Quarterly Report (10-q)

Date : 07/18/2019 @ 11:03AM
Source : Edgar (US Regulatory)
Stock : Danaher Corporation (DHR)
Quote : 138.01  0.24 (0.17%) @ 12:04AM
After Hours
Last Trade
Last $ 138.01 ◊ 0.00 (0.00%)

Quarterly Report (10-q)

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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 June 28, 2019
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: 1-8089
DHRLOGOFOR8KSA17.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
2.500% Senior Notes due 2025
DHR 2.5 07/08/25
New York Stock Exchange
1.200% Senior Notes due 2027
DHR 1.2 06/30/27
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 July 12, 2019 was 717,367,599 .



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)
 
June 28, 2019
 
December 31, 2018
ASSETS
 
 
 
Current assets:
 
 
 
Cash and equivalents
$
5,433.6

 
$
787.8

Trade accounts receivable, net
3,481.6

 
3,489.6

Inventories:
 
 
 
Finished goods
1,099.2

 
1,031.2

Work in process
332.4

 
313.9

Raw materials
624.3

 
565.0

Total inventories
2,055.9

 
1,910.1

Prepaid expenses and other current assets
632.6

 
906.3

Total current assets
11,603.7

 
7,093.8

Property, plant and equipment, net of accumulated depreciation of $2,999.2 and $2,828.3, respectively
2,541.6

 
2,511.2

Other long-term assets
1,678.1

 
648.4

Goodwill
26,074.5

 
25,906.0

Other intangible assets, net
11,424.1

 
11,673.1

Total assets
$
53,322.0

 
$
47,832.5

LIABILITIES AND STOCKHOLDERS’ EQUITY
 
 
 
Current liabilities:
 
 
 
Notes payable and current portion of long-term debt
$
153.7

 
$
51.8

Trade accounts payable
1,664.1

 
1,712.8

Accrued expenses and other liabilities
3,190.2

 
3,076.9

Total current liabilities
5,008.0

 
4,841.5

Other long-term liabilities
5,956.4

 
5,075.8

Long-term debt
10,144.4

 
9,688.5

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 at June 28, 2019; no shares issued or outstanding at December 31, 2018
1,599.6

 

Com mon stock - $0.01 par value, 2.0 billion shares authorized; 834.0 million issued and 717.3 million outstanding at June 28, 2019; 817.9 million issued and 701.5 million outstanding at December 31, 2018
8.3

 
8.2

Additional paid-in capital
7,482.6

 
5,834.3

Retained earnings
25,955.0

 
25,163.0

Accumulated other comprehensive income (loss)
(2,844.3
)
 
(2,791.1
)
Total Danaher stockholders’ equity
32,201.2

 
28,214.4

Noncontrolling interests
12.0

 
12.3

Total stockholders’ equity
32,213.2

 
28,226.7

Total liabilities and stockholders’ equity
$
53,322.0

 
$
47,832.5

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
 
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


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
 
Six-Month Period Ended
 
June 28, 2019
 
June 29, 2018
 
June 28, 2019
 
June 29, 2018
Net earnings
$
731.3

 
$
673.8

 
$
1,065.1

 
$
1,240.4

Other comprehensive income (loss), net of income taxes:
 
 
 
 
 
 
 
Foreign currency translation adjustments
(46.5
)
 
(641.1
)
 
(57.3
)
 
(347.0
)
Pension and postretirement plan benefit adjustments
4.6

 
6.7

 
10.0

 
13.8

Unrealized gain (loss) on available-for-sale securities adjustments
0.5

 
(0.1
)
 
0.9

 
(0.6
)
Cash flow hedge adjustments
(6.8
)
 

 
(6.8
)
 

Total other comprehensive income (loss), net of income taxes
(48.2
)
 
(634.5
)
 
(53.2
)
 
(333.8
)
Comprehensive income
$
683.1

 
$
39.3

 
$
1,011.9

 
$
906.6

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
 
Six-Month Period Ended
 
June 28, 2019
 
June 29, 2018
 
June 28, 2019
 
June 29, 2018
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
$
8.3

 
$
8.1

 
$
8.2

 
$
8.1

Common stock-based award activity

 
0.1

 

 
0.1

Issuance of common stock

 

 
0.1

 

Balance, end of period
$
8.3

 
$
8.2

 
$
8.3

 
$
8.2

Additional paid-in capital
 
 
 
 
 
 
 
Balance, beginning of period
$
7,376.3

 
$
5,611.1

 
$
5,834.3

 
$
5,538.2

Common stock-based award activity
93.5

 
66.9

 
175.6

 
127.9

Common stock issued in connection with acquisitions

 
23.9

 

 
23.9

Common stock issued in connection with LYONs’ conversions, including tax benefit of $3.5, $1.1, $8.2 and $4.2, respectively
12.8

 
4.2

 
29.6

 
16.1

Issuance of common stock

 

 
1,443.1

 

Balance, end of period
$
7,482.6

 
$
5,706.1

 
$
7,482.6

 
$
5,706.1

Retained earnings
 
 
 
 
 
 
 
Balance, beginning of period
$
25,368.5

 
$
23,415.4

 
$
25,163.0

 
$
22,806.1

Adoption of accounting standards

 

 

 
154.5

Net earnings
731.3

 
673.8

 
1,065.1

 
1,240.4

Dividends declared
(122.1
)
 
(112.0
)
 
(243.9
)
 
(223.8
)
Mandatory Convertible Preferred Stock cumulative dividends
(22.7
)
 

 
(29.2
)
 

Balance, end of period
$
25,955.0

 
$
23,977.2

 
$
25,955.0

 
$
23,977.2

Accumulated other comprehensive income (loss)
 
 
 
 
 
 
 
Balance, beginning of period
$
(2,796.1
)
 
$
(1,844.7
)
 
$
(2,791.1
)
 
$
(1,994.2
)
Adoption of accounting standards

 

 

 
(151.2
)
Other comprehensive income (loss)
(48.2
)
 
(634.5
)
 
(53.2
)
 
(333.8
)
Balance, end of period
$
(2,844.3
)
 
$
(2,479.2
)
 
$
(2,844.3
)
 
$
(2,479.2
)
Noncontrolling interests
 
 
 
 
 
 
 
Balance, beginning of period
$
12.1

 
$
11.9

 
$
12.3

 
$
9.6

Change in noncontrolling interests
(0.1
)
 
0.2

 
(0.3
)
 
2.5

Balance, end of period
$
12.0

 
$
12.1

 
$
12.0

 
$
12.1

Total stockholders’ equity, end of period
$
32,213.2

 
$
27,224.4

 
$
32,213.2

 
$
27,224.4

See the accompanying Notes to the Consolidated Condensed Financial Statements.

4


DANAHER CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
($ in millions)
(unaudited)
 
Six-Month Period Ended
 
June 28, 2019
 
June 29, 2018
Cash flows from operating activities:
 
 
 
Net earnings
$
1,065.1

 
$
1,240.4

Noncash items:
 
 
 
Depreciation
300.5

 
302.0

Amortization
358.7

 
353.4

Stock-based compensation expense
85.4

 
73.4

Change in trade accounts receivable, net
7.4

 
159.6

Change in inventories
(171.5
)
 
(197.1
)
Change in trade accounts payable
(47.0
)
 
87.0

Change in prepaid expenses and other assets
211.9

 
186.2

Change in accrued expenses and other liabilities
64.3

 
(340.0
)
Net operating cash provided by operating activities
1,874.8

 
1,864.9

Cash flows from investing activities:
 
 
 
Cash paid for acquisitions
(326.6
)
 
(2,067.8
)
Payments for additions to property, plant and equipment
(336.5
)
 
(291.7
)
Proceeds from sales of property, plant and equipment
12.1

 
1.4

Payments for purchases of investments
(92.3
)
 

Proceeds from sale of investments

 
22.1

All other investing activities
15.9

 
(29.3
)
Net operating cash used in investing activities
(727.4
)
 
(2,365.3
)
Cash flows from financing activities:
 
 
 
Proceeds from the issuance of common stock in connection with stock-based compensation
83.0

 
49.7

Proceeds from the public offering of common stock, net of issuance costs
1,443.2

 

Proceeds from the public offering of preferred stock, net of issuance costs
1,599.6

 

Payment of dividends
(233.9
)
 
(209.3
)
Net proceeds from borrowings (maturities of 90 days or less)
599.6

 
1,030.1

Net repayments of borrowings (maturities longer than 90 days)
(3.9
)
 
(3.9
)
All other financing activities
(4.8
)
 
(16.2
)
Net operating cash provided by financing activities
3,482.8

 
850.4

Effect of exchange rate changes on cash and equivalents
15.6

 
(76.3
)
Net change in cash and equivalents
4,645.8

 
273.7

Beginning balance of cash and equivalents
787.8

 
630.3

Ending balance of cash and equivalents
$
5,433.6

 
$
904.0

 
 
 
 
Supplemental disclosures:
 
 
 
Cash interest payments
$
49.2

 
$
65.4

Cash income tax payments
196.1

 
310.4

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 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, 2018 and the Notes thereto included in the Company’s 2018 Annual Report on Form 10-K filed on February 21, 2019 (the “2018 Annual Report” or “2018 Annual Report on Form 10-K”).
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 June 28, 2019 and December 31, 2018 , its results of operations for the three and six -month periods ended June 28, 2019 and June 29, 2018 and its cash flows for each of the six -month periods then ended.
Accounting Standards Recently Adopted
In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-02, Leases (Topic 842) , which requires lessees to recognize a right-of-use (“ROU”) asset and a lease liability for all leases with terms greater than 12 months and also requires disclosures by lessees and lessors about the amount, timing and uncertainty of cash flows arising from leases. The accounting applied by a lessor is largely unchanged from that applied under the prior standard. Subsequent to the issuance of Topic 842, the FASB clarified the guidance through several ASUs; hereinafter the collection of lease guidance is referred to as “ASC 842”.
On January 1, 2019, the Company adopted ASC 842 using the modified retrospective method for all lease arrangements at the beginning of the period of adoption. Results for reporting periods beginning January 1, 2019 are presented under ASC 842, while prior period amounts were not adjusted and continue to be reported in accordance with the Company’s historic accounting under ASC 840, Leases (“ASC 840”). The standard had a material impact on the Company’s Consolidated Condensed Balance Sheet but did not have a significant impact on the Company’s consolidated net earnings and cash flows. The most significant impact was the recognition of ROU assets and lease liabilities for operating leases, while the accounting for finance leases remained substantially unchanged. For leases that commenced before the effective date of ASC 842, the Company elected the permitted practical expedients to not reassess the following: (i) whether any expired or existing contracts contain leases; (ii) the lease classification for any expired or existing leases; and (iii) initial direct costs for any existing leases. The Company also elected to include leases with a term of 12 months or less in the recognized ROU assets and lease liabilities.
As a result of the cumulative impact of adopting ASC 842, the Company recorded operating lease ROU assets of $971 million and operating lease liabilities of $1,012 million as of January 1, 2019, primarily related to real estate and automobile leases, based on the present value of the future lease payments on the date of adoption. Refer to Note 5 for the additional disclosures required by ASC 842.
The Company determines if an arrangement is a lease at inception. For leases where the Company is the lessee, ROU assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent an obligation to make lease payments arising from the lease. ROU assets and lease liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. As most of the Company’s leases do not provide an implicit interest rate, the Company uses its incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. The ROU asset also consists of any prepaid lease payments, lease incentives received, costs which will be incurred in exiting a lease and the amount of any asset or liability recognized on business combinations relating to favorable or unfavorable lease terms. The lease terms used to calculate the ROU asset and related lease liability include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. Lease expense for operating leases is recognized on a straight-line basis over the lease term as an operating expense while the expense for finance leases is recognized as depreciation expense and interest expense using the accelerated interest method of recognition. The Company has lease agreements which require payments for lease and non-lease components and has elected to account for these as a single lease component.

6


The Company leases Life Sciences, Diagnostics, and Environmental & Applied Solutions equipment to customers in both operating-type lease (“OTL”) and sales-type lease (“STL”) arrangements. Equipment lease revenue for OTL agreements is recognized on a straight-line basis over the life of the lease, and the costs of customer-leased equipment is recorded within property, plant and equipment, net in the accompanying Consolidated Condensed Balance Sheets and depreciated over the equipment’s estimated useful life. Depreciation expense associated with the leased equipment under OTL arrangements is reflected in cost of sales in the accompanying Consolidated Condensed Statements of Earnings. The OTLs are generally not cancellable until after an initial term and may or may not require the customer to purchase a minimum number of consumables or tests throughout the contract term. Certain of the Company’s lease contracts are customized for larger customers and often result in complex terms and conditions that typically require significant judgment in applying the criteria used to evaluate whether the arrangement should be considered an OTL or an STL. An STL results in earlier recognition of equipment revenue as compared to an OTL. Some of the Company’s leases include a purchase option for the customer to purchase the leased asset at the end of the lease arrangement for a purchase price equal to the asset’s fair market value at the time of the purchase. The Company manages its risk on the unguaranteed residual asset for leased equipment through the pricing and term of the leases. In certain geographies, equipment coming off OTL and STL arrangements after the initial lease term may be leased to other customers or used for spare parts.
For lease arrangements with lease and non-lease components where the Company is the lessor, the Company allocates the contract’s transaction price to the lease and non-lease components on a relative standalone selling price basis using the Company’s best estimate of the standalone selling price of each distinct product or service in the contract. The primary method used to estimate standalone selling price is the price observed in standalone sales to customers; however, when prices in standalone sales are not available the Company may use third-party pricing for similar products or services or estimate the standalone selling price. Allocation of the transaction price is determined at the inception of the lease arrangement. The Company’s leases primarily consist of leases with fixed lease payments. For those leases with variable lease payments, the variable lease payment is typically based upon use of the leased equipment or the purchase of consumables used with the leased equipment.
In August 2017, the FASB issued ASU No. 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities, which expands and refines hedge accounting for both financial and non-financial risk components, aligns the recognition and presentation of the effects of hedging instruments and hedge items in the financial statements and includes certain targeted improvements to ease the application of current guidance related to the assessment of hedge effectiveness. The ASU was effective for public entities for fiscal years beginning after December 15, 2018. In January 2019, the Company entered into approximately $1.9 billion of cross-currency swap derivative contracts to hedge its net investment in foreign operations against adverse changes in the exchange rates between the U.S. dollar and the Danish kroner, Japanese yen, euro and Swiss franc. In June 2019, the Company entered into interest rate swap agreements with a notional amount of $850 million which represents a portion of the amount of U.S. dollar-denominated bonds (with terms ranging from 10 to 30 years) the Company anticipates issuing to finance a portion of the acquisition of the Biopharma Business of General Electric Company (“GE”) Life Sciences (the “GE Biopharma Business” or “GE Biopharma”). These contracts effectively fix the interest rate for a portion of the Company’s anticipated U.S. denominated debt issuance equal to the notional amount of the swaps to the rate specified in the interest rate swap agreements . Refer to Note 9 for additional disclosures about the Company’s hedging activities.
Except for the above accounting policy for leases that was updated as a result of adopting ASC 842, there have been no changes to the Company’s significant accounting policies described in the Annual Report on Form 10-K for the year ended December 31, 2018 that have a material impact on the Company’s Consolidated Condensed Financial Statements and the related Notes.
Accounting Standards Not Yet Adopted
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, April 2019 and May 2019, the FASB issued ASU No. 2018-19, Codification Improvements to Topic 326, Financial Instruments-Credit Losses, ASU No. 2019-04, Codification Improvements to Topic 326, Financial Instruments-Credit Losses , Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments and ASU No. 2019-05, Financial Instruments-Credit Losses (Topic 326): Targeted Transition Relief which provided additional implementation guidance on the previously issued ASU. Management has not yet completed its assessment of the impact of the new standard on the Company’s financial statements. Currently, the Company believes that the most notable impact of this ASU will relate to its processes around the assessment of the adequacy of its allowance for doubtful accounts on trade accounts receivable and the recognition of credit losses.

7


In August 2018, the FASB issued 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. Management has not yet completed its assessment of the impact of the new standard on the Company’s financial statements.
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.

8


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 June 28, 2019:
 
 
 
 
 
 
 
 
 
Balance, March 29, 2019
$
(2,108.9
)
 
$
(685.7
)
 
$
(1.5
)
 
$

 
$
(2,796.1
)
Other comprehensive income (loss) before reclassifications:
 
 
 
 
 
 
 
 
 
(Decrease) increase
(51.9
)
 

 
0.7

 
(8.9
)
 
(60.1
)
Income tax impact
5.4

 

 
(0.2
)
 
2.1

 
7.3

Other comprehensive income (loss) before reclassifications, net of income taxes
(46.5
)
 

 
0.5

 
(6.8
)
 
(52.8
)
Amounts reclassified from accumulated other comprehensive income (loss):
 
 
 
 
 
 
 
 
 
Increase

 
6.1

(a)

 

 
6.1

Income tax impact

 
(1.5
)
 

 

 
(1.5
)
Amounts reclassified from accumulated other comprehensive income (loss), net of income taxes

 
4.6

 

 

 
4.6

Net current period other comprehensive income (loss), net of income taxes
(46.5
)
 
4.6

 
0.5

 
(6.8
)
 
(48.2
)
Balance, June 28, 2019
$
(2,155.4
)
 
$
(681.1
)
 
$
(1.0
)
 
$
(6.8
)
 
$
(2,844.3
)
For the Three-Month Period Ended June 29, 2018:
 
 
 
 
 
 
 
 
 
Balance, March 30, 2018
$
(1,171.8
)
 
$
(671.3
)
 
$
(1.6
)
 
$

 
$
(1,844.7
)
Other comprehensive income (loss) before reclassifications:
 
 
 
 
 
 
 
 
 
Decrease
(641.1
)
 

 
(0.1
)
 

 
(641.2
)
Income tax impact

 

 

 

 

Other comprehensive income (loss) before reclassifications, net of income taxes
(641.1
)
 

 
(0.1
)
 

 
(641.2
)
Amounts reclassified from accumulated other comprehensive income (loss):
 
 
 
 
 
 
 
 
 
Increase

 
8.8

(a)

 

 
8.8

Income tax impact

 
(2.1
)
 

 

 
(2.1
)
Amounts reclassified from accumulated other comprehensive income (loss), net of income taxes

 
6.7

 

 

 
6.7

Net current period other comprehensive income (loss), net of income taxes
(641.1
)
 
6.7

 
(0.1
)
 

 
(634.5
)
Balance, June 29, 2018
$
(1,812.9
)
 
$
(664.6
)
 
$
(1.7
)
 
$

 
$
(2,479.2
)
(a) This accumulated other comprehensive income (loss) component is included in the computation of net periodic pension cost. Refer to Note 10 for additional details.

9


 
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 Six-Month Period Ended June 28, 2019:
 
 
 
 
 
 
 
 
 
Balance, December 31, 2018
$
(2,098.1
)
 
$
(691.1
)
 
$
(1.9
)
 
$

 
$
(2,791.1
)
Other comprehensive income (loss) before reclassifications:
 
 
 
 
 
 
 
 
 
(Decrease) increase
(59.2
)
 

 
1.2

 
(8.9
)
 
(66.9
)
Income tax impact
1.9

 

 
(0.3
)
 
2.1

 
3.7

Other comprehensive income (loss) before reclassifications, net of income taxes
(57.3
)
 

 
0.9

 
(6.8
)
 
(63.2
)
Amounts reclassified from accumulated other comprehensive income (loss):
 
 
 
 
 
 
 
 
 
Increase

 
13.2

(a)

 

 
13.2

Income tax impact

 
(3.2
)
 

 

 
(3.2
)
Amounts reclassified from accumulated other comprehensive income (loss), net of income taxes

 
10.0

 

 

 
10.0

Net current period other comprehensive income (loss), net of income taxes
(57.3
)
 
10.0

 
0.9

 
(6.8
)
 
(53.2
)
Balance, June 28, 2019
$
(2,155.4
)
 
$
(681.1
)
 
$
(1.0
)
 
$
(6.8
)
 
$
(2,844.3
)
For the Six-Month Period Ended June 29, 2018:
 
 
 
 
 
 
 
 
 
Balance, December 31, 2017
$
(1,422.1
)
 
$
(571.2
)
 
$
(0.9
)
 
$

 
$
(1,994.2
)
Adoption of accounting standards
(43.8
)
 
(107.2
)
 
(0.2
)
 

 
(151.2
)
Balance, January 1, 2018
(1,465.9
)
 
(678.4
)
 
(1.1
)
 

 
(2,145.4
)
Other comprehensive income (loss) before reclassifications:
 
 
 
 
 
 
 
 
 
Decrease
(347.0
)
 

 
(0.8
)
 

 
(347.8
)
Income tax impact

 

 
0.2

 

 
0.2

Other comprehensive income (loss) before reclassifications, net of income taxes
(347.0
)
 

 
(0.6
)
 

 
(347.6
)
Amounts reclassified from accumulated other comprehensive income (loss):
 
 
 
 
 
 
 
 
 
Increase

 
18.1

(a)

 

 
18.1

Income tax impact

 
(4.3
)
 

 

 
(4.3
)
Amounts reclassified from accumulated other comprehensive income (loss), net of income taxes

 
13.8

 

 

 
13.8

Net current period other comprehensive income (loss), net of income taxes
(347.0
)
 
13.8

 
(0.6
)
 

 
(333.8
)
Balance, June 29, 2018
$
(1,812.9
)
 
$
(664.6
)
 
$
(1.7
)
 
$

 
$
(2,479.2
)

(a) This accumulated other comprehensive income (loss) component is included in the computation of net periodic pension cost. Refer to Note 10 for additional details.


10


NOTE 2. REVENUE
The following tables present the Company’s revenues disaggregated by geographical region and revenue type for the three and six -month periods ended June 28, 2019 and June 29, 2018 ($ in millions). Sales taxes and other usage-based taxes collected from customers are excluded from revenue.
 
Life Sciences
 
Diagnostics
 
Dental
 
Environmental & Applied Solutions
 
Total
Three-Month Period Ended June 28, 2019:
 
 
 
 
 
 
 
 
 
Geographical region:
 
 
 
 
 
 
 
 
 
North America
$
653.6

 
$
601.0

 
$
340.2

 
$
488.3

 
$
2,083.1

Western Europe
459.3

 
281.7

 
156.1

 
261.6

 
1,158.7

Other developed markets
137.6

 
95.2

 
45.0

 
31.3

 
309.1

High-growth markets
462.1

 
640.4

 
170.8

 
332.4

 
1,605.7

Total
$
1,712.6

 
$
1,618.3

 
$
712.1

 
$
1,113.6

 
$
5,156.6

 
 
 
 
 
 
 
 
 
 
Revenue type:
 
 
 
 
 
 
 
 
 
Recurring
$
1,111.9

 
$
1,380.6

 
$
522.1

 
$
592.8

 
$
3,607.4

Nonrecurring
600.7

 
237.7

 
190.0

 
520.8

 
1,549.2

Total
$
1,712.6

 
$
1,618.3

 
$
712.1

 
$
1,113.6

 
$
5,156.6

 
 
 
 
 
 
 
 
 
 
Three-Month Period Ended June 29, 2018:
 
 
 
 
 
 
 
 
 
Geographical region:
 
 
 
 
 
 
 
 
 
North America
$
578.0

 
$
578.7

 
$
346.1

 
$
450.7

 
$
1,953.5

Western Europe
449.5

 
288.7

 
170.5

 
263.2

 
1,171.9

Other developed markets
138.5

 
91.3

 
47.1

 
32.3

 
309.2

High-growth markets
439.2

 
592.2

 
169.7

 
345.3

 
1,546.4

Total
$
1,605.2

 
$
1,550.9

 
$
733.4

 
$
1,091.5

 
$
4,981.0

 
 
 
 
 
 
 
 
 
 
Revenue type:
 
 
 
 
 
 
 
 
 
Recurring
$
1,056.0

 
$
1,311.0

 
$
547.3

 
$
574.6

 
$
3,488.9

Nonrecurring
549.2

 
239.9

 
186.1

 
516.9

 
1,492.1

Total
$
1,605.2

 
$
1,550.9

 
$
733.4

 
$
1,091.5

 
$
4,981.0



11


 
Life Sciences
 
Diagnostics
 
Dental
 
Environmental & Applied Solutions
 
Total
Six-Month Period Ended June 28, 2019:
 
 
 
 
 
 
 
 
 
Geographical region:
 
 
 
 
 
 
 
 
 
North America
$
1,240.9

 
$
1,233.4

 
$
638.7

 
$
937.5

 
$
4,050.5

Western Europe
919.6

 
570.6

 
316.2

 
521.3

 
2,327.7

Other developed markets
286.9

 
187.2

 
85.4

 
60.2

 
619.7

High-growth markets
892.1

 
1,163.9

 
331.5

 
651.1

 
3,038.6

Total
$
3,339.5

 
$
3,155.1

 
$
1,371.8

 
$
2,170.1

 
$
10,036.5

 
 
 
 
 
 
 
 
 
 
Revenue type:
 
 
 
 
 
 
 
 
 
Recurring
$
2,180.1

 
$
2,704.7

 
$
1,009.9

 
$
1,175.0

 
$
7,069.7

Nonrecurring
1,159.4

 
450.4

 
361.9

 
995.1

 
2,966.8

Total
$
3,339.5

 
$
3,155.1

 
$
1,371.8

 
$
2,170.1

 
$
10,036.5

 
 
 
 
 
 
 
 
 
 
Six-Month Period Ended June 29, 2018:
 
 
 
 
 
 
 
 
 
Geographical region:
 
 
 
 
 
 
 
 
 
North America
$
1,058.4

 
$
1,186.1

 
$
637.4

 
$
869.0

 
$
3,750.9

Western Europe
899.4

 
599.1

 
346.1

 
528.0

 
2,372.6

Other developed markets
283.4

 
183.5

 
91.0

 
63.9

 
621.8

High-growth markets
840.0

 
1,101.9

 
331.5

 
657.7

 
2,931.1

Total
$
3,081.2

 
$
3,070.6

 
$
1,406.0

 
$
2,118.6

 
$
9,676.4

 
 
 
 
 
 
 
 
 
 
Revenue type:
 
 
 
 
 
 
 
 
 
Recurring
$
2,026.4

 
$
2,619.5

 
$
1,035.3

 
$
1,131.6

 
$
6,812.8

Nonrecurring
1,054.8

 
451.1

 
370.7

 
987.0

 
2,863.6

Total
$
3,081.2

 
$
3,070.6

 
$
1,406.0

 
$
2,118.6

 
$
9,676.4


The Company sells equipment to customers as well as consumables, spare parts, software licenses and services, some of which customers purchase on a recurring basis. In most of the Company’s businesses, consumables 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 dental implants and 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, spare parts, software licenses recognized over time, software-as-a-service, sales-and-usage based royalties and OTLs. Nonrecurring revenue includes sales from equipment, software licenses recognized at a point in time and STLs. OTLs and STLs are included in the above revenue amounts. For the three-month periods ended June 28, 2019 and June 29, 2018 , revenue accounted for under ASC 842 and ASC 840 was $106 million and $96 million , respectively. For the six -month periods ended June 28, 2019 and June 29, 2018 , revenue accounted for under ASC 842 and ASC 840 was $213 million and $193 million , respectively.
Remaining performance obligations related to Topic 606, Revenue from Contracts with Customers (“ASC 606”) 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 June 28, 2019 , the aggregate amount of the transaction price allocated to remaining performance obligations was approximately $2.0 billion . The Company expects to recognize revenue on approximately 40% of the remaining performance obligations over the next 12 months, 25%  over the subsequent 12 months, and the remainder thereafter.
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.

12


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 June 28, 2019 and December 31, 2018 were $85 million and $82 million , respectively.
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 June 28, 2019 and December 31, 2018 , contract liabilities were $822 million and $799 million , respectively, and are included within accrued expenses and other liabilities and other long-term liabilities in the accompanying Consolidated Condensed Balance Sheets. Revenue recognized during the six -month periods ended June 28, 2019 and June 29, 2018 that was included in the contract liability balance on December 31, 2018 and at the date of adoption of ASC 606 on January 1, 2018 was $442 million and $424 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, 2018 , reference is made to the financial statements as of and for the year ended December 31, 2018 and Note 3 thereto included in the Company’s 2018 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 items identified as of the acquisition date are considered for subsequent adjustment. The Company is continuing to evaluate certain pre-acquisition contingencies associated with its 2018 and 2019 acquisitions and is also in the process of obtaining valuations of acquired intangible assets and certain acquisition-related liabilities in connection with these acquisitions. The Company will make appropriate adjustments to the purchase price allocation prior to completion of the measurement period, as required.
During the six -month period ended June 28, 2019 , the Company acquired three businesses for total consideration of $327 million in cash, net of cash acquired. The businesses acquired complement existing units of the Life Sciences segment. The aggregate annual sales of these businesses at the time of their acquisition, based on the companies’ revenues for their last completed fiscal year prior to the acquisition, were $68 million . The Company preliminarily recorded an aggregate of $210 million of goodwill related to these acquisitions.
The following summarizes the estimated fair values of the assets acquired and liabilities assumed at the date of acquisition for the acquisitions consummated during the six -month period ended June 28, 2019 ($ in millions):
Trade accounts receivable
$
8.6

Inventories
8.8

Property, plant and equipment
3.9

Goodwill
210.3

Other intangible assets, primarily customer relationships, trade names and technology
115.2

Trade accounts payable
(2.8
)
Other assets and liabilities, net
(17.4
)
Net cash consideration
$
326.6



13


Pro Forma Financial Information
The unaudited pro forma information for the periods set forth below gives effect to the 2019 and 2018 acquisitions as if they had occurred as of January 1, 2018 . 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
 
Six-Month Period Ended
 
June 28, 2019
 
June 29, 2018
 
June 28, 2019
 
June 29, 2018
Sales
$
5,157.5

 
$
5,020.4

 
$
10,043.3

 
$
9,810.4

Net earnings attributable to common stockholders
707.7

 
679.2

 
1,031.6

 
1,230.6

Diluted net earnings per share
0.97

 
0.96

 
1.43

 
1.74


In the three-month period ended June 29, 2018 , unaudited pro forma earnings set forth above were adjusted to exclude the $1 million pretax impact of nonrecurring acquisition date fair value adjustments to inventory related to the 2018 acquisition of Integrated DNA Technologies, Inc. (“IDT”).
In addition, acquisition-related transaction costs of $15 million associated with the IDT acquisition were excluded from pro forma earnings in 2018 .
Pending Acquisition
On February 25, 2019, the Company entered into an Equity and Asset Purchase Agreement (the “GE Biopharma Purchase Agreement”) with GE to acquire the GE Biopharma Business for a cash purchase price of approximately $21.0 billion , subject to certain adjustments, and the assumption of approximately $0.4 billion of pension liabilities (the “GE Biopharma Acquisition”). The GE Biopharma Business is a leading provider of instruments, consumables and software that support the research, discovery, process development and manufacturing workflows of biopharmaceutical drugs. Based on unaudited preliminary financial measures provided by GE, the GE Biopharma Business generated revenues of approximately $3.0 billion in 2018 . The Company expects to include the GE Biopharma Business within the Life Sciences segment. The GE Biopharma 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. The transaction is expected to be completed in the fourth quarter of 2019, subject to customary conditions, including receipt of applicable regulatory approvals.
The Company expects to finance the GE Biopharma 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”), proceeds from the issuance of debt or other borrowings and available cash on hand. Refer to Note 14 for additional information related to the March 1, 2019 public offerings.

NOTE 4. ENVISTA INITIAL PUBLIC OFFERING
In July 2018, the Company announced its intention to spin-off its Dental business into a separate publicly-traded company, Envista Holdings Corporation (“Envista”). On February 25, 2019, in connection with the announcement of the GE Biopharma Acquisition, the Company also announced a modification of its plans with respect to Envista , specifically that it now intends to conduct an initial public offering of Envista shares (the “Envista IPO”) in the second half of 2019, subject to the satisfaction of certain conditions, including obtaining final approval from the Danaher Board of Directors, favorable rulings from the Internal Revenue Service (“IRS”) and other regulatory approvals. All assets, liabilities, revenues and expenses of Envista are included in continuing operations of the Company in these Consolidated Condensed Financial Statements.
Subsequent to the anticipated Envista IPO, the Company currently intends to distribute to our shareholders all or a portion of the Company’s remaining equity interest in Envista, which may include the spin-off of Envista shares effected as a dividend to all of the Company’s shareholders, the split-off of Envista shares in exchange for Danaher shares or other securities, or any combination thereof in one transaction or in a series of transactions (collectively, “the Distribution”). While the Company currently intends to effect the Distribution, the Company has no obligation to pursue or consummate any further dispositions of Danaher’s ownership in Envista, including through the Distribution, by any specified date or at all. If pursued, the Distribution may be subject to various conditions, including receipt of any necessary regulatory or other approvals, the existence of satisfactory market conditions, and the receipt of an opinion of counsel to the effect that the separation of Envista in connection with the IPO, together with such Distribution, will be tax-free to the Company and the Company’s shareholders for U.S. federal income tax purposes. The conditions to the Distribution may not be satisfied; the Company may decide not to consummate the

14


Distribution even if the conditions are satisfied; or the Company may decide to waive one or more of these conditions and consummate the Distribution even if all of the conditions are not satisfied. The Company cannot assure whether or when any such transaction will be consummated or as to the final terms of any such transaction.

NOTE 5. LEASES
The Company has operating leases for office space, warehouses, distribution centers, research and development facilities, manufacturing locations and certain equipment, primarily automobiles. Many leases include one or more options to renew, some of which include options to extend the leases for up to 30 years , and some leases include options to terminate the leases within 30 days . In certain of the Company’s lease agreements, the rental payments are adjusted periodically to reflect actual charges incurred for common area maintenance, utilities, inflation and/or changes in other indexes. The Company’s finance leases were not material as of June 28, 2019 and for both the three and six -month periods then ended. ROU assets arising from finance leases are included in property, plant and equipment, net and the liabilities are included in notes payable and current portion of long-term debt and long-term debt in the accompanying Consolidated Condensed Balance Sheets.
The components of operating lease expense were as follows ($ in millions) :
 
Three-Month Period Ended
 
Six-Month Period Ended
 
June 28, 2019
 
June 28, 2019
Fixed operating lease expense (a)
$
56.0

 
$
119.4

Variable operating lease expense
12.9

 
24.9

Total operating lease expense
$
68.9

 
$
144.3

(a) Includes short-term leases and sublease income, both of which were immaterial.
Supplemental cash flow information related to the Company’s operating leases for the six -month period ended June 28, 2019 was as follows ($ in millions):
Cash paid for amounts included in the measurement of operating lease liabilities
$
119.8

ROU assets obtained in exchange for operating lease obligations
66.3


The following table presents the lease balances within the Consolidated Condensed Balance Sheet, weighted average remaining lease term, and weighted average discount rates related to the Company’s operating leases as of June 28, 2019 ($ in millions):
Lease Assets and Liabilities
Classification
 
Assets:
 
 
Operating lease ROU assets
Other long-term assets
$
924.9

 
 
 
Liabilities:
 
 
Current:
 
 
Operating lease liabilities
Accrued expenses and other liabilities
$
185.2

Long-term:
 
 
Operating lease liabilities
Other long-term liabilities
780.1

Total operating lease liabilities
 
$
965.3

 
 
 
Weighted average remaining lease term
7 years

Weighted average discount rate
3.1
%


15


The following table presents the maturity of the Company’s operating lease liabilities as of June 28, 2019 ($ in millions):
Remainder of 2019
$
110.9

2020
190.9

2021
156.1

2022
131.7

2023
112.9

Thereafter
387.2

Total operating lease payments
1,089.7

Less: imputed interest
124.4

Total operating lease liabilities
$
965.3


As of June 28, 2019 , the Company had no additional significant operating or finance leases that had not yet commenced.

NOTE 6. GOODWILL
The following is a rollforward of the Company’s goodwill ($ in millions):
Balance, December 31, 2018
$
25,906.0

Attributable to 2019 acquisitions
210.3

Adjustments due to finalization of purchase price allocations
(6.9
)
Foreign currency translation and other
(34.9
)
Balance, June 28, 2019
$
26,074.5

The carrying value of goodwill by segment is summarized as follows ($ in millions):
 
June 28, 2019
 
December 31, 2018
Life Sciences
$
13,488.0

 
$
13,311.0

Diagnostics
6,919.1

 
6,925.6

Dental
3,321.9

 
3,325.5

Environmental & Applied Solutions
2,345.5

 
2,343.9

Total
$
26,074.5

 
$
25,906.0


The Company has not identified any “triggering” events which indicate an impairment of goodwill in the six -month period ended June 28, 2019 .

NOTE 7. 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.

16


A summary of financial assets and liabilities that are measured at fair value on a recurring basis were as follows ($ in millions):
 
Quoted Prices in Active Market (Level 1)
 
Significant Other Observable Inputs (Level 2)
 
Significant Unobservable Inputs (Level 3)
 
Total
June 28, 2019:
 
 
 
 
 
 
 
Assets:
 
 
 
 
 
 
 
Available-for-sale debt securities
$

 
$
36.4

 
$

 
$
36.4

Investment in equity securities

 

 
241.2

 
241.2

Cross-currency swap derivative contracts

 
0.3

 

 
0.3

Liabilities:
 
 
 
 
 
 
 
Cross-currency swap derivative contracts

 
5.0

 

 
5.0

Interest rate swap derivative contracts

 
8.9

 

 
8.9

Deferred compensation plans

 
69.3

 

 
69.3

 
 
 
 
 
 
 
 
December 31, 2018:
 
 
 
 
 
 
 
Assets:
 
 
 
 
 
 
 
Available-for-sale debt securities
$

 
$
38.3

 
$

 
$
38.3

Investment in equity securities

 

 
148.9

 
148.9

Liabilities:
 
 
 
 
 
 
 
Deferred compensation plans

 
60.9

 

 
60.9


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 June 28, 2019 , 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 are classified as Level 3 in the fair value hierarchy because the Company estimates the fair value 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 investments in equity securities includes investments that the Company has made as a limited partner in a partnership for which the underlying investments are recorded on a fair value basis.
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 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 9 for additional information.
In June 2019, the Company entered into interest rate swap agreements with a notional amount of $850 million which represents a portion of the amount of U.S. dollar-denominated bonds (with terms ranging from 10 to 30 years) the Company anticipates issuing to finance a portion of the GE Biopharma Acquisition. These contracts effectively fix the interest rate for a portion of the Company’s anticipated U.S. denominated debt issuance equal to the notional amount of the swaps to the rate specified in the interest rate swap agreements . The interest rate swap derivative contracts are classified as Level 2 in the fair value hierarchy as they are measured using the income approach, based on the relevant interest rate yield curves. Refer to Note 9 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 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

17


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):
 
June 28, 2019
 
December 31, 2018
 
Carrying Amount
 
Fair Value
 
Carrying Amount
 
Fair Value
Assets:
 
 
 
 
 
 
 
Available-for-sale debt securities
$
36.4

 
$
36.4

 
$
38.3

 
$
38.3

Investment in equity securities
241.2

 
241.2

 
148.9

 
148.9

Cross-currency swap derivative contracts
0.3

 
0.3

 

 

Liabilities:
 
 
 
 
 
 
 
Cross-currency swap derivative contracts
5.0

 
5.0

 

 

Interest rate swap derivative contracts
8.9

 
8.9

 

 

Notes payable and current portion of long-term debt
153.7

 
153.7

 
51.8

 
51.8

Long-term debt
10,144.4

 
10,580.3