<PAGE>
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 June 30, 2000
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 20, 2000 was
141,758,035.
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DANAHER CORPORATION
-------------------
INDEX
FORM 10-Q
PART I - FINANCIAL INFORMATION Page
Item 1. Financial Statements
Consolidated Condensed Balance Sheets
at June 30, 2000 and December 31, 1999 3
Consolidated Condensed Statements of
Earnings for the three months and
six months ended June 30, 2000 and
July 2, 1999 4
Consolidated Condensed Statements of
Cash Flow for the six months ended
June 30, 2000 and July 2, 1999 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)
---------------
<TABLE>
<CAPTION>
June 30, December 31,
2000 1999
----------- ------------
(unaudited) (Note 1)
ASSETS
------
<S> <C> <C>
Current Assets:
Cash and cash equivalents $ 183,713 $ 260,281
Accounts receivable, net 624,709 544,738
Inventories:
Finished goods 171,696 128,134
Work in process 87,738 67,437
Raw material and supplies 181,515 129,102
---------- ----------
Total inventories 440,949 324,673
Prepaid expenses and other
current assets 68,761 72,425
---------- ----------
Total current assets 1,318,132 1,202,117
Property, plant and equipment, net
of accumulated depreciation of
$596,226 and $552,724
respectively 563,232 500,189
Other assets 100,705 52,476
Excess of cost over net assets of
acquired companies, net 1,727,981 1,292,289
---------- ----------
Total assets $3,710,050 $3,047,071
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
-------------------------------------
Current Liabilities:
Notes payable and current
portion of long-term debt $ 52,670 $ 33,597
Accounts payable 247,177 213,209
Accrued expenses 654,870 461,980
---------- ----------
Total current liabilities 954,717 708,786
Other liabilities 310,357 288,494
Long-term debt 675,500 341,037
Stockholders' equity:
Common stock-$.01 par value 1,552 1,540
Additional paid-in capital 349,958 420,036
Retained earnings 1,469,824 1,321,283
Accumulated other comprehensive
income (51,858) (34,105)
---------- ----------
Total stockholders' equity 1,769,476 1,708,754
---------- ----------
Total liabilities and
stockholders' equity $3,710,050 $3,047,071
========== ==========
</TABLE>
See notes to consolidated condensed financial statements.
1
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DANAHER CORPORATION
-------------------
CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS
---------------------------------------------
(000's omitted except per share amounts)
(unaudited)
<TABLE>
<CAPTION>
Quarter Ended Six Months Ended
June 30, July 2, June 30, July 2,
2000 1999 2000 1999
-------- -------- ---------- ----------
<S> <C> <C> <C> <C>
Net sales $890,775 $774,133 $1,758,622 $1,567,177
Operating costs and expenses:
Cost of sales 541,185 472,203 1,079,143 969,763
Selling, general and
administrative expenses 202,136 179,159 404,622 362,765
Goodwill and other
amortization 10,789 8,914 20,563 18,111
-------- -------- ---------- ----------
Total operating costs and
expenses 754,110 660,276 1,504,328 1,350,639
-------- -------- ---------- ----------
Operating profit 136,665 113,857 254,294 216,538
Interest expense, net 5,591 5,965 7,804 12,513
-------- -------- ---------- ----------
Earnings before income taxes 131,074 107,892 246,490 204,025
Income taxes 49,807 41,539 93,666 78,550
-------- -------- ---------- ----------
Net Earnings $ 81,267 $ 66,353 $ 152,824 $ 125,475
======== ======== ========== ==========
Basic earnings per share $.57 $.47 $1.07 $.89
======== ======== ========== ==========
Average shares outstanding 142,246 141,083 142,498 140,938
======== ======== ========== ==========
Diluted earnings per share $.56 $.46 $1.05 $.86
======== ======== ========== ==========
Average common stock and
equivalent shares
outstanding 145,243 145,682 145,306 145,385
======== ======== ========== ==========
</TABLE>
See notes to consolidated condensed financial statements.
2
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DANAHER CORPORATION
-------------------
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOW
----------------------------------------------
(000's omitted)
(unaudited)
<TABLE>
<CAPTION>
Six Months Ended
June 30, July 2,
2000 1999
--------- --------
<S> <C> <C>
Cash flows from operating activities:
Net earnings from operations $ 152,824 $125,475
Noncash items, depreciation
and amortization 69,847 64,353
Change in accounts receivable 27,553 26,226
Change in inventories (48,587) (9,020)
Change in accounts payable (943) 23,022
Change in other assets and liabilities 84,382 (30,779)
--------- --------
Total operating cash flows 285,076 199,277
--------- --------
Cash flows from investing activities:
Payments for additions to property,
plant, and equipment, net (39,809) (38,998)
Cash paid for acquisitions (445,803) --
--------- --------
Net cash used in investing
activities (485,612) (38,998)
--------- --------
Cash flows from financing activities:
Proceeds from issuance of common stock 12,108 13,125
Borrowing (repayments) of debt 199,070 (73,665)
Payment of dividends (4,283) (5,310)
Purchase of commom stock (82,174) --
--------- --------
Net cash used in financing activities 124,721 (65,850)
--------- --------
Effect of exchange rate changes on cash (753) (1,772)
--------- --------
Net change in cash and cash equivalents (76,568) 92,657
Beginning balance of cash and cash
equivalents 260,281 47,798
--------- --------
Ending balance of cash and cash
equivalents $ 183,713 $140,455
========= ========
Supplemental disclosures:
Cash interest payments $ 7,118 $ 12,432
========= ========
Cash income tax payments $ 17,627 $ 69,327
========= ========
</TABLE>
See notes to consolidated condensed financial statements.
3
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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 1999 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
June 30, 2000 and December 31, 1999, its results of operations for the three
months and six months ended June 30, 2000 and July 2, 1999, and its cash flows
for the six months ended June 30, 2000 and July 2, 1999.
Total comprehensive income was as follows:
<TABLE>
<CAPTION>
2000 1999
------ ------
(millions)
<S> <C> <C>
Quarter $ 71.4 $56.5
Six Months $135.1 $96.0
</TABLE>
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 1999 Annual Report. There has been no material change in total assets or
liabilities by segment. Segment results for 2000 are shown below:
<TABLE>
<CAPTION>
Sales
-----------
Second Quarter Six Months
2000 1999 2000 1999
-------- -------- ---------- ----------
<S> <C> <C> <C> <C>
Process/Environmental Controls $550,277 $442,945 $1,070,725 $ 914,143
Tools and Components 340,498 331,188 687,897 653,034
-------- -------- ---------- ----------
$890,775 $774,133 $1,758,622 $1,567,177
======== ======== ========== ==========
Operating Profit
----------------
Second Quarter Six Months
2000 1999 2000 1999
-------- -------- ---------- ----------
Process/Environmental Controls $ 90,815 $ 70,253 $ 172,474 $ 141,744
Tools and Components 50,550 48,045 90,770 83,335
Other (4,700) (4,441) (8,950) (8,541)
-------- -------- ---------- ----------
$136,665 $113,857 $ 254,294 $ 216,538
======== ======== ========== ==========
</TABLE>
4
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
------- ---------------------------------------------------------------
RESULTS OF OPERATIONS
---------------------
Results of Operations
---------------------
Net sales for the 2000 quarter were 15.1% higher than the 1999
quarter. Net sales for the six-month period were 12.2% higher than the
corresponding period in 1999. Acquisitions accounted for 8% and 5.5% of the
second quarter and six month sales growth, respectively. Comparable companies
grew approximately 7% for both the quarter and six month period, led by strong
volume gains in the Electronic Test, Motion, Power Quality, and Hand Tools
businesses.
Gross profit margin in 2000, as a percentage of sales, was
approximately 39.3% for the quarter and 38.6% for the six-month period, an
increase of 0.3 and 0.5 percentage points from 1999 levels, respectively. This
increase was attributable primarily to the leverage of higher shipment volumes
spread over the fixed cost base and productivity improvements in both business
segments, slightly offset by lower gross margins of businesses acquired during
2000.
Selling, general and administrative expenses for the 2000 quarter and
six month period increased $23 million and $42 million, respectively, reflecting
the impact of recently acquired companies, increased variable spending generated
by higher sales volumes, and increased spending in organizational development
and electronic commerce activities. These expenses, as a percentage of sales,
fell 0.4 points, driven by the leverage of a larger revenue base spread over
fixed costs, and the impact of recently acquired companies.
Interest expense was 6.3% and 37.6% lower than the 1999 quarter and
six month period, respectively. Lower average debt levels resulting from strong
operating cash flows, and the retirement of a portion of higher fixed rate
borrowings, have driven these reductions.
The effective tax rate of 38.0% for the second quarter
5
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and the six-month period in 2000, 0.5 percentage points lower than the
respective periods in the prior year, is mainly due to a higher proportion of
foreign earnings.
Liquidity and Capital Resources
-------------------------------
Operating cash flow for the six months ended June 30, 2000 was $85.8
million higher than in 1999, resulting from improved earnings, improved accounts
receivable management, and increased deferred tax liabilities. Total debt
increased to $728.2 million at June 30, 2000, compared to $374.6 million at
December 31, 1999. This increase relates principally to new borrowings incurred
to finance acquisitions. In the first quarter of 2000, the Company repurchased
$82 million of the Company's common stock and acquired American Precision
Industries, Inc. for a cash price of approximately $250 million, including
assumption of debt. On June 20, 2000, the Company acquired Kollmorgen
Corporation for a cash price of $23 per share, or approximately $325 million,
including the assumption of debt.
Subsequent to the end of the second quarter of 2000, on July 3, 2000,
the Company purchased the motion control businesses of Warner Electric for $144
million in cash. The debt reflected on the June 30, 2000 balance sheet includes
borrowings incurred in anticipation of funding the Warner Electric acquisition.
The cash and cash equivalents of $183.7 million on the June 30, 2000 balance
sheet were invested in highly liquid investment grade short term instruments.
A regular quarterly dividend of $.015 per share was declared, payable
on July 31, 2000 to holders of record on June 30, 2000.
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
6
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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 20, 2000 By: /s/ Patrick W. Allender
------------- -----------------------
Patrick W. Allender
Chief Financial Officer
Date: July 20, 2000 By: /s/ Christopher C. McMahon
------------- --------------------------
Christopher C. McMahon
Controller
7
