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 July 2, 1999
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 July 22, 1999
was 142,172,024.
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DANAHER CORPORATION
INDEX
FORM 10-Q
PART I - FINANCIAL INFORMATION Page
Item 1. Financial Statements
Consolidated Condensed Balance Sheets
at July 2, 1999 and December 31, 1998 3
Consolidated Condensed Statements of
Earnings for the three months and
six months ended July 2, 1999 and
June 26, 1998 4
Consolidated Condensed Statements of
Cash Flow for the six months ended
July 2, 1999 and June 26, 1998 5
Notes to Consolidated Condensed
Financial Statements 6-7
Item 2. Management's Discussion and
Analysis of Financial Condition
and Results of Operations 7-8
PART II - OTHER INFORMATION
Item 6. (a) Exhibits: 8-9
(b) Reports on Form 8-K: None
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DANAHER CORPORATION
CONSOLIDATED CONDENSED BALANCE SHEETS
(000's omitted)
July 2, December 31,
1999 1998
(unaudited) (Note 1)
ASSETS
Current Assets:
Cash and cash equivalents $ 128,008 $ 41,923
Accounts receivable, net 433,698 467,108
Inventories:
Finished goods 130,455 122,141
Work in process 73,022 74,385
Raw material and supplies 126,355 126,960
Total inventories 329,832 323,486
Prepaid expenses and other
current assets 58,470 54,387
Total current assets 950,008 886,904
Property, plant and equipment, net
of accumulated depreciation of
$466,993 and $441,593,
respectively 460,214 471,025
Other assets 95,491 96,213
Excess of cost over net assets of
acquired companies, net 1,246,479 1,284,573
Total assets $2,752,192 $2,738,715
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Notes payable and current
portion of long-term debt $ 58,534 $ 59,639
Accounts payable 179,908 158,596
Accrued expenses 459,751 470,470
Total current liabilities 698,193 688,705
Other liabilities 263,450 285,261
Long-term debt 341,282 412,918
Stockholders' equity:
Common stock-$.01 par value 1,471 1,467
Additional paid-in capital 386,161 374,412
Retained earnings 1,092,759 978,655
Accumulated other comprehensive
income (31,124) (2,703)
Total stockholders' equity 1,449,267 1,351,831
Total liabilities and
stockholders' equity $2,752,192 $2,738,715
See notes to consolidated condensed financial statements.
DANAHER CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS
(000's omitted except per share amounts)
(unaudited)
Quarter Ended Six Months Ended
July 2, June 26, July 2, June 26,
1999 1998 1999 1998
Net revenues $741,778 $736,428 $1,496,368 $1,382,668
Operating costs and expenses:
Cost of sales 459,039 462,983 938,480 881,077
Selling, general and
administrative expenses 165,716 173,471 335,757 321,204
Goodwill and other
amortization 8,885 8,100 18,053 14,499
Total operating costs and
expenses 633,640 644,554 1,292,290 1,216,780
Operating profit 108,138 91,874 204,078 165,888
Interest expense, net 5,696 6,983 11,947 10,180
Earnings before income taxes 102,442 84,891 192,131 155,708
Income taxes 39,440 32,683 73,970 59,297
Net Earnings $ 63,002 $ 52,208 $ 118,161 $ 96,411
Basic earnings per share $ .46 $ .39 $ .87 $ .72
Average shares outstanding 135,894 134,142 135,766 134,087
Diluted earnings per share $ .45 $ .38 $ .84 $ .70
Average common stock and
equivalent shares
outstanding 140,413 138,551 140,151 138,399
See notes to consolidated condensed financial statements.
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DANAHER CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOW
(000's omitted)
(unaudited)
Six Months Ended
July 2, June 26,
1999 1998
Cash flows from operating activities:
Net earnings from operations $ 118,161 $ 96,411
Noncash items, depreciation
and amortization 61,739 50,683
Decrease in accounts receivable 27,717 22,603
Increase in inventories (9,026) (29,164)
Increase in accounts payable 22,719 8,032
Change in other assets and liabilities (34,365) 41,535
Total operating cash flows 186,945 190,100
Cash flows from investing activities:
Payments for additions to property,
plant, and equipment, net (35,146) (39,039)
Cash paid for acquisitions -- (375,441)
Net cash provided by (used in)
investing activities (35,146) (414,480)
Cash flows from financing activities:
Proceeds from issuance of common stock 11,753 3,766
Borrowing (repayments) of debt (72,741) 233,404
Payment of dividends (4,057) (6,131)
Net cash used in financing activities (65,045) 231,039
Effect of exchange rate changes on cash (669) (896)
Net change in cash and cash equivalents 86,085 5,763
Beginning balance of cash and cash
equivalents 41,923 70,821
Ending balance of cash and cash
equivalents $ 128,008 $ 76,584
Supplemental disclosures:
Cash interest payments $ 11,952 $ 9,849
Cash income tax payments $ 67,285 $ 37,003
See notes to consolidated condensed financial statements.
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 1998 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 July 2, 1999 and December 31,
1998, its results of operations for the three months and six months
ended July 2, 1999 and June 26, 1998, and its cash flows for the
six months ended July 2, 1999 and June 26, 1998.
Total comprehensive income was as follows:
1999 1998
(millions)
Quarter $53.7 $54.3
Six Months $89.7 $94.5
Total comprehensive income for all periods represents net income
and the change in cumulative foreign translation adjustment.
NOTE 2. SEGMENT INFORMATION
Segment information is presented consistently with the
basis described in the 1998 Annual Report. There has been no
material change in total assets or liabilities by segment. Segment
results for 1999 are shown below:
Sales-Quarter Sales-Six Months
1999 1998 1999 1998
Process/Environmental Controls $410,590 $422,603 $843,334 $769,133
Tool and Components 331,188 313,825 653,034 613,535
$741,778 $736,428 $1,496,368 $1,382,668
Op Profit-Quarter Op Profit-Six Months
1999 1998 1999 1998
Process/Environmental Controls $64,534 $59,902 $129,284 $108,152
Tool and Components 48,045 36,566 83,335 66,057
Other (4,441) (4,594) (8,541) (8,321)
$108,138 $91,874 $204,078 $165,888
NOTE 3. MERGER WITH HACH COMPANY
On July 14, 1999, the Company announced completion of
the Hach merger whereby the Company issued .2987 shares of common
stock in exchange for each outstanding share of Hach Company.
The transaction will be a tax-free reorganization and will be
accounted for as a pooling-of-interests. Accordingly, future
financial statements will be restated to reflect the combined
companies. Sales reported will increase $137.0 million in 1998
and $127.1 million in 1997. Reported net income will increase
$9.2 million in 1998 and $12.0 million in 1997. 1998 reported
diluted earnings per share will increase approximately $.01 and
1997 reported diluted earnings per share will increase
approximately $.03. Results for interim periods have not yet
been determined on a combined company basis. Hach is engaged in
the manufacture and marketing of instruments and kits to analyze
the chemical and other properties of water and aqueous solutions.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Results of Operations
Net sales for the 1999 quarter were 1% higher than the
1998 quarter. Net sales for the six-month period were 8% higher
than the corresponding period in 1998. This is principally due to
continued increases in shipment volume in all segments and the
effect of acquisitions, with comparable companies accounting for
approximately 2% of sales growth in the six-month period.
Acquisitions, net of divested businesses, did not have a
significant effect on sales growth for the quarter.
Gross profit margin in 1999, as a percentage of sales,
was approximately 38.1% for the quarter and 37.3% for the
six-month period, an increase of 1.0 percentage points from 1998
levels. The gross margin increase was attributable to both the
effect of cost reduction efforts and productivity improvements
within the existing business units.
Selling, general and administrative expenses for the
1999 quarter decreased in total dollars reflecting cost reduction
efforts. Selling, general and administrative expenses as a
percentage of sales was 22.3% for the 1999 quarter and 22.4% for
the six month period, respectively. This represents a decrease of
1.3 and 0.8 percentage points, respectively, from prior periods.
This reflects principally cost reduction efforts across both
business segments.
Interest expense for the quarter was 18.4% lower due to
strong cash flow experienced in 1999 and 1998. For the six-month
period, interest expense was 17.4% higher, due to higher average
debt levels, reflecting the funding of acquisitions at the end of
the 1998 first quarter.
The effective tax rate is consistent for the second
quarter. The six-month period is .4 percent points higher in
1999 than 1998, mainly due to adjustments to the tax rate made by
Fluke in the 1998 first quarter, which represented the fiscal
year-end for Fluke.
Liquidity and Capital Resources
Since December 31, 1998, the Company has experienced
increases in inventory and accounts payable. This is due to the
lower activity levels experienced in the last weeks of 1998
caused by the holiday season. Total debt decreased to $399.8
million at July 2, 1999, primarily as a result of strong
operating cash flow.
A regular quarterly dividend of $.015 per share was
declared, payable on July 30, 1999 to holders of record on June
25, 1999.
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 - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits: (27) Financial Data Schedules
(b) Reports on Form 8-K: None
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: July 22, 1999 By: /s/ Patrick W. Allender
Patrick W. Allender
Chief Financial Officer
Date: July 22, 1999 By: /s/ C. Scott Brannan
C. Scott Brannan
Controller
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