Danaher Reports Third Quarter 2020 Results
WASHINGTON, Oct. 22, 2020 /PRNewswire/ -- Danaher Corporation (NYSE: DHR) (the "Company") today announced results for the quarter ended October 2, 2020. All results in this release reflect only continuing operations unless otherwise noted.
For the third quarter 2020, net earnings were $883.5 million, or $1.16 per diluted common share which represents a 38.0% year-over-year increase from the comparable 2019 period.
Non-GAAP adjusted diluted net earnings per common share were $1.72 which represents a 62.0% increase over the comparable 2019 period. Revenues increased 34.5% year-over-year to $5.9 billion, with 14.0% non-GAAP core revenue growth including Cytiva.
Operating cash flow for the third quarter 2020 was $1.7 billion, representing a 93.0% increase year-over-year, and non-GAAP free cash flow was $1.5 billion, representing a 110.0% increase year-over-year.
For the fourth quarter 2020 the Company anticipates that non-GAAP core revenue growth including Cytiva will be in the low-double digit range.
Rainer M. Blair, President and Chief Executive Officer, stated, "We delivered outstanding third quarter results, achieving double-digit revenue growth, over 60% adjusted EPS growth, and we more than doubled our free cash flow year-over-year. Since the onset of the COVID-19 pandemic, our team has turned unprecedented challenges into impactful opportunities to support our customers and the global community, and we're proud to play a pivotal role in tackling COVID-19 head-on."
Blair continued, "Our performance is a testament to our associates' dedication, as they stay focused on executing for our customers during the pandemic. With the Danaher Business System as our driving force and the powerful combination of our innovative team, strong portfolio of businesses, and solid balance sheet, we believe Danaher will continue to outperform well into the future."
Danaher will discuss its results during its quarterly investor conference call on October 22, 2020 starting at 8:00 a.m. ET. The call and an accompanying slide presentation will be webcast on the "Investors" section of Danaher's website, www.danaher.com, under the subheading "Events & Presentations." A replay of the webcast will be available in the same section of Danaher's website shortly after the conclusion of the presentation and will remain available until the next quarterly earnings call.
The conference call can be accessed by dialing 866-503-8675 within the U.S. or by dialing +1 786-815-8792 outside the U.S. a few minutes before the 8:00 a.m. ET start and telling the operator that you are dialing in for Danaher's earnings conference call (access code 6799891). A replay of the conference call will be available shortly after the conclusion of the call and until November 5, 2020. 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 67,000 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 statements regarding the Company's anticipated fourth quarter and future financial performance, the Company's contributions to the response to the COVID-19 pandemic, the positioning of the Company's portfolio 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, Danaher's ability to successfully integrate the operations and employees of the Biopharma business Danaher acquired from General Electric Company (now known as Cytiva) with Danaher's existing business, the ability to realize anticipated financial, tax and operational synergies and benefits from such acquisition, Cytiva's performance and maintenance of important business relationships, the impact of our debt obligations (including the debt incurred to finance the acquisition of Cytiva) 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), developments and uncertainties in U.S. policy stemming from the U.S. administration, such as changes in U.S. trade and tariff policies and the reaction of other countries thereto, contractions or growth rates and cyclicality of markets we serve, competition, our ability to develop and successfully market new products and technologies and expand into new markets, the potential for improper conduct by our employees, agents or business partners, our compliance with applicable laws and regulations (including regulations relating to medical devices and the health care industry), the results of our clinical trials and perceptions thereof, our ability to effectively address cost reductions and other changes in the health care industry, our ability to successfully identify and consummate appropriate acquisitions and strategic investments and successfully complete divestitures and other dispositions, our ability to integrate the businesses we acquire and achieve the anticipated benefits of such acquisitions, contingent liabilities relating to acquisitions, investments and divestitures (including tax-related and other contingent liabilities relating to past and future IPOs, split-offs or spin-offs), security breaches or other disruptions of our information technology systems or violations of data privacy laws, the impact of our restructuring activities on our ability to grow, risks relating to potential impairment of goodwill and other intangible assets, currency exchange rates, tax audits and changes in our tax rate and income tax liabilities, changes in tax laws applicable to multinational companies, litigation and other contingent liabilities including intellectual property and environmental, health and safety matters, the rights of the United States government to use, disclose and license certain intellectual property we license if we fail to commercialize it, risks relating to product, service or software defects, product liability and recalls, risks relating to product manufacturing, our relationships with and the performance of our channel partners, uncertainties relating to collaboration arrangements with third-parties, commodity costs and surcharges, our ability to adjust purchases and manufacturing capacity to reflect market conditions, reliance on sole sources of supply, the impact of deregulation on demand for our products and services, labor matters, international economic, political, legal, compliance and business factors (including the impact of the United Kingdom's separation from the EU and uncertainty relating to the terms of such separation), 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 2019 Annual Report on Form 10-K and our first, second and third quarter 2020 Quarterly Reports on Form 10-Q. These forward-looking statements speak only as of the date of this release and except to the extent required by applicable law, the Company does not assume any obligation to update or revise any forward-looking statement, whether as a result of new information, future events and developments or otherwise.
DANAHER CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS (unaudited)
($ and shares in millions, except per share amounts)
Three-Month Period Ended Nine-Month Period Ended
October 2, 2020 September 27, 2019 October 2, 2020 September 27, 2019
Sales $
5,883.2 $
4,378.0 $
15,523.7 $
13,042.7
Cost of sales (2,657.7) (1,936.6) (7,002.8) (5,762.6)
Gross profit 3,225.5 2,441.4 8,520.9 7,280.1
Operating costs:
Selling, general and
administrative expenses (1,795.3) (1,382.5) (4,939.0) (4,140.2)
Research and development
expenses (342.6) (282.6) (952.2) (832.2)
Operating profit 1,087.6 776.3 2,629.7 2,307.7
Nonoperating income (expense):
Other (expense) income,
net 6.4 4.2 4.2 14.3
Gain on sale of product
lines - 454.6
Interest expense (76.7) (24.0) (202.7) (64.2)
Interest income 4.2 30.1 67.7 72.0
Earnings from continuing
operations before income
taxes 1,021.5 786.6 2,953.5 2,329.8
Income taxes (138.0) (155.9) (547.6) (690.4)
Net earnings from
continuing operations 883.5 630.7 2,405.9 1,639.4
Earnings from
discontinued operations,
net of income taxes - 37.3 93.7
Net earnings 883.5 668.0 2,405.9 1,733.1
Mandatory convertible
preferred stock
dividends (41.1) (19.6) (95.3) (48.8)
Net earnings attributable
to common stockholders $
842.4 $
648.4 $
2,310.6 $
1,684.3
Net earnings per common share from
continuing operations:
Basic $
1.18 $
0.85 $
3.28 (a) $
2.23
Diluted $
1.16 $
0.84 $
3.22 $
2.20
Net earnings per common share from
discontinued operations:
Basic
$ $
0.05
$ $
0.13
Diluted
$ $
0.05
$ $
0.13
Net earnings per common share:
Basic $
1.18 $
0.90 $
3.28 (a) $
2.36
Diluted $
1.16 $
0.89 $
3.22 $
2.32 (b)
Average common stock and common equivalent
shares outstanding:
Basic 710.9 718.8 704.4 714.7
Diluted 724.3 729.3 716.8 725.2
(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.
(b) Net earnings per
common share does not
add 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 2, 2020 September 27, 2019 October 2, 2020 September 27, 2019
---
Diluted Net Earnings Per Common
Share from Continuing Operations
(GAAP) $
1.16 $
0.84 $
3.22 $
2.20
Pretax amortization of acquisition-
related intangible assets A 0.45 0.21 1.09 0.64
Pretax acquisition-related fair
value adjustments to inventory and
deferred revenue, incremental
transaction costs deemed
significant and integration
preparation costs, in each case
related to the acquisition of
Cytiva B 0.31 0.04 0.71 0.09
Pretax impairment charges related
to a facility in the Diagnostics
segment in the first quarter of
2020, trade name and other
intangible assets in the
Environmental & Applied Solutions
segment in the first quarter of
2020 and trade names in the
Environmental & Applied Solutions
segment in the third quarter of
2020 C 0.02 0.03
Pretax fair value adjustments and
losses on the Company's equity and
limited partnership investments D - 0.02
Gain on the sale of certain product
lines in the Life Sciences segment
in the second quarter of 2020 E - (0.62)
Tax effect of all adjustments
reflected above F (0.16) (0.04) (0.16) (0.13)
Discrete tax adjustments and other
tax-related adjustments G (0.08) (0.12) 0.31
Declared dividends on the MCPS
assuming "if-converted" method H 0.02 0.01 0.06 0.03
Adjusted Diluted Net Earnings Per
Common Share from Continuing
Operations (Non-GAAP) $
1.72 $
1.06 $
4.23 $
3.14
(1) Each of the per share amounts
above have been calculated
assuming the Mandatory
Convertible Preferred Stock
("MCPS") had been converted
into shares of common stock.
Adjusted Diluted Shares Outstanding
---
Three-Month Period Ended Nine-Month Period Ended
October 2, 2020 September 27, 2019 October 2, 2020 September 27, 2019
---
(shares in millions)
Average common
stock and
common
equivalent
shares
outstanding -
diluted 724.3 729.3 716.8 725.2
Converted
shares (2) 19.6 11.6 16.3 9.3
Adjusted
average common
stock and
common
equivalent
shares
outstanding -
diluted 743.9 740.9 733.1 734.5
(2) 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 $205.90 and $142.26 as of
October 2, 2020 and September
27, 2019, respectively.
See the accompanying Notes to Reconciliation of GAAP to Non-GAAP Financial Measures
Core Sales Growth and Core Sales Growth Including Cytiva
---
% Change Three- % Change Nine-
Month Period Ended Month Period Ended
October 2, 2020 vs. October 2, 2020 vs.
Comparable 2019 Comparable 2019
Period Period
---
Total sales growth (GAAP) 34.5 19.0
% %
Impact of:
Acquisitions/divestitures (24.5) (15.5)
% %
Currency exchange rates (1.0)
% 1.0
%
---
Core sales growth (non-GAAP) 9.0
% 4.5
%
Impact of Cytiva sales growth (net of divested
product lines) 5.0
% 3.0
%
---
Core sales growth including Cytiva (non-GAAP) 14.0
% 7.5
%
===
Forecasted Core Sales Growth and Core Sales Growth Including Cytiva
---
% Change Three-Month Period Ending December
31, 2020 vs. Comparable 2019 Period
Core
sales
growth
(non-
GAAP)
+High-single digit
Impact of
Cytiva
sales
growth
(net of
divested
product
lines)
~300-400 bps
Core
sales
growth
including
Cytiva
(non-
GAAP)
+Low-double digit
See the accompanying Notes to Reconciliation of GAAP to Non-GAAP Financial Measures
Reconciliation of Operating Cash Flows from Continuing Operations (GAAP) to Free Cash Flow from Continuing Operations (Non-GAAP)
---
Three-Month Period Ended
Year-over-Year
Change
October 2, 2020 September 27, 2019
Cash Flows from (used in) Continuing
Operations ($ in millions):
---
Operating Cash Flows from
Continuing Operations
(GAAP) $
1,722.7 $
892.6
Investing Cash Flows used
in Continuing Operations
(GAAP) $
(328.4) $
(223.9)
Financing Cash Flows
(used in) from
Continuing Operations
(GAAP) $
(1,319.8) $
8,127.7
Free Cash Flow from Continuing Operations
($ in millions):
---
Operating Cash Flows from
Continuing Operations
(GAAP) $
1,722.7 $
892.6 ~ 93.0%
Less: payments for
additions to property,
plant and equipment
(capital expenditures)
from continuing
operations (GAAP) (187.3) (162.1)
Plus: proceeds from sales
of property, plant and
equipment (capital
disposals) from
continuing operations
(GAAP) 0.6 0.8
Free Cash Flow from
Continuing Operations
(Non-GAAP) $
1,536.0 $
731.3 ~ 110.0%
Ratio of Free Cash Flow from Continuing
Operations to Net Earnings from
Continuing Operations ($ in millions):
---
Free Cash Flows from
Continuing Operations
from Above (GAAP) $
1,536.0 $
731.3
Net Earnings from
Continuing Operations
(GAAP) 883.5 630.7
Free Cash Flow from
Continuing Operations to
Net Earnings from
Continuing Operations
Conversion Ratio (Non-
GAAP) 1.74 1.16
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").
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 2, 2020 September 27, 2019 October 2, 2020 September 27, 2019
Pretax $
331.1 $
155.6 $
801.6 $
469.3
After-tax 265.7 126.1 644.5 379.0
B Pretax costs incurred for fair value
adjustments to inventory and
deferred revenue related to the
acquisition of Cytiva in the three-
month period ended October 2, 2020
($232 million pretax as reported in
this line item, $181 million after-
tax) and fair value adjustments to
inventory and deferred revenue,
transaction costs deemed significant
and integration preparation costs
related to the acquisition of Cytiva
for the nine-month period ended
October 2, 2020 ($519 million pretax
as reported in this line item, $411
million after-tax). Pretax costs
incurred for transaction costs
deemed significant and integration
preparation costs related to the
acquisition of Cytiva for the three-
month period ended September 27,
2019 ($30 million pretax as reported
in this line item, $28 million
after-tax) and the nine-month
period ended September 27, 2019 ($63
million pretax as reported in this
line item, $57 million after-tax).
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 Pretax 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 pretax
impairment charges related to a
facility in the Diagnostics segment
and 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 Pretax fair value adjustments and
losses on the Company's equity and
limited partnership investments
recorded in the nine-month period
ended October 2, 2020 ($13 million
pretax as reported in this line
item, $10 million after-tax,
respectively).
E Pretax gain on the sale of certain
product lines in the Life Sciences
segment in the nine-month period
ended October 2, 2020 ($455 million
pretax as reported in this line
item, $305 million after-tax).
F 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.
G 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 gains 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
due to audit settlements and
expiration of statutes of
limitation, and excess tax benefits
from stock-based compensation.
Discrete tax adjustments and other
tax-related adjustments for the
nine-month period ended September
27, 2019 includes the impact of net
discrete tax charges of $227 million
(or $0.31 per diluted common share).
The discrete tax matters for the
nine-month period ended September
27, 2019 relate primarily to changes
in estimates associated with prior
period uncertain tax positions and
audit settlements, net of the
release of valuation allowances
associated with certain foreign tax
credits and tax benefits resulting
from a change in law and excess tax
benefits from stock-based
compensation realized in the nine-
month period ended September 27,
2019 in excess of anticipated
levels. The Company anticipates
excess tax benefits from stock
compensation of approximately $7
million per quarter and therefore
excludes benefits in excess of this
amount in the calculation of
Adjusted Diluted Net Earnings Per
Common Share from Continuing
Operations.
H In March 2019, the Company issued
$1.65 billion in aggregate
liquidation preference of 4.75%
MCPS. In May 2020. the Company
issued $1.72 billion in aggregate
liquidation preference of 5.0% MCPS.
Dividends on the 4.75% and 5.0%
MCPS 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 4.75% MCPS will
automatically convert on April 15,
2022 into between 6.6556 and 8.1530
shares of Danaher's common stock,
subject to further anti-dilution
adjustments. Unless earlier
converted, each share of 5.0% MCPS
will automatically convert on April
15, 2023 into between 5.0081 and
6.1349 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
4.75% and 5.0% MCPS, respectively.
For the purposes of calculating
adjusted earnings per share, 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 are referred to as
the "Converted Shares".)
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 from continuing operations, 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 (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 from continuing operations 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 divested product lines and also adding the Cytiva sales to the current period.
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:
-- 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.
-- 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.
-- 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.
-- 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 4.75% and 5.0% MCPS, respectively, (unless
converted or redeemed earlier in accordance with the terms of the
applicable certificate of designations). On the prior pages, we
present the earnings per share-related measures on a basis which
assumes the MCPS had already been converted as of the beginning of
the applicable period (and accordingly also exclude the dividends
that were actually paid on the MCPS during such period, since such
dividends would no longer be paid once the MCPS convert). 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 from continuing operations and core sales
from continuing operations including Cytiva, (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 from continuing operations including Cytiva) 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 from continuing operations and forecasted core sales from continuing operations including Cytiva, 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
