Stock Transactions And Stock-Based Compensation

6 Months Ended

Jun. 28, 2019

Share-based Payment Arrangement [Abstract]

Stock Transactions And Stock-Based Compensation

STOCK TRANSACTIONS AND STOCK-BASED COMPENSATION

Neither the Company nor any “affiliated purchaser” repurchased any shares of Company common stock during the six-month period ended June 28, 2019. 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. As of June 28, 2019, 20 million shares remained available for repurchase pursuant to the Repurchase Program.

The following table summarizes the Company’s share activity (shares in millions):

	Three-Month Period Ended		Six-Month Period Ended
	June 28, 2019	June 29, 2018	June 28, 2019	June 29, 2018
Preferred stock - shares issued:
Balance, beginning of period	1.7	—	—	—
Issuance of Mandatory Convertible Preferred Stock	—	—	1.7	—
Balance, end of period	1.7	—	1.7	—
Common stock - shares issued:
Balance, beginning of period	832.5	814.8	817.9	812.5
Common stock-based award activity	1.1	0.9	3.1	2.8
Common stock issued in connection with acquisitions	—	0.2	—	0.2
Common stock issued in connection with LYONs’ conversions	0.4	0.1	0.9	0.5
Issuance of common stock	—	—	12.1	—
Balance, end of period	834.0	816.0	834.0	816.0

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 “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 “MCPS Offering”), resulting in net proceeds of approximately $1.6 billion, after deducting expenses and the underwriters’ discount of $50 million. The Company intends to use the net proceeds from the Common Stock Offering and the MCPS Offering to fund a portion of the cash consideration payable for, and certain costs associated with, the GE Biopharma Acquisition. Pending completion of the GE Biopharma Acquisition, the Company has invested the net proceeds in short-term bank deposits and/or interest-bearing, investment-grade securities.

As a result of the dividend paid to shareholders of the Company’s common stock in April 2019, the Company triggered an anti-dilution adjustment pursuant to the terms of the MCPS and after giving affect to this adjustment, each share of MCPS will mandatorily convert on the mandatory conversion date, which is expected to be April 15, 2022, into between 6.6373 and 8.1306 shares of the Company’s common stock, 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 April 15, 2022. Subject to certain exceptions, at any time prior to April 15, 2022, holders may elect to convert each share of the MCPS into 6.6373 shares of common stock, subject to further anti-dilution adjustments. In the event of a fundamental change, the MCPS will convert at the fundamental change rates specified in the certificate of designations, and the holders of MCPS would be entitled to a fundamental change make-whole dividend.

Holders of MCPS will be entitled to receive, when and if declared by the Company’s Board of Directors, cumulative dividends at the annual rate of 4.75% of the liquidation preference of $1,000 per share (equivalent to $47.50 annually 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 will be payable quarterly on January 15, April 15, July 15 and October 15 of each year (commencing on July 15, 2019 to, and including, April 15, 2022), to the holders of record of the MCPS 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.

If the GE Biopharma Acquisition has not closed on or before 5:00 p.m. (New York City time) on August 25, 2020, the GE Biopharma Purchase Agreement is terminated or the Company’s Board of Directors, in its good faith judgment, determines that the GE Biopharma Acquisition will not occur, the Company has the option to redeem the shares of MCPS, in whole but not in part, subject to certain terms and conditions.

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, 2018 included in the Company’s 2018 Annual Report. As of June 28, 2019, approximately 47 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						Six-Month Period Ended
	June 28, 2019			June 29, 2018			June 28, 2019			June 29, 2018
Restricted stock units (“RSUs”)/performance stock units (“PSUs”):
Pretax compensation expense	$	27.9		$	24.7		$	52.2		$	45.6
Income tax benefit	(5.8		)	(5.2		)	(10.9		)	(9.6		)
RSU/PSU expense, net of income taxes	22.1			19.5			41.3			36.0
Stock options:
Pretax compensation expense	18.3			15.4			33.2			27.8
Income tax benefit	(3.8		)	(3.3		)	(7.0		)	(5.9		)
Stock option expense, net of income taxes	14.5			12.1			26.2			21.9
Total stock-based compensation:
Pretax compensation expense	46.2			40.1			85.4			73.4
Income tax benefit	(9.6		)	(8.5		)	(17.9		)	(15.5		)
Total stock-based compensation expense, net of income taxes	$	36.6		$	31.6		$	67.5		$	57.9

Stock-based compensation has been recognized as a component of selling, general and administrative expenses in the accompanying Consolidated Condensed Statements of Earnings. As of June 28, 2019, $219 million of total unrecognized compensation cost related to RSUs/PSUs is expected to be recognized over a weighted average period of approximately three years. As of June 28, 2019, $194 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.