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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 ________________________________________________________
FORM 10-Q
 ________________________________________________________
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended April 3, 2020
OR
TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from              to             
Commission File Number: 001-08089
DHRLOGOFOR8KSA57.JPG
DANAHER CORPORATION
(Exact name of registrant as specified in its charter)
Delaware
 
59-1995548
(State of Incorporation)
 
(I.R.S. Employer Identification Number)
 
 
2200 Pennsylvania Avenue, N.W., Suite 800W
 
20037-1701
Washington,
DC
 
(Address of Principal Executive Offices)
 
(Zip Code)
Registrant’s telephone number, including area code: 202-828-0850
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
Common stock, $0.01 par value
DHR
New York Stock Exchange
4.75% Mandatory Convertible Preferred Stock, Series A, without par value
DHR.PRA
New York Stock Exchange
Floating Rate Senior Notes due 2022
DHR F 06/30/22
New York Stock Exchange
1.700% Senior Notes due 2022
DHR 1.7 01/04/22
New York Stock Exchange
1.700% Senior Notes due 2024
DHR 1.7 03/30/24
New York Stock Exchange
2.500% Senior Notes due 2025
DHR 2.5 07/08/25
New York Stock Exchange
0.200% Senior Notes due 2026
DHR 0.2 03/18/26
New York Stock Exchange
2.100% Senior Notes due 2026
DHR 2.1 09/30/26
New York Stock Exchange
1.200% Senior Notes due 2027
DHR 1.2 06/30/27
New York Stock Exchange
0.450% Senior Notes due 2028
DHR 0.45 03/18/28
New York Stock Exchange
2.500% Senior Notes due 2030
DHR 2.5 03/30/30
New York Stock Exchange
0.750% Senior Notes due 2031
DHR 0.75 09/18/31
New York Stock Exchange
1.350% Senior Notes due 2039
DHR 1.35 09/18/39
New York Stock Exchange
1.800% Senior Notes due 2049
DHR 1.8 09/18/49
New York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.    Yes  ☒    No  ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  ☒    No  ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large Accelerated Filer
 
 
Accelerated Filer
 
 
 
 
 
Non-accelerated Filer
 
 
Smaller Reporting Company
 
 
 
 
 
 
 
 
Emerging Growth Company
 
 
 
 
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.    ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act)    Yes      No  ☒
The number of shares of common stock outstanding at May 1, 2020 was 697,511,185.



DANAHER CORPORATION
INDEX
FORM 10-Q
 
 
Page
PART I -
FINANCIAL INFORMATION
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
PART II -
OTHER INFORMATION
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 




DANAHER CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
($ and shares in millions, except per share amount)
(unaudited)
 
April 3, 2020
 
December 31, 2019
ASSETS
 
 
 
Current assets:
 
 
 
Cash and equivalents
$
4,367.7

 
$
19,912.3

Trade accounts receivable, less allowance for doubtful accounts of $119.0 and $103.7, respectively
3,433.3

 
3,191.4

Inventories:
 
 
 
Finished goods
1,408.9

 
833.5

Work in process
498.0

 
284.9

Raw materials
668.1

 
509.9

Total inventories
2,575.0

 
1,628.3

Prepaid expenses and other current assets
766.6

 
864.6

Total current assets
11,142.6

 
25,596.6

Property, plant and equipment, net of accumulated depreciation of $2,739.6 and $2,761.4, respectively
2,988.5

 
2,302.0

Other long-term assets
2,561.1

 
1,720.8

Goodwill
33,725.5

 
22,712.5

Other intangible assets, net
18,512.6

 
9,749.7

Total assets
$
68,930.3

 
$
62,081.6

LIABILITIES AND STOCKHOLDERS’ EQUITY
 
 
 
Current liabilities:
 
 
 
Notes payable and current portion of long-term debt
$
3,234.3

 
$
212.4

Trade accounts payable
1,748.3

 
1,514.4

Accrued expenses and other liabilities
3,483.0

 
3,205.3

Total current liabilities
8,465.6

 
4,932.1

Other long-term liabilities
6,661.1

 
5,350.9

Long-term debt
22,737.2

 
21,516.7

Stockholders’ equity:
 
 
 
Preferred stock, without par value, 15.0 million shares authorized; 1.65 million shares of 4.75% Mandatory Convertible Preferred Stock, Series A, issued and outstanding as of both April 3, 2020 and December 31, 2019
1,599.6

 
1,599.6

Common stock - $0.01 par value, 2.0 billion shares authorized; 837.3 million issued and 697.0 million outstanding as of April 3, 2020; 835.5 million issued and 695.5 million outstanding as of December 31, 2019
8.4

 
8.4

Additional paid-in capital
7,629.8

 
7,564.6

Retained earnings
24,608.6

 
24,166.3

Accumulated other comprehensive income (loss)
(2,791.3
)
 
(3,068.3
)
Total Danaher stockholders’ equity
31,055.1

 
30,270.6

Noncontrolling interests
11.3

 
11.3

Total stockholders’ equity
31,066.4

 
30,281.9

Total liabilities and stockholders’ equity
$
68,930.3

 
$
62,081.6

See the accompanying Notes to the Consolidated Condensed Financial Statements.

1


DANAHER CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS
($ and shares in millions, except per share amounts)
(unaudited)
 
Three-Month Period Ended
 
 
April 3, 2020
 
March 29, 2019
 
Sales
$
4,343.1

 
$
4,220.2

 
Cost of sales
(1,900.3
)
 
(1,865.3
)
 
Gross profit
2,442.8

 
2,354.9

 
Operating costs:
 
 
 
 
Selling, general and administrative expenses
(1,458.3
)
 
(1,367.7
)
 
Research and development expenses
(287.0
)
 
(267.5
)
 
Operating profit
697.5

 
719.7

 
Nonoperating income (expense):
 
 
 
 
Other (expense) income, net
(1.5
)
 
5.1

 
Interest expense
(47.4
)
 
(20.5
)
 
Interest income
62.5

 
15.7

 
Earnings from continuing operations before income taxes
711.1

 
720.0

 
Income taxes
(116.0
)
 
(387.7
)
 
Net earnings from continuing operations
595.1

 
332.3

 
Earnings from discontinued operations, net of income taxes

 
1.5

 
Net earnings
595.1

 
333.8

 
Mandatory convertible preferred stock dividends
(19.6
)
 
(6.5
)
 
Net earnings attributable to common stockholders
$
575.5

 
$
327.3

 
Net earnings per common share from continuing operations:
 
 
 
 
Basic
$
0.83

 
$
0.46

 
Diluted
$
0.81

 
$
0.45

 
Net earnings per common share from discontinued operations:
 
 
 
 
Basic
$

 
$

 
Diluted
$

 
$

 
Net earnings per common share:
 
 
 
 
Basic
$
0.83

 
$
0.46

 
Diluted
$
0.81

 
$
0.46

*
Average common stock and common equivalent shares outstanding:
 
 

 
Basic
697.2

 
707.6

 
Diluted
707.9

 
718.5

 

* Net earnings per common share does not add due to rounding.
See the accompanying Notes to the Consolidated Condensed Financial Statements.


2


DANAHER CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF COMPREHENSIVE INCOME
($ in millions)
(unaudited)
 
Three-Month Period Ended
 
April 3, 2020
 
March 29, 2019
Net earnings
$
595.1

 
$
333.8

Other comprehensive income (loss), net of income taxes:
 
 
 
Foreign currency translation adjustments
(153.9
)
 
(10.8
)
Pension and postretirement plan benefit adjustments
8.2

 
5.4

Unrealized gain on available-for-sale securities adjustments
0.6

 
0.4

Cash flow hedge adjustments
422.1

 

Total other comprehensive income (loss), net of income taxes
277.0

 
(5.0
)
Comprehensive income
$
872.1

 
$
328.8

See the accompanying Notes to the Consolidated Condensed Financial Statements.

3


DANAHER CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF STOCKHOLDERS’ EQUITY
($ in millions)
(unaudited)
 
Three-Month Period Ended
 
April 3, 2020
 
March 29, 2019
Preferred stock:
 
 
 
Balance, beginning of period
$
1,599.6

 
$

Issuance of Mandatory Convertible Preferred Stock

 
1,599.6

Balance, end of period
$
1,599.6

 
$
1,599.6

Common stock:
 
 
 
Balance, beginning of period
$
8.4

 
$
8.2

Issuance of common stock

 
0.1

Balance, end of period
$
8.4

 
$
8.3

Additional paid-in capital:
 
 
 
Balance, beginning of period
$
7,564.6

 
$
5,834.3

Common stock-based award activity
64.5

 
82.1

Common stock issued in connection with LYONs’ conversions, including tax benefit of $0.0 and $4.7, respectively
0.7

 
16.8

Issuance of common stock

 
1,443.1

Balance, end of period
$
7,629.8

 
$
7,376.3

Retained earnings:
 
 
 
Balance, beginning of period
$
24,166.3

 
$
25,163.0

Adoption of accounting standards
(7.6
)
 

Net earnings
595.1

 
333.8

Dividends declared for common stock
(125.6
)
 
(121.8
)
Mandatory Convertible Preferred Stock cumulative dividends
(19.6
)
 
(6.5
)
Balance, end of period
$
24,608.6

 
$
25,368.5

Accumulated other comprehensive income (loss):
 
 
 
Balance, beginning of period
$
(3,068.3
)
 
$
(2,791.1
)
Other comprehensive income (loss)
277.0

 
(5.0
)
Balance, end of period
$
(2,791.3
)
 
$
(2,796.1
)
Noncontrolling interests:
 
 
 
Balance, beginning of period
$
11.3

 
$
12.3

Change in noncontrolling interests

 
(0.2
)
Balance, end of period
$
11.3

 
$
12.1

Total stockholders’ equity, end of period
$
31,066.4

 
$
31,568.7

See the accompanying Notes to the Consolidated Condensed Financial Statements.

4


DANAHER CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
($ in millions)
(unaudited)
 
Three-Month Period Ended
 
April 3, 2020
 
March 29, 2019
Cash flows from operating activities:
 
 
 
Net earnings
$
595.1

 
$
333.8

Less: earnings from discontinued operations, net of income taxes

 
1.5

Net earnings from continuing operations
595.1

 
332.3

Noncash items:
 
 
 
Depreciation
141.4

 
138.7

Amortization
156.4

 
157.4

Stock-based compensation expense
45.2

 
35.1

Change in trade accounts receivable, net
181.6

 
72.6

Change in inventories
(175.6
)
 
(124.6
)
Change in trade accounts payable
10.0

 
7.1

Change in prepaid expenses and other assets
79.1

 
167.5

Change in accrued expenses and other liabilities
(207.2
)
 
(73.4
)
Total operating cash provided by continuing operations
826.0

 
712.7

Total operating cash provided by discontinued operations
(7.0
)
 
(9.4
)
Net operating cash provided by operating activities
819.0

 
703.3

Cash flows from investing activities:
 
 
 
Cash paid for acquisitions
(20,734.5
)
 
(308.2
)
Payments for additions to property, plant and equipment
(132.5
)
 
(140.1
)
Proceeds from sales of property, plant and equipment
0.5

 
0.5

Payments for purchases of investments
(37.3
)
 
(43.2
)
All other investing activities
35.2

 
7.8

Total investing cash used in continuing operations
(20,868.6
)
 
(483.2
)
Total investing cash used in discontinued operations

 
(15.3
)
Net operating cash used in investing activities
(20,868.6
)
 
(498.5
)
Cash flows from financing activities:
 
 
 
Proceeds from the issuance of common stock in connection with stock-based compensation
10.3

 
37.3

Proceeds from the sale of common stock, net of issuance costs

 
1,443.2

Proceeds from the sale of preferred stock, net of issuance costs

 
1,599.6

Payment of dividends
(138.1
)
 
(112.2
)
Net proceeds from (repayments of) borrowings (maturities of 90 days or less)
390.2

 
(86.1
)
Proceeds from borrowings (maturities longer than 90 days)
4,371.4

 

All other financing activities
(0.3
)
 
(4.0
)
Net operating cash provided by financing activities
4,633.5

 
2,877.8

Effect of exchange rate changes on cash and equivalents
(128.5
)
 
39.6

Net change in cash and equivalents
(15,544.6
)
 
3,122.2

Beginning balance of cash and equivalents
19,912.3

 
787.8

Ending balance of cash and equivalents
$
4,367.7

 
$
3,910.0

Supplemental disclosures:
 
 
 
Cash interest payments
$
39.2

 
$
42.0

Cash income tax payments (refunds)
60.9

 
(6.3
)
See the accompanying Notes to the Consolidated Condensed Financial Statements.

5


DANAHER CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(unaudited)

NOTE 1. GENERAL
The Consolidated Condensed Financial Statements included herein have been prepared by Danaher Corporation (“Danaher” or the “Company”) without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). In this quarterly report, the terms “Danaher” or the “Company” refer to Danaher Corporation, Danaher Corporation and its consolidated subsidiaries, (unless otherwise indicated or the context otherwise requires) or the consolidated subsidiaries of Danaher Corporation, as the context requires. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) have been condensed or omitted pursuant to SEC rules and regulations; however, the Company believes that the disclosures are adequate to make the information presented not misleading. The Consolidated Condensed Financial Statements included herein should be read in conjunction with the financial statements as of and for the year ended December 31, 2019 and the Notes thereto included in the Company’s 2019 Annual Report on Form 10-K filed on February 21, 2020 (the “2019 Annual Report”).
In the opinion of the Company, the accompanying financial statements contain all adjustments (consisting of only normal recurring accruals) necessary to present fairly the financial position of the Company as of April 3, 2020 and December 31, 2019, its results of operations for the three-month periods ended April 3, 2020 and March 29, 2019 and its cash flows for each of the three-month periods then ended.
Accounting Standards Recently Adopted—In August 2018, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2018-13, Fair Value Measurement (Topic 820), which modifies the disclosures on fair value measurements by removing the requirement to disclose the amount and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy and the policy for timing of such transfers. The ASU expands the disclosure requirements for Level 3 fair value measurements, primarily focused on changes in unrealized gains and losses included in other comprehensive income (loss). The ASU is effective for public entities for fiscal years beginning after December 15, 2019, with early adoption permitted. On January 1, 2020, the Company adopted the ASU and the ASU did not have a significant impact on the Company’s Consolidated Condensed Financial Statements. Refer to Note 6 for the Company’s fair value measurement disclosures.
In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which amends the impairment model by requiring entities to use a forward-looking approach based on expected losses rather than incurred losses to estimate credit losses on certain types of financial instruments, including trade receivables. This may result in the earlier recognition of allowances for losses. The ASU is effective for public entities for fiscal years beginning after December 15, 2019, with early adoption permitted. In November 2018, the FASB issued ASU No. 2018-19, Codification Improvements to Topic 326, Financial Instruments—Credit Losses, which provided additional implementation guidance on the previously issued ASU. On January 1, 2020, the Company adopted the ASU using the modified retrospective transition method. The Company recorded a net decrease to beginning retained earnings of $8 million as of January 1, 2020 due to the cumulative impact of adopting Topic 326. The impact to retained earnings was primarily the result of an increase in the Company’s allowance for doubtful accounts as a result of Topic 326’s requirement to use a forward-looking approach based on expected losses rather than incurred losses to estimate credit losses on certain types of financial instruments, including trade receivables. As a result of the adoption of the ASU, the Company’s allowance for doubtful accounts as of April 3, 2020 reflects the Company’s best estimate of the expected future losses for its accounts receivables based on the current economic conditions; however, as a result of the uncertainty caused by the coronavirus (COVID-19) pandemic and other factors, these estimates may change and future actual losses may differ from the Company’s estimates. The Company will continue to monitor economic conditions and will revise the estimates of the expected future losses for accounts receivable as necessary.
Accounting Standards Not Yet Adopted—In August 2018, the FASB issued ASU No. 2018-14, Disclosure Framework—Changes to the Disclosure Requirements for Defined Benefit Plans, which amends ASC 715, Compensation—Retirement Benefits, to add, remove and clarify disclosure requirements related to defined benefit pension and other postretirement plans. The ASU is effective for public entities for fiscal years beginning after December 15, 2020, with early adoption permitted. Management has not yet completed its assessment of the impact of the new standard on the Company’s financial statements.
Operating Leases—As of April 3, 2020 and December 31, 2019, operating lease right-of-use assets where the Company was the lessee were $827 million and $764 million, respectively, and are included within other long-term assets in the accompanying Consolidated Condensed Balance Sheets.  The associated operating lease liabilities were $860 million and $797 million as of

6


April 3, 2020 and December 31, 2019, respectively, and are included in accrued expenses and other liabilities and other long-term liabilities.
Accumulated Other Comprehensive Income (Loss)—Accumulated other comprehensive income (loss) refers to certain gains and losses that under U.S. GAAP are included in comprehensive income (loss) but are excluded from net earnings as these amounts are initially recorded as an adjustment to stockholders’ equity. The changes in accumulated other comprehensive income (loss) by component are summarized below ($ in millions). Foreign currency translation adjustments generally relate to indefinite investments in non-U.S. subsidiaries, as well as the impact from the Company’s hedges of its net investment in foreign operations, including the Company’s cross-currency swap derivatives, net of any tax impacts.
 
Foreign Currency Translation Adjustments
 
Pension & Postretirement Plan Benefit Adjustments
 
Unrealized Gain (Loss) on Available-For-Sale Securities Adjustments
 
Cash Flow Hedge Adjustments
 
Total
For the Three-Month Period Ended April 3, 2020:
 
 
Balance, December 31, 2019
$
(2,173.3
)
 
$
(781.5
)
 
$
(0.7
)
 
$
(112.8
)
 
$
(3,068.3
)
Other comprehensive income (loss) before reclassifications:
 
 
 
 
 
 
 
 
 
(Decrease) increase
(131.5
)
 

 
0.7

 
650.8

 
520.0

Income tax impact
(22.4
)
 

 
(0.1
)
 
(118.9
)
 
(141.4
)
Other comprehensive income (loss) before reclassifications, net of income taxes
(153.9
)
 

 
0.6

 
531.9

 
378.6

Amounts reclassified from accumulated other comprehensive income (loss):
 
 
 
 
 
 
 
 
 
Increase (decrease)

 
10.8

(a)

 
(138.8
)
(b)
(128.0
)
Income tax impact

 
(2.6
)
 

 
29.0

 
26.4

Amounts reclassified from accumulated other comprehensive income (loss), net of income taxes

 
8.2

 

 
(109.8
)
 
(101.6
)
Net current period other comprehensive income (loss), net of income taxes
(153.9
)
 
8.2

 
0.6

 
422.1

 
277.0

Balance, April 3, 2020
$
(2,327.2
)
 
$
(773.3
)
 
$
(0.1
)
 
$
309.3

 
$
(2,791.3
)
For the Three-Month Period Ended March 29, 2019:
 
 
Balance, December 31, 2018
$
(2,098.1
)
 
$
(691.1
)
 
$
(1.9
)
 
$

 
$
(2,791.1
)
Other comprehensive income (loss) before reclassifications:
 
 
 
 
 
 
 
 
 
(Decrease) increase
(7.3
)
 

 
0.5

 

 
(6.8
)
Income tax impact
(3.5
)
 

 
(0.1
)
 

 
(3.6
)
Other comprehensive income (loss) before reclassifications, net of income taxes
(10.8
)
 

 
0.4

 

 
(10.4
)
Amounts reclassified from accumulated other comprehensive income (loss):
 
 
 
 
 
 
 
 
 
Increase

 
7.1

(a)

 

 
7.1

Income tax impact

 
(1.7
)
 

 

 
(1.7
)
Amounts reclassified from accumulated other comprehensive income (loss), net of income taxes

 
5.4

 

 

 
5.4

Net current period other comprehensive income (loss), net of income taxes
(10.8
)
 
5.4

 
0.4

 

 
(5.0
)
Balance, March 29, 2019
$
(2,108.9
)
 
$
(685.7
)
 
$
(1.5
)
 
$

 
$
(2,796.1
)
(a) This accumulated other comprehensive income (loss) component is included in the computation of net periodic pension cost. Refer to Notes 9 and 11 for additional details.
(b) Reflects reclassification to earnings related to hedges of certain long-term debt (refer to Note 8 for additional details).


7


NOTE 2. REVENUE
The following tables present the Company’s revenues disaggregated by geographical region and revenue type for the three-month periods ended April 3, 2020 and March 29, 2019 ($ in millions). Sales taxes and other usage-based taxes collected from customers are excluded from revenue.
 
Life Sciences
 
Diagnostics
 
Environmental & Applied Solutions
 
Total
Three-month period ended April 3, 2020:
 
 
 
 
 
 
 
Geographical region:
 
 
 
 
 
 
 
North America
$
620.7

 
$
754.7

 
$
496.9

 
$
1,872.3

Western Europe
471.6

 
309.8

 
256.0

 
1,037.4

Other developed markets
152.8

 
98.7

 
30.3

 
281.8

High-growth markets (a)
405.3

 
463.8

 
282.5

 
1,151.6

Total
$
1,650.4

 
$
1,627.0

 
$
1,065.7

 
$
4,343.1

 
 
 
 
 
 
 
 
Revenue type:
 
 
 
 
 
 
 
Recurring
$
1,159.4

 
$
1,427.9

 
$
619.6

 
$
3,206.9

Nonrecurring
491.0

 
199.1

 
446.1

 
1,136.2

Total
$
1,650.4

 
$
1,627.0

 
$
1,065.7

 
$
4,343.1

 
 
 
 
 
 
 
 
Three-month period ended March 29, 2019:
 
 
 
 
 
 
 
Geographical region:
 
 
 
 
 
 
 
North America
$
587.3

 
$
632.4

 
$
449.2

 
$
1,668.9

Western Europe
460.3

 
288.9

 
259.7

 
1,008.9

Other developed markets
149.3

 
92.0

 
28.9

 
270.2

High-growth markets (a)
430.0

 
523.5

 
318.7

 
1,272.2

Total
$
1,626.9

 
$
1,536.8

 
$
1,056.5

 
$
4,220.2

 
 
 
 
 
 
 
 
Revenue type:
 
 
 
 
 
 
 
Recurring
$
1,068.2

 
$
1,324.1

 
$
582.2

 
$
2,974.5

Nonrecurring
558.7

 
212.7

 
474.3

 
1,245.7

Total
$
1,626.9

 
$
1,536.8

 
$
1,056.5

 
$
4,220.2


(a) The Company defines high-growth markets as developing markets of the world experiencing extended periods of accelerated growth in gross domestic product and infrastructure which include Eastern Europe, the Middle East, Africa, Latin America and Asia (with the exception of Japan and Australia). The Company defines developed markets as all markets that are not high-growth markets.
The Company sells equipment to customers as well as consumables, software licenses and services, some of which customers purchase on a recurring basis. Consumables sold for use with the equipment sold by the Company are typically critical to the use of the equipment and are typically used on a one-time or limited basis, requiring frequent replacement in the customer’s operating cycle. Examples of these consumables include reagents used in diagnostic tests, filters used in filtration, separation and purification processes and cartridges for marking and coding equipment. Additionally, some of the Company’s consumables are used on a standalone basis, such as water treatment solutions. The Company separates its goods and services between those sold on a recurring basis and those sold on a nonrecurring basis. Recurring revenue includes revenue from consumables, services, software licenses recognized over time, software-as-a-service licenses, sales-and-usage based royalties and operating-type leases (“OTLs”). Nonrecurring revenue includes sales from equipment, software licenses recognized at a point in time and sales-type leases (“STLs”). OTLs and STLs are included in the above revenue amounts. For the three-month periods ended April 3, 2020 and March 29, 2019, lease revenue was $110 million and $106 million, respectively.
Remaining performance obligations related to Topic 606, Revenue from Contracts with Customers, represent the aggregate transaction price allocated to performance obligations with an original contract term greater than one year which are fully or partially unsatisfied at the end of the period. As of April 3, 2020, the aggregate amount of the transaction price allocated to remaining performance obligations was approximately $2.4 billion. The Company expects to recognize revenue on approximately 46% of the remaining performance obligations over the next 12 months, 24% over the subsequent 12 months, and the remainder recognized thereafter.

8


The timing of revenue recognition, billings and cash collections results in billed accounts receivable, unbilled receivables (“contract assets”) and deferred revenue, customer deposits and billings in excess of revenue recognized (“contract liabilities”) on the Consolidated Condensed Balance Sheets. Most of the Company’s long-term contracts are billed as work progresses in accordance with the contract terms and conditions, either at periodic intervals or upon achievement of certain milestones. Often this results in billing occurring subsequent to revenue recognition resulting in contract assets. Contract assets are generally classified as other current assets in the Consolidated Condensed Balance Sheets. The balance of contract assets as of April 3, 2020 and December 31, 2019 was $120 million and $77 million, respectively. The increase in the contract asset balance during the three-month period ended April 3, 2020 was primarily due to the Cytiva Acquisition (defined below).
The Company often receives cash payments from customers in advance of the Company’s performance resulting in contract liabilities. These contract liabilities are classified as either current or long-term in the Consolidated Condensed Balance Sheets based on the timing of when the Company expects to recognize revenue. As of April 3, 2020 and December 31, 2019, contract liabilities were approximately $1.2 billion and $806 million, respectively, and are included within accrued expenses and other liabilities and other long-term liabilities in the accompanying Consolidated Condensed Balance Sheets. The increase in the contract liability balance during the three-month period ended April 3, 2020 was primarily a result of the Cytiva Acquisition and cash payments received in advance of satisfying performance obligations, partially offset by revenue recognized during the year that was included in the opening contract liability balance. Revenue recognized during the three-month periods ended April 3, 2020 and March 29, 2019 that was included in the contract liability balance on December 31, 2019 and December 31, 2018 was $268 million and $267 million, respectively. Contract assets and liabilities are reported on the accompanying Consolidated Condensed Balance Sheets on a contract-by-contract basis.

NOTE 3. ACQUISITIONS
For a description of the Company’s acquisition activity for the year ended December 31, 2019, reference is made to the financial statements as of and for the year ended December 31, 2019 and Note 3 thereto included in the Company’s 2019 Annual Report.
The Company continually evaluates potential acquisitions that either strategically fit with the Company’s existing portfolio or expand the Company’s portfolio into a new and attractive business area. The Company has completed a number of acquisitions that have been accounted for as purchases and have resulted in the recognition of goodwill in the Company’s financial statements. This goodwill arises because the purchase prices for these businesses reflect a number of factors including the future earnings and cash flow potential of these businesses, the multiple to earnings, cash flow and other factors at which similar businesses have been purchased by other acquirers, the competitive nature of the processes by which the Company acquired the businesses, avoidance of the time and costs which would be required (and the associated risks that would be encountered) to enhance the Company’s existing product offerings to key target markets and enter into new and profitable businesses and the complementary strategic fit and resulting synergies these businesses bring to existing operations.
The Company makes an initial allocation of the purchase price at the date of acquisition based upon its understanding of the fair value of the acquired assets and assumed liabilities. The Company obtains this information during due diligence and through other sources. In the months after closing, as the Company obtains additional information about these assets and liabilities, including through tangible and intangible asset appraisals, and learns more about the newly acquired business, it is able to refine the estimates of fair value and more accurately allocate the purchase price. Only facts and circumstances that existed as of the acquisition date are considered for subsequent adjustment. The Company is continuing to evaluate certain pre-acquisition contingencies associated with its 2020 acquisition of Cytiva (described below) and is also in the process of obtaining valuations of certain acquisition-related assets and liabilities in connection with this acquisition. The Company will make appropriate adjustments to the purchase price allocation prior to completion of the measurement period, as required.
On March 31, 2020, the Company acquired the Biopharma business of General Electric Company’s (“GE”) Life Sciences division, now known as Cytiva, for a cash purchase price of approximately $20.7 billion (net of approximately $0.1 billion of acquired cash), subject to certain adjustments, and the assumption of approximately $0.4 billion of pension liabilities (the “Cytiva Acquisition”). Cytiva is a leading provider of instruments, consumables and software that support the research, discovery, process development and manufacturing workflows of biopharmaceutical drugs. Cytiva had revenues of approximately $3.3 billion in 2019 and is included in the Company’s Life Sciences segment. Due to the proximity of the acquisition date to the end of the Company’s first quarter, there are no results of operations for Cytiva included in the Company’s Consolidated Condensed Statement of Earnings. The impact of the Cytiva Acquisition has been reflected in the Company’s Consolidated Condensed Balance Sheet on a preliminary basis. The acquisition is expected to provide additional sales and earnings growth opportunities for the Company’s Life Sciences segment by expanding the business’ geographic and product line diversity, including new product and service offerings that complement the Company’s current biologics workflow solutions. As a condition to obtaining certain regulatory approvals for the closing of the transaction, the Company was required to divest certain of its existing product lines in the Life Sciences segment that in the aggregate generated revenues of

9


approximately $170 million in 2019. On April 30, 2020, the Company completed the sale of the majority of these product lines for a cash purchase price of approximately $825 million and will recognize a gain on the sale in the second quarter of 2020.  The divestiture of these product lines did not represent a strategic shift with a major effect on the Company's operations and financial results and will not be reported as a discontinued operation.
The Company financed the Cytiva Acquisition with approximately $3.0 billion of proceeds from the March 1, 2019 underwritten public offerings of its Common Stock and Mandatory Convertible Preferred Stock (“MCPS”), approximately $10.8 billion of proceeds from the issuance of euro-denominated and U.S. dollar-denominated long-term debt in the second half of 2019, and approximately $6.9 billion from the aggregate of proceeds from commercial paper borrowings, borrowings under the Company’s Five-Year Facility (as defined below) and cash on hand. The Company preliminarily recorded approximately $11.5 billion of goodwill related to the Cytiva Acquisition.
The following summarizes the estimated fair values of the assets acquired and liabilities assumed at the date of acquisition for the Cytiva Acquisition ($ in millions):
Trade accounts receivable
$
488.3

Inventories
817.0

Property, plant and equipment
788.9

Goodwill
11,497.2

Other intangible assets, primarily technology and customer relationships
9,003.0

Trade accounts payable
(250.8
)
Pension liabilities
(417.2
)
Deferred tax liabilities
(796.6
)
Other assets and liabilities, net
(395.3
)
Net cash consideration
$
20,734.5


Pro Forma Financial Information
The unaudited pro forma information for the periods set forth below gives effect to the 2020 and 2019 acquisitions as if they had occurred as of January 1, 2019. The pro forma information is presented for informational purposes only and is not necessarily indicative of the results of operations that actually would have been achieved had the acquisitions been consummated as of that time ($ in millions, except per share amounts):
 
Three-Month Period Ended
 
April 3, 2020
 
March 29, 2019
Sales
$
5,119.5

 
$
4,922.1

Net earnings from continuing operations
711.2

 
265.3

Diluted net earnings per common share from continuing operations (a)
0.98

 
0.34


(a) Diluted net earnings per common share from continuing operations is calculated by adding the interest on the Company’s LYONs to net earnings from continuing operations and deducting the MCPS dividends from net earnings from continuing operations.
For the three-month periods ended April 3, 2020 and March 29, 2019, unaudited pro forma revenue and earnings were adjusted to include the pre-tax impact of approximately $3 million and $162 million, respectively, in non-recurring adjustments related to acquisition date fair value adjustments to inventory and deferred revenue related to the Cytiva Acquisition. In addition, acquisition-related transaction costs of $59 million and $15 million associated with the Cytiva Acquisition were excluded from pro forma earnings in the three-month periods ended April 3, 2020 and March 29, 2019, respectively.

NOTE 4. DISCONTINUED OPERATIONS
On December 18, 2019, Danaher completed the separation (the “Separation”) of Envista Holdings Corporation (“Envista”). For additional details on the Separation, reference is made to the financial statements as of and for the year ended December 31, 2019 and Note 4 thereto included in the Company’s 2019 Annual Report on Form 10-K. The accounting requirements for reporting the Separation of Envista as a discontinued operation were met when the Separation was completed. Accordingly, the accompanying Consolidated Condensed Financial Statements for all periods presented reflect this business as a discontinued operation.

10


In connection with the Separation, Danaher and Envista entered into various agreements to effect the disposition and provide a framework for their relationship after the Separation, including a separation agreement, transition services agreement, employee matters agreement, tax matters agreement, intellectual property matters agreement and Danaher Business System license agreement. These agreements provide for the allocation between Danaher and Envista of assets, employees, liabilities and obligations (including investments, property and employee benefits and tax related assets and liabilities) attributable to periods prior to, at and after Envista’s separation from Danaher and govern certain relationships between Danaher and Envista after the Separation. In addition, Danaher is also party to various commercial agreements with Envista entities. The amounts paid and received by Danaher for transition services provided under the above agreements as well as sales and purchases to and from Envista were not material to the Company’s results of operations for the three-month period ended April 3, 2020.
The key components of income from discontinued operations for the three-month period ended March 29, 2019 were as follows ($ in millions):
Sales
$
659.7

Cost of sales
(296.6
)
Selling, general and administrative expenses
(315.7
)
Research and development expenses
(43.3
)
Other income
0.1

Interest expense
(2.8
)
Earnings from discontinued operations before income taxes
1.4

Income taxes
0.1

Earnings from discontinued operations, net of income taxes
$
1.5



NOTE 5. GOODWILL AND OTHER INTANGIBLE ASSETS
The following is a rollforward of the Company’s goodwill ($ in millions):
Balance, December 31, 2019
$
22,712.5

Attributable to 2020 acquisitions
11,497.2

Adjustments due to finalization of purchase price allocations
0.7

Foreign currency translation and other
(484.9
)
Balance, April 3, 2020
$
33,725.5

The carrying value of goodwill by segment is summarized as follows ($ in millions):
 
April 3, 2020
 
December 31, 2019
Life Sciences
$
24,703.0

 
$
13,471.8

Diagnostics
6,740.1

 
6,901.2

Environmental & Applied Solutions
2,282.4

 
2,339.5

Total
$
33,725.5

 
$
22,712.5


The increase in the goodwill balance of the Life Sciences segment in the three-month period ended April 3, 2020 is a result of the Cytiva Acquisition. Refer to Note 3 for more detail. The Company has not identified any “triggering” events which indicate an impairment of goodwill in the three-month period ended April 3, 2020.

11


Finite-lived intangible assets are amortized over their legal or estimated useful life. The following summarizes the gross carrying value and accumulated amortization for each major category of intangible assets ($ in millions):
 
April 3, 2020
 
December 31, 2019
 
Gross Carrying Amount
 
Accumulated Amortization
 
Gross Carrying Amount
 
Accumulated Amortization
Finite-lived intangibles:
 
 
 
 
 
 
 
Patents and technology
$
10,035.5

 
$
(970.1
)
 
$
2,712.7

 
$
(934.1
)
Customer relationships and other intangibles
7,915.4

 
(2,672.4
)
 
6,367.4

 
(2,612.3
)
Total finite-lived intangibles
17,950.9

 
(3,642.5
)
 
9,080.1

 
(3,546.4
)
Indefinite-lived intangibles:
 
 
 
 
 
 
 
Trademarks and trade names
4,204.2

 

 
4,216.0

 

Total intangibles
$
22,155.1

 
$
(3,642.5
)
 
$
13,296.1

 
$
(3,546.4
)

During the three-month period ended April 3, 2020, the Company acquired finite-lived intangible assets, consisting primarily of developed technology and customer relationships, with a weighted average life of 14 years as a result of the Cytiva Acquisition. Refer to Note 3 for additional information on the intangible assets acquired.
The Company identified impairment triggers during the first quarter of 2020 which resulted in the impairment of certain long-lived assets, including a trade name. The Company recorded impairment charges totaling $8 million in the three-month period ended April 3, 2020 related to these long-lived assets.

NOTE 6. FAIR VALUE MEASUREMENTS
Accounting standards define fair value based on an exit price model, establish a framework for measuring fair value where the Company’s assets and liabilities are required to be carried at fair value and provide for certain disclosures related to the valuation methods used within a valuation hierarchy as established within the accounting standards. This hierarchy prioritizes the inputs into three broad levels as follows. Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2 inputs are quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets in markets that are not active, or other observable characteristics for the asset or liability, including interest rates, yield curves and credit risks, or inputs that are derived principally from, or corroborated by, observable market data through correlation. Level 3 inputs are unobservable inputs based on the Company’s assumptions. A financial asset or liability’s classification within the hierarchy is determined based on the lowest level input that is significant to the fair value measurement in its entirety.

12


A summary of financial assets and liabilities that are measured at fair value on a recurring basis were as follows ($ in millions):
 
Balance, April 3, 2020
 
Quoted Prices in Active Market (Level 1)
 
Significant Other Observable Inputs (Level 2)
 
Significant Unobservable Inputs (Level 3)
Assets:
 
 
 
 
 
 
 
Available-for-sale debt securities
$
35.4

 
$

 
$
35.4

 
$

Investment in equity securities
150.1

 
17.1

 

 

Cross-currency swap derivative contracts
658.0

 

 
658.0

 

Liabilities:
 
 
 
 
 
 
 
Deferred compensation plans
71.4

 

 
71.4

 

 
 
 
 
 
 
 
 
 
Balance, December 31, 2019
 
Quoted Prices in Active Market (Level 1)
 
Significant Other Observable Inputs (Level 2)
 
Significant Unobservable Inputs (Level 3)
Assets:
 
 
 
 
 
 
 
Available-for-sale debt securities
$
33.7

 
$

 
$
33.7

 
$

Investment in equity securities
110.8

 

 

 

Cross-currency swap derivative contracts
25.7

 

 
25.7

 

Liabilities:
 
 
 
 
 
 
 
Cross-currency swap derivative contracts
111.7

 

 
111.7

 

Deferred compensation plans
70.4

 

 
70.4

 


Available-for-sale debt securities, which are included in other long-term assets in the accompanying Consolidated Condensed Balance Sheets, are measured at fair value using quoted prices reported by investment brokers and dealers based on the underlying terms of the security and comparison to similar securities traded on an active market. As of April 3, 2020, available-for-sale debt securities primarily include U.S. Treasury Notes and corporate debt securities, which are valued based on instruments with similar terms traded on an active market.
The Company’s investments in equity securities consist of investments in publicly traded equity securities and investments in non-marketable equity securities. The publicly traded securities are classified as Level 1 in the fair value hierarchy as they are measured based on quotes in active markets. For the non-marketable equity securities, the Company estimates the fair value of the investments in equity securities based on the measurement alternative and adjusts for impairments and observable price changes with a same or similar security from the same issuer within net earnings (the “Fair Value Alternative”). The Company’s investments in these equity securities are not classified in the fair value hierarchy due to the use of these measurement methods. Additionally, the Company is a limited partner in a partnership that invests in early-stage companies. While the partnership records these investments at fair value, the Company’s investment in the partnership is accounted for under the equity method of accounting and is not subject to the fair value measurement disclosures. During the three-month period ended April 3, 2020, the Company recorded a $7 million unrealized loss ($0.01 per diluted common share) related to a reduction in the fair value of these investments which is reflected in other (expense) income, net in the Company’s Consolidated Condensed Statement of Earnings. No significant realized gains or losses were recorded in the three-month period ended March 29, 2019 with respect to these investments.
The cross-currency swap derivative contracts are used to partially hedge the Company’s net investments in foreign operations against adverse movements in exchange rates between the U.S. dollar and the Danish kroner, Japanese yen, euro and Swiss franc. The Company also uses cross-currency swap derivative contracts to hedge the exchange rate exposure from long-term debt issuances in a foreign currency other than the functional currency of the borrower. The cross-currency swap derivative contracts are classified as Level 2 in the fair value hierarchy as they are measured using the income approach with the relevant interest rates and foreign currency current exchange rates and forward curves as inputs. Refer to Note 8 for additional information.
The Company has established nonqualified contribution and deferred compensation programs that permit the Company to make tax-deferred contributions to officers and certain other employees, and also permit directors, officers and certain other employees to voluntarily defer taxation on a portion of their compensation. All amounts contributed or deferred under such plans are unfunded, unsecured obligations of the Company and are presented as a component of the Company’s compensation

13


and benefits accrual included in other long-term liabilities in the accompanying Consolidated Condensed Balance Sheets. Non-director participants may choose among alternative earning rates for the amounts they defer, which are primarily based on investment options within the Company’s 401(k) program. Changes in the deferred compensation liability under these programs are recognized based on changes in the fair value of the participants’ accounts, which are based on the applicable earnings rates. Amounts voluntarily deferred by directors and amounts unilaterally contributed to participant accounts by the Company are deemed invested in the Company’s common stock and future distributions of such contributions (as well as future distributions of any voluntary deferrals allocated at any time to the Danaher common stock investment option) will be made solely in shares of Company common stock, and therefore are not reflected in the above amounts.
Fair Value of Financial Instruments
The carrying amounts and fair values of the Company’s financial instruments were as follows ($ in millions):
 
April 3, 2020
 
December 31, 2019
 
Carrying Amount
 
Fair Value
 
Carrying Amount
 
Fair Value
Assets:
 
 
 
 
 
 
 
Available-for-sale debt securities
$
35.4

 
$
35.4

 
$
33.7

 
$
33.7

Investment in equity securities
150.1

 
150.1

 
110.8

 
110.8

Cross-currency swap derivative contracts
658.0

 
658.0

 
25.7

 
25.7

Liabilities:
 
 
 
 
 
 
 
Cross-currency swap derivative contracts

 

 
111.7

 
111.7

Notes payable and current portion of long-term debt
3,234.3

 
3,234.3

 
212.4

 
212.4

Long-term debt
22,737.2

 
22,042.6

 
21,516.7

 
21,896.9


As of April 3, 2020 and December 31, 2019, available-for-sale debt securities and cross-currency swap derivative contracts were categorized as Level 2 and short and long-term borrowings were categorized as Level 1.
The fair value of long-term borrowings was based on quoted market prices. The difference between the fair value and the carrying amounts of long-term borrowings (other than the Company’s Liquid Yield Option Notes due 2021 (the “LYONs”)) is attributable to changes in market interest rates and/or the Company’s credit ratings subsequent to the incurrence of the borrowing. In the case of the LYONs, differences in the fair value from the carrying value are attributable to changes in the price of the Company’s common stock due to the LYONs’ conversion features. The fair values of borrowings with original maturities of one year or less, as well as cash and cash equivalents, trade accounts receivable, net and trade accounts payable approximate their carrying amounts due to the short-term maturities of these instruments.


14


NOTE 7. FINANCING
As of April 3, 2020, the Company was in compliance with all of its debt covenants. The components of the Company’s debt were as follows ($ in millions):
 
April 3, 2020
 
December 31, 2019
Euro-denominated commercial paper (€4.3 billion and €4.6 billion, respectively)
$
4,616.0

 
$
5,146.2

U.S. dollar-denominated commercial paper
790.2

 

364-day revolving credit facility

 

Zero-coupon LYONs due 2021
33.2

 
33.6

0.352% senior unsecured notes due 2021 (¥30.0 billion aggregate principal amount) (the “2021 Yen Notes”)
276.7

 
275.8

1.7% senior unsecured notes due 2022 (€800.0 million aggregate principal amount) (the “2022 Euronotes”)
863.8

 
894.8

Floating rate senior unsecured notes due 2022 (€250.0 million aggregate principal amount) (the “Floating Rate 2022 Euronotes”)
270.1

 
279.8

2.05% senior notes due 2022 (the “2022 Biopharma Notes”)
697.3

 
696.9

0.5% senior unsecured bonds due 2023 (CHF 540.0 million aggregate principal amount) (the “2023 CHF Bonds”)
554.7

 
558.9

1.7% senior notes due 2024 (€750.0 million aggregate principal amount) (the “2024 Euronotes”)
805.5

 

5-year revolving credit facility
2,500.0

 

2.2% senior unsecured notes due 2024 (the “2024 Biopharma Notes”)
696.2

 
696.2

2.5% senior unsecured notes due 2025 (€800.0 million aggregate principal amount) (the “2025 Euronotes”)
862.6

 
893.7

3.35% senior unsecured notes due 2025 (the “2025 U.S. Notes”)
497.4

 
497.3

0.2% senior unsecured notes due 2026 (€1.3 billion aggregate principal amount) (the “2026 Biopharma Euronotes”)
1,343.6

 
1,392.3

2.1% senior notes due 2026 (€500.0 million aggregate principal amount) (the “2026 Euronotes”)
534.9

 

0.3% senior unsecured notes due 2027 (¥30.8 billion aggregate principal amount) (the “2027 Yen Notes”)
283.4

 
282.5

1.2% senior unsecured notes due 2027 (€600.0 million aggregate principal amount) (the “2027 Euronotes”)
644.7

 
668.0

0.45% senior unsecured notes due 2028 (€1.3 billion aggregate principal amount) (the “2028 Biopharma Euronotes”)
1,341.7

 
1,390.1

1.125% senior unsecured bonds due 2028 (CHF 210.0 million aggregate principal amount) (the “2028 CHF Bonds”)
219.3

 
221.0

2.6% senior unsecured notes due 2029 (the “2029 Biopharma Notes”)
794.3

 
794.8

2.5% senior notes due 2030 (€500.0 million aggregate principal amount) (the “2030 Euronotes”)
535.3

 

0.75% senior unsecured notes due 2031 (€1.8 billion aggregate principal amount) (the “2031 Biopharma Euronotes”)
1,880.8

 
1,948.7

0.65% senior unsecured notes due 2032 (¥53.2 billion aggregate principal amount) (the “2032 Yen Notes”)
489.3

 
487.8

1.35% senior unsecured notes due 2039 (€1.3 billion aggregate principal amount) (the “2039 Biopharma Euronotes”)
1,335.1

 
1,383.6

3.25% senior unsecured notes due 2029 (the “2039 Biopharma Notes”)
888.9

 
890.3

4.375% senior unsecured notes due 2045 (the “2045 U.S. Notes”)
499.4

 
499.4

1.8% senior unsecured notes due 2049 (€750.0 million aggregate principal amount) (the “2049 Biopharma Euronotes”)
801.7

 
830.9

3.4% senior unsecured notes due 2049 (the “2049 Biopharma Notes”)
888.4

 
890.2

Other
27.0

 
76.3

Total debt
25,971.5

 
21,729.1

Less: currently payable
3,234.3

 
212.4

Long-term debt
$
22,737.2

 
$
21,516.7


For additional details regarding the Company’s debt financing, refer to Note 11 of the Company’s financial statements as of and for the year ended December 31, 2019 included in the Company’s 2019 Annual Report.

15


The Company has historically satisfied any short-term liquidity needs that are not met through operating cash flow and available cash primarily through issuances of commercial paper under its U.S. dollar and euro-denominated commercial paper programs. The Company’s $5.0 billion unsecured, multi-year revolving credit facility with a syndicate of banks that expires on August 24, 2024 (the “Five-Year Facility”) and the Company’s $5.0 billion 364-day unsecured revolving credit facility with a syndicate of banks that expires on August 26, 2020 (the “364-Day Facility”) (collectively, the “Credit Facilities”) are available for direct borrowings and provide support for the commercial paper programs. Given the adverse impact of COVID-19 on the availability of new borrowings in the commercial paper market, beginning in March 2020 the Company has also used borrowings under its Credit Facilities for general corporate purposes. Specifically, on March 24, 2020, the Company borrowed approximately $2.5 billion under the Five-Year Facility to fund a portion of the Cytiva Acquisition and for general corporate purposes, at an annual interest rate of 1.7% through March 31, 2020 and at an annual rate of 1.9% beginning April 1, 2020. As of April 3, 2020, $2.5 billion was outstanding under the Five-Year Facility and no borrowings were outstanding under the 364-Day Facility. On April 7, 2020, the Company borrowed $2.5 billion under the 364-Day Facility for general corporate purposes, which may include repayment of outstanding commercial paper borrowings as they mature, at an annual interest rate of 2.3%. As of April 3, 2020, the Company was in compliance with all covenants under the Credit Facilities. The Company may elect, upon the payment of a fee equal to 0.75% of the principal amount of the loans then outstanding and, upon the satisfaction of certain conditions, to convert any loans outstanding under the 364-Day Facility on August 26, 2020 (the “Scheduled Termination Date”), into term loans that are due and payable one year following the Scheduled Termination Date.  The Company is considering its options regarding the 364-Day Facility, including negotiating a new credit facility to replace and/or refinance all or a portion of the existing credit facility or converting borrowings under the credit facility into a term loan. The Company expects to limit borrowings under the Five-Year Facility and 364-Day Facility to amounts that would leave sufficient borrowing capacity under the facilities so that it could borrow, if needed, to repay all of the outstanding commercial paper as it matures. The Company has classified approximately $2.5 billion of its borrowings outstanding under the commercial paper programs as of April 3, 2020 as long-term debt in the accompanying Consolidated Condensed Balance Sheet as the Company had the intent and ability, as supported by availability under the Five-Year Facility, to refinance these borrowings for at least one year from the balance sheet date. Following the March 24, 2020 and April 7, 2020 borrowings under the Credit Facilities, the Company had availability under its Credit Facilities of approximately $5.0 billion for direct borrowings or to backstop commercial paper. As of May 1, 2020, approximately $3.4 billion of this $5.0 billion of availability was being used to backstop outstanding commercial paper borrowings.
As of April 3, 2020, borrowings outstanding under the Company’s U.S. dollar and euro-denominated commercial paper program had a weighted average annual interest rate of 0.2% and a weighted average remaining maturity of approximately 56 days.
Debt discounts, premiums and debt issuance costs totaled $131 million and $112 million as of April 3, 2020 and December 31, 2019, respectively, and have been netted against the aggregate principal amounts of the related debt in the components of debt table above.
2020 Debt Issuances
On March 30, 2020 and April 8, 2020, Danaher Corporation completed underwritten public offerings of senior unsecured Euronotes due 2024, 2026 and 2030 (collectively the “Notes”). The following summarizes the key terms of the offerings in aggregate (€ in millions):
 
Issue Date
 
Aggregate Principal Amount
 
Stated Annual Interest Rate
 
Issue Price (as % of Principal Amount)
 
Maturity Date
 
Interest Payment Dates
(in arrears)
2024 Euronotes
March 30, 2020
 
750.0

 
1.700
%
 
99.931
%
 
March 30, 2024
 
March 30
2024 Euronotes
April 8, 2020
 
150.0

 
1.700
%
 
100.298
%
 
March 30, 2024
 
March 30
2026 Euronotes
March 30, 2020
 
500.0

 
2.100
%
 
99.717
%
 
September 30, 2026
 
September 30
2026 Euronotes
April 8, 2020
 
300.0

 
2.100
%
 
100.842
%
 
September 30, 2026
 
September 30
2030 Euronotes
March 30, 2020
 
500.0

 
2.500
%
 
99.642
%
 
March 30, 2030
 
March 30
2030 Euronotes
April 8, 2020
 
300.0

 
2.500
%
 
102.166
%
 
March 30, 2030
 
March 30

The Company received net proceeds from the notes issued on March 30, 2020, after underwriting discounts and commissions and offering expenses, of approximately €1.7 billion (approximately $1.9 billion based on currency exchange rates as of the date of the pricing of the notes). The Company received net proceeds from the notes issued on April 8, 2020, after underwriting discounts and commissions and offering expenses, of approximately €754 million (approximately $816 million based on currency exchange rates as of the date of the pricing of the notes). Proceeds from these offerings will be used for

16


general corporate purposes, which may include repayment of a portion of our outstanding commercial paper borrowings as they mature and/or repayment of amounts borrowed under the Company’s Credit Facilities.
Guarantors of Debt
The Company has guaranteed long-term debt and commercial paper issued by certain of its wholly-owned subsidiaries. The 2022 Euronotes, Floating Rate 2022 Euronotes, 2025 Euronotes and 2027 Euronotes were issued by DH Europe Finance S.A. (“Danaher International”). The 2022 Biopharma Notes, 2024 Biopharma Notes, 2026 Biopharma Euronotes, 2028 Biopharma Euronotes, 2029 Biopharma Notes, 2031 Biopharma Euronotes, 2039 Biopharma Euronotes, 2049 Biopharma Euronotes, and 2049 Biopharma Notes were issued by DH Europe Finance II S.a.r.l. (“Danaher International II”). The 2023 CHF Bonds and 2028 CHF Bonds were issued by DH Switzerland Finance S.A. (“Danaher Switzerland”). The 2021 Yen Notes, 2027 Yen Notes and 2032 Yen Notes were issued by DH Japan Finance S.A. (“Danaher Japan”). Each of Danaher International, Danaher International II, Danaher Switzerland and Danaher Japan are wholly-owned finance subsidiaries of Danaher Corporation. All of the outstanding and future securities issued by each of these entities are or will be fully and unconditionally guaranteed by the Company and these guarantees rank on parity with the Company’s unsecured and unsubordinated indebtedness.
LYONs Redemption
During the three-month period ended April 3, 2020, holders of certain of the Company’s LYONs converted such LYONs into an aggregate of 10 thousand shares of the Company’s common stock, par value $0.01 per share.

NOTE 8. HEDGING TRANSACTIONS AND DERIVATIVE FINANCIAL INSTRUMENTS
The Company uses cross-currency swap derivative contracts to partially hedge its net investments in foreign operations against adverse movements in exchange rates between the U.S. dollar and the Danish kroner, Japanese yen, euro and Swiss franc. The cross-currency swap derivative contracts are agreements to exchange fixed-rate payments in one currency for fixed-rate payments in another currency and approximately $1.0 billion of these derivative contracts were outstanding as of April 3, 2020. These contracts effectively convert U.S. dollar-denominated bonds to obligations denominated in Danish kroner, Japanese yen, euro and Swiss franc, and partially offset the impact of changes in currency rates on foreign currency denominated net investments. These contracts also reduce the interest rate from the stated interest rates on the U.S. dollar-denominated debt to the interest rates of the swaps. The changes in the spot rate of these instruments are recorded in accumulated other comprehensive income (loss) in stockholders’ equity, partially offsetting the foreign currency translation adjustment of the Company’s related net investment that is also recorded in accumulated other comprehensive income (loss) in the accompanying Consolidated Condensed Statements of Stockholders’ Equity. Any ineffective portions of net investment hedges are reclassified from accumulated other comprehensive income (loss) into earnings during the period of change. The interest income or expense from these swaps are recorded in interest expense in the accompanying Consolidated Condensed Statements of Earnings consistent with the classification of interest expense attributable to the underlying debt. These instruments mature on dates ranging from September 2025 to September 2028.
The Company also uses cross-currency swap derivative contracts to hedge U.S. dollar-denominated long-term debt issuances in a foreign subsidiary whose functional currency is the euro against adverse movements in exchange rates between the U.S. dollar and the euro. These contracts effectively convert these U.S. dollar-denominated bonds to obligations denominated in euro. The changes in the fair value of these instruments are recorded in accumulated other comprehensive income (loss) in stockholders’ equity, with a reclassification from accumulated other comprehensive income (loss) to net earnings to offset the remeasurement of the hedged debt that is also recorded in net earnings. Any ineffective portions of net investment hedges are reclassified from accumulated other comprehensive income (loss) into earnings during the period of change. The interest income or expense from these swaps are recorded in interest expense in the accompanying Consolidated Condensed Statement of Earnings consistent with the classification of interest expense attributable to the underlying debt. These instruments mature on dates ranging from November 2022 to November 2049.
The Company has also issued foreign currency denominated long-term debt as partial hedges of its net investments in foreign operations against adverse movements in exchange rates between the U.S. dollar and the euro, Japanese yen and Swiss franc. These foreign currency denominated long-term debt issuances are designated and qualify as nonderivative hedging instruments. Accordingly, the foreign currency translation of these debt instruments is recorded in accumulated other comprehensive income (loss) in stockholders’ equity in the accompanying Consolidated Condensed Balance Sheets, offsetting the foreign currency translation adjustment of the Company’s related net investment that is also recorded in accumulated other comprehensive income (loss). Any ineffective portions of net investment hedges are reclassified from accumulated other comprehensive income (loss) into earnings during the period of change. These instruments mature on dates ranging from March 2021 to May 2032.

17


The Company used interest rate swap agreements to hedge the variability in cash flows due to changes in benchmark interest rates related to a portion of the U.S. debt the Company issued to fund the Cytiva Acquisition. These contracts effectively fixed the interest rate for a portion of the Company’s U.S. dollar-denominated debt equal to the notional amount of the swaps to the rate specified in the interest rate swap agreements, and were settled in November 2019. The changes in the fair value of these instruments were recorded in accumulated other comprehensive income (loss) in stockholders’ equity prior to the issuance of the debt and are subsequently being reclassified to interest expense over the life of the related debt.
The following table summarizes the notional values as of April 3, 2020 and pretax impact of changes in the fair values of instruments designated as net investment hedges and cash flow hedges in accumulated other comprehensive income (“OCI”) for the three-month periods ended April 3, 2020 and March 29, 2019 ($ in millions):
 
Original Notional Amount
 
Notional Amount Outstanding
 
Gain (Loss) Recognized in OCI
For the Three-Month Period Ended April 3, 2020:
 
 
 
 
 
Net investment hedges:
 
 
 
 
 
Foreign currency contracts
$
1,875.0

 
$
1,000.0

 
$
93.3

Foreign currency denominated debt
8,102.9

 
8,102.9

 
156.2

Cash flow hedges:
 
 
 
 
 
Foreign currency contracts
4,000.0

 
4,000.0

 
650.8

Total
$
14,827.9

 
$
13,102.9

 
$
900.3

For the Three-Month Period Ended March 29, 2019:
 
 
 
 
 
Net investment hedges:
 
 
 
 
 
Foreign currency contracts
$
1,875.0

 
$
1,875.0

 
$
14.8

Foreign currency denominated debt
7,518.3

 
7,518.3

 
137.8

Total
$
9,393.3

 
$
9,393.3

 
$
152.6


Gains or losses related to net investment hedges are classified as foreign currency translation adjustments in the schedule of changes in OCI in Note 1, as these items are attributable to the Company’s hedges of its net investment in foreign operations. Gains or losses related to the cash flow hedges and interest rate swaps are classified as cash flow hedge adjustments in the schedule of changes in OCI in Note 1. The amount reclassified to earnings for the interest rate swaps in the three-month period ended April 3, 2020 was less than $1 million. During the three-month period ended April 3, 2020, the Company reclassified $139 million of deferred gains from accumulated other comprehensive income (loss) to net earnings related to the cross-currency swap derivative contracts that are cash flow hedges of the Company’s U.S. dollar-denominated debt. This reclassification was equal to the remeasurement loss recorded in the three-month period on the hedged debt.
The Company did not reclassify any other deferred gains or losses related to net investment hedges or cash flow hedges from accumulated other comprehensive income (loss) to earnings during the three-month periods ended April 3, 2020 and March 29, 2019. In addition, the Company did not have any ineffectiveness related to net investment hedges or interest rate swaps during the three-month periods ended April 3, 2020 and March 29, 2019. The cash inflows and outflows associated with the Company’s derivative contracts designated as net investment hedges are classified in all other investing activities in the accompanying Consolidated Condensed Statements of Cash Flows. The cash inflows and outflows associated with the Company’s derivative contracts designated as cash flow hedges are classified in cash flows from operating activities in the accompanying Consolidated Condensed Statement of Cash Flows.

18


The Company’s derivative instruments, as well as its nonderivative debt instruments designated and qualifying as net investment hedges, were classified in the Company’s Consolidated Condensed Balance Sheet as follows ($ in millions):
 
April 3, 2020
 
December 31, 2019
Derivative assets:
 
 
 
Prepaid expenses and other current assets
$
658.0

 
$
25.7

 
 
 
 
Derivative liabilities:
 
 
 
Accrued expenses and other liabilities

 
111.7

 
 
 
 
Nonderivative hedging instruments:
 
 
 
Long-term debt
8,102.9

 
6,275.9


Amounts related to the Company’s derivatives expected to be reclassified from accumulated other comprehensive income (loss) to net earnings during the next 12 months if interest rates and foreign exchange rates remain the same are not significant.

NOTE 9. DEFINED BENEFIT PLANS
The following sets forth the components of the Company’s net periodic benefit (cost) of the noncontributory defined benefit pension plans ($ in millions):
 
Three-Month Period Ended
 
April 3, 2020
 
March 29, 2019
U.S. pension benefits:
 
 
 
Service cost
$

 
$
(1.6
)
Interest cost
(16.6
)
 
(22.2
)
Expected return on plan assets
29.1

 
31.6

Amortization of actuarial loss
(9.0
)
 
(6.2
)
Amortization of prior service cost
(0.2
)
 
(0.2
)
Net periodic pension benefit
$
3.3


$
1.4

 
 
 
 
Non-U.S. pension benefits:
 
 
 
Service cost
$
(6.0
)
 
$
(5.8
)
Interest cost
(4.5
)
 
(6.2
)
Expected return on plan assets
8.9

 
10.1

Amortization of actuarial loss
(2.4
)
 
(1.1
)
Amortization of prior service credit
0.3

 

Net periodic pension cost
$
(3.7
)
 
$
(3.0
)
The following sets forth the components of the Company’s net periodic benefit cost of the other postretirement employee benefit plans ($ in millions):
 
Three-Month Period Ended
 
April 3, 2020
 
March 29, 2019
Service cost
$
(0.1
)
 
$
(0.1
)
Interest cost
(0.8
)
 
(1.2
)
Amortization of prior service credit
0.5

 
0.5

Net periodic cost
$
(0.4
)
 
$
(0.8
)


19


The net periodic benefit cost of the noncontributory defined benefit pension plans and other postretirement employee benefit plans incurred during the three-month periods ended April 3, 2020 and March 29, 2019 are reflected in the following captions in the accompanying Consolidated Condensed Statements of Earnings ($ in millions):
 
Three-Month Period Ended
 
April 3, 2020
 
March 29, 2019
Service cost:
 
 
 
Cost of sales
$
(1.5
)
 
$
(2.0
)
Selling, general and administrative expenses
(4.6
)
 
(5.5
)
Total service cost
(6.1
)
 
(7.5
)
Other net periodic benefit costs:
 
 
 
Other (expense) income, net
5.3

 
5.1

Total
$
(0.8
)
 
$
(2.4
)

Employer Contributions
During 2020, the Company’s cash contribution requirements for its U.S. and non-U.S. defined benefit pension plans are forecasted to be approximately $85 million and $50 million, respectively. The ultimate amounts to be contributed depend upon, among other things, legal requirements, underlying asset returns, the plan’s funded status, the anticipated tax deductibility of the contribution, local practices, market conditions, interest rates and other factors. On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act was signed into law and includes a provision that allows employers to defer payment of contributions to U.S. defined benefit pension plans due in 2020 until January 1, 2021. The Company is still evaluating whether it will defer any 2020 contributions to its U.S. defined benefit pension plans pursuant to this provision.

NOTE 10. INCOME TAXES
The following table summarizes the Company’s effective tax rate:
 
Three-Month Period Ended
 
April 3, 2020
 
March 29, 2019
Effective tax rate
16.3
%
 
53.8
%

The effective tax rate for the three-month period ended April 3, 2020 differs from the U.S. federal statutory rate of 21.0% principally due to the impact of net discrete benefits of $27 million ($0.04 per diluted common share) related primarily to excess tax benefits from stock-based compensation and the release of reserves for uncertain tax positions due to the expiration of statutes of limitation.
The effective tax rate for the three-month period ended March 29, 2019 differs from the U.S. federal statutory rate of 21.0% principally due to the impact of net discrete charges of $245 million ($0.34 per diluted common share) related primarily to changes in estimates associated with prior period uncertain tax positions and audit settlements, net of the release of valuation allowances associated with certain foreign tax credits, tax benefits resulting from a change in tax law and excess tax benefits from stock-based compensation. These discrete tax charges resulted in an increase of 34.0% in the reported tax rate.
In the fourth quarter of 2018 and in the first quarter of 2019, the Internal Revenue Service (“IRS”) proposed significant adjustments to the Company’s taxable income for the years 2012 through 2015 with respect to the deferral of tax on certain premium income related to the Company’s self-insurance programs. For income tax purposes, the recognition of premium income has been deferred in accordance with U.S. tax laws related to insurance. The IRS is challenging the deferral of premiums for certain types of the Company’s self-insurance policies. The proposed adjustments would increase the Company’s taxable income over the 2012-2015 period by approximately $2.7 billion. Management believes the positions the Company has taken in its U.S. tax returns are in accordance with the relevant tax laws and is vigorously defending these positions. Due to the enactment of the Tax Cuts and Jobs Act in 2017 and the resulting reduction in the U.S. corporate tax rate for years after 2017, the Company revalued its deferred tax liabilities related to the temporary differences associated with this deferred premium income from 35.0% to 21.0%. If the Company is not successful in defending these assessments, the taxes owed to the IRS may be computed under the previous 35.0% statutory tax rate and the Company may be required to revalue the related deferred tax liabilities from 21.0% to 35.0%, which in addition to any interest due on the amounts assessed, would require a charge to future

20


earnings. The ultimate resolution of this matter is uncertain, could take many years and could result in a material adverse impact to the Company’s financial statements, including its cash flows and effective tax rate.
Tax authorities in Denmark have raised significant issues related to interest accrued by certain of the Company’s subsidiaries. On December 10, 2013, the Company received assessments from the Danish tax authority (“SKAT”) of approximately DKK 1.8 billion including interest (approximately $257 million based on the exchange rate as of April 3, 2020), imposing withholding tax relating to interest accrued in Denmark on borrowings from certain of the Company’s subsidiaries for the years 2004-2009. The Company appealed these assessments to the Danish National Tax Tribunal in 2014. The appeal is pending, awaiting the final outcome of other, preceding withholding tax cases that were appealed to the Danish Courts and subsequently to the Court of Justice of the European Union (“CJEU”). In February 2019, the CJEU decided several of these cases and ruled that the exemption of interest payments from withholding taxes provided in the applicable European Union (“EU”) directive should be denied where taxpayers use the directive for abusive or fraudulent purposes, and that it is up to the national courts to make this determination. This decision of the CJEU now awaits application by the Danish High Court in the other, preceding withholding tax cases. SKAT has maintained a similar position related to withholding tax on interest accrued in Denmark on borrowings from certain of the Company’s subsidiaries with respect to tax years 2010-2012 and 2013-2015. On August 27, 2019 and December 16, 2019, the Company received assessments for these matters of approximately DKK 1.1 billion including interest (approximately $156 million based on the exchange rate as of April 3, 2020) for tax years 2010-2012 and DKK 767 million including interest (approximately $111 million based on the exchange rate as of April 3, 2020) for tax years 2013-2015, respectively. The Company is appealing these assessments as well. 
Management believes the positions the Company has taken in Denmark are in accordance with the relevant tax laws and is vigorously defending its positions. The Company intends on pursuing this matter through the Danish High Court should the appeal to the Danish National Tax Tribunal be unsuccessful. The Company will continue to monitor decisions of both the Danish courts and the CJEU and evaluate the impact of these court rulings on the Company’s tax positions in Denmark. The ultimate resolution of this matter is uncertain, could take many years, and could result in a further material adverse impact to the Company’s financial statements, including its cash flow and effective tax rate.

NOTE 11. NONOPERATING INCOME (EXPENSE)
The Company disaggregates the service cost component of net periodic benefit costs of the noncontributory defined benefit pension plans and other postretirement employee benefit plans and presents the other components of net periodic benefit cost in other (expense) income, net. These other components include the assumed rate of return on plan assets, partially offset by amortization of actuarial losses and interest and aggregated to a gain of $5 million for both the three-month periods ended April 3, 2020 and March 29, 2019.
The Company estimates the fair value of investments in equity securities using the Fair Value Alternative and records adjustments to fair value within net earnings. Additionally, the Company is a limited partner in a partnership that invests in early-stage companies. While the partnership records these investments at fair value, the Company’s investment in the partnership is accounted for under the equity method of accounting. During the three-month period ended April 3, 2020, the Company recorded a $7 million unrealized loss ($0.01 per diluted common share) related to a reduction in the fair value of these investments.

NOTE 12. COMMITMENTS AND CONTINGENCIES
The Company reviews the adequacy of its legal reserves on a quarterly basis and establishes reserves for loss contingencies that are both probable and reasonably estimable. For a further description of the Company’s litigation and contingencies, refer to Note 18 of the Company’s financial statements as of and for the year ended December 31, 2019 included in the Company’s 2019 Annual Report.
The Company generally accrues estimated warranty costs at the time of sale. In general, manufactured products are warranted against defects in material and workmanship when properly used for their intended purpose, installed correctly and appropriately maintained. Warranty periods depend on the nature of the product and range from the date of such sale up to ten years. The amount of the accrued warranty liability is determined based on historical information such as past experience, product failure rates or number of units repaired, estimated cost of material and labor and in certain instances estimated property damage. The accrued warranty liability is reviewed on a quarterly basis and may be adjusted as additional information regarding expected warranty costs becomes known.

21


The following is a rollforward of the Company’s accrued warranty liability ($ in millions):
Balance, December 31, 2019
$
73.3

Accruals for warranties issued during the period
10.0

Settlements made
(9.5
)
Additions due to acquisitions
2.4

Effect of foreign currency translation
(2.2
)
Balance, April 3, 2020
$
74.0



NOTE 13. STOCK TRANSACTIONS AND STOCK-BASED COMPENSATION
Neither the Company nor any “affiliated purchaser” repurchased any shares of Company common stock during the three-month period ended April 3, 2020. On July 16, 2013, the Company’s Board of Directors approved a repurchase program (the “Repurchase Program”) authorizing the repurchase of up to 20 million shares of the Company’s common stock from time to time on the open market or in privately negotiated transactions. As of April 3, 2020, 20 million shares remained available for repurchase pursuant to the Repurchase Program.
The following table summarizes the Company’s share activity (shares in millions):
 
Three-Month Period Ended
 
April 3, 2020
 
March 29, 2019
Preferred stock - shares issued:
 
 
 
Balance, beginning of period
1.7

 

Issuance of MCPS

 
1.7

Balance, end of period
1.7

 
1.7

 
 
 
 
Common stock - shares issued:
 
 
 
Balance, beginning of period
835.5

 
817.9

Common stock-based compensation awards
1.8

 
2.0

Common stock issued in connection with LYONs’ conversions

 
0.5

Issuance of common stock

 
12.1

Balance, end of period
837.3

 
832.5


On March 1, 2019, the Company completed the underwritten public offering of 12.1 million shares of Danaher common stock at a price to the public of $123.00 per share (the “Common Stock Offering”), resulting in net proceeds of approximately $1.4 billion, after deducting expenses and the underwriters’ discount of $45 million. Simultaneously, the Company completed the underwritten public offering of 1.65 million shares of its 4.75% MCPS, Series A, without par value and with a liquidation preference of $1,000 per share (the “MCPS Offering”), resulting in net proceeds of approximately $1.6 billion, after deducting expenses and the underwriters’ discount of $50 million. The Company used the net proceeds from the Common Stock Offering and the MCPS Offering to fund a portion of the cash consideration payable for, and certain costs associated with, the Cytiva Acquisition. Prior to the completion of the Cytiva Acquisition, the Company invested the net proceeds in short-term bank deposits and/or interest-bearing, investment-grade securities.
Taking into account the anti-dilution adjustments as a result of the dividends paid to the Company’s common shareholders on or prior to April 3, 2020, each share of MCPS will mandatorily convert on the mandatory conversion date, which is expected to be April 15, 2022, into between 6.6542 and 8.1513 shares of the Company’s common stock, subject to further anti-dilution adjustments. The number of shares of the Company’s common stock issuable upon conversion will be determined based on the average volume-weighted average price per share of the Company’s common stock over the 20 consecutive trading day period beginning on, and including, the 21st scheduled trading day immediately before April 15, 2022. Subject to certain exceptions, at any time prior to April 15, 2022, holders may elect to convert each share of the MCPS into 6.6542 shares of common stock, subject to further anti-dilution adjustments. In the event of a fundamental change, the MCPS will convert at the fundamental change rates specified in the certificate of designations, and the holders of MCPS would be entitled to a fundamental change make-whole dividend.

22


Holders of MCPS will be entitled to receive, when and if declared by the Company’s Board of Directors, cumulative dividends at the annual rate of 4.75% of the liquidation preference of $1,000 per share (equivalent to $47.50 annually per share), payable in cash or, subject to certain limitations, by delivery of shares of the Company’s common stock or any combination of cash and shares of the Company’s common stock, at the Company’s election. If declared, dividends on the MCPS are payable quarterly on January 15, April 15, July 15 and October 15 of each year (to, and including, April 15, 2022), to the holders of record of the MCPS as they appear on the Company’s stock register at the close of business on the immediately preceding December 31, March 31, June 30 and September 30, respectively.
For a full description of the Company’s stock-based compensation programs, refer to Note 19 of the Company’s financial statements as of and for the year ended December 31, 2019 included in the Company’s 2019 Annual Report. As of April 3, 2020, approximately 55 million shares of the Company’s common stock were reserved for issuance under the 2007 Omnibus Incentive Plan.
The following summarizes the components of the Company’s stock-based compensation expense ($ in millions):
 
Three-Month Period Ended
 
April 3, 2020
 
March 29, 2019
Restricted stock units (“RSUs”)/performance stock units (“PSUs”):
 
 
 
Pretax compensation expense
$
27.6

 
$
21.7

Income tax benefit
(5.7
)
 
(4.5
)
RSU/PSU expense, net of income taxes
21.9

 
17.2

Stock options:
 
 
 
Pretax compensation expense
17.6

 
13.4

Income tax benefit
(3.6
)
 
(2.8
)
Stock option expense, net of income taxes
14.0

 
10.6

Total stock-based compensation:
 
 
 
Pretax compensation expense
45.2

 
35.1

Income tax benefit
(9.3
)
 
(7.3
)
Total stock-based compensation expense, net of income taxes
$
35.9

 
$
27.8


Stock-based compensation has been recognized as a component of selling, general and administrative expenses in the accompanying Consolidated Condensed Statements of Earnings. As of April 3, 2020, $231 million of total unrecognized compensation cost related to RSUs/PSUs is expected to be recognized over a weighted average period of approximately three years. As of April 3, 2020, $204 million of total unrecognized compensation cost related to stock options is expected to be recognized over a weighted average period of approximately three years. Future compensation amounts will be adjusted for any changes in estimated forfeitures.

NOTE 14. NET EARNINGS PER COMMON SHARE FROM CONTINUING OPERATIONS
Basic net earnings per common share (“EPS”) from continuing operations is calculated by taking net earnings from continuing operations less the MCPS dividends divided by the weighted average number of common shares outstanding for the applicable period. Diluted net EPS from continuing operations is computed based on the weighted average number of common shares outstanding increased by the number of additional shares that would have been outstanding had the potentially dilutive common shares been issued and reduced by the number of shares the Company could have repurchased with the proceeds from the issuance of the potentially dilutive shares. For the three-month period ended April 3, 2020, approximately 2 million options to purchase shares were not included in the diluted EPS calculation as the impact of their inclusion would have been anti-dilutive. For the three-month period ended March 29, 2019no options to purchase shares were excluded from the diluted EPS calculation.
The impact of the MCPS calculated under the if-converted method was anti-dilutive, and as such 12 million shares and 13 million shares underlying the MCPS were excluded from the diluted EPS calculation for the three-month periods ended April 3, 2020 and March 29, 2019, respectively.

23


Information related to the calculation of net earnings from continuing operations per common share is summarized as follows ($ and shares in millions, except per share amounts):
 
Three-Month Period Ended
 
April 3, 2020
 
March 29, 2019
Numerator:
 
 
 
Net earnings from continuing operations
$
595.1

 
$
332.3

MCPS dividends
(19.6
)
 
(6.5
)
Net earnings from continuing operations attributable to common stockholders for Basic EPS
575.5

 
325.8

Adjustment for interest on convertible debentures
0.3

 
0.5

Net earnings from continuing operations attributable to common stockholders after assumed conversions for Diluted EPS
$
575.8

 
$
326.3

 
 
 
 
Denominator:
 
 
 
Weighted average common shares outstanding used in Basic EPS
697.2

 
707.6

Incremental common shares from:
 
 
 
Assumed exercise of dilutive options and vesting of dilutive RSUs and PSUs
9.4

 
8.7

Assumed conversion of the convertible debentures
1.3

 
2.2

Weighted average common shares outstanding used in Diluted EPS
707.9

 
718.5

 
 
 
 
Basic EPS from continuing operations
$
0.83

 
$
0.46

Diluted EPS from continuing operations
$
0.81

 
$
0.45



NOTE 15. SEGMENT INFORMATION
The Company operates and reports its results in three separate business segments consisting of the Life Sciences, Diagnostics, and Environmental & Applied Solutions segments. When determining the reportable segments, the Company  aggregated operating segments based on their similar economic and operating characteristics. Operating profit represents total revenues less operating expenses, excluding nonoperating income and expense, interest and income taxes. Operating profit amounts in the Other segment consist of unallocated corporate costs and other costs not considered part of management’s evaluation of reportable segment operating performance. Intersegment amounts are not significant and are eliminated to arrive at consolidated totals.

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Segment results are shown below ($ in millions):
 
Three-Month Period Ended
 
April 3, 2020
 
March 29, 2019
Sales:
 
 
 
Life Sciences
$
1,650.4

 
$
1,626.9

Diagnostics
1,627.0

 
1,536.8

Environmental & Applied Solutions
1,065.7

 
1,056.5

Total
$
4,343.1

 
$
4,220.2

 
 
 
 
Operating profit:
 
 
 
Life Sciences
$
325.6

 
$
309.0

Diagnostics
251.2

 
233.1

Environmental & Applied Solutions
239.9

 
244.6

Other
(119.2
)
 
(67.0
)
Total
$
697.5

 
$
719.7


Segment identifiable assets are shown below ($ in millions):
 
April 3, 2020
 
December 31, 2019
Life Sciences
$
44,765.7

 
$
22,381.3

Diagnostics
14,508.4

 
14,442.2

Environmental & Applied Solutions
4,945.1

 
4,881.8

Other
4,711.1

 
20,376.3

Total
$
68,930.3

 
$
62,081.6



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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is designed to provide a reader of Danaher Corporation’s (“Danaher,” the “Company,” “we,” “us” or “our”) financial statements with a narrative from the perspective of Company management. The Company’s MD&A is divided into five sections:
Information Relating to Forward-Looking Statements
Overview
Results of Operations
Liquidity and Capital Resources
Critical Accounting Estimates
You should read this discussion along with the Company’s MD&A and audited financial statements as of and for the year ended December 31, 2019 and Notes thereto, included in the Company’s 2019 Annual Report on Form 10-K and the Company’s Consolidated Condensed Financial Statements and related Notes as of and for the three-month period ended April 3, 2020 included in this Report.
Unless otherwise indicated, all financial results in this report refer to continuing operations.

INFORMATION RELATING TO FORWARD-LOOKING STATEMENTS
Certain statements included or incorporated by reference in this quarterly report, in other documents we file with or furnish to the Securities and Exchange Commission, in our press releases, webcasts, conference calls, materials delivered to shareholders and other communications, are “forward-looking statements” within the meaning of the United States federal securities laws. All statements other than historical factual information are forward-looking statements, including without limitation statements regarding: projections of revenue (including preliminary revenue data for April 2020), expenses, profit, profit margins, tax rates, tax provisions, cash flows, pension and benefit obligations and funding requirements, our liquidity position or other projected financial measures; management’s plans and strategies for future operations, including statements relating to anticipated operating performance, cost reductions, restructuring activities, new product and service developments, competitive strengths or market position, acquisitions and the integration thereof (including the integration of the Cytiva Acquisition), divestitures, spin-offs, split-offs or other distributions, strategic opportunities, securities offerings, stock repurchases, dividends and executive compensation; growth, declines and other trends in markets we sell into; new or modified laws, regulations and accounting pronouncements; future regulatory approvals and the timing and conditionality thereof; outstanding claims, legal proceedings, tax audits and assessments and other contingent liabilities; future foreign currency exchange rates and fluctuations in those rates; the potential or anticipated direct or indirect impact of COVID-19 on our business, results of operations and/or financial condition; general economic and capital markets conditions; the anticipated timing of any of the foregoing; assumptions underlying any of the foregoing; and any other statements that address events or developments that Danaher intends or believes will or may occur in the future. Terminology such as “believe,” “anticipate,” “should,” “could,” “intend,” “will,” “plan,” “expect,” “estimate,” “project,” “target,” “may,” “possible,” “potential,” “forecast” and “positioned” and similar references to future periods are intended to identify forward-looking statements, although not all forward-looking statements are accompanied by such words.
Forward-looking statements are based on assumptions and assessments made by our management in light of their experience and perceptions of historical trends, current conditions, expected future developments and other factors. Forward-looking statements are not guarantees of future performance and actual results may differ materially from the results, developments and business decisions contemplated by our forward-looking statements. Accordingly, you should not place undue reliance on any such forward-looking statements. Important factors that in some cases have affected us in the past and that in the future could cause actual results to differ materially from those envisaged in the forward-looking statements include the following:
The COVID-19 pandemic has adversely impacted, and poses risks to, our business, results of operations and financial condition, the nature and extent of which are highly uncertain and unpredictable.
The Cytiva Acquisition could negatively impact our business, results of operations and financial condition.
Our outstanding debt has increased significantly as a result of the Cytiva Acquisition and we may incur additional debt in the future. Our existing and future indebtedness may limit our operations and our use of our cash flow and negatively

26


impact our credit ratings; and any failure to comply with the covenants that apply to our indebtedness could adversely affect our liquidity and financial statements.
Conditions in the global economy, the particular markets we serve and the financial markets may adversely affect our business and financial statements.
Significant developments or uncertainties stemming from the U.S. administration, including changes in U.S. trade policies, tariffs and the reaction of other countries thereto, particularly China, can have an adverse effect on our business.
Our growth could suffer if the markets into which we sell our products and services decline, do not grow as anticipated or experience cyclicality.
We face intense competition and if we are unable to compete effectively, we may experience decreased demand and decreased market share. Even if we compete effectively, we may be required to reduce prices for our products and services.
Our growth depends in part on the timely development and commercialization, and customer acceptance, of new and enhanced products and services based on technological innovation.
Our reputation, ability to do business and financial statements can be impaired by improper conduct by any of our employees, agents or business partners.
Certain of our businesses are subject to extensive regulation by the U.S. Food and Drug Administration and by comparable agencies of other countries, as well as laws regulating fraud and abuse in the health care industry and the privacy and security of health information. Failure to comply with those regulations could adversely affect our reputation, ability to do business and financial statements.
Our products are subject to clinical trials, the results of which may be unexpected, or perceived as unfavorable by the market, and could have a material adverse effect on our business, financial condition or results of operations.
Off-label marketing of our products could result in substantial penalties.
Certain modifications to our products may require new 510(k) clearances or other marketing authorizations and may require us to recall or cease marketing our products.
The health care industry and related industries that we serve have undergone, and are in the process of undergoing, significant changes in an effort to reduce costs, which could adversely affect our financial statements.
Any inability to consummate acquisitions at our historical rate and at appropriate prices, and to make appropriate investments that support our long-term strategy, could negatively impact our growth rate and stock price.
Our acquisition of businesses, investments, joint ventures and other strategic relationships could negatively impact our financial statements.
The indemnification provisions of acquisition agreements by which we have acquired companies may not fully protect us and as a result we may face unexpected liabilities.
Divestitures or other dispositions could negatively impact our business and contingent liabilities from businesses that we or our predecessors have disposed could adversely affect our financial statements.
We could incur significant liability if any of the 2015 separation and split-off of our communications business, the 2016 separation and spin-off of Fortive Corporation (“Fortive”) or the 2019 separation, initial public offering (“IPO”) and split-off of Envista is determined to be a taxable transaction.
Potential indemnification liabilities pursuant to the 2015 separation and split-off of our communications business, the 2016 separation and spin-off of Fortive or the 2019 separation, IPO and split-off of Envista could materially and adversely affect our business and financial statements.
A significant disruption in, or breach in security of, our information technology systems or data or violation of data privacy laws could adversely affect our business, reputation and financial statements.
Our operations, products and services expose us to the risk of environmental, health and safety liabilities, costs and violations that could adversely affect our business, reputation and financial statements.

27


Our businesses are subject to extensive regulation; failure to comply with those regulations could adversely affect our financial statements and our business, including our reputation.
Our restructuring actions can have long-term adverse effects on our business.
We may be required to recognize impairment charges for our goodwill and other intangible assets.
Foreign currency exchange rates can adversely affect our financial statements.