Envista Holdings Corporation (together with its subsidiaries, “Envista” or the “Company”) was formed as a wholly-owned subsidiary of Danaher Corporation (“Danaher” or “Parent”). Danaher formed Envista to ultimately acquire, own and operate the Dental business of Danaher. On September 20, 2019, the Company completed an initial public offering (“IPO”) resulting in the issuance of 30.8 million shares of its common stock (including shares issued pursuant to the underwriters’ option to purchase additional shares) to the public, which represented 19.4% of the Company’s outstanding common stock, at $22.00 per share, the initial public offering price for total net proceeds, after deducting underwriting discounts and commissions, of $643 million. In connection with the completion of the IPO, through a series of equity and other transactions, Danaher transferred substantially all of its Dental business to the Company. As consideration for the transfer of the Dental business to the Company, the Company paid to Danaher approximately $2.0 billion, which included the net proceeds from the IPO and the net proceeds from term debt financing, as further discussed in Note 6, and issued to Danaher 127.9 million shares of the Company’s common stock. Danaher held 80.6% of the Company’s outstanding common stock as of October 18, 2019, giving Danaher 80.6% of the total voting power of the Company’s outstanding common stock. The transactions described above related to the transfer of the Dental business are collectively referred to herein as the “Separation.” As the majority stockholder, Danaher has the ability to control the outcome of matters submitted to the Company’s stockholders for approval, including the election of directors, amendments of the Company’s organizational documents and any merger, consolidation, sale of all or substantially all of the Company’s assets or other major corporate transactions.

Danaher has informed the Company that it intends to distribute to its stockholders its remaining equity interest in the Company, which may include the spin-off of Envista shares effected as a dividend to all of Danaher’s stockholders, the split-off of Envista shares in exchange for Danaher shares or other securities or any combination thereof in one transaction or in a series of transactions (collectively, the “Distribution”). While Danaher has informed the Company of its intention to effect the Distribution, it has no obligation to pursue or consummate any further dispositions of its ownership in Envista, including through the Distribution, by any specified date or at all. If pursued, the Distribution may be subject to various conditions, including receipt of any necessary regulatory or other approvals, the existence of satisfactory market conditions and the receipt of an opinion of counsel to the effect that the separation of Envista in connection with the IPO, together with such Distribution, will be tax-free to Danaher and its stockholders for U.S. federal income tax purposes. The conditions to the Distribution may not be satisfied; Danaher may decide not to consummate the Distribution even if the conditions are satisfied; or Danaher may decide to waive one or more of these conditions and consummate the Distribution even if all of the conditions are not satisfied. The Company cannot provide any assurance as to whether or when any such transaction will be consummated or as to the final terms of any such transaction.

The Company provides products that are used to diagnose, treat and prevent disease and ailments of the teeth, gums and supporting bone, as well as to improve the aesthetics of the human smile. The Company is a leading worldwide provider of a broad range of dental implants, orthodontic appliances, general dental consumables, equipment and services and is dedicated to driving technological innovations that help dental professionals improve clinical outcomes and enhance productivity.

The Company’s Equipment & Consumables segment develops, manufactures and markets dental equipment and supplies used in dental offices, including digital imaging systems, software and other visualization/magnification systems; handpieces and associated consumables; treatment units and other dental practice equipment; endodontic systems and related consumables; restorative materials and instruments, rotary burs, impression materials, bonding agents and cements and infection prevention products.

For periods after the Separation, the financial statements are prepared on a consolidated basis. Prior to the Separation, the Company operated as part of Danaher and not as a separate, publicly-traded company and the Company’s financial statements are combined, have been prepared on a stand-alone basis and are derived from Danaher's consolidated financial statements and accounting records. The Consolidated and Combined Condensed Financial Statements reflect the financial position, results of operations and cash flows related to the Dental business that was transferred to the Company. All revenues and costs as well as assets and liabilities directly associated with the business activity of the Company are included as a component in the financial statements. Prior to the Separation, the financial statements also include allocations of certain general, administrative, sales and marketing expenses and cost of sales from Danaher’s corporate office and from other Danaher businesses to the Company and allocations of related assets, liabilities and Danaher’s investment, as applicable. The allocations were determined on a reasonable basis; however, the amounts are not necessarily representative of the amounts that would have been reflected in the financial statements had the Company been an entity that operated independently of Danaher. Related-party allocations are discussed further in Note 15.

Prior to the Separation, the Company was dependent upon Danaher for all of its working capital and financing requirements under Danaher’s centralized approach to cash management and financing of its operations. Financial transactions relating to the Company were accounted for through the net parent investment account of the Company. Accordingly, none of Danaher’s cash, cash equivalents or debt was assigned to the Company in these financial statements for the periods prior to the Separation.

Net parent investment, which included retained earnings, represented Danaher’s interest in the recorded net assets of the Company. Prior to the Separation, all significant transactions between the Company and Danaher have been included in the accompanying Consolidated and Combined Condensed Financial Statements. Transactions with Danaher are reflected in the accompanying Consolidated and Combined Condensed Statements of Changes in Equity as “Net transfers to Parent” and in the accompanying Consolidated and Combined Condensed Balance Sheets within “Net parent investment.”

Sales to the Company’s largest customer were 13% of total sales during each of the three-month periods ended September 27, 2019 and September 28, 2018 and 12% during each of the nine-month periods ended September 27, 2019 and September 28, 2018. No other individual customer accounted for more than 10% of total sales during these periods. Accounts receivable from this customer was 8% of total receivables for each of September 27, 2019 and December 31, 2018.

The Consolidated and Combined Condensed Financial Statements included herein have been prepared by the Company without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations; however, the Company believes that the disclosures are adequate to make the information presented not misleading. The information included in this Quarterly Report on Form 10-Q should be read in conjunction with the Company’s combined financial statements and accompanying notes for the three years ended December 31, 2018 included in the final prospectus (File No. 333-232758) filed by the Company with the U.S. Securities and Exchange Commission (the “SEC”) on September 18, 2019 pursuant to Rule 424(b)(4) under the Securities Act of 1933, as amended (the “Securities Act”) (the “Prospectus”).

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 September 27, 2019 and December 31, 2018, and its results of operations for the three and nine-month periods ended September 27, 2019 and September 28, 2018 and its cash flows for each of the nine-month periods then ended.

Accounting Standards Recently Adopted—In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-02, Leases (Topic 842), which requires lessees to recognize a right-of-use (“ROU”) asset and a lease liability for all leases with terms greater than 12 months and also requires disclosures by lessees and lessors about the amount, timing and uncertainty of cash flows arising from leases. Subsequent to the issuance of Topic 842, the FASB clarified the guidance through several ASUs; hereinafter the collection of lease guidance is referred to as “ASC 842.”

On January 1, 2019, the Company adopted ASC 842 using the modified retrospective method for all lease arrangements at the beginning of the period of adoption. Results for reporting periods beginning January 1, 2019 are presented under ASC 842, while prior period amounts were not adjusted and continue to be reported in accordance with the Company’s historic accounting under Accounting Standards Codification (“ASC”) 840, Leases. The adoption of ASC 842 had a material impact on the Company’s Consolidated and Combined Condensed Balance Sheet but did not have a significant impact on the Company’s consolidated and combined net earnings and cash flows. The most significant impact was the recognition of ROU assets and lease liabilities for operating leases, while the accounting for finance leases remained substantially unchanged. For leases that commenced before the effective date of ASC 842, the Company elected the permitted practical expedients to not reassess the following: (i) whether any expired or existing contracts contain leases; (ii) the lease classification for any expired or existing leases; and (iii) initial direct costs for any existing leases. The Company also elected to include leases with a term of 12 months or less in the recognized ROU assets and lease liabilities.

As a result of the cumulative impact of adopting ASC 842, the Company recorded operating lease ROU assets of $182 million and operating lease liabilities of $191 million as of January 1, 2019, primarily related to real estate and automobile leases, based on the present value of the future lease payments on the date of adoption. Refer to Note 3 for the additional disclosures required by ASC 842.

The Company determines if an arrangement is a lease at inception. For leases where the Company is the lessee, ROU assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent an obligation to make lease payments arising from the lease. ROU assets and lease liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. As most of the Company’s leases do not provide an implicit interest rate, the Company used Danaher’s incremental borrowing rate (for the period prior to the Separation) and its incremental borrowing rate (for the period after Separation) based on the information available at commencement date in determining the present value of lease payments. The ROU asset includes prepaid lease payments, lease incentives received, costs which will be incurred in exiting a lease and the amount of any asset or liability recognized on business combinations relating to favorable or unfavorable lease terms. The lease terms used to calculate the ROU asset and related lease liability include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. Lease expense for operating leases is recognized on a straight-line basis over the lease term as an operating expense. The Company has lease agreements which require payments for lease and non-lease components and has elected to account for these as a single lease component.

In August 2017, the FASB issued ASU No. 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities, which expands and refines hedge accounting for both financial and non-financial risk components, aligns the recognition and presentation of the effects of hedging instruments and hedge items in the financial statements and includes certain targeted improvements to ease the application of current guidance related to the assessment of hedge effectiveness. The ASU was effective for public entities for fiscal years beginning after December 15, 2018. The Company adopted this guidance on January 1, 2019 and there was no impact on the Company’s consolidated and combined financial statements. Refer to Note 7 for additional disclosures about the Company’s hedging activities.

Except for the above accounting policy for leases that was updated as a result of adopting ASC 842 and the derivatives and hedging policy discussed in Note 7, there have been no changes to the Company’s significant accounting policies described in the Prospectus for the year ended December 31, 2018 that have a material impact on the Company’s Consolidated and Combined Condensed Financial Statements.

Accounting Standards Not Yet Adopted—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 to add, remove and clarify disclosure requirements related to defined benefit pension plans. The ASU is effective for public entities for fiscal years beginning after December 15, 2020, with early adoption permitted. Management has not yet completed its assessment of the impact of the new standard on the Company’s consolidated financial statements.

In August 2018, the FASB issued ASU 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. Management has not yet completed its assessment of the impact of the new standard on the Company’s consolidated financial statements.

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. The ASU will be adopted using a modified retrospective transition method, with the adoption impact recognized through a cumulative-effect adjustment to retained earnings in the period of adoption. In November 2018, April 2019 and May 2019, the FASB issued ASU No. 2018-19, Codification Improvements to Topic 326, Financial Instruments—Credit Losses, ASU No. 2019-04, Codification Improvements to Topic 326, Financial Instruments—Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments and ASU No. 2019-05, Financial Instruments—Credit Losses (Topic 326): Targeted Transition Relief which provided additional implementation guidance on the previously issued ASU. Management has not yet completed its assessment of the impact of the new standard on the Company’s consolidated financial statements. The Company is in the process of implementing changes to its accounting policies and procedures for the new standard. Currently, the Company believes that the most notable impact of this ASU will relate to its processes around the assessment of the adequacy of its allowance for doubtful accounts on trade accounts receivable and the recognition of credit losses.

Accumulated Other Comprehensive Income (Loss)—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 and the impact from the Company’s hedge of its net investment in foreign operations, including the Company’s cross-currency swap derivatives, net of any income tax impact.



	Foreign Currency Translation Adjustments			Cash Flow Hedge Adjustments			Pension Adjustments				Total
For the Three-Month Period Ended September 27, 2019:
Balance, June 28, 2019	$	(80.9	)	$	—		$	(4.5	)		$	(85.4	)
Other comprehensive income (loss) before reclassifications:
Decrease	(53.5		)	(0.7		)	—				(54.2		)
Income tax impact	(1.4		)	0.1			—				(1.3		)
Other comprehensive income (loss) before reclassifications, net of income taxes	(54.9		)	(0.6		)	—				(55.5		)
Net current period other comprehensive (loss):	(54.9		)	(0.6		)	—				(55.5		)
Balance, September 27, 2019	$	(135.8	)	$	(0.6	)	$	(4.5	)		$	(140.9	)

For the Three-Month Period Ended September 28, 2018:
Balance, June 29, 2018	$	(43.8	)	$	—		$	(10.1	)		$	(53.9	)
Other comprehensive income (loss) before reclassifications:
Decrease	(17.3		)	—			—				(17.3		)
Income tax impact	—			—			—				—
Other comprehensive income (loss) before reclassifications, net of income taxes	(17.3		)	—			—				(17.3		)
Amounts reclassified from accumulated other comprehensive income (loss):
Decrease	—			—			(1.0		)	(a)	(1.0		)
Income tax impact	—			—			0.2				0.2
Amounts reclassified from accumulated other comprehensive income (loss), net of income taxes:	—			—			(0.8		)		(0.8		)
Net current period other comprehensive income (loss):	(17.3		)	—			(0.8		)		(18.1		)
Balance, September 28, 2018	$	(61.1	)	$	—		$	(10.9	)		$	(72.0	)



	Foreign Currency Translation Adjustments			Cash Flow Hedge Adjustments				Pension Adjustments				Total
For the Nine-Month Period Ended September 27, 2019:
Balance, December 31, 2018	$	(74.3	)	$	—			$	(3.9	)		$	(78.2	)
Other comprehensive income (loss) before reclassifications:
Decrease	(60.1		)	(0.7		)	—	—				(60.8		)
Income tax impact	(1.4		)	0.1				—				(1.3		)
Other comprehensive income (loss) before reclassifications, net of income taxes	(61.5		)	(0.6		)		—				(62.1		)
Amounts reclassified from accumulated other comprehensive income (loss):
Decrease	—			—				(0.9		)	(a)	(0.9		)
Income tax impact	—			—				0.3				0.3
Amounts reclassified from accumulated other comprehensive income (loss), net of income taxes:	—			—				(0.6		)		(0.6		)
Net current period other comprehensive income (loss):	(61.5		)	(0.6		)		(0.6		)		(62.7		)
Balance, September 27, 2019	$	(135.8	)	$	(0.6	)		$	(4.5	)		$	(140.9	)
For the Nine-Month Period Ended September 28, 2018:
Balance, December 31, 2017	$	10.9		$	—			$	(10.3	)		$	0.6
Adoption of accounting standards	—			—				(0.2		)		(0.2		)
Balance, January 1, 2018	10.9			—				(10.5		)		0.4
Other comprehensive income (loss) before reclassifications:
Decrease	(72.0		)	—				—				(72.0		)
Income tax impact	—			—				—				—
Other comprehensive income (loss) before reclassifications, net of income taxes	(72.0		)	—				—				(72.0		)
Amounts reclassified from accumulated other comprehensive income (loss):
Decrease	—			—				(0.5		)	(a)	(0.5		)
Income tax impact	—			—				0.1				0.1
Amounts reclassified from accumulated other comprehensive income (loss), net of income taxes:	—			—				(0.4		)		(0.4		)
Net current period other comprehensive income (loss):	(72.0		)	—				(0.4		)		(72.4		)
Balance, September 28, 2018	$	(61.1	)	$	—			$	(10.9	)		$	(72.0	)