Discontinued Operations

12 Months Ended

Dec. 31, 2020

Discontinued Operations and Disposal Groups [Abstract]

DISCONTINUED OPERATIONS

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

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

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

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

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

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

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

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

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


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