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Cover and table of contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
| ☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended March 28, 2025
OR
| ☐ | TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission File Number: 001-08089
DANAHER CORPORATION
(Exact name of registrant as specified in its charter)
| Delaware | 59-1995548 | ||||||||||
| (State of Incorporation) | (I.R.S. Employer Identification Number) | ||||||||||
| 2200 Pennsylvania Avenue, N.W., Suite 800W | 20037-1701 | ||||||||||
| Washington, | DC | ||||||||||
| (Address of Principal Executive Offices) | (Zip Code) |
Registrant’s telephone number, including area code: 202-828-0850
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||
| Common stock, $0.01 par value | DHR | New York Stock Exchange | ||||||
| 0.200% Senior Notes due 2026 | DHR/26 | New York Stock Exchange | ||||||
| 2.100% Senior Notes due 2026 | DHR 26 | New York Stock Exchange | ||||||
| 1.200% Senior Notes due 2027 | DHR/27 | New York Stock Exchange | ||||||
| 0.450% Senior Notes due 2028 | DHR/28 | New York Stock Exchange | ||||||
| 2.500% Senior Notes due 2030 | DHR 30 | New York Stock Exchange | ||||||
| 0.750% Senior Notes due 2031 | DHR/31 | New York Stock Exchange | ||||||
| 1.350% Senior Notes due 2039 | DHR/39 | New York Stock Exchange | ||||||
| 1.800% Senior Notes due 2049 | DHR/49 | New York Stock Exchange |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large Accelerated Filer | ☒ | Accelerated Filer | ☐ | |||||||||||||||||
| Non-accelerated Filer | ☐ | Smaller Reporting Company | ☐ | |||||||||||||||||
| Emerging Growth Company | ☐ |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act) Yes ☐ No ☒
The number of shares of common stock outstanding at April 16, 2025 was 715,669,594.
DANAHER CORPORATION
INDEX
FORM 10-Q
DANAHER CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
($ in millions, except per share amount)
(unaudited)
| March 28, 2025 | December 31, 2024 | ||||||||||
| ASSETS | |||||||||||
| Current assets: | |||||||||||
| Cash and equivalents | $ | 1,993 | $ | 2,078 | |||||||
| Trade accounts receivable, less allowance for doubtful accounts of $115 and $113, respectively | 3,506 | 3,537 | |||||||||
| Inventories: | |||||||||||
| Finished goods | 1,272 | 1,145 | |||||||||
| Work in process | 517 | 465 | |||||||||
| Raw materials | 743 | 720 | |||||||||
| Total inventories | 2,532 | 2,330 | |||||||||
| Prepaid expenses and other current assets | 1,494 | 1,552 | |||||||||
| Total current assets | 9,525 | 9,497 | |||||||||
| Property, plant and equipment, net of accumulated depreciation of $4,309 and $4,101, respectively | 5,110 | 4,990 | |||||||||
| Other long-term assets | 3,939 | 3,990 | |||||||||
| Goodwill | 41,657 | 40,497 | |||||||||
| Other intangible assets, net | 18,885 | 18,568 | |||||||||
| Total assets | $ | 79,116 | $ | 77,542 | |||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||||||
| Current liabilities: | |||||||||||
| Notes payable and current portion of long-term debt | $ | 501 | $ | 505 | |||||||
| Trade accounts payable | 1,722 | 1,753 | |||||||||
| Accrued expenses and other liabilities | 4,422 | 4,540 | |||||||||
| Total current liabilities | 6,645 | 6,798 | |||||||||
| Other long-term liabilities | 5,638 | 5,694 | |||||||||
| Long-term debt | 15,976 | 15,500 | |||||||||
| Stockholders’ equity: | |||||||||||
| Common stock - $0.01 par value, 2.0 billion shares authorized; 885.6 million issued and 715.6 million outstanding as of March 28, 2025; 884.3 million issued and 719.1 million outstanding as of December 31, 2024 | 9 | 9 | |||||||||
| Additional paid-in capital | 16,845 | 16,727 | |||||||||
| Treasury stock | (9,306) | (8,163) | |||||||||
| Retained earnings | 44,913 | 44,188 | |||||||||
| Accumulated other comprehensive income (loss) | (1,612) | (3,218) | |||||||||
| Total Danaher stockholders’ equity | 50,849 | 49,543 | |||||||||
| Noncontrolling interests | 8 | 7 | |||||||||
| Total stockholders’ equity | 50,857 | 49,550 | |||||||||
| Total liabilities and stockholders’ equity | $ | 79,116 | $ | 77,542 |
See the accompanying Notes to the Consolidated Condensed Financial Statements.
DANAHER CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS
($ and shares in millions, except per share amounts)
(unaudited)
| Three-Month Period Ended | ||||||||||||||||||||||||||||||||
| March 28, 2025 | March 29, 2024 | |||||||||||||||||||||||||||||||
| Sales | $ | 5,741 | $ | 5,796 | ||||||||||||||||||||||||||||
| Cost of sales | (2,230) | (2,309) | ||||||||||||||||||||||||||||||
| Gross profit | 3,511 | 3,487 | ||||||||||||||||||||||||||||||
| Operating costs: | ||||||||||||||||||||||||||||||||
| Selling, general and administrative expenses | (1,858) | (1,807) | ||||||||||||||||||||||||||||||
| Research and development expenses | (379) | (368) | ||||||||||||||||||||||||||||||
| Operating profit | 1,274 | 1,312 | ||||||||||||||||||||||||||||||
| Nonoperating income (expense): | ||||||||||||||||||||||||||||||||
| Other income (expense), net | (79) | (36) | ||||||||||||||||||||||||||||||
| Interest expense | (72) | (65) | ||||||||||||||||||||||||||||||
| Interest income | 6 | 60 | ||||||||||||||||||||||||||||||
| Earnings before income taxes | 1,129 | 1,271 | ||||||||||||||||||||||||||||||
| Income taxes | (175) | (183) | ||||||||||||||||||||||||||||||
| Net earnings | $ | 954 | $ | 1,088 | ||||||||||||||||||||||||||||
| Net earnings per common share: | ||||||||||||||||||||||||||||||||
| Basic | $ | 1.33 | $ | 1.47 | ||||||||||||||||||||||||||||
| Diluted | $ | 1.32 | $ | 1.45 | ||||||||||||||||||||||||||||
| Average common stock and common equivalent shares outstanding: | ||||||||||||||||||||||||||||||||
| Basic | 716.3 | 740.6 | ||||||||||||||||||||||||||||||
| Diluted | 720.8 | 748.6 |
See the accompanying Notes to the Consolidated Condensed Financial Statements.
DANAHER CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF COMPREHENSIVE INCOME
($ in millions)
(unaudited)
| Three-Month Period Ended | |||||||||||||||||||||||
| March 28, 2025 | March 29, 2024 | ||||||||||||||||||||||
| Net earnings | $ | 954 | $ | 1,088 | |||||||||||||||||||
| Other comprehensive income (loss), net of income taxes: | |||||||||||||||||||||||
| Foreign currency translation adjustments | 1,449 | (948) | |||||||||||||||||||||
| Pension and postretirement plan benefit adjustments | 1 | 2 | |||||||||||||||||||||
| Cash flow hedge adjustments | 156 | (50) | |||||||||||||||||||||
| Total other comprehensive income (loss), net of income taxes | 1,606 | (996) | |||||||||||||||||||||
| Comprehensive income | $ | 2,560 | $ | 92 |
See the accompanying Notes to the Consolidated Condensed Financial Statements.
DANAHER CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF STOCKHOLDERS’ EQUITY
($ in millions)
(unaudited)
| Three-Month Period Ended | |||||||||||||||||||||||
| March 28, 2025 | March 29, 2024 | ||||||||||||||||||||||
| Common stock: | |||||||||||||||||||||||
| Balance, beginning and end of period | $ | 9 | $ | 9 | |||||||||||||||||||
| Additional paid-in capital: | |||||||||||||||||||||||
| Balance, beginning of period | $ | 16,727 | $ | 16,170 | |||||||||||||||||||
| Common stock-based award activity | 118 | 144 | |||||||||||||||||||||
| Balance, end of period | $ | 16,845 | $ | 16,314 | |||||||||||||||||||
| Treasury stock: | |||||||||||||||||||||||
| Balance, beginning of period | $ | (8,163) | $ | (2,019) | |||||||||||||||||||
| Repurchase of common stock, including excise tax | (1,089) | — | |||||||||||||||||||||
| Common stock-based award activity | (54) | (80) | |||||||||||||||||||||
| Balance, end of period | $ | (9,306) | $ | (2,099) | |||||||||||||||||||
| Retained earnings: | |||||||||||||||||||||||
| Balance, beginning of period | $ | 44,188 | $ | 41,074 | |||||||||||||||||||
| Net earnings | 954 | 1,088 | |||||||||||||||||||||
| Common stock dividends declared | (229) | (200) | |||||||||||||||||||||
| Balance, end of period | $ | 44,913 | $ | 41,962 | |||||||||||||||||||
| Accumulated other comprehensive income (loss): | |||||||||||||||||||||||
| Balance, beginning of period | $ | (3,218) | $ | (1,748) | |||||||||||||||||||
| Other comprehensive income (loss) | 1,606 | (996) | |||||||||||||||||||||
| Balance, end of period | $ | (1,612) | $ | (2,744) | |||||||||||||||||||
| Noncontrolling interests: | |||||||||||||||||||||||
| Balance, beginning of period | $ | 7 | $ | 4 | |||||||||||||||||||
| Change in noncontrolling interests | 1 | 1 | |||||||||||||||||||||
| Balance, end of period | $ | 8 | $ | 5 | |||||||||||||||||||
| Total stockholders’ equity, end of period | $ | 50,857 | $ | 53,447 |
See the accompanying Notes to the Consolidated Condensed Financial Statements.
DANAHER CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
($ in millions)
(unaudited)
| Three-Month Period Ended | |||||||||||
| March 28, 2025 | March 29, 2024 | ||||||||||
| Cash flows from operating activities: | |||||||||||
| Net earnings | $ | 954 | $ | 1,088 | |||||||
| Noncash items: | |||||||||||
| Depreciation | 181 | 179 | |||||||||
| Amortization of intangible assets | 410 | 407 | |||||||||
| Amortization of acquisition-related inventory fair value step-up | — | 25 | |||||||||
| Stock-based compensation expense | 61 | 60 | |||||||||
| Pretax gain on sale of product line and investment losses | 81 | 37 | |||||||||
| Impairment charges | 15 | — | |||||||||
| Change in trade accounts receivable, net | 89 | 516 | |||||||||
| Change in inventories | (166) | (118) | |||||||||
| Change in trade accounts payable | (61) | (74) | |||||||||
| Change in prepaid expenses and other assets | (32) | (21) | |||||||||
| Change in accrued expenses and other liabilities | (233) | (360) | |||||||||
| Net cash provided by operating activities | 1,299 | 1,739 | |||||||||
| Cash flows from investing activities: | |||||||||||
| Payments for additions to property, plant and equipment | (245) | (291) | |||||||||
| Proceeds from sales of property, plant and equipment | 6 | — | |||||||||
| Payments for purchases of investments | (18) | (53) | |||||||||
| Proceeds from sales of investments | 5 | 9 | |||||||||
| Proceeds from sale of product line | 9 | — | |||||||||
| All other investing activities | 1 | 14 | |||||||||
| Total cash used in investing activities | (242) | (321) | |||||||||
| Cash flows from financing activities: | |||||||||||
| Payments for the issuance of common stock in connection with stock-based compensation, net | (5) | (1) | |||||||||
| Payment of dividends | (194) | (177) | |||||||||
| Net borrowings (maturities longer than 90 days) | 4 | — | |||||||||
| Net (repayments of) proceeds from borrowings (maturities of 90 days or less) | (3) | 68 | |||||||||
| Payments for repurchase of common stock | (1,078) | — | |||||||||
| All other financing activities | 21 | (23) | |||||||||
| Total cash used in financing activities | (1,255) | (133) | |||||||||
| Effect of exchange rate changes on cash and equivalents | 113 | (118) | |||||||||
| Net change in cash and equivalents | (85) | 1,167 | |||||||||
| Beginning balance of cash and equivalents | 2,078 | 5,864 | |||||||||
| Ending balance of cash and equivalents | $ | 1,993 | $ | 7,031 | |||||||
| Supplemental disclosures: | |||||||||||
| Cash interest payments | $ | 63 | $ | 42 | |||||||
| Cash income tax payments | 201 | 222 |
See the accompanying Notes to the Consolidated Condensed Financial Statements.
DANAHER CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(unaudited)
NOTE 1. GENERAL
The Consolidated Condensed Financial Statements included herein have been prepared by Danaher Corporation (“Danaher” or the “Company”) without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). In this quarterly report, the terms “Danaher” or the “Company” refer to Danaher Corporation, Danaher Corporation and its consolidated subsidiaries, or the consolidated subsidiaries of Danaher Corporation, as the context requires. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) have been condensed or omitted pursuant to SEC rules and regulations; however, the Company believes that the disclosures are adequate to make the information presented not misleading. The Consolidated Condensed Financial Statements included herein should be read in conjunction with the financial statements as of and for the year ended December 31, 2024 and the Notes thereto included in the Company’s 2024 Annual Report on Form 10-K filed on February 20, 2025 (the “2024 Annual Report”).
In the opinion of the Company, the accompanying financial statements contain all adjustments (consisting of only normal recurring accruals) necessary to present fairly the financial position of the Company as of March 28, 2025 and December 31, 2024, its results of operations for the three-month periods ended March 28, 2025 and March 29, 2024 and its cash flows for each of the three-month periods then ended.
There have been no changes to the Company’s significant accounting policies described in the Company’s 2024 Annual Report that have a material impact on the Company’s Consolidated Condensed Financial Statements and the related Notes. Reclassifications of certain prior year amounts have been made to conform to the current year presentation.
Accounting Standards Recently Adopted—In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-07, Improvements to Reportable Segment Disclosures. The ASU requires additional disclosures about reportable segments’ significant expenses on an interim and annual basis. The Company adopted the ASU effective January 1, 2024 on a retrospective basis. Refer to Note 5 for additional segment disclosures.
In December 2023, the FASB issued ASU 2023-09, Improvements to Income Tax Disclosures. The ASU expands disclosures in the income tax rate reconciliations table and cash taxes paid. The Company adopted the ASU effective January 1, 2025. This accounting standard will increase the tax disclosures in the Company’s annual reporting but will have no impact on reported income tax expense or related tax assets or liabilities.
Accounting Standards Not Yet Adopted—In November 2024, the FASB issued ASU 2024-03, Disaggregation of Income Statement Expenses. The ASU requires disclosure of disaggregated information about certain income statement expenses, including specific expense categories. The ASU is effective for annual periods beginning after December 15, 2026 and for interim periods within fiscal years beginning after December 15, 2027. The Company is assessing the impact of the ASU on the Company’s disclosures and expects that the standard will increase disclosures in the Company’s annual and interim reporting when adopted.
Prepaid Expenses and Other Current Assets—Prepaid expenses and other current assets primarily result from advance payments to vendors for goods and services which are capitalized until the related goods are received or services are performed and advance payments to tax authorities. The Company’s prepaid expenses and other current assets balances as of March 28, 2025 and December 31, 2024 are primarily comprised of prepaid expenses of $600 million and $620 million, respectively, and taxes receivable for income and other taxes of $808 million and $853 million, respectively.
Operating Leases—As of both March 28, 2025 and December 31, 2024, operating lease right-of-use assets where the Company was the lessee were approximately $1.1 billion and are included within other long-term assets in the accompanying Consolidated Condensed Balance Sheets. The associated operating lease liabilities were approximately $1.1 billion as of both March 28, 2025 and December 31, 2024 and are included in accrued expenses and other liabilities and other long-term liabilities in the accompanying Consolidated Condensed Balance Sheets.
Contingencies—The Company reviews the adequacy of its legal reserves on a quarterly basis and establishes reserves for loss contingencies that are both probable and reasonably estimable. For a further description of the Company’s litigation and contingencies, refer to Note 17 of the Company’s financial statements as of and for the year ended December 31, 2024 included in the Company’s 2024 Annual Report.
NOTE 2. ACQUISITIONS
For a description of the Company’s acquisition activity for the year ended December 31, 2024, reference is made to the financial statements as of and for the year ended December 31, 2024 and Note 2 thereto included in the Company’s 2024 Annual Report. There were no acquisitions during the three-month period ended March 28, 2025.
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 that have been accounted for as purchases and have resulted in the recognition of goodwill in the Company’s financial statements. This goodwill arises because the purchase prices for these businesses exceed the fair value of acquired identifiable net assets due to the purchase prices reflecting 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 earnings before interest, taxes, depreciation and amortization (“EBITDA”), revenue, revenue 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.
Pro Forma Financial Information
The unaudited pro forma information for the periods set forth below gives effect to the 2024 acquisitions as if they had occurred as of the beginning of the comparable prior annual reporting period, including the results from operations for the acquired businesses as well as the impact of assumed financing of the transaction and the impact of the purchase price allocation (including the amortization of acquired intangible assets). 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):
| Three-Month Period Ended | |||||||||||||||||||||||
| March 28, 2025 | March 29, 2024 | ||||||||||||||||||||||
| Sales | $ | 5,741 | $ | 5,812 | |||||||||||||||||||
| Net earnings | 954 | 1,105 | |||||||||||||||||||||
| Diluted net earnings per common share | 1.32 | 1.48 |
The three-month period ended March 29, 2024 unaudited pro forma net earnings were adjusted to exclude the pretax impact of a $25 million nonrecurring acquisition date fair value adjustment to inventory.
NOTE 3. NET EARNINGS PER COMMON SHARE
Basic net earnings per common share (“EPS”) is calculated by taking net earnings divided by the weighted average number of common shares outstanding for the applicable period. Diluted net EPS is computed by taking net earnings increased by the number of additional shares that would have been outstanding had the potentially dilutive common shares been issued and reduced by the number of shares the Company could have repurchased with the proceeds from the issuance of the potentially dilutive shares. For the three-month periods ended March 28, 2025 and March 29, 2024, approximately 5.3 million and 442 thousand options, respectively, to purchase shares were excluded from the diluted EPS calculation, as the impact of their inclusion would have been anti-dilutive.
Information related to the calculation of net earnings per common share is summarized as follows ($ and shares in millions, except per share amounts):
| Three-Month Period Ended | ||||||||||||||||||||||||||
| March 28, 2025 | March 29, 2024 | |||||||||||||||||||||||||
| Numerator: | ||||||||||||||||||||||||||
| Net earnings | $ | 954 | $ | 1,088 | ||||||||||||||||||||||
| Denominator: | ||||||||||||||||||||||||||
| Weighted average common shares outstanding used in Basic EPS | 716.3 | 740.6 | ||||||||||||||||||||||||
| Incremental common shares from: | ||||||||||||||||||||||||||
| Assumed exercise of dilutive options and vesting of dilutive restricted stock units (“RSUs”) and performance stock units (“PSUs”) | 4.5 | 8.0 | ||||||||||||||||||||||||
| Weighted average common shares outstanding used in Diluted EPS | 720.8 | 748.6 | ||||||||||||||||||||||||
| Basic EPS | $ | 1.33 | $ | 1.47 | ||||||||||||||||||||||
| Diluted EPS | $ | 1.32 | $ | 1.45 |
NOTE 4. REVENUE
The following tables present the Company’s revenues disaggregated by geographical region and revenue type for the three-month periods ended March 28, 2025 and March 29, 2024 ($ in millions). Sales taxes and other usage-based taxes collected from customers are excluded from revenue.
| Biotechnology | Life Sciences | Diagnostics | Total | ||||||||||||||||||||
| For the Three-Month Period Ended March 28, 2025: | |||||||||||||||||||||||
| Geographical region: | |||||||||||||||||||||||
| North America(a) | $ | 543 | $ | 721 | $ | 1,318 | $ | 2,582 | |||||||||||||||
| Western Europe | 566 | 378 | 400 | 1,344 | |||||||||||||||||||
| Other developed markets(b) | 64 | 123 | 91 | 278 | |||||||||||||||||||
| High-growth markets(c) | 439 | 458 | 640 | 1,537 | |||||||||||||||||||
| Total | $ | 1,612 | $ | 1,680 | $ | 2,449 | $ | 5,741 | |||||||||||||||
| Revenue type: | |||||||||||||||||||||||
| Recurring | $ | 1,457 | $ | 1,136 | $ | 2,223 | $ | 4,816 | |||||||||||||||
| Nonrecurring | 155 | 544 | 226 | 925 | |||||||||||||||||||
| Total | $ | 1,612 | $ | 1,680 | $ | 2,449 | $ | 5,741 | |||||||||||||||
| For the Three-Month Period Ended March 29, 2024: | |||||||||||||||||||||||
| Geographical region: | |||||||||||||||||||||||
| North America(a) | $ | 514 | $ | 781 | $ | 1,337 | $ | 2,632 | |||||||||||||||
| Western Europe | 546 | 372 | 406 | 1,324 | |||||||||||||||||||
| Other developed markets(b) | 79 | 125 | 99 | 303 | |||||||||||||||||||
| High-growth markets(c) | 385 | 467 | 685 | 1,537 | |||||||||||||||||||
| Total | $ | 1,524 | $ | 1,745 | $ | 2,527 | $ | 5,796 | |||||||||||||||
| Revenue type: | |||||||||||||||||||||||
| Recurring | $ | 1,309 | $ | 1,192 | $ | 2,294 | $ | 4,795 | |||||||||||||||
| Nonrecurring | 215 | 553 | 233 | 1,001 | |||||||||||||||||||
| Total | $ | 1,524 | $ | 1,745 | $ | 2,527 | $ | 5,796 |
(a) The Company defines North America as the United States and Canada.
(b) The Company defines other developed markets as all the markets of the world that are not North America, Western Europe or high-growth markets.
(c) The Company defines high-growth markets as developing markets of the world experiencing accelerated growth, over extended periods, in gross domestic product and infrastructure which include Eastern Europe, the Middle East, Africa, Latin America (including Mexico) 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.
The Company’s products and services primarily consist of life sciences research, biopharmaceutical drug production and medical diagnostic products and services. The Company sells equipment to customers as well as consumables, software 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, chromatography resins used for research and bioprocessing and filters used in filtration, separation and purification processes. Additionally, some of the Company’s consumables are used on a standalone basis, such as custom nucleic acids, genomics solutions, antibodies and immunoassays. 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 (both used with Company equipment and used on a standalone basis), services and operating-type leases (“OTLs”). Nonrecurring revenue includes sales of equipment and sales-type leases (“STLs”). OTLs and STLs are included in the above revenue amounts. For the three-month periods ended March 28, 2025 and March 29, 2024, lease revenue was $114 million and $99 million, respectively.
Remaining performance obligations related to Topic 606, Revenue from Contracts with Customers, 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. As of March 28, 2025, the aggregate amount of the transaction price allocated to remaining performance obligations was approximately $4.5 billion. The Company expects to recognize revenue on approximately 48% of the remaining performance obligations over the next 12 months, 26% over the subsequent 12 months, and the remainder recognized thereafter.
The timing of revenue recognition, billings and cash collections results in billed accounts receivable, unbilled receivables (“contract assets”) and deferred revenue, customer deposits and billings in excess of revenue recognized (“contract liabilities”) on the Consolidated Condensed Balance Sheets. Contract assets and liabilities are reported on a net basis (on a contract-by-contract basis) on the accompanying Consolidated Condensed Balance Sheets at the end of each reporting period.
The Company often receives cash payments from customers in advance of the Company’s performance resulting in contract liabilities that are classified as either current or long-term in the Consolidated Condensed Balance Sheets based on the timing of when the Company expects to recognize revenue. As of March 28, 2025 and December 31, 2024, contract liabilities were approximately $1.7 billion and $1.5 billion, respectively, and are included within accrued expenses and other liabilities and other long-term liabilities in the accompanying Consolidated Condensed Balance Sheets. The increase in the contract liability balance during the three-month period ended March 28, 2025 was primarily a result of cash payments received in advance of satisfying performance obligations, partially offset by amounts recognized as revenue. Revenue recognized during the three-month periods ended March 28, 2025 and March 29, 2024 that was included in the contract liability balance on December 31, 2024 and December 31, 2023 was $497 million and $547 million, respectively.
NOTE 5. SEGMENT INFORMATION
The Company operates and reports its results in three separate business segments consisting of the Biotechnology, Life Sciences and Diagnostics segments. Operating profit represents total revenues less operating expenses, excluding nonoperating income and expense, interest and income taxes. The identifiable assets by segment are those used in each segment’s operations. Intersegment amounts are not significant and are eliminated to arrive at consolidated totals.
The chief operating decision maker (“CODM”) uses segment sales and operating profit to allocate resources (including employees and financial or capital resources), predominantly through the annual budget process, to assess the performance of the segments and to evaluate the performance of certain employees for the determination of compensation. The CODM reviews forecast-to-actual variances in segment sales and operating profit on a monthly basis when making decisions about allocating capital and personnel to the segments.
The table below reconciles segment sales to segment operating profit with the expense categories presented reflecting the expenses that the Company has determined to be significant segment expenses. Significant segment expenses are the expense category details regularly provided to the CODM to allocate resources to the segments and to evaluate segment performance. Detailed segment data for the three-month periods ended March 28, 2025 and March 29, 2024 is as follows ($ in millions):
| Biotechnology | Life Sciences | Diagnostics | Other**(a)** | Total | |||||||||||||||||||||||||||||||||||||
| For the Three-Month Period Ended March 28, 2025: | |||||||||||||||||||||||||||||||||||||||||
| Sales | $ | 1,612 | $ | 1,680 | $ | 2,449 | $ | — | $ | 5,741 | |||||||||||||||||||||||||||||||
| Less: | |||||||||||||||||||||||||||||||||||||||||
| Depreciation | (34) | (45) | (100) | (2) | (181) | ||||||||||||||||||||||||||||||||||||
| Amortization of intangible assets | (213) | (149) | (48) | — | (410) | ||||||||||||||||||||||||||||||||||||
| Other segment expenses(b) | (924) | (1,285) | (1,583) | (84) | (3,876) | ||||||||||||||||||||||||||||||||||||
| Operating profit | $ | 441 | $ | 201 | $ | 718 | $ | (86) | $ | 1,274 | |||||||||||||||||||||||||||||||
| For the Three-Month Period Ended March 29, 2024: | |||||||||||||||||||||||||||||||||||||||||
| Sales | $ | 1,524 | $ | 1,745 | $ | 2,527 | $ | — | $ | 5,796 | |||||||||||||||||||||||||||||||
| Less: | |||||||||||||||||||||||||||||||||||||||||
| Depreciation | (42) | (38) | (97) | (2) | (179) | ||||||||||||||||||||||||||||||||||||
| Amortization of intangible assets | (218) | (141) | (48) | — | (407) | ||||||||||||||||||||||||||||||||||||
| Other segment expenses(b) | (939) | (1,331) | (1,552) | (76) | (3,898) | ||||||||||||||||||||||||||||||||||||
| Operating profit | $ | 325 | $ | 235 | $ | 830 | $ | (78) | $ | 1,312 |
(a) Other consists of unallocated corporate costs and other costs not considered part of management’s evaluation of reportable segment operating performance.
(b) Other segment expenses for each reportable segment include cost of sales, selling, general and administrative (“SG&A”) expenses, research and development (“R&D”) expenses, excluding in each case depreciation and amortization of intangible assets. Included within these categories of expenses are overhead expenses, stock compensation expense, restructuring charges and allocated corporate expenses.
The following table presents identifiable assets as of March 28, 2025 and December 31, 2024 ($ in millions):
| March 28, 2025 | December 31, 2024 | ||||||||||
| Identifiable assets: | |||||||||||
| Biotechnology | $ | 36,121 | $ | 34,605 | |||||||
| Life Sciences | 23,396 | 23,211 | |||||||||
| Diagnostics | 14,291 | 14,204 | |||||||||
| Other | 5,308 | 5,522 | |||||||||
| Total | $ | 79,116 | $ | 77,542 |
The following table presents capital expenditures for the three-month periods ended March 28, 2025 and March 29, 2024 ($ in millions):
| Three-Month Period Ended | |||||||||||||||||||||||
| March 28, 2025 | March 29, 2024 | ||||||||||||||||||||||
| Capital expenditures: | |||||||||||||||||||||||
| Biotechnology | $ | 81 | $ | 102 | |||||||||||||||||||
| Life Sciences | 48 | 60 | |||||||||||||||||||||
| Diagnostics | 115 | 127 | |||||||||||||||||||||
| Other | 1 | 2 | |||||||||||||||||||||
| Total | $ | 245 | $ | 291 |
NOTE 6. INCOME TAXES
The following table summarizes the Company’s effective tax rate:
| Three-Month Period Ended | |||||||||||||||||||||||
| March 28, 2025 | March 29, 2024 | ||||||||||||||||||||||
| Effective tax rate | 15.5 | % | 14.4 | % |
The Company operates globally, including in certain jurisdictions with lower tax rates than the United States (“U.S.”) federal statutory rate. Therefore, the impact of Danaher’s global operations and benefits from tax credits and incentives contributes to a lower effective tax rate compared to the U.S. federal statutory tax rate. For each period presented, the effective tax rate differs from the U.S. federal statutory rate of 21.0% principally due to the impact of the Company’s global operations, research tax credits, foreign-derived intangible income and aggregate net discrete benefits or charges.
For the three-month period ended March 28, 2025, net discrete tax benefits of $10 million reduced the effective tax rate by 0.9% and related primarily to changes in estimates of prior year tax filing positions, release of reserves for uncertain tax positions due to the expiration of statutes of limitation and excess tax benefits from stock-based compensation, net of charges related to changes in estimates associated with prior period uncertain tax positions.
For the three-month period ended March 29, 2024, net discrete tax benefits of $36 million reduced the effective tax rate by 2.8% and related primarily to excess tax benefits from stock-based compensation, release of reserves for uncertain tax positions due to the expiration of statutes of limitation and changes in estimates associated with prior period uncertain tax positions.
In the fourth quarter of 2022, the U.S. Internal Revenue Service (“IRS”) proposed significant adjustments to the Company’s taxable income for the years 2016 through 2018 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 proposed adjustments would have increased the Company’s taxable income over the 2016 through 2018 periods by approximately $2.5 billion. In the first quarter of 2023, the Company settled these proposed adjustments with the IRS, although the audit is still open with respect to other matters for the 2016 through 2018 period. The impact of the settlement with respect to the Company’s self-insurance policies was not material to the Company’s financial statements, including cash flows and the effective tax rate. As the settlement with the IRS was specific to the audit period, the settlement does not preclude the IRS from proposing similar adjustments to the Company’s self-insurance programs with respect to periods after 2018. Management believes the positions the Company has taken in its U.S. tax returns are in accordance with the relevant tax laws.
For a description of the Company’s significant tax matters, reference is made to the financial statements as of and for the year ended December 31, 2024 and Note 7 thereto included in the Company’s 2024 Annual Report.
NOTE 7. OTHER INCOME (EXPENSE), NET
The following sets forth the components of the Company’s other income (expense), net ($ in millions):
| Three-Month Period Ended | |||||||||||||||||||||||||||||||||||
| March 28, 2025 | March 29, 2024 | ||||||||||||||||||||||||||||||||||
| Other components of net periodic benefit costs | $ | 2 | $ | 1 | |||||||||||||||||||||||||||||||
| Investment gains (losses): | |||||||||||||||||||||||||||||||||||
| Realized investment gains (losses) | (66) | (39) | |||||||||||||||||||||||||||||||||
| Unrealized investment gains (losses) | (24) | 2 | |||||||||||||||||||||||||||||||||
| Total investment gains (losses) | (90) | (37) | |||||||||||||||||||||||||||||||||
| Gain on sale of product line | 9 | — | |||||||||||||||||||||||||||||||||
| Total other income (expense), net | $ | (79) | $ | (36) |
Other Components of Net Periodic Benefit Costs
The Company disaggregates the service cost component of net periodic benefit costs of noncontributory defined benefit pension plans and other postretirement employee benefit plans. The service cost component is presented in cost of goods sold and SG&A expenses. The other components of net periodic benefit costs are presented in other income (expense), net. These other components of net periodic benefit costs include the assumed rate of return on plan assets, partially offset by amortization of actuarial losses and interest.
Investment Gains (Losses)
For investments in equity 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 partnerships that invest primarily in early-stage companies. While the partnerships record these investments at fair value, the Company’s investments in the partnerships are accounted for under the equity method of accounting. The investment gains (losses) include realized and unrealized gains and losses related to changes in the fair value of the Company’s investments in equity securities and the Company’s equity in earnings of the partnerships that reflect the changes in fair value of the investments of the partnerships, and related management fees and operating expenses.
Gain on Sale of Product Line
During the three-month period ended March 28, 2025, the Company divested a product line for a cash purchase price of $9 million and recognized a pretax gain on sale of $9 million ($7 million after-tax). The divested product line generated revenues of approximately $50 million in the Diagnostics segment in 2024. The divestiture of this product line did not represent a strategic shift with a major effect on the Company’s operations and financial results and therefore is not reported as a discontinued operation.
NOTE 8. GOODWILL AND OTHER INTANGIBLE ASSETS
The following is a rollforward of the Company’s goodwill ($ in millions):
| Balance, December 31, 2024 | $ | 40,497 | |||
| Adjustments due to finalization of purchase price allocations | 3 | ||||
| Foreign currency translation and other | 1,157 | ||||
| Balance, March 28, 2025 | $ | 41,657 |
The carrying value of goodwill by segment is summarized as follows ($ in millions):
| March 28, 2025 | December 31, 2024 | ||||||||||
| Biotechnology | $ | 22,315 | $ | 21,437 | |||||||
| Life Sciences | 12,505 | 12,305 | |||||||||
| Diagnostics | 6,837 | 6,755 | |||||||||
| Total | $ | 41,657 | $ | 40,497 |
The Company has not identified any “triggering” events which indicate an impairment of goodwill in 2025. The Company has not identified any impairment triggers that resulted in impairments of intangible assets in the first quarter of 2025. The Company will continue to review goodwill and other intangible assets for impairment when events or changes in circumstances, including evolving market conditions and regulatory environment, indicate related carrying amounts may not be recoverable.
During the three-month period ended March 28, 2025, the Company recorded a $15 million impairment related to a facility in the Biotechnology segment.
NOTE 9. FAIR VALUE MEASUREMENTS
Accounting standards define fair value based on an exit price model, establish a framework for measuring fair value where the Company’s assets and liabilities are required to be carried at fair value and provide for certain disclosures related to the valuation methods used within a valuation hierarchy as established within the accounting standards. This hierarchy prioritizes the inputs into three broad levels as follows. Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2 inputs are quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets in markets that are not active, or other observable characteristics for the asset or liability, including interest rates, yield curves and credit risks, or inputs that are derived principally from, or corroborated by, observable market data through correlation. Level 3 inputs are unobservable inputs based on the Company’s assumptions. A financial asset or liability’s classification within the hierarchy is determined based on the lowest level input that is significant to the fair value measurement in its entirety.
A summary of financial assets that are measured at fair value on a recurring basis were as follows ($ in millions):
| Balance | Quoted Prices in Active Market (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | ||||||||||||||||||||||||||||||||||||||||||||
| March 28, 2025 | December 31, 2024 | March 28, 2025 | December 31, 2024 | March 28, 2025 | December 31, 2024 | March 28, 2025 | December 31, 2024 | ||||||||||||||||||||||||||||||||||||||||
| Assets: | |||||||||||||||||||||||||||||||||||||||||||||||
| Investment in equity securities | $ | 215 | $ | 218 | $ | — | $ | 3 | $ | — | $ | — | $ | — | $ | — | |||||||||||||||||||||||||||||||
| Cross-currency swap derivative contracts | 400 | 415 | — | — | 400 | 415 | — | — | |||||||||||||||||||||||||||||||||||||||
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 using 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 partnerships that invest primarily in early-stage companies. While the partnerships record these investments at fair value, the Company’s investments in the partnerships are accounted for under the equity method of accounting and are not subject to fair value measurement disclosures noted above. As of both March 28, 2025 and December 31, 2024, the Company’s equity method investments included investments in partnerships with a carrying value of approximately $1.4 billion. Refer to Note 7 for additional information on gains and losses on the Company’s investments including investments in the partnerships.
The cross-currency swap derivative contracts are classified as Level 2 in the fair value hierarchy as they are measured using the income approach with the relevant interest rates and current currency exchange rates and forward curves as inputs. Refer to Note 11 for additional information.
Fair Value of Other Financial Instruments
The carrying amounts and fair values of the Company’s other financial instruments were as follows ($ in millions):
| March 28, 2025 | December 31, 2024 | ||||||||||||||||||||||
| Carrying Amount | Fair Value | Carrying Amount | Fair Value | ||||||||||||||||||||
| Debt obligations: | |||||||||||||||||||||||
| Notes payable and current portion of long-term debt | $ | 501 | $ | 497 | $ | 505 | $ | 502 | |||||||||||||||
| Long-term debt | 15,976 | 13,498 | 15,500 | 13,109 |
As of March 28, 2025 and December 31, 2024, 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 is attributable to changes in market interest rates and/or the Company’s credit ratings subsequent to the incurrence of the borrowing. 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 generally approximate their carrying amounts due to the short-term maturities of these instruments.
NOTE 10. FINANCING
As of March 28, 2025, the Company was in compliance with all of its debt covenants. The components of the Company’s debt were as follows ($ in millions):
| Outstanding Amount | ||||||||||||||
| Description and Aggregate Principal Amount | March 28, 2025 | December 31, 2024 | ||||||||||||
| Euro-denominated commercial paper (€931 million)(e) | $ | 1,008 | $ | 965 | ||||||||||
| 3.35% senior unsecured notes due 9/15/2025 ($500 million) (the “2025 U.S. Notes”)(f) | 500 | 500 | ||||||||||||
| 0.2% senior unsecured notes due 3/18/2026 (€1.3 billion) (the “2026 Biopharma Euronotes”)(b) | 1,352 | 1,293 | ||||||||||||
| 2.1% senior unsecured notes due 9/30/2026 (€800 million) (the “2026 Euronotes”)(f) | 865 | 828 | ||||||||||||
| 0.3% senior unsecured notes due 5/11/2027 (¥30.8 billion) (the “2027 Yen Notes”)(d) | 205 | 195 | ||||||||||||
| 1.2% senior unsecured notes due 6/30/2027 (€600 million) (the “2027 Euronotes”)(a) | 648 | 620 | ||||||||||||
| 0.45% senior unsecured notes due 3/18/2028 (€1.3 billion) (the “2028 Biopharma Euronotes”)(b) | 1,349 | 1,291 | ||||||||||||
| 1.125% senior unsecured bonds due 12/08/2028 (CHF 210 million) (the “2028 CHF Bonds”)(c) | 240 | 233 | ||||||||||||
| 2.6% senior unsecured notes due 11/15/2029 ($800 million) (the “2029 Biopharma Notes”)(b) | 797 | 797 | ||||||||||||
| 2.5% senior unsecured notes due 3/30/2030 (€800 million) (the “2030 Euronotes”)(f) | 866 | 829 | ||||||||||||
| 0.75% senior unsecured notes due 9/18/2031 (€1.8 billion) (the “2031 Biopharma Euronotes”)(b) | 1,887 | 1,805 | ||||||||||||
| 0.65% senior unsecured notes due 5/11/2032 (¥53.2 billion) (the “2032 Yen Notes”)(d) | 354 | 337 | ||||||||||||
| 1.35% senior unsecured notes due 9/18/2039 (€1.3 billion) (the “2039 Biopharma Euronotes”)(b) | 1,340 | 1,282 | ||||||||||||
| 3.25% senior unsecured notes due 11/15/2039 ($900 million) (the “2039 Biopharma Notes”)(b) | 892 | 892 | ||||||||||||
| 4.375% senior unsecured notes due 9/15/2045 ($500 million) (the “2045 U.S. Notes”)(f) | 499 | 499 | ||||||||||||
| 1.8% senior unsecured notes due 9/18/2049 (€750 million) (the “2049 Biopharma Euronotes”)(b) | 804 | 769 | ||||||||||||
| 3.4% senior unsecured notes due 11/15/2049 ($900 million) (the “2049 Biopharma Notes”)(b) | 890 | 890 | ||||||||||||
| 2.6% senior unsecured notes due 10/01/2050 ($1.0 billion) (the “2050 U.S. Notes”)(f) | 982 | 982 | ||||||||||||
| 2.8% senior unsecured notes due 12/10/2051 ($1.0 billion) (the “2051 U.S. Notes”)(f) | 985 | 985 | ||||||||||||
| Other | 14 | 13 | ||||||||||||
| Total debt | 16,477 | 16,005 | ||||||||||||
| Less: currently payable | (501) | (505) | ||||||||||||
| Long-term debt | $ | 15,976 | $ | 15,500 |
(a) Issued by DH Europe Finance S.A. (“Danaher International”).
(b) Issued by DH Europe Finance II S.a.r.l. (“Danaher International II”).
(c) Issued by DH Switzerland Finance S.A. (“Danaher Switzerland”).
(d) Issued by DH Japan Finance S.A. (“Danaher Japan”).
(e) Issued by Danaher Corporation or Danaher International II.
(f) Issued by Danaher Corporation.
Debt discounts, premiums and debt issuance costs totaled $93 million and $96 million as of March 28, 2025 and December 31, 2024, respectively, and have been netted against the aggregate principal amounts of the related debt in the components of debt table above. For additional details regarding the Company’s debt financing, refer to Note 13 of the Company’s financial statements as of and for the year ended December 31, 2024 included in the Company’s 2024 Annual Report.
The Company has historically satisfied short-term liquidity needs that are not met through operating cash flow and available cash primarily through issuances of commercial paper under its U.S. dollar and euro-denominated commercial paper programs. The Company’s $5.0 billion unsecured, multi-year revolving credit facility with a syndicate of banks that expires on August 11, 2028 (the “Credit Facility”), is available for direct borrowings and provides credit support for the commercial paper programs. For a description of the Credit Facility, refer to the Company’s 2024 Annual Report. As of March 28, 2025, the Company has classified approximately $2.4 billion of its borrowings outstanding under the euro-denominated commercial paper programs and the 2026 Biopharma Euronotes as long-term debt in the accompanying Consolidated Condensed Balance Sheets (even though such borrowings are scheduled to mature within one year of March 28, 2025) as the Company had the intent and ability, as supported by availability under the Credit Facility, to refinance these borrowings for at least one year from the balance sheet date.
As of March 28, 2025, borrowings outstanding under the Company’s euro-denominated commercial paper program had a weighted average annual interest rate of 2.8% and a weighted average remaining maturity of approximately 42 days. There were no borrowings outstanding under the U.S. dollar-denominated commercial paper program as of March 28, 2025.
Guarantors of Debt
The Company has guaranteed long-term debt and commercial paper issued by certain of its wholly-owned finance subsidiaries: Danaher International, Danaher International II, Danaher Switzerland and Danaher Japan. 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.
NOTE 11. HEDGING TRANSACTIONS AND DERIVATIVE FINANCIAL INSTRUMENTS
The Company uses cross-currency swap derivative contracts to partially hedge its net investments in non-U.S. operations against adverse movements in exchange rates between the U.S. dollar and the Danish kroner, Japanese yen, euro and Swiss franc. These contracts are agreements to exchange fixed-rate payments in one currency for fixed-rate payments in another currency and effectively convert U.S. dollar-denominated bonds to obligations denominated in the hedged currency. 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) (“OCI”) in stockholders’ equity, partially offsetting the foreign currency translation adjustment of the Company’s related net investment that is also recorded in accumulated OCI. The interest income or expense from these swaps are recorded in interest expense in the accompanying Consolidated Condensed 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 December 2031.
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. 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 OCI and are subsequently reclassified to net earnings to offset the remeasurement of the hedged debt that is also recorded in net earnings. The interest income or expense from these swaps are recorded in interest expense in the accompanying Consolidated Condensed Statements of Earnings consistent with the classification of interest expense attributable to the underlying debt. These instruments mature on dates ranging from November 2029 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 debt issuances are designated and qualify as nonderivative hedging instruments. Accordingly, the foreign currency translation of these debt instruments is recorded in accumulated OCI, offsetting the foreign currency translation adjustment of the Company’s related net investment that is also recorded in accumulated OCI. These instruments mature on dates ranging from June 2025 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 debt the Company issued. These contracts effectively fixed the interest rate for a portion of the Company’s 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 and December 2021. The changes in the fair value of these instruments were recorded in accumulated OCI 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 March 28, 2025 and March 29, 2024 and pretax impact of changes in the fair values of instruments designated as net investment hedges and cash flow hedges in accumulated OCI for the three-month periods ended March 28, 2025 and March 29, 2024 ($ in millions):
| Original Notional Amount | Notional Amount Outstanding | Gain (Loss) Recognized in OCI | Amounts Reclassified from OCI | ||||||||||||||||||||
| For the Three-Month Period Ended March 28, 2025: | |||||||||||||||||||||||
| Net investment hedges: | |||||||||||||||||||||||
| Cross-currency contracts | $ | 3,875 | $ | 3,000 | $ | (54) | $ | — | |||||||||||||||
| Foreign currency denominated debt | 3,333 | 3,333 | (136) | — | |||||||||||||||||||
| Cash flow hedges: | |||||||||||||||||||||||
| Cross-currency contracts | 4,000 | 2,600 | 39 | 116 | |||||||||||||||||||
| Interest rate swaps | 1,600 | — | — | 1 | |||||||||||||||||||
| Total | $ | 12,808 | $ | 8,933 | $ | (151) | $ | 117 | |||||||||||||||
| For the Three-Month Period Ended March 29, 2024: | |||||||||||||||||||||||
| Net investment hedges: | |||||||||||||||||||||||
| Cross-currency contracts | $ | 3,875 | $ | 3,000 | $ | 55 | $ | — | |||||||||||||||
| Foreign currency denominated debt | 4,129 | 4,129 | 134 | — | |||||||||||||||||||
| Cash flow hedges: | |||||||||||||||||||||||
| Cross-currency contracts | 4,000 | 3,300 | 23 | (74) | |||||||||||||||||||
| Interest rate swaps | 1,600 | — | — | 1 | |||||||||||||||||||
| Total | $ | 13,604 | $ | 10,429 | $ | 212 | $ | (73) | |||||||||||||||
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 12, 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 12. The amount reclassified from OCI for the cross-currency swap derivative contracts that are cash flow hedges of the Company’s U.S. dollar-denominated debt was equal to the remeasurement amount recorded in the three-month period 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 OCI to earnings during the three-month periods ended March 28, 2025 and March 29, 2024. In addition, the Company did not have any ineffectiveness related to net investment hedges or cash flow hedges during the three-month periods ended March 28, 2025 and March 29, 2024. Should any ineffectiveness arise, any ineffective portions of the hedges would be reclassified from accumulated OCI into earnings during the period of change. 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 Condensed 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 Condensed 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 in the Company’s Consolidated Condensed Balance Sheets as follows ($ in millions):
| March 28, 2025 | December 31, 2024 | ||||||||||
| Derivative assets: | |||||||||||
| Other long-term assets | $ | 400 | $ | 415 | |||||||
| Nonderivative hedging instruments: | |||||||||||
| Long-term debt | 3,333 | 3,042 |
Amounts related to the Company’s derivatives expected to be reclassified from accumulated OCI to net earnings during the next 12 months, if interest rates and foreign exchange rates remain unchanged, were not significant.
NOTE 12. STOCKHOLDERS' EQUITY AND STOCK-BASED COMPENSATION
Stockholders’ Equity
On July 22, 2024, 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. During the three-month period ended March 28, 2025 the Company repurchased approximately 4.5 million shares of the Company’s common stock for approximately $1.1 billion (which includes $11 million of excise taxes which will be paid in 2026) as part of the Repurchase Program.
As of March 28, 2025, approximately 12 million shares remained available for repurchase pursuant to the Repurchase Program. There is no expiration date for the Repurchase Program, and the timing and amount of any shares repurchased under the program will be determined by members of the Company’s management based on its evaluation of market conditions and other factors. The Repurchase Program may be suspended or discontinued at any time. Any repurchased shares will be available for use in connection with the Company’s equity compensation plans (or any successor plans) and for other corporate purposes.
The following table summarizes the Company’s share activity (shares in millions):
| Three-Month Period Ended | |||||||||||||||||||||||
| March 28, 2025 | March 29, 2024 | ||||||||||||||||||||||
| Common stock - shares issued: | |||||||||||||||||||||||
| Balance, beginning of period | 884.3 | 880.5 | |||||||||||||||||||||
| Common stock-based compensation awards | 1.3 | 1.8 | |||||||||||||||||||||
| Balance, end of period | 885.6 | 882.3 |
Stock-Based Compensation
For a full description of the Company’s stock-based compensation programs, refer to Note 18 of the Company’s financial statements as of and for the year ended December 31, 2024 included in the Company’s 2024 Annual Report. As of March 28, 2025, approximately 42 million shares of the Company’s common stock were reserved for issuance under the 2007 Omnibus Incentive Plan.
The following summarizes the components of the Company’s stock-based compensation expense ($ in millions):
| Three-Month Period Ended | |||||||||||||||||||||||
| March 28, 2025 | March 29, 2024 | ||||||||||||||||||||||
| RSUs/PSUs: | |||||||||||||||||||||||
| Pretax compensation expense | $ | 35 | $ | 32 | |||||||||||||||||||
| Income tax benefit | (7) | (6) | |||||||||||||||||||||
| RSU/PSU expense, net of income taxes | 28 | 26 | |||||||||||||||||||||
| Stock options: | |||||||||||||||||||||||
| Pretax compensation expense | 26 | 28 | |||||||||||||||||||||
| Income tax benefit | (5) | (6) | |||||||||||||||||||||
| Stock option expense, net of income taxes | 21 | 22 | |||||||||||||||||||||
| Total stock-based compensation: | |||||||||||||||||||||||
| Pretax compensation expense | 61 | 60 | |||||||||||||||||||||
| Income tax benefit | (12) | (12) | |||||||||||||||||||||
| Total stock-based compensation expense, net of income taxes | $ | 49 | $ | 48 |
Stock-based compensation has been recognized as a component of SG&A expenses in the accompanying Consolidated Condensed Statements of Earnings. As of March 28, 2025, $294 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 March 28, 2025, $242 million of total unrecognized compensation cost related to stock options is expected to be recognized over a weighted average period of approximately two years. Future compensation amounts will be adjusted for any changes in estimated forfeitures.
Accumulated Other Comprehensive Income
Accumulated OCI refers to certain gains and losses that under U.S. GAAP are included in comprehensive income (loss) but are excluded from net earnings as these amounts are initially recorded as an adjustment to stockholders’ equity. Foreign currency translation adjustments generally relate to indefinite investments in non-U.S. subsidiaries, as well as the impact from the Company’s hedges of its net investment in foreign operations, including the Company’s cross-currency swap derivatives, net of any income tax impacts.
The changes in accumulated OCI by component are summarized below ($ in millions).
| Foreign Currency Translation Adjustments | Pension and Postretirement Plan Benefit Adjustments | Cash Flow Hedge Adjustments | Accumulated Comprehensive Income (Loss) | ||||||||||||||||||||||||||
| For the Three-Month Period Ended March 28, 2025: | |||||||||||||||||||||||||||||
| Balance, December 31, 2024 | $ | (2,904) | $ | (300) | $ | (14) | $ | (3,218) | |||||||||||||||||||||
| OCI before reclassifications: | |||||||||||||||||||||||||||||
| Increase (decrease) | 1,436 | — | 39 | 1,475 | |||||||||||||||||||||||||
| Income tax impact | 13 | — | — | 13 | |||||||||||||||||||||||||
| OCI before reclassifications, net of income taxes | 1,449 | — | 39 | 1,488 | |||||||||||||||||||||||||
| Reclassification adjustments: | |||||||||||||||||||||||||||||
| Increase (decrease) | — | 2 | (a) | 117 | (b) | 119 | |||||||||||||||||||||||
| Income tax impact | — | (1) | — | (1) | |||||||||||||||||||||||||
| Reclassification adjustments, net of income taxes | — | 1 | 117 | 118 | |||||||||||||||||||||||||
| Net OCI, net of income taxes | 1,449 | 1 | 156 | 1,606 | |||||||||||||||||||||||||
| Balance, March 28, 2025 | $ | (1,455) | $ | (299) | $ | 142 | $ | (1,612) | |||||||||||||||||||||
| For the Three-Month Period Ended March 29, 2024: | |||||||||||||||||||||||||||||
| Balance, December 31, 2023 | $ | (1,446) | $ | (401) | $ | 99 | $ | (1,748) | |||||||||||||||||||||
| OCI before reclassifications: | |||||||||||||||||||||||||||||
| Increase (decrease) | (935) | — | 23 | (912) | |||||||||||||||||||||||||
| Income tax impact | (13) | — | — | (13) | |||||||||||||||||||||||||
| OCI before reclassifications, net of income taxes | (948) | — | 23 | (925) | |||||||||||||||||||||||||
| Reclassification adjustments: | |||||||||||||||||||||||||||||
| Increase (decrease) | — | 3 | (a) | (73) | (b) | (70) | |||||||||||||||||||||||
| Income tax impact | — | (1) | — | (1) | |||||||||||||||||||||||||
| Reclassification adjustments, net of income taxes | — | 2 | (73) | (71) | |||||||||||||||||||||||||
| Net OCI, net of income taxes | (948) | 2 | (50) | (996) | |||||||||||||||||||||||||
| Balance, March 29, 2024 | $ | (2,394) | $ | (399) | $ | 49 | $ | (2,744) | |||||||||||||||||||||
(a) This accumulated other comprehensive income (loss) component is included in the computation of net periodic benefit cost (refer to Note 7 for additional details).
(b) Reflects reclassification to earnings related to cash flow hedges of certain long-term debt (refer to Note 11 for additional details).
Next: Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS