Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2016 | Oct. 21, 2016 | |
Document and Entity Information | ||
Entity Registrant Name | Edwards Lifesciences Corp | |
Entity Central Index Key | 1,099,800 | |
Current Fiscal Year End Date | --12-31 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2016 | |
Document Fiscal Year Focus | 2,016 | |
Document Fiscal Period Focus | Q3 | |
Amendment Flag | false | |
Entity Common Stock, Shares Outstanding | 213,813,939 |
CONSOLIDATED CONDENSED BALANCE
CONSOLIDATED CONDENSED BALANCE SHEETS - USD ($) $ in Millions | Sep. 30, 2016 | Dec. 31, 2015 |
Current assets | ||
Cash and cash equivalents | $ 645 | $ 718.4 |
Short-term investments (Note 4) | 555.3 | 506.3 |
Accounts and other receivables, net of allowances of $7.7 and $6.8, respectively | 454.2 | 371.8 |
Inventories (Note 2) | 401 | 339.9 |
Prepaid expenses | 49.8 | 45.1 |
Other current assets | 66.1 | 66.4 |
Total current assets | 2,171.4 | 2,047.9 |
Long-term accounts receivable, net of allowances of $6.6 and $6.3, respectively | 5.3 | 3.6 |
Long-term investments (Note 4) | 467.5 | 379.9 |
Property, plant, and equipment, net | 543.7 | 482.5 |
Goodwill | 630 | 628.3 |
Other intangible assets, net | 207 | 205.4 |
Deferred income taxes | 189.3 | 180.5 |
Other assets | 124.8 | 131.2 |
Total assets | 4,339 | 4,059.3 |
Current liabilities | ||
Accounts payable and accrued liabilities (Note 2) | 532.8 | 476.2 |
Long-term debt | 600.6 | 599.9 |
Other long-term liabilities | 513.8 | 480.1 |
Commitments and contingencies (Note 9) | ||
Stockholders' equity | ||
Preferred stock, $.01 par value, authorized 50.0 shares, no shares outstanding | 0 | 0 |
Common stock, $1.00 par value, 350.0 shares authorized, 242.0 and 239.1 shares issued, and 213.7 and 215.4 shares outstanding, respectively | 242 | 239.1 |
Additional paid-in capital | 1,091.1 | 946.8 |
Retained earnings | 3,747.8 | 3,336.8 |
Accumulated other comprehensive loss | (171.2) | (182.6) |
Treasury stock, at cost, 28.3 and 23.7 shares, respectively | (2,217.9) | (1,837) |
Total stockholders' equity | 2,691.8 | 2,503.1 |
Total liabilities and stockholders' equity | $ 4,339 | $ 4,059.3 |
CONSOLIDATED CONDENSED BALANCE3
CONSOLIDATED CONDENSED BALANCE SHEETS (Parenthetical) - USD ($) $ in Millions | Sep. 30, 2016 | Dec. 31, 2015 |
Statement of Financial Position [Abstract] | ||
Accounts and other receivables, allowances | $ 7.7 | $ 6.8 |
Long-term accounts receivable, allowances | $ 6.6 | $ 6.3 |
Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized | 50,000,000 | 50,000,000 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value (in dollars per share) | $ 1 | $ 1 |
Common stock, shares authorized | 350,000,000 | 350,000,000 |
Common stock, shares issued | 242,000,000 | 239,100,000 |
Common stock, shares outstanding | 213,700,000 | 215,400,000 |
Treasury stock, shares | 28,300,000 | 23,700,000 |
CONSOLIDATED CONDENSED STATEMEN
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS - USD ($) shares in Millions, $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Income Statement [Abstract] | ||||
Net sales | $ 739.4 | $ 615.5 | $ 2,196 | $ 1,822.6 |
Cost of sales | 201.4 | 146.7 | 584.2 | 441.3 |
Gross profit | 538 | 468.8 | 1,611.8 | 1,381.3 |
Selling, general, and administrative expenses | 229.6 | 212 | 671.1 | 628.4 |
Research and development expenses | 113.1 | 101 | 328.4 | 284.9 |
Intellectual property litigation expenses | 6.5 | 2.4 | 27.8 | 3.7 |
Special charges (Note 3) | 0 | 0 | 34.5 | 0 |
Interest expense, net | 2.1 | 2.5 | 6.9 | 6.7 |
Other expenses, net | 1.5 | 0.2 | 5.6 | 2.2 |
Income before provision for income taxes | 185.2 | 150.7 | 537.5 | 455.4 |
Provision for income taxes | 43.8 | 32.6 | 126.5 | 101.2 |
Net income | $ 141.4 | $ 118.1 | $ 411 | $ 354.2 |
Earnings per share: | ||||
Basic (in dollars per share) | $ 0.66 | $ 0.55 | $ 1.93 | $ 1.65 |
Diluted (in dollars per share) | $ 0.65 | $ 0.54 | $ 1.89 | $ 1.61 |
Weighted-average number of common shares outstanding: | ||||
Basic (in shares) | 213.2 | 215.2 | 212.8 | 215.3 |
Diluted (in shares) | 218.1 | 219.9 | 217.7 | 220.1 |
CONSOLIDATED CONDENSED STATEME5
CONSOLIDATED CONDENSED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Statement of Comprehensive Income [Abstract] | ||||
Net income | $ 141.4 | $ 118.1 | $ 411 | $ 354.2 |
Other comprehensive income (loss), net of tax (Note 10): | ||||
Foreign currency translation adjustments | 10.6 | (6.9) | 31.5 | (53.2) |
Unrealized loss on cash flow hedges | (2) | (15.5) | (22.8) | (14.8) |
Unrealized (loss) gain on available-for-sale investments | (1.3) | (0.6) | 1.9 | (1.1) |
Reclassification of net realized investment loss to earnings | 0.2 | 0.4 | 0.8 | 0.8 |
Other comprehensive income (loss) | 7.5 | (22.6) | 11.4 | (68.3) |
Comprehensive income | $ 148.9 | $ 95.5 | $ 422.4 | $ 285.9 |
CONSOLIDATED CONDENSED STATEME6
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS - USD ($) $ in Millions | 9 Months Ended | |
Sep. 30, 2016 | Sep. 30, 2015 | |
Cash flows from operating activities | ||
Net income | $ 411 | $ 354.2 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 52.1 | 51.3 |
Stock-based compensation (Note 7) | 43 | 37 |
Excess tax benefit from stock plans | (56.6) | (27.1) |
Gain on investments | (2.4) | (2.5) |
Deferred income taxes | (2.6) | (1.1) |
Purchased in-process research and development (Note 3) | 34.5 | 0 |
Other | 6.3 | 9.9 |
Changes in operating assets and liabilities: | ||
Accounts and other receivables, net | (54.8) | (28.3) |
Inventories | (43.1) | (56.1) |
Accounts payable and accrued liabilities | 41.4 | 35.9 |
Income taxes | 72.9 | 63.9 |
Prepaid expenses and other current assets | (14.5) | 8.9 |
Other | 16.1 | (0.1) |
Net cash provided by operating activities | 503.3 | 445.9 |
Cash flows from investing activities | ||
Capital expenditures | (112.9) | (65.2) |
Purchases of held-to-maturity investments (Note 4) | (579.6) | (903.5) |
Proceeds from held-to-maturity investments (Note 4) | 628.7 | 1,135.1 |
Purchases of available-for sale investments (Note 4) | (337) | (307.2) |
Proceeds from available-for-sale investments (Note 4) | 161.1 | 126.3 |
Investments in intangible assets and in-process research and development | (41.3) | 0 |
Investments in trading securities, net | (6.5) | (6.3) |
Investments in unconsolidated affiliates, net (Note 4) | (5.1) | (0.8) |
Acquisition of business, net of cash acquired | 0 | (320.1) |
Other | 0.7 | (1.7) |
Net cash used in investing activities | (291.9) | (343.4) |
Cash flows from financing activities | ||
Proceeds from issuance of debt | 24.6 | 20.7 |
Payments on debt and capital lease obligations | (25.7) | (18.8) |
Purchases of treasury stock (Note 8) | (380.9) | (180.1) |
Equity forward contract related to accelerated share repurchase agreement (Note 8) | (35) | 0 |
Excess tax benefit from stock plans | 56.6 | 27.1 |
Proceeds from stock plans | 82.7 | 60 |
Other | 4.1 | (7.8) |
Net cash used in financing activities | (273.6) | (98.9) |
Effect of currency exchange rate changes on cash and cash equivalents | (11.2) | (11.3) |
Net decrease in cash and cash equivalents | (73.4) | (7.7) |
Cash and cash equivalents at beginning of period | 718.4 | 653.8 |
Cash and cash equivalents at end of period | 645 | 646.1 |
Cash paid during the year for: | ||
Income taxes | 55.3 | 37.2 |
Non-cash investing and financing transactions: | ||
Capital expenditures accruals | $ 19.7 | $ 9.9 |
BASIS OF PRESENTATION
BASIS OF PRESENTATION | 9 Months Ended |
Sep. 30, 2016 | |
Accounting Policies [Abstract] | |
BASIS OF PRESENTATION | BASIS OF PRESENTATION The accompanying interim consolidated condensed financial statements and related disclosures have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC") and should be read in conjunction with the consolidated financial statements and notes included in Edwards Lifesciences Corporation's Annual Report on Form 10-K for the year ended December 31, 2015 . Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles ("GAAP") have been condensed or omitted. In the opinion of management of Edwards Lifesciences Corporation ("Edwards Lifesciences" or the "Company"), the interim consolidated condensed financial statements reflect all adjustments considered necessary for a fair statement of the interim periods. All such adjustments are of a normal, recurring nature. The results of operations for the interim periods are not necessarily indicative of the results of operations to be expected for the full year. A reclassification related to the presentation of taxes receivable has been made in the prior year's consolidated condensed balance sheet to conform to current year presentation. Recently Adopted Accounting Standards In September 2015, the Financial Accounting Standards Board ("FASB") issued an update to the guidance on business combinations. The new guidance requires that an acquirer recognize adjustments to provisional amounts that are identified during the measurement period in the reporting period in which the adjustment amounts are determined. The guidance was effective for fiscal years beginning after December 15, 2015, including interim periods within those fiscal years. The adoption of this guidance did not impact the Company's consolidated financial statements. In April 2015, the FASB issued an amendment to the accounting guidance on the presentation of debt issuance costs. The guidance requires an entity to present debt issuance costs related to a recognized debt liability as a direct deduction from the carrying amount of that debt, consistent with debt discounts. In August 2015, the FASB clarified that for a line-of-credit arrangement, a company can continue to defer and present debt issuance costs as an asset and subsequently amortize the debt issuance costs over the term of the line-of-credit arrangement, whether or not there are any outstanding borrowings on the line-of-credit arrangement. The guidance was effective for annual reporting periods beginning after December 31, 2015 and interim periods within those periods, and must be applied retrospectively to each prior reporting period presented. The adoption of this guidance did not have a material impact on the Company's consolidated financial statements. New Accounting Standards Not Yet Adopted In August 2016, the FASB issued an amendment to the guidance on the statement of cash flows. The standard addresses eight specific cash flow issues, and is intended to reduce the diversity in practice around how certain transactions are classified within the statement of cash flows. The guidance is effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years with early adoption permitted. This guidance will impact how the Company classifies contingent consideration payments made after a business combination. Contingent consideration payments that are not made soon after the acquisition date will be classified as a financing activity up to the amount of the contingent consideration liability recognized at the acquisition date, with any excess classified as an operating activity. The Company does not expect the adoption of the other provisions of this guidance to have a material impact on it's consolidated financial statements. In March 2016, the FASB issued an amendment to the guidance on stock compensation. The amendment simplifies several aspects of the accounting for share-based payment award transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. The guidance is effective for annual periods beginning after December 15, 2016, and interim periods within those annual periods. The Company anticipates that adoption of this guidance will introduce more volatility to its effective tax rate, generally reducing the rate. In March 2016, the FASB issued an update to the guidance on revenue recognition. The update clarifies the implementation guidance on principal versus agent considerations, including how an entity should identify the unit of accounting for the principal versus agent evaluation and how it should apply the control principle to certain types of arrangements. In April 2016, the FASB issued another update to the guidance on revenue recognition. This update clarifies the implementation guidance on identifying performance obligations and licensing, while retaining the related principles for those areas. In May 2016, the FASB issued a further update to the guidance on revenue recognition. This update clarifies the implementation guidance on assessing collectibility, presentation of sales taxes and other similar taxes received from customers, noncash consideration, contract modifications at transition, and completed contracts at transition. The amendments in these updates are effective for annual reporting periods beginning after December 15, 2017, and interim periods within those annual periods. The Company is currently evaluating the impact the revenue recognition guidance, including these updates, will have on its consolidated financial statements. In February 2016, the FASB issued an amendment to the guidance on leases. The amendment improves transparency and comparability among companies by recognizing lease assets and lease liabilities on the balance sheet and by disclosing key information about leasing arrangements. The guidance is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. The Company is currently evaluating the impact this guidance will have on its consolidated financial statements. |
COMPOSITION OF CERTAIN FINANCIA
COMPOSITION OF CERTAIN FINANCIAL STATEMENT CAPTIONS | 9 Months Ended |
Sep. 30, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
COMPOSITION OF CERTAIN FINANCIAL STATEMENT CAPTIONS | COMPOSITION OF CERTAIN FINANCIAL STATEMENT CAPTIONS Components of selected captions in the consolidated condensed balance sheets consisted of the following (in millions): September 30, 2016 December 31, 2015 Inventories Raw materials $ 60.6 $ 63.8 Work in process 93.7 64.1 Finished products 246.7 212.0 $ 401.0 $ 339.9 At September 30, 2016 and December 31, 2015 , approximately $72.4 million and $58.8 million , respectively, of the Company's finished products inventories were held on consignment. September 30, 2016 December 31, 2015 Accounts payable and accrued liabilities Accounts payable $ 87.0 $ 63.9 Employee compensation and withholdings 199.9 209.4 Property, payroll, and other taxes 35.9 34.5 Research and development accruals 37.6 38.6 Accrued rebates 33.3 23.9 Fair value of derivatives 19.4 4.2 Accrued marketing expenses 13.2 9.6 Taxes payable 6.7 14.5 Litigation reserves 8.1 5.6 Other accrued liabilities 91.7 72.0 $ 532.8 $ 476.2 |
SPECIAL CHARGES
SPECIAL CHARGES | 9 Months Ended |
Sep. 30, 2016 | |
Unusual or Infrequent Items, or Both [Abstract] | |
SPECIAL CHARGES | SPECIAL CHARGES Acquisition of In-process Research and Development ("IPR&D") In May 2016, the Company entered into two separate agreements to acquire technologies for use in its transcatheter heart valve programs. In connection with these agreements, the Company recorded an IPR&D charge totaling $34.5 million . The acquired technologies are in the early stages of development and have no alternative uses. Additional design developments, bench testing, pre-clinical studies, and human clinical studies must be successfully completed prior to selling any product using these technologies. |
INVESTMENTS
INVESTMENTS | 9 Months Ended |
Sep. 30, 2016 | |
Investments [Abstract] | |
INVESTMENTS | INVESTMENTS Debt Securities Investments in debt securities at the end of each period were as follows (in millions): September 30, 2016 December 31, 2015 Held-to-maturity Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value Bank time deposits $ 412.0 $ — $ — $ 412.0 $ 440.1 $ — $ — $ 440.1 U.S. government and agency securities 22.1 — — 22.1 32.5 — (0.2 ) 32.3 Asset-backed securities 0.6 — — 0.6 1.2 — — 1.2 Corporate debt securities 9.1 — — 9.1 16.4 — — 16.4 Municipal securities 3.2 — — 3.2 5.2 — — 5.2 Total $ 447.0 $ — $ — $ 447.0 $ 495.4 $ — $ (0.2 ) $ 495.2 Available-for-sale Commercial paper $ 41.0 $ — $ — $ 41.0 $ 28.1 $ — $ — $ 28.1 U.S. government and agency securities 101.6 0.3 — 101.9 38.7 — (0.2 ) 38.5 Asset-backed securities 79.9 0.1 — 80.0 62.8 — (0.2 ) 62.6 Corporate debt securities 313.5 1.2 (0.2 ) 314.5 230.0 — (1.3 ) 228.7 Municipal securities 4.6 — — 4.6 4.7 — — 4.7 Total $ 540.6 $ 1.6 $ (0.2 ) $ 542.0 $ 364.3 $ — $ (1.7 ) $ 362.6 The cost and fair value of investments in debt securities, by contractual maturity, as of September 30, 2016 were as follows: Held-to-Maturity Available-for-Sale Cost Fair Value Cost Fair Value (in millions) Due in 1 year or less $ 437.4 $ 437.4 $ 117.8 $ 117.9 Due after 1 year through 5 years 1.0 1.0 343.0 344.1 Instruments not due at a single maturity date 8.6 8.6 79.8 80.0 $ 447.0 $ 447.0 $ 540.6 $ 542.0 Actual maturities may differ from the contractual maturities due to call or prepayment rights. Investments in Unconsolidated Affiliates The Company has a number of equity investments in privately and publicly held companies. Investments in these unconsolidated affiliates are recorded in " Long-term Investments " on the consolidated condensed balance sheets, and are as follows: September 30, December 31, (in millions) Available-for-sale investments Cost $ — $ — Unrealized gains 0.2 0.2 Fair value of available-for-sale investments 0.2 0.2 Equity method investments Cost 10.6 10.9 Equity in losses (3.5 ) (4.2 ) Carrying value of equity method investments 7.1 6.7 Cost method investments Carrying value of cost method investments 26.5 21.3 Total investments in unconsolidated affiliates $ 33.8 $ 28.2 During the three and nine months ended September 30, 2016 , the gross realized gains or losses from sales of available-for-sale investments were not material. |
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS | 9 Months Ended |
Sep. 30, 2016 | |
Fair Value Disclosures [Abstract] | |
FAIR VALUE MEASUREMENTS | FAIR VALUE MEASUREMENTS The consolidated condensed financial statements include financial instruments for which the fair market value of such instruments may differ from amounts reflected on a historical cost basis. Financial instruments of the Company consist of cash deposits, accounts and other receivables, investments, accounts payable, certain accrued liabilities, and borrowings under a revolving credit agreement. The carrying value of these financial instruments generally approximates fair value due to their short-term nature. Financial instruments also include long-term notes payable. As of September 30, 2016 , the fair value of the notes payable, based on Level 2 inputs, was $614.7 million , versus a carrying value of $600.6 million . Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. The Company prioritizes the inputs used to determine fair values in one of the following three categories: Level 1—Quoted market prices in active markets for identical assets or liabilities. Level 2—Inputs, other than quoted prices in active markets, that are observable, either directly or indirectly. Level 3—Unobservable inputs that are not corroborated by market data. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, the level in the fair value hierarchy within which the fair value measurement in its entirety falls has been determined based on the lowest level input that is significant to the fair value measurement in its entirety. Assets and Liabilities Measured at Fair Value on a Recurring Basis The following table summarizes the Company's financial instruments which are measured at fair value on a recurring basis (in millions): September 30, 2016 Level 1 Level 2 Level 3 Total Assets Cash equivalents $ 35.1 $ 9.5 $ — $ 44.6 Available-for-sale investments: Corporate debt securities — 314.5 — 314.5 Asset-backed securities — 80.0 — 80.0 U.S. government and agency securities 76.5 25.4 — 101.9 Commercial paper — 41.0 — 41.0 Municipal securities — 4.6 — 4.6 Equity investments in unconsolidated affiliates 0.2 — — 0.2 Investments held for deferred compensation plans 43.7 — — 43.7 Derivatives — 8.8 — 8.8 $ 155.5 $ 483.8 $ — $ 639.3 Liabilities Derivatives $ — $ 19.4 $ — $ 19.4 Deferred compensation plans 44.1 — — 44.1 Contingent consideration obligation — — 31.6 31.6 $ 44.1 $ 19.4 $ 31.6 $ 95.1 December 31, 2015 Assets Cash equivalents $ 3.5 $ 8.5 $ — $ 12.0 Available-for-sale investments: Corporate debt securities — 228.7 — 228.7 Asset-backed securities — 62.6 — 62.6 U.S. government and agency securities 9.6 28.9 — 38.5 Commercial paper — 28.1 — 28.1 Municipal securities — 4.7 — 4.7 Equity investments in unconsolidated affiliates 0.1 — — 0.1 Investments held for deferred compensation plans 35.3 — — 35.3 Derivatives — 23.3 — 23.3 $ 48.5 $ 384.8 $ — $ 433.3 Liabilities Derivatives $ — $ 4.2 $ — $ 4.2 Deferred compensation plans 35.5 — — 35.5 Contingent consideration obligation — — 30.5 30.5 $ 35.5 $ 4.2 $ 30.5 $ 70.2 The following table summarizes the changes in fair value of the contingent consideration obligation for the nine months ended September 30, 2016 (in millions): Balance at December 31, 2015 $ 30.5 Changes in fair value (recorded in " Research and Development Expenses ") 1.1 Balance at September 30, 2016 $ 31.6 Cash Equivalents and Available-for-sale Investments The Company estimates the fair values of its money market funds based on quoted prices in active markets for identical assets. The Company estimates the fair values of its commercial paper, U.S. government and agency securities, asset-backed securities, and corporate debt securities by taking into consideration valuations obtained from third-party pricing services. The pricing services use industry standard valuation models, including both income and market-based approaches, for which all significant inputs are observable, either directly or indirectly, to estimate fair value. These inputs include reported trades and broker-dealer quotes on the same or similar securities, benchmark yields, credit spreads, prepayment and default projections based on historical data, and other observable inputs. The Company independently reviews and validates the pricing received from the third-party pricing service by comparing the prices to prices reported by a secondary pricing source. The Company’s validation procedures have not resulted in an adjustment to the pricing received from the pricing service. Investments in unconsolidated affiliates are long-term equity investments in companies that are in various stages of development. Certain of the Company’s investments in unconsolidated affiliates are designated as available-for-sale. These investments are carried at fair market value based on quoted market prices. Deferred Compensation Plans The Company holds investments in trading securities related to its deferred compensation plans. The investments are in a variety of stock and bond mutual funds. The fair values of these investments and the corresponding liabilities are based on quoted market prices. Derivative Instruments The Company uses derivative financial instruments in the form of foreign currency forward exchange contracts and foreign currency option contracts to manage foreign currency exposures, and interest rate swap agreements to manage its interest rate exposures. All derivatives contracts are recognized on the balance sheet at their fair value. The fair value of foreign currency derivative financial instruments was estimated based on quoted market foreign exchange rates and market discount rates. The fair value of the interest rate swap agreements was determined based on a discounted cash flow analysis reflecting the contractual terms of the agreements and the 6-month LIBOR forward interest rate curve. Judgment was employed in interpreting market data to develop estimates of fair value; accordingly, the estimates presented herein are not necessarily indicative of the amounts that the Company could realize in a current market exchange. The use of different market assumptions or valuation methodologies could have a material effect on the estimated fair value amounts. Contingent Consideration Obligation The Company recorded a contingent consideration obligation related to its acquisition of CardiAQ. The $50.0 million contingent consideration obligation has been recorded at its estimated fair value, which was determined using a probability weighted discounted cash flow analysis that considered significant unobservable inputs. These inputs included a 1.5% discount rate used to present value the projected cash flows, a 65.0% probability of milestone achievement, and a projected payment date in 2018. The use of different assumptions could have a material effect on the estimated fair value amount. |
DERIVATIVE INSTRUMENTS AND HEDG
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES | 9 Months Ended |
Sep. 30, 2016 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES | DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES The Company uses derivative financial instruments to manage its currency exchange rate risk and its interest rate risk, as summarized below. It is the Company's policy not to enter into derivative financial instruments for speculative purposes. Notional amounts are stated in United States dollar equivalents at spot exchange rates at the respective dates. Notional Amount September 30, 2016 December 31, 2015 (in millions) Foreign currency forward exchange contracts $ 861.7 $ 1,061.6 Interest rate swap agreements 300.0 300.0 The Company uses interest rate swaps to convert a portion of its fixed-rate debt into variable-rate debt. These interest rate swaps are designated as fair value hedges and meet the shortcut method requirements under the accounting standards for derivatives and hedging. Accordingly, changes in the fair values of the interest rate swaps are considered to exactly offset changes in the fair value of the underlying long-term debt. The Company uses foreign currency forward exchange contracts to offset the changes due to currency rate movements in the amount of future cash flows associated with intercompany transactions and certain local currency expenses expected to occur within the next 13 months . These foreign currency forward exchange contracts are designated as cash flow hedges. Certain of the Company's locations have assets and liabilities denominated in currencies other than their functional currencies resulting principally from intercompany and local currency transactions. The Company uses foreign currency forward exchange contracts and foreign currency option contracts that are not designated as hedging instruments to offset the transaction gains and losses associated with certain of these assets and liabilities. The Company also uses foreign currency forward exchange contracts to protect its net investment in certain foreign subsidiaries from adverse changes in foreign currency exchange rates. These foreign currency forward exchange contracts are designated as net investment hedges. All foreign currency forward exchange contracts and foreign currency option contracts are denominated in currencies of major industrial countries, principally the Euro and the Japanese yen. All derivative financial instruments are recognized at fair value in the consolidated condensed balance sheets. For each derivative instrument that is designated and effective as a fair value hedge, the gain or loss on the derivative is recognized immediately to earnings, and offsets the loss or gain on the underlying hedged item. The gain or loss on the interest rate swaps (designated as fair value hedges) is classified in net interest expense, as they hedge the interest rate risk associated with the Company's fixed-rate debt. The Company reports in " Accumulated Other Comprehensive Loss " the effective portion of the gain or loss on derivative financial instruments that are designated, and that qualify, as cash flow hedges. The Company reclassifies these gains and losses into earnings in the same period in which the underlying hedged transactions affect earnings. The effective portions of net investment hedges are reported in " Accumulated Other Comprehensive Loss " as a part of the cumulative translation adjustment, and would be reclassified into earnings if the underlying net investment is sold or substantially liquidated. The ineffective portions of cash flow hedges and net investment hedges are recorded in current period earnings. For the nine months ended September 30, 2016 and 2015 , the Company did not record any gains or losses due to hedge ineffectiveness. The gains and losses on derivative financial instruments for which the Company does not elect hedge accounting treatment are recognized in the consolidated condensed statements of operations in each period based upon the change in the fair value of the derivative financial instrument. Cash flows from net investment hedges are reported as investing activities in the consolidated condensed statements of cash flows, and cash flows from all other derivative financial instruments are reported as operating activities. Derivative financial instruments involve credit risk in the event the counterparty should default. It is the Company's policy to execute such instruments with global financial institutions that the Company believes to be creditworthy. The Company diversifies its derivative financial instruments among counterparties to minimize exposure to any one of these entities. The Company also uses International Swap Dealers Association master-netting agreements. The master-netting agreements provide for the net settlement of all contracts through a single payment in a single currency in the event of default, as defined by the agreements. The following table presents the location and fair value amounts of derivative instruments reported in the consolidated condensed balance sheets (in millions): Fair Value Derivatives designated as hedging instruments Balance Sheet Location September 30, 2016 December 31, 2015 Assets Foreign currency contracts Other current assets $ 4.5 $ 15.0 Interest rate swap agreements Other assets $ 4.1 $ 1.6 Liabilities Foreign currency contracts Accrued and other liabilities $ 19.4 $ 4.2 Derivatives not designated as hedging instruments Assets Foreign currency contracts Other current assets $ 0.2 $ — Foreign currency contracts Other assets $ — $ 6.7 The following table presents the effect of master-netting agreements and rights of offset on the consolidated condensed balance sheets (in millions): 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 September 30, 2016 Gross Amounts Financial Instruments Cash Collateral Received Net Amount Derivative assets Foreign currency contracts $ 4.7 $ — $ 4.7 $ (1.5 ) $ — $ 3.2 Interest rate swap agreements $ 4.1 $ — $ 4.1 $ — $ — $ 4.1 Derivative liabilities Foreign currency contracts $ 19.4 $ — $ 19.4 $ (1.5 ) $ — $ 17.9 December 31, 2015 Derivative assets Foreign currency contracts $ 21.7 $ — $ 21.7 $ (4.0 ) $ — $ 17.7 Interest rate swap agreements $ 1.6 $ — $ 1.6 $ — $ — $ 1.6 Derivative liabilities Foreign currency contracts $ 4.2 $ — $ 4.2 $ (4.0 ) $ — $ 0.2 The following tables present the effect of derivative instruments on the consolidated condensed statements of operations and consolidated condensed statements of comprehensive income (in millions): Amount of Gain or (Loss) Recognized in OCI on Derivative (Effective Portion) Amount of Gain or (Loss) Reclassified from Accumulated OCI into Income Three Months Ended Three Months Ended Location of Gain or (Loss) Reclassified from Accumulated OCI into Income 2016 2015 2016 2015 Cash flow hedges Foreign currency contracts $ (6.4 ) $ (2.2 ) Cost of sales $ (3.3 ) $ 19.9 Selling, general, and administrative expenses $ (0.1 ) $ 0.5 Net investment hedges Foreign currency contracts $ (0.3 ) $ (5.0 ) Other expenses, net $ — $ — Amount of Gain or (Loss) Recognized in OCI on Derivative (Effective Portion) Amount of Gain or (Loss) Reclassified from Accumulated OCI into Income Nine Months Ended Nine Months Ended Location of Gain or (Loss) Reclassified from Accumulated OCI into Income 2016 2015 2016 2015 Cash flow hedges Foreign currency contracts $ (26.9 ) $ 26.7 Cost of sales $ 11.3 $ 49.4 Selling, general, and administrative expenses $ (0.4 ) $ 0.5 Net investment hedges Foreign currency contracts $ (4.1 ) $ (5.0 ) Other expenses, net $ — $ — Amount of Gain or (Loss) Recognized in Income on Derivative Three Months Ended Location of Gain or (Loss) Recognized in Income on Derivative Fair value hedges 2016 2015 Interest rate swap agreements Interest expense, net $ (2.3 ) $ 4.5 Amount of Gain or (Loss) Recognized in Income on Derivative Nine Months Ended Location of Gain or (Loss) Recognized in Income on Derivative Fair value hedges 2016 2015 Interest rate swap agreements Interest expense, net $ 2.5 $ 6.4 The gains on the interest rate swap agreements are fully offset by the changes in the fair value of the fixed-rate debt being hedged. Amount of Gain or (Loss) Recognized in Income on Derivative Three Months Ended Location of Gain or (Loss) Recognized in Income on Derivative Derivatives not designated as hedging instruments 2016 2015 Foreign currency contracts Other expenses, net $ (2.7 ) $ (0.3 ) Amount of Gain or (Loss) Recognized in Income on Derivative Nine Months Ended Location of Gain or (Loss) Recognized in Income on Derivative Derivatives not designated as hedging instruments 2016 2015 Foreign currency contracts Other expenses, net $ (18.5 ) $ 6.5 The Company expects that during the next twelve months it will reclassify to earnings a $3.1 million loss currently recorded in " Accumulated Other Comprehensive Loss ." |
STOCK-BASED COMPENSATION
STOCK-BASED COMPENSATION | 9 Months Ended |
Sep. 30, 2016 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
STOCK-BASED COMPENSATION | STOCK-BASED COMPENSATION Stock-based compensation expense related to awards issued under the Company's incentive compensation plans for the three and nine months ended September 30, 2016 and 2015 was as follows (in millions): Three Months Ended Nine Months Ended 2016 2015 2016 2015 Cost of sales $ 2.2 $ 1.7 $ 6.3 $ 5.1 Selling, general, and administrative expenses 9.5 8.7 28.6 25.4 Research and development expenses 2.7 2.2 8.1 6.5 Total stock-based compensation expense $ 14.4 $ 12.6 $ 43.0 $ 37.0 At September 30, 2016 , the total remaining compensation cost related to nonvested stock options, restricted stock units, market-based restricted stock units, performance-based restricted stock units, and employee stock purchase plan ("ESPP") subscription awards amounted to $109.6 million , which will be amortized on a straight-line basis over the weighted-average remaining requisite service period of 32 months . During the nine months ended September 30, 2016 , the Company granted 1.0 million stock options at a weighted-average exercise price of $105.38 and 0.2 million shares of restricted stock units at a weighted-average grant-date fair value of $104.68 . The Company also granted 0.1 million shares of market-based restricted stock units at a weighted-average grant-date fair value of $116.06 . In addition, the Company issued an additional 0.1 million shares related to a previous year's grant of market-based restricted stock units since the payout percentage achieved at the end of the performance period was in excess of the target. The market-based restricted stock units vest based on a combination of certain service and market conditions. The actual number of shares issued will be determined based on the Company’s total shareholder return relative to a selected industry peer group over a three -year performance period, and may range from 0% to 175% of the targeted number of shares granted. In 2015, in conjunction with the acquisition of CardiAQ, the Company granted performance-based restricted stock units that vest based on the achievement of a specified milestone. The Company reassesses the probability of vesting at each quarter end and adjusts the stock-based compensation expense based on its probability assessment. As of September 30, 2016 , achievement of the milestone was deemed not yet probable and no expense has been recognized related to these awards. Fair Value Disclosures The fair value of the market-based restricted stock units was determined using a Monte Carlo simulation model, which uses multiple input variables to determine the probability of satisfying the market condition requirements. The weighted-average assumptions used to determine the fair value of the market-based restricted stock units granted during the nine months ended September 30, 2016 and 2015 included a risk-free interest rate of 1.0% and 1.0% , respectively, and an expected volatility rate of 30.0% and 31.0% , respectively. The following table includes the weighted-average grant-date fair values of stock options granted during the periods indicated and the related weighted-average assumptions used in the Black-Scholes option pricing model: Option Awards Three Months Ended Nine Months Ended 2016 2015 2016 2015 Average risk-free interest rate 1.0 % 1.6 % 1.1 % 1.4 % Expected dividend yield None None None None Expected volatility 33.2 % 29.7 % 33.1 % 29.8 % Expected term (years) 4.6 4.7 4.5 4.6 Fair value, per option $ 31.23 $ 20.29 $ 31.02 $ 18.06 The following table includes the weighted-average grant-date fair values for ESPP subscriptions granted during the periods indicated and the related weighted-average assumptions used in the Black-Scholes option pricing model: ESPP Three Months Ended Nine Months Ended 2016 2015 2016 2015 Average risk-free interest rate 0.2 % 0.2 % 0.3 % 0.2 % Expected dividend yield None None None None Expected volatility 31.9 % 26.7 % 29.3 % 27.6 % Expected term (years) 0.8 0.8 0.6 0.6 Fair value, per share $ 31.13 $ 17.18 $ 21.97 $ 15.51 |
ACCELERATED SHARE REPURCHASE
ACCELERATED SHARE REPURCHASE | 9 Months Ended |
Sep. 30, 2016 | |
Equity [Abstract] | |
ACCELERATED SHARE REPURCHASE | ACCELERATED SHARE REPURCHASE In February 2016, Edwards entered into ASR agreements to repurchase $325.0 million of the Company's common stock based on the volume-weighted average price ("VWAP") of the Company's common stock during the term of the agreements, less a discount. Upon entering into the agreements, Edwards received an initial delivery of 3.2 million shares. The initial shares were valued at $83.60 per share based on the closing price of the Company's common stock on the date of the agreements, and represented approximately 82% of the total contract value. At the conclusion of each of the ASR agreements, the Company may receive additional shares or may be required to pay additional cash or shares (at the Company's election). The final settlements are based on the VWAP over the term of the agreements, less a discount, and will occur at varying termination dates extending to December 2016, subject to certain adjustments pursuant to the agreements. In April 2016, one of the ASR agreements concluded at a VWAP less discount per share price of $84.39 , and the Company received an additional 0.3 million shares under that agreement. If the remaining agreement had been settled on September 30, 2016 , Edwards would have received 0.1 million additional shares. The ASR agreements were accounted for as two separate transactions: (a) the value of the initial delivery of shares was recorded as shares of common stock acquired in a treasury stock transaction on the acquisition date, and (b) the remaining amount of the purchase price paid was recorded as a forward contract indexed to the Company's own common stock and was recorded in " Additional Paid-in Capital " on the consolidated balance sheets. The initial delivery of shares resulted in an immediate reduction of the outstanding shares used to calculate the weighted-average common shares outstanding for basic and diluted earnings per share. The Company determined that the forward contract indexed to the Company's common stock met all the applicable criteria for equity classification and, therefore, was not accounted for as a derivative instrument. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 9 Months Ended |
Sep. 30, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | COMMITMENTS AND CONTINGENCIES On October 30, 2015, Boston Scientific Scimed, Inc., a subsidiary of Boston Scientific Corporation (“Boston Scientific”), filed a lawsuit in the district court in Düsseldorf, Germany against Edwards Lifesciences and its German subsidiary, Edwards Lifesciences Services GmbH, alleging that Edwards Lifesciences’ SAPIEN 3 heart valve infringes certain claims of a Boston Scientific German national patent arising from EP 2 749 254 B1 (the “‘254 patent”) related to paravalvular sealing technology. On February 26, 2016, Boston Scientific added the German national patent arising from EP 2 926 766 (the “‘766 Patent”) to the infringement allegations. On April 8, 2016, Boston Scientific filed a similar patent infringement action in district court in Paris, France relating to these patents. The complaints seek unspecified money damages and injunctive relief. The Company intends to defend itself vigorously in these matters. Trial is scheduled for February 2017 in the German matter and is not yet scheduled in the France matter. On November 2, 2015, Edwards Lifesciences LLC, a U.S. subsidiary of Edwards Lifesciences, filed a lawsuit against Sadra Medical, Inc. and Boston Scientific Scimed, Inc., two subsidiaries of Boston Scientific, in the United Kingdom in the High Court of Justice, Chancery Division, Patents Court to declare invalid and revoke the U.K. national patent corresponding to the ‘254 patent. Edwards later added Boston Scientific’s UK national patent corresponding to the ‘766 patent to this invalidity lawsuit. The Boston Scientific subsidiaries filed counterclaims against Edwards Lifesciences and three of its European subsidiaries alleging that the SAPIEN 3 heart valve infringes certain claims of the same patents and seeking unspecified monetary damages and injunctive relief. Trial is scheduled for January 2017. On November 23, 2015, Edwards Lifesciences PVT, Inc., a U.S. subsidiary of Edwards Lifesciences, filed a lawsuit in the district court in Düsseldorf, Germany for patent infringement against Boston Scientific and a German subsidiary, Boston Scientific Medizintechnik GmbH, alleging that the Lotus heart valve infringes certain claims of Edwards Lifesciences’ German national patents EP 1 441 672 B1 and 2 255 753 B1 related to prosthetic valve and delivery system technology. Edwards Lifesciences later added its German national patent EP 2 399 550 to this suit. The complaint seeks unspecified monetary damages and injunctive relief. Trial is scheduled for February 2017. O n April 19, 2016, Boston Scientific filed a lawsuit against Edwards Lifesciences in the Federal District Court in the District of Delaware alleging that the SAPIEN 3 heart valve infringes certain claims of Boston Scientific’s U.S. Patent 8,992,608 (the “‘608 patent”) related to paravalvular sealing technology and seeking unspecified monetary damages and injunctive relief. On June 9, 2016, Edwards Lifesciences LLC and Edwards Lifesciences PVT, Inc. filed counterclaims alleging that Boston Scientific’s Lotus heart valve infringes Edwards Lifesciences’ U.S. Patents 9,168,133; 9,339,383; and 7,510,575 related to prosthetic valve technology. Trial is scheduled for July 2018. On October 12, 2016, Edwards Lifesciences filed an Inter Partes Review ("IPR") request with the U.S. Patent and Trademark Office challenging the validity of Boston Scientific’s ‘608 patent. Also on April 19, 2016, Boston Scientific filed a lawsuit against Edwards Lifesciences in the Federal District Court in the Central District of California alleging that five of its transcatheter heart valve delivery systems and a valve crimper infringe certain claims of eight Boston Scientific U.S. patents. The complaints seek unspecified monetary damages and injunctive relief. Trial is scheduled for May 2018. The Company intends to defend itself vigorously in these matters and has filed an IPR request related to the crimping device patent. Because the ultimate outcome of the above matters involve judgments, estimates and inherent uncertainties, and cannot be predicted with certainty, charges related to such matters could have a material adverse impact on Edwards Lifesciences' financial position, results of operations, and liquidity. In addition, Edwards Lifesciences is or may be a party to, or may otherwise be responsible for, pending or threatened lawsuits related primarily to products and services currently or formerly manufactured or performed, as applicable, by Edwards Lifesciences (the “Other Lawsuits”). The Other Lawsuits 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. Management does not believe that any charge relating to the Other Lawsuits would have a material adverse effect on Edwards Lifesciences’ overall financial position, results of operations, or liquidity. However, the resolution of one or more of the Other Lawsuits in any reporting period, could have a material adverse impact on Edwards Lifesciences' net income or cash flows for that period. The Company is not able to estimate the amount or range of any loss for legal contingencies for which there is no reserve or additional loss for matters already reserved. Edwards Lifesciences is subject to various environmental laws and regulations both within and outside of the United States. The operations of Edwards Lifesciences, like those of other medical device companies, involve the use of substances regulated under environmental laws, primarily in manufacturing and sterilization processes. While it is difficult to quantify the potential impact of continuing compliance with environmental protection laws, management believes that such compliance will not have a material impact on Edwards Lifesciences' financial position, results of operations, or liquidity. |
ACCUMULATED OTHER COMPREHENSIVE
ACCUMULATED OTHER COMPREHENSIVE LOSS | 9 Months Ended |
Sep. 30, 2016 | |
Equity [Abstract] | |
ACCUMULATED OTHER COMPREHENSIVE LOSS | ACCUMULATED OTHER COMPREHENSIVE LOSS The following table is a summary of activity for each component of " Accumulated Other Comprehensive Loss " for the nine months ended September 30, 2016 (in millions): Foreign Currency Translation Adjustments Unrealized Gain (Loss) on Cash Flow Hedges Unrealized (Loss) Gain on Available-for-sale Investments Unrealized Pension Costs Total Accumulated Other Comprehensive Loss December 31, 2015 $ (181.5 ) $ 11.8 $ (1.5 ) $ (11.4 ) $ (182.6 ) Other comprehensive gain (loss) before reclassifications 30.0 (26.9 ) 1.8 — 4.9 Amounts reclassified from accumulated other comprehensive loss — (10.9 ) 0.8 — (10.1 ) Deferred income tax benefit 1.5 15.0 0.1 — 16.6 September 30, 2016 $ (150.0 ) $ (11.0 ) $ 1.2 $ (11.4 ) $ (171.2 ) The following table provides information about amounts reclassified from " Accumulated Other Comprehensive Loss " (in millions): Three Months Ended Nine Months Ended Affected Line on Consolidated Condensed Statements of Operations Details about Accumulated Other Comprehensive Loss Components 2016 2015 2016 2015 Gain (loss) on cash flow hedges $ (3.4 ) $ 20.4 $ 10.9 $ 49.9 Cost of sales 1.2 (7.5 ) (4.5 ) (18.2 ) Provision for income taxes $ (2.2 ) $ 12.9 $ 6.4 $ 31.7 Net of tax (Loss) gain on available-for-sale investments $ (0.2 ) $ (0.4 ) $ (0.8 ) $ (0.8 ) Other expenses, net — — — — Provision for income taxes $ (0.2 ) $ (0.4 ) $ (0.8 ) $ (0.8 ) Net of tax |
EARNINGS PER SHARE
EARNINGS PER SHARE | 9 Months Ended |
Sep. 30, 2016 | |
Earnings Per Share [Abstract] | |
EARNINGS PER SHARE | EARNINGS PER SHARE Basic earnings per share is computed by dividing net income by the weighted-average common shares outstanding during a period. Employee equity share options, nonvested shares, and similar equity instruments granted by the Company are treated as potential common shares in computing diluted earnings per share. Diluted shares outstanding include the dilutive effect of restricted stock units, market-based restricted stock units, performance-based restricted stock units, and in-the-money options. The dilutive impact of the restricted stock units, market-based restricted stock units, performance-based restricted stock units, and in-the-money options is calculated based on the average share price for each fiscal period using the treasury stock method. Under the treasury stock method, the amount that the employee must pay for exercising stock options, the amount of stock-based compensation expense for future service that the Company has not yet recognized, and the amount of tax benefits that would be recorded in " Additional Paid-in Capital " when the award becomes deductible are assumed to be used to repurchase shares. Potential common share equivalents have been excluded where their inclusion would be anti-dilutive. The table below presents the computation of basic and diluted earnings per share (in millions, except for per share information): Three Months Ended Nine Months Ended 2016 2015 2016 2015 Basic: Net income $ 141.4 $ 118.1 $ 411.0 $ 354.2 Weighted-average shares outstanding 213.2 215.2 212.8 215.3 Basic earnings per share $ 0.66 $ 0.55 $ 1.93 $ 1.65 Diluted: Net income $ 141.4 $ 118.1 $ 411.0 $ 354.2 Weighted-average shares outstanding 213.2 215.2 212.8 215.3 Dilutive effect of stock plans 4.9 4.7 4.9 4.8 Dilutive weighted-average shares outstanding 218.1 219.9 217.7 220.1 Diluted earnings per share $ 0.65 $ 0.54 $ 1.89 $ 1.61 Stock options, restricted stock units, and market-based restricted stock units to purchase 1.1 million and 1.8 million shares for the three months ended September 30, 2016 and 2015 , respectively, and 0.8 million and 1.3 million shares for the nine months ended September 30, 2016 and 2015 , respectively, were outstanding, but were not included in the computation of diluted earnings per share because the effect would have been anti-dilutive. Additionally, 0.1 million shares that would have been received if the ASR agreement discussed in Note 8 was settled as of September 30, 2016 were not included in the computation of diluted earnings per share because the effect would have been anti-dilutive. |
INCOME TAXES
INCOME TAXES | 9 Months Ended |
Sep. 30, 2016 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | INCOME TAXES The Company's effective income tax rates were 23.7% and 21.6% for the three months ended September 30, 2016 and 2015 , respectively, and 23.5% and 22.2% for the nine months ended September 30, 2016 and 2015 . The change in the effective rates is primarily a result of fluctuations in the relative contribution of our foreign operations and United States operations to worldwide pre-tax income, offset by the benefit from the reinstatement of the federal research credit. The federal research credit expired on December 31, 2014 and was not reinstated until December 18, 2015 when the research credit was permanently extended, retroactive to January 1, 2015. Therefore, the effective income tax rate for the three and nine months ended September 30, 2015 was calculated without an assumed benefit from the federal research credit. The Company strives to resolve open matters with each tax authority at the examination level and could reach agreement with a tax authority at any time. While the Company has accrued for matters it believes 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 condensed financial statements. Furthermore, the Company may later decide to challenge any assessments, if made, and may exercise its right to appeal. The 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. As of September 30, 2016 and December 31, 2015 , the liability for income taxes associated with uncertain tax positions was $231.4 million and $216.1 million , respectively. The Company estimates that these liabilities would be reduced by $40.8 million and $40.6 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 of $190.6 million and $175.5 million , respectively, if not required, would favorably affect the Company's effective tax rate. At September 30, 2016 , all material state, local, and foreign income tax matters have been concluded for years through 2008. The Internal Revenue Service ("IRS") has substantially completed its fieldwork for the 2009 through 2012 tax years. However, the audit is currently in suspense pending finalization of an Advance Pricing Agreement ("APA") and Joint Committee of Taxation approval. The Company has entered into an APA process between the Switzerland and United States governments for the years 2009 through 2013 covering transfer pricing matters with the possibility of a rollforward of the results to subsequent years. The transfer pricing matters are significant to the Company's consolidated condensed financial statements, and the final outcome, including the ability of the two governments to reach an agreement, is uncertain. During 2014, the Company filed with the IRS a request for a pre-filing agreement associated with a tax return filing position on a portion of the litigation settlement payment received from Medtronic, Inc. in May 2014. During the first quarter of 2015, the IRS accepted the pre-filing agreement into the pre-filing agreement program. The finalization of the pre-filing agreement is still pending. However, the Company made an advance payment of tax in December 2015 solely to prevent the further accrual of interest on any potential deficiency, not to signify any potential agreement to a contrary position that may be taken by the IRS. |
SEGMENT INFORMATION
SEGMENT INFORMATION | 9 Months Ended |
Sep. 30, 2016 | |
Segment Reporting [Abstract] | |
SEGMENT INFORMATION | SEGMENT INFORMATION Edwards Lifesciences conducts operations worldwide and is managed in the following geographical regions: United States, Europe, Japan, and Rest of World. All regions sell products that are used to treat structural heart disease and critically ill patients. The Company's geographic segments are reported based on the financial information provided to the Chief Operating Decision Maker (the Chief Executive Officer). The Company evaluates the performance of its geographic segments based on net sales and income before provision for income taxes ("pre-tax income"). The accounting policies of the segments are substantially the same as those described in Note 2 of the Company's consolidated financial statements included in its Annual Report on Form 10-K for the year ended December 31, 2015 . Segment net sales and segment pre-tax income are based on internally derived standard foreign exchange rates, which may differ from year to year, and do not include inter-segment profits. Because of the interdependence of the reportable segments, the pre-tax income as presented may not be representative of the geographical distribution that would occur if the segments were not interdependent. Net sales by geographic area are based on the location of the customer. Certain items are maintained at the corporate level and are not allocated to the segments. The non-allocated items include net interest expense, global marketing expenses, corporate research and development expenses, manufacturing variances, corporate headquarters costs, special gains and charges, certain stock-based compensation, foreign currency hedging activities, certain litigation costs, and most of the Company's amortization expense. Although most of the Company's depreciation expense is included in segment pre-tax income, due to the Company's methodology for cost build-up, it is impractical to determine the amount of depreciation expense included in each segment, and, therefore, a portion is maintained at the corporate level. The Company neither discretely allocates assets to its operating segments, nor evaluates the operating segments using discrete asset information. The table below presents information about Edwards Lifesciences' reportable segments (in millions): Three Months Ended Nine Months Ended 2016 2015 2016 2015 Segment Net Sales United States $ 417.1 $ 323.1 $ 1,194.2 $ 909.3 Europe 171.2 194.6 556.3 625.0 Japan 68.1 73.8 203.8 217.7 Rest of World 72.4 78.8 220.9 230.5 Total segment net sales $ 728.8 $ 670.3 $ 2,175.2 $ 1,982.5 Segment Pre-tax Income United States $ 274.2 $ 197.0 $ 776.0 $ 530.8 Europe 80.1 95.3 273.0 306.4 Japan 33.4 35.1 101.5 103.1 Rest of World 17.4 22.8 54.4 61.1 Total segment pre-tax income $ 405.1 $ 350.2 $ 1,204.9 $ 1,001.4 The table below presents reconciliations of segment net sales to consolidated net sales and segment pre-tax income to consolidated pre-tax income (in millions): Three Months Ended Nine Months Ended 2016 2015 2016 2015 Net Sales Reconciliation Segment net sales $ 728.8 $ 670.3 $ 2,175.2 $ 1,982.5 Foreign currency 10.6 (54.8 ) 20.8 (159.9 ) Consolidated net sales $ 739.4 $ 615.5 $ 2,196.0 $ 1,822.6 Pre-tax Income Reconciliation Segment pre-tax income $ 405.1 $ 350.2 $ 1,204.9 $ 1,001.4 Unallocated amounts: Corporate items (211.9 ) (185.0 ) (613.4 ) (520.6 ) Special charges (Note 3) — — (34.5 ) — Intellectual property litigation expenses (6.5 ) (2.4 ) (27.8 ) (3.7 ) Interest expense, net (2.1 ) (2.5 ) (6.9 ) (6.7 ) Foreign currency 0.6 (9.6 ) 15.2 (15.0 ) Consolidated pre-tax income $ 185.2 $ 150.7 $ 537.5 $ 455.4 Enterprise-wide Information Enterprise-wide information is based on actual foreign exchange rates used in the Company's consolidated condensed financial statements. Three Months Ended Nine Months Ended 2016 2015 2016 2015 (in millions) Net Sales by Geographic Area United States $ 417.1 $ 323.1 $ 1,194.2 $ 909.3 Europe 172.3 166.4 564.4 533.6 Japan 79.8 60.3 226.3 180.7 Rest of World 70.2 65.7 211.1 199.0 $ 739.4 $ 615.5 $ 2,196.0 $ 1,822.6 Net Sales by Major Product and Service Area Transcatheter Heart Valve Therapy $ 410.1 $ 296.1 $ 1,196.5 $ 846.0 Surgical Heart Valve Therapy 190.9 187.9 585.5 588.8 Critical Care 138.4 131.5 414.0 387.8 $ 739.4 $ 615.5 $ 2,196.0 $ 1,822.6 September 30, 2016 December 31, 2015 (in millions) Long-lived Tangible Assets by Geographic Area United States $ 531.5 $ 473.6 Europe 30.2 36.0 Japan 9.8 8.1 Rest of World 97.0 96.0 $ 668.5 $ 613.7 |
BASIS OF PRESENTATION (Policies
BASIS OF PRESENTATION (Policies) | 9 Months Ended |
Sep. 30, 2016 | |
Accounting Policies [Abstract] | |
Recently Adopted Accounting Standards and New Accounting Standards Not Yet Adopted | Recently Adopted Accounting Standards In September 2015, the Financial Accounting Standards Board ("FASB") issued an update to the guidance on business combinations. The new guidance requires that an acquirer recognize adjustments to provisional amounts that are identified during the measurement period in the reporting period in which the adjustment amounts are determined. The guidance was effective for fiscal years beginning after December 15, 2015, including interim periods within those fiscal years. The adoption of this guidance did not impact the Company's consolidated financial statements. In April 2015, the FASB issued an amendment to the accounting guidance on the presentation of debt issuance costs. The guidance requires an entity to present debt issuance costs related to a recognized debt liability as a direct deduction from the carrying amount of that debt, consistent with debt discounts. In August 2015, the FASB clarified that for a line-of-credit arrangement, a company can continue to defer and present debt issuance costs as an asset and subsequently amortize the debt issuance costs over the term of the line-of-credit arrangement, whether or not there are any outstanding borrowings on the line-of-credit arrangement. The guidance was effective for annual reporting periods beginning after December 31, 2015 and interim periods within those periods, and must be applied retrospectively to each prior reporting period presented. The adoption of this guidance did not have a material impact on the Company's consolidated financial statements. New Accounting Standards Not Yet Adopted In August 2016, the FASB issued an amendment to the guidance on the statement of cash flows. The standard addresses eight specific cash flow issues, and is intended to reduce the diversity in practice around how certain transactions are classified within the statement of cash flows. The guidance is effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years with early adoption permitted. This guidance will impact how the Company classifies contingent consideration payments made after a business combination. Contingent consideration payments that are not made soon after the acquisition date will be classified as a financing activity up to the amount of the contingent consideration liability recognized at the acquisition date, with any excess classified as an operating activity. The Company does not expect the adoption of the other provisions of this guidance to have a material impact on it's consolidated financial statements. In March 2016, the FASB issued an amendment to the guidance on stock compensation. The amendment simplifies several aspects of the accounting for share-based payment award transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. The guidance is effective for annual periods beginning after December 15, 2016, and interim periods within those annual periods. The Company anticipates that adoption of this guidance will introduce more volatility to its effective tax rate, generally reducing the rate. In March 2016, the FASB issued an update to the guidance on revenue recognition. The update clarifies the implementation guidance on principal versus agent considerations, including how an entity should identify the unit of accounting for the principal versus agent evaluation and how it should apply the control principle to certain types of arrangements. In April 2016, the FASB issued another update to the guidance on revenue recognition. This update clarifies the implementation guidance on identifying performance obligations and licensing, while retaining the related principles for those areas. In May 2016, the FASB issued a further update to the guidance on revenue recognition. This update clarifies the implementation guidance on assessing collectibility, presentation of sales taxes and other similar taxes received from customers, noncash consideration, contract modifications at transition, and completed contracts at transition. The amendments in these updates are effective for annual reporting periods beginning after December 15, 2017, and interim periods within those annual periods. The Company is currently evaluating the impact the revenue recognition guidance, including these updates, will have on its consolidated financial statements. In February 2016, the FASB issued an amendment to the guidance on leases. The amendment improves transparency and comparability among companies by recognizing lease assets and lease liabilities on the balance sheet and by disclosing key information about leasing arrangements. The guidance is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. The Company is currently evaluating the impact this guidance will have on its consolidated financial statements. |
COMPOSITION OF CERTAIN FINANC21
COMPOSITION OF CERTAIN FINANCIAL STATEMENT CAPTIONS (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Schedule of Inventories | Components of selected captions in the consolidated condensed balance sheets consisted of the following (in millions): September 30, 2016 December 31, 2015 Inventories Raw materials $ 60.6 $ 63.8 Work in process 93.7 64.1 Finished products 246.7 212.0 $ 401.0 $ 339.9 |
Schedule of Accounts Payable and Accrued Liabilities | At September 30, 2016 and December 31, 2015 , approximately $72.4 million and $58.8 million , respectively, of the Company's finished products inventories were held on consignment. September 30, 2016 December 31, 2015 Accounts payable and accrued liabilities Accounts payable $ 87.0 $ 63.9 Employee compensation and withholdings 199.9 209.4 Property, payroll, and other taxes 35.9 34.5 Research and development accruals 37.6 38.6 Accrued rebates 33.3 23.9 Fair value of derivatives 19.4 4.2 Accrued marketing expenses 13.2 9.6 Taxes payable 6.7 14.5 Litigation reserves 8.1 5.6 Other accrued liabilities 91.7 72.0 $ 532.8 $ 476.2 |
INVESTMENTS (Tables)
INVESTMENTS (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Investments [Abstract] | |
Schedule of Investments in Debt Securities | Investments in debt securities at the end of each period were as follows (in millions): September 30, 2016 December 31, 2015 Held-to-maturity Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value Bank time deposits $ 412.0 $ — $ — $ 412.0 $ 440.1 $ — $ — $ 440.1 U.S. government and agency securities 22.1 — — 22.1 32.5 — (0.2 ) 32.3 Asset-backed securities 0.6 — — 0.6 1.2 — — 1.2 Corporate debt securities 9.1 — — 9.1 16.4 — — 16.4 Municipal securities 3.2 — — 3.2 5.2 — — 5.2 Total $ 447.0 $ — $ — $ 447.0 $ 495.4 $ — $ (0.2 ) $ 495.2 Available-for-sale Commercial paper $ 41.0 $ — $ — $ 41.0 $ 28.1 $ — $ — $ 28.1 U.S. government and agency securities 101.6 0.3 — 101.9 38.7 — (0.2 ) 38.5 Asset-backed securities 79.9 0.1 — 80.0 62.8 — (0.2 ) 62.6 Corporate debt securities 313.5 1.2 (0.2 ) 314.5 230.0 — (1.3 ) 228.7 Municipal securities 4.6 — — 4.6 4.7 — — 4.7 Total $ 540.6 $ 1.6 $ (0.2 ) $ 542.0 $ 364.3 $ — $ (1.7 ) $ 362.6 |
Schedule of Cost and Fair Value of Investments in Debt Securities, By Contractual Maturity | The cost and fair value of investments in debt securities, by contractual maturity, as of September 30, 2016 were as follows: Held-to-Maturity Available-for-Sale Cost Fair Value Cost Fair Value (in millions) Due in 1 year or less $ 437.4 $ 437.4 $ 117.8 $ 117.9 Due after 1 year through 5 years 1.0 1.0 343.0 344.1 Instruments not due at a single maturity date 8.6 8.6 79.8 80.0 $ 447.0 $ 447.0 $ 540.6 $ 542.0 |
Schedule of Investments in Unconsolidated Affiliates | Investments in these unconsolidated affiliates are recorded in " Long-term Investments " on the consolidated condensed balance sheets, and are as follows: September 30, December 31, (in millions) Available-for-sale investments Cost $ — $ — Unrealized gains 0.2 0.2 Fair value of available-for-sale investments 0.2 0.2 Equity method investments Cost 10.6 10.9 Equity in losses (3.5 ) (4.2 ) Carrying value of equity method investments 7.1 6.7 Cost method investments Carrying value of cost method investments 26.5 21.3 Total investments in unconsolidated affiliates $ 33.8 $ 28.2 |
FAIR VALUE MEASUREMENTS (Tables
FAIR VALUE MEASUREMENTS (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Fair Value Disclosures [Abstract] | |
Summary of Financial Instruments Measured at Fair Value on a Recurring Basis | The following table summarizes the Company's financial instruments which are measured at fair value on a recurring basis (in millions): September 30, 2016 Level 1 Level 2 Level 3 Total Assets Cash equivalents $ 35.1 $ 9.5 $ — $ 44.6 Available-for-sale investments: Corporate debt securities — 314.5 — 314.5 Asset-backed securities — 80.0 — 80.0 U.S. government and agency securities 76.5 25.4 — 101.9 Commercial paper — 41.0 — 41.0 Municipal securities — 4.6 — 4.6 Equity investments in unconsolidated affiliates 0.2 — — 0.2 Investments held for deferred compensation plans 43.7 — — 43.7 Derivatives — 8.8 — 8.8 $ 155.5 $ 483.8 $ — $ 639.3 Liabilities Derivatives $ — $ 19.4 $ — $ 19.4 Deferred compensation plans 44.1 — — 44.1 Contingent consideration obligation — — 31.6 31.6 $ 44.1 $ 19.4 $ 31.6 $ 95.1 December 31, 2015 Assets Cash equivalents $ 3.5 $ 8.5 $ — $ 12.0 Available-for-sale investments: Corporate debt securities — 228.7 — 228.7 Asset-backed securities — 62.6 — 62.6 U.S. government and agency securities 9.6 28.9 — 38.5 Commercial paper — 28.1 — 28.1 Municipal securities — 4.7 — 4.7 Equity investments in unconsolidated affiliates 0.1 — — 0.1 Investments held for deferred compensation plans 35.3 — — 35.3 Derivatives — 23.3 — 23.3 $ 48.5 $ 384.8 $ — $ 433.3 Liabilities Derivatives $ — $ 4.2 $ — $ 4.2 Deferred compensation plans 35.5 — — 35.5 Contingent consideration obligation — — 30.5 30.5 $ 35.5 $ 4.2 $ 30.5 $ 70.2 |
Summary of Changes in Fair Value of Contingent Consideration Obligation | The following table summarizes the changes in fair value of the contingent consideration obligation for the nine months ended September 30, 2016 (in millions): Balance at December 31, 2015 $ 30.5 Changes in fair value (recorded in " Research and Development Expenses ") 1.1 Balance at September 30, 2016 $ 31.6 |
DERIVATIVE INSTRUMENTS AND HE24
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Summary of Derivative Financial Instruments Used to Manage Currency Exchange Rate Risk and Interest Rate Risk | The Company uses derivative financial instruments to manage its currency exchange rate risk and its interest rate risk, as summarized below. It is the Company's policy not to enter into derivative financial instruments for speculative purposes. Notional amounts are stated in United States dollar equivalents at spot exchange rates at the respective dates. Notional Amount September 30, 2016 December 31, 2015 (in millions) Foreign currency forward exchange contracts $ 861.7 $ 1,061.6 Interest rate swap agreements 300.0 300.0 |
Schedule of Location and Fair Value Amounts of Derivative Instruments Reported in Consolidated Condensed Balance Sheets | The following table presents the location and fair value amounts of derivative instruments reported in the consolidated condensed balance sheets (in millions): Fair Value Derivatives designated as hedging instruments Balance Sheet Location September 30, 2016 December 31, 2015 Assets Foreign currency contracts Other current assets $ 4.5 $ 15.0 Interest rate swap agreements Other assets $ 4.1 $ 1.6 Liabilities Foreign currency contracts Accrued and other liabilities $ 19.4 $ 4.2 Derivatives not designated as hedging instruments Assets Foreign currency contracts Other current assets $ 0.2 $ — Foreign currency contracts Other assets $ — $ 6.7 |
Schedule of Effect of Master-Netting Agreements and Rights of Offset, Derivative Assets | The following table presents the effect of master-netting agreements and rights of offset on the consolidated condensed balance sheets (in millions): 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 September 30, 2016 Gross Amounts Financial Instruments Cash Collateral Received Net Amount Derivative assets Foreign currency contracts $ 4.7 $ — $ 4.7 $ (1.5 ) $ — $ 3.2 Interest rate swap agreements $ 4.1 $ — $ 4.1 $ — $ — $ 4.1 Derivative liabilities Foreign currency contracts $ 19.4 $ — $ 19.4 $ (1.5 ) $ — $ 17.9 December 31, 2015 Derivative assets Foreign currency contracts $ 21.7 $ — $ 21.7 $ (4.0 ) $ — $ 17.7 Interest rate swap agreements $ 1.6 $ — $ 1.6 $ — $ — $ 1.6 Derivative liabilities Foreign currency contracts $ 4.2 $ — $ 4.2 $ (4.0 ) $ — $ 0.2 |
Schedule of Effect of Master-Netting Agreements and Rights of Offset, Derivative Liabilities | The following table presents the effect of master-netting agreements and rights of offset on the consolidated condensed balance sheets (in millions): 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 September 30, 2016 Gross Amounts Financial Instruments Cash Collateral Received Net Amount Derivative assets Foreign currency contracts $ 4.7 $ — $ 4.7 $ (1.5 ) $ — $ 3.2 Interest rate swap agreements $ 4.1 $ — $ 4.1 $ — $ — $ 4.1 Derivative liabilities Foreign currency contracts $ 19.4 $ — $ 19.4 $ (1.5 ) $ — $ 17.9 December 31, 2015 Derivative assets Foreign currency contracts $ 21.7 $ — $ 21.7 $ (4.0 ) $ — $ 17.7 Interest rate swap agreements $ 1.6 $ — $ 1.6 $ — $ — $ 1.6 Derivative liabilities Foreign currency contracts $ 4.2 $ — $ 4.2 $ (4.0 ) $ — $ 0.2 |
Schedule of Effect of Derivative Instruments on Consolidated Condensed Statements of Operations and Consolidated Condensed Statements of Comprehensive Income | The following tables present the effect of derivative instruments on the consolidated condensed statements of operations and consolidated condensed statements of comprehensive income (in millions): Amount of Gain or (Loss) Recognized in OCI on Derivative (Effective Portion) Amount of Gain or (Loss) Reclassified from Accumulated OCI into Income Three Months Ended Three Months Ended Location of Gain or (Loss) Reclassified from Accumulated OCI into Income 2016 2015 2016 2015 Cash flow hedges Foreign currency contracts $ (6.4 ) $ (2.2 ) Cost of sales $ (3.3 ) $ 19.9 Selling, general, and administrative expenses $ (0.1 ) $ 0.5 Net investment hedges Foreign currency contracts $ (0.3 ) $ (5.0 ) Other expenses, net $ — $ — Amount of Gain or (Loss) Recognized in OCI on Derivative (Effective Portion) Amount of Gain or (Loss) Reclassified from Accumulated OCI into Income Nine Months Ended Nine Months Ended Location of Gain or (Loss) Reclassified from Accumulated OCI into Income 2016 2015 2016 2015 Cash flow hedges Foreign currency contracts $ (26.9 ) $ 26.7 Cost of sales $ 11.3 $ 49.4 Selling, general, and administrative expenses $ (0.4 ) $ 0.5 Net investment hedges Foreign currency contracts $ (4.1 ) $ (5.0 ) Other expenses, net $ — $ — Amount of Gain or (Loss) Recognized in Income on Derivative Three Months Ended Location of Gain or (Loss) Recognized in Income on Derivative Fair value hedges 2016 2015 Interest rate swap agreements Interest expense, net $ (2.3 ) $ 4.5 Amount of Gain or (Loss) Recognized in Income on Derivative Nine Months Ended Location of Gain or (Loss) Recognized in Income on Derivative Fair value hedges 2016 2015 Interest rate swap agreements Interest expense, net $ 2.5 $ 6.4 The gains on the interest rate swap agreements are fully offset by the changes in the fair value of the fixed-rate debt being hedged. Amount of Gain or (Loss) Recognized in Income on Derivative Three Months Ended Location of Gain or (Loss) Recognized in Income on Derivative Derivatives not designated as hedging instruments 2016 2015 Foreign currency contracts Other expenses, net $ (2.7 ) $ (0.3 ) Amount of Gain or (Loss) Recognized in Income on Derivative Nine Months Ended Location of Gain or (Loss) Recognized in Income on Derivative Derivatives not designated as hedging instruments 2016 2015 Foreign currency contracts Other expenses, net $ (18.5 ) $ 6.5 |
STOCK-BASED COMPENSATION (Table
STOCK-BASED COMPENSATION (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Schedule of Stock-Based Compensation Expense | Stock-based compensation expense related to awards issued under the Company's incentive compensation plans for the three and nine months ended September 30, 2016 and 2015 was as follows (in millions): Three Months Ended Nine Months Ended 2016 2015 2016 2015 Cost of sales $ 2.2 $ 1.7 $ 6.3 $ 5.1 Selling, general, and administrative expenses 9.5 8.7 28.6 25.4 Research and development expenses 2.7 2.2 8.1 6.5 Total stock-based compensation expense $ 14.4 $ 12.6 $ 43.0 $ 37.0 |
Schedule of Weighted-Average Assumptions for Options Granted | The following table includes the weighted-average grant-date fair values of stock options granted during the periods indicated and the related weighted-average assumptions used in the Black-Scholes option pricing model: Option Awards Three Months Ended Nine Months Ended 2016 2015 2016 2015 Average risk-free interest rate 1.0 % 1.6 % 1.1 % 1.4 % Expected dividend yield None None None None Expected volatility 33.2 % 29.7 % 33.1 % 29.8 % Expected term (years) 4.6 4.7 4.5 4.6 Fair value, per option $ 31.23 $ 20.29 $ 31.02 $ 18.06 |
Schedule of Weighted-Average Assumptions for ESPP Subscriptions Granted | The following table includes the weighted-average grant-date fair values for ESPP subscriptions granted during the periods indicated and the related weighted-average assumptions used in the Black-Scholes option pricing model: ESPP Three Months Ended Nine Months Ended 2016 2015 2016 2015 Average risk-free interest rate 0.2 % 0.2 % 0.3 % 0.2 % Expected dividend yield None None None None Expected volatility 31.9 % 26.7 % 29.3 % 27.6 % Expected term (years) 0.8 0.8 0.6 0.6 Fair value, per share $ 31.13 $ 17.18 $ 21.97 $ 15.51 |
ACCUMULATED OTHER COMPREHENSI26
ACCUMULATED OTHER COMPREHENSIVE LOSS (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Equity [Abstract] | |
Summary of Activity for Each Component of Accumulated Other Comprehensive Loss | The following table is a summary of activity for each component of " Accumulated Other Comprehensive Loss " for the nine months ended September 30, 2016 (in millions): Foreign Currency Translation Adjustments Unrealized Gain (Loss) on Cash Flow Hedges Unrealized (Loss) Gain on Available-for-sale Investments Unrealized Pension Costs Total Accumulated Other Comprehensive Loss December 31, 2015 $ (181.5 ) $ 11.8 $ (1.5 ) $ (11.4 ) $ (182.6 ) Other comprehensive gain (loss) before reclassifications 30.0 (26.9 ) 1.8 — 4.9 Amounts reclassified from accumulated other comprehensive loss — (10.9 ) 0.8 — (10.1 ) Deferred income tax benefit 1.5 15.0 0.1 — 16.6 September 30, 2016 $ (150.0 ) $ (11.0 ) $ 1.2 $ (11.4 ) $ (171.2 ) |
Schedule of Amounts Reclassified from Accumulated Other Comprehensive Loss | The following table provides information about amounts reclassified from " Accumulated Other Comprehensive Loss " (in millions): Three Months Ended Nine Months Ended Affected Line on Consolidated Condensed Statements of Operations Details about Accumulated Other Comprehensive Loss Components 2016 2015 2016 2015 Gain (loss) on cash flow hedges $ (3.4 ) $ 20.4 $ 10.9 $ 49.9 Cost of sales 1.2 (7.5 ) (4.5 ) (18.2 ) Provision for income taxes $ (2.2 ) $ 12.9 $ 6.4 $ 31.7 Net of tax (Loss) gain on available-for-sale investments $ (0.2 ) $ (0.4 ) $ (0.8 ) $ (0.8 ) Other expenses, net — — — — Provision for income taxes $ (0.2 ) $ (0.4 ) $ (0.8 ) $ (0.8 ) Net of tax |
EARNINGS PER SHARE (Tables)
EARNINGS PER SHARE (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Earnings Per Share [Abstract] | |
Schedule of Computation of Basic and Diluted Earnings Per Share | The table below presents the computation of basic and diluted earnings per share (in millions, except for per share information): Three Months Ended Nine Months Ended 2016 2015 2016 2015 Basic: Net income $ 141.4 $ 118.1 $ 411.0 $ 354.2 Weighted-average shares outstanding 213.2 215.2 212.8 215.3 Basic earnings per share $ 0.66 $ 0.55 $ 1.93 $ 1.65 Diluted: Net income $ 141.4 $ 118.1 $ 411.0 $ 354.2 Weighted-average shares outstanding 213.2 215.2 212.8 215.3 Dilutive effect of stock plans 4.9 4.7 4.9 4.8 Dilutive weighted-average shares outstanding 218.1 219.9 217.7 220.1 Diluted earnings per share $ 0.65 $ 0.54 $ 1.89 $ 1.61 |
SEGMENT INFORMATION (Tables)
SEGMENT INFORMATION (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Segment Reporting [Abstract] | |
Information About Reportable Segments and Reconciliation of Segment Net Sales to Consolidated Net Sales and Segment Pre-Tax Income to Consolidated Pre-Tax Income | The table below presents information about Edwards Lifesciences' reportable segments (in millions): Three Months Ended Nine Months Ended 2016 2015 2016 2015 Segment Net Sales United States $ 417.1 $ 323.1 $ 1,194.2 $ 909.3 Europe 171.2 194.6 556.3 625.0 Japan 68.1 73.8 203.8 217.7 Rest of World 72.4 78.8 220.9 230.5 Total segment net sales $ 728.8 $ 670.3 $ 2,175.2 $ 1,982.5 Segment Pre-tax Income United States $ 274.2 $ 197.0 $ 776.0 $ 530.8 Europe 80.1 95.3 273.0 306.4 Japan 33.4 35.1 101.5 103.1 Rest of World 17.4 22.8 54.4 61.1 Total segment pre-tax income $ 405.1 $ 350.2 $ 1,204.9 $ 1,001.4 The table below presents reconciliations of segment net sales to consolidated net sales and segment pre-tax income to consolidated pre-tax income (in millions): Three Months Ended Nine Months Ended 2016 2015 2016 2015 Net Sales Reconciliation Segment net sales $ 728.8 $ 670.3 $ 2,175.2 $ 1,982.5 Foreign currency 10.6 (54.8 ) 20.8 (159.9 ) Consolidated net sales $ 739.4 $ 615.5 $ 2,196.0 $ 1,822.6 Pre-tax Income Reconciliation Segment pre-tax income $ 405.1 $ 350.2 $ 1,204.9 $ 1,001.4 Unallocated amounts: Corporate items (211.9 ) (185.0 ) (613.4 ) (520.6 ) Special charges (Note 3) — — (34.5 ) — Intellectual property litigation expenses (6.5 ) (2.4 ) (27.8 ) (3.7 ) Interest expense, net (2.1 ) (2.5 ) (6.9 ) (6.7 ) Foreign currency 0.6 (9.6 ) 15.2 (15.0 ) Consolidated pre-tax income $ 185.2 $ 150.7 $ 537.5 $ 455.4 |
Enterprise-Wide Information | Enterprise-wide information is based on actual foreign exchange rates used in the Company's consolidated condensed financial statements. Three Months Ended Nine Months Ended 2016 2015 2016 2015 (in millions) Net Sales by Geographic Area United States $ 417.1 $ 323.1 $ 1,194.2 $ 909.3 Europe 172.3 166.4 564.4 533.6 Japan 79.8 60.3 226.3 180.7 Rest of World 70.2 65.7 211.1 199.0 $ 739.4 $ 615.5 $ 2,196.0 $ 1,822.6 Net Sales by Major Product and Service Area Transcatheter Heart Valve Therapy $ 410.1 $ 296.1 $ 1,196.5 $ 846.0 Surgical Heart Valve Therapy 190.9 187.9 585.5 588.8 Critical Care 138.4 131.5 414.0 387.8 $ 739.4 $ 615.5 $ 2,196.0 $ 1,822.6 September 30, 2016 December 31, 2015 (in millions) Long-lived Tangible Assets by Geographic Area United States $ 531.5 $ 473.6 Europe 30.2 36.0 Japan 9.8 8.1 Rest of World 97.0 96.0 $ 668.5 $ 613.7 |
COMPOSITION OF CERTAIN FINANC29
COMPOSITION OF CERTAIN FINANCIAL STATEMENT CAPTIONS - Schedule of Inventories (Details) - USD ($) $ in Millions | Sep. 30, 2016 | Dec. 31, 2015 |
Inventories | ||
Raw materials | $ 60.6 | $ 63.8 |
Work in process | 93.7 | 64.1 |
Finished products | 246.7 | 212 |
Total inventories | 401 | 339.9 |
Finished products inventories held on consignment | $ 72.4 | $ 58.8 |
COMPOSITION OF CERTAIN FINANC30
COMPOSITION OF CERTAIN FINANCIAL STATEMENT CAPTIONS - Schedule of Accounts Payable and Accrued Liabilities (Details) - USD ($) $ in Millions | Sep. 30, 2016 | Dec. 31, 2015 |
Accounts payable and accrued liabilities | ||
Accounts payable | $ 87 | $ 63.9 |
Employee compensation and withholdings | 199.9 | 209.4 |
Property, payroll, and other taxes | 35.9 | 34.5 |
Research and development accruals | 37.6 | 38.6 |
Accrued rebates | 33.3 | 23.9 |
Fair value of derivatives | 19.4 | 4.2 |
Accrued marketing expenses | 13.2 | 9.6 |
Taxes payable | 6.7 | 14.5 |
Litigation reserves | 8.1 | 5.6 |
Other accrued liabilities | 91.7 | 72 |
Total accounts payable and accrued liabilities | $ 532.8 | $ 476.2 |
SPECIAL CHARGES (Details)
SPECIAL CHARGES (Details) - USD ($) $ in Millions | 1 Months Ended | 3 Months Ended | 9 Months Ended | ||
May 31, 2016 | Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Unusual or Infrequent Items, or Both [Abstract] | |||||
Purchased in-process research and development | $ 34.5 | $ 0 | $ 0 | $ 34.5 | $ 0 |
INVESTMENTS - Schedule of Inves
INVESTMENTS - Schedule of Investments in Debt Securities (Details) - USD ($) $ in Millions | Sep. 30, 2016 | Dec. 31, 2015 |
Held-to-maturity | ||
Cost | $ 447 | $ 495.4 |
Gross Unrealized Gains | 0 | 0 |
Gross Unrealized Losses | 0 | (0.2) |
Fair Value | 447 | 495.2 |
Available-for-sale | ||
Cost | 540.6 | 364.3 |
Gross Unrealized Gains | 1.6 | 0 |
Gross Unrealized Losses | (0.2) | (1.7) |
Fair Value | 542 | 362.6 |
Bank time deposits | ||
Held-to-maturity | ||
Cost | 412 | 440.1 |
Gross Unrealized Gains | 0 | 0 |
Gross Unrealized Losses | 0 | 0 |
Fair Value | 412 | 440.1 |
Commercial paper | ||
Available-for-sale | ||
Cost | 41 | 28.1 |
Gross Unrealized Gains | 0 | 0 |
Gross Unrealized Losses | 0 | 0 |
Fair Value | 41 | 28.1 |
U.S. government and agency securities | ||
Held-to-maturity | ||
Cost | 22.1 | 32.5 |
Gross Unrealized Gains | 0 | 0 |
Gross Unrealized Losses | 0 | (0.2) |
Fair Value | 22.1 | 32.3 |
Available-for-sale | ||
Cost | 101.6 | 38.7 |
Gross Unrealized Gains | 0.3 | 0 |
Gross Unrealized Losses | 0 | (0.2) |
Fair Value | 101.9 | 38.5 |
Asset-backed securities | ||
Held-to-maturity | ||
Cost | 0.6 | 1.2 |
Gross Unrealized Gains | 0 | 0 |
Gross Unrealized Losses | 0 | 0 |
Fair Value | 0.6 | 1.2 |
Available-for-sale | ||
Cost | 79.9 | 62.8 |
Gross Unrealized Gains | 0.1 | 0 |
Gross Unrealized Losses | 0 | (0.2) |
Fair Value | 80 | 62.6 |
Corporate debt securities | ||
Held-to-maturity | ||
Cost | 9.1 | 16.4 |
Gross Unrealized Gains | 0 | 0 |
Gross Unrealized Losses | 0 | 0 |
Fair Value | 9.1 | 16.4 |
Available-for-sale | ||
Cost | 313.5 | 230 |
Gross Unrealized Gains | 1.2 | 0 |
Gross Unrealized Losses | (0.2) | (1.3) |
Fair Value | 314.5 | 228.7 |
Municipal securities | ||
Held-to-maturity | ||
Cost | 3.2 | 5.2 |
Gross Unrealized Gains | 0 | 0 |
Gross Unrealized Losses | 0 | 0 |
Fair Value | 3.2 | 5.2 |
Available-for-sale | ||
Cost | 4.6 | 4.7 |
Gross Unrealized Gains | 0 | 0 |
Gross Unrealized Losses | 0 | 0 |
Fair Value | $ 4.6 | $ 4.7 |
INVESTMENTS - Schedule of Cost
INVESTMENTS - Schedule of Cost and Fair Value of Investments in Debt Securities, By Contractual Maturity (Details) - USD ($) $ in Millions | Sep. 30, 2016 | Dec. 31, 2015 |
Cost | ||
Due in 1 year or less | $ 437.4 | |
Due after 1 year through 5 years | 1 | |
Instruments not due at a single maturity date | 8.6 | |
Cost | 447 | $ 495.4 |
Fair Value | ||
Due in 1 year or less | 437.4 | |
Due after 1 year through 5 years | 1 | |
Instruments not due at a single maturity date | 8.6 | |
Fair Value | 447 | 495.2 |
Cost | ||
Due in 1 year or less | 117.8 | |
Due after 1 year through 5 years | 343 | |
Instruments not due at a single maturity date | 79.8 | |
Cost | 540.6 | 364.3 |
Fair Value | ||
Due in 1 year or less | 117.9 | |
Due after 1 year through 5 years | 344.1 | |
Instruments not due at a single maturity date | 80 | |
Fair Value | $ 542 | $ 362.6 |
INVESTMENTS - Schedule of Inv34
INVESTMENTS - Schedule of Investments in Unconsolidated Affiliates (Details) - USD ($) $ in Millions | Sep. 30, 2016 | Dec. 31, 2015 |
Available-for-sale investments | ||
Cost | $ 0 | $ 0 |
Unrealized gains | 0.2 | 0.2 |
Fair value of available-for-sale investments | 0.2 | 0.2 |
Equity method investments | ||
Cost | 10.6 | 10.9 |
Equity in losses | (3.5) | (4.2) |
Carrying value of equity method investments | 7.1 | 6.7 |
Cost method investments | ||
Carrying value of cost method investments | 26.5 | 21.3 |
Total investments in unconsolidated affiliates | $ 33.8 | $ 28.2 |
FAIR VALUE MEASUREMENTS - Narra
FAIR VALUE MEASUREMENTS - Narrative (Details) - USD ($) $ in Millions | 9 Months Ended | |
Sep. 30, 2016 | Dec. 31, 2015 | |
Financial instruments | ||
Carrying value of notes payable | $ 600.6 | $ 599.9 |
Level 3 | Obligations | CardiAQ | ||
Financial instruments | ||
Contingent consideration obligation | $ 50 | |
Discount rate | 1.50% | |
Probability of milestone achievement (as a percent) | 65.00% | |
Estimate of Fair Value Measurement | Level 2 | ||
Financial instruments | ||
Fair value of notes payable | $ 614.7 |
FAIR VALUE MEASUREMENTS - Summa
FAIR VALUE MEASUREMENTS - Summary of Financial Instruments Measured at Fair Value on a Recurring Basis (Details) - Estimate of Fair Value Measurement - Fair Value on a Recurring Basis - USD ($) $ in Millions | Sep. 30, 2016 | Dec. 31, 2015 |
Assets | ||
Cash equivalents | $ 44.6 | $ 12 |
Investments held for deferred compensation plans | 43.7 | 35.3 |
Derivatives | 8.8 | 23.3 |
Assets | 639.3 | 433.3 |
Liabilities | ||
Derivatives | 19.4 | 4.2 |
Deferred compensation plans | 44.1 | 35.5 |
Contingent consideration obligation | 31.6 | 30.5 |
Liabilities | 95.1 | 70.2 |
Corporate debt securities | ||
Assets | ||
Available-for-sale investments | 314.5 | 228.7 |
Asset-backed securities | ||
Assets | ||
Available-for-sale investments | 80 | 62.6 |
U.S. government and agency securities | ||
Assets | ||
Available-for-sale investments | 101.9 | 38.5 |
Commercial paper | ||
Assets | ||
Available-for-sale investments | 41 | 28.1 |
Municipal securities | ||
Assets | ||
Available-for-sale investments | 4.6 | 4.7 |
Equity investments in unconsolidated affiliates | ||
Assets | ||
Available-for-sale investments | 0.2 | 0.1 |
Level 1 | ||
Assets | ||
Cash equivalents | 35.1 | 3.5 |
Investments held for deferred compensation plans | 43.7 | 35.3 |
Derivatives | 0 | 0 |
Assets | 155.5 | 48.5 |
Liabilities | ||
Derivatives | 0 | 0 |
Deferred compensation plans | 44.1 | 35.5 |
Contingent consideration obligation | 0 | 0 |
Liabilities | 44.1 | 35.5 |
Level 1 | Corporate debt securities | ||
Assets | ||
Available-for-sale investments | 0 | 0 |
Level 1 | Asset-backed securities | ||
Assets | ||
Available-for-sale investments | 0 | 0 |
Level 1 | U.S. government and agency securities | ||
Assets | ||
Available-for-sale investments | 76.5 | 9.6 |
Level 1 | Commercial paper | ||
Assets | ||
Available-for-sale investments | 0 | 0 |
Level 1 | Municipal securities | ||
Assets | ||
Available-for-sale investments | 0 | 0 |
Level 1 | Equity investments in unconsolidated affiliates | ||
Assets | ||
Available-for-sale investments | 0.2 | 0.1 |
Level 2 | ||
Assets | ||
Cash equivalents | 9.5 | 8.5 |
Investments held for deferred compensation plans | 0 | 0 |
Derivatives | 8.8 | 23.3 |
Assets | 483.8 | 384.8 |
Liabilities | ||
Derivatives | 19.4 | 4.2 |
Deferred compensation plans | 0 | 0 |
Contingent consideration obligation | 0 | 0 |
Liabilities | 19.4 | 4.2 |
Level 2 | Corporate debt securities | ||
Assets | ||
Available-for-sale investments | 314.5 | 228.7 |
Level 2 | Asset-backed securities | ||
Assets | ||
Available-for-sale investments | 80 | 62.6 |
Level 2 | U.S. government and agency securities | ||
Assets | ||
Available-for-sale investments | 25.4 | 28.9 |
Level 2 | Commercial paper | ||
Assets | ||
Available-for-sale investments | 41 | 28.1 |
Level 2 | Municipal securities | ||
Assets | ||
Available-for-sale investments | 4.6 | 4.7 |
Level 2 | Equity investments in unconsolidated affiliates | ||
Assets | ||
Available-for-sale investments | 0 | 0 |
Level 3 | ||
Assets | ||
Cash equivalents | 0 | 0 |
Investments held for deferred compensation plans | 0 | 0 |
Derivatives | 0 | 0 |
Assets | 0 | 0 |
Liabilities | ||
Derivatives | 0 | 0 |
Deferred compensation plans | 0 | 0 |
Contingent consideration obligation | 31.6 | 30.5 |
Liabilities | 31.6 | 30.5 |
Level 3 | Corporate debt securities | ||
Assets | ||
Available-for-sale investments | 0 | 0 |
Level 3 | Asset-backed securities | ||
Assets | ||
Available-for-sale investments | 0 | 0 |
Level 3 | U.S. government and agency securities | ||
Assets | ||
Available-for-sale investments | 0 | 0 |
Level 3 | Commercial paper | ||
Assets | ||
Available-for-sale investments | 0 | 0 |
Level 3 | Municipal securities | ||
Assets | ||
Available-for-sale investments | 0 | 0 |
Level 3 | Equity investments in unconsolidated affiliates | ||
Assets | ||
Available-for-sale investments | $ 0 | $ 0 |
FAIR VALUE MEASUREMENTS - Sum37
FAIR VALUE MEASUREMENTS - Summary of Changes in Fair Value of Contingent Consideration Obligation (Details) $ in Millions | 9 Months Ended |
Sep. 30, 2016USD ($) | |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | |
Beginning balance | $ 30.5 |
Changes in fair value (recorded in Research and Development Expenses) | 1.1 |
Ending balance | $ 31.6 |
DERIVATIVE INSTRUMENTS AND HE38
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES - Summary of Derivative Financial Instruments Used to Manage Currency Exchange Rate Risk and Interest Rate Risk (Details) - Derivatives designated as hedging instruments - USD ($) $ in Millions | Sep. 30, 2016 | Dec. 31, 2015 |
Foreign currency forward exchange contracts | ||
Derivative Financial Instruments | ||
Notional Amount | $ 861.7 | $ 1,061.6 |
Interest rate swap agreements | ||
Derivative Financial Instruments | ||
Notional Amount | $ 300 | $ 300 |
DERIVATIVE INSTRUMENTS AND HE39
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES - Narrative (Details) $ in Millions | 9 Months Ended |
Sep. 30, 2016USD ($) | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Changes due to currency rate movements and expenses expected to occur, maximum term | 13 months |
Loss expected to be reclassified to earnings | $ 3.1 |
DERIVATIVE INSTRUMENTS AND HE40
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES - Schedule of Location and Fair Value Amounts of Derivative Instruments Reported in Consolidated Condensed Balance Sheets (Details) - USD ($) $ in Millions | Sep. 30, 2016 | Dec. 31, 2015 |
Foreign currency contracts | ||
Assets | ||
Fair value of derivative assets | $ 4.7 | $ 21.7 |
Liabilities | ||
Fair value of derivative liabilities | 19.4 | 4.2 |
Interest rate swap agreements | ||
Assets | ||
Fair value of derivative assets | 4.1 | 1.6 |
Derivatives designated as hedging instruments | Foreign currency contracts | Other current assets | ||
Assets | ||
Fair value of derivative assets | 4.5 | 15 |
Derivatives designated as hedging instruments | Foreign currency contracts | Accrued and other liabilities | ||
Liabilities | ||
Fair value of derivative liabilities | 19.4 | 4.2 |
Derivatives designated as hedging instruments | Interest rate swap agreements | Other assets | ||
Assets | ||
Fair value of derivative assets | 4.1 | 1.6 |
Derivatives not designated as hedging instruments | Foreign currency contracts | Other current assets | ||
Assets | ||
Fair value of derivative assets | 0.2 | 0 |
Derivatives not designated as hedging instruments | Foreign currency contracts | Other assets | ||
Assets | ||
Fair value of derivative assets | $ 0 | $ 6.7 |
DERIVATIVE INSTRUMENTS AND HE41
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES - Schedule of Effect of Master-Netting Agreements and Rights of Offset, Derivative Assets and Liabilities (Details) - USD ($) $ in Millions | Sep. 30, 2016 | Dec. 31, 2015 |
Foreign currency contracts | ||
Offsetting Liabilities [Line Items] | ||
Gross Amounts | $ 19.4 | $ 4.2 |
Gross Amounts Offset in the Consolidated Balance Sheet | 0 | 0 |
Net Amounts Presented in the Consolidated Balance Sheet | 19.4 | 4.2 |
Gross Amounts Not Offset in the Consolidated Balance Sheet | ||
Financial Instruments | (1.5) | (4) |
Cash Collateral Received | 0 | 0 |
Net Amount | 17.9 | 0.2 |
Offsetting Assets [Line Items] | ||
Gross Amounts | 4.7 | 21.7 |
Gross Amounts Offset in the Consolidated Balance Sheet | 0 | 0 |
Net Amounts Presented in the Consolidated Balance Sheet | 4.7 | 21.7 |
Gross Amounts Not Offset in the Consolidated Balance Sheet | ||
Financial Instruments | (1.5) | (4) |
Cash Collateral Received | 0 | 0 |
Net Amount | 3.2 | 17.7 |
Interest rate swap agreements | ||
Offsetting Assets [Line Items] | ||
Gross Amounts | 4.1 | 1.6 |
Gross Amounts Offset in the Consolidated Balance Sheet | 0 | 0 |
Net Amounts Presented in the Consolidated Balance Sheet | 4.1 | 1.6 |
Gross Amounts Not Offset in the Consolidated Balance Sheet | ||
Financial Instruments | 0 | 0 |
Cash Collateral Received | 0 | 0 |
Net Amount | $ 4.1 | $ 1.6 |
DERIVATIVE INSTRUMENTS AND HE42
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES - Schedule of Effect of Derivative Instruments on Consolidated Condensed Statements of Operations and Consolidated Condensed Statements of Comprehensive Income (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Foreign currency contracts | Derivatives not designated as hedging instruments | Other expenses, net | ||||
Derivative Instruments, Gain (Loss) | ||||
Amount of Gain or (Loss) Recognized in Income on Derivative | $ (2.7) | $ (0.3) | $ (18.5) | $ 6.5 |
Cash flow hedges | Foreign currency contracts | ||||
Derivative Instruments, Gain (Loss) | ||||
Amount of Gain or (Loss) Recognized in OCI on Derivative (Effective Portion) | (6.4) | (2.2) | (26.9) | 26.7 |
Cash flow hedges | Foreign currency contracts | Cost of sales | ||||
Derivative Instruments, Gain (Loss) | ||||
Amount of Gain or (Loss) Reclassified from Accumulated OCI into Income | (3.3) | 19.9 | 11.3 | 49.4 |
Cash flow hedges | Foreign currency contracts | Selling, general, and administrative expenses | ||||
Derivative Instruments, Gain (Loss) | ||||
Amount of Gain or (Loss) Reclassified from Accumulated OCI into Income | (0.1) | 0.5 | (0.4) | 0.5 |
Net investment hedges | Foreign currency contracts | ||||
Derivative Instruments, Gain (Loss) | ||||
Amount of Gain or (Loss) Recognized in OCI on Derivative (Effective Portion) | (0.3) | (5) | (4.1) | (5) |
Net investment hedges | Foreign currency contracts | Other expenses, net | ||||
Derivative Instruments, Gain (Loss) | ||||
Amount of Gain or (Loss) Reclassified from Accumulated OCI into Income | 0 | 0 | 0 | 0 |
Fair value hedges | Interest rate swap agreements | Interest expense, net | ||||
Derivative Instruments, Gain (Loss) | ||||
Amount of Gain or (Loss) Recognized in Income on Derivative | $ (2.3) | $ 4.5 | $ 2.5 | $ 6.4 |
STOCK-BASED COMPENSATION - Sche
STOCK-BASED COMPENSATION - Schedule of Stock-Based Compensation Expense (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Allocation of stock-based compensation expense | ||||
Total stock-based compensation expense | $ 14.4 | $ 12.6 | $ 43 | $ 37 |
Cost of sales | ||||
Allocation of stock-based compensation expense | ||||
Total stock-based compensation expense | 2.2 | 1.7 | 6.3 | 5.1 |
Selling, general, and administrative expenses | ||||
Allocation of stock-based compensation expense | ||||
Total stock-based compensation expense | 9.5 | 8.7 | 28.6 | 25.4 |
Research and development expenses | ||||
Allocation of stock-based compensation expense | ||||
Total stock-based compensation expense | $ 2.7 | $ 2.2 | $ 8.1 | $ 6.5 |
STOCK-BASED COMPENSATION - Narr
STOCK-BASED COMPENSATION - Narrative (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions | 9 Months Ended | |
Sep. 30, 2016 | Sep. 30, 2015 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||
Total remaining unrecognized compensation cost | $ 109.6 | |
Unrecognized compensation cost, recognition period | 32 months | |
Options granted in period (in shares) | 1 | |
Options granted in period, weighted average exercise price (in dollars per share) | $ 105.38 | |
Restricted stock units | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Awards granted in period (in shares) | 0.2 | |
Awards granted in period, weighted average grant date fair value (in dollars per share) | $ 104.68 | |
Market-based restricted stock units | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Awards granted in period (in shares) | 0.1 | |
Awards granted in period, weighted average grant date fair value (in dollars per share) | $ 116.06 | |
Additional issued in period (in shares) | 0.1 | |
Award vesting period | 3 years | |
Weighted-average risk-free interest rate | 1.00% | 1.00% |
Expected volatility rate | 30.00% | 31.00% |
Market-based restricted stock units | Minimum | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Award vesting rights percentage | 0.00% | |
Market-based restricted stock units | Maximum | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Award vesting rights percentage | 175.00% |
STOCK-BASED COMPENSATION - Sc45
STOCK-BASED COMPENSATION - Schedule of Weighted-Average Assumptions for Options Granted (Details) - Option Awards - $ / shares | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Average risk-free interest rate | 1.00% | 1.60% | 1.10% | 1.40% |
Expected dividend yield | 0.00% | 0.00% | 0.00% | 0.00% |
Expected volatility (as a percent) | 33.20% | 29.70% | 33.10% | 29.80% |
Expected term, period | 4 years 7 months 6 days | 4 years 8 months 12 days | 4 years 6 months | 4 years 7 months 6 days |
Fair value, per option or share (in dollars per share) | $ 31.23 | $ 20.29 | $ 31.02 | $ 18.06 |
STOCK-BASED COMPENSATION - Sc46
STOCK-BASED COMPENSATION - Schedule of Weighted-Average Assumptions for ESPP Subscriptions Granted (Details) - ESPP - $ / shares | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Average risk-free interest rate | 0.20% | 0.20% | 0.30% | 0.20% |
Expected dividend yield | 0.00% | 0.00% | 0.00% | 0.00% |
Expected volatility (as a percent) | 31.90% | 26.70% | 29.30% | 27.60% |
Expected term, period | 9 months 18 days | 9 months 18 days | 7 months 6 days | 7 months 6 days |
Fair value, per share (in dollars per share) | $ 31.13 | $ 17.18 | $ 21.97 | $ 15.51 |
ACCELERATED SHARE REPURCHASE (D
ACCELERATED SHARE REPURCHASE (Details) - USD ($) $ / shares in Units, shares in Millions | 1 Months Ended | ||
Apr. 30, 2016 | Feb. 29, 2016 | Sep. 30, 2016 | |
Accelerated Share Repurchase Agreement, February 2016 | |||
Accelerated Share Repurchases [Line Items] | |||
Share repurchase program, authorized amount | $ 325,000,000 | ||
Initial delivery (in shares) | 0.3 | 3.2 | |
Value of initial shares (in dollars per share) | $ 83.60 | ||
Initial shares repurchased as a percent of total contract value | 82.00% | ||
Volume weighted-average price less discount per share (in dollars per share) | $ 84.39 | ||
Accelerated Share Repurchase Agreement, February 2016, If Settled on Balance Sheet Date | |||
Accelerated Share Repurchases [Line Items] | |||
Additional shares that would be received had all agreements been settled | 0.1 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Details) | Apr. 19, 2016patentproduct | Sep. 30, 2016lawsuit | Nov. 02, 2015subsidiary |
Loss Contingencies [Line Items] | |||
Number of lawsuits that if settled could have a material adverse impact on net income or cash flows | lawsuit | 1 | ||
Edwards Lifesciences vs Boston Scientific Patent Lawsuits | |||
Loss Contingencies [Line Items] | |||
Number of products involved in patent infringement | product | 5 | ||
Edwards Lifesciences vs Boston Scientific Patent Lawsuits | Boston Scientific | |||
Loss Contingencies [Line Items] | |||
Number of subsidiaries in litigation | 2 | ||
Number of patents allegedly infringed | patent | 8 | ||
Edwards Lifesciences vs Boston Scientific Patent Lawsuits | Boston Scientific | Europe | |||
Loss Contingencies [Line Items] | |||
Number of subsidiaries in litigation | 3 |
ACCUMULATED OTHER COMPREHENSI49
ACCUMULATED OTHER COMPREHENSIVE LOSS - Summary of Activity for Each Component of Accumulated Other Comprehensive Loss (Details) $ in Millions | 9 Months Ended |
Sep. 30, 2016USD ($) | |
AOCI Attributable to Parent, Net of Tax | |
Balance at the beginning of the period | $ 2,503.1 |
Other comprehensive gain (loss) before reclassifications | 4.9 |
Amounts reclassified from accumulated other comprehensive loss | (10.1) |
Deferred income tax benefit | 16.6 |
Balance at the end of the period | 2,691.8 |
Foreign Currency Translation Adjustments | |
AOCI Attributable to Parent, Net of Tax | |
Balance at the beginning of the period | (181.5) |
Other comprehensive gain (loss) before reclassifications | 30 |
Amounts reclassified from accumulated other comprehensive loss | 0 |
Deferred income tax benefit | 1.5 |
Balance at the end of the period | (150) |
Unrealized Gain (Loss) on Cash Flow Hedges | |
AOCI Attributable to Parent, Net of Tax | |
Balance at the beginning of the period | 11.8 |
Other comprehensive gain (loss) before reclassifications | (26.9) |
Amounts reclassified from accumulated other comprehensive loss | (10.9) |
Deferred income tax benefit | 15 |
Balance at the end of the period | (11) |
Unrealized (Loss) Gain on Available-for-sale Investments | |
AOCI Attributable to Parent, Net of Tax | |
Balance at the beginning of the period | (1.5) |
Other comprehensive gain (loss) before reclassifications | 1.8 |
Amounts reclassified from accumulated other comprehensive loss | 0.8 |
Deferred income tax benefit | 0.1 |
Balance at the end of the period | 1.2 |
Unrealized Pension Costs | |
AOCI Attributable to Parent, Net of Tax | |
Balance at the beginning of the period | (11.4) |
Other comprehensive gain (loss) before reclassifications | 0 |
Amounts reclassified from accumulated other comprehensive loss | 0 |
Deferred income tax benefit | 0 |
Balance at the end of the period | (11.4) |
Total Accumulated Other Comprehensive Loss | |
AOCI Attributable to Parent, Net of Tax | |
Balance at the beginning of the period | (182.6) |
Balance at the end of the period | $ (171.2) |
ACCUMULATED OTHER COMPREHENSI50
ACCUMULATED OTHER COMPREHENSIVE LOSS - Schedule of Amounts Reclassified from Accumulated Other Comprehensive Loss (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Affected Line on Consolidated Condensed Statements of Operations | ||||
Cost of sales | $ (201.4) | $ (146.7) | $ (584.2) | $ (441.3) |
Other expenses, net | (1.5) | (0.2) | (5.6) | (2.2) |
Provision for income taxes | (43.8) | (32.6) | (126.5) | (101.2) |
Net income | 141.4 | 118.1 | 411 | 354.2 |
Amount Reclassified from Accumulated Other Comprehensive Loss | Gain (loss) on cash flow hedges | ||||
Affected Line on Consolidated Condensed Statements of Operations | ||||
Cost of sales | (3.4) | 20.4 | 10.9 | 49.9 |
Provision for income taxes | 1.2 | (7.5) | (4.5) | (18.2) |
Net income | (2.2) | 12.9 | 6.4 | 31.7 |
Amount Reclassified from Accumulated Other Comprehensive Loss | (Loss) gain on available-for-sale investments | ||||
Affected Line on Consolidated Condensed Statements of Operations | ||||
Other expenses, net | (0.2) | (0.4) | (0.8) | (0.8) |
Provision for income taxes | 0 | 0 | 0 | |
Net income | $ (0.2) | $ (0.4) | $ (0.8) | $ (0.8) |
EARNINGS PER SHARE - Schedule o
EARNINGS PER SHARE - Schedule of Computation of Basic and Diluted Earnings Per Share (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Basic: | ||||
Net income | $ 141.4 | $ 118.1 | $ 411 | $ 354.2 |
Weighted-average shares outstanding | 213.2 | 215.2 | 212.8 | 215.3 |
Basic earnings per share (in dollars per share) | $ 0.66 | $ 0.55 | $ 1.93 | $ 1.65 |
Diluted: | ||||
Net income | $ 141.4 | $ 118.1 | $ 411 | $ 354.2 |
Weighted-average shares outstanding | 213.2 | 215.2 | 212.8 | 215.3 |
Dilutive effect of stock plans (in shares) | 4.9 | 4.7 | 4.9 | 4.8 |
Dilutive weighted-average shares outstanding | 218.1 | 219.9 | 217.7 | 220.1 |
Diluted earnings per share (in dollars per share) | $ 0.65 | $ 0.54 | $ 1.89 | $ 1.61 |
EARNINGS PER SHARE - Narrative
EARNINGS PER SHARE - Narrative (Details) - shares shares in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Anti-dilutive securities | ||||
Anti-dilutive common shares from ASR agreements excluded from computation of earnings per share (in shares) | 0.1 | |||
Stock compensation plan | ||||
Anti-dilutive securities | ||||
Anti-dilutive securities excluded from the computation of earnings per share (in shares) | 1.1 | 1.8 | 0.8 | 1.3 |
INCOME TAXES (Details)
INCOME TAXES (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | Dec. 31, 2015 | |
Income Tax Disclosure [Abstract] | |||||
Effective income tax rate | 23.70% | 21.60% | 23.50% | 22.20% | |
Liability for income taxes associated with uncertain tax positions | $ 231.4 | $ 231.4 | $ 216.1 | ||
Offsetting tax benefits associated with correlative effects of potential transfer pricing adjustments, state income taxes and timing adjustments | 40.8 | 40.8 | 40.6 | ||
Net amounts that would favorably affect effective tax rate | $ 190.6 | $ 190.6 | $ 175.5 |
SEGMENT INFORMATION - Informati
SEGMENT INFORMATION - Information About Reportable Segments (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Segment Net Sales | ||||
Net sales | $ 739.4 | $ 615.5 | $ 2,196 | $ 1,822.6 |
Segment Pre-tax Income | ||||
Pre-tax income | 185.2 | 150.7 | 537.5 | 455.4 |
Operating segments | ||||
Segment Net Sales | ||||
Net sales | 728.8 | 670.3 | 2,175.2 | 1,982.5 |
Segment Pre-tax Income | ||||
Pre-tax income | 405.1 | 350.2 | 1,204.9 | 1,001.4 |
United States | Operating segments | ||||
Segment Net Sales | ||||
Net sales | 417.1 | 323.1 | 1,194.2 | 909.3 |
Segment Pre-tax Income | ||||
Pre-tax income | 274.2 | 197 | 776 | 530.8 |
Europe | Operating segments | ||||
Segment Net Sales | ||||
Net sales | 171.2 | 194.6 | 556.3 | 625 |
Segment Pre-tax Income | ||||
Pre-tax income | 80.1 | 95.3 | 273 | 306.4 |
Japan | Operating segments | ||||
Segment Net Sales | ||||
Net sales | 68.1 | 73.8 | 203.8 | 217.7 |
Segment Pre-tax Income | ||||
Pre-tax income | 33.4 | 35.1 | 101.5 | 103.1 |
Rest of World | Operating segments | ||||
Segment Net Sales | ||||
Net sales | 72.4 | 78.8 | 220.9 | 230.5 |
Segment Pre-tax Income | ||||
Pre-tax income | $ 17.4 | $ 22.8 | $ 54.4 | $ 61.1 |
SEGMENT INFORMATION - Reconcili
SEGMENT INFORMATION - Reconciliations of Segment Net Sales to Consolidated Net Sales and Segment Pre-Tax Income to Consolidated Pre-Tax Income (Details) - USD ($) $ in Millions | 1 Months Ended | 3 Months Ended | 9 Months Ended | ||
May 31, 2016 | Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Net Sales Reconciliation | |||||
Consolidated net sales | $ 739.4 | $ 615.5 | $ 2,196 | $ 1,822.6 | |
Pre-tax Income Reconciliation | |||||
Pre-tax income | 185.2 | 150.7 | 537.5 | 455.4 | |
Unallocated amounts: | |||||
Special charges (Note 3) | $ (34.5) | 0 | 0 | (34.5) | 0 |
Intellectual property litigation expenses | (6.5) | (2.4) | (27.8) | (3.7) | |
Interest expense, net | (2.1) | (2.5) | (6.9) | (6.7) | |
Operating segments | |||||
Net Sales Reconciliation | |||||
Consolidated net sales | 728.8 | 670.3 | 2,175.2 | 1,982.5 | |
Pre-tax Income Reconciliation | |||||
Pre-tax income | 405.1 | 350.2 | 1,204.9 | 1,001.4 | |
Corporate items | |||||
Unallocated amounts: | |||||
Corporate items | (211.9) | (185) | (613.4) | (520.6) | |
Reconciling items | |||||
Net Sales Reconciliation | |||||
Consolidated net sales | 10.6 | (54.8) | 20.8 | (159.9) | |
Unallocated amounts: | |||||
Intellectual property litigation expenses | (6.5) | (2.4) | (27.8) | (3.7) | |
Interest expense, net | (2.1) | (2.5) | (6.9) | (6.7) | |
Foreign currency | $ 0.6 | $ (9.6) | $ 15.2 | $ (15) |
SEGMENT INFORMATION - Enterpris
SEGMENT INFORMATION - Enterprise-Wide Information (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | Dec. 31, 2015 | |
Enterprise-Wide Information | |||||
Net sales | $ 739.4 | $ 615.5 | $ 2,196 | $ 1,822.6 | |
Long-lived Tangible Assets by Geographic Area | |||||
Long-lived tangible assets | 668.5 | 668.5 | $ 613.7 | ||
Transcatheter Heart Valve Therapy | |||||
Enterprise-Wide Information | |||||
Net sales | 410.1 | 296.1 | 1,196.5 | 846 | |
Surgical Heart Valve Therapy | |||||
Enterprise-Wide Information | |||||
Net sales | 190.9 | 187.9 | 585.5 | 588.8 | |
Critical Care | |||||
Enterprise-Wide Information | |||||
Net sales | 138.4 | 131.5 | 414 | 387.8 | |
United States | |||||
Enterprise-Wide Information | |||||
Net sales | 417.1 | 323.1 | 1,194.2 | 909.3 | |
Long-lived Tangible Assets by Geographic Area | |||||
Long-lived tangible assets | 531.5 | 531.5 | 473.6 | ||
Europe | |||||
Enterprise-Wide Information | |||||
Net sales | 172.3 | 166.4 | 564.4 | 533.6 | |
Long-lived Tangible Assets by Geographic Area | |||||
Long-lived tangible assets | 30.2 | 30.2 | 36 | ||
Japan | |||||
Enterprise-Wide Information | |||||
Net sales | 79.8 | 60.3 | 226.3 | 180.7 | |
Long-lived Tangible Assets by Geographic Area | |||||
Long-lived tangible assets | 9.8 | 9.8 | 8.1 | ||
Rest of World | |||||
Enterprise-Wide Information | |||||
Net sales | 70.2 | $ 65.7 | 211.1 | $ 199 | |
Long-lived Tangible Assets by Geographic Area | |||||
Long-lived tangible assets | $ 97 | $ 97 | $ 96 |