Document and Entity Information
Document and Entity Information | 6 Months Ended |
Jun. 30, 2019shares | |
Document Information [Line Items] | |
Document Type | 10-Q |
Document Quarterly Report | true |
Document Period End Date | Jun. 30, 2019 |
Document Transition Report | false |
Entity File Number | 000-09165 |
Entity Registrant Name | STRYKER CORP |
Entity Incorporation, State or Country Code | MI |
Entity Tax Identification Number | 38-1239739 |
Entity Address, Address Line One | 2825 Airview Boulevard |
Entity Address, City or Town | Kalamazoo, |
Entity Address, State or Province | MI |
Entity Address, Postal Zip Code | 49002 |
City Area Code | (269) |
Local Phone Number | 385-2600 |
Entity Current Reporting Status | Yes |
Entity Interactive Data Current | Yes |
Entity Filer Category | Large Accelerated Filer |
Entity Small Business | false |
Entity Emerging Growth Company | false |
Entity Shell Company | false |
Entity Common Stock, Shares Outstanding | 374,103,607 |
Amendment Flag | false |
Document Fiscal Year Focus | 2019 |
Document Fiscal Period Focus | Q2 |
Entity Central Index Key | 0000310764 |
Current Fiscal Year End Date | --12-31 |
Common Stock | |
Document Information [Line Items] | |
Title of each class | Common Stock, $.10 Par Value |
Trading Symbol | SYK |
Security Exchange Name | NYSE |
Senior Unsecured Notes 1.125% due 2021 | |
Document Information [Line Items] | |
Title of each class | 1.125% Notes due 2023 |
Trading Symbol | SYK23 |
Security Exchange Name | NYSE |
Senior Unsecured Notes 2.125% due 2027 | |
Document Information [Line Items] | |
Title of each class | 2.125% Notes due 2027 |
Trading Symbol | SYK27 |
Security Exchange Name | NYSE |
Senior Unsecured Notes 2.625% due 2030 | |
Document Information [Line Items] | |
Title of each class | 2.625% Notes due 2030 |
Trading Symbol | SYK30 |
Security Exchange Name | NYSE |
Senior Unsecured Notes Variable due 2020 | |
Document Information [Line Items] | |
Title of each class | Floating Rate Notes due 2020 |
Trading Symbol | SYK20A |
Security Exchange Name | NYSE |
Consolidated Statements Of Earn
Consolidated Statements Of Earnings (Unaudited) - USD ($) shares in Millions, $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Income Statement [Abstract] | ||||
Net sales | $ 3,650 | $ 3,322 | $ 7,166 | $ 6,563 |
Cost of sales | 1,270 | 1,132 | 2,503 | 2,236 |
Gross profit | 2,380 | 2,190 | 4,663 | 4,327 |
Research, development and engineering expenses | 246 | 216 | 471 | 420 |
Selling, general and administrative expenses | 1,282 | 1,190 | 2,685 | 2,426 |
Recall charges | 117 | 2 | 130 | 6 |
Amortization of intangible assets | 122 | 110 | 236 | 212 |
Total operating expenses | 1,767 | 1,518 | 3,522 | 3,064 |
Operating income | 613 | 672 | 1,141 | 1,263 |
Other income (expense), net | (48) | (49) | (96) | (98) |
Earnings before income taxes | 565 | 623 | 1,045 | 1,165 |
Income taxes | 85 | 171 | 153 | 270 |
Net earnings | $ 480 | $ 452 | $ 892 | $ 895 |
Net earnings per share of common stock: | ||||
Basic | $ 1.29 | $ 1.21 | $ 2.39 | $ 2.39 |
Diluted | $ 1.26 | $ 1.19 | $ 2.35 | $ 2.35 |
Weighted-average shares outstanding (in millions): | ||||
Basic | 373.9 | 373.9 | 373.6 | 373.9 |
Effect of dilutive employee stock options | 5.6 | 6.2 | 5.8 | 6.5 |
Diluted | 379.5 | 380.1 | 379.4 | 380.4 |
Cash dividends declared per share of common stock (in dollars per share) | $ 0.52 | $ 0.47 | $ 1.04 | $ 0.94 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income (Unaudited) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Statement of Comprehensive Income [Abstract] | ||||
Net earnings | $ 480 | $ 452 | $ 892 | $ 895 |
Other comprehensive income (loss), net of tax: | ||||
Marketable securities | 0 | 0 | 1 | (1) |
Pension plans | (7) | 8 | (11) | 2 |
Unrealized gains (losses) on designated hedges | 3 | 2 | (13) | 17 |
Financial statement translation | (61) | (57) | 24 | (22) |
Total other comprehensive income (loss), net of tax | (65) | (47) | 1 | (4) |
Comprehensive income | $ 415 | $ 405 | $ 893 | $ 891 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Millions | Jun. 30, 2019 | Dec. 31, 2018 |
Current assets | ||
Cash and cash equivalents | $ 1,754 | $ 3,616 |
Marketable securities | 85 | 83 |
Accounts receivable, less allowance of $70 ($64 in 2018) | 2,408 | 2,332 |
Inventories: | ||
Materials and supplies | 652 | 606 |
Work in process | 186 | 149 |
Finished goods | 2,360 | 2,200 |
Total inventories | 3,198 | 2,955 |
Prepaid expenses and other current assets | 740 | 747 |
Total current assets | 8,185 | 9,733 |
Property, plant and equipment: | ||
Land, buildings and improvements | 1,057 | 1,041 |
Machinery and equipment | 3,421 | 3,236 |
Total property, plant and equipment | 4,478 | 4,277 |
Less accumulated depreciation | 2,091 | 1,986 |
Property, plant and equipment, net | 2,387 | 2,291 |
Goodwill | 8,762 | 8,563 |
Other intangibles, net | 4,184 | 4,163 |
Noncurrent deferred income tax assets | 1,613 | 1,678 |
Other noncurrent assets | 1,223 | 801 |
Total assets | 26,354 | 27,229 |
Current liabilities | ||
Accounts payable | 616 | 646 |
Accrued compensation | 640 | 917 |
Income taxes payable | 139 | 158 |
Dividend payable | 192 | 192 |
Accrued expenses and other liabilities | 1,820 | 1,521 |
Current maturities of debt | 539 | 1,373 |
Total current liabilities | 3,946 | 4,807 |
Long-term debt, excluding current maturities | 7,974 | 8,486 |
Income taxes | 1,106 | 1,228 |
Other noncurrent liabilities | 1,385 | 978 |
Total liabilities | 14,411 | 15,499 |
Shareholders' equity | ||
Common stock, $0.10 par value | 37 | 37 |
Additional paid-in capital | 1,569 | 1,559 |
Retained earnings | 10,967 | 10,765 |
Accumulated other comprehensive loss | (630) | (631) |
Total shareholders' equity | 11,943 | 11,730 |
Total liabilities and shareholders' equity | $ 26,354 | $ 27,229 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Millions | Jun. 30, 2019 | Dec. 31, 2018 |
Statement of Financial Position [Abstract] | ||
Allowance for doubtful accounts receivable | $ 70 | $ 64 |
Common stock, par value (in dollars per share) | $ 0.1 | $ 0.1 |
Consolidated Statements Of Shar
Consolidated Statements Of Shareholders' Equity (Unaudited) - USD ($) shares in Millions, $ in Millions | Total | Total Stryker shareholders' equity | Common Stock | Additional Paid-In Capital | Retained Earnings | Accumulated Other Comprehensive Income (Loss) | Non-controlling interest |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Cumulative effect of accounting changes | $ (759) | ||||||
Beginning balance at Dec. 31, 2017 | $ 37 | $ 1,496 | 8,986 | $ (553) | $ 14 | ||
Beginning balance (in shares) at Dec. 31, 2017 | 374.4 | ||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Issuance of common stock under stock option and benefit plans | (43) | ||||||
Issuance of common stock under stock option and benefit plans (in shares) | 1.5 | ||||||
Repurchase of common stock | (7) | (293) | |||||
Repurchase of common stock (in shares) | (1.9) | ||||||
Share-based compensation | 57 | ||||||
Net earnings (loss) | $ 895 | 895 | 0 | ||||
Cash dividends declared | (352) | ||||||
Other comprehensive income (loss) | (4) | (4) | |||||
Interest purchased | (15) | ||||||
Foreign currency exchange translation adjustment | 1 | ||||||
Ending balance at Jun. 30, 2018 | 9,460 | $ 9,460 | $ 37 | 1,503 | 8,477 | (557) | 0 |
Ending balance (in shares) at Jun. 30, 2018 | 374 | ||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Cumulative effect of accounting changes | 0 | ||||||
Beginning balance at Mar. 31, 2018 | $ 37 | 1,486 | 8,201 | (510) | 9 | ||
Beginning balance (in shares) at Mar. 31, 2018 | 373.7 | ||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Issuance of common stock under stock option and benefit plans | (11) | ||||||
Issuance of common stock under stock option and benefit plans (in shares) | 0.3 | ||||||
Repurchase of common stock (in shares) | 0 | ||||||
Share-based compensation | 28 | ||||||
Net earnings (loss) | 452 | 452 | 0 | ||||
Cash dividends declared | (176) | ||||||
Other comprehensive income (loss) | (47) | (47) | |||||
Interest purchased | (9) | ||||||
Foreign currency exchange translation adjustment | 0 | ||||||
Ending balance at Jun. 30, 2018 | 9,460 | 9,460 | $ 37 | 1,503 | 8,477 | (557) | 0 |
Ending balance (in shares) at Jun. 30, 2018 | 374 | ||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Cumulative effect of accounting changes | 0 | ||||||
Beginning balance at Dec. 31, 2018 | 11,730 | $ 37 | 1,559 | 10,765 | (631) | 0 | |
Beginning balance (in shares) at Dec. 31, 2018 | 374.4 | ||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Issuance of common stock under stock option and benefit plans | $ 0 | (45) | |||||
Issuance of common stock under stock option and benefit plans (in shares) | 1.6 | ||||||
Repurchase of common stock | $ 0 | (8) | (299) | ||||
Repurchase of common stock (in shares) | (1.9) | ||||||
Share-based compensation | 63 | ||||||
Net earnings (loss) | 892 | 892 | 0 | ||||
Cash dividends declared | (391) | ||||||
Other comprehensive income (loss) | 1 | 1 | |||||
Interest purchased | 0 | ||||||
Foreign currency exchange translation adjustment | 0 | ||||||
Ending balance at Jun. 30, 2019 | 11,943 | 11,943 | $ 37 | 1,569 | 10,967 | (630) | 0 |
Ending balance (in shares) at Jun. 30, 2019 | 374.1 | ||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Cumulative effect of accounting changes | 0 | ||||||
Beginning balance at Mar. 31, 2019 | $ 37 | 1,538 | 10,683 | (565) | 0 | ||
Beginning balance (in shares) at Mar. 31, 2019 | 373.8 | ||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Issuance of common stock under stock option and benefit plans | $ 0 | 3 | |||||
Issuance of common stock under stock option and benefit plans (in shares) | 0.3 | ||||||
Repurchase of common stock | $ 0 | ||||||
Repurchase of common stock (in shares) | 0 | ||||||
Share-based compensation | 28 | ||||||
Net earnings (loss) | 480 | 480 | 0 | ||||
Cash dividends declared | (196) | ||||||
Other comprehensive income (loss) | (65) | (65) | |||||
Interest purchased | 0 | ||||||
Foreign currency exchange translation adjustment | 0 | ||||||
Ending balance at Jun. 30, 2019 | $ 11,943 | $ 11,943 | $ 37 | $ 1,569 | $ 10,967 | $ (630) | $ 0 |
Ending balance (in shares) at Jun. 30, 2019 | 374.1 |
Consolidated Statements Of Cash
Consolidated Statements Of Cash Flows (Unaudited) - USD ($) $ in Millions | 6 Months Ended | |
Jun. 30, 2019 | Jun. 30, 2018 | |
Operating activities | ||
Net earnings | $ 892 | $ 895 |
Adjustments to reconcile net earnings to net cash provided by operating activities: | ||
Depreciation | 153 | 150 |
Amortization of intangible assets | 236 | 212 |
Share-based compensation | 63 | 57 |
Recall charges | 130 | 6 |
Sale of inventory stepped-up to fair value at acquisition | 38 | 11 |
Changes in operating assets and liabilities: | ||
Accounts receivable | (72) | 115 |
Inventories | (285) | (294) |
Accounts payable | (16) | 65 |
Accrued expenses and other liabilities | (76) | (190) |
Recall-related payments | (34) | (68) |
Income taxes | (86) | (47) |
Other, net | (116) | 34 |
Net cash provided by operating activities | 827 | 946 |
Investing activities | ||
Acquisitions, net of cash acquired | (260) | (767) |
Purchases of marketable securities | (37) | (145) |
Proceeds from sales of marketable securities | 34 | 117 |
Purchases of property, plant and equipment | (287) | (278) |
Net cash used in investing activities | (550) | (1,073) |
Financing activities | ||
Proceeds (payments) on short-term borrowings, net | 6 | (7) |
Proceeds from issuance of long-term debt | 0 | 595 |
Payments on long-term debt | (1,341) | (600) |
Dividends paid | (390) | (352) |
Repurchases of common stock | (307) | (300) |
Cash paid for taxes from withheld shares | (111) | (96) |
Payments to purchase noncontrolling interest | 0 | (14) |
Other financing, net | 8 | 2 |
Net cash (used in) provided by financing activities | (2,135) | (772) |
Effect of exchange rate changes on cash and cash equivalents | (4) | (2) |
Change in cash and cash equivalents | (1,862) | (901) |
Cash and cash equivalents at beginning of period | 3,616 | 2,542 |
Cash and cash equivalents at end of period | $ 1,754 | $ 1,641 |
Basis Of Presentation
Basis Of Presentation | 6 Months Ended |
Jun. 30, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | BASIS OF PRESENTATION General Information Management believes the accompanying unaudited Consolidated Financial Statements contain all adjustments, including normal recurring items, considered necessary to fairly present the financial position of Stryker Corporation and its consolidated subsidiaries (the "Company," "we," us" or "our") on June 30, 2019 and the results of operations for the three and six months 2019 . The results of operations included in these Consolidated Financial Statements may not necessarily be indicative of our annual results. These statements should be read in conjunction with our Annual Report on Form 10-K for 2018 . Certain prior year amounts have been reclassified to conform with current year presentation in our Consolidated Statements of Cash Flows. New Accounting Pronouncements Not Yet Adopted We evaluate all Accounting Standards Updates (ASUs) issued by the Financial Accounting Standards Board (FASB) for consideration of their applicability. ASUs not included in our disclosures were assessed and determined to be either not applicable or are not expected to have a material impact on our Consolidated Financial Statements. In August 2018 the FASB issued ASU 2018-15, Intangibles - Goodwill and Other - Internal Use Software - Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contrac t, which amends the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract to align with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. The update is effective for fiscal years beginning after December 15, 2020, including interim periods within those fiscal years. Early adoption is permitted. We are in the process of evaluating the impact on our Consolidated Financial Statements and the timing of adoption of this update. Accounting Pronouncements Recently Adopted On January 1, 2019 we adopted ASU 2016-02, Leases , and related amendments (ASC 842), which require lease assets and liabilities to be recorded on the balance sheet for leases with terms greater than twelve months. Refer to Note 6 for further information. On January 1, 2019 we adopted ASU 2017-12, Derivatives and Hedging - Targeted Improvements to Accounting for Hedging Activities |
Revenue Recognition
Revenue Recognition | 6 Months Ended |
Jun. 30, 2019 | |
Revenue Recognition [Abstract] | |
Revenue Recognition | REVENUE RECOGNITION Our policies for recognizing sales have not changed from those described in our Annual Report on Form 10-K for 2018 . We disaggregate our net sales by product line and geography for each of our segments as we believe it best depicts how the nature, amount, timing and certainty of our net sales and cash flows are affected by economic factors. Net Sales by Product Line Three Months Six Months 2019 2018 2019 2018 Orthopaedics: Knees $ 440 $ 422 $ 879 $ 841 Hips 343 336 679 667 Trauma and Extremities 394 387 790 776 Other 96 83 175 160 $ 1,273 $ 1,228 $ 2,523 $ 2,444 MedSurg: Instruments $ 520 $ 438 $ 998 $ 850 Endoscopy 480 448 950 892 Medical 542 505 1,073 1,016 Sustainability 75 64 140 124 $ 1,617 $ 1,455 $ 3,161 $ 2,882 Neurotechnology and Spine: Neurotechnology $ 483 $ 437 $ 948 $ 847 Spine 277 202 534 390 $ 760 $ 639 $ 1,482 $ 1,237 Total $ 3,650 $ 3,322 $ 7,166 $ 6,563 Net Sales by Geography Three Months 2019 Three Months 2018 United States International United States International Orthopaedics: Knees $ 324 $ 116 $ 304 $ 118 Hips 219 124 207 129 Trauma and Extremities 252 142 242 145 Other 79 17 68 15 $ 874 $ 399 $ 821 $ 407 MedSurg: Instruments $ 414 $ 106 $ 339 $ 99 Endoscopy 383 97 354 94 Medical 430 112 384 121 Sustainability 75 — 63 1 $ 1,302 $ 315 $ 1,140 $ 315 Neurotechnology and Spine: Neurotechnology $ 311 $ 172 $ 280 $ 158 Spine 208 69 144 57 $ 519 $ 241 $ 424 $ 215 Total $ 2,695 $ 955 $ 2,385 $ 937 Net Sales by Geography Six Months 2019 Six Months 2018 United States International United States International Orthopaedics: Knees $ 644 $ 235 $ 605 $ 236 Hips 432 247 412 255 Trauma and Extremities 506 284 487 289 Other 142 33 131 29 $ 1,724 $ 799 $ 1,635 $ 809 MedSurg: Instruments $ 795 $ 203 $ 655 $ 195 Endoscopy 759 191 703 189 Medical 846 227 765 251 Sustainability 139 1 123 1 $ 2,539 $ 622 $ 2,246 $ 636 Neurotechnology and Spine: Neurotechnology $ 608 $ 340 $ 536 $ 312 Spine 403 131 282 107 $ 1,011 $ 471 $ 818 $ 419 Total $ 5,274 $ 1,892 $ 4,699 $ 1,864 Contract Assets and Liabilities On June 30, 2019 there were no contract assets recorded on our Consolidated Balance Sheets. Our contract liabilities arise as a result of consideration received from customers at inception of contracts for certain businesses or where the timing of billing for services precedes satisfaction of our performance obligations. We generally satisfy performance obligations within one year from the contract inception date. Our contract liabilities were $321 and $327 on June 30, 2019 and December 31, 2018 |
Accumulated Other Comprehensive
Accumulated Other Comprehensive (Loss) Income (AOCI) | 6 Months Ended |
Jun. 30, 2019 | |
Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract] | |
Accumulated Other Comprehensive (Loss) Income (AOCI) | ACCUMULATED OTHER COMPREHENSIVE (LOSS) INCOME (AOCI) Three Months 2019 Marketable Securities Pension Plans Hedges Financial Statement Translation Total Beginning $ (3 ) $ (141 ) $ 34 $ (455 ) $ (565 ) OCI — (10 ) 3 (66 ) (73 ) Income taxes — 2 2 5 9 Reclassifications to: Other expense — 2 — — 2 Income taxes — (1 ) (2 ) — (3 ) Net OCI $ — $ (7 ) $ 3 $ (61 ) $ (65 ) Ending $ (3 ) $ (148 ) $ 37 $ (516 ) $ (630 ) Three Months 2018 Marketable Securities Pension Plans Hedges Financial Statement Translation Total Beginning $ (5 ) $ (140 ) $ 43 $ (408 ) $ (510 ) OCI (1 ) 6 3 (57 ) (49 ) Income taxes — 2 (1 ) — 1 Reclassifications to: Cost of sales — — (1 ) — (1 ) Other income 1 2 — — 3 Income taxes — (2 ) 1 — (1 ) Net OCI $ — $ 8 $ 2 $ (57 ) $ (47 ) Ending $ (5 ) $ (132 ) $ 45 $ (465 ) $ (557 ) Six Months 2019 Marketable Securities Pension Plans Hedges Financial Statement Translation Total Beginning $ (4 ) $ (137 ) $ 50 $ (540 ) $ (631 ) OCI 1 (16 ) (16 ) 28 (3 ) Income taxes — 3 8 (4 ) 7 Reclassifications to: Cost of sales — — (2 ) — (2 ) Other expense — 3 — — 3 Income taxes — (1 ) (3 ) — (4 ) Net OCI $ 1 $ (11 ) $ (13 ) $ 24 $ 1 Ending $ (3 ) $ (148 ) $ 37 $ (516 ) $ (630 ) Six Months 2018 Marketable Securities Pension Plans Hedges Financial Statement Translation Total Beginning $ (4 ) $ (134 ) $ 28 $ (443 ) $ (553 ) OCI (2 ) (4 ) 24 (34 ) (16 ) Income taxes — 3 (6 ) 12 9 Reclassifications to: Cost of sales — — (2 ) — (2 ) Other income 1 4 — — 5 Income taxes — (1 ) 1 — — Net OCI $ (1 ) $ 2 $ 17 $ (22 ) $ (4 ) Ending $ (5 ) $ (132 ) $ 45 $ (465 ) $ (557 ) |
Derivative Instruments
Derivative Instruments | 6 Months Ended |
Jun. 30, 2019 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivative Instruments | DERIVATIVE INSTRUMENTS Foreign Currency Hedges We use operational and economic hedges, foreign currency exchange forward contracts, net investment hedges (both derivative and non-derivative financial instruments) and interest rate derivative instruments to manage the impact of currency exchange and interest rate fluctuations on earnings and cash flow. We do not enter into derivative instruments for speculative purposes. We have not changed our hedging strategies, accounting practices or objectives from those disclosed in our Annual Report on Form 10-K for 2018 . June 2019 Designated Non-Designated Total Gross notional amount $ 842 $ 4,928 $ 5,770 Maximum term in days 586 Fair value: Other current assets $ 9 $ 93 $ 102 Other noncurrent assets 1 — 1 Other current liabilities (8 ) (15 ) (23 ) Other noncurrent liabilities (1 ) — (1 ) Total fair value $ 1 $ 78 $ 79 December 2018 Designated Non-Designated Total Gross notional amount $ 870 $ 5,466 $ 6,336 Maximum term in days 586 Fair value: Other current assets $ 15 $ 28 $ 43 Other noncurrent assets 1 33 34 Other current liabilities (5 ) (15 ) (20 ) Total fair value $ 11 $ 46 $ 57 On June 30, 2019 the total after tax loss amount in AOCI related to our designated net investment hedges was $5 . We evaluate the effectiveness of our net investment hedges quarterly. We have not recognized any ineffectiveness in 2019. In July 2019 we entered into €1.0 billion in certain forward currency contracts and designated these as net investment hedges to hedge a portion of our investments in certain of our entities with functional currencies denominated in Euros. We have elected to use the spot method to assess effectiveness for our derivatives designated as net investment hedges. Accordingly, the change in fair value attributable to changes in the spot rate is recorded in AOCI. We exclude the spot-forward difference from the assessment of hedge effectiveness and amortize this amount separately on a straight-line basis over the term of the forward contracts. This amortization will be recorded to Other income (expense), net on our Consolidated Statements of Earnings. We are exposed to credit loss in the event of nonperformance by our counterparties on our outstanding derivative instruments but do not anticipate nonperformance by any of our counterparties. Should a counterparty default, our maximum loss exposure is the asset balance of the instrument. Net Currency Exchange Rate Gains (Losses) Three Months Six Months Recorded in: 2019 2018 2019 2018 Cost of sales $ — $ 1 $ 2 $ 2 Other income (expense), net (2 ) (2 ) (4 ) (4 ) Total $ (2 ) $ (1 ) $ (2 ) $ (2 ) Pretax gains on derivatives designated as hedges recorded in AOCI that are expected to be reclassified to earnings within 12 months of the balance sheet date are $1 and $13 on June 30, 2019 and December 31, 2018 . This reclassification is primarily due to the sale of inventory that includes previously hedged purchases. There were de minimis ineffective portions of derivatives, which are included in the table above. Interest Rate Risk On June 30, 2019 there were no open cash flow or fair value interest rate hedges. |
Fair Value Measurements
Fair Value Measurements | 6 Months Ended |
Jun. 30, 2019 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | FAIR VALUE MEASUREMENTS Our policies for managing risk related to foreign currency, interest rates, credit and markets and our process for determining fair value have not changed from those described in our Annual Report on Form 10-K for 2018 . There were no significant transfers into or out of any level in 2019 . Assets Measured at Fair Value June December 2019 2018 Cash and cash equivalents $ 1,754 $ 3,616 Trading marketable securities 139 118 Level 1 - Assets $ 1,893 $ 3,734 Available-for-sale marketable securities: Corporate and asset-backed debt securities $ 38 $ 38 United States agency debt securities 6 11 United States Treasury debt securities 32 23 Certificates of deposit 9 11 Total available-for-sale marketable securities $ 85 $ 83 Foreign currency exchange forward contracts 103 77 Level 2 - Assets $ 188 $ 160 Total assets measured at fair value $ 2,081 $ 3,894 Liabilities Measured at Fair Value June December 2019 2018 Deferred compensation arrangements $ 139 $ 118 Level 1 - Liabilities $ 139 $ 118 Foreign currency exchange forward contracts $ 24 $ 20 Level 2 - Liabilities $ 24 $ 20 Contingent consideration: Beginning $ 117 $ 32 Additions 165 77 Change in estimate (2 ) 15 Settlements (9 ) (7 ) Ending $ 271 $ 117 Level 3 - Liabilities $ 271 $ 117 Total liabilities measured at fair value $ 434 $ 255 Fair Value of Available for Sale Securities by Maturity June 2019 December 2018 Due in one year or less $ 44 $ 51 Due after one year through three years $ 41 $ 32 On June 30, 2019 and December 31, 2018 the aggregate difference between the cost and fair value of available-for-sale marketable securities was nominal. Interest and marketable securities income recorded in other income (expense), net, was $34 and $27 in the three months and was $73 and $50 in the six months 2019 and 2018 . Our investments in available-for-sale marketable securities had a minimum credit quality rating of A2 (Moody's), A (Standard & Poor's) and A (Fitch). We do not plan to sell the investments, and it is not more likely than not that we will be required to sell the investments before recovery of their amortized cost basis, which may be maturity. We do not consider these investments to be other-than-temporarily impaired on June 30, 2019 . On June 30, 2019 the majority of our investments with unrealized losses that were not deemed to be other-than-temporarily impaired were in a continuous unrealized loss position for less than twelve months, and the losses were not material. Securities in a Continuous Unrealized Loss Position Number of Investments Fair Value Corporate and asset-backed 19 $ 10 United States agency 4 4 United States Treasury 5 6 Total 28 $ 20 |
Contingencies and Commitments
Contingencies and Commitments | 6 Months Ended |
Jun. 30, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
Contingencies and Commitments | CONTINGENCIES AND COMMITMENTS We are involved in various ongoing proceedings, legal actions and claims arising in the normal course of business, including proceedings related to product, labor, intellectual property and other matters that are more fully described below. The outcomes of these matters will generally not be known for prolonged periods of time. In certain of the legal proceedings, the claimants seek damages as well as other compensatory and equitable relief that could result in the payment of significant claims and settlements and/or the imposition of injunctions or other equitable relief. For legal matters for which management had sufficient information to reasonably estimate our future obligations, a liability representing management's best estimate of the probable loss, or the minimum of the range of probable losses when a best estimate within the range is not known, is recorded. The estimates are based on consultation with legal counsel, previous settlement experience and settlement strategies. If actual outcomes are less favorable than those estimated by management, additional expense may be incurred, which could unfavorably affect future operating results. We are self-insured for product liability claims and expenses. The ultimate cost to us with respect to product liability claims could be materially different than the amount of the current estimates and accruals and could have a material adverse effect on our financial position, results of operations and cash flows. In 2010 we filed a lawsuit in federal court against Zimmer Biomet Holdings, Inc. (Zimmer), alleging that a Zimmer product infringed on three of our patents. In 2013 following a jury trial favorable to us, the trial judge entered a final judgment that, among other things, awarded us damages of $76 and ordered Zimmer to pay us enhanced damages. Zimmer appealed this ruling. In December 2014 the Federal Circuit affirmed the damages awarded to us, reversed the order for enhanced damages and remanded the issue of attorney fees to the trial court. In May 2015 the trial court entered a stipulated judgment that, among other things, required Zimmer to pay us the base amount of damages and interest, while the issues of enhanced damages and attorney fees continue to be pursued. In June 2015 we recorded a $54 gain, net of legal costs, which was recorded within selling, general and administrative expenses. On June 13, 2016 the United States Supreme Court vacated the decision of the Federal Circuit that reversed our judgment for enhanced damages and remanded the case to the Federal Circuit to reconsider the issue. On September 12, 2016 the Federal Circuit issued an opinion that, among other things, remanded the issue of enhanced damages to the trial court. On July 12, 2017 the trial court reaffirmed its award of enhanced damages and entered a judgment of $164 in our favor. Zimmer appealed, and on December 10, 2018 the Federal Circuit affirmed the decision. Zimmer filed a petition on January 23, 2019 to seek a rehearing of this ruling by the entire Federal Circuit. On March 19, 2019 the Federal Circuit denied Zimmer’s petition for a rehearing. Zimmer conditionally paid us $167 while it seeks a review of the decision by the Supreme Court. Recall Matters In June 2012 we voluntarily recalled our Rejuvenate and ABG II Modular-Neck hip stems and terminated global distribution of these hip products. Product liability lawsuits relating to this voluntary recall have been filed against us. In November 2014 we entered into a settlement agreement to compensate eligible United States patients who had revision surgery prior to November 3, 2014 and in December 2016 the settlement program was extended to patients who had revision surgery prior to December 19, 2016. We continue to offer support for recall-related care and reimburse patients who are not eligible to enroll in the settlement program for testing and treatment services, including any necessary revision surgeries. In addition, there are remaining lawsuits that we will continue to defend against. In August 2016 and May 2018 we voluntarily recalled certain lot-specific sizes and offsets of LFIT Anatomic CoCr V40 Femoral Heads. Product liability lawsuits and claims relating to this voluntary recall have been filed against us. In November 2018 we entered into a settlement agreement to resolve a significant number of claims and lawsuits related to the recalls. The specific terms of the settlement agreement, including the financial terms, are confidential. We have incurred, and expect to incur in the future, costs associated with the settlement of these matters. Based on the information that has been received, we have estimated the remaining range of probable loss to resolve these matters globally to be approximately $350 to $600 . We have recorded charges to earnings representing the minimum of the range of probable loss. The final outcomes of these matters are dependent on many factors that are difficult to predict. Accordingly, the ultimate cost to entirely resolve these matters globally may be materially different than the amount of our current estimate and accruals and could have a material adverse effect on our results of operations and cash flows. Leases We lease various manufacturing, warehousing and distribution facilities, administrative and sales offices as well as equipment under operating leases. We evaluate our contracts to identify leases, which is generally if there is an identified asset and we have the right to direct the use of and obtain substantially all of the economic benefit from the use of the identified asset. Certain of our lease agreements contain rent escalation clauses (including index-based escalations), rent holidays, capital improvement funding or other lease concessions. We recognize our minimum rental expense on a straight-line basis over the term of the lease beginning with the date of initial control of the asset. With the adoption of ASC 842 we recognized all leases with terms greater than twelve months in duration on our Consolidated Balance Sheets as right-of-use assets and lease liabilities of approximately $350 as of January 1, 2019. We adopted the standard using the prospective approach and did not retrospectively apply to prior periods. Right-of-use assets are recorded in Other noncurrent assets on our Consolidated Balance Sheets. Current and non-current lease liabilities are recorded in Accrued expenses and other liabilities and Other noncurrent liabilities, respectively, on our Consolidated Balance Sheets. We have made certain assumptions and judgments when applying ASC 842, the most significant of which are: • We elected the package of practical expedients available for transition which allow us to not reassess whether expired or existing contracts contain leases under the new definition of a lease, lease classification for expired or existing leases and whether previously capitalized initial direct costs would qualify for capitalization under ASC 842. • We did not elect to use hindsight when considering judgments and estimates such as assessments of lessee options to extend or terminate a lease or purchase the underlying asset. • For all asset classes, we elected to not recognize a right-of-use asset and lease liability for short-term leases. • For all asset classes, we elected to not separate non-lease components from lease components to which they relate and have accounted for the combined lease and non-lease components as a single lease component. • The determination of the discount rate used in a lease is our incremental borrowing rate which is based on what we would normally pay to borrow on a collateralized basis over a similar term an amount equal to the lease payments. Leases June 2019 Right-of-use assets $ 357 Lease liabilities, current $ 88 Lease liabilities, non-current $ 269 Other information Weighted-average remaining lease term 5.9 years Weighted-average discount rate 3.44 % Three Months 2019 Six Months 2019 Operating lease cost $ 34 68 |
Acquisitions
Acquisitions | 6 Months Ended |
Jun. 30, 2019 | |
Business Combinations [Abstract] | |
Acquisitions | ACQUISITIONS We acquire stock in companies and various assets that continue to support our capital deployment and product development strategies. Cash paid for acquisitions, net of cash acquired, was $260 and $767 in the six months 2019 and 2018 . Acquisition and integration related charges, including the amortization of inventory stepped up to fair value, was $53 and $24 in the three months and $191 and $41 in the six months 2019 and 2018 . In March 2019 we completed the acquisition of OrthoSpace, Ltd. for total cash consideration of $110 with future milestone payments of up to an additional $110 . OrthoSpace is a medical device company specializing in orthopaedic biodegradable technology for the treatment of irreparable rotator cuff tears. Goodwill attributable to the acquisition was $114 and is not deductible for tax purposes. In November 2018 we completed the acquisition of K2M Group Holdings, Inc. (K2M) for $27.50 per share, or an aggregate purchase price of approximately $1,380 . K2M is a global leader of complex spine and minimally invasive solutions focused on achieving three-dimensional Total Body Balance. K2M is part of our Spine business within Neurotechnology and Spine. Goodwill attributable to the acquisition is not deductible for tax purposes. In February 2018 we completed the acquisition of Entellus Medical, Inc. (Entellus) for $24.00 per share, or an aggregate purchase price of $697 , net of cash acquired. Entellus is focused on delivering superior patient and physician experiences through products designed for the minimally invasive treatment of various ear, nose and throat (ENT) disease states. Entellus is part of our Neurotechnology business within Neurotechnology and Spine. Goodwill attributable to the acquisition is not deductible for tax purposes. The purchase price allocations for K2M and OrthoSpace are preliminary and are based on estimates and assumptions that are subject to change within the measurement period. The purchase price allocation for the acquisition of Entellus was completed in 2019. Purchase Price Allocation of Acquired Net Assets 2018 K2M Entellus Tangible assets: Accounts receivable $ 60 $ 17 Inventory 131 14 Other assets 122 62 Contingent consideration — (79 ) Other liabilities (243 ) (76 ) Intangible assets: Customer relationship 34 33 Distributor relationship 1 — Trade name 10 — Developed technology and patents 475 261 Internally developed software 2 — Goodwill 788 465 Purchase price, net of cash acquired $ 1,380 $ 697 Weighted-average life of intangible assets 14 16 Estimated Amortization Expense Remainder 2020 2021 2022 2023 $ 230 $ 439 $ 426 $ 415 $ 396 |
Debt and Credit Facilities
Debt and Credit Facilities | 6 Months Ended |
Jun. 30, 2019 | |
Long-term Debt, Unclassified [Abstract] | |
Debt And Credit Facilities | DEBT AND CREDIT FACILITIES In January 2019 we repaid $500 of our senior unsecured notes with a coupon of 1.800% that were due on January 15, 2019 . In March 2019 we repaid $750 of our senior unsecured notes with a coupon of 2.000% that were due on March 8, 2019 . Our commercial paper program allows us to have a maximum of $1,500 in commercial paper outstanding with maturities up to 397 days from the date of issuance. On June 30, 2019 there were no amounts outstanding under our commercial paper program. We have lines of credit issued by various financial institutions that are available to fund our day-to-day operating needs. Certain of our credit facilities require us to comply with financial and other covenants. We were in compliance with all covenants on June 30, 2019 . Summary of Total Debt June 2019 December 2018 Senior unsecured notes: Rate Due 1.800% January 15, 2019 $ — $ 500 2.000% March 8, 2019 — 750 4.375% January 15, 2020 500 499 Variable November 30, 2020 341 343 2.625% March 15, 2021 748 747 1.125% November 30, 2023 623 627 3.375% May 15, 2024 586 584 3.375% November 1, 2025 746 746 3.500% March 15, 2026 990 990 2.125% November 30, 2027 847 853 3.650% March 7, 2028 595 595 2.625% November 30, 2030 729 733 4.100% April 1, 2043 391 391 4.375% May 15, 2044 395 395 4.625% March 15, 2046 981 980 Other 41 126 Total debt $ 8,513 $ 9,859 Less current maturities of debt 539 1,373 Total long-term debt $ 7,974 $ 8,486 Unamortized debt issuance costs $ 47 $ 50 Available borrowing capacity $ 1,531 $ 1,548 Fair value of senior unsecured notes $ 9,142 $ 9,746 |
Income Taxes
Income Taxes | 6 Months Ended |
Jun. 30, 2019 | |
Income Tax [Abstract] | |
Income Taxes | INCOME TAXES Our effective tax rates were 15.0% and 27.4% in the three months and 14.6% and 23.2% in the six months 2019 and 2018 . The decrease in the effective tax rate for the three and six months was primarily due to a favorable United States audit settlement for tax years 2012 and 2013. |
Segment Information
Segment Information | 6 Months Ended |
Jun. 30, 2019 | |
Segment Reporting [Abstract] | |
Segment Information | SEGMENT INFORMATION Three Months Six Months 2019 2018 2019 2018 Orthopaedics $ 1,273 $ 1,228 $ 2,523 $ 2,444 MedSurg 1,617 1,455 3,161 2,882 Neurotechnology and Spine 760 639 1,482 1,237 Net sales $ 3,650 $ 3,322 $ 7,166 $ 6,563 Orthopaedics $ 448 $ 437 $ 885 $ 866 MedSurg 404 326 781 627 Neurotechnology and Spine 214 181 413 359 Segment operating income $ 1,066 $ 944 $ 2,079 $ 1,852 Items not allocated to segments: Corporate and other (122 ) (89 ) (254 ) (187 ) Acquisition and integration-related charges (53 ) (24 ) (191 ) (41 ) Amortization of intangible assets (122 ) (110 ) (236 ) (212 ) Restructuring-related charges (42 ) (22 ) (98 ) (85 ) Medical device regulations (12 ) (2 ) (19 ) (3 ) Recall-related matters (117 ) (2 ) (130 ) (6 ) Regulatory and legal matters 15 (23 ) (10 ) (55 ) Consolidated operating income $ 613 $ 672 $ 1,141 $ 1,263 There were no significant changes to total assets by segment from information provided in our Annual Report on Form 10-K for 2018 . |
Basis Of Presentation (Policies
Basis Of Presentation (Policies) | 6 Months Ended |
Jun. 30, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
New Accounting Pronouncements Not Yet Adopted | New Accounting Pronouncements Not Yet Adopted We evaluate all Accounting Standards Updates (ASUs) issued by the Financial Accounting Standards Board (FASB) for consideration of their applicability. ASUs not included in our disclosures were assessed and determined to be either not applicable or are not expected to have a material impact on our Consolidated Financial Statements. In August 2018 the FASB issued ASU 2018-15, Intangibles - Goodwill and Other - Internal Use Software - Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contrac t, which amends the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract to align with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. The update is effective for fiscal years beginning after December 15, 2020, including interim periods within those fiscal years. Early adoption is permitted. We are in the process of evaluating the impact on our Consolidated Financial Statements and the timing of adoption of this update. |
Accounting Pronouncements Recently Adopted | Accounting Pronouncements Recently Adopted On January 1, 2019 we adopted ASU 2016-02, Leases , and related amendments (ASC 842), which require lease assets and liabilities to be recorded on the balance sheet for leases with terms greater than twelve months. Refer to Note 6 for further information. On January 1, 2019 we adopted ASU 2017-12, Derivatives and Hedging - Targeted Improvements to Accounting for Hedging Activities , which amends and simplifies hedge accounting guidance, as well as improves presentation and disclosure to align the economic effects of risk management strategies in the financial statements. The adoption of this update did not have a material impact on our Consolidated Financial Statements. |
Revenue Recognition (Tables)
Revenue Recognition (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Revenue Recognition [Abstract] | |
Schedule of Disaggregated Revenue | We disaggregate our net sales by product line and geography for each of our segments as we believe it best depicts how the nature, amount, timing and certainty of our net sales and cash flows are affected by economic factors. Net Sales by Product Line Three Months Six Months 2019 2018 2019 2018 Orthopaedics: Knees $ 440 $ 422 $ 879 $ 841 Hips 343 336 679 667 Trauma and Extremities 394 387 790 776 Other 96 83 175 160 $ 1,273 $ 1,228 $ 2,523 $ 2,444 MedSurg: Instruments $ 520 $ 438 $ 998 $ 850 Endoscopy 480 448 950 892 Medical 542 505 1,073 1,016 Sustainability 75 64 140 124 $ 1,617 $ 1,455 $ 3,161 $ 2,882 Neurotechnology and Spine: Neurotechnology $ 483 $ 437 $ 948 $ 847 Spine 277 202 534 390 $ 760 $ 639 $ 1,482 $ 1,237 Total $ 3,650 $ 3,322 $ 7,166 $ 6,563 Net Sales by Geography Three Months 2019 Three Months 2018 United States International United States International Orthopaedics: Knees $ 324 $ 116 $ 304 $ 118 Hips 219 124 207 129 Trauma and Extremities 252 142 242 145 Other 79 17 68 15 $ 874 $ 399 $ 821 $ 407 MedSurg: Instruments $ 414 $ 106 $ 339 $ 99 Endoscopy 383 97 354 94 Medical 430 112 384 121 Sustainability 75 — 63 1 $ 1,302 $ 315 $ 1,140 $ 315 Neurotechnology and Spine: Neurotechnology $ 311 $ 172 $ 280 $ 158 Spine 208 69 144 57 $ 519 $ 241 $ 424 $ 215 Total $ 2,695 $ 955 $ 2,385 $ 937 Net Sales by Geography Six Months 2019 Six Months 2018 United States International United States International Orthopaedics: Knees $ 644 $ 235 $ 605 $ 236 Hips 432 247 412 255 Trauma and Extremities 506 284 487 289 Other 142 33 131 29 $ 1,724 $ 799 $ 1,635 $ 809 MedSurg: Instruments $ 795 $ 203 $ 655 $ 195 Endoscopy 759 191 703 189 Medical 846 227 765 251 Sustainability 139 1 123 1 $ 2,539 $ 622 $ 2,246 $ 636 Neurotechnology and Spine: Neurotechnology $ 608 $ 340 $ 536 $ 312 Spine 403 131 282 107 $ 1,011 $ 471 $ 818 $ 419 Total $ 5,274 $ 1,892 $ 4,699 $ 1,864 |
Accumulated Other Comprehensi_2
Accumulated Other Comprehensive (Loss) Income (AOCI) (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract] | |
Schedule of Accumulated Other Comprehensive Income (Loss) | Three Months 2019 Marketable Securities Pension Plans Hedges Financial Statement Translation Total Beginning $ (3 ) $ (141 ) $ 34 $ (455 ) $ (565 ) OCI — (10 ) 3 (66 ) (73 ) Income taxes — 2 2 5 9 Reclassifications to: Other expense — 2 — — 2 Income taxes — (1 ) (2 ) — (3 ) Net OCI $ — $ (7 ) $ 3 $ (61 ) $ (65 ) Ending $ (3 ) $ (148 ) $ 37 $ (516 ) $ (630 ) Three Months 2018 Marketable Securities Pension Plans Hedges Financial Statement Translation Total Beginning $ (5 ) $ (140 ) $ 43 $ (408 ) $ (510 ) OCI (1 ) 6 3 (57 ) (49 ) Income taxes — 2 (1 ) — 1 Reclassifications to: Cost of sales — — (1 ) — (1 ) Other income 1 2 — — 3 Income taxes — (2 ) 1 — (1 ) Net OCI $ — $ 8 $ 2 $ (57 ) $ (47 ) Ending $ (5 ) $ (132 ) $ 45 $ (465 ) $ (557 ) Six Months 2019 Marketable Securities Pension Plans Hedges Financial Statement Translation Total Beginning $ (4 ) $ (137 ) $ 50 $ (540 ) $ (631 ) OCI 1 (16 ) (16 ) 28 (3 ) Income taxes — 3 8 (4 ) 7 Reclassifications to: Cost of sales — — (2 ) — (2 ) Other expense — 3 — — 3 Income taxes — (1 ) (3 ) — (4 ) Net OCI $ 1 $ (11 ) $ (13 ) $ 24 $ 1 Ending $ (3 ) $ (148 ) $ 37 $ (516 ) $ (630 ) Six Months 2018 Marketable Securities Pension Plans Hedges Financial Statement Translation Total Beginning $ (4 ) $ (134 ) $ 28 $ (443 ) $ (553 ) OCI (2 ) (4 ) 24 (34 ) (16 ) Income taxes — 3 (6 ) 12 9 Reclassifications to: Cost of sales — — (2 ) — (2 ) Other income 1 4 — — 5 Income taxes — (1 ) 1 — — Net OCI $ (1 ) $ 2 $ 17 $ (22 ) $ (4 ) Ending $ (5 ) $ (132 ) $ 45 $ (465 ) $ (557 ) |
Reclassification out of Accumulated Other Comprehensive Income | Three Months 2019 Marketable Securities Pension Plans Hedges Financial Statement Translation Total Beginning $ (3 ) $ (141 ) $ 34 $ (455 ) $ (565 ) OCI — (10 ) 3 (66 ) (73 ) Income taxes — 2 2 5 9 Reclassifications to: Other expense — 2 — — 2 Income taxes — (1 ) (2 ) — (3 ) Net OCI $ — $ (7 ) $ 3 $ (61 ) $ (65 ) Ending $ (3 ) $ (148 ) $ 37 $ (516 ) $ (630 ) Three Months 2018 Marketable Securities Pension Plans Hedges Financial Statement Translation Total Beginning $ (5 ) $ (140 ) $ 43 $ (408 ) $ (510 ) OCI (1 ) 6 3 (57 ) (49 ) Income taxes — 2 (1 ) — 1 Reclassifications to: Cost of sales — — (1 ) — (1 ) Other income 1 2 — — 3 Income taxes — (2 ) 1 — (1 ) Net OCI $ — $ 8 $ 2 $ (57 ) $ (47 ) Ending $ (5 ) $ (132 ) $ 45 $ (465 ) $ (557 ) Six Months 2019 Marketable Securities Pension Plans Hedges Financial Statement Translation Total Beginning $ (4 ) $ (137 ) $ 50 $ (540 ) $ (631 ) OCI 1 (16 ) (16 ) 28 (3 ) Income taxes — 3 8 (4 ) 7 Reclassifications to: Cost of sales — — (2 ) — (2 ) Other expense — 3 — — 3 Income taxes — (1 ) (3 ) — (4 ) Net OCI $ 1 $ (11 ) $ (13 ) $ 24 $ 1 Ending $ (3 ) $ (148 ) $ 37 $ (516 ) $ (630 ) Six Months 2018 Marketable Securities Pension Plans Hedges Financial Statement Translation Total Beginning $ (4 ) $ (134 ) $ 28 $ (443 ) $ (553 ) OCI (2 ) (4 ) 24 (34 ) (16 ) Income taxes — 3 (6 ) 12 9 Reclassifications to: Cost of sales — — (2 ) — (2 ) Other income 1 4 — — 5 Income taxes — (1 ) 1 — — Net OCI $ (1 ) $ 2 $ 17 $ (22 ) $ (4 ) Ending $ (5 ) $ (132 ) $ 45 $ (465 ) $ (557 ) |
Derivative Instruments (Tables)
Derivative Instruments (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Schedule of Derivative Instruments in Statement of Financial Position, Fair Value | June 2019 Designated Non-Designated Total Gross notional amount $ 842 $ 4,928 $ 5,770 Maximum term in days 586 Fair value: Other current assets $ 9 $ 93 $ 102 Other noncurrent assets 1 — 1 Other current liabilities (8 ) (15 ) (23 ) Other noncurrent liabilities (1 ) — (1 ) Total fair value $ 1 $ 78 $ 79 December 2018 Designated Non-Designated Total Gross notional amount $ 870 $ 5,466 $ 6,336 Maximum term in days 586 Fair value: Other current assets $ 15 $ 28 $ 43 Other noncurrent assets 1 33 34 Other current liabilities (5 ) (15 ) (20 ) Total fair value $ 11 $ 46 $ 57 |
Schedule of Derivatives Instruments Statements of Financial Performance and Financial Position, Location | Three Months Six Months Recorded in: 2019 2018 2019 2018 Cost of sales $ — $ 1 $ 2 $ 2 Other income (expense), net (2 ) (2 ) (4 ) (4 ) Total $ (2 ) $ (1 ) $ (2 ) $ (2 ) |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Fair Value Disclosures [Abstract] | |
Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis | Assets Measured at Fair Value June December 2019 2018 Cash and cash equivalents $ 1,754 $ 3,616 Trading marketable securities 139 118 Level 1 - Assets $ 1,893 $ 3,734 Available-for-sale marketable securities: Corporate and asset-backed debt securities $ 38 $ 38 United States agency debt securities 6 11 United States Treasury debt securities 32 23 Certificates of deposit 9 11 Total available-for-sale marketable securities $ 85 $ 83 Foreign currency exchange forward contracts 103 77 Level 2 - Assets $ 188 $ 160 Total assets measured at fair value $ 2,081 $ 3,894 Liabilities Measured at Fair Value June December 2019 2018 Deferred compensation arrangements $ 139 $ 118 Level 1 - Liabilities $ 139 $ 118 Foreign currency exchange forward contracts $ 24 $ 20 Level 2 - Liabilities $ 24 $ 20 Contingent consideration: Beginning $ 117 $ 32 Additions 165 77 Change in estimate (2 ) 15 Settlements (9 ) (7 ) Ending $ 271 $ 117 Level 3 - Liabilities $ 271 $ 117 Total liabilities measured at fair value $ 434 $ 255 |
Investments Classified by Contractual Maturity Date | Fair Value of Available for Sale Securities by Maturity June 2019 December 2018 Due in one year or less $ 44 $ 51 Due after one year through three years $ 41 $ 32 |
Schedule of Unrealized Loss on Investments | Securities in a Continuous Unrealized Loss Position Number of Investments Fair Value Corporate and asset-backed 19 $ 10 United States agency 4 4 United States Treasury 5 6 Total 28 $ 20 |
Contingencies and Commitments (
Contingencies and Commitments (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
Lease, Cost | Leases June 2019 Right-of-use assets $ 357 Lease liabilities, current $ 88 Lease liabilities, non-current $ 269 Other information Weighted-average remaining lease term 5.9 years Weighted-average discount rate 3.44 % Three Months 2019 Six Months 2019 Operating lease cost $ 34 68 |
Acquisitions (Tables)
Acquisitions (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Business Combinations [Abstract] | |
Schedule of Business Acquisitions, by Acquisition | Purchase Price Allocation of Acquired Net Assets 2018 K2M Entellus Tangible assets: Accounts receivable $ 60 $ 17 Inventory 131 14 Other assets 122 62 Contingent consideration — (79 ) Other liabilities (243 ) (76 ) Intangible assets: Customer relationship 34 33 Distributor relationship 1 — Trade name 10 — Developed technology and patents 475 261 Internally developed software 2 — Goodwill 788 465 Purchase price, net of cash acquired $ 1,380 $ 697 Weighted-average life of intangible assets 14 16 |
Schedule of Finite-Lived Intangible Assets, Future Amortization Expense | Estimated Amortization Expense Remainder 2020 2021 2022 2023 $ 230 $ 439 $ 426 $ 415 $ 396 |
Debt and Credit Facilities (Tab
Debt and Credit Facilities (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Long-term Debt, Unclassified [Abstract] | |
Schedule of Long-term Debt Instruments | Summary of Total Debt June 2019 December 2018 Senior unsecured notes: Rate Due 1.800% January 15, 2019 $ — $ 500 2.000% March 8, 2019 — 750 4.375% January 15, 2020 500 499 Variable November 30, 2020 341 343 2.625% March 15, 2021 748 747 1.125% November 30, 2023 623 627 3.375% May 15, 2024 586 584 3.375% November 1, 2025 746 746 3.500% March 15, 2026 990 990 2.125% November 30, 2027 847 853 3.650% March 7, 2028 595 595 2.625% November 30, 2030 729 733 4.100% April 1, 2043 391 391 4.375% May 15, 2044 395 395 4.625% March 15, 2046 981 980 Other 41 126 Total debt $ 8,513 $ 9,859 Less current maturities of debt 539 1,373 Total long-term debt $ 7,974 $ 8,486 Unamortized debt issuance costs $ 47 $ 50 Available borrowing capacity $ 1,531 $ 1,548 Fair value of senior unsecured notes $ 9,142 $ 9,746 |
Segment Information (Tables)
Segment Information (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Segment Reporting [Abstract] | |
Sales and Other Financial Information by Business Segment | Three Months Six Months 2019 2018 2019 2018 Orthopaedics $ 1,273 $ 1,228 $ 2,523 $ 2,444 MedSurg 1,617 1,455 3,161 2,882 Neurotechnology and Spine 760 639 1,482 1,237 Net sales $ 3,650 $ 3,322 $ 7,166 $ 6,563 Orthopaedics $ 448 $ 437 $ 885 $ 866 MedSurg 404 326 781 627 Neurotechnology and Spine 214 181 413 359 Segment operating income $ 1,066 $ 944 $ 2,079 $ 1,852 Items not allocated to segments: Corporate and other (122 ) (89 ) (254 ) (187 ) Acquisition and integration-related charges (53 ) (24 ) (191 ) (41 ) Amortization of intangible assets (122 ) (110 ) (236 ) (212 ) Restructuring-related charges (42 ) (22 ) (98 ) (85 ) Medical device regulations (12 ) (2 ) (19 ) (3 ) Recall-related matters (117 ) (2 ) (130 ) (6 ) Regulatory and legal matters 15 (23 ) (10 ) (55 ) Consolidated operating income $ 613 $ 672 $ 1,141 $ 1,263 |
Revenue Recognition - Narrative
Revenue Recognition - Narrative (Details) - USD ($) $ in Millions | Jun. 30, 2019 | Dec. 31, 2018 |
Revenue Recognition [Abstract] | ||
Contract liabilities | $ 321 | $ 327 |
Revenue Recognition - Disaggreg
Revenue Recognition - Disaggregated Sales Analysis (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Disaggregation of Revenue [Line Items] | ||||
Net sales | $ 3,650 | $ 3,322 | $ 7,166 | $ 6,563 |
United States | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 2,695 | 2,385 | 5,274 | 4,699 |
International | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 955 | 937 | 1,892 | 1,864 |
Orthopaedics | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 1,273 | 1,228 | 2,523 | 2,444 |
Orthopaedics | United States | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 874 | 821 | 1,724 | 1,635 |
Orthopaedics | International | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 399 | 407 | 799 | 809 |
Orthopaedics | Knees | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 440 | 422 | 879 | 841 |
Orthopaedics | Knees | United States | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 324 | 304 | 644 | 605 |
Orthopaedics | Knees | International | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 116 | 118 | 235 | 236 |
Orthopaedics | Hips | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 343 | 336 | 679 | 667 |
Orthopaedics | Hips | United States | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 219 | 207 | 432 | 412 |
Orthopaedics | Hips | International | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 124 | 129 | 247 | 255 |
Orthopaedics | Trauma and Extremities | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 394 | 387 | 790 | 776 |
Orthopaedics | Trauma and Extremities | United States | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 252 | 242 | 506 | 487 |
Orthopaedics | Trauma and Extremities | International | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 142 | 145 | 284 | 289 |
Orthopaedics | Other | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 96 | 83 | 175 | 160 |
Orthopaedics | Other | United States | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 79 | 68 | 142 | 131 |
Orthopaedics | Other | International | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 17 | 15 | 33 | 29 |
MedSurg | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 1,617 | 1,455 | 3,161 | 2,882 |
MedSurg | United States | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 1,302 | 1,140 | 2,539 | 2,246 |
MedSurg | International | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 315 | 315 | 622 | 636 |
MedSurg | Instruments | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 520 | 438 | 998 | 850 |
MedSurg | Instruments | United States | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 414 | 339 | 795 | 655 |
MedSurg | Instruments | International | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 106 | 99 | 203 | 195 |
MedSurg | Endoscopy | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 480 | 448 | 950 | 892 |
MedSurg | Endoscopy | United States | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 383 | 354 | 759 | 703 |
MedSurg | Endoscopy | International | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 97 | 94 | 191 | 189 |
MedSurg | Medical | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 542 | 505 | 1,073 | 1,016 |
MedSurg | Medical | United States | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 430 | 384 | 846 | 765 |
MedSurg | Medical | International | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 112 | 121 | 227 | 251 |
MedSurg | Sustainability | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 75 | 64 | 140 | 124 |
MedSurg | Sustainability | United States | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 75 | 63 | 139 | 123 |
MedSurg | Sustainability | International | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 0 | 1 | 1 | 1 |
Neurotechnology and Spine | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 760 | 639 | 1,482 | 1,237 |
Neurotechnology and Spine | United States | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 519 | 424 | 1,011 | 818 |
Neurotechnology and Spine | International | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 241 | 215 | 471 | 419 |
Neurotechnology and Spine | Neurotechnology | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 483 | 437 | 948 | 847 |
Neurotechnology and Spine | Neurotechnology | United States | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 311 | 280 | 608 | 536 |
Neurotechnology and Spine | Neurotechnology | International | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 172 | 158 | 340 | 312 |
Neurotechnology and Spine | Spine | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 277 | 202 | 534 | 390 |
Neurotechnology and Spine | Spine | United States | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 208 | 144 | 403 | 282 |
Neurotechnology and Spine | Spine | International | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | $ 69 | $ 57 | $ 131 | $ 107 |
Accumulated Other Comprehensi_3
Accumulated Other Comprehensive (Loss) Income (AOCI) (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||||
Accumulated Other Comprehensive Income (Loss), Net of Tax at beginning of period | $ (565) | $ (510) | $ (631) | $ (553) |
OCI | (73) | (49) | (3) | (16) |
Income taxes | 9 | 1 | 7 | 9 |
Cost of sales | 1,270 | 1,132 | 2,503 | 2,236 |
Other income | (48) | (49) | (96) | (98) |
Income taxes | (85) | (171) | (153) | (270) |
Net OCI | (65) | (47) | 1 | (4) |
Accumulated Other Comprehensive Income (Loss), Net of Tax at end of period | (630) | (557) | (630) | (557) |
Reclassification out of Accumulated Other Comprehensive Income | ||||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||||
Cost of sales | (1) | (2) | (2) | |
Other income | 2 | 3 | 3 | 5 |
Income taxes | (3) | (1) | (4) | 0 |
Net OCI | (65) | (47) | 1 | (4) |
Marketable Securities | ||||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||||
Accumulated Other Comprehensive Income (Loss), Net of Tax at beginning of period | (3) | (5) | (4) | (4) |
OCI | 0 | (1) | 1 | (2) |
Income taxes | 0 | 0 | 0 | 0 |
Accumulated Other Comprehensive Income (Loss), Net of Tax at end of period | (3) | (5) | (3) | (5) |
Marketable Securities | Reclassification out of Accumulated Other Comprehensive Income | ||||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||||
Cost of sales | 0 | 0 | 0 | |
Other income | 0 | 1 | 0 | 1 |
Income taxes | 0 | 0 | 0 | 0 |
Net OCI | 0 | 0 | 1 | (1) |
Pension Plans | ||||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||||
Accumulated Other Comprehensive Income (Loss), Net of Tax at beginning of period | (141) | (140) | (137) | (134) |
OCI | (10) | 6 | (16) | (4) |
Income taxes | 2 | 2 | 3 | 3 |
Accumulated Other Comprehensive Income (Loss), Net of Tax at end of period | (148) | (132) | (148) | (132) |
Pension Plans | Reclassification out of Accumulated Other Comprehensive Income | ||||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||||
Cost of sales | 0 | 0 | 0 | |
Other income | 2 | 2 | 3 | 4 |
Income taxes | (1) | (2) | (1) | (1) |
Net OCI | (7) | 8 | (11) | 2 |
Hedges | ||||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||||
Accumulated Other Comprehensive Income (Loss), Net of Tax at beginning of period | 34 | 43 | 50 | 28 |
OCI | 3 | 3 | (16) | 24 |
Income taxes | 2 | (1) | 8 | (6) |
Accumulated Other Comprehensive Income (Loss), Net of Tax at end of period | 37 | 45 | 37 | 45 |
Hedges | Reclassification out of Accumulated Other Comprehensive Income | ||||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||||
Cost of sales | (1) | (2) | (2) | |
Other income | 0 | 0 | 0 | 0 |
Income taxes | (2) | 1 | (3) | 1 |
Net OCI | 3 | 2 | (13) | 17 |
Financial Statement Translation | ||||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||||
Accumulated Other Comprehensive Income (Loss), Net of Tax at beginning of period | (455) | (408) | (540) | (443) |
OCI | (66) | (57) | 28 | (34) |
Income taxes | 5 | 0 | (4) | 12 |
Accumulated Other Comprehensive Income (Loss), Net of Tax at end of period | (516) | (465) | (516) | (465) |
Financial Statement Translation | Reclassification out of Accumulated Other Comprehensive Income | ||||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||||
Cost of sales | 0 | 0 | 0 | |
Other income | 0 | 0 | 0 | 0 |
Income taxes | 0 | 0 | 0 | 0 |
Net OCI | $ (61) | $ (57) | $ 24 | $ (22) |
Derivative Instruments (Forward
Derivative Instruments (Forward Currency Exchange Contracts) (Details) - Foreign Exchange Contract - USD ($) $ in Millions | 6 Months Ended | 12 Months Ended |
Jun. 30, 2019 | Dec. 31, 2018 | |
Derivative [Line Items] | ||
Notional Amount | $ 5,770 | $ 6,336 |
Maximum term in days | 586 days | 586 days |
Derivative, Fair Value, Net | $ 79 | $ 57 |
Other current assets | ||
Derivative [Line Items] | ||
Derivative assets | 102 | 43 |
Other noncurrent assets | ||
Derivative [Line Items] | ||
Derivative assets | 1 | 34 |
Other current liabilities | ||
Derivative [Line Items] | ||
Derivative liabilities | (23) | (20) |
Other noncurrent liabilities | ||
Derivative [Line Items] | ||
Derivative liabilities | (1) | |
Designated | ||
Derivative [Line Items] | ||
Notional Amount | 842 | 870 |
Derivative, Fair Value, Net | 1 | 11 |
Designated | Other current assets | ||
Derivative [Line Items] | ||
Derivative assets | 9 | 15 |
Designated | Other noncurrent assets | ||
Derivative [Line Items] | ||
Derivative assets | 1 | 1 |
Designated | Other current liabilities | ||
Derivative [Line Items] | ||
Derivative liabilities | (8) | (5) |
Designated | Other noncurrent liabilities | ||
Derivative [Line Items] | ||
Derivative liabilities | (1) | |
Non-Designated | ||
Derivative [Line Items] | ||
Notional Amount | 4,928 | 5,466 |
Derivative, Fair Value, Net | 78 | 46 |
Non-Designated | Other current assets | ||
Derivative [Line Items] | ||
Derivative assets | 93 | 28 |
Non-Designated | Other noncurrent assets | ||
Derivative [Line Items] | ||
Derivative assets | 0 | 33 |
Non-Designated | Other current liabilities | ||
Derivative [Line Items] | ||
Derivative liabilities | (15) | $ (15) |
Non-Designated | Other noncurrent liabilities | ||
Derivative [Line Items] | ||
Derivative liabilities | $ 0 |
Derivative Instruments (Narrati
Derivative Instruments (Narrative) (Details) - Designated as Hedging Instrument - Foreign Exchange Contract - USD ($) $ in Millions | 6 Months Ended | 12 Months Ended | |
Jun. 30, 2019 | Dec. 31, 2018 | Jul. 26, 2019 | |
Derivative, fair value | $ 5 | ||
Cash flow hedge gain (loss) to be reclassified within twelve months | $ 1 | $ 13 | |
Subsequent Event | |||
Derivative, fair value | $ 1,000 |
Derivative Instruments (Income
Derivative Instruments (Income Statement Location) (Details) - Foreign Exchange Contract - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Net currency exchange rate gains (losses) | $ (2) | $ (1) | $ (2) | $ (2) |
Cost of sales | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Net currency exchange rate gains (losses) | 0 | 1 | 2 | 2 |
Other income (expense), net | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Net currency exchange rate gains (losses) | $ (2) | $ (2) | $ (4) | $ (4) |
Fair Value Measurements (Valuat
Fair Value Measurements (Valuation Of Financial Instruments By Pricing Categories) (Details) - USD ($) $ in Millions | 6 Months Ended | 12 Months Ended | ||
Jun. 30, 2019 | Dec. 31, 2018 | Jun. 30, 2018 | Dec. 31, 2017 | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Cash and cash equivalents | $ 1,754 | $ 3,616 | $ 1,641 | $ 2,542 |
Assets | ||||
Available-for-sale securities, current | 85 | 83 | ||
Investments Fair Value Disclosure | 2,081 | 3,894 | ||
Contingent consideration: | ||||
Total liabilities measured at fair value | 434 | 255 | ||
Fair Value, Inputs, Level 1 | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Cash and cash equivalents | 1,754 | 3,616 | ||
Trading marketable securities | 139 | 118 | ||
Assets | ||||
Investments Fair Value Disclosure | 1,893 | 3,734 | ||
Deferred compensation arrangements | 139 | 118 | ||
Contingent consideration: | ||||
Total liabilities measured at fair value | 139 | 118 | ||
Fair Value, Inputs, Level 2 | ||||
Assets | ||||
Investments Fair Value Disclosure | 188 | 160 | ||
Contingent consideration: | ||||
Total liabilities measured at fair value | 24 | 20 | ||
Fair Value, Inputs, Level 2 | Foreign currency exchange forward contracts | ||||
Assets | ||||
Derivative asset | 103 | 77 | ||
Liabilities | ||||
Foreign currency exchange forward contracts | 24 | 20 | ||
Fair Value, Inputs, Level 2 | Available-for-sale marketable securities: | ||||
Assets | ||||
Available-for-sale securities, current | 85 | 83 | ||
Fair Value, Inputs, Level 2 | Available-for-sale marketable securities: | Corporate and asset-backed debt securities | ||||
Assets | ||||
Available-for-sale securities, current | 38 | 38 | ||
Fair Value, Inputs, Level 2 | Available-for-sale marketable securities: | United States agency debt securities | ||||
Assets | ||||
Available-for-sale securities, current | 6 | 11 | ||
Fair Value, Inputs, Level 2 | Available-for-sale marketable securities: | United States Treasury debt securities | ||||
Assets | ||||
Available-for-sale securities, current | 32 | 23 | ||
Fair Value, Inputs, Level 2 | Available-for-sale marketable securities: | Certificates of deposit | ||||
Assets | ||||
Available-for-sale securities, current | 9 | 11 | ||
Fair Value, Inputs, Level 3 | ||||
Contingent consideration: | ||||
Beginning | 117 | 32 | ||
Additions | 165 | 77 | ||
Change in estimate | (2) | 15 | ||
Settlements | (9) | (7) | ||
Ending | 271 | 117 | ||
Total liabilities measured at fair value | $ 271 | $ 117 |
Fair Value Measurements (Assets
Fair Value Measurements (Assets and Liabilities Measured At Fair Value On A Recurring Basis Using Unobservable Inputs (Level 3)) (Details) - USD ($) $ in Millions | Jun. 30, 2019 | Dec. 31, 2018 |
Fair Value Disclosures [Abstract] | ||
Due in one year or less | $ 44 | $ 51 |
Due after one year through three years | $ 41 | $ 32 |
Fair Value Measurements (Narrat
Fair Value Measurements (Narrative) (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Fair Value Disclosures [Abstract] | ||||
Gain on sale of marketable securities | $ 34 | $ 27 | $ 73 | $ 50 |
Fair Value Measurements (Unreal
Fair Value Measurements (Unrealized Losses And Fair Value Of Investments With Unrealized Losses) (Details) $ in Millions | Jun. 30, 2019USD ($)investment |
Number of Investments | investment | 28 |
Fair Value | $ | $ 20 |
Corporate and asset-backed debt securities | |
Number of Investments | investment | 19 |
Fair Value | $ | $ 10 |
United States agency debt securities | |
Number of Investments | investment | 4 |
Fair Value | $ | $ 4 |
United States Treasury debt securities | |
Number of Investments | investment | 5 |
Fair Value | $ | $ 6 |
Contingencies and Commitments_2
Contingencies and Commitments (Narrative) (Details) $ in Millions | Mar. 19, 2019USD ($) | Jul. 12, 2017USD ($) | Jun. 30, 2015USD ($) | Dec. 31, 2013USD ($) | Dec. 31, 2010patent | Jun. 30, 2019USD ($) |
Voluntary recall | Minimum | ||||||
Loss Contingencies [Line Items] | ||||||
Estimate of possible loss | $ 350 | |||||
Voluntary recall | Maximum | ||||||
Loss Contingencies [Line Items] | ||||||
Estimate of possible loss | $ 600 | |||||
Zimmer Product Infringement | ||||||
Loss Contingencies [Line Items] | ||||||
Number of patents infringed upon | patent | 3 | |||||
Value of damages awarded | $ 164 | $ 76 | ||||
Gain (loss) related to litigation settlement | $ 54 | |||||
Proceeds from legal settlements | $ 167 |
Contingencies and Commitments -
Contingencies and Commitments - Leases (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | |
Jun. 30, 2019 | Jun. 30, 2019 | Jan. 01, 2019 | |
Lessee, Lease, Description [Line Items] | |||
Right-of-use assets | $ 357 | $ 357 | |
Lease liabilities, current | 88 | 88 | |
Lease liabilities, non-current | $ 269 | $ 269 | |
Other information | |||
Weighted-average remaining lease term | 5 years 10 months 24 days | 5 years 10 months 24 days | |
Weighted-average discount rate | 3.44% | 3.44% | |
Operating lease cost | $ 34 | $ 68 | |
ASU 2016-02 | |||
Lessee, Lease, Description [Line Items] | |||
Right-of-use assets | $ 350 |
Acquisitions (Narrative) (Detai
Acquisitions (Narrative) (Details) - USD ($) $ / shares in Units, $ in Millions | 1 Months Ended | 3 Months Ended | 6 Months Ended | |||||
Mar. 31, 2019 | Aug. 31, 2018 | Feb. 28, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | Dec. 31, 2018 | |
Business Acquisition [Line Items] | ||||||||
Acquisitions, net of cash acquired | $ 260 | $ 767 | ||||||
Acquisition and integration-related charges | $ 53 | $ 24 | 191 | $ 41 | ||||
Goodwill | $ 8,762 | $ 8,762 | $ 8,563 | |||||
OrthoSpace, Ltd. | ||||||||
Business Acquisition [Line Items] | ||||||||
Acquisitions, net of cash acquired | $ 110 | |||||||
Future milestone payments | 110 | |||||||
Goodwill | $ 114 | |||||||
K2M | ||||||||
Business Acquisition [Line Items] | ||||||||
Acquisitions, net of cash acquired | $ 1,380 | |||||||
Goodwill | 788 | |||||||
Consideration transferred (in dollars per share) | $ 27.50 | |||||||
Entellus | ||||||||
Business Acquisition [Line Items] | ||||||||
Acquisitions, net of cash acquired | $ 697 | |||||||
Goodwill | $ 465 | |||||||
Consideration transferred (in dollars per share) | $ 24 |
Acquisitions (Allocation Of The
Acquisitions (Allocation Of The Preliminary Purchase Price To The Acquired Net Assets (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2018 | Jun. 30, 2019 | |
Goodwill | $ 8,563 | $ 8,762 |
K2M | ||
Accounts receivable | 60 | |
Inventory | 131 | |
Other assets | 122 | |
Contingent consideration | 0 | |
Other liabilities | (243) | |
Goodwill | 788 | |
Assets and liabilities acquired, net | $ 1,380 | |
Weighted-average life of intangible assets | 14 years | |
K2M | Customer relationship | ||
Intangible assets acquired | $ 34 | |
K2M | Distributor relationship | ||
Intangible assets acquired | 1 | |
K2M | Trade name | ||
Intangible assets acquired | 10 | |
K2M | Developed technology and patents | ||
Intangible assets acquired | 475 | |
K2M | Internally developed software | ||
Intangible assets acquired | 2 | |
Entellus | ||
Accounts receivable | 17 | |
Inventory | 14 | |
Other assets | 62 | |
Contingent consideration | (79) | |
Other liabilities | (76) | |
Goodwill | 465 | |
Assets and liabilities acquired, net | $ 697 | |
Weighted-average life of intangible assets | 16 years | |
Entellus | Customer relationship | ||
Intangible assets acquired | $ 33 | |
Entellus | Distributor relationship | ||
Intangible assets acquired | 0 | |
Entellus | Trade name | ||
Intangible assets acquired | 0 | |
Entellus | Developed technology and patents | ||
Intangible assets acquired | 261 | |
Entellus | Internally developed software | ||
Intangible assets acquired | $ 0 |
Acquisitions (Future Amortizati
Acquisitions (Future Amortization Expense) (Details) $ in Millions | Jun. 30, 2019USD ($) |
Business Combinations [Abstract] | |
Remainder of 2019 | $ 230 |
2020 | 439 |
2021 | 426 |
2022 | 415 |
2023 | $ 396 |
Debt and Credit Facilities (Det
Debt and Credit Facilities (Details) - USD ($) | 6 Months Ended | |||
Jun. 30, 2019 | Mar. 31, 2019 | Jan. 31, 2019 | Dec. 31, 2018 | |
Commercial Paper | $ 0 | |||
Other Long-term Debt | 41,000,000 | $ 126,000,000 | ||
Total debt | 8,513,000,000 | 9,859,000,000 | ||
Less current maturities of debt | 539,000,000 | 1,373,000,000 | ||
Total long-term debt | 7,974,000,000 | 8,486,000,000 | ||
Unamortized debt issuance costs | 47,000,000 | 50,000,000 | ||
Available borrowing capacity | 1,531,000,000 | 1,548,000,000 | ||
Fair value of senior unsecured notes | $ 9,142,000,000 | 9,746,000,000 | ||
Senior Unsecured Notes 1.800% due 2019 | ||||
Repaid face amount of debt | $ 500,000,000 | |||
Stated interest rate | 1.80% | |||
Maturity Date | Jan. 15, 2019 | |||
Unsecured Debt | $ 0 | 500,000,000 | ||
Senior Unsecured Notes 2.000% due 2019 | ||||
Repaid face amount of debt | $ 750,000,000 | |||
Stated interest rate | 2.00% | |||
Maturity Date | Mar. 8, 2019 | |||
Unsecured Debt | $ 0 | 750,000,000 | ||
Commercial Paper | ||||
Debt instrument, maturity | 397 days | |||
Commercial Paper | Maximum | ||||
Commercial paper | $ 1,500,000,000 | |||
Senior Unsecured Notes 4.375% due 2020 | ||||
Stated interest rate | 4.375% | |||
Maturity Date | Jan. 15, 2020 | |||
Unsecured Debt | $ 500,000,000 | 499,000,000 | ||
Senior Unsecured Notes Variable due 2020 | ||||
Maturity Date | Nov. 30, 2020 | |||
Unsecured Debt | $ 341,000,000 | 343,000,000 | ||
Senior Unsecured Notes 2.625% due 2021 | ||||
Stated interest rate | 2.625% | |||
Maturity Date | Mar. 15, 2021 | |||
Unsecured Debt | $ 748,000,000 | 747,000,000 | ||
Senior Unsecured Notes 1.125% due 2021 | ||||
Stated interest rate | 1.125% | |||
Maturity Date | Nov. 30, 2023 | |||
Unsecured Debt | $ 623,000,000 | 627,000,000 | ||
Senior Unsecured Notes 3.375% due 2024 | ||||
Stated interest rate | 3.375% | |||
Maturity Date | May 15, 2024 | |||
Unsecured Debt | $ 586,000,000 | 584,000,000 | ||
Senior Unsecured Notes 3.375% due 2025 | ||||
Stated interest rate | 3.375% | |||
Maturity Date | Nov. 1, 2025 | |||
Unsecured Debt | $ 746,000,000 | 746,000,000 | ||
Senior Unsecured Notes 3.50% due 2026 | ||||
Stated interest rate | 3.50% | |||
Maturity Date | Mar. 15, 2026 | |||
Unsecured Debt | $ 990,000,000 | 990,000,000 | ||
Senior Unsecured Notes 2.125% due 2027 | ||||
Stated interest rate | 2.125% | |||
Maturity Date | Nov. 30, 2027 | |||
Unsecured Debt | $ 847,000,000 | 853,000,000 | ||
Senior Unsecured Notes 3.650% due 2028 | ||||
Stated interest rate | 3.65% | |||
Maturity Date | Mar. 7, 2028 | |||
Unsecured Debt | $ 595,000,000 | 595,000,000 | ||
Senior Unsecured Notes 2.625% due 2030 | ||||
Stated interest rate | 2.625% | |||
Maturity Date | Nov. 30, 2030 | |||
Unsecured Debt | $ 729,000,000 | 733,000,000 | ||
Senior Unsecured Notes 4.100% due 2043 | ||||
Stated interest rate | 4.10% | |||
Maturity Date | Apr. 1, 2043 | |||
Unsecured Debt | $ 391,000,000 | 391,000,000 | ||
Senior Unsecured Notes 4.375% due 2044 | ||||
Stated interest rate | 4.375% | |||
Maturity Date | May 15, 2044 | |||
Unsecured Debt | $ 395,000,000 | 395,000,000 | ||
Senior Unsecured Notes 4.625% due 2046 | ||||
Stated interest rate | 4.625% | |||
Maturity Date | Mar. 15, 2046 | |||
Unsecured Debt | $ 981,000,000 | $ 980,000,000 |
Income Taxes (Details)
Income Taxes (Details) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019Rate | Jun. 30, 2018Rate | Jun. 30, 2019 | Jun. 30, 2018 | |
Income Tax [Abstract] | ||||
Effective income tax rate reconciliation, percent | 15.00% | 27.40% | 14.60% | 23.20% |
Segment Information (Sales And
Segment Information (Sales And Other Financial Information By Business Segment) (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Segment Reporting Information [Line Items] | ||||
Net sales | $ 3,650 | $ 3,322 | $ 7,166 | $ 6,563 |
Segment operating income | 613 | 672 | 1,141 | 1,263 |
Acquisition and integration-related charges | (53) | (24) | (191) | (41) |
Amortization of intangible assets | (122) | (110) | (236) | (212) |
Recall-related matters | (117) | (2) | (130) | (6) |
Orthopaedics | ||||
Segment Reporting Information [Line Items] | ||||
Net sales | 1,273 | 1,228 | 2,523 | 2,444 |
MedSurg | ||||
Segment Reporting Information [Line Items] | ||||
Net sales | 1,617 | 1,455 | 3,161 | 2,882 |
Neurotechnology and Spine | ||||
Segment Reporting Information [Line Items] | ||||
Net sales | 760 | 639 | 1,482 | 1,237 |
Operating Segments | ||||
Segment Reporting Information [Line Items] | ||||
Net sales | 3,650 | 3,322 | 7,166 | 6,563 |
Segment operating income | 1,066 | 944 | 2,079 | 1,852 |
Operating Segments | Orthopaedics | ||||
Segment Reporting Information [Line Items] | ||||
Net sales | 1,273 | 1,228 | 2,523 | 2,444 |
Segment operating income | 448 | 437 | 885 | 866 |
Operating Segments | MedSurg | ||||
Segment Reporting Information [Line Items] | ||||
Net sales | 1,617 | 1,455 | 3,161 | 2,882 |
Segment operating income | 404 | 326 | 781 | 627 |
Operating Segments | Neurotechnology and Spine | ||||
Segment Reporting Information [Line Items] | ||||
Net sales | 760 | 639 | 1,482 | 1,237 |
Segment operating income | 214 | 181 | 413 | 359 |
Corporate and other | ||||
Segment Reporting Information [Line Items] | ||||
Segment operating income | (122) | (89) | (254) | (187) |
Segment Reconciling Items | ||||
Segment Reporting Information [Line Items] | ||||
Acquisition and integration-related charges | (53) | (24) | (191) | (41) |
Amortization of intangible assets | (122) | (110) | (236) | (212) |
Restructuring-related charges | (42) | (22) | (98) | (85) |
Medical device regulations | (12) | (2) | (19) | (3) |
Recall-related matters | (117) | (2) | (130) | (6) |
Regulatory and legal matters | $ 15 | $ (23) | $ (10) | $ (55) |