What changed in this filing

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Item 1. Financial Statements

2022-10-27 compared with 2022-07-22 · 125 added, 92 removed, 522 unchanged (29% of the section changed)

4 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

(in millions, except per share data) 2022 2021 2022 2021

24 unchanged sentences

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

Ta b l e o f c o n t e n t s

Table of conten t s

IQVIA HOLDINGS INC.

2 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

(in millions) 2022 2021 2022 2021

1 unchanged sentence

Comprehensive income adjustments:

Unrealized (losses) gains on derivative instruments, net of income tax (benefit) expense of $( 1 ), $( 1 ), $ 8 , $ —

( 7 ) ( 2 ) 23 4

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

( 4 ) — ( 6 ) —

Foreign currency translation, net of income tax expense (benefit) of $ 84 , $( 23 ), $ 111 , $ 39

Unrealized gains (losses) on derivative instruments, net of income tax expense of $ 2 , $ — , $ 10 , $ —

Defined benefit plan adjustments, net of income tax expense of $ 2 , $ — , $ 2 , $ —

Foreign currency translation, net of income tax expense of $ 84 , $ 28 , $ 195 , $ 66

( 218 ) ( 117 ) ( 539 ) ( 237 )

1 unchanged sentence

Reclassifications on derivative instruments included in net income, net of income tax benefit of $ — , $ 1 , $ 4 , $ 2

Comprehensive (loss) income ( 22 ) 234 290 280

Comprehensive income 82 143 372 423

Comprehensive income attributable to non-controlling interests — — — ( 5 )

Comprehensive (loss) income attributable to IQVIA Holdings Inc.

Comprehensive income attributable to IQVIA Holdings Inc.

$ 82 $ 143 $ 372 $ 418

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

Ta b l e o f c o n t e n t s

Table of conten t s

IQVIA HOLDINGS INC.

1 unchanged sentence

CONDENSED CONSOLIDATED BALANCE SHEETS

(in millions, except per share data) June 30, 2022 December 31, 2021

(in millions, except per share data) September 30, 2022 December 31, 2021

Current assets:

30 unchanged sentences

Stockholders’ equity:

Common stock and additional paid-in capital, 400.0 shares authorized as of June 30, 2022 and December 31, 2021, $ 0.01 par value, 256.3 shares issued and 186.6 shares outstanding as of June 30, 2022;

Common stock and additional paid-in capital, 400.0 shares authorized as of September 30, 2022 and December 31, 2021, $ 0.01 par value, 256.3 shares issued and 185.8 shares outstanding as of September 30, 2022;

255.8 shares issued and 190.6 shares outstanding as of December 31, 2021

1 unchanged sentence

Retained earnings 3,107 2,243

Treasury stock, at cost, 69.7 and 65.2 shares as of June 30, 2022 and December 31, 2021, respectively

Treasury stock, at cost, 70.5 and 65.2 shares as of September 30, 2022 and December 31, 2021, respectively

( 7,715 ) ( 6,572 )

3 unchanged sentences

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

Ta b l e o f c o n t e n t s

Table of conten t s

IQVIA HOLDINGS INC.

1 unchanged sentence

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Six Months Ended June 30,

Nine Months Ended September 30,

(in millions) 2022 2021

29 unchanged sentences

Contingent consideration and deferred purchase price payments ( 22 ) ( 39 )

Net cash provided by (used in) financing activities 115 ( 1,031 )

Net cash used in financing activities ( 136 ) ( 1,097 )

Effect of foreign currency exchange rate changes on cash ( 127 ) ( 41 )

Increase (decrease) in cash and cash equivalents 62 ( 7 )

Decrease in cash and cash equivalents ( 92 ) ( 344 )

Cash and cash equivalents at beginning of period 1,366 1,814

1 unchanged sentence

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

Ta b l e o f c o n t e n t s

Table of conten t s

IQVIA HOLDINGS INC.

30 unchanged sentences

Balance, June 30, 2022 256.3 ( 69.7 ) 3 10,787 2,824 ( 7,565 ) ( 697 ) — 5,352

Issuance of common stock — — — ( 1 ) — — — — ( 1 )

Repurchase of common stock — ( 0.8 ) — — — ( 150 ) — — ( 150 )

Stock-based compensation — — — 64 — — — — 64

Net income — — — — 283 — — — 283

Unrealized gains on derivative instruments, net of tax — — — — — — 6 — 6

Defined benefit plan adjustments, net of tax — — — — — — 10 — 10

Foreign currency translation, net of tax — — — — — — ( 218 ) — ( 218 )

Reclassification adjustments, net of tax — — — — — — 1 — 1

Balance, September 30, 2022 256.3 ( 70.5 ) $ 3 $ 10,850 $ 3,107 $ ( 7,715 ) $ ( 898 ) $ — $ 5,347

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

Table of conten t s

IQVIA HOLDINGS INC.

AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(in millions) Common

26 unchanged sentences

Balance, June 30, 2021 255.6 ( 64.0 ) 3 10,693 1,664 ( 6,273 ) ( 327 ) — 5,760

Issuance of common stock — — — 4 — — — — 4

Repurchase of common stock — ( 0.5 ) — — — ( 125 ) — — ( 125 )

Stock-based compensation — — — 48 — — — — 48

Acquisition of Quest's non-controlling interest, net of tax — — ( 1 ) — — — — ( 1 )

Net income — — — — 261 — — — 261

Unrealized losses on derivative instruments, net of tax — — — — — — ( 4 ) — ( 4 )

Foreign currency translation, net of tax — — — — — — ( 117 ) — ( 117 )

Reclassification adjustments, net of tax — — — — — — 3 — 3

Balance, September 30, 2021 255.6 ( 64.5 ) $ 3 $ 10,744 $ 1,925 $ ( 6,398 ) $ ( 445 ) $ — $ 5,829

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

Ta b l e o f c o n t e n t s

Table of conten t s

IQVIA HOLDINGS INC.

14 unchanged sentences

Accounting pronouncements adopted

In October 2021, the Financial Accounting Standards Board issued new accounting guidance that requires contract assets and contract liabilities (i.e., deferred revenue) acquired in a business combination to be recognized and measured by the acquirer on the acquisition date in accordance with Accounting Standards Codification (“ASC”) 606, Revenue from Contracts with Customers.

Under current GAAP, an acquirer generally recognizes assets acquired and liabilities assumed in a business combination, including contract assets and contract liabilities arising from revenue contracts with customers and other similar contracts that are accounted for in accordance with ASC 606, at fair value on the acquisition date.

In October 2021, the Financial Accounting Standards Board ("FASB") issued new accounting guidance that requires contract assets and contract liabilities (i.e., deferred revenue) acquired in a business combination to be recognized and measured by the acquirer on the acquisition date in accordance with Accounting Standards Codification (“ASC”) 606, Revenue from Contracts with Customers.

Under previous GAAP, an acquirer generally recognized assets acquired and liabilities assumed in a business combination, including contract assets and contract liabilities arising from revenue contracts with customers and other similar contracts that are accounted for in accordance with ASC 606, at fair value on the acquisition date.

Generally, this new guidance will result in the acquirer recognizing contract assets and contract liabilities at the same amounts recorded by the acquiree.

The Company adopted this new accounting guidance effective January 1, 2022.

The adoption of this new accounting guidance did not have a material impact on the Company's consolidated financial statements for the three and six months ended June 30, 2022.

The adoption of this new accounting guidance did not have a material impact on the Company's consolidated financial statements for the three and nine months ended September 30, 2022.

The impact of this guidance on the Company's consolidated financial statements for the remainder of the year will depend on the size and nature of future acquisitions, if any .

Ta b l e o f c o n t e n t s

Table of conten t s

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

The following tables represent revenues by geographic region and reportable segment for the three and six months ended June 30, 2022 and 2021:

Three Months Ended June 30, 2022

The following tables represent revenues by geographic region and reportable segment for the three and nine months ended September 30, 2022 and 2021:

Three Months Ended September 30, 2022

(in millions) Technology &

6 unchanged sentences

Total revenues $ 1,400 $ 1,979 $ 183 $ 3,562

Three Months Ended June 30, 2021

Three Months Ended September 30, 2021

(in millions) Technology &

6 unchanged sentences

Total revenues $ 1,337 $ 1,853 $ 201 $ 3,391

Six Months Ended June 30, 2022

Nine Months Ended September 30, 2022

(in millions) Technology &

6 unchanged sentences

Total revenues $ 4,247 $ 5,863 $ 561 $ 10,671

Six Months Ended June 30, 2021

Nine Months Ended September 30, 2021

(in millions) Technology &

6 unchanged sentences

Total revenues $ 4,038 $ 5,612 $ 588 $ 10,238

No individual customer represented 10% or more of consolidated revenues for the three and six months ended June 30, 2022 or 2021.

No individual customer represented 10% or more of consolidated revenues for the three and nine months ended September 30, 2022 or 2021.

Transaction Price Allocated to the Remaining Performance Obligations

As of June 30, 2022, approximately $ 28.7 billion of revenue is expected to be recognized in the future from remaining performance obligations.

As of September 30, 2022, approximately $ 27.9 billion of revenue is expected to be recognized in the future from remaining performance obligations.

The Company expects to recognize revenue on approximately 30 % of these remaining performance obligations over the next twelve months , with the balance recognized thereafter.

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 .

Ta b l e o f c o n t e n t s

Table of conten t s

Trade Accounts Receivable, Unbilled Services and Unearned Income

Trade accounts receivables and unbilled services consist of the following:

(in millions) June 30, 2022 December 31, 2021

(in millions) September 30, 2022 December 31, 2021

Billed $ 1,145 $ 1,275

4 unchanged sentences

Unbilled services and unearned income were as follows:

(in millions) June 30, 2022 December 31, 2021 Change

(in millions) September 30, 2022 December 31, 2021 Change

Unbilled services $ 1,526 $ 1,309 $ 217

1 unchanged sentence

Net balance $ ( 316 ) $ ( 516 ) $ 200

Unbilled services, which is comprised of approximately 61 % and 62 % of unbilled receivables and 39 % and 38 % of contract assets as of June 30, 2022 and December 31, 2021, respectively, increased by $ 137 million as compared to December 31, 2021.

Unbilled services, which is comprised of approximately 61 % and 63 % of unbilled receivables and 39 % and 37 % of contract assets as of September 30, 2022 and December 31, 2021, respectively, increased by $ 217 million as compared to December 31, 2021.

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 decreased by $ 15 million over the same period resulting in an increase of $ 152 million in the net balance of unbilled services and unearned income between December 31, 2021 and June 30, 2022.

Unearned income increased by $ 17 million over the same period resulting in an increase of $ 200 million in the net balance of unbilled services and unearned income between December 31, 2021 and September 30, 2022.

The change in the net balance is driven by the difference in timing of revenue recognition in accordance with ASC 606, Revenue from Contracts with Customers, primarily 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 three and six months ended June 30, 2022 and 2021.

The following is a summary of goodwill by reportable segment for the six months ended June 30, 2022:

Bad debt expense recognized on the Company’s receivables and unbilled services was de minimis for the three and nine months ended September 30, 2022 and 2021.

The following is a summary of goodwill by reportable segment for the nine months ended September 30, 2022:

(in millions) Technology & Analytics Solutions Research & Development Solutions Contract Sales & Medical Solutions Consolidated

2 unchanged sentences

Impact of foreign currency fluctuations and other ( 802 ) ( 46 ) ( 15 ) ( 863 )

Balance as of June 30, 2022 $ 10,938 $ 2,014 $ 152 $ 13,104

Ta b l e o f c o n t e n t s

Balance as of September 30, 2022 $ 11,038 $ 1,992 $ 147 $ 13,177

Table of conten t s

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

(in millions) Balance Sheet Classification June 30, 2022 December 31, 2021

(in millions) Balance Sheet Classification September 30, 2022 December 31, 2021

Assets Liabilities Notional Assets Liabilities Notional

4 unchanged sentences

The pre-tax effect of the Company’s cash flow hedging instruments on other comprehensive income is summarized in the following table:

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

(in millions) 2022 2021 2022 2021

2 unchanged sentences

Total $ 9 $ ( 1 ) $ 57 $ 8

The amount of foreign exchange gains related to the net investment hedge included in the cumulative translation adjustment component of accumulated other comprehensive (loss) income (“AOCI”) for the six months ended June 30, 2022 and 2021 was $ 466 million and $ 206 million, respectively.

The amount of foreign exchange gains related to the net investment hedge included in the cumulative translation adjustment component of accumulated other comprehensive (loss) income (“AOCI”) for the nine months ended September 30, 2022 and 2021 was $ 807 million and $ 332 million, respectively.

Fair Value Measurements

10 unchanged sentences

This includes certain pricing models, discounted cash flow methodologies and similar techniques that use significant unobservable inputs.

The carrying values of cash, cash equivalents, accounts receivable and accounts payable approximated their fair values as of June 30, 2022 and December 31, 2021 due to their short-term nature.

As of June 30, 2022 and December 31, 2021, the fair value of total debt approximated $ 12,050 million and $ 12,255 million, respectively, as determined under Level 1 and Level 2 measurements for these financial instruments.

Ta b l e o f c o n t e n t s

The carrying values of cash, cash equivalents, accounts receivable and accounts payable approximated their fair values as of September 30, 2022 and December 31, 2021 due to their short-term nature.

As of September 30, 2022 and December 31, 2021, the fair value of total debt approximated $ 11,603 million and $ 12,255 million, respectively, as determined under Level 1 and Level 2 measurements for these financial instruments.

Table of conten t s

Recurring Fair Value Measurements

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 June 30, 2022:

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 September 30, 2022:

(in millions) Level 1 Level 2 Level 3 Total

12 unchanged sentences

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.

Based on the assessments of the probability of achieving specific targets, as of June 30, 2022 the Company has accrued approximately 81 % of the maximum contingent consideration payments that could potentially become payable.

The following table summarizes the changes in Level 3 financial assets and liabilities measured on a recurring basis for the six months ended June 30:

Based on the assessments of the probability of achieving specific targets, as of September 30, 2022 the Company has accrued approximately 73 % of the maximum contingent consideration payments that could potentially become payable.

The following table summarizes the changes in Level 3 financial assets and liabilities measured on a recurring basis for the nine months ended September 30:

Contingent Consideration

4 unchanged sentences

Revaluations included in earnings and foreign currency translation adjustments ( 17 ) ( 25 )

Balance as of June 30 $ 76 $ 86

Balance as of September 30 $ 95 $ 96

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

2 unchanged sentences

Non-recurring Fair Value Measurements

As of June 30, 2022, assets carried on the balance sheet and not remeasured to fair value on a recurring basis totaled approximately $ 17,969 million and were identified as Level 3.

As of September 30, 2022, assets carried on the balance sheet and not remeasured to fair value on a recurring basis totaled approximately $ 18,021 million and were identified as Level 3.

These assets are comprised of cost and equity method investments of $ 126 million, goodwill of $ 13,177 million and other identifiable intangibles, net of $ 4,718 million.

Ta b l e o f c o n t e n t s

Table of conten t s

Credit Arrangements

The following is a summary of the Company’s revolving credit facilities as of June 30, 2022:

The following is a summary of the Company’s revolving credit facilities as of September 30, 2022:

Interest Rates

$ 1,500 million (revolving credit facility)

LIBOR in the relevant currency borrowed plus a margin of 1.25 % as of June 30, 2022

LIBOR in the relevant currency borrowed plus a margin of 1.25 % as of September 30, 2022

$ 110 million (receivables financing facility)

LIBOR Market Index Rate ( 1.79 % as of June 30, 2022) plus 0.90 %

LIBOR Market Index Rate ( 3.14 % as of September 30, 2022) plus 0.90 %

The following table summarizes the Company’s debt at the dates indicated:

(dollars in millions) June 30, 2022 December 31, 2021

(dollars in millions) September 30, 2022 December 31, 2021

Revolving Credit Facility due 2026:

32 unchanged sentences

Long-term debt $ 12,243 $ 12,034

Ta b l e o f c o n t e n t s

Contractual maturities of long-term debt are as follows as of June 30, 2022:

Table of conten t s

Contractual maturities of long-term debt are as follows as of September 30, 2022:

(in millions)

7 unchanged sentences

The proceeds from the Additional Term A Loans were used to repay approximately $ 950 million of outstanding revolving credit loans under the Company’s Credit Agreement and for general corporate purposes.

As of June 30, 2022, the Company’s Credit Agreement provided financing through several senior secured credit facilities of up to approximately $ 8,173 million, which consisted of $ 6,673 million principal amounts of debt outstanding (as detailed in the table above), and $ 1,500 million of available borrowing capacity on the $ 1,500 million revolving credit facility and standby letters of credit.

As of September 30, 2022, the Company’s Credit Agreement provided financing through several senior secured credit facilities of up to approximately $ 8,009 million, which consisted of $ 6,509 million principal amounts of debt outstanding (as detailed in the table above), and $ 1,500 million of available borrowing capacity on the $ 1,500 million revolving credit facility and standby letters of credit.

The revolving credit facility is comprised of a $ 675 million senior secured revolving facility available in U.S.

6 unchanged sentences

The Company’s long-term debt arrangements contain other usual and customary restrictive covenants that, among other things, place limitations on the Company’s ability to declare dividends.

As of June 30, 2022, the Company was in compliance in all material respects with the financial covenants under the Company’s financing arrangements .

As of September 30, 2022, the Company was in compliance in all material respects with the financial covenants under the Company’s financing arrangements .

Contingencies

5 unchanged sentences

As additional information becomes available, the Company adjusts its assessments and estimates of such liabilities accordingly.

Ta b l e o f c o n t e n t s

The Company routinely enters into agreements with third parties, including our clients and suppliers, all in the normal course of business.

Table of conten t s

The Company routinely enters into agreements with third parties, including its clients and suppliers, all in the normal course of business.

In these agreements, the Company sometimes agrees to indemnify and hold harmless the other party for any damages such other party may suffer as a result of potential intellectual property infringement and other claims.

32 unchanged sentences

Veeva is currently appealing the Order.

Ta b l e o f c o n t e n t s

Table of conten t s

In 2016, IQVIA acquired Dimensions Healthcare LLC (“Dimensions”), a company operating in the Middle East that was engaged in a joint venture with MedImpact International LLC (“MedImpact International”).

7 unchanged sentences

MedImpact further seeks to enjoin IQVIA from continuing to misuse its intellectual property.

IQVIA rejects the claims raised by MedImpact and is vigorously defending IQVIA’s position.

The parties have mostly completed discovery and await the Court’s decisions on numerous motions, including motions for summary judgment.

A trial date is anticipated in 2023.

On October 7, 2022, the Court dismissed MedImpact’s RICO claims as well as all claims against IQVIA Inc., IQVIA Ltd., and one of the individual employee defendants.

A trial date on the remaining claims is anticipated in 2023.

IQVIA rejects all of the claims raised by MedImpact and is vigorously defending IQVIA’s position.

On December 13, 2021, IQVIA filed suit against MedImpact in the same California federal court, alleging that MedImpact and a former executive misappropriated and misused IQVIA’s intellectual property received in the same prior joint venture, in violation of, among other things, the DTSA and RICO.

3 unchanged sentences

The Company is authorized to issue 1.0 million shares of preferred stock, $ 0.01 per share par value.

No shares of preferred stock were issued or outstanding as of June 30, 2022 or December 31, 2021.

No shares of preferred stock were issued or outstanding as of September 30, 2022 or December 31, 2021.

Equity Repurchase Program

On February 10, 2022, the Company’s Board of Directors (the “Board”) increased the stock repurchase authorization under the Company's equity repurchase program (the “Repurchase Program”) with respect to the repurchase of the Company’s common stock by an additional $ 2.0 billion, which increased the total amount that has been authorized under the Repurchase Program to $ 9.725 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.

During the six months ended June 30, 2022, the Company repurchased 4.5 million shares of its common stock for $ 993 million under the Repurchase Program.

These amounts include approximately 0.5 million of shares valued at approximately $ 100 million, which were accrued for as of June 30, 2022 based on the terms of the transactions.

As of June 30, 2022, the Company has remaining authorization to repurchase up to approximately $ 1.5 billion of its common stock under the Repurchase Program.

During the nine months ended September 30, 2022, the Company repurchased 5.3 million shares of its common stock for $ 1,143 million under the Repurchase Program.

These amounts include approximately 0.2 million of shares valued at approximately $ 40 million, which were accrued for as of September 30, 2022 based on when the trade and settlement dates occurred.

As of September 30, 2022, the Company has remaining authorization to repurchase up to approximately $ 1.4 billion of its common stock under the Repurchase Program.

In addition, from time to time, the Company has repurchased and may continue to repurchase common stock through private or other transactions outside of the Repurchase Program.

Business Combinations

The Company completed several individually immaterial acquisitions during the six months ended June 30, 2022.

The Company completed several individually immaterial acquisitions during the nine months ended September 30, 2022.

The Company’s assessment of fair value, including the valuation of certain identified intangibles, and the purchase price allocation related to these acquisitions is preliminary and subject to change upon completion.

3 unchanged sentences

Pro forma information is not presented as pro forma results of operations would not be materially different to the actual results of operations of the Company.

Ta b l e o f c o n t e n t s

Table of conten t s

The following table provides certain preliminary financial information for these acquisitions:

(in millions) June 30, 2022

(in millions) September 30, 2022

Assets acquired:

6 unchanged sentences

Net assets acquired (1) $ 1,095

(1) Net assets acquired includes contingent consideration and deferred purchase price of $ 26 million for the six months ended June 30, 2022.

(1) Net assets acquired includes contingent consideration and deferred purchase price of $ 58 million for the nine months ended September 30, 2022.

The portion of goodwill deductible for income tax purposes was preliminarily assessed as $ 30 million.

The following table provides a summary of the preliminary estimated fair value of certain intangible assets acquired:

(in millions) Amortization Period June 30, 2022

(in millions) Amortization Period September 30, 2022

Other identifiable intangibles:

Customer relationships 1 - 17 years $ 311

Non-compete agreements 3 years 3

Software and related assets 3 - 5 years 58

Trade names 2 years 3

Backlog 1 - 4 years 14

Databases 5 years 11

Trade names 2 - 3 years 6

Non-compete agreements 3 years 3

Total Other identifiable intangibles $ 403

10 unchanged sentences

Foreign currency translation and other ( 2 )

Balance as of June 30, 2022 $ 23

Balance as of September 30, 2022 $ 21

The reversals were due to changes in estimates primarily from the redeployment of staff and higher than expected voluntary terminations.

Restructuring costs are not allocated to the Company’s reportable segments as they are not part of the segment performance measures regularly reviewed by management.

The Company expects that the majority of the restructuring accruals as of June 30, 2022 will be paid in 2022 and 2023.

Ta b l e o f c o n t e n t s

The effective income tax rate was 21.6 % in the second quarter of 2022 and 2021, and 19.5 % and 19.2 % in the first six months of 2022 and 2021, respectively.

The effective income tax rate in the second quarter and in the first six months of 2022 and 2021 was favorably impacted as a result of excess tax benefits recognized upon settlement of share-based compensation awards.

For the second quarter of 2022 and 2021 this impact was $ 1 million and $ 6 million, respectively, and for the first six months of 2022 and 2021 this impact was $ 14 million and $ 23 million , respectively.

The Company expects that the majority of the restructuring accruals as of September 30, 2022 will be paid in 2022 and 2023.

Table of conten t s

The effective income tax rate was 19.4 % and 4.4 % in the third quarter of 2022 and 2021, respectively, and 19.5 % and 13.8 % in the first nine months of 2022 and 2021, respectively.

The effective income tax rate in the third quarter and the first nine months of 2022 and 2021 was favorably impacted by the Company recording a benefit related to the 2021 and 2020 U.S.

Federal tax return position associated with Foreign Derived Intangible Income (“FDII”) and Global Intangible Low-Taxed Income (“GILTI”) tax credits of $ 6 million and $ 29 million, respectively.

Additionally, the effective income tax rate in the third quarter and in the first nine months of 2022 and 2021 was favorably impacted as a result of excess tax benefits recognized upon settlement of share-based compensation awards.

For the third quarter of 2022 and 2021 this impact was $ 1 million and $ 3 million, respectively, and for the first nine months of 2022 and 2021 this impact was $ 15 million and $ 26 million , respectively.

On August 16, 2022, the U.S.

government enacted the Inflation Reduction Act of 2022, which, among other things, implements a 15% minimum tax on book income of certain large corporations, a 1% excise tax on net stock repurchases and several tax incentives to promote clean energy.

The Company is assessing these impacts on its condensed consolidated financial statements.

Accumulated Other Comprehensive (Loss) Income

6 unchanged sentences

Reclassification adjustments — 18 — ( 4 ) 14

Balance as of June 30, 2022 $ ( 780 ) $ 27 $ ( 1 ) $ 57 $ ( 697 )

Balance as of September 30, 2022 $ ( 914 ) $ 36 $ 11 $ ( 31 ) $ ( 898 )

Below is a summary of the adjustments for amounts reclassified from AOCI into the condensed consolidated statements of income and the affected financial statement line item:

(in millions) Affected Financial Statement

Line Item Three Months Ended June 30, Six Months Ended June 30,

Line Item Three Months Ended September 30, Nine Months Ended September 30,

2022 2021 2022 2021

15 unchanged sentences

The Company’s reportable segment information is presented below:

Ta b l e o f c o n t e n t s

Three Months Ended June 30, Six Months Ended June 30,

Table of conten t s

Three Months Ended

September 30, Nine Months Ended

September 30,

(in millions) 2022 2021 2022 2021

25 unchanged sentences

The following table reconciles the basic to diluted weighted average shares outstanding:

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

(in millions, except per share data) 2022 2021 2022 2021

9 unchanged sentences

Performance awards are included in diluted earnings per share based on if the performance targets have been met at the end of the reporting period.

Ta b l e o f c o n t e n t s

For the three and six months ended June 30, 2022 and 2021, the weighted average number of outstanding stock-based awards not included in the computation of diluted earnings per share because they are subject to performance conditions that have not been met at the end of the reporting period or the effect of including such stock-based awards in the computation would be anti-dilutive was 0.7 and 1.0 million, and 0.5 and 1.0 million, respectively.

Ta b l e o f c o n t e n t s

Table of conten t s

For the three and nine months ended September 30, 2022 and 2021, the weighted average number of outstanding stock-based awards not included in the computation of diluted earnings per share because they are subject to performance conditions that have not been met at the end of the reporting period or the effect of including such stock-based awards in the computation would be anti-dilutive was 0.4 and 0.9 million, and 0.5 and 0.9 million, respectively.

Subsequent Events

On October 13, 2022, the Company elected to prepay $ 510 million, the entire outstanding balance, of its U.S.

Dollar Term B Loan due 2024.

Table of conten t s

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements