Document and Entity Information
Document and Entity Information | 9 Months Ended |
Sep. 30, 2016shares | |
Document and Entity Information [Abstract] | |
Document Type | 10-Q |
Amendment Flag | false |
Document Period End Date | Sep. 30, 2016 |
Document Fiscal Year Focus | 2,016 |
Document Fiscal Period Focus | Q3 |
Trading Symbol | SYK |
Entity Registrant Name | STRYKER CORP |
Entity Central Index Key | 310,764 |
Current Fiscal Year End Date | --12-31 |
Entity Filer Category | Large Accelerated Filer |
Entity Common Stock, Shares Outstanding | 374,451,718 |
Consolidated Statements Of Earn
Consolidated Statements Of Earnings (Unaudited) - 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 | $ 2,833 | $ 2,420 | $ 8,168 | $ 7,231 |
Cost of sales | 960 | 796 | 2,759 | 2,449 |
Gross profit | 1,873 | 1,624 | 5,409 | 4,782 |
Research, development and engineering expenses | 184 | 155 | 526 | 461 |
Selling, general and administrative expenses | 1,057 | 887 | 3,044 | 2,640 |
Recall charges | 57 | 150 | 104 | 316 |
Amortization of intangible assets | 89 | 54 | 230 | 152 |
Total operating expenses | 1,387 | 1,246 | 3,904 | 3,569 |
Operating income | 486 | 378 | 1,505 | 1,213 |
Other income (expense), net | (67) | (33) | (172) | (90) |
Earnings before income taxes | 419 | 345 | 1,333 | 1,123 |
Income taxes | 64 | 44 | 196 | 206 |
Net earnings | $ 355 | $ 301 | $ 1,137 | $ 917 |
Net earnings per share of common stock: | ||||
Basic net earnings per share of common stock | $ 0.95 | $ 0.80 | $ 3.04 | $ 2.43 |
Diluted net earnings per share of common stock | $ 0.94 | $ 0.79 | $ 3.01 | $ 2.40 |
Weighted-average shares outstanding: | ||||
Basic | 374.4 | 376.3 | 373.9 | 377.4 |
Effect of dilutive employee stock options | 4.6 | 4.4 | 4.4 | 4.4 |
Diluted | 379 | 380.7 | 378.3 | 381.8 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income (Unaudited) - 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 earnings | $ 355 | $ 301 | $ 1,137 | $ 917 |
Other comprehensive (loss) income, net of tax: | ||||
Marketable securities | 0 | 0 | 0 | (3) |
Pension plans | (1) | 0 | (4) | 10 |
Unrealized losses on designated hedges | 0 | (15) | (35) | (4) |
Financial statement translation | (4) | (83) | 78 | (278) |
Total other comprehensive (loss) income, net of tax | (5) | (98) | 39 | (275) |
Comprehensive income | $ 350 | $ 203 | $ 1,176 | $ 642 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Millions | Sep. 30, 2016 | Dec. 31, 2015 |
Current assets | ||
Cash and cash equivalents | $ 2,953 | $ 3,379 |
Marketable securities | 69 | 700 |
Accounts receivable, less allowance of $64 ($61 in 2015) | 1,803 | 1,662 |
Inventories: | ||
Materials and supplies | 396 | 304 |
Work in process | 126 | 103 |
Finished goods | 1,570 | 1,232 |
Total inventories | 2,092 | 1,639 |
Prepaid expenses and other current assets | 449 | 563 |
Total current assets | 7,366 | 7,943 |
Property, plant and equipment: | ||
Land, buildings and improvements | 802 | 687 |
Machinery and equipment | 2,321 | 2,043 |
Total property, plant and equipment | 3,123 | 2,730 |
Less allowance for depreciation | 1,618 | 1,531 |
Net property, plant and equipment | 1,505 | 1,199 |
Other assets | ||
Goodwill | 6,475 | 4,136 |
Other intangibles, net | 3,608 | 1,794 |
Other noncurrent assets | 1,233 | 1,151 |
Total assets | 20,187 | 16,223 |
Current liabilities | ||
Accounts payable | 420 | 410 |
Accrued compensation | 640 | 637 |
Income taxes | 213 | 141 |
Dividend payable | 142 | 142 |
Accrued recall | 603 | 694 |
Accrued expenses and other liabilities | 873 | 710 |
Current maturities of debt | 135 | 768 |
Total current liabilities | 3,026 | 3,502 |
Long-term debt, excluding current maturities | 6,713 | 3,230 |
Other noncurrent liabilities | 1,116 | 980 |
Total liabilities | 10,855 | 7,712 |
Shareholders' equity | ||
Common stock, $0.10 par value: Authorized: 1 billions shares, outstanding: 374 millions shares (373 millions shares in 2015) | 37 | 37 |
Additional paid-in capital | 1,404 | 1,321 |
Retained earnings | 8,491 | 7,792 |
Accumulated other comprehensive income | (600) | (639) |
Total shareholders' equity | 9,332 | 8,511 |
Total liabilities & shareholders' equity | $ 20,187 | $ 16,223 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) shares in Millions, $ in Millions | Sep. 30, 2016 | Dec. 31, 2015 |
Statement of Financial Position [Abstract] | ||
Accounts receivable, Allowance for Doubtful Accounts | $ 69 | $ 61 |
Common stock, par value (in dollars per share) | $ 0.10 | $ 0.10 |
Common stock, authorized (in shares) | 1,000 | 1,000 |
Common stock, outstanding (in shares) | 374 | 373 |
Consolidated Statement Of Share
Consolidated Statement Of Shareholders' Equity (Unaudited) - 9 months ended Sep. 30, 2016 - USD ($) $ in Millions | Total | Common Stock | Additional Paid-In Capital | Retained Earnings | Accumulated Other Comprehensive (Loss) Income |
Excess Tax Benefit from stock issued under employee stock plans | $ 31 | ||||
December 31, 2015 at Dec. 31, 2015 | 8,511 | $ 37 | $ 1,321 | $ 7,792 | $ (639) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Net earnings | 1,137 | ||||
Other comprehensive income | 39 | 39 | |||
Issuance of 1.6 million shares of common stock under stock option and benefit plans, including $31 excess income tax benefit | 13 | 13 | |||
Repurchase of 0.1 million shares of common stock | (13) | (1) | (12) | ||
Share-based compensation | 71 | 71 | |||
Cash dividends declared of $1.14 per share of common stock | (426) | (426) | |||
September 30, 2016 at Sep. 30, 2016 | $ 9,332 | $ 37 | $ 1,404 | $ 8,491 | $ (600) |
Consolidated Statement Of Shar7
Consolidated Statement Of Shareholders' Equity (Unaudited) (Parenthetical) shares in Millions, $ in Millions | 9 Months Ended |
Sep. 30, 2016USD ($)shares | |
Statement of Stockholders' Equity [Abstract] | |
Issuance of common stock under stock option and benefit plans, shares | 1.6 |
Issuance of common stock under stock option and benefit plans, excess income tax benefit | $ | $ 31 |
Repurchase and retirement of common stock, shares | 0.1 |
Consolidated Statements Of Cash
Consolidated Statements Of Cash Flows (Unaudited) - USD ($) $ in Millions | 9 Months Ended | |
Sep. 30, 2016 | Sep. 30, 2015 | |
Operating activities | ||
Net earnings | $ 1,137 | $ 917 |
Adjustments to reconcile net earnings to net cash provided by operating activities: | ||
Depreciation | 165 | 137 |
Amortization of intangible assets | 230 | 152 |
Share-based compensation | 71 | 65 |
Recall charges | 104 | 316 |
Sale of inventory stepped up to fair value at acquisition | 37 | 7 |
Excess tax benefits from stock issued under employee stock plans | (31) | (20) |
Changes in operating assets and liabilities: | ||
Accounts receivable | 22 | 26 |
Inventories | (307) | (124) |
Accounts payable | (11) | 15 |
Accrued expenses and other liabilities | (72) | (35) |
Recall-related payments | (181) | (1,172) |
Income taxes | (58) | (241) |
Other | 58 | 185 |
Net cash provided by operating activities | 1,164 | 228 |
Investing activities | ||
Acquisitions, net of cash acquired | (4,296) | (140) |
Purchases of marketable securities | (136) | (1,184) |
Sales of marketable securities | 769 | 4,056 |
Purchases of property, plant and equipment | (347) | (191) |
Other investing, net | (4) | 0 |
Net cash (used in) provided by investing activities | (4,014) | 2,541 |
Financing activities | ||
Proceeds from borrowings | 4,248 | 1,298 |
Payments on borrowings | (1,430) | (1,799) |
Dividends paid | (426) | (391) |
Repurchase of common stock | (13) | (446) |
Excess tax benefits from stock issued under employee stock plans | 31 | 20 |
Other financing | (7) | 16 |
Net cash provided by (used in) financing activities | 2,403 | (1,302) |
Effect of exchange rate changes on cash and cash equivalents | 21 | (99) |
Change in cash and cash equivalents | (426) | 1,368 |
Cash and cash equivalents at beginning of period | 3,379 | 1,795 |
Cash and cash equivalents at end of period | $ 2,953 | $ 3,163 |
Basis Of Presentation
Basis Of Presentation | 9 Months Ended |
Sep. 30, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | BASIS OF PRESENTATION General Information These statements should be read in conjunction with our Annual Report on Form 10-K for 2015 . Management believes that the accompanying unaudited Consolidated Financial Statements contain all adjustments, including normal recurring items, considered necessary for a fair presentation of the interim periods. However, the results of operations included in these Consolidated Financial Statements may not necessarily be indicative of our annual results. Certain prior year amounts on the Consolidated Balance Sheets were reclassified as a result of the adoption of Accounting Standards Update (ASU) 2015-03, Interest - Imputation of Interest: Simplifying the Presentation of Debt Issuance Costs, to conform with the current year presentation. Refer to Note 7 for further information. Certain prior year amounts have been reclassified to conform to the current year presentation of our segment information in Note 10. New Accounting Pronouncements Not Yet Adopted In August 2016 the Financial Accounting Standards Board (FASB) issued ASU 2016-15, Statement of Cash Flows: Classification of Certain Cash Receipts and Cash Payments, which eliminates diversity in practice related to how certain cash receipts and cash payments are presented and classified in the Consolidated Statement of Cash Flows. We plan to adopt this update on January 1, 2017 and do not anticipate that the adoption of this update will have a material impact on our Consolidated Financial Statements. In March 2016 the FASB issued ASU 2016-09, Compensation-Stock Compensation: Improvements to Employee Share-Based Payment Accounting. This update simplifies the accounting for employee share-based payment transactions, including the accounting for income taxes, forfeitures and statutory tax withholding requirements, as well as simplifying classification in the Consolidated Statements of Cash Flows. We plan to adopt this update on January 1, 2017. Upon adoption of this update, excess income tax benefits associated with share-based compensation, which are currently recognized within additional paid in capital, will be recognized within the income tax provision in our Consolidated Statements of Earnings. Additionally, our Consolidated Statements of Cash Flows will present such excess income tax benefits, which are currently presented as a financing activity, as an operating activity. If we had adopted this update on January 1, 2016, the impact would have been $31 through September 30, 2016. The impact of adopting this update in 2017 on our Consolidated Financial Statements will be dependent on market factors, the timing and intrinsic value of future share-based compensation award vests and exercises. In February 2016 the FASB issued ASU 2016-02, Leases. This update requires an entity to recognize assets and liabilities on the balance sheet for leases with lease terms greater than 12 months. We plan to adopt this update on January 1, 2019. We are still evaluating the impact that this update will have on our Consolidated Financial Statements. In May 2014 the FASB issued ASU 2014-09, Revenue from Contracts with Customers. This update outlines a single, comprehensive model for accounting for revenue from contracts with customers. We plan to adopt this update on January 1, 2018. We are still evaluating the impact that this update will have on our Consolidated Financial Statements. No other new accounting pronouncements were issued or became effective during the period that had, or are expected to have, a material impact on our Consolidated Financial Statements. |
Fair Value Measurements
Fair Value Measurements | 9 Months Ended |
Sep. 30, 2016 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | FAIR VALUE MEASUREMENTS Financial assets and liabilities carried at fair value are classified and disclosed in one of the following three categories: Level 1 Quoted market prices in active markets for identical assets or liabilities Level 2 Observable market-based inputs or unobservable inputs that are corroborated by market data Level 3 Unobservable inputs reflecting our assumptions or external inputs from active markets When applying the fair value principles in the valuation of assets and liabilities, we are required to maximize the use of quoted market prices and minimize the use of unobservable inputs. We calculate the fair value of our Level 1 and Level 2 instruments based on the exchange traded price of identical or similar instruments, where available, or based on other observable inputs taking into account our credit risk and that of our counterparties. Foreign currency exchange contracts and interest rate hedges are included in Level 2, as we use inputs other than quoted prices that are observable for the asset or liability. The Level 2 derivative instruments are primarily valued using standard calculations and models that use readily observable market data as their basis. Our Level 3 liabilities represent milestone payments for acquisitions. For certain Level 3 liabilities, the Black-Scholes option pricing model was used to value the liabilities, while the fair value of other liabilities was estimated using a discounted cash flow technique. Significant unobservable inputs to this technique included our probability assessments related to the occurrence of certain events, appropriately discounted considering the uncertainties associated with the obligation. We remeasure the fair value of our assets and liabilities each reporting period. We record the changes in fair value within selling, general and administrative expense and the changes in the time value of money within other income (expense), net. Assets and Liabilities Measured at Fair Value September December 2016 2015 Cash and cash equivalents $ 2,953 $ 3,379 Trading marketable securities 91 82 Level 1 - Assets $ 3,044 $ 3,461 Available-for-sale marketable securities: Corporate and asset-backed debt securities $ 26 $ 214 Foreign government debt securities — 96 United States agency debt securities 11 120 United States treasury debt securities 14 264 Certificates of deposit 18 8 Total available-for-sale marketable securities $ 69 $ 702 Foreign currency exchange forward contracts 12 69 Interest rate swap asset 39 15 Level 2 - Assets $ 120 $ 786 Total assets measured at fair value $ 3,164 $ 4,247 Deferred compensation arrangements $ 91 $ 82 Level 1 - Liabilities $ 91 $ 82 Foreign currency exchange forward contracts $ 33 $ 10 Interest rate swap liability — 4 Level 2 - Liabilities $ 33 $ 14 Contingent consideration: Beginning balance $ 56 $ 48 Additions 49 11 Losses included in earnings (5 ) — Settlements (3 ) (3 ) Balance at the end of the period $ 97 $ 56 Level 3 - Liabilities $ 97 $ 56 Total liabilities measured at fair value $ 221 $ 152 There were no significant transfers into or out of any level between December 31, 2015 and September 30, 2016 . Fair Value of Available for Sale Securities by Maturity September December 2016 2015 Due in one year or less $ 42 $ 588 Due after one year through three years $ 27 $ 114 On September 30, 2016 the aggregate difference between the cost and fair value of available-for-sale marketable securities was nominal. The total of interest and marketable securities income was $ 7 and $ 1 in the three months 2016 and 2015 and $ 19 and $ 12 in the nine months 2016 and 2015 . We record interest and marketable securities income in other income (expense), net. Less than 1% of our investments in available-for-sale marketable securities had a credit quality rating of less than A2 (Moody's), A (Standard & Poor's) and A (Fitch). We do not plan to sell the investments, and it is not more likely than not that we will be required to sell the investments before recovery of their amortized cost basis, which may be maturity. We do not consider these investments to be other-than-temporarily impaired on September 30, 2016 . Substantially all our investments with unrealized losses that were not deemed to be other-than-temporarily impaired were in a continuous unrealized loss position for less than twelve months. Securities in a Continuous Unrealized Loss Position Number of Investments Fair Value Corporate and asset-backed debt securities 6 $ 3 United States agency debt securities 1 1 United States treasury debt securities 1 2 Certificates of deposit 13 7 Total 21 $ 13 |
Accumulated Other Comprehensive
Accumulated Other Comprehensive Income (AOCI) | 9 Months Ended |
Sep. 30, 2016 | |
Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract] | |
Accumulated Other Comprehensive Income (AOCI) | ACCUMULATED OTHER COMPREHENSIVE INCOME Three Months 2016 Marketable Securities Pension Plans Hedges Financial Statement Translation Total Beginning $ — $ (122 ) $ (31 ) $ (442 ) $ (595 ) OCI 1 (4 ) (4 ) (8 ) (15 ) Income taxes — 1 2 4 7 Reclassifications to: Cost of sales — 2 3 — 5 Other income (1 ) — — — (1 ) Income taxes — — (1 ) — (1 ) Net OCI — (1 ) — (4 ) (5 ) Ending $ — $ (123 ) $ (31 ) $ (446 ) $ (600 ) Three Months 2015 Marketable Securities Pension Plans Hedges Financial Statement Translation Total Beginning $ — $ (126 ) $ 24 $ (329 ) $ (431 ) OCI (1 ) (2 ) (14 ) (83 ) (100 ) Income taxes — — 4 — 4 Reclassifications to: Cost of sales — 2 (7 ) — (5 ) Other expense 1 — — — 1 Income taxes — — 2 — 2 Net OCI — — (15 ) (83 ) (98 ) Ending $ — $ (126 ) $ 9 $ (412 ) $ (529 ) Nine Months 2016 Marketable Securities Pension Plans Hedges Financial Statement Translation Total Beginning $ — $ (119 ) $ 4 $ (524 ) $ (639 ) OCI 3 (10 ) (43 ) 69 19 Income taxes (1 ) 2 13 9 23 Reclassifications to: Cost of sales — 5 (5 ) — — Other income (3 ) — — — (3 ) Income taxes 1 (1 ) — — — Net OCI — (4 ) (35 ) 78 39 Ending $ — $ (123 ) $ (31 ) $ (446 ) $ (600 ) Nine Months 2015 Marketable Securities Pension Plans Hedges Financial Statement Translation Total Beginning $ 3 $ (136 ) $ 13 $ (134 ) $ (254 ) OCI 2 8 6 (278 ) (262 ) Income taxes (1 ) (2 ) (2 ) — (5 ) Reclassifications to: Cost of sales — 6 (12 ) — (6 ) Other income (5 ) — — — (5 ) Income taxes 1 (2 ) 4 — 3 Net OCI (3 ) 10 (4 ) (278 ) (275 ) Ending $ — $ (126 ) $ 9 $ (412 ) $ (529 ) |
Derivative Instruments
Derivative Instruments | 9 Months Ended |
Sep. 30, 2016 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivative Instruments | DERIVATIVE INSTRUMENTS We use operational and economic hedges, foreign currency exchange forward contracts, net investment hedges and interest rate derivative instruments to manage the impact of currency exchange and interest rate fluctuations on earnings and cash flow. At inception the derivative is designated as a cash flow hedge, a fair value hedge or a free standing derivative. We do not enter into derivative instruments for speculative purposes. We did not change our hedging strategies, accounting practices, or objectives from those disclosed in our Annual Report on Form 10-K for 2015 . Designated Net Investment Hedges We have designated certain long-term intercompany loans payable and forward exchange contracts as net investment hedges of our investments in certain international subsidiaries that use the Euro as their functional currency. For derivative instruments that are designated and qualify as a net investment hedge, the effective portion of the derivative's gain or loss is recognized in OCI and reported as a component of Accumulated Other Comprehensive Income (AOCI). On September 30, 2016 the total after-tax amount in AOCI related to our designated net investment hedges was $ 6 . We use the forward method to measure ineffectiveness. Under this method the change in the carrying value of the Euro-denominated amounts, due to remeasurement of the effective portion, is reported as a component of AOCI. The remaining change in the carrying value of the ineffective portion, if any, is recognized in other income (expense), net. The gain or loss related to settled net investment hedges will be subsequently reclassified into net earnings when the hedged net investment is either sold or substantially liquidated. We evaluate the effectiveness of our net investment hedges quarterly and did not recognize any ineffectiveness in the nine months 2016. Designated and Non-Designated Hedges September 2016 Designated Non-Designated Total Gross notional amount $ 1,100 $ 2,851 $ 3,951 Maximum term in days 548 Fair value: Other current assets $ 7 $ 4 $ 11 Other noncurrent assets 1 — 1 Other current liabilities (25 ) (6 ) (31 ) Other noncurrent liabilities (2 ) — (2 ) Total $ (19 ) $ (2 ) $ (21 ) December 2015 Designated Non-Designated Total Gross notional amount $ 889 $ 4,061 $ 4,950 Maximum term in days 546 Fair value: Other current assets $ 27 $ 41 $ 68 Other noncurrent assets 1 — 1 Other current liabilities (6 ) (3 ) (9 ) Other noncurrent liabilities (1 ) — (1 ) Total $ 21 $ 38 $ 59 We are exposed to credit loss in the event of nonperformance by our counterparties on our outstanding derivative instruments but do not anticipate nonperformance by any of our counterparties. Should a counterparty default, our maximum exposure to loss is the asset balance of the instrument. Net Currency Exchange Rate Gains (Losses) Three Months Nine Months Reported in: 2016 2015 2016 2015 Cost of sales $ (3 ) $ 7 $ 5 $ 12 Other income (expense), net (5 ) (5 ) (15 ) (16 ) Total $ (8 ) $ 2 $ (10 ) $ (4 ) On September 30, 2016 and December 31, 2015 pretax (losses) gains on derivatives designated as hedges of ($ 25 ) and $ 17 , reported in AOCI, were expected to be reclassified to earnings during the next 12 months. This reclassification is primarily due to the sale of inventory that includes previously hedged purchases. There were no ineffective portions of derivatives that resulted in gains or losses in any of the periods presented. Interest Rate Risk on Future Debt Issuance Forward starting interest rate derivative instruments designated as cash flow hedges are used to manage the exposure to interest rate volatility with regard to future issuance and refinancing of debt. The effective portion of the gains or losses on forward starting interest rate derivative instruments that are designated and qualify as cash flow hedges is reported as a component of AOCI. Beginning in the period in which the debt refinancing occurs and the related derivative instruments is terminated, the effective portion of the gains or losses is then reclassified into interest expense over the term of the related debt. On September 30, 2016 we had interest rate swaps with notional amounts of $ 600 designated as forward starting interest rate swaps in anticipation of future debt issuances. The market value of outstanding interest rate swap agreements on September 30, 2016 was $ 1 , which is recorded in other assets with an offsetting amount recorded in AOCI. Upon the probable issuance of the debt, these amounts will be released to interest expense over the term of the debt. The cash flow effect of this hedge is recorded in cash flow from operations. In the nine months 2016 we terminated multiple designated interest rate cash flow hedges, recognized $7 in OCI related to hedges on our debt issuances and recognized a nominal amount of ineffectiveness in interest expense. The remaining amounts in AOCI will be reclassified to interest expense over the term of the debt. The cash flow effect of these hedges is recognized in cash flow from operations. Fair Value Hedges On September 30, 2016 we had interest rate swaps with gross notional amounts of $500 designated as fair value hedges of underlying fixed rate obligations representing a portion of our $600 senior unsecured notes due in 2024. In the nine months 2016 there was no hedge ineffectiveness recorded as a result of these fair value hedges. Fair Value Interest Rate Hedge Instruments September 2016 December 2015 Gross notional amount $ 500 $ 500 Fair value: Other noncurrent assets $ 38 $ 15 Long-term debt (38 ) (15 ) Total $ — $ — |
Acquisitions
Acquisitions | 9 Months Ended |
Sep. 30, 2016 | |
Business Combinations [Abstract] | |
Acquisitions | ACQUISITIONS In April 2016 we completed the acquisition of Sage Products, LLC (Sage) for total consideration of approximately $ 2,875 . Sage develops, manufactures and distributes disposable products used primarily in the intensive care unit. This acquisition enhanced our product offerings within our MedSurg segment. Purchase price allocations for this acquisition were based on preliminary valuations. Our estimates and assumptions are subject to change within the measurement period. In April 2016 we completed the acquisition of Physio-Control International, Inc. (Physio) for total consideration of approximately $ 1,299 , net of a working capital adjustment received during the three months 2016. Physio develops, manufactures and markets monitors/defibrillators, automated external defibrillators (AEDs) and CPR-assist devices along with data management and support services. This acquisition enhances our product offerings within our MedSurg segment. Purchase price allocations for this acquisition were based on preliminary valuations. Our estimates and assumptions are subject to change within the measurement period. The Other acquisitions in 2016 include the acquisition of Synergetics' neuro portfolio (Synergetics). The Synergetics acquisition enhances our product offerings within our MedSurg segment. Purchase price allocations for the Other acquisitions were based on preliminary valuations. Our estimates and assumptions are subject to change within the measurement period. The Other acquisitions in 2015 include the acquisition of certain assets of CHG Hospital Beds, Inc. (CHG). The CHG acquisition enhances our product offerings within our MedSurg segment. The measurement period for CHG is complete. Revisions to the original purchase price allocation were nominal. Goodwill acquired with the Sage, Synergetics and CHG acquisitions is deductible for tax purposes. Supplemental pro forma combined statements of earnings have not been presented for the Sage and Physio acquisitions as the impact of their results of operations were not material to our Consolidated Statements of Earnings. Purchase Price Allocation of Acquired Net Assets 2016 2015 Sage Physio Other Other Purchase price paid $ 2,870 $ 1,299 $ 314 $ 140 Contingent consideration 5 — 27 9 Loss on settlement of pre-existing contract — — (19 ) — Total consideration $ 2,875 $ 1,299 $ 322 $ 149 Tangible assets acquired: Cash $ 91 $ 32 $ 1 $ — Accounts receivable 29 106 5 4 Inventory 63 74 19 9 Other assets 80 118 16 13 Liabilities (76 ) (387 ) (29 ) (7 ) Goodwill 1,515 638 170 62 Intangible assets: Customer relationship 930 349 12 13 Trade name 70 150 13 2 Developed technology and patents 173 212 106 53 Non-compete — — 2 — IPR&D — 7 7 — Total $ 2,875 $ 1,299 $ 322 $ 149 Weighted-average life of intangible assets 15 14 12 10 Estimated Amortization Expense Remainder of 2016 2017 2018 2019 2020 $ 86 $ 345 $ 338 $ 329 $ 310 |
Contingencies and Commitments
Contingencies and Commitments | 9 Months Ended |
Sep. 30, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |
Contingencies and Commitments | CONTINGENCIES AND COMMITMENTS We are involved in various ongoing proceedings, legal actions and claims arising in the normal course of business, including proceedings related to product, labor, intellectual property and other matters that are more fully described below. The outcomes of these matters will generally not be known for prolonged periods of time. In certain of the legal proceedings, the claimants seek damages as well as other compensatory and equitable relief that could result in the payment of significant claims and settlements and/or the imposition of injunctions or other equitable relief. For legal matters for which management has sufficient information to reasonably estimate our future obligations, a liability representing management's best estimate of the probable loss, or the minimum of the range of probable losses when a best estimate within the range is not known, is recorded. The estimates are based on consultation with legal counsel, previous settlement experience and settlement strategies. If actual outcomes are less favorable than those estimated by management, additional expense may be incurred, which could unfavorably affect future operating results. We are self-insured for product liability claims and expenses. The ultimate cost to us with respect to product liability claims could be materially different than the amount of the current estimates and accruals and could have a material adverse effect on our financial position, results of operations and cash flows. In June 2012 we voluntarily recalled our Rejuvenate and ABG II Modular-Neck hip stems and terminated global distribution of these hip products. Product liability lawsuits relating to this voluntary recall have been filed against us. On November 3, 2014 we announced that we had entered into a settlement agreement to compensate eligible United States patients who had revision surgery to replace their Rejuvenate and/or ABG II Modular-Neck hip stem prior to that date. We continue to offer support for recall-related care and reimburse patients who are not eligible to enroll in the settlement program for testing and treatment services, including any necessary revision surgeries. In addition, some lawsuits remain and we continue to defend against them. Based on the information that has been received, the actuarially determined range of probable loss to resolve this matter globally is currently estimated to be approximately $ 1,915 to $ 2,174 ($ 2,147 to $ 2,406 before $ 232 of third-party insurance recoveries.) In the three months 2016 we recognized additional charges to earnings of $ 45 , representing the excess of the minimum of the range over the previously recorded reserves. We have made a total of $ 1,483 of recall-related payments, including $ 1,382 of settlement payments. The final outcome of this matter is dependent on many factors that are difficult to predict, including the number of enrollees in the settlement program and the total awards to them, the number and costs of patients not eligible for the settlement program who seek testing and treatment services and require revision surgery and the number and actual costs to resolve the remaining lawsuits. Accordingly, the ultimate cost to resolve this entire matter globally may be materially different than the amount of the current estimate and accruals and could have a material adverse effect on our financial position, results of operations and cash flows. In 2010 we filed a lawsuit in federal court against Zimmer Biomet Holdings, Inc. (Zimmer) alleging that a Zimmer product infringed on three of our patents. In 2013 following a jury trial favorable to us, the trial judge entered a judgment that, among other things, awarded us damages of $ 76 and ordered Zimmer to pay us enhanced damages. Zimmer appealed this ruling. In December 2014 the Federal Circuit affirmed the damages awarded to us, reversed the order for enhanced damages and remanded the issue of attorney fees to the trial court. In May 2015 the trial court entered a stipulated judgment that, among other things, required Zimmer to pay us the base amount of damages and interest, while the issues of enhanced damages and attorney fees continue to be pursued. In June 2015 we recorded a $ 54 gain, net of legal costs, which was recorded within selling, general and administrative expenses. On June 13, 2016 the United States Supreme Court vacated the decision of the Federal Circuit that reversed our judgment for enhanced damages and remanded the case to the Federal Circuit to reconsider the issue. On September 12, 2016 the Federal Circuit issued an opinion that,among other things, remanded the issue of enhanced damages to the trial court. In April 2011 Hill-Rom Company, Inc. and affiliated entities (Hill-Rom) brought a lawsuit against us alleging infringement under United States patent laws with respect to nine patents related to electrical network communications for hospital beds. On March 31, 2015 the court granted the parties’ joint motion to dismiss with prejudice the claims and counterclaims associated with three of these patents. The case has been stayed with respect to the remaining six patents until reexamination proceedings at the United States Patent Office have concluded. The ultimate resolution of this matter cannot be predicted and it is not possible at this time for us to estimate any probable loss or range of probable losses; however, the ultimate result could have a material adverse effect on our financial position, results of operations and cash flows. |
Debt and Credit Facilities
Debt and Credit Facilities | 9 Months Ended |
Sep. 30, 2016 | |
Long-term Debt, Unclassified [Abstract] | |
Debt And Credit Facilities | DEBT AND CREDIT FACILITIES In March 2016 we sold $3,500 of senior unsecured notes. In September 2016 we repaid all $750 of our senior unsecured notes that were due on September 30, 2016. In September 2016 we increased the amount of commercial paper issuable under the commercial paper program by $250 to a maximum of $1,500 outstanding with maturities up to 397 days from the date of issuance. On September 30, 2016 outstanding commercial paper totaled $100 , the weighted-average original maturity of the commercial paper outstanding was approximately 50 days, and the weighted average annualized interest rate of short-term debt was approximately 0.7% . We have lines of credit issued by various financial institutions that are available to fund our day-to-day operating needs. In August 2016 we entered into a new senior unsecured revolving credit facility that replaces our previous agreement dated August 29, 2014. The primary changes were to increase the aggregate principal amount of the commitments by $ 250 to $1,500 and to extend the maturity date to August 19, 2021. Certain of our credit facilities require us to comply with financial and other covenants. We were in compliance with all covenants on September 30, 2016 . The following table is a summary of our total debt and other debt information. September December 2016 2015 Senior unsecured notes: Rate Due 2.000% 09/30/2016 $ — $ 749 1.300% 04/01/2018 598 597 2.000% 03/08/2019 746 — 4.375% 01/15/2020 497 496 2.625% 03/15/2021 745 — 3.375% 05/15/2024 631 606 3.375% 11/01/2025 744 744 3.500% 03/15/2026 986 — 4.100% 04/01/2043 391 390 4.375% 05/15/2044 394 394 4.625% 03/15/2046 979 — Commercial paper 100 — Other 37 22 Total debt $ 6,848 $ 3,998 Less current maturities 135 768 Total long-term debt $ 6,713 $ 3,230 Unamortized debt issuance costs $ 46 $ 24 Available borrowing capacity under all existing facilities $ 1,560 $ 1,236 Fair value of debt $ 7,118 $ 4,009 The fair value of debt (excluding the interest rate hedge) was based on the quoted interest rates for similar types and amounts of borrowings. Substantially all of our debt was classified within Level 1 of the fair value hierarchy. The fair value of the debt was estimated using rates with identical terms and maturities based on quoted active market prices and yields, which took into account the underlying terms of the debt instruments. On January 1, 2016 we retrospectively adopted ASU 2015-03, Interest - Imputation of Interest: Simplifying the Presentation of Debt Issuance Costs. The adoption of this update resulted in the reclassification of $24 of unamortized debt issuance costs, principally from other noncurrent assets, to a reduction of long-term debt on our Consolidated Balance Sheets on December 31, 2015. |
Capital Stock
Capital Stock | 9 Months Ended |
Sep. 30, 2016 | |
Class of Stock Disclosures [Abstract] | |
Capital Stock | CAPITAL STOCK In February 2016 we declared a quarterly dividend of $0.38 per share payable on April 30, 2016 to shareholders of record at the close of business on March 31, 2016. In April 2016 we declared a quarterly dividend of $0.38 per share payable on July 29, 2016 to shareholders at the close of business on June 30, 2016. In July 2016 we declared a quarterly dividend of $0.38 per share payable on October 31, 2016 to shareholders at the close of business on September 30, 2016 . In the nine months 2016, 135 thousand shares, repurchased at the end of 2015, were settled at a cost of $ 13 under our authorized repurchase programs. The manner, timing and amount of repurchases is determined by management based on an evaluation of market conditions, stock price and other factors and is subject to regulatory considerations. Purchases are made from time-to-time in the open market, in privately negotiated transactions or otherwise. On September 30, 2016 the total dollar value of shares that could be acquired under our authorized repurchase programs was $ 1,870 . We have suspended our share repurchase program through the remainder of 2016. |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2016 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | INCOME TAXES Our effective tax rates were 15.2% and 12.8% in the three months 2016 and 2015 and 14.7% and 18.3% in the nine months 2016 and 2015 . The increase in the effective income tax rate in the three months 2016 was primarily due to the impact of the jurisdictional allocation of tax expense related to recall matters in the three months 2015. The effective income tax rate in the nine months 2016 decreased primarily due to certain discrete tax items in 2015 related to the establishment of our European regional headquarters. |
Segment Information
Segment Information | 9 Months Ended |
Sep. 30, 2016 | |
Segment Reporting [Abstract] | |
Segment Information | SEGMENT INFORMATION The following table is a summary of our results of operations by reportable segment. Three Months Nine Months 2016 2015 2016 2015 Orthopaedics $ 1,077 $ 1,019 $ 3,216 $ 3,077 MedSurg 1,253 943 3,469 2,809 Neurotechnology and Spine 503 458 1,483 1,345 Net sales $ 2,833 $ 2,420 $ 8,168 $ 7,231 Orthopaedics $ 385 $ 370 $ 1,105 $ 1,041 MedSurg 255 198 706 574 Neurotechnology and Spine 156 113 455 342 Segment operating income $ 796 $ 681 $ 2,266 $ 1,957 Items not allocated to segments: Corporate and other (90 ) (76 ) (252 ) (220 ) Acquisition and integration-related charges (49 ) (1 ) (120 ) (31 ) Amortization of intangible assets (89 ) (54 ) (230 ) (152 ) Restructuring-related charges (25 ) (22 ) (67 ) (78 ) Rejuvenate and ABG II and other recalls (57 ) (150 ) (104 ) (316 ) Legal matters — — 12 53 Total operating income $ 486 $ 378 $ 1,505 $ 1,213 Total assets of our MedSurg segment increased to $ 8,724 as a result of our recent acquisitions as discussed in Note 5. There were no other significant changes to total assets by segment from information provided in our Annual Report on Form 10-K for 2015. |
Basis Of Presentation (Policies
Basis Of Presentation (Policies) | 9 Months Ended |
Sep. 30, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
New Accounting Pronouncements Not Yet Adopted | In August 2016 the Financial Accounting Standards Board (FASB) issued ASU 2016-15, Statement of Cash Flows: Classification of Certain Cash Receipts and Cash Payments, which eliminates diversity in practice related to how certain cash receipts and cash payments are presented and classified in the Consolidated Statement of Cash Flows. We plan to adopt this update on January 1, 2017 and do not anticipate that the adoption of this update will have a material impact on our Consolidated Financial Statements. In March 2016 the FASB issued ASU 2016-09, Compensation-Stock Compensation: Improvements to Employee Share-Based Payment Accounting. This update simplifies the accounting for employee share-based payment transactions, including the accounting for income taxes, forfeitures and statutory tax withholding requirements, as well as simplifying classification in the Consolidated Statements of Cash Flows. We plan to adopt this update on January 1, 2017. Upon adoption of this update, excess income tax benefits associated with share-based compensation, which are currently recognized within additional paid in capital, will be recognized within the income tax provision in our Consolidated Statements of Earnings. Additionally, our Consolidated Statements of Cash Flows will present such excess income tax benefits, which are currently presented as a financing activity, as an operating activity. If we had adopted this update on January 1, 2016, the impact would have been $31 through September 30, 2016. The impact of adopting this update in 2017 on our Consolidated Financial Statements will be dependent on market factors, the timing and intrinsic value of future share-based compensation award vests and exercises. In February 2016 the FASB issued ASU 2016-02, Leases. This update requires an entity to recognize assets and liabilities on the balance sheet for leases with lease terms greater than 12 months. We plan to adopt this update on January 1, 2019. We are still evaluating the impact that this update will have on our Consolidated Financial Statements. In May 2014 the FASB issued ASU 2014-09, Revenue from Contracts with Customers. This update outlines a single, comprehensive model for accounting for revenue from contracts with customers. We plan to adopt this update on January 1, 2018. We are still evaluating the impact that this update will have on our Consolidated Financial Statements. No other new accounting pronouncements were issued or became effective during the period that had, or are expected to have, a material impact on our Consolidated Financial Statements. |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Fair Value Disclosures [Abstract] | |
Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis | Assets and Liabilities Measured at Fair Value September December 2016 2015 Cash and cash equivalents $ 2,953 $ 3,379 Trading marketable securities 91 82 Level 1 - Assets $ 3,044 $ 3,461 Available-for-sale marketable securities: Corporate and asset-backed debt securities $ 26 $ 214 Foreign government debt securities — 96 United States agency debt securities 11 120 United States treasury debt securities 14 264 Certificates of deposit 18 8 Total available-for-sale marketable securities $ 69 $ 702 Foreign currency exchange forward contracts 12 69 Interest rate swap asset 39 15 Level 2 - Assets $ 120 $ 786 Total assets measured at fair value $ 3,164 $ 4,247 Deferred compensation arrangements $ 91 $ 82 Level 1 - Liabilities $ 91 $ 82 Foreign currency exchange forward contracts $ 33 $ 10 Interest rate swap liability — 4 Level 2 - Liabilities $ 33 $ 14 Contingent consideration: Beginning balance $ 56 $ 48 Additions 49 11 Losses included in earnings (5 ) — Settlements (3 ) (3 ) Balance at the end of the period $ 97 $ 56 Level 3 - Liabilities $ 97 $ 56 Total liabilities measured at fair value $ 221 $ 152 |
Investments Classified by Contractual Maturity Date | Fair Value of Available for Sale Securities by Maturity September December 2016 2015 Due in one year or less $ 42 $ 588 Due after one year through three years $ 27 $ 114 |
Schedule of Unrealized Loss on Investments [Table Text Block] | Securities in a Continuous Unrealized Loss Position Number of Investments Fair Value Corporate and asset-backed debt securities 6 $ 3 United States agency debt securities 1 1 United States treasury debt securities 1 2 Certificates of deposit 13 7 Total 21 $ 13 |
Accumulated Other Comprehensi21
Accumulated Other Comprehensive Income (AOCI) (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract] | |
Schedule of Accumulated Other Comprehensive Income (Loss) [Table Text Block] | Three Months 2016 Marketable Securities Pension Plans Hedges Financial Statement Translation Total Beginning $ — $ (122 ) $ (31 ) $ (442 ) $ (595 ) OCI 1 (4 ) (4 ) (8 ) (15 ) Income taxes — 1 2 4 7 Reclassifications to: Cost of sales — 2 3 — 5 Other income (1 ) — — — (1 ) Income taxes — — (1 ) — (1 ) Net OCI — (1 ) — (4 ) (5 ) Ending $ — $ (123 ) $ (31 ) $ (446 ) $ (600 ) Three Months 2015 Marketable Securities Pension Plans Hedges Financial Statement Translation Total Beginning $ — $ (126 ) $ 24 $ (329 ) $ (431 ) OCI (1 ) (2 ) (14 ) (83 ) (100 ) Income taxes — — 4 — 4 Reclassifications to: Cost of sales — 2 (7 ) — (5 ) Other expense 1 — — — 1 Income taxes — — 2 — 2 Net OCI — — (15 ) (83 ) (98 ) Ending $ — $ (126 ) $ 9 $ (412 ) $ (529 ) Nine Months 2016 Marketable Securities Pension Plans Hedges Financial Statement Translation Total Beginning $ — $ (119 ) $ 4 $ (524 ) $ (639 ) OCI 3 (10 ) (43 ) 69 19 Income taxes (1 ) 2 13 9 23 Reclassifications to: Cost of sales — 5 (5 ) — — Other income (3 ) — — — (3 ) Income taxes 1 (1 ) — — — Net OCI — (4 ) (35 ) 78 39 Ending $ — $ (123 ) $ (31 ) $ (446 ) $ (600 ) Nine Months 2015 Marketable Securities Pension Plans Hedges Financial Statement Translation Total Beginning $ 3 $ (136 ) $ 13 $ (134 ) $ (254 ) OCI 2 8 6 (278 ) (262 ) Income taxes (1 ) (2 ) (2 ) — (5 ) Reclassifications to: Cost of sales — 6 (12 ) — (6 ) Other income (5 ) — — — (5 ) Income taxes 1 (2 ) 4 — 3 Net OCI (3 ) 10 (4 ) (278 ) (275 ) Ending $ — $ (126 ) $ 9 $ (412 ) $ (529 ) |
Reclassification out of Accumulated Other Comprehensive Income | Three Months 2016 Marketable Securities Pension Plans Hedges Financial Statement Translation Total Beginning $ — $ (122 ) $ (31 ) $ (442 ) $ (595 ) OCI 1 (4 ) (4 ) (8 ) (15 ) Income taxes — 1 2 4 7 Reclassifications to: Cost of sales — 2 3 — 5 Other income (1 ) — — — (1 ) Income taxes — — (1 ) — (1 ) Net OCI — (1 ) — (4 ) (5 ) Ending $ — $ (123 ) $ (31 ) $ (446 ) $ (600 ) Three Months 2015 Marketable Securities Pension Plans Hedges Financial Statement Translation Total Beginning $ — $ (126 ) $ 24 $ (329 ) $ (431 ) OCI (1 ) (2 ) (14 ) (83 ) (100 ) Income taxes — — 4 — 4 Reclassifications to: Cost of sales — 2 (7 ) — (5 ) Other expense 1 — — — 1 Income taxes — — 2 — 2 Net OCI — — (15 ) (83 ) (98 ) Ending $ — $ (126 ) $ 9 $ (412 ) $ (529 ) Nine Months 2016 Marketable Securities Pension Plans Hedges Financial Statement Translation Total Beginning $ — $ (119 ) $ 4 $ (524 ) $ (639 ) OCI 3 (10 ) (43 ) 69 19 Income taxes (1 ) 2 13 9 23 Reclassifications to: Cost of sales — 5 (5 ) — — Other income (3 ) — — — (3 ) Income taxes 1 (1 ) — — — Net OCI — (4 ) (35 ) 78 39 Ending $ — $ (123 ) $ (31 ) $ (446 ) $ (600 ) Nine Months 2015 Marketable Securities Pension Plans Hedges Financial Statement Translation Total Beginning $ 3 $ (136 ) $ 13 $ (134 ) $ (254 ) OCI 2 8 6 (278 ) (262 ) Income taxes (1 ) (2 ) (2 ) — (5 ) Reclassifications to: Cost of sales — 6 (12 ) — (6 ) Other income (5 ) — — — (5 ) Income taxes 1 (2 ) 4 — 3 Net OCI (3 ) 10 (4 ) (278 ) (275 ) Ending $ — $ (126 ) $ 9 $ (412 ) $ (529 ) |
Derivative Instruments (Tables)
Derivative Instruments (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Schedule of Derivative Instruments in Statement of Financial Position, Fair Value | Designated and Non-Designated Hedges September 2016 Designated Non-Designated Total Gross notional amount $ 1,100 $ 2,851 $ 3,951 Maximum term in days 548 Fair value: Other current assets $ 7 $ 4 $ 11 Other noncurrent assets 1 — 1 Other current liabilities (25 ) (6 ) (31 ) Other noncurrent liabilities (2 ) — (2 ) Total $ (19 ) $ (2 ) $ (21 ) December 2015 Designated Non-Designated Total Gross notional amount $ 889 $ 4,061 $ 4,950 Maximum term in days 546 Fair value: Other current assets $ 27 $ 41 $ 68 Other noncurrent assets 1 — 1 Other current liabilities (6 ) (3 ) (9 ) Other noncurrent liabilities (1 ) — (1 ) Total $ 21 $ 38 $ 59 |
Schedule of Derivatives Instruments Statements of Financial Performance and Financial Position, Location | Net Currency Exchange Rate Gains (Losses) Three Months Nine Months Reported in: 2016 2015 2016 2015 Cost of sales $ (3 ) $ 7 $ 5 $ 12 Other income (expense), net (5 ) (5 ) (15 ) (16 ) Total $ (8 ) $ 2 $ (10 ) $ (4 ) |
Schedule of Interest Rate Derivatives | Fair Value Interest Rate Hedge Instruments September 2016 December 2015 Gross notional amount $ 500 $ 500 Fair value: Other noncurrent assets $ 38 $ 15 Long-term debt (38 ) (15 ) Total $ — $ — |
Acquisitions (Tables)
Acquisitions (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Business Combinations [Abstract] | |
Schedule of Business Acquisitions, by Acquisition | Purchase Price Allocation of Acquired Net Assets 2016 2015 Sage Physio Other Other Purchase price paid $ 2,870 $ 1,299 $ 314 $ 140 Contingent consideration 5 — 27 9 Loss on settlement of pre-existing contract — — (19 ) — Total consideration $ 2,875 $ 1,299 $ 322 $ 149 Tangible assets acquired: Cash $ 91 $ 32 $ 1 $ — Accounts receivable 29 106 5 4 Inventory 63 74 19 9 Other assets 80 118 16 13 Liabilities (76 ) (387 ) (29 ) (7 ) Goodwill 1,515 638 170 62 Intangible assets: Customer relationship 930 349 12 13 Trade name 70 150 13 2 Developed technology and patents 173 212 106 53 Non-compete — — 2 — IPR&D — 7 7 — Total $ 2,875 $ 1,299 $ 322 $ 149 Weighted-average life of intangible assets 15 14 12 10 |
Schedule of Finite-Lived Intangible Assets, Future Amortization Expense | Estimated Amortization Expense Remainder of 2016 2017 2018 2019 2020 $ 86 $ 345 $ 338 $ 329 $ 310 |
Debt and Credit Facilities (Tab
Debt and Credit Facilities (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Long-term Debt, Unclassified [Abstract] | |
Schedule of Long-term Debt Instruments | The following table is a summary of our total debt and other debt information. September December 2016 2015 Senior unsecured notes: Rate Due 2.000% 09/30/2016 $ — $ 749 1.300% 04/01/2018 598 597 2.000% 03/08/2019 746 — 4.375% 01/15/2020 497 496 2.625% 03/15/2021 745 — 3.375% 05/15/2024 631 606 3.375% 11/01/2025 744 744 3.500% 03/15/2026 986 — 4.100% 04/01/2043 391 390 4.375% 05/15/2044 394 394 4.625% 03/15/2046 979 — Commercial paper 100 — Other 37 22 Total debt $ 6,848 $ 3,998 Less current maturities 135 768 Total long-term debt $ 6,713 $ 3,230 Unamortized debt issuance costs $ 46 $ 24 Available borrowing capacity under all existing facilities $ 1,560 $ 1,236 Fair value of debt $ 7,118 $ 4,009 |
Segment Information (Tables)
Segment Information (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Segment Reporting [Abstract] | |
Sales and Other Financial Information by Business Segment | The following table is a summary of our results of operations by reportable segment. Three Months Nine Months 2016 2015 2016 2015 Orthopaedics $ 1,077 $ 1,019 $ 3,216 $ 3,077 MedSurg 1,253 943 3,469 2,809 Neurotechnology and Spine 503 458 1,483 1,345 Net sales $ 2,833 $ 2,420 $ 8,168 $ 7,231 Orthopaedics $ 385 $ 370 $ 1,105 $ 1,041 MedSurg 255 198 706 574 Neurotechnology and Spine 156 113 455 342 Segment operating income $ 796 $ 681 $ 2,266 $ 1,957 Items not allocated to segments: Corporate and other (90 ) (76 ) (252 ) (220 ) Acquisition and integration-related charges (49 ) (1 ) (120 ) (31 ) Amortization of intangible assets (89 ) (54 ) (230 ) (152 ) Restructuring-related charges (25 ) (22 ) (67 ) (78 ) Rejuvenate and ABG II and other recalls (57 ) (150 ) (104 ) (316 ) Legal matters — — 12 53 Total operating income $ 486 $ 378 $ 1,505 $ 1,213 |
Basis Of Presentation - New Acc
Basis Of Presentation - New Accounting Pronouncements Not Yet Adopted (Details) $ in Millions | 9 Months Ended |
Sep. 30, 2016USD ($) | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Excess Tax Benefit from stock issued under employee stock plans | $ 31 |
Adjustments for New Accounting Pronouncement [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Excess Tax Benefit from stock issued under employee stock plans | $ (31) |
Fair Value Measurements (Narrat
Fair Value Measurements (Narrative) (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Fair Value, Option, Qualitative Disclosures Related to Election [Line Items] | ||||
Marketable Securities, Gain (Loss) | $ 7 | $ 1 | $ 19 | $ 12 |
Corporate and asset-backed debt securities | Standard & Poor's, A Rating | ||||
Fair Value, Option, Qualitative Disclosures Related to Election [Line Items] | ||||
Percentage Of Company's Investments With Credit Quality Rating Less Than Single A And A2 | 1.00% | |||
Corporate and asset-backed debt securities | Moody's, A Rating | ||||
Fair Value, Option, Qualitative Disclosures Related to Election [Line Items] | ||||
Percentage Of Company's Investments With Credit Quality Rating Less Than Single A And A2 | 0.00% | |||
Corporate and asset-backed debt securities | Fitch, A Rating | ||||
Fair Value, Option, Qualitative Disclosures Related to Election [Line Items] | ||||
Percentage Of Company's Investments With Credit Quality Rating Less Than Single A And A2 | 1.00% |
Fair Value Measurements (Valuat
Fair Value Measurements (Valuation Of Financial Instruments By Pricing Categories) (Details) - USD ($) $ in Millions | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2016 | Dec. 31, 2015 | Sep. 30, 2016 | Dec. 31, 2015 | |
ASSETS | ||||
Available-for-sale Securities, Current | $ 69 | $ 700 | ||
Investments Fair Value Disclosure | 3,164 | 4,247 | ||
Liabilities | ||||
Financial and Nonfinancial Liabilities, Fair Value Disclosure | 221 | 152 | ||
Interest rate swap liability | ||||
ASSETS | ||||
Derivative Asset | 0 | 0 | ||
Fair Value, Inputs, Level 1 | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Cash and cash equivalents | 2,953 | 3,379 | ||
ASSETS | ||||
Investments Fair Value Disclosure | 3,044 | 3,461 | ||
Deferred compensation arrangements | 91 | 82 | ||
Liabilities | ||||
Financial and Nonfinancial Liabilities, Fair Value Disclosure | 91 | 82 | ||
Fair Value, Inputs, Level 1 | Trading marketable securities | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Trading marketable securities | 91 | 82 | ||
Fair Value, Inputs, Level 2 | ||||
ASSETS | ||||
Investments Fair Value Disclosure | 120 | 786 | ||
Liabilities | ||||
Financial and Nonfinancial Liabilities, Fair Value Disclosure | 33 | 14 | ||
Fair Value, Inputs, Level 2 | Foreign currency exchange forward contracts | ||||
ASSETS | ||||
Derivative Asset | 12 | 69 | ||
Liabilities | ||||
Foreign currency exchange forward contracts | 33 | 10 | ||
Fair Value, Inputs, Level 2 | Interest rate swap liability | ||||
ASSETS | ||||
Derivative Asset | 39 | 15 | ||
Liabilities | ||||
Interest rate swap liability | 0 | 4 | ||
Fair Value, Inputs, Level 2 | Available-for-sale marketable securities: | ||||
ASSETS | ||||
Available-for-sale Securities, Current | 69 | 702 | ||
Fair Value, Inputs, Level 2 | Available-for-sale marketable securities: | Corporate and asset-backed debt securities | ||||
ASSETS | ||||
Available-for-sale Securities, Current | 26 | 214 | ||
Fair Value, Inputs, Level 2 | Available-for-sale marketable securities: | Foreign government debt securities | ||||
ASSETS | ||||
Available-for-sale Securities, Current | 0 | 96 | ||
Fair Value, Inputs, Level 2 | Available-for-sale marketable securities: | United States agency debt securities | ||||
ASSETS | ||||
Available-for-sale Securities, Current | 11 | 120 | ||
Fair Value, Inputs, Level 2 | Available-for-sale marketable securities: | United States treasury debt securities | ||||
ASSETS | ||||
Available-for-sale Securities, Current | 14 | 264 | ||
Fair Value, Inputs, Level 2 | Available-for-sale marketable securities: | Certificates of deposit | ||||
ASSETS | ||||
Available-for-sale Securities, Current | 18 | 8 | ||
Fair Value, Inputs, Level 3 | ||||
Liabilities | ||||
Financial and Nonfinancial Liabilities, Fair Value Disclosure | 97 | 56 | ||
Business Combination, Contingent Consideration Arrangements, Change in Amount of Contingent Consideration [Abstract] | ||||
Beginning balance | $ 56 | $ 48 | ||
Additions | 49 | 11 | ||
Losses included in earnings | (5) | 0 | ||
Settlements | (3) | (3) | ||
Balance at the end of the period | 97 | 56 | ||
Total liabilities measured at fair value | $ 56 | $ 48 | $ 97 | $ 56 |
Fair Value Measurements (Assets
Fair Value Measurements (Assets and Liabilities Measured At Fair Value On A Recurring Basis Using Unobservable Inputs (Level 3)) (Details) - USD ($) $ in Millions | Sep. 30, 2016 | Dec. 31, 2015 |
Fair Value Disclosures [Abstract] | ||
Estimated fair value due in one year or less | $ 42 | $ 588 |
Estimated fair value due after one year through three years | $ 27 | $ 114 |
Fair Value Measurements (Unreal
Fair Value Measurements (Unrealized Losses And Fair Value Of Investments With Unrealized Losses) (Details) $ in Millions | Sep. 30, 2016USD ($)investment |
Available-for-sale, Securities in Unrealized Loss Positions, Qualitative Disclosure, Number of Positions | investment | 21 |
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value | $ | $ 13 |
Corporate and asset-backed debt securities | |
Available-for-sale, Securities in Unrealized Loss Positions, Qualitative Disclosure, Number of Positions | investment | 6 |
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value | $ | $ 3 |
United States agency debt securities | |
Available-for-sale, Securities in Unrealized Loss Positions, Qualitative Disclosure, Number of Positions | investment | 1 |
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value | $ | $ 1 |
United States treasury debt securities | |
Available-for-sale, Securities in Unrealized Loss Positions, Qualitative Disclosure, Number of Positions | investment | 1 |
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value | $ | $ 2 |
Certificates of deposit | |
Available-for-sale, Securities in Unrealized Loss Positions, Qualitative Disclosure, Number of Positions | investment | 13 |
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value | $ | $ 7 |
Accumulated Other Comprehensi31
Accumulated Other Comprehensive Income (AOCI) (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||||
Accumulated Other Comprehensive Income (Loss), Net of Tax at beginning of period | $ (595) | $ (431) | $ (639) | $ (254) |
OCI | (15) | (100) | 19 | (262) |
Tax expense | 7 | 4 | 23 | (5) |
Cost of sales | (960) | (796) | (2,759) | (2,449) |
Other income (expense), net | 67 | 33 | 172 | 90 |
Income taxes | 64 | 44 | 196 | 206 |
Total other comprehensive (loss) income, net of tax | (5) | (98) | 39 | (275) |
Accumulated Other Comprehensive Income (Loss), Net of Tax at end of period | (600) | (529) | (600) | (529) |
Reclassification out of Accumulated Other Comprehensive Income | ||||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||||
Cost of sales | 5 | |||
Other income (expense), net | (1) | |||
Income taxes | (1) | 2 | 0 | 3 |
Total other comprehensive (loss) income, net of tax | (5) | (98) | 39 | (275) |
Reclassification out of Accumulated Other Comprehensive Income | Cost of Sales | ||||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||||
Cost of sales | (5) | 0 | (6) | |
Reclassification out of Accumulated Other Comprehensive Income | Other Income (expense) | ||||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||||
Other income (expense), net | 1 | (3) | (5) | |
Marketable Securities | ||||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||||
Accumulated Other Comprehensive Income (Loss), Net of Tax at beginning of period | 0 | 0 | 0 | 3 |
OCI | 1 | (1) | 3 | 2 |
Tax expense | 0 | 0 | (1) | (1) |
Accumulated Other Comprehensive Income (Loss), Net of Tax at end of period | 0 | 0 | 0 | 0 |
Marketable Securities | Reclassification out of Accumulated Other Comprehensive Income | ||||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||||
Cost of sales | 0 | |||
Other income (expense), net | (1) | |||
Income taxes | 0 | 0 | 1 | 1 |
Total other comprehensive (loss) income, net of tax | 0 | 0 | 0 | (3) |
Marketable Securities | Reclassification out of Accumulated Other Comprehensive Income | Cost of Sales | ||||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||||
Cost of sales | 0 | 0 | 0 | |
Marketable Securities | Reclassification out of Accumulated Other Comprehensive Income | Other Income (expense) | ||||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||||
Other income (expense), net | 1 | (3) | (5) | |
Pension Plans | ||||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||||
Accumulated Other Comprehensive Income (Loss), Net of Tax at beginning of period | (122) | (126) | (119) | (136) |
OCI | (4) | (2) | (10) | 8 |
Tax expense | 1 | 0 | 2 | (2) |
Accumulated Other Comprehensive Income (Loss), Net of Tax at end of period | (123) | (126) | (123) | (126) |
Pension Plans | Reclassification out of Accumulated Other Comprehensive Income | ||||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||||
Cost of sales | 2 | |||
Other income (expense), net | 0 | |||
Income taxes | 0 | 0 | (1) | (2) |
Total other comprehensive (loss) income, net of tax | (1) | 0 | (4) | 10 |
Pension Plans | Reclassification out of Accumulated Other Comprehensive Income | Cost of Sales | ||||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||||
Cost of sales | 2 | 5 | 6 | |
Pension Plans | Reclassification out of Accumulated Other Comprehensive Income | Other Income (expense) | ||||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||||
Other income (expense), net | 0 | 0 | 0 | |
Hedges | ||||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||||
Accumulated Other Comprehensive Income (Loss), Net of Tax at beginning of period | (31) | 24 | 4 | 13 |
OCI | (4) | (14) | (43) | 6 |
Tax expense | 2 | 4 | 13 | (2) |
Accumulated Other Comprehensive Income (Loss), Net of Tax at end of period | (31) | 9 | (31) | 9 |
Hedges | Reclassification out of Accumulated Other Comprehensive Income | ||||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||||
Cost of sales | 3 | |||
Other income (expense), net | 0 | |||
Income taxes | (1) | 2 | 0 | 4 |
Total other comprehensive (loss) income, net of tax | 0 | (15) | (35) | (4) |
Hedges | Reclassification out of Accumulated Other Comprehensive Income | Cost of Sales | ||||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||||
Cost of sales | (7) | (5) | (12) | |
Hedges | Reclassification out of Accumulated Other Comprehensive Income | Other Income (expense) | ||||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||||
Other income (expense), net | 0 | 0 | 0 | |
Financial Statement Translation | ||||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||||
Accumulated Other Comprehensive Income (Loss), Net of Tax at beginning of period | (442) | (329) | (524) | (134) |
OCI | (8) | (83) | 69 | (278) |
Tax expense | 4 | 0 | 9 | 0 |
Accumulated Other Comprehensive Income (Loss), Net of Tax at end of period | (446) | (412) | (446) | (412) |
Financial Statement Translation | Reclassification out of Accumulated Other Comprehensive Income | ||||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||||
Cost of sales | 0 | |||
Other income (expense), net | 0 | |||
Income taxes | 0 | 0 | 0 | 0 |
Total other comprehensive (loss) income, net of tax | $ (4) | (83) | 78 | (278) |
Financial Statement Translation | Reclassification out of Accumulated Other Comprehensive Income | Cost of Sales | ||||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||||
Cost of sales | 0 | 0 | 0 | |
Financial Statement Translation | Reclassification out of Accumulated Other Comprehensive Income | Other Income (expense) | ||||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||||
Other income (expense), net | $ 0 | $ 0 | $ 0 |
Derivative Instruments (Narrati
Derivative Instruments (Narrative) (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 | |
Gain (Loss) on Derivative Instruments, Net, Pretax | $ (25) | $ 17 | |||
Gain (loss) on termination of derivative | $ 0 | $ (15) | (35) | $ (4) | |
Senior Unsecured Notes 3.375% due 2024 | |||||
Senior Unsecured Notes | 600 | ||||
Net Investment Hedging | |||||
Derivative Instruments in Hedges, Net Investment in Foreign Operations, Assets, Fair Value | 6 | 6 | |||
Interest rate swap liability | Interest Rate Risk | Designated as Hedging Instrument | |||||
Notional Amount | 600 | 600 | |||
Derivative Asset, Fair Value, Gross Asset | 1 | 1 | |||
Interest rate swap liability | Cash Flow Hedging | |||||
Gain (loss) on termination of derivative | 0 | ||||
Interest rate swap liability | Fair Value Hedging | Designated as Hedging Instrument | |||||
Notional Amount | $ 500 | $ 500 | $ 500 |
Derivative Instruments (Forward
Derivative Instruments (Forward Currency Exchange Contracts) (Details) - Foreign Exchange Contract - USD ($) $ in Millions | 9 Months Ended | 12 Months Ended |
Sep. 30, 2016 | Dec. 31, 2015 | |
Derivative [Line Items] | ||
Notional Amount | $ 3,951 | $ 4,950 |
Maximum Term (Days) | 548 days | 546 days |
Derivative, Fair Value, Net | $ (21) | $ 59 |
Other current assets | ||
Derivative [Line Items] | ||
Derivative Asset, Fair Value, Gross Asset | 11 | 68 |
Other noncurrent assets | ||
Derivative [Line Items] | ||
Derivative Asset, Fair Value, Gross Asset | 1 | 1 |
Other current liabilities | ||
Derivative [Line Items] | ||
Derivative Liability, Fair Value, Gross Liability | (31) | (9) |
Other noncurrent liabilities | ||
Derivative [Line Items] | ||
Derivative Liability, Fair Value, Gross Liability | (2) | (1) |
Designated | ||
Derivative [Line Items] | ||
Notional Amount | 1,100 | 889 |
Derivative, Fair Value, Net | (19) | 21 |
Designated | Other current assets | ||
Derivative [Line Items] | ||
Derivative Asset, Fair Value, Gross Asset | 7 | 27 |
Designated | Other noncurrent assets | ||
Derivative [Line Items] | ||
Derivative Asset, Fair Value, Gross Asset | 1 | 1 |
Designated | Other current liabilities | ||
Derivative [Line Items] | ||
Derivative Liability, Fair Value, Gross Liability | (25) | (6) |
Designated | Other noncurrent liabilities | ||
Derivative [Line Items] | ||
Derivative Liability, Fair Value, Gross Liability | (2) | (1) |
Non-Designated | ||
Derivative [Line Items] | ||
Notional Amount | 2,851 | 4,061 |
Derivative, Fair Value, Net | (2) | 38 |
Non-Designated | Other current assets | ||
Derivative [Line Items] | ||
Derivative Asset, Fair Value, Gross Asset | 4 | 41 |
Non-Designated | Other noncurrent assets | ||
Derivative [Line Items] | ||
Derivative Asset, Fair Value, Gross Asset | 0 | 0 |
Non-Designated | Other current liabilities | ||
Derivative [Line Items] | ||
Derivative Liability, Fair Value, Gross Liability | (6) | (3) |
Non-Designated | Other noncurrent liabilities | ||
Derivative [Line Items] | ||
Derivative Liability, Fair Value, Gross Liability | $ 0 | $ 0 |
Derivative Instruments (Income
Derivative Instruments (Income Statement Location) (Details) - Foreign Exchange Contract - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Foreign Currency Transaction Gain (Loss), before Tax | $ (8) | $ 2 | $ (10) | $ (4) |
Cost of sales | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Foreign Currency Transaction Gain (Loss), before Tax | (3) | 7 | 5 | 12 |
Other income (expense), net | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Foreign Currency Transaction Gain (Loss), before Tax | $ (5) | $ (5) | $ (15) | $ (16) |
Derivative Instruments (Designa
Derivative Instruments (Designated Interest Rate Hedge) (Details) - Interest rate swap liability - USD ($) $ in Millions | Sep. 30, 2016 | Dec. 31, 2015 |
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||
Derivative Asset | $ 0 | $ 0 |
Other noncurrent assets | ||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||
Derivative Asset, Fair Value, Gross Asset | 38 | 15 |
Long-term Debt | ||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||
Derivative Asset, Fair Value, Gross Liability | (38) | (15) |
Designated as Hedging Instrument | Fair Value Hedging | ||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||
Derivative, Notional Amount | $ 500 | $ 500 |
Acquisitions (Narrative) (Detai
Acquisitions (Narrative) (Details) - USD ($) $ in Millions | 9 Months Ended | |
Sep. 30, 2016 | Sep. 30, 2015 | |
Business Acquisition [Line Items] | ||
Acquisitions, net of cash acquired | $ 4,296 | $ 140 |
Sage Products | ||
Business Acquisition [Line Items] | ||
Total consideration | 2,875 | |
Physio Acquisition | ||
Business Acquisition [Line Items] | ||
Total consideration | 1,299 | |
Acquisitions, net of cash acquired | $ 1,299 |
Acquisitions (Allocation Of The
Acquisitions (Allocation Of The Preliminary Purchase Price To The Acquired Net Assets Of The Trauson Acquisition (Details) - USD ($) $ in Millions | 9 Months Ended | 12 Months Ended | |
Sep. 30, 2016 | Sep. 30, 2015 | Dec. 31, 2015 | |
Goodwill | $ 6,475 | $ 4,136 | |
Sage Products | |||
Purchase price paid | 2,870 | ||
Contingent consideration | 5 | ||
Loss on settlement of pre-existing contract | 0 | ||
Total consideration | 2,875 | ||
Cash | 91 | ||
Accounts receivable | 29 | ||
Inventory | 63 | ||
Other assets | 80 | ||
Liabilities | (76) | ||
Goodwill | 1,515 | ||
Assets and liabilities acquired, net | $ 2,875 | ||
Weighted-average life of intangible assets | 15 years | ||
Sage Products | Customer relationship | |||
Intangible assets acquired | $ 930 | ||
Sage Products | Trade name | |||
Intangible assets acquired | 70 | ||
Sage Products | Developed technology and patents | |||
Intangible assets acquired | 173 | ||
Sage Products | Non-compete | |||
Intangible assets acquired | 0 | ||
Sage Products | IPR&D | |||
Intangible assets acquired | 0 | ||
Physio Acquisition | |||
Purchase price paid | 1,299 | ||
Contingent consideration | 0 | ||
Loss on settlement of pre-existing contract | 0 | ||
Total consideration | 1,299 | ||
Cash | 32 | ||
Accounts receivable | 106 | ||
Inventory | 74 | ||
Other assets | 118 | ||
Liabilities | (387) | ||
Goodwill | 638 | ||
Assets and liabilities acquired, net | $ 1,299 | ||
Weighted-average life of intangible assets | 14 years | ||
Physio Acquisition | Customer relationship | |||
Intangible assets acquired | $ 349 | ||
Physio Acquisition | Trade name | |||
Intangible assets acquired | 150 | ||
Physio Acquisition | Developed technology and patents | |||
Intangible assets acquired | 212 | ||
Physio Acquisition | Non-compete | |||
Intangible assets acquired | 0 | ||
Physio Acquisition | IPR&D | |||
Intangible assets acquired | 7 | ||
Other | |||
Purchase price paid | 314 | 140 | |
Contingent consideration | 27 | 9 | |
Loss on settlement of pre-existing contract | (19) | $ 0 | |
Total consideration | 322 | 149 | |
Cash | 1 | 0 | |
Accounts receivable | 5 | 4 | |
Inventory | 19 | 9 | |
Other assets | 16 | 13 | |
Liabilities | (29) | (7) | |
Goodwill | 170 | 62 | |
Assets and liabilities acquired, net | $ 322 | $ 149 | |
Weighted-average life of intangible assets | 12 years | 10 years | |
Other | Customer relationship | |||
Intangible assets acquired | $ 12 | $ 13 | |
Other | Trade name | |||
Intangible assets acquired | 13 | 2 | |
Other | Developed technology and patents | |||
Intangible assets acquired | 106 | 53 | |
Other | Non-compete | |||
Intangible assets acquired | 2 | 0 | |
Other | IPR&D | |||
Intangible assets acquired | $ 7 | $ 0 |
Acquisitions (Future Amortizati
Acquisitions (Future Amortization Expense) (Details) $ in Millions | Sep. 30, 2016USD ($) |
Business Combinations [Abstract] | |
Remainder of 2016 | $ 86 |
2,017 | 345 |
2,018 | 338 |
2,019 | 329 |
2,020 | $ 310 |
Contingencies and Commitments (
Contingencies and Commitments (Narrative) (Details) $ in Millions | Mar. 31, 2015patent | Jun. 30, 2015USD ($) | Apr. 30, 2011patent | Sep. 30, 2016USD ($) | Dec. 31, 2013USD ($) | Dec. 31, 2010patent |
Loss Contingencies [Line Items] | ||||||
Loss Contingency, Damages Awarded, Value | $ 1,483 | |||||
Payments for Legal Settlements | $ 54 | |||||
Rejuvenate and ABG II Voluntary Recall | ||||||
Loss Contingencies [Line Items] | ||||||
Insurance Recoveries | 232 | |||||
Rejuvenate and ABG II Voluntary Recall | ||||||
Loss Contingencies [Line Items] | ||||||
Estimated Litigation Liability | 45 | |||||
Loss Contingency, Damages Awarded, Value | 1,382 | |||||
Rejuvenate and ABG II Voluntary Recall | Minimum | ||||||
Loss Contingencies [Line Items] | ||||||
Loss Contingency, Estimate of Possible Loss | 2,147 | |||||
Rejuvenate and ABG II Voluntary Recall | Minimum | Insurance Settlement | ||||||
Loss Contingencies [Line Items] | ||||||
Loss Contingency, Estimate of Possible Loss | 1,915 | |||||
Rejuvenate and ABG II Voluntary Recall | Maximum | ||||||
Loss Contingencies [Line Items] | ||||||
Loss Contingency, Estimate of Possible Loss | 2,406 | |||||
Rejuvenate and ABG II Voluntary Recall | Maximum | Insurance Settlement | ||||||
Loss Contingencies [Line Items] | ||||||
Loss Contingency, Estimate of Possible Loss | $ 2,174 | |||||
Zimmer Product Infringement | ||||||
Loss Contingencies [Line Items] | ||||||
Loss Contingency, Damages Awarded, Value | $ 76 | |||||
Gain Contingency, Patents Allegedly Infringed upon, Number | patent | 3 | |||||
Hill-Rom Company | ||||||
Loss Contingencies [Line Items] | ||||||
Loss Contingency, Patents Allegedly Infringed, Number | patent | 9 | |||||
Loss Contingency, Patents Found Not Infringed, Number | patent | 3 | |||||
Loss Contingency, Patents Found Infringed, Number | patent | 6 |
Debt and Credit Facilities (Det
Debt and Credit Facilities (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | |
Sep. 30, 2016 | Sep. 30, 2016 | Dec. 31, 2015 | |
Proceeds from Issuance of Debt | $ 3,500 | ||
Commercial Paper | $ 100 | $ 100 | $ 0 |
Weighted Average Maturity, Commercial Paper | 50 days | ||
Debt, Long-term and Short-term, Combined Amount | 6,848 | $ 6,848 | 3,998 |
Debt, Current | 135 | 135 | 768 |
Long-term debt, excluding current maturities | (6,713) | (6,713) | (3,230) |
Unamortized Debt Issuance Expense | 46 | 46 | 24 |
Line of Credit Facility, Remaining Borrowing Capacity | 1,560 | 1,560 | 1,236 |
Debt Instrument, Fair Value Disclosure | 7,118 | $ 7,118 | 4,009 |
New Accounting Pronouncement, Early Adoption, Effect | |||
Long-term debt, excluding current maturities | (24) | ||
Senior Unsecured Notes 2.00% due 2016 | |||
Repayments of Secured Debt | $ 750 | ||
Debt Instrument, Interest Rate, Stated Percentage | 2.00% | 2.00% | |
Debt Instrument, Maturity Date | Sep. 30, 2016 | ||
Unsecured Debt | $ 0 | $ 0 | 749 |
Senior Unsecured Notes 1.30% due 2018 | |||
Debt Instrument, Interest Rate, Stated Percentage | 1.30% | 1.30% | |
Debt Instrument, Maturity Date | Apr. 1, 2018 | ||
Unsecured Debt | $ 598 | $ 598 | 597 |
Senior Unsecured Notes 2.000% due 2019 | |||
Debt Instrument, Interest Rate, Stated Percentage | 2.00% | 2.00% | |
Debt Instrument, Maturity Date | Mar. 8, 2019 | ||
Unsecured Debt | $ 746 | $ 746 | 0 |
Senior Unsecured Notes 4.375% Due 2020 | |||
Debt Instrument, Interest Rate, Stated Percentage | 4.375% | 4.375% | |
Debt Instrument, Maturity Date | Jan. 15, 2020 | ||
Unsecured Debt | $ 497 | $ 497 | 496 |
Senior Unsecured Notes 2.625% due 2021 | |||
Debt Instrument, Interest Rate, Stated Percentage | 2.625% | 2.625% | |
Debt Instrument, Maturity Date | Mar. 15, 2021 | ||
Unsecured Debt | $ 745 | $ 745 | 0 |
Senior Unsecured Notes 3.375% due 2024 | |||
Debt Instrument, Interest Rate, Stated Percentage | 3.375% | 3.375% | |
Debt Instrument, Maturity Date | May 15, 2024 | ||
Unsecured Debt | $ 631 | $ 631 | 606 |
Senior Unsecured Notes 3.375% due 2025 | |||
Debt Instrument, Interest Rate, Stated Percentage | 3.375% | 3.375% | |
Debt Instrument, Maturity Date | Nov. 1, 2025 | ||
Unsecured Debt | $ 744 | $ 744 | 744 |
Senior Unsecured Notes 3.50% due 2026 | |||
Debt Instrument, Interest Rate, Stated Percentage | 3.50% | 3.50% | |
Debt Instrument, Maturity Date | Mar. 15, 2026 | ||
Unsecured Debt | $ 986 | $ 986 | 0 |
Senior Unsecured Notes 4.10% due 2043 | |||
Debt Instrument, Interest Rate, Stated Percentage | 4.10% | 4.10% | |
Debt Instrument, Maturity Date | Apr. 1, 2043 | ||
Unsecured Debt | $ 391 | $ 391 | 390 |
Senior Unsecured Notes 4.375% due 2044 | |||
Debt Instrument, Interest Rate, Stated Percentage | 4.375% | 4.375% | |
Debt Instrument, Maturity Date | May 15, 2044 | ||
Unsecured Debt | $ 394 | $ 394 | 394 |
Senior Unsecured Notes 4.625% due 2018 | |||
Debt Instrument, Interest Rate, Stated Percentage | 4.625% | 4.625% | |
Debt Instrument, Maturity Date | Mar. 15, 2046 | ||
Unsecured Debt | $ 979 | $ 979 | 0 |
Other Debt | |||
Unsecured Debt | 37 | $ 37 | $ 22 |
Commercial Paper | |||
Borrowing Limit Increase | $ 250 | ||
Debt Instrument, Maturity | 397 days | ||
Short-term Debt, Weighted Average Interest Rate | 0.70% | 0.70% | |
Commercial Paper | Maximum | |||
Commercial paper | $ 1,500 | $ 1,500 | |
Line of Credit | |||
Borrowing Limit Increase | 250 | ||
Line of Credit | Maximum | |||
Commercial paper | $ 1,500 | $ 1,500 |
Capital Stock (Narrative) (Deta
Capital Stock (Narrative) (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Millions | 1 Months Ended | 3 Months Ended | 9 Months Ended | |||
Jul. 31, 2016 | Apr. 30, 2016 | Feb. 29, 2016 | Sep. 30, 2016 | Sep. 30, 2016 | Sep. 30, 2015 | |
Class of Stock Disclosures [Abstract] | ||||||
Cash dividends declared, per share of common stock | $ 0.38 | $ 0.38 | $ 0.38 | $ 1.14 | ||
Stock Repurchased During Period, Shares | 135 | |||||
Payments for Repurchase of Common Stock | $ 13 | $ 446 | ||||
2012 $405.0 Million Repurchase Agreement [Member] | ||||||
Stock Repurchase Program, Remaining Authorized Repurchase Amount | $ 1,870 | $ 1,870 |
Income Taxes (Details)
Income Taxes (Details) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016Rate | Sep. 30, 2015Rate | Sep. 30, 2016Rate | Sep. 30, 2015Rate | |
Income Tax Disclosure [Abstract] | ||||
Effective Income Tax Rate Reconciliation, at Federal Statutory Income Tax Rate, Percent | 15.20% | 12.80% | 14.70% | 18.30% |
Segment Information (Sales And
Segment Information (Sales And Other Financial Information By Business Segment) (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 | |
Net sales | $ 2,833 | $ 2,420 | $ 8,168 | $ 7,231 | |
Segment operating income | 486 | 378 | 1,505 | 1,213 | |
Acquisition and integration-related charges | (49) | (1) | (120) | (31) | |
Amortization of intangible assets | (89) | (54) | (230) | (152) | |
Restructuring-related charges | (25) | (22) | (67) | (78) | |
Rejuvenate and ABG II and other recalls | (57) | (150) | (104) | (316) | |
Legal matters | 0 | 0 | 12 | 53 | |
Assets | 20,187 | 20,187 | $ 16,223 | ||
Corporate and Other | |||||
Segment operating income | (90) | (76) | (252) | (220) | |
Operating Segments | |||||
Net sales | 2,833 | 2,420 | 8,168 | 7,231 | |
Segment operating income | 796 | 681 | 2,266 | 1,957 | |
Operating Segments | Orthopaedics | |||||
Net sales | 1,077 | 1,019 | 3,216 | 3,077 | |
Segment operating income | 385 | 370 | 1,105 | 1,041 | |
Operating Segments | MedSurg | |||||
Net sales | 1,253 | 943 | 3,469 | 2,809 | |
Segment operating income | 255 | 198 | 706 | 574 | |
Assets | 8,724 | 8,724 | |||
Operating Segments | Neurotechnology and Spine | |||||
Net sales | 503 | 458 | 1,483 | 1,345 | |
Segment operating income | $ 156 | $ 113 | $ 455 | $ 342 |