10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the quarterly period ended September 30, 2017

OR

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

Commission File No. 1-11083

BOSTON SCIENTIFIC CORPORATION

(Exact name of registrant as specified in its charter)

DELAWARE	04-2695240
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

300 BOSTON SCIENTIFIC WAY, MARLBOROUGH, MASSACHUSETTS 01752-1234

(Address of principal executive offices) (zip code)

(508) 683-4000

(Registrant’s telephone number, including area code)

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

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).Yes þ No o

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

Large accelerated filer þ	Accelerated filer o
Non-Accelerated filer o (Do not check if a smaller reporting company)	Smaller reporting company o
	Emerging growth company o

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

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

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

	Shares outstanding
Class	as of October 31, 2017
Common Stock, $0.01 par value	1,373,195,517

TABLE OF CONTENTS

		Page No.
PART I	FINANCIAL INFORMATION	3
ITEM 1.	Condensed Consolidated Financial Statements	3
	Condensed Consolidated Statements of Operations (Unaudited)	3
	Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited)	4
	Condensed Consolidated Balance Sheets (Unaudited as of September 30, 2017)	5
	Condensed Consolidated Statements of Cash Flows (Unaudited)	6
	Notes to the Condensed Consolidated Financial Statements (Unaudited)	7
ITEM 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	33
ITEM 3.	Quantitative and Qualitative Disclosures About Market Risk	55
ITEM 4.	Controls and Procedures	56
PART II	OTHER INFORMATION	57
ITEM 1.	Legal Proceedings	57
ITEM 1A.	Risk Factors	57
ITEM 6.	Exhibits	57
SIGNATURE		58

2

PART I

FINANCIAL INFORMATION

ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

BOSTON SCIENTIFIC CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

	Three Months Ended September 30,						Nine Months Ended September 30,
in millions, except per share data	2017			2016			2017			2016
Net sales	$	2,222		$	2,105		$	6,640		$	6,195
Cost of products sold	637			594			1,919			1,805
Gross profit	1,585			1,511			4,721			4,390
Operating expenses:
Selling, general and administrative expenses	800			772			2,408			2,268
Research and development expenses	254			232			734			664
Royalty expense	16			20			50			59
Amortization expense	139			136			424			408
Intangible asset impairment charges	3			7			3			7
Restructuring charges (credits)	12			5			17			22
Contingent consideration expense (benefit)	(4		)	(13		)	(78		)	23
Litigation-related charges (credits)	(12		)	4			196			632
	1,208			1,163			3,754			4,083
Operating income (loss)	377			348			967			307
Other income (expense):
Interest expense	(57		)	(58		)	(172		)	(175		)
Other, net	(11		)	(33		)	(89		)	(44		)
Income (loss) before income taxes	309			257			706			88
Income tax expense (benefit)	26			29			(13		)	(135		)
Net income (loss)	$	283		$	228		$	719		$	223
Net income (loss) per common share — basic	$	0.21		$	0.17		$	0.53		$	0.16
Net income (loss) per common share — assuming dilution	$	0.20		$	0.17		$	0.52		$	0.16
Weighted-average shares outstanding
Basic	1,372.0			1,360.6			1,369.1			1,356.1
Assuming dilution	1,394.1			1,379.7			1,391.8			1,374.9

See notes to the unaudited condensed consolidated financial statements.

3

BOSTON SCIENTIFIC CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (UNAUDITED)

	Three Months Ended September 30,						Nine Months Ended September 30,
(in millions)	2017			2016			2017			2016
Net income (loss)	$	283		$	228		$	719		$	223
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustment	25			2			46			(3		)
Net change in unrealized gains and losses on derivative financial instruments	(24		)	(31		)	(100		)	(184		)
Net change in available-for-sale securities	1			—			3			—
Net change in unrealized costs associated with certain retirement plans	—			—			(1		)	—
Total other comprehensive income (loss)	2			(29		)	(52		)	(187		)
Total comprehensive income (loss)	$	285		$	199		$	667		$	36

See notes to the unaudited condensed consolidated financial statements.

4

BOSTON SCIENTIFIC CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

	As of
	September 30,			December 31,
in millions, except share and per share data	2017			2016
	(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	210		$	196
Trade accounts receivable, net	1,470			1,472
Inventories	1,077			955
Deferred and prepaid income taxes	76			75
Other current assets	645			541
Total current assets	3,478			3,239
Property, plant and equipment, net	1,678			1,630
Goodwill	6,882			6,678
Other intangible assets, net	5,783			5,883
Other long-term assets	815			666
TOTAL ASSETS	$	18,636		$	18,096
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Current debt obligations	$	1,266		$	64
Accounts payable	371			447
Accrued expenses	2,551			2,312
Other current liabilities	640			764
Total current liabilities	4,828			3,587
Long-term debt	4,416			5,420
Deferred income taxes	66			18
Other long-term liabilities	1,738			2,338
Commitments and contingencies
Stockholders’ equity
Preferred stock, $0.01 par value - authorized 50,000,000 shares, none issued and outstanding
Common stock, $0.01 par value - authorized 2,000,000,000 shares - issued 1,620,302,039 shares as of September 30, 2017 and 1,609,670,817 shares as of December 31, 2016	16			16
Treasury stock, at cost - 247,566,270 shares as of September 30, 2017 and December 31, 2016	(1,717		)	(1,717		)
Additional paid-in capital	17,125			17,014
Accumulated deficit	(7,785		)	(8,581		)
Accumulated other comprehensive income (loss), net of tax	(51		)	1
Total stockholders’ equity	7,588			6,733
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	18,636		$	18,096

See notes to the unaudited condensed consolidated financial statements.

5

BOSTON SCIENTIFIC CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

	Nine Months Ended September 30,
(in millions)	2017			2016
Cash provided by (used for) operating activities	$	554		$	506
Investing activities:
Purchases of property, plant and equipment	(240		)	(209		)
Proceeds on disposals of property, plant and equipment	—			29
Payments for acquisitions of businesses, net of cash acquired	(392		)	(70		)
Net payments for investments, acquisitions of certain technologies and issuances of notes receivable	(89		)	(105		)
Cash provided by (used for) investing activities	(721		)	(355		)
Financing activities:
Payments on long-term borrowings	(1,000		)	(250		)
Net increase (decrease) in commercial paper	1,253			—
Payment of contingent consideration amounts previously established in purchase accounting	(30		)	(35		)
Proceeds from borrowings on credit facilities	2,156			330
Payments on borrowings from credit facilities	(2,216		)	(330		)
Cash used to net share settle employee equity awards	(64		)	(57		)
Proceeds from issuances of shares of common stock	79			108
Cash provided by (used for) financing activities	178			(234		)
Effect of foreign exchange rates on cash	3			1
Net increase (decrease) in cash and cash equivalents	14			(82		)
Cash and cash equivalents at beginning of period	196			319
Cash and cash equivalents at end of period	$	210		$	237
Supplemental Information
Stock-based compensation expense	$	96		$	87
Fair value of contingent consideration recorded in purchase accounting	—			4

See notes to the unaudited condensed consolidated financial statements.

6

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE A – BASIS OF PRESENTATION

The accompanying unaudited condensed consolidated financial statements of Boston Scientific Corporation have been prepared in accordance with accounting principles generally accepted in the United States (U.S. GAAP) and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments (consisting only of normal recurring adjustments) considered necessary for fair presentation have been included. Operating results for the three and nine months ended September 30, 2017 are not necessarily indicative of the results that may be expected for the year ending December 31, 2017. For further information, refer to the consolidated financial statements and footnotes thereto included in Item 8 of our most recent Annual Report on Form 10-K.

Subsequent Events

We evaluate events occurring after the date of our most recent accompanying unaudited condensed consolidated balance sheets for potential recognition or disclosure in our financial statements. We did not identify any material subsequent events requiring adjustment to our accompanying unaudited condensed consolidated financial statements (recognized subsequent events) for the three and nine months ended September 30, 2017. Those items requiring disclosure (unrecognized subsequent events) in the financial statements have been disclosed accordingly. Refer to Note B – Acquisitions and Strategic Investments and Note I – Commitments and Contingenciesfor more information.

NOTE B – ACQUISITIONS AND STRATEGIC INVESTMENTS

2017 Acquisitions

Apama Medical Inc.

On October 10, 2017, we completed the acquisition of Apama Medical Inc. (Apama), a privately-held company developing the Apama™ Radiofrequency single-shot Balloon Catheter System for the treatment of atrial fibrillation. Total consideration was comprised of $175 million cash up-front and a maximum of $125 millionin contingent payments based on the achievement of clinical and regulatory milestones. Apama will be integrated into our Rhythm Management segment.

Symetis SA

On May 16, 2017, we completed the acquisition of Symetis SA (Symetis), a privately-held Swiss structural heart company focused on minimally-invasive transcatheter aortic valve replacement devices, for approximately $430 millionin cash. We are in the process of integrating Symetis into our Interventional Cardiology business and expect the integration to be substantially complete by the end of 2018.

Purchase Price Allocation

We accounted for the acquisition of Symetis as a business combination and, in accordance with FASB ASC Topic 805, Business Combinations, we recorded the assets acquired and liabilities assumed at their respective fair values as of the acquisition date. The components of the aggregate preliminary purchase price are as follows (in millions):

Payment for acquisition, net of cash acquired $ 392

The following summarizes the preliminary purchase price allocation for the Symetis acquisition as of September 30, 2017

(in millions):

Goodwill	$	191
Amortizable intangible assets	278
Other assets acquired	26
Liabilities assumed	(103		)
	$	392

7

We allocated a portion of the purchase price to specific intangible asset categories as follows:

	Amount Assigned (in millions)		Amortization Period (in years)	Risk-Adjusted Discount Rates used in Purchase Price Allocation
Amortizable intangible assets:
Technology-related	$	268	13	24%
Other intangible assets	10		2-13	24%
	$	278

Our technology-related intangible assets consist of technical processes, intellectual property, and institutional understanding with respect to products and processes that we will leverage in future products or processes and will carry forward from one product generation to the next. We used the multi-period excess earnings method, a form of the income approach, to derive the fair value of the technology-related intangible assets, and are amortizing them on a straight-line basis over their assigned estimated useful lives.

Contingent Consideration

Certain of our acquisitions involve contingent consideration arrangements. Payment of additional consideration is generally contingent on the acquired company reaching certain performance milestones, including attaining specified revenue levels, achieving product development targets and/or obtaining regulatory approvals for products in development at the date of the acquisition. In accordance with U.S. GAAP, we recognize a liability equal to the fair value of the contingent payments we expect to make as of the acquisition date. We re-measure this liability each reporting period and record changes in the fair value through a separate line item within our unaudited condensed consolidated statements of operations. We paid contingent consideration of $45 million during the first nine months of2017 and $77 million during the first nine months of2016.

Changes in the fair value of our contingent consideration liabilities were as follows (in millions):

Balance as of December 31, 2016	$	204
Fair value adjustments	(78		)
Contingent payments related to prior period acquisitions	(45		)
Balance as of September 30, 2017	$	81

As of September 30, 2017, the maximum amount of future contingent consideration (undiscounted) that we could be required to pay was approximately $1.261 billion.

Contingent consideration liabilities are remeasured to fair value each reporting period using projected revenues, discount rates, probabilities of payment and projected payment dates. The recurring Level 3 fair value measurements of our contingent consideration liabilities include the following significant unobservable inputs:

Contingent Consideration Liabilities	Fair Value as of September 30, 2017	Valuation Technique	Unobservable Input	Range
R&D and Commercialization-based Milestones	$31 million	Discounted Cash Flow	Discount Rate	2%
			Projected Year of Payment	2018 - 2021
Revenue-based Payments	$50 million	Discounted Cash Flow	Discount Rate	11% - 15%
			Projected Year of Payment	2017 - 2026

8

Increases or decreases in the fair value of our contingent consideration liabilities can result from changes in discount periods and rates, as well as changes in the timing and amount of revenue estimates or in the timing or likelihood of achieving R&D, commercialization-based, and revenue-based milestones. Projected contingent payment amounts related to some of our R&D, commercialization-based, and revenue-based milestones are discounted back to the current period using a discounted cash flow model. Projected revenues are based on our most recent internal operational budgets and long-range strategic plans. Increases in projected revenues and probabilities of payment may result in higher fair value measurements. Increases in discount rates and the time to payment may result in lower fair value measurements. Increases or decreases in any of those inputs together, or in isolation, may result in a significantly lower or higher fair value measurement.

Strategic Investments

On November 1, 2017, we entered into a definitive agreement with an investee company where we may be obligated to pay $145 million in cash up-front and a maximum of $130 million in contingent payments to acquire the investee. The agreement contains a provision, expiring October 31, 2019, allowing the investee company to sell the remaining equity interests of the investee company to us upon achievement of a regulatory milestone, and an option allowing us to acquire the remaining equity interests.

We account for certain of our strategic investments as equity method investments, in accordance with FASB ASC Topic 323, Investments - Equity Method and Joint Ventures.

The aggregate carrying amount of our strategic investments were comprised of the following categories:

	As of
(in millions)	September 30, 2017		December 31, 2016
Equity method investments	$	204	$	265
Cost method investments	69		20
Available-for-sale securities	32		20
Notes receivable	44		42
	$	349	$	347

These investments are classified as other long-term assets within our accompanying unaudited condensed consolidated balance sheets, in accordance with U.S. GAAP and our accounting policies.

During the second quarter of 2017, we recorded a charge of $53 million for an other-than-temporary impairment loss equal to the difference between the carrying value of one of our investments and its fair value. The charge was recorded within the Other, net caption of our unaudited condensed consolidated statements of operations.

NOTE C – GOODWILL AND OTHER INTANGIBLE ASSETS

The gross carrying amount of goodwill and other intangible assets and the related accumulated amortization for intangible assets subject to amortization and accumulated write-offs of goodwill are as follows:

	As of
	September 30, 2017					December 31, 2016
	Gross Carrying		Accumulated Amortization/			Gross Carrying		Accumulated Amortization/
(in millions)	Amount		Write-offs			Amount		Write-offs
Amortizable intangible assets
Technology-related	$	9,388	$	(4,774	)	$	9,123	$	(4,468	)
Patents	514		(375		)	529		(374		)
Other intangible assets	1,625		(807		)	1,583		(722		)
	$	11,527	$	(5,956	)	$	11,235	$	(5,564	)
Unamortizable intangible assets
Goodwill	$	16,782	$	(9,900	)	$	16,578	$	(9,900	)
In-process research and development (IPR&D)	92		—			92		—
Technology-related	120		—			120		—
	$	16,994	$	(9,900	)	$	16,790	$	(9,900	)

9

Our technology-related intangible assets that are not subject to amortization represent technical processes, intellectual property and/or institutional understanding acquired through business combinations that are fundamental to the on-going operations of our business and have no limit to their useful life. Our technology-related intangible assets that are not subject to amortization are comprised primarily of certain acquired balloon and other technology, which is foundational to our continuing operations within the Cardiovascular market and other markets within interventional medicine. We assess our indefinite-lived intangible assets at least annually for impairment and reassess their classification as indefinite-lived assets. We assess qualitative factors to determine whether the existence of events and circumstances indicate that it is more likely than not that our indefinite-lived intangible assets are impaired. If we conclude that it is more likely than not that the asset is impaired, we then determine the fair value of the intangible asset and perform the quantitative impairment test by comparing the fair value with the carrying value in accordance with FASB ASC Topic 350, Intangibles - Goodwill and Other.

In the third quarter of 2017, we performed our annual impairment test of all IPR&D projects and our indefinite-lived core technology assets and determined that the assets were not impaired. In addition, we verified the classification as indefinite-lived assets continues to be appropriate.

The following represents our goodwill balance by global reportable segment:

(in millions)	Cardiovascular		Rhythm Management		MedSurg		Total
Balance as of December 31, 2016	$	3,513	$	290	$	2,875	$	6,678
Impact of foreign currency fluctuations and other changes in carrying amount	11		1		1		13
Goodwill acquired	191		—		—		191
Balance as of September 30, 2017	$	3,715	$	291	$	2,876	$	6,882

Goodwill Impairment Testing

We test our goodwill balances during the second quarter of each year for impairment, or more frequently if indicators are present or changes in circumstances suggest an impairment may exist. In the second quarter of 2017, we performed our annual goodwill impairment test for all of our reporting units and concluded the fair value of each reporting unit exceeded its carrying value.

The following is a rollforward of accumulated goodwill write-offs by global reportable segment:

(in millions)	Cardiovascular			Rhythm Management			MedSurg			Total
Accumulated write-offs as of December 31, 2016	$	(1,479	)	$	(6,960	)	$	(1,461	)	$	(9,900	)
Goodwill written off	—			—			—			—
Accumulated write-offs as of September 30, 2017	$	(1,479	)	$	(6,960	)	$	(1,461	)	$	(9,900	)

NOTE D – FAIR VALUE MEASUREMENTS

Derivative Instruments and Hedging Activities

We address market risk from changes in foreign currency exchange rates and interest rates through a risk management program which includes the use of derivative financial instruments. We operate this program pursuant to documented corporate risk management policies and do not enter into derivative transactions for speculative purposes. Our derivative instruments do not subject our earnings or cash flows to material risk as the gains or losses on these derivatives generally offset losses or gains recognized on the hedged item. We manage our concentration of counterparty credit risk by limiting acceptable counterparties to major financial institutions with investment grade credit ratings, limiting the amount of credit exposure to individual counterparties and by actively monitoring counterparty credit ratings and the amount of individual credit exposure. We also employ master netting arrangements that limit the risk of counterparty non-payment on a particular settlement date to the net gain that would have otherwise been received from the counterparty. Although not completely eliminated, we do not consider the risk of counterparty default to be significant as a result of these protections. Further, none of our derivative instruments are subject to collateral or other security arrangements, nor do they contain provisions that are dependent on our credit ratings from any credit rating agency.

10

The success of our risk management program depends, in part, on forecasted transactions denominated primarily in British pound sterling, Euro and Japanese yen. We may experience unanticipated currency exchange gains or losses to the extent the actual activity is different than forecasted. In addition, changes in currency exchange rates related to any unhedged transactions may impact our earnings and cash flows.

Our risk from changes in currency exchange rates consists primarily of monetary assets and liabilities, forecasted intercompany and third-party transactions, and net investments in certain subsidiaries. We manage currency exchange rate risk at a consolidated level to reduce the cost of hedging by taking advantage of offsetting transactions. We employ derivative instruments, primarily forward currency contracts, to reduce the risk to our earnings and cash flows associated with changes in currency exchange rates.

Certain of our currency derivative instruments designated as cash flow hedges under FASB ASC Topic 815, Derivatives and Hedging are intended to protect the U.S. dollar value of forecasted transactions. The effective portion of gains or losses on a derivative instrument designated as a cash flow hedge is recorded in other comprehensive income (OCI), net of tax, until the underlying third-party transaction occurs. When the related third-party transaction occurs we recognize the gain or loss to earnings within the Cost of products sold caption of our unaudited condensed consolidated statements of operations. In the event the hedging relationship is no longer effective, or if the hedged forecasted transaction becomes no longer probable, we reclassify the amount of gains or losses on the derivative instrument designated as a cash flow hedge to earnings at that time.

We also use currency forward contracts that are not part of designated hedging relationships under FASB ASC Topic 815 as a part of our strategy to manage our exposure to currency exchange risk related to monetary assets and liabilities and related forecasted transactions. These currency forward contracts have an original time to maturity consistent with the hedged currency transaction exposures, generally less than one year and are marked-to-market with changes in fair value recorded to earnings and reflected within the Other, net caption of our unaudited condensed consolidated statements of operations.

Our interest rate risk relates primarily to U.S. dollar borrowings, partially offset by U.S. dollar cash investments. We use interest rate derivative instruments to manage our earnings and cash flow exposure to changes in interest rates. Under these agreements we and the counterparty, at specified intervals, exchange the difference between fixed and floating interest amounts calculated by reference to an agreed upon notional principal amount. We designate these derivative instruments either as fair value or cash flow hedges under FASB ASC Topic 815.

The changes in the fair value of interest rate derivatives designated as fair value hedges and the changes in the fair value of the underlying hedged debt instrument generally offset and are recorded within the Interest expense caption of our unaudited condensed consolidated statements of operations. To the extent the hedge relationship is effective, we record the changes in the fair value of interest rate derivatives designated as cash flow hedges within the Accumulated other comprehensive income, net of tax, caption of our unaudited condensed consolidated balance sheets until the underlying hedged item occurs, at which time we recognize the gain or loss within interest expense. We record the ineffective portion, if any, of our interest rate derivatives designated as cash flow hedges directly to earnings within interest expense and in the event the hedged cash flow does not occur, or it becomes no longer probable that it will occur we reclassify the amount of gains or losses to earnings at that time.

We are amortizing the realized gains or losses from interest rate derivative instruments previously designated as fair value hedges and the effective portion of gains or losses from interest rate derivative contracts previously designated as cash flow hedges into earnings as a component of interest expense over the remaining term of the hedged item, in accordance with FASB ASC Topic 815.

The following table presents the contractual amounts of our derivative instruments outstanding:

(in millions)	Topic 815 designation	As of
		September 30, 2017		December 31, 2016
Forward currency contracts	Cash flow hedge	$	3,218	$	2,271
Forward currency contracts	Non-designated	2,111		1,830
Total Notional Outstanding		$	5,329	$	4,101

The remaining time to maturity as of September 30, 2017 is within 60 months for all designated forward currency contracts and generally less than one year for all non-designated forward currency contracts. We had no interest rate derivative instruments outstanding as of September 30, 2017 and December 31, 2016.

11

The following presents the effect of our derivative instruments designated as cash flow hedges under FASB ASC Topic 815 on our accompanying unaudited condensed consolidated statements of operations:

(in millions)	Location in Unaudited Condensed Consolidated Statements of Operations	Effective Amount Recognized in OCI								Effective Amount Reclassified from OCI into Earnings
		Pre-Tax Gain (Loss)			Tax Benefit (Expense)		Gain (Loss) Net of Tax			Pre-Tax (Gain) Loss			Tax Benefit (Expense)		(Gain) Loss Net of Tax
Three Months Ended September 30, 2017
Forward currency contracts	Cost of products sold	$	(24	)	$	9	$	(15	)	$	(14	)	$	5	$	(9	)
Three Months Ended September 30, 2016
Forward currency contracts	Cost of products sold	$	(22	)	$	8	$	(14	)	$	(27	)	$	10	$	(17	)
Nine Months Ended September 30, 2017
Forward currency contracts	Cost of products sold	$	(88	)	$	32	$	(56	)	$	(68	)	$	25	$	(43	)
Interest rate derivative contracts	Interest expense	—			—		—			(1		)	—		(1		)
		$	(88	)	$	32	$	(56	)	$	(69	)	$	25	$	(44	)
Nine Months Ended September 30, 2016
Forward currency contracts	Cost of products sold	$	(180	)	$	65	$	(115	)	$	(107	)	$	38	$	(69	)

As of September 30, 2017, pre-tax net gains or losses for our derivative instruments designated, or previously designated, as currency hedge contracts under FASB ASC Topic 815 that may be reclassified to earnings within the next twelve months are presented below:

(in millions)	Location in Unaudited Condensed Consolidated Statements of Operations	Amount of Pre-Tax Gain (Loss) that may be Reclassified to Earnings
Fair value hedge contracts	Interest expense	$	12
Cash flow hedge contracts	Interest expense	1
Cash flow hedge contracts	Cost of products sold	(30		)

Net gains and losses on currency hedge contracts not designated as hedging instruments offset by net gains and losses from currency transaction exposures are presented below:

(in millions)	Location in Unaudited Condensed Consolidated Statements of Operations
		Three Months Ended						Nine Months Ended
		September 30,						September 30,
		2017			2016			2017			2016
Net gain (loss) on currency hedge contracts	Other, net	$	(13	)	$	(7	)	$	(25	)	$	(74	)
Net gain (loss) on currency transaction exposures	Other, net	9			1			13			64
Net currency exchange gain (loss)		$	(4	)	$	(6	)	$	(12	)	$	(10	)

Fair Value Measurements

FASB ASC Topic 815 requires all derivative instruments to be recognized at their fair values as either assets or liabilities on the balance sheet. We determine the fair value of our derivative instruments using the framework prescribed by FASB ASC Topic 820, Fair Value Measurements and Disclosures, by considering the estimated amount we would receive or pay to transfer these instruments at the reporting date when taking into account current currency exchange rates and interest rates, the creditworthiness of the counterparty for unrealized gain positions and our own creditworthiness for unrealized loss positions. In certain instances, we may utilize financial models to measure fair value of our derivative instruments. In doing so, we use inputs that include quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, other observable inputs for the asset or liability, and inputs derived principally from, or corroborated by, observable market data by correlation or other means.

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The following are the balances of our derivative assets and liabilities:

	Location in Unaudited Condensed Consolidated Balance Sheets (1)	As of
		September 30,		December 31,
(in millions)		2017		2016
Derivative Assets:
Designated Derivative Instruments
Forward currency contracts	Other current assets	$	7	$	98
Forward currency contracts	Other long-term assets	59		65
		66		163
Non-Designated Derivative Instruments
Forward currency contracts	Other current assets	17		36
Total Derivative Assets		$	83	$	199
Derivative Liabilities:
Designated Derivative Instruments
Forward currency contracts	Other current liabilities	$	38	$	3
Forward currency contracts	Other long-term liabilities	25		4
		63		7
Non-Designated Derivative Instruments
Forward currency contracts	Other current liabilities	29		19
Total Derivative Liabilities		$	92	$	26

(1) We classify derivative assets and liabilities as current when the remaining term of the derivative contract is one year or less.

On a recurring basis, we measure certain financial assets and financial liabilities at fair value based upon quoted market prices, where available. Where quoted market prices or other observable inputs are not available, we apply valuation techniques to estimate fair value. FASB ASC Topic 820 establishes a three-level valuation hierarchy for disclosure of fair value measurements. The categorization of financial assets and financial liabilities within the valuation hierarchy is based upon the lowest level of input that is significant to the measurement of fair value. The three levels of the hierarchy are defined as follows:

• Level 1 – Inputs to the valuation methodology are quoted market prices for identical assets or liabilities.

• Level 2 – Inputs to the valuation methodology are other observable inputs, including quoted market prices for similar assets or liabilities and market-corroborated inputs.

• Level 3 – Inputs to the valuation methodology are unobservable inputs based on management’s best estimate of inputs market participants would use in pricing the asset or liability at the measurement date, including assumptions about risk.

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Assets and liabilities measured at fair value on a recurring basis consist of the following:

	As of
	September 30, 2017								December 31, 2016
(in millions)	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Assets
Money market and government funds	$	27	$	—	$	—	$	27	$	42	$	—	$	—	$	42
Available-for-sale securities	32		—		—		32		20		—		—		20
Forward currency contracts	—		83		—		83		—		199		—		199
	$	59	$	83	$	—	$	142	$	62	$	199	$	—	$	261
Liabilities
Forward currency contracts	$	—	$	92	$	—	$	92	$	—	$	26	$	—	$	26
Accrued contingent consideration	—		—		81		81		—		—		204		204
	$	—	$	92	$	81	$	173	$	—	$	26	$	204	$	230

Our investments in money market and government funds are classified within Level 1 of the fair value hierarchy because they are valued using quoted market prices. These investments are classified as cash and cash equivalents within our accompanying unaudited condensed consolidated balance sheets, in accordance with U.S. GAAP and our accounting policies. In addition to $27 million invested in money market and government funds as of September 30, 2017, we had $183 million in interest bearing and non-interest bearing bank accounts. In addition to $42 million invested in money market and government funds as of December 31, 2016, we had $19 million in short-term deposits and $135 million in interest bearing and non-interest bearing bank accounts.

Our recurring fair value measurements using significant unobservable inputs (Level 3) relate solely to our contingent consideration liability. Refer to Note B – Acquisitions and Strategic Investmentsfor a discussion of the changes in the fair value of our contingent consideration liability.

We hold certain assets and liabilities that are measured at fair value on a non-recurring basis in periods subsequent to initial recognition. The fair value of a cost method investment is not estimated if there are no identified events or changes in circumstances that may have a significant adverse effect on the fair value of the investment. Refer to Note B – Acquisitions and Strategic Investments for a discussion of our strategic investments.

The fair value of our outstanding debt obligations was $6.032 billion as of September 30, 2017 and $5.739 billion as of December 31, 2016, which was determined by using quoted market prices for our publicly registered senior notes, classified as Level 1 within the fair value hierarchy. Refer to Note E – Borrowings and Credit Arrangements for a discussion of our debt obligations.

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NOTE E – BORROWINGS AND CREDIT ARRANGEMENTS

We had total debt of $5.682 billion as of September 30, 2017 and $5.484 billion as of December 31, 2016. The debt maturity schedule for the significant components of our long-term debt obligations is presented below:

in millions, except interest rates	Maturity Date	As of
		September 30, 2017			December 31, 2016
January 2017 5.125% Notes	January 2017	$	—		$	250
October 2018 2.650% Notes	October 2018	600			600
January 2020 6.000% Notes	January 2020	850			850
May 2020 2.850% Notes	May 2020	600			600
May 2022 3.375% Notes	May 2022	500			500
May 2025 3.850% Notes	May 2025	750			750
October 2023 4.125% Notes	October 2023	450			450
November 2035 6.250% Notes	November 2035	350			350
January 2040 7.375% Notes	January 2040	300			300
August 2018 Term Loan	August 2018	—			150
August 2020 Term Loan	2018 - 2020	—			600
Debt Discount	2018 - 2040	(7		)	(8		)
Deferred Financing Costs	2018 - 2040	(20		)	(24		)
Interest Rate Swaps	2020 - 2023	42			51
Capital Lease Obligation	2018 - 2020	1			1
Long-term debt		$	4,416		$	5,420

Note: The table above does not include unamortized amounts related to interest rate contracts designated as cash flow hedges.

Revolving Credit Facility

On August 4, 2017, we entered into a $2.250 billion revolving credit facility (the 2017 Facility) with a global syndicate of commercial banks and terminated our previous $2.000 billion revolving credit facility (the 2015 Facility), which was scheduled to mature April 2020. The 2017 Facility matures on August 4, 2022. Eurodollar and multicurrency loans under the 2017 Facility bear interest at LIBOR plus an interest margin of between 0.90 percent and 1.50 percent, based on our corporate credit ratings and consolidated leverage ratio (1.10 percent as of September 30, 2017). Under the credit agreement for the 2017 Facility (the 2017 Credit Agreement), we are required to pay a facility fee (0.15 percent as of September 30, 2017) based on our credit ratings and the total amount of revolving credit commitment, regardless of usage of the 2017 Facility. This facility provides backing for the commercial paper program described below. There were no borrowings outstanding under the 2017 Facility as of September 30, 2017 and no borrowings outstanding under the 2015 Facility as of December 31, 2016.

The 2017 Facility agreement in place requires that we maintain certain financial covenants, as follows:

	Covenant Requirement as of September 30, 2017	Actual as of September 30, 2017
Maximum leverage ratio (1)	3.5 times	2.3 times

(1) Ratio of total debt to consolidated EBITDA, as defined by the credit agreement, for the preceding four consecutive fiscal quarters.

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The 2017 Credit Agreement provides for an exclusion from the calculation of consolidated EBITDA, as defined by such agreement, through the agreed maturity, of any non-cash charges and up to $500 million in restructuring charges and restructuring-related expenses related to our current or future restructuring plans. As of September 30, 2017, we had $476 million of the restructuring charge exclusion remaining. In addition, any cash litigation payments (net of any cash litigation receipts), as defined by the 2017 Credit Agreement, are excluded from the calculation of consolidated EBITDA and any new debt issued to fund any tax deficiency payments is excluded from consolidated total debt, as defined in the 2017 Credit Agreement, provided that the sum of any excluded net cash litigation payments and any new debt issued to fund any tax deficiency payments does not exceed $2.624 billion in the aggregate. As of September 30, 2017, we had $2.358 billion of the combined legal and debt exclusion remaining.

As of and through September 30, 2017, we were in compliance with the required covenants.

Any inability to maintain compliance with these covenants could require us to seek to renegotiate the terms of our credit facility or seek waivers from compliance with these covenants, both of which could result in additional borrowing costs. Further, there can be no assurance that our lenders would agree to such new terms or grant such waivers.

Commercial Paper

In June 2017, we launched a commercial paper program that allowed the Company to have a maximum of $2.000 billion in commercial paper outstanding. In August 2017, we increased our commercial paper program’s maximum to $2.250 billion, in line with the increased size of the 2017 Facility. As of September 30, 2017 there was $1.260 billion of commercial paper outstanding. The commercial paper program is backed by the 2017 Facility. Commercial paper issued as of September 30, 2017 had a weighted average maturity of 29 days and a weighted average yield of 1.65 percent.

Term Loans

As of September 30, 2017, we had no amounts outstanding under our unsecured term loan facilities and$750 million outstanding as of December 31, 2016. These facilities include an unsecured term loan facility maturing August 2018 (August 2018 Term Loan) and an unsecured term loan facility maturing August 2020 (August 2020 Term Loan). The August 2018 Term Loan had $150 million outstanding as of December 31, 2016 and was fully repaid as of June 30, 2017. The August 2020 Term Loan had $600 million outstanding as of December 31, 2016 and was fully repaid as of September 30, 2017.

Senior Notes

We had senior notes outstanding of $4.400 billion as ofSeptember 30, 2017 and$4.650 billion as of December 31, 2016. On January 12, 2017, we used our existing credit facilities to repay the $250 million plus interest of our senior notes due in January 2017.Our senior notes were issued in public offerings, are redeemable prior to maturity and are not subject to any sinking fund requirements. Our senior notes are unsecured, unsubordinated obligations and rank on parity with each other. These notes are effectively junior to borrowings under our credit and security facility and to the extent borrowed by our subsidiaries, to liabilities of our subsidiaries (see Other Arrangements below).

Other Arrangements

As ofDecember 31, 2016, we maintained a$300 million credit and security facility secured by our U.S. trade receivables maturing on June 9, 2017. On February 7, 2017, we amended the terms of this credit and security facility, including increasing the facility size to$400 millionand extending the facility maturity date to February 2019. We had no borrowings outstanding under this facility as of September 30, 2017 and $60 million as of December 31, 2016.

We have accounts receivable factoring programs in certain European countries that we account for as sales under FASB ASC Topic 860, Transfers and Servicing. These agreements provide for the sale of accounts receivable to third parties, without recourse, of up to $449 million as of September 30, 2017. We have no retained interests in the transferred receivables, other than collection and administrative responsibilities and, once sold, the accounts receivable are no longer available to satisfy creditors in the event of bankruptcy. We de-recognized $167 million of receivables as of September 30, 2017 at an average interest rate of 1.6 percent and $152 million as of December 31, 2016 at an average interest rate of 1.8 percent.

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In addition, we have uncommitted credit facilities with a commercial Japanese bank that provide for borrowings, promissory notes discounting and receivables factoring of up to 22.0 billion Japanese yen (approximately $196 million as of September 30, 2017). We de-recognized $162 million of notes receivable and factored receivables as of September 30, 2017 at an average interest rate of 1.3 percent and $149 million of notes receivable as of December 31, 2016 at an average interest rate of 1.6 percent. De-recognized accounts and notes receivable are excluded from trade accounts receivable, net in the accompanying unaudited condensed consolidated balance sheets.

We had outstanding letters of credit of $37 million as of September 30, 2017 and $44 million as of December 31, 2016, which consisted primarily of bank guarantees and collateral for workers' compensation insurance arrangements. As of September 30, 2017 and December 31, 2016, none of the beneficiaries had drawn upon the letters of credit or guarantees; accordingly, we did not recognize a related liability for our outstanding letters of credit in our consolidated balance sheets as of September 30, 2017 or December 31, 2016. We believe we will generate sufficient cash from operations to fund these arrangements and intend to fund these arrangements without drawing on the letters of credit.

As of and through September 30, 2017, we were in compliance with all the required covenants related to our debt obligations. For additional information regarding the terms of our debt agreements, refer to Note F - Borrowings and Credit Arrangements of the consolidated financial statements in our most recent Annual Report on Form 10-K.

NOTE F – RESTRUCTURING-RELATED ACTIVITIES

2016 Restructuring Plan

On June 6, 2016, our Board of Directors approved and we committed to a restructuring initiative (the 2016 Restructuring Plan). The 2016 Restructuring Plan is intended to develop global commercialization, technology and manufacturing capabilities in key growth markets, build on our Plant Network Optimization (PNO) strategy, which is intended to simplify our manufacturing plant structure by transferring certain production lines among facilities and expanding operational efficiencies in support of our operating income margin goals. Key activities under the 2016 Restructuring Plan include strengthening global infrastructure through evolving global real estate assets and workplaces, developing global commercial and technical competencies, enhancing manufacturing and distribution expertise in certain regions and continuing implementation of our ongoing PNO strategy. These activities were initiated in the second quarter of 2016 and are expected to be substantially completed by the end of 2018.

The 2016 Restructuring Plan is expected to result in total pre-tax charges of approximately $175 million to $225 million and approximately $160 million to $210 million of these charges are estimated to result in cash outlays. We have recorded related costs of $108 million since the inception of the plan through September 30, 2017 and recorded a portion of these expenses as restructuring charges and the remaining portion through other lines within our consolidated statements of operations.

The following table provides a summary of our estimates of costs associated with the 2016 Restructuring Plan through the end of 2018 by major type of cost:

Type of cost	Total Estimated Amount Expected to be Incurred
Restructuring charges:
Termination benefits	$65 million to $75 million
Other (1)	$5 million to $15 million
Restructuring-related expenses:
Other (2)	$105 million to $135 million
	$175 million to $225 million

(1) Consists primarily of consulting fees and costs associated with contract cancellations.

(2) Comprised of other costs directly related to the 2016 Restructuring Plan, including program management, accelerated depreciation and costs to transfer product lines among facilities.

We recorded restructuring charges pursuant to our restructuring plans of $12 million in the third quarter of 2017, $5 million in the third quarter of 2016, $17 million in the first nine months of2017 and $22 million in the first nine months of2016. In addition, we recorded expenses within other lines of our accompanying unaudited condensed consolidated statements of operations related to our restructuring initiatives of $14 million in the third quarter of 2017, $12 million in the third quarter of 2016, $44 million in the first nine months of2017 and $33 million in the first nine months of2016.

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The following presents these costs (credits) by major type and line item within our accompanying unaudited condensed consolidated statements of operations:

Three Months Ended September 30, 2017
(in millions)	Termination Benefits		Accelerated Depreciation		Transfer Costs		Other		Total
Restructuring charges	$	11	$	—	$	—	$	1	$	12
Restructuring-related expenses:
Cost of products sold	—		—		11		—		11
Selling, general and administrative expenses	—		2		—		1		3
	—		2		11		1		14
	$	11	$	2	$	11	$	2	$	26

All charges incurred in the third quarter of 2017 were related to the 2016 Restructuring Plan.

Three Months Ended September 30, 2016
(in millions)	Termination Benefits		Transfer Costs		Fixed Asset Write-offs		Other		Total
Restructuring charges	$	1	$	—	$	2	$	2	$	5
Restructuring-related expenses:
Cost of products sold	—		8		—		—		8
Selling, general and administrative expenses	—		—		—		4		4
	—		8		—		4		12
	$	1	$	8	$	2	$	6	$	17
(in millions)	Termination Benefits		Transfer Costs		Fixed Asset Write-offs		Other		Total
2016 Restructuring Plan	$	1	$	3	$	—	$	3	$	7
2014 Restructuring Plan	—		5		2		3		10
	$	1	$	8	$	2	$	6	$	17

Nine Months Ended September 30, 2017
(in millions)	Termination Benefits		Accelerated Depreciation		Transfer Costs		Other		Total
Restructuring charges	$	14	$	—	$	—	$	3	$	17
Restructuring-related expenses:
Cost of products sold	—		—		35		—		35
Selling, general and administrative expenses	—		5		—		4		9
	—		5		35		4		44
	$	14	$	5	$	35	$	7	$	61

All charges incurred in the first nine months of2017 were related to the 2016 Restructuring Plan.

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Nine Months Ended September 30, 2016
(in millions)	Termination Benefits			Accelerated Depreciation		Transfer Costs		Fixed Asset Write-offs		Other		Total
Restructuring charges	$	16		$	—	$	—	$	2	$	4	$	22
Restructuring-related expenses:
Cost of products sold	—			—		20		—		—		20
Selling, general and administrative expenses	—			4		—		—		9		13
	—			4		20		—		9		33
	$	16		$	4	$	20	$	2	$	13	$	55
(in millions)	Termination Benefits			Accelerated Depreciation		Transfer Costs		Fixed Asset Write-offs		Other		Total
2016 Restructuring Plan	$	19		$	—	$	4	$	—	$	2	$	25
2014 Restructuring Plan	(3		)	4		16		2		11		30
	$	16		$	4	$	20	$	2	$	13	$	55

Termination benefits represent amounts incurred pursuant to our ongoing benefit arrangements and amounts for “one-time” involuntary termination benefits and have been recorded in accordance with FASB ASC Topic 712,Compensation - Nonretirement Postemployment Benefits and FASBASC Topic 420,Exit or Disposal Cost Obligations. Other restructuring costs, which represent primarily consulting fees and costs related to contract cancellations, are being recorded as incurred in accordance with FASB ASC Topic 420. Accelerated depreciation is being recorded over the adjusted remaining useful life of the related assets and program management and production line transfer costs are being recorded as incurred.

As of September 30, 2017, we incurred cumulative restructuring charges related to our 2016 Restructuring Plan of $45 million and restructuring-related charges of $63 million since we committed to the plan. The following presents these costs by major type:

(in millions)	2016 Restructuring Plan
Termination benefits	$	38
Other	7
Total restructuring charges	45
Accelerated depreciation	7
Transfer costs	50
Other	6
Restructuring-related expenses	63
	$	108

We made cash payments of $51 million in the first nine months of2017 associated with our 2016 Restructuring Plan, and as of September 30, 2017, we had made total cash payments of $78 million related to our 2016 Restructuring Plan since committing to the plan. These payments were made using cash generated from operations and are comprised of the following:

(in millions)	2016 Restructuring Plan
Nine Months Ended September 30, 2017
Termination benefits	$	12
Transfer costs	35
Other	4
	$	51
Program to Date
Termination benefits	$	20
Transfer costs	50
Other	8
	$	78

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Our restructuring liability is primarily comprised of accruals for termination benefits. The following is a rollforward of the termination benefit liability associated with our 2016 Restructuring Plan, which is reported as a component of accrued expenses included in our accompanying unaudited condensed consolidated balance sheets:

(in millions)	2016 Restructuring Plan
Accrued as of December 31, 2016	$	16
Charges (credits)	14
Cash payments	(12		)
Accrued as of September 30, 2017	$	18

In addition to our accrual for termination benefits, we had an $8 million liability as of September 30, 2017 and $6 million as of December 31, 2016 for other restructuring-related items.

NOTE G – SUPPLEMENTAL BALANCE SHEET INFORMATION

Components of selected captions in our accompanying unaudited condensed consolidated balance sheets are as follows:

Trade accounts receivable, net

	As of
(in millions)	September 30, 2017			December 31, 2016
Accounts receivable	$	1,580		$	1,579
Less: allowance for doubtful accounts	(81		)	(73		)
Less: allowance for sales returns	(29		)	(34		)
	$	1,470		$	1,472

The following is a rollforward of our allowance for doubtful accounts:

	Three Months Ended September 30,						Nine Months Ended September 30,
(in millions)	2017			2016			2017			2016
Beginning balance	$	74		$	80		$	73		$	75
Net charges to expenses	9			(1		)	14			5
Utilization of allowances	(2		)	(4		)	(6		)	(5		)
Ending balance	$	81		$	75		$	81		$	75

Inventories

	As of
(in millions)	September 30, 2017		December 31, 2016
Finished goods	$	674	$	625
Work-in-process	108		94
Raw materials	295		236
	$	1,077	$	955

Other current assets

	As of
(in millions)	September 30, 2017		December 31, 2016
Prepaid expenses	$	72	$	58
Restricted cash	449		243
Other	124		240
	$	645	$	541

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Property, plant and equipment, net

	As of
(in millions)	September 30, 2017		December 31, 2016
Land	$	93	$	91
Buildings and improvements	1,056		981
Equipment, furniture and fixtures	3,139		2,955
Capital in progress	297		338
	4,585		4,365
Less: accumulated depreciation	2,907		2,735
	$	1,678	$	1,630

Depreciation expense was $71 million for the third quarter of 2017, $67 million for the third quarter of 2016, $198 million for the first nine months of2017 and $193 million for the first nine months of2016.

Accrued expenses

	As of
(in millions)	September 30, 2017		December 31, 2016
Legal reserves	$	1,355	$	1,062
Payroll and related liabilities	560		572
Accrued contingent consideration	28		63
Other	608		615
	$	2,551	$	2,312

Other long-term liabilities

	As of
(in millions)	September 30, 2017		December 31, 2016
Accrued income taxes	$	842	$	781
Legal reserves	335		961
Accrued contingent consideration	53		141
Other	508		455
	$	1,738	$	2,338

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Accrued warranties

We offer warranties on certain of our product offerings. The majority of our warranty liability relates to implantable devices offered by our Cardiac Rhythm Management (CRM) business, which include defibrillator and pacemaker systems. Our CRM products come with a standard limited warranty covering the replacement of these devices. We offer a full warranty for a portion of the period post-implant and a partial warranty for a period of time thereafter. We estimate the costs that we may incur under our warranty programs based on the number of units sold, historical and anticipated rates of warranty claims and cost per claim and record a liability equal to these estimated costs as cost of products sold at the time the product sale occurs. We reassess the adequacy of our recorded warranty liabilities on a quarterly basis and adjust these amounts as necessary. The current portion of our warranty accrual is included in other accrued expenses in the table above and the non-current portion of our warranty accrual is included in other long-term liabilities in the table above. Changes in our product warranty accrual consisted of the following:

	Nine Months Ended September 30,
(in millions)	2017			2016
Beginning Balance	$	22		$	23
Provision	20			16
Settlements/reversals	(18		)	(19		)
Ending Balance	$	24		$	20

NOTE H – INCOME TAXES

Our effective tax rate from continuing operations is presented below:

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2017		2016		2017		2016
Effective tax rate from continuing operations	8.5	%	11.2	%	(2.0	)%	(152.4	)%

The change in our reported tax rates for the third quarter and first nine months of2017, as compared to the same periods in 2016, relates primarily to the impact of certain receipts and charges that are taxed at different rates than our effective tax rate, including intangible asset impairment charges, acquisition-related items, restructuring and restructuring-related items, investment impairment-related items, litigation-related items and amortization expense, as well as the impact of certain discrete tax items.

As of September 30, 2017, we had $1.128 billion of gross unrecognized tax benefits, of which a net $1.039 billion, if recognized, would affect our effective tax rate. As of December 31, 2016, we had $1.095 billion of gross unrecognized tax benefits, of which a net $1.006 billion, if recognized, would affect our effective tax rate.

We have received Notices of Deficiency from the Internal Revenue Service (IRS) reflecting proposed audit adjustments for Guidant Corporation for its 2001 through 2006 tax years and for Boston Scientific Corporation for its 2006 and 2007 tax years. The total incremental tax liability asserted by the IRS for the applicable periods is $1.162 billion plus interest. The primary issue in dispute for all years is the transfer pricing associated with the technology license agreements between domestic and foreign subsidiaries of Guidant. In addition, the IRS has proposed adjustments in connection with the financial terms of our Transaction Agreement with Abbott Laboratories pertaining to the sale of Guidant's vascular intervention business to Abbott in April 2006. During 2014, we received a Revenue Agent Report from the IRS reflecting significant proposed audit adjustments to our 2008, 2009 and 2010 tax years based upon the same transfer pricing methodologies that the IRS applied to our 2001 through 2007 tax years.

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We do not agree with the transfer pricing methodologies applied by the IRS or its resulting assessment. We have filed petitions with the U.S. Tax Court (Tax Court) contesting the Notices of Deficiency for the 2001 through 2007 tax years in challenge and submitted a letter to the IRS Office of Appeals (IRS Appeals) protesting the Revenue Agent Report for the 2008 through 2010 tax years and requesting an administrative appeal hearing. The issues in dispute were scheduled to be heard in Tax Court in late July 2016. On July 19, 2016, we entered into a Stipulation of Settled Issues with the IRS intended to resolve all of the aforementioned transfer pricing issues, as well as the issues related to our transaction with Abbott, for the 2001 through 2007 tax years. The Stipulation of Settled Issues is contingent upon IRS Office of Appeals applying the same basis of settlement to all transfer pricing issues for the Company’s 2008, 2009 and 2010 tax years as well as review by the United States Congress Joint Committee on Taxation. In October 2016, we reached an agreement in principle with the IRS Appeals as to the resolution of transfer pricing issues in 2008, 2009 and 2010 tax years, subject to additional calculations of tax as well as documentation to memorialize our agreement.

In the event that the conditions in the Stipulation of Settled Items are satisfied, we expect to make net tax payments of approximately $275 million, plus interest, through the date of payment. If finalized, payments related to the resolution are expected in the next nine months. We believe that our income tax reserves associated with these matters are adequate as of September 30, 2017 and we do not expect to recognize any additional charges related to the resolution of this controversy. However, the final resolution of these issues is contingent and if the Stipulation of Settled Issues is not finalized, it could have a material impact on our financial condition, results of operations, or cash flows.

We recognize interest and penalties related to income taxes as a component of income tax expense. We had $633 million accrued for gross interest and penalties as of September 30, 2017 and $572 million as of December 31, 2016. We recognized net tax expense related to interest and penalties of $14 million during the third quarter of 2017 and $13 million in the third quarter of 2016, $40 million during the first nine months of2017 and $35 million during the first nine months of2016.

It is reasonably possible that within the next 12 months we will resolve multiple issues including transfer pricing and transactional-related issues with foreign, federal and state taxing authorities, in which case we could record a reduction in our balance of unrecognized tax benefits of up to approximately $757 million.

NOTE I – COMMITMENTS AND CONTINGENCIES

The medical device market in which we primarily participate is largely technology driven. As a result, intellectual property rights, particularly patents and trade secrets, play a significant role in product development and differentiation. Over the years, there has been litigation initiated against us by others, including our competitors, claiming that our current or former product offerings infringe patents owned or licensed by them. Intellectual property litigation is inherently complex and unpredictable. In addition, competing parties frequently file multiple suits to leverage patent portfolios across product lines, technologies and geographies and to balance risk and exposure between the parties. In some cases, several competitors are parties in the same proceeding or in a series of related proceedings or litigate multiple features of a single class of devices. These forces frequently drive settlement not only for individual cases, but also for a series of pending and potentially related and unrelated cases. Although monetary and injunctive relief is typically sought, remedies and restitution are generally not determined until the conclusion of the trial court proceedings and can be modified on appeal. Accordingly, the outcomes of individual cases are difficult to time, predict or quantify and are often dependent upon the outcomes of other cases in other geographies.

During recent years, we successfully negotiated closure of several long-standing legal matters and have received favorable rulings in several other matters, however, there continues to be outstanding intellectual property litigation. Adverse outcomes in one or more of these matters could have a material adverse effect on our ability to sell certain products and on our operating margins, financial position, results of operations and/or liquidity.

In the normal course of business, product liability, securities and commercial claims are asserted against us. Similar claims may be asserted against us in the future related to events not known to management at the present time. We maintain an insurance policy providing limited coverage against securities claims and we are substantially self-insured with respect to product liability claims and fully self-insured with respect to intellectual property infringement claims. The absence of significant third-party insurance coverage increases our potential exposure to unanticipated claims or adverse decisions. Product liability claims, securities and commercial litigation and other legal proceedings in the future, regardless of their outcome, could have a material adverse effect on our financial position, results of operations and/or liquidity.

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In addition, like other companies in the medical device industry, we are subject to extensive regulation by national, state and local government agencies in the United States and other countries in which we operate. From time to time we are the subject of qui tam actions and governmental investigations often involving regulatory, marketing and other business practices. These qui tam actions and governmental investigations could result in the commencement of civil and criminal proceedings, substantial fines, penalties and administrative remedies and have a material adverse effect on our financial position, results of operations and/or liquidity.

In accordance with FASB ASC Topic 450, Contingencies, we accrue anticipated costs of settlement, damages, losses for product liability claims and, under certain conditions, costs of defense, based on historical experience or to the extent specific losses are probable and estimable. Otherwise, we expense these costs as incurred. If the estimate of a probable loss is a range and no amount within the range is more likely, we accrue the minimum amount of the range.

Our accrual for legal matters that are probable and estimable was $1.690 billion as of September 30, 2017 and $2.023 billion as of December 31, 2016 and includes certain estimated costs of settlement, damages and defense. The net litigation-related charges recorded in the first nine months of 2017 and 2016 primarily include amounts related to transvaginal surgical mesh product liability cases and claims. We continue to assess certain litigation and claims to determine the amounts, if any, that management believes will be paid as a result of such claims and litigation and, therefore, additional losses may be accrued and paid in the future, which could materially adversely impact our operating results, cash flows and/or our ability to comply with our debt covenants.

In management's opinion, we are not currently involved in any legal proceedings other than those disclosed in our most recent Annual Report on Form 10-K, our Quarterly Reports on Form 10-Q for the Quarters ended March 31, 2017 and June 30, 2017, and those specifically identified below, which, individually or in the aggregate, could have a material adverse effect on our financial condition, operations and/or cash flows. Unless included in our legal accrual or otherwise indicated below, a range of loss associated with any individual material legal proceeding cannot be estimated.

Patent Litigation

On May 19, 2005, G. David Jang, M.D. filed suit against us alleging breach of contract relating to certain patent rights covering stent technology. The suit was filed in the U.S. District Court for the Central District of California seeking monetary damages and rescission of contract. After a Markman ruling relating to the Jang patent rights, Dr. Jang stipulated to the dismissal of certain claims alleged in the complaint with a right to appeal and the parties subsequently agreed to settle the other claims. In May 2007, Dr. Jang filed an appeal with respect to the remaining patent claims and in July 2008, the Court of Appeals vacated the District Court's consent judgment and remanded the case back to the District Court for further clarification. In August 2011, the District Court entered a stipulated judgment that we did not infringe the Jang patent. Dr. Jang filed an appeal on September 21, 2011 and on August 22, 2012, the Court of Appeals vacated the District Court's judgment and remanded the case to the District Court for further proceedings. On July 8, 2015, a jury found that our Express™ Stent family did not literally infringe a Jang patent, but that the stents infringed under the doctrine of equivalents. The court reserved judgment until the conclusion of further proceedings related to the doctrine of equivalents finding. On September 29, 2015, the court ruled that our Express™ Stent family did not infringe under the doctrine of equivalents and, on October 30, 2015, the court entered judgment in our favor. On November 25, 2015, Dr. Jang filed a motion for judgment as a matter of law on literal infringement and/or for a new trial. On February 3, 2016, the court denied Dr. Jang’s motion for a new trial and judgment as a matter of law. Dr. Jang filed a notice of appeal. On September 29, 2017, the United States Court of Appeals for the Federal Circuit affirmed the judgment that our Express Stent did not infringe the Jang patents and the Company did not owe Dr. Jang any payments.

On April 19, 2016, a subsidiary of Boston Scientific filed suit against Edwards Lifesciences Corporation in the United States District Court for the Central District of California for patent infringement. We allege that Edwards’ aortic valve delivery systems infringe eight of our catheter related patents. On October 13, 2016, Edwards filed a petition for inter partes review of one asserted patent with the USPTO, Patent Trial and Appeal Board. On April 21, 2017, the USPTO denied the petition. On April 19 and 20, 2017, Edwards filed multiple inter partes review petitions against the patents in suit. On September 8, 2017, the court granted a stay of the action pending an inter partes review of the patents in suit.

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Product Liability Litigation

As of October 25, 2017, approximately 48,500 product liability cases or claims related to transvaginal surgical mesh products designed to treat stress urinary incontinence and pelvic organ prolapse have been asserted against us. The pending cases are in various federal and state courts in the United States and include eight putative class actions. There were also approximately 20 cases in Canada, inclusive of one certified and three putative class actions, and fewer than 25 claims in the United Kingdom. Generally, the plaintiffs allege personal injury associated with use of our transvaginal surgical mesh products. The plaintiffs assert design and manufacturing claims, failure to warn, breach of warranty, fraud, violations of state consumer protection laws and loss of consortium claims. Over 3,100 of the cases have been specially assigned to one judge in state court in Massachusetts. On February 7, 2012, the Judicial Panel on Multi-District Litigation (MDL) established MDL-2326 in the United States District Court for the Southern District of West Virginia and transferred the federal court transvaginal surgical mesh cases to MDL-2326 for coordinated pretrial proceedings. During the fourth quarter of 2013, we received written discovery requests from certain state attorneys general offices regarding our transvaginal surgical mesh products. We have responded to those requests. As of October 25, 2017, we have entered into master settlement agreements in principle or are in final stages of entering one with certain plaintiffs' counsel to resolve an aggregate of approximately 44,000 cases and claims. These master settlement agreements provide that the settlement and distribution of settlement funds to participating claimants are conditional upon, among other things, achieving minimum required claimant participation thresholds. Of the approximately 44,000 cases and claims, approximately 15,500 have met the conditions of the settlement and are final. All settlement agreements were entered into solely by way of compromise and without any admission or concession by us of any liability or wrongdoing.

We have established a product liability accrual for known and estimated future cases and claims asserted against us as well as with respect to the actions that have resulted in verdicts against us and the costs of defense thereof associated with our transvaginal surgical mesh products. While we believe that our accrual associated with this matter is adequate, changes to this accrual may be required in the future as additional information becomes available. While we continue to engage in discussions with plaintiffs’ counsel regarding potential resolution of pending cases and claims and intend to vigorously contest the cases and claims asserted against us that do not settle, the final resolution of the cases and claims is uncertain and could have a material impact on our results of operations, financial condition and/or liquidity. Initial trials involving our transvaginal surgical mesh products have resulted in both favorable and unfavorable judgments for us. We do not believe that the judgment in any one trial is representative of potential outcomes of all cases or claims related to our transvaginal surgical mesh products.

Governmental Investigations and Qui Tam Matters

On May 5, 2014, we were served with a subpoena from the United States Department of Health and Human Services, Office of the Inspector General. The subpoena seeks information relating to the launch of the Cognis™ and Teligen™ line of devices in 2008, the performance of those devices from 2007 to 2009 and the operation of the Physician Guided Learning Program. We are cooperating with this request. On May 6, 2016, a qui tam lawsuit in this matter was unsealed in the United States District Court for the District of Minnesota. At the same time, we learned that the U.S. government and the State of California had earlier declined to intervene in that lawsuit on April 15, 2016. The complaint was served on us on July 21, 2016. On October 7, 2016, the plaintiff/relator served an amended complaint that dropped the allegations relating to the Physician Guided Learning Program. We filed a motion to dismiss the amended complaint on December 7, 2016 and the court heard our motion to dismiss on April 5, 2017. On August 29, 2017, the Court granted the motion to dismiss, without prejudice, and on September 19, 2017, the relator filed a Second Amended Complaint.

Other Proceedings

In June of 2016, Guidant asserted three arbitrations claims, two of which remain pending, related to three insurance policies for indemnity arising out of previously incurred and satisfied liabilities tied to allegedly defective cardiac rhythm management devices, which Guidant had manufactured. Guidant has claimed indemnities against such liabilities under insurance policies which it purchased for the 2004 policy year. One of these claims was resolved in September 2017.

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Matters Concluded Since December 31, 2016

On September 27, 2010, Boston Scientific Scimed, Inc., Boston Scientific Ltd., Endovascular Technologies, Inc. and we filed suit against Taewoong Medical, Co., Ltd., Standard Sci-Tech, Inc., EndoChoice, Inc. and Sewoon Medical Co., Ltd for infringement of three patents on stents for use in the GI system (the Pulnev and Hankh patents) and against Cook Medical Inc. (and related entities) for infringement of the same three patents and an additional patent (the Thompson patent). The suit was filed in the United States District Court for the District of Massachusetts seeking monetary damages and injunctive relief. In December 2010, we amended our complaint to add infringement of six additional Pulnev patents. In January 2011, the defendants filed a counterclaim of invalidity and unenforceability. In September 2011, we amended the complaint to add Chek-Med Systems d/b/a GI Supply as a defendant. On December 22, 2016 the following defendants were dismissed: Taewoong Medical Co., Ltd., GI Supply, Inc., Standard Sci-Tech, Inc., EndoChoice, Inc. and Sewoon Medical Co. The remaining parties reached a settlement and on March 21, 2017, the case was dismissed.

NOTE J – WEIGHTED AVERAGE SHARES OUTSTANDING

	Three Months Ended September 30,		Nine Months Ended September 30,
(in millions)	2017	2016	2017	2016
Weighted average shares outstanding - basic	1,372.0	1,360.6	1,369.1	1,356.1
Net effect of common stock equivalents	22.1	19.1	22.7	18.8
Weighted average shares outstanding - assuming dilution	1,394.1	1,379.7	1,391.8	1,374.9

The impact of stock options outstanding with exercise prices greater than the average fair market value of our common stock was immaterial for all periods presented.

We issued approximately two million shares of our common stock in the third quarter of 2017, three million shares of our common stock in the third quarter of 2016, 11 million shares of our common stock in the first nine months of2017 and 15 million shares of our common stock in the first nine months of2016, following the exercise of underlying stock options, vesting of deferred stock units or purchases under our employee stock purchase plan. We did not repurchase any shares of our common stock during the first nine months of2017 or 2016.

NOTE K – SEGMENT REPORTING

We have three reportable segments comprised of Cardiovascular, Rhythm Management and MedSurg, which represent an aggregation of our operating segments.

Each of our reportable segments generates revenue from the sale of medical devices. We measure and evaluate our reportable segments based on segment net sales and operating income, excluding the impact of changes in foreign currency. Sales generated from reportable segments, as well as operating results of reportable segments and corporate expenses, are calculated based on internally-derived standard currency exchange rates, which may differ from year to year and do not include intersegment profits.

We restated segment information for the prior period based on our internally-derived standard currency exchange rates as of January 1, 2017, used for the current period in order to remove the impact of foreign currency exchange fluctuation. We exclude from segment operating income certain corporate-related expenses and certain transactions or adjustments that our chief operating decision maker considers to be non-operational, such as intangible asset impairment charges, acquisition-related items, restructuring and restructuring-related items, litigation-related items and amortization expense. Although we exclude these amounts from segment operating income, they are included in reported consolidated operating income (loss) and are included in the reconciliation below.

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A reconciliation of the totals reported for the reportable segments to the applicable line items in our accompanying unaudited condensed consolidated statements of operations is as follows:

	Three Months Ended September 30,						Nine Months Ended September 30,
(in millions)	2017			2016			2017			2016
				(restated)						(restated)
Net sales
Interventional Cardiology	$	589		$	565		$	1,806		$	1,705
Peripheral Interventions	268			256			812			764
Cardiovascular	857			821			2,618			2,469
Cardiac Rhythm Management	461			465			1,417			1,380
Electrophysiology	71			60			203			180
Rhythm Management	532			525			1,620			1,560
Endoscopy	402			365			1,194			1,065
Urology and Pelvic Health	272			247			819			732
Neuromodulation	153			138			449			395
MedSurg	827			750			2,462			2,192
Net sales allocated to reportable segments	2,216			2,096			6,700			6,221
Impact of foreign currency fluctuations	6			9			(60		)	(26		)
	$	2,222		$	2,105		$	6,640		$	6,195
Income (loss) before income taxes
Cardiovascular	$	243		$	247		$	756		$	751
Rhythm Management	103			90			319			231
MedSurg	272			234			781			682
Operating income allocated to reportable segments	618			571			1,856			1,664
Corporate expenses and currency exchange	(60		)	(60		)	(215		)	(162		)
Intangible asset impairment charges, acquisition-related, restructuring- and restructuring-related, and litigation-related net credits (charges)	(42		)	(27		)	(250		)	(787		)
Amortization expense	(139		)	(136		)	(424		)	(408		)
Operating income (loss)	377			348			967			307
Other expense, net	(68		)	(91		)	(261		)	(219		)
Income (loss) before income taxes	$	309		$	257		$	706		$	88

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NOTE L – CHANGES IN OTHER COMPREHENSIVE INCOME

The following table provides the reclassifications out of other comprehensive income. Amounts in the chart below are presented net of tax.

Three Months Ended September 30, 2017
(in millions)	Foreign Currency Translation Adjustments			Unrealized Gains/Losses on Derivative Financial Instruments			Unrealized Gains/Losses on Available-for-Sale Securities			Defined Benefit Pension Items/Other			Total
Balance as of June 30, 2017	$	(58	)	$	31		$	(4	)	$	(22	)	$	(53	)
Other comprehensive income (loss) before reclassifications	25			(15		)	—			—			10
Amounts reclassified from accumulated other comprehensive income	—			(9		)	1			—			(8		)
Net current-period other comprehensive income	25			(24		)	1			—			2
Balance as of September 30, 2017	$	(33	)	$	7		$	(3	)	$	(22	)	$	(51	)

Three Months Ended September 30, 2016
(in millions)	Foreign Currency Translation Adjustments			Unrealized Gains/Losses on Derivative Financial Instruments			Defined Benefit Pension Items/Other			Total
Balance as of June 30, 2016	$	(59	)	$	(1	)	$	(10	)	$	(70	)
Other comprehensive income (loss) before reclassifications	2			(14		)	(1		)	(13		)
Amounts reclassified from accumulated other comprehensive income	—			(17		)	1			(16		)
Net current-period other comprehensive income	2			(31		)	—			(29		)
Balance as of September 30, 2016	$	(57	)	$	(32	)	$	(10	)	$	(99	)

Nine Months Ended September 30, 2017
(in millions)	Foreign Currency Translation Adjustments			Unrealized Gains/Losses on Derivative Financial Instruments			Unrealized Gains/Losses on Available-for-Sale Securities			Defined Benefit Pension Items/Other			Total
Balance as of December 31, 2016	$	(79	)	$	107		$	(6	)	$	(21	)	$	1
Other comprehensive income (loss) before reclassifications	46			(56		)	—			(2		)	(12		)
Amounts reclassified from accumulated other comprehensive income	—			(44		)	3			1			(40		)
Net current-period other comprehensive income	46			(100		)	3			(1		)	(52		)
Balance as of September 30, 2017	$	(33	)	$	7		$	(3	)	$	(22	)	$	(51	)

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Nine Months Ended September 30, 2016
(in millions)	Foreign Currency Translation Adjustments			Unrealized Gains/Losses on Derivative Financial Instruments			Defined Benefit Pension Items/Other			Total
Balance as of December 31, 2015	$	(54	)	$	152		$	(10	)	$	88
Other comprehensive income (loss) before reclassifications	(3		)	(115		)	(4		)	(122		)
Amounts reclassified from accumulated other comprehensive income	—			(69		)	4			(65		)
Net current-period other comprehensive income	(3		)	(184		)	—			(187		)
Balance as of September 30, 2016	$	(57	)	$	(32	)	$	(10	)	$	(99	)

Refer to Note D – Fair Value Measurements in this Quarterly Report on Form 10-Q for further detail on the reclassifications related to derivatives.

The income tax impact of the amounts in other comprehensive income for defined benefit and pension items before reclassification were immaterial for the third quarter and first nine months of2017 and 2016. The gains and losses on defined benefit and pension related items reclassified from accumulated other comprehensive income were reduced by immaterial income tax impacts for the third quarter and first nine months of2017 and 2016. The gains and losses on available-for-sale securities were reduced by immaterial income tax impacts for the third quarter and first nine months of2017.

NOTE M – NEW ACCOUNTING PRONOUNCEMENTS

From time to time, new accounting pronouncements are issued by the FASB or other standard setting bodies. Recently issued standards typically do not require adoption until a future effective date. Prior to their effective date, we evaluate the pronouncements to determine the potential effects of adoption on our unaudited condensed consolidated financial statements.

Standards Implemented since December 31, 2016

ASC Update No. 2016-09

In March 2016, the FASB issued ASC Update No. 2016-09, Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting. The purpose of Update No. 2016-09 is to simplify accounting for share-based payment transactions, such as, the accounting for income taxes, statutory tax withholding requirements, forfeitures and statements of cash flows presentation. Update No. 2016-09 was effective for annual periods beginning after December 15, 2016, including interim periods within those annual periods.

We adopted Update No. 2016-09 prospectively in the first quarter of 2017 and, as such, no prior periods were adjusted. We previously recorded income tax benefits or deficiencies to additional paid-in capital; however, Update No. 2016-09 requires that all tax benefits or deficiencies be recorded to the provision for income taxes. In the first nine months of2017, we recorded an income tax benefit of $37 million. The actual impact to future periods will depend on the price of our stock, number of stock options exercised and other factors that are difficult to predict. In the first quarter of 2017, a cumulative effect adjustment of $76 million was recorded to retained earnings upon adoption for windfall tax benefits not previously recognized.

ASC Update No. 2016-17

In October 2016, the FASB issued ASC Update No. 2016-17, Consolidation (Topic 810): Interests Held through Related Parties That Are under Common Control. The purpose of Update No. 2016-17 is to amend the consolidation guidance from Update No. 2015-02 on how a reporting entity that is the single decision maker of a variable interest entity (VIE) should treat indirect interests in the entity held through related parties that are under common control with the reporting entity when determining whether it is the primary beneficiary of that VIE. The amendment requires that a single decision maker include those indirect interests held through related parties that are under common control with the single decision maker on a proportionate basis consistent with indirect interests held through other related parties. Update No. 2016-17 was effective for annual periods beginning after December 15, 2016, including interim periods within those annual periods. We adopted Update No. 2016-17 in the first quarter of 2017. The adoption of Update No. 2016-17 did not have a material impact on our financial position or results of operations.

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ASC Update No. 2016-19

In December 2016, the FASB issued ASC Update No. 2016-19, Technical Corrections and Improvements. The purpose of Update No. 2016-19 is to clarify or correct unintended applications of guidance that affect a wide variety of topics in the ASC. Most of the amendments in this Update did not require transition guidance and were effective immediately. Six amendments in this update clarified guidance or corrected references in the ASC and were effective for annual periods beginning after December 15, 2016, including interim periods within these annual periods. We adopted these amendments in the first quarter of 2017. The adoption of Update No. 2016-19 did not have a material impact on our financial position or results of operations.

ASC Update No. 2017-04

In January 2017, the FASB issued ASC Update No. 2017-04, Intangibles - Goodwill and Other Topics (Topic 350): Simplifying the Test for Goodwill Impairment. The purpose of Update No. 2017-04 is to reduce the cost and complexity of evaluating goodwill for impairment. It eliminates the need for entities to calculate the impaired fair value of goodwill by assigning the fair value of a reporting unit to all of its assets and liabilities as if that reporting unit had been acquired in a business combination. Under this amendment, an entity will perform its goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An impairment charge is recognized for the amount by which the carrying value exceeds the reporting unit's fair value. We elected to early adopt Update No. 2017-04 prospectively in the first quarter of 2017. The adoption of Update No. 2017-04 did not have a material impact on our financial position or results of operations.

Standards to be Implemented

ASC Update No. 2014-09

In May 2014, the FASB issued ASC Update No. 2014-09, Revenue from Contracts with Customers (Topic 606), which has been subsequently updated. The purpose of Update No. 2014-09 is to provide enhancements to the quality and consistency of how revenue is reported while also improving comparability in the financial statements of companies using U.S. GAAP and International Financial Reporting Standards. The core principle requires entities to recognize revenue in a manner that depicts the transfer of goods or services to customers in amounts that reflect the consideration an entity expects to be entitled to in exchange for those goods or services. Topic 606, as amended, becomes effective for annual periods beginning after December 15, 2017, at which point we plan to adopt the standard. We currently plan to adopt the standard using the “modified retrospective method.” Under that method, we will apply the rules to contracts that are not completed as of January 1, 2018, and recognize the cumulative effect of initially applying the standard as an adjustment to the opening balance of retained earnings.

We have reached conclusions on our key accounting assessments related to the standard and are finalizing our accounting policies. Based on our initial assessment, we believe the timing of revenue recognition for our primary revenue stream, single-use medical device sales, will not materially change. We are still finalizing our accounting policies related to variable consideration and assessing disclosure requirements. Upon adopting Topic 606, we will provide additional disclosures in the notes to the consolidated financial statements, specifically related to disaggregated revenue, contract balances and performance obligations.

In 2017, we are implementing new internal controls as part of our efforts to adopt the new revenue recognition standard. In the third quarter of 2017, we provided global training to our finance team on Topic 606. In the fourth quarter of 2017, we will perform a simulation of our new accounting processes and procedures to prepare our team for the month-end close process upon adoption of Topic 606. We will require new internal controls to address risks associated with applying the five-step model, specifically related to judgments made in connection to variable consideration and applying the constraint. Additionally, we will establish monitoring controls to identify new sales arrangements and changes in our business environment that could impact our current accounting assessment. During the fourth quarter of 2017, we expect to finalize our impact assessment and redesign impacted processes, policies and controls.

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ASC Update No. 2016-01

In January 2016, the FASB issued ASC Update No. 2016-01, Financial Instruments - Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities. The purpose of Update No. 2016-01 is to improve financial reporting for financial instruments by reducing the number of items recorded to other comprehensive income. It requires entities to measure equity investments that do not result in consolidation and are not accounted for under the equity method at fair value with changes recognized in net income. However, an entity may choose to measure equity investments that do not have readily determinable fair values at cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer. It simplifies the impairment assessment of equity investments without readily determinable fair values by requiring a qualitative assessment to identify impairment. It also requires separate presentation of financial assets and financial liabilities by measurement category and form of financial asset and liability. Update No. 2016-01 is effective for annual periods beginning after December 15, 2017, including interim periods within those annual periods. Early adoption of certain provisions is permitted. We are unable to determine the effect that the adoption will have on our financial position and results of operations, as it will depend on our equity investments at the adoption date and their future performance.

ASC Update No. 2016-02

In February 2016, the FASB issued ASC Update No. 2016-02, Leases (Topic 842). The purpose of Update No. 2016-02 is to increase the transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet, including those previously classified as operating leases under current U.S. GAAP and disclosing key information about leasing arrangements. Update No. 2016-02 is effective for annual periods beginning after December 15, 2018, including interim periods within those annual periods. Early adoption is permitted, and a modified retrospective approach is required for adoption. While we are still in the process of determining the effect that the new standard will have on our financial position and results of operations, we expect to recognize additional assets and corresponding liabilities on our consolidated balance sheets, as a result of our operating lease portfolio as disclosed in Note G - Lease and Other Purchase Obligations in our most recent Annual Report on Form 10-K.

ASC Update No. 2016-13

In June 2016, the FASB issued ASC Update No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. The purpose of Update No. 2016-13 is to replace the current incurred loss impairment methodology for financial assets measured at amortized cost with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information, including forecasted information, to develop credit loss estimates. Update No. 2016-13 is effective for annual periods beginning after December 15, 2019, including interim periods within those annual periods. Early adoption is permitted for annual periods beginning after December 15, 2018. We are in the process of determining the effect that the adoption will have on our financial position and results of operations.

ASC Update No. 2016-15

In August 2016, the FASB issued ASC Update No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments. The purpose of Update No. 2016-15 is to reduce the diversity in practice in presentation and classification of the following items within the statement of cash flows: debt prepayments or debt extinguishment costs, settlement of zero coupon debt instruments or other debt instruments with coupon interest rates that are insignificant in relation to the effective interest rate of the borrowing, contingent consideration payments made after a business combination, proceeds from the settlement of insurance claims, proceeds from the settlement of corporate-owned life insurance policies, distributions received from equity method investments and beneficial interests in securitization transactions. It also addresses classification of transactions that have characteristics of more than one class of cash flows. Update No. 2016-15 is effective for annual periods beginning after December 15, 2017, and a retrospective transition method is required. We intend to early adopt the standard in the fourth quarter of 2017. Upon adoption, we expect our 2015 cash provided by operating activities to increase by approximately $45 million with a corresponding decrease in our cash provided by financing activities related to classification of debt repayment costs incurred in connection with our 2015 debt financing activities. We do not expect the adoption to have a material impact on our consolidated statements of cash flows for 2016 or 2017.

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ASC Update No. 2016-16

In October 2016, the FASB issued ASC Update No. 2016-16, Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory. The purpose of Update No. 2016-16 is to allow an entity to recognize the income tax consequences of an intra-entity transfer of an asset other than inventory when the transfer occurs, as opposed to waiting until the asset is sold to a third party, or impaired. Update No. 2016-16 is effective for annual periods beginning after December 15, 2017, including interim periods within those annual periods. Early adoption is permitted as of the beginning of an annual period for which financial statements have not been issued or made available for issuance. We are in the process of determining the effect that adoption will have on our financial position and results of operations.

ASC Update No. 2016-18

In November 2016, the FASB issued ASC Update No. 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash. The purpose of Update No. 2016-18 is to clarify guidance and presentation related to restricted cash in the statements of cash flows as well as increased disclosure requirements. It requires beginning-of-period and end-of-period total amounts shown on the statements of cash flows to include cash and cash equivalents as well as restricted cash and restricted cash equivalents. Update No. 2016-18 is effective for annual periods beginning after December 15, 2017, including interim reporting periods within those annual periods. Early adoption is permitted. We are in the process of determining the effect the adoption will have on our consolidated statements of cash flows.

ASC Update No. 2017-01

In January 2017, the FASB issued ASC Update No. 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business. The purpose of Update No. 2017-01 is to change the definition of a business to assist entities with evaluating when a set of transferred assets and activities is a business. Update No. 2017-01 is effective for annual periods beginning after December 15, 2017, including interim periods within those annual periods. Early adoption is permitted as of the beginning of an annual or interim period for which financial statements have not been issued or made available for issuance. The adoption of Update No. 2017-01 is not expected to have a material impact on our financial position or results of operations.

ASC Update No. 2017-09

In May 2017, the FASB issued ASC Update No. 2017-09, Compensation - Stock Compensation (Topic 718): Scope of Modification Accounting. The purpose of Update No. 2017-09 is to provide guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting. Update No. 2017-09 is effective for annual periods beginning after December 15, 2017, including interim periods within those annual periods. Early adoption is permitted as of the beginning of an annual or interim period for which financial statements have not been issued or made available for issuance. The adoption of Update No. 2017-09 is not expected to have a material impact on our financial position or results of operations.

ASC Update No. 2017-10

In May 2017, the FASB issued ASC Update No. 2017-10, Service Concession Arrangements (Topic 853): Determining the Customer of the Operation Services (a consensus of the FASB Emerging Issues Task Force). The purpose of Update No. 2017-10 is to address the diversity in practice as to how an operating entity determines the customer of the operation services in a service concession agreement. Update No. 2017-10 is effective the same time as FASB ASC Topic 606 and requires the same transition method elected for FASB ASC Topic 606. The adoption of Update No. 2017-10 is not expected to have a material impact on our financial position or results of operations.

ASC Update No. 2017-12

In August 2017, the FASB issued ASC Update No. 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities. The purpose of Update No. 2017-12 is to simplify the application of hedge accounting and better align financial reporting of hedging relationships with risk management objectives. Update No. 2017-12 is effective for annual periods beginning after December 15, 2018, including interim periods within those annual periods. Early adoption is permitted, including adoption in an interim period. The adoption of Update No. 2017-12 is not expected to have a material impact on our financial position or results of operations.

No other new accounting pronouncements, issued or effective, during the period had, or are expected to have, a material impact on our condensed consolidated financial statements.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Introduction

Boston Scientific Corporation is a worldwide developer, manufacturer and marketer of medical devices that are used in a broad range of interventional medical specialties. Our mission is to transform lives through innovative medical solutions that improve the health of patients around the world. Our products and technologies are used to diagnose or treat a wide range of medical conditions, including heart, vascular, digestive, pulmonary, urological, pelvic health and chronic pain conditions. We continue to innovate in these areas and are intent on extending our innovations into new geographies and high-growth adjacency markets. When used in this report, the terms, "we," "us," "our," and "the Company" mean Boston Scientific Corporation and its divisions and subsidiaries.

Financial Summary

Three Months Ended September 30, 2017

Our net sales for the third quarter of 2017 were $2.222 billion, as compared to net sales of $2.105 billion for the third quarter of 2016, an increase of $117 million, or 5.6 percent. Our operational net sales, which exclude a negative impact of$3 million in the third quarter 2017 due to changes in foreign currency exchange rates, increased$120 million, or 5.7 percent as compared to the same period in the prior year.¹ This increase included operational net sales of $31 million in the third quarter of 2017, with no prior year period related net sales, due to the acquisition of EndoChoice Holdings, Inc. (EndoChoice) during the fourth quarter of 2016, and the acquisition of Symetis SA (Symetis) during the second quarter of 2017. Refer to Quarterly Results and Business Overview for a discussion of our net sales by global business.

Our reported net income for the third quarter of 2017 was $283 million, or $0.20 per share. Our reported results for the third quarter of 2017 included intangible asset impairment charges, acquisition-related net charges, restructuring and restructuring-related net charges, litigation-related net credits, and amortization expense totaling $149 million (after-tax), or $0.11 per share. Adjusted net income, which excludes these items, for the third quarter of 2017, was $432 million, or $0.31 per share.¹ Our reported net income for the third quarter of 2016 was $228 million, or $0.17 per share. Our reported results for the third quarter of 2016included intangible asset impairment charges, acquisition-related net credits, restructuring and restructuring-related net charges, litigation-related net charges and amortization expense totaling $140 million (after-tax), or $0.10 per share. Adjusted net income, which excludes these items, for the third quarter of 2016, was $368 million, or $0.27 per share.¹ 

¹Operational net sales growth rates, which exclude the impact of changes in foreign currency exchange rates, and adjusted net income and adjusted net income per share, which exclude certain items required by generally accepted accounting principles in the United States (U.S. GAAP) are not prepared in accordance with U.S. GAAP. Refer to Additional Information for a discussion of management’s use of these non-GAAP financial measures.

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The following is a reconciliation of our results of operations prepared in accordance with U.S. GAAP to those adjusted results considered by management. Refer to Quarterly Results and Business Overview for a discussion of each reconciling item:

	Three Months Ended September 30, 2017
in millions, except per share data	Pre-Tax			Tax Impact			After-Tax			Impact per share
GAAP net income (loss)	$	309		$	(26	)	$	283		$	0.20
Non-GAAP adjustments:
Intangible asset impairment charges	3			0			3			0.00
Acquisition-related net charges (credits)	25			(11		)	14			0.01
Restructuring and restructuring-related net charges (credits)	26			(6		)	20			0.02
Litigation-related net charges (credits)	(12		)	2			(10		)	(0.01		)
Amortization expense	139			(17		)	122			0.09
Adjusted net income	$	490		$	(58	)	$	432		$	0.31

	Three Months Ended September 30, 2016
in millions, except per share data	Pre-Tax			Tax Impact			After-Tax			Impact per share
GAAP net income (loss)	$	257		$	(29	)	$	228		$	0.17
Non-GAAP adjustments:
Intangible asset impairment charges	7			(1		)	6			0.00
Acquisition-related net charges (credits)	(1		)	(1		)	(2		)	(0.00		)
Restructuring and restructuring-related net charges (credits)	17			(4		)	13			0.01
Litigation-related net charges (credits)	4			(1		)	3			0.00
Amortization expense	136			(16		)	120			0.09
Adjusted net income	$	420		$	(52	)	$	368		$	0.27

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Nine Months Ended September 30, 2017

Our net sales for the first nine months of2017 were $6.640 billion, as compared to net sales of $6.195 billion for the first nine months of2016, an increase of $445 million, or 7.2 percent. Our operational net sales, which exclude a negative impact of$34 million in the first nine months of2017 due to changes in foreign currency exchange rates, increased$479 million, or 7.7 percent as compared to the same period in the prior year.¹ This increase included operational net sales of approximately $76 million in the first nine months of2017, with no prior year period related net sales, due to the acquisitions of the EndoChoice and Symetis, as previously described. Refer to Quarterly Results and Business Overview for a discussion of our net sales by global business.

Our reported net income for the first nine months of2017 was $719 million, or $0.52 per share. Our reported results for the first nine months of2017 included intangible asset impairment charges, acquisition-related net credits, restructuring and restructuring-related net charges, litigation-related net charges, investment impairment charges and amortization expense totaling $553 million (after-tax), or $0.39 per share. Excluding these items, net income for the first nine months of2017 was $1.272 billion, or $0.91 per share.¹ Our reported net income for the first nine months of2016 was $223 million, or $0.16 per share. Our reported results for the first nine months of2016 included intangible asset impairment charges, acquisition-related net charges, restructuring and restructuring-related net charges, litigation-related net charges and amortization expense totaling $896 million (after-tax), or $0.65 per share. Excluding these items, net income for the first nine months of2016 was $1.119 billion, or $0.81 per share.¹ 

¹Operational net sales growth rates, which exclude the impact of changes in foreign currency exchange rates, and adjusted net income and adjusted net income per share, which exclude certain items required by U.S. GAAP, are not prepared in accordance with U.S. GAAP. Refer to Additional Information for a discussion of management’s use of these non-GAAP financial measures.

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The following is a reconciliation of our results of operations prepared in accordance with U.S. GAAP to those adjusted results considered by management. Refer to Quarterly Results and Business Overview for a discussion of each reconciling item:

	Nine Months Ended September 30, 2017
				Tax						Impact per
in millions, except per share data	Pre-Tax			Impact			After-Tax			share
GAAP net income (loss)	$	706		$	13		$	719		$	0.52
Non-GAAP adjustments:
Intangible asset impairment charges	3			0			3			0.00
Acquisition-related net charges (credits)	(1		)	(19		)	(20		)	(0.01		)
Restructuring and restructuring-related net charges (credits)	61			(13		)	48			0.03
Litigation-related net charges (credits)	196			(73		)	123			0.09
Investment impairment charges	53			(19		)	34			0.02
Amortization expense	424			(59		)	365			0.26
Adjusted net income	$	1,442		$	(170	)	$	1,272		$	0.91

	Nine Months Ended September 30, 2016
			Tax					Impact per
in millions, except per share data	Pre-Tax		Impact			After-Tax		share
GAAP net income (loss)	$	88	$	135		$	223	$	0.16
Non-GAAP adjustments:
Intangible asset impairment charges	7		(1		)	6		0.00
Acquisition-related net charges (credits)	93		(3		)	90		0.07
Restructuring and restructuring-related net charges (credits)	55		(13		)	42		0.03
Litigation-related net charges (credits)	632		(228		)	404		0.29
Amortization expense	408		(54		)	354		0.26
Adjusted net income	$	1,283	$	(164	)	$	1,119	$	0.81

Cash provided by operating activities was $554 million for the first nine months of2017. As of September 30, 2017, we had total debt of $5.682 billion, cash and cash equivalents of $210 million and a working capital deficit of $1.350 billion. Refer to Liquidity and Capital Resources for further discussion.

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Quarterly Results and Business Overview

Net Sales

The following table provides our net sales by business and the relative change on an as reported and operational basis. The operational growth rates in the tables below can be recalculated from our net sales presented in Note K – Segment Reporting to our unaudited condensed consolidated financial statements contained in Item 1 of this Quarterly Report on Form 10-Q. Operational growth rates, which exclude the impact of changes in foreign currency exchange rates, are not financial measures prepared in accordance with U.S. GAAP and should not be considered in isolation from, or as a replacement for, the most directly comparable U.S. GAAP financial measure. Refer to Additional Information for a further discussion of management’s use of this non-GAAP financial measure.

					Change
	Three Months Ended September 30,				As Reported Basis			Less: Impact of Foreign Currency			Operational Basis
(in millions)	2017		2016
Interventional Cardiology	$	589	$	568	3.8		%	(0.4	)	%	4.2		%
Peripheral Interventions	268		257		4.7		%	(0.4	)	%	5.1		%
Cardiovascular	857		825		4.1		%	(0.4	)	%	4.5		%
Cardiac Rhythm Management	463		467		(0.6	)	%	0.3		%	(0.9	)	%
Electrophysiology	71		60		17.8		%	0.2		%	17.6		%
Rhythm Management	534		527		1.5		%	0.3		%	1.2		%
Endoscopy	403		367		9.8		%	(0.2	)	%	10.0		%
Urology and Pelvic Health	274		248		10.3		%	0.1		%	10.2		%
Neuromodulation	154		138		11.0		%	0.0		%	11.0		%
MedSurg	831		753		10.2		%	(0.1	)	%	10.3		%
Net Sales	$	2,222	$	2,105	5.6		%	(0.1	)	%	5.7		%

					Change
	Nine Months Ended September 30,				As Reported Basis		Less: Impact of Foreign Currency			Operational Basis
(in millions)	2017		2016
Interventional Cardiology	$	1,784	$	1,695	5.3	%	(0.6	)	%	5.9	%
Peripheral Interventions	802		757		5.9	%	(0.7	)	%	6.6	%
Cardiovascular	2,586		2,452		5.4	%	(0.7	)	%	6.1	%
Cardiac Rhythm Management	1,407		1,378		2.2	%	(0.5	)	%	2.7	%
Electrophysiology	201		179		12.4	%	(0.8	)	%	13.2	%
Rhythm Management	1,608		1,557		3.3	%	(0.6	)	%	3.9	%
Endoscopy	1,182		1,060		11.5	%	(0.6	)	%	12.1	%
Urology and Pelvic Health	815		731		11.5	%	(0.3	)	%	11.8	%
Neuromodulation	449		395		13.7	%	(0.3	)	%	14.0	%
MedSurg	2,446		2,186		11.9	%	(0.4	)	%	12.3	%
Net Sales	$	6,640	$	6,195	7.2	%	(0.5	)	%	7.7	%

Growth rates are based on actual, non-rounded amounts and may not recalculate precisely.

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Cardiovascular

Interventional Cardiology

Our Interventional Cardiology business develops and manufactures technologies for diagnosing and treating coronary artery disease and other cardiovascular disorders including structural heart conditions. Our product offerings include coronary stents, balloon catheters, rotational atherectomy systems, guide wires, guide catheters, embolic protection devices, crossing and re-entry devices for the treatment of chronically occluded coronary vessels, diagnostic catheters used in percutaneous transluminal coronary angioplasty procedures, and intravascular ultrasound (IVUS) imaging systems and fractional flow reserve systems (FFR), which comprise our PCI Guidance offering to assist in the diagnosis of coronary artery disease.

Our structural heart product offerings include our WATCHMAN™ device designed to close the left atrial appendage in patients with non-valvular atrial fibrillation that are at risk for ischemic stroke and a portfolio of devices for transcatheter aortic valve replacement (TAVR). Our TAVR portfolio includes our Lotus™ Valve System, which is based on a mechanically-expanded architecture, and our ACURATE TA™, ACURATE neo™ and ACURATE TF™ Valve Systems, which are based on a self-expanding architecture. Together, our TAVR portfolio provides a set of solutions to treat a broad range of patient disease states and to accommodate a range of physician preferences.

Our WATCHMAN™ Left Atrial Appendage Closure Technology (WATCHMAN) is the first device studied in a randomized clinical trial to offer an alternative to warfarin and is marketed globally. We believe that the WATCHMAN device will be the only left atrial appendage closure technology commercially available in the U.S. through at least 2019.

The original Lotus™ Valve System, as well as our next generation Lotus EDGE™ Valve System, are investigational devices in the U.S. and not yet commercially available in the U.S. market. In October 2016, we suspended our limited launch of the Lotus EDGE Valve System in Europe and other CE-mark countries and initiated a voluntary removal of field inventory due to reports that, in some cases, the device could not be fully locked during the procedure due to premature release of a pin connecting the Lotus EDGE Valve to the delivery system. In February 2017, we initiated a voluntary removal of all Lotus Valve Devices, including Lotus with Depth Guard™ Technology, from global commercial and clinical sites due to reports of premature release of a pin connecting the Lotus Valve to the delivery system. As with the prior announced suspension of our Lotus Edge Valve System device, we believe that the issue is caused by excess tension in the pin mechanism introduced during the manufacturing process. We expect to bring the Lotus Edge Valve System back to market in Europe in the first quarter of 2018. We anticipate filing the U.S. PMA submission for the Lotus Edge Valve System in the fourth quarter of 2017 or January 2018, with a U.S. launch planned for mid-2018.

Our net sales of Interventional Cardiology products of $589 million represented 27 percent of our consolidated net sales for the third quarter of 2017. Our Interventional Cardiology net sales increased $21 million, or 3.8 percent, in the third quarter of 2017, as compared to the same period in the prior year. Our operational net sales which exclude an immaterial impact in the third quarter of 2017 due to changes in foreign currency exchange rates, increased 4.2 percent as compared to the same period in the prior year. This year-over-year increase was primarily related to sales of our WATCHMAN device and growth in our Complex PCI product offerings.

On May 16, 2017, we completed the acquisition of Symetis SA (Symetis), a privately-held Swiss structural heart company focused on minimally-invasive transcatheter aortic valve replacement devices, for approximately $430 millionin cash. We are in the process of integrating Symetis into our Interventional Cardiology business and expect the integration to be substantially complete by the end of 2018.

Peripheral Interventions

Our Peripheral Interventions (PI) product offerings include stents, balloon catheters, wires, peripheral embolization devices and other devices used to diagnose and treat peripheral vascular and venous diseases, along with products to treat, diagnose and ease various forms of cancer.

Our net sales of PI products of $268 million represented 12 percent of our consolidated net sales for the third quarter of 2017. Our PI net sales increased $11 million, or 4.7 percent, in the third quarter of 2017, as compared to the same period in the prior year. Our operational net sales which exclude an immaterial impact in the third quarter of 2017 due to changes in foreign currency exchange rates, increased 5.1 percent as compared to the same period in the prior year. This year-over-year increase was primarily driven by growth in our core PI franchises, particularly our stent portfolio, our drug-eluting product franchise, and our atherectomy systems.

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Rhythm Management

Cardiac Rhythm Management

Our Cardiac Rhythm Management (CRM) business develops and manufactures a variety of implantable devices including implantable cardioverter defibrillator (ICD) systems and implantable cardiac resynchronization therapy defibrillators (CRT-D), the world's first and only commercially available subcutaneous implantable cardioverter defibrillator, the S-ICD System, and pacemaker systems and implantable cardiac resynchronization therapy pacemakers (CRT-P) that monitor the heart and deliver electricity to treat cardiac abnormalities. In addition, in most geographies, our implantable device systems include our remote LATITUDE™ Patient Management System, which enables physicians to monitor device performance remotely, allowing for more frequent monitoring in order to guide treatment decisions.

In our defibrillator portfolio, we offer several lines of transvenous ICD’s, including our longest lasting EL (extended longevity) ICD and CRT-D’s using our proprietary EnduraLife™ Battery Technology and our MINI ICD, our smallest and thinnest ICD. Our most current generation of defibrillators, the RESONATE™ family of devices, includes our CRT-D and ICD systems. These devices include our proprietary HeartLogic™ Heart Failure (HF) Diagnostic, EnduraLife™ Battery Technology, SmartCRT™ with Multisite pacing in CRT-D, and in all major markets magnetic resonate imaging (MRI) conditional labeling when used with our current generation of leads. Our SmartCRT™ approach includes MultiSite pacing technology that allows a personalized approach to care in CRT-D patients. MRI conditional labeling was approved by the FDA in September 2017 and covers our current generation RESONATE™ family of devices and our prior generation of DYNAGEN™ and INOGEN™ devices. We now have MRI conditional labeling across our defibrillator portfolio in nearly every major market around the world. Our implantable defibrillator portfolio is complemented by our suite of ACUITY™ X4 Quadripolar LV Leads, RELIANCE™ family of ICD Leads, and INGEVITY™ Pacing Lead. In addition, we offer our EMBLEM™ MRI S-ICD System, which affords physicians the ability to treat patients who are at risk for sudden cardiac arrest without touching the heart or invading the vasculature.

We market our ACCOLADE™ family of pacemaker systems in nearly all major markets around the world. Approval of our ACCOLADE™ family of pacemaker systems in the U.S., Europe and Japan also includes approval for use of these products in patients undergoing MRI scans. We received FDA approval of our ACCOLADE MRI-compatible pacemaker and MRI-compatible Ingevity™ Pacing Lead in April 2016.

Our net sales of CRM products of $463 million represented 21 percent of our consolidated net sales for the third quarter of 2017. Our net sales of CRM products decreased $4 million, or 0.6 percent, in the third quarter of 2017, as compared to the same period in the prior year. Our operational net sales which exclude an immaterial impact in the third quarter of 2017 due to changes in foreign currency exchange rates, decreased 0.9 percent as compared to the same period in the prior year. This year-over-year decrease was primarily driven by difficult comparisons following our U.S. MRI pacemaker launch in 2016. Our defibrillator growth was primarily driven by EMBLEM™ S-ICD sales growth.

The following are the components of our CRM net sales:

	Three Months Ended September 30,
(in millions)	2017		2016
Defibrillator systems	$	314	$	311
Pacemaker systems	149		156
CRM products	$	463	$	467

Electrophysiology

Our Electrophysiology business develops and manufactures less-invasive medical technologies used in the diagnosis and treatment of rate and rhythm disorders of the heart. Our leading products include the Rhythmia™ Mapping System, a next-generation, catheter-based, 3-D cardiac mapping and navigation solution designed to help diagnose and treat a variety of arrhythmias. We also market our Blazer™ Therapeutic Ablation Catheter line, a broad portfolio of diagnostic catheters, and variety of capital equipment used in the Electrophysiology lab.

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Our net sales of Electrophysiology products of $71 million represented three percent of our consolidated net sales for the third quarter of 2017. Our Electrophysiology net sales increased $11 million, or 17.8 percent, in the third quarter of 2017, as compared to the same period in the prior year. Our operational net sales which exclude an immaterial impact in the third quarter of 2017 due to changes in foreign currency exchange rates, increased 17.6 percent as compared to the same period in the prior year. This year-over-year increase was primarily driven by increased sales of our next generation Rhythmia™ Mapping System, Rhythmia HDx™ and related catheters and accessories.

On October 10, 2017, we completed the acquisition of Apama Medical Inc. (Apama), a privately-held company developing the Apama™ Radiofrequency single-shot Balloon Catheter System for the treatment of atrial fibrillation. Total consideration was comprised of $175 million cash up-front and a maximum of $125 millionin contingent payments based on the achievement of clinical and regulatory milestones. Apama will be integrated into our Rhythm Management segment.

MedSurg

Endoscopy

Our Endoscopy business develops and manufactures devices to diagnose and treat a broad range of gastrointestinal (GI) and pulmonary conditions with innovative, less invasive technologies.

Our net sales of Endoscopy products of $403 million represented 18 percent of our consolidated net sales for the third quarter of 2017. Our Endoscopy net sales increased $36 million, or 9.8 percent, in the third quarter of 2017, as compared to the same period in the prior year. Our operational net sales which exclude an immaterial impact in the third quarter of 2017 due to changes in foreign currency exchange rates, increased 10.0 percent as compared to the same period in the prior year. This year-over-year increase was primarily driven by growth across several of our key product franchises, including our hemostasis franchise, featuring our Resolution™ and Resolution 360™ Clips, our biliary franchise with our SpyGlass™ DS Direct Visualization System and our infection prevention products, and pathology services that were acquired as part of the EndoChoice acquisition.

On November 22, 2016, we completed the acquisition of EndoChoice. EndoChoice is an Alpharetta, Georgia-based company focused on the development and commercialization of infection prevention products, pathology services and single-use devices for specialists treating a wide range of GI conditions. We began the process of integrating EndoChoice into our Endoscopy business in the fourth quarter of 2016 and expect to be complete by the end of 2017. In March 2017, management decided to discontinue future sales of the FUSE™ System that was obtained as part of this acquisition.

Urology and Pelvic Health

Our Urology and Pelvic Health division develops and manufactures devices to treat various urological and pelvic conditions, such as kidney stones, benign prostatic hyperplasia (BPH), erectile dysfunction, male incontinence, pelvic floor disorders, abnormal uterine bleeding and uterine fibroids and polyps.

Our net sales of Urology and Pelvic Health products of $274 million represented 12 percent of our consolidated net sales for the third quarter of 2017. Urology and Pelvic Health net sales increased $26 million, or 10.3 percent in the third quarter of 2017, as compared to the same period in the prior year. Our operational net sales which exclude an immaterial impact in the third quarter of 2017 due to changes in foreign currency exchange rates, increased 10.2 percent as compared to the same period in the prior year. This year-over-year increase was primarily attributable to growth in sales of our kidney stone products, led by our LithoVue™ Digital Flexible Ureteroscope, and our men's health products, as well as growth across all of our franchises internationally.

Neuromodulation

Our Neuromodulation business offers the Precision™, Precision Spectra™, Precision Montage™ and Precision Novi™ Spinal Cord Stimulator (SCS) Systems, used for the management of chronic pain. Internationally, Vercise™, Vercise™ PC, and Vercise™ Gevia™ Deep Brain Stimulation (DBS) Systems are offered in various countries in Europe, Latin America and Asia Pacific for the treatment of Parkinson's disease, tremor and intractable primary and secondary dystonia, a neurological movement disorder characterized by involuntary muscle contractions.

The Vercise™ PC DBS System with its Neural Navigator™ Programming Software allows for programming flexibility, designed to treat a greater range of patients throughout their disease progression. We are currently in a U.S. pivotal trial with our Vercise DBS System for the treatment of Parkinson’s disease, and expect to launch into the U.S. DBS market by the end of 2017 or early 2018, followed by our directional lead and MRI-conditional labeling in 2018.

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Our net sales of Neuromodulation products of $154 million represented seven percent of our consolidated net sales for the third quarter of 2017. Neuromodulation net sales increased $16 million, or 11.0 percent, in the third quarter of 2017, as compared to the same period in the prior year. Our operational net sales which exclude an immaterial impact in the third quarter due to changes in foreign currency exchange rates, increased 11.0 percent as compared to the same period in the prior year. This year-over-year increase was primarily driven by share gains from our Precision Montage™ System, continued adoption of the Precision Spectra™ with MultiWave™ Technology SCS System in the U.S. and an increase in international sales.

Emerging Markets

As part of our strategic imperatives to drive global expansion, described in our most recent Annual Report on Form 10-K, we are seeking to grow net sales and market share by expanding our global presence, including in Emerging Markets. We define Emerging Markets as 20 countries that we believe have strong growth potential based on their economic conditions, healthcare sectors and our global capabilities. We are seeking to expand our presence and strengthen relationships in order to grow net sales and market share within our Emerging Markets and we have increased our investment in infrastructure in these countries in order to maximize opportunities. Our Emerging Markets net sales represented approximately 11 percent of our consolidated net sales for the third quarter of 2017 and approximately 10 percent in the third quarter of 2016. In the third quarter of 2017, our Emerging Market net sales grew 18.3 percent on both a reported and operational basis, as compared to the same period in the prior year.

Gross Profit

Our gross profit was $1.585 billion for the third quarter of 2017, $1.511 billion for the third quarter of 2016, $4.721 billion for the first nine months of2017 and $4.390 billion for the first nine months of2016. The following is a reconciliation of our gross profit margins and a description of the drivers of the change from period to period:

	Three Months		Nine Months
Gross profit margin - period ended September 30, 2016	71.8	%	70.9	%
Manufacturing cost reductions	1.7		1.9
Sales pricing and mix	(0.1	)	0.2
Inventory step-up due to acquisition accounting	(0.3	)	(0.1	)
Net impact of foreign currency	(1.2	)	(1.0	)
All other, including other period expense	(0.6	)	(0.8	)
Gross profit margin - period ended September 30, 2017	71.3	%	71.1	%

The primary factors contributing to the decrease in our gross profit margins during the third quarter, as compared to the same period in 2016, was the negative impact of foreign currency fluctuations and other inventory charges and period expense partially offset by the positive impacts of cost reductions resulting from our process improvement programs and restructuring programs. The primary factors contributing to the increase in our gross profit margins during the first nine months of 2017, as compared to the same periods in 2016, was also the positive impacts of cost reductions resulting from our process improvement programs and restructuring programs, as well as net favorability over the past nine months in our sales pricing and product mix. Partially offsetting these factors was the negative impact of foreign currency fluctuations and other inventory charges and period expense.

Operating Expenses

The following table provides a summary of certain of our operating expenses:

	Three Months Ended September 30,						Nine Months Ended September 30,
	2017			2016			2017			2016
		% of Net			% of Net			% of Net			% of Net
(in millions)	$	Sales		$	Sales		$	Sales		$	Sales
Selling, general and administrative expenses	800	36.0	%	772	36.7	%	2,408	36.3	%	2,268	36.6	%
Research and development expenses	254	11.4	%	232	11.1	%	734	11.0	%	664	10.7	%
Royalty expense	16	0.7	%	20	0.9	%	50	0.8	%	59	1.0	%

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Selling, General and Administrative (SG&A) Expenses

In the third quarter of 2017, our SG&A expenses increased $28 million, or four percent, as compared to the third quarter of 2016 and were 70basis points lower as a percentage of net sales. In the first nine months of 2017, our SG&A expenses increased $140 million, or six percent, as compared to the first nine months of 2016 and were 30basis points lower as a percentage of net sales. The decrease in SG&A as a percentage of sales was primarily driven by the benefit of our targeted initiatives focused on reducing SG&A.

Research and Development (R&D) Expenses

In the third quarter of 2017, our R&D expenses increased $22 million, or nine percent, as compared to the third quarter of 2016, and were 30basis points higher as a percentage of net sales. In the first nine months of2017, our R&D expenses increased $70 million, or 11 percent, as compared to the first nine months of2016, and were 30basis points higher as a percentage of net sales. We remain committed to advancing medical technologies and investing in meaningful R&D projects across our businesses in order to maintain a healthy pipeline of new products that we believe will contribute to profitable sales growth. The increase in expenses was due primarily to investments across all of our businesses in order to maintain a healthy pipeline of new products that we believe will contribute to profitable sales growth.

Royalty Expense

In the third quarter of 2017, our royalty expense decreased $4 million, or 20 percent, as compared to the third quarter of 2016. In the first nine months of2017, our royalty expense decreased $9 million, or 15 percent, as compared to the first nine months of2016. Our royalty expense remained relatively flat at approximately one percent of net sales in the third quarter and first nine months of 2017 and 2016. The decrease in royalty expense relates primarily to a lower royalty rate structure on certain products.

Amortization Expense

Our amortization expense was $139 million in the third quarter of 2017, as compared to $136 million in the third quarter of 2016, and $424 million in the first nine months of2017, as compared to $408 million in the first nine months of2016. This increase was primarily due to amortizable intangible assets acquired as part of the EndoChoice and Symetis acquisitions. Amortization expense is excluded by management for purposes of evaluating operating performance.

Intangible Asset Impairment Charges

We incurred intangible asset impairment charges, including charges for technology-related impairments, of $3 million in the third quarter and first nine months of2017 and $7 million in the third quarter and first nine months of2016. Intangible asset impairment charges are excluded by management for purposes of evaluating operating performance.

Contingent Consideration Expense

We recorded a net benefit of $4 million during the third quarter of 2017 and a net benefit of $78 million during the first nine months of2017, related to the change in fair value of our contingent consideration liabilities. We recorded a net benefit of $13 million during the third quarter of 2016 and a net expense of $23 million during the first nine months of2016, related to the change in fair value of our contingent consideration liabilities. Refer to Note B – Acquisitions and Strategic Investments to our unaudited condensed consolidated financial statements contained in Item 1 of this Quarterly Report on Form 10-Q for additional details related to our contingent consideration expenses. Contingent consideration expense is excluded by management for purposes of evaluating operating performance.

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Restructuring Charges and Restructuring-related Activities

We recorded restructuring charges pursuant to our restructuring plans of $12 million in the third quarter of 2017 and $5 million in the third quarter of 2016, $17 million during the first nine months of2017 and $22 million during the first nine months of2016. In addition, we recorded expenses within other lines of our accompanying unaudited condensed consolidated statements of operations related to our restructuring initiatives of $14 million in the third quarter of 2017 and $12 million in the third quarter of 2016, $44 million in the first nine months of2017 and $33 million in the first nine months of2016. Restructuring and restructuring-related costs are excluded by management for purposes of evaluating operating performance.

The 2016 Restructuring Plan is expected to result in total pre-tax charges of approximately $175 million to $225 million and reduce gross annual expenses by approximately $115 million to $150 million by the end of 2020 as plan benefits are realized.

We made cash payments of $51 million during the first nine months of2017 associated with our 2016 Restructuring Plan and as of September 30, 2017, we had made total cash payments of $78 million related to our 2016 Restructuring Plan.

Refer to Note F – Restructuring-related Activities to our unaudited condensed consolidated financial statements contained in Item 1 of this Quarterly Report on Form 10-Q for additional details related to our restructuring plans.

Litigation-related charges and credits

We recorded litigation-related net credits of $12 million in the third quarter of 2017 and litigation-related net charges of $196 million in the first nine months of2017. We recorded litigation-related net charges of $4 million in the third quarter of 2016 and $632 million in the first nine months of2016. The net charges recorded in the first nine months of 2017 and 2016 primarily include amounts related to transvaginal surgical mesh product liability cases and claims. Litigation-related charges and credits are excluded by management for purposes of evaluating operating performance. Refer to Note I – Commitments and Contingencies to our unaudited condensed consolidated financial statements contained in Item 1 of this Quarterly Report on Form 10-Q for discussion of our material legal proceedings.

Interest Expense

Our interest expense was $57 million in the third quarter of 2017, with an average borrowing rate of 3.7 percent as compared to $58 million in the third quarter of 2016, with an average borrowing rate of 3.9 percent. Our interest expense was $172 million during the first nine months of2017 with an average borrowing rate of 3.8 percent, as compared to $175 million for the first nine months of2016, with an average borrowing rate of 3.9 percent. Refer to Liquidity and Capital Resources and Note D – Fair Value Measurements and Note E – Borrowings and Credit Arrangements to our unaudited condensed consolidated financial statements contained in Item 1 of this Quarterly Report on Form 10-Q for information regarding our debt obligations and related derivative instruments and hedging activities.

Other, net

The following are the components of other, net:

	Three Months Ended September 30,						Nine Months Ended September 30,
(in millions)	2017			2016			2017			2016
Interest income	$	3		$	—		$	4		$	5
Net foreign currency gain (loss)	(4		)	(6		)	(12		)	(10		)
Net gains (losses) on investments	(6		)	(25		)	(64		)	(35		)
Other income (expense), net	(4		)	(2		)	(17		)	(4		)
	$	(11	)	$	(33	)	$	(89	)	$	(44	)

During the second quarter of 2017, we recorded a charge of $53 million for an other-than-temporary impairment loss equal to the difference between the carrying value of one of our investments and its fair value. Certain impairment charges that are considered unusual or infrequent and significant are excluded by management for purposes of evaluating operating performance. Refer to Note B – Acquisitions and Strategic Investments to our unaudited condensed consolidated financial statements contained in Item 1 of this Quarterly Report on Form 10-Q for information regarding our strategic investments.

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Tax Rates

Our effective tax rate from continuing operations is presented below:

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2017		2016		2017		2016
Effective tax rate from continuing operations	8.5	%	11.2	%	(2.0	)%	(152.4	)%

The change in our reported tax rates for the third quarter and first nine months of2017, as compared to the same periods in 2016, relates primarily to the impact of certain receipts and charges that are taxed at different rates than our effective tax rate, including intangible asset impairment charges, acquisition-related items, restructuring and restructuring-related items, investment impairment-related items, litigation-related items and amortization expense, as well as the impact of certain discrete tax items.

We are contesting in U.S. Tax Court significant proposed adjustments from the Internal Revenue Service (IRS) related to its audit of our transfer pricing methodologies for the 2001 through 2007 tax years. The IRS also proposed similar transfer pricing adjustments for the 2008 through 2010 tax years. We disagree with the transfer pricing methodologies being applied by the IRS and we were scheduled to go to trial in the U.S. Tax Court in late July 2016. On July 19, 2016, we entered a Stipulation of Settled Issues with the IRS intended to resolve all of the aforementioned transfer pricing issues, as well as issues related to our transaction with Abbott, for the 2001 through 2007 tax years. The Stipulation of Settled Issues is contingent upon the IRS Office of Appeals applying the same basis of settlement to all transfer pricing issues for the Company’s 2008, 2009 and 2010 tax years as well as review by the United States Congress Joint Committee on Taxation. In October 2016, we reached an agreement in principle with IRS Office of Appeals as to the resolution of the transfer pricing issues in 2008, 2009 and 2010 tax years, subject to additional calculations of tax as well as documentation to memorialize our agreement.

In the event that the conditions in the Stipulation of Settled Items are satisfied, we expect to make net tax payments of approximately $275 million, plus interest through the date of payment. If finalized, payments related to the resolution are expected in the next nine months. We believe that our income tax reserves associated with these matters are adequate as of September 30, 2017 and we do not expect to recognize any additional charges related to resolution of this controversy. However, the final resolution of these issues is contingent and if the Stipulation of Settled Issues is not finalized, it could have a material impact on our financial condition, results of operations, or cash flows.

Refer to Note H – Income Taxesto our unaudited condensed consolidated financial statements contained in Item 1 of this Quarterly Report on Form 10-Q for information regarding our tax litigation.

Critical Accounting Policies and Estimates

Our financial results are affected by the selection and application of accounting policies and methods. In the nine months ended September 30, 2017, there were no material changes to the application of critical accounting policies and estimates as described in our most recent Annual Report on Form 10-K.

Liquidity and Capital Resources

Based on our current business plan, we believe our existing balance of cash and cash equivalents, future cash generated from operations, access to capital markets and existing credit facilities will be sufficient to fund our operations, invest in our infrastructure, pay our legal-related liabilities, pay taxes due, fund possible mergers and/or acquisitions and service our existing debt for the next twelve months.

As of September 30, 2017, we had $210 million of cash and cash equivalents on hand, comprised of $27 million invested in money market and government funds and $183 million in interest bearing and non-interest bearing bank accounts. We invest excess cash on hand in short-term financial instruments that earn market interest rates while mitigating principal risk through instrument and counterparty diversification, as well as what we believe to be prudent instrument selection. We limit our direct exposure to securities in any one industry or issuer. We also have access to our $2.250 billion commercial paper program, which is backed by the 2017 revolving credit facility described below. As of September 30, 2017, we had $1.260 billion in commercial paper debt outstanding resulting in an additional $990 million of available liquidity and full access to our $400 million credit facility secured by our U.S. trade receivables all described below.

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The following provides a summary and description of our net cash inflows (outflows):

	Nine Months Ended September 30,
(in millions)	2017			2016
Cash provided by (used for) operating activities	$	554		$	506
Cash provided by (used for) investing activities	(721		)	(355		)
Cash provided by (used for) financing activities	178			(234		)

Operating Activities

During the first nine months of2017, cash provided by operating activities was $554 million, as compared to cash provided by operating activities of $506 million during the first nine months of2016, an increase of $48 million. The increase was driven by changes in working capital.

Investing Activities

During the first nine months of2017, cash used for investing activities primarily relate to purchases of property, plant and equipment of $240 million, including amounts to complete our manufacturing plant in Malaysia; payments for the Symetis acquisition, net of cash acquired of $392 million; and payments related to strategic investments, acquisitions of certain technologies and issuances of notes receivable of $89 million. During the first nine months of 2016, cash used for investing activities primarily included purchases of property, plant and equipment of $209 million, payments for acquisitions of businesses, net of cash acquired of $70 million and payments related to strategic investments, acquisitions of certain technologies and issuances of notes receivable of $105 million, partially offset by proceeds from the sale of one of two buildings located in Quincy, Massachusetts of $29 million.

Financing Activities

Our cash flows for financing activities reflect issuances and repayments of debt, payments of acquisition-related contingent consideration, cash used to net share settle employee equity awards and stock issuances related to our equity incentive programs.

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Debt

We had total debt of $5.682 billion as of September 30, 2017 and $5.484 billion as of December 31, 2016. The debt maturity schedule for the significant components of our long-term debt obligations is presented below:

in millions, except interest rates	Maturity Date	As of
		September 30, 2017			December 31, 2016
January 2017 5.125% Notes	January 2017	$	—		$	250
October 2018 2.650% Notes	October 2018	600			600
January 2020 6.000% Notes	January 2020	850			850
May 2020 2.850% Notes	May 2020	600			600
May 2022 3.375% Notes	May 2022	500			500
May 2025 3.850% Notes	May 2025	750			750
October 2023 4.125% Notes	October 2023	450			450
November 2035 6.250% Notes	November 2035	350			350
January 2040 7.375% Notes	January 2040	300			300
August 2018 Term Loan	August 2018	—			150
August 2020 Term Loan	2018 - 2020	—			600
Debt Discount	2018 - 2040	(7		)	(8		)
Deferred Financing Costs	2018 - 2040	(20		)	(24		)
Interest Rate Swaps	2020 - 2023	42			51
Capital Lease Obligation	2018 - 2020	1			1
Long-term debt		$	4,416		$	5,420

Note: The table above does not include unamortized amounts related to interest rate contracts designated as cash flow hedges.

Revolving Credit Facility

On August 4, 2017, we entered into a $2.250 billion revolving credit facility (the 2017 Facility) with a global syndicate of commercial banks and terminated our previous $2.000 billion revolving credit facility (the 2015 Facility), which was scheduled to mature April 2020. The 2017 Facility matures on August 4, 2022. Eurodollar and multicurrency loans under the 2017 Facility bear interest at LIBOR plus an interest margin of between 0.90 percent and 1.50 percent, based on our corporate credit ratings and consolidated leverage ratio (1.10 percent as of September 30, 2017). Under the credit agreement for the 2017 Facility (the 2017 Credit Agreement), we are required to pay a facility fee (0.15 percent as of September 30, 2017) based on our credit ratings and the total amount of revolving credit commitment, regardless of usage of the 2017 Facility. This facility provides backing for the commercial paper program described below. There were no borrowings outstanding under the 2017 Facility as of September 30, 2017 and no borrowings outstanding under the 2015 Facility as of December 31, 2016.

The 2017 Facility agreement in place requires that we maintain certain financial covenants, as follows:

	Covenant Requirement as of September 30, 2017	Actual as of September 30, 2017
Maximum leverage ratio (1)	3.5 times	2.3 times

(1) Ratio of total debt to consolidated EBITDA, as defined by the credit agreement, for the preceding four consecutive fiscal quarters.

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The 2017 Credit Agreement provides for an exclusion from the calculation of consolidated EBITDA, as defined by such agreement, through the agreed maturity, of any non-cash charges and up to $500 million in restructuring charges and restructuring-related expenses related to our current or future restructuring plans. As of September 30, 2017, we had $476 million of the restructuring charge exclusion remaining. In addition, any cash litigation payments (net of any cash litigation receipts), as defined by the 2017 Credit Agreement, are excluded from the calculation of consolidated EBITDA and any new debt issued to fund any tax deficiency payments is excluded from consolidated total debt, as defined in the 2017 Credit Agreement, provided that the sum of any excluded net cash litigation payments and any new debt issued to fund any tax deficiency payments does not exceed $2.624 billion in the aggregate. As of September 30, 2017, we had $2.358 billion of the combined legal and debt exclusion remaining.

As of and through September 30, 2017, we were in compliance with the required covenants.

Any inability to maintain compliance with these covenants could require us to seek to renegotiate the terms of our credit facility or seek waivers from compliance with these covenants, both of which could result in additional borrowing costs. Further, there can be no assurance that our lenders would agree to such new terms or grant such waivers.

Commercial Paper

In June 2017, we launched a commercial paper program that allowed the Company to have a maximum of $2.000 billion in commercial paper outstanding. In August 2017, we increased our commercial paper program’s maximum to $2.250 billion, in line with the increased size of the 2017 Facility. As of September 30, 2017 there was $1.260 billion of commercial paper outstanding. The commercial paper program is backed by the 2017 Facility. Commercial paper issued as of September 30, 2017 had a weighted average maturity of 29 days and a weighted average yield of 1.65 percent.

Term Loans

As of September 30, 2017, we had no amounts outstanding under our unsecured term loan facilities and$750 million outstanding as of December 31, 2016. These facilities include an unsecured term loan facility maturing August 2018 (August 2018 Term Loan) and an unsecured term loan facility maturing August 2020 (August 2020 Term Loan). The August 2018 Term Loan had $150 million outstanding as of December 31, 2016 and was fully repaid as of June 30, 2017. The August 2020 Term Loan had $600 million outstanding as of December 31, 2016 and was fully repaid as of September 30, 2017.

Senior Notes

We had senior notes outstanding of $4.400 billion as ofSeptember 30, 2017 and$4.650 billion as of December 31, 2016. On January 12, 2017, we used our existing credit facilities to repay the $250 million plus interest of our senior notes due in January 2017.Our senior notes were issued in public offerings, are redeemable prior to maturity and are not subject to any sinking fund requirements. Our senior notes are unsecured, unsubordinated obligations and rank on parity with each other. These notes are effectively junior to borrowings under our credit and security facility and to the extent borrowed by our subsidiaries, to liabilities of our subsidiaries (see Other Arrangements below).

Other Arrangements

As ofDecember 31, 2016, we maintained a$300 million credit and security facility secured by our U.S. trade receivables maturing on June 9, 2017. On February 7, 2017, we amended the terms of this credit and security facility, including increasing the facility size to$400 millionand extending the facility maturity date to February 2019. We had no borrowings outstanding under this facility as of September 30, 2017 and $60 million as of December 31, 2016.

We have accounts receivable factoring programs in certain European countries that we account for as sales under FASB ASC Topic 860, Transfers and Servicing. These agreements provide for the sale of accounts receivable to third parties, without recourse, of up to $449 million as of September 30, 2017. We have no retained interests in the transferred receivables, other than collection and administrative responsibilities and, once sold, the accounts receivable are no longer available to satisfy creditors in the event of bankruptcy. We de-recognized $167 million of receivables as of September 30, 2017 at an average interest rate of 1.6 percent and $152 million as of December 31, 2016 at an average interest rate of 1.8 percent.

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In addition, we have uncommitted credit facilities with a commercial Japanese bank that provide for borrowings, promissory notes discounting and receivables factoring of up to 22.0 billion Japanese yen (approximately $196 million as of September 30, 2017). We de-recognized $162 million of notes receivable and factored receivables as of September 30, 2017 at an average interest rate of 1.3 percent and $149 million of notes receivable as of December 31, 2016 at an average interest rate of 1.6 percent. De-recognized accounts and notes receivable are excluded from trade accounts receivable, net in the accompanying unaudited condensed consolidated balance sheets.

We had outstanding letters of credit of $37 million as of September 30, 2017 and $44 million as of December 31, 2016, which consisted primarily of bank guarantees and collateral for workers' compensation insurance arrangements. As of September 30, 2017 and December 31, 2016, none of the beneficiaries had drawn upon the letters of credit or guarantees; accordingly, we did not recognize a related liability for our outstanding letters of credit in our consolidated balance sheets as of September 30, 2017 or December 31, 2016. We believe we will generate sufficient cash from operations to fund these arrangements and intend to fund these arrangements without drawing on the letters of credit.

As of and through September 30, 2017, we were in compliance with all the required covenants related to our debt obligations. For additional details related to our debt, including our revolving credit facility, term loans, senior notes and other arrangements, see Note E – Borrowings and Credit Arrangements to our unaudited condensed consolidated financial statements contained in Item 1 of this Quarterly Report on Form 10-Q.

Equity

We received $79 million during the first nine months of2017 and $108 million during the first nine months of2016 in proceeds from stock issuances related to our stock option and employee stock purchase plans. Proceeds from the exercise of employee stock options and employee stock purchases vary from period to period based upon, among other factors, fluctuations in the trading price of our common stock and in the exercise and stock purchase patterns of our employees.

We did not repurchase any shares of our common stock during the first nine months of2017 and 2016. As of September 30, 2017, the remaining authorization to repurchase shares under our 2013 share repurchase program was $535 million.

Stock-based compensation expense related to our stock ownership plans was approximately $96 million for the first nine months of2017 and $87 million for the first nine months of2016.

Contractual Obligations and Commitments

Certain of our acquisitions involve the payment of contingent consideration. See Note B – Acquisitions and Strategic Investmentsto our unaudited condensed consolidated financial statements contained in Item 1 of this Quarterly Report on Form 10-Q for further details regarding the estimated potential amount of future contingent consideration we could be required to pay associated with our acquisitions. There have been no other material changes to our contractual obligations and commitments as reported in our most recent Annual Report filed on Form 10-K.

Legal Matters

For a discussion of our material legal proceedings see Note I – Commitments and Contingencies to our unaudited condensed consolidated financial statements contained in Item 1 of this Quarterly Report on Form 10-Q and Note K – Commitments and Contingencies to our audited financial statements contained in Item 8 of our most recent Annual Report on Form 10-K.

Recent Accounting Pronouncements

Information regarding new accounting pronouncements is included in Note M – New Accounting Pronouncements to our unaudited condensed consolidated financial statements contained in Item 1 of this Quarterly Report on Form 10-Q.

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Additional Information

Use of Non-GAAP Financial Measures

To supplement our unaudited condensed consolidated financial statements presented on a GAAP basis, we disclose certain non-GAAP financial measures, including adjusted net income (earnings) and adjusted net income (earnings) per share that exclude certain amounts and operational net sales that exclude the impact of changes in foreign currency exchange rates. These non-GAAP financial measures are not in accordance with generally accepted accounting principles in the United States.

The GAAP financial measure most directly comparable to adjusted net income is GAAP net income (loss) and the GAAP financial measure most directly comparable to adjusted net income per share is GAAP net income (loss) per share. To calculate operational net sales that exclude changes in foreign currency exchange rates, we convert actual net sales from local currency to U.S. dollars using constant foreign currency exchange rates in the current and prior period. The GAAP financial measure most directly comparable to operational growth rate percentages is growth rate percentages using net sales on a GAAP basis. Reconciliations of each of these non-GAAP financial measures to the corresponding GAAP financial measure are included elsewhere in this Quarterly Report on Form 10-Q.

Management uses these supplemental non-GAAP financial measures to evaluate performance period over period, to analyze the underlying trends in our business, to assess our performance relative to our competitors and to establish operational goals and forecasts that are used in allocating resources. In addition, management uses these non-GAAP financial measures to further its understanding of the performance of our operating segments. The adjustments excluded from our non-GAAP financial measures are consistent with those excluded from our operating segments’ measures of net sales and profit or loss. These adjustments are excluded from the segment measures that are reported to our chief operating decision maker that are used to make operating decisions and assess performance.

We believe that presenting adjusted net income and adjusted net income per share that exclude certain amounts and operational net sales that exclude the impact of changes in foreign currency exchange rates, in addition to the corresponding GAAP financial measures, provides investors greater transparency to the information used by management for its operational decision-making and allows investors to see our results “through the eyes” of management. We further believe that providing this information assists our investors in understanding our operating performance and the methodology used by management to evaluate and measure such performance.

Adjusted net income and adjusted net income per share that exclude certain amounts and operational net sales that exclude the impact of changes in foreign currency exchange rates, are not in accordance with GAAP and should not be considered in isolation from or as a replacement for the most directly comparable GAAP financial measures. Further, other companies may calculate these non-GAAP financial measures differently than we do, which may limit the usefulness of those measures for comparative purposes.

The following is an explanation of each of the adjustments that management excluded as part of these non-GAAP financial measures for the three and nine months ended September 30, 2017 and 2016, as well as reasons for excluding each of these individual items:

Adjusted Net Income and Adjusted Net Income per Share:

• Intangible asset impairment charges - This amount represents write-downs of certain intangible asset balances in the first nine months of 2017 and 2016. We review intangible assets subject to amortization quarterly to determine if any adverse conditions exist or a change in circumstances has occurred that would indicate impairment and test our indefinite-lived intangible assets at least annually for impairment. If we determine the carrying value of the amortizable intangible asset is not recoverable or we conclude that it is more likely than not that the indefinite-live asset is impaired, we will write the carrying value down to fair value in the period identified. We exclude the impact of impairment charges from management's assessment of operating performance and from our operating segments' measures of profit and loss used for making operating decisions and assessing performance. Accordingly, management has excluded intangible asset impairment charges for purposes of calculating these non-GAAP financial measures to facilitate an evaluation of our current operating performance and a comparison to our past operating performance.

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• Acquisition-related net charges (credits) - These adjustments may consist of (a) contingent consideration fair value adjustments, (b) gains on previously held investments, (c) purchased and/or funded in-process research and development expenses incurred outside of a business combination and (d) due diligence, other fees, inventory step-up amortization and integration and exit costs. The contingent consideration adjustments represent accounting adjustments to state contingent consideration liabilities at their estimated fair value. These adjustments can be highly variable depending on the assessed likelihood and amount of future contingent consideration payments. Due diligence, other fees, inventory step-up amortization and integration and exit costs include legal, tax, severance and other expenses associated with prior and potential future acquisitions that can be highly variable and not representative of ongoing operations. Accordingly, management excluded these amounts for purposes of calculating these non-GAAP financial measures to facilitate an evaluation of our current operating performance and a comparison to our past operating performance.

• Restructuring and restructuring-related net charges (credits) - These adjustments represent severance and other direct costs associated with our restructuring plans. These restructuring plans each consist of distinct initiatives that are fundamentally different from our ongoing, core cost reduction initiatives in terms of, among other things, the frequency with which each action is performed and the required planning, resourcing, cost and timing. Examples of such initiatives include the movement of business activities, facility consolidations and closures and the transfer of product lines between manufacturing facilities, which, due to the highly regulated nature of our industry, requires a significant investment in time and cost to create duplicate manufacturing lines, run product validations and seek regulatory approvals. Restructuring initiatives generally take approximately two years to complete and have a distinct project timeline that begins subsequent to approval by our Board of Directors. In contrast to our ongoing cost reduction initiatives, restructuring initiatives typically result in duplicative cost and exit costs over this period of time, are one-time shut downs or transfers and are not considered part of our core, ongoing operations. Because these restructuring plans are incremental to the core activities that arise in the ordinary course of our business, management excluded these costs for purposes of calculating these non-GAAP financial measures to facilitate an evaluation of our current operating performance and a comparison to our past operating performance.

• Litigation-related net charges (credits) - These adjustments include certain significant product liability and other litigation-related charges and credits. We record these charges and credits, which we consider to be unusual or infrequent and significant, within the litigation-related charges line in our consolidated statements of operations; all other legal and product liability charges, credits and costs are recorded within selling general and administrative expenses. These amounts are excluded by management in assessing our operating performance, as well as from our operating segments' measures of profit and loss used for making operating decisions and assessing performance. Accordingly, management excluded these amounts for purposes of calculating these non-GAAP financial measures to facilitate an evaluation of our current operating performance and a comparison to our past operating performance.

• Investment impairment charges - These amounts represent write-downs relating to our investment portfolio that are considered unusual or infrequent and significant. Each reporting period, we evaluate our investments to determine if there are any events or circumstances that are likely to have a significant adverse effect on the fair value of the investment. If we identify an impairment indicator, we will estimate the fair value of the investment and compare it to its carrying value and determine if the impairment is other-than-temporary. For other-than-temporary impairments, we recognize an impairment loss equal to the difference between an investment’s carrying value and its fair value. Management excludes the impact of certain impairment charges when assessing operating performance, as well as from our operating segments’ measures of profit and loss used for making operating decisions and assessing performance. Accordingly, management excluded these investment impairment charges for purposes of calculating its non-GAAP financial measures to facilitate an evaluation of our current operating performance and a comparison to our past operating performance.

• Amortization expense - We record intangible assets at historical cost and amortize them over their estimated useful lives. Amortization expense is excluded from management's assessment of operating performance and is also excluded from our operating segments' measures of profit and loss used for making operating decisions and assessing performance. Accordingly, management has excluded amortization expense for purposes of calculating these non-GAAP financial measures to facilitate an evaluation of our current operating performance and a comparison to our past operating performance.

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Operational Net Sales Excluding the Impact of Changes in Foreign Currency Exchange Rates

• The impact of changes in foreign currency exchange rates is highly variable and difficult to predict. Accordingly, management excludes the impact of changes in foreign currency exchange rates for purposes of reviewing the net sales and growth rates to facilitate an evaluation of our current operating performance and a comparison to our past operating performance.

Safe Harbor for Forward-Looking Statements

Certain statements that we may make from time to time, including statements contained in this Quarterly Report on Form 10-Q and information incorporated by reference herein, constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements may be identified by words like “anticipate,” “expect,” “project,” “believe,” “plan,” “may,” “estimate,” “intend” and similar words. These forward-looking statements are based on our beliefs, assumptions and estimates using information available to us at the time and are not intended to be guarantees of future events or performance. If our underlying assumptions turn out to be incorrect, or if certain risks or uncertainties materialize, actual results could vary materially from the expectations and projections expressed or implied by our forward-looking statements. As a result, readers are cautioned not to place undue reliance on any of our forward-looking statements. Except as required by law, we do not intend to update any forward-looking statements even if new information becomes available or other events occur in the future.

The forward-looking statements in this Quarterly Report on Form 10-Q are based on certain risks and uncertainties, including the risk factors described in “Part I, Item 1A. Risk Factors” in our most recent Annual Report on Form 10-K and the specific risk factors discussed below and in connection with forward-looking statements throughout this Quarterly Report on Form 10-Q, which could cause actual results to vary materially from the expectations and projections expressed or implied by our forward-looking statements. These factors, in some cases, have affected and in the future could affect our ability to implement our business strategy and may cause actual results to differ materially from those contemplated by the forward-looking statements. These additional factors include, among other things, future political, economic, competitive, reimbursement and regulatory conditions, new product introductions, demographic trends, intellectual property, litigation and governmental investigations, financial market conditions and future business decisions made by us and our competitors, all of which are difficult or impossible to predict accurately and many of which are beyond our control. We caution each reader of this Quarterly Report on Form 10-Q to consider carefully these factors.

The following are some of the important risk factors that could cause our actual results to differ materially from our expectations in any forward-looking statements. For further discussion of these and other risk factors, see “Part I, Item 1A. Risk Factors” in our most recent Annual Report on Form 10-K.

Our Businesses

• Our ability to increase net sales, expand the market and capture market share;

• The volatility of the market and our ability to increase our net sales and capture market share;

• The ongoing impact on our business of physician alignment to hospitals, governmental investigations and audits of hospitals and other market and economic conditions on the overall number of procedures performed;

• Competitive offerings and related declines in average selling prices for our products, particularly our drug-eluting coronary stent systems and our CRM products;

• The performance of and physician and patient confidence in, our products and technologies, or those of our competitors;

• The impact and outcome of ongoing and future clinical trials and market studies undertaken by us, our competitors or other third parties, or perceived product performance of our or our competitors' products;

• Variations in clinical results, reliability or product performance of our and our competitors' products;

• Our ability to acquire or develop, launch and supply new or next-generation products and technologies worldwide and across our businesses in line with our commercialization strategies in a timely and successful manner, and with respect to our recent acquisitions;

51

• The effect of consolidation and competition in the markets in which we do business, or plan to do business;

• Disruption in the manufacture or supply of certain components, materials or products, or the failure to secure in a timely manner alternative manufacturing or additional or replacement components, materials or products;

• Our ability to retain and attract key personnel;

• The impact of enhanced requirements to obtain regulatory approval in the U.S. and around the world, including the associated timing and cost of product approval;

• The impact of increased pressure on the availability and rate of third-party reimbursement for our products and procedures in the U.S. and around the world, including with respect to the timing and costs of creating and expanding markets for new products and technologies; and

• Risk associated with counterparty default on our derivative financial instruments.

Regulatory Compliance, Litigation and Data Protection

• The impact of healthcare policy changes and legislative or regulatory efforts in the U.S. and around the world to modify product approval or reimbursement processes, including a trend toward demonstrating clinical outcomes, comparative effectiveness and cost efficiency, as well as the impact of other healthcare reform legislation;

• Risks associated with our regulatory compliance and quality systems and activities in the U.S. and around the world, including meeting regulatory standards applicable to manufacturing and quality processes;

• Our ability to minimize or avoid future field actions or FDA warning letters relating to our products and processes and the ongoing inherent risk of potential physician advisories related to medical devices;

• The impact of increased scrutiny of and heightened global regulatory enforcement facing the medical device industry arising from political and regulatory changes, economic pressures or otherwise, including under U.S. Anti-Kickback Statute, U.S. False Claims Act and similar laws in other jurisdictions; U.S. Foreign Corrupt Practices Act (FCPA) and/or similar laws in other jurisdictions and U.S. and foreign export control, trade embargo and customs laws;

• Costs and risks associated with litigation;

• The effect of our litigation and risk management practices, including self-insurance and compliance activities on our loss contingencies, legal provision and cash flows;

• The impact of, diversion of management attention as a result of and costs to cooperate with, litigate and/or resolve, governmental investigations and our class action, product liability, contract and other legal proceedings;

• Risks associated with a failure to protect our intellectual property rights and the outcome of patent litigation; and

• Our ability to properly operate our information systems that support our business operations and protect our data integrity from a cyber-attack or other breach that has a material adverse effect on our business, reputation, or results of operations.

Innovation and Certain Growth Initiatives

• The timing, size and nature of our strategic growth initiatives and market opportunities, including with respect to our internal research and development platforms and externally available research and development platforms and technologies and the ultimate cost and success of those initiatives and opportunities;

• Our ability to complete planned clinical trials successfully, obtain regulatory approvals and launch new and next generation products in a timely manner consistent with cost estimates, including the successful completion of in-process projects from in-process research and development;

52

• Our ability to identify and prioritize our internal research and development project portfolio and our external investment portfolio on profitable revenue growth opportunities as well as to keep them in line with the estimated timing and costs of such projects and expected revenue levels for the resulting products and technologies;

• Our ability to successfully develop, manufacture and market new products and technologies in a timely manner and the ability of our competitors and other third parties to develop products or technologies that render our products or technologies noncompetitive or obsolete;

• The impact of our failure to succeed at or our decision to discontinue, write-down or reduce the funding of any of our research and development projects, including in-process projects from in-process research and development, in our growth adjacencies or otherwise;

• Dependence on acquisitions, alliances or investments to introduce new products or technologies and to enter new or adjacent growth markets and our ability to fund them or to fund contingent payments with respect to those acquisitions, alliances and investments; and

• The failure to successfully integrate and realize the expected benefits from the strategic acquisitions, alliances and investments we have consummated or may consummate in the future.

International Markets

• Our dependency on international net sales to achieve growth, including in emerging markets;

• The impact of changes in our international structure and leadership;

• Risks associated with international operations and investments, including the timing and collectibility of customer payments, political and economic conditions (including the impact of the United Kingdom's exit from the EU, often referred to as "Brexit"), protection of our intellectual property, compliance with established and developing U.S. and foreign legal and regulatory requirements, including FCPA and similar laws in other jurisdictions and U.S. and foreign export control, trade embargo and customs laws, as well as changes in reimbursement practices and policies;

• Our ability to maintain or expand our worldwide market positions in the various markets in which we compete or seek to compete, including through investments in product diversification and emerging markets such as Brazil, Russia, India and China;

• Our ability to execute and realize anticipated benefits from our investments in emerging markets; and

• The potential effect of foreign currency fluctuations and interest rate fluctuations on our net sales, expenses and resulting margins.

Liquidity

• Our ability to generate sufficient cash flow to fund operations, capital expenditures, global expansion initiatives, any litigation settlements and judgments, share repurchases and strategic investments and acquisitions as well as maintaining our investment grade ratings and managing our debt levels and covenant compliance;

• Our ability to access the public and private capital markets when desired and to issue debt or equity securities on terms reasonably acceptable to us;

• The unfavorable resolution of open tax matters, exposure to additional tax liabilities and the impact of changes in U.S. and international tax laws;

• The impact of examinations and assessments by domestic and international taxing authorities on our tax provision, financial condition or results of operations;

• The impact of goodwill and other intangible asset impairment charges, including on our results of operations; and

• Our ability to collect outstanding and future receivables and/or sell receivables under our factoring programs.

53

Cost Reduction and Optimization Initiatives

• Risks associated with significant changes made or expected to be made to our organizational and operational structure, pursuant to our 2016 Restructuring Plan, as well as any further restructuring or optimization plans we may undertake in the future and our ability to recognize benefits and cost reductions from such programs; and

• Business disruption and employee distraction as we execute our global compliance program, restructuring and optimization plans and divestitures of assets or businesses and implement our other strategic and cost reduction initiatives.

Rule 10b5-1 Trading Plans by Executive Officers

Periodically, certain of our executive officers adopt written stock trading plans in accordance with Rule 10b5-1 under the Exchange Act and our own Stock Trading Policy. A Rule 10b5-1 Trading Plan is a written document that pre-establishes the amount, prices and dates (or formulas for determining the amounts, prices and dates) of future purchases or sales of our stock, including shares issued upon exercise of stock options or vesting of deferred stock units. These plans are entered into at a time when the person is not in possession of material non-public information about our company. We disclose details regarding individual Rule 10b5-1 Trading Plans on the Investor Relations section of our website.

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We develop, manufacture and sell medical devices globally and our earnings and cash flows are exposed to market risk from changes in currency exchange rates and interest rates. We address these risks through a risk management program that includes the use of derivative financial instruments. We operate the program pursuant to documented corporate risk management policies. We do not enter derivative transactions for speculative purposes. Gains and losses on derivative financial instruments substantially offset losses and gains on underlying hedged exposures. Furthermore, we manage our exposure to counterparty risk on derivative instruments by entering into contracts with a diversified group of major financial institutions and by actively monitoring outstanding positions.

Our currency risk consists primarily of foreign currency denominated firm commitments, forecasted foreign currency denominated intercompany and third-party transactions and net investments in certain subsidiaries. We use both nonderivative (primarily European manufacturing operations) and derivative instruments to manage our earnings and cash flow exposure to changes in currency exchange rates. We had currency derivative instruments outstanding in the contract amount of $5.329 billion as of September 30, 2017 and $4.101 billion as of December 31, 2016. We recorded $83 million of other assets and $92 million of other liabilities to recognize the fair value of these derivative instruments as of September 30, 2017, as compared to $199 million of other assets and $26 million of other liabilities as of December 31, 2016. A ten percent appreciation in the U.S. dollar’s value relative to the hedged currencies would increase the derivative instruments’ fair value by $329 million as of September 30, 2017 and $257 million as of December 31, 2016. A ten percent depreciation in the U.S. dollar’s value relative to the hedged currencies would decrease the derivative instruments’ fair value by $419 million as of September 30, 2017 and by $223 million as of December 31, 2016. Any increase or decrease in the fair value of our currency exchange rate sensitive derivative instruments would be substantially offset by a corresponding decrease or increase in the fair value of the hedged underlying asset, liability or forecasted transaction, resulting in minimal impact on our consolidated statements of operations.

Our interest rate risk relates primarily to U.S. dollar borrowings partially offset by U.S. dollar cash investments. We have historically used interest rate derivative instruments to manage our earnings and cash flow exposure to changes in interest rates. We had no interest rate derivative instruments outstanding as of September 30, 2017. As of September 30, 2017, $4.415 billion of our outstanding debt obligations were at fixed interest rates, representing approximately 78 percent of our total debt.

Refer to Note D – Fair Value Measurements to our unaudited condensed consolidated financial statements contained in Item 1 of this Quarterly Report on Form 10-Q for further information regarding our derivative financial instruments.

55

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our Chief Executive Officer (CEO) and our Chief Financial Officer (CFO), evaluated the effectiveness of our disclosure controls and procedures as of September 30, 2017 pursuant to Rule 13a-15(b) of the Securities Exchange Act of 1934, as amended (the Exchange Act). Disclosure controls and procedures are designed to ensure that material information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and that such material information is accumulated and communicated to our management, including our CEO and CFO, as appropriate, to allow timely decisions regarding required disclosure. Based on their evaluation, our CEO and CFO concluded that, as of September 30, 2017, our disclosure controls and procedures were effective.

Changes in Internal Control Over Financial Reporting

During the three and nine month period ended September 30, 2017, there were no changes in our internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

56

PART II

OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

See Note H – Income Taxes and Note I – Commitments and Contingencies to our unaudited condensed consolidated financial statements contained in Item 1 of this Quarterly Report on Form 10-Q, which is incorporated herein by reference.

ITEM 1A. RISK FACTORS

In addition to the other information contained elsewhere in this report, you should carefully consider the factors discussed in “Part I, Item 1A. Risk Factors” in our most recent Annual Report filed on Form 10-K, which could materially affect our business, financial condition or future results.

ITEM 6. EXHIBITS (* documents filed or furnished with this report, # compensatory plans or arrangements)

10.1	Credit Agreement dated as of August 4, 2017 by and among Boston Scientific Corporation, the several lenders party thereto, Bank of America, N.A. and Wells Fargo Bank, National Association, as Syndication Agents and JPMorgan Chase Bank, N.A., as Administrative Agent (incorporated herein by reference to Exhibit 10.1, Current Report on Form 8-K filed on August 7, 2017, File No. 1-11083).
31.1*	Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2*	Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1*	Certification of the Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2*	Certification of the Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101*	Interactive Data Files Pursuant to Rule 405 of Regulation S-T: (i) the Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2017 and 2016, (ii) the Condensed Consolidated Statements of Comprehensive Income for the three and nine months ended September 30, 2017 and 2016, (iii) the Condensed Consolidated Balance Sheets as of September 30, 2017 and December 31, 2016, (iv) the Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2017 and 2016 and (v) the notes to the Condensed Consolidated Financial Statements.

57

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized on November 2, 2017.

BOSTON SCIENTIFIC CORPORATION
By:	/s/ Daniel J. Brennan
	Name:	Daniel J. Brennan
	Title:	Executive Vice President and Chief Financial Officer

58

EX-31.1

EXHIBIT 31.1

CERTIFICATIONS

I, Michael F. Mahoney, certify that:

1	I have reviewed this Quarterly Report on Form 10-Q of Boston Scientific Corporation;
2	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4	The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
	a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
	b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
	c)	Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
	d)	Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5	The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
	a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
	b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date:	November 2, 2017	/s/ Michael F. Mahoney
		Michael F. Mahoney
		President and Chief Executive Officer

EX-31.2

EXHIBIT 31.2

CERTIFICATIONS

I, Daniel J. Brennan, certify that:

1	I have reviewed this Quarterly Report on Form 10-Q of Boston Scientific Corporation;
2	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4	The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
	a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
	b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
	c)	Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
	d)	Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5	The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
	a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
	b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date:	November 2, 2017	/s/ Daniel J. Brennan
		Daniel J. Brennan
		Executive Vice President and Chief Financial Officer

EX-32.1

EXHIBIT 32.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TO 18 U.S.C.

SECTION 1350 AS ADOPTED PURSUANT TO SECTION 906 OF THE

SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of Boston Scientific Corporation (the “Company”) for the period ended September 30, 2017 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned Chief Executive Officer of the Company hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that based on his knowledge:

(1)	the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2)	the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Boston Scientific Corporation.

This certification shall not be deemed "filed" for any purpose, nor shall it be deemed to be incorporated by reference into any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934 regardless of any general incorporation language in such filing.

By:	/s/ Michael F. Mahoney
	Michael F. Mahoney
	President and Chief Executive Officer
	November 2, 2017

EX-32.2

EXHIBIT 32.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT TO 18 U.S.C.

SECTION 1350 AS ADOPTED PURSUANT TO SECTION 906 OF THE

SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of Boston Scientific Corporation (the “Company”) for the period ended September 30, 2017 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned Chief Financial Officer of the Company hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that based on his knowledge:

(1)	the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2)	the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Boston Scientific Corporation.

This certification shall not be deemed "filed" for any purpose, nor shall it be deemed to be incorporated by reference into any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934 regardless of any general incorporation language in such filing.

By:	/s/ Daniel J. Brennan
	Daniel J. Brennan
	Executive Vice President and Chief Financial Officer
	November 2, 2017

XML

Document and Entity Information - shares	9 Months Ended
	Sep. 30, 2017	Oct. 31, 2017
Document and Entity Information [Abstract]
Entity Registrant Name	BOSTON SCIENTIFIC CORPORATION
Entity Central Index Key	0000885725
Document Type	10-Q
Document Period End Date	Sep. 30, 2017
Amendment Flag	false
Document Fiscal Year Focus	2017
Document Fiscal Period Focus	Q3
Current Fiscal Year End Date	--12-31
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding		1,373,195,517

XML

Condensed Consolidated Statements of Operations (Unaudited) - USD ($) shares in Millions, $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Net sales	$ 2,222	$ 2,105	$ 6,640	$ 6,195
Cost of products sold	637	594	1,919	1,805
Gross profit	1,585	1,511	4,721	4,390
Operating expenses:
Selling, general and administrative expenses	800	772	2,408	2,268
Research and development expenses	254	232	734	664
Royalty expense	16	20	50	59
Amortization expense	139	136	424	408
Intangible asset impairment charges	3	7	3	7
Restructuring charges (credits)	12	5	17	22
Contingent consideration expense (benefit)	(4)	(13)	(78)	23
Litigation-related charges (credits)	(12)	4	196	632
Operating expenses	1,208	1,163	3,754	4,083
Operating income (loss)	377	348	967	307
Other income (expense):
Interest expense	(57)	(58)	(172)	(175)
Other, net	(11)	(33)	(89)	(44)
Income (loss) before income taxes	309	257	706	88
Income tax expense (benefit)	26	29	(13)	(135)
Net income (loss)	$ 283	$ 228	$ 719	$ 223
Net income (loss) per common share — basic	$ 0.21	$ 0.17	$ 0.53	$ 0.16
Net income (loss) per common share — assuming dilution	$ 0.20	$ 0.17	$ 0.52	$ 0.16
Weighted-average shares outstanding
Basic	1,372.0	1,360.6	1,369.1	1,356.1
Assuming dilution	1,394.1	1,379.7	1,391.8	1,374.9

XML

Condensed Consolidated Statements of Comprehensive Income (Loss) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Net income (loss)	$ 283	$ 228	$ 719	$ 223
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustment	25	2	46	(3)
Net change in unrealized gains and losses on derivative financial instruments	(24)	(31)	(100)	(184)
Net change in available-for-sale securities	1	0	3	0
Net change in unrealized costs associated with certain retirement plans	0	0	(1)	0
Total other comprehensive income (loss)	2	(29)	(52)	(187)
Total comprehensive income (loss)	$ 285	$ 199	$ 667	$ 36

XML

Condensed Consolidated Balance Sheets (Unaudited) - USD ($) $ in Millions	Sep. 30, 2017	Dec. 31, 2016
Current assets:
Cash and cash equivalents	$ 210	$ 196
Trade accounts receivable, net	1,470	1,472
Inventories	1,077	955
Deferred and prepaid income taxes	76	75
Other current assets	645	541
Total current assets	3,478	3,239
Property, plant and equipment, net	1,678	1,630
Goodwill	6,882	6,678
Other intangible assets, net	5,783	5,883
Other long-term assets	815	666
TOTAL ASSETS	18,636	18,096
Current liabilities:
Current debt obligations	1,266	64
Accounts payable	371	447
Accrued expenses	2,551	2,312
Other current liabilities	640	764
Total current liabilities	4,828	3,587
Long-term debt	4,416	5,420
Deferred income taxes	66	18
Other long-term liabilities	1,738	2,338
Commitments and contingencies
Stockholders’ equity
Preferred stock, $0.01 par value - authorized 50,000,000 shares, none issued and outstanding
Common stock, $0.01 par value - authorized 2,000,000,000 shares - issued 1,620,302,039 shares as of September 30, 2017 and 1,609,670,817 shares as of December 31, 2016	16	16
Treasury stock, at cost - 247,566,270 shares as of September 30, 2017 and December 31, 2016	(1,717)	(1,717)
Additional paid-in capital	17,125	17,014
Accumulated deficit	(7,785)	(8,581)
Accumulated other comprehensive income (loss), net of tax	(51)	1
Total stockholders’ equity	7,588	6,733
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$ 18,636	$ 18,096

XML

Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares	Sep. 30, 2017	Dec. 31, 2016
Condensed Consolidated Balance Sheet (Parenthetical) [Abstract]
Common Stock, Par or Stated Value Per Share	$ 0.01	$ 0.01
Common Stock, Shares Authorized	2,000,000,000	2,000,000,000
Common Stock, Shares, Issued	1,620,302,039	1,609,670,817
Common Stock, Shares, Outstanding	1,372,735,769	1,362,104,547
Preferred Stock, Par or Stated Value Per Share	$ 0.01	$ 0.01
Preferred Stock, Shares Authorized	50,000,000	50,000,000
Preferred Stock, Shares Issued	0	0
Preferred Stock, Shares Outstanding	0	0
Treasury Stock, Shares	247,566,270	247,566,270

XML

Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Millions	9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016
Cash provided by (used for) operating activities
Cash provided by (used for) operating activities	$ 554	$ 506
Investing activities:
Purchases of property, plant and equipment	(240)	(209)
Proceeds on disposals of property, plant and equipment	0	29
Payments for acquisitions of businesses, net of cash acquired	(392)	(70)
Net payments for investments, acquisitions of certain technologies and issuances of notes receivable	(89)	(105)
Cash provided by (used for) investing activities	(721)	(355)
Financing activities:
Payments on long-term borrowings	(1,000)	(250)
Net increase (decrease) in commercial paper	1,253	0
Payment of contingent consideration amounts previously established in purchase accounting	(30)	(35)
Proceeds from borrowings on credit facilities	2,156	330
Payments on borrowings from credit facilities	(2,216)	(330)
Cash used to net share settle employee equity awards	(64)	(57)
Proceeds from issuances of shares of common stock	79	108
Cash provided by (used for) financing activities	178	(234)
Effect of foreign exchange rates on cash	3	1
Net increase (decrease) in cash and cash equivalents	14	(82)
Cash and cash equivalents at beginning of period	196	319
Cash and cash equivalents at end of period	210	237
Supplemental Information
Stock-based compensation expense	96	87
Fair value of contingent consideration recorded in purchase accounting	$ 0	$ 4

XML

Basis of Presentation

9 Months Ended

Sep. 30, 2017

Basis of Presentation [Abstract]

BASIS OF PRESENTATION

NOTE A – BASIS OF PRESENTATION

The accompanying unaudited condensed consolidated financial statements of Boston Scientific Corporation have been prepared in accordance with accounting principles generally accepted in the United States (U.S. GAAP) and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments (consisting only of normal recurring adjustments) considered necessary for fair presentation have been included. Operating results for the three and nine months ended September 30, 2017 are not necessarily indicative of the results that may be expected for the year ending December 31, 2017. For further information, refer to the consolidated financial statements and footnotes thereto included in Item 8 of our most recent Annual Report on Form 10-K.

Subsequent Events

We evaluate events occurring after the date of our most recent accompanying unaudited condensed consolidated balance sheets for potential recognition or disclosure in our financial statements. We did not identify any material subsequent events requiring adjustment to our accompanying unaudited condensed consolidated financial statements (recognized subsequent events) for the three and nine months ended September 30, 2017. Those items requiring disclosure (unrecognized subsequent events) in the financial statements have been disclosed accordingly. Refer to Note B – Acquisitions and Strategic Investments and Note I – Commitments and Contingenciesfor more information.

XML

Acquisitions and Strategic Investments

9 Months Ended

Sep. 30, 2017

Business Combinations [Abstract]

ACQUISITIONS AND STRATEGIC INVESTMENTS

NOTE B – ACQUISITIONS AND STRATEGIC INVESTMENTS

2017 Acquisitions

Apama Medical Inc.

On October 10, 2017, we completed the acquisition of Apama Medical Inc. (Apama), a privately-held company developing the Apama™ Radiofrequency single-shot Balloon Catheter System for the treatment of atrial fibrillation. Total consideration was comprised of $175 million cash up-front and a maximum of $125 millionin contingent payments based on the achievement of clinical and regulatory milestones. Apama will be integrated into our Rhythm Management segment.

Symetis SA

On May 16, 2017, we completed the acquisition of Symetis SA (Symetis), a privately-held Swiss structural heart company focused on minimally-invasive transcatheter aortic valve replacement devices, for approximately $430 millionin cash. We are in the process of integrating Symetis into our Interventional Cardiology business and expect the integration to be substantially complete by the end of 2018.

Purchase Price Allocation

We accounted for the acquisition of Symetis as a business combination and, in accordance with FASB ASC Topic 805, Business Combinations, we recorded the assets acquired and liabilities assumed at their respective fair values as of the acquisition date. The components of the aggregate preliminary purchase price are as follows (in millions):

Payment for acquisition, net of cash acquired $ 392

The following summarizes the preliminary purchase price allocation for the Symetis acquisition as of September 30, 2017

(in millions):

Goodwill	$	191
Amortizable intangible assets	278
Other assets acquired	26
Liabilities assumed	(103		)
	$	392

We allocated a portion of the purchase price to specific intangible asset categories as follows:

	Amount Assigned (in millions)		Amortization Period (in years)	Risk-Adjusted Discount Rates used in Purchase Price Allocation
Amortizable intangible assets:
Technology-related	$	268	13	24%
Other intangible assets	10		2-13	24%
	$	278

Our technology-related intangible assets consist of technical processes, intellectual property, and institutional understanding with respect to products and processes that we will leverage in future products or processes and will carry forward from one product generation to the next. We used the multi-period excess earnings method, a form of the income approach, to derive the fair value of the technology-related intangible assets, and are amortizing them on a straight-line basis over their assigned estimated useful lives.

Contingent Consideration

Certain of our acquisitions involve contingent consideration arrangements. Payment of additional consideration is generally contingent on the acquired company reaching certain performance milestones, including attaining specified revenue levels, achieving product development targets and/or obtaining regulatory approvals for products in development at the date of the acquisition. In accordance with U.S. GAAP, we recognize a liability equal to the fair value of the contingent payments we expect to make as of the acquisition date. We re-measure this liability each reporting period and record changes in the fair value through a separate line item within our unaudited condensed consolidated statements of operations. We paid contingent consideration of $45 million during the first nine months of2017 and $77 million during the first nine months of2016.

Changes in the fair value of our contingent consideration liabilities were as follows (in millions):

Balance as of December 31, 2016	$	204
Fair value adjustments	(78		)
Contingent payments related to prior period acquisitions	(45		)
Balance as of September 30, 2017	$	81

As of September 30, 2017, the maximum amount of future contingent consideration (undiscounted) that we could be required to pay was approximately $1.261 billion.

Contingent consideration liabilities are remeasured to fair value each reporting period using projected revenues, discount rates, probabilities of payment and projected payment dates. The recurring Level 3 fair value measurements of our contingent consideration liabilities include the following significant unobservable inputs:

Contingent Consideration Liabilities	Fair Value as of September 30, 2017	Valuation Technique	Unobservable Input	Range
R&D and Commercialization-based Milestones	$31 million	Discounted Cash Flow	Discount Rate	2%
			Projected Year of Payment	2018 - 2021
Revenue-based Payments	$50 million	Discounted Cash Flow	Discount Rate	11% - 15%
			Projected Year of Payment	2017 - 2026

Increases or decreases in the fair value of our contingent consideration liabilities can result from changes in discount periods and rates, as well as changes in the timing and amount of revenue estimates or in the timing or likelihood of achieving R&D, commercialization-based, and revenue-based milestones. Projected contingent payment amounts related to some of our R&D, commercialization-based, and revenue-based milestones are discounted back to the current period using a discounted cash flow model. Projected revenues are based on our most recent internal operational budgets and long-range strategic plans. Increases in projected revenues and probabilities of payment may result in higher fair value measurements. Increases in discount rates and the time to payment may result in lower fair value measurements. Increases or decreases in any of those inputs together, or in isolation, may result in a significantly lower or higher fair value measurement.

Strategic Investments

On November 1, 2017, we entered into a definitive agreement with an investee company where we may be obligated to pay $145 million in cash up-front and a maximum of $130 million in contingent payments to acquire the investee. The agreement contains a provision, expiring October 31, 2019, allowing the investee company to sell the remaining equity interests of the investee company to us upon achievement of a regulatory milestone, and an option allowing us to acquire the remaining equity interests.

We account for certain of our strategic investments as equity method investments, in accordance with FASB ASC Topic 323, Investments - Equity Method and Joint Ventures.

The aggregate carrying amount of our strategic investments were comprised of the following categories:

	As of
(in millions)	September 30, 2017		December 31, 2016
Equity method investments	$	204	$	265
Cost method investments	69		20
Available-for-sale securities	32		20
Notes receivable	44		42
	$	349	$	347

These investments are classified as other long-term assets within our accompanying unaudited condensed consolidated balance sheets, in accordance with U.S. GAAP and our accounting policies.

During the second quarter of 2017, we recorded a charge of $53 million for an other-than-temporary impairment loss equal to the difference between the carrying value of one of our investments and its fair value. The charge was recorded within the Other, net caption of our unaudited condensed consolidated statements of operations.

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Goodwill and Other Intangible Assets

9 Months Ended

Sep. 30, 2017

Goodwill and Intangible Assets Disclosure [Abstract]

GOODWILL AND OTHER INTANGIBLE ASSETS

NOTE C – GOODWILL AND OTHER INTANGIBLE ASSETS

The gross carrying amount of goodwill and other intangible assets and the related accumulated amortization for intangible assets subject to amortization and accumulated write-offs of goodwill are as follows:

	As of
	September 30, 2017					December 31, 2016
	Gross Carrying		Accumulated Amortization/			Gross Carrying		Accumulated Amortization/
(in millions)	Amount		Write-offs			Amount		Write-offs
Amortizable intangible assets
Technology-related	$	9,388	$	(4,774	)	$	9,123	$	(4,468	)
Patents	514		(375		)	529		(374		)
Other intangible assets	1,625		(807		)	1,583		(722		)
	$	11,527	$	(5,956	)	$	11,235	$	(5,564	)
Unamortizable intangible assets
Goodwill	$	16,782	$	(9,900	)	$	16,578	$	(9,900	)
In-process research and development (IPR&D)	92		—			92		—
Technology-related	120		—			120		—
	$	16,994	$	(9,900	)	$	16,790	$	(9,900	)

Our technology-related intangible assets that are not subject to amortization represent technical processes, intellectual property and/or institutional understanding acquired through business combinations that are fundamental to the on-going operations of our business and have no limit to their useful life. Our technology-related intangible assets that are not subject to amortization are comprised primarily of certain acquired balloon and other technology, which is foundational to our continuing operations within the Cardiovascular market and other markets within interventional medicine. We assess our indefinite-lived intangible assets at least annually for impairment and reassess their classification as indefinite-lived assets. We assess qualitative factors to determine whether the existence of events and circumstances indicate that it is more likely than not that our indefinite-lived intangible assets are impaired. If we conclude that it is more likely than not that the asset is impaired, we then determine the fair value of the intangible asset and perform the quantitative impairment test by comparing the fair value with the carrying value in accordance with FASB ASC Topic 350, Intangibles - Goodwill and Other.

In the third quarter of 2017, we performed our annual impairment test of all IPR&D projects and our indefinite-lived core technology assets and determined that the assets were not impaired. In addition, we verified the classification as indefinite-lived assets continues to be appropriate.

The following represents our goodwill balance by global reportable segment:

(in millions)	Cardiovascular		Rhythm Management		MedSurg		Total
Balance as of December 31, 2016	$	3,513	$	290	$	2,875	$	6,678
Impact of foreign currency fluctuations and other changes in carrying amount	11		1		1		13
Goodwill acquired	191		—		—		191
Balance as of September 30, 2017	$	3,715	$	291	$	2,876	$	6,882

Goodwill Impairment Testing

We test our goodwill balances during the second quarter of each year for impairment, or more frequently if indicators are present or changes in circumstances suggest an impairment may exist. In the second quarter of 2017, we performed our annual goodwill impairment test for all of our reporting units and concluded the fair value of each reporting unit exceeded its carrying value.

The following is a rollforward of accumulated goodwill write-offs by global reportable segment:

(in millions)	Cardiovascular			Rhythm Management			MedSurg			Total
Accumulated write-offs as of December 31, 2016	$	(1,479	)	$	(6,960	)	$	(1,461	)	$	(9,900	)
Goodwill written off	—			—			—			—
Accumulated write-offs as of September 30, 2017	$	(1,479	)	$	(6,960	)	$	(1,461	)	$	(9,900	)

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Fair Value Measurements

9 Months Ended

Sep. 30, 2017

Fair Value Disclosures [Abstract]

FAIR VALUE MEASUREMENTS

NOTE D – FAIR VALUE MEASUREMENTS

Derivative Instruments and Hedging Activities

We address market risk from changes in foreign currency exchange rates and interest rates through a risk management program which includes the use of derivative financial instruments. We operate this program pursuant to documented corporate risk management policies and do not enter into derivative transactions for speculative purposes. Our derivative instruments do not subject our earnings or cash flows to material risk as the gains or losses on these derivatives generally offset losses or gains recognized on the hedged item. We manage our concentration of counterparty credit risk by limiting acceptable counterparties to major financial institutions with investment grade credit ratings, limiting the amount of credit exposure to individual counterparties and by actively monitoring counterparty credit ratings and the amount of individual credit exposure. We also employ master netting arrangements that limit the risk of counterparty non-payment on a particular settlement date to the net gain that would have otherwise been received from the counterparty. Although not completely eliminated, we do not consider the risk of counterparty default to be significant as a result of these protections. Further, none of our derivative instruments are subject to collateral or other security arrangements, nor do they contain provisions that are dependent on our credit ratings from any credit rating agency.

The success of our risk management program depends, in part, on forecasted transactions denominated primarily in British pound sterling, Euro and Japanese yen. We may experience unanticipated currency exchange gains or losses to the extent the actual activity is different than forecasted. In addition, changes in currency exchange rates related to any unhedged transactions may impact our earnings and cash flows.

Our risk from changes in currency exchange rates consists primarily of monetary assets and liabilities, forecasted intercompany and third-party transactions, and net investments in certain subsidiaries. We manage currency exchange rate risk at a consolidated level to reduce the cost of hedging by taking advantage of offsetting transactions. We employ derivative instruments, primarily forward currency contracts, to reduce the risk to our earnings and cash flows associated with changes in currency exchange rates.

Certain of our currency derivative instruments designated as cash flow hedges under FASB ASC Topic 815, Derivatives and Hedging are intended to protect the U.S. dollar value of forecasted transactions. The effective portion of gains or losses on a derivative instrument designated as a cash flow hedge is recorded in other comprehensive income (OCI), net of tax, until the underlying third-party transaction occurs. When the related third-party transaction occurs we recognize the gain or loss to earnings within the Cost of products sold caption of our unaudited condensed consolidated statements of operations. In the event the hedging relationship is no longer effective, or if the hedged forecasted transaction becomes no longer probable, we reclassify the amount of gains or losses on the derivative instrument designated as a cash flow hedge to earnings at that time.

We also use currency forward contracts that are not part of designated hedging relationships under FASB ASC Topic 815 as a part of our strategy to manage our exposure to currency exchange risk related to monetary assets and liabilities and related forecasted transactions. These currency forward contracts have an original time to maturity consistent with the hedged currency transaction exposures, generally less than one year and are marked-to-market with changes in fair value recorded to earnings and reflected within the Other, net caption of our unaudited condensed consolidated statements of operations.

Our interest rate risk relates primarily to U.S. dollar borrowings, partially offset by U.S. dollar cash investments. We use interest rate derivative instruments to manage our earnings and cash flow exposure to changes in interest rates. Under these agreements we and the counterparty, at specified intervals, exchange the difference between fixed and floating interest amounts calculated by reference to an agreed upon notional principal amount. We designate these derivative instruments either as fair value or cash flow hedges under FASB ASC Topic 815.

The changes in the fair value of interest rate derivatives designated as fair value hedges and the changes in the fair value of the underlying hedged debt instrument generally offset and are recorded within the Interest expense caption of our unaudited condensed consolidated statements of operations. To the extent the hedge relationship is effective, we record the changes in the fair value of interest rate derivatives designated as cash flow hedges within the Accumulated other comprehensive income, net of tax, caption of our unaudited condensed consolidated balance sheets until the underlying hedged item occurs, at which time we recognize the gain or loss within interest expense. We record the ineffective portion, if any, of our interest rate derivatives designated as cash flow hedges directly to earnings within interest expense and in the event the hedged cash flow does not occur, or it becomes no longer probable that it will occur we reclassify the amount of gains or losses to earnings at that time.

We are amortizing the realized gains or losses from interest rate derivative instruments previously designated as fair value hedges and the effective portion of gains or losses from interest rate derivative contracts previously designated as cash flow hedges into earnings as a component of interest expense over the remaining term of the hedged item, in accordance with FASB ASC Topic 815.

The following table presents the contractual amounts of our derivative instruments outstanding:

(in millions)	Topic 815 designation	As of
		September 30, 2017		December 31, 2016
Forward currency contracts	Cash flow hedge	$	3,218	$	2,271
Forward currency contracts	Non-designated	2,111		1,830
Total Notional Outstanding		$	5,329	$	4,101

The remaining time to maturity as of September 30, 2017 is within 60 months for all designated forward currency contracts and generally less than one year for all non-designated forward currency contracts. We had no interest rate derivative instruments outstanding as of September 30, 2017 and December 31, 2016.

The following presents the effect of our derivative instruments designated as cash flow hedges under FASB ASC Topic 815 on our accompanying unaudited condensed consolidated statements of operations:

(in millions)	Location in Unaudited Condensed Consolidated Statements of Operations	Effective Amount Recognized in OCI								Effective Amount Reclassified from OCI into Earnings
		Pre-Tax Gain (Loss)			Tax Benefit (Expense)		Gain (Loss) Net of Tax			Pre-Tax (Gain) Loss			Tax Benefit (Expense)		(Gain) Loss Net of Tax
Three Months Ended September 30, 2017
Forward currency contracts	Cost of products sold	$	(24	)	$	9	$	(15	)	$	(14	)	$	5	$	(9	)
Three Months Ended September 30, 2016
Forward currency contracts	Cost of products sold	$	(22	)	$	8	$	(14	)	$	(27	)	$	10	$	(17	)
Nine Months Ended September 30, 2017
Forward currency contracts	Cost of products sold	$	(88	)	$	32	$	(56	)	$	(68	)	$	25	$	(43	)
Interest rate derivative contracts	Interest expense	—			—		—			(1		)	—		(1		)
		$	(88	)	$	32	$	(56	)	$	(69	)	$	25	$	(44	)
Nine Months Ended September 30, 2016
Forward currency contracts	Cost of products sold	$	(180	)	$	65	$	(115	)	$	(107	)	$	38	$	(69	)

As of September 30, 2017, pre-tax net gains or losses for our derivative instruments designated, or previously designated, as currency hedge contracts under FASB ASC Topic 815 that may be reclassified to earnings within the next twelve months are presented below:

(in millions)	Location in Unaudited Condensed Consolidated Statements of Operations	Amount of Pre-Tax Gain (Loss) that may be Reclassified to Earnings
Fair value hedge contracts	Interest expense	$	12
Cash flow hedge contracts	Interest expense	1
Cash flow hedge contracts	Cost of products sold	(30		)

Net gains and losses on currency hedge contracts not designated as hedging instruments offset by net gains and losses from currency transaction exposures are presented below:

(in millions)	Location in Unaudited Condensed Consolidated Statements of Operations
		Three Months Ended						Nine Months Ended
		September 30,						September 30,
		2017			2016			2017			2016
Net gain (loss) on currency hedge contracts	Other, net	$	(13	)	$	(7	)	$	(25	)	$	(74	)
Net gain (loss) on currency transaction exposures	Other, net	9			1			13			64
Net currency exchange gain (loss)		$	(4	)	$	(6	)	$	(12	)	$	(10	)

Fair Value Measurements

FASB ASC Topic 815 requires all derivative instruments to be recognized at their fair values as either assets or liabilities on the balance sheet. We determine the fair value of our derivative instruments using the framework prescribed by FASB ASC Topic 820, Fair Value Measurements and Disclosures, by considering the estimated amount we would receive or pay to transfer these instruments at the reporting date when taking into account current currency exchange rates and interest rates, the creditworthiness of the counterparty for unrealized gain positions and our own creditworthiness for unrealized loss positions. In certain instances, we may utilize financial models to measure fair value of our derivative instruments. In doing so, we use inputs that include quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, other observable inputs for the asset or liability, and inputs derived principally from, or corroborated by, observable market data by correlation or other means.

The following are the balances of our derivative assets and liabilities:

	Location in Unaudited Condensed Consolidated Balance Sheets (1)	As of
		September 30,		December 31,
(in millions)		2017		2016
Derivative Assets:
Designated Derivative Instruments
Forward currency contracts	Other current assets	$	7	$	98
Forward currency contracts	Other long-term assets	59		65
		66		163
Non-Designated Derivative Instruments
Forward currency contracts	Other current assets	17		36
Total Derivative Assets		$	83	$	199
Derivative Liabilities:
Designated Derivative Instruments
Forward currency contracts	Other current liabilities	$	38	$	3
Forward currency contracts	Other long-term liabilities	25		4
		63		7
Non-Designated Derivative Instruments
Forward currency contracts	Other current liabilities	29		19
Total Derivative Liabilities		$	92	$	26

(1) We classify derivative assets and liabilities as current when the remaining term of the derivative contract is one year or less.

On a recurring basis, we measure certain financial assets and financial liabilities at fair value based upon quoted market prices, where available. Where quoted market prices or other observable inputs are not available, we apply valuation techniques to estimate fair value. FASB ASC Topic 820 establishes a three-level valuation hierarchy for disclosure of fair value measurements. The categorization of financial assets and financial liabilities within the valuation hierarchy is based upon the lowest level of input that is significant to the measurement of fair value. The three levels of the hierarchy are defined as follows:

• Level 1 – Inputs to the valuation methodology are quoted market prices for identical assets or liabilities.

• Level 2 – Inputs to the valuation methodology are other observable inputs, including quoted market prices for similar assets or liabilities and market-corroborated inputs.

• Level 3 – Inputs to the valuation methodology are unobservable inputs based on management’s best estimate of inputs market participants would use in pricing the asset or liability at the measurement date, including assumptions about risk.

Assets and liabilities measured at fair value on a recurring basis consist of the following:

	As of
	September 30, 2017								December 31, 2016
(in millions)	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Assets
Money market and government funds	$	27	$	—	$	—	$	27	$	42	$	—	$	—	$	42
Available-for-sale securities	32		—		—		32		20		—		—		20
Forward currency contracts	—		83		—		83		—		199		—		199
	$	59	$	83	$	—	$	142	$	62	$	199	$	—	$	261
Liabilities
Forward currency contracts	$	—	$	92	$	—	$	92	$	—	$	26	$	—	$	26
Accrued contingent consideration	—		—		81		81		—		—		204		204
	$	—	$	92	$	81	$	173	$	—	$	26	$	204	$	230

Our investments in money market and government funds are classified within Level 1 of the fair value hierarchy because they are valued using quoted market prices. These investments are classified as cash and cash equivalents within our accompanying unaudited condensed consolidated balance sheets, in accordance with U.S. GAAP and our accounting policies. In addition to $27 million invested in money market and government funds as of September 30, 2017, we had $183 million in interest bearing and non-interest bearing bank accounts. In addition to $42 million invested in money market and government funds as of December 31, 2016, we had $19 million in short-term deposits and $135 million in interest bearing and non-interest bearing bank accounts.

Our recurring fair value measurements using significant unobservable inputs (Level 3) relate solely to our contingent consideration liability. Refer to Note B – Acquisitions and Strategic Investmentsfor a discussion of the changes in the fair value of our contingent consideration liability.

We hold certain assets and liabilities that are measured at fair value on a non-recurring basis in periods subsequent to initial recognition. The fair value of a cost method investment is not estimated if there are no identified events or changes in circumstances that may have a significant adverse effect on the fair value of the investment. Refer to Note B – Acquisitions and Strategic Investments for a discussion of our strategic investments.

The fair value of our outstanding debt obligations was $6.032 billion as of September 30, 2017 and $5.739 billion as of December 31, 2016, which was determined by using quoted market prices for our publicly registered senior notes, classified as Level 1 within the fair value hierarchy. Refer to Note E – Borrowings and Credit Arrangements for a discussion of our debt obligations.

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Borrowings and Credit Arrangements

9 Months Ended

Sep. 30, 2017

Debt Disclosure [Abstract]

BORROWINGS AND CREDIT ARRANGEMENTS

NOTE E – BORROWINGS AND CREDIT ARRANGEMENTS

We had total debt of $5.682 billion as of September 30, 2017 and $5.484 billion as of December 31, 2016. The debt maturity schedule for the significant components of our long-term debt obligations is presented below:

in millions, except interest rates	Maturity Date	As of
		September 30, 2017			December 31, 2016
January 2017 5.125% Notes	January 2017	$	—		$	250
October 2018 2.650% Notes	October 2018	600			600
January 2020 6.000% Notes	January 2020	850			850
May 2020 2.850% Notes	May 2020	600			600
May 2022 3.375% Notes	May 2022	500			500
May 2025 3.850% Notes	May 2025	750			750
October 2023 4.125% Notes	October 2023	450			450
November 2035 6.250% Notes	November 2035	350			350
January 2040 7.375% Notes	January 2040	300			300
August 2018 Term Loan	August 2018	—			150
August 2020 Term Loan	2018 - 2020	—			600
Debt Discount	2018 - 2040	(7		)	(8		)
Deferred Financing Costs	2018 - 2040	(20		)	(24		)
Interest Rate Swaps	2020 - 2023	42			51
Capital Lease Obligation	2018 - 2020	1			1
Long-term debt		$	4,416		$	5,420

Note: The table above does not include unamortized amounts related to interest rate contracts designated as cash flow hedges.

Revolving Credit Facility

On August 4, 2017, we entered into a $2.250 billion revolving credit facility (the 2017 Facility) with a global syndicate of commercial banks and terminated our previous $2.000 billion revolving credit facility (the 2015 Facility), which was scheduled to mature April 2020. The 2017 Facility matures on August 4, 2022. Eurodollar and multicurrency loans under the 2017 Facility bear interest at LIBOR plus an interest margin of between 0.90 percent and 1.50 percent, based on our corporate credit ratings and consolidated leverage ratio (1.10 percent as of September 30, 2017). Under the credit agreement for the 2017 Facility (the 2017 Credit Agreement), we are required to pay a facility fee (0.15 percent as of September 30, 2017) based on our credit ratings and the total amount of revolving credit commitment, regardless of usage of the 2017 Facility. This facility provides backing for the commercial paper program described below. There were no borrowings outstanding under the 2017 Facility as of September 30, 2017 and no borrowings outstanding under the 2015 Facility as of December 31, 2016.

The 2017 Facility agreement in place requires that we maintain certain financial covenants, as follows:

	Covenant Requirement as of September 30, 2017	Actual as of September 30, 2017
Maximum leverage ratio (1)	3.5 times	2.3 times

(1) Ratio of total debt to consolidated EBITDA, as defined by the credit agreement, for the preceding four consecutive fiscal quarters.

The 2017 Credit Agreement provides for an exclusion from the calculation of consolidated EBITDA, as defined by such agreement, through the agreed maturity, of any non-cash charges and up to $500 million in restructuring charges and restructuring-related expenses related to our current or future restructuring plans. As of September 30, 2017, we had $476 million of the restructuring charge exclusion remaining. In addition, any cash litigation payments (net of any cash litigation receipts), as defined by the 2017 Credit Agreement, are excluded from the calculation of consolidated EBITDA and any new debt issued to fund any tax deficiency payments is excluded from consolidated total debt, as defined in the 2017 Credit Agreement, provided that the sum of any excluded net cash litigation payments and any new debt issued to fund any tax deficiency payments does not exceed $2.624 billion in the aggregate. As of September 30, 2017, we had $2.358 billion of the combined legal and debt exclusion remaining.

As of and through September 30, 2017, we were in compliance with the required covenants.

Any inability to maintain compliance with these covenants could require us to seek to renegotiate the terms of our credit facility or seek waivers from compliance with these covenants, both of which could result in additional borrowing costs. Further, there can be no assurance that our lenders would agree to such new terms or grant such waivers.

Commercial Paper

In June 2017, we launched a commercial paper program that allowed the Company to have a maximum of $2.000 billion in commercial paper outstanding. In August 2017, we increased our commercial paper program’s maximum to $2.250 billion, in line with the increased size of the 2017 Facility. As of September 30, 2017 there was $1.260 billion of commercial paper outstanding. The commercial paper program is backed by the 2017 Facility. Commercial paper issued as of September 30, 2017 had a weighted average maturity of 29 days and a weighted average yield of 1.65 percent.

Term Loans

As of September 30, 2017, we had no amounts outstanding under our unsecured term loan facilities and$750 million outstanding as of December 31, 2016. These facilities include an unsecured term loan facility maturing August 2018 (August 2018 Term Loan) and an unsecured term loan facility maturing August 2020 (August 2020 Term Loan). The August 2018 Term Loan had $150 million outstanding as of December 31, 2016 and was fully repaid as of June 30, 2017. The August 2020 Term Loan had $600 million outstanding as of December 31, 2016 and was fully repaid as of September 30, 2017.

Senior Notes

We had senior notes outstanding of $4.400 billion as ofSeptember 30, 2017 and$4.650 billion as of December 31, 2016. On January 12, 2017, we used our existing credit facilities to repay the $250 million plus interest of our senior notes due in January 2017.Our senior notes were issued in public offerings, are redeemable prior to maturity and are not subject to any sinking fund requirements. Our senior notes are unsecured, unsubordinated obligations and rank on parity with each other. These notes are effectively junior to borrowings under our credit and security facility and to the extent borrowed by our subsidiaries, to liabilities of our subsidiaries (see Other Arrangements below).

Other Arrangements

As ofDecember 31, 2016, we maintained a$300 million credit and security facility secured by our U.S. trade receivables maturing on June 9, 2017. On February 7, 2017, we amended the terms of this credit and security facility, including increasing the facility size to$400 millionand extending the facility maturity date to February 2019. We had no borrowings outstanding under this facility as of September 30, 2017 and $60 million as of December 31, 2016.

We have accounts receivable factoring programs in certain European countries that we account for as sales under FASB ASC Topic 860, Transfers and Servicing. These agreements provide for the sale of accounts receivable to third parties, without recourse, of up to $449 million as of September 30, 2017. We have no retained interests in the transferred receivables, other than collection and administrative responsibilities and, once sold, the accounts receivable are no longer available to satisfy creditors in the event of bankruptcy. We de-recognized $167 million of receivables as of September 30, 2017 at an average interest rate of 1.6 percent and $152 million as of December 31, 2016 at an average interest rate of 1.8 percent.

In addition, we have uncommitted credit facilities with a commercial Japanese bank that provide for borrowings, promissory notes discounting and receivables factoring of up to 22.0 billion Japanese yen (approximately $196 million as of September 30, 2017). We de-recognized $162 million of notes receivable and factored receivables as of September 30, 2017 at an average interest rate of 1.3 percent and $149 million of notes receivable as of December 31, 2016 at an average interest rate of 1.6 percent. De-recognized accounts and notes receivable are excluded from trade accounts receivable, net in the accompanying unaudited condensed consolidated balance sheets.

We had outstanding letters of credit of $37 million as of September 30, 2017 and $44 million as of December 31, 2016, which consisted primarily of bank guarantees and collateral for workers' compensation insurance arrangements. As of September 30, 2017 and December 31, 2016, none of the beneficiaries had drawn upon the letters of credit or guarantees; accordingly, we did not recognize a related liability for our outstanding letters of credit in our consolidated balance sheets as of September 30, 2017 or December 31, 2016. We believe we will generate sufficient cash from operations to fund these arrangements and intend to fund these arrangements without drawing on the letters of credit.

As of and through September 30, 2017, we were in compliance with all the required covenants related to our debt obligations. For additional information regarding the terms of our debt agreements, refer to Note F - Borrowings and Credit Arrangements of the consolidated financial statements in our most recent Annual Report on Form 10-K.

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Restructuring Related Activities

9 Months Ended

Sep. 30, 2017

Restructuring and Related Activities [Abstract]

RESTRUCTURING-RELATED ACTIVITIES

NOTE F – RESTRUCTURING-RELATED ACTIVITIES

2016 Restructuring Plan

On June 6, 2016, our Board of Directors approved and we committed to a restructuring initiative (the 2016 Restructuring Plan). The 2016 Restructuring Plan is intended to develop global commercialization, technology and manufacturing capabilities in key growth markets, build on our Plant Network Optimization (PNO) strategy, which is intended to simplify our manufacturing plant structure by transferring certain production lines among facilities and expanding operational efficiencies in support of our operating income margin goals. Key activities under the 2016 Restructuring Plan include strengthening global infrastructure through evolving global real estate assets and workplaces, developing global commercial and technical competencies, enhancing manufacturing and distribution expertise in certain regions and continuing implementation of our ongoing PNO strategy. These activities were initiated in the second quarter of 2016 and are expected to be substantially completed by the end of 2018.

The 2016 Restructuring Plan is expected to result in total pre-tax charges of approximately $175 million to $225 million and approximately $160 million to $210 million of these charges are estimated to result in cash outlays. We have recorded related costs of $108 million since the inception of the plan through September 30, 2017 and recorded a portion of these expenses as restructuring charges and the remaining portion through other lines within our consolidated statements of operations.

The following table provides a summary of our estimates of costs associated with the 2016 Restructuring Plan through the end of 2018 by major type of cost:

Type of cost	Total Estimated Amount Expected to be Incurred
Restructuring charges:
Termination benefits	$65 million to $75 million
Other (1)	$5 million to $15 million
Restructuring-related expenses:
Other (2)	$105 million to $135 million
	$175 million to $225 million

(1) Consists primarily of consulting fees and costs associated with contract cancellations.

(2) Comprised of other costs directly related to the 2016 Restructuring Plan, including program management, accelerated depreciation and costs to transfer product lines among facilities.

We recorded restructuring charges pursuant to our restructuring plans of $12 million in the third quarter of 2017, $5 million in the third quarter of 2016, $17 million in the first nine months of2017 and $22 million in the first nine months of2016. In addition, we recorded expenses within other lines of our accompanying unaudited condensed consolidated statements of operations related to our restructuring initiatives of $14 million in the third quarter of 2017, $12 million in the third quarter of 2016, $44 million in the first nine months of2017 and $33 million in the first nine months of2016.

The following presents these costs (credits) by major type and line item within our accompanying unaudited condensed consolidated statements of operations:

Three Months Ended September 30, 2017
(in millions)	Termination Benefits		Accelerated Depreciation		Transfer Costs		Other		Total
Restructuring charges	$	11	$	—	$	—	$	1	$	12
Restructuring-related expenses:
Cost of products sold	—		—		11		—		11
Selling, general and administrative expenses	—		2		—		1		3
	—		2		11		1		14
	$	11	$	2	$	11	$	2	$	26

All charges incurred in the third quarter of 2017 were related to the 2016 Restructuring Plan.

Three Months Ended September 30, 2016
(in millions)	Termination Benefits		Transfer Costs		Fixed Asset Write-offs		Other		Total
Restructuring charges	$	1	$	—	$	2	$	2	$	5
Restructuring-related expenses:
Cost of products sold	—		8		—		—		8
Selling, general and administrative expenses	—		—		—		4		4
	—		8		—		4		12
	$	1	$	8	$	2	$	6	$	17
(in millions)	Termination Benefits		Transfer Costs		Fixed Asset Write-offs		Other		Total
2016 Restructuring Plan	$	1	$	3	$	—	$	3	$	7
2014 Restructuring Plan	—		5		2		3		10
	$	1	$	8	$	2	$	6	$	17

Nine Months Ended September 30, 2017
(in millions)	Termination Benefits		Accelerated Depreciation		Transfer Costs		Other		Total
Restructuring charges	$	14	$	—	$	—	$	3	$	17
Restructuring-related expenses:
Cost of products sold	—		—		35		—		35
Selling, general and administrative expenses	—		5		—		4		9
	—		5		35		4		44
	$	14	$	5	$	35	$	7	$	61

All charges incurred in the first nine months of2017 were related to the 2016 Restructuring Plan.

Nine Months Ended September 30, 2016
(in millions)	Termination Benefits			Accelerated Depreciation		Transfer Costs		Fixed Asset Write-offs		Other		Total
Restructuring charges	$	16		$	—	$	—	$	2	$	4	$	22
Restructuring-related expenses:
Cost of products sold	—			—		20		—		—		20
Selling, general and administrative expenses	—			4		—		—		9		13
	—			4		20		—		9		33
	$	16		$	4	$	20	$	2	$	13	$	55
(in millions)	Termination Benefits			Accelerated Depreciation		Transfer Costs		Fixed Asset Write-offs		Other		Total
2016 Restructuring Plan	$	19		$	—	$	4	$	—	$	2	$	25
2014 Restructuring Plan	(3		)	4		16		2		11		30
	$	16		$	4	$	20	$	2	$	13	$	55

Termination benefits represent amounts incurred pursuant to our ongoing benefit arrangements and amounts for “one-time” involuntary termination benefits and have been recorded in accordance with FASB ASC Topic 712,Compensation - Nonretirement Postemployment Benefits and FASBASC Topic 420,Exit or Disposal Cost Obligations. Other restructuring costs, which represent primarily consulting fees and costs related to contract cancellations, are being recorded as incurred in accordance with FASB ASC Topic 420. Accelerated depreciation is being recorded over the adjusted remaining useful life of the related assets and program management and production line transfer costs are being recorded as incurred.

As of September 30, 2017, we incurred cumulative restructuring charges related to our 2016 Restructuring Plan of $45 million and restructuring-related charges of $63 million since we committed to the plan. The following presents these costs by major type:

(in millions)	2016 Restructuring Plan
Termination benefits	$	38
Other	7
Total restructuring charges	45
Accelerated depreciation	7
Transfer costs	50
Other	6
Restructuring-related expenses	63
	$	108

We made cash payments of $51 million in the first nine months of2017 associated with our 2016 Restructuring Plan, and as of September 30, 2017, we had made total cash payments of $78 million related to our 2016 Restructuring Plan since committing to the plan. These payments were made using cash generated from operations and are comprised of the following:

(in millions)	2016 Restructuring Plan
Nine Months Ended September 30, 2017
Termination benefits	$	12
Transfer costs	35
Other	4
	$	51
Program to Date
Termination benefits	$	20
Transfer costs	50
Other	8
	$	78

Our restructuring liability is primarily comprised of accruals for termination benefits. The following is a rollforward of the termination benefit liability associated with our 2016 Restructuring Plan, which is reported as a component of accrued expenses included in our accompanying unaudited condensed consolidated balance sheets:

(in millions)	2016 Restructuring Plan
Accrued as of December 31, 2016	$	16
Charges (credits)	14
Cash payments	(12		)
Accrued as of September 30, 2017	$	18

In addition to our accrual for termination benefits, we had an $8 million liability as of September 30, 2017 and $6 million as of December 31, 2016 for other restructuring-related items.

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Supplemental Balance Sheet Information

9 Months Ended

Sep. 30, 2017

Supplemental Balance Sheet Information [Abstract]

Supplemental Balance Sheet Disclosures

NOTE G – SUPPLEMENTAL BALANCE SHEET INFORMATION

Components of selected captions in our accompanying unaudited condensed consolidated balance sheets are as follows:

Trade accounts receivable, net

	As of
(in millions)	September 30, 2017			December 31, 2016
Accounts receivable	$	1,580		$	1,579
Less: allowance for doubtful accounts	(81		)	(73		)
Less: allowance for sales returns	(29		)	(34		)
	$	1,470		$	1,472

The following is a rollforward of our allowance for doubtful accounts:

	Three Months Ended September 30,						Nine Months Ended September 30,
(in millions)	2017			2016			2017			2016
Beginning balance	$	74		$	80		$	73		$	75
Net charges to expenses	9			(1		)	14			5
Utilization of allowances	(2		)	(4		)	(6		)	(5		)
Ending balance	$	81		$	75		$	81		$	75

Inventories

	As of
(in millions)	September 30, 2017		December 31, 2016
Finished goods	$	674	$	625
Work-in-process	108		94
Raw materials	295		236
	$	1,077	$	955

Other current assets

	As of
(in millions)	September 30, 2017		December 31, 2016
Prepaid expenses	$	72	$	58
Restricted cash	449		243
Other	124		240
	$	645	$	541

Property, plant and equipment, net

	As of
(in millions)	September 30, 2017		December 31, 2016
Land	$	93	$	91
Buildings and improvements	1,056		981
Equipment, furniture and fixtures	3,139		2,955
Capital in progress	297		338
	4,585		4,365
Less: accumulated depreciation	2,907		2,735
	$	1,678	$	1,630

Depreciation expense was $71 million for the third quarter of 2017, $67 million for the third quarter of 2016, $198 million for the first nine months of2017 and $193 million for the first nine months of2016.

Accrued expenses

	As of
(in millions)	September 30, 2017		December 31, 2016
Legal reserves	$	1,355	$	1,062
Payroll and related liabilities	560		572
Accrued contingent consideration	28		63
Other	608		615
	$	2,551	$	2,312

Other long-term liabilities

	As of
(in millions)	September 30, 2017		December 31, 2016
Accrued income taxes	$	842	$	781
Legal reserves	335		961
Accrued contingent consideration	53		141
Other	508		455
	$	1,738	$	2,338

Accrued warranties

We offer warranties on certain of our product offerings. The majority of our warranty liability relates to implantable devices offered by our Cardiac Rhythm Management (CRM) business, which include defibrillator and pacemaker systems. Our CRM products come with a standard limited warranty covering the replacement of these devices. We offer a full warranty for a portion of the period post-implant and a partial warranty for a period of time thereafter. We estimate the costs that we may incur under our warranty programs based on the number of units sold, historical and anticipated rates of warranty claims and cost per claim and record a liability equal to these estimated costs as cost of products sold at the time the product sale occurs. We reassess the adequacy of our recorded warranty liabilities on a quarterly basis and adjust these amounts as necessary. The current portion of our warranty accrual is included in other accrued expenses in the table above and the non-current portion of our warranty accrual is included in other long-term liabilities in the table above. Changes in our product warranty accrual consisted of the following:

	Nine Months Ended September 30,
(in millions)	2017			2016
Beginning Balance	$	22		$	23
Provision	20			16
Settlements/reversals	(18		)	(19		)
Ending Balance	$	24		$	20

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Income Taxes

9 Months Ended

Sep. 30, 2017

Income Tax Disclosure [Abstract]

INCOME TAXES

NOTE H – INCOME TAXES

Our effective tax rate from continuing operations is presented below:

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2017		2016		2017		2016
Effective tax rate from continuing operations	8.5	%	11.2	%	(2.0	)%	(152.4	)%

The change in our reported tax rates for the third quarter and first nine months of2017, as compared to the same periods in 2016, relates primarily to the impact of certain receipts and charges that are taxed at different rates than our effective tax rate, including intangible asset impairment charges, acquisition-related items, restructuring and restructuring-related items, investment impairment-related items, litigation-related items and amortization expense, as well as the impact of certain discrete tax items.

As of September 30, 2017, we had $1.128 billion of gross unrecognized tax benefits, of which a net $1.039 billion, if recognized, would affect our effective tax rate. As of December 31, 2016, we had $1.095 billion of gross unrecognized tax benefits, of which a net $1.006 billion, if recognized, would affect our effective tax rate.

We have received Notices of Deficiency from the Internal Revenue Service (IRS) reflecting proposed audit adjustments for Guidant Corporation for its 2001 through 2006 tax years and for Boston Scientific Corporation for its 2006 and 2007 tax years. The total incremental tax liability asserted by the IRS for the applicable periods is $1.162 billion plus interest. The primary issue in dispute for all years is the transfer pricing associated with the technology license agreements between domestic and foreign subsidiaries of Guidant. In addition, the IRS has proposed adjustments in connection with the financial terms of our Transaction Agreement with Abbott Laboratories pertaining to the sale of Guidant's vascular intervention business to Abbott in April 2006. During 2014, we received a Revenue Agent Report from the IRS reflecting significant proposed audit adjustments to our 2008, 2009 and 2010 tax years based upon the same transfer pricing methodologies that the IRS applied to our 2001 through 2007 tax years.

We do not agree with the transfer pricing methodologies applied by the IRS or its resulting assessment. We have filed petitions with the U.S. Tax Court (Tax Court) contesting the Notices of Deficiency for the 2001 through 2007 tax years in challenge and submitted a letter to the IRS Office of Appeals (IRS Appeals) protesting the Revenue Agent Report for the 2008 through 2010 tax years and requesting an administrative appeal hearing. The issues in dispute were scheduled to be heard in Tax Court in late July 2016. On July 19, 2016, we entered into a Stipulation of Settled Issues with the IRS intended to resolve all of the aforementioned transfer pricing issues, as well as the issues related to our transaction with Abbott, for the 2001 through 2007 tax years. The Stipulation of Settled Issues is contingent upon IRS Office of Appeals applying the same basis of settlement to all transfer pricing issues for the Company’s 2008, 2009 and 2010 tax years as well as review by the United States Congress Joint Committee on Taxation. In October 2016, we reached an agreement in principle with the IRS Appeals as to the resolution of transfer pricing issues in 2008, 2009 and 2010 tax years, subject to additional calculations of tax as well as documentation to memorialize our agreement.

In the event that the conditions in the Stipulation of Settled Items are satisfied, we expect to make net tax payments of approximately $275 million, plus interest, through the date of payment. If finalized, payments related to the resolution are expected in the next nine months. We believe that our income tax reserves associated with these matters are adequate as of September 30, 2017 and we do not expect to recognize any additional charges related to the resolution of this controversy. However, the final resolution of these issues is contingent and if the Stipulation of Settled Issues is not finalized, it could have a material impact on our financial condition, results of operations, or cash flows.

We recognize interest and penalties related to income taxes as a component of income tax expense. We had $633 million accrued for gross interest and penalties as of September 30, 2017 and $572 million as of December 31, 2016. We recognized net tax expense related to interest and penalties of $14 million during the third quarter of 2017 and $13 million in the third quarter of 2016, $40 million during the first nine months of2017 and $35 million during the first nine months of2016.

It is reasonably possible that within the next 12 months we will resolve multiple issues including transfer pricing and transactional-related issues with foreign, federal and state taxing authorities, in which case we could record a reduction in our balance of unrecognized tax benefits of up to approximately $757 million.

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Commitments and Contingencies

9 Months Ended

Sep. 30, 2017

Commitments and Contingencies Disclosure [Abstract]

COMMITMENTS AND CONTINGENCIES

NOTE I – COMMITMENTS AND CONTINGENCIES

The medical device market in which we primarily participate is largely technology driven. As a result, intellectual property rights, particularly patents and trade secrets, play a significant role in product development and differentiation. Over the years, there has been litigation initiated against us by others, including our competitors, claiming that our current or former product offerings infringe patents owned or licensed by them. Intellectual property litigation is inherently complex and unpredictable. In addition, competing parties frequently file multiple suits to leverage patent portfolios across product lines, technologies and geographies and to balance risk and exposure between the parties. In some cases, several competitors are parties in the same proceeding or in a series of related proceedings or litigate multiple features of a single class of devices. These forces frequently drive settlement not only for individual cases, but also for a series of pending and potentially related and unrelated cases. Although monetary and injunctive relief is typically sought, remedies and restitution are generally not determined until the conclusion of the trial court proceedings and can be modified on appeal. Accordingly, the outcomes of individual cases are difficult to time, predict or quantify and are often dependent upon the outcomes of other cases in other geographies.

During recent years, we successfully negotiated closure of several long-standing legal matters and have received favorable rulings in several other matters, however, there continues to be outstanding intellectual property litigation. Adverse outcomes in one or more of these matters could have a material adverse effect on our ability to sell certain products and on our operating margins, financial position, results of operations and/or liquidity.

In the normal course of business, product liability, securities and commercial claims are asserted against us. Similar claims may be asserted against us in the future related to events not known to management at the present time. We maintain an insurance policy providing limited coverage against securities claims and we are substantially self-insured with respect to product liability claims and fully self-insured with respect to intellectual property infringement claims. The absence of significant third-party insurance coverage increases our potential exposure to unanticipated claims or adverse decisions. Product liability claims, securities and commercial litigation and other legal proceedings in the future, regardless of their outcome, could have a material adverse effect on our financial position, results of operations and/or liquidity.

In addition, like other companies in the medical device industry, we are subject to extensive regulation by national, state and local government agencies in the United States and other countries in which we operate. From time to time we are the subject of qui tam actions and governmental investigations often involving regulatory, marketing and other business practices. These qui tam actions and governmental investigations could result in the commencement of civil and criminal proceedings, substantial fines, penalties and administrative remedies and have a material adverse effect on our financial position, results of operations and/or liquidity.

In accordance with FASB ASC Topic 450, Contingencies, we accrue anticipated costs of settlement, damages, losses for product liability claims and, under certain conditions, costs of defense, based on historical experience or to the extent specific losses are probable and estimable. Otherwise, we expense these costs as incurred. If the estimate of a probable loss is a range and no amount within the range is more likely, we accrue the minimum amount of the range.

Our accrual for legal matters that are probable and estimable was $1.690 billion as of September 30, 2017 and $2.023 billion as of December 31, 2016 and includes certain estimated costs of settlement, damages and defense. The net litigation-related charges recorded in the first nine months of 2017 and 2016 primarily include amounts related to transvaginal surgical mesh product liability cases and claims. We continue to assess certain litigation and claims to determine the amounts, if any, that management believes will be paid as a result of such claims and litigation and, therefore, additional losses may be accrued and paid in the future, which could materially adversely impact our operating results, cash flows and/or our ability to comply with our debt covenants.

In management's opinion, we are not currently involved in any legal proceedings other than those disclosed in our most recent Annual Report on Form 10-K, our Quarterly Reports on Form 10-Q for the Quarters ended March 31, 2017 and June 30, 2017, and those specifically identified below, which, individually or in the aggregate, could have a material adverse effect on our financial condition, operations and/or cash flows. Unless included in our legal accrual or otherwise indicated below, a range of loss associated with any individual material legal proceeding cannot be estimated.

Patent Litigation

On May 19, 2005, G. David Jang, M.D. filed suit against us alleging breach of contract relating to certain patent rights covering stent technology. The suit was filed in the U.S. District Court for the Central District of California seeking monetary damages and rescission of contract. After a Markman ruling relating to the Jang patent rights, Dr. Jang stipulated to the dismissal of certain claims alleged in the complaint with a right to appeal and the parties subsequently agreed to settle the other claims. In May 2007, Dr. Jang filed an appeal with respect to the remaining patent claims and in July 2008, the Court of Appeals vacated the District Court's consent judgment and remanded the case back to the District Court for further clarification. In August 2011, the District Court entered a stipulated judgment that we did not infringe the Jang patent. Dr. Jang filed an appeal on September 21, 2011 and on August 22, 2012, the Court of Appeals vacated the District Court's judgment and remanded the case to the District Court for further proceedings. On July 8, 2015, a jury found that our Express™ Stent family did not literally infringe a Jang patent, but that the stents infringed under the doctrine of equivalents. The court reserved judgment until the conclusion of further proceedings related to the doctrine of equivalents finding. On September 29, 2015, the court ruled that our Express™ Stent family did not infringe under the doctrine of equivalents and, on October 30, 2015, the court entered judgment in our favor. On November 25, 2015, Dr. Jang filed a motion for judgment as a matter of law on literal infringement and/or for a new trial. On February 3, 2016, the court denied Dr. Jang’s motion for a new trial and judgment as a matter of law. Dr. Jang filed a notice of appeal. On September 29, 2017, the United States Court of Appeals for the Federal Circuit affirmed the judgment that our Express Stent did not infringe the Jang patents and the Company did not owe Dr. Jang any payments.

On April 19, 2016, a subsidiary of Boston Scientific filed suit against Edwards Lifesciences Corporation in the United States District Court for the Central District of California for patent infringement. We allege that Edwards’ aortic valve delivery systems infringe eight of our catheter related patents. On October 13, 2016, Edwards filed a petition for inter partes review of one asserted patent with the USPTO, Patent Trial and Appeal Board. On April 21, 2017, the USPTO denied the petition. On April 19 and 20, 2017, Edwards filed multiple inter partes review petitions against the patents in suit. On September 8, 2017, the court granted a stay of the action pending an inter partes review of the patents in suit.

Product Liability Litigation

As of October 25, 2017, approximately 48,500 product liability cases or claims related to transvaginal surgical mesh products designed to treat stress urinary incontinence and pelvic organ prolapse have been asserted against us. The pending cases are in various federal and state courts in the United States and include eight putative class actions. There were also approximately 20 cases in Canada, inclusive of one certified and three putative class actions, and fewer than 25 claims in the United Kingdom. Generally, the plaintiffs allege personal injury associated with use of our transvaginal surgical mesh products. The plaintiffs assert design and manufacturing claims, failure to warn, breach of warranty, fraud, violations of state consumer protection laws and loss of consortium claims. Over 3,100 of the cases have been specially assigned to one judge in state court in Massachusetts. On February 7, 2012, the Judicial Panel on Multi-District Litigation (MDL) established MDL-2326 in the United States District Court for the Southern District of West Virginia and transferred the federal court transvaginal surgical mesh cases to MDL-2326 for coordinated pretrial proceedings. During the fourth quarter of 2013, we received written discovery requests from certain state attorneys general offices regarding our transvaginal surgical mesh products. We have responded to those requests. As of October 25, 2017, we have entered into master settlement agreements in principle or are in final stages of entering one with certain plaintiffs' counsel to resolve an aggregate of approximately 44,000 cases and claims. These master settlement agreements provide that the settlement and distribution of settlement funds to participating claimants are conditional upon, among other things, achieving minimum required claimant participation thresholds. Of the approximately 44,000 cases and claims, approximately 15,500 have met the conditions of the settlement and are final. All settlement agreements were entered into solely by way of compromise and without any admission or concession by us of any liability or wrongdoing.

We have established a product liability accrual for known and estimated future cases and claims asserted against us as well as with respect to the actions that have resulted in verdicts against us and the costs of defense thereof associated with our transvaginal surgical mesh products. While we believe that our accrual associated with this matter is adequate, changes to this accrual may be required in the future as additional information becomes available. While we continue to engage in discussions with plaintiffs’ counsel regarding potential resolution of pending cases and claims and intend to vigorously contest the cases and claims asserted against us that do not settle, the final resolution of the cases and claims is uncertain and could have a material impact on our results of operations, financial condition and/or liquidity. Initial trials involving our transvaginal surgical mesh products have resulted in both favorable and unfavorable judgments for us. We do not believe that the judgment in any one trial is representative of potential outcomes of all cases or claims related to our transvaginal surgical mesh products.

Governmental Investigations and Qui Tam Matters

On May 5, 2014, we were served with a subpoena from the United States Department of Health and Human Services, Office of the Inspector General. The subpoena seeks information relating to the launch of the Cognis™ and Teligen™ line of devices in 2008, the performance of those devices from 2007 to 2009 and the operation of the Physician Guided Learning Program. We are cooperating with this request. On May 6, 2016, a qui tam lawsuit in this matter was unsealed in the United States District Court for the District of Minnesota. At the same time, we learned that the U.S. government and the State of California had earlier declined to intervene in that lawsuit on April 15, 2016. The complaint was served on us on July 21, 2016. On October 7, 2016, the plaintiff/relator served an amended complaint that dropped the allegations relating to the Physician Guided Learning Program. We filed a motion to dismiss the amended complaint on December 7, 2016 and the court heard our motion to dismiss on April 5, 2017. On August 29, 2017, the Court granted the motion to dismiss, without prejudice, and on September 19, 2017, the relator filed a Second Amended Complaint.

Other Proceedings

In June of 2016, Guidant asserted three arbitrations claims, two of which remain pending, related to three insurance policies for indemnity arising out of previously incurred and satisfied liabilities tied to allegedly defective cardiac rhythm management devices, which Guidant had manufactured. Guidant has claimed indemnities against such liabilities under insurance policies which it purchased for the 2004 policy year. One of these claims was resolved in September 2017.

Matters Concluded Since December 31, 2016

On September 27, 2010, Boston Scientific Scimed, Inc., Boston Scientific Ltd., Endovascular Technologies, Inc. and we filed suit against Taewoong Medical, Co., Ltd., Standard Sci-Tech, Inc., EndoChoice, Inc. and Sewoon Medical Co., Ltd for infringement of three patents on stents for use in the GI system (the Pulnev and Hankh patents) and against Cook Medical Inc. (and related entities) for infringement of the same three patents and an additional patent (the Thompson patent). The suit was filed in the United States District Court for the District of Massachusetts seeking monetary damages and injunctive relief. In December 2010, we amended our complaint to add infringement of six additional Pulnev patents. In January 2011, the defendants filed a counterclaim of invalidity and unenforceability. In September 2011, we amended the complaint to add Chek-Med Systems d/b/a GI Supply as a defendant. On December 22, 2016 the following defendants were dismissed: Taewoong Medical Co., Ltd., GI Supply, Inc., Standard Sci-Tech, Inc., EndoChoice, Inc. and Sewoon Medical Co. The remaining parties reached a settlement and on March 21, 2017, the case was dismissed.

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Weighted Average Shares Outstanding

9 Months Ended

Sep. 30, 2017

Earnings Per Share [Abstract]

Weighted Average Number Of Shares Outstanding [Text Block]

NOTE J – WEIGHTED AVERAGE SHARES OUTSTANDING

	Three Months Ended September 30,		Nine Months Ended September 30,
(in millions)	2017	2016	2017	2016
Weighted average shares outstanding - basic	1,372.0	1,360.6	1,369.1	1,356.1
Net effect of common stock equivalents	22.1	19.1	22.7	18.8
Weighted average shares outstanding - assuming dilution	1,394.1	1,379.7	1,391.8	1,374.9

The impact of stock options outstanding with exercise prices greater than the average fair market value of our common stock was immaterial for all periods presented.

We issued approximately two million shares of our common stock in the third quarter of 2017, three million shares of our common stock in the third quarter of 2016, 11 million shares of our common stock in the first nine months of2017 and 15 million shares of our common stock in the first nine months of2016, following the exercise of underlying stock options, vesting of deferred stock units or purchases under our employee stock purchase plan. We did not repurchase any shares of our common stock during the first nine months of2017 or 2016.

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Segment Reporting

9 Months Ended

Sep. 30, 2017

Segment Reporting [Abstract]

SEGMENT REPORTING

NOTE K – SEGMENT REPORTING

We have three reportable segments comprised of Cardiovascular, Rhythm Management and MedSurg, which represent an aggregation of our operating segments.

Each of our reportable segments generates revenue from the sale of medical devices. We measure and evaluate our reportable segments based on segment net sales and operating income, excluding the impact of changes in foreign currency. Sales generated from reportable segments, as well as operating results of reportable segments and corporate expenses, are calculated based on internally-derived standard currency exchange rates, which may differ from year to year and do not include intersegment profits.

We restated segment information for the prior period based on our internally-derived standard currency exchange rates as of January 1, 2017, used for the current period in order to remove the impact of foreign currency exchange fluctuation. We exclude from segment operating income certain corporate-related expenses and certain transactions or adjustments that our chief operating decision maker considers to be non-operational, such as intangible asset impairment charges, acquisition-related items, restructuring and restructuring-related items, litigation-related items and amortization expense. Although we exclude these amounts from segment operating income, they are included in reported consolidated operating income (loss) and are included in the reconciliation below.

A reconciliation of the totals reported for the reportable segments to the applicable line items in our accompanying unaudited condensed consolidated statements of operations is as follows:

	Three Months Ended September 30,						Nine Months Ended September 30,
(in millions)	2017			2016			2017			2016
				(restated)						(restated)
Net sales
Interventional Cardiology	$	589		$	565		$	1,806		$	1,705
Peripheral Interventions	268			256			812			764
Cardiovascular	857			821			2,618			2,469
Cardiac Rhythm Management	461			465			1,417			1,380
Electrophysiology	71			60			203			180
Rhythm Management	532			525			1,620			1,560
Endoscopy	402			365			1,194			1,065
Urology and Pelvic Health	272			247			819			732
Neuromodulation	153			138			449			395
MedSurg	827			750			2,462			2,192
Net sales allocated to reportable segments	2,216			2,096			6,700			6,221
Impact of foreign currency fluctuations	6			9			(60		)	(26		)
	$	2,222		$	2,105		$	6,640		$	6,195
Income (loss) before income taxes
Cardiovascular	$	243		$	247		$	756		$	751
Rhythm Management	103			90			319			231
MedSurg	272			234			781			682
Operating income allocated to reportable segments	618			571			1,856			1,664
Corporate expenses and currency exchange	(60		)	(60		)	(215		)	(162		)
Intangible asset impairment charges, acquisition-related, restructuring- and restructuring-related, and litigation-related net credits (charges)	(42		)	(27		)	(250		)	(787		)
Amortization expense	(139		)	(136		)	(424		)	(408		)
Operating income (loss)	377			348			967			307
Other expense, net	(68		)	(91		)	(261		)	(219		)
Income (loss) before income taxes	$	309		$	257		$	706		$	88

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Changes in Other Comprehensive Income

9 Months Ended

Sep. 30, 2017

Changes in Other Comprehensive Income [Abstract]

Comprehensive Income (Loss) Note [Text Block]

NOTE L – CHANGES IN OTHER COMPREHENSIVE INCOME

The following table provides the reclassifications out of other comprehensive income. Amounts in the chart below are presented net of tax.

Three Months Ended September 30, 2017
(in millions)	Foreign Currency Translation Adjustments			Unrealized Gains/Losses on Derivative Financial Instruments			Unrealized Gains/Losses on Available-for-Sale Securities			Defined Benefit Pension Items/Other			Total
Balance as of June 30, 2017	$	(58	)	$	31		$	(4	)	$	(22	)	$	(53	)
Other comprehensive income (loss) before reclassifications	25			(15		)	—			—			10
Amounts reclassified from accumulated other comprehensive income	—			(9		)	1			—			(8		)
Net current-period other comprehensive income	25			(24		)	1			—			2
Balance as of September 30, 2017	$	(33	)	$	7		$	(3	)	$	(22	)	$	(51	)

Three Months Ended September 30, 2016
(in millions)	Foreign Currency Translation Adjustments			Unrealized Gains/Losses on Derivative Financial Instruments			Defined Benefit Pension Items/Other			Total
Balance as of June 30, 2016	$	(59	)	$	(1	)	$	(10	)	$	(70	)
Other comprehensive income (loss) before reclassifications	2			(14		)	(1		)	(13		)
Amounts reclassified from accumulated other comprehensive income	—			(17		)	1			(16		)
Net current-period other comprehensive income	2			(31		)	—			(29		)
Balance as of September 30, 2016	$	(57	)	$	(32	)	$	(10	)	$	(99	)

Nine Months Ended September 30, 2017
(in millions)	Foreign Currency Translation Adjustments			Unrealized Gains/Losses on Derivative Financial Instruments			Unrealized Gains/Losses on Available-for-Sale Securities			Defined Benefit Pension Items/Other			Total
Balance as of December 31, 2016	$	(79	)	$	107		$	(6	)	$	(21	)	$	1
Other comprehensive income (loss) before reclassifications	46			(56		)	—			(2		)	(12		)
Amounts reclassified from accumulated other comprehensive income	—			(44		)	3			1			(40		)
Net current-period other comprehensive income	46			(100		)	3			(1		)	(52		)
Balance as of September 30, 2017	$	(33	)	$	7		$	(3	)	$	(22	)	$	(51	)

Nine Months Ended September 30, 2016
(in millions)	Foreign Currency Translation Adjustments			Unrealized Gains/Losses on Derivative Financial Instruments			Defined Benefit Pension Items/Other			Total
Balance as of December 31, 2015	$	(54	)	$	152		$	(10	)	$	88
Other comprehensive income (loss) before reclassifications	(3		)	(115		)	(4		)	(122		)
Amounts reclassified from accumulated other comprehensive income	—			(69		)	4			(65		)
Net current-period other comprehensive income	(3		)	(184		)	—			(187		)
Balance as of September 30, 2016	$	(57	)	$	(32	)	$	(10	)	$	(99	)

Refer to Note D – Fair Value Measurements in this Quarterly Report on Form 10-Q for further detail on the reclassifications related to derivatives.

The income tax impact of the amounts in other comprehensive income for defined benefit and pension items before reclassification were immaterial for the third quarter and first nine months of2017 and 2016. The gains and losses on defined benefit and pension related items reclassified from accumulated other comprehensive income were reduced by immaterial income tax impacts for the third quarter and first nine months of2017 and 2016. The gains and losses on available-for-sale securities were reduced by immaterial income tax impacts for the third quarter and first nine months of2017.

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New Accounting Pronouncements

9 Months Ended

Sep. 30, 2017

Accounting Policies [Abstract]

New Accounting Pronouncements and Changes in Accounting Principles [Text Block]

NOTE M – NEW ACCOUNTING PRONOUNCEMENTS

From time to time, new accounting pronouncements are issued by the FASB or other standard setting bodies. Recently issued standards typically do not require adoption until a future effective date. Prior to their effective date, we evaluate the pronouncements to determine the potential effects of adoption on our unaudited condensed consolidated financial statements.

Standards Implemented since December 31, 2016

ASC Update No. 2016-09

In March 2016, the FASB issued ASC Update No. 2016-09, Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting. The purpose of Update No. 2016-09 is to simplify accounting for share-based payment transactions, such as, the accounting for income taxes, statutory tax withholding requirements, forfeitures and statements of cash flows presentation. Update No. 2016-09 was effective for annual periods beginning after December 15, 2016, including interim periods within those annual periods.

We adopted Update No. 2016-09 prospectively in the first quarter of 2017 and, as such, no prior periods were adjusted. We previously recorded income tax benefits or deficiencies to additional paid-in capital; however, Update No. 2016-09 requires that all tax benefits or deficiencies be recorded to the provision for income taxes. In the first nine months of2017, we recorded an income tax benefit of $37 million. The actual impact to future periods will depend on the price of our stock, number of stock options exercised and other factors that are difficult to predict. In the first quarter of 2017, a cumulative effect adjustment of $76 million was recorded to retained earnings upon adoption for windfall tax benefits not previously recognized.

ASC Update No. 2016-17

In October 2016, the FASB issued ASC Update No. 2016-17, Consolidation (Topic 810): Interests Held through Related Parties That Are under Common Control. The purpose of Update No. 2016-17 is to amend the consolidation guidance from Update No. 2015-02 on how a reporting entity that is the single decision maker of a variable interest entity (VIE) should treat indirect interests in the entity held through related parties that are under common control with the reporting entity when determining whether it is the primary beneficiary of that VIE. The amendment requires that a single decision maker include those indirect interests held through related parties that are under common control with the single decision maker on a proportionate basis consistent with indirect interests held through other related parties. Update No. 2016-17 was effective for annual periods beginning after December 15, 2016, including interim periods within those annual periods. We adopted Update No. 2016-17 in the first quarter of 2017. The adoption of Update No. 2016-17 did not have a material impact on our financial position or results of operations.

ASC Update No. 2016-19

In December 2016, the FASB issued ASC Update No. 2016-19, Technical Corrections and Improvements. The purpose of Update No. 2016-19 is to clarify or correct unintended applications of guidance that affect a wide variety of topics in the ASC. Most of the amendments in this Update did not require transition guidance and were effective immediately. Six amendments in this update clarified guidance or corrected references in the ASC and were effective for annual periods beginning after December 15, 2016, including interim periods within these annual periods. We adopted these amendments in the first quarter of 2017. The adoption of Update No. 2016-19 did not have a material impact on our financial position or results of operations.

ASC Update No. 2017-04

In January 2017, the FASB issued ASC Update No. 2017-04, Intangibles - Goodwill and Other Topics (Topic 350): Simplifying the Test for Goodwill Impairment. The purpose of Update No. 2017-04 is to reduce the cost and complexity of evaluating goodwill for impairment. It eliminates the need for entities to calculate the impaired fair value of goodwill by assigning the fair value of a reporting unit to all of its assets and liabilities as if that reporting unit had been acquired in a business combination. Under this amendment, an entity will perform its goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An impairment charge is recognized for the amount by which the carrying value exceeds the reporting unit's fair value. We elected to early adopt Update No. 2017-04 prospectively in the first quarter of 2017. The adoption of Update No. 2017-04 did not have a material impact on our financial position or results of operations.

Standards to be Implemented

ASC Update No. 2014-09

In May 2014, the FASB issued ASC Update No. 2014-09, Revenue from Contracts with Customers (Topic 606), which has been subsequently updated. The purpose of Update No. 2014-09 is to provide enhancements to the quality and consistency of how revenue is reported while also improving comparability in the financial statements of companies using U.S. GAAP and International Financial Reporting Standards. The core principle requires entities to recognize revenue in a manner that depicts the transfer of goods or services to customers in amounts that reflect the consideration an entity expects to be entitled to in exchange for those goods or services. Topic 606, as amended, becomes effective for annual periods beginning after December 15, 2017, at which point we plan to adopt the standard. We currently plan to adopt the standard using the “modified retrospective method.” Under that method, we will apply the rules to contracts that are not completed as of January 1, 2018, and recognize the cumulative effect of initially applying the standard as an adjustment to the opening balance of retained earnings.

We have reached conclusions on our key accounting assessments related to the standard and are finalizing our accounting policies. Based on our initial assessment, we believe the timing of revenue recognition for our primary revenue stream, single-use medical device sales, will not materially change. We are still finalizing our accounting policies related to variable consideration and assessing disclosure requirements. Upon adopting Topic 606, we will provide additional disclosures in the notes to the consolidated financial statements, specifically related to disaggregated revenue, contract balances and performance obligations.

In 2017, we are implementing new internal controls as part of our efforts to adopt the new revenue recognition standard. In the third quarter of 2017, we provided global training to our finance team on Topic 606. In the fourth quarter of 2017, we will perform a simulation of our new accounting processes and procedures to prepare our team for the month-end close process upon adoption of Topic 606. We will require new internal controls to address risks associated with applying the five-step model, specifically related to judgments made in connection to variable consideration and applying the constraint. Additionally, we will establish monitoring controls to identify new sales arrangements and changes in our business environment that could impact our current accounting assessment. During the fourth quarter of 2017, we expect to finalize our impact assessment and redesign impacted processes, policies and controls.

ASC Update No. 2016-01

In January 2016, the FASB issued ASC Update No. 2016-01, Financial Instruments - Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities. The purpose of Update No. 2016-01 is to improve financial reporting for financial instruments by reducing the number of items recorded to other comprehensive income. It requires entities to measure equity investments that do not result in consolidation and are not accounted for under the equity method at fair value with changes recognized in net income. However, an entity may choose to measure equity investments that do not have readily determinable fair values at cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer. It simplifies the impairment assessment of equity investments without readily determinable fair values by requiring a qualitative assessment to identify impairment. It also requires separate presentation of financial assets and financial liabilities by measurement category and form of financial asset and liability. Update No. 2016-01 is effective for annual periods beginning after December 15, 2017, including interim periods within those annual periods. Early adoption of certain provisions is permitted. We are unable to determine the effect that the adoption will have on our financial position and results of operations, as it will depend on our equity investments at the adoption date and their future performance.

ASC Update No. 2016-02

In February 2016, the FASB issued ASC Update No. 2016-02, Leases (Topic 842). The purpose of Update No. 2016-02 is to increase the transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet, including those previously classified as operating leases under current U.S. GAAP and disclosing key information about leasing arrangements. Update No. 2016-02 is effective for annual periods beginning after December 15, 2018, including interim periods within those annual periods. Early adoption is permitted, and a modified retrospective approach is required for adoption. While we are still in the process of determining the effect that the new standard will have on our financial position and results of operations, we expect to recognize additional assets and corresponding liabilities on our consolidated balance sheets, as a result of our operating lease portfolio as disclosed in Note G - Lease and Other Purchase Obligations in our most recent Annual Report on Form 10-K.

ASC Update No. 2016-13

In June 2016, the FASB issued ASC Update No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. The purpose of Update No. 2016-13 is to replace the current incurred loss impairment methodology for financial assets measured at amortized cost with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information, including forecasted information, to develop credit loss estimates. Update No. 2016-13 is effective for annual periods beginning after December 15, 2019, including interim periods within those annual periods. Early adoption is permitted for annual periods beginning after December 15, 2018. We are in the process of determining the effect that the adoption will have on our financial position and results of operations.

ASC Update No. 2016-15

In August 2016, the FASB issued ASC Update No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments. The purpose of Update No. 2016-15 is to reduce the diversity in practice in presentation and classification of the following items within the statement of cash flows: debt prepayments or debt extinguishment costs, settlement of zero coupon debt instruments or other debt instruments with coupon interest rates that are insignificant in relation to the effective interest rate of the borrowing, contingent consideration payments made after a business combination, proceeds from the settlement of insurance claims, proceeds from the settlement of corporate-owned life insurance policies, distributions received from equity method investments and beneficial interests in securitization transactions. It also addresses classification of transactions that have characteristics of more than one class of cash flows. Update No. 2016-15 is effective for annual periods beginning after December 15, 2017, and a retrospective transition method is required. We intend to early adopt the standard in the fourth quarter of 2017. Upon adoption, we expect our 2015 cash provided by operating activities to increase by approximately $45 million with a corresponding decrease in our cash provided by financing activities related to classification of debt repayment costs incurred in connection with our 2015 debt financing activities. We do not expect the adoption to have a material impact on our consolidated statements of cash flows for 2016 or 2017.

ASC Update No. 2016-16

In October 2016, the FASB issued ASC Update No. 2016-16, Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory. The purpose of Update No. 2016-16 is to allow an entity to recognize the income tax consequences of an intra-entity transfer of an asset other than inventory when the transfer occurs, as opposed to waiting until the asset is sold to a third party, or impaired. Update No. 2016-16 is effective for annual periods beginning after December 15, 2017, including interim periods within those annual periods. Early adoption is permitted as of the beginning of an annual period for which financial statements have not been issued or made available for issuance. We are in the process of determining the effect that adoption will have on our financial position and results of operations.

ASC Update No. 2016-18

In November 2016, the FASB issued ASC Update No. 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash. The purpose of Update No. 2016-18 is to clarify guidance and presentation related to restricted cash in the statements of cash flows as well as increased disclosure requirements. It requires beginning-of-period and end-of-period total amounts shown on the statements of cash flows to include cash and cash equivalents as well as restricted cash and restricted cash equivalents. Update No. 2016-18 is effective for annual periods beginning after December 15, 2017, including interim reporting periods within those annual periods. Early adoption is permitted. We are in the process of determining the effect the adoption will have on our consolidated statements of cash flows.

ASC Update No. 2017-01

In January 2017, the FASB issued ASC Update No. 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business. The purpose of Update No. 2017-01 is to change the definition of a business to assist entities with evaluating when a set of transferred assets and activities is a business. Update No. 2017-01 is effective for annual periods beginning after December 15, 2017, including interim periods within those annual periods. Early adoption is permitted as of the beginning of an annual or interim period for which financial statements have not been issued or made available for issuance. The adoption of Update No. 2017-01 is not expected to have a material impact on our financial position or results of operations.

ASC Update No. 2017-09

In May 2017, the FASB issued ASC Update No. 2017-09, Compensation - Stock Compensation (Topic 718): Scope of Modification Accounting. The purpose of Update No. 2017-09 is to provide guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting. Update No. 2017-09 is effective for annual periods beginning after December 15, 2017, including interim periods within those annual periods. Early adoption is permitted as of the beginning of an annual or interim period for which financial statements have not been issued or made available for issuance. The adoption of Update No. 2017-09 is not expected to have a material impact on our financial position or results of operations.

ASC Update No. 2017-10

In May 2017, the FASB issued ASC Update No. 2017-10, Service Concession Arrangements (Topic 853): Determining the Customer of the Operation Services (a consensus of the FASB Emerging Issues Task Force). The purpose of Update No. 2017-10 is to address the diversity in practice as to how an operating entity determines the customer of the operation services in a service concession agreement. Update No. 2017-10 is effective the same time as FASB ASC Topic 606 and requires the same transition method elected for FASB ASC Topic 606. The adoption of Update No. 2017-10 is not expected to have a material impact on our financial position or results of operations.

ASC Update No. 2017-12

In August 2017, the FASB issued ASC Update No. 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities. The purpose of Update No. 2017-12 is to simplify the application of hedge accounting and better align financial reporting of hedging relationships with risk management objectives. Update No. 2017-12 is effective for annual periods beginning after December 15, 2018, including interim periods within those annual periods. Early adoption is permitted, including adoption in an interim period. The adoption of Update No. 2017-12 is not expected to have a material impact on our financial position or results of operations.

No other new accounting pronouncements, issued or effective, during the period had, or are expected to have, a material impact on our condensed consolidated financial statements.

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Goodwill and Other Intangible Assets Goodwill (Policies)

9 Months Ended

Sep. 30, 2017

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and Intangible Assets, Goodwill, Policy [Policy Text Block]

Our technology-related intangible assets that are not subject to amortization represent technical processes, intellectual property and/or institutional understanding acquired through business combinations that are fundamental to the on-going operations of our business and have no limit to their useful life. Our technology-related intangible assets that are not subject to amortization are comprised primarily of certain acquired balloon and other technology, which is foundational to our continuing operations within the Cardiovascular market and other markets within interventional medicine. We assess our indefinite-lived intangible assets at least annually for impairment and reassess their classification as indefinite-lived assets. We assess qualitative factors to determine whether the existence of events and circumstances indicate that it is more likely than not that our indefinite-lived intangible assets are impaired. If we conclude that it is more likely than not that the asset is impaired, we then determine the fair value of the intangible asset and perform the quantitative impairment test by comparing the fair value with the carrying value in accordance with FASB ASC Topic 350, Intangibles - Goodwill and Other.

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Fair Value Measurements Fair Value Measurements (Policies)

9 Months Ended

Sep. 30, 2017

Fair Value Disclosures [Abstract]

Fair Value Measurement, Policy [Policy Text Block]

FASB ASC Topic 815 requires all derivative instruments to be recognized at their fair values as either assets or liabilities on the balance sheet. We determine the fair value of our derivative instruments using the framework prescribed by FASB ASC Topic 820, Fair Value Measurements and Disclosures, by considering the estimated amount we would receive or pay to transfer these instruments at the reporting date when taking into account current currency exchange rates and interest rates, the creditworthiness of the counterparty for unrealized gain positions and our own creditworthiness for unrealized loss positions. In certain instances, we may utilize financial models to measure fair value of our derivative instruments. In doing so, we use inputs that include quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, other observable inputs for the asset or liability, and inputs derived principally from, or corroborated by, observable market data by correlation or other means.

Derivatives, Policy [Policy Text Block]

Our derivative instruments do not subject our earnings or cash flows to material risk as the gains or losses on these derivatives generally offset losses or gains recognized on the hedged item. We manage our concentration of counterparty credit risk by limiting acceptable counterparties to major financial institutions with investment grade credit ratings, limiting the amount of credit exposure to individual counterparties and by actively monitoring counterparty credit ratings and the amount of individual credit exposure. We also employ master netting arrangements that limit the risk of counterparty non-payment on a particular settlement date to the net gain that would have otherwise been received from the counterparty. Although not completely eliminated, we do not consider the risk of counterparty default to be significant as a result of these protections. Further, none of our derivative instruments are subject to collateral or other security arrangements, nor do they contain provisions that are dependent on our credit ratings from any credit rating agency.

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Restructuring Related Activities Restructuring Related Activities (Policies)

9 Months Ended

Sep. 30, 2017

Restructuring and Related Activities [Abstract]

Costs Associated with Exit or Disposal Activities or Restructurings, Policy [Policy Text Block]

Termination benefits represent amounts incurred pursuant to our ongoing benefit arrangements and amounts for “one-time” involuntary termination benefits and have been recorded in accordance with FASB ASC Topic 712,Compensation - Nonretirement Postemployment Benefits and FASBASC Topic 420,Exit or Disposal Cost Obligations. Other restructuring costs, which represent primarily consulting fees and costs related to contract cancellations, are being recorded as incurred in accordance with FASB ASC Topic 420. Accelerated depreciation is being recorded over the adjusted remaining useful life of the related assets and program management and production line transfer costs are being recorded as incurred.

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Commitments and Contingencies Commitments and Contingencies (Policies)

9 Months Ended

Sep. 30, 2017

Commitments and Contingencies Disclosure [Abstract]

Legal Costs, Policy [Policy Text Block]

In accordance with FASB ASC Topic 450, Contingencies, we accrue anticipated costs of settlement, damages, losses for product liability claims and, under certain conditions, costs of defense, based on historical experience or to the extent specific losses are probable and estimable. Otherwise, we expense these costs as incurred. If the estimate of a probable loss is a range and no amount within the range is more likely, we accrue the minimum amount of the range.

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New Accounting Pronouncements (Policies)

9 Months Ended

Sep. 30, 2017

Accounting Policies [Abstract]

ASC Update No. 2017-09, Compensation - Stock Compensation (Topic 718): Scope of Modification Accounting [Policy Text Block]

ASC Update No. 2017-09

In May 2017, the FASB issued ASC Update No. 2017-09, Compensation - Stock Compensation (Topic 718): Scope of Modification Accounting. The purpose of Update No. 2017-09 is to provide guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting. Update No. 2017-09 is effective for annual periods beginning after December 15, 2017, including interim periods within those annual periods. Early adoption is permitted as of the beginning of an annual or interim period for which financial statements have not been issued or made available for issuance. The adoption of Update No. 2017-09 is not expected to have a material impact on our financial position or results of operations.

ASC Update No. 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business [Policy Text Block]

ASC Update No. 2017-01

In January 2017, the FASB issued ASC Update No. 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business. The purpose of Update No. 2017-01 is to change the definition of a business to assist entities with evaluating when a set of transferred assets and activities is a business. Update No. 2017-01 is effective for annual periods beginning after December 15, 2017, including interim periods within those annual periods. Early adoption is permitted as of the beginning of an annual or interim period for which financial statements have not been issued or made available for issuance. The adoption of Update No. 2017-01 is not expected to have a material impact on our financial position or results of operations.

ASC Update No. 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash [Policy Text Block]

ASC Update No. 2016-18

In November 2016, the FASB issued ASC Update No. 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash. The purpose of Update No. 2016-18 is to clarify guidance and presentation related to restricted cash in the statements of cash flows as well as increased disclosure requirements. It requires beginning-of-period and end-of-period total amounts shown on the statements of cash flows to include cash and cash equivalents as well as restricted cash and restricted cash equivalents. Update No. 2016-18 is effective for annual periods beginning after December 15, 2017, including interim reporting periods within those annual periods. Early adoption is permitted. We are in the process of determining the effect the adoption will have on our consolidated statements of cash flows.

Subsequent Events, Policy [Policy Text Block]

Subsequent Events

We evaluate events occurring after the date of our most recent accompanying unaudited condensed consolidated balance sheets for potential recognition or disclosure in our financial statements. We did not identify any material subsequent events requiring adjustment to our accompanying unaudited condensed consolidated financial statements (recognized subsequent events) for the three and nine months ended September 30, 2017. Those items requiring disclosure (unrecognized subsequent events) in the financial statements have been disclosed accordingly. Refer to Note B – Acquisitions and Strategic Investments and Note I – Commitments and Contingenciesfor more information.

ASC Topic 820, Fair Value Measurements and Disclosures

FASB ASC Topic 815 requires all derivative instruments to be recognized at their fair values as either assets or liabilities on the balance sheet. We determine the fair value of our derivative instruments using the framework prescribed by FASB ASC Topic 820, Fair Value Measurements and Disclosures, by considering the estimated amount we would receive or pay to transfer these instruments at the reporting date when taking into account current currency exchange rates and interest rates, the creditworthiness of the counterparty for unrealized gain positions and our own creditworthiness for unrealized loss positions. In certain instances, we may utilize financial models to measure fair value of our derivative instruments. In doing so, we use inputs that include quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, other observable inputs for the asset or liability, and inputs derived principally from, or corroborated by, observable market data by correlation or other means.

ASC Topic 815, Derivatives and Hedging

Our derivative instruments do not subject our earnings or cash flows to material risk as the gains or losses on these derivatives generally offset losses or gains recognized on the hedged item. We manage our concentration of counterparty credit risk by limiting acceptable counterparties to major financial institutions with investment grade credit ratings, limiting the amount of credit exposure to individual counterparties and by actively monitoring counterparty credit ratings and the amount of individual credit exposure. We also employ master netting arrangements that limit the risk of counterparty non-payment on a particular settlement date to the net gain that would have otherwise been received from the counterparty. Although not completely eliminated, we do not consider the risk of counterparty default to be significant as a result of these protections. Further, none of our derivative instruments are subject to collateral or other security arrangements, nor do they contain provisions that are dependent on our credit ratings from any credit rating agency.

ASC Topic 712, Compensation - Non-retirement Postemployment Benefits and ASC Topic 420, Exit or Disposal Cost Obligations

Termination benefits represent amounts incurred pursuant to our ongoing benefit arrangements and amounts for “one-time” involuntary termination benefits and have been recorded in accordance with FASB ASC Topic 712,Compensation - Nonretirement Postemployment Benefits and FASBASC Topic 420,Exit or Disposal Cost Obligations. Other restructuring costs, which represent primarily consulting fees and costs related to contract cancellations, are being recorded as incurred in accordance with FASB ASC Topic 420. Accelerated depreciation is being recorded over the adjusted remaining useful life of the related assets and program management and production line transfer costs are being recorded as incurred.

Legal Costs, Policy [Policy Text Block]

In accordance with FASB ASC Topic 450, Contingencies, we accrue anticipated costs of settlement, damages, losses for product liability claims and, under certain conditions, costs of defense, based on historical experience or to the extent specific losses are probable and estimable. Otherwise, we expense these costs as incurred. If the estimate of a probable loss is a range and no amount within the range is more likely, we accrue the minimum amount of the range.

ASC Update No. 2014-09, Revenue from Contracts with Customers (Topic 606) [Policy Text Block]

ASC Update No. 2014-09

In May 2014, the FASB issued ASC Update No. 2014-09, Revenue from Contracts with Customers (Topic 606), which has been subsequently updated. The purpose of Update No. 2014-09 is to provide enhancements to the quality and consistency of how revenue is reported while also improving comparability in the financial statements of companies using U.S. GAAP and International Financial Reporting Standards. The core principle requires entities to recognize revenue in a manner that depicts the transfer of goods or services to customers in amounts that reflect the consideration an entity expects to be entitled to in exchange for those goods or services. Topic 606, as amended, becomes effective for annual periods beginning after December 15, 2017, at which point we plan to adopt the standard. We currently plan to adopt the standard using the “modified retrospective method.” Under that method, we will apply the rules to contracts that are not completed as of January 1, 2018, and recognize the cumulative effect of initially applying the standard as an adjustment to the opening balance of retained earnings.

We have reached conclusions on our key accounting assessments related to the standard and are finalizing our accounting policies. Based on our initial assessment, we believe the timing of revenue recognition for our primary revenue stream, single-use medical device sales, will not materially change. We are still finalizing our accounting policies related to variable consideration and assessing disclosure requirements. Upon adopting Topic 606, we will provide additional disclosures in the notes to the consolidated financial statements, specifically related to disaggregated revenue, contract balances and performance obligations.

In 2017, we are implementing new internal controls as part of our efforts to adopt the new revenue recognition standard. In the third quarter of 2017, we provided global training to our finance team on Topic 606. In the fourth quarter of 2017, we will perform a simulation of our new accounting processes and procedures to prepare our team for the month-end close process upon adoption of Topic 606. We will require new internal controls to address risks associated with applying the five-step model, specifically related to judgments made in connection to variable consideration and applying the constraint. Additionally, we will establish monitoring controls to identify new sales arrangements and changes in our business environment that could impact our current accounting assessment. During the fourth quarter of 2017, we expect to finalize our impact assessment and redesign impacted processes, policies and controls.

ASC Update No. 2016-01, Financial Instruments [Policy Text Block]

ASC Update No. 2016-01

In January 2016, the FASB issued ASC Update No. 2016-01, Financial Instruments - Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities. The purpose of Update No. 2016-01 is to improve financial reporting for financial instruments by reducing the number of items recorded to other comprehensive income. It requires entities to measure equity investments that do not result in consolidation and are not accounted for under the equity method at fair value with changes recognized in net income. However, an entity may choose to measure equity investments that do not have readily determinable fair values at cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer. It simplifies the impairment assessment of equity investments without readily determinable fair values by requiring a qualitative assessment to identify impairment. It also requires separate presentation of financial assets and financial liabilities by measurement category and form of financial asset and liability. Update No. 2016-01 is effective for annual periods beginning after December 15, 2017, including interim periods within those annual periods. Early adoption of certain provisions is permitted. We are unable to determine the effect that the adoption will have on our financial position and results of operations, as it will depend on our equity investments at the adoption date and their future performance.

ASC Update No. 2016-02, Leases (Topic 842) [Policy Text Block]

ASC Update No. 2016-02

In February 2016, the FASB issued ASC Update No. 2016-02, Leases (Topic 842).

ASC Update No. 2016-09, Compensation- Stock Compensation (Topic 718) [Policy Text Block]

ASC Update No. 2016-09

In March 2016, the FASB issued ASC Update No. 2016-09, Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting. The purpose of Update No. 2016-09 is to simplify accounting for share-based payment transactions, such as, the accounting for income taxes, statutory tax withholding requirements, forfeitures and statements of cash flows presentation. Update No. 2016-09 was effective for annual periods beginning after December 15, 2016, including interim periods within those annual periods.

We adopted Update No. 2016-09 prospectively in the first quarter of 2017 and, as such, no prior periods were adjusted. We previously recorded income tax benefits or deficiencies to additional paid-in capital; however, Update No. 2016-09 requires that all tax benefits or deficiencies be recorded to the provision for income taxes. In the first nine months of2017, we recorded an income tax benefit of $37 million. The actual impact to future periods will depend on the price of our stock, number of stock options exercised and other factors that are difficult to predict. In the first quarter of 2017, a cumulative effect adjustment of $76 million was recorded to retained earnings upon adoption for windfall tax benefits not previously recognized.

ASC Update No. 2017-10, Service Concession Arrangements (Topic 853): Determining the Customer of the Operation Services (a consensus of the FASB Emerging Issues Task Force) [Policy Text Block]

ASC Update No. 2017-10

In May 2017, the FASB issued ASC Update No. 2017-10, Service Concession Arrangements (Topic 853): Determining the Customer of the Operation Services (a consensus of the FASB Emerging Issues Task Force). The purpose of Update No. 2017-10 is to address the diversity in practice as to how an operating entity determines the customer of the operation services in a service concession agreement. Update No. 2017-10 is effective the same time as FASB ASC Topic 606 and requires the same transition method elected for FASB ASC Topic 606. The adoption of Update No. 2017-10 is not expected to have a material impact on our financial position or results of operations.

ASC Update No. 2016-13 [Policy Text Block]

ASC Update No. 2016-13

In June 2016, the FASB issued ASC Update No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. The purpose of Update No. 2016-13 is to replace the current incurred loss impairment methodology for financial assets measured at amortized cost with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information, including forecasted information, to develop credit loss estimates. Update No. 2016-13 is effective for annual periods beginning after December 15, 2019, including interim periods within those annual periods. Early adoption is permitted for annual periods beginning after December 15, 2018. We are in the process of determining the effect that the adoption will have on our financial position and results of operations.

ASC Update No. 2016-15, Statement of Cash Flows [Policy Text Block]

ASC Update No. 2016-15

In August 2016, the FASB issued ASC Update No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments. The purpose of Update No. 2016-15 is to reduce the diversity in practice in presentation and classification of the following items within the statement of cash flows: debt prepayments or debt extinguishment costs, settlement of zero coupon debt instruments or other debt instruments with coupon interest rates that are insignificant in relation to the effective interest rate of the borrowing, contingent consideration payments made after a business combination, proceeds from the settlement of insurance claims, proceeds from the settlement of corporate-owned life insurance policies, distributions received from equity method investments and beneficial interests in securitization transactions. It also addresses classification of transactions that have characteristics of more than one class of cash flows. Update No. 2016-15 is effective for annual periods beginning after December 15, 2017, and a retrospective transition method is required. We intend to early adopt the standard in the fourth quarter of 2017. Upon adoption, we expect our 2015 cash provided by operating activities to increase by approximately $45 million with a corresponding decrease in our cash provided by financing activities related to classification of debt repayment costs incurred in connection with our 2015 debt financing activities. We do not expect the adoption to have a material impact on our consolidated statements of cash flows for 2016 or 2017.

ASU Update No. 2016-16, Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory [Policy Text Block]

ASC Update No. 2016-16

In October 2016, the FASB issued ASC Update No. 2016-16, Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory. The purpose of Update No. 2016-16 is to allow an entity to recognize the income tax consequences of an intra-entity transfer of an asset other than inventory when the transfer occurs, as opposed to waiting until the asset is sold to a third party, or impaired. Update No. 2016-16 is effective for annual periods beginning after December 15, 2017, including interim periods within those annual periods.

ASU Update No. 2016-17, Consolidation (Topic 810): Interests Held through Related Parties That Are under Common Control [Policy Text Block]

ASC Update No. 2016-17

In October 2016, the FASB issued ASC Update No. 2016-17, Consolidation (Topic 810): Interests Held through Related Parties That Are under Common Control. The purpose of Update No. 2016-17 is to amend the consolidation guidance from Update No. 2015-02 on how a reporting entity that is the single decision maker of a variable interest entity (VIE) should treat indirect interests in the entity held through related parties that are under common control with the reporting entity when determining whether it is the primary beneficiary of that VIE. The amendment requires that a single decision maker include those indirect interests held through related parties that are under common control with the single decision maker on a proportionate basis consistent with indirect interests held through other related parties. Update No. 2016-17 was effective for annual periods beginning after December 15, 2016, including interim periods within those annual periods. We adopted Update No. 2016-17 in the first quarter of 2017. The adoption of Update No. 2016-17 did not have a material impact on our financial position or results of operations.

ASC Update No. 2016-19, Technical Corrections and Improvements [Policy Text Block]

ASC Update No. 2016-19

In December 2016, the FASB issued ASC Update No. 2016-19, Technical Corrections and Improvements. The purpose of Update No. 2016-19 is to clarify or correct unintended applications of guidance that affect a wide variety of topics in the ASC. Most of the amendments in this Update did not require transition guidance and were effective immediately. Six amendments in this update clarified guidance or corrected references in the ASC and were effective for annual periods beginning after December 15, 2016, including interim periods within these annual periods. We adopted these amendments in the first quarter of 2017. The adoption of Update No. 2016-19 did not have a material impact on our financial position or results of operations.

ASC Update No. 2017-04, Intangibles - Goodwill and Other Topics (Topic 350): Simplifying the Test for Goodwill Impairment [Policy Text Block]

ASC Update No. 2017-04

In January 2017, the FASB issued ASC Update No. 2017-04, Intangibles - Goodwill and Other Topics (Topic 350): Simplifying the Test for Goodwill Impairment. The purpose of Update No. 2017-04 is to reduce the cost and complexity of evaluating goodwill for impairment. It eliminates the need for entities to calculate the impaired fair value of goodwill by assigning the fair value of a reporting unit to all of its assets and liabilities as if that reporting unit had been acquired in a business combination. Under this amendment, an entity will perform its goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An impairment charge is recognized for the amount by which the carrying value exceeds the reporting unit's fair value. We elected to early adopt Update No. 2017-04 prospectively in the first quarter of 2017. The adoption of Update No. 2017-04 did not have a material impact on our financial position or results of operations.

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Acquisitions and Strategic Investments (Tables)

9 Months Ended

Sep. 30, 2017

Business Acquisition [Line Items]

Business Combination, Components of Purchase Price [Table Text Block]

The components of the aggregate preliminary purchase price are as follows (in millions):

Payment for acquisition, net of cash acquired $ 392

Investment [Table Text Block]

The aggregate carrying amount of our strategic investments were comprised of the following categories:

	As of
(in millions)	September 30, 2017		December 31, 2016
Equity method investments	$	204	$	265
Cost method investments	69		20
Available-for-sale securities	32		20
Notes receivable	44		42
	$	349	$	347

Business Combination, Purchase Price Allocation Schedule [Table Text Block]

The following summarizes the preliminary purchase price allocation for the Symetis acquisition as of September 30, 2017

(in millions):

Goodwill	$	191
Amortizable intangible assets	278
Other assets acquired	26
Liabilities assumed	(103		)
	$	392

Business Acquisition, Purchase Price Allocation, Intangible Assets, Description [Table Text Block]

We allocated a portion of the purchase price to specific intangible asset categories as follows:

	Amount Assigned (in millions)		Amortization Period (in years)	Risk-Adjusted Discount Rates used in Purchase Price Allocation
Amortizable intangible assets:
Technology-related	$	268	13	24%
Other intangible assets	10		2-13	24%
	$	278

Rollforward of Fair Value of Contingent Consideration [Table Text Block]

Changes in the fair value of our contingent consideration liabilities were as follows (in millions):

Balance as of December 31, 2016	$	204
Fair value adjustments	(78		)
Contingent payments related to prior period acquisitions	(45		)
Balance as of September 30, 2017	$	81

Description of unobservable inputs used in Level 3 fair value measurements [Table Text Block]

The recurring Level 3 fair value measurements of our contingent consideration liabilities include the following significant unobservable inputs:

Contingent Consideration Liabilities	Fair Value as of September 30, 2017	Valuation Technique	Unobservable Input	Range
R&D and Commercialization-based Milestones	$31 million	Discounted Cash Flow	Discount Rate	2%
			Projected Year of Payment	2018 - 2021
Revenue-based Payments	$50 million	Discounted Cash Flow	Discount Rate	11% - 15%
			Projected Year of Payment	2017 - 2026

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Goodwill and Other Intangible Assets Goodwill (Tables)

9 Months Ended

Sep. 30, 2017

Goodwill and Intangible Assets Disclosure [Abstract]

Description of unobservable inputs used in Level 3 fair value measurements [Table Text Block]

The recurring Level 3 fair value measurements of our contingent consideration liabilities include the following significant unobservable inputs:

Contingent Consideration Liabilities	Fair Value as of September 30, 2017	Valuation Technique	Unobservable Input	Range
R&D and Commercialization-based Milestones	$31 million	Discounted Cash Flow	Discount Rate	2%
			Projected Year of Payment	2018 - 2021
Revenue-based Payments	$50 million	Discounted Cash Flow	Discount Rate	11% - 15%
			Projected Year of Payment	2017 - 2026

Schedule of Goodwill [Table Text Block]

The following represents our goodwill balance by global reportable segment:

(in millions)	Cardiovascular		Rhythm Management		MedSurg		Total
Balance as of December 31, 2016	$	3,513	$	290	$	2,875	$	6,678
Impact of foreign currency fluctuations and other changes in carrying amount	11		1		1		13
Goodwill acquired	191		—		—		191
Balance as of September 30, 2017	$	3,715	$	291	$	2,876	$	6,882

The gross carrying amount of goodwill and other intangible assets and the related accumulated amortization for intangible assets subject to amortization and accumulated write-offs of goodwill are as follows:

	As of
	September 30, 2017					December 31, 2016
	Gross Carrying		Accumulated Amortization/			Gross Carrying		Accumulated Amortization/
(in millions)	Amount		Write-offs			Amount		Write-offs
Amortizable intangible assets
Technology-related	$	9,388	$	(4,774	)	$	9,123	$	(4,468	)
Patents	514		(375		)	529		(374		)
Other intangible assets	1,625		(807		)	1,583		(722		)
	$	11,527	$	(5,956	)	$	11,235	$	(5,564	)
Unamortizable intangible assets
Goodwill	$	16,782	$	(9,900	)	$	16,578	$	(9,900	)
In-process research and development (IPR&D)	92		—			92		—
Technology-related	120		—			120		—
	$	16,994	$	(9,900	)	$	16,790	$	(9,900	)

The following is a rollforward of accumulated goodwill write-offs by global reportable segment:

(in millions)	Cardiovascular			Rhythm Management			MedSurg			Total
Accumulated write-offs as of December 31, 2016	$	(1,479	)	$	(6,960	)	$	(1,461	)	$	(9,900	)
Goodwill written off	—			—			—			—
Accumulated write-offs as of September 30, 2017	$	(1,479	)	$	(6,960	)	$	(1,461	)	$	(9,900	)

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Fair Value Measurements (Tables)

9 Months Ended

Sep. 30, 2017

Derivative [Line Items]

Schedule of Derivative Instruments [Table Text Block]

The following table presents the contractual amounts of our derivative instruments outstanding:

(in millions)	Topic 815 designation	As of
		September 30, 2017		December 31, 2016
Forward currency contracts	Cash flow hedge	$	3,218	$	2,271
Forward currency contracts	Non-designated	2,111		1,830
Total Notional Outstanding		$	5,329	$	4,101

Gains (losses) recognized in earnings for derivatives designed as hedging instruments

As of September 30, 2017, pre-tax net gains or losses for our derivative instruments designated, or previously designated, as currency hedge contracts under FASB ASC Topic 815 that may be reclassified to earnings within the next twelve months are presented below:

(in millions)	Location in Unaudited Condensed Consolidated Statements of Operations	Amount of Pre-Tax Gain (Loss) that may be Reclassified to Earnings
Fair value hedge contracts	Interest expense	$	12
Cash flow hedge contracts	Interest expense	1
Cash flow hedge contracts	Cost of products sold	(30		)

The following presents the effect of our derivative instruments designated as cash flow hedges under FASB ASC Topic 815 on our accompanying unaudited condensed consolidated statements of operations:

(in millions)	Location in Unaudited Condensed Consolidated Statements of Operations	Effective Amount Recognized in OCI								Effective Amount Reclassified from OCI into Earnings
		Pre-Tax Gain (Loss)			Tax Benefit (Expense)		Gain (Loss) Net of Tax			Pre-Tax (Gain) Loss			Tax Benefit (Expense)		(Gain) Loss Net of Tax
Three Months Ended September 30, 2017
Forward currency contracts	Cost of products sold	$	(24	)	$	9	$	(15	)	$	(14	)	$	5	$	(9	)
Three Months Ended September 30, 2016
Forward currency contracts	Cost of products sold	$	(22	)	$	8	$	(14	)	$	(27	)	$	10	$	(17	)
Nine Months Ended September 30, 2017
Forward currency contracts	Cost of products sold	$	(88	)	$	32	$	(56	)	$	(68	)	$	25	$	(43	)
Interest rate derivative contracts	Interest expense	—			—		—			(1		)	—		(1		)
		$	(88	)	$	32	$	(56	)	$	(69	)	$	25	$	(44	)
Nine Months Ended September 30, 2016
Forward currency contracts	Cost of products sold	$	(180	)	$	65	$	(115	)	$	(107	)	$	38	$	(69	)

Net foreign currency gain (loss) [Table Text Block]

Net gains and losses on currency hedge contracts not designated as hedging instruments offset by net gains and losses from currency transaction exposures are presented below:

(in millions)	Location in Unaudited Condensed Consolidated Statements of Operations
		Three Months Ended						Nine Months Ended
		September 30,						September 30,
		2017			2016			2017			2016
Net gain (loss) on currency hedge contracts	Other, net	$	(13	)	$	(7	)	$	(25	)	$	(74	)
Net gain (loss) on currency transaction exposures	Other, net	9			1			13			64
Net currency exchange gain (loss)		$	(4	)	$	(6	)	$	(12	)	$	(10	)

Classification of derivative assets and liabilities within level 2

The following are the balances of our derivative assets and liabilities:

	Location in Unaudited Condensed Consolidated Balance Sheets (1)	As of
		September 30,		December 31,
(in millions)		2017		2016
Derivative Assets:
Designated Derivative Instruments
Forward currency contracts	Other current assets	$	7	$	98
Forward currency contracts	Other long-term assets	59		65
		66		163
Non-Designated Derivative Instruments
Forward currency contracts	Other current assets	17		36
Total Derivative Assets		$	83	$	199
Derivative Liabilities:
Designated Derivative Instruments
Forward currency contracts	Other current liabilities	$	38	$	3
Forward currency contracts	Other long-term liabilities	25		4
		63		7
Non-Designated Derivative Instruments
Forward currency contracts	Other current liabilities	29		19
Total Derivative Liabilities		$	92	$	26

(1) We classify derivative assets and liabilities as current when the remaining term of the derivative contract is one year or less.

Assets and liabilities measured at fair value on a recurring basis

Assets and liabilities measured at fair value on a recurring basis consist of the following:

	As of
	September 30, 2017								December 31, 2016
(in millions)	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Assets
Money market and government funds	$	27	$	—	$	—	$	27	$	42	$	—	$	—	$	42
Available-for-sale securities	32		—		—		32		20		—		—		20
Forward currency contracts	—		83		—		83		—		199		—		199
	$	59	$	83	$	—	$	142	$	62	$	199	$	—	$	261
Liabilities
Forward currency contracts	$	—	$	92	$	—	$	92	$	—	$	26	$	—	$	26
Accrued contingent consideration	—		—		81		81		—		—		204		204
	$	—	$	92	$	81	$	173	$	—	$	26	$	204	$	230

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Borrowings and Credit Arrangements (Tables)

9 Months Ended

Sep. 30, 2017

Debt Disclosure [Abstract]

Summary Of Term Loan And Revolving Credit Facility Agreement Compliance With Debt Covenants [Table Text Block]

The 2017 Facility agreement in place requires that we maintain certain financial covenants, as follows:

	Covenant Requirement as of September 30, 2017	Actual as of September 30, 2017
Maximum leverage ratio (1)	3.5 times	2.3 times

(1) Ratio of total debt to consolidated EBITDA, as defined by the credit agreement, for the preceding four consecutive fiscal quarters.

Schedule of debt maturities

The debt maturity schedule for the significant components of our long-term debt obligations is presented below:

in millions, except interest rates	Maturity Date	As of
		September 30, 2017			December 31, 2016
January 2017 5.125% Notes	January 2017	$	—		$	250
October 2018 2.650% Notes	October 2018	600			600
January 2020 6.000% Notes	January 2020	850			850
May 2020 2.850% Notes	May 2020	600			600
May 2022 3.375% Notes	May 2022	500			500
May 2025 3.850% Notes	May 2025	750			750
October 2023 4.125% Notes	October 2023	450			450
November 2035 6.250% Notes	November 2035	350			350
January 2040 7.375% Notes	January 2040	300			300
August 2018 Term Loan	August 2018	—			150
August 2020 Term Loan	2018 - 2020	—			600
Debt Discount	2018 - 2040	(7		)	(8		)
Deferred Financing Costs	2018 - 2040	(20		)	(24		)
Interest Rate Swaps	2020 - 2023	42			51
Capital Lease Obligation	2018 - 2020	1			1
Long-term debt		$	4,416		$	5,420

Note: The table above does not include unamortized amounts related to interest rate contracts designated as cash flow hedges.

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Restructuring Related Activities (Tables)

9 Months Ended

Sep. 30, 2017

Restructuring and Related Cost [Line Items]

Restructuring and related costs

The following presents these costs (credits) by major type and line item within our accompanying unaudited condensed consolidated statements of operations:

Three Months Ended September 30, 2017
(in millions)	Termination Benefits		Accelerated Depreciation		Transfer Costs		Other		Total
Restructuring charges	$	11	$	—	$	—	$	1	$	12
Restructuring-related expenses:
Cost of products sold	—		—		11		—		11
Selling, general and administrative expenses	—		2		—		1		3
	—		2		11		1		14
	$	11	$	2	$	11	$	2	$	26

All charges incurred in the third quarter of 2017 were related to the 2016 Restructuring Plan.

Three Months Ended September 30, 2016
(in millions)	Termination Benefits		Transfer Costs		Fixed Asset Write-offs		Other		Total
Restructuring charges	$	1	$	—	$	2	$	2	$	5
Restructuring-related expenses:
Cost of products sold	—		8		—		—		8
Selling, general and administrative expenses	—		—		—		4		4
	—		8		—		4		12
	$	1	$	8	$	2	$	6	$	17
(in millions)	Termination Benefits		Transfer Costs		Fixed Asset Write-offs		Other		Total
2016 Restructuring Plan	$	1	$	3	$	—	$	3	$	7
2014 Restructuring Plan	—		5		2		3		10
	$	1	$	8	$	2	$	6	$	17

Nine Months Ended September 30, 2017
(in millions)	Termination Benefits		Accelerated Depreciation		Transfer Costs		Other		Total
Restructuring charges	$	14	$	—	$	—	$	3	$	17
Restructuring-related expenses:
Cost of products sold	—		—		35		—		35
Selling, general and administrative expenses	—		5		—		4		9
	—		5		35		4		44
	$	14	$	5	$	35	$	7	$	61

All charges incurred in the first nine months of2017 were related to the 2016 Restructuring Plan.

Nine Months Ended September 30, 2016
(in millions)	Termination Benefits			Accelerated Depreciation		Transfer Costs		Fixed Asset Write-offs		Other		Total
Restructuring charges	$	16		$	—	$	—	$	2	$	4	$	22
Restructuring-related expenses:
Cost of products sold	—			—		20		—		—		20
Selling, general and administrative expenses	—			4		—		—		9		13
	—			4		20		—		9		33
	$	16		$	4	$	20	$	2	$	13	$	55
(in millions)	Termination Benefits			Accelerated Depreciation		Transfer Costs		Fixed Asset Write-offs		Other		Total
2016 Restructuring Plan	$	19		$	—	$	4	$	—	$	2	$	25
2014 Restructuring Plan	(3		)	4		16		2		11		30
	$	16		$	4	$	20	$	2	$	13	$	55

Cumulative restructuring charges

(in millions)	2016 Restructuring Plan
Termination benefits	$	38
Other	7
Total restructuring charges	45
Accelerated depreciation	7
Transfer costs	50
Other	6
Restructuring-related expenses	63
	$	108

Cash payments associated with restructuring initiatives

These payments were made using cash generated from operations and are comprised of the following:

(in millions)	2016 Restructuring Plan
Nine Months Ended September 30, 2017
Termination benefits	$	12
Transfer costs	35
Other	4
	$	51
Program to Date
Termination benefits	$	20
Transfer costs	50
Other	8
	$	78

Summary of accrued expenses within accompanying unaudited condensed consolidated balance sheets

The following is a rollforward of the termination benefit liability associated with our 2016 Restructuring Plan, which is reported as a component of accrued expenses included in our accompanying unaudited condensed consolidated balance sheets:

(in millions)	2016 Restructuring Plan
Accrued as of December 31, 2016	$	16
Charges (credits)	14
Cash payments	(12		)
Accrued as of September 30, 2017	$	18

2016 Restructuring Plan [Member]

Restructuring and Related Cost [Line Items]

Restructuring and related costs

The following table provides a summary of our estimates of costs associated with the 2016 Restructuring Plan through the end of 2018 by major type of cost:

Type of cost	Total Estimated Amount Expected to be Incurred
Restructuring charges:
Termination benefits	$65 million to $75 million
Other (1)	$5 million to $15 million
Restructuring-related expenses:
Other (2)	$105 million to $135 million
	$175 million to $225 million

(1) Consists primarily of consulting fees and costs associated with contract cancellations.

(2) Comprised of other costs directly related to the 2016 Restructuring Plan, including program management, accelerated depreciation and costs to transfer product lines among facilities.

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Supplemental Balance Sheet Information (Tables)

9 Months Ended

Sep. 30, 2017

Supplemental Balance Sheet Information [Abstract]

Trade accounts receivable, net

	As of
(in millions)	September 30, 2017			December 31, 2016
Accounts receivable	$	1,580		$	1,579
Less: allowance for doubtful accounts	(81		)	(73		)
Less: allowance for sales returns	(29		)	(34		)
	$	1,470		$	1,472

Rollforward of allowances for doubtful accounts

	Three Months Ended September 30,						Nine Months Ended September 30,
(in millions)	2017			2016			2017			2016
Beginning balance	$	74		$	80		$	73		$	75
Net charges to expenses	9			(1		)	14			5
Utilization of allowances	(2		)	(4		)	(6		)	(5		)
Ending balance	$	81		$	75		$	81		$	75

Inventory Disclosure [Text Block]

	As of
(in millions)	September 30, 2017		December 31, 2016
Finished goods	$	674	$	625
Work-in-process	108		94
Raw materials	295		236
	$	1,077	$	955

Other Current Assets [Text Block]

	As of
(in millions)	September 30, 2017		December 31, 2016
Prepaid expenses	$	72	$	58
Restricted cash	449		243
Other	124		240
	$	645	$	541

Property, plant and equipment, net

	As of
(in millions)	September 30, 2017		December 31, 2016
Land	$	93	$	91
Buildings and improvements	1,056		981
Equipment, furniture and fixtures	3,139		2,955
Capital in progress	297		338
	4,585		4,365
Less: accumulated depreciation	2,907		2,735
	$	1,678	$	1,630

Schedule of Accrued Liabilities

	As of
(in millions)	September 30, 2017		December 31, 2016
Legal reserves	$	1,355	$	1,062
Payroll and related liabilities	560		572
Accrued contingent consideration	28		63
Other	608		615
	$	2,551	$	2,312

Other long-term liabilities

	As of
(in millions)	September 30, 2017		December 31, 2016
Accrued income taxes	$	842	$	781
Legal reserves	335		961
Accrued contingent consideration	53		141
Other	508		455
	$	1,738	$	2,338

Accrued warranties

	Nine Months Ended September 30,
(in millions)	2017			2016
Beginning Balance	$	22		$	23
Provision	20			16
Settlements/reversals	(18		)	(19		)
Ending Balance	$	24		$	20

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Income Taxes (Tables)

9 Months Ended

Sep. 30, 2017

Schedule of Income Tax Rate Reconciliation [Line Items]

Schedule of Effective Income Tax Rate Reconciliation [Table Text Block]

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2017		2016		2017		2016
Effective tax rate from continuing operations	8.5	%	11.2	%	(2.0	)%	(152.4	)%

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Weighted Average Shares Outstanding (Tables)

9 Months Ended

Sep. 30, 2017

Earnings Per Share [Abstract]

Schedule of Weighted Average Number of Shares [Table Text Block]

	Three Months Ended September 30,		Nine Months Ended September 30,
(in millions)	2017	2016	2017	2016
Weighted average shares outstanding - basic	1,372.0	1,360.6	1,369.1	1,356.1
Net effect of common stock equivalents	22.1	19.1	22.7	18.8
Weighted average shares outstanding - assuming dilution	1,394.1	1,379.7	1,391.8	1,374.9

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Segment Reporting (Tables)

9 Months Ended

Sep. 30, 2017

Segment Reporting [Abstract]

Segment Reporting Information By Segment

A reconciliation of the totals reported for the reportable segments to the applicable line items in our accompanying unaudited condensed consolidated statements of operations is as follows:

	Three Months Ended September 30,						Nine Months Ended September 30,
(in millions)	2017			2016			2017			2016
				(restated)						(restated)
Net sales
Interventional Cardiology	$	589		$	565		$	1,806		$	1,705
Peripheral Interventions	268			256			812			764
Cardiovascular	857			821			2,618			2,469
Cardiac Rhythm Management	461			465			1,417			1,380
Electrophysiology	71			60			203			180
Rhythm Management	532			525			1,620			1,560
Endoscopy	402			365			1,194			1,065
Urology and Pelvic Health	272			247			819			732
Neuromodulation	153			138			449			395
MedSurg	827			750			2,462			2,192
Net sales allocated to reportable segments	2,216			2,096			6,700			6,221
Impact of foreign currency fluctuations	6			9			(60		)	(26		)
	$	2,222		$	2,105		$	6,640		$	6,195
Income (loss) before income taxes
Cardiovascular	$	243		$	247		$	756		$	751
Rhythm Management	103			90			319			231
MedSurg	272			234			781			682
Operating income allocated to reportable segments	618			571			1,856			1,664
Corporate expenses and currency exchange	(60		)	(60		)	(215		)	(162		)
Intangible asset impairment charges, acquisition-related, restructuring- and restructuring-related, and litigation-related net credits (charges)	(42		)	(27		)	(250		)	(787		)
Amortization expense	(139		)	(136		)	(424		)	(408		)
Operating income (loss)	377			348			967			307
Other expense, net	(68		)	(91		)	(261		)	(219		)
Income (loss) before income taxes	$	309		$	257		$	706		$	88

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Changes in Other Comprehensive Income (Tables)

9 Months Ended

Sep. 30, 2017

Changes in Other Comprehensive Income [Abstract]

Changes in Other Comprehensive Income [Table Text Block]

The following table provides the reclassifications out of other comprehensive income. Amounts in the chart below are presented net of tax.

Three Months Ended September 30, 2017
(in millions)	Foreign Currency Translation Adjustments			Unrealized Gains/Losses on Derivative Financial Instruments			Unrealized Gains/Losses on Available-for-Sale Securities			Defined Benefit Pension Items/Other			Total
Balance as of June 30, 2017	$	(58	)	$	31		$	(4	)	$	(22	)	$	(53	)
Other comprehensive income (loss) before reclassifications	25			(15		)	—			—			10
Amounts reclassified from accumulated other comprehensive income	—			(9		)	1			—			(8		)
Net current-period other comprehensive income	25			(24		)	1			—			2
Balance as of September 30, 2017	$	(33	)	$	7		$	(3	)	$	(22	)	$	(51	)

Three Months Ended September 30, 2016
(in millions)	Foreign Currency Translation Adjustments			Unrealized Gains/Losses on Derivative Financial Instruments			Defined Benefit Pension Items/Other			Total
Balance as of June 30, 2016	$	(59	)	$	(1	)	$	(10	)	$	(70	)
Other comprehensive income (loss) before reclassifications	2			(14		)	(1		)	(13		)
Amounts reclassified from accumulated other comprehensive income	—			(17		)	1			(16		)
Net current-period other comprehensive income	2			(31		)	—			(29		)
Balance as of September 30, 2016	$	(57	)	$	(32	)	$	(10	)	$	(99	)

Nine Months Ended September 30, 2017
(in millions)	Foreign Currency Translation Adjustments			Unrealized Gains/Losses on Derivative Financial Instruments			Unrealized Gains/Losses on Available-for-Sale Securities			Defined Benefit Pension Items/Other			Total
Balance as of December 31, 2016	$	(79	)	$	107		$	(6	)	$	(21	)	$	1
Other comprehensive income (loss) before reclassifications	46			(56		)	—			(2		)	(12		)
Amounts reclassified from accumulated other comprehensive income	—			(44		)	3			1			(40		)
Net current-period other comprehensive income	46			(100		)	3			(1		)	(52		)
Balance as of September 30, 2017	$	(33	)	$	7		$	(3	)	$	(22	)	$	(51	)

Nine Months Ended September 30, 2016
(in millions)	Foreign Currency Translation Adjustments			Unrealized Gains/Losses on Derivative Financial Instruments			Defined Benefit Pension Items/Other			Total
Balance as of December 31, 2015	$	(54	)	$	152		$	(10	)	$	88
Other comprehensive income (loss) before reclassifications	(3		)	(115		)	(4		)	(122		)
Amounts reclassified from accumulated other comprehensive income	—			(69		)	4			(65		)
Net current-period other comprehensive income	(3		)	(184		)	—			(187		)
Balance as of September 30, 2016	$	(57	)	$	(32	)	$	(10	)	$	(99	)

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Acquisitions and Strategic Investments (Details) - USD ($) $ in Millions			3 Months Ended		9 Months Ended
	Oct. 10, 2017	May 16, 2017	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016	Dec. 31, 2016
Business Acquisition [Line Items]
Contingent consideration expense (benefit)			$ (4)	$ (13)	$ (78)	$ 23
Other Nonoperating Income (Expense)			(11)	$ (33)	(89)	(44)
Goodwill			6,882		6,882		$ 6,678
Business Combination, Contingent Consideration, Asset			81		81		$ 204
Payments for acquisitions of businesses, net of cash acquired					392	70
Payment of contingent consideration					(45)	$ (77)
Business Combination, Contingent Consideration Arrangements, Range of Outcomes, Value, High			1,261		1,261
revenue-based payments [Member] | Discounted cash flow [Member]
Business Acquisition [Line Items]
Business Combination, Contingent Consideration, Liability			50		50
R&D and Commercialization-based Milestone [Member] | Discounted cash flow [Member]
Business Acquisition [Line Items]
Business Combination, Contingent Consideration, Liability			$ 31		$ 31
Fair Value Inputs, Discount Rate					2.00%
Minimum [Member] | revenue-based payments [Member] | Discounted cash flow [Member]
Business Acquisition [Line Items]
Fair Value Inputs, Discount Rate					11.00%
contingent consideration liability, projected year of payment					2017
Minimum [Member] | R&D and Commercialization-based Milestone [Member] | Discounted cash flow [Member]
Business Acquisition [Line Items]
contingent consideration liability, projected year of payment					2018
Maximum [Member] | revenue-based payments [Member] | Discounted cash flow [Member]
Business Acquisition [Line Items]
Fair Value Inputs, Discount Rate					15.00%
contingent consideration liability, projected year of payment					2026
Maximum [Member] | R&D and Commercialization-based Milestone [Member] | Discounted cash flow [Member]
Business Acquisition [Line Items]
contingent consideration liability, projected year of payment					2021
Customer Relationships [Member]
Business Acquisition [Line Items]
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life					13 years
Technology-Based Intangible Assets [Member]
Business Acquisition [Line Items]
Finite-lived Intangible Assets Acquired					$ 268
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life					13 years
Range of Risk Adjusted Discount Rates used in Purchase Price Allocation			24.00%		24.00%
Other Intangible Assets [Member]
Business Acquisition [Line Items]
Finite-lived Intangible Assets Acquired					$ 10
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life					2 years
Range of Risk Adjusted Discount Rates used in Purchase Price Allocation			24.00%		24.00%
Finite-Lived Intangible Assets [Member]
Business Acquisition [Line Items]
Finite-lived Intangible Assets Acquired					$ 278
2017 Acquisitions [Member]
Business Acquisition [Line Items]
Goodwill			$ 191		191
Payments for acquisitions of businesses, net of cash acquired					392
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Finite-Lived Intangibles			278		278
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Other Noncurrent Assets			26		26
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Liabilities			$ (103)		(103)
Business Combination, Consideration Transferred, Including Equity Interest in Acquiree Held Prior to Combination					$ 392
Symetis [Member]
Business Acquisition [Line Items]
Payments for acquisitions of businesses, net of cash acquired		$ 430
Subsequent Event [Member] | Apama [Member]
Business Acquisition [Line Items]
Payments for acquisitions of businesses, net of cash acquired	$ 175
Potential payments based on acheiving certain milestones	$ 125

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Strategic Investments (Details) - USD ($) $ in Millions	3 Months Ended			9 Months Ended
	Sep. 30, 2017	Jun. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016	Nov. 01, 2017	Dec. 31, 2016
Schedule of Investments [Line Items]
Other Nonoperating Income (Expense)	$ (11)		$ (33)	$ (89)	$ (44)
Equity Method Investments	204			204			$ 265
Cost Method Investments	69			69			20
Available-for-sale Securities	32			32			20
Notes Receivable From Portfolio Companies	44			44			42
Investments	$ 349			$ 349			$ 347
investment impairment [Member]
Schedule of Investments [Line Items]
Other Nonoperating Income (Expense)		$ (53)
Subsequent Event [Member]
Schedule of Investments [Line Items]
potential up-front cash payment						$ 145
potential contingent payments to acquire investee						$ 130

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Goodwill and Other Intangible Assets (Details) - USD ($) $ in Millions	9 Months Ended
	Sep. 30, 2017	Dec. 31, 2016
Goodwill [Line Items]
Finite-Lived Intangible Assets, Gross	$ 11,527	$ 11,235
Finite-Lived Intangible Assets, Accumulated Amortization	(5,956)	(5,564)
Indefinite-lived intangible assets, including goodwill	16,994	16,790
Indefinite-lived intangible assets, accumulated write-offs	(9,900)	(9,900)
Goodwill	6,882	6,678
Goodwill, Purchase Accounting Adjustments	13
Goodwill, Acquired During Period	191
Goodwill, Impaired, Accumulated Impairment Loss	(9,900)	(9,900)
Goodwill (Textuals) [Abstract]
Goodwill impairment charge	0
Cardiovascular [Member]
Goodwill [Line Items]
Goodwill	3,715	3,513
Goodwill, Purchase Accounting Adjustments	11
Goodwill, Acquired During Period	191
Goodwill, Impaired, Accumulated Impairment Loss	(1,479)	(1,479)
Goodwill (Textuals) [Abstract]
Goodwill impairment charge	0
Rhythm Management [Member]
Goodwill [Line Items]
Goodwill	291	290
Goodwill, Purchase Accounting Adjustments	1
Goodwill, Acquired During Period	0
Goodwill, Impaired, Accumulated Impairment Loss	(6,960)	(6,960)
Goodwill (Textuals) [Abstract]
Goodwill impairment charge	0
MedSurg [Member]
Goodwill [Line Items]
Goodwill	2,876	2,875
Goodwill, Purchase Accounting Adjustments	1
Goodwill, Acquired During Period	0
Goodwill, Impaired, Accumulated Impairment Loss	(1,461)	(1,461)
Goodwill (Textuals) [Abstract]
Goodwill impairment charge	0
Unclassified Indefinite-lived Intangible Assets [Member]
Goodwill [Line Items]
Goodwill, Gross	16,782	16,578
Goodwill, Impaired, Accumulated Impairment Loss	(9,900)	(9,900)
Technology-related [Member]
Goodwill [Line Items]
Indefinite-Lived Intangible Assets (Excluding Goodwill)	120	120
In-process research and development [Member]
Goodwill [Line Items]
Indefinite-Lived Intangible Assets (Excluding Goodwill)	92	92
Technology-related [Member]
Goodwill [Line Items]
Finite-Lived Intangible Assets, Gross	9,388	9,123
Finite-Lived Intangible Assets, Accumulated Amortization	(4,774)	(4,468)
Patents [Member]
Goodwill [Line Items]
Finite-Lived Intangible Assets, Gross	514	529
Finite-Lived Intangible Assets, Accumulated Amortization	(375)	(374)
Other Intangible Assets [Member]
Goodwill [Line Items]
Finite-Lived Intangible Assets, Gross	1,625	1,583
Finite-Lived Intangible Assets, Accumulated Amortization	$ (807)	$ (722)

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Fair Value Measurements Fair Value Measurements (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016	Dec. 31, 2016
Derivative Instruments, Gain (Loss) [Line Items]
Derivative Instruments, Loss Recognized in Other Comprehensive Income (Loss), Effective Portion			$ 0
Other Comprehensive Income (Loss), Derivatives Qualifying as Hedges, Tax			0
Foreign Currency Derivative Instruments Not Designated as Hedging Instruments at Fair Value, Net	$ 2,111		2,111		$ 1,830
Derivative Instruments, Gain (Loss) Recognized in Other Comprehensive Income (Loss), Effective Portion, Net			0
Other Comprehensive Income (Loss), Reclassification Adjustment from AOCI on Derivatives, Tax			0
Derivative Assets	83		83		199
Derivative Liabilities	92		92		26
Available-for-sale Securities	32		32		20
Foreign Currency Contracts, Liability, Fair Value Disclosure	3,218		3,218		2,271
Time Deposits, at Carrying Value					19
Cash	183		183		135
Cost-method Investments, Aggregate Carrying Amount	69		69		20
Debt Instrument, Fair Value Disclosure	6,032		6,032		5,739
Derivative, Notional Amount	5,329		5,329		4,101
Fair Value, Measurements, Recurring [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Money Market Funds, at Carrying Value	27		27		42
Available-for-sale Securities	32		32		20
Foreign Currency Contract, Asset, Fair Value Disclosure	83		83		199
Assets, Fair Value Disclosure	142		142		261
Foreign Currency Contracts, Liability, Fair Value Disclosure	92		92		26
Accrued Contingent Consideration	81		81		204
Liabilities, Fair Value Disclosure	173		173		230
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 1 [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Money Market Funds, at Carrying Value	27		27		42
Available-for-sale Securities	32		32		20
Foreign Currency Contract, Asset, Fair Value Disclosure	0		0		0
Assets, Fair Value Disclosure	59		59		62
Foreign Currency Contracts, Liability, Fair Value Disclosure	0		0		0
Accrued Contingent Consideration	0		0		0
Liabilities, Fair Value Disclosure	0		0		0
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Money Market Funds, at Carrying Value	0		0		0
Available-for-sale Securities	0		0		0
Foreign Currency Contract, Asset, Fair Value Disclosure	83		83		199
Assets, Fair Value Disclosure	83		83		199
Foreign Currency Contracts, Liability, Fair Value Disclosure	92		92		26
Accrued Contingent Consideration	0		0		0
Liabilities, Fair Value Disclosure	92		92		26
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 3 [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Money Market Funds, at Carrying Value	0		0		0
Available-for-sale Securities	0		0		0
Foreign Currency Contract, Asset, Fair Value Disclosure	0		0		0
Assets, Fair Value Disclosure	0		0		0
Foreign Currency Contracts, Liability, Fair Value Disclosure	0		0		0
Accrued Contingent Consideration	81		81		204
Liabilities, Fair Value Disclosure	81		81		204
Designated as Hedging Instrument [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Derivative Instruments in Hedges, Assets, at Fair Value	66		66		163
Derivative Instruments in Hedges, Liabilities, at Fair Value	63		63		7
Designated as Hedging Instrument [Member] | Prepaid And Other Current Assets [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Derivative Instruments in Hedges, Assets, at Fair Value	7		7		98
Designated as Hedging Instrument [Member] | Other Long Term Assets [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Derivative Instruments in Hedges, Assets, at Fair Value	59		59		65
Designated as Hedging Instrument [Member] | Other current liabilities [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Derivative Instruments in Hedges, Liabilities, at Fair Value	38		38		3
Designated as Hedging Instrument [Member] | Other Noncurrent Liabilities [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Derivative Instruments in Hedges, Liabilities, at Fair Value	25		25		4
Not Designated as Hedging Instrument [Member] | Prepaid And Other Current Assets [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Derivative Instruments Not Designated as Hedging Instruments, Asset, at Fair Value	17		17		36
Not Designated as Hedging Instrument [Member] | Other current liabilities [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Derivative Instruments Not Designated as Hedging Instruments, Liability, at Fair Value	29		29		$ 19
Not Designated as Hedging Instrument [Member] | Other, net [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Derivative Instruments Not Designated as Hedging Instruments, Gain (Loss), Net	(13)	$ (7)	(25)	$ (74)
Net gain (loss) from foreign currency transaction exposures	9	1	13	64
Foreign Currency Transaction Gain (Loss), Realized	(4)	(6)	(12)	(10)
Cash Flow Hedging [Member] | Designated as Hedging Instrument [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Derivative Instruments, Loss Recognized in Other Comprehensive Income (Loss), Effective Portion			(88)
Other Comprehensive Income (Loss), Derivatives Qualifying as Hedges, Tax			32
Derivative Instruments, Gain (Loss) Recognized in Other Comprehensive Income (Loss), Effective Portion, Net			(56)
Derivative Instruments, Gain Reclassified from Accumulated OCI into Income, Effective Portion			(69)
Derivative Instruments, Gain (Loss) Reclassified from Accumulated OCI into Income, Effective Portion, Net			(44)
Other Comprehensive Income (Loss), Reclassification Adjustment from AOCI on Derivatives, Tax			25
Fair Value Hedging [Member] | Interest Expense [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Interest Rate Cash Flow Hedge Gain (Loss) to be Reclassified During Next 12 Months, Net	12		12
Cash Flow Hedging [Member] | Interest Expense [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Interest Rate Cash Flow Hedge Gain (Loss) to be Reclassified During Next 12 Months, Net	1		1
Cash Flow Hedging [Member] | Cost of Goods, Product Line [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Interest Rate Cash Flow Hedge Gain (Loss) to be Reclassified During Next 12 Months, Net	(30)		(30)
Foreign Exchange Contract [Member] | Cash Flow Hedging [Member] | Designated as Hedging Instrument [Member] | Cost of Sales [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Derivative Instruments, Loss Recognized in Other Comprehensive Income (Loss), Effective Portion	(24)	(22)	(88)	(180)
Other Comprehensive Income (Loss), Derivatives Qualifying as Hedges, Tax	9	8	32	65
Derivative Instruments, Gain (Loss) Recognized in Other Comprehensive Income (Loss), Effective Portion, Net	(15)	(14)	(56)	(115)
Derivative Instruments, Gain Reclassified from Accumulated OCI into Income, Effective Portion	(14)	(27)	(68)	(107)
Derivative Instruments, Gain (Loss) Reclassified from Accumulated OCI into Income, Effective Portion, Net	(9)	(17)	(43)	(69)
Other Comprehensive Income (Loss), Reclassification Adjustment from AOCI on Derivatives, Tax	$ 5	$ 10	25	$ 38
Interest Rate Contract [Member] | Interest Expense [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Derivative Instruments, Gain Reclassified from Accumulated OCI into Income, Effective Portion			(1)
Derivative Instruments, Gain (Loss) Reclassified from Accumulated OCI into Income, Effective Portion, Net			$ (1)

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Borrowings and Credit Arrangements (Details) $ in Millions, ¥ in Billions	2 Months Ended	3 Months Ended	9 Months Ended	12 Months Ended
	Sep. 30, 2017 USD ($)	Mar. 31, 2017 USD ($)	Sep. 30, 2017 USD ($)	Dec. 31, 2016 USD ($)	Sep. 30, 2017 JPY (¥)	Aug. 04, 2017 USD ($)	Jun. 30, 2017 USD ($)	Apr. 10, 2015 USD ($)
Debt Instrument [Line Items]
Total debt	$ 5,682		$ 5,682	$ 5,484
Line of Credit Facility, Maximum Borrowing Capacity		$ 400		300
Line of Credit Facility, Fair Value of Amount Outstanding	0		0	$ 60
Maximum amount of proceeds from sale of finance receivables	449		$ 449
Average interest rate of de-recognized receivables			1.60%	1.80%
De-recognized receivables	167		$ 167	$ 152
Long-term Debt	(4,416)		(4,416)	(5,420)
Letters of Credit Outstanding, Amount	$ 37		$ 37	$ 44
January 2017 Notes [Member]
Debt Instrument [Line Items]
Debt Instrument, Interest Rate, Stated Percentage	5.125%		5.125%	5.125%	5.125%
Long-term Debt	$ 0		$ 0	$ (250)
October 2018 Notes [Member]
Debt Instrument [Line Items]
Debt Instrument, Interest Rate, Stated Percentage	2.65%		2.65%	2.65%	2.65%
Long-term Debt	$ (600)		$ (600)	$ (600)
January 2020 Notes [Member]
Debt Instrument [Line Items]
Debt Instrument, Interest Rate, Stated Percentage	6.00%		6.00%	6.00%	6.00%
Long-term Debt	$ (850)		$ (850)	$ (850)
May 2020 Notes [Member]
Debt Instrument [Line Items]
Debt Instrument, Interest Rate, Stated Percentage	2.85%		2.85%	2.85%	2.85%
Long-term Debt	$ (600)		$ (600)	$ (600)
May 2022 Notes [Member]
Debt Instrument [Line Items]
Debt Instrument, Interest Rate, Stated Percentage	3.375%		3.375%	3.375%	3.375%
Long-term Debt	$ (500)		$ (500)	$ (500)
May 2025 Notes [Member]
Debt Instrument [Line Items]
Debt Instrument, Interest Rate, Stated Percentage	3.85%		3.85%	3.85%	3.85%
Long-term Debt	$ (750)		$ (750)	$ (750)
October 2023 Notes [Member]
Debt Instrument [Line Items]
Debt Instrument, Interest Rate, Stated Percentage	4.125%		4.125%	4.125%	4.125%
Long-term Debt	$ (450)		$ (450)	$ (450)
November 2035 Notes [Member]
Debt Instrument [Line Items]
Debt Instrument, Interest Rate, Stated Percentage	6.25%		6.25%	6.25%	6.25%
Long-term Debt	$ (350)		$ (350)	$ (350)
January 2040 Notes [Member]
Debt Instrument [Line Items]
Debt Instrument, Interest Rate, Stated Percentage	7.375%		7.375%	7.375%	7.375%
Long-term Debt	$ (300)		$ (300)	$ (300)
2018 Term Loan [Member] [Member]
Debt Instrument [Line Items]
Long-term Debt	0		0	(150)
2020 Term Loan [Member]
Debt Instrument [Line Items]
Long-term Debt	0		0	(600)
Senior Notes [Member]
Debt Instrument [Line Items]
Long-term Debt	(4,400)		(4,400)	(4,650)
Unsecured Term Loan Facility [Member]
Debt Instrument [Line Items]
Long-term Debt				(750)
Premiums, accelerated amortization of debt issuance costs & investor discount costs [Member]
Debt Instrument [Line Items]
Long-term Debt	(7)		(7)	(8)
Securities Financing Transaction, Cost [Member]
Debt Instrument [Line Items]
Long-term Debt	(20)		(20)	(24)
Interest Rate Swap [Member]
Debt Instrument [Line Items]
Long-term Debt	(42)		(42)	(51)
Capital Lease Obligations [Member]
Debt Instrument [Line Items]
Long-term Debt	(1)		(1)	(1)
Line of Credit [Member]
Debt Instrument [Line Items]
Commercial Paper	2,250		2,250				$ 2,000
Senior Notes [Member]
Debt Instrument [Line Items]
Extinguishment of Debt, Amount		$ 250
Commercial Paper, Not Included with Cash and Cash Equivalents [Member]
Debt Instrument [Line Items]
Commercial Paper	$ 1,260		$ 1,260
Commercial Paper [Member]
Debt Instrument [Line Items]
Short-term Debt, Weighted Average Interest Rate	1.65%		1.65%		1.65%
the 2017 Facility [Member]
Debt Instrument [Line Items]
Exclusion from EBITDA for Restructuring Charges						$ 500
Line of Credit Facility, Maximum Borrowing Capacity						$ 2,250
Interest Margin above LIBOR, Minimum						0.90%
Interest Margin above LIBOR, Maximum						1.50%
Line of Credit Facility, Interest Rate During Period	1.10%
Line of Credit Facility, Commitment Fee Percentage	0.15%
Restructuring charges remaining to be excluded from calculation of consolidated EBITDA	$ 476		$ 476
Litigation and Debt Exclusion from EBITDA						$ 2,624
Legal payments remaining to be excluded from calculation of consolidated EBITDA	2,358		2,358
the 2015 Facility [Member]
Debt Instrument [Line Items]
Line of Credit Facility, Maximum Borrowing Capacity								$ 2,000
Uncommitted Credit Facilities With A Commercial Japanese Banks [Member]
Debt Instrument [Line Items]
Maximum amount of proceeds from sale of finance receivables	196		196		¥ 22.0
De-recognized receivables	$ 162		$ 162	$ 149
Average discounted rates of notes receivables	1.30%		1.30%	1.60%	1.30%
Current Requirement [Member]
Debt Instrument [Line Items]
Maximum Leverage Ratio	3.50		3.50		3.50
Actual, Covenant [Member]
Debt Instrument [Line Items]
Maximum Leverage Ratio	2.3		2.3		2.3

XML

Restructuring Related Activities (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended		16 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Dec. 31, 2016
Restructuring and Related Cost [Line Items]
Restructuring Charges Incurred to Date					$ 45
Restructuring-related Costs Incurred to Date					63
Estimated costs of restructuring program by major type of cost
Payments for Restructuring			$ (51)		(78)
Restructuring Related Expenses	$ 14	$ 12	44	$ 33
Restructuring and Related Cost, Incurred Cost	26	17	61	55
Restructuring Charges	12	5	17	22
2016 Restructuring Plan [Member]
Restructuring and Related Cost [Line Items]
Restructuring Charges Incurred to Date					45
Restructuring-related Costs Incurred to Date					63
Estimated costs of restructuring program by major type of cost
Restructuring and Related Cost, Cost Incurred to Date	108		108		108
Payments for Restructuring			(51)		(78)
Restructuring and Related Cost, Incurred Cost		7		25
2014 Restructuring plan [Member]
Estimated costs of restructuring program by major type of cost
Restructuring and Related Cost, Incurred Cost		10		30
Termination Benefits [Member]
Estimated costs of restructuring program by major type of cost
Restructuring Related Expenses	0	0	0	0
Restructuring and Related Cost, Incurred Cost	11	1	14	16
Restructuring Charges	11	1	14	16
Termination Benefits [Member] | 2016 Restructuring Plan [Member]
Restructuring and Related Cost [Line Items]
Restructuring Reserve	18		18		18	$ 16
Restructuring Charges Incurred to Date					38
Estimated costs of restructuring program by major type of cost
Payments for Restructuring			(12)		(20)
Restructuring and Related Cost, Incurred Cost		1		19
Restructuring Charges			14
Termination Benefits [Member] | 2014 Restructuring plan [Member]
Estimated costs of restructuring program by major type of cost
Restructuring and Related Cost, Incurred Cost		0		(3)
Accelerated depreciation [Member]
Estimated costs of restructuring program by major type of cost
Restructuring Related Expenses	2		5	4
Restructuring and Related Cost, Incurred Cost	2		5	4
Restructuring Charges	0		0	0
Accelerated depreciation [Member] | 2016 Restructuring Plan [Member]
Restructuring and Related Cost [Line Items]
Restructuring-related Costs Incurred to Date					7
Estimated costs of restructuring program by major type of cost
Restructuring and Related Cost, Incurred Cost				0
Accelerated depreciation [Member] | 2014 Restructuring plan [Member]
Estimated costs of restructuring program by major type of cost
Restructuring and Related Cost, Incurred Cost				4
Transfer costs [Member]
Estimated costs of restructuring program by major type of cost
Restructuring Related Expenses	11	8	35	20
Restructuring and Related Cost, Incurred Cost	11	8	35	20
Restructuring Charges	0	0	0	0
Transfer costs [Member] | 2016 Restructuring Plan [Member]
Restructuring and Related Cost [Line Items]
Restructuring-related Costs Incurred to Date					50
Estimated costs of restructuring program by major type of cost
Payments for Restructuring			(35)		(50)
Restructuring and Related Cost, Incurred Cost		3		4
Transfer costs [Member] | 2014 Restructuring plan [Member]
Estimated costs of restructuring program by major type of cost
Restructuring and Related Cost, Incurred Cost		5		16
Impairment of an asset in value [Member]
Estimated costs of restructuring program by major type of cost
Restructuring Related Expenses		0		0
Restructuring and Related Cost, Incurred Cost		2		2
Restructuring Charges		2		2
Impairment of an asset in value [Member] | 2016 Restructuring Plan [Member]
Estimated costs of restructuring program by major type of cost
Restructuring and Related Cost, Incurred Cost		0		0
Impairment of an asset in value [Member] | 2014 Restructuring plan [Member]
Estimated costs of restructuring program by major type of cost
Restructuring and Related Cost, Incurred Cost		2		2
Other [Member]
Restructuring and Related Cost [Line Items]
Restructuring Reserve	8		8		8	$ 6
Estimated costs of restructuring program by major type of cost
Restructuring Related Expenses	1	4	4	9
Restructuring and Related Cost, Incurred Cost	2	6	7	13
Restructuring Charges	1	2	3	4
Other [Member] | 2016 Restructuring Plan [Member]
Restructuring and Related Cost [Line Items]
Restructuring Charges Incurred to Date					7
Restructuring-related Costs Incurred to Date					6
Estimated costs of restructuring program by major type of cost
Payments for Restructuring			(4)		(8)
Restructuring and Related Cost, Incurred Cost		3		2
Other [Member] | 2014 Restructuring plan [Member]
Estimated costs of restructuring program by major type of cost
Restructuring and Related Cost, Incurred Cost		3		11
Minimum [Member] | 2016 Restructuring Plan [Member]
Restructuring and Related Cost [Line Items]
Restructuring and Related Cost, Expected Cost	175		175		175
Estimated costs of restructuring program by major type of cost
Restructuring plan estimated future cash outflow			160
Minimum [Member] | Restructuring Plan [Member] | Termination Benefits [Member] | 2016 Restructuring Plan [Member]
Restructuring and Related Cost [Line Items]
Restructuring and Related Cost, Expected Cost	65		65		65
Minimum [Member] | Restructuring Plan [Member] | Other [Member] | 2016 Restructuring Plan [Member]
Restructuring and Related Cost [Line Items]
Restructuring and Related Cost, Expected Cost	5		5		5
Minimum [Member] | Restructuring Related To Plan [Member] | Other [Member] | 2016 Restructuring Plan [Member]
Restructuring and Related Cost [Line Items]
Restructuring and Related Cost, Expected Cost	105		105		105
Maximum [Member] | 2016 Restructuring Plan [Member]
Restructuring and Related Cost [Line Items]
Restructuring and Related Cost, Expected Cost	225		225		225
Estimated costs of restructuring program by major type of cost
Restructuring plan estimated future cash outflow			210
Maximum [Member] | Restructuring Plan [Member] | Termination Benefits [Member] | 2016 Restructuring Plan [Member]
Restructuring and Related Cost [Line Items]
Restructuring and Related Cost, Expected Cost	75		75		75
Maximum [Member] | Restructuring Plan [Member] | Other [Member] | 2016 Restructuring Plan [Member]
Restructuring and Related Cost [Line Items]
Restructuring and Related Cost, Expected Cost	15		15		15
Maximum [Member] | Restructuring Related To Plan [Member] | Other [Member] | 2016 Restructuring Plan [Member]
Restructuring and Related Cost [Line Items]
Restructuring and Related Cost, Expected Cost	135		135		$ 135
Cost of Sales [Member]
Estimated costs of restructuring program by major type of cost
Restructuring Related Expenses	11	8	35	20
Cost of Sales [Member] | Termination Benefits [Member]
Estimated costs of restructuring program by major type of cost
Restructuring Related Expenses	0	0	0	0
Cost of Sales [Member] | Accelerated depreciation [Member]
Estimated costs of restructuring program by major type of cost
Restructuring Related Expenses	0		0	0
Cost of Sales [Member] | Transfer costs [Member]
Estimated costs of restructuring program by major type of cost
Restructuring Related Expenses	11	8	35	20
Cost of Sales [Member] | Impairment of an asset in value [Member]
Estimated costs of restructuring program by major type of cost
Restructuring Related Expenses		0		0
Cost of Sales [Member] | Other [Member]
Estimated costs of restructuring program by major type of cost
Restructuring Related Expenses	0	0	0	0
Selling, General and Administrative Expenses [Member]
Estimated costs of restructuring program by major type of cost
Restructuring Related Expenses	3	4	9	13
Selling, General and Administrative Expenses [Member] | Termination Benefits [Member]
Estimated costs of restructuring program by major type of cost
Restructuring Related Expenses	0	0	0	0
Selling, General and Administrative Expenses [Member] | Accelerated depreciation [Member]
Estimated costs of restructuring program by major type of cost
Restructuring Related Expenses	2		5	4
Selling, General and Administrative Expenses [Member] | Transfer costs [Member]
Estimated costs of restructuring program by major type of cost
Restructuring Related Expenses	0	0	0	0
Selling, General and Administrative Expenses [Member] | Impairment of an asset in value [Member]
Estimated costs of restructuring program by major type of cost
Restructuring Related Expenses		0		0
Selling, General and Administrative Expenses [Member] | Other [Member]
Estimated costs of restructuring program by major type of cost
Restructuring Related Expenses	$ 1	$ 4	$ 4	$ 9

XML

Supplemental Balance Sheet Information (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016	Dec. 31, 2016
Trade accounts receivable, net
Accounts receivable	$ 1,580		$ 1,580		$ 1,579
Less: allowance for doubtful accounts	(81)		(81)		(73)
Less: allowance for sales returns	(29)		(29)		(34)
Trade accounts receivable, net	1,470		1,470		1,472
Allowance for doubtful accounts
Beginning balance	74	$ 80	73	$ 75
Charges to expenses	9	(1)	14	5
Utilization of allowances	(2)	(4)	(6)	(5)
Ending balance	81	75	81	75
Inventories
Finished goods	674		674		625
Work-in-process	108		108		94
Raw materials	295		295		236
Inventories	1,077		1,077		955
Prepaid Expense and Other Assets, Current
Prepaid Expense	72		72		58
Restricted Cash and Cash Equivalents	449		449		243
Other Assets, Current	124		124		240
prepaid and other current assets	645		645		541
Property, plant and equipment, net
Land	93		93		91
Buildings and improvements	1,056		1,056		981
Equipment, furniture and fixtures	3,139		3,139		2,955
Capital in progress	297		297		338
Property, plant and equipment	4,585		4,585		4,365
Less: accumulated depreciation	2,907		2,907		2,735
Property, plant and equipment, net	1,678		1,678		1,630
Accrued expenses
Legal reserves	1,355		1,355		1,062
Payroll and related liabilities	560		560		572
Business Combination, Contingent Consideration, Liability, Current	28		28		63
Other	608		608		615
Accrued expenses	2,551		2,551		2,312
Other long-term liabilities
Accrued income taxes	842		842		781
Legal reserves	335		335		961
Business Combination, Contingent Consideration, Liability, Noncurrent	53		53		141
Other Accrued Liabilities, Noncurrent	508		508		455
Other long-term liabilities	1,738		1,738		$ 2,338
Accrued warranties
Beginning Balance			22	23
Provision			20	16
Settlements/ reversals			(18)	(19)
Ending Balance	24	20	24	20
Supplemental Balance Sheet Information
Depreciation expense	$ 71	$ 67	$ 198	$ 193

XML

Income Taxes (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended			12 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Jun. 30, 2018	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2018	Dec. 31, 2016
Effective Income Tax Rate Reconciliation, Percent [Abstract]
Unrecognized Tax Benefits	$ 1,128			$ 1,128			$ 1,095
Unrecognized Tax Benefits that Would Impact Effective Tax Rate	1,039			1,039			1,006
Incremental tax liability asserted by IRS	$ 1,162			$ 1,162
Reported tax rate	8.50%	11.20%		(2.00%)	(152.40%)
Net tax expense/benefits related to interest and penalties	$ 14	$ 13		$ 40	$ 35
Unrecognized Tax Benefits, Income Tax Penalties and Interest Accrued, Total	$ 633			$ 633			$ 572
Subsequent Event [Member]
Effective Income Tax Rate Reconciliation, Percent [Abstract]
Litigation Settlement, Amount			$ 275
Potential Reduction In Unrecognized Tax Benefits Over Next Twelve Months As Result Of Concluding Certain Matters						$ 757

XML

Commitments and Contingencies (Details) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2017 USD ($)	Sep. 30, 2016 USD ($)	Jun. 30, 2018 USD ($)	Sep. 30, 2017 USD ($)	Sep. 30, 2016 USD ($)	Oct. 25, 2017 claims	Dec. 31, 2016 USD ($)
Commitments and Contingencies (Textuals) [Abstract]
Accrual for legal matters that are probable and estimable | $	$ 1,690			$ 1,690			$ 2,023
Litigation Settlement, Expense | $	$ (12)	$ 4		$ 196	$ 632
Subsequent Event [Member]
Loss Contingencies [Line Items]
Litigation Settlement, Amount | $			$ 275
Commitments and Contingencies (Textuals) [Abstract]
Product liability cases or claims related to mesh product						48,500
Putative class actions in the U.S., Mesh						8
Product liability cases or claims related to mesh product - Canada						20
Certified class actions in Canada, Mesh						1
Putative class actions in Canada, Mesh						3
Product liability cases or claims related to mesh product - United Kingdom						25
Assigned to one judge in MA [Member] | Subsequent Event [Member]
Commitments and Contingencies (Textuals) [Abstract]
Product liability cases or claims related to mesh product						3,100
Settled Litigation [Member] | Subsequent Event [Member]
Commitments and Contingencies (Textuals) [Abstract]
Product liability cases or claims related to mesh product						44,000
Total Product liability cases and claims settled related to Mesh product						15,500

XML

Weighted Average Shares Outstanding (Details) - shares shares in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Weighted average shares outstanding - basic	1,372.0	1,360.6	1,369.1	1,356.1
Weighted Average Number Diluted Shares Outstanding Adjustment	22.1	19.1	22.7	18.8
Weighted average shares outstanding - assuming dilution	1,394.1	1,379.7	1,391.8	1,374.9
Stock Issued During Period, Shares, New Issues	2.0	3.0	11.0	15.0

XML

Segment Reporting (Details) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2017 USD ($)	Sep. 30, 2016 USD ($)	Sep. 30, 2017 USD ($) reportablesegments	Sep. 30, 2016 USD ($)
Segment Reporting (Textuals) [Abstract]
Number of reportable segments | reportablesegments			3
Net sales
Net sales allocated to reportable segments	$ 2,216	$ 2,096	$ 6,700	$ 6,221
Impact Of Foreign Currency Fluctuations On Net Sales	6	9	(60)	(26)
Net sales	2,222	2,105	6,640	6,195
Operating Income Allocated to Reportable Segments	618	571	1,856	1,664
Amortization expense	(139)	(136)	(424)	(408)
Operating income (loss)	377	348	967	307
Other expense, net	(68)	(91)	(261)	(219)
Income (loss) before income taxes	309	257	706	88
Global Interventional Cardiology (IC) Reporting Unit [Member]
Net sales
Net sales allocated to reportable segments	589	565	1,806	1,705
Global Peripheral Interventions (PI) Reporting Unit [Member]
Net sales
Net sales allocated to reportable segments	268	256	812	764
Cardiovascular [Member]
Net sales
Net sales allocated to reportable segments	857	821	2,618	2,469
Operating Income Allocated to Reportable Segments	243	247	756	751
Global CRM Reporting Unit [Member]
Net sales
Net sales allocated to reportable segments	461	465	1,417	1,380
Global Electrophysiology (EP) Reporting Unit [Member]
Net sales
Net sales allocated to reportable segments	71	60	203	180
Rhythm Management [Member]
Net sales
Net sales allocated to reportable segments	532	525	1,620	1,560
Operating Income Allocated to Reportable Segments	103	90	319	231
Global Endoscopy (Endo) Reporting Unit [Member]
Net sales
Net sales allocated to reportable segments	402	365	1,194	1,065
Global Urology (Uro) Reporting Unit [Member]
Net sales
Net sales allocated to reportable segments	272	247	819	732
Global Neuromodulation (NM) Reporting Unit [Member]
Net sales
Net sales allocated to reportable segments	153	138	449	395
MedSurg [Member]
Net sales
Net sales allocated to reportable segments	827	750	2,462	2,192
Operating Income Allocated to Reportable Segments	272	234	781	682
Corporate expenses and currency exchange [Member]
Net sales
Operating (Loss) Income Unallocated to Segment	(60)	(60)	(215)	(162)
Special Charges [Member]
Net sales
Operating (Loss) Income Unallocated to Segment	$ (42)	$ (27)	$ (250)	$ (787)

XML

Changes in Other Comprehensive Income (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016	Jun. 30, 2017	Dec. 31, 2016	Jun. 30, 2016	Dec. 31, 2015
Changes in Other Comprehensive Income [Abstract]
Accumulated Other Comprehensive Income (Loss), Foreign Currency Translation Adjustment, Net of Tax	$ (33)	$ (57)	$ (33)	$ (57)	$ (58)	$ (79)	$ (59)	$ (54)
Accumulated Other Comprehensive Income (Loss), Cumulative Changes in Net Gain (Loss) from Cash Flow Hedges, Effect Net of Tax	7	(32)	7	(32)	31	107	(1)	152
Accumulated Other Comprehensive Income (Loss), Available-for-sale Securities Adjustment, Net of Tax	(3)		(3)		(4)	(6)
Accumulated Other Comprehensive Income (Loss), Pension and Other Postretirement Benefit Plans, Net of Tax	(22)	(10)	(22)	(10)	(22)	(21)	(10)	(10)
Accumulated Other Comprehensive Income (Loss), Net of Tax	(51)	(99)	(51)	(99)	$ (53)	$ 1	$ (70)	$ 88
Cumulative Translation Adjustment, Net of Tax, Period Increase (Decrease)	25	2	46	(3)
Other Comprehensive Income (Loss), Unrealized Gain (Loss) on Derivatives Arising During Period, Before Reclassifications, Net of Tax	(15)	(14)	(56)	(115)
Other Comprehensive Income (Loss), Available-for-sale Securities Adjustment, before Reclassification Adjustments, Net of Tax	0		0
Other Comprehensive (Income) Loss, Pension and Other Postretirement Benefit Plans, Adjustment, before Reclassification Adjustments, Net of Tax	0	(1)	(2)	(4)
Other Comprehensive Income (Loss), before Reclassifications, Net of Tax	10	(13)	(12)	(122)
Other Comprehensive Income (Loss), Unrealized Gain (Loss) on Derivatives Arising During Period, Reclassified from OCI, Net of Tax	(9)	(17)	(44)	(69)
Other Comprehensive Income (Loss), Available-for-sale Securities Adjustment, Net of Tax	1	0	3	0
Other Comprehensive (Income) Loss, Reclassification Adjustment from AOCI, Pension and Other Postretirement Benefit Plans, Net of Tax	0	1	1	4
Other Comprehensive Income (Loss), Reclassifications out of OCI, Net of Tax	(8)	(16)	(40)	(65)
Other Comprehensive Income (Loss), Foreign Currency Transaction and Translation Adjustment, Net of Tax	25	2	46	(3)
Other Comprehensive Income (Loss), Unrealized Gain (Loss) on Derivatives Arising During Period, Net of Tax	(24)	(31)	(100)	(184)
Other Comprehensive Income (Loss), Available-for-sale Securities Adjustment, before Reclassification Adjustments and Tax	1		3
Other Comprehensive (Income) Loss, Pension and Other Postretirement Benefit Plans, Adjustment, Net of Tax	0	0	1	0
Other Comprehensive Income (Loss), Net of Tax	$ 2	$ (29)	$ (52)	$ (187)

XML

New Accounting Pronouncements New ASU impacts (Details) - USD ($) $ in Millions	9 Months Ended
	Sep. 30, 2017	Mar. 31, 2017
New ASU impacts [Abstract]
Proceeds and Excess Tax Benefit from Share-based Compensation	$ 37
Cumulative Effect of New Accounting Principle in Period of Adoption		$ 76