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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the fiscal year ended December 31, 2018
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the transition period from to
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Delaware
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59-1995548
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(State or Other Jurisdiction of
Incorporation or Organization)
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(I.R.S. Employer
Identification Number)
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2200 Pennsylvania Ave. N.W., Suite 800W
Washington, D.C.
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20037-1701
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(Address of Principal Executive Offices)
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(Zip Code)
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Title of Each Class
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Name of Each Exchange On Which Registered
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Common Stock $.01 par value
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New York Stock Exchange
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€600,000,000 1.000% Senior Notes due 2019
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New York Stock Exchange
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€250,000,000 Floating Rate Senior Notes due 2022
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New York Stock Exchange
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€800,000,000 1.700% Senior Notes due 2022
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New York Stock Exchange
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€800,000,000 2.500% Senior Notes due 2025
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New York Stock Exchange
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€600,000,000 1.200% Senior Notes due 2027
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New York Stock Exchange
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Large accelerated filer
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Accelerated filer
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Non-accelerated filer
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Smaller reporting company
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Emerging growth company
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Item 1.
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enhancing its portfolio in attractive science and technology markets through strategic capital allocation;
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strengthening its competitive advantage through consistent application of the DANAHER BUSINESS SYSTEM (“DBS”) tools; and
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consistently attracting and retaining exceptional talent.
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Life Sciences
. The Company’s life sciences technologies facilitate the process of drug discovery, development, regulatory validation and production and are sold to biopharmaceutical, food and beverage and medical customers. In the biopharmaceutical area, the business sells a broad line of filtration and purification technologies, single use bioreactors and associated accessories, hardware and engineered systems primarily to pharmaceutical and biopharmaceutical companies for use in the development and commercialization of chemically synthesized and biologically derived drugs, plasma and vaccines. Biotechnology drugs, plasma and biologically derived vaccines in particular are filtration and purification intensive and represent a significant opportunity for growth for Pall in the
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Industrial
. Virtually all of the raw materials, process fluids and waste streams that flow through industry are candidates for multiple stages of filtration, separation and purification. In addition, most of the machines used in complex production processes require filtration to protect sensitive parts from degradation due to contamination. Pall’s industrial technologies enhance the quality and efficiency of manufacturing processes and prolong equipment life in applications such as semiconductor equipment, airplanes, oil refineries, power generation turbines, petrochemical plants, municipal water plants and mobile mining equipment. Within these end-markets, demand is driven by end-users and original equipment manufacturers (“OEM”) seeking to improve product performance, increase production and efficiency, reduce operating costs, extend the life of their equipment, conserve water and meet environmental regulations.
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chemistry systems use electrochemical detection and chemical reactions with patient samples to detect and quantify substances of diagnostic interest in blood, urine and other body fluids. Commonly performed tests include glucose, cholesterol, triglycerides, electrolytes, proteins and enzymes, as well as tests to detect urinary tract infections and kidney and bladder disease.
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immunoassay systems also detect and quantify biochemicals of diagnostic interest (such as proteins and hormones) in body fluids, particularly in circumstances where more specialized diagnosis is required. Commonly performed immunoassay tests assess thyroid function, screen and monitor for cancer and cardiac risk and provide important information in fertility and reproductive testing.
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hematology products are used for cellular analysis. The business’ hematology systems use principles of physics, optics, electronics and chemistry to separate cells of diagnostic interest and then quantify and characterize them, allowing clinicians to study formed elements in blood (such as red and white blood cells and platelets).
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microbiology systems are used for the identification of bacteria and antibiotic susceptibility testing (ID/AST) from human clinical samples, to detect and quantify bacteria related to microbial infections in urine, blood, and other body fluids, and to detect infections such as urinary tract infections, pneumonia and wound infections. The business’ technology enables direct testing of clinical isolates to ensure reliable detection of resistance to antibiotics.
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automation systems reduce manual operation and associated cost and errors from the pre-analytical through post-analytical stages including sample barcoding/information tracking, centrifugation, aliquotting, storage and conveyance. These systems along with the analyzers described above are controlled through laboratory level software that enables laboratory managers to monitor samples, results and lab efficiency.
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molecular diagnostics products, which are derived from Danaher’s acquisition of Cepheid in 2016, including biomedical testing instruments, systems and related consumables that enable DNA-based testing for organisms and genetic-based diseases in both clinical and non-clinical markets. These products integrate and automate the complicated and time-intensive steps associated with DNA-based testing (including sample preparation and DNA amplification and detection) to allow the testing to be performed in both laboratory and non-laboratory environments with minimal training and infrastructure. These products also include systems which commonly test for health care-associated infections, respiratory disease, sexual health and virology.
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implant systems, dental prosthetics and associated treatment planning software;
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orthodontic bracket systems, aligners and lab products;
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endodontic systems and related consumables;
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restorative materials and instruments including rotary burs, impression materials, bonding agents and cements;
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infection prevention products;
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digital imaging systems and software and other visualization and magnification systems;
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air and electric powered handpieces and associated consumables; and
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treatment units and other dental practice equipment.
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a wide range of analytical instruments, software and related consumables and services that detect and measure chemical, physical and microbiological parameters in ultra-pure, potable, industrial, waste, ground, source and ocean water;
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ultraviolet disinfection systems, consumables and services, which disinfect billions of gallons of municipal, industrial and consumer water every day; and
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industrial water treatment solutions, including chemical treatment solutions intended to address corrosion, scaling and biological growth problems in boiler, cooling water and industrial wastewater applications as well as associated analytical services.
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the business provides innovative color and appearance solutions through standards, software, measurement devices and related services. The business’ expertise in inspiring, virtualizing, selecting, specifying, formulating and measuring color and appearance helps users improve the quality and relevance of their products and reduces costs.
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the business is a leading global provider of software for online collaboration, three-dimensional virtualization, workflow automation, quality approvals and prepress processes to manage structural design, artwork creation, color and product information for branded packaging and marketing materials. Its packaging solutions help consumer goods manufacturers improve their business processes, shorten time to market and reduce costs across internal departments and external suppliers.
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the business provides flexographic computer-to-plate imaging equipment, solutions for print process control, press control, quality assurance and digital finishing systems for the packaging, labels and commercial print industries. Its automation, print process and press control solutions help packaging manufacturers reduce lead time and satisfy their customers’ demands for smaller, more frequent print jobs.
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the business provides a variety of equipment and solutions used to give products unique identities by printing date, lot and bar codes and other information on primary and secondary packaging, applying high-quality alphanumeric codes, logos and graphics to a wide range of surfaces at a variety of production line speeds, angles and locations on a product
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Establishment Registration
. The Company’s applicable subsidiaries must register with the FDA each facility where regulated products are developed or manufactured. The FDA periodically inspects these facilities.
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Marketing Authorization
. The Company’s applicable subsidiaries must obtain FDA clearance or approval to begin marketing a regulated, non-510(k)-exempted product in the United States. For some products, this clearance is obtained by submitting a 510(k) pre-market notification, which generally provides data on the design and performance of the product to allow the FDA to determine substantial equivalence to a product already in commercial distribution in the United States. Other products must go through a formal pre-market approval process which includes the review of non-clinical laboratory studies, clinical investigations, and information on the design and manufacture of the device as well as the successful completion of a pre-market approval inspection by the FDA.
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Quality Systems
. The Company’s applicable subsidiaries are required to establish a quality management system that includes clearly defined processes and procedures for ensuring regulated products are developed, manufactured and distributed in accordance with applicable regulatory requirements and international standards. These subsidiaries also must establish processes and procedures for investigating and responding to customer complaints regarding the performance of regulated products and are subject to periodic inspection by the FDA for compliance with the quality management system requirements.
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Labeling
. The labeling for regulated products must contain specified information and in some cases, the FDA reviews and approves the labeling and any quality assurance protocols specified in the labeling. The FDA and other federal, state and non-U.S. regulatory bodies (including the Federal Trade Commission, the Office of the Inspector General of the Department of Health and Human Services, the U.S. Department of Justice and various state Attorneys General) also monitor the manner in which the Company’s subsidiaries promote and advertise their products. Although physicians may use their medical judgment to employ medical devices for indications other than those cleared or approved by the FDA, the FDA prohibits manufacturers from promoting products for such “off-label” uses.
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Imports and Exports
. The FDCA establishes requirements for importing products into and exporting products from the United States. In general, any limitations on importing and exporting products apply only to products that have not received U.S. marketing clearance or approval.
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Post-market Reporting
. After regulated products have been distributed to customers, the Company’s applicable subsidiaries may receive product complaints requiring them to investigate and report to the FDA certain events involving the products. These subsidiaries also must notify the FDA when they conduct recalls (known as field actions) involving their products.
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The Federal Anti-Kickback Statute prohibits persons from knowingly and willfully soliciting, offering, receiving or providing remuneration, directly or indirectly, in exchange for or to induce either the referral of an individual, or the furnishing or arranging for a good or service, for which payment may be made under a federal health care program, such as Medicare or Medicaid.
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The Health Insurance Portability and Accountability Act of 1996 (“HIPAA”) prohibits knowingly and willfully (1) executing a scheme to defraud any health care benefit program, including private payors, or (2) falsifying, concealing or covering up a material fact or making any materially false, fictitious or fraudulent statement in connection with the delivery of or payment for health care benefits, items or services. In addition, HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act of 2009, also restricts the use and disclosure of patient-identifiable health information, mandates the adoption of standards relating to the privacy and security of patient-identifiable health information and requires the reporting of certain security breaches with respect to such information.
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The False Claims Act imposes liability on any person or entity that, among other things, knowingly presents, or causes to be presented, a false or fraudulent claim for payment by a federal health care program. The qui tam provisions of the False Claims Act allow a private individual to bring actions on behalf of the federal government alleging that the defendant has submitted a false claim to the federal government, and to share in any monetary recovery.
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The Open Payments Act requires manufacturers of medical devices covered under Medicare and Medicaid to record payments and other transfers of value to physicians and teaching hospitals and to report this data to the Centers for Medicare and Medicaid Services for subsequent public disclosure. Similar reporting requirements have also been enacted on the state level, and an increasing number of countries worldwide either have adopted or are considering similar laws requiring transparency of interactions with health care professionals.
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certain products of the Company’s subsidiaries utilize radioactive material, and the Company is subject to federal, state, local and non-U.S. regulations governing the management, storage, handling and disposal of these materials; and
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some of the in vitro diagnostic drugs-of-abuse assays and reagents of the Company’s subsidiaries contain small amounts of controlled substances, and as a result some of the Company’s facilities are inspected periodically by the United States Drug Enforcement Administration to ensure that the Company properly handles, stores, and disposes of controlled substances in the manufacture of those products.
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the International Traffic in Arms Regulations administered by the U.S. Department of State, Directorate of Defense Trade Controls, which, among other things, imposes license requirements on the export from the United States of defense articles and defense services listed on the U.S. Munitions List;
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the Export Administration Regulations administered by the U.S. Department of Commerce, Bureau of Industry and Security, which, among other things, impose licensing requirements on the export, in-country transfer and re-export of certain dual-use goods, technology and software (which are items that have both commercial and military, or proliferation applications);
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the regulations administered by the U.S. Department of Treasury, Office of Foreign Assets Control, which implement economic sanctions imposed against designated countries, governments and persons based on United States foreign policy and national security considerations; and
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the import regulatory activities of the U.S. Customs and Border Protection and other U.S. government agencies.
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reducing demand for our products and services (in this Annual Report, references to products and services also includes software), limiting the financing available to our customers and suppliers, increasing order cancellations and resulting in longer sales cycles and slower adoption of new technologies;
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increasing the difficulty in collecting accounts receivable and the risk of excess and obsolete inventories;
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increasing price competition in our served markets;
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supply interruptions, which could disrupt our ability to produce our products;
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increasing the risk of impairment of goodwill and other long-lived assets, and the risk that we may not be able to fully recover the value of other assets such as real estate and tax assets;
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increasing the risk that counterparties to our contractual arrangements will become insolvent or otherwise unable to fulfill their contractual obligations which, in addition to increasing the risks identified above, could result in preference actions against us; and
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adversely impacting market sizes and growth rates.
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correctly identify customer needs and preferences and predict future needs and preferences;
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allocate our R&D funding to products and services with higher growth prospects;
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anticipate and respond to our competitors’ development of new products and services and technological innovations;
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differentiate our offerings from our competitors’ offerings and avoid commoditization;
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innovate and develop new technologies and applications, and acquire or obtain rights to third-party technologies that may have valuable applications in our served markets;
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obtain adequate intellectual property rights with respect to key technologies before our competitors do;
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successfully commercialize new technologies in a timely manner, price them competitively and cost-effectively manufacture and deliver sufficient volumes of new products of appropriate quality on time;
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obtain necessary regulatory approvals of appropriate scope (including with respect to medical device products by demonstrating satisfactory clinical results where applicable, as well as achieving third-party reimbursement); and
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stimulate customer demand for and convince customers to adopt new technologies.
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many of our customers, and the end-users to whom our customers supply products, rely on government funding of and reimbursement for health care products and services and research activities. The U.S. Patient Protection and Affordable Care Act, as amended by the Health Care and Education Affordability Reconciliation Act (collectively, the “PPACA”), health care austerity measures in other countries and other potential health care reform changes and government austerity measures have reduced and may further reduce the amount of government funding or reimbursement available to customers or end-users of our products and services and/or the volume of medical procedures using our products and services. For example, the Protecting Access to Medicare Act of 2014, or PAMA, introduced a multi-year pricing program for services payable under the Clinical Laboratory Fee Schedule (“CLFS”) that is designed to bring Medicare allowable amounts in line with the amounts paid by private payers. It is still unclear whether and to what extent these new rates will affect overall pricing and reimbursement for clinical laboratory testing services, but if our customers conclude that Medicare reimbursement for these services is inadequate, it could in turn adversely impact the prices at which we sell our products. Other countries, as well as some private payors also control the price of health care products, directly or indirectly, through reimbursement, payment, pricing or coverage limitations, tying reimbursement to outcomes or (in the case of governmental entities) through compulsory licensing. Global economic uncertainty or deterioration can also adversely impact government funding and reimbursement.
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the PPACA imposes on medical device manufacturers, such as Danaher, a 2.3% excise tax on U.S. sales of certain medical devices. The excise tax has been suspended until the end of 2019, but the Company would be subject to the tax beginning in 2020.
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governmental and private health care providers and payors around the world are increasingly utilizing managed care for the delivery of health care services, centralizing purchasing, limiting the number of vendors that may participate in purchasing programs, forming group purchasing organizations and integrated health delivery networks and pursuing consolidation to improve their purchasing leverage and using competitive bid processes to procure health care products and services.
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any business, technology, service or product that we acquire or invest in could under-perform relative to our expectations and the price that we paid or not perform in accordance with our anticipated timetable, or we could fail to operate any such business profitably.
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we may incur or assume significant debt in connection with our acquisitions, investments, joint ventures or strategic relationships, which could also cause a deterioration of Danaher’s credit ratings, result in increased borrowing costs and interest expense and diminish our future access to the capital markets.
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acquisitions, investments, joint ventures or strategic relationships could cause our financial results to differ from our own or the investment community’s expectations in any given period, or over the long-term.
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pre-closing and post-closing earnings charges could adversely impact operating results in any given period, and the impact may be substantially different from period-to-period.
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acquisitions, investments, joint ventures or strategic relationships could create demands on our management, operational resources and financial and internal control systems that we are unable to effectively address.
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we could experience difficulty in integrating personnel, operations and financial and other controls and systems and retaining key employees and customers.
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we may be unable to achieve cost savings or other synergies anticipated in connection with an acquisition, investment, joint venture or strategic relationship.
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we may assume unknown liabilities, known contingent liabilities that become realized, known liabilities that prove greater than anticipated, internal control deficiencies or exposure to regulatory sanctions resulting from the acquired company’s or investee’s activities and the realization of any of these liabilities or deficiencies may increase our expenses, adversely affect our financial position or cause us to fail to meet our public financial reporting obligations.
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in connection with acquisitions and joint ventures, we often enter into post-closing financial arrangements such as purchase price adjustments, earn-out obligations and indemnification obligations, which may have unpredictable financial results.
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as a result of our acquisitions and investments, we have recorded significant goodwill and other assets on our balance sheet and if we are not able to realize the value of these assets, or if the fair value of our investments declines, we may be required to incur impairment charges.
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we may have interests that diverge from those of our joint venture partners or other strategic partners and we may not be able to direct the management and operations of the joint venture or other strategic relationship in the manner we believe is most appropriate, exposing us to additional risk.
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investing in or making loans to early-stage companies often entails a high degree of risk, and we may not achieve the strategic, technological, financial or commercial benefits we anticipate; we may lose our investment or fail to recoup our loan; or our investment may be illiquid for a greater-than-expected period of time.
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we are required to comply with various import laws and export control and economic sanctions laws, which may affect our transactions with certain customers, business partners and other persons and dealings between our employees and between our subsidiaries. In certain circumstances, export control and economic sanctions regulations may prohibit the export of certain products, services and technologies. In other circumstances, we may be required to obtain an export license before exporting the controlled item. Compliance with the various import laws that apply to our businesses can restrict our access to, and increase the cost of obtaining, certain products and at times can interrupt our supply of imported inventory.
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we also have agreements to sell products and services to government entities and are subject to various statutes and regulations that apply to companies doing business with government entities. The laws governing government contracts differ from the laws governing private contracts. For example, many government contracts contain pricing and other terms and conditions that are not applicable to private contracts. Our agreements with government entities may be subject to termination, reduction or modification at the convenience of the government or in the event of changes in government requirements, reductions in federal spending and other factors, and we may underestimate our costs of performing under the contract. In certain cases, a governmental entity may require us to pay back amounts it has paid to us. Government contracts that have been awarded to us following a bid process could become the subject of a bid protest by a losing bidder, which could result in loss of the contract. We are also subject to investigation and audit for compliance with the requirements governing government contracts.
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interruption in the transportation of materials to us and finished goods to our customers;
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differences in terms of sale, including payment terms;
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local product preferences and product requirements;
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changes in a country’s or region’s political or economic conditions, such as the devaluation of particular currencies;
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trade protection measures, embargoes and import or export restrictions and requirements;
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unexpected changes in laws or regulatory requirements, including changes in tax laws;
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capital controls and limitations on ownership and on repatriation of earnings and cash;
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the potential for nationalization of enterprises;
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changes in medical reimbursement policies and programs;
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limitations on legal rights and our ability to enforce such rights;
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difficulty in staffing and managing widespread operations;
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differing labor regulations;
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difficulties in implementing restructuring actions on a timely or comprehensive basis;
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differing protection of intellectual property; and
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greater uncertainty, risk, expense and delay in commercializing products in certain foreign jurisdictions, including with respect to product and other regulatory approvals.
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Life Sciences,
80
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Diagnostics,
75
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Dental,
42
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Environmental & Applied Solutions,
61
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Name
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Age
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Position
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Officer Since
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Steven M. Rales
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67
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Chairman of the Board
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1984
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Mitchell P. Rales
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62
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Chairman of the Executive Committee
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1984
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Thomas P. Joyce, Jr.
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58
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Chief Executive Officer and President
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2002
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Matthew R. McGrew
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47
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Executive Vice President and Chief Financial Officer
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2019
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Daniel L. Comas
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55
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Executive Vice President
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1996
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Rainer M. Blair
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54
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Executive Vice President
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2014
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William K. Daniel II
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54
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Executive Vice President
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2006
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Joakim Weidemanis
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49
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Executive Vice President
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2017
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Brian W. Ellis
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52
|
|
Senior Vice President – General Counsel and Chief Compliance Officer
|
|
2016
|
|
William H. King
|
|
51
|
|
Senior Vice President – Strategic Development
|
|
2005
|
|
Angela S. Lalor
|
|
53
|
|
Senior Vice President – Human Resources
|
|
2012
|
|
Robert S. Lutz
|
|
61
|
|
Senior Vice President – Chief Accounting Officer
|
|
2002
|
|
Daniel A. Raskas
|
|
52
|
|
Senior Vice President – Corporate Development
|
|
2004
|
|
|
2018
|
|
2017
|
|
2016
|
|
2015
|
|
2014
|
|
||||||||||
|
Sales
|
$
|
19,893.0
|
|
|
$
|
18,329.7
|
|
|
$
|
16,882.4
|
|
|
$
|
14,433.7
|
|
|
$
|
12,866.9
|
|
|
|
Operating profit
|
3,403.8
|
|
|
2,990.4
|
|
|
2,735.2
|
|
|
2,157.4
|
|
|
2,044.5
|
|
|
|||||
|
Net earnings from continuing operations
|
2,650.9
|
|
|
2,469.8
|
|
(a)(b)
|
2,153.4
|
|
(c)(d)
|
1,746.7
|
|
(f)
|
1,638.7
|
|
(h)
|
|||||
|
Earnings from discontinued operations, net of income taxes
|
—
|
|
|
22.3
|
|
|
400.3
|
|
|
1,610.7
|
|
(e)
|
959.7
|
|
(g)
|
|||||
|
Net earnings
|
$
|
2,650.9
|
|
|
$
|
2,492.1
|
|
(a)(b)
|
$
|
2,553.7
|
|
(c)(d)
|
$
|
3,357.4
|
|
(e)(f)
|
$
|
2,598.4
|
|
(g)(h)
|
|
Net earnings per share from continuing operations:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Basic
|
$
|
3.78
|
|
|
$
|
3.55
|
|
(a)(b)
|
$
|
3.12
|
|
(c)(d)
|
$
|
2.50
|
|
(f)
|
$
|
2.33
|
|
(h)
|
|
Diluted
|
$
|
3.74
|
|
|
$
|
3.50
|
|
(a)(b)
|
$
|
3.08
|
|
(c)(d)
|
$
|
2.47
|
|
(f)
|
$
|
2.29
|
|
(h)
|
|
Net earnings per share from discontinued operations:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Basic
|
$
|
—
|
|
|
$
|
0.03
|
|
|
$
|
0.58
|
|
|
$
|
2.31
|
|
(e)
|
$
|
1.37
|
|
(g)
|
|
Diluted
|
$
|
—
|
|
|
$
|
0.03
|
|
|
$
|
0.57
|
|
|
$
|
2.27
|
|
(e)
|
$
|
1.34
|
|
(g)
|
|
Net earnings per share:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Basic
|
$
|
3.78
|
|
|
$
|
3.58
|
|
(a)(b)
|
$
|
3.69
|
|
(c)(d) *
|
$
|
4.81
|
|
(e)(f)
|
$
|
3.70
|
|
(g)(h)
|
|
Diluted
|
$
|
3.74
|
|
|
$
|
3.53
|
|
(a)(b)
|
$
|
3.65
|
|
(c)(d)
|
$
|
4.74
|
|
(e)(f)
|
$
|
3.63
|
|
(g)(h)
|
|
Dividends declared per share
|
$
|
0.64
|
|
(i)
|
$
|
0.56
|
|
(j)
|
$
|
0.57
|
|
(k)
|
$
|
0.54
|
|
(l)
|
$
|
0.40
|
|
(m)
|
|
Total assets
|
$
|
47,832.5
|
|
|
$
|
46,648.6
|
|
|
$
|
45,295.3
|
|
|
$
|
48,222.2
|
|
|
$
|
36,991.7
|
|
|
|
Total debt
|
$
|
9,740.3
|
|
|
$
|
10,522.1
|
|
|
$
|
12,269.0
|
|
|
$
|
12,870.4
|
|
|
$
|
3,473.4
|
|
|
|
(a)
|
Includes $73 million ($46 million after-tax or $0.06 per diluted share) gain on sale of certain marketable equity securities. Refer to Note
14
to the Consolidated Financial Statements included in this Annual Report for additional information.
|
|
(b)
|
Includes $146 million ($0.21 per diluted share) of discrete tax benefits associated with the resolution of uncertain tax positions as well as the remeasurement of deferred tax assets and liabilities and the Transition Tax from the TCJA. Refer to Note
13
to the Consolidated Financial Statements included in this Annual Report for additional information.
|
|
(c)
|
Includes $223 million ($140 million after-tax or $0.20 per diluted share) gain on sale of certain marketable equity securities. Refer to Note
14
to the Consolidated Financial Statements included in this Annual Report for additional information.
|
|
(d)
|
Includes $179 million ($112 million after-tax or $0.16 per diluted share) loss on extinguishment of borrowings, net of certain deferred gains. Refer to Note
14
to the Consolidated Financial Statements included in this Annual Report for additional information.
|
|
(e)
|
Includes $767 million after-tax gain ($1.08 per diluted share) on disposition of the Company’s communications business.
|
|
(f)
|
Includes $12 million ($8 million after-tax or $0.01 per diluted share) gain on sale of certain marketable equity securities.
|
|
(g)
|
Includes $34 million ($26 million after-tax or $0.04 per diluted share) gain on sale of the Company’s electric vehicle systems/hybrid product line.
|
|
(h)
|
Includes $123 million ($77 million after-tax or $0.11 per diluted share) gain on sale of certain marketable equity securities.
|
|
(i)
|
The Company increased its quarterly dividend rate in 2018 to $0.16 per share.
|
|
(j)
|
The Company increased its quarterly dividend rate in 2017 to $0.14 per share.
|
|
(k)
|
The Company increased its quarterly dividend rate in the first quarter of 2016 to $0.16 per share and subsequently reduced its quarterly dividend rate to $0.125 per share as a result of the Fortive Separation in the third quarter of 2016.
|
|
(l)
|
The Company increased its quarterly dividend rate in 2015 to $0.135 per share.
|
|
(m)
|
The Company increased its quarterly dividend rate in 2014 to $0.10 per share.
|
|
*
|
Net earnings per share amount does not add due to rounding.
|
|
•
|
Overview
|
|
•
|
Results of Operations
|
|
•
|
Liquidity and Capital Resources
|
|
•
|
Critical Accounting Estimates
|
|
•
|
New Accounting Standards
|
|
•
|
sales from acquired businesses; and
|
|
•
|
the impact of currency translation.
|
|
•
|
the period-to-period change in revenue (excluding sales from acquired businesses); and
|
|
•
|
the period-to-period change in revenue (excluding sales from acquired businesses) after applying current period foreign exchange rates to the prior year period.
|
|
|
2018 vs. 2017
|
|
2017 vs. 2016
|
||
|
Total sales growth (GAAP)
|
8.5
|
%
|
|
8.5
|
%
|
|
Less the impact of:
|
|
|
|
||
|
Acquisitions and other
|
(2.0
|
)%
|
|
(4.5
|
)%
|
|
Currency exchange rates
|
(0.5
|
)%
|
|
(0.5
|
)%
|
|
Core revenue growth (non-GAAP)
|
6.0
|
%
|
|
3.5
|
%
|
|
•
|
Higher
2018
sales volumes from existing businesses and incremental year-over-year cost savings associated with the
continuing productivity improvement initiatives taken in
2018
and
2017
, net of incremental year-over-year costs associated with various product development, sales and marketing growth investments and the impact of foreign exchange rates -
70
basis points
|
|
•
|
Restructuring, impairment and other related charges related to discontinuing a product line in the second quarter of 2017 related to the Diagnostic segment -
40
basis points
|
|
•
|
Trade name impairments and related productivity improvement initiatives in 2017 related to the Dental segment -
5
basis points
|
|
•
|
The incremental net dilutive effect in
2018
of acquired businesses -
20
basis points
|
|
•
|
Costs incurred in the fourth quarter of
2018
related to the anticipated separation of the Dental business -
5
basis points
|
|
•
|
Acquisition-related charges consisting of transaction costs and fair value adjustments to inventory for the acquisition of IDT in the second quarter of 2018 -
10
basis points
|
|
•
|
Higher
2017
sales volumes from existing businesses and incremental year-over-year cost savings associated with the
continuing productivity improvement initiatives taken in
2017
and
2016
, net of incremental year-over-year costs associated with various product development, sales and marketing growth investments in
2017
-
60
basis points
|
|
•
|
Acquisition-related charges consisting of transaction costs and fair value adjustments to inventory and deferred revenue for the acquisition of Cepheid in 2016 -
50
basis points
|
|
•
|
Restructuring, impairment and other related charges related to discontinuing a product line in the second quarter of
2017
related to the Diagnostic segment -
40
basis points
|
|
•
|
Trade name impairments and related productivity improvement initiatives in the fourth quarter of
2017
related to the Dental segment -
5
basis points
|
|
•
|
Third quarter 2016 gain on resolution of acquisition-related matters less the fourth quarter 2017 net gain on resolution of acquisition-related matters -
5
basis points
|
|
•
|
The incremental net dilutive effect in
2017
of acquired businesses -
50
basis points
|
|
|
2018
|
|
2017
|
|
2016
|
||||||
|
Life Sciences
|
$
|
6,471.4
|
|
|
$
|
5,710.1
|
|
|
$
|
5,365.9
|
|
|
Diagnostics
|
6,257.6
|
|
|
5,839.9
|
|
|
5,038.3
|
|
|||
|
Dental
|
2,844.5
|
|
|
2,810.9
|
|
|
2,785.4
|
|
|||
|
Environmental & Applied Solutions
|
4,319.5
|
|
|
3,968.8
|
|
|
3,692.8
|
|
|||
|
Total
|
$
|
19,893.0
|
|
|
$
|
18,329.7
|
|
|
$
|
16,882.4
|
|
|
|
For the Year Ended December 31
|
||||||||||
|
($ in millions)
|
2018
|
|
2017
|
|
2016
|
||||||
|
Sales
|
$
|
6,471.4
|
|
|
$
|
5,710.1
|
|
|
$
|
5,365.9
|
|
|
Operating profit
|
1,229.3
|
|
|
1,004.3
|
|
|
818.9
|
|
|||
|
Depreciation
|
127.4
|
|
|
119.0
|
|
|
126.8
|
|
|||
|
Amortization
|
343.8
|
|
|
308.9
|
|
|
299.4
|
|
|||
|
Operating profit as a % of sales
|
19.0
|
%
|
|
17.6
|
%
|
|
15.3
|
%
|
|||
|
Depreciation as a % of sales
|
2.0
|
%
|
|
2.1
|
%
|
|
2.4
|
%
|
|||
|
Amortization as a % of sales
|
5.3
|
%
|
|
5.4
|
%
|
|
5.6
|
%
|
|||
|
|
2018 vs. 2017
|
|
2017 vs. 2016
|
||
|
Total sales growth (GAAP)
|
13.5
|
%
|
|
6.5
|
%
|
|
Less the impact of:
|
|
|
|
||
|
Acquisitions and other
|
(5.0
|
)%
|
|
(2.0
|
)%
|
|
Currency exchange rates
|
(1.0
|
)%
|
|
(0.5
|
)%
|
|
Core revenue growth (non-GAAP)
|
7.5
|
%
|
|
4.0
|
%
|
|
•
|
Higher
2018
sales volumes from existing businesses and incremental year-over-year cost savings associated with the
continuing productivity improvement initiatives taken in
2018
and
2017
, net of incremental year-over-year costs associated with various new product development, sales and marketing growth investments -
180
basis points
|
|
•
|
2018 gain on resolution of acquisition-related matters -
20
basis points
|
|
•
|
The incremental net dilutive effect in 2018 of acquired businesses -
35
basis points
|
|
•
|
Acquisition-related charges consisting of transaction costs and fair value adjustments to inventory for the acquisition of IDT in the second quarter of 2018 -
25
basis points
|
|
•
|
Higher
2017
sales volumes from existing businesses and incremental year-over-year cost savings associated with the
continuing productivity improvement initiatives taken in
2017
and
2016
, net of incremental year-over-year costs associated with various product development, sales and marketing growth investments and the
effect of year-over-year changes in currency exchange rates
-
205
basis points
|
|
•
|
Acquisition-related charges including transaction costs deemed significant, change in control and restructuring payments, and fair value adjustment to acquired inventory and deferred revenue -
10
basis points
|
|
•
|
The incremental net accretive effect in 2017 of acquired businesses and intersegment product line transfers -
20
basis points
|
|
•
|
Fourth quarter 2017 loss on resolution of acquisition-related matters -
5
basis points
|
|
|
For the Year Ended December 31
|
||||||||||
|
($ in millions)
|
2018
|
|
2017
|
|
2016
|
||||||
|
Sales
|
$
|
6,257.6
|
|
|
$
|
5,839.9
|
|
|
$
|
5,038.3
|
|
|
Operating profit
|
1,073.8
|
|
|
871.6
|
|
|
786.4
|
|
|||
|
Depreciation
|
379.2
|
|
|
368.1
|
|
|
332.1
|
|
|||
|
Amortization
|
209.8
|
|
|
213.4
|
|
|
149.4
|
|
|||
|
Operating profit as a % of sales
|
17.2
|
%
|
|
14.9
|
%
|
|
15.6
|
%
|
|||
|
Depreciation as a % of sales
|
6.1
|
%
|
|
6.3
|
%
|
|
6.6
|
%
|
|||
|
Amortization as a % of sales
|
3.4
|
%
|
|
3.7
|
%
|
|
3.0
|
%
|
|||
|
|
2018 vs. 2017
|
|
2017 vs. 2016
|
||
|
Total sales growth (GAAP)
|
7.0
|
%
|
|
16.0
|
%
|
|
Less the impact of:
|
|
|
|
||
|
Acquisitions and other
|
—
|
%
|
|
(12.0
|
)%
|
|
Currency exchange rates
|
(0.5
|
)%
|
|
—
|
%
|
|
Core revenue growth (non-GAAP)
|
6.5
|
%
|
|
4.0
|
%
|
|
•
|
Higher
2018
sales volumes from existing businesses and incremental year-over-year cost savings associated with the
continuing productivity improvement initiatives taken in
2018
and
2017
, net of incremental year-over-year costs
|
|
•
|
Restructuring, impairment and other related charges related to discontinuing a product line in 2017 -
130
basis points
|
|
•
|
2017 gain on resolution of acquisition-related matters -
25
basis points
|
|
•
|
Higher
2017
sales volumes from existing businesses and incremental year-over-year cost savings associated with the
continuing productivity improvement initiatives taken in
2017
and
2016
, net of incremental year-over-year costs associated with various new product development, sales and marketing growth investments and the
effect of year-over-year changes in currency exchange rates
-
35
basis points
|
|
•
|
Acquisition-related charges in 2016 associated with the acquisition of Cepheid, including transaction costs deemed significant, change in control and restructuring payments, and fair value adjustments to acquired inventory and deferred revenue -
150
basis points
|
|
•
|
2017 gain on resolution of acquisition-related matters -
25
basis points
|
|
•
|
Restructuring, impairment and other related charges related to discontinuing a product line
in
2017
-
130
basis points
|
|
•
|
The incremental net dilutive effect in
2017
of acquired businesses -
150
basis points
|
|
|
For the Year Ended December 31
|
||||||||||
|
($ in millions)
|
2018
|
|
2017
|
|
2016
|
||||||
|
Sales
|
$
|
2,844.5
|
|
|
$
|
2,810.9
|
|
|
$
|
2,785.4
|
|
|
Operating profit
|
346.7
|
|
|
400.7
|
|
|
419.4
|
|
|||
|
Depreciation
|
39.4
|
|
|
39.7
|
|
|
43.8
|
|
|||
|
Amortization
|
90.6
|
|
|
81.7
|
|
|
83.4
|
|
|||
|
Operating profit as a % of sales
|
12.2
|
%
|
|
14.3
|
%
|
|
15.1
|
%
|
|||
|
Depreciation as a % of sales
|
1.4
|
%
|
|
1.4
|
%
|
|
1.6
|
%
|
|||
|
Amortization as a % of sales
|
3.2
|
%
|
|
2.9
|
%
|
|
3.0
|
%
|
|||
|
|
2018 vs. 2017
|
|
2017 vs. 2016
|
||
|
Total sales growth (GAAP)
|
1.0
|
%
|
|
1.0
|
%
|
|
Less the impact of:
|
|
|
|
||
|
Currency exchange rates
|
(0.5
|
)%
|
|
(1.0
|
)%
|
|
Core revenue growth (non-GAAP)
|
0.5
|
%
|
|
—
|
%
|
|
•
|
Trade name impairments and related productivity improvement initiatives in 2017 -
45
basis points
|
|
•
|
Lower
2018
core sales volumes of traditional dental equipment and consumables, incremental year-over-year costs associated with sales and marketing growth investments, lower overall pricing, and the effect of year-over-year changes in currency exchange rates, net of incremental year-over-year cost savings associated with the
continuing productivity improvement initiatives taken in
2018
and
2017
and higher sales volumes in specialty consumables -
245
basis points
|
|
•
|
The incremental net dilutive effect in
2018
of acquired businesses -
10
basis points
|
|
•
|
Incremental year-over-year costs associated with various new product development, sales and marketing growth investments, the effect of year-over-year changes in currency exchange rates and unfavorable product mix due to lower sales of dental consumables in
2017
, net of incremental year-over-year cost savings associated with the
continuing productivity improvement initiatives taken in
2017
and
2016
-
35
basis points
|
|
•
|
Trade name impairments and related productivity improvement initiatives in
2017
-
35
basis points
|
|
•
|
The incremental net dilutive effect in
2017
of acquired businesses -
10
basis points
|
|
|
For the Year Ended December 31
|
||||||||||
|
($ in millions)
|
2018
|
|
2017
|
|
2016
|
||||||
|
Sales
|
$
|
4,319.5
|
|
|
$
|
3,968.8
|
|
|
$
|
3,692.8
|
|
|
Operating profit
|
988.0
|
|
|
914.6
|
|
|
870.0
|
|
|||
|
Depreciation
|
47.0
|
|
|
43.4
|
|
|
35.8
|
|
|||
|
Amortization
|
62.0
|
|
|
56.5
|
|
|
50.9
|
|
|||
|
Operating profit as a % of sales
|
22.9
|
%
|
|
23.0
|
%
|
|
23.6
|
%
|
|||
|
Depreciation as a % of sales
|
1.1
|
%
|
|
1.1
|
%
|
|
1.0
|
%
|
|||
|
Amortization as a % of sales
|
1.4
|
%
|
|
1.4
|
%
|
|
1.4
|
%
|
|||
|
|
2018 vs. 2017
|
|
2017 vs. 2016
|
||
|
Total sales growth (GAAP)
|
9.0
|
%
|
|
7.5
|
%
|
|
Less the impact of:
|
|
|
|
||
|
Acquisitions and other
|
(2.0
|
)%
|
|
(3.0
|
)%
|
|
Currency exchange rates
|
(1.0
|
)%
|
|
(0.5
|
)%
|
|
Core revenue growth (non-GAAP)
|
6.0
|
%
|
|
4.0
|
%
|
|
•
|
Higher
2018
sales volumes, incremental year-over-year cost savings associated with the
continuing productivity improvement initiatives taken in
2018
and
2017
, and improved pricing, net of incremental year-over-year costs associated with various new product development and sales and marketing growth investments -
35
basis points
|
|
•
|
The incremental net dilutive effect in
2018
of acquired businesses -
45
basis points
|
|
•
|
Higher
2017
sales volumes, incremental year-over-year cost savings associated with the
continuing productivity improvement initiatives taken in
2017
and
2016
, improved pricing and the
effect of year-over-year changes in currency exchange rates
, net of incremental year-over-year costs associated with various new product development and sales and marketing growth investments -
5
basis points
|
|
•
|
The incremental net dilutive effect in
2017
of acquired businesses -
65
basis points
|
|
|
For the Year Ended December 31
|
||||||||||
|
($ in millions)
|
2018
|
|
2017
|
|
2016
|
||||||
|
Sales
|
$
|
19,893.0
|
|
|
$
|
18,329.7
|
|
|
$
|
16,882.4
|
|
|
Cost of sales
|
(8,785.9
|
)
|
|
(8,137.2
|
)
|
|
(7,547.8
|
)
|
|||
|
Gross profit
|
$
|
11,107.1
|
|
|
$
|
10,192.5
|
|
|
$
|
9,334.6
|
|
|
Gross profit margin
|
55.8
|
%
|
|
55.6
|
%
|
|
55.3
|
%
|
|||
|
|
For the Year Ended December 31
|
||||||||||
|
($ in millions)
|
2018
|
|
2017
|
|
2016
|
||||||
|
Sales
|
$
|
19,893.0
|
|
|
$
|
18,329.7
|
|
|
$
|
16,882.4
|
|
|
Selling, general and administrative (“SG&A”) expenses
|
(6,472.1
|
)
|
|
(6,073.3
|
)
|
|
(5,624.3
|
)
|
|||
|
Research and development (“R&D”) expenses
|
(1,231.2
|
)
|
|
(1,128.8
|
)
|
|
(975.1
|
)
|
|||
|
SG&A as a % of sales
|
32.5
|
%
|
|
33.1
|
%
|
|
33.3
|
%
|
|||
|
R&D as a % of sales
|
6.2
|
%
|
|
6.2
|
%
|
|
5.8
|
%
|
|||
|
•
|
established a flat corporate income tax rate of
21.0%
on U.S. earnings;
|
|
•
|
imposed a one-time tax on unremitted cumulative non-U.S. earnings of foreign subsidiaries
, which we refer to in this Annual Report as the
Transition Tax
;
|
|
•
|
imposes a new minimum tax on certain non-U.S. earnings, irrespective of the territorial system of taxation, and generally allows for the repatriation of future earnings of foreign subsidiaries without incurring additional U.S. taxes by transitioning to a territorial system of taxation;
|
|
•
|
subjects certain payments made by a U.S. company to a related foreign company to certain minimum taxes (Base Erosion Anti-Abuse Tax);
|
|
•
|
eliminated certain prior tax incentives for manufacturing in the United States and creates an incentive for U.S. companies to sell, lease or license goods and services abroad by allowing for a reduction in taxes owed on earnings related to such sales;
|
|
•
|
allows the cost of investments in certain depreciable assets acquired and placed in service after September 27, 2017 to be immediately expensed; and
|
|
•
|
reduces deductions with respect to certain compensation paid to specified executive officers.
|
|
•
|
The Transition Tax is based on the Company’s post-1986 earnings and profits that were previously deferred from U.S. income taxes. In the year ended December 31, 2017, the Company recorded a provision amount for the Transition Tax expense resulting in an increase in income tax expense of approximately
$1.2 billion
. During 2018, the Company finalized the calculations of the Transition Tax liability and increased the provisional amount recorded in 2017 by
$40 million
, with the increase included as a component of income tax expense from continuing operations in 2018. Regulations allow the Company to reduce the Transition Tax payable by applying available foreign tax credits and other tax attributes. The Company has elected to pay the net Transition Tax payable over an
eight
-year period as permitted by the TCJA. As of December 31, 2018, the remaining Transition Tax balance to be paid over the next
seven
years is approximately
$180 million
.
|
|
•
|
In connection with finalizing the calculation of tax credits available to reduce the Transition Tax and other U.S. taxable income, the Company recorded an additional provision of
$13 million
related to net unrealizable credits which is included as a component of income tax expense from continuing operations in 2018.
|
|
•
|
U.S. deferred tax assets and liabilities were remeasured as of December 31, 2017 based upon the tax rates at which the assets and liabilities are expected to reverse in the future, which is generally
21.0%
, resulting in an income tax benefit of approximately
$1.2 billion
in 2017. Upon finalizing the provisional accounting for the remeasurement of U.S. deferred tax assets and liabilities in 2018, the Company recorded an additional tax benefit of
$47 million
, which is included as a component of income tax expense from continuing operations.
|
|
•
|
The TCJA imposes tax on U.S. shareholders for global intangible low-taxed income (“GILTI”) earned by certain foreign subsidiaries. The Company is required to make an accounting policy election of either: (1) treating taxes due on future amounts included in U.S. taxable income related to GILTI as a current period tax expense when incurred (the “period cost method”); or (2) factoring such amounts into the Company’s measurement of its deferred tax expense (the “deferred method”). As of December 31, 2017, the Company was still analyzing its global income and did not record a GILTI-related deferred tax amount. In 2018, the Company elected the period cost method for its accounting for GILTI.
|
|
|
Year Ended December 31
|
|||||||
|
|
2018
|
|
2017
|
|
2016
|
|||
|
Effective tax rate from continuing operations
|
19.5
|
%
|
|
16.0
|
%
|
|
17.5
|
%
|
|
•
|
The effective tax rate of
19.5%
in
2018
includes
70
basis points of tax benefits primarily related to the
release of reserves upon the expiration of statutes of limitation, audit settlements and release of valuation allowance in a certain foreign tax jurisdiction. These tax benefits were partially offset by additional provisions related to completing the accounting for the enactment of the TCJA as summarized above and tax costs directly related to reorganization activities associated with preparing for the Dental Separation.
|
|
•
|
The effective tax rate of
16.0%
in
2017
includes
500
basis points of net tax benefits due to the revaluation of deferred tax liabilities from
35.0%
to
21.0%
due to the TCJA and the release of reserves upon statute of limitation expiration, partially offset by income tax expense related to the Transition Tax on foreign earnings due to the TCJA and changes in estimates associated with prior period uncertain tax positions.
|
|
•
|
The effective tax rate of
17.5%
in
2016
includes
350
basis points of net tax benefits from permanent foreign exchange losses and the release of reserves upon the expiration of statutes of limitation and audit settlements, partially offset by income tax expense related to repatriation of earnings and legal entity realignments associated with the Fortive Separation and changes in estimates associated with prior period uncertain tax positions.
|
|
($ in millions)
|
2018
|
|
2017
|
|
2016
|
||||||
|
Total operating cash flows provided by continuing operations
|
$
|
4,022.0
|
|
|
$
|
3,477.8
|
|
|
$
|
3,087.5
|
|
|
|
|
|
|
|
|
||||||
|
Cash paid for acquisitions
|
$
|
(2,173.3
|
)
|
|
$
|
(385.8
|
)
|
|
$
|
(4,880.1
|
)
|
|
Payments for additions to property, plant and equipment
|
(655.7
|
)
|
|
(619.6
|
)
|
|
(589.6
|
)
|
|||
|
Proceeds from sales of property, plant and equipment
|
6.3
|
|
|
32.6
|
|
|
9.8
|
|
|||
|
Payments for purchases of investments
|
(148.9
|
)
|
|
—
|
|
|
—
|
|
|||
|
Proceeds from sales of investments
|
22.2
|
|
|
137.9
|
|
|
264.8
|
|
|||
|
All other investing activities
|
—
|
|
|
(8.5
|
)
|
|
21.9
|
|
|||
|
Total investing cash used in discontinued operations
|
—
|
|
|
—
|
|
|
(69.8
|
)
|
|||
|
Net cash used in investing activities
|
$
|
(2,949.4
|
)
|
|
$
|
(843.4
|
)
|
|
$
|
(5,243.0
|
)
|
|
|
|
|
|
|
|
||||||
|
Proceeds from the issuance of common stock
|
$
|
96.0
|
|
|
$
|
68.8
|
|
|
$
|
164.5
|
|
|
Payment of dividends
|
(433.4
|
)
|
|
(378.3
|
)
|
|
(399.8
|
)
|
|||
|
Payment for purchase of noncontrolling interest
|
—
|
|
|
(64.4
|
)
|
|
—
|
|
|||
|
Make-whole premiums to redeem borrowings prior to maturity
|
—
|
|
|
—
|
|
|
(188.1
|
)
|
|||
|
Net proceeds from (repayments of) borrowings (maturities of 90 days or less)
|
65.7
|
|
|
(3,778.5
|
)
|
|
2,218.1
|
|
|||
|
Proceeds from borrowings (maturities longer than 90 days)
|
—
|
|
|
1,782.1
|
|
|
3,240.9
|
|
|||
|
Repayments of borrowings (maturities longer than 90 days)
|
(507.8
|
)
|
|
(668.4
|
)
|
|
(2,480.6
|
)
|
|||
|
All other financing activities
|
(17.9
|
)
|
|
(59.8
|
)
|
|
(27.0
|
)
|
|||
|
Cash distributions to Fortive, net
|
—
|
|
|
—
|
|
|
(485.3
|
)
|
|||
|
Net cash (used in) provided by financing activities
|
$
|
(797.4
|
)
|
|
$
|
(3,098.5
|
)
|
|
$
|
2,042.7
|
|
|
•
|
Operating cash flows from continuing operations
increased
$544 million
, or
16%
, during
2018
as compared to
2017
, due primarily to higher net earnings, which included higher noncash charges for depreciation and amortization, the impact of a noncash gain from the sale of marketable equity securities in 2017, and lower cash used for funding trade accounts receivable, inventories and trade accounts payable in 2018 compared to 2017. This increase was partially offset by higher cash used for payments for various employee-related liabilities, customer funding and accrued expenses during 2018.
|
|
•
|
Net cash used in investing activities during
2018
consisted primarily of cash paid for acquisitions, additions to property, plant and equipment and payments for purchases of investments. The Company acquired
two
businesses during
2018
for total consideration (including assumed debt and net of cash acquired) of approximately
$2.2 billion
.
|
|
•
|
The Company repaid the $500 million aggregate principal amount of 2018 U.S. Notes (plus accrued interest) upon their maturity in September 2018 using available cash and proceeds from the issuance of commercial paper.
|
|
•
|
As of
December 31, 2018
, the Company held
$788 million
of cash and cash equivalents.
|
|
•
|
2018
operating cash flows benefited from higher net earnings in
2018
as compared to
2017
. Net earnings in 2017 also included a $73 million gain on sale of marketable equity securities for which the proceeds were reflected in the investing activities section of the accompanying Consolidated Statement of Cash Flows, and therefore, did not contribute to operating cash flows.
|
|
•
|
Net earnings from continuing operations for
2018
reflected
an increase
of
$69 million
of depreciation and amortization expense as compared to
2017
. Amortization expense primarily relates to the amortization of intangible assets acquired in connection with acquisitions and increased due to recently acquired businesses. Depreciation expense relates to both the Company’s manufacturing and operating facilities as well as instrumentation leased to customers under operating-type lease arrangements and increased due primarily to the impact of increased capital expenditures. Depreciation and amortization are noncash expenses that decrease earnings without a corresponding impact to operating cash flows.
|
|
•
|
The aggregate of trade accounts receivable, inventories and trade accounts payable
provided
$24 million
in operating cash flows during
2018
, compared to
$243 million
of operating cash flows used in
2017
. The amount of cash flow generated from or used by the aggregate of trade accounts receivable, inventories and trade accounts payable depends upon how effectively the Company manages the cash conversion cycle, which effectively represents the number of days that elapse from the day it pays for the purchase of raw materials and components to the collection of cash from its customers and can be significantly impacted by the timing of collections and payments in a period.
|
|
•
|
The aggregate of prepaid expenses and other assets, deferred income taxes and accrued expenses and other liabilities
used
$114 million
in operating cash flows during
2018
, compared to
$110 million
used
in
2017
. The timing of various employee-related liabilities, customer funding and accrued expenses drove the majority of this change.
|
|
($ in millions)
|
Total
|
|
Less Than
One Year
|
|
1-3 Years
|
|
4-5 Years
|
|
More Than
5 Years
|
||||||||||
|
Debt and leases:
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Debt obligations
(a)(b)
|
$
|
9,724.8
|
|
|
$
|
50.6
|
|
|
$
|
4,346.5
|
|
|
$
|
1,748.5
|
|
|
$
|
3,579.2
|
|
|
Capital lease obligations
(b)
|
15.5
|
|
|
1.2
|
|
|
2.8
|
|
|
11.5
|
|
|
—
|
|
|||||
|
Total debt and leases
|
9,740.3
|
|
|
51.8
|
|
|
4,349.3
|
|
|
1,760.0
|
|
|
3,579.2
|
|
|||||
|
Interest payments on debt and capital lease obligations
(c)
|
1,105.6
|
|
|
128.9
|
|
|
210.0
|
|
|
158.4
|
|
|
608.3
|
|
|||||
|
Operating lease obligations
(d)
|
1,009.9
|
|
|
203.0
|
|
|
301.0
|
|
|
218.7
|
|
|
287.2
|
|
|||||
|
Other:
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Purchase obligations
(e)
|
659.1
|
|
|
610.2
|
|
|
45.7
|
|
|
3.0
|
|
|
0.2
|
|
|||||
|
Other long-term liabilities reflected on the Company’s Consolidated Balance Sheet
(f)
|
5,075.8
|
|
|
—
|
|
|
621.5
|
|
|
515.2
|
|
|
3,939.1
|
|
|||||
|
Total
|
$
|
17,590.7
|
|
|
$
|
993.9
|
|
|
$
|
5,527.5
|
|
|
$
|
2,655.3
|
|
|
$
|
8,414.0
|
|
|
(a)
|
As described in Note
10
to the Consolidated Financial Statements.
|
|
(b)
|
Amounts do not include interest payments. Interest on debt and capital lease obligations is reflected in a separate line in the table.
|
|
(c)
|
Interest payments on debt are projected for future periods using the interest rates in effect as of
December 31, 2018
. Certain of these projected interest payments may differ in the future based on changes in market interest rates.
|
|
(d)
|
As described in Note
16
to the Consolidated Financial Statements, certain leases require the Company to pay real estate taxes, insurance, maintenance and other operating expenses associated with the leased premises. These future costs are not included in the table above. As discussed in Note 1 to the Consolidated Financial Statements, the Company adopted ASC 842 related to lease accounting on January 1, 2019. Future minimum lease payments differ from the future lease liability recognized under ASC 842, as the lease liability recognized under ASC 842 discounts the lease payments while the minimum lease payments are not discounted. Additionally, ASC 842 allows a lessee to elect to combine or separate any non-lease components in an arrangement with the lease components for the calculation of the lease liability while the minimum lease payments exclude any non-lease components.
|
|
(e)
|
Consist of agreements to purchase goods or services that are enforceable and legally binding on the Company and that specify all significant terms, including fixed or minimum quantities to be purchased, fixed, minimum or variable price provisions and the approximate timing of the transaction.
|
|
(f)
|
Primarily consist of obligations under product service and warranty policies and allowances, performance and operating cost guarantees, estimated environmental remediation costs, self-insurance and litigation claims, postretirement benefits, pension obligations, deferred tax
|
|
|
Amount of Commitment Expiration per Period
|
||||||||||||||||||
|
($ in millions)
|
Total
|
|
Less Than
One Year |
|
1-3 Years
|
|
4-5 Years
|
|
More Than
5 Years |
||||||||||
|
Guarantees and related instruments
|
$
|
667.8
|
|
|
$
|
572.1
|
|
|
$
|
51.2
|
|
|
$
|
21.9
|
|
|
$
|
22.6
|
|
|
|
As of December 31
|
||||||
|
|
2018
|
|
2017
|
||||
|
ASSETS
|
|
|
|
||||
|
Current assets:
|
|
|
|
||||
|
Cash and equivalents
|
$
|
787.8
|
|
|
$
|
630.3
|
|
|
Trade accounts receivable, less allowance for doubtful accounts of $120.4 and $116.1, respectively
|
3,489.6
|
|
|
3,521.8
|
|
||
|
Inventories
|
1,910.1
|
|
|
1,840.8
|
|
||
|
Prepaid expenses and other current assets
|
906.3
|
|
|
857.1
|
|
||
|
Total current assets
|
7,093.8
|
|
|
6,850.0
|
|
||
|
Property, plant and equipment, net
|
2,511.2
|
|
|
2,454.6
|
|
||
|
Other long-term assets
|
648.4
|
|
|
538.3
|
|
||
|
Goodwill
|
25,906.0
|
|
|
25,138.6
|
|
||
|
Other intangible assets, net
|
11,673.1
|
|
|
11,667.1
|
|
||
|
Total assets
|
$
|
47,832.5
|
|
|
$
|
46,648.6
|
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
|
|
||||
|
Current liabilities:
|
|
|
|
||||
|
Notes payable and current portion of long-term debt
|
$
|
51.8
|
|
|
$
|
194.7
|
|
|
Trade accounts payable
|
1,712.8
|
|
|
1,509.9
|
|
||
|
Accrued expenses and other liabilities
|
3,076.9
|
|
|
3,087.7
|
|
||
|
Total current liabilities
|
4,841.5
|
|
|
4,792.3
|
|
||
|
Other long-term liabilities
|
5,075.8
|
|
|
5,161.1
|
|
||
|
Long-term debt
|
9,688.5
|
|
|
10,327.4
|
|
||
|
Stockholders’ equity:
|
|
|
|
||||
|
Common stock - $0.01 par value, 2.0 billion shares authorized; 817.9 and 812.5 issued; 701.5 and 696.6 outstanding, respectively
|
8.2
|
|
|
8.1
|
|
||
|
Additional paid-in capital
|
5,834.3
|
|
|
5,538.2
|
|
||
|
Retained earnings
|
25,163.0
|
|
|
22,806.1
|
|
||
|
Accumulated other comprehensive income (loss)
|
(2,791.1
|
)
|
|
(1,994.2
|
)
|
||
|
Total Danaher stockholders’ equity
|
28,214.4
|
|
|
26,358.2
|
|
||
|
Noncontrolling interests
|
12.3
|
|
|
9.6
|
|
||
|
Total stockholders’ equity
|
28,226.7
|
|
|
26,367.8
|
|
||
|
Total liabilities and stockholders’ equity
|
$
|
47,832.5
|
|
|
$
|
46,648.6
|
|
|
|
Year Ended December 31
|
|
||||||||||
|
|
2018
|
|
2017
|
|
2016
|
|
||||||
|
Sales
|
$
|
19,893.0
|
|
|
$
|
18,329.7
|
|
|
$
|
16,882.4
|
|
|
|
Cost of sales
|
(8,785.9
|
)
|
|
(8,137.2
|
)
|
|
(7,547.8
|
)
|
|
|||
|
Gross profit
|
11,107.1
|
|
|
10,192.5
|
|
|
9,334.6
|
|
|
|||
|
Operating costs:
|
|
|
|
|
|
|
||||||
|
Selling, general and administrative expenses
|
(6,472.1
|
)
|
|
(6,073.3
|
)
|
|
(5,624.3
|
)
|
|
|||
|
Research and development expenses
|
(1,231.2
|
)
|
|
(1,128.8
|
)
|
|
(975.1
|
)
|
|
|||
|
Operating profit
|
3,403.8
|
|
|
2,990.4
|
|
|
2,735.2
|
|
|
|||
|
Nonoperating income (expense):
|
|
|
|
|
|
|
||||||
|
Other income, net
|
37.2
|
|
|
103.6
|
|
|
239.1
|
|
|
|||
|
Loss on early extinguishment of borrowings
|
—
|
|
|
—
|
|
|
(178.8
|
)
|
|
|||
|
Interest expense
|
(157.4
|
)
|
|
(162.7
|
)
|
|
(184.4
|
)
|
|
|||
|
Interest income
|
9.2
|
|
|
7.5
|
|
|
0.2
|
|
|
|||
|
Earnings from continuing operations before income taxes
|
3,292.8
|
|
|
2,938.8
|
|
|
2,611.3
|
|
|
|||
|
Income taxes
|
(641.9
|
)
|
|
(469.0
|
)
|
|
(457.9
|
)
|
|
|||
|
Net earnings from continuing operations
|
2,650.9
|
|
|
2,469.8
|
|
|
2,153.4
|
|
|
|||
|
Earnings from discontinued operations, net of income taxes
|
—
|
|
|
22.3
|
|
|
400.3
|
|
|
|||
|
Net earnings
|
$
|
2,650.9
|
|
|
$
|
2,492.1
|
|
|
$
|
2,553.7
|
|
|
|
Net earnings per share from continuing operations:
|
|
|
|
|
|
|
||||||
|
Basic
|
$
|
3.78
|
|
|
$
|
3.55
|
|
|
$
|
3.12
|
|
|
|
Diluted
|
$
|
3.74
|
|
|
$
|
3.50
|
|
|
$
|
3.08
|
|
|
|
Net earnings per share from discontinued operations:
|
|
|
|
|
|
|
||||||
|
Basic
|
$
|
—
|
|
|
$
|
0.03
|
|
|
$
|
0.58
|
|
|
|
Diluted
|
$
|
—
|
|
|
$
|
0.03
|
|
|
$
|
0.57
|
|
|
|
Net earnings per share:
|
|
|
|
|
|
|
||||||
|
Basic
|
$
|
3.78
|
|
|
$
|
3.58
|
|
|
$
|
3.69
|
|
*
|
|
Diluted
|
$
|
3.74
|
|
|
$
|
3.53
|
|
|
$
|
3.65
|
|
|
|
Average common stock and common equivalent shares outstanding:
|
|
|
|
|
|
|
||||||
|
Basic
|
700.6
|
|
|
695.8
|
|
|
691.2
|
|
|
|||
|
Diluted
|
710.2
|
|
|
706.1
|
|
|
699.8
|
|
|
|||
|
*
|
Net earnings per share amount does not add due to rounding.
|
|
|
Year Ended December 31
|
||||||||||
|
|
2018
|
|
2017
|
|
2016
|
||||||
|
Net earnings
|
$
|
2,650.9
|
|
|
$
|
2,492.1
|
|
|
$
|
2,553.7
|
|
|
Other comprehensive income (loss), net of income taxes:
|
|
|
|
|
|
||||||
|
Foreign currency translation adjustments
|
(632.2
|
)
|
|
976.1
|
|
|
(517.3
|
)
|
|||
|
Pension and postretirement plan benefit adjustments
|
(12.7
|
)
|
|
71.0
|
|
|
(58.2
|
)
|
|||
|
Unrea
lized loss
on available-for-sale securities
|
(0.8
|
)
|
|
(19.6
|
)
|
|
(114.8
|
)
|
|||
|
Total other comprehensive income (loss), net of income taxes
|
(645.7
|
)
|
|
1,027.5
|
|
|
(690.3
|
)
|
|||
|
Comprehensive income
|
$
|
2,005.2
|
|
|
$
|
3,519.6
|
|
|
$
|
1,863.4
|
|
|
|
Common Stock
|
|
Additional Paid-in Capital
|
|
Retained Earnings
|
|
Accumulated Other Comprehensive Income (Loss)
|
|
Noncontrolling Interests
|
|||||||||||||
|
Shares
|
|
Amount
|
|
|||||||||||||||||||
|
Balance, January 1, 2016
|
801.6
|
|
|
$
|
8.0
|
|
|
$
|
4,981.2
|
|
|
$
|
21,012.3
|
|
|
$
|
(2,311.2
|
)
|
|
$
|
73.7
|
|
|
Net earnings for the year
|
—
|
|
|
—
|
|
|
—
|
|
|
2,553.7
|
|
|
—
|
|
|
—
|
|
|||||
|
Other comprehensive income (loss)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(690.3
|
)
|
|
—
|
|
|||||
|
Dividends declared
|
—
|
|
|
—
|
|
|
—
|
|
|
(393.6
|
)
|
|
—
|
|
|
—
|
|
|||||
|
Common stock-based award activity
|
5.8
|
|
|
0.1
|
|
|
322.6
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
|
Common stock issued in connection with LYONs’ conversions
|
0.3
|
|
|
—
|
|
|
9.1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
|
Distribution of Fortive Corporation
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,468.9
|
)
|
|
(20.2
|
)
|
|
—
|
|
|||||
|
Change in noncontrolling interests
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
0.3
|
|
|||||
|
Balance, December 31, 2016
|
807.7
|
|
|
8.1
|
|
|
5,312.9
|
|
|
20,703.5
|
|
|
(3,021.7
|
)
|
|
74.0
|
|
|||||
|
Net earnings for the year
|
—
|
|
|
—
|
|
|
—
|
|
|
2,492.1
|
|
|
—
|
|
|
—
|
|
|||||
|
Other comprehensive income (loss)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,027.5
|
|
|
—
|
|
|||||
|
Dividends declared
|
—
|
|
|
—
|
|
|
—
|
|
|
(389.5
|
)
|
|
—
|
|
|
—
|
|
|||||
|
Common stock-based award activity
|
4.8
|
|
|
—
|
|
|
214.1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
|
Common stock issued in connection with LYONs’ conversions
|
—
|
|
|
—
|
|
|
12.4
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
|
Change in noncontrolling interests
|
—
|
|
|
—
|
|
|
(1.2
|
)
|
|
—
|
|
|
—
|
|
|
(64.4
|
)
|
|||||
|
Balance, December 31, 2017
|
812.5
|
|
|
8.1
|
|
|
5,538.2
|
|
|
22,806.1
|
|
|
(1,994.2
|
)
|
|
9.6
|
|
|||||
|
Adoption of accounting standards
|
—
|
|
|
—
|
|
|
—
|
|
|
154.5
|
|
|
(151.2
|
)
|
|
—
|
|
|||||
|
Balance, January 1, 2018
|
812.5
|
|
|
8.1
|
|
|
5,538.2
|
|
|
22,960.6
|
|
|
(2,145.4
|
)
|
|
9.6
|
|
|||||
|
Net earnings for the year
|
—
|
|
|
—
|
|
|
—
|
|
|
2,650.9
|
|
|
—
|
|
|
—
|
|
|||||
|
Other comprehensive income (loss)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(645.7
|
)
|
|
—
|
|
|||||
|
Dividends declared
|
—
|
|
|
—
|
|
|
—
|
|
|
(448.5
|
)
|
|
—
|
|
|
—
|
|
|||||
|
Common stock-based award activity
|
4.6
|
|
|
0.1
|
|
|
252.8
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
|
Common stock issued in connection with acquisitions
|
0.2
|
|
|
—
|
|
|
23.9
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
|
Common stock issued in connection with LYONs’ conversions
|
0.6
|
|
|
—
|
|
|
19.4
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
|
Change in noncontrolling interests
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2.7
|
|
|||||
|
Balance, December 31, 2018
|
817.9
|
|
|
$
|
8.2
|
|
|
$
|
5,834.3
|
|
|
$
|
25,163.0
|
|
|
$
|
(2,791.1
|
)
|
|
$
|
12.3
|
|
|
|
Year Ended December 31
|
||||||||||
|
|
2018
|
|
2017
|
|
2016
|
||||||
|
Cash flows from operating activities:
|
|
|
|
|
|
||||||
|
Net earnings
|
$
|
2,650.9
|
|
|
$
|
2,492.1
|
|
|
$
|
2,553.7
|
|
|
Less: earnings from discontinued operations, net of income taxes
|
—
|
|
|
22.3
|
|
|
400.3
|
|
|||
|
Net earnings from continuing operations
|
2,650.9
|
|
|
2,469.8
|
|
|
2,153.4
|
|
|||
|
Noncash items:
|
|
|
|
|
|
||||||
|
Depreciation
|
601.5
|
|
|
577.8
|
|
|
545.0
|
|
|||
|
Amortization
|
706.2
|
|
|
660.5
|
|
|
583.1
|
|
|||
|
Stock-based compensation expense
|
151.4
|
|
|
139.4
|
|
|
129.8
|
|
|||
|
Restructuring and impairment charges
|
2.1
|
|
|
56.1
|
|
|
12.0
|
|
|||
|
Pretax loss on early extinguishment of borrowings
|
—
|
|
|
—
|
|
|
178.8
|
|
|||
|
Pretax gain on sales of investments
|
—
|
|
|
(72.8
|
)
|
|
(223.4
|
)
|
|||
|
Change in deferred income taxes
|
(195.1
|
)
|
|
(426.9
|
)
|
|
(383.9
|
)
|
|||
|
Change in trade accounts receivable, net
|
(58.3
|
)
|
|
(161.4
|
)
|
|
(183.1
|
)
|
|||
|
Change in inventories
|
(143.3
|
)
|
|
(27.4
|
)
|
|
9.4
|
|
|||
|
Change in trade accounts payable
|
225.8
|
|
|
(54.4
|
)
|
|
78.1
|
|
|||
|
Change in prepaid expenses and other assets
|
89.7
|
|
|
4.4
|
|
|
(62.4
|
)
|
|||
|
Change in accrued expenses and other liabilities
|
(8.9
|
)
|
|
312.7
|
|
|
250.7
|
|
|||
|
Total operating cash provided by continuing operations
|
4,022.0
|
|
|
3,477.8
|
|
|
3,087.5
|
|
|||
|
Total operating cash provided by discontinued operations
|
—
|
|
|
—
|
|
|
434.3
|
|
|||
|
Net cash provided by operating activities
|
4,022.0
|
|
|
3,477.8
|
|
|
3,521.8
|
|
|||
|
Cash flows from investing activities:
|
|
|
|
|
|
||||||
|
Cash paid for acquisitions
|
(2,173.3
|
)
|
|
(385.8
|
)
|
|
(4,880.1
|
)
|
|||
|
Payments for additions to property, plant and equipment
|
(655.7
|
)
|
|
(619.6
|
)
|
|
(589.6
|
)
|
|||
|
Proceeds from sales of property, plant and equipment
|
6.3
|
|
|
32.6
|
|
|
9.8
|
|
|||
|
Payments for purchases of investments
|
(148.9
|
)
|
|
—
|
|
|
—
|
|
|||
|
Proceeds from sales of investments
|
22.2
|
|
|
137.9
|
|
|
264.8
|
|
|||
|
All other investing activities
|
—
|
|
|
(8.5
|
)
|
|
21.9
|
|
|||
|
Total investing cash used in continuing operations
|
(2,949.4
|
)
|
|
(843.4
|
)
|
|
(5,173.2
|
)
|
|||
|
Total investing cash used in discontinued operations
|
—
|
|
|
—
|
|
|
(69.8
|
)
|
|||
|
Net cash used in investing activities
|
(2,949.4
|
)
|
|
(843.4
|
)
|
|
(5,243.0
|
)
|
|||
|
Cash flows from financing activities:
|
|
|
|
|
|
||||||
|
Proceeds from the issuance of common stock
|
96.0
|
|
|
68.8
|
|
|
164.5
|
|
|||
|
Payment of dividends
|
(433.4
|
)
|
|
(378.3
|
)
|
|
(399.8
|
)
|
|||
|
Payment for purchase of noncontrolling interest
|
—
|
|
|
(64.4
|
)
|
|
—
|
|
|||
|
Make-whole premiums to redeem borrowings prior to maturity
|
—
|
|
|
—
|
|
|
(188.1
|
)
|
|||
|
Net proceeds from (repayments of) borrowings (maturities of 90 days or less)
|
65.7
|
|
|
(3,778.5
|
)
|
|
2,218.1
|
|
|||
|
Proceeds from borrowings (maturities longer than 90 days)
|
—
|
|
|
1,782.1
|
|
|
3,240.9
|
|
|||
|
Repayments of borrowings (maturities longer than 90 days)
|
(507.8
|
)
|
|
(668.4
|
)
|
|
(2,480.6
|
)
|
|||
|
All other financing activities
|
(17.9
|
)
|
|
(59.8
|
)
|
|
(27.0
|
)
|
|||
|
Total financing cash (used in) provided by continuing operations
|
(797.4
|
)
|
|
(3,098.5
|
)
|
|
2,528.0
|
|
|||
|
Cash distributions to Fortive Corporation, net
|
—
|
|
|
—
|
|
|
(485.3
|
)
|
|||
|
Net cash (used in) provided by financing activities
|
(797.4
|
)
|
|
(3,098.5
|
)
|
|
2,042.7
|
|
|||
|
Effect of exchange rate changes on cash and equivalents
|
(117.7
|
)
|
|
130.7
|
|
|
(148.6
|
)
|
|||
|
Net change in cash and equivalents
|
157.5
|
|
|
(333.4
|
)
|
|
172.9
|
|
|||
|
Beginning balance of cash and equivalents
|
630.3
|
|
|
963.7
|
|
|
790.8
|
|
|||
|
Ending balance of cash and equivalents
|
$
|
787.8
|
|
|
$
|
630.3
|
|
|
$
|
963.7
|
|
|
|
|
|
|
|
|
||||||
|
Supplemental disclosure:
|
|
|
|
|
|
||||||
|
Distribution of noncash net assets to Fortive Corporation
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(1,983.6
|
)
|
|
Category
|
|
Useful Life
|
|
Buildings
|
|
30 years
|
|
Leased assets and leasehold improvements
|
|
Amortized over the lesser of the economic life of the asset or
the term of the lease
|
|
Machinery and equipment
|
|
3 – 10 years
|
|
Customer-leased instruments
|
|
5 – 7 years
|
|
|
Foreign Currency Translation Adjustments
|
|
Pension & Postretirement Plan Benefit Adjustments
|
|
Unrealized Gain (Loss) on Available-For-Sale Securities Adjustments
|
|
Total
|
||||||||
|
Balance, January 1, 2016
|
$
|
(1,797.4
|
)
|
|
$
|
(647.3
|
)
|
|
$
|
133.5
|
|
|
$
|
(2,311.2
|
)
|
|
Other comprehensive income (loss) before reclassifications:
|
|
|
|
|
|
|
|
||||||||
|
(Decrease) increase
|
(517.3
|
)
|
|
(115.4
|
)
|
|
39.6
|
|
|
(593.1
|
)
|
||||
|
Income tax impact
|
—
|
|
|
38.9
|
|
|
(14.8
|
)
|
|
24.1
|
|
||||
|
Other comprehensive income (loss) before reclassifications, net of income taxes
|
(517.3
|
)
|
|
(76.5
|
)
|
|
24.8
|
|
|
(569.0
|
)
|
||||
|
Amounts reclassified from accumulated other comprehensive income (loss):
|
|
|
|
|
|
|
|
||||||||
|
Increase (decrease)
|
—
|
|
|
28.0
|
|
(a)
|
(223.4
|
)
|
(b)
|
(195.4
|
)
|
||||
|
Income tax impact
|
—
|
|
|
(9.7
|
)
|
|
83.8
|
|
|
74.1
|
|
||||
|
Amounts reclassified from accumulated other comprehensive income (loss), net of income taxes
|
—
|
|
|
18.3
|
|
|
(139.6
|
)
|
|
(121.3
|
)
|
||||
|
Net current period other comprehensive income (loss), net of income taxes
|
(517.3
|
)
|
|
(58.2
|
)
|
|
(114.8
|
)
|
|
(690.3
|
)
|
||||
|
Distribution of Fortive Corporation
|
(83.5
|
)
|
|
63.3
|
|
(c)
|
—
|
|
|
(20.2
|
)
|
||||
|
Balance, December 31, 2016
|
(2,398.2
|
)
|
|
(642.2
|
)
|
|
18.7
|
|
|
(3,021.7
|
)
|
||||
|
Other comprehensive income (loss) before reclassifications:
|
|
|
|
|
|
|
|
||||||||
|
Increase
|
976.1
|
|
|
62.4
|
|
|
41.7
|
|
|
1,080.2
|
|
||||
|
Income tax impact
|
—
|
|
|
(13.4
|
)
|
|
(15.7
|
)
|
|
(29.1
|
)
|
||||
|
Other comprehensive income (loss) before reclassifications, net of income taxes
|
976.1
|
|
|
49.0
|
|
|
26.0
|
|
|
1,051.1
|
|
||||
|
Amounts reclassified from accumulated other comprehensive income (loss):
|
|
|
|
|
|
|
|
||||||||
|
Increase (decrease)
|
—
|
|
|
28.7
|
|
(a)
|
(72.8
|
)
|
(b)
|
(44.1
|
)
|
||||
|
Income tax impact
|
—
|
|
|
(6.7
|
)
|
|
27.2
|
|
|
20.5
|
|
||||
|
Amounts reclassified from accumulated other comprehensive income (loss), net of income taxes
|
—
|
|
|
22.0
|
|
|
(45.6
|
)
|
|
(23.6
|
)
|
||||
|
Net current period other comprehensive income (loss), net of income taxes
|
976.1
|
|
|
71.0
|
|
|
(19.6
|
)
|
|
1,027.5
|
|
||||
|
Balance, December 31, 2017
|
(1,422.1
|
)
|
|
(571.2
|
)
|
|
(0.9
|
)
|
|
(1,994.2
|
)
|
||||
|
Adoption of accounting standards
|
(43.8
|
)
|
|
(107.2
|
)
|
|
(0.2
|
)
|
|
(151.2
|
)
|
||||
|
Balance, January 1, 2018
|
(1,465.9
|
)
|
|
(678.4
|
)
|
|
(1.1
|
)
|
|
(2,145.4
|
)
|
||||
|
Other comprehensive income (loss) before reclassifications:
|
|
|
|
|
|
|
|
||||||||
|
Decrease
|
(632.2
|
)
|
|
(44.9
|
)
|
|
(1.1
|
)
|
|
(678.2
|
)
|
||||
|
Income tax impact
|
—
|
|
|
9.2
|
|
|
0.3
|
|
|
9.5
|
|
||||
|
Other comprehensive income (loss) before reclassifications, net of income taxes
|
(632.2
|
)
|
|
(35.7
|
)
|
|
(0.8
|
)
|
|
(668.7
|
)
|
||||
|
Amounts reclassified from accumulated other comprehensive income (loss):
|
|
|
|
|
|
|
|
||||||||
|
Increase
|
—
|
|
|
30.3
|
|
(a)
|
—
|
|
|
30.3
|
|
||||
|
Income tax impact
|
—
|
|
|
(7.3
|
)
|
|
—
|
|
|
(7.3
|
)
|
||||
|
Amounts reclassified from accumulated other comprehensive income (loss), net of income taxes
|
—
|
|
|
23.0
|
|
|
—
|
|
|
23.0
|
|
||||
|
Net current period other comprehensive income (loss), net of income taxes
|
(632.2
|
)
|
|
(12.7
|
)
|
|
(0.8
|
)
|
|
(645.7
|
)
|
||||
|
Balance, December 31, 2018
|
$
|
(2,098.1
|
)
|
|
$
|
(691.1
|
)
|
|
$
|
(1.9
|
)
|
|
$
|
(2,791.1
|
)
|
|
(a)
|
This accumulated other comprehensive income (loss) component is included in the computation of net periodic pension and postretirement cost (refer to Notes
11
and
12
for additional details).
|
|
(b)
|
Included in other income in the accompanying Consolidated Statements of Earnings (refer to Note
14
for additional details).
|
|
(c)
|
This accumulated other comprehensive income (loss) component included an income tax impact of
$21 million
.
|
|
|
Life Sciences
|
|
Diagnostics
|
|
Dental
|
|
Environmental & Applied Solutions
|
|
Total
|
||||||||||
|
Geographical region:
|
|
|
|
|
|
|
|
|
|
||||||||||
|
North America
|
$
|
2,295.6
|
|
|
$
|
2,403.4
|
|
|
$
|
1,350.4
|
|
|
$
|
1,770.7
|
|
|
$
|
7,820.1
|
|
|
Western Europe
|
1,846.7
|
|
|
1,155.4
|
|
|
659.6
|
|
|
1,059.1
|
|
|
4,720.8
|
|
|||||
|
Other developed markets
|
570.0
|
|
|
379.1
|
|
|
179.9
|
|
|
125.7
|
|
|
1,254.7
|
|
|||||
|
High-growth markets
|
1,759.1
|
|
|
2,319.7
|
|
|
654.6
|
|
|
1,364.0
|
|
|
6,097.4
|
|
|||||
|
Total
|
$
|
6,471.4
|
|
|
$
|
6,257.6
|
|
|
$
|
2,844.5
|
|
|
$
|
4,319.5
|
|
|
$
|
19,893.0
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Revenue type:
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Recurring
|
$
|
4,131.8
|
|
|
$
|
5,272.0
|
|
|
$
|
2,039.8
|
|
|
$
|
2,280.0
|
|
|
$
|
13,723.6
|
|
|
Nonrecurring
|
2,339.6
|
|
|
985.6
|
|
|
804.7
|
|
|
2,039.5
|
|
|
6,169.4
|
|
|||||
|
Total
|
$
|
6,471.4
|
|
|
$
|
6,257.6
|
|
|
$
|
2,844.5
|
|
|
$
|
4,319.5
|
|
|
$
|
19,893.0
|
|
|
|
2018
|
|
2017
|
|
2016
|
||||||
|
Trade accounts receivable
|
$
|
41.1
|
|
|
$
|
21.6
|
|
|
$
|
97.8
|
|
|
Inventories
|
14.8
|
|
|
21.3
|
|
|
204.8
|
|
|||
|
Property, plant and equipment
|
88.4
|
|
|
9.1
|
|
|
161.8
|
|
|||
|
Goodwill
|
1,275.4
|
|
|
267.6
|
|
|
3,061.8
|
|
|||
|
Other intangible assets, primarily customer relationships, trade names and technology
|
850.7
|
|
|
155.1
|
|
|
1,867.0
|
|
|||
|
In-process research and development
|
—
|
|
|
—
|
|
|
65.0
|
|
|||
|
Trade accounts payable
|
(6.7
|
)
|
|
(9.9
|
)
|
|
(50.7
|
)
|
|||
|
Other assets and liabilities, net
|
(66.5
|
)
|
|
(75.0
|
)
|
|
(518.0
|
)
|
|||
|
Assumed debt
|
—
|
|
|
—
|
|
|
(1.0
|
)
|
|||
|
Attributable to noncontrolling interest
|
—
|
|
|
(4.0
|
)
|
|
—
|
|
|||
|
Net assets acquired
|
2,197.2
|
|
|
385.8
|
|
|
4,888.5
|
|
|||
|
Less: noncash consideration
|
(23.9
|
)
|
|
—
|
|
|
(8.4
|
)
|
|||
|
Net cash consideration
|
$
|
2,173.3
|
|
|
$
|
385.8
|
|
|
$
|
4,880.1
|
|
|
|
IDT
|
|
Other
|
|
Total
|
||||||
|
Trade accounts receivable
|
$
|
36.0
|
|
|
$
|
5.1
|
|
|
$
|
41.1
|
|
|
Inventories
|
14.8
|
|
|
—
|
|
|
14.8
|
|
|||
|
Property, plant and equipment
|
88.2
|
|
|
0.2
|
|
|
88.4
|
|
|||
|
Goodwill
|
1,212.6
|
|
|
62.8
|
|
|
1,275.4
|
|
|||
|
Other intangible assets, primarily customer relationships, trade names and technology
|
811.0
|
|
|
39.7
|
|
|
850.7
|
|
|||
|
Trade accounts payable
|
(5.5
|
)
|
|
(1.2
|
)
|
|
(6.7
|
)
|
|||
|
Other assets and liabilities, net
|
(55.0
|
)
|
|
(11.5
|
)
|
|
(66.5
|
)
|
|||
|
Net assets acquired
|
2,102.1
|
|
|
95.1
|
|
|
2,197.2
|
|
|||
|
Less: noncash consideration
|
(23.9
|
)
|
|
—
|
|
|
(23.9
|
)
|
|||
|
Net cash consideration
|
$
|
2,078.2
|
|
|
$
|
95.1
|
|
|
$
|
2,173.3
|
|
|
|
Cepheid
|
|
Others
|
|
Total
|
||||||
|
Trade accounts receivable
|
$
|
61.4
|
|
|
$
|
36.4
|
|
|
$
|
97.8
|
|
|
Inventories
|
165.8
|
|
|
39.0
|
|
|
204.8
|
|
|||
|
Property, plant and equipment
|
144.5
|
|
|
17.3
|
|
|
161.8
|
|
|||
|
Goodwill
|
2,584.0
|
|
|
477.8
|
|
|
3,061.8
|
|
|||
|
Other intangible assets, primarily customer relationships, trade names and technology
|
1,480.0
|
|
|
387.0
|
|
|
1,867.0
|
|
|||
|
In-process research and development
|
65.0
|
|
|
—
|
|
|
65.0
|
|
|||
|
Trade accounts payable
|
(41.2
|
)
|
|
(9.5
|
)
|
|
(50.7
|
)
|
|||
|
Other assets and liabilities, net
|
(452.4
|
)
|
|
(65.6
|
)
|
|
(518.0
|
)
|
|||
|
Assumed debt
|
(1.0
|
)
|
|
—
|
|
|
(1.0
|
)
|
|||
|
Net assets acquired
|
4,006.1
|
|
|
882.4
|
|
|
4,888.5
|
|
|||
|
Less: noncash consideration
|
(8.4
|
)
|
|
—
|
|
|
(8.4
|
)
|
|||
|
Net cash consideration
|
$
|
3,997.7
|
|
|
$
|
882.4
|
|
|
$
|
4,880.1
|
|
|
|
2018
|
|
2017
|
||||
|
Sales
|
$
|
19,995.7
|
|
|
$
|
18,744.7
|
|
|
Net earnings from continuing operations
|
2,652.9
|
|
|
2,449.8
|
|
||
|
Diluted net earnings per share from continuing operations
|
3.74
|
|
|
3.47
|
|
||
|
|
2017
|
|
2016
|
||||
|
Sales
|
$
|
—
|
|
|
$
|
3,029.8
|
|
|
Cost of sales
|
—
|
|
|
(1,566.4
|
)
|
||
|
Selling, general and administrative expenses
|
—
|
|
|
(696.0
|
)
|
||
|
Research and development expenses
|
—
|
|
|
(190.4
|
)
|
||
|
Interest expense
|
—
|
|
|
(19.7
|
)
|
||
|
Income from discontinued operations before income taxes
|
—
|
|
|
557.3
|
|
||
|
Income taxes
|
22.3
|
|
|
(157.0
|
)
|
||
|
Earnings from discontinued operations, net of income taxes
|
$
|
22.3
|
|
|
$
|
400.3
|
|
|
|
2018
|
|
2017
|
||||
|
Finished goods
|
$
|
1,031.2
|
|
|
$
|
982.5
|
|
|
Work in process
|
313.9
|
|
|
309.7
|
|
||
|
Raw materials
|
565.0
|
|
|
548.6
|
|
||
|
Total
|
$
|
1,910.1
|
|
|
$
|
1,840.8
|
|
|
|
2018
|
|
2017
|
||||
|
Land and improvements
|
$
|
176.5
|
|
|
$
|
155.6
|
|
|
Buildings
|
1,047.8
|
|
|
1,009.5
|
|
||
|
Machinery and equipment
|
2,482.3
|
|
|
2,239.5
|
|
||
|
Customer-leased equipment
|
1,632.9
|
|
|
1,569.4
|
|
||
|
Gross property, plant and equipment
|
5,339.5
|
|
|
4,974.0
|
|
||
|
Less: accumulated depreciation
|
(2,828.3
|
)
|
|
(2,519.4
|
)
|
||
|
Property, plant and equipment, net
|
$
|
2,511.2
|
|
|
$
|
2,454.6
|
|
|
|
Life
Sciences
|
|
Diagnostics
|
|
Dental
|
|
Environmental & Applied Solutions
|
|
Total
|
||||||||||
|
Balance, January 1, 2017
|
$
|
11,610.3
|
|
|
$
|
6,903.0
|
|
|
$
|
3,215.6
|
|
|
$
|
2,098.0
|
|
|
$
|
23,826.9
|
|
|
Attributable to 2017 acquisitions
|
95.5
|
|
|
—
|
|
|
2.8
|
|
|
169.3
|
|
|
267.6
|
|
|||||
|
Adjustments due to finalization of purchase price allocations
|
(19.1
|
)
|
|
(39.6
|
)
|
(a)
|
8.8
|
|
|
—
|
|
|
(49.9
|
)
|
|||||
|
Foreign currency translation and other
|
648.8
|
|
|
216.1
|
|
|
142.8
|
|
|
86.3
|
|
|
1,094.0
|
|
|||||
|
Balance, December 31, 2017
|
12,335.5
|
|
|
7,079.5
|
|
|
3,370.0
|
|
|
2,353.6
|
|
|
25,138.6
|
|
|||||
|
Attributable to 2018 acquisitions
|
1,212.6
|
|
|
—
|
|
|
—
|
|
|
62.8
|
|
|
1,275.4
|
|
|||||
|
Adjustments due to finalization of purchase price allocations
|
2.8
|
|
|
—
|
|
|
—
|
|
|
4.7
|
|
|
7.5
|
|
|||||
|
Foreign currency translation and other
|
(239.9
|
)
|
|
(153.9
|
)
|
|
(44.5
|
)
|
|
(77.2
|
)
|
|
(515.5
|
)
|
|||||
|
Balance, December 31, 2018
|
$
|
13,311.0
|
|
|
$
|
6,925.6
|
|
|
$
|
3,325.5
|
|
|
$
|
2,343.9
|
|
|
$
|
25,906.0
|
|
|
(a)
|
This adjustment is primarily related to finalization of the Cepheid purchase price allocations.
|
|
|
2018
|
|
2017
|
||||||||||||
|
|
Gross
Carrying
Amount
|
|
Accumulated
Amortization
|
|
Gross
Carrying
Amount
|
|
Accumulated
Amortization
|
||||||||
|
Finite-lived intangibles:
|
|
|
|
|
|
|
|
||||||||
|
Patents and technology
|
$
|
2,985.3
|
|
|
$
|
(945.2
|
)
|
|
$
|
2,363.5
|
|
|
$
|
(783.7
|
)
|
|
Customer relationships and other intangibles
|
7,302.8
|
|
|
(2,661.3
|
)
|
|
7,354.9
|
|
|
(2,203.6
|
)
|
||||
|
Trademarks and trade names
|
190.7
|
|
|
(28.0
|
)
|
|
23.9
|
|
|
(14.0
|
)
|
||||
|
Total finite-lived intangibles
|
10,478.8
|
|
|
(3,634.5
|
)
|
|
9,742.3
|
|
|
(3,001.3
|
)
|
||||
|
Indefinite-lived intangibles:
|
|
|
|
|
|
|
|
||||||||
|
Trademarks and trade names
|
4,828.8
|
|
|
—
|
|
|
4,926.1
|
|
|
—
|
|
||||
|
Total intangibles
|
$
|
15,307.6
|
|
|
$
|
(3,634.5
|
)
|
|
$
|
14,668.4
|
|
|
$
|
(3,001.3
|
)
|
|
|
Quoted Prices in
Active Market
(Level 1)
|
|
Significant Other
Observable Inputs
(Level 2)
|
|
Significant
Unobservable
Inputs (Level 3)
|
|
Total
|
||||||||
|
December 31, 2018:
|
|
|
|
|
|
|
|
||||||||
|
Assets:
|
|
|
|
|
|
|
|
||||||||
|
Available-for-sale debt securities
|
$
|
—
|
|
|
$
|
38.3
|
|
|
$
|
—
|
|
|
$
|
38.3
|
|
|
Investment in equity securities
|
—
|
|
|
—
|
|
|
148.9
|
|
|
148.9
|
|
||||
|
Liabilities:
|
|
|
|
|
|
|
|
||||||||
|
Deferred compensation plans
|
—
|
|
|
60.9
|
|
|
—
|
|
|
60.9
|
|
||||
|
December 31, 2017:
|
|
|
|
|
|
|
|
||||||||
|
Assets:
|
|
|
|
|
|
|
|
||||||||
|
Available-for-sale debt securities
|
$
|
—
|
|
|
$
|
45.4
|
|
|
$
|
—
|
|
|
$
|
45.4
|
|
|
Liabilities:
|
|
|
|
|
|
|
|
||||||||
|
Deferred compensation plans
|
—
|
|
|
62.9
|
|
|
—
|
|
|
62.9
|
|
||||
|
|
2018
|
|
2017
|
||||||||||||
|
|
Carrying
Amount
|
|
Fair Value
|
|
Carrying
Amount
|
|
Fair Value
|
||||||||
|
Assets:
|
|
|
|
|
|
|
|
||||||||
|
Available-for-sale debt securities
|
$
|
38.3
|
|
|
$
|
38.3
|
|
|
$
|
45.4
|
|
|
$
|
45.4
|
|
|
Investment in equity securities
|
148.9
|
|
|
148.9
|
|
|
—
|
|
|
—
|
|
||||
|
Liabilities:
|
|
|
|
|
|
|
|
||||||||
|
Notes payable and current portion of long-term debt
|
51.8
|
|
|
51.8
|
|
|
194.7
|
|
|
194.7
|
|
||||
|
Long-term debt
|
9,688.5
|
|
|
9,990.6
|
|
|
10,327.4
|
|
|
10,847.1
|
|
||||
|
|
2018
|
|
2017
|
||||||||||||
|
|
Current
|
|
Noncurrent
|
|
Current
|
|
Noncurrent
|
||||||||
|
Compensation and benefits
|
$
|
1,026.8
|
|
|
$
|
236.9
|
|
|
$
|
961.0
|
|
|
$
|
236.2
|
|
|
Pension and postretirement benefits
|
75.2
|
|
|
961.9
|
|
|
95.8
|
|
|
1,052.0
|
|
||||
|
Taxes, income and other
|
292.4
|
|
|
3,577.7
|
|
|
386.4
|
|
|
3,543.6
|
|
||||
|
Deferred revenue
|
685.2
|
|
|
113.8
|
|
|
666.0
|
|
|
104.9
|
|
||||
|
Sales and product allowances
|
167.8
|
|
|
2.0
|
|
|
155.7
|
|
|
2.0
|
|
||||
|
Other
|
829.5
|
|
|
183.5
|
|
|
822.8
|
|
|
222.4
|
|
||||
|
Total
|
$
|
3,076.9
|
|
|
$
|
5,075.8
|
|
|
$
|
3,087.7
|
|
|
$
|
5,161.1
|
|
|
|
2018
|
|
2017
|
||||
|
U.S. dollar-denominated commercial paper
|
$
|
72.8
|
|
|
$
|
436.9
|
|
|
Euro-denominated commercial paper (€2.1 billion and €1.7 billion, respectively)
|
2,377.5
|
|
|
1,993.9
|
|
||
|
1.65% senior unsecured notes due 2018 (the “2018 U.S. Notes”)
|
—
|
|
|
499.2
|
|
||
|
1.0% senior unsecured notes due 2019 (€600.0 million aggregate principal amount) (the “2019 Euronotes”)
|
687.0
|
|
|
718.4
|
|
||
|
2.4% senior unsecured notes due 2020 (the “2020 U.S. Notes”)
|
498.5
|
|
|
497.7
|
|
||
|
5.0% senior unsecured notes due 2020 (the “2020 Assumed Pall Notes”)
|
386.7
|
|
|
394.6
|
|
||
|
Zero-coupon LYONs due 2021
|
56.2
|
|
|
69.1
|
|
||
|
0.352% senior unsecured notes due 2021 (¥30.0 billion aggregate principal amount) (the “2021 Yen Notes”)
|
273.2
|
|
|
265.5
|
|
||
|
1.7% senior unsecured notes due 2022 (€800.0 million aggregate principal amount) (the “2022 Euronotes”)
|
913.2
|
|
|
955.6
|
|
||
|
Floating rate senior unsecured notes due 2022 (€250.0 million aggregate principal amount) (the "Floating Rate 2022 Euronotes")
|
285.7
|
|
|
299.1
|
|
||
|
0.5% senior unsecured bonds due 2023 (CHF 540.0 million aggregate principal amount) (the “2023 CHF Bonds”)
|
550.7
|
|
|
555.5
|
|
||
|
2.5% senior unsecured notes due 2025 (€800.0 million aggregate principal amount) (the “2025 Euronotes”)
|
912.6
|
|
|
955.6
|
|
||
|
3.35% senior unsecured notes due 2025 (the “2025 U.S. Notes”)
|
496.8
|
|
|
496.3
|
|
||
|
0.3% senior unsecured notes due 2027 (¥30.8 billion aggregate principal amount) (the “2027 Yen Notes”)
|
279.9
|
|
|
272.2
|
|
||
|
1.2% senior unsecured notes due 2027 (€600.0 million aggregate principal amount) (the “2027 Euronotes”)
|
682.0
|
|
|
714.1
|
|
||
|
1.125% senior unsecured bonds due 2028 (CHF 210.0 million aggregate principal amount) (the “2028 CHF Bonds”)
|
218.1
|
|
|
220.3
|
|
||
|
0.65% senior unsecured notes due 2032 (¥53.2 billion aggregate principal amount) (the “2032 Yen Notes”)
|
483.4
|
|
|
470.2
|
|
||
|
4.375% senior unsecured notes due 2045 (the “2045 U.S. Notes”)
|
499.3
|
|
|
499.3
|
|
||
|
Other
|
66.7
|
|
|
208.6
|
|
||
|
Total debt
|
9,740.3
|
|
|
10,522.1
|
|
||
|
Less: currently payable
|
51.8
|
|
|
194.7
|
|
||
|
Long-term debt
|
$
|
9,688.5
|
|
|
$
|
10,327.4
|
|
|
|
Outstanding Balance as of December 31, 2018
|
|
Stated Annual Interest Rate
|
|
Issue Price (as % of Principal Amount)
|
|
Issue Date
|
|
Maturity Date
|
|
Interest Payment Dates (in arrears)
|
||||
|
2019 Euronotes
(1)
|
$
|
687.0
|
|
|
1.0
|
%
|
|
99.696
|
%
|
|
July 8, 2015
|
|
July 8, 2019
|
|
July 8
|
|
2020 U.S. Notes
(3)
|
498.5
|
|
|
2.4
|
%
|
|
99.757
|
%
|
|
September 15, 2015
|
|
September 15, 2020
|
|
March 15 and September 15
|
|
|
2020 Assumed Pall Notes
(5)
|
386.7
|
|
|
5.0
|
%
|
|
not applicable
|
|
|
not applicable
|
|
June 15, 2020
|
|
June 15 and December 15
|
|
|
2021 LYONs
|
56.2
|
|
|
see below
|
|
|
not applicable
|
|
|
January 22, 2001
|
|
January 22, 2021
|
|
January 22 and July 22
|
|
|
2021 Yen Notes
(4)
|
273.2
|
|
|
0.352
|
%
|
|
100
|
%
|
|
February 28, 2016
|
|
March 16, 2021
|
|
September 16
|
|
|
2022 Euronotes
(1)
|
913.2
|
|
|
1.7
|
%
|
|
99.651
|
%
|
|
July 8, 2015
|
|
January 4, 2022
|
|
January 4
|
|
|
Floating Rate 2022 Euronotes
(6)
|
285.7
|
|
|
three-month EURIBOR + 0.3%
|
|
|
100.147
|
%
|
|
June 30, 2017
|
|
June 30, 2022
|
|
March 30, June 30, September 30 and December 31
|
|
|
2023 CHF Bonds
(2)
|
550.7
|
|
|
0.5
|
%
|
|
100.924
|
%
|
|
December 8, 2015
|
|
December 8, 2023
|
|
December 8
|
|
|
2025 Euronotes
(1)
|
912.6
|
|
|
2.5
|
%
|
|
99.878
|
%
|
|
July 8, 2015
|
|
July 8, 2025
|
|
July 8
|
|
|
2025 U.S. Notes
(3)
|
496.8
|
|
|
3.35
|
%
|
|
99.857
|
%
|
|
September 15, 2015
|
|
September 15, 2025
|
|
March 15 and September 15
|
|
|
2027 Yen Notes
(7)
|
279.9
|
|
|
0.3
|
%
|
|
100
|
%
|
|
May 11, 2017
|
|
May 11, 2027
|
|
May 11 and November 11
|
|
|
2027 Euronotes
(6)
|
682.0
|
|
|
1.2
|
%
|
|
99.682
|
%
|
|
June 30, 2017
|
|
June 30, 2027
|
|
June 30
|
|
|
2028 CHF Bonds
(2)
|
218.1
|
|
|
1.125
|
%
|
|
102.870
|
%
|
|
December 8, 2015 and December 8, 2017
|
|
December 8, 2028
|
|
December 8
|
|
|
2032 Yen Notes
(7)
|
483.4
|
|
|
0.65
|
%
|
|
100
|
%
|
|
May 11, 2017
|
|
May 11, 2032
|
|
May 11 and November 11
|
|
|
2045 U.S. Notes
(3)
|
499.3
|
|
|
4.375
|
%
|
|
99.784
|
%
|
|
September 15, 2015
|
|
September 15, 2045
|
|
March 15 and September 15
|
|
|
U.S. dollar and euro-denominated commercial paper
|
2,450.3
|
|
|
various
|
|
|
various
|
|
|
various
|
|
various
|
|
various
|
|
|
Other
|
66.7
|
|
|
various
|
|
|
various
|
|
|
various
|
|
various
|
|
various
|
|
|
Total debt
|
$
|
9,740.3
|
|
|
|
|
|
|
|
|
|
|
|
||
|
(1)
|
The net proceeds, after underwriting discounts and commissions and offering expenses, of approximately
€2.2 billion
(approximately
$2.4 billion
based on currency exchange rates as of the date of issuance) from these notes were used to pay a portion of the purchase price for the acquisition of Pall Corporation in 2015 (the “Pall Acquisition”).
|
|
(2)
|
The net proceeds, including the related premium, and after underwriting discounts and commissions and offering expenses, of
CHF 758 million
(
$739 million
based on currency exchange rates as of date of pricing) from these bonds were used to repay a portion of the commercial paper issued to finance the Pall Acquisition and the
CHF 100 million
aggregate principal amount of the
0.0%
senior unsecured bonds (the “2017 CHF Bonds”) that matured in December 2017.
|
|
(3)
|
The net proceeds, after underwriting discounts and commissions and offering expenses, of approximately
$2.0 billion
from these notes were used to repay a portion of the commercial paper issued to finance the Pall Acquisition.
|
|
(4)
|
The net proceeds, after offering expenses, of approximately
¥29.9 billion
(
$262 million
based on currency exchange rates as of the date of issuance) from these notes were used to repay a portion of the commercial paper borrowings issued to finance the Pall Acquisition.
|
|
(5)
|
In connection with the Pall Acquisition, the Company acquired senior unsecured notes previously issued by Pall with an aggregate principal amount of
$375 million
. In accordance with accounting for business combinations, these notes were recorded at their fair value of
$417 million
on the date of acquisition and for accounting purposes, interest charges on these notes recorded in the Company’s Consolidated Statement of Earnings reflect an effective interest rate of approximately
2.9%
per year.
|
|
(6)
|
The net proceeds at issuance, after offering expenses, of
€843 million
(
$940 million
based on currency exchange rates as of the date of pricing) from these notes were used to partially repay commercial paper borrowings.
|
|
(7)
|
The net proceeds at issuance, after offering expenses, of approximately
¥83.6 billion
(
$744 million
based on currency exchange rates as of the date of pricing) from these notes were used to partially repay commercial paper borrowings.
|
|
2019
|
$
|
51.8
|
|
|
2020
|
4,021.8
|
|
|
|
2021
|
327.5
|
|
|
|
2022
|
1,211.9
|
|
|
|
2023
|
548.1
|
|
|
|
Thereafter
|
3,579.2
|
|
|
|
|
U.S. Pension Benefits
|
|
Non-U.S. Pension Benefits
|
||||||||||||
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
|
Change in pension benefit obligation:
|
|
|
|
|
|
|
|
||||||||
|
Benefit obligation at beginning of year
|
$
|
(2,612.9
|
)
|
|
$
|
(2,558.1
|
)
|
|
$
|
(1,571.8
|
)
|
|
$
|
(1,493.0
|
)
|
|
Service cost
|
(6.7
|
)
|
|
(7.3
|
)
|
|
(35.5
|
)
|
|
(32.7
|
)
|
||||
|
Interest cost
|
(81.0
|
)
|
|
(82.3
|
)
|
|
(25.1
|
)
|
|
(25.5
|
)
|
||||
|
Employee contributions
|
—
|
|
|
—
|
|
|
(9.3
|
)
|
|
(8.2
|
)
|
||||
|
Benefits and other expenses paid
|
179.0
|
|
|
181.8
|
|
|
51.4
|
|
|
58.3
|
|
||||
|
Acquisitions and other
|
—
|
|
|
—
|
|
|
(3.6
|
)
|
|
—
|
|
||||
|
Actuarial gain (loss)
|
145.2
|
|
|
(139.9
|
)
|
|
68.9
|
|
|
51.4
|
|
||||
|
Amendments, settlements and curtailments
|
31.4
|
|
|
(7.1
|
)
|
|
26.5
|
|
|
10.5
|
|
||||
|
Foreign exchange rate impact
|
—
|
|
|
—
|
|
|
56.2
|
|
|
(132.6
|
)
|
||||
|
Benefit obligation at end of year
|
(2,345.0
|
)
|
|
(2,612.9
|
)
|
|
(1,442.3
|
)
|
|
(1,571.8
|
)
|
||||
|
Change in plan assets:
|
|
|
|
|
|
|
|
||||||||
|
Fair value of plan assets at beginning of year
|
2,004.9
|
|
|
1,868.2
|
|
|
1,199.3
|
|
|
1,042.9
|
|
||||
|
Actual (loss) return on plan assets
|
(72.1
|
)
|
|
265.3
|
|
|
(19.9
|
)
|
|
74.6
|
|
||||
|
Employer contributions
|
55.1
|
|
|
53.2
|
|
|
52.4
|
|
|
44.7
|
|
||||
|
Employee contributions
|
—
|
|
|
—
|
|
|
9.3
|
|
|
8.2
|
|
||||
|
Amendments and settlements
|
(30.6
|
)
|
|
—
|
|
|
(28.2
|
)
|
|
(3.7
|
)
|
||||
|
Benefits and other expenses paid
|
(179.0
|
)
|
|
(181.8
|
)
|
|
(51.4
|
)
|
|
(58.3
|
)
|
||||
|
Acquisitions and other
|
—
|
|
|
—
|
|
|
1.9
|
|
|
—
|
|
||||
|
Foreign exchange rate impact
|
—
|
|
|
—
|
|
|
(45.0
|
)
|
|
90.9
|
|
||||
|
Fair value of plan assets at end of year
|
1,778.3
|
|
|
2,004.9
|
|
|
1,118.4
|
|
|
1,199.3
|
|
||||
|
Funded status
|
$
|
(566.7
|
)
|
|
$
|
(608.0
|
)
|
|
$
|
(323.9
|
)
|
|
$
|
(372.5
|
)
|
|
|
U.S. Plans
|
|
Non-U.S. Plans
|
||||||||
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||
|
Discount rate
|
4.3
|
%
|
|
3.6
|
%
|
|
2.0
|
%
|
|
1.8
|
%
|
|
Rate of compensation increase
|
4.0
|
%
|
|
4.0
|
%
|
|
2.3
|
%
|
|
2.2
|
%
|
|
|
U.S. Pension Benefits
|
|
Non-U.S. Pension Benefits
|
||||||||||||
|
($ in millions)
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
|
Service cost
|
$
|
(6.7
|
)
|
|
$
|
(7.3
|
)
|
|
$
|
(35.5
|
)
|
|
$
|
(32.7
|
)
|
|
Interest cost
|
(81.0
|
)
|
|
(82.3
|
)
|
|
(25.1
|
)
|
|
(25.5
|
)
|
||||
|
Expected return on plan assets
|
132.0
|
|
|
130.5
|
|
|
46.9
|
|
|
42.4
|
|
||||
|
Amortization of prior service (cost) credit
|
(0.9
|
)
|
|
—
|
|
|
0.5
|
|
|
0.3
|
|
||||
|
Amortization of net loss
|
(31.3
|
)
|
|
(24.9
|
)
|
|
(6.0
|
)
|
|
(7.8
|
)
|
||||
|
Curtailment and settlement gains recognized
|
—
|
|
|
—
|
|
|
4.9
|
|
|
0.5
|
|
||||
|
Net periodic pension benefit (cost)
|
$
|
12.1
|
|
|
$
|
16.0
|
|
|
$
|
(14.3
|
)
|
|
$
|
(22.8
|
)
|
|
|
Year Ended December 31
|
||||||||||
|
|
2018
|
|
2017
|
|
2016
|
||||||
|
Service cost:
|
|
|
|
|
|
||||||
|
Cost of sales
|
$
|
(11.4
|
)
|
|
$
|
(8.2
|
)
|
|
$
|
(9.8
|
)
|
|
Selling, general and administrative expenses
|
(30.8
|
)
|
|
(31.8
|
)
|
|
(35.6
|
)
|
|||
|
Total service cost
|
(42.2
|
)
|
|
(40.0
|
)
|
|
(45.4
|
)
|
|||
|
Other net periodic pension costs:
|
|
|
|
|
|
||||||
|
Nonoperating income (expense), net
|
40.0
|
|
|
33.2
|
|
|
19.2
|
|
|||
|
Total
|
$
|
(2.2
|
)
|
|
$
|
(6.8
|
)
|
|
$
|
(26.2
|
)
|
|
|
U.S. Plans
|
|
Non-U.S. Plans
|
||||||||
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||
|
Discount rate
|
3.6
|
%
|
|
4.1
|
%
|
|
1.8
|
%
|
|
1.8
|
%
|
|
Expected long-term return on plan assets
|
7.0
|
%
|
|
7.0
|
%
|
|
3.9
|
%
|
|
3.9
|
%
|
|
Rate of compensation increase
|
4.0
|
%
|
|
4.0
|
%
|
|
2.3
|
%
|
|
2.9
|
%
|
|
|
Quoted Prices in Active Market (Level 1)
|
|
Significant Other Observable Inputs (Level 2)
|
|
Significant Unobservable Inputs (Level 3)
|
|
Total
|
||||||||
|
Cash and equivalents
|
$
|
29.7
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
29.7
|
|
|
Equity securities:
|
|
|
|
|
|
|
|
||||||||
|
Common stock
|
355.7
|
|
|
—
|
|
|
—
|
|
|
355.7
|
|
||||
|
Preferred stock
|
4.6
|
|
|
—
|
|
|
—
|
|
|
4.6
|
|
||||
|
Fixed income securities:
|
|
|
|
|
|
|
|
||||||||
|
Corporate bonds
|
—
|
|
|
76.8
|
|
|
—
|
|
|
76.8
|
|
||||
|
Government issued
|
—
|
|
|
32.8
|
|
|
—
|
|
|
32.8
|
|
||||
|
Mutual funds
|
284.6
|
|
|
205.2
|
|
|
—
|
|
|
489.8
|
|
||||
|
Insurance contracts
|
—
|
|
|
168.7
|
|
|
—
|
|
|
168.7
|
|
||||
|
Total
|
$
|
674.6
|
|
|
$
|
483.5
|
|
|
$
|
—
|
|
|
1,158.1
|
|
|
|
Investments measured at NAV
(a)
:
|
|
|
|
|
|
|
|
||||||||
|
Mutual funds
|
|
|
|
|
|
|
179.8
|
|
|||||||
|
Insurance contracts
|
|
|
|
|
|
|
209.1
|
|
|||||||
|
Common collective trusts
|
|
|
|
|
|
|
957.8
|
|
|||||||
|
Venture capital, partnerships and other private investments
|
|
|
|
|
|
|
391.9
|
|
|||||||
|
Total assets at fair value
|
|
|
|
|
|
|
$
|
2,896.7
|
|
||||||
|
(a)
|
The fair value amounts presented in the table above are intended to permit reconciliation of the fair value hierarchy to the total plan assets.
|
|
|
Quoted Prices in Active Market (Level 1)
|
|
Significant Other Observable Inputs (Level 2)
|
|
Significant Unobservable Inputs (Level 3)
|
|
Total
|
||||||||
|
Cash and equivalents
|
$
|
36.0
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
36.0
|
|
|
Equity securities:
|
|
|
|
|
|
|
|
||||||||
|
Common stock
|
444.8
|
|
|
—
|
|
|
—
|
|
|
444.8
|
|
||||
|
Preferred stock
|
6.7
|
|
|
—
|
|
|
—
|
|
|
6.7
|
|
||||
|
Fixed income securities:
|
|
|
|
|
|
|
|
||||||||
|
Corporate bonds
|
—
|
|
|
113.3
|
|
|
—
|
|
|
113.3
|
|
||||
|
Government issued
|
—
|
|
|
37.5
|
|
|
—
|
|
|
37.5
|
|
||||
|
Mutual funds
|
341.5
|
|
|
147.0
|
|
|
—
|
|
|
488.5
|
|
||||
|
Insurance contracts
|
—
|
|
|
299.4
|
|
|
—
|
|
|
299.4
|
|
||||
|
Total
|
$
|
829.0
|
|
|
$
|
597.2
|
|
|
$
|
—
|
|
|
1,426.2
|
|
|
|
Investments measured at NAV
(a)
:
|
|
|
|
|
|
|
|
||||||||
|
Mutual funds
|
|
|
|
|
|
|
232.4
|
|
|||||||
|
Insurance contracts
|
|
|
|
|
|
|
72.1
|
|
|||||||
|
Common collective trusts
|
|
|
|
|
|
|
1,089.8
|
|
|||||||
|
Venture capital, partnerships and other private investments
|
|
|
|
|
|
|
383.7
|
|
|||||||
|
Total assets at fair value
|
|
|
|
|
|
|
$
|
3,204.2
|
|
||||||
|
(a)
|
The fair value amounts presented in the table above are intended to permit reconciliation of the fair value hierarchy to the total plan assets.
|
|
|
U.S. Pension Plans
|
|
Non-U.S. Pension Plans
|
|
All Pension Plans
|
||||||
|
2019
|
$
|
172.3
|
|
|
$
|
50.2
|
|
|
$
|
222.5
|
|
|
2020
|
174.1
|
|
|
52.4
|
|
|
226.5
|
|
|||
|
2021
|
174.8
|
|
|
51.1
|
|
|
225.9
|
|
|||
|
2022
|
174.3
|
|
|
54.1
|
|
|
228.4
|
|
|||
|
2023
|
174.2
|
|
|
56.3
|
|
|
230.5
|
|
|||
|
2024 - 2028
|
814.7
|
|
|
308.7
|
|
|
1,123.4
|
|
|||
|
|
2018
|
|
2017
|
||||
|
Change in benefit obligation:
|
|
|
|
||||
|
Benefit obligation at beginning of year
|
$
|
(167.3
|
)
|
|
$
|
(174.6
|
)
|
|
Service cost
|
(0.5
|
)
|
|
(0.7
|
)
|
||
|
Interest cost
|
(5.3
|
)
|
|
(5.6
|
)
|
||
|
Amendments, curtailments and other
|
1.1
|
|
|
(0.4
|
)
|
||
|
Actuarial gain (loss)
|
9.5
|
|
|
(1.5
|
)
|
||
|
Retiree contributions
|
(2.6
|
)
|
|
(2.9
|
)
|
||
|
Benefits paid
|
18.6
|
|
|
18.4
|
|
||
|
Benefit obligation at end of year
|
(146.5
|
)
|
|
(167.3
|
)
|
||
|
Change in plan assets:
|
|
|
|
||||
|
Fair value of plan assets
|
—
|
|
|
—
|
|
||
|
Funded status
|
$
|
(146.5
|
)
|
|
$
|
(167.3
|
)
|
|
|
2018
|
|
2017
|
||
|
Discount rate
|
4.2
|
%
|
|
3.5
|
%
|
|
Medical trend rate – initial
|
6.0
|
%
|
|
6.3
|
%
|
|
Medical trend rate – grading period
|
19 years
|
|
|
20 years
|
|
|
Medical trend rate – ultimate
|
4.5
|
%
|
|
4.5
|
%
|
|
($ in millions)
|
1% Increase
|
|
1% Decrease
|
||||
|
Effect on the total of service and interest cost components
|
$
|
0.3
|
|
|
$
|
(0.2
|
)
|
|
Effect on postretirement medical benefit obligation
|
4.4
|
|
|
(3.7
|
)
|
||
|
($ in millions)
|
2018
|
|
2017
|
||||
|
Service cost
|
$
|
(0.5
|
)
|
|
$
|
(0.7
|
)
|
|
Interest cost
|
(5.3
|
)
|
|
(5.6
|
)
|
||
|
Amortization of net gain
|
—
|
|
|
0.1
|
|
||
|
Amortization of prior service credit
|
2.5
|
|
|
3.1
|
|
||
|
Net periodic benefit cost
|
$
|
(3.3
|
)
|
|
$
|
(3.1
|
)
|
|
|
Year Ended December 31
|
||||||||||
|
|
2018
|
|
2017
|
|
2016
|
||||||
|
Service cost:
|
|
|
|
|
|
||||||
|
Cost of sales
|
$
|
(0.1
|
)
|
|
$
|
(0.1
|
)
|
|
$
|
(0.2
|
)
|
|
Selling, general and administrative expenses
|
(0.4
|
)
|
|
(0.6
|
)
|
|
(0.5
|
)
|
|||
|
Total service cost
|
(0.5
|
)
|
|
(0.7
|
)
|
|
(0.7
|
)
|
|||
|
Other net periodic pension costs:
|
|
|
|
|
|
||||||
|
Nonoperating income (expense), net
|
(2.8
|
)
|
|
(2.4
|
)
|
|
(3.5
|
)
|
|||
|
Total
|
$
|
(3.3
|
)
|
|
$
|
(3.1
|
)
|
|
$
|
(4.2
|
)
|
|
2019
|
$
|
15.2
|
|
|
2020
|
14.5
|
|
|
|
2021
|
13.8
|
|
|
|
2022
|
13.1
|
|
|
|
2023
|
12.3
|
|
|
|
2024 - 2028
|
54.1
|
|
|
|
|
2018
|
|
2017
|
|
2016
|
||||||
|
United States
|
$
|
914.2
|
|
|
$
|
927.2
|
|
|
$
|
647.7
|
|
|
International
|
2,378.6
|
|
|
2,011.6
|
|
|
1,963.6
|
|
|||
|
Total
|
$
|
3,292.8
|
|
|
$
|
2,938.8
|
|
|
$
|
2,611.3
|
|
|
|
2018
|
|
2017
|
|
2016
|
||||||
|
Current:
|
|
|
|
|
|
||||||
|
Federal U.S.
|
$
|
278.8
|
|
|
$
|
448.3
|
|
|
$
|
237.2
|
|
|
Non-U.S.
|
494.3
|
|
|
457.2
|
|
|
542.9
|
|
|||
|
State and local
|
63.9
|
|
|
(9.6
|
)
|
|
61.7
|
|
|||
|
Deferred:
|
|
|
|
|
|
||||||
|
Federal U.S.
|
(157.2
|
)
|
|
(424.7
|
)
|
|
(237.5
|
)
|
|||
|
Non-U.S.
|
(6.8
|
)
|
|
(61.5
|
)
|
|
(104.2
|
)
|
|||
|
State and local
|
(31.1
|
)
|
|
59.3
|
|
|
(42.2
|
)
|
|||
|
Income tax provision
|
$
|
641.9
|
|
|
$
|
469.0
|
|
|
$
|
457.9
|
|
|
|
2018
|
|
2017
|
||||
|
Deferred tax assets:
|
|
|
|
||||
|
Allowance for doubtful accounts
|
$
|
19.7
|
|
|
$
|
18.6
|
|
|
Inventories
|
81.2
|
|
|
95.9
|
|
||
|
Pension and postretirement benefits
|
222.7
|
|
|
250.6
|
|
||
|
Environmental and regulatory compliance
|
22.4
|
|
|
26.8
|
|
||
|
Other accruals and prepayments
|
223.7
|
|
|
345.8
|
|
||
|
Stock-based compensation expense
|
64.7
|
|
|
63.9
|
|
||
|
Tax credit and loss carryforwards
|
894.5
|
|
|
673.4
|
|
||
|
Valuation allowances
|
(389.6
|
)
|
|
(324.6
|
)
|
||
|
Total deferred tax asset
|
1,139.3
|
|
|
1,150.4
|
|
||
|
Deferred tax liabilities:
|
|
|
|
||||
|
Property, plant and equipment
|
(90.0
|
)
|
|
(63.4
|
)
|
||
|
Insurance, including self-insurance
|
(564.0
|
)
|
|
(696.2
|
)
|
||
|
Basis difference in LYONs
|
(21.6
|
)
|
|
(12.9
|
)
|
||
|
Goodwill and other intangibles
|
(2,774.9
|
)
|
|
(2,711.2
|
)
|
||
|
Total deferred tax liability
|
(3,450.5
|
)
|
|
(3,483.7
|
)
|
||
|
Net deferred tax liability
|
$
|
(2,311.2
|
)
|
|
$
|
(2,333.3
|
)
|
|
•
|
established a flat corporate income tax rate of
21.0%
on U.S. earnings;
|
|
•
|
imposed a one-time tax on unremitted cumulative non-U.S. earnings of foreign subsidiaries
(“Transition Tax”);
|
|
•
|
imposes a new minimum tax on certain non-U.S. earnings, irrespective of the territorial system of taxation, and generally allows for the repatriation of future earnings of foreign subsidiaries without incurring additional U.S. taxes by transitioning to a territorial system of taxation;
|
|
•
|
subjects certain payments made by a U.S. company to a related foreign company to certain minimum taxes (Base Erosion Anti-Abuse Tax);
|
|
•
|
eliminated certain prior tax incentives for manufacturing in the United States and creates an incentive for U.S. companies to sell, lease or license goods and services abroad by allowing for a reduction in taxes owed on earnings related to such sales;
|
|
•
|
allows the cost of investments in certain depreciable assets acquired and placed in service after September 27, 2017 to be immediately expensed; and
|
|
•
|
reduces deductions with respect to certain compensation paid to specified executive officers.
|
|
•
|
The Transition Tax is based on the Company’s post-1986 earnings and profits that were previously deferred from U.S. income taxes. In the year ended December 31, 2017, the Company recorded a provision amount for the Transition Tax expense resulting in an increase in income tax expense of approximately
$1.2 billion
. During 2018, the Company finalized the calculations of the Transition Tax liability and increased the provisional amount recorded in 2017 by
$40 million
, with the increase included as a component of income tax expense from continuing operations in 2018. Regulations allow the Company to reduce the Transition Tax payable by applying available foreign tax credits and other tax attributes. The Company has elected to pay the net Transition Tax payable over an
eight
-year period as permitted by the TCJA. As of December 31, 2018, the remaining Transition Tax balance to be paid over the next
seven
years is approximately
$180 million
.
|
|
•
|
In connection with finalizing the calculation of tax credits available to reduce the Transition Tax and other U.S. taxable income, the Company recorded an additional provision of
$13 million
related to net unrealizable credits which is included as a component of income tax expense from continuing operations in 2018.
|
|
•
|
U.S. deferred tax assets and liabilities were remeasured as of December 31, 2017 based upon the tax rates at which the assets and liabilities are expected to reverse in the future, which is generally
21.0%
, resulting in an income tax benefit of approximately
$1.2 billion
in 2017. Upon finalizing the provisional accounting for the remeasurement of U.S. deferred tax assets and liabilities in 2018, the Company recorded an additional tax benefit of
$47 million
, which is included as a component of income tax expense from continuing operations.
|
|
•
|
The TCJA imposes tax on U.S. shareholders for global intangible low-taxed income (“GILTI”) earned by certain foreign subsidiaries. The Company is required to make an accounting policy election of either: (1) treating taxes due on future amounts included in U.S. taxable income related to GILTI as a current period tax expense when incurred (the “period cost method”); or (2) factoring such amounts into the Company’s measurement of its deferred tax expense (the “deferred method”). As of December 31, 2017, the Company was still analyzing its global income and did not record a GILTI-related deferred tax amount. In 2018, the Company elected the period cost method for its accounting for GILTI.
|
|
|
Percentage of Pretax Earnings
|
|||||||
|
|
2018
|
|
2017
|
|
2016
|
|||
|
Statutory federal income tax rate
|
21.0
|
%
|
|
35.0
|
%
|
|
35.0
|
%
|
|
Increase (decrease) in tax rate resulting from:
|
|
|
|
|
|
|||
|
State income taxes (net of federal income tax benefit)
|
0.9
|
%
|
|
0.8
|
%
|
|
0.6
|
%
|
|
Foreign rate differential
|
(0.3
|
)%
|
|
(11.6
|
)%
|
|
(10.2
|
)%
|
|
Resolution and expiration of statutes of limitation of uncertain tax positions
|
(1.7
|
)%
|
|
(6.5
|
)%
|
|
(3.1
|
)%
|
|
Permanent foreign exchange losses
|
—
|
%
|
|
(0.6
|
)%
|
|
(8.2
|
)%
|
|
Research credits, uncertain tax positions and other
|
(0.6
|
)%
|
|
(1.0
|
)%
|
|
3.4
|
%
|
|
TCJA - revaluation of U.S. deferred income taxes
|
(1.4
|
)%
|
|
(41.5
|
)%
|
|
—
|
%
|
|
TCJA - Transition Tax
|
1.6
|
%
|
|
41.4
|
%
|
|
—
|
%
|
|
Effective income tax rate
|
19.5
|
%
|
|
16.0
|
%
|
|
17.5
|
%
|
|
•
|
The effective tax rate of
19.5%
in
2018
includes
70
basis points of tax benefits primarily related to the
release of reserves upon the expiration of statutes of limitation, audit settlements and release of valuation allowance in a certain foreign tax jurisdiction. These tax benefits were partially offset by additional provisions related to completing the accounting for the enactment of the TCJA as summarized above and tax costs directly related to reorganization activities associated with preparing for the Dental Separation.
|
|
•
|
The effective tax rate of
16.0%
in
2017
includes
500
basis points of net tax benefits due to the revaluation of deferred tax liabilities from
35.0%
to
21.0%
due to the TCJA and the release of reserves upon statute of limitation expiration, partially offset by income tax expense related to the Transition Tax on foreign earnings due to the TCJA and changes in estimates associated with prior period uncertain tax positions.
|
|
•
|
The effective tax rate of
17.5%
in 2016 includes 350
basis points of net tax benefits from permanent foreign exchange losses and the release of reserves upon the expiration of statutes of limitation and audit settlements, partially offset by income tax expense related to repatriation of earnings and legal entity realignments associated with the Fortive Separation and changes in estimates associated with prior period uncertain tax positions.
|
|
|
2018
|
|
2017
|
|
2016
|
||||||
|
Unrecognized tax benefits, beginning of year
|
$
|
736.8
|
|
|
$
|
992.2
|
|
|
$
|
990.2
|
|
|
Additions based on tax positions related to the current year
|
43.1
|
|
|
53.0
|
|
|
80.0
|
|
|||
|
Additions for tax positions of prior years
|
324.3
|
|
|
39.8
|
|
|
154.3
|
|
|||
|
Reductions for tax positions of prior years
|
(21.9
|
)
|
|
(14.5
|
)
|
|
(7.0
|
)
|
|||
|
Acquisitions, divestitures and other
|
9.4
|
|
|
13.4
|
|
|
(41.5
|
)
|
|||
|
Lapse of statute of limitations
|
(52.9
|
)
|
|
(246.7
|
)
|
|
(124.0
|
)
|
|||
|
Settlements
|
(41.8
|
)
|
|
(124.8
|
)
|
|
(45.3
|
)
|
|||
|
Effect of foreign currency translation
|
(11.0
|
)
|
|
24.4
|
|
|
(14.5
|
)
|
|||
|
Unrecognized tax benefits, end of year
|
$
|
986.0
|
|
|
$
|
736.8
|
|
|
$
|
992.2
|
|
|
|
2018
|
|
2017
|
|
2016
|
||||||
|
Life Sciences
|
$
|
11.4
|
|
|
$
|
25.4
|
|
|
$
|
40.5
|
|
|
Diagnostics
|
14.9
|
|
|
85.4
|
|
|
62.2
|
|
|||
|
Dental
|
23.7
|
|
|
35.8
|
|
|
34.3
|
|
|||
|
Environmental & Applied Solutions
|
20.0
|
|
|
12.5
|
|
|
15.4
|
|
|||
|
Total
|
$
|
70.0
|
|
|
$
|
159.1
|
|
|
$
|
152.4
|
|
|
|
Employee Severance & Related
|
|
Facility Exit & Related
|
|
Total
|
||||||
|
Balance, January 1, 2017
|
$
|
45.3
|
|
|
$
|
11.8
|
|
|
$
|
57.1
|
|
|
Costs incurred
|
77.7
|
|
|
81.4
|
|
|
159.1
|
|
|||
|
Paid/settled
|
(74.0
|
)
|
|
(75.9
|
)
|
|
(149.9
|
)
|
|||
|
Balance, December 31, 2017
|
49.0
|
|
|
17.3
|
|
|
66.3
|
|
|||
|
Costs incurred
|
59.4
|
|
|
10.6
|
|
|
70.0
|
|
|||
|
Paid/settled
|
(68.8
|
)
|
|
(20.3
|
)
|
|
(89.1
|
)
|
|||
|
Balance, December 31, 2018
|
$
|
39.6
|
|
|
$
|
7.6
|
|
|
$
|
47.2
|
|
|
|
2018
|
|
2017
|
|
2016
|
||||||
|
Cost of sales
|
$
|
16.8
|
|
|
$
|
38.0
|
|
|
$
|
25.4
|
|
|
Selling, general and administrative expenses
|
53.2
|
|
|
121.1
|
|
|
127.0
|
|
|||
|
Total
|
$
|
70.0
|
|
|
$
|
159.1
|
|
|
$
|
152.4
|
|
|
2019
|
$
|
203.0
|
|
|
2020
|
167.7
|
|
|
|
2021
|
133.3
|
|
|
|
2022
|
116.8
|
|
|
|
2023
|
101.9
|
|
|
|
Thereafter
|
287.2
|
|
|
|
|
2018
|
|
2017
|
||||
|
Balance, January 1
|
$
|
79.0
|
|
|
$
|
75.8
|
|
|
Accruals for warranties issued during the year
|
60.6
|
|
|
54.5
|
|
||
|
Settlements made
|
(60.0
|
)
|
|
(56.6
|
)
|
||
|
Additions due to acquisitions
|
—
|
|
|
1.7
|
|
||
|
Effect of foreign currency translation
|
(2.2
|
)
|
|
3.6
|
|
||
|
Balance, December 31
|
$
|
77.4
|
|
|
$
|
79.0
|
|
|
|
2018
|
|
2017
|
|
2016
|
|||
|
Risk-free interest rate
|
2.6 – 3.1%
|
|
|
1.8 – 2.2%
|
|
|
1.2 – 1.8%
|
|
|
Weighted average volatility
|
21.4
|
%
|
|
17.9
|
%
|
|
24.3
|
%
|
|
Dividend yield
|
0.6
|
%
|
|
0.7
|
%
|
|
0.6
|
%
|
|
Expected years until exercise
|
5.0 – 8.0
|
|
|
5.0 – 8.0
|
|
|
5.5 – 8.0
|
|
|
|
2018
|
|
2017
|
|
2016
|
||||||
|
RSUs/PSUs:
|
|
|
|
|
|
||||||
|
Pretax compensation expense
|
$
|
94.7
|
|
|
$
|
90.2
|
|
|
$
|
85.9
|
|
|
Income tax benefit
|
(19.8
|
)
|
|
(27.7
|
)
|
|
(25.3
|
)
|
|||
|
RSU/PSU expense, net of income taxes
|
74.9
|
|
|
62.5
|
|
|
60.6
|
|
|||
|
Stock options:
|
|
|
|
|
|
||||||
|
Pretax compensation expense
|
56.7
|
|
|
49.2
|
|
|
43.9
|
|
|||
|
Income tax benefit
|
(12.0
|
)
|
|
(15.6
|
)
|
|
(13.6
|
)
|
|||
|
Stock option expense, net of income taxes
|
44.7
|
|
|
33.6
|
|
|
30.3
|
|
|||
|
Total stock-based compensation:
|
|
|
|
|
|
||||||
|
Pretax compensation expense
|
151.4
|
|
|
139.4
|
|
|
129.8
|
|
|||
|
Income tax benefit
|
(31.8
|
)
|
|
(43.3
|
)
|
|
(38.9
|
)
|
|||
|
Total stock-based compensation expense, net of income taxes
|
$
|
119.6
|
|
|
$
|
96.1
|
|
|
$
|
90.9
|
|
|
|
Options
|
|
Weighted Average Exercise Price
|
|
Weighted Average Remaining Contractual Term (in years)
|
|
Aggregate Intrinsic Value
|
|||||
|
Outstanding as of January 1, 2016
|
24.9
|
|
|
$
|
43.75
|
|
|
|
|
|
||
|
Granted
|
5.7
|
|
|
67.52
|
|
|
|
|
|
|||
|
Exercised
|
(5.3
|
)
|
|
33.45
|
|
|
|
|
|
|||
|
Cancelled/forfeited
|
(1.2
|
)
|
|
73.21
|
|
|
|
|
|
|||
|
Adjustment due to Fortive Separation
(a)
|
(5.2
|
)
|
|
50.44
|
|
|
|
|
|
|||
|
Outstanding as of December 31, 2016
|
18.9
|
|
|
50.07
|
|
|
|
|
|
|||
|
Granted
|
4.4
|
|
|
86.14
|
|
|
|
|
|
|||
|
Exercised
|
(3.3
|
)
|
|
35.26
|
|
|
|
|
|
|||
|
Cancelled/forfeited
|
(1.2
|
)
|
|
70.40
|
|
|
|
|
|
|||
|
Outstanding as of December 31, 2017
|
18.8
|
|
|
59.84
|
|
|
|
|
|
|||
|
Granted
|
4.1
|
|
|
99.51
|
|
|
|
|
|
|||
|
Exercised
|
(3.4
|
)
|
|
41.88
|
|
|
|
|
|
|||
|
Cancelled/forfeited
|
(0.9
|
)
|
|
80.14
|
|
|
|
|
|
|||
|
Outstanding as of December 31, 2018
|
18.6
|
|
|
70.86
|
|
|
7
|
|
$
|
600.8
|
|
|
|
Vested and expected to vest as of December 31, 2018
(b)
|
18.0
|
|
|
$
|
70.24
|
|
|
7
|
|
$
|
592.8
|
|
|
Vested as of December 31, 2018
|
7.7
|
|
|
$
|
53.19
|
|
|
5
|
|
$
|
383.3
|
|
|
(a)
|
The “Adjustment due to Fortive Separation” reflects the cancellation of options which were outstanding as of July 2, 2016 and held by Fortive employees, which have been converted to Fortive equity awards as part of the Fortive Separation.
|
|
(b)
|
The “expected to vest” options are the net unvested options that remain after applying the forfeiture rate assumption to total unvested options.
|
|
|
Outstanding
|
|
Exercisable
|
||||||||||||
|
Exercise Price
|
Shares
|
|
Average Exercise Price
|
|
Average Remaining Life (in years)
|
|
Shares
|
|
Average Exercise Price
|
||||||
|
$19.89 to $39.60
|
2.1
|
|
|
$
|
34.15
|
|
|
2
|
|
2.0
|
|
|
$
|
34.13
|
|
|
$39.61 to $56.70
|
2.5
|
|
|
48.73
|
|
|
4
|
|
2.3
|
|
|
48.15
|
|
||
|
$56.71 to $70.75
|
6.1
|
|
|
64.58
|
|
|
6
|
|
2.6
|
|
|
63.64
|
|
||
|
$70.76 to $86.08
|
3.9
|
|
|
85.13
|
|
|
8
|
|
0.7
|
|
|
84.37
|
|
||
|
$86.09 to $101.65
|
4.0
|
|
|
99.23
|
|
|
9
|
|
0.1
|
|
|
95.44
|
|
||
|
|
Number of RSUs/PSUs
|
|
Weighted Average
Grant-Date Fair Value
|
|||
|
Unvested as of January 1, 2016
|
6.1
|
|
|
$
|
53.93
|
|
|
Granted
|
1.9
|
|
|
66.15
|
|
|
|
Vested
|
(1.8
|
)
|
|
50.64
|
|
|
|
Adjustment due to Fortive Separation
(a)
|
(1.2
|
)
|
|
58.24
|
|
|
|
Forfeited
|
(0.5
|
)
|
|
28.79
|
|
|
|
Unvested as of December 31, 2016
|
4.5
|
|
|
62.16
|
|
|
|
Granted
|
1.4
|
|
|
86.04
|
|
|
|
Vested
|
(1.5
|
)
|
|
58.48
|
|
|
|
Forfeited
|
(0.5
|
)
|
|
68.83
|
|
|
|
Unvested as of December 31, 2017
|
3.9
|
|
|
71.27
|
|
|
|
Granted
|
1.5
|
|
|
99.15
|
|
|
|
Vested
|
(1.2
|
)
|
|
68.37
|
|
|
|
Forfeited
|
(0.3
|
)
|
|
78.41
|
|
|
|
Unvested as of December 31, 2018
|
3.9
|
|
|
82.21
|
|
|
|
(a)
|
The “Adjustment due to Fortive Separation” reflects the cancellation of RSUs and PSUs which were outstanding as of July 2, 2016 and held by Fortive employees which have been converted to Fortive equity awards as part of the Fortive Separation.
|
|
|
Net Earnings from Continuing Operations (Numerator)
|
|
Shares (Denominator)
|
|
Per Share Amount
|
|||||
|
For the year ended December 31, 2018
|
|
|
|
|
|
|||||
|
Basic EPS
|
$
|
2,650.9
|
|
|
700.6
|
|
|
$
|
3.78
|
|
|
Adjustment for interest on convertible debentures
|
2.2
|
|
|
—
|
|
|
|
|||
|
Incremental shares from assumed exercise of dilutive options and vesting of dilutive RSUs and PSUs
|
—
|
|
|
7.2
|
|
|
|
|||
|
Incremental shares from assumed conversion of the convertible debentures
|
—
|
|
|
2.4
|
|
|
|
|||
|
Diluted EPS
|
$
|
2,653.1
|
|
|
710.2
|
|
|
$
|
3.74
|
|
|
|
|
|
|
|
|
|||||
|
For the year ended December 31, 2017
|
|
|
|
|
|
|||||
|
Basic EPS
|
$
|
2,469.8
|
|
|
695.8
|
|
|
$
|
3.55
|
|
|
Adjustment for interest on convertible debentures
|
2.1
|
|
|
—
|
|
|
|
|||
|
Incremental shares from assumed exercise of dilutive options and vesting of dilutive RSUs and PSUs
|
—
|
|
|
7.5
|
|
|
|
|||
|
Incremental shares from assumed conversion of the convertible debentures
|
—
|
|
|
2.8
|
|
|
|
|||
|
Diluted EPS
|
$
|
2,471.9
|
|
|
706.1
|
|
|
$
|
3.50
|
|
|
|
|
|
|
|
|
|||||
|
For the year ended December 31, 2016
|
|
|
|
|
|
|||||
|
Basic EPS
|
$
|
2,153.4
|
|
|
691.2
|
|
|
$
|
3.12
|
|
|
Adjustment for interest on convertible debentures
|
1.8
|
|
|
—
|
|
|
|
|||
|
Incremental shares from assumed exercise of dilutive options and vesting of dilutive RSUs and PSUs
|
—
|
|
|
6.0
|
|
|
|
|||
|
Incremental shares from assumed conversion of the convertible debentures
|
—
|
|
|
2.6
|
|
|
|
|||
|
Diluted EPS
|
$
|
2,155.2
|
|
|
699.8
|
|
|
$
|
3.08
|
|
|
|
2018
|
|
2017
|
|
2016
|
||||||
|
Sales:
|
|
|
|
|
|
||||||
|
Life Sciences
|
$
|
6,471.4
|
|
|
$
|
5,710.1
|
|
|
$
|
5,365.9
|
|
|
Diagnostics
|
6,257.6
|
|
|
5,839.9
|
|
|
5,038.3
|
|
|||
|
Dental
|
2,844.5
|
|
|
2,810.9
|
|
|
2,785.4
|
|
|||
|
Environmental & Applied Solutions
|
4,319.5
|
|
|
3,968.8
|
|
|
3,692.8
|
|
|||
|
Total
|
$
|
19,893.0
|
|
|
$
|
18,329.7
|
|
|
$
|
16,882.4
|
|
|
|
|
|
|
|
|
||||||
|
Operating profit:
|
|
|
|
|
|
||||||
|
Life Sciences
|
$
|
1,229.3
|
|
|
$
|
1,004.3
|
|
|
$
|
818.9
|
|
|
Diagnostics
|
1,073.8
|
|
|
871.6
|
|
|
786.4
|
|
|||
|
Dental
|
346.7
|
|
|
400.7
|
|
|
419.4
|
|
|||
|
Environmental & Applied Solutions
|
988.0
|
|
|
914.6
|
|
|
870.0
|
|
|||
|
Other
|
(234.0
|
)
|
|
(200.8
|
)
|
|
(159.5
|
)
|
|||
|
Total
|
$
|
3,403.8
|
|
|
$
|
2,990.4
|
|
|
$
|
2,735.2
|
|
|
|
|
|
|
|
|
||||||
|
Identifiable assets:
|
|
|
|
|
|
||||||
|
Life Sciences
|
$
|
22,122.4
|
|
|
$
|
20,576.8
|
|
|
$
|
19,875.9
|
|
|
Diagnostics
|
14,031.1
|
|
|
14,359.2
|
|
|
14,159.6
|
|
|||
|
Dental
|
5,897.3
|
|
|
6,026.8
|
|
|
5,772.2
|
|
|||
|
Environmental & Applied Solutions
|
4,637.3
|
|
|
4,649.2
|
|
|
4,172.9
|
|
|||
|
Other
|
1,144.4
|
|
|
1,036.6
|
|
|
1,314.7
|
|
|||
|
Total
|
$
|
47,832.5
|
|
|
$
|
46,648.6
|
|
|
$
|
45,295.3
|
|
|
|
|
|
|
|
|
||||||
|
Depreciation and amortization:
|
|
|
|
|
|
||||||
|
Life Sciences
|
$
|
471.2
|
|
|
$
|
427.9
|
|
|
$
|
426.2
|
|
|
Diagnostics
|
589.0
|
|
|
581.5
|
|
|
481.5
|
|
|||
|
Dental
|
130.0
|
|
|
121.4
|
|
|
127.2
|
|
|||
|
Environmental & Applied Solutions
|
109.0
|
|
|
99.9
|
|
|
86.7
|
|
|||
|
Other
|
8.5
|
|
|
7.6
|
|
|
6.5
|
|
|||
|
Total
|
$
|
1,307.7
|
|
|
$
|
1,238.3
|
|
|
$
|
1,128.1
|
|
|
|
2018
|
|
2017
|
|
2016
|
||||||
|
Capital expenditures, gross:
|
|
|
|
|
|
||||||
|
Life Sciences
|
$
|
140.1
|
|
|
$
|
130.6
|
|
|
$
|
109.7
|
|
|
Diagnostics
|
380.0
|
|
|
372.6
|
|
|
374.3
|
|
|||
|
Dental
|
72.2
|
|
|
48.9
|
|
|
49.1
|
|
|||
|
Environmental & Applied Solutions
|
57.1
|
|
|
60.9
|
|
|
51.0
|
|
|||
|
Other
|
6.3
|
|
|
6.6
|
|
|
5.5
|
|
|||
|
Total
|
$
|
655.7
|
|
|
$
|
619.6
|
|
|
$
|
589.6
|
|
|
|
Year Ended December 31
|
||||||||||
|
($ in millions)
|
2018
|
|
2017
|
|
2016
|
||||||
|
Sales:
|
|
|
|
|
|
||||||
|
United States
|
$
|
7,374.4
|
|
|
$
|
6,837.9
|
|
|
$
|
6,377.4
|
|
|
China
|
2,357.3
|
|
|
2,011.6
|
|
|
1,799.1
|
|
|||
|
Germany
|
1,247.0
|
|
|
1,161.6
|
|
|
1,084.6
|
|
|||
|
Japan
|
918.7
|
|
|
872.1
|
|
|
864.7
|
|
|||
|
All other (each country individually less than 5% of total sales)
|
7,995.6
|
|
|
7,446.5
|
|
|
6,756.6
|
|
|||
|
Total
|
$
|
19,893.0
|
|
|
$
|
18,329.7
|
|
|
$
|
16,882.4
|
|
|
|
|
|
|
|
|
||||||
|
Property, plant and equipment, net:
|
|
|
|
|
|
||||||
|
United States
|
$
|
1,224.4
|
|
|
$
|
1,126.2
|
|
|
$
|
1,198.4
|
|
|
Germany
|
198.3
|
|
|
212.4
|
|
|
190.8
|
|
|||
|
United Kingdom
|
157.0
|
|
|
152.0
|
|
|
140.6
|
|
|||
|
All other (each country individually less than 5% of total property, plant and equipment, net)
|
931.5
|
|
|
964.0
|
|
|
824.2
|
|
|||
|
Total
|
$
|
2,511.2
|
|
|
$
|
2,454.6
|
|
|
$
|
2,354.0
|
|
|
|
Year Ended December 31
|
||||||||||
|
($ in millions)
|
2018
|
|
2017
|
|
2016
|
||||||
|
Analytical and physical instrumentation
|
$
|
2,437.0
|
|
|
$
|
2,232.9
|
|
|
$
|
2,088.9
|
|
|
Research and medical products
|
12,686.0
|
|
|
11,512.4
|
|
|
10,366.7
|
|
|||
|
Dental products
|
2,844.5
|
|
|
2,810.9
|
|
|
2,785.4
|
|
|||
|
Product identification
|
1,925.5
|
|
|
1,773.5
|
|
|
1,641.4
|
|
|||
|
Total
|
$
|
19,893.0
|
|
|
$
|
18,329.7
|
|
|
$
|
16,882.4
|
|
|
($ in millions, except per share data)
|
1st Quarter
|
|
2nd Quarter
|
|
3rd Quarter
|
|
4th Quarter
|
|
||||||||
|
2018:
|
|
|
|
|
|
|
|
|
||||||||
|
Sales
|
$
|
4,695.4
|
|
|
$
|
4,981.0
|
|
|
$
|
4,853.1
|
|
|
$
|
5,363.5
|
|
|
|
Gross profit
|
2,643.6
|
|
|
2,817.1
|
|
|
2,690.5
|
|
|
2,955.9
|
|
|
||||
|
Operating profit
|
743.0
|
|
|
867.5
|
|
|
830.7
|
|
|
962.6
|
|
|
||||
|
Net earnings from continuing operations
|
566.6
|
|
|
673.8
|
|
|
663.7
|
|
|
746.8
|
|
|
||||
|
Net earnings
|
566.6
|
|
|
673.8
|
|
|
663.7
|
|
|
746.8
|
|
|
||||
|
Net earnings per share from continuing operations:
|
|
|
|
|
|
|
|
|
||||||||
|
Basic
|
$
|
0.81
|
|
|
$
|
0.96
|
|
|
$
|
0.95
|
|
|
$
|
1.06
|
|
|
|
Diluted
|
$
|
0.80
|
|
|
$
|
0.95
|
|
|
$
|
0.93
|
|
|
$
|
1.05
|
|
*
|
|
Net earnings per share:
|
|
|
|
|
|
|
|
|
||||||||
|
Basic
|
$
|
0.81
|
|
|
$
|
0.96
|
|
|
$
|
0.95
|
|
|
$
|
1.06
|
|
|
|
Diluted
|
$
|
0.80
|
|
|
$
|
0.95
|
|
|
$
|
0.93
|
|
|
$
|
1.05
|
|
*
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
2017:
|
|
|
|
|
|
|
|
|
||||||||
|
Sales
|
$
|
4,205.7
|
|
|
$
|
4,510.1
|
|
|
$
|
4,528.2
|
|
|
$
|
5,085.7
|
|
|
|
Gross profit
|
2,334.3
|
|
|
2,482.3
|
|
|
2,536.8
|
|
|
2,839.1
|
|
|
||||
|
Operating profit
|
617.0
|
|
|
676.7
|
|
|
759.2
|
|
|
937.5
|
|
|
||||
|
Net earnings from continuing operations
|
483.8
|
|
|
557.3
|
|
|
572.1
|
|
|
856.6
|
|
|
||||
|
Net earnings from discontinued operations
|
22.3
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
||||
|
Net earnings
|
506.1
|
|
|
557.3
|
|
|
572.1
|
|
|
856.6
|
|
|
||||
|
Net earnings per share from continuing operations:
|
|
|
|
|
|
|
|
|
|
|||||||
|
Basic
|
$
|
0.70
|
|
|
$
|
0.80
|
|
|
$
|
0.82
|
|
|
$
|
1.23
|
|
|
|
Diluted
|
$
|
0.69
|
|
|
$
|
0.79
|
|
|
$
|
0.81
|
|
|
$
|
1.21
|
|
|
|
Net earnings per share from discontinued operations:
|
|
|
|
|
|
|
|
|
||||||||
|
Basic
|
$
|
0.03
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
Diluted
|
$
|
0.03
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
Net earnings per share:
|
|
|
|
|
|
|
|
|
||||||||
|
Basic
|
$
|
0.73
|
|
|
$
|
0.80
|
|
|
$
|
0.82
|
|
|
$
|
1.23
|
|
|
|
Diluted
|
$
|
0.72
|
|
|
$
|
0.79
|
|
|
$
|
0.81
|
|
|
$
|
1.21
|
|
|
|
a)
|
The following documents are filed as part of this report.
|
|
(1)
|
Financial Statements. The financial statements are set forth under “Item 8. Financial Statements and Supplementary Data” of this Annual Report on Form 10-K.
|
|
(2)
|
Schedules. An index of Exhibits and Schedules is on page 117 of this report. Schedules other than those listed below have been omitted from this Annual Report on Form 10-K because they are not required, are not applicable or the required information is included in the financial statements or the notes thereto.
|
|
(3)
|
Exhibits. The exhibits listed in the accompanying Exhibit Index are filed or incorporated by reference as part of this Annual Report on Form 10-K.
|
|
|
Page Number in
Form 10-K
|
|
Schedule:
|
|
|
Valuation and Qualifying Accounts
|
|
|
Exhibit Number
|
|
Description
|
||
|
|
|
|
||
|
2.1
|
|
|
Incorporated by reference to Exhibit 2.1 to Amendment No. 1 to Fortive Corporation’s Registration Statement on Form 10, filed on March 3, 2016 (Commission File Number: 1-8089)
|
|
|
|
|
|
|
|
|
3.1
|
|
|
Incorporated by reference from Exhibit 3.1 to Danaher Corporation’s Quarterly Report on Form 10-Q for the quarter ended June 29, 2012 (Commission File Number: 1-8089)
|
|
|
|
|
|
|
|
|
3.2
|
|
|
Incorporated by reference from Exhibit 3.2 to Danaher Corporation’s Current Report on Form 8-K filed December 6, 2016 (Commission File Number: 1-8089)
|
|
|
|
|
|
|
|
|
4.1
|
|
|
Incorporated by reference from Exhibit 1.2 to Danaher Corporation’s Current Report on Form 8-K filed on December 11, 2007 (Commission File Number: 1-8089)
|
|
|
|
|
|
|
|
|
4.2
|
|
|
Incorporated by reference from Exhibit 4.1 to Danaher Corporation’s Current Report on Form 8-K filed September 15, 2015 (Commission File Number: 1-8089)
|
|
|
|
|
|
|
|
|
4.3
|
|
|
Incorporated by reference from Exhibit 4.1 to Danaher Corporation’s Current Report on Form 8-K filed on July 8, 2015 (Commission File Number: 1-8089)
|
|
|
|
|
|
|
|
|
4.4
|
|
|
Incorporated by reference from Exhibit 4.2 to Danaher Corporation’s Current Report on Form 8-K filed on July 8, 2015 (Commission File Number: 1-8089)
|
|
|
|
|
|
|
|
|
4.5
|
|
|
Incorporated by reference from Exhibit 4.3 to Danaher Corporation’s Current Report on Form 8-K filed on July 8, 2015 (Commission File Number: 1-8089)
|
|
|
|
|
|
|
|
|
4.6
|
|
|
Incorporated by reference from Exhibit 4.2 to Danaher Corporation’s Current Report on Form 8-K filed on June 30, 2017 (Commission File Number: 1-8089)
|
|
|
|
|
|
|
|
|
4.7
|
|
|
Incorporated by reference from Exhibit 4.3 to Danaher Corporation’s Current Report on Form 8-K filed on June 30, 2017 (Commission File Number: 1-8089)
|
|
|
|
|
|
|
|
|
10.1
|
|
|
Incorporated by reference from Exhibit 10.1 to Danaher Corporation’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2017 (Commission File Number: 333-213631)
|
|
|
|
|
|
|
|
|
10.2
|
|
|
Incorporated by reference from Exhibit 10.2 to Danaher Corporation’s Annual Report on Form 10-K for the year ended December 31, 2008 (Commission File Number: 1-8089)
|
|
|
|
|
|
|
|
|
10.3
|
|
|
Incorporated by reference from Exhibit 10.3 to Danaher Corporation’s Annual Report on Form 10-K for the year ended December 31, 2008 (Commission File Number: 1-8089)
|
|
|
|
|
|
|
|
|
10.4
|
|
|
|
|
|
|
|
|
|
|
|
10.5
|
|
|
|
|
|
|
|
|
|
|
|
10.6
|
|
|
|
|
|
|
|
|
|
|
|
10.7
|
|
|
|
|
|
|
|
|
|
|
|
10.8
|
|
|
|
|
|
|
|
|
|
|
|
10.9
|
|
|
|
|
|
|
|
|
|
|
|
10.10
|
|
|
Incorporated by reference from Exhibit 10.3 to Danaher Corporation’s Quarterly Report on Form 10-Q for the quarter ended September 28, 2018 (Commission File Number: 1-8089)
|
|
|
|
|
|
|
|
|
10.11
|
|
|
Incorporated by reference from Exhibit 10.1 to Danaher Corporation’s Quarterly Report on Form 10-Q for the quarter ended March 29, 2013 (Commission File Number: 1-8089)
|
|
|
|
|
|
|
|
|
10.12
|
|
|
Incorporated by reference from Exhibit 10.16 to Danaher Corporation’s Annual Report on Form 10-K for the year ended December 31, 2014 (Commission File Number: 1-8089)
|
|
|
|
|
|
|
|
|
10.13
|
|
|
Incorporated by reference from Exhibit 10.1 to Danaher Corporation’s Current Report on Form 8-K filed on September 15, 2014 (Commission File Number: 1-8089)
|
|
|
|
|
|
|
|
|
10.14
|
|
|
|
|
|
|
|
|
|
|
|
10.15
|
|
|
Incorporated by reference from Exhibit 10.2 to Danaher Corporation’s Current Report on Form 8-K filed on November 8, 2018 (Commission File Number: 1-8089)
|
|
|
|
|
|
|
|
|
10.16
|
|
|
Incorporated by reference from Exhibit 10.1 to Danaher Corporation’s Current Report on Form 8-K filed on November 8, 2018 (Commission File Number: 1-8089)
|
|
|
|
|
|
|
|
|
10.17
|
|
|
Incorporated by reference from Exhibit 10.20 to Danaher Corporation’s Annual Report on Form 10-K for the year ended December 31, 2016 (Commission File Number: 1-8089)
|
|
|
|
|
|
|
|
|
10.18
|
|
|
|
|
|
|
|
|
|
|
|
10.19
|
|
|
Incorporated by reference from Exhibit 10.1 to Danaher Corporation’s Current Report on Form 8-K filed on July 10, 2015 (Commission File Number: 1-8089)
|
|
|
|
|
|
|
|
|
10.20
|
|
|
Incorporated by reference from Exhibit 10.25 to Danaher Corporation’s Annual Report on Form 10-K for the year ended December 31, 2011 (Commission File Number: 1-8089)
|
|
|
|
|
|
|
|
|
10.21
|
|
|
Incorporated by reference from Exhibit 10.10 to Danaher Corporation’s Quarterly Report on Form 10-Q for the quarter ended July 1, 2011 (Commission File Number: 1-8089)
|
|
|
|
|
|
|
|
|
10.22
|
|
|
Incorporated by reference from Exhibit 10.2 to Danaher Corporation’s Quarterly Report on Form 10-Q for the quarter ended June 27, 2014 (Commission File Number: 1-8089)
|
|
|
|
|
|
|
|
|
10.23
|
|
|
Incorporated by reference from Exhibit 10.7 to Danaher Corporation’s Quarterly Report on Form 10-Q for the quarter ended July 1, 2016 (Commission File Number: 1-8089)
|
|
|
|
|
|
|
|
|
10.24
|
|
|
Incorporated by reference from Exhibit 10.35 to Danaher Corporation’s Annual Report on Form 10-K for the year ended December 31, 2008 (Commission File Number: 1-8089)
|
|
|
|
|
|
|
|
|
10.25
|
|
|
Incorporated by reference from Exhibit 10.2 to Amendment No. 1 to Fortive Corporation’s Registration Statement on Form 10, filed on March 3, 2016 (Commission File Number: 1-37654)
|
|
|
|
|
|
|
|
|
10.26
|
|
|
Incorporated by reference from Exhibit 10.3 to Amendment No. 1 to Fortive Corporation’s Registration Statement on Form 10, filed on March 3, 2016 (Commission File Number: 1-37654)
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10.27
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Incorporated by reference from Exhibit 10.1 to Amendment No. 1 to Fortive Corporation’s Registration Statement on Form 10, filed on March 3, 2016 (Commission File Number: 1-37654)
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10.28
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Incorporated by reference from Exhibit 10.4 to Amendment No. 1 to Fortive Corporation’s Registration Statement on Form 10, filed on March 3, 2016 (Commission File Number: 1-37654)
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10.29
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Incorporated by reference from Exhibit 10.5 to Amendment No. 1 to Fortive Corporation’s Registration Statement on Form 10, filed on March 3, 2016 (Commission File Number: 1-37654)
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21.1
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23.1
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31.1
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31.2
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32.1
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32.2
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101.INS
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XBRL Instance Document
(5)
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101.SCH
|
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XBRL Taxonomy Extension Schema Document
(5)
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101.CAL
|
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XBRL Taxonomy Extension Calculation Linkbase Document
(5)
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101.DEF
|
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XBRL Taxonomy Extension Definition Linkbase Document
(5)
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101.LAB
|
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XBRL Taxonomy Extension Label Linkbase Document
(5)
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101.PRE
|
|
XBRL Taxonomy Extension Presentation Linkbase Document
(5)
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+
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The schedules have been omitted from this filing pursuant to Item 601(b)(2) of Regulation S-K. Danaher will furnish copies of such schedules to the Securities and Exchange Commission upon request.
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*
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Indicates management contract or compensatory plan, contract or arrangement.
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(1)
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In accordance with Instruction 2 to Item 601(a)(4) of Regulation S-K, Danaher has entered into an agreement with William K. Daniel II that is substantially identical in all material respects to the form of agreement referenced as Exhibit 10.12 except as to the name of the counterparty.
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(2)
|
In accordance with Instruction 2 to Item 601(a)(4) of Regulation S-K, FJ900, Inc. (a subsidiary of Danaher) has entered into a management agreement with Joust Capital II, LLC that is substantially identical in all material respects to the form of agreement referenced as Exhibit 10.20, except as to the referenced aircraft and the name of the counterparty.
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(3)
|
In accordance with Instruction 2 to Item 601(a)(4) of Regulation S-K, Danaher Corporation or a subsidiary thereof has entered into additional interchange agreements with each of Joust Capital II, LLC and Joust Capital III, LLC that are substantially identical in all material respects to the form of agreement attached as 10.21, except as to the referenced aircraft and, in certain cases, the name of the counterparty.
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(4)
|
In accordance with Instruction 2 to Item 601(a)(4) of Regulation S-K, Danaher Corporation has entered into an aircraft time sharing agreement with Matthew R. McGrew that is substantially identical in all material respects to the forms of agreement referenced as Exhibit 10.22 and Exhibit 10.23, respectively,
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(5)
|
Attached as Exhibit 101 to this report are the following documents formatted in XBRL (Extensible Business Reporting Language): (i) Consolidated Balance Sheets as of December 31, 2018 and 2017, (ii) Consolidated Statements of Earnings for the years ended December 31, 2018, 2017 and 2016, (iii) Consolidated Statements of Comprehensive Income for the years ended December 31, 2018, 2017 and 2016, (iv) Consolidated Statements of Stockholders’ Equity for the years December 31, 2018, 2017 and 2016, (v) Consolidated Statements of Cash Flows for the years ended December 31, 2018, 2017 and 2016 and (vi) Notes to Consolidated Financial Statements.
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|
|
DANAHER CORPORATION
|
||
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Date:
|
February 20, 2019
|
By:
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/s/ THOMAS P. JOYCE, JR.
|
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Thomas P. Joyce, Jr.
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President and Chief Executive Officer
|
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Name, Title and Signature
|
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Date
|
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/s/ STEVEN M. RALES
|
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February 20, 2019
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Steven M. Rales
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Chairman of the Board
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/s/ MITCHELL P. RALES
|
|
February 20, 2019
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Mitchell P. Rales
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Chairman of the Executive Committee
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/s/ DONALD J. EHRLICH
|
|
February 20, 2019
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Donald J. Ehrlich
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Director
|
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|
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/s/ LINDA HEFNER FILLER
|
|
February 20, 2019
|
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|
Linda Hefner Filler
|
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Director
|
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|
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/s/ THOMAS P. JOYCE, JR.
|
|
February 20, 2019
|
|
|
Thomas P. Joyce, Jr.
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|
President, Chief Executive Officer and Director
|
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|
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/s/ TERI LIST-STOLL
|
|
February 20, 2019
|
|
|
Teri List-Stoll
|
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|
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Director
|
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|
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/s/ WALTER G. LOHR, JR.
|
|
February 20, 2019
|
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|
Walter G. Lohr, Jr.
|
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Director
|
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|
|
/s/ JOHN T. SCHWIETERS
|
|
February 20, 2019
|
|
|
John T. Schwieters
|
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Director
|
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|
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/s/ ALAN G. SPOON
|
|
February 20, 2019
|
|
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Alan G. Spoon
|
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Director
|
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/s/ RAYMOND C. STEVENS, Ph.D.
|
|
February 20, 2019
|
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|
Raymond C. Stevens
|
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Director
|
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|
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/s/ ELIAS A. ZERHOUNI, M.D.
|
|
February 20, 2019
|
|
|
Elias A. Zerhouni, M.D.
|
|
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|
|
Director
|
|
|
|
|
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|
|
/s/ MATTHEW R. MCGREW
|
|
February 20, 2019
|
|
|
Matthew R. McGrew
|
|
|
|
|
Executive Vice President and Chief Financial Officer
|
|
|
|
|
|
|
|
|
|
/s/ ROBERT S. LUTZ
|
|
February 20, 2019
|
|
|
Robert S. Lutz
|
|
|
|
|
Senior Vice President and Chief Accounting Officer
|
|
||
|
Classification
|
Balance at Beginning of Period
(a)
|
|
Charged to Costs & Expenses
|
|
Impact of Currency
|
|
Charged to Other Accounts
(b)
|
|
Write-Offs, Write-Downs & Deductions
|
|
Balance at End of Period
(a)
|
||||||||||||
|
Year ended December 31, 2018:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Allowances deducted from asset account
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Allowance for doubtful accounts
|
$
|
118.2
|
|
|
$
|
35.9
|
|
|
$
|
(4.5
|
)
|
|
$
|
1.3
|
|
|
$
|
(29.3
|
)
|
|
$
|
121.6
|
|
|
Year ended December 31, 2017:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Allowances deducted from asset account
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Allowance for doubtful accounts
|
$
|
103.5
|
|
|
$
|
32.9
|
|
|
$
|
4.5
|
|
|
$
|
3.5
|
|
|
$
|
(26.2
|
)
|
|
$
|
118.2
|
|
|
Year ended December 31, 2016:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Allowances deducted from asset account
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Allowance for doubtful accounts
|
$
|
89.7
|
|
|
$
|
32.5
|
|
|
$
|
(0.6
|
)
|
|
$
|
2.3
|
|
|
$
|
(20.4
|
)
|
|
$
|
103.5
|
|
|
(a)
|
Amounts include allowance for doubtful accounts classified as current and noncurrent.
|
|
(b)
|
Amounts related to businesses acquired, net of amounts related to businesses disposed not included in discontinued operations.
|
No information found
* THE VALUE IS THE MARKET VALUE AS OF THE LAST DAY OF THE QUARTER FOR WHICH THE 13F WAS FILED.
| FUND | NUMBER OF SHARES | VALUE ($) | PUT OR CALL |
|---|
| DIRECTORS | AGE | BIO | OTHER DIRECTOR MEMBERSHIPS |
|---|
No information found
Customers
Price
Yield
| Owner | Position | Direct Shares | Indirect Shares |
|---|