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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
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 


Table of Contents


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

Table of Contents

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

Table of Contents

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

Table of Contents

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

Table of Contents

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

Table of Contents

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

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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).


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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.

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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

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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.

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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.

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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.

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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

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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.


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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):