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 October 1, 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 October 21,
1999 was 142,346,187.
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DANAHER CORPORATION
INDEX
FORM 10-Q
PART I - FINANCIAL INFORMATION Page
Item 1. Financial Statements
Consolidated Condensed Balance Sheets
at October 1, 1999 and December 31, 1998 3
Consolidated Condensed Statements of
Earnings for the three months and
nine months ended October 1, 1999 and
September 25, 1998 4
Consolidated Condensed Statements of
Cash Flow for the nine months ended
October 1, 1999 and September 25, 1998 5
Notes to Consolidated Condensed
Financial Statements 6-7
Item 2. Management's Discussion and
Analysis of Financial Condition
and Results of Operations 8-9
PART II - OTHER INFORMATION
Item 6. (a) Exhibits: 9
(b) Reports on Form 8-K: None
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DANAHER CORPORATION
CONSOLIDATED CONDENSED BALANCE SHEETS
(000's omitted)
(Unaudited)
October 1, December 31,
1999 1998
(Notes 1 and 3)
ASSETS
Current Assets:
Cash and cash equivalents $ 280,138 $ 47,798
Accounts receivable, net 514,522 485,543
Inventories:
Finished goods 146,769 130,463
Work in process 73,739 75,768
Raw material and supplies 128,941 131,250
Total inventories 349,449 337,481
Prepaid expenses and other
current assets 64,442 60,874
Total current assets 1,208,551 931,696
Property, plant and equipment, net
of accumulated depreciation of
$543,143 and $493,332,
respectively 508,732 510,198
Other assets 76,908 99,402
Excess of cost over net assets of
acquired companies, net 1,286,533 1,299,563
Total assets $3,080,724 $2,840,859
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Notes payable and current
portion of long-term debt $ 74,847 $ 59,721
Accounts payable 195,179 161,782
Accrued expenses 531,959 479,743
Total current liabilities 801,985 701,246
Other liabilities 289,405 294,907
Long-term debt 341,494 443,918
Stockholders' equity:
Common stock-$.01 par value 1,542 1,536
Additional paid-in capital 417,510 332,054
Retained earnings 1,249,119 1,069,571
Accumulated other comprehensive
income (20,331) (2,373)
Total stockholders' equity 1,647,840 1,400,788
Total liabilities and
stockholders' equity $3,080,724 $2,840,859
See notes to consolidated condensed financial statements.
DANAHER CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS
(000's omitted except per share amounts)
(unaudited)
Quarter Ended Nine Months Ended
October 1, September 25, October 1, September 25,
1999 1998 1999 1998
Net sales $781,867 $758,253 $2,349,044 $2,211,462
Operating costs and expenses:
Cost of sales 470,799 457,646 1,440,562 1,373,544
Selling, general and
administrative expenses 182,515 189,332 545,280 538,275
Goodwill and other
amortization 9,337 7,786 27,448 21,978
Total operating costs and
expenses 662,651 654,764 2,013,290 1,933,797
Operating profit 119,216 103,489 335,754 277,665
Other (Note 3) 11,778 40,796 11,778 40,796
Interest expense, net 2,720 7,804 15,233 18,613
Earnings before income taxes 104,718 54,889 308,743 218,256
Income taxes 42,872 23,879 121,422 86,960
Net Earnings $ 61,846 $ 31,010 $ 187,321 $ 131,296
Basic earnings per share $ .43 $ .22 $1.32 $ .94
Average shares outstanding 142,494 140,482 141,457 139,561
Diluted earnings per share $ .42 $ .21 $1.28 $ .91
Average common stock and
equivalent shares
outstanding 146,785 144,488 145,852 143,789
See notes to consolidated condensed financial statements.
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DANAHER CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOW
(000's omitted)
(unaudited)
Nine Months Ended
October 1, September 25,
1999 1998
Cash flows from operating activities:
Net earnings from operations $ 187,321 $ 131,296
Noncash items, depreciation
and amortization 96,460 84,069
Change in accounts receivable (16,481) 10,345
Change in inventories (12,872) (26,614)
Change in accounts payable 27,713 1,234
Change in other assets and liabilities 83,361 58,149
Total operating cash flows 365,502 258,479
Cash flows from investing activities:
Payments for additions to property,
plant, and equipment, net (61,508) (76,681)
Cash paid for acquisitions (60,380) (524,345)
Net cash used in investing activities (121,888) (601,026)
Cash flows from financing activities:
Proceeds from sale of treasury stock 69,845 --
Proceeds from issuance of common stock 15,617 24,956
Borrowing (repayments) of debt (88,144) 291,239
Payment of dividends (7,773) (9,761)
Net cash provided by (used in)
financing activities (10,455) 306,434
Effect of exchange rate changes on cash (819) 808
Net change in cash and cash equivalents 232,340 (35,305)
Beginning balance of cash and cash
equivalents 47,798 80,578
Ending balance of cash and cash
equivalents $ 280,138 $ 45,273
Supplemental disclosures:
Cash interest payments $ 9,635 $ 18,733
Cash income tax payments $ 82,210 $ 85,978
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 October 1, 1999 and December
31, 1998, its results of operations for the three months and nine
months ended October 1, 1999 and September 25, 1998, and its cash
flows for the nine months ended October 1, 1999 and September 25,
1998.
Total comprehensive income was as follows:
1999 1998
(millions)
Quarter $73.4 $29.9
Nine Months $169.4 $136.1
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 the quarter and nine months ended October 1, 1999 and
September 25, 1998 are shown below:
Net Sales
Quarter Nine Months
1999 1998 1999 1998
Process/Environmental Controls $455,057 $440,378 $1,369,200 $1,280,052
Tool and Components 326,810 317,875 979,844 931,410
$781,867 $758,253 $2,349,044 $2,211,462
Operating Profit
Quarter Nine Months
1999 1998 1999 1998
Process/Environmental Controls $73,936 $61,921 $215,680 $178,361
Tool and Components 48,981 44,983 132,316 111,040
Other (3,701) (3,415) (12,242) (11,736)
$119,216 $103,489 $335,754 $277,665
NOTE 3. MERGERS
On July 14, 1999, the Company acquired Hach Company.
The Company issued .2987 shares of common stock in exchange for
each outstanding share of Hach Company. The transaction was a
tax-free reorganization and was accounted for as a pooling-of-
interests. Accordingly, the financial statements presented have
been restated to reflect the combined companies. Sales reported
have increased $111.1 million for the nine months ended October
1, 1999 and $104.0 million for the nine months ended September
25, 1998. Hach is engaged in the manufacture and marketing of
instruments and kits to analyze the chemical and other properties
of water and aqueous solutions.
Third quarter 1999 results include a one-time charge of
$11.8 million ($9.8 million after-tax or $0.07 per diluted share)
to reflect the costs of the transaction and the elimination of
redundant activities and operations.
After consideration of the one-time charge above, net
income increased $2.0 million for the nine months ended October
1, 1999 and $6.4 million for the nine months ended September 25,
1998 due to the Hach acquisition.
On July 9, 1998, the Company acquired Fluke Corporation
in a transaction accounted for as a pooling-of-interests. Third
quarter 1998 results include a one-time charge of $40.8 million
($28.6 million after-tax or $0.20 per diluted share) to reflect
the costs of the transaction and its integration into the
Company.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Results of Operations
Net sales for the 1999 quarter were 3.1% higher than
the 1998 quarter. Net sales for the nine-month period were 6.2%
higher than the corresponding period in 1998. This is principally
due to continued increases in shipment volume in both segments
and the effect of acquisitions, with comparable companies
accounting for approximately 2% of sales growth in the nine-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 39.8% for the quarter and 38.7% for the
nine-month period, an increase of 0.8 percentage points from the
1998 nine-month period and 0.1 percentage points from the 1998
third quarter. The year to date 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 23.3% for the 1999 quarter and 23.2% for
the nine month period. This represents a decrease of 1.7 and 1.1
percentage points from the 1998 quarter and year to date periods,
respectively. The decreases are driven by cost reduction efforts
across both business segments.
Interest expense for the quarter was 65.2% lower due to
strong cash flow experienced in 1999 and 1998. For the
nine-month period, interest expense was 18.2% lower, due to lower
average debt levels resulting from strong operating cash flow.
The effective tax rate decreased 2.6 percentage points
for the third quarter and 0.5 percentage points for the nine-
month period from 1998 respective periods, mainly due to a higher
level of non-deductible merger costs in 1998.
Liquidity and Capital Resources
Since December 31, 1998, the Company has experienced
increases in inventory and accounts payable. This is due to
seasonally lower levels experienced at the end of 1998 caused by
the holiday season. Total debt decreased by $87.3 million and
cash increased by $232.3 million from year end primarily as a
result of strong operating cash flow. The Company's cash
equivalents as of October 1, 1999 are invested in highly liquid
investment grade debt instruments with a maturity of ninety days
or less.
A regular quarterly dividend of $.015 per share was
declared, payable on October 29, 1999 to holders of record on
September 24, 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: October 21, 1999 By: /s/ Patrick W. Allender
Patrick W. Allender
Chief Financial Officer
Date: October 21, 1999 By: /s/ Christopher C. McMahon
Christopher C. McMahon
Controller
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