What changed in this filing

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Item 1. Financial Statements

2024-07-22 compared with 2024-05-02 · 108 added, 70 removed, 453 unchanged (28% of the section changed)

3 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

Three Months Ended March 31,

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

(in millions, except per share data) 2024 2023 2024 2023

7 unchanged sentences

Interest expense 163 169 329 310

Other expense (income), net 11 ( 26 )

Income before income taxes and equity in losses of unconsolidated affiliates 340 362

Other income, net ( 67 ) ( 16 ) ( 56 ) ( 42 )

Income before income taxes and equity in earnings (losses) of unconsolidated affiliates 436 375 776 737

Income tax expense 75 81 124 152

Income before equity in losses of unconsolidated affiliates 291 291

Equity in losses of unconsolidated affiliates ( 3 ) ( 2 )

Income before equity in earnings (losses) of unconsolidated affiliates 361 294 652 585

Equity in earnings (losses) of unconsolidated affiliates 2 3 ( 1 ) 1

Net income $ 363 $ 297 $ 651 $ 586

9 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

Three Months Ended March 31,

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

(in millions) 2024 2023 2024 2023

4 unchanged sentences

Foreign currency translation, net of income tax expense (benefit) of $ 13 ,$( 3 ),$ 50 ,$( 32 )

( 42 ) ( 44 ) ( 111 ) ( 34 )

Reclassification adjustments:

Reclassifications on derivative instruments included in net income, net of income tax (expense) of $( 4 ),$( 3 ),$( 7 ),$( 11 )

( 11 ) ( 7 ) ( 20 ) ( 32 )

Comprehensive income $ 325 $ 268 $ 569 $ 553

3 unchanged sentences

CONDENSED CONSOLIDATED BALANCE SHEETS

(in millions, except per share data) March 31, 2024 December 31, 2023

(in millions, except per share data) June 30, 2024 December 31, 2023

Current assets:

30 unchanged sentences

Stockholders’ equity:

Common stock and additional paid-in capital, 400.0 shares authorized as of March 31, 2024 and December 31, 2023, $ 0.01 par value, 257.9 shares issued and 182.2 shares outstanding as of March 31, 2024;

Common stock and additional paid-in capital, 400.0 shares authorized as of June 30, 2024 and December 31, 2023, $ 0.01 par value, 258.0 shares issued and 182.3 shares outstanding as of June 30, 2024;

257.2 shares issued and 181.5 shares outstanding as of December 31, 2023

1 unchanged sentence

Retained earnings 5,343 4,692

Treasury stock, at cost, 75.7 and 75.7 shares as of March 31, 2024 and December 31, 2023, respectively

Treasury stock, at cost, 75.7 and 75.7 shares as of June 30, 2024 and December 31, 2023, respectively

( 8,741 ) ( 8,741 )

6 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Three Months Ended March 31,

Six Months Ended June 30,

(in millions) 2024 2023

5 unchanged sentences

Stock-based compensation 104 125

Losses from unconsolidated affiliates 3 2

Losses (earnings) from unconsolidated affiliates 1 ( 1 )

Gain on investments, net ( 12 ) ( 10 )

10 unchanged sentences

Investments in debt and equity securities ( 2 ) ( 36 )

Proceeds from sale of property, equipment and software 25 —

Net cash used in investing activities ( 535 ) ( 818 )

Financing activities:

Proceeds from issuance of debt — 1,250

Payment of debt issuance costs — ( 18 )

Repayment of debt and principal payments on finance leases ( 86 ) ( 77 )

22 unchanged sentences

Balance, March 31, 2024 257.9 ( 75.7 ) $ 3 $ 11,013 $ 4,980 $ ( 8,741 ) $ ( 911 ) $ 6,344

Issuance of common stock 0.1 — — 1 — — — 1

Stock-based compensation — — — 44 — — — 44

Net income — — — — 363 — — 363

Unrealized gains on derivative instruments, net of tax — — — — — — 15 15

Foreign currency translation, net of tax — — — — — — ( 42 ) ( 42 )

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

Balance, June 30, 2024 258.0 ( 75.7 ) $ 3 $ 11,058 $ 5,343 $ ( 8,741 ) $ ( 949 ) $ 6,714

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

9 unchanged sentences

Balance, March 31, 2023 256.9 ( 71.4 ) $ 3 $ 10,906 $ 3,623 $ ( 7,869 ) $ ( 731 ) $ 5,932

Issuance of common stock 0.1 — — — — — — —

Repurchase of common stock, net of tax — ( 2.5 ) — — — ( 495 ) — ( 495 )

Stock-based compensation — — — 43 — — — 43

Net income — — — — 297 — — 297

Unrealized gains on derivative instruments, net of tax — — — — — — 22 22

Foreign currency translation, net of tax — — — — — — ( 44 ) ( 44 )

Reclassification adjustments, net of tax — — — — — — ( 7 ) ( 7 )

Balance, June 30, 2023 257.0 ( 73.9 ) $ 3 $ 10,949 $ 3,920 $ ( 8,364 ) $ ( 760 ) $ 5,748

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

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Recently Issued Accounting Standards

Accounting pronouncements issued but not adopted as of March 31, 2024

Accounting pronouncements issued but not adopted as of June 30, 2024

In November 2023, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2023-07, Segment Reporting (Topic 280):

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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 months ended March 31, 2024 and 2023:

Three Months Ended March 31, 2024

The following tables represent revenues by geographic region and reportable segment for the three and six months ended June 30, 2024 and 2023:

Three Months Ended June 30, 2024

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

3 unchanged sentences

Total revenues $ 1,495 $ 2,147 $ 172 $ 3,814

Three Months Ended March 31, 2023

Three Months Ended June 30, 2023

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

3 unchanged sentences

Total revenues $ 1,456 $ 2,096 $ 176 $ 3,728

No individual customer represented 10% or more of consolidated revenues for the three months ended March 31, 2024 or 2023.

Six Months Ended June 30, 2024

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

Americas $ 1,526 $ 2,000 $ 139 $ 3,665

Europe and Africa 1,131 1,092 112 2,335

Asia-Pacific 291 1,150 110 1,551

Total revenues $ 2,948 $ 4,242 $ 361 $ 7,551

Six Months Ended June 30, 2023

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

Americas $ 1,507 $ 1,965 $ 150 $ 3,622

Europe and Africa 1,087 1,027 96 2,210

Asia-Pacific 306 1,130 112 1,548

Total revenues $ 2,900 $ 4,122 $ 358 $ 7,380

No individual customer represented 10% or more of consolidated revenues for the three and six months ended June 30, 2024 or 2023.

Transaction Price Allocated to the Remaining Performance Obligations

As of March 31, 2024, approximately $ 33.0 billion of revenues are expected to be recognized in the future from remaining performance obligations.

As of June 30, 2024, approximately $ 32.8 billion of revenues are expected to be recognized in the future from remaining performance obligations.

The Company expects to recognize revenues on approximately 30 % of these remaining performance obligations over the next twelve months , on approximately 80 % over the next five years, with the balance recognized thereafter.

3 unchanged sentences

Trade accounts receivables and unbilled services consist of the following:

(in millions) March 31, 2024 December 31, 2023

(in millions) June 30, 2024 December 31, 2023

Trade accounts receivable $ 1,357 $ 1,473

4 unchanged sentences

Unbilled services and unearned income were as follows:

(in millions) March 31, 2024 December 31, 2023 Change

(in millions) June 30, 2024 December 31, 2023 Change

Unbilled services $ 1,938 $ 1,942 $ ( 4 )

1 unchanged sentence

Net balance $ 127 $ 143 $ ( 16 )

Unbilled services, which is comprised of approximately 67 % and 66 % of unbilled receivables and 33 % and 34 % of contract assets as of March 31, 2024 and December 31, 2023, respectively, increased by $ 77 million as compared to December 31, 2023.

Unbilled services, which is comprised of approximately 69 % and 68 % of unbilled receivables and 31 % and 32 % of contract assets as of June 30, 2024 and December 31, 2023, respectively, decreased by $ 4 million as compared to December 31, 2023.

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 $ 115 million over the same period resulting in a decrease of $ 38 million in the net balance of unbilled services and unearned income between March 31, 2024 and December 31, 2023.

Unearned income increased by $ 12 million over the same period resulting in a decrease of $ 16 million in the net balance of unbilled services and unearned income between June 30, 2024 and December 31, 2023.

The change in the net balance is driven by the difference in timing of revenue recognition in accordance with Accounting Standards Codification ("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.

The majority of the unearned income balance as of the beginning of the year is expected to be recognized in revenues during the year ended December 31, 2024.

Bad debt expense recognized on the Company’s trade accounts receivable was immaterial for the three months ended March 31, 2024 and 2023.

Bad debt expense recognized on the Company’s trade accounts receivable was immaterial for the three and six months ended June 30, 2024 and 2023.

Accounts Receivable Factoring Arrangements

The Company has accounts receivable factoring agreements to sell certain eligible unsecured trade accounts receivable, either based on automatic arrangements or at its option, without recourse, to unrelated third-party financial institutions for cash.

During the three months ended March 31, 2024, through its accounts receivable factoring arrangements that the Company utilizes most frequently, the Company factored approximately $ 211 million of customer invoices on a non-recourse basis and received approximately $ 206 million in cash proceeds from the sales.

During the six months ended June 30, 2024, through its accounts receivable factoring arrangements that the Company utilizes most frequently, the Company factored approximately $ 380 million of customer invoices on a non-recourse basis and received approximately $ 370 million in cash proceeds from the sales.

The fees associated with these transactions were immaterial.

The Company has other accounts receivable arrangements for which the activity associated with them is immaterial.

The following is a summary of goodwill by reportable segment for the three months ended March 31, 2024:

The following is a summary of goodwill by reportable segment for the six months ended June 30, 2024:

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

2 unchanged sentences

Impact of foreign currency fluctuations and other ( 223 ) ( 8 ) ( 6 ) ( 237 )

Balance as of March 31, 2024 $ 11,935 $ 2,433 $ 148 $ 14,516

Balance as of June 30, 2024 $ 11,900 $ 2,431 $ 146 $ 14,477

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 March 31, 2024 December 31, 2023

(in millions) Balance Sheet Classification June 30, 2024 December 31, 2023

Assets Liabilities Notional Assets Liabilities Notional

5 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 March 31,

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

(in millions) 2024 2023 2024 2023

2 unchanged sentences

Total $ 4 $ 20 $ 38 $ —

The Company expects approximately $ 38 million of pre-tax unrealized gains related to its foreign exchange contracts and interest rate derivatives included in accumulated other comprehensive (loss) income (“AOCI”) as of March 31, 2024 to be reclassified into earnings within the next twelve months.

The total amount, net of income taxes, of the cash flow hedge effect on the accompanying condensed consolidated financial statements of income was $ 9 million and $ 25 million for the three months ended March 31, 2024 and 2023, respectively.

As of March 31, 2024, the Company's cross-currency swaps were designated as a hedge of its net investment in certain foreign subsidiaries.

For the three months ended March 31, 2024, the Company recorded a gain of $ 56 million within AOCI as a result of these cross-currency swaps.

The Company recognized approximately $ 9 million related to the excluded component as a reduction of interest expense for the three months ended March 31, 2024.

As of March 31, 2024, the portion of the Company's foreign currency denominated debt balance (net of original issue discount) designated as a hedge of its net investment in certain foreign subsidiaries totaled € 2,789 million ($ 3,011 million).

The amount of foreign exchange gains (losses) related to the net investment hedge included in the cumulative translation adjustment component of AOCI for the three months ended March 31, 2024 and 2023 was $ 68 million and $( 89 ) million, respectively.

The Company expects approximately $ 33 million of pre-tax unrealized gains related to its foreign exchange contracts and interest rate derivatives included in accumulated other comprehensive (loss) income (“AOCI”) as of June 30, 2024 to be reclassified into earnings within the next twelve months.

For the three and six months ended June 30, 2024 and 2023, the total amount, net of income taxes, of the cash flow hedge effect on the accompanying condensed consolidated financial statements of income was $ 11 million and $ 7 million, and $ 20 million and $ 32 million, respectively.

As of June 30, 2024, the Company's cross-currency swaps were designated as a hedge of its net investment in certain foreign subsidiaries.

For the six months ended June 30, 2024, the Company recorded a gain of $ 107 million within AOCI as a result of these cross-currency swaps.

The Company recognized approximately $ 9 million and $ 18 million related to the excluded component as a reduction of interest expense for the three and six months ended June 30, 2024, respectively.

As of June 30, 2024, the portion of the Company's foreign currency denominated debt balance (net of original issue discount) designated as a hedge of its net investment in certain foreign subsidiaries totaled € 2,688 million ($ 2,881 million).

The amount of foreign exchange gains (losses) related to the net investment hedge included in the cumulative translation adjustment component of AOCI for the six months ended June 30, 2024 and 2023 was $ 88 million and $( 92 ) 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 March 31, 2024 and December 31, 2023 due to their short-term nature.

As of March 31, 2024 and December 31, 2023, the fair value of total debt was $ 13,397 million and $ 13,597 million, respectively, as determined under Level 2 measurements for these financial instruments.

The carrying values of cash, cash equivalents, accounts receivable and accounts payable approximated their fair values as of June 30, 2024 and December 31, 2023 due to their short-term nature.

As of June 30, 2024 and December 31, 2023, the fair value of total debt was $ 13,111 million and $ 13,597 million, respectively, as determined under Level 2 measurements for these financial instruments.

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 March 31, 2024:

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, 2024:

(in millions) Level 1 Level 2 Level 3 Total

21 unchanged sentences

Assumptions used to estimate the fair value of contingent consideration include various financial metrics (revenues 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 March 31, 2024, the Company has accrued approximately 42 % 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 three months ended March 31, 2024:

Based on the assessments of the probability of achieving specific targets, as of June 30, 2024, the Company has accrued approximately 22 % 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, 2024:

(in millions) Contingent Consideration

3 unchanged sentences

Revaluations included in earnings and foreign currency translation adjustments ( 60 )

Balance as of March 31, 2024 $ 119

Balance as of June 30, 2024 $ 65

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.

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

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

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

Non-recurring Fair Value Measurements

As of March 31, 2024, assets carried on the balance sheet and not remeasured to fair value on a recurring basis totaled $ 19,477 million and were identified as Level 3.

As of June 30, 2024, assets carried on the balance sheet and not remeasured to fair value on a recurring basis totaled $ 19,349 million and were identified as Level 3.

These assets are comprised of debt investments and cost and equity method investments of $ 264 million, goodwill of $ 14,477 million and other identifiable intangibles, net of $ 4,608 million.

Credit Arrangements

The following is a summary of the Company’s revolving credit facilities as of March 31, 2024:

The following is a summary of the Company’s revolving credit facilities as of June 30, 2024:

Interest Rates

$ 2,000 million (revolving credit facility)

Dollar Term SOFR plus a margin of 1.25 % plus a 10 basis credit spread adjustment as of March 31, 2024

Dollar Term SOFR plus a margin of 1.25 % plus a 10 basis credit spread adjustment as of June 30, 2024

$ 110 million (receivables financing facility)

Dollar Term SOFR plus a margin of 0.90 % plus a 11 basis credit spread adjustment as of March 31, 2024

Dollar Term SOFR plus a margin of 0.90 % plus a 11 basis credit spread adjustment as of June 30, 2024

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

(dollars in millions) March 31, 2024 December 31, 2023

(dollars in millions) June 30, 2024 December 31, 2023

Revolving Credit Facility due 2026:

33 unchanged sentences

Long-term debt $ 12,091 $ 12,955

Contractual maturities of long-term debt as of March 31, 2024 are as follows:

Contractual maturities of long-term debt as of June 30, 2024 are as follows:

(in millions)

2 unchanged sentences

Senior Secured Credit Facilities

As of March 31, 2024, the Company’s Fifth Amended and Restated Credit Agreement provided financing through several senior secured credit facilities of up to $ 6,743 million, which consisted of $ 4,848 million principal amounts of debt outstanding (as detailed in the table above), and $ 1,895 million of available borrowing capacity on the $ 2,000 million revolving credit facility and standby letters of credit.

As of June 30, 2024, the Company’s Fifth Amended and Restated Credit Agreement provided financing through several senior secured credit facilities of up to $ 6,695 million, which consisted of $ 4,700 million principal amounts of debt outstanding (as detailed in the table above), and $ 1,995 million of available borrowing capacity on the $ 2,000 million revolving credit facility and standby letters of credit.

The revolving credit facility is comprised of a $ 1,175 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 March 31, 2024, the Company was in compliance in all material respects with the financial covenants under the Company’s financing arrangements .

As of June 30, 2024, the Company was in compliance in all material respects with the financial covenants under the Company’s financing arrangements .

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 is vigorously defending its position.

On July 11, 2024, the Supreme Court dismissed plaintiffs’ appeal.

The Supreme Court's decision in favor of IMS Korea is final and conclusive.

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 PIPA.

3 unchanged sentences

On December 23, 2021, the appellate court affirmed the judgment of the Seoul Central District Court.

The Prosecutor's Office has appealed to the Supreme Court.

The Company intends to vigorously defend its position on appeal.

The Prosecutor's Office appealed to the Supreme Court.

On July 11, 2024, the Supreme Court dismissed the appeal by the Prosecutor’s Office.

The Supreme Court's decision in favor of IMS Korea is final and conclusive.

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

15 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 March 31, 2024 or December 31, 2023.

No shares of preferred stock were issued or outstanding as of June 30, 2024 or December 31, 2023.

Equity Repurchase Program

As of March 31, 2024, the total stock repurchase authorization under the Company's equity repurchase program (the "Repurchase Program") was $ 11,725 million.

As of June 30, 2024, the total stock repurchase authorization under the Company's equity repurchase program (the "Repurchase Program") was $ 11,725 million.

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 three months ended March 31, 2024, the Company did not repurchase any shares of its common stock under the Repurchase Program.

As of March 31, 2024, the Company had remaining authorization to repurchase up to $ 2,363 million of its common stock under the Repurchase Program.

During the six months ended June 30, 2024, the Company did not repurchase any shares of its common stock under the Repurchase Program.

As of June 30, 2024, the Company had remaining authorization to repurchase up to $ 2,363 million 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 three months ended March 31, 2024.

The Company completed several individually immaterial acquisitions during the six months ended June 30, 2024.

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.

4 unchanged sentences

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

(in millions) March 31, 2024

(in millions) June 30, 2024

Assets acquired:

10 unchanged sentences

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

(in millions) Amortization Period March 31, 2024

(in millions) Amortization Period June 30, 2024

Other identifiable intangibles:

Customer relationships 10 - 13 years $ 82

Software and related assets 5 years 14

Non-compete agreements 3 - 5 years 6

Backlog 1 year 4

10 unchanged sentences

Foreign currency translation and other ( 1 )

Balance as of March 31, 2024 $ 34

Balance as of June 30, 2024 $ 42

The reversals were due to changes in estimates primarily resulting 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 March 31, 2024 will be paid in 2024 and 2025.

The Company's effective income tax rate was 14.4 % and 19.6 % in the first quarter of 2024 and 2023, respectively.

The effective income tax rate in the first quarter of 2024 was favorably impacted compared to the first quarter of 2023 due to changes in the geographical mix of earnings amongst the United States and foreign tax jurisdictions.

The effective income tax rate in the first quarter of 2024 and 2023 was also favorably impacted by $ 9 million and $ 8 million, respectively, as a result of excess tax benefits recognized upon settlement of share-based compensation awards.

The Company expects that the majority of the restructuring accruals as of June 30, 2024 will be paid in 2024 and 2025.

The Company's effective income tax rate was 17.2 % and 21.6 % in the second quarter of 2024 and 2023, and 16.0% and 20.6% in the first six months of 2024 and 2023, respectively.

The effective income tax rate in the second quarter and in the first six months of 2024 was favorably impacted compared to the second quarter and first six months of 2023 due to changes in the geographical mix of earnings amongst the United States and foreign tax jurisdictions.

The effective income tax rate in the second quarter and in the first six months of 2024 and 2023 was also favorably impacted as a result of excess tax benefits recognized upon settlement of share-based compensation awards.

For the second quarter of 2024 and 2023 this impact was $ 3 million and $ 2 million, respectively, and for the first six months of 2024 and 2023 this impact was $ 12 million and $ 10 million, respectively.

Numerous foreign jurisdictions have agreed to implement the Organization for Economic Co-operation and Development’s (“OECD”) Pillar 2 global corporate minimum tax rate of 15% on companies with revenues of at least €750 million, which went into effect in 2024.

The Company has evaluated the effect of this for the first quarter of 2024 and does not expect any material impacts for 2024 .

The Company has evaluated the effect of this for the second quarter of 2024 and does not expect any material impacts for 2024.

The Company will continue to monitor as additional jurisdictions enact Pillar 2 legislation.

5 unchanged sentences

Reclassification adjustments — ( 27 ) — 7 ( 20 )

Balance as of March 31, 2024 $ ( 1,001 ) $ — $ 3 $ 87 $ ( 911 )

Balance as of June 30, 2024 $ ( 1,030 ) $ 4 $ 3 $ 74 $ ( 949 )

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 March 31,

(in millions) Affected Financial Statement Line Item Three Months Ended June 30, Six Months Ended June 30,

2024 2023 2024 2023

Derivative instruments:

14 unchanged sentences

The Company’s reportable segment information is presented below:

Three Months Ended March 31,

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

(in millions) 2024 2023 2024 2023

25 unchanged sentences

The following table presents the computation of basic and diluted earnings per share:

Three Months Ended March 31,

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

(in millions, except per share data) 2024 2023 2024 2023

8 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.

For the three months ended March 31, 2024 and 2023, 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 0.8 million and 1.0 million, respectively.

For the three and six months ended June 30, 2024 and 2023, 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 1.1 million and 1.2 million, and 1.0 million and 1.1 million, respectively.

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