Year Ended December 31, Change Percent Change
2018 2017 2016 2018 2017 2018 2017
Transcatheter Heart Valve Therapy $ 2,286.7
$ 2,027.2
$ 1,628.5
$ 259.5
$ 398.7
12.8 % 24.5 %
Surgical Heart Valve Therapy 761.6
807.1
774.9
(45.5 ) 32.2
(5.6 )% 4.2 %
Critical Care 674.5
601.0
560.3
73.5
40.7
12.2 % 7.3 %
Total net sales $ 3,722.8
$ 3,435.3
$ 2,963.7
$ 287.5
$ 471.6
8.4 % 15.9 %

We use a diverse and broad range of raw and organic materials in the design, development, and manufacture of our products. We manufacture our non-implantable products from fabricated raw materials including resins, chemicals, electronics, and metals. Most of our replacement heart valves are manufactured from natural tissues harvested from animal tissue, as well as fabricated materials. We purchase certain materials and components used in manufacturing our products from external suppliers. In addition, we purchase certain supplies from single sources for reasons of sole source availability or constraints resulting from regulatory requirements.

~~Transcatheter Heart Valve Therapy~~

We work with our suppliers to mitigate risk and seek continuity of supply while maintaining quality and reliability. Alternative supplier options are generally considered, identified, and approved for materials deemed critical to our products, although we do not typically pursue immediate regulatory qualification of alternative sources due to the strength of our existing supplier relationships and the time and expense associated with the regulatory validation process.

~~2018 Compared~~

We comply with ~~2017~~

~~The increase~~all current global guidelines regarding risks for products incorporating animal tissue intended to be implanted in ~~net sales of THVT~~humans. We follow rigorous sourcing and manufacturing procedures intended to safeguard humans from potential risks associated with diseases such as bovine spongiform encephalopathy ("BSE"). We obtain bovine tissue used in our pericardial tissue valve products ~~was due primarily to:~~

~~higher sales of the~~ ~~Edwards SAPIEN 3~~ ~~valve across all regions, particularly~~only from sources within the United States and ~~Japan, driven~~Australia, where strong control measures and surveillance programs exist. In addition, bovine tissue used in our pericardial tissue valve products is from tissue types considered by ~~strong therapy adoption;~~global health and regulatory organizations to have shown no risk of infectibility. Our manufacturing and sterilization processes are designed to render tissue biologically safe from all known infectious agents and viruses.

Quality Assurance

We are committed to providing to our patients quality products and have implemented modern quality systems and concepts throughout the organization. The quality system starts with the initial design concept, risk management, and product specification, and continues through the design of the product, packaging and labeling, and the manufacturing, sales, support, and servicing of the product. The quality system is intended to design quality into the products and utilizes continuous improvement concepts, including Lean/Six Sigma principles, throughout the product lifecycle.

Our operations are frequently inspected by the many regulators that oversee medical device manufacturing, including the United States Food and Drug Administration ("FDA"), European Notified Bodies, and other regulatory entities. The medical technology industry is highly regulated and our facilities and operations are designed to comply with all applicable quality systems standards, including the International Organization for Standardization ("ISO") 13485. These standards require, among other items, quality system controls that are applied to product design, component material, suppliers, and manufacturing operations. These regulatory approvals and ISO certifications can be obtained only after a successful audit of a company's quality system has been conducted by regulatory or independent outside auditors. Periodic reexamination by an independent outside auditor is required to maintain these certifications.

Environmental, Health, and Safety

We are committed to providing a safe and healthy workplace and complying with all relevant regulations and medical technology industry standards. Through our corporate and site level Environmental, Health, and Safety functions, we establish and monitor programs to reduce pollution, prevent injuries, and maintain compliance with applicable regulations. In order to measure performance, we monitor and report on a number of metrics, including regulated and non-regulated waste disposal, energy usage, water consumption, air toxic emissions, and injuries from our production activities. Each of our manufacturing sites is evaluated regularly with respect to a broad range of Environmental, Health, and Safety criteria.

Research and Development

In 2020, we made significant investments in research and development as we worked to develop therapies that we believe have the potential to change the practice of medicine. Research and development spending increased 1% year over year to 17% of 2020 sales. This increase was primarily the result of significant investments in our transcatheter structural heart programs, including an increase in clinical research for our mitral and tricuspid therapies business. We are engaged in ongoing research and development to deliver clinically advanced new products, to enhance the effectiveness, ease of use, safety, and reliability of our current leading products, and to expand the applications of our products as appropriate. We focus on opportunities within specific areas of structural heart disease and critical care monitoring.

A considerable portion of our research and development investment includes clinical trials and the collection of evidence that provide data for use in regulatory submissions, and required post-market approval studies involving applications of our

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products. Our investment in clinical studies also includes outcomes and cost-effectiveness data for payers, clinicians, and healthcare systems.

In Transcatheter Aortic Valve Replacement, we are developing new products to further improve and streamline transcatheter aortic heart valve replacement procedures, and developing pulmonic platforms to expand therapies for congenital heart disease patients.

In Transcatheter Mitral and Tricuspid Therapies, we are making significant investments in innovation and clinical evidence to develop technologies designed to treat mitral and tricuspid valve diseases. In addition to our internally developed programs, we have made investments in several companies that are independently developing minimally-invasive technologies to treat structural heart diseases.

Our Surgical Structural Heart development programs include innovative platforms for patients who are best treated surgically, specifically active patients and patients with more complex combined procedures.

In our Critical Care product line, we are pursuing the development of a variety of decision support solutions for our clinicians. This includes next-generation noninvasive and minimally-invasive hemodynamic monitoring systems, and a next-generation monitor platform. We are also developing a decision support software suite with advanced algorithms for proactive hemodynamic management, including a semi-closed loop system for standardized management of patient fluid levels. Lastly, we are developing a connectivity platform that will offer clinicians additional clinical support, remote monitoring capability, analytics, and insights for their patients’ hemodynamic status.

Our research and development activities are conducted primarily in facilities located in the United States and Israel. Our experienced research and development staff are focused on product design and development, quality, clinical research, and regulatory compliance. To pursue primary research efforts, we have developed alliances with several leading research institutions and universities, and also work with leading clinicians around the world in conducting scientific studies on our existing and developing products.

Proprietary Technology

Patents, trademarks, and other proprietary rights are important to the success of our business. We also rely upon trade secrets, know-how, continuing innovations, licensing opportunities, and non-disclosure agreements to develop and maintain our competitive position.

We own or have rights to a substantial number of patents and have patent applications pending both in the U.S. and in foreign countries. We continue to innovate and file new patent applications to protect the full range of our products and technologies.

Additionally, we are a party to numerous license agreements with various third parties pursuant to which we have obtained, for varying terms, the exclusive or non-exclusive rights to certain patents held by such third parties in consideration for cross-licensing rights and/or royalty payments. We have also licensed certain patent rights to others.

We undertake reasonable measures to protect our patent rights, including monitoring the products of our competitors for possible infringement of our owned and licensed patents. Litigation has been necessary to enforce certain patent rights held by us, and we plan to continue to defend and prosecute our rights with respect to such patents.

Moreover, we own certain U.S. registered trademarks used in our business. Many of our trademarks have also been registered for use in certain foreign countries where registration is available and where we have determined it is commercially advantageous to do so.

Government Regulation and Other Matters

Our products and facilities are subject to regulation by numerous government agencies, including the U.S. FDA, European Union Member States competent authorities, and the Japanese Pharmaceuticals and Medical Devices Agency, to confirm compliance with the various laws and regulations governing the development, testing, manufacturing, labeling, marketing, and distribution of our products. We are also governed by federal, state, local, and international laws of general applicability, such as those regulating employee health and safety, and the protection of the environment. Overall, the amount and scope of domestic and foreign laws and regulations applicable to our business has increased over time. Compliance with these regulations has not had a material effect on our capital expenditures, earnings, or competitive position to date, but new

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regulations or amendments to existing regulations to make them more stringent could have such an effect in the future. We cannot estimate the expenses we may incur to comply with potential new laws or changes to existing laws, or the other potential effects these laws may have on our business.

United States Regulation. In the United States, the FDA has responsibility for regulating medical devices. The FDA regulates design, development, testing, clinical studies, manufacturing, labeling, promotion, and record keeping for medical devices, and reporting of adverse events, recalls, or other field actions by manufacturers and users to identify potential problems with marketed medical devices. Many of the devices that we develop and market are in a category for which the FDA has implemented stringent clinical investigation and pre-market clearance or approval requirements. The process of obtaining FDA clearance or approval to market a product is resource intensive, lengthy, and costly. FDA review may involve substantial delays that adversely affect the marketing and sale of our products. A number of our products are pending regulatory clearance or approval to begin commercial sales in various markets. Ultimately, the FDA may not authorize the commercial release of a medical device if it determines the device is not safe and effective or does not meet other regulatory standards. Additionally, even if a product is cleared or approved, the FDA may impose restrictions or require testing and surveillance programs to monitor the effects of these products once commercialized.

The FDA has the authority to halt the distribution of certain medical devices, detain or seize adulterated or misbranded medical devices, order the repair, replacement, or refund of the costs of such devices, or preclude the importation of devices that are or appear violative. The FDA also conducts inspections to determine compliance with the quality system regulations concerning the manufacturing and design of devices and current medical device reporting regulations, recall regulations, clinical testing regulations, and other requirements. The FDA may withdraw product clearances or approvals due to failure to comply with regulatory standards, or the occurrence of unforeseen problems following initial approval, and require notification of health professionals and others with regard to medical devices that present unreasonable risks of substantial harm to the public health. Additionally, the failure to comply with FDA or comparable regulatory standards or the discovery of previously unknown product problems could result in fines, delays, suspensions or withdrawals of regulatory clearances or approvals, seizures, injunctions, recalls, refunds, civil money penalties, or criminal prosecution. Our compliance with applicable regulatory requirements is subject to continual review. Moreover, the FDA and several other United States agencies administer controls over the export of medical devices from the United States and the import of medical devices into the United States, which could also subject us to sanctions for noncompliance.

We are also subject to additional laws and regulations that govern our business operations, products, and technologies, including:

•federal, state, and foreign anti-kickback laws and regulations, which generally prohibit payments to anyone, including physicians as an inducement to purchase or recommend a product;

•the Stark law, which prohibits physicians from referring Medicare or Medicaid patients to a provider that bills these programs for the provision of certain designated health services if the physician (or a member of the physician's immediate family) has a financial relationship with that provider;

•federal and state laws and regulations that protect the confidentiality of certain patient health information, including patient records, and restrict the use and disclosure of such information, in particular, the Health Insurance Portability and Accountability Act of 1996;

•the Physician Payments Sunshine Act, which requires public disclosure of the financial relationships of United States physicians and teaching hospitals with applicable manufacturers, including medical device, pharmaceutical, and biologics companies;

•the False Claims Act, which prohibits the submission of false or otherwise improper claims for payment to a federally funded health care program, and health care fraud statutes that prohibit false statements and improper claims to any third-party payor; and

•the United States Foreign Corrupt Practices Act, which can be used to prosecute United States companies for arrangements with foreign government officials or other parties, or for not keeping accurate financial records or maintaining adequate internal controls to prevent and detect arrangements with foreign government officials or other parties.

Failure to comply with these laws and regulations could result in criminal liability, significant fines or penalties, negative publicity, and substantial costs and expenses associated with investigation and enforcement activities. To assist in our

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compliance efforts, we work to adhere to many codes of ethics and conduct regarding our business activities in the United States and other countries in which we operate. In addition, we have in place a dedicated team to improve our internal business compliance programs and policies.

International Regulation. Internationally, the regulation of medical devices is complex. In Europe, our products are subject to extensive regulatory requirements. The regulatory regime in the European Union for medical devices became mandatory in June 1998. It requires that medical devices may only be placed on the market if they do not compromise safety and health when properly installed, maintained, and used in accordance with their intended purpose. National laws conforming to the European Union's legislation regulate our products under the medical devices regulatory system. Although the more variable national requirements under which medical devices were formerly regulated have been substantially replaced by the European Union Medical Devices Directive, individual nations can still impose unique requirements that may require supplemental submissions. The European Union medical device laws require manufacturers to declare that their products conform to the essential regulatory requirements after which the products may be placed on the market bearing the CE Mark. Manufacturers' quality systems for products in all but the lowest risk classification are also subject to certification and audit by an independent notified body. In Europe, particular emphasis is being placed on more sophisticated and faster procedures for the reporting of adverse events to the competent authorities.

In May 2017, the European Union (the "EU") implemented a new regulatory scheme for medical devices under the Medical Device Regulation ("MDR"). The MDR becomes fully effective in 2021 and will bring significant new requirements for many medical devices, including enhanced requirements for clinical evidence and documentation, increased focus on device identification and traceability, new definitions and registration of economic operators throughout the distribution chain, and additional post-market surveillance and vigilance. Compliance with the MDR requires re-certification of many of our products to the enhanced standards, and has resulted in and will continue to result in substantial additional expense. In addition, in the EU, we import some of our devices through our offices in Switzerland. Switzerland is not a member state of the EU, but is linked to the EU through bilateral treaties; therefore, the free movement of goods, including medical devices, between the EU and Switzerland after implementation of the MDR requires a revised Mutual Recognition Agreement ("MRA"), which continues to be under negotiation for the MDR. If an MRA covering the MDR is not put in place, then non-EU manufacturers may be required to make significant changes, including replacement of Swiss economic operators with operators based in EU Member States, and changes will need to be made to our device labeling and/or packaging to satisfy MDR requirements. If these measures are unable to be taken, it may no longer be possible to place such devices on the EU market.

In Japan, pre-market approval and clinical studies are required as is governmental pricing approval for medical devices. Clinical studies are subject to a stringent Japanese "Good Clinical Practices" standard. Approval time frames from the Japanese Ministry of Health, Labour and Welfare vary from simple notifications to review periods of one or more years, depending on the complexity and risk level of the device. In addition, importation of medical devices into Japan is subject to the "Good Import Practices" regulations. As with any highly regulated market, significant changes in the regulatory environment could adversely affect future sales.

In many of the other foreign countries in which we market our products, we may be subject to regulations affecting, among other things:

•product standards and specifications;

•packaging requirements;

•labeling requirements;

•product collection and disposal requirements;

•quality system requirements;

•import restrictions;

•tariffs;

•duties; and

•tax requirements.

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Many of the regulations applicable to our devices and products in these countries are similar to those of the FDA. In some regions, the level of government regulation of medical devices is increasing, which can lengthen time to market and increase registration and approval costs. In many countries, the national health or social security organizations require our products to be qualified before they can be marketed and considered eligible for reimbursement.

Health Care Initiatives. Government and private sector initiatives to limit the growth of health care costs, including price regulation and competitive pricing, coverage and payment policies, comparative effectiveness reviews, technology assessments, increasing evidentiary demands, and managed-care arrangements, are continuing in many countries where we do business, including the United States, Europe, and Japan. As a result of these changes, the marketplace has placed increased emphasis on the delivery of more cost-effective medical therapies. For example, government programs, private health care insurance, and managed-care plans have attempted to control costs by restricting coverage and limiting the level of reimbursement for procedures or treatments, and some third-party payors require their pre-approval before new or innovative devices or therapies are utilized by patients. These various initiatives have created increased price sensitivity over medical products generally and may impact demand for our products and technologies.

The delivery of our products is subject to regulation by the United States Department of Health and Human Services ("HHS") and comparable state and foreign agencies responsible for reimbursement and regulation of health care items and services. Foreign governments also impose regulations in connection with their health care reimbursement programs and the delivery of health care items and services. Reimbursement schedules regulate the amount the United States government will reimburse hospitals and doctors for the inpatient care of persons covered by Medicare. HHS' Centers for Medicare & Medicaid Services ("CMS") may also review whether and/or under what circumstances a procedure or technology is reimbursable for Medicare beneficiaries. Changes in current coverage and reimbursement levels could have an adverse effect on market demand and our pricing flexibility. The CMS National Coverage Determination for Transcatheter Aortic Valve Replacement was issued in June 2019. The modernized requirements and more streamlined patient evaluation process are meaningful enhancements that may help ensure equitable access for more patients suffering from severe aortic stenosis.

Health care cost containment efforts have also prompted domestic hospitals and other customers of medical device manufacturers to consolidate into larger purchasing groups to enhance purchasing power. The medical technology industry has also experienced some consolidation, partly in order to offer a broader range of products to large purchasers. As a result, transactions with customers are larger, more complex, and tend to involve more long-term contracts than in the past. These larger customers, due to their enhanced purchasing power, may have a material impact on product pricing.

These laws or any future legislation, including deficit reduction legislation, could impact medical procedure volumes, reimbursement for our products, and demand for our products or the prices at which we sell our products.

Seasonality

Our quarterly net sales are influenced by many factors, including new product introductions, acquisitions, regulatory approvals, patient and physician holiday schedules, and other factors. Net sales in the third quarter are typically lower than other quarters of the year due to the seasonality of the United States and European markets, where summer vacation schedules normally result in fewer medical procedures.

Human Capital Management Strategy

Human Capital Management ("HCM") Governance

Attracting, developing, and retaining talent is fundamental to our success. The primary goals of our talent management strategy are to attract and maintain a motivated, professional workforce and to ensure alignment on our patient-focused innovation strategy.

Our Board of Directors has oversight over human capital management with time dedicated at each regularly scheduled meeting to discuss talent management, including, among other things, talent strategy, diversity, succession planning, employee development, employee health, safety, and welfare, results of employee surveys, and compensation. The Board of Directors also approves Key Operating Drivers, which are strategic milestones that include financial objectives and are tracked using a point system across our entire organization, that focus the Company and management toward short, medium, and long-term goals that align with our talent management strategy. In addition, the Chief Executive Officer ("CEO") has talent management related performance goals tied to his compensation; these Performance Management Objectives are tracked and, then, reported to and evaluated by our Board of Directors.

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Our HCM governance includes a global talent development review ("TDR") process as well as an HCM dashboard. The purpose of our TDR process is to align our business strategy with talent strategies, assess talent against future organizational needs, evaluate critical talent populations, and enhance the strength of our succession planning. Our HCM dashboard is generated quarterly and provides insights on key metrics related to areas such as attraction and growth rates, retention trends, diversity, and employee sentiment.

Culture

Investing in our workforce means our employees can stay focused on our patient-focused innovation strategy and the development of life-saving therapies for the patients we serve. We are committed to maintaining a culture where we celebrate diversity, ensure that employees' voices are heard, and promote good health and safety. We strive to offer competitive employee benefits packages and are committed to fair and equitable pay practices. We track compensation patterns in all geographies where we operate, and we regularly look for ways to ensure fair and equitable pay.

We are committed to fostering an environment where all employees can grow and thrive. A diverse workforce results in a broader range of perspectives, helping drive our commitment to innovation.

We believe in empowering our employees and providing avenues that enable their voices to be heard. We conduct a multilingual global employee survey, called myVoice, to pulse our employees and gain their feedback in a confidential manner. We gain insights on various topics including patient focus, diversity, inclusion and belonging, quality, innovation, and engagement. Speak-Up is a resource available to all employees to bring forth compliance related concerns. In addition, during each quarterly townhall meeting, our CEO has an "Ask Mike" section in which he answers questions that have been submitted to him by employees. Answers to questions that are not covered in the townhall meeting are posted online internally.

We understand that good health leads to better performance. Edwards offers a competitive employee benefits package that includes, among other things, health and welfare insurance, health savings accounts, family support services, and a variety of site-specific programs. We regularly evaluate our benefits package to make modifications that are aligned with the competitive landscape, legislative changes, and the unique needs of our population. We also provide robust wellness programs that address prevention, nutrition, mental health, physical activity, education, financial fitness, and community service.

Talent Development

In addition to our robust TDR process and tuition reimbursement programs, we provide a variety of leadership, technical, and professional development programs around the globe.

Headcount and Labor Representation

As of December 31, 2020, we had approximately 14,900 employees worldwide, the majority of whom were located in the United States, Singapore, and the Dominican Republic. None of our North American employees are represented by a labor union. In various countries outside of North America, we interact with trade unions and work councils that represent employees.

Additional details regarding diversity, talent development, compensation, and employee health and safety can be found in our Sustainability Report posted on our website at www.edwards.com under "About Us — Corporate Responsibility."

References to our website in this Annual Report on Form 10-K are provided for convenience only and the content on our website does not constitute a part of this Report.

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Item 1A. Risk Factors

Our business and assets are subject to varying degrees of risk and uncertainty. An investor should carefully consider the risks described below, as well as other information contained in this Annual Report on Form 10-K and in our other filings with the SEC. Additional risks not presently known to us or that we currently deem immaterial may also adversely affect our business. If any of these events or circumstances occurs, our business, financial condition, results of operations, or prospects could be materially harmed. In that case, the value of our securities could decline and an investor could lose part or all of his or her investment. In addition, forward-looking statements within the meaning of the federal securities laws that are contained in this Annual Report on Form 10-K or in our other filings or statements may be subject to the risks described below as well as other risks and uncertainties. Please read the cautionary notice regarding forward-looking statements in Part I above.

Business and Operating Risks

We are subject to risks associated with public health threats and epidemics, including the novel coronavirus ("COVID-19").

We are subject to risks associated with public health threats and epidemics, including the global health concerns relating to the COVID-19 pandemic. The global pandemic has adversely impacted and is likely to further adversely impact nearly all aspects of our business and markets, including our workforce and operations and the operations of our customers, suppliers, and business partners. In particular, we may experience material financial or operational impacts, including:

•Significant volatility or reductions in demand for our products;

•Impacts and delays to clinical trials, our pipeline milestones, or regulatory clearances and approvals; or

•The inability to meet our customers’ needs or other obligations due to disruptions to our operations or the operations of our third-party partners, suppliers, contractors, logistics partners, or customers including disruptions to production, development, manufacturing, administrative, and supply operations and arrangements.

The extent to which the COVID-19 global pandemic and measures taken in response thereto impact our business, results

of operations, and financial condition will depend on future developments, which are highly uncertain and are difficult to

predict. These developments include, but are not limited to, the duration and spread of the outbreak (including new variants of COVID-19), its severity, the actions to contain the virus or address its impact, the timing, distribution, and efficacy of vaccines and other treatments, U.S. and foreign government actions to respond to the reduction in global economic activity, and how quickly and to what extent normal economic and operating conditions can resume.

Failure to successfully innovate and develop new and differentiated products in a timely manner and effectively market these products could have a material effect on our prospects.

Our continued growth and success depend on our ability to innovate and develop new and differentiated products in a timely manner and effectively market these products. Without the timely innovation and development of products, our products could be rendered obsolete or less competitive by changing customer preferences or because of the introduction of a competitor’s newer technologies. Innovating products requires the devotion of significant financial and other resources to research and development activities; however, there is no certainty that the products we are currently developing will complete the development process, or that we will obtain the regulatory or other approvals required to market such products in a timely manner or at all. Even if we timely innovate and develop products, our ability to market them could be constrained by a number of different factors, including barriers in patients' treatment pathway (including disease awareness, detection, and diagnosis), the need for regulatory clearance, restrictions imposed on approved indications, and uncertainty over third-party reimbursement. Failure in any of these areas could have a material effect on our prospects.

Unsuccessful clinical trials or procedures relating to products could have a material adverse effect on our prospects.

The regulatory approval process for new products and new indications for existing products requires extensive clinical trials and procedures, including early clinical feasibility and regulatory studies. Unfavorable or inconsistent clinical data from current or future clinical trials or procedures conducted by us, our competitors, or third parties, or perceptions regarding this clinical data, could adversely affect our ability to obtain necessary approvals and the market's view of our future prospects. Such clinical trials and procedures are inherently uncertain and there can be no assurance that these trials or procedures will be enrolled or completed in a timely or cost-effective manner or result in a commercially viable product or indication; failure to do so could have a material adverse effect on our prospects. Clinical trials or procedures may experience significant setbacks even after earlier trials have shown promising results. Further, preliminary results from clinical trials or procedures may be contradicted by subsequent analyses. In addition, results from our clinical trials or procedures may not be supported by actual long-term studies or clinical experience. If preliminary clinical results are later contradicted, or if initial results cannot be

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supported by actual long-term studies or clinical experience, our business could be adversely affected. Clinical trials or procedures may be delayed, suspended, or terminated by us, the FDA, or other regulatory authorities at any time if it is believed that the trial participants face unacceptable health risks or any other reasons.

We operate in highly competitive markets, and if we do not compete effectively, our business will be harmed.

We face substantial competition and compete with companies of all sizes on the basis of cost-effectiveness, technological innovations, product performance, brand name recognition, breadth of product offerings, real or perceived product advantages, pricing and availability and rate of reimbursement. In addition, given the trend toward value-based healthcare, if we are not able to continue to demonstrate the full value of our differentiated products to healthcare providers and payors, our competitive position could be adversely affected. See "Competition" under "Business" in Part I, Item 1 included herein.

If we identify underperforming operations or products or if there are unforeseen operating difficulties and expenditures in connection with business acquisitions or strategic alliances, we may be required, from time to time, to recognize charges, which could be substantial and which could adversely affect our results of operations.

We actively manage a portfolio of research and development products, and we regularly explore potential acquisitions of complementary businesses, technologies, services, or products, as well as potential strategic alliances. From time to time, we identify operations and products that are underperforming, do not fit with our longer-term business strategy or there may be unforeseen operating difficulties and significant expenditures during the integration of an acquired business, technology, service, or product into our existing operations. We may seek to dispose of these underperforming operations or products, and we may also seek to dispose of other operations or products for strategic or other business reasons. If we cannot dispose of an operation or product on acceptable terms, we may voluntarily cease operations related to that product. In addition, we may be required to take charges or write-downs in connection with acquisitions and divestitures. In particular, acquisitions of businesses engaged in the development of new products may give rise to developed technology and/or in-process research and development assets. To the extent that the value of these assets decline, we may be required to write down the value of the assets. Also, in connection with certain asset acquisitions, we may be required to take an immediate charge related to acquired in-process research and development assets. Any of these events could result in charges, which could be substantial and which could adversely affect our results of operations.

The success of many of our products depends upon certain key physicians.

We maintain working relationships with physicians upon whom we rely to provide considerable knowledge and experience. These physicians may assist us as researchers, marketing consultants, product trainers and consultants, inventors, and as public speakers. If new laws, regulations, or other developments limit our ability to appropriately engage these professionals or to continue to receive their advice and input, the development, marketing, and successful use of our products could suffer, which could have a material adverse effect on our business, financial condition, and results of operations.

If we or one of our suppliers or logistics partners encounters manufacturing, logistics, or quality problems, our business could be materially adversely affected.

The manufacture and sterilization of many of our products is highly complex due in part to rigorous regulatory requirements. Quality is extremely important due to the serious and costly consequences of a product failure. Problems can arise for a number of reasons, including disruption of facility utilities, equipment malfunction, failure to follow protocols and procedures, raw material problems, software problems, or human error. Disruptions can occur at any time, including during production line transfers and expansions. Disruptions can also occur if our manufacturing and warehousing facilities are damaged by earthquakes, hurricanes, volcanoes, fires, and other natural disasters or catastrophic circumstances. As we expand into new markets and scale new products for commercial production, we may face unanticipated delays or surges in demand which could strain our production capacity and lead to other types of disruption. If any of these manufacturing, logistics, or quality problems arise or if we or one of our suppliers or logistics partner otherwise fail to meet internal quality standards or those of the FDA or other applicable regulatory body, our reputation could be damaged, we could become subject to a safety alert or a recall, we could incur product liability and other costs, product approvals and production could be delayed, and our business could otherwise be materially adversely affected.

We rely on third parties in the design, manufacture, and sterilization of our products. Any failure by or loss of a vendor could result in delays and increased costs, which may adversely affect our business.

We rely on third parties for a broad range of raw and organic materials and other items in the design, manufacture, and sterilization of our products, and we purchase certain supplies and services from single sources for reasons of quality assurance, cost-effectiveness, availability, constraints resulting from regulatory requirements, and other reasons. We may experience supply interruptions due to a variety of factors, including:

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•General economic conditions that could adversely affect the financial viability of our vendors;

•Vendors' election to no longer service medical technology companies due to the burdens of applicable quality requirements and regulations;

•The limitation or ban of certain materials used in the manufacture of our products; and

•Delays or shortages due to trade or regulatory embargoes.

A change or addition to our vendors could require significant effort due to the rigorous regulations and requirements of the FDA and other regulatory authorities; it could be difficult to establish additional or replacement sources on a timely basis, which could have a material adverse effect on our business.

Failure to protect our information technology infrastructure against cyber-based attacks, network security breaches, service interruptions, or data corruption could materially disrupt our operations and adversely affect our business and operating results.

The operation of our business depends on our information technology systems. We rely on our information technology systems to, among other things, effectively manage sales and marketing data, accounting and financial functions, inventory management, product development tasks, clinical data, customer service and technical support functions. Our information technology systems are vulnerable to damage or interruption from earthquakes, fires, floods and other natural disasters, terrorist attacks, power losses, computer system or data network failures, security breaches, data corruption, and cyber-based attacks. Cyber-based attacks can include, but are not limited to, computer viruses, computer denial-of-service attacks, phishing attacks, ransomware attacks, worms, and other malicious software programs or other attacks, covert introduction of malware to computers and networks, impersonation of authorized users, and efforts to discover and exploit any design flaws, bugs, security vulnerabilities, or security weaknesses, as well as intentional or unintentional acts by employees or other insiders with access privileges, intentional acts of vandalism by third parties and sabotage. In addition, federal, state, and international laws and regulations, such as the General Data Protection Regulation adopted by the European Union and the California Consumer Privacy Act, can expose us to enforcement actions and investigations by regulatory authorities, and potentially result in regulatory penalties and significant legal liability, if our information technology security efforts fail. In addition, a variety of our software systems are cloud‑based data management applications, hosted by third‑party service providers whose security and information technology systems are subject to similar risks.

The failure of either our or our service providers’ information technology could disrupt our operations or result in decreased sales, result in liability claims or regulatory penalties, or lead to increased overhead costs, product shortages, loss or misuse of proprietary or confidential information, intellectual property, or sensitive or personal information, all of which could have a material adverse effect on our reputation, business, financial condition, and operating results.

Our business and results of operations may be adversely affected if we are unable to recruit and retain qualified management and other personnel.

Our continued success depends, in large part, on our ability to hire and retain qualified people or otherwise have access to such qualified people globally and if we are unable to do so, our business and operations may be impaired or disrupted. See "Human Capital Management Strategy" under "Business" in Part I, Item 1 included herein. Competition for highly qualified people is intense, and there is no assurance that we will be successful in attracting or retaining replacements to fill vacant positions, successors to fill retirements or employees moving to new positions, or other highly qualified personnel.

Market and Other External Risks

Because we operate globally, our business is subject to a variety of risks associated with international sales and operations.

Our extensive global operations and business activity as well as the fact that many of our manufacturing facilities and suppliers are outside of the United States are accompanied by certain financial, economic, political, and other risks, including those listed below.

Domestic and Global Economic Conditions. We cannot predict to what extent general domestic and global economic conditions may negatively impact our business. These include, but are not limited to, credit and capital markets, interest rates, tax law, including tax rate and policy changes, factors affecting global economic stability, the political environment relating to health care, and the potential implications of the U.K. “Brexit” or the withdrawal from the European Union of other member

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countries. These and other conditions could also adversely affect our customers, payers, vendors and other stakeholders and may impact their ability or decision to purchase our products or make payments on a timely basis.

Health Care Legislation and Other Regulations. We are subject to various federal and foreign laws that govern our domestic and international business practices. For example, in the U.S., the Affordable Care Act, the Medicare Access and CHIP Reauthorization Act of 2015, and the 21st Century Cures Act, or any future legislation, including deficit reduction legislation, could impact medical procedure volumes, reimbursement for our products, and demand for our products or the prices at which we sell our products. In addition, a Mutual Recognition Agreement still under negotiation for the Medical Device Regulation can result in a lack of free movement of medical devices between the European Union and Switzerland, can impact our access in the European Union and can, ultimately, have a material effect on our business, financial condition, and results of operations. For more information about these laws as they relate to our business, see the section entitled “Health Care Legislation” and “Government Regulation and Other Matters” in Part I, Item 1, “Business.”

In addition, the United States Foreign Corrupt Practices Act, the United Kingdom Bribery Act, and similar laws in other jurisdictions contain prohibitions against bribery and other illegal payments, and make it an offense to fail to have procedures in place that prevent such payments. Penalties resulting from any violation of these laws could adversely affect us and our business.

Taxes. We are subject to income taxes in the United States as well as other jurisdictions.

•Provision for Income Taxes. Our provision for income taxes and our underlying effective tax rate could fluctuate due to changes in the mix of earnings and losses in countries with differing statutory tax rates. Our income tax provision could also be impacted by changes in excess tax benefits of stock-based compensation, federal and state tax credits, non-deductible expenses, changes in the valuation of deferred tax assets and liabilities and our ability to utilize them, the applicability and creditability of withholding taxes, and effects from acquisitions.

•Tax Reform. Our provision for income taxes could be materially impacted by changes in accounting principles or evolving tax laws, including, but not limited to, global corporate tax reform and base-erosion and tax transparency efforts. For example, many countries are aligning their international tax rules with the Organisation for Economic Co-operation and Development’s Base Erosion and Profit Shifting recommendations and action plans that aim to standardize and modernize international corporate tax policy, including changes to cross-border taxes, transfer pricing documentation rules, nexus-based tax practices, and taxation of digital activities.

•Tax Audits. We are subject to ongoing tax audits in the various jurisdictions in which we operate. Tax authorities may disagree with certain positions we have taken and assess additional taxes. Although we regularly assess the likely outcomes of the audits and record reserves for potential tax payments, the calculation of tax liabilities involves the application of complex tax laws, and our estimates could be different than the amounts for which we are ultimately liable.

•Tax Incentives. We benefit from various global tax incentives extended to encourage investment or employment. Several foreign jurisdictions have granted us tax incentives which require renewal at various times in the future. If our incentives are not renewed or we cannot or do not wish to satisfy all or part of the tax incentive conditions, we may lose the tax incentives and could be required to refund tax incentives previously realized. As a result, our provision for income taxes could be higher than it would have been had we maintained the benefits of the tax incentives.

Other economic, political, and social risks. Our future results could be harmed by a variety of other factors associated with doing business internationally such as those enumerated in these risk factors as well as the following:

•trade protection measures, quotas, embargoes, import or export requirements, and duties, tariffs, or surcharges;

•cultural or other local factors affecting financial terms with customers;

•differing labor regulations; and

•currency exchange rate ~~fluctuations, which increased net sales by $20.0 million, due primarily to~~fluctuations; that is, decreases in the ~~strengthening~~value of ~~the Euro against~~ the United States ~~dollar.~~

~~2017 Compared with 2016~~

~~The increase in net~~dollar to the Euro or the Japanese yen, as well as other currencies, have the effect of increasing our reported revenues even when the volume of international sales ~~of THVT products~~has remained constant. Increases in the value of the United States dollar relative to the Euro or the Japanese yen, as well as other currencies, have the opposite effect. Significant increases or decreases in the value of the United States dollar could have a material adverse effect on our revenues, cost of sales, or results of operations.

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If government and other third-party payors decline to reimburse our customers for our products or impose other cost containment measures to reduce reimbursement levels, our ability to profitably sell our products will be harmed.

We sell our products and technologies to hospitals and other health care providers, nearly all of which receive reimbursement for the health care services provided to patients from third-party payors, such as government programs (both domestic and international), private insurance plans, and managed care programs. The ability of customers to obtain appropriate reimbursement for their products from private and governmental third-party payors is critical to our success. The availability of reimbursement affects which products customers purchase and the prices they are willing to pay. Reimbursement varies from country to country and can significantly impact acceptance of new products.

Government and other third-party payors are increasingly attempting to contain health care costs by limiting both coverage and the level of reimbursement for medical products and services. Reimbursement levels may be decreased in the future. Additionally, future legislation, regulation, or reimbursement policies of third-party payors may otherwise adversely affect the demand for and price levels of our products. The introduction of cost containment incentives, combined with closer scrutiny of health care expenditures by both private health insurers and employers, has resulted in increased discounts and contractual adjustments to hospital charges for services performed. Hospitals or physicians may respond to such cost-containment pressures by substituting lower cost products or other therapies.

Third-party payors may deny reimbursement if they determine that a device used in a procedure was ~~due primarily to:~~

not used in accordance with cost-effective treatment methods as determined by such third-party payors or was used for an unapproved indication. Third-party payors may also deny reimbursement for experimental procedures and devices. We believe that many of our existing products are cost-effective, even though the ~~Edwards SAPIEN 3~~ ~~valve, driven~~one-time cost may be significant, because they are intended to improve quality of life and reduce overall health care costs over a long period of time. We cannot be certain that these third-party payors will recognize these cost savings and quality of life benefits instead of merely focusing on the lower initial costs associated with competing therapies. If our products are not considered cost-effective by ~~strong therapy adoption.~~

~~The increase~~third-party payors, our customers may not be reimbursed for them, resulting in ~~international~~ ~~net sales of THVT products was due primarily to:~~

~~the~~ ~~Edwards SAPIEN 3~~ ~~valve, due primarily to increased sales in Japan, driven by its launch in March 2016, and Europe, driven by strong therapy adoption;~~

~~partially offset by:~~

lower sales of our products.

Continued consolidation in the ~~Edwards SAPIEN XT~~ ~~valve~~health care industry could have an adverse effect on our sales and results of operations.

The health care industry has been consolidating, and organizations such as GPOs, independent delivery networks, and large single accounts, such as the United States Veterans Administration, continue to consolidate purchasing decisions for many of our health care provider customers. As a result, transactions with customers ~~converted~~are larger and more complex, and tend to ~~Edwards SAPIEN 3.~~involve more long-term contracts. The purchasing power of these larger customers has increased, and may continue to increase, causing downward pressure on product pricing. If we are not one of the providers selected by one of these organizations, we may be precluded from making sales to its members or participants. Even if we are one of the selected providers, we may be at a disadvantage relative to other selected providers that are able to offer volume discounts based on purchases of a broader range of medical equipment and supplies. Further, we may be required to commit to pricing that has a material adverse effect on our revenues, profit margins, business, financial condition, and results of operations. We expect that market demand, governmental regulation, third-party reimbursement policies, and societal pressures will continue to drive consolidation and increase pricing pressure.

Legal, Compliance, and Regulatory Risks

Our inability to protect our intellectual property or failure to maintain the confidentiality and integrity of data or other sensitive company information, by cyber-attack or other event, could have a material adverse effect on our business.

Our success and competitive position are dependent in part upon our ability to protect our proprietary intellectual property through a combination of patents and trade secrets. We cannot guarantee that the protective steps we take are adequate to protect these rights:

•Patents issued to or licensed by us in the past or in the future may be challenged and held invalid.

•As our patents expire, we may be unsuccessful in extending their protection through patent term extensions.

•Confidentiality agreements with certain employees, consultants, and other third parties intended to protect, in part, trade secrets and other proprietary information could be breached, and we may not have adequate remedies.

•Others could independently develop substantially equivalent proprietary information or gain access to our trade secrets or proprietary information, design around our technology, or develop competing technologies.

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•Our intellectual property, other proprietary technology, and other sensitive company information is dependent on sophisticated information technology systems and is potentially vulnerable to cyber-attacks, loss, theft, damage, destruction from system malfunction, computer viruses, loss of data privacy, or misappropriation or misuse of it by those with permitted access, and other events.

•We may not detect infringement.

•Intellectual property protection may also be unavailable or limited in some foreign countries.

We spend significant resources to protect and enforce our intellectual property rights, sometimes resulting in expensive and time-consuming litigation that is complex and may ultimately be unsuccessful. Our inability to protect our intellectual property could have a material adverse effect on our business or prospects.

Third parties may claim we are infringing their intellectual property, and we could suffer significant litigation or licensing expenses or be prevented from selling products.

During recent years, we and our competitors have been involved in substantial litigation regarding patent and other intellectual property rights which is typically costly and time-consuming. We may be forced to defend against claims and legal actions alleging infringement of the intellectual property rights of others, and, if our defense is unsuccessful, Edwards could have significant liabilities to third parties or face injunctions that bar the sale of our products, or could require us to seek licenses from third parties.Such licenses may not be available on commercially reasonable terms, may prevent us from manufacturing, selling, or using certain products, or may be non-exclusive, which could provide our competitors access to the same technologies.

In addition, third parties could also obtain patents that may require us to either redesign products, negotiate licenses from such third parties, which may be costly, unavailable or require us to exit a particular product offering.

We and our customers are subject to rigorous governmental regulations and we may incur significant expenses to comply with these regulations and develop products that are compatible with these regulations. In addition, failure to comply with these regulations could subject us to substantial sanctions which could adversely affect our business, results of operations, and financial condition.

The medical technologies we create, study, manufacture and market globally are subject to rigorous regulation and scrutiny by the FDA and various other federal, state, and foreign governmental authorities. Government regulation applies to nearly all aspects of our products’ lifecycles, including testing, clinical study, manufacturing, transporting, sourcing, safety, labeling, storing, packaging, recordkeeping, reporting, advertising, promoting, distributing, marketing, and importing or exporting of medical devices and products. In general, unless an exemption applies, a medical device or product must receive regulatory approval or clearance before it can be marketed or sold. Modifications to existing products or the marketing of new uses for existing products also may require regulatory approvals, approval supplements, or clearances. If we are unable to obtain these required approvals, we may be required to cease manufacturing and sale, or recall or restrict the use of such modified device, pay fines, or take other action until such time as appropriate clearance or approval is obtained.

Regulatory agencies may refuse to grant approval or clearance, or review and disagree with our interpretation of approvals or clearances, or with our decision that regulatory approval is not required or has been maintained. Regulatory submissions may require the provision of additional data and may be time consuming and costly, and their outcome is uncertain. Regulatory agencies may also change policies, adopt additional regulations, or revise existing regulations, each of which could prevent or delay approval or clearance of devices, or could impact our ability to market a previously cleared, approved, or unregulated device. Our failure to comply with these regulatory requirements of the FDA or other applicable regulatory requirements in the United States or elsewhere might subject us to administratively or judicially imposed sanctions. These sanctions include, among others, warning letters, fines, civil penalties, criminal penalties, injunctions, debarment, product seizure or detention, product recalls and total or partial suspension of production, sale and/or promotion. Any of the foregoing actions could result in decreased sales including as a result of negative publicity and product liability claims, and could have a material adverse effect on our financial condition, results of operations, and prospects. In addition to the sanctions for noncompliance described above, commencement of an enforcement proceeding, inspection, or investigation could divert substantial management attention from the operation of our business and have an adverse effect on our business, results of operations, and financial condition.

Also, we are subject to various United States and international laws pertaining to health care pricing, anti-corruption, and fraud and abuse, including prohibitions on kickbacks and the submission of false claims laws and restrictions on relationships with physicians and other referral sources. These laws are broad in scope and are subject to evolving interpretation, which could require us to incur substantial costs to monitor compliance. If we are found not to be in compliance, we may be required to alter our practices or have sanctions imposed against us and our officers and employees, including substantial fines, imprisonment, and exclusion from participation in governmental health care programs.

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We may incur losses from product liability or other claims that could adversely affect our operating results.

Our business exposes us to potential product liability risks that are inherent in the design, manufacture, and marketing of medical technologies. Our products are often used in surgical and intensive care settings with seriously ill patients. In addition, many of the devices we manufacture and sell are designed to be implanted in the human body for long periods of time. Component failures, manufacturing and assembly flaws, design defects, software defects, medical procedure errors, or inadequate disclosure of product-related risks or information could result in an unsafe condition, injury to, or death of, patients. Such problems could result in product liability, medical malpractice or other lawsuits and claims, safety alerts, or product recalls in the future. We establish reserves and may incur charges in excess of those reserves. Although we maintain product liability and other insurance with coverages we believe are adequate, product liability or other claims may exceed insurance coverage limits, fines, and penalties. In addition, regulatory sanctions may not be covered by insurance, or insurance may not continue to be available or available on commercially reasonable terms. These litigation matters and regulatory actions, recalls or other actions, regardless of outcome, could have a material adverse effect on our business, reputation, and ability to attract and retain customers.

Use of our products in unapproved circumstances could expose us to liabilities.

The marketing approval from the FDA and other regulators of certain of our products are, or are expected to be, limited to specific indications. We are prohibited from marketing or promoting any unapproved use of our products. Physicians, however, can use these products in ways or circumstances other than those strictly within the scope of the regulatory approval. Although the product training we provide to physicians and other health care professionals is conducted in compliance with applicable laws, and therefore, is mainly limited to approved uses or for clinical trials, no assurance can be given that claims might not be asserted against us if our products are used in ways or for procedures that are not approved.

Our operations are subject to environmental, health, and safety regulations that could result in substantial costs.

Our operations are subject to environmental, health, and safety laws, and regulations concerning, among other things, the generation, handling, transportation, and disposal of hazardous substances or wastes, the cleanup of hazardous substance releases, and emissions or discharges into the air or water. We have incurred and may incur in the future expenditures in connection with environmental, health and safety laws, and regulations. New laws and regulations, violations of these laws or regulations, stricter enforcement of existing requirements, or the discovery of previously unknown contamination could require us to incur costs or could become the basis for new or increased liabilities that could be material.

We are subject to risks arising from concerns and/or regulatory actions relating to animal borne illnesses, including “mad cow disease.”

Certain of our products, including pericardial tissue valves, are manufactured using bovine tissue. Concerns relating to the potential transmission of animal borne illnesses, including BSE, commonly known as "mad cow disease," from cows to humans may result in reduced acceptance of products containing bovine materials. Certain medical device regulatory agencies have considered whether to continue to permit the sale of medical devices that incorporate bovine material. We obtain bovine tissue only from closely controlled sources within the United States and Australia. The bovine tissue used in our pericardial tissue valves is from tissue types considered by global health and regulatory organizations to have shown no risk of infectibility for the suspected BSE infectious agent. We have not experienced any significant adverse impact on our sales as a result of concerns regarding BSE, but no assurance can be given that such an impact may not occur in the future.

Item 1B. Unresolved Staff Comments

None.

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Item 2. Properties

The locations and uses of our major properties are as follows:


North America
Irvine, California	(1)	Corporate Headquarters, Research and Development, Regulatory and Clinical Affairs, Manufacturing, Marketing, Administration
Draper, Utah	(1),(2)	Manufacturing, Administration
Haina, Dominican Republic	(1),(2)	Manufacturing
Añasco, Puerto Rico	(2)	Manufacturing
Central America
Cartago, Costa Rica	(1),(2)	Manufacturing
Europe
Nyon, Switzerland	(1)	Administration, Marketing
Prague, Czech Republic	(2)	Administration
Shannon, Limerick, Ireland	(1),(2)	Manufacturing (under construction)
Asia
Singapore	(1),(2)	Manufacturing, Distribution, Administration
Tokyo, Japan	(2)	Administration, Marketing, Distribution
Shanghai, China	(2)	Administration, Marketing
Caesarea, Israel	(2)	Research and Development
Or Yehuda, Israel	(2)	Research and Development

(1) Owned property.

(2) Leased property.

The Dominican Republic lease expires in 2022; the Puerto Rico property has two leases that expire in 2023; the Costa Rica lease expires in 2021; the Prague, Czech Republic lease expires in 2026; the Shannon, Ireland lease expires in 2024; the Tokyo, Japan lease expires in 2021; the Shanghai, China lease expires in 2021; Singapore has one land lease that expires in 2036 and one that expires in 2041; Caesarea, Israel has one lease that expires in 2021 and one that expires in 2030; and the Or Yehuda, Israel lease expires in 2023. We believe our properties have been well maintained, are in good operating condition, and are adequate for current needs. We do not anticipate difficulty in renewing existing leases as they expire or in finding alternative facilities.

Item 3. Legal Proceedings

For a description of our material pending legal proceedings, please see Note 18 to the "Consolidated Financial Statements" of this Annual Report on Form 10-K, which is incorporated by reference.

Item 4. Mine Safety Disclosures

Not applicable.

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PART II

Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

Market Information

Our common stock is traded on the New York Stock Exchange (the "NYSE") under the symbol "EW."

Number of Stockholders

On January 31, 2021, there were 8,876 stockholders of record of our common stock.

Dividends

We have never paid any cash dividends on our capital stock and have no current plans to pay any cash dividends. Our current policy is to retain any future earnings for use in our business.

Issuer Purchases of Equity Securities

On May 8, 2019, the Board of Directors approved a stock repurchase program authorizing us to purchase on the open market, including pursuant to a Rule 10b5-1 plan and in privately negotiated transactions, up to $1.0 billion of our common stock. The repurchase program does not have an expiration date. We did not purchase any of our common stock during the fourth quarter of 2020 and, as of December 31, 2020, we had remaining authority to purchase $625.0 million of common stock.

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Performance Graph

The following graph compares the performance of our common stock with that of the S&P 500 Index and the S&P 500 Health Care Equipment Index. The cumulative total return listed below assumes an initial investment of $100 at the market close on December 31, 2015 and reinvestment of dividends. Stockholder returns over the indicated period should not be considered indicative of future stockholder returns.


	Total Cumulative Return
	2016		2017		2018		2019		2020
Edwards Lifesciences	$	118.64	$	142.71	$	193.94	$	295.38	$	346.53
S&P 500	111.96		136.40		130.42		171.49		203.04
S&P 500 Health Care Equipment	106.48		139.38		162.02		209.52		246.47

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Item 6. Selected Financial Data


		As of or for the Years Ended December 31,
		2020		2019		2018		2017		2016
		(in millions, except per share data)
OPERATING RESULTS	Net sales	$	4,386.3	$	4,348.0	$	3,722.8	$	3,435.3	$	2,963.7
	Gross profit	3,305.7		3,233.6		2,783.4		2,560.0		2,166.3
	Operating income (a)	897.6		1,146.8		748.2		1,089.4		751.2
	Net income (a)	823.4		1,046.9		722.2		583.6		569.5
COMMON STOCK INFORMATION	Net income per common share (a) (c):
	Basic	$	1.32	$	1.68	$	1.15	$	0.92	$	0.89
	Diluted	1.30		1.64		1.13		0.90		0.87
	Cash dividends declared per common share	—		—		—		—		—
BALANCE SHEET DATA	Total assets	$	7,237.1	$	6,488.1	$	5,323.7	$	5,666.4	$	4,518.5
	Long-term debt (b)	595.0		594.4		593.8		438.4		822.3

(a) The above results for 2020 include a $367.9 million pre-tax charge ($305.1 million, net of tax) related to a litigation settlement. The above results for 2019 include special charges of $64.6 million ($58.7 million, net of tax), primarily the impairment of certain assets and the acquisition of early-stage intellectual property. The above results for 2018 include special charges of $109.1 million ($103.0 million, net of tax), primarily the impairment of intangible assets and a $180.0 million ($137.5 million, net of tax) charge related to a litigation settlement. The above results for 2017 include a $112.5 million ($70.3 million, net of tax) gain for a litigation payment received in 2017 and a $262.0 million tax expense related to the implementation of U.S. tax law changes. See Part II, Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations" and Note 3, Note 4, and Note 17 to the "Consolidated Financial Statements" for additional information.

(b) In October 2013, we issued $600.0 million of 2.875% fixed-rate unsecured senior notes due October 15, 2018 (the "2013 Notes"). At December 31, 2017, the 2013 Notes were classified as short-term obligations as these obligations were due within one year. These 2013 Notes were paid in October 2018. In June 2018, we issued $600.0 million of 4.3% fixed-rate unsecured senior notes due June 15, 2028, which were classified as long-term obligations as of December 31, 2020, 2019 and 2018. Amounts outstanding under our Five-Year Credit Agreement ("Credit Agreement") have been classified as long-term obligations in accordance with the terms of the Credit Agreement.

(c) The per share amounts for the prior periods presented have been retroactively adjusted to reflect the three-for-one stock split effected in the second quarter of 2020.

Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis presents the factors that had a material effect on our results of operations during the two years ended December 31, 2020. Also discussed is our financial position as of December 31, 2020. You should read this discussion in conjunction with the historical consolidated financial statements and related notes included elsewhere in this Form 10-K. For a discussion related to the results of operations for 2019 compared to 2018 and a discussion related to our consolidated cash flows for 2019 compared to 2018, refer to Part II, Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our 2019 Annual Report on Form 10–K filed with the Securities and Exchange Commission on February ~~2018,~~ 14, 2020.

Overview

We are the global leader in patient-focused medical innovations for structural heart disease, as well as critical care and surgical monitoring. Driven by a passion to help patients, we partner with the world's leading clinicians and researchers and invest in research and development to transform care for those impacted by structural heart disease or who require

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hemodynamic monitoring during surgery or in intensive care. We conduct operations worldwide and are managed in the following geographical regions: United States, Europe, Japan, and Rest of World. Our products are categorized into the following main areas: Transcatheter Aortic Valve Replacement ("TAVR"), Transcatheter Mitral and Tricuspid Therapies ("TMTT"), Surgical Structural Heart ("Surgical"), and Critical Care.

On May 7, 2020, our Board of Directors declared a three-for-one stock split of our outstanding shares of common stock effected in the form of a stock dividend, distributed on May 29, 2020 to stockholders of record on May 18, 2020. We distributed two newly issued shares of common stock to holders of record of each share of common stock to effect the stock split. All applicable share and per-share amounts in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” have been retroactively adjusted to give effect to this stock split.

Financial Highlights and COVID-19

In March 2020, the World Health Organization categorized the Coronavirus disease 2019 ("COVID-19") as a pandemic. COVID-19 continues to spread throughout the United States and other countries across the world, and the duration and severity of its effects are currently unknown. The global pandemic has adversely impacted and is likely to further adversely impact nearly all aspects of our business and markets, including our workforce and the operations of our customers, suppliers, and business partners. Our priority has been to support our clinician partners, protect the well-being of our employees, and maintain continuous access to our life-saving technologies while offering front-line in-hospital support. Our manufacturing operations have continued to respond to impacts related to COVID-19, and we have been able to supply our technologies around the world. Across the organization, we are proactively managing inventory, assessing alternative logistics options, and closely monitoring the supply of components.

TAVR and Surgical procedure volumes varied greatly since the middle of March 2020 by geography, and even by hospital, as patients and their physicians analyzed the trade-off between aortic stenosis and their concern for COVID-19. In the last few weeks of the first quarter of 2020, procedure volumes related to our TAVR and Surgical products dropped significantly. Beginning in the second quarter of 2020, procedure volumes improved. In the second quarter of 2020, we also started to progressively resume patient enrollment in all clinical trials that were voluntarily paused or slowed at the end of the first quarter of 2020. While we saw improvements to pre-COVID levels when we resumed enrollment, procedure volumes and enrollment in our clinical trials have since been negatively impacted due to a resurgence of COVID-19 in late 2020. Even though health systems adapted to the challenge, the resurgence of COVID-19 late in 2020 continued to impact these patients who need care. In Critical Care, there was greater demand in Europe and the United States for our pressure monitoring products, but demand for other Critical Care products began to decrease at the end of the first quarter of 2020 due to COVID-19, and that trend continued through the fourth quarter of 2020.

Despite the challenges associated with COVID-19, our net sales for 2020 were $4.4 billion, representing an increase of $38.3 million over 2019, driven by sales growth of our TAVR products.

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Our gross profit increase in 2020 was driven by a charge of $73.1 million recorded in 2019, primarily comprised of the write off of inventory related to strategic decisions regarding our TAVR portfolio, including the decision to discontinue our CENTERA program.

The decrease in our diluted earnings per share in 2020 was driven by an after-tax charge of $305.1 million to settle certain patent litigation related to transcatheter mitral and tricuspid repair products.

Healthcare Environment, Opportunities, and Challenges

The medical technology industry is highly competitive and continues to evolve. Our success is measured both by the development of innovative products and the value we bring to our stakeholders. We are committed to developing new technologies and providing innovative patient care, and we are committed to defending our intellectual property in support of those developments. While some evidence collection was slowed due to the COVID-19 pandemic, we and the clinical community are committed to continuing our trials and generating robust evidence. In 2020, we invested 17.3% of our net sales in research and development. The following is a summary of important developments during 2020:

•in response to the urgent COVID-19 response around the globe, we temporarily paused new enrollments in our active pivotal clinical trials of transcatheter mitral and tricuspid therapies, which began resuming in the second quarter of 2020;

•we received CE Mark for ~~our self-expanding~~ ~~CENTERA~~the Edwards PASCAL transcatheter valve repair system for the treatment of European patients with tricuspid regurgitation;

•we received Chinese regulatory approval for the Edwards SAPIEN 3 transcatheter heart valve for the treatment of severe, symptomatic aortic stenosis patients at high risk offor or unable to undergo open-heart ~~surgery. Also,~~surgery;

•we reached an agreement with Abbott to settle all outstanding patent disputes between the companies in ~~April 2018,~~ cases related to transcatheter mitral and tricuspid repair products;

•we received ~~approval to initiate a United States pivotal trial to study~~ ~~CENTERA~~ for severe, symptomatic aortic stenosis patients at intermediate risk of open-heart surgery, and commenced the trial in October 2018. In April 2018, we received United States Food and Drug Administration approval for a limited continued access protocol of our PARTNER 3 Trial for low-risk patients with severe aortic stenosis in the United States, which we began enrolling late in the third quarter of 2018. Also in April 2018, we received CE Mark for the ~~Edwards Cardioband~~ ~~tricuspid valve reconstruction system for the treatment of tricuspid regurgitation. In November 2018, we received CE Mark for the~~ ~~Edwards SAPIEN 3 Ultra System,~~ ~~which features the~~ ~~SAPIEN 3Ultra~~ ~~valve with a heightened outer skirt, and a delivery system that incorporates an on-balloon design that is compatible with the low-profile~~ ~~Axela~~ ~~sheath. In December 2018, we received~~

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FDA approval for the ~~Edwards SAPIEN 3 Ultra System~~ KONECT RESILIA aortic valved conduit, the first ready-to-implant solution for ~~severe, symptomatic~~bio-Bentall procedures, a complex surgery that involves replacement of a patient's aortic ~~stenosis patients who are determined to be at intermediate or greater risk of open-heart surgery.~~valve, aortic root, and the ascending aorta.

~~Surgical Heart Valve Therapy~~

~~2018 Compared with 2017~~

~~The decrease in net sales of SHVT products was due primarily to:~~

~~sales return reserves~~•we treated our first patient in the ~~United States related to our conversion to a consignment inventory model for surgical valves;~~

~~partially offset by:~~

~~increased sales~~RESTORE clinical trial, which will evaluate the safety and effectiveness of ~~surgical aortic tissue valves~~ the investigational HARPOON Beating Heart Mitral Valve Repair System in the United States and ~~Rest~~Canada.

We are dedicated to generating robust clinical, economic, and quality of ~~World;~~life evidence increasingly expected by patients, clinicians, and payors in the current healthcare environment, with the goal of encouraging the adoption of innovative new medical therapies that demonstrate superior outcomes.

~~foreign currency exchange rate fluctuations, which increased net sales by $9.2 million, due primarily to the strengthening of the Euro against the United States dollar.~~

~~2017 Compared with 2016~~

~~The increase in net sales of SHVT products was due primarily to:~~

~~surgical aortic tissue valves in Europe and the United States, primarily due to increased sales of the~~ ~~EDWARDS INTUITY Elite Valve System,~~ ~~and growth in our core products, partially offset by the continuing shift from our surgical aortic tissue valves to transcatheter aortic valves; and~~

~~mitral tissue valves, due to increased sales in Rest of World, primarily China.~~

~~In September 2018, we began launching our~~ ~~INSPIRIS RESILIA~~ ~~aortic valve in Japan. The~~ ~~INSPIRIS RELILIA~~ ~~valve is the first in a new class of resilient heart valves designed to be an option for active patients.~~

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Critical Care

We are a world leader in hemodynamic monitoring systems used to measure a patient's heart function and fluid status in surgical and intensive care settings. Hemodynamic monitoring plays an important role in enhancing surgical recovery. Edwards’ complete hemodynamic portfolio helps clinicians make proactive clinical decisions that can improve patient outcomes, and includes the minimally invasive FloTrac system, the noninvasive ClearSight system, and ForeSight, the noninvasive tissue oximetry system. We also support clinical needs with our well-established Swan-Ganz line of pulmonary artery catheters, arterial pressure monitoring products, and Edwards Oximetry Central Venous Catheters. In conjunction with our sensors, our HemoSphere monitoring platforms display valuable physiological information in an easy to understand and actionable manner. Amplifying our sensor and monitoring platform portfolio is the addition of our first predictive algorithm, Acumen Hypotension Prediction Index, which alerts clinicians in advance of a patient developing low blood pressure.

Sales of our core hemodynamic products represented 9%, 9%, and 10% of our net sales in 2020, 2019, and 2018, ~~Compared~~respectively.

Competition

The medical technology industry is highly competitive. We compete with ~~2017~~many companies, including divisions of companies much larger than us and smaller companies that compete in specific product lines or certain geographies.

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Furthermore, new product development and technological change characterize the areas in which we compete. Our present or future products could be rendered obsolete or uneconomical as a result of technological advances by one or more of our present or future competitors or by other therapies, including drug therapies. We must continue to develop and commercialize new products and technologies to remain competitive in the cardiovascular medical technology industry. We believe that we are competitive primarily because we deliver superior clinical outcomes that are supported by extensive data, and innovative features that enhance patient benefit, product performance, and reliability; these superior clinical outcomes are in part due to the level of customer and clinical support we provide.

The cardiovascular segment of the medical technology industry is dynamic and subject to significant change due to cost-of-care considerations, regulatory reform, industry and customer consolidation, and evolving patient needs. The ability to provide products and technologies that demonstrate value and improve clinical outcomes is becoming increasingly important for medical technology manufacturers.

We believe that we are a leading global competitor in each of our product lines. In Transcatheter Aortic Valve Replacement, our primary competitors include Medtronic PLC and Abbott Laboratories ("Abbott"). In Transcatheter Mitral and Tricuspid Therapies, our primary competitor is Abbott, and there are a considerable number of large and small companies with development efforts in these fields. In Surgical Structural Heart, our primary competitors include Medtronic PLC, Abbott, and CryoLife. In Critical Care, we compete primarily with a variety of companies in specific product lines including ICU Medical, Inc., PULSION Medical Systems SE, a subsidiary of Getinge AB, Cheetah Medical, Inc., a subsidiary of Baxter International, and LiDCO Group PLC, now part of Masimo.

Sales and Marketing

Our portfolio includes some of the most recognizable cardiovascular device product brands in treating structural heart disease today. We have a number of product lines that require sales and marketing strategies tailored to deliver high-quality, cost-effective products and technologies to customers worldwide. Because of the diverse global needs of the population that we serve, our distribution system consists of several direct sales forces as well as independent distributors. We are not dependent on any single customer and no single customer accounted for 10% or more of our net sales in 2020.

To ensure optimal outcomes for patients, we conduct educational symposia and best practices training for our physician, hospital executive, service line leadership, nursing, and clinical-based customers. We rely extensively on our sales and field clinical specialist personnel who work closely with our customers in hospitals. Field clinical specialists routinely attend procedures where Edwards' products are being used in order to provide guidance on the use of our devices, thereby enabling physicians and staff to reach expert proficiency and deliver positive patient outcomes. Our customers include physicians, nurses, and other clinical personnel, but can also include decision makers such as service line leaders, material managers, biomedical staff, hospital administrators and executives, purchasing managers, and ministries of health. Also, for certain of our product lines and where appropriate, our corporate sales team actively pursues approval of Edwards Lifesciences as a qualified supplier for hospital group purchasing organizations ("GPOs") that negotiate contracts with suppliers of medical products. Additionally, we have contracts with a number of United States and European national and regional buying groups, including healthcare systems and Integrated Delivery Networks. Where we choose to market our products is also influenced by the existence of, or potential for, adequate reimbursement to hospitals and other providers by national healthcare systems.

United States. In the United States, we sell substantially all of our products through our direct sales forces. In 2020, 57% of our net sales were derived from sales to customers in the United States.

International. In 2020, 43% of our net sales were derived internationally through our direct sales forces and independent distributors. Of the total international sales, 52% were in Europe, 25% were in Japan, and 23% were in Rest of World. We sell our products in approximately 100 countries, and our major international markets include Canada, China, France, Germany, Italy, Japan, and the United Kingdom. A majority of the sales and marketing approach outside the United States is direct sales, although it varies depending on each country's size and state of development.

Raw Materials and Manufacturing

We operate manufacturing facilities in various geographies around the world. We manufacture our Transcatheter Aortic Valve Replacement, Transcatheter Mitral and Tricuspid technologies, and Structural Surgical Heart products primarily in the United States (California and Utah), Singapore, Costa Rica, and Ireland. We manufacture our Critical Care products primarily in our facilities located in Puerto Rico and the Dominican Republic.

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We comply with all current global guidelines regarding risks for products incorporating animal tissue intended to be implanted in humans. We follow rigorous sourcing and manufacturing procedures intended to safeguard humans from potential risks associated with diseases such as bovine spongiform encephalopathy ("BSE"). We obtain bovine tissue used in our pericardial tissue valve products only from sources within the United States and Australia, where strong control measures and surveillance programs exist. In addition, bovine tissue used in our pericardial tissue valve products is from tissue types considered by global health and regulatory organizations to have shown no risk of infectibility. Our manufacturing and sterilization processes are designed to render tissue biologically safe from all known infectious agents and viruses.

Quality Assurance

Environmental, Health, and Safety

Research and Development

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products. Our investment in clinical studies also includes outcomes and cost-effectiveness data for payers, clinicians, and healthcare systems.

Proprietary Technology

Government Regulation and Other Matters

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We are also subject to additional laws and regulations that govern our business operations, products, and technologies, including:

•federal, state, and foreign anti-kickback laws and regulations, which generally prohibit payments to anyone, including physicians as an inducement to purchase or recommend a product;

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In many of the other foreign countries in which we market our products, we may be subject to regulations affecting, among other things:

•product standards and specifications;

•packaging requirements;

•labeling requirements;

•product collection and disposal requirements;

•quality system requirements;

•import restrictions;

•tariffs;

•duties; and

•tax requirements.

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Seasonality

Human Capital Management Strategy

Human Capital Management ("HCM") Governance

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Culture

We are committed to fostering an environment where all employees can grow and thrive. A diverse workforce results in a broader range of perspectives, helping drive our commitment to innovation.

Talent Development

In addition to our robust TDR process and tuition reimbursement programs, we provide a variety of leadership, technical, and professional development programs around the globe.

Headcount and Labor Representation

References to our website in this Annual Report on Form 10-K are provided for convenience only and the content on our website does not constitute a part of this Report.

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Item 1A. Risk Factors

Business and Operating Risks

We are subject to risks associated with public health threats and epidemics, including the novel coronavirus ("COVID-19").

•Significant volatility or reductions in demand for our products;

•Impacts and delays to clinical trials, our pipeline milestones, or regulatory clearances and approvals; or

The extent to which the COVID-19 global pandemic and measures taken in response thereto impact our business, results

of operations, and financial condition will depend on future developments, which are highly uncertain and are difficult to

Failure to successfully innovate and develop new and differentiated products in a timely manner and effectively market these products could have a material effect on our prospects.

Unsuccessful clinical trials or procedures relating to products could have a material adverse effect on our prospects.

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We operate in highly competitive markets, and if we do not compete effectively, our business will be harmed.

The success of many of our products depends upon certain key physicians.

If we or one of our suppliers or logistics partners encounters manufacturing, logistics, or quality problems, our business could be materially adversely affected.

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•General economic conditions that could adversely affect the financial viability of our vendors;

•Vendors' election to no longer service medical technology companies due to the burdens of applicable quality requirements and regulations;

•The limitation or ban of certain materials used in the manufacture of our products; and

•Delays or shortages due to trade or regulatory embargoes.

Our business and results of operations may be adversely affected if we are unable to recruit and retain qualified management and other personnel.

Market and Other External Risks

Because we operate globally, our business is subject to a variety of risks associated with international sales and operations.

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Taxes. We are subject to income taxes in the United States as well as other jurisdictions.

•trade protection measures, quotas, embargoes, import or export requirements, and duties, tariffs, or surcharges;

•cultural or other local factors affecting financial terms with customers;

•differing labor regulations; and

•currency exchange rate fluctuations; that is, decreases in the value of the United States dollar to the Euro or the Japanese yen, as well as other currencies, have the effect of increasing our reported revenues even when the volume of international sales has remained constant. Increases in the value of the United States dollar relative to the Euro or the Japanese yen, as well as other currencies, have the opposite effect. Significant increases or decreases in the value of the United States dollar could have a material adverse effect on our revenues, cost of sales, or results of operations.

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Third-party payors may deny reimbursement if they determine that a device used in a procedure was not used in accordance with cost-effective treatment methods as determined by such third-party payors or was used for an unapproved indication. Third-party payors may also deny reimbursement for experimental procedures and devices. We believe that many of our existing products are cost-effective, even though the one-time cost may be significant, because they are intended to improve quality of life and reduce overall health care costs over a long period of time. We cannot be certain that these third-party payors will recognize these cost savings and quality of life benefits instead of merely focusing on the lower initial costs associated with competing therapies. If our products are not considered cost-effective by third-party payors, our customers may not be reimbursed for them, resulting in lower sales of our products.

Continued consolidation in the health care industry could have an adverse effect on our sales and results of operations.

The health care industry has been consolidating, and organizations such as GPOs, independent delivery networks, and large single accounts, such as the United States Veterans Administration, continue to consolidate purchasing decisions for many of our health care provider customers. As a result, transactions with customers are larger and more complex, and tend to involve more long-term contracts. The purchasing power of these larger customers has increased, and may continue to increase, causing downward pressure on product pricing. If we are not one of the providers selected by one of these organizations, we may be precluded from making sales to its members or participants. Even if we are one of the selected providers, we may be at a disadvantage relative to other selected providers that are able to offer volume discounts based on purchases of a broader range of medical equipment and supplies. Further, we may be required to commit to pricing that has a material adverse effect on our revenues, profit margins, business, financial condition, and results of operations. We expect that market demand, governmental regulation, third-party reimbursement policies, and societal pressures will continue to drive consolidation and increase pricing pressure.

Legal, Compliance, and Regulatory Risks

•Patents issued to or licensed by us in the past or in the future may be challenged and held invalid.

•As our patents expire, we may be unsuccessful in extending their protection through patent term extensions.

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•We may not detect infringement.

•Intellectual property protection may also be unavailable or limited in some foreign countries.

Third parties may claim we are infringing their intellectual property, and we could suffer significant litigation or licensing expenses or be prevented from selling products.

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We may incur losses from product liability or other claims that could adversely affect our operating results.

Use of our products in unapproved circumstances could expose us to liabilities.

Our operations are subject to environmental, health, and safety regulations that could result in substantial costs.

We are subject to risks arising from concerns and/or regulatory actions relating to animal borne illnesses, including “mad cow disease.”

Item 1B. Unresolved Staff Comments

None.

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Item 2. Properties

The locations and uses of our major properties are as follows:


North America
Irvine, California	(1)	Corporate Headquarters, Research and Development, Regulatory and Clinical Affairs, Manufacturing, Marketing, Administration
Draper, Utah	(1),(2)	Manufacturing, Administration
Haina, Dominican Republic	(1),(2)	Manufacturing
Añasco, Puerto Rico	(2)	Manufacturing
Central America
Cartago, Costa Rica	(1),(2)	Manufacturing
Europe
Nyon, Switzerland	(1)	Administration, Marketing
Prague, Czech Republic	(2)	Administration
Shannon, Limerick, Ireland	(1),(2)	Manufacturing (under construction)
Asia
Singapore	(1),(2)	Manufacturing, Distribution, Administration
Tokyo, Japan	(2)	Administration, Marketing, Distribution
Shanghai, China	(2)	Administration, Marketing
Caesarea, Israel	(2)	Research and Development
Or Yehuda, Israel	(2)	Research and Development

(1) Owned property.

(2) Leased property.

Item 3. Legal Proceedings

For a description of our material pending legal proceedings, please see Note 18 to the "Consolidated Financial Statements" of this Annual Report on Form 10-K, which is incorporated by reference.

Item 4. Mine Safety Disclosures

Not applicable.

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PART II

Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

Market Information

Our common stock is traded on the New York Stock Exchange (the "NYSE") under the symbol "EW."

Number of Stockholders

On January 31, 2021, there were 8,876 stockholders of record of our common stock.

Dividends

We have never paid any cash dividends on our capital stock and have no current plans to pay any cash dividends. Our current policy is to retain any future earnings for use in our business.

Issuer Purchases of Equity Securities

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Performance Graph


	Total Cumulative Return
	2016		2017		2018		2019		2020
Edwards Lifesciences	$	118.64	$	142.71	$	193.94	$	295.38	$	346.53
S&P 500	111.96		136.40		130.42		171.49		203.04
S&P 500 Health Care Equipment	106.48		139.38		162.02		209.52		246.47

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Item 6. Selected Financial Data


		As of or for the Years Ended December 31,
		2020		2019		2018		2017		2016
		(in millions, except per share data)
OPERATING RESULTS	Net sales	$	4,386.3	$	4,348.0	$	3,722.8	$	3,435.3	$	2,963.7
	Gross profit	3,305.7		3,233.6		2,783.4		2,560.0		2,166.3
	Operating income (a)	897.6		1,146.8		748.2		1,089.4		751.2
	Net income (a)	823.4		1,046.9		722.2		583.6		569.5
COMMON STOCK INFORMATION	Net income per common share (a) (c):
	Basic	$	1.32	$	1.68	$	1.15	$	0.92	$	0.89
	Diluted	1.30		1.64		1.13		0.90		0.87
	Cash dividends declared per common share	—		—		—		—		—
BALANCE SHEET DATA	Total assets	$	7,237.1	$	6,488.1	$	5,323.7	$	5,666.4	$	4,518.5
	Long-term debt (b)	595.0		594.4		593.8		438.4		822.3

(c) The per share amounts for the prior periods presented have been retroactively adjusted to reflect the three-for-one stock split effected in the second quarter of 2020.

Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations

Overview

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Financial Highlights and COVID-19

Despite the challenges associated with COVID-19, our net sales for 2020 were $4.4 billion, representing an increase of $38.3 million over 2019, driven by sales growth of our TAVR products.

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Healthcare Environment, Opportunities, and Challenges

•we received CE Mark for the Edwards PASCAL transcatheter valve repair system for the treatment of European patients with tricuspid regurgitation;

•we received Chinese regulatory approval for the Edwards SAPIEN 3 transcatheter heart valve for the treatment of severe, symptomatic aortic stenosis patients at high risk for or unable to undergo open-heart surgery;

•we reached an agreement with Abbott to settle all outstanding patent disputes between the companies in cases related to transcatheter mitral and tricuspid repair products;

•we received FDA approval for the KONECT RESILIA aortic valved conduit, the first ready-to-implant solution for bio-Bentall procedures, a complex surgery that involves replacement of a patient's aortic valve, aortic root, and the ascending aorta.

•we treated our first patient in the RESTORE clinical trial, which will evaluate the safety and effectiveness of the investigational HARPOON Beating Heart Mitral Valve Repair System in the United States and Canada.

We are dedicated to generating robust clinical, economic, and quality of life evidence increasingly expected by patients, clinicians, and payors in the current healthcare environment, with the goal of encouraging the adoption of innovative new medical therapies that demonstrate superior outcomes.

Results of Operations

Net Sales by Major Regions

(dollars in millions)


	Years Ended December 31,				Change
	2020		2019		$		%
United States	$	2,516.8	$	2,532.7	$	(15.9)	(0.6)	%
Europe	973.6		941.2		32.4		3.4	%
Japan	460.1		444.7		15.4		3.5	%
Rest of World	435.8		429.4		6.4		1.5	%
International	1,869.5		1,815.3		54.2		3.0	%
Total net sales	$	4,386.3	$	4,348.0	$	38.3	0.9	%

International net sales include the impact of foreign currency exchange rate fluctuations. The impact of foreign currency exchange rate fluctuations on net sales is not necessarily indicative of the impact on net income due to the corresponding effect of foreign currency exchange rate fluctuations on international manufacturing and operating costs, and our hedging activities. For more information, see "Quantitative and Qualitative Disclosures About Market Risk."

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Net Sales by Product Group

(dollars in millions)


	Years Ended December 31,				Change
	2020		2019		$		%
Transcatheter Aortic Valve Replacement	$	2,857.3	$	2,737.9	$	119.4	4.4	%
Transcatheter Mitral and Tricuspid Therapies	41.8		28.2		13.6		48.5	%
Surgical Heart Valve Therapy	761.8		841.7		(79.9)		(9.5)	%
Critical Care	725.4		740.2		(14.8)		(2.0)	%
Total net sales	$	4,386.3	$	4,348.0	$	38.3	0.9	%

Transcatheter Aortic Valve Replacement

The increase in net sales of TAVR products was due primarily to higher sales of the Edwards SAPIEN 3 Ultra System following its regulatory approval in the United States (December 2018) and in Europe (November 2018). The adoption of the Edwards SAPIEN 3 Ultra System continued to be very positive in 2020. However, our sales in 2020 were negatively impacted by the COVID-19 pandemic, and these challenges have continued in early 2021. Our procedure volumes dropped significantly beginning in March 2020 due to COVID-19, and began to steadily improve beginning in May 2020. In the first quarter of 2020, to ensure the safety of our employees and clinician partners from the threat of COVID-19, we decided to pause proctoring at centers that were not already trained on the Edwards SAPIEN 3 Ultra System. In the second quarter of 2020, we resumed proctoring.

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Transcatheter Mitral and Tricuspid Therapies

The increase in net sales of TMTT products was due primarily to sales in Europe of theEdwards PASCAL transcatheter valve repair system, which received CE Mark in February 2019. Our sales in 2020 were negatively impacted by the COVID-19 pandemic. Our procedure volumes for PASCAL dropped significantly in March 2020 due to COVID-19, and began to improve beginning in May 2020.

At the end of March 2020, we temporarily paused new enrollments in our active pivotal clinical trials of transcatheter

mitral and tricuspid therapies in response to the COVID-19 response around the globe. In the second quarter of 2020, we began

resuming enrollments. However, due to a resurgence of COVID-19 in late 2020, we are experiencing a negative impact to clinical trial enrollment. In May 2020, we received CE Mark for the PASCAL Ace implant system for mitral and tricuspid repair.

Surgical Structural Heart

The decrease in net sales of Surgical products was due primarily to decreased sales of aortic tissue valves, primarily in the United States and Europe, due to the impact of COVID-19. The ongoing adoption of TAVR also contributed to the decrease in United States surgical aortic valve sales. These decreases were partially offset by increased sales of the INSPIRIS RESILIA

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aortic valve and the KONECT aortic valved conduit, primarily in the United States. Increased and improved management of intensive care unit capacity, as well as prioritization of heart surgery in many hospitals, contributed to rebounding procedure volumes late in the second quarter of 2020. In the fourth quarter of 2020, hospitals experienced an influx of COVID-19 patients, limiting surgical valve procedures.

In Europe, our HARPOON Beating Heart Mitral Valve Repair System became available commercially at the end of 2019, and the first commercial case was successfully completed in Europe in the second quarter of 2020. In addition, we received FDA approval in April 2020 to begin our U.S. pivotal investigational device exemption study. HARPOON offers the potential for earlier treatment of degenerative mitral valve disease, with faster recovery and more consistent outcomes for surgical patients.

Critical Care

The decrease in net sales of Critical Care products was driven by ~~our~~ ~~HemoSphere~~ ~~advanced monitoring platform, core hemodynamic products, and~~a decline in sales of our enhanced surgical recovery products, primarily in the United ~~States. In addition, foreign currency exchange rate fluctuations increased net sales by $5.1 million,~~States, as many surgical procedures were delayed due ~~primarily~~ to ~~the strengthening~~COVID-19 beginning in March 2020. We also experienced a decline in orders of ~~the Euro against the United States dollar.~~

~~2017 Compared with 2016~~

~~The increase in net sales of Critical Care products was due primarily to enhanced surgical recovery products and core hemodynamic products, primarily~~our HemoSphere advanced monitoring platform in the United States as hospitals limited their capital spending due to COVID-19.

These decreases in net sales were partially offset by increased demand for our pressure monitoring products, primarily in Europe and ~~Rest~~the United States, as COVID-19 hospitalizations increased. In addition, our sales in 2020 and 2019 included $22.6 million and $16.8 million, respectively, related to CAS Medical Systems, Inc. ("CASMED"), which we acquired on April 18, 2019. CASMED is a medical technology company dedicated to non-invasive monitoring of ~~World.~~

~~During the first quarter of 2018, we received regulatory approval of our~~ ~~Acumen Hypotension Prediction Index~~tissue oxygenation in the United States. This technology leverages predictive analytics to alert clinicians of hypotension, or low blood pressure, before it occurs in their surgical patients. In the fourth quarter of 2018, we received FDA approval of our ~~Acumen Hypotension Prediction Index~~ ~~for use on the~~ ~~HemoSphere~~ ~~platform.~~brain.

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Gross Profit

~~The increase in~~Our gross profit was higher as a percentage of net sales in ~~2018~~2020 compared to ~~2017~~2019. In 2019, our gross profit was ~~driven by:~~

reduced by $73.1 million due to the decision to discontinue our CENTERA program, resulting in a ~~0.7~~1.7 percentage point increase in ~~the United States and~~2020 compared to 2019. This increase was partially offset by a) a ~~0.2~~1.0 percentage point ~~increase~~decrease in ~~international markets due to an improved product mix, driven by THVT products;~~

~~partially offset by:~~

~~the impact of multiple investments in our operations, including an increase in costs to improve our manufacturing processes; and~~

~~a 0.2 percentage point decrease~~2020 due to the impact of foreign currency exchange rate fluctuations, ~~including the settlement~~net of ~~foreign currency~~ hedging, ~~contracts.~~

~~The increase in gross profit as a percentage of net sales in 2017 compared to 2016 was driven by:~~

~~a 1.3 percentage point increase in the United States~~ and ~~a 0.3 percentage point increase in international markets due to an improved product mix, driven by THVT products;~~

~~partially offset by:~~

~~expenses~~b) incremental costs associated with ~~flooding from Hurricane Maria in Puerto Rico and the planned closure of our manufacturing plant in Switzerland.~~COVID-19.

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Selling, General, and Administrative ("SG&A") Expenses

The increase in SG&A expenses in 2018 compared to 2017 was due primarily to (1) higher sales and marketing expenses in the United States, Europe and Rest of World, mainly to support the THVT program, (2) higher personnel-related costs, and (3) the impact of foreign currency, which increased expenses by $10.6 million primarily due to the strengthening of the Euro against the United States dollar. The increase in SG&A expenses as a percentage of net sales in 2018 was due primarily to the previously mentioned expense increases.

The increase in SG&A expenses in 2017 compared to 2016 was due primarily to higher sales and marketing expenses in the United States and Europe, mainly to support the THVT program, and higher personnel-related costs. The decrease in SG&A expenses ~~as a percentage of net sales~~ in ~~2017~~2020 compared to 2019 was due primarily to ~~leverage from our higher THVT~~a) decreased sales, marketing and travel-related expense associated with COVID-19 and b) lower performance-based compensation, partially offset by increased sales and marketing expenses related to transcatheter structural heart field personnel, primarily in the United ~~States and Japan.~~States.

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Research and Development ("R&D") Expenses

The increase in R&D expenses in ~~2018~~2020 compared to ~~2017~~2019 was due primarily to a) investments in our transcatheter ~~structural heart~~mitral and tricuspid therapies and our aortic valve replacement programs ~~including~~and b) costs associated with discontinuing our SUTRAFIX program. These increases were partially offset by a) decreased spending on transcatheter aortic valve clinical ~~trials.~~trials and b) decreased performance-based compensation.

~~The increase in R&D expenses in 2017 compared to 2016 was due primarily to investments in our transcatheter structural heart programs, including development expenses associated with the~~ ~~Cardioband~~ ~~Reconstruction System.~~

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Intellectual Property Litigation Expenses, ~~(Income),~~ net

We incurred intellectual property litigation expenses, including settlements and external legal costs, of ~~$214.0 million, $39.2~~$405.4 million and ~~$32.6~~$33.4 million during ~~2018, 2017~~2020 and ~~2016,~~2019, respectively. ~~In January 2019,~~On July 12, 2020, we reached an agreement with ~~Boston Scientific~~Abbott Laboratories and its direct and indirect subsidiaries ("Abbott") to, among other things, settle all outstanding patent disputes between the companies (the “Settlement Agreement”) in cases related to transcatheter mitral and tricuspid repair products. See Note 18 to the "Consolidated Financial Statements" for additional information. The Settlement Agreement resulted in us recording an estimated $367.9 million pre-tax charge and related liability in June 2020 related to past damages. In addition, we will incur royalty expenses through May 2024 totaling an estimated $100 million. We made a one-time $100.0 million payment to ~~Boston Scientific of $180.0 million, which was included as an expense~~Abbott in ~~2018. The settlement covers alleged past damages~~July 2020, and ~~no further royalties~~ will ~~be owed by either party. In November 2017, we recorded a $112.5 million litigation gain related to the theft of trade secrets.~~make quarterly payments in future years.

Change in Fair Value of Contingent Consideration Liabilities, net

The change in fair value of contingent consideration liabilities resulted in expense of $13.6 million in 2020 and income of ~~$5.7~~$6.1 million ~~income~~in 2019. The expense in 2020 was primarily driven by the accretion of ~~$9.9 million,~~interest due to the passage of time and ~~expense~~adjustments to discount rates, partially offset by changes in the projected probability and timing of ~~$1.1 million for~~milestone achievements, and the ~~years ended December 31, 2018, 2017, and 2016, respectively.~~projected timing of cash inflows. The income in ~~2018 and 2017~~2019 was due primarily to longer product development timelines, which reduced the probability of milestone ~~achievements. These gains were net of expenses associated with changes in~~achievements, partially offset by the fair value of the liabilities associated with the December 2017 acquisition of Harpoon Medical Inc., the achievement by Valtech Cardio Ltd. of a regulatory milestone, adjustments to discount rates, and accretion of interest due to the passage of ~~time. For further information, see Note 10 to the "Consolidated Financial Statements~~."time and discount rate adjustments.

Special Charges (Gain), net

For information on special charges and gains, see Note 4 to the "Consolidated Financial Statements."

Interest Expense

Interest expense was ~~$29.9 million, $23.2~~$15.8 million and ~~$19.2~~$20.7 million in ~~2018, 2017,~~2020 and ~~2016,~~2019, respectively. The ~~increase~~decrease in interest expense ~~for 2018 as compared to 2017~~ resulted primarily from higher ~~average~~capitalized interest ~~rates. The increase in interest expense for 2017 as compared~~due to ~~2016 resulted primarily from a higher average debt balance, partially offset by lower average interest rates.~~facilities construction.

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Interest Income

Interest income was ~~$32.0 million, $20.3~~$23.4 million and ~~$10.8~~$32.2 million in ~~2018, 2017,~~2020 and ~~2016,~~2019, respectively. The ~~increase~~decrease in interest income ~~for 2018 and 2017~~ resulted primarily from lower average interest rates, partially offset by a higher average ~~interest rates.~~investment balance.

Other ~~(Income) Expense,~~Income, net

(in millions)


	Years Ended December 31,
	2020		2019
Foreign exchange gains, net	$	(12.3)	$	(5.9)
Gain on investments	(0.6)		(0.5)
Non-service cost components of net periodic pension benefit cost	0.4		0.2

Other	1.0		(2.0)
Total other income, net	$	(11.5)	$	(8.2)

Years Ended December 31,
2018 2017 2016
Foreign exchange (gains) losses, net $ (6.7 ) $ 5.4
$ 0.5
Loss (gain) on investments 1.7
2.7
(0.2 )
Non-service cost components of net periodic pension benefit (credit) cost (0.1 ) (6.1 ) —
Charitable foundation contribution —
—
5.0
Other 1.1
(0.6 ) (0.4 )
Total other (income) expense, net $ (4.0 ) $ 1.4
$ 4.9

The net foreign exchange ~~(gains) losses~~gains relate ~~primarily~~ to the foreign currency fluctuations in our global trade and intercompany receivable and payable balances, offset by the gains and losses on derivative instruments intended as an economic hedge of those exposures.

The ~~loss (gain)~~gain on investments ~~primarily~~ represents our net share of gains and losses in investments accounted for under the equity method, and realized gains and losses on ~~our available-for-sale money market and cost method investments.~~investments in equity securities.

The non-service cost components of net periodic pension benefit ~~(credit)~~ cost includes the costs of our defined benefit plans that are not attributed to services rendered by eligible employees during the year, such as interest costs, expected return on plan assets, and amortization of actuarial gains or losses. ~~Certain costs associated with realignments, including settlements~~

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~~and curtailments, have been included as a component of "Special (Gains) Charges, net." For further information, see Notes 4 and 12 to the "Consolidated Financial Statements.~~"

In March 2016, we contributed $5.0 million to the Edwards Lifesciences Foundation, a related-party not-for-profit organization intended to provide philanthropic support to health- and community-focused charitable organizations. The

~~contribution was irrevocable and was recorded as an expense at the time of payment.~~

Provision for Income Taxes


	Years Ended December 31,				Change
	2020		2019		$	%
Provision for income taxes	93.3		119.6		(26.3)	(22.0)	%
Effective tax rate	10.2	%	10.3	%

Our effective income tax ~~rates for 2018, 2017,~~rate in 2020 and ~~2016 were impacted as follows (in millions):~~

Years Ended December 31,
2018 2017 2016
Income tax expense at U.S. federal statutory rate $ 159.9
$ 362.2
$ 258.3
Foreign income taxed at different rates (16.2 ) (106.9 ) (88.6 )
State and local taxes, net of federal tax benefit 6.8
11.5
9.7
Tax credits, federal and state (36.7 ) (25.8 ) (21.3 )
(Release) build of reserve for prior years' uncertain tax positions (35.5 ) (7.7 ) 4.6
U.S. tax on foreign earnings, net of credits (12.2 ) (30.3 ) 5.1
Foreign-derived intangible income deduction (6.6 ) —
—
Deductible employee share-based compensation (41.8 ) (48.2 ) —
Nondeductible employee share-based compensation 2.8
3.9
3.6
Impacts related to 2017 U.S. Tax Reform 15.8
294.1
—
Other 2.9
(1.5 ) (3.0 )
Income tax provision $ 39.2
$ 451.3
$ 168.4

~~On December 22, 2017, Public Law 115-97, commonly referred to as the Tax Cuts~~2019 was 10.2% and ~~Jobs Act (the "2017 Act")~~10.3%, was signed into law. The 2017 Act (1) reduced the U.S. federal corporate tax rate from 35 percent to 21 percent for tax years beginning after December 31, 2017, (2) required companies to pay a one-time mandatory deemed repatriation tax on the cumulative earnings of certain foreign subsidiaries that were previously tax deferred, and (3) created new taxes on certain foreign earnings in future years.

On December 22, 2017, Staff Accounting Bulletin No. 118 ("SAB 118") was issued to address the application of generally accepted accounting principles in the United States of America ("GAAP") in situations when a registrant does not have the necessary information available, prepared, or analyzed (including computations) in reasonable detail to complete the accounting for certain income tax effects of the 2017 Act. In accordance with SAB 118, as of December 31, 2017, we estimated provisional amounts for (1) $3.3 million of tax benefits in connection with the remeasurement of certain tax assets and liabilities, (2) $297.4 million of net tax expense recorded in connection with the one-time mandatory deemed repatriation tax on cumulative earnings of certain foreign subsidiaries, and (3) $32.3 million of tax benefits associated with a tax reform related restructuring. In accordance with SAB 118, during 2018 we adjusted the provisional amounts as described below.

As a result of Internal Revenue Service ("IRS") guidance issued subsequent to the 2017 Act, the $32.3 million of tax benefits associated with the tax reform related restructuring mentioned above were reversed. In addition, during 2018, we recorded a $12.8 million reduction in the repatriation tax and an additional benefit of $3.7 million in connection with the remeasurement of deferred tax assets. In accordance with SAB 118, we completed our accounting for the 2017 Act during the fourth quarter of 2018.

respectively. Our effective tax rate for ~~2018 is lower than our effective~~2020 decreased slightly in comparison to 2019 primarily due to the tax ~~rate for 2017 primarily because of the~~ benefit from the ~~reduction in the U.S. federal corporate rate from 35% to 21%~~Settlement Agreement with Abbott (see Notes 3 and ~~tax benefits related~~18 to the ~~settlement of tax audits. In addition, the effective rate for 2017 included the one-time impact of the mandatory taxation of previously unrepatriated earnings,~~"Consolidated Financial Statements"), partially offset by the ~~revaluation of tax-related balance sheet items due to~~increase in the U.S. tax on global intangible low-taxed income and the decrease in the tax benefit from employee share-based compensation.

In 2020, the difference between our 10.2% effective tax rate ~~changes required by~~and the ~~2017 Act.~~Federal statutory rate of 21% was primarily due to a) foreign earnings taxed at lower rates, b) Federal and California research and development credits, and c) the tax benefit from employee share-based compensation.

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~~Uncertain Tax Positions~~

As of December 31, ~~2018~~2020, we have $145.1 million of California research expenditure tax credits that we expect to use in future periods. The credits may be carried forward indefinitely. Based upon anticipated future taxable income, we expect that it is more likely than not that all California research expenditure tax credits will be utilized, although the utilization of the full benefit is expected to occur over a number of years and ~~2017,~~into the distant future.

As of December 31, 2020, gross uncertain tax positions were ~~$150.7 million and $225.6 million, respectively.~~$281.8 million. We estimate that these liabilities would be reduced by ~~$42.7~~$95.1 million ~~and $94.0 million, respectively,~~ from offsetting tax benefits associated with the correlative effects of potential transfer pricing adjustments, state income taxes, and timing adjustments. The net ~~amounts~~amount of ~~$108.0~~$186.7 million, ~~and $131.6 million, respectively,~~ if not required, would favorably affect our effective tax rate.

~~A reconciliation of the beginning and ending amount of uncertain tax positions, excluding interest, penalties, and foreign exchange, is as follows (in millions):~~

Years Ended December 31,
2018 2017 2016
Uncertain gross tax positions, January 1 $ 225.6
$ 245.5
$ 216.1
Current year tax positions 37.8
77.7
29.0
Increase in prior year tax positions 13.9
63.7
2.7
Decrease in prior year tax positions (78.8 ) (65.0 ) (0.9 )
Settlements (46.5 ) (95.3 ) (0.3 )
Lapse of statutes of limitations (1.3 ) (1.0 ) (1.1 )
Uncertain gross tax positions, December 31 $ 150.7
$ 225.6
$ 245.5

The table above summarizes the gross amounts of uncertain tax positions without regard to reduction in tax liabilities or additions to deferred tax assets and liabilities if such uncertain tax positions were settled.

We recognize interest and penalties, if any, related to uncertain tax positions in the provision for income taxes. As of December 31, 2018, we had accrued $4.6 million (net of $1.9 million tax benefit) of interest related to uncertain tax positions, and as of December 31, 2017, we had accrued $7.4 million (net of $2.9 million tax benefit) of interest related to uncertain tax positions. During 2018, 2017, and 2016, we recognized interest (benefit) expense, net of tax benefit, of $(2.8) million, $(7.3) million, and $4.0 million, respectively, in “~~Provision for Income Taxes” on the consolidated statements of operations.~~

We strive to resolve open matters with each tax authority at the examination level and could reach agreement with a tax authority at any time. While we have accrued for matters we believe are more likely than not to require settlement, the final outcome with a tax authority may result in a tax liability that is more or less than that reflected in the consolidated financial statements. Furthermore, we may later decide to challenge any assessments, if made, and may exercise our right to appeal. The

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uncertain tax positions are reviewed quarterly and adjusted as events occur that affect potential liabilities for additional taxes, such as lapsing of applicable statutes of limitations, proposed assessments by tax authorities, negotiations between tax authorities, identification of new issues, and issuance of new legislation, regulations, or case law. We believe that adequate amounts of tax and related penalty and interest have been provided in income tax expense for any adjustments that may result from our uncertain tax positions.

At December 31, ~~2018,~~2020, all material state, local, and foreign income tax matters have been concluded for years through ~~2008.~~ 2015. While not material, we continue to address matters in Wisconsin and India for years from 2010.

During 2018, we executed an Advance Pricing Agreement (“APA”) between the United States and Switzerland governments for tax years 2009 through 2020 covering various, but not all, transfer pricing matters.The unagreed transfer pricing matters, namely Surgical Structural Heart and Transcatheter Aortic Valve Replacement intercompany royalty transactions, then reverted to Internal Revenue Service ("IRS") Examination for further consideration as part of the respective years' regular tax audit.In addition, we signed agreements during 2018 with the IRS to settle open tax years 2009 through 2014, including all transfer pricing matters for those years and the tax treatment of a portion of a litigation settlement payment received in 2014.

The IRS began its examination of the 2015 and 2016 tax years during the fourth quarter of ~~2018.~~

~~During~~ 2018 ~~we executed an Advance Pricing Agreement ("APA") between~~and later added the ~~United States and Switzerland governments~~2017 tax year to this audit cycle during the first quarter of 2019. The IRS audit field work for the 2015 through 2017 tax years ~~2009 through~~was substantially completed during the fourth quarter of 2020, ~~covering various~~except for transfer pricing ~~matters and we have updated our transfer pricing policies accordingly. Certain~~matters.

As a result, certain intercompany transactions covering tax years 2015 through ~~2018~~2020 that were not resolved under the APA program remain subject to IRS examination, and those transactions and related tax positions remain ~~uncertain.~~ uncertain as of December 31, 2020.The IRS has signaled that it may be preparing proposed audit adjustments related to these intercompany transactions for the 2015 through 2017 tax years which, if issued, could be provided to us during 2021. We have considered this information in our evaluation of our reserves for uncertain tax positions.

These unresolved transfer pricing matters, net of any correlative repatriation tax adjustment, may be significant to our consolidated financial statements.Based on the information currently available and numerous possible outcomes, we cannot reasonably estimate what, if any, changes to our existing uncertain tax positions may occur in the next 12 months and, therefore, have continued to record the gross uncertain tax positions as a long-term liability.

We intend to file to renew the APA between the United States and Switzerland for the years 2021 and forward. In addition, we executed other APAs as follows: during 2017, an APA between the United States and Japan covering tax years 2015 through ~~2019,~~2019; and during 2018, APAs between Japan and Singapore ~~as well as~~and between Switzerland and Japan covering tax years 2015 through 2019. We have filed to renew these APAs related to Japan for the years 2020 and forward. The execution of some or all of these APAs depends on a number of variables outside of our control.

Based upon the information currently available and numerous possible outcomes, we cannot reasonably estimate what, if any, changes in our existing uncertain tax positions may occur in the next 12 months and thus have recorded the gross uncertain tax positions as a long-term liability.

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We have received tax incentives in certain non-U.S. tax jurisdictions, the primary benefit offor which will expire in ~~2024.~~2029. The tax reductions as compared to the local statutory rates were ~~$144.9~~$189.2 million ($~~0.70~~0.30 per diluted share)~~, $81.0~~ and $157.6 million ($~~0.39 per diluted share), and $78.7 million ($0.32~~0.25 per diluted share) for the years ended December 31, ~~2018, 2017,~~2020 and ~~2016,~~2019, respectively.

Our Dominican Republic branch receives tax incentives, including an exemption from paying Dominican Republic income taxes, under a Free Trade Zone law. Effective November 9, 2012, the Dominican Republic enacted a law which, among other tax provisions, would apply a 10% withholding tax on dividends or branch remittances from a Free Trade Zone company to its shareholder(s). The Dominican Republic withholding tax provision was, however, contingent upon certain future events. On October 5, 2016, the Dominican Republic Ministry of Finance published a notification confirming that the 10% withholding tax on branch remittances would be due and payable by Dominican Republic Free Trade Zone companies for dividends and remittances paid on or after October 5, 2016. The impact of this withholding tax has been reflected in our income tax provision.

Liquidity and Capital Resources

Our sources of cash liquidity include cash and cash equivalents, short-term investments, amounts available under credit facilities, and cash from operations. We believe that these sources are sufficient to fund the current requirements of working capital, capital expenditures, and other financial commitments for the next twelve months from the financial statement issuance date. However, we periodically consider various financing alternatives and may, from time to time, seek to take advantage of favorable interest rate environments or other market conditions.

The Tax Cuts and Jobs Act of 2017 ~~Act,~~(the "2017 Act"), which was signed into law on December 22, 2017, included extensive changes to the international tax regime. The 2017 Act required a deemed repatriation of post-1986 undistributed foreign earnings and profits. The ~~deemed repatriation resulted in a $270.5 million tax obligation as of December 31, 2018. The~~ one-time transition tax liability, as adjusted, is payable in ~~seven~~five remaining annual installments, as outlined in the contractual obligations table below. As of December 31, 2020, we had a remaining tax obligation of $238.7 million related to the deemed repatriation. See Note 1617 to the "Consolidated Financial Statements" for additional information about the one-time transition tax.

As of December 31, ~~2018,~~2020, cash and cash equivalents and short-term investments held in the United States and outside the United States were ~~$659.3~~$618.8 million and ~~$297.2~~$783.8 million, respectively. During ~~2018,~~2020, we repatriated cash ~~and short-term investments~~ of ~~$1.4 billion.~~$600.0 million. We

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assert that $1.1 billion of our foreign earnings continue to be permanently reinvested and our intent is to repatriate ~~$0.6 billion~~$599.8 million of our foreign earnings as of December 31, ~~2018.~~2020.

On July 12, 2020, we reached the Settlement Agreement with Abbott to settle all outstanding patent disputes between the companies in cases related to transcatheter mitral and tricuspid repair products. The Settlement Agreement resulted in us recording an estimated $367.9 million pretax charge in June 2020 related to past damages. In addition, we will incur royalty expenses through May 2024 totaling an estimated $100 million. We made a one-time $100.0 million payment to Abbott in July 2020, and will make quarterly payments in future years. For further information, see Notes 3 and 18 to the "Consolidated Financial Statements."

On April 18, 2019, we acquired CASMED for an aggregate cash purchase price of $2.45 per share of common stock, or $100.8 million. For more information, see Note 8 to the "Consolidated Financial Statements."

Certain of our business acquisitions involve contingent consideration arrangements. Payment of additional consideration in the future may be required, contingent upon the acquired company reaching certain performance milestones, such as attaining specified revenue levels or obtaining regulatory approvals. For further information, see Note 78 to the "Consolidated Financial Statements."

~~In April 2018, we entered into~~We have a ~~new~~ Five-Year Credit Agreement ("the Credit Agreement") which matures on April 28, ~~2023, and the previous Five-Year Credit Agreement was terminated.~~2023. The Credit Agreement provides up to an aggregate ~~of$750.0~~of $750.0 million in borrowings in multiple currencies. Subject to certain terms and conditions, we may increase the amount available under the Credit Agreement by up to an additional $250.0 million in the aggregate. As of December 31, ~~2018,~~2020, there were no borrowings outstanding under the Credit Agreement. The Credit Agreement is unsecured and contains various financial and other covenants, including a maximum leverage ratio, as defined in the Credit Agreement. The Company was in compliance with all covenants at December 31, ~~2018.~~2020.

~~In October 2013, we issued $600.0 million of 2.875% fixed-rate unsecured senior notes (the "2013 Notes") due October 15, 2018. The 2013 Notes were repaid in October 2018.~~ In June 2018, we issued $600.0 million of 4.3% fixed-rate unsecured senior notes (the "2018 Notes") due June 15, 2028. ~~A portion of the proceeds from~~We may redeem the 2018 Notes, ~~were used~~in whole or in part, at any time and from time to ~~repay amounts outstanding under our previous Five-Year Credit Agreement, and the remainder was used to partially repay the maturing 2013 Notes and for general corporate purposes.~~time at specified redemption prices. As of December 31, 2020, we have not elected to redeem any of the 2018 Notes. As of December 31, 2020, the total carrying value of our 2018 Notes was ~~$593.8~~$595.0 million. For further information on our debt, see Note 910 to the "Consolidated Financial Statements."

~~We reached an agreement with Boston Scientific to settle all outstanding patent disputes for a one-time payment to Boston Scientific of $180.0 million, which was paid in January 2019.~~

From time to time, we repurchase shares of our common stock under share repurchase programs authorized by the Board of Directors. We consider several factors in determining when to execute share repurchases, including, among other things, expected dilution from stock plans, cash capacity, and the market price of our common stock. During ~~2018,~~2020, under the Board

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authorized repurchase programs, we repurchased a total of ~~5.4~~3.0 million shares at an aggregate cost of ~~$784.3~~$614.7 million, and as of December 31, ~~2018,~~2020, we had remaining authority to purchase ~~$0.5 billion~~$625.0 million of our common stock. For further information, see Note 1314 to the "Consolidated Financial Statements." In February 2021, we entered into an accelerated share repurchase agreement to repurchase $250.0 million of our common stock. For further information, see Note 22 to the "Consolidated Financial Statements."

Consolidated Cash Flows - For the twelve months ended December 31, ~~2018, 2017,~~2020 and ~~2016~~2019

Net cash flows provided by operating activities of ~~$926.8 million~~$1.1 billion for ~~2018~~2020 decreased ~~$73.9~~$128.6 million from ~~2017~~2019 due primarily to ~~higher tax payments~~lower operating profits in 2020 and a ~~higher bonus payout in 2018 associated with 2017 performance,~~payment of $100.0 million for a litigation settlement, partially offset by ~~improved operating performance~~a payment of $180.0 million in ~~2018 and higher working capital needs in 2017.~~2019 for a litigation settlement.

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Net cash flows provided by operating activities of $1.0 billion for 2017 increased $296.3 million from 2016 due primarily to improved operating performance and receipt of a litigation payment, partially offset by higher working capital needs associated with growthused in ~~the business and the timing of tax payments.~~

~~Net cash provided by~~ investing activities of ~~$76.7~~$531.1 million in ~~2018~~2020 consisted primarily of ~~net proceeds from investments of $323.2 million, partially offset by~~ capital expenditures of ~~$238.7~~$407.0 million and net purchases of investments of $87.6 million.

Net cash used in investing activities of ~~$647.2~~$595.8 million in ~~2017~~2019 consisted primarily of a) capital expenditures of $254.4 million, b) net purchases of investments of ~~$235.7~~$174.9 million, ~~capital expenditures of $168.1 million,~~c) a ~~$100.0~~$100.2 million net cash payment associated with the acquisition of ~~Harpoon Medical, Inc.,~~CASMED, d) a $35.0 million payment for an option to acquire a company, and ~~an $81.9~~e) a $24.0 million ~~net cash~~ payment to acquire certain early-stage transcatheter intellectual property and associated ~~with the acquisition~~clinical and regulatory experience.

We currently anticipate making capital expenditures of ~~Valtech Cardio Ltd.~~approximately $350 million in 2021 as we continue to invest in our operations.

Net cash used in ~~investing~~financing activities of ~~$211.7~~$486.9 million in ~~2016 consisted primarily of capital expenditures of $176.1 million and $41.3 million for the acquisition of intangible assets.~~

~~Net cash used in~~ ~~financing activities~~ ~~of $1.1 billion in 2018~~2020 consisted primarily of purchases of treasury stock of ~~$795.5 million and net debt repayments of $437.3~~$625.4 million, partially offset by proceeds from stock plans of ~~$147.0~~$140.5 million.

Net cash used in financing activities of ~~$473.2~~$115.6 million in ~~2017~~2019 consisted primarily of purchases of treasury stock of ~~$763.3~~$263.3 million, partially offset by ~~(1) net proceeds from the issuance of debt of $176.3 million and (2)~~ proceeds from stock plans of ~~$113.8~~$160.5 million.

Net cash used in financing activities of $268.5 million in 2016 consisted primarily of purchases of treasury stock of $662.3 million, partially offset by (1) net proceeds from the issuance of debt of $222.1 million, (2) proceeds from stock plans of $103.3 million, and (3) the excess tax benefit from stock plans of $64.3 million.Contractual Obligations

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A summary of all of our contractual obligations and commercial commitments as of December 31, ~~2018~~2020 is as follows (in millions):


	Payments Due by Period
Contractual Obligations	Total		Year 1		Years 2-3		Years 4-5		After 5 Years
Debt	$	600.0	$	—	$	—	$	—	$	600.0
Operating leases	108.1		30.0		35.1		14.9		28.1
Interest on debt	148.9		20.5		40.5		39.4		48.5
Transition tax on unremitted foreign earnings and profits (a)	238.7		25.1		72.2		141.4		—
Litigation settlement obligation (minimum payments)	250.0		50.0		100.0		100.0		—
Pension obligations (b)	2.5		2.5		—		—		—
Purchase and other commitments (c)	26.7		13.7		9.7		1.5		1.8
Total contractual cash obligations (d), (e)	$	1,374.9	$	141.8	$	257.5	$	297.2	$	678.4

(a) As of December 31, 2020, we had recorded $238.7 million of income tax liabilities related to the one-time transition tax that resulted from the enactment of the 2017 Act. The transition tax is due in eight annual installments, with the first annual installment paid in 2018, the second annual installment paid in 2019 and the third annual installment paid in 2020. The remaining installment amounts will be equal to 8% of the total liability, payable in fiscal years 2021 through 2022, 15% in fiscal year 2023, 20% in fiscal year 2024, and 25% in fiscal year 2025. See Note 17 to the "Consolidated Financial Statements" for additional information about the one-time transition tax.

(b) The amount included in "Less Than 1 Year" reflects anticipated contributions to our various pension plans. Anticipated contributions beyond one year are not determinable. The total accrued benefit liability for our pension plans recognized as of December 31, 2020 was $52.9 million. This amount is impacted by, among other items, pension expense funding levels, changes in plan demographics and assumptions, and investment returns on plan assets. Therefore, we are unable to make a reasonably reliable estimate of the amount and period in which the liability might be paid, and did not include this amount in the contractual obligations table. See Note 13 to the "Consolidated Financial Statements" for further information.

(c) Purchase and other commitments consists primarily of open purchase orders for the acquisition of goods and services in the normal course of business. We have excluded open purchase orders with a remaining term of less than one year. For certain purchase and other commitments, such as commitments to fund equity method or other investments, the timing of the payment is not certain. In these cases, the maturity dates in the table reflect our best estimates.

(d) As of December 31, 2020, the gross liability for uncertain tax positions, including interest, was $301.2 million and relates primarily to transfer pricing matters. During 2018, we executed an APA between the United States and Switzerland governments for tax years 2009 through 2020 covering various but not all transfer pricing matters. As a result, certain

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Payments Due by Period
Contractual Obligations Total
Less Than
1 Year

1-3
Years

4-5
Years

After 5
Years
Debt $ 600.0
$ —
$ —
$ —
$ 600.0
Operating leases 91.2
25.6
35.0
16.3
14.3
Interest on debt 185.5
20.0
40.1
39.6
85.8
Transition tax on unremitted foreign earnings and profits (a) 270.5
8.9
49.8
71.6
140.2
Litigation settlement obligation 180.0
180.0
—
—
—
Pension obligations (b) 1.9
1.9
—
—
—
Purchase and other commitments 34.6
12.6
19.5
0.6
1.9
Total contractual cash obligations (c), (d) $ 1,363.7
$ 249.0
$ 144.4
$ 128.1
$ 842.2

~~(a)~~

As of December 31, 2018, we had recorded $270.5 million of income tax liabilities related to the one-time transition tax that resulted from the enactment of the 2017 Act. The transition tax is due in eight annual installments, and the first annual installment was paid in 2018. The second annual installment is 8% of the total liability, net of a $16.1 million overpayment of 2017 federal income taxes. The remaining installment amounts will be equal to 8% of the total liability, payable in fiscal years 2020 through 2022, 15% in fiscal year 2023, 20% in fiscal year 2024, and 25% in fiscal year 2025. See Note 16 to the "~~Consolidated Financial Statements" for additional information about the one-time transition tax.~~

~~(b)~~

The amount included in "Less Than 1 Year" reflects anticipated contributions to our various pension plans. Anticipated contributions beyond one year are not determinable. The total accrued benefit liability for our pension plans recognized as of December 31, 2018 was $37.0 million. This amount is impacted by, among other items, pension expense funding levels, changes in plan demographics and assumptions, and investment returns on plan assets. Therefore, we are unable to make a reasonably reliable estimate of the amount and period in which the liability might be paid, and did not include this amount in the contractual obligations table. See Note 12 to the "~~Consolidated Financial Statements" for further information.~~

~~(c)~~

As of December 31, 2018, the gross liability for uncertain tax positions, including interest, was $157.2 million and relates primarily to transfer pricing matters. During 2018, we executed an Advance Pricing Agreement ("APA") between the United States and Switzerland governments for tax years 2009 through 2020 covering various transfer pricing matters and we have updated our transfer pricing policies accordingly. Certain intercompany transactions covering tax years 2015 through 2018 were not resolved and those related tax positions remain uncertain.intercompany transactions covering tax years 2015 through 2020 that were not resolved under the APA program remain subject to IRS examination, and those transactions and related tax positions remain uncertain as of the balance sheet date. These unresolved transfer pricing matters may be significant to our consolidated financial statements, and the final outcome of the negotiations is uncertain. Management believes that adequate amounts of tax and related penalty and interest have been provided in income tax expense for any adjustments that may result for our uncertain tax positions. We are unable to make a reasonably reliable estimate of the amount and period in which the liability might be paid, and did not include this amount in the contractual obligations table.

~~(d)~~

We acquire assets still in development, enter into research and development arrangements, acquire businesses, and sponsor certain clinical trials that often require milestone, royalty, or other future payments to third-parties, contingent upon the occurrence of certain future events. In situations where we have no ability to influence the achievement of the milestone or otherwise avoid the payment, we have included those payments in the table above. However, we have excluded from the table contingent milestone payments and other contingent liabilities for which we cannot reasonably predict future payments or for which we can avoid making payment by unilaterally deciding to stop development of a product or cease progress of a clinical trial. We estimate that these contingent payments could be up to $585.0 million if all milestones or other contingent obligations are met. This amount includes certain milestone-based contingent obligations that may be paid through a combination of cash and issuance of common stock.

(e) We acquire assets still in development, enter into research and development arrangements, acquire businesses, and sponsor certain clinical trials that often require milestone, royalty, or other future payments to third-parties, contingent upon the occurrence of certain future events. In situations where we have no ability to influence the achievement of the milestone or otherwise avoid the payment, we have included those payments in the table above. However, we have excluded from the table contingent milestone payments and other contingent liabilities for which we cannot reasonably predict future payments or for which we can avoid making payment by unilaterally deciding to stop development of a product or cease progress of a clinical trial. We estimate that these contingent payments could be up to $810.0 million if all milestones or other contingent obligations are met. This amount includes certain milestone-based contingent obligations that may be paid through a combination of cash and issuance of common stock, and certain sales-based royalties in excess of minimum payment thresholds related to litigation settlements.

Critical Accounting Policies and Estimates

Our results of operations and financial position are determined based upon the application of our accounting policies, as discussed in the notes to the "Consolidated Financial Statements." Certain of our accounting policies represent a selection among acceptable alternatives under GAAP. In evaluating our transactions, management assesses all relevant GAAP and chooses the accounting policy that most accurately reflects the nature of the transactions.

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The application of accounting policies requires the use of judgment and estimates. These matters that are subject to judgments and estimation are inherently uncertain, and different amounts could be reported using different assumptions and estimates. Management uses its best estimates and judgments in determining the appropriate amount to reflect in the consolidated financial statements, using historical experience and all available information. We also use outside experts where appropriate. We apply estimation methodologies consistently from year to year.

We believe the following are the critical accounting policies which could have the most significant effect on our reported results and require subjective or complex judgments by management.

Revenue Recognition

When we recognize revenue from the sale of our products, the amount of consideration we ultimately receive varies depending upon the return terms, sales rebates, discounts, and other incentives that we may offer, which are accounted for as variable consideration when estimating the amount of revenue to recognize. The estimate of variable consideration requires significant judgment. We include estimated amounts in the transaction price to the extent it is probable that a significant reversal of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is resolved. The estimates of variable consideration and determination of whether to include estimated amounts in the transaction price are based largely upon an assessment of historical payment experience, historical relationship to revenues, estimated customer inventory levels, and current contract sales terms with direct and indirect customers. Product returns are typically not significant because returns are generally not allowed unless the product is damaged at time of receipt. If the historical data and inventory estimates used to calculate the variable consideration do not approximate future activity, our financial position, results of operations, and cash flows could be impacted.

In addition, in limited circumstances, we may allow customers to return previously purchased products, such as for next-generation product offerings. For these transactions, we defer recognition of revenue on the sale of the earlier generation product based upon an estimate of the amount of product to be returned when the next-generation products are shipped to the customer. Uncertain timing of next-generation product approvals, variability in product launch strategies, product recalls, and variation in product utilization all affect the estimates related to sales returns and could cause actual returns to differ from these estimates.

Our sales adjustment related to distributor rebates given to our United States distributors represents the difference between our sales price to the distributor and the negotiated price to be paid by the end-customer. We validate the distributor rebate accrual quarterly through either a review of the inventory reports obtained from our distributors or an estimate of the

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distributor's inventory. This distributor inventory information is used to verify the estimated liability for future distributor rebate claims based on historical rebates and contract rates. We periodically monitor current pricing trends and distributor inventory levels to ensure the credit for future distributor rebates is fairly stated.

Excess and Obsolete Inventory

The valuation of our inventory requires us to estimate excess, obsolete, and expired inventory. We base our provisions for excess, obsolete, and expired inventory on our estimates of forecasted net sales. A significant change in the timing or level of demand for our products as compared to forecasted amounts may result in recording additional allowances for excess, obsolete, and expired inventory in the future. In addition, our industry is characterized by rapid product development and frequent new product introductions. Uncertain timing of next-generation product approvals, variability in product launch strategies, product recalls, increasing levels of consigned inventory, and variation in product utilization all affect our estimates related to excess, obsolete, and expired inventory.

Intangible Assets and Long-lived Assets

We acquire intangible assets in connection with business combinations and asset purchases. The acquired intangible assets are recorded at fair value, which is determined based on a discounted cash flow analysis. The determination of fair value requires significant estimates, including, but not limited to, the amount and timing of projected future cash flows, the discount rate used to discount those cash flows, the assessment of the asset's life cycle, including the timing and expected costs to complete in-process projects, and the consideration of legal, technical, regulatory, economic, and competitive risks.

~~IPR&D~~In-process research and development assets acquired in business combinations is reviewed for impairment annually, or whenever an event occurs or circumstances change that would indicate the carrying amount may be impaired. Additionally, management reviews the carrying amounts of other intangible and long-lived assets whenever events or circumstances indicate that the carrying amounts

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of an asset may not be recoverable. The impairment reviews require significant estimates about fair value, including estimation of future cash flows, selection of an appropriate discount rate, and estimates of long-term growth rates.

Contingent Consideration

We record contingent consideration resulting from a business combination at its fair value on the acquisition date. We determine the fair value of the contingent consideration based primarily on the following factors:

~~timing and~~•discount rates used to present value the projected cash flows;

•the probability of success of clinical events orand regulatory ~~approvals;~~

~~timing and probability of success of~~approvals, and/or meeting commercial milestones;

•projected payment dates; and

~~discount rates.~~

•volatility of future revenue.

On a quarterly basis, we revalue these obligations and record changes in their fair value as an adjustment to earnings. Changes to contingent consideration obligations can result from adjustments to discount rates, accretion of the discount rates due to the passage of time, changes in our estimates of the likelihood or timing of achieving development or commercial milestones, changes in the probability of certain clinical events, or changes in the assumed probability associated with regulatory approval.

The assumptions related to determining the value of contingent consideration include a significant amount of judgment, and any changes in the underlying estimates could have a material impact on the amount of contingent consideration expense recorded in any given period.

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Income Taxes

The determination of our provision for income taxes requires significant judgment, the use of estimates, and the interpretation and application of complex tax laws. Realization of certain deferred tax assets, primarily tax credits, net operating loss and other carryforwards, is dependent upon generating sufficient taxable income in the appropriate jurisdiction prior to the expiration of the carryforward periods. Failure to achieve forecasted taxable income in the applicable taxing jurisdictions could affect the ultimate realization of deferred tax assets and could result in an increase in our effective tax rate on future earnings.

We have made an accounting policy election to recognize the U.S. tax effects of global intangible low-taxed income ~~("GILTI")~~ as a component of income tax expense in the period the tax arises.

We are subject to income taxes in the United States and numerous foreign jurisdictions. Our income tax returns are periodically audited by domestic and foreign tax authorities. These audits include questions regarding our tax filing positions, including the timing and amount of deductions and the allocation of income amongst various tax jurisdictions. We evaluate our tax positions and establish liabilities in accordance with the applicable accounting guidance on uncertainty in income taxes. Significant judgment is required in evaluating our uncertain tax positions, including estimating the ultimate resolution to intercompany pricing controversies between countries when there are numerous possible outcomes. We review these tax uncertainties quarterly and adjust the liability as events occur that affect potential liabilities for additional taxes, such as the progress of tax audits, lapsing of applicable statutes of limitations, negotiations between tax authorities, identification of new issues, and issuance of new legislation, regulations, or case law.

For additional details on our income taxes, see Note 2 and Note 1617 to the "Consolidated Financial Statements."

Stock-based Compensation

We measure and recognize compensation expense for all stock-based awards based on estimated fair values. Stock-based awards consist of stock options, service-based restricted stock units, market-based restricted stock units, performance-based restricted stock units, and employee stock purchase subscriptions. The fair value of each option award and employee stock purchase subscription is estimated on the date of grant using the Black-Scholes option valuation model. The fair value of market-based restricted stock units is determined using a Monte Carlo simulation model, which uses multiple input variables to determine the probability of satisfying the market condition requirements. The Black-Scholes and Monte Carlo models require various highly judgmental assumptions, including stock price volatility, risk-free interest rate, and expected option term. For performance-based restricted stock units, expense is recognized if and when we conclude that it is probable that the performance condition will be achieved, which requires judgment. Stock-based compensation expense is recorded net of

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estimated forfeitures. Judgment is required in estimating the stock awards that will ultimately be forfeited. If actual results differ significantly from these estimates, stock-based compensation expense and our results of operations would be impacted.

Legal Contingencies

We are or may be a party to, or may otherwise be responsible for, pending or threatened lawsuits including those related to products and services currently or formerly manufactured or performed, as applicable, by us, workplace and employment matters, matters involving real estate, our operations or health care regulations, or governmental investigations. We accrue for loss contingencies to the extent that we conclude that it is probable that a loss will be incurred and the amount of the loss can be reasonably estimated. These matters raise difficult and complex factual and legal issues and are subject to many uncertainties, including, but not limited to, the facts and circumstances of each particular case or claim, the jurisdiction in which each suit is brought, and differences in applicable law. As such, significant judgment is required in determining our legal accruals. We describe our legal proceedings in Note 18 to the "Consolidated Financial Statements."

New Accounting Standards

Information regarding new accounting standards is included in Note 2 to the "Consolidated Financial Statements."

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Our business and financial results are affected by fluctuations in world financial markets, including changes in currency exchange rates and interest rates. We manage these risks through a combination of normal operating and financing activities and derivative financial instruments. We do not use derivative financial instruments for trading or speculative purposes.

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Interest Rate Risk

Our exposure to market risk for changes in interest rates relates primarily to our investment portfolio and our long-term debt. Our investment strategy is focused on preserving capital and supporting our liquidity requirements, while earning a reasonable market return. We invest in a variety of ~~fixed-rate~~ debt securities, primarily time deposits, commercial paper, U.S. and foreign government and agency securities, asset-backed securities, corporate debt securities, and municipal debt securities. The market value of our investments may decline if current market interest rates rise. As of December 31, ~~2018,~~2020, we had ~~$726.2~~$985.9 million of investments in ~~fixed-rate~~ debt securities which had an average remaining term to maturity of approximately ~~1.0~~1.56 years. Taking into consideration the average maturity of our ~~fixed-rate~~ debt securities, a hypothetical 0.5% to 1.0% absolute increase in interest rates at December 31, ~~2018~~2020 would have resulted in a ~~$3.5~~$7.8 million to ~~$7.0~~$15.6 million decrease in the fair value of these investments. Such a decrease would only result in a realized loss if we choose or are forced to sell the investments before the scheduled maturity, which we currently do not anticipate.

For more information related to ~~outstanding debt obligations,~~investments, see Note 67 to the "Consolidated Financial Statements."

We are also exposed to interest rate risk on our debt obligations. As of December 31, ~~2018,~~2020, we had $600.0 million of Notes outstanding that carry a fixed rate, and also had available a $750.0 million Credit Agreement that carries a variable interest rate based on the London interbank offered rate ("LIBOR"). As of December 31, ~~2018,~~2020, there were no borrowings outstanding under the Credit Agreement. Based on our December 31, ~~2018~~2020 variable debt levels, a hypothetical 1.0% absolute increase in ~~our~~ floating market interest rates would ~~increase~~not have impacted our interest expense by approximately $6.0 million, most of which would be offset by increased returns on our short-term investments. The impact on net interest would be immaterial to our financial condition and results of operations.since we had no variable debt outstanding during the year. As of December 31, ~~2018,~~2020, a hypothetical 1.0% absolute increase in market interest rates would decrease the fair value of the fixed-rate debt by approximately ~~$44.7~~$43.2 million. This hypothetical change in interest rates would not impact the interest expense on the fixed-rate debt.

For more information related to outstanding debt obligations, see Note 910 to the "Consolidated Financial Statements."

Currency Risk

We are exposed to foreign currency risks that arise from normal business operations. These risks include the translation of local currency balances and results of our non-United States subsidiaries into United States dollars, currency gains and losses related to intercompany and third-party transactions denominated in currencies other than a ~~location's~~subsidiary's functional currency, and currency gains and losses associated with intercompany loans. Our principal currency exposures relate to the Euro and the Japanese yen. Our objective is to minimize the volatility of our exposure to these risks through a combination of normal operating and financing activities and the use of derivative financial instruments in the form of foreign currency forward exchange contracts and cross currency swap contracts. The total notional amount of our derivative financial instruments entered into for foreign currency management purposes at December 31, ~~2018~~2020 was ~~$1.4~~$1.8 billion. A hypothetical 10% increase/decrease in the value of the United States dollar against all hedged currencies would increase/decrease the fair value of these derivative contracts by ~~$61.2~~$141.5 million. Any gains or losses on the fair value of derivative contracts would generally be offset by gains and losses on the underlying transactions, so the net impact would not be significant to our financial condition or results of operations.

For more information related to outstanding foreign exchange contracts, see Note 2 and Note 1112 to the "Consolidated Financial Statements."

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Credit Risk

Derivative financial instruments involve credit risk in the event the financial institution counterparty should default. It is our policy to execute such instruments with major financial institutions that we believe to be creditworthy. At December 31, ~~2018,~~2020, all derivative financial instruments were with bank counterparties assigned investment grade ratings by national rating agencies. We further diversify our derivative financial instruments among counterparties to minimize exposure to any one of these entities. We have not experienced a counterparty default and do not anticipate any non-performance by our current derivative counterparties.

Concentrations of Risk

We invest excess cash in a variety of ~~fixed-rate~~ debt securities, and diversify the investments between financial institutions. Our investment policy limits the amount of credit exposure to any one issuer.

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In the normal course of business, we provide credit to customers in the health care industry, perform credit evaluations of these customers, and maintain allowances for potential credit losses, which have historically been adequate compared to actual losses. In ~~2018,~~2020, we had no customers that represented 10% or more of our total net sales or accounts receivable, net.

Investment Risk

We are exposed to investment risks related to changes in the underlying financial condition and credit capacity of certain of our investments. As of December 31, ~~2018,~~2020, we had ~~$726.2~~$985.9 million of investments in ~~fixed-rate~~ debt securities of various companies, of which ~~$483.8~~$766.5 million were long-term. In addition, we had ~~$22.5~~$35.1 million of investments in equity instruments of public and private companies. Should these companies experience a decline in financial performance, financial condition or credit capacity, or fail to meet certain development milestones, including as a result of the impact from COVID-19 on their business or operations or otherwise, a decline in the investments' ~~values~~value may occur, resulting in unrealized or realized losses.

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Item 8. Financial Statements and Supplementary Data

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, ~~2018~~2020



Report of Independent Registered Public Accounting Firm			4139

Financial Statements:

Consolidated Balance Sheets as of December 31, ~~2018~~2020 and ~~2017~~2019			4342

For the Years Ended December 31, ~~2018, 2017,~~2020, 2019, and ~~2016:~~2018:

Consolidated Statements of Operations			4443

Consolidated Statements of Comprehensive Income			4544

Consolidated Statements of Cash Flows			4645

Consolidated Statements of Stockholders' Equity			4746

Notes to Consolidated Financial Statements			4847

~~Other~~All other schedules are omitted as they are not applicable ~~and have not been submitted.~~or the required information is furnished in the Consolidated Financial Statements or notes thereto.

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Report of Independent Registered Public Accounting Firm

To the Board of Directors and Stockholders of Edwards Lifesciences ~~Corporation:~~Corporation

Opinions on the Financial Statements and Internal Control over Financial Reporting

We have audited the accompanying consolidated balance sheets of Edwards Lifesciences Corporationand its subsidiaries(the “Company”) as of December 31, ~~2018~~2020and ~~December 31, 2017,~~2019,and the related consolidated statements of operations, of comprehensive income, of stockholders’ equity and of cash flows ~~and stockholders’ equity~~ for each of the three years in the period ended December 31, ~~2018,~~2020, including the related notes (collectively referred to as the “consolidated financial statements”).We also have audited the Company's internal control over financial reporting as of December 31, ~~2018,~~2020, based on criteria established in Internal Control - Integrated Framework(2013)issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the consolidatedfinancial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, ~~2018~~2020and ~~December 31, 2017~~2019, and the results of itsoperations and itscash flows for each of the three years in the period ended December 31, ~~2018~~2020in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, ~~2018,~~2020, based on criteria established in Internal Control - Integrated Framework(2013)issued by the COSO.

Change in Accounting Principle

As discussed in Note 2 to the consolidated financial statements, the Company changed the manner in which it accounts for leases in 2019.

Basis for Opinions

The Company's management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in Management's Report on Internal Control ~~over~~Over Financial Reporting appearing under Item 9A. Our responsibility is to express opinions on the Company’s consolidatedfinancial statements and on the Company's internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidatedfinancial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.

Our audits of the consolidatedfinancial statements included performing procedures to assess the risks of material misstatement of the consolidatedfinancial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidatedfinancial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidatedfinancial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

Definition and Limitations of Internal Control over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the

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company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

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Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that (i) relate to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Uncertain Tax Positions Related to Intercompany Transfer Pricing

As described in Notes 2 and 17 to the consolidated financial statements, the Company had a gross uncertain tax position liability balance of $281.8 million as of December 31, 2020, primarily related to transfer pricing. The Company is subject to income taxes in the United States and numerous foreign jurisdictions. As disclosed by management, the Company’s income tax returns in these jurisdictions are periodically audited by domestic and foreign tax authorities. These audits include questions regarding the Company’s tax filing positions, including the timing and amount of deductions and the allocation of income amongst various tax jurisdictions. Significant judgment is required by management in evaluating uncertain tax positions, including estimating the ultimate resolution to intercompany pricing controversies between countries when there are numerous possible outcomes.

The principal considerations for our determination that performing procedures relating to uncertain tax positions related to intercompany transfer pricing is a critical audit matter are the significant judgment by management when determining uncertain tax positions related to intercompany transfer pricing, including a high degree of estimation uncertainty in evaluating whether certain tax filing positions taken by management will be upheld by the related local tax authority. This in turn led to a high degree of auditor judgment, effort, and subjectivity in performing procedures to evaluate the accurate measurement of uncertain tax positions related to intercompany transfer pricing. Also, the evaluation of audit evidence available to support the tax liabilities for uncertain tax positions related to intercompany transfer pricing is complex and required significant auditor judgment as the nature of the evidence is highly subjective and the audit effort involved the use of professionals with specialized skill and knowledge.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to recognition of the liability for uncertain tax positions related to intercompany transfer pricing and controls over measurement of the liability. These procedures also included, among others, (i) testing the information used in the calculation of the liability for uncertain tax positions, including U.S. federal filing positions and the related final tax returns; (ii) testing the calculation of the liability for uncertain tax positions related to intercompany transfer pricing, by jurisdiction, including management’s assessment of the technical merits of tax positions and estimates of the amount of tax benefit expected to be sustained; (iii) testing of management’s assessment of possible outcomes of uncertain tax positions related to intercompany transfer pricing; and (iv) evaluating the status and results of income tax audits with the relevant tax authorities. Professionals with specialized skill and knowledge were used to assist in the evaluation of the completeness and measurement of the Company’s uncertain tax positions related to intercompany transfer pricing, including evaluating the reasonableness of management’s assessment of whether tax positions are more-likely-than-not to be sustained and the amount of potential benefit to be realized, and the application of relevant tax laws.

Fair Value of Contingent Consideration Liabilities

As described in Note 11 to the consolidated financial statements, certain of the Company’s acquisitions involve contingent consideration arrangements. As of December 31, 2020, the Company had a contingent consideration liability of $186.1 million. As disclosed by management, payment of additional consideration is contingent upon the acquired company reaching certain performance milestones, such as attaining specified revenue levels or obtaining regulatory approvals. These contingent consideration liabilities are measured by management at estimated fair value using either a probability weighted discounted cash flow analysis or a Monte Carlo simulation model, both of which consider significant unobservable inputs. These inputs

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include (1) the discount rate used to present value the projected cash flows, (2) the probability of milestone achievement, (3) the projected payment dates, and (4) the volatility of future revenue.

The principal considerations for our determination that performing procedures relating to the fair value of contingent consideration liabilities is a critical audit matter are the significant judgment by management when estimating the fair value of these contingent consideration liabilities, including a high degree of estimation uncertainty in evaluating the discount rate, the probability of milestone achievement, the projected payment dates, and the volatility of future revenue. This in turn led to a high degree of auditor judgment, effort, and subjectivity in performing procedures to evaluate the fair value of contingent consideration liabilities. Also, the evaluation of audit evidence available to support the fair value of the contingent consideration liabilities is complex and resulted in significant auditor judgment as the nature of the evidence is highly subjective and the audit effort involved the use of professionals with specialized skill and knowledge.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to management’s process for estimating the fair value of contingent consideration liabilities, including controls over the determination of the significant unobservable inputs selected by management. These procedures also included, among others, (i) testing management’s process for estimating the fair value of contingent consideration liabilities and (ii) testing management’s probability weighted discounted cash flow analysis or a Monte Carlo simulation used to estimate the fair value of the contingent consideration liabilities. Testing management’s process included evaluating the appropriateness of the valuation methods used and the reasonableness of the significant assumptions related to the discount rate, the probability of milestone achievement, the projected payment dates, and the volatility of future revenue. Evaluating the reasonableness of the probability of milestone achievement and projected payment date of each milestone involved consideration of information obtained from the Company’s product engineers, clinical trial data, and third-party industry data. The discount rate was evaluated by considering the cost of capital of comparable businesses and other industry factors. Professionals with specialized skill and knowledge were used to assist in the evaluation of certain significant assumptions, including the discount rate and volatility of future revenue.

/s/ PricewaterhouseCoopers LLP

Irvine, California

February ~~15, 2019~~12, 2021

We have served as the Company’s auditor since ~~1999.~~

1999

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EDWARDS LIFESCIENCES CORPORATION

CONSOLIDATED BALANCE SHEETS

(in millions, except par value)


	December 31,							December 31,
	2018			2017				2020		2019
ASSETS	ASSETS						ASSETS
Current assets							Current assets
Cash and cash equivalents	$	714.1		$	818.3		Cash and cash equivalents	$	1,183.2	$	1,179.1
Short-term investments (Note 6)	242.4			519.2
Accounts receivable, net (Note 5)	456.9			438.7
Short-term investments (Note 7)							Short-term investments (Note 7)	219.4		337.8
Accounts receivable, net of allowances of $9.6 and $8.7, respectively							Accounts receivable, net of allowances of $9.6 and $8.7, respectively	514.6		543.6
Other receivables	80.4			40.6			Other receivables	88.2		55.5
Inventories (Note 5)	607.0			554.9			Inventories (Note 5)	802.3		640.9

Prepaid expenses	54.3			60.6			Prepaid expenses	75.1		59.1
Other current assets	131.8			116.9			Other current assets	208.2		168.0
Total current assets	2,286.9			2,549.2			Total current assets	3,091.0		2,984.0
Long-term investments (Note 6)	506.3			567.0
Long-term investments (Note 7)							Long-term investments (Note 7)	801.6		585.5
Property, plant, and equipment, net (Note 5)	867.5			679.7			Property, plant, and equipment, net (Note 5)	1,395.2		1,060.3
Goodwill (Note 8)	1,112.2			1,126.5
Other intangible assets, net (Note 8)	343.2			468.0
Operating lease right-of-use assets (Note 6)							Operating lease right-of-use assets (Note 6)	94.2		80.1
Goodwill (Note 9)							Goodwill (Note 9)	1,173.2		1,167.7
Other intangible assets, net (Note 9)							Other intangible assets, net (Note 9)	331.4		336.5
Deferred income taxes	174.0			167.1			Deferred income taxes	230.9		172.2
Other assets	33.6			108.9			Other assets	119.6		101.8
Total assets	$	5,323.7		$	5,666.4		Total assets	$	7,237.1	$	6,488.1
LIABILITIES AND STOCKHOLDERS' EQUITY	LIABILITIES AND STOCKHOLDERS' EQUITY						LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities							Current liabilities
Accounts payable	$	134.0		$	116.6		Accounts payable	$	196.5	$	180.4
Accrued and other liabilities (Note 5)	742.6			653.7			Accrued and other liabilities (Note 5)	670.2		696.5
Short-term debt (Note 9)	—			598.0
Contingent consideration liabilities (Notes 7 and 10)	—			51.7
Operating lease liabilities (Note 6)							Operating lease liabilities (Note 6)	27.2		25.5

Total current liabilities	876.6			1,420.0			Total current liabilities	893.9		902.4
Long-term debt (Note 9)	593.8			438.4
Contingent consideration liabilities (Notes 7 and 10)	178.6			192.6
Taxes payable (Note 16)	259.4			347.5
Uncertain tax positions (Note 16)	124.9			164.6
Long-term debt (Note 10)							Long-term debt (Note 10)	595.0		594.4
Contingent consideration liabilities (Notes 8 and 11)							Contingent consideration liabilities (Notes 8 and 11)	186.1		172.5
Taxes payable (Note 17)							Taxes payable (Note 17)	215.3		236.6
Operating lease liabilities (Note 6)							Operating lease liabilities (Note 6)	72.7		58.9
Uncertain tax positions (Note 17)							Uncertain tax positions (Note 17)	214.4		171.7
Litigation settlement accrual (Notes 3 and 18)							Litigation settlement accrual (Notes 3 and 18)	233.0		0
Other long-term liabilities	150.0			147.1			Other long-term liabilities	252.4		203.3
Commitments and contingencies (Notes 9 and 17)
Stockholders' equity (Note 13)
Preferred stock, $.01 par value, authorized 50.0 shares, no shares outstanding	—			—
Common stock, $1.00 par value, 350.0 shares authorized, 215.2 and 212.0 shares issued, and 207.7 and 209.7 shares outstanding, respectively	215.2			212.0
Commitments and contingencies (Notes 6, 10 and 18)							Commitments and contingencies (Notes 6, 10 and 18)	0		0
Stockholders' equity (Note 14)							Stockholders' equity (Note 14)
Preferred stock, $0.01 par value, authorized 50.0 shares, 0 shares outstanding							Preferred stock, $0.01 par value, authorized 50.0 shares, 0 shares outstanding	0		0
Common stock, $1.00 par value, 1,050.0 shares authorized, 636.4 and 218.1 shares issued, and 624.3 and 209.1 shares outstanding, respectively							Common stock, $1.00 par value, 1,050.0 shares authorized, 636.4 and 218.1 shares issued, and 624.3 and 209.1 shares outstanding, respectively	636.4		218.1
Additional paid-in capital	1,384.4			1,166.9			Additional paid-in capital	1,438.1		1,623.3
Retained earnings	2,694.7			1,962.1			Retained earnings	4,565.0		3,741.6
Accumulated other comprehensive loss	(138.5		)	(132.7		)	Accumulated other comprehensive loss	(161.1)		(156.0)
Treasury stock, at cost, 7.5 and 2.3 shares, respectively	(1,015.4		)	(252.1		)
Treasury stock, at cost, 12.1 and 9.0 shares, respectively							Treasury stock, at cost, 12.1 and 9.0 shares, respectively	(1,904.1)		(1,278.7)
Total stockholders' equity	3,140.4			2,956.2			Total stockholders' equity	4,574.3		4,148.3
Total liabilities and stockholders' equity	$	5,323.7		$	5,666.4		Total liabilities and stockholders' equity	$	7,237.1	$	6,488.1

The accompanying notes are an integral part of these consolidated financial statements.

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EDWARDS LIFESCIENCES CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

(in millions, except per share information)


	Years Ended December 31,
	2020		2019		2018
Net sales	$	4,386.3	$	4,348.0	$	3,722.8
Cost of sales	1,080.6		1,114.4		939.4
Gross profit	3,305.7		3,233.6		2,783.4
Selling, general, and administrative expenses	1,228.4		1,242.2		1,088.5
Research and development expenses	760.7		752.7		622.2
Intellectual property litigation expenses, net (Note 3)	405.4		33.4		214.0
Change in fair value of contingent consideration liabilities	13.6		(6.1)		(5.7)
Special charges (Note 4)	0		64.6		116.2

Operating income	897.6		1,146.8		748.2
Interest expense	15.8		20.7		29.9
Interest income	(23.4)		(32.2)		(32.0)
Special gain (Note 4)	0		0		(7.1)
Other income, net (Note 16)	(11.5)		(8.2)		(4.0)
Income before provision for income taxes	916.7		1,166.5		761.4
Provision for income taxes (Note 17)	93.3		119.6		39.2
Net income	$	823.4	$	1,046.9	$	722.2
Share information (Note 2):
Earnings per share:
Basic	$	1.32	$	1.68	$	1.15
Diluted	$	1.30	$	1.64	$	1.13
Weighted-average number of common shares outstanding:
Basic	622.6		624.8		627.6
Diluted	631.9		636.7		640.9

Years Ended December 31,
2018 2017 2016
Net sales $ 3,722.8
$ 3,435.3
$ 2,963.7
Cost of sales 939.4
875.3
797.4
Gross profit 2,783.4
2,560.0
2,166.3
Selling, general, and administrative expenses 1,088.5
990.8
904.7
Research and development expenses 622.2
552.6
442.2
Intellectual property litigation expenses (income), net (Note 3) 214.0
(73.3 ) 32.6
Change in fair value of contingent consideration liabilities (5.7 ) (9.9 ) 1.1
Special charges, net (Note 4) 116.2
9.7
34.5
Other operating expenses —
0.7
—
Operating income 748.2
1,089.4
751.2
Interest expense 29.9
23.2
19.2
Interest income (32.0 ) (20.3 ) (10.8 )
Special (gains) charges, net (Note 4) (7.1 ) 50.2
—
Other (income) expense, net (Note 15) (4.0 ) 1.4
4.9
Income before provision for income taxes 761.4
1,034.9
737.9
Provision for income taxes (Note 16) 39.2
451.3
168.4
Net income $ 722.2
$ 583.6
$ 569.5
Share information (Note 2):

Earnings per share:

Basic $ 3.45
$ 2.77
$ 2.67
Diluted $ 3.38
$ 2.70
$ 2.61
Weighted-average number of common shares outstanding:

Basic 209.2
210.9
213.0
Diluted 213.6
215.9
217.8

The accompanying notes are an integral part of these consolidated financial statements.

Table of Contents

EDWARDS LIFESCIENCES CORPORATION

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(in millions)


	Years Ended December 31,										Years Ended December 31,
	2018			2017			2016				2020		2019		2018
Net income	$	722.2		$	583.6		$	569.5		Net income	$	823.4	$	1,046.9	$	722.2
Other comprehensive (loss) income, net of tax (Note 14):
Other comprehensive (loss) income, net of tax (Note 15):										Other comprehensive (loss) income, net of tax (Note 15):
Foreign currency translation adjustments	(38.6		)	97.5			(16.1		)	Foreign currency translation adjustments	32.4		(11.2)		(38.6)
Unrealized gain (loss) on cash flow hedges	40.4			(30.6		)	4.9
Defined benefit pension plans	0.6			3.5			(6.2		)
Unrealized (loss) gain on available-for-sale investments	(3.3		)	(7.8		)	0.5
Unrealized (loss) gain on hedges										Unrealized (loss) gain on hedges	(40.2)		(11.1)		40.4
Unrealized pension costs										Unrealized pension costs	(4.2)		(1.9)		0.6
Unrealized gain (loss) on available-for-sale investments										Unrealized gain (loss) on available-for-sale investments	6.6		6.3		(3.3)
Reclassification of net realized investment loss to earnings	2.9			3.1			1.1			Reclassification of net realized investment loss to earnings	0.3		0.4		2.9
Other comprehensive (loss) income, net of tax	2.0			65.7			(15.8		)	Other comprehensive (loss) income, net of tax	(5.1)		(17.5)		2.0
Comprehensive income	$	724.2		$	649.3		$	553.7		Comprehensive income	$	818.3	$	1,029.4	$	724.2

The accompanying notes are an integral part of these consolidated financial statements.

Table of Contents

EDWARDS LIFESCIENCES CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in millions)


	Years Ended December 31,
	2020		2019		2018
Cash flows from operating activities
Net income	$	823.4	$	1,046.9	$	722.2
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation and amortization	107.2		89.3		77.4
Non-cash operating lease cost	28.2		25.3		0
Stock-based compensation (Notes 2 and 14)	92.6		81.3		71.0

Inventory write off	0		73.1		0
Impairment charges (Note 4)	0		40.6		118.8
Change in fair value of contingent consideration liabilities, net (Note 11)	13.6		(6.1)		(5.7)
Deferred income taxes	(49.4)		12.1		(27.3)
Purchased in-process research and development	0		24.0		0
Other	(3.5)		(2.8)		13.0
Changes in operating assets and liabilities:
Accounts and other receivables, net	41.9		(88.0)		(28.7)
Inventories	(120.6)		(105.4)		(65.7)
Prepaid expenses and other current assets	(28.5)		(6.8)		15.6
Accounts payable and accrued liabilities	(84.5)		116.5		12.5
Litigation settlement accrual	270.5		(180.0)		180.0
Income taxes	(52.9)		43.2		(157.8)
Other	16.3		19.7		1.4
Net cash provided by operating activities	1,054.3		1,182.9		926.7
Cash flows from investing activities
Capital expenditures	(407.0)		(254.4)		(238.7)

Purchases of held-to-maturity investments (Note 7)	(162.0)		(130.2)		(210.0)
Proceeds from sales and maturities of held-to-maturity investments (Note 7)	212.2		50.0		578.1
Purchases of available-for-sale investments (Note 7)	(689.7)		(437.9)		(249.3)
Proceeds from sales and maturities of available-for-sale investments (Note 7)	564.8		359.9		223.2




Acquisition (Notes 8 and 9)	0		(100.2)		0
Payment for acquisition option	(10.0)		(35.0)		0
Issuances of notes receivable	(27.0)		(12.9)		(0.6)
Investments in intangible assets and in-process research and development	(0.3)		(24.0)		(3.0)

Other	(12.1)		(11.1)		(23.0)
Net cash (used in) provided by investing activities	(531.1)		(595.8)		76.7
Cash flows from financing activities
Proceeds from issuance of debt	16.2		18.9		688.0
Payments on debt and finance lease obligations	(17.0)		(28.9)		(1,125.3)
Purchases of treasury stock	(625.4)		(263.3)		(795.5)

Proceeds from stock plans	140.5		160.5		147.0
Payment of contingent consideration	0		0		(15.1)

Other	(1.2)		(2.8)		(0.3)
Net cash used in financing activities	(486.9)		(115.6)		(1,101.2)
Effect of currency exchange rate changes on cash, cash equivalents, and restricted cash	(20.5)		(3.0)		(6.5)
Net increase (decrease) in cash, cash equivalents, and restricted cash	15.8		468.5		(104.3)
Cash, cash equivalents, and restricted cash at beginning of year	1,184.4		715.9		820.2
Cash, cash equivalents, and restricted cash at end of year	$	1,200.2	$	1,184.4	$	715.9

Years Ended December 31,
2018 2017 2016
Cash flows from operating activities

Net income $ 722.2
$ 583.6
$ 569.5
Adjustments to reconcile net income to cash provided by operating activities:

Depreciation and amortization 77.4
81.9
71.2
Stock-based compensation (Notes 2 and 13) 71.0
61.6
56.9
Excess tax benefit from stock plans —
—
(64.3 )
Impairment charges (Note 4) 118.8
31.0
—
Change in fair value of contingent consideration liabilities, net (Note 10) (5.7 ) (9.9 ) 1.1
Deferred income taxes (27.3 ) 17.8
(37.4 )
Purchased in-process research and development —
6.7
34.5
Other 13.0
(6.2 ) 7.9
Changes in operating assets and liabilities:

Accounts and other receivables, net (28.7 ) (27.8 ) (60.4 )
Inventories (65.7 ) (124.0 ) (65.6 )
Accounts payable and accrued liabilities 192.5
93.8
77.7
Income taxes (157.8 ) 293.7
105.1
Prepaid expenses and other current assets 15.7
(9.9 ) (12.6 )
Other 1.4
8.4
20.8
Net cash provided by operating activities 926.8
1,000.7
704.4
Cash flows from investing activities

Capital expenditures (238.7 ) (168.1 ) (176.1 )
Deposit of cash in escrow —
(25.0 ) —
Purchases of held-to-maturity investments (Note 6) (210.0 ) (804.9 ) (594.7 )
Proceeds from held-to-maturity investments (Note 6) 578.1
654.7
852.5
Purchases of available-for-sale investments (Note 6) (249.3 ) (529.8 ) (470.4 )
Proceeds from available-for-sale investments (Note 6) 223.2
448.7
232.6
Investments in unconsolidated affiliates (Note 6) (6.6 ) —
(7.6 )
Proceeds from unconsolidated affiliates (Note 6) 0.4
8.3
1.9
Investments in trading securities, net (12.6 ) (12.7 ) (9.8 )
Payment of contingent consideration (10.0 ) —
—
Acquisitions (Notes 7 and 8) —
(192.9 ) —
Issuances of notes receivable —
(18.9 ) —
Investments in intangible assets and in-process research and development (3.0 ) (7.4 ) (41.3 )
Other 5.2
0.8
1.2
Net cash provided by (used in) investing activities 76.7
(647.2 ) (211.7 )
Cash flows from financing activities

Proceeds from issuance of debt 688.0
994.7
253.5
Payments on debt and capital lease obligations (1,125.3 ) (818.4 ) (31.4 )
Purchases of treasury stock (795.5 ) (763.3 ) (662.3 )
Proceeds from stock plans 147.0
113.8
103.3
Payment of contingent consideration (15.1 ) —
—
Excess tax benefit from stock plans —
—
64.3
Other (0.3 ) —
4.1
Net cash used in financing activities (1,101.2 ) (473.2 ) (268.5 )
Effect of currency exchange rate changes on cash and cash equivalents (6.5 ) 7.9
(12.5 )
Net (decrease) increase in cash and cash equivalents (104.2 ) (111.8 ) 211.7
Cash and cash equivalents at beginning of year 818.3
930.1
718.4
Cash and cash equivalents at end of year $ 714.1
$ 818.3
$ 930.1

The accompanying notes are an integral part of these consolidated financial statements.

Table of Contents

EDWARDS LIFESCIENCES CORPORATION

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

(in millions)


																								Common Stock			Treasury Stock
	Common Stock					Treasury Stock																		Shares	Par Value		Shares	Amount		Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Total Stockholders' Equity
	Shares		Par Value			Shares		Amount			Additional Paid-in Capital			Retained Earnings			Accumulated Other Comprehensive Loss			Total Stockholders' Equity
BALANCE AT DECEMBER 31, 2015	239.1		$	239.1		23.7		$	(1,837.0	)	$	946.8		$	3,336.8		$	(182.6	)	$	2,503.1
Net income														569.5						569.5
Other comprehensive loss, net of tax																	(15.8		)	(15.8		)
Common stock issued under equity plans, including tax benefits	3.5		3.5								164.1									167.6
Stock-based compensation expense											56.9									56.9
Purchases of treasury stock						7.3		(662.3		)										(662.3		)
BALANCE AT DECEMBER 31, 2016	242.6		242.6			31.0		(2,499.3		)	1,167.8			3,906.3			(198.4		)	2,619.0
Impact to retained earnings from adoption of ASU 2016-09														9.3						9.3
BALANCE AT JANUARY 1, 2017	242.6		242.6			31.0		(2,499.3		)	1,167.8			3,915.6			(198.4		)	2,628.3
BALANCE AT DECEMBER 31, 2017																							BALANCE AT DECEMBER 31, 2017	212.0	$	212.0	2.3	$	(252.1)	$	1,166.9	$	1,962.1	$	(132.7)	$	2,956.2
Impact to retained earnings from adoption of ASU 2016-16 and ASU 2018-02																							Impact to retained earnings from adoption of ASU 2016-16 and ASU 2018-02									10.4		(7.8)		2.6
BALANCE AT JANUARY 1, 2018																							BALANCE AT JANUARY 1, 2018	212.0	212.0		2.3	(252.1)		1,166.9		1,972.5		(140.5)		2,958.8
Net income														583.6						583.6			Net income									722.2				722.2
Other comprehensive income, net of tax																	65.7			65.7			Other comprehensive income, net of tax											2.0		2.0
Common stock issued under equity plans	3.0		3.0								110.8									113.8			Common stock issued under equity plans	3.2	3.2					143.8						147.0
Stock-based compensation expense											61.6									61.6			Stock-based compensation expense							71.0						71.0
Shares issued to acquire business						(2.8	)	264.3			2.2									266.5
Shares issued in payment for contingent consideration liabilities																							Shares issued in payment for contingent consideration liabilities				(0.3)	32.2		2.7						34.9
Purchases of treasury stock						7.7		(763.3		)										(763.3		)	Purchases of treasury stock				5.5	(795.5)								(795.5)
Retirement of treasury stock	(33.6	)	(33.6		)	(33.6	)	2,746.2			(175.5		)	(2,537.1		)				—
BALANCE AT DECEMBER 31, 2017	212.0		212.0			2.3		(252.1		)	1,166.9			1,962.1			(132.7		)	2,956.2
Impact to retained earnings from adoption of ASU 2016-16 and ASU 2018-02														10.4			(7.8		)	2.6
BALANCE AT JANUARY 1, 2018	212.0		212.0			2.3		(252.1		)	1,166.9			1,972.5			(140.5		)	2,958.8

BALANCE AT DECEMBER 31, 2018																							BALANCE AT DECEMBER 31, 2018	215.2	215.2		7.5	(1,015.4)		1,384.4		2,694.7		(138.5)		3,140.4

Net income														722.2						722.2			Net income									1,046.9				1,046.9
Other comprehensive loss, net of tax																	2.0			2.0			Other comprehensive loss, net of tax											(17.5)		(17.5)
Common stock issued under equity plans	3.2		3.2								143.8									147.0			Common stock issued under equity plans	2.9	2.9					157.6						160.5
Stock-based compensation expense											71.0									71.0			Stock-based compensation expense							81.3						81.3
Shares issued in payment for contingent consideration liabilities						(0.3	)	32.2			2.7									34.9

Purchases of treasury stock						5.5		(795.5		)										(795.5		)	Purchases of treasury stock				1.5	(263.3)		—						(263.3)
BALANCE AT DECEMBER 31, 2018	215.2		$	215.2		7.5		$	(1,015.4	)	$	1,384.4		$	2,694.7		$	(138.5	)	$	3,140.4

BALANCE AT DECEMBER 31, 2019																							BALANCE AT DECEMBER 31, 2019	218.1	218.1		9.0	(1,278.7)		1,623.3		3,741.6		(156.0)		4,148.3
Net income																							Net income									823.4				823.4
Other comprehensive loss, net of tax																							Other comprehensive loss, net of tax											(5.1)		(5.1)
Common stock issued under equity plans																							Common stock issued under equity plans	4.5	4.5					136.0						140.5
Stock-based compensation expense																							Stock-based compensation expense							92.6						92.6

Purchases of treasury stock																							Purchases of treasury stock				3.1	(625.4)								(625.4)

Stock issued to effect stock split																							Stock issued to effect stock split	413.8	413.8					(413.8)						0
BALANCE AT DECEMBER 31, 2020																							BALANCE AT DECEMBER 31, 2020	636.4	$	636.4	12.1	$	(1,904.1)	$	1,438.1	$	4,565.0	$	(161.1)	$	4,574.3


~~(949) 250-2500~~ ~~Registrant's telephone number, including area code~~
Securities registered pursuant to Section 12(b) of the Act:
Title of each class	Trading Symbols(s)	Name of each exchange on which registered:
Common Stock, par value $1.00 per share	EW	New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act:None



PART I
Item 1.	Business	12
Item 1A.	Risk Factors	911
Item 1B.	Unresolved Staff Comments	1817
Item 2.	Properties	1918
Item 3.	Legal Proceedings	1918
Item 4.	Mine Safety Disclosures	1918
PART II
Item 5.	Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	2019
Item 6.	Selected Financial Data	2221
Item 7.	Management's Discussion and Analysis of Financial Condition and Results of Operations	2221
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	3835
Item 8.	Financial Statements and Supplementary Data	4038
Item 9.	Changes in and Disagreements With Accountants on Accounting and Financial Disclosure	9291
Item 9A.	Controls and Procedures	92
Item 9B.	Other Information	9392
PART III
Item 10.	Directors, Executive Officers and Corporate Governance	9493
Item 11.	Executive Compensation	9493
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	9493
Item 13.	Certain Relationships and Related Transactions, and Director Independence	9493
Item 14.	Principal Accounting Fees and Services	9493
PART IV
Item 15.	Exhibits and Financial Statement Schedules	9594
Item 16.	Form 10-K Summary	9896
	Signatures	9997



Period	Total Number of Shares (or Units) Purchased (a)	Average Price Paid per Share (or Unit)		Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs	Maximum Number (or Approximate Dollar Value) of Shares that May Yet Be Purchased Under the Plans or Programs (in millions) (b), (c)
October 1, 2018 through October 31, 2018	1,475,683	$	150.26	1,475,683	$	544.8
November 1, 2018 through November 30, 2018	597	147.80		—	544.8
December 1, 2018 through December 31, 2018	338,086	148.05		338,086	494.6
Total	1,814,366	149.84		1,813,769



	Total Cumulative Return
	2014		2015		2016		2017		2018
Edwards Lifesciences	$	193.70	$	240.21	$	284.98	$	342.79	$	465.85
S&P 500	113.69		115.26		129.05		157.22		150.33
S&P 500 Health Care Equipment	126.28		133.82		142.50		186.53		216.82


	As of December 31,
	2020		2019
	(in millions)
Inventories
Raw materials	$	136.7	$	118.0
Work in process	140.0		121.7
Finished products	525.6		401.2
	$	802.3	$	640.9
Property, plant, and equipment, net
Land	$	97.6	$	98.0
Buildings and leasehold improvements	881.5		619.8
Machinery and equipment	564.9		466.3
Equipment with customers	42.2		35.6
Software	94.2		87.9
Construction in progress	313.3		265.0
	1,993.7		1,572.6
Accumulated depreciation	(598.5)		(512.3)
	$	1,395.2	$	1,060.3

Accrued and other liabilities
Employee compensation and withholdings	$	236.7	$	295.8
Accrued rebates	67.2		67.1
Property, payroll, and other taxes	49.7		51.4
Research and development accruals	52.3		51.4
Litigation settlement (Notes 3 and 18)	37.5		0
Litigation and insurance reserves (Note 18)	23.3		20.0
Taxes payable	18.6		52.9
Fair value of derivatives	39.3		6.4
Accrued marketing expenses	14.3		17.5
Accrued professional services	7.6		10.1
Accrued realignment reserves	14.5		16.7
Accrued relocation related costs	21.0		17.4
Other accrued liabilities	88.2		89.8
	$	670.2	$	696.5



ý☒			ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934



o☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934



North America
Irvine, California			(1(1)		)			Corporate Headquarters, Research and Development, Regulatory and Clinical Affairs, Manufacturing, Marketing, Administration
Draper, Utah			(1(1),(2)			)			Manufacturing, Administration
Haina, Dominican Republic			(2(1),(2)			)			Manufacturing
Añasco, Puerto Rico			(2(2)		)			Manufacturing
Central America
Cartago, Costa Rica			(2(1),(2)			)		Manufacturing
Europe
Nyon, Switzerland			(1)					Administration, Marketing
Prague, Czech Republic			(2)					Administration
Shannon, Limerick, Ireland			(1),(2)					Manufacturing (under construction)
~~Europe~~Asia
~~Nyon, Switzerland~~Singapore			(1(1),(2)			)			Manufacturing, Distribution, Administration ~~Marketing~~
~~Prague, Czech Republic~~			(2	)		~~Administration~~
~~Shannon, Ireland~~	(2	)		~~Manufacturing (under construction)~~
~~Asia~~
Tokyo, Japan	(2(2)		)				Administration, Marketing, Distribution
Shanghai, China			(2(2)		)			Administration, Marketing
~~Singapore~~Caesarea, Israel			~~(1),~~(2)					~~Manufacturing, Distribution, Administration~~Research and Development
Or Yehuda, Israel			(2)					Research and Development



	Years Ended December 31,						Change				Percent Change
	2018		2017		2016		2018		2017		2018		2017
United States	$	2,055.3	$	1,907.6	$	1,615.7	$	147.7	$	291.9	7.7	%	18.1	%
Europe	885.1		831.0		749.0		54.1		82.0		6.5	%	10.9	%
Japan	396.8		350.3		309.3		46.5		41.0		13.3	%	13.3	%
Rest of World	385.6		346.4		289.7		39.2		56.7		11.4	%	19.5	%
International	1,667.5		1,527.7		1,348.0		139.8		179.7		9.2	%	13.3	%
Total net sales	$	3,722.8	$	3,435.3	$	2,963.7	$	287.5	$	471.6	8.4	%	15.9	%



	Year Ended December 31,						Change					Percent Change
	2018		2017		2016		2018			2017		2018		2017
Transcatheter Heart Valve Therapy	$	2,286.7	$	2,027.2	$	1,628.5	$	259.5		$	398.7	12.8	%	24.5	%
Surgical Heart Valve Therapy	761.6		807.1		774.9		(45.5		)	32.2		(5.6	)%	4.2	%
Critical Care	674.5		601.0		560.3		73.5			40.7		12.2	%	7.3	%
Total net sales	$	3,722.8	$	3,435.3	$	2,963.7	$	287.5		$	471.6	8.4	%	15.9	%


2021	$	30.0
2022	20.7
2023	14.4
2024	8.8
2025	6.1
Thereafter	28.1
Total lease payments	108.1
Less: imputed interest	(8.2)
Total lease liabilities	$	99.9


	December 31, 2020								December 31, 2019
Held-to-maturity	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value		Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Bank time deposits	$	50.0	$	0	$	0	$	50.0	$	100.2	$	0	$	0	$	100.2








Available-for-sale
Bank time deposits	$	24.1	$	0	$	0	$	24.1	$	13.1	$	0	$	0	$	13.1
Commercial paper	0		0		0		0		34.3		0		0		34.3
U.S. government and agency securities	147.0		2.2		0		149.2		113.2		0.6		0		113.8
Foreign government bonds	0		0		0		0		1.7		0		0		1.7
Asset-backed securities	149.6		1.9		0		151.5		141.2		0.6		(0.1)		141.7
Corporate debt securities	600.8		7.5		0		608.3		487.0		2.3		(0.1)		489.2
Municipal securities	2.8		0		0		2.8		0		0		0		0
	$	924.3	$	11.6	$	0	$	935.9	$	790.5	$	3.5	$	(0.2)	$	793.8



	December 31, 2018									December 31, 2017
Held-to-maturity	Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value		Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Bank time deposits	$	20.0	$	—	$	—		$	20.0	$	382.9	$	—	$	—		$	382.9
Commercial paper	—		—		—			—		1.4		—		—			1.4
U.S. government and agency securities	—		—		—			—		3.9		—		—			3.9
	$	20.0	$	—	$	—		$	20.0	$	388.2	$	—	$	—		$	388.2

Available-for-sale
Bank time deposits	$	—	$	—	$	—		$	—	$	0.5	$	—	$	—		$	0.5
Commercial paper	56.7		—		—			56.7		40.3		—		—			40.3
U.S. government and agency securities	79.7		0.2		(0.7		)	79.2		69.4		—		(0.7		)	68.7
Foreign government bonds	1.7		—		—			1.7		3.0		—		—			3.0
Asset-backed securities	110.6		0.1		(0.5		)	110.2		121.2		—		(0.4		)	120.8
Corporate debt securities	459.8		0.1		(4.3		)	455.6		446.5		0.8		(1.8		)	445.5
Municipal securities	2.8		—		—			2.8		4.4		—		—			4.4
	$	711.3	$	0.4	$	(5.5	)	$	706.2	$	685.3	$	0.8	$	(2.9	)	$	683.2


	December 31, 2019
	Less than 12 Months				12 Months or Greater				Total
	Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses




Asset-backed securities	$	73.4	$	(0.1)	$	0	$	0	$	73.4	$	(0.1)
Corporate debt securities	81.4		(0.1)		0		0		81.4		(0.1)

	$	154.8	$	(0.2)	$	0	$	0	$	154.8	$	(0.2)


Current assets	$	6.1
Property and equipment, net	1.3
Goodwill	64.4
Developed technology	35.9
Customer relationships	8.8
Deferred tax assets	2.2
Liabilities assumed	(17.9)
Total purchase price	100.8
Less: cash acquired	(0.6)
Total purchase price, net of cash acquired	$	100.2


~~(1)~~	~~Owned property.~~


~~(2)~~	~~Leased property.~~



	United States		Europe			Rest of World			Total
	(in millions)
Goodwill at December 31, 2016	$	567.2	$	58.9		$	—		$	626.1
Goodwill acquired during the year	142.1		—			316.5			458.6
Currency translation adjustment	—		8.3			33.5			41.8
Goodwill at December 31, 2017	709.3		67.2			350.0			1,126.5
Currency translation adjustment	—		(3.0		)	(11.3		)	(14.3		)
Goodwill at December 31, 2018	$	709.3	$	64.2		$	338.7		$	1,112.2



		December 31,
	Weighted-Average Useful Life (in years)	2018							2017
	Weighted-Average Useful Life (in years)	Cost		Accumulated Amortization			Net Carrying Value		Cost		Accumulated Amortization			Net Carrying Value
Amortizable intangible assets
Patents	7.4	$	185.8	$	(181.2	)	$	4.6	$	186.1	$	(180.4	)	$	5.7
Developed technology	12.3	119.8		(44.2		)	75.6		190.8		(43.8		)	147.0
	11.9	305.6		(225.4		)	80.2		376.9		(224.2		)	152.7
Unamortizable intangible assets
IPR&D		263.0		—			263.0		315.3		—			315.3
		$	568.6	$	(225.4	)	$	343.2	$	692.2	$	(224.2	)	$	468.0



	Operating Leases		Aggregate Debt Maturities
2019	$	25.6	$	—
2020	21.5		—
2021	13.5		—
2022	9.9		—
2023	6.4		—
Thereafter	14.3		600.0
Total obligations and commitments	$	91.2	$	600.0


December 31, 2020	Level 1		Level 2		Level 3		Total
Assets
Cash equivalents	$	16.2	$	0	$	0	$	16.2
Available-for-sale investments:
Bank time deposits	0		24.1		0		24.1
Corporate debt securities	0		608.3		0		608.3
Asset-backed securities	0		151.5		0		151.5
U.S. government and agency securities	56.9		92.2		0		149.1


Municipal securities	0		2.8		0		2.8

Investments held for deferred compensation plans	111.2		0		0		111.2
Derivatives	0		8.1		0		8.1
	$	184.3	$	887.0	$	0	$	1,071.3
Liabilities
Derivatives	$	0	$	39.3	$	0	$	39.3
Deferred compensation plans	111.6		0		0		111.6
Contingent consideration liabilities	0		0		186.1		186.1
	$	111.6	$	39.3	$	186.1	$	337.0

December 31, 2019
Assets
Cash equivalents	$	0.7	$	31.7	$	0	$	32.4
Available-for-sale investments:
Bank time deposits	0		13.1		0		13.1
Corporate debt securities	0		489.2		0		489.2
Asset-backed securities	0		141.7		0		141.7
U.S. government and agency securities	76.1		37.7		0		113.8
Foreign government bonds	0		1.7		0		1.7
Commercial paper	0		34.3		0		34.3


Investments held for deferred compensation plans	88.9		0		0		88.9
Derivatives	0		30.7		0		30.7
	$	165.7	$	780.1	$	0	$	945.8
Liabilities
Derivatives	$	0	$	6.4	$	0	$	6.4
Deferred compensation plans	88.7		0		0		88.7
Contingent consideration liabilities	0		0		172.5		172.5
	$	88.7	$	6.4	$	172.5	$	267.6



Balance at December 31, 2017	$	244.3
Payments (cash and issued shares)	(60.0		)
Changes in fair value	(5.7		)
Balance at December 31, 2018	$	178.6


	Notional Amount
	December 31, 2020		December 31, 2019
	(in millions)
Foreign currency forward exchange contracts	$	1,525.5	$	1,336.5
Cross currency swap contracts	300.0		300.0


		Fair Value
	Balance Sheet Location	December 31, 2020		December 31, 2019
Derivatives designated as hedging instruments
Assets
Foreign currency contracts	Other current assets	$	7.3	$	14.2
Foreign currency contracts	Other assets	$	0	$	3.2
Cross currency swap contracts	Other assets	$	0.8	$	13.3

Liabilities
Foreign currency contracts	Accrued and other liabilities	$	39.3	$	6.4


																					Gross Amounts Not Offset in the Consolidated Balance Sheet
							Gross Amounts Not Offset in the Consolidated Balance Sheet										Gross Amounts Offset in the Consolidated Balance Sheet		Net Amounts Presented in the Consolidated Balance Sheet
			Gross Amounts Offset in the Consolidated Balance Sheet		Net Amounts Presented in the Consolidated Balance Sheet
December 31, 2018	Gross Amounts						Financial Instruments			Cash Collateral Received		Net Amount
December 31, 2020														December 31, 2020	Gross Amounts						Gross Amounts Offset in the Consolidated Balance Sheet		Net Amounts Presented in the Consolidated Balance Sheet		Financial Instruments		Cash Collateral Received	Net Amount
Derivative Assets														Derivative Assets
Foreign currency contracts	$	29.1	$	—	$	29.1	$	(3.6	)	$	—	$	25.5	Foreign currency contracts	$	7.3	$	0	$	7.3	$	(6.1)	$	0	$	1.2
Cross currency swap contracts	$	0.8	$	—	$	0.8	$	—		$	—	$	0.8	Cross currency swap contracts	$	0.8	$	0	$	0.8	$	0	$	0	$	0.8
Derivative Liabilities														Derivative Liabilities
Foreign currency contracts	$	5.2	$	—	$	5.2	$	(3.6	)	$	—	$	1.6	Foreign currency contracts	$	39.3	$	0	$	39.3	$	(6.1)	$	0	$	33.2
December 31, 2017

December 31, 2019														December 31, 2019
Derivative Assets														Derivative Assets
Foreign currency contracts	$	4.9	$	—	$	4.9	$	(3.7	)	$	—	$	1.2	Foreign currency contracts	$	17.4	$	0	$	17.4	$	(5.7)	$	0	$	11.7
Cross currency swap contracts														Cross currency swap contracts	$	13.3	$	0	$	13.3	$	0	$	0	$	13.3
Derivative Liabilities														Derivative Liabilities
Foreign currency contracts	$	24.8	$	—	$	24.8	$	(3.7	)	$	—	$	21.1	Foreign currency contracts	$	6.4	$	0	$	6.4	$	(5.7)	$	0	$	0.7


	Amount of Gain or (Loss) Recognized in OCI on Derivative (Effective Portion)				Location of Gain or (Loss) Reclassified from Accumulated OCI into Income	Amount of Gain or (Loss) Reclassified from Accumulated OCI into Income

	2020		2019			2020		2019
	(in millions)					(in millions)
Cash flow hedges
Foreign currency contracts	$	(33.7)	$	23.5	Cost of sales	$	18.4	$	40.9
					Selling, general, and administrative expenses	$	2.2	$	1.9



	Amount of Gain or (Loss) Recognized in OCI on Derivative (Effective Portion)				Location of Gain or (Loss) Reclassified from Accumulated OCI into Income	Amount of Gain or (Loss) Recognized in Income on Derivative (Amount Excluded from Effectiveness Testing)
	2020		2019			2020		2019
	(in millions)					(in millions)
Net investment hedges

Cross currency swap contracts	$	(12.6)	$	12.5	Interest expense	$	6.4	$	6.6



	Amount of Gain or (Loss) Recognized in OCI on Derivative (Effective Portion)					Location of Gain or (Loss) Reclassified from Accumulated OCI into Income	Amount of Gain or (Loss) Recognized in Income on Derivative (Amount Excluded from Effectiveness Testing)
	2018		2017				2018		2017
Net investment hedges
Cross currency swap contracts	$	0.8	$	—		Interest expense	$	3.5	$	—
Foreign currency denominated debt	$	6.8	$	(35.5	)



		Amount of Gain or (Loss) Recognized in Income on Derivative (a)
	Location of Gain or (Loss) Recognized in Income on Derivative
		2018		2017			2016
		(in millions)
Fair value hedges
Foreign currency contracts	Other (income) expense, net	$	0.5	$	—		$	—
Interest rate swap agreements	Interest expense	$	—	$	(1.1	)	$	(1.2	)


~~(a)~~	The gains and losses on the interest rate swap agreements were fully offset by the changes in the fair value of the fixed-rate debt being hedged. In December 2017, the interest rate swap was settled at a loss of $0.7 million, which was amortized to interest expense over the remaining life of the debt.


	Location and Amount of Gain or (Loss) Recognized in Income on Fair Value and Cash Flow Hedging Relationships
	Twelve Months Ended December 31, 2020
	Cost of sales		Selling, general, and administrative expenses		Other Income, net

Total amounts of income and expense line items shown in the consolidated statements of operations in which the effects of fair value or cash flow hedges are recorded	$	(1,080.6)	$	(1,228.4)	$	11.5
The effects of fair value and cash flow hedging:
Gain (loss) on fair value hedging relationships:
Foreign currency contracts:
Hedged items	0		0		4.8
Derivatives designated as hedging instruments	0		0		(4.8)
Amount excluded from effectiveness testing recognized in earnings based on an amortization approach	0		0		3.4
Gain (loss) on cash flow hedging relationships:
Foreign currency contracts:
Amount of gain (loss) reclassified from accumulated OCI into income	18.4		2.2		0


	Location and Amount of Gain or (Loss) Recognized in Income on Fair Value and Cash Flow Hedging Relationships														Location and Amount of Gain or (Loss) Recognized in Income on Fair Value and Cash Flow Hedging Relationships
	Twelve Months Ended December 31, 2018														Twelve Months Ended December 31, 2019
	Cost of sales			Selling, general, and administrative expenses				Interest expense			Other (Income) Expense, net				Cost of sales				Selling, general, and administrative expenses						Other Income, net
																		Other Income, net
Total amounts of income and expense line items shown in the consolidated statements of operations in which the effects of fair value or cash flow hedges are recorded	$	(939.4	)			$	(1,088.5			)				$		(29.9	)			$	4.0	Total amounts of income and expense line items shown in the consolidated statements of operations in which the effects of fair value or cash flow hedges are recorded	$	(1,114.4)	$	(1,242.2)	$	8.2
The effects of fair value and cash flow hedging:													The effects of fair value and cash flow hedging:
Gain (loss) on fair value hedging relationships:													Gain (loss) on fair value hedging relationships:
Foreign currency contracts:													Foreign currency contracts:
Hedged items	—			—				—			—		Hedged items		0				0						2.9
Derivatives designated as hedging instruments	—			—				—			—		Derivatives designated as hedging instruments		0				0						(2.9)
Amount excluded from effectiveness testing recognized in earnings based on an amortization approach	—			—				—			0.5		Amount excluded from effectiveness testing recognized in earnings based on an amortization approach		0				0						4.3
Gain (loss) on cash flow hedging relationships:													Gain (loss) on cash flow hedging relationships:
Foreign currency contracts:													Foreign currency contracts:
Amount of gain (loss) reclassified from accumulated OCI into income	$	(17.3	)	$	(2.3	)		$	—		$	—	Amount of gain (loss) reclassified from accumulated OCI into income		40.9				1.9						0



	Years Ended December 31,
	2018			2017
	(in millions)
Change in fair value of plan assets:
Beginning of year	$	71.2		$	78.6
Actual return on plan assets	(0.8		)	4.3
Employer contributions	3.9			6.5
Participant contributions	1.2			2.2
Settlements	(14.4		)	(20.7		)
Benefits paid	(0.3		)	(3.1		)
Currency exchange rate changes and other	(0.4		)	3.4
End of year	$	60.4		$	71.2

Funded Status
Projected benefit obligation	$	(97.4	)	$	(114.9	)
Plan assets at fair value	60.4			71.2
Underfunded status	$	(37.0	)	$	(43.7	)
Net amounts recognized on the consolidated balance sheet:
Other long-term liabilities	$	37.0		$	43.7
Accumulated other comprehensive loss, net of tax:
Net actuarial loss	$	(19.4	)	$	(17.1	)
Net prior service cost	2.3			(0.9		)
Deferred income tax benefit	3.6			3.9
Total	$	(13.5	)	$	(14.1	)



Equity securities	~~22.5~~25.3	%
Debt securities	~~49.7~~47.5	%
Real estate	~~6.8~~7.7	%
Other	~~21.0~~19.5	%
Total	100.0	%


~~(a)~~	Certain investments that were measured at net asset value per share have not been classified in the fair value hierarchy. The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the total plan assets.


	Insurance Contracts
Balance at December 31, 2018	$	1.0



Purchases, sales and settlements	(0.1)


Balance at December 31, 2019	0.9





Currency exchange rate impact	0.1
Balance at December 31, 2020	$	1.0



	Insurance Contracts
Balance at December 31, 2016	$	58.5
Actual return on plan assets:
Relating to assets still held at December 31, 2017	(0.9		)
Relating to assets sold during 2017	0.1
Purchases, sales and settlements	(15.5		)
Transfers in and/or out of Level 3	(42.6		)
Currency exchange rate impact	3.1
Balance at December 31, 2017	2.7
Actual return on plan assets:
Relating to assets still held at December 31, 2018	(1.6		)
Currency exchange rate impact	(0.1		)
Balance at December 31, 2018	$	1.0