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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 October 1, 2021
OR
TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from              to             
Commission File Number: 001-08089
DHR-20211001_G1.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
5.00% Mandatory Convertible Preferred Stock, Series B, without par value DHR.PRB New York Stock Exchange
Floating Rate Senior Notes due 2022 DHR/22A New York Stock Exchange
1.700% Senior Notes due 2024 DHR 24 New York Stock Exchange
2.500% Senior Notes due 2025 DHR/25 New York Stock Exchange
0.200% Senior Notes due 2026 DHR/26 New York Stock Exchange
2.100% Senior Notes due 2026 DHR 26 New York Stock Exchange
1.200% Senior Notes due 2027 DHR/27 New York Stock Exchange
0.450% Senior Notes due 2028 DHR/28 New York Stock Exchange
2.500% Senior Notes due 2030 DHR 30 New York Stock Exchange
0.750% Senior Notes due 2031 DHR/31 New York Stock Exchange
1.350% Senior Notes due 2039 DHR/39 New York Stock Exchange
1.800% Senior Notes due 2049 DHR/49 New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.    Yes  ☒    No  ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  ☒    No  ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large Accelerated Filer Accelerated Filer
Non-accelerated Filer Smaller Reporting Company
Emerging Growth Company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.    ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act)    Yes  ☐    No  ☒
The number of shares of common stock outstanding at October 15, 2021 was 714,576,868.



DANAHER CORPORATION
INDEX
FORM 10-Q
    Page
PART I - FINANCIAL INFORMATION
1
2
3
4
5
6
PART II - OTHER INFORMATION



DANAHER CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
($ in millions, except per share amount)
(unaudited)
October 1, 2021 December 31, 2020
ASSETS
Current assets:
Cash and equivalents $ 2,552  $ 6,035 
Trade accounts receivable, less allowance for doubtful accounts of $121 and $132, respectively
4,194  4,045 
Inventories:
Finished goods 1,367  1,232 
Work in process 465  369 
Raw materials 905  691 
Total inventories 2,737  2,292 
Prepaid expenses and other current assets 1,293  1,430 
Total current assets 10,776  13,802 
Property, plant and equipment, net of accumulated depreciation of $3,390 and $3,182, respectively
3,640  3,262 
Other long-term assets 3,470  2,395 
Goodwill 41,237  35,420 
Other intangible assets, net 23,375  21,282 
Total assets $ 82,498  $ 76,161 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Notes payable and current portion of long-term debt $ $ 11 
Trade accounts payable 2,133  2,049 
Accrued expenses and other liabilities 5,117  5,342 
Total current liabilities 7,257  7,402 
Other long-term liabilities 8,189  7,789 
Long-term debt 23,591  21,193 
Stockholders’ equity:
Preferred stock, no par value, 15.0 million shares authorized; 1.65 million shares of 4.75% Mandatory Convertible Preferred Stock, Series A, issued and outstanding as of October 1, 2021 and December 31, 2020; 1.72 million shares of 5.00% Mandatory Convertible Preferred Stock, Series B, issued and outstanding as of October 1, 2021 and December 31, 2020
3,268  3,268 
Common stock - $0.01 par value, 2.0 billion shares authorized; 855.2 million issued and 714.5 million outstanding as of October 1, 2021; 851.3 million issued and 711.0 million outstanding as of December 31, 2020
Additional paid-in capital 10,004  9,698 
Retained earnings 31,231  27,159 
Accumulated other comprehensive income (loss) (1,061) (368)
Total Danaher stockholders’ equity 43,451  39,766 
Noncontrolling interests 10  11 
Total stockholders’ equity 43,461  39,777 
Total liabilities and stockholders’ equity $ 82,498  $ 76,161 
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 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  374  459 
Interest expense (62) (78) (182) (203)
Interest income 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.
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 Nine-Month Period Ended
  October 1, 2021 October 2, 2020 October 1, 2021 October 2, 2020
Net earnings $ 1,158  $ 883  $ 4,645  $ 2,405 
Other comprehensive income (loss), net of income taxes:
Foreign currency translation adjustments (396) 923  (909) 1,846 
Pension and postretirement plan benefit adjustments 12  33  25 
Unrealized gain (loss) on available-for-sale securities adjustments —  —  (1)
Cash flow hedge adjustments (2) (90) 184  175 
Total other comprehensive income (loss), net of income taxes (386) 842  (693) 2,047 
Comprehensive income $ 772  $ 1,725  $ 3,952  $ 4,452 
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 Nine-Month Period Ended
October 1, 2021 October 2, 2020 October 1, 2021 October 2, 2020
Preferred stock:
Balance, beginning of period $ 3,268  $ 3,268  $ 3,268  $ 1,600 
Issuance of Mandatory Convertible Preferred Stock —  —  —  1,668 
Balance, end of period $ 3,268  $ 3,268  $ 3,268  $ 3,268 
Common stock:
Balance, beginning of period $ $ $ $
Issuance of common stock —  —  — 
Balance, end of period $ $ $ $
Additional paid-in capital:
Balance, beginning of period $ 9,890  $ 9,475  $ 9,698  $ 7,565 
Common stock-based award and other activity 91  104  249  275 
Common stock issued in connection with LYONs’ conversions, including tax benefit of $0, $39, $10 and $42, respectively
—  39  34  50 
Issuance of common stock —  —  —  1,728 
Common stock issued in connection with acquisitions 23  —  23  — 
Balance, end of period $ 10,004  $ 9,618  $ 10,004  $ 9,618 
Retained earnings:
Balance, beginning of period $ 30,264  $ 25,373  $ 27,159  $ 24,166 
Adoption of accounting standards —  —  —  (8)
Net earnings 1,158  883  4,645  2,405 
Common stock dividends declared (150) (128) (450) (381)
Mandatory Convertible Preferred Stock dividends declared (41) (41) (123) (95)
Balance, end of period $ 31,231  $ 26,087  $ 31,231  $ 26,087 
Accumulated other comprehensive income (loss):
Balance, beginning of period $ (675) $ (1,863) $ (368) $ (3,068)
Other comprehensive income (loss) (386) 842  (693) 2,047 
Balance, end of period $ (1,061) $ (1,021) $ (1,061) $ (1,021)
Noncontrolling interests:
Balance, beginning of period $ 10  $ 11  $ 11  $ 11 
Change in noncontrolling interests —  —  (1) — 
Balance, end of period $ 10  $ 11  $ 10  $ 11 
Total stockholders’ equity, end of period $ 43,461  $ 37,972  $ 43,461  $ 37,972 
See the accompanying Notes to the Consolidated Condensed Financial Statements.
4

DANAHER CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
($ in millions)
(unaudited)
  Nine-Month Period Ended
  October 1, 2021 October 2, 2020
Cash flows from operating activities:
Net earnings $ 4,645  $ 2,405 
Less: earnings from discontinued operations, net of income taxes 86  — 
Net earnings from continuing operations 4,559  2,405 
Noncash items:
Depreciation 525  465 
Amortization of intangible assets 1,056  802 
Amortization of acquisition-related inventory fair value step-up 46  417 
Stock-based compensation expense 159  137 
Contract settlement expense 542  — 
Pretax gain on sale of product lines and investment (gains) losses (343) (445)
Change in trade accounts receivable, net (152) 212 
Change in inventories (438) (243)
Change in trade accounts payable 100  (107)
Change in prepaid expenses and other assets 102  36 
Change in accrued expenses and other liabilities (131) 315 
Total operating cash provided by continuing operations 6,025  3,994 
Total operating cash used in discontinued operations —  (7)
Net cash provided by operating activities 6,025  3,987 
Cash flows from investing activities:
Cash paid for acquisitions (10,628) (20,819)
Payments for additions to property, plant and equipment (874) (475)
Proceeds from sales of property, plant and equipment 13 
Payments for purchases of investments (784) (215)
Proceeds from sales of investments 104  — 
Proceeds from sale of product lines 26  826 
All other investing activities 35  24 
Total cash used in investing activities for continuing operations (12,108) (20,658)
Cash flows from financing activities:
Proceeds from the issuance of common stock in connection with stock-based compensation 63  125 
Proceeds from the sale of common stock, net of issuance costs —  1,729 
Proceeds from the sale of preferred stock, net of issuance costs —  1,668 
Payment of dividends (551) (445)
Net proceeds from (repayments of) borrowings (maturities of 90 days or less) 3,496  (3,339)
Net proceeds from borrowings (maturities longer than 90 days) —  7,691 
Net repayments of borrowings (maturities longer than 90 days) (279) (5,000)
All other financing activities (12) (3)
Total cash provided by financing activities for continuing operations 2,717  2,426 
Effect of exchange rate changes on cash and equivalents (117) 21 
Net change in cash and equivalents (3,483) (14,224)
Beginning balance of cash and equivalents 6,035  19,912 
Ending balance of cash and equivalents $ 2,552  $ 5,688 
Supplemental disclosures:
Cash interest payments $ 279  $ 235 
Cash income tax payments 1,086  644 
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, 2020 and the Notes thereto included in the Company’s 2020 Annual Report on Form 10-K filed on February 24, 2021 (the “2020 Annual Report”).
In the opinion of the Company, the accompanying financial statements contain all adjustments (consisting of only normal recurring accruals) necessary to present fairly the financial position of the Company as of October 1, 2021 and December 31, 2020, its results of operations for the three and nine-month periods ended October 1, 2021 and October 2, 2020 and its cash flows for each of the nine-month periods then ended.
There have been no changes to the Company’s significant accounting policies described in the Company’s 2020 Annual Report that have a material impact on the Company’s Consolidated Condensed Financial Statements and the related Notes. Reclassifications of certain prior year amounts have been made to conform to the current year presentation.
Accounting Standards Not Yet Adopted—In August 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) No. 2020-06, Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity. The ASU includes amendments to the guidance on convertible instruments and the derivative scope exception for contracts in an entity’s own equity and simplifies the accounting for convertible instruments which include beneficial conversion features or cash conversion features by removing certain separation models in Subtopic 470-20. Additionally, the ASU will require entities to use the “if-converted” method when calculating diluted earnings per share for convertible instruments. The ASU is effective for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. Management anticipates the adoption of this ASU will not have a significant impact on the Company’s financial statements.
Operating Leases—As of October 1, 2021 and December 31, 2020, operating lease right-of-use assets where the Company was the lessee were $980 million and $942 million, respectively, and are included within other long-term assets in the accompanying Consolidated Condensed Balance Sheets.  The associated operating lease liabilities were $1,028 million and $974 million as of October 1, 2021 and December 31, 2020, respectively, and are included in accrued expenses and other liabilities and other long-term liabilities.

6

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 income tax impacts.
Foreign Currency Translation Adjustments Pension and Postretirement Plan Benefit Adjustments Unrealized Gain (Loss) on Available-For-Sale Securities Adjustments Cash Flow Hedge Adjustments Total
For the Three-Month Period Ended October 1, 2021:
Balance, July 2, 2021
$ 232  $ (907) $ (1) $ $ (675)
Other comprehensive income (loss) before reclassifications:
Increase (decrease) (387) —  —  87  (300)
Income tax impact (9) —  —  —  (9)
Other comprehensive income (loss) before reclassifications, net of income taxes (396) —  —  87  (309)
Amounts reclassified from accumulated other comprehensive income (loss):
Increase (decrease) —  15  (a) —  (89) (b) (74)
Income tax impact —  (3) —  —  (3)
Amounts reclassified from accumulated other comprehensive income (loss), net of income taxes —  12  —  (89) (77)
Net current period other comprehensive income (loss), net of income taxes (396) 12  —  (2) (386)
Balance, October 1, 2021 $ (164) $ (895) $ (1) $ (1) $ (1,061)
For the Three-Month Period Ended October 2, 2020:
Balance, July 3, 2020 $ (1,250) $ (765) $ —  $ 152  $ (1,863)
Other comprehensive income (loss) before reclassifications:
Increase (decrease) 909  —  —  (305) 604 
Income tax impact 14  —  —  48  62 
Other comprehensive income (loss) before reclassifications, net of income taxes 923  —  —  (257) 666 
Amounts reclassified from accumulated other comprehensive income (loss):
Increase (decrease) —  12  (a) —  167  (b) 179 
Income tax impact —  (3) —  —  (3)
Amounts reclassified from accumulated other comprehensive income (loss), net of income taxes —  —  167  176 
Net current period other comprehensive income (loss), net of income taxes 923  —  (90) 842 
Balance, October 2, 2020
$ (327) $ (756) $ —  $ 62  $ (1,021)
(a) This accumulated other comprehensive income (loss) component is included in the computation of net periodic pension cost (refer to Notes 9 and 12 for additional details).
(b) Reflects reclassification to earnings related to hedges of certain long-term debt (refer to Note 8 for additional details).
7

Foreign Currency Translation Adjustments Pension and Postretirement Plan Benefit Adjustments Unrealized Gain (Loss) on Available-For-Sale Securities Adjustments Cash Flow Hedge Adjustments Total
For the Nine-Month Period Ended October 1, 2021:
Balance, December 31, 2020 $ 745  $ (928) $ —  $ (185) $ (368)
Other comprehensive income (loss) before reclassifications:
Increase (decrease) (885) —  (1) 389  (497)
Income tax impact (24) —  —  —  (24)
Other comprehensive income (loss) before reclassifications, net of income taxes (909) —  (1) 389  (521)
Amounts reclassified from accumulated other comprehensive income (loss):
Increase (decrease) —  43  (a) —  (205) (b) (162)
Income tax impact —  (10) —  —  (10)
Amounts reclassified from accumulated other comprehensive income (loss), net of income taxes —  33  —  (205) (172)
Net current period other comprehensive income (loss), net of income taxes (909) 33  (1) 184  (693)
Balance, October 1, 2021 $ (164) $ (895) $ (1) $ (1) $ (1,061)
For the Nine-Month Period Ended October 2, 2020:
Balance, December 31, 2019 $ (2,173) $ (781) $ (1) $ (113) $ (3,068)
Other comprehensive income (loss) before reclassifications:
Increase (decrease) 1,848  —  (8) 1,841 
Income tax impact (2) —  — 
Other comprehensive income (loss) before reclassifications, net of income taxes 1,846  —  (5) 1,842 
Amounts reclassified from accumulated other comprehensive income (loss):
Increase (decrease) —  34  (a) —  184  (b) 218 
Income tax impact —  (9) —  (4) (13)
Amounts reclassified from accumulated other comprehensive income (loss), net of income taxes —  25  —  180  205 
Net current period other comprehensive income (loss), net of income taxes 1,846  25  175  2,047 
Balance, October 2, 2020
$ (327) $ (756) $ —  $ 62  $ (1,021)
(a) This accumulated other comprehensive income (loss) component is included in the computation of net periodic pension cost (refer to Notes 9 and 12 for additional details).
(b) Reflects reclassification to earnings related to hedges of certain long-term debt (refer to Note 8 for additional details).
8

NOTE 2. REVENUE
The following tables present the Company’s revenues disaggregated by geographical region and revenue type for the three and nine-month periods ended October 1, 2021 and October 2, 2020 ($ in millions). Sales taxes and other usage-based taxes collected from customers are excluded from revenue.
Life Sciences Diagnostics Environmental & Applied Solutions Total
For the Three-Month Period Ended October 1, 2021:
Geographical region:
North America $ 1,291  $ 1,083  $ 512  $ 2,886 
Western Europe 989  424  256  1,669 
Other developed markets 202  126  28  356 
High-growth markets (a)
1,150  816  352  2,318 
Total $ 3,632  $ 2,449  $ 1,148  $ 7,229 
Revenue type:
Recurring $ 2,591  $ 2,150  $ 678  $ 5,419 
Nonrecurring 1,041  299  470  1,810 
Total $ 3,632  $ 2,449  $ 1,148  $ 7,229 
For the Three-Month Period Ended October 2, 2020:
Geographical region:
North America $ 1,101  $ 798  $ 481  $ 2,380 
Western Europe 780  349  245  1,374 
Other developed markets 193  104  29  326 
High-growth markets (a)
849  638  317  1,804 
Total $ 2,923  $ 1,889  $ 1,072  $ 5,884 
Revenue type:
Recurring $ 2,076  $ 1,542  $ 610  $ 4,228 
Nonrecurring 847  347  462  1,656 
Total $ 2,923  $ 1,889  $ 1,072  $ 5,884 
(a) The Company defines high-growth markets as developing markets of the world experiencing extended periods of accelerated growth in gross domestic product and infrastructure which include Eastern Europe, the Middle East, Africa, Latin America and Asia (with the exception of Japan, Australia and New Zealand). The Company defines developed markets as all markets that are not high-growth markets.
9

Life Sciences Diagnostics Environmental & Applied Solutions Total
For the Nine-Month Period Ended October 1, 2021:
Geographical region:
North America $ 3,903  $ 3,025  $ 1,501  $ 8,429 
Western Europe 3,011  1,282  810  5,103 
Other developed markets 636  355  87  1,078 
High-growth markets (a)
3,362  2,301  1,032  6,695 
Total $ 10,912  $ 6,963  $ 3,430  $ 21,305 
Revenue type:
Recurring $ 7,760  $ 6,074  $ 1,984  $ 15,818 
Nonrecurring 3,152  889  1,446  5,487 
Total $ 10,912  $ 6,963  $ 3,430  $ 21,305 
For the Nine-Month Period Ended October 2, 2020:
Geographical region:
North America $ 2,721  $ 2,244  $ 1,430  $ 6,395 
Western Europe 1,963  974  721  3,658 
Other developed markets 524  298  88  910 
High-growth markets (a)
2,007  1,660  894  4,561 
Total $ 7,215  $ 5,176  $ 3,133  $ 15,524 
Revenue type:
Recurring $ 5,135  $ 4,305  $ 1,810  $ 11,250 
Nonrecurring 2,080  871  1,323  4,274 
Total $ 7,215  $ 5,176  $ 3,133  $ 15,524 
(a) The Company defines high-growth markets as developing markets of the world experiencing extended periods of accelerated growth in gross domestic product and infrastructure which include Eastern Europe, the Middle East, Africa, Latin America and Asia (with the exception of Japan, Australia and New Zealand). The Company defines developed markets as all markets that are not high-growth markets.
The Company sells equipment to customers as well as consumables, software licenses and services, some of which customers purchase on a recurring basis. Consumables sold for use with the equipment sold by the Company are typically critical to the use of the equipment and are typically used on a one-time or limited basis, requiring frequent replacement in the customer’s operating cycle. Examples of these consumables include reagents used in diagnostic tests, filters used in filtration, separation and purification processes and cartridges for marking and coding equipment. Additionally, some of the Company’s consumables are used on a standalone basis, such as water treatment solutions. The Company separates its goods and services between those typically sold to a customer on a recurring basis and those typically sold on a nonrecurring basis. Recurring revenue includes revenue from consumables, services, software licenses recognized over time, software-as-a-service licenses, sales-and-usage based royalties and operating-type leases (“OTLs”). Nonrecurring revenue includes sales from equipment, software licenses recognized at a point in time and sales-type leases (“STLs”). OTLs and STLs are included in the above revenue amounts. For the three-month periods ended October 1, 2021 and October 2, 2020, lease revenue was $125 million and $119 million, respectively. For the nine-month periods ended October 1, 2021 and October 2, 2020, lease revenue was $359 million and $356 million, respectively.
Remaining performance obligations related to Topic 606, Revenue from Contracts with Customers, represent the aggregate transaction price allocated to performance obligations with an original contract term greater than one year which are fully or partially unsatisfied at the end of the period. As of October 1, 2021, the aggregate amount of the transaction price allocated to remaining performance obligations was approximately $3.7 billion. The Company expects to recognize revenue on approximately 50% of the remaining performance obligations over the next 12 months, 25% over the subsequent 12 months, and the remainder recognized thereafter.
10

The timing of revenue recognition, billings and cash collections results in billed accounts receivable, unbilled receivables (“contract assets”) and deferred revenue, customer deposits and billings in excess of revenue recognized (“contract liabilities”) on the Consolidated Condensed Balance Sheets.
Most of the Company’s long-term contracts are billed as work progresses in accordance with the contract terms and conditions, either at periodic intervals or upon achievement of certain milestones. Often this results in billing occurring subsequent to revenue recognition resulting in contract assets. Contract assets are generally classified as other current assets in the Consolidated Condensed Balance Sheets. The balance of contract assets as of October 1, 2021 and December 31, 2020 was $88 million and $65 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 October 1, 2021 and December 31, 2020, contract liabilities were approximately $1.8 billion and $1.4 billion, respectively, and are included within accrued expenses and other liabilities and other long-term liabilities in the accompanying Consolidated Condensed Balance Sheets. The increase in the contract liability balance during the nine-month period ended October 1, 2021 was primarily a result of cash payments received in advance of satisfying performance obligations and acquisitions, partially offset by revenue recognized during the year that was included in the opening contract liability balance. Revenue recognized during the nine-month periods ended October 1, 2021 and October 2, 2020 that was included in the contract liability balance on December 31, 2020 and December 31, 2019 was $963 million and $537 million, respectively. Contract assets and liabilities are reported on a net basis on the accompanying Consolidated Condensed Balance Sheets on a contract-by-contract basis at the end of each reporting period.

NOTE 3. ACQUISITIONS
For a description of the Company’s acquisition activity for the year ended December 31, 2020, reference is made to the financial statements as of and for the year ended December 31, 2020 and Note 3 thereto included in the Company’s 2020 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. The fair values of acquired intangibles are determined based on estimates and assumptions that are deemed reasonable by the Company. Significant assumptions include the discount rates and certain assumptions that form the basis of the forecasted results of the acquired business including revenue, earnings before interest, taxes, depreciation and amortization (“EBITDA”), growth rates, royalty rates and technology obsolescence rates. These assumptions are forward looking and could be affected by future economic and market conditions. The Company engages third-party valuation specialists who review the Company’s critical assumptions and calculations of the fair value of acquired intangible assets in connection with significant acquisitions. Only facts and circumstances that existed as of the acquisition date are considered for subsequent adjustment. The Company is continuing to evaluate certain pre-acquisition contingencies associated with its 2021 and 2020 acquisitions and is also in the process of obtaining valuations of certain acquisition-related assets and 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.
On August 30, 2021, the Company acquired Aldevron, L.L.C. (“Aldevron”) for a cash purchase price of approximately $9.6 billion (the “Aldevron Acquisition”). Aldevron manufactures high-quality plasmid DNA, mRNA and proteins, serving biotechnology and pharmaceutical customers across research, clinical and commercial applications, and is now part of the Company’s Life Sciences segment. Aldevron generated revenues of approximately $300 million in 2020. The acquisition of Aldevron is expected to provide additional sales and earnings opportunities for the Company by expanding product line
11

diversity, including new product offerings supporting genomic medicine. The Company financed the Aldevron Acquisition using cash on hand and proceeds from the issuance of commercial paper.
In addition to the Aldevron Acquisition, during the nine-month period ended October 1, 2021, the Company acquired nine other businesses for total consideration of approximately $1.1 billion in cash, net of cash acquired. The businesses acquired complement existing units of each of the Company’s three segments. The aggregate annual sales of these nine businesses at the time of their acquisition, in each case based on the company’s revenues for its last completed fiscal year prior to the acquisition, were $93 million.
The following summarizes the estimated fair values of the assets acquired and liabilities assumed at the date of acquisition for the Aldevron Acquisition, and separately for all other acquisitions during the nine-month period ended October 1, 2021 ($ in millions):
Aldevron Others Total
Trade accounts receivable $ 46  $ 16  $ 62 
Inventories 93  26  119 
Property, plant and equipment 142  11  153 
Goodwill 6,078  821  6,899 
Other intangible assets, primarily technology, customer relationships and trade names 3,514  328  3,842 
Trade accounts payable (15) (8) (23)
Deferred tax liabilities (208) (76) (284)
Other assets and liabilities, net (64) (40) (104)
Fair value of net assets acquired 9,586  1,078  10,664 
  Less: noncash consideration (23) (13) (36)
Net cash consideration $ 9,563  $ 1,065  $ 10,628 
On March 31, 2020, the Company acquired the Biopharma business of General Electric Company’s (“GE”) Life Sciences division, now known as Cytiva, for a cash purchase price of approximately $20.7 billion (net of approximately $0.1 billion of acquired cash) and the assumption of approximately $0.4 billion of pension liabilities (the “Cytiva Acquisition”). Cytiva is a leading provider of instruments, consumables and software that support the research, discovery, process development and manufacturing workflows of biopharmaceutical drugs. Cytiva is included in the Company’s Life Sciences segment results beginning in the second quarter of 2020. The acquisition has provided and 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 existing biologics workflow solutions. To fulfill a condition to obtaining certain regulatory approvals for the closing of the transaction, on April 30, 2020, the Company divested certain of its existing product lines in the Life Sciences segment for a cash purchase price, net of cash transferred and transaction costs, of $826 million and recognized a pretax gain on sale of $455 million ($305 million after-tax or $0.42 per diluted common share). The divested product lines in the aggregate generated revenues of approximately $170 million in 2019. The divestiture of these product lines did not represent a strategic shift with a major effect on the Company’s operations and financial results and therefore is not reported as a discontinued operation.
Pro Forma Financial Information
The unaudited pro forma information for the periods set forth below gives effect to the 2021 and 2020 acquisitions as if they had occurred as of January 1, 2020. The pro forma information is presented for informational purposes only and is not necessarily indicative of the results of operations that actually would have been achieved had the acquisitions been consummated as of that time ($ in millions, except per share amounts):
  Three-Month Period Ended Nine-Month Period Ended
  October 1, 2021 October 2, 2020 October 1, 2021 October 2, 2020
Sales $ 7,280  $ 5,992  $ 21,546  $ 16,605 
Net earnings from continuing operations 1,159  960  4,483  1,890 
Diluted net earnings per common share from continuing operations (a)
1.54  1.27  6.00  2.50 
(a) Diluted net earnings per common share from continuing operations is calculated by adding the interest accrued on the Company’s LYONs to net earnings from continuing operations and deducting the MCPS dividends from net earnings from continuing operations for the anti-dilutive MCPS shares (refer to Note 15 for additional information).
12

The 2021 unaudited pro forma net earnings set forth above were adjusted to exclude the pretax impact of $17 million of non-recurring acquisition date fair value adjustments to inventory and the 2020 unaudited pro forma net earnings were adjusted to include the impact of the inventory fair value adjustment related to the Aldevron Acquisition. In addition, acquisition-related transaction costs of $28 million related to the Aldevron Acquisition in the three and nine-month periods ended October 1, 2021 were excluded from pro forma net earnings.
The 2021 unaudited pro forma sales and net earnings set forth above were adjusted to exclude the pretax impact of $46 million of non-recurring acquisition date fair value adjustments to inventory and deferred revenue related to the Cytiva Acquisition in the nine-month period ended October 1, 2021. The 2020 unaudited pro forma sales and net earnings were adjusted to include the impact of these items.
In addition, acquisition-related transaction costs of $59 million for the nine-month period ended October 2, 2020, associated with the Cytiva Acquisition were excluded from pro forma net earnings. The pretax gain of $455 million ($305 million after-tax) for the nine-month period ended October 2, 2020 related to the divestiture of certain product lines that was required as a condition to obtaining certain regulatory approvals for the closing of the Cytiva Acquisition was excluded from the 2020 pro forma net earnings.

NOTE 4. DISCONTINUED OPERATIONS
On July 2, 2016, the Company completed the separation of its former Test & Measurement segment, Industrial Technologies segment (excluding the product identification businesses) and retail/commercial petroleum business by distributing to Danaher stockholders on a pro rata basis all of the issued and outstanding common stock of Fortive Corporation (“Fortive”), the entity the Company incorporated to hold such businesses. For the nine-month period ended October 1, 2021, the Company recorded an income tax benefit of $86 million related to the release of previously provided reserves associated with uncertain tax positions on certain of the Company’s tax returns which were jointly filed with Fortive entities. These reserves were released due to the expiration of statutes of limitations for those returns. This income tax benefit is included in earnings from discontinued operations, net of income taxes in the accompanying Consolidated Condensed Statements of Earnings.

NOTE 5. GOODWILL AND OTHER INTANGIBLE ASSETS
The following is a rollforward of the Company’s goodwill ($ in millions):
Balance, December 31, 2020 $ 35,420 
Attributable to 2021 acquisitions 6,899 
Attributable to 2021 divestitures (12)
Adjustments due to finalization of purchase price allocations (12)
Foreign currency translation and other (1,058)
Balance, October 1, 2021 $ 41,237 
The carrying value of goodwill by segment is summarized as follows ($ in millions):
October 1, 2021 December 31, 2020
Life Sciences $ 31,755  $ 25,812 
Diagnostics 6,974  7,082 
Environmental & Applied Solutions 2,508  2,526 
Total $ 41,237  $ 35,420 
The Company has not identified any “triggering” events which indicate an impairment of goodwill in 2021.
The Company reviews identified intangible assets for impairment whenever events or changes in circumstances indicate that the related carrying amounts may not be recoverable. The Company identified impairment triggers during both the first quarters of 2021 and 2020 and during the third quarter of 2020 which resulted in the impairment of certain long-lived assets, including trade names and other intangible assets. The Company recorded impairment charges totaling $10 million in the nine-month period ended October 1, 2021 and $14 million and $22 million in the three and nine-month periods ended October 2, 2020, respectively, related to these long-lived assets.

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NOTE 6. FAIR VALUE MEASUREMENTS
Accounting standards define fair value based on an exit price model, establish a framework for measuring fair value where the Company’s assets and liabilities are required to be carried at fair value and provide for certain disclosures related to the valuation methods used within a valuation hierarchy as established within the accounting standards. This hierarchy prioritizes the inputs into three broad levels as follows. Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2 inputs are quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets in markets that are not active, or other observable characteristics for the asset or liability, including interest rates, yield curves and credit risks, or inputs that are derived principally from, or corroborated by, observable market data through correlation. Level 3 inputs are unobservable inputs based on the Company’s assumptions. A financial asset or liability’s classification within the hierarchy is determined based on the lowest level input that is significant to the fair value measurement in its entirety.
A summary of financial assets and liabilities that are measured at fair value on a recurring basis were as follows ($ in millions):
Balance, October 1, 2021 Quoted Prices in Active Market (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3)
Assets:
Available-for-sale debt securities $ 21  $ —  $ 21  $ — 
Investment in equity securities 318  74  —  — 
Liabilities:
Cross-currency swap derivative contracts 133  —  133  — 
Deferred compensation plans 123  —  123  — 
Balance, December 31, 2020 Quoted Prices in Active Market (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3)
Assets:
Available-for-sale debt securities $ 27  $ —  $ 27  $ — 
Investment in equity securities 176  —  — 
Liabilities:
Cross-currency swap derivative contracts 622  —  622  — 
Deferred compensation plans 111  —  111  — 
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 October 1, 2021 and December 31, 2020, available-for-sale debt securities primarily include U.S. Treasury Notes and corporate debt securities, which are valued based on the terms of the instruments in comparison with similar terms traded on the active market.
The Company’s investments in equity securities consist of investments in publicly traded equity securities and investments in non-marketable equity securities. The publicly traded securities are classified as Level 1 in the fair value hierarchy as they are measured based on quotes in active markets. For the non-marketable equity securities, the Company estimates the fair value of the investments in equity securities based on the measurement alternative and adjusts for impairments and observable price changes with a same or similar security from the same issuer within net earnings (the “Fair Value Alternative”). The Company’s investments in these equity securities are not classified in the fair value hierarchy due to the use of these measurement methods. Additionally, the Company is a limited partner in partnerships that invest primarily in early-stage companies. While the partnerships record these investments at fair value, the Company’s investments in the partnerships are accounted for under the equity method of accounting and are not subject to fair value measurement disclosures. As of October 1, 2021 and December 31, 2020, the Company’s equity method investments included investments in partnerships with a carrying value of approximately $1.2 billion and $453 million, respectively. During the three and nine-month periods ended October 1, 2021, the Company recorded realized and unrealized gains of $128 million and $330 million, respectively, related to changes in the fair value of the Company’s investments in equity securities and the Company’s equity in earnings of the partnerships that reflect the changes in fair value of the investments of the partnerships. During the three and nine-month periods ended October 2, 2020, the Company recorded unrealized gains of $3 million and unrealized losses of $10 million, respectively, related to changes in the fair value of the Company’s investments including investments of the partnerships. Refer to Note 12 for additional information on gains and losses on the Company’s investments including investments in the
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partnerships. These gains and losses are reflected in other income (expense), net in the Company’s Consolidated Condensed Statements of Earnings.
The cross-currency swap derivative contracts are used to partially hedge the Company’s net investments in foreign operations against adverse movements in exchange rates between the U.S. dollar and the Danish kroner, Japanese yen, euro and Swiss franc. The Company also uses cross-currency swap derivative contracts to hedge the exchange rate exposure from long-term debt issuances in a foreign currency other than the functional currency of the borrower. The cross-currency swap derivative contracts are classified as Level 2 in the fair value hierarchy as they are measured using the income approach with the relevant interest rates and foreign currency current exchange rates and forward curves as inputs. Refer to Note 8 for additional information.
The Company has established nonqualified contribution and deferred compensation programs that permit the Company to make tax-deferred contributions to officers and certain other employees, and also permit directors, officers and certain other employees to voluntarily defer taxation on a portion of their compensation. All amounts contributed or deferred under such plans are unfunded, unsecured obligations of the Company and are presented as a component of the Company’s compensation and benefits accrual included in other long-term liabilities in the accompanying Consolidated Condensed Balance Sheets. Non-director participants may choose among alternative earning rates for the amounts they defer, which are primarily based on investment options within the Company’s 401(k) program. Changes in the deferred compensation liability under these programs are recognized based on changes in the fair value of the participants’ accounts, which are based on the applicable earnings rates. Amounts voluntarily deferred by directors and amounts unilaterally contributed to participant accounts by the Company are deemed invested in the Company’s common stock and future distributions of such contributions (as well as future distributions of any voluntary deferrals allocated at any time to the Danaher common stock investment option) will be made solely in shares of Company common stock, and therefore are not reflected in the above amounts.
Fair Value of Financial Instruments
The carrying amounts and fair values of the Company’s financial instruments were as follows ($ in millions):
  October 1, 2021 December 31, 2020
  Carrying Amount Fair Value Carrying Amount Fair Value
Assets:
Available-for-sale debt securities $ 21  $ 21  $ 27  $ 27 
Investment in equity securities 318  318  176  176 
Liabilities:
Cross-currency swap derivative contracts 133  133  622  622 
Notes payable and current portion of long-term debt 11  11 
Long-term debt 23,591  24,478  21,193  23,004 
As of October 1, 2021 and December 31, 2020, available-for-sale debt securities and cross-currency swap derivative contracts were categorized as Level 2 and short and long-term borrowings were categorized as Level 1.
The fair value of long-term borrowings was based on quoted market prices. The difference between the fair value and the carrying amounts of long-term borrowings (other than the Company’s Liquid Yield Option Notes due 2021 (the “LYONs”) prior to their redemption on January 22, 2021) is attributable to changes in market interest rates and/or the Company’s credit ratings subsequent to the incurrence of the borrowing. In the case of the LYONs, differences in the fair value from the carrying value were attributable to changes in the price of the Company’s common stock due to the LYONs’ conversion features. The fair values of borrowings with original maturities of one year or less, as well as cash and cash equivalents, trade accounts receivable, net and trade accounts payable approximate their carrying amounts due to the short-term maturities of these instruments.

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NOTE 7. FINANCING
As of October 1, 2021, the Company was in compliance with all of its debt covenants. The components of the Company’s debt were as follows ($ in millions):
October 1, 2021 December 31, 2020
Euro-denominated commercial paper (€1.2 billion and €500 million, respectively)
$ 1,392  $ 611 
U.S. dollar-denominated commercial paper 2,677  — 
Zero-coupon LYONs due 2021
—  24 
0.352% senior unsecured notes due 2021 (¥30.0 billion aggregate principal amount) (the “2021 Yen Notes”)
—  290 
Floating rate senior unsecured notes due 2022 (€250 million aggregate principal amount) (the “Floating Rate 2022 Euronotes”)
290  305 
2.05% senior notes due 2022 (the “2022 Biopharma Notes”)
699  698 
0.5% senior unsecured bonds due 2023 (CHF 540 million aggregate principal amount) (the “2023 CHF Bonds”)
581  611 
1.7% senior unsecured notes due 2024 (€900 million aggregate principal amount) (the “2024 Euronotes”)
1,039  1,096 
2.2% senior unsecured notes due 2024 (the “2024 Biopharma Notes”)
697  697 
2.5% senior unsecured notes due 2025 (€800 million aggregate principal amount) (the “2025 Euronotes”)
925  975 
3.35% senior unsecured notes due 2025 (the “2025 U.S. Notes”)
498  498 
0.2% senior unsecured notes due 2026 (€1.3 billion aggregate principal amount) (the “2026 Biopharma Euronotes”)
1,443  1,520 
2.1% senior unsecured notes due 2026 (€800 million aggregate principal amount) (the “2026 Euronotes”)
923  975 
0.3% senior unsecured notes due 2027 (¥30.8 billion aggregate principal amount) (the “2027 Yen Notes”)
277  297 
1.2% senior unsecured notes due 2027 (€600 million aggregate principal amount) (the “2027 Euronotes”)
692  729 
0.45% senior unsecured notes due 2028 (€1.3 billion aggregate principal amount) (the “2028 Biopharma Euronotes”)
1,440  1,518 
1.125% senior unsecured bonds due 2028 (CHF 210 million aggregate principal amount) (the “2028 CHF Bonds”)
229  241 
2.6% senior unsecured notes due 2029 (the “2029 Biopharma Notes”)
795  795 
2.5% senior unsecured notes due 2030 (€800 million aggregate principal amount) (the “2030 Euronotes”)
926  978 
0.75% senior unsecured notes due 2031 (€1.8 billion aggregate principal amount) (the “2031 Biopharma Euronotes”)
2,018  2,127 
0.65% senior unsecured notes due 2032 (¥53.2 billion aggregate principal amount) (the “2032 Yen Notes”)
478  514 
1.35% senior unsecured notes due 2039 (€1.3 billion aggregate principal amount) (the “2039 Biopharma Euronotes”)
1,433  1,511 
3.25% senior unsecured notes due 2039 (the “2039 Biopharma Notes”)
890  889 
4.375% senior unsecured notes due 2045 (the “2045 U.S. Notes”)
499  499 
1.8% senior unsecured notes due 2049 (€750 million aggregate principal amount) (the “2049 Biopharma Euronotes”)
860  907 
3.4% senior unsecured notes due 2049 (the “2049 Biopharma Notes”)
889  889 
2.6% senior unsecured notes due 2050 (the “2050 U.S. Notes”)
980  979 
Other 28  31 
Total debt 23,598  21,204 
Less: currently payable 11 
Long-term debt $ 23,591  $ 21,193 
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For additional details regarding the Company’s debt financing, refer to Note 11 of the Company’s financial statements as of and for the year ended December 31, 2020 included in the Company’s 2020 Annual Report.
The Company has historically satisfied short-term liquidity needs that are not met through operating cash flow and available cash primarily through issuances of commercial paper under its U.S. dollar and euro-denominated commercial paper programs. The Company’s $5.0 billion unsecured, multi-year revolving credit facility with a syndicate of banks that expires on August 24, 2024 (the “Five-Year Facility”), is available for direct borrowings and provides credit support for the commercial paper programs. For a description of the Five-Year Facility, refer to the Company’s 2020 Annual Report.
As of October 1, 2021, borrowings outstanding under the Company’s U.S. dollar and euro-denominated commercial paper program had a weighted average annual interest rate of negative 0.01% and a weighted average remaining maturity of approximately 22 days.
Debt discounts, premiums and debt issuance costs totaled $121 million and $132 million as of October 1, 2021 and December 31, 2020, respectively, and have been netted against the aggregate principal amounts of the related debt in the components of debt table above.
Guarantors of Debt
The Company has guaranteed long-term debt issued by certain of its wholly-owned subsidiaries. The Floating Rate 2022 Euronotes, 2025 Euronotes and 2027 Euronotes were issued by DH Europe Finance S.A. (“Danaher International”). The 2022 Biopharma Notes, 2024 Biopharma Notes, 2026 Biopharma Euronotes, 2028 Biopharma Euronotes, 2029 Biopharma Notes, 2031 Biopharma Euronotes, 2039 Biopharma Euronotes, 2039 Biopharma Notes, 2049 Biopharma Euronotes and 2049 Biopharma Notes were issued by DH Europe Finance II S.a.r.l. (“Danaher International II”). The 2023 CHF Bonds and 2028 CHF Bonds were issued by DH Switzerland Finance S.A. (“Danaher Switzerland”). The 2027 Yen Notes and 2032 Yen Notes were issued by DH Japan Finance S.A. (“Danaher Japan”). Each of Danaher International, Danaher International II, Danaher Switzerland and Danaher Japan are wholly-owned finance subsidiaries of Danaher Corporation. All of the outstanding and future securities issued by each of these entities are or will be fully and unconditionally guaranteed by the Company and these guarantees rank on parity with the Company’s unsecured and unsubordinated indebtedness.
LYONs Redemption
During the first quarter of 2021, holders of certain of the Company’s LYONs converted such LYONs into an aggregate of 912 thousand shares of the Company’s common stock, par value $0.01 per share. The Company’s deferred tax liability of $10 million associated with the book and tax basis difference in such converted LYONs was transferred to additional paid-in capital. The residual LYONS not converted into shares of the Company’s common stock were redeemed at face value on January 22, 2021.

NOTE 8. HEDGING TRANSACTIONS AND DERIVATIVE FINANCIAL INSTRUMENTS
The Company uses cross-currency swap derivative contracts to partially hedge its 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 agreements to exchange fixed-rate payments in one currency for fixed-rate payments in another currency. These contracts effectively convert U.S. dollar-denominated bonds to obligations denominated in Danish kroner, Japanese yen, euro and Swiss franc, and partially offset the impact of changes in currency rates on the Company’s foreign currency denominated net investments. These contracts also reduce the interest rate from the stated interest rates on the U.S. dollar-denominated debt to the interest rates of the swaps. The changes in the spot rate of these instruments are recorded in accumulated other comprehensive income (loss) in stockholders’ equity, partially offsetting the foreign currency translation adjustment of the Company’s related net investment that is also recorded in accumulated other comprehensive income (loss). Any ineffective portions of net investment hedges are reclassified from accumulated other comprehensive income (loss) into earnings during the period of change. The interest income or expense from these swaps are recorded in interest expense in the accompanying Consolidated Condensed Statements of Earnings consistent with the classification of interest expense attributable to the underlying debt. These instruments mature on dates ranging from September 2025 to October 2030.
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The Company also uses cross-currency swap derivative contracts to hedge U.S. dollar-denominated long-term debt issuances in a foreign subsidiary whose functional currency is the euro against adverse movements in exchange rates between the U.S. dollar and the euro. These contracts effectively convert these U.S. dollar-denominated bonds to obligations denominated in euro. The changes in the fair value of these instruments are recorded in accumulated other comprehensive income (loss) in stockholders’ equity, with a reclassification from accumulated other comprehensive income (loss) to net earnings to offset the remeasurement of the hedged debt that is also recorded in net earnings. Any ineffective portions of the cash flow hedges are reclassified from accumulated other comprehensive income (loss) into earnings during the period of change. The interest income or expense from these swaps are recorded in interest expense in the accompanying Consolidated Condensed Statements of Earnings consistent with the classification of interest expense attributable to the underlying debt. These instruments mature on dates ranging from November 2022 to November 2049.
The Company has also issued foreign currency denominated long-term debt as partial hedges of its net investments in foreign operations against adverse movements in exchange rates between the U.S. dollar and the euro, Japanese yen and Swiss franc. These foreign currency denominated long-term debt issuances are designated and qualify as nonderivative hedging instruments. Accordingly, the foreign currency translation of these debt instruments is recorded in accumulated other comprehensive income (loss) in stockholders’ equity, offsetting the foreign currency translation adjustment of the Company’s related net investment that is also recorded in accumulated other comprehensive income (loss). Any ineffective portions of net investment hedges are reclassified from accumulated other comprehensive income (loss) into earnings during the period of change. These instruments mature on dates ranging from June 2022 to May 2032.
The Company used interest rate swap agreements to hedge the variability in cash flows due to changes in benchmark interest rates related to a portion of the U.S. debt the Company issued to fund the Cytiva Acquisition. These contracts effectively fixed the interest rate for a portion of the Company’s U.S. dollar-denominated debt equal to the notional amount of the swaps to the rate specified in the interest rate swap agreements and were settled in November 2019. The changes in the fair value of these instruments were recorded in accumulated other comprehensive income (loss) in stockholders’ equity prior to the issuance of the debt and are subsequently being reclassified to interest expense over the life of the related debt.
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The following table summarizes the notional values as of October 1, 2021 and October 2, 2020 and pretax impact of changes in the fair values of instruments designated as net investment hedges and cash flow hedges in accumulated other comprehensive income (“OCI”) for the three and nine-month periods ended October 1, 2021 and October 2, 2020 ($ in millions):
Original Notional Amount Notional Amount Outstanding Gain (Loss) Recognized in OCI Amounts Reclassified from OCI
For the Three-Month Period Ended October 1, 2021:
Net investment hedges:
Foreign currency contracts $ 2,875  $ 2,000  $ 34  $ — 
Foreign currency denominated debt 4,864  4,864  52  — 
Cash flow hedges:
Foreign currency contracts 4,000  4,000  87  (90)
Interest rate swaps 850  —  — 
Total $ 12,589  $ 10,864  $ 173  $ (89)
For the Three-Month Period Ended October 2, 2020:
Net investment hedges:
Foreign currency contracts: $ 2,875  $ 2,000  $ (57) $ — 
Foreign currency denominated debt 6,619  6,619  (209) — 
Cash flow hedges:
Foreign currency contracts 4,000  4,000  (305) 166
Interest rate swaps 850  —  —  1
Total $ 14,344  $ 12,619  $ (571) $ 167 
For the Nine-Month Period Ended October 1, 2021:
Net investment hedges:
Foreign currency contracts $ 2,875  $ 2,000  $ 100  $ — 
Foreign currency denominated debt 4,864  4,864  236  — 
Cash flow hedges:
Foreign currency contracts 4,000  4,000  389  (207)
Interest rate swaps 850  —  — 
Total $ 12,589  $ 10,864  $ 725  $ (205)
For the Nine-Month Period Ended October 2, 2020:
Net investment hedges:
Foreign currency contracts: $ 2,875  $ 2,000  $ 10  $ — 
Foreign currency denominated debt 6,619  6,619  (242) — 
Cash flow hedges:
Foreign currency contracts 4,000  4,000  (8) 182 
Interest rate swaps 850  —  — 
Total $ 14,344  $ 12,619  $ (240) $ 184 
Gains or losses related to net investment hedges are classified as foreign currency translation adjustments in the schedule of changes in OCI in Note 1, as these items are attributable to the Company’s hedges of its net investment in foreign operations. Gains or losses related to the cash flow hedges and interest rate swaps are classified as cash flow hedge adjustments in the schedule of changes in OCI in Note 1. The amounts reclassified from other comprehensive income (loss) for the cross-currency swap derivative contracts that are cash flow hedges of the Company’s U.S. dollar-denominated debt was equal to the remeasurement amount recorded in the three and nine-month periods on the hedged debt.
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The Company did not reclassify any other deferred gains or losses related to net investment hedges or cash flow hedges from accumulated other comprehensive income (loss) to earnings during the three and nine-month periods ended October 1, 2021 and October 2, 2020. In addition, the Company did not have any ineffectiveness related to net investment hedges or cash flow hedges during the three and nine-month periods ended October 1, 2021 and October 2, 2020. The cash inflows and outflows associated with the Company’s derivative contracts designated as net investment hedges are classified in all other investing activities in the accompanying Consolidated Condensed Statements of Cash Flows. The cash inflows and outflows associated with the Company’s derivative contracts designated as cash flow hedges are classified in cash flows from operating activities in the accompanying Consolidated Condensed Statements of Cash Flows.
The Company’s derivative instruments, as well as its nonderivative debt instruments designated and qualifying as net investment hedges, were classified in the Company’s Consolidated Condensed Balance Sheets as follows ($ in millions):
October 1, 2021 December 31, 2020
Derivative liabilities:
Accrued expenses and other liabilities $ 133  $ 622 
Nonderivative hedging instruments:
Long-term debt 4,864  4,573 
Amounts related to the Company’s derivatives expected to be reclassified from accumulated other comprehensive income (loss) to net earnings during the next 12 months, if interest rates and foreign exchange rates remain unchanged, are not significant.

NOTE 9. DEFINED BENEFIT PLANS
The following sets forth the components of the Company’s net periodic benefit (cost) of the noncontributory defined benefit pension plans ($ in millions):
Three-Month Period Ended Nine-Month Period Ended
October 1, 2021 October 2, 2020 October 1, 2021 October 2, 2020
U.S. pension benefits:
Service cost $ —  $ —  $ —  $ — 
Interest cost (11) (17) (34) (51)
Expected return on plan assets 31  30  93  90 
Amortization of actuarial loss (12) (10) (34) (28)
Amortization of prior service cost (1) —  (1) (1)
Net periodic pension benefit $ $ $ 24  $ 10 
Non-U.S. pension benefits:
Service cost $ (11) $ (11) $ (33) $ (28)
Interest cost (5) (5) (15) (15)
Expected return on plan assets 10  32  27 
Amortization of actuarial loss (2) (2) (8) (7)
Amortization of prior service credit — 
Curtailment and settlement gains (losses) recognized (1) —  (1) — 
Net periodic pension cost $ (8) $ (9) $ (24) $ (22)
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The following sets forth the components of the Company’s net periodic benefit cost of the other postretirement employee benefit plans ($ in millions):
  Three-Month Period Ended Nine-Month Period Ended
  October 1, 2021 October 2, 2020 October 1, 2021 October 2, 2020
Service cost $ —  $ —  $ —  $ — 
Interest cost (1) (1) (2) (3)
Amortization of actuarial loss (1) —  (2) — 
Amortization of prior service credit — 
Net periodic cost $ (1) $ (1) $ (2) $ (2)
The net periodic benefit cost of the noncontributory defined benefit pension plans and other postretirement employee benefit plans incurred during the three and nine-month periods ended October 1, 2021 and October 2, 2020 are reflected in the following captions in the accompanying Consolidated Condensed Statements of Earnings ($ in millions):
  Three-Month Period Ended Nine-Month Period Ended
  October 1, 2021 October 2, 2020 October 1, 2021 October 2, 2020
Service cost:
Cost of sales $ (1) $ (3) $ (5) $ (7)
Selling, general and administrative expenses (10) (8) (28) (21)
Total service cost (11) (11) (33) (28)
Other net periodic benefit costs:
Other income (expense), net 31  14 
Total expense $ (2) $ (7) $ (2) $ (14)
Employer Contributions
During 2021, the Company’s cash contribution requirements for its non-U.S. defined benefit pension plans are forecasted to be approximately $50 million. The Company is forecasting no cash contributions for its U.S. defined benefit pension plan in 2021. The ultimate amounts to be contributed depend upon, among other things, legal requirements, underlying asset returns, the plan’s funded status, the anticipated tax deductibility of the contribution, local practices, market conditions, interest rates and other factors.

NOTE 10. INCOME TAXES
The following table summarizes the Company’s effective tax rate:
Three-Month Period Ended Nine-Month Period Ended
October 1, 2021 October 2, 2020 October 1, 2021 October 2, 2020
Effective tax rate 16.5  % 13.5  % 17.3  % 18.5  %
The effective tax rate for the three-month period ended October 1, 2021 differs from the U.S. federal statutory rate of 21.0% principally due to net discrete benefits of $23 million related primarily to excess tax benefits from stock-based compensation, audit settlements and a higher tax benefit associated with the pretax expense in the quarter related to the modification and partial termination of a commercial arrangement and resolution of the associated litigation. These factors reduced the effective tax rate by 3.2% for the three-month period ended October 1, 2021.
The effective tax rate for the nine-month period ended October 1, 2021 differs from the U.S. federal statutory rate of 21.0% principally due to net discrete benefits of $143 million 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 expense 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. These factors reduced the effective tax rate by 2.9% for the nine-month period ended October 1, 2021.
The effective tax rate for the three-month period ended October 2, 2020 differs from the U.S. federal statutory rate of 21.0% principally due to net discrete benefits related primarily to the release of reserves for uncertain tax positions from audit settlements and the expiration of statutes of limitation, excess tax benefits from stock-based compensation and other items. These factors reduced the effective tax rate by 6.1% for the three-month period ended October 2, 2020.
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The effective tax rate for the nine-month period ended October 2, 2020 differs from the U.S. federal statutory rate of 21.0% principally due to the release of reserves for uncertain tax positions from audit settlements and expiration of statutes of limitation and excess tax benefits from stock-based compensation, partially offset by a higher tax rate associated with the gain on the divestiture of certain product lines in the Life Sciences segment in the second quarter of 2020 and changes in estimates associated with prior period uncertain tax positions. These factors reduced the effective tax rate by 1.1% for the nine-month period ended October 2, 2020.
For a description of the tax provision for discontinued operations, refer to Note 4 to the Consolidated Condensed Financial Statements.
For a description of the Company’s significant tax matters, reference is made to the financial statements as of and for the year ended December 31, 2020 and Note 15 thereto included in the Company’s 2020 Annual Report.
Tax authorities in Denmark have issued tax assessments related to interest accrued by certain of the Company’s subsidiaries for the years 2004 through 2015. During the first quarter of 2021, the Company received a notice from the Danish tax authorities that included a reduction in the interest amounts imposed in the original tax assessments. Taking into account the revised interest amounts, the assessments total approximately DKK 2.1 billion including interest accrued to date (approximately $328 million based on the exchange rate as of October 1, 2021). The Company’s appeal of the original assessments with the Danish National Tax Tribunal has been put on hold awaiting the final outcome of other preceding withholding tax cases that are to be heard by the Danish High Court. Management believes the positions the Company has taken in Denmark are in accordance with the relevant tax laws and is vigorously defending its positions. The Company intends on pursuing this matter through the Danish High Court should the appeal to the Danish National Tax Tribunal be unsuccessful. While the ultimate resolution of this matter is uncertain and could take many years, taking into account the notice reducing the interest amounts and tax payments previously made related to these assessments, the Company does not expect the resolution of this matter will have a future material adverse impact to the Company’s financial statements, including its cash flow and effective tax rate.

NOTE 11. OTHER OPERATING EXPENSES
Effective July 24, 2021, the Company’s indirect, wholly-owned subsidiary, Beckman Coulter, Inc. (“Beckman”), entered into a series of related agreements with Quidel Corporation and a subsidiary thereof (“Quidel”) to resolve litigation that Beckman initiated against Quidel and to modify and partially terminate the related prior commercial arrangement. Pursuant to the related agreements, the dispute regarding Beckman’s ability to compete in B-type Naturietic Peptide (“BNP”) test related activities has been settled, allowing Beckman to research, develop, manufacture and distribute BNP type tests. Beckman’s commitment to supply certain BNP test kits to Quidel has also been terminated. Beckman also obtained the right to distribute and sell the BNP assay currently sold by Quidel. As consideration under the agreements, Beckman will pay Quidel predominantly fixed payments of approximately $75 million per year through 2029 (subject to proration in 2021). The Company engaged a third-party valuation specialist to assist in determining the value of the elements of the transaction. The present value of the payments to Quidel is estimated to be $581 million, of which $547 million was recorded as a pretax contract settlement expense primarily due to the unfavorable nature of the prior arrangement (consisting of a cash charge of $5 million and a noncash charge of $542 million) in the third quarter of 2021 related to the modification and partial termination of the prior commercial arrangement and resolution of the associated litigation. The Company also capitalized $34 million in intangible assets, comprised of proprietary technology, customer relationships and the use of a trade name acquired in the settlement, which represent a noncash investing activity. Due to the extended payment terms of the arrangement, the arrangement represents a noncash financing activity of $576 million. Over the period of the arrangement, the cash payments related to servicing the obligation due to Quidel will be recorded as cash outflows from financing activities and the payments related to the imputed interest on the obligation due to Quidel will be recorded as cash outflows from operating activities in the Consolidated Condensed Statement of Cash Flows.

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NOTE 12. OTHER INCOME (EXPENSE), NET
The following sets forth the components of the Company’s other income (expense), net:
Three-Month Period Ended Nine-Month Period Ended
October 1, 2021 October 2, 2020 October 1, 2021 October 2, 2020
Other components of net periodic benefit costs
$ $ $ 31  $ 14 
Investment gains (losses):
Realized investment gains (losses) 10  —  48  — 
Unrealized investment gains (losses) 118  282  (10)
Total investment gains (losses) 128  330  (10)
Gain on sale of product lines —  —  13  455 
Total other income (expense), net $ 137  $ $ 374  $ 459 
Other Components of Net Periodic Benefit Costs
The Company disaggregates the service cost component of net periodic benefit costs of the noncontributory defined benefit pension plans and other postretirement employee benefit plans and presents the other components of net periodic benefit cost in other income (expense), net. These other components of net periodic benefit costs include the assumed rate of return on plan assets, partially offset by amortization of actuarial losses and interest.
Investment Gains (Losses)
The Company estimates the fair value of its investments in equity securities using the Fair Value Alternative and records adjustments to fair value within net earnings. Additionally, the Company is a limited partner in partnerships that invest primarily in early-stage companies. While the partnerships record these investments at fair value, the Company’s investments in the partnerships are accounted for under the equity method of accounting. The investment gains (losses) include realized and unrealized gains and losses related to changes in the fair value of the Company’s investments in equity securities and the Company’s equity in earnings of the partnerships that reflect the changes in fair value of the investments of the partnerships.
Gain on Sale of Product Lines
During the first quarter of 2021, the Company divested certain product lines for a cash purchase price, net of cash transferred and transaction costs, of $26 million and recognized a pretax gain on sale of $13 million ($10 million after-tax). The divested product lines generated revenues of approximately $88 million in the Environmental & Applied Solutions segment in 2020. The divestiture of these product lines did not represent a strategic shift with a major effect on the Company’s operations and financial results and therefore is not reported as a discontinued operation.
As a condition to obtaining certain regulatory approvals for the closing of the Cytiva Acquisition, the Company was required to divest certain of its existing product lines in the Life Sciences segment that in the aggregate generated revenues of approximately $170 million in 2019. On April 30, 2020, the Company completed the sale of the majority of these product lines for a cash purchase price, net of cash transferred and transaction costs, of $826 million and recognized a pretax gain on sale of $455 million ($305 million after tax). The divestiture of these product lines did not represent a strategic shift with a major effect on the Company’s operations and financial results and therefore is not reported as a discontinued operation.

NOTE 13. COMMITMENTS AND CONTINGENCIES
The Company reviews the adequacy of its legal reserves on a quarterly basis and establishes reserves for loss contingencies that are both probable and reasonably estimable. For a further description of the Company’s litigation and contingencies, refer to Note 18 of the Company’s financial statements as of and for the year ended December 31, 2020 included in the Company’s 2020 Annual Report.
The Company generally accrues estimated warranty costs at the time of sale. In general, manufactured products are warranted against defects in material and workmanship when properly used for their intended purpose, installed correctly and appropriately maintained. Warranty periods depend on the nature of the product and range from the date of such sale up to ten years. The amount of the accrued warranty liability is determined based on historical information such as past experience, product failure rates or number of units repaired, estimated cost of material and labor and in certain instances estimated property damage. The accrued warranty liability is reviewed on a quarterly basis and may be adjusted as additional information regarding expected warranty costs becomes known.
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The following is a rollforward of the Company’s accrued warranty liability ($ in millions):
Balance, December 31, 2020 $ 86 
Accruals for warranties issued during the period 41 
Settlements made (34)
Effect of foreign currency translation (1)
Balance, October 1, 2021 $ 92 

NOTE 14. STOCK TRANSACTIONS AND STOCK-BASED COMPENSATION
Neither the Company nor any “affiliated purchaser” repurchased any shares of Company common stock during the nine-month period ended October 1, 2021. On July 16, 2013, the Company’s Board of Directors approved a repurchase program (the “Repurchase Program”) authorizing the repurchase of up to 20 million shares of the Company’s common stock from time to time on the open market or in privately negotiated transactions. As of October 1, 2021, 20 million shares remained available for repurchase pursuant to the Repurchase Program.
The following table summarizes the Company’s share activity (shares in millions):
Three-Month Period Ended Nine-Month Period Ended
October 1, 2021 October 2, 2020 October 1, 2021 October 2, 2020
Preferred stock - shares issued:
Balance, beginning of period 3.4  3.4  3.4  1.7 
Issuance of MCPS —  —  —  1.7 
Balance, end of period 3.4  3.4  3.4  3.4 
Common stock - shares issued:
Balance, beginning of period 854.4  849.5  851.3  835.5 
Common stock-based compensation awards 0.8  1.1  3.0  3.9 
Common stock issued in connection with LYONs’ conversions —  —  0.9  0.3 
Issuance of common stock —  —  —  10.9 
Balance, end of period 855.2  850.6  855.2  850.6 
In May 2020, the Company completed the underwritten public offering of 10.9 million shares of Danaher common stock at a price to the public of $163.00 per share (the “2020 Common Stock Offering”), resulting in net proceeds of approximately $1.73 billion, after deducting expenses and the underwriters’ discount of $54 million. Simultaneously, the Company completed the underwritten public offering of 1.72 million shares of its 5.0% Series B Mandatory Convertible Preferred Stock (“MCPS Series B”), without par value and with a liquidation preference of $1,000 per share (the “2020 MCPS Offering”), resulting in net proceeds of approximately $1.67 billion, after deducting expenses and the underwriters’ discount of $49 million. The Company has used the net proceeds from the 2020 Common Stock Offering and the 2020 MCPS Offering for general corporate purposes.
In March 2019, the Company completed the underwritten public offering of 1.65 million shares of its 4.75% MCPS Series A, without par value and with a liquidation preference of $1,000 per share.
Unless converted earlier in accordance with the terms of the applicable certificate of designations, each share of MCPS Series A and MCPS Series B (together, the “MCPS Shares”) will mandatorily convert on their respective Mandatory Conversion Date, set forth below, into a number of shares of the Company’s common stock between the applicable Minimum Conversion Rate and the applicable Maximum Conversion Rate, set forth below, subject to further anti-dilution adjustments. The number of shares of the Company’s common stock issuable upon conversion will be determined based on the average volume-weighted average price 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 the applicable Mandatory Conversion Date. Subject to certain exceptions, at any time prior to the Mandatory Conversion Date, holders may elect to convert the MCPS Shares into common stock based on the applicable Minimum Conversion Rate, subject to further anti-dilution adjustments. In the event of a fundamental change, the MCPS Shares will convert at the fundamental change rates specified in the applicable certificate of designations, and the holders of MCPS Shares would be entitled to a fundamental change make-whole dividend. In the third quarter of 2021, 20 shares of MCPS Series A were converted into 133 shares of Danaher common stock.
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Holders of MCPS Shares will be entitled to receive, when and if declared by the Company’s Board of Directors, cumulative dividends at the applicable Annual Cumulative Dividend Rate of the Liquidation Preference per share, payable in cash or, subject to certain limitations, by delivery of shares of the Company’s common stock or any combination of cash and shares of the Company’s common stock, at the Company’s election. If declared, dividends on the MCPS Shares are payable quarterly on January 15, April 15, July 15 and October 15 of each year (to, and including, the Mandatory Conversion Date), to the holders of record of the MCPS Shares as they appear on the Company’s stock register at the close of business on the immediately preceding December 31, March 31, June 30 and September 30, respectively.
The following summarizes the key terms of the MCPS Shares:
Annual Cumulative Dividend Rate Liquidation Preference per share Minimum Conversion Rate Maximum Conversion Rate Mandatory Conversion Date
Series A 4.75  % $ 1,000  6.6601 shares 8.1585 shares April 15, 2022
Series B 5.00  % $ 1,000  5.0098 shares 6.1370 shares April 15, 2023
For a full description of the Company’s stock-based compensation programs, refer to Note 19 of the Company’s financial statements as of and for the year ended December 31, 2020 included in the Company’s 2020 Annual Report. As of October 1, 2021, approximately 50 million shares of the Company’s common stock were reserved for issuance under the 2007 Omnibus Incentive Plan.
The following summarizes the components of the Company’s stock-based compensation expense ($ in millions):
  Three-Month Period Ended Nine-Month Period Ended
  October 1, 2021 October 2, 2020 October 1, 2021 October 2, 2020
Restricted stock units (“RSUs”)/performance stock units (“PSUs”):
Pretax compensation expense $ 31  $ 27  $ 95  $ 83 
Income tax benefit (6) (5) (19) (17)
RSU/PSU expense, net of income taxes 25  22  76  66 
Stock options:
Pretax compensation expense 21  18  64  54 
Income tax benefit (4) (4) (13) (11)
Stock option expense, net of income taxes 17  14  51  43 
Total stock-based compensation:
Pretax compensation expense 52  45  159  137 
Income tax benefit (10) (9) (32) (28)
Total stock-based compensation expense, net of income taxes $ 42  $ 36  $ 127  $ 109 
Stock-based compensation has been recognized as a component of selling, general and administrative expenses in the accompanying Consolidated Condensed Statements of Earnings. As of October 1, 2021, $211 million of total unrecognized compensation cost related to RSUs/PSUs is expected to be recognized over a weighted average period of approximately two years. As of October 1, 2021, $225 million of total unrecognized compensation cost related to stock options is expected to be recognized over a weighted average period of approximately three years. Future compensation amounts will be adjusted for any changes in estimated forfeitures.

NOTE 15. NET EARNINGS PER COMMON SHARE FROM CONTINUING OPERATIONS
Basic net earnings per common share from continuing operations (“EPS”) is calculated by taking net earnings fr