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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Danaher Corporation | NYSE:DHR | NYSE | Common Stock |
Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|
2.40 | 0.88% | 274.38 | 275.51 | 271.31 | 272.44 | 1,949,851 | 01:00:00 |
ý
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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¨
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TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Delaware
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59-1995548
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(State of Incorporation)
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(I.R.S. Employer Identification number)
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2200 Pennsylvania Avenue, 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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Large accelerated filer
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ý
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Accelerated filer
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¨
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Non-accelerated filer
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¨
(Do not check if a smaller reporting company)
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Smaller reporting company
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¨
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Page
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PART I -
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FINANCIAL INFORMATION
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PART II -
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OTHER INFORMATION
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April 1, 2016
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December 31, 2015
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||||
ASSETS
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||||
Current assets:
|
|
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||||
Cash and equivalents
|
$
|
664.3
|
|
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$
|
790.8
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Trade accounts receivable, net
|
3,871.2
|
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3,964.1
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Inventories:
|
|
|
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||||
Finished goods
|
1,115.2
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1,038.5
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Work in process
|
346.4
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319.8
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Raw materials
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776.1
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737.1
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Total inventories
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2,237.7
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2,095.4
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Prepaid expenses and other current assets
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974.0
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986.4
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Total current assets
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7,747.2
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7,836.7
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Property, plant and equipment, net of accumulated depreciation of $2,861.8 and $2,672.1, respectively
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2,872.5
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2,825.6
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Other assets
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1,016.7
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1,219.3
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Goodwill
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25,485.4
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25,070.3
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Other intangible assets, net
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11,263.8
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11,270.3
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Total assets
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$
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48,385.6
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$
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48,222.2
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LIABILITIES AND STOCKHOLDERS’ EQUITY
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||||
Current liabilities:
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||||
Notes payable and current portion of long-term debt
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$
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197.0
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$
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845.2
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Trade accounts payable
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1,918.8
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2,049.0
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Accrued expenses and other liabilities
|
3,205.5
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3,276.2
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Total current liabilities
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5,321.3
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6,170.4
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Other long-term liabilities
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6,292.5
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6,262.6
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Long-term debt
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12,194.7
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12,025.2
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Stockholders’ equity:
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Common stock - $0.01 par value, 2.0 billion shares authorized; 803.8 and 801.6 issued; 688.6 and 686.8 outstanding, respectively
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8.0
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8.0
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Additional paid-in capital
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5,072.6
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4,981.2
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Retained earnings
|
21,660.6
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21,012.3
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Accumulated other comprehensive income (loss)
|
(2,236.5
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)
|
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(2,311.2
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)
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Total Danaher stockholders’ equity
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24,504.7
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23,690.3
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Noncontrolling interests
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72.4
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73.7
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Total stockholders’ equity
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24,577.1
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23,764.0
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Total liabilities and stockholders’ equity
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$
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48,385.6
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$
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48,222.2
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Three Month Period Ended
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||||||
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April 1, 2016
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April 3, 2015
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||||
Sales
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$
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5,387.2
|
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$
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4,694.7
|
|
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Cost of sales
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(2,524.6
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)
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(2,226.5
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)
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Gross profit
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2,862.6
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2,468.2
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Operating costs:
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||||
Selling, general and administrative expenses
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(1,660.7
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)
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(1,413.7
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)
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Research and development expenses
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(319.8
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)
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(299.4
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)
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Operating profit
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882.1
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755.1
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Nonoperating income (expense):
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||||
Other income
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223.4
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—
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Interest expense
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(61.7
|
)
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(29.3
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)
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Interest income
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—
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2.3
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Earnings from continuing operations before income taxes
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1,043.8
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728.1
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Income taxes
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(285.4
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)
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(170.1
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)
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Net earnings from continuing operations
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758.4
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558.0
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Earnings from discontinued operations, net of income taxes
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—
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11.8
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Net earnings
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$
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758.4
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$
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569.8
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Net earnings per share from continuing operations:
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||||
Basic
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$
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1.10
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$
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0.79
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Diluted
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$
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1.09
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$
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0.78
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Net earnings per share from discontinued operations:
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||||
Basic
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$
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—
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$
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0.02
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Diluted
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$
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—
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$
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0.02
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Net earnings per share:
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||||
Basic
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$
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1.10
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$
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0.81
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Diluted
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$
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1.09
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$
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0.79
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*
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Average common stock and common equivalent shares outstanding:
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||||
Basic
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688.6
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707.2
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Diluted
|
697.1
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718.7
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Three Month Period Ended
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||||||
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April 1, 2016
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April 3, 2015
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||||
Net earnings
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$
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758.4
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$
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569.8
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Other comprehensive income (loss), net of income taxes:
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||||
Foreign currency translation adjustments
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201.1
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(679.8
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)
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Pension and postretirement plan benefit adjustments
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5.3
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7.0
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Unrealized gain (loss) on available-for-sale securities adjustments
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(131.7
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)
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(1.4
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)
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Total other comprehensive income (loss), net of income taxes
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74.7
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(674.2
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)
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Comprehensive income (loss)
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$
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833.1
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$
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(104.4
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)
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Common Stock
|
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Additional Paid-in Capital
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Retained Earnings
|
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Accumulated Other Comprehensive Income (Loss)
|
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Noncontrolling Interests
|
|||||||||||||
Shares
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Amount
|
|
|||||||||||||||||||
Balance, December 31, 2015
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801.6
|
|
|
$
|
8.0
|
|
|
$
|
4,981.2
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$
|
21,012.3
|
|
|
$
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(2,311.2
|
)
|
|
$
|
73.7
|
|
Net earnings for the period
|
—
|
|
|
—
|
|
|
—
|
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758.4
|
|
|
—
|
|
|
—
|
|
|||||
Other comprehensive income (loss)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
74.7
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|
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—
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|
|||||
Dividends declared
|
—
|
|
|
—
|
|
|
—
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|
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(110.1
|
)
|
|
—
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|
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—
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|
|||||
Common stock-based award activity
|
2.2
|
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—
|
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|
90.8
|
|
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—
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—
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—
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|||||
Common stock issued in connection with LYONs’ conversions, including tax benefit of $0.2
|
—
|
|
|
—
|
|
|
0.6
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Change in noncontrolling interests
|
—
|
|
|
—
|
|
|
—
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|
|
—
|
|
|
—
|
|
|
(1.3
|
)
|
|||||
Balance, April 1, 2016
|
803.8
|
|
|
$
|
8.0
|
|
|
$
|
5,072.6
|
|
|
$
|
21,660.6
|
|
|
$
|
(2,236.5
|
)
|
|
$
|
72.4
|
|
|
Three Month Period Ended
|
||||||
|
April 1, 2016
|
|
April 3, 2015
|
||||
Cash flows from operating activities:
|
|
|
|
||||
Net earnings
|
$
|
758.4
|
|
|
$
|
569.8
|
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Less: earnings from discontinued operations, net of income taxes
|
—
|
|
|
11.8
|
|
||
Net earnings from continuing operations
|
758.4
|
|
|
558.0
|
|
||
Noncash items:
|
|
|
|
||||
Depreciation
|
150.5
|
|
|
135.0
|
|
||
Amortization
|
159.6
|
|
|
100.5
|
|
||
Stock-based compensation expense
|
41.1
|
|
|
30.3
|
|
||
Pretax gain on sale of investments
|
(223.4
|
)
|
|
—
|
|
||
Change in trade accounts receivable, net
|
144.2
|
|
|
104.2
|
|
||
Change in inventories
|
(110.6
|
)
|
|
(111.1
|
)
|
||
Change in trade accounts payable
|
(155.0
|
)
|
|
(84.8
|
)
|
||
Change in prepaid expenses and other assets
|
47.3
|
|
|
26.8
|
|
||
Change in accrued expenses and other liabilities
|
(39.3
|
)
|
|
(229.3
|
)
|
||
Total operating cash provided by continuing operations
|
772.8
|
|
|
529.6
|
|
||
Total operating cash used in discontinued operations
|
—
|
|
|
(6.0
|
)
|
||
Net cash provided by operating activities
|
772.8
|
|
|
523.6
|
|
||
Cash flows from investing activities:
|
|
|
|
||||
Cash paid for acquisitions
|
(107.5
|
)
|
|
(482.6
|
)
|
||
Payments for additions to property, plant and equipment
|
(151.0
|
)
|
|
(117.0
|
)
|
||
Payments for purchases of investments
|
—
|
|
|
(87.1
|
)
|
||
Proceeds from sale of investments
|
264.8
|
|
|
—
|
|
||
All other investing activities
|
2.0
|
|
|
3.2
|
|
||
Total investing cash provided by (used in) continuing operations
|
8.3
|
|
|
(683.5
|
)
|
||
Total investing cash used in discontinued operations
|
—
|
|
|
(7.2
|
)
|
||
Net cash provided by (used in) investing activities
|
8.3
|
|
|
(690.7
|
)
|
||
Cash flows from financing activities:
|
|
|
|
||||
Proceeds from the issuance of common stock
|
43.9
|
|
|
61.6
|
|
||
Payment of dividends
|
(92.7
|
)
|
|
(70.4
|
)
|
||
Net repayments of borrowings (maturities of 90 days or less)
|
(1,077.1
|
)
|
|
(247.5
|
)
|
||
Proceeds from borrowings (maturities longer than 90 days)
|
262.3
|
|
|
—
|
|
||
Repayments of borrowings (maturities longer than 90 days)
|
(0.3
|
)
|
|
(1.2
|
)
|
||
All other financing activities
|
(26.7
|
)
|
|
(3.3
|
)
|
||
Net cash used in financing activities
|
(890.6
|
)
|
|
(260.8
|
)
|
||
Effect of exchange rate changes on cash and equivalents
|
(17.0
|
)
|
|
(66.7
|
)
|
||
Net change in cash and equivalents
|
(126.5
|
)
|
|
(494.6
|
)
|
||
Beginning balance of cash and equivalents
|
790.8
|
|
|
3,005.6
|
|
||
Ending balance of cash and equivalents
|
$
|
664.3
|
|
|
$
|
2,511.0
|
|
Supplemental disclosures:
|
|
|
|
||||
Cash interest payments
|
$
|
68.7
|
|
|
$
|
37.3
|
|
Cash income tax payments
|
86.9
|
|
|
101.0
|
|
Trade accounts receivable
|
$
|
9.9
|
|
Inventories
|
9.6
|
|
|
Property, plant and equipment
|
5.2
|
|
|
Goodwill
|
82.3
|
|
|
Other intangible assets, primarily customer relationships, trade names and technology
|
21.9
|
|
|
Trade accounts payable
|
(4.0
|
)
|
|
Other assets and liabilities, net
|
(17.4
|
)
|
|
Net cash consideration
|
$
|
107.5
|
|
|
Three Month Period Ended
|
||||||
|
April 1, 2016
|
|
April 3, 2015
|
||||
Sales
|
$
|
5,389.9
|
|
|
$
|
5,455.4
|
|
Net earnings from continuing operations
|
758.6
|
|
|
539.1
|
|
||
Diluted net earnings per share from continuing operations
|
1.09
|
|
|
0.75
|
|
•
|
a multi-industry, science and technology growth company that will retain the Danaher name and consist of Danaher’s existing Life Sciences & Diagnostics (including Pall) and Dental segments as well as the water quality and product identification businesses, which in aggregate generated approximately
$16.5 billion
and
$3.9 billion
of revenue in 2015 (adjusted to include the full annual revenues of Pall for 2015) and the first quarter of 2016, respectively (2015 revenues for these businesses excluding pre-acquisition Pall revenue were approximately
$14.4 billion
); and
|
•
|
a diversified industrial growth company (Fortive Corporation (“Fortive”)) that will consist of Danaher’s existing Test & Measurement segment, Industrial Technologies segment (excluding the product identification businesses) and retail/commercial petroleum business, which in aggregate generated approximately
$6.2 billion
and
$1.5 billion
of revenue in 2015 and the first quarter of 2016, respectively.
|
Sales
|
$
|
178.6
|
|
Cost of sales
|
(46.8
|
)
|
|
Selling, general, and administrative expenses
|
(73.0
|
)
|
|
Research and development expenses
|
(39.7
|
)
|
|
Interest expense
|
(0.9
|
)
|
|
Earnings from discontinued operations before income taxes
|
18.2
|
|
|
Income taxes
|
(6.4
|
)
|
|
Earnings from discontinued operations, net of income taxes
|
$
|
11.8
|
|
Balance, December 31, 2015
|
$
|
25,070.3
|
|
Attributable to 2016 acquisitions
|
82.3
|
|
|
Foreign currency translation and other
|
332.8
|
|
|
Balance, April 1, 2016
|
$
|
25,485.4
|
|
|
April 1, 2016
|
|
December 31, 2015
|
||||
Test & Measurement
|
$
|
1,950.0
|
|
|
$
|
1,943.7
|
|
Environmental
|
1,975.5
|
|
|
1,909.1
|
|
||
Life Sciences & Diagnostics
|
15,983.2
|
|
|
15,730.4
|
|
||
Dental
|
3,304.7
|
|
|
3,236.1
|
|
||
Industrial Technologies
|
2,272.0
|
|
|
2,251.0
|
|
||
Total goodwill
|
$
|
25,485.4
|
|
|
$
|
25,070.3
|
|
|
Quoted Prices in Active Market (Level 1)
|
|
Significant Other Observable Inputs (Level 2)
|
|
Significant Unobservable Inputs (Level 3)
|
|
Total
|
||||||||
April 1, 2016:
|
|
|
|
|
|
|
|
||||||||
Assets:
|
|
|
|
|
|
|
|
||||||||
Available-for-sale securities
|
$
|
90.1
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
90.1
|
|
Liabilities:
|
|
|
|
|
|
|
|
||||||||
Deferred compensation plans
|
—
|
|
|
71.5
|
|
|
—
|
|
|
71.5
|
|
||||
December 31, 2015:
|
|
|
|
|
|
|
|
||||||||
Assets:
|
|
|
|
|
|
|
|
||||||||
Available-for-sale securities
|
$
|
342.3
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
342.3
|
|
Liabilities:
|
|
|
|
|
|
|
|
||||||||
Deferred compensation plans
|
—
|
|
|
77.4
|
|
|
—
|
|
|
77.4
|
|
|
April 1, 2016
|
|
December 31, 2015
|
||||||||||||
|
Carrying Amount
|
|
Fair Value
|
|
Carrying Amount
|
|
Fair Value
|
||||||||
Assets:
|
|
|
|
|
|
|
|
||||||||
Available-for-sale securities
|
$
|
90.1
|
|
|
$
|
90.1
|
|
|
$
|
342.3
|
|
|
$
|
342.3
|
|
Liabilities:
|
|
|
|
|
|
|
|
||||||||
Short-term borrowings
|
197.0
|
|
|
197.0
|
|
|
845.2
|
|
|
845.2
|
|
||||
Long-term borrowings
|
12,194.7
|
|
|
12,840.0
|
|
|
12,025.2
|
|
|
12,471.4
|
|
|
April 1, 2016
|
|
December 31, 2015
|
||||
U.S. dollar-denominated commercial paper
|
$
|
394.8
|
|
|
$
|
920.0
|
|
Euro-denominated commercial paper (€2.4 billion and €2.8 billion, respectively)
|
2,702.0
|
|
|
3,096.9
|
|
||
2.3% senior unsecured notes due 2016
|
500.0
|
|
|
500.0
|
|
||
4.0% senior unsecured bonds due 2016 (CHF 120.0 million aggregate principal amount)
|
128.2
|
|
|
122.6
|
|
||
Floating rate senior unsecured notes due 2017 (€500.0 million aggregate principal amount)
|
571.4
|
|
|
544.8
|
|
||
0.0% senior unsecured bonds due 2017 (CHF 100.0 million aggregate principal amount)
|
104.3
|
|
|
99.7
|
|
||
1.65% senior unsecured notes due 2018
|
497.3
|
|
|
497.1
|
|
||
5.625% senior unsecured notes due 2018
|
500.0
|
|
|
500.0
|
|
||
1.0% senior unsecured notes due 2019 (€600.0 million aggregate principal amount)
|
682.6
|
|
|
651.0
|
|
||
5.4% senior unsecured notes due 2019
|
750.0
|
|
|
750.0
|
|
||
2.4% senior unsecured notes due 2020
|
496.1
|
|
|
495.9
|
|
||
5.0% senior unsecured notes due 2020
|
410.7
|
|
|
410.7
|
|
||
Zero-coupon Liquid Yield Option Notes (LYONs) due 2021
|
72.6
|
|
|
72.6
|
|
||
0.352% senior unsecured notes due 2021 (¥30.0 billion aggregate principal amount)
|
267.7
|
|
|
—
|
|
||
3.9% senior unsecured notes due 2021
|
600.0
|
|
|
600.0
|
|
||
1.7% senior unsecured notes due 2022 (€800.0 million aggregate principal amount)
|
908.9
|
|
|
866.8
|
|
||
0.5% senior unsecured bonds due 2023 (CHF 540.0 million aggregate principal amount)
|
566.0
|
|
|
541.6
|
|
||
2.5% senior unsecured notes due 2025 (€800.0 million aggregate principal amount)
|
910.1
|
|
|
867.9
|
|
||
3.35% senior unsecured notes due 2025
|
495.4
|
|
|
495.3
|
|
||
1.125% senior unsecured bonds due 2028 (CHF 110.0 million aggregate principal amount)
|
115.7
|
|
|
110.7
|
|
||
4.375% senior unsecured notes due 2045
|
499.3
|
|
|
499.3
|
|
||
Other
|
218.6
|
|
|
227.5
|
|
||
Subtotal
|
12,391.7
|
|
|
12,870.4
|
|
||
Less: currently payable
|
197.0
|
|
|
845.2
|
|
||
Long-term debt
|
$
|
12,194.7
|
|
|
$
|
12,025.2
|
|
|
Three Month Period Ended
|
||||||
U.S. Pension Benefits
|
April 1, 2016
|
|
April 3, 2015
|
||||
Service cost
|
$
|
2.3
|
|
|
$
|
1.5
|
|
Interest cost
|
22.7
|
|
|
24.1
|
|
||
Expected return on plan assets
|
(33.3
|
)
|
|
(32.8
|
)
|
||
Amortization of actuarial loss
|
6.0
|
|
|
6.5
|
|
||
Curtailment gain recognized
|
(0.7
|
)
|
|
—
|
|
||
Net periodic pension cost
|
$
|
(3.0
|
)
|
|
$
|
(0.7
|
)
|
|
|
|
|
||||
Non-U.S. Pension Benefits
|
|
|
|
||||
Service cost
|
$
|
9.6
|
|
|
$
|
11.3
|
|
Interest cost
|
10.5
|
|
|
8.6
|
|
||
Expected return on plan assets
|
(12.4
|
)
|
|
(9.5
|
)
|
||
Amortization of actuarial loss
|
3.3
|
|
|
4.4
|
|
||
Amortization of prior service credit
|
(0.1
|
)
|
|
(0.1
|
)
|
||
Settlement gain recognized
|
—
|
|
|
(0.4
|
)
|
||
Net periodic pension cost
|
$
|
10.9
|
|
|
$
|
14.3
|
|
|
Three Month Period Ended
|
||||||
|
April 1, 2016
|
|
April 3, 2015
|
||||
Service cost
|
$
|
0.2
|
|
|
$
|
0.3
|
|
Interest cost
|
1.4
|
|
|
2.0
|
|
||
Amortization of actuarial loss
|
0.1
|
|
|
0.7
|
|
||
Amortization of prior service credit
|
(0.8
|
)
|
|
(0.8
|
)
|
||
Net periodic benefit cost
|
$
|
0.9
|
|
|
$
|
2.2
|
|
Risk-free interest rate
|
1.3% - 1.6%
|
|
Weighted average volatility
|
24.6
|
%
|
Dividend yield
|
0.6
|
%
|
Expected years until exercise
|
5.5 - 8.0
|
|
|
Three Month Period Ended
|
||||||
|
April 1, 2016
|
|
April 3, 2015
|
||||
Restricted Stock Units (“RSUs”)/Performance Stock Units (“PSUs”):
|
|
|
|
||||
Pretax compensation expense
|
$
|
27.0
|
|
|
$
|
18.8
|
|
Income tax benefit
|
(8.0
|
)
|
|
(5.7
|
)
|
||
RSU/PSU expense, net of income taxes
|
19.0
|
|
|
13.1
|
|
||
Stock options:
|
|
|
|
||||
Pretax compensation expense
|
14.1
|
|
|
11.5
|
|
||
Income tax benefit
|
(4.5
|
)
|
|
(3.5
|
)
|
||
Stock option expense, net of income taxes
|
9.6
|
|
|
8.0
|
|
||
Total stock-based compensation:
|
|
|
|
||||
Pretax compensation expense
|
41.1
|
|
|
30.3
|
|
||
Income tax benefit
|
(12.5
|
)
|
|
(9.2
|
)
|
||
Total stock-based compensation expense, net of income taxes
|
$
|
28.6
|
|
|
$
|
21.1
|
|
|
Options
|
|
Weighted Average Exercise Price
|
|
Weighted Average Remaining Contractual Term (in years)
|
|
Aggregate Intrinsic Value
|
|||||
Outstanding as of December 31, 2015
|
20.1
|
|
|
$
|
57.84
|
|
|
|
|
|
||
Granted
|
3.7
|
|
|
87.20
|
|
|
|
|
|
|||
Exercised
|
(1.4
|
)
|
|
42.38
|
|
|
|
|
|
|||
Cancelled/forfeited
|
(0.7
|
)
|
|
74.40
|
|
|
|
|
|
|||
Outstanding as of April 1, 2016
|
21.7
|
|
|
$
|
63.27
|
|
|
7
|
|
$
|
704.5
|
|
Vested and expected to vest as of April 1, 2016
(a)
|
20.9
|
|
|
$
|
62.46
|
|
|
6
|
|
$
|
693.8
|
|
Vested as of April 1, 2016
|
10.1
|
|
|
$
|
44.94
|
|
|
4
|
|
$
|
511.5
|
|
(a)
|
The “Expected to vest” options are the net unvested options that remain after applying the forfeiture rate assumption to total unvested options.
|
|
Number of RSUs/PSUs
|
|
Weighted Average Grant-Date Fair Value
|
|||
Unvested as of December 31, 2015
|
4.9
|
|
|
$
|
73.31
|
|
Granted
|
1.2
|
|
|
85.24
|
|
|
Vested
|
(0.8
|
)
|
|
62.44
|
|
|
Forfeited
|
(0.3
|
)
|
|
67.21
|
|
|
Unvested as of April 1, 2016
|
5.0
|
|
|
78.09
|
|
Balance, December 31, 2015
|
$
|
135.1
|
|
Accruals for warranties issued during the period
|
30.1
|
|
|
Settlements made
|
(31.6
|
)
|
|
Additions due to acquisitions
|
0.1
|
|
|
Effect of foreign currency translation
|
1.7
|
|
|
Balance, April 1, 2016
|
$
|
135.4
|
|
|
Net Earnings from Continuing Operations
(Numerator) |
|
Shares
(Denominator) |
|
Per Share Amount
|
|||||
For the Three Month Period Ended April 1, 2016:
|
|
|
|
|
|
|||||
Basic EPS
|
$
|
758.4
|
|
|
688.6
|
|
|
$
|
1.10
|
|
Adjustment for interest on convertible debentures
|
0.4
|
|
|
—
|
|
|
|
|||
Incremental shares from assumed exercise of dilutive options and vesting of dilutive RSUs and PSUs
|
—
|
|
|
6.1
|
|
|
|
|||
Incremental shares from assumed conversion of the convertible debentures
|
—
|
|
|
2.4
|
|
|
|
|||
Diluted EPS
|
$
|
758.8
|
|
|
697.1
|
|
|
$
|
1.09
|
|
|
|
|
|
|
|
|||||
For the Three Month Period Ended April 3, 2015:
|
|
|
|
|
|
|||||
Basic EPS
|
$
|
558.0
|
|
|
707.2
|
|
|
$
|
0.79
|
|
Adjustment for interest on convertible debentures
|
0.6
|
|
|
—
|
|
|
|
|||
Incremental shares from assumed exercise of dilutive options and vesting of dilutive RSUs and PSUs
|
—
|
|
|
8.4
|
|
|
|
|||
Incremental shares from assumed conversion of the convertible debentures
|
—
|
|
|
3.1
|
|
|
|
|||
Diluted EPS
|
$
|
558.6
|
|
|
718.7
|
|
|
$
|
0.78
|
|
|
Three Month Period Ended
|
||||||
Sales:
|
April 1, 2016
|
|
April 3, 2015
|
||||
Test & Measurement
|
$
|
640.3
|
|
|
$
|
678.9
|
|
Environmental
|
855.8
|
|
|
823.2
|
|
||
Life Sciences & Diagnostics
|
2,411.9
|
|
|
1,695.7
|
|
||
Dental
|
655.9
|
|
|
662.4
|
|
||
Industrial Technologies
|
823.3
|
|
|
834.5
|
|
||
Total
|
$
|
5,387.2
|
|
|
$
|
4,694.7
|
|
|
|
|
|
||||
Operating Profit:
|
|
|
|
||||
Test & Measurement
|
$
|
133.8
|
|
|
$
|
151.6
|
|
Environmental
|
147.7
|
|
|
160.6
|
|
||
Life Sciences & Diagnostics
|
359.8
|
|
|
215.5
|
|
||
Dental
|
95.1
|
|
|
60.1
|
|
||
Industrial Technologies
|
200.1
|
|
|
205.2
|
|
||
Other
|
(54.4
|
)
|
|
(37.9
|
)
|
||
Total
|
$
|
882.1
|
|
|
$
|
755.1
|
|
•
|
Information Relating to Forward-Looking Statements
|
•
|
Overview
|
•
|
Results of Operations
|
•
|
Liquidity and Capital Resources
|
•
|
Critical Accounting Policies and Estimates
|
•
|
We are pursuing a plan to separate into two independent, publicly traded companies. The proposed Separation may not be completed on the currently contemplated timeline or at all and may not achieve the intended benefits.
|
•
|
Conditions in the global economy, the markets we serve and the financial markets may adversely affect our business and financial statements.
|
•
|
Our restructuring actions could have long-term adverse effects on our business.
|
•
|
Our growth could suffer if the markets into which we sell our products (references to products in this section include software) and services decline, do not grow as anticipated or experience cyclicality.
|
•
|
We face intense competition and if we are unable to compete effectively, we may experience decreased demand and decreased market share. Even if we compete effectively, we may be required to reduce prices for our products and services.
|
•
|
Our growth depends in part on the timely development and commercialization, and customer acceptance, of new and enhanced products and services based on technological innovation.
|
•
|
Our reputation, ability to do business and financial statements may be impaired by improper conduct by any of our employees, agents or business partners.
|
•
|
Any inability to consummate acquisitions at our historical rate and at appropriate prices could negatively impact our growth rate and stock price.
|
•
|
Our acquisition of businesses, including our recent acquisition of Pall, joint ventures and strategic relationships could negatively impact our financial statements.
|
•
|
The indemnification provisions of acquisition agreements by which we have acquired companies may not fully protect us and as a result we may face unexpected liabilities.
|
•
|
Divestitures and other dispositions could negatively impact our business, and contingent liabilities from businesses that we have sold could adversely affect our financial statements.
|
•
|
Certain of our businesses are subject to extensive regulation by the U.S. Food and Drug Administration (“FDA”) and by comparable agencies of other countries, as well as laws regulating fraud and abuse in the health care industry and the privacy and security of health information. Failure to comply with those regulations could adversely affect our reputation and financial statements.
|
•
|
The health care industry and related industries that we serve have undergone, and are in the process of undergoing, significant changes in an effort to reduce costs, which could adversely affect our financial statements.
|
•
|
Our operations, products and services expose us to the risk of environmental, health and safety liabilities, costs and violations that could adversely affect our reputation and financial statements.
|
•
|
Our businesses are subject to extensive regulation; failure to comply with those regulations could adversely affect our financial statements and reputation.
|
•
|
We may be required to recognize impairment charges for our goodwill and other intangible assets.
|
•
|
Foreign currency exchange rates may adversely affect our financial statements.
|
•
|
Changes in our tax rates or exposure to additional income tax liabilities or assessments could affect our profitability. In addition, audits by tax authorities could result in additional tax payments for prior periods.
|
•
|
We are subject to a variety of litigation and other legal and regulatory proceedings in the course of our business that could adversely affect our financial statements.
|
•
|
If we do not or cannot adequately protect our intellectual property, or if third parties infringe our intellectual property rights, we may suffer competitive injury or expend significant resources enforcing our rights.
|
•
|
Third parties may claim that we are infringing or misappropriating their intellectual property rights and we could suffer significant litigation expenses, losses or licensing expenses or be prevented from selling products or services.
|
•
|
Defects and unanticipated use or inadequate disclosure with respect to our products or services could adversely affect our business, reputation and financial statements.
|
•
|
The manufacture of many of our products is a highly exacting and complex process, and if we directly or indirectly encounter problems manufacturing products, our reputation, business and financial statements could suffer.
|
•
|
Our indebtedness may limit our operations and our use of our cash flow, and any failure to comply with the covenants that apply to our indebtedness could adversely affect our liquidity and financial statements.
|
•
|
Adverse changes in our relationships with, or the financial condition, performance, purchasing patterns or inventory levels of, key distributors and other channel partners could adversely affect our financial statements.
|
•
|
Our financial results are subject to fluctuations in the cost and availability of commodities that we use in our operations.
|
•
|
If we cannot adjust our manufacturing capacity or the purchases required for our manufacturing activities to reflect changes in market conditions and customer demand, our profitability may suffer. In addition, our reliance upon sole or limited sources of supply for certain materials, components and services could cause production interruptions, delays and inefficiencies.
|
•
|
Changes in governmental regulations may reduce demand for our products or services or increase our expenses.
|
•
|
Work stoppages, union and works council campaigns and other labor disputes could adversely impact our productivity and results of operations.
|
•
|
International economic, political, legal, compliance and business factors could negatively affect our financial statements.
|
•
|
If we suffer loss to our facilities, supply chains, distribution systems or information technology systems due to catastrophe or other events, our operations could be seriously harmed.
|
•
|
A significant disruption in, or breach in security of, our information technology systems could adversely affect our business.
|
•
|
Our defined benefit pension plans are subject to financial market risks that could adversely affect our financial statements.
|
•
|
a multi-industry, science and technology growth company that will retain the Danaher name and consist of Danaher’s existing Life Sciences & Diagnostics (including Pall) and Dental segments as well as the water quality and product identification businesses, which in aggregate generated approximately
$16.5 billion
and
$3.9 billion
of revenue in 2015 (adjusted to include the full annual revenues of Pall for 2015) and the first quarter of 2016, respectively (2015 revenues for these businesses excluding pre-acquisition Pall revenue were approximately
$14.4 billion
); and
|
•
|
a diversified industrial growth company (Fortive) that will consist of Danaher’s existing Test & Measurement segment, Industrial Technologies segment (excluding the product identification businesses) and retail/commercial petroleum business, which in aggregate generated approximately
$6.2 billion
and
$1.5 billion
of revenue in 2015 and the first quarter of 2016, respectively.
|
•
|
Higher
2016
sales volumes and incremental year-over-year cost savings associated with the restructuring actions and continuing productivity improvement initiatives taken in
2015
, net of incremental year-over-year costs associated with various new product development, sales and marketing growth investments and the effect of a stronger U.S. dollar in 2016 -
45
basis points
|
•
|
Acquisition-related charges associated with fair value adjustments to acquired inventory recorded in
2015
in connection with the Nobel Biocare acquisition -
40
basis points
|
•
|
The incremental net dilutive effect in
2016
of acquired businesses -
40
basis points
|
•
|
Charges associated with the anticipated 2016 Separation -
15
basis points
|
|
Three Month Period Ended
|
||||||
|
April 1, 2016
|
|
April 3, 2015
|
||||
Test & Measurement
|
$
|
640.3
|
|
|
$
|
678.9
|
|
Environmental
|
855.8
|
|
|
823.2
|
|
||
Life Sciences & Diagnostics
|
2,411.9
|
|
|
1,695.7
|
|
||
Dental
|
655.9
|
|
|
662.4
|
|
||
Industrial Technologies
|
823.3
|
|
|
834.5
|
|
||
Total
|
$
|
5,387.2
|
|
|
$
|
4,694.7
|
|
|
Three Month Period Ended
|
||||||
($ in millions)
|
April 1, 2016
|
|
April 3, 2015
|
||||
Sales
|
$
|
640.3
|
|
|
$
|
678.9
|
|
Operating profit
|
133.8
|
|
|
151.6
|
|
||
Depreciation
|
6.6
|
|
|
6.1
|
|
||
Amortization
|
13.5
|
|
|
13.8
|
|
||
Operating profit as a % of sales
|
20.9
|
%
|
|
22.3
|
%
|
||
Depreciation as a % of sales
|
1.0
|
%
|
|
0.9
|
%
|
||
Amortization as a % of sales
|
2.1
|
%
|
|
2.0
|
%
|
|
% Change Three Month Period Ended April 1, 2016 vs.
Comparable 2015 Period |
|
Existing businesses
|
(5.0
|
)%
|
Acquisitions
|
0.5
|
%
|
Currency exchange rates
|
(1.0
|
)%
|
Total
|
(5.5
|
)%
|
•
|
Lower
2016
sales volumes and the impact of the stronger U.S. dollar in
2016
, net of incremental year-over-year cost savings associated with the restructuring actions and continuing productivity improvement initiatives taken in
2015
-
135
basis points
|
•
|
The incremental dilutive effect in
2016
of acquired businesses -
5
basis points
|
|
Three Month Period Ended
|
||||||
($ in millions)
|
April 1, 2016
|
|
April 3, 2015
|
||||
Sales
|
$
|
855.8
|
|
|
$
|
823.2
|
|
Operating profit
|
147.7
|
|
|
160.6
|
|
||
Depreciation
|
13.3
|
|
|
12.8
|
|
||
Amortization
|
9.9
|
|
|
9.0
|
|
||
Operating profit as a % of sales
|
17.3
|
%
|
|
19.5
|
%
|
||
Depreciation as a % of sales
|
1.6
|
%
|
|
1.6
|
%
|
||
Amortization as a % of sales
|
1.2
|
%
|
|
1.1
|
%
|
|
% Change Three Month Period Ended April 1, 2016 vs.
Comparable 2015 Period |
|
Existing businesses
|
3.5
|
%
|
Acquisitions
|
3.0
|
%
|
Currency exchange rates
|
(2.5
|
)%
|
Total
|
4.0
|
%
|
•
|
Incremental investments in new product development initiatives and the effect of a stronger U.S. dollar in 2016, net of higher
2016
sales volumes and incremental year-over-year cost savings associated with the restructuring actions and continuing productivity improvement initiatives taken in
2015
-
155
basis points
|
•
|
The incremental dilutive effect in
2016
of acquired businesses -
65
basis points
|
|
Three Month Period Ended
|
||||||
($ in millions)
|
April 1, 2016
|
|
April 3, 2015
|
||||
Sales
|
$
|
2,411.9
|
|
|
$
|
1,695.7
|
|
Operating profit
|
359.8
|
|
|
215.5
|
|
||
Depreciation
|
107.5
|
|
|
89.9
|
|
||
Amortization
|
105.5
|
|
|
46.5
|
|
||
Operating profit as a % of sales
|
14.9
|
%
|
|
12.7
|
%
|
||
Depreciation as a % of sales
|
4.5
|
%
|
|
5.3
|
%
|
||
Amortization as a % of sales
|
4.4
|
%
|
|
2.7
|
%
|
|
% Change Three Month Period Ended April 1, 2016 vs.
Comparable 2015 Period |
|
Existing businesses
|
2.5
|
%
|
Acquisitions
|
41.5
|
%
|
Currency exchange rates
|
(2.0
|
)%
|
Total
|
42.0
|
%
|
•
|
Higher
2016
sales volumes and the incremental year-over-year cost savings associated with the restructuring actions and continuing productivity improvement initiatives taken in
2015
, net of incremental cost actions and the impact of the stronger U.S. dollar in
2016
-
205
basis points
|
•
|
The incremental net accretive effect in
2016
of acquired businesses -
15
basis points
|
|
Three Month Period Ended
|
||||||
($ in millions)
|
April 1, 2016
|
|
April 3, 2015
|
||||
Sales
|
$
|
655.9
|
|
|
$
|
662.4
|
|
Operating profit
|
95.1
|
|
|
60.1
|
|
||
Depreciation
|
10.9
|
|
|
12.7
|
|
||
Amortization
|
21.5
|
|
|
22.1
|
|
||
Operating profit as a % of sales
|
14.5
|
%
|
|
9.1
|
%
|
||
Depreciation as a % of sales
|
1.7
|
%
|
|
1.9
|
%
|
||
Amortization as a % of sales
|
3.3
|
%
|
|
3.3
|
%
|
|
% Change Three Month Period Ended April 1, 2016 vs.
Comparable 2015 Period |
|
Existing businesses
|
0.5
|
%
|
Acquisitions
|
0.5
|
%
|
Currency exchange rates
|
(2.0
|
)%
|
Total
|
(1.0
|
)%
|
•
|
Incremental year-over-year cost savings associated with the restructuring actions and continuing productivity improvement initiatives taken in
2015
and improved pricing, net of lower
2016
sales volumes from existing businesses and the effect of a stronger U.S. dollar in
2016
-
250
basis points
|
•
|
Acquisition-related charges associated with fair value adjustments to acquired inventory recorded in
2015
in connection with the Nobel Biocare acquisition -
300
basis points
|
•
|
The incremental net dilutive effect in
2016
of acquired businesses -
10
basis points
|
|
Three Month Period Ended
|
||||||
($ in millions)
|
April 1, 2016
|
|
April 3, 2015
|
||||
Sales
|
$
|
823.3
|
|
|
$
|
834.5
|
|
Operating profit
|
200.1
|
|
|
205.2
|
|
||
Depreciation
|
10.3
|
|
|
11.4
|
|
||
Amortization
|
9.2
|
|
|
9.1
|
|
||
Operating profit as a % of sales
|
24.3
|
%
|
|
24.6
|
%
|
||
Depreciation as a % of sales
|
1.3
|
%
|
|
1.4
|
%
|
||
Amortization as a % of sales
|
1.1
|
%
|
|
1.1
|
%
|
|
% Change Three Month Period Ended April 1, 2016 vs.
Comparable 2015 Period |
|
Existing businesses
|
(1.5
|
)%
|
Acquisitions
|
1.5
|
%
|
Currency exchange rates
|
(1.5
|
)%
|
Total
|
(1.5
|
)%
|
•
|
Incremental year-over-year cost savings associated with the restructuring actions and continuing productivity improvement initiatives taken in
2015
and improved pricing, net of lower
2016
sales volumes from existing businesses
|
•
|
The incremental net dilutive effect in
2016
of acquired businesses -
55
basis points
|
|
Three Month Period Ended
|
||||||
($ in millions)
|
April 1, 2016
|
|
April 3, 2015
|
||||
Sales
|
$
|
5,387.2
|
|
|
$
|
4,694.7
|
|
Cost of sales
|
(2,524.6
|
)
|
|
(2,226.5
|
)
|
||
Gross profit
|
$
|
2,862.6
|
|
|
$
|
2,468.2
|
|
Gross profit margin
|
53.1
|
%
|
|
52.6
|
%
|
|
Three Month Period Ended
|
||||||
($ in millions)
|
April 1, 2016
|
|
April 3, 2015
|
||||
Sales
|
$
|
5,387.2
|
|
|
$
|
4,694.7
|
|
Selling, general and administrative (“SG&A”) expenses
|
1,660.7
|
|
|
1,413.7
|
|
||
Research and development (“R&D”) expenses
|
319.8
|
|
|
299.4
|
|
||
SG&A as a % of sales
|
30.8
|
%
|
|
30.1
|
%
|
||
R&D as a % of sales
|
5.9
|
%
|
|
6.4
|
%
|
|
Three Month Period Ended
|
||||||
($ in millions)
|
April 1, 2016
|
|
April 3, 2015
|
||||
Total operating cash flows provided by continuing operations
|
$
|
772.8
|
|
|
$
|
529.6
|
|
|
|
|
|
||||
Cash paid for acquisitions
|
$
|
(107.5
|
)
|
|
$
|
(482.6
|
)
|
Payments for additions to property, plant and equipment
|
(151.0
|
)
|
|
(117.0
|
)
|
||
Payments for purchases of investments
|
—
|
|
|
(87.1
|
)
|
||
Proceeds from sale of investments
|
264.8
|
|
|
—
|
|
||
All other investing activities
|
2.0
|
|
|
3.2
|
|
||
Total investing cash used in discontinued operations
|
—
|
|
|
(7.2
|
)
|
||
Net cash provided by (used in) investing activities
|
$
|
8.3
|
|
|
$
|
(690.7
|
)
|
|
|
|
|
||||
Proceeds from the issuance of common stock
|
$
|
43.9
|
|
|
$
|
61.6
|
|
Payment of dividends
|
(92.7
|
)
|
|
(70.4
|
)
|
||
Net repayments of borrowings (maturities of 90 days or less)
|
(1,077.1
|
)
|
|
(247.5
|
)
|
||
Proceeds from borrowings (maturities longer than 90 days)
|
262.3
|
|
|
—
|
|
||
Repayments of borrowings (maturities longer than 90 days)
|
(0.3
|
)
|
|
(1.2
|
)
|
||
All other financing activities
|
(26.7
|
)
|
|
(3.3
|
)
|
||
Net cash used in financing activities
|
$
|
(890.6
|
)
|
|
$
|
(260.8
|
)
|
•
|
Operating cash flows from continuing operations increased
$243 million
, or approximately
46%
, during the first
three
months of
2016
as compared to the first
three
months of
2015
, due primarily to higher net earnings which also included higher noncash charges for depreciation, amortization, stock compensation and lower income tax payments.
|
•
|
During the
three
month period ended
April 1, 2016
, the Company received
$265 million
of cash proceeds from the sale of marketable equity securities.
|
•
|
In February 2016, the Company issued the 2021 Yen Notes (described in Note 6 of the Consolidated Condensed Financial Statements) and used the
$262 million
of net proceeds from the issuance of the notes to repay a portion of the commercial paper borrowings incurred in connection with the 2015 acquisition of Pall. During the first quarter of 2016, the Company, on a net basis, repaid approximately $1.1 billion of commercial paper and other short-term borrowings.
|
•
|
As of
April 1, 2016
, the Company held
$664 million
of cash and cash equivalents.
|
•
|
2016 operating cash flows benefited from higher net earnings for the first three months of 2016 as compared to the comparable period in 2015 excluding the impact of the gain from the sale of marketable equity securities included in other nonoperating income in 2016. This nonoperating gain is reflected in the investing activities section of the Statement of Cash Flows and, therefore, does not contribute to operating cash flows.
|
•
|
Net earnings from continuing operations for the first
three
months of
2016
reflected an increase of
$75 million
of depreciation and amortization expense as compared to the comparable period of
2015
. Amortization expense primarily relates to the amortization of intangible assets acquired in connection with acquisitions and increased due to the impact of 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 increases in equipment leased to customers and the impact of recently acquired businesses. 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 used
$121 million
in operating cash flows during the first
three
months of
2016
, compared to
$92 million
used in the comparable period of
2015
. 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 and accrued expenses and other liabilities provided
$8 million
of operating cash flows during the first
three
months of
2016
, compared to
$203 million
used in the comparable period of
2015
. The timing of cash payments for income taxes and various employee-related liabilities, including with respect to recently acquired companies, drove the majority of this change.
|
(a)
|
Exhibits:
|
**
|
Attached as Exhibit 101 to this report are the following documents formatted in XBRL (Extensible Business Reporting Language): (i) Consolidated Condensed Balance Sheets as of
April 1, 2016
and
December 31, 2015
, (ii) Consolidated Condensed Statements of Earnings for the
three
month periods ended
April 1, 2016
and
April 3, 2015
, (iii) Consolidated Condensed Statements of Comprehensive Income for the
three
month periods ended
April 1, 2016
and
April 3, 2015
, (iv) Consolidated Condensed Statement of Stockholders’ Equity for the
three
month period ended
April 1, 2016
, (v) Consolidated Condensed Statements of Cash Flows for the
three
month periods ended
April 1, 2016
and
April 3, 2015
, and (vi) Notes to Consolidated Condensed Financial Statements.
|
|
|
DANAHER CORPORATION:
|
|
|
|
|
|
Date:
|
April 20, 2016
|
By:
|
/s/ Daniel L. Comas
|
|
|
|
Daniel L. Comas
|
|
|
|
Executive Vice President and Chief Financial Officer
|
|
|
|
|
Date:
|
April 20, 2016
|
By:
|
/s/ Robert S. Lutz
|
|
|
|
Robert S. Lutz
|
|
|
|
Senior Vice President and Chief Accounting Officer
|
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