Danaher Reports Third Quarter 2018 Results

Thursday, October 18, 2018 General News
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B 

Acquisition-related transaction costs deemed significant ($15 million pretax as presented in this line item, $13 million after-tax), and fair value adjustments to inventory ($1 million pretax as presented in this line item, $0.8 million after-tax), in each case related to the acquisition of IDT and incurred in the second quarter of 2018.  The Company deems acquisition-related transaction costs incurred in a given period to be significant (generally relating to the Company's larger acquisitions) if it determines that such costs exceed the range of acquisition-related transaction costs typical for Danaher in a given period.

C 

Net gains on resolution of acquisition-related matters in the Life Sciences segment ($9 million pretax as presented in this line item, $7 million after-tax) for the second quarter of 2018.

D 

During the second quarter of 2017, the Company recorded $76 million of pretax restructuring, impairment and other related charges ($51 million after-tax) primarily related to the Company's strategic decision to discontinue certain product development efforts in its Diagnostics segment.  As a result, the Company incurred noncash charges for the impairment of certain technology-related intangibles as well as related inventory and plant, property, and equipment with no further use totaling $49 million.  In addition, the Company incurred cash restructuring costs primarily related to employee severance and related charges totaling $27 million.  This is addressed in more detail in the "Statement Regarding Non-GAAP Measures."

E 

This line item reflects the aggregate tax effect of all nontax adjustments reflected in the preceding line items of the table.  In addition, the footnote above indicates the after-tax amount of each individual adjustment item.  Danaher estimates the tax effect of each adjustment item by applying Danaher's overall estimated effective tax rate to the pretax amount, unless the nature of the item and/or the tax jurisdiction in which the item has been recorded requires application of a specific tax rate or tax treatment, in which case the tax effect of such item is estimated by applying such specific tax rate or tax treatment.

F 

Represents discrete income tax gains, primarily related to the release of valuation allowances associated with certain foreign operating losses ($23 million and $32 million, respectively, in the three and nine-month periods ended September 28, 2018) and (1) $35 million in the nine-month period ended September 29, 2017 and (2) equity compensation-related excess tax benefits ($16 million in the nine-month period ended September 29, 2017).  On January 1, 2017, Danaher adopted the updated accounting guidance required by ASU 2016-09, Compensation—Stock Compensation, which requires income statement recognition of all excess tax benefits and deficiencies related to equity compensation.  We exclude from Adjusted Diluted Net EPS any excess tax benefits that exceed the levels we believe are representative of historical experience.  In the first quarter of 2017, we anticipated $10 million of equity compensation-related excess tax benefits and realized $26 million of excess tax benefits, and therefore, we have excluded $16 million of these benefits in the calculation of Adjusted Diluted Net Earnings per Share.  In the other periods presented, realized equity compensation-related excess tax benefits approximated the anticipated benefit and no adjustment was required.

G 

Pretax costs incurred in the three-month period ending December 31, 2018 ($10 million pretax as reported in this line item, $8 million after-tax) related to preparation for the 2019 separation of the Dental segment ("Dental Separation") primarily related to professional fees for legal, tax, finance and information technology services.



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