SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
[ X ] SECURITIES AND EXCHANGE ACT OF 1934
For the Quarter ended September 26, 1997
OR
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES AND EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number: 1-8089
DANAHER CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 59-1995548
(State of incorporation) (I.R.S. Employer Identification number)
1250 24th Street, N.W., Suite 800
Washington, D.C. 20037
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: 202-828-0850
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 and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
The number of shares of common stock outstanding at October 20, 1997 was
58,452,152.
DANAHER CORPORATION
INDEX
FORM 10-Q
PART I - FINANCIAL INFORMATION Page
Item 1. Financial Statements
Consolidated Condensed Balance Sheets
at September 26, 1997 and December 31, 1996 . . . . . 1
Consolidated Condensed Statements of
Earnings for the three months and
nine months ended September 26, 1997
and September 27, 1996. . . . . . . . . . . .. . . . 2
Consolidated Condensed Statements of
Cash Flow for the nine months ended
September 26, 1997 and September 27, 1996 . . . . . 3
Notes to Consolidated Condensed
Financial Statements. . . . . . . . . . . . . . . . . 4
Item 2. Management's Discussion and
Analysis of Financial Condition
and Results of Operations . . . . . . . . . . . . . . 6
Liquidity and Capital Resources. . . . . . . . . . . 6
PART II - OTHER INFORMATION
Item 1. Legal Proceedings . . . . . . . . . . . 7
Item 2. Change in Securities. . . . . . . . . . . . 7
Item 3. Defaults Upon Senior Securities . . . . . . 7
Item 4. Submission of matters to a vote of
Security Holders. . . . . . . . . . . . . . 7
Item 5. Other Information . . . . . . . .. . . . . . 7
Item 6. Exhibits and Reports on Form 8-K . . . . . . 7
<PAGE>
DANAHER CORPORATION
CONSOLIDATED CONDENSED BALANCE SHEETS
(000's omitted)
September 26, December 31,
1997 1996
(NOTE 1)
ASSETS
Current Assets:
Cash and cash equivalents $ 22,764 $ 26,444
Accounts receivable, net 322,066 266,668
Inventories:
Finished goods 97,927 88,083
Work in process 50,948 49,681
Raw material and supplies 77,213 66,472
Total inventories 226,088 204,236
Prepaid expenses and other
current assets 52,060 49,393
Total current assets 622,978 546,741
Property, plant and equipment, net
of accumulated depreciation of
$255,905 and $218,830,
respectively 331,790 319,606
Other assets 101,810 105,903
Excess of cost over net assets of
acquired companies, net 858,233 792,824
Total assets $1,914,811 $1,765,074
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Notes payable and current
portion of long-term debt $ 19,122 $ 16,757
Accounts payable 130,374 110,194
Accrued expenses 425,523 347,622
Total current liabilities 575,019 474,573
Other liabilities 269,031 270,670
Long-term debt 200,402 219,570
Stockholders' equity:
Common stock - $.01 par value 642 642
Additional paid-in capital 335,013 333,587
Retained earnings 613,934 506,773
Cumulative foreign translation
adjustment and other (9,789) 8,858
Treasury stock (69,441) (49,599)
Total stockholders' equity 870,359 800,261
Total liabilities and
stockholders' equity $1,914,811 $1,765,074
See notes to consolidated condensed financial statements.
<PAGE>
DANAHER CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS
(000's omitted except per share amounts)
(unaudited)
Quarter Ended Nine Months Ended
Sept. 26, Sept. 27, Sept 26, Sept. 27,
1997 1996 1997 1996
Net revenues $516,601 $470,787 $1,485,831 $1,315,241
Operating costs and
expenses:
Cost of sales 343,467 321,766 1,001,153 903,939
Selling, general and
administrative expenses 95,851 83,266 274,383 233,072
Goodwill and other
amortization 5,900 5,462 17,513 14,507
Total operating costs
and expenses 445,218 410,494 1,293,049 1,151,518
Operating profit 71,383 60,293 192,782 163,723
Interest expense, net 2,891 5,248 9,991 11,212
Earnings from continuing
operations before income
taxes 68,492 55,045 182,791 152,511
Income taxes 26,711 21,468 71,217 59,481
Earnings from continuing
operations $ 41,781 $ 33,577 $ 111,574 $ 93,030
Gain on sale of discontinued
operations, net of taxes
of $ -0- -- -- -- 79,811
Net Earnings $ 41,781 $ 33,577 $ 111,574 $ 172,841
Per Share:
From continuing
operations $ .69 $ .56 $ 1.85 $ 1.55
From discontinued
operations -- -- -- 1.33
Net earnings $ .69 $ .56 $ 1.85 $ 2.88
Average common stock and
equivalent shares
outstanding 60,242,750 60,045,807 60,216,738 59,970,139
See notes to consolidated condensed financial statements.<PAGE>
DANAHER CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOW
(000's omitted)
(unaudited)
Nine Months Ended
Sept. 26, 1997 Sept. 27, 1996
Cash flows from operating activities:
Net earnings from operations $ 111,574 $ 93,030
Noncash items, depreciation
and amortization 56,769 51,325
Increase in accounts receivable (42,199) (44,174)
(Increase) decrease in inventories (441) 9,147
Increase in accounts payable 14,390 11,466
Change in other assets and
liabilities 80,338 26,085
Total operating cash flows 220,431 146,879
Cash flows from investing activities:
Sale of Fayette Tubular Products -- 155,000
Payments for additions to property,
plant and equipment, net (36,994) (38,731)
Cash paid for acquisitions (147,238) (235,503)
Net cash used in investing activities (184,232) (119,234)
Cash flow from financing activities:
Acquisition of treasury stock (19,842) (12,110)
Proceeds from issuance of common stock 1,426 1,796
Borrowings (repayments) of debt (16,803) 534
Payment of dividends (4,413) (3,772)
Net cash provided by (used in)
financing activities (39,632) (13,562)
Effect of exchange rate changes on cash (247) (82)
Net change in cash and cash equivalents (3,680) 14,011
Beginning balance of cash and cash
equivalents 26,444 7,938
Ending balance of cash and cash
equivalents $ 22,764 $ 21,949
Supplemental disclosures:
Cash interest payments $ 9,584 $ 11,659
Cash income tax payments $ 49,441 $ 52,588
See notes to consolidated condensed financial statements.<PAGE>
DANAHER CORPORATION
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(unaudited)
NOTE 1. GENERAL
The consolidated condensed financial statements included
herein have been prepared by Danaher Corporation (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 generally
accepted accounting principles 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 condensed
financial statements included herein should be read in
conjunction with the financial statements and the notes
thereto included in the Company's 1996 Annual Report on Form
10-K.
In the opinion of the registrant, the accompanying
financial statements contain all adjustments (consisting of
only normal recurring adjustments) necessary to present
fairly the financial position of the Company at September 26,
1997 and December 31, 1996, its results of operations for the
three months and nine months ended September 26, 1997 and
September 27, 1996, and its cash flows for the nine months
ended September 26, 1997 and September 27, 1996.
NOTE 2. ACQUISITION OF ACME-CLEVELAND CORPORATION
The Company obtained control of Acme-Cleveland
Corporation (Acme) as of July 2, 1996. Total consideration
for Acme was approximately $200 million. The fair value of
assets acquired was approximately $240 million and
approximately $40 million of liabilities were assumed. The
transaction is being accounted for as a purchase. The
purchase price allocations have been completed on a
preliminary basis, subject to adjustment should new or
additional facts about the business become known.
The unaudited pro forma information for the period set
forth below gives effect to the transaction as if it had
occurred at the beginning of each period. The pro forma
information is presented for information purposes only and is
not necessarily indicative of the results of operations that
actually would have been achieved had the acquisition been
consummated as of that time (unaudited, 000's omitted):
Year Ended Nine Months Ended
December 31, September 27,
1996 1996
Net Sales $1,885,700 $1,389,063
Net Earnings 129,197 94,268
Earnings per Share $ 2.15 $1.57
NOTE 3. DISCONTINUED OPERATIONS
In January, 1996, the Company sold its Fayette Tubular
Products subsidiary for $155 million cash. A gain of $79.8
million was recognized in the first quarter of 1996.
NOTE 4. NONRECURRING TRANSACTIONS
The Company sold its investment in Tylan General
Corporation and recognized a gain of approximately $3.5
million before income taxes in the first quarter of 1997.
This was offset by a charge to close facilities within the
Hengstler subsidiary and relocate work to an existing company
facility.
NOTE 5. EARNINGS PER SHARE
Statement of Financial Accounting Standards Number 128
will change the reporting of earnings per share effective in
the fourth quarter of 1997. Basic earnings per share will
not include stock options as common stock equivalents and
will be higher than previously reported primary earnings per
share. Diluted earnings per share will equal previously
reported primary earnings per share under the Company's
current capital structure. The pro-forma impact on
previously reported 1996 and 1997 earnings per share would be
as shown below.
Year Nine Months
1996 1997 1996
Average shares
outstanding (basic 58,623,470 58,804,608 58,510,944
earnings per share)
Stock option
equivalents 1,331,166 1,412,130 1,459,195
Average shares and
equivalents (diluted 59,954,636 60,216,738 59,970,139
earnings per share)
Continuing operations-
Basic earnings per share $2.18 $1.90 $1.59
Diluted earnings per share $2.13 $1.85 $1.55
(Continued)
Quarter
1997 1996
Average shares
outstanding (basic 58,639,603 58,616,627
earnings per share)
Stock option
equivalents 1,603,147 1,429,180
Average shares and
equivalents (diluted 60,242,750 60,045,807
earnings per share)
Continuing operations-
Basic earnings per share $ .71 $.57
Diluted earnings per share $ .69 $.56
NOTE 6. TENDER OFFER FOR EXIDE ELECTRONICS GROUP, INC.
On July 10, 1997, the Company proposed to acquire all
outstanding shares of Exide Electronics Group, Inc. for
approximately $230 million in a merger transaction whereby
Exide Electronics Group, Inc. shareholders would receive $20
per share in cash. If the merger is completed, which remains
uncertain as of the date of this quarterly report, the Exide
Electronics Group, Inc. businesses would be an addition to the
Company's Process/ Environmental Controls business segment.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Results of Operations
Net revenues for the 1997 quarter and nine-month period
were 10% and 13% higher compared to the corresponding periods
in 1996. Customer demand was higher in all business segments.
Acquisitions accounted for approximately 4% and 8% of sales
growth in the quarter and the nine-month period.
Gross profit margins for the 1997 third quarter and nine-
month period, as a percentage of sales, were approximately
33.5% and 32.6%, respectively. For the quarter and nine-month
period, gross profit margins are up 1.8 and 1.3 percentage
points because the acquired companies provide a higher gross
margin and productivity improvements within the existing
business units were experienced.
Selling, general and administrative expenses for the 1997
third quarter as a percentage of sales were approximately 0.9
percentage points higher than the 1996 level. For the 1997
nine-month period, these costs as a percentage of sales are
also higher principally due to the higher overall selling
expense structure of the acquired businesses.
Interest expense for the 1997 quarter and nine-month
period was 45% and 11% less than the 1996 levels due to lower
average debt levels, principally due to strong operating cash
flows.
The effective tax rate is identical for all 1997 and 1996
periods.
Liquidity and Capital Resources
Total debt increased $3.8 million from the second quarter
to $219.5 million. This reflects funds expended for the
acquisition of Gems Sensors, offset by strong operating cash
flows. The Company anticipates reductions in working capital
levels in the fourth quarter.
The Company's regular quarterly dividend of $.025 per
share was declared for holders of record on September 26, 1997
payable on October 31, 1997.
The Company's cash provided from operations, as well as
credit facilities available, should provide sufficient
available funds to meet anticipated working capital
requirements, capital expenditures, acquisitions, dividends and
scheduled debt repayments.
PART II
ITEM 1. Legal Proceedings
None
ITEM 2. Change in Securities
None
ITEM 3. Defaults upon Senior Securities
None
ITEM 4. Submission of Matters to a Vote of Security
Holders
None
ITEM 5. Other Information
None
ITEM 6. Exhibits and Reports on Form 8-K
(a) Exhibits: (27) Financial Data Schedules
(b) Reports on Form 8-K: None
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934, the Registrant has duly caused this report to be
signed on its behalf by the undersigned thereunto duly
authorized.
DANAHER CORPORATION:
Date: October 21, 1997 By: /s/ Patrick W. Allender
Patrick W. Allender
Chief Financial Officer
Date: October 21, 1997 By: /s/ C. Scott Brannan
C. Scott Brannan
Controller
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