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•

demand for and clinical acceptance of products;



•

the timing and execution of customer contracts, particularly large contracts that would materially affect our operating results in a given quarter;



•

the timing of sales of products and of the introduction of new products;



•

the timing of marketing, training, and other expenses related to the introduction of new products;



•

the timing of regulatory approvals;



•

changes in foreign currency exchange rates;



•

delays or problems in introducing new products, such as slower than anticipated adoption of transcatheter heart valves;



•

changes in our pricing policies or the pricing policies of our competitors;



•

the timing of approvals of governmental reimbursement rates or changes in reimbursement rates for our products;



•

increased expenses, whether related to sales and marketing, raw materials or supplies, product development, or administration;



•

changes in the level of economic activity in the United States or other regions in which we do business;



•

costs related to acquisitions of technologies or businesses; and



•

our ability to expand our operations and the amount and timing of expansion-related expenditures.

        The quarterly and full-year financial guidance we provide to investors and analysts with insight to our view of our future performance is based on assumptions about our sales and operating results. Due to the nature of our business and the numerous factors that can impact our sales and operating performance, including those described above, our financial guidance may vary from actual results. If we fail to meet any financial guidance that we provide, or if we find it necessary to revise such guidance during the year, the price of our common stock could decline.

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We face intense competition, and if we do not compete effectively, our business will be harmed.

        The cardiovascular medical device industry is highly competitive. We compete with many companies, some of which have longer operating histories, better brand or name recognition, and broader product offerings. Our customers consider many factors when selecting a product, including product reliability, breadth of product line, clinical outcomes, product availability, price, availability and rate of reimbursement, and services provided by the manufacturer. In addition, our ability to compete will depend in large part on our ability to develop and acquire new products and technologies, anticipate technology advances, and keep pace with other developers of cardiovascular therapies and technologies. Our sales, technical, and other key personnel play an integral role in the development, marketing, and selling of new and existing products. If we are unable to recruit, hire, develop, and retain a talented, competitive workforce, our ability to compete may be adversely affected. Our competitive position can also be adversely affected by product problems, physician advisories and safety alerts, reflecting the importance of quality in the medical device industry. Our position can shift as a result of any of these factors. See "Competition" under "Business" included herein.

Consolidation in the health care industry could have an adverse effect on our revenuessales and results of operations.

        The health care industry has been consolidating, and organizations such as GPOs, independent delivery networks, and large single accounts, such as the United States Veterans Administration, continue to consolidate purchasing decisions for many of our health care provider customers. As a result, transactions with

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customers are larger, more complex, and tend to involve more long-term contracts. The purchasing power of these larger customers has increased, and may continue to increase, causing downward pressure on product pricing. If we are not one of the providers selected by one of these organizations, we may be precluded from making sales to its members or participants. Even if we are one of the selected providers, we may be at a disadvantage relative to other selected providers that are able to offer volume discounts based on purchases of a broader range of medical equipment and supplies. Further, we may be required to commit to pricing that has a material adverse effect on our revenues, and profit margins, business, financial condition, and results of operations. We expect that market demand, governmental regulation, third-party reimbursement policies, and societal pressures will continue to change the worldwide health care industry, resulting in further business consolidations and alliances, which may exert further downward pressure on the prices of our products and could adversely impact our business, financial condition, and results of operations.

Our inability to protect our intellectual property or other sensitive company datainformation could have a material adverse effect on our business.

        Our success and competitive position are dependent in part upon our proprietary intellectual property. We rely on a combination of patents and trade secrets to protect our proprietary intellectual property, and we expect to continue to do so. Although we seek to protect our proprietary rights through a variety of means, we cannot guarantee that the protective steps we have taken are adequate to protect these rights. Patents issued to or licensed by us in the past or in the future may be challenged and held invalid. In addition, as our patents expire, we may be unsuccessful in extending their protection through patent term extensions. The expiration of, or the failure to maintain or extend our patents, could have a material adverse effect on us.

        We also rely on confidentiality agreements with certain employees, consultants, and other third parties to protect, in part, trade secrets and other proprietary information. These agreements could be breached, and we may not have adequate remedies for such a breach. In addition, others could independently develop substantially equivalent proprietary information or gain access to our trade secrets or proprietary information.

        Our intellectual property, other proprietary technology, and other sensitive company datainformation is potentially vulnerable to loss, damage, or misappropriation from system malfunction, computer viruses, unauthorized access to our data, or misappropriation or misuse thereofof it by those with permitted access, and other events. While we have invested to protect our intellectual property and other data,information, and continue to work diligently in this area, there can be no assurance that our precautionary measures will prevent breakdowns, breaches, cyber-

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attackscyber-attacks, or other events. Such events could have a material adverse effect on our reputation, financial condition, or results of operations.

        We spend significant resources to enforce our intellectual property rights, sometimes resulting in litigation. Intellectual property litigation is complex and can be expensive and time-consuming. However, our efforts in this regard may not be successful. We may not be able to detect infringement. In addition, competitors may design around our technology or develop competing technologies. Patent litigation can result in substantial cost and diversion of effort. Intellectual property protection may also be unavailable or limited in some foreign countries, enabling our competitors to capture increased market position. The invalidation of key intellectual property rights or an unsuccessful outcome in lawsuits filed to protect our intellectual property could have a material adverse effect on our financial condition, results of operations, or prospects.

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

        During recent years, we and our competitors have been involved in substantial litigation regarding patent and other intellectual property rights in the medical device industry. From time to time, we have been and may in the future be forced to defend against claims and legal actions alleging infringement of the intellectual property rights of others, and such intellectual property litigation is typically costly and time-consuming. Adverse determinations in any such litigation could result in significant liabilities to third parties or

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injunctions, or could require us to seek licenses from third parties and, if such licenses are not available on commercially reasonable terms, prevent us from manufacturing, selling, or using certain products, any one of which could have a material adverse effect on us. In addition, some licenses may be non-exclusive, which could provide our competitors access to the same technologies.

        Third parties could also obtain patents that may require us to either redesign products or, if possible, negotiate licenses from such third parties. Such licenses may materially increase our expenses. If we are unable to redesign products or obtain a license, we might have to exit a particular product offering.

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

        The medical devices we manufacture and market are subject to rigorous regulation by the FDA and numerous other federal, state, and foreign governmental authorities, including regulations that cover the composition, labeling, testing, clinical study, design, sourcing, manufacturing, packaging, marketing, advertising, promotion, and distribution of our products.

        We are required to register with the FDA as a device manufacturer. As a result, we are subject to periodic inspection by the FDA for compliance with the FDA's Quality System Regulation ("QSR") requirements, which require manufacturers of medical devices to adhere to certain regulations, including testing, design, quality control, and documentation procedures. The FDA may also inspect our compliance with requirements related to adverse event reporting, recalls or corrections (field actions), the conduct of clinical studies, and other requirements. In the European Union, we are required to maintain certain CE Mark and ISO certifications in order to sell our products, and are subject to periodic inspections by notified bodies to obtain and maintain these certifications. If we or our suppliers fail to adhere to QSR, CE Mark, ISO, or similar requirements, this could delay or interrupt product production or sales and/or lead to fines, difficulties in obtaining regulatory clearances, recalls, or other consequences, which in turn could have a material adverse effect on our financial condition and results of operations or prospects.

        Medical devices must receive FDA clearance or approval before they can be commercially marketed in the United States. In addition, the FDA may require testing and surveillance programs to monitor the effects of approved products that have been commercialized, and can prevent or limit further marketing of a product

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based upon the results of post-marketing programs. In addition, the federal Medical Device Reporting regulations require us to provide information to the FDA whenever there is evidence that reasonably suggests that a device may have caused or contributed to a death or serious injury or, if a malfunction were to occur, would be likely to cause or contribute to a death or serious injury. Federal regulations also require us to report certain recalls or corrective actions to the FDA. Furthermore, most major markets for medical devices outside the United States require clearance, approval, or compliance with certain standards before a product can be commercially marketed. The process of obtaining regulatory clearances or approvals to market a medical device, particularly from the FDA and certain foreign governmental authorities, can be costly and time-consuming, and clearances or approvals may not be granted for products or product improvements on a timely basis, if at all. Delays in receipt of, or failure to obtain, clearances or approvals for products or product improvements could result in delayed realization of product revenues or in substantial additional costs, which could have a material adverse effect on our business or results of operations or prospects. At any time after approval of a product for commercial sale, the FDA may conduct periodic inspections to determine compliance with QSR requirements, and/or current Medical Device Reporting regulations, or other regulatory requirements. Noncompliance with applicable requirements may subject us or responsible individuals to sanctions including civil money penalties, product seizure, injunction, or criminal prosecution. In addition, the FDA may withhold or delay pre-market approval of our products until the noncompliance is resolved. Product approvals by the FDA can also be withdrawn due to failure to comply with regulatory standards or the occurrence of unforeseen problems following initial approval.

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        Regulatory agencies in the United States or other international geographies from time to time limit or ban the use of certain materials used in the manufacture of our products, require collection and disposal of products at the end of their lifecycle, and require disclosure of the origin of certain raw materials in our products. Noncompliance with applicable requirements could have a material adverse affecteffect on our business.

        The United States Physician Payment Sunshine Act, and similar laws in other jurisdictions, also imposes newimpose reporting and disclosure requirements on device, pharmaceutical, and biologics companies for certain financial relationships with United States health care providers and teaching hospitals. Failure to submit required information or submitting incorrect information may result in significant civil monetary penalties. We will be required to report such aggregate data by March 31, 2014 and detailed data by May 30, 2014.

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

        Despite our implementation of robust compliance processes, we may be subject, from time to time, to inspections, investigations, and other enforcement actions by governmental authorities. If we are found not to be in compliance with applicable laws or regulations, the applicable governmental authority can impose fines, delay, suspend, or revoke regulatory clearances or approvals, institute proceedings to detain or seize our products, issue a recall, impose marketing or operating restrictions, enjoin future violations and assess civil penalties against us or our officers or employees, and institute criminal prosecution. Moreover, governmental authorities can ban or request the recall, repair, replacement, or refund of the cost of any device or product we manufacture or distribute. Any of the foregoing actions could result in decreased sales as a result of negative publicity and product liability claims, and could have a material adverse effect on our financial condition, results of operations, and prospects. In addition to the sanctions for noncompliance described above, commencement of an enforcement proceeding, inspection, or investigation could divert substantial management attention from the operation of our business and have an adverse effect on our business, results of operations, and financial condition.

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Our industry is experiencing greater scrutiny and regulation by governmental authorities, which may lead to greater governmental regulation in the future.

        In recent years, the medical device industry has been subject to increased regulatory scrutiny, including by the FDA, numerous other federal, state, and foreign governmental authorities, as well as members of Congress. This has included increased regulation, enforcement, inspections, and governmental investigations of the medical device industry and disclosure of financial relationships with health care professionals. We anticipate that the government will continue to scrutinize our industry closely, and that additional regulation by governmental authorities, both foreign and domestic, may increase compliance costs, exposure to litigation, and other adverse effects to our operations.

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

        The regulatory approval process for new products and new indications for existing products requires extensive clinical trials and procedures, including early clinical experiences and regulatory studies. Unfavorable or inconsistent clinical data from current or future clinical trials or procedures conducted by us, our competitors, or third parties, or perceptions regarding this clinical data, could adversely affect our ability to obtain necessary approvals and the market's view of our future prospects. Such clinical trials and procedures are inherently uncertain and there can be no assurance that these trials or procedures will be completed in a timely or cost-effective manner or result in a commercially viable product. Failure to successfully complete

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these trials or procedures in a timely and cost-effective manner could have a material adverse effect on our prospects. Clinical trials or procedures may experience significant setbacks even after earlier trials have shown promising results. Further, preliminary results from clinical trials or procedures may be contradicted by subsequent clinical analysis. In addition, results from our clinical trials or procedures may not be supported by actual long-term studies or clinical experience. If preliminary clinical results are later contradicted, or if initial results cannot be supported by actual long-term studies or clinical experience, our business could be adversely affected. Clinical trials or procedures may be suspended or terminated by us, the FDA or other regulatory authorities at any time if it is believed that the trial participants face unacceptable health risks.

We are subject to risks arising from concerns and/or regulatory actions relating to "mad cow disease."

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

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

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

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        Third-party payors are increasingly attempting to contain health care costs by limiting both coverage and the level of reimbursement for medical products and services. There can be no assurance that levels of reimbursement, if any, will not be decreased in the future, or that future legislation, regulation, or reimbursement policies of third-party payors will not otherwise adversely affect the demand for and price levels of our products. The introduction of cost containment incentives, combined with closer scrutiny of health care expenditures by both private health insurers and employers, has resulted in increased discounts and contractual adjustments to hospital charges for services performed. Hospitals or physicians may respond to such cost-containment pressures by substituting lower cost products or other therapies. In addition, the 2010 United States health care law could adversely affect reimbursement levels for our products, or otherwise adversely affect our product pricing and profitability.

        Initiatives to limit the growth of health care costs, including price regulation, are underway in several countries around the world. In many countries, customers are reimbursed for our products under a government operated insurance system. Under such a system, the government periodically reviews reimbursement levels and may limit patient access. If a government were to decide to reduce reimbursement levels, our product pricing could be adversely affected.

        Third-party payors may deny reimbursement if they determine that a device used in a procedure was not used in accordance with cost-effective treatment methods as determined by such third-party payors, or was used for an unapproved indication. Third-party payors may also deny reimbursement for experimental procedures and devices. We believe that many of our existing products are cost-effective, even though the

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one-time cost may be significant, because they are intended to reduce overall health care costs over a long period of time. We cannot be certain that these third-party payors will recognize these cost savings instead of merely focusing on the lower initial costs associated with competing therapies. If our products are not considered cost-effective by third-party payors, our customers may not be reimbursed for them, resulting in lower sales of our products.

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

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

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

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

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

        The development, marketing, and sale of many of our products requires us to maintain working relationships with physicians upon whom we rely to provide considerable knowledge and experience. These physicians may assist us as researchers, marketing consultants, product trainers and consultants, inventors, and as public speakers. If new laws, regulations, or other developments limit our ability to maintain strong

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relationships with these professionals or to continue to receive their advice and input, the development and marketing of our products could suffer, which could have a material adverse effect on our business, financial condition, and results of operations.

Item 1B.    Unresolved Staff Comments

        None.

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Item 2.    Properties

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

        The Irvine, California lease expires in 2021; the Draper, Utah lease expires in 2024; the Dominican Republic property has one lease that expires in 2016 and one that expires in 2021; the Dominican Republic property leases expire in 2019; the Puerto Rico property has one lease that expires in 2016 and one that expires in 2018; the Horw, Switzerland lease expires in 2015;2016; the Tokyo, Japan lease expires in 2015; and Singapore has one land lease that expires in 2036 and one that expires in 2041. We believe our properties have been well maintained, are in good operating condition, and are adequate for current needs.

Item 3.    Legal Proceedings

        For a description of our material pending legal proceedings, please see Note 1617 to the "Consolidated Financial Statements" of this Annual Report on Form 10-K, which is incorporated by reference.

Item 4.    Mine Safety Disclosures

        Not applicable.

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PART II

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

Market Price

        The principal market for our common stock is the New York Stock Exchange (the "NYSE"). The table below sets forth, for the calendar quarters indicated, the high and low salesclosing prices of our common stock as reported by the NYSE.

Number of Stockholders

        On January 31, 2014,February 10, 2015, there were 16,51915,961 stockholders of record of our common stock.

Dividends

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

Issuer Purchases of Equity Securities

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Performance Graph

        The following graph compares the performance of our common stock with that of the S&P 500 Index and the S&P 500 Healthcare Equipment Index. The cumulative total return listed below assumes an initial investment of $100 on December 31, 20082009 and reinvestment of dividends.

COMPARISON OF FIVE5 YEAR CUMULATIVE TOTAL RETURN

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Item 6.    Selected Financial Data

        The financial data for the prior years presented in the table below have been restated to reflect our change in accounting principle. For further information, set forth below should be readsee Note 3 to the "Consolidated Financial Statements."

        Our sales growth was driven by our Transcatheter Heart Valves product group due to strong growthValve Therapy products which, in Europe, benefited from the launch of theEdwards SAPIEN 3 transcatheter heart valve, and starting in 2013, the United States.States, benefited from the launch of theEdwards SAPIEN XT transcatheter heart valve. Our gross profit margin has benefited from a more profitable product mix, ledwas negatively impacted in 2014 by theforeign currency exchange rate fluctuations, increased Transcatheter Heart Valve sales, but has been tempered byincentive compensation due to our strong performance, and higher manufacturing costs, as we have preparedprimarily for new product launches.our operations in Utah. Net income in 2014 and 2013 also benefited from the $52.3special items. In 2014, we received $750.0 million litigation award,($487.9 million, net of tax,tax) from Medtronic, Inc. ("Medtronic") for an upfront payment due under a litigation settlement agreement, and in 2013, we received from Medtronic Inc. We continue to significantly invest in research and development to extend and defend our leadership position.an $83.6 million ($52.3 million, net of tax) litigation award.

Healthcare Environment, Opportunities and Challenges

        The medical device 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. To strengthen our leadership and enable future growth opportunities, in 20132014 we invested 15.8 percent14.9% of our net sales in research and development. In the coming year,a consolidating industry, we expect increased competition withbelieve our Transcatheter Heart Valves asfocus on innovation and a robust product pipeline will continue to help us compete more effectively, sustain our competitors begin introducing products in the United Statessuccesses, and Europe.build long-term value for our shareholders. The following is a summary of important Transcatheter Heart Valve developments during 2013:2014:

•

early clinical evidenceoutcomes in The PARTNER II Trial demonstrated similar outcomes between theEdwards SAPIEN 3 transcatheter heart valveTrial demonstrated outstanding safety, including a low mortality and theEdwards SAPIEN XT transcatheter heart valve in inoperable patients, a positive step toward the approval ofSAPIEN XT and its lower profile delivery system;stroke rate;



•

longer-term updates from The PARTNER Trial strengthened the evidence that patients treated with theSAPIEN valve isdemonstrated a safemortality benefit, persistent symptom benefit, and less-invasive alternativea statistically significant reduction in re-hospitalizations compared with standard therapy;



•

we received regulatory approval in Europe for patients who needourSAPIEN 3 valve;



•

we received regulatory approval in the United States for ourEdwards SAPIEN XT valve, replacement, but are at high surgical risk;and we continued to evaluate theSAPIEN 3 valve as part of the PARTNER II Trial; and



•

we received regulatory approval and reimbursementin Europe for ourtheEdwards SAPIEN XTINTUITY Elite Valve System, and in the United States, this valve platform has been studied as part of the TRANSFORM Trial. Three-year clinical outcomes of theEdwards INTUITY valve platform studied in Japanthe TRITON Trial demonstrated improved cardiac and in January 2014, regulatory approval in Europe to launch ourSAPIEN 3 valve. United States studies of theSAPIEN 3 valve were initiated in August 2013.valvular performance, as well as patient functional status.

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        We are dedicated to generating robust clinical and economic evidence increasingly expected by patients, clinicians, and payors in the new healthcare environment, with athe goal of enhancing the value of delivering comprehensive care.

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Results of Operations

Net Sales by Major Regions
(dollars in millions)

        The $107.7 millionincrease in net sales in the United States in 2014 was due primarily to:

•

Transcatheter Heart Valve Therapy, which increased net sales by $85.1 million, due primarily to (1) commercial sales of theEdwards SAPIEN XT transcatheter heart valve resulting from the product launch in June 2014, (2) an increase in clinical sales of theEdwards SAPIEN 3 transcatheter heart valve, (3) royalties received under a license agreement with Medtronic (see Note 4 to the "Consolidated Financial Statements"), and (4) the reversal of the sales reserve for estimated Transcatheter Heart Valve Therapy product returns upon delivery of next-generation valves. The introduction of the next-generation valves was completed in 2014. These increases were partially offset by decreased sales of theEdwards SAPIEN transcatheter heart valve as customers converted toEdwards SAPIEN XT, a reduction in net stocking orders as customers converted from direct sales to consignment, and decreased clinical sales ofEdwards SAPIEN XT;



•

Critical Care, which increased net sales by $12.9 million, due primarily to enhanced surgical recovery products; and



•

Surgical Heart Valve Therapy, which increased net sales by $9.9 million, driven primarily by sales of pericardial aortic tissue valves.

        The $169.7 millionincrease in international net sales in 2014 was due primarily to:

•

Transcatheter Heart Valve Therapy, which increased net sales by $152.4 million, driven primarily by the launch of theEdwards SAPIEN 3 transcatheter heart valve in Europe and the ongoing launch of theEdwards SAPIEN XT transcatheter heart valve in Japan, partially offset by lower sales of theEdwards SAPIEN XT transcatheter heart valve in Europe as customers converted toEdwards SAPIEN 3;



•

Surgical Heart Valve Therapy, which increased net sales by $25.9 million, driven primarily by sales of pericardial aortic tissue valves andEDWARDS INTUITY Elite valves; and



•

Critical Care, which increased net sales by $16.1 million, driven primarily by core hemodynamic products and enhanced surgical recovery products;

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        partially offset by:

•

foreign currency exchange rate fluctuations, which decreased net sales by $23.0 million, due to the weakening of various currencies against the United States dollar, mainly the Japanese yen, partially offset by the strengthening of the Euro against the United States dollar.

        The $127.5 millionincrease in net sales in the United States in 2013 was due primarily to:

•

Transcatheter Heart Valves,Valve Therapy, which increased net sales by $106.1 million, driven primarily by sales of theEdwards SAPIEN transcatheter heart valve. Procedure volume increased following the FDA action in October 2012 to expand the indicated patient population and access routes compared to the original 2011 approval.

        The $18.4 millionincrease in international net sales in 2013 was due primarily to:

•

Transcatheter Heart Valves,Valve Therapy, which increased net sales by $52.4 million, driven primarily by sales of theEdwards SAPIEN XT transcatheter heart valve; and



•

surgical heart valve products, which increased net sales by $15.4 million, driven primarily by sales of theCarpentier-Edwards PERIMOUNT Magna Mitral Easepericardial mitral tissue valves andEDWARDS INTUITY Elite valves;

        partially offset by:

•

foreign currency exchange rate fluctuations, which decreased net sales by $43.9 million, due primarily to the weakening of the Japanese yen against the United States dollar, partially offset by the strengthening of the Euro against the United States dollar.

        The $206.5 millionincrease in net sales in the United States in 2012 was due primarily to:

•

Transcatheter Heart Valves, which increased net sales by $203.5 million, driven primarily by sales of theEdwards SAPIEN transcatheter heart valve which was launched in the fourth quarter of 2011.

        The $14.5 millionincrease in international net sales in 2012 was due primarily to:

•

Transcatheter Heart Valves, which increased net sales by $35.9 million, driven primarily by sales of theEdwards SAPIEN XT transcatheter heart valve; and



•

Surgical Heart Valve Therapy products, which increased net sales by $19.5 million, driven primarily by sales of theCarpentier-Edwards PERIMOUNT Magna Aortic Ease valve;

        partially offset by:

•

foreign currency exchange rate fluctuations, which decreased net sales by $42.4 million, due primarily to the weakening of the Euro against the United States dollar.

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

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Net Sales by Product Group
(dollars in millions)

Transcatheter Heart Valve Therapy

        The $235.9 million increase in net sales of Transcatheter Heart Valve Therapy products in 2014 was due primarily to:

•

theEdwards SAPIEN 3 transcatheter heart valve, driven primarily by the launch in Europe and clinical sales in the United States; and



•

theEdwards SAPIEN XT transcatheter heart valve, driven primarily by the launches in the United States and Japan;

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        partially offset by:

•

lower sales of theEdwards SAPIEN transcatheter heart valve, primarily in the United States, and theEdwards SAPIEN XT transcatheter heart valve in Europe, as customers converted to next-generation products.

        The $155.6 million increase in net sales of Transcatheter Heart Valve Therapy products in 2013 was due primarily to:

•

theEdwards SAPIEN transcatheter heart valve in the United States, which increased net sales by $97.2 million;



•

theEdwards SAPIEN XT transcatheter heart valve, which increased net sales by $61.8 million, due primarily to an increase in international sales; and



•

foreign currency exchange rate fluctuations, which increased net sales by $5.2 million, due primarily to the strengthening of the Euro against the United States dollar;

        partially offset by:

•

a $14.1 million sales reserve for estimated Transcatheter Heart Valve Therapy product returns expected in 2014 upon introduction of theEdwards SAPIEN 3 transcatheter valve system in Europe and theEdwards SAPIEN XT transcatheter heart valve in the United States.

        During the first quarter of 2014, we completed enrollment in the 500 patient cohort of The PARTNER II Trial studying theEdwards SAPIEN 3 transcatheter valve system in high risk and inoperable patients. In January 2014, we received FDA approval to expand The PARTNER II Trial to include a 1,000 patient single-arm, non-randomized cohort to study theEdwards SAPIEN 3 transcatheter valve system in the treatment of intermediate-risk patients with severe symptomatic aortic stenosis. Enrollment was completed in September 2014. At the end of 2014, we submitted our pre-market approval application forSAPIEN 3 in the United States.

        In January 2014, we received CE Mark for theEdwards SAPIEN 3 transcatheter valve system in Europe. In June 2014, we received FDA approval for theEdwards SAPIEN XT transcatheter heart valve in the United States for the treatment of high-risk and inoperable patients with severe symptomatic aortic stenosis.

Surgical Heart Valve Therapy

        The $24.9 million increase in net sales of Surgical Heart Valve Therapy products in 2014 was due primarily to:

•

surgical heart valve products, which increased net sales by $36.4 million, driven by sales in the United States and Europe of pericardial aortic tissue valves andEDWARDS INTUITY Elite valves;

        partially offset by:

•

foreign currency exchange rate fluctuations, which decreased net sales by $10.5 million, due to the weakening of various currencies against the United States dollar, mainly the Japanese yen, partially offset by the strengthening of the Euro against the United States dollar.

        The $13.7 million increase in net sales of Surgical Heart Valve Therapy products in 2013 was due primarily to:

•

surgical heart valve products, which increased net sales by $30.1 million, driven by sales of theCarpentier-Edwards PERIMOUNT Magna Aortic Ease, Carpentier-Edwards PERIMOUNT Magna Mitral Ease,pericardial aortic and mitral tissue valves, andEDWARDS INTUITY Elite valves; and



•

cardiac surgery systems, which increased net sales by $4.9 million, driven by sales of specialty cannula products;

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        partially offset by:

•

foreign currency exchange rate fluctuations, which decreased net sales by $20.2 million, due primarily to the weakening of the Japanese yen against the United States dollar.

        The $3.1 million increase in net sales of Surgical Heart Valve Therapy products in 2012 was due primarily to:

•

surgical heart valve products, which increased net sales by $12.5 million, driven by sales of theCarpentier-Edwards PERIMOUNT Magna Aortic Ease        valve; and



•

cardiac surgery systems, which increased net sales by $6.0 million, driven by specialty cannula products and minimally invasive surgical products;

        partially offset by:

•

foreign currency exchange rate fluctuations, which decreased net sales by $15.3 million, due primarily to the weakening of the Euro against the United States dollar.

        At the end of the first quarter of 2013,In April 2014, we received approval to sellCE Mark for ourCarpentier-Edwards PERIMOUNT Magna Ease valve in China. In the United States, we received approval from the FDA to include advancedEDWARDS INTUITY Elite ourvalve system. This next-generation, minimally invasiverapid deployment system facilitates smaller incisions in surgical aortic valve surgery system,replacement procedures. In the United States, we completed enrollment of patients in our ongoing TRANSFORM Trial a clinical trial designed to support FDA approval for the product. WeEDWARDS INTUITY Elite, and we continued to enrollenrolling patients in our COMMENCE clinical trial, which is studying our next-generationGLX advanced tissue treatment platform applied to theMagna Ease aortic surgical valve and theMagna Mitral Ease valve.

Transcatheter Heart ValvesCritical Care

        The $155.6$16.6 million increase in net sales of Transcatheter Heart ValvesCritical Care products in 20132014 was due primarily to:

•

theEdwards SAPIEN transcatheter heart valve into enhanced surgical recovery products, and core hemodynamic products outside the United States, which increased net sales by $97.2 million;

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•

theEdwards SAPIEN XT transcatheter heart valve, which increased net sales by $61.8 million, due primarily to an increase in international sales; and



•

foreign currency exchange rate fluctuations, which increased net sales by $5.2 million, due primarily to the strengthening of the Euro against the United States dollar;

partially offset by:

•

a $14.1 million sales reserve for estimated Transcatheter Heart Valve product returns expected in 2014 upon introduction of theEdwards SAPIEN 3 transcatheter valve system in Europe and theEdwards SAPIEN XT transcatheter heart valve in the United States. Additional sales reserves are expected in 2014 for incremental estimated Transcatheter Heart Valve product returns.

        The $218.3 million increase in net sales of Transcatheter Heart Valves in 2012 was due primarily to:

•

theEdwards SAPIEN transcatheter heart valve, which increased net sales by $176.7 million, due primarily to the launch in the United States in the fourth quarter of 2011; and



•

theEdwards SAPIEN XT transcatheter heart valve, which increased net sales by $63.8 million, due primarily to an increase in international sales;

        partially offset by:

•

foreign currency exchange rate fluctuations, which decreased net sales by $16.7$12.0 million, due primarily to the weakening of the EuroJapanese yen against the United States dollar.

        During the fourth quarter of 2013, we completed enrollment in Cohort A, the surgical arm of The PARTNER II Trial, which is evaluating theEdwards SAPIEN XT transcatheter heart valve for the United States market. We submitted our pre-market approval for Cohort B of The PARTNER II Trial to the FDA during the second quarter of 2013 and the FDA's evaluation remains pending. Cohort B is designed for patients with a higher risk profile who are deemed inoperable. Also during the second quarter of 2013, we received approval forSAPIEN XT in Japan, and began commercial sales in October 2013. During the third quarter of 2013, we received approval forSAPIEN in Australia andSAPIEN XT in Canada, and received FDA approval to expand The PARTNER II Trial to include a 500 patient cohort to study theEdwards SAPIEN 3 transcatheter valve system in high risk and inoperable patients. Also, in the third quarter of 2013, the FDA revised the label for ourSAPIEN valve to remove references to specific access points, now making it available for patients who need alternate access points. In January 2014, we received FDA approval to expand The PARTNER II Trial to include a 1,000 patient single-arm, non-randomized cohort to study theEdwards SAPIEN 3 transcatheter valve system in the treatment of intermediate risk patients with severe symptomatic aortic stenosis. In addition, in January 2014, we received CE Mark forSAPIEN 3 in Europe and immediately commenced a launch.

Critical Care

        The $23.4 million decrease in net sales of Critical Care products in 2013 was due primarily to foreign currency exchange rate fluctuations, which decreased net sales by $28.9 million, due primarily to the weakening of the Japanese yen against the United States dollar.

        In June 2014, we received FDA clearance for theClearSight system, a noninvasive monitor that provides clinicians access to blood volume and blood flow information for patients at moderate or high risk of post-surgical complications, in whom invasive monitoring would not be used. The $0.4 millionClearSight system is part of our enhanced surgical recovery product portfolio. In September 2014, due to a strategic shift of our investment initiatives, we decided to discontinue our automated glucose monitoring program.

Gross Profit

        The 1.6 percentage point decrease in gross profit as a percentage of net sales of Critical Care products in 20122014 was due primarily to:driven by:

•

a 0.7 percentage point decrease due to the impact of foreign currency exchange rate fluctuations, which decreased net sales by $10.4 million,including the settlement of foreign currency hedging contracts;



•

a 0.7 percentage point decrease due primarily to the weakening of the Euro against the United States dollar;higher performance-based incentive compensation; and



•

the discontinuation of distributed sales of certain oximetry products and reduced sales ofhigher manufacturing costs, primarily for our Central Venous Access products, which decreased net sales by $6.7 million;operations in Utah;

        partially offset by:

•

advanced monitoring products, which increased net salesa 0.8 percentage point increase due to an improved product mix in the United States, driven by $16.7 million, driven byFloTrac systems.Transcatheter Heart Valve Therapy products.

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Gross Profit

        The 0.5 percentage point increase in gross profit as a percentage of net sales in 2013 was driven by:

•

a 1.0 percentage point increase due to an improved product mix in the United States, driven by Transcatheter Heart Valves;Valve Therapy products; and



•

a 0.5 percentage point increase in international markets due to a more profitable product mix, primarily higher sales of Transcatheter Heart Valves;Valve Therapy products;

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        partially offset by:

•

a 1.3 percentage point decrease due primarily to higher manufacturing costs due to capacity expansion in preparation for multiple Transcatheter Heart Valve Therapy product introductions.

        The 3.2 percentage point increase in gross profit as a percentage of net sales in 2012 was driven by:

•

a 2.3 percentage point increase due to the impact of foreign currency exchange rate fluctuations, including the settlement of foreign currency hedging contracts; and



•

a 2.3 percentage point increase in the United States due to a more profitable product mix, primarily higher sales of Transcatheter Heart Valves;

        partially offset by:

•

the voluntary recalls in the second quarter of 2012 of certain of our heart valves and Critical Care catheters, and manufacturing inefficiencies.

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

        The $40.3$124.6 million increase in SG&A expenses in 2014 was due primarily to (1) higher sales and marketing expenses in the United States, Europe, and Japan, mainly to support the Transcatheter Heart Valve Therapy program, and (2) higher performance-based incentive compensation.

        The $36.0 million increase in SG&A expenses in 2013 was due primarily to (1) higher sales and marketing expenses in the United States and Japan, mainly to support the Transcatheter Heart Valve Therapy program and (2) the 2.3% United States medical device excise tax, or $15.8 million, on United States sales of most medical devices which became effective in 2013. These increases were partially offset by the impact of foreign currency, which reduced expenses by $12.4 million due primarily to the weakening of the Japanese yen against the United States dollar. The decrease in SG&A expenses as a percentage of net sales in 2013 was due primarily to decreased SG&A expenses in Europe as a percentage of net sales.

        The $62.9 million increase in SG&A expenses in 2012 was due primarily to higher sales and marketing expenses in the United States, mainly to support the launch of the Transcatheter Heart Valve program. The decrease in SG&A expenses as a percentage of net sales in 2012 was primarily due to the impact of foreign currency and lower sales and marketing expenses in Europe as a percentage of net sales. The impact of foreign currency reduced SG&A expenses by $17.0 million due primarily to the weakening of the Euro against the United States dollar.

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Research and Development Expenses
(dollars in millions)

        The increase in research and development expenses in 20132014 was due primarily to new aortic and 2012mitral Transcatheter Heart Valve Therapy product development efforts, additional investments in clinical studies in the Surgical Heart Valve Therapy program, and higher performance-based incentive compensation. The decrease in research and development expenses as a percentage of net sales was due primarily to higher net sales.

        The increase in research and development expenses in 2013 was due primarily to additional investments in clinical studies and new product development efforts in the Transcatheter Heart Valve Therapy program.

Special (Gains) Charges
Intellectual Property Litigation (Income) Expense, Net(in millions)

Settlements and Litigation

        In February 2013,May 2014, we entered into an agreement with Medtronic to settle all outstanding patent litigation between the companies, including all cases related to transcatheter heart valves. Pursuant to the agreement, we received $83.6 millionan upfront payment from Medtronic Inc. in satisfactionthe amount of the April 2010 jury award of damages for infringement of the U.S. Andersen transcatheter heart valve patent, including accrued interest.$750.0 million. For further information, see Note 164 to the "Consolidated Financial Statements."

        In December 2011, we recorded a $3.3 million charge related to a litigation settlement.

Realignment Expenses

        In DecemberFebruary 2013, we recorded a $10.4received $83.6 million charge related primarily to severance expenses associated with a global workforce realignment impacting 118 employees. Asfrom Medtronic in satisfaction of December 31, 2013, our remaining severance obligationsthe initial April 2010 jury award of $9.2 million are expected to be substantially paid bydamages for infringement of the end of 2014.

        In December 2012, we recorded a $9.0 million charge related primarily to severance expenses associated with a global workforce realignment impacting 92 employees. As of December 31, 2013, payments related to the realignment were substantially complete.

        In December 2011, we recorded a $5.5 million charge related primarily to severance expenses associated with a global workforce realignment impacting 49 employees. As of December 31, 2013, payments related to the realignment were complete.

IPR&D Impairment

        In December 2013, we recorded a $5.9 million write-off of IPR&D assets acquired from Embrella Cardiovascular, Inc. For further information, see Note 5 to the "Consolidated Financial Statements."United States Andersen transcatheter heart valve patent, including accrued interest.

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Licensing of Intellectual Property

        In April 2012, we obtained an exclusive license to a suturing device for minimally invasive surgery applications. The intellectual property is under development and there is uncertainty as to whether the product will ultimately be approved. We recorded a charge of $2.0 millionincurred external legal costs related to the upfront licensing and royalty fees.

        In June 2012, we obtained a co-exclusive sublicense to intellectual property related to processing tissuelitigation of $9.6 million, $22.1 million, and implanting cardiovascular valves. The intellectual property is under development$14.4 million during 2014, 2013, and there is uncertainty as to whether the product will ultimately be approved. We recorded a charge of $5.0 million related to the upfront licensing fee.2012, respectively.

European Receivables ReserveSpecial Charges

        During 2011, we recorded a $12.8        Special charges were $70.7 million, charge$16.3 million, and $16.0 million for the years ended December 31, 2014, 2013, and 2012, respectively. For additional details, see Note 5 to reflect the increased risk associated with our southern European receivables, primarily Greece."Consolidated Financial Statements."

Interest Expense

        Interest expense was $17.2 million, $9.8 million, and $4.4 million in 2014, 2013, and $3.1 million in 2013, 2012, and 2011, respectively. The $5.4 million increase in interest expense for 2013 resulted primarily from a higher average debt balance as compared to the prior year2014 and higher average interest rates due to the issuance in October 2013 of $600.0 million of 2.875% fixed-rate unsecured senior notes. The $1.3 million increase in interest expense for 2012 resulted primarily from higher average interest rates and a higher average debt balance as compared to the prior year.year due to the issuance in October 2013 of $600.0 million of 2.875% fixed-rate unsecured senior notes.

Interest Income

        Interest income was $6.4 million, $4.6 million, and $4.8 million in 2014, 2013, and $3.4 million in 2013, 2012, and 2011, respectively. The $0.2 millionincrease in interest income for 2014 resulted primarily from higher average investment balances. The decrease in interest income for 2013 resulted primarily from lower average interest rates, partially offset by higher average investment balances. The $1.4 million increase in interest income for 2012 resulted primarily from the recognition of interest income on discounted accounts receivables in southern Europe, partially offset by lower average interest rates.

Other Expense, (Income), net
(in millions)

        In December 2014, we recorded a $4.0 million impairment charge related to our promissory note receivable because it was likely that we will be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the promissory note agreement.

        The 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 our available-for-sale and cost method investments. During 2014, we recorded an other-than-temporary impairment charge of $3.5 million related to one of our cost method investments.

        In March 2014, we recorded a $3.7 million insurance settlement gain related to inventory that was damaged in the fourth quarter of 2013.

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

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

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        In September 2009,2014, we soldcommitted to purchase our hemofiltration product line. In connection withDraper, Utah facility for $17.0 million under a purchase option provided in the transaction,lease agreement. Under the terms of the lease agreement, we were entitled to earn-out payments up to $9.0paid $1.0 million based onin December 2014 for certain revenue objectives to be achieved by the buyer over the two years following the sale. As of March 31, 2011, all earn-out payments had been earned.lease contract termination costs.

Provision for Income Taxes

        Our effective income tax rates for 2014, 2013, 2012 and 20112012 were impacted as follows (in millions):

        Certain previously reported amounts in the above table have been reclassified to conform to our current year presentation.

Reserve for Uncertain Tax Positions

        As of December 31, 20132014 and 2012,2013, the liability for income taxes associated with uncertain tax positions was $127.7$192.3 million and $113.6$127.7 million, respectively. We estimate that these liabilities would be reduced by $30.9$34.3 million and $26.1$30.9 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 $96.8$158.0 million and $87.5$96.8 million, respectively, if not required, would favorably affect our effective tax rate.

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

        We recognize interest and penalties, if any, related to uncertain tax positions in the provision for income taxes. As of December 31, 2014, we had accrued $6.8 million (net of $5.0 million tax benefit) of interest related to uncertain tax positions, and as of December 31, 2013, we had accrued $4.5 million (net of $3.3 million tax benefit) of interest related to uncertain tax positions, and as of December 31, 2012, we had accrued $3.1 million (net of $2.1 million tax benefit) of interest related to uncertain tax positions. During 2014, 2013, 2012 and 2011,2012, we recognized interest expense, net of tax benefit, of $2.3 million, $1.4 million, $1.0 million and $0.4$1.0 million, respectively, in "Provision for Income Taxes" on the consolidated statements of operations.

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        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

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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. Management believes that adequate amounts of tax and related penalty and interest have been provided in income tax expense for any adjustments that may result from these uncertain tax positions.

        At December 31, 2013,2014, all material state, local, and foreign income tax matters have been concluded for years through 2006.2008. During the third quarter of 2013, the Internal Revenue Service ("IRS") completed its fieldwork for the 2009 and 2010 tax years. The case is currently in suspense pending finalization of an Advance Pricing Agreement ("APA") and Joint Committee of Taxation approval. The IRS began its examination of the 2011 and 2012 tax years during the fourth quarter of 2013.

        We have also entered into an APA process between the Switzerland and the United States governments for the years 2009 through 20132015 covering transfer pricing matters. These transfer pricing matters are significant to our consolidated financial statements, and the final outcome of the negotiations between the two governments is uncertain.

        During 2014, we also filed with the IRS a request for a pre-filing agreement associated with a tax return filing position on a portion of the litigation settlement payment received from Medtronic in May 2014 (see Note 4 to the "Consolidated Financial Statements").

        Management believes that adequate amounts of tax and related penalty and interest have been provided in income tax expense for any adjustments that may result for our uncertain tax positions. Based upon the information currently available and numerous possible outcomes, we cannot reasonably estimate what, if any, changes in our existing uncertain tax positions may occur in the next 12 months and thus have recorded the gross uncertain tax positions as a long-term liability. However, if the APA and/or pre-filing agreement is finalized in the next 12 months, it is reasonably possible that these events could result in a significant change in our uncertain tax positions within the next 12 months.

        The effective income tax rate for the year ended December 31, 2014 included (1) $262.1 million of tax expense associated with a $750.0 million litigation settlement payment received from Medtronic in May 2014 (see Note 4 to the "Consolidated Financial Statements") and (2) $4.8 million of tax benefits from the remeasurement of uncertain tax positions.

        The federal research credit expired on December 31, 2011 and was not reinstated untilon January 2, 2013. Accordingly,As a result, the effective income tax rate for the year ended December 31, 2012 was calculated without an assumeda benefit for the federal research credit. The effective income tax rate for the year ended December 31, 2013 included (1) an $8.4 million benefit for the full year 2012 federal research credit and (2) $31.3 million of tax expense associated with the $83.6 million litigation award received from Medtronic Inc. in February 2013.2013 (see Note 4 to the "Consolidated Financial Statements").

        We have received tax incentives in Puerto Rico, the Dominican Republic, Singapore, and Switzerland. The tax reductions as compared to the local statutory rates favorably impacted earnings per diluted share for the years ended December 31, 2014, 2013, and 2012 by $0.63, $0.44, and 2011 by $0.44, $0.39, and $0.40, respectively. The Puerto Rico, Dominican Republic, Singapore, and Switzerland grants provide our manufacturing operations partial or full exemption from local taxes until the years 2028, 2030 (subject to review beginning in 2015), 2024, and 2015, respectively.

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

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time, seek to take advantage of favorable interest rate environments or other market conditions. We believe that we have the financial flexibility to attract long-term capital to fund short-term and long-term growth objectives. However, no assurances can be given that such long-term capital will be available to us on favorable terms, or at all.

        We believe that cash held in the United States, in addition to amounts available under credit facilities and cash from operations, are sufficient to fund our United States operating requirements.requirements for the next twelve months. Cash and cash equivalents and short-term investments held outside the United States have historically been used to fund international operations and acquire businesses outside of the United States, although a portion of those amounts may, from time to time, be subject to temporary intercompany loans into the United States. As of December 31, 2013,2014, cash and cash equivalents and short-term investments held in the United States and outside the United States were $811.7 million.$651.7 million and $787.1 million, respectively. The majority of cash and cash equivalents and short-term investments held outside the

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United States relates to undistributed earnings of certain of our foreign subsidiaries, which are considered by us to be indefinitely reinvested. Repatriations of cash and cash equivalents and short-term investments held outside the United States are subject to restrictions in certain jurisdictions, and may be subject to withholding and other taxes. The potential tax liability related to any repatriation would be dependent on the facts and circumstances that exist at the time such repatriation is made and the complexities of the tax laws of the United States and the respective foreign jurisdictions.

        We have a Five-Year Credit FacilityAgreement ("the Credit Agreement") which provides up to an aggregate of $750.0 million in borrowings in multiple currencies. As of December 31, 2014, there were no borrowings outstanding under the Credit Agreement. In October 2013, we issued $600.0 million of 2.875% fixed-rate unsecured senior notes due October 15, 2018. The proceeds from the Notes of $597.0 million were used to repay all amounts outstanding under our Credit Facility and the remainder will be used for general corporate purposes. For further information on our long-term debt, see Note 89 to the "Consolidated Financial Statements."

        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. The current $750.0 million program provides for repurchases through December 31, 2016. Under this stock repurchase authorization, in November 2013 and FebruaryDuring 2014, we entered into Rule 10b5-1 plans to repurchase, during the period January through April 2014, up to an aggregate total of $300.0 million of our common stock in accordance with certain pre-defined price parameters. During 2013, we repurchased a total of 6.84.4 million shares at an aggregate cost of $495.1$300.0 million, and as of December 31, 2013,2014, had remaining authority to purchase $502.5$952.5 million of our common stock. For further information, see Note 1213 to the "Consolidated Financial Statements."

        Net cash flows provided byoperating activities of $1,022.3 million for 2014 increased $549.6 million from 2013 due primarily to (1) the $750.0 million upfront payment received from Medtronic under a litigation settlement agreement, (2) a lower bonus payout in 2014 associated with 2013 bonuses, and (3) improved operating performance. These increases were partially offset by (1) income tax payments of $224.5 million related to the Medtronic settlement, (2) the prior year receipt of $83.6 million from Medtronic in satisfaction of the initial April 2010 jury award of damages for infringement of the United States Andersen transcatheter heart valve patent, and (3) the $50.0 million charitable contribution to the Edwards Lifesciences Foundation in 2014.