☑ | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934, or |
☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Delaware | 04-2695240 | |||||||
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
Title of each class | Trading | Name of each exchange on which registered | ||||||||||||
Common Stock, $0.01 par value | BSX | New York Stock Exchange | ||||||||||||
0.625% Senior Notes due 2027 | BSX27 | New York Stock Exchange | ||||||||||||
5.50% Mandatory Convertible Preferred Stock, Series A, par value $0.01 per share | BSX PR A | New York Stock Exchange |
Large accelerated filer | ☑ | Accelerated filer | ☐ | ||||||||
Non-accelerated filer | ☐ | Smaller reporting company | ☐ | ||||||||
Emerging growth company | ☐ |
• •POLARxTM Cryoablation single shot ablation systems, and • |
• |
Owned(1) | Leased(2) | Total | |||||||||||||||
U.S. | 4,043,041 | 1,257,706 | 5,300,747 | ||||||||||||||
International | 2,200,042 | 1,916,968 | 4,117,010 | ||||||||||||||
6,243,083 | 3,174,674 | 9,417,757 |
Owned (1) | Leased (2) | Total | ||||||
U.S. | 4,072,000 | 1,446,000 | 5,518,000 | |||||
International | 2,258,000 | 1,624,000 | 3,882,000 | |||||
6,330,000 | 3,070,000 | 9,400,000 |
(1) Includes our principal manufacturing facilities in Minnesota, Ireland, Puerto Rico and one facility in Costa Rica, our manufacturing facility in Malaysia, our primary customer fulfillment centers in Massachusetts, the Netherlands and Japan, and our global headquarters location in Marlborough, Massachusetts. |
Year Ended December 31, | 2019 | 2018 | 2017 | 2016 | 2015 | ||||||||||||||
Net sales | $ | 10,735 | $ | 9,823 | $ | 9,048 | $ | 8,386 | $ | 7,477 | |||||||||
Gross profit | 7,620 | 7,011 | 6,455 | 5,962 | 5,304 | ||||||||||||||
Total operating expenses | 6,102 | 5,504 | 5,170 | 5,515 | 5,587 | ||||||||||||||
Operating income (loss) | 1,518 | 1,506 | 1,285 | 447 | (283 | ) | |||||||||||||
Income (loss) before income taxes | 687 | 1,422 | 933 | 177 | (650 | ) | |||||||||||||
Net income (loss) | 4,700 | 1,671 | 104 | 347 | (239 | ) | |||||||||||||
Net income (loss) per common share: | |||||||||||||||||||
Basic | $ | 3.38 | $ | 1.21 | $ | 0.08 | $ | 0.26 | $ | (0.18 | ) | ||||||||
Assuming dilution | $ | 3.33 | $ | 1.19 | $ | 0.08 | $ | 0.25 | $ | (0.18 | ) |
As of December 31, | 2019 | 2018 | 2017 | 2016 | 2015 | ||||||||||||||
Cash, cash equivalents and marketable securities | $ | 217 | $ | 146 | $ | 188 | $ | 196 | $ | 319 | |||||||||
Working capital (deficit) | (168 | ) | (1,257 | ) | (1,832 | ) | (348 | ) | 1,041 | ||||||||||
Total assets | 30,565 | 20,999 | 19,042 | 18,096 | 18,133 | ||||||||||||||
Borrowings (short-term) | 1,416 | 2,253 | 1,801 | 64 | 3 | ||||||||||||||
Borrowings (long-term) | 8,592 | 4,803 | 3,815 | 5,420 | 5,674 | ||||||||||||||
Stockholders’ equity | 13,877 | 8,726 | 7,012 | 6,733 | 6,320 | ||||||||||||||
Book value per common share † | $ | 9.95 | $ | 6.30 | $ | 5.11 | $ | 4.94 | $ | 4.69 |
Year Ended December 31, 2021 | ||||||||||||||||||||
(in millions, except per share data) | Income (Loss) Before Income Taxes | Income Tax Expense (Benefit) | Net Income (Loss) | Preferred Stock Dividends | Net Income (Loss) Available to Common Stockholders | Impact per Share(3) | ||||||||||||||
Reported | $ | 1,076 | $ | 36 | $ | 1,041 | $ | (55) | $ | 985 | $ | 0.69 | ||||||||
Non-GAAP adjustments: | ||||||||||||||||||||
Amortization expense | 741 | (65) | 676 | — | 676 | 0.47 | ||||||||||||||
Goodwill and other intangible asset impairment charges | 370 | (51) | 318 | — | 318 | 0.22 | ||||||||||||||
Acquisition/divestiture-related net charges (credits) | (450) | (2) | (453) | — | (453) | (0.32) | ||||||||||||||
Restructuring and restructuring-related net charges (credits) | 191 | (22) | 169 | — | 169 | 0.12 | ||||||||||||||
Litigation-related net charges (credits) | 430 | (98) | 331 | — | 331 | 0.23 | ||||||||||||||
Investment portfolio net losses (gains) | 181 | (43) | 137 | — | 137 | 0.10 | ||||||||||||||
European Union (EU) Medical device regulation (MDR) implementation costs | 49 | (4) | 45 | — | 45 | 0.03 | ||||||||||||||
Deferred tax expenses (benefits) | — | 132 | 132 | — | 132 | 0.09 | ||||||||||||||
Discrete tax items | — | (5) | (5) | — | (5) | (0.00) | ||||||||||||||
Adjusted | $ | 2,587 | $ | 196 | $ | 2,391 | $ | (55) | $ | 2,336 | $ | 1.63 |
Year Ended December 31, 2020 | ||||||||||||||||||||
(in millions, except per share data) | Income (Loss) Before Income Taxes | Income Tax Expense (Benefit) | Net Income (Loss) | Preferred Stock Dividends | Net Income (Loss) Available to Common Stockholders | Impact per Share(4) | ||||||||||||||
Reported | $ | (79) | $ | 2 | $ | (82) | $ | (33) | $ | (115) | $ | (0.08) | ||||||||
Non-GAAP adjustments: | ||||||||||||||||||||
Amortization expense | 789 | (88) | 701 | — | 701 | 0.49 | ||||||||||||||
Goodwill and other intangible asset impairment charges | 533 | (68) | 465 | — | 465 | 0.32 | ||||||||||||||
Acquisition/divestiture-related net charges (credits) | 196 | (81) | 115 | — | 115 | 0.08 | ||||||||||||||
Restructuring and restructuring-related net charges (credits) | 171 | (25) | 146 | — | 146 | 0.10 | ||||||||||||||
Litigation-related net charges (credits) | 278 | (17) | 261 | — | 261 | 0.18 | ||||||||||||||
Investment portfolio net losses (gains) | (429) | 98 | (331) | — | (331) | (0.23) | ||||||||||||||
European Union (EU) Medical device regulation (MDR) implementation costs | 29 | (3) | 25 | — | 25 | 0.02 | ||||||||||||||
Deferred tax expenses (benefits) | — | 41 | 41 | — | 41 | 0.03 | ||||||||||||||
Discrete tax items | — | 69 | 69 | — | 69 | 0.05 | ||||||||||||||
Adjusted | $ | 1,488 | $ | 77 | $ | 1,411 | $ | (33) | $ | 1,378 | 0.96 |
Year Ended December 31, 2019 | |||||||
(in millions, except per share data) | Net Income (Loss) | Impact per Share | |||||
GAAP net income (loss) | $ | 4,700 | $ | 3.33 | |||
Non-GAAP adjustments: | |||||||
Amortization expense | 628 | 0.44 | |||||
Intangible asset impairment charges | 102 | 0.07 | |||||
Acquisition/divestiture-related net charges (credits) | 672 | 0.48 | |||||
Restructuring and restructuring-related net charges (credits) | 68 | 0.05 | |||||
Litigation-related net charges (credits) | 72 | 0.05 | |||||
Investment impairment charges | 3 | 0.00 | |||||
EU MDR implementation charges | 5 | 0.00 | |||||
Debt extinguishment net charges (credits) | 67 | 0.05 | |||||
Deferred tax expenses (benefits) | (4,102 | ) | (2.91 | ) | |||
Discrete tax items | 18 | 0.01 | |||||
Adjusted net income | $ | 2,234 | $ | 1.58 |
Year Ended December 31, 2018 | |||||||
(in millions, except per share data) | Net Income (Loss) | Impact per Share | |||||
GAAP net income (loss) | $ | 1,671 | $ | 1.19 | |||
Non-GAAP adjustments: | |||||||
Amortization expense | 520 | 0.37 | |||||
Intangible asset impairment charges | 31 | 0.02 | |||||
Acquisition-related net charges (credits) | 5 | 0.00 | |||||
Restructuring and restructuring-related net charges (credits) | 77 | 0.05 | |||||
Litigation-related net charges (credits) | 79 | 0.06 | |||||
Investment impairment charges | 6 | 0.00 | |||||
Discrete tax items | (328 | ) | (0.23 | ) | |||
Adjusted net income | $ | 2,060 | $ | 1.47 |
Year Ended December 31, | 2021 versus 2020 | 2020 versus 2019 | |||||||||||||||||||||||||||
(in millions) | 2021 | 2020 | 2019 | ||||||||||||||||||||||||||
Endoscopy | $ | 2,141 | $ | 1,780 | $ | 1,894 | 20.3% | (6.0)% | |||||||||||||||||||||
Urology and Pelvic Health | 1,583 | 1,286 | 1,413 | 23.1% | (9.0)% | ||||||||||||||||||||||||
MedSurg | 3,724 | 3,066 | 3,307 | 21.4% | (7.3)% | ||||||||||||||||||||||||
Cardiac Rhythm Management | 2,019 | 1,704 | 1,939 | 18.5% | (12.1)% | ||||||||||||||||||||||||
Electrophysiology | 365 | 287 | 329 | 27.4% | (12.8)% | ||||||||||||||||||||||||
Neuromodulation | 909 | 761 | 873 | 19.5% | (12.8)% | ||||||||||||||||||||||||
Rhythm and Neuro | 3,293 | 2,752 | 3,140 | 19.7% | (12.4)% | ||||||||||||||||||||||||
Interventional Cardiology | 3,038 | 2,299 | 2,816 | 32.2% | (18.4)% | ||||||||||||||||||||||||
Peripheral Interventions | 1,820 | 1,577 | 1,392 | 15.4% | 13.3% | ||||||||||||||||||||||||
Cardiovascular | 4,858 | 3,876 | 4,208 | 25.3% | (7.9)% | ||||||||||||||||||||||||
Medical Devices | 11,875 | 9,694 | 10,654 | 22.5% | (9.0)% | ||||||||||||||||||||||||
Specialty Pharmaceuticals(5) | 13 | 219 | 81 | (93.9)% | 169.2% | ||||||||||||||||||||||||
Net Sales | $ | 11,888 | $ | 9,913 | $ | 10,735 | 19.9% | (7.7)% | |||||||||||||||||||||
Year Ended December 31, | 2019 versus 2018 | 2018 versus 2017 | |||||||||||||
(in millions) | 2019 | 2018 | 2017 | ||||||||||||
Endoscopy | $ | 1,894 | $ | 1,762 | $ | 1,619 | 7.5% | 8.8% | |||||||
Urology and Pelvic Health | 1,413 | 1,245 | 1,124 | 13.4% | 10.8% | ||||||||||
MedSurg | 3,307 | 3,007 | 2,742 | 10.0% | 9.7% | ||||||||||
Cardiac Rhythm Management | 1,939 | 1,951 | 1,895 | (0.6)% | 2.9% | ||||||||||
Electrophysiology | 329 | 311 | 278 | 5.5% | 12.1% | ||||||||||
Neuromodulation | 873 | 779 | 635 | 12.0% | 22.7% | ||||||||||
Rhythm and Neuro | 3,140 | 3,041 | 2,808 | 3.3% | 8.3% | ||||||||||
Interventional Cardiology | 2,816 | 2,590 | 2,419 | 8.7% | 7.1% | ||||||||||
Peripheral Interventions | 1,392 | 1,187 | 1,081 | 17.3% | 9.8% | ||||||||||
Cardiovascular | 4,208 | 3,777 | 3,500 | 11.4% | 7.9% | ||||||||||
Medical Devices(1) | 10,654 | 9,823 | 9,048 | 8.5% | 8.6% | ||||||||||
Specialty Pharmaceuticals | 81 | n/a | n/a | n/a | n/a | ||||||||||
Net Sales | $ | 10,735 | $ | 9,823 | $ | 9,048 | 9.3% | 8.6% |
Gross Profit Margin | |||||
Year Ended December 31, 2019 | 71.0% | ||||
Sales pricing, volume and mix | |||||
Inventory step-up | |||||
Net impact of foreign currency fluctuations | |||||
All other, including other | |||||
Year Ended December 31, | |||||
Sales pricing, volume and mix | |||||
Prior year LOTUS Edge™ discontinuation | 0.9% | ||||
Net impact of foreign currency fluctuations | |||||
All other, including other | |||||
Year Ended December 31, |
Year Ended December 31, | ||||||||||||||||||||||||||
2021 | 2020 | 2019 | ||||||||||||||||||||||||
(in millions) | $ | % of Net Sales | $ | % of Net Sales | $ | % of Net Sales | ||||||||||||||||||||
Selling, general and administrative expenses | $ | 4,359 | 36.7 | % | $ | 3,787 | 38.2 | % | $ | 3,941 | 36.7 | % | ||||||||||||||
Research and development expenses | 1,204 | 10.1 | % | 1,143 | 11.5 | % | 1,174 | 10.9 | % | |||||||||||||||||
Royalty expense | 49 | 0.4 | % | 45 | 0.5 | % | 65 | 0.6 | % |
Year Ended December 31, | |||||||||||||||||
2019 | 2018 | 2017 | |||||||||||||||
(in millions) | $ | % of Net Sales | $ | % of Net Sales | $ | % of Net Sales | |||||||||||
Selling, general and administrative expenses | $ | 3,941 | 36.7 | % | $ | 3,569 | 36.3 | % | $ | 3,294 | 36.4 | % | |||||
Research and development expenses | 1,174 | 10.9 | % | 1,113 | 11.3 | % | 997 | 11.0 | % | ||||||||
Royalty expense | 65 | 0.6 | % | 70 | 0.7 | % | 68 | 0.8 | % |
Year Ended December 31, | |||||||||||||||||
(in millions) | 2021 | 2020 | 2019 | ||||||||||||||
Amortization expense | $ | 741 | $ | 789 | $ | 699 | |||||||||||
Goodwill impairment charges | — | 73 | — | ||||||||||||||
Intangible asset impairment charges | 370 | 460 | 105 | ||||||||||||||
Contingent consideration net expense (benefit) | (136) | (100) | (35) | ||||||||||||||
Restructuring charges (credits) | 40 | 52 | 38 | ||||||||||||||
Litigation-related net charges (credits) | 430 | 278 | 115 | ||||||||||||||
Gain on disposal of businesses and assets | (78) | — | — |
Year Ended December 31, | |||||||||||
(in millions) | 2019 | 2018 | 2017 | ||||||||
Amortization expense | $ | 699 | $ | 599 | $ | 565 | |||||
Intangible asset impairment charges | 105 | 35 | 4 | ||||||||
Contingent consideration expense (benefit) | (35 | ) | (21 | ) | (80 | ) | |||||
Restructuring charges (credits) | 38 | 36 | 37 | ||||||||
Litigation-related net charges (credits) | 115 | 103 | 285 |
(in millions) | Year Ended December 31, | ||||||||||||||||
2021 | 2020 | 2019 | |||||||||||||||
Interest expense | $ | (341) | $ | (361) | $ | (473) | |||||||||||
Weighted average borrowing rate | 3.6 | % | 3.6 | % | 4.8 | % |
(in millions) | Year Ended December 31, | ||||||||||
2019 | 2018 | 2017 | |||||||||
Interest expense | $ | (473 | ) | $ | (241 | ) | $ | (229 | ) | ||
Weighted average borrowing rate | 4.8 | % | 3.6 | % | 3.8 | % |
Year Ended December 31, | |||||||||||
(in millions) | 2019 | 2018 | 2017 | ||||||||
Interest income | $ | 30 | $ | 3 | $ | 5 | |||||
Net foreign currency gain (loss) | (358 | ) | 11 | (15 | ) | ||||||
Net gains (losses) on investments | (30 | ) | 155 | (92 | ) | ||||||
Other income (expense), net | (1 | ) | (14 | ) | (22 | ) | |||||
$ | (358 | ) | $ | 156 | $ | (124 | ) |
Year Ended December 31, | |||||||||||||||||
(in millions) | 2021 | 2020 | 2019 | ||||||||||||||
Interest income | $ | 4 | $ | 3 | $ | 30 | |||||||||||
Net foreign currency gain (loss) | (27) | (32) | (358) | ||||||||||||||
Net gains (losses) on investments | 250 | 383 | (30) | ||||||||||||||
Other income (expense), net | (9) | 7 | (1) | ||||||||||||||
$ | 218 | $ | 362 | $ | (358) |
Year Ended December 31, | ||||||||||||||||||||
2021 | 2020 | 2019 | ||||||||||||||||||
Reported tax rate | 3.3 | % | 2.9 | % | (584.0) | % | ||||||||||||||
Impact of certain receipts/charges(1) | 13.0 | % | 8.3 | % | 594.2 | % | ||||||||||||||
16.3 | % | 11.2 | % | 10.2 | % |
Year Ended December 31, | ||||||||
2019 | 2018 | 2017 | ||||||
Reported tax rate | (584.0 | )% | (17.5 | )% | 88.8 | % | ||
Impact of certain receipts/charges (1) | 594.2 | % | 30.7 | % | (75.8 | )% | ||
10.2 | % | 13.2 | % | 13.0 | % |
Year Ended December 31, | |||||||||||||||||
(in millions) | 2021 | 2020 | 2019 | ||||||||||||||
Cash provided by (used for) operating activities | $ | 1,870 | $ | 1,508 | $ | 1,836 | |||||||||||
Cash provided by (used for) investing activities | (1,597) | (411) | (5,041) | ||||||||||||||
Cash provided by (used for) financing activities | (95) | 293 | 2,973 |
Year Ended December 31, | |||||||||||
(in millions) | 2019 | 2018 | 2017 | ||||||||
Cash provided by (used for) operating activities | $ | 1,836 | $ | 310 | $ | 1,426 | |||||
Cash provided by (used for) investing activities | (5,041 | ) | (1,921 | ) | (1,010 | ) | |||||
Cash provided by (used for) financing activities | 2,973 | 1,432 | 110 | ||||||||
Cash provided by (used for) operating activities | $ | 1,836 | $ | 310 | $ | 1,426 | |||||
Less: Purchases of property, plant and equipment | 461 | 316 | 319 | ||||||||
Add: Proceed on disposals of property, plant and equipment | 7 | 14 | — | ||||||||
Free cash flow | 1,382 | 8 | 1,107 | ||||||||
Add: Restructuring and restructuring-related payments | 66 | 89 | 72 | ||||||||
Add: Acquisitions-related payments | 266 | 205 | 95 | ||||||||
Add: EU MDR payments | 4 | — | — | ||||||||
Add: Certain discrete tax payments (refunds/credits) | (42 | ) | 977 | (239 | ) | ||||||
Add: Litigation-related settlements | 330 | 791 | 694 | ||||||||
Adjusted free cash flow2 | $ | 2,007 | $ | 2,070 | $ | 1,729 |
As of | |||||||||||
(in millions) | December 31, 2021 | December 31, 2020 | |||||||||
Current debt obligations | $ | 261 | $ | 13 | |||||||
Long-term debt | 8,804 | $ | 9,130 | ||||||||
Total debt | $ | 9,065 | $ | 9,143 |
As of | |||||||
(in millions) | December 31, 2019 | December 31, 2018 | |||||
Current debt obligations | $ | 1,416 | $ | 2,253 | |||
Long-term debt | 8,592 | 4,803 | |||||
Total debt | $ | 10,008 | $ | 7,056 |
As of | |||||||||||
(in millions) | December 31, 2021 | December 31, 2020 | |||||||||
Fixed-rate debt instruments | $ | 9,048 | $ | 9,123 | |||||||
Variable rate debt instruments | 17 | 20 | |||||||||
Total debt | $ | 9,065 | $ | 9,143 |
As of | |||||||
(in millions) | December 31, 2019 | December 31, 2018 | |||||
Fixed-rate debt instruments | $ | 7,587 | $ | 4,797 | |||
Variable rate debt instruments | 2,421 | 2,259 | |||||
Total debt | $ | 10,008 | $ | 7,056 |
(in millions) | 2022 | 2023 | 2024 | 2025 | 2026 | Thereafter | Total | ||||||||||||||||||||||||||||||||||
Debt obligations(1) | $ | 250 | $ | 244 | $ | 850 | $ | 1,023 | $ | 850 | $ | 5,905 | $ | 9,121 | |||||||||||||||||||||||||||
Interest payments(2) | 325 | 321 | 296 | 267 | 234 | 2,232 | 3,676 | ||||||||||||||||||||||||||||||||||
Lease obligations | 86 | 69 | 56 | 49 | 40 | 228 | 528 | ||||||||||||||||||||||||||||||||||
Purchase obligations(2) | 631 | 82 | 58 | 31 | 11 | — | 812 | ||||||||||||||||||||||||||||||||||
Legal reserves(3) | 264 | — | — | — | — | — | 264 | ||||||||||||||||||||||||||||||||||
One-time transition tax | 40 | 75 | 100 | 125 | — | — | 340 | ||||||||||||||||||||||||||||||||||
$ | 1,597 | $ | 791 | $ | 1,360 | $ | 1,495 | $ | 1,135 | $ | 8,365 | $ | 14,741 |
(in millions) | 2020 | 2021 | 2022 | 2023 | 2024 | Thereafter | Total | ||||||||||||||||||||
Debt obligations (1) | $ | 1,411 | $ | — | $ | 1,500 | $ | 244 | $ | 850 | $ | 6,068 | $ | 10,072 | |||||||||||||
Interest payments (2) | 343 | 326 | 308 | 280 | 252 | 2,550 | 4,059 | ||||||||||||||||||||
Lease obligations (2) | 84 | 71 | 59 | 48 | 41 | 79 | 382 | ||||||||||||||||||||
Purchase obligations (2) | 334 | 20 | 7 | 3 | 1 | 1 | 366 | ||||||||||||||||||||
Minimum royalty obligations (2) | 3 | 3 | 2 | 2 | 2 | 2 | 15 | ||||||||||||||||||||
License and software commitments (2) | 4 | 5 | 5 | 3 | 3 | — | 20 | ||||||||||||||||||||
Legal reserves | 470 | — | — | — | — | — | 470 | ||||||||||||||||||||
One-time transition tax | 40 | 40 | 40 | 75 | 100 | 125 | 420 | ||||||||||||||||||||
$ | 2,689 | $ | 465 | $ | 1,921 | $ | 655 | $ | 1,249 | $ | 8,825 | $ | 15,804 |
•Any future obligations to make payments of contingent consideration pursuant to certain of our acquisition agreements, due to the exact amount and timing of payments being uncertain. Refer to |
•Adjustments to increase our estimated one-time transition tax totaling $91 million, which are pending review by the U.S. Internal Revenue Service (IRS), and unrecognized tax benefits, accrued interest and penalties and other related items totaling $103 million because the timing of their future cash settlement is uncertain. Refer to Note J – Income Taxes to our consolidated financial statements included in Item 8. Financial Statements and Supplementary Data of this Annual Report on Form 10-K for more information, •With certain of our acquisitions, we acquired IPR&D projects that require future funding to complete. We estimate that the total remaining cost to complete acquired IPR&D projects is between $40 million and $50 million. Net cash inflows from the projects currently in development are expected to continue through 2039, following the respective launches of these technologies in the U.S., Europe and Japan. Certain of our acquisitions also involve the potential payment of contingent consideration, but the timing and amounts are uncertain. See Note B – Acquisitions and Strategic Investments to our consolidated financial statements included in Item 8. Financial Statements and Supplementary Data of this Annual Report on Form 10-K for more information, •Holders of our 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, and 55 •On February 14, 2022, we completed our acquisition of Baylis Medical Company Inc. (Baylis Medical) for an upfront cash payment of $1.750 billion. Refer to Note B – Acquisitions and Strategic Investments to our consolidated financial statements included in Item 8. Financial Statements and Supplementary Data of this Annual Report on Form 10-K for additional information. |
/s/ Michael F. Mahoney | /s/ Daniel J. Brennan | |||||||||||||||||||
Michael F. Mahoney | Daniel J. Brennan | |||||||||||||||||||
Executive Vice President and Chief Financial Officer |
Description of the Matter | Business Combinations | ||||
As disclosed in Note B to the consolidated financial statements, during Auditing the Company’s accounting for its acquisitions was complex due to the significant estimation required by management to determine the fair value of identified intangible assets, which totaled | |||||
How We Addressed the Matter in Our Audit | We obtained an understanding, evaluated the design and tested the operating effectiveness of the controls over the Company’s accounting for acquisitions. For example, we tested controls over the identification and valuation of intangible assets, including the valuation models and underlying assumptions used to develop such estimates. We also tested controls over the valuation of the contingent consideration liability, including the valuation models and underlying assumptions used to develop such estimates. For each of the Company's acquisitions, we read the purchase agreements, evaluated the significant assumptions and methods used in developing the fair value estimates, and tested the recognition of (1) the tangible assets acquired and liabilities assumed at fair value; (2) the identifiable intangible assets acquired at fair value; and (3) goodwill measured as a residual. To test the estimated fair value of the intangible assets, we performed audit procedures that included, among others, evaluating the Company's use of the income approach and testing the significant assumptions used in the model, as described above. In testing the valuation of contingent consideration, we assessed, among other things, the terms of the arrangements and the conditions that must be met for the |
Year Ended December 31, | |||||||||||||||||
(in millions, except per share data) | 2021 | 2020 | 2019 | ||||||||||||||
Net sales | $ | 11,888 | $ | 9,913 | $ | 10,735 | |||||||||||
Cost of products sold | 3,711 | 3,465 | 3,116 | ||||||||||||||
Gross profit | 8,177 | 6,448 | 7,620 | ||||||||||||||
Operating expenses: | |||||||||||||||||
Selling, general and administrative expenses | 4,359 | 3,787 | 3,941 | ||||||||||||||
Research and development expenses | 1,204 | 1,143 | 1,174 | ||||||||||||||
Royalty expense | 49 | 45 | 65 | ||||||||||||||
Amortization expense | 741 | 789 | 699 | ||||||||||||||
Goodwill impairment charges | — | 73 | — | ||||||||||||||
Intangible asset impairment charges | 370 | 460 | 105 | ||||||||||||||
Contingent consideration net expense (benefit) | (136) | (100) | (35) | ||||||||||||||
Restructuring net charges (credits) | 40 | 52 | 38 | ||||||||||||||
Litigation-related net charges (credits) | 430 | 278 | 115 | ||||||||||||||
Gains on disposal of businesses and assets | (78) | — | — | ||||||||||||||
6,978 | 6,528 | 6,102 | |||||||||||||||
Operating income (loss) | 1,199 | (80) | 1,518 | ||||||||||||||
Other income (expense): | |||||||||||||||||
Interest expense | (341) | (361) | (473) | ||||||||||||||
Other, net | 218 | 362 | (358) | ||||||||||||||
Income (loss) before income taxes | 1,076 | (79) | 687 | ||||||||||||||
Income tax (benefit) expense | 36 | 2 | (4,013) | ||||||||||||||
Net income (loss) | 1,041 | (82) | 4,700 | ||||||||||||||
Preferred stock dividends | (55) | (33) | — | ||||||||||||||
Net income (loss) available to common stockholders | $ | 985 | $ | (115) | $ | 4,700 | |||||||||||
Net income (loss) per common share — basic | $ | 0.69 | $ | (0.08) | $ | 3.38 | |||||||||||
Net income (loss) per common share — assuming dilution | $ | 0.69 | $ | (0.08) | $ | 3.33 | |||||||||||
Weighted-average shares outstanding | |||||||||||||||||
Basic | 1,422.3 | 1,416.7 | 1,391.5 | ||||||||||||||
Assuming dilution | 1,433.8 | 1,416.7 | 1,410.6 |
Year Ended December 31, | |||||||||||
(in millions, except per share data) | 2019 | 2018 | 2017 | ||||||||
Net sales | $ | 10,735 | $ | 9,823 | $ | 9,048 | |||||
Cost of products sold | 3,116 | 2,813 | 2,593 | ||||||||
Gross profit | 7,620 | 7,011 | 6,455 | ||||||||
Operating expenses: | |||||||||||
Selling, general and administrative expenses | 3,941 | 3,569 | 3,294 | ||||||||
Research and development expenses | 1,174 | 1,113 | 997 | ||||||||
Royalty expense | 65 | 70 | 68 | ||||||||
Amortization expense | 699 | 599 | 565 | ||||||||
Intangible asset impairment charges | 105 | 35 | 4 | ||||||||
Contingent consideration expense (benefit) | (35 | ) | (21 | ) | (80 | ) | |||||
Restructuring charges (credits) | 38 | 36 | 37 | ||||||||
Litigation-related charges (credits) | 115 | 103 | 285 | ||||||||
6,102 | 5,504 | 5,170 | |||||||||
Operating income (loss) | 1,518 | 1,506 | 1,285 | ||||||||
Other income (expense): | |||||||||||
Interest expense | (473 | ) | (241 | ) | (229 | ) | |||||
Other, net | (358 | ) | 156 | (124 | ) | ||||||
Income (loss) before income taxes | 687 | 1,422 | 933 | ||||||||
Income tax (benefit) expense | (4,013 | ) | (249 | ) | 828 | ||||||
Net income (loss) | $ | 4,700 | $ | 1,671 | $ | 104 | |||||
Net income (loss) per common share — basic | $ | 3.38 | $ | 1.21 | $ | 0.08 | |||||
Net income (loss) per common share — assuming dilution | $ | 3.33 | $ | 1.19 | $ | 0.08 | |||||
Weighted-average shares outstanding | |||||||||||
Basic | 1,391.5 | 1,381.0 | 1,370.1 | ||||||||
Assuming dilution | 1,410.6 | 1,401.4 | 1,392.7 |
Year Ended December 31, | |||||||||||||||||
(in millions) | 2021 | 2020 | 2019 | ||||||||||||||
Net income (loss) | $ | 1,041 | $ | (82) | $ | 4,700 | |||||||||||
Other comprehensive income (loss), net of tax: | |||||||||||||||||
Foreign currency translation adjustment | (125) | 76 | 195 | ||||||||||||||
Net change in derivative financial instruments | 170 | (137) | 62 | ||||||||||||||
Net change in defined benefit pensions and other items | 11 | (1) | (20) | ||||||||||||||
Total other comprehensive income (loss) | 56 | (63) | 237 | ||||||||||||||
Total comprehensive income (loss) | $ | 1,096 | $ | (145) | $ | 4,937 |
Year Ended December 31, | |||||||||||
(in millions) | 2019 | 2018 | 2017 | ||||||||
Net income (loss) | $ | 4,700 | $ | 1,671 | $ | 104 | |||||
Other comprehensive income (loss), net of tax: | |||||||||||
Foreign currency translation adjustment | 195 | (21 | ) | 48 | |||||||
Net change in derivative financial instruments | 62 | 110 | (106 | ) | |||||||
Net change in available-for-sale securities | — | — | 5 | ||||||||
Net change in defined benefit pensions and other items | (20 | ) | 2 | (6 | ) | ||||||
Total other comprehensive income (loss) | 237 | 91 | (59 | ) | |||||||
Total comprehensive income (loss) | $ | 4,937 | $ | 1,761 | $ | 45 |
As of December 31, | |||||||||||
(in millions, except share and per share data) | 2021 | 2020 | |||||||||
ASSETS | |||||||||||
Current assets: | |||||||||||
Cash and cash equivalents | $ | 1,925 | $ | 1,734 | |||||||
Trade accounts receivable, net | 1,778 | 1,531 | |||||||||
Inventories | 1,610 | 1,351 | |||||||||
Prepaid income taxes | 205 | 194 | |||||||||
Assets held for sale | — | 1,133 | |||||||||
Other current assets | 799 | 751 | |||||||||
Total current assets | 6,317 | 6,694 | |||||||||
Property, plant and equipment, net | 2,252 | 2,084 | |||||||||
Goodwill | 11,988 | 9,951 | |||||||||
Other intangible assets, net | 6,121 | 5,917 | |||||||||
Deferred tax assets | 4,142 | 4,210 | |||||||||
Other long-term assets | 1,410 | 1,921 | |||||||||
TOTAL ASSETS | $ | 32,229 | $ | 30,777 | |||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||||||
Current liabilities: | |||||||||||
Current debt obligations | $ | 261 | $ | 13 | |||||||
Accounts payable | 794 | 513 | |||||||||
Accrued expenses | 2,436 | 2,197 | |||||||||
Other current liabilities | 783 | 958 | |||||||||
Total current liabilities | 4,274 | 3,681 | |||||||||
Long-term debt | 8,804 | 9,130 | |||||||||
Deferred tax liabilities | 310 | 330 | |||||||||
Other long-term liabilities | 2,220 | 2,309 | |||||||||
Commitments and contingencies | 0 | 0 | |||||||||
Stockholders’ equity: | |||||||||||
Preferred stock, $0.01 par value - authorized 50,000,000 shares; issued 10,062,500 shares as of December 31, 2021 and December 31, 2020 | — | — | |||||||||
Common stock, $0.01 par value - authorized 2,000,000,000 shares; issued 1,688,810,052 shares as of December 31, 2021 and 1,679,911,918 shares as of December 31, 2020 | 17 | 17 | |||||||||
Treasury stock, at cost - 263,289,848 shares as of December 31, 2021 and December 31, 2020 | (2,251) | (2,251) | |||||||||
Additional paid-in capital | 19,986 | 19,732 | |||||||||
Accumulated deficit | (1,392) | (2,378) | |||||||||
Accumulated other comprehensive income (loss), net of tax: | |||||||||||
Foreign currency translation adjustment | 93 | 218 | |||||||||
Unrealized gain on derivative financial instruments | 206 | 36 | |||||||||
Unrealized costs associated with defined benefit pensions and other items | (36) | (47) | |||||||||
Total stockholders’ equity | 16,622 | 15,326 | |||||||||
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ | 32,229 | $ | 30,777 |
As of December 31, | |||||||
(in millions, except share and per share data) | 2019 | 2018 | |||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 217 | $ | 146 | |||
Trade accounts receivable, net | 1,828 | 1,608 | |||||
Inventories | 1,579 | 1,166 | |||||
Prepaid income taxes | 195 | 161 | |||||
Other current assets | 880 | 921 | |||||
Total current assets | 4,699 | 4,003 | |||||
Property, plant and equipment, net | 2,079 | 1,782 | |||||
Goodwill | 10,176 | 7,911 | |||||
Other intangible assets, net | 7,886 | 6,372 | |||||
Deferred tax assets | 4,196 | 87 | |||||
Other long-term assets | 1,529 | 845 | |||||
TOTAL ASSETS | $ | 30,565 | $ | 20,999 | |||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||
Current liabilities: | |||||||
Current debt obligations | $ | 1,416 | $ | 2,253 | |||
Accounts payable | 542 | 349 | |||||
Accrued expenses | 2,109 | 2,246 | |||||
Other current liabilities | 800 | 412 | |||||
Total current liabilities | 4,866 | 5,260 | |||||
Long-term debt | 8,592 | 4,803 | |||||
Deferred tax liabilities | 595 | 328 | |||||
Other long-term liabilities | 2,635 | 1,882 | |||||
Commitments and contingencies | |||||||
Stockholders’ equity: | |||||||
Preferred stock, $0.01 par value - authorized 50,000,000 shares, none issued and outstanding | |||||||
Common stock, $0.01 par value - authorized 2,000,000,000 shares; issued 1,642,488,911 shares as of December 31, 2019 and 1,632,148,030 shares as of December 31, 2018 | 16 | 16 | |||||
Treasury stock, at cost - 247,566,270 shares as of December 31, 2019 and December 31, 2018 | (1,717 | ) | (1,717 | ) | |||
Additional paid-in capital | 17,561 | 17,346 | |||||
Accumulated deficit | (2,253 | ) | (6,953 | ) | |||
Accumulated other comprehensive income (loss), net of tax: | |||||||
Foreign currency translation adjustment | 142 | (53 | ) | ||||
Unrealized gain (loss) on derivative financial instruments | 173 | 111 | |||||
Unrealized costs associated with defined benefit pensions and other items | (45 | ) | (25 | ) | |||
Total stockholders’ equity | 13,877 | 8,726 | |||||
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ | 30,565 | $ | 20,999 |
Treasury Stock | Additional Paid-In Capital | Accumulated Deficit | Accumulated Other Comprehensive Income (Loss), Net of Tax | |||||||||||||||||||
Common Stock | ||||||||||||||||||||||
(in millions, except share data) | Shares Issued | Par Value | ||||||||||||||||||||
Balance as of December 31, 2016 | 1,609,670,817 | $ | 16 | $ | (1,717 | ) | $ | 17,014 | $ | (8,581 | ) | $ | 1 | |||||||||
Net income (loss) | 104 | |||||||||||||||||||||
Cumulative effect adjustment for ASU 2016-09 | 86 | |||||||||||||||||||||
Changes in other comprehensive income (loss), net of tax: | ||||||||||||||||||||||
Foreign currency translation adjustment | 48 | |||||||||||||||||||||
Derivative financial instruments | (106 | ) | ||||||||||||||||||||
Available-for-sale securities | 5 | |||||||||||||||||||||
Defined benefit pensions and other items | (6 | ) | ||||||||||||||||||||
Impact of stock-based compensation plans, net of tax | 11,392,081 | 147 | ||||||||||||||||||||
Balance as of December 31, 2017 | 1,621,062,898 | $ | 16 | $ | (1,717 | ) | $ | 17,161 | $ | (8,390 | ) | $ | (59 | ) | ||||||||
Net income (loss) | 1,671 | |||||||||||||||||||||
Cumulative effect adjustments for ASC Update Adoptions(1) | (233 | ) | ||||||||||||||||||||
Changes in other comprehensive income (loss), net of tax: | ||||||||||||||||||||||
Foreign currency translation adjustment | (21 | ) | ||||||||||||||||||||
Derivative financial instruments | 110 | |||||||||||||||||||||
Defined benefit pensions and other items | 2 | |||||||||||||||||||||
Impact of stock-based compensation plans, net of tax | 11,085,132 | 185 | ||||||||||||||||||||
Balance as of December 31, 2018 | 1,632,148,030 | $ | 16 | $ | (1,717 | ) | $ | 17,346 | $ | (6,953 | ) | $ | 33 | |||||||||
Net income (loss) | 4,700 | |||||||||||||||||||||
Changes in other comprehensive income (loss), net of tax: | ||||||||||||||||||||||
Foreign currency translation adjustment | 195 | |||||||||||||||||||||
Derivative financial instruments | 62 | |||||||||||||||||||||
Defined benefit pensions and other items | (20 | ) | ||||||||||||||||||||
Impact of stock-based compensation plans, net of tax | 10,340,881 | 215 | ||||||||||||||||||||
Balance as of December 31, 2019 | 1,642,488,911 | $ | 16 | $ | (1,717 | ) | $ | 17,561 | $ | (2,253 | ) | $ | 270 |
Year Ended December 31, | |||||||||||||||||
(in millions, except share data) | 2021 | 2020 | 2019 | ||||||||||||||
Preferred stock shares outstanding | |||||||||||||||||
Beginning | 10,062,500 | — | — | ||||||||||||||
Preferred stock issuance | — | 10,062,500 | — | ||||||||||||||
Ending | 10,062,500 | 10,062,500 | — | ||||||||||||||
Common stock shares outstanding | |||||||||||||||||
Beginning | 1,679,911,918 | 1,642,488,911 | 1,632,148,030 | ||||||||||||||
Common stock issuance | — | 29,382,500 | — | ||||||||||||||
Impact of stock-based compensation plans | 8,898,134 | 8,040,507 | 10,340,881 | ||||||||||||||
Ending | 1,688,810,052 | 1,679,911,918 | 1,642,488,911 | ||||||||||||||
Preferred stock | |||||||||||||||||
Beginning | $ | — | $ | — | $ | — | |||||||||||
Preferred stock issuance | — | — | — | ||||||||||||||
Ending | — | $ | — | — | |||||||||||||
Common stock | |||||||||||||||||
Beginning | $ | 17 | $ | 16 | $ | 16 | |||||||||||
Common stock issuance | — | — | — | ||||||||||||||
Impact of stock-based compensation plans | — | — | — | ||||||||||||||
Ending | $ | 17 | $ | 17 | $ | 16 | |||||||||||
Treasury Stock | |||||||||||||||||
Beginning | $ | (2,251) | $ | (1,717) | $ | (1,717) | |||||||||||
Repurchase of common stock | — | (535) | — | ||||||||||||||
Ending | $ | (2,251) | $ | (2,251) | $ | (1,717) | |||||||||||
Additional Paid-In Capital | |||||||||||||||||
Beginning | $ | 19,732 | $ | 17,561 | $ | 17,346 | |||||||||||
Preferred stock issuance | — | 975 | — | ||||||||||||||
Common stock issuance | — | 975 | — | ||||||||||||||
Impact of stock-based compensation plans | 254 | 221 | 215 | ||||||||||||||
Ending | $ | 19,986 | $ | 19,732 | $ | 17,561 | |||||||||||
Accumulated Deficit | |||||||||||||||||
Beginning | $ | (2,378) | $ | (2,253) | $ | (6,953) | |||||||||||
Net income (loss) | 1,041 | (82) | 4,700 | ||||||||||||||
Cumulative effect adjustment for adoption of ASU 2016-13 | — | (10) | — | ||||||||||||||
Preferred stock dividends | (55) | (33) | — | ||||||||||||||
Ending | $ | (1,392) | $ | (2,378) | $ | (2,253) | |||||||||||
Accumulated Other Comprehensive Income (Loss), Net of Tax | |||||||||||||||||
Beginning | $ | 207 | $ | 270 | $ | 33 | |||||||||||
Changes in other comprehensive income (loss), net of tax: | |||||||||||||||||
Foreign currency translation adjustment | (125) | 76 | 195 | ||||||||||||||
Derivative financial instruments | 170 | (137) | 62 | ||||||||||||||
Defined benefit pensions and other items | 11 | (1) | (20) | ||||||||||||||
Ending | $ | 263 | $ | 207 | $ | 270 | |||||||||||
Total stockholders' equity | $ | 16,622 | $ | 15,326 | $ | 13,877 | |||||||||||
Year Ended December 31, | |||||||||||||||||
(in millions) | 2021 | 2020 | 2019 | ||||||||||||||
Net income (loss) | $ | 1,041 | $ | (82) | $ | 4,700 | |||||||||||
Adjustments to reconcile net income (loss) to cash provided by (used for) operating activities | |||||||||||||||||
Gain on disposal of businesses and assets | (78) | — | — | ||||||||||||||
Depreciation and amortization | 1,093 | 1,123 | 1,011 | ||||||||||||||
Deferred and prepaid income taxes | (124) | (82) | (4,301) | ||||||||||||||
Stock-based compensation expense | 194 | 170 | 157 | ||||||||||||||
Goodwill and other intangible asset impairment charges | 370 | 533 | 105 | ||||||||||||||
Net loss (gain) on investments and notes receivable | (250) | (333) | 30 | ||||||||||||||
Contingent consideration net expense (benefit) | (136) | (100) | (35) | ||||||||||||||
Inventory step-up amortization | 34 | 58 | 46 | ||||||||||||||
Foreign exchange (gain) loss | 27 | 32 | 358 | ||||||||||||||
Other, net | 51 | 213 | 63 | ||||||||||||||
Increase (decrease) in operating assets and liabilities, excluding purchase accounting: | |||||||||||||||||
Trade accounts receivable | (279) | 335 | (130) | ||||||||||||||
Inventories | (346) | (65) | (290) | ||||||||||||||
Other assets | (134) | (265) | 45 | ||||||||||||||
Accounts payable, accrued expenses and other liabilities | 408 | (28) | 79 | ||||||||||||||
Cash provided by (used for) operating activities | 1,870 | 1,508 | 1,836 | ||||||||||||||
Purchases of property, plant and equipment and internal use software | (554) | (376) | (461) | ||||||||||||||
Proceeds from sale of property, plant and equipment | 14 | 12 | 7 | ||||||||||||||
Payments for acquisitions of businesses, net of cash acquired | (2,258) | (3) | (4,382) | ||||||||||||||
Proceeds from divestiture of certain businesses | 826 | 15 | 90 | ||||||||||||||
Proceeds from royalty rights | 82 | 87 | 52 | ||||||||||||||
Proceeds from (payments for) settlements of hedge contracts | 15 | — | (199) | ||||||||||||||
Proceeds from (payments for) investments and acquisitions of certain technologies | 279 | (146) | (149) | ||||||||||||||
Cash provided by (used for) investing activities | (1,597) | (411) | (5,041) | ||||||||||||||
Payment of contingent consideration previously established in purchase accounting | (15) | (49) | (66) | ||||||||||||||
Payments for royalty rights | (85) | (97) | (69) | ||||||||||||||
Proceeds from royalty rights transfer | — | — | 256 | ||||||||||||||
Payments on short-term borrowings | — | (2,950) | (1,000) | ||||||||||||||
Proceeds from short-term borrowings, net of debt issuance costs | — | 2,245 | 700 | ||||||||||||||
Net increase (decrease) in commercial paper | — | (714) | (575) | ||||||||||||||
Payments on borrowings from credit facilities | — | (1,919) | — | ||||||||||||||
Proceeds from borrowings on credit facilities | — | 1,916 | — | ||||||||||||||
Payments on long-term borrowings and debt extinguishment costs | — | (1,260) | (3,560) | ||||||||||||||
Proceeds from long-term borrowings, net of debt issuance costs | — | 1,683 | 7,229 | ||||||||||||||
Cash dividends paid on preferred stock | (55) | (28) | — | ||||||||||||||
Net proceeds from issuance of preferred stock in connection with public offering | — | 975 | — | ||||||||||||||
Net proceeds from issuance of common stock in connection with public offering | — | 975 | — | ||||||||||||||
Payments for repurchase of common stock | — | (535) | — | ||||||||||||||
Cash used to net share settle employee equity awards | (50) | (59) | (65) | ||||||||||||||
Proceeds from issuances of shares of common stock pursuant to employee stock compensation and purchase plans | 110 | 111 | 123 | ||||||||||||||
Cash provided by (used for) financing activities | (95) | 293 | 2,973 | ||||||||||||||
Effect of foreign exchange rates on cash | (6) | (2) | 10 | ||||||||||||||
Net increase (decrease) in cash, cash equivalents, restricted cash and restricted cash equivalents | 173 | 1,388 | (222) | ||||||||||||||
Cash, cash equivalents, restricted cash and restricted cash equivalents at beginning of period | 1,995 | 607 | 829 | ||||||||||||||
Cash, cash equivalents, restricted cash and restricted cash equivalents at end of period | $ | 2,168 | $ | 1,995 | $ | 607 |
BOSTON SCIENTIFIC CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS | Year Ended December 31, | ||||||||||
(in millions) | 2019 | 2018 | 2017 | ||||||||
Net income (loss) | $ | 4,700 | $ | 1,671 | $ | 104 | |||||
Adjustments to reconcile net income (loss) to cash provided by operating activities | |||||||||||
Gain on sale of businesses | (8 | ) | — | — | |||||||
Depreciation and amortization | 1,011 | 894 | 844 | ||||||||
Deferred and prepaid income taxes | (4,301 | ) | (87 | ) | 245 | ||||||
Stock-based compensation expense | 157 | 140 | 127 | ||||||||
Intangible asset impairment charges | 105 | 35 | 4 | ||||||||
Net loss (gain) on investments and notes receivable | 30 | (155 | ) | 92 | |||||||
Contingent consideration expense (benefit) | (35 | ) | (21 | ) | (80 | ) | |||||
Payment of contingent consideration in excess of amount recognized at acquisition | (6 | ) | (9 | ) | (14 | ) | |||||
Inventory step-up amortization | 46 | 6 | 10 | ||||||||
Exchange (gain) loss | 358 | (11 | ) | 15 | |||||||
Other, net | 63 | 8 | 13 | ||||||||
Increase (decrease) in operating assets and liabilities, net of acquisitions: | |||||||||||
Trade accounts receivable | (130 | ) | (110 | ) | (30 | ) | |||||
Inventories | (290 | ) | (83 | ) | (107 | ) | |||||
Other assets | 45 | (172 | ) | (20 | ) | ||||||
Accounts payable and accrued expenses | 111 | (631 | ) | 195 | |||||||
Other liabilities | (18 | ) | (1,164 | ) | 28 | ||||||
Cash provided by (used for) operating activities | 1,836 | 310 | 1,426 | ||||||||
Purchases of property, plant and equipment | (461 | ) | (316 | ) | (319 | ) | |||||
Proceeds on disposals of property, plant and equipment | 7 | 14 | — | ||||||||
Payments for acquisitions of businesses, net of cash acquired | (4,382 | ) | (1,448 | ) | (560 | ) | |||||
Proceeds from divestiture of certain businesses | 90 | — | — | ||||||||
Proceeds from royalty rights | 52 | — | — | ||||||||
Payments for settlements of hedge contracts | (199 | ) | — | — | |||||||
Payments for investments and acquisitions of certain technologies | (149 | ) | (172 | ) | (131 | ) | |||||
Cash provided by (used for) investing activities | (5,041 | ) | (1,921 | ) | (1,010 | ) | |||||
Payment of contingent consideration and royalty rights previously established in purchase accounting | (135 | ) | (19 | ) | (33 | ) | |||||
Proceeds from royalty rights transfer | 256 | — | — | ||||||||
Proceeds from short-term borrowings, net of debt issuance costs | 700 | 999 | — | ||||||||
Net increase (decrease) in commercial paper | (575 | ) | 21 | 1,183 | |||||||
Proceeds from borrowings on credit facilities | — | 569 | 2,156 | ||||||||
Payments on borrowings from credit facilities | — | (569 | ) | (2,216 | ) | ||||||
Payments on short-term borrowings | (1,000 | ) | — | — | |||||||
Payments on long-term borrowings and debt extinguishment costs | (3,560 | ) | (602 | ) | (1,000 | ) | |||||
Proceeds from long-term borrowings, net of debt issuance costs | 7,229 | 987 | — | ||||||||
Cash used to net share settle employee equity awards | (65 | ) | (56 | ) | (65 | ) | |||||
Proceeds from issuances of shares of common stock | 123 | 101 | 85 | ||||||||
Cash provided by (used for) financing activities | 2,973 | 1,432 | 110 | ||||||||
Effect of foreign exchange rates on cash | 10 | (8 | ) | 4 | |||||||
Net increase (decrease) in cash, cash equivalents, restricted cash and restricted cash equivalents | (222 | ) | (188 | ) | 530 | ||||||
Cash, cash equivalents, restricted cash and restricted cash equivalents at beginning of period | 829 | 1,017 | 487 | ||||||||
Cash, cash equivalents, restricted cash and restricted cash equivalents at end of period | $ | 607 | $ | 829 | $ | 1,017 | |||||
Supplemental Information | |||||||||||
Cash (received) paid for income taxes, net | $ | 242 | $ | 1,037 | $ | (42 | ) | ||||
Cash paid for interest | 449 | 262 | 235 | ||||||||
Fair value of contingent consideration recorded in purchase accounting | 127 | 248 | 94 | ||||||||
As of December 31, | |||||||||||
Reconciliation to amounts within the consolidated balance sheets: | 2019 | 2018 | 2017 | ||||||||
Cash and cash equivalents | $ | 217 | $ | 146 | $ | 188 | |||||
Restricted cash and restricted cash equivalents included in Other current assets | 346 | 655 | 803 | ||||||||
Restricted cash equivalents included in Other long-term assets | 43 | 27 | 26 | ||||||||
Cash, cash equivalents, restricted cash and restricted cash equivalents at end of period | $ | 607 | $ | 829 | $ | 1,017 |
Year Ended December 31, | |||||||||||||||||
(in millions) | 2021 | 2020 | 2019 | ||||||||||||||
Supplemental Information | |||||||||||||||||
Cash (received) paid for income taxes, net | $ | 302 | $ | 207 | $ | 242 | |||||||||||
Cash paid for interest | 338 | 359 | 449 | ||||||||||||||
Fair value of contingent consideration recorded in purchase accounting | 440 | — | 127 | ||||||||||||||
Non-cash impact of transferred royalty rights | (82) | (87) | — | ||||||||||||||
As of December 31, | |||||||||||||||||
Reconciliation to amounts within the consolidated balance sheets: | 2021 | 2020 | 2019 | ||||||||||||||
Cash and cash equivalents | $ | 1,925 | $ | 1,734 | $ | 217 | |||||||||||
Restricted cash and restricted cash equivalents included in Other current assets | 188 | 208 | 346 | ||||||||||||||
Restricted cash equivalents included in Other long-term assets | 55 | 52 | 43 | ||||||||||||||
Cash, cash equivalents, restricted cash and restricted cash equivalents at end of period | $ | 2,168 | $ | 1,995 | $ | 607 |
/s/ Michael F. Mahoney | /s/ Daniel J. Brennan | |||||||||||||||||||
Michael F. Mahoney | Daniel J. Brennan | |||||||||||||||||||
Chief Executive Officer | Executive Vice President and Chief Financial Officer |
Description of the Matter | Business Combinations | ||||
As disclosed in Note B to the consolidated financial statements, during 2021, the Company completed four acquisitions for total aggregate purchase price of $3.3 billion, net of cash acquired. The transactions were accounted for as business combinations. In certain acquisitions, the Company has recognized a liability for acquisition consideration that is contingent upon achieving either research and development, commercialization, or sales-based milestones. The Company determines the fair value of these contingent consideration arrangements, both as part of the initial purchase price allocation, and on an ongoing basis each reporting period until the arrangements are settled. As of December 31, 2021, the amount accrued for future estimated contingent consideration is $486 million, which represents a Level 3 estimate in the fair value hierarchy due to the significant unobservable inputs used in determining the fair value and the use of management judgment about the assumptions that market participants would use in pricing the liabilities. Auditing the Company’s accounting for its acquisitions was complex due to the significant estimation required by management to determine the fair value of identified intangible assets, which totaled $1.2 billion and principally consisted of developed technology, and to determine the fair value of contingent consideration arrangements. A significant emphasis is placed on the appropriateness of the estimates used by management to determine the fair value of acquired intangible assets due to the sensitivity of the respective fair values to the underlying assumptions. The Company used an income approach to measure the technology-related intangible assets. The significant assumptions used to estimate the value of the intangible assets included discount rates and certain assumptions that form the basis of the forecasted results, including revenue growth rates, estimates of technological obsolescence, operating profit margin and market participant synergies. The significance of the estimations used by management to determine the fair value of contingent consideration was primarily due to the sensitivity of the respective fair values to the underlying assumptions. The significant assumptions include estimation of the probability and timing of payment, future sales forecasts, as well as the appropriate discount rate based on the estimated timing of payments. These significant assumptions are forward looking and could be affected by future economic and market conditions. | |||||
How We Addressed the Matter in Our Audit | We obtained an understanding, evaluated the design and tested the operating effectiveness of the controls over the Company’s accounting for acquisitions. For example, we tested controls over the identification and valuation of intangible assets, including the valuation models and underlying assumptions used to develop such estimates. We also tested controls over the valuation of the contingent consideration liability, including the valuation models and underlying assumptions used to develop such estimates. For each of the Company's acquisitions, we read the purchase agreements, evaluated the significant assumptions and methods used in developing the fair value estimates, and tested the recognition of (1) the tangible assets acquired and liabilities assumed at fair value; (2) the identifiable intangible assets acquired at fair value; and (3) goodwill measured as a residual. To test the estimated fair value of the intangible assets, we performed audit procedures that included, among others, evaluating the Company's use of the income approach and testing the significant assumptions used in the model, as described above. In testing the valuation of contingent consideration, we assessed, among other things, the terms of the arrangements and the conditions that must be met for the amounts to become payable. We evaluated the completeness and accuracy of the underlying data used in the analyses. For example, we compared the significant assumptions to current industry, market and economic trends, to the assumptions used to value similar assets in other acquisitions, to the historical results of the acquired business and to other guideline companies within the same industry. We involved our valuation professionals to assist with our evaluation of the methodology used by the Company and significant assumptions included in the fair value estimates. |
Year Ended December 31, | |||||||||||||||||
(in millions, except per share data) | 2021 | 2020 | 2019 | ||||||||||||||
Net sales | $ | 11,888 | $ | 9,913 | $ | 10,735 | |||||||||||
Cost of products sold | 3,711 | 3,465 | 3,116 | ||||||||||||||
Gross profit | 8,177 | 6,448 | 7,620 | ||||||||||||||
Operating expenses: | |||||||||||||||||
Selling, general and administrative expenses | 4,359 | 3,787 | 3,941 | ||||||||||||||
Research and development expenses | 1,204 | 1,143 | 1,174 | ||||||||||||||
Royalty expense | 49 | 45 | 65 | ||||||||||||||
Amortization expense | 741 | 789 | 699 | ||||||||||||||
Goodwill impairment charges | — | 73 | — | ||||||||||||||
Intangible asset impairment charges | 370 | 460 | 105 | ||||||||||||||
Contingent consideration net expense (benefit) | (136) | (100) | (35) | ||||||||||||||
Restructuring net charges (credits) | 40 | 52 | 38 | ||||||||||||||
Litigation-related net charges (credits) | 430 | 278 | 115 | ||||||||||||||
Gains on disposal of businesses and assets | (78) | — | — | ||||||||||||||
6,978 | 6,528 | 6,102 | |||||||||||||||
Operating income (loss) | 1,199 | (80) | 1,518 | ||||||||||||||
Other income (expense): | |||||||||||||||||
Interest expense | (341) | (361) | (473) | ||||||||||||||
Other, net | 218 | 362 | (358) | ||||||||||||||
Income (loss) before income taxes | 1,076 | (79) | 687 | ||||||||||||||
Income tax (benefit) expense | 36 | 2 | (4,013) | ||||||||||||||
Net income (loss) | 1,041 | (82) | 4,700 | ||||||||||||||
Preferred stock dividends | (55) | (33) | — | ||||||||||||||
Net income (loss) available to common stockholders | $ | 985 | $ | (115) | $ | 4,700 | |||||||||||
Net income (loss) per common share — basic | $ | 0.69 | $ | (0.08) | $ | 3.38 | |||||||||||
Net income (loss) per common share — assuming dilution | $ | 0.69 | $ | (0.08) | $ | 3.33 | |||||||||||
Weighted-average shares outstanding | |||||||||||||||||
Basic | 1,422.3 | 1,416.7 | 1,391.5 | ||||||||||||||
Assuming dilution | 1,433.8 | 1,416.7 | 1,410.6 |
Year Ended December 31, | |||||||||||||||||
(in millions) | 2021 | 2020 | 2019 | ||||||||||||||
Net income (loss) | $ | 1,041 | $ | (82) | $ | 4,700 | |||||||||||
Other comprehensive income (loss), net of tax: | |||||||||||||||||
Foreign currency translation adjustment | (125) | 76 | 195 | ||||||||||||||
Net change in derivative financial instruments | 170 | (137) | 62 | ||||||||||||||
Net change in defined benefit pensions and other items | 11 | (1) | (20) | ||||||||||||||
Total other comprehensive income (loss) | 56 | (63) | 237 | ||||||||||||||
Total comprehensive income (loss) | $ | 1,096 | $ | (145) | $ | 4,937 |
As of December 31, | |||||||||||
(in millions, except share and per share data) | 2021 | 2020 | |||||||||
ASSETS | |||||||||||
Current assets: | |||||||||||
Cash and cash equivalents | $ | 1,925 | $ | 1,734 | |||||||
Trade accounts receivable, net | 1,778 | 1,531 | |||||||||
Inventories | 1,610 | 1,351 | |||||||||
Prepaid income taxes | 205 | 194 | |||||||||
Assets held for sale | — | 1,133 | |||||||||
Other current assets | 799 | 751 | |||||||||
Total current assets | 6,317 | 6,694 | |||||||||
Property, plant and equipment, net | 2,252 | 2,084 | |||||||||
Goodwill | 11,988 | 9,951 | |||||||||
Other intangible assets, net | 6,121 | 5,917 | |||||||||
Deferred tax assets | 4,142 | 4,210 | |||||||||
Other long-term assets | 1,410 | 1,921 | |||||||||
TOTAL ASSETS | $ | 32,229 | $ | 30,777 | |||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||||||
Current liabilities: | |||||||||||
Current debt obligations | $ | 261 | $ | 13 | |||||||
Accounts payable | 794 | 513 | |||||||||
Accrued expenses | 2,436 | 2,197 | |||||||||
Other current liabilities | 783 | 958 | |||||||||
Total current liabilities | 4,274 | 3,681 | |||||||||
Long-term debt | 8,804 | 9,130 | |||||||||
Deferred tax liabilities | 310 | 330 | |||||||||
Other long-term liabilities | 2,220 | 2,309 | |||||||||
Commitments and contingencies | 0 | 0 | |||||||||
Stockholders’ equity: | |||||||||||
Preferred stock, $0.01 par value - authorized 50,000,000 shares; issued 10,062,500 shares as of December 31, 2021 and December 31, 2020 | — | — | |||||||||
Common stock, $0.01 par value - authorized 2,000,000,000 shares; issued 1,688,810,052 shares as of December 31, 2021 and 1,679,911,918 shares as of December 31, 2020 | 17 | 17 | |||||||||
Treasury stock, at cost - 263,289,848 shares as of December 31, 2021 and December 31, 2020 | (2,251) | (2,251) | |||||||||
Additional paid-in capital | 19,986 | 19,732 | |||||||||
Accumulated deficit | (1,392) | (2,378) | |||||||||
Accumulated other comprehensive income (loss), net of tax: | |||||||||||
Foreign currency translation adjustment | 93 | 218 | |||||||||
Unrealized gain on derivative financial instruments | 206 | 36 | |||||||||
Unrealized costs associated with defined benefit pensions and other items | (36) | (47) | |||||||||
Total stockholders’ equity | 16,622 | 15,326 | |||||||||
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ | 32,229 | $ | 30,777 |
Year Ended December 31, | |||||||||||||||||
(in millions, except share data) | 2021 | 2020 | 2019 | ||||||||||||||
Preferred stock shares outstanding | |||||||||||||||||
Beginning | 10,062,500 | — | — | ||||||||||||||
Preferred stock issuance | — | 10,062,500 | — | ||||||||||||||
Ending | 10,062,500 | 10,062,500 | — | ||||||||||||||
Common stock shares outstanding | |||||||||||||||||
Beginning | 1,679,911,918 | 1,642,488,911 | 1,632,148,030 | ||||||||||||||
Common stock issuance | — | 29,382,500 | — | ||||||||||||||
Impact of stock-based compensation plans | 8,898,134 | 8,040,507 | 10,340,881 | ||||||||||||||
Ending | 1,688,810,052 | 1,679,911,918 | 1,642,488,911 | ||||||||||||||
Preferred stock | |||||||||||||||||
Beginning | $ | — | $ | — | $ | — | |||||||||||
Preferred stock issuance | — | — | — | ||||||||||||||
Ending | — | $ | — | — | |||||||||||||
Common stock | |||||||||||||||||
Beginning | $ | 17 | $ | 16 | $ | 16 | |||||||||||
Common stock issuance | — | — | — | ||||||||||||||
Impact of stock-based compensation plans | — | — | — | ||||||||||||||
Ending | $ | 17 | $ | 17 | $ | 16 | |||||||||||
Treasury Stock | |||||||||||||||||
Beginning | $ | (2,251) | $ | (1,717) | $ | (1,717) | |||||||||||
Repurchase of common stock | — | (535) | — | ||||||||||||||
Ending | $ | (2,251) | $ | (2,251) | $ | (1,717) | |||||||||||
Additional Paid-In Capital | |||||||||||||||||
Beginning | $ | 19,732 | $ | 17,561 | $ | 17,346 | |||||||||||
Preferred stock issuance | — | 975 | — | ||||||||||||||
Common stock issuance | — | 975 | — | ||||||||||||||
Impact of stock-based compensation plans | 254 | 221 | 215 | ||||||||||||||
Ending | $ | 19,986 | $ | 19,732 | $ | 17,561 | |||||||||||
Accumulated Deficit | |||||||||||||||||
Beginning | $ | (2,378) | $ | (2,253) | $ | (6,953) | |||||||||||
Net income (loss) | 1,041 | (82) | 4,700 | ||||||||||||||
Cumulative effect adjustment for adoption of ASU 2016-13 | — | (10) | — | ||||||||||||||
Preferred stock dividends | (55) | (33) | — | ||||||||||||||
Ending | $ | (1,392) | $ | (2,378) | $ | (2,253) | |||||||||||
Accumulated Other Comprehensive Income (Loss), Net of Tax | |||||||||||||||||
Beginning | $ | 207 | $ | 270 | $ | 33 | |||||||||||
Changes in other comprehensive income (loss), net of tax: | |||||||||||||||||
Foreign currency translation adjustment | (125) | 76 | 195 | ||||||||||||||
Derivative financial instruments | 170 | (137) | 62 | ||||||||||||||
Defined benefit pensions and other items | 11 | (1) | (20) | ||||||||||||||
Ending | $ | 263 | $ | 207 | $ | 270 | |||||||||||
Total stockholders' equity | $ | 16,622 | $ | 15,326 | $ | 13,877 | |||||||||||
Year Ended December 31, | |||||||||||||||||
(in millions) | 2021 | 2020 | 2019 | ||||||||||||||
Net income (loss) | $ | 1,041 | $ | (82) | $ | 4,700 | |||||||||||
Adjustments to reconcile net income (loss) to cash provided by (used for) operating activities | |||||||||||||||||
Gain on disposal of businesses and assets | (78) | — | — | ||||||||||||||
Depreciation and amortization | 1,093 | 1,123 | 1,011 | ||||||||||||||
Deferred and prepaid income taxes | (124) | (82) | (4,301) | ||||||||||||||
Stock-based compensation expense | 194 | 170 | 157 | ||||||||||||||
Goodwill and other intangible asset impairment charges | 370 | 533 | 105 | ||||||||||||||
Net loss (gain) on investments and notes receivable | (250) | (333) | 30 | ||||||||||||||
Contingent consideration net expense (benefit) | (136) | (100) | (35) | ||||||||||||||
Inventory step-up amortization | 34 | 58 | 46 | ||||||||||||||
Foreign exchange (gain) loss | 27 | 32 | 358 | ||||||||||||||
Other, net | 51 | 213 | 63 | ||||||||||||||
Increase (decrease) in operating assets and liabilities, excluding purchase accounting: | |||||||||||||||||
Trade accounts receivable | (279) | 335 | (130) | ||||||||||||||
Inventories | (346) | (65) | (290) | ||||||||||||||
Other assets | (134) | (265) | 45 | ||||||||||||||
Accounts payable, accrued expenses and other liabilities | 408 | (28) | 79 | ||||||||||||||
Cash provided by (used for) operating activities | 1,870 | 1,508 | 1,836 | ||||||||||||||
Purchases of property, plant and equipment and internal use software | (554) | (376) | (461) | ||||||||||||||
Proceeds from sale of property, plant and equipment | 14 | 12 | 7 | ||||||||||||||
Payments for acquisitions of businesses, net of cash acquired | (2,258) | (3) | (4,382) | ||||||||||||||
Proceeds from divestiture of certain businesses | 826 | 15 | 90 | ||||||||||||||
Proceeds from royalty rights | 82 | 87 | 52 | ||||||||||||||
Proceeds from (payments for) settlements of hedge contracts | 15 | — | (199) | ||||||||||||||
Proceeds from (payments for) investments and acquisitions of certain technologies | 279 | (146) | (149) | ||||||||||||||
Cash provided by (used for) investing activities | (1,597) | (411) | (5,041) | ||||||||||||||
Payment of contingent consideration previously established in purchase accounting | (15) | (49) | (66) | ||||||||||||||
Payments for royalty rights | (85) | (97) | (69) | ||||||||||||||
Proceeds from royalty rights transfer | — | — | 256 | ||||||||||||||
Payments on short-term borrowings | — | (2,950) | (1,000) | ||||||||||||||
Proceeds from short-term borrowings, net of debt issuance costs | — | 2,245 | 700 | ||||||||||||||
Net increase (decrease) in commercial paper | — | (714) | (575) | ||||||||||||||
Payments on borrowings from credit facilities | — | (1,919) | — | ||||||||||||||
Proceeds from borrowings on credit facilities | — | 1,916 | — | ||||||||||||||
Payments on long-term borrowings and debt extinguishment costs | — | (1,260) | (3,560) | ||||||||||||||
Proceeds from long-term borrowings, net of debt issuance costs | — | 1,683 | 7,229 | ||||||||||||||
Cash dividends paid on preferred stock | (55) | (28) | — | ||||||||||||||
Net proceeds from issuance of preferred stock in connection with public offering | — | 975 | — | ||||||||||||||
Net proceeds from issuance of common stock in connection with public offering | — | 975 | — | ||||||||||||||
Payments for repurchase of common stock | — | (535) | — | ||||||||||||||
Cash used to net share settle employee equity awards | (50) | (59) | (65) | ||||||||||||||
Proceeds from issuances of shares of common stock pursuant to employee stock compensation and purchase plans | 110 | 111 | 123 | ||||||||||||||
Cash provided by (used for) financing activities | (95) | 293 | 2,973 | ||||||||||||||
Effect of foreign exchange rates on cash | (6) | (2) | 10 | ||||||||||||||
Net increase (decrease) in cash, cash equivalents, restricted cash and restricted cash equivalents | 173 | 1,388 | (222) | ||||||||||||||
Cash, cash equivalents, restricted cash and restricted cash equivalents at beginning of period | 1,995 | 607 | 829 | ||||||||||||||
Cash, cash equivalents, restricted cash and restricted cash equivalents at end of period | $ | 2,168 | $ | 1,995 | $ | 607 |
Year Ended December 31, | |||||||||||||||||
(in millions) | 2021 | 2020 | 2019 | ||||||||||||||
Supplemental Information | |||||||||||||||||
Cash (received) paid for income taxes, net | $ | 302 | $ | 207 | $ | 242 | |||||||||||
Cash paid for interest | 338 | 359 | 449 | ||||||||||||||
Fair value of contingent consideration recorded in purchase accounting | 440 | — | 127 | ||||||||||||||
Non-cash impact of transferred royalty rights | (82) | (87) | — | ||||||||||||||
As of December 31, | |||||||||||||||||
Reconciliation to amounts within the consolidated balance sheets: | 2021 | 2020 | 2019 | ||||||||||||||
Cash and cash equivalents | $ | 1,925 | $ | 1,734 | $ | 217 | |||||||||||
Restricted cash and restricted cash equivalents included in Other current assets | 188 | 208 | 346 | ||||||||||||||
Restricted cash equivalents included in Other long-term assets | 55 | 52 | 43 | ||||||||||||||
Cash, cash equivalents, restricted cash and restricted cash equivalents at end of period | $ | 2,168 | $ | 1,995 | $ | 607 |
/s/ Michael F. Mahoney | /s/ Daniel J. Brennan | |||||||||||||||||||
Michael F. Mahoney | Daniel J. Brennan | |||||||||||||||||||
Chief Executive Officer | Executive Vice President and Chief Financial Officer |
Description of the Matter | Business Combinations | ||||
As disclosed in Note B to the consolidated financial statements, during 2021, the Company completed four acquisitions for total aggregate purchase price of $3.3 billion, net of cash acquired. The transactions were accounted for as business combinations. In certain acquisitions, the Company has recognized a liability for acquisition consideration that is contingent upon achieving either research and development, commercialization, or sales-based milestones. The Company determines the fair value of these contingent consideration arrangements, both as part of the initial purchase price allocation, and on an ongoing basis each reporting period until the arrangements are settled. As of December 31, 2021, the amount accrued for future estimated contingent consideration is $486 million, which represents a Level 3 estimate in the fair value hierarchy due to the significant unobservable inputs used in determining the fair value and the use of management judgment about the assumptions that market participants would use in pricing the liabilities. Auditing the Company’s accounting for its acquisitions was complex due to the significant estimation required by management to determine the fair value of identified intangible assets, which totaled $1.2 billion and principally consisted of developed technology, and to determine the fair value of contingent consideration arrangements. A significant emphasis is placed on the appropriateness of the estimates used by management to determine the fair value of acquired intangible assets due to the sensitivity of the respective fair values to the underlying assumptions. The Company used an income approach to measure the technology-related intangible assets. The significant assumptions used to estimate the value of the intangible assets included discount rates and certain assumptions that form the basis of the forecasted results, including revenue growth rates, estimates of technological obsolescence, operating profit margin and market participant synergies. The significance of the estimations used by management to determine the fair value of contingent consideration was primarily due to the sensitivity of the respective fair values to the underlying assumptions. The significant assumptions include estimation of the probability and timing of payment, future sales forecasts, as well as the appropriate discount rate based on the estimated timing of payments. These significant assumptions are forward looking and could be affected by future economic and market conditions. | |||||
How We Addressed the Matter in Our Audit | We obtained an understanding, evaluated the design and tested the operating effectiveness of the controls over the Company’s accounting for acquisitions. For example, we tested controls over the identification and valuation of intangible assets, including the valuation models and underlying assumptions used to develop such estimates. We also tested controls over the valuation of the contingent consideration liability, including the valuation models and underlying assumptions used to develop such estimates. For each of the Company's acquisitions, we read the purchase agreements, evaluated the significant assumptions and methods used in developing the fair value estimates, and tested the recognition of (1) the tangible assets acquired and liabilities assumed at fair value; (2) the identifiable intangible assets acquired at fair value; and (3) goodwill measured as a residual. To test the estimated fair value of the intangible assets, we performed audit procedures that included, among others, evaluating the Company's use of the income approach and testing the significant assumptions used in the model, as described above. In testing the valuation of contingent consideration, we assessed, among other things, the terms of the arrangements and the conditions that must be met for the amounts to become payable. We evaluated the completeness and accuracy of the underlying data used in the analyses. For example, we compared the significant assumptions to current industry, market and economic trends, to the assumptions used to value similar assets in other acquisitions, to the historical results of the acquired business and to other guideline companies within the same industry. We involved our valuation professionals to assist with our evaluation of the methodology used by the Company and significant assumptions included in the fair value estimates. |
Year Ended December 31, | |||||||||||||||||
(in millions, except per share data) | 2021 | 2020 | 2019 | ||||||||||||||
Net sales | $ | 11,888 | $ | 9,913 | $ | 10,735 | |||||||||||
Cost of products sold | 3,711 | 3,465 | 3,116 | ||||||||||||||
Gross profit | 8,177 | 6,448 | 7,620 | ||||||||||||||
Operating expenses: | |||||||||||||||||
Selling, general and administrative expenses | 4,359 | 3,787 | 3,941 | ||||||||||||||
Research and development expenses | 1,204 | 1,143 | 1,174 | ||||||||||||||
Royalty expense | 49 | 45 | 65 | ||||||||||||||
Amortization expense | 741 | 789 | 699 | ||||||||||||||
Goodwill impairment charges | — | 73 | — | ||||||||||||||
Intangible asset impairment charges | 370 | 460 | 105 | ||||||||||||||
Contingent consideration net expense (benefit) | (136) | (100) | (35) | ||||||||||||||
Restructuring net charges (credits) | 40 | 52 | 38 | ||||||||||||||
Litigation-related net charges (credits) | 430 | 278 | 115 | ||||||||||||||
Gains on disposal of businesses and assets | (78) | — | — | ||||||||||||||
6,978 | 6,528 | 6,102 | |||||||||||||||
Operating income (loss) | 1,199 | (80) | 1,518 | ||||||||||||||
Other income (expense): | |||||||||||||||||
Interest expense | (341) | (361) | (473) | ||||||||||||||
Other, net | 218 | 362 | (358) | ||||||||||||||
Income (loss) before income taxes | 1,076 | (79) | 687 | ||||||||||||||
Income tax (benefit) expense | 36 | 2 | (4,013) | ||||||||||||||
Net income (loss) | 1,041 | (82) | 4,700 | ||||||||||||||
Preferred stock dividends | (55) | (33) | — | ||||||||||||||
Net income (loss) available to common stockholders | $ | 985 | $ | (115) | $ | 4,700 | |||||||||||
Net income (loss) per common share — basic | $ | 0.69 | $ | (0.08) | $ | 3.38 | |||||||||||
Net income (loss) per common share — assuming dilution | $ | 0.69 | $ | (0.08) | $ | 3.33 | |||||||||||
Weighted-average shares outstanding | |||||||||||||||||
Basic | 1,422.3 | 1,416.7 | 1,391.5 | ||||||||||||||
Assuming dilution | 1,433.8 | 1,416.7 | 1,410.6 |
Year Ended December 31, | |||||||||||||||||
(in millions) | 2021 | 2020 | 2019 | ||||||||||||||
Net income (loss) | $ | 1,041 | $ | (82) | $ | 4,700 | |||||||||||
Other comprehensive income (loss), net of tax: | |||||||||||||||||
Foreign currency translation adjustment | (125) | 76 | 195 | ||||||||||||||
Net change in derivative financial instruments | 170 | (137) | 62 | ||||||||||||||
Net change in defined benefit pensions and other items | 11 | (1) | (20) | ||||||||||||||
Total other comprehensive income (loss) | 56 | (63) | 237 | ||||||||||||||
Total comprehensive income (loss) | $ | 1,096 | $ | (145) | $ | 4,937 |
As of December 31, | |||||||||||
(in millions, except share and per share data) | 2021 | 2020 | |||||||||
ASSETS | |||||||||||
Current assets: | |||||||||||
Cash and cash equivalents | $ | 1,925 | $ | 1,734 | |||||||
Trade accounts receivable, net | 1,778 | 1,531 | |||||||||
Inventories | 1,610 | 1,351 | |||||||||
Prepaid income taxes | 205 | 194 | |||||||||
Assets held for sale | — | 1,133 | |||||||||
Other current assets | 799 | 751 | |||||||||
Total current assets | 6,317 | 6,694 | |||||||||
Property, plant and equipment, net | 2,252 | 2,084 | |||||||||
Goodwill | 11,988 | 9,951 | |||||||||
Other intangible assets, net | 6,121 | 5,917 | |||||||||
Deferred tax assets | 4,142 | 4,210 | |||||||||
Other long-term assets | 1,410 | 1,921 | |||||||||
TOTAL ASSETS | $ | 32,229 | $ | 30,777 | |||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||||||
Current liabilities: | |||||||||||
Current debt obligations | $ | 261 | $ | 13 | |||||||
Accounts payable | 794 | 513 | |||||||||
Accrued expenses | 2,436 | 2,197 | |||||||||
Other current liabilities | 783 | 958 | |||||||||
Total current liabilities | 4,274 | 3,681 | |||||||||
Long-term debt | 8,804 | 9,130 | |||||||||
Deferred tax liabilities | 310 | 330 | |||||||||
Other long-term liabilities | 2,220 | 2,309 | |||||||||
Commitments and contingencies | 0 | 0 | |||||||||
Stockholders’ equity: | |||||||||||
Preferred stock, $0.01 par value - authorized 50,000,000 shares; issued 10,062,500 shares as of December 31, 2021 and December 31, 2020 | — | — | |||||||||
Common stock, $0.01 par value - authorized 2,000,000,000 shares; issued 1,688,810,052 shares as of December 31, 2021 and 1,679,911,918 shares as of December 31, 2020 | 17 | 17 | |||||||||
Treasury stock, at cost - 263,289,848 shares as of December 31, 2021 and December 31, 2020 | (2,251) | (2,251) | |||||||||
Additional paid-in capital | 19,986 | 19,732 | |||||||||
Accumulated deficit | (1,392) | (2,378) | |||||||||
Accumulated other comprehensive income (loss), net of tax: | |||||||||||
Foreign currency translation adjustment | 93 | 218 | |||||||||
Unrealized gain on derivative financial instruments | 206 | 36 | |||||||||
Unrealized costs associated with defined benefit pensions and other items | (36) | (47) | |||||||||
Total stockholders’ equity | 16,622 | 15,326 | |||||||||
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ | 32,229 | $ | 30,777 |
Year Ended December 31, | |||||||||||||||||
(in millions, except share data) | 2021 | 2020 | 2019 | ||||||||||||||
Preferred stock shares outstanding | |||||||||||||||||
Beginning | 10,062,500 | — | — | ||||||||||||||
Preferred stock issuance | — | 10,062,500 | — | ||||||||||||||
Ending | 10,062,500 | 10,062,500 | — | ||||||||||||||
Common stock shares outstanding | |||||||||||||||||
Beginning | 1,679,911,918 | 1,642,488,911 | 1,632,148,030 | ||||||||||||||
Common stock issuance | — | 29,382,500 | — | ||||||||||||||
Impact of stock-based compensation plans | 8,898,134 | 8,040,507 | 10,340,881 | ||||||||||||||
Ending | 1,688,810,052 | 1,679,911,918 | 1,642,488,911 | ||||||||||||||
Preferred stock | |||||||||||||||||
Beginning | $ | — | $ | — | $ | — | |||||||||||
Preferred stock issuance | — | — | — | ||||||||||||||
Ending | — | $ | — | — | |||||||||||||
Common stock | |||||||||||||||||
Beginning | $ | 17 | $ | 16 | $ | 16 | |||||||||||
Common stock issuance | — | — | — | ||||||||||||||
Impact of stock-based compensation plans | — | — | — | ||||||||||||||
Ending | $ | 17 | $ | 17 | $ | 16 | |||||||||||
Treasury Stock | |||||||||||||||||
Beginning | $ | (2,251) | $ | (1,717) | $ | (1,717) | |||||||||||
Repurchase of common stock | — | (535) | — | ||||||||||||||
Ending | $ | (2,251) | $ | (2,251) | $ | (1,717) | |||||||||||
Additional Paid-In Capital | |||||||||||||||||
Beginning | $ | 19,732 | $ | 17,561 | $ | 17,346 | |||||||||||
Preferred stock issuance | — | 975 | — | ||||||||||||||
Common stock issuance | — | 975 | — | ||||||||||||||
Impact of stock-based compensation plans | 254 | 221 | 215 | ||||||||||||||
Ending | $ | 19,986 | $ | 19,732 | $ | 17,561 | |||||||||||
Accumulated Deficit | |||||||||||||||||
Beginning | $ | (2,378) | $ | (2,253) | $ | (6,953) | |||||||||||
Net income (loss) | 1,041 | (82) | 4,700 | ||||||||||||||
Cumulative effect adjustment for adoption of ASU 2016-13 | — | (10) | — | ||||||||||||||
Preferred stock dividends | (55) | (33) | — | ||||||||||||||
Ending | $ | (1,392) | $ | (2,378) | $ | (2,253) | |||||||||||
Accumulated Other Comprehensive Income (Loss), Net of Tax | |||||||||||||||||
Beginning | $ | 207 | $ | 270 | $ | 33 | |||||||||||
Changes in other comprehensive income (loss), net of tax: | |||||||||||||||||
Foreign currency translation adjustment | (125) | 76 | 195 | ||||||||||||||
Derivative financial instruments | 170 | (137) | 62 | ||||||||||||||
Defined benefit pensions and other items | 11 | (1) | (20) | ||||||||||||||
Ending | $ | 263 | $ | 207 | $ | 270 | |||||||||||
Total stockholders' equity | $ | 16,622 | $ | 15,326 | $ | 13,877 | |||||||||||
Year Ended December 31, | |||||||||||||||||
(in millions) | 2021 | 2020 | 2019 | ||||||||||||||
Net income (loss) | $ | 1,041 | $ | (82) | $ | 4,700 | |||||||||||
Adjustments to reconcile net income (loss) to cash provided by (used for) operating activities | |||||||||||||||||
Gain on disposal of businesses and assets | (78) | — | — | ||||||||||||||
Depreciation and amortization | 1,093 | 1,123 | 1,011 | ||||||||||||||
Deferred and prepaid income taxes | (124) | (82) | (4,301) | ||||||||||||||
Stock-based compensation expense | 194 | 170 | 157 | ||||||||||||||
Goodwill and other intangible asset impairment charges | 370 | 533 | 105 | ||||||||||||||
Net loss (gain) on investments and notes receivable | (250) | (333) | 30 | ||||||||||||||
Contingent consideration net expense (benefit) | (136) | (100) | (35) | ||||||||||||||
Inventory step-up amortization | 34 | 58 | 46 | ||||||||||||||
Foreign exchange (gain) loss | 27 | 32 | 358 | ||||||||||||||
Other, net | 51 | 213 | 63 | ||||||||||||||
Increase (decrease) in operating assets and liabilities, excluding purchase accounting: | |||||||||||||||||
Trade accounts receivable | (279) | 335 | (130) | ||||||||||||||
Inventories | (346) | (65) | (290) | ||||||||||||||
Other assets | (134) | (265) | 45 | ||||||||||||||
Accounts payable, accrued expenses and other liabilities | 408 | (28) | 79 | ||||||||||||||
Cash provided by (used for) operating activities | 1,870 | 1,508 | 1,836 | ||||||||||||||
Purchases of property, plant and equipment and internal use software | (554) | (376) | (461) | ||||||||||||||
Proceeds from sale of property, plant and equipment | 14 | 12 | 7 | ||||||||||||||
Payments for acquisitions of businesses, net of cash acquired | (2,258) | (3) | (4,382) | ||||||||||||||
Proceeds from divestiture of certain businesses | 826 | 15 | 90 | ||||||||||||||
Proceeds from royalty rights | 82 | 87 | 52 | ||||||||||||||
Proceeds from (payments for) settlements of hedge contracts | 15 | — | (199) | ||||||||||||||
Proceeds from (payments for) investments and acquisitions of certain technologies | 279 | (146) | (149) | ||||||||||||||
Cash provided by (used for) investing activities | (1,597) | (411) | (5,041) | ||||||||||||||
Payment of contingent consideration previously established in purchase accounting | (15) | (49) | (66) | ||||||||||||||
Payments for royalty rights | (85) | (97) | (69) | ||||||||||||||
Proceeds from royalty rights transfer | — | — | 256 | ||||||||||||||
Payments on short-term borrowings | — | (2,950) | (1,000) | ||||||||||||||
Proceeds from short-term borrowings, net of debt issuance costs | — | 2,245 | 700 | ||||||||||||||
Net increase (decrease) in commercial paper | — | (714) | (575) | ||||||||||||||
Payments on borrowings from credit facilities | — | (1,919) | — | ||||||||||||||
Proceeds from borrowings on credit facilities | — | 1,916 | — | ||||||||||||||
Payments on long-term borrowings and debt extinguishment costs | — | (1,260) | (3,560) | ||||||||||||||
Proceeds from long-term borrowings, net of debt issuance costs | — | 1,683 | 7,229 | ||||||||||||||
Cash dividends paid on preferred stock | (55) | (28) | — | ||||||||||||||
Net proceeds from issuance of preferred stock in connection with public offering | — | 975 | — | ||||||||||||||
Net proceeds from issuance of common stock in connection with public offering | — | 975 | — | ||||||||||||||
Payments for repurchase of common stock | — | (535) | — | ||||||||||||||
Cash used to net share settle employee equity awards | (50) | (59) | (65) | ||||||||||||||
Proceeds from issuances of shares of common stock pursuant to employee stock compensation and purchase plans | 110 | 111 | 123 | ||||||||||||||
Cash provided by (used for) financing activities | (95) | 293 | 2,973 | ||||||||||||||
Effect of foreign exchange rates on cash | (6) | (2) | 10 | ||||||||||||||
Net increase (decrease) in cash, cash equivalents, restricted cash and restricted cash equivalents | 173 | 1,388 | (222) | ||||||||||||||
Cash, cash equivalents, restricted cash and restricted cash equivalents at beginning of period | 1,995 | 607 | 829 | ||||||||||||||
Cash, cash equivalents, restricted cash and restricted cash equivalents at end of period | $ | 2,168 | $ | 1,995 | $ | 607 |
Year Ended December 31, | |||||||||||||||||
(in millions) | 2021 | 2020 | 2019 | ||||||||||||||
Supplemental Information | |||||||||||||||||
Cash (received) paid for income taxes, net | $ | 302 | $ | 207 | $ | 242 | |||||||||||
Cash paid for interest | 338 | 359 | 449 | ||||||||||||||
Fair value of contingent consideration recorded in purchase accounting | 440 | — | 127 | ||||||||||||||
Non-cash impact of transferred royalty rights | (82) | (87) | — | ||||||||||||||
As of December 31, | |||||||||||||||||
Reconciliation to amounts within the consolidated balance sheets: | 2021 | 2020 | 2019 | ||||||||||||||
Cash and cash equivalents | $ | 1,925 | $ | 1,734 | $ | 217 | |||||||||||
Restricted cash and restricted cash equivalents included in Other current assets | 188 | 208 | 346 | ||||||||||||||
Restricted cash equivalents included in Other long-term assets | 55 | 52 | 43 | ||||||||||||||
Cash, cash equivalents, restricted cash and restricted cash equivalents at end of period | $ | 2,168 | $ | 1,995 | $ | 607 |
(in millions) | Preventice | Lumenis | All Other | Total | ||||||||||||||||
Payment for acquisition, net of cash acquired | $ | 706 | $ | 1,032 | $ | 519 | $ | 2,258 | ||||||||||||
Fair value of contingent consideration | 221 | — | 218 | 440 | ||||||||||||||||
Fair value of prior interest | 269 | — | 287 | 556 | ||||||||||||||||
$ | 1,197 | $ | 1,032 | $ | 1,025 | $ | 3,254 |
(in millions) | Preventice | Lumenis | All Other | Total | |||||||||||||||||||
Goodwill | $ | 926 | $ | 544 | $ | 594 | $ | 2,064 | |||||||||||||||
Amortizable intangible assets | 237 | 423 | 465 | 1,125 | |||||||||||||||||||
Indefinite-lived intangible assets | — | 69 | 43 | 112 | |||||||||||||||||||
Other assets acquired | 65 | 115 | 9 | 190 | |||||||||||||||||||
Liabilities assumed | (32) | (101) | (11) | (144) | |||||||||||||||||||
Net deferred tax liabilities | — | (18) | (75) | (93) | |||||||||||||||||||
$ | 1,197 | $ | 1,032 | $ | 1,025 | $ | 3,254 |
Amount Assigned (in millions) | Weighted Average Amortization Period (in years) | Risk-Adjusted Discount Rates used in Purchase Price Allocation | |||||||||||||||||||||
Preventice: | |||||||||||||||||||||||
Amortizable intangible assets: | |||||||||||||||||||||||
Technology-related | $ | 215 | 9 | 10% | |||||||||||||||||||
Other intangible assets | 22 | 8 | 10% | ||||||||||||||||||||
$ | 237 | ||||||||||||||||||||||
Lumenis: | |||||||||||||||||||||||
Amortizable intangible assets: | |||||||||||||||||||||||
Technology-related | $ | 388 | 12 | 11% | |||||||||||||||||||
Other intangible assets | 35 | 11 | 11% | ||||||||||||||||||||
Indefinite-lived intangible assets: | |||||||||||||||||||||||
In-process research and development (IPR&D) | 69 | N/A | 12% | ||||||||||||||||||||
$ | 492 | ||||||||||||||||||||||
All Other: | |||||||||||||||||||||||
Amortizable intangible assets: | |||||||||||||||||||||||
Technology-related | $ | 465 | 12 | 16% | - | 17% | |||||||||||||||||
Indefinite-lived intangible assets: | |||||||||||||||||||||||
In-process research and development (IPR&D) | 43 | N/A | 17% | ||||||||||||||||||||
$ | 508 | ||||||||||||||||||||||
(in millions) | |||||
Payment for acquisition, net of cash acquired | $ | 3,619 |
(in millions) | |||||
Goodwill | $ | 1,635 | |||
Trade accounts receivable, net | 108 | ||||
Inventories | 232 | ||||
Other current assets | 252 | ||||
Other intangible assets, net | 1,785 | ||||
Other long-term assets | 538 | ||||
Accrued expenses and other current liabilities | (308) | ||||
Other long-term liabilities | (274) | ||||
Deferred tax liability | (349) | ||||
$ | 3,619 |
(in millions) | |||
Payment for acquisition, net of cash acquired | $ | 3,619 |
Amount Assigned (in millions) | Amortization Period (in years) | Risk-Adjusted Discount Rates used in Purchase Price Allocation | |||||||||||||||||||||||||||
Amortizable intangible assets: | |||||||||||||||||||||||||||||
Technology-related | $ | 1,709 | 10 | - | 18 | 11 | % | - | 12% | ||||||||||||||||||||
Other intangible assets | 75 | 2 | - | 11 | 11% | ||||||||||||||||||||||||
$ | 1,785 |
(in millions) | |||
Goodwill | $ | 1,644 | |
Trade accounts receivable, net | 108 | ||
Inventories | 232 | ||
Other current assets | 252 | ||
Other intangible assets, net | 1,785 | ||
Other long-term assets | 537 | ||
Accrued expenses and other current liabilities | (308 | ) | |
Other long-term liabilities | (274 | ) | |
Deferred tax liability | (358 | ) | |
$ | 3,619 |
Amount Assigned (in millions) | Amortization Period (in years) | Risk-Adjusted Discount Rates used in Purchase Price Allocation | ||||||||||
Amortizable intangible assets: | ||||||||||||
Technology-related | $ | 1,709 | 10 | - | 18 | 11 | % | - | 12% | |||
Other intangible assets | 75 | 2 | - | 11 | 11% | |||||||
$ | 1,785 |
Year Ended December 31, | |||||||
(in millions, except per share data) (Unaudited) | 2019 | 2018 | |||||
Net sales | $ | 11,142 | $ | 10,429 | |||
Net income (loss) | $ | 4,585 | $ | 1,244 | |||
Net income (loss) per common share — basic | $ | 3.30 | $ | 0.90 | |||
Net income (loss) per common share — assuming dilution | $ | 3.25 | $ | 0.89 |
(in millions) | |||||
Payments for acquisitions, net of cash acquired | $ | 763 | |||
Fair value of contingent consideration | 127 | ||||
Fair value of prior interests | 102 | ||||
$ | 992 |
(in millions) | |||
Payments for acquisitions, net of cash acquired | $ | 763 | |
Fair value of contingent consideration | 127 | ||
Fair value of prior interests | 102 | ||
$ | 992 |
(in millions) | |||||
Goodwill | $ | 577 | |||
Amortizable intangible assets | 220 | ||||
Indefinite-lived intangible assets | 240 | ||||
Other assets acquired | 24 | ||||
Liabilities assumed | (12) | ||||
Net deferred tax liabilities | (58) | ||||
$ | 992 |
(in millions) | |||
Goodwill | $ | 575 | |
Amortizable intangible assets | 220 | ||
Indefinite-lived intangible assets | 240 | ||
Other assets acquired | 24 | ||
Liabilities assumed | (12 | ) | |
Net deferred tax liabilities | (56 | ) | |
$ | 992 |
Amount Assigned (in millions) | Amortization Period (in years) | Risk-Adjusted Discount Rates used in Purchase Price Allocation | |||||||||||||||||||||||||||
Amortizable intangible assets: | |||||||||||||||||||||||||||||
Technology-related | $ | 210 | 12 | 15% | |||||||||||||||||||||||||
Other intangible assets | 10 | 12 | 15% | ||||||||||||||||||||||||||
Indefinite-lived intangible assets: | |||||||||||||||||||||||||||||
In-process research and development | 240 | N/A | 19% | ||||||||||||||||||||||||||
$ | 461 |
Amount Assigned (in millions) | Amortization Period (in years) | Risk-Adjusted Discount Rates used in Purchase Price Allocation | |||||
Amortizable intangible assets: | |||||||
Technology-related | $ | 210 | 12 | 15% | |||
Other intangible assets | 10 | 12 | 15% | ||||
Indefinite-lived intangible assets: | |||||||
In-process research and development | 240 | n/a | 19% | ||||
$ | 461 |
(in millions) | |||
Payments for acquisitions, net of cash acquired | $ | 1,449 | |
Fair value of contingent consideration | 248 | ||
Fair value of prior interests | 251 | ||
$ | 1,948 |
(in millions) | |||
Goodwill | $ | 939 | |
Amortizable intangible assets | 939 | ||
In-process research and development | 213 | ||
Other assets acquired | 38 | ||
Liabilities assumed | (19 | ) | |
Net deferred tax liabilities | (162 | ) | |
$ | 1,948 |
Amount Assigned (in millions) | Amortization Period (in years) | Risk-Adjusted Discount Rates used in Purchase Price Allocation | ||||||||||
Amortizable intangible assets | ||||||||||||
Technology-related | $ | 908 | 6 | - | 14 | 14 | % | - | 23% | |||
Other intangible assets | 31 | 6 | - | 13 | 13 | % | - | 15% | ||||
Indefinite-lived intangible assets | ||||||||||||
In-process research and development | 213 | n/a | 15% | |||||||||
$ | 1,153 |
(in millions) | |||
Payment for acquisitions, net of cash acquired | $ | 560 | |
Fair value of contingent consideration | 72 | ||
$ | 632 |
(in millions) | |||
Goodwill | $ | 287 | |
Amortizable intangible assets | 278 | ||
Indefinite-lived intangible assets | 186 | ||
Other assets acquired | 44 | ||
Liabilities assumed | (61 | ) | |
Deferred tax liabilities | (102 | ) | |
$ | 632 |
Amount Assigned (in millions) | Amortization Period (in years) | Risk-Adjusted Discount Rates used in Purchase Price Allocation | |||||||
Amortizable intangible assets | |||||||||
Technology-related | $ | 268 | 13 | 24% | |||||
Other intangible assets | 10 | 2 | - | 13 | 24% | ||||
Indefinite-lived intangible assets | |||||||||
In-process research and development | $ | 186 | n/a | 15% | |||||
$ | 464 |
(in millions) | |||||
Balance as of December 31, 2019 | $ | 354 | |||
Contingent consideration net expense (benefit) | (100) | ||||
Contingent consideration payments | (58) | ||||
Balance as of December 31, 2020 | $ | 196 | |||
Amount recorded related to current year acquisitions | 440 | ||||
Contingent consideration net expense (benefit) | (136) | ||||
Contingent consideration payments | (15) | ||||
Balance as of December 31, 2021 | $ | 486 |
(in millions) | |||
Balance as of December 31, 2017 | $ | 169 | |
Amounts recorded related to current year acquisitions | 248 | ||
Purchase price adjustments related to prior year acquisitions | (22 | ) | |
Contingent consideration expense (benefit) | (21 | ) | |
Contingent consideration payments | (28 | ) | |
Balance as of December 31, 2018 | $ | 347 | |
Amounts recorded related to current year acquisitions | 127 | ||
Contingent consideration arrangements transferred to Varian | (16 | ) | |
Contingent consideration expense (benefit) | (35 | ) | |
Contingent consideration payments | (68 | ) | |
Balance as of December 31, 2019 | $ | 354 |
Contingent Consideration Liability | Fair Value as of December 31, 2021 | Valuation Technique | Unobservable Input | Range | Weighted Average(1) | ||||||||||||||||||
R&D, Regulatory and Commercialization-based Milestones | $143 million | Discounted Cash Flow | Discount Rate | 1% | 2% | 1% | |||||||||||||||||
Probability of Payment | 80% | 95% | 92% | ||||||||||||||||||||
Projected Year of Payment | 2022 | 2024 | 2023 | ||||||||||||||||||||
Revenue-based Payments | $343 million | Discounted Cash Flow | Discount Rate | 4 | % | - | 14% | 6% | |||||||||||||||
Probability of Payment | 100 | % | - | 100% | 100% | ||||||||||||||||||
Projected Year of Payment | 2021 | - | 2024 | 2022 | |||||||||||||||||||
Contingent Consideration Liability | Fair Value as of December 31, 2019 | Valuation Technique | Unobservable Input | Range | Weighted Average (1) | |||
R&D, Regulatory and Commercialization-based Milestones | $198 million | Discounted Cash Flow | Discount Rate | 2 | % | - | 3% | 3% |
Probability of Payment | 40 | % | - | 90% | 82% | |||
Projected Year of Payment | 2020 | - | 2027 | 2021 | ||||
Revenue-based Payments | $156 million | Discounted Cash Flow | Discount Rate | 11 | % | - | 15% | 13% |
Probability of Payment | 60 | % | - | 100% | 99% | |||
Projected Year of Payment | 2020 | - | 2026 | 2021 |
As of December 31, | |||||||||||
(in millions) | 2021 | 2020 | |||||||||
Equity method investments | $ | 259 | $ | 319 | |||||||
Measurement alternative investments(1) | 142 | 183 | |||||||||
Publicly-held securities(2) | 10 | 414 | |||||||||
Notes receivable | — | 2 | |||||||||
$ | 412 | $ | 918 |
As of December 31, | |||||||
(in millions) | 2019 | 2018 | |||||
Equity method investments | $ | 264 | $ | 303 | |||
Measurement alternative investments(1) | 171 | 94 | |||||
Publicly-held securities(2) | 1 | — | |||||
Notes receivable | 23 | 26 | |||||
$ | 458 | $ | 424 |
(2) Publicly-held equity securities are measured at fair value with changes |
(in millions) | As of December 31, 2020 | ||||
Cash | $ | 37 | |||
Trade accounts receivable, net | 24 | ||||
Inventories | 79 | ||||
Other current assets | 17 | ||||
Goodwill | 175 | ||||
Other intangible assets, net | 758 | ||||
Other long-term assets | 45 | ||||
Assets held for sale | $ | 1,133 | |||
Accrued expenses and other current liabilities | $ | 25 | |||
Other long-term liabilities | 27 | ||||
Deferred tax liability | 148 | ||||
Liabilities held for sale included in Other current liabilities | $ | 200 |
As of December 31, 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 | $ | 11,957 | $ | (6,754) | $ | 11,059 | $ | (6,179) | |||||||||||||||
Patents | 494 | (398) | 511 | (407) | |||||||||||||||||||
Other intangible assets | 1,900 | (1,325) | 1,775 | (1,220) | |||||||||||||||||||
Amortizable intangible assets | $ | 14,351 | $ | (8,476) | $ | 13,345 | $ | (7,806) | |||||||||||||||
Goodwill | $ | 21,888 | $ | (9,900) | $ | 19,924 | $ | (9,973) | |||||||||||||||
IPR&D | 126 | 257 | |||||||||||||||||||||
Technology-related | 120 | 120 | |||||||||||||||||||||
Indefinite-lived intangible assets | $ | 246 | $ | 377 |
As of December 31, 2019 | As of December 31, 2018 | ||||||||||||||
(in millions) | Gross Carrying Amount | Accumulated Amortization/Write-offs | Gross Carrying Amount | Accumulated Amortization/Write-offs | |||||||||||
Amortizable intangible assets | |||||||||||||||
Technology-related | $ | 12,020 | $ | (5,706 | ) | $ | 10,197 | $ | (5,266 | ) | |||||
Patents | 525 | (408 | ) | 520 | (393 | ) | |||||||||
Other intangible assets | 1,754 | (1,081 | ) | 1,666 | (958 | ) | |||||||||
$ | 14,299 | $ | (7,195 | ) | $ | 12,383 | $ | (6,617 | ) | ||||||
Indefinite-lived intangible assets | |||||||||||||||
Goodwill | $ | 20,076 | $ | (9,900 | ) | $ | 17,811 | $ | (9,900 | ) | |||||
In-process research and development (IPR&D) | 662 | — | 486 | — | |||||||||||
Technology-related | 120 | — | 120 | — | |||||||||||
$ | 20,858 | $ | (9,900 | ) | $ | 18,417 | $ | (9,900 | ) |
(in millions) | MedSurg | Rhythm and Neuro | Cardiovascular | Specialty Pharmaceuticals | Total | ||||||||||||||||||||||||
Balance as of December 31, 2019 | $ | 2,061 | $ | 2,192 | $ | 5,676 | $ | 247 | $ | 10,176 | |||||||||||||||||||
Foreign currency fluctuations and other changes | (2) | 3 | 22 | — | 22 | ||||||||||||||||||||||||
Goodwill impairment charges | — | — | — | (73) | (73) | ||||||||||||||||||||||||
Goodwill reclassified to Current assets held for sale | — | — | — | (175) | (175) | ||||||||||||||||||||||||
Balance as of December 31, 2020 | $ | 2,059 | $ | 2,194 | $ | 5,697 | $ | — | $ | 9,951 | |||||||||||||||||||
Foreign currency fluctuations and other changes | (5) | (1) | (21) | — | (27) | ||||||||||||||||||||||||
Goodwill acquired | 544 | 1,309 | 210 | — | 2,064 | ||||||||||||||||||||||||
Balance as of December 31, 2021 | $ | 2,598 | $ | 3,503 | $ | 5,887 | $ | — | $ | 11,988 |
(in millions) | MedSurg | Rhythm and Neuro | Cardiovascular | Specialty Pharmaceuticals | Total | ||||||||||||||
Balance as of December 31, 2017 | $ | 2,877 | $ | 417 | $ | 3,704 | $ | — | $ | 6,998 | |||||||||
Reportable segment revisions | (1,379 | ) | 1,379 | — | — | — | |||||||||||||
Foreign currency fluctuations and other changes | (3 | ) | (22 | ) | (3 | ) | — | (29 | ) | ||||||||||
Goodwill acquired | 568 | 150 | 224 | — | 942 | ||||||||||||||
Balance as of December 31, 2018 | $ | 2,063 | $ | 1,924 | $ | 3,925 | $ | — | $ | 7,911 | |||||||||
Foreign currency fluctuations and other changes | (1 | ) | — | 58 | 9 | 66 | |||||||||||||
Goodwill acquired | — | 268 | 1,712 | 238 | 2,218 | ||||||||||||||
Goodwill divested | — | — | (19 | ) | — | (19 | ) | ||||||||||||
Balance as of December 31, 2019 | $ | 2,061 | $ | 2,192 | $ | 5,676 | $ | 247 | $ | 10,176 |
Fiscal Year | |||||
2022 | $ | 752 | |||
2023 | 738 | ||||
2024 | 703 | ||||
2025 | 644 | ||||
2026 | 620 |
Fiscal Year | |||
2020 | $ | 787 | |
2021 | 750 | ||
2022 | 722 | ||
2023 | 708 | ||
2024 | 672 |
(in millions) | FASB ASC Topic 815 Designation | As of December 31, | ||||||||||||||||||
2021 | 2020 | |||||||||||||||||||
Forward currency contracts | Cash flow hedge | $ | 3,996 | $ | 4,531 | |||||||||||||||
Forward currency contracts | Net investment hedge | 493 | 1,004 | |||||||||||||||||
Foreign currency-denominated debt(1) | Net investment hedge | 997 | 868 | |||||||||||||||||
Forward currency contracts | Non-designated | 3,892 | 4,946 | |||||||||||||||||
Total Notional Outstanding | $ | 9,378 | $ | 11,349 |
(in millions) | FASB ASC Topic 815 Designation | As of December 31, | ||||||||
2019 | 2018 | |||||||||
Forward currency contracts | Cash flow hedge | $ | 3,891 | $ | 3,962 | |||||
Forward currency contracts | Net investment hedge | 953 | 1,483 | |||||||
Foreign currency-denominated debt(1) | Net investment hedge | 997 | — | |||||||
Forward currency contracts | Non-designated | 4,377 | 5,880 | |||||||
Interest rate derivative contracts | Cash flow hedge | — | 1,000 | |||||||
Total Notional Outstanding | $ | 10,218 | $ | 12,326 |
Effect of Hedging Relationships on Accumulated Other Comprehensive Income | ||||||||||||||||||||||||||||||||
Amount Recognized in OCI on Hedges | 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 | |||||||||||||||||||||||||
Year Ended December 31, 2021 | ||||||||||||||||||||||||||||||||
Forward currency contracts | ||||||||||||||||||||||||||||||||
Cash flow hedges | $ | 268 | $ | (60) | $ | 208 | Cost of products sold | $ | 3,711 | $ | (54) | $ | 12 | $ | (42) | |||||||||||||||||
Net investment hedges(2) | 56 | (13) | 43 | Interest expense | 341 | (13) | 3 | (10) | ||||||||||||||||||||||||
Foreign currency-denominated debt | ||||||||||||||||||||||||||||||||
Net investment hedges(3) | 82 | (19) | 64 | Other, net | (218) | — | — | — | ||||||||||||||||||||||||
Interest rate derivative contracts | ||||||||||||||||||||||||||||||||
Cash flow hedges | — | — | — | Interest expense | 341 | 5 | (1) | 4 | ||||||||||||||||||||||||
Year Ended December 31, 2020 | ||||||||||||||||||||||||||||||||
Forward currency contracts | ||||||||||||||||||||||||||||||||
Cash flow hedges | $ | (99) | $ | 22 | $ | (77) | Cost of products sold | $ | 3,465 | $ | (83) | $ | 19 | $ | (64) | |||||||||||||||||
Net investment hedges(2) | (37) | 8 | (29) | Interest expense | 361 | (24) | 5 | (19) | ||||||||||||||||||||||||
Foreign currency-denominated debt | ||||||||||||||||||||||||||||||||
Net investment hedges(3) | (89) | 21 | (68) | Other, net | (362) | — | — | — | ||||||||||||||||||||||||
Interest rate derivative contracts | ||||||||||||||||||||||||||||||||
Cash flow hedges | — | — | — | Interest expense | 361 | 5 | (1) | 4 | ||||||||||||||||||||||||
Year Ended December 31, 2019 | ||||||||||||||||||||||||||||||||
Forward currency contracts | ||||||||||||||||||||||||||||||||
Cash flow hedges | $ | 150 | $ | (34) | $ | 117 | Cost of products sold | $ | 3,116 | $ | (73) | $ | 16 | $ | (56) | |||||||||||||||||
Net investment hedges(2) | 68 | (15) | 53 | Interest expense | 473 | (43) | 10 | (33) | ||||||||||||||||||||||||
Foreign currency-denominated debt | ||||||||||||||||||||||||||||||||
Net investment hedges(3) | (14) | 3 | (11) | Other, net | (358) | — | — | — | ||||||||||||||||||||||||
Interest rate derivative contracts | ||||||||||||||||||||||||||||||||
Cash flow hedges | — | — | — | Interest expense | 473 | 3 | (1) | 2 |
Effect of Hedging Relationships on Accumulated Other Comprehensive Income | ||||||||||||||||||||||||
Amount Recognized in OCI on Hedges | Consolidated Statements of Operations (1) | Amount Reclassified from AOCI into Earnings | ||||||||||||||||||||||
Pre-Tax Gain (Loss) | Tax Benefit (Expense) | Gain (Loss) Net of Tax | Location of Amount Reclassified | Total Amount of Line Item Presented | Pre-Tax (Gain) Loss | Tax (Benefit) Expense | (Gain) Loss Net of Tax | |||||||||||||||||
Year Ended December 31, 2019 | ||||||||||||||||||||||||
Forward currency contracts | ||||||||||||||||||||||||
Cash flow hedges | $ | 150 | $ | (34 | ) | $ | 117 | Cost of products sold | $ | 3,116 | $ | (73 | ) | $ | 16 | $ | (56 | ) | ||||||
Net investment hedges (2) | 68 | (15 | ) | 53 | Interest expense | 473 | (43 | ) | 10 | (33 | ) | |||||||||||||
Foreign currency-denominated debt | ||||||||||||||||||||||||
Net investment hedges | (14 | ) | 3 | (11 | ) | Interest expense | 473 | — | — | — | ||||||||||||||
Interest rate derivative contracts | ||||||||||||||||||||||||
Cash flow hedges | — | — | — | Interest expense | 473 | 3 | (1 | ) | 2 | |||||||||||||||
Year Ended December 31, 2018 | ||||||||||||||||||||||||
Forward currency contracts | ||||||||||||||||||||||||
Cash flow hedges | $ | 167 | $ | (38 | ) | $ | 130 | Cost of products sold | $ | 2,813 | $ | 19 | $ | (4 | ) | $ | 15 | |||||||
Net investment hedges (2) | 56 | (13 | ) | 43 | Interest expense | 241 | (27 | ) | 6 | (21 | ) | |||||||||||||
Interest rate derivative contracts | ||||||||||||||||||||||||
Cash flow hedges | (44 | ) | 10 | (34 | ) | Interest expense | 241 | (1 | ) | — | (1 | ) | ||||||||||||
Year Ended December 31, 2017 | ||||||||||||||||||||||||
Forward currency contracts | ||||||||||||||||||||||||
Cash flow hedges | $ | (101 | ) | $ | 37 | $ | (65 | ) | Cost of products sold | $ | 2,593 | $ | (64 | ) | $ | 23 | $ | (41 | ) | |||||
Interest rate derivative contracts | ||||||||||||||||||||||||
Cash flow hedges | — | — | — | Interest expense | 229 | (1 | ) | — | (1 | ) |
Designated Hedging Instrument | FASB ASC Topic 815 Designation | Location on 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 | $ | 127 | ||||||||||||||||
Forward currency contracts | Net investment hedge | Interest expense | 3 | |||||||||||||||||
Interest rate derivative contracts | Cash flow hedge | Interest expense | (5) |
Designated Hedging Instrument | FASB ASC Topic 815 Designation | Location on 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 | $ | 77 | ||||
Forward currency contracts | Net investment hedge | Interest expense | 24 | |||||
Interest rate derivative contracts | Cash flow hedge | Interest expense | (5 | ) |
(in millions) | Location on Consolidated Statements of Operations | Year Ended December 31, | ||||||||||||||||||||||||
2021 | 2020 | 2019 | ||||||||||||||||||||||||
Net gain (loss) on currency hedge contracts | Other, net | $ | (16) | $ | 73 | $ | (343) | |||||||||||||||||||
Net gain (loss) on currency transaction exposures | Other, net | (12) | (105) | (15) | ||||||||||||||||||||||
Net currency exchange gain (loss) | $ | (27) | $ | (32) | $ | (358) |
(in millions) | Location on Consolidated Statements of Operations | Year Ended December 31, | ||||||||||||
2019 | 2018 | 2017 | ||||||||||||
Net gain (loss) on currency hedge contracts | Other, net | $ | (343 | ) | $ | 41 | $ | (25 | ) | |||||
Net gain (loss) on currency transaction exposures | Other, net | (15 | ) | (30 | ) | 10 | ||||||||
Net currency exchange gain (loss) | $ | (358 | ) | $ | 11 | $ | (15 | ) |
(in millions) | Location on Consolidated Balance Sheets(1) | As of December 31, | ||||||||||||||||||
2021 | 2020 | |||||||||||||||||||
Derivative and Nonderivative Assets: | ||||||||||||||||||||
Designated Hedging Instruments | ||||||||||||||||||||
Forward currency contracts | Other current assets | $ | 183 | $ | 53 | |||||||||||||||
Forward currency contracts | Other long-term assets | 169 | 109 | |||||||||||||||||
352 | 162 | |||||||||||||||||||
Non-Designated Hedging Instruments | ||||||||||||||||||||
Forward currency contracts | Other current assets | 42 | 79 | |||||||||||||||||
Total Derivative and Nonderivative Assets | $ | 394 | $ | 242 | ||||||||||||||||
Derivative and Nonderivative Liabilities: | ||||||||||||||||||||
Designated Hedging Instruments | ||||||||||||||||||||
Forward currency contracts | Other current liabilities | $ | 32 | $ | 44 | |||||||||||||||
Forward currency contracts | Other long-term liabilities | 6 | 54 | |||||||||||||||||
Foreign currency-denominated debt(2) | Other long-term liabilities | 1,011 | 1,094 | |||||||||||||||||
1,049 | 1,191 | |||||||||||||||||||
Non-Designated Hedging Instruments | ||||||||||||||||||||
Forward currency contracts | Other current liabilities | 22 | 71 | |||||||||||||||||
Total Derivative and Nonderivative Liabilities | $ | 1,071 | $ | 1,262 |
(in millions) | Location on Consolidated Balance Sheets (1) | As of December 31, | ||||||||
2019 | 2018 | |||||||||
Derivative and Nonderivative Assets: | ||||||||||
Designated Hedging Instruments | ||||||||||
Forward currency contracts | Other current assets | $ | 72 | $ | 55 | |||||
Forward currency contracts | Other long-term assets | 216 | 183 | |||||||
288 | 237 | |||||||||
Non-Designated Hedging Instruments | ||||||||||
Forward currency contracts | Other current assets | 33 | 67 | |||||||
Total Derivative and Nonderivative Assets | $ | 321 | $ | 304 | ||||||
Derivative and Nonderivative Liabilities: | ||||||||||
Designated Hedging Instruments | ||||||||||
Forward currency contracts | Other current liabilities | $ | 3 | $ | 2 | |||||
Forward currency contracts | Other long-term liabilities | 8 | 3 | |||||||
Foreign currency-denominated debt | Other long-term liabilities | 998 | — | |||||||
Interest rate contracts | Other current liabilities | — | 44 | |||||||
1,009 | 49 | |||||||||
Non-Designated Hedging Instruments | ||||||||||
Forward currency contracts | Other current liabilities | 29 | 31 | |||||||
Total Derivative and Nonderivative Liabilities | $ | 1,037 | $ | 80 |
As of | |||||||||||||||||||||||||||||||||||||||||||||||
December 31, 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 | $ | 1,632 | $ | — | $ | — | $ | 1,632 | $ | 1,584 | $ | — | $ | — | $ | 1,584 | |||||||||||||||||||||||||||||||
Publicly-held securities | 10 | — | — | 10 | 414 | — | — | 414 | |||||||||||||||||||||||||||||||||||||||
Hedging instruments | — | 394 | — | 394 | — | 242 | — | 242 | |||||||||||||||||||||||||||||||||||||||
Licensing arrangements | — | — | 246 | 246 | — | — | 365 | 365 | |||||||||||||||||||||||||||||||||||||||
$ | 1,642 | $ | 394 | $ | 246 | $ | 2,282 | $ | 1,998 | $ | 242 | $ | 365 | $ | 2,605 | ||||||||||||||||||||||||||||||||
Liabilities | |||||||||||||||||||||||||||||||||||||||||||||||
Hedging instruments | $ | — | $ | 1,071 | $ | — | $ | 1,071 | $ | — | $ | 1,262 | $ | — | $ | 1,262 | |||||||||||||||||||||||||||||||
Contingent consideration liability | — | — | 486 | 486 | — | — | 196 | 196 | |||||||||||||||||||||||||||||||||||||||
Licensing arrangements | — | — | 281 | 281 | — | — | 407 | 407 | |||||||||||||||||||||||||||||||||||||||
$ | — | $ | 1,071 | $ | 767 | $ | 1,838 | $ | — | $ | 1,262 | $ | 603 | $ | 1,865 |
As of | |||||||||||||||||||||||||||||||
December 31, 2019 | December 31, 2018 | ||||||||||||||||||||||||||||||
(in millions) | Level 1 | Level 2 | Level 3 | Total | Level 1 | Level 2 | Level 3 | Total | |||||||||||||||||||||||
Assets | |||||||||||||||||||||||||||||||
Money market and government funds | $ | 50 | $ | — | $ | — | $ | 50 | $ | 13 | $ | — | $ | — | $ | 13 | |||||||||||||||
Publicly-held securities | 1 | — | — | 1 | — | — | — | — | |||||||||||||||||||||||
Hedging instruments | — | 321 | — | 321 | — | 304 | — | 304 | |||||||||||||||||||||||
Licensing arrangements | — | — | 518 | 518 | — | — | — | — | |||||||||||||||||||||||
$ | 51 | $ | 321 | $ | 518 | $ | 890 | $ | 14 | $ | 304 | $ | — | $ | 318 | ||||||||||||||||
Liabilities | |||||||||||||||||||||||||||||||
Hedging instruments | $ | — | $ | 1,037 | $ | — | $ | 1,037 | $ | — | $ | 80 | $ | — | $ | 80 | |||||||||||||||
Contingent consideration liability | — | — | 354 | 354 | — | — | 347 | 347 | |||||||||||||||||||||||
Licensing arrangements | — | — | 571 | 571 | — | — | — | — | |||||||||||||||||||||||
$ | — | $ | 1,037 | $ | 925 | $ | 1,963 | $ | — | $ | 80 | $ | 347 | $ | 427 |
Licensing Arrangements | Fair Value as of December 31, 2019 | Valuation Technique | Unobservable Input | Range | Weighted Average (1) | |||
Financial Asset | $518 million | Discounted Cash Flow | Discount Rate | 11 | % | - | 19% | 19% |
Projected Year of Payment | 2020 | - | 2028 | 2024 | ||||
Financial Liability | $571 million | Discounted Cash Flow | Discount Rate | 19% | 19% | |||
Projected Year of Payment | 2020 | - | 2027 | 2023 |
Licensing Arrangements | Fair Value as of December 31, 2021 | Valuation Technique | Unobservable Input | Range | Weighted Average(1) | ||||||||||||||||||
Financial Asset | $246 million | Discounted Cash Flow | Discount Rate | 15% | 15% | ||||||||||||||||||
Projected Year of Payment | 2022 | - | 2025 | 2023 | |||||||||||||||||||
Financial Liability | $281 million | Discounted Cash Flow | Discount Rate | 12% | - | 15% | 13% | ||||||||||||||||
Projected Year of Payment | 2022 | - | 2026 | 2024 |
(in millions) | |||||
Balance as of December 31, 2019 | $ | 518 | |||
Proceeds from royalty rights | (175) | ||||
Fair value adjustment (expense) benefit | 22 | ||||
Balance as of December 31, 2020 | $ | 365 | |||
Proceeds from royalty rights | (163) | ||||
Fair value adjustment (expense) benefit | 44 | ||||
Balance as of December 31, 2021 | $ | 246 |
(in millions) | |||
Balance as of December 31, 2018 | $ | — | |
Amounts recorded related to current year acquisition | 567 | ||
Proceeds from royalty rights | (52 | ) | |
Fair value adjustment (expense) benefit | 3 | ||
Balance as of December 31, 2019 | $ | 518 |
(in millions) | |||||
Balance as of December 31, 2019 | $ | 571 | |||
Payments for royalty rights | (186) | ||||
Fair value adjustment expense (benefit) | 22 | ||||
Balance as of December 31, 2020 | $ | 407 | |||
Payments for royalty rights | (166) | ||||
Fair value adjustment expense (benefit) | 41 | ||||
Balance as of December 31, 2021 | $ | 281 |
(in millions) | |||
Balance as of December 31, 2018 | $ | — | |
Amounts recorded related to current year acquisition | 315 | ||
Proceeds from secured borrowings relating to royalty arrangements | 256 | ||
Balance as of December 31, 2019 | $ | 571 |
Issuance Date | Maturity Date | As of December 31, | Stated Interest Rate | Issuance Date | Maturity Date | As of December 31, | Coupon Rate(1) | |||||||||||||||||||||||||||||||||||||||
(in millions, except interest rates) | 2019 | 2018 | (in millions, except interest rates) | 2021 | 2020 | |||||||||||||||||||||||||||||||||||||||||
January 2020 Notes | December 2009 | January 2020 | $ | — | $ | 850 | 6.000% | |||||||||||||||||||||||||||||||||||||||
May 2020 Notes | May 2015 | May 2020 | — | 600 | 2.850% | |||||||||||||||||||||||||||||||||||||||||
May 2022 Notes | May 2015 | May 2022 | 500 | 500 | 3.375% | |||||||||||||||||||||||||||||||||||||||||
August 2022 Term Loan | August 2019 | August 2022 | 1,000 | — | ||||||||||||||||||||||||||||||||||||||||||
May 2022 Notes(3) | May 2022 Notes(3) | May 2015 | May 2022 | $ | — | $ | 250 | 3.375% | ||||||||||||||||||||||||||||||||||||||
October 2023 Notes | August 2013 | October 2023 | 244 | 450 | 4.125% | October 2023 Notes | August 2013 | October 2023 | 244 | 244 | 4.125% | |||||||||||||||||||||||||||||||||||
March 2024 Notes | February 2019 | March 2024 | 850 | — | 3.450% | March 2024 Notes | February 2019 | March 2024 | 850 | 850 | 3.450% | |||||||||||||||||||||||||||||||||||
May 2025 Notes | May 2015 | May 2025 | 523 | 750 | 3.850% | May 2025 Notes | May 2015 | May 2025 | 523 | 523 | 3.850% | |||||||||||||||||||||||||||||||||||
June 2025 Notes | June 2025 Notes | May 2020 | June 2025 | 500 | 500 | 1.900% | ||||||||||||||||||||||||||||||||||||||||
March 2026 Notes | February 2019 | March 2026 | 850 | — | 3.750% | March 2026 Notes | February 2019 | March 2026 | 850 | 850 | 3.750% | |||||||||||||||||||||||||||||||||||
December 2027 Notes | November 2019 | December 2027 | 1,011 | — | 0.625% | |||||||||||||||||||||||||||||||||||||||||
December 2027 Notes(4) | December 2027 Notes(4) | November 2019 | December 2027 | 1,021 | 1,105 | 0.625% | ||||||||||||||||||||||||||||||||||||||||
March 2028 Notes | February 2018 | March 2028 | 434 | 1,000 | 4.000% | March 2028 Notes | February 2018 | March 2028 | 434 | 434 | 4.000% | |||||||||||||||||||||||||||||||||||
March 2029 Notes | February 2019 | March 2029 | 850 | — | 4.000% | March 2029 Notes | February 2019 | March 2029 | 850 | 850 | 4.000% | |||||||||||||||||||||||||||||||||||
November 2035 Notes (1) | November 2005 | November 2035 | 350 | 350 | 7.000% | |||||||||||||||||||||||||||||||||||||||||
June 2030 Notes | June 2030 Notes | May 2020 | June 2030 | 1,200 | 1,200 | 2.650% | ||||||||||||||||||||||||||||||||||||||||
November 2035 Notes(2) | November 2035 Notes(2) | November 2005 | November 2035 | 350 | 350 | 6.750% | ||||||||||||||||||||||||||||||||||||||||
March 2039 Notes | February 2019 | March 2039 | 750 | — | 4.550% | March 2039 Notes | February 2019 | March 2039 | 750 | 750 | 4.550% | |||||||||||||||||||||||||||||||||||
January 2040 Notes | December 2009 | January 2040 | 300 | 300 | 7.375% | January 2040 Notes | December 2009 | January 2040 | 300 | 300 | 7.375% | |||||||||||||||||||||||||||||||||||
March 2049 Notes | February 2019 | March 2049 | 1,000 | — | 4.700% | March 2049 Notes | February 2019 | March 2049 | 1,000 | 1,000 | 4.700% | |||||||||||||||||||||||||||||||||||
Unamortized Debt Issuance Discount and Deferred Financing Costs | 2020 - 2049 | (83 | ) | (29 | ) | Unamortized Debt Issuance Discount and Deferred Financing Costs | 2022 - 2049 | (76) | (88) | |||||||||||||||||||||||||||||||||||||
Unamortized Gain on Fair Value Hedges | 2020-2023 | 7 | 26 | Unamortized Gain on Fair Value Hedges | 2023 | 3 | 5 | |||||||||||||||||||||||||||||||||||||||
Finance Lease Obligation (2) | Various | 6 | 6 | |||||||||||||||||||||||||||||||||||||||||||
Finance Lease Obligation | Finance Lease Obligation | Various | 6 | 7 | ||||||||||||||||||||||||||||||||||||||||||
Long-term debt | $ | 8,592 | $ | 4,803 | Long-term debt | $ | 8,804 | $ | 9,130 |
(1) Coupon rates are semi-annual, except for the 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 |
(3) As of December 31, 2021 the outstanding balance is presented within Current Debt Obligations within our consolidated balance sheet. (4) The December 2027 notes are euro-denominated and presented in U.S. dollars based on the exchange rate in effect as of December 31, 2021 and December 31, 2020. |
Covenant Requirement 2021as of December 31, | Actual | ||||||||||
Maximum permitted leverage ratio(1) |
As of December 31, | |||||||
(in millions, except maturity and yield) | 2019 | 2018 | |||||
Commercial paper outstanding | $ | 711 | $ | 1,248 | |||
Maximum borrowing capacity | 2,750 | 2,750 | |||||
Borrowing capacity available | 2,039 | 1,502 | |||||
Weighted average maturity | 55 days | 27 days | |||||
Weighted average yield | 2.21 | % | 3.04 | % |
As of December 31, 2021 | As of December 31, 2020 | ||||||||||||||||||||||
Factoring Arrangements | Amount De-recognized | Weighted Average Interest Rate | Amount De-recognized | Weighted Average Interest Rate | |||||||||||||||||||
Euro denominated | $ | 141 | 2.1 | % | $ | 148 | 1.9 | % | |||||||||||||||
Yen denominated | 223 | 0.6 | % | 240 | 0.6 | % | |||||||||||||||||
Renminbi denominated | — | 3.2 | % | — | 3.5 | % |
As of December 31, 2019 | As of December 31, 2018 | ||||||||||||
Factoring Arrangements | Amount De-recognized | Weighted Average Interest Rate | Amount De-recognized | Weighted Average Interest Rate | |||||||||
Euro denominated | $ | 171 | 1.4 | % | $ | 165 | 2.7 | % | |||||
Yen denominated | 226 | 0.6 | % | 195 | 0.9 | % |
Fiscal Year | Unrecorded Purchase Obligations | ||
2020 | $ | 334 | |
2021 | 20 | ||
2022 | 7 | ||
2023 | 3 | ||
2024 | 1 | ||
Thereafter | 1 | ||
$ | 366 |
Fiscal Year | Unrecorded Purchase Obligations | ||||
2022 | $ | 631 | |||
2023 | 82 | ||||
2024 | 58 | ||||
2025 | 31 | ||||
2026 | 11 | ||||
Thereafter | — | ||||
$ | 812 |
As of December 31, | |||||||||||
(in millions) | 2021 | 2020 | |||||||||
Assets | |||||||||||
Operating lease right-of-use assets in Other long-term assets | $ | 435 | $ | 458 | |||||||
Liabilities | |||||||||||
Operating lease liabilities in Other current liabilities | 71 | 70 | |||||||||
Operating lease liabilities in Other long-term liabilities | 389 | 401 |
(in millions) | As of December 31, 2019 | ||
Assets | |||
Operating lease right-of-use assets in Other long-term assets | $ | 336 | |
Liabilities | |||
Operating lease liabilities in Other current liabilities | 67 | ||
Operating lease liabilities in Other long-term liabilities | 276 |
As of December 31, | |||||||||||
2021 | 2020 | ||||||||||
Weighted average remaining lease term | 10 years | 11 years | |||||||||
Weighted average discount rate | 2.6% | 2.4% |
Year Ended December 31, | |||||||||||
(in millions) | 2021 | 2020 | |||||||||
Cash paid for amounts included in the measurement of operating lease liabilities | |||||||||||
Operating cash flows from operating leases | $ | 87 | $ | 91 |
Year Ended | |||
(in millions) | December 31, 2019 | ||
Cash paid for amounts included in the measurement of operating lease liabilities | |||
Operating cash flows from operating leases | $ | 77 |
Fiscal year | Operating Leases | ||||
2022 | $ | 86 | |||
2023 | 69 | ||||
2024 | 56 | ||||
2025 | 49 | ||||
2026 | 40 | ||||
Thereafter | 228 | ||||
Total future minimum operating lease payments | 528 | ||||
Less: imputed interest | (68) | ||||
Present value of operating lease liabilities | $ | 460 |
Fiscal year | Operating Leases | ||
2020 | $ | 84 | |
2021 | 71 | ||
2022 | 59 | ||
2023 | 48 | ||
2024 | 41 | ||
Thereafter | 79 | ||
Total future minimum operating lease payments | 382 | ||
Less: imputed interest | 39 | ||
Present value of operating lease liabilities | $ | 343 |
Fiscal year | Future Minimum Rental Commitments | ||
2019 | $ | 73 | |
2020 | 61 | ||
2021 | 47 | ||
2022 | 39 | ||
2023 | 31 | ||
Thereafter | 111 | ||
$ | 362 |
Type of Cost (in millions) | Total Estimated Amount Expected to be Incurred | ||||||||||
Restructuring charges: | |||||||||||
Termination benefits | $75 | - | $100 | ||||||||
Other(1) | 25 | - | 50 | ||||||||
Restructuring-related expenses: | |||||||||||
Other(2) | 325 | - | 375 | ||||||||
$425 | - | $525 |
Type of cost | Total Amount Incurred | ||
Restructuring charges: | |||
Termination benefits | $ | 86 | million |
Other (1) | 21 | million | |
Restructuring-related expenses: | |||
Other (2) | 164 | million | |
$ | 271 | million |
Type of cost (in millions) |
Restructuring charges: | |||||
86 | |||||
Other(1) | 21 | ||||
Restructuring-related expenses: | |||||
Other(2) | 164 | ||||
$ | 271 |
Year Ended December 31, 2021 | Termination Benefits | Transfer Costs | Other | Total | ||||||||||||||||||||||
Restructuring charges | $ | 20 | $ | — | $ | 20 | $ | 40 | ||||||||||||||||||
Restructuring-related expenses: | ||||||||||||||||||||||||||
Cost of products sold | — | 79 | — | 79 | ||||||||||||||||||||||
Selling, general and administrative expenses | — | — | 72 | 72 | ||||||||||||||||||||||
Research and development expenses | — | — | — | — | ||||||||||||||||||||||
— | 79 | 72 | 151 | |||||||||||||||||||||||
$ | 20 | $ | 79 | $ | 92 | $ | 191 | |||||||||||||||||||
Year Ended December 31, 2019 | Termination Benefits | Transfer Costs | Other | Total | ||||||||||||||||||||||||||||||||||
Year Ended December 31, 2020 | Year Ended December 31, 2020 | Termination Benefits | Transfer Costs | Other | Total | |||||||||||||||||||||||||||||||||
Restructuring charges | $ | 38 | $ | — | $ | — | $ | 38 | Restructuring charges | $ | 27 | $ | — | $ | 24 | $ | 52 | |||||||||||||||||||||
Restructuring-related expenses: | Restructuring-related expenses: | |||||||||||||||||||||||||||||||||||||
Cost of products sold | — | 32 | — | 32 | Cost of products sold | — | 64 | — | 64 | |||||||||||||||||||||||||||||
Selling, general and administrative expenses | — | — | 13 | 13 | Selling, general and administrative expenses | — | — | 51 | 51 | |||||||||||||||||||||||||||||
Research and development expenses | Research and development expenses | — | — | 4 | 4 | |||||||||||||||||||||||||||||||||
— | 32 | 13 | 44 | $ | — | $ | 64 | $ | 55 | $ | 119 | |||||||||||||||||||||||||||
$ | 38 | $ | 32 | $ | 13 | $ | 82 | $ | 27 | $ | 64 | $ | 79 | $ | 171 |
Year Ended December 31, 2019 | Termination Benefits | Transfer Costs | Other | Total | |||||||||||||||||||
Restructuring charges | $ | 38 | $ | — | $ | — | $ | 38 | |||||||||||||||
Restructuring-related expenses: | |||||||||||||||||||||||
Cost of products sold | — | 32 | — | 32 | |||||||||||||||||||
Selling, general and administrative expenses | — | — | 13 | 13 | |||||||||||||||||||
— | 32 | 13 | 44 | ||||||||||||||||||||
$ | 38 | $ | 32 | $ | 13 | $ | 82 |
Year Ended December 31, 2018 | Termination Benefits | Transfer Costs | Other | Total | |||||||||||
Restructuring charges | $ | 32 | $ | — | $ | 4 | $ | 36 | |||||||
Restructuring-related expenses: | |||||||||||||||
Cost of products sold | — | 47 | — | 47 | |||||||||||
Selling, general and administrative expenses | — | — | 12 | 12 | |||||||||||
— | 47 | 12 | 59 | ||||||||||||
$ | 32 | $ | 47 | $ | 16 | $ | 96 |
Year Ended December 31, 2017 | Termination Benefits | Transfer Costs | Other | Total | |||||||||||
Restructuring charges | $ | 25 | $ | — | $ | 12 | $ | 37 | |||||||
Restructuring-related expenses: | |||||||||||||||
Cost of products sold | — | 45 | — | 45 | |||||||||||
Selling, general and administrative expenses | — | — | 13 | 13 | |||||||||||
— | 45 | 13 | 58 | ||||||||||||
$ | 25 | $ | 45 | $ | 25 | $ | 95 |
(in millions) | 2016 Restructuring Plan | 2019 Restructuring Plan | Total | ||||||||||||||||||||
Termination benefits | $ | 86 | $ | 59 | $ | 145 | |||||||||||||||||
Other(1) | 21 | 44 | 64 | ||||||||||||||||||||
Total restructuring charges | 106 | 102 | 209 | ||||||||||||||||||||
Transfer costs | 126 | 166 | 292 | ||||||||||||||||||||
Other(2) | 39 | 82 | 121 | ||||||||||||||||||||
Restructuring-related charges | 164 | 249 | 413 | ||||||||||||||||||||
$ | 271 | $ | 351 | $ | 622 |
(in millions) | 2016 Restructuring Plan | 2019 Restructuring Plan | Total | ||||||||
Termination benefits | $ | 86 | $ | 30 | $ | 115 | |||||
Other (1) | 21 | 2 | 23 | ||||||||
Total restructuring charges | 106 | 32 | 138 | ||||||||
Transfer costs | 126 | 13 | 139 | ||||||||
Other (2) | 39 | 2 | 41 | ||||||||
Restructuring-related charges | 164 | 15 | 180 | ||||||||
$ | 271 | $ | 47 | $ | 318 |
(in millions) | 2016 Restructuring Plan | 2019 Restructuring Plan | Total | ||||||||||||||
Termination benefits | $ | 89 | $ | 35 | $ | 123 | |||||||||||
Transfer costs | 125 | 156 | 281 | ||||||||||||||
Other | 41 | 72 | 114 | ||||||||||||||
$ | 255 | $ | 263 | $ | 517 | ||||||||||||
(in millions) | 2016 Restructuring Plan | 2019 Restructuring Plan | Total | ||||||||
Year Ended December 31, 2019 | |||||||||||
Termination benefits | $ | 13 | $ | 6 | $ | 18 | |||||
Transfer costs | 18 | 13 | 32 | ||||||||
Other | 10 | 4 | 14 | ||||||||
$ | 41 | $ | 23 | $ | 64 |
As of December 31, | |||||||||||
(in millions) | 2021 | 2020 | |||||||||
Trade accounts receivable | $ | 1,886 | $ | 1,637 | |||||||
Allowance for credit losses | (108) | (105) | |||||||||
$ | 1,778 | $ | 1,531 |
As of December 31, | |||||||
(in millions) | 2019 | 2018 | |||||
Accounts receivable | $ | 1,902 | $ | 1,676 | |||
Allowance for doubtful accounts | (74 | ) | (68 | ) | |||
$ | 1,828 | $ | 1,608 |
Year Ended December 31, | |||||||||||||||||
(in millions) | 2021 | 2020 | 2019 | ||||||||||||||
Beginning balance | $ | 105 | $ | 74 | $ | 68 | |||||||||||
Cumulative effect adjustment for adoption of ASU 2016-13 | n/a | 10 | n/a | ||||||||||||||
Credit loss expense | 28 | 49 | 23 | ||||||||||||||
Write-offs | (25) | (27) | (17) | ||||||||||||||
Ending balance | $ | 108 | $ | 105 | $ | 74 |
Year Ended December 31, | |||||||||||
(in millions) | 2019 | 2018 | 2017 | ||||||||
Beginning balance | $ | 68 | $ | 68 | $ | 73 | |||||
Net charges to expenses | 23 | 19 | 14 | ||||||||
Utilization of allowances | (17 | ) | (19 | ) | (18 | ) | |||||
Ending balance | $ | 74 | $ | 68 | $ | 68 |
As of December 31, | |||||||||||
(in millions) | 2021 | 2020 | |||||||||
Finished goods | $ | 1,029 | $ | 893 | |||||||
Work-in-process | 128 | 109 | |||||||||
Raw materials | 452 | 349 | |||||||||
$ | 1,610 | $ | 1,351 |
As of December 31, | |||||||
(in millions) | 2019 | 2018 | |||||
Finished goods | $ | 971 | $ | 760 | |||
Work-in-process | 192 | 100 | |||||
Raw materials | 416 | 306 | |||||
$ | 1,579 | $ | 1,166 |
As of December 31, | |||||||||||
(in millions) | 2021 | 2020 | |||||||||
Restricted cash and restricted cash equivalents | $ | 188 | $ | 208 | |||||||
Derivative assets | 226 | 133 | |||||||||
Licensing arrangements | 132 | 148 | |||||||||
Other | 254 | 263 | |||||||||
$ | 799 | $ | 751 |
As of December 31, | |||||||
(in millions) | 2019 | 2018 | |||||
Restricted cash and restricted cash equivalents | $ | 346 | $ | 655 | |||
Derivative assets | 105 | 122 | |||||
Licensing arrangements | 186 | — | |||||
Taxes receivable | 105 | 37 | |||||
Other | 138 | 107 | |||||
$ | 880 | $ | 921 |
As of December 31, | |||||||||||
(in millions) | 2021 | 2020 | |||||||||
Land | $ | 109 | $ | 104 | |||||||
Buildings and improvements | 1,335 | 1,292 | |||||||||
Equipment, furniture and fixtures | 3,475 | 3,465 | |||||||||
Capital in progress | 605 | 446 | |||||||||
5,525 | 5,308 | ||||||||||
Less: accumulated depreciation | 3,273 | 3,224 | |||||||||
$ | 2,252 | $ | 2,084 |
As of December 31, | |||||||
(in millions) | 2019 | 2018 | |||||
Land | $ | 117 | $ | 97 | |||
Buildings and improvements | 1,198 | 1,100 | |||||
Equipment, furniture and fixtures | 3,411 | 3,224 | |||||
Capital in progress | 442 | 319 | |||||
5,169 | 4,740 | ||||||
Less: accumulated depreciation | 3,089 | 2,958 | |||||
$ | 2,079 | $ | 1,782 |
As of December 31, | |||||||||||
(in millions) | 2021 | 2020 | |||||||||
Restricted cash equivalents | $ | 55 | $ | 52 | |||||||
Operating lease right-of-use assets | 435 | 458 | |||||||||
Derivative assets | 169 | 109 | |||||||||
Investments | 412 | 918 | |||||||||
Licensing arrangements | 114 | 218 | |||||||||
Other | 225 | 166 | |||||||||
$ | 1,410 | $ | 1,921 |
As of December 31, | |||||||
(in millions) | 2019 | 2018 | |||||
Restricted cash equivalents | $ | 43 | $ | 27 | |||
Operating lease right-of-use assets | 336 | — | |||||
Derivative assets | 216 | 183 | |||||
Investments | 458 | 424 | |||||
Licensing arrangements | 332 | — | |||||
Other | 144 | 211 | |||||
$ | 1,529 | $ | 845 |
As of December 31, | |||||||||||
(in millions) | 2021 | 2020 | |||||||||
Legal reserves | $ | 264 | $ | 505 | |||||||
Payroll and related liabilities | 848 | 681 | |||||||||
Rebates | 350 | 331 | |||||||||
Contingent consideration | 289 | 26 | |||||||||
Other | 686 | 656 | |||||||||
$ | 2,436 | $ | 2,197 |
As of December 31, | |||||||
(in millions) | 2019 | 2018 | |||||
Legal reserves | $ | 470 | $ | 712 | |||
Payroll and related liabilities | 708 | 630 | |||||
Accrued contingent consideration | 56 | 138 | |||||
Rebates | 298 | 229 | |||||
Other | 576 | 538 | |||||
$ | 2,109 | $ | 2,246 |
As of December 31, | |||||||||||
(in millions) | 2021 | 2020 | |||||||||
Deferred revenue | $ | 208 | $ | 138 | |||||||
Licensing arrangements | 138 | 153 | |||||||||
Taxes payable | 209 | 158 | |||||||||
Liabilities held for sale | — | 200 | |||||||||
Other | 228 | 307 | |||||||||
$ | 783 | $ | 958 |
As of December 31, | |||||||
(in millions) | 2019 | 2018 | |||||
Deferred revenue | $ | 144 | $ | 115 | |||
Licensing arrangements | 197 | — | |||||
Taxes payable | 265 | 125 | |||||
Other | 195 | 173 | |||||
$ | 800 | $ | 412 |
As of December 31, | |||||||||||
(in millions) | 2021 | 2020 | |||||||||
Accrued income taxes | $ | 442 | $ | 547 | |||||||
Legal reserves | 284 | 64 | |||||||||
Contingent consideration | 197 | 171 | |||||||||
Licensing arrangements | 143 | 253 | |||||||||
Operating lease liabilities | 389 | 401 | |||||||||
Deferred revenue | 276 | 257 | |||||||||
Other | 489 | 615 | |||||||||
$ | 2,220 | $ | 2,309 |
As of December 31, | |||||||
(in millions) | 2019 | 2018 | |||||
Accrued income taxes | $ | 667 | $ | 739 | |||
Legal reserves | 227 | 217 | |||||
Accrued contingent consideration | 299 | 209 | |||||
Licensing arrangements | 374 | — | |||||
Operating lease liabilities | 276 | — | |||||
Other | 792 | 717 | |||||
$ | 2,635 | $ | 1,882 |
Year Ended December 31, | |||||||||||||||||
(in millions) | 2021 | 2020 | 2019 | ||||||||||||||
Domestic | $ | (648) | $ | (660) | $ | (1,145) | |||||||||||
Foreign | 1,724 | 581 | 1,832 | ||||||||||||||
$ | 1,076 | $ | (79) | $ | 687 |
Year Ended December 31, | |||||||||||
(in millions) | 2019 | 2018 | 2017 | ||||||||
Domestic | $ | (1,145 | ) | $ | 35 | $ | (408 | ) | |||
Foreign | 1,832 | 1,387 | 1,341 | ||||||||
$ | 687 | $ | 1,422 | $ | 933 |
Year Ended December 31, | |||||||||||||||||
(in millions) | 2021 | 2020 | 2019 | ||||||||||||||
Current | |||||||||||||||||
Federal | $ | 18 | $ | (29) | $ | 120 | |||||||||||
State | 33 | (35) | 54 | ||||||||||||||
Foreign | 127 | 151 | 101 | ||||||||||||||
178 | 87 | 275 | |||||||||||||||
Deferred | |||||||||||||||||
Federal | (256) | (26) | (146) | ||||||||||||||
State | (3) | (6) | (18) | ||||||||||||||
Foreign | 117 | (53) | (4,124) | ||||||||||||||
(142) | (85) | (4,288) | |||||||||||||||
$ | 36 | $ | 2 | $ | (4,013) |
Year Ended December 31, | |||||||||||
(in millions) | 2019 | 2018 | 2017 | ||||||||
Current | |||||||||||
Federal | $ | 120 | $ | (221 | ) | $ | 320 | ||||
State | 54 | (27 | ) | 9 | |||||||
Foreign | 101 | 160 | 255 | ||||||||
275 | (87 | ) | 584 | ||||||||
Deferred | |||||||||||
Federal | (146 | ) | (124 | ) | 272 | ||||||
State | (18 | ) | 4 | 1 | |||||||
Foreign | (4,124 | ) | (42 | ) | (28 | ) | |||||
(4,288 | ) | (162 | ) | 244 | |||||||
$ | (4,013 | ) | $ | (249 | ) | $ | 828 |
Year Ended December 31, | |||||||||||||||||
2021 | 2020 | 2019 | |||||||||||||||
U.S. federal statutory income tax rate | 21.0 | % | (21.0) | % | 21.0 | % | |||||||||||
State income taxes, net of federal benefit | 2.5 | % | 16.6 | % | 6.7 | % | |||||||||||
Domestic taxes on foreign earnings | 6.8 | % | 155.4 | % | 21.9 | % | |||||||||||
Effect of foreign taxes | (14.3) | % | (40.7) | % | (47.6) | % | |||||||||||
Acquisition-related | (8.1) | % | (16.7) | % | 12.2 | % | |||||||||||
Research credit | (3.0) | % | (43.0) | % | (4.2) | % | |||||||||||
Valuation allowance | 0.8 | % | (42.0) | % | 1.1 | % | |||||||||||
Goodwill impairment charges | — | % | 3.7 | % | — | % | |||||||||||
Compensation-related | (0.6) | % | (7.7) | % | (0.3) | % | |||||||||||
Non-deductible expenses | 0.4 | % | 64.4 | % | 3.6 | % | |||||||||||
Uncertain tax positions | 1.2 | % | (96.8) | % | 1.4 | % | |||||||||||
Intra-entity asset transfers | — | % | 10.2 | % | (597.0) | % | |||||||||||
Return to provision | (5.7) | % | (37.3) | % | (0.2) | % | |||||||||||
Change in tax rates | 1.9 | % | 51.8 | % | (0.2) | % | |||||||||||
Other, net | 0.4 | % | 6.0 | % | (2.4) | % | |||||||||||
3.3 | % | 2.9 | % | (584.0) | % | ||||||||||||
Year Ended December 31, | ||||||||
2019 | 2018 | 2017 | ||||||
(reclassified)(1) | ||||||||
U.S. federal statutory income tax rate | 21.0 | % | 21.0 | % | 35.0 | % | ||
State income taxes, net of federal benefit | 6.7 | % | 0.4 | % | (1.0 | )% | ||
Domestic taxes on foreign earnings | 21.9 | % | 0.5 | % | 0.4 | % | ||
Effect of foreign taxes | (47.6 | )% | (8.3 | )% | (38.9 | )% | ||
Acquisition-related | 12.2 | % | 2.1 | % | (1.7 | )% | ||
Research credit | (4.2 | )% | (2.6 | )% | (2.6 | )% | ||
Valuation allowance | 1.1 | % | (5.2 | )% | (4.1 | )% | ||
Compensation-related | (0.3 | )% | (1.0 | )% | (2.5 | )% | ||
Non-deductible expenses | 3.3 | % | 0.3 | % | 2.2 | % | ||
Uncertain tax positions | 1.4 | % | (22.0 | )% | 10.7 | % | ||
TCJA net impact | — | % | (4.7 | )% | 91.4 | % | ||
Intra-entity intangible asset transfers | (597.0 | )% | — | % | — | % | ||
Other, net | (2.5 | )% | 1.8 | % | (0.2 | )% | ||
(584.0 | )% | (17.5 | )% | 88.8 | % |
As of December 31, | |||||||||||
(in millions) | 2021 | 2020 | |||||||||
Deferred Tax Assets: | (reclassified)(1) | ||||||||||
Inventory costs and related reserves | $ | 10 | $ | 10 | |||||||
Tax benefit of net operating losses and credits | 620 | 557 | |||||||||
Reserves and accruals | 324 | 308 | |||||||||
Restructuring-related charges | 14 | 23 | |||||||||
Litigation and product liability reserves | 127 | 82 | |||||||||
Investment write-down | 31 | — | |||||||||
Compensation related | 130 | 134 | |||||||||
Federal benefit of uncertain tax positions | 8 | 9 | |||||||||
Intangible assets | 3,546 | 3,551 | |||||||||
Capitalized R&D | 67 | 4 | |||||||||
Property, plant and equipment | 14 | — | |||||||||
Other | 35 | (10) | |||||||||
4,926 | 4,668 | ||||||||||
Less: valuation allowance | (1,014) | (887) | |||||||||
3,912 | 3,781 | ||||||||||
Deferred Tax Liabilities: | |||||||||||
Property, plant and equipment | — | 1 | |||||||||
Unrealized gains and losses on derivative financial instruments | 79 | 12 | |||||||||
Investment write-up | — | 34 | |||||||||
79 | 47 | ||||||||||
Net Deferred Tax Assets | 3,833 | 3,734 | |||||||||
Prepaid on intercompany profit | 205 | 194 | |||||||||
Net Deferred Tax Assets and Prepaid on Intercompany Profit | $ | 4,038 | $ | 3,928 |
As of December 31, | |||||||
(in millions) | 2019 | 2018 | |||||
Deferred Tax Assets: | |||||||
Inventory costs and related reserves | $ | — | $ | 18 | |||
Tax benefit of net operating loss and credits | 545 | 450 | |||||
Reserves and accruals | 258 | 258 | |||||
Restructuring-related charges | 20 | 12 | |||||
Litigation and product liability reserves | 168 | 221 | |||||
Investment write-down | 42 | 28 | |||||
Compensation related | 121 | 106 | |||||
Federal benefit of uncertain tax positions | 10 | 10 | |||||
Intangible assets | 3,447 | — | |||||
Other | — | 37 | |||||
4,611 | 1,140 | ||||||
Less: valuation allowance | (915 | ) | (344 | ) | |||
3,696 | 796 | ||||||
Deferred Tax Liabilities: | |||||||
Property, plant and equipment | 16 | 25 | |||||
Unrealized gains and losses on derivative financial instruments | 52 | 44 | |||||
Intangible assets | — | 968 | |||||
Inventory costs and related services | 2 | — | |||||
Other | 25 | — | |||||
95 | 1,037 | ||||||
Net Deferred Tax Assets / (Liabilities) | 3,601 | (241 | ) | ||||
Prepaid on intercompany profit | 195 | 161 | |||||
Net Deferred Tax Assets / (Liabilities) and Prepaid on Intercompany Profit | $ | 3,796 | $ | (80 | ) |
Location on Consolidated Balance Sheets | As of December 31, | |||||||||||||
Component | 2021 | 2020 | ||||||||||||
Prepaid on intercompany profit | Prepaid income taxes | $ | 205 | $ | 194 | |||||||||
Non-current deferred tax asset | Assets held for sale | — | 2 | |||||||||||
Non-current deferred tax asset | Deferred tax assets | 4,142 | 4,210 | |||||||||||
Deferred Tax Assets and Prepaid on Intercompany Profit | 4,348 | 4,406 | ||||||||||||
Non-current deferred tax liability | Deferred tax liabilities | 310 | 330 | |||||||||||
Non-current deferred tax liability | Liabilities held for sale in Other current liabilities | — | 148 | |||||||||||
Deferred Tax Liabilities | 310 | 478 | ||||||||||||
Net Deferred Tax Assets and Prepaid on Intercompany Profit | $ | 4,038 | $ | 3,928 |
Location on Consolidated Balance Sheets | As of December 31, | |||||||
Component | 2019 | 2018 | ||||||
Prepaid on intercompany profit | Prepaid income taxes | $ | 195 | $ | 161 | |||
Non-current deferred tax asset | Deferred tax assets | 4,196 | 87 | |||||
Deferred Tax Assets and Prepaid on Intercompany Profit | 4,391 | 249 | ||||||
Non-current deferred tax liability | Deferred income taxes | 595 | 328 | |||||
Deferred Tax Liabilities | 595 | 328 | ||||||
Net Deferred Tax Assets (Liabilities) and Prepaid on Intercompany Profit | $ | 3,796 | $ | (80 | ) |
Year Ended December 31, | |||||||||||
(in millions) | 2019 | 2018 | 2017 | ||||||||
Beginning Balance | $ | 427 | $ | 1,238 | $ | 1,095 | |||||
Additions based on positions related to the current year | 30 | 79 | 134 | ||||||||
Additions based on positions related to prior years | 45 | 4 | 16 | ||||||||
Reductions for tax positions of prior years | (34 | ) | (433 | ) | (3 | ) | |||||
Settlements with taxing authorities | (4 | ) | (459 | ) | (2 | ) | |||||
Statute of limitation expirations | (9 | ) | (3 | ) | (2 | ) | |||||
Ending Balance | $ | 455 | $ | 427 | $ | 1,238 |
Year Ended December 31, | |||||||||||||||||
(in millions) | 2021 | 2020 | 2019 | ||||||||||||||
Beginning Balance | $ | 261 | $ | 455 | $ | 427 | |||||||||||
Additions based on positions related to the current year | 8 | 28 | 30 | ||||||||||||||
Additions based on positions related to prior years | 41 | 6 | 45 | ||||||||||||||
Reductions for tax positions of prior years | (36) | (186) | (34) | ||||||||||||||
Settlements with taxing authorities | (2) | (27) | (4) | ||||||||||||||
Statute of limitation expirations | (17) | (15) | (9) | ||||||||||||||
Ending Balance | $ | 255 | $ | 261 | $ | 455 |
Year Ended December 31, | |||||||||||||||||
(in millions, except per share data) | 2021 | 2020 | 2019 | ||||||||||||||
Cost of products sold | $ | 11 | $ | 9 | $ | 8 | |||||||||||
Selling, general and administrative expenses | 147 | 130 | 120 | ||||||||||||||
Research and development expenses | 36 | 30 | 28 | ||||||||||||||
194 | 170 | 157 | |||||||||||||||
Income tax (benefit) expense | (29) | (28) | (24) | ||||||||||||||
$ | 165 | $ | 142 | $ | 133 | ||||||||||||
Net impact per common share - basic | $ | 0.12 | $ | 0.10 | $ | 0.10 | |||||||||||
Net impact per common share - assuming dilution | $ | 0.12 | $ | 0.10 | $ | 0.09 |
Year Ended December 31, | |||||||||||
(in millions, except per share data) | 2019 | 2018 | 2017 | ||||||||
Cost of products sold | $ | 8 | $ | 7 | $ | 7 | |||||
Selling, general and administrative expenses | 120 | 109 | 98 | ||||||||
Research and development expenses | 28 | 24 | 23 | ||||||||
157 | 140 | 127 | |||||||||
Income tax (benefit) expense | (24 | ) | (21 | ) | (32 | ) | |||||
$ | 133 | $ | 119 | $ | 96 | ||||||
Net impact per common share - basic | $ | 0.10 | $ | 0.09 | $ | 0.07 | |||||
Net impact per common share - assuming dilution | $ | 0.09 | $ | 0.08 | $ | 0.07 |
Year Ended December 31, | |||||||||||||||||||||||||||||||||||
2021 | 2020 | 2019 | |||||||||||||||||||||||||||||||||
Options granted (in thousands) | 3,822 | 3,819 | 2,992 | ||||||||||||||||||||||||||||||||
Weighted-average exercise price | $ | 37.69 | $ | 41.79 | $ | 40.20 | |||||||||||||||||||||||||||||
Weighted-average grant-date fair value | $ | 10.77 | $ | 10.44 | $ | 11.76 | |||||||||||||||||||||||||||||
Black-Scholes Assumptions | |||||||||||||||||||||||||||||||||||
Expected volatility | 29 | % | 23 | % | 24 | % | |||||||||||||||||||||||||||||
Expected term (in years, weighted) | 5.9 | 5.8 | 6.1 | ||||||||||||||||||||||||||||||||
Risk-free interest rate | 0.66% | - | 1.20% | 0.27% | - | 1.72% | 1.38% | - | 2.61% |
Year Ended December 31, | ||||||||||||||||||||
2019 | 2018 | 2017 | ||||||||||||||||||
Options granted (in thousands) | 2,992 | 3,491 | 4,439 | |||||||||||||||||
Weighted-average exercise price | $ | 40.20 | $ | 27.26 | $ | 24.70 | ||||||||||||||
Weighted-average grant-date fair value | $ | 11.76 | $ | 8.55 | $ | 7.16 | ||||||||||||||
Black-Scholes Assumptions | ||||||||||||||||||||
Expected volatility | 24 | % | 26 | % | 25 | % | ||||||||||||||
Expected term (in years, weighted) | 6.1 | 6.0 | 6.1 | |||||||||||||||||
Risk-free interest rate | 1.38 | % | - | 2.61% | 2.61 | % | - | 3.01% | 2.03 | % | - | 2.21% |
Stock Options (in thousands) | Weighted Average Exercise Price | Weighted Average Remaining Contractual Life (in years) | Aggregate Intrinsic Value (in millions) | |||||||||
Outstanding as of December 31, 2016 | 26,644 | $ | 11 | |||||||||
Granted | 4,439 | 25 | ||||||||||
Exercised | (3,922 | ) | 10 | |||||||||
Cancelled/forfeited | (445 | ) | 17 | |||||||||
Outstanding as of December 31, 2017 | 26,716 | $ | 13 | |||||||||
Granted | 3,491 | 27 | ||||||||||
Exercised | (4,385 | ) | 11 | |||||||||
Cancelled/forfeited | (519 | ) | 22 | |||||||||
Outstanding as of December 31, 2018 | 25,304 | $ | 16 | |||||||||
Granted | 2,992 | 40 | ||||||||||
Exercised | (4,872 | ) | 12 | |||||||||
Cancelled/forfeited | (359 | ) | 24 | |||||||||
Outstanding as of December 31, 2019 | 23,065 | $ | 19 | 5.5 | $ | 594 | ||||||
Exercisable as of December 31, 2019 | 15,091 | $ | 14 | 4.1 | $ | 476 | ||||||
Expected to vest as of December 31, 2019 | 7,617 | 30 | 8.0 | 114 | ||||||||
Total vested and expected to vest as of December 31, 2019 | 22,707 | $ | 19 | 5.3 | $ | 590 |
Stock Options (in thousands) | Weighted Average Exercise Price | Weighted Average Remaining Contractual Life (in years) | Aggregate Intrinsic Value (in millions) | ||||||||||||||||||||
Outstanding as of December 31, 2018 | 25,304 | $ | 16 | ||||||||||||||||||||
Granted | 2,992 | 40 | |||||||||||||||||||||
Exercised | (4,872) | 12 | |||||||||||||||||||||
Cancelled/forfeited | (359) | 24 | |||||||||||||||||||||
Outstanding as of December 31, 2019 | 23,065 | $ | 19 | ||||||||||||||||||||
Granted | 3,819 | 42 | |||||||||||||||||||||
Exercised | (3,096) | 13 | |||||||||||||||||||||
Cancelled/forfeited | (666) | 27 | |||||||||||||||||||||
Outstanding as of December 31, 2020 | 23,122 | $ | 24 | ||||||||||||||||||||
Granted | 3,822 | 38 | |||||||||||||||||||||
Exercised | (4,796) | 13 | |||||||||||||||||||||
Cancelled/forfeited | (699) | 26 | |||||||||||||||||||||
Outstanding as of December 31, 2021 | 21,448 | $ | 29 | 5.9 | 296 | ||||||||||||||||||
Exercisable as of December 31, 2021 | 13,248 | 23 | 4.5 | 263 | |||||||||||||||||||
Expected to vest as of December 31, 2021 | 7,893 | 38 | 8.3 | 32 | |||||||||||||||||||
Total vested and expected to vest as of December 31, 2021 | 21,141 | $ | 29 | 5.9 | $ | 295 |
Non-Vested Stock Award Units (in thousands) | Weighted Average Grant-Date Fair Value | |||||||||||||
Balance as of December 31, 2018 | 12,683 | $ | 22 | |||||||||||
Granted | 3,656 | 39 | ||||||||||||
Vested(1) | (4,811) | 20 | ||||||||||||
Forfeited | (449) | 27 | ||||||||||||
Balance as of December 31, 2019 | 11,079 | $ | 29 | |||||||||||
Granted | 3,609 | 41 | ||||||||||||
Vested(1) | (4,147) | 25 | ||||||||||||
Forfeited | (554) | 34 | ||||||||||||
Balance as of December 31, 2020 | 9,987 | $ | 34 | |||||||||||
Granted | 4,240 | $ | 39 | |||||||||||
Vested(1) | (3,823) | $ | 31 | |||||||||||
Forfeited | (658) | 36 | ||||||||||||
Balance as of December 31, 2021 | 9,745 | $ | 37 |
Non-Vested Stock Award Units (in thousands) | Weighted Average Grant-Date Fair Value | |||||
Balance as of December 31, 2016 | 18,797 | $ | 14 | |||
Granted | 4,798 | 24 | ||||
Vested (1) | (7,663 | ) | 11 | |||
Forfeited | (683 | ) | 17 | |||
Balance as of December 31, 2017 | 15,250 | $ | 18 | |||
Granted | 4,375 | 28 | ||||
Vested (1) | (6,194 | ) | 16 | |||
Forfeited | (748 | ) | 22 | |||
Balance as of December 31, 2018 | 12,683 | $ | 22 | |||
Granted | 3,656 | 39 | ||||
Vested (1) | (4,811 | ) | 20 | |||
Forfeited | (449 | ) | 27 | |||
Balance as of December 31, 2019 | 11,079 | $ | 29 |
2019 | 2018 | 2017 | |||||||||
Awards | Awards | Awards | |||||||||
Stock price on date of grant | $ | 40.12 | $ | 27.09 | $ | 24.55 | |||||
Measurement period (in years) | 2.9 | 2.9 | 2.8 | ||||||||
Risk-free rate | 2.48 | % | 2.36 | % | 1.45 | % |
2021 | 2020 | 2019 | |||||||||||||||
Awards | Awards | Awards | |||||||||||||||
Stock price on date of grant | $ | 37.50 | $ | 42.16 | $ | 40.12 | |||||||||||
Measurement period (in years) | 2.9 | 2.9 | 2.9 | ||||||||||||||
Risk-free rate | 0.20 | % | 1.37 | % | 2.48 | % |
2021 AFCF | 2020 AFCF | 2019 AFCF | |||||||||||||||
Fair value, net of forfeitures to date (in millions) | $ | 12 | $ | 6 | $ | 8 | |||||||||||
Achievement of target payout | 131 | % | 89 | % | 90 | % | |||||||||||
Year-end stock price used in determining fair value | $ | 42.48 | $ | 35.95 | $ | 45.22 |
2019 AFCF | 2018 AFCF | 2017 AFCF | |||||||||
Fair value, net of forfeitures to date (in millions) | $ | 8 | $ | 11 | $ | 6 | |||||
Achievement of target payout | 90 | % | 118 | % | 98 | % | |||||
Year-end stock price used in determining fair value | $ | 45.22 | $ | 35.34 | $ | 24.79 |
Unrecognized Compensation Cost (in millions) (1) | Weighted Average Remaining Vesting Period (in years) | ||||||||||
Stock options | $ | 36 | |||||||||
Non-vested stock awards | 178 | ||||||||||
$ | 214 | 1.7 |
Unrecognized Compensation Cost (in millions) (1) | Weighted Average Remaining Vesting Period (in years) | ||||
Stock options | $ | 35 | |||
Non-vested stock awards | 169 | ||||
$ | 204 | 1.2 |
Year Ended December 31, | |||||||||||||||||||||||||||||||||||
2021 | 2020 | 2019 | |||||||||||||||||||||||||||||||||
Shares issued or to be issued (in thousands) | 2,578 | 1,387 | 2,196 | ||||||||||||||||||||||||||||||||
Range of purchase prices | $ | 29.98 | - | $ | 36.11 | $ | 29.84 | $29.29 | - | $36.47 | |||||||||||||||||||||||||
Expense recognized (in millions) | $ | 24 | $ | 10 | $ | 19 |
Year Ended December 31, | ||||||||||||||||||||
2019 | 2018 | 2017 | ||||||||||||||||||
Shares issued or to be issued (in thousands) | 2,196 | 2,452 | 2,491 | |||||||||||||||||
Range of purchase prices | $ | 29.29 | - | $36.47 | $ | 21.49 | - | $27.91 | $ | 18.60 | - | $21.07 | ||||||||
Expense recognized (in millions) | $ | 19 | $ | 17 | $ | 13 |
Year Ended December 31, | |||||||||||||||||
(in millions) | 2021 | 2020 | 2019 | ||||||||||||||
Weighted average shares outstanding - basic | 1,422.3 | 1,416.7 | 1,391.5 | ||||||||||||||
Net effect of common stock equivalents | 11.5 | — | 19.0 | ||||||||||||||
Weighted average shares outstanding - assuming dilution | 1,433.8 | 1,416.7 | 1,410.6 |
Year Ended December 31, | ||||||||
(in millions) | 2019 | 2018 | 2017 | |||||
Weighted average shares outstanding - basic | 1,391.5 | 1,381.0 | 1,370.1 | |||||
Net effect of common stock equivalents | 19.0 | 20.4 | 22.6 | |||||
Weighted average shares outstanding - assuming dilution | 1,410.6 | 1,401.4 | 1,392.7 |
Year Ended December 31, | |||||||||||||||||
(in millions) | 2021 | 2020 | 2019 | ||||||||||||||
Common stock equivalents(1) | n/a | 14 | n/a | ||||||||||||||
Stock options outstanding(2) | 3 | 6 | 0 | ||||||||||||||
MCPS(3) | 24 | 14 | n/a |
Year Ended December 31, | |||||||||||||||||
Net sales | 2021 | 2020 | 2019 | ||||||||||||||
MedSurg | $ | 3,724 | $ | 3,066 | $ | 3,307 | |||||||||||
Rhythm and Neuro | 3,293 | 2,752 | 3,140 | ||||||||||||||
Cardiovascular | 4,858 | 3,876 | 4,208 | ||||||||||||||
Total net sales of reportable segments | 11,875 | 9,694 | 10,654 | ||||||||||||||
All other (Specialty Pharmaceuticals) | 13 | 219 | $ | 81 | |||||||||||||
Consolidated net sales | $ | 11,888 | $ | 9,913 | $ | 10,735 |
Year Ended December 31, | ||||||||||||||||||||||||||||
Year Ended December 31, | ||||||||||||||||||||||||||||
Net sales | 2019 | 2018 | 2017 | |||||||||||||||||||||||||
Depreciation expense | Depreciation expense | 2021 | 2020 | 2019 | ||||||||||||||||||||||||
MedSurg | $ | 3,307 | $ | 3,007 | $ | 2,742 | MedSurg | $ | 81 | $ | 80 | $ | 75 | |||||||||||||||
Rhythm and Neuro | 3,140 | 3,041 | 2,808 | Rhythm and Neuro | 104 | 96 | 92 | |||||||||||||||||||||
Cardiovascular | 4,208 | 3,777 | 3,500 | Cardiovascular | 167 | 154 | 138 | |||||||||||||||||||||
Total net sales of reportable segments | 10,654 | 9,823 | 9,048 | |||||||||||||||||||||||||
Total depreciation expense of reportable segments | Total depreciation expense of reportable segments | 352 | 330 | 306 | ||||||||||||||||||||||||
All other (Specialty Pharmaceuticals) | 81 | n/a | n/a | All other (Specialty Pharmaceuticals) | — | $ | 3 | $ | 6 | |||||||||||||||||||
Consolidated net sales | $ | 10,735 | $ | 9,823 | $ | 9,048 | ||||||||||||||||||||||
Consolidated depreciation expense | Consolidated depreciation expense | $ | 352 | $ | 333 | $ | 311 |
Year Ended December 31, | |||||||||||||||||
Income (loss) before income taxes | 2021 | 2020 | 2019 | ||||||||||||||
MedSurg | $ | 1,399 | $ | 1,079 | $ | 1,204 | |||||||||||
Rhythm and Neuro | 607 | 439 | 666 | ||||||||||||||
Cardiovascular | 1,448 | 661 | 1,137 | ||||||||||||||
Total operating income of reportable segments | 3,454 | 2,179 | 3,007 | ||||||||||||||
All other (Specialty Pharmaceuticals) | 4 | 143 | 56 | ||||||||||||||
Unallocated amounts: | |||||||||||||||||
Corporate expenses, including hedging activities | (447) | (405) | (264) | ||||||||||||||
Goodwill and other intangible asset impairment charges, acquisition/divestiture-related net charges (credits), restructuring and restructuring-related net charges (credits), certain litigation-related net charges (credits) and EU Medical Device Regulation (MDR) implementation costs | (1,070) | (1,208) | (582) | ||||||||||||||
Amortization expense | (741) | (789) | (699) | ||||||||||||||
Operating income (loss) | 1,199 | (80) | 1,518 | ||||||||||||||
Other income (expense), net | (123) | 1 | (831) | ||||||||||||||
Income (loss) before income taxes | $ | 1,076 | $ | (79) | $ | 687 |
Operating income of reportable segments as a percentage of net sales of reportable segments | Year Ended December 31, | ||||||||||||||||
2021 | 2020 | 2019 | |||||||||||||||
MedSurg | 37.6 | % | 35.2 | % | 36.4 | % | |||||||||||
Rhythm and Neuro | 18.4 | % | 15.9 | % | 21.2 | % | |||||||||||
Cardiovascular | 29.8 | % | 17.1 | % | 27.0 | % |
As of December 31, | |||||||||||
Total assets | 2021 | 2020 | |||||||||
MedSurg | $ | 1,794 | $ | 1,638 | |||||||
Rhythm and Neuro | 1,981 | 1,827 | |||||||||
Cardiovascular | 2,821 | 2,461 | |||||||||
Total assets of reportable segments | 6,595 | 5,926 | |||||||||
All other (Specialty Pharmaceuticals) | — | 1,133 | |||||||||
Goodwill | 11,988 | 9,951 | |||||||||
Other intangible assets, net | 6,121 | 5,917 | |||||||||
All other corporate assets | 7,525 | 7,850 | |||||||||
$ | 32,229 | $ | 30,777 |
Year Ended December 31, | |||||||||||
Depreciation expense | 2019 | 2018 | 2017 | ||||||||
MedSurg | $ | 75 | $ | 72 | $ | 68 | |||||
Rhythm and Neuro | 92 | 91 | 91 | ||||||||
Cardiovascular | 138 | 133 | 120 | ||||||||
Total depreciation expense of reportable segments | 306 | 296 | 279 | ||||||||
All other (Specialty Pharmaceuticals) | 6 | n/a | n/a | ||||||||
Consolidated depreciation expense | $ | 311 | $ | 296 | $ | 279 |
As of December 31, | |||||||||||||||||
Long-lived assets | 2021 | 2020 | 2019 | ||||||||||||||
U.S. | $ | 1,190 | $ | 1,151 | $ | 1,148 | |||||||||||
Ireland | 436 | 382 | 327 | ||||||||||||||
Other countries | 625 | 551 | 604 | ||||||||||||||
Property, plant and equipment, net | 2,252 | 2,084 | 2,079 | ||||||||||||||
Goodwill | 11,988 | 9,951 | 10,176 | ||||||||||||||
Other intangible assets, net | 6,121 | 5,917 | 7,886 | ||||||||||||||
Operating lease right-of-use assets in Other long-term assets | 435 | 458 | 336 | ||||||||||||||
$ | 20,795 | $ | 18,409 | $ | 20,477 |
Year Ended December 31, | |||||||||||
Income (loss) before income taxes | 2019 | 2018 | 2017 | ||||||||
MedSurg | $ | 1,204 | $ | 1,102 | $ | 984 | |||||
Rhythm and Neuro | 666 | 655 | 537 | ||||||||
Cardiovascular | 1,137 | 1,117 | 988 | ||||||||
Total operating income of reportable segments | 3,007 | 2,875 | 2,509 | ||||||||
All other (Specialty Pharmaceuticals) | 56 | n/a | n/a | ||||||||
Unallocated amounts: | |||||||||||
Corporate expenses, including hedging activities | (264 | ) | (372 | ) | (252 | ) | |||||
Intangible asset impairment charges, acquisition/divestiture-related, restructuring- and restructuring-related, litigation-related net (charges) credits and EU MDR implementation costs | (582 | ) | (398 | ) | (407 | ) | |||||
Amortization expense | (699 | ) | (599 | ) | (565 | ) | |||||
Operating income (loss) | 1,518 | 1,506 | 1,285 | ||||||||
Other expense, net | (831 | ) | (85 | ) | (353 | ) | |||||
Income (loss) before income taxes | $ | 687 | $ | 1,422 | $ | 933 |
Operating income of reportable segments as a percentage of net sales of reportable segments | Year Ended December 31, | |||||||
2019 | 2018 | 2017 | ||||||
MedSurg | 36.4 | % | 36.7 | % | 35.9 | % | ||
Rhythm and Neuro | 21.2 | % | 21.5 | % | 19.1 | % | ||
Cardiovascular | 27.0 | % | 29.6 | % | 28.2 | % |
As of December 31, | |||||||
Total assets | 2019 | 2018 | |||||
MedSurg | $ | 1,803 | $ | 1,846 | |||
Rhythm and Neuro | 1,873 | 1,696 | |||||
Cardiovascular | 2,535 | 1,954 | |||||
Total assets of reportable segments | 6,211 | 5,497 | |||||
All other (Specialty Pharmaceuticals) | 211 | — | |||||
Goodwill | 10,176 | 7,911 | |||||
Other intangible assets, net | 7,886 | 6,372 | |||||
All other corporate assets | 6,082 | 1,219 | |||||
$ | 30,565 | $ | 20,999 |
As of December 31, | |||||||||||
Long-lived assets | 2019 | 2018 | 2017 | ||||||||
U.S. | $ | 1,148 | $ | 1,061 | $ | 1,065 | |||||
Ireland | 327 | 242 | 210 | ||||||||
Other countries | 604 | 478 | 422 | ||||||||
Property, plant and equipment, net | 2,079 | 1,782 | 1,697 | ||||||||
Goodwill | 10,176 | 7,911 | 6,998 | ||||||||
Other intangible assets, net | 7,886 | 6,372 | 5,837 | ||||||||
Operating lease right-of-use assets in Other long-term assets | 336 | — | — | ||||||||
$ | 20,477 | $ | 16,064 | $ | 14,531 |
Year Ended December 31, | |||||||||||||||||||||||||||||||||||||||||||||||||||||
2021 | 2020 | 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Businesses | U.S. | OUS | Total | U.S. | OUS | Total | U.S. | OUS | Total | ||||||||||||||||||||||||||||||||||||||||||||
Endoscopy | $ | 1,222 | $ | 919 | $ | 2,141 | $ | 1,000 | $ | 780 | $ | 1,780 | $ | 1,080 | $ | 814 | $ | 1,894 | |||||||||||||||||||||||||||||||||||
Urology and Pelvic Health | 1,120 | 463 | 1,583 | 918 | 368 | 1,286 | 1,005 | 408 | 1,413 | ||||||||||||||||||||||||||||||||||||||||||||
Cardiac Rhythm Management | 1,214 | 805 | 2,019 | 992 | 712 | 1,704 | 1,135 | 804 | 1,939 | ||||||||||||||||||||||||||||||||||||||||||||
Electrophysiology | 128 | 237 | 365 | 118 | 169 | 287 | 148 | 180 | 329 | ||||||||||||||||||||||||||||||||||||||||||||
Neuromodulation | 713 | 196 | 909 | 610 | 151 | 761 | 695 | 178 | 873 | ||||||||||||||||||||||||||||||||||||||||||||
Interventional Cardiology | 1,508 | 1,530 | 3,038 | 981 | 1,317 | 2,299 | 1,293 | 1,522 | 2,816 | ||||||||||||||||||||||||||||||||||||||||||||
Peripheral Interventions | 996 | 824 | 1,820 | 888 | 689 | 1,577 | 741 | 651 | 1,392 | ||||||||||||||||||||||||||||||||||||||||||||
Specialty Pharmaceuticals | 10 | 4 | 13 | 193 | 27 | 219 | 70 | 11 | 81 | ||||||||||||||||||||||||||||||||||||||||||||
Net Sales | $ | 6,911 | $ | 4,978 | $ | 11,888 | $ | 5,701 | $ | 4,212 | $ | 9,913 | $ | 6,167 | $ | 4,569 | $ | 10,735 |
Year Ended December 31, | |||||||||||||||||
Geographic Regions | 2021 | 2020 | 2019 | ||||||||||||||
U.S. | $ | 6,901 | $ | 5,508 | $ | 6,097 | |||||||||||
EMEA (Europe, Middle East and Africa) | 2,518 | 2,097 | 2,264 | ||||||||||||||
APAC (Asia-Pacific) | 2,070 | 1,781 | 1,898 | ||||||||||||||
LACA (Latin America and Canada) | 386 | 307 | 395 | ||||||||||||||
Medical Devices | 11,875 | 9,694 | 10,654 | ||||||||||||||
U.S. | 10 | 193 | 70 | ||||||||||||||
International | 4 | 27 | 11 | ||||||||||||||
Specialty Pharmaceuticals | 13 | 219 | 81 | ||||||||||||||
Net Sales | $ | 11,888 | $ | 9,913 | $ | 10,735 | |||||||||||
Emerging Markets(1) | $ | 1,429 | $ | 1,138 | $ | 1,282 |
Year Ended December 31, | |||||||||||||||||||||||||||||||||||
2019 | 2018 | 2017 | |||||||||||||||||||||||||||||||||
Businesses | U.S. | OUS | Total | U.S. | OUS | Total | U.S. | OUS | Total | ||||||||||||||||||||||||||
Endoscopy | $ | 1,080 | $ | 814 | $ | 1,894 | $ | 980 | $ | 781 | $ | 1,762 | $ | 894 | $ | 724 | $ | 1,619 | |||||||||||||||||
Urology and Pelvic Health | 1,005 | 408 | 1,413 | 864 | 381 | 1,245 | 785 | 339 | 1,124 | ||||||||||||||||||||||||||
Cardiac Rhythm Management | 1,135 | 804 | 1,939 | 1,159 | 792 | 1,951 | 1,135 | 760 | 1,895 | ||||||||||||||||||||||||||
Electrophysiology | 148 | 180 | 329 | 150 | 161 | 311 | 136 | 142 | 278 | ||||||||||||||||||||||||||
Neuromodulation | 695 | 178 | 873 | 624 | 155 | 779 | 517 | 118 | 635 | ||||||||||||||||||||||||||
Interventional Cardiology | 1,293 | 1,522 | 2,816 | 1,154 | 1,436 | 2,590 | 1,122 | 1,297 | 2,419 | ||||||||||||||||||||||||||
Peripheral Interventions | 741 | 651 | 1,392 | 608 | 579 | 1,187 | 575 | 506 | 1,081 | ||||||||||||||||||||||||||
Specialty Pharmaceuticals | 70 | 11 | 81 | n/a | n/a | n/a | n/a | n/a | n/a | ||||||||||||||||||||||||||
Net Sales | $ | 6,167 | $ | 4,569 | $ | 10,735 | $ | 5,538 | $ | 4,286 | $ | 9,823 | $ | 5,162 | $ | 3,885 | $ | 9,048 |
Year Ended December 31, | |||||||||||
Geographic Regions | 2019 | 2018 | 2017 | ||||||||
U.S. | $ | 6,097 | $ | 5,538 | $ | 5,162 | |||||
EMEA (Europe, Middle East and Africa) | 2,264 | 2,176 | 1,940 | ||||||||
APAC (Asia-Pacific) | 1,898 | 1,727 | 1,587 | ||||||||
LACA (Latin America and Canada) | 395 | 383 | 358 | ||||||||
Medical Devices | 10,654 | 9,823 | 9,048 | ||||||||
U.S. | 70 | n/a | n/a | ||||||||
OUS | 11 | n/a | n/a | ||||||||
Specialty Pharmaceuticals | 81 | n/a | n/a | ||||||||
Net Sales | $ | 10,735 | $ | 9,823 | $ | 9,048 | |||||
Emerging Markets (1) | $ | 1,252 | $ | 1,097 | $ | 931 |
(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 | $ | 218 | $ | 36 | $ | (47) | $ | 207 | |||||||||||||||||||||
Other comprehensive income (loss) before reclassifications | 12 | 208 | 8 | 228 | |||||||||||||||||||||||||
(Income) loss amounts reclassified from accumulated other comprehensive income | (137) | (38) | 3 | (173) | |||||||||||||||||||||||||
Total other comprehensive income (loss) | (125) | 170 | 11 | 56 | |||||||||||||||||||||||||
Balance as of December 31, 2021 | $ | 93 | $ | 206 | $ | (36) | $ | 263 |
(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 | $ | 142 | $ | 173 | $ | (45) | $ | 270 | |||||||||||||||||||||
Other comprehensive income (loss) before reclassifications | 95 | (77) | (5) | 13 | |||||||||||||||||||||||||
(Income) loss amounts reclassified from accumulated other comprehensive income | (19) | (60) | 3 | (76) | |||||||||||||||||||||||||
Total other comprehensive income (loss) | 76 | (137) | (1) | (63) | |||||||||||||||||||||||||
Balance as of December 31, 2020 | $ | 218 | $ | 36 | $ | (47) | $ | 207 |
(in millions) | Foreign Currency Translation Adjustments | Net Change in Derivative Financial Instruments | Net Change in Available-for-Sale Securities | Net Change in Defined Benefit Pensions and Other Items | Total | ||||||||||||||
Balance as of December 31, 2018 | $ | (53 | ) | $ | 111 | $ | — | $ | (25 | ) | $ | 33 | |||||||
Other comprehensive income (loss) before reclassifications | 228 | 116 | — | (22 | ) | 322 | |||||||||||||
(Income) loss amounts reclassified from accumulated other comprehensive income | (33 | ) | (54 | ) | — | 2 | (86 | ) | |||||||||||
Total other comprehensive income (loss) | 195 | 62 | — | (20 | ) | 237 | |||||||||||||
Balance as of December 31, 2019 | $ | 142 | $ | 173 | $ | — | $ | (45 | ) | $ | 270 |
(in millions) | Foreign Currency Translation Adjustments | Net Change in Derivative Financial Instruments | Net Change in Available-for-Sale Securities | Net Change in Defined Benefit Pensions and Other Items | Total | ||||||||||||||
Balance as of December 31, 2017 | $ | (32 | ) | $ | 1 | $ | (1 | ) | $ | (27 | ) | $ | (59 | ) | |||||
Other comprehensive income (loss) before reclassifications | — | 96 | — | (2 | ) | 94 | |||||||||||||
(Income) loss amounts reclassified from accumulated other comprehensive income | (21 | ) | 14 | 1 | 4 | (3 | ) | ||||||||||||
Total other comprehensive income (loss) | (21 | ) | 110 | — | 2 | 91 | |||||||||||||
Balance as of December 31, 2018 | $ | (53 | ) | $ | 111 | $ | — | $ | (25 | ) | $ | 33 |
Discount Rate | Expected Return on Plan Assets | Rate of Compensation Increase | |||||||||||||||
U.K. Plan | 0.4% | 0.4% | 3.4% |
(in millions) | |||||
Fair value of plan assets | $ | 213 | |||
Benefit obligation | (216) | ||||
Funded status | $ | (3) |
(in millions) | |||
Fair value of plan assets | $ | 213 | |
Benefit obligation | (216 | ) | |
Funded status | $ | (3 | ) |
As of December 31, 2021 | |||||||||||||||||||||||
(in millions) | Accumulated Benefit Obligation (ABO) | Projected Benefit Obligation (PBO) | Fair value of Plan Assets | Unfunded/Underfunded PBO Recognized | |||||||||||||||||||
Domestic Retirement Plans | $ | 56 | $ | 59 | $ | — | $ | 59 | |||||||||||||||
U.K. Plan | 209 | 209 | 205 | 3 | |||||||||||||||||||
Other International Retirement Plans | 214 | 234 | 130 | 103 | |||||||||||||||||||
$ | 478 | $ | 502 | $ | 336 | $ | 166 |
As of December 31, 2019 | |||||||||||||||
(in millions) | Accumulated Benefit Obligation (ABO) | Projected Benefit Obligation (PBO) | Fair value of Plan Assets | Unfunded/Underfunded PBO Recognized | |||||||||||
Domestic Retirement Plans | $ | 50 | $ | 54 | $ | — | $ | 54 | |||||||
U.K. Plan | 212 | 212 | 209 | 3 | |||||||||||
Other International Retirement Plans | 204 | 223 | 123 | 100 | |||||||||||
$ | 466 | $ | 488 | $ | 332 | $ | 156 |
As of December 31, 2020 | |||||||||||||||||||||||
(in millions) | Accumulated Benefit Obligation (ABO) | Projected Benefit Obligation (PBO) | Fair value of Plan Assets | Unfunded/Underfunded PBO Recognized | |||||||||||||||||||
Domestic Retirement Plans | $ | 54 | $ | 58 | $ | — | $ | 58 | |||||||||||||||
U.K. Plan | 226 | 226 | 223 | 3 | |||||||||||||||||||
Other International Retirement Plans | 225 | 247 | 132 | 115 | |||||||||||||||||||
$ | 506 | $ | 532 | $ | 355 | $ | 177 |
As of December 31, 2018 | |||||||||||||||
(in millions) | Accumulated Benefit Obligation (ABO) | Projected Benefit Obligation (PBO) | Fair value of Plan Assets | Unfunded/Underfunded PBO Recognized | |||||||||||
Domestic Retirement Plans | $ | 47 | $ | 50 | $ | — | $ | 50 | |||||||
International Retirement Plans | 166 | 182 | 107 | 75 | |||||||||||
$ | 213 | $ | 232 | $ | 107 | $ | 125 |
Year Ended December 31, | |||||||||||
(in millions) | 2021 | 2020 | |||||||||
Beginning obligations | $ | 532 | $ | 488 | |||||||
Acquired plans | 4 | — | |||||||||
Service costs | 17 | 19 | |||||||||
Interest costs | 3 | 5 | |||||||||
Actuarial (gain) loss | (7) | 22 | |||||||||
Plan amendments and assumption changes | (6) | (5) | |||||||||
Benefits paid | (22) | (23) | |||||||||
Impact of foreign currency fluctuations | (20) | 26 | |||||||||
Ending obligation | $ | 502 | $ | 532 |
Year Ended December 31, | |||||||
(in millions) | 2019 | 2018 | |||||
Beginning obligations | $ | 232 | $ | 207 | |||
Acquired and established plans(1) | 216 | 23 | |||||
Service costs | 15 | 14 | |||||
Interest costs | 5 | 4 | |||||
Actuarial (gain) loss | — | (1 | ) | ||||
Plan amendments and assumption changes | 11 | (2 | ) | ||||
Benefits paid | (10 | ) | (10 | ) | |||
Impact of foreign currency fluctuations | 19 | (3 | ) | ||||
Ending obligation | $ | 488 | $ | 232 |
Weighted Average Discount Rate | Weighted Average Expected Return on Plan | Weighted Average Rate of Compensation Increase(1) | |||||||||||||||||||||||||||
Domestic Retirement Plans | 2.40% | n/a | 1.50% | ||||||||||||||||||||||||||
U.K. Plan | 0.70% | 0.70% | n/a | ||||||||||||||||||||||||||
Other International Retirement Plans | 0.82% | 2.16% | 2.60% |
Weighted Average Discount Rate | Weighted Average Expected Return on Plan | Weighted Average Rate of Compensation Increase(1) | |||
Domestic Retirement Plans | 2.94% | n/a | 1.50% | ||
U.K. Plan | 0.60% | 0.60% | 3.00% | ||
Other International Retirement Plans | 0.75% | 2.05% | 2.65% |
Weighted Average Discount Rate | Weighted Average Expected Return on Plan | Weighted Average Rate of Compensation Increase(1) | |||||||||||||||
Domestic Retirement Plans | 1.90% | n/a | 1.50% | ||||||||||||||
U.K. Plan | 0.10% | 0.10% | n/a | ||||||||||||||
Other International Retirement Plans | 0.67% | 1.98% | 2.40% |
Discount Rate | Expected Return on Plan Assets | Rate of Compensation Increase | ||||||||||||
Domestic Retirement Plans | 4.00 | % | - | 4.25% | n/a | 3.00% | ||||||||
International Retirement Plans | 0.50 | % | - | 2.34% | 1.90 | % | - | 4.10% | 1.50 | % | - | 6.78% |
Year Ended December 31, | |||||||||||
(in millions) | 2021 | 2020 | |||||||||
Beginning fair value | $ | 355 | $ | 332 | |||||||
Acquired plans | 1 | — | |||||||||
Actual return on plan assets | 5 | 2 | |||||||||
Employer contributions | 12 | 12 | |||||||||
Participant contributions | 2 | 2 | |||||||||
Actuarial gain (loss) | (4) | 14 | |||||||||
Benefits paid | (22) | (23) | |||||||||
Impact of foreign currency fluctuations | (13) | 16 | |||||||||
Ending fair value | $ | 336 | $ | 355 |
Year Ended December 31, | |||||||
(in millions) | 2019 | 2018 | |||||
Beginning fair value | $ | 107 | $ | 87 | |||
Acquired and established plans(1) | 213 | 16 | |||||
Actual return on plan assets | 7 | (2 | ) | ||||
Employer contributions | 13 | 14 | |||||
Participant contributions | 2 | 2 | |||||
Actuarial gain (loss) | (20 | ) | — | ||||
Benefits paid | (10 | ) | (10 | ) | |||
Impact of foreign currency fluctuations | 19 | — | |||||
Ending fair value | $ | 332 | $ | 107 |
As of | |||||||||||||||||||||||||||||||||||||||||||||||
December 31, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||
(in millions) | Level 1 | Level 2 | Level 3 | Total | |||||||||||||||||||||||||||||||||||||||||||
Buy-in contracts | $ | — | $ | — | $ | 205 | $ | 205 | |||||||||||||||||||||||||||||||||||||||
Total assets | $ | — | $ | — | $ | 205 | $ | 205 |
As of | |||||||||||||||
December 31, 2019 | |||||||||||||||
(in millions) | Level 1 | Level 2 | Level 3 | Total | |||||||||||
Buy-in contracts | $ | — | $ | — | $ | 207 | $ | 207 | |||||||
Cash | 1 | — | — | 1 | |||||||||||
Total assets | $ | 1 | $ | — | $ | 207 | $ | 209 |
As of | |||||||||||||||||||||||||||||||||||||||||||||||
December 31, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||
(in millions) | Level 1 | Level 2 | Level 3 | Total | |||||||||||||||||||||||||||||||||||||||||||
Buy-in contracts | $ | — | $ | — | $ | 223 | $ | 223 | |||||||||||||||||||||||||||||||||||||||
Total assets | $ | — | $ | — | $ | 223 | $ | 223 |
(in millions) | Buy-in Contracts | ||
Balance as of December 31, 2018 | $ | — | |
Acquired plans(1) | 213 | ||
Actuarial gain (loss) | (20 | ) | |
Benefits paid | (4 | ) | |
Impact of foreign currency fluctuations | 19 | ||
Balance as of December 31, 2019 | $ | 209 |
(in millions) | Buy-in Contracts | ||||
Balance as of December 31, 2020 | $ | 223 | |||
Actual return on plan assets | — | ||||
Actuarial gain (loss) | (5) | ||||
Impact of foreign currency fluctuations | (2) | ||||
Balance as of December 31, 2021 | $ | 205 |
(in millions) | Post Retirement Benefits | ||||
2022 | $ | 20 | |||
2023 | 21 | ||||
2024 | 16 | ||||
2025 | 22 | ||||
2026 | 23 | ||||
2027-2031 | 109 | ||||
Three Months Ended | |||||||||||||||
Mar 31, | June 30, | Sept 30, | Dec 31, | ||||||||||||
2019 | |||||||||||||||
Net sales | $ | 2,493 | $ | 2,631 | $ | 2,707 | $ | 2,905 | |||||||
Gross profit | 1,763 | 1,873 | 1,930 | 2,054 | |||||||||||
Operating income (loss) | 541 | 384 | 383 | 210 | |||||||||||
Net income (loss) | 424 | 154 | 126 | 3,996 | |||||||||||
Net income (loss) per common share - basic | $ | 0.31 | $ | 0.11 | $ | 0.09 | $ | 2.87 | |||||||
Net income (loss) per common share - assuming dilution | $ | 0.30 | $ | 0.11 | $ | 0.09 | $ | 2.83 | |||||||
2018 | |||||||||||||||
Net sales | $ | 2,379 | $ | 2,490 | $ | 2,393 | $ | 2,561 | |||||||
Gross profit | 1,707 | 1,751 | 1,720 | 1,832 | |||||||||||
Operating income (loss) | 407 | 392 | 388 | 319 | |||||||||||
Net income (loss) | 298 | 555 | 432 | 386 | |||||||||||
Net income (loss) per common share - basic | $ | 0.22 | $ | 0.40 | $ | 0.31 | $ | 0.28 | |||||||
Net income (loss) per common share - assuming dilution | $ | 0.21 | $ | 0.40 | $ | 0.31 | $ | 0.27 |
EXHIBIT NO. | TITLE | |||||||
2.1 | ||||||||
3.1 | ||||||||
3.2 | ||||||||
4.1 | Specimen Certificate for shares of the Company's Common Stock (incorporated herein by reference to Exhibit 4.1, Registration No. 33-46980). | |||||||
4.2* | ||||||||
4.3 | ||||||||
4.4 | ||||||||
4.5 | ||||||||
4.6 | ||||||||
4.7 | ||||||||
4.22 | ||||||||
4.23 |
4.24 | ||||||||
10.1 | ||||||||
10.2 | ||||||||
10.3 | ||||||||
10.4 | ||||||||
10.5 | ||||||||
10.6 | ||||||||
10.7 | ||||||||
10.8 | Transaction Agreement, dated as of January 8, 2006, as amended, between the Company and Abbott Laboratories (incorporated herein by reference to Exhibit 10.47, Exhibit 10.48, Exhibit 10.49 and Exhibit 10.50, Annual Report on Form 10-K for year ended December 31, 2005 and Exhibit 10.1, Current Report on Form 8-K dated April 7, 2006, File No. 1-11083). | |||||||
10.9 | ||||||||
10.10 | ||||||||
10.11 | ||||||||
10.13 | Form of Boston Scientific Corporation Excess Benefit Plan, as amended (incorporated herein by reference to Exhibit 10.1, Current Report on Form 8-K dated June 29, 2005 and Exhibit 10.4, Current Report on Form 8-K dated December 16, 2008, File No. 1-11083).# | |||||||
10.14 | ||||||||
10.15 | ||||||||
10.16 | ||||||||
10.17 | ||||||||
10.18 | ||||||||
10.19 | ||||||||
10.20 | Boston Scientific Corporation 2000 Long-Term Incentive Plan, as amended (incorporated herein by reference to Exhibit 10.20, Annual Report on Form 10-K for the year ended December 31, 1999, Exhibit 10.18, Annual Report on Form 10-K for the year ended December 31, 2001, Exhibit 10.1, Current Report on Form 8-K dated December 22, 2004, Exhibit 10.3, Current Report on Form 8-K dated May 9, 2005, and Exhibit 10.3, Current Report on Form 8-K dated December 16, 2008, File No. 1-11083).# | |||||||
10.21 | ||||||||
10.22 | ||||||||
10.23 | ||||||||
10.24 | ||||||||
10.25 | ||||||||
10.26 |
10.28 | ||||||||
10.29 | ||||||||
10.30 | ||||||||
10.31 | ||||||||
10.32 | ||||||||
10.33 | ||||||||
10.34 | ||||||||
10.55 | ||||||||
10.69 | ||||||||
10.83 | ||||||||
10.96 | ||||||||
10.110 | ||||||||
10.122 | ||||||||
10.123 | ||||||||
10.124 | ||||||||
10.125 | ||||||||
10.126 | ||||||||
10.127 | ||||||||
10.128 | ||||||||
10.129 | ||||||||
10.130 | ||||||||
10.131 | ||||||||
10.132 | ||||||||
10.133 | ||||||||
10.134 | ||||||||
10.135 | ||||||||
10.136 | ||||||||
10.137 | ||||||||
21* | ||||||||
23* | ||||||||
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) | |||||||
Dated: February 23, 2022 | Boston Scientific Corporation | |||||||||||||
By: | ||||||||||||||
/s/ Daniel J. Brennan | ||||||||||||||
Daniel J. Brennan | ||||||||||||||
Executive Vice President and Chief Financial Officer | ||||||||||||||
(duly authorized officer and principal financial officer) |
Dated: February | By: | /s/ Daniel J. Brennan | ||||||||||||
Daniel J. Brennan | ||||||||||||||
Executive Vice President and Chief | ||||||||||||||
(Principal |
Dated: February 23, 2022 | By: | /s/ Michael F. Mahoney | ||||||||||||
Director, Chairman of the Board, President and Chief Executive Officer | ||||||||||||||
(Principal |
Dated: February | By: | |||||||||||||
/s/ Jonathan R. Monson | ||||||||||||||
Jonathan R. Monson | ||||||||||||||
Vice President, Global Controller and Chief Accounting Officer | ||||||||||||||
(Principal Accounting Officer) |
Dated: February 23, 2022 | By: | /s/ Nelda J. Connors | ||||||||||||
Director | ||||||||||||||
Dated: February 23, 2022 | By: | /s/ Charles J. Dockendorff | ||||||||||||
Director | ||||||||||||||
Dated: February 23, 2022 | By: | /s/ Yoshiaki Fujimori | ||||||||||||
Director | ||||||||||||||
Dated: February 23, 2022 | By: | /s/ Donna A. James | ||||||||||||
Director | ||||||||||||||
Dated: February 23, 2022 | By: | /s/ Edward J. Ludwig | ||||||||||||
Director | ||||||||||||||
Dated: February | By: | /s/ | ||||||||||||
David J. Roux | ||||||||||||||
David J. Roux | ||||||||||||||
Director | ||||||||||||||
Dated: February | By: | /s/ John E. Sununu | ||||||||||||
John E. Sununu | ||||||||||||||
Director | ||||||||||||||
Dated: February 23, 2022 | By: | /s/ David S. Wichmann | ||||||||||||
David S. Wichmann | ||||||||||||||
Director | ||||||||||||||
Dated: February 23, 2022 | By: | /s/ Ellen M. Zane | ||||||||||||
Ellen M. Zane | ||||||||||||||
Director | ||||||||||||||
Description | Balance at Beginning of Year | Charges to Costs and Expenses (a) | Deductions to Allowances for Uncollectible Accounts (b) | Charges to (Deductions from) Other Accounts (c) | Balance at End of Year | ||||||||||||
Year Ended December 31, 2019: | |||||||||||||||||
Allowances for uncollectible accounts (d) | $ | 68 | 23 | (17 | ) | — | $ | 74 | |||||||||
Year Ended December 31, 2018: | |||||||||||||||||
Allowances for uncollectible accounts (d) | $ | 98 | 19 | (19 | ) | (30 | ) | $ | 68 | ||||||||
Year Ended December 31, 2017: | |||||||||||||||||
Allowances for uncollectible accounts and sales returns and allowances | $ | 119 | 14 | (18 | ) | (17 | ) | $ | 98 |
Description | Balance at Beginning of Year | Cumulative effect adjustment for adoption of ASU 2016-13 (a) | Credit loss exposure (a) | Write-offs (c) | Balance at End of Year | ||||||||||||||||||||||||||||||
Year Ended December 31, 2021: | |||||||||||||||||||||||||||||||||||
Allowances for credit losses | $ | 105 | n/a | 28 | (25) | $ | 108 | ||||||||||||||||||||||||||||
Year Ended December 31, 2020: | |||||||||||||||||||||||||||||||||||
Allowances for credit losses (b) | $ | 74 | 10 | 49 | (27) | $ | 105 | ||||||||||||||||||||||||||||
Year Ended December 31, 2019: | |||||||||||||||||||||||||||||||||||
Allowances for uncollectible accounts | $ | 68 | n/a | 23 | (17) | $ | 74 |