lived and Indefinite-Lived Intangible Assets Acquired as Part of Business Combination [Table Text Block] |
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Goodwill and Other Intangible Assets Goodwill (Tables) |
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Intangible Assets and Goodwill [Table Text Block] | The gross carrying amount of goodwill and other intangible assets and the related accumulated amortization for intangible assets subject to amortization and accumulated write-offs of goodwill are as follows:
(1) In the fourth quarter of 2020, we recorded goodwill impairment charges of $73 million related to the Specialty Pharmaceuticals business and classified the remaining assets and liabilities as held for sale as of December 31, 2020. On March 1, 2021, we completed the divestiture of the Specialty Pharmaceuticals business. The goodwill impairment charges of $73 million related to the Specialty Pharmaceuticals business are no longer presented within accumulated write-offs above as of June 30, 2021.
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Schedule of Goodwill [Table Text Block] | The following represents our goodwill balance by global reportable segment:
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Hedging Activities and Fair Value Measurements (Tables) |
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Derivative [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Notional Amounts of Outstanding Derivative Positions [Table Text Block] | The following table presents the contractual amounts of our hedging instruments outstanding:
(1) Foreign currency-denominated debt is the portion of the €900 million debt principal designated as a net investment hedge.
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Derivative Instruments, Gain (Loss) [Table Text Block] |
(1) In all periods presented in the table above, the pre-tax (gain) loss amounts reclassified from AOCI to earnings represent the effect of the hedging relationships on earnings. All other amounts included in earnings related to hedging relationships were immaterial. (2) For our outstanding forward currency contracts designated as net investment hedges, the net gain or loss reclassified from AOCI to earnings as a reduction of Interest expense represents the straight-line amortization of the excluded component as calculated at the date of designation. This initial value of the excluded component has been excluded from the assessment of effectiveness in accordance with FASB ASC Topic 815. In the current and prior period, we did not recognize any gains or losses on the components included in the assessment of hedge effectiveness in earnings. (3) For our outstanding euro-denominated debt principal designated as a net investment hedge, the change in fair value attributable to changes in the spot rate is recorded in the CTA component of OCI. No amounts were reclassified from AOCI to current period earnings.
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Derivative Instruments, Gain (Loss) that may be Reclassified from AOCI to Earnings within Twelve Months [Table Text Block] | As of June 30, 2021, pre-tax net gains or losses for our derivative instruments designated, or previously designated, as cash flow and net investment hedges under FASB ASC Topic 815 that may be reclassified from AOCI to earnings within the next twelve months are presented below (in millions):
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Derivatives Not Designated as Hedging Instruments [Table Text Block] | Net gains and losses on currency hedge contracts not designated as hedging instruments offset by net gains and losses from currency transaction exposures are presented below:
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Schedule of Derivative Instruments in Statement of Financial Position, Fair Value [Table Text Block] | The following are the balances of our derivative and nonderivative assets and liabilities:
(1) We classify derivative and nonderivative assets and liabilities as current when the settlement date of the contract is one year or less. (2) Foreign currency-denominated debt is the portion of the €900 million debt principal designated as a net investment hedge. A portion of this notional is subject to de-designation and re-designation based on changes in the underlying hedged item.
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Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis [Table Text Block] | Assets and liabilities measured at fair value on a recurring basis consist of the following:
(1) Unobservable inputs relate to a single financial asset and liability. As such, unobservable inputs were not weighted by the relative fair value of the instruments. For projected year of payment, the amount represents the median of the inputs and is not a weighted average. Changes in the fair value of our licensing arrangements' financial asset were as follows:
Changes in the fair value of our licensing arrangements' financial liability were as follows:
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Contractual Obligations and Commitments (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Debt Instrument [Line Items] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Long-term Debt Instruments [Table Text Block] |
Note: The table above does not include unamortized amounts related to interest rate contracts designated as cash flow hedges. (1) Coupon rates are semi-annual, except for the euro-denominated December 2027 Notes, which bear an annual coupon. (2) Corporate credit rating improvements may result in a decrease in the adjusted interest rate on our November 2035 Notes to the extent that our lowest credit rating is above BBB- or Baa3. The interest rates on our November 2035 Notes will be permanently reinstated to the issuance rate if the lowest credit ratings assigned to these senior notes is either A- or A3 or higher. (3) As of June 30, 2021 the outstanding balance is presented within Current Debt Obligations within our unaudited consolidated balance sheet.
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Summary Of Term Loan And Revolving Credit Facility Agreement Compliance With Debt Covenants [Table Text Block] |
(1)Ratio of total debt to consolidated EBITDA, as defined by the credit agreements, as amended.
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Transfer of Financial Assets Accounted for as Sales [Table Text Block] |
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Supplemental Balance Sheet Information (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Supplemental Balance Sheet Information [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Trade accounts receivable, net [Table Text Block] |
(1) Effective January 1, 2020, we adopted FASB ASC Topic 326, Financial Instruments - Credit Losses using the modified retrospective method, which requires that we recognize credit loss reserves when financial assets are established if credit losses are expected over the asset’s contractual life. Refer to Note R – New Accounting Pronouncements to our audited financial statements contained in Item 8 of our most recent Annual Report on Form 10-K for additional information.
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Inventory Disclosure [Table Text Block] |
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Schedule of Other Current Assets [Table Text Block] |
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Property, plant and equipment, net [Table Text Block] |
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Schedule of Other Assets [Table Text Block] |
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Schedule of Accrued Liabilities [Table Text Block] |
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Other Current Liabilities [Table Text Block] |
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Other long-term liabilities [Table Text Block] |
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Income Taxes (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2021 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Income Tax Rate Reconciliation [Line Items] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Effective Income Tax Rate from Continuing Operations [Table Text Block] |
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Weighted Average Shares Outstanding (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Weighted Average Number of Shares [Table Text Block] |
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Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share | The following securities were excluded from the calculation of weighted average shares outstanding - assuming dilution because their effect in the periods presented below would have been anti-dilutive:
(1) Represents common stock equivalents pursuant to our employee stock-based compensation plans, which are anti-dilutive in the second quarter and first six months of 2020 due to our Net loss position in those periods. (2) Represents stock options outstanding pursuant to our employee stock-based compensation plans with exercise prices that were greater than the average fair market value of our common stock for the related periods. (3) Represents common stock issuable upon the conversion of MCPS. Refer to Note I – Stockholders' Equity for additional information.
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Segment Reporting (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Reconciliation of Operating Profit (Loss) from Segments to Consolidated [Table Text Block] | A reconciliation of the totals reported for the reportable segments to the applicable line items within our accompanying unaudited consolidated statements of operations is as follows (in millions, except percentages):
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Revenue (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disaggregation of Revenue [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disaggregation of Revenue [Table Text Block] | The following tables disaggregate our revenue from contracts with customers by business and geographic region (in millions):
On March 1, 2021, we completed the divestiture of the Specialty Pharmaceuticals business. Our consolidated net sales for the first six months of 2021 include Specialty Pharmaceuticals up to the date of the closing of the transaction.
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Changes in Other Comprehensive Income (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Comprehensive Income (Loss) Net of Tax, Period Change [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Changes in Other Comprehensive Income [Table Text Block] | The following tables provide the reclassifications out of Other comprehensive income (loss), net of tax:
(1) In connection with the completion of the divestiture of the Specialty Pharmaceuticals business in the first quarter of 2021, we released $127 million of cumulative translation adjustments associated with the disposed business from Accumulated other comprehensive income (loss), net of tax.
|
Strategic Investments (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | |
---|---|---|---|
Jun. 30, 2021 |
Jun. 30, 2021 |
Dec. 31, 2020 |
|
Schedule of Investments [Line Items] | |||
Equity method investments | $ 264 | $ 264 | $ 319 |
Measurement alternative investments(1) | 175 | 175 | 183 |
Equity Securities, FV-NI | 176 | 176 | 414 |
Notes receivable | 0 | 0 | 2 |
Investments | 616 | 616 | $ 918 |
Equity Securities, FV-NI, Gain (Loss) | (8) | (154) | |
Equity Method Investment, Difference Between Carrying Amount and Underlying Equity | $ 314 | $ 314 |
Income Taxes (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | |||
---|---|---|---|---|---|
Jun. 30, 2021 |
Jun. 30, 2020 |
Jun. 30, 2021 |
Jun. 30, 2020 |
Dec. 31, 2020 |
|
Effective Income Tax Rate Reconciliation, Percent [Abstract] | |||||
Effective tax rate from continuing operations | (24.90%) | 18.40% | (11.20%) | 13.70% | |
Unrecognized Tax Benefits | $ 280 | $ 280 | $ 261 | ||
Unrecognized Tax Benefits that Would Impact Effective Tax Rate | 195 | 195 | $ 183 | ||
Decrease in Unrecognized Tax Benefits is Reasonably Possible | 24 | 24 | |||
The CARES Act | $ 2,200,000 | $ 2,200,000 |
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