Company: DHR
Filing Date: 2025-02-20
Form Type: 10-K
Source: 0000313616-25-000043
Chunk: 306

Company: DANAHER CORP /DE/
Filing Date: 2025-02-20
Form: 10-K
Item: Item 7
Chunk 306
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  If the fair value is less than the carrying value, the difference is recorded as an impairment loss.  

If actual results are not consistent with management’s estimates and assumptions, goodwill and other intangible assets may be overstated and a charge would need to be taken against net earnings which would adversely affect the Company’s financial statements. 

The Company estimates the fair value of acquired trade names through the use of a relief from royalty method, which values an indefinite-lived intangible asset by estimating the royalties saved through the ownership of an asset.  Under this method, an owner of an indefinite-lived intangible asset determines the arm’s length royalty that likely would have been charged if the owner had to license the asset from a third party.  The royalty rate, which is based on the estimated rate applied against forecasted sales, is tax-effected and discounted at present value using a discount rate commensurate with the relative risk of achieving the cash flow attributable to the asset.  Management judgment is necessary to determine key assumptions, including revenue growth rates, perpetual revenue growth rates, royalty rates and discount rates.  As further described in Note 10 to the accompanying Consolidated Financial Statements, the Company recorded noncash impairment charges of $265 million pretax ($201 million after-tax) for the year ended December 31, 2024 related to an indefinite-lived trade name within the genomics consumable business included in the Life Sciences segment and an indefinite-lived trade name in the Diagnostics segment, which are included in selling, general and administrative expenses in the Consolidated Statement of Earnings.  Following these impacts, if the fair values of the trade names declined by 10%, the Company estimates it would record additional impairment charges of $59 million. 

Contingent Liabilities—As discussed in “Item 3.  Legal Proceedings” and Note 17 to the Consolidated Financial Statements, the Company is, from time to time, subject to a variety of litigation and similar contingent liabilities incidental to its business (or the business operations of previously owned entities).  The Company recognizes a liability for any legal contingency or contract settlement expense that is known or probable of occurrence and reasonably estimable.  These assessments require judgments concerning matters such as litigation developments and outcomes, the anticipated outcome of negotiations, the number of future claims and the cost of both pending and future claims.  In addition, because most contingencies are resolved over long periods of time, liabilities may change in the future due to various factors, including those discussed in Note 17 to the Consolidated