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☒
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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☐
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Delaware
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36-4316614
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(State or other jurisdiction of incorporation or organization)
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(I.R.S. Employer Identification No.)
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|||
One Edwards Way
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Irvine
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California
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92614
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(Address of Principal Executive Offices)
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(Zip Code)
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Title of each class
|
Trading Symbol(s)
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Name of each exchange on which registered
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Common Stock, par value $1.00 per share
|
EW
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New York Stock Exchange
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Large accelerated filer
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☒
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Accelerated filer
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☐
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Non-accelerated filer
|
☐
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Smaller reporting company
|
☐
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Emerging growth company
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☐
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Page
Number
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June 30,
2019 |
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December 31,
2018 |
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ASSETS
|
|
|
|
|
|
||
Current assets
|
|
|
|
|
|
||
Cash and cash equivalents
|
$
|
726.8
|
|
|
$
|
714.1
|
|
Short-term investments (Note 5)
|
207.5
|
|
|
242.4
|
|
||
Accounts and other receivables, net of allowances of $8.8 and $8.9, respectively
|
609.6
|
|
|
537.3
|
|
||
Inventories (Note 2)
|
624.9
|
|
|
607.0
|
|
||
Prepaid expenses
|
55.7
|
|
|
54.3
|
|
||
Other current assets
|
130.2
|
|
|
131.8
|
|
||
Total current assets
|
2,354.7
|
|
|
2,286.9
|
|
||
Long-term investments (Note 5)
|
412.9
|
|
|
506.3
|
|
||
Property, plant, and equipment, net
|
931.1
|
|
|
867.5
|
|
||
Operating lease right-of-use assets (Note 3)
|
71.2
|
|
|
—
|
|
||
Goodwill
|
1,173.9
|
|
|
1,112.2
|
|
||
Other intangible assets, net
|
385.6
|
|
|
343.2
|
|
||
Deferred income taxes
|
163.8
|
|
|
174.0
|
|
||
Other assets
|
80.3
|
|
|
33.6
|
|
||
Total assets
|
$
|
5,573.5
|
|
|
$
|
5,323.7
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY
|
|
|
|
|
|
||
Current liabilities
|
|
|
|
|
|
||
Accounts payable and accrued liabilities (Note 2)
|
$
|
673.2
|
|
|
$
|
876.6
|
|
Operating lease liabilities (Note 3)
|
23.8
|
|
|
—
|
|
||
Total current liabilities
|
697.0
|
|
|
876.6
|
|
||
Long-term debt
|
594.1
|
|
|
593.8
|
|
||
Contingent consideration liabilities (Note 7)
|
193.3
|
|
|
178.6
|
|
||
Taxes payable
|
236.7
|
|
|
259.4
|
|
||
Operating lease liabilities (Note 3)
|
50.4
|
|
|
—
|
|
||
Uncertain tax positions
|
139.5
|
|
|
124.9
|
|
||
Other long-term liabilities
|
162.2
|
|
|
150.0
|
|
||
Commitments and contingencies (Note 11)
|
|
|
|
|
|
||
Stockholders' equity
|
|
|
|
|
|
||
Preferred stock, $.01 par value, authorized 50.0 shares, no shares outstanding
|
—
|
|
|
—
|
|
||
Common stock, $1.00 par value, 350.0 shares authorized, 216.9 and 215.2 shares issued, and 207.9 and 207.7 shares outstanding, respectively
|
216.9
|
|
|
215.2
|
|
||
Additional paid-in capital
|
1,512.3
|
|
|
1,384.4
|
|
||
Retained earnings
|
3,186.7
|
|
|
2,694.7
|
|
||
Accumulated other comprehensive loss (Note 12)
|
(138.2
|
)
|
|
(138.5
|
)
|
||
Treasury stock, at cost, 9.0 and 7.5 shares, respectively
|
(1,277.4
|
)
|
|
(1,015.4
|
)
|
||
Total stockholders' equity
|
3,500.3
|
|
|
3,140.4
|
|
||
Total liabilities and stockholders' equity
|
$
|
5,573.5
|
|
|
$
|
5,323.7
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Net sales
|
$
|
1,086.9
|
|
|
$
|
943.7
|
|
|
$
|
2,079.9
|
|
|
$
|
1,838.5
|
|
Cost of sales
|
304.0
|
|
|
246.2
|
|
|
535.8
|
|
|
479.8
|
|
||||
Gross profit
|
782.9
|
|
|
697.5
|
|
|
1,544.1
|
|
|
1,358.7
|
|
||||
Selling, general, and administrative expenses
|
308.5
|
|
|
274.9
|
|
|
588.8
|
|
|
530.9
|
|
||||
Research and development expenses
|
191.9
|
|
|
154.1
|
|
|
363.3
|
|
|
297.3
|
|
||||
Intellectual property litigation expenses
|
7.0
|
|
|
5.5
|
|
|
11.6
|
|
|
11.2
|
|
||||
Change in fair value of contingent consideration liabilities, net (Note 7)
|
8.0
|
|
|
10.9
|
|
|
14.7
|
|
|
14.7
|
|
||||
Special charge (Note 4)
|
—
|
|
|
—
|
|
|
24.0
|
|
|
—
|
|
||||
Operating income
|
267.5
|
|
|
252.1
|
|
|
541.7
|
|
|
504.6
|
|
||||
Interest income, net
|
(2.4
|
)
|
|
—
|
|
|
(4.4
|
)
|
|
(0.8
|
)
|
||||
Special gain (Note 4)
|
—
|
|
|
—
|
|
|
—
|
|
|
(7.1
|
)
|
||||
Other (income) expense, net
|
(1.4
|
)
|
|
1.1
|
|
|
(3.2
|
)
|
|
(2.0
|
)
|
||||
Income before provision for (benefit from) income taxes
|
271.3
|
|
|
251.0
|
|
|
549.3
|
|
|
514.5
|
|
||||
Provision for (benefit from) income taxes
|
29.0
|
|
|
(31.7
|
)
|
|
57.3
|
|
|
25.2
|
|
||||
Net income
|
$
|
242.3
|
|
|
$
|
282.7
|
|
|
$
|
492.0
|
|
|
$
|
489.3
|
|
Share information (Note 13)
|
|
|
|
|
|
|
|
|
|
|
|
||||
Earnings per share:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Basic
|
$
|
1.16
|
|
|
$
|
1.35
|
|
|
$
|
2.37
|
|
|
$
|
2.33
|
|
Diluted
|
$
|
1.14
|
|
|
$
|
1.32
|
|
|
$
|
2.32
|
|
|
$
|
2.28
|
|
Weighted-average number of common shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Basic
|
208.1
|
|
|
209.5
|
|
|
208.0
|
|
|
209.8
|
|
||||
Diluted
|
212.1
|
|
|
214.0
|
|
|
212.1
|
|
|
214.5
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Net income
|
$
|
242.3
|
|
|
$
|
282.7
|
|
|
$
|
492.0
|
|
|
$
|
489.3
|
|
Other comprehensive income (loss), net of tax (Note 12):
|
|
|
|
|
|
|
|
||||||||
Foreign currency translation adjustments
|
9.5
|
|
|
(66.2
|
)
|
|
(3.6
|
)
|
|
(32.9
|
)
|
||||
Unrealized (loss) gain on cash flow hedges
|
(9.0
|
)
|
|
33.5
|
|
|
(1.8
|
)
|
|
23.8
|
|
||||
Defined benefit pension plans
|
—
|
|
|
0.2
|
|
|
(0.1
|
)
|
|
0.5
|
|
||||
Unrealized gain (loss) on available-for-sale investments
|
2.2
|
|
|
2.1
|
|
|
5.5
|
|
|
(4.0
|
)
|
||||
Reclassification of net realized investment loss to earnings
|
0.3
|
|
|
0.9
|
|
|
0.3
|
|
|
2.3
|
|
||||
Other comprehensive income (loss)
|
3.0
|
|
|
(29.5
|
)
|
|
0.3
|
|
|
(10.3
|
)
|
||||
Comprehensive income
|
$
|
245.3
|
|
|
$
|
253.2
|
|
|
$
|
492.3
|
|
|
$
|
479.0
|
|
|
Six Months Ended
June 30, |
||||||
|
2019
|
|
2018
|
||||
Cash flows from operating activities
|
|
|
|
|
|
||
Net income
|
$
|
492.0
|
|
|
$
|
489.3
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
|
||
Depreciation and amortization
|
42.3
|
|
|
38.3
|
|
||
Non-cash operating lease cost
|
11.8
|
|
|
—
|
|
||
Stock-based compensation (Note 9)
|
43.1
|
|
|
37.6
|
|
||
Inventory reserves
|
46.2
|
|
|
—
|
|
||
Change in fair value of contingent consideration liabilities, net (Note 7)
|
14.7
|
|
|
14.7
|
|
||
Deferred income taxes
|
12.9
|
|
|
18.9
|
|
||
Purchase of intellectual property (Note 4)
|
24.0
|
|
|
—
|
|
||
Other
|
(7.7
|
)
|
|
2.0
|
|
||
Changes in operating assets and liabilities:
|
|
|
|
|
|
||
Accounts and other receivables, net
|
(89.2
|
)
|
|
2.6
|
|
||
Inventories
|
(61.9
|
)
|
|
(20.5
|
)
|
||
Accounts payable and accrued liabilities
|
(190.6
|
)
|
|
(89.2
|
)
|
||
Income taxes
|
(3.5
|
)
|
|
(188.9
|
)
|
||
Prepaid expenses and other current assets
|
3.9
|
|
|
(11.5
|
)
|
||
Other
|
4.7
|
|
|
(1.8
|
)
|
||
Net cash provided by operating activities
|
342.7
|
|
|
291.5
|
|
||
Cash flows from investing activities
|
|
|
|
|
|
||
Capital expenditures
|
(106.8
|
)
|
|
(96.0
|
)
|
||
Purchases of held-to-maturity investments (Note 5)
|
(30.0
|
)
|
|
—
|
|
||
Proceeds from held-to-maturity investments (Note 5)
|
50.0
|
|
|
339.5
|
|
||
Purchases of available-for sale investments (Note 5)
|
(75.4
|
)
|
|
—
|
|
||
Proceeds from available-for-sale investments (Note 5)
|
190.8
|
|
|
101.1
|
|
||
Investments in intangible assets
|
(24.0
|
)
|
|
(3.0
|
)
|
||
Payment of contingent consideration
|
—
|
|
|
(10.0
|
)
|
||
Acquisition (Note 6)
|
(100.2
|
)
|
|
—
|
|
||
Payment for acquisition option
|
(35.0
|
)
|
|
—
|
|
||
Other
|
(7.2
|
)
|
|
(6.4
|
)
|
||
Net cash (used in) provided by investing activities
|
(137.8
|
)
|
|
325.2
|
|
||
Cash flows from financing activities
|
|
|
|
|
|
||
Proceeds from issuance of debt, net
|
9.7
|
|
|
685.8
|
|
||
Payments on debt and capital lease obligations
|
(20.2
|
)
|
|
(522.2
|
)
|
||
Purchases of treasury stock
|
(262.0
|
)
|
|
(350.4
|
)
|
||
Equity forward contract related to accelerated share repurchase agreement (Note 10)
|
—
|
|
|
(80.0
|
)
|
||
Proceeds from stock plans
|
86.5
|
|
|
84.3
|
|
||
Payment of contingent consideration
|
—
|
|
|
(15.1
|
)
|
||
Other
|
(1.0
|
)
|
|
(2.2
|
)
|
||
Net cash used in financing activities
|
(187.0
|
)
|
|
(199.8
|
)
|
||
Effect of currency exchange rate changes on cash and cash equivalents
|
(5.2
|
)
|
|
(8.8
|
)
|
||
Net increase in cash and cash equivalents
|
12.7
|
|
|
408.1
|
|
||
Cash and cash equivalents at beginning of period
|
714.1
|
|
|
818.3
|
|
||
Cash and cash equivalents at end of period
|
$
|
726.8
|
|
|
$
|
1,226.4
|
|
|
Common Stock
|
|
Treasury Stock
|
|
|
|
|
|
|
|
|
||||||||||||||||||
|
Shares
|
|
Par Value
|
|
Shares
|
|
Amount
|
|
Additional Paid-in Capital
|
|
Retained Earnings
|
|
Accumulated Other Comprehensive Loss
|
|
Total Stockholders' Equity
|
||||||||||||||
Balance at December 31, 2018
|
215.2
|
|
|
$
|
215.2
|
|
|
7.5
|
|
|
$
|
(1,015.4
|
)
|
|
$
|
1,384.4
|
|
|
$
|
2,694.7
|
|
|
$
|
(138.5
|
)
|
|
$
|
3,140.4
|
|
Net income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
249.7
|
|
|
|
|
|
249.7
|
|
||||||
Other comprehensive income, net of tax
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2.7
|
)
|
|
(2.7
|
)
|
||||||
Common stock issued under equity plans
|
0.8
|
|
|
0.8
|
|
|
|
|
|
|
|
|
44.2
|
|
|
|
|
|
|
|
|
45.0
|
|
||||||
Stock-based compensation expense
|
|
|
|
|
|
|
|
|
|
|
|
|
20.8
|
|
|
|
|
|
|
|
|
20.8
|
|
||||||
Purchases of treasury stock
|
|
|
|
|
|
|
0.1
|
|
|
(5.7
|
)
|
|
|
|
|
|
|
|
|
|
|
(5.7
|
)
|
||||||
Balance at March 31, 2019
|
216.0
|
|
|
$
|
216.0
|
|
|
7.6
|
|
|
$
|
(1,021.1
|
)
|
|
$
|
1,449.4
|
|
|
$
|
2,944.4
|
|
|
$
|
(141.2
|
)
|
|
$
|
3,447.5
|
|
Net income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
242.3
|
|
|
|
|
|
242.3
|
|
||||||
Other comprehensive income, net of tax
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3.0
|
|
|
3.0
|
|
||||||
Common stock issued under equity plans
|
0.9
|
|
|
0.9
|
|
|
|
|
|
|
|
|
40.6
|
|
|
|
|
|
|
|
|
41.5
|
|
||||||
Stock-based compensation expense
|
|
|
|
|
|
|
|
|
|
|
|
|
22.3
|
|
|
|
|
|
|
|
|
22.3
|
|
||||||
Purchases of treasury stock
|
|
|
|
|
|
|
1.4
|
|
|
(256.3
|
)
|
|
|
|
|
|
|
|
|
|
|
(256.3
|
)
|
||||||
Balance at June 30, 2019
|
216.9
|
|
|
$
|
216.9
|
|
|
9.0
|
|
|
$
|
(1,277.4
|
)
|
|
$
|
1,512.3
|
|
|
$
|
3,186.7
|
|
|
$
|
(138.2
|
)
|
|
$
|
3,500.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
|
Common Stock
|
|
Treasury Stock
|
|
|
|
|
|
|
|
|
||||||||||||||||||
|
Shares
|
|
Par Value
|
|
Shares
|
|
Amount
|
|
Additional Paid-in Capital
|
|
Retained Earnings
|
|
Accumulated Other Comprehensive Loss
|
|
Total Stockholders' Equity
|
||||||||||||||
Balance at December 31, 2017
|
212.0
|
|
|
$
|
212.0
|
|
|
2.3
|
|
|
$
|
(252.1
|
)
|
|
$
|
1,166.9
|
|
|
$
|
1,962.1
|
|
|
$
|
(132.7
|
)
|
|
$
|
2,956.2
|
|
Impact to retained earnings from adoption of ASU 2016-16 and ASU 2018-02
|
|
|
|
|
|
|
|
|
|
|
10.4
|
|
|
(7.8
|
)
|
|
2.6
|
|
|||||||||||
Balance at January 1, 2018
|
212.0
|
|
|
212.0
|
|
|
2.3
|
|
|
(252.1
|
)
|
|
1,166.9
|
|
|
1,972.5
|
|
|
(140.5
|
)
|
|
2,958.8
|
|
||||||
Net income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
206.6
|
|
|
|
|
|
206.6
|
|
||||||
Other comprehensive loss, net of tax
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
19.2
|
|
|
19.2
|
|
||||||
Common stock issued under equity plans
|
1.0
|
|
|
1.0
|
|
|
|
|
|
|
|
|
43.8
|
|
|
|
|
|
|
|
|
44.8
|
|
||||||
Stock-based compensation expense
|
|
|
|
|
|
|
|
|
|
|
|
|
18.4
|
|
|
|
|
|
|
|
|
18.4
|
|
||||||
Purchases of treasury stock
|
|
|
|
|
|
|
|
|
(2.1
|
)
|
|
|
|
|
|
|
|
|
|
(2.1
|
)
|
||||||||
Balance at March 31, 2018
|
213.0
|
|
|
$
|
213.0
|
|
|
2.3
|
|
|
$
|
(254.2
|
)
|
|
$
|
1,229.1
|
|
|
$
|
2,179.1
|
|
|
$
|
(121.3
|
)
|
|
$
|
3,245.7
|
|
Net income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
282.7
|
|
|
|
|
|
282.7
|
|
||||||
Other comprehensive loss, net of tax
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(29.5
|
)
|
|
(29.5
|
)
|
||||||
Common stock issued under equity plans
|
1.0
|
|
|
1.0
|
|
|
|
|
|
|
|
|
38.5
|
|
|
|
|
|
|
|
|
39.5
|
|
||||||
Stock-based compensation expense
|
|
|
|
|
|
|
|
|
|
|
|
|
19.2
|
|
|
|
|
|
|
|
|
19.2
|
|
||||||
Shares issued in payment for contingent consideration liabilities
|
|
|
|
|
|
|
(0.3
|
)
|
|
32.2
|
|
|
2.7
|
|
|
|
|
|
|
|
|
34.9
|
|
||||||
Purchases of treasury stock
|
|
|
|
|
|
|
2.8
|
|
|
(348.3
|
)
|
|
(80.0
|
)
|
|
|
|
|
|
|
|
(428.3
|
)
|
||||||
Balance at June 30, 2018
|
214.0
|
|
|
$
|
214.0
|
|
|
4.8
|
|
|
$
|
(570.3
|
)
|
|
$
|
1,209.5
|
|
|
$
|
2,461.8
|
|
|
$
|
(150.8
|
)
|
|
$
|
3,164.2
|
|
|
June 30, 2019
|
|
December 31, 2018
|
||||
Inventories
|
|
|
|
||||
Raw materials
|
$
|
120.7
|
|
|
$
|
111.5
|
|
Work in process
|
164.4
|
|
|
144.8
|
|
||
Finished products
|
339.8
|
|
|
350.7
|
|
||
|
$
|
624.9
|
|
|
$
|
607.0
|
|
|
June 30, 2019
|
|
December 31, 2018
|
||||
Accounts payable and accrued liabilities
|
|
|
|
|
|
||
Accounts payable
|
$
|
151.0
|
|
|
$
|
134.0
|
|
Employee compensation and withholdings
|
197.8
|
|
|
226.1
|
|
||
Taxes payable (Note 14)
|
14.6
|
|
|
31.3
|
|
||
Property, payroll, and other taxes
|
39.2
|
|
|
39.5
|
|
||
Research and development accruals
|
55.8
|
|
|
48.9
|
|
||
Accrued rebates
|
82.5
|
|
|
80.0
|
|
||
Fair value of derivatives
|
4.6
|
|
|
4.4
|
|
||
Accrued marketing expenses
|
15.5
|
|
|
22.3
|
|
||
Litigation and insurance reserves
|
19.0
|
|
|
196.7
|
|
||
Accrued relocation costs
|
13.0
|
|
|
11.3
|
|
||
Accrued professional services
|
9.4
|
|
|
11.0
|
|
||
Accrued realignment reserves
|
17.0
|
|
|
6.8
|
|
||
Other accrued liabilities
|
53.8
|
|
|
64.3
|
|
||
|
$
|
673.2
|
|
|
$
|
876.6
|
|
|
Six Months Ended
June 30, |
||||||
|
2019
|
|
2018
|
||||
Cash paid during the year for:
|
|
|
|
||||
Income taxes
|
$
|
45.2
|
|
|
$
|
195.1
|
|
Amounts included in the measurement of lease liabilities:
|
|
|
|
||||
Operating cash flows from operating leases
|
$
|
12.7
|
|
|
$
|
—
|
|
Non-cash investing and financing transactions:
|
|
|
|
|
|
||
Fair value of shares issued in payment for contingent consideration liabilities
|
$
|
—
|
|
|
$
|
34.3
|
|
Right-of-use assets obtained in exchange for new lease liabilities
|
$
|
23.5
|
|
|
$
|
—
|
|
Capital expenditures accruals
|
$
|
21.8
|
|
|
$
|
14.5
|
|
|
June 30,
2019 |
||
Operating lease ROU assets
|
$
|
71.2
|
|
|
|
||
Operating lease liabilities, current portion
|
$
|
23.8
|
|
Operating lease liabilities, long-term portion
|
50.4
|
|
|
Total operating lease liabilities
|
$
|
74.2
|
|
2019
|
$
|
13.2
|
|
2020
|
23.4
|
|
|
2021
|
15.6
|
|
|
2022
|
10.5
|
|
|
2023
|
7.6
|
|
|
Thereafter
|
10.0
|
|
|
Total lease payments
|
80.3
|
|
|
Less: imputed interest
|
(6.1
|
)
|
|
Total lease liabilities
|
$
|
74.2
|
|
|
|
||
Weighted-average remaining lease term (in years)
|
4.5
|
|
|
Weighted-average discount rate
|
3.0
|
%
|
|
Operating
Leases |
||
2019
|
$
|
25.6
|
|
2020
|
21.5
|
|
|
2021
|
13.5
|
|
|
2022
|
9.9
|
|
|
2023
|
6.4
|
|
|
Thereafter
|
14.3
|
|
|
Total obligations and commitments
|
$
|
91.2
|
|
|
June 30, 2019
|
|
December 31, 2018
|
||||||||||||||||||||||||||||
Held-to-maturity
|
Cost
|
|
Gross Unrealized Gains
|
|
Gross Unrealized Losses
|
|
Fair Value
|
|
Cost
|
|
Gross Unrealized Gains
|
|
Gross Unrealized Losses
|
Fair Value
|
|||||||||||||||||
Bank time deposits
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
20.0
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
20.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Available-for-sale
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Commercial paper
|
$
|
10.9
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
10.9
|
|
|
$
|
56.7
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
56.7
|
|
U.S. government and agency securities
|
80.8
|
|
|
0.6
|
|
|
(0.1
|
)
|
|
81.3
|
|
|
79.7
|
|
|
0.2
|
|
|
(0.7
|
)
|
|
79.2
|
|
||||||||
Foreign government bonds
|
1.7
|
|
|
—
|
|
|
—
|
|
|
1.7
|
|
|
1.7
|
|
|
—
|
|
|
—
|
|
|
1.7
|
|
||||||||
Asset-backed securities
|
80.7
|
|
|
0.5
|
|
|
—
|
|
|
81.2
|
|
|
110.6
|
|
|
0.1
|
|
|
(0.5
|
)
|
|
110.2
|
|
||||||||
Corporate debt securities
|
417.8
|
|
|
1.8
|
|
|
(0.4
|
)
|
|
419.2
|
|
|
459.8
|
|
|
0.1
|
|
|
(4.3
|
)
|
|
455.6
|
|
||||||||
Municipal securities
|
2.7
|
|
|
—
|
|
|
—
|
|
|
2.7
|
|
|
2.8
|
|
|
—
|
|
|
—
|
|
|
2.8
|
|
||||||||
Total
|
$
|
594.6
|
|
|
$
|
2.9
|
|
|
$
|
(0.5
|
)
|
|
$
|
597.0
|
|
|
$
|
711.3
|
|
|
$
|
0.4
|
|
|
$
|
(5.5
|
)
|
|
$
|
706.2
|
|
|
Available-for-Sale
|
||||||
|
Cost
|
|
Fair Value
|
||||
|
(in millions)
|
||||||
Due in 1 year or less
|
$
|
207.4
|
|
|
$
|
207.5
|
|
Due after 1 year through 5 years
|
324.0
|
|
|
325.9
|
|
||
Instruments not due at a single maturity date
|
63.2
|
|
|
63.6
|
|
||
|
$
|
594.6
|
|
|
$
|
597.0
|
|
|
June 30, 2019
|
||||||||||||||||||||||
|
Less than 12 Months
|
|
12 Months or Greater
|
|
Total
|
||||||||||||||||||
|
Fair Value
|
|
Gross Unrealized Losses
|
|
Fair Value
|
|
Gross Unrealized Losses
|
|
Fair Value
|
|
Gross Unrealized Losses
|
||||||||||||
U.S. government and agency securities
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
29.7
|
|
|
$
|
(0.1
|
)
|
|
$
|
29.7
|
|
|
$
|
(0.1
|
)
|
Asset-backed securities
|
—
|
|
|
—
|
|
|
31.0
|
|
|
—
|
|
|
31.0
|
|
|
—
|
|
||||||
Corporate debt securities
|
47.2
|
|
|
(0.1
|
)
|
|
129.1
|
|
|
(0.3
|
)
|
|
176.3
|
|
|
(0.4
|
)
|
||||||
|
$
|
47.2
|
|
|
$
|
(0.1
|
)
|
|
$
|
189.8
|
|
|
$
|
(0.4
|
)
|
|
$
|
237.0
|
|
|
$
|
(0.5
|
)
|
|
December 31, 2018
|
||||||||||||||||||||||
|
Less than 12 Months
|
|
12 Months or Greater
|
|
Total
|
||||||||||||||||||
|
Fair Value
|
|
Gross Unrealized Losses
|
|
Fair Value
|
|
Gross Unrealized Losses
|
|
Fair Value
|
|
Gross Unrealized Losses
|
||||||||||||
U.S. government and agency securities
|
$
|
0.7
|
|
|
$
|
(0.1
|
)
|
|
$
|
56.5
|
|
|
$
|
(0.6
|
)
|
|
$
|
57.2
|
|
|
$
|
(0.7
|
)
|
Asset-backed securities
|
4.0
|
|
|
0.1
|
|
|
61.3
|
|
|
(0.6
|
)
|
|
65.3
|
|
|
(0.5
|
)
|
||||||
Corporate debt securities
|
177.4
|
|
|
(1.1
|
)
|
|
203.7
|
|
|
(3.2
|
)
|
|
381.1
|
|
|
(4.3
|
)
|
||||||
|
$
|
182.1
|
|
|
$
|
(1.1
|
)
|
|
$
|
321.5
|
|
|
$
|
(4.4
|
)
|
|
$
|
503.6
|
|
|
$
|
(5.5
|
)
|
|
June 30,
2019 |
|
December 31,
2018 |
||||
|
(in millions)
|
||||||
Equity method investments
|
|
|
|
|
|
||
Cost
|
$
|
10.3
|
|
|
$
|
9.1
|
|
Equity in losses
|
(5.0
|
)
|
|
(4.7
|
)
|
||
Carrying value of equity method investments
|
5.3
|
|
|
4.4
|
|
||
Equity securities
|
|
|
|
|
|
||
Carrying value of non-marketable equity securities
|
18.1
|
|
|
18.1
|
|
||
Total investments in unconsolidated affiliates
|
$
|
23.4
|
|
|
$
|
22.5
|
|
Current assets
|
|
$
|
6.1
|
|
|
Property and equipment, net
|
|
1.3
|
|
|
|
Goodwill
|
|
64.4
|
|
|
|
Developed technology
|
|
35.9
|
|
|
|
Customer relationships
|
|
8.8
|
|
|
|
Deferred tax assets
|
|
2.2
|
|
|
|
Liabilities assumed
|
|
(17.9
|
)
|
|
|
Total purchase price
|
|
100.8
|
|
|
|
Less: cash acquired
|
|
(0.6
|
)
|
|
|
Total purchase price, net of cash acquired
|
|
$
|
100.2
|
|
|
June 30, 2019
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
Assets
|
|
|
|
|
|
|
|
|
|
|
|
||||
Cash equivalents
|
$
|
0.1
|
|
|
$
|
18.7
|
|
|
$
|
—
|
|
|
$
|
18.8
|
|
Available-for-sale investments:
|
|
|
|
|
|
|
|
|
|||||||
Corporate debt securities
|
—
|
|
|
419.2
|
|
|
—
|
|
|
419.2
|
|
||||
Asset-backed securities
|
—
|
|
|
81.2
|
|
|
—
|
|
|
81.2
|
|
||||
U.S. government and agency securities
|
45.3
|
|
|
36.0
|
|
|
—
|
|
|
81.3
|
|
||||
Foreign government bonds
|
—
|
|
|
1.7
|
|
|
—
|
|
|
1.7
|
|
||||
Commercial paper
|
—
|
|
|
10.9
|
|
|
—
|
|
|
10.9
|
|
||||
Municipal securities
|
—
|
|
|
2.7
|
|
|
—
|
|
|
2.7
|
|
||||
Investments held for deferred compensation plans
|
79.7
|
|
|
—
|
|
|
—
|
|
|
79.7
|
|
||||
Derivatives
|
—
|
|
|
18.6
|
|
|
—
|
|
|
18.6
|
|
||||
|
$
|
125.1
|
|
|
$
|
589.0
|
|
|
$
|
—
|
|
|
$
|
714.1
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
||||
Derivatives
|
$
|
—
|
|
|
$
|
4.6
|
|
|
$
|
—
|
|
|
$
|
4.6
|
|
Deferred compensation plans
|
80.0
|
|
|
—
|
|
|
—
|
|
|
80.0
|
|
||||
Contingent consideration liabilities
|
—
|
|
|
—
|
|
|
193.3
|
|
|
193.3
|
|
||||
|
$
|
80.0
|
|
|
$
|
4.6
|
|
|
$
|
193.3
|
|
|
$
|
277.9
|
|
December 31, 2018
|
|
|
|
|
|
|
|
|
|
|
|
||||
Assets
|
|
|
|
|
|
|
|
|
|||||||
Cash equivalents
|
$
|
—
|
|
|
$
|
11.8
|
|
|
$
|
—
|
|
|
$
|
11.8
|
|
Available-for-sale investments:
|
|
|
|
|
|
|
|
||||||||
Corporate debt securities
|
—
|
|
|
455.6
|
|
|
—
|
|
|
455.6
|
|
||||
Asset-backed securities
|
—
|
|
|
110.2
|
|
|
—
|
|
|
110.2
|
|
||||
U.S. government and agency securities
|
19.6
|
|
|
59.6
|
|
|
—
|
|
|
79.2
|
|
||||
Foreign government bonds
|
—
|
|
|
1.7
|
|
|
—
|
|
|
1.7
|
|
||||
Commercial paper
|
—
|
|
|
56.7
|
|
|
—
|
|
|
56.7
|
|
||||
Municipal securities
|
—
|
|
|
2.8
|
|
|
—
|
|
|
2.8
|
|
||||
Investments held for deferred compensation plans
|
67.6
|
|
|
—
|
|
|
—
|
|
|
67.6
|
|
||||
Derivatives
|
—
|
|
|
29.9
|
|
|
—
|
|
|
29.9
|
|
||||
|
$
|
87.2
|
|
|
$
|
728.3
|
|
|
$
|
—
|
|
|
$
|
815.5
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
||||
Derivatives
|
$
|
—
|
|
|
$
|
5.2
|
|
|
$
|
—
|
|
|
$
|
5.2
|
|
Deferred compensation plans
|
68.5
|
|
|
—
|
|
|
—
|
|
|
68.5
|
|
||||
Contingent consideration liabilities
|
|
|
|
—
|
|
|
178.6
|
|
|
178.6
|
|
||||
|
$
|
68.5
|
|
|
$
|
5.2
|
|
|
$
|
178.6
|
|
|
$
|
252.3
|
|
Balance at December 31, 2018
|
|
$
|
178.6
|
|
Changes in fair value
|
|
14.7
|
|
|
Balance at June 30, 2019
|
|
$
|
193.3
|
|
|
Notional Amount
|
||||||
|
June 30, 2019
|
|
December 31, 2018
|
||||
|
(in millions)
|
||||||
Foreign currency forward exchange contracts
|
$
|
1,282.4
|
|
|
$
|
1,378.2
|
|
Cross currency swap contracts
|
300.0
|
|
|
300.0
|
|
|
|
|
|
Fair Value
|
||||||
Derivatives designated as hedging instruments
|
|
Balance Sheet
Location
|
|
June 30, 2019
|
|
December 31, 2018
|
||||
Assets
|
|
|
|
|
|
|
|
|
||
Foreign currency contracts
|
|
Other current assets
|
|
$
|
15.1
|
|
|
$
|
29.1
|
|
Foreign currency contracts
|
|
Other assets
|
|
$
|
0.6
|
|
|
$
|
—
|
|
Cross currency swap contracts
|
|
Other assets
|
|
$
|
2.9
|
|
|
$
|
0.8
|
|
Liabilities
|
|
|
|
|
|
|
|
|
||
Foreign currency contracts
|
|
Accounts payable and accrued liabilities
|
|
$
|
4.6
|
|
|
$
|
4.4
|
|
Foreign currency contracts
|
|
Other long-term liabilities
|
|
$
|
—
|
|
|
$
|
0.8
|
|
|
|
|
|
|
|
|
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
|
|
|
||||||||||||||||||
June 30, 2019
|
Gross
Amounts
|
|
Financial
Instruments
|
|
Cash
Collateral
Received
|
|
Net
Amount
|
||||||||||||||||
Derivative assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Foreign currency contracts
|
$
|
15.7
|
|
|
$
|
—
|
|
|
$
|
15.7
|
|
|
$
|
(3.3
|
)
|
|
$
|
—
|
|
|
$
|
12.4
|
|
Cross currency swap contracts
|
$
|
2.9
|
|
|
$
|
—
|
|
|
$
|
2.9
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2.9
|
|
Derivative liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Foreign currency contracts
|
$
|
4.6
|
|
|
$
|
—
|
|
|
$
|
4.6
|
|
|
$
|
(3.3
|
)
|
|
$
|
—
|
|
|
$
|
1.3
|
|
December 31, 2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Derivative assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Foreign currency contracts
|
$
|
29.1
|
|
|
$
|
—
|
|
|
$
|
29.1
|
|
|
$
|
(3.6
|
)
|
|
$
|
—
|
|
|
$
|
25.5
|
|
Cross currency swap contracts
|
$
|
0.8
|
|
|
$
|
—
|
|
|
$
|
0.8
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
0.8
|
|
Derivative liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Foreign currency contracts
|
$
|
5.2
|
|
|
$
|
—
|
|
|
$
|
5.2
|
|
|
$
|
(3.6
|
)
|
|
$
|
—
|
|
|
$
|
1.6
|
|
|
|
Amount of Gain or (Loss)
Recognized in OCI
on Derivative
|
|
|
|
Amount of Gain or (Loss)
Reclassified from
Accumulated OCI
into Income
|
||||||||||||
|
|
Three Months Ended
June 30, |
|
Location of Gain or
(Loss) Reclassified from
Accumulated OCI
into Income
|
|
Three Months Ended
June 30, |
||||||||||||
|
|
|
||||||||||||||||
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||||
Cash flow hedges
|
|
|
|
|
|
|
|
|
|
|
||||||||
Foreign currency contracts
|
|
$
|
(2.1
|
)
|
|
$
|
31.5
|
|
|
Cost of sales
|
|
$
|
11.3
|
|
|
$
|
(12.7
|
)
|
|
|
|
|
|
|
Selling, general, and administrative expenses
|
|
$
|
0.5
|
|
|
$
|
(1.0
|
)
|
|
|
Amount of Gain or (Loss)
Recognized in OCI
on Derivative
|
|
|
|
Amount of Gain or (Loss)
Reclassified from
Accumulated OCI
into Income
|
||||||||||||
|
|
Six Months Ended
June 30, |
|
Location of Gain or
(Loss) Reclassified from
Accumulated OCI
into Income
|
|
Six Months Ended
June 30, |
||||||||||||
|
|
|
||||||||||||||||
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||||
Cash flow hedges
|
|
|
|
|
|
|
|
|
|
|
||||||||
Foreign currency contracts
|
|
$
|
10.8
|
|
|
$
|
16.1
|
|
|
Cost of sales
|
|
$
|
18.9
|
|
|
$
|
(14.2
|
)
|
|
|
|
|
|
|
Selling, general, and administrative expenses
|
|
$
|
0.8
|
|
|
$
|
(2.1
|
)
|
|
|
Amount of Gain or (Loss)
Recognized in OCI
on Derivative
|
|
|
|
Amount of Gain or (Loss)
Recognized in Income on Derivative (Amount Excluded from
Effectiveness Testing)
|
||||||||||||
|
|
Three Months Ended
June 30, |
|
Location of Gain or
(Loss) Recognized in Income on Derivative (Amount Excluded from Effectiveness Testing)
|
|
Three Months Ended
June 30, |
||||||||||||
|
|
|
||||||||||||||||
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||||
Net investment hedges
|
|
|
|
|
|
|
|
|
|
|
||||||||
Cross currency swap contracts
|
|
$
|
(3.2
|
)
|
|
$
|
(10.0
|
)
|
|
Interest income, net
|
|
$
|
1.7
|
|
|
$
|
0.2
|
|
Foreign currency denominated debt
|
|
$
|
—
|
|
|
$
|
27.0
|
|
|
|
|
|
|
|
|
|
Amount of Gain or (Loss)
Recognized in OCI
on Derivative
(Effective Portion)
|
|
|
|
Amount of Gain or (Loss)
Recognized in Income on Derivative (Amount Excluded from
Effectiveness Testing)
|
||||||||||||
|
|
Six Months Ended
June 30, |
|
Location of Gain or
(Loss) Reclassified from
Accumulated OCI
into Income
|
|
Six Months Ended
June 30, |
||||||||||||
|
|
|
||||||||||||||||
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||||
Net investment hedges
|
|
|
|
|
|
|
|
|
|
|
||||||||
Cross currency swap contracts
|
|
$
|
2.1
|
|
|
$
|
(10.0
|
)
|
|
Interest income, net
|
|
$
|
3.3
|
|
|
$
|
0.2
|
|
Foreign currency denominated debt
|
|
$
|
—
|
|
|
$
|
6.8
|
|
|
|
|
|
|
|
|
Location and Amount of Gain or (Loss) Recognized in Income on Cash Flow Hedging Relationships
|
||||||||||||||||||||||
|
Three Months Ended June 30, 2019
|
|
Six Months Ended June 30, 2019
|
||||||||||||||||||||
|
Cost of sales
|
|
Selling, general, and administrative expenses
|
|
Other (Income)Expense, net
|
|
Cost of sales
|
|
Selling, general, and administrative expenses
|
|
Other (Income) Expense, net
|
||||||||||||
|
|
|
|
|
|||||||||||||||||||
Total amounts of income and expense line items presented in the consolidated statements of operations in which the effects of fair value or cash flow hedges are recorded
|
$
|
(304.0
|
)
|
|
$
|
(308.5
|
)
|
|
$
|
1.4
|
|
|
$
|
(535.8
|
)
|
|
$
|
(588.8
|
)
|
|
$
|
3.2
|
|
The effects of fair value and cash flow hedging:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Gain (loss) on fair value hedging relationships:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Foreign currency contracts:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Hedged items
|
—
|
|
|
—
|
|
|
4.5
|
|
|
—
|
|
|
—
|
|
|
6.3
|
|
||||||
Derivatives designated as hedging instruments
|
—
|
|
|
—
|
|
|
(4.5
|
)
|
|
—
|
|
|
—
|
|
|
(6.3
|
)
|
||||||
Amount excluded from effectiveness testing recognized in earnings based on an amortization approach
|
—
|
|
|
—
|
|
|
1.2
|
|
|
—
|
|
|
—
|
|
|
2.1
|
|
||||||
Gain (loss) on cash flow hedging relationships:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Foreign currency contracts:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Amount of gain (loss) reclassified from accumulated OCI into income
|
$
|
11.3
|
|
|
$
|
0.5
|
|
|
$
|
—
|
|
|
$
|
18.9
|
|
|
$
|
0.8
|
|
|
$
|
—
|
|
|
Location and Amount of Gain or (Loss) Recognized in Income on Cash Flow Hedging Relationships
|
||||||||||||||||
|
Three Months Ended June 30, 2018
|
Six Months Ended June 30, 2018
|
|||||||||||||||
|
Cost of sales
|
|
Selling, general, and administrative expenses
|
|
|
Cost of sales
|
|
Selling, general, and administrative expenses
|
|
||||||||
|
|
|
|
|
|||||||||||||
Total amounts of income and expense line items presented in the consolidated statements of operations in which the effects of fair value or cash flow hedges are recorded
|
$
|
(246.2
|
)
|
|
$
|
(274.9
|
)
|
|
|
$
|
(479.8
|
)
|
|
$
|
(530.9
|
)
|
|
The effects of fair value and cash flow hedging:
|
|
|
|
|
|
|
|
|
|
||||||||
Gain (loss) on cash flow hedging relationships:
|
|
|
|
|
|
|
|
|
|
||||||||
Foreign currency contracts:
|
|
|
|
|
|
|
|
|
|
||||||||
Amount of gain (loss) reclassified from accumulated OCI into income
|
$
|
(12.7
|
)
|
|
$
|
(1.0
|
)
|
|
|
$
|
(14.2
|
)
|
|
$
|
(2.1
|
)
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Cost of sales
|
$
|
3.9
|
|
|
$
|
2.8
|
|
|
$
|
7.9
|
|
|
$
|
5.8
|
|
Selling, general, and administrative expenses
|
14.3
|
|
|
12.7
|
|
|
27.0
|
|
|
24.5
|
|
||||
Research and development expenses
|
4.1
|
|
|
3.7
|
|
|
8.2
|
|
|
7.3
|
|
||||
Total stock-based compensation expense
|
$
|
22.3
|
|
|
$
|
19.2
|
|
|
$
|
43.1
|
|
|
$
|
37.6
|
|
Option Awards
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Average risk-free interest rate
|
2.3
|
%
|
|
2.9
|
%
|
|
2.3
|
%
|
|
2.9
|
%
|
||||
Expected dividend yield
|
None
|
|
|
None
|
|
|
None
|
|
|
None
|
|
||||
Expected volatility
|
29.7
|
%
|
|
29.0
|
%
|
|
29.6
|
%
|
|
29.1
|
%
|
||||
Expected term (years)
|
5.0
|
|
|
5.0
|
|
|
5.0
|
|
|
5.0
|
|
||||
Fair value, per option
|
$
|
54.03
|
|
|
$
|
42.12
|
|
|
$
|
54.03
|
|
|
$
|
42.14
|
|
ESPP
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Average risk-free interest rate
|
2.4
|
%
|
|
1.9
|
%
|
|
2.4
|
%
|
|
1.6
|
%
|
||||
Expected dividend yield
|
None
|
|
|
None
|
|
|
None
|
|
|
None
|
|
||||
Expected volatility
|
31.9
|
%
|
|
32.8
|
%
|
|
32.5
|
%
|
|
32.6
|
%
|
||||
Expected term (years)
|
0.6
|
|
|
0.6
|
|
|
0.6
|
|
|
0.6
|
|
||||
Fair value, per share
|
$
|
46.73
|
|
|
$
|
36.94
|
|
|
$
|
48.43
|
|
|
$
|
35.49
|
|
|
|
|
|
Initial Delivery
|
|
Final Settlement
|
|||||||||||||||||
Agreement Date
|
|
Amount
Paid
|
|
Shares
Received
|
|
Price per
Share (a)
|
|
Value of
Shares as %
of Contract
Value
|
|
Settlement
Date
|
|
Total Shares
Received
|
|
Average Price
per Share (a)
|
|||||||||
April 2018
|
|
$
|
400.0
|
|
|
2.5
|
|
|
$
|
127.36
|
|
|
80
|
%
|
|
July 2018
|
|
2.8
|
|
|
$
|
142.37
|
|
May 2019
|
|
$
|
150.0
|
|
|
0.7
|
|
|
$
|
178.66
|
|
|
80
|
%
|
|
May 2019
|
|
0.8
|
|
|
$
|
178.42
|
|
May 2019
|
|
$
|
100.0
|
|
|
0.5
|
|
|
$
|
170.02
|
|
|
80
|
%
|
|
June 2019
|
|
0.6
|
|
|
$
|
178.46
|
|
|
Foreign
Currency
Translation
Adjustments
|
|
Unrealized Gain on Hedges
|
|
Unrealized (Loss) Gain on Available-for-sale Investments
|
|
Unrealized
Pension
Costs
|
|
Total
Accumulated
Other
Comprehensive
Loss
|
||||||||||
December 31, 2018
|
$
|
(143.6
|
)
|
|
$
|
23.6
|
|
|
$
|
(5.0
|
)
|
|
$
|
(13.5
|
)
|
|
$
|
(138.5
|
)
|
Other comprehensive gain (loss) before reclassifications
|
0.2
|
|
|
11.6
|
|
|
7.2
|
|
|
(0.1
|
)
|
|
18.9
|
|
|||||
Amounts reclassified from accumulated other comprehensive loss
|
(3.3
|
)
|
|
(15.5
|
)
|
|
0.3
|
|
|
—
|
|
|
(18.5
|
)
|
|||||
Deferred income tax (expense) benefit
|
(0.5
|
)
|
|
2.1
|
|
|
(1.7
|
)
|
|
—
|
|
|
(0.1
|
)
|
|||||
June 30, 2019
|
$
|
(147.2
|
)
|
|
$
|
21.8
|
|
|
$
|
0.8
|
|
|
$
|
(13.6
|
)
|
|
$
|
(138.2
|
)
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
|
|
||||||||||||
|
Affected Line on Consolidated Condensed
Statements of Operations
|
||||||||||||||||
Details about Accumulated Other
Comprehensive Loss Components
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
|||||||||
Foreign currency translation adjustments
|
$
|
1.7
|
|
|
$
|
—
|
|
|
$
|
3.3
|
|
|
$
|
—
|
|
|
Other (income) expense, net
|
|
(0.4
|
)
|
|
—
|
|
|
(0.8
|
)
|
|
—
|
|
|
Provision for (benefit from) income taxes
|
||||
|
$
|
1.3
|
|
|
$
|
—
|
|
|
$
|
2.5
|
|
|
$
|
—
|
|
|
Net of tax
|
Gain on hedges
|
$
|
11.3
|
|
|
$
|
(12.7
|
)
|
|
$
|
18.9
|
|
|
$
|
(14.2
|
)
|
|
Cost of sales
|
|
0.5
|
|
|
(1.0
|
)
|
|
0.8
|
|
|
(2.1
|
)
|
|
Selling, general, and administrative expenses
|
||||
|
(3.3
|
)
|
|
—
|
|
|
(4.2
|
)
|
|
—
|
|
|
Other (income) expense, net
|
||||
|
11.8
|
|
|
(13.7
|
)
|
|
15.5
|
|
|
(16.3
|
)
|
|
Total before tax
|
||||
|
(2.8
|
)
|
|
3.3
|
|
|
(4.8
|
)
|
|
4.0
|
|
|
Provision for (benefit from) income taxes
|
||||
|
$
|
9.0
|
|
|
$
|
(10.4
|
)
|
|
$
|
10.7
|
|
|
$
|
(12.3
|
)
|
|
Net of tax
|
(Loss) gain on available-for-sale investments
|
$
|
(0.3
|
)
|
|
$
|
(0.9
|
)
|
|
$
|
(0.3
|
)
|
|
$
|
(2.3
|
)
|
|
Other (income) expense, net
|
|
—
|
|
|
0.1
|
|
|
—
|
|
|
0.2
|
|
|
Provision for (benefit from) income taxes
|
||||
|
$
|
(0.3
|
)
|
|
$
|
(0.8
|
)
|
|
$
|
(0.3
|
)
|
|
$
|
(2.1
|
)
|
|
Net of tax
|
Unrealized pension costs
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(0.6
|
)
|
|
Other (income) expense, net
|
|
—
|
|
|
—
|
|
|
—
|
|
|
0.1
|
|
|
Provision for (benefit from) income taxes
|
||||
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(0.5
|
)
|
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Basic:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net income
|
$
|
242.3
|
|
|
$
|
282.7
|
|
|
$
|
492.0
|
|
|
$
|
489.3
|
|
Weighted-average shares outstanding
|
208.1
|
|
|
209.5
|
|
|
208.0
|
|
|
209.8
|
|
||||
Basic earnings per share
|
$
|
1.16
|
|
|
$
|
1.35
|
|
|
$
|
2.37
|
|
|
$
|
2.33
|
|
Diluted:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net income
|
$
|
242.3
|
|
|
$
|
282.7
|
|
|
$
|
492.0
|
|
|
$
|
489.3
|
|
Weighted-average shares outstanding
|
208.1
|
|
|
209.5
|
|
|
208.0
|
|
|
209.8
|
|
||||
Dilutive effect of stock plans
|
4.0
|
|
|
4.5
|
|
|
4.1
|
|
|
4.7
|
|
||||
Dilutive weighted-average shares outstanding
|
212.1
|
|
|
214.0
|
|
|
212.1
|
|
|
214.5
|
|
||||
Diluted earnings per share
|
$
|
1.14
|
|
|
$
|
1.32
|
|
|
$
|
2.32
|
|
|
$
|
2.28
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Segment Net Sales
|
|
|
|
|
|
|
|
|
|
|
|
||||
United States
|
$
|
624.9
|
|
|
$
|
512.2
|
|
|
$
|
1,187.7
|
|
|
$
|
991.7
|
|
Europe
|
237.2
|
|
|
211.2
|
|
|
464.5
|
|
|
416.5
|
|
||||
Japan
|
113.7
|
|
|
101.9
|
|
|
212.9
|
|
|
193.0
|
|
||||
Rest of World
|
107.7
|
|
|
101.7
|
|
|
204.5
|
|
|
193.4
|
|
||||
Total segment net sales
|
$
|
1,083.5
|
|
|
$
|
927.0
|
|
|
$
|
2,069.6
|
|
|
$
|
1,794.6
|
|
Segment Operating Income
|
|
|
|
|
|
|
|
|
|
|
|
||||
United States
|
$
|
427.6
|
|
|
$
|
343.7
|
|
|
$
|
810.9
|
|
|
$
|
657.5
|
|
Europe
|
122.3
|
|
|
101.7
|
|
|
241.7
|
|
|
204.7
|
|
||||
Japan
|
71.1
|
|
|
62.0
|
|
|
132.1
|
|
|
116.8
|
|
||||
Rest of World
|
32.3
|
|
|
32.3
|
|
|
63.1
|
|
|
61.3
|
|
||||
Total segment operating income
|
$
|
653.3
|
|
|
$
|
539.7
|
|
|
$
|
1,247.8
|
|
|
$
|
1,040.3
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Net Sales Reconciliation
|
|
|
|
|
|
|
|
|
|
|
|
||||
Segment net sales
|
$
|
1,083.5
|
|
|
$
|
927.0
|
|
|
$
|
2,069.6
|
|
|
$
|
1,794.6
|
|
Foreign currency
|
3.4
|
|
|
16.7
|
|
|
10.3
|
|
|
43.9
|
|
||||
Consolidated net sales
|
$
|
1,086.9
|
|
|
$
|
943.7
|
|
|
$
|
2,079.9
|
|
|
$
|
1,838.5
|
|
Pre-tax Income Reconciliation
|
|
|
|
|
|
|
|
|
|
|
|
||||
Segment operating income
|
$
|
653.3
|
|
|
$
|
539.7
|
|
|
$
|
1,247.8
|
|
|
$
|
1,040.3
|
|
Unallocated amounts:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Corporate items
|
(389.1
|
)
|
|
(266.7
|
)
|
|
(688.9
|
)
|
|
(511.0
|
)
|
||||
Special charge (Note 4)
|
—
|
|
|
—
|
|
|
(24.0
|
)
|
|
—
|
|
||||
Intellectual property litigation expenses
|
(7.0
|
)
|
|
(5.5
|
)
|
|
(11.6
|
)
|
|
(11.2
|
)
|
||||
Change in fair value of contingent consideration liabilities, net
|
(8.0
|
)
|
|
(10.9
|
)
|
|
(14.7
|
)
|
|
(14.7
|
)
|
||||
Foreign currency
|
18.3
|
|
|
(4.5
|
)
|
|
33.1
|
|
|
1.2
|
|
||||
Consolidated operating income
|
267.5
|
|
|
252.1
|
|
|
541.7
|
|
|
504.6
|
|
||||
Non-operating income
|
3.8
|
|
|
(1.1
|
)
|
|
7.6
|
|
|
9.9
|
|
||||
Consolidated pre-tax income
|
$
|
271.3
|
|
|
$
|
251.0
|
|
|
$
|
549.3
|
|
|
$
|
514.5
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
|
(in millions)
|
|
|
|
|
||||||||||
Net Sales by Geographic Area
|
|
|
|
|
|
|
|
|
|
|
|
||||
United States
|
$
|
624.9
|
|
|
$
|
512.1
|
|
|
$
|
1,187.7
|
|
|
$
|
991.6
|
|
Europe
|
241.7
|
|
|
228.0
|
|
|
476.4
|
|
|
458.0
|
|
||||
Japan
|
113.1
|
|
|
102.6
|
|
|
211.5
|
|
|
195.3
|
|
||||
Rest of World
|
107.2
|
|
|
101.0
|
|
|
204.3
|
|
|
193.6
|
|
||||
|
$
|
1,086.9
|
|
|
$
|
943.7
|
|
|
$
|
2,079.9
|
|
|
$
|
1,838.5
|
|
Net Sales by Major Product and Service Area
|
|
|
|
|
|
|
|
|
|
|
|
||||
Transcatheter Aortic Valve Replacement
|
$
|
677.7
|
|
|
$
|
584.0
|
|
|
$
|
1,275.4
|
|
|
$
|
1,135.1
|
|
Transcatheter Mitral and Tricuspid Therapies
|
7.0
|
|
|
0.9
|
|
|
11.3
|
|
|
1.4
|
|
||||
Surgical Structural Heart
|
217.8
|
|
|
190.3
|
|
|
432.5
|
|
|
369.8
|
|
||||
Critical Care
|
184.4
|
|
|
168.5
|
|
|
360.7
|
|
|
332.2
|
|
||||
|
$
|
1,086.9
|
|
|
$
|
943.7
|
|
|
$
|
2,079.9
|
|
|
$
|
1,838.5
|
|
|
June 30, 2019
|
|
December 31, 2018
|
||||
|
(in millions)
|
||||||
Long-lived Tangible Assets by Geographic Area
|
|
|
|
|
|
||
United States
|
$
|
755.5
|
|
|
$
|
642.1
|
|
Europe
|
60.1
|
|
|
36.6
|
|
||
Japan
|
17.0
|
|
|
6.7
|
|
||
Rest of World
|
249.3
|
|
|
214.4
|
|
||
|
$
|
1,081.9
|
|
|
$
|
899.8
|
|
|
Three Months Ended
June 30, |
|
|
|
|
|
Six Months Ended
June 30, |
|
|
|
|
||||||||||||||||||
|
|
|
Percent Change
|
|
|
|
Percent Change
|
||||||||||||||||||||||
|
2019
|
|
2018
|
|
Change
|
|
2019
|
|
2018
|
|
Change
|
|
|||||||||||||||||
United States
|
$
|
624.9
|
|
|
$
|
512.1
|
|
|
$
|
112.8
|
|
|
22.0
|
%
|
|
$
|
1,187.7
|
|
|
$
|
991.6
|
|
|
$
|
196.1
|
|
|
19.8
|
%
|
Europe
|
241.7
|
|
|
228.0
|
|
|
13.7
|
|
|
6.0
|
%
|
|
476.4
|
|
|
458.0
|
|
|
18.4
|
|
|
4.0
|
%
|
||||||
Japan
|
113.1
|
|
|
102.6
|
|
|
10.5
|
|
|
10.1
|
%
|
|
211.5
|
|
|
195.3
|
|
|
16.2
|
|
|
8.2
|
%
|
||||||
Rest of World
|
107.2
|
|
|
101.0
|
|
|
6.2
|
|
|
6.3
|
%
|
|
204.3
|
|
|
193.6
|
|
|
10.7
|
|
|
5.6
|
%
|
||||||
International
|
462.0
|
|
|
431.6
|
|
|
30.4
|
|
|
7.1
|
%
|
|
892.2
|
|
|
846.9
|
|
|
45.3
|
|
|
5.4
|
%
|
||||||
Total net sales
|
$
|
1,086.9
|
|
|
$
|
943.7
|
|
|
$
|
143.2
|
|
|
15.2
|
%
|
|
$
|
2,079.9
|
|
|
$
|
1,838.5
|
|
|
$
|
241.4
|
|
|
13.1
|
%
|
|
Three Months Ended
June 30, |
|
|
|
|
|
Six Months Ended
June 30, |
|
|
|
|
||||||||||||||||||
|
|
|
Percent Change
|
|
|
|
Percent Change
|
||||||||||||||||||||||
|
2019
|
|
2018
|
|
Change
|
|
2019
|
|
2018
|
|
Change
|
|
|||||||||||||||||
Transcatheter Aortic Valve Replacement
|
$
|
677.7
|
|
|
$
|
584.0
|
|
|
$
|
93.7
|
|
|
16.0
|
%
|
|
$
|
1,275.4
|
|
|
$
|
1,135.1
|
|
|
$
|
140.3
|
|
|
12.4
|
%
|
Transcatheter Mitral and Tricuspid Therapies
|
7.0
|
|
|
0.9
|
|
|
6.1
|
|
|
NM
|
|
|
11.3
|
|
|
1.4
|
|
|
9.9
|
|
|
NM
|
|
||||||
Surgical Structural Heart
|
217.8
|
|
|
190.3
|
|
|
27.5
|
|
|
14.5
|
%
|
|
432.5
|
|
|
369.8
|
|
|
62.7
|
|
|
17.0
|
%
|
||||||
Critical Care
|
184.4
|
|
|
168.5
|
|
|
15.9
|
|
|
9.4
|
%
|
|
360.7
|
|
|
332.2
|
|
|
28.5
|
|
|
8.6
|
%
|
||||||
Total net sales
|
$
|
1,086.9
|
|
|
$
|
943.7
|
|
|
$
|
143.2
|
|
|
15.2
|
%
|
|
$
|
2,079.9
|
|
|
$
|
1,838.5
|
|
|
$
|
241.4
|
|
|
13.1
|
%
|
|
|
|
|
|
•
|
higher sales of the Edwards SAPIEN 3 valve, particularly in the United States, driven by strong therapy adoption; and
|
•
|
higher sales of the Edwards SAPIEN 3 Ultra System following its regulatory approval in Europe (November 2018) and the United States (December 2018);
|
•
|
foreign currency exchange rate fluctuations, which decreased net sales for the three and six months ended June 30, 2019 by $10.6 million and $25.3 million, respectively, due primarily to the weakening of the Euro against the United States dollar.
|
•
|
sales return reserves of $28.4 million and $63.1 million, respectively, in the United States related to our conversion to a consignment inventory model; and
|
•
|
increased sales of aortic tissue valves in the United States and Japan, primarily the INSPIRIS RESILIA aortic valve;
|
•
|
foreign currency exchange rate fluctuations, which decreased net sales for the three and six months ended June 30, 2019 by $5.4 million and $12.2 million, respectively, due primarily to the weakening of the Euro against the United States dollar.
|
•
|
the impact of inventory reserves related to strategic decisions regarding our transcatheter aortic valve portfolio, including the decision to discontinue our CENTERA program;
|
•
|
a 2.6 percentage point increase due to the impact of foreign currency exchange rate fluctuations, including the settlement of foreign currency hedging contracts.
|
•
|
a 2.2 percentage point increase due to the impact of foreign currency exchange rate fluctuations, including the settlement of foreign currency hedging contracts;
|
•
|
an improved product mix, primarily in the United States, driven by TAVR products; and
|
•
|
the prior year impact of converting to a consignment inventory model for surgical valves;
|
•
|
the impact of inventory reserves related to strategic decisions regarding our transcatheter aortic valve portfolio, including the decision to discontinue our CENTERA program; and
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Foreign exchange gains, net
|
$
|
(1.6
|
)
|
|
$
|
(0.1
|
)
|
|
$
|
(3.6
|
)
|
|
$
|
(4.3
|
)
|
Loss on investments
|
0.3
|
|
|
1.2
|
|
|
0.4
|
|
|
2.1
|
|
||||
Other
|
(0.1
|
)
|
|
—
|
|
|
—
|
|
|
0.2
|
|
||||
Other (income) expense, net
|
$
|
(1.4
|
)
|
|
$
|
1.1
|
|
|
$
|
(3.2
|
)
|
|
$
|
(2.0
|
)
|
Period
|
|
|
|
Total Number
of Shares
(or Units)
Purchased (a)
|
|
Average
Price Paid
per Share
(or Unit)
|
|
Total Number of
Shares (or Units)
Purchased as Part of Publicly Announced Plans or Programs
|
|
Maximum Number
(or Approximate
Dollar Value) of
Shares that
May Yet Be
Purchased
Under the Plans
or Programs
(in millions) (b)
|
|
||||||
April 1, 2019 through April 30, 2019
|
|
256
|
|
|
$
|
190.29
|
|
|
—
|
|
|
$
|
489.6
|
|
|
||
May 1, 2019 through May 31, 2019
|
|
875,640
|
|
|
178.47
|
|
|
840,736
|
|
|
1,339.6
|
|
|
||||
June 1, 2019 through June 30, 2019
|
|
560,336
|
|
|
178.46
|
|
|
560,336
|
|
|
1,239.6
|
|
|
||||
Total
|
|
1,436,232
|
|
|
178.47
|
|
|
1,401,072
|
|
|
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
The difference between the total number of shares (or units) purchased and the total number of shares (or units) purchased as part of publicly announced plans or programs is due to shares withheld by us to satisfy tax withholding obligations in connection with the vesting of restricted stock units issued to employees.
|
(b)
|
On May 8, 2019, the Board of Directors approved a stock repurchase program authorizing us to purchase on the open market, including pursuant to a Rule 10b5-1 plan and in privately negotiated transactions, up to $1.0 billion of our common stock.
|
|
|
EDWARDS LIFESCIENCES CORPORATION
|
|
|
|
(Registrant)
|
|
Date:
|
July 26, 2019
|
By:
|
/s/ SCOTT B. ULLEM
|
|
|
|
Scott B. Ullem
Chief Financial Officer
(Principal Financial Officer)
|
Date:
|
July 26, 2019
|
By:
|
/s/ ROBERT W.A. SELLERS
|
|
|
|
Robert W.A. Sellers
Corporate Controller
(Principal Accounting Officer)
|
Exhibit No.
|
|
Description
|
|
|
* 10.1
|
|
|
|
|
31.1
|
|
|
||
31.2
|
|
|
||
32
|
|
|
||
101.INS
|
|
|
XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
|
|
101.SCH
|
|
|
XBRL Taxonomy Extension Schema Document.
|
|
101.CAL
|
|
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
|
101.DEF
|
|
|
XBRL Taxonomy Extension Definition Linkbase Document
|
|
101.LAB
|
|
|
XBRL Taxonomy Extension Label Linkbase Document
|
|
101.PRE
|
|
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
Date:
|
July 26, 2019
|
By:
|
/s/ MICHAEL A. MUSSALLEM
|
|
|
|
Michael A. Mussallem
Chairman of the Board and
Chief Executive Officer
|
Date:
|
July 26, 2019
|
By:
|
/s/ SCOTT B. ULLEM
|
|
|
|
Scott B. Ullem
Chief Financial Officer
|
July 26, 2019
|
/s/ MICHAEL A. MUSSALLEM
|
|
Michael A. Mussallem
Chairman of the Board and
Chief Executive Officer
|
July 26, 2019
|
/s/ SCOTT B. ULLEM
|
|
Scott B. Ullem
Chief Financial Officer
|