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 March 27, 1998
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 April 16,
1998 was 58,554,870.<PAGE>
DANAHER CORPORATION
INDEX
FORM 10-Q
PART I - FINANCIAL INFORMATION Page
Item 1. Financial Statements
Consolidated Condensed Balance Sheets
at March 27, 1998 and December 31, 1997 1
Consolidated Condensed Statements of
Earnings for the three months ended
March 27, 1998 and March 28, 1997 2
Consolidated Condensed Statements of
Cash Flows for the three months ended
March 27, 1998 and March 28, 1997 3
Notes to Consolidated Condensed
Financial Statements 4-5
Item 2. Management's Discussion and
Analysis of Financial Condition and
Results of Operations 5-6
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 6
(27) Financial Data Schedules<PAGE>
DANAHER CORPORATION
CONSOLIDATED CONDENSED BALANCE SHEETS
(000's omitted)
March 27, December 31,
1998 1997
(unaudited) (NOTE 1)
ASSETS
Current Assets:
Cash and equivalents $ 30,357 $ 33,317
Accounts receivable, net 366,653 322,600
Inventories:
Finished goods 109,220 82,451
Work in process 66,594 54,544
Raw material and supplies 93,476 72,421
Total inventories 269,290 209,416
Prepaid expenses and other
current assets 55,694 53,006
Total current assets 721,994 618,339
Property, plant and equipment, net
of accumulated depreciation of
$276,318 and $263,227, respectively 379,328 335,223
Other assets 61,169 72,739
Excess of cost over net assets of
acquired companies, net 1,208,234 853,416
Total assets $ 2,370,725 $1,879,717
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Notes payable and current
portion of long-term debt $ 213,888 $ 35,527
Accounts payable 167,993 135,190
Accrued expenses 422,386 353,518
Total current liabilities 804,267 524,235
Other liabilities 294,758 275,881
Long-term debt 313,717 162,720
Stockholders' equity:
Common stock - $.01 par value 644 643
Additional paid-in capital 338,719 336,109
Retained earnings 692,266 655,692
Cumulative foreign translation
adjustment and other (4,205) (6,122)
Treasury stock (69,441) (69,441)
Total stockholders' equity 957,983 916,881
Total liabilities and
stockholders' equity $2,370,725 $1,879,881
See notes to consolidated condensed financial statements.<PAGE>
DANAHER CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS
(000's omitted except per share amounts)
(unaudited)
Three Months Ended
March 27, March 28,
1998 1997
Net sales $ 534,418 $ 466,441
Cost of sales 363,816 318,961
Selling, general and
administrative expenses 99,658 86,266
Goodwill and other amortization 5,896 5,757
Total operating expenses 105,554 410,984
Operating profit 65,048 55,457
Interest expense, net 3,186 3,864
Earnings from continuing operations
before income taxes 61,861 51,593
Income taxes 23,817 20,058
Net earnings $ 38,044 $ 31,535
Basic earnings per share $ .65 $ .53
Average common stock outstanding 58,724,639 59,116,974
Diluted earnings per share $ .63 $ .52
Average common stock and common
equivalent shares outstanding 60,609,716 60,378,418
See notes to consolidated condensed financial statements.
<PAGE>
DANAHER CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(000's omitted)
(unaudited)
Three Months Ended
March 27, March 28,
1998 1997
Cash flows from operating activities:
Net earnings from operations $ 38,044 $ 31,535
Noncash items, depreciation and
amortization 18,987 18,930
(Increase) decrease in accounts receivable 4,310 (14,767)
Increase in inventories (12,083) (5,303)
Increase in accounts payable 16,103 12,427
Change in other assets and liabilities 42,598 38,582
Total operating cash flows 107,959 81,404
Cash flows from investing activities:
Payments for additions to property,
plant, and equipment, net (12,819) (7,687)
Cash paid for acquisitions (375,441) (33,311)
Net cash provided by (used in)
investing activities (388,260) (40,998)
Cash flows from financing activities:
Proceeds from issuance of common stock 2,611 811
Dividends paid (1,470) (1,470)
Borrowing (repayment) of debt 276,072 (26,963)
Net cash provided by (used in)
financing activities 277,213 (27,622)
Effect of exchange rate changes on cash 128 (674)
Net change in cash and equivalents (2,960) 12,110
Beginning balance of cash equivalents 33,317 26,444
Ending balance of cash equivalents $ 30,357 $ 38,554
Supplemental disclosures:
Cash interest payments $ 284 $ 1,375
Cash income tax payments $ 5,804 $ 1,780
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 1997 Annual Report on
Form 10-K.
In the opinion of the registrant, the accompanying
financial statements contain all adjustments (consisting of only
normal recurring accruals) necessary to present fairly the
financial position of the Company at March 27, 1998 and December
31, 1997, its results of operations for the three months ended
March 27, 1998 and March 28, 1997, and its cash flows for the
three months ended March 27, 1998 and March 28, 1997.
Comprehensive income exceeded reported net income by
approximately $1.9 million.
NOTE 2. ACQUISITION OF PACIFIC SCIENTIFIC COMPANY
The Company obtained control of Pacific Scientific Company
as of March 9, 1998. Total consideration was approximately $420
million. The fair value of assets acquired were approximately
$520 million and approximately $100 million of liabilities,
including approximately $50 million of debt, was 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 informational 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 Quarter Ended Quarter Ended
December 31, March 28, March 27,
1997 1997 1998
Net Sales $ 2,361,428 $ 538,905 $ 606,000
Net Earnings 147,810 29,353 36,388
Earnings per
Share, diluted $2.45 $ .49 $ .60
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Results of Operations
Net Sales for the first quarter of 1998 of $534.4 million
were 15% higher than the 1997 quarter. Sales were higher in both
business segments. Of this increase, acquisitions accounted for
approximately 8% and companies included in both periods accounted
for 7%. Increases in the volume of shipments in all business
segments provided this growth.
Gross profit margin for the first quarter of 1998, as a
percentage of sales, was 31.9%, which represents a 0.3 percentage
point increase from 1997 levels. This results both from the
effect of the acquired companies which provide a higher gross
margin and productivity improvements within the existing business
units.
Selling, general and administrative expenses for the 1998
first quarter were 16% higher than in 1997 because of higher
sales levels. As a percentage of sales, these costs increased by
0.1 percentage points in 1998 to 18.6%, principally due to higher
costs in this area associated with acquisitions made since the
first quarter of 1997.
Interest expense of $3,186,000 in 1998 was lower than the
corresponding 1997 period. Average debt levels were lower in
1998, reflecting the strong cash flow experienced in 1998 and
1997 and that the large increase in debt associated with the
Pacific Scientific acquisition was in place for only the final
two weeks of the 1998 first quarter.
The 1998 effective tax rate of 38.5% is 0.5% lower than the
1997 effective rate, reflecting lower tax rates associated with
expected higher earnings from foreign operations.
Liquidity and Capital Resources
During the first quarter of 1998, the Company experienced
increases in inventory and accounts payable. This is principally
due to the lower activity levels experienced in the last weeks of
the 1997 year due to the holiday season. Total debt under the
Company's borrowing facilities increased to $528 million at March
27, 1998, compared to $198 million at December 31, 1997. This
increase relates principally to the funding of the acquisition of
Pacific Scientific Company in March, offset in part by strong
cash flow from operations. This acquisition was funded under the
Company's uncommitted lines of credit.
The Company declared a regular quarterly dividend of $.025
per share payable on April 24, 1998, to holders of record on
March 20, 1998.
The Company's cash provided from operations, as well as
credit facilities available, should provide sufficient available
funds to meet normal working capital requirements, capital
expenditures, dividends, scheduled debt repayments, and to fund
acquisitions, if applicable.
PART II - OTHER INFORMATION
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: April 16, 1998 By: /s/ Patrick W. Allender
Patrick W. Allender
Chief Financial Officer
Date: April 16, 1998 By: /s/ C. Scott Brannan
C. Scott Brannan
Controller
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