Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Report of Management on Danaher Corporation’s Internal Control Over Financial Reporting

The management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting for the Company. Internal control over financial reporting is defined in Rules 13a-15(f) and 15d-15(f) promulgated under the Securities Exchange Act of 1934.

The Company’s management assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2020. In making this assessment, the Company’s management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) in “Internal Control-Integrated Framework” (2013 framework). Based on this assessment, management concluded that, as of December 31, 2020, the Company’s internal control over financial reporting is effective.

The Company completed the acquisition of Cytiva on March 31, 2020. Since the Company has not yet fully incorporated the internal controls and procedures of Cytiva into the Company’s internal control over financial reporting, management excluded Cytiva from its assessment of the effectiveness of the Company’s internal control over financial reporting as of December 31, 2020. Cytiva constituted 36% of the Company’s total assets as of December 31, 2020 and 15% of the Company’s total revenues for the year then ended.

The Company’s independent registered public accounting firm has issued an audit report on the effectiveness of the Company’s internal control over financial reporting. This report dated February 24, 2021 appears on pages 60-61 of this Form 10-K.

Report of Independent Registered Public Accounting Firm

To the Stockholders and the Board of Directors of Danaher Corporation

Opinion on Internal Control over Financial Reporting

We have audited Danaher Corporation and subsidiaries’ internal control over financial reporting as of December 31, 2020, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). In our opinion, Danaher Corporation and subsidiaries (the Company) maintained, in all material respects, effective internal control over financial reporting as of December 31, 2020, based on the COSO criteria.

As indicated in the accompanying Report of Management on Danaher Corporation’s Internal Control Over Financial Reporting, management’s assessment of and conclusion on the effectiveness of internal control over financial reporting did not include the internal controls of Cytiva, which is included in the 2020 consolidated financial statements of the Company and constituted 36% of total assets as of December 31, 2020 and 15% of the Company’s total revenue for the year then ended. Our audit of internal control over financial reporting of the Company also did not include an evaluation of the internal control over financial reporting of Cytiva.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2020 and 2019, the related consolidated statements of earnings, comprehensive income, stockholders’ equity and cash flows for each of the three years in the period ended December 31, 2020, and the related notes and financial statement schedule listed in the Index at Item 15(a) and our report dated February 24, 2021 expressed an unqualified opinion thereon.

Basis for Opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Report of Management on Danaher Corporation’s Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.

Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control Over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ Ernst & Young LLP

Tysons, Virginia

February 24, 2021

Report of Independent Registered Public Accounting Firm

To the Stockholders and the Board of Directors of Danaher Corporation

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Danaher Corporation and subsidiaries (the Company) as of December 31, 2020 and 2019, the related consolidated statements of earnings, comprehensive income, stockholders’ equity and cash flows for each of the three years in the period ended December 31, 2020, and the related notes and financial statement schedule listed in the Index at Item 15(a) (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2020 and 2019, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2020, in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2020, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated February 24, 2021 expressed an unqualified opinion thereon.

Basis for Opinion

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

			Uncertain Tax Positions
Description of the Matter			As discussed in Note 15 to the consolidated financial statements, the Company operates in the U.S. and multiple international tax jurisdictions and as a result files numerous tax returns in those locations. Uncertainty in a tax position may arise for multiple reasons, including because tax laws are subject to interpretation. For some matters, the Company uses judgment to (1) determine whether, based on the technical merits, a tax position is more likely than not to be sustained and (2) measure the amount of tax benefit that qualifies for recognition. As of December 31, 2020, the Company’s gross unrecognized tax benefits related to uncertain tax positions were approximately $1.2 billion. As further discussed in Note 15, if the Internal Revenue Service proposes adjustments related to the Company's self-insurance programs and if the Company is unsuccessful in defending its position the Company may be required to record a charge against future earnings. The Company believes its positions related to the self-insurance programs are more likely than not sustainable and accordingly has no unrecognized tax benefit related to these self-insurance programs.
Due to the inherent uncertainty in predicting the resolution of some of these tax matters, auditing the Company’s uncertain tax positions and the related unrecognized tax benefits is complex and required the use of tax subject matter resources to determine whether the more likely than not criteria was met.
How We Addressed the Matter in Our Audit			We tested controls over management’s accounting for uncertain tax positions, including assessment of the technical merits of tax positions.
To evaluate whether the technical merits of some uncertain tax positions are more likely than not sustainable, our audit procedures included, among others, evaluation of applicable tax law, court cases, tax regulations and other regulatory guidance by our tax subject matter resources. We also involved tax subject matter resources in verifying our understanding of the relevant facts and analysis by reading relevant correspondence with the tax authority and reading third-party advice obtained by management. We also evaluated the adequacy of the Company’s disclosures included in Note 15 to the consolidated financial statements in relation to these matters.
			Accounting for the Acquisition of Cytiva
Description of the Matter			As discussed in Note 3 to the consolidated financial statements, on March 31, 2020, the Company acquired the Biopharma business now known as Cytiva, for a purchase price of $20.7 billion. The transaction was accounted for as a business combination. As part of the allocation of the purchase price, the Company estimated the fair value of finite-lived intangible assets to be $10.7 billion, comprised of product trade names, developed technology and customer relationships.
Auditing the Company's accounting for its acquisition of Cytiva was complex due to the estimation uncertainty in determining the fair value of finite-lived intangible assets. The estimation uncertainty was primarily due to the sensitivity of the respective assets’ fair value to underlying assumptions about the future performance of Cytiva and other related valuation assumptions. The significant assumptions used to estimate the value of these assets included discount rates and certain assumptions that form the basis of the forecasted results including revenue and EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) growth rates, royalty rates and technology obsolescence rates. These assumptions are forward looking and could be affected by future economic and market conditions.
How We Addressed the Matter in Our Audit			We tested the Company's controls over its accounting for acquisitions, including controls over management’s review of the significant assumptions described above.
To test the estimated fair value of these intangible assets, we performed audit procedures that included, among others, evaluating the Company's use of the selected valuation model and testing the significant assumptions used in the model and testing the completeness and accuracy of the underlying data. For example, we compared certain assumptions to current market and economic trends, to historical results of the acquired business, to assumptions used by guideline companies within the industry, and to internal communications and analysis. Our valuation specialists assisted with the evaluation of the valuation model selected and certain assumptions, including the discount rate, royalty rates and technological obsolescence rates.

/s/ Ernst & Young LLP

We have served as the Company’s auditor since 2002.

Tysons, Virginia

February 24, 2021

DANAHER CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

($ in millions, except per share amount)

			As of December 31
			2020						2019
ASSETS
Current assets:
Cash and equivalents			$	6,035					$	19,912
Trade accounts receivable, less allowance for doubtful accounts of $132 as of December 31, 2020 and $104 as of December 31, 2019			4,045						3,191
Inventories			2,292						1,628
Prepaid expenses and other current assets			1,430						865
Total current assets			13,802						25,596
Property, plant and equipment, net			3,262						2,302
Other long-term assets			2,395						1,721
Goodwill			35,420						22,713
Other intangible assets, net			21,282						9,750
Total assets			$	76,161					$	62,082
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Notes payable and current portion of long-term debt			$	11					$	212
Trade accounts payable			2,049						1,515
Accrued expenses and other liabilities			5,342						3,205
Total current liabilities			7,402						4,932
Other long-term liabilities			7,789						5,351
Long-term debt			21,193						21,517
Stockholders’ equity:
Preferred stock, no par value, 15.0 million shares authorized; 1.65 million shares of 4.75% Mandatory Convertible Preferred Stock, Series A, issued and outstanding as of December 31, 2020 and December 31, 2019; 1.72 million shares of 5.00% Mandatory Convertible Preferred Stock, Series B, issued and outstanding as of December 31, 2020 and no shares issued or outstanding as of December 31, 2019			3,268						1,600
Common stock - $0.01 par value, 2.0 billion shares authorized; 851.3 million issued and 711.0 million outstanding as of December 31, 2020; 835.5 million issued and 695.5 million outstanding as of December 31, 2019			9						8
Additional paid-in capital			9,698						7,565
Retained earnings			27,159						24,166
Accumulated other comprehensive income (loss)			(368)						(3,068)
Total Danaher stockholders’ equity			39,766						30,271
Noncontrolling interests			11						11
Total stockholders’ equity			39,777						30,282
Total liabilities and stockholders’ equity			$	76,161					$	62,082

See the accompanying Notes to the Consolidated Financial Statements.

DANAHER CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF EARNINGS

($ and shares in millions, except per share amounts)

			Year Ended December 31
			2020						2019						2018
Sales			$	22,284					$	17,911					$	17,049
Cost of sales			(9,809)						(7,927)						(7,544)
Gross profit			12,475						9,984						9,505
Operating costs:
Selling, general and administrative expenses			(6,896)						(5,589)						(5,391)
Research and development expenses			(1,348)						(1,126)						(1,059)
Operating profit			4,231						3,269						3,055
Nonoperating income (expense):
Other income (expense), net			39						12						35
Gain on sale of product lines			455						—						—
Loss on early extinguishment of borrowings			(26)						(7)						—
Interest expense			(275)						(108)						(137)
Interest income			71						139						9
Earnings from continuing operations before income taxes			4,495						3,305						2,962
Income taxes			(849)						(873)						(556)
Net earnings from continuing operations			3,646						2,432						2,406
Earnings from discontinued operations, net of income taxes			—						576						245
Net earnings			3,646						3,008						2,651
Mandatory convertible preferred stock dividends			(136)						(68)						—
Net earnings attributable to common stockholders			$	3,510					$	2,940					$	2,651
Net earnings per common share from continuing operations:
Basic			$	4.97					$	3.31					$	3.43
Diluted			$	4.89					$	3.26					$	3.39
Net earnings per common share from discontinued operations:
Basic			$	—					$	0.81					$	0.35
Diluted			$	—					$	0.79					$	0.34
Net earnings per common share:
Basic			$	4.97					$	4.11		*			$	3.78
Diluted			$	4.89					$	4.05					$	3.74		*
Average common stock and common equivalent shares outstanding:
Basic			706.2						715.0						700.6
Diluted			718.7						725.5						710.2

• Net earnings per common share amount does not add due to rounding.

See the accompanying Notes to the Consolidated Financial Statements.

DANAHER CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

($ in millions)

			Year Ended December 31
			2020						2019						2018
Net earnings			$	3,646					$	3,008					$	2,651
Other comprehensive income (loss), net of income taxes:
Foreign currency translation adjustments			2,918						(75)						(632)
Pension and postretirement plan benefit adjustments			(147)						(90)						(13)
Unrealized gain (loss) on available-for-sale securities			1						1						(1)
Cash flow hedge adjustments			(72)						(113)						—
Total other comprehensive income (loss), net of income taxes			2,700						(277)						(646)
Comprehensive income			$	6,346					$	2,731					$	2,005

See the accompanying Notes to the Consolidated Financial Statements.

DANAHER CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

($ in millions)

			Year Ended December 31
			2020						2019						2018
Preferred stock:
Balance, beginning of period			$	1,600					$	—					$	—
Issuance of Mandatory Convertible Preferred Stock			1,668						1,600						—
Balance, end of period			$	3,268					$	1,600					$	—
Common stock:
Balance, beginning of period			$	8					$	8					$	8
Common stock-based award activity			1						—						—
Issuance of common stock			—						—						—
Balance, end of period			$	9					$	8					$	8
Additional paid-in capital:
Balance, beginning of period			$	7,565					$	5,834					$	5,538
Common stock-based award activity			351						315						253
Common stock issued in connection with acquisitions			—						—						24
Common stock issued in connection with LYONs’ conversions			53						33						19
Issuance of common stock			1,729						1,443						—
Sale of Envista Holdings Corporation common stock			—						(60)						—
Balance, end of period			$	9,698					$	7,565					$	5,834
Retained earnings:
Balance, beginning of period			$	24,166					$	25,162					$	22,806
Adoption of accounting standards			(8)						—						154
Net earnings			3,646						3,008						2,651
Common stock dividends declared			(509)						(484)						(449)
Mandatory Convertible Preferred Stock dividends declared			(136)						(68)						—
Tendered common stock in exchange offer for Envista Holdings Corporation common stock			—						(3,452)						—
Balance, end of period			$	27,159					$	24,166					$	25,162
Accumulated other comprehensive income (loss):
Balance, beginning of period			$	(3,068)					$	(2,791)					$	(1,994)
Adoption of accounting standards			—						—						(151)
Other comprehensive income (loss)			2,700						(277)						(646)
Balance, end of period			$	(368)					$	(3,068)					$	(2,791)
Noncontrolling interests:
Balance, beginning of period			$	11					$	12					$	10
Activity related to Envista Holdings Corporation			—						(3)						—
Change in noncontrolling interests			—						2						2
Balance, end of period			$	11					$	11					$	12
Total stockholders’ equity, end of period			$	39,777					$	30,282					$	28,225

See the accompanying Notes to the Consolidated Financial Statements.

DANAHER CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

($ in millions)

			Year Ended December 31
			2020						2019						2018
Cash flows from operating activities:
Net earnings			$	3,646					$	3,008					$	2,651
Less: earnings from discontinued operations, net of income taxes			—						576						245
Net earnings from continuing operations			3,646						2,432						2,406
Noncash items:
Depreciation			637						564						562
Amortization of intangible assets			1,138						625						616
Amortization of acquisition-related inventory fair value step-up			457						—						—
Stock-based compensation expense			187						159						138
Pretax gain on sale of product lines			(455)						—						—
Change in deferred income taxes			518						(415)						(252)
Change in trade accounts receivable, net			(264)						(157)						(55)
Change in inventories			(123)						(22)						(134)
Change in trade accounts payable			227						18						229
Change in prepaid expenses and other assets			102						48						78
Change in accrued expenses and other liabilities			145						405						56
Total operating cash provided by continuing operations			6,215						3,657						3,644
Total operating cash (used in) provided by discontinued operations			(7)						295						378
Net cash provided by operating activities			6,208						3,952						4,022
Cash flows from investing activities:
Cash paid for acquisitions			(20,971)						(331)						(2,173)
Payments for additions to property, plant and equipment			(791)						(636)						(584)
Proceeds from sales of property, plant and equipment			2						13						6
Payments for purchases of investments			(342)						(241)						(146)
Proceeds from sales of investments			13						—						22
Proceeds from sale of product lines			826						—						—
All other investing activities			24						29						1
Total investing cash used in continuing operations			(21,239)						(1,166)						(2,874)
Total investing cash used in discontinued operations			—						(72)						(75)
Net cash used in investing activities			(21,239)						(1,238)						(2,949)
Cash flows from financing activities:
Proceeds from the issuance of common stock in connection with stock-based compensation			153						130						96
Proceeds from the public offering of common stock, net of issuance costs			1,729						1,443						—
Proceeds from the public offering of preferred stock, net of issuance costs			1,668						1,600						—
Net proceeds from the sale of Envista Holdings Corporation common stock, net of issuance costs			—						643						—
Payment of dividends			(615)						(527)						(433)
Net (repayments of) proceeds from borrowings (maturities of 90 days or less)			(4,637)						2,802						66
Proceeds from borrowings (maturities longer than 90 days)			8,670						12,113						—
Repayments of borrowings (maturities longer than 90 days)			(5,933)						(1,565)						(508)
Make-whole premiums to redeem borrowings prior to maturity			(26)						(7)						—
All other financing activities			(3)						(43)						(18)
Total financing cash provided by (used in) continuing operations			1,006						16,589						(797)
Cash distributions to Envista Holdings Corporation, net			—						(224)						—
Net cash provided by (used in) financing activities			1,006						16,365						(797)
Effect of exchange rate changes on cash and equivalents			148						45						(118)
Net change in cash and equivalents			(13,877)						19,124						158
Beginning balance of cash and equivalents			19,912						788						630
Ending balance of cash and equivalents			$	6,035					$	19,912					$	788
Supplemental disclosure:
Shares redeemed through the split-off of Envista Holdings Corporation (22.9 million shares held as Treasury shares)			$	—					$	3,452					$	—

See the accompanying Notes to the Consolidated Financial Statements.

DANAHER CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1. BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Business—Danaher Corporation (“Danaher” or the “Company”) designs, manufactures and markets professional, medical, industrial and commercial products and services, which are typically characterized by strong brand names, innovative technology and major market positions. As of December 31, 2020, the Company operates in three business segments: Life Sciences; Diagnostics; and Environmental & Applied Solutions.

The Company’s Life Sciences segment offers a broad range of instruments and consumables that are primarily used by customers to study the basic building blocks of life, including genes, proteins, metabolites and cells, in order to understand the causes of disease, identify new therapies, and test and manufacture new drugs and vaccines.

The Company’s Diagnostics segment offers analytical instruments, reagents, consumables, software and services that hospitals, physicians’ offices, reference laboratories and other critical care settings use to diagnose disease and make treatment decisions.

The Company’s Environmental & Applied Solutions segment offers products and services that help protect important resources and keep global food and water supplies safe. The Company’s water quality business provides instrumentation, consumables, software, services and disinfection systems to help analyze, treat and manage the quality of ultra-pure, potable, industrial, waste, ground, source and ocean water in residential, commercial, municipal, industrial and natural resource applications. The Company’s product identification business provides instruments, software, services and consumables for various color and appearance management, packaging design and quality management, packaging converting, printing, marking, coding and traceability applications for consumer, pharmaceutical and industrial products.

Refer to Notes 3 and 4 for a discussion of significant acquisitions, discontinued operations and other dispositions.

Accounting Principles—The accompanying financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”). The Consolidated Financial Statements include the accounts of the Company and its subsidiaries. All intercompany balances and transactions have been eliminated upon consolidation. The Consolidated Financial Statements also reflect the impact of noncontrolling interests. Noncontrolling interests do not have a significant impact on the Company’s consolidated results of continuing operations, therefore earnings attributable to noncontrolling interests for continuing operations are not presented separately in the Company’s Consolidated Statements of Earnings. Earnings attributable to noncontrolling interests have been reflected in selling, general and administrative expenses and were insignificant in all periods presented. Reclassifications of certain prior year amounts have been made to conform to the current year presentation.

Use of Estimates—The preparation of these financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. The Company bases these estimates on historical experience, the current economic environment and on various other assumptions that are believed to be reasonable under the circumstances. However, uncertainties associated with these estimates exist and actual results may differ materially from these estimates.

Cash and Equivalents—The Company considers all highly liquid investments with a maturity of three months or less at the date of purchase to be cash equivalents.

Accounts Receivable and Allowances for Doubtful Accounts—All trade accounts, contract and finance receivables are reported on the accompanying Consolidated Balance Sheets adjusted for any write-offs and net of allowances for doubtful accounts. The allowances for doubtful accounts represent management’s best estimate of the expected future credit losses from the Company’s trade accounts, contract and finance receivable portfolios. Determination of the allowances requires management to exercise judgment about the timing, frequency and severity of credit losses that could materially affect the provision for credit losses and, therefore, net earnings. The Company regularly performs detailed reviews of its portfolios to determine if an impairment has occurred and evaluates the collectability of receivables based on a combination of various financial and qualitative factors that may affect customers’ ability to pay, including customers’ financial condition, collateral, debt-servicing ability, past payment experience and credit bureau information. In circumstances where the Company is aware of a specific customer’s inability to meet its financial obligations, a specific reserve is recorded against amounts due to reduce the recognized receivable to the amount reasonably expected to be collected. Additions to the allowances for doubtful accounts are charged to current period earnings, amounts determined to be uncollectible are charged directly against the allowances, while amounts recovered on previously written-off accounts increase the allowances. If the financial condition of the Company’s customers were to deteriorate, resulting in an impairment of their ability to make payments, additional reserves would be

required. The Company does not believe that trade accounts receivable represent significant concentrations of credit risk because of the diversified portfolio of individual customers and geographical areas. On January 1, 2020, the Company adopted Accounting Standards Update (“ASU”) No. 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, using the modified retrospective transition method and recorded a net increase to the allowance for doubtful accounts of $10 million due to the cumulative impact of adoption. As a result of the adoption of the ASU, the Company’s allowance for doubtful accounts as of December 31, 2020 reflects the Company’s best estimate of the expected future losses for its accounts receivables based on economic conditions; however, as a result of the uncertainty caused by the coronavirus (COVID-19) pandemic and other factors, these estimates may change and future actual losses may differ from the Company’s estimates. The Company will continue to monitor economic conditions and will revise the estimates of the expected future losses for accounts receivable as necessary. The Company recorded $31 million, $30 million and $31 million of expense associated with doubtful accounts for the years ended December 31, 2020, 2019 and 2018, respectively.

Included in the Company’s trade accounts receivable and other long-term assets as of December 31, 2020 and 2019 are $254 million and $244 million of net aggregate financing receivables, respectively. All financing receivables are evaluated for impairment based on individual customer credit profiles.

Inventory Valuation—Inventories include the costs of material, labor and overhead. Domestic inventories are stated at the lower of cost and net realizable value primarily using the first-in, first-out (“FIFO”) method with certain businesses applying the last-in, first-out method (“LIFO”) to value inventory. Inventories held outside the United States are stated at the lower of cost or market primarily using the FIFO method.

Property, Plant and Equipment—Property, plant and equipment are carried at cost. The provision for depreciation has been computed principally by the straight-line method based on the estimated useful lives of the depreciable assets as follows:

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

Estimated useful lives are periodically reviewed and, when appropriate, changes to estimates are made prospectively.

Investments—Investments over which the Company has a significant influence but not a controlling interest, are accounted for using the equity method of accounting which requires the Company to record its initial investment at cost and adjust the balance each period for the Company’s share of the investee’s income or loss and dividends paid. The Company also invests in start-up companies where the Company has neither control of nor significant influence over the investee. The Company measures these non-marketable equity securities at fair value and recognizes changes in fair value in net earnings. For securities without readily available fair values, the Company has elected the measurement alternative to record these investments at cost and to adjust for impairments and observable price changes with a same or similar security from the same issuer within net earnings (the “Fair Value Alternative”). Additionally, the Company is a limited partner in a partnership that invests in start-up companies. While the partnership records these investments at fair value, the Company’s investment in the partnership is accounted for under the equity method of accounting. The Company made minority investments in non-marketable equity securities and equity method investments totaling $342 million in 2020 and $241 million in 2019, including investments in a partnership of $172 million in 2020 and $189 million in 2019. During 2020, the Company recorded net realized and unrealized gains of $18 million, related to changes in the fair value of these investments which is reflected in other income (expense), net, in the Consolidated Statement of Earnings. No significant realized or unrealized gains or losses were recorded in 2019 or 2018 with respect to these investments.

Other Assets—Other assets principally include noncurrent financing receivables, noncurrent deferred tax assets and other investments.

Fair Value of Financial Instruments—The Company’s financial instruments consist primarily of cash and cash equivalents, trade accounts receivable, investments in equity securities, available-for-sale debt securities and cross-currency swaps, nonqualified deferred compensation plans, obligations under trade accounts payable and short and long-term debt. Due to their short-term nature, the carrying values for cash and cash equivalents, trade accounts receivable and trade accounts payable approximate fair value. Refer to Note 9 for the fair values of the Company’s investments in equity securities, available-for-sale debt securities and cross-currency swaps and other obligations.

Goodwill and Other Intangible Assets—Goodwill and other intangible assets result from the Company’s acquisition of existing businesses. In accordance with accounting standards related to business combinations, goodwill is not amortized; however, certain finite-lived identifiable intangible assets, primarily customer relationships and acquired technology, are amortized over their estimated useful lives. Intangible assets with indefinite lives are not amortized. In-process research and development (“IPR&D”) is initially capitalized at fair value and when the IPR&D project is complete, the asset is considered a finite-lived intangible asset and amortized over its estimated useful life. If an IPR&D project is abandoned, an impairment loss equal to the value of the intangible asset is recorded in the period of abandonment. The Company reviews identified intangible assets and goodwill for impairment whenever events or changes in circumstances indicate that the related carrying amounts may not be recoverable. The Company also tests intangible assets with indefinite lives and goodwill for impairment at least annually. Refer to Notes 3 and 8 for additional information about the Company’s goodwill and other intangible assets.

Revenue Recognition—The Company derives revenues primarily from the sale of Life Sciences, Diagnostics and Environmental & Applied Solutions products and services. Revenue is recognized when control of the promised products or services is transferred to the Company’s customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those products or services (the transaction price). A performance obligation is a promise in a contract to transfer a distinct product or service to a customer and is the unit of account under Accounting Standards Codification (“ASC”) 606, Revenue from Contracts with Customers. For equipment, consumables and most software licenses sold by the Company, control transfers to the customer at a point in time. To indicate the transfer of control, the Company must have a present right to payment, legal title must have passed to the customer, the customer must have the significant risks and rewards of ownership, and where acceptance is not a formality, the customer must have accepted the product or service. The Company’s principal terms of sale are FOB Shipping Point, or equivalent, and, as such, the Company primarily transfers control and records revenue for product sales upon shipment. Sales arrangements with delivery terms that are not FOB Shipping Point are not recognized upon shipment and the transfer of control for revenue recognition is evaluated based on the associated shipping terms and customer obligations. If a performance obligation to the customer with respect to a sales transaction remains to be fulfilled following shipment (typically installation or acceptance by the customer), revenue recognition for that performance obligation is deferred until such commitments have been fulfilled. Returns for products sold are estimated and recorded as a reduction of revenue at the time of sale. Customer allowances and rebates, consisting primarily of volume discounts and other short-term incentive programs, are recorded as a reduction of revenue at the time of sale because these allowances reflect a reduction in the transaction price. Product returns, customer allowances and rebates are estimated based on historical experience and known trends. For extended warranty, service, post contract support (“PCS”), software-as-a-service (“SaaS”) and other long-term contracts, control transfers to the customer over the term of the arrangement. Revenue for extended warranty, service, PCS, SaaS and certain software licenses is recognized based upon the period of time elapsed under the arrangement. Revenue for other long-term contracts is generally recognized based upon the cost-to-cost measure of progress, provided that the Company meets the criteria associated with transferring control of the good or service over time.

Certain of the Company’s revenues relate to operating-type lease (“OTL”) arrangements. Leases are outside the scope of ASC 606 and are therefore accounted for in accordance with ASC 842, Leases (or ASC 840, Leases (“ASC 840”) prior to January 1, 2019). Equipment lease revenue for OTL agreements is recognized on a straight-line basis over the life of the lease, and the cost of customer-leased equipment is recorded within property, plant and equipment in the accompanying Consolidated Balance Sheets and depreciated over the equipment’s estimated useful life. Depreciation expense associated with the leased equipment under OTL arrangements is reflected in cost of sales in the accompanying Consolidated Statements of Earnings. The OTLs are generally not cancellable until after an initial term and may or may not require the customer to purchase a minimum number of consumables or tests throughout the contract term. The Company also enters into sales-type lease (“STL”) arrangements with customers which result in earlier recognition of equipment lease revenue as compared to an OTL.

For a contract with multiple performance obligations, the Company allocates the contract’s transaction price to each performance obligation on a relative standalone selling price basis using the Company’s best estimate of the standalone selling price of each distinct product or service in the contract. The primary method used to estimate standalone selling price is the price observed in standalone sales to customers; however, when prices in standalone sales are not available the Company may use third-party pricing for similar products or services or estimate the standalone selling price. Allocation of the transaction price is determined at the contracts’ inception.

Shipping and Handling—Shipping and handling costs are included as a component of cost of sales. Revenue derived from shipping and handling costs billed to customers is included in sales.

Advertising—Advertising costs are expensed as incurred.

Research and Development—The Company conducts research and development activities for the purpose of developing new products, enhancing the functionality, effectiveness, ease of use and reliability of the Company’s existing products and

expanding the applications for which uses of the Company’s products are appropriate. Research and development costs are expensed as incurred.

Income Taxes—The Company’s income tax expense represents the tax liability for the current year, the tax benefit or expense for the net change in deferred tax liabilities and assets during the year, as well as reserves for unrecognized tax benefits and return to provision adjustments. Deferred tax liabilities and assets are determined based on the difference between the financial statement and tax basis of assets and liabilities using enacted rates expected to be in effect during the year in which the differences reverse. Deferred tax assets generally represent items that can be used as a tax deduction or credit in the Company’s tax return in future years for which the tax benefit has already been reflected on the Company’s Consolidated Statements of Earnings. The Company establishes valuation allowances for its deferred tax assets if it is more likely than not that some or all of the deferred tax asset will not be realized. Deferred tax liabilities generally represent items that have already been taken as a deduction on the Company’s tax return but have not yet been recognized as an expense in the Company’s Consolidated Statements of Earnings. The effect on deferred tax assets and liabilities due to a change in tax rates is recognized in income tax expense in the period that includes the enactment date. The Company provides for unrecognized tax benefits when, based upon the technical merits, it is “more likely than not” that an uncertain tax position will not be sustained upon examination. Judgment is required in evaluating tax positions and determining income tax provisions. The Company re-evaluates the technical merits of its tax positions and may recognize an uncertain tax benefit in certain circumstances, including when: (1) a tax audit is completed; (2) applicable tax laws change, including a tax case ruling or legislative guidance; or (3) the applicable statute of limitations expires. The Company recognizes potential accrued interest and penalties associated with unrecognized tax positions in income tax expense. Refer to Note 15 for additional information and discussion of the impact of the enactment of the Tax Cuts and Jobs Act (“TCJA”) in the United States.

Productivity Improvement and Restructuring—The Company periodically initiates productivity improvement and restructuring activities to appropriately position the Company’s cost base relative to prevailing economic conditions and associated customer demand as well as in connection with certain acquisitions. Costs associated with productivity improvement and restructuring actions can include one-time termination benefits and related charges in addition to facility closure, contract termination and other related activities. The Company records the cost of the productivity improvement and restructuring activities when the associated liability is incurred.

Foreign Currency Translation—Exchange rate adjustments resulting from foreign currency transactions are recognized in net earnings, whereas effects resulting from the translation of financial statements are reflected as a component of accumulated other comprehensive income (loss) within stockholders’ equity. Assets and liabilities of subsidiaries operating outside the United States with a functional currency other than U.S. dollars are translated into U.S. dollars using year end exchange rates and income statement accounts are translated at weighted average rates. Net foreign currency transaction gains or losses were not material in any of the years presented. As discussed below, the Company uses its foreign currency-denominated debt and cross-currency swap arrangements whereby existing U.S. dollar-denominated borrowings are effectively converted to foreign currency borrowings to partially hedge its net investments in foreign operations against adverse movements in exchange rates.

Derivative Financial Instruments—The Company is neither a dealer nor a trader in derivative instruments. The Company has generally accepted the exposure to transactional exchange rate movements without using derivative instruments to manage this risk, although the Company from time to time partially hedges its net investments in foreign operations against adverse movements in exchange rates through foreign currency-denominated debt and cross-currency swaps. The Company will periodically enter into foreign currency forward contracts to mitigate a portion of its foreign currency exchange risk and forward starting swaps to mitigate interest rate risk related to the Company’s debt. The Company also uses cross-currency swap derivative contracts to hedge long-term debt issuances in a foreign currency other than the functional currency of the borrower. When utilized, the derivative instruments are recorded on the Consolidated Balance Sheets as either an asset or liability measured at fair value. To the extent the derivative instrument qualifies as an effective hedge, changes in fair value are recognized in accumulated other comprehensive income (loss) in stockholders’ equity. Changes in the value of the foreign currency denominated debt and cross-currency swaps designated as hedges of the Company’s net investment in foreign operations based on spot rates are recognized in accumulated other comprehensive income (loss) in stockholders’ equity and offset changes in the value of the Company’s foreign currency denominated operations. Refer to Note 12 for additional information.

Accumulated Other Comprehensive Income (Loss)—Accumulated other comprehensive income (loss) refers to certain gains and losses that under U.S. GAAP are included in comprehensive income (loss) but are excluded from net earnings as these amounts are initially recorded as an adjustment to stockholders’ equity. Foreign currency translation adjustments are generally not adjusted for income taxes as they relate to indefinite investments in non-U.S. subsidiaries. The changes in accumulated other comprehensive income (loss) by component are summarized below ($ in millions). Foreign currency translation adjustments generally relate to indefinite investments in non-U.S. subsidiaries, as well as the impact from the Company’s hedges of its net investment in foreign operations, including the Company’s cross-currency swap derivatives, net of any tax impacts.

			Foreign Currency Translation Adjustments						Pension and Postretirement Plan Benefit Adjustments						Unrealized Gain (Loss) on Available-For-Sale Securities						Cash Flow Hedge Adjustments						Total
Balance, January 1, 2018			$	(1,466)					$	(678)					$	(1)					$	—					$	(2,145)
Other comprehensive income (loss) before reclassifications:
Decrease			(632)						(45)						(1)						—						(678)
Income tax impact			—						9						—						—						9
Other comprehensive income (loss) before reclassifications, net of income taxes			(632)						(36)						(1)						—						(669)
Amounts reclassified from accumulated other comprehensive income (loss):
Increase			—						30			(a)			—						—						30
Income tax impact			—						(7)						—						—						(7)
Amounts reclassified from accumulated other comprehensive income (loss), net of income taxes			—						23						—						—						23
Net current period other comprehensive income (loss), net of income taxes			(632)						(13)						(1)						—						(646)
Balance, December 31, 2018			(2,098)						(691)						(2)						—						(2,791)
Other comprehensive income (loss) before reclassifications:
(Decrease) increase			(178)						(149)						2						(149)						(474)
Income tax impact			(6)						32						(1)						9						34
Other comprehensive income (loss) before reclassifications, net of income taxes			(184)						(117)						1						(140)						(440)
Amounts reclassified from accumulated other comprehensive income (loss):
Increase			109			(c)			36			(a)			—						27			(b)			172
Income tax impact			—						(9)						—						—						(9)
Amounts reclassified from accumulated other comprehensive income (loss), net of income taxes			109						27						—						27						163
Net current period other comprehensive income (loss), net of income taxes			(75)						(90)						1						(113)						(277)
Balance, December 31, 2019			(2,173)						(781)						(1)						(113)						(3,068)
Other comprehensive income (loss) before reclassifications:
Increase (decrease)			2,893						(239)						1						(432)						2,223
Income tax impact			25						57						—						—						82
Other comprehensive income (loss) before reclassifications, net of income taxes			2,918						(182)						1						(432)						2,305
Amounts reclassified from accumulated other comprehensive income (loss):
Increase			—						46			(a)			—						361			(b)			407
Income tax impact			—						(11)						—						(1)						(12)
Amounts reclassified from accumulated other comprehensive income (loss), net of income taxes			—						35						—						360						395
Net current period other comprehensive income (loss), net of income taxes			2,918						(147)						1						(72)						2,700
Balance, December 31, 2020			$	745					$	(928)					$	—					$	(185)					$	(368)

(a) This accumulated other comprehensive income (loss) component is included in the computation of net periodic pension and postretirement cost (refer to Notes 13 and 14 for additional details).

(b) Reflects reclassification to earnings related to remeasurement of certain long-term debt (refer to Note 12 for additional details).

(c) Reflects reclassification to earnings related to the Envista Disposition (refer to Note 4 for additional details).

Accounting for Stock-Based Compensation—The Company accounts for stock-based compensation by measuring the cost of employee services received in exchange for all equity awards granted, including stock options, restricted stock units (“RSUs”) and performance stock units (“PSUs”), based on the fair value of the award as of the grant date. Equity-based compensation expense is recognized net of an estimated forfeiture rate on a straight-line basis over the requisite service period of the award, except that in the case of RSUs, compensation expense is recognized using an accelerated attribution method. Refer to Note 19 for additional information on the stock-based compensation plans in which certain employees of the Company participate.

Pension and Postretirement Benefit Plans—The Company measures its pension and postretirement plans’ assets and its obligations that determine the respective plan’s funded status as of the end of the Company’s fiscal year, and recognizes an asset for a plan’s overfunded status or a liability for a plan’s underfunded status in its balance sheet. Changes in the funded status of the plans are recognized in the year in which the changes occur and reported in comprehensive income (loss). Refer to Notes 13 and 14 for additional information on the Company’s pension and postretirement plans including a discussion of the actuarial assumptions, the Company’s policy for recognizing the associated gains and losses and the method used to estimate service and interest cost components.

Accounting Standards Recently Adopted—In August 2018, the Financial Accounting Standards Board (“FASB”) issued ASU Update No. 2018-13, Fair Value Measurement (Topic 820), which modifies the disclosures on fair value measurements by removing the requirement to disclose the amount and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy and the policy for timing of such transfers. The ASU expands the disclosure requirements for Level 3 fair value measurements, primarily focused on changes in unrealized gains and losses included in other comprehensive income (loss). The ASU is effective for public entities for fiscal years beginning after December 15, 2019, with early adoption permitted. On January 1, 2020, the Company adopted the ASU and the ASU did not have a significant impact on the Company’s Consolidated Financial Statements. Refer to Note 9 for the Company’s fair value measurement disclosures.

In August 2018, the FASB issued ASU No. 2018-14, Disclosure Framework—Changes to the Disclosure Requirements for Defined Benefit Plans, which amends ASC 715, Compensation—Retirement Benefits, to add, remove and clarify disclosure requirements related to defined benefit pension and other postretirement plans. Adoption of the ASU resulted in elimination of the following disclosures (a) the amounts expected to be amortized from accumulated other comprehensive income and reported as a component of net periodic benefit cost during the following fiscal year, and (b) the effects of a one-percentage-point change in the assumed health care cost trend rates on the aggregate projected service and interest cost and accumulated postretirement benefit obligation; and additional disclosures explaining the reasons for significant gains and losses related to the change in benefit obligations for the period. Refer to Notes 13 and 14 for the Company’s pension and other postretirement employee benefit plan disclosures.

In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which amends the impairment model by requiring entities to use a forward-looking approach based on expected losses rather than incurred losses to estimate credit losses on certain types of financial instruments, including trade receivables. This may result in the earlier recognition of allowances for losses. The ASU is effective for public entities for fiscal years beginning after December 15, 2019, with early adoption permitted. In November 2018, the FASB issued ASU No. 2018-19, Codification Improvements to Topic 326, Financial Instruments—Credit Losses, which provided additional implementation guidance on the previously issued ASU. On January 1, 2020, the Company adopted the ASU using the modified retrospective transition method. The Company recorded a decrease to beginning retained earnings of $8 million, net of tax, as of January 1, 2020 due to the cumulative impact of adopting Topic 326. The impact to retained earnings was primarily the result of an increase in the Company’s allowance for doubtful accounts as a result of Topic 326’s requirement to use a forward-looking approach based on expected losses rather than incurred losses to estimate credit losses on certain types of financial instruments, including trade receivables.

Accounting Standards Not Yet Adopted—In August 2020, the FASB issued ASU No. 2020-06, Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity. The ASU includes amendments to the guidance on convertible instruments and the derivative scope exception for contracts in an entity’s own equity and simplifies the accounting for convertible instruments which include beneficial conversion features or cash conversion features by removing certain separation models in Subtopic 470-20. Additionally, the ASU will require entities to use the “if-converted” method when calculating diluted earnings per share for convertible instruments. The ASU is effective for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. Management has not yet completed its assessment of the impact of the new standard on the Company’s Consolidated Financial Statements.

NOTE 2. REVENUE

The following table presents the Company’s revenues disaggregated by geographical region and revenue type ($ in millions). Sales taxes and other usage-based taxes collected from customers are excluded from revenues. The Company defines high-growth markets as developing markets of the world experiencing extended periods of accelerated growth in gross domestic product and infrastructure which include Eastern Europe, the Middle East, Africa, Latin America and Asia (with the exception of Japan, Australia and New Zealand). The Company defines developed markets as all markets of the world that are not high-growth markets.

			Life Sciences						Diagnostics						Environmental & Applied Solutions						Total
Year ended December 31, 2020:
Geographical region:
North America			$	3,919					$	3,182					$	1,910					$	9,011
Western Europe			2,939						1,375						1,009						5,323
Other developed markets			754						423						122						1,299
High-growth markets			2,964						2,423						1,264						6,651
Total			$	10,576					$	7,403					$	4,305					$	22,284
Revenue type:
Recurring			$	7,400					$	6,143					$	2,435					$	15,978
Nonrecurring			3,176						1,260						1,870						6,306
Total			$	10,576					$	7,403					$	4,305					$	22,284
Year ended December 31, 2019:
Geographical region:
North America			$	2,596					$	2,531					$	1,885					$	7,012
Western Europe			1,876						1,132						1,049						4,057
Other developed markets			585						402						125						1,112
High-growth markets			1,894						2,496						1,340						5,730
Total			$	6,951					$	6,561					$	4,399					$	17,911
Revenue type:
Recurring			$	4,411					$	5,524					$	2,372					$	12,307
Nonrecurring			2,540						1,037						2,027						5,604
Total			$	6,951					$	6,561					$	4,399					$	17,911
Year ended December 31, 2018:
Geographical region:
North America			$	2,295					$	2,404					$	1,771					$	6,470
Western Europe			1,847						1,155						1,059						4,061
Other developed markets			570						379						126						1,075
High-growth markets			1,759						2,320						1,364						5,443
Total			$	6,471					$	6,258					$	4,320					$	17,049
Revenue type:
Recurring			$	4,132					$	5,272					$	2,280					$	11,684
Nonrecurring			2,339						986						2,040						5,365
Total			$	6,471					$	6,258					$	4,320					$	17,049

The Company sells equipment to customers as well as consumables, software licenses and services, some of which customers purchase on a recurring basis. Consumables sold for use with the equipment sold by the Company are typically critical to the use of the equipment and are typically used on a one-time or limited basis, requiring frequent replacement in the customer’s operating cycle. Examples of these consumables include reagents used in diagnostic tests, filters used in filtration, separation and purification processes and cartridges for marking and coding equipment. Additionally, some of the Company’s consumables are used on a standalone basis, such as water treatment solutions. The Company separates its goods and services between those typically sold to a customer on a recurring basis and those typically sold to a customer on a nonrecurring basis. Recurring revenue includes revenue from consumables, services, software licenses recognized over time, SaaS licenses, sales-and-usage based royalties and OTLs. Nonrecurring revenue includes sales from equipment, software licenses recognized at a point in time and STLs. OTLs and STLs are included in the above revenue amounts. For the years ended December 31, 2020, 2019 and 2018, lease revenue was $444 million, $432 million and $401 million, respectively.

Remaining Performance Obligations

Remaining performance obligations represent the aggregate transaction price allocated to performance obligations with an original contract term greater than one year which are fully or partially unsatisfied at the end of the period. Remaining performance obligations include noncancelable purchase orders, the non-lease portion of minimum purchase commitments under long-term consumable supply arrangements, extended warranty, service and PCS contracts, SaaS and other long-term contracts. These remaining performance obligations do not include revenue from contracts with customers with an original term of one year or less, revenue from long-term consumable supply arrangements with no minimum purchase requirements or revenue expected from purchases made in excess of the minimum purchase requirements or revenue from equipment leased to customers. While the remaining performance obligation disclosure is similar in concept to backlog, the definition of remaining performance obligations excludes leases and contracts that provide the customer with the right to cancel or terminate for convenience with no substantial penalty, even if historical experience indicates the likelihood of cancellation or termination is remote. Additionally, the Company has elected to exclude contracts with customers with an original term of one year or less from remaining performance obligations while these contracts are included within backlog.

As of December 31, 2020, the aggregate amount of the transaction price allocated to remaining performance obligations was approximately $3.0 billion. The Company expects to recognize revenue on approximately 50% of the remaining performance obligations over the next 12 months, 23% over the subsequent 12 months, and the remainder recognized thereafter.

Contract Balances

The timing of revenue recognition, billings and cash collections results in billed trade accounts receivable, unbilled receivables (“contract assets”) and deferred revenue, customer deposits and billings in excess of revenue recognized (“contract liabilities”) on the Consolidated Balance Sheets. In addition, the Company defers certain costs incurred to obtain a contract (“contract costs”).

Contract Assets—Most of the Company’s long-term contracts are billed as work progresses in accordance with the contract terms and conditions, either at periodic intervals or upon achievement of certain milestones. Often this results in billing occurring subsequent to revenue recognition resulting in contract assets. Contract assets are generally classified as other current assets in the Consolidated Balance Sheets. The balance of contract assets as of December 31, 2020 and 2019 was $65 million and $77 million, respectively.

Contract Liabilities—The Company often receives cash payments from customers in advance of the Company’s performance resulting in contract liabilities. These contract liabilities are classified as either current or long-term in the Consolidated Balance Sheets based on the timing of when the Company expects to recognize revenue. As of December 31, 2020 and 2019, contract liabilities were approximately $1.4 billion and $806 million, respectively, and are included within accrued expenses and other liabilities and other long-term liabilities in the accompanying Consolidated Balance Sheets. The increase in the contract liability balance during the year ended December 31, 2020 was primarily a result of cash payments received in advance of satisfying performance obligations and acquisitions, partially offset by revenue recognized during the year that was included in the opening contract liability balance. The increase in the contract liability balance during the year ended December 31, 2019 was primarily a result of cash payments received in advance of satisfying performance obligations and acquisitions, partially offset by revenue recognized during the year that was included in the opening contract liability balance. Revenue recognized during the years ended December 31, 2020 and 2019 that was included in the opening contract liability balance was $638 million and $603 million, respectively.

Contract Costs—The Company capitalizes certain direct incremental costs incurred to obtain a contract, typically sales-related commissions, where the amortization period for the related asset is greater than one year. These costs are amortized over the contract term or a longer period, generally the expected life of the customer relationship if renewals are expected and the renewal commission is not commensurate with the initial commission. Contract costs are classified as current or long-term

other assets in the Consolidated Balance Sheets based on the timing of when the Company expects to recognize the expense and are generally amortized into earnings on a straight-line basis (which is consistent with the transfer of control for the related goods or services). Management assesses these costs for impairment at least quarterly and as “triggering” events occur that indicate it is more likely than not that an impairment exists. The balance of contract costs as of December 31, 2020 and 2019 were not significant. Amortization expense related to these costs for the years ended December 31, 2020 and 2019 was also not significant. The costs to obtain a contract where the amortization period for the related asset is one year or less are expensed as incurred and recorded within selling, general and administrative expenses in the accompanying Consolidated Statements of Earnings.

Contract assets, liabilities and costs are reported on the accompanying Consolidated Balance Sheets on a contract-by-contract basis.

NOTE 3. ACQUISITIONS

The Company continually evaluates potential acquisitions that either strategically fit with the Company’s existing portfolio or expand the Company’s portfolio into a new and attractive business area. The Company has completed a number of acquisitions and the purchases of the acquired businesses have resulted in the recognition of goodwill in the Company’s Consolidated Financial Statements. This goodwill arises because the purchase prices for these businesses reflect a number of factors including the future earnings and cash flow potential of these businesses, the multiple to earnings, cash flow and other factors at which similar businesses have been purchased by other acquirers, the competitive nature of the processes by which the Company acquired the businesses, the avoidance of the time and costs which would be required (and the associated risks that would be encountered) to enhance the Company’s existing product offerings to key target markets and enter into new and profitable businesses and the complementary strategic fit and resulting synergies these businesses bring to existing operations.

The Company makes an initial allocation of the purchase price at the date of acquisition based upon its understanding of the fair value of the acquired assets and assumed liabilities. The Company obtains the information used for the purchase price allocation during due diligence and through other sources. In the months after closing, as the Company obtains additional information about the acquired assets and liabilities, including through tangible and intangible asset appraisals, and learns more about the newly acquired business, it is able to refine the estimates of fair value and more accurately allocate the purchase price. The fair values of acquired intangibles are determined based on estimates and assumptions that are deemed reasonable by the Company. Significant assumptions include the discount rates and certain assumptions that form the basis of the forecasted results of the acquired business including revenue, earnings before interest, taxes, depreciation and amortization (“EBITDA”), growth rates, royalty rates and technology obsolescence rates. These assumptions are forward looking and could be affected by future economic and market conditions. The Company engages third-party valuation specialists who review the Company’s critical assumptions and calculations of the fair value of acquired intangible assets in connection with significant acquisitions. Only facts and circumstances that existed as of the acquisition date are considered for subsequent adjustment. The Company is continuing to evaluate certain pre-acquisition contingencies associated with certain of its 2020 acquisitions (including the acquisition of Cytiva, as described below) and is also in the process of obtaining valuations of certain acquisition-related assets and liabilities in connection with these acquisitions. The Company will make appropriate adjustments to the purchase price allocation prior to completion of the measurement period, as required.

The following briefly describes the Company’s acquisition activity for the three years ended December 31, 2020.

On March 31, 2020, the Company acquired the Biopharma business of General Electric Company’s (“GE”) Life Sciences division, now known as Cytiva, for a cash purchase price of approximately $20.7 billion (net of approximately $0.1 billion of acquired cash) and the assumption of approximately $0.4 billion of pension liabilities (the “Cytiva Acquisition”). Cytiva is a leading provider of instruments, consumables and software that support the research, discovery, process development and manufacturing workflows of biopharmaceutical drugs. Cytiva is included in the Company’s Life Sciences segment results beginning in the second quarter of 2020. The acquisition has provided and is expected to provide additional sales and earnings growth opportunities for the Company’s Life Sciences segment by expanding the business’ geographic and product line diversity, including new product and service offerings that complement the Company’s current biologics workflow solutions. To fulfill a condition to obtaining certain regulatory approvals for the closing of the transaction, on April 30, 2020 the Company divested certain of its existing product lines in the Life Sciences segment for a cash purchase price, net of cash transferred and transaction costs, of $826 million and recognized a pretax gain on sale of $455 million ($305 million after-tax or $0.42 per diluted common share). The divested product lines in the aggregate generated revenues of approximately $170 million in 2019. The divestiture of these product lines did not represent a strategic shift with a major effect on the Company’s operations and financial results and therefore is not reported as a discontinued operation.

The Company financed the Cytiva Acquisition with approximately $3.0 billion of proceeds from the 2019 underwritten public offerings of its Common Stock and Series A Mandatory Convertible Preferred Stock (“MCPS Series A”), approximately

$10.8 billion of proceeds from the 2019 issuance of euro-denominated and U.S. dollar-denominated long-term debt, and approximately $6.9 billion from the aggregate of proceeds from commercial paper borrowings, borrowings under the Company’s Five-Year Facility (as defined below) and cash on hand. The Company preliminarily recorded approximately $10.2 billion of goodwill related to the Cytiva Acquisition.

During 2020, in addition to the Cytiva Acquisition, the Company acquired four businesses for total consideration of $256 million in cash, net of cash acquired. The businesses acquired complement existing units of the Company’s Life Sciences and Environmental & Applied Solutions segments. The Company preliminarily recorded an aggregate of $231 million of goodwill related to these acquisitions. The aggregate annual sales of the five businesses acquired in 2020 at the time of their acquisition, in each case based on the company’s revenues for its last completed fiscal year prior to the acquisition, were approximately $3.3 billion.

During 2019, the Company acquired five businesses for total consideration of $331 million in cash, net of cash acquired. The business acquired complements existing units of each of the Company’s three segments. The aggregate annual sales of these businesses at the time of their acquisition, in each case based on the company’s revenues for its last completed fiscal year prior to the acquisition, were $72 million. The Company recorded an aggregate of $217 million of goodwill related to these acquisitions.

On April 13, 2018, the Company acquired Integrated DNA Technologies, Inc. (“IDT”), a privately-held manufacturer of custom DNA and RNA oligonucleotides serving customers in the academic and biopharmaceutical research, biotechnology, agriculture, clinical diagnostics and pharmaceutical development end-markets, for a purchase price of approximately $2.1 billion, net of cash acquired. IDT had revenues of approximately $260 million in 2017, and is now part of the Company’s Life Sciences segment.

The Company financed the acquisition of IDT with available cash and proceeds from the issuance of commercial paper. The Company recorded approximately $1.2 billion of goodwill related to the IDT acquisition. The acquisition of IDT has provided additional sales and earnings growth opportunities for the Company’s Life Sciences segment by expanding the segment’s product line diversity, including new product and service offerings in the area of genomics consumables, and through the potential future acquisition of complementary businesses.

In addition to the IDT acquisition, during 2018, the Company acquired one other business for total consideration of $95 million in cash, net of cash acquired. The business acquired complements an existing unit of the Environmental & Applied Solutions segment. The aggregate annual sales of this business at the time of its acquisition, based on the company’s revenues for its last completed fiscal year prior to the acquisition, were $53 million. The Company recorded an aggregate of $63 million of goodwill related to this acquisition.

The following summarizes the estimated fair values of the assets acquired and liabilities assumed at the date of acquisition ($ in millions):

			2020						2019						2018
Trade accounts receivable			$	487					$	9					$	41
Inventories			934						9						15
Property, plant and equipment			690						4						88
Goodwill			10,402						217						1,276
Other intangible assets, primarily technology, customer relationships and trade names			10,712						113						851
Trade accounts payable			(250)						(3)						(7)
Pension liabilities			(423)						—						—
Deferred tax liabilities			(1,167)						—						(21)
Other assets and liabilities, net			(414)						(18)						(46)
Net assets acquired			20,971						331						2,197
Less: noncash consideration			—						—						(24)
Net cash consideration			$	20,971					$	331					$	2,173

The following summarizes the estimated fair values of the assets acquired and liabilities assumed at the date of acquisition for the individually significant acquisition in 2020 discussed above, and all of the other 2020 acquisitions as a group ($ in millions):

			Cytiva						Others						Total
Trade accounts receivable			$	482					$	5					$	487
Inventories			930						4						934
Property, plant and equipment			689						1						690
Goodwill			10,171						231						10,402
Other intangible assets, primarily technology, customer relationships and trade names			10,656						56						10,712
Trade accounts payable			(247)						(3)						(250)
Pension liabilities			(423)						—						(423)
Deferred tax liabilities			(1,157)						(10)						(1,167)
Other assets and liabilities, net			(386)						(28)						(414)
Net cash consideration			$	20,715					$	256					$	20,971

The following summarizes the estimated fair values of the assets acquired and liabilities assumed at the date of acquisition for the individually significant acquisition in 2018 discussed above, and all of the other 2018 acquisitions as a group ($ in millions):

			IDT						Others						Total
Trade accounts receivable			$	36					$	5					$	41
Inventories			15						—						15
Property, plant and equipment			88						—						88
Goodwill			1,213						63						1,276
Other intangible assets, primarily technology, customer relationships and trade names			811						40						851
Trade accounts payable			(6)						(1)						(7)
Deferred tax liabilities			(21)						—						(21)
Other assets and liabilities, net			(34)						(12)						(46)
Net assets acquired			2,102						95						2,197
Less: noncash consideration			(24)						—						(24)
Net cash consideration			$	2,078					$	95					$	2,173

Transaction-related costs for the Cytiva Acquisition were $59 million and $93 million for the years ended December 31, 2020 and 2019, respectively. During 2018, the Company incurred acquisition-related transaction costs and change in control payments of $15 million associated with the IDT acquisition. In addition, the Company’s earnings for 2018 reflect the pretax impact of $1 million of nonrecurring acquisition date fair value adjustments to inventory related to the IDT acquisition. Transaction-related costs and acquisition-related fair value adjustments attributable to other acquisitions were not material for the years ended December 31, 2020, 2019 or 2018.

Pro Forma Financial Information (Unaudited)

The unaudited pro forma information for the periods set forth below gives effect to the 2020 and 2019 acquisitions as if they had occurred as of January 1, 2019. The pro forma information is presented for informational purposes only and is not necessarily indicative of the results of operations that actually would have been achieved had the acquisitions been consummated as of that time ($ in millions except per share amounts):

			2020						2019
Sales			$	23,130					$	20,985
Net earnings from continuing operations			3,845						2,416
Diluted net earnings per common share from continuing operations (a)			5.16						3.21

(a) Diluted net earnings per common share from continuing operations is calculated by adding the interest on the Company’s LYONs to net earnings from continuing operations and deducting the MCPS dividends from net earnings from continuing operations.

The 2020 unaudited pro forma sales and net earnings set forth above were adjusted to exclude the pretax impact of $509 million of nonrecurring acquisition date fair value adjustments to inventory and deferred revenue related to the Cytiva Acquisition. The 2019 unaudited pro forma sales and net earnings from continuing operations were adjusted to include the impact of these items.

In addition, acquisition-related transaction costs of $59 million and $93 million for the years ended December 31, 2020 and 2019, respectively, associated with the Cytiva Acquisition were excluded from pro forma net earnings from continuing operations. The pretax gain of $455 million ($305 million after-tax or $0.42 per diluted common share) related to the divestiture of certain product lines that was required as a condition to obtaining certain regulatory approvals for the closing of the Cytiva Acquisition was also excluded from the 2020 pro forma net earnings from continuing operations.

NOTE 4. DISCONTINUED OPERATIONS

On September 20, 2019, Envista Holdings Corporation (“Envista”), completed an initial public offering (“IPO”) of 30.8 million shares of its common stock, which represented 19.4% of Envista’s outstanding shares at the time of the offering, at a public offering price of $22.00 per share. Envista realized net proceeds of $643 million from the IPO, after deducting underwriting discounts and deal expenses.

In connection with the completion of the IPO, through a series of equity and other transactions, the Company transferred its dental businesses to Envista (the “Separation”). In exchange, Envista transferred consideration of approximately $2.0 billion to the Company, which consists primarily of the net proceeds from the IPO and approximately $1.3 billion of proceeds from Envista’s term debt financing. The excess of the net book value of the business transferred to Envista over the net proceeds from the IPO was $60 million and was recorded as a reduction to additional paid-in capital in the accompanying Consolidated Balance Sheet.

On December 18, 2019, Danaher completed the disposition of the remaining 80.6% ownership of Envista common stock through a split-off exchange offer, which resulted in Danaher’s repurchase of 22.9 million shares of the Company’s common stock in exchange for the remaining shares of Envista held by Danaher (the “Split-Off”). The IPO, Separation and Split-Off are collectively referred to as the “Envista Disposition”. As a result, the Company recognized a gain on the disposition of $451 million in the fourth quarter of 2019. At the time of the disposition, the Company reclassified $109 million of foreign currency translation adjustment losses related to Envista from accumulated other comprehensive income (loss) to the Company’s results of discontinued operations as a component of the net gain on the Envista Disposition. As a result of the IPO, Danaher recorded an increase to noncontrolling interest of $689 million in 2019 for the sale of the Envista common stock and subsequent earnings and other comprehensive income (loss) attributable to the noncontrolling interest. At the time of the Envista Disposition, Danaher decreased noncontrolling interests by $692 million to record the deconsolidation of Envista and the elimination of the noncontrolling interest.

The accounting requirements for reporting Envista as a discontinued operation were met when the Split-Off was completed. Accordingly, the Consolidated Financial Statements for all periods presented reflect this business as a discontinued operation. The Company allocated a portion of the consolidated interest expense to discontinued operations based on the ratio of the discontinued business’ net assets to the Company’s consolidated net assets. Envista had revenues of approximately $2.6 billion in 2019 prior to the exchange offer and approximately $2.8 billion in 2018.

As a result of the Envista Disposition, the Company incurred $69 million and $15 million in IPO and Separation-related costs during the years ended December 31, 2019 and 2018, respectively, which are reflected in earnings from discontinued operations, net of income taxes in the accompanying Consolidated Statements of Earnings. These costs primarily relate to professional fees associated with preparation of regulatory filings and activities within finance, tax, legal and information technology functions as well as certain investment banking fees and tax costs.

Danaher used a portion of the consideration received from Envista to redeem $882 million in aggregate principal amount of outstanding indebtedness in the fourth quarter of 2019 (consisting of the Company’s 2.4% senior unsecured notes due 2020 and 5.0% senior unsecured notes due 2020). The Company incurred make-whole premiums in connection with the redemption of $7 million ($5 million after-tax or $0.01 per diluted common share). The Company used the balance of the consideration it received from Envista to redeem commercial paper borrowings as they matured.

In connection with the Envista IPO and Separation, Danaher and Envista entered into various agreements to effect the disposition and provide a framework for their relationship after the Envista Separation, including a separation agreement, transition services agreement, employee matters agreement, tax matters agreement, intellectual property matters agreement and DANAHER BUSINESS SYSTEM (“DBS”) license agreement. These agreements provide for the allocation between Danaher and Envista of assets, employees, liabilities and obligations (including investments, property and employee benefits and tax-related assets and liabilities) attributable to periods prior to, at and after Envista’s separation from Danaher and govern certain relationships between Danaher and Envista after the Envista Separation. In addition, Danaher is also party to various

commercial agreements with Envista entities. The amounts paid and received by Danaher for transition services provided under the above agreements as well as sales and purchases to and from Envista were not material to the Company’s results of operations for the years ended December 31, 2020 and 2019.

The key components of income from Envista from discontinued operations for the years ended December 31 were as follows ($ in millions):

									2019						2018
Sales									$	2,610					$	2,845
Cost of sales									(1,177)						(1,243)
Selling, general and administrative expenses									(1,095)						(1,081)
Research and development expenses									(152)						(172)
Other income (expense), net									2						3
Interest expense									(9)						(21)
Income from discontinued operations before income taxes									179						331
Gain on disposition of Envista before income taxes									451						—
Earnings from discontinued operations before income taxes									630						331
Income taxes									(41)						(86)
Earnings from discontinued operations, net of income taxes									589						245
Net earnings attributable to noncontrolling interest									(13)						—
Net earnings from discontinued operations attributable to common stockholders									$	576					$	245

NOTE 5. LEASES

The Company has operating leases for office space, warehouses, distribution centers, research and development facilities, manufacturing locations and certain equipment, primarily automobiles. Many leases include one or more options to renew, some of which include options to extend the leases for up to 30 years, and some leases include options to terminate the leases within 30 days. In certain of the Company’s lease agreements, the rental payments are adjusted periodically to reflect actual charges incurred for common area maintenance, utilities, inflation and/or changes in other indexes. The Company’s finance leases were not material as of December 31, 2020 and 2019. Right-of-use (“ROU”) assets arising from finance leases are included in property, plant and equipment, net and the liabilities are included in notes payable and current portion of long-term debt and long-term debt in the accompanying Consolidated Balance Sheets.

The components of operating lease expense for the years ended December 31 were as follows ($ in millions):

			2020						2019
Fixed operating lease expense (a)			$	216					$	196
Variable operating lease expense			46						45
Total operating lease expense			$	262					$	241

(a) Includes short-term leases and sublease income, both of which were immaterial.

Supplemental cash flow information related to the Company’s operating leases for the years ended December 31 were as follows ($ in millions):

			2020						2019
Cash paid for amounts included in the measurement of operating lease liabilities			$	221					$	202
ROU assets obtained in exchange for operating lease obligations			246						145

The following table presents the lease balances within the Consolidated Balance Sheets, weighted average remaining lease term, and weighted average discount rates related to the Company’s operating leases as of December 31 ($ in millions):

						2020						2019
Lease Assets and Liabilities			Classification
Assets:
Operating lease ROU assets			Other long-term assets			$	942					$	764
Liabilities:
Current:
Operating lease liabilities			Accrued expenses and other liabilities			$	189					$	158
Long-term:
Operating lease liabilities			Other long-term liabilities			785						639
Total operating lease liabilities						$	974					$	797
Weighted average remaining lease term						7 years						7 years
Weighted average discount rate						2.8		%				3.1		%

The following table presents the maturity of the Company’s operating lease liabilities as of December 31, 2020 ($ in millions):

2021			$	213
2022			181
2023			151
2024			128
2025			105
Thereafter			302
Total operating lease payments			1,080
Less: imputed interest			106
Total operating lease liabilities			$	974

As of December 31, 2020, the Company had no additional significant operating or finance leases that had not yet commenced.

ASC 840 Comparative Disclosures

Total rent expense under ASC 840 for all operating leases was $234 million for the year ended December 31, 2018.

NOTE 6. INVENTORIES

The classes of inventory as of December 31 are summarized as follows ($ in millions):

			2020						2019
Finished goods			$	1,232					$	833
Work in process			369						285
Raw materials			691						510
Total			$	2,292					$	1,628

As of December 31, 2020 and 2019, the difference between inventories valued at LIFO and the value of that same inventory if the FIFO method had been used was not significant. The liquidation of LIFO inventory did not have a significant impact on the Company’s results of operations in any period presented.

NOTE 7. PROPERTY, PLANT AND EQUIPMENT

The classes of property, plant and equipment as of December 31 are summarized as follows ($ in millions):

			2020						2019
Land and improvements			$	192					$	149
Buildings			1,522						954
Machinery and equipment			2,881						2,194
Customer-leased equipment			1,849						1,766
Gross property, plant and equipment			6,444						5,063
Less: accumulated depreciation			3,182						2,761
Property, plant and equipment, net			$	3,262					$	2,302

NOTE 8. GOODWILL AND OTHER INTANGIBLE ASSETS

As discussed in Note 3, goodwill arises from the purchase price for acquired businesses exceeding the fair value of tangible and intangible assets acquired less assumed liabilities and noncontrolling interests. Management assesses the goodwill of each of its reporting units for impairment at least annually at the beginning of the fourth quarter and as “triggering” events occur that indicate that it is more likely than not that an impairment exists. The Company elected to bypass the optional qualitative goodwill assessment allowed by applicable accounting standards and performed a quantitative impairment test for all reporting units as this was determined to be the most effective method to assess for impairment across the reporting units.

The Company estimates the fair value of its reporting units primarily using a market approach, based on current trading multiples of EBITDA for companies operating in businesses similar to each of the Company’s reporting units, in addition to recent available market sale transactions of comparable businesses. In determining the estimated fair value of each reporting unit, the Company also applies a control premium. If the estimated fair value of the reporting unit is less than its carrying value, the Company must perform additional analysis to determine if the reporting unit’s goodwill has been impaired.

As of December 31, 2020, the Company had five reporting units for goodwill impairment testing. As of the date of the 2020 annual impairment test, the carrying value of the goodwill included in each individual reporting unit ranged from $512 million to approximately $24.9 billion. No goodwill impairment charges were recorded for the years ended December 31, 2020, 2019 and 2018 and no “triggering” events have occurred subsequent to the performance of the 2020 annual impairment test. The factors used by management in its impairment analysis are inherently subject to uncertainty. If actual results are not consistent with management’s estimates and assumptions, goodwill and other intangible assets may be overstated and a charge would need to be taken against net earnings.

The following is a rollforward of the Company’s goodwill by segment ($ in millions):

			Life Sciences						Diagnostics						Environmental & Applied Solutions						Total
Balance, January 1, 2019			$	13,311					$	6,926					$	2,344					$	22,581
Attributable to 2019 acquisitions			213						3						1						217
Adjustments due to finalization of purchase price allocations			(7)						—						—						(7)
Foreign currency translation and other			(45)						(28)						(5)						(78)
Balance, December 31, 2019			13,472						6,901						2,340						22,713
Attributable to 2020 acquisitions			10,291						—						111						10,402
Attributable to 2020 divestitures			(181)						—						—						(181)
Adjustments due to finalization of purchase price allocations			(3)						—						—						(3)
Foreign currency translation and other			2,233						181						75						2,489
Balance, December 31, 2020			$	25,812					$	7,082					$	2,526					$	35,420

The increase in the goodwill balance of the Life Sciences segment in the year ended December 31, 2020 is primarily a result of the Cytiva Acquisition. Measurement period adjustments between the acquisition date and December 31, 2020 decreased the goodwill recognized for the Cytiva Acquisition by approximately $1.3 billion, as the initial allocation of the purchase price was adjusted to allocate additional purchase price to technology, customer relationships and trade names partially offset by related deferred tax liabilities. Refer to Note 3 for more detail.

Finite-lived intangible assets are amortized over their legal or estimated useful life. The following summarizes the gross carrying value and accumulated amortization for each major category of intangible assets as of December 31 ($ in millions):

			2020												2019
			Gross Carrying Amount						Accumulated Amortization						Gross Carrying Amount						Accumulated Amortization
Finite-lived intangibles:
Patents and technology			$	12,526					$	(1,539)					$	2,713					$	(934)
Customer relationships, trade names and other intangibles			9,355						(3,235)						6,367						(2,612)
Total finite-lived intangibles			21,881						(4,774)						9,080						(3,546)
Indefinite-lived intangibles:
Trademarks and trade names			4,175						—						4,216						—
Total intangibles			$	26,056					$	(4,774)					$	13,296					$	(3,546)

During 2020, the Company acquired finite-lived intangible assets, consisting primarily of developed technology, customer relationships and trade names, with a weighted average life of 17 years primarily as a result of the Cytiva Acquisition. During 2019, the Company acquired finite-lived intangible assets, consisting primarily of customer relationships, with a weighted average life of 13 years. Refer to Note 3 for additional information on the intangible assets acquired.

The Company reviews identified intangible assets for impairment whenever events or changes in circumstances indicate that the related carrying amounts may not be recoverable. Indefinite-lived intangibles are subject to impairment testing at least annually or more frequently if events or changes in circumstances indicate that potential impairment exists. The Company identified impairment triggers during the first and third quarters of 2020 which resulted in the impairment of certain long-lived assets, including trade names and other intangible assets. The Company recorded impairment charges totaling $22 million related to these long-lived assets.

Total intangible amortization expense in 2020, 2019 and 2018 was $1,138 million, $625 million and $616 million, respectively. The increase in intangible amortization expense in 2020 was primarily as a result of the Cytiva Acquisition and the amortization of the associated finite-lived intangible assets. Based on the intangible assets recorded as of December 31, 2020, amortization expense is estimated to be $1,380 million during 2021, $1,362 million during 2022, $1,357 million during 2023, $1,316 million during 2024 and $1,291 million during 2025.

NOTE 9. FAIR VALUE MEASUREMENTS

Accounting standards define fair value based on an exit price model, establish a framework for measuring fair value where the Company’s assets and liabilities are required to be carried at fair value and provide for certain disclosures related to the valuation methods used within a valuation hierarchy as established within the accounting standards. This hierarchy prioritizes the inputs into three broad levels as follows. Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2 inputs are quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets in markets that are not active, or other observable characteristics for the asset or liability, including interest rates, yield curves and credit risks, or inputs that are derived principally from, or corroborated by, observable market data through correlation. Level 3 inputs are unobservable inputs based on the Company’s assumptions. A financial asset or liability’s classification within the hierarchy is determined based on the lowest level input that is significant to the fair value measurement in its entirety.

A summary of financial assets and liabilities that are measured at fair value on a recurring basis were as follows ($ in millions):

			Year Ended December 31						Quoted Prices in Active Market (Level 1)						Significant Other Observable Inputs (Level 2)						Significant Unobservable Inputs (Level 3)
2020:
Assets:
Available-for-sale debt securities			$	27					$	—					$	27					$	—
Investment in equity securities			176						6						—						—
Liabilities:
Cross-currency swap derivative contracts			622						—						622						—
Deferred compensation plans			111						—						111						—
2019:
Assets:
Available-for-sale debt securities			$	34					$	—					$	34					$	—
Investment in equity securities			111						—						—						—
Cross-currency swap derivative contracts			26						—						26						—
Liabilities:
Cross-currency swap derivative contracts			112						—						112						—
Deferred compensation plans			70						—						70						—

Available-for-sale debt securities, which are included in other long-term assets in the accompanying Consolidated Balance Sheets, are measured at fair value using quoted prices reported by investment brokers and dealers based on the underlying terms of the security and comparison to similar securities traded on an active market. As of December 31, 2020 and 2019, available-for-sale debt securities primarily include U.S. Treasury Notes and corporate debt securities, which are valued based on the terms of the instruments in comparison with similar terms on the active market.

The Company’s investments in equity securities consist of investments in publicly traded equity securities and investments in non-marketable equity securities. The publicly traded securities are classified as Level 1 in the fair value hierarchy as they are measured based on quotes in active markets. For the non-marketable equity securities, the Company estimates the fair value of the investments in equity securities based on the measurement alternative and adjusts for impairments and observable price changes with a same or similar security from the same issuer within net earnings (the Fair Value Alternative). The Company’s investments in these equity securities are not classified in the fair value hierarchy due to the use of these measurement methods. Additionally, the Company is a limited partner in a partnership that invests in early-stage companies. While the partnership records these investments at fair value, the Company’s investment in the partnership is accounted for under the equity method of accounting and is not subject to fair value measurement disclosures. During the year ended December 31, 2020, the Company recorded net realized and unrealized gains of $18 million related to changes in the fair value of these investments which is reflected in other income (expense), net in the Consolidated Statement of Earnings. No significant realized or unrealized gains or losses were recorded in either 2019 or 2018 with respect to these investments.

The cross-currency swap derivative contracts are used to partially hedge the Company’s net investments in foreign operations against adverse movements in exchange rates between the U.S. dollar and the Danish kroner, Japanese yen, euro and Swiss franc. The Company also uses cross-currency swap derivative contracts to hedge the exchange rate exposure from long-term debt issuances in a foreign currency other than the functional currency of the borrower. The cross-currency swap derivative contracts are classified as Level 2 in the fair value hierarchy as they are measured using the income approach with the relevant

interest rates and current foreign currency exchange rates and forward curves as inputs. Refer to Note 12 for additional information.

The Company has established nonqualified contribution and deferred compensation programs that permit the Company to make tax-deferred contributions to officers and certain other employees, and also permit directors, officers and certain other employees to voluntarily defer taxation on a portion of their compensation. All amounts contributed or deferred under such plans are unfunded, unsecured obligations of the Company and are presented as a component of the Company’s compensation and benefits accrual included in other long-term liabilities in the accompanying Consolidated Balance Sheets (refer to Note 10). Non-director participants may choose among alternative earning rates for the amounts they defer, which are primarily based on investment options within the Company’s 401(k) program. Changes in the deferred compensation liability under these programs are recognized based on changes in the fair value of the participants’ accounts, which are based on the applicable earnings rates. Amounts voluntarily deferred by directors and amounts unilaterally contributed to participant accounts by the Company are deemed invested in the Company’s common stock and future distributions of such contributions (as well as future distributions of any voluntary deferrals allocated at any time to the Danaher common stock investment option) will be made solely in shares of Company common stock, and therefore are not reflected in the above amounts.

Fair Value of Financial Instruments

The carrying amounts and fair values of the Company’s financial instruments as of December 31 were as follows ($ in millions):

			2020												2019
			Carrying Amount						Fair Value						Carrying Amount						Fair Value
Assets:
Available-for-sale debt securities			$	27					$	27					$	34					$	34
Investment in equity securities			176						176						111						111
Cross-currency swap derivative contracts			—						—						26						26
Liabilities:
Cross-currency swap derivative contracts			622						622						112						112
Notes payable and current portion of long-term debt			11						11						212						212
Long-term debt			21,193						23,004						21,517						21,897

As of December 31, 2020 and 2019 available-for-sale debt securities and cross-currency swap derivative contracts were categorized as Level 2 and short and long-term borrowings were categorized as Level 1.

The fair value of long-term borrowings was based on quoted market prices. The difference between the fair value and the carrying amounts of long-term borrowings (other than the Company’s Liquid Yield Option Notes due 2021 (the “LYONs”)) is attributable to changes in market interest rates and/or the Company’s credit ratings subsequent to the incurrence of the borrowing. In the case of the LYONs, differences in the fair value from the carrying value are attributable to changes in the price of the Company’s common stock due to the LYONs’ conversion features. The fair values of borrowings with original maturities of one year or less, as well as cash and cash equivalents, trade accounts receivable, net and trade accounts payable approximate their carrying amounts due to the short-term maturities of these instruments.

Refer to Note 13 for information related to the fair value of the Company sponsored defined benefit pension plan assets.

NOTE 10. ACCRUED EXPENSES AND OTHER LIABILITIES

Accrued expenses and other liabilities as of December 31 were as follows ($ in millions):

			2020												2019
			Current						Noncurrent						Current						Noncurrent
Compensation and benefits			$	1,393					$	178					$	931					$	223
Pension and postretirement benefits			69						1,502						151						898
Taxes, income and other			552						4,951						356						3,309
Deferred revenue			1,212						205						688						118
Sales and product allowances			200						2						115						2
Operating lease liabilities			189						785						158						639
Cross-currency swap derivative liabilities			622						—						112						—
Other			1,105						166						694						162
Total			$	5,342					$	7,789					$	3,205					$	5,351

NOTE 11. FINANCING

The components of the Company’s debt as of December 31 were as follows ($ in millions):

			2020						2019
Euro-denominated commercial paper (€500 million and €4.6 billion, respectively)			$	611					$	5,146
Zero-coupon LYONs due 2021			24						34
0.352% senior unsecured notes due 2021 (¥30.0 billion aggregate principal amount) (the “2021 Yen Notes”)			290						276
1.7% senior unsecured notes due 2022 (€800 million aggregate principal amount) (the “2022 Euronotes”)			—						895
Floating rate senior unsecured notes due 2022 (€250 million aggregate principal amount) (the “Floating Rate 2022 Euronotes”)			305						280
2.05% senior unsecured notes due 2022 (the “2022 Biopharma Notes”)			698						697
0.5% senior unsecured bonds due 2023 (CHF 540 million aggregate principal amount) (the “2023 CHF Bonds”)			611						559
1.7% senior unsecured notes due 2024 (€900 million aggregate principal amount) (the “2024 Euronotes”)			1,096						—
2.2% senior unsecured notes due 2024 (the “2024 Biopharma Notes”)			697						696
2.5% senior unsecured notes due 2025 (€800 million aggregate principal amount) (the “2025 Euronotes”)			975						894
3.35% senior unsecured notes due 2025 (the “2025 U.S. Notes”)			498						497
0.2% senior unsecured notes due 2026 (€1.3 billion aggregate principal amount) (the “2026 Biopharma Euronotes”)			1,520						1,392
2.1% senior unsecured notes due 2026 (€800 million aggregate principal amount) (the “2026 Euronotes”)			975						—
0.3% senior unsecured notes due 2027 (¥30.8 billion aggregate principal amount) (the “2027 Yen Notes”)			297						283
1.2% senior unsecured notes due 2027 (€600 million aggregate principal amount) (the “2027 Euronotes”)			729						668
0.45% senior unsecured notes due 2028 (€1.3 billion aggregate principal amount) (the “2028 Biopharma Euronotes”)			1,518						1,390
1.125% senior unsecured bonds due 2028 (CHF 210 million aggregate principal amount) (the “2028 CHF Bonds”)			241						221
2.6% senior unsecured notes due 2029 (the “2029 Biopharma Notes”)			795						795
2.5% senior unsecured notes due 2030 (€800 million aggregate principal amount) (the “2030 Euronotes”)			978						—
0.75% senior unsecured notes due 2031 (€1.8 billion aggregate principal amount) (the “2031 Biopharma Euronotes”)			2,127						1,949
0.65% senior unsecured notes due 2032 (¥53.2 billion aggregate principal amount) (the “2032 Yen Notes”)			514						488
1.35% senior unsecured notes due 2039 (€1.3 billion aggregate principal amount) (the “2039 Biopharma Euronotes”)			1,511						1,384
3.25% senior unsecured notes due 2039 (the “2039 Biopharma Notes”)			889						890
4.375% senior unsecured notes due 2045 (the “2045 U.S. Notes”)			499						499
1.8% senior unsecured notes due 2049 (€750 million aggregate principal amount) (the “2049 Biopharma Euronotes”)			907						831
3.4% senior unsecured notes due 2049 (the “2049 Biopharma Notes”)			889						890
2.6% senior unsecured notes due 2050 (the “2050 U.S. Notes”)			979						—
Other			31						75
Total debt			21,204						21,729
Less: currently payable			11						212
Long-term debt			$	21,193					$	21,517

Debt discounts, premiums and debt issuance and other related costs totaled $132 million and $112 million as of December 31, 2020 and 2019, respectively, and have been netted against the aggregate principal amounts of the related debt in the components of debt table above.

Commercial Paper Programs and Credit Facilities

In 2015, the Company entered into a $4.0 billion unsecured multi-year revolving credit facility with a syndicate of banks that was scheduled to expire on July 10, 2020 (the “Superseded Credit Facility”). In 2019, the Company replaced the Superseded Credit Facility with a $5.0 billion unsecured revolving credit facility with a syndicate of banks that expires on August 27, 2024, subject to a one-year extension option at the request of the Company with the consent of the lenders (the “Five-Year Facility”). The Five-Year Facility also contains an expansion option permitting Danaher to request up to five increases of up to an aggregate additional $2.5 billion from lenders that elect to make such increase available, upon the satisfaction of certain conditions. At the same time, the Company entered into a $5.0 billion 364-day unsecured revolving credit facility with a syndicate of banks that was scheduled to expire on August 26, 2020 (the “Superseded 364-Day Facility”). In 2020, the Company replaced the Superseded 364-Day Facility with a $2.5 billion 364-day unsecured revolving credit facility with a syndicate of banks that was scheduled to expire on June 4, 2021 and then terminated such credit facility on December 31, 2020 (the “Terminated 364-Day Credit Facility”).

The Company expects to limit borrowings under the Five-Year Facility to amounts that would leave sufficient borrowing capacity under the facilities so that it could borrow, if needed, to repay all of the outstanding commercial paper as it matures.

Borrowings under the Five-Year Facility bear interest as follows: (1) Eurocurrency Rate Committed Loans (as defined in the Five-Year Facility) bear interest at a variable rate equal to the London inter-bank offered rate plus a margin of between 58.5 and 100 basis points, depending on Danaher’s long-term debt credit rating; (2) Base Rate Committed Loans and Swing Line Loans (each as defined in the Five-Year Facility) bear interest at a variable rate equal to the highest of (a) the Federal funds rate (as published by the Federal Reserve Bank of New York from time to time) plus 50 basis points; (b) Bank of America’s “prime rate” as publicly announced from time to time and (c) the Eurocurrency Rate (as defined in the Five-Year Facility) plus 100 basis points; and (3) Bid Loans (as defined in the Five-Year Facility) bear interest at the rate bid by the particular lender providing such loan. In addition, Danaher is required to pay a per annum facility fee of between 4 and 12.5 basis points (depending on Danaher’s long-term debt credit rating) based on the aggregate commitments under the Five-Year Facility, regardless of usage.

Borrowings under the Superseded and Terminated 364-Day Facility bore interest as follows: (1) Eurodollar Rate Loans (as defined in the 364-Day Facility) bore interest at a variable rate per annum equal to the London inter-bank offered rate plus a margin of between 59.5 and 100.5 basis points for the Superseded 364-Day Facility and 90 and 127.5 basis points for the Terminated 364-Day Facility, depending on Danaher’s long-term debt credit rating; and (2) Base Rate Loans (as defined in the 364-Day Facility) bore interest at a variable rate per annum equal to the highest of (a) the Federal funds rate (as published by the Federal Reserve Bank of New York from time to time) plus 50 basis points, (b) Bank of America’s “prime rate” as publicly announced from time to time and (c) the Eurodollar Rate (as defined in the 364-Day Facility) plus 100 basis points, plus in each case a margin of up to 0.5 basis points for the Superseded 364-Day Facility and between 0 and 27.5 basis points for the Terminated 364-Day Facility, depending on Danaher’s long-term debt credit rating. In addition, Danaher was required to pay a per annum facility fee of between 3 and 5 basis points for the Superseded 364-Day Facility and 10 and 22.5 basis points for the Terminated 364-Day Facility (depending on Danaher’s long-term debt credit rating), based on the aggregate commitments under the Superseded and Terminated 364-Day Facility, regardless of usage.

The Five-Year Facility requires the Company to maintain a consolidated leverage ratio (as defined in the facility) of 0.65 to 1.00 or less. Borrowings under the Five-Year Facility are prepayable at the Company’s option at any time in whole or in part without premium or penalty. As of December 31, 2020, no borrowings were outstanding under the Five-Year Facility and the Company was in compliance with all covenants under the facilities. The nonperformance by any member of the Five-Year Facility syndicates would reduce the maximum capacity of the Five-Year Facility by such member’s commitment amount.

The Company’s obligations under the Five-Year Facility are unsecured. The Company has unconditionally and irrevocably guaranteed the obligations of each of its subsidiaries in the event a subsidiary is named a borrower under the Five-Year Facility. The Five-Year Facility contains customary representations, warranties, conditions precedent, events of default, indemnities and affirmative and negative covenants. The Five-Year Facility is available for liquidity support for Danaher’s expanded U.S. dollar and euro commercial paper programs, as discussed below, and for general corporate purposes.

Under the Company’s U.S. and euro-denominated commercial paper programs, the Company or a subsidiary of the Company, as applicable, may issue and sell unsecured, short-term promissory notes. The notes are typically issued at a discount from par, generally based on the ratings assigned to the Company by credit rating agencies at the time of the issuance and prevailing market rates measured by reference to LIBOR or EURIBOR. The Five-Year Facility provides liquidity support for issuances under the Company’s commercial paper programs, and can also be used for working capital and other general corporate purposes. The availability of the Five-Year Facility as a standby liquidity facility to repay maturing commercial paper is an important factor in maintaining the existing credit ratings of the Company’s commercial paper programs. As commercial paper

obligations mature, the Company may issue additional short-term commercial paper obligations to refinance all or part of these borrowings. As of December 31, 2020, borrowings outstanding under the Company’s euro commercial paper programs had a weighted average annual interest rate of negative 0.05% and a weighted average remaining maturity of approximately 25 days. As of December 31, 2020, the Company has classified approximately $611 million of its borrowings outstanding under the euro-denominated commercial paper programs and $290 million of borrowings outstanding under the 2021 Yen Notes as long-term debt in the accompanying Consolidated Balance Sheet as the Company had the intent and ability, as supported by availability under the Five-Year Facility, to refinance these borrowings for at least one year from the balance sheet date.

The Company’s ability to access the commercial paper market, and the related costs of these borrowings, is affected by the strength of the Company’s credit rating and market conditions. Any downgrade in the Company’s credit rating would increase the cost of borrowings under the Company’s commercial paper program and the Five-Year Facility, and could limit or preclude the Company’s ability to issue commercial paper. If the Company’s access to the commercial paper market is adversely affected due to a credit downgrade, change in market conditions or otherwise, the Company expects it would rely on a combination of available cash, operating cash flow and the Five-Year Facility to provide short-term funding. In such event, the cost of borrowings under the Five-Year Facility could be higher than the cost of commercial paper borrowings.

2020 Financing Activity

The Company continues to monitor the impact of the COVID-19 pandemic on the Company’s liquidity and capital resources and take actions intended to mitigate adverse impacts. Historically, the Company has generally relied on borrowings under its commercial paper program to address liquidity requirements that exceed the capacity provided by its operating cash flows and cash on hand, while also accessing the capital markets from time to time to secure financing for more significant acquisitions. The COVID-19 pandemic adversely affected the availability of new borrowings in the commercial paper markets at times during 2020. Therefore, in the first half of 2020, the Company engaged in the following financing transactions:

• The Company borrowed $2.5 billion under the Five-Year Facility and $2.5 billion under the Superseded 364-Day Facility for general corporate purposes (including payment of a portion of the purchase price for the Cytiva Acquisition and repayment of certain commercial paper obligations as they matured). The Company replaced the Superseded 364-Day Facility with a new $2.5 billion 364-Day Facility, which was terminated on December 31, 2020. All amounts borrowed under the credit facilities referenced above were repaid in 2020.

• The Company issued approximately €2.5 billion (approximately $2.7 billion based on currency exchange rates as of the respective dates of the pricing of the notes) aggregate principal amount of euro-denominated senior unsecured notes, the proceeds of which have been and are being used for general corporate purposes (including repayment of the borrowings under the Superseded 364-Day Facility and the Five-Year Facility, and repayment of certain commercial paper obligations as they matured).

• The Company completed the 2020 Common Stock Offering and 2020 MCPS Offering and received net proceeds of approximately $1.73 billion and $1.67 billion, respectively, which have been and will be used for general corporate purposes.

In addition, during the fourth quarter of 2020, the Company issued $1.0 billion aggregate principal amount of senior unsecured notes, the proceeds of which have been and will be used for general corporate purposes, including the redemption of the €800 million aggregate principal amount of 1.7% senior unsecured notes due 2022. These borrowings were redeemed in the fourth quarter of 2020 at a redemption price equal to the outstanding principal amount and a make-whole premium as specified in the applicable indenture, plus accrued and unpaid interest. The Company recorded a loss on early extinguishment of these borrowings, net of certain deferred gains, related to the payment of the make-whole premiums in connection with the redemption of $26 million ($20 million after-tax or $0.03 per diluted common share).

2020 Debt Issuances

As discussed above, in 2020, Danaher Corporation completed underwritten public offerings of senior unsecured Euronotes due 2024, 2026 and 2030 (collectively the “Euronotes”) and U.S. dollar-denominated senior unsecured notes due 2050. The following summarizes the key terms of the offerings in aggregate (€ and $ in millions):

			Issue Date						Aggregate Principal Amount						Stated Annual Interest Rate						Issue Price (as % of Principal Amount)						Maturity Date						Interest Payment Dates (in arrears)
2024 Euronotes			March 30, 2020						€	750					1.7		%				99.931		%				March 30, 2024						March 30
2024 Euronotes			April 8, 2020						€	150					1.7		%				100.298		%				March 30, 2024						March 30
2026 Euronotes			March 30, 2020						€	500					2.1		%				99.717		%				September 30, 2026						September 30
2026 Euronotes			April 8, 2020						€	300					2.1		%				100.842		%				September 30, 2026						September 30
2030 Euronotes			March 30, 2020						€	500					2.5		%				99.642		%				March 30, 2030						March 30
2030 Euronotes			April 8, 2020						€	300					2.5		%				102.166		%				March 30, 2030						March 30
2050 U.S. Notes			October 6, 2020						$	1,000					2.6		%				98.970		%				October 1, 2050						April 1 and October 1

The Company received net proceeds from the notes issued on March 30, 2020, after underwriting discounts and commissions and offering expenses, of approximately €1.7 billion (approximately $1.9 billion based on currency exchange rates as of the date of the pricing of the notes). The Company received net proceeds from the notes issued on April 8, 2020, after underwriting discounts and commissions and offering expenses, of €754 million ($816 million based on currency exchange rates as of the date of the pricing of the notes). The Company received net proceeds from the notes issued on October 6, 2020, after underwriting discounts and commissions and offering expenses, of $980 million.

Covenants and Redemption Provisions Applicable to Notes

With respect to the 2027 and 2032 Yen Notes; the 2024, 2025, 2026, 2027 and 2030 Euronotes; the 2025, 2045 and 2050 U.S. Notes; the 2022, 2024, 2029, 2039 and 2049 Biopharma Notes; and the 2026, 2028, 2031, 2039 and 2049 Biopharma Euronotes, at any time prior to the applicable maturity date, the Company may redeem the applicable series of notes in whole or in part, by paying the principal amount accrued and unpaid interest and, until the par call date specified in the applicable indenture or comparable governing document, the “make-whole” premium specified therein (and in the case of the Yen Notes, net of certain swap-related gains or losses as applicable). With respect to each of the 2023 and 2028 CHF Bonds, at any time after 85% or more of the applicable bonds have been redeemed or purchased and canceled, the Company may redeem some or all of the remaining bonds for their principal amount plus accrued and unpaid interest. With respect to the 2021, 2027 and 2032 Yen Notes; Floating Rate 2022, 2024, 2025, 2026, 2027 and 2030 Euronotes; the 2023 and 2028 CHF Bonds; and the 2026, 2028, 2031, 2039 and 2049 Biopharma Euronotes, the Company may redeem such notes and bonds upon the occurrence of specified, adverse changes in tax laws, or interpretations under such laws, at a redemption price equal to the principal amount of the bonds to be redeemed.

If a change of control triggering event occurs with respect to any of the 2021, 2027 and 2032 Yen Notes; the 2022, Floating Rate 2022, 2024, 2025, 2026, 2027 and 2030 Euronotes; the 2025, 2045 and 2050 U.S. Notes; the 2023 and 2028 CHF Bonds; the 2022, 2024, 2029, 2039 and 2049 Biopharma Notes; or the 2026, 2028, 2031, 2039 and 2049 Biopharma Euronotes, each holder of such notes may require the Company to repurchase some or all of such notes and bonds at a purchase price equal to 101% (100% in the case of the 2027 and 2032 Yen Notes) of the principal amount of the notes and bonds, plus accrued and unpaid interest (and in the case of the Yen Notes, certain swap-related losses as applicable). A change of control triggering event means the occurrence of both a change of control and a rating event, each as defined in the applicable indenture or comparable governing document. Except in connection with a change of control triggering event, the Company does not have any credit rating downgrade triggers that would accelerate the maturity of a material amount of outstanding debt. Each holder of the 2027 and 2032 Yen Notes may also require the Company to repurchase some or all of its notes at a purchase price equal to 100% of the principal amount of the notes, plus accrued and unpaid interest and certain swap-related losses as applicable, in certain circumstances whereby such holder comes into violation of economic sanctions laws as a result of holding such notes.

The respective indentures or comparable governing documents under which the above-described notes and bonds were issued contain customary covenants including, for example, limits on the incurrence of secured debt and sale-leaseback transactions. None of these covenants are considered restrictive to the Company’s operations and as of December 31, 2020, the Company was in compliance with all of its debt covenants.

Long-Term Indebtedness

The following summarizes the key terms for the Company’s long-term debt as of December 31, 2020:

			Outstanding Balance as of December 31, 2020						Stated Annual Interest Rate						Issue Price (as % of Principal Amount)						Issue Date						Maturity Date												Interest Payment Dates (in arrears)
2021 LYONs			$	24					see below						N/A						January 22, 2001						January 22, 2021												January 22 and July 22
2021 Yen Notes (4)			290						0.352		%				100		%				February 28, 2016						March 16, 2021												March 16 and September 16
Floating Rate 2022 Euronotes (5)			305						three-month EURIBOR + 0.3%						100.147		%				June 30, 2017						June 30, 2022												March 30, June 30, September 30 and December 31
2022 Biopharma Notes (8)			698						2.05		%				99.994		%				November 7, 2019						November 15, 2022												May 15 and November 15
2023 CHF Bonds (2)			611						0.5		%				100.924		%				December 8, 2015						December 8, 2023												December 8
2024 Euronotes			913						1.7		%				99.931		%				March 30, 2020						March 30, 2024												March 30
2024 Euronotes			183						1.7		%				100.298		%				April 8, 2020						March 30, 2024												March 30
2024 Biopharma Notes (8)			697						2.2		%				99.952		%				November 7, 2019						November 15, 2024												May 15 and November 15
2025 Euronotes (1)			975						2.5		%				99.878		%				July 8, 2015						July 8, 2025												July 8
2025 U.S. Notes (3)			498						3.35		%				99.857		%				September 15, 2015						September 15, 2025												March 15 and September 15
2026 Biopharma Euronotes (7)			1,520						0.2		%				99.833		%				September 18, 2019						March 18, 2026												March 18
2026 Euronotes			607						2.1		%				99.717		%				March 30, 2020						September 30, 2026												September 30
2026 Euronotes			368						2.1		%				100.842		%				April 8, 2020						September 30, 2026												September 30
2027 Yen Notes (6)			297						0.3		%				100		%				May 11, 2017						May 11, 2027												May 11 and November 11
2027 Euronotes (5)			729						1.2		%				99.682		%				June 30, 2017						June 30, 2027												June 30
2028 Biopharma Euronotes (7)			1,518						0.45		%				99.751		%				September 18, 2019						March 18, 2028												March 18
2028 CHF Bonds (2)			241						1.125		%				102.870		%				December 8, 2015 and December 8, 2017						December 8, 2028												December 8
2029 Biopharma Notes (8)			795						2.6		%				99.903		%				November 7, 2019						November 15, 2029												May 15 and November 15
2030 Euronotes			606						2.5		%				99.642		%				March 30, 2020						March 30, 2030												March 30
2030 Euronotes			372						2.5		%				102.166		%				April 8, 2020						March 30, 2030												March 30
2031 Biopharma Euronotes (7)			2,127						0.75		%				99.920		%				September 18, 2019						September 18, 2031												September 18
2032 Yen Notes (6)			514						0.65		%				100		%				May 11, 2017						May 11, 2032												May 11 and November 11
2039 Biopharma Euronotes (7)			1,511						1.35		%				99.461		%				September 18, 2019						September 18, 2039												September 18
2039 Biopharma Notes (8)			889						3.25		%				99.809		%				November 7, 2019						November 15, 2039												May 15 and November 15
2045 U.S. Notes (3)			499						4.375		%				99.784		%				September 15, 2015						September 15, 2045												March 15 and September 15
2049 Biopharma Euronotes (7)			907						1.8		%				99.564		%				September 18, 2019						September 18, 2049												September 18
2049 Biopharma Notes (8)			889						3.4		%				99.756		%				November 7, 2019						November 15, 2049												May 15 and November 15
2050 U.S. Notes			979						2.6		%				98.970		%				October 6, 2020						October 1, 2050												April 1 and October 1
Euro-denominated commercial paper			611						various						various						various						various												various
Other			31						various						various						various						various												various
Total debt			$	21,204

(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 and the 2019 Euronotes 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 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) 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.

(6) 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.

(7) The net proceeds at issuance, after offering expenses, of approximately €6.2 billion ($6.8 billion based on currency exchange rates as of the date of pricing) from these notes were used to finance the Cytiva Acquisition.

(8) The net proceeds at issuance, after offering expenses, of approximately $4.0 billion from these notes were used to finance the Cytiva Acquisition.

LYONs

In 2001, the Company issued $830 million (value at maturity) in LYONs. The net proceeds to the Company were $505 million, of which approximately $100 million was used to pay down debt and the balance was used for general corporate purposes, including acquisitions. The LYONs originally carry a yield to maturity of 2.375% (with contingent interest payable as described below). Pursuant to the terms of the indenture that governs the Company’s LYONs, each $1,000 of principal amount at maturity could be converted into 38.1998 shares of Danaher common stock at any time on or before the maturity date of January 22, 2021.

During the year ended December 31, 2020, holders of certain of the Company’s LYONs converted such LYONs into an aggregate of approximately 367 thousand shares of the Company’s common stock, par value $0.01 per share. The Company’s deferred tax liability of $43 million associated with the book and tax basis difference in the converted LYONs was transferred to additional paid-in capital.

As of December 31, 2020, an aggregate of approximately 24 million shares of the Company’s common stock had been issued upon conversion of LYONs. As of December 31, 2020, the accreted value of the outstanding LYONs was lower than the traded market value of the underlying common stock issuable upon conversion.

Under the terms of the LYONs, the Company paid contingent interest to the holders of LYONs during any six-month period from January 23 to July 22 and from July 23 to January 22 if the average market price of a LYON for a specified measurement period equaled 120% or more of the sum of the issue price and accrued original issue discount for such LYON. The amount of contingent interest to be paid with respect to any quarterly period equaled the higher of either 0.0315% of the bonds’ average market price during the specified measurement period or the amount of the cash dividend paid on Danaher’s common stock during such quarterly period multiplied by the number of shares issuable upon conversion of a LYON. The Company paid $1 million, $1 million and $2 million of contingent interest on the LYONs for each of the years ended December 31, 2020, 2019 and 2018, respectively. Except for the contingent interest described above, the Company did not pay interest on the LYONs prior to maturity. In 2021, prior to the redemption of the outstanding LYONs on January 22, 2021, holders of $24 million of outstanding LYONs converted such LYONs into approximately 912 thousand shares of the Company’s common stock. As a result of the conversion in the first quarter of 2021, the Company will transfer to additional paid-in capital the deferred tax liability of $10 million associated with the book and tax basis difference in the converted LYONs. The residual LYONS not converted into shares of the Company’s common stock were redeemed at face value.

2019 Long-Term Debt Repayments

On October 24, 2019, the Company redeemed the $500 million aggregate principal amount of 2.4% Senior Notes due 2020 and the $375 million aggregate principal amount of 5.0% 2020 Assumed Pall Notes, in each case at a redemption price equal to the outstanding principal amount and a make-whole premium as specified in the applicable indenture, plus accrued and unpaid interest. The aggregate make-whole premiums required in connection with the redemption were $7 million ($5 million after-tax or $0.01 per diluted common share). The payment of the make-whole premiums is reflected as a loss on early extinguishment of borrowings. The Company funded the redemption using a portion of the cash distribution it received in connection with the Envista Disposition.

The €600 million aggregate principal amount of the 2019 Euronotes were repaid with accrued interest upon their maturity on July 8, 2019 using proceeds from the issuance of euro-denominated commercial paper.

Guarantors of Debt

The Company has guaranteed long-term debt and commercial paper issued by certain of its wholly-owned subsidiaries. The Floating Rate 2022 Euronotes, 2025 Euronotes, 2027 Euronotes and euro-denominated commercial paper were issued by DH Europe Finance S.A. (“Danaher International”). The 2022 Biopharma Notes, 2024 Biopharma Notes, 2026 Biopharma Euronotes, 2028 Biopharma Euronotes, 2029 Biopharma Notes, 2031 Biopharma Euronotes, 2039 Biopharma Euronotes, 2039 Biopharma Notes, 2049 Biopharma Euronotes, 2049 Biopharma Notes and euro-denominated commercial paper were issued by DH Europe Finance II S.a.r.l. (“Danaher International II”). The 2023 CHF Bonds and 2028 CHF Bonds were issued by DH Switzerland Finance S.A. (“Danaher Switzerland”). The 2021 Yen Notes, 2027 Yen Notes and 2032 Yen Notes were issued by DH Japan Finance S.A. (“Danaher Japan”). Each of Danaher International, Danaher International II, Danaher Switzerland and Danaher Japan are wholly-owned finance subsidiaries of Danaher Corporation. All of the outstanding and future securities issued by each of these entities are or will be fully and unconditionally guaranteed by the Company and these guarantees rank on parity with the Company’s unsecured and unsubordinated indebtedness.

Other

The Company’s minimum principal payments for the next five years are as follows ($ in millions):

2021			$	11
2022			1,014
2023			597
2024			2,688
2025			1,468
Thereafter			15,426

The Company made interest payments of $331 million, $129 million and $140 million in 2020, 2019 and 2018, respectively. Interest payments increased in 2020 due primarily to the impact of higher average debt balances as a result of the issuances of debt in 2019 and 2020 (primarily to fund the Cytiva Acquisition) and 2020 borrowings under the Five-Year Facility and the Superseded 364-Day Facility, prior to the subsequent repayment of such credit facility borrowings. Proceeds from these borrowings as well as available cash balances were used to fund the acquisition of Cytiva and for general corporate purposes.

NOTE 12. HEDGING TRANSACTIONS AND DERIVATIVE FINANCIAL INSTRUMENTS

The Company uses cross-currency swap derivative contracts to partially hedge its net investments in foreign operations against adverse movements in exchange rates between the U.S. dollar and the Danish kroner, Japanese yen, euro and Swiss franc. The cross-currency swap derivative contracts are agreements to exchange fixed-rate payments in one currency for fixed-rate payments in another currency. As of December 31, 2020, the Company had $2.0 billion, including $1.0 billion entered into during 2020, of cross-currency swap derivative contracts outstanding as hedges of its net investment in foreign operations. These contracts effectively convert these U.S. dollar-denominated bonds to obligations denominated in Danish kroner, Japanese yen, euro and Swiss franc, and partially offset the impact of changes in currency rates on foreign currency denominated net investments. These contracts also reduce the interest rate from the stated interest rates on the U.S. dollar-denominated debt to the interest rates of the swaps. The changes in the spot rate of these instruments are recorded in accumulated other comprehensive income (loss) in stockholders’ equity, partially offsetting the foreign currency translation adjustment of the Company’s related net investment that is also recorded in accumulated other comprehensive income (loss) in the accompanying Consolidated Statements of Stockholders’ Equity. Any ineffective portions of net investment hedges are reclassified from accumulated other comprehensive income (loss) into earnings during the period of change. The interest income or expense from these swaps are recorded in interest expense in the accompanying Consolidated Statements of Earnings consistent with the classification of interest expense attributable to the underlying debt. These instruments mature on dates ranging from September 2025 to October 2030.

The Company also uses cross-currency swap derivative contracts to hedge U.S. dollar-denominated long-term debt issuances in a foreign subsidiary whose functional currency is the euro against adverse movements in exchange rates between the U.S. dollar and the euro. These contracts effectively convert these U.S. dollar-denominated bonds to obligations denominated in euro. The changes in the fair value of these instruments are recorded in accumulated other comprehensive income (loss) in stockholders’ equity, with a reclassification from accumulated other comprehensive income (loss) to net earnings to offset the remeasurement of the hedged debt that is also recorded in net earnings. Any ineffective portions of net investment hedges are reclassified from accumulated other comprehensive income (loss) into earnings during the period of change. The interest income or expense from these swaps are recorded in interest expense in the accompanying Consolidated Statements of Earnings consistent with the classification of interest expense attributable to the underlying debt. These instruments mature on dates ranging from November 2022 to November 2049.

The Company has also issued foreign currency denominated long-term debt as partial hedges of its net investments in foreign operations against adverse movements in exchange rates between the U.S. dollar and the euro, Japanese yen and Swiss franc. These foreign currency denominated long-term debt issuances are designated and qualify as nonderivative hedging instruments. Accordingly, the foreign currency translation of these debt instruments is recorded in accumulated other comprehensive income (loss) in stockholders’ equity in the accompanying Consolidated Balance Sheets, offsetting the foreign currency translation adjustment of the Company’s related net investment that is also recorded in accumulated other comprehensive income (loss). Any ineffective portions of net investment hedges are reclassified from accumulated other comprehensive income (loss) into earnings during the period of change. These instruments mature on dates ranging from March 2021 to May 2032.

The Company used interest rate swap agreements to hedge the variability in cash flows due to changes in benchmark interest rates related to a portion of the U.S. debt the Company issued to fund the Cytiva Acquisition. These contracts effectively fixed the interest rate for a portion of the Company’s U.S. dollar-denominated debt equal to the notional amount of the swaps to the rate specified in the interest rate swap agreements and were settled in November 2019. The changes in the fair value of these instruments were recorded in accumulated other comprehensive income (loss) in stockholders’ equity prior to the issuance of the debt and are subsequently being reclassified to interest expense over the life of the related debt.

The following table summarizes the notional values as of December 31, 2020 and 2019 and pretax impact of changes in the fair values of instruments designated as net investment hedges and cash flow hedges in accumulated other comprehensive income (“OCI”) for the year then ended ($ in millions):

			Original Notional Amount						Notional Amount Outstanding						Gain (Loss) Recognized in OCI
Year ended December 31, 2020:
Net investment hedges:
Foreign currency contracts			$	2,875					$	2,000					$	(104)
Foreign currency denominated debt			4,573						4,573						(418)
Cash flow hedges:
Foreign currency contracts			4,000						4,000						(432)
Total			$	11,448					$	10,573					$	(954)
Year ended December 31, 2019:
Net investment hedges:
Foreign currency contracts			$	1,875					$	1,000					$	24
Foreign currency denominated debt			6,276						6,276						130
Cash flow hedges:
Foreign currency contracts			4,000						4,000						(112)
Interest rate swaps			850						—						(37)
Total			$	13,001					$	11,276					$	5

Gains or losses related to the net investment hedges are classified as foreign currency translation adjustments in the schedule of changes in OCI in Note 1, as these items are attributable to the Company’s hedges of its net investment in foreign operations. Gains or losses related to the cash flow hedges are classified as cash flow hedge adjustments in the schedule of changes in OCI in Note 1. The amount reclassified to earnings for the interest rate swaps was $2 million and less than $1 million in 2020 and 2019, respectively. In 2020 and 2019, the Company reclassified $359 million and $27 million, respectively, of deferred losses from accumulated other comprehensive income (loss) to net earnings related to the cross-currency swap derivative contracts that are cash flow hedges of the Company’s U.S. dollar-denominated debt. This reclassification was equal to the remeasurement gain recorded on the hedged debt. The Company did not reclassify any other deferred gains or losses related to net investment hedges or cash flow hedges from accumulated other comprehensive income (loss) to earnings during the years ended December 31, 2020 and 2019. In addition, the Company did not have any ineffectiveness related to net investment hedges or interest rate swaps during the years ended December 31, 2020 and 2019. The cash inflows and outflows associated with the Company’s derivative contracts designated as net investment hedges are classified in all other investing activities in the accompanying Consolidated Statements of Cash Flows. The cash inflows and outflows associated with the Company’s derivative contracts designated as cash flow hedges are classified in cash flows from operating activities in the accompanying Consolidated Statements of Cash Flows.

The Company’s derivative instruments, as well as its nonderivative debt instruments designated and qualifying as net investment hedges, were classified as of December 31 in the Company’s Consolidated Balance Sheets as follows ($ in millions):

			2020						2019
Derivative assets:
Prepaid expenses and other current assets			$	—					$	26
Derivative liabilities:
Accrued expenses and other liabilities			622						112
Nonderivative hedging instruments:
Long-term debt			4,573						6,276

Amounts related to the Company’s derivatives expected to be reclassified from accumulated other comprehensive income (loss) to net earnings during the next 12 months if interest rates and foreign exchange rates remain the same are not significant.

NOTE 13. PENSION BENEFIT PLANS

The Company has noncontributory defined benefit pension plans which cover certain of its U.S. employees. During 2012, all remaining benefit accruals under the U.S. plans ceased. Defined benefit plans from acquisitions subsequent to 2012 are ceased as soon as practical. The Company also has noncontributory defined benefit pension plans which cover certain of its non-U.S. employees, and under certain of these plans, benefit accruals continue. In general, the Company’s policy is to fund these plans based on considerations relating to legal requirements, underlying asset returns, the plan’s funded status, the anticipated tax deductibility of the contribution, local practices, market conditions, interest rates and other factors.

The following sets forth the funded status of the U.S. and non-U.S. plans as of the most recent actuarial valuations using measurement dates of December 31 ($ in millions):

			U.S. Pension Benefits												Non-U.S. Pension Benefits
			2020						2019						2020						2019
Change in pension benefit obligation:
Benefit obligation at beginning of year			$	(2,468)					$	(2,340)					$	(1,446)					$	(1,315)
Service cost			—						(6)						(40)						(25)
Interest cost			(69)						(89)						(22)						(24)
Employee contributions			—						—						(6)						(5)
Benefits and other expenses paid			165						164						59						48
Acquisitions and other			(96)						—						(436)						—
Actuarial loss			(273)						(237)						(106)						(152)
Amendments, settlements and curtailments			23						40						4						47
Foreign exchange rate impact			—						—						(168)						(20)
Benefit obligation at end of year			(2,718)						(2,468)						(2,161)						(1,446)
Change in plan assets:
Fair value of plan assets at beginning of year			1,866						1,778						1,138						1,032
Actual return on plan assets			227						283						104						115
Employer contributions			140						10						51						44
Employee contributions			—						—						6						5
Amendments and settlements			(22)						(41)						(7)						(37)
Benefits and other expenses paid			(165)						(164)						(59)						(48)
Acquisitions and other			79						—						30						—
Foreign exchange rate impact			—						—						68						27
Fair value of plan assets at end of year			2,125						1,866						1,331						1,138
Funded status			$	(593)					$	(602)					$	(830)					$	(308)

The largest contributor to the net actuarial losses affecting the benefit obligation in both 2020 and 2019 for the U.S. plans and the non-U.S. plans is decreases in the discount rates, partially offset by return on plan assets exceeding expectations.

Projected benefit obligation (“PBO”) and fair value of plan assets for pension plans with PBO’s in excess of plan assets ($ in millions):

			U.S. Pension Benefits												Non-U.S. Pension Benefits
			2020						2019						2020						2019
Projected benefit obligation			$	2,718					$	2,468					$	1,366					$	778
Fair value of plan assets			2,125						1,866						441						370

Accumulated benefit obligation (“ABO”) and fair value of plan assets for pension plans with ABO’s in excess of plan assets ($ in millions):

			U.S. Pension Benefits												Non-U.S. Pension Benefits
			2020						2019						2020						2019
Accumulated benefit obligation			$	2,718					$	2,468					$	1,257					$	730
Fair value of plan assets			2,125						1,866						434						370

Weighted average assumptions used to determine benefit obligations at date of measurement:

			U.S. Plans												Non-U.S. Plans
			2020						2019						2020						2019
Discount rate			2.3		%				3.2		%				1.1		%				1.4		%
Rate of compensation increase			N/A						4.0		%				2.5		%				2.4		%

Components of net periodic pension benefit (cost) ($ in millions):

			U.S. Pension Benefits												Non-U.S. Pension Benefits
			2020						2019						2020						2019
Service cost			$	—					$	(6)					$	(40)					$	(25)
Interest cost			(69)						(89)						(22)						(24)
Expected return on plan assets			121						126						37						40
Amortization of prior service (cost) credit			(1)						(1)						1						—
Amortization of net loss			(37)						(26)						(10)						(4)
Curtailment and settlement gains (losses) recognized			—						—						(1)						(7)
Net periodic pension benefit (cost)			$	14					$	4					$	(35)					$	(20)

The net periodic benefit (cost) of the noncontributory defined benefit pension plans incurred during the years ended December 31, 2020, 2019 and 2018 are reflected in the following captions in the accompanying Consolidated Statements of Earnings ($ in millions):

			Year Ended December 31
			2020						2019						2018
Service cost:
Cost of sales			$	(7)					$	(6)					$	(11)
Selling, general and administrative expenses			(33)						(25)						(21)
Total service cost expense			(40)						(31)						(32)
Other net periodic pension costs:
Other income (expense), net			19						15						37
Total (expense) income			$	(21)					$	(16)					$	5

Weighted average assumptions used to determine net periodic pension benefit (cost) at date of measurement:

			U.S. Plans												Non-U.S. Plans
			2020						2019						2020						2019
Discount rate			3.2		%				4.3		%				1.4		%				2.1		%
Expected long-term return on plan assets			7.0		%				7.0		%				3.4		%				3.9		%
Rate of compensation increase			4.0		%				4.0		%				2.4		%				2.4		%

The discount rate reflects the market rate on December 31 of the prior year for high-quality fixed-income investments with maturities corresponding to the Company’s benefit obligations and is subject to change each year. For non-U.S. plans, rates appropriate for each plan are determined based on investment-grade instruments with maturities approximately equal to the average expected benefit payout under the plan. During 2019, the Company updated the mortality assumptions used to estimate the projected benefit obligation to reflect updated mortality tables.

Included in accumulated other comprehensive income (loss) as of December 31, 2020 are the following amounts that have not yet been recognized in net periodic pension cost: unrecognized prior service credit of $1 million ($1 million, net of tax) and unrecognized actuarial losses of approximately $1.2 billion ($919 million, net of tax). The unrecognized losses and prior service cost, net, is calculated as the difference between the actuarially determined projected benefit obligation and the value of the plan assets less accrued pension costs as of December 31, 2020.

Selection of Expected Rate of Return on Assets

For the years ended December 31, 2020, 2019 and 2018, the Company used an expected long-term rate of return assumption of 7.0% for its U.S. defined benefit pension plan. The Company intends to use an expected long-term rate of return assumption of 6.75% for 2021 for its U.S. plan. This expected rate of return reflects the asset allocation of the plan, and is based primarily on broad, publicly-traded equity and fixed-income indices and forward-looking estimates of active portfolio and investment management. Long-term rate of return on asset assumptions for the non-U.S. plans were determined on a plan-by-plan basis based on the composition of assets and ranged from 0.5% to 5.0% in 2020 and 0.8% to 5.0% in 2019, with a weighted average rate of return assumption of 3.4% in 2020 and 3.9% in 2019.

Plan Assets

The U.S. plan’s goal is to maintain between 60% and 70% of its assets in equity portfolios, which are invested in individual equity securities or funds that are expected to mirror broad market returns for equity securities or in assets with characteristics similar to equity investments, such as venture capital funds and partnerships. Asset holdings are periodically rebalanced when equity holdings are outside this range. The balance of the U.S. plan asset portfolio is invested in bond funds, real estate funds, various absolute and real return funds and private equity funds. Non-U.S. plan assets are invested in various insurance contracts, equity and debt securities as determined by the administrator of each plan. The value of the plan assets directly affects the funded status of the Company’s pension plans recorded in the Consolidated Financial Statements.

The Company has some investments that are valued using Net Asset Value (“NAV”) as the practical expedient. In addition, some of the investments valued using NAV as the practical expedient have limits on their redemption to monthly, quarterly, semiannually or annually and require up to 90 days prior written notice. These investments valued using NAV consist of mutual funds, venture capital funds, partnerships, and other private investments, which allow the Company to allocate investments across a broad array of types of funds and diversify the portfolio.

The fair values of the Company’s pension plan assets for both the U.S. and non-U.S. plans as of December 31, 2020, by asset category were as follows ($ in millions):

			Quoted Prices in Active Market (Level 1)						Significant Other Observable Inputs (Level 2)						Significant Unobservable Inputs (Level 3)						Total
Cash and equivalents			$	175					$	—					$	—					$	175
Equity securities:
Common stock			503						—						—						503
Preferred stock			6						—						—						6
Fixed income securities:
Corporate bonds			—						42						—						42
Government issued			—						58						—						58
Mutual funds			244						51						—						295
Insurance contracts			—						354						—						354
Total			$	928					$	505					$	—					1,433
Investments measured at NAV (a):
Common/collective trusts																					1,198
Venture capital, partnerships and other private investments																					825
Total assets at fair value																					$	3,456

(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.

The fair values of the Company’s pension plan assets for both the U.S. and non-U.S. plans as of December 31, 2019, by asset category were as follows ($ in millions):

			Quoted Prices in Active Market (Level 1)						Significant Other Observable Inputs (Level 2)						Significant Unobservable Inputs (Level 3)						Total
Cash and equivalents			$	68					$	—					$	—					$	68
Equity securities:
Common stock			390						—						—						390
Preferred stock			6						—						—						6
Fixed income securities:
Corporate bonds			—						35						—						35
Government issued			—						22						—						22
Mutual funds			287						132						—						419
Insurance contracts			—						299						—						299
Total			$	751					$	488					$	—					1,239
Investments measured at NAV (a):
Common/collective trusts																					1,071
Venture capital, partnerships and other private investments																					694
Total assets at fair value																					$	3,004

(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.

Preferred stock and common stock traded on an active market, as well as mutual funds are valued at the quoted closing price reported on the active market on which the individual securities are traded. Preferred stock, common stock, corporate bonds, U.S. government securities and mutual funds that are not traded on an active market are valued at quoted prices reported by investment brokers and dealers based on the underlying terms of the security and comparison to similar securities traded on an active market. Insurance contracts are valued based upon the quoted prices of the underlying investments with the insurance company.

Common/collective trusts are valued based on the plan’s interest, represented by investment units, in the underlying investments held within the trust that are traded in an active market by the trustee.

Venture capital, partnerships and other private investments are valued using the NAV based on the information provided by the asset fund managers, which reflects the plan’s share of the fair value of the net assets of the investment. Depending on the nature of the assets, the underlying investments are valued using a combination of either discounted cash flows, earnings and market multiples, third-party appraisals or through reference to the quoted market prices of the underlying investments held by the venture, partnership or private entity where available. Valuation adjustments reflect changes in operating results, financial condition, or prospects of the applicable portfolio company.

The methods described above may produce a fair value estimate that may not be indicative of net realizable value or reflective of future fair values. Furthermore, while the Company believes the valuation methods are appropriate and consistent with the methods used by other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different fair value measurement at the reporting date.

Expected Contributions

During 2020, the Company contributed $140 million to its U.S. defined benefit pension plan and $51 million to its non-U.S. defined benefit pension plans. During 2021, the Company’s cash contribution requirements for its U.S. and its non-U.S. defined benefit pension plans are expected to be approximately $10 million and $44 million, respectively.

The following sets forth benefit payments, which reflect expected future service, as appropriate, expected to be paid by the plans in the periods indicated ($ in millions):

			U.S. Pension Plans						Non-U.S. Pension Plans						All Pension Plans
2021			$	188					$	61					$	249
2022			187						68						255
2023			187						66						253
2024			182						68						250
2025			173						68						241
2026 - 2030			789						379						1,168

Other Matters

Substantially all employees not covered by defined benefit plans are covered by defined contribution plans, which generally provide for Company funding based on a percentage of compensation.

A limited number of the Company’s subsidiaries participate in multiemployer defined benefit and contribution plans, primarily outside of the United States, that require the Company to periodically contribute funds to the plan. The risks of participating in a multiemployer plan differ from the risks of participating in a single-employer plan in the following respects: (1) assets contributed to the multiemployer plan by one employer may be used to provide benefits to employees of other participating employers, (2) if a participating employer ceases contributing to the plan, the unfunded obligations of the plan may be required to be borne by the remaining participating employers and (3) if the Company elects to stop participating in the plan, the Company may be required to pay the plan an amount based on the unfunded status of the plan. None of the multiemployer plans in which the Company’s subsidiaries participate are considered to be quantitatively or qualitatively significant, either individually or in the aggregate. In addition, contributions made to these plans during 2020, 2019 and 2018 were not considered significant, either individually or in the aggregate.

The Company’s net periodic pension cost for the year ended December 31, 2019 includes a settlement loss of $7 million ($6 million after tax or $0.01 per diluted common share) as a result of the transfer of a portion of its non-U.S. pension liabilities related to one defined benefit plan to a third party. Expense for all defined benefit and defined contribution pension plans amounted to $224 million, $203 million and $167 million for the years ended December 31, 2020, 2019 and 2018, respectively.

NOTE 14. OTHER POSTRETIREMENT EMPLOYEE BENEFIT PLANS

In addition to providing pension benefits, the Company provides certain health care and life insurance benefits for some of its retired employees in the United States. Certain employees may become eligible for these benefits as they reach normal retirement age while working for the Company.

The following sets forth the funded status of the domestic plans as of the most recent actuarial valuations using measurement dates as of December 31 ($ in millions):

			2020						2019
Change in benefit obligation:
Benefit obligation at beginning of year			$	(139)					$	(142)
Service cost			—						—
Interest cost			(4)						(5)
Actuarial gain (loss)			(15)						(4)
Retiree contributions			(2)						(2)
Benefits paid			12						14
Benefit obligation at end of year			(148)						(139)
Change in plan assets:
Fair value of plan assets			—						—
Funded status			$	(148)					$	(139)

As of December 31, 2020 and 2019, $133 million and $123 million, respectively, of the total underfunded status of the plan was recognized as long-term accrued postretirement liability since it was not expected to be funded within one year. The largest contributor to the net actuarial losses affecting the benefit obligation in both 2020 and 2019 for the plan is due to decreases in the discount rates.

As of December 31, 2020 and 2019, the projected benefit obligation of the plan exceeded the fair value of the plan assets, as the plan had no plan assets, and the accumulated and projected benefit obligation was $148 million and $139 million, respectively.

Weighted average assumptions used to determine benefit obligations at date of measurement:

			2020						2019
Discount rate			2.1		%				3.1		%
Medical trend rate – initial			5.5		%				5.7		%
Medical trend rate – grading period			17 years						18 years
Medical trend rate – ultimate			4.5		%				4.5		%

The medical trend rate used to determine the postretirement benefit obligation was 5.5% for 2020. The rate decreases gradually to an ultimate rate of 4.5% in 2037 and remains at that level thereafter. The trend rate is a significant factor in determining the amounts reported.

Components of net periodic benefit (cost) ($ in millions):

			2020						2019
Service cost			$	—					$	—
Interest cost			(4)						(5)
Amortization of prior service credit			2						2
Amortization of net loss			(1)						—
Net periodic benefit (cost)			$	(3)					$	(3)

The net periodic cost of the other postretirement employee benefit plans incurred during the years ended December 31, 2020, 2019 and 2018 are reflected in the following captions in the accompanying Consolidated Statements of Earnings ($ in millions):

			Year Ended December 31
			2020						2019						2018
Service cost:
Cost of sales			$	—					$	—					$	—
Selling, general and administrative expenses			—						—						(1)
Total service cost			—						—						(1)
Other net periodic pension costs:
Other income (expense), net			(3)						(3)						(2)
Total			$	(3)					$	(3)					$	(3)

Included in accumulated other comprehensive income (loss) as of December 31, 2020 are the following amounts that have not yet been recognized in net periodic benefit cost: unrecognized prior service credits of $14 million ($11 million, net of tax) and unrecognized actuarial losses of $27 million ($21 million, net of tax). The unrecognized losses and prior service credits, net, is calculated as the difference between the actuarially determined projected benefit obligation and the value of the plan assets less accrued benefit costs as of December 31, 2020.

The following sets forth benefit payments, which reflect expected future service, as appropriate, expected to be paid in the periods indicated ($ in millions):

2021			$	15
2022			14
2023			13
2024			12
2025			11
2026 - 2030			47

NOTE 15. INCOME TAXES

Earnings from continuing operations before income taxes for the years ended December 31 were as follows ($ in millions):

			2020						2019						2018
United States			$	1,655					$	854					$	801
International			2,840						2,451						2,161
Total			$	4,495					$	3,305					$	2,962

The provision for income taxes from continuing operations for the years ended December 31 were as follows ($ in millions):

			2020						2019						2018
Current:
Federal U.S.			$	(321)					$	453					$	283
Non-U.S.			580						800						461
State and local			72						35						64
Deferred:
Federal U.S.			530						(297)						(201)
Non-U.S.			(16)						(128)						(12)
State and local			4						10						(39)
Income tax provision			$	849					$	873					$	556

Noncurrent deferred tax assets and noncurrent deferred tax liabilities are included in other assets and other long-term liabilities, respectively, in the accompanying Consolidated Balance Sheets. Deferred income tax assets and liabilities as of December 31 were as follows ($ in millions):

			2020						2019
Deferred tax assets:
Allowance for doubtful accounts			$	24					$	19
Inventories			99						73
Pension and postretirement benefits			259						231
Environmental and regulatory compliance			27						22
Other accruals and prepayments			341						195
Stock-based compensation expense			68						69
Operating lease liabilities			215						194
Tax credit and loss carryforwards			569						703
Valuation allowances			(264)						(261)
Total deferred tax asset			1,338						1,245
Deferred tax liabilities:
Property, plant and equipment			(50)						(113)
Insurance, including self-insurance			(713)						(272)
Basis difference in LYONs			(11)						(14)
Operating lease ROU assets			(204)						(186)
Goodwill and other intangibles			(3,814)						(2,312)
Total deferred tax liability			(4,792)						(2,897)
Net deferred tax liability			$	(3,454)					$	(1,652)

The Company evaluates the future realizability of tax credits and loss carryforwards considering the anticipated future earnings of the Company’s subsidiaries as well as tax planning strategies in the associated jurisdictions. Deferred taxes associated with U.S. entities consist of net deferred tax liabilities of approximately $1.9 billion and $1.6 billion as of December 31, 2020 and 2019, respectively. Deferred taxes associated with non-U.S. entities consist of net deferred tax liabilities of $1.6 billion and $90 million as of December 31, 2020 and 2019, respectively. The significant increase to net deferred tax liabilities in 2020 is primarily due to the Cytiva Acquisition. During 2020, the Company’s valuation allowance increased by $3 million primarily due to certain tax benefits recognized in 2020 that are not expected to be realized, partially offset by release of a valuation allowance in a certain foreign jurisdiction. As of December 31, 2020, the total amount of the basis difference in investments indefinitely reinvested outside the United States for which deferred taxes have not been provided is approximately $10.3 billion. The income taxes applicable to repatriating such earnings are not readily determinable. As of December 31, 2020, the Company had no plans which would subject these basis differences to income taxes in the United States or elsewhere.

On December 22, 2017, the TCJA was enacted, substantially changing the U.S. tax system. Under the SEC Staff Accounting Bulletin No. 118 (“SAB No. 118”) guidance, for the year ended December 31, 2017, the Company recorded provisional amounts in earnings for the effects of the enactment of the TCJA and during 2018, the Company completed its accounting for the TCJA based on the Company’s interpretation of the new tax regulations and related guidance issued by the U.S. Department of the Treasury and the Internal Revenue Service (“IRS”).

The TCJA imposes tax on U.S. shareholders for global intangible low-taxed income (“GILTI”) earned by certain foreign subsidiaries. The Company has elected the period cost method for its accounting for GILTI.

The effective income tax rate from continuing operations for the years ended December 31 varies from the U.S. statutory federal income tax rate as follows:

			Percentage of Pretax Earnings
			2020						2019						2018
Statutory federal income tax rate			21.0		%				21.0		%				21.0		%
Increase (decrease) in tax rate resulting from:
State income taxes (net of federal income tax benefit)			1.1		%				0.8		%				0.9		%
Foreign rate differential			(1.6)		%				(1.4)		%				(0.9)		%
Resolution and expiration of statutes of limitation of uncertain tax positions			(0.7)		%				(2.1)		%				(1.7)		%
Research credits, uncertain tax positions and other			0.7		%				9.3		%				0.3		%
Excess tax benefits from stock-based compensation			(1.6)		%				(1.2)		%				(1.0)		%
TCJA - revaluation of U.S. deferred income taxes			—		%				—		%				(1.6)		%
TCJA - Transition Tax			—		%				—		%				1.8		%
Effective income tax rate			18.9		%				26.4		%				18.8		%

The Company’s effective tax rate for 2020, 2019 and 2018 differs from the U.S. federal statutory rate of 21.0%, due to the Company’s earnings outside the United States that are indefinitely reinvested and taxed at rates different than the U.S. federal statutory rate as well as the impact of the following:

• The effective tax rate of 18.9% in 2020 includes net tax benefits primarily related to the release of reserves for uncertain tax positions from audit settlements and expiration of statutes of limitation and excess tax benefits from stock-based compensation, partially offset by a higher tax rate associated with the gain on the divestiture of certain product lines in the Life Sciences segment and changes in estimates associated with prior period uncertain tax positions. These items decreased the reported rate on a net basis by 0.7%.

• The effective tax rate of 26.4% in 2019 includes 650 basis points of net tax charges related primarily to changes in estimates associated with prior period uncertain tax positions, audit settlements, and Envista Disposition costs, net of the release of reserves for uncertain tax positions due to the expiration of statutes of limitation, release of valuation allowances associated with certain foreign tax credits, tax benefits resulting from changes in tax law and excess tax benefits from stock-based compensation.

• The effective tax rate of 18.8% in 2018 includes 120 basis points of tax benefits primarily related to the release of reserves upon the expiration of statutes of limitation, audit settlements and release of a 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 and tax costs directly related to reorganization activities associated with the Envista Disposition.

The Company made income tax payments related to both continuing and discontinued operations of approximately $1.1 billion, $847 million and $673 million in 2020, 2019 and 2018, respectively. Current income taxes payable related to both continuing and discontinued operations has been reduced by $110 million, $79 million and $57 million in 2020, 2019 and 2018, respectively, for tax deductions attributable to stock-based compensation, of which, the excess tax benefit over the amount recorded for financial reporting purposes for both continuing and discontinued operations was $85 million, $55 million and $38 million, respectively. The excess tax benefits have been recorded as reductions to the current income tax provision and are reflected as operating cash inflows in the accompanying Consolidated Statements of Cash Flows. Taxes receivable for income and other taxes are classified as prepaid expenses and other current assets in the Consolidated Balance Sheets. As of December 31, 2020 and 2019 these balances were $700 million and $196 million, respectively.

Included in deferred income taxes as of December 31, 2020 are tax benefits for U.S. and non-U.S. net operating loss carryforwards totaling $452 million ($174 million of which the Company does not expect to realize and have corresponding valuation allowances). Certain of the losses can be carried forward indefinitely and others can be carried forward to various dates from 2021 through 2040. In addition, the Company had general business and foreign tax credit carryforwards of $117 million ($66 million of which the Company does not expect to realize and have corresponding valuation allowances) as of December 31, 2020, which can be carried forward to various dates from 2021 to 2030. In addition, as of December 31, 2020, the Company had $24 million of valuation allowances related to other deferred tax asset balances that are not more likely than not of being realized.

As of December 31, 2020, gross unrecognized tax benefits totaled approximately $1.2 billion (approximately $1.4 billion, net of the impact of $148 million of indirect tax benefits offset by $354 million associated with potential interest and penalties). As of December 31, 2019, gross unrecognized tax benefits totaled approximately $1.2 billion (approximately $1.4 billion, net of the impact of $131 million of indirect tax benefits offset by $320 million associated with potential interest and penalties). The Company recognized approximately $41 million, $227 million and $41 million in potential interest and penalties related to both continuing and discontinued operations associated with uncertain tax positions during 2020, 2019 and 2018, respectively. To the extent unrecognized tax benefits (including interest and penalties) are recognized with respect to uncertain tax positions, approximately $1.4 billion and $1.3 billion as of December 31, 2020 and 2019, respectively, would reduce the tax expense and effective tax rate in future periods. The Company recognized interest and penalties related to unrecognized tax benefits within income taxes in the accompanying Consolidated Statements of Earnings. Unrecognized tax benefits and associated accrued interest and penalties are included in taxes, income and other accrued expenses as detailed in Note 10.

A reconciliation of the beginning and ending amount of unrecognized tax benefits, excluding amounts accrued for potential interest and penalties related to both continuing and discontinued operations, is as follows ($ in millions):

			2020						2019						2018
Unrecognized tax benefits, beginning of year			$	1,181					$	986					$	737
Additions based on tax positions related to the current year			47						71						43
Additions for tax positions of prior years			24						197						325
Reductions for tax positions of prior years			(20)						(16)						(22)
Acquisitions, divestitures and other			(30)						7						9
Lapse of statute of limitations			(13)						(51)						(53)
Settlements			(38)						(12)						(42)
Effect of foreign currency translation			24						(1)						(11)
Unrecognized tax benefits, end of year			$	1,175					$	1,181					$	986

The Company conducts business globally, and files numerous consolidated and separate income tax returns in the U.S. federal, state and foreign jurisdictions. The non-U.S. countries in which the Company has a significant presence include China, Denmark, Germany, Singapore, Sweden, Switzerland and the United Kingdom. Excluding these jurisdictions, the Company believes that a change in the statutory tax rate of any individual foreign country would not have a material effect on the Company’s Consolidated Financial Statements given the geographic dispersion of the Company’s taxable income.

The Company and its subsidiaries are routinely examined by various domestic and international taxing authorities. The IRS has completed substantially all of the examinations of the Company’s federal income tax returns through 2015 and is currently examining certain of the Company’s federal income tax returns for 2016 through 2018. In addition, the Company has subsidiaries in Austria, Belgium, Canada, China, Denmark, France, Germany, India, Japan, Korea, Switzerland, the United Kingdom and various other countries, states and provinces that are currently under audit for years ranging from 2004 through 2018.

In the fourth quarter of 2018 and the first quarter of 2019, the IRS proposed significant adjustments to the Company’s taxable income for the years 2012 through 2015 with respect to the deferral of tax on certain premium income related to the Company’s self-insurance programs. For income tax purposes, the recognition of premium income has been deferred in accordance with U.S. tax laws related to insurance. The IRS challenged the deferral of premiums for certain types of the Company’s self-insurance policies. These proposed adjustments would have increased the Company’s taxable income over the 2012 through 2015 period by approximately $2.7 billion. In the third quarter of 2020, the Company settled the 2012 through 2015 audit period with the IRS, including the resolution of these proposed adjustments. The settlement was not material to the Company’s financial statements, including its cash flows and effective tax rate. As the settlement with the IRS was specific to the audit period, the settlement does not preclude the IRS from proposing similar adjustments to the Company’s self-insurance programs in current or future audits. In connection with its examination of the Company’s federal income tax returns for 2016, 2017 and 2018, the IRS has requested additional information on the Company’s self-insurance programs. Due to the enactment of the TCJA in 2017 and the resulting reduction in the U.S. corporate tax rate for years after 2017, the Company revalued its deferred tax liabilities related to the temporary differences associated with this deferred premium income from 35.0% to 21.0%. If the IRS proposes adjustments related to the Company’s self-insurance premiums with respect to years subsequent to 2015 and prior to adoption of the TCJA and the Company is unsuccessful in defending its position, any taxes owed to the IRS may be computed under the previous 35.0% statutory tax rate and the Company may be required to revalue the related deferred tax liabilities from 21.0% to 35.0%, which in addition to any interest due on the amounts assessed, would require a charge to future earnings. Management believes the positions the Company has taken in its U.S. tax returns are in accordance with the relevant tax laws.

Tax authorities in Denmark have raised significant issues related to interest accrued by certain of the Company’s subsidiaries. On December 10, 2013, the Company received assessments from the Danish tax authority (“SKAT”) of approximately DKK 1.9 billion including interest through December 31, 2020 (approximately $309 million based on exchange rates as of December 31, 2020) imposing withholding tax relating to interest accrued in Denmark on borrowings from certain of the Company’s subsidiaries for the years 2004 through 2009. The Company appealed these assessments to the Danish National Tax Tribunal in 2014. The appeal is pending, awaiting the final outcome of other, preceding withholding tax cases that were appealed to the Danish courts and subsequently to the Court of Justice of the European Union (“CJEU”). In February 2019, the CJEU decided several of these cases and ruled that the exemption of interest payments from withholding taxes provided in the applicable European Union (“EU”) directive should be denied where taxpayers use the directive for abusive or fraudulent purposes, and that it is up to the national courts to make this determination. This decision of the CJEU now awaits application by the Danish High Court in the other, preceding withholding tax cases. SKAT has maintained a similar position related to withholding tax on interest accrued in Denmark on borrowings from certain of the Company’s subsidiaries with respect to tax years 2010 through 2015. In 2019, the Company received aggregate assessments for these matters of approximately DKK 1.8 billion including interest through December 31, 2020 (approximately $302 million based on the exchange rate as of December 31, 2020). The Company is appealing these assessments as well.

Management believes the positions the Company has taken in Denmark are in accordance with the relevant tax laws and is vigorously defending its positions. The Company intends on pursuing this matter through the Danish High Court should the appeal to the Danish National Tax Tribunal be unsuccessful. The Company will continue to monitor decisions of both the Danish courts and the CJEU and evaluate the impact of these court rulings on the Company’s tax positions in Denmark. The ultimate resolution of this matter is uncertain, could take many years, and could result in a further material adverse impact to the Company’s financial statements, including its cash flow and effective tax rate.

On June 24, 2020, SKAT issued a press release to announce that it has misapplied Denmark’s interest rules in some assessments concerning withholding tax and overcharged interest. Subsequent to year end, the Company received a notice from SKAT dated January 15, 2021 that includes a significant reduction in the interest amounts due related to the assessments discussed above. The Company is reviewing the notice and the revised interest calculations received from SKAT.

Management estimates that it is reasonably possible that the amount of unrecognized tax benefits related to continuing operations may be reduced by approximately $199 million within 12 months as a result of resolution of worldwide tax matters, payments of tax audit settlements and/or statute of limitations expirations. Future resolution of uncertain tax positions related to discontinued operations may result in additional charges or credits to earnings from discontinued operations in the Consolidated Statements of Earnings (refer to Note 4).

The Company operates in various non-U.S. jurisdictions where income tax incentives and rulings have been granted for specific periods of time. In Switzerland, the Company has various tax rulings and tax holiday arrangements which reduce the overall effective tax rate of the Company. The tax holidays expire between 2021 and 2027. In Singapore, the Company operates under various tax incentive agreements that provide for reduced tax rates. Subject to the Company satisfying certain requirements, the agreements expire in 2022. As of December 31, 2020, the Company had satisfied the conditions enumerated in these agreements. Included in the accompanying Consolidated Financial Statements are tax benefits of $43 million, $71 million and $69 million (or $0.06, $0.10 and $0.10 per diluted common share) for 2020, 2019 and 2018, respectively, from these rulings and tax holidays.

NOTE 16. NONOPERATING INCOME (EXPENSE)

The Company disaggregates the service cost component of net periodic benefit costs of noncontributory defined benefit pension plans and other postretirement employee benefit plans and presents the other components of net periodic benefit cost in other income (expense), net. These other components include the assumed rate of return on plan assets, partially offset by amortization of actuarial losses and interest and aggregated to a gain of $16 million, $12 million and $35 million as of December 31, 2020, 2019 and 2018, respectively. The Company’s net periodic pension cost for the year ended December 31, 2019 includes a settlement loss of $7 million ($6 million after tax or $0.01 per diluted common share) as a result of the transfer of a portion of its non-U.S. pension liabilities related to one defined benefit plan to a third party.

The Company estimates the fair value of investments in equity securities using the Fair Value Alternative and records adjustments to fair value within net earnings. Additionally, the Company is a limited partner in a partnership that invests in early stage companies. While the partnership records these investments at fair value, the Company’s investment in the partnership is accounted for under the equity method of accounting. During the year ended December 31, 2020, the Company recorded net realized and unrealized gains of $18 million related to changes in the fair value of these investments. In addition, the Company recorded other income of $5 million related to certain other transactions during 2020. These items are reflected in

other income (expense), net in the Company’s Consolidated Statement of Earnings. No significant realized or unrealized gains or losses were recorded in either 2019 or 2018 with respect to these investments.

As a condition to obtaining certain regulatory approvals for the closing of the Cytiva Acquisition, the Company was required to divest certain of its existing product lines in the Life Sciences segment that in the aggregate generated revenues of approximately $170 million in 2019. On April 30, 2020, the Company completed the sale of these product lines for a cash purchase price, net of cash transferred and transaction costs, of $826 million and recognized a pretax gain on sale of $455 million ($305 million after-tax or $0.42 per diluted common share) in the second quarter of 2020. The divestiture of these product lines did not represent a strategic shift with a major effect on the Company’s operations and financial results and therefore is not reported as a discontinued operation.

In the fourth quarter of 2020, the Company redeemed the €800 million aggregate principal amount of 1.7% senior unsecured notes due 2022 at a redemption price equal to the outstanding principal amount and a make-whole premium as specified in the applicable indenture, plus accrued and unpaid interest. The Company recorded a loss on early extinguishment of these borrowings, including deferred costs, related to the payment of the make-whole premiums in connection with the redemption of $26 million ($20 million after-tax or $0.03 per diluted common share) which is reflected as a loss on early extinguishment of borrowings in the Consolidated Statement of Earnings.

In the fourth quarter of 2019, Danaher used a portion of the consideration received from Envista to redeem $882 million in aggregate principal amount of outstanding indebtedness (consisting of the Company’s 2.4% senior unsecured notes due 2020 and 5.0% senior unsecured notes due 2020). The Company incurred make-whole premiums in connection with the redemption of $7 million ($5 million after-tax or $0.01 per diluted common share) which is reflected as a loss on early extinguishment of borrowings in the Consolidated Statement of Earnings.

NOTE 17. COMMITMENTS

Warranties

The Company generally accrues estimated warranty costs at the time of sale. In general, manufactured products are warranted against defects in material and workmanship when properly used for their intended purpose, installed correctly and appropriately maintained. Warranty periods depend on the nature of the product and range from the date of such sale up to ten years. The amount of the accrued warranty liability is determined based on historical information such as past experience, product failure rates or number of units repaired, estimated cost of material and labor and in certain instances estimated property damage. The accrued warranty liability is reviewed on a quarterly basis and may be adjusted as additional information regarding expected warranty costs becomes known.

The following is a rollforward of the Company’s accrued warranty liability ($ in millions):

			2020						2019
Balance, January 1			$	73					$	68
Accruals for warranties issued during the year			45						48
Settlements made			(36)						(43)
Adjustments due to acquisitions/divestitures			2						—
Effect of foreign currency translation			2						—
Balance, December 31			$	86					$	73

Purchase Obligations

The Company has entered into 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. Purchase obligations exclude agreements that are cancellable at any time without penalty. As of December 31, 2020, the aggregate amount of the Company’s purchase obligations totaled approximately $1.1 billion and the majority of these obligations are expected to be settled during 2021.

NOTE 18. LITIGATION AND CONTINGENCIES

The Company is subject to or otherwise responsible for a variety of litigation and other legal and regulatory proceedings in the course of its business (or related to the business operations of previously owned entities), including claims or counterclaims for damages arising out of the use of products or services and claims relating to intellectual property matters, employment matters, tax matters, commercial disputes, breach of contract claims, competition and sales and trading practices, environmental matters,

personal injury, insurance coverage, securities matters, fiduciary duties and acquisition or divestiture-related matters, as well as regulatory subpoenas, requests for information, investigations and enforcement. The Company also from time to time becomes subject to lawsuits as a result of acquisitions or as a result of liabilities retained from, or representations, warranties or indemnities provided in connection with, businesses divested by the Company or its predecessors. The types of claims made in lawsuits include claims for compensatory damages, punitive and consequential damages (and in some cases, treble damages) and/or injunctive relief.

While the Company maintains general, products, property, workers’ compensation, automobile, cargo, aviation, crime, fiduciary and directors’ and officers’ liability insurance (and has acquired rights under similar policies in connection with certain acquisitions) up to certain limits that cover certain of these claims, this insurance may be insufficient or unavailable to cover such losses. For general, products and property liability and most other insured risks, the Company purchases outside insurance coverage only for severe losses and must establish and maintain reserves with respect to amounts within the self-insured retention. In addition, while the Company believes it is entitled to indemnification from third-parties for some of these claims, these rights may also be insufficient or unavailable to cover such losses.

The Company records a liability in the Consolidated Financial Statements for loss contingencies when a loss is known or considered probable and the amount can be reasonably estimated. If the reasonable estimate of a known or probable loss is a range, and no amount within the range is a better estimate than any other, the minimum amount of the range is accrued. If a loss does not meet the known or probable level but is reasonably possible it is disclosed and if the loss or range of loss can be reasonably estimated, the estimated loss or range of loss is disclosed. The Company’s reserves consist of specific reserves for individual claims and additional amounts for anticipated developments of these claims as well as for incurred but not yet reported claims. The specific reserves for individual known claims are quantified with the assistance of legal counsel and outside risk professionals where appropriate. In addition, outside risk professionals assist in the determination of reserves for incurred but not yet reported claims through evaluation of the Company’s specific loss history, actual claims reported and industry trends together with statistical and other factors. Reserve estimates may be adjusted as additional information regarding a claim becomes known. Because most contingencies are resolved over long periods of time, new developments (including litigation developments, the discovery of new facts, changes in legislation and outcomes of similar cases), changes in assumptions or changes in the Company’s strategy in any given period can require the Company to adjust the loss contingency estimates that have been recorded in the financial statements, record estimates for liabilities or assets previously not susceptible of reasonable estimates or pay cash settlements or judgments. While the Company actively pursues financial recoveries from insurance providers and indemnifying parties, it does not recognize any recoveries until realized or until such time as a sustained pattern of collections is established related to historical matters of a similar nature and magnitude. If the Company’s self-insurance and litigation reserves prove inadequate, it would be required to incur an expense equal to the amount of the loss incurred in excess of the reserves, which would adversely affect the Company’s Consolidated Financial Statements.

In addition, the Company’s operations, products and services are subject to numerous U.S. federal, state, local and non-U.S. environmental, health and safety laws and regulations concerning, among other things, the health and safety of our employees, the generation, storage, use and transportation of hazardous materials, emissions or discharges of substances into the environment, investigation and remediation of hazardous substances or materials at various sites, chemical constituents in products and end-of-life disposal and take-back programs for products sold. A number of the Company’s operations involve the handling, manufacturing, use or sale of substances that are or could be classified as hazardous materials within the meaning of applicable laws. Compliance with these laws and regulations has not had and, based on current information and the applicable laws and regulations currently in effect, is not expected to have a material effect on the Company’s capital expenditures, earnings or competitive position, and the Company does not anticipate material capital expenditures for environmental control facilities.

In addition to environmental compliance costs, the Company from time to time incurs costs related to remedial efforts or alleged environmental damage associated with past or current waste disposal practices or other hazardous materials handling practices. For example, generators of hazardous substances found in disposal sites at which environmental problems are alleged to exist, as well as the current and former owners of those sites and certain other classes of persons, are subject to claims brought by state and federal regulatory agencies pursuant to statutory authority. The Company has received notification from the U.S. Environmental Protection Agency, and from state and non-U.S. environmental agencies, that conditions at certain sites where the Company and others previously disposed of hazardous wastes and/or are or were property owners require clean-up and other possible remedial action, including sites where the Company has been identified as a potentially responsible party under U.S. federal and state environmental laws. The Company has projects underway at a number of current and former facilities, in both the United States and abroad, to investigate and remediate environmental contamination resulting from past operations. Remediation activities generally relate to soil and/or groundwater contamination and may include pre-remedial activities such as fact-finding and investigation, risk assessment, feasibility study and/or design, as well as remediation actions such as contaminant removal, monitoring and/or installation, operation and maintenance of longer-term remediation systems. The Company is also from time to time party to personal injury, property damage or other claims brought by private parties

alleging injury or damage due to the presence of, or exposure to, hazardous substances. The Company can also become subject to additional remedial, compliance or personal injury costs due to future events such as changes in existing laws or regulations, changes in agency direction or enforcement policies, developments in remediation technologies, changes in the conduct of the Company’s operations and changes in accounting rules.

The Company has recorded a provision for environmental investigation and remediation and environmental-related claims with respect to sites owned or formerly owned by the Company and its subsidiaries and third-party sites where the Company has been determined to be a potentially responsible party. The Company generally makes an assessment of the costs involved for its remediation efforts based on environmental studies, as well as its prior experience with similar sites. The ultimate cost of site cleanup is difficult to predict given the uncertainties of the Company’s involvement in certain sites, uncertainties regarding the extent of the required cleanup, the availability of alternative cleanup methods, variations in the interpretation of applicable laws and regulations, the possibility of insurance recoveries with respect to certain sites and the fact that imposition of joint and several liability with right of contribution is possible under the Comprehensive Environmental Response, Compensation and Liability Act of 1980 and other environmental laws and regulations. If the Company determines that potential liability for a particular site or with respect to a personal injury claim is known or considered probable and reasonably estimable, the Company accrues the total estimated loss, including investigation and remediation costs, associated with the site or claim. As of December 31, 2020, the Company had a reserve of $194 million for environmental matters which are known or considered probable and reasonably estimable (of which $124 million are noncurrent), which reflects the Company’s best estimate of the costs to be incurred with respect to such matters.

While the Company actively pursues insurance recoveries, as well as recoveries from other potentially responsible parties, it does not recognize any insurance recoveries for environmental liability claims until realized or until such time as a sustained pattern of collections is established related to historical matters of a similar nature and magnitude.

The Company’s Restated Certificate of Incorporation requires it to indemnify to the full extent authorized or permitted by law any person made, or threatened to be made a party to any action or proceeding by reason of his or her service as a director or officer of the Company, or by reason of serving at the request of the Company as a director or officer of any other entity, subject to limited exceptions. Danaher’s Amended and Restated By-laws provide for similar indemnification rights. In addition, Danaher has executed with each director and executive officer of Danaher Corporation an indemnification agreement which provides for substantially similar indemnification rights and under which Danaher has agreed to pay expenses in advance of the final disposition of any such indemnifiable proceeding. While the Company maintains insurance for this type of liability, a significant deductible applies to this coverage and any such liability could exceed the amount of the insurance coverage.

As of December 31, 2020, the Company had approximately $724 million of guarantees consisting primarily of outstanding standby letters of credit, bank guarantees and performance and bid bonds. These guarantees have been provided in connection with certain arrangements with vendors, customers, insurance providers, financing counterparties and governmental entities to secure the Company’s obligations and/or performance requirements related to specific transactions. The Company believes that if the obligations under these instruments were triggered, it would not have a material effect on its Consolidated Financial Statements.

NOTE 19. STOCK TRANSACTIONS AND STOCK-BASED COMPENSATION

On July 16, 2013, the Company’s Board of Directors approved a repurchase program (the “Repurchase Program”) authorizing the repurchase of up to 20 million shares of the Company’s common stock from time to time on the open market or in privately negotiated transactions. There is no expiration date for the Repurchase Program, and the timing and amount of any shares repurchased under the program will be determined by the Company’s management based on its evaluation of market conditions and other factors. The Repurchase Program may be suspended or discontinued at any time. Any repurchased shares will be available for use in connection with the Company’s equity compensation plans (or any successor plan) and for other corporate purposes. As of December 31, 2020, 20 million shares remained available for repurchase pursuant to the Repurchase Program. The Company expects to fund any future stock repurchases using the Company’s available cash balances or proceeds from the issuance of debt.

Except in connection with the Envista Split-Off in 2019, neither the Company nor any “affiliated purchaser” repurchased any shares of Company common stock during 2020, 2019 or 2018. Refer to Note 4 for discussion of the 22.9 million shares of Danaher common stock tendered to and repurchased by the Company in connection with the Envista Split-Off.

The following table summarizes the Company’s share activity for the years ended December 31 (shares in millions):

			2020						2019						2018
Preferred stock - shares issued:
Balance, beginning of period			1.7						—						—
Issuance of MCPS			1.7						1.7						—
Balance, end of period			3.4						1.7						—
Common stock - shares issued:
Balance, beginning of period			835.5						817.9						812.5
Common stock-based award activity			4.5						4.6						4.6
Common stock issued in connection with acquisitions			—						—						0.2
Common stock issued in connection with LYONs’ conversions			0.4						0.9						0.6
Issuance of common stock			10.9						12.1						—
Balance, end of period			851.3						835.5						817.9

In May 2020, the Company completed the underwritten public offering of 10.9 million shares of Danaher common stock at a price to the public of $163.00 per share (the “2020 Common Stock Offering”), resulting in net proceeds of approximately $1.73 billion, after deducting expenses and the underwriters’ discount of $54 million. Simultaneously, the Company completed the underwritten public offering of 1.72 million shares of its 5.0% Series B Mandatory Convertible Preferred Stock (“MCPS Series B”), without par value and with a liquidation preference of $1,000 per share (the “2020 MCPS Offering”), resulting in net proceeds of approximately $1.67 billion, after deducting expenses and the underwriters’ discount of $49 million. The Company has used and intends to use the net proceeds from the 2020 Common Stock Offering and the 2020 MCPS Offering for general corporate purposes and pending such use has invested the net proceeds in short-term bank deposits and/or interest-bearing, investment-grade securities.

On March 1, 2019, the Company completed the underwritten public offering of 12.1 million shares of Danaher common stock at a price to the public of $123.00 per share (the “2019 Common Stock Offering”), resulting in net proceeds of approximately $1.4 billion, after deducting expenses and the underwriters’ discount of $45 million. Simultaneously, the Company completed the underwritten public offering of 1.65 million shares of its 4.75% MCPS Series A, without par value and with a liquidation preference of $1,000 per share (the “2019 MCPS Offering”), resulting in net proceeds of approximately $1.6 billion, after deducting expenses and the underwriters’ discount of $50 million. The Company used the net proceeds from the 2019 Common Stock Offering and the 2019 MCPS Offering to fund a portion of the cash consideration payable for, and certain costs associated with, the Cytiva Acquisition. Prior to the completion of the Cytiva Acquisition, the Company invested the net proceeds in short-term bank deposits and/or interest-bearing, investment-grade securities.

Unless converted earlier in accordance with the terms of the applicable certificate of designations, each share of MCPS Series A and MCPS Series B (together, the “MCPS Shares”) will mandatorily convert on their respective Mandatory Conversion Date, set forth below, into a number of shares of the Company’s common stock between the applicable Minimum Conversion Rate and the applicable Maximum Conversion Rate, set forth below, subject to further anti-dilution adjustments. The number of shares of the Company’s common stock issuable upon conversion will be determined based on the average volume-weighted average price per share of the Company’s common stock over the 20 consecutive trading day period beginning on, and including, the 21st scheduled trading day immediately before the applicable Mandatory Conversion Date. Subject to certain exceptions, at any time prior to the Mandatory Conversion Date, holders may elect to convert the MCPS Shares into common stock based on the applicable Minimum Conversion Rate, subject to further anti-dilution adjustments. In the event of a fundamental change, the MCPS Shares will convert at the fundamental change rates specified in the applicable certificate of designations, and the holders of MCPS Shares would be entitled to a fundamental change make-whole dividend. In 2020, holders converted 20 shares of MCPS Series A into 132 shares of Danaher common stock.

Holders of MCPS Shares will be entitled to receive, when and if declared by the Company’s Board of Directors, cumulative dividends at the applicable Annual Cumulative Dividend Rate of the Liquidation Preference per share, payable in cash or, subject to certain limitations, by delivery of shares of the Company’s common stock or any combination of cash and shares of the Company’s common stock, at the Company’s election. If declared, dividends on the MCPS Shares are payable quarterly on January 15, April 15, July 15 and October 15 of each year (to, and including, the Mandatory Conversion Date), to the holders of record of the MCPS Shares as they appear on the Company’s stock register at the close of business on the immediately preceding December 31, March 31, June 30 and September 30, respectively.

The following summarizes the key terms of the MCPS Shares as of December 31, 2020:

			Annual Cumulative Dividend Rate						Liquidation Preference per Share						Minimum Conversion Rate						Maximum Conversion Rate						Mandatory Conversion Date
Series A			4.75		%				$	1,000					6.6563 shares						8.1538 shares						April 15, 2022
Series B			5.00		%				$	1,000					5.0081 shares						6.1349 shares						April 15, 2023

Stock options, RSUs and PSUs have been issued to directors, officers and other employees under the Company’s 2007 Omnibus Incentive Plan. In addition, in connection with the 2015 acquisition of Pall Corporation and the 2016 acquisition of Cepheid, the Company assumed certain outstanding stock options and RSUs, as applicable, that had been awarded under the stock compensation plans of the respective acquiree (the “Assumed Plans”). The Assumed Plans operate in a similar manner to the Company’s 2007 Omnibus Incentive Plan, and no further equity awards will be issued under the Assumed Plans. The 2007 Omnibus Incentive Plan provides for the grant of stock options, stock appreciation rights, RSUs, restricted stock, PSUs or any other stock-based award and cash-based awards. A total of approximately 127 million shares of Danaher common stock have been authorized for issuance under the 2007 Omnibus Incentive Plan. As of December 31, 2020, approximately 54 million shares of the Company’s common stock remain available for issuance under the 2007 Omnibus Incentive Plan.

Stock options granted under the 2007 Omnibus Incentive Plan generally vest pro rata over a five-year period and terminate ten years from the grant date, though the specific terms of each grant are determined by the Compensation Committee of the Company’s Board (the “Compensation Committee”). The Company’s executive officers and certain other employees have been awarded options with different vesting criteria, and options granted to outside directors are fully vested as of the grant date. Option exercise prices for options granted by the Company equal the closing price of the Company’s common stock on the NYSE on the date of grant. In connection with the Company’s assumption of options issued pursuant to the Assumed Plans, the number of shares underlying each option and exercise price of each option were adjusted to reflect the substitution of the Company’s stock for the stock of the applicable acquired company.

RSUs issued under the 2007 Omnibus Incentive Plan provide for the issuance of a share of the Company’s common stock at no cost to the holder. The RSUs that have been granted to employees under the 2007 Omnibus Incentive Plan generally provide for time-based vesting over a five-year period, although executive officers and certain other employees have been awarded RSUs with different time-based vesting criteria, and RSUs previously granted to members of the Company’s senior management have also been subject to performance-based vesting criteria. The RSUs that have been granted to directors under the 2007 Omnibus Incentive Plan vest on the earlier of the first anniversary of the grant date or the date of, and immediately prior to, the next annual meeting of the Company’s shareholders following the grant date, but the underlying shares are not issued until the earlier of the director’s death or the first day of the seventh month following the director’s retirement from the Board. Prior to vesting, RSUs granted under the 2007 Omnibus Incentive Plan do not have dividend equivalent rights, do not have voting rights and the shares underlying the RSUs are not considered issued and outstanding. With respect to RSUs granted under the Assumed Plan, in connection with the Company’s assumption of these RSUs the number of shares underlying each RSU were adjusted to reflect the substitution of the Company’s stock for the stock of the applicable acquired company, and certain of these RSUs have dividend equivalent rights.

PSUs issued under the 2007 Omnibus Incentive Plan provide for the issuance of a share of the Company’s common stock at no cost to the holder, vest based on specified performance criteria, are subject to an additional holding period and are entitled to dividend equivalent rights. The PSU dividend equivalent rights are subject to the same vesting and payment restrictions as the related shares, and the shares underlying the PSU’s are not considered issued and outstanding.

In connection with the Envista Disposition, Envista adopted a stock-based compensation plan, which provided for stock-based awards denominated in shares of Envista common stock. Envista employees who participated in the Danaher stock compensation program prior to the Separation continued to participate in such program solely with respect to outstanding compensation awards received prior to the Separation, until the Split-Off (at which time such awards were terminated and replaced with awards denominated in Envista common stock under the Envista stock compensation plan). Stock-based compensation expense for Envista is included in results from discontinued operations.

The equity compensation awards granted by the Company generally vest only if the employee is employed by the Company (or in the case of directors, the director continues to serve on the Company Board) on the vesting date or in other limited circumstances. To cover the exercise of options and vesting of RSUs and PSUs, the Company generally issues new shares from its authorized but unissued share pool, although it may instead issue treasury shares in certain circumstances.

The Company accounts for stock-based compensation by measuring the cost of employee services received in exchange for all equity awards granted based on the fair value of the award as of the grant date. The Company recognizes the compensation expense over the requisite service period (which is generally the vesting period but may be shorter than the vesting period if the

employee becomes retirement eligible before the end of the vesting period). The fair value for RSU awards was calculated using the closing price of the Company’s common stock on the date of grant, adjusted for the fact that RSUs (other than certain RSUs granted under the Assumed Plans) do not accrue dividends. The fair value of the PSU awards was calculated using a Monte Carlo pricing model. The fair value of the options granted was calculated using a Black-Scholes Merton option pricing model (“Black-Scholes”).

The following summarizes the assumptions used in the Black-Scholes model to value options granted during the years ended December 31:

			2020						2019						2018
Risk-free interest rate			0.3 – 1.3%						1.7 – 2.6%						2.6 – 3.1%
Weighted average volatility			24.3		%				20.4		%				21.4		%
Dividend yield			0.4		%				0.5		%				0.6		%
Expected years until exercise			5.0 – 8.0						5.0 – 8.0						5.0 – 8.0

The Black-Scholes model incorporates assumptions to value stock-based awards. The risk-free rate of interest for periods within the contractual life of the option is based on a zero-coupon U.S. government instrument whose maturity period equals or approximates the option’s expected term. Expected volatility is based on implied volatility from traded options on the Company’s stock and historical volatility of the Company’s stock. The dividend yield is calculated by dividing the Company’s annual common stock dividend, based on the most recent quarterly dividend rate, by the closing stock price on the grant date. To estimate the option exercise timing used in the valuation model (which impacts the risk-free interest rate and the expected years until exercise), in addition to considering the vesting period and contractual term of the option, the Company analyzes and considers actual historical exercise experience for previously granted options. The Company stratifies its employee population into multiple groups for option valuation and attribution purposes based upon distinctive patterns of forfeiture rates and option holding periods, as indicated by the ranges set forth in the table above for the risk-free interest rate and the expected years until exercise.

The amount of stock-based compensation expense recognized during a period is also based on the portion of the awards that are ultimately expected to vest. The Company estimates pre-vesting forfeitures at the time of grant by analyzing historical data and revises those estimates in subsequent periods if actual forfeitures differ from those estimates. Ultimately, the total expense recognized over the vesting period will equal the fair value of awards that actually vest.

The following summarizes the components of the Company’s continuing operations stock-based compensation expense for the years ended December 31 ($ in millions):

			2020						2019						2018
RSUs/PSUs:
Pretax compensation expense			$	114					$	97					$	86
Income tax benefit			(24)						(20)						(17)
RSU/PSU expense, net of income taxes			90						77						69
Stock options:
Pretax compensation expense			73						62						52
Income tax benefit			(15)						(13)						(11)
Stock option expense, net of income taxes			58						49						41
Total stock-based compensation:
Pretax compensation expense			187						159						138
Income tax benefit			(39)						(33)						(28)
Total stock-based compensation expense, net of income taxes			$	148					$	126					$	110

Stock-based compensation has been recognized as a component of selling, general and administrative expenses in the accompanying Consolidated Statements of Earnings. As of December 31, 2020, $168 million of total unrecognized compensation cost related to RSUs/PSUs is expected to be recognized over a weighted average period of approximately two years. As of December 31, 2020, $167 million of total unrecognized compensation cost related to stock options is expected to be recognized over a weighted average period of approximately three years. Future compensation amounts will be adjusted for any changes in estimated forfeitures.

The following summarizes option activity under the Company’s stock plans (in millions, except weighted exercise price and number of years):

			Options						Weighted Average Exercise Price						Weighted Average Remaining Contractual Term (in years)						Aggregate Intrinsic Value
Outstanding as of January 1, 2018			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
Granted			4.3						117.32
Exercised			(3.5)						53.02
Cancelled/forfeited			(0.9)						98.98
Adjustment due to Envista Split-Off (a)			(1.5)						91.65
Outstanding as of December 31, 2019			17.0						82.95
Granted			2.9						160.71
Exercised			(3.5)						62.54
Cancelled/forfeited			(0.5)						113.94
Outstanding as of December 31, 2020			15.9						100.65						7						$	1,931
Vested and expected to vest as of December 31, 2020 (b)			15.4						$	99.61					7						$	1,887
Vested as of December 31, 2020			6.3						$	74.00					5						$	940

(a) The “Adjustment due to Envista Split-Off” reflects the cancellation of options which were outstanding as of December 18, 2019 and held by Envista employees, which have been terminated and replaced by Envista equity awards as part of the Envista Split-Off.

(b) The “expected to vest” options are the net unvested options that remain after applying the forfeiture rate assumption to total unvested options.

The aggregate intrinsic value in the table above represents the total pretax intrinsic value (the difference between the Company’s closing stock price on the last trading day of 2020 and the exercise price, multiplied by the number of in-the-money options) that would have been received by the option holders had all option holders exercised their options on December 31, 2020. The amount of aggregate intrinsic value will change based on the price of the Company’s common stock.

Options outstanding as of December 31, 2020 are summarized below (in millions, except price per share and number of years):

			Outstanding																		Exercisable
Exercise Price			Shares						Average Exercise Price						Average Remaining Life (in years)						Shares						Average Exercise Price
$36.87 to $52.96			1.0						$	43.97					2						1.0						$	43.96
$52.97 to $66.70			2.7						63.94						4						2.1						63.41
$66.71 to $99.32			3.7						82.40						6						2.0						78.94
$99.33 to $131.04			5.2						106.64						8						1.1						104.20
$131.05 to $234.68			3.3						156.93						9						0.1						139.44

The aggregate intrinsic value of options exercised during the years ended December 31, 2020, 2019 and 2018 was $415 million, $266 million and $202 million, respectively. Exercise of options during the years ended December 31, 2020, 2019 and 2018 resulted in cash receipts of $211 million, $179 million and $133 million, respectively. Upon exercise of the award by the employee, the Company derives a tax deduction measured by the excess of the market value over the grant price at the date of exercise. The Company realized a tax benefit of $82 million, $51 million and $40 million in 2020, 2019 and 2018, respectively, related to the exercise of employee stock options.

The following summarizes information on unvested RSU and PSU activity (in millions, except weighted average grant-date fair value):

			Number of RSUs/PSUs						Weighted Average Grant-Date Fair Value
Unvested as of January 1, 2018			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
Granted			1.4						115.38
Vested			(1.1)						75.51
Forfeited			(0.3)						92.82
Adjustment due to Envista Split-Off (a)			(0.4)						98.18
Unvested as of December 31, 2019			3.5						94.85
Granted			1.1						159.93
Vested			(1.0)						91.08
Forfeited			(0.2)						111.59
Unvested as of December 31, 2020			3.4						116.03

(a) The “Adjustment due to Envista Split-Off” reflects the cancellation of RSUs and PSUs which were outstanding as of December 18, 2019 and held by Envista employees which have been terminated and replaced by Envista equity awards as part of the Envista Split-Off.

The Company realized a tax benefit of $18 million, $25 million and $17 million in the years ended December 31, 2020, 2019 and 2018, respectively, related to the vesting of RSUs.

The excess tax benefit of $85 million, $55 million and $38 million related to the exercise of employee stock options and vesting of RSUs for the years ended December 31, 2020, 2019 and 2018, respectively, has been recorded as a reduction to the current income tax provision and is reflected as an operating cash inflow in the accompanying Consolidated Statements of Cash Flows.

In connection with the exercise of certain stock options and the vesting of RSUs previously issued by the Company, a number of shares sufficient to fund statutory minimum tax withholding requirements has been withheld from the total shares issued or released to the award holder (though under the terms of the applicable plan, the shares are considered to have been issued and are not added back to the pool of shares available for grant). During the year ended December 31, 2020, 352 thousand shares with an aggregate value of $58 million were withheld to satisfy the requirement. During the year ended December 31, 2019, 402 thousand shares with an aggregate value of $49 million were withheld to satisfy the requirement. The withholding is treated as a reduction in additional paid-in capital in the accompanying Consolidated Statements of Stockholders’ Equity and a reduction in proceeds from the issuance of common stock in connection with stock-based compensation in the Consolidated Statements of Cash Flows.

NOTE 20. NET EARNINGS PER COMMON SHARE FROM CONTINUING OPERATIONS

Basic net earnings per share (“EPS”) from continuing operations is calculated by taking net earnings from continuing operations less the MCPS dividends divided by the weighted average number of common shares outstanding for the applicable period. Diluted net EPS from continuing operations is computed by taking net earnings from continuing operations plus the interest on the Company’s LYONs less the MCPS dividends divided by the weighted average number of common shares outstanding increased by the number of additional shares that would have been outstanding had the potentially dilutive common shares been issued and reduced by the number of shares the Company could have repurchased with the proceeds from the issuance of the potentially dilutive shares. For the years ended December 31, 2020 and 2018, 1 million options to purchase shares were not included in the diluted earnings per share calculation as the impact of their inclusion would have been anti-dilutive. For the year ended December 31, 2019, no options to purchase shares were excluded from the diluted earnings per share calculation. Basic and diluted EPS are computed independently for each quarter and annual period, which involves the use of different weighted-average share count figures relating to quarterly and annual periods. As a result, and after factoring the effect of rounding to the nearest cent per share, the sum of prior quarter-to-date EPS figures may not equal annual EPS.

The impact of the MCPS calculated under the if-converted method was anti-dilutive, and as such 17 million and 10 million shares underlying the MCPS (assuming a conversion ratio based on the December 31, 2020 and 2019 share prices, respectively) were excluded from the diluted EPS calculation for the years ended December 31, 2020 and 2019, respectively.

Information related to the calculation of net earnings from continuing operations per share of common stock for the years ended December 31 is summarized as follows ($ and shares in millions, except per share amounts):

			2020						2019						2018
Numerator:
Net earnings from continuing operations			$	3,646					$	2,432					$	2,406
MCPS dividends			(136)						(68)						—
Net earnings from continuing operations attributable to common stockholders for Basic EPS			3,510						2,364						2,406
Adjustment for interest on convertible debentures			1						2						2
Net earnings from continuing operations attributable to common stockholders after assumed conversions for Diluted EPS			$	3,511					$	2,366					$	2,408
Denominator:
Weighted average common shares outstanding used in Basic EPS			706.2						715.0						700.6
Incremental common shares from:
Assumed exercise of dilutive options and vesting of dilutive RSUs and PSUs			11.4						8.9						7.2
Assumed conversion of the convertible debentures			1.1						1.6						2.4
Weighted average common shares outstanding used in Diluted EPS			718.7						725.5						710.2
Basic EPS from continuing operations			$	4.97					$	3.31					$	3.43
Diluted EPS from continuing operations			$	4.89					$	3.26					$	3.39

NOTE 21. SEGMENT INFORMATION

The Company operates and reports its results in three separate business segments consisting of the Life Sciences, Diagnostics and Environmental & Applied Solutions segments. When determining the reportable segments, the Company aggregated operating segments based on their similar economic and operating characteristics. Operating profit represents total revenues less operating expenses, excluding nonoperating income and expense, interest and income taxes. Operating profit amounts in the Other segment consist of unallocated corporate costs and other costs not considered part of management’s evaluation of reportable segment operating performance. The identifiable assets by segment are those used in each segment’s operations. Intersegment amounts are not significant and are eliminated to arrive at consolidated totals.

Detailed segment data for the years ended December 31 is as follows ($ in millions):

			2020						2019						2018
Sales:
Life Sciences			$	10,576					$	6,951					$	6,471
Diagnostics			7,403						6,561						6,258
Environmental & Applied Solutions			4,305						4,399						4,320
Total			$	22,284					$	17,911					$	17,049
Operating profit:
Life Sciences			$	2,054					$	1,401					$	1,229
Diagnostics			1,538						1,134						1,074
Environmental & Applied Solutions			979						1,052						988
Other			(340)						(318)						(236)
Total			$	4,231					$	3,269					$	3,055
Identifiable assets:
Life Sciences			$	48,919					$	22,381					$	22,122
Diagnostics			15,042						14,442						14,031
Environmental & Applied Solutions			5,083						4,882						4,637
Other			7,117						20,377						1,201
Discontinued operations			—						—						5,842
Total			$	76,161					$	62,082					$	47,833
Depreciation and amortization:
Life Sciences			$	1,053					$	487					$	471
Diagnostics			602						582						589
Environmental & Applied Solutions			110						111						109
Other			10						9						9
Total			$	1,775					$	1,189					$	1,178
Capital expenditures, gross:
Life Sciences			$	306					$	143					$	140
Diagnostics			447						435						380
Environmental & Applied Solutions			36						54						57
Other			2						4						7
Total			$	791					$	636					$	584

Operations in Geographical Areas:

			Year Ended December 31
($ in millions)			2020						2019						2018
Sales:
United States			$	8,616					$	6,660					$	6,134
China			2,688						2,308						2,170
Germany			1,238						1,013						1,082
All other (each country individually less than 5% of total sales)			9,742						7,930						7,663
Total			$	22,284					$	17,911					$	17,049
Property, plant and equipment, net:
United States			$	1,317					$	1,077					$	1,081
Sweden			553						32						32
United Kingdom			214						163						157
Germany			207						163						169
All other (each country individually less than 5% of total property, plant and equipment, net)			971						867						811
Total			$	3,262					$	2,302					$	2,250

Sales by Major Product Group:

			Year Ended December 31
($ in millions)			2020						2019						2018
Analytical and physical instrumentation			$	2,443					$	2,464					$	2,437
Research and medical products			17,979						13,512						12,686
Product identification			1,862						1,935						1,926
Total			$	22,284					$	17,911					$	17,049