WASHINGTON, Oct. 21, 2021 /PRNewswire/ -- Danaher
Corporation (NYSE: DHR) (the "Company") today announced results for
the third quarter 2021. All results in this release reflect
only continuing operations unless otherwise noted.
For the quarter ended October 1,
2021, net earnings were $1.2
billion, or $1.54 per diluted
common share which represents a 33.0% year-over-year increase from
the comparable 2020 period. Non-GAAP adjusted diluted net
earnings per common share were $2.39
which represents a 39.0% increase over the comparable 2020
period.
Revenues increased 23.0% year-over-year to $7.2 billion, with 20.5% non-GAAP core revenue
growth.
Year-to-date operating cash flow was $6.0
billion, representing a 51.0% increase year-over-year, and
non-GAAP free cash flow was $5.2
billion, representing a 46.5% increase year-over-year.
For the fourth quarter 2021, the Company anticipates that
non-GAAP core revenue growth will be in the low-to-mid teens
percent range.
For the full year 2021, the Company now anticipates that the
non-GAAP core revenue growth rate including Cytiva will be more
than 20%.
Rainer M. Blair, President and
Chief Executive Officer, stated, "Our team delivered another
outstanding result in the third quarter, with over 20% core revenue
growth and terrific earnings and cash flow performance. We
continued to invest for growth across our businesses, expanding
production capacity and accelerating innovation initiatives.
Additionally, the recently closed acquisition of Aldevron enhances
our portfolio and expands our capabilities into the important field
of genomic medicine."
Blair continued, "Our performance is a testament to the power of
our portfolio and our team's commitment to the Danaher Business
System, and we see significant opportunities ahead to continue
building sustainable, long-term value for shareholders."
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 800-895-3361
within the U.S. or by dialing +1-785-424-1062 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 earnings conference call (conference ID: DHRQ321).
A replay of the conference call will be available shortly after the
conclusion of the call and until November
4, 2021. 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 69,000 associates is united by a common culture and
operating system, the Danaher Business System, and its 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, as
applicable, 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 expected financial
performance for the fourth quarter and full year 2021, the
Company's prospects in the field of genomic medicine, Danaher's
opportunities to build sustainable, long-term shareholder value 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 highly uncertain and unpredictable
severity, magnitude and duration of the COVID-19 pandemic (and the
related governmental, business and community responses thereto) on
our business, results of operations and financial condition, the
impact of our debt obligations (including the debt incurred to
finance the acquisitions of Cytiva and Aldevron) on our operations
and liquidity, deterioration of or instability in the economy, the
markets we serve and the financial markets (including as a result
of the COVID-19 pandemic), uncertainties relating to U.S. laws or
policies, including potential changes in U.S. trade policies and
tariffs 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 rules
relating to off-label marketing and other 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 (including with respect to the
acquisition of Aldevron), our ability to realize anticipated
growth, synergies and other benefits of the Aldevron acquisition,
Aldevron's performance and maintenance of important business
relationships, contingent liabilities and other risks relating to
acquisitions, investments, strategic relationships 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, 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, social and business factors
(including the impact of the United
Kingdom's separation from the EU), disruptions relating to
man-made and natural disasters (including pandemics such as
COVID-19) 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 2020 Annual Report on Form 10-K and
Quarterly Report on Form 10-Q for the third quarter of 2021.
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
($ and shares in
millions, except per share amounts)
(unaudited)
|
|
|
Three-Month Period
Ended
|
|
Nine-Month Period
Ended
|
|
|
October 1,
2021
|
|
October 2,
2020
|
|
October 1,
2021
|
|
October 2,
2020
|
|
Sales
|
$
|
7,229
|
|
|
$
|
5,884
|
|
|
$
|
21,305
|
|
|
$
|
15,524
|
|
|
Cost of
sales
|
(2,870)
|
|
|
(2,658)
|
|
|
(8,296)
|
|
|
(7,003)
|
|
|
Gross
profit
|
4,359
|
|
|
3,226
|
|
|
13,009
|
|
|
8,521
|
|
|
Operating
costs:
|
|
|
|
|
|
|
|
|
Selling, general and
administrative expenses
|
(2,062)
|
|
|
(1,796)
|
|
|
(5,904)
|
|
|
(4,939)
|
|
|
Research and
development expenses
|
(441)
|
|
|
(342)
|
|
|
(1,247)
|
|
|
(952)
|
|
|
Other operating
expenses
|
(547)
|
|
|
—
|
|
|
(547)
|
|
|
—
|
|
|
Operating
profit
|
1,309
|
|
|
1,088
|
|
|
5,311
|
|
|
2,630
|
|
|
Nonoperating income
(expense):
|
|
|
|
|
|
|
|
|
Other income
(expense), net
|
137
|
|
|
7
|
|
|
374
|
|
|
459
|
|
|
Interest
expense
|
(62)
|
|
|
(78)
|
|
|
(182)
|
|
|
(203)
|
|
|
Interest
income
|
3
|
|
|
4
|
|
|
10
|
|
|
67
|
|
|
Earnings from
continuing operations before income taxes
|
1,387
|
|
|
1,021
|
|
|
5,513
|
|
|
2,953
|
|
|
Income
taxes
|
(229)
|
|
|
(138)
|
|
|
(954)
|
|
|
(548)
|
|
|
Net earnings from
continuing operations
|
1,158
|
|
|
883
|
|
|
4,559
|
|
|
2,405
|
|
|
Earnings from
discontinued operations, net of income taxes
|
—
|
|
|
—
|
|
|
86
|
|
|
—
|
|
|
Net
earnings
|
1,158
|
|
|
883
|
|
|
4,645
|
|
|
2,405
|
|
|
Mandatory convertible
preferred stock dividends
|
(41)
|
|
|
(41)
|
|
|
(123)
|
|
|
(95)
|
|
|
Net earnings
attributable to common stockholders
|
$
|
1,117
|
|
|
$
|
842
|
|
|
$
|
4,522
|
|
|
$
|
2,310
|
|
|
Net earnings per
common share from continuing operations:
|
|
|
|
|
|
|
|
|
Basic
|
$
|
1.56
|
|
|
$
|
1.18
|
|
|
$
|
6.21
|
|
|
$
|
3.28
|
|
(a)
|
Diluted
|
$
|
1.54
|
|
|
$
|
1.16
|
|
|
$
|
6.10
|
|
(a)
|
$
|
3.22
|
|
(a)
|
Net earnings per
common share from discontinued operations:
|
|
|
|
|
|
|
|
|
Basic
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
0.12
|
|
|
$
|
—
|
|
|
Diluted
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
0.12
|
|
|
$
|
—
|
|
|
Net earnings per
common share:
|
|
|
|
|
|
|
|
|
Basic
|
$
|
1.56
|
|
|
$
|
1.18
|
|
|
$
|
6.33
|
|
|
$
|
3.28
|
|
(a)
|
Diluted
|
$
|
1.54
|
|
|
$
|
1.16
|
|
|
$
|
6.22
|
|
(a)
|
$
|
3.22
|
|
(a)
|
Average common stock
and common equivalent shares outstanding:
|
|
|
|
|
|
|
|
|
Basic
|
715.1
|
|
|
710.9
|
|
|
714.3
|
|
|
704.4
|
|
|
Diluted
|
727.0
|
|
|
724.3
|
|
|
736.4
|
|
|
716.8
|
|
|
|
|
(a)
|
Net earnings per
common share amounts for the relevant three-month periods do not
add to the nine-month period amounts due to rounding.
|
|
|
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 Common Share from Continuing
Operations 1
|
|
|
Three-Month Period
Ended
|
|
Nine-Month Period
Ended
|
|
October 1,
2021
|
|
October 2,
2020
|
|
October 1,
2021
|
|
October 2,
2020
|
Diluted Net
Earnings Per Common Share From Continuing Operations
(GAAP)
|
$
|
1.54
|
|
|
$
|
1.16
|
|
|
$
|
6.10
|
|
|
$
|
3.22
|
|
Pretax amortization of
acquisition-related intangible assets A
|
0.49
|
|
|
0.45
|
|
|
1.42
|
|
|
1.09
|
|
Pretax
acquisition-related fair value adjustments to inventory and
transaction costs deemed significant related to the acquisition of
Aldevron and fair value adjustments to inventory and deferred
revenue, transaction costs deemed significant and integration
preparation costs related to the acquisition of Cytiva
B
|
0.06
|
|
|
0.31
|
|
|
0.12
|
|
|
0.71
|
|
Pretax impairment
charges related to a trade name in the Diagnostics segment in the
first quarter of 2021, trade names in the Environmental &
Applied Solutions segment recorded in the third quarter of 2020 and
a facility in the Diagnostics segment and a trade name and other
intangible assets in the Environmental & Applied Solutions
segment in the first quarter of 2020 C
|
—
|
|
|
0.02
|
|
|
0.01
|
|
|
0.03
|
|
Pretax fair value net
(gains) losses on the Company's equity and limited partnership
investments D
|
(0.17)
|
|
|
—
|
|
|
(0.44)
|
|
|
0.02
|
|
Pretax gain on
disposition of certain product lines E
|
—
|
|
|
—
|
|
|
(0.02)
|
|
|
(0.62)
|
|
Contract settlement
expense F
|
0.73
|
|
|
—
|
|
|
0.73
|
|
|
—
|
|
Tax effect of all
adjustments reflected above G
|
(0.24)
|
|
|
(0.16)
|
|
|
(0.39)
|
|
|
(0.16)
|
|
Discrete tax
adjustments H
|
(0.03)
|
|
|
(0.08)
|
|
|
(0.19)
|
|
|
(0.12)
|
|
Declared dividends on
the MCPS assuming "if-converted" method I
|
0.01
|
|
|
0.02
|
|
|
0.02
|
|
|
0.06
|
|
Adjusted Diluted
Net Earnings Per Common Share From Continuing Operations
(Non-GAAP)
|
$
|
2.39
|
|
|
$
|
1.72
|
|
|
$
|
7.36
|
|
|
$
|
4.23
|
|
|
|
1
|
Each of the per share
adjustment amounts above have been calculated assuming the
Mandatory Convertible Preferred Stock ("MCPS") had been converted
into shares of common stock.
|
|
|
See the accompanying
Notes to Reconciliation of GAAP to Non-GAAP Financial
Measures
|
Adjusted Average
Common Stock and Common Equivalent Diluted Shares
Outstanding
(shares in
millions)
|
|
|
Three-Month Period
Ended
|
|
Nine-Month Period
Ended
|
|
October 1,
2021
|
|
October 2,
2020
|
|
October 1,
2021
|
|
October 2,
2020
|
Average common stock
and common equivalent shares outstanding - diluted (GAAP)
2
|
727.0
|
|
|
724.3
|
|
|
736.4
|
|
|
716.8
|
|
Converted shares
3
|
19.6
|
|
|
19.6
|
|
|
8.6
|
|
|
16.3
|
|
Adjusted average
common stock and common equivalent
shares outstanding - diluted (non-GAAP)
|
746.6
|
|
|
743.9
|
|
|
745.0
|
|
|
733.1
|
|
|
|
2
|
The impact of the
MCPS Series A calculated under the if-converted method was
anti-dilutive for the three-month period ended October 1,
2021, and as such 11.0 million shares underlying the MCPS
Series A were excluded from the calculation of diluted EPS for the
three-month period and the related MCPS Series A dividends of $19
million were included in the calculation of net earnings for
diluted EPS for the period. The impact of the MCPS Series A
calculated under the if-converted method was dilutive for the
nine-month period ended October 1, 2021, and as such 11.0
million shares underlying the MCPS Series A were included in the
calculation of diluted EPS for the nine-month period and the
related MCPS Series A dividends of $59 million were excluded from
the calculation of net earnings for diluted EPS for the
period.
|
|
|
|
The impact of the
MCPS Series B calculated under the if-converted method was
anti-dilutive for the three and nine-month periods ended
October 1, 2021, and as such 8.6 million shares
underlying the MCPS Series B were excluded from the
calculation of diluted EPS in both periods and the related MCPS
Series B dividends of $22 million and $64 million were
included in the calculation of net earnings for diluted EPS
for the respective periods.
|
|
|
|
The impact of the
MCPS Series A and MCPS Series B calculated under the if-converted
method was anti-dilutive for the three and nine-month periods
ended October 2, 2020, and as such 19.6 million and 16.3
million shares, respectively, underlying the MCPS Series A and MCPS
Series B were excluded from the diluted EPS calculation and the
related MCPS Series A and MCPS Series B dividends were included in
the calculation of net earnings for diluted EPS for the three and
nine-month periods ended October 2, 2020.
|
|
|
3
|
The number of
converted shares assumes the conversion of all MCPS and issuance of
the underlying shares applying the "if-converted" method of
accounting and using an average 20 trading-day trailing volume
weighted average price ("VWAP") of $320.10 and $205.90 as of
October 1, 2021 and October 2, 2020,
respectively.
|
|
|
See the accompanying
Notes to Reconciliation of GAAP to Non-GAAP Financial
Measures
|
Core Sales Growth,
Core Sales Growth Including Cytiva and Base Business Core Sales
Growth
|
|
|
% Change
Three-Month Period Ended October 1, 2021 vs. Comparable 2020
Period
|
|
% Change
Nine-Month Period Ended October 1, 2021 vs. Comparable 2020
Period
|
Total sales growth
(GAAP)
|
23.0
|
%
|
|
37.0
|
%
|
Impact of:
|
|
|
|
Acquisitions/divestitures
|
(1.0)
|
|
|
(10.0)
|
|
Currency exchange
rates
|
(1.5)
|
|
|
(2.5)
|
|
Core sales growth
(non-GAAP)
|
20.5
|
%
|
|
24.5
|
%
|
Impact of Cytiva
sales growth (net of divested product lines)
|
|
|
2.5
|
|
Core sales growth
including Cytiva (non-GAAP)
|
|
|
27.0
|
%
|
|
|
|
|
Impact of
COVID-related tailwinds
|
(10.5)
|
|
|
(14.5)
|
|
Base business core
sales growth (non-GAAP)
|
10.0
|
%
|
|
12.5
|
%
|
|
Forecasted Core
Sales Growth, Core Sales Growth Including Cytiva and Base Business
Core Sales Growth 4
|
|
|
% Change
Three-Month Period Ending December 31, 2021 vs. Comparable 2020
Period
|
|
% Change Year
Ending December 31, 2021 vs. Comparable 2020 Period
|
Core sales growth
(non-GAAP)
|
+Low to
mid-teens
|
|
>20.0 %
|
Impact of Cytiva
sales growth (net of divested product lines)
|
|
|
+Low-single
digit
|
Core sales growth
including Cytiva (non-GAAP)
|
|
|
>20.0 %
|
|
|
|
|
Impact of
COVID-related tailwinds
|
(Mid to high-single
digit)
|
|
>(10.0)
|
Base business core
sales growth (non-GAAP)
|
+High-single
digit
|
|
>10.0 %
|
|
|
4
|
We do not reconcile
these measures to the comparable GAAP measure because of the
inherent difficulty in predicting and estimating the future impact
and timing of currency translation, acquisitions and divested
product lines, which would be reflected in any forecasted GAAP
revenue.
|
|
|
Note: Danaher
calculates period-to-period core sales growth including Cytiva by
adding Cytiva sales to core sales for both the baseline and current
periods. Beginning in the second quarter of 2021, Cytiva
sales are included in core sales, and therefore the measure "core
sales including Cytiva" is no longer provided for quarterly periods
beginning with the second quarter of 2021.
|
|
|
See the accompanying
Notes to Reconciliation of GAAP to Non-GAAP Financial
Measures
|
Free Cash Flow
from Continuing Operations and Free Cash Flow from Continuing
Operations to Net Earnings from Continuing Operations Conversion
Ratio
($ in
millions)
|
|
|
Nine-Month Period
Ended
|
|
Year-over-Year
Change
|
|
October 1,
2021
|
|
October 2,
2020
|
|
Total Cash Flows
from Continuing Operations:
|
|
|
|
|
|
Total cash provided
by operating activities from continuing operations
(GAAP)
|
$
|
6,025
|
|
|
$
|
3,994
|
|
|
|
Total cash used in
investing activities from continuing operations (GAAP)
|
$
|
(12,108)
|
|
|
$
|
(20,658)
|
|
|
|
Total cash provided
by financing activities from continuing operations
(GAAP)
|
$
|
2,717
|
|
|
$
|
2,426
|
|
|
|
|
|
|
|
|
|
Free Cash Flow
from Continuing Operations:
|
|
|
|
|
|
Total cash provided
by operating activities from continuing operations
(GAAP)
|
$
|
6,025
|
|
|
$
|
3,994
|
|
|
~ 51.0%
|
Less: payments for
additions to property, plant & equipment (capital expenditures)
from continuing operations (GAAP)
|
(874)
|
|
|
(475)
|
|
|
|
Plus: proceeds from
sales of property, plant & equipment (capital disposals) from
continuing operations (GAAP)
|
13
|
|
|
1
|
|
|
|
Free cash flow from
continuing operations (non-GAAP)
|
$
|
5,164
|
|
|
$
|
3,520
|
|
|
~ 46.5%
|
|
|
|
|
|
|
Free Cash Flow
from Continuing Operations to Net Earnings from Continuing
Operations Conversion Ratio:
|
|
|
|
|
|
Free cash flow from
continuing operations from above (non-GAAP)
|
$
|
5,164
|
|
|
$
|
3,520
|
|
|
|
Net earnings from
continuing operations (GAAP)
|
4,559
|
|
|
2,405
|
|
|
|
Free cash flow from
continuing operations to net earnings from continuing operations
conversion ratio (non-GAAP)
|
1.13
|
|
|
1.46
|
|
|
|
|
We define free cash
flow as operating cash flows from continuing operations, less
payments for additions to property, plant and equipment from
continuing operations ("capital expenditures") plus the proceeds
from sales of plant, property and equipment from continuing
operations ("capital disposals"). All amounts presented above
reflect only continuing
operations.
|
|
|
See the accompanying
Notes to Reconciliation of GAAP to Non-GAAP Financial
Measures
|
Notes to
Reconciliation of GAAP to Non-GAAP Financial
Measures
|
|
|
A
|
Amortization of
acquisition-related intangible assets in the following historical
periods ($ in millions) (only the pretax amounts set forth below
are reflected in the amortization line item above):
|
|
Three-Month Period
Ended
|
|
Nine-Month Period
Ended
|
|
October 1,
2021
|
|
October 2,
2020
|
|
October 1,
2021
|
|
October 2,
2020
|
Pretax
|
$
|
365
|
|
|
$
|
331
|
|
|
$
|
1,056
|
|
|
$
|
802
|
|
After-tax
|
293
|
|
|
266
|
|
|
842
|
|
|
645
|
|
|
|
B
|
Costs incurred for
fair value adjustments to inventory and transaction costs deemed
significant related to the acquisition of Aldevron in the
three-month period ended October 1, 2021, ($45 million pretax
as reported in this line item, $36 million after-tax). Costs
incurred for fair value adjustments to inventory and deferred
revenue and transaction costs deemed significant related to the
acquisitions of Cytiva and Aldevron in the nine-month period ended
October 1, 2021, ($91 million pretax as reported in this line item,
$72 million after-tax). Costs incurred for fair value
adjustments to inventory and deferred revenue in the three and
nine-month periods and transaction costs deemed significant and
integration preparation costs in the nine-month period ended
October 2, 2020, related to the acquisition of Cytiva, ($232
million pretax as reported in this line item, $181 million
after-tax and $519 million pretax as reported in this line item,
$411 million after-tax, respectively). 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.
|
|
|
C
|
Impairment charges
related to a trade name in the Diagnostics segment recorded in the
first quarter of 2021 ($10 million pretax as reported in this line
item, $8 million after-tax). Impairment charges related to
trade names in the Environmental & Applied Solutions segment
recorded in the three-month period ended October 2, 2020 ($14
million pretax as reported in this line item, $11 million
after-tax) and impairment charges related to a facility in the
Diagnostics segment and a trade name and other intangible assets in
the Environmental & Applied Solutions segment recorded in the
nine-month period ended October 2, 2020 ($22 million pretax as
reported in this line item, $17 million after-tax).
|
|
|
D
|
Fair value net
gains/losses on the Company's equity and limited partnership
investments recorded in the three and nine-month periods ended
October 1, 2021, ($128 million pretax gain as reported in this
line item, $97 million after-tax and $330 million pretax gain as
reported in this line item, $258 million after-tax, respectively)
and fair value net gains/losses on the Company's equity and limited
partnership investments recorded in the nine-month period ended
October 2, 2020, ($13 million pretax loss as reported in this
line item, $10 million after-tax).
|
|
|
E
|
Gain on disposition
of certain product lines in the nine-month period ended October 2,
2021, ($13 million pretax as reported in this line item, $10
million after-tax). Gain on disposition of certain product
lines in the nine-month period ended October 2, 2020, ($455 million
pretax as reported in this line item, $305 million
after-tax).
|
|
|
F
|
Expense related to
the modification and partial termination of a prior commercial
arrangement and resolution of the associated litigation in the
three and nine-month periods ended October 2, 2021, ($547 million
pretax as reported in this line item, $415 million
after-tax).
|
|
|
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 footnotes above indicate 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 October 1, 2021, include the impact of net
discrete tax benefits of $23 million (or $0.03 per diluted common
share) related primarily to excess tax benefits from stock-based
compensation, audit settlements and a higher tax benefit associated
with the pretax charge in the quarter related to the modification
and partial termination of a commercial arrangement and resolution
of the associated litigation. Discrete tax adjustments and
other tax-related adjustments for the nine-month period ended
October 1, 2021, include the impact of net discrete tax
benefits of $143 million (or $0.19 per diluted common share)
related primarily to release of reserves for uncertain tax
positions due to the expiration of statutes of limitation, audit
settlements, excess tax benefits from stock-based compensation and
a higher tax benefit associated with the pretax charge in the
quarter related to the modification and partial termination of a
commercial arrangement and resolution of the associated litigation,
net of changes in estimates associated with prior period uncertain
tax positions. Discrete tax adjustments and other tax-related
adjustments for the three and nine-month periods ended
October 2, 2020, include the impact of net discrete tax
benefits of $58 million (or $0.08 per diluted common share) and $85
million (or $0.12 per diluted common share), respectively, related
primarily to the release of reserves for uncertain tax positions
from audit settlements and expiration of statutes of limitation,
excess tax benefits from stock-based compensation and other
items. 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 from continuing operations per common
share.
|
|
|
I
|
In March 2019, the
Company issued $1.65 billion in aggregate liquidation preference of
4.75% MCPS Series A. In May 2020, the Company issued $1.72
billion in aggregate liquidation preference of 5.0% MCPS Series
B. Dividends on the MCPS Series A and Series B are payable on
a cumulative basis at an annual rate of 4.75% and 5.0%,
respectively, on the liquidation preference of $1,000 per
share. Unless earlier converted, each share of MCPS Series A
will automatically convert on April 15, 2022 into between 6.6601
and 8.1585 shares of Danaher's common stock, subject to further
anti-dilution adjustments. Unless earlier converted, each
share of MCPS Series B will automatically convert on April 15, 2023
into between 5.0098 and 6.1370 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 the Company's
common stock over the 20 consecutive trading day period beginning
on, and including, the 21st scheduled trading day immediately
before April 15, 2022 and April 15, 2023 for the MCPS Series A and
Series B, respectively. For the calculation of net earnings
per common share from continuing operations, the impact of the
dilutive MCPS are calculated under the if-converted method and the
related MCPS dividends are excluded. For the purposes of
calculating adjusted earnings per common share from continuing
operations, the Company has excluded the paid and anticipated MCPS
cash 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
only with respect to any MCPS the conversion of which would be
dilutive in the particular period are referred to as the "Converted
Shares") for any MCPS that were anti-dilutive for the given
period. For additional information about the impact of the
MCPS on the calculation of diluted EPS, see note 2 in the
Adjusted Average Common Stock and Common Equivalent Diluted Shares
Outstanding table above.
|
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 Common Share
from Continuing Operations, 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 sales and related sales measures, identify
underlying growth trends in our business and compare our sales
performance with prior and future periods and to our peers; and
- with respect to free cash flow from continuing operations and
related cash flow measures (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).
We also present core sales on a basis that includes sales
attributable to Cytiva (formerly the Biopharma Business of General
Electric Company's ("GE") Life Sciences business), which Danaher
acquired from GE on March 31,
2020. Historically Danaher has calculated core sales solely
on a basis that excludes sales from acquired businesses recorded
prior to the first anniversary of the acquisition. However,
given Cytiva's significant size and historical core sales growth
rate, in each case compared to Danaher's existing businesses,
management believes it is appropriate to also present core sales on
a basis that includes Cytiva sales. Management believes this
presentation provides useful information to investors by
demonstrating the impact Cytiva has on the Company's current growth
profile, rather than waiting to demonstrate such impact 12 months
after the acquisition when Cytiva would normally have been included
in Danaher's core sales calculation. Danaher calculates
period-to-period core sales growth including Cytiva by adding to
the baseline period sales Cytiva's historical sales from such
period (when it was owned by GE), net of the sales of the Company
product lines divested in 2020 to obtain regulatory approval to
acquire Cytiva ("Cytiva sales") and also adding the Cytiva sales to
the current period. Beginning in the second quarter of 2021,
Cytiva sales are included in core sales, and therefore we no longer
provide the measure "core sales including Cytiva" for quarterly
periods beginning with the second quarter of 2021. We also
present "base business" core revenue growth to demonstrate our core
revenue growth and our core revenue growth including Cytiva
excluding core sales growth directly attributable to COVID-19 and
its impact.
Management uses these non-GAAP measures to measure the Company's
operating and financial performance, and uses core sales and
non-GAAP measures similar to Adjusted Diluted Net Earnings Per
Common Share from Continuing Operations 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 Common Share
from Continuing Operations:
-
- Amortization of Intangible Assets. 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
sales generation and that intangible asset amortization related to
past acquisitions will recur in future periods until such
intangible assets have been fully amortized.
- Restructuring Charges. 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 to facilitate a more consistent comparison of operating
results over time.
- Other Adjustments. With respect to the other items excluded
from Adjusted Diluted Net Earnings Per Common Share from Continuing
Operations, 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.
- With respect to adjusted average common stock and common
equivalent shares outstanding, Danaher's Mandatory Convertible
Preferred Stock ("MCPS") will mandatorily convert into Danaher
common stock on the mandatory conversion date, which is expected to
be April 15, 2022 and April 15, 2023 for the Series A and Series B
MCPS, respectively, (unless converted or redeemed earlier in
accordance with the terms of the applicable certificate of
designations). With respect to the calculation of Adjusted Diluted
Net Earnings Per Common Share from Continuing Operations, we apply
the "if converted" method of share dilution to the MCPS Series A
and B in all applicable periods irrespective of whether such
preferred shares would be dilutive or anti-dilutive in the period.
We believe this presentation provides useful information to
investors by helping them understand what the net impact will be on
Danaher's earnings per share-related measures once the MCPS convert
into Danaher common stock.
- With respect to core sales related measures, (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
(other than Cytiva, in the case of core sales including Cytiva and
base business core sales) 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.
With respect to forecasted core sales related measures, we do
not reconcile these measures to the comparable GAAP measure because
of the inherent difficulty in predicting and estimating the future
impact and timing of currency translation, acquisitions and
divested product lines, which would be reflected in any forecasted
GAAP revenue.
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SOURCE Danaher Corporation