WASHINGTON, July 18, 2019 /PRNewswire/ -- Danaher
Corporation (NYSE: DHR) today announced results for the second
quarter 2019. For the quarter ended June 28,
2019, net earnings were $731.3
million, or $0.97 per diluted
share which represents a 2.0% year-over-year increase from the
comparable 2018 period.
Non-GAAP adjusted diluted net earnings per share were
$1.19 which represents a 3.5%
increase over the comparable 2018 period. For the second quarter
2019, revenues increased 3.5% year-over-year to $5.2 billion, with non-GAAP core revenue growth
of 5.5%.
Operating cash flow for the second quarter 2019 was $1.2 billion and non-GAAP free cash flow was
$1.0 billion.
For the third quarter 2019, the Company anticipates that diluted
net earnings per share will be in the range of $0.86 to $0.89 and
non-GAAP adjusted diluted net earnings per share will be in the
range of $1.12 to $1.15.
For the full year 2019, the Company now anticipates that diluted
net earnings per share will be in the range of $3.38 to $3.43
versus previous guidance of $3.34 to
$3.42. The Company is raising its
2019 non-GAAP adjusted diluted net earnings per share guidance to
$4.75 to $4.80 versus previous guidance of $4.72 to $4.80.
Thomas P. Joyce, Jr., President
and Chief Executive Officer, stated, "We are very pleased by our
strong start to 2019, with our team's execution driving another
quarter of 5.5% core revenue growth. We believe that recent
investments in innovation and commercial initiatives contributed to
share gains in many of our businesses. Combined with solid
operating margin expansion and cash flow generation, the strength
of our results is a testament to our team and the power of the
Danaher Business System."
Joyce added, "We continue to make progress on our anticipated
acquisition of GE Biopharma and the planned initial public offering
of our Dental business, which will be called Envista. Both
transactions remain on track relative to our previously indicated
expectations. We are excited about the opportunities ahead, and we
believe the combination of our differentiated portfolio and our
team's DBS-driven execution positions us well to continue our
strong performance through 2019 and beyond."
Danaher will discuss its results during its quarterly investor
conference call today starting at 8:00 a.m.
ET. The call and an accompanying slide presentation will be
webcast on the "Investors" section of Danaher's website,
www.danaher.com, under the subheading "Events & Presentations."
A replay of the webcast will be available in the same section of
Danaher's website shortly after the conclusion of the presentation
and will remain available until the next quarterly earnings
call.
The conference call can be accessed by dialing 866-503-8675
within the U.S. or by dialing +1 786-815-8792 outside the U.S. a
few minutes before the 8:00 a.m. ET
start and telling the operator that you are dialing in for
Danaher's investor conference call (access code 8699843). A replay
of the conference call will be available shortly after the
conclusion of the call and until July 25,
2019. You can access the replay dial-in information on the
"Investors" section of Danaher's website under the subheading
"Events & Presentations." In addition, presentation materials
relating to Danaher's results have been posted to the "Investors"
section of Danaher's website under the subheading "Quarterly
Earnings."
ABOUT DANAHER
Danaher is a global science and technology innovator committed
to helping its customers solve complex challenges and improving
quality of life around the world. Its family of world class brands
has leadership positions in the demanding and attractive health
care, environmental and applied end-markets. With more than 20
operating companies, Danaher's globally diverse team of
approximately 71,000 associates is united by a common culture and
operating system, the Danaher Business System, and our Shared
Purpose, Helping Realize Life's Potential. For more
information, please visit www.danaher.com.
NON-GAAP MEASURES
In addition to the financial measures prepared in accordance
with generally accepted accounting principles (GAAP), this earnings
release also contains non-GAAP financial measures. Calculations of
these measures, the reasons why we believe these measures provide
useful information to investors, a reconciliation of these measures
to the most directly comparable GAAP measures and other information
relating to these non-GAAP measures are included in the
supplemental reconciliation schedule attached.
FORWARD-LOOKING STATEMENTS
Statements in this release that are not strictly historical,
including the statements regarding the Company's anticipated
financial performance for the third quarter and full year 2019 and
opportunities and positioning for 2019 and beyond, the anticipated
acquisition of GE Biopharma and initial public offering ("IPO") of
our Dental business, the expected timetable for completing such
acquisition and IPO and the anticipated impact thereof on Danaher
and any other statements regarding events or developments that we
believe or anticipate will or may occur in the future are
"forward-looking" statements within the meaning of the federal
securities laws. There are a number of important factors that could
cause actual results, developments and business decisions to differ
materially from those suggested or indicated by such
forward-looking statements and you should not place undue reliance
on any such forward-looking statements. These factors include,
among other things, the uncertainty of regulatory approvals with
respect to the GE Biopharma acquisition and the timing or
conditionality thereof, the parties' ability to satisfy the
acquisition agreement conditions and consummate the acquisition of
GE Biopharma on the anticipated timetable and terms or at all,
Danaher's ability to successfully integrate GE Biopharma's
operations and employees with Danaher's existing business, the
ability to realize anticipated financial, tax and operational
synergies and benefits, GE Biopharma's performance and maintenance
of important business relationships, Danaher's ability to complete
the previously-announced IPO of its Dental business on the
currently contemplated timeline or at all and achieve the intended
benefits thereof, deterioration of or instability in the economy,
the markets served by us or GE Biopharma and the financial markets,
developments and uncertainties in U.S. policy stemming from the
U.S. administration, such as changes in U.S. trade and tariff
policies and the reaction of other countries thereto, contractions
or growth rates and cyclicality of markets we serve, competition,
our ability to develop and successfully market new products and
technologies and expand into new markets, the potential for
improper conduct by our employees, agents or business partners, our
compliance with applicable laws and regulations (including
regulations relating to medical devices and the health care
industry), the results of our clinical trials and perceptions
thereof, our ability to effectively address cost reductions and
other changes in the health care industry, our ability to
successfully identify and consummate appropriate acquisitions and
strategic investments and successfully complete divestitures and
other dispositions, our ability to integrate the businesses we
acquire and achieve the anticipated benefits of such acquisitions,
contingent liabilities relating to acquisitions, investments and
divestitures (including tax-related and other contingent
liabilities relating to past and future IPOs, split-offs or
spin-offs), security breaches or other disruptions of our
information technology systems or violations of data privacy laws,
the impact of our restructuring activities on our ability to grow,
risks relating to potential impairment of goodwill and other
intangible assets, currency exchange rates, tax audits and changes
in our tax rate and income tax liabilities, changes in tax laws
applicable to multinational companies, litigation and other
contingent liabilities including intellectual property and
environmental, health and safety matters, the rights of
the United States government to
use, disclose and license certain intellectual property we license
if we fail to commercialize it, risks relating to product, service
or software defects, product liability and recalls, risks relating
to product manufacturing, the impact of our debt obligations on our
operations and liquidity (including the impact of the additional
debt Danaher expects to incur to finance the GE Biopharma
acquisition), our relationships with and the performance of our
channel partners, uncertainties relating to collaboration
arrangements with third-parties, commodity costs and surcharges,
our ability to adjust purchases and manufacturing capacity to
reflect market conditions, reliance on sole sources of supply, the
impact of deregulation on demand for our products and services,
labor matters, international economic, political, legal, compliance
and business factors (including the impact of the United Kingdom's decision to leave the EU and
uncertainty relating to the terms and timing of such separation),
disruptions relating to man-made and natural disasters and pension
plan costs. Additional information regarding the factors that may
cause actual results to differ materially from these
forward-looking statements is available in our SEC filings,
including our 2018 Annual Report on Form 10-K and Quarterly Reports
on Form 10-Q for the first quarter of 2019 and second quarter of
2019. These forward-looking statements speak only as of the date of
this release and except to the extent required by applicable law,
the Company does not assume any obligation to update or revise any
forward-looking statement, whether as a result of new information,
future events and developments or otherwise.
DANAHER
CORPORATION AND SUBSIDIARIES
CONSOLIDATED
CONDENSED STATEMENTS OF EARNINGS (unaudited)
($ and shares in
millions, except per share amounts)
|
|
|
Three-Month Period
Ended
|
|
Six-Month Period
Ended
|
|
June 28,
2019
|
|
June 29,
2018
|
|
June 28,
2019
|
|
June 29,
2018
|
Sales
|
$
|
5,156.6
|
|
|
$
|
4,981.0
|
|
|
$
|
10,036.5
|
|
|
$
|
9,676.4
|
|
Cost of
sales
|
(2,279.2)
|
|
|
(2,163.9)
|
|
|
(4,441.1)
|
|
|
(4,215.7)
|
|
Gross
profit
|
2,877.4
|
|
|
2,817.1
|
|
|
5,595.4
|
|
|
5,460.7
|
|
Operating
costs:
|
|
|
|
|
|
|
|
Selling, general and
administrative expenses
|
(1,671.8)
|
|
|
(1,637.9)
|
|
|
(3,355.2)
|
|
|
(3,239.8)
|
|
Research and
development expenses
|
(321.8)
|
|
|
(311.7)
|
|
|
(632.6)
|
|
|
(610.4)
|
|
Operating
profit
|
883.8
|
|
|
867.5
|
|
|
1,607.6
|
|
|
1,610.5
|
|
Nonoperating income
(expense):
|
|
|
|
|
|
|
|
Other income,
net
|
6.3
|
|
|
8.3
|
|
|
11.5
|
|
|
16.1
|
|
Interest
expense
|
(20.6)
|
|
|
(43.2)
|
|
|
(43.9)
|
|
|
(82.3)
|
|
Interest
income
|
26.2
|
|
|
2.5
|
|
|
41.9
|
|
|
3.9
|
|
Earnings before
income taxes
|
895.7
|
|
|
835.1
|
|
|
1,617.1
|
|
|
1,548.2
|
|
Income
taxes
|
(164.4)
|
|
|
(161.3)
|
|
|
(552.0)
|
|
|
(307.8)
|
|
Net
earnings
|
731.3
|
|
|
673.8
|
|
|
1,065.1
|
|
|
1,240.4
|
|
Mandatory convertible
preferred stock dividends
|
(22.7)
|
|
|
—
|
|
|
(29.2)
|
|
|
—
|
|
Net earnings
attributable to common stockholders
|
$
|
708.6
|
|
|
$
|
673.8
|
|
|
$
|
1,035.9
|
|
|
$
|
1,240.4
|
|
Net earnings per
common share:
|
|
|
|
|
|
|
|
Basic
|
$
|
0.99
|
|
|
$
|
0.96
|
|
|
$
|
1.45
|
|
|
$
|
1.77
|
|
Diluted
|
$
|
0.97
|
|
|
$
|
0.95
|
|
|
$
|
1.43
|
|
|
$
|
1.75
|
|
Average common stock
and common equivalent shares
outstanding:
|
|
|
|
|
|
|
|
Basic
|
717.6
|
|
|
700.2
|
|
|
712.6
|
|
|
699.4
|
|
Diluted
|
727.9
|
|
|
709.5
|
|
|
723.2
|
|
|
709.5
|
|
|
This information is
presented for reference only. A complete copy of Danaher's
Form 10-Q financial statements is available on the Company's
website (www.danaher.com).
|
DANAHER
CORPORATION
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL
MEASURES
|
|
Adjusted Diluted
Net Earnings Per Share
|
|
|
Three-Month Period
Ended
|
|
Six-Month Period
Ended
|
|
June 28, 2019
1
|
|
June 29,
2018
|
|
June 28, 2019
1
|
|
June 29,
2018
|
Diluted Net
Earnings Per Share (GAAP)
|
$
|
0.97
|
|
|
$
|
0.95
|
|
|
$
|
1.43
|
|
|
$
|
1.75
|
|
Pretax amortization
of acquisition-related intangible
assets A
|
0.24
|
|
|
0.26
|
|
|
0.49
|
|
|
0.50
|
|
First half of 2019
pretax Dental business separation
costs and costs related to establishing new separate
company infrastructure in connection with the Dental
business initial public offering, primarily related to
incremental salaries, benefits and rent expense
B
|
0.01
|
|
|
—
|
|
|
0.03
|
|
|
—
|
|
Pretax transaction
costs deemed significant and
integration preparation costs related to the anticipated
GE Biopharma acquisition C
|
0.03
|
|
|
—
|
|
|
0.05
|
|
|
—
|
|
First quarter 2019
costs and estimated liabilities related
to a legal contingency D
|
—
|
|
|
—
|
|
|
0.05
|
|
|
—
|
|
Pretax
acquisition-related transaction costs deemed
significant and fair value adjustments to inventory, in
each case related to the acquisition of IDT and incurred
in the second quarter of 2018 E
|
—
|
|
|
0.02
|
|
|
—
|
|
|
0.02
|
|
Pretax gain on
resolution of acquisition-related matters
recognized in the second quarter of 2018 F
|
—
|
|
|
(0.01)
|
|
|
—
|
|
|
(0.01)
|
|
Tax effect of all
adjustments reflected above G
|
(0.05)
|
|
|
(0.06)
|
|
|
(0.11)
|
|
|
(0.11)
|
|
Discrete tax
adjustments and other tax-related
adjustments H
|
(0.02)
|
|
|
(0.01)
|
|
|
0.31
|
|
|
(0.01)
|
|
Declared dividends on
the MCPS assuming "if-
converted" method I
|
0.01
|
|
|
—
|
|
|
0.01
|
|
|
—
|
|
Adjusted Diluted
Net Earnings Per Share (Non-GAAP)
|
$
|
1.19
|
|
|
$
|
1.15
|
|
|
$
|
2.26
|
|
|
$
|
2.14
|
|
|
1
Each of the per share amounts above have been calculated assuming
the Mandatory Convertible Preferred Stock ("MCPS") had been
converted.
|
DANAHER
CORPORATION
RECONCILIATION OF
GAAP TO NON-GAAP FINANCIAL MEASURES
(continued)
|
|
Forecasted
Adjusted Diluted Net Earnings Per
Share 2
|
|
|
Three-Month Period
Ending
September 27, 2019
3
|
|
Year
Ending
December 31, 2019
3
|
|
Low
End
|
|
High
End
|
|
Low
End
|
|
High
End
|
Forecasted Diluted
Net Earnings Per Share (GAAP)
|
$
|
0.86
|
|
|
$
|
0.89
|
|
|
$
|
3.38
|
|
|
$
|
3.43
|
|
Anticipated pretax
amortization of acquisition-related
intangible assets A
|
0.24
|
|
|
0.24
|
|
|
0.97
|
|
|
0.97
|
|
Anticipated pretax
first half of 2019 Dental business
separation costs and costs related to establishing new
separate company infrastructure in connection with the
Dental business initial public offering, primarily related
to incremental salaries, benefits and rent expense
B
|
0.03
|
|
|
0.03
|
|
|
0.09
|
|
|
0.09
|
|
Anticipated pretax
transaction costs deemed significant
and integration preparation costs related to the
anticipated GE Biopharma acquisition C
|
0.03
|
|
|
0.03
|
|
|
0.14
|
|
|
0.14
|
|
First quarter 2019
costs and estimated liabilities related
to a legal contingency D
|
—
|
|
|
—
|
|
|
0.05
|
|
|
0.05
|
|
Tax effect of all
adjustments reflected above G
|
(0.05)
|
|
|
(0.05)
|
|
|
(0.23)
|
|
|
(0.23)
|
|
Discrete tax
adjustments and other tax-related
adjustments H
|
—
|
|
|
—
|
|
|
0.31
|
|
|
0.31
|
|
Declared and
anticipated dividends on the MCPS
assuming "if-converted" method I
|
0.01
|
|
|
0.01
|
|
|
0.04
|
|
|
0.04
|
|
Forecasted
Adjusted Diluted Net Earnings Per Share
(Non-GAAP)
|
$
|
1.12
|
|
|
$
|
1.15
|
|
|
$
|
4.75
|
|
|
$
|
4.80
|
|
|
|
2
|
These forward-looking
estimates do not reflect future gains and charges that are
inherently difficult to predict and estimate due to their unknown
timing, effect and/or significance, such as certain future gains or
losses on the sale of investments, acquisition or
divestiture-related gains or charges, discrete tax items and legal
contingency provisions.
|
3
|
Each of the per share
amounts above was calculated assuming MCPS had been
converted.
|
|
See the
accompanying Notes to Reconciliation of GAAP to Non-GAAP Financial
Measures
|
Core Revenue
Growth 4
|
|
|
% Change
Three-
Month Period Ended
June 28, 2019 vs.
Comparable 2018
Period
|
|
% Change
Six-
Month Period Ended
June 28, 2019 vs.
Comparable 2018
Period
|
Total sales growth
(GAAP)
|
3.5
|
%
|
|
3.5
|
%
|
Less the impact
of:
|
|
|
|
Acquisitions
|
(1.0)
|
%
|
|
(1.5)
|
%
|
Currency exchange
rates
|
3.0
|
%
|
|
3.5
|
%
|
Core revenue growth
(Non-GAAP)
|
5.5
|
%
|
|
5.5
|
%
|
|
|
4
|
We use the term "core
revenue" to refer to GAAP revenue excluding (1) sales from acquired
businesses recorded prior to the first anniversary of the
acquisition less the amount of sales attributable to divested
businesses or product lines not considered discontinued operations
("acquisitions") and (2) the impact of currency translation.
The portion of GAAP revenue attributable to currency translation is
calculated as the difference between (a) the period-to-period
change in revenue (excluding acquisition sales) and (b) the
period-to-period change in revenue (excluding acquisition sales)
after applying current period foreign exchange rates to the prior
year period. We use the term "core revenue growth" to refer
to the measure of comparing current period core revenue with the
corresponding period of the prior year.
|
DANAHER
CORPORATION
RECONCILIATION OF
GAAP TO NON-GAAP FINANCIAL MEASURES
(continued)
|
|
Reconciliation of
Operating Cash Flows (GAAP) to Free Cash Flow
(Non-GAAP)
|
|
|
Three-Month
Period
Ended
|
|
Three-Month
Period
Ended
|
|
Six-Month Period
Ended
|
($ in
millions)
|
March
29,
2019
|
|
March 30,
2018
|
|
June 28,
2019
|
|
June 29,
2018
|
|
June 28,
2019
|
|
June 29,
2018
|
Net Operating Cash
Used in Investing
Activities (GAAP)
|
$
|
(498.5)
|
|
|
$
|
(122.7)
|
|
|
$
|
(228.9)
|
|
|
$
|
(2,242.6)
|
|
|
$
|
(727.4)
|
|
|
$
|
(2,365.3)
|
|
Net Operating Cash
Provided by (Used in)
Financing Activities (GAAP)
|
2,877.8
|
|
|
(321.7)
|
|
|
605.0
|
|
|
1,172.1
|
|
|
3,482.8
|
|
|
850.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Operating Cash
Provided by Operating
Activities (GAAP)
|
$
|
703.3
|
|
|
$
|
828.9
|
|
|
$
|
1,171.5
|
|
|
$
|
1,036.0
|
|
|
$
|
1,874.8
|
|
|
$
|
1,864.9
|
|
Less: payments for
additions to property,
plant and equipment (capital expenditures)
(GAAP)
|
(155.7)
|
|
|
(137.9)
|
|
|
(180.8)
|
|
|
(153.8)
|
|
|
(336.5)
|
|
|
(291.7)
|
|
Plus: proceeds from
sales of property, plant
and equipment (capital disposals) (GAAP)
|
0.8
|
|
|
0.4
|
|
|
11.3
|
|
|
1.0
|
|
|
12.1
|
|
|
1.4
|
|
Free Cash Flow
(Non-GAAP)
|
$
|
548.4
|
|
|
$
|
691.4
|
|
|
$
|
1,002.0
|
|
|
$
|
883.2
|
|
|
$
|
1,550.4
|
|
|
$
|
1,574.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Earnings
(GAAP)
|
$
|
333.8
|
|
|
$
|
566.6
|
|
|
$
|
731.3
|
|
|
$
|
673.8
|
|
|
$
|
1,065.1
|
|
|
$
|
1,240.4
|
|
Free Cash Flow to
Net Earnings Conversion
Ratio (Non-GAAP)
|
1.64
|
|
|
1.22
|
|
|
1.37
|
|
|
1.31
|
|
|
1.46
|
|
|
1.27
|
|
Adjusted Diluted
Shares Outstanding
|
|
|
|
|
|
|
|
|
|
|
Forecasted
|
|
Three-Month Period
Ended
|
|
Year
Ended
|
|
Three-Month
Period Ending
|
|
Year
Ending
|
(shares in
millions)
|
June 28,
2019
|
|
June 29,
2018
|
|
September 28,
2018
|
|
December 31,
2018
|
|
September 27,
2019
|
|
December 31,
2019
|
Average common stock
and
common equivalent shares
outstanding - diluted
|
727.9
|
|
|
709.5
|
|
|
710.6
|
|
|
710.2
|
|
|
730.0
|
|
|
727.1
|
|
Converted shares
5
|
11.9
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
11.9
|
|
|
10.0
|
|
Adjusted average
common
stock and common equivalent
shares outstanding - diluted
|
739.8
|
|
|
709.5
|
|
|
710.6
|
|
|
710.2
|
|
|
741.9
|
|
|
737.1
|
|
|
|
5
|
The number of
converted shares assumes the conversion of all 1.65 million shares
of common stock underlying the MCPS applying the "if-converted"
method of accounting and using an average 20 trading-day trailing
volume weighted average price ("VWAP") of $139.04 as of June 28,
2019.
|
DANAHER
CORPORATION
RECONCILIATION OF
GAAP TO NON-GAAP FINANCIAL MEASURES
(continued)
|
|
Notes to
Reconciliation of GAAP to Non-GAAP Financial
Measures
|
|
A
|
Amortization of
acquisition-related intangible assets in the following historical
and forecasted periods ($ in millions) (only the pretax amounts set
forth below are reflected in the amortization line item
above):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Forecasted
|
|
|
Three-Month Period
Ended
|
|
Six-Month Period
Ended
|
|
Three-Month
Period
Ending
|
|
Year
Ending
|
|
|
June 28,
2019
|
|
June 29,
2018
|
|
June 28,
2019
|
|
June 29,
2018
|
|
September
27, 2019
|
|
December
31, 2019
|
|
Pretax
|
$
|
178.8
|
|
|
$
|
181.1
|
|
|
$
|
358.7
|
|
|
$
|
353.4
|
|
|
$
|
179.2
|
|
|
$
|
717.1
|
|
|
After-tax
|
143.4
|
|
|
144.3
|
|
|
287.7
|
|
|
281.3
|
|
|
143.4
|
|
|
574.4
|
|
|
|
B
|
Pretax costs incurred
(or anticipated to be incurred, as applicable) in the three-month
period ended June 28, 2019, ($11 million pretax as reported in this
line item, $9 million after-tax), the six-month period ended June
28, 2019 ($22 million pretax as reported in this line item, $19
million after-tax), the three-month period ending September 27,
2019 ($25 million pretax as reported in this line item, $22 million
after-tax) and the year ending December 31, 2019 ($64 million
pretax as reported in this line item, $55 million after-tax)
related to preparation for the anticipated Dental business
separation and initial public offering primarily related to
professional fees for legal, tax, finance and information
technology services and duplicative general and administrative
costs related to establishing a public company infrastructure for
the business including incremental salaries, benefits and rent
expense.
|
|
|
C
|
Pretax costs incurred
(or anticipated to be incurred, as applicable) for transaction
costs deemed significant and integration preparation costs in the
three-month period ended June 28, 2019, ($18 million pretax as
reported in this line item, $16 million after-tax), the six-month
period ended June 28, 2019 ($33 million pretax as reported in this
line item, $29 million after-tax) the three-month period ending
September 27, 2019 ($20 million pretax as reported in this line
item, $18 million after-tax) and the year ending December 31, 2019
($102 million pretax as reported in this line item, $92 million
after-tax) related to the anticipated GE Biopharma
acquisition. The Company deems acquisition-related
transaction costs incurred in a given period to be significant
(generally relating to the Company's larger acquisitions) if it
determines that such costs exceed the range of acquisition-related
transaction costs typical for Danaher in a given period.
|
|
|
D
|
Provision for
potential costs and liabilities in connection with a legal
contingency ($36 million pretax as presented in this line item, $29
million after-tax) recorded in the three-month period ended March
29, 2019.
|
|
|
E
|
Acquisition-related
transaction costs deemed significant ($15 million pretax as
presented in this line item, $13 million after-tax), and fair value
adjustments to inventory ($1 million pretax as presented in this
line item, $0.8 million after-tax), in each case related to the
acquisition of IDT and incurred in the three and six-month periods
ended June 29, 2018.
|
|
|
F
|
Net gains on
resolution of acquisition-related matters in the Life Sciences
segment ($9 million pretax as presented in this line item, $7
million after-tax) for the three and six-month periods ended June
29, 2018.
|
|
|
G
|
This line item
reflects the aggregate tax effect of all nontax adjustments
reflected in the preceding line items of the table. In
addition, the footnote above indicates the after-tax amount of each
individual adjustment item. Danaher estimates the tax effect
of each adjustment item by applying Danaher's overall estimated
effective tax rate to the pretax amount, unless the nature of the
item and/or the tax jurisdiction in which the item has been
recorded requires application of a specific tax rate or tax
treatment, in which case the tax effect of such item is estimated
by applying such specific tax rate or tax treatment. The MCPS
dividends are not tax deductible and therefore the tax effect of
the adjustments does not include any tax impact of the MCPS
dividends.
|
|
|
H
|
Discrete tax
adjustments and other tax-related adjustments for the three-month
period ended June 28, 2019 includes the impact of net discrete tax
gains of $15 million or $0.02 per diluted share.
Discrete tax adjustments and other tax-related adjustments for the
six-month period ended June 28, 2019 includes the impact of net
discrete tax charges of $227 million or $0.31 per diluted
share. The discrete tax matters relate 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 and tax benefits
resulting from a change in law and excess tax benefits from
stock-based compensation realized in the three-month and six-month
periods ended June 28, 2019 in excess of anticipated levels.
The Company anticipates excess tax benefits from stock compensation
of approximately $7 million per quarter and therefore excludes
benefits in excess of this amount in the calculation of Adjusted
Diluted Net Earnings Per Share.
|
|
|
I
|
In March 2019, the
Company issued $1.65 billion in aggregate liquidation preference of
our 4.75% MCPS. Dividends on the MCPS are payable on a
cumulative basis at an annual rate of 4.75% on the liquidation
preference of $1,000 per share. Unless earlier converted,
each share of MCPS will automatically convert on April 15, 2022
into between 6.6373 and 8.1306 shares of Danaher's common stock,
subject to further anti-dilution adjustments. The number of
shares of Danaher's common stock issuable on conversion of the MCPS
will be determined based on the VWAP per share of our common stock
over the 20 consecutive trading day period beginning on, and
including, the 21st scheduled trading day immediately before April
15, 2022. For the purposes of calculating adjusted earnings
per share, the Company has excluded the anticipated MCPS dividends
and assumed the "if-converted" method of share dilution (the
incremental shares of common stock deemed outstanding applying the
"if-converted" method of calculating share dilution are referred to
as the "Converted Shares.") The Company believes that using
the "if-converted" method provides additional insight to investors
on the anticipated impact of the MCPS once they are converted into
common stock no later than April 15, 2022.
|
Statement Regarding Non-GAAP Measures
Each of the non-GAAP measures set forth above should be
considered in addition to, and not as a replacement for or superior
to, the comparable GAAP measure, and may not be comparable to
similarly titled measures reported by other companies.
Management believes that these measures provide useful information
to investors by offering additional ways of viewing Danaher
Corporation's ("Danaher" or the "Company") results that, when
reconciled to the corresponding GAAP measure, help our investors
to:
- with respect to Adjusted Diluted Net Earnings Per Share,
understand the long-term profitability trends of our business and
compare our profitability to prior and future periods and to our
peers;
- with respect to core revenue, identify underlying growth trends
in our business and compare our revenue performance with prior and
future periods and to our peers; and
- with respect to free cash flow (the "FCF Measure"), understand
Danaher's ability to generate cash without external financings,
strengthen its balance sheet, invest in its business and grow its
business through acquisitions and other strategic opportunities
(although a limitation of free cash flow is that it does not take
into account the Company's debt service requirements and other
non-discretionary expenditures, and as a result the entire free
cash flow amount is not necessarily available for discretionary
expenditures).
Management uses these non-GAAP measures to measure the Company's
operating and financial performance, and uses core revenue and
non-GAAP measures similar to Adjusted Diluted Net Earnings Per
Share and the FCF Measure in the Company's executive compensation
program.
The items excluded from the non-GAAP measures set forth above
have been excluded for the following reasons:
- With respect to Adjusted Diluted Net Earnings Per Share:
-
- We exclude the amortization of acquisition-related intangible
assets because the amount and timing of such charges are
significantly impacted by the timing, size, number and nature of
the acquisitions we consummate. While we have a history of
significant acquisition activity we do not acquire businesses on a
predictable cycle, and the amount of an acquisition's purchase
price allocated to intangible assets and related amortization term
are unique to each acquisition and can vary significantly from
acquisition to acquisition. Exclusion of this amortization expense
facilitates more consistent comparisons of operating results over
time between our newly acquired and long-held businesses, and with
both acquisitive and non-acquisitive peer companies. We believe
however that it is important for investors to understand that such
intangible assets contribute to revenue generation and that
intangible asset amortization related to past acquisitions will
recur in future periods until such intangible assets have been
fully amortized.
- We exclude costs incurred pursuant to discrete restructuring
plans that are fundamentally different (in terms of the size,
strategic nature and planning requirements, as well as the
inconsistent frequency, of such plans) from the ongoing
productivity improvements that result from application of the
Danaher Business System. Because these restructuring plans are
incremental to the core activities that arise in the ordinary
course of our business and we believe are not indicative of
Danaher's ongoing operating costs in a given period, we exclude
these costs from the calculation of Adjusted Diluted Net Earnings
Per Share to facilitate a more consistent comparison of operating
results over time.
- With respect to the other items excluded from Adjusted Diluted
Net Earnings Per Share, we exclude these items because they are of
a nature and/or size that occur with inconsistent frequency, occur
for reasons that may be unrelated to Danaher's commercial
performance during the period and/or we believe that such items may
obscure underlying business trends and make comparisons of
long-term performance difficult. For example, the first quarter
2019 legal contingency charges excluded from Adjusted Earnings Per
Share were excluded because legal contingencies of this nature and
amount are atypical for our businesses, infrequent and not
representative of a trend in our underlying business.
- With respect to core revenue, (1) we exclude the impact of
currency translation because it is not under management's control,
is subject to volatility and can obscure underlying business
trends, and (2) we exclude the effect of acquisitions and divested
product lines because the timing, size, number and nature of such
transactions can vary significantly from period-to-period and
between us and our peers, which we believe may obscure underlying
business trends and make comparisons of long-term performance
difficult.
- With respect to the FCF Measure, we exclude payments for
additions to property, plant and equipment (net of the proceeds
from capital disposals) to demonstrate the amount of operating cash
flow for the period that remains after accounting for the Company's
capital expenditure requirements.
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SOURCE Danaher Corporation