Stock Transactions And Stock-Based Compensation

9 Months Ended

Sep. 27, 2019

Share-based Payment Arrangement [Abstract]

Stock Transactions And Stock-Based Compensation

STOCK TRANSACTIONS AND STOCK-BASED COMPENSATION

Capital Stock

Under the Company’s amended and restated certificate of incorporation, as of September 20, 2019, the Company’s authorized capital stock consists of 500 million shares of common stock with a par value of $0.01 per share and 15 million shares of preferred stock with no par value per share. On September 17, 2019, the Company issued shares of the Company’s common stock to Danaher as partial consideration for the transfer of the Dental business by Danaher to the Company, which, together with the 100 shares of the Company’s common stock previously held by Danaher resulted in Danaher owning 127.9 million shares of the Company’s common stock. On September 20, 2019, the Company completed its IPO resulting in the issuance of an additional 30.8 million shares of its common stock. No preferred shares were issued or outstanding as of September 27, 2019.

Each share of the Company’s common stock entitles the holder to one vote on all matters to be voted upon by common stockholders. The Company’s Board of Directors is authorized to issue shares of preferred stock in one or more series and has discretion to determine the rights, preferences, privileges and restrictions, including voting rights, dividend rights, conversion rights, redemption privileges and liquidation preferences, of each series of preferred stock. The Board’s authority to issue preferred stock with voting rights or conversion rights that, if exercised, could adversely affect the voting power of the holders of common stock, could potentially discourage attempts by third parties to obtain control of the Company through certain types of takeover practices.

The following table summarizes the Company’s stock activity (shares in millions):

	Three-Month Period Ended		Nine-Month Period Ended
	September 27, 2019	September 28, 2018	September 27, 2019	September 28, 2018
Common stock - shares issued:
Balance, beginning of period	—	—	—	—
Shares issued to Danaher	127.9	—	127.9	—
Issuance of common stock	30.8	—	30.8	—
Balance, end of period	158.7	—	158.7	—

Stock-Based Compensation

For a full description of the Company’s stock-based compensation programs, refer to Note 15 of the Company’s financial statements as of and for the year ended December 31, 2018 included within the Company’s Prospectus.

The Company had no stock-based compensation plans prior to the Separation; however certain employees of the Company participated in Danaher's stock-based compensation plans, which provided for the grants of stock options, performance stock units (“PSUs”) and restricted stock units (“RSUs”) among other types of awards. The expense associated with the Company's employees who participated in the plans is allocated to the Company in the accompanying Consolidated and Combined Condensed Statements of Earnings. After the Separation, these employees continue to participate in Danaher’s stock-based compensation plans with respect to pre-Separation awards. Outstanding Danaher equity awards held by the Company’s employees at the time of the Distribution (if pursued) generally will be converted entirely into equivalent awards with respect to the Company’s common stock at the time of the Distribution, with adjustments to preserve the aggregate value of the awards. At the time of the Distribution (if pursued), outstanding equity awards of Danaher held by the Company’s employees will be converted into or replaced with awards of the Company’s common stock under the Company’s equity plan based on the “concentration method,” and will be adjusted to maintain the economic value before and after the Distribution date using the respective, relative fair market value of each of the Danaher common stock and the Company common stock.  The equity awards the Company issues in replacement of Danaher's performance-based RSUs and PSUs will retain the same terms (e.g., vesting date, expiration date and post-vesting holding period) as of the date of the conversion, except that the performance-based vesting conditions will no longer apply.

The following summarizes the components of the Company’s stock-based compensation expense ($ in millions):

	Three-Month Period Ended						Nine-Month Period Ended
	September 27, 2019			September 28, 2018			September 27, 2019			September 28, 2018
RSUs/PSUs:
Pretax compensation expense	$	2.2		$	2.3		$	7.8		$	5.8
Income tax benefit	(0.4		)	(0.6		)	(1.7		)	(1.4		)
RSUs/PSUs expense, net of income taxes	1.8			1.7			6.1			4.4
Stock options:
Pretax compensation expense	1.4			1.4			4.7			3.7
Income tax benefit	(0.1		)	(0.3		)	(1.0		)	(0.8		)
Stock option expense, net of income taxes	1.3			1.1			3.7			2.9
Total stock-based compensation:
Pretax compensation expense	3.6			3.7			12.5			9.5
Income tax benefit	(0.5		)	(0.9		)	(2.7		)	(2.2		)
Total stock-based compensation expense, net of income taxes	$	3.1		$	2.8		$	9.8		$	7.3

Stock-based compensation has been recognized as a component of selling, general and administrative expenses in the accompanying Consolidated and Combined Condensed Statements of Earnings. For both the three and nine-month periods ended September 27, 2019, stock-based compensation consisted of both the Company’s and Danaher’s equity awards. For both the three and nine-month periods ended September 28, 2018, stock-based compensation consisted of Danaher equity awards. As of September 27, 2019, $24 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 September 27, 2019, $21 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.