What changed in this filing

/stocks — the workspaceLOADING

Item 8. Financial Statements and Supplementary Data

2021-02-12 compared with 2020-02-18 · 453 added, 378 removed, 1178 unchanged (41% of the section changed)

13 unchanged sentences

The effectiveness of the Company’s internal control over financial reporting as of December 31, 2020 has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their report which appears herein.

/s/ Ari Bousbib

/s/ Michael R.

Chairman, Chief Executive Officer and President

(Principal Executive Officer )

/s/ Ari Bousbib /s/ Ronald E.

Chairman and Chief Executive Officer

Executive Vice President and Chief Financial Officer

(Principal Executive Officer )

(Principal Financial Officer)

4 unchanged sentences

We have audited the accompanying consolidated balance sheets of IQVIA Holdings Inc.

and its subsidiaries (the “Company”) as of December 31, 2019 and 2018, and the related consolidated statements of income, comprehensive (loss) income, stockholders’ equity (deficit) and cash flows for each of the three years in the period ended December 31, 2019, including the related notes and financial statement schedules listed in the index appearing under Item 15(a)(2) (collectively referred to as the “consolidated financial statements”).

and its subsidiaries (the “Company”) as of December 31, 2020 and 2019, and the related consolidated statements of income, comprehensive income (loss), stockholders’ equity and cash flows for each of the three years in the period ended December 31, 2020, including the related notes and financial statement schedules listed in the index appearing under Item 15(a)(2) (collectively referred to as the “consolidated financial statements”).

We also have audited the Company's internal control over financial reporting as of December 31, 2020, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

8 unchanged sentences

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits i n accordance with the standards of the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.

8 unchanged sentences

A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;

(ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company;

and (iii) provide reasonable assurance regarding

prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

accordance with authorizations of management and directors of the company;

and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.

22 unchanged sentences

(in millions, except per share data) 2020 2019 2018

Revenues $ 11,359 $ 11,088 $ 10,412

Costs of revenue, exclusive of depreciation and amortization 7,500 7,300 6,746

1 unchanged sentence

Depreciation and amortization 1,287 1,202 1,141

Impairment charges

Restructuring costs 52 75 68

4 unchanged sentences

Other (income) expense, net ( 65 ) ( 37 ) 5

Income before income taxes and equity in earnings of

unconsolidated affiliates

Income tax expense (benefit)

Income before income taxes and equity in earnings of unconsolidated affiliates 373 352 328

Income tax expense 72 116 59

Income before equity in earnings (losses) of unconsolidated affiliates 301 236 269

Equity in (losses) earnings of unconsolidated affiliates

Equity in earnings (losses) of unconsolidated affiliates 7 ( 9 ) 15

Net income 308 227 284

Net income attributable to non-controlling interests ( 29 ) ( 36 ) ( 25 )

1 unchanged sentence

Earnings per share attributable to common stockholders:

Basic $ 1.46 $ 0.98 $ 1.27

Diluted $ 1.43 $ 0.96 $ 1.24

Weighted average common shares outstanding:

Basic 191.3 195.1 203.7

Diluted 195.0 199.6 208.2

The accompanying notes are an integral part of these consolidated financial statements.

1 unchanged sentence

AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

Year Ended December 31,

(in millions) 2020 2019 2018

Comprehensive (loss) income adjustments:

Unrealized (losses) gains on derivative instruments, net of income tax

expense (benefit) of $ 4 , ($ 5 ) and $ 1

Net income $ 308 $ 227 $ 284

Comprehensive income adjustments:

Unrealized (losses) gains on derivative instruments, net of income tax expense (benefit) of $( 10 ), $ 4 and $( 5 )

( 30 ) ( 15 ) 1

Defined benefit plan adjustments, net of income tax (benefit) expense of

$( 15 ), $ 5 and $( 4 )

Foreign currency translation, net of income tax (benefit) expense of

($ 30 ), $ 50 and ($ 201 )

( 54 ) ( 30 ) ( 8 )

Foreign currency translation, net of income tax expense (benefit) of $( 145 ), $( 30 ) and $ 50

183 ( 39 ) ( 258 )

Reclassification adjustments:

(Gains) losses on derivative instruments included in net income, net of

income tax expense of $—, $ 1 and $—

Amortization of actuarial losses and prior service costs included in net

Comprehensive income (loss)

Comprehensive (income) loss attributable to non-controlling interests

Losses (gains) on derivative instruments included in net income, net of

income tax benefit of $ 3 , $ — and $ 1

10 ( 1 ) ( 12 )

Amortization of actuarial losses and prior service costs included in net income

Comprehensive income 417 142 8

Comprehensive income attributable to non-controlling interests ( 32 ) ( 38 ) ( 22 )

Comprehensive income (loss) attributable to IQVIA Holdings Inc.

$ 385 $ 104 $ ( 14 )

The accompanying notes are an integral part of these consolidated financial statements.

14 unchanged sentences

Investments in unconsolidated affiliates 84 87

Goodwill 12,654 12,159

Other identifiable intangibles, net 5,205 5,514

1 unchanged sentence

Deposits and other assets 386 227

Total assets $ 24,564 $ 23,251

LIABILITIES AND STOCKHOLDERS’ EQUITY

11 unchanged sentences

Total liabilities 18,284 16,988

Commitments and contingencies (Note 1)

Commitments and contingencies (Note 1 and 12)

Stockholders’ equity:

4 unchanged sentences

at December 31, 2019

11,095 11,049

Retained earnings 1,277 998

Treasury stock, at cost, 60.7 and 54.0 shares at December 31, 2019 and 2018,

Treasury stock, at cost, 63.5 and 60.7 shares at December 31, 2020 and 2019, respectively

( 6,166 ) ( 5,733 )

Accumulated other comprehensive loss ( 205 ) ( 311 )

10 unchanged sentences

Operating activities:

Adjustments to reconcile net income to cash provided by operating

Net income $ 308 $ 227 $ 284

Adjustments to reconcile net income to cash provided by operating activities:

Depreciation and amortization 1,287 1,202 1,141

Amortization of debt issuance costs and discount 18 13 11

Amortization of accumulated other comprehensive loss on terminated

interest rate swaps

Stock-based compensation 95 146 113

Impairment of goodwill and identifiable intangible assets

Loss (gain) on disposals of property and equipment, net

Loss (earnings) from unconsolidated affiliates

Loss on disposals of property and equipment, net — 1 —

(Earnings) loss from unconsolidated affiliates ( 7 ) 9 ( 15 )

(Gain) loss on investments, net ( 25 ) ( 43 ) 3

10 unchanged sentences

Net cash paid for acquisition of businesses ( 177 ) ( 588 ) ( 309 )

Disposition of business, net of cash disposed

(Purchases) sales of marketable securities, net

Purchases of marketable securities, net ( 9 ) ( 3 ) ( 4 )

Investments in unconsolidated affiliates, net of payments received 10 — ( 17 )

(Investments in) proceeds from sale of equity securities ( 2 ) ( 22 ) ( 23 )

Other ( 2 ) 5 2

Net cash used in investing activities ( 796 ) ( 1,190 ) ( 810 )

5 unchanged sentences

Repayment of revolving credit facility ( 1,635 ) ( 2,776 ) ( 2,329 )

Principal payments on capital lease obligations

Proceeds related to employee stock option plans

(Payments) proceeds related to employee stock option plans ( 44 ) 11 15

Repurchase of common stock ( 447 ) ( 949 ) ( 1,405 )

3 unchanged sentences

Effect of foreign currency exchange rate changes on cash 31 ( 5 ) ( 60 )

Decrease in cash and cash equivalents

Increase (decrease) in cash and cash equivalents 977 ( 54 ) ( 68 )

Cash and cash equivalents at beginning of period 837 891 959

3 unchanged sentences

AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)

(in millions)

Retained Earnings (Accumulated Deficit)

Comprehensive

(Loss) Income

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(in millions) Common Stock Shares Treasury Stock Shares Common Stock Additional Paid-In Capital Retained Earnings Treasury Stock Accumulated Other Comprehensive (Loss) Income Non-controlling Interests Total

Balance, December 31, 2017 249.5 ( 41.4 ) 2 10,780 538 ( 3,374 ) 49 249 8,244

Issuance of common stock

2.0 — 1 10 — — — — 11

Repurchase of common stock

Repurchase and retirement of common stock

— ( 12.6 ) — — — ( 1,396 ) — — ( 1,396 )

Stock-based compensation

Distribution to non-controlling interest

Unrealized gain on derivative instruments,

— — — 108 — — — — 108

Distributions to non-controlling interest

— — — — — — — ( 31 ) ( 31 )

— — — — 259 — — 25 284

Unrealized gain on derivative instruments, net of tax

— — — — — — 1 — 1

Defined benefit plan adjustments, net of tax — — — — — — ( 8 ) — ( 8 )

Foreign currency translation, net of tax — — — — — — ( 255 ) ( 3 ) ( 258 )

Reclassification adjustments, net of tax — — — — — — ( 11 ) — ( 11 )

Other — — — — 10 — — — 10

Balance, December 31, 2018 251.5 ( 54.0 ) $ 3 $ 10,898 $ 807 $ ( 4,770 ) $ ( 224 ) $ 240 $ 6,954

3 unchanged sentences

Distributions to non-controlling interest — — — — — — — ( 18 ) ( 18 )

Unrealized gain on derivative instruments,

Net income — — — — 191 — — 36 227

Unrealized losses on derivative instruments, net of tax — — — — — — ( 15 ) — ( 15 )

Defined benefit plan adjustments, net of tax

— — — — — — ( 30 ) — ( 30 )

Foreign currency translation, net of tax

— — — — — — ( 41 ) 2 ( 39 )

Reclassification adjustments, net of tax

— — $ — $ — $ — $ — $ ( 1 ) $ — $ ( 1 )

Balance, December 31, 2019 253 ( 60.7 ) $ 3 $ 11,046 $ 998 $ ( 5,733 ) $ ( 311 ) $ 260 $ 6,263

2 unchanged sentences

Stock-based compensation — — — 90 — — — — 90

Distributions to non-controlling interest

Unrealized losses on derivative instruments,

Distributions to non-controlling interests, net — — — — — — — ( 13 ) ( 13 )

Net income — — — — 279 — — 29 308

Unrealized losses on derivative instruments, net of tax — — — — — — ( 30 ) — ( 30 )

Defined benefit plan adjustments, net of tax

— — — — — — ( 54 ) — ( 54 )

Foreign currency translation, net of tax — — — — — — 180 3 183

7 unchanged sentences

IQVIA Holdings Inc.

(together with its subsidiaries, the “Company” or “IQVIA”) is a leading global provider of advanced analytics, technology solutions and contract research services to the life sciences industry.

IQVIA applies human data science – leveraging the analytic rigor and clarity of data science to the ever-expanding scope of human science – to enable companies to reimagine and develop new approaches to clinical development and commercialization, speed innovation, and accelerate improvements in healthcare outcomes.

Powered by the IQVIA CORE, the Company delivers unique and actionable insights at the intersection of large-scale analytics, transformative technology and extensive domain expertise, as well as execution capabilities to help biotech, medical device, and pharmaceutical companies, medical researchers, government agencies, payers and other healthcare stakeholders tap into a deeper understanding of diseases, human behaviors and scientific advances, in an effort to advance their path toward cures.

(together with its subsidiaries, the “Company” or “IQVIA”) is a leading global provider of advanced analytics, technology solutions, and clinical research services to the life sciences industry.

IQVIA creates intelligent connections across all aspects of healthcare through its analytics, transformative technology, big data resources and extensive domain expertise.

IQVIA Connected Intelligence™ delivers powerful insights with speed and agility — enabling customers to accelerate the clinical development and commercialization of innovative medical treatments that improve healthcare outcomes for patients.

With approximately 70,000 employees, the Company conducts business in more than 100 countries.

IQVIA is a global leader in protecting individual patient privacy.

The company uses a wide variety of privacy-enhancing technologies and safeguards to protect individual privacy while generating and analyzing information on a scale that helps healthcare stakeholders identify disease patterns and correlate with the precise treatment path and therapy needed for better outcomes.

IQVIA’s insights and execution capabilities help biotech, medical device and pharmaceutical companies, medical researchers, government agencies, payers and other healthcare stakeholders tap into a deeper understanding of diseases, human behaviors and scientific advances, in an effort to advance their path toward cures.

Principles of Consolidation

21 unchanged sentences

At inception, the Company designates whether or not the derivative instrument is an effective hedge of an asset, liability or firm commitment which is then classified as either a cash flow hedge or a fair value hedge.

If determined to be an effective cash flow hedge, changes in the fair value of the derivative instrument are recorded as a component of Accumulated Other Comprehensive Income (“ AOCI ’) until realized.

If determined to be an effective cash flow hedge, changes in the fair value of the derivative instrument are recorded as a component of AOCI until realized.

The Company includes the impact from these hedges in the same line item as the hedged item on the consolidated statements of cash flows.

2 unchanged sentences

Changes in the fair values of derivative instruments that are not an effective hedge are recognized in earnings.

When it is probable that a hedged forecasted transaction will not occur, the Company discontinues hedge accounting for the affected portion of the forecasted transaction and reclassifies gains or losses that were accumulat ed in AOCI to earnings in other expense (income) , net for foreign exchange derivatives and interest expense for interest rate derivatives on the consolidated statements of income.

When it is probable that a hedged forecasted transaction will not occur, the Company discontinues hedge accounting for the affected portion of the forecasted transaction and reclassifies gains or losses that were accumulated in AOCI to earnings in other expense (income), net for foreign exchange derivatives and interest expense for interest rate derivatives on the consolidated statements of income.

Cash flows are classified consistent with the underlying hedged item.

8 unchanged sentences

Property and equipment are stated at cost and are depreciated using the straight-line method over the shorter of the asset’s estimated useful life or the lease term, if related to leased property, as follows:

Buildings and leasehold improvements

Buildings and leasehold improvements 3 - 40 years

Furniture and fixtures

1 unchanged sentence

Definite-lived identifiable intangible assets are amortized primarily using an accelerated method that reflects the pattern in which the Company expects to benefit from the use of the asset over its estimated remaining useful life as follows:

Trademarks and trade names

Trademarks and trade names 1 - 17 years

Contract backlog and client relationships

34 unchanged sentences

This cost-based method of revenue recognition requires the Company to make estimates of costs to complete its projects on an ongoing basis.

Significant judgment is required to evaluate assumptions related to these estimates.

Significant judgment is required to evaluate

assumptions related to these estimates.

The effect of revisions to estimates related to the transaction price or costs to complete a project are recorded in the period in which the estimate is revised.

38 unchanged sentences

Restructuring Costs

Restructuring costs, which primarily include termination benefits and facility closure costs, are recorded at estimated fair value.

Restructuring costs, which primarily include termination benefits and facility closure costs, are recorded at estimated value.

Key assumptions in determining the restructuring costs include the terms and payments that may be negotiated to terminate certain contractual obligations and the timing of employees leaving the Company.

9 unchanged sentences

Recognition of deferred income tax assets is based on management’s belief that it is more likely than not that the income tax benefit associated with certain temporary differences, income tax operating loss and capital loss carryforwards and income tax credits, would be realized.

The Company recorded a valuation allowance to reduce its deferred income tax assets for those deferred income tax items for which it was more likely than not that realization would not occur.

The Company determined the amount of the valuation allowance based, in part, on the Company’s assessment of future taxable income and in light of the Company’s ongoing income tax strategies.

The Company records a valuation allowance to reduce its deferred income tax assets for those deferred income tax items for which it was more likely than not that realization would not occur.

The Company determines the amount of the valuation allowance based, in part, on the Company’s assessment of future taxable income and in light of the Company’s ongoing income tax strategies.

If the estimate of future taxable income or tax strategies changes at any time in the future, the Company would record an adjustment to our valuation allowance.

1 unchanged sentence

Income tax expense is based on the distribution of profit before income tax among the various taxing jurisdictions in which we operate, adjusted as required by the income tax laws of each taxing jurisdiction.

Changes in the distribution of profits and losses among taxing jurisdictions may have a significant impact on our effective income tax rate.

Changes in the distribution of profits and losses

among taxing jurisdictions may have a significant impact on our effective income tax rate.

The Company does not consider the undistributed earnings of our foreign subsidiaries to be indefinitely reinvested outside of the United States.

12 unchanged sentences

The Company accounts for its stock-based compensation for performance awards based on the closing market price of the Company’s common stock on the date of grant and for performance awards that include market conditions based upon the Monte Carlo simulation model.

The Company determines if an arrangement is a lease at inception.

Operating leases are included in operating lease right-of-use (“ROU”) assets, other current liabilities, and operating lease liabilities on our condensed consolidated balance sheets.

The Company determines if an arrangement is a lease at inception and reassesses if there are changes in terms and conditions of the contract.

Operating leases are included in operating lease right-of-use (“ROU”) assets, other current liabilities, and operating lease liabilities on our consolidated balance sheets.

Operating lease ROU assets and operating lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at commencement date.

4 unchanged sentences

The Company has lease agreements with lease and non-lease components that the Company has elected to account for as single lease components.

On January 1, 2019, the Company adopted ASC 842 using the modified retrospective transition method as of the beginning of the period of adoption.

Therefore, on January 1, 2019, the Company recognized and measured leases without revising the historical comparative period information or disclosures.

Earnings Per Share

4 unchanged sentences

Diluted shares outstanding are calculated based on the average share price for each fiscal period using the treasury stock method.

Under the treasury stock method, the amount the employee must pay for exercising stock options, the amount of compensation cost for future service that the Company has not yet recognized, and the amount of benefits that would be recorded in additional paid-in capital when the award becomes deductible for tax purposes are assumed to be used to repurchase shares.

Under the treasury stock method, the amount the employee must pay for

exercising stock options, the amount of compensation cost for future service that the Company has not yet recognized, and the amount of benefits that would be recorded in additional paid-in capital when the award becomes deductible for tax purposes are assumed to be used to repurchase shares.

Equity Method Investments

6 unchanged sentences

Upon reissuance of treasury stock, amounts in excess of the acquisition cost are credited to additional paid in capital.

If the Company reissues treasury stock at an amount below its acquisition cost and additional paid in capital associated with prior treasury stock transactions is insufficient to cover the difference between the acquisition cost and the reissue price, this difference is recorded in retained earnings.

Recently Issued Accounting Standards

Accounting pronouncements adopted as of December 31, 2019

In February 2018, the FASB issued new accounting guidance that will allow a reclassification from accumulated other comprehensive income to retained earnings for “stranded income tax effects” resulting from the Tax Act.

Because the income statement impact related to the reduction of the historical corporate income tax rate under the Tax Act is required to be included in income tax expense, the guidance acknowledges that the income tax effects of items within accumulated other comprehensive income (“stranded income tax effects”) do not reflect the appropriate income tax rate.

The Company adopted this new accounting guidance on January 1, 2019 using the aggregate portfolio approach.

The Company elected the option to not reclassify accumulated other comprehensive income to retained earnings for “stranded income tax effects” resulting from the Tax Act.

In August 2017, the FASB issued new accounting guidance that will allow more financial and nonfinancial hedging strategies to be eligible for hedge accounting.

It also amends the presentation and disclosure requirements and changes how companies assess hedge effectiveness.

It is intended to more closely align hedge accounting with risk management strategies, simplify the application of hedge accounting, and increase transparency as to the scope and results of hedging programs.

Accounting pronouncements recently adopted

In August 2018, the FASB issued new accounting guidance that clarifies and aligns the accounting for implementation costs for hosting arrangements with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software.

The Company adopted this new accounting guidance on January 1, 2020.

The adoption of this new accounting guidance did not have a materia l effect on the Company’s consolidated financial statements.

In February 2016, the FASB issued new accounting guidance that requires lessees to recognize almost all leases on their balance sheet as a right-of-use asset and a lease liability.

The income statement will reflect lease expense for operating leases, and amortization and interest expense for financing leases.

The Company adopted this new accounting guidance on January 1, 2019 and elected the practical expedients upon transition that retained the lease classification, initial direct costs and determination of whether contracts are or contain a lease, for any leases that existed prior to adoption of the new guidance.

The Company also elected the transition method which allows for disclosures to be updated prospectively and prior periods to be presented in accordance with previous guidance.

The adoption of this standard had a material impact on the Company’s condensed consolidated balance sheets but did not have a material impact on the Company’s condensed consolidated results of operations or cash flows.

The adoption of this new accounting guidance did not have a material effect on the Company’s consolidated financial statements.

In August 2018, the FASB issued new accounting guidance that modifies the disclosure requirements in Topic 820, Fair Value Measurement, by removing certain disclosure requirements related to the fair value hierarchy, modifying existing disclosure requirements related to measurement uncertainty and adding new disclosure requirements, such as disclosing the changes in unrealized gains and losses for the period included in other comprehensive income for recurring Level 3 fair value measurements held at the end of the reporting period and disclosing the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements.

This new accounting guidance also modifies the disclosure requirements for employers that sponsor defined benefit pension or other postretirement plans.

The Company adopted this new accounting guidance on January 1, 2020.

The adoption of this new accounting guidance did not have a material effect on the Company’s consolidated financial statements.

In January 2017, the FASB issued new accounting guidance that simplifies the measurement of goodwill by eliminating the step two impairment test.

Step two measures a goodwill impairment loss by comparing the implied fair value of goodwill with the carrying amount of that goodwill.

The new guidance requires a comparison of the Company’s fair value of a reporting unit with the carrying amount and the Company is required to recognize an impairment charge for the amount by which the carrying amount exceeds the fair value.

The Company adopted this new accounting guidance on January 1, 2020.

The adoption of this new accounting guidance did not have a material effect on the Company’s consolidated financial statements.

In June 2016, the FASB issued a new accounting standard intended to provide financial statement users with more decision-useful information about expected credit losses and other commitments to extend credit held by the reporting entity.

The standard replaces the incurred loss impairment methodology in current GAAP with one that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates.

The Company adopted this new accounting guidance on January 1, 2020.

The adoption of this guidance did not have a material effect on the Company’s consolidated financial statements.

This is based on factors including the Company's assessment of historical losses, client's creditworthiness and the fact that the Company's trade receivables are short term in duration.

Accounting pronouncements issued but not adopted as of December 31, 2020

In March 2020, the FASB issued new accounting guidance that provides optional expedients and exceptions for applying U.S.

GAAP to contract modifications and hedging relationships, subject to meeting certain criteria, that reference LIBOR or another rate that is expected to be discontinued.

The new accounting guidance is effective for the Company as of March 12, 2020 through December 31, 2022.

The Company is currently evaluating the impact of this new accounting guidance on its credit arrangements and derivatives that reference LIBOR.

The Company does not expect the new accounting guidance to have a material effect on the Company’s consolidated financial statements.

In January 2020, the FASB issued new accounting guidance that states any equity security transitioning from the alternative method of accounting to the equity method, or vice versa, due to an observable transaction, will be remeasured immediately before the transition.

2 unchanged sentences

Early adoption is permitted.

The Company is currently evaluating the impact of this new accounting guidance on its consolidated financial statements.

The Company does not expect the new accounting guidance to have a material effect on the Company’s consolidated financial statements.

In December 2019, the FASB issued new accounting guidance to clarify and simplify the accounting for income taxes.

2 unchanged sentences

Early adoption is permitted.

The Company is currently evaluating the impact of this new accounting guidance on its consolidated financial statements.

The new accounting guidance will be effective for the Company on January 1, 2020.

The adoption of this new accounting guidance is not expected to have a material effect on the Company’s consolidated financial statements.

In August 2018, the FASB issued new accounting guidance that modifies the disclosure requirements for employers that sponsor defined benefit pension or other postretirement plans.

The new accounting guidance will be effective for the Company on January 1, 2021.

Early adoption is permitted.

The adoption of this new accounting guidance is not expected to have a material effect on the Company’s consolidated financial statements.

The new accounting guidance will be effective for the Company on January 1, 2020.

The adoption of this new accounting guidance is not expected to have a material effect on the Company’s consolidated financial statements.

In January 2017, the FASB issued new accounting guidance that simplifies the measurement of goodwill by eliminating the step two impairment test.

Step two measures a goodwill impairment loss by comparing the implied fair value of goodwill with the carrying amount of that goodwill.

The new accounting guidance will be effective for the Company on January 1, 2020.

Based on current impairment test results, the Company does not expect a material effect on the Consolidated Financial Statements.

However, the impact of the new accounting guidance will depend on the performance of the reporting units and the market conditions at the time of adoption.

replaces the incurred loss impairment methodology in current GAAP with one that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates.

The standard will be effective for the Company on January 1, 2020.

The adoption of this new accounting guidance is not expected to have a material effect on the Company’s consolidated financial statements.

The Company does not expect the new accounting guidance to have a material effect on the Company’s consolidated financial statements.

Revenues by Geography, Concentration of Credit Risk and Remaining Performance Obligations

1 unchanged sentence

The following tables represent revenues by geographical region and reportable segment for the years ended December 31, 2020, 2019 and 2018:

Year Ended December 31, 2019

(in millions)

Technology & Analytics Solutions

Development Solutions

December 31, 2020

(in millions) Technology & Analytics Solutions

Research & Development Solutions

Contract Sales & Medical Solutions

$ 2,413 $ 2,680 $ 326 $ 5,419

Europe and Africa 1,844 1,667 184 3,695

Asia-Pacific 601 1,413 231 2,245

Total revenues

Year Ended December 31, 2018

(in millions)

Technology & Analytics Solutions

Development Solutions

$ 4,858 $ 5,760 $ 741 $ 11,359

December 31, 2019

(in millions) Technology & Analytics Solutions

Research & Development Solutions

Contract Sales & Medical Solutions

$ 2,370 $ 2,693 $ 399 $ 5,462

Europe and Africa 1,543 1,734 200 3,477

Asia-Pacific 573 1,361 215 2,149

Total revenues

Year Ended December 31, 2017

(in millions)

Technology & Analytics Solutions

Development Solutions

$ 4,486 $ 5,788 $ 814 $ 11,088

December 31, 2018

(in millions) Technology & Analytics Solutions

Research & Development Solutions

Contract Sales & Medical Solutions

$ 2,087 $ 2,553 $ 358 $ 4,998

Europe and Africa 1,520 1,693 235 3,448

Asia-Pacific 530 1,219 217 1,966

Total revenues

$ 4,137 $ 5,465 $ 810 $ 10,412

No individual country, except for the United States and the United Kingdom, accounted for 10% or more of total revenues for the year ended December 31, 2020, 2019 and 2018.

1 unchanged sentence

For the year ended December 31, 2019, revenues in the United States and the United Kingdom accounted for 45 % and 10 % of total revenue, respectively.

No individual country, except for the United States, accounted for 10% or more of total revenues for the year ended December 31, 2017.

For the year ended December 31, 2017, revenue in the United States accounted for 42 % of total revenue.

No individual customer represented 10% or more of total revenues for the years ended December 31, 2019, 2018 or 2017.

For the year ended December 31, 2018, revenues in the United States and the United Kingdom accounted for 43 % and 11 % of total revenue, respectively.

No individual customer represented 10% or more of total revenues for the years ended December 31, 2020, 2019 and 2018.

Transaction Price Allocated to the Remaining Performance Obligations

2 unchanged sentences

The customer contract transaction price allocated to the remaining performance obligations differs from backlog in that it does not include wholly unperformed contracts under which the customer has a unilateral right to cancel the arrangement.

The Company applied the practical expedient that permits the omission of prior period information about its remaining performance obligations.

No other practical expedients were applied.

Trade Accounts Receivable, Unbilled Services and Unearned Income

2 unchanged sentences

Trade accounts receivable

Billed $ 1,181 $ 1,312

Unbilled services 1,263 1,286

3 unchanged sentences

Unbilled services and unearned income was as follows:

(in millions)

(in millions) 2020 2019 Change

Unbilled services $ 1,263 $ 1,286 $ ( 23 )

Unearned income ( 1,252 ) ( 1,014 ) ( 238 )

Unbilled services, which is comprised of approximately equal parts of unbilled receivables and contract assets as of December 31, 2019, increased by $ 156 million as compared to December 31, 2018.

Net balance $ 11 $ 272 $ ( 261 )

Unbilled services, which is comprised of approximately 60 % of unbilled receivables and 40 % of contract assets as of December 31, 2020, decreased by $ 23 million as compared to December 31, 2019.

Contract assets are unbilled services for which invoicing is based on the timing of certain milestones related to service contracts for clinical research whereas unbilled receivables are billable upon the passage of time.

Unearned income increased by $ 7 million over the same period resulting in an increase of $ 149 million in the net balance of unbilled services and unearned income between December 31, 2019 and 2018.

Growth in the net balance is driven by the difference in timing of revenue recognition in accordance with ASC 606, Revenue from Contracts with Customers, related to the Company’s Research & Development Solutions contracts (which is based on the percentage of costs incurred) versus the timing of invoicing, which is based on certain milestones.

Unearned income increased by $ 238 million over the same period resulting in a decrease of $ 261 million in the net balance of unbilled services and unearned income between December 31, 2020 and 2019.

Decrease in the net balance

is driven by the difference in timing of revenue recognition in accordance with ASC 606, Revenue from Contracts with Customers, related to the Company’s Research & Development Solutions contracts (which is based on the percentage of costs incurred) versus the timing of invoicing, which is based on certain milestones.

Bad debt expense recognized on the Company’s receivables and unbilled services was de minimis for the years ended December 31, 2020, 2019 and 2018.

1 unchanged sentence

The Company’s short-term investments in debt, equity and other securities consist primarily of trading investments in mutual funds and are measured at fair value with realized and unrealized gains and losses recorded in other expense (income), net on the accompanying consolidated statements of income.

ASU 2016-01 became effective on January 1, 2018.

ASU 2016-01 requires entities to measure equity investments (except those accounted for under the equity method, those that result in consolidation of the investee and certain other investments) at fair value and recognize any changes in fair value in net income at the end of each reporting period.

Entities can no longer classify equity investments as trading or available for sale and can no longer recognize unrealized holding gains and losses on equity securities classified previously as available for sale in other comprehensive income (loss).

Entities can no longer use the cost method of accounting as it was previously applied for equity securities that do not have readily determinable fair values.

Entities may choose to measure those investments at cost, less any impairment, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer at each reporting period.

During the fourth quarter of 2018, the Company recorded the cumulative adoption of ASU 2016-01 within stockholders’ equity .

The Company’s long-term equity investments (except those accounted for under the equity method, those that result in consolidation of the investee and certain other investments) are measured at fair value and any changes in fair value are recognized in net income at the end of each reporting period.

For equity investments that do not have readily determinable fair values and do not qualify for the existing practical expedient in Accounting Standards Codification (“ASC”) 820 “Fair Value Measurement” (“ASC 820”) to estimate fair value using the net asset value per share of the investment, the Company applies a new measurement alternative and measure those investments at cost, less any impairment, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer at each reporting period.

Unconsolidated Affiliates

10 unchanged sentences

(“NQ PE Fund I”) 3 4

Cenduit TM (“Cenduit”)

NostraData Pty Ltd.

2 unchanged sentences

Helparound ("Helparound") 3 4

Longwood Fund V, L.P.

("Longwood") 1 —

Variable Interest Entities

As of December 31, 2020, the Company’s investments in unconsolidated variable interest entities (“VIEs”) and its estimated maximum exposure to loss were as follows:

(in millions)

Investments in

Unconsolidated

(in millions) Investments in Unconsolidated VIEs

Maximum Exposure to Loss

Longwood 1 10

Pappas Life Science Ventures V, L.P.

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The Company transacts business in more than 100 countries and is subject to risks associated with fluctuating foreign exchange rates.

Accordingly, the Company enters into foreign currency forward contracts to (i) hedge certain forecasted foreign exchange cash flows arising from service contracts (“Service Contract Hedging”) and (ii) hedge non-United States dollar anticipated intercompany royalties (“Royalty Hedging”).

It is the Company’s policy to enter into foreign currency transactions only to the extent necessary to reduce earnings and cash flow volatility associated with foreign exchange rate movements.

The Company does not enter into foreign currency transactions for investment or speculative purposes.

The principal currencies hedged are the Euro, the British Pound, the Japanese Yen, the Swiss Franc and the Canadian dollar.

Service Contract Hedging and Royalty Hedging contracts are designated as cash flow hedges and are carried at fair value, with changes in the fair value recorded to AOCI.

The principal currencies hedged in 2020 were the British Pound and the Japanese Yen.

Service Contract Hedging and Reseller Hedging contracts are designated as cash flow hedges and are carried at fair value, with changes in the fair value recorded to AOCI.

The change in fair value is reclassified from AOCI to earnings in the period in which the hedged transaction occurs.

These contracts have various expiration dates through November 2020 .

As of December 31, 2019 and 2018, the Company had open Service Contract Hedging and Royalty Hedging contracts to hedge certain forecasted foreign currency cash flow transactions occurring in 2020 and 2019 with notional amounts totaling $ 148 million and $ 202 million, respectively.

These contracts have various expiration dates through September 2021.

As of December 31, 2020 and 2019, the Company had open Service Contract Hedging and Reseller Hedging contracts to hedge certain forecasted foreign currency cash flow transactions occurring in 2021 and 2020 with notional amounts totaling $ 70 million and $ 148 million, respectively.

For accounting purposes these hedges are considered highly effective.

As of December 31, 2019 and 2018, the Company had recorded gross unrealized gains (losses) of $ 4 million and less than ($ 1 ) million and $ 5 million and ($ 3 ) million , respectively, related to these contracts.

As of December 31, 2020 and 2019, the Company had recorded gross unrealized gains (losses) of $ 5 million and $ — million and $ 4 million and less than $( 1 ) million, respectively, related to these contracts.

Upon expiration of the hedge instruments in 2020, the Company reclassified the unrealized holding gains and losses on the derivative instruments included in AOCI into earnings.

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Interest Rate Risk Management

The Company purchases interest rate caps and has entered into interest rate swap agreements for purposes of managing its exposure to interest rate fluctuations.

The Company has entered into interest rate swap agreements for purposes of managing its exposure to interest rate fluctuations.

In April 2014, IMS Health entered into United States dollar and Euro denominated interest rate swap agreements (“2014 Swaps”) to hedge interest rate exposure on notional amounts of approximately $ 600 million of its borrowings.

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On June 3, 2015, the Company entered into seven forward starting interest rate swaps (“2015 Swaps”) in an effort to limit its exposure to changes in the variable interest rate on its Senior Secured Credit Facilities (as defined below).

Interest on the swaps began accruing on June 30, 2016 , and the interest rate swaps expire at various times through March 2020 .

As of December 31, 2019, only three of the 2015 Swaps were still outstanding.

The Company pays a fixed rate of 2.1 % and receives a variable rate of interest equal to the three-month LIBOR on these agreements.

The critical terms of the 2015 Swaps are substantially the same as the underlying borrowings.

These interest rate swaps are being accounted for as cash flow hedges as these transactions were executed to hedge the Company’s interest payments and for accounting purposes are considered highly effective.

As such, the effective portion of the hedges is recorded as unrealized gains (losses) on derivatives included in AOCI and the ineffective portion of the hedges is recognized in earnings.

Interest on the swaps began accruing on June 30, 2016, and the interest rate swaps expired at various times through March 2020.

As of December 31, 2020, none

of the 2015 Swaps were still outstanding.

The Company paid a fixed rate of 2.1 % and received a variable rate of interest equal to the three-month LIBOR on these agreements.

On July 19, 2018, the Company entered into two forward starting interest rate swaps (“2018 Swaps”) with a total notional value of $ 500 million in an effort to limit its exposure to changes in the variable interest rate on its Senior Secured Credit Facilities (as defined below).

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The Company pays a fixed rate of 3.0 % and receives a variable rate of interest equal to the three-month LIBOR on the 2018 Swaps.

On March 27, 2020, the Company entered into an interest rate swap with a notional value of $ 1 billion in an effort to limit its exposure to changes in the variable interest rate on its Senior Secured Credit Facilities (as defined below).

Interest on the swap began accruing on March 31, 2020 and the swap expires on March 31, 2023.

The Company pays a fixed rate of .56 % and receives a variable rate of interest equal to the one-month LIBOR on the swap.

On June 4, 2020, the Company entered into an interest rate swap with a notional value of $ 300 million in an effort to limit its exposure to changes in the variable interest rate on its Senior Secured Credit Facilities (as defined below).

Interest on the swap began accruing on June 30, 2020 and the swap expires on June 28, 2024.

The Company pays a fixed rate of .54 % and receives a variable rate of interest equal to the three-month LIBOR on the swap.

The critical terms of the swaps are substantially the same as the underlying borrowings.

These interest rate swaps are accounted for as cash flow hedges as these transactions were executed to hedge the Company's interest payments and for accounting purposes are considered highly effective.

As such, the effective portion of the hedges is recorded as unrealized gains (losses) on derivatives included in AOCI.

The fair value of these interest rate swaps represents the present value of the anticipated net payments the Company will make to the counterparty, which, when they occur, are reflected as interest expense on the consolidated statements of income.

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Those amounts would be reclassified from AOCI to earnings upon the sale or substantial liquidation of these net investments.

The amount of foreign exchange gains related to the net investment hedge included in the cumulative translation adjustment component of AOCI for the year ended December 31, 2019 was $ 97 million.

The amount of foreign exchange losses related to the net investment hedge included in the cumulative translation adjustment component of AOCI for the year ended December 31, 2020 was $ 561 million.

The fair values of the Company’s derivative instruments and the line items on the accompanying consolidated balance sheets to which they were recorded are summarized in the following table:

December 31, 2019

December 31, 2018

(in millions)

Balance Sheet

Classification

Derivatives designated as hedging

Foreign exchange forward contracts

Other current assets

and liabilities

Interest rate swaps

and liabilities

Interest rate caps

Deposits and other

Derivatives not designated as hedging

Interest rate swaps

Other liabilities

December 31, 2020 December 31, 2019

(in millions) Balance Sheet Classification Assets Liabilities Notional Assets Liabilities Notional

Derivatives designated as hedging instruments:

Foreign exchange forward contracts Other current assets and liabilities

$ 5 — $ 70 $ 4 $ — $ 148

Interest rate swaps Other assets and liabilities — 55 1,800 — 27 875

Derivatives not designated as hedging instruments:

Interest rate swaps Other liabilities — 1 356 — 3 325

Total derivatives $ 5 $ 56 $ 4 $ 30

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Interest rate derivatives ( 28 ) ( 22 ) ( 6 )

Total $ ( 27 ) $ ( 20 ) $ ( 15 )

The Company expects approximately $ 14 million of pre-tax unrealized losses related to its foreign exchange contracts and interest rate derivatives included in AOCI at December 31, 2020 to be reclassified into earnings within the next twelve months.

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Marketable securities

$ 122 $ — $ — $ 122

Derivatives — 5 — 5

$ 122 $ 5 $ — $ 127

$ — $ 56 $ — $ 56

Contingent consideration — — 119 119

$ — $ 56 $ 119 $ 175

The following table summarizes the fair value of the Company’s financial assets and liabilities that are measured and reported at fair value on a recurring basis as of December 31, 2019:

1 unchanged sentence

Marketable securities

$ 79 $ — $ — $ 79

Derivatives — 4 — 4

$ 79 $ 4 $ — $ 83

$ — $ 30 $ — $ 30

Contingent consideration — — 113 113

$ — $ 30 $ 113 $ 143

Below is a summary of the valuation techniques used in determining fair value:

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Contingent consideration —The Company values contingent consideration related to business combinations using a weighted probability calculation of potential payment scenarios discounted at rates reflective of the risks associated with the expected future cash flows.

Assumptions used to estimate the fair value of contingent consideration include v arious financial metrics (revenue performance targets and operating forecasts) and the probability of achieving the specific targets.

Assumptions used to estimate the fair value of contingent consideration include various financial metrics (revenue performance targets and operating forecasts) and the probability of achieving the specific targets.

The following table summarizes the changes in Level 3 financial assets and liabilities measured on a recurring basis for the year ended December 31,:

4 unchanged sentences

Contingent consideration paid ( 22 ) ( 46 ) ( 24 )

Revaluations included in earnings and foreign currency translation

Revaluations included in earnings and foreign currency translation adjustments

( 19 ) ( 4 ) 25

Balance as of December 31, $ 119 $ 113 $ 123

The Company used the following key assumptions when estimating the fair value of contingent considerations:

Unobservable Input Weighted average probability of target achievement Range of potential payment

Revenue target 82 % 0 %- 100 %

EBITDA target 92 % 0 %- 100 %

Operational target 91 % 0 %- 100 %

The current portion of contingent consideration is included within accrued expenses and the long-term portion is included within other liabilities on the accompanying consolidated balance sheets.

Revaluations of contingent consideration are recognized in other expense (income), net on the accompanying consolidated statements of income.

A change in significant unobservable inputs above could result in a significantly higher or lower fair value measurement of contingent consideration.

Non-recurring Fair Value Measurements

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Goodwill —Goodwill represents the difference between the purchase price and the fair value of the identifiable tangible and intangible net assets resulting from business combinations.

The Company performs a qualitative analysis to determine whether it is more likely than not that the estimated fair value of a reporting unit is less than its book value.

On an annual basis and if a triggering event occurs, the Company performs a qualitative analysis to determine whether it is more likely than not that the estimated fair value of a reporting unit is less than its book value.

This includes a qualitative analysis of macroeconomic conditions, industry and market considerations, internal cost factors, financial performance, fair value history and other company specific events.

If this qualitative analysis indicates that it is more likely than not that the estimated fair value is less than the book value for the respective reporting unit, the Company applies a two -step impairment test in which the Company determines whether the estimated fair value of the reporting unit is in excess of its carrying value.

If the carrying value of the net assets assigned to the reporting unit exceeds the estimated fair value of the reporting unit, the Company performs the second step of the impairment test to determine the implied estimated fair value of the reporting unit’s goodwill.

The Company determines the implied estimated fair value of goodwill by determining the present value of the estimated future cash flows for each reporting unit and comparing to the net book value of assets and liabilities exclusive of goodwill .

If this qualitative analysis indicates that it is more likely than not that the estimated fair value is less than the book value for the respective reporting unit, the Company determines whether the estimated fair value of the reporting unit is in excess of its carrying value.

If the carrying value of the net assets assigned to the reporting unit exceeds the estimated fair value of the reporting unit, the Company compares the fair value with the carrying amount and recognizes an impairment charge for the amount by which the carrying amount exceeds the fair value.

See Note 8 for additional information.

1 unchanged sentence

See Note 8 for additional information.

Indefinite-lived Intangible Asset —If a qualitative analysis indicates that it is more likely than not that the estimated fair value is less than the carrying value of an indefinite-lived intangible asset, the Company determines the estimated fair value of the indefinite-lived intangible asset (trade name) by determining the present value of the estimated royalty payments on an after-tax basis that it would be required to pay the owner for the right to use such trade name.

Indefinite-lived Intangible Asset —If a triggering event occurs and a qualitative analysis indicates that it is more likely than not that the estimated fair value is less than the carrying value of an indefinite-lived intangible asset, the Company determines the estimated fair value of the indefinite-lived intangible asset (trade name) by determining the present value of the estimated royalty payments on an after-tax basis that it would be required to pay the owner for the right to use such trade name.

If the carrying amount exceeds the estimated fair value, an impairment loss is recognized in an amount equal to the excess.

3 unchanged sentences

Land, buildings and leasehold improvements $ 351 $ 331

Equipment 657 570

Furniture and fixtures 76 81

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(in millions)

2020 2019 2018

Depreciation expense

4 unchanged sentences

(in millions)

2020 2019 2018

Amortization expense $ 1,153 $ 1,074 $ 1,016

2 unchanged sentences

The following is a summary of identifiable intangible assets:

As of December 31, 2019

As of December 31, 2018

(in millions)

As of December 31, 2020 As of December 31, 2019

(in millions) Gross

Amount Accumulated

Amortization Net

Amount Accumulated

Amortization Net

Definite-lived identifiable

1 unchanged sentence

Client relationships and backlog $ 5,095 $ ( 1,745 ) $ 3,350 $ 4,809 $ ( 1,303 ) $ 3,506

Trademarks, trade names and other

Trademarks, trade name and other 544 ( 212 ) 332 528 ( 158 ) 370

Databases 1,930 ( 1,629 ) 301 1,836 ( 1,185 ) 651

Software and related assets 2,109 ( 915 ) 1,194 1,620 ( 665 ) 955

Non-compete agreements 28 ( 18 ) 10 32 ( 18 ) 14

$ 9,706 $ ( 4,519 ) $ 5,187 $ 8,825 $ ( 3,329 ) $ 5,496

Indefinite-lived identifiable

intangible assets

Trade name $ 18 $ — $ 18 $ 18 $ — $ 18

The following is a summary of goodwill by segment for the years ended December 31, 2020 and 2019:

(in millions)

Technology & Analytics Solutions

Technology & Analytics Solutions Research & Development Solutions

Contract Sales & Medical Solutions

1 unchanged sentence

Business combinations 216 215 5 436

Impact of foreign currency fluctuations

Impact of foreign currency fluctuations and other

( 81 ) 4 — ( 77 )

Balance as of December 31, 2019 10,374 1,646 139 12,159

Business combinations 86 29 0 115

Impact of foreign currency fluctuations

Impact of foreign currency fluctuations and other

404 ( 29 ) 5 380

Balance as of December 31, 2020 $ 10,864 $ 1,646 $ 144 $ 12,654

There were no goodwill impairment losses as of December 31, 2019 or 2018.

There were no goodwill impairment losses for the years ended December 31, 2020 or 2019.

Accrued Expenses

3 unchanged sentences

Restructuring 53 67

Interest 55 53

Client contract related 849 763

1 unchanged sentence

Contingent consideration and deferred purchase price 59 52

Other 272 235

$ 2,232 $ 1,937

Credit Arrangements

The following is a summary of the Company’s revolving credit facilities at December 31, 2020:

Interest Rates

Facility Interest Rates

$ 1,500 million (revolving credit facility)

LIBOR in the relevant currency borrowed plus a margin of 1.50 %

at December 31, 2019

LIBOR in the relevant currency borrowed plus a margin of 1.50 % at December 31, 2020

$ 25 million (receivables financing facility)

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Dollar LIBOR at average floating rates of 1.75 %

Term A Loan due 2023—U.S.

Dollar LIBOR at average floating rates of 2.75 %

Term A Loan due 2023—Euro LIBOR at average floating rates of 1.50 %

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Dollar denominated borrowings—U.S.

Dollar LIBOR at average

floating rates of 3.26 %

Japanese Yen denominated borrowings—Japanese Yen LIBOR at average

floating rates of 1.50 %

Dollar LIBOR at average floating rates of 1.64 %

Japanese Yen denominated borrowings—Japanese Yen LIBOR at average floating rates of 1.50 %

5.0 % Senior Notes due 2027—U.S.

5 unchanged sentences

3.5 % Senior Notes due 2024—Euro denominated

4.875 % Senior Notes due 2023 —U.S.

Dollar denominated

2.25 % Senior Notes due 2028—Euro denominated

2.875 % Senior Notes due 2028—U.S.

Euro denominated

Receivables financing facility due 2022—U.S.

Dollar LIBOR at average

floating rates of 2.66 %

Dollar LIBOR at average floating rates of 1.04 %

Principal amount of debt 12,600 11,705

4 unchanged sentences

(in millions)

Thereafter 3,905

At December 31, 2020, there were bank guarantees totaling approximately £ 0.9 million (approximately $ 1.3 million) issued against the availability of the general banking facility with a European headquartered bank through their operations in the United Kingdom.

1 unchanged sentence

2020 Financing Transactions

At December 31, 2019, the Company’s Fourth Amended and Restated Credit Agreement, as amended (the “Credit Agreement”) provided financing through several senior credit facilities (collectively, the “Senior Secured Credit Facilities”) of approximately $ 6,811 million, which consisted of $ 5,677 million principal amounts of debt outstanding (as detailed in the table above), $ 3 million of issued standby letters of credit and $ 1,131 million of available borrowing capacity on the $ 1,500 million revolving credit facility.

At December 31, 2020, the Company’s Fourth Amended and Restated Credit Agreement, as amended (the “Credit Agreement”) provided financing through several senior secured credit facilities (collectively, the “senior secured credit facilities”) of up to approximately $ 7,692 million, which consisted of $ 6,192 million principal amounts of debt outstanding (as detailed in the table above), $ 4 million of issued standby letters of credit and $ 1,496 million of available borrowing capacity on the revolving credit facility.

On June 24, 2020, IQVIA Inc.

(the “Issuer”), a wholly owned subsidiary of the Company, completed the issuance and sale of € 711 million in gross proceeds of the Issuer’s 2.875 % senior notes due 2028 (the “ 2.875 % Notes”).

The 2.875 % Notes were issued pursuant to an Indenture, dated June 24, 2020, among the Issuer, U.S.

Bank National Association, as trustee of the Notes, and certain subsidiaries of the Issuer as guarantors.

The 2.875 % Notes are unsecured obligations of the Issuer, will mature on June 15, 2028 and bear interest at the rate of 2.875 % per year, with interest payable semiannually on June 15 and December 15 of each year, beginning on December 15, 2020.

The Issuer may redeem the 2.875 % Notes prior to their final stated maturity, subject to a customary make-whole premium, at any time prior to June 15, 2023 (subject to a customary “equity claw” redemption right) and thereafter subject to a redemption premium declining from 1.438 % to 0.000 %.

The proceeds from the 2.875 % Notes offering were used to redeem all of the Issuer’s outstanding 3.500 % senior notes due 2024 (the “ 3.500 % Notes”), including the payment of premiums in respect thereof, to repay a portion of the existing borrowings under the Issuer’s revolving credit facility and to pay fees and expenses related to the offering.

The Issuer’s obligations with respect to the 3.500 % Notes were discharged on the same day as the Issuer completed the issuance of the 3.500 % Notes, and the 3.500 % Notes were redeemed on July 9, 2020.

On March 11, 2020, the Company entered into Amendment No.

7 to the Credit Agreement to borrow $ 900 million in additional U.S.

Dollar denominated term A loans due 2023 (the “TLA-2 Loans”) and, on March 30, 2020, entered into Amendment No.

8 to the Credit Agreement to amend certain terms of the TLA-2 Loans.

The TLA-2 Loans bear interest based on the U.S.

Dollar LIBOR plus a margin ranging from 1.50 % to 2.25 %, with a U.S.

Dollar LIBOR floor of 1.00 % per annum.

The proceeds from the TLA-2 Loans were used to repay outstanding revolving credit loans under the Company's senior secured credit facilities.

On March 30, 2020, the Company prepaid $ 100 million of the TLA-2 loans.

2019 Financing Transactions

At December 31, 2019, the Company’s Credit Agreement provided financing through the several senior credit facilities of approximately $ 6,811 million, which consisted of $ 5,677 million principal amounts of debt outstanding (as detailed in the table above), $ 3 million of issued standby letters of credit and $ 1,131 million of available borrowing capacity on the $ 1,500 million revolving credit facility.

On December 18, 2019, the Company entered into Amendment No.

5 unchanged sentences

5 to the Credit Agreement that repriced the Euro LIBOR floor applicable to the Euro-denominated Term B Loan due 2024 and Term B Loan due 2025 to 0 % per annum.

On August 13, 2019, IQVIA Inc.

(the “Issuer”), a wholly owned subsidiary of the Company, completed the issuance and sale of € 720 million in gross proceeds of the Issuer’s 2.25 % Senior Notes due 2028 (the “2.25% Notes”).

On August 13, 2019, the Issuer completed the issuance and sale of € 720 million in gross proceeds of the Issuer’s 2.25 % Senior Notes due 2028 (the “ 2.25 % Notes”).

The 2.25 % Notes were issued pursuant to an Indenture, dated August 13, 2019, among the Issuer, U.S.

9 unchanged sentences

The net proceeds from this notes offering were used to repay existing borrowings under the Issuer’s revolving credit facility, to pay fees and expenses related to the notes offering and for other general corporate purposes.

The 5.00% Notes are unsecured obligations of the Issuer, will mature on May 15, 2027 and bear interest at the rate of 5.00 % per annum, with interest payable semi-annually on May 15 and November 15 of each year, beginning on November 15, 2019 .

The 5.00 % Notes are unsecured obligations of the Issuer, will mature on May 15, 2027 and bear interest at the rate of 5.00 % per annum, with interest payable semi-annually on January 15 and July 15 of each year, beginning on January 15, 2020.

The Issuer may redeem the 5.00 % Notes prior to their final stated maturity, subject to a customary make-whole premium, at any time prior to May 15, 2022 (subject to a customary “equity claw” redemption right) and thereafter subject to a redemption premium declining from 2.500 % to 0.000 %.

2018 Financing Transactions

At December 31, 2018, the Company’s Fourth Amended and Restated Credit Agreement, as amended (the “Credit Agreement”) provided financing through several senior secured credit facilities (collectively, the “Senior Secured Credit Facilities”) of up to approximately $ 6,959 million, which consisted of $ 6,079 million principal amounts of debt outstanding (as detailed in the table above) and $ 880 million of available borrowing capacity on the $ 1,500 million revolving credit facility that expires in 2023.

On June 11, 2018, the Company entered into Amendment No.

4 to the Credit Agreement (“Amendment No.

4”) that amended the terms of the existing term A loans and revolving credit facility to extend the maturity from 2021 to 2023 and reduce the applicable interest rate from LIBOR plus a margin ranging from 1.75 % to 2.50 % to LIBOR plus a margin ranging from 1.25 % to 2.00 %.

In connection with Amendment No.

4, the Company recognized a $ 2 million loss on extinguishment of debt, which includes fees and related expenses.

The amendments with respect to the revolving credit facility and the term A loans became effective on June 13, 2018 .

Under Amendment No.

4, the Company also placed additional term B loans.

The additional term B loans will mature in 2025 and were comprised of $ 950 million of U.S.

dollar denominated term B loans and € 583 million ($ 681 million) Euro denominated term B loans .

dollar denominated term B loans bear interest based on the U.S.

Dollar LIBOR plus a

margin ranging from 1.75 % to 2.00 %.

The Euro denominated term B loans bear interest based on the Euro LIBOR with a floor ranging from 0.50 % to 0.75 %, plus a margin of 2.00 %.

The proceeds of the additional term B loans were used to pay down the revolving credit facility and $ 650 million of existing term B loans due 2024 and to pay fees and expenses in connection with the transactions .

On April 6, 2018, the Company entered into Amendment No.

3 to the Credit Agreement that increased the amount of commitments available to the Company and certain of its subsidiaries to $ 1,500 million under the revolving credit facility.

No other terms of the Credit Agreement were amended.

Receivables Financing Facility

On November 25, 2020, the Company amended its receivables financing facility to exclude certain of its accounts receivable from the facility.

On December 19, 2019, the Company amended its receivables financing facility to extend the term of the facility to December 19, 2022.

5 unchanged sentences

The assets of the SPE are not available to satisfy any of the Company’s obligations or any obligations of its subsidiaries.

As of December 31, 2019, no additional amounts of revolving loans were available under the receivables financing facility.

As of December 31, 2020, there were $ 60 million of revolving loans available under the receivables financing facility.

Restrictive Covenants

4 unchanged sentences

The Company has operating leases for corporate offices, datacenters, motor vehicles and certain equipment, many of which contain renewal and escalation clauses.

The leases expire at various dates through 2029 with options to cancel certain leases at various intervals.

These operating leases expire at various dates through 2029 with options to cancel certain leases at various intervals.

The Company also has finance leases for office and lab spaces that expire in 2044.

Based on the timing of payments on the finance leases the cash flow impact is not material for the yea r ended December 31, 2020 .

In determining the lease term at lease commencement, the Company includes the noncancellable term and the periods which the Company deems it is reasonably certain to exercise or not to exercise a renewal or cancellation option.

As of December 31, 2019, the Company has additional operating leases, primarily for corporate offices, that have not yet commenced of $ 7 million.

These operating leases will commence in the first quarter of 2020 with lease terms through 2025 .

The components of lease expense were as follows:

Year Ended December 31,

(in millions)

Classification

Year Ended December 31, 2020 Year Ended December 31, 2019

Operating lease cost (1)

Selling, general and administrative expenses

Financing lease cost (1)

Depreciation and amortization, and Interest expense 6 —

Total lease cost

(1) Includes variable lease costs, which are immaterial.

Rental expenses under lease agreements were $ 197 million and $ 197 million in 2018 and 2017, respectively.

Rental expenses under lease agreements was $ 197 million in 2018.

Other information related to leases was as follows:

(in millions)

Year Ended December 31,

(in millions) Year Ended December 31, 2020 Year Ended December 31, 2019

Supplemental Cash Flow:

3 unchanged sentences

Operating leases

Financing leases

Weighted Average Remaining Lease Term:

Operating leases

4.58 years 5.01 years

Financing leases

Weighted Average Discount Rate:

Operating leases

3.78 % 4.22 %

Financing leases

Future minimum lease payments under non-cancellable leases as of December 31, 2020 were as follows:

(in millions)

Operating Leases

(in millions) Operating Leases Financing Leases

2021 $ 159 $ —

Thereafter 52 159

Total future minimum lease payments 578 183

Less imputed interest ( 51 ) ( 61 )

Total $ 527 $ 122

Reported as of December 31, 2020:

1 unchanged sentence

Operating lease liabilities 371 —

The Company elected the alternative modified transition method and as such, included the following prior period information as previously disclosed in accordance with ASC 840.

The following is a summary of future minimum payments under operating leases that have initial or remaining non-cancelable lease terms in excess of one year at December 31, 2018:

(in millions)

Total minimum lease payments

Other liabilities — 122

Total $ 527 $ 122

Contingencies

19 unchanged sentences

On May 24, 2019, approximately 247 plaintiffs appealed the Appellate Court’s decision to the Supreme Court.

The Company believes the appeal is without merit and intends to vigorously defend its position.

The Company believes the appeal is without merit and is vigorously defending its position.

On July 23, 2015, indictments were issued by the Seoul Central District Prosecutors’ Office in South Korea against 24 individuals and companies alleging improper handling of sensitive health information in violation of, among others, South Korea’s Personal Information Protection Act.

2 unchanged sentences

On February 14, 2020, the Seoul Central District Court acquitted IMS Korea and its two employees of the charges of improper handling of sensitive health information.

The matter is now on appeal.

The Company intends to vigorously defend its position on appeal.

On January 10, 2017, Quintiles IMS Health Incorporated and IMS Software Services Ltd.

3 unchanged sentences

IQVIA Parties seek injunctive relief, appointment of a monitor, the award of compensatory and punitive damages and reimbursement of all litigation expenses, including reasonable attorneys’ fees and costs.

On March 13, 2017, Veeva filed counterclaims alleging anticompetitive business practices in violation of the Sherman Act and state laws.

On March 13, 2017, Veeva filed

counterclaims alleging anticompetitive business practices in violation of the Sherman Act and state laws.

Veeva claims damages in excess of $ 200 million, and is seeking punitive damages and litigation costs, including attorneys’ fees.

1 unchanged sentence

Since the initial filings, the parties have filed additional litigations against each other, primarily concerning the use of IQVIA data with various other Veeva products.

The parties are currently engaging in the discovery process.

The parties have been engaged in the discovery process in connection with the first lawsuit.

Stockholders’ Equity

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Equity Repurchase Program

On February 13, 2019, the Company’s Board of Directors (the “Board”) increased the stock repurchase authorization under a previously approved equity repurchase program (the “Repurchase Program”) by $ 2.0 billion, which increased the total amount that has been authorized under the Repurchase Program to $ 7.725 billion since the plan’s inception in October 2013.

The Repurchase Program does not obligate the Company to repurchase any particular amount of common stock, and it may be modified, extended, suspended or discontinued at any time.

On October 30, 2013, the Board first approved the Repurchase Program, authorizing the repurchase of up to $ 125 million of either the Company’s common stock or vested in-the-money employee stock options, or a combination thereof.

The Board increased the stock repurchase authorization under the Repurchase Program with respect to the repurchase of its common stock by $ 600 million, $ 1.5 billion, $ 2 billion and $ 1.5 billion in 2015, 2016, 2017 and 2018, respectively, which increased the total amount that has been authorized under the Repurchase Program to $ 5.725 billion.

The Board increased the stock repurchase authorization under the Repurchase Program with respect to the repurchase of its common stock by $ 600 million, $ 1.5 billion, $ 2 billion and $ 1.5 billion, $ 2.0 billion in 2015, 2016, 2017, 2018, and 2019 respectively, which increased the total amount that has been authorized under the Repurchase Program to $ 7.725 billion.

The Repurchase Program does not obligate the Company to repurchase any particular amount of common stock or vested in-the- money employee stock options, and it may be modified, extended, suspended or discontinued at any time.

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2020 Offerings

There were no equity offerings during the year.

2019 Offerings

In March 2019, the Company completed an underwritten secondary public offering of 5,000,000 shares of its common stock held by certain of the Company’s remaining private equity sponsors (the “Selling Stockholders”), of which the Company repurchased 1,000,000 shares for an aggregate purchase price of approximately $ 140.8 million.

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Pursuant to an agreement with the underwriters, the Company’s per-share purchase price for repurchased shares was the same as the per share purchase price payable by the underwriters to the Selling Stockholders.

2018 Offerings

In November 2018, the Company completed an underwritten secondary public offering of 6,000,000 shares of its common stock held by certain of the Company’s principal stockholders (the “November 2018 Selling Stockholders”), of which the Company repurchased 2,000,000 shares for an aggregate purchase price of approximately $ 247 million.

The Company did not offer any stock in this transaction and did not receive any proceeds from the sale of the shares by the November 2018 Selling Stockholders.

Pursuant to an agreement with the underwriter, the Company’s per-share purchase price for repurchased shares was the same as the per-share purchase price payable by the underwriter to the November 2018 Selling Stockholders.

In June 2018, the Company completed an underwritten secondary public offering of 12,000,000 shares of its common stock held by certain of the Company’s principal stockholders (the “June Selling Stockholders”), of which the Company repurchased 4,000,000 shares for an aggregate purchase price of approximately $ 412 million.

The Company did not offer any stock in this transaction and did not receive any proceeds from the sale of the shares by the June Selling Stockholders.

Other Equity Repurchases

On February 13, 2020, the Company agreed to purchase at market price an aggregate of 1,000,000 shares of its common stock, par value $ 0.01 per share, in a private transaction from certain of its existing shareholders (the “February 2020 Repurchase”).

In addition to the February 2020 Repurchase, certain of the Company’s remaining private equity sponsors informed the Company that they have sold 4,000,000 shares of the Company’s common stock pursuant to Rule 144 under the Securities Act of 1933, as amended, for a total of 5,000,000 shares.

In August 2019, the Company agreed to purchase an aggregate of 1,000,000 shares of its common stock, par value $ 0.01 per share, in a private transaction from certain of its existing shareholders (the “Repurchase”).

In addition to the Repurchase, certain of the Company’s remaining private equity sponsors informed the Company that they have sold 4,000,000 shares of the Company’s common stock pursuant to Rule 144 under the Securities Act of 1933, as amended, for a total of 5,000,000 shares.

In November 2017, the Company completed an underwritten secondary public offering of 10,000,000 shares of its common stock held by certain of the Company’s principal stockholders (the “November Selling Stockholders”), of which the Company repurchased 2,500,000 shares for an aggregate purchase price of approximately $ 255 million.

These shares were repurchased outside of the Company’s existing Repurchase Program.

The Company did not offer any stock in this transaction and did not receive any proceeds from the sale of the shares by the November Selling Stockholders.

Below is a summary of the share repurchases made both under and outside of the Repurchase Program:

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Quest’s non-controlling interest was $ 279 million at December 31, 2020.

During the year ended December 31, 2019, Q 2 Solutions distributed dividends of $ 18 million to Quest and did not receive a contribution from Quest to fund ongoing operational and strategic activities.

Subsequent Events

During the year ended December 31, 2020, Q 2 Solutions distributed dividends of $ 21 million to Quest and received a $ 8 million contribution from Quest to fund ongoing operational and strategic activities.

Business Combinations

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The following table provides certain financial information for these acquisitions, including the preliminary allocations of the purchase prices to certain intangible assets acquired and goodwill:

(in millions)

(in millions) Amortization Period

Total cost of acquisitions, net of cash acquired(1)

Amounts recorded in the Consolidated Balance Sheets:

Goodwill $ 115 $ 437

Portion of goodwill deductible for income tax purposes 99 186

Intangible assets:

Customer relationships

Non-compete agreements

Customer relationships 10 - 18 years $ 90 $ 216

Backlog 0 years — 11

Non-compete agreements 3 - 3 years 2 6

Software 3 - 3 years 8 35

Trade names 2 - 3 years 1 3

Total intangible assets $ 101 $ 271

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The Company has continued to take restructuring actions in 2020 to align its resources and reduce overcapacity to adapt to changing market conditions and integrate acquisitions.

These actions include closing facilities, consolidating functional activities, eliminating redundant positions, and aligning resources with customer requirements.

These actions include consolidating functional activities, eliminating redundant positions, and aligning resources with customer requirements.

These restructuring actions are expected to continue into 2021.

During the first quarter of 2019, there was also a decrease of $ 9 million in facility exit costs due to the reclassification of restructuring into a long-term operating lease liability related to the implementation of ASC 842, Leases.

The management approved plans resulted in approximately $ 52 million, $ 75 million and $ 68 million of restructuring expense, net of reversals, which consisted of severance, facility closure costs and other exit-related costs in 2020, 2019, and 2018, respectively.

The following amounts were recorded for the restructuring plans:

(in millions)

Severance and

Related Costs

(in millions) Severance and Related Costs Exit Costs Total

Balance at December 31, 2018 $ 47 $ 27 $ 74

Expense, net of reversals 75 0 75

Payments ( 57 ) ( 16 ) ( 73 )

Foreign currency translation and other ( 1 ) ( 8 ) ( 9 )

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Expense, net of reversals 52 — 52

Payments ( 67 ) ( 1 ) ( 68 )

Foreign currency translation and other 2 0 2

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(in millions) 2020 2019 2018

Domestic $ ( 649 ) $ ( 504 ) $ ( 521 )

Foreign 1,022 856 849

$ 373 $ 352 $ 328

The components of income tax expense attributable to continuing operations are as follows:

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Federal and state

$ — $ 11 $ 17

Foreign 244 248 233

Deferred (benefit) expense:

Federal and state ( 161 ) ( 109 ) ( 170 )

The differences between the Company’s consolidated income tax expense attributable to continuing operations and the expense computed at the United States statutory income tax rate of 21 % in 2019, 21 % in 2018 and 35 % in 2017 were as follows:

Foreign ( 11 ) ( 34 ) ( 21 )

( 172 ) ( 143 ) ( 191 )

$ 72 $ 116 $ 59

Year Ended December 31,

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Research and development ( 14 ) ( 21 ) ( 20 )

Foreign nontaxable interest income

United States taxes recorded on foreign earnings (*)

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Equity compensation ( 29 ) ( 14 ) ( 8 )

Non-taxable gain on acquisition

Non-taxable gain on acquisition adjustment 6 ( 5 ) —

Non-controlling interest ( 5 ) ( 6 ) ( 3 )

Tax Act impact — — ( 35 )

$ 72 $ 116 $ 59

(*) Includes impact of GILTI, and other U.S.

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In 2020, the U.S.

Treasury Department issued final regulations on the transition tax and proposed regulations on FDII, which was introduced by the Tax Act described below.

Treasury Department issued final regulations regarding Foreign Derived Intangible Income (“FDII”) and Global Intangible Low-Taxed Income (“GILTI”).

The Company has determined it will elect the GILTI high tax exception as allowed by the final regulations and will amend its 2018 and 2019 US Federal consolidated income tax returns resulting in a favorable impact of $ 26 million, which the Company recorded in 2020.

In 2019 the U.S.

Treasury Department issued final regulations on the transition tax and proposed regulations on FDII, which was introduced by the Tax Act enacted by the U.S.

government on December 22, 2017.

The Tax Act is comprehensive legislation that includes provisions that lower the federal corporate income tax rate from 35 % to 21 % beginning in 2018 and imposes a one-time transition tax on undistributed foreign earnings.

While the final regulations related to the transition tax did not have a material impact on the Company, the proposed guidance for FDII had an unfavorable impact.

Although the proposed guidance for FDII is not authoritative and subject to change in the regulatory review process, the company reversed the tax benefit recorded in 2018 by recording a tax expense of $ 25 million for this impact.

It is expected that during 2020 the U.S.

Treasury Department will issue final regulations on FDII.

On December 22, 2017, the U.S.

government enacted the Tax Act.

ASC 740 “Income Taxes” generally requires the effects of the tax law change to be recorded in the

period of enactment.

Staff Accounting Bulletin No.

118 (“SAB 118”) address es situations when a registrant does not have the necessary information available, prepared, or analyzed (including computations) in reasonable detail to complete an accounting assessment and allows companies to record provisional amounts during a measurement period not to extend beyond one year.

Subsequent changes to provisional amounts are reported in the period in which they are determined.

In 2018 the Company recorded a $ 35 million benefit related to finalizing the accounting related to the Tax Act.

Additionally, in 2018 the Company recorded a benefit of $ 25 million related to FDII, as well as a tax expense of $ 35 million related to GILTI, as a result of the new provisions of the Tax Act.

In 2017, due to the Tax Act, the Company revalued its U.S.

deferred tax assets and liabilities and recorded a benefit to deferred income taxes of $ 966 million.

Undistributed earnings of the Company’s foreign subsidiaries amounted to approximately $ 4,075 million at December 31, 2020.

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Employee benefits 228 168

Operating lease liability

Valuation allowance for deferred income tax assets

Lease liability 139 119

Foreign exchange on debt instruments 143 —

interest expense limitation 75 35

Total deferred income tax assets 1,303 1,018

Valuation allowance for deferred income tax assets ( 306 ) ( 266 )

Total deferred income tax assets (net of valuation allowance) 997 752

Deferred income tax liabilities:

Amortization and depreciation ( 1,038 ) ( 1,105 )

Operating lease right-of-use assets

Lease right-of-use assets ( 133 ) ( 119 )

Foreign exchange on debt instruments — ( 28 )

Other ( 50 ) ( 27 )

Total deferred income tax liabilities $ ( 1,221 ) $ ( 1,279 )

Net deferred income tax liabilities $ ( 224 ) $ ( 527 )

During 2019 the net deferred tax liabilities decreased mainly due to amortization of intangibles related to the merger between Quintiles and IMS health (“Merger”).

During 2020 the net deferred tax liabilities decreased mainly due to foreign exchange revaluations of debt instruments and amortization of intangibles related to the merger between Quintiles and IMS Health.

The Company had federal, state and local, and foreign tax loss carryforwards and tax credits, the tax effect of which was $ 646 million as of December 31, 2020.

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In 2020, the Company increased its valuation allowance by $ 40 million to $ 306 million at December 31, 2020 from $ 266 million at December 31, 2019.

The valuation allowance increased primarily due to current year branch basket foreign tax credits that the Company has determined are not more likely than not to be used before their expiration.

The valuation allowance also increased due to an increase in the value of the U.S.

The valuation allowance increased primarily due to current year state tax benefits on foreign exchange revaluations on debt instruments, branch basket foreign tax credits that the Company has determined are not more likely than not to be used before their expiration, and due to an increase in the value of the U.S.

state net operating losses.

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United States 2017 - 2019

India 2006 - 2020

United Kingdom 2019

Switzerland 2015 - 2019

In certain of the jurisdictions noted above, the Company operates through more than one legal entity, each of which has different open years subject to examination.

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Pension Benefits

United States Plans

Non-United States Plans

United States Plans Non-United States Plans

(in millions) 2020 2019 2020 2019

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Interest cost 12 14 8 9

Actuarial (gains) losses

Actuarial losses 65 50 60 55

Business combinations — — — —

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Contributions — — 2 2

Amendments — — ( 1 ) —

Curtailments — — — ( 5 )

Settlements — — ( 7 ) ( 1 )

Foreign currency fluctuations and other — — 29 12

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Benefits paid ( 10 ) ( 10 ) ( 18 ) ( 19 )

Settlements — — ( 7 ) ( 1 )

Foreign currency fluctuations and other — — 17 12

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Other long-term liabilities 47 42 210 171

At December 31, 2019, the benefit obligation for other postretirement benefits was $ 2 million, with $ 1 million recorded in accrued expenses and $ 1 million included within other long-term liabilities;

AOCI ( 21 ) 13 ( 65 ) ( 30 )

At December 31, 2020, the benefit obligation for other postretirement benefits was $ 1 million, with less than $ 1 million recorded in accrued expenses and $ 1 million included within other long-term liabilities;

and the amount recognized in AOCI was less than $ 1 million.

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(in millions) 2020 2019 2020 2019

Plans with accumulated benefit obligation in excess of

Plans with accumulated benefit obligation in excess of plan assets:

Accumulated benefit obligation

$ 52 $ 47 $ 572 $ 485

Fair value of plan assets 5 4 384 334

Plans with projected benefit obligation in excess of

Plans with projected benefit obligation in excess of plan assets:

Projected benefit obligation

$ 53 $ 49 $ 610 $ 519

Fair value of plan assets

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Pension Benefits

United States Plans

Non-United States Plans

United States Plans Non-United States Plans

Year Ended December 31,

(in millions) 2020 2019 2018 2020 2019 2018

Service cost $ 13 $ 12 $ 13 $ 29 $ 25 $ 26

Interest cost 12 14 12 8 9 9

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Net periodic benefit cost ( 5 ) 1 ( 2 ) 20 13 17

Other changes in plan assets and

benefit obligations recognized in

other comprehensive loss:

Other changes in plan assets and benefit obligations recognized in other comprehensive loss:

Actuarial loss (gain) – current years 34 ( 2 ) 22 35 32 ( 15 )

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Amortization of actuarial losses — — — — — ( 1 )

Total recognized in other

comprehensive loss (income)

Total recognized in net periodic benefit

cost and other comprehensive loss

Total recognized in other comprehensive loss (income)

34 ( 2 ) 22 35 37 ( 10 )

Total recognized in net periodic benefit cost and other comprehensive loss (income)

$ 29 $ ( 1 ) $ 20 $ 55 $ 50 $ 7

All components of net periodic benefit cost other than service cost are recorded in other expense (income), net on the accompanying consolidated statements of income.

Gain (losses) affecting the benefit obligation for the period ending December 31, 2020 was primarily related to the change in discount rate .

On October 26, 2018, the High Court of the United Kingdom issued a judgement relating to Guaranteed Minimum Pensions (“GMPs”) in the Lloyds case.

The judgement concluded the schemes should be amended to equalize pension benefits for men and women in relation to guaranteed minimum pension benefits.

A preliminary assessment by the Company’s actuarial advisors estimated an impact of approximately $ 1.7 million between the two United Kingdom pension schemes, which has been recognized in AOCI as a prior service cost in 2018.

service cost in 2018.

On November 20, 2020, the High Court ruled that the schemes should revisit individual transfer payments made since May 17, 1990 to review for any additional amount due as a result of the guaranteed minimum pension equalization.

An assessment by the Company’s actuarial advisors determined that the impact of this ruling to be immaterial.

The weighted average assumptions used to determine net periodic benefit cost were as follows for the years ended December 31:

Pension Benefits

Postretirement Benefits

United States Plans

Non-United States Plans

United States Plans Non-United States Plans

2020 2019 2018 2020 2019 2018

Discount rate

Rate of compensation

Expected return on

3.52 % 4.42 % 3.69 % 1.45 % 1.99 % 1.91 %

Rate of compensation increases

3 % 3 % 3 % 2.78 % 4.54 % 4.54 %

Expected return on plan assets

7.42 % 7.67 % 7.69 % 3.91 % 4.02 % 4.17 %

The weighted average assumptions used to determine benefit obligations were as follows at December 31:

Pension Benefits

What changed 10-K

Item 8. Financial Statements and Supplementary Data