Edwards Lifesciences Corp (Form: 10-Q, Received: 07/27/2020 16:56:59)

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Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)



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

For the Quarterly Period Ended June 30, 2020



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

For the transition period from to

Commission file number 1-15525

EDWARDS LIFESCIENCES CORPORATION

(Exact name of registrant as specified in its charter)



Delaware			36-4316614
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification No.)

One Edwards Way

Irvine, California 92614

(Address of principal executive offices and zip code)

(949) 250-2500

(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:



Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $1.00 per share	EW	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.



Large accelerated filer	☒	Accelerated filer	☐	Non-accelerated filer	☐	Smaller reporting company	☐	Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

The number of shares outstanding of the registrant's common stock, $1.00 par value, as of July 22, 2020 was 621,740,581.

Table of Contents

EDWARDS LIFESCIENCES CORPORATION

FORM 10-Q

For the quarterly period ended June 30, 2020

TABLE OF CONTENTS



		Page Number
Part I.	FINANCIAL INFORMATION
Item 1.	Financial Statements (Unaudited)	1
	Consolidated Condensed Balance Sheets	1
	Consolidated Condensed Statements of Operations	2
	Consolidated Condensed Statements of Comprehensive Income (Loss)	3
	Consolidated Condensed Statements of Cash Flows	4
	Consolidated Condensed Statements of Stockholders' Equity	5
	Notes to Consolidated Condensed Financial Statements	7
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	25
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	35
Item 4.	Controls and Procedures	35
Part II.	OTHER INFORMATION
Item 1.	Legal Proceedings	36
Item 1A.	Risk Factors	36
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	36
Item 6.	Exhibits	37
Signature		38

Table of Contents

NOTE REGARDING FORWARD-LOOKING STATEMENTS

This report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. We intend the forward-looking statements contained in this report to be covered by the safe harbor provisions of such Acts. All statements other than statements of historical fact in this report or referred to or incorporated by reference into this report are "forward-looking statements" for purposes of these sections. These statements include, among other things, the expected impact of COVID-19 on our business, any predictions, opinions, expectations, plans, strategies, objectives and any statements of assumptions underlying any of the foregoing relating to the company's current and future business and operations, including, but not limited to, financial matters, development activities, clinical trials and regulatory matters, manufacturing and supply operations, and product sales and demand. These statements can sometimes be identified by the use of the forward-looking words such as "may," "believe," "will," "expect," "project," "estimate," "should," "anticipate," "plan," "goal," "continue," "seek," "pro forma," "forecast," "intend," "guidance," "optimistic," "aspire," "confident," other forms of these words or similar words or expressions or the negative thereof. Statements of past performance, efforts, or results about which inferences or assumptions may be made can also be forward-looking statements and are not indicative of future performance or results; these statements can be identified by the use of words such as "preliminary," "initial," diligence," "industry-leading," "compliant," "indications," or "early feedback" or other forms of these words or similar words or expressions or the negative thereof. These forward-looking statements are subject to substantial risks and uncertainties that could cause our results or future business, financial condition, results of operations or performance to differ materially from our historical results or experiences or those expressed or implied in any forward-looking statements contained in this report. These risks and uncertainties include, but are not limited to: uncertainties regarding the severity and duration of the COVID-19 pandemic and its impact on our business and the economy generally, clinical trial or commercial results or new product approvals and therapy adoption; unpredictability of product launches; competitive dynamics; changes to reimbursement for the company's products; the company’s success in developing new products and avoiding manufacturing and quality issues; the impact of currency exchange rates; the timing or results of research and development and clinical trials; unanticipated actions by the U.S. Food and Drug Administration and other regulatory agencies; unexpected litigation impacts or expenses; and other risks detailed under “Risk Factors” in the quarterly report on Form 10-Q for the quarter ended March 31, 2020 and in our annual report on Form 10-K for the year ended December 31, 2019, as such risks and uncertainties may be amended, supplemented or superseded from time to time by subsequent reports on Forms 10-Q and 8-K we file with the Securities and Exchange Commission from time to time. These forward-looking statements speak only as of the date on which they are made and we do not undertake any obligation to update any forward-looking statement to reflect events or circumstances after the date of the statement. If we do update or correct one or more of these statements, investors and others should not conclude that we will make additional updates or corrections.

Unless otherwise indicated or otherwise required by the context, the terms "we," "our," "it," "its," "Company," "Edwards," and "Edwards Lifesciences" refer to Edwards Lifesciences Corporation and its subsidiaries.

Table of Contents

Part I. Financial Information

Item 1. Financial Statements

EDWARDS LIFESCIENCES CORPORATION

CONSOLIDATED CONDENSED BALANCE SHEETS

(in millions, except par value; unaudited)



	June 30, 2020			December 31, 2019
ASSETS
Current assets
Cash and cash equivalents	$	903.5		$	1,179.1
Short-term investments (Note 5)	260.3			337.8
Accounts and other receivables, net of allowances of $9.3 and $8.7, respectively	567.9			599.1
Inventories (Note 2)	735.1			640.9
Prepaid expenses	57.3			59.1
Other current assets	166.2			168.0
Total current assets	2,690.3			2,984.0
Long-term investments (Note 5)	594.4			585.5
Property, plant, and equipment, net	1,195.6			1,060.3
Operating lease right-of-use assets	84.7			80.1
Goodwill	1,167.7			1,167.7
Other intangible assets, net	333.5			336.5
Deferred income taxes	204.1			172.2
Other assets	153.8			101.8
Total assets	$	6,424.1		$	6,488.1
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable and accrued liabilities (Note 2)	$	849.4		$	876.9
Operating lease liabilities	23.8			25.5
Total current liabilities	873.2			902.4
Long-term debt	594.7			594.4
Contingent consideration liabilities (Note 6)	189.9			172.5
Taxes payable	214.2			236.6
Operating lease liabilities	66.0			58.9
Uncertain tax positions	181.3			171.7
Other long-term liabilities (Note 2)	465.7			203.3
Commitments and contingencies (Note 9)
Stockholders' equity
Preferred stock, $.01 par value, authorized 50.0 shares, no shares outstanding	—			—
Common stock, $1.00 par value, 1,050.0 shares authorized, 633.5 and 218.1 shares issued, and 621.4 and 209.1 shares outstanding, respectively (Note 1)	633.5			218.1
Additional paid-in capital	1,323.9			1,623.3
Retained earnings	3,930.3			3,741.6
Accumulated other comprehensive loss (Note 10)	(146.1		)	(156.0		)
Treasury stock, at cost, 12.1 and 9.0 shares, respectively	(1,902.5		)	(1,278.7		)
Total stockholders' equity	3,839.1			4,148.3
Total liabilities and stockholders' equity	$	6,424.1		$	6,488.1

The accompanying notes are an integral part of these

consolidated condensed financial statements.

Table of Contents

EDWARDS LIFESCIENCES CORPORATION

CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS

(in millions, except per share information; unaudited)



	Three Months Ended June 30,						Six Months Ended June 30,
	2020			2019			2020			2019
Net sales	$	925.0		$	1,086.9		$	2,053.7		$	2,079.9
Cost of sales	238.2			304.0			503.3			535.8
Gross profit	686.8			782.9			1,550.4			1,544.1
Selling, general, and administrative expenses	274.9			308.5			582.7			588.8
Research and development expenses	182.1			191.9			369.5			363.3
Intellectual property litigation expenses (Note 3)	379.9			7.0			392.4			11.6
Change in fair value of contingent consideration liabilities, net (Note 6)	19.6			8.0			17.4			14.7
Special charge (Note 4)	—			—			—			24.0
Operating (loss) income	(169.7		)	267.5			188.4			541.7
Interest income, net	(1.8		)	(2.4		)	(6.3		)	(4.4		)
Other expense (income), net	0.3			(1.4		)	(1.6		)	(3.2		)
(Loss) income before (benefit from) provision for income taxes	(168.2		)	271.3			196.3			549.3
(Benefit from) provision for income taxes	(46.3		)	29.0			7.6			57.3
Net (loss) income	$	(121.9	)	$	242.3		$	188.7		$	492.0
Share information (Notes 1 and 11)
(Loss) earnings per share:
Basic	$	(0.20	)	$	0.39		$	0.30		$	0.79
Diluted	$	(0.20	)	$	0.38		$	0.30		$	0.77
Weighted-average number of common shares outstanding:
Basic	620.3			624.4			622.5			624.1
Diluted	620.3			636.2			627.7			636.4

The accompanying notes are an integral part of these

consolidated condensed financial statements.

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EDWARDS LIFESCIENCES CORPORATION

CONSOLIDATED CONDENSED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(in millions; unaudited)



	Three Months Ended June 30,						Six Months Ended June 30,
	2020			2019			2020			2019
Net (loss) income	$	(121.9	)	$	242.3		$	188.7		$	492.0
Other comprehensive (loss) income, net of tax (Note 10):
Foreign currency translation adjustments	1.7			9.5			4.0			(3.6		)
Unrealized loss on hedges	(7.3		)	(9.0		)	(0.7		)	(1.8		)
Defined benefit pension plans	—			—			(0.2		)	(0.1		)
Unrealized gain on available-for-sale investments	11.3			2.2			6.7			5.5
Reclassification of net realized investment loss to earnings	0.2			0.3			0.1			0.3
Other comprehensive income	5.9			3.0			9.9			0.3
Comprehensive (loss) income	$	(116.0	)	$	245.3		$	198.6		$	492.3

The accompanying notes are an integral part of these

consolidated condensed financial statements.

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EDWARDS LIFESCIENCES CORPORATION

CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS

(in millions; unaudited)



	Six Months Ended June 30,
	2020			2019
Cash flows from operating activities
Net income	$	188.7		$	492.0
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	49.0			42.3
Non-cash operating lease cost	13.3			11.8
Stock-based compensation (Note 8)	48.7			43.1
Inventory write off	—			46.2
Change in fair value of contingent consideration liabilities, net (Note 6)	17.4			14.7
Deferred income taxes	(39.2		)	12.9
Purchase of intellectual property (Note 4)	—			24.0
Other	4.8			(7.7		)
Changes in operating assets and liabilities:
Accounts and other receivables, net	21.5			(89.2		)
Inventories	(99.2		)	(61.9		)
Accounts payable and accrued liabilities	(135.3		)	(10.6		)
Income taxes	9.1			(3.5		)
Prepaid expenses and other current assets	(0.3		)	3.9
Litigation settlement accrual (Note 3)	367.9			(180.0		)
Other	(8.2		)	4.7
Net cash provided by operating activities	438.2			342.7
Cash flows from investing activities
Capital expenditures	(190.5		)	(106.8		)
Purchases of held-to-maturity investments (Note 5)	(112.0		)	(30.0		)
Proceeds from held-to-maturity investments (Note 5)	212.2			50.0
Purchases of available-for-sale investments (Note 5)	(275.7		)	(75.4		)
Proceeds from available-for-sale investments (Note 5)	255.0			190.8
Investments in intangible assets (Note 4)	—			(24.0		)
Acquisition	—			(100.2		)
Payment for acquisition option	(10.0		)	(35.0		)
Issuances of notes receivable	(21.9		)	(5.4		)
Other	(2.0		)	(1.8		)
Net cash used in investing activities	(144.9		)	(137.8		)
Cash flows from financing activities
Proceeds from issuance of debt, net	10.6			9.7
Payments on debt and finance lease obligations	(11.8		)	(20.2		)
Purchases of treasury stock	(623.8		)	(262.0		)
Proceeds from stock plans	67.4			86.5
Other	(4.7		)	(1.0		)
Net cash used in financing activities	(562.3		)	(187.0		)
Effect of currency exchange rate changes on cash and cash equivalents	(6.6		)	(5.2		)
Net (decrease) increase in cash and cash equivalents	(275.6		)	12.7
Cash and cash equivalents at beginning of period	1,179.1			714.1
Cash and cash equivalents at end of period	$	903.5		$	726.8

The accompanying notes are an integral part of these

consolidated condensed financial statements.

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EDWARDS LIFESCIENCES CORPORATION

CONSOLIDATED CONDENSED STATEMENTS OF STOCKHOLDERS' EQUITY

(in millions; unaudited)



	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, 2019	218.1	$	218.1	9.0	$	(1,278.7	)	$	1,623.3		$	3,741.6		$	(156.0	)	$	4,148.3
Net income											310.6						310.6
Other comprehensive income, net of tax														4.0			4.0
Common stock issued under equity plans	0.4	0.4						28.7									29.1
Stock-based compensation expense								23.9									23.9
Purchases of treasury stock				3.0	(614.8		)										(614.8		)
Balance at March 31, 2020	218.5	$	218.5	12.0	$	(1,893.5	)	$	1,675.9		$	4,052.2		$	(152.0	)	$	3,901.1
Net loss											(121.9		)				(121.9		)
Other comprehensive income, net of tax														5.9			5.9
Common stock issued under equity plans	1.2	1.2						37.0									38.2
Stock-based compensation expense								24.8									24.8
Purchases of treasury stock				0.1	(9.0		)										(9.0		)
Stock issued to effect stock split (Note 1)	413.8	413.8						(413.8		)							—
Balance at June 30, 2020	633.5	$	633.5	12.1	$	(1,902.5	)	$	1,323.9		$	3,930.3		$	(146.1	)	$	3,839.1

The accompanying notes are an integral part of these

consolidated condensed financial statements.

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EDWARDS LIFESCIENCES CORPORATION

CONSOLIDATED CONDENSED STATEMENTS OF STOCKHOLDERS' EQUITY

(in millions; unaudited)



	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 loss, 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 loss, 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

The accompanying notes are an integral part of these

consolidated condensed financial statements.

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1. BASIS OF PRESENTATION

The accompanying interim consolidated condensed financial statements and related disclosures have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC") and should be read in conjunction with the consolidated financial statements and notes included in Edwards Lifesciences Corporation's Annual Report on Form 10-K for the year ended December 31, 2019. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles in the United States of America ("GAAP") have been condensed or omitted.

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements. Actual results may differ from these estimates. In particular, the novel Coronavirus ("COVID-19") pandemic has adversely impacted and is likely to further adversely impact nearly all aspects of our business and markets, including our workforce and operations and the operations of our customers, suppliers, and business partners. The full extent to which the pandemic will directly or indirectly impact the Company's business, results of operations and financial condition, including sales, expenses, manufacturing, clinical trials, research and development costs, reserves and allowances, fair value measurements, asset impairment charges, contingent consideration obligations, and the effectiveness of the Company's hedging instruments, will depend on future developments that are highly uncertain and difficult to predict. These developments include, but are not limited to, the duration and spread of the outbreak, its severity, the actions to contain the virus or address its impact, U.S. and foreign government actions to respond to the reduction in global economic activity, and how quickly and to what extent normal economic and operating conditions can resume.

In the opinion of management, the interim consolidated condensed financial statements reflect all adjustments considered necessary for a fair statement of the interim periods. All such adjustments are of a normal, recurring nature. The results of operations for the interim periods are not necessarily indicative of the results of operations to be expected for the full year.

Certain reclassifications have been made to the prior year's consolidated condensed financial statements to conform to the current year presentation.

Stock Split

On May 7, 2020, the Company’s Board of Directors declared a three-for-one stock split of its outstanding shares of common stock effected in the form of a stock dividend, distributed on May 29, 2020 to stockholders of record on May 18, 2020. The Company distributed two newly issued shares of common stock to holders of record of each share of common stock to effect the stock split. All applicable share and per-share amounts in the consolidated condensed financial statements and the notes to consolidated condensed financial statements have been retroactively adjusted to reflect this stock split. The consolidated condensed balance sheet as of December 31, 2019 and the consolidated condensed statements of stockholders’ equity for the six months ended June 30, 2019 have not been retroactively adjusted to reflect the stock split.

Recently Adopted Accounting Standards

In August 2018, the Financial Accounting Standards Board ("FASB") issued an amendment to the accounting guidance on cloud computing service arrangements. The guidance aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. The guidance also requires an entity to expense the capitalized implementation costs of a hosting arrangement that is a service contract over the term of the hosting arrangement. The guidance was effective for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. The adoption of this guidance on January 1, 2020 did not have a material impact on the Company's consolidated financial statements.

In August 2018, the FASB issued an amendment to the accounting guidance on fair value measurements. The guidance modifies the disclosure requirements on fair value measurements, including the removal of disclosures of the amount of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy, the policy for timing of transfers between levels, and the valuation processes for Level 3 fair value measurements. The guidance also adds certain disclosure requirements related to Level 3 fair value measurements. The guidance was effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. The adoption of this guidance on January 1, 2020 did not have a material impact on the Company's consolidated financial statements.

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In June 2016, the FASB issued an amendment to the guidance on the measurement of credit losses on financial instruments. The amendment updates the guidance for measuring and recording credit losses on financial assets measured at amortized cost by replacing the “incurred loss” model with an “expected loss” model. Accordingly, these financial assets will be presented at the net amount expected to be collected. The amendment also requires that credit losses related to available-for-sale debt securities be recorded as an allowance through net income rather than reducing the carrying amount under the current, other-than-temporary-impairment model. The guidance was effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. The adoption of this guidance on January 1, 2020 did not have a material impact on the Company's consolidated financial statements.

2. OTHER CONSOLIDATED FINANCIAL STATEMENT DETAILS

Composition of Certain Financial Statement Captions

Components of selected captions in the consolidated condensed balance sheets consisted of the following (in millions):



	June 30, 2020		December 31, 2019
Inventories
Raw materials	$	126.2	$	118.0
Work in process	144.3		121.7
Finished products	464.6		401.2
	$	735.1	$	640.9

At June 30, 2020 and December 31, 2019, $121.4 million and $120.9 million, respectively, of the Company's finished products inventories were held on consignment.



	June 30, 2020		December 31, 2019
	(in millions)
Accounts payable and accrued liabilities
Accounts payable	$	153.4	$	180.4
Employee compensation and withholdings	198.9		295.8
Taxes payable (Note 12)	67.6		52.9
Property, payroll, and other taxes	43.6		51.4
Research and development accruals	51.5		51.4
Accrued rebates	50.0		67.1
Fair value of derivatives	6.4		6.4
Accrued marketing expenses	12.0		17.5
Litigation settlement (Note 3)	112.5		—
Litigation and insurance reserves	19.8		20.0
Accrued relocation costs	19.2		17.4
Accrued professional services	10.8		10.1
Accrued realignment reserves	13.1		16.7
Other accrued liabilities	90.6		89.8
	$	849.4	$	876.9

Other long-term liabilities
Litigation settlement (Note 3)	$	255.4	$	—
Deferred compensation	90.5		88.7
Pension liabilities	44.7		41.6
Deferred tax liabilities	36.8		36.9
Other	38.3		36.1
	$	465.7	$	203.3

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Supplemental Cash Flow Information

(in millions)



	Six Months Ended June 30,
	2020		2019
Cash paid during the year for:
Amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	14.1	$	12.7
Non-cash investing and financing transactions:
Right-of-use assets obtained in exchange for new lease liabilities	$	19.5	$	23.5
Capital expenditures accruals	$	41.7	$	21.8

3. INTELLECTUAL PROPERTY LITIGATION EXPENSES

On July 12, 2020, the Company reached an agreement with Abbott Laboratories and its direct and indirect subsidiaries ("Abbott") to, among other things, settle all outstanding patent disputes between the companies (the “Settlement Agreement”) in cases related to transcatheter mitral and tricuspid repair products. See Note 9 for additional information. The Settlement Agreement resulted in the Company recording an estimated $367.9 million pre-tax charge and related liability in June 2020 related to past damages. In addition, the Company will incur royalty expenses through May 2024 totaling an estimated $100 million. The Company made a one-time $100.0 million payment to Abbott in July 2020, and will make quarterly payments in future years.

4. SPECIAL CHARGE

In March 2019, the Company recorded a $24.0 million charge related to the acquisition of early-stage transcatheter intellectual property and associated clinical and regulatory experience.

5. INVESTMENTS

Debt Securities

Investments in debt securities at the end of each period were as follows (in millions):



	June 30, 2020									December 31, 2019
Held-to-maturity	Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value		Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Bank time deposits	$	—	$	—	$	—		$	—	$	100.2	$	—	$	—			$	100.2

Available-for-sale
Bank time deposits	$	33.2	$	—	$	—		$	33.2	$	13.1	$	—	$	—			$	13.1
Commercial paper	47.5		—		—			47.5		34.3		—		—				34.3
U.S. government and agency securities	128.0		3.0		—			131.0		113.2		0.6		—				113.8
Foreign government bonds	1.7		—		—			1.7		1.7		—		—				1.7
Asset-backed securities	141.6		1.7		(0.1		)	143.2		141.2		0.6		(0.1		)		141.7
Corporate debt securities	458.0		7.4		(0.1		)	465.3		487.0		2.3		(0.1		)		489.2
Total	$	810.0	$	12.1	$	(0.2	)	$	821.9	$	790.5	$	3.5	$	(0.2	)		$	793.8

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The cost and fair value of investments in debt securities, by contractual maturity, as of June 30, 2020, were as follows:



	Available-for-Sale
	Cost		Fair Value
	(in millions)
Due in 1 year or less	$	259.1	$	260.3
Due after 1 year through 5 years	402.2		410.5
Instruments not due at a single maturity date	148.7		151.1
	$	810.0	$	821.9

Actual maturities may differ from the contractual maturities due to call or prepayment rights.

The following tables present gross unrealized losses and fair values for those investments that were in an unrealized loss position as of June 30, 2020 and December 31, 2019, aggregated by investment category and the length of time that individual securities have been in a continuous loss position (in millions):



	June 30, 2020
	Less than 12 Months					12 Months or Greater				Total
	Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses
Asset-backed securities	$	4.8	$	(0.1	)	$	—	$	—	$	4.8	$	(0.1	)
Corporate debt securities	9.7		(0.1		)	—		—		9.7		(0.1		)
	$	14.5	$	(0.2	)	$	—	$	—	$	14.5	$	(0.2	)



	December 31, 2019
	Less than 12 Months					12 Months or Greater				Total
	Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses
Asset-backed securities	$	73.4	$	(0.1	)	$	—	$	—	$	73.4	$	(0.1	)
Corporate debt securities	81.4		(0.1		)	—		—		81.4		(0.1		)
	$	154.8	$	(0.2	)	$	—	$	—	$	154.8	$	(0.2	)

Investments in Unconsolidated Affiliates

The Company has a number of equity investments in privately and publicly held companies. Investments in these unconsolidated affiliates are recorded in "Long-term Investments" on the consolidated condensed balance sheets, and are as follows:



	June 30, 2020			December 31, 2019
	(in millions)
Equity method investments
Cost	$	9.5		$	10.7
Equity in losses	(4.3		)	(4.5		)
Carrying value of equity method investments	5.2			6.2
Equity securities
Carrying value of non-marketable equity securities	27.6			23.1
Total investments in unconsolidated affiliates	$	32.8		$	29.3

Non-marketable equity securities consist of investments in privately held companies without readily determinable fair values, and are reported at cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or similar investment of the same issuer. The Company recorded an upward adjustment of

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$1.8 million during the three and six months ended June 30, 2020 based on observable price changes, and a downward adjustment of $0.7 million during the six months ended June 30, 2020 due to an impairment. As of June 30, 2020, the Company had recorded accumulated upward adjustments of $3.8 million based on observable price changes, and accumulated downward adjustments of $2.6 million due to impairments and observable price changes.

During the three and six months ended June 30, 2020, the gross realized gains or losses from sales of available-for-sale investments were not material.

6. FAIR VALUE MEASUREMENTS

The consolidated condensed financial statements include financial instruments for which the fair market value of such instruments may differ from amounts reflected on a historical cost basis. Financial instruments of the Company consist of cash deposits, accounts and other receivables, investments, accounts payable, certain accrued liabilities, and borrowings under a revolving credit agreement. These financial instruments are held at cost, which generally approximates fair value due to their short-term nature.

Financial instruments also include notes payable. As of June 30, 2020, the fair value of the notes payable, based on Level 2 inputs, was $718.5 million.

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. The Company prioritizes the inputs used to determine fair values in one of the following three categories:

Level 1—Quoted market prices in active markets for identical assets or liabilities.

Level 2—Inputs, other than quoted prices in active markets, that are observable, either directly or indirectly.

Level 3—Unobservable inputs that are not corroborated by market data.

In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, the level in the fair value hierarchy within which the fair value measurement in its entirety falls has been determined based on the lowest level input that is significant to the fair value measurement in its entirety.

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Assets and Liabilities Measured at Fair Value on a Recurring Basis

The following table summarizes the Company's financial instruments which are measured at fair value on a recurring basis (in millions):



June 30, 2020	Level 1		Level 2		Level 3		Total
Assets
Cash equivalents	$	9.9	$	18.0	$	—	$	27.9
Available-for-sale investments:
Bank time deposits	—		33.2		—		33.2
Corporate debt securities	—		465.3		—		465.3
Asset-backed securities	—		143.2		—		143.2
U.S. government and agency securities	59.2		71.8		—		131.0
Foreign government bonds	—		1.7		—		1.7
Commercial paper	—		47.5		—		47.5
Investments held for deferred compensation plans	89.9		—		—		89.9
Derivatives	—		52.0		—		52.0
	$	159.0	$	832.7	$	—	$	991.7
Liabilities
Derivatives	$	—	$	6.4	$	—	$	6.4
Deferred compensation plans	90.5		—		—		90.5
Contingent consideration liabilities	—		—		189.9		189.9
	$	90.5	$	6.4	$	189.9	$	286.8
December 31, 2019
Assets
Cash equivalents	$	0.7	$	31.7	$	—	$	32.4
Available-for-sale investments:
Bank time deposits	—		13.1		—		13.1
Corporate debt securities	—		489.2		—		489.2
Asset-backed securities	—		141.7		—		141.7
U.S. government and agency securities	76.1		37.7		—		113.8
Foreign government bonds	—		1.7		—		1.7
Commercial paper	—		34.3		—		34.3
Investments held for deferred compensation plans	88.9		—		—		88.9
Derivatives	—		30.7		—		30.7
	$	165.7	$	780.1	$	—	$	945.8
Liabilities
Derivatives	$	—	$	6.4	$	—	$	6.4
Deferred compensation plans	88.7		—		—		88.7
Contingent consideration liabilities	—		—		172.5		172.5
	$	88.7	$	6.4	$	172.5	$	267.6

The following table summarizes the changes in fair value of the contingent consideration liabilities (in millions):



	Six Months Ended June 30,
	2020		2019
Balance at December 31	$	172.5	$	178.6
Changes in fair value	17.4		14.7
Balance at June 30	$	189.9	$	193.3

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Cash Equivalents and Available-for-sale Investments

The Company estimates the fair values of its money market funds based on quoted prices in active markets for identical assets. The Company estimates the fair values of its time deposits, commercial paper, U.S. and foreign government and agency securities, municipal securities, asset-backed securities, and corporate debt securities by taking into consideration valuations obtained from third-party pricing services. The pricing services use industry standard valuation models, including both income and market-based approaches, for which all significant inputs are observable, either directly or indirectly, to estimate fair value. These inputs include reported trades and broker-dealer quotes on the same or similar securities, benchmark yields, credit spreads, prepayment and default projections based on historical data, and other observable inputs. The Company independently reviews and validates the pricing received from the third-party pricing service by comparing the prices to prices reported by a secondary pricing source. The Company’s validation procedures have not resulted in an adjustment to the pricing received from the pricing service.

Deferred Compensation Plans

The Company holds investments in trading securities related to its deferred compensation plans. The investments are in a variety of stock and bond mutual funds. The fair values of these investments and the corresponding liabilities are based on quoted market prices.

Derivative Instruments

The Company uses derivative financial instruments in the form of foreign currency forward exchange contracts and cross currency swap contracts to manage foreign currency exposures. All derivatives contracts are recognized on the balance sheet at their fair value. The fair value of the derivative financial instruments was estimated based on quoted market foreign exchange rates and market discount rates. Judgment was employed in interpreting market data to develop estimates of fair value; accordingly, the estimates presented herein are not necessarily indicative of the amounts that the Company could realize in a current market exchange. The use of different market assumptions or valuation methodologies could have a material effect on the estimated fair value amounts.

Contingent Consideration Liabilities

Certain of the Company's acquisitions involve contingent consideration arrangements. Payment of additional consideration is contingent upon the acquired company reaching certain performance milestones, such as attaining specified revenue levels or obtaining regulatory approvals. These contingent consideration liabilities are measured at estimated fair value using either a probability weighted discounted cash flow analysis or a Monte Carlo simulation model, both of which consider significant unobservable inputs. These inputs include (1) the discount rate used to present value the projected cash flows (ranging from 0.1% to 9.3%; weighted average of 3.2%), (2) the probability of milestone achievement (ranging from 1.2% to 99.6%; weighted average of 73.0%), (3) the projected payment dates (ranging from 2022 to 2026; weighted average of 2025), and (4) the volatility of future revenue (ranging from 37.0% to 40.0%; weighted average of 38.9%). The weighted average of each of the above inputs was determined based on the relative fair value of each obligation. The use of different assumptions could have a material effect on the estimated fair value amounts.

7. DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

The Company uses derivative financial instruments to manage interest rate and foreign currency risks, as summarized below. It is the Company's policy not to enter into derivative financial instruments for speculative purposes. Notional amounts are stated in United States dollar equivalents at spot exchange rates at the respective dates.



	Notional Amount
	June 30, 2020		December 31, 2019
	(in millions)
Foreign currency forward exchange contracts	$	1,297.7	$	1,336.5
Cross currency swap contracts	300.0		300.0

Derivative financial instruments involve credit risk in the event the counterparty should default. It is the Company's policy to execute such instruments with global financial institutions that the Company believes to be creditworthy. The Company diversifies its derivative financial instruments among counterparties to minimize exposure to any one of these entities. The Company also uses International Swap Dealers Association master-netting agreements. The master-netting

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agreements provide for the net settlement of all contracts through a single payment in a single currency in the event of default, as defined by the agreements.

The Company uses foreign currency forward exchange contracts and cross currency swap contracts to manage its exposure to changes in currency exchange rates from (a) future cash flows associated with intercompany transactions and certain local currency expenses expected to occur within the next 13 months (designated as cash flow hedges), (b) its net investment in certain foreign subsidiaries (designated as net investment hedges) and (c) foreign currency denominated assets or liabilities (designated as fair value hedges). The Company also uses foreign currency forward exchange contracts that are not designated as hedging instruments to offset the transaction gains and losses associated with certain assets and liabilities denominated in currencies other than their functional currencies (resulting principally from intercompany and local currency transactions).

All derivative financial instruments are recognized at fair value in the consolidated condensed balance sheets. For each derivative instrument that is designated as a fair value hedge, the gain or loss on the derivative included in the assessment of hedge effectiveness is recognized immediately to earnings, and offsets the loss or gain on the underlying hedged item. The Company reports in "Accumulated Other Comprehensive Loss" the gain or loss on derivative financial instruments that are designated, and that qualify, as cash flow hedges. The Company reclassifies these gains and losses into earnings in the same line item and in the same period in which the underlying hedged transactions affect earnings. Changes in the fair value of net investment hedges are reported in "Accumulated Other Comprehensive Loss" as a part of the cumulative translation adjustment and would be reclassified into earnings if the underlying net investment is sold or substantially liquidated. The portion of the change in fair value related to components excluded from the hedge effectiveness assessment are amortized into earnings over the life of the derivative. The gains and losses on derivative financial instruments for which the Company does not elect hedge accounting treatment are recognized in the consolidated statements of operations in each period based upon the change in the fair value of the derivative financial instrument. Cash flows from net investment hedges are reported as investing activities in the consolidated statements of cash flows, and cash flows from all other derivative financial instruments are reported as operating activities.

The following table presents the location and fair value amounts of derivative instruments reported in the consolidated condensed balance sheets (in millions):



		Fair Value
Derivatives designated as hedging instruments	Balance Sheet Location	June 30, 2020		December 31, 2019
Assets
Foreign currency contracts	Other current assets	$	11.4	$	14.2
Foreign currency contracts	Other assets	$	5.0	$	3.2
Cross currency swap contracts	Other assets	$	35.6	$	13.3
Liabilities
Foreign currency contracts	Accounts payable and accrued liabilities	$	6.4	$	6.4

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The following table presents the effect of master-netting agreements and rights of offset on the consolidated condensed balance sheets (in millions):



							Gross Amounts Not Offset in the Consolidated Balance Sheet
			Gross Amounts Offset in the Consolidated Balance Sheet
					Net Amounts Presented in the Consolidated Balance Sheet
June 30, 2020	Gross Amounts				Net Amounts Presented in the Consolidated Balance Sheet		Financial Instruments			Cash Collateral Received		Net Amount
Derivative assets
Foreign currency contracts	$	16.4	$	—	$	16.4	$	(5.1	)	$	—	$	11.3
Cross currency swap contracts	$	35.6	$	—	$	35.6	$	—		$	—	$	35.6
Derivative liabilities
Foreign currency contracts	$	6.4	$	—	$	6.4	$	(5.1	)	$	—	$	1.3
December 31, 2019
Derivative assets
Foreign currency contracts	$	17.4	$	—	$	17.4	$	(5.7	)	$	—	$	11.7
Cross currency swap contracts	$	13.3	$	—	$	13.3	$	—		$	—	$	13.3
Derivative liabilities
Foreign currency contracts	$	6.4	$	—	$	6.4	$	(5.7	)	$	—	$	0.7

The following tables present the effect of derivative and non-derivative hedging instruments on the consolidated condensed statements of operations and consolidated condensed statements of comprehensive income (loss) (in millions):



	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,
	Three Months Ended June 30,							Three Months Ended June 30,
	2020			2019				2020		2019
Cash flow hedges
Foreign currency contracts	$	(4.9	)	$	(2.1	)	Cost of sales	$	7.7	$	11.3
							Selling, general, and administrative expenses	$	0.9	$	0.5



	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,
	Six Months Ended June 30,					Six Months Ended June 30,
	2020		2019			2020		2019
Cash flow hedges
Foreign currency contracts	$	12.6	$	10.8	Cost of sales	$	13.8	$	18.9
					Selling, general, and administrative expenses	$	1.7	$	0.8



	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,
	Three Months Ended June 30,							Three Months Ended June 30,
	2020			2019				2020		2019
Net investment hedges
Cross currency swap contracts	$	(9.0	)	$	(3.2	)	Interest income, net	$	1.6	$	1.7

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	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,
	Six Months Ended June 30,					Six Months Ended June 30,
	2020		2019			2020		2019
Net investment hedges
Cross currency swap contracts	$	22.3	$	2.1	Interest income, net	$	3.3	$	3.3

The cross currency swaps have an expiration date of June 15, 2028. At maturity of the cross currency swap contracts, the Company will deliver the notional amount of €257.2 million and will receive $300.0 million from the counterparties. The Company will receive semi-annual interest payments from the counterparties based on a fixed interest rate until maturity of the agreements.



		Amount of Gain or (Loss) Recognized in Income on Derivative
		Three Months Ended June 30,
	Location of Gain or (Loss) Recognized in Income on Derivative	Three Months Ended June 30,
		2020			2019
Fair value hedges
Foreign currency contracts	Other expense (income), net	$	(1.4	)	$	(3.3	)



		Amount of Gain or (Loss) Recognized in Income on Derivative
		Six Months Ended June 30,
	Location of Gain or (Loss) Recognized in Income on Derivative	Six Months Ended June 30,
		2020		2019
Fair value hedges
Foreign currency contracts	Other expense (income), net	$	0.3	$	(4.2	)



		Amount of Gain or (Loss) Recognized in Income on Derivative
		Three Months Ended June 30,
	Location of Gain or (Loss) Recognized in Income on Derivative	Three Months Ended June 30,
		2020			2019
Derivatives not designated as hedging instruments
Foreign currency contracts	Other expense (income), net	$	(6.9	)	$	—



		Amount of Gain or (Loss) Recognized in Income on Derivative
		Six Months Ended June 30,
	Location of Gain or (Loss) Recognized in Income on Derivative	Six Months Ended June 30,
		2020		2019
Derivatives not designated as hedging instruments
Foreign currency contracts	Other expense (income), net	$	1.7	$	(1.5	)

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The following tables present the effect of cash flow hedge accounting on the consolidated condensed statements of operations (in millions):



	Location and Amount of Gain or (Loss) Recognized in Income on Cash Flow Hedging Relationships
	Three Months Ended June 30, 2020									Six Months Ended June 30, 2020
	Cost of sales			Selling, general, and administrative expenses			Other Expense (Income), net			Cost of sales			Selling, general, and administrative expenses			Other Expense (Income), net
	Cost of sales			Selling, general, and administrative expenses			Other Expense (Income), net			Cost of sales			Selling, general, and administrative expenses			Other Expense (Income), net
Total amounts of income and expense line items presented in the consolidated condensed statements of operations in which the effects of fair value or cash flow hedges are recorded	$	(238.2	)	$	(274.9	)	$	(0.3	)	$	(503.3	)	$	(582.7	)	$	1.6
The effects of fair value and cash flow hedging:
Gain (loss) on fair value hedging relationships:
Foreign currency contracts:
Hedged items	$	—		$	—		$	2.2		$	—		$	—		$	1.5
Derivatives designated as hedging instruments	$	—		$	—		$	(2.2	)	$	—		$	—		$	(1.5	)
Amount excluded from effectiveness testing recognized in earnings based on an amortization approach	$	—		$	—		$	0.8		$	—		$	—		$	1.8
Gain (loss) on cash flow hedging relationships:
Foreign currency contracts:
Amount of gain (loss) reclassified from accumulated OCI into income	$	7.7		$	0.9		$	—		$	13.8		$	1.7		$	—



	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 Expense (Income), net			Cost of sales			Selling, general, and administrative expenses			Other Expense (Income), net
	Cost of sales			Selling, general, and administrative expenses			Other Expense (Income), net			Cost of sales			Selling, general, and administrative expenses			Other Expense (Income), net
Total amounts of income and expense line items presented in the consolidated condensed 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		$	—

The Company expects that during the next twelve months it will reclassify to earnings a $6.1 million gain currently recorded in "Accumulated Other Comprehensive Loss."

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8. STOCK-BASED COMPENSATION

Stock-based compensation expense related to awards issued under the Company's incentive compensation plans for the three and six months ended June 30, 2020 and 2019 was as follows (in millions):



	Three Months Ended June 30,				Six Months Ended June 30,
	2020		2019		2020		2019
Cost of sales	$	4.7	$	3.9	$	9.3	$	7.9
Selling, general, and administrative expenses	15.3		14.3		29.7		27.0
Research and development expenses	4.8		4.1		9.7		8.2
Total stock-based compensation expense	$	24.8	$	22.3	$	48.7	$	43.1

At June 30, 2020, the total remaining compensation cost related to nonvested stock options, restricted stock units, market-based restricted stock units, and employee stock purchase plan ("ESPP") subscription awards amounted to $173.0 million, which will be amortized on a straight-line basis over the weighted-average remaining requisite service period of 33 months.

During the six months ended June 30, 2020, the Company granted 1.7 million stock options at a weighted-average exercise price of $72.82, and 0.6 million restricted stock units at a weighted-average grant-date fair value of $72.85. During the six months ended June 30, 2020, the Company also granted 0.1 million market-based restricted stock units at a weighted-average grant-date fair value of $82.67 and issued an additional 0.1 million shares of common stock related to a previous year's grant of market-based restricted stock units since the payout percentage achieved at the end of the performance period was in excess of the targeted shares. The market-based restricted stock units vest based on a combination of certain service and market conditions. The actual number of shares issued will be determined based on the Company's total shareholder return relative to a selected industry peer group over a three-year performance period, and may range from 0% to 175% of the targeted number of shares granted.

Fair Value Disclosures

The fair value of the market-based restricted stock units was determined using a Monte Carlo simulation model, which uses multiple input variables to determine the probability of satisfying the market condition requirements. The weighted-average assumptions used to determine the fair value of the market-based restricted stock units granted during the six months ended June 30, 2020 and 2019 included a risk-free interest rate of 0.2% and 2.2%, respectively, and an expected volatility rate

of 32.7% and 29.4%, respectively.

The following table includes the weighted-average grant-date fair values of stock options granted during the periods indicated and the related weighted-average assumptions used in the Black-Scholes option pricing model:



Option Awards	Three Months Ended June 30,						Six Months Ended June 30,
	2020			2019			2020			2019
Average risk-free interest rate	0.3		%	2.3		%	0.3		%	2.3		%
Expected dividend yield	None			None			None			None
Expected volatility	33.5		%	29.7		%	33.4		%	29.6		%
Expected term (years)	5.0			5.0			5.0			5.0
Fair value, per option	$	21.58		$	18.01		$	21.61		$	18.01

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The following table includes the weighted-average grant-date fair values for ESPP subscriptions granted during the periods indicated and the related weighted-average assumptions used in the Black-Scholes option pricing model:



ESPP	Three Months Ended June 30,						Six Months Ended June 30,
	2020			2019			2020			2019
Average risk-free interest rate	0.1		%	2.4		%	1.4		%	2.4		%
Expected dividend yield	None			None			None			None
Expected volatility	37.5		%	31.9		%	32.6		%	26.6		%
Expected term (years)	0.6			0.6			0.6			0.6
Fair value, per share	$	18.42		$	15.58		$	16.06		$	16.14

9. COMMITMENTS AND CONTINGENCIES

In January 2019, Abbott filed lawsuits against Edwards Lifesciences and its direct and indirect subsidiaries (“Edwards”) in the Federal District Court in the District of Delaware, in the United Kingdom, Germany, Switzerland and Italy, and, in February 2020, in Ireland, alleging patent infringement involving Edwards’ PASCAL heart valve repair system (collectively, the “PASCAL litigation”). In February 2019, Edwards filed a lawsuit against Abbott in the Federal District Court in the Central District of California alleging patent infringement involving Abbott's MITRACLIP device (with the PASCAL litigation, the “Abbott Matters”). On July 12, 2020, Edwards entered into the Settlement Agreement with Abbott to, among other things, settle all patent litigation between the parties related to alleged patent infringement involving Edwards’ PASCAL heart valve repair system and Abbott’s MITRACLIP device. Pursuant to the Settlement Agreement, all of the Abbott Matters and related appeals in courts worldwide were dismissed.

The Settlement Agreement resulted in the Company recording an estimated $367.9 million pre-tax net charge in June 2020 related to past damages. See Note 3 for additional information.

In addition, the Company is or may be a party to, or may otherwise be responsible for, pending or threatened lawsuits including those related to products and services currently or formerly manufactured or performed, as applicable, by the Company, workplace and employment matters, matters involving real estate, Company operations or health care regulations, or governmental investigations (the "Other Lawsuits"). The Other Lawsuits raise difficult and complex factual and legal issues and are subject to many uncertainties, including, but not limited to, the facts and circumstances of each particular case or claim, the jurisdiction in which each suit is brought, and differences in applicable law. Management does not believe that any loss relating to the Other Lawsuits would have a material adverse effect on the Company's overall financial condition, results of operations or cash flows. However, the resolution of one or more of the Other Lawsuits in any reporting period, could have a material adverse impact on the Company's financial results for that period. The Company is not able to estimate the amount or range of any loss for legal contingencies related to the Other Lawsuits for which there is no reserve or additional loss for matters already reserved.

The Company is subject to various environmental laws and regulations both within and outside of the United States. The Company's operations, like those of other medical device companies, involve the use of substances regulated under environmental laws, primarily in manufacturing and sterilization processes. While it is difficult to quantify the potential impact of continuing compliance with environmental protection laws, management believes that such compliance will not have a material impact on the Company's financial results.

10. ACCUMULATED OTHER COMPREHENSIVE LOSS

The following tables summarize the activity for each component of "Accumulated Other Comprehensive Loss" (in millions):

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	Foreign Currency Translation Adjustments			Unrealized Gain on Hedges			Unrealized Gain (Loss) on Available-for-sale Investments			Unrealized Pension Costs			Total Accumulated Other Comprehensive Loss
December 31, 2019	$	(154.8	)	$	12.5		$	1.7		$	(15.4	)	$	(156.0	)
Other comprehensive gain (loss) before reclassifications	11.6			19.0			(6.3		)	(0.2		)	24.1
Amounts reclassified from accumulated other comprehensive loss	(1.7		)	(8.6		)	(0.1		)	—			(10.4		)
Deferred income tax (expense) benefit	(7.6		)	(3.8		)	1.7			—			(9.7		)
March 31, 2020	(152.5		)	19.1			(3.0		)	(15.6		)	(152.0		)
Other comprehensive gain (loss) before reclassifications	1.2			(3.7		)	14.8			—			12.3
Amounts reclassified from accumulated other comprehensive loss	(1.6		)	(7.2		)	0.2			—			(8.6		)
Deferred income tax benefit (expense)	2.1			3.6			(3.5		)	—			2.2
June 30, 2020	$	(150.8	)	$	11.8		$	8.5		$	(15.6	)	$	(146.1	)



	Foreign Currency Translation Adjustments			Unrealized Gain on Hedges			Unrealized Gain (Loss) 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 (loss) gain before reclassifications	(10.2		)	15.6			4.4			(0.1		)	9.7
Amounts reclassified from accumulated other comprehensive loss	(1.6		)	(7.0		)	—			—			(8.6		)
Deferred income tax expense	(1.3		)	(1.4		)	(1.1		)	—			(3.8		)
March 31, 2019	(156.7		)	30.8			(1.7		)	(13.6		)	(141.2		)
Other comprehensive gain (loss) before reclassifications	10.4			(4.0		)	2.8			—			9.2
Amounts reclassified from accumulated other comprehensive loss	(1.7		)	(8.5		)	0.3			—			(9.9		)
Deferred income tax benefit (expense)	0.8			3.5			(0.6		)	—			3.7
June 30, 2019	$	(147.2	)	$	21.8		$	0.8		$	(13.6	)	$	(138.2	)

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The following table provides information about amounts reclassified from "Accumulated Other Comprehensive Loss" (in millions):



	Three Months Ended June 30,						Six Months Ended June 30,
	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	2020			2019			2020			2019
Foreign currency translation adjustments	$	1.6		$	1.7		$	3.3		$	3.3		Other income, net
	(0.4		)	(0.4		)	(0.8		)	(0.8		)	Provision for income taxes
	$	1.2		$	1.3		$	2.5		$	2.5		Net of tax
Gain on hedges	$	7.7		$	11.3		$	13.8		$	18.9		Cost of sales
	0.9			0.5			1.7			0.8			Selling, general, and administrative expenses
	(1.4		)	(3.3		)	0.3			(4.2		)	Other income, net
	7.2			8.5			15.8			15.5			Total before tax
	(2.1		)	(2.8		)	(4.0		)	(4.8		)	Provision for income taxes
	$	5.1		$	5.7		$	11.8		$	10.7		Net of tax
Gain (loss) on available-for-sale investments	$	(0.2	)	$	(0.3	)	$	(0.1	)	$	(0.3	)	Other income, net
	(0.1		)	—			(0.3		)	—			Provision for income taxes
	$	(0.3	)	$	(0.3	)	$	(0.4	)	$	(0.3	)	Net of tax

11. EARNINGS PER SHARE

Basic earnings per share is computed by dividing net income (loss) by the weighted-average common shares outstanding during a period. Diluted earnings per share is computed based on the weighted-average common shares outstanding plus the effect of dilutive potential common shares outstanding during the period calculated using the treasury stock method. Dilutive potential common shares include employee equity share options, nonvested shares, and similar equity instruments granted by the Company. Potential common share equivalents have been excluded where their inclusion would be anti-dilutive.

The table below presents the computation of basic and diluted earnings per share (in millions, except for per share information):



	Three Months Ended June 30,					Six Months Ended June 30,
	2020			2019		2020		2019
Basic:
Net (loss) income	$	(121.9	)	$	242.3	$	188.7	$	492.0
Weighted-average shares outstanding	620.3			624.4		622.5		624.1
Basic (loss) earnings per share	$	(0.20	)	$	0.39	$	0.30	$	0.79
Diluted:
Net (loss) income	$	(121.9	)	$	242.3	$	188.7	$	492.0
Weighted-average shares outstanding	620.3			624.4		622.5		624.1
Dilutive effect of stock plans	—			11.8		5.2		12.3
Dilutive weighted-average shares outstanding	620.3			636.2		627.7		636.4
Diluted (loss) earnings per share	$	(0.20	)	$	0.38	$	0.30	$	0.77

Stock options, restricted stock units, and market-based restricted stock units to purchase 13.3 million and 2.9 million shares for the three months ended June 30, 2020 and 2019, respectively, and 7.7 million and 1.7 million shares for the six months ended June 30, 2020 and 2019, respectively, were outstanding, but were not included in the computation of diluted earnings per share because the effect would have been anti-dilutive.

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12. INCOME TAXES

The Company's effective income tax rates were 27.5% and 10.7% for the three months ended June 30, 2020 and 2019, respectively, and 3.9% and 10.4% for the six months ended June 30, 2020 and 2019, respectively. The fluctuation in the effective rates between the three and six months ended June 30, 2020 and the three and six months ended June 30, 2019 is primarily due to the impact of the Settlement Agreement with Abbott (see Notes 3 and 9). The effective rates for the six months ended June 30, 2020 and 2019 were also lower than the federal statutory rate of 21% primarily due to (1) the tax benefit from employee share-based compensation, (2) foreign earnings taxed at lower rates, and (3) Federal and California research and development credits. The effective rates include a tax benefit from employee share-based compensation of $20.2 million and $17.6 million for the three months ended June 30, 2020 and 2019, respectively, and $30.6 million and $36.6 million for the six months ended June 30, 2020 and 2019, respectively.

The Company strives to resolve open matters with each tax authority at the examination level and could reach agreement with a tax authority at any time. While the Company has accrued for matters it believes are more likely than not to require settlement, the final outcome with a tax authority may result in a tax liability that is more or less than that reflected in the consolidated condensed financial statements. Furthermore, the Company may later decide to challenge any assessments, if made, and may exercise its right to appeal. The uncertain tax positions are reviewed quarterly and adjusted as events occur that affect potential liabilities for additional taxes, such as lapsing of applicable statutes of limitations, proposed assessments by tax authorities, negotiations between tax authorities, identification of new issues, and issuance of new legislation, regulations, or case law.

As of June 30, 2020 and December 31, 2019, the gross liability for income taxes associated with uncertain tax positions was $223.2 million and $203.1 million, respectively. The Company estimates that these liabilities would be reduced by $63.7 million and $50.1 million, respectively, from offsetting tax benefits associated with the correlative effects of potential transfer pricing adjustments, state income taxes, and timing adjustments. The net amounts of $159.5 million and $153.0 million, respectively, if not required, would favorably affect the Company's effective tax rate.

The Internal Revenue Service began its examination of the 2015 and 2016 tax years during the fourth quarter of 2018 and its examination of the 2017 tax year during the first quarter of 2019. As of June 30, 2020, all material state, local, and foreign income tax matters have been concluded for years through 2010.

During 2018, the Company executed an Advance Pricing Agreement ("APA") between the United States and Switzerland governments for tax years 2009 through 2020 covering various transfer pricing matters. Certain intercompany transactions covering tax years 2015 through 2020 were not resolved and those related tax positions remain uncertain. These transfer pricing matters may be significant to the Company's consolidated condensed financial statements. Based upon the information currently available and numerous possible outcomes, the Company cannot reasonably estimate what, if any, changes in its existing uncertain tax positions may occur in the next 12 months and, therefore, has recorded the gross uncertain tax positions as a long-term liability.

In addition, the Company executed other APAs as follows: during 2017, an APA between the United States and Japan covering tax years 2015 through 2019; and during 2018, APAs between Japan and Singapore and between Switzerland and Japan covering tax years 2015 through 2019. The Company has filed or intends to file to renew these APAs for the years 2020 and forward. The execution of some or all of these APAs depends on a number of variables outside of the Company's control.

13. SEGMENT INFORMATION

Edwards Lifesciences conducts operations worldwide and is managed in the following geographical regions: United States, Europe, Japan, and Rest of World. All regions sell products that are used to treat advanced cardiovascular disease.

The Company's geographic segments are reported based on the financial information provided to the Chief Operating Decision Maker (the Chief Executive Officer). The Company evaluates the performance of its geographic segments based on net sales and income before provision for income taxes ("pre-tax income"). The accounting policies of the segments are substantially the same as those described in Note 2 of the Company's consolidated financial statements included in its Annual Report on Form 10-K for the year ended December 31, 2019. Segment net sales and segment pre-tax income are based on internally derived standard foreign exchange rates, which may differ from year to year, and do not include inter-segment profits. Because of the interdependence of the reportable segments, the operating profit as presented may not be representative of the geographical distribution that would occur if the segments were not interdependent. Net sales by geographic area are based on the location of the customer.

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Certain items are maintained at the corporate level and are not allocated to the segments. The non-allocated items include net interest expense, global marketing expenses, corporate research and development expenses, manufacturing variances, corporate headquarters costs, special gains and charges, stock-based compensation, foreign currency hedging activities, certain litigation costs, changes in the fair value of contingent consideration liabilities, and most of the Company's amortization expense. Although most of the Company's depreciation expense is included in segment pre-tax income, due to the Company's methodology for cost build-up, it is impractical to determine the amount of depreciation expense included in each segment, and, therefore, a portion is maintained at the corporate level. The Company neither discretely allocates assets to its operating segments, nor evaluates the operating segments using discrete asset information.

The table below presents information about Edwards Lifesciences' reportable segments (in millions):



	Three Months Ended June 30,				Six Months Ended June 30,
	2020		2019		2020		2019
Segment Net Sales
United States	$	516.2	$	624.9	$	1,183.6	$	1,187.7
Europe	206.9		237.2		454.4		464.5
Japan	105.3		113.7		215.1		212.9
Rest of World	103.8		107.7		208.2		204.5
Total segment net sales	$	932.2	$	1,083.5	$	2,061.3	$	2,069.6
Segment Operating Income
United States	$	345.4	$	427.6	$	810.2	$	810.9
Europe	104.0		122.3		232.0		241.7
Japan	69.0		71.1		140.7		132.1
Rest of World	34.7		32.3		69.6		63.1
Total segment operating income	$	553.1	$	653.3	$	1,252.5	$	1,247.8

The table below presents reconciliations of segment net sales to consolidated net sales and segment operating income to consolidated pre-tax income (in millions):



	Three Months Ended June 30,						Six Months Ended June 30,
	2020			2019			2020			2019
Net Sales Reconciliation
Segment net sales	$	932.2		$	1,083.5		$	2,061.3		$	2,069.6
Foreign currency	(7.2		)	3.4			(7.6		)	10.3
Consolidated net sales	$	925.0		$	1,086.9		$	2,053.7		$	2,079.9
Pre-tax Income Reconciliation
Segment operating income	$	553.1		$	653.3		$	1,252.5		$	1,247.8
Unallocated amounts:
Corporate items	(333.0		)	(389.1		)	(673.7		)	(688.9		)
Special charge (Note 4)	—			—			—			(24.0		)
Intellectual property litigation expenses	(379.9		)	(7.0		)	(392.4		)	(11.6		)
Change in fair value of contingent consideration liabilities, net	(19.6		)	(8.0		)	(17.4		)	(14.7		)
Foreign currency	9.7			18.3			19.4			33.1
Consolidated operating (loss) income	(169.7		)	267.5			188.4			541.7
Non-operating income	1.5			3.8			7.9			7.6
Consolidated pre-tax (loss) income	$	(168.2	)	$	271.3		$	196.3		$	549.3

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Enterprise-wide Information

The following enterprise-wide information is based on actual foreign exchange rates used in the Company's consolidated condensed financial statements.



	Three Months Ended June 30,				Six Months Ended June 30,
	2020		2019		2020		2019
	(in millions)
Net Sales by Geographic Area
United States	$	516.2	$	624.9	$	1,183.6	$	1,187.7
Europe	204.7		241.7		454.0		476.4
Japan	106.8		113.1		216.8		211.5
Rest of World	97.3		107.2		199.3		204.3
	$	925.0	$	1,086.9	$	2,053.7	$	2,079.9
Net Sales by Major Product and Service Area
Transcatheter Aortic Valve Replacement	$	594.3	$	677.7	$	1,336.5	$	1,275.4
Transcatheter Mitral and Tricuspid Therapies	6.1		7.0		16.6		11.3
Surgical Structural Heart	160.9		217.8		354.3		432.5
Critical Care	163.7		184.4		346.3		360.7
	$	925.0	$	1,086.9	$	2,053.7	$	2,079.9



	June 30, 2020		December 31, 2019
	(in millions)
Long-lived Tangible Assets by Geographic Area
United States	$	991.1	$	849.1
Europe	141.9		101.5
Japan	20.1		21.7
Rest of World	280.5		269.4
	$	1,433.6	$	1,241.7

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Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

Overview

The following discussion and analysis contains forward-looking statements within the meaning of the federal securities laws, and should be read in conjunction with the disclosures we make concerning risks and other factors that may affect our business and operating results. See “Note Regarding Forward-Looking Statements” preceding Part I, Item 1 in this Quarterly Report on Form 10-Q.

We are the global leader in patient-focused medical innovations for structural heart disease and critical care monitoring. Driven by a passion to help patients, we partner with the world's leading clinicians and researchers and invest in research and development to transform care for those impacted by structural heart disease or who require hemodynamic monitoring during surgery or intensive care. We conduct operations worldwide and are managed in the following geographical regions: United States, Europe, Japan, and Rest of World. Our products are categorized into the following main areas: Transcatheter Aortic Valve Replacement ("TAVR"), Transcatheter Mitral and Tricuspid Therapies ("TMTT"), Surgical Structural Heart ("Surgical"), and Critical Care.

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

Financial Highlights and COVID-19

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

TAVR and Surgical procedure volumes varied greatly since the end of March 2020 by geography, and even by hospital, as patients and their physicians analyzed the trade-off between aortic stenosis and their concern for COVID-19. In the last few weeks of the first quarter of 2020, procedure volumes related to our TAVR and Surgical products dropped significantly. In the second quarter of 2020, procedure volumes began to improve as we progressed through the quarter. We also started to

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progressively resume patient enrollment in clinical trials that were voluntarily paused or slowed at the end of the first quarter of 2020, and we are working with additional centers as many are now ready to re-engage. In Critical Care, there was greater demand in Europe for our pressure monitoring products, but demand for other Critical Care products began to decrease at the end of the first quarter of 2020 due to COVID-19, and that trend continued through the second quarter of 2020.

Despite the challenges associated with COVID-19, our net sales for the first six months of 2020 were $2.1 billion, representing a decrease of $26.2 million over the first six months of 2019. Sales growth of our TAVR products, primarily the Edwards SAPIEN 3 Ultra valve, for the six months ended June 30, 2020 was not enough to offset lower demand for our Surgical Structural Heart and Critical Care products.

The decrease from the prior year period in our diluted earnings per share was driven by an after-tax charge of $306.9 million in the second quarter of 2020 to settle certain patent litigation related to transcatheter mitral and tricuspid repair products. For further information, see Notes 3 and 9 to the "Consolidated Condensed Financial Statements."

We are closely monitoring the impact of COVID-19 on all aspects of our business and geographies, including its impact on our customers, employees, suppliers, vendors, business partners and distribution channels. The extent to which the COVID-19 global pandemic impacts our business, results of operations, and financial condition will depend on future developments, which are highly uncertain and are difficult to predict; these developments include, but are not limited to, the duration and spread of the outbreak, its severity, the actions to contain the virus or address its impact, U.S. and foreign government actions to respond to the reduction in global economic activity, and how quickly and to what extent normal economic and operating conditions can resume. Even after the COVID-19 outbreak has subsided, we may continue to experience materially adverse impacts on our financial condition and results of operations.

Healthcare Environment, Opportunities, and Challenges

The medical technology industry is highly competitive and continues to evolve. Our success is measured both by the development of innovative products and the value we bring to our stakeholders. We are committed to developing new technologies and providing innovative patient care, and we are committed to defending our intellectual property in support of those developments. In the first six months of 2020, we invested 18.0% of our net sales in research and development.

New Accounting Standards

For information on new accounting standards, see Note 1 to the "Consolidated Condensed Financial Statements."

Results of Operations

Net Sales Trends

(dollars in millions)



	Three Months Ended June 30,									Six Months Ended June 30,
	Three Months Ended June 30,							Percent Change		Six Months Ended June 30,							Percent Change
	2020		2019		Change			Percent Change		2020		2019		Change			Percent Change
United States	$	516.2	$	624.9	$	(108.7	)	(17.4	)%	$	1,183.6	$	1,187.7	$	(4.1	)	(0.3	)%
Europe	204.7		241.7		(37.0		)	(15.2	)%	454.0		476.4		(22.4		)	(4.7	)%
Japan	106.8		113.1		(6.3		)	(5.5	)%	216.8		211.5		5.3			2.5	%
Rest of World	97.3		107.2		(9.9		)	(9.5	)%	199.3		204.3		(5.0		)	(2.5	)%
International	408.8		462.0		(53.2		)	(11.5	)%	870.1		892.2		(22.1		)	(2.5	)%
Total net sales	$	925.0	$	1,086.9	$	(161.9	)	(14.9	)%	$	2,053.7	$	2,079.9	$	(26.2	)	(1.3	)%

International net sales include the impact of foreign currency exchange rate fluctuations. The impact of foreign currency exchange rate fluctuations on net sales is not necessarily indicative of the impact on net income (loss) due to the corresponding effect of foreign currency exchange rate fluctuations on international manufacturing and operating costs, and our hedging activities.

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Net Sales by Product Group

(dollars in millions)



	Three Months Ended June 30,									Six Months Ended June 30,
	Three Months Ended June 30,							Percent Change		Six Months Ended June 30,							Percent Change
	2020		2019		Change			Percent Change		2020		2019		Change			Percent Change
Transcatheter Aortic Valve Replacement	$	594.3	$	677.7	$	(83.4	)	(12.3	)%	$	1,336.5	$	1,275.4	$	61.1		4.8	%
Transcatheter Mitral and Tricuspid Therapies	6.1		7.0		(0.9		)	(11.2	)%	16.6		11.3		5.3			47.6	%
Surgical Structural Heart	160.9		217.8		(56.9		)	(26.1	)%	354.3		432.5		(78.2		)	(18.1	)%
Critical Care	163.7		184.4		(20.7		)	(11.3	)%	346.3		360.7		(14.4		)	(4.0	)%
Total net sales	$	925.0	$	1,086.9	$	(161.9	)	(14.9	)%	$	2,053.7	$	2,079.9	$	(26.2	)	(1.3	)%

Transcatheter Aortic Valve Replacement

Net sales of TAVR products decreased for the three months ended June 30, 2020 as patients and providers turned their focus to the COVID-19 pandemic. The decrease in sales was driven by the Edwards SAPIEN 3 valve, particularly in the United States and Europe, partially offset by higher sales of the Edwards SAPIEN 3 Ultra System following its regulatory approval in the United States (December 2018) and in Europe (November 2018). Our procedure volumes dropped significantly beginning in March 2020 due to COVID-19, and began to steadily improve in May and June 2020. For the six months ended June 30, 2020, increased sales of the Edwards SAPIEN 3 Ultra System more than offset the decrease in SAPIEN 3 sales.

The launch of the Edwards SAPIEN 3 Ultra System continued to be very positive in the first six months of 2020. In the first quarter of 2020, to ensure the safety of our employees and clinician partners from the threat of COVID-19, we decided to pause proctoring at centers that were not already trained on the Edwards SAPIEN 3 Ultra System. In the second quarter of 2020, we resumed training.

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Transcatheter Mitral and Tricuspid Therapies

Net sales of TMTT products decreased for the three months ended June 30, 2020 as patients and providers turned their focus to the COVID-19 pandemic. The decrease in sales was driven by the Edwards PASCAL transcatheter valve repair system ("PASCAL") in Europe, partially offset by increased sales of the Cardioband system for tricuspid valve repair. Our procedure volumes for PASCAL dropped significantly in April 2020 due to COVID-19, and began to improve in May and June 2020. For the six months ended June 30, 2020, net sales of TMTT products increased due primarily to sales in Europe of PASCAL, which received CE Mark in February 2019, and the Cardioband system for tricuspid valve repair.

At the end of March 2020, we temporarily paused new enrollments in our active pivotal clinical trials of transcatheter mitral and tricuspid therapies in response to the COVID-19 response around the globe. In consultation with investigators and hospitals, more than half of our trial centers have been reactivated and are beginning to treat patients.

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Surgical Structural Heart

Net sales of Surgical products decreased for the three and six months ended June 30, 2020 due primarily to decreased sales of aortic tissue valves, primarily in the United States and Europe, due to the impact of COVID-19. The ongoing adoption of TAVR also contributed to the decrease in United States surgical aortic valve sales. These decreases were partially offset by increased sales of the INSPIRIS RESILIA aortic valve, primarily in the United States and Japan. Increased and improved management of intensive care unit capacity, as well as prioritization of heart surgery in many hospitals, contributed to rebounding procedure volumes late in the second quarter of 2020.

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

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Critical Care

The decrease in net sales of Critical Care products was driven by our enhanced surgical recovery products, primarily in the United States, as many surgical procedures were delayed due to COVID-19. We also experienced a decline in orders of our HemoSphere advanced monitoring platform in the United States as hospitals limited their capital spending due to COVID-19. Foreign exchange rate fluctuations decreased net sales for the three and six months ended June 30, 2020 by $3.3 million and $4.6 million, respectively, due to the weakening of multiple currencies, primarily the Euro, against the United States dollar.

These decreases in net sales were partially offset by increased demand for our pressure monitoring products, primarily in Europe. In addition, our sales for the three and six months ended June 30, 2020 included $4.4 million and $10.1 million, respectively, related to CAS Medical Systems, Inc. ("CASMED"), which we acquired on April 18, 2019. CASMED is a medical technology company dedicated to non-invasive monitoring of tissue oxygenation in the brain.

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Gross Profit

The increase in gross profit as a percentage of net sales for the three and six months ended June 30, 2020 was driven primarily by:


•	the prior year charge of $46.2 million related to strategic decisions regarding our transcatheter aortic valve portfolio, including the decision to discontinue our CENTERA program;

partially offset by:


•	a 0.5 percentage point and 0.4 percentage point decrease, respectively, due to the impact of foreign currency exchange rate fluctuations, including the settlement of foreign currency hedging contracts; and


•	incremental costs associated with COVID-19.

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

The decrease in SG&A expenses for the three and six months ended June 30, 2020 was due to (1) decreased sales, marketing and travel-related expenses, primarily in the United States, Europe and Japan, due to COVID-19, (2) decreased personnel-related costs due to lower sales performance, and (3) the impact of foreign currency, which decreased expenses by $4.3 million and $7.2 million, respectively, due to the strengthening of the United States dollar against multiple currencies, primarily the Euro. The decrease in SG&A for the six months ended June 30, 2020 was due to the aforementioned decreases,

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partially offset by higher transcatheter structural heart field personnel-related costs, primarily in the United States and Europe, during the first three months of 2020.

Research and Development ("R&D") Expenses

The decrease in R&D expenses for the three months ended June 30, 2020 was primarily due to decreased spending on clinical trials as we paused certain mitral and tricuspid active pivotal clinical trials due to COVID-19. The increase in R&D expenses for the six months ended June 30, 2020 was primarily due to investments in our transcatheter mitral and tricuspid therapies during the first quarter of 2020, partially offset by the decreased spending on clinical trials in the second quarter of 2020.

Change in Fair Value of Contingent Consideration Liabilities, net

The change in fair value of contingent consideration liabilities resulted in expense of $19.6 million and $17.4 million for the three and six months ended June 30, 2020, respectively, and $8.0 million and $14.7 million for the three and six months ended June 30, 2019, respectively. The changes in fair value were primarily driven by credit spreads (which increased during the first quarter of 2020 and decreased in the second quarter of 2020), partially offset by discount rates (which decreased significantly in the first quarter of 2020) and the accretion of interest due to the passage of time. The changes to the credit spread and discount rate assumptions were primarily due to COVID-19. For further information, see Note 6 to the "Consolidated Condensed Financial Statements."

Special Charge

For information on the $24.0 million special charge recorded during the six months ended June 30, 2019, see Note 4 to the "Consolidated Condensed Financial Statements."

Other Income, net

(in millions)



	Three Months Ended June 30,						Six Months Ended June 30,
	2020			2019			2020			2019
Foreign exchange gains, net	$	—		$	(1.6	)	$	(3.7	)	$	(3.6	)
(Gain) loss on investments	(1.2		)	0.3			0.6			0.4
Other	1.5			(0.1		)	1.5			—
Other expense (income), net	$	0.3		$	(1.4	)	$	(1.6	)	$	(3.2	)

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

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The (gain) loss on investments primarily represents our net share of gains and losses in investments accounted for under the equity method, and realized gains and losses on investments in equity securities.

Provision for Income Taxes

The provision for income taxes consists of provisions for federal, state, and foreign income taxes. We operate in an international environment with significant operations in various locations outside the United States, which have statutory tax rates typically lower than the United States tax rate. Accordingly, the consolidated income tax rate is a composite rate reflecting the earnings in the various locations and the applicable rates.

Our effective income tax rate was 27.5% and 10.7% for the three months ended June 30, 2020 and 2019, respectively, and 3.9% and 10.4% for the six months ended June 30, 2020 and 2019, respectively. The fluctuation in the effective rates between the three and six months ended June 30, 2020 and the three and six months ended June 30, 2019 is primarily due to the impact of the litigation settlement agreement (the "Settlement Agreement") with Abbott Laboratories (see Notes 3 and 9 to the "Consolidated Condensed Financial Statements"). The effective rates for the six months ended June 30, 2020 and 2019 were also lower than the federal statutory rate of 21% primarily due to (1) the tax benefit from employee share-based compensation, (2) foreign earnings taxed at lower rates, and (3) Federal and California research and development credits.

We strive to resolve open matters with each tax authority at the examination level and could reach agreement with a tax authority at any time. While we have accrued for matters we believe are more likely than not to require settlement, the final outcome with a tax authority may result in a tax liability that is more or less than that reflected in the consolidated financial statements. Furthermore, we may later decide to challenge any assessments, if made, and may exercise our right to appeal. The uncertain tax positions are reviewed quarterly and adjusted as events occur that affect potential liabilities for additional taxes, such as lapsing of applicable statutes of limitations, proposed assessments by tax authorities, negotiations between tax authorities, identification of new issues, and issuance of new legislation, regulations, or case law. We believe that adequate amounts of tax and related penalty and interest have been provided in income tax expense for any adjustments that may result from our uncertain tax positions. For further information, see Note 12 to the "Consolidated Condensed Financial Statements."

The Internal Revenue Service began its examination of the 2015 and 2016 tax years during the fourth quarter of 2018 and its examination of the 2017 tax year during the first quarter of 2019. At June 30, 2020, all material state, local, and foreign income tax matters have been concluded for years through 2010.

During 2018, we executed an Advance Pricing Agreement ("APA") between the United States and Switzerland governments for tax years 2009 through 2020 covering various transfer pricing matters. Certain intercompany transactions covering tax years 2015 through 2020 were not resolved and those related tax positions remain uncertain. These transfer pricing matters may be significant to our consolidated financial statements. Based upon the information currently available and numerous possible outcomes, we cannot reasonably estimate what, if any, changes in our existing uncertain tax positions may occur in the next 12 months and, therefore, have recorded the gross uncertain tax positions as a long-term liability.

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

Liquidity and Capital Resources

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

As of June 30, 2020, cash and cash equivalents and short-term investments held in the United States and outside the United States were $920.1 million and $243.7 million, respectively.

In April 2018, we entered into a Five-Year Credit Agreement ("the Credit Agreement") which matures on April 28, 2023. The Credit Agreement provides up to an aggregate of $750.0 million in borrowings in multiple currencies. Subject to certain terms and conditions, we may increase the amount available under the Credit Agreement by up to an additional $250.0 million in the aggregate. As of June 30, 2020, there were no borrowings outstanding under the Credit Agreement.

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In June 2018, we issued $600.0 million of 4.300% fixed-rate unsecured senior notes (the "2018 Notes") due June 15, 2028. As of June 30, 2020, the total carrying value of the 2018 Notes was $594.7 million.

From time to time, we repurchase shares of our common stock under share repurchase programs authorized by the Board of Directors. We consider several factors in determining when to execute share repurchases, including, among other things, expected dilution from stock plans, cash capacity, and the market price of our common stock. During the six months ended June 30, 2020, under the Board authorized program, we repurchased a total of 3.0 million shares at an aggregate cost of $614.7 million, and as of June 30, 2020, we had remaining authority to purchase $625.0 million of our common stock.

Certain of our business acquisitions involve contingent consideration arrangements. Payment of additional consideration in the future may be required, contingent upon the acquired company reaching certain performance milestones, such as attaining specified revenue levels, achieving product development targets, or obtaining regulatory approvals. For further information, see Note 6 to the "Consolidated Condensed Financial Statements."

On July 12, 2020, we reached the Settlement Agreement with Abbott Laboratories to settle all outstanding patent disputes between the companies in cases related to transcatheter mitral and tricuspid repair products. The Settlement Agreement resulted in us recording an estimated $367.9 million pretax charge in June 2020 related to past damages. In addition, we will incur royalty expenses through May 2024 totaling an estimated $100 million. We made a one-time $100.0 million payment to Abbott in July 2020, and will make quarterly payments in future years. For further information, see Notes 3 and 9 to the "Consolidated Condensed Financial Statements."

At June 30, 2020, there had been no material changes in our significant contractual obligations and commercial commitments as disclosed in our Annual Report on Form 10-K for the year ended December 31, 2019.

Consolidated Cash Flows - For the six months ended June 30, 2020 and 2019:

Net cash flows provided by operating activities of $438.2 million for the six months ended June 30, 2020 increased $95.5 million over the same period last year due primarily to a payment of $180.0 million in 2019 for a litigation settlement, partially offset by higher working capital needs in 2020.

Net cash used in investing activities of $144.9 million for the six months ended June 30, 2020 consisted primarily of (1) capital expenditures of $190.5 million, partially offset by net proceeds from investments of $77.3 million.

Net cash used in investing activities of $137.8 million for the six months ended June 30, 2019 consisted primarily of (1) an $100.2 million net cash payment associated with the acquisition of CASMED in April 2019, (2) capital expenditures of $106.8 million, (3) a $35.0 million payment for an option to acquire a company, and (4) a $24.0 million payment to acquire certain early-stage transcatheter intellectual property and associated clinical and regulatory experience, partially offset by net proceeds from investments of $130.6 million.

Net cash used in financing activities of $562.3 million for the six months ended June 30, 2020 consisted primarily of purchases of treasury stock of $623.8 million, partially offset by proceeds from stock plans of $67.4 million.

Net cash used in financing activities of $187.0 million for the six months ended June 30, 2019 consisted primarily of purchases of treasury stock of $262.0 million, partially offset by proceeds from stock plans of $86.5 million.

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Critical Accounting Policies and Estimates

The consolidated condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States which require us to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the consolidated condensed financial statements and revenues and expenses during the periods reported. Actual results could differ from those estimates. Information with respect to our critical accounting policies and estimates which we believe could have the most significant effect on our reported results and require subjective or complex judgments by management is contained on pages 38-41 in Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations," of our Annual Report on Form 10-K for the year ended December 31, 2019. There have been no significant changes from the information discussed therein.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Interest Rate Risk, Foreign Currency Risk, Credit Risk, and Concentrations of Risk

For a complete discussion of our exposure to interest rate risk, foreign currency risk, credit risk, and concentrations of risk, refer to Item 7A "Quantitative and Qualitative Disclosures About Market Risk" on pages 42-44 of our Annual Report on Form 10-K for the year ended December 31, 2019. There have been no significant changes from the information discussed therein.

Investment Risk

We are exposed to investment risks related to changes in the underlying financial condition and credit capacity of certain of our investments. As of June 30, 2020, we had $821.9 million of investments in fixed-rate debt securities of various companies, of which $561.6 million were long-term. In addition, we had $32.8 million of investments in equity instruments of public and private companies. Should these companies experience a decline in financial performance, financial condition, or credit capacity, or fail to meet certain development milestones, including as a result of the impact of COVID-19 on their business or operations or otherwise, a decline in the investments' value may occur, resulting in unrealized or realized losses.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures. Our management, including the Chief Executive Officer and the Chief Financial Officer, performed an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended) as of June 30, 2020. Based on their evaluation, the Chief Executive Officer and Chief Financial Officer have concluded as of June 30, 2020 that our disclosure controls and procedures are designed at a reasonable assurance level and effective in providing reasonable assurance that the information we are required to disclose in the reports we file or submit under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized, and reported within the time periods specified in the Securities and Exchange Commission's rules and forms, and that such information is accumulated and communicated to our management, including the Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

Changes in Internal Control Over Financial Reporting. There have been no changes in our internal controls over financial reporting during the quarter ended June 30, 2020 that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.

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Part II. Other Information

Item 1. Legal Proceedings

Please see Note 9 to the "Consolidated Condensed Financial Statements" of this Quarterly Report on Form 10-Q regarding the settlement and dismissal of all outstanding patent litigation matters involving Abbott Laboratories and its direct and indirect subsidiaries (collectively, the “Abbott Matters”), which is incorporated by reference. A description of the Abbott Matters is included in Part II, Item 1, "Legal Proceedings," and Note 8 to the "Consolidated Condensed Financial Statements" of our Quarterly Report on Form 10-Q for our quarter ended March 31, 2020 filed with the Securities and Exchange Commission on April 28, 2020 and is incorporated herein by reference. As a result of the dismissal of the Abbott Matters, we will not make disclosures regarding these matters in our future filings with the Securities and Exchange Commission.

Item 1A. Risk Factors

A description of the risk factors associated with our business is contained in the “Risk Factors” section of our Annual Report on Form 10-K for our fiscal year ended December 31, 2019 and of our Quarterly Report on Form 10-Q for our quarter ended March 31, 2020. There have been no material changes to our Risk Factors as previously reported.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Issuer Purchases of Equity Securities



Period	Total Number of Shares (or Units) Purchased (a)	Average Price Paid per Share (or Unit) (b)		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) (c)
April 1, 2020 through April 30, 2020	170	$	186.82	—	$	625.0
May 1, 2020 through May 31, 2020	41,045	219.53		—	625.0
June 1, 2020 through June 30, 2020	—	—		—	625.0
Total	41,215	219.39		—


(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)	The three-for-one stock split distributed on May 29, 2020 excluded treasury shares. Because all treasury share purchases were transacted prior to the stock split, the average price paid per share presented in the table above is at pre-split market prices.


(c)	On May 8, 2019, the Board of Directors approved a stock repurchase program authorizing us to purchase on the open market, including pursuant to a Rule 10b5-1 plan and in privately negotiated transactions, up to $1.0 billion of our common stock. The repurchase program does not have an expiration date.

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Item 6. Exhibits

The exhibits listed in the Exhibit Index (following the signature page of this report) are filed, furnished, or incorporated by reference as part of this report on Form 10-Q.



Exhibit No.			Description
3.1			Certificate of Amendment of Amended and Restated Certificate of Incorporation (incorporated by reference to Exhibit 3.1 to Edwards Lifesciences’ Current Report on Form 8-K filed with the SEC on May 8, 2020
10.1			Edwards Lifesciences Corporation Long-Term Stock Incentive Compensation Program, as amended and restated as of May 7, 2020
10.2			Edwards Lifesciences Corporation 2020 Nonemployee Directors Stock Incentive Program, as amended and restated as of May 7, 2020 (incorporated by reference to Appendix B in Edwards Lifesciences' Definitive Proxy Statement filed March 25, 2020)
10.3			Edwards Lifesciences Corporation 2001 Employee Stock Purchase Plan for United States Employees, as amended and restated May 7, 2020
10.4			Edwards Lifesciences Corporation 2001 Employee Stock Purchase Plan for International Employees, as amended and restated May 7, 2020
31.1			Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2			Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32			Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS			XBRL Inline 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
104			Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.



		EDWARDS LIFESCIENCES CORPORATION
		(Registrant)
Date:	July 27, 2020	By:	/s/ SCOTT B. ULLEM
			Scott B. Ullem Chief Financial Officer (Principal Financial Officer)
Date:	July 27, 2020	By:	/s/ ROBERT W.A. SELLERS
			Robert W.A. Sellers Corporate Controller (Principal Accounting Officer)

Exhibit 10.1

Edwards Lifesciences Corporation

Long-Term Stock Incentive Compensation Program

(as Amended and Restated May 7, 2020)

Table of Contents

______________________________________________

Article 1. Establishment, Objectives, and Duration 1

Article 2. Definitions 1

Article 3. Administration 4

Article 4. Eligibility and Participation 4

Article 5. Shares Subject to the Program and Maximum Awards 5

Article 6. Stock Options 6

Article 7. Restricted Stock 8

Article 8. Restricted Stock Units 9

Article 9. Performance Measures 10

Article 10. Beneficiary Designation 11

Article 11. Deferrals 11

Article 12. Rights of Employees and Contractors 12

Article 13. Change in Control 12

Article 14. Amendment, Modification, and Termination 12

Article 15. Compliance with Applicable Law and Withholding 13

Article 16. Indemnification 13

Article 17. Successors 14

Article 18. Legal Construction 14

Article 19. Recoupment Policy 14

EDWARDS LIFESCIENCES CORPORATION

LONG-TERM STOCK INCENTIVE COMPENSATION PROGRAM

(Amended and Restated as of May 7, 2020)

Article 1. Establishment, Objectives, and Duration

1.1 Establishment of the Program. Edwards Lifesciences Corporation, a Delaware corporation (hereinafter referred to as the “Company”), hereby amends and restates the incentive compensation plan established April 1, 2000 and known as the “Edwards Lifesciences Corporation Long-Term Stock Incentive Compensation Program” (hereinafter, as amended and restated, referred to as the “Program”), as set forth in this document. The Program permits the grant of Nonqualified Stock Options, Incentive Stock Options, Restricted Stock and Restricted Stock Units.

The Program became effective as of April 1, 2000 (the “Effective Date”) and shall remain in effect as provided in Section 1.3 hereof.

The Program was amended and restated effective as of July 12, 2000, May 8, 2002, February 20, 2003, February 17, 2005, February 16, 2006, March 6, 2007, February 14, 2008, March 21, 2008, March 20, 2009, February 11, 2010, further amended on March 23, 2010, further amended and restated as of February 10, 2011, May 12, 2011, February 16, 2012, February 21, 2013, February 20, 2014, further amended on November 13, 2014, and further amended and restated as of February 19, 2015, February 25, 2016, February 23, 2017, and May 7, 2020.

1.2 Objectives of the Program. The objectives of the Program are to optimize the profitability and growth of the Company through long-term incentives which are consistent with the Company’s goals and which link the personal interests of Participants to those of the Company’s stockholders; to provide Participants with an incentive for excellence in individual performance; and to promote teamwork among Participants.

The Program is further intended to provide flexibility to the Company in its ability to motivate, attract, and retain the services of Participants who make significant contributions to the Company’s success and to allow Participants to share in the success of the Company.

1.3 Duration of the Program. The Program shall commence on the Effective Date, as described in Section 1.1 hereof, and shall remain in effect, subject to the right of the Board to amend or terminate the Program at any time pursuant to Article 14 hereof, until all Shares subject to it shall have been purchased or acquired according to the Program’s provisions. However, in no event may an Award be granted under the Program on or after February 25, 2026.

Article 2. Definitions

Whenever used in the Program, the following terms shall have the meanings set forth below, and when the meaning is intended, the initial letter of the word shall be capitalized:

2.1 “Award” means, individually or collectively, a grant under this Program of Nonqualified Stock Options, Incentive Stock Options, Restricted Stock or Restricted Stock Units.

2.2 “Award Agreement” means an agreement entered into by the Company and each Participant setting forth the terms and provisions applicable to Awards granted under this Program.

2.3 “Board” or “Board of Directors” means the Board of Directors of the Company.

2.4 “Change in Control” of the Company shall mean the occurrence of any one of the following events:

(a)

Any “Person”, as such term is used in Sections 13(d) and 14(d) of the Exchange Act (other than the Company, any corporation owned, directly or indirectly, by the stockholders of the Company in substantially the same proportions as their ownership of stock of the Company, and any trustee or other fiduciary holding securities under an employee benefit plan of the Company or such proportionately owned corporation), is or becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing thirty percent (30%) or more of the combined voting power of the Company’s then outstanding securities; or

(b)

During any period of not more than twenty-four (24) months, individuals who at the beginning of such period constitute the Board of Directors of the Company, and any new director (other than a director designated by a Person who has entered into an agreement with the Company to effect a transaction described in Sections 2.4(a), 2.4(c), or 2.4(d) of this Section 2.4) whose election by the Board or nomination for election by the Company’s stockholders was approved by a vote of at least two-thirds ( ²/₃) of the directors then still in office who either were directors at the beginning of the period or whose election or nomination for election was previously so approved, cease for any reason to constitute at least a majority thereof; or

(c)

The consummation of a merger or consolidation of the Company with any other entity, other than: (i) a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) more than sixty percent (60%) of the combined voting power of the voting securities of the Company or such surviving entity outstanding immediately after such merger or consolidation; or (ii) a merger or consolidation effected to implement a recapitalization of the Company (or similar transaction) in which no Person acquires more than thirty percent (30%) of the combined voting power of the Company’s then outstanding securities; or


(d)	The Company’s stockholders approve a plan of complete liquidation or dissolution of the Company, or an agreement for the sale or disposition by the Company of all or substantially all of the Company’s assets (or any transaction having a similar effect).

2.5 “Code” means the Internal Revenue Code of 1986, as amended from time to time.

2.6 “Committee” means the Compensation and Governance Committee or any other committee appointed by the Board to administer Awards to Participants, as specified in Article 3 herein.

2.7 “Company” means Edwards Lifesciences Corporation, a Delaware corporation, and any successor thereto as provided in Article 16 herein.

2.8 “Contractor” means an individual providing services to the Company or a Subsidiary who is not an Employee or member of the Board, as well as an individual who is a member of the board of directors of a Subsidiary and who is not an Employee or member of the Board, and who does not participate in the Edwards Lifesciences Corporation Nonemployee Directors and Consultants Stock Incentive Program.

2.9 “Covered Employee” means a Participant who is one of the group of “covered employees,” as defined in the regulations promulgated under Code Section 162(m), or any successor statute.

2.10 “Disability” shall have the meaning ascribed to such term in the Participant’s governing long-term disability plan, or if no such plan exists, at the discretion of the Board.

2.11 “Effective Date” shall have the meaning ascribed to such term in Section 1.1 hereof.

2.12 “Employee” means any employee of the Company or of a Subsidiary of the Company. Directors who are employed by the Company or by a Subsidiary shall be considered Employees under this Program.

2.13 “Exchange Act” means the Securities Exchange Act of 1934, as amended from time to time, or any successor act thereto.

2.14 “Fair Market Value” means, the closing price of a share of Common Stock as reported in the New York Stock Exchange Composite Transactions on the date as of which such value is being determined or, if there shall be no reported transactions for such date, on the next preceding date for which transactions were reported.

2.15 “Incentive Stock Option” or “ISO” means an option to purchase Shares granted under Article 6 herein and which is designated as an Incentive Stock Option and which is intended to meet the requirements of Code Section 422.

2.16 “Insider” shall mean an individual who is, on the relevant date, an officer of the Company, director of the Company, or beneficial owner of more than ten percent (10%) of any class of the Company’s equity securities that is registered pursuant to Section 12 of the Exchange Act, all as defined under Section 16 of the Exchange Act.

2.17 “Nonqualified Stock Option” or “NQSO” means an option to purchase Shares granted under Article 6 herein and which is not intended to meet the requirements of Code Section 422.

2.18 “Option” means an Incentive Stock Option or a Nonqualified Stock Option, as described in Article 6 herein.

2.19 “Option Price” means the price at which a Share may be purchased by a Participant pursuant to an Option.

2.20 “Participant” means an Employee or Contractor who has been selected to receive an Award or who has outstanding an Award granted under the Program.

2.21 “Performance‑Based Exception” means the performance‑based exception from the tax deductibility limitations of Code Section 162(m) applicable to compensation payable to Covered Employees.

2.22 “Period of Restriction” means the period during which the transfer of Shares of Restricted Stock is limited in some way (based on the passage of time, the achievement of performance goals, or upon the occurrence of other events as determined by the Committee, in its discretion), and the Shares are subject to a substantial risk of forfeiture, as provided in Article 7 herein.

2.23 “Restricted Stock” means an Award granted to a Participant pursuant to Article 7 herein.

2.24 “Restricted Stock Units” means an Award granted to a Participant pursuant to Article 8 herein.

2.25 “Retirement” means, unless otherwise defined in the applicable Award Agreement, any termination of an Employee’s employment or a Contractor’s service after age fifty-five (55) other than due to death, Disability or, with respect to Awards made after May 8, 2002, Cause, provided that such Employee or Contractor has at least a combined ten (10) years of service with the Company and Baxter International Inc. A Participant’s number of years of service with the Company and Baxter International Inc. shall be determined by calculating the number of complete twelve‑month (12) periods of employment from the Participant’s original date of hire as an Employee or Contractor with the Company or Baxter International Inc. to the Participant’s date of employment or service termination. Employment or service with Baxter International Inc. shall be included for purposes of determining qualification for Retirement only to the extent that such employment or service immediately, and without any break, precedes employment or service with the Company. For purposes of this definition, unless defined otherwise in the applicable Award Agreement, “Cause” means: (a) a Participant’s willful and continued failure to substantially perform his duties with the Company or a Subsidiary (other than any such failure resulting from Disability); (b) a Participant’s willfully engaging in conduct that is demonstrably and materially injurious to the Company or a Subsidiary, monetarily or otherwise; or (c) a Participant’s having been convicted of a felony. For the purpose of determining “Cause,” no act, or failure to act, on a Participant’s part shall be deemed “willful” unless done, or omitted to be done, by the Participant not in good faith and without reasonable belief that the action or omission was in the best interests of the Company or a Subsidiary.

2.26 “Shares” means the shares of common stock of the Company.

2.27 “Subsidiary” means any business, whether or not incorporated, in which the Company beneficially owns, directly or indirectly through another entity or entities, securities or interests representing more than fifty percent (50%) of the combined voting power of the voting securities or voting interests of such business.

Article 3. Administration

3.1 General. The Program shall be administered by the Compensation and Governance Committee of the Board, or by any other Committee appointed by the Board, which shall consist of two (2) or more nonemployee directors within the meaning of the rules promulgated by the Securities and Exchange Commission under Section 16 of the Exchange Act who also qualify as outside directors within the meaning of Code Section 162(m) and the related regulations under the Code, in the judgement of and except as otherwise determined by the Board. Any Committee administering the Program shall be

comprised entirely of directors. The members of the Committee shall be appointed from time to time by, and shall serve at the sole discretion of, the Board.

The Committee shall have the authority to delegate administrative duties to officers, Employees, or directors of the Company; provided, however, that the Committee shall not be able to delegate its authority with respect to: (i) granting Awards to Insiders; (ii) granting Awards that are intended to qualify for the Performance‑Based Exception; and (iii) certifying that any performance goals and other material terms attributable to Awards that are intended to qualify for the Performance‑Based Exception have been satisfied.

3.2 Authority of the Committee. Except as limited by law or by the Certificate of Incorporation or Bylaws of the Company, and subject to the provisions of the Program, the Committee shall have the authority to: (a) interpret the provisions of the Program, and prescribe, amend, and rescind rules and procedures relating to the Program; (b) grant Awards under the Program, in such forms and amounts and subject to such terms and conditions as it deems appropriate, including, without limitation, Awards which are made in combination with or in tandem with other Awards (whether or not contemporaneously granted) or compensation or in lieu of current or deferred compensation; (c) subject to Article 14, modify the terms of, cancel and reissue, or repurchase outstanding Awards; (d) prescribe the form of agreement, certificate, or other instrument evidencing any Award under the Program; (e) correct any defect or omission and reconcile any inconsistency in the Program or in any Award hereunder; (f) design Awards to satisfy requirements to make such Awards tax-advantaged to Participants in any jurisdiction or for any other reason that the Company desires; and (g) make all other determinations and take all other actions as it deems necessary or desirable for the administration of the Program; provided, however, that no outstanding Option will be (i) amended to lower the exercise price, (ii) canceled, exchanged or surrendered in exchange for cash or other awards for the purpose of repricing the Option, or (iii) canceled, exchanged or surrendered for the purpose of reissuing such Option to a Participant at a lower exercise price (other than, in each case, pursuant to Section 5.4) without the approval of the Company’s stockholders. The determination of the Committee on matters within its authority shall be conclusive and binding on the Company and all other persons. The Committee shall comply with all applicable laws in administering the Plan. As permitted by law (and subject to Section 3.1 herein), the Committee may delegate its authority as identified herein.

3.3 Decisions Binding. All determinations and decisions made by the Committee pursuant to the provisions of the Program and all related orders and resolutions of the Board shall be final, conclusive, and binding on all persons, including the Company, its stockholders, directors, Employees, Contractors, Participants, and their estates and beneficiaries.

Article 4. Eligibility and Participation

4.1 Eligibility. Persons eligible to participate in this Program shall include all Employees and Contractors. Members of the Board who are not Employees of the Company shall not be eligible to participate in the Program.

4.2 Actual Participation. Subject to the provisions of the Program, the Committee may, from time to time, select from all eligible Employees and Contractors those to whom Awards shall be granted and shall determine the nature and amount of each Award.

Article 5. Shares Subject to the Program and Maximum Awards; Minimum Vesting

5.1 Number of Shares Available for Grants. Subject to adjustment as provided in Section 5.4 herein, the number of Shares hereby reserved for delivery to Participants under the Program shall be three hundred twenty seven million six hundred thousand (327,600,000) Shares. The maximum number of Shares that may be delivered pursuant to Options qualified as ISOs granted under the Program is three hundred twenty seven million six hundred thousand (327,600,000) Shares. No more than thirty-three million six hundred thousand (33,600,000) Shares reserved for issuance under the Program may be granted in the form of Shares of Restricted Stock or Restricted Stock Units. The Committee shall determine the appropriate methodology for calculating the number of Shares issued pursuant to the Program. The following rules shall apply to grants of such Awards under the Program:


(a)	Options: The maximum aggregate number of Shares that may be granted in the form of Options in any one (1) fiscal year to any one (1) Participant shall be twelve million (12,000,000).


(b)	Restricted Stock and Restricted Stock Units: The maximum aggregate number of Shares that may be granted in the form of Restricted Stock and Restricted Stock Units in any one (1) fiscal year to any one (1) Participant shall be two million four hundred thousand (2,400,000).

5.2 Type of Shares. Shares issued under the Program in connection with Stock Options or Restricted Stock Units may be authorized and unissued Shares or issued Shares held as treasury Shares. Shares issued under the Program in connection with Restricted Stock shall be issued Shares held as treasury Shares; provided, however, that authorized and unissued Shares may be issued in connection with Restricted Stock to the extent that the Committee determines that past services of the Participant constitute adequate consideration for at least the par value thereof.

5.3 Reuse of Shares.


(a)	General. In the event of the expiration or termination (by reason of forfeiture, expiration, cancellation, surrender, failure to vest or otherwise) of any Award under the Program, that number of Shares that was subject to the Award but not delivered shall again be available for subsequent Awards under the Program.


(b)	Restricted Stock and Restricted Stock Units. In the event that Shares are delivered under the Program as Restricted Stock and are thereafter forfeited or reacquired by the Company pursuant to rights reserved upon the grant thereof, such forfeited or reacquired Shares shall again be available for subsequent Awards under the Program.

(c)

Limitations. Notwithstanding the provisions of Sections 5.3(a) above, the following Shares shall not be available for reissuance under the Program: (i) Shares which are exchanged by a Participant or withheld by the Company or one of its Subsidiaries to satisfy the tax withholding obligations related to any Option; and (ii) Shares which are exchanged by a Participant or withheld by the Company as full or partial payment of the Option Price upon the exercise of an Option. Shares that are exchanged by a Participant or withheld by the Company as full or partial payment in connection with any Award under the Program that is a Restricted Stock or Restricted Stock Unit Award granted under the Program, as well as any Shares exchanged by a Participant or withheld by the Company or one of its Subsidiaries to satisfy the tax withholding obligations related to any Restricted Stock or Restricted Stock Unit Award granted under the Program, shall be available for subsequent Awards under the Program.

5.4 Adjustments in Authorized Shares. In the event of any change in corporate capitalization, such as a stock split, or a corporate transaction, such as any merger, consolidation, separation, including a spin-off, or other distribution of stock or property of the Company, any reorganization (whether or not such reorganization comes within the definition of such term in Code Section 368), or any partial or complete liquidation of the Company, such adjustment shall be made in the number and class of Shares which may be delivered under Section 5.1, in the number and class of and/or price of Shares subject to outstanding Awards granted under the Program, and in the Award limits set forth in Section 5.1, as shall be determined to be appropriate and equitable by the Committee, in its sole discretion, to prevent dilution or enlargement of rights; provided, however, that the number of Shares subject to any Award shall always be a whole number. In a stock-for-stock acquisition of the Company, the Committee may, in its sole discretion, substitute securities of another issuer for any Shares subject to outstanding Awards.

5.5 International Awards. One or more Awards may be granted to Participants who provide services to the Company or a Subsidiary outside of the United States. Any Awards granted to such persons may be granted pursuant to the terms and conditions of any applicable sub-plans, if any, approved by the Committee.

5.6 Minimum Vesting Requirements. Except for any accelerated vesting required or permitted pursuant to Article 13 and except as otherwise provided in this Section 5.6, and subject to such additional vesting requirements or conditions as the Committee may establish with respect to the Award, each Award granted under the Program shall be subject to the minimum vesting requirements set forth in the applicable sections of the Program; provided that the Committee may accelerate or provide in the applicable Award Agreement for the accelerated vesting of any Award in connection with a Change in Control, the termination of the Participant’s employment with the Company or service to the Company as a Contractor (including a termination due to the Participant’s death, Disability or Retirement, but not including a termination for cause), or as consideration or partial consideration for a release by the Participant of pending or threatened claims against the Company or a Subsidiary or any of their respective officers, directors or other affiliates (regardless of whether the release is given in connection with a termination of employment or service for cause or other circumstances). The Committee may,

however, accelerate or provide in the applicable Award Agreement for the accelerated vesting of any Award in circumstances not contemplated by the preceding sentence, and/or provide for a vesting schedule that is shorter than the minimum schedule set forth in the applicable sections of the Program (or provide for an Award to be fully vested at grant notwithstanding the other vesting rules of the Program), in such circumstances as the Committee may deem appropriate; provided, however, that the Shares subject to the portion of any such Awards that vest earlier than the minimum vesting dates that would be applicable pursuant to the minimum vesting requirements of the applicable sections of the Program (or, as to any accelerated vesting, provides for accelerated vesting other than in the circumstances contemplated by the preceding sentence) shall not, in the aggregate, exceed ten percent (10%) of the total number of Shares available for award grant purposes under the Program. For purposes of clarity, vesting may occur in one or more installments ratably over any applicable minimum vesting period set forth in other sections of the Program.

Article 6. Stock Options

6.1 Grant of Options. Subject to the terms and provisions of the Program, Options may be granted to Participants in such number, and upon such terms, and at any time and from time to time as shall be determined by the Committee.

6.2 Award Agreement. Each Option grant shall be evidenced by an Award Agreement that shall specify the Option Price, the duration of the Option, the number of Shares to which the Option pertains, and such other provisions as the Committee shall determine. The Award Agreement also shall specify whether the Option is intended to be an ISO or an NQSO.

6.3 Option Price. The Option Price for each grant of an Option under this Program shall be at least equal to one hundred percent (100%) of the Fair Market Value of a Share on the date the Option is granted.

6.4 Duration of Options. Each Option granted to a Participant on or after February 16, 2006 shall expire at such time, not later than the seventh (7th) anniversary date of its grant, as the Committee shall determine.

6.5 Exercise of Options. Options granted under this Article 6 shall be exercisable at such times and be subject to such restrictions and conditions as the Committee shall in each instance approve, which need not be the same for each grant or for each Participant; provided, however, that, subject to Section 5.6 herein, each Option shall become exercisable over a minimum period of three (3) years measured from the date of grant of the option.

6.6 Payment. Options granted under this Article 6 shall be exercised by the delivery of a written notice (or such other form of notice as the Company may specify) of exercise to the Company, setting forth the number of Shares with respect to which the Option is to be exercised, accompanied by full payment for the Shares (or a satisfactory “cashless exercise” notice).

The Option Price upon exercise of any Option shall be payable to the Company in full either: (a) in cash or its equivalent; (b) by tendering previously acquired Shares (by either actual delivery or attestation) having an aggregate Fair Market Value at the time of exercise equal to the total Option Price; (c) by a cashless exercise, as permitted under Federal Reserve Board’s Regulation T, subject to applicable securities law restrictions and such procedures and limitations as the Company may specify from time to time; (d) by any other means which the Committee determines to be consistent with the Program’s purpose and applicable law; or (e) by a combination of two or more of (a) through (d).

Subject to any governing rules or regulations, including cashless exercise procedures, as soon as practicable after receipt of a notification of exercise and full payment (or a satisfactory “cashless exercise” notice), the Company shall cause to be issued and delivered to the Participant, in certificate form or otherwise, evidence of the Shares purchased under the Option(s).

6.7 Restrictions on Share Transferability. The Committee may impose such restrictions on any Shares acquired pursuant to the exercise of an Option granted under this Article 6 as it may deem advisable, including, without limitation, restrictions under applicable federal securities laws, under the requirements of any stock exchange or market upon which such Shares are then listed and/or traded, and under any blue sky or state securities laws applicable to such Shares.

6.8 Termination of Employment or Service. Each Participant’s Option Award Agreement shall set forth the extent to which the Participant shall have the right to exercise the Option following termination of the Participant’s employment with the Company or service to the Company as a Contractor. Such provisions shall be determined in the sole discretion of

the Committee, shall be included in the Award Agreement entered into with each Participant, need not be uniform among all Options issued pursuant to this Article 6, and may reflect distinctions based on the reasons for termination.

6.9 Nontransferability of Options.


(a)	Incentive Stock Options. No ISO granted under the Program may be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated, other than by will or by the laws of descent and distribution. Further, all ISOs granted to a Participant under the Program shall be exercisable during his or her lifetime only by such Participant.

(b)

Nonqualified Stock Options. Except as otherwise provided in a Participant’s Award Agreement, no NQSO granted under this Article 6 may be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated, other than by will or by the laws of descent and distribution. Further, except as otherwise provided in a Participant’s Award Agreement, all NQSOs granted to a Participant under this Article 6 shall be exercisable during his or her lifetime only by such Participant.

6.10 Substitution of Cash. Unless otherwise provided in a Participant’s Award Agreement, and notwithstanding any provision in the Program to the contrary (including but not limited to Section 14.2), in the event of a Change in Control in which the Company’s stockholders holding Shares receive consideration other than shares of common stock that are registered under Section 12 of the Exchange Act, the Committee shall have the authority to require that any outstanding Option be surrendered to the Company by a Participant for cancellation by the Company, with the Participant receiving in exchange a cash payment from the Company within ten (10) days of the Change in Control. Such cash payment shall be equal to the number of Shares under Option, multiplied by the excess, if any the Fair Market Value of a Share on the date the Change in Control occurs, over the Option Price.

6.11 Additional Rules Applicable to Incentive Stock Options. There shall be imposed in any Award Agreement relating to ISOs such other terms and conditions as from time to time are required in order that the Option be an “incentive stock option” as that term is defined in Code Section 422. No ISO may be granted to any person who, at the time the Option is granted, owns (or is deemed to own under Code Section 424(d)) outstanding Shares possessing more than 10% of the total combined voting power of all classes of stock of the Company, unless the exercise price of such Option is at least 110% of the Fair Market Value of the stock subject to the Option and such Option by its terms is not exercisable after the expiration of five years from the date such Option is granted.

Article 7. Restricted Stock

7.1 Grant of Restricted Stock. Subject to the terms and provisions of the Program, the Committee, at any time and from time to time, may grant Shares of Restricted Stock to Participants in such amounts as the Committee shall determine.

7.2 Restricted Stock Agreement. Each Restricted Stock grant shall be evidenced by a Restricted Stock Award Agreement that shall specify the Period(s) of Restriction, the number of Shares of Restricted Stock granted, and such other provisions as the Committee shall determine. Subject to Section 5.6 herein, the Period of Restriction shall be a minimum of three (3) years measured from the grant date of the Restricted Stock

7.3 Restriction on Transferability. Except as provided in this Article 7, the Shares of Restricted Stock granted herein may not be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated until the end of the applicable Period of Restriction established by the Committee and specified in the Restricted Stock Award Agreement, or upon earlier satisfaction of any other conditions, as specified by the Committee in its sole discretion and set forth in the Restricted Stock Award Agreement. All rights with respect to the Restricted Stock granted to a Participant under the Program shall be available during his or her lifetime only to such Participant.

7.4 Other Restrictions. Subject to Article 9 herein, the Committee shall impose such other conditions and/or restrictions on any Shares of Restricted Stock granted pursuant to the Program as it may deem advisable including, without limitation, any or all of the following:


(a)	A required period of employment or service as a Contractor with the Company, as determined by the Committee, prior to the vesting of Shares of Restricted Stock.


(b)	A requirement that Participants forfeit (or in the case of Shares sold to a Participant, resell to the Company at his or her cost) all or a part of Shares of Restricted Stock in the event of termination of his or her employment or service as a Contractor during the Period of Restriction.


(c)	A prohibition against employment of Participants holding Shares of Restricted Stock by any competitor of the Company, against such Participants’ dissemination of any secret or confidential information belonging to the Company, or the solicitation by Participants of the Company’s employees for employment by another entity.

Shares of Restricted Stock awarded pursuant to the Program shall be registered in the name of the Participant and, if such Shares are certificated, in the sole discretion of the Committee, may be deposited in a bank designated by the Committee or with the Company. The Committee may require a stock power endorsed in blank with respect to Shares of Restricted Stock whether or not certificated.

Except as otherwise provided in this Article 7, Shares of Restricted Stock covered by each Restricted Stock grant made under the Program shall become freely transferable (subject to any restrictions under any applicable securities law) by the Participant after the last day of the applicable Period of Restriction.

7.5 Voting Rights. Unless the Committee determines otherwise, Participants holding Shares of Restricted Stock issued hereunder shall be entitled to exercise full voting rights with respect to those Shares during the Period of Restriction.

7.6 Dividends and Other Distributions. Unless the Committee determines otherwise, during the Period of Restriction, Participants holding Shares of Restricted Stock issued hereunder shall be entitled to regular cash dividends paid with respect to such Shares. The Committee may apply any restrictions to the dividends that the Committee deems appropriate. Without limiting the generality of the preceding sentence, if the grant or vesting of Shares of Restricted Stock is designed to comply with the requirements of the Performance‑Based Exception, the Committee may apply any restrictions it deems appropriate to the payment of dividends declared with respect to such Shares of Restricted Stock, such that the dividends and/or the Shares of Restricted Stock maintain eligibility for the Performance‑Based Exception.

7.7 Termination of Employment or Service. Each Restricted Stock Award Agreement shall set forth the extent to which the Participant shall have the right to vest in previously unvested Shares of Restricted Stock following termination of the Participant’s employment with the Company or service to the Company as a Contractor. Such provisions shall be determined in the sole discretion of the Committee, shall be included in the Award Agreement entered into with each Participant, need not be uniform among all Shares of Restricted Stock issued pursuant to the Program, and may reflect distinctions based on the reasons for termination.

Article 8. Restricted Stock Units

8.1. Restricted Stock Units Awards. Subject to the terms and conditions of the Program, the Committee, at any time and from time to time, may issue Restricted Stock Units which entitle the Participant to receive the Shares underlying those units following the lapse of specified restrictions (whether based on the achievement of designated performance goals or the satisfaction of specified services or upon the expiration of a designated time period following the vesting of the units).

8.2. Restricted Stock Units Award Agreement. Each Restricted Stock Units award shall be evidenced by a Restricted Stock Units Award Agreement that shall specify the vesting restrictions, the number of Shares subject to the Restricted Stock Units award, and such other provisions as the Committee shall determine. Subject to Section 5.6 herein, Restricted Stock Units shall vest over a minimum period of three (3) years measured from the grant date of the award.

8.3. Restrictions. The Committee shall impose such other conditions and/or restrictions on the issuance of any Shares under the Restricted Stock Units granted pursuant to the Program as it may deem advisable including, without limitation, any or all of the following:


(a)	A required period of service with the Company, as determined by the Committee, prior to the issuance of Shares under the Restricted Stock Units award.


(b)	A requirement that the Restricted Stock Units award be forfeited in whole or in part in the event of termination of the Participant’s employment or service as a Contractor during the vesting period.


(c)	A prohibition against employment of Participants holding Restricted Stock Units by any competitor of the Company, against such Participants’ dissemination of any secret or confidential information belonging to the Company, or the solicitation by Participants of the Company’s employees for employment by another entity.

Except as otherwise provided in this Article 8, Shares subject to Restricted Stock Units under the Program shall be freely transferable (subject to any restrictions under applicable securities law) by the Participant after receipt of such shares.

8.4. Stockholder Rights. Participants holding Restricted Stock Units issued hereunder shall not have any rights with respect to Shares subject to the award until the award vests and the Shares are issued hereunder. However, dividend‑equivalent units may be paid or credited, either in cash or in actual or phantom Shares, on outstanding Restricted Stock Units awards, subject to such terms and conditions as the Committee may deem appropriate.

8.5. Termination of Employment or Service. Each Restricted Stock Units Award Agreement shall set forth the extent to which the Participant shall have the right to vest in previously unvested Shares subject to the Restricted Stock Units award following termination of the Participant’s employment with the Company or service to the Company as a Contractor. Such provisions shall be determined in the sole discretion of the Committee, shall be included in the Award Agreement entered into with each Participant, need not be uniform among all Restricted Stock Unit awards issued pursuant to the Program, and may reflect distinctions based on the reasons for termination.

Article 9. Performance-Based Awards

9.1 Code Section 162(m) Performance-Based Awards. Without limiting the generality of the foregoing, any of the types of Awards listed in Articles 6 through 8 above may be, and Options granted to officers and employees (“Qualifying Options”) typically will be, granted as Awards intended to satisfy the Performance-Based Exception (“Performance-Based Awards”). The grant, vesting, exercisability or payment of Performance-Based Awards may depend (or, in the case of Qualifying Options, may also depend) on the degree of achievement of one or more performance goals relative to a pre-established targeted level or levels using one or more of the Performance Measures set forth below (on an absolute or relative (including, without limitation, relative to the performance of other companies or upon comparisons of any of the indicators of performance relative to other companies) basis) for the Company on a consolidated basis or for one or more of the Subsidiaries, segments, divisions or business units, or any combination of the foregoing. Any Qualifying Option shall be subject only to the requirements of Section 9.2 and 9.4 in order for such Award to satisfy the requirements for the Performance-Based Exception. Any other Performance-Based Award shall be subject to all of the following provisions of this Article 9.

9.2 Class; Administrator. The eligible class of persons for Performance-Based Awards under this Article 9 shall be officers and employees of the Company or one of its Subsidiaries.

9.3 Performance Measures. The specific performance goals for Performance-Based Awards (other than Qualifying Options) shall be, on an absolute or relative basis, established based on one or more of the following performance measures (“Performance Measures”) as selected by the Committee in its sole discretion:


(i)	return measures (including, but not limited to, return on assets, capital, investment, equity or sales);


(ii)	earnings per share;


(iii)	net income (before or after taxes) or operating income;


(iv)	earnings before interest, taxes, depreciation and amortization or operating income before depreciation and amortization;


(v)	sales or revenue targets;


(vi)	market to book value ratio;


(vii)	cash flow or free cash flow (cash flow from operations less capital expenditures);


(viii)	market share;


(ix)	cost reduction goals;


(x)	budget comparisons;


(xi)	implementation, completion or progress of projects, processes, products or product‑lines strategic or critical to the Company’s business operations;


(xii)	measures of customer satisfaction;


(xiii)	share price (including, but not limited to, growth measures and total shareholder return);


(xiv)	working capital;


(xv)	economic value added;


(xvi)	percentage of sales generated by new products;


(xvii)	progress of research and development projects or milestones;


(xviii)	growth in sales of products or product‑lines;


(xix)	any combination of, or a specified increase in, any of the foregoing; and


(xx)	the formation of joint ventures, research and development collaborations, marketing or customer service collaborations, or the completion of other corporate transactions intended to enhance the Company’s revenue or profitability or expand the Company’s customer base.

To qualify Awards for the Performance-Based Exception, the applicable Performance Measures (or Performance Measure, as the case may be) and specific performance goal or goals (“targets”) must be established and approved by the Committee during the first 90 days of the performance period (and, in the case of performance periods of less than one year, in no event after 25% or more of the performance period has elapsed) and while performance relating to such target(s) remains substantially uncertain within the meaning of Code Section 162(m). The Committee may provide, at the time it establishes the applicable Performance Measures, for the Performance Measures (or performance against the Performance Measures, as the case may be) to be adjusted to mitigate the unbudgeted impact of material, unusual or nonrecurring gains and losses, accounting changes or other events specified by the Committee. The applicable performance measurement period may not be less than three months nor more than 10 years.

9.4 Maximum Performance-Based Award. Grants of Qualifying Options to any one Participant in any one fiscal year shall be subject to the limit set forth in Section 5.1(a). The maximum number of Shares which may be subject to Performance-Based Awards that are granted to any one Participant in any one fiscal year shall be subject to the limit set forth in Section 5.1(b). Awards that are cancelled during the year shall be counted against these limits to the extent required by Code Section 162(m).

9.5 Certification of Payment; Reservation of Discretion. Before any Performance-Based Award under this Article 9 (other than Qualifying Options) is paid and to the extent required to qualify the Award for the Performance-Based Exception, the Committee must certify in writing that the performance target(s) and any other material terms of the Performance-Based Award were in fact timely satisfied. The Committee will have the discretion to determine the restrictions or other limitations of the individual Awards granted under this Article 9 including the authority to reduce Awards, payouts or vesting or to pay no Awards, in its sole discretion, if the Committee preserves such authority at the time of grant by language to this effect in its authorizing resolutions or otherwise. In the event that applicable tax and/or securities laws change to permit Committee discretion to alter the governing performance measures without obtaining stockholder approval of such changes, the Committee shall have sole discretion to make such changes without obtaining stockholder approval. In addition, in the event that the Committee determines that it is advisable to grant Awards that shall not qualify for the Performance‑Based Exception, the Committee may make such grants without satisfying the requirements of Code Section 162(m).

Article 10. Beneficiary Designation

Each Participant under the Program may, from time to time, name any beneficiary or beneficiaries (who may be named contingently or successively) to whom any benefit under the Program is to be paid in case of his or her death before

he or she receives any or all of such benefit. Each such designation shall revoke all prior designations by the same Participant, shall be in a form prescribed by the Company, and will be effective only when filed by the Participant in writing with the Company during the Participant’s lifetime. In the absence of any such designation, benefits remaining unpaid at the Participant’s death shall be paid to the Participant’s estate.

Article 11. Deferrals

The Committee may permit or require a Participant to defer such Participant’s receipt of the payment of cash or the delivery of Shares that would otherwise be due to such Participant by virtue of the exercise of an Option or the lapse or waiver of restrictions with respect to Restricted Stock or Restricted Stock Units. If any such deferral election is required or permitted, the Committee shall, in its sole discretion, establish rules and procedures for such payment deferrals which shall be consistent with the requirements of Code Section 409A and the Treasury regulations and rulings promulgated thereunder.

Article 12. Rights of Employees and Contractors

12.1 Employment. Nothing in the Program or any Award Agreement shall interfere with or limit in any way the right of the Company or a Subsidiary to terminate at any time any Participant’s employment or service to the Company or a Subsidiary as a Contractor, nor confer upon any Participant any right to continue in the employ of the Company or a Subsidiary or to provide services to the Company or a Subsidiary as a Contractor.

12.2 Participation. No Employee or Contractor shall have the right to be selected to receive an Award under this Program, or, having been so selected, to be selected to receive a future Award.

Article 13. Change in Control

The Board or the Committee may provide in connection with any Change in Control that upon (or, as may be necessary to give effect to the assumption or acceleration and termination, as the case may be, immediately prior to) the occurrence of a Change in Control as to any Award then outstanding that (1) such Award will be assumed by a successor or surviving entity, or a parent thereof, with appropriate adjustments to the Award pursuant to Section 5.4, or (2) such Award will terminate (and not be assumed by a successor or surviving entity, or a parent thereof). In the event an Award is to be so assumed in connection to a Change in Control, then the provisions of the Award Agreement for such Award will apply. In the event an Award is to be so terminated in connection with a Change in Control then, unless otherwise specifically prohibited under applicable laws or by the rules and regulations of any governing governmental agencies or national securities exchanges and before giving effect to such termination:

(a) If the Award is an Option that is not subject to performance-based vesting conditions, it shall become immediately exercisable;

(b) If the Award is Restricted Stock or Restricted Stock Units that are not subject to performance‑based vesting conditions, any vesting restrictions imposed on the Award and underlying Shares shall lapse and Restricted Stock Units shall become payable;

(c) If the Award is subject to performance‑based vesting conditions, the Award will vest and become exercisable or payable (as the case may be) on a pro rata basis based upon an assumed achievement of all relevant targeted performance goals and upon the length of time within the Performance Period(s) which has elapsed prior to the Change in Control.

The Board or the Committee may supplement or expressly supersede the provisions of this Article 13 as to an Award in the applicable Award Agreement. The provisions of this Article 13, as in effect prior to February 19, 2015, continue to be effective as to Awards granted prior to that date.

Article 14. Amendment, Modification, and Termination

14.1 Amendment, Modification, and Termination. Subject to the terms of the Program, including Section 14.2, the Board may at any time and from time to time, alter, amend, suspend or terminate the Program in whole or in part. However, stockholder approval shall be required for any amendment only to the extent required by applicable law.

14.2 Awards Previously Granted. Notwithstanding any provision of the Program or of any Award Agreement to the contrary (but subject to Section 6.10 hereof), no termination, amendment, or modification of the Program or amendment of an Award previously granted under the Program shall adversely affect in any material way any Award previously granted under the Program, without the express consent of the Participant holding such Award.

Article 15. Compliance with Applicable Law and Withholding

15.1 General. Notwithstanding anything to the contrary in the Program or any Award Agreement, the following shall apply:


(a)	The Company shall have no obligation to issue any Shares under the Program if such issuance would violate any applicable law or any applicable regulation or requirement of any securities exchange or similar entity.


(b)	Prior to the issuance of any Shares under the Program, the Company may require a written statement that the recipient is acquiring the Shares for investment and not for the purpose or with the intention of distributing the Shares and that the recipient will not dispose of them in violation of the registration requirements of the Securities Act of 1933.


(c)	With respect to any person who is subject to Section 16(a) of the Exchange Act, the Committee may, at any time, add such conditions and limitations to any incentive or payment under the Program or implement procedures for the administration of the Program which it deems necessary or desirable to comply with the requirements of Rule 16b-3 of the Exchange Act.

(d)

If, at any time, the Company determines that the listing, registration, or qualification (or any updating of any such document) of any Award, or the Shares issuable pursuant thereto, is necessary on any securities exchange or under any federal or state securities or blue sky law, or that the consent or approval of any governmental regulatory body is necessary or desirable as a condition of, or in connection with, any Award, the issuance of Shares pursuant to any Award, or the removal of any restrictions imposed on Shares subject to an Award, such Award shall not be granted and the Shares shall not be issued or such restrictions shall not be removed, as the case may be, in whole or in part, unless such listing, registration, qualification, consent, or approval shall have been effected or obtained free of any conditions not acceptable to the Company or the Committee otherwise provides.

15.2 Securities Law Compliance. With respect to Insiders, transactions under this Program are intended to comply with all applicable conditions of Rule 16b-3 or its successors under the 1934 Act.

15.3 Tax Withholding. The Company shall have the power and the right to deduct or withhold, or require a Participant to remit to the Company, an amount sufficient to satisfy federal, state, and local taxes, domestic or foreign, required by law or regulation to be withheld with respect to any taxable event arising as a result of this Program.

15.4 Share Withholding. Awards payable in Shares may provide that with respect to withholding required upon any taxable event arising thereunder, Participants may elect to satisfy the withholding requirement, in whole or in part, by having the Company withhold Shares to satisfy their withholding tax obligations; provided that, unless otherwise provided by the Committee, Participants may only elect to have Shares withheld having a Fair Market Value on the date the tax is to be determined equal to or less than the minimum withholding tax which could be imposed on the transaction. Unless otherwise provided by the Committee, all elections shall be irrevocable, made in writing, signed by the Participant, and shall be subject to any restrictions or limitations, including prior Committee approval, that the Committee, in its sole discretion, deems appropriate.

Article 16. Indemnification

Each person who is or shall have been a member of the Committee, or of the Board, shall be indemnified and held harmless by the Company against and from any loss, cost, liability, or expense that may be imposed upon or reasonably incurred by him or her in connection with or resulting from any claim, action, suit, or proceeding to which he or she may be a party or in which he or she may be involved by reason of any action taken or failure to act under the Program and against and from any and all amounts paid by him or her in settlement thereof, with the Company’s approval, or paid by him or her in satisfaction of any judgment in any such action, suit, or proceeding against him or her, provided he or she shall give the Company an opportunity, at its own expense, to handle and defend the same before he or she undertakes to handle and defend it on his or her own behalf. The foregoing right of indemnification shall not be exclusive of any other rights of indemnification to which such persons may be entitled under the Company’s Articles of Incorporation or Bylaws, as a matter of law, or otherwise, or any power that the Company may have to indemnify them or hold them harmless.

Article 17. Successors

All obligations of the Company under the Program with respect to Awards granted hereunder shall, to the extent legally permissible, be binding on any successor to the Company, whether the existence of such successor is the result of a direct or indirect purchase, merger, consolidation, or otherwise, of all or substantially all of the business and/or assets of the Company.

Article 18. Legal Construction

18.1 Gender and Number. Except where otherwise indicated by the context, any masculine term used herein also shall include the feminine; the plural shall include the singular and the singular shall include the plural.

18.2 Severability. In the event any provision of the Program shall be held illegal or invalid for any reason, the illegality or invalidity shall not affect the remaining parts of the Program, and the Program shall be construed and enforced as if the illegal or invalid provision had not been included.

18.3 Governing Law. To the extent not preempted by federal law, the Program, and all Award or other agreements hereunder, shall be construed in accordance with and governed by the laws of the state of Delaware without giving effect to principles of conflicts of laws.

Article 19. Recoupment Policy

The Awards granted under the Program are subject to the terms of the Company’s recoupment, clawback or similar policy as it may be in effect from time to time, as well as any similar provisions of applicable law, any of which could in certain circumstances require repayment or forfeiture of Awards or any Shares or other cash or property received with respect to the Awards (including any value received from a disposition of the Shares acquired upon payment of the Awards).

* * *

Exhibit 10.3

EDWARDS LIFESCIENCES CORPORATION

2001 EMPLOYEE STOCK PURCHASE PLAN

FOR UNITED STATES EMPLOYEES

(As Amended and Restated May 7, 2020)

326980.1

Edwards Lifesciences Corporation

2001 Employee Stock Purchase Plan

For United States Employees

(As Amended and Restated May 7, 2020)

ARTICLE I -- PURPOSE


1.01.	Purpose

The Edwards Lifesciences Corporation 2001 Employee Stock Purchase Plan for United States Employees is intended to provide a method whereby employees of Edwards Lifesciences Corporation (the “Company”) and its participating subsidiary companies authorized by the Committee (or an officer designated by the Committee pursuant to Section 9.02) to extend the benefits of the Plan to their Eligible Employees will have an opportunity to acquire a proprietary interest in the Company through the purchase of shares of the Company’s common stock. It is the intention of the Company to have the Plan qualify as an "employee stock purchase plan" under Section 423 of the Internal Revenue Code of 1986, as amended, although the Company makes no undertaking or representation to maintain such qualification. The provisions of the Plan shall be construed so as to extend and limit participation in a manner consistent with the requirements of Code Section 423.

The Plan was initially adopted by the Board on February 8, 2001, and subsequently approved by the stockholders on May 10, 2001. The Plan was subsequently amended and restated by the Board on February 20, 2003, September 13, 2005, February 15, 2007, July 9, 2009, November 10, 2009, February 21, 2013, February 23, 2017 and May 7, 2020.

ARTICLE II -- DEFINITIONS


2.01.	Base Pay

"Base Pay" shall mean regular straight-time earnings plus commissions and payments in lieu of regular earnings (such as vacation, sick pay and holiday pay). In the case of a part-time hourly employee, such employee's base pay during an Offering shall be determined by multiplying such employee's hourly rate of pay by the number of regularly scheduled hours of work for such employee during such Offering.


2.02.	Change in Control

“Change in Control” of the Company shall mean the occurrence of any one of the following events:

(a)

(b)

During any period of not more than twenty-four (24) months, individuals who at the beginning of such period constitute the Board of Directors of the Company, and any new director (other than a director designated by a Person who has entered into an agreement with the Company to effect a transaction described in Sections 2.02(a), 2.02(c), or 2.02(d) of this Section 2.02) whose election by the Board or nomination for election by the Company’s stockholders was approved by a vote of at least two-thirds (2/3) of the directors then still in office who either

were directors at the beginning of the period or whose election or nomination for election was previously so approved, cease for any reason to constitute at least a majority thereof; or

(c)


(d)	The Company’s stockholders approve a plan of complete liquidation or dissolution of the Company, or an agreement for the sale or disposition by the Company of all or substantially all of the Company’s assets (or any transaction having a similar effect).


2.03.	Code

“Code” shall mean the Internal Revenue Code of 1986, as amended.


2.04.	Committee

"Committee" shall mean the individuals appointed by the Company to administer the Plan as described in Article IX.


2.05.	Company

“Company” shall mean Edwards Lifesciences Corporation.


2.06.	Corporate Affiliate

“Corporate Affiliate” shall mean any parent or subsidiary corporation or limited liability company of the Company (as determined in accordance with Code section 424), whether now existing or subsequently established.


2.07.	Eligible Employee

"Eligible Employee" means, unless local laws prohibit such employee’s participation in the Plan, any regular employee of a Participating Company who is scheduled to work 20 or more hours per week.

2.08. Enrollment Period

"Enrollment Period" shall mean with respect to any Offering, the period designated by the Committee prior to such Offering during which Eligible Employees may authorize payroll deductions through a Subscription. Unless the Committee determines otherwise, the Enrollment Period with respect to any Offering shall end on the twenty-fifth day of the month immediately preceding the Offering Commencement Date and any Subscription received after such date shall be deemed to be an enrollment in the next following Offering.


2.09.	Exchange Act

“Exchange Act” shall mean the Securities Exchange Act of 1934, as amended from time to time, or any successor thereto.


2.10.	Fair Market Value

The “Fair Market Value” of a share of Stock on a given day shall be determined as follows: (i) if the Stock is listed on any established stock exchange or a national market system (a) for any date of determination except the Purchase Date, Fair Market Value shall be the closing sales price for such stock (or the closing bid, if no sale is reported) as quoted on such exchange or system for the last market trading day prior to the time of determination, as reported in The Wall Street Journal or such other source as the Committee deems reliable; (b) for the Purchase Date, Fair Market Value shall be the closing sales price for such stock (or the closing bid, if no sale is reported) as quoted on such exchange or system on the Purchase Date, as reported in The Wall Street Journal or such other source as the Committee deems reliable, or (ii) in the absence of an established market for the Stock, the Fair Market Value thereof shall be determined in good faith by the Committee.


2.11.	Offering

“Offering” shall mean the quarterly offering of the Company’s Stock, the duration of which shall not exceed twenty seven (27) months.


2.12.	Offering Commencement Date

“Offering Commencement Date” shall mean June 1, 2001 and, unless determined otherwise by the Committee, the first day of each calendar quarter thereafter.


2.13.	Offering End Date

"Offering End Date" shall mean, with respect to each Offering beginning prior to July 1, 2007, the first to occur of the day preceding the second annual anniversary of the Offering Commencement Date or the day preceding July 1, 2007, unless determined otherwise by the Committee prior to the Offering Commencement Date or such date as determined pursuant to Section 6.04. “Offering End Date” shall mean, with respect to each Offering beginning on or after July 1, 2007, the day preceding the first annual anniversary of the Offering Commencement Date, unless determined otherwise by the Committee prior to the Offering Commencement Date or such date as determined pursuant to Section 6.04.


2.14.	Participant

“Participant” shall mean an Eligible Employee who has elected to participate in an Offering by entering a Subscription during the Enrollment Period for such Offering.


2.15.	Participating Company

“Participating Company” shall mean the Company and each Corporate Affiliate as may be authorized from time to time by the Committee to extend the benefits of the Plan to their Eligible Employees and set forth in Appendix A to this Plan.


2.16.	Plan

"Plan" shall mean the Edwards Lifesciences Corporation 2001 Employee Stock Purchase Plan for United States Employees, as amended from time to time.


2.17.	Purchase Date

“Purchase Date” shall mean with respect to any Offering, the last day of each calendar quarter (or such other dates determined by the Committee prior to the Offering Commencement Date or pursuant to Section 6.04) during the period beginning with the Offering Commencement Date for such Offering and ending with the Offering End Date; provided, however, if any such day is not a business day, the Purchase Date shall be the next preceding business date on which shares of Stock are traded.


2.18.	Stock

“Stock” shall mean the common stock, par value $1.00, of the Company.


2.19.	Subscription

“Subscription” shall mean an Eligible Employee’s authorization for payroll deductions made in the form and manner specified by the Committee (which may include enrollment by submitting forms, by voice response, internet access or other electronic means). Unless withdrawn earlier in accordance with Section 6.02, each Subscription shall be in effect for the duration of the Offering to which it applies. No more than one Subscription may be in effect for an Eligible Employee during any calendar quarter.

ARTICLE III -- ELIGIBILITY AND PARTICIPATION


3.01.	Initial Eligibility

Any individual who is an Eligible Employee on an Offering Commencement Date shall be eligible to participate in the Offering commencing on such date, subject to the terms and conditions of the Plan.


3.02.	Leave of Absence

For purposes of participation in the Plan, a Participant on a leave of absence shall be deemed to be an employee for a period of up to 90 days or, if longer, during the period the Participant’s right to reemployment is guaranteed by statute or contract. If the leave of absence is paid, deductions authorized under any Subscription in effect at the time the leave began will continue. If the leave of absence is unpaid, no deductions or contributions will be permitted during the leave. If such a Participant returns to active status within 90 days or the guaranteed reemployment period, as applicable, payroll deductions under the Subscription in effect at the time the leave began will automatically begin again upon the Participant's return to active status, unless the Subscription has expired. If the Participant does not return to active status within 90 days or the guaranteed reemployment period, as applicable, the Participant shall be treated as having terminated employment for all purposes of the Plan. If such terminated Participant later returns to active employment as an Eligible Employee or if a Participant returns to active employment as an Eligible Employee after the Subscription has expired, such individual will be treated as a new employee and will be eligible to participate in Offerings commencing after his or her reemployment date by filing a Subscription during the applicable Enrollment Period for such Offering.


3.03.	Restrictions on Participation

Notwithstanding any provisions of the Plan to the contrary, no Eligible Employee shall be granted a right to purchase Stock:


(a)	if, immediately after the grant, such employee would own Stock, and/or hold outstanding options to purchase Stock, possessing 5% or more of the total combined voting power or value of all classes of the Company’s stock (for purposes of this paragraph, the rules of Section 424(d) of the Code shall apply in determining stock ownership of any employee); or


(b)	which permits the employee’s rights to purchase Stock under all employee stock purchase plans of the Company to accrue at a rate which exceeds $25,000 in Fair Market Value of the Stock (determined at the time such right to purchase Stock is granted) for each calendar year in which such right is outstanding (as computed to comply with Section 423(b)(8) of the Code).

Further, with respect to any Offering, in no event shall an employee be granted a right to purchase in excess of 10,000 shares of Stock, subject to adjustment pursuant to Section 10.03.


3.04.	Commencement of Participation

An Eligible Employee may become a Participant in any Offering by entering a Subscription during the Enrollment Period for such Offering. Payroll deductions for such Offering shall commence on the applicable Offering Commencement Date and shall end on the applicable Offering End Date unless withdrawn by the Participant or sooner terminated in accordance with Article VII. Only one Subscription may be in effect with respect to any Participant at any one time.


3.05.	Participation After Rehire

An Eligible Employee’s Subscription will automatically terminate on the date he or she is no longer an employee of any Participating Company. If the Eligible Employee terminates employment with a Subscription in effect with respect to an Offering and is rehired prior to the Offering End Date for that Offering, the Subscription will not be reinstated and the Eligible Employee will not be allowed to again make payroll deductions under such Offering. The Eligible Employee may elect to participate in Offerings commencing after his or her reemployment date by entering a Subscription during the applicable Enrollment Period for such Offering. Notwithstanding the foregoing, an Eligible Employee’s transfer from one Participating Company to another shall not terminate such Eligible Employee’s Subscription.


3.06.	Transfers

An Eligible Employee’s transfer from one Participating Company under this Plan to another shall not terminate such Eligible Employee’s Subscription.

If an Eligible Employee transfers to a Corporate Affiliate that is not a Participating Company under this Plan, the employee will be treated as a terminated Participant under this Plan. The employee may become eligible to participate in the Company’s stock purchase plan for international employees if the employee is transferred to a subsidiary or affiliate of the Company that is designated to participate in the stock purchase plan for international employees subject to the terms and conditions set forth in that plan.

ARTICLE IV -- OFFERINGS


4.01.	Quarterly Offerings

The Plan commenced with an Offering beginning on June 1, 2001 and, unless determined otherwise by the Committee, will continue in operation with a new Offering commencing on the first day of each calendar quarter thereafter. Eligible Employees may not have in effect more than one Subscription at a time.

Participants may subscribe to any Offering by entering a Subscription during the Enrollment Period for such Offering in such manner as the Committee may prescribe (which may include enrollment by submitting forms, by voice response, internet access or other electronic means).

A Subscription that is in effect on an Offering End Date will automatically be deemed to be a Subscription for the Offering that commences immediately following such Offering End Date, provided that the Participant is still an Eligible Employee and has not withdrawn the Subscription. Under the foregoing automatic enrollment provisions, payroll deductions will continue at the level in effect immediately prior to the new Offering Commencement Date, unless changed in advance by the Participant in accordance with Section 5.03.


4.02.	Purchase Price

The purchase price per share of Stock under each Offering shall be the lower of:


(a)	85% of the Fair Market Value of the Stock on the Offering Commencement Date; or


(b)	85% of the Fair Market Value of the Stock on the Purchase Date.

Such purchase price may only be paid with accumulated payroll deductions in accordance with Article V.

ARTICLE V -- PAYROLL DEDUCTIONS


5.01.	Amount of Deduction


5.02.	Participant's Account

All payroll deductions made with respect to a Participant shall be credited to his or her recordkeeping account under the Plan. A Participant may not make any separate cash payment into such account. No interest will accrue or be paid on any amount withheld from a Participant’s pay under the Plan or credited to the Participant’s account. Except in the case that any purchase limits set forth under the Plan would be exceeded, all amounts in a Participant’s account will be used to purchase shares of Stock and no cash refunds shall be made from such account. Shares of Stock issued may be whole shares and/or fractional shares. Any amounts that are withheld but unable to be applied to the purchase of Stock because of the limitations of Section 3.03 shall be returned to the Participant without interest and will not be used to purchase shares with respect to any other Offering under the Plan.


5.03.	Changes in Payroll Deductions

During an Offering, a Participant may change his or her level of payroll deduction with respect to such Offering within the limits described in Section 5.01 in accordance with procedures established by the Committee (including, without limitation, rules relating to the frequency of such changes); provided, however, if the Participant reduces his or her payroll deductions to zero, it shall be deemed to be a withdrawal of the Subscription and the Participant may not thereafter participate in such Offering but must wait until the next Offering to resubscribe to the Plan. Any such discontinuance or change in level shall be effective as soon as administratively practicable.

ARTICLE VI -- EXERCISE OF RIGHTS TO PURCHASE STOCK


6.01.	Automatic Exercise


6.02.	Withdrawal From Offering

A Participant may not withdraw the accumulated payroll deductions in his or her account during an Offering. If the Participant withdraws his or her Subscription with respect to any Offering, the accumulated payroll deductions in the Participant’s account at the time the Subscription is withdrawn will be used to purchase shares of Stock at the next Purchase Date for the Offering to which the Subscription related, in accordance with Section 6.01.


6.03.	Delivery of Stock

Stock purchases under the Plan will be held in an account in the Participant’s name in uncertificated form unless certification is requested by the Participant. Furthermore, Stock to be delivered to a Participant under the Plan will be registered in the name of the Participant.


6.04.	Change in Control

If pursuant to a Change in Control rights to purchase Stock are not assumed or otherwise continued in full force and effect, then each right to purchase Stock under each Offering in effect at the time of the Change in Control shall automatically be exercised, immediately prior to the effective date of any Change in Control, by applying the payroll deductions of each Participant for the Offering in which such Change in Control occurs to the purchase of shares of Stock at a purchase price per share equal to eighty-five percent (85%) of the lower of (i) the Fair Market Value per share of Stock on the start date of the applicable Offering or (ii) the Fair Market Value per share of Stock immediately prior to the effective date of such Change in Control.

ARTICLE VII -- WITHDRAWAL


7.01.	Effect on Subsequent Participation

The Committee shall have the authority to decide the Participant’s eligibility to participate in any succeeding Offering if Participant withdraws from any Offering.


7.02.	Termination of Employment

Subject to the following provisions of this Section 7.02, upon termination of the Participant's employment for any reason that results in the Participant not qualifying as an Eligible Employee, any Subscription then in effect will be deemed to have been withdrawn and any payroll deductions credited to the Participant’s account will be used to purchase Stock on the next Purchase Date for the Offering with respect to which such deductions relate. Notwithstanding the foregoing, if the Participant has a Subscription in effect on the Participant’s termination of employment, payroll deductions (at the rate in effect on the termination date) shall continue to be made from Base Pay earned prior to termination of employment, if any, that is paid to the Participant after such termination of employment and before the earlier of (i) the three-month anniversary of such termination of employment, or (ii) the Offering End Date of such Offering. Any such payroll deduction shall be used to purchase Stock on the next Purchase Date for the Offering after the deduction is made.


7.03.	Effect of Hardship Rules

At the discretion of the Company, the Company may cancel or suspend a Participant from participating in the Plan if the Participant claims a hardship with respect to his/her participation in any applicable benefit program and pursuant to the applicable benefit program, the Participant cannot be permitted to continue to participate in the Plan. If cancellation or suspension is required, the Company will determine whether accumulated contributions should be refunded or may be held to purchase shares on the next Purchase Date and when the Participant will become eligible to participate in the Plan in the future.

ARTICLE VIII -- STOCK


8.01.	Maximum Shares

The maximum number of shares which may be issued under the Plan, subject to adjustment upon changes in capitalization of the Company as provided in Section 10.03, shall be Thirty Six Million Three Hundred Thousand (36,300,000) shares. If the total number of shares for which rights to purchase Stock are exercised on any Purchase Date exceeds the maximum number of shares available for issuance, the Company shall make a pro rata allocation of the shares available for delivery and distribution in as nearly a uniform manner as shall be practicable and as it shall determine to be equitable, and the balance of payroll deductions credited to the account of each Participant under the Plan shall be returned to him as promptly as possible.


8.02.	Participant's Interest in Rights to Purchase Stock

The Participant will have no interest in Stock covered by a right to purchase Stock under the Plan until such right has been exercised.

ARTICLE XI -- ADMINISTRATION


9.01.	Appointment of Committee

The Company’s Board of Directors shall appoint a Committee to administer the Plan. No member of the Committee who is not an Eligible Employee shall be eligible to purchase Stock under the Plan.


9.02.	Authority of Committee

Subject to the express provisions of the Plan, the Committee shall have plenary authority in its discretion to interpret and construe any and all provisions of the Plan, to adopt rules and regulations for administering the Plan, to adopt sub-plans creating additional rules and restrictions for participation and to make all other determinations deemed necessary or advisable for administering the Plan. The Committee shall also have full power and authority to determine whether, to what extent and under what circumstances any Eligible Employee’s participation in the Plan shall be cancelled or suspended as a result of 401(k) hardship rules or similar rules, as determined at the sole discretion of the Committee. The Committee's determination on the foregoing matters shall be conclusive. The Committee shall also have the authority to determine if and when the employees of Corporate Affiliates organized or acquired after the Effective Date shall be eligible for participation in the Plan. The Committee may delegate to an officer its authority under this Section 9.02 to determine if and when the employees of a Corporate Affiliate shall be eligible or ineligible for participation in the Plan.


9.03.	Rules Governing the Administration of the Committee

The Company’s Board of Directors may from time to time appoint members of the Committee in substitution for or in addition to members previously appointed and may fill vacancies, however caused, in the Committee. The Committee may select one of its members as its Chairman and shall hold its meetings at such times and places as it shall deem advisable and may hold telephonic meetings. A majority of its members shall constitute a quorum. All determinations of the Committee shall be made by a majority of its members. The Committee may correct any defect or omission or reconcile any inconsistency in the Plan, in the manner and to the extent it shall deem desirable. Any decision or determination reduced to writing and signed by a majority of the members of the Committee shall be as fully effective as if it had been made by a majority vote at a meeting duly called and held. The Committee may appoint a secretary and shall make such rules and regulations for the conduct of its business as it shall deem advisable.


9.04.	Statements

Each Participant shall receive a statement of his account showing the number of shares of Stock held and the amount of cash credited to such account. Such statements will be provided as soon as administratively feasible following the end of each calendar quarter.

ARTICLE X -- MISCELLANEOUS

10.01. Transferability

Neither payroll deductions credited to a Participant's account nor any rights with regard to the exercise of a right to purchase Stock or to receive Stock under the Plan may be assigned, transferred, pledged, or otherwise disposed of in any way by the Participant other than by will or the laws of descent and distribution. Any such attempted assignment, transfer, pledge or other disposition shall be without effect. During a Participant^’s lifetime, rights to purchase Stock that are held by such Participant shall be exercisable only by that Participant.

10.02. Use of Funds

All payroll deductions received or held by the Participating Company under this Plan may be used by the Participating Company for any corporate purpose and the Participating Company shall not be obligated to segregate such payroll deductions.

10.03. Adjustment Upon Changes in Capitalization

In the event of a stock split, stock dividend, recapitalization, reclassification or combination of shares, merger, spin-off or similar event, the Committee shall adjust equitably (a) the number and class of shares or other securities that are reserved for sale under the Plan, (b) the number and class of shares or other securities that are subject to outstanding rights to purchase Stock, (c) the maximum number of shares of Stock that can be purchased by a Participant with respect to any Offering and (d) the appropriate market value and other price determinations applicable to rights to purchase Stock. The Committee shall make all determinations under this Section 10.03, and all such determinations shall be conclusive and binding.

10.04. Amendment and Termination

The Company’s Board of Directors shall have complete power and authority to terminate or amend the Plan at any time and for any reason; provided, however, that the Company’s Board of Directors shall not, without the approval of the stockholders of the Company in accordance with Section 423 of the Code, (i) increase the maximum number of shares which may be issued under any Offering (except pursuant to Section 10.03); (ii) amend the requirements as to the class of employees eligible to purchase stock under the Plan; or (iii) permit members of the Committee who are not Eligible Employees to purchase stock under the Plan.

Upon termination of the Plan, the date of termination shall be considered a Purchase Date, and any cash remaining in Participant accounts will be applied to the purchase of Stock, unless determined otherwise by the Company’s Board of Directors. Upon termination of the Plan, the Company’s Board of Directors shall have authority to establish administrative procedures regarding the exercise of outstanding rights to purchase Stock or to determine that such rights shall not be exercised.

10.05. Effective Date

This Plan became effective as of June 1, 2001.

10.06. No Employment Rights

The Plan does not, directly or indirectly, create in any employee or class of employees any right with respect to continuation of employment with the Company or any Corporate Affiliate, and it shall not be deemed to interfere in any way with the right of the Company or any Corporate Affiliate employing such person to terminate, or otherwise modify, an employee's employment at any time.

10.07. Effect of Plan

The provisions of the Plan shall, in accordance with its terms, be binding upon, and inure to the benefit of, all successors of each employee participating in the Plan, including, without limitation, such employee's estate and the executors, administrators or trustees thereof, heirs and legatees, and any receiver, trustee in bankruptcy or representative of creditors of such employee.

10.08. Governing Law

The law of the State of California will govern all matters relating to this Plan except to the extent it is superseded by the laws of the United States.

APPENDIX A

LIST OF PARTICIPATING COMPANIES

Following is a list of Participating Companies as of February 23, 2017:

Edwards Lifesciences Corporation

Edwards Lifesciences International Assignments Inc.

Edwards Lifesciences LLC

Edwards Lifesciences (U.S.) Inc.

A-1

Exhibit 10.4

EDWARDS LIFESCIENCES CORPORATION

2001 EMPLOYEE STOCK PURCHASE PLAN

FOR INTERNATIONAL EMPLOYEES

(As Amended and Restated May 7, 2020)

Edwards Lifesciences Corporation

2001 Employee Stock Purchase Plan

For International Employees

(As Amended and Restated May 7, 2020)¹

ARTICLE I -- PURPOSE


1.01.	Purpose

The Edwards Lifesciences Corporation 2001 Employee Stock Purchase Plan for International Employees is intended to provide a method whereby certain employees of participating subsidiary companies of Edwards Lifesciences Corporation (the “Company”) authorized by the Committee (or an officer designated by the Committee pursuant to Section 9.02) to extend the benefits of the Plan to their Eligible Employees will have an opportunity to acquire a proprietary interest in the Company through the purchase of shares of the Company’s common stock.

The Plan was initially adopted by the Board on February 8, 2001, and subsequently amended and restated by the Board on February 20, 2003, September 13, 2005, July 9, 2009, November 10, 2009, February 20, 2014 and May 7, 2020.

ARTICLE II -- DEFINITIONS


2.01.	Base Pay

"Base Pay" shall mean regular straight-time earnings (including compensation paid to a representative director or non-employee director of a Participating Company) plus commissions (where legally permissible and administratively feasible as determined by the Company in its sole discretion) and payments in lieu of regular earnings and any legally mandated bonus or other pay. In the case of a part-time hourly employee, such employee's base pay during an Offering shall be determined by multiplying such employee's hourly rate of pay by the number of regularly scheduled hours of work for such employee during such Offering.


2.02.	Change in Control

“Change in Control” of the Company shall mean the occurrence of any one of the following events:


(a)	Any “Person”, as such term is used in Sections 13(d) and 14(d) of the Exchange Act (other than the Company, any corporation owned, directly or indirectly, by the stockholders of the Company in substantially the same proportions as their ownership of stock of the Company, and any trustee or other fiduciary holding securities under an employee benefit plan of the

¹Share limits reflect stock splits and stock dividends through June 2020.

Company or such proportionately owned corporation), is or becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing thirty percent (30%) or more of the combined voting power of the Company’s then outstanding securities; or

(b)

approved by a vote of at least two-thirds (2/3) of the directors then still in office who either were directors at the beginning of the period or whose election or nomination for election was previously so approved, cease for any reason to constitute at least a majority thereof; or

(c)


(d)	The Company’s stockholders approve a plan of complete liquidation or dissolution of the Company, or an agreement for the sale or disposition by the Company of all or substantially all of the Company’s assets (or any transaction having a similar effect).


2.03.	Code

“Code” shall mean the United States Internal Revenue Code of 1986, as amended.


2.04.	Committee

"Committee" shall mean the individuals appointed by the Company to administer the Plan as described in Article IX.

2.05. Company

“Company” shall mean Edwards Lifesciences Corporation.

2.06. Corporate Affiliate

“Corporate Affiliate” shall mean any parent or subsidiary corporation or limited liability company of the Company (as determined in accordance with Code section 424) whether now existing or subsequently established.


2.07.	Conversion Rate

“Conversion Rate” shall mean with respect to any non-United States currency, the rate established by the Company’s Corporate Treasury Department for purposes of converting such currency to United States dollars.


2.08.	Eligible Employee

"Eligible Employee" means, unless local laws prohibit or require such employee’s participation in the Plan, any regular employee of a Participating Company who is scheduled to work 20 or more hours per week or a representative director or non-employee director of a Participating Company. Eligible Employee shall also mean any other employee of a Participating Company to the extent that local law requires the Plan to be extended to such employee. The Committee shall designate the Corporate Affiliates that shall be eligible to participate in the Plan.


2.09.	Enrollment Period

"Enrollment Period" shall mean with respect to any Offering, the period designated by the Committee prior to such Offering during which Eligible Employees may authorize payroll deductions (or, if payroll deductions are not permitted or advisable under local law, other means of contributions specified by the Committee) through a Subscription. Unless the Committee determines otherwise, the Enrollment Period with respect to any Offering shall

end on the twenty-fifth day of the month immediately preceding the Offering Commencement Date and any Subscription received after such date shall be deemed to be an enrollment in the next following Offering.


2.10.	Exchange Act

“Exchange Act” shall mean the United States Securities Exchange Act of 1934, as amended from time to time, or any successor thereto.


2.11.	Fair Market Value

The “Fair Market Value” of a share of Stock on a given day shall be determined as follows: (i) if the Stock is listed on any established stock exchange or a national market system, (a) for any date of determination except the Purchase Date, Fair Market Value shall be the closing sales price for such stock (or the closing bid, if no sale is reported) as quoted on such exchange or system for the last market trading day prior to the time of determination, as reported in The Wall Street Journal or such other source as the Committee deems reliable; (b) for the Purchase Date, Fair Market Value shall be the closing sales price for such stock (or the closing bid, if no sale is reported) as quoted on such exchange or system on the Purchase Date, as reported in The Wall Street Journal or such other source as the Committee deems reliable, or (ii) in the absence of an established market for the Stock, the Fair Market Value thereof shall be determined in good faith by the Committee.


2.12.	Offering

“Offering” shall mean the quarterly offering of the Company’s Stock, the duration of which shall not exceed twenty seven (27) months.


2.13.	Offering Commencement Date

“Offering Commencement Date” shall mean June 1, 2001 and, unless determined otherwise by the Committee, the first day of each calendar quarter thereafter.


2.14.	Offering End Date


2.15.	Participant

“Participant” shall mean an Eligible Employee who has elected to participate in an Offering by entering a Subscription during the Enrollment Period for such Offering.


2.16.	Participating Company

“Participating Company” shall mean each Corporate Affiliate as may be authorized from time to time by the Committee to extend the benefits of the Plan to their Eligible Employees and set forth in Appendix A of this Plan. The Committee may determine that some Eligible Employees of a Participating Company shall not be offered participation in the Plan.


2.17.	Plan

"Plan" shall mean the Edwards Lifesciences Corporation 2001 Employee Stock Purchase Plan for International Employees, as amended from time to time.


2.18.	Purchase Date


2.19.	Stock

“Stock” shall mean the common stock, par value US$1.00, of the Company.


2.20.	Subscription

“Subscription” shall mean an Eligible Employee’s authorization for payroll deductions or contributions, as applicable, made in the form and manner specified by the Committee (which may include enrollment by submitting forms, by voice response, internet access or other electronic means). Unless withdrawn earlier in accordance with Section 6.02, each Subscription shall be in effect for the duration of the Offering to which it applies. No more than one Subscription may be in effect for an Eligible Employee during any calendar quarter.

ARTICLE III -- ELIGIBILITY AND PARTICIPATION


3.01.	Initial Eligibility

Any individual who is an Eligible Employee on an Offering Commencement Date shall be eligible to participate in the Offering commencing on such date, subject to the terms and conditions of the Plan.


3.02.	Leave of Absence

For purposes of participation in the Plan, a Participant on a leave of absence shall be deemed to be an Eligible Employee for a period of up to 90 days or, if longer, during the period the Participant’s right to reinstatement as an employee or non-employee director of a Participating Company is guaranteed by statute or contract. If the leave of absence is paid, deductions authorized under any Subscription in effect at the time the leave began will continue. If the leave of absence is unpaid, no deductions or contributions will be permitted during the leave unless this provision is contrary to applicable local law. If such a Participant returns to active status within 90 days or the guaranteed reemployment period, as applicable, payroll deductions or contributions, as applicable, under the Subscription in effect at the time the leave began will automatically begin again upon the Participant's return to active status, unless the Subscription has expired. If the Participant does not return to active status within 90 days or the guaranteed reinstatement period, as applicable, the Participant shall be treated as having terminated service for all purposes of the Plan, unless otherwise required under local law. If such terminated Participant later returns to active service as an Eligible Employee or if a Participant returns to active service as an Eligible Employee after the Subscription has expired, such individual will be eligible to participate in Offerings commencing after his or her new service start date by filing a Subscription during the applicable Enrollment Period for such Offering.


3.03.	Restrictions on Participation

Notwithstanding any provisions of the Plan to the contrary, no Eligible Employee shall be granted a right to purchase Stock: (a) if, immediately after the grant, such individual would own Stock, and/or hold outstanding

options to purchase Stock, possessing 5% or more of the total combined voting power or value of all classes of the Company’s stock (for purposes of this paragraph, the rules of Section 424(d) of the Code shall apply in determining stock ownership of any individual); or (b) which permits the individual’s rights to purchase Stock under all employee stock purchase plans of the Company to accrue at a rate which exceeds $25,000 in Fair Market Value of the Stock (determined at the time such right to purchase Stock is granted) for each calendar year in which such right is outstanding. Further, the Committee may additionally limit the number of shares of Stock or contributions per Eligible Employee made available for purchase under the Plan by Eligible Employees in certain countries, locations or Participating Companies, if necessary or advisable to avoid securities law filings, achieve tax objectives or to meet or facilitate other Company compliance objectives in particular locations outside the U.S.

Further, with respect to any Offering, in no event shall an individual be granted a right to purchase in excess of 10,000 shares of Stock, subject to adjustment pursuant to Section 10.03.


3.04.	Commencement of Participation

An Eligible Employee may become a Participant in any Offering by entering a Subscription during the Enrollment Period for such Offering. Payroll deductions or contributions, as applicable, for such Offering shall commence on the applicable Offering Commencement Date and shall end on the applicable Offering End Date unless withdrawn by the Participant or sooner terminated in accordance with Article VII. Only one Subscription may be in effect with respect to any Participant at any one time.


3.05.	Participation After Rehire

An Eligible Employee’s Subscription will automatically terminate on the date he or she is no longer providing service to any Participating Company. If the Eligible Employee terminates service with a Subscription in effect with respect to an Offering and is reinstated prior to the Offering End Date for that Offering, the Subscription will not be reinstated and the Eligible Employee will not be allowed to again make payroll deductions or contributions, as applicable, under such Offering. The Eligible Employee may elect to participate in Offerings commencing after his or her reinstatement date by entering a Subscription during the applicable Enrollment Period for such Offering. Notwithstanding the foregoing, an Eligible Employee’s transfer from one Participating Company to another shall not terminate such Eligible Employee’s Subscription.

3.06. Transfers

An Eligible Employee’s transfer from one Participating Company under this Plan to another shall not terminate such Eligible Employee’s Subscription.

If an Eligible Employee transfers to the Company or a Corporate Affiliate that is not a Participating Company under this Plan, the individual will be treated as a terminated Participant under this Plan. The individual may become eligible to participate in the Company’s stock purchase plan for United States employees if the individual is transferred to the Company or a subsidiary or affiliate of the Company that is designated to participate in the stock purchase plan for United States employees subject to the terms and conditions set forth in that plan.

ARTICLE IV -- OFFERINGS


4.01.	Quarterly Offerings

A Subscription that is in effect on an Offering End Date will automatically be deemed to be a Subscription for the Offering that commences immediately following such Offering End Date, provided that the Participant is still an Eligible Employee and has not withdrawn the Subscription. Under the foregoing automatic enrollment provisions, payroll deductions or contributions, as applicable, will continue at the level in effect immediately prior to the new Offering Commencement Date, unless changed in advance by the Participant in accordance with Section 5.03.


4.02.	Purchase Price

The purchase price per share of Stock under each Offering shall be the lower of:


(a)	85% of the Fair Market Value of the Stock on the Offering Commencement Date; or


(b)	85% of the Fair Market Value of the Stock on the Purchase Date.

Such purchase price may only be paid with accumulated payroll deductions subject to and in accordance with Article V.

ARTICLE V -- PAYROLL DEDUCTIONS


5.01.	Amount of Deduction

An Eligible Employee’s Subscription shall authorize payroll deductions at a rate, in whole percentages, of no less than 1% and no more than 12% of Base Pay on each payday that the Subscription is in effect, unless payroll deductions are not permitted or advisable under local laws, in which case, an Eligible Employee may contribute by such other means as specified by the Committee subject to the contribution limits specified in this section.


5.02.	Participant's Account

All payroll deductions or contributions, as applicable, made with respect to a Participant shall be credited to his or her recordkeeping account under the Plan unless a separate bank account is required to be set up under applicable local law. A Participant may not make any separate cash payment into such account unless required under applicable local law. Unless required by local law, no interest will accrue or be paid on any amount withheld from a Participant’s pay under the Plan or credited to the Participant’s account. Except in the case that any purchase limits set forth under the Plan would be exceeded, all amounts in a Participant’s account will be used to purchase shares of Stock and no cash refunds shall be made from such account. Shares of Stock issued may be whole shares and/or fractional shares. Any amounts that are withheld but unable to be applied to the purchase of Stock because of the limitations of Section 3.03 shall be returned to the Participant without interest and will not be used to purchase shares with respect to any other Offering under the Plan.


5.03.	Changes in Payroll Deductions

During an Offering, a Participant may change his or her level of payroll deduction or contributions, as applicable with respect to such Offering within the limits described in Section 5.01 in accordance with procedures established by the Committee (including, without limitation, rules relating to the frequency of such changes); provided, however, if the Participant reduces his or her payroll deductions or contributions, as applicable, to zero, it shall be deemed to be a withdrawal of the Subscription and the Participant may not thereafter participate in such Offering but must wait until the next Offering to resubscribe to the Plan. Any such discontinuance or change in level shall be effective as soon as administratively practicable.

ARTICLE VI --EXERCISE OF RIGHTS TO PURCHASE STOCK


6.01.	Automatic Exercise

A Participant’s right to purchase Stock with respect to any Offering will be automatically exercised on each Purchase Date for the Offering. The right to purchase Stock will be exercised by using the accumulated payroll deductions in the Participant’s account as of each such Purchase Date or contributions, as applicable, to purchase the number of shares of Stock that may be purchased at the purchase price on such date, determined in accordance with Section 4.02. If the Participant is paid in a non-United States currency, the Participant’s accumulated payroll deductions or contributions shall be converted into United States dollars using the Conversion Rate in effect on the Purchase Date.


6.02.	Withdrawal From Offering

A Participant may not withdraw the accumulated payroll deductions in his or her account during an Offering unless the Committee determines otherwise for local law reasons. If the Participant withdraws his or her Subscription with respect to any Offering, the accumulated payroll deductions or contributions, as applicable, in the Participant’s account at the time the Subscription is withdrawn will be used to purchase shares of Stock at the next Purchase Date for the Offering to which the Subscription related, in accordance with Section 6.01. Notwithstanding the foregoing, in the event a Participant withdraws his or her Subscription with respect to an Offering and terminates his or her service prior to the next Purchase Date for which the Participant’s accumulated payroll deductions or contributions would be used to purchase shares of Stock, then Participant’s accumulated payroll deductions or contributions shall be refunded to Participant in accordance with Section 7.02.


6.03.	Delivery of Stock


6.04.	Change in Control

If pursuant to a Change in Control rights to purchase Stock are not assumed or otherwise continued in full force and effect, then each right to purchase Stock under each Offering in effect at the time of the Change in Control shall automatically be exercised, immediately prior to the effective date of any Change in Control, by applying the payroll deductions or contributions, as applicable, of each Participant for the Offering in which such Change in Control occurs to the purchase of shares of Stock at a purchase price per share equal to eighty-five percent (85%) of the lower of (i) the Fair Market Value per share of Stock on the start date of the applicable Offering or (ii) the Fair Market Value per share of Stock immediately prior to the effective date of such Change in Control.

ARTICLE VII --WITHDRAWAL


7.01.	Effect on Subsequent Participation

The Committee shall have the authority to decide the Participant’s eligibility to participate in any succeeding Offering if Participant withdraws from an Offering.


7.02.	Termination of Employment

Upon termination of the Participant's service with a Participating Company for any reason that results in the Participant not qualifying as an Eligible Employee, any Subscription then in effect will be deemed to have been withdrawn and any payroll deductions or contributions, as applicable, credited to the Participant’s account will be promptly refunded to such Participant in the currency in which such Participant is paid by his or her Participating Company.

7.03. Effect of Hardship Rules

ARTICLE VIII --STOCK


8.01.	Maximum Shares

The maximum number of shares which may be issued under the Plan, subject to adjustment upon changes in capitalization of the Company as provided in Section 10.03, shall be Nine Million Six Hundred Thousand (9,600,000) shares. If the total number of shares for which rights to purchase Stock are exercised on any Purchase Date exceeds the maximum number of shares available for issuance, the Company shall make a pro rata allocation of the shares available for delivery and distribution in as nearly a uniform manner as shall be practicable and as it shall determine to be equitable, and the balance of payroll deductions or contributions, as applicable, credited to the account of each Participant under the Plan shall be returned to him as promptly as possible.


8.02.	Participant's Interest in Rights to Purchase Stock

The Participant will have no interest in Stock covered by a right to purchase Stock under the Plan until such right has been exercised.

ARTICLE IX -- ADMINISTRATION


9.01.	Appointment of Committee

The Company’s Board of Directors shall appoint a Committee to administer the Plan. No member of the Committee who is not an Eligible Employee shall be eligible to purchase Stock under the Plan.


9.02.	Authority of Committee

Subject to the express provisions of the Plan, the Committee shall have plenary authority in its discretion to interpret and construe any and all provisions of the Plan, to adopt rules and regulations for administering the Plan, to adopt sub-plans creating additional rules and restrictions for participation and to make all other determinations deemed necessary or advisable for administering the Plan. Without limiting the generality of the foregoing, the Committee specifically is authorized to adopt rules and regulations regarding the handling of payroll deductions, payment of interest, conversion of local currency, payroll tax, withholding procedures, participation limits and handling of stock certificates which vary with local requirements. The Committee shall also have full power and authority to determine whether, to what extent and under what circumstances any Eligible Employee’s participation in the Plan shall be cancelled or suspended as a result of applicable hardship rules or similar rules, as determined at the sole

discretion of the Committee. The Committee's determination on the foregoing matters shall be conclusive. The Committee shall also have the authority to determine if and when individuals working for Corporate Affiliates organized or acquired after the Effective Date shall be eligible for participation in the Plan. The Committee may delegate to an officer its authority under this Section 9.02 to determine if and when individuals working for a Corporate Affiliate shall be eligible or ineligible for participation in the Plan.


9.03.	Rules Governing the Administration of the Committee


9.04.	Statements

ARTICLE X -- MISCELLANEOUS


10.01.	Transferability

Neither payroll deductions nor contributions credited to a Participant's account nor any rights with regard to the exercise of a right to purchase Stock or to receive Stock under the Plan may be assigned, transferred, pledged, or otherwise disposed of in any way by the Participant other than by will or the laws of descent and distribution. Any such attempted assignment, transfer, pledge or other disposition shall be without effect. During a Participant^’s lifetime, rights to purchase Stock that are held by such Participant shall be exercisable only by that Participant.


10.02.	Use of Funds

All payroll deductions or contributions, as applicable, received or held by the Participating Company under this Plan may be used by the Participating Company for any corporate purpose and the Participating Company shall not be obligated to segregate such payroll deductions or contributions, as applicable; provided, however, such amounts shall be held in trust or otherwise segregated from the Participating Company’s general assets to the extent required under local law.


10.03.	Adjustment Upon Changes in Capitalization

In the event of a stock split, stock dividend, recapitalization, reclassification or combination of shares, merger, spin-off, or similar event, the Committee shall adjust equitably (a) the number and class of shares or other securities that are reserved for sale under the Plan, (b) the number and class of shares or other securities that are subject to outstanding rights to purchase Stock, (c) the maximum number of shares of Stock that can be purchased by a Participant with respect to any Offering and (d) the appropriate market value and other price determinations applicable to rights to purchase Stock. The Committee shall make all determinations under this Section 10.03, and all such determinations shall be conclusive and binding.


10.04.	Amendment and Termination

The Company’s Board of Directors shall have complete power and authority to terminate or amend the Plan at any time and for any reason. Upon termination of the Plan, the date of termination shall be considered a Purchase Date, and any cash remaining in Participant accounts will be applied to the purchase of Stock, unless determined otherwise by the Company’s Board of Directors. Upon termination of the Plan, the Company’s Board of Directors shall have authority to establish administrative procedures regarding the exercise of outstanding rights to purchase Stock or to determine that such rights shall not be exercised.


10.05.	Effective Date

This Plan became effective as of June 1, 2001.

10.06. No Employment Rights

The Plan does not, directly or indirectly, create in any employee or class of employees or directors any right with respect to continuation of employment or service with the Company or any Corporate Affiliate, and it shall not be deemed to interfere in any way with the right of the Company or any Corporate Affiliate retaining such person to terminate, or otherwise modify, an individual's employment or service position at any time.


10.07.	Effect of Plan

The provisions of the Plan shall, in accordance with its terms, be binding upon, and inure to the benefit of, all successors of each individual participating in the Plan, including, without limitation, such individual's estate and the executors, administrators or trustees thereof, heirs and legatees, and any receiver, trustee in bankruptcy or representative of creditors of such individual.


10.08.	Governing Law

The law of the State of California will govern all matters relating to this Plan except to the extent it is superseded by the laws of the United States.

APPENDIX A

LIST OF PARTICIPATING COMPANIES

Following is a list of Participating Companies as of May 7, 2019:



Edwards Legal Entity	Country of Incorporation
Edwards Lifesciences Austria GmbH	Austria
Edwards Lifesciences Pty. Limited	Australia
Edwards Lifesciences S.P.R.L.	Belgium
Edwards Lifesciences Comercio de Produtos Medico-Cirurgicos Ltda.	Brazil
Edwards Lifesciences (Canada) Inc.	Canada
Edwards (Shanghai) Medical Products Co., Ltd.	China
Edwards Lifesciences Colombia S.A.S.	Columbia
Edwards Lifesciences Costa Rica, S.R.L.	Costa Rica
Edwards Lifesciences Czech Republic s.r.o.	Czech Republic
Edwards Lifesciences A/S	Denmark
Edwards Lifesciences SAS	France
Edwards Lifesciences Services GmbH	Germany
Edwards Lifesciences Hellas, M.E.P.E.	Greece
Edwards Lifesciences (India) Private Limited	India
Edwards Lifesciences Ireland, Limited	Ireland
Edwards Lifesciences (Israel) Ltd	Israel
Edwards Lifesciences Sales (Israel) Ltd	Israel
Valtech Cardio Ltd. (Israel)	Israel
Edwards Lifesciences Italia SpA	Italy
Edwards Lifesciences (Japan) Limited	Japan
Edwards Lifesciences Korea Co., Ltd.	Korea
Edwards Lifesciences (Malaysia) Sdn. Bhd.	Malaysia
Edwards Lifesciences Asia Pacific Sdn. Bhd.	Malaysia
Edwards Lifesciences Mexico, S.A. de C.V.	Mexico
Edwards Lifesciences B.V.	The Netherlands
BMEYE BV	The Netherlands
Edwards Lifesciences (New Zealand) Limited	New Zealand
Edwards Lifesciences (Poland) Sp. z.o.o.	Poland
Edwards Lifesciences (Portugal) Comércio e Distribuicao de Dispositivos Medicos, Lda.	Portugal
Edwards Lifesciences Export (Puerto Rico) Corporation	Puerto Rico
Edwards Lifesciences (Asia) Pte., Ltd.	Singapore
Edwards Lifesciences (Singapore) Pte Ltd	Singapore
Edwards Lifesciences (Proprietary) LTD	South Africa
Edwards Lifesciences S.L.	Spain
Edwards Lifesciences Nordic AB	Sweden
Edwards Lifesciences AG	Switzerland
Edwards Lifesciences Technology S.A.R.L.	Switzerland
Edwards Lifesciences (Taiwan) Corporation	Taiwan
Edwards Lifesciences (Thailand) Ltd.	Thailand
Edwards Lifesciences Turkey Health Technologies Limited Şirketi (Turkish Name) Edwards Lifesciences Sağlik Ürünleri Limited Şirketi	Turkey
Edwards Lifesciences Limited	United Kingdom

A-1

ADDENDUM FOR PARTICIPANTS

IN JAPAN WORKING FOR

EDWARDS LIFESCIENCES LIMITED

Effective February 20, 2014

For purposes of Eligible Employees of Edwards Lifesciences Limited, the Company’s subsidiary in Japan, the following terms shall apply and replace any similar provisions in the Plan document. To the extent there is a conflict between the terms of the Plan document and this Addendum, this Addendum shall govern. Otherwise, the terms of the Plan document shall control.

2.12 Offering

“Offering” shall mean the annual offering on July 1 of each year of the Company’s Stock, the duration of which shall not exceed twenty seven (27) months.

2.13 Offering Commencement Date

“Offering Commencement Date” shall mean July 1 of each year, unless determined otherwise by the Committee.

4.01 Annual Offerings

The Plan shall consist of annual Offering commencing on July 1 of each calendar year. Eligible Employees may not have in effect more than one Subscription at a time.

A Subscription that is in effect on an Offering End Date will automatically be deemed to be a Subscription for the Offering that commences immediately following such Offering End Date, provided that the Participant is still an Eligible Employee and has not withdrawn the Subscription. Under the foregoing automatic enrollment provisions, payroll deductions or contributions will continue at the level in effect immediately prior to the new Offering Commencement Date, unless changed in advance by the Participant in accordance with Section 5.03.

ADDENDUM FOR PARTICIPANTS

IN MALAYSIA WORKING FOR

EDWARDS LIFESCIENCES (MALAYSIA) SDN. BHD.

Effective October 1, 2016

For purposes of Eligible Employees of Edwards Lifesciences (Malaysia) Sdn. Bhd., the Company's subsidiary in Malaysia, the following terms shall apply and replace any similar provisions in the Plan document. To the extent there is a conflict between the terms of the Plan document and this Addendum, this Addendum shall govern. Otherwise, the terms of the Plan document shall control.

2.12 Offering

"Offering" shall mean the annual offering on October 1 of each year of the Company's Stock, the duration of which shall not exceed twenty seven (27) months.

2.13 Offering Commencement Date

"Offering Commencement Date" shall mean October 1 of each year, unless determined otherwise by the Committee.

4.01 Annual Offerings

The Plan shall consist of annual Offerings commencing on October 1 of each calendar year. Eligible Employees may not have in effect more than one Subscription at a time.

A Subscription that is in effect on an Offering End Date will automatically be deemed to a be a Subscription for the Offering that commences immediately following such Offering End Date, provided that the Participant is still an Eligible Employee and has not withdrawn the Subscription. Under the foregoing automatic enrollment provisions, payroll deductions or contributions will continue at the level in effect immediately prior to the new Offering Commencement Date, unless change in advance by the Participant in accordance with Section 5.03.

Exhibit 31.1

EDWARDS LIFESCIENCES CORPORATION

CERTIFICATIONS PURSUANT TO

SECTION 302 OF

THE SARBANES-OXLEY ACT OF 2002

CERTIFICATION

I, Michael A. Mussallem, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Edwards Lifesciences Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.



Date:	July 27, 2020	By:	/s/ MICHAEL A. MUSSALLEM
			Michael A. Mussallem Chairman of the Board and Chief Executive Officer

Exhibit 31.2

EDWARDS LIFESCIENCES CORPORATION

CERTIFICATIONS PURSUANT TO

SECTION 302 OF

THE SARBANES-OXLEY ACT OF 2002

CERTIFICATION

I, Scott B. Ullem, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Edwards Lifesciences Corporation;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.



Date:	July 27, 2020	By:	/s/ SCOTT B. ULLEM
			Scott B. Ullem Chief Financial Officer

Exhibit 32

EDWARDS LIFESCIENCES CORPORATION

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Edwards Lifesciences Corporation (the "Company") on Form 10-Q for the period ended June 30, 2020 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), we, Michael A. Mussallem, Chairman of the Board and Chief Executive Officer of the Company, and Scott B. Ullem, Corporate Vice President, Chief Financial Officer, certify, pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1)The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.



July 27, 2020	/s/ MICHAEL A. MUSSALLEM
	Michael A. Mussallem Chairman of the Board and Chief Executive Officer
July 27, 2020	/s/ SCOTT B. ULLEM
	Scott B. Ullem Chief Financial Officer